MERRILL LYNCH
CONVERTIBLE
FUND, INC.
FUND LOGO
Semi-Annual Report
February 29, 2000
This report is not authorized for use as an offer of sale or a
solicitation of an offer to buy shares of the Fund unless
accompanied or preceded by the Fund's current prospectus. Past
performance results shown in this report should not be considered a
representation of future performance. Investment return and
principal value of shares will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
Statements and other information herein are as dated and are subject
to change.
Merrill Lynch
Convertible Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
Printed on post-consumer recycled paper
MERRILL LYNCH CONVERTIBLE FUND, INC.
DEAR SHAREHOLDER
For the six months ended February 29, 2000, total returns for
Merrill Lynch Convertible Fund, Inc.'s Class A, Class B, Class C and
Class D Shares were +6.86%, +6.35%, +6.27% and +6.70%, respectively.
(Results shown do not reflect sales charges and would be lower if
sales charges were included. Complete performance information can be
found on pages 3 and 4 of this report to shareholders.) Fund
performance continued to be negatively affected by the Fund's value
holdings, notwithstanding the dramatic reduction of those holdings
in favor of growth stocks at the beginning of January.
Value-type securities were reduced to only 33% of the Fund's
holdings by February 29, 2000 as compared to 63% on August 31, 1999.
We trimmed our holdings in basic industries and consumer cyclicals
dramatically to better reflect the overall profile in the
convertible market. We used the proceeds from these sales to
increase our positions in growth companies, notably in technology
and communications. Many of these investments have been in
relatively defensive new-issue convertibles rather than convertible
issues that offered little in the way of downside protection.
Specifically, we sold our positions in USX-U.S. Steel Group, the
nation's largest steelmaker; Texas Industries, Inc., a steel and
cement manufacturer; and Federal-Mogul Financial Trust, an original
equipment auto parts company. Other sales included Phelps Dodge
Corporation, the nation's largest copper producer, which we received
in exchange for Cyprus Amax Minerals Company; Inco Limited, the
Western Hemisphere's largest nickel mining and production firm; and
Metsa Serla Oyj, one of Europe's largest paper companies. We
purchased telecommunications issues such as a MediaOne Group Inc.
security exchangeable into Vodafone Airtouch PLC, one of the world's
largest wireless communications companies, and Nextel
Communications, Inc., the largest wireless communications company in
the United States. Other growth investments purchased were marketing
software company Siebel Systems Inc., America Online Inc. and a
Reliant Energy Inc. note exchangeable into Time Warner Inc. common
stock. In addition, we invested in Roche Holdings Inc., parent of
one of the world's largest pharmaceuticals company, and two new
biotechnology issues focusing on genetic engineering, Human Genome
Sciences, Inc. and Curagen Corporation. We also added to our
position in PSINET Inc. through a new convertible preferred
offering. Cable and broadcasting purchases included UnitedGlobalCom
Inc., a global broadband communications provider of voice, video and
data services, and Echostar Communications Corporation, a direct
broadcast television company.
Investment Environment
The diverging trends within the stock market became even more
extreme during the six months ended February 29, 2000. For example,
the National Association of Securities Dealers Automated Quotations
(NASDAQ) Composite Index returned +71.62%, while the Dow Jones
Industrial Average and the Standard & Poor's 500 Index returned
- -5.77% and +4.11%, respectively, during the same period. The breadth
statistics continued to be quite poor with the weekly and daily
cumulative advance/decline lines at new lows. In spite of the
NASDAQ's performance, only 22% of stocks in the New York Stock
Exchange (NYSE) were above their 200-day moving averages (a
mathematical trendline) at the end of the six-month period. This
compares to 38% six months ago, reflecting an underlying
deterioration for NYSE stocks as the NASDAQ rallied. A limited
number of stocks made new highs. Market concentration was extreme,
as are current valuations in many sectors.
Merrill Lynch Convertible Fund, Inc.
February 29, 2000
The US economy has been growing strongly, leading to improved
earnings for many companies. The Federal Reserve Board raised
interest rates by 0.25% twice in the period, reflecting concern that
the economy could overheat and cause inflation to accelerate. These
fears may be warranted as highlighted by the nearly 50% increase in
oil prices during the period. Extraordinary productivity
improvements have mitigated this risk somewhat, but may be
unsustainable longer term. In the face of this environment, we will
continue our issue-by-issue focus, bearing in mind the growth
orientation of the convertible market.
In Conclusion
We appreciate your continued investment in Merrill Lynch Convertible
Fund, Inc., and we look forward to reviewing our outlook and
strategy with you again in our next report to shareholders.
Sincerely,
(Terry K. Glenn)
Terry K. Glenn
President and Director
(Daniel Luchansky)
Daniel Luchansky
Vice President and Portfolio Manager
April 4, 2000
OFFICERS AND DIRECTORS
Terry K. Glenn, President and Director
James H. Bodurtha, Director
Herbert I. London, Director
Joseph L. May, Director
Andre F. Perold, Director
Roberta Cooper Ramo, Director
Arthur Zeikel, Director
Vincent T. Lathbury III, Senior Vice President
Joseph T. Monagle Jr., Senior Vice President
Daniel A. Luchansky, Vice President
Donald C. Burke, Vice President and Treasurer
Ira P. Shapiro, Secretary
Custodian
The State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
Robert R. Martin, Director of Merrill Lynch Convertible Fund, Inc.
has recently retired. The Fund's Board of Directors wishes
Mr. Martin well in his retirement.
Merrill Lynch Convertible Fund, Inc.
February 29, 2000
PERFORMANCE DATA
About Fund Performance
Investors are able to purchase shares of the Fund through the
Merrill Lynch Select Pricing SM System, which offers four pricing
alternatives:
* Class A Shares incur a maximum initial sales charge (front-end
load) of 5.25% and bear no ongoing distribution or account
maintenance fees. Class A Shares are available only to eligible
investors.
* Class B Shares are subject to a maximum contingent deferred sales
charge of 4% if redeemed during the first year, decreasing 1% each
year thereafter to 0% after the fourth year. In addition, Class B
Shares are subject to a distribution fee of 0.75% and an account
maintenance fee of 0.25%. These shares automatically convert to
Class D Shares after approximately 8 years. (There is no initial
sales charge for automatic share conversions.)
* Class C Shares are subject to a distribution fee of 0.75% and an
account maintenance fee of 0.25%. In addition, Class C Shares are
subject to a 1% contingent deferred sales charge if redeemed within
one year of purchase.
* Class D Shares incur a maximum initial sales charge of 5.25% and
an account maintenance fee of 0.25% (but no distribution fee).
None of the past results shown should be considered a representation
of future performance. Figures shown in the "Recent Performance
Results" and "Average Annual Total Return" tables assume
reinvestment of all dividends and capital gains distributions at net
asset value on the ex-dividend date. Investment return and principal
value of shares will fluctuate so that shares, when redeemed, may be
worth more or less than their original cost. Dividends paid to each
class of shares will vary because of the different levels of account
maintenance, distribution and transfer agency fees applicable to
each class, which are deducted from the income available to be paid
to shareholders.
<TABLE>
Recent Performance Results*
<CAPTION>
Ten Years/
6 Month 12 Month Since Inception
As of February 29, 2000 Total Return Total Return Total Return
<S> <C> <C> <C>
ML Convertible Fund, Inc. Class A Shares++ +6.86% +16.23% +141.94%
ML Convertible Fund, Inc. Class B Shares +6.35 +14.94 + 8.06
ML Convertible Fund, Inc. Class C Shares +6.27 +14.96 + 8.03
ML Convertible Fund, Inc. Class D Shares +6.70 +15.88 + 10.30
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included. Total
investment returns are based on changes in net asset values for the
periods shown, and assume reinvestment of all dividends and capital
gains distributions at net asset value on the ex-dividend date. The
Fund's ten-year/since inception periods are ten years for Class A
Shares and from 8/04/97 for Class B, Class C & Class D Shares.
++Investment results for Class A Shares prior to August 4, 1997
reflect the performance of the Fund's Capital Shares when the Fund
was a closed-end, dual investment company. Results for this period
reflect only capital appreciation of the Fund's holdings, and do not
reflect income.
</TABLE>
Merrill Lynch Convertible Fund, Inc.
February 29, 2000
PERFORMANCE DATA (concluded)
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares++*
Year Ended 12/31/99 + 9.13% + 3.40%
Five Years Ended 12/31/99 +12.00 +10.79
Ten Years Ended 12/31/99 + 8.11 + 7.53
[FN]
++Performance results for Class A Shares prior to August 4, 1997
reflect the performance of the Fund's Capital Shares when the Fund
was closed-end.
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge currently applicable to ClassA
Shares.
% Return Without % Return With
Sales CDSC Sales CDSC**
Class B Shares*
Year Ended 12/31/99 +8.10% +4.10%
Inception (8/04/97)
through 12/31/99 +2.36 +1.80
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Year Ended 12/31/99 +8.02% +7.02%
Inception (8/04/97)
through 12/31/99 +2.35 +2.35
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Sales Charge Sales Charge**
Class D Shares*
Year Ended 12/31/99 +8.91% +3.19%
Inception (8/04/97)
through 12/31/99 +3.17 +0.88
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
PORTFOLIO INFORMATION
As of February 29, 2000
Percent of
Ten Largest Holdings Net Assets
Reliant Energy Inc., 2% due 9/15/2029 3.7%
3Com Corporation 3.5
WHX Corporation, Series A, 6.50% 3.5
Bell Atlantic Financial Services, 4.25% due
9/15/2005 (into Cable & Wireless
Communications PLC) 3.4
Nextel Communications, Inc., 5.25% due
1/15/2010 3.3
Unocal Capital Trust, 6.25% 3.2
EMC Corporation* 2.9
Lattice Semiconductor Company, 4.75% due
11/01/2006 2.8
MediaOne Group Inc., 3.041% due
11/15/2002 2.8
Union Pacific Capital Trust, 6.25% 2.4
*Includes combined holdings.
Merrill Lynch Convertible Fund, Inc.
February 29, 2000
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
S&P Moody's Face
Industry Rating Rating Amount Convertible Debentures Value
<S> <S> <S> <C> <S> <C>
Advertising A NR* US$ 250,000 Interpublic Group Company Inc., 1.87% due 6/01/2006 (c) $ 229,375
- --0.7% NR* NR* 150,000 Young & Rubicam Inc., 3% due 1/15/2005 (c) 145,125
------------
374,500
Automotive A- Baa1 800,000 Magna International Inc., 5% due 10/15/2002 760,000
Parts--2.6% B+ B2 750,000 Tower Automotive, Inc., 5% due 8/01/2004 (c) 565,312
------------
1,325,312
Banking & NR* NR* 400,000 BankAtlantic Bancorp, Inc., 5.625% due 12/01/2007 277,000
Financial--0.5%
Biotechnology NR* NR* 250,000 Afftmetrix Inc., 4.75% due 2/15/2007 (c) 265,625
- --3.4% NR* NR* 250,000 Curagen Corporation, 6% due 2/02/2007 (c) 476,875
NR* NR* 300,000 Genzyme Corporation, 5.25% due 6/01/2005 491,625
NR* NR* 250,000 Human Genome Sciences, Inc., 5% due 2/01/2007 (c) 506,562
------------
1,740,687
Broadcasting BBB- Baa3 1,000,000 Clear Channel Communications, 1.50% due 12/01/2002 913,750
- --9.9% NR* NR* 600,000 Echostar Communications Corporation, 4.875% due
1/01/2007 (c) 831,750
NR* baa3 2,630,000 MediaOne Group Inc., 3.041% due 11/15/2002 1,430,062
BBB+ Baa2 2,290,000 Reliant Energy Inc., 2% due 9/15/2029 (e) 1,919,318
------------
5,094,880
Computer NR* NR* 250,000 I2 Technologies Inc., 5.25% due 12/15/2006 (c) 553,750
Software--2.3% NR* NR* 200,000 Siebel Systems Inc., 5.50% due 9/15/2006 (c) 622,000
------------
1,175,750
Environmental BBB Baa3 1,000,000 Thermo Fibertek Inc., 4.50% due 7/15/2004 (c) 802,500
- --1.6%
Financial NR* NR* 150,000 E*Trade Group Inc., 6% due 2/01/2007 (c) 175,876
Services--0.3%
Healthcare BBB+ Baa3 750,000 Wellpoint Health Network, 2% due 7/02/2019 (a) 502,500
- --1.0%
Home BBB+ A3 1,450,000 Newell Financial Trust I, 5.25% due 12/01/2027 (Preferred) 945,219
Furnishings
- --1.8%
Internet--0.4% B- B3 200,000 Mindspring Enterprises, 5% due 4/15/2006 197,000
Internet B- B3 750,000 At Home Corporation, 0.525% due 12/28/2018 (c) 405,000
Software--0.8%
Internetworking BB- Ba3 2,000,000 America Online Inc., 2.851% due 12/06/2019 (a) 1,025,000
- --3.0% CCC NR* 250,000 Exodus Communications Inc., 4.75% due 7/15/2008 (c) 527,187
------------
1,552,187
Machinery--1.5% NR* NR* 500,000 Advanced Energy Industries, 5.25% due 11/15/2006 750,000
Medical NR* NR* 550,000 ++Phoenix Shannon PLC, 9.50% due 11/01/2000 (c) 5,500
Supplies--0.0%
Networking NR* NR* 1,400,000 Network Associates Inc., 5.195% due 2/13/2018 (a) 521,500
Products--1.0%
Oil & Gas BBB- Baa2 500,000 Kerr-McGee Corporation, 5.25% due 2/15/2010 491,250
Producers--1.0%
</TABLE>
Merrill Lynch Convertible Fund, Inc.
February 29, 2000
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
S&P Moody's Face
Industry Rating Rating Amount Convertible Debentures Value
<S> <S> <S> <C> <S> <C>
Pharmaceuti- NR* NR* US$ 100,000 Alkermes Inc., 3.75% due 2/15/2007 (c) $ 145,375
cals--1.5% NR* NR* 1,300,000 Roche Holdings Inc., 5.614% due 5/06/2012 (a)(c) 616,694
------------
762,069
Scientific BBB Baa3 500,000 ThermoQuest Corporation, 5% due 8/15/2000 (c) 505,000
Equipment
- --1.0%
Semiconductors NR* B2 500,000 Cypress Semiconductor, 4% due 2/01/2005 590,000
- --5.3% NR* NR* 800,000 Lattice Semiconductor Company, 4.75% due 11/01/2006 (c) 1,432,000
B B2 425,000 Micron Technology Inc., 7% due 7/01/2004 618,906
NR* NR* 100,000 Semtech Corporation, 4.50% due 2/01/2007 (c) 92,625
------------
2,733,531
Software--0.6% NR* NR* 250,000 Rational Software Corporation, 5% due 2/01/2007 (c) 290,625
Technology EMC Corporation:
- --2.9% BBB- B3 500,000 6% due 5/15/2004 731,250
BBB- B3 500,000 6% due 5/15/2004 731,250
------------
1,462,500
Telecommun- NR* NR* 500,000 American Tower Corporation, 5% due 2/15/2010 (c) 539,375
ications--4.4% A+ A1 1,200,000 Bell Atlantic Financial Services, 4.25% due 9/15/2005
(into Cable & Wireless Communications PLC) 1,719,000
------------
2,258,375
Telephone B+ B1 200,000 Colt Telecom Group PLC, 2% due 12/16/2006 230,109
Communications
- --0.4%
Telephone B B1 1,500,000 Nextel Communications, Inc., 5.25% due 1/15/2010 (c) 1,668,750
Networks--3.3%
Total Convertible Debentures
(Cost--$23,425,982)--51.2% 26,247,620
Shares
Held Convertible Preferred Stocks
Chemicals--0.9% NR* Ba2 770 Hercules Trust II, 6.50% 436,975
Conglomerates BB ba2 6,800 Seagram Company Ltd., 7.50% 368,900
- --0.7%
Construction & BBB- baa3 5,000 Fleetwood Capital Trust, 6% 150,000
Housing--1.2% BBB- baa3 15,000 Fleetwood Capital Trust, 6% (c) 450,000
------------
600,000
Containers B+ ba3 20,000 Owens-Illinois Inc., 4.75%475,000
- --0.9%
Energy--3.2% BBB- baa2 40,000 Unocal Capital Trust, 6.25% 1,645,000
</TABLE>
Merrill Lynch Convertible Fund, Inc.
February 29, 2000
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
S&P Moody's Face
Industry Rating Rating Amount Convertible Debentures Value
<S> <S> <S> <S> <C>
Industrials B- B3 7,000 Loral Space & Communications, 6% $ 323,750
- --1.5% B- B3 10,000 Loral Space & Communications, 6% 422,500
------------
746,250
Internet--1.7% NR* caa 7,500 PSINET Inc., 6.75% 603,750
NR* caa 5,000 PSINET Inc., Series C, 6.75% (c)(f) 255,625
------------
859,375
Oil & Gas B b3 7,500 Pogo Trust I, 6.50% 420,000
Producers--0.8%
Paper--2.3% BBB- baal 28,000 International Paper Capital Trust, 5.25% (b) 1,183,000
Railroads--2.8% BB+ baa3 5,000 Canadian National Railway Company, 5.25% 200,000
BB+ ba2 32,000 Union Pacific Capital Trust, 6.25% 1,248,000
------------
1,448,000
Real Estate BBB baa1 45,000 Equity Residential Properties, Series J, $2.15 1,096,875
Investment
Trusts--2.1%
Restaurants BBB- baa2 20,000 Wendy's Financing I, Series A, 5% 812,500
- --1.6%
Retail--1.6% B+ ba3 19,500 Kmart Financing I, 7.75% 820,218
Steel--4.6% CCC+ NR* 60,000 WHX Corporation, Series A, 6.50% 1,800,000
A- baa1 78,610 Worthington Industries, Inc. (Convertible, Series
DECS into Rouge Steel Common Stock), 7.25% 540,444
------------
2,340,444
Telecommuni- A- baa1 12,000 DECS Trust VI, 6.25% 768,000
cations--2.4% NR* NR* 5,000 UnitedGlobalCom Inc., Series D, 7% 447,500
------------
1,215,500
Television NR* NR* 2,500 Pegasus Communications, 6.50% (c) 279,375
- --0.5%
Utilities--0.5% B+ ba2 5,000 Calpine Capital Trust II, 5.50% (c) 280,000
Total Convertible Preferred Stocks
(Cost--$18,662,528)--29.3% 15,027,412
Common Stocks & Warrants
Analytical 70,000 ++Thermo Electron Corporation 1,093,750
Equipment
Manufacturing--2.1%
Building & Construction--1.1% 81,700 ++Morrison Knudsen Corporation 561,688
Computers--1.1% 60,000 ++Silicon Graphics, Inc. 588,750
Conglomerates 105,000 ++Polyphase Corporation** 85,313
- --0.3% 52,500 Polyphase Corporation (Warrants)(d)** 39,375
52,500 Polyphase Corporation (Warrants)(d)** 39,375
------------
164,063
</TABLE>
Merrill Lynch Convertible Fund, Inc.
February 29, 2000
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
Shares
Industry Held Common Stocks and Warrents Value
<S> <C> <S> <C>
Consumer & 55,000 ++Cendant Corporation $ 979,688
Business
Services--1.9%
Energy--1.0% 31,680 Occidental Petroleum Corporation 508,860
Healthcare 60,000 ++HEALTHSOUTH Corporation 292,500
Services--0.6%
Networking 18,500 ++3Com Corporation 1,816,469
Products--3.5%
Oil & Gas Producers--1.9% 30,000 Diamond Offshore Drilling, Inc. 952,500
Retail--Specialty--0.8% 7,000 The Home Depot, Inc. 404,688
Semiconductors--0.4% 5,000 ++Integrated Device Technology, Inc. 184,063
Steel--0.3% 15,000 AK Steel Holding Corporation 124,687
Utilities--2.0% 67,529 ++Citizens Utilities Company (Class B) 1,029,817
Utilities--Communication--1.4% 14,000 AT&T Corp. 692,125
Total Common Stocks & Warrants
(Cost--$9,279,515)--18.4% 9,393,648
Total Investments (Cost--$51,368,025)--98.9% 50,668,680
Short Sales (Proceeds--$22,577)--0.0%** (4,469)
Other Assets Less Liabilities--1.1% 587,738
------------
Net Assets--100.0% $ 51,251,949
============
(a)Represents a zero coupon bond; the interest rate shown reflects
the effective yield at the time of purchase by the Fund.
(b)Restricted securities as to resale. The value of the Fund's
investment in restricted securities was $1,183,000, representing
2.3% of net assets.
Acquisition
Issue Date Cost Value
International
Paper Capital
Trust, 5.25%
(Convertible
Preferred) 1/16/1997 $ 1,331,400 $ 1,183,000
------------- -------------
Total $ 1,331,400 $ 1,183,000
============= =============
(c)The security may be offered and sold to "qualified institutional
buyers" under Rule 144A of the Securities Act of 1933.
(d)Warrants entitle the Fund to purchase a predetermined number of
shares of common stock and are non-income producing. The purchase
price and number of shares are subject to adjustment under certain
conditions until the expiration date.
(e)Floating rate note.
(f)Represents a pay-in-kind security which may pay dividends in
additional shares.
*Not Rated.
**Covered short sales entered into as of February 29, 2000 were as
follows:
Shares Issue Value
5,500 Polyphase Corporation $ (4,469)
Total (Proceeds--$22,577) $ (4,469)
============
++Non-income producing security.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Convertible Fund, Inc.
February 29, 2000
FINANCIAL INFORMATION
<TABLE>
Statement of Assets and Liabilities as of February 29, 2000
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$51,368,025) $ 50,668,680
Foreign cash 7,120
Desposits on short sales 146,245
Receivables:
Securities sold $ 2,912,057
Interest 171,280
Dividends 67,122
Capital shares sold 17,160 3,167,619
-------------
Prepaid registration fees and other assets 24,717
-------------
Total assets 54,014,381
-------------
Liabilities: Common stock sold short, at value (proceeds--$22,577) 4,469
Payables:
Custodian bank 1,829,147
Securities purchased 500,000
Capital shares redeemed 137,799
Investment adviser 20,579
Distributor 11,577 2,499,102
-------------
Accrued expenses and other liabilities 258,861
-------------
Total liabilities 2,762,432
-------------
Net Assets: Net assets $ 51,251,949
=============
Net Assets Class A Common Stock, $.10 par value, 100,000,000 shares
Consist of: authorized $ 273,827
Class B Common Stock, $.10 par value, 100,000,000 shares
authorized 90,978
Class C Common Stock, $.10 par value, 100,000,000 shares
authorized 19,940
Class D Common Stock, $.10 par value, 100,000,000 shares
authorized 30,892
Paid-in capital in excess of par 53,139,526
Undistributed investment income--net 201,862
Accumulated realized capital losses on investments and foreign
currency transactions--net (1,824,139)
Unrealized depreciation on investments and foreign currency
transactions--net (680,937)
-------------
Net assets $ 51,251,949
=============
Net Asset Value: Class A--Based on net assets of $33,756,357 and 2,738,269 shares
outstanding $ 12.33
=============
Class B--Based on net assets of $11,218,786 and 909,775 shares
outstanding $ 12.33
=============
Class C--Based on net assets of $2,457,576 and 199,403 shares
outstanding $ 12.32
=============
Class D--Based on net assets of $3,819,230 and 308,922 shares
outstanding $ 12.36
=============
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Convertible Fund, Inc.
February 29, 2000
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations for the Six Months Ended February 29, 2000
<S> <S> <C> <C>
Investment Dividends $ 723,233
Income: Interest and discount earned 592,677
-------------
Total income 1,315,910
-------------
Expenses: Investment advisory fees $ 160,889
Account maintenance and distribution fees--Class B 62,833
Professional fees 37,124
Printing and shareholder reports 31,276
Accounting services 26,234
Directors' fees and expenses 22,655
Registration fees 22,645
Transfer agent fees--Class A 19,069
Account maintenance and distribution fees--Class C 13,458
Transfer agent fees--Class B 8,658
Account maintenance fees--Class D 4,913
Transfer agent fees--Class D 2,177
Pricing services 2,145
Transfer agent fees--Class C 1,905
Custodian fees 1,672
Other 5,115
-------------
Total expenses 422,768
-------------
Investment income--net 893,142
-------------
Realized & Realized gain from:
Unrealized Gain Investments--net 2,633,761
(Loss) on Foreign currency transactions--net 502 2,634,263
Investments & -------------
Foreign Currency Change in unrealized appreciation/depreciation on:
Transactions Investments--net (266,557)
- --Net: Foreign currency transactions--net (54) (266,611)
------------- -------------
Net Increase in Net Assets Resulting from Operations $ 3,260,794
=============
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Convertible Fund, Inc.
February 29, 2000
FINANCIAL INFORMATION (continued)
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Six For the
Months Ended Year Ended
February 29, August 31,
Increase (Decrease) in Net Assets: 2000 1999
<S> <S> <C> <C>
Operations: Investment income--net $ 893,142 $ 2,629,079
Realized gain (loss) on investments and foreign currency
transactions--net 2,634,263 (4,040,535)
Change in unrealized appreciation/depreciation on
investments and foreign currency transactions--net (266,611) 7,203,219
------------ ------------
Net increase in net assets resulting from operations 3,260,794 5,791,763
------------ ------------
Dividends & Investment income--net:
Distributions to Class A (636,442) (3,109,143)
Shareholders: Class B (160,716) (1,077,140)
Class C (34,493) (245,610)
Class D (66,710) (375,748)
In excess of realized gain on investments--net:
Class A -- (23,131)
Class B -- (10,558)
Class C -- (2,358)
Class D -- (2,981)
------------ ------------
Net decrease in net assets resulting from dividends and
distributions to shareholders (898,361) (4,846,669)
------------ ------------
Capital Share Net decrease in net assets derived from capital share
Transactions: transactions (10,602,072) (29,987,587)
------------ ------------
Net Assets: Total decrease in net assets (8,239,639) (29,042,493)
Beginning of period 59,491,588 88,534,081
------------ ------------
End of period* $ 51,251,949 $ 59,491,588
============ ============
<FN>
*Undistributed investment income--net $ 201,862 $ 207,081
============ ============
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Convertible Fund, Inc.
February 29, 2000
FINANCIAL INFORMATION (continued)
<TABLE>
Financial Highlights
<CAPTION>
Class A++++++++
For the For the
The following per share data and ratios have been derived Six Months For the For the Period Year
from information provided in the financial statements. Ended Year Ended Jan. 1, 1997 Ended
Feb. 29, August 31, to Aug. 31, Dec. 31,
Increase (Decrease) in Net Asset Value: 2000+++ 1999+++ 1998+++ 1997+++ 1996+++
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 11.75 $ 11.59 $ 17.36 $ 15.57 $ 13.43
Operating -------- -------- -------- -------- --------
Performance:++++ Investment income--net .21 .45 .60 .06 --
Realized and unrealized gain (loss) on
investments and foreign currency
transactions--net .58 .51 (1.37) 1.75 2.78
-------- -------- -------- -------- --------
Total from investment operations .79 .96 (.77) 1.81 2.78
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.21) (.79) (.32) -- --
Realized gain on investments--net -- -- (4.55) -- (.64)
In excess of realized gain on
investments--net -- (.01) (.07) -- --
-------- -------- -------- -------- --------
Total dividends and distributions (.21) (.80) (4.94) -- (.64)
-------- -------- -------- -------- --------
Capital charge resulting from issuance of
Common Stock -- -- (.06) -- --
-------- -------- -------- -------- --------
Capital charge resulting from issuance
of new classes of shares -- -- --++ (.02) --
-------- -------- -------- -------- --------
Net asset value, end of period $ 12.33 $ 11.75 $ 11.59 $ 17.36 $ 15.57
======== ======== ======== ======== ========
Total Investment Based on net asset value per share 6.86%+++++ 8.54% (7.03%) 11.50%+++++ 20.60%
Return:** ======== ======== ======== ======== ========
Ratios to Average Expenses*** 1.26%* 1.32% 1.29% .90%* .78%
Net Assets: ======== ======== ======== ======== ========
Investment income--net 3.63%* 3.91% 4.48% 4.76%* 4.98%
======== ======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $ 33,756 $ 37,142 $ 52,425 $110,178 $289,993
Data: ======== ======== ======== ======== ========
Portfolio turnover 48.86% 85.42% 155.20% 92.86% 129.06%
======== ======== ======== ======== ========
*Annualized.
**Total investment returns exclude the effects of sales charges.
Performance results prior to August 4, 1997 are for when the Fund
was a dual-structure closed-end management investment company and
include only the returns for the Capital Shares but exclude results
from the Income Shares.
***Excluding taxes on undistributed net realized long-term capital
gains for years prior to the period January 1, 1997 to August 31,
1997.
++Amount is less than $.01 per share.
++++Excludes the effect of per share operating performance of the
Fund's Income Shares, which were redeemed on July 31, 1997. Per
share operating performance prior to the period January 1, 1997 to
August 1, 1997 reflects when the Fund was a dual-structure closed-
end management investment company. For the period January 1, 1997 to
July 31, 1997, investment income--net per Income Share was $.73 and
dividends of investment income--net per Income Share were $.70.
+++Based on average shares outstanding.
+++++Aggregate total investment return.
++++++++Formerly Capital Shares.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Convertible Fund, Inc.
February 29, 2000
FINANCIAL INFORMATION (continued)
<TABLE>
Financial Highlights (continued)
<CAPTION>
Class B+++++
For the For the For the
The following per share data and ratios have been derived Six Months Year Period
from information provided in the financial statements. Ended Ended Aug. 4, 1997++
Feb. 29, August 31, to Aug. 31,
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 11.74 $ 11.53 $ 17.35 $ 16.91
Operating -------- -------- -------- --------
Performance: Investment income--net .15 .34 .44 .05
Realized and unrealized gain (loss) on investments
and foreign currency transactions--net .58 .49 (1.34) .39
-------- -------- -------- --------
Total from investment operations .73 .83 (.90) .44
-------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.14) (.61) (.28) --
Realized gain on investments--net -- -- (4.55) --
In excess of realized gain on investments--net -- (.01) (.07) --
-------- -------- -------- --------
Total dividends and distributions (.14) (.62) (4.90) --
-------- -------- -------- --------
Capital charge resulting from issuance of
Common Stock -- -- (.02) --
-------- -------- -------- --------
Net asset value, end of period $ 12.33 $ 11.74 $ 11.53 $ 17.35
======== ======== ======== ========
Total Investment Based on net asset value per share 6.35%+++ 7.36% (7.76%) 2.60%+++
Return:** ======== ======== ======== ========
Ratios to Expenses 2.29%* 2.35% 2.35% 2.66%*
Average ======== ======== ======== ========
Net Assets: Investment income--net 2.61%* 2.91% 3.31% 3.77%*
======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $ 11,219 $ 14,774 $ 23,900 $ 5,759
Data: ======== ======== ======== ========
Portfolio turnover 48.86% 85.42% 155.20% 92.86%
======== ======== ======== ========
*Annualized.
**Total investment returns exclude the effects of sales charges.
++Commencement of operations.
+++Aggregate total investment return.
+++++Based on average shares outstanding.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Convertible Fund, Inc.
February 29, 2000
FINANCIAL INFORMATION (continued)
<TABLE>
Financial Highlights (continued)
<CAPTION>
Class C+++++
For the For the For the
The following per share data and ratios have been derived Six Months Year Period
from information provided in the financial statements. Ended Ended Aug. 4, 1997++
Feb. 29, August 31, to Aug. 31,
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 11.74 $ 11.54 $ 17.36 $ 16.91
Operating -------- -------- -------- --------
Performance: Investment income--net .15 .34 .44 .05
Realized and unrealized gain (loss) on investments
and foreign currency transactions--net .58 .49 (1.34) .40
-------- -------- -------- --------
Total from investment operations .73 .83 (.90) .45
-------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.15) (.62) (.28) --
Realized gain on investments--net -- -- (4.55) --
In excess of realized gain on investments--net -- (.01) (.07) --
-------- -------- -------- --------
Total dividends and distributions (.15) (.63) (4.90) --
-------- -------- -------- --------
Capital charge resulting from issuance of
Common Stock -- -- (.02) --
-------- -------- -------- --------
Net asset value, end of period $ 12.32 $ 11.74 $ 11.54 $ 17.36
======== ======== ======== ========
Total Investment Based on net asset value per share 6.27%+++ 7.34% (7.76%) 2.66%+++
Return:** ======== ======== ======== ========
Ratios to Average Expenses 2.29%* 2.35% 2.36% 2.74%*
Net Assets: ======== ======== ======== ========
Investment income--net 2.61%* 2.91% 3.34% 3.58%*
======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $ 2,458 $ 3,141 $ 5,138 $ 1,014
Data: ======== ======== ======== ========
Portfolio turnover 48.86% 85.42% 155.20% 92.86%
======== ======== ======== ========
*Annualized.
**Total investment returns exclude the effects of sales charges.
++Commencement of operations.
+++Aggregate total investment return.
+++++Based on average shares outstanding.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Convertible Fund, Inc.
February 29, 2000
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights (concluded)
<CAPTION>
Class D+++++
For the For the For the
The following per share data and ratios have been derived Six Months Year Period
from information provided in the financial statements. Ended Ended Aug. 4, 1997++
Feb. 29, August 31, to Aug. 31,
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 11.78 $ 11.61 $ 17.36 $ 16.91
Operating -------- -------- -------- --------
Performance: Investment income--net .20 .43 .54 .07
Realized and unrealized gain (loss) on investments
and foreign currency transactions--net .57 .50 (1.34) .38
-------- -------- -------- --------
Total from investment operations .77 .93 (.80) .45
-------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.19) (.75) (.31) --
Realized gain on investments--net -- -- (4.55) --
In excess of realized gain on investments--net -- (.01) (.07) --
-------- -------- -------- --------
Total dividends and distributions (.19) (.76) (4.93) --
-------- -------- -------- --------
Capital charge resulting from issuance of
Common Stock -- -- (.02) --
-------- -------- -------- --------
Net asset value, end of period $ 12.36 $ 11.78 $ 11.61 $ 17.36
======== ======== ======== ========
Total Investment Based on net asset value per share 6.70%+++ 8.22% (6.96%) 2.66%+++
Return:** ======== ======== ======== ========
Ratios to Average Expenses 1.51%* 1.57% 1.59% 1.92%*
Net Assets: ======== ======== ======== ========
Investment income--net 3.39%* 3.68% 4.02% 4.81%*
======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $ 3,819 $ 4,435 $ 7,071 $ 1,365
Data: ======== ======== ======== ========
Portfolio turnover 48.86% 85.42% 155.20% 92.86%
======== ======== ======== ========
*Annualized.
**Total investment returns exclude the effects of sales charges.
++Commencement of operations.
+++Aggregate total investment return.
+++++Based on average shares outstanding.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Convertible Fund, Inc.
February 29, 2000
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch Convertible Fund, Inc. (the "Fund") is registered
under the Investment Company Act of 1940 as a non-diversified, open-
end management investment company. The Fund's financial statements
are prepared in accordance with generally accepted accounting
principles, which may require the use of management accruals and
estimates. These unaudited financial statements reflect all
adjustments, which are, in the opinion of management, necessary to a
fair statement of the results for the interim period presented. All
such adjustments are of a normal recurring nature. The Fund offers
four classes of shares under the Merrill Lynch Select Pricing SM
System. Shares of Class A and Class D are sold with a front-end
sales charge. Shares of Class B and Class C may be subject to a
contingent deferred sales charge. All classes of shares have
identical voting, dividend, liquidation and other rights and the
same terms and conditions, except that Class B, Class C and Class D
Shares bear certain expenses related to the account maintenance of
such shares, and Class B and Class C Shares bear certain expenses
related to the distribution of such shares. Each class has exclusive
voting rights with respect to matters relating to its account
maintenance and distribution expenditures. The following is a
summary of significant accounting policies followed by the Fund.
(a) Valuation of investments--Portfolio securities that are traded
on stock exchanges are valued at the last sale price on the exchange
that such securities are traded on, as of the close of business on
the day the securities are being valued or, lacking any sales, at
the last available bid price. Securities traded in the over-the-
counter market are valued at the last available bid price prior to
the time of valuation. In cases where securities are traded on more
than one exchange, the securities are valued on the exchange
designated by or under the authority of the Board of Directors as
the primary market. Securities that are traded both in the over-the-
counter market and on a stock exchange are valued according to the
broadest and most representative market. Options written or
purchased are valued at the last sale price in the case of exchange-
traded options. In the case of options traded in the over-the-
counter market, valuation is the last asked price (options written)
or the last bid price (options purchased). Short-term securities are
valued at amortized cost, which approximates market value. Other
investments, including futures contracts and related options, are
stated at market value. Securities and assets for which market value
quotations are not readily available are valued at their fair value
as determined in good faith by or under the direction of the Fund's
Board of Directors.
(b) Derivative financial instruments--The Fund may engage in various
portfolio strategies to seek to increase its return by hedging its
portfolio against adverse movements in the equity, debt and currency
markets. Losses may arise due to changes in the value of the
contract or if the counterparty does not perform under the contract.
* Financial futures contracts--The Fund may purchase or sell
financial futures and options on such futures contracts for the
purpose of hedging the market risk on existing securities or the
intended purchase of securities. Futures contracts are contracts for
delayed delivery of securities at a specific future date and at a
specific price or yield. Upon entering into a contract, the Fund
deposits and maintains as collateral such initial margin as required
by the exchange on which the transaction is effected. Pursuant to
the contract, the Fund agrees to receive from or pay to the broker
an amount of cash equal to the daily fluctuation in value of the
contract. Such receipts or payments are known as variation margin
and are recorded by the Fund as unrealized gains or losses. When the
contract is closed, the Fund records a realized gain or loss equal
to the difference between the value of the contract at the time it
was opened and the value at the time it was closed.
* Options--The Fund is authorized to write and purchase call and put
options. When the Fund writes an option, an amount equal to the
premium received by the Fund is reflected as an asset and an
equivalent liability. The amount of the liability is subsequently
marked to market to reflect the current market value of the option
written.
When a security is purchased or sold through an exercise of an
option, the related premium paid (or received) is added to (or
deducted from) the basis of the security acquired or deducted from
(or added to) the proceeds of the security sold. When an option
expires (or the Fund enters into a closing transaction), the Fund
realizes a gain or loss on the option to the extent of the premiums
received or paid (or gain or loss to the extent the cost of the
closing transaction exceeds the premium paid or received).
Merrill Lynch Convertible Fund, Inc.
February 29, 2000
Written and purchased options are non-income producing investments.
* Forward foreign exchange contracts--The Fund is authorized to
enter into forward foreign exchange contracts as a hedge against
either specific transactions or portfolio positions. Such contracts
are not entered on the Fund's records. However, the effect on
operations is recorded from the date the Fund enters into such
contracts.
* Foreign currency options and futures--The Fund is also authorized
to purchase or sell listed or over-the-counter foreign currency
options, foreign currency futures and related options on foreign
currency futures as a short or long hedge against possible
variations in foreign exchange rates. Such transactions may be
effected with respect to hedges on non-US dollar denominated
securities owned by the Fund, sold by the Fund but not yet
delivered, or committed or anticipated to be purchased by the Fund.
(c) Foreign currency transactions--Transactions denominated in
foreign currencies are recorded at the exchange rate prevailing when
recognized. Assets and liabilities denominated in foreign currencies
are valued at the exchange rate at the end of the period. Foreign
currency transactions are the result of settling (realized) or
valuing (unrealized) assets or liabilities expressed in foreign
currencies into US dollars. Realized and unrealized gains or losses
from investments include the effects of foreign exchange rates on
investments.
(d) Income taxes--It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its
taxable income to its shareholders. Therefore, no Federal income tax
provision is required. Under the applicable foreign tax law, a
withholding tax may be imposed on interest, dividends and capital
gains at various rates.
(e) Security transactions and investment income--Security
transactions are recorded on the dates the transactions are entered
into (the trade dates). Dividend income is recorded on the ex-
dividend dates. Dividends from foreign securities where the ex-
dividend date may have passed are subsequently recorded when the
Fund has determined the ex-dividend date. Interest income (including
amortization of discount) is recognized on the accrual basis.
Realized gains and losses on security transactions are determined on
the identified cost basis.
(f) Prepaid registration fees--Prepaid registration fees are charged
to expense as the related shares are issued.
(g) Dividends and distributions--Dividends from net investment
income are declared and paid quarterly. Distributions of capital
gains are recorded on the ex-dividend dates. Distributions in excess
of realized capital gains are due primarily to differing tax
treatments for futures transactions and post-October losses.
(h) Short sales--When the Fund engages in a short sale, an amount
equal to the proceeds received by the Fund is reflected as an asset
and an equivalent liability. The amount of the liability is
subsequently marked to market to reflect the market value of the
short sale. The Fund maintains a segregated account of securities as
collateral for the short sales. The Fund is exposed to market risk
based on the amount, if any, that the market value of the stock
exceeds the market value of the securities in the segregated
account.
(i) Custodian bank--The Fund recorded an amount payable to the
custodian bank reflecting an overnight overdraft which resulted from
a failed trade that settled the next day.
2. Investment Advisory Agreement and
Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with
Merrill Lynch Asset Management, L.P. ("MLAM"). The general partner
of MLAM is Princeton Services, Inc. ("PSI"), an indirect wholly-
owned subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is
the limited partner. The Fund has also entered into a Distibution
Agreement and Distribution Plans with Merrill Lynch Funds
Distributor ("MLFD" or the "Distributor"), a division of Princeton
Funds Distributor, Inc. ("PFD"), which is a wholly-owned subsidiary
of Merrill Lynch Group, Inc.
Merrill Lynch Convertible Fund, Inc.
February 29, 2000
NOTES TO FINANCIAL STATEMENTS (concluded)
MLAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee at the annual rate of .60% of
the average daily net assets of the Fund.
Pursuant to the Distribution Plans adopted by the Fund in accordance
with Rule 12b-1 under the Investment Company Act of 1940, the Fund
pays the Distributor ongoing account maintenance and distribution
fees. The fees are accrued daily and paid monthly at annual rates
based upon the average daily net assets of the shares as follows:
Account Distribution
Maintenance Fee Fee
Class B .25% .75%
Class C .25% .75%
Class D .25% --
Pursuant to a sub-agreement with the Distributor, Merrill Lynch,
Pierce, Fenner & Smith Incorporated ("MLPF&S"), a subsidiary of ML &
Co., also provides account maintenance and distribution services to
the Fund. The ongoing account maintenance fee compensates the
Distributor and MLPF&S for providing account maintenance services to
Class B, Class C and Class D shareholders. The ongoing distribution
fee compensates the Distributor and MLPF&S for providing shareholder
and distribution-related services to Class B and Class C
shareholders.
For the six months ended February 29, 2000, MLFD earned underwriting
discounts and direct commissions and MLPF&S earned dealer
concessions on sales of the Fund's Class A Shares as follows:
MLFD MLPF&S
Class A $629 $105
For the six months ended February 29, 2000, MLPF&S received
contingent deferred sales charges of $44,384 and $11 relating to
transactions in Class B and Class C Shares, respectively.
During the six months ended February 29, 2000, the Fund paid Merrill
Lynch Security Pricing Service, an affiliate of MLPF&S, $39 for
security price quotations to compute the net asset value of the
Fund.
Financial Data Services, Inc. ("FDS"), a wholly-owned subsidiary of
ML & Co., is the Fund's transfer agent.
Accounting services are provided to the Fund by MLAM at cost.
Certain officers and/or directors of the Fund are officers and/or
directors of MLAM, PSI, FDS, PFD, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended February 29, 2000 were $25,657,222 and
$35,267,846, respectively.
Net realized gains (losses) for the six months ended February 29,
2000 and net unrealized gains (losses) as of February 29, 2000 were
as follows:
Realized Unrealized
Gains (Losses) Gains (Losses)
Long-term investments $ 2,633,845 $ (699,345)
Short-term investments (84) --
Short sales -- 18,108
Foreign currency
transactions 502 300
----------- ------------
Total $ 2,634,263 $ (680,937)
=========== ============
As of February 29, 2000, net unrealized depreciation for Federal
income tax purposes aggregated $699,345, of which $7,073,890 related
to appreciated securities and $7,773,235 related to depreciated
securities. The aggregate cost of investments at February 29, 2000
for Federal income tax purposes was $51,368,025.
4. Capital Share Transactions:
Net decrease in net assets derived from capital share transactions
was $10,602,072 and $29,987,587 for the six months ended February
29, 2000 and the year ended August 31, 1999, respectively.
Transactions in capital shares for each class were as follows:
Class A Shares for the Six Months Dollar
Ended February 29, 2000 Shares Amount
Shares sold 26,295 $ 310,375
Shares issued to shareholders
in reinvestment of dividends 19,632 225,783
----------- ------------
Total issued 45,927 536,158
Shares redeemed (469,942) (5,495,934)
----------- ------------
Net decrease (424,015) $ (4,959,776)
=========== ============
Merrill Lynch Convertible Fund, Inc.
February 29, 2000
Class A Shares for the
Year Ended Dollar
August 31, 1999 Shares Amount
Shares sold 87,781 $ 1,030,148
Shares issued to shareholders
in reinvestment of dividends
and distributions 99,755 1,134,773
----------- ------------
Total issued 187,536 2,164,921
Shares redeemed (1,547,522) (17,946,626)
----------- ------------
Net decrease (1,359,986) $(15,781,705)
=========== ============
Class B Shares for the
Six Months Ended Dollar
February 29, 2000 Shares Amount
Shares sold 48,769 $ 570,819
Shares issued to shareholders
in reinvestment of dividends 10,024 115,423
----------- ------------
Total issued 58,793 686,242
Automatic conversion
of shares (5,421) (63,137)
Shares redeemed (401,772) (4,680,786)
----------- ------------
Net decrease (348,400) $ (4,057,681)
=========== ============
Class B Shares for the
Year Ended Dollar
August 31, 1999 Shares Amount
Shares sold 115,605 $ 1,344,949
Shares issued to shareholders
in reinvestment of dividends
and distributions 71,158 808,779
----------- ------------
Total issued 186,763 2,153,728
Automatic conversion
of shares (42,938) (498,986)
Shares redeemed (958,225) (11,060,710)
----------- ------------
Net decrease (814,400) $ (9,405,968)
=========== ============
Class C Shares for the
Six Months Ended Dollar
Fenruary 29, 2000 Shares Amount
Shares sold 3,445 $ 40,598
Shares issued to shareholders
in reinvestment of dividends 2,404 27,675
----------- ------------
Total issued 5,849 68,273
Shares redeemed (74,074) (865,728)
----------- ------------
Net decrease (68,225) $ (797,455)
=========== ============
Class C Shares for the
Year Ended Dollar
August 31, 1999 Shares Amount
Shares sold 30,898 $ 357,873
Shares issued to shareholders
in reinvestment of dividends
and distributions 15,080 171,466
----------- ------------
Total issued 45,978 529,339
Shares redeemed (223,804) (2,606,130)
----------- ------------
Net decrease (177,826) $ (2,076,791)
=========== ============
Class D Shares for the
Six Months Ended Dollar
February 29, 2000 Shares Amount
Shares sold 1,586 $ 18,882
Automatic conversion
of shares 5,409 63,137
Shares issued to shareholders
in reinvestment of dividends 4,388 50,623
----------- ------------
Total issued 11,383 132,642
Shares redeemed (79,071) (919,802)
----------- ------------
Net decrease (67,688) $ (787,160)
=========== ============
Class D Shares for the
Year Ended Dollar
August 31, 1999 Shares Amount
Shares sold 15,422 $ 179,679
Automatic conversion
of shares 42,767 498,986
Shares issued to shareholders
in reinvestment of dividends
and distributions 25,681 292,765
----------- ------------
Total issued 83,870 971,430
Shares redeemed (316,367) (3,694,553)
----------- ------------
Net decrease (232,497) $ (2,723,123)
=========== ============
5. Capital Loss Carryforward:
At August 31, 1999, the Fund had a net capital loss carryforward of
approximately $1,035,000, all of which expires in 2007. This amount
will be available to offset like amounts of any future taxable
gains.
