MERRILL LYNCH
STRATEGIC
DIVIDEND FUND
FUND LOGO
Quarterly Report
April 30, 1996
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.
<PAGE>
Merrill Lynch
Strategic Dividend Fund
Box 9011
Princeton, NJ
08543-9011
MERRILL LYNCH STRATEGIC DIVIDEND FUND
Officers and
Trustees
Arthur Zeikel, President and Trustee
Ronald W. Forbes, Trustee
Cynthia A. Montgomery, Trustee
Charles C. Reilly, Trustee
Kevin A. Ryan, Trustee
Richard R. West, Trustee
Terry K. Glenn, Executive Vice President
Norman R. Harvey, Senior Vice President
Donald C. Burke, Vice President
Walter D. Rogers, Vice President and Portfolio Manager
Gerald M. Richard, Treasurer
Robert Harris, Secretary
Custodian
State Street Bank and Trust Company
One Heritage Drive, P2N
North Quincy, Massachusetts 02171
<PAGE>
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
DEAR SHAREHOLDER
Investor perceptions regarding the US economy changed over the
course of the April quarter. In February, it appeared that the US
economy was losing momentum. Lackluster retail sales, increases in
initial unemployment claims (along with weak job and income growth),
and evidence of slowing in the manufacturing sector all suggested
that the rate of economic growth was decelerating, with some
forecasters even suggesting the possibility of an imminent
recession.
However, the consensus outlook for the rate of future economic
growth changed dramatically with the report of stronger-than-
expected employment data for February and March. As a result,
investors began to anticipate renewed economic growth. Long-term
interest rates rose, and the Federal Reserve Board left monetary
policy on hold. Adding to investor concerns was the report that the
Knight-Ridder Commodity Research Bureau Index was near an eight-year
high, largely because of an increase in agricultural prices and an
upward spike in the price of crude oil.
Investors are likely to continue to focus on the probable direction
of economic activity and Federal Reserve Board monetary policy in
the weeks ahead. At this time, inflationary pressures do not seem to
be building and the capital spending, housing and consumption
sectors are still relatively weak, which suggest that the economy is
not on the verge of overheating. Nevertheless, it is likely that
further indications of stronger economic activity in the weeks ahead
may add to investor concerns that accelerating economic activity
could lead to higher inflation and interest rates.
Portfolio Matters
For the quarter ended April 30, 1996, Merrill Lynch Strategic
Dividend Fund's Class A, Class B, Class C and Class D Shares had
total returns of +2.55%, +2.28%, +2.25% and +2.41%, respectively.
While the Fund's performance lagged the +3.39% total return for the
unmanaged Standard & Poor's 500 Index (S&P 500), it was
significantly above the estimated +1.28% total return for the 200
highest-yielding stocks in the S&P 500. The Fund's primary
investment focus is on these 200 stocks of dividend paying companies
with above-market yields. (Results shown are before the deduction of
sales charges; results would be lower if sales charges were
included. For complete performance information, see pages 4--7 of
this report to shareholders.)
<PAGE>
The Fund's heaviest weighting continues to be in the market's three
highest-yielding sectors (utilities, financial and energy), which
together account for 56.9% of the Fund's net assets. The average
weighted dividend yield of the Fund's equity investments was 3.87%
at April quarter-end, compared with the 2.16% dividend yield of the
S&P 500.
The significant underperformance of the higher-yielding stocks
relative to the overall stock market during the April quarter was
primarily attributable to the disappointing performance of electric
utilities, telephone and financial stocks. However, energy and
natural gas stocks produced attractive returns in the April quarter,
largely reflecting the sharply rising prices of their underlying
commodities. Stocks of energy and natural gas companies were 13.3%
of Fund net assets as of April quarter-end. Colder-than-normal
weather conditions during the first few months of this year created
a tight market for natural gas, pushing wellhead prices sharply
higher. Storage inventories of natural gas and oil are currently
quite low, particularly in the United States. We believe crude oil
and natural gas prices are likely to remain at current levels until
inventories return to normal sometime in the third quarter.
During the April quarter, as concerns about accelerating inflation
and the risk of a Federal Reserve Board tightening pushed interest
rates up, stock prices of companies that are perceived to be
particularly interest-rate sensitive declined. In the utility
sector, stocks of electric companies within the S&P 500 experienced
the sharpest price decline, falling over 11%, followed by a 5%
decline in telephone stocks. These two industry groups accounted for
20.3% of the Fund's net assets (electric utilities at 12.0% and
telephone stocks at 8.3%) versus 10.9% in the S&P 500. Although
financial stocks rose modestly (0.9%) in the April quarter, their
performance was below that of the overall stock market's price-only
return of +2.85%. The Fund's holdings in financial stocks were 17.5%
of net assets at April quarter-end. Because it is our opinion that
the recent back up in interest rates has been excessive, we believe
stocks within the interest-rate sensitive sectors of finance and
utilities are currently attractively valued and may rally when
interest rates fall.
During the quarter ended April 30, 1996, our investment activity
centered on increasing the Fund's weighting in higher-yielding
stocks. This involved adding high-yielding equities while reducing
the low-yielding holdings which appreciated in value. We initiated
investments in eight new common stocks, increased our weighting in
one, sold two and reduced our weightings in 17 others. Four of the
new purchases were utilities--two natural gas companies, an electric
utility and a telephone company. The remaining four new positions
were companies in the capital goods, consumer, energy and industrial
sectors. The new additions to the Fund's utility holdings were AGL
Resources, Inc., Consolidated Natural Gas Co., IPALCO Enterprises,
Inc. and U S West Communications Group, Inc.
<PAGE>
AGL Resources, Inc. is the largest natural gas distribution utility
in the Southeast, serving customers in the above-average growth
markets of Georgia and Tennessee. A major cost restructuring program
initiated last year should continue to benefit earnings, cash flow
and dividend growth.
Consolidated Natural Gas Co. is a major integrated natural gas
company with interests in oil and gas exploration, gas distribution,
transmission and production. Earnings are expected to benefit from
overall company cost-cutting, strong gas production results, new
rates and customer growth at the distribution utility. With one of
the strongest balance sheets in the industry, we believe earnings,
cash flow and dividend growth should accelerate for this company.
IPALCO Enterprises, Inc. is a non-nuclear electric utility serving
Indianapolis and the surrounding area, with relatively low electric
rates and a strong balance sheet. The low-cost, coal-fired
generation assures a lower level of risk from the possibility that
non-regulated power producers will capture market share in its
territory. We expect above-average earnings and dividend growth over
the long term from this fundamentally strong electric utility.
U S West Communications Group, Inc.'s dividend yield is one of the
highest in the telephone industry. With earnings growth expected to
accelerate from the strong volume growth in its telephone business,
we believe the stock offers attractive upside potential. The
company's service territory is experiencing strong ongoing demand in
access line growth with strong residential and business line growth
and increased usage.
Another new addition is The Manitowoc Company, Inc., a capital goods
company which manufactures a diversified line of cranes and
excavators designed primarily for use by the utility, petroleum
exploration and production and construction industries. The company
also makes commercial dispensing machines for use in the food
service business, and operates a very profitable marine vessel
conversion and repair service. The company's crane business is
enjoying strong demand from both domestic and international orders.
The backlog of unfilled orders is significant, and production
schedules are relatively full for the balance of the year. The food
services and marine businesses are also producing strong revenue and
margin improvements. Reflecting these positive fundamentals, we
believe the stock price could trade up to its past premium
price/earnings multiple.
<PAGE>
We expanded our holdings in the drug industry with the addition of
American Home Products Corporation, a major pharmaceutical company
with a broad product line in the prescription drug, over-the-counter
drug, animal healthcare and agricultural businesses. Ongoing
divestitures of non-core businesses, a strong new products pipeline
and improving margins reflecting improved product mix and controlled
costs, should enable the company to produce double-digit earnings
growth over the next few years.
We added Occidental Petroleum Corporation, a worldwide oil and gas
exploration and production company with major chemical operations
and a natural gas pipeline, to our energy holdings. We see
significant earnings growth potential as the exploration and
production operations and natural gas pipeline businesses continue
to produce profits, aided by a well-designed restructuring program
which we expect to continue to produce cost savings and debt
reduction.
Our final new purchase was Worthington Industries, Inc., a processor
and manufacturer of custom steel products and precision parts
primarily for the automobile, transportation and construction
industries. Profitability at this financially strong and well-
managed company has been squeezed by recent events such as the
strike at General Motors Corp. We expect earnings to begin to
improve during the upcoming fiscal year, and the shares could return
to their previously premium price/earnings multiple.
In Conclusion
We thank you for your investment in Merrill Lynch Strategic Dividend
Fund, and we look forward to reviewing our outlook and strategy with
you again in our upcoming annual report to shareholders.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Walter D. Rogers)
Walter D. Rogers
Vice President and Portfolio Manager
<PAGE>
June 6, 1996
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.
* 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. 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.
<PAGE>
<TABLE>
Recent
Performance
Results
<CAPTION>
12 Month 3 Month
4/30/96 1/31/96 4/30/95 % Change % Change
<S> <C> <C> <C> <C> <C>
ML Strategic Dividend Fund Class A Shares* $12.80 $12.56 $11.67 +22.13%(1) +1.91%
ML Strategic Dividend Fund Class B Shares* 12.80 12.56 11.67 +22.12(1) +1.91
ML Strategic Dividend Fund Class C Shares* 12.73 12.50 11.64 +21.82(1) +1.84
ML Strategic Dividend Fund Class D Shares* 12.79 12.56 11.67 +22.02(1) +1.83
Standard & Poor's 500 Index** 654.17 636.02 514.71 +27.09 +2.85
ML Strategic Dividend Fund Class A Shares--Total Return* +26.51(2) +2.55(3)
ML Strategic Dividend Fund Class B Shares--Total Return* +25.13(4) +2.28(5)
ML Strategic Dividend Fund Class C Shares--Total Return* +25.11(6) +2.25(7)
ML Strategic Dividend Fund Class D Shares--Total Return* +26.15(8) +2.41(9)
Standard & Poor's 500 Index--Total Return** +30.16 +3.39
<FN>
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included.
**An unmanaged broad-based index comprised of common stocks. Total
investment returns for unmanaged indexes are based on estimates.
(1)Percent change includes reinvestment of $1.309 per share capital
gains distributions.
(2)Percent change includes reinvestment of $0.442 per share ordinary
income dividends and $1.309 per share capital gains distributions.
(3)Percent change includes reinvestment of $0.081 per share ordinary
income dividends.
(4)Percent change includes reinvestment of $0.306 per share ordinary
income dividends and $1.309 per share capital gains distributions.
(5)Percent change includes reinvestment of $0.047 per share ordinary
income dividends.
(6)Percent change includes reinvestment of $0.332 per share ordinary
income dividends and $1.309 per share capital gains distributions.
(7)Percent change includes reinvestment of $0.051 per share ordinary
income dividends.
(8)Percent change includes reinvestment of $0.417 per share ordinary
income dividends and $1.309 per share capital gains distributions.
(9)Percent change includes reinvestment of $0.073 per share ordinary
income dividends.
</TABLE>
PERFORMANCE DATA (concluded)
<PAGE>
<TABLE>
Performance
Summary--
Class A Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <C> <C> <C> <C> <C>
11/29/88--12/31/88 $10.71 $10.56 $0.140 $0.156 + 1.37%
1989 10.56 12.50 -- 0.612 +24.61
1990 12.50 10.95 -- 0.725 - 6.70
1991 10.95 12.15 -- 0.516 +15.99
1992 12.15 12.75 -- 0.460 + 8.95
1993 12.75 12.74 0.645 0.456 + 8.66
1994 12.74 10.70 1.596 0.465 + 0.17
1995 10.70 12.22 1.309 0.463 +32.08
1/1/96--4/30/96 12.22 12.80 -- 0.081 + 5.40
------ ------
Total $3.690 Total $3.934
Cumulative total return as of 4/30/96: +125.69%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the ex-dividend date, and do not
include sales charge; results would be lower if sales charge was
included.
</TABLE>
<TABLE>
Performance
Summary--
Class B Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <C> <C> <C> <C> <C>
11/25/87--12/31/87 $10.00 $10.02 -- $0.047 + 0.67%
1988 10.02 10.56 $0.266 0.465 +12.81
1989 10.56 12.49 -- 0.504 +23.40
1990 12.49 10.94 -- 0.604 - 7.68
1991 10.94 12.14 -- 0.393 +14.78
1992 12.14 12.75 -- 0.328 + 7.89
1993 12.75 12.74 0.645 0.315 + 7.54
1994 12.74 10.71 1.596 0.333 - 0.82
1995 10.71 12.24 1.309 0.330 +30.73
1/1/96--4/30/96 12.24 12.80 -- 0.047 + 4.96
------ ------
Total $3.816 Total $3.366
Cumulative total return as of 4/30/96: +134.51%**
<PAGE>
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the ex-dividend date, and do not
reflect deduction of any sales charge; results would be lower if
sales charge was deducted.
</TABLE>
<TABLE>
Performance
Summary--
Class C Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <C> <C> <C> <C> <C>
10/21/94--12/31/94 $11.84 $10.69 $0.798 $0.108 - 2.02%
1995 10.69 12.17 1.309 0.358 +30.59
1/1/96--4/30/96 12.17 12.73 -- 0.051 + 5.02
------ ------
Total $2.107 Total $0.517
Cumulative total return as of 4/30/96: +34.37%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the ex-dividend date, and do not
reflect deduction of any sales charge; results would be lower if
sales charge was deducted.
</TABLE>
<PAGE>
<TABLE>
Performance
Summary--
Class D Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <C> <C> <C> <C> <C>
10/21/94--12/31/94 $11.85 $10.71 $0.798 $0.115 - 1.88%
1995 10.71 12.22 1.309 0.439 +31.69
1/1/96--4/30/96 12.22 12.79 -- 0.073 + 5.26
------ ------
Total $2.107 Total $0.627
Cumulative total return as of 4/30/96: +36.01%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the ex-dividend date, and do not
include sales charge; results would be lower if sales charge was
included.
</TABLE>
Average Annual
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 3/31/96 +28.32% +21.58%
Five Years Ended 3/31/96 +12.08 +10.88
Inception (11/29/88) through 3/31/96 +11.68 +10.86
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 3/31/96 +27.05% +23.05%
Five Years Ended 3/31/96 +10.93 +10.93
Inception (11/25/87) through 3/31/96 +10.71 +10.71
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
<PAGE>
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Year Ended 3/31/96 +26.88% +25.88%
Inception (10/21/94) through 3/31/96 +22.50 +22.50
[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 3/31/96 +28.02% +21.30%
Inception (10/21/94) through 3/31/96 +23.52 +18.99
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
Shares Percent of
EUROPE Industries Held Common Stocks Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Netherlands Oil--International 20,000 Royal Dutch Petroleum PLC (ADR)* $ 1,157,315 $ 2,865,000 1.7%
Total Investments in the Netherlands 1,157,315 2,865,000 1.7
Spain Oil & Gas Producers 50,000 Repsol S.A. (ADR)* 1,597,265 1,850,000 1.1
Total Investments in Spain 1,597,265 1,850,000 1.1
<PAGE>
United Oil--International 19,000 British Petroleum Co. PLC (ADR)* 1,676,727 2,075,750 1.2
Kingdom
Total Investments in the
United Kingdom 1,676,727 2,075,750 1.2
Total Investments in Europe 4,431,307 6,790,750 4.0
NORTH
AMERICA
United Aerospace & 40,000 Northrop Grumman Corp. 1,435,901 2,475,000 1.5
States Defense 30,000 TRW Inc. 1,663,738 2,816,250 1.6
11,000 United Technologies Corporation 958,535 1,215,500 0.7
------------ ------------ ------
4,058,174 6,506,750 3.8
Automobiles 85,000 Ford Motor Company 2,416,975 3,049,375 1.8
50,000 General Motors Corp. 2,421,750 2,712,500 1.6
------------ ------------ ------
4,838,725 5,761,875 3.4
Automotive 72,000 Arvin Industries, Inc. 1,656,934 1,620,000 0.9
Equipment 60,000 Dana Corp. 1,649,850 1,995,000 1.2
------------ ------------ ------
3,306,784 3,615,000 2.1
Banks 20,000 Barnett Banks, Inc. 1,002,350 1,267,500 0.8
28,000 Boatmen's Bancshares, Inc. 1,004,500 1,078,000 0.6
52,000 The Chase Manhattan Corp. 1,759,002 3,581,500 2.1
74,000 CoreStates Financial Corp. 2,584,814 2,886,000 1.7
26,000 First Commerce Corp. 832,910 884,000 0.5
23,000 Mellon Bank Corp. 990,205 1,236,250 0.7
23,000 Mercantile Bancorp. 1,002,055 1,023,500 0.6
------------ ------------ ------
9,175,836 11,956,750 7.0
Chemicals 23,000 The Dow Chemical Co. 1,369,880 2,044,125 1.2
50,000 du Pont (E.I.) de Nemours & Co. 3,365,700 4,018,750 2.3
------------ ------------ ------
4,735,580 6,062,875 3.5
Cosmetics & Household 17,000 Avon Products, Inc. 1,009,895 1,510,875 0.9
Products 42,000 The Clorox Co. 2,495,107 3,470,250 2.0
------------ ------------ ------
3,505,002 4,981,125 2.9
<PAGE>
Drugs 20,000 American Home Products Corp. 2,125,575 2,110,000 1.2
40,000 Bristol-Myers Squibb Co. 1,826,550 3,290,000 1.9
35,000 Eli Lilly & Co. 951,993 2,065,000 1.2
------------ ------------ ------
4,904,118 7,465,000 4.3
Electrical 50,000 General Electric Co. 2,415,562 3,875,000 2.3
Equipment
Financial 35,000 American Express Co. 747,737 1,697,500 1.0
Services 60,000 Beneficial Corp. 2,305,713 3,315,000 1.9
------------ ------------ ------
3,053,450 5,012,500 2.9
Food Merchandising 52,500 Lance, Inc. 943,175 820,313 0.5
Hardware Products 34,000 The Stanley Works 1,418,965 2,133,500 1.2
Information 20,000 Xerox Corp. 2,054,831 2,930,000 1.7
Processing
Insurance 95,000 American General Corp. 1,961,793 3,336,875 1.9
50,000 Lincoln National Corp. 2,135,530 2,412,500 1.4
110,000 Ohio Casualty Corp. 3,512,187 3,685,000 2.2
------------ ------------ ------
7,609,510 9,434,375 5.5
Machinery 47,200 Manitowoc Company, Inc. (The) 1,306,732 1,604,800 0.9
Metals 55,000 Carpenter Technology Corp. 1,747,599 2,069,375 1.2
70,000 Cyprus Amax Minerals Co. 1,840,867 1,898,750 1.1
130,000 Worthington Industries, Inc. 2,715,050 2,648,750 1.6
------------ ------------ ------
6,303,516 6,616,875 3.9
Miscellaneous 28,000 Minnesota Mining & Manufacturing Co. 1,671,180 1,841,000 1.1
Technology
Oil--Domestic 30,000 Atlantic Richfield Co. 3,395,562 3,532,500 2.0
50,000 Occidental Petroleum Corp. 1,318,625 1,287,500 0.8
70,000 Phillips Petroleum Co. 2,423,547 2,905,000 1.7
------------ ------------ ------
7,137,734 7,725,000 4.5
Oil--International 40,000 Exxon Corp. 2,379,692 3,400,000 2.0
20,000 Mobil Corp. 915,150 2,300,000 1.3
30,000 Texaco Inc. 1,407,728 2,565,000 1.5
------------ ------------ ------
4,702,570 8,265,000 4.8
<PAGE>
Paper & Forest 60,000 Weyerhaeuser Co. 2,666,100 2,970,000 1.7
Products
Photography 40,000 Eastman Kodak Co. 1,624,689 3,060,000 1.8
Publishing/Printing 70,000 McGraw-Hill, Inc. 2,434,950 3,088,750 1.8
Real Estate 40,000 Avalon Properties, Inc. 846,650 840,000 0.5
Investment Trust 30,000 Patriot American Hospitality Inc. 720,000 836,250 0.5
------------ ------------ ------
1,566,650 1,676,250 1.0
Retail 50,000 J.C. Penney Company Inc. 2,315,950 2,475,000 1.4
29,000 May Department Stores Co. 1,257,489 1,479,000 0.9
30,000 Sears, Roebuck & Co. 1,006,800 1,496,250 0.9
------------ ------------ ------
4,580,239 5,450,250 3.2
Savings & Loan 80,000 Great Western Financial Corporation 1,685,600 1,840,000 1.1
Transportation 35,000 Union Pacific Corp. 1,752,100 2,384,375 1.4
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
Shares Percent of
EUROPE Industries Held Common Stocks Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
United Utilities 85,000 American Electric Power Co., Inc. $ 2,682,600 $ 3,453,125 2.0%
States --Electric 126,000 Consolidated Edison Co. of
(concluded) New York, Inc. 3,559,500 3,701,250 2.2
45,000 Edison International 705,825 720,000 0.4
100,000 Houston Industries Inc. 1,934,250 2,137,500 1.2
40,000 IPALCO Enterprises, Inc. 1,067,000 1,010,000 0.6
60,000 Northern States Power Co. 2,613,600 2,805,000 1.6
25,000 Pacific Gas and Electric Co. 689,250 568,750 0.3
66,000 Public Service Co. of Colorado 2,137,905 2,186,250 1.3
50,000 Public Service Enterprise Group, Inc. 1,754,000 1,306,250 0.8
100,000 Wisconsin Energy Corp. 2,593,500 2,662,500 1.6
------------ ------------ ------
19,737,430 20,550,625 12.0
Utilities--Gas & 137,400 AGL Resources, Inc. 2,580,795 2,593,425 1.5
Gas Pipeline 125,000 The Brooklyn Union Gas Co. 3,351,250 3,281,250 1.9
40,000 Consolidated Natural Gas Co. 1,805,775 1,870,000 1.1
50,000 Sonat, Inc. 882,073 2,181,250 1.3
------------ ------------ ------
8,619,893 9,925,925 5.8
<PAGE>
Utilities-- 69,000 GTE Corp. 2,455,578 2,992,875 1.8
Telecommunications 60,000 NYNEX Corp. 2,299,200 2,947,500 1.7
90,000 Southern New England Telecommuni-
cations Corp. 3,095,355 4,005,000 2.3
58,000 Sprint Corp. 1,710,171 2,443,250 1.4
55,000 U S West Communications Group, Inc. 1,852,675 1,801,250 1.1
------------ ------------ ------
11,412,979 14,189,875 8.3
Total Investments in North America 129,222,074 161,743,788 94.4
Total Common Stocks 133,653,381 168,534,538 98.4
Face
Amount Short-Term Securities
Repurchase $4,361,000 UBS Securities Inc., purchased on
Agreements** 4/30/1996 to yield 5.30% to 5/01/1996 4,361,000 4,361,000 2.5
Total Short-Term Securities 4,361,000 4,361,000 2.5
Total Investments $138,014,381 172,895,538 100.9
------------
Liabilities in Excess of Other Assets (1,613,747) (0.9)
------------ ------
Net Assets $171,281,791 100.0%
============ ======
Net Asset Value: Class A--Based on net assets of $19,583,616
and 1,530,528 shares outstanding $ 12.80
============
Class B--Based on net assets of $104,670,665
and 8,178,043 shares outstanding $ 12.80
============
Class C--Based on net assets of $2,037,422 and
160,075 shares outstanding $ 12.73
============
Class D--Based on net assets of $44,990,088 and
3,516,715 shares outstanding $ 12.79
============
<FN>
*American Depositary Receipts (ADR).
**Repurchase Agreements are fully collateralized by US Government &
Agency Obligations.
</TABLE>
<PAGE>
PORTFOLIO CHANGES
For the Quarter Ended April 30, 1996
Additions
*360 Communications Company
AGL Resources, Inc.
American Home Products Corp.
Consolidated Natural Gas Co.
IPALCO Enterprises, Inc.
Manitowoc Company, Inc. (The)
Occidental Petroleum Corp.
U S West Communications Group, Inc.
Worthington Industries, Inc.
Deletions
*360 Communications Company
Developers Diversified Realty Corp.
Simon Property Group, Inc.
[FN]
*Added and deleted in the same quarter.
PORTFOLIO INFORMATION
As of April 30, 1996
<PAGE>
Percent of
Ten Largest Common Stock Holdings Net Assets
du Pont (E.I.) de Nemours & Co. 2.3%
Southern New England Telecommunications Corp. 2.3
General Electric Co. 2.3
Consolidated Edison Co. of New York, Inc. 2.2
Ohio Casualty Corp. 2.2
The Chase Manhattan Corp. 2.1
Atlantic Richfield Co. 2.0
The Clorox Co. 2.0
American Electric Power Co., Inc. 2.0
Exxon Corp. 2.0
