MERRILL
LYNCH
GLOBAL
ALLOCATION
FUND, INC.
Semi-Annual Report April 30, 1994
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.
Merrill Lynch
Global Allocation Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
MERRILL LYNCH GLOBAL ALLOCATION FUND, INC.
Officers and
Directors
<PAGE>
Arthur Zeikel, President and Director
Donald Cecil, Director
Edward H. Meyer, Director
Charles C. Reilly, Director
Richard R. West, Director
Terry K. Glenn, Executive Vice President
Norman R. Harvey, Senior Vice President
Donald C. Burke, Vice President
Bryan N. Ison, Vice President
Gerald M. Richard, Treasurer
Michael J. Hennewinkel, Secretary
Custodian
Brown Brothers Harriman & Co.
40 Water Street
Boston, Massachusetts 02109
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
<PAGE>
<TABLE>
Summary of
Fund's Overall
Asset Mix
As of 4/30/94
<CAPTION>
Percent of Fund's Portfolio Reference Portfolio
4/30/94 1/31/94 Percentages
<S> <C> <C> <C>
US & Canadian Equities* 21.5% 19.6% 36.0%
Japanese & Pacific Basin Equities* 5.7 6.2 14.4
European Equities 10.5 12.4 9.6
Total Equities 37.7 38.2 60.0
US/Canadian Fixed-Income Securities** 42.3 30.8 24.0
Other Fixed-Income Securities** 15.9 7.3 16.0
Total Fixed-Income Securities 58.2 38.1 40.0
US/Canadian Cash & Cash Equivalents 4.1 23.7 --
<FN>
*Includes value of Stock Index Futures.
**Does not include value of segregated securities held as
collateral for Stock Index Futures.
</TABLE>
DEAR SHAREHOLDER
The April quarter was a turbulent
period for financial markets world-
wide. In the United States, the Federal
Reserve Board began to raise short-
term interest rates on February 4, 1994,
and tightened monetary policy again at
the March 22 and April 18, 1994 meet-
ings of the Federal Open Market Com-
mittee. As a result, the US bond market
(which had reached its recent peak in
October 1993) sold off, with the 10-year
US Treasury bond declining approxi-
mately 8% in price from February 4
through April month-end. From the end
of January through the end of April,
the yield on the 10-year Treasury bond
rose from approximately 5.6% to 7.0%.
<PAGE>
Lower US bond prices set off a chain
reaction in bond markets worldwide.
European fixed-income prices had
peaked in mid-January 1994 and began
to decline late in the month. The sell-off
intensified in February along with the
decline in US bond prices. For example,
the price of a German 10-year govern-
ment bond declined approximately 6%
during the April quarter. Global bond
markets--especially those in develop-
ing economies such as Latin America--
came under significantly greater pres-
sure as leveraged investors were forced
to liquidate positions as prices declined.
On the equity side, the Standard &
Poor's 500 Index reached an all-time historic
high in late January, but then the
index declined in February and fell
to a greater degree in March. US stock
prices recovered somewhat during
April, with the S&P 500 ending the
quarter at the 450.91 level for a decline
of 6.37% during the period. Perform-
ances of other world equity markets
varied during the quarter, with the UK
and French stock markets declining in
value, the German market appreciating,
and the Japanese market down slightly.
For the three months ended April 30,
1994, the Fund's Class A and Class B
Shares' total returns declined 2.56% and
2.81%, respectively. This is only
the third quarter of the 19 full
quarters of the Fund's history that
Class A and Class B Shares had nega-
tive returns. The Fund's broad geo-
graphic and asset class diversification
helped to support net asset value dur-
ing this recent turbulent environment.
Furthermore, at the beginning of the
quarter, the Fund had very little ex-
posure to emerging stock and bond
markets, which declined more than
more mature capital markets following
very strong performances during 1993.
<PAGE>
Investment Activities
Merrill Lynch Global Allocation Fund,
Inc. began the April quarter with
23.7% of its net assets in cash and cash
equivalents. These cash reserves en-
abled the Fund to take advantage of
lower valuations and increase longer-
term investments at attractive prices.
As a result of our investment activities,
the Fund's cash reserves were reduced
to 2.1% by April quarter-end.
The majority of our investments during
the April quarter were in fixed-income
securities. For example, we purchased
a variety of European bonds, primarily
securities issued by the German govern-
ment or German states, with maturities
ranging from 10 years to 20 years. Most
of the bonds with maturities greater
than 10 years are "puttable" back to the
issuer after 10 years, thereby reducing
maturity risk. The biggest asset alloca-
tion shift was in US/Canadian fixed-
income securities with an increase from
30.8% to 42.3%. We also purchased US
Treasury securities with maturities
ranging from two years to seven years
and intermediate-term US corporate
bonds as well as two-year--ten-year
Canadian government bonds. In addi-
tion, we expanded investments in Latin
American debt through the purchase
of bonds issued by the governments
or governmental agencies of Mexico,
Argentina and, to a much smaller
extent, Brazil. Other Latin American
fixed-income investments included
Argentine corporate issues.
The Fund did not increase its equity
investments during the April quarter.
Although many shares became more
reasonably valued during the period,
we found that the relatively greater
declines in fixed-income markets led
us to favor purchasing bonds over
stocks.
<PAGE>
In Conclusion
We thank you for your investment in
Merrill Lynch Global Allocation Fund,
Inc., and we look forward to reviewing
our outlook and strategy with you again
in our next quarterly report to
shareholders.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Bryan N. Ison)
Bryan N. Ison
Vice President and Portfolio Manager
June 9, 1994
PERFORMANCE DATA
None of the past results shown should be considered a representation
of future performance. Investment return and principal value of Class A
and Class B Shares will fluctuate so that shares, when redeemed, may be
worth more or less than their original cost.
<PAGE>
<TABLE>
Recent
Performance
Results*
<CAPTION>
Net Asset Value Total Return
4/30/94 1/31/94 4/30/93 12-Month 3-Month
<S> <C> <C> <C> <C> <C>
ML Global Allocation Fund, Inc. Class A Shares $13.32 $13.67 $12.61 +11.40%(1) -2.56%
ML Global Allocation Fund, Inc. Class B Shares 13.16 13.54 12.50 +10.25(2) -2.81
US Stocks: Standard & Poor's 500 Index** + 5.28 -5.76
Non-US Stocks: Financial Times--Actuaries World Index*** +16.41 -0.10
US Bonds: ML Government Index GA05**** - 0.86 -5.23
Non-US Bonds: Salomon Brothers World Government Bond Index***** + 8.24 +2.16
<FN>
*Investment results shown for the 3-month and 12-month periods are before the deduction of any sales charges.
**An unmanaged broad-based index comprised of common stocks. Total investment returns for unmanaged indexes are based on
estimates.
***An unmanaged capitalization-weighted index comprised of over 1,800 companies in 24 countries, excluding the United States.
****An unmanaged index designed to track the total return of the current coupon five-year US Treasury bond.
*****An unmanaged market capitalization-weighted index tracking 10 government bond indexes, excluding the United States.
(1)Percent change includes reinvestment of $0.508 per share ordinary income dividends and $0.194 per share capital gains
distributions.
(2)Percent change includes reinvestment of $0.409 per share ordinary income dividends and $0.194 per share capital gains
distributions.
</TABLE>
Average Annual
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 3/31/94 +12.79% + 5.46%
Five Years Ended 3/31/94 +15.48 +13.93
Inception (2/3/89) through 3/31/94 +14.86 +13.38
[FN]
*Maximum sales charge is 6.5%.
**Assuming maximum sales charge.
<PAGE>
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 3/31/94 +11.62% + 7.62%
Five Years Ended 3/31/94 +14.31 +14.31
Inception (2/3/89) through 3/31/94 +13.69 +13.69
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
PERFORMANCE DATA (concluded)
<TABLE>
Performance
Summary--
Class A Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
2/3/89--12/31/89 $10.00 $10.76 $0.199 $0.484 +14.64%
1990 10.76 9.89 0.237 0.854 + 1.88
1991 9.89 11.05 0.196 1.409 +28.75
1992 11.05 11.53 0.038 0.816 +12.19
1993 11.53 13.23 0.194 0.508 +21.01
1/1/94--4/30/94 13.23 13.32 -- -- + 0.68
------ ------
Total $0.864 Total $4.071
Cumulative total return as of 4/30/94: +105.54%**
<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>
<PAGE>
<TABLE>
Performance
Summary--
Class B Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
2/3/89--12/31/89 $10.00 $10.75 $0.199 $0.392 +13.58%
1990 10.75 9.88 0.237 0.741 + 0.84
1991 9.88 11.03 0.196 1.300 +27.47
1992 11.03 11.47 0.038 0.731 +11.06
1993 11.47 13.11 0.194 0.409 +19.69
1/1/94--4/30/94 13.11 13.16 -- -- + 0.38
------ ------
Total $0.864 Total $3.573
Cumulative total return as of 4/30/94: +94.81%**
<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>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
Value Percent of
COUNTRY Industries Shares Held Common Stocks, Notes & Warrants Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
Australia Banking 2,595,293 Westpac Banking Corp. $ 5,448,334 $ 8,792,074 0.1%
Food 6,500,000 Goodman Fielder Wattie Ltd. 6,989,431 7,046,416 0.1
Tobacco 1,768,300 Rothmans Holdings, Ltd. 7,303,733 8,323,600 0.1
1,242,300 WD & HO Wills Holdings, Ltd. 2,092,022 3,632,634 0.1
------------ ------------ ------
9,395,755 11,956,234 0.2
Total Common Stocks in Australia 21,833,520 27,794,724 0.4
<PAGE>
Austria Utilities-- 29,150 Oesterreichische Elektrizitats AG (Verbund) 1,223,237 1,553,495 0.0
Electric
Total Common Stocks in Austria 1,223,237 1,553,495 0.0
Belgium Mining 50,120 Union Miniere N.V. 2,964,624 3,809,202 0.1
Total Common Stocks in Belgium 2,964,624 3,809,202 0.1
Canada Natural Resources 300,000 Canadian Pacific, Ltd. 3,503,161 4,875,000 0.1
Oil & Related 353,000 International Petroleum Corp. 1,000,196 375,062 0.0
Telecommunications 100,000 BCE Telecommunications, Inc. 3,375,484 3,575,000 0.0
Total Common Stocks in Canada 7,878,841 8,825,062 0.1
Finland Banking 250,000 Kansallis-Osake-Pankki 533,290 563,640 0.0
3,033,915 Unitas Bank Ltd. 8,709,516 8,536,048 0.1
------------ ------------ ------
9,242,806 9,099,688 0.1
Metals 175,000 Outokumpu OY 1,920,901 2,804,226 0.0
Paper & 450,000 Repola OY S 5,925,368 7,957,107 0.1
Forest Products
Total Common Stocks in Finland 17,089,075 19,861,021 0.2
France Automobiles 38,300 Peugeot S.A. 3,966,996 6,031,921 0.1
Banking 53,900 Compagnie Financiere de Paribas 4,269,897 4,116,207 0.1
5,989 Compagnie Financiere de Paribas (New Shares) 418,613 457,365 0.0
86,500 Societe Generale 9,605,405 9,676,297 0.1
------------ ------------ ------
14,293,915 14,249,869 0.2
<PAGE>
Capital Goods 27,695 Compagnie de Fives-Lille 1,444,568 3,102,972 0.0
Insurance 53,860 GAN S.A. (Registered) 3,637,238 4,108,408 0.1
Multi-Industry 15,650 EuraFrance 4,256,713 5,723,492 0.1
Utilities 26,128 Compagnie Generale des Eaux 11,466,525 11,870,715 0.2
Total Common Stocks in France 39,065,955 45,087,377 0.7
Germany Banking 4,950 Bayerische Vereinsbank AG 1,181,909 1,520,090 0.0
38,900 Deutsche Bank AG 18,544,907 18,334,045 0.3
------------ ------------ ------
19,726,816 19,854,135 0.3
Capital Goods 369,636 Kloeckner Werke AG 17,229,762 38,134,393 0.5
Chemicals 89,650 Bayer AG 15,407,964 21,299,650 0.3
Insurance 5,490 Munich Reinsurance Co. 9,599,956 10,764,706 0.1
Multi-Industry 57,600 Veba AG 14,765,678 17,858,606 0.3
Steel 85,000 Thyssen AG 10,329,445 14,682,051 0.2
Total Common Stocks in Germany 87,059,621 122,593,541 1.7
Hong Telecommuni- 1,180,000 Hong Kong Telecommunications Ltd. 754,179 2,261,005 0.0
Kong cations
Utilities-- 676,800 China Light & Power Co., Ltd. 841,166 3,526,825 0.1
Electric
Total Common Stocks in Hong Kong 1,595,345 5,787,830 0.1
Ireland Building & 1,065,600 CRH PLC 3,594,241 6,201,717 0.1
Construction
Miscellaneous-- 2,178,000 Waterford Wedgwood Units 1,080,827 1,877,303 0.0
Consumer Goods
Total Common Stocks in Ireland 4,675,068 8,079,020 0.1
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Value Percent of
COUNTRY Industries Shares Held Common Stocks, Notes & Warrants Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
Italy Banking 533,400 IMI (Ordinary) $ 3,443,328 $ 4,408,680 0.1%
Insurance 387,000 Assicurazioni Generali 10,169,033 11,237,838 0.1
Multi-Industry 6,949,495 Compagnie Industriali Riunite S.p.A. (CIR) 5,670,704 12,164,892 0.2
Telecommuni- 3,000,000 Societa Finanziaria Telefonica S.p.A. (STET) 4,365,656 11,539,912 0.1
cations 11,181,363 Societa Finanziaria Telefonica S.p.A.
(STET) (RISP) 20,700,047 36,474,717 0.5
3,958,000 Societa Italiana Esercizio Telecom S.p.A.
(S.I.P.) 3,323,376 11,779,466 0.2
------------ ------------ ------
28,389,079 59,794,095 0.8
Total Common Stocks in Italy 47,672,144 87,605,505 1.2
Japan Automobiles 1,512,000 Suzuki Motor Corp. 13,245,256 20,056,991 0.3
& Equipment 397,000 Toyoda Automatic Loom Works, Ltd. 4,589,043 6,826,668 0.1
295,000 Toyota Motor Corp. 4,030,746 5,768,399 0.1
------------ ------------ ------
21,865,045 32,652,058 0.5
Beverage 310,000 Chukyo Coca-Cola Bottling Co., Ltd. 3,892,222 4,721,431 0.1
284,000 Hokkaido Coca-Cola Bottling Co., Ltd. 3,496,769 5,246,340 0.1
423,000 Kinki Coca-Cola Bottling Co., Ltd. 6,836,980 8,395,991 0.1
245,000 Mikuni Coca-Cola Bottling Co., Ltd. 3,943,827 4,405,522 0.1
408,000 Sanyo Coca-Cola Bottling Co., Ltd. 6,054,493 7,817,628 0.1
------------ ------------ ------
24,224,291 30,586,912 0.5
Capital Goods 3,608,000 Mitsubishi Heavy Industries America, Inc. 21,963,469 23,930,431 0.3
Electrical 410,000 Chudenko Corp. 13,428,175 15,752,186 0.2
Engineering
<PAGE>
Electronics 1,141,000 Canon, Inc. 14,706,779 18,499,067 0.3
189,000 Hitachi, Ltd. 1,899,032 1,782,844 0.0
1,413,000 Matsushita Electric Industrial Co., Ltd. 17,136,557 23,186,695 0.3
415,000 Murata Manufacturing Co., Ltd. 13,871,658 17,942,419 0.2
1,360,000 Sumitomo Electric Industries 15,481,185 19,243,392 0.3
------------ ------------ ------
63,095,211 80,654,417 1.1
Engineering & 29,000 Taihei Dengyo Kaisha Ltd. 657,632 849,170 0.0
Construction
Insurance 1,112,000 Dai-Tokyo Fire & Marine Insurance Co., Ltd. 6,505,779 8,522,747 0.1
665,000 Fuji Fire & Marine Insurance Co., Ltd. 3,727,641 4,534,833 0.1
1,322,000 Koa Fire & Marine Insurance Co., Ltd. 6,884,434 9,145,013 0.1
620,000 Mitsui Marine & Fire Insurance Co., Ltd. 5,004,638 5,019,947 0.1
1,182,000 Nichido Fire & Marine Insurance Co., Ltd. 6,863,646 9,732,888 0.1
1,295,000 Nippon Fire & Marine Insurance Co., Ltd. 6,665,367 9,543,579 0.1
1,775,000 Sumitomo Marine & Fire Insurance Co., Ltd. 13,830,866 17,197,111 0.3
1,625,000 Tokio Marine & Fire Insurance Co., Ltd. 17,355,002 20,757,591 0.3
630,000 Yasuda Fire & Marine Insurance Co., Ltd. 4,971,410 4,896,630 0.1
------------ ------------ ------
71,808,783 89,350,339 1.3
Metals 751,000 Toyo Seikan Kaisha, Ltd. 18,417,114 21,105,041 0.3
Pharmaceuticals 865,000 Sankyo Pharmaceuticals Co. Ltd. 21,123,949 19,633,979 0.3
384,000 Taisho Pharmaceuticals Co. 7,984,458 7,659,625 0.1
------------ ------------ ------
29,108,407 27,293,604 0.4
Photography 659,000 Fuji Photo Film Co., Ltd. 14,995,088 14,181,095 0.2
Retail Stores 448,000 Ito Yokado Co., Ltd. 20,618,869 23,551,145 0.3
100,000 Sangetsu Co., Ltd. 3,160,832 3,655,301 0.1
------------ ------------ ------
23,779,701 27,206,446 0.4
Steel 10,000 Maruichi Steel Tube Ltd. 153,093 179,817 0.0
Total Common Stocks in Japan 303,496,009 363,741,516 5.2
<PAGE>
Nether- Airlines 901,000 KLM Royal Dutch Airlines 17,486,458 25,888,024 0.4
lands
Banking 296,150 ABN Amro Holding N.V. 9,100,038 9,797,444 0.1
Beverage 23,283 Heineken Holdings Inc. 2,129,208 2,638,407 0.0
23,237 Heineken N.V. 2,268,817 2,952,671 0.1
------------ ------------ ------
4,398,025 5,591,078 0.1
Chemicals 113,650 Akzo N.V. 10,208,263 13,653,870 0.2
Electronics 486,000 Philips Electronics N.V. 12,590,702 14,172,825 0.2
Insurance 155,000 Aegon N.V. 8,361,695 7,983,083 0.1
250,400 Amev N.V. 9,528,450 9,736,284 0.2
385,965 Internationale Nederlanden Groep N.V. 12,885,006 16,085,330 0.2
------------ ------------ ------
30,775,151 33,804,697 0.5
Miscellaneous-- 10,000 Nijverdal Ten Cate N.V. 501,699 450,054 0.0
Manufacturing
Paper & Forest 300,720 Koninklijke KNP 5,008,146 7,897,534 0.1
Products
Total Common Stocks in the Netherlands 90,068,482 111,255,526 1.6
New Paper & Forest 164,330 Carter Holt Harvey, Ltd. 166,358 349,334 0.0
Zealand Products
Total Common Stocks in New Zealand 166,358 349,334 0.0
South Automobiles & 25,542 ++++++Kia Motors (GDS)++++ 823,544 698,148 0.0
Korea Equipment
Total Common Stocks in South Korea 823,544 698,148 0.0
<PAGE>
Spain Banking 61,775 Banco Popular Espanol 6,511,311 7,160,596 0.1
83,000 Bank Intercontinental S.A. 4,607,612 7,310,881 0.1
------------ ------------ ------
11,118,923 14,471,477 0.2
Energy & Petroleum 218,500 Repsol S.A. 5,580,410 7,245,596 0.1
Insurance 30,000 Mapfre S.A. 1,130,028 1,263,509 0.0
Miscellaneous 137,500 Autopista Espana (ACESA) 1,363,125 1,348,538 0.0
195,000 Grupo Fosforera Espanola S.A. 1,696,601 1,818,653 0.0
------------ ------------ ------
3,059,726 3,167,191 0.0
Multi-Industry 45,750 Corporacion Financiera Alba S.A. 1,611,658 1,997,964 0.0
Real Estate 205,148 Metrovacesa 4,967,085 8,032,812 0.2
31,560 Metrovacesa (New Shares) 921,380 1,189,048 0.0
56,303 Vallehermoso Espanola S.A. 528,717 1,100,221 0.0
46,997 Vallehermoso Espanola S.A. (New Shares) 581,234 897,500 0.0
------------ ------------ ------
6,998,416 11,219,581 0.2
Telecommuni- 1,802,118 Telefonica Nacional de Espana S.A. 20,127,134 24,343,933 0.4
cations 184,000 Telefonica Nacional de Espana S.A. (ADR)++ 5,492,988 7,498,000 0.1
------------ ------------ ------
25,620,122 31,841,933 0.5
Utilities--Electric 30,000 Empresa Nacional de Electricidad S.A. 815,981 1,494,449 0.0
591,800 Iberdrola I S.A. 3,310,030 4,235,904 0.1
------------ ------------ ------
4,126,011 5,730,353 0.1
Total Common Stocks in Spain 59,245,294 76,937,604 1.1
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Value Percent of
COUNTRY Industries Shares Held Common Stocks, Notes & Warrants Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
Sweden Electrical-- 120,000 ASEA AB 'B' Free $ 6,532,086 $ 9,954,278 0.1%
Equipment
Mining 725,725 Trelleborg 'B' Free 5,291,716 9,859,621 0.1
Miscellaneous 200,000 SKF 'A' 3,713,376 4,075,767 0.1
350,000 SKF 'B' Free 6,569,663 7,132,593 0.1
------------ ------------ ------
10,283,039 11,208,360 0.2
Multi-Industry 245,000 Svedala Industri 'AB' Free 3,925,653 5,920,967 0.1
Total Common Stocks in Sweden 26,032,494 36,943,226 0.5
Switzer- Banking 35,700 Schweizerischer Bankverein (Bearer) 9,737,910 9,920,190 0.1
land
Electrical-- 29,800 BBC Brown Boveri & Cie (Bearer) 17,422,295 27,320,020 0.4
Equipment
Insurance 2,460 Baloise Holding Insurance (Registered) 3,018,431 4,493,071 0.1
Pharmaceuticals 19,800 Ciba-Geigy AG (Registered) 9,511,983 11,777,841 0.2
1,460 Sandoz AG (Part. Cert.) 2,573,492 3,849,478 0.1
6,427 Sandoz AG (Registered) 14,872,369 16,945,612 0.2
------------ ------------ ------
26,957,844 32,572,931 0.5
Total Common Stocks in Switzerland 57,136,480 74,306,212 1.1
United Aerospace 1,452,500 Rolls Royce PLC 3,586,733 4,467,091 0.1
Kingdom
Banking 428,000 National Westminster Bank PLC 3,096,090 2,917,890 0.0
<PAGE>
Beverage 1,220,600 Grand Metropolitan PLC 8,154,275 8,765,251 0.1
35,000 Grand Metropolitan PLC (ADR)++ 1,031,100 997,500 0.0
------------ ------------ ------
9,185,375 9,762,751 0.1
Conglomerates 746,100 Hanson PLC 2,959,657 3,085,832 0.1
50,000 Hanson PLC (ADR)++ 984,250 1,031,250 0.0
------------ ------------ ------
3,943,907 4,117,082 0.1
Consumer Goods 850,000 Vendome Luxury Group (Units) 5,501,439 5,601,713 0.1
Electrical 1,230,200 General Electric Co. PLC 5,848,390 5,647,172 0.1
Equipment
Energy & 45,000 British Petroleum Co. Ltd. PLC (ADR)++ 2,638,675 3,150,000 0.0
Petroleum
Food 825,000 Tate & Lyle PLC 4,995,657 5,561,944 0.1
350,000 United Biscuit PLC 2,086,198 1,908,900 0.0
------------ ------------ ------
7,081,855 7,470,844 0.1
Insurance 599,000 Commercial Union Assurance Co. PLC 5,354,117 4,973,018 0.1
Leisure & 557,900 The Rank Organisation PLC 3,467,992 3,625,987 0.1
Entertainment 490,000 Thorn EMI PLC (Ordinary) 7,194,681 8,388,555 0.1
------------ ------------ ------
10,662,673 12,014,542 0.2
Pharmaceuticals 700,000 SmithKline Beecham Corp. PLC (ADR)++ 19,423,436 19,075,000 0.3
1,000,000 Zeneca Group PLC 9,406,370 10,423,200 0.1
------------ ------------ ------
28,829,806 29,498,200 0.4
Retail Stores 255,100 Boots Co. PLC 1,701,586 2,114,026 0.0
421,500 Marks & Spencer PLC 2,531,515 2,796,948 0.0
1,300,000 Tesco PLC 4,019,708 4,135,950 0.1
------------ ------------ ------
8,252,809 9,046,924 0.1
Steel 1,500,000 British Steel PLC 1,442,449 3,454,200 0.0
Utilities-- 520,000 Cable & Wireless International PLC 3,817,494 3,529,344 0.1
Communications
Utilities--Gas 435,800 British Gas PLC 1,789,284 1,881,675 0.0
<PAGE>
Waste Disposal 83,500 Attwoods PLC (ADR)++ 759,800 782,812 0.0
Total Common Stocks in the United Kingdom 101,790,896 108,315,258 1.5
United Aerospace 56,000 Boeing Co. 2,003,133 2,520,000 0.0
States
Airlines 25,000 UAL Corp. 2,907,375 3,228,125 0.1
955,900 USAir Group Inc. 12,833,444 7,766,688 0.1
------------ ------------ ------
15,740,819 10,994,813 0.2
Apparel 860,000 Fruit of the Loom, Inc. 23,555,786 25,262,500 0.4
373,900 Liz Claiborne Inc. 8,022,626 9,347,500 0.1
------------ ------------ ------
31,578,412 34,610,000 0.5
Automobiles 110,300 General Motors Corp. 3,895,971 6,259,525 0.1
Banking 85,000 Albank Financial Corp. 971,875 1,731,875 0.0
280,500 AmSouth Bancorporation 7,624,356 8,800,687 0.1
678,400 Anchor Bancorp., Inc. 8,229,970 8,734,400 0.1
200,000 Bank of New York 10,650,626 11,075,000 0.2
75,000 BankAmerica Corp. 3,219,677 3,243,750 0.0
319,000 Bankers Trust Co. 7,620,125 7,097,750 0.1
129,500 Banknorth Group, Inc. 1,865,422 2,492,875 0.0
700,000 Barnett Banks Inc. 28,355,015 32,287,500 0.5
500,000 California Federal Bank 4,500,000 5,187,500 0.1
496,700 Charter One Financial, Inc. 9,263,048 10,430,700 0.2
798,500 Chase Manhattan Corp. 26,045,496 27,149,000 0.4
1,391 Chase Manhattan Corp. (Warrants) (a) 6,955 8,868 0.0
1,513,500 Chemical Banking Corp. 55,174,508 52,594,125 0.8
1,721,300 City National Corp. 12,174,108 17,213,000 0.2
1,337,500 Comerica Inc. 35,892,696 37,450,000 0.5
164,000 Continental Bank Corp. 4,305,590 5,658,000 0.1
375,000 CoreStates Financial Corp. 9,855,001 9,937,500 0.1
1,200,000 First of America Bank 44,882,312 45,300,000 0.6
1,025,000 First Commerce Corp. 26,395,098 27,418,750 0.4
400,000 First Union Corp. 16,226,028 17,850,000 0.3
1,426,103 KeyCorp. 42,386,643 45,100,492 0.6
498,600 Mellon Bank Corp. 26,731,868 27,796,950 0.4
112,950 Mercantile Bancorp. 2,920,618 4,066,200 0.1
45,000 Premier Bancorp. 708,437 787,500 0.0
283,800 Republic of New York Corp. 13,848,705 14,012,625 0.2
20,000 Trustcompany Bankcorp. NY 288,320 380,000 0.0
------------ ------------ ------
400,142,497 423,805,047 6.0
<PAGE>
Biotechnology 362,536 Applied Immune Sciences, Inc. 5,834,069 3,081,556 0.0
Computers 148,500 Boole & Babbage, Inc. 2,962,360 3,898,125 0.1
321,600 Borland International Corp. 4,836,966 3,899,400 0.1
27,200 Digital Equipment Corp. 1,553,514 571,200 0.0
300,000 International Business Machines Corp. 15,067,744 17,175,000 0.2
------------ ------------ ------
24,420,584 25,543,725 0.4
Conglomerates 125,000 ADT Limited 1,434,405 1,187,500 0.0
20,833 ADT Limited (Warrants) (a) 0 6,510 0.0
------------ ------------ ------
1,434,405 1,194,010 0.0
Construction 28,000 K. Hovnanian Enterprises 285,784 350,000 0.0
& Housing
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Shares Held/ Value Percent of
COUNTRY Industries Face Amount Common Stocks, Notes & Warrants Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
United Energy & 163,900 Ashland Coal, Inc. $ 4,132,919 $ 4,445,787 0.1%
States Petroleum 85,000 Brown (Tom), Inc. 366,313 1,094,375 0.0
(con- 49,500 Cabot Oil & Gas Corp. (Class A) 529,030 1,089,000 0.0
tinued) 34,600 Coastal Corp. 817,773 1,094,225 0.0
153,000 Coho Resources, Inc. 1,662,813 612,000 0.0
130,000 Helmerich & Payne, Inc. 2,773,422 3,396,250 0.1
46,400 Mitchell Energy Development Corp. (Class A) 675,717 904,800 0.0
174,350 Mitchell Energy Development Corp. (Class B) 2,755,451 3,399,825 0.1
50,000 Murphy Oil Corp. 1,899,720 2,200,000 0.0
106,100 Nuevo Energy Co. 2,048,791 1,976,112 0.0
1,563,400 Occidental Petroleum Corp. 29,245,537 27,750,350 0.4
203,000 Onbancorp, Inc. 6,085,242 5,988,500 0.1
61,200 Pennzoil Co. 3,775,844 3,014,100 0.0
199,700 Plains Resources, Inc. 2,052,005 1,148,275 0.0
1,794,248 Santa Fe Energy Resources, Inc. 16,331,708 15,923,950 0.2
311,200 Southern National Corp. 5,945,098 6,068,400 0.1
425,000 Trans Texas Gas Corp. 5,950,000 5,365,625 0.1
700,000 USX-Marathon Group 12,267,189 11,812,500 0.2
138,800 Unocal Corp. 3,272,336 3,834,350 0.1
------------ ------------ ------
102,586,908 101,118,424 1.5
Financial 750,100 Student Loan Marketing Association 32,766,557 29,441,425 0.4
Services
Foods/Food 405,500 Borden, Inc. 5,081,701 5,271,500 0.0
Processing 100,000 Eagle Food Centers, Inc. 612,500 525,000 0.0
------------ ------------ ------
5,694,201 5,796,500 0.0
Healthcare 961,200 Baxter International, Inc. 21,122,668 21,987,450 0.3
Services 650,000 Beverly Enterprises, Inc. 6,733,713 8,612,500 0.1
500,000 Hillhaven Corp. 7,233,093 9,937,500 0.1
150,000 Manor Care, Inc. 2,928,940 4,162,500 0.1
582,500 US Surgical Corp. 13,388,647 10,266,563 0.2
------------ ------------ ------
51,407,061 54,966,513 0.8
Hospital 55,000 Community Psychiatric Centers 580,744 797,500 0.0
Management
Index-Related US$ 40,800 Republic of Austria Stock Index Growth Notes
due 8/15/1996 432,941 499,800 0.0
<PAGE>
Industrial 85,200 Cooper Industries, Inc. 3,081,334 3,248,250 0.0
Industrial Consumer 2,672 Gardner Denver Machinery, Inc. 22,042 22,044 0.0
Goods
Information 165,000 Amdahl Corp. 728,475 1,113,750 0.0
Processing 800,000 Unisys Corp. 9,264,381 8,700,000 0.1
------------ ------------ ------
9,992,856 9,813,750 0.1
Insurance 200,000 American General Corp. 5,176,374 5,100,000 0.1
571,000 Horace Mann Educators, Inc. 13,654,588 15,702,500 0.2
------------ ------------ ------
18,830,962 20,802,500 0.3
Leisure 93,700 Handleman Co. 1,044,751 1,018,988 0.0
Metals 277,500 Alcan Aluminum, Ltd. 4,669,221 5,792,812 0.1
130,000 Aluminum Co. of America 8,733,493 8,840,000 0.1
100,000 Inco Ltd. 2,132,000 2,437,500 0.0
132,800 Reynolds Metals Co. 5,801,771 5,577,600 0.1
------------ ------------ ------
21,336,485 22,647,912 0.3
Miscellaneous 223,900 Jostens Inc. 4,199,326 3,554,413 0.1
Multi-Industry 235,000 Loews Corp. 22,205,769 21,032,500 0.3
Natural Resources 300,000 Freeport McMoRan Inc. 5,137,697 5,737,500 0.1
Oil Services 670,000 Arethusa (Off-Shore) Ltd. 6,809,378 6,532,500 0.1
149,800 Atwood Oceanics, Inc. 1,238,663 1,872,500 0.0
43,400 Cliffs Drilling Co. 595,425 553,350 0.0
408,000 Gerrity Oil & Gas Corp. 5,748,846 3,111,000 0.1
1,800,000 Noble Drilling Corp. 14,009,718 12,375,000 0.2
------------ ------------ ------
28,402,030 24,444,350 0.4
Packaging 200,000 Stone Container Corp. 2,576,204 2,700,000 0.0
Paper & Forest 525,000 Boise Cascade Corp. 11,800,164 11,287,500 0.2
Products 435,000 Bowater, Inc. 8,882,625 9,135,000 0.1
112,000 Champion International Corp. 3,318,152 3,416,000 0.1
150,000 International Paper Co. 9,477,586 9,787,500 0.1
------------ ------------ ------
33,478,527 33,626,000 0.5
<PAGE>
Pharmaceuticals/ 600,000 ALZA Corp. 13,048,597 15,150,000 0.2
Biotechnology 121,500 Alteon Inc. 1,205,188 911,250 0.0
139,400 American Home Products Corp. 8,256,144 8,050,350 0.1
58,200 AutoImmune Inc. 385,575 407,400 0.0
600,000 Bristol-Myers Squibb Co. 33,254,124 32,325,000 0.5
173,000 Immune Response Corp. 2,272,832 1,708,375 0.0
200,000 Johnson & Johnson Co. 7,266,450 8,275,000 0.1
325,000 Lilly (Eli) & Co. 16,618,583 16,006,250 0.2
550,000 Merck & Co. 18,652,516 16,293,750 0.3
156,300 Pfizer, Inc. 9,292,504 9,221,700 0.1
780,500 Syntex Corp. 15,220,206 11,805,063 0.2
------------ ------------ ------
125,472,719 120,154,138 1.7
Pollution Control 646,900 WMX Technologies, Inc. 16,148,443 16,900,263 0.2
Publishing 107,900 Deluxe Corp. 2,919,774 2,913,300 0.1
301,500 New York Times Co. (Class A) 7,158,778 7,650,563 0.1
------------ ------------ ------
10,078,552 10,563,863 0.2
Real Estate 373,100 First Union Real Estate Investments 2,861,920 2,658,337 0.1
174,400 Health Equity Properties, Inc. 1,469,320 1,700,400 0.0
661,300 Mid-America Realty Investments 6,616,640 6,613,000 0.1
------------ ------------ ------
10,947,880 10,971,737 0.2
Resources 440,000 Horsham Corp. 3,550,742 5,885,000 0.1
Retail Stores 608,500 Baker (J.) Inc. 10,187,765 12,778,500 0.2
516,900 ++++++Buttrey Food & Drug Stores Co. 4,084,486 2,584,500 0.0
156,700 Dayton Hudson Corp. 10,496,970 12,379,300 0.2
1,110,000 ++++++Filene's Basement Corp. 10,092,619 9,712,500 0.1
342,000 Hook-SupeRx, Inc. 3,476,715 4,531,500 0.1
150,000 Payless Cashways Inc. 1,812,800 2,362,500 0.0
660,000 Service Merchandise Co., Inc. 6,701,173 4,702,500 0.1
158,400 Smith Food & Drug Ltd. 3,067,501 2,989,800 0.0
1,063,500 The Vons Companies, Inc. 17,691,549 19,408,875 0.3
------------ ------------ ------
67,611,578 71,449,975 1.0
Savings & Loan 106,000 Ahmanson (H.F.) & Co. 1,767,857 1,934,500 0.0
Associations 50,000 Greenpoint Savings Bank 931,250 943,750 0.0
------------ ------------ ------
2,699,107 2,878,250 0.0
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Value Percent of
COUNTRY Industries Shares Held Common Stocks, Notes & Warrants Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
United Savings Banks 248,000 Bankers Corp. $ 1,688,842 $ 4,278,000 0.1%
States 655,000 Brooklyn Bancorp Inc. (e) 15,782,500 22,106,250 0.3
(con- 500,000 Dime Savings Bank of New York 3,417,510 4,250,000 0.1
cluded) 196,400 Downey Savings & Loan Association 2,896,670 3,682,500 0.1
2,005,053++++++Glendale Federal Savings Bank 17,644,852 14,787,266 0.2
770,194 Glendale Federal Savings Bank (Warrants) (a) 0 1,347,840 0.0
37,500 NS Bancorp, Inc. 300,000 1,153,125 0.0
200,000 Portsmouth Bank Shares, Inc. 1,396,014 2,100,000 0.0
-------------- -------------- ------
43,126,388 53,704,981 0.8
Shoes 182,300 NIKE, Inc. (Class B) 9,775,783 9,775,838 0.2
Telecommuni- 104,500 GTE Corp. 3,514,166 3,304,813 0.0
cations
Textiles 1,196,700 Burlington Industries, Inc. 16,747,082 18,249,675 0.3
Tobacco 760,000 Philip Morris Companies, Inc. 36,587,110 41,420,000 0.6
Utilities-- 500,000 Allegheny Power System, Inc. 11,795,010 11,812,500 0.2
Electric 125,000 CMS Energy Corp. 2,290,025 2,781,250 0.1
2,071,000 Centerior Energy Corp. 31,583,112 23,039,875 0.3
350,000 Commonwealth Edison Company Inc. 9,219,908 8,881,250 0.1
150,000 Consolidated Edison Company Inc. 4,390,815 4,593,750 0.1
300,000 General Public Utilities Corp. 8,663,890 9,150,000 0.1
400,000 Long Island Lighting Co. 9,545,750 8,900,000 0.1
750,000 Niagara Mohawk Power Corp. 13,840,921 13,781,250 0.2
75,000 Texas Utilities Co. 2,763,875 2,643,750 0.0
-------------- -------------- ------
94,093,306 85,583,625 1.2
Utilities--Gas 77,100 Atmos Energy Corp. 1,445,257 2,216,625 0.0
126,900 Pacific Enterprises 2,486,131 2,902,838 0.1
40,800 South Jersey Industries, Inc. 711,756 841,500 0.0
20,000 Western Digital Corp. 259,880 315,000 0.0
-------------- -------------- ------
4,903,024 6,275,963 0.1
Total Common Stocks, Notes & Warrants
in the United States 1,274,367,949 1,306,745,166 18.6
Total Investments in Common Stocks,
Notes & Warrants 2,144,184,936 2,410,288,767 34.2
<PAGE>
<CAPTION>
Equity Closed-End Funds
<S> <S> <C> <S> <C> <C> <C>
Portugal Financial Services 39,500 Capital Portugal Fund 2,052,116 3,220,466 0.1
Total Equity Closed-End Funds in Portugal 2,052,116 3,220,466 0.1
United Financial Services 240,000 Austria Fund 2,017,632 2,340,000 0.0
States 166,666 European Warrant Fund 1,363,723 2,291,657 0.1
11,700 Global Yield Fund 89,797 81,900 0.0
300,100 Growth Fund of Spain, Inc. 2,630,827 3,038,513 0.0
150,000 Irish Investment Fund, Inc. 1,086,041 1,368,750 0.0
150,000 Italy Fund 1,198,520 1,687,500 0.0
25,600 Jakarta Growth Fund 158,080 259,200 0.0
40,000 Portugal Fund 360,368 535,000 0.0
Total Equity Closed-End Funds in the
United States 8,904,988 11,602,520 0.1
Total Investments in Equity Closed-End Funds 10,957,104 14,822,986 0.2
<PAGE>
<CAPTION>
Preferred Stocks
<S> <S> <C> <S> <C> <C> <C>
Germany Automobiles 80,150 Volkswagen of America, Inc. (Pfd.) 17,907,876 20,212,790 0.3
Multi-Industry 40,000 R.W.E. AG (Pfd.) 7,689,009 8,856,712 0.1
Total Preferred Stocks in Germany 25,596,885 29,069,502 0.4
Spain Banking 225,000 Santander Overseas Bank (8% Pfd., Series D)
(ADR)++ 5,463,250 5,203,125 0.1
Total Preferred Stocks in Spain 5,463,250 5,203,125 0.1
United Engineering 750,000 AMEC PLC (6.50% Convertible Pfd.) 968,501 1,147,612 0.0
Kingdom
Retail Stores 545,000 Signet Group (Pfd.) (ADR)++ 2,194,907 4,905,000 0.1
Waste Disposal 1,700,000 Attwoods PLC (8.50% Convertible Pfd.) 2,417,796 2,472,480 0.0
Total Preferred Stocks in the United Kingdom 5,581,204 8,525,092 0.1
United Airlines 100,000 +++++AMR Corp. (Convertible Pfd. $3.00) 5,065,500 4,350,000 0.0
States 85,000 +++++UAL Corp. (6.25% Convertible Pfd.) 7,885,625 7,182,500 0.1
150,000 USAir Group, Inc. (Convertible Pfd. $4.375,
Series B) 7,940,250 4,706,250 0.1
------------ ------------ ------
20,891,375 16,238,750 0.2
Automobiles & 20,000 Ford Motor Co. (8.40% Convertible Pfd.,
Equipment Series A) 1,000,000 1,930,000 0.0
Banking 125,000 California Federal Bank (10.625% Pfd.) 12,500,000 12,562,500 0.2
100,000 Fourth Financial Corp. (Convertible Pfd.,
Class A) 2,500,000 2,750,000 0.0
30,300 Marine Midland Banks, Inc. (Adj. Rate Pfd.,
Series A) 907,425 1,393,800 0.0
100,000 Onbancorp, Inc. (6.75% Convertible Pfd.,
Series B) 2,668,750 2,575,000 0.0
151,512 Riggs National Corp. (10.75% Convertible
Pfd., Series B) 3,819,050 3,863,556 0.1
------------ ------------ ------
22,395,225 23,144,856 0.3
<PAGE>
Energy & 150,000 Grant Tensor Corp. (9.75% Convertible Pfd.) 1,853,375 1,650,000 0.0
Petroleum 64,219 Santa Fe Energy Resources, Inc. (7% Pfd.) 954,075 1,196,079 0.0
50,000 Tenneco Inc. (Convertible Pfd., Series P) 1,475,000 2,056,250 0.1
------------ ------------ ------
4,282,450 4,902,329 0.1
Energy & Related 347,200 Chiles Offshore Corp. (6% Convertible Pfd.) 8,514,382 7,898,800 0.1
Financial 175,000 A/S Eksportfinans (8.70% Pfd.) 4,377,500 4,353,125 0.1
Services
Industrial 400,000 Prime Retail, Inc. (10.50% Pfd.) 10,000,000 9,600,000 0.1
1,100,000 US Surgical Devices (Convertible Pfd.) 24,805,000 23,375,000 0.4
------------ ------------ ------
34,805,000 32,975,000 0.5
Natural Resources 85,000 Alumax Inc. (Convertible Pfd.) 7,240,312 8,882,500 0.1
150,000 Cyprus Amax Minerals Co. (Convertible Pfd.,
Series A) 9,188,313 9,750,000 0.2
20,000 Echo Bay Finance Ltd. (Pfd., Series A) 500,000 755,000 0.0
245,000 Freeport-McMoRan Copper & Gold Inc.
(Convertible Pfd. Shares) 5,828,450 5,818,750 0.1
219,000 Freeport-McMoRan Inc. (Convertible Pfd.--Gold) 7,703,330 8,157,750 0.1
------------ ------------ ------
30,460,405 33,364,000 0.5
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Value Percent of
COUNTRY Industries Shares Held Preferred Stocks Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
United Paper & Forest 300,000 Boise Cascade Corp. (Convertible Pfd.,
States Products Series G) $ 6,337,500 $ 6,150,000 0.1%
(con-
cluded) Real Estate 500,000 Catellus Development Corp. (7.25% Conv.
Exchangeable Pfd., Series B) 25,000,000 20,000,000 0.3
666,000 National Health Investors, Inc. (8.50%
Convertible Pfd.) 16,650,000 17,149,500 0.2
------------ ------------ ------
41,650,000 37,149,500 0.5
Savings Bank 659,900 Glendale Federal Savings Bank (8.75%
Convertible Pfd., Series E) 16,070,337 14,517,800 0.2
Utilities-- 12,500 Gulf States Utilities Co. (8.52% Pfd.) 1,363,750 1,275,000 0.0
Electric
Total Preferred Stocks in the United States 192,147,924 183,899,160 2.6
Total Investments in Preferred Stocks 228,789,263 226,696,879 3.2
<PAGE>
<CAPTION>
Face Amount Fixed-Income Securities
<S> <S> <C> <S> <C> <C> <C>
Canada Canadian Government Bonds (1):
C$ 110,000,000 4.75% due 3/15/1996 78,342,254 76,307,024 1.1
50,000,000 6.50% due 6/01/2004 33,790,887 31,933,382 0.5
Domtar, Inc. (2):
6,763,000 10.35% due 9/01/2006 4,014,962 4,689,046 0.1
3,500,000 10% due 4/15/2011 1,938,573 2,375,996 0.0
Mark Resources Inc., Convertible Bonds (5):
7,250,000 7% due 4/15/2002 5,052,564 4,777,335 0.1
5,250,000 8% due 11/30/2004 3,962,054 3,687,545 0.1
+++Olympia & York Inc. (4):
57,194,000 Series 1, 10.70% due 11/04/1995 29,626,733 26,919,696 0.4
34,000,000 Series 2, 11% due 11/04/1998 18,060,242 16,002,896 0.2
65,000,000 Sheritt, Inc., 11% due 3/31/2004 (42) 47,056,898 45,419,985 0.6
14,500,000 Talisman Energy Convertible Bonds, 8.50% due
12/01/2000 (26) 11,040,982 10,394,641 0.1
Total Fixed-Income Securities in Canada 232,886,149 222,507,546 3.2
European ECU 15,200,000 Banco Commercial Portuguese, Convertible
Currency Units Bonds, 8.75% due 5/21/2002 (3) 21,270,256 22,127,400 0.3
2,000,000 Credit Local de France, 9.48%
due 10/16/2001 (4) (b) 1,462,354 1,382,380 0.0
37,500,000 Government of France, 8.25% due 4/25/2022 (1) 45,849,230 45,965,306 0.7
1,000,000 Investor International Placements,
Convertible Bonds, 7.25% due 6/21/2001 (4) 1,001,412 1,240,299 0.0
7,000,000 SKF-AB Lyons, Convertible Bonds, 7.356% due
7/26/2002 (5) (b) 4,647,712 4,463,329 0.1
Total Fixed-Income Securities in
European Currency Units 74,230,964 75,178,714 1.1
Finland Fim 75,000,000 Republic of Finland, 11% due 1/15/1999 (1) 14,754,836 15,636,121 0.2
Total Fixed-Income Securities in Finland 14,754,836 15,636,121 0.2
<PAGE>
France Frf 4,500 Compagnie Generale des Eaux, Convertible
Bonds, 6% due 1/01/1998 (7) 2,467,248 2,616,841 0.1
20,000 IBM Finance, Convertible Bonds, 5.75%
due 1/01/1998 (3) 1,436,923 1,451,599 0.0
Total Fixed-Income Securities in France 3,904,171 4,068,440 0.1
Germany DM Bundesrepublic Deutscheland:
7,000,000 6.25% due 2/20/1998 (1) 3,605,437 4,270,950 0.1
360,000,000 6.75% due 4/22/2003 (42) 217,907,042 218,280,543 3.1
100,000,000 6.50% due 7/15/2003 (1) 60,464,910 59,957,768 0.8
2,310,000 Commerzbank AG, Floating Rate Convertible
Bonds, 0% due 6/15/2001 (3) (b) 1,556,456 2,161,575 0.0
37,500,000 Freie Hansestadt Hamburg, 6.08% due
11/29/2018 (42) 21,421,335 21,617,647 0.3
164,000,000 Land Hessen, 6% due 11/29/2013 (42) 94,406,242 93,601,207 1.3
110,000,000 Mecklenberg Vorpommern, 6.15%
due 6/16/2023 (42) 61,012,437 62,051,282 0.9
22,000,000 Nordrhein-Westfalen, 6.125%
due 12/21/2018 (42) 12,594,837 12,708,899 0.2
62,000,000 Rheinland-Pfalz, 6.08% due 11/29/2018 (42) 35,633,056 35,797,285 0.5
50,000,000 Sachsen-Anhalt, 6% due 1/10/2014 (42) 28,632,994 28,506,787 0.4
205,000,000 Treuhandanstalt, 6.875% due 6/11/2003 (42) 121,620,921 124,954,148 1.8
Total Fixed-Income Securities in Germany 658,855,667 663,908,091 9.4
Ireland IrP 8,046,277 CRH Capital Corp., 6.50% due 4/30/2005 (4) 15,808,558 16,152,961 0.2
Total Fixed-Income Securities in Ireland 15,808,558 16,152,961 0.2
Italy Softe SA-LUX (8):
Lit 10,500,000,000 Convertible Bonds, 4.25% due 7/30/1998 7,317,044 8,447,517 0.1
15,460,000,000 (Ex-Warrants), 8.75% due 3/24/1997 (a) 9,991,958 9,668,573 0.1
Total Fixed-Income Securities in Italy 17,309,002 18,116,090 0.2
<PAGE>
Japan Yen 2,850,000,000 Glaxo Holdings PLC, Convertible Bonds,
4.30% due 9/28/1998 (9) 25,735,735 28,284,367 0.4
650,000,000 Hankyu Corp., Convertible Bonds, 1.25%
due 9/30/1998 (20) 5,829,555 6,115,505 0.1
1,090,000,000 Hokkaido Coca-Cola Bottling Co., Ltd.,
Convertible Bonds, 0.90% due 6/30/1995 (41) 11,126,237 11,353,051 0.1
988,000,000 Matsushita Electric Works, Convertible
Bonds, 2.70% due 5/31/2002 (23) 9,691,544 11,785,713 0.2
535,000,000 Toyota Motor Corp., Convertible Bonds,
1.20% due 1/28/1998 (10) 3,311,798 5,730,078 0.1
Total Fixed-Income Securities in Japan 55,694,869 63,268,714 0.9
New Zealand NZ$ 3,000,000 Brierly Investments Ltd., Convertible Notes,
9% due 6/30/1998 (4) 1,832,476 2,125,809 0.1
2,000,000 Natural Gas Corp. Holdings, Convertible
Bonds, 10.50% due 10/14/1997 (7) 1,186,318 1,705,256 0.0
Total Fixed-Income Securities in New Zealand 3,018,794 3,831,065 0.1
Spain Pta 605,000,000 Banco de Santander, Convertible Bonds,
9% due 6/24/1994 (3) 4,603,421 4,791,636 0.1
Government of Spain (1):
2,000,000,000 10.25% due 11/30/1998 15,786,603 15,558,845 0.2
7,000,000,000 11.30% due 1/15/2002 64,934,781 57,435,233 0.8
4,600,000,000 10.30% due 6/15/2002 35,232,794 35,843,227 0.5
Total Fixed-Income Securities in Spain 120,557,599 113,628,941 1.6
Switzerland Chf 1,500,000 American Medical International, Inc.,
5% due 3/18/1996 (11) 493,386 1,039,372 0.0
4,010,000 Chrysler Financial Corp.,
5.75% due 6/18/1996 (4) 1,914,011 2,899,705 0.1
1,401,000 Ciba-Geigy AG, Convertible Bonds,
2% due 8/09/1998 (1) 1,178,587 1,339,169 0.0
3,020,000 News International, PLC,
5.375% due 4/30/1996 (13) 1,115,703 2,140,893 0.0
Total Fixed-Income Securities in Switzerland 4,701,687 7,419,139 0.1
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Value Percent of
COUNTRY Face Amount Fixed-Income Securities Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
United Pound 3,750,000 Blue Circle, Convertible Bonds,
Kingdom Sterling 10.50% due 6/21/2005 (15) $ 7,147,695 $ 6,703,875 0.1%
20,950,000 Elf Enterprises Finance PLC,
Convertible Bonds, 8.75% due 6/27/2006 (4) 34,774,448 31,897,946 0.5
4,875,000 English China Clays PLC,
Convertible Bonds, 6.50% due 9/30/2003 (14) 8,364,034 7,570,266 0.1
5,250,000 Hanson PLC, Convertible Bonds,
9.50% due 1/31/2006 (5) 9,953,589 9,202,489 0.1
500,000 Land Securities PLC, Convertible Bonds,
6.75% due 12/31/2002 (25) 679,603 780,225 0.0
1,000,000 RMC Capital Ltd., Convertible Bonds,
8.75% due 5/31/2006 (14) 1,755,430 2,014,950 0.0
3,250,000 Redland Capital PLC, Convertible Bonds,
7.25% due 1/28/2002 (15) 5,382,804 5,022,225 0.1
8,350,000 Sainsbury (J) PLC, Convertible Bonds,
8.50% due 11/19/2005 (4) 16,072,715 15,623,059 0.2
5,750,000 Tate & Lyle International,
5.75% due 3/21/2001 (19) 7,504,988 7,709,456 0.1
35,000,000 United Kingdom Treasury Gilt,
8% due 6/10/2003 (42) 52,684,254 53,223,844 0.8
Total Fixed-Income Securities
in the United Kingdom 144,319,560 139,748,335 2.0
<PAGE>
United US$ 3,490,000 AEGON N.V., Convertible Bonds, 7%
States due 9/15/2001 (16) 4,475,299 4,763,850 0.1
22,500,000 Alexander Haagen Properties Inc., Exchangeable
Debentures, 7.25% due 12/27/2003 (32) 22,500,000 21,600,000 0.3
43,500,000 Allison Engine, Inc., 10% due 12/01/2003 (5) 43,815,625 41,760,000 0.6
28,000,000 Allnet Communication Services, 9%
due 5/15/2003 (8) 27,743,272 26,740,000 0.4
3,087,500 American Medical International, Inc.,
6.50% due 5/30/1997 (11) 2,578,063 3,102,937 0.0
27,450,000 Baldwin Co., 10.375% due 8/01/2003 (14) 27,352,437 24,705,000 0.4
21,000,000 Banco de Galicia, 9% due 11/01/2003 (3) 20,913,960 18,060,000 0.3
108,000,000 Banco Nacional (BNCE), 7.25% due 2/02/2004 (3) 94,915,575 87,480,000 1.2
Banco Rio de la Plata (14):
60,000,000 (Class 3), 8.50% due 7/15/1998 60,508,125 55,650,000 0.8
32,000,000 8.75% due 12/15/2003 29,920,000 27,040,000 0.4
32,100,000 Beazer Homes USA, Inc., 9% due 3/01/2004 (30) 31,349,000 28,890,000 0.4
11,000,000 Best Buy Company Inc.,
8.625% due 10/01/2000 (5) 11,015,000 10,615,000 0.2
7,370,000 Boise Cascade Corp., 9.45% due 11/01/2009 (5) 8,024,087 7,664,800 0.1
25,000,000 Brazil Exit Bonds, 6% due 9/15/2013 (42) 14,425,854 11,375,000 0.2
34,000,000 Bridge Oil (USA), Inc.,
9.50% due 8/15/2000 (12) 34,032,500 31,960,000 0.5
675,000 CRH Capital Corp., Convertible Bonds,
5.75% due 4/30/2005 (4) 810,000 804,937 0.0
CTC Mansfield Funding Corp. (42):
15,000,000 10.25% due 3/30/2003 15,600,000 15,300,000 0.2
12,000,000 11.125% due 9/30/2016 12,820,000 12,360,000 0.2
40,000,000 California Energy Co., Inc.,
6.80% due 1/15/2004 (7) (b) 30,232,187 28,400,000 0.4
8,000,000 Calpine Corp., Inc., 9.25% due 2/01/2004 (7) 7,277,500 7,160,000 0.1
10,000,000 Centerpoint Properties Corp., Convertible Bonds,
8.22% due 1/15/2004 (4) 10,000,000 10,900,000 0.2
7,200,000 Cetus (Chiron) Corp., Convertible Bonds, 5.25%
due 5/21/2002 (17) 5,220,250 5,958,000 0.1
Ciba-Geigy Corp. (9):
7,945,000 5.50% due 10/28/1998 (Warrants) (a) 9,418,275 10,010,700 0.1
24,945,000 +++++Convertible Bonds, 6.25% due 3/15/2016 25,632,050 24,009,562 0.3
Cleveland Electric Illuminating Company Inc.,
First Mortgage (7):
5,000,000 9.30% due 7/26/1999 5,437,500 5,081,250 0.1
12,500,000 9.25% due 7/29/1999 13,562,500 12,687,500 0.2
3,000,000 9.05% due 8/15/2001 3,093,750 2,940,000 0.0
7,500,000 7.625% due 8/01/2002 7,462,500 6,712,500 0.1
5,000,000 7.375% due 6/01/2003 4,700,000 4,375,000 0.1
30,000,000 +++++Collateralized Investment Co. Notes VI,
4.50% due 7/01/1994 (25) 30,000,000 30,000,000 0.4
<PAGE>
+++Columbia Gas System, Inc. (26):
2,000,000 9% due 8/01/1993 2,326,250 2,430,000 0.0
6,500,000 7.50% due 6/01/1997 6,808,750 6,873,750 0.1
4,700,000 10.25% due 8/01/2011 5,340,375 5,922,000 0.1
10,000,000 10.50% due 6/01/2012 11,225,000 12,450,000 0.2
5,000,000 10.15% due 11/01/2013 5,562,500 6,200,000 0.1
4,000,000 9.50% due 10/10/2019 4,310,000 4,900,000 0.1
4,000,000 Congoleum Corp., 9% due 2/01/2001 (5) 4,000,000 3,720,000 0.1
12,500,000 Consoltex Group, Inc., 11% due 10/01/2003 (5) 12,530,000 12,312,500 0.2
27,000,000 Crossland Federal Savings Bank,
9% due 9/01/2003 (3) 27,678,000 25,920,000 0.4
20,000,000 Crown Packaging Ltd., 10.75% due 11/01/2000 (5) 20,000,000 19,600,000 0.3
5,000,000 DalTile International, Inc.,
10.597% due 7/15/1998 (15) (b) 3,029,864 3,000,000 0.0
26,500,000 Dell Computer Corp., 11% due 8/15/2000 (37) 26,577,500 26,897,500 0.4
Delta Airlines, Inc. (20):
8,000,000 Series A2, 9.20% due 9/23/2014 7,370,000 7,360,000 0.1
8,000,000 10.06% due 1/02/2016 8,005,000 8,000,000 0.1
20,000,000 Dominion Textile, 8.875% due 11/01/2003 (38) 19,901,600 18,450,000 0.3
+++++EUA Power Corp. (7):
1,000,000 Series B, 17.50% due 5/15/1993 475,000 125,000 0.0
3,157,600 Series C, 17.50% due 11/15/1992 1,915,790 394,700 0.0
30,000,000 Eagle Food Centers, 8.625% due 4/15/2000 (33) 29,972,337 28,275,000 0.4
19,000,000 Easco Corp., 10% due 3/15/2001 (4) 19,005,000 18,240,000 0.3
+++El Paso Electric Co. (7):
3,050,000 9.20% due 7/21/1997 2,501,000 2,478,125 0.0
23,000,000 10.375% due 1/02/2011 19,600,000 18,687,500 0.3
59,950,000 10.75% due 4/01/2013 51,355,500 48,709,375 0.7
8,500,000 Eletson Holdings Inc., 9.25% due 11/15/2003 (20) 8,537,500 7,990,000 0.1
19,000,000 Envirotest Systems Corp., 9.125%
due 3/15/2001 (5) 18,412,210 17,860,000 0.3
30,000,000 First Union Real Estate, 8.875%
due 10/01/2003 (32) 29,756,100 28,200,000 0.4
23,500,000 +++++Four Seasons Hotel, Inc., 9.125%
due 7/01/2000 (6) 23,401,875 21,502,500 0.3
26,000,000 Freeport-McMoRan Resources, 8.75%
due 2/15/2004 (24) 25,887,500 23,985,000 0.3
50,000,000 General Electric Capital Corp., 3.55%
due 1/19/1995 (4) 49,969,000 49,500,000 0.7
HIH Capital Ltd., Convertible Bonds (14):
470,000 +++++(Bearer), 7.50% due 9/25/2006 394,800 352,500 0.0
2,000,000 7.50% due 9/25/2006 1,665,000 1,500,000 0.0
10,000,000 Harris Chemical of North America, 9.193%
due 7/15/2001 (34) (b) 8,170,022 8,125,000 0.1
3,500,000 Hartmarx Corp., 10.875% due 1/15/2002 (5) 3,476,270 3,377,500 0.0
2,000,000 Hillhaven Corp., 10.125% due 9/01/2001 (5) 2,002,500 1,985,000 0.0
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Value Percent of
COUNTRY Face Amount Fixed-Income Securities Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
United US$ 7,750,000 Horace Mann Educators, Inc., Convertible
States Bonds, 4% due 12/01/1999 (31) $ 7,682,500 $ 7,517,500 0.1%
(continued) 3,550,000 Hospital Corp. of America, 6.434%
due 6/01/1998 (11) (b) 2,421,324 2,653,625 0.0
77,000,000 International Semi-Tech Microelectronics Inc.,
10.284% due 8/15/2003 (14) (b) 37,222,458 37,152,500 0.5
26,500,000 K. Hovnanian Enterprises, 9.75%
due 6/01/2005 (30) 26,241,800 24,777,500 0.4
7,500,000 LTC Properties, Convertible Bonds, 9.75%
due 7/01/2004 (25) 7,500,000 9,900,000 0.1
7,000,000 Lend Lease Finance Corp. Ltd., Convertible
Bonds, 4.75% due 6/01/2003 (4) 7,950,000 7,752,500 0.1
10,000,000 Lomas Mortgage USA, Inc., 9.75%
due 10/01/1997 (25) 10,000,000 10,025,000 0.1
25,000,000 MDC Holdings Inc., 11.125% due 12/15/2003 (5) 24,709,000 24,250,000 0.3
15,000,000 MFS Communications Corp., Inc., 10.44%
due 1/15/2004 (5) (b) 8,912,639 8,625,000 0.1
8,500,000 Mediq/PRN Senior Notes, 11.125%
due 7/01/1999 (22) 8,845,000 8,521,250 0.1
Meditrust, Convertible Bonds (25):
6,000,000 7% due 3/01/1998 6,035,000 6,495,000 0.1
28,500,000 7.50% due 3/01/2001 28,500,000 28,215,000 0.4
3,000,000 9% due 1/01/2002 3,000,000 3,690,000 0.1
10,000,000 Methanex Corp., 8.875% due 11/15/2001 (5) 10,027,400 9,650,000 0.1
5,000,000 Mid-Atlantic Realty Trust, Convertible Bonds,
7.625% due 9/15/2003 (4) 4,875,000 4,850,000 0.1
<PAGE>
12,500,000 Nacolah Holding Corp., 9.50% due 12/01/2003 (4) 12,500,000 11,812,500 0.2
5,000,000 National Health Investors, Inc., 7.375%
due 4/01/1998 (5) 5,125,000 5,037,500 0.1
23,000,000 Nationwide Health Properties Inc., 6.25%
due 1/01/1999 (5) 23,000,000 22,655,000 0.3
Nextel Communications Inc. (8) (b):
3,000,000 9.668% due 9/01/2003 1,884,912 1,882,500 0.0
23,500,000 10.70% due 8/15/2004 14,158,584 13,571,250 0.2
8,000,000 Noble Drilling Corp., 9.25% due 10/01/2003 (12) 8,000,000 7,560,000 0.1
1,000,000 Novacare, Inc., Convertible Bonds,
5.50% due 1/15/2000 (11) 857,500 920,000 0.0
22,000,000 OMI Corp., 10.25% due 11/01/2003 (20) 21,910,000 20,570,000 0.3
14,000,000 OSI Specialities Corp., 9.25% due 10/01/2003 (5) 14,000,000 13,300,000 0.2
Owens--Illinois, Inc. (5):
3,000,000 10.50% due 6/15/2002 3,051,000 3,060,000 0.0
19,500,000 9.75% due 8/15/2004 18,908,250 18,915,000 0.3
PDV America, Inc. (14):
35,000,000 7.25% due 8/01/1998 34,856,150 33,075,000 0.5
10,000,000 7.75% due 8/01/2000 10,062,500 9,387,500 0.1
2,000,000 P.T. Indorayon, Convertible Bonds,
5.50% due 10/01/2002 (2) 2,363,125 2,440,000 0.0
3,900,000 P.T. Pabrik Kertas Tjiwa Kimia, Convertible
Bonds, 7.25% due 4/12/2001 (2) 2,923,000 3,685,500 0.1
7,500,000 Paging Network, Inc., 8.875% due 2/01/2006 (5) 6,825,000 6,712,500 0.1
27,250,000 Paracelsus Healthcare Corp., 9.875%
due 10/15/2003 (18) 27,221,875 25,751,250 0.4
45,000,000 Penn Traffic Co., 8.625% due 12/15/2003 (5) 44,876,400 41,175,000 0.6
6,500,000 +++++Petrolera Argentina San Jorge S.A., 11%
due 2/09/1998 (26) 6,278,750 6,605,000 0.1
9,545,000 Phoenix Home Life-Mutual Insurance Co., 8%
due 11/25/2023 (31) 9,545,000 8,781,400 0.1
30,500,000 Plastic Specialties & Technology, Inc., 11.25%
due 12/01/2003 (5) 30,540,000 28,975,000 0.4
25,062,500 +++++++Presidio Oil Co., 11.50%
due 9/15/2000 (26) 25,683,750 25,563,750 0.4
12,000,000 Price Co., Convertible Bonds, 5.50%
due 2/28/2012 (14) 11,213,250 10,170,000 0.1
<PAGE>
23,000,000 Public Service of New Mexico, EIP Funding,
10.25% due 10/01/2012 (7) 23,000,000 22,770,000 0.3
13,200,000 Public Service of New Mexico, First PV Funding,
10.30% due 1/15/2014 (7) 13,213,000 12,870,000 0.2
18,000,000 Public Service of New Mexico Lease Obligation,
First PV Funding, Convertible Bonds, 10.15%
due 1/15/1996 (7) 17,128,125 17,370,000 0.2
14,500,000 Pueblo Xtra, 9.50% due 8/01/2003 (22) 14,111,375 13,231,250 0.2
24,500,560 RTC Commercial Mortgage, Class E, 8.25%
due 12/25/2020 (3) 24,125,395 22,418,013 0.3
18,500,000 Ralphs Grocery Company, 10.25% due
7/15/2002 (5) 19,166,250 18,453,750 0.3
4,000,000 Regency Health Services, Inc., Convertible
Bonds, 6.50% due 7/15/2003 (18) 4,000,000 5,440,000 0.1
Republic of Argentina (1):
12,500,000 Global Bond, 8.375% due 12/20/2003 11,456,250 10,625,000 0.2
184,500,000 Par Bond, 4.25% due 3/31/2023 101,644,750 97,323,750 1.4
113,000,000 4.312% due 3/31/2023 86,525,750 79,947,500 1.1
38,610,000 Republic of Brazil, 4.312% due 1/01/2001 30,178,912 27,895,725 0.4
7,480,875 +++++Resolution Trust Co., 9% due 3/15/2003
(Class 3) (21) (d) 7,083,453 7,480,875 0.1
3,000,000 Roosevelt Financial Group, Inc., 9.50%
due 8/01/2002 (27) 3,000,000 3,105,000 0.0
10,000,000 SKW Real Estate, 9.05% due 4/15/2004 9,996,030 9,950,000 0.1
Safeway, Inc. (5):
5,000,000 10% due 11/01/2002 5,247,500 5,237,500 0.1
5,000,000 9.30% due 2/01/2007 5,139,375 5,100,000 0.1
23,500,000 Salant Corp., Secured, 10.50%
due 12/31/1998 (38) 23,030,000 22,912,500 0.3
10,075,000 Sequa Corp., 9.625% due 10/15/1999 (14) 9,874,312 9,923,875 0.1
28,000,000 Sherritt Gordon Ltd., 9.75% due 4/01/2003 (29) 28,124,375 27,090,000 0.4
5,000,000 Siemens Corp., 8% due 6/24/2002
(With Warrants) (a) (9) 6,536,250 6,850,000 0.1
32,050,000 Sifto Canada, Inc., 8.50% due 7/15/2000 (5) 32,100,250 30,447,500 0.4
5,500,000 Sizeler Property Investors, Inc.,
Convertible Bonds, 8% due 7/15/2003 (24) 5,505,000 5,527,500 0.1
3,000,000 Ssangyong Oil Corp., 3.75% due 12/31/2008 (12) 3,195,750 3,495,000 0.0
9,000,000 Stone Consolidated Corp., 10.25%
due 12/15/2000 (40) 9,000,000 8,640,000 0.1
19,500,000 Stone Container Corp., 9.875%
due 2/01/2001 (2) 19,227,500 18,135,000 0.3
5,500,000 Storer Communications Inc., 10%
due 5/15/2003 (8) 5,538,500 5,445,000 0.1
38,000,000 Tarkett International, 9.50%
due 3/01/2002 (15) 36,711,250 35,150,000 0.5
18,250,000 Texfi Industries, Inc., 8.75%
due 8/01/1999 (39) 17,930,300 14,235,000 0.2
Toledo Edison Co. (42):
2,000,000 9.30% due 4/01/1998 2,130,000 2,045,000 0.0
15,425,000 7.25% due 8/01/1999 15,425,000 14,422,375 0.2
3,000,000 9.50% due 4/01/2001 3,221,250 3,030,000 0.0
2,000,000 7.91% due 4/01/2003 1,992,500 1,820,000 0.0
17,000,000 Transtexas Gas Corp., 10.50%
due 9/01/2000 (12) 17,073,125 17,000,000 0.2
2,220,000 Tung Ho Steel Enterprise, Convertible Bonds,
4% due 7/26/2001 (24) 2,243,700 2,575,200 0.0
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
Value Percent of
COUNTRY Face Amount Fixed-Income Securities Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
United United Mexican States, Discount Notes (1):
States US$ 10,000,000 8.50% due 9/15/2002 $ 9,420,000 $ 9,175,000 0.1%
(concluded) 65,000,000 Series A, 4.187% due 12/31/2019 58,148,000 54,437,500 0.8
35,000,000 Series B, 4.312% due 12/31/2019 30,062,500 29,312,500 0.4
United Mexican States, Rights (1):
99,996,000 (Series A) 0 0 0.0
53,845,000 (Series B) 0 0 0.0
11,000,000 USAir Inc., 10% due 7/01/2003 (28) 8,529,375 7,535,000 0.1
USAir Pass Thru (28):
7,500,000 9.625% due 9/01/2003 7,495,625 6,337,500 0.1
4,644,818 9.33% due 1/01/2006 4,529,163 4,226,785 0.1
9,000,000 10.375% due 3/01/2013 8,922,500 7,650,000 0.1
5,475,000 US Trails Senior Secured, 12%
due 7/15/1998 (4) 4,433,125 4,352,625 0.1
6,000,000 USX-Marathon Oil Co., 7% due 6/15/2017 (12) 5,650,000 5,310,000 0.1
5,875,000 Veba International Finance (Warrants),
6% due 4/06/2000 (4) (a) 7,083,300 9,282,500 0.1
21,834,700 Vista Properties, Inc., 13.75%
due 10/31/2001 (25) (c) 11,267,896 8,733,880 0.1
19,000,000 The Vons Companies, Inc., 9.625%
due 4/01/2002 (5) 20,335,000 19,190,000 0.3
Webb (Del E.) Corp. (30):
15,000,000 9.75% due 3/01/2003 15,000,000 14,137,500 0.2
4,500,000 9% due 2/15/2006 4,010,000 3,982,500 0.1
14,000,000 Wilrig AS, 11.25% due 3/15/2004 (5) 14,000,000 13,370,000 0.2
-------------- -------------- ------
2,428,465,430 2,324,105,114 33.0
US Government & US Treasury Notes:
Agency Obligations US 50,000,000 4% due 1/31/1996 49,531,250 48,671,900 0.7
85,000,000 4.625% due 2/29/1996 84,823,681 83,459,375 1.2
150,000,000 4.75% due 2/15/1997 149,103,248 144,890,700 2.0
150,000,000 7.50% due 11/15/2001 157,250,000 154,945,350 2.2
-------------- -------------- ------
440,708,179 431,967,325 6.1
Total Fixed-Income Securities in the
United States 2,869,173,609 2,756,072,439 39.1
Total Investments in Fixed-Income
Securities 4,215,215,465 4,099,536,596 58.2
<CAPTION>
Short-Term Securities
<S> <S> <C> <S> <C> <C> <C>
United States
Commercial Paper* US$ 106,618,000 General Electric Capital Corp., 3.53%
due 5/02/1994 106,597,091 106,597,091 1.5
33,383,000 Matterhorn Capital Corp., 3.78%
due 5/26/1994 33,291,864 33,291,864 0.5
Total Investments in Commercial Paper 139,888,955 139,888,955 2.0
US Government & 4,500,000 Federal National Mortgage Association,
Agency Obligations* 3.70% due 5/25/1994 4,488,438 4,488,438 0.1
Total Investments in US Government &
Agency Obligations 4,488,438 4,488,438 0.1
Total Investments in Short-Term Securities 144,377,393 144,377,393 2.1
Total Investments $6,743,524,161 6,895,722,621 97.9
==============
Unrealized Depreciation on Forward Foreign Exchange Contracts** (20,446,866) (0.3)
Variation Margin on Stock Index Futures Contracts*** 13,000 0.0
Other Assets Less Liabilities 166,485,672 2.4
-------------- ------
Net Assets $7,041,774,427 100.0%
============== ======
<FN>
(a)Warrants entitle the Fund to purchase a predetermined number of shares
of stock/face amount of bonds at a predetermined price until the expira-
tion date.
(b)The interest rate shown represents the yield-to-maturity on this zero
coupon issue.
(c)Represents a pay-in-kind security.
(d)Subject to principal paydowns as a result of prepayments or refinancings
of the underlying mortgage instruments. As a result, the average life may be
less than the original maturity.
(e)Name changed from Crossland Federal Savings Bank.
Corresponding industry groups for fixed-income securities:
<PAGE>
(1)Government
(2)Paper & Forest Products
(3)Banking
(4)Financial
(5)Industrial
(6)Leisure
(7)Utilities--Electric
(8)Telecommunications
(9)Pharmaceutical
(10)Automobiles & Equipment
(11)Hospital Management
(12)Oil & Related
(13)Newspaper/Publishing
(14)Multi-Industry
(15)Building Materials
(16)Electrical Equipment
(17)Biotechnology
(18)Healthcare
(19)Food
(20)Transportation
(21)Asset-Backed Security
(22)Supermarkets
(23)Electronics
(24)Metals
(25)Real Estate Investment Trust
(26)Energy Related
(27)Savings Bank
(28)Airlines
(29)Resources
(30)Building & Construction
(31)Insurance
(32)Real Estate
(33)Advertising
(34)Chemicals
(35)Commercial Services
(36)Broadcasting
(37)Computers
(38)Textiles
(39)Food & Tobacco
(40)Packaging & Containers
(41)Beverages
(42)Government Regional
(43)Conglomerates
++American Depositary Receipt (ADR).
++++Global Depositary Shares (GDS).
++++++Investment in Companies 5% or more of whose outstanding securities are
held by the Fund (such companies are defined as "Affiliated Companies" in
section 2(a)(3) of the Investment Company Act of 1940) are as follows:
<CAPTION>
<PAGE>
Net Share Net Dividend
Industry Affiliate Activity Cost Income
<S> <S> <C> <C> <C>
Retail Stores Buttrey Food & Drug
Stores Co. -- -- --
Retail Stores Filene's Basement Corp. 1,110,000 $10,092,619 --
Savings Banks Glendale Federal Savings
Bank 43,000 117,625 --
*Commercial Paper and US Government & Agency Obligations are traded
on a discount basis; the interest rates shown are the discount rates paid at
the time of purchase by the Fund.
**Forward foreign exchange contracts as of April 30, 1994 were as follows:
Expiration Unrealized
Foreign Currency Sold Date Depreciation
Chf 52,000,000 May 1994 $ (338,796)
DM 542,000,000 May 1994 (10,125,238)
DM 560,000,000 June 1994 (2,607,985)
ECU 35,000,000 May 1994 (655,935)
Frf 135,000,000 May 1994 (442,905)
Pound Sterling 46,000,000 May 1994 (1,642,536)
Nlg 98,000,000 May 1994 (1,076,297)
Pta1 3,950,000,000 May 1994 (2,925,593)
Yen 900,000,000 May 1994 (131,655)
Yen 33,000,000,000 June 1994 (499,926)
Total (US$ Commitment--$1,304,300,527) $(20,446,866)
------------
Total Unrealized Depreciation--Net On
Forward Foreign Exchange Contracts $(20,446,866)
============
***Financial futures contracts purchased as of April 30, 1994 were as follows:
Number of Expiration Value
Contracts Issue Date (Notes 1a & 1e)
20 Standard & Poor's 500 Index June 1994 $ 4,503,500
Total Financial Futures Contracts Purchased
(Total Contract Price--$4,673,400) $ 4,503,500
============
The market value of pledged securities is $1,698,125.
<PAGE>
+++Non-income producing security.
+++++Restricted security pursuant to Rule 144A.
+++++++Restricted securities as to resale. The value of the Fund's investment in
restricted securities was approximately representing 0.4% of net assets.
Acquisition Value
Issue Date Cost (Note 1a)
Presidio Oil Co., 11.50%
due 9/15/2000 8/03/1993 $ 25,683,750 $ 25,563,750
------------ ------------
$ 25,683,750 $ 25,563,750
============ ============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
<CAPTION>
As of April 30, 1994
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$6,743,524,161) (Note 1a) $6,895,722,621
Variation margin on stock index futures contracts (Note 1e & 5) 13,000
Foreign cash (Note 1c) 881,576
Cash --
Receivables:
Securities sold $ 134,017,703
Interest 87,729,166
Capital shares sold 62,144,514
Dividends 7,054,352
Forward exchange contract (Note 1c) 197,979 291,143,714
-------------
Deferred organization expenses (Note 1h) 4,680
Prepaid registration fees and other assets (Note 1h) 128,864
--------------
Total assets 7,187,894,455
--------------
Liabilities: Unrealized depreciation on forward foreign exchange contracts (Note 1c) 20,446,866
Payables:
Securities purchased 85,339,277
Capital shares redeemed 16,350,994
Forward exchange contract (Note 1c) 8,338,528
Distributor (Note 2) 4,539,720
Investment adviser (Note 2) 3,865,397 118,433,916
-------------
Accrued expenses and other liabilities 7,239,246
--------------
Total liabilities 146,120,028
--------------
Net Assets Net assets $7,041,774,427
==============
Net Assets Class A Shares of Common Stock, $0.10 par value, 200,000,000 shares authorized $ 9,158,612
Consist of: Class B Shares of Common Stock, $0.10 par value, 900,000,000 shares authorized 44,245,178
Paid-in capital in excess of par 6,681,004,139
Undistributed investment income--net 31,073,492
Undistributed realized capital gains and foreign currency transaction gains--net 143,780,140
Unrealized appreciation on investments and foreign currency transactions--net 132,512,866
--------------
Net assets $7,041,774,427
==============
Net Asset Class A--Based on net assets of $1,219,668,720 and 91,586,124 shares outstanding $ 13.32
Value: ==============
Class B--Based on net assets of $5,822,105,707 and 442,451,775 shares outstanding $ 13.16
==============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Six Months Ended April 30, 1994
<S> <S> <C> <C>
Investment Interest and discount earned $ 127,565,718
Income Dividends (net of $1,122,665 foreign withholding tax) 26,368,670
(Notes 1f Other 218,434
& 1g): --------------
Total income 154,152,822
--------------
Expenses: Distribution fees--Class B (Note 2) $ 25,776,706
Investment advisory fees (Note 2) 22,129,737
Transfer agent fees--Class B (Note 2) 2,204,374
Custodian fees 1,017,340
Registration fees (Note 1h) 623,145
Transfer agent fees--Class A (Note 2) 380,929
Printing and shareholder reports 274,102
Accounting services (Note 2) 115,346
Professional fees 44,126
Directors' fees and expenses 13,217
Amortization of organization expenses (Note 1h) 1,981
Other 24,539
-------------
Total expenses 52,605,542
--------------
Investment income-net 101,547,280
--------------
Realized & Realized gain (loss) from:
Unrealized Investments--net $ 163,262,599
Gain (Loss) Foreign currency transactions--net (17,427,950) 145,834,649
on Invest- --------------
ments & Change in unrealized appreciation/depreciation:
Foreign Investments--net (115,885,543)
Currency Foreign currency transactions--net (32,587,085) (148,472,628)
Transactions ------------- --------------
- - - --Net Net realized and unrealized loss on investments and foreign currency transactions (2,637,979)
(Notes 1c, --------------
1g & 3): Net Increase in Net Assets Resulting from Operations $ 98,909,301
==============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
For the Six For the
Months Ended Year Ended
April 30, October 31,
1994 1993
Increase (Decrease) in Net Assets:
<S> <S> <C> <C>
Operations: Investment income--net $ 101,547,280 $ 78,569,836
Realized gain on investments and foreign currency transactions--net 145,834,649 96,098,223
Change in unrealized appreciation/depreciation on investments and foreign
currency transactions--net (148,472,628) 303,533,099
-------------- --------------
Net increase in net assets resulting from operations 98,909,301 478,201,158
-------------- --------------
Dividends & Investment income--net:
Distributions Class A (20,634,331) (21,579,231)
to Share- Class B (81,055,168) (78,516,167)
holders Realized gain on investments--net:
(Note 1i): Class A (16,636,230) (2,640,570)
Class B (80,810,426) (10,640,849)
-------------- --------------
Net decrease in net assets resulting from dividends and distributions to
shareholders (199,136,155) (113,376,817)
-------------- --------------
Capital Share Net increase in net assets derived from capital share transactions 1,924,650,472 3,647,738,774
Transactions -------------- --------------
(Note 4):
Net Assets: Total increase in net assets 1,824,423,618 4,012,563,115
Beginning of period 5,217,350,809 1,204,787,694
-------------- --------------
End of period* $7,041,774,427 $5,217,350,809
============== ==============
<FN>
*Undistributed investment income--net $ 31,073,492 $ 31,215,711
============== ==============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
Class A
The following per share data and ratios have been For the
derived from information provided in the financial Six Months
statements. Ended April 30, For the Year Ended October 31,
Increase (Decrease) in Net Asset Value: 1994 1993 1992 1991 1990
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 13.52 $ 11.92 $ 12.16 $ 10.37 $ 10.79
Operating ---------- ---------- ---------- ---------- ----------
Performance: Investment income--net .28 .39 .36 .55 .60
Realized and unrealized gain (loss) on
investments and foreign currency transactions--net .04 2.14 .89 2.24 (.16)
---------- ---------- ---------- ---------- ----------
Total from investment operations .32 2.53 1.25 2.79 .44
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.29) (.81) (.89) (.45) (.66)
Realized gain on investments--net (.23) (.12) (.60) (.55) (.20)
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (.52) (.93) (1.49) (1.00) (.86)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 13.32 $ 13.52 $ 11.92 $ 12.16 $ 10.37
========== ========== ========== ========== ==========
Total Based on net asset value per share 2.41%++ 22.61% 11.78% 28.89% 3.91%
Investment ========== ========== ========== ========== ==========
Return:**
Ratios to Expenses .85%* .93% 1.07% 1.29% 1.29%
Average ========== ========== ========== ========== ==========
Net Assets: Investment income--net 4.10%* 3.90% 10.82% 8.96% 4.37%
========== ========== ========== ========== ==========
Supplemental Net assets, end of period (in thousands) $1,219,669 $ 917,806 $ 245,839 $ 72,702 $ 49,691
Data: ========== ========== ========== ========== ==========
Portfolio turnover 35.64% 50.35% 59.56% 81.21% 129.51%
========== ========== ========== ========== ==========
<PAGE>
<CAPTION>>
Class B
The following per share data and ratios have been For the
derived from information provided in the financial Six Months
statements. Ended April 30, For the Year Ended October 31,
Increase (Decrease) in Net Asset Value: 1994 1993 1992 1991 1990
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 13.38 $ 11.83 $ 12.10 $ 10.33 $ 10.73
Operating ---------- ---------- ---------- ---------- ----------
Performance: Investment income--net .21 .28 .22 .44 .49
Realized and unrealized gain (loss) on investments
and foreign currency transactions--net .03 2.11 .91 2.22 (.16)
---------- ---------- ---------- ---------- ----------
Total from investment operations .24 2.39 1.13 2.66 .33
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.23) (.72) (.80) (.34) (.53)
Realized gain on investments--net (.23) (.12) (.60) (.55) (.20)
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (.46) (.84) (1.40) (.89) (.73)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 13.16 $ 13.38 $ 11.83 $ 12.10 $ 10.33
========== ========== ========== ========== ==========
Total Based on net asset value per share 1.86%++ 21.42% 10.64% 27.48% 2.93%
Investment ========== ========== ========== ========== ==========
Return:**
Ratios to Expenses, excluding distribution fees .86%* .95% 1.09% 1.31% 1.31%
Average ========== ========== ========== ========== ==========
Net Assets: Expenses 1.86%* 1.95% 2.09% 2.31% 2.31%
========== ========== ========== ========== ==========
Investment income--net 3.08%* 2.87% 11.95% 7.98% 3.35%
========== ========== ========== ========== ==========
Supplemental Net assets, end of period (in thousands) $5,822,106 $4,299,545 $ 958,949 $ 161,328 $ 115,682
Data: ========== ========== ========== ========== ==========
Portfolio turnover 35.64% 50.35% 59.56% 81.21% 129.51%
========== ========== ========== ========== ==========
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch Global Allocation Fund, Inc. (the "Fund") is regis-
tered under the Investment Company Act of 1940 as a non-diversi-
fied, open-end management investment company. The shares of the Fund
are divided into Class A Shares and Class B Shares. Class A Shares
are sold with a front-end sales charge. Class B Shares may be sub-
ject to a contingent deferred sales charge. Both classes of shares
have identical voting, dividend, liquidation and other rights and
the same terms and conditions, except that Class B Shares bear cer-
tain expenses related to the account maintenance and distribution of
such shares and have exclusive voting rights with respect to matters
relating to such account maintenance distribution expenditures. The
following is a summary of significant accounting policies followed
by the Fund.
(a) Valuation of investments--Portfolio securities which are traded
on US stock exchanges are valued at the last sale price on the prin-
cipal market on which such securities are traded, 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
or yield equivalents obtained from one or more dealers in the over-
the-counter market prior to the time of valuation. Portfolio secur-
ities which are traded both in the over-the-counter market and on
a stock exchange are valued according to the broadest and most rep-
resentative market. Portfolio securities which are traded on Euro-
pean stock exchanges are valued at the closing bid price on such
exchanges on the day the securities are being valued or, if closing
prices are unavailable, at the last traded bid price available
prior to the time of valuation. Short-term securities are valued
at amortized cost which approximates market.
Options written by the Fund are valued at the last asked price in
the case of exchange-traded options or, in the case of options
traded in the over-the-counter market, the average of the last
asked price as obtained from one or more dealers. Options purchased
by the Fund are valued at their last bid price in the case of ex-
change-traded options or, in the case of options traded in the
over-the-counter market, the average of the last bid price as ob-
tained from two or more dealers, unless there is only one dealer,
in which case that dealer's price is used.
<PAGE>
Securities and assets for which market quotations are not readily
available are valued at fair value as determined in good faith by
or under the direction of the Board of Directors of the Fund.
(b) Repurchase agreements--The Fund invests in US Government secur-
ities pursuant to repurchase agreements with a member bank of the
Federal Reserve System or a primary dealer in US Government secur-
ities. Under such agreements, the bank or primary dealer agrees to
repurchase the security at a mutually agreed upon time and price.
The Fund takes possession of the underlying securities, marks to
market such securities and, if necessary, receives additions to
such securities daily to ensure that the contract if fully collat-
eralized.
(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) receivables or payables expressed in foreign
currencies into US dollars. Realized and unrealized gains or losses
from investments include the effects of foreign exchange rates
on investments.
The Fund is authorized to enter into forward foreign exchange con-
tracts 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. Premium or discount is amortized over
the life of the contracts.
The Fund may also 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 secur-
ities owned by the Fund, sold by the Fund but not yet delivered, or
committed or anticipated to be purchased by the Fund.
(d) Options--The Fund can write covered call options and purchase
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 equi-
valent liability. The amount of the liability is subsequently marked
to market to reflect the current value of the option written.
<PAGE>
When a security is sold through an exercise of an option, the re-
lated premium received (or paid) is deducted from (or added to) the
basis 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 premiums paid or received).
Written and purchased options are non-income producing
investments.
(e) Financial futures contracts--The Fund may purchase or sell
stock index futures contracts and options on such futures contracts.
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.
(f) Income taxes--It is the Fund's policy to comply with the re-
quirements 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 cap-
ital gains at various rates.
(g) Security transactions and investment income--Security trans-
actions are recorded on the dates the transactions are entered into
(the trade dates). Dividend income is recorded on the ex-dividend
dates except that if the ex-dividend date has passed, certain divi-
dends from foreign securities are recorded as soon as the Fund is
informed of the ex-dividend date. Interest income (including amor-
tization of discount) is recognized on the accrual basis. Realized
gains and losses on security transactions are determined on the
identified cost basis.
(h) Deferred organization expenses and prepaid registration fees--
Deferred organization expenses are charged to expense on a straight-
line basis over a five-year period. Prepaid registration fees are
charged to expense as the related shares are issued.
<PAGE>
(i) Dividends and distributions--Dividends and distributions paid
by the Fund are recorded on the ex-dividend dates.
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"). Effective January 1,
1994, the investment advisory business of MLAM was reorganized
from a corporation to a limited partnership. Both prior to and after
the reorganization, ultimate control of MLAM was vested with
Merrill Lynch & Co., Inc. ("ML & Co."). The general partner of
MLAM is Princeton Services, Inc., an indirect wholly-owned sub-
sidiary of ML & Co. The limited partners are ML & Co. and Merrill
Lynch Investment Management, Inc. ("MLIM") which is also an
indirect wholly-owned subsidiary of ML & Co. The Fund has also
entered into a Distribution Agreement and a Distribution Plan with
Merrill Lynch Funds Distributor, Inc. ("MLFD" or "Distributor"), a
wholly-owned subsidiary of MLIM.
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 of 0.75%, on an annual
basis, of the average daily value of the Fund's net assets. MLAM has
agreed to waive a portion of its fee payable by the Fund so that such
fee is reduced for average daily net assets of the Fund, in excess of
$2.5 billion from the annual rate of 0.75% to 0.70%, and further
reduced from 0.70% to 0.65% for average daily net assets in excess
of $5 billion. MLAM has entered into a sub-advisory agreement with
Merrill Lynch Asset Management U.K., Ltd. ("MLAM U.K."), an affil-
iate of MLAM, pursuant to which MLAM pays MLAM U.K. a fee computed
at the rate of 0.10% of the average daily net assets of the Fund
for providing investment advisory services to MLAM with respect to
the Fund. For the six months ended April 30, 1994, MLAM paid MLAM
U.K. a fee of $2,860,505 pursuant to such agreement. Certain of
the states in which the shares of the Fund are qualified for sale
impose limitations on the expenses of the Fund. The most restric-
tive annual expense limitation requires that the Investment Adviser
reimburse the Fund to the extent the Fund's expenses (excluding
interest, taxes, distribution fees, brokerage fees and commissions,
and extraordinary items) exceed 2.5% of the Fund's first $30 million
of average daily net assets, 2.0% of the next $70 million of average
daily net assets, and 1.5% of the average daily net assets in excess
thereof. MLAM's obligation to reimburse the Fund is limited to the
amount of the management fee. No fee payment will be made to MLAM
during any fiscal year which will cause expenses to exceed the most
restrictive expense limitation at the time of such payment.
<PAGE>
The Fund has adopted a Plan of Distribution (the "Plan") in accord-
ance with Rule 12b-1 under the Investment Company Act of 1940
pursuant to which the Fund pays the Distributor an ongoing account
maintenance fee and distribution fee, which are accrued daily and
paid monthly, at the annual rates of 0.25% and 0.75%, respectively,
of the average daily net assets of the Class B Shares of the Fund.
The ongoing account maintenance fee compensates the Distributor
and Merrill Lynch for providing account maintenance services to
Class B shareholders, the distribution fee is to compensate the
Distributor for the services it provides and the expenses borne by
the Distributor under the Distribution Agreement. As authorized by
the Plan, the Distributor has entered into an agreement with Merrill
Lynch, Pierce, Fenner & Smith Inc. ("MLPF&S"), an affiliate of
MLAM, which provides for the compensation of MLPF&S for providing
distribution-related services to the Fund. For the six months ended
April 30, 1994, MLFD earned $25,776,706 under the plan, all of which
was paid to MLPF&S pursuant to the agreement.
NOTES TO FINANCIAL STATEMENTS (concluded)
For the six months ended April 30, 1994, MLFD earned underwriting
discounts of $408,624, and MLPF&S earned dealer concessions of
$6,397,179 on sales of the Fund's Class A Shares.
MLPF&S also received contingent deferred sales charges of
$2,605,465 relating to transactions in Class B Shares and $173,619
in commissions on the execution of portfolio security trans-
actions for the Fund during the period.
At April 30, 1994, the Fund owed affiliated funds $9,990,370 for
securities purchased.
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.
<PAGE>
Certain officers and/or directors of the Fund are officers and/or
directors of MLIM, MLPF&S, FDS, MLFD, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended April 30, 1994 were $4,563,527,922 and
$1,876,272,227, respectively.
Net realized and unrealized gains (losses) as of April 30, 1994
were as follows:
Realized Unrealized
Gains (Losses) Gains (Losses)
Long-term investments $ 158,992,145 $ 152,198,460
Short-term investments (31,914) --
Foreign currency transactions 311,176 931,172
Forward foreign exchange contracts (17,739,126) (20,446,866)
Financial futures contracts 4,302,368 (169,900)
-------------- --------------
Total $ 145,834,649 $ 132,512,866
============== ==============
As of April 30, 1994, net unrealized appreciation for Federal in-
come tax purposes aggregated $152,215,167, of which $388,599,604 re-
lated to appreciated securities and $236,384,437 related to depre-
ciated securities. At April 30, 1994, the aggregate cost of invest-
ments, including put options purchased, less premiums received for
options written, for Federal income tax purposes was $6,743,524,161.
4. Capital Share Transactions:
Net increase (decrease) in net assets derived from capital share
transactions was $1,924,650,472 and $3,647,738,774 for the six
months ended April 30, 1994 and the year ended October 31, 1993,
respectively.
Transactions in capital shares for Class A and Class B shares were
as follows:
Class A Shares for the Six Months Dollar
Ended April 30, 1994 Shares Amount
Shares sold 30,999,981 $ 416,541,972
Shares issued to shareholders in
reinvestment of dividends and
distributions 2,531,539 33,137,849
-------------- --------------
Total issued 33,531,520 449,679,821
Shares redeemed (9,832,463) (132,081,664)
-------------- --------------
Net increase 23,699,057 $ 317,598,157
============== ==============
Class A Shares for the Year Ended Dollar
October 31, 1993 Shares Amount
Shares sold 51,001,581 $ 652,336,461
Shares issued to shareholders in
reinvestment of dividends and
distributions 1,771,977 20,906,783
-------------- --------------
Total issued 52,773,558 673,243,244
Shares redeemed (5,508,522) (70,517,148)
-------------- --------------
Net increase 47,265,036 $ 602,726,096
============== ==============
<PAGE>
Class B Shares for the Six Months Dollar
Ended April 30, 1994 Shares Amount
Shares sold 139,978,671 $1,860,424,125
Shares issued to shareholders in
reinvestment of dividends and
distributions 11,173,260 145,028,915
-------------- --------------
Total issued 151,151,931 2,005,453,040
Shares redeemed (30,129,406) (398,400,725)
-------------- --------------
Net increase 121,022,525 $1,607,052,315
============== ==============
Class B Shares for the Year Ended Dollar
October 31, 1993 Shares Amount
Shares sold 248,487,181 $3,152,585,403
Shares issued to shareholders in
reinvestment of dividends and
distributions 6,532,523 76,482,665
-------------- --------------
Total issued 255,019,704 3,229,068,068
Shares redeemed (14,631,176) (184,055,390)
-------------- --------------
Net increase 240,388,528 $3,045,012,678
============== ==============
5. Commitments:
At April 30, 1994, the Fund had entered into forward foreign ex-
change contracts under which it had agreed to purchase and sell var-
ious foreign currency with an approximate value of $16,855,000 and
$7,791,000, respectively.
PORTFOLIO INFORMATION
Worldwide
Investments
As of 4/30/94
<PAGE>
Percent Breakdown of
Stocks & Fixed-Income Percent of
Securities by Country Net Assets
United States* 62.5%
Germany 11.5
Japan 6.1
United Kingdom 3.6
Canada 3.3
Spain 2.8
Netherlands 1.6
Italy 1.4
Switzerland 1.2
European Currency Units 1.1
France 0.8
Sweden 0.5
Finland 0.4
Australia 0.4
Ireland 0.3
Hong Kong 0.1
New Zealand 0.1
Belgium 0.1
Portugal l0.1
Austria --
South Korea --
-----
Total 97.9%
=====
[FN]
*Includes investments in short-term securities.
<PAGE>
Ten Largest Industries Percent of
(Equity Investments) Net Assets
Banking* 8.6%
Pharmaceuticals 3.0
Insurance 2.6
Retail Stores 1.6
Energy & Petroleum 1.5
Telecommunications 1.3
Electronics 1.3
Utilities-Electric 1.0
Real Estate 0.9
Capital Goods 0.8
[FN]
*Includes Savings Banks
Ten Largest Holdings Percent of
(Equity Investments) Net Assets
Chemical Banking Corp. 0.8%
First America Bank 0.6
KeyCorp. 0.6
Philip Morris Companies, Inc. 0.6
Kloeckner Werke AG 0.5
City National Corp. 0.5
Societa Finanziaria Telefonica
S.p.A. (STET) RISP 0.5
Bristol-Myers Squibb Co. 0.5
Barnett Banks Inc. 0.5
Mellon Bank Corp. 0.4
PORTFOLIO CHANGES
For the Quarter Ended April 30, 1994
<PAGE>
Additions
*A.K. Steel Holding Corp., 10.75% due 4/01/2004
Ahmanson (H. F.) & Co.
Allegheny Power System, Inc.
American General Corp.
Assicurazioni Generali
Banco Nasional (BNCE), 7.25% due 2/02/2004
Banco Rio de la Plata, 8.75% due 12/15/2003
Bankers Trust Co.
Beazer Homes USA, Inc., 9% due 3/01/2004
Borden, Inc.
Bundesrepublic Deutscheland:
6.75% due 4/22/2003
6.50% due 7/15/2003
Brazil Exit Bonds, 6% due 9/15/2013
CRH Capital Corp., Convertible Bonds,
5.75% due 4/30/2005
Cable & Wireless International PLC
California Energy Co., Inc., 0% due 1/15/2004
California Federal Bank
California Federal Bank (10.625% Pfd.)
Calpine Corp., Inc., 9.25% due 2/01/2004
Canadian Government Bonds:
4.75% due 3/15/1996
6.50% due 6/01/2004
*Cartiere Burgo S.p.A. (Rights)
Charter One Financial, Inc.
Ciba-Geigy Corp., 5.50% due 10/28/1998
Cleveland Electric Illuminating Company, Inc,
First Mortgage, 9.05% due 8/15/2001
*Coltec Industries, Inc., 11.25% due 12/01/2015
Commonwealth Edison Company Inc.
Compagnie Financiere de Paribas
(New Shares)
Consolidated Edison Company of NY, Inc.
Cooper Industries, Inc.
Deluxe Corp.
Eagle Food Centers, Inc.
<PAGE>
Easco Corp., 10% due 3/15/2001
Envirotest Systems Corp., 9.125% due
3/15/2001
First Union Real Estate Investments
Freeport-McMoRan Resources, 8.75% due
2/15/2004
Freie Hansestadt Hamburg, 6.08% due 11/29/2018
Gardner Denver Machinery, Inc.
Government of Spain, 10.30% due 6/15/2002
Greenpoint Savings Bank
Hartmax Corp., 10.875% due 2/15/2004
Hillhaven Corp., 10.125% due 9/01/2001
*Hyster-Yale Materials Handling,
12.375% due 8/01/1999
IMI (Ordinary)
K. Hovnanian Enterprises
Kansallis-Osake-Pankki
Lend Lease Finance Corp. Ltd., Convertible
Bonds, 4.75% due 6/01/2003
MFS Communications Corp., Inc., 0% due
1/15/2004
Mecklenberg Vorpommern, 6.15% due
6/16/2023
Meditrust Corp., Convertible Bonds,
7.50% due 3/01/2001
Mid-America Realty Investments
Mitsui Marine & Fire Insurance Co., Ltd.
Munich Reinsurance Co.
National Health Investors, Inc.,
7.375% due 4/01/1998
National Health Investors, Inc.
(Convertible Pfd.).
Nextel Communications Inc., 0% due
8/01/2004
Niagara Mohawk Power Corp.
Nuevo Energy Co.
Onbancorp, Inc.
Owens-Illinois, Inc.:
10.50% due 6/15/2002
9.75% due 8/15/2004
Paging Network, Inc., 8.875% due 2/01/2006
Prime Retail, Inc. (10.50% Pfd.).
Ralphs Grocery Company, 10.25% due
7/01/2002
<PAGE>
The Rank Organisation PLC
Regency Health Services, Inc., Convertible
Bonds, 6.50% due 7/15/2003
Republic of Argentina:
8.375% due 12/20/2003
4.25% due 3/31/2023
Republic of Brazil, 4.312% due 1/01/2001
Rhineland-Pfalz, 6.08% due 11/29/2018
SKF 'A'
SKF 'B' Free
SKW Real Estate, 9.05% due 4/15/2004
Safeway Stores:
10% due 11/01/2002
9.30% due 2/01/2007
Sherritt, Inc., 11% due 3/31/2004
Southern National Corp.
Stone Container Corp.
Stone Container Corp., 9.875% due 2/01/2001
Tarkett International, 9% due 3/01/2002
Texas Utilities Co.
Trans Texas Gas Corp.
Treuhandanstalt, 6.875% due 6/11/2003
US Surgical Devices (Convertible Pfd.).
USAir Inc., 10% due 7/01/2003
Unitas Bank Ltd.
United Kingdom Treasury Gilt, 8% due 6/10/2003
United Mexican States:
Discount Notes, 8.50% due 9/15/2002
*Rights
Rights (Series A)
Rights (Series B)
Vallehermoso Espanola S.A. (New Shares)
Vendome Luxury Group (Units)
The Vons Companies, Inc., 9.625% due
4/01/2002
Webb (Del E.) Corp., 9% due 2/15/2006
Western Digital Corp.
Wilrig AS, 11.25% due 3/15/2004
Yasuda Fire & Marine Insurance Co., Ltd.
<PAGE>
Deletions
*A.K. Steel Holding Corp., 10.75% due 4/01/2004
ARA Group, Inc.:
12% due 4/15/2000
12.50% due 7/15/2001
Anadarko Petroleum Corp.
Australian Gas & Light Co.
BTR PLC
BTR PLC (Warrants)
BTR PLC (Warrants) (Exp. 1998)
Banco Comercial Portugues (ADR)
Bankers Trust Co., Convertible Bonds,
7.625% due 6/01/2033
Bayerische Vereinsbank AG (Rights)
British Airways PLC
British Telecommunications PLC
CRH Capital PLC (Convertible Pfd.)
Card Establishment Services, Inc.,
10% due 10/01/2003
Cartiere Burgo S.p.A.
*Cartiere Burgo S.p.A. (Rights)
Charter Medical Corp., 7.50% due 3/25/2001
Chemical Banking Corp.
Ciba-Geigy Corp., 5.50% due 10/28/1998
(Warrants)
*Coltec Industries, Inc., 11.25% due 12/01/2015
Continental Cablevision, Inc.,12.875%
due 11/01/2004
Dell Computer Corp. (Convertible Pfd.)
Dial REIT, Inc.
Dixons Group PLC
Dutch State Mining N.V.
EuraFrance (Rights)
Fuerzas Electricidad Cataluna (FECSA)
(Series A)
GIO Australia Holdings Ltd.
Government of Spain, 11.60% due 1/15/1997
Hochtief AG
Holderbank Financiere Glarus AG (Bearer)
*Hyster-Yale Materials Handling.,
12.375% due 8/01/1999
Kearney Street Real Estate, 4.15%
due 7/15/2000
<PAGE>
Kingdom of Denmark, 8% due 5/15/2003
Kyocera Corp.
Kyudenko Corp.
LTC Properties, Inc.
Marcus Cable, 11.875% due 10/01/2005
Meditrust SBI
Montedison S.p.A.
Navistar Financial, 9.50% due 6/01/1996
Novacare Inc.
Pinault-Printemps Group
Presidio Oil Co., 14.05% due 7/15/2002
RJR Nabisco Holdings, Inc., 15%
due 5/15/2001
Regency Health Convertible Bonds,
6.50% due 1/15/2003
Regency Health Services, Inc.
Resolution Trust Co.:
Class 2, 6.50% due 3/15/2003
N2 Class 3, 8.75% due 3/15/2003
Reuters Holdings PLC
Safeway Inc.
Schering AG
Societe Nationale Elf Aquitaine
Softe SA--LUX (Cum Warrants), 8.75%
due 3/24/1997
Stone Container Corp.:
12.625% due 7/15/1998
11.875% due 12/01/1998
Sulzer Gebrueder AG (Registered)
Sulzer Gebrueder AG (Warrants)
Texas Instruments Inc.
Turner Broadcasting Co., 12% due 10/15/2001
US Treasury Bonds, 10.50% due 8/15/1995
United Mexican States, Discount Notes:
5% due 3/31/2008
6.25% due 12/31/2019
*United Mexican States, Rights
Volkswagen of America, Inc.
Winterthur (Registered)
[FN]
*Added and deleted in the same quarter.
