MERRILL LYNCH
FUNDAMENTAL
GROWTH
FUND, INC.
FUND LOGO
Semi-Annual Report
February 28, 1995
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
Fundamental
Growth Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
<PAGE>
MERRILL LYNCH FUNDAMENTAL GROWTH FUND, INC.
DEAR SHAREHOLDER
For the quarter ended February 28, 1995, Merrill Lynch Fundamental
Growth Fund, Inc.'s Class A, Class B, Class C and Class D Shares had
total returns of +4.01%, +3.87%, +3.87% and +4.02%, respectively,
compared to a total return of +8.17% for the unmanaged Standard &
Poor's 500 Index (S&P 500). A substantial decline in the stock
prices of three Mexican companies, representing 2.9% of the Fund's
net assets on November 30, 1994, was responsible for an approximate
1.7% loss in net asset values during the quarter. The investment
holdings in all of these companies were eliminated during the
February quarter. The Fund does not have any other investment
exposure to companies based in Latin America. (Results shown do not
reflect sales charges; results would be lower if sales charges were
included. Complete performance information, including average annual
and aggregate total returns, can be found on pages 4 and 5 of this
report to shareholders.)
The top ten holdings, which represented 28.9% of the Fund's net
assets at the end of the February quarter, are representative of the
portfolio's focus on primarily large-capitalization growth companies
in the consumer nondurable goods and services sectors and the
technology industry. Of the top ten stock holdings in the Fund at
the end of the February quarter, four companies had total returns
greater than the S&P 500. (See page 18 of this report for a listing
of the Fund's top ten holdings.) On the other hand, Compaq Computer
Corp. and Duracell International Inc. had experienced share price
losses. The stock price of Compaq Computer declined after management
announced that the company's first-quarter 1995 earnings would most
likely be unchanged from a year ago as a result of higher expenses
from the launch of new portable and desktop computer product lines.
The Environment
The program of monetary restraint initiated by the Federal Reserve
Board over a year ago, when it first raised the target level of the
Federal Funds rate in early February 1994, appears to have had
little effect on restraining increases in basic and industrial
commodity prices. Capital spending by corporations, especially on
computer and telecommunication systems, continues to lead the growth
in business activity. The growth rate of consumer spending continues
in a slowing trend while overall economic activity continues at a
reasonable pace. Investors appear to have continued to shift their
focus toward companies in the consumer nondurable and services
sectors as well as to the technology industry during the first two
months of 1995, continuing a trend which started in mid-1994.
<PAGE>
Investment Strategy
We made some changes in the Fund's ten largest company holdings and
industry positions during the February quarter by taking capital
gains on the basis of relatively high valuations. We reduced our
position in Intel Corp., which was the largest company holding on
November 30, 1994, from 4.1% of net assets to a 1.0% weighting on
February 28, 1995. We reduced the Fund's investment in Texas
Instruments, Inc. from 3.1% of net assets to 0.5%. We eliminated our
positions in cisco Systems, Inc. and Computer Associates
International, Inc., 3.9% and 3.0% of net assets, respectively, on
November 30, 1994. As a result of these changes in the top ten
company holdings and other portfolio transactions, the Fund's
technology weighting declined from 19.7% of net assets on November
30, 1994 to 9.2% on February 28, 1995.
The telecommunications industry, which was the largest industry
weighting at 7.9% of net assets on November 30, 1994, declined to
4.7% on February 28, 1995 as the result of the elimination of Bell
Atlantic Corp. and Vodafone Group PLC. Also, as a result of the
elimination of the investment holdings in cisco Systems, Inc. and
Computer Associates International, Inc., the communications and
software computer industries were replaced by information processing
and computers among the top ten industries.
The portfolio changes have resulted in less concentration among the
top ten industries as the overall weighting declined from 48.8% of
net assets on November 30, 1994 to 46.2% on February 28, 1995.
Investment holdings in consumer nondurables and services industry
sectors represented over 45% of net assets at the end of the
February quarter compared to over 50% at the end of the November
fiscal quarter. However, over 21% of net assets are still invested
in companies in the beverages, cosmetics, food, household products
and pharmaceuticals industries. The cash reserves of the Fund rose
from 6.0% of net assets on November 30, 1994 to 25.3% on February
28, 1995 as a result of the elimination of some companies from the
portfolio resulting from changes in valuation ratios and business
conditions.
Portfolio Matters
The Fund held the common stock, convertible preferred or debt
securities of 50 companies at the end of the February 28, 1995
quarter compared to 63 companies at the end of the November 30, 1994
quarter. We eliminated 16 holdings during the February quarter and
introduced three new companies to the Fund.
Significant capital losses were realized with the elimination of
Consorcio G Grupo Dina, S.A. de C.V. (ADR), Grupo Televisa, S.A. de
C.V., 'L' (GDS) and Cifra, S.A. de C.V., 'C' from the Fund
subsequent to the devaluation of the Mexican peso starting in late
December 1994. The unanticipated and substantial negative effect on
the Mexican economy and financial markets could continue for a
meaningful time period. The stock prices of the Mexican companies
have declined further from the prices at which the holdings were
eliminated.
<PAGE>
We eliminated the Fund's holding of a convertible preferred security
of Best Buy Company, Inc. at a modest loss when management announced
that the company was experiencing downward pressure on gross margins
and the possibility of a poor earnings comparison to the year-ago
February quarter. We also eliminated our investment in Fingerhut
Companies, Inc. at a loss because we became concerned about the
business outlook for general merchandise and catalog retailing. A
loss also was realized with the elimination of NovaCare, Inc. We
were concerned about the ability of NovaCare's management to regain
its positive business and earnings growth momentum. Also, there
appears to be the possibility of negative developments in the public
healthcare reimbursement systems under the new Congress in
Washington, DC, as well as at the state level.
We also eliminated the Fund's investment in Reliance Group Holdings,
Inc. with the realization of a loss as we became concerned about a
deteriorating commercial insurance underwriting environment. We also
eliminated General Reinsurance Corp., realizing a capital gain for
the same reason. A loss was realized with the elimination of Bell
Atlantic Corp. The investment was made at the time of the proposed
merger of Bell Atlantic Corp. and TCI Communications, Inc. in
October 1993. The reason for the elimination of the holding was our
growing concern about a substantial increase in competition during
1995 in the local exchange telecommunications business, with likely
adverse effects on rate of return and cash flow. Vodafone Group PLC
shares also were eliminated with the recognition of a capital gain
because of our concerns about an adverse shift in the mix of new
cellular phone subscribers toward the consumer market with the
potential for a deterioration in gross margins. Daimler-Benz AG was
sold because of concerns about the company's management having to
take more restructuring charges and a much longer time period likely
to be required to restore profitability.
Other eliminations included cisco Systems, Inc., Computer Associates
International, Inc., Dollar General Corporation, Infinity
Broadcasting Corp. and MGIC Investment Corp. These eliminations were
accomplished with capital gains, and represented sales made on the
basis of relative valuations in the current financial market
environment.
We introduced three companies to the portfolio during the February
quarter. We added Eastman Kodak Co. because we believe that the
corporation is going to resume being a global growth company under
the restructuring guidance of the new chief executive officer,
George Fisher. Emerson Electric Co. was added to the Fund because of
the attractive valuation of its stock in light of an upturn in its
overseas business. In the technology sector, we added 3Com Corp.,
one of the leading companies in the rapidly growing communications
equipment and systems industry.
<PAGE>
In Conclusion
The surprise devaluation of the Mexican peso by the Zedillo
government during the February quarter had a significant negative
effect on the overall positive investment return of the Fund, even
though the Mexican holdings were only 2.9% of net assets at the
beginning of the February quarter. The primary focus of the Fund is
on high-quality, large capitalization, US-based growth companies.
The investment returns for these companies have improved, both
absolutely and relatively, since mid-year 1994 as compared to the
S&P 500.
We appreciate your continued investment in Merrill Lynch Fundamental
Growth Fund, Inc., and we will keep you apprised of our investment
strategy and activities in our upcoming quarterly report to
shareholders.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Lawrence R. Fuller)
Lawrence R. Fuller
Vice President and Portfolio Manager
April 6, 1995
Proxy Results
During the six-month period ended February 28, 1995, Merrill Lynch
Fundamental Growth Fund, Inc. shareholders voted on four proposals.
Proposals 1, 2 and 4 were approved at a special shareholders'
meeting on September 27, 1994. Proposal 3 was passed at a special
shareholders' meeting on January 31, 1995. The description of each
proposal and number of shares voted are as follows:
<PAGE>
<TABLE>
<CAPTION>
Shares Voted Shares Voted
For Withhold Authority
<S> <S> <C> <C>
1. To elect the Fund's Board of Directors: Joe Grills 4,917,324 140,741
Walter Mintz 4,917,324 140,741
Melvin R. Seiden 4,917,324 140,741
Stephen B. Swensrud 4,917,324 140,741
Harry Woolf 4,917,324 140,741
Arthur Zeikel 4,917,324 140,741
<CAPTION>
Shares Voted Shares Voted Shares Voted
For Against Abstain
<S> <C> <C> <C>
2. To select Ernst & Young LLP as the Fund's
independent auditors. 4,863,973 51,314 142,778
3. To approve certain changes to the Fund's
fundamental investment restrictions. 2,723,441 115,667 226,960
4. To amend the Fund's articles of incorporation to
implement the Merrill Lynch Select Pricing SM System. 4,425,014 273,818 359,233
</TABLE>
PERFORMANCE DATA
About Fund Performance
Since October 21, 1994, investors have been able to purchase shares
of the Fund through the Merrill Lynch Select Pricing SM System,
which offers four pricing alternatives:
* Class A Shares incur a maximum initial sales charge (front-end
load) of 5.25% and bear no ongoing distribution or account
maintenance fees. Class A Shares are available only to eligible
investors, as detailed in the Fund's prospectus. If you were a Class
A shareholder prior to October 21, 1994, your Class A Shares were
redesignated to Class D Shares on October 21, 1994, which, in the
case of certain eligible investors, were simultaneously exchanged
for Class A Shares.
<PAGE>
* Class B Shares are subject to a maximum contingent deferred sales
charge of 4% if redeemed during the first year, decreasing 1% each
year thereafter to 0% after the fourth year. In addition, Class B
Shares are subject to a distribution fee of 0.75% and an account
maintenance fee of 0.25%. These shares automatically convert to
Class D Shares after 8 years. If you were a Class B shareholder
prior to October 21, 1994, your Class B shares were redesignated to
Class C Shares on October 21, 1994.
* Class C Shares are subject to a distribution fee of 0.75% and an
account maintenance fee of 0.25%. In addition, Class C Shares are
subject to a 1% contingent deferred sales charge if redeemed within
one year of purchase.
* Class D Shares incur a maximum initial sales charge of 5.25% and
an account maintenance fee of 0.25% (but no distribution fee).
Performance data for the Fund's Class C and Class D Shares are
presented in the "Performance Summary," "Recent Performance Results"
and the "Average Annual Total Return" tables below and on page 5.
Data for Class A Shares and Class B Shares are also presented in the
"Recent Performance Results" and "Aggregate Total Return" tables
below and on page 5.
The "Recent Performance Results" table shows investment results
before the deduction of any sales charges for Class C and Class D
Shares for the 12-month and 3-month periods ended February 28, 1995
and for Class A and Class B Shares for the since inception and 3-
month periods ended February 28, 1995. All data in this table assume
imposition of the actual total expenses incurred by each class of
shares during the relevant period.
None of the past results shown should be considered a representation
of future performance. Investment return and principal value of
shares will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost. Dividends paid to each class
of shares will vary because of the different levels of account
maintenance, distribution and transfer agency fees applicable to
each class, which are deducted from the income available to be paid
to shareholders.
<PAGE>
Average Annual Total Return
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Year Ended 12/31/94 -6.28% -7.18%
Inception (12/24/92)
through 12/31/94 -1.13 -1.13
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after one year. On 10/21/94, Class B Shares were redesignated to
Class C Shares.
**Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Sales Charge Sales Charge**
Class D Shares*
Year Ended 12/31/94 -5.56% -10.52%
Inception (12/24/92)
through 12/31/94 -0.37 - 3.02
[FN]
*Maximum sales charge is 5.25%. On 10/21/94, Class A Shares were
redesignated to Class D Shares.
**Assuming maximum sales charge.
Aggregate Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Inception (10/21/94)
through 12/31/94 -0.54% -5.77%
[FN]
*Maximum sales charge is 5.25%. On 10/21/94, Class A Shares were
redesignated to Class D Shares.
**Assuming maximum sales charge.
<PAGE>
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Inception (10/21/94)
through 12/31/94 -0.76% -4.60%
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years. On 10/21/94, Class B Shares were redesignated to
Class C Shares.
**Assuming payment of applicable contingent deferred sales charge.
PERFORMANCE DATA (concluded)
<TABLE>
Recent Performance Results
<CAPTION>
12 Month 3 Month
2/28/95 11/30/94 2/28/94++ % Change++ % Change
<S> <C> <C> <C> <C> <C>
ML Fundamental Growth Fund, Inc. Class A Shares* $9.97 $9.90 $ 9.99 +2.53%(1) +3.46%(1)
ML Fundamental Growth Fund, Inc. Class B Shares* 9.80 9.75 9.85 +2.26(1) +3.31(1)
ML Fundamental Growth Fund, Inc. Class C Shares* 9.80 9.75 10.19 -1.15(1) +3.31(1)
ML Fundamental Growth Fund, Inc. Class D Shares* 9.97 9.90 10.28 +4.17(1) +8.17(1)
Standard & Poor's 500 Index** 487.39 453.69 467.14 +4.33 +7.43
ML Fundamental Growth Fund, Inc. Class A Shares--Total Return* +3.07(2) +4.01(2)
ML Fundamental Growth Fund, Inc. Class B Shares--Total Return* +2.81(2) +3.87(2)
ML Fundamental Growth Fund, Inc. Class C Shares--Total Return* -0.62(2) +3.87(2)
ML Fundamental Growth Fund, Inc. Class D Shares--Total Return* +0.17(2) +4.02(2)
Standard & Poor's 500 Index--Total Return** +7.37 +8.17
<FN>
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included.
**An unmanaged broad-based Index comprised of common stocks. Total
investment returns for unmanaged indexes are based on estimates.
++Investment results shown for Class A and Class B Shares are since
inception (10/21/94).
(1)Percent change includes reinvestment of $0.255 per share capital
gains distributions.
(2)Percent change includes reinvestment of $0.051 per share income
dividends and $0.255 per share capital gains distributions.
</TABLE>
<PAGE>
<TABLE>
Performance Summary--Class C Shares***
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <C> <C> <C> <C> <C>
12/24/92--12/31/92 $10.00 $ 9.92 -- -- -0.80%
1993 9.92 10.43 -- -- +5.14
1994 10.43 9.46 $0.255 $0.051 -6.28
1/1/95--2/28/95 9.46 9.80 -- -- +3.59
------ ------
Total $0.255 Total $0.051
Cumulative total return as of 2/28/95: +1.27%**
<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.
***As a result of the implementation of the Merrill Lynch Select
Pricing SM System, Class B Shares of the Fund outstanding prior to
October 21, 1994 have been redesignated Class C Shares.
</TABLE>
<TABLE>
Performance Summary--Class D Shares***
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <C> <C> <C> <C> <C>
12/24/92--12/31/92 $10.00 $ 9.92 -- -- -0.80%
1993 9.92 10.51 -- -- +5.95
1994 10.51 9.61 $0.255 $0.051 -5.56
1/1/95--2/28/95 9.61 9.97 -- -- +3.75
------ ------
Total $0.255 Total $0.051
Cumulative total return as of 2/28/95: +2.98%**
<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.
***As a result of the implementation of the Merrill Lynch Select
Pricing SM System, Class A Shares of the Fund outstanding prior to
October 21, 1994 have been redesignated Class D Shares.
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS
<CAPTION>
Shares Held/ Value Percent of
Industries Face Amount Stocks & Bonds Cost (Note 1a) Net Assets
<S> <C> <S> <C> <C> <C>
Advertising 20,000 Interpublic Group of Companies, Inc. $ 697,450 $ 682,500 0.9%
Automotive & Truck 20,000 Ek Chor China Motorcycle Co. Ltd. 734,300 282,500 0.3
Banking & Financial 30,000 State Street Boston Corp. 1,113,525 956,250 1.2
Beverages 45,000 The Coca-Cola Co. 2,295,200 2,475,000 3.1
40,000 PepsiCo, Inc. 1,511,350 1,565,000 2.0
----------- ----------- ------
3,806,550 4,040,000 5.1
Broadcast--Cable 65,000 ++TCI Communications, Inc. (Class A)(b) 1,534,150 1,478,750 1.9
45,000 Time Warner Inc. 1,711,106 1,738,125 2.2
----------- ----------- ------
3,245,256 3,216,875 4.1
Broadcast--Media 30,000 Turner Broadcasting System, Inc. 787,265 566,250 0.7
Business Services 15,000 The Olsten Corp. 501,683 515,625 0.6
$ 500,000 The Olsten Corp., Convertible Bond,
4.875% due 5/15/2003 500,000 552,500 0.7
----------- ----------- ------
1,001,683 1,068,125 1.3
Chemical Producers 50,000 Duracell International Inc. 2,161,956 2,081,250 2.6
10,000 Great Lakes Chemical Corp. 732,730 601,250 0.7
----------- ----------- ------
2,894,686 2,682,500 3.3
Communications 30,000 ++3Com Corp. 1,551,963 1,560,000 2.0
Computers 85,000 ++Compaq Computer Corp. 3,184,473 2,932,500 3.7
Consumer Products & 45,000 ++CUC International, Inc. 1,252,989 1,586,250 2.0
Services
Cosmetics 25,000 The Gillette Co. 1,792,750 1,978,125 2.5
30,000 International Flavors &
Fragrances Inc. 1,331,497 1,443,750 1.8
----------- ----------- ------
3,124,247 3,421,875 4.3
Electrical Equipment 20,000 Emerson Electric Co. 1,293,340 1,322,500 1.7
<PAGE>
Electronics 10,000 Intel Corp. 617,500 796,250 1.0
Entertainment 40,000 ++Electronic Arts Inc. 1,237,292 860,000 1.1
Finance 5,000 Countrywide Credit Industries, Inc. 88,117 81,250 0.1
Financial Services 30,000 The Travelers Corp. 1,292,652 1,166,250 1.5
Food 5,000 General Mills, Inc. 340,300 303,125 0.4
5,000 Kellogg Co. 302,175 270,625 0.3
20,000 Wrigley (Wm.) Jr. Co. (Class B) 850,948 902,500 1.1
----------- ----------- ------
1,493,423 1,476,250 1.8
Food Merchandising 65,000 Albertson's, Inc. 1,867,122 1,998,750 2.5
Home Furnishings 50,000 Shaw Industries, Inc. 857,375 781,250 1.0
Hotel 35,000 Marriott International, Inc. 1,058,621 1,085,000 1.4
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Shares Held/ Value Percent of
Industries Face Amount Stocks & Bonds Cost (Note 1a) Net Assets
<S> <C> <S> <C> <C> <C>
Household Products 25,000 Colgate-Palmolive Co. $ 1,536,500 $ 1,612,500 2.0%
30,000 Procter & Gamble Co. 1,856,363 1,995,000 2.5
----------- ----------- ------
3,392,863 3,607,500 4.5
Information Processing 35,000 First Financial Management Corp. 2,156,956 2,419,375 3.0
40,000 General Motors Corp. (Class E) 1,475,250 1,535,000 1.9
----------- ----------- ------
3,632,206 3,954,375 4.9
Insurance 8,000 American International Group, Inc. 744,214 830,000 1.0
Leisure 40,000 PolyGram N.V. (ADR)(a) 1,566,058 1,980,000 2.5
Medical--Technology 30,000 ++Haemonetics Corp. 751,330 476,250 0.6
Oil Services 20,000 Schlumberger Ltd. 1,222,550 1,137,500 1.4
Pharmaceuticals 35,000 ++Amgen, Inc. 2,166,706 2,410,625 3.0
25,000 Pfizer Inc. 1,696,713 2,068,750 2.6
----------- ----------- ------
3,863,419 4,479,375 5.6
<PAGE>
Photography 35,000 Eastman Kodak Co. 1,746,350 1,785,000 2.2
Pollution Control 20,000 WMX Technologies Inc. 623,700 527,500 0.7
Publishing 10,000 ++Scholastic Corp. 455,625 502,500 0.6
Restaurant 70,000 McDonald's Corp. 2,128,900 2,327,500 2.9
Retail Specialty 40,000 ++Bed, Bath & Beyond, Inc. 1,030,934 960,000 1.2
35,000 The Pep Boys--Manny, Moe & Jack 1,166,513 1,146,250 1.4
$ 350,000 The Pep Boys--Manny, Moe & Jack,
Convertible Bond, 4% due 9/01/1999 350,000 347,375 0.4
100,000 Staples Inc. 2,164,114 2,425,000 3.0
----------- ----------- ------
4,711,561 4,878,625 6.0
Semiconductors 5,000 Texas Instruments, Inc. 377,175 393,750 0.5
Software--Computer 40,000 ++Sybase, Inc. 1,889,369 1,620,000 2.0
Telecommunications 100,000 MCI Communications Corp. 2,341,575 2,000,000 2.5
60,000 ++QUALCOMM Inc. 1,663,750 1,725,000 2.2
----------- ----------- ------
4,005,325 3,725,000 4.7
Toys 75,000 Mattel, Inc. 1,675,255 1,678,125 2.1
Travel & Lodging 50,000 Carnival Corporation (Class A) 1,127,968 1,187,500 1.5
Total Stocks & Bonds 67,113,697 67,653,625 84.7
Face Amount Short-Term Securities
Commercial Paper* $3,559,000 General Electric Capital Corp.,
6% due 3/01/1995 3,559,000 3,559,000 4.5
2,000,000 Matterhorn Capital Corp.,
5.90% due 3/23/1995 1,992,789 1,992,789 2.5
----------- ----------- ------
5,551,789 5,551,789 7.0
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded)
<CAPTION>
Value Percent of
Face Amount Short-Term Securities Cost (Note 1a) Net Assets
<S> <C> <S> <C> <C> <C>
US Government & Federal Farm Credit Banks:
Agency Obligations* $1,000,000 5.72% due 3/13/1995 $ 998,093 $ 998,093 1.3%
2,000,000 5.90% due 3/20/1995 1,993,772 1,993,772 2.5
Federal Home Loan Banks:
3,000,000 5.93% due 3/02/1995 2,999,506 2,999,506 3.8
1,500,000 5.88% due 3/15/1995 1,496,570 1,496,570 1.9
Federal Home Loan Mortgage
Association:
2,000,000 5.75% due 3/06/1995 1,998,403 1,998,403 2.5
1,500,000 5.87% due 3/08/1995 1,498,288 1,498,288 1.9
3,500,000 Federal National Mortgage
Association, 5.87% due 3/03/1995 3,498,859 3,498,859 4.4
----------- ----------- ------
14,483,491 14,483,491 18.3
Total Short-Term Securities 20,035,280 20,035,280 25.3
Total Investments $87,148,977 87,688,905 110.0
===========
Liabilities in Excess of Other Assets (7,955,065) (10.0)
----------- ------
Net Assets $79,733,840 100.0%
=========== ======
<FN>
*Commercial Paper and certain 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.
(a)American Depositary Receipts (ADR).
(b)Formerly Tele-Communications, Inc. (Class A).
++Non-income producing security.
See Notes to Financial Statements.
</TABLE>
<PAGE>
FINANCIAL INFORMATION
<TABLE>
Statement of Assets and Liabilities as of February 28, 1995
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$87,148,977) (Note 1a) $87,688,905
Cash 535
Receivables:
Capital shares sold $ 1,258,764
Dividends 76,131
Interest 14,137 1,349,032
-----------
Deferred organization expenses (Note 1f) 66,001
Prepaid registration fees and other assets (Note 1f) 74,440
-----------
Total assets 89,178,913
-----------
Liabilities: Payables:
Securities purchased 8,661,632
Capital shares redeemed 681,649
Distributor (Note 2) 49,864
Investment adviser (Note 2) 37,005 9,430,150
-----------
Accrued expenses and other liabilities 14,923
-----------
Total liabilities 9,445,073
-----------
Net Assets: Net assets $79,733,840
===========
Net Assets Class A Shares of capital stock, $0.10 par value, 100,000,000
Consist of: shares authorized $ 38,883
Class B Shares of capital stock, $0.10 par value, 100,000,000
shares authorized 290,838
Class C Shares of capital stock, $0.10 par value, 100,000,000
shares authorized 398,674
Class D Shares of capital stock, $0.10 par value, 100,000,000
shares authorized 83,348
Paid-in capital in excess of par 78,837,124
Accumulated investment loss--net (216,866)
Accumulated realized capital losses on investments and foreign
currency transactions--net (238,089)
Unrealized appreciation on investments and foreign
currency transactions--net 539,928
-----------
Net assets $79,733,840
===========
<PAGE>
Net Asset Value: Class A--Based on net assets of $3,877,626 and 388,834 shares
of capital stock outstanding $ 9.97
===========
Class B--Based on net assets of $28,491,758 and 2,908,384 shares
of capital stock outstanding $ 9.80
===========
Class C--Based on net assets of $39,056,928 and 3,986,740 shares
of capital stock outstanding $ 9.80
===========
Class D--Based on net assets of $8,307,528 and 833,483 shares
of capital stock outstanding $ 9.97
===========
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations for the Six Months Ended February 28, 1995
<S> <S> <C> <C>
Investment Dividends (net of $1,514 foreign withholding tax) $ 316,856
Income Interest and discount earned 188,586
(Notes 1d & 1e): -----------
Total income 505,442
-----------
Expenses: Distribution fees--Class C (Note 2) 202,225
Investment advisory fees (Note 2) 200,476
Distribution fees--Class B (Note 2) 59,050
Transfer agent fees--Class C (Note 2) 53,078
Printing and shareholder reports 48,827
Accounting services (Note 2) 35,353
Professional fees 34,647
Registration fees (Note 1f) 21,165
Transfer agent fees--Class B (Note 2) 18,877
Directors' fees and expenses 10,551
Account maintenance fees--Class D (Note 2) 9,349
Amortization of organization expenses (Note 1f) 8,483
Transfer agent fees--Class D (Note 2) 8,219
Custodian fees 4,189
Transfer agent fees--Class A (Note 2) 2,666
Other 5,153
-----------
Total expenses 722,308
-----------
Investment loss--net (216,866)
-----------
<PAGE>
Realized & Realized gain (loss) from:
Unrealized Gain Investments--net $ 23,973
(Loss) on Foreign currency transactions--net (51) 23,922
Investments & -----------
Foreign Currency Change in unrealized depreciation on:
Transactions--Net Investments--net 1,520,446
(Notes 1b, 1c, Foreign currency transactions--net -- 1,520,446
1e & 3): ----------- -----------
Net Increase in Net Assets Resulting from Operations $ 1,327,502
===========
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Six For the Year
Months Ended Ended
February 28, August 31,
Increase (Decrease) in Net Assets: 1995 1994
<S> <S> <C> <C>
Operations: Investment loss--net $ (216,866) $ (214,924)
Realized gain on investments and foreign currency
transactions--net 23,922 2,028,567
Change in unrealized depreciation on investments and
foreign currency transactions--net 1,520,446 (964,529)
----------- -----------
Net increase in net assets resulting from operations 1,327,502 849,114
----------- -----------
Distributions to Realized gain on investments--net:
Shareholders Class A (81,095) --
(Note 1g): Class B (445,476) --
Class C (1,196,817) --
Class D (213,366) --
----------- -----------
Net decrease in net assets resulting from distributions
to shareholders (1,936,754) --
----------- -----------
Capital Share Net increase in net assets derived from capital share
Transactions transactions 24,456,939 2,371,410
(Note 4): ----------- -----------
<PAGE>
Net Assets: Total increase in net assets 23,847,687 3,220,524
Beginning of period 55,886,153 52,665,629
----------- -----------
End of period $79,733,840 $55,886,153
=========== ===========
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Financial Highlights
<CAPTION>
For the Period
The following per share data and ratios have been derived October 21, 1994++
from information provided in the financial statements. to February 28, 1995++++
Increase (Decrease) in Net Assets: Class A Class B
<S> <S> <C> <C>
Per Share Net asset value, beginning of period $ 9.99 $ 9.85
Operating ----------- -----------
Performance: Investment loss--net -- (.03)
Realized and unrealized gain on investments and foreign
currency transactions--net .29 .29
----------- -----------
Total from investment operations .29 .26
----------- -----------
Less distributions from realized gain on investments--net (.31) (.31)
----------- -----------
Net asset value, end of period $ 9.97 $ 9.80
=========== ===========
Total Investment Based on net asset value per share 3.07%+++ 2.81%+++
Return:** =========== ===========
Ratios to Expenses, excluding distribution fees 1.57%* 1.60%*
Average Net =========== ===========
Assets: Expenses 1.57%* 2.60%*
=========== ===========
Investment income (loss)--net .11%* (.88)%*
=========== ===========
<PAGE>
Supplemental Net assets, end of period (in thousands) $ 3,878 $ 28,492
Data: =========== ===========
Portfolio turnover 48.83% 48.83%
=========== ===========
<FN>
++Commencement of Operations.
++++Based on average shares outstanding during the period.
+++Aggregate total investment return.
*Annualized.
**Total investment returns exclude the effects of sales loads.
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Financial Highlights (continued)
<CAPTION>
Class C
For the For the
Six For the Period
The following per share data and ratios have been derived Months Year Dec. 24,
from information provided in the financial statements. Ended Ended 1992++ to
Feb. 28, Aug. 31, Aug. 31,
Increase (Decrease) in Net Asset Value: 1995++++ 1994++++ 1993++++
<S> <S> <C> <C> <C>
Per Share Net asset value, beginning of period $ 9.96 $ 9.86 $ 10.00
Operating -------- -------- --------
Performance: Investment loss--net (.04) (.05) (.05)
Realized and unrealized gain (loss) on investments
and foreign currency transactions--net .19 .15 (.09)
-------- -------- --------
Total from investment operations .15 .10 (.14)
-------- -------- --------
Less distributions from realized gain on investments--net (.31) -- --
-------- -------- --------
Net asset value, end of period $ 9.80 $ 9.96 $ 9.86
======== ======== ========
<PAGE>
Total Investment Based on net asset value per share 1.68%+++ 1.01% (1.40%)+++
Return:** ======== ======== ========
Ratios to Average Expenses, excluding distribution fees 1.43%* 1.35% 1.79%*
Net Assets: ======== ======== ========
Expenses 2.43%* 2.35% 2.79%*
======== ======== ========
Investment loss--net (.82%)* (.52%) (.83%)*
======== ======== ========
Supplemental Net assets, end of period (in thousands) $ 39,057 $ 47,263 $ 45,736
Data: ======== ======== ========
Portfolio turnover 48.83% 112.68% 64.09%
======== ======== ========
<FN>
++Commencement of Operations.
++++Based on average shares outstanding during the period.
+++Aggregate total investment return.
*Annualized.
**Total investment returns exclude the effects of sales loads.
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights (concluded)
<CAPTION>
Class D
For the For the
Six For the Period
The following per share data and ratios have been derived Months Year Dec. 24,
from information provided in the financial statements. Ended Ended 1992++ to
Feb. 28, Aug. 31, Aug. 31,
Increase (Decrease) in Net Asset Value: 1995++++ 1994 1993++++
<S> <S> <C> <C> <C>
Per Share Net asset value, beginning of period $ 10.09 $ 9.91 $ 10.00
Operating -------- -------- --------
Performance: Investment income--net -- .03 --
Realized and unrealized gain (loss) on investments
and foreign currency transactions--net .19 .15 (.09)
-------- -------- --------
Total from investment operations .19 .18 (.09)
-------- -------- --------
Less distributions from realized gain on investments--net (.31) -- --
-------- -------- --------
Net asset value, end of period $ 9.97 $ 10.09 $ 9.91
======== ======== ========
<PAGE>
Total Investment Based on net asset value per share 2.06%+++ 1.82% (.90%)+++
Return:** ======== ======== ========
Ratios to Average Expenses, excluding account maintenance fees 1.39%* 1.33% 1.78%*
Net Assets: ======== ======== ========
Expenses 1.64%* 1.58% 2.03%*
======== ======== ========
Investment income (loss)--net (.01%)* .31% (.04%)*
======== ======== ========
Supplemental Net assets, end of period (in thousands) $ 8,308 $ 8,623 $ 6,930
Data: ======== ======== ========
Portfolio turnover 48.83% 112.68% 64.09%
======== ======== ========
<FN>
++Commencement of Operations.
++++Based on average shares outstanding during the period.
+++Aggregate total investment return.
*Annualized.
**Total investment returns exclude the effects of sales loads.
See Notes to Financial Statements.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch Fundamental Growth Fund, Inc. (the "Fund") is
registered under the Investment Company Act of 1940 as a
diversified, open-end management investment company. These unaudited
financial statements reflect all adjustments which are, in the
opinion of management, necessary to a fair statement of the results
for the interim period presented. All such adjustments are of a
normal recurring nature. The Fund offers four classes of shares
under the Merrill Lynch Select Pricing SM System. Shares of Class A
and Class D are sold with a front-end sales charge. Shares of Class
B and Class C may be subject to a contingent deferred sales charge.
All classes of shares have identical voting, dividend, liquidation
and other rights and the same terms and conditions, except that
Class B, Class C and Class D Shares bear certain expenses related to
the account maintenance of such shares, and Class B and Class C
Shares also bear certain expenses related to the distribution of
such shares. Each class has exclusive voting rights with respect to
matters relating to its account maintenance and distribution
expenditures. The following is a summary of significant accounting
policies followed by the Fund.
<PAGE>
(a) Valuation of investments--Portfolio securities which are traded
on stock exchanges are valued at the last sale price on the
principal 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. In cases where
securities are traded on more than one exchange, the securities are
valued on the exchange designated by or under the authority of the
Fund's Board of Directors as the primary market. Securities traded
in the over-the-counter market are valued at the last available bid
prices obtained from one or more dealers in the over-the-counter
market prior to the time of valuation. Portfolio securities which
are traded both in the over-the-counter market and on a stock
exchange are valued according to the broadest and most
representative market. Short-term securities are valued at amortized
cost, which approximates market value. Options purchased by the Fund
are valued at their last bid 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 bid price as obtained from two or
more dealers unless a quotation from only one dealer is available,
in which case only that dealer's price will be used. 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. 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 Fund's Board of Directors.
(b) Derivative financial instruments--The Fund may engage in various
portfolio strategies to seek to increase its return by hedging its
portfolio against adverse movements in the equity, debt and currency
markets. Losses may arise due to changes in the value of the
contract or if the counterparty does not perform under the contract.
* Financial futures contracts--The Fund may purchase or sell
interest rate 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.
* Forward foreign exchange contracts--The Fund is authorized to
enter into forward foreign exchange contracts as a hedge against
either specific transactions or portfolio positions. Such contracts
are not entered on the Fund's records. However, the effect on
operations is recorded from the date the Fund enters into such
contracts. Premium or discount is amortized over the life of the
contracts.
<PAGE>
* Options--The Fund is authorized to write and purchase call and put
options. When the Fund writes an option, an amount equal to the
premium received by the Fund is reflected as an asset and an
equivalent liability. The amount of the liability is subsequently
marked to market to reflect the current market value of the option
written. When a security is purchased or sold through an exercise of
an option, the related premium paid (or received) is added to (or
deducted from) the basis of the security acquired or deducted from
(or added to) the proceeds of the security sold. When an option
expires (or the Fund enters into a closing transaction), the Fund
realizes a gain or loss on the option to the extent of the premiums
received or paid (or gain or loss to the extent the cost of the
closing transaction exceeds the premium paid or received).
Written and purchased options are non-income producing investments.
NOTES TO FINANCIAL STATEMENTS (continued)
(c) Foreign currency transactions--Transactions denominated in
foreign currencies are recorded at the exchange rate prevailing when
recognized. Assets and liabilities denominated in foreign currencies
are valued at the exchange rate at the end of the period. Foreign
currency transactions are the result of settling (realized) or
valuing (unrealized) assets or liabilities expressed in foreign
currencies into US dollars. Realized and unrealized gains or losses
from investments include the effects of foreign exchange rates on
investments.
(d) Income taxes--It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its
taxable income to its shareholders. Therefore, no Federal income tax
provision is required. Under the applicable foreign tax law, a
withholding tax may be imposed on interest, dividends, and capital
gains at various rates.
(e) Security transactions and investment income--Security
transactions are recorded on the dates the transactions are entered
into (the trade dates). Dividend income is recorded on the ex-
dividend date, except that if the ex-dividend date has passed,
certain dividends from foreign securities are recorded as soon as
the Fund is informed of the ex-dividend date. Interest income
(including amortization of discount) is recognized on the accrual
basis. Realized gains and losses on security transactions are
determined on the identified cost basis.
<PAGE>
(f) 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.
(g) 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"). The general partner
of MLAM is Princeton Services, Inc. ("PSI"), an indirect wholly-
owned subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is
the limited partner. The Fund has also entered into a Distribution
Agreement and Distribution Plans with Merrill Lynch Funds
Distributor, Inc. ("MLFD" or "Distributor"), a wholly-owned
subsidiary of Merrill Lynch Group, Inc.
MLAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee at the annual rate of 0.65% of
the average daily value of the Fund's net assets. The Investment
Advisory Agreement obligates MLAM to 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 remaining average daily net assets. No fee payment
will be made to the Investment Adviser during any fiscal year which
will cause such expenses to exceed the expense limitations at the
time of such payment.
Pursuant to the distribution plans ("the Distribution Plans")
adopted by the Fund in accordance with Rule 12b-1 under the
Investment Company Act of 1940, the Fund pays the Distributor
ongoing account maintenance and distribution fees. The fees are
accrued daily and paid monthly at annual rates based upon the
average daily net assets of the shares as follows:
Account Distribution
Maintenance Fee Fee
Class B 0.25% 0.75%
Class C 0.25% 0.75%
Class D 0.25% --
<PAGE>
Pursuant to a sub-agreement with the Distributor, Merrill Lynch,
Pierce, Fenner & Smith Inc. ("MLPF&S"), a subsidiary of ML & Co.,
also provides account maintenance and distribution services to the
Fund. The ongoing account maintenance fee compensates the
Distributor and MLPF&S for providing account maintenance services to
Class B, Class C and Class D shareholders. The ongoing distribution
fee compensates the Distributor and MLPF&S for providing shareholder
and distribution-related services to Class B and Class C
shareholders.
For the six months ended February 28, 1995, MLFD earned underwriting
discounts and MLPF&S earned dealer concessions on sales of the
Fund's Class A and Class D Shares as follows:
MLFD MLPF&S
Class A $ -- $ --
Class D $ 1,361 $19,432
MLPF&S received contingent deferred sales charges of $6,575 relating
to transactions in Class B Shares, $4,958 relating to transactions
in Class C Shares, and $6,900 in commissions on the execution of
portfolio security transactions for the Fund for the six months
ended February 28, 1995.
Financial Data Services, Inc. ("FDS"), a wholly-owned subsidiary of
ML & Co., is the Fund's transfer agent.
Accounting services are provided to the Fund by MLAM at cost.
Certain officers and/or directors of the Fund are officers and/or
directors of MLAM, MLPF&S, FDS, PSI, MLFD, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended February 28, 1995 were $44,977,384 and
$27,940,688, respectively.
Net realized and unrealized gains (losses) as of February 28, 1995
were as follows:
<PAGE>
Realized Unrealized
Gains (Losses) Gains
Long-term investments $ 24,146 $ 539,928
Short-term investments (173) --
Foreign currency transactions (51) --
----------- -----------
Total $ 23,922 $ 539,928
=========== ===========
As of February 28, 1995, net unrealized appreciation for Federal
income tax purposes aggregated $539,928, of which $3,721,034 related
to appreciated securities and $3,181,106 related to depreciated
securities. At February 28, 1995, the aggregate cost of investments
for Federal income tax purposes was $87,148,977.
4. Shares of Beneficial Interest:
Net increase in net assets derived from capital share transactions
for the six months ended February 28, 1995 and the year ended August
31, 1994 were $24,456,939 and $2,371,410, respectively.
Transactions in capital shares for each class were as follows:
Class A Shares for the Period Dollar
Oct. 21, 1994++ to Feb. 28, 1995 Shares Amount
Shares sold 455,062 $ 4,538,601
Shares issued to share-
holders in reinvestment
of dividends 8,261 76,992
----------- -----------
Total issued 463,323 4,615,593
Shares redeemed (74,489) (743,971)
----------- -----------
Net increase 388,834 $ 3,871,622
=========== ===========
[FN]
++Commencement of Operations.
<PAGE>
Class B Shares for the Period Dollar
Oct. 21, 1994++ to Feb. 28, 1995 Shares Amount
Shares sold 4,682,214 $45,849,314
Shares issued to share-
holders in reinvestment
of dividends 46,613 427,439
----------- -----------
Total issued 4,728,827 46,276,753
Shares redeemed (1,820,443) (17,755,650)
----------- -----------
Net increase 2,908,384 $28,521,103
=========== ===========
[FN]
++Commencement of Operations.
Class C Shares for the Six Months Dollar
Ended February 28, 1995 Shares Amount
Shares sold 2,259,117 $22,037,427
Shares issued to share-
holders in reinvestment
of dividends 115,667 1,060,667
----------- -----------
Total issued 2,374,784 23,098,094
Shares redeemed (3,134,128) (30,794,875)
----------- -----------
Net decrease (759,344) $(7,696,781)
=========== ===========
NOTES TO FINANCIAL STATEMENTS (concluded)
Class C Shares for the Year Dollar
Ended August 31, 1994 Shares Amount
Shares sold 2,123,924 $20,737,115
Shares redeemed (2,017,787) (19,872,529)
----------- -----------
Net increase 106,137 $ 864,586
=========== ===========
<PAGE>
Class D Shares for the Six Months Dollar
Ended February 28, 1995 Shares Amount
Shares sold 250,402 $ 2,471,838
Shares issued to shareholders
in reinvestment of dividends 19,040 177,266
----------- -----------
Total issued 269,442 2,649,104
Shares redeemed (290,786) (2,888,109)
----------- -----------
Net decrease (21,344) $ (239,005)
=========== ===========
Class D Shares for the Year Dollar
Ended August 31, 1994 Shares Amount
Shares sold 556,921 $ 5,502,292
Shares redeemed (401,467) (3,995,468)
----------- -----------
Net increase 155,454 $ 1,506,824
=========== ===========
As a result of the implementation of the Merrill Lynch Select
Pricing SM System, Class A Shares of the Fund outstanding prior to
October 21, 1994 have been redesignated to Class D Shares. There
were 676,497 shares redesignated amounting to $6,699,703. In
addition, Class B Shares of the Fund outstanding prior to October
21, 1994 have been redesignated to Class C Shares. There were
2,449,771 shares redesignated amounting to $24,321,655.
OFFICERS AND DIRECTORS
Arthur Zeikel, President and Director
Joe Grills, Director
Walter Mintz, Director
Melvin R. Seiden, Director
Steven B. Swensrud, Director
Harry Woolf, Director
Terry K. Glenn, Executive Vice President
Norman R. Harvey, Senior Vice President
Donald C. Burke, Vice President
Lawrence R. Fuller, Vice President and
Portfolio Manager
Gerald M. Richard, Treasurer
Michael J. Hennewinkel, Secretary
<PAGE>
Custodian
The Chase Manhattan Bank, N.A.
Global Securities Services
4 Chase MetroTech Center, 18th Floor
Brooklyn, New York 11245
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
PORTFOLIO INFORMATION
Ten Largest Holdings Percent of
(Equity Investments) Net Assets
Compaq Computer Corp. 3.7%
The Coca-Cola Co. 3.1
Staples Inc. 3.0
First Financial Management Corp. 3.0
Amgen, Inc. 3.0
McDonald's Corp. 2.9
Duracell International Inc. 2.6
Pfizer Inc. 2.6
MCI Communications Corp. 2.5
Albertson's, Inc. 2.5
Percent of
Ten Largest Industries Net Assets
Retail Specialty 6.0%
Pharmaceuticals 5.6
Beverages 5.1
Information Processing 4.9
Telecommunications 4.7
Household Products 4.5
Cosmetics 4.3
Broadcast--Cable 4.1
Computers 3.7
Chemical Producers 3.3
<PAGE>
Portfolio Changes for the Quarter Ended
February 28, 1995
Additions
3Com Corp.
Eastman Kodak Co.
Emerson Electric Co.
Deletions
Bell Atlantic Corp.
Best Buy Company, Inc. (Convertible Preferred)
Cifra, S.A. de C.V., 'C'
cisco Systems, Inc.
Computer Associates International, Inc.
Consorcio G Grupo Dina, S.A. de C.V. (ADR)
Daimler-Benz AG (ADR)
Dollar General Corporation
Fingerhut Companies, Inc.
General Reinsurance Corp.
Grupo Televisa, S.A. de C.V., 'L' (GDS)
Infinity Broadcasting Corp.
MGIC Investment Corp.
NovaCare, Inc.
Reliance Group Holdings, Inc.
Vodafone Group PLC (ADR)
