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MERRILL LYNCH
ASSET INCOME
FUND, INC.
FUND LOGO
Quarterly Report
September 30, 1999
Officers and Directors
Terry K. Glenn, President and Director
Joe Grills, Director
Walter Mintz, Director
Robert S. Salomon Jr., Director
Melvin R. Seiden, Director
Stephen B. Swensrud, Director
Arthur Zeikel, Director
Robert C. Doll, Senior Vice President
Thomas R. Robinson, Senior Vice President and
Portfolio Manager
Donald C. Burke, Vice President and Treasurer
Barbara G. Fraser, Secretary
Custodian
The Chase Manhattan Bank
4 MetroTech Center, 18th Floor
Brooklyn, NY 11245
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800)637-3863
Investing in emerging market securities involves a number of risk
factors and special considerations, including restrictions on
foreign investments and on repatriation of capital invested in
emerging markets, currency fluctuations, and potential price
volatility and less liquidity of securities traded in emerging
markets. In addition, there may be less publicly available
information about the issuers of securities, and such issuers may
not be subject to accounting, auditing and financial reporting
standards and requirements comparable to those to which US companies
are subject. Therefore, the Fund is designed as a long-term
investment for investors capable of assuming the risks of investing
in emerging markets. The Fund should be considered as a vehicle for
diversification and not as a complete investment program. Please
refer to the prospectus for details.
This report is not authorized for use as an offer of sale or a
solicitation of an offer to buy shares of the Fund unless
accompanied or preceded by the Fund's current prospectus. Past
performance results shown in this report should not be considered a
representation of future performance. Investment return and
principal value of shares will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
Statements and other information herein are as dated and are subject
to change.
Merrill Lynch
Asset Income
Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
Printed on post-consumer recycled paper
MERRILL LYNCH ASSET INCOME FUND, INC.
Worldwide
Investments as of
September 30, 1999
Breakdown of
Stocks & Fixed-Income Percent of
Securities by Country Net Assets++
United States* 71.3%
Germany 10.4
Japan 4.4
United Kingdom 3.0
France 1.7
Netherlands 1.3
Switzerland 1.0
Spain 0.8
Brazil 0.6
Canada 0.5
Sweden 0.4
Finland 0.3
Australia 0.3
Italy 0.3
Ireland 0.2
South Korea 0.1
Norway 0.1
Bermuda 0.0+++
Austria 0.0+++
Denmark 0.0+++
Hong Kong 0.0+++
[FN]
*Includes investments in short-term securities.
++Percent of net assets may not equal 100%.
+++Percent of net assets is less than 0.1%.
Ten Largest Industries Percent of
(Equity Investments) Net Assets
Banking 2.8%
Telecommunications 2.3
Electronics 1.7
Pharmaceuticals 1.0
Chemicals 1.0
Diversified 0.7
Computer Services & Software 0.7
Insurance 0.6
Computers 0.6
Retail--Stores 0.5
Ten Largest Holdings Percent of
(Equity Investments) Net Assets
Wells Fargo Company 0.8%
UBS AG (Registered Shares) 0.4
Softbank Corporation 0.3
Ito-Yokado Co., Ltd. (ADR) 0.3
General Electric Company 0.3
STMicroelectronics NV
(NY Registered Shares) 0.3
Colgate-Palmolive Company 0.3
Microsoft Corporation 0.3
Mannesmann AG 0.3
Fujitsu Limited 0.3
Merrill Lynch Asset Income Fund, Inc., September 30, 1999
DEAR SHAREHOLDER
As of September 30, 1999, the asset allocation for Merrill Lynch
Asset Income Fund, Inc. was: US bonds, 61% of net assets; foreign
bonds, 9%; US stocks, 9%; foreign stocks, 16%; and cash reserves,
5%.
A favorable assessment of foreign equity market prospects led us to
increase our foreign stock representation from 9% of net assets to
16% during the September quarter. After increasing the Fund's
Japanese equity representation in prior months, we maintained an
overweight commitment in Japan relative to the benchmark unmanaged
Morgan Stanley Capital International Europe Australasia Far East
Index. At September 30, 1999, Europe was the largest regional
commitment in the Fund. We also maintained positions in Asian
markets outside Japan and in Latin America through Brazilian
equities. Within our foreign equity holdings, we continued to
emphasize sectors where above-average earnings growth is projected
over the next several years and valuations appear reasonable. Areas
that we believe fulfill these criteria included healthcare,
telecommunications service and equipment and financial services.
We reduced the Fund's US common stock commitment from 10% of net
assets to 9% during the three months ended September 30, 1999.
However, the emphasis among our US equity holdings stayed on the
shares of companies that appeared capable of exhibiting above-
average earnings growth over a period of years and where valuations
appeared reasonable relative to earnings growth potential. The
largest single group represented among US equity holdings remained
technology. Other areas with significant representation in the
portfolio included consumer staples, healthcare and financial
services.
During the three months ended September 30, 1999, the US economy
continued to demonstrate the strength that has prevailed throughout
the year. As a result, the Federal Reserve Board continued its
process of gradually tightening monetary policy in order to ensure
that economic strength did not lead to an acceleration of inflation.
This background led us to pursue an increasingly defensive posture
within the US fixed-income sector of the portfolio. During the
September quarter, we reduced the Fund's allocation to US bonds from
69% of net assets to 61% and its average duration from 7.1 years to
6.3 years. In addition, we reduced the Fund's foreign bond
commitment from 12% of net assets to 9% during the September
quarter, although we maintained our positions in German and UK fixed-
income securities.
In Conclusion
We thank you for your investment in Merrill Lynch Asset Income Fund,
Inc., and we look forward to reviewing our outlook and strategy with
you in our next report to shareholders.
Sincerely,
(Terry K. Glenn)
Terry K. Glenn
President and Director
(Thomas R. Robinson)
Thomas R. Robinson
Senior Vice President and
Portfolio Manager
October 28, 1999
PERFORMANCE DATA
About Fund Performance
Investors are able to purchase shares of the Fund through the
Merrill Lynch Select Pricing SM System, which offers four pricing
alternatives:
* Class A Shares incur a maximum initial sales charge (front-end
load) of 4% and bear no ongoing distribution or account maintenance
fees. Class A Shares are available only to eligible investors.
* Class B Shares are subject to a maximum contingent deferred sales
charge of 4% if redeemed during the first year, decreasing 1% each
year thereafter to 0% after the fourth year. In addition, Class B
Shares are subject to a distribution fee of 0.50% and an account
maintenance fee of 0.25%. These shares automatically convert to
Class D Shares after approximately 10 years. (There is no initial
sales charge for automatic share conversions.)
* Class C Shares are subject to a distribution fee of 0.55% 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 4% and an
account maintenance fee of 0.25% (but no distribution fee).
None of the past results shown should be considered a representation
of future performance. Figures shown in the "Recent Performance
Results" and "Average Annual Total Return" tables assume
reinvestment of all dividends and capital gains distributions at net
asset value on the payable date. Investment return and principal
value of shares will fluctuate so that shares, when redeemed, may be
worth more or less than their original cost. Dividends paid to each
class of shares will vary because of the different levels of account
maintenance, distribution and transfer agency fees applicable to
each class, which are deducted from the income available to be paid
to shareholders.
Average Annual
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 9/30/99 +2.99% -1.13%
Five Years Ended 9/30/99 +8.41 +7.53
Inception (9/02/94)
through 9/30/99 +8.18 +7.31
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 9/30/99 +2.12% -1.65%
Five Years Ended 9/30/99 +7.58 +7.58
Inception (9/02/94)
through 9/30/99 +7.36 +7.36
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Year Ended 9/30/99 +1.97% +1.03%
Inception (10/21/94)
through 9/30/99 +7.64 +7.64
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Sales Charge Sales Charge**
Class D Shares*
Year Ended 9/30/99 +2.53% -1.57%
Inception (10/21/94)
through 9/30/99 +8.21 +7.32
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
Merrill Lynch Asset Income Fund, Inc., September 30, 1999
PERFORMANCE DATA (concluded)
<TABLE>
Recent
Performance
Results*
<CAPTION>
3 Month 12 Month Since Inception Standardized
As of September 30, 1999 Total Return Total Return Total Return 30-Day Yield
<S> <C> <C> <C>
ML Asset Income Fund, Inc. Class A Shares -0.03% +2.99% +49.07% 4.01%
ML Asset Income Fund, Inc. Class B Shares -0.12 +2.12 +43.38 3.42
ML Asset Income Fund, Inc. Class C Shares -0.13 +1.97 +43.87 3.38
ML Asset Income Fund, Inc. Class D Shares 0.00 +2.53 +47.69 3.77
<FN>
*Investment results shown do not reflect sales charges; results
would be lower if a sales charge was included. Total investment
returns are based on changes in net asset values for the periods
shown, and assume reinvestment of all dividends and capital gains
distributions at net asset value on the payable date. The Fund's
since inception periods are from 9/02/94 for Class A & Class B
Shares and from 10/21/94 for Class C & Class D Shares.
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
Shares Percent of
COUNTRY Industries Held Common Stocks Value Net Assets
<S> <S> <C> <S> <C> <C>
Australia Broadcasting & Publishing 200 The News Corporation Limited (Preferred) (ADR)* $ 5,337 0.1%
Diversified 2,200 Broken Hill Proprietary Company Limited 25,337 0.2
Total Common Stocks in Australia 30,674 0.3
Austria Paper Products 87 Mayr-Melnhof Karton AG 3,853 0.0
Total Common Stocks in Austria 3,853 0.0
Bermuda Insurance 100 Ace Limited 1,694 0.0
Telecommunications & 100 Global Crossing Ltd. 2,644 0.0
Equipment
Total Common Stocks in Bermuda 4,338 0.0
Brazil Forest Products 890 Aracruz Celulose SA (ADR)* 18,579 0.2
Mining 1,150 Companhia Vale do Rio Doce 'A' (Preferred) 24,497 0.2
Telecommunications 1,000 Embratel Participacoes SA (ADR)* 11,437 0.1
207 Telecomunicacoes Brasileiras SA-Telebras
(Preferred Block) (ADR)* 15,512 0.1
----------- ------
26,949 0.2
Total Common Stocks in Brazil 70,025 0.6
Canada Communications Equipment 600 Nortel Networks Corporation 30,600 0.3
Oil 300 Alberta Energy Company Ltd. 8,659 0.1
Paper & Forest Products 700 Domtar, Inc. 7,219 0.0
Telecommunications 809 Teleglobe Inc. 12,489 0.1
Total Common Stocks in Canada 58,967 0.5
Denmark Commercial Services 50 ISS International Service System A/S 'B' 2,799 0.0
Total Common Stocks in Denmark 2,799 0.0
Finland Communications 316 Nokia Oyj 28,282 0.2
Equipment
Paper & Forest Products 200 UPM-Kymmene Oyj 6,811 0.1
Total Common Stocks in Finland 35,093 0.3
France Chemicals 431 Rhone-Poulenc SA 22,246 0.2
Electronics 215 Thomson CSF 7,299 0.1
Foods 24 Groupe Danone 5,836 0.0
Information Processing 15 Cap Gemini SA 2,363 0.0
Insurance 174 Axa 21,998 0.2
Metals 265 Pechiney SA 'A' 14,665 0.1
Oil--Related 43 Elf Aquitaine SA 7,505 0.1
Reinsurance 170 Scor 8,232 0.1
Semiconductor Capital 453 STMicroelectronics NV (NY Registered Shares) 33,522 0.3
Equipment
Supermarkets 109 Carrefour SA 17,434 0.2
Telecommunications 293 France Telecom SA 25,693 0.2
Utilities--Water 295 Vivendi 20,704 0.2
Total Common Stocks in France 187,497 1.7
Germany Chemicals 441 BASF AG 18,772 0.2
395 Henkel KGaA (Preferred) 24,843 0.2
----------- ------
43,615 0.4
Diversified 742 RWE AG 30,756 0.3
Electronics 356 Siemens AG 29,380 0.3
Machinery & Equipment 200 Mannesmann AG 31,926 0.3
Multi-Industry 483 Veba AG 26,446 0.2
Total Common Stocks in Germany 162,123 1.5
Hong Kong Multi-Industry 300 Hutchison Whampoa Limited 2,790 0.0
Total Common Stocks in Hong Kong 2,790 0.0
Ireland Banking 2,176 Bank of Ireland 17,761 0.2
Total Common Stocks in Ireland 17,761 0.2
Italy Oil & Gas Producers 3,000 ENI SpA 18,804 0.2
Publishing 388 Mondadori (Arnoldo) Editore SpA 6,772 0.1
Total Common Stocks in Italy 25,576 0.3
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Shares Percent of
COUNTRY Industries Held Common Stocks Value Net Assets
<S> <S> <C> <S> <C> <C>
Japan Automobiles 305 Honda Motor Co., Ltd. (ADR)* $ 24,953 0.2%
42 Toyota Motor Corporation (ADR)* 2,620 0.0
----------- ------
27,573 0.2
Banking 1,000 The Bank of Tokyo-Mitsubishi, Ltd. 15,365 0.1
1,000 The Sanwa Bank, Ltd. 13,392 0.1
1,000 The Sumitomo Bank, Ltd. 15,036 0.1
----------- ------
43,793 0.3
Computers 1,000 NEC Corporation 20,158 0.2
Cosmetics & 1,000 Kao Corporation 28,287 0.3
Toiletries
Distribution 100 Softbank Corporation 38,060 0.3
Electronics 1,000 Fujitsu Limited 31,200 0.3
1,000 Matsushita Electric Industrial Company, Ltd. 21,286 0.2
132 Sony Corporation (ADR)* 19,808 0.2
1,000 Toshiba Corporation 7,452 0.1
----------- ------
79,746 0.8
Glass 3,000 Nippon Sheet Glass Company, Ltd. 16,916 0.2
Insurance 2,000 The Tokio Marine & Fire Insurance Co. Ltd. 23,682 0.2
Internet 100 Internet Initiative Japan Inc. (ADR)* 6,350 0.1
Machine Tools 1,000 Minebea Company Ltd. 12,734 0.1
& Machinery
Merchandising 1,000 Marui Co., Ltd. 18,682 0.2
Retail 430 Ito-Yokado Co., Ltd. (ADR)* 34,615 0.3
Retail--Stores 3,000 The Daimaru, Inc. 15,196 0.1
2,000 Mitsukoshi, Ltd. 12,010 0.1
----------- ------
27,206 0.2
Steel 5,000 Nippon Steel Corporation 13,580 0.1
Telecommunications 1 NTT Mobile Communications Network, Inc. 19,735 0.2
2 Nippon Telegraph & Telephone Corporation (NTT) 24,622 0.2
----------- ------
44,357 0.4
Tires & Rubber 1,000 Bridgestone Corp. 28,005 0.3
Transport Services 3 East Japan Railway Company 19,115 0.2
Total Common Stocks in Japan 482,859 4.4
Netherlands Banking 1,316 ABN AMRO Holding NV 29,410 0.3
Broadcasting 256 Wolters Kluwer NV 'A' 8,772 0.1
& Publishing
Chemicals 458 Akzo Nobel NV 19,496 0.2
Computer Software 200 Baan Company, NV 2,841 0.0
85 Getronics NV 4,573 0.0
----------- ------
7,414 0.0
Electronic Components 65 ASM Lithography Holding NV 4,396 0.0
Foods 100 CSM NV 4,805 0.0
884 Koninklijke Ahold NV 29,022 0.3
----------- ------
33,827 0.3
Human Resources 250 Vedior NV 'A' 4,377 0.0
Multi-Industry 147 Unilever NV 'A' 9,971 0.1
287 Unilever NV (NY Registered Shares) 19,552 0.2
----------- ------
29,523 0.3
Retail 300 Vendex KBB NV 8,620 0.1
Total Common Stocks in the Netherlands 145,835 1.3
Norway Computer Software 356 Merkantildata ASA 3,653 0.1
262 Merkantildata ASA (Rights) (a) 4 0.0
----------- ------
3,657 0.1
Transport Services 200 Bergesen d.y. ASA 'B' 3,097 0.0
Total Common Stocks in Norway 6,754 0.1
South Korea Electronics 30 Samsung Electronics 4,860 0.0
Steel 300 Pohang Iron & Steel Company, Ltd. (ADR)* 9,394 0.1
Total Common Stocks in South Korea 14,254 0.1
Spain Building Materials 710 Uralita, SA 5,863 0.1
Petroleum--Domestic 1,403 Repsol-YPF, SA 27,458 0.3
Telecommunications 1,602 Telefonica SA 25,624 0.2
Utilities--Electric 1,363 Endesa SA 25,877 0.2
Total Common Stocks in Spain 84,822 0.8
Sweden Auto & Truck 221 Autoliv, Inc. 8,335 0.1
Automobile Parts 424 Haldex AB 5,330 0.0
Automobiles 200 Volvo AB 'B' 5,651 0.1
Banking 750 ForeningsSparbanken AB 12,175 0.1
Investment Management 1,070 Investment AB Bure 6,138 0.1
Real Estate 354 Fastighets AB Tornet 4,450 0.0
Investment Trusts
Total Common Stocks in Sweden 42,079 0.4
Switzerland Banking 162 Credit Suisse Group (Registered Shares) 29,664 0.3
Banking & Financial 165 UBS AG (Registered Shares) 46,474 0.4
Human Resources 8 Adecco SA (Registered Shares) 4,469 0.1
Pharmaceuticals 2 Roche Holding AG 23,126 0.2
Total Common Stocks in Switzerland 103,733 1.0
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Shares Percent of
COUNTRY Industries Held Common Stocks Value Net Assets
<S> <S> <C> <S> <C> <C>
United Banking 2,246 HSBC Holdings PLC $ 25,734 0.2%
Kingdom 1,793 Lloyds TSB Group PLC 22,285 0.2
----------- ------
48,019 0.4
Beverages 2,525 Diageo PLC 25,792 0.2
Diversified 5,700 Billiton PLC 23,881 0.2
Drugs 552 AstraZeneca Group PLC 23,145 0.2
Household Products 535 Reckitt & Colman PLC 6,641 0.1
Leisure 2,000 Hilton Group PLC 6,947 0.1
Oil--Integrated 462 Shell Transport & Trading Company (ADR)* 21,021 0.2
Oil--Related 1,111 BP Amoco PLC 20,283 0.2
Pharmaceuticals 918 Glaxo Wellcome PLC 23,938 0.2
Publishing 3,300 Reed International PLC 19,856 0.2
Railroads 500 Railtrack Group PLC 10,519 0.1
Real Estate 1,800 The British Land Company PLC 14,045 0.1
Retail--Stores 200 Dixons Group PLC 3,562 0.0
Telecommunications 1,620 British Telecommunications PLC 24,522 0.2
300 Cable & Wireless PLC 3,264 0.0
200 Energis PLC 4,718 0.1
1,288 Vodafone AirTouch PLC 30,490 0.3
----------- ------
62,994 0.6
Transport Services 1,300 The Peninsular and Oriental Steam Navigation
Company 19,603 0.2
Total Common Stocks in the United Kingdom 330,246 3.0
United Aerospace & Defense 261 United Technologies Corporation 15,481 0.1
States
Application 75 Siebel Systems, Inc. 4,997 0.0
Development
Software
Automobiles 330 Delphi Automotive Systems Corporation 5,301 0.1
Banking 199 Bank of America Corporation 11,082 0.1
262 The Bank of New York Company, Inc. 8,761 0.1
100 The Chase Manhattan Corporation 7,537 0.1
300 Mellon Bank Corporation 10,125 0.1
2,350 Wells Fargo Company 93,119 0.8
----------- ------
130,624 1.2
Beverages 375 PepsiCo, Inc. 11,344 0.1
Broadcasting/Cable 700 AT&T Corp.-Liberty Media Group (Class A) 25,987 0.2
Capital Equipment 100 Eaton Corporation 8,631 0.1
Chemicals 200 E.I. du Pont de Nemours and Company 12,175 0.1
400 Rohm and Haas Company 14,450 0.1
----------- ------
26,625 0.2
Computer Services 360 Cisco Systems, Inc. 24,660 0.2
/Software 150 International Business Machines Corporation 18,206 0.2
360 Microsoft Corporation 32,603 0.3
----------- ------
75,469 0.7
Computers 100 Compaq Computer Corporation 2,294 0.0
150 EMC Corporation 10,716 0.1
180 Sun Microsystems, Inc. 16,740 0.2
300 Tandy Corporation 15,506 0.1
----------- ------
45,256 0.4
Conglomerates 200 AlliedSignal Inc. 11,987 0.1
Consumer--Electronics 50 Dell Computer Corporation 2,091 0.0
Consumer Products 400 The Dial Corporation 10,200 0.1
Electronics 285 General Electric Company 33,790 0.3
366 Intel Corporation 27,198 0.3
----------- ------
60,988 0.6
Financial Services 150 Associates First Capital Corporation (Class A) 5,400 0.1
315 Citigroup Inc. 13,860 0.1
----------- ------
19,260 0.2
Financial Services 150 Household International, Inc. 6,019 0.1
--Consumer
Foods 450 Keebler Foods Company 13,444 0.1
Healthcare 200 Columbia/HCA Healthcare Corporation 4,237 0.0
Household Products 724 Colgate-Palmolive Company 33,123 0.3
150 The Procter & Gamble Company 14,063 0.1
----------- ------
47,186 0.4
Information 300 Unisys Corporation 13,538 0.1
Processing
Insurance 206 American International Group, Inc. 17,909 0.1
150 The Chubb Corporation 7,472 0.1
----------- ------
25,381 0.2
Laser Systems 190 JDS Uniphase Corporation 21,612 0.2
& Components
Machinery & Equipment 100 Caterpillar Inc. 5,481 0.1
Manufacturing 235 Tyco International Ltd. 24,264 0.2
Medical Technology 225 Johnson & Johnson 20,672 0.2
Metals 300 Alcoa Inc. 18,619 0.2
Miscellaneous 100 Union Pacific Resources Group Inc. 1,606 0.0
Materials &
Commodities
Natural Gas 524 Enron Corp. 21,615 0.2
Natural Resources 250 Burlington Resources Inc. 9,187 0.1
Oil--Integrated 150 Mobil Corporation 15,113 0.1
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTI0N>
Shares Percent of
COUNTRY Industries Held Common Stocks Value Net Assets
<S> <S> <C> <S> <C> <C>
United Oil Services 150 Schlumberger Limited $ 9,347 0.1%
States
(concluded) Paper & Forest 200 International Paper Company 9,612 0.1
Products
Petroleum 360 Unocal Corporation 13,343 0.1
Pharmaceutical-- 130 American Home Products Corporation 5,395 0.1
Diversified
Pharmaceuticals 400 Bristol-Myers Squibb Company 27,000 0.3
200 Cardinal Health, Inc. 10,900 0.1
150 Merck & Co., Inc. 9,722 0.1
450 Pfizer Inc. 16,172 0.1
100 Pharmacia & Upjohn, Inc. 4,963 0.0
----------- ------
68,757 0.6
Radio & Television 250 AMFM Inc. 15,219 0.1
Restaurants 300 McDonald's Corporation 12,900 0.1
Retail--Specialty 150 Lowe's Companies, Inc. 7,312 0.1
Retail--Stores 74 Best Buy Co., Inc. 4,593 0.0
150 Dayton Hudson Corporation 9,009 0.1
200 Federated Department Stores, Inc. 8,737 0.1
262 Safeway Inc. 9,972 0.1
----------- ------
32,311 0.3
Scientific Equipment 110 Millipore Corporation 4,132 0.0
Semiconductors 184 Motorola, Inc. 16,192 0.1
Telecommunications 423 AT&T Corp. 18,400 0.2
100 Clear Channel Communications, Inc. 7,987 0.1
200 GTE Corporation 15,375 0.1
125 Lucent Technologies Inc. 8,109 0.1
245 MCI WorldCom Inc. 17,594 0.1
----------- ------
67,465 0.6
Tobacco 200 Philip Morris Companies Inc. 6,838 0.1
Utilities--Communication 275 Ameritech Corporation 18,477 0.2
Utilities--Electric 225 Public Service Enterprise Group Incorporated 8,691 0.1
Wireless Communication 300 American Tower Corporation (Class A) 5,869 0.1
Equipment
Total Common Stocks in the United States 1,004,075 9.1
Total Investments in Common Stocks
(Cost--$2,595,596) 2,816,153 25.6
Face
Amount Fixed-Income Securities
Germany Foreign E 698,000 BundesObligation, 4.75% due 11/20/2001 757,891 6.8
Government 250,000 Deutschland Republic, 4.75% due 7/04/2028 229,308 2.1
Obligations
Total Fixed-Income Securities in Germany 987,199 8.9
United US Government Federal National Mortgage Association:
States Agency US$ 915,000 5.625% due 3/15/2001 910,992 8.3
Obligations 930,000 5.125% due 2/13/2004 886,113 8.0
1,020,000 5.25% due 1/15/2009 921,182 8.3
2,100,000 6.375% due 6/15/2009 2,057,349 18.7
----------- ------
4,775,636 43.3
US Government 1,180,000 US Treasury Bonds, 5.25% due 11/15/2028 1,022,730 9.3
Obligations 900,000 US Treasury Notes, 5.75% due 6/30/2001 900,844 8.2
----------- ------
1,923,574 17.5
Total Fixed-Income Securities in the
United States 6,699,210 60.8
Total Investments in Fixed-Income Securities
(Cost--$7,917,590) 7,686,409 69.7
Short-Term Securities
United Commercial Paper** 151,000 General Electric Capital Corp., 5.60% due
States 10/01/1999 151,000 1.4
Total Investments in Short-Term Securities
(Cost--$151,000) 151,000 1.4
Total Investments (Cost--$10,664,186) 10,653,562 96.7
Other Assets Less Liabilities 366,924 3.3
----------- ------
Net Assets $11,020,486 100.0%
=========== ======
Net Asset Value: Class A--Based on net assets of $357,864 and 36,133 shares
outstanding $ 9.90
===========
Class B--Based on net assets of $8,338,921 and 843,194 shares
outstanding $ 9.89
===========
Class C--Based on net assets of $716,067 and 72,372 shares
outstanding $ 9.89
===========
Class D--Based on net assets of $1,607,634 and 162,645 shares
outstanding $ 9.88
===========
<FN>
*American Depositary Receipts (ADR).
**Commercial Paper is traded on a discount basis; the interest rate
shown reflects the discount rate paid at the time of purchase by the
Fund.
(a)The rights may be exercised until 10/19/1999.
</TABLE>
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