MERRILL LYNCH
ASSET GROWTH
FUND, INC.
FUND LOGO
Quarterly Report
May 31, 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.
<PAGE>
Merrill Lynch
Asset Growth
Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
MERRILL LYNCH ASSET GROWTH FUND, INC.
Worldwide
Investments as of
May 31, 1995
Percent Breakdown of
Stocks & Fixed-Income Percent of
Securities by Country Net Assets++
United States 40.9%
Japan 20.2
United Kingdom 5.8
Hong Kong 3.7
Germany 3.1
Switzerland 3.0
France 2.9
Malaysia 2.3
Canada 2.0
Singapore 1.6
Argentina 1.5
Australia 1.5
Mexico 1.5
Italy 1.5
Chile 1.1
Netherlands 1.1
Sweden 1.0
Norway 1.0
Indonesia 0.9
Spain 0.9
Philippines 0.8
Thailand 0.8
[FN]
++Percent of net assets may not total 100%.
<PAGE>
Ten Largest Industries Percent of
(Equity Investments) Net Assets
Chemicals 6.3%
Telecommunications 4.9
Electronics 4.5
Capital Goods 4.4
Building & Construction 3.9
Multi-Industry 3.4
Machinery 3.2
Electrical Equipment 3.2
Building Materials 3.0
Petroleum 2.8
Country Percent
Ten Largest Holdings of of Net
(Equity Investments) Origin Assets
Eastman Kodak Co. US 1.4%
Ford Motor Co. US 1.3
Dresser Industries, Inc. US 1.3
Fisher Scientific International, Inc. US 1.3
General Signal Corp. US 1.3
Pitney Bowes, Inc. US 1.3
Keystone International, Inc. US 1.3
Abbott Laboratories US 1.2
Phillips Petroleum Company. US 1.2
Hong Leong Industries BHD. Malaysia 1.2
DEAR SHAREHOLDER
Increasing signs of slowing economic growth led to higher US stock
and bond prices during the May quarter. Recent declines in
indicators such as new home sales and durable goods orders were
reflected in the slight downward revision in first-quarter gross
domestic product growth to 2.7% from 2.8%. At the same time,
inventories of unsold goods grew at a slower rate than previously
estimated, while consumer, residential construction and capital
goods spending were revised upward. As a result, it appears that the
economy is losing enough momentum to keep inflation under control
and preclude further significant monetary policy tightening by the
Federal Reserve Board.
<PAGE>
Despite some periods of strengthening, the US dollar has been
persistently weak relative to the yen and the Deutschemark. Large
trade deficits and exports of capital from the United States have
kept the US currency in a decade-long decline relative to the
Japanese and German currencies. Over the longer term, since the
United States has the highest productivity among industrialized
nations and among the lowest labor costs, demand for US dollar-
denominated assets may improve. However, a reduction of the still-
widening US trade deficit may be necessary before the US dollar
appreciates substantially relative to the yen and the Deutschemark.
Another important factor that will continue to influence currency
markets is the increasing possibility of US/Japanese trade
sanctions.
Thus far in 1995, economic developments have been very positive for
the US stock and bond markets. Continued signs of a moderating
expansion and well-contained inflationary pressures would provide
further assurance that the peak in interest rates is behind us,
creating a stronger foundation for higher stock and bond prices. On
the other hand, indications of reaccelerating growth and increasing
inflationary pressures would be negative developments for the US
financial markets.
Portfolio Matters
As of May 31, 1995, the Fund's asset allocation was: foreign stocks,
58% of net assets; US stocks, 25%; US bonds, 16%; and cash and cash
equivalents, 1%. Our position in US stocks, the largest single
country allocation, was relatively unchanged during the three months
ended May 31, 1995. While we liquidated positions in J.P. Morgan &
Co. Inc., GTE Corp. and Ingersoll-Rand Co., we added commitments in
Stewart & Stevenson Services, Inc., Ford Motor Co. and Fisher
Scientific International, Inc.
After a significant advance since late 1994, the US stock market
still appears attractive. Evidence is growing that the US economy is
slowing down. However, since the slowdown is not expected to be
severe, US corporate earnings should not be highly vulnerable.
Assuming that earnings are not disappointing, the US stock market
still appears to be reasonably valued and offers potential for
further appreciation over the next 6 months--12 months, in our view.
<PAGE>
We enlarged our commitment to Japanese equities, taking advantage of
market weakness. While we eliminated our position in Tokyo Electric
Power Co., Inc., we established new positions in Kyocera Corp.,
Makita Corp., Sekisui Chemical Co., Ltd. and Mitsubishi Trust &
Banking Corp. After significant underperformance since mid-1994, we
believe that the Japanese stock market offers potential for
substantial recovery. Stocks seem particularly attractive relative
to alternative investments in Japan, with yields on money market
instruments approaching 1% and the yields on intermediate-term bonds
under 3% as of the end of May 1995. The Japanese stock market could
also benefit from a favorable resolution of the trade dispute with
the United States over autos and auto parts, the announcement of a
program to strengthen the financial system, and more accommodative
fiscal and monetary policies. Since we expect the yen to weaken
relative to the US dollar, we hedged the currency by selling yen
forward versus the US dollar to the equivalent cash value of 65% of
the value of the Japanese equity positions.
We also expanded the already overweighted position in emerging
market equities, and, in particular, in East Asian markets through a
position in Philippine Long Distance Telephone Co. We believe that
these markets are likely to benefit from superior economic prospects
as well as from lower interest rates worldwide. Recovery in Latin
American markets should continue, reflecting evidence of further
improvement in the Mexican financial situation. Our position in
European equities remains selective, with emphasis placed on capital
spending, telecommunications and energy-related companies with above-
average earnings prospects.
As for the bond representation, we maintain positions in high-yield
US obligations. In addition to providing average current yields of
better than 10%, these bonds have appreciated in line with a decline
in US interest rates since late 1994. In our opinion, potential
exists for modest further appreciation in these fixed-income
positions, as evidence of a slowing US economy should result in a
further decline in intermediate and longer-term US interest rates in
the months ahead.
In Conclusion
We thank you for your investment in Merrill Lynch Asset Growth Fund,
Inc., and we look forward to reviewing our outlook and strategy with
you in our upcoming annual report to shareholders.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Joel Heymsfeld)
Joel Heymsfeld
Vice President and Portfolio Manager
June 22, 1995
<PAGE>
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.
* Class B Shares are subject to a maximum contingent deferred sales
charge of 4% if redeemed during the first year, decreasing 1% each
year thereafter to 0% after the fourth year. In addition, Class B
Shares are subject to a distribution fee of 0.75% and an account
maintenance fee of 0.25%. These shares automatically convert to
Class D Shares after approximately 8 years.
* Class C Shares are subject to a distribution fee of 0.75% and an
account maintenance fee of 0.25%. In addition, Class C Shares are
subject to a 1% contingent deferred sales charge if redeemed within
one year of purchase.
* Class D Shares incur a maximum initial sales charge of 5.25% and
an account maintenance fee of 0.25% (but no distribution fee).
Performance data for all of the Fund's shares are presented in the
"Aggregate Total Return" tables below and the "Recent Performance
Results" table on page 5. The "Recent Performance Results" table
shows investment results before the deduction of any sales charges
for the Fund's shares for the since inception periods and 3-month
period ended May 31, 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>
Aggregate
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Inception (9/02/94)
through 3/31/95 -7.42% -12.28%
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Inception (9/02/94)
through 3/31/95 -8.01% -11.69%
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Inception (10/21/94)
through 3/31/95 -6.57% -7.50%
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
<PAGE>
% Return Without % Return With
Sales Charge Sales Charge**
Class D Shares*
Inception (10/21/94)
through 3/31/95 -6.23% -11.16%
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
<TABLE>
Recent
Performance
Results*
<CAPTION>
Since Inception 3 Month
5/31/95 2/28/95 Inception++ % Change++ % Change
<S> <C> <C> <C> <C> <C>
Class A Shares $9.55 $9.09 $10.00 -4.50% +5.06%
Class B Shares 9.51 9.07 10.00 -4.90 +4.85
Class C Shares 9.50 9.06 9.85 -3.55 +4.86
Class D Shares 9.55 9.08 9.86 -3.14 +5.18
Class A Shares--Total Return -4.11(1) +5.06
Class B Shares--Total Return -4.81(2) +4.85
Class C Shares--Total Return -3.31(3) +4.86
Class D Shares--Total Return -2.77(4) +5.18
<FN>
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included.
++Class A and Class B Shares commenced operations on 9/02/94. Class
C and Class D Shares commenced operations on 10/21/94.
(1)Percent change includes reinvestment of $0.038 per share ordinary
income dividends.
(2)Percent change includes reinvestment of $0.009 per share ordinary
income dividends.
(3)Percent change includes reinvestment of $0.023 per share ordinary
income dividends.
(4)Percent change includes reinvestment of $0.036 per share ordinary
income dividends.
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (In US dollars)
<CAPTION>
Shares Percent of
COUNTRY Industries Held Common Stocks Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Argentina Banking 5,500 Banco Frances del Rio de la Plata S.A.
(ADR) (a) $ 170,444 $ 107,250 0.6%
Oil & Gas 8,000 Yacimientos Petroliferos Fiscales S.A.
Producers (Sponsored) (ADR) (a) 186,139 162,000 0.9
Total Common Stocks in Argentina 356,583 269,250 1.5
Australia Multi-Industry 50,000 CSR Ltd. 170,559 157,908 0.9
50,000 Pacific Dunlop Ltd. 151,296 106,831 0.6
Total Common Stocks in Australia 321,855 264,739 1.5
Canada Natural 9,500 Canadian Pacific Ltd. 169,195 162,688 0.9
Resources
Telecommuni- 5,000 Northern Telecommunications Ltd. 174,050 191,875 1.1
cations
Total Common Stocks in Canada 343,245 354,563 2.0
Chile Banking 9,000 Banco O'Higgins S.A. (ADR) (a) 183,915 190,125 1.1
Total Common Stocks in Chile 183,915 190,125 1.1
France Building & 1,400 Compagnie de Saint Gobain 168,830 175,388 1.0
Construction
Capital Goods 8,000 Alcatel Alsthom (ADR) (a) 174,480 146,000 0.8
Petroleum 3,000 TOTAL S.A. (Class B) 178,190 l86,161 1.1
Total Common Stocks in France 521,500 507,549 2.9
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (In US dollars)
<CAPTION>
Shares Percent of
COUNTRY Industries Held Common Stocks Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Germany Electronics 400 Siemens AG $ 177,405 $ 190,530 1.1%
Machinery & 600 Mannesmann AG 167,773 175,985 1.0
Equipment
Multi-Industry 600 Preussag AG 180,772 178,622 1.0
<PAGE>
Total Common Stocks in Germany 525,950 545,137 3.1
Hong Kong Chemicals 500,000 Shanghai Petrochemical Co., Ltd. 167,118 166,456 0.9
Multi-Industry 20,000 Swire Pacific Ltd. 'A' 169,462 154,497 0.9
Real Estate 22,000 Sun Hung Kai Properties, Ltd. 168,928 159,280 0.9
Utilities-- 32,000 China Light & Power Co., Ltd. 167,608 175,001 1.0
Electric
Total Common Stocks in Hong Kong 673,116 655,234 3.7
Indonesia Telecommuni- 4,190 P.T. Indonesian Satellite (ADR) (a) 162,969 165,505 0.9
cations
Total Common Stocks in Indonesia 162,969 165,505 0.9
Italy Building 45,000 Italcementi S.p.A. 183,136 141,004 0.8
Materials
Telecommuni- 40,000 Societa Finanziara Telefonica S.p.A. (STET) 121,375 115,667 0.7
cations
Total Common Stocks in Italy 304,511 256,671 1.5
Japan Building & 15,000 Maeda Corp. 167,593 171,023 1.0
Construction 20,000 Okumura Corp. 171,072 177,646 1.0
----------- ----------- ------
338,665 348,669 2.0
Building 14,000 Asahi Glass Co., Ltd. 172,319 173,862 1.0
Materials
Capital Goods 20,000 Hitachi Cable Ltd. 172,962 153,755 0.9
20,000 Mitsubishi Heavy Industries, Ltd. 161,560 137,433 0.8
----------- ----------- ------
334,522 291,188 1.7
Chemicals 12,000 Sekisui Chemical Co., Ltd. 149,020 141,076 0.8
Consumer-- 4,000 Rohm Co. 171,777 182,614 1.0
Electronics
<PAGE>
Electrical 24,000 Mitsubishi Electric Co. 165,781 166,056 0.9
Equipment
Electronics 2,000 Kyocera Corp. 158,278 152,099 0.9
10,000 Makita Corp. 151,915 154,938 0.9
10,000 Matsushita Electric Industrial Co., Ltd. 168,023 154,938 0.9
9,000 Sharp Corp. 161,720 127,735 0.7
----------- ----------- ------
639,936 589,710 3.4
Financial 5,000 Mitsubishi Trust & Banking Corp. 90,460 81,017 0.5
Services
Insurance 20,000 Nippon Fire & Marine Insurance Co., Ltd. 150,777 126,552 0.7
14,000 Tokio Marine & Fire Insurance Co., Ltd. 168,933 160,615 0.9
----------- ----------- ------
319,710 287,167 1.6
Machinery 18,000 Komatsu Ltd. 168,239 140,296 0.8
20,000 Makino Milling Machine Co. 177,637 130,101 0.7
----------- ----------- ------
345,876 270,397 1.5
Petroleum 23,000 Nippon Oil Co., Ltd. 170,284 149,616 0.8
Photography 9,000 Canon, Inc. 156,955 140,509 0.8
Printing & 9,000 Dai Nippon Printing Co., Ltd. 167,255 138,380 0.8
Publishing
Retail Stores 3,000 Ito-Yokado Co., Ltd. 160,796 158,959 0.9
Textiles 21,000 Toray Industries Ltd. 165,267 136,109 0.8
Trading 15,000 Kamigumi Co., Ltd. 174,860 141,750 0.8
17,000 Sumitomo Corp. 171,167 154,417 0.9
----------- ----------- ------
346,027 296,167 1.7
Total Common Stocks in Japan 3,894,650 3,551,496 20.2
Malaysia Automotive & 70,000 UMW Holdings BHD 183,210 188,920 1.1
Equipment
Building 35,000 Hong Leong Industries BHD 187,829 214,489 1.2
Materials
Total Common Stocks in Malaysia 371,039 403,409 2.3
<PAGE>
Mexico Capital Goods 34,000 Cementos Mexicanos, S.A. de C.V. (Class B)
(Cemex) 224,841 110,465 0.6
Retail Stores 60,000 Cifra, S.A. de C.V. 'C' 164,781 74,449 0.4
Telecommuni- 11,400 Empresas ICA Sociedad Controladora,
cations S.A. de C.V. (ADR) (a) 222,744 79,800 0.5
Total Common Stocks in Mexico 612,366 264,714 1.5
Nether- Oil-- 1,500 Royal Dutch Petroleum N.V. (ADR)(a) 162,683 190,125 1.1
lands International
Total Common Stocks in the Netherlands 162,683 190,125 1.1
Norway Shipping 4,000 Kvaerner A.S. (Class B) 175,700 167,904 1.0
Total Common Stocks in Norway 175,700 167,904 1.0
Philippines Telecommuni- 2,000 Philippine Long Distance Telephone Co.
cations (ADR) (a) 139,932 143,750 0.8
Total Common Stocks in the Philippines 139,932 143,750 0.8
Singapore Machinery 17,000 Jurong Shipyard Ltd. 162,465 140,365 0.8
Shipping 110,000 Neptune Orient Lines Ltd. 170,752 134,262 0.8
Total Common Stocks in Singapore 333,217 274,627 1.6
Spain Petroleum 5,000 Repsol S.A. (ADR) (a) 160,925 163,125 0.9
Total Common Stocks in Spain 160,925 163,125 0.9
Sweden Engineering & 9,000 SKF AB 'B' Free 160,889 175,510 1.0
Construction
Total Common Stocks in Sweden 160,889 175,510 1.0
Switzerland Building & 200 Holderbank Financiere Glarus AG (Bearer) 147,046 159,245 0.9
Construction
<PAGE>
Electrical 200 BBC Brown Boveri & Cie (Bearer) 181,431 204,376 1.2
Equipment
Machinery 250 Sulzer Gebrueder AG 178,420 160,875 0.9
Total Common Stocks in Switzerland 506,897 524,496 3.0
Thailand Real Estate 60,000 MDX Company Ltd. 246,175 138,630 0.8
Total Common Stocks in Thailand 246,175 138,630 0.8
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (In US dollars)
<CAPTION>
Shares Percent of
COUNTRY Industries Held Common Stocks Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
United Beverages 6,200 Grand Metropolitan PLC (ADR) (a) $ 170,432 $ 156,550 0.9%
Kingdom
Business 55,000 Lucas Industries PLC (Ordinary) 171,851 165,915 0.9
Services
Chemicals 3,300 Imperial Chemical Industries PLC (ADR) (a) 170,627 167,475 1.0
Conglomerates 8,500 Hanson PLC (Sponsored) (ADR) (a) 163,073 161,500 0.9
Electrical 37,000 General Electric Co. PLC (Ordinary) 167,508 187,984 1.1
Equipment
Utilities--Gas 3,600 British Gas PLC (ADR) (a) 165,852 174,600 1.0
Total Common Stocks in the United Kingdom 1,009,343 1,014,024 5.8
United Aerospace & 2,600 United Technologies Corp. 164,307 197,275 1.1
States Defense
Agriculture 9,750 Archer-Daniels-Midland Co. 168,577 180,375 1.0
Automobile Parts 4,000 Stewart & Stevenson Services, Inc. 141,594 131,500 0.7
Automobiles 8,000 Ford Motor Co. 214,755 234,000 1.3
Capital Goods 10,200 Keystone International, Inc. 195,499 220,575 1.3
<PAGE>
Chemicals 3,500 Eastman Chemical Co. 183,182 210,000 1.2
5,100 Nalco Chemical Co. 168,231 192,525 1.1
----------- ----------- ------
351,413 402,525 2.3
Commercial-- 6,100 Kelly Services, Inc. (Class A) 182,125 176,900 1.0
Services
Hardware Products 5,000 The Stanley Works Co. 196,655 200,000 1.1
Hospital Supplies 5,500 Abbott Laboratories 173,580 220,000 1.2
Industrial 6,000 Comsat Corp. 126,006 117,000 0.7
Manufacturing 7,000 Fisher Scientific International, Inc. 215,580 228,375 1.3
Office-Related 6,000 Pitney Bowes, Inc. 191,454 222,000 1.3
Oil--Integrated 6,000 Phillips Petroleum Company 206,370 217,500 1.2
Oil Services 10,000 Dresser Industries, Inc. 202,207 228,750 1.3
3,000 Schlumberger Ltd., Inc. 170,865 195,000 1.1
----------- ----------- ------
373,072 423,750 2.4
Pharmaceuticals 4,500 Merck & Co., Inc. 153,832 212,062 1.2
Photography 4,100 Eastman Kodak Co. 214,194 247,537 1.4
Pollution Control 6,000 General Signal Corp. 211,357 222,000 1.3
13,000 Wheelabrator Technologies Inc. 210,060 198,250 1.1
----------- ----------- ------
421,417 420,250 2.4
Telecommuni- 3,000 Bell Atlantic Corp. 147,930 167,250 0.9
cations
Utilities-- 3,900 AT&T Corp. 208,199 197,925 1.1
Communications
Total Common Stocks in the United States 4,046,559 4,416,799 24.9
Total Investments in Common Stocks 15,214,019 14,637,382 83.1
<CAPTION>
Face Amount Fixed-Income Securities
<S> <S> <C> <S> <C> <C> <C>
United Airlines US$ 200,000 USAir Inc., 10.375% due 3/01/2013 178,000 190,000 1.1
States
<PAGE>
Broadcast & 200,000 Sinclair Broadcast Group, Inc., 10% due
Publishing 12/15/2003 187,000 198,000 1.1
Chemicals 325,000 G-I Holdings Inc., 12.27%* due 10/01/1998 218,110 221,000 1.3
Communications 225,000 Panamsat L.P., 7.8548%* due 8/01/2003 152,079 159,750 0.9
Cosmetics 200,000 Revlon Consumer Products Corp., 9.375% due
4/01/2001 180,222 193,000 1.1
Energy 200,000 TransTexas Gas Corp., 10.50% due 9/01/2000 193,500 215,500 1.2
Financial 200,000 Reliance Group Holdings, Inc., 9.75% due
Services 11/15/2003 180,000 194,500 1.1
100,000 Videotron Holdings PLC, 10.625% due 2/15/2005 99,375 105,750 0.6
----------- ----------- ------
279,375 300,250 1.7
Hotels & 200,000 Bally's Park Place Funding Corp., 9.25% due
Casinos 3/15/2004 171,750 183,000 1.0
200,000 John Q. Hammons Hotel, 8.875% due 2/15/2004 178,500 191,000 1.1
----------- ----------- ------
350,250 374,000 2.1
Industrial 200,000 ADT Operations, 9.25% due 8/01/2003 191,250 204,500 1.2
Services
Paper 200,000 Stone Container Corp., 11.50% due 10/01/2004 198,564 214,000 1.2
Restaurants 200,000 Flagstar Corp., 11.375% due 9/15/2003 176,000 154,000 0.9
Textiles 200,000 WestPoint Stevens, Inc., 9.375% due 12/15/2005 182,000 196,000 1.1
Utilities-- 200,000 CTC Mansfield Funding Corp., 10.25% due
Electric 3/30/2003 185,500 199,500 1.1
Total Investments in Fixed-Income
Securities 2,671,850 2,819,500 16.0
Total Investments $17,885,869 17,456,882 99.1
===========
Unrealized Depreciation on Forward Foreign Exchange Contracts++ (321,362) (1.8)
Other Assets Less Liabilities 484,786 2.7
----------- ------
Net Assets $17,620,306 100.0%
=========== ======
<PAGE>
Net Asset Value: Class A--Based on net assets of $1,968,819 and 206,053
shares outstanding $ 9.55
===========
Class B--Based on net assets of $13,283,042 and
1,396,449 shares outstanding $ 9.51
===========
Class C--Based on net assets of $744,401 and 78,326
shares outstanding $ 9.50
===========
Class D--Based on net assets of $1,624,044 and 170,139
shares outstanding $ 9.55
===========
<FN>
*Represents a zero coupon or step bond; the interest rate shown is
the effective yield at the time of purchase.
(a)American Depositary Receipt (ADR).
++Forward foreign exchange contracts as of May 31, 1995 were as
follows:
Foreign Currency Expiration Unrealized
Sold Date Depreciation
YEN 191,672,000 July 1995 $(321,362)
Total Unrealized Depreciation--Net on Forward Foreign
Exchange Contracts (US Commitment--$1,959,836) $(321,362)
==========
</TABLE>
PORTFOLIO CHANGES
For the Quarter Ended May 31, 1995
Additions
Fisher Scientific International, Inc.
Ford Motor Co.
*HMH Properties, Inc.
Kyocera Corp.
Makita Corp.
Mitsubishi Trust & Banking Corp.
Philippine Long Distance
Telephone Co. (ADR)
Sekisui Chemical Co., Ltd.
Societa Finanziara Telefonica S.p.A. (STET)
Stewart & Stevenson Services, Inc.
<PAGE>
Deletions
Consorcio G Grupo Dina, S.A. de C.V. (ADR)
GTECorp.
*HMH Properties, Inc.
Hafslund Nycomed A.S. (ADR)
Host Marriott Hospitality, Inc.,
10.375% due 6/15/2011
Ingersoll-Rand Co.
Morgan (J.P.) & Co., Inc.
National Medical Enterprises Inc.,
9.625% due 9/01/2002
Telefonica de Espana S.A. (ADR)
Tokyo Electric Power Co., Inc.
[FN]
*Added and deleted in the same quarter.
OFFICERS AND DIRECTORS
Arthur Zeikel, President and Director
Joe Grills, Director
Walter Mintz, Director
Melvin R. Seiden, Director
Stephen B. Swensrud, Director
Harry Woolf, Director
Terry K. Glenn, Executive Vice President
Bernard J. Durnin, Senior Vice President
Donald C. Burke, Vice President
Joel Heymsfeld, Vice President
Gerald M. Richard, Treasurer
Mark B. Goldfus, Secretary
Custodian
The Chase Manhattan Bank, N.A.
4 MetroTech Center, 18th Floor
Brooklyn, New York 11245
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
Transfer Agency Mutual Fund Operations
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
<PAGE>
