MERRILL LYNCH
ASSET GROWTH
FUND,INC.
FUND LOGO
Semi-Annual Report
February, 29, 1996
Officers and Directors
Arthur Zeikel, President and Director
Joe Grills, Director
Walter Mintz, Director
Robert S. Salomon Jr., Director
Melvin R. Seiden, Director
Stephen B. Swensrud, Director
Terry K. Glenn, Executive Vice President
Richard L. Reller, 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, NY 11245
<PAGE>
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800)637-3863
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
Growth Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
<PAGE>
MERRILL LYNCH ASSET GROWTH FUND, INC.
Worldwide
Investments as of
February 29, 1996
Percent Breakdown of
Stocks & Fixed-Income Percent of
Securities by Country Net Assets++
United States 50.1%
Japan 16.8
Germany 4.5
Canada 3.2
Switzerland 2.4
Argentina 2.4
Italy 2.3
Netherlands 2.2
Hong Kong 2.2
Philippines 2.0
Mexico 1.7
United Kingdom 1.6
Finland 1.5
Spain 1.4
Brazil 1.2
Indonesia 1.2
France 0.7
[FN]
++Percent of net assets may not total 100%.
<PAGE>
Ten Largest Industries Percent of
(Equity Investments) Net Assets
Telecommunications 10.2%
Electronics 6.6
Electrical Equipment 4.9
Petroleum 4.9
Insurance 4.8
Banking 3.9
Pharmaceuticals 3.6
Photography 2.8
Oil Services 2.6
Building & Construction 2.5
Country Percent
Ten Largest Holdings of of Net
(Equity Investments) Origin Assets
Merck & Co., Inc. US 1.9%
Northern Telecommun-
ications Ltd. (ADR) Canada 1.8
Siemens AG Germany 1.8
Aetna Life & Casualty
Company US 1.7
Eastman Kodak Co. US 1.7
Mannesmann AG Germany 1.6
General Electric Co.
PLC (Ordinary) UK 1.6
Royal Dutch Petroleum
N.V. (ADR) Netherlands 1.6
Ford Motor Co. US 1.5
Bell Atlantic Corp. US 1.5
DEAR SHAREHOLDER
Throughout most of the February quarter, it appeared that the US
economy was losing momentum. Consumer spending was barely growing
and the industrial sector was at a virtual standstill. With
inflationary pressures subdued, the Federal Reserve Board responded
to the slowing economy by continued modest monetary policy easing.
However, late in the quarter a series of economic releases began to
suggest that economic activity would not continue to be as sluggish
as originally expected. A surge in auto sales and factory orders,
rising consumer confidence and strong housing starts led some
investors to believe that economic activity was again accelerating
and further easing by the Federal Reserve Board unlikely. These
concerns were highlighted shortly after the February quarter's close
with the report of a sharp increase in new jobs in February and a
drop in unemployment. In the weeks ahead, it is likely that
investors will continue to monitor economic data releases closely as
they attempt to gauge the US economy's progress.
<PAGE>
The impasse between the Clinton Administration and Congress over the
Federal budget continues. However, both sides have made concessions
since the debate began. It appears that investors are currently
focusing on the progress that has been made rather than on the
differences that remain. Initially, President Clinton proposed
deficits of about $190 billion annually through fiscal year 2002.
He now proposes balanced budgets, as do the Republicans. Furthermore,
even without policy changes, it appears that the US Federal budget
deficit should remain stable at about 2% of gross domestic product
for the rest of the decade. This is far better than is the case for
most Group of Seven industrial nations and a great improvement over
the last 15 years. Nevertheless, current indications are that a
piecemeal budget accord is the most likely outcome. Although this
may fall short of investors' best expectations, it appears that
the Federal budget debate over the past year has resulted in a
trend toward a more conservative fiscal policy.
Portfolio Matters
As of February 29, 1996, the Fund's asset allocation was: foreign
stocks, 47% of net assets; US stocks, 37%; US dollar-denominated
fixed-income securities, 13%; and cash reserves, 3%.
During the three-month period ended February 29, 1996, we increased
our commitment to US and foreign stocks. In the United States, we
retained significant commitments in sectors which should perform
well in a sluggish economic environment, including consumer staples,
financial services and energy. New investments in these sectors
included Philip Morris Companies, Inc., Citicorp, and Enron Corp. In
the capital spending area, we invested in Foster Wheeler
Corporation, and a commitment in the airlines industry was initiated
through Delta Air Lines, Inc.
We expect the Federal Reserve Board to continue easing monetary
policy in order to stimulate the sluggish economy. Given
expectations of a strengthening of economic activity later in 1996,
we retained positions in "early cycle" equities, including Ford
Motor Co. and Sears, Roebuck & Co. We maintained a modest weighting
in technology-related equities through investments in Texas
Instruments Inc., General Motors Corp. (Class E) and Corning, Inc.
Japan remained the largest commitment in the foreign equity sector,
accounting for nearly 17% of total portfolio value. We expect the
Japanese stock market to exhibit further gains over the next year in
response to evidence of a sustained economic recovery. Among the
Japanese holdings, our positions in Sanwa Bank, Ltd. and Mitsubishi
Trust & Banking Corp. were eliminated because of increased
uncertainty over the pace of resolving problems in Japanese
financial institutions. The shares of Ito-Yokado Co., Ltd. were also
sold. However, we initiated new positions in Nomura Securities Co.,
Ltd., Mitsui-Soko Co., Ltd. and Eisai Co., Ltd., to participate in
the recovering Japanese stock market. We also eliminated the
currency hedge against the yen. Following the substantial recovery
of the US dollar versus the yen since the spring of 1995, potential
for a further strengthening of the dollar seems limited over the
next several months.
<PAGE>
Within Europe, we added a number of commitments that seemed to offer
exceptional value, as consistent with our selective approach to
European equity markets. These new positions include Philips
Electronics N.V., Michelin (C.G.D.E.) (Class B), Nokia Corp.
(Sponsored)(ADR), Finnlines OY and Sandoz AG(ADR). Concern over a
deteriorating regulatory environment in the United Kingdom led us to
sell British Gas PLC(ADR) and British Telecom PLC(ADR). We also sold
TOTAL S.A. (Class B) because we regarded the shares to be fully
valued.
Representation in Asian and Latin American emerging markets was also
expanded. In Asia, we initiated new positions in HSBC Holdings PLC
in Hong Kong and San Miguel Corp. (Class B) in the Philippines. In
Latin America, we purchased shares of Telecomunicacoes Brasileiras
S.A.-Telebras (ADR), along with Kimberly-Clark de Mexico, S.A. de
C.V. and Panamerican Beverages, Inc. (Class A)(ADR). On balance, we
expect the Asian and Latin American markets to perform well in
upcoming months because of favorable economic prospects.
We expanded the Fund's equity investments by reducing commitments to
high-yield dollar-denominated fixed-income securities. Following a
significant decline in long-term US interest rates since late 1994,
the potential for a further downtrend appears limited. However, the
average yield of nearly 10% on the Fund's remaining fixed-income
positions should prove relatively attractive, since we do not
believe that the bonds entail significant price risk in upcoming
months.
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 quarterly report to shareholders.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
<PAGE>
(Thomas R. Robinson)
Thomas R. Robinson
Vice President and
Senior Portfolio Manager
(Joel Heymsfeld)
Joel Heymsfeld
Vice President and
Portfolio Manager
April 9, 1996
PERFORMANCE DATA
About Fund Performance
Investors are able to purchase shares of the Fund through the
Merrill Lynch Select Pricing SM System, which offers four pricing
alternatives:
* Class A Shares incur a maximum initial sales charge (front-end
load) of 5.25% and bear no ongoing distribution or account
maintenance fees. Class A Shares are available only to eligible
investors.
* Class B Shares are subject to a maximum contingent deferred sales
charge of 4% if redeemed during the first year, decreasing 1% each
year thereafter to 0% after the fourth year. In addition, Class B
Shares are subject to a distribution fee of 0.75% and an account
maintenance fee of 0.25%. These shares automatically convert to
Class D Shares after approximately 8 years.
<PAGE>
* Class C Shares are subject to a distribution fee of 0.75% and an
account maintenance fee of 0.25%. In addition, Class C Shares are
subject to a 1% contingent deferred sales charge if redeemed within
one year of purchase.
* Class D Shares incur a maximum initial sales charge of 5.25% and
an account maintenance fee of 0.25% (but no distribution fee).
None of the past results shown should be considered a representation
of future performance. Investment return and principal value of
shares will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost. Dividends paid to each class
of shares will vary because of the different levels of account
maintenance, distribution and transfer agency fees applicable to
each class, which are deducted from the income available to be paid
to shareholders.
Average Annual
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 12/31/95 +7.49% +1.84%
Inception (9/02/94)
through 12/31/95 +0.53 -3.47
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 12/31/95 +6.40% +2.40%
Inception (9/02/94)
through 12/31/95 -0.48 -2.71
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
<PAGE>
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Year Ended 12/31/95 +6.34% +5.34%
Inception (10/21/94)
through 12/31/95 +0.73 +0.73
[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 12/31/95 +7.28% +1.65%
Inception (10/21/94)
through 12/31/95 +1.59 -2.90
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
<TABLE>
Recent
Performance
Results*
<CAPTION>
12 Month 3 Month
2/29/96 11/30/95 2/28/95 % Change % Change
<S> <C> <C> <C> <C> <C>
Class A Shares $10.06 $9.82 $9.09 +10.67% +2.44%
Class B Shares 10.07 9.73 9.07 +11.03 +3.49
Class C Shares 10.03 9.72 9.06 +10.71 +3.19
Class D Shares 10.05 9.80 9.08 +10.68 +2.55
Class A Shares-Total Return +13.25(1) +4.83(1)
Class B Shares-Total Return +12.12(2) +4.51(2)
Class C Shares-Total Return +12.08(3) +4.47(3)
Class D Shares-Total Return +13.04(4) +4.74(4)
<PAGE>
<FN>
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included.
(1)Percent change includes reinvestment of $0.226 per share ordinary
income dividends.
(2)Percent change includes reinvestment of $0.096 per share ordinary
income dividends.
(3)Percent change includes reinvestment of $0.120 per share ordinary
income dividends.
(4)Percent change includes reinvestment of $0.207 per share ordinary
income dividends.
</TABLE>
<TABLE>
Performance
Summary--
Class A Shares
<CAPTION>
Net Asset Value Capital Gains Dividends
Period Covered Beginning Ending Distributed Paid* % Change**
<S> <C> <C> <C> <C> <C>
9/02/94--12/31/94 $10.00 $ 9.33 -- $0.038 -6.31%
1995 9.33 9.80 -- 0.226 +7.49
1/1/96--2/29/96 9.80 10.06 -- -- +2.65
------
Total $0.264
Cumulative total return as of 2/29/96: +3.37%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the ex-dividend date, and do not
include sales charge; results would be lower if sales charge was
included.
</TABLE>
<TABLE>
Performance
Summary--
Class B Shares
<CAPTION>
Net Asset Value Capital Gains Dividends
Period Covered Beginning Ending Distributed Paid* % Change**
<S> <C> <C> <C> <C> <C>
9/02/94--12/31/94 $10.00 $ 9.33 -- $0.009 -6.61%
1995 9.33 9.83 -- 0.096 +6.40
1/1/96--2/29/96 9.83 10.07 -- -- +2.44
------
Total $0.105
Cumulative total return as of 2/29/96: +1.79%**
<PAGE>
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the ex-dividend date, and do not
reflect deduction of any sales charge; results would be lower if
sales charge was deducted.
</TABLE>
PERFORMANCE DATA (concluded)
<TABLE>
Performance
Summary--
Class C Shares
<CAPTION>
Net Asset Value Capital Gains Dividends
Period Covered Beginning Ending Distributed Paid* % Change**
<S> <C> <C> <C> <C> <C>
10/21/94--12/31/94 $9.85 $ 9.32 -- $0.023 -5.14%
1995 9.32 9.79 -- 0.120 +6.34
1/1/96--2/29/96 9.79 10.03 -- -- +2.45
------
Total $0.143
Cumulative total return as of 2/29/96: +3.35%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the ex-dividend date, and do not
reflect deduction of any sales charge; results would be lower if
sales charge was deducted.
</TABLE>
<TABLE>
Performance
Summary--
Class D Shares
<CAPTION>
Net Asset Value Capital Gains Dividends
Period Covered Beginning Ending Distributed Paid* % Change**
<S> <C> <C> <C> <C> <C>
10/21/94--12/31/94 $9.86 $ 9.33 -- $0.036 -5.01%
1995 9.33 9.80 -- 0.207 +7.28
1/1/96--2/29/96 9.80 10.05 -- -- +2.55
------
Total $0.243
Cumulative total return as of 2/29/96: +4.50%**
<PAGE>
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the ex-dividend date, and do not
include sales charge; results would be lower if sales charge was
included.
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
Value Percent of
COUNTRY Industries Shares Held Common Stocks Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
Argentina Banking 6,325 Banco Frances del Rio de la Plata S.A.
(ADR) (a) $ 170,444 $ 164,450 1.2%
Petroleum 8,000 Yacimientos Petroliferos Fiscales S.A.
(Sponsored)(ADR) (a) 186,139 155,000 1.2
Total Common Stocks in Argentina 356,583 319,450 2.4
Brazil Telecommunications 3,000 Telecomunicacoes Brasileiras S.A.-
Telebras(ADR)(a) 164,018 157,500 1.2
Total Common Stocks in Brazil 164,018 157,500 1.2
Canada Multi-Industry 9,500 Canadian Pacific, Ltd. 169,195 187,625 1.4
Telecommunications 5,000 Northern Telecommunications Ltd. 174,050 237,500 1.8
Total Common Stocks in Canada 343,245 425,125 3.2
Finland Telecommunications 3,000 ++Nokia Corp. (Sponsored) (ADR)(a) 111,328 104,625 0.8
Equipment
Transportation 5,000 Finnlines OY 92,231 87,578 0.7
Total Common Stocks in Finland 203,559 192,203 1.5
France Tires & Rubber 2,000 Michelin (C.G.D.E.)(Class B) 82,618 89,603 0.7
Total Common Stocks in France 82,618 89,603 0.7
Germany Electronics 400 Siemens AG 177,405 228,086 1.8
<PAGE>
Machinery & Equipment 600 Mannesmann AG 167,773 214,417 1.6
Multi-Industry 500 Preussag AG 146,953 148,929 1.1
Total Common Stocks in Germany 492,131 591,432 4.5
Hong Kong Banking 7,200 HSBC Holdings PLC 116,006 115,492 0.9
Telecommunications 9,000 Hong Kong Telecommunications Ltd.
(ADR)(a) 149,040 173,250 1.3
Total Common Stocks in Hong Kong 265,046 288,742 2.2
Indonesia Telecommunications 4,190 P.T. Indonesian Satellite Corp.
(ADR)(a) 162,969 156,601 1.2
Total Common Stocks in Indonesia 162,969 156,601 1.2
Italy Machinery 50,000 Danieli & C. Officine Meccaniche S.p.A. 129,513 178,106 1.4
Telecommunications 40,000 Societa Finanziara Telefonica S.p.A.
(STET) 121,375 122,424 0.9
Total Common Stocks in Italy 250,888 300,530 2.3
Japan Building & Construction 15,000 Maeda Corp. 167,593 147,003 1.1
20,000 Okumura Corp. 171,072 178,116 1.4
----------- ----------- ------
338,665 325,119 2.5
Capital Goods 20,000 Hitachi Cable Ltd. 172,962 152,617 1.2
20,000 Mitsubishi Heavy Industries, Ltd. 161,560 161,941 1.2
----------- ----------- ------
334,522 314,558 2.4
Consumer--Electronics 10,000 Matsushita Electric Industrial Co., Ltd. 168,023 159,848 1.2
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Value Percent of
COUNTRY Industries Shares Held Common Stocks Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
Japan (concluded)
Electrical Equipment 24,000 Mitsubishi Electric Co. $ 165,781 $ 175,833 1.3%
Electronics 3,000 Rohm Co. 128,833 178,402 1.4
Financial Services 4,000 Nomura Securities Co., Ltd. 81,427 82,207 0.6
Insurance 14,000 Tokio Marine & Fire Insurance Co., Ltd. 168,933 169,172 1.3
Pharmaceuticals 5,000 Eisai Co., Ltd 92,663 91,342 0.7
Photography 8,000 Canon, Inc. 140,603 146,908 1.1
Printing & Publishing 9,000 Dai Nippon Printing Co., Ltd. 167,255 154,995 1.2
Trading 15,000 Kamigumi Co., Ltd. 174,860 145,576 1.1
17,000 Sumitomo Corp. 171,167 171,456 1.3
----------- ----------- ------
346,027 317,032 2.4
Warehouse & Storage 12,000 Mitsui-Soko Co., Ltd. 98,013 94,082 0.7
Total Common Stocks in Japan 2,230,745 2,209,498 16.8
Mexico Beverages 3,000 Panamerican Beverages, Inc. (Class A)
(ADR) (a) 117,433 121,500 0.9
Paper Products 6,000 Kimberly-Clark de Mexico, S.A. de C.V. 101,160 100,328 0.8
Total Common Stocks in Mexico 218,593 221,828 1.7
Netherlands Electrical Equipment 2,100 Philips Electronics N.V. 81,166 87,410 0.6
Petroleum 1,500 Royal Dutch Petroleum N.V. (ADR)(a) 162,683 206,625 1.6
Total Common Stocks in the Netherlands 243,849 294,035 2.2
Philippines Beverages 39,000 San Miguel Corp. (Class B) 150,362 142,537 1.1
Telecommunications 2,000 Philippine Long Distance Telephone Co.
(ADR)(a) 139,932 118,250 0.9
Total Common Stocks in the Philippines 290,294 260,787 2.0
Spain Petroleum 5,000 Repsol S.A. (ADR)(a) 160,925 181,250 1.4
Total Common Stocks in Spain 160,925 181,250 1.4
<PAGE>
Switzerland Electrical Equipment 150 BBC Brown Boveri & Cie (Bearer) 136,074 179,590 1.4
Pharmaceuticals 3,000 Sandoz AG (ADR)(a) 129,917 139,875 1.0
Total Common Stocks in Switzerland 265,991 319,465 2.4
United Electrical Equipment 37,000 General Electric Co. PLC (Ordinary) 167,508 209,428 1.6
Kingdom
Total Common Stocks in the United Kingdom 167,508 209,428 1.6
United Aerospace & Defense 2,000 Boeing Co. (The) 146,689 162,250 1.3
States 1,500 United Technologies Corp. 132,653 161,250 1.2
----------- ----------- ------
279,342 323,500 2.5
Airlines 1,385 Delta Air Lines, Inc. 109,455 108,030 0.8
Automobiles 6,500 Ford Motor Co. 174,625 203,125 1.5
Banking 3,000 Bank of New York Company, Inc. (The) 128,430 155,625 1.2
1,000 Citicorp 72,955 78,000 0.6
----------- ----------- ------
201,385 233,625 1.8
Chemicals 2,500 Eastman Chemical Co. 129,988 180,000 1.4
Electronics 3,500 Corning, Inc. 97,383 113,750 0.9
3,000 General Motors Corp. (Class E) 153,218 171,375 1.3
200 ++Lexmark International Group, Inc.
(Class A) 4,414 4,525 0.0
3,200 Texas Instruments Inc. 178,250 159,600 1.2
----------- ----------- ------
433,265 449,250 3.4
Engineering & 1,700 Foster Wheeler Corporation 74,696 74,800 0.6
Construction
Furniture/Home 5,000 Singer Co. 133,935 146,250 1.1
Appliances 2,500 Whirlpool Corporation 144,731 139,062 1.1
----------- ----------- ------
278,666 285,312 2.2
Hardware Products 3,000 The Stanley Works Co. 118,299 169,500 1.3
Healthcare 7,000 ++Humana, Inc. 157,045 171,500 1.3
<PAGE>
Hospital Supplies 4,500 Abbott Laboratories 142,020 187,875 1.4
Insurance 3,000 Aetna Life & Casualty Company 222,041 226,875 1.7
4,000 Allstate Corp. 163,729 171,500 1.3
2,000 National Re Corp. 66,103 62,500 0.5
----------- ----------- ------
451,873 460,875 3.5
Natural Gas 3,400 Enron Corp. 130,426 124,525 0.9
Oil Services 7,000 Dresser Industries, Inc. 140,902 196,875 1.5
2,000 Schlumberger Ltd., Inc. 128,620 145,750 1.1
----------- ----------- ------
269,522 342,625 2.6
Petroleum 2,500 Pennzoil Company 100,457 95,625 0.7
Pharmaceuticals 3,700 Merck & Co., Inc. 126,485 245,125 1.9
Photography 3,100 Eastman Kodak Co. 160,989 221,650 1.7
Pollution Control 11,000 Wheelabrator Technologies Inc. 176,940 174,625 1.3
Retail Stores 3,400 Sears, Roebuck & Co. 135,257 154,275 1.2
Scientific Equipment 5,000 Fisher Scientific International, Inc. 154,457 186,250 1.4
Telecommunications 2,900 AT&T Corp. 153,995 184,512 1.4
3,000 Bell Atlantic Corp. 147,930 198,375 1.5
----------- ----------- ------
301,925 382,887 2.9
Tobacco 1,000 Philip Morris Companies, Inc. 98,951 99,000 0.8
Total Common Stocks in the United States 4,206,068 4,873,979 37.1
Total Investments in Common Stocks 10,105,030 11,091,456 84.4
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
Value Percent of
COUNTRY Industries Face Amount Fixed-Income Securities Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
United Airlines US$ 200,000 USAir Inc., 10.375% due 3/01/2013 $ 178,000 $ 200,000 1.5%
States
Chemicals GI Holdings Inc.:
148,000 12.27%* due 10/01/1998 108,159 119,140 0.9
140,715 10% due 2/15/2006 145,640 145,464 1.1
----------- ----------- ------
253,799 264,604 2.0
<PAGE>
Communications 140,000 PanAmSat L.P., 12.02%* due 8/01/2003 103,134 120,750 0.9
100,000 Videotron Holdings PLC, 10.625% due
2/15/2005 99,375 109,000 0.8
----------- ----------- ------
202,509 229,750 1.7
Cosmetics 100,000 Revlon Consumer Products Corp., 9.375%
due 4/01/2001 90,274 101,500 0.8
Energy 200,000 TransTexas Gas Corp., 11.50% due 6/15/2002 200,000 203,000 1.5
Financial Services 200,000 Reliance Group Holdings, Inc., 9.75% due
11/15/2003 180,000 207,500 1.6
Hotels & Casinos 100,000 Bally's Park Place Funding Corp., 9.25%
due 3/15/2004 88,000 102,500 0.8
Textiles 200,000 WestPoint Stevens, Inc., 9.375% due 182,000 200,000 1.5
12/15/2005
Utilities-Electric 200,000 CTC Mansfield Funding Corp., 10.25% due 185,500 204,000 1.6
3/30/2003
Total Investments in Fixed-Income
Securities 1,560,082 1,712,854 13.0
Short-Term Securities
United Commercial Paper** 293,000 General Electric Capital Corp., 5.42% due 293,000 293,000 2.2
States 3/01/1996
Total Investments in Short-Term Securities 293,000 293,000 2.2
Total Investments $11,958,112 13,097,310 99.6
===========
Other Assets Less Liabilities 50,188 0.4
----------- ------
Net Assets $13,147,498 100.0%
=========== ======
<PAGE>
<FN>
*Represents a zero coupon or step bond; the interest rate shown is
the effective yield at the time of purchase by the Fund.
**Commercial Paper is traded on a discount basis; the interest rate
shown is the discount rate paid at the time of purchase by the Fund.
++Non-income producing security.
(a)American Depositary Receipts (ADR).
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
<CAPTION>
As of February 29, 1996
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$11,958,112) (Note 1a) $13,097,310
Cash 1,974
Receivables:
Interest $ 42,726
Dividends 24,372
Investment adviser (Note 2) 4,039
Capital shares sold 3,512 74,649
-----------
Deferred organization expenses (Note 1f) 88,921
Prepaid expenses (Note 1f) 110,598
-----------
Total assets 13,373,452
-----------
Liabilities: Payables:
Capital shares redeemed 32,697
Securities purchased 24,443
Forward foreign exchange contracts (Note 1b) 18,729
Distributor (Note 2) 8,518 84,387
-----------
Accrued expenses 141,567
-----------
Total liabilities 225,954
-----------
Net Assets: Net assets $13,147,498
===========
<PAGE>
Net Assets Class A Shares of Common Stock, $0.10 par value,
Consist of: 100,000,000 shares authorized $ 15,034
Class B Shares of Common Stock, $0.10 par value,
100,000,000 shares authorized 94,006
Class C Shares of Common Stock, $0.10 par value,
100,000,000 shares authorized 5,474
Class D Shares of Common Stock, $0.10 par value,
100,000,000 shares authorized 16,119
Paid-in capital in excess of par 12,885,061
Accumulated investment loss--net (90,921)
Accumulated realized capital losses on investments and
foreign currency transactions--net (916,280)
Unrealized appreciation on investments and foreign
currency transactions--net 1,139,005
-----------
Net assets $13,147,498
===========
Net Asset Value: Class A--Based on net assets of $1,512,110 and
150,337 shares outstanding $ 10.06
===========
Class B--Based on net assets of $9,466,495 and
940,062 shares outstanding $ 10.07
===========
Class C--Based on net assets of $549,009 and
54,739 shares outstanding $ 10.03
===========
Class D--Based on net assets of $1,619,884 and
161,187 shares outstanding. $ 10.05
===========
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Six Months Ended February 29, 1996
<S> <S> <C> <C>
Investment Interest and discount earned $ 143,864
Income Dividends (net of $6,670 foreign withholding tax) 97,882
(Notes 1d & 1e): -----------
Total income 241,746
-----------
<PAGE>
Expenses: Registration fees (Note 1f) $ 65,598
Investment advisory fees (Note 2) 53,307
Account maintenance and distribution fees--Class B (Note 2) 51,667
Printing and shareholder reports 33,004
Professional fees 31,661
Accounting services (Note 2) 24,685
Directors' fees and expenses 13,393
Transfer agent fees--Class B (Note 2) 13,176
Amortization of organization expenses (Note 1f) 11,794
Custodian fees 6,894
Account maintenance and distribution fees--Class C (Note 2) 3,220
Pricing fees 2,835
Account maintenance fees--Class D (Note 2) 2,099
Transfer agent fees--Class D (Note 2) 1,853
Transfer agent fees--Class A (Note 2) 1,719
Transfer agent fees--Class C (Note 2) 879
Other 11,872
-----------
Total expenses before reimbursements 329,656
Reimbursement of expenses (Note 2) (94,981)
-----------
Total expenses after reimbursement 234,675
-----------
Investment income--net 7,071
-----------
Realized & Realized gain (loss) from:
Unrealized Investments--net (1,058,756)
Gain (Loss) on Foreign currency transactions--net 397,104 (661,652)
Investment & -----------
Foreign Currency Change in unrealized appreciation (depreciation) on:
Transactions--Net Investments--net 1,371,291
(Notes 1b, 1c, Foreign currency transactions--net (248,306) 1,122,985
1e & 3): ----------- -----------
Net realized and unrealized gain on investments and
foreign currency transactions 461,333
-----------
Net Increase in Net Assets Resulting from Operations $ 468,404
===========
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENTS IN CHANGES IN NET ASSETS
<CAPTION>
For the
For the Period
Six Months September 2,
Ended 1994++ to
February 29, August 31,
Increase (Decrease) in Net Assets: 1996 1995
<S> <S> <C> <C>
Operations: Investment income--net $ 7,071 $ 102,063
Realized loss on investments and foreign currency transactions--net (661,652) (254,628)
Change in unrealized appreciation (depreciation) on investments
and foreign currency transactions--net 1,122,985 16,020
----------- -----------
Net increase (decrease) in net assets resulting from operations 468,404 (136,545)
----------- -----------
<PAGE>
Dividends to Investment income--net:
Shareholders Class A (35,456) (9,329)
(Note 1g): Class B (96,592) (13,875)
Class C (8,073) (1,125)
Class D (35,184) (421)
----------- -----------
Net decrease in net assets resulting from dividends to shareholders (175,305) (24,750)
----------- -----------
Capital Share Net increase (decrease) in net assets derived from capital
Transactions share transactions (3,089,251) 16,004,945
(Note 4): ----------- -----------
Net Assets: Total increase (decrease) in net assets (2,796,152) 15,843,650
Beginning of period 15,943,650 100,000
----------- -----------
End of period* $13,147,498 $15,943,650
=========== ===========
*Undistributed (accumulated) investment income (loss)--net $ ( 90,921) $ 77,313
=========== ===========
<FN>
++Commencement of Operations.
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
Class A Class B
For the For the For the For the
Six Period Six Period
The following per share data and ratios have been derived Months Sept. 2, Months Sept. 2,
from information provided in the financial statements. Ended 1994++ to Ended 1994++ to
Feb. 29, Aug. 31, Feb. 29, Aug. 31,
Increase (Decrease) in Net Asset Value: 1996 1995 1996 1995
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 9.90 $ 10.00 $ 9.83 $ 10.00
Operating ------- ------- ------- -------
Performance: Investment income--net .06 .16 .00++++ .05
Realized and unrealized gain (loss) on investments
and foreign currency transactions--net .33 (.22) .34 (.21)
------- ------- ------- -------
Total from investment operations .39 (.06) .34 (.16)
------- ------- ------- -------
Less dividends investment income--net (.23) (.04) (.10) (.01)
------- ------- ------- -------
Net asset value, end of period $ 10.06 $ 9.90 $ 10.07 $ 9.83
======= ======= ======= =======
<PAGE>
Total Investment Based on net asset value per share 3.99%+++ (.59%)+++ 3.45%+++ (1.60%)+++
Return:** ======= ======= ======= =======
Ratios to Average Expenses, net of reimbursement 2.47%* 2.47%* 3.50%* 3.50%*
Net Assets: ======= ======= ======= =======
Expenses 3.80%* 3.31%* 4.83%* 4.37%*
======= ======= ======= =======
Investment income (loss)--net .93%* 1.46%* (.11%)* .43%*
======= ======= ======= =======
Supplemental Net assets, end of period (in thousands) $ 1,512 $ 1,677 $ 9,466 $11,835
Data: ======= ======= ======= =======
Portfolio turnover 39.16% 42.50% 39.16% 42.50%
======= ======= ======= =======
Average commission rate paid $ .0165 -- +++++$ .0165 -- +++++
======= ======= ======= =======
<CAPTION>
Class C Class D
For the For the For the For the
Six Period Six Period
The following per share data and ratios have been derived Months Oct. 21, Months Oct. 21,
from information provided in the financial statements. Ended 1994++ to Ended 1994++ to
Feb. 29, Aug. 31, Feb. 29, Aug. 31,
Increase (Decrease) in Net Asset Value: 1996 1995 1996 1995
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 9.82 $ 9.85 $ 9.88 $ 9.86
Operating ------- ------- ------- -------
Performance: Investment income (loss)--net (.03) .04 .03 .10
Realized and unrealized gain (loss) on
investments and foreign currency transactions--net .36 (.05) .35 (.04)
------- ------- ------- -------
Total from investment operations .33 (.01) .38 .06
------- ------- ------- -------
Less dividends investment income--net (.12) (.02) (.21) (.04)
------- ------- ------- -------
Net asset value, end of period $ 10.03 $ 9.82 $ 10.05 $ 9.88
======= ======= ======= =======
Total Investment Based on net asset value per share 3.40%+++ (.05%)+++ 3.89%+++ .59%+++
Return:** ======= ======= ======= =======
<PAGE>
Ratios to Average Expenses, net of reimbursement 3.52%* 3.51%* 2.72%* 2.75%*
Net Assets: ======= ======= ======= =======
Expenses 4.85%* 4.58%* 4.05%* 4.32%*
======= ======= ======= =======
Investment income (loss)--net (.13%)* .51%* .68%* 1.43%*
======= ======= ======= =======
Supplemental Net assets, end of period (in thousands) $ 549 $ 735 $ 1,620 $ 1,697
Data: ======= ======= ======= =======
Portfolio turnover 39.16% 42.50% 39.16% 42.50%
======= ======= ======= =======
Average commission rate paid $ .0165 -- +++++$ .0165 -- +++++
======= ======= ======= =======
<FN>
*Annualized.
**Total investment returns exclude the effect of sales loads.
++Commencement of Operations.
++++Amount is less than $.01 per share.
+++Aggregate total investment return.
+++++Data not required for the period.
See Notes to Financial Statements.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch Asset Growth Fund, Inc. (the "Fund") is registered
under the Investment Company Act of 1940 as a non-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 exchange
on which such securities are traded, as of the close of business on
the day the securities are being valued or, lacking any sales, at
the last available bid price. Securities traded in the over-the-
counter market are valued at the last available bid price prior to
the time of valuation. 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 Board of Directors as
the primary market. 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. Options written are valued
at the last sale price in the case of exchange-traded options or, in
the case of options traded in the over-the-counter market, the last
asked price. Options purchased are valued at the last sale price in
the case of exchange-traded options or, in the case of options
traded in the over-the-counter market, the last bid price. Short-
term securities are valued at amortized cost, which approximates
market value. Other investments, including futures contracts and
related options, are stated at market value. Securities and assets
for which market value quotations are not available are valued at
their fair value as determined in good faith by or under the
direction of the Fund's Board of Directors, including valuations
furnished by a pricing service retained by the Fund, which may
utilize a matrix system for valuations.
NOTES TO FINANCIAL STATEMENTS (continued)
(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 and options on such futures contracts for the
purpose of hedging the market risk on existing securities or the
intended purchase of securities. Futures contracts are contracts for
delayed delivery of securities at a specific future date and at a
specific price or yield. 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.
<PAGE>
* Foreign currency options and futures--The Fund may also purchase or
sell listed or over-the-counter foreign currency options, foreign
currency futures and related options on foreign currency futures as
a short or long hedge against possible variations in foreign
exchange rates. Such transactions may be effected with respect to
hedges on non-US dollar denominated securities owned by the Fund,
sold by the Fund but not yet delivered, or committed or anticipated
to be purchased by the Fund.
* 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.
* Options--The Fund is authorized to write covered call options and
purchase put options. When the Fund writes an option, an amount
equal to the premium received by the Fund is reflected as an asset
and an equivalent liability. The amount of the liability is
subsequently marked to market to reflect the current 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.
(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.
<PAGE>
(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 dates, 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.
(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 of 0.75%, on an annual basis,
of the average daily value of the Fund's net assets. Certain of the
states in which the shares of the Fund are qualified for sale impose
limitations on the expenses of the Fund. The most restrictive annual
expense limitation requires that MLAM reimburse the Fund to the
extent the Fund's expenses (excluding interest, taxes, distribution
fees, brokerage fees and commissions, and extraordinary items)
exceed 2.5% of the Fund's first $30 million of average daily net
assets, 2.0% of the next $70 million of average daily net assets,
and 1.5% of the average daily net assets in excess thereof. MLAM's
obligation to reimburse the Fund is limited to the amount of the
management fee. No fee payment will be made to MLAM during any
fiscal year which will cause such expenses to exceed the most
restrictive expense limitation at the time of such payment. For the
six months ended February 29, 1996, MLAM earned fees of $53,307, all
of which was reimbursed pursuant to the expense limitation. MLAM
also reimbursed the Fund for additional expenses of $41,674.
<PAGE>
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% --
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 29, 1996, 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 $ 3 $209
Class D $72 $979
For the six months ended February 29, 1996, MLPF&S received
contingent deferred sales charges of $21,252 and $315 relating to
transactions in Class B and Class C Shares, respectively.
In addition, MLPF&S received $2,685 in commissions on the execution
of portfolio security transactions for the Fund for the six months
ended February 29, 1996.
During the six months ended February 29, 1996, the Fund paid Merrill
Lynch Security Pricing Service, an affiliate of MLPF&S, $515 for
security price quotations to compute the net asset value of the
Fund.
<PAGE>
Merrill Lynch Financial Data Services, Inc. ("MLFDS"), 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, MLFDS, MLFD, PSI, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended February 29, 1996 were $5,221,049 and
$7,862,752, respectively.
NOTES TO FINANCIAL STATEMENTS (concluded)
Net realized and unrealized gains (losses) as of February 29, 1996
were as follows:
Realized Unrealized
Gains (Losses) Gains (Losses)
Long-term investments $(1,058,767) $ 1,139,198
Short-term investments 11 --
Forward foreign exchange contracts 405,424 --
Foreign currency transactions (8,320) (193)
----------- -----------
Total $ (661,652) $ 1,139,005
=========== ===========
As of February 29, 1996, net unrealized appreciation for Federal
income tax purposes aggregated $1,139,198, of which $1,369,904
related to appreciated securities and $230,706 related to
depreciated securities. At February 29, 1996, the aggregate cost of
investments for Federal income tax purposes was $11,958,112.
4. Capital Share Transactions:
Net increase (decrease) in net assets derived from capital share
transactions was $(3,089,251) and $16,004,945 for the six months
ended February 29, 1996 and for the period ended August 31, 1995,
respectively.
Transactions in capital shares for each class were as follows:
Class A Shares for the Six Months Dollar
Ended February 29, 1996 Shares Amount
<PAGE>
Shares sold 16,178 $ 160,075
Shares issued to shareholders in
reinvestment of dividends 2,989 28,966
----------- -----------
Total issued 19,167 189,041
Shares redeemed (38,209) (377,682)
----------- -----------
Net decrease (19,042) $ (188,641)
=========== ===========
Class A Shares for the Period Dollar
September 2, 1994++ to Shares Amount
August 31, 1995
Shares sold 275,032 $ 2,724,867
Shares issued to shareholders in
reinvestment of dividends 647 6,028
----------- -----------
Total issued 275,679 2,730,895
Shares redeemed (111,300) (1,060,813)
----------- -----------
Net increase 164,379 $ 1,670,082
=========== ===========
[FN]
++Prior to September 2, 1994 (commencement of operations), the Fund
issued 5,000 shares to MLAM for $50,000.
Class B Shares for the Six Months Dollar
Ended February 29, 1996 Shares Amount
Shares sold 57,047 $ 565,872
Shares issued to shareholders in
reinvestment of dividends 7,835 76,236
----------- -----------
Total issued 64,882 642,108
Shares redeemed (327,225) (3,223,726)
Automatic conversion of shares (1,427) (14,117)
----------- -----------
Net decrease (263,770) $(2,595,735)
=========== ===========
Class B Shares for the Period Dollar
September 2, 1994++ to Shares Amount
August 31, 1995
<PAGE>
Shares sold 1,943,995 $19,092,515
Shares issued to shareholders in
reinvestment of dividends 1,273 11,853
----------- -----------
Total issued 1,945,268 19,104,368
Shares redeemed (739,645) (7,002,581)
Automatic conversion of shares (6,791) (63,907)
----------- -----------
Net increase 1,198,832 $12,037,880
=========== ===========
[FN]
++Prior to September 2, 1994 (commencement of operations), the Fund
issued 5,000 shares to MLAM for $50,000.
Class C Shares for the Six Months Dollar
Ended February 29, 1996 Shares Amount
Shares sold 4,491 $ 43,752
Shares issued to shareholders in
reinvestment of dividends 642 6,223
----------- -----------
Total issued 5,133 49,975
Shares redeemed (25,188) (249,225)
----------- -----------
Net decrease (20,055) $ (199,250)
=========== ===========
Class C Shares for the Period Dollar
October 21, 1994++ to Shares Amount
August 31, 1995
Shares sold 120,893 $ 1,143,290
Shares issued to shareholders in
reinvestment of dividends 88 814
----------- -----------
Total issued 120,981 1,144,104
Shares redeemed (46,187) (431,343)
----------- -----------
Net increase 74,794 $ 712,761
=========== ===========
[FN]
++Commencement of Operations.
<PAGE>
Class D Shares for the Six Months Dollar
Ended February 29, 1996 Shares Amount
Shares sold 19,258 $ 190,194
Automatic conversion of shares 1,419 14,117
Shares issued to shareholders in
reinvestment of dividends 3,537 34,271
----------- -----------
Total issued 24,214 238,582
Shares redeemed (34,706) (344,207)
----------- -----------
Net decrease (10,492) $ (105,625)
=========== ===========
Class D Shares for the Period Dollar
October 21, 1994++ to Shares Amount
August 31, 1995
Shares sold 186,141 $ 1,722,943
Automatic conversion of shares 6,773 63,907
Shares issued to shareholders in
reinvestment of dividends 42 393
----------- -----------
Total issued 192,956 1,787,243
Shares redeemed (21,277) (203,021)
----------- -----------
Net increase 171,679 $ 1,584,222
=========== ===========
[FN]
++Commencement of Operations.
EQUITY PORTFOLIO CHANGES
For the Quarter Ended February 29, 1996
Additions
<PAGE>
Citicorp
Delta Air Lines, Inc.
Eisai Co., Ltd.
Enron Corp.
Finnlines OY
Foster Wheeler Corporation
HSBC Holdings PLC
Kimberly-Clark de Mexico, S.A. de C.V.
Lexmark International Group, Inc.
(Class A)
Michelin (C.G.D.E.) (Class B)
Mitsui-Soko Co., Ltd.
Nokia Corp. (Sponsored) (ADR)
Nomura Securities Co., Ltd.
Panamerican Beverages, Inc. (Class A)
(ADR)
Philip Morris Companies, Inc.
Philips Electronics N.V.
San Miguel Corp. (Class B)
Sandoz AG (ADR)
Singer Co.
Telecomunicacoes Brasileiras S.A.-Telebras (ADR)
Deletions
Aluminum Company of America
British Gas PLC (ADR)
British Telecommunications
PLC (ADR)
Cifra, S.A. de C.V. 'C'
Consolidated Natural Gas Co.
Ito-Yokado Co., Ltd.
Keystone International, Inc.
MDX Company Ltd.
Mitsubishi Trust & Banking Corp.
Sanwa Bank, Ltd.
TOTAL S.A. (Class B)
