MERRILL LYNCH
ASSET GROWTH
FUND, INC.
FUND LOGO
Quarterly Report
May 31, 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
Norman R. Harvey, Senior Vice President
Donald C. Burke, Vice President
Thomas R. Robinson, 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
MERRILL LYNCH ASSET GROWTH FUND, INC.
Worldwide
Investments as of
May 31, 1996
Percent Breakdown of
Stocks & Fixed-Income Percent of
Securities by Country Net Assets++
<PAGE>
United States 53.1%
Japan 8.2
Germany 7.9
Italy 3.8
Canada 2.9
Mexico 2.7
Brazil 1.9
Spain 1.6
Finland 1.5
France 1.4
Switzerland 1.4
Netherlands 1.3
Argentina 1.2
Hong Kong 1.2
Sweden 1.1
United Kingdom 0.9
Philippines 0.7
Indonesia 0.6
South Korea 0.4
[FN]
++Percent of net assets may not total 100%.
Ten Largest Industries Percent of
(Equity Investments) Net Assets
Telecommunications 7.7%
Electronics 6.2
Computer Services & Software 4.8
Insurance 4.2
Banking 3.7
Pharmaceuticals 3.3
Petroleum 2.8
Electrical Equipment 2.8
Aerospace & Defense 2.7
Oil Services 2.6
Country Percent
Ten Largest Holdings of of Net
(Equity Investments) Origin Assets
Merck & Co., Inc. US 1.9%
Eastman Kodak Co. US 1.9
Aetna Life & Casualty
Company US 1.8
Dresser Industries, Inc. US 1.6
Fisher Scientific
International, Inc. US 1.6
Abbott Laboratories US 1.6
Bell Atlantic Corp. US 1.5
The Stanley Works Co. US 1.5
AT&T Corp. US 1.5
Telecomunicacoes
Brasileiras S.A.-
Telebras (ADR) Brazil 1.5
<PAGE>
DEAR SHAREHOLDER
Conflicting economic indicators created greater uncertainty in the
investment outlook during the quarter ended May 31, 1996. With
reports of stronger-than-expected employment data, investors began
to anticipate renewed economic growth. Long-term interest rates
rose, and the Federal Reserve Board left monetary policy on hold.
However, revised data indicate the US economy actually grew more
slowly in the first quarter of 1996 than had been originally
reported. In addition, consumer sentiment does not appear to be
improving markedly.
Investors also became concerned that inflationary pressures are
increasing because of higher prices for agricultural commodities and
a sharp upturn in the price of crude oil. Nevertheless, other
wholesale and consumer price increases remain subdued. More
importantly, wage increases--a significant factor in the inflation
outlook--continue to be well-contained.
Investors are likely to continue to focus on the probable direction
of economic activity and Federal Reserve Board monetary policy in
the weeks ahead. At this time, it appears that the economy is not on
the verge of overheating. Nevertheless, it is likely that any
further near-term indication of stronger-than-expected economic
activity may increase investor apprehension concerning the outlook
for higher inflation and interest rates.
Portfolio Matters
As of May 31, 1996, the Fund's asset allocation was: foreign stocks,
31% of net assets; US stocks, 48%; foreign bonds, 10%; US bonds, 5%;
and cash reserves, 6%.
During the three-month period ended May 31, 1996, we reduced the
proportion of assets allocated to high-yield US bonds from 13% of
net assets to 5%. This reduction reflects our evolving perception
that the US economy was somewhat stronger than previously thought.
In such an environment it appeared less likely that the Federal
Reserve Board would undertake further easing of monetary policy in
the upcoming months. Therefore, we believe that interest rates on US
bonds could back up further over the near term to intermediate term.
In the foreign bond sector, we initiated positions in German
obligations with a two-year--three-year maturity range. These
commitments should appreciate in response to anticipated further
interest rate reductions by the Bundesbank. We hedged the German
bond commitments back into US dollars because we believe that the
Deutschemark could exhibit further weaknesses relative to the US
dollar.
<PAGE>
We also established positions in the higher-yielding European bond
markets, such as Italy, Spain and Sweden. Our commitments were in
bonds in the two-year--five-year maturity range. The return on these
bonds could be enhanced by the convergence of yields in these
markets with those in Germany because of a weak German economy and
an accommodative monetary policy by the Bundesbank. This policy
should allow for interest rate cuts by the central banks of Italy,
Spain and Sweden and enable their currencies to strengthen versus
the Deutschemark.
In recent months, we continued to gradually increase the commitment
to US equities. In selecting new positions, we emphasized companies
that dominate their industries, are either in the midst of or have
completed restructuring programs, and represent attractive values.
For example, we invested in American Express
Company, Deere & Company and Cincinnati Milacron, Inc. because they
are three restructured companies which enjoy dominant franchises
within their respective industries. The Fund's other major area of
expansion was in technology companies. New positions included
Microsoft Corp., cisco Systems, Inc., Oracle Corp., and Intel Corp.
These companies maintain dominant positions in specific niches
within the technology sector and represent exceptional value.
Japan remained the largest commitment in the foreign equity sector,
although we reduced the proportion of assets allocated to Japanese
equities from 17% of net assets to 8%. Among the Japanese holdings,
we eliminated positions in Kamigumi Co., Ltd., Dai Nippon Printing
Co., Ltd., and also sold the shares in Hitachi Cable Ltd. We
reestablished the hedge of Japanese equity holdings back into US
dollars, reflecting our expectations of a further weakening of the
yen relative to the US dollar.
Within Europe, we continued to add positions which are exceptionally
attractive on a valuation basis. These commitments included Usinor-
Sacilor S.A. in France and Henkel KGaA in Germany. In Asia, we
established a position in the Korean market through Hyundai
Engineering & Construction Co., while selling Philippine Long
Distance Telephone Co. We also expanded our position in Canada by
adding Magna International, Inc. and Potash Corp. of Saskatchewan,
Inc. to the portfolio. The Fund's representation in Latin America
was further enlarged with the purchase of shares of Grupo Carso,
S.A. de C.V. in Mexico and Companhia Cervejaria Brahma PN in Brazil.
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.
<PAGE>
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Thomas R. Robinson)
Thomas R. Robinson
Vice President and
Senior Portfolio Manager
(Joel Heymsfeld)
Joel Heymsfeld
Portfolio Manager
June 25, 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:
<PAGE>
* 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).
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 3/31/96 +12.21% +6.32%
Inception (9/02/94)
through 3/31/96 + 2.44 -1.00
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
<PAGE>
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 3/31/96 +11.20% +7.20%
Inception (9/02/94)
through 3/31/96 + 1.45 -0.45
[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 3/31/96 +11.05% +10.05%
Inception (10/21/94)
through 3/31/96 + 2.59 + 2.59
[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 3/31/96 +12.00% +6.12%
Inception (10/21/94)
through 3/31/96 + 3.45 -0.34
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
<PAGE>
<TABLE>
Recent
Performance
Results*
<CAPTION>
12 Month 3 Month
5/31/96 2/29/96 5/31/95 % Change % Change
<S> <C> <C> <C> <C> <C>
Class A Shares $10.36 $10.06 $9.55 + 8.48% +2.98%
Class B Shares 10.34 10.07 9.51 + 8.73 +2.68
Class C Shares 10.30 10.03 9.50 + 8.42 +2.69
Class D Shares 10.34 10.05 9.55 + 8.27 +2.89
Class A Shares-Total Return +11.01(1) +2.98
Class B Shares-Total Return + 9.80(2) +2.68
Class C Shares-Total Return + 9.76(3) +2.69
Class D Shares-Total Return +10.58(4) +2.89
<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--5/31/96 9.80 10.36 -- -- +5.71
------
Total $0.264
Cumulative total return as of 5/31/96: +6.45%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the ex-dividend date, and do not
include sales charge; results would be lower if sales charge was
included.
</TABLE>
<PAGE>
<TABLE>
Performance
Summary--
Class B Shares
<CAPTION>
Net Asset Value Capital Gains 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--5/31/96 9.83 10.34 -- -- +5.19
------
Total $0.105
Cumulative total return as of 5/31/96: +4.52%**
<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--5/31/96 9.79 10.30 -- -- +5.21
------
Total $0.143
Cumulative total return as of 5/31/96: +6.13%**
<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>
<PAGE>
<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--5/31/96 9.80 10.34 -- -- +5.51
------
Total $0.243
Cumulative total return as of 5/31/96: +7.51%**
<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>
Percent of
COUNTRY Industries Shares Held Common Stocks Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Argentina Banking 2,325 Banco Frances del Rio de la
Plata S.A.(ADR) (a) $ 62,653 $ 65,391 0.5%
Petroleum 4,000 Yacimientos Petroliferos Fiscales
S.A. (Sponsored) (ADR)(a) 89,240 88,000 0.7
Total Common Stocks in Argentina 151,893 153,391 1.2
Brazil Beverages 100,000 Companhia Cervejaria Brahma PN
(Preferred) 57,349 59,619 0.5
Telecommunications 2,800 TelecomunicaCoes Brasileiras S.A.-
Telebras (ADR)(a) 148,296 180,250 1.4
Total Common Stocks in Brazil 205,645 239,869 1.9
<PAGE>
Canada Automobile Parts 1,800 Magna International, Inc. 78,963 86,850 0.7
Mining 1,200 Potash Corp. of Saskatchewan, Inc. 87,560 79,800 0.6
Multi-Industry 4,000 Canadian Pacific, Ltd. 71,240 82,000 0.7
Telecommunications 2,000 Northern Telecommunications Ltd. 69,620 108,500 0.9
Total Common Stocks in Canada 307,383 357,150 2.9
Finland Telecommunications 2,000 Nokia Corp. (Sponsored) (ADR)(a) 73,630 87,000 0.7
Equipment
Transportation 5,000 Finnlines OY 92,231 103,453 0.8
Total Common Stocks in Finland 165,861 190,453 1.5
France Iron & Steel 5,800 Usinor-Sacilor S.A. 95,485 93,114 0.8
Tires & Rubber 1,500 Michelin (C.G.D.E.)(Class B) 61,877 75,580 0.6
Total Common Stocks in France 157,362 168,694 1.4
Germany Chemicals 200 Henkel KGaA (Preferred) 85,393 84,076 0.7
Electrical Equipment 1,500 Siemens AG 66,527 84,122 0.7
Machinery & Equipment 200 Mannesmann AG 55,924 69,371 0.5
Multi-Industry 300 Preussag AG 88,172 76,573 0.6
Total Common Stocks in Germany 296,016 314,142 2.5
Hong Kong Banking 5,200 HSBC Holdings PLC 83,758 78,637 0.7
Telecommunications 3,500 Hong Kong Telecommunications Ltd.
(ADR)(a) 57,960 64,750 0.5
Total Common Stocks in Hong Kong 141,718 143,387 1.2
Indonesia Telecommunications 2,090 P.T. Indonesian Satellite Corp. (ADR)(a) 82,376 71,583 0.6
Total Common Stocks in Indonesia 82,376 71,583 0.6
<PAGE>
Italy Machinery 23,900 Danieli & C. Officine Meccaniche S.p.A. 66,523 90,959 0.7
Telecommunications 24,000 Societa Finanziara Telefonica S.p.A.
(STET) 72,825 85,981 0.7
Total Common Stocks in Italy 139,348 176,940 1.4
Japan Banking 4,000 Sanwa Bank Ltd. 80,937 77,087 0.6
Building & Construction 7,000 Maeda Corp. 78,210 71,991 0.6
9,000 Okumura Corp. 76,982 79,301 0.6
----------- ----------- ------
155,192 151,292 1.2
Capital Goods 10,000 Mitsubishi Heavy Industries, Ltd. 80,780 86,074 0.7
Consumer-Electronics 5,000 Matsushita Electric Industrial Co., Ltd. 84,011 86,167 0.7
Electrical Equipment 11,000 Mitsubishi Electric Co. 75,983 75,419 0.6
Electronics 1,000 Rohm Co., Ltd. 42,944 62,633 0.5
Financial Services 4,000 Nomura Securities Co., Ltd. 81,427 75,605 0.6
Insurance 6,000 Tokio Marine & Fire Insurance Co., Ltd. 72,400 77,828 0.6
Pharmaceuticals 4,250 Eisai Co., Ltd 75,013 77,967 0.6
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Percent of
COUNTRY Industries Shares Held Common Stocks Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Japan Photography 4,000 Canon, Inc. $ 70,302 $ 78,569 0.7%
(concluded)
Trading 8,000 Sumitomo Corp. 80,549 88,947 0.7
Warehouse & Storage 9,000 Mitsui-Soko Co., Ltd. 73,996 78,301 0.7
Total Common Stocks in Japan 973,534 1,015,889 8.2
Mexico Beverages 4,100 Panamerican Beverages, Inc. (Class A) 163,611 172,200 1.4
Multi-Industry 6,200 Grupo Carso, S.A. de C.V. (ADR)(a) 98,670 93,000 0.7
Paper Products 4,000 Kimberly-Clark de Mexico, S.A. de C.V. 67,484 73,980 0.6
Total Common Stocks in Mexico 329,765 339,180 2.7
<PAGE>
Netherlands Electronics 2,100 Philips Electronics N.V. 81,166 74,491 0.6
Petroleum 600 Royal Dutch Petroleum N.V. (ADR)(a) 65,073 90,000 0.7
Total Common Stocks in the Netherlands 146,239 164,491 1.3
Philippines Beverages 24,200 San Miguel Corp. (Class B) 85,238 83,783 0.7
Total Common Stocks in the Philippines 85,238 83,783 0.7
South Korea Engineering & 3,500 Hyundai Engineering & Construction
Construction Co. (GDR)(b) 45,605 50,750 0.4
Total Common Stocks in South Korea 45,605 50,750 0.4
Spain Petroleum 2,000 Repsol S.A. (ADR)(a) 64,370 68,000 0.5
Total Common Stocks in Spain 64,370 68,000 0.5
Switzerland Electrical Equipment 60 BBC Brown Boveri & Cie (Bearer) 54,429 71,831 0.6
Pharmaceuticals 2,000 Sandoz AG (ADR)(a) 86,500 103,000 0.8
Total Common Stocks in Switzerland 140,929 174,831 1.4
United Electrical Equipment 18,500 General Electric Co. PLC (Ordinary) 90,048 106,616 0.9
Kingdom
Total Common Stocks in the
United Kingdom 90,048 106,616 0.9
United Aerospace & Defense 2,000 Boeing Co. (The) 146,689 170,500 1.4
States 1,500 United Technologies Corp. 132,653 164,063 1.3
----------- ----------- ------
279,342 334,563 2.7
Airlines 1,385 Delta Air Lines, Inc. 109,455 114,782 0.9
Automobile 2,500 Ford Motor Co. 67,291 91,250 0.7
1,600 General Motors Corp. 90,249 88,200 0.7
----------- ----------- ------
157,540 179,450 1.4
<PAGE>
Banking 3,000 Bank of New York Company, Inc. (The) 128,430 155,625 1.3
1,000 Citicorp 72,955 84,000 0.7
----------- ----------- ------
201,385 239,625 2.0
Broadcasting--Media 1,600 Viacom, Inc. 66,554 67,800 0.5
Computer Services 2,000 cisco Systems, Inc. 89,318 109,250 0.9
& Software 2,500 Dell Computer Corp. 94,734 137,813 1.1
1,275 First Data Corp. 90,096 101,681 0.8
900 International Business Machines Corp. 98,906 96,075 0.8
500 Microsoft Corp. 56,031 59,313 0.5
2,813 Oracle Corp. 93,203 92,813 0.7
----------- ----------- ------
522,288 596,945 4.8
Electronics 1,500 Applied Materials, Inc. 60,464 55,688 0.4
3,500 Corning, Inc. 97,383 133,875 1.1
1,200 General Electric Company 91,075 99,300 0.8
3,000 General Motors Corp. (Class E) 153,218 169,125 1.4
1,500 Intel Corp. 93,240 113,063 0.9
3,000 Lexmark International Group, Inc.
(Class A) 63,688 66,000 0.5
----------- ----------- ------
559,068 637,051 5.1
Engineering & 1,700 Foster Wheeler Corporation 74,696 75,650 0.6
Construction
Financial Services 2,850 American Express Company 132,447 130,387 1.0
300 Associates First Capital Corporation 8,700 11,100 0.1
----------- ----------- ------
141,147 141,487 1.1
Furniture/ 1,400 Singer Co. 37,502 28,875 0.2
Home Appliances
Hardware Products 3,000 The Stanley Works Co. 118,299 181,875 1.5
Health Care 7,000 Humana, Inc. 157,045 154,000 1.2
Hospital Supplies 4,500 Abbott Laboratories 142,020 194,062 1.6
Household Products 1,050 Procter & Gamble Company (The) 88,454 92,269 0.7
Insurance 3,000 Aetna Life & Casualty Company 222,041 221,250 1.8
4,000 Allstate Corp. 163,729 169,000 1.4
1,400 National Re Corp. 46,605 46,200 0.4
----------- ----------- ------
432,375 436,450 3.6
<PAGE>
Machine Tools 2,500 Cincinnati Milacron, Inc. 63,001 60,000 0.5
& Machinery 3,000 Deere & Company 124,668 124,875 1.0
----------- ----------- ------
187,669 184,875 1.5
Natural Gas 3,400 Enron Corp. 130,426 136,000 1.1
Oil Services 7,000 Dresser Industries, Inc. 140,902 204,750 1.6
1,500 Schlumberger Ltd. 96,465 125,062 1.0
----------- ----------- ------
237,367 329,812 2.6
Petroleum 2,500 Pennzoil Company 100,457 108,125 0.9
Pharmaceuticals 3,700 Merck & Co., Inc. 126,485 239,112 1.9
Photography 3,100 Eastman Kodak Co. 160,989 230,562 1.9
Pollution Control 11,000 Wheelabrator Technologies Inc. 176,940 178,750 1.4
Railroads 900 Conrail, Inc. 63,099 63,225 0.5
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
Percent of
COUNTRY Industries Shares Held Common Stocks Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
United Retail Stores 3,400 Sears, Roebuck & Co. $ 135,257 $ 172,975 1.4%
States
(concluded) Scientific Equipment 5,000 Fisher Scientific International, Inc. 154,457 204,375 1.6
Steel 600 AK Steel Holding Corp. 25,315 25,950 0.2
Telecommunications 2,900 AT&T Corp. 153,995 180,887 1.5
3,000 Bell Atlantic Corp. 147,930 187,125 1.5
1,500 Lucent Technologies, Inc. 40,500 57,000 0.5
----------- ----------- ------
342,425 425,012 3.5
Tobacco 1,000 Philip Morris Companies, Inc. 98,951 99,375 0.8
Travel & Lodging 3,200 Carnival Corporation (Class A) 90,487 95,200 0.8
Total Common Stocks in the
United States 5,117,494 5,968,232 48.0
Total Investments in Common Stocks 8,640,824 9,787,381 78.7
<PAGE>
Face Amount Fixed-Income Securities
Germany Foreign DM 500,000 Bundes Obligations, 6.00% due 2/20/1998 351,407 339,450 2.7
Government 500,000 Treuhand Obligations, 5.00% due 1/14/1999 343,845 333,696 2.7
Obligations
Total Fixed-Income Securities in
Germany 695,252 673,146 5.4
Italy Foreign Buoni Poliennali del Tesoro (Italian
Government Government Bonds):
Obligations Lit 225,000,000 9.50% due 2/01/1999 143,890 148,689 1.2
225,000,000 9.50% due 2/01/2001 142,000 148,908 1.2
Total Fixed-Income Securities in Italy 285,890 297,597 2.4
Spain Foreign Esp 17,000,000 Spanish Government, 8.40% due 4/30/2001 132,445 131,644 1.1
Government
Obligations
Total Fixed-Income Securities in Spain 132,445 131,644 1.1
Sweden Foreign Skr 800,000 Government of Sweden, 10.25% due 5/05/2000 130,859 130,428 1.1
Government
Obligations
Total Fixed-Income Securities in Sweden 130,859 130,428 1.1
United Chemicals US$ 148,000 GI Holdings, Inc., 12.27%* due 10/01/1998 111,294 118,770 0.9
States
Communications 140,000 PanAmSat L.P., 12.02%* due 8/01/2003 106,170 120,050 1.0
Energy 200,000 TransTexas Gas Corp., 11.50% due
6/15/2002 200,000 196,000 1.6
Utilities-Electric 199,000 CTC Mansfield Funding Corp., 10.25% due
3/30/2003 184,573 203,223 1.6
Total Fixed-Income Securities in the
United States 602,037 638,043 5.1
Total Investments in Fixed-Income
Securities 1,846,483 1,870,858 15.1
Short-Term Securities
<PAGE>
United Commercial US$ 470,000 General Electric Capital Corp., 5.40%
States Paper** due 6/03/1996 469,859 469,859 3.8
US Government & 200,000 Federal Home Loan Bank, 5.20% due
Agency 7/01/1996 199,133 199,133 1.6
Obligations**
Total Investments in Short-Term
Securities 668,992 668,992 5.4
Total Investments $11,156,299 12,327,231 99.2
===========
Unrealized Appreciation on Forward Foreign Exchange Contracts*** 15,856 0.1
Other Assets Less Liabilities 84,321 0.7
----------- ------
Net Assets $12,427,408 100.0%
=========== ======
Net Asset Value: Class A--Based on net assets of $1,344,975
and 129,849 shares outstanding $ 10.36
===========
Class B--Based on net assets of $8,843,104
and 854,951 shares outstanding $ 10.34
===========
Class C--Based on net assets of $499,262
and 48,466 shares outstanding $ 10.30
===========
Class D--Based on net assets of $1,740,067
and 168,242 shares outstanding $ 10.34
===========
<FN>
(a)American Depositary Receipts (ADR).
(b)Global Depositary Receipts (GDR).
*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 and certain US Government & Agency Obligations are
traded on a discount basis; the interest rates shown are the
discount rates paid at the time of purchase by the Fund.
***Forward foreign exchange contracts as of May 31, 1996 were as
follows:
<PAGE>
Foreign Expiration Unrealized
Currency Sold Date Appreciation
DM 1,044,190 October 1996 $10,103
YEN 105,460,000 October 1996 5,753
Total Unrealized Appreciation--Net on Forward Foreign
Exchange Contracts (US$Commitment--$1,700,000) $15,856
=======
</TABLE>
EQUITY PORTFOLIO CHANGES
For the Quarter Ended May 31, 1996
Additions
AK Steel Holding Corp.
American Express Company
Applied Materials, Inc.
Associates First Capital Corporation
Carnival Corporation (Class A)
Cincinnati Milacron, Inc.
cisco Systems, Inc.
Companhia Cervejaria Brahma
PN (Preferred)
Conrail, Inc.
Deere & Company
Dell Computer Corp.
First Data Corp.
General Electric Company
General Motors Corp.
Grupo Carso, S.A. de C.V. (ADR)
Henkel KGaA (Preferred)
Hyundai Engineering &
Construction Co. (GDR)
Intel Corp.
International Business Machines Corp.
Lucent Technologies, Inc.
Magna International, Inc.
Microsoft Corp.
Oracle Corp.
Potash Corp. of Saskatchewan, Inc.
Procter & Gamble Company (The)
Sanwa Bank Ltd.
Usinor-Sacilor S.A.
Viacom, Inc.
<PAGE>
Deletions
Dai Nippon Printing Co., Ltd.
Eastman Chemical Co.
Hitachi Cable Ltd.
Kamigumi Co., Ltd
Philippine Long Distance
Telephone Co. (ADR)
Texas Instruments Inc.
Whirlpool Corporation
