-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, O/0ZFh10GOtiMsbFK/DDpjFjSXPDq/14nEnngbxKI/GrQTBR7XTGivh1FmOyhCSW ibmgpLCjE7yFn652NnRqyA== 0000900092-94-000235.txt : 19940531 0000900092-94-000235.hdr.sgml : 19940531 ACCESSION NUMBER: 0000900092-94-000235 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940331 FILED AS OF DATE: 19940520 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MERRILL LYNCH BALANCED FD FOR INV & RET CENTRAL INDEX KEY: 0000746637 STANDARD INDUSTRIAL CLASSIFICATION: 0000 STATE OF INCORPORATION: MD FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-04035 FILM NUMBER: 94529695 BUSINESS ADDRESS: STREET 1: P O BOX 9011 CITY: PRINCETON STATE: NJ ZIP: 08543 BUSINESS PHONE: 6092823319 FORMER COMPANY: FORMER CONFORMED NAME: MERRILL LYNCH RETIREMENT BENEFIT INVESTMENT PROG INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: MERRILL LYNCH BALANCED FUND FOR INVESTMENT & RETIREMENT DATE OF NAME CHANGE: 19910529 FORMER COMPANY: FORMER CONFORMED NAME: MERRILL LYNCH RETIREMENT BENEFIT INVESTMENT PROGRAM INC DATE OF NAME CHANGE: 19910501 N-30D 1 SEMI-ANNUAL REPORT MERRILL LYNCH BALANCED FUND For Investment and Retirement FUND LOGO Semi-Annual Report March 31, 1994 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 per- formance. Investment return and principal value of shares will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Custodian National Westminster Bank NJ 10 Exchange Place Jersey City, NJ 07302 Transfer Agent Financial Data Services, Inc. 4800 Deer Lake Drive East Jacksonville, FL 32246-6484 (800) 637-3863 Merrill Lynch Retirement Benefit Investment Program, Inc. Full Investment Portfolio d/b/a Merrill Lynch Balanced Fund for Investment and Retirement Box 9011 Princeton, NJ 08543-9011 Merrill Lynch Balanced Fund for Investment and Retirement PORTFOLIO SUMMARY GRAPHIC MATERIAL APPEARS HERE: SEE APPENDIX, GRAPHIC AND IMAGE MATERIAL, Item 1 As of March 31, 1994 Currency Diversification Percent of Net Assets US Dollar 82.8% Mexican Peso 3.0 Canadian Dollar 2.5 Australian Dollar 2.2 UK Sterling 1.8 Italian Lira 1.7 Spanish Peseta 1.2 Hong Kong Dollar 1.1 French Franc 0.8 Argentinian Peso 0.7 Chilean Peso 0.7 Swedish Krona 0.6 German Mark 0.4 Portuguese Escudo 0.4 Singaporean Dollar 0.1 US Common Stock Investments S&P Fund 500* After Tax Profit Margin 6.9% 5.5% Yield 1.6% 2.3% Price/Earnings Ratio** 21.0 18.0 Return on Equity 20.1% 14.2% Average Capitalization (in billions) $8.0 $6.5 Earnings Growth Rate (5 yr. average) 7.0% 4.0% [FN] *An unmanaged broad-based index comprised of common stocks. **Based on 1994 earnings estimates. Fixed-Income Investments Merrill Lynch Fund BOAO Index* Duration 5.3 Years 5.5 Years Average Maturity 8.1 Years 9.9 Years Asset Breakdown: US Treasuries/Agencies 63.3% 75.5% Corporates 13.2% 24.5% International Governments 23.5% -- [FN] *An unmanaged market-weighted corporate and Government master bond index reflecting approximately 97% of total outstanding US bonds. DEAR SHAREHOLDER During the March quarter, the Fund's asset mix moved toward cash equivalents and bonds at the expense of equities. At March quar- ter-end, cash equivalents were up to 7.9% of net assets from 3.4% at year-end 1993, while equities decreased to 57.3% from 64.3%, and bonds increased to 34.8% from 32.3%. Last fall, when there were early indications that economic growth was accelerating substantially from previous quarterly rates, fixed-income and equity investors became nervous. Recently re- leased statistics confirmed that the US economy expanded at a strong 7.0% rate in the fourth quarter. Analyzing gross domestic product (GDP) figures, we see that several factors contributed to this growth. Consumer spending increased 4.6%; business invest- ment jumped 22.1%; residential housing rose 31%; net exports were strong; and Government spending was flat. It is our opinion that this rate of growth is not sustainable. In fact, since the begin- ning of 1994, snow storms across the country and the earthquake in Los Angeles have dampened growth. On the positive side, the sharp drop in interest rates gave home- owners a huge windfall as they refinanced their mortgages, which helps to explain the consumption boom. Businesses have invested substantial amounts of money in computing and telecommunications technologies in the ongoing restructuring process. Together these trends suggest a strong economy, and raised concerns of heightened inflationary pressures for investors. Following the market's lead, the Federal Reserve Board raised short- term interest rates modestly in early February, in late March and again in mid-April. In line with its goal of price stability and its policy of providing an interest rate conducive to sustainable growth, Federal Reserve Board Chairman Alan Greenspan indicated to Congress a preference for modest corrective steps to avoid wrenching counter measures if inflation actually worsened. Already the backup in long-term interest rates has had an impact on mortgage refinanc- ings, which have declined 50% over the last four months after sur- ging in 1993. While residential housing and durable goods purchases are likely to slow from the fourth-quarter pace as interest rates increase, auto sales and consumer confidence continue to be remarkably strong in the first months of 1994. To satisfy pent-up demand, it may take sev- eral months until we see consumers slow spending in line with income. On the business side of the economy, net exports seem destined to slow down as several of our large trading partners are still exper- iencing negative-to-flat industrial production. Businesses are still expected to invest in technologies to remain competitive worldwide (although the current rate is unsustainable), and it has been this substitution of capital for labor that is largely responsible for the significant increase in productivity we have recently seen. The Fed- eral Reserve Board estimates productivity is now improving by 1.5% annually compared to 1.1% in recent quarters. The productivity im- provements contribute meaningfully in the effort to keep inflation low and permit GDP growth at higher levels without causing an accel- eration of inflation. Equity Investment Strategy Our strategy during the quarter was to underweight the credit-sens- itive sector that was being adversely affected by the backup in interest rates, although we have reversed our pattern recently. We have been reducing exposure to consumer-credit cyclicals, which should begin to slow as the benefits of lower mortgage rates are exhausted. Our economic forecast calls for still-strong growth in the first half of 1994, and we are emphasizing cyclical companies that benefit from the higher operating rates that typically occur later in the economic cycle. After several false starts, these in- dustries are just beginning to exact modestly higher prices. We still favor those companies that have substantially restructured and should now, in a stronger economy, see the fruits of their la- bors. We continue to be excited about opportunities in telecommun- ications technology, an area where we expect to achieve above- average growth into the next century. However, we had taken some profits since long-term growth stocks tend to be more negatively affected by increasing interest rates. Outside of the United States, we have substantially reduced the Fund's exposure to Hong Kong, which could not be expected to main- tain the rapid rate of growth experienced in 1993, especially in the face of US criticism over human rights violations in the People's Republic of China. We are beginning to position the portfolio to ben- efit from an anticipated upturn in economic activity on the European continent through purchases of companies based in Italy, France and Germany. Fixed-Income Investment Strategy The US fixed-income market was leading the Federal Reserve Board in raising interest rates since last October. We expected investors to react positively to the central bank's preemptive move against infla- tion. However, instead of the yield curve flattening as we had ex- pected, it has risen evenly across maturity sectors. The Federal Re- serve Board's gradual monetary policy tightening has evoked the expectation that short-term interest rates will rise further. In addition, in response to the massive flow of funds into the market over the past several years, the change in interest rate trends has caused a reversal in psychology leading to a flood of US Treasury securities offered for resale. We believe that these technical fac- tors are mostly unwound. We know the economy has slowed from the fourth-quarter pace, but still seek further evidence of a slowdown to a more sustainable rate. In the near term, we are cautious as we await evidence that the Federal Reserve Board's actions will ac- tually preempt inflation. Once signs of a slower economy develop, it is likely that we will extend the average life of the US portion of the Fund's bond portfolio. Internationally, bond markets have been extremely volatile as pessi- mism about inflation and interest rates in the United States also affected investors in Europe and other markets including Latin Amer- ica, where local currencies are linked to the US dollar. But the fac- tors that have stimulated overseas markets over the previous months still remain in place, and most observers agree that interest rates will continue to decline in Germany and in France, reflecting efforts to restart their economies. In Conclusion Contrary to our comments in our last report to shareholders, the eco- nomy has demonstrated greater strength than we anticipated, but we do expect future growth to decelerate from the level achieved in the closing months of 1993. The combination of greater sales growth and improving productivity should lead to double-digit corporate earnings gains in the quarters just ahead. This should bring equity market val- uations down to more reasonable levels and foster a greater interest in equity securities than we experienced in February and March. We believe the concerns of accelerating inflation have been overdone and anticipate a positive return on bonds in the second quarter. We appreciate your continued support of Merrill Lynch Balanced Fund for Investment and Retirement, and we look forward to sharing our strategy with you in our upcoming quarterly report to shareholders. Sincerely, (Arthur Zeikel) Arthur Zeikel President (Denis B. Cummings) Denis B. Cummings Vice President and Portfolio Manager April 28, 1994 OFFICERS AND DIRECTORS Arthur Zeikel, President and Director Kenneth S. Axelson, Director Herbert I. London, Director Robert R. Martin, Director Joseph L. May, Director Andre F. Perold, Director Terry K. Glenn, Executive Vice President Bernard J. Durnin, Senior Vice President Donald C. Burke, Vice President Denis B. Cummings, Vice President and Portfolio Manager Gerald M. Richard, Treasurer Jerry Weiss, Secretary PERFORMANCE DATA None of the past results shown should be considered a representation of future performance. Investment return and principal value of Class A and Class B Shares will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Performance Summary--Class A Shares
Net Asset Value Capital Gains Period Covered Beginning Ending Distributed Dividends Paid* % Change** 10/27/88--12/31/88 $11.18 $10.78 $0.008 $0.364 - 0.23% 1989 10.78 11.93 -- 0.767 +18.12 1990 11.93 10.57 0.377 0.719 - 2.31 1991 10.57 12.85 -- 0.457 +26.40 1992 12.85 12.08 0.745 0.546 + 4.16 1993 12.08 12.33 1.013 0.604 +15.93 1/1/94--3/31/94 12.33 11.67 -- -- - 5.35 ------ ------ Total $2.143 Total $3.457 Cumulative total return as of 3/31/94: +66.31%** *Figures may include short-term capital gains distributions. **Figures assume reinvestment of all dividends and capital gains dis- tributions at net asset value on the ex-dividend date, and do not include sales charge; results would be lower if sales charge was included.
Performance Summary--Class B Shares
Net Asset Value Capital Gains Period Covered Beginning Ending Distributed Dividends Paid* % Change** 11/29/85--12/31/85 $10.00 $10.19 -- -- + 1.90% 1986 10.19 11.03 $0.280 $0.250 +13.53 1987 11.03 10.52 0.222 0.496 + 1.75 1988 10.52 10.78 0.008 0.582 + 8.14 1989 10.78 11.95 -- 0.634 +17.01 1990 11.95 10.64 0.377 0.547 - 3.30 1991 10.64 12.93 -- 0.329 +24.96 1992 12.93 12.18 0.745 0.409 + 3.19 1993 12.18 12.44 1.013 0.467 +14.67 1/1/94--3/31/94 12.44 11.75 -- -- - 5.55 ------ ------ Total $2.645 Total $3.714 Cumulative total return as of 3/31/94: +101.16%** *Figures may include short-term capital gains distributions. **Figures assume reinvestment of all capital gains distributions at net asset value on the ex-dividend date, and do not reflect deduc- tion of any sales charge; results would be lower if sales charge was deducted.
Average Annual Total Return % Return Without % Return With Sales Charge Sales Charge** Class A Shares* Year Ended 3/31/94 + 4.86% - 1.95% Five Years Ended 3/31/94 +10.10 + 8.63 Inception (10/27/88) through 3/31/94 + 9.83 + 8.47 [FN] *Maximum sales charge is 6.5%. **Assuming maximum sales charge. % Return % Return Without CDSC With CDSC** Class B Shares* Year Ended 3/31/94 + 3.88% + 0.19% Five Years Ended 3/31/94 + 8.96 + 8.96 Inception (11/29/85) through 3/31/94 + 8.74 + 8.74 [FN] *Maximum contingent deferred sales charge is 4% and is reduced to 0% after 4 years. **Assuming payment of applicable contingent deferred sales charge. PERFORMANCE DATA (concluded) Recent Performance Results*
12 Month 3 Month 3/31/94 12/31/93 3/31/93 % Change % Change ML Balanced Fund Class A Shares $11.67 $12.33 $12.64 +0.10%(1) -5.35% ML Balanced Fund Class B Shares 11.75 12.44 12.70 +0.24(1) -5.55 ML Balanced Fund Class A Shares--Total Return +4.86(2) -5.35 ML Balanced Fund Class B Shares--Total Return +3.88(3) -5.55 S&P 500/ML BOAO Blended Index--Total Return** +2.24 -3.38 *Investment results shown for the 3-month and 12-month periods are before the deduction of any sales charge. **An unmanaged broad-based index comprised of corporate bonds, govern- ment bonds and common stocks. Total investment returns for unmanaged indexes are based on estimates. (1)Percent change includes reinvestment of $1.013 per share capital gains distributions. (2)Percent change includes reinvestment of $0.604 per share ordinary in- come dividends and $1.013 per share capital gains distributions. (3)Percent change includes reinvestment of $0.467 per share ordinary in- come dividends and $1.013 per share capital gains distributions.
PORTFOLIO INFORMATION Ten Largest Equity Holdings Percent of As of March 31, 1994 Net Assets Singer Co. N.V. 2.9% Wheelabrator Technologies, Inc. 2.7 Telefonos de Mexico, S.A. de C.V. (ADR) 2.4 Computer Sciences Corp. 2.3 ADC Telecommunications, Inc. 1.8 MCI Communications Corp. 1.6 Danka Business Systems PLC (ADR) 1.6 Grupo Carso, S.A. de C.V. (ADR) 1.5 LDDS Communications Inc. (Class A) 1.5 Sunbeam-Oster Inc. 1.5 SCHEDULE OF INVESTMENTS
Face Value Percent of Industries Amount* Corporate Bonds Cost (Note 1a) Net Assets Financial $ 10,000,000 Ford Capital BV, 9.375% due 1/01/1998 $ 10,037,900 $ 10,890,640 1.4% Services 5,000,000 Landeskreditbank, N.V., 7.875% due 4/15/2004 4,972,067 5,256,255 0.6 Financial 10,000,000 American General Financial Corp., 7.38% Services- due 5/13/1997 9,993,200 10,275,000 1.3 Consumer Tobacco 10,000,000 Philip Morris Companies, Inc., 7.75% due 5/01/1999 9,975,000 10,275,000 1.3 Total Investments in Corporate Bonds 34,978,167 36,696,895 4.6 Country US Government & Agency Obligations United States Federal Home Loan Mortgage Corp.: 4,910,000 REMIC 1243-HP, 5.625% due 4/25/2024(a) 4,788,017 4,713,600 0.6 25,000,000 REMIC FHG 16PH, 6.75% due 4/15/2021(a) 25,390,625 23,468,750 2.9 20,000,000 Federal National Mortgage Association, REMIC 1993 103PG, 6.75% due 5/25/2022(a) 20,262,500 18,400,313 2.3 5,000,000 Republic of Italy, 8.75% due 2/08/2001 5,373,050 5,388,690 0.7 US Treasury Notes: 55,000,000 7.875% due 8/15/2001 53,943,600 58,884,375 7.4 25,000,000 6.25% due 2/15/2003 25,710,937 24,125,000 3.0 35,000,000 5.75% due 8/15/2003 36,432,812 32,467,960 4.1 22,000,000 US Treasury STRIPS++, 6.81% due 5/15/2000(b) 15,607,802 14,826,988 1.8 Total Investments in US Government & Agency Obligations 187,509,343 182,275,676 22.8 Foreign Obligations Australia A$ 13,100,000 Queensland Treasury Corp. Global, 8.00% due 7/14/1999 9,812,507 9,230,822 1.2 Canada C$ 14,500,000 Government of Canada, 7.25% due 6/01/2003 10,739,024 10,005,964 1.2 Italy Buoni Poliennali del Tesoro: Lit 5,050,000,000 9.00% due 10/01/1998 3,073,203 3,134,632 0.4 12,500,000,000 10.00% due 8/01/2003 7,957,684 8,079,078 1.0 Mexico Mxp 45,013,640 Mexican Cetes, 9.04% due 9/07/1995(b) 12,341,483 11,361,416 1.4 Spain Pta 600,000,000 Spanish Government Bonds, 10.50% due 10/30/2003 5,158,819 4,815,005 0.6 Sweden Skr 40,000,000 Government of Sweden, 6.50% due 6/05/2001 4,894,532 4,635,597 0.6 United UK Treasury Gilt: Kingdom Pound 1,350,000 8.75% due 9/01/1997 2,267,919 2,106,366 0.3 Sterling 4,500,000 8.00% due 6/10/2003 7,536,136 6,826,707 0.8 Total Investments in Foreign Obligations 63,781,307 60,195,587 7.5 Total Investments in Corporate Bonds, US Government & Agency & Foreign Obligations 286,268,817 279,168,158 34.9
SCHEDULE OF INVESTMENTS (continued)
Shares Value Percent of Industries Held US Stocks & Warrants Cost (Note 1a) Net Assets Basic Industry Chemicals 70,000 du Pont (E.I.) de Nemours & Co. $ 4,084,332 $ 3,710,000 0.5% 55,000 IMC Fertilizer Group, Inc. 2,523,134 2,172,500 0.3 125,000 Rohm & Haas Co. 6,791,460 6,828,125 0.9 Consumer-- 30,000 Duracell International Inc. 1,245,024 1,192,500 0.1 Miscellaneous Containers 170,000 Crown Cork & Seal Co., Inc. 5,064,404 6,651,250 0.8 Forest Products 132,500 Willamette Industries, Inc. 4,954,250 6,260,625 0.8 Paper 153,000 Scott Paper Co. 6,566,724 6,406,875 0.8 Railroads 130,000 CSX Corp. 11,448,373 10,660,000 1.3 270,000 Southern Pacific Rail Co. 5,596,644 5,670,000 0.7 Total Basic Industry 48,274,345 49,551,875 6.2 Capital Spending Aerospace 250,000 Allied-Signal Inc. 7,805,352 9,156,250 1.1 Auto & Truck 155,000 Consorcio G Groupo Dina, S.A. de C.V. (ADR) (d)(1) 2,506,119 2,499,375 0.3 Capital Goods 1,140,000 Wheelabrator Technologies, Inc. 12,797,181 21,802,500 2.7 Communications 50,000 Motorola, Inc. 4,263,282 5,062,500 0.6 75,000 Tellabs, Inc. 3,080,391 4,068,750 0.5 Computer Services 500,000 Computer Sciences Corp. 14,036,687 18,250,000 2.3 325,000 General Motors Corp. (Class E) 9,470,962 11,131,250 1.4 Computer Technology 22,800 Novell Inc. 509,503 410,400 0.1 Electrical Equipment 162,000 Emerson Electric Co. 9,124,573 9,618,750 1.2 35,000 W.W. Grainger 2,267,080 2,222,500 0.3 Electronics 50,000 Perkin Elmer Corp. 1,959,750 1,668,750 0.2 210,000 Solectron Corp. 5,168,718 6,326,250 0.8 Engineering & 210,000 Thermo Electron Corp. 8,634,781 8,163,750 1.0 Construction Office Equipment 325,000 Danka Business Systems PLC (ADR)(d)(1) 9,952,519 12,634,375 1.6 Telecommunications 385,000++++ADC Telecommunications, Inc. 11,768,964 14,533,750 1.8 & Equipment 90,000 DSC Communications Corp. 5,136,258 4,522,500 0.6 Total Capital Spending 108,482,120 132,071,650 16.5
SCHEDULE OF INVESTMENTS (continued)
Shares Value Percent of Industries Held US Stocks & Warrants Cost (Note 1a) Net Assets Consumer Goods & Services Apparel 140,000 Phillips-Van Heusen Corp. $ 3,151,463 $ 4,882,500 0.6% Appliances 675,000 Singer Co. N.V. (1) 17,730,688 23,203,125 2.9 639,500 Sunbeam-Oster Inc. 12,710,739 11,830,750 1.5 Automotive 100,000 Ford Motor Co. 5,841,808 5,875,000 0.7 150,000 Magna International Inc. 7,474,189 7,050,000 0.9 Beverages 19,100 Panamerican Beverage Inc. (1) 487,050 661,337 0.1 Conglomerates 690,000++++Grupo Carso, S.A. de C.V. (ADR)(d)(1)++++++ 5,878,820 12,506,250 1.5 Healthcare-- 420,000 Humana Inc. 7,781,015 7,822,500 1.0 Products & Services 75,000 Vivra Inc. 1,398,603 1,837,500 0.2 Household Products 140,000 Procter & Gamble Co. 7,773,736 7,507,500 0.9 Medical 245,000++++Physician Corp. 4,985,524 6,431,250 0.8 Printing & Publishing 100,000 Gannett Co. 5,007,669 5,262,500 0.7 Retail 27,400 Heilig-Meyers Co. 341,708 849,400 0.1 Services 200,000 Block (H & R), Inc. 7,764,675 8,600,000 1.1 60,275 Kelly Services, Inc. (Class A) 1,715,024 1,401,394 0.2 Telecommunications 61,200 ALC Communications Corp. 1,560,600 2,034,900 0.3 100,000 GTE Corp. 3,204,870 3,100,000 0.4 515,750 LDDS Communications Inc. (Class A) 11,447,075 12,249,062 1.5 550,000 MCI Communications Corp. 15,538,597 12,856,250 1.6 70,000 Sprint Corp. 2,594,900 2,397,500 0.3 315,000 Telefonos de Mexico, S.A. de C.V. (ADR) (d)(1) 12,692,065 18,978,750 2.4 Tires & Rubber 140,000 Bandag, Inc. (Class A) 6,400,395 6,755,000 0.9 350,000 Cooper Tire & Rubber Co. 7,181,026 8,925,000 1.1 Total Consumer Goods & Services 150,662,239 173,017,468 21.7 Credit-Sensitive & Financial Services Banking 80,000 Banco de Galicia y Buenos Aires S.A. (ADR) (d)(1) 2,018,496 2,540,000 0.3 40,000 Banco Frances del Rio de la Plata S.A. (ADR) (d)(1) 1,476,693 1,255,000 0.2 80,000 BankAmerica Corp. 3,457,141 3,150,000 0.4 50,000 Bank of New York Co. 2,404,161 2,550,000 0.3 122,500 Espirito Santo Financial Holding S.A. (ADR) (d)(1) 3,447,435 3,613,750 0.4 130,000 Grupo Financiero Serfin S.A. 3,204,369 3,266,250 0.4 90,000 Istituto Mobiliare (ADR)(d)(1) 1,976,579 2,115,000 0.3 Telecommunications 35,000 International Telephone & Telegraph Corp. 2,966,908 3,001,250 0.4 Total Credit-Sensitive & Financial Services 20,951,782 21,491,250 2.7
SCHEDULE OF INVESTMENTS (continued)
Shares Value Percent of Industries Held US Stocks & Warrants Cost (Note 1a) Net Assets Energy Oil--Integrated 20,000 Mobil Oil Corp. $ 1,571,620 $ 1,487,500 0.2% Oil International 70,000 Royal Dutch Petroleum Co. N.V. (ADR)(d)(1) 6,155,380 6,956,250 0.9 Petroleum 170,000 Phillips Petroleum Co. 4,864,574 4,526,250 0.5 Utilities--Electric 350,000 California Energy Co., Inc. 6,244,403 6,300,000 0.8 Total Energy 18,835,977 19,270,000 2.4 Total Investments in US Stocks & Warrants 347,206,463 395,402,243 49.5 Foreign Stocks & Warrants Argentina Utilities-- 560,000 Telecom Argentina S.A. (Class B) 3,305,379 3,108,311 0.4 Communications Australia Banking 335,942 National Australia Bank Ltd. 2,106,640 2,680,702 0.3 Multi-Industry 300,948 Pacific Dunlop, Ltd. 1,129,136 1,055,124 0.1 Retail 270,000 Coles Myer Ltd. (Warrants)(c) 808,121 357,822 0.0 Canada Consumer--Durables 280,000 International Semi-Tech Microelectronics, Inc. (Receipts)(e) 1,806,344 1,619,433 0.2 Media/Publishing 80,000 News Corp. (ADR)(d) 4,079,037 4,030,000 0.5 Retail Stores 50,000 Hudson's Bay Company (Ord.) 1,529,050 1,066,368 0.1 Chile Utilities 11,000 Compania de Telefonos de Chile S.A. 1,274,185 981,750 0.1 Utilities--Electric 121,600 Distribuidora Chilectra Metropolitana S.A. (ADR)(d)++++++ 3,323,793 4,354,496 0.6 France Multi-Industry 3,750 Compagnie Generale des Eaux 1,401,331 1,709,177 0.2 Oil-Integrated 149,100 Societe Nationale Elf Aquitaine (ADR)(d) 5,303,144 4,864,387 0.6
SCHEDULE OF INVESTMENTS (continued)
Shares Value Percent of Industries Held Foreign Stocks & Warrants Cost (Note 1a) Net Assets Germany Automotive 50,000 Daimler-Benz AG (ADR)(d) $ 2,337,500 $ 2,543,750 0.3% Machinery 2,000 Mannesmann AG 343,289 499,251 0.1 Hong Kong Banking 274,108 HSBC Holdings PLC 1,613,351 3,086,123 0.4 Electronics 1,300,000 Johnson Electric Co. 2,603,189 3,179,636 0.4 Foods/Food 500,000 Dairy Farm International Holdings Ltd. 866,896 757,056 0.1 Processing Multi-Industry 504,000 Hutchison Whampoa, Ltd. 1,010,407 2,054,534 0.3 Mexico Engineering & 291,600 Empresas ICA Sociedad Controladora, Construction S.A. de C.V. (ADR)(d) 5,751,141 6,998,400 0.9 Portugal Banking 100,000 Banco Commercial Portugal (New)(ADR)(d) 1,342,303 1,562,500 0.2 97,000 Banco Commercial Portugal (Registered) 1,233,051 1,583,824 0.2 Singapore Beverages 65,000 Fraser & Neave Ltd. (Ordinary) 730,745 696,873 0.1 Spain Petroleum 60,000 Repsol S.A. 1,616,190 1,882,310 0.2 Utilities--Electric 50,000 Empresa Nacional de Electricidad S.A. (ADR)(d) 701,000 2,537,500 0.3 United Kingdom Business Services 50,000 Reuters Holding PLC (ADR)(d) 2,571,186 4,306,250 0.5 Consumer-- 50,000 Hanson PLC Sponsored (ADR)(d) 1,106,687 993,750 0.1 Miscellaneous Electronics 100,000 Siebe PLC 886,652 877,507 0.1 Engineering & 510,000 Huntingdon International Holdings PLC (ADR)(d) 12,702,548 3,123,750 0.4 Construction
SCHEDULE OF INVESTMENTS (concluded)
Shares Value Percent of Industries Held Foreign Stocks & Warrants Cost (Note 1a) Net Assets Venezuela Automotive & 657,500 Siderurgica Venezolana SIVENSA Equipment S.A.I.C.A.-S.A.C.A. (ADR)(Warrants)(c)(d)++++++ $ 1,544,625 $ 19,725 0.0% Total Investments in Foreign Stocks & Warrants 65,026,920 62,530,309 7.7 Total Investments in US & Foreign Stocks & Warrants 412,233,383 457,932,552 57.2 Face Amount* Short-Term Securities Commercial $30,000,000 du Pont (E.I.) de Nemours & Co., 3.49% due Paper** 4/25/1994 29,930,200 29,930,200 3.7 General Electric Capital Corp.: 635,000 3.50% due 4/01/1994 635,000 635,000 0.1 20,609,000 3.53% due 4/04/1994 20,602,938 20,602,938 2.6 Total Investments in Short-Term Securities 51,168,138 51,168,138 6.4 Total Investments $749,670,338 788,268,848 98.5 ============ Other Assets Less Liabilities 12,171,258 1.5 ------------ ------ Net Assets $800,440,106 100.0% ============ ====== (a)Real Estate Mortgage Investment Conduits (REMIC). (b)Represents the yield-to-maturity on this zero coupon issue. (c)Warrants entitle the Fund to purchase a predetermined number of shares of common stock. The purchase price and number of shares are subject to adjustment under certain conditions until the expiration date. (d)American Depositary Receipt (ADR). (e)Receipts evidence payment by the Fund of 40% of the pur- chase price of Class A Shares of International Semi-Tech Microelectronics, Inc. The Fund is obligated to pay the remaining 60%, approximately $2,700,000 over the next two years. *Denominated in US dollars unless otherwise indicated. **Commercial Paper is traded on a discount basis; the interest rates shown are the discount rates paid at the time of purchase by the Fund. ++Separate Trading of Registrated Interest and Principal of Securities (STRIPS). ++++Non-income producing security. ++++++Restricted security pursuant to Rule 144A. (1)Consistent with the general policy of the Securities and Exchange Commission, the nationality or domicile of an issuer for determina- tion of foreign issuer status may be (i) the country under whose laws the issuer is organized, (ii) the country in which the issuer's securities are principally traded, or (iii) the country in which the issuer derives a significant proportion (at least 50%) of its revenue or profits from goods produced or sold, investments made, or services performed in the country, or in which at least 50% of the assets of the issuer are situated. See Notes to Financial Statements.
FINANCIAL INFORMATION
Statement of Assets and Liabilities as of March 31, 1994 Assets: Investments, at value (identified cost--$749,670,338) (Note 1a) $788,268,848 Receivables: Securities sold $ 17,442,878 Interest 3,296,857 Capital shares sold 711,423 Dividends 406,028 21,857,186 ------------ Deferred organization expenses (Note 1f) 2,683 Prepaid registration fees and other assets (Note 1f) 144,208 ------------ Total assets 810,272,925 ------------ Liabilities: Payables: Securities purchased 5,024,240 Capital shares redeemed 2,758,319 Distributor (Note 2) 674,136 Investment adviser (Note 2) 448,623 8,905,318 ------------ Accrued expenses and other liabilities 927,501 ------------ Total liabilities 9,832,819 ------------ Net Assets: Net assets $800,440,106 ============ Net Assets Class A Common Stock, $0.01 par value, 500,000,000 shares authorized $ 34,412 Consist of: Class B Common Stock, $0.01 par value, 500,000,000 shares authorized 646,960 Paid-in capital in excess of par 702,898,369 Undistributed investment income--net 2,421,693 Undistributed realized capital gains on investments and foreign currency transactions--net 55,845,048 Unrealized appreciation on investments and foreign currency transactions--net 38,593,624 ------------ Net assets $800,440,106 ============ Net Asset Class A--Based on net assets of $40,175,446 and 3,441,241 shares Value: outstanding $ 11.67 ============ Class B--Based on net assets of $760,264,660 and 64,695,953 shares outstanding $ 11.75 ============ See Notes to Financial Statements.
FINANCIAL INFORMATION (continued)
Statement of Operations for the Six Months Ended March 31, 1994 Investment Interest and discount earned $ 10,813,618 Income Dividends (net of $130,379 foreign withholding tax) 2,886,327 (Notes ------------ 1d & 1e): Total income 13,699,945 ------------ Expenses: Distribution fees--Class B (Note 2) 4,093,753 Investment advisory fees (Note 2) 2,716,119 Transfer agent fees--Class B (Note 2) 486,429 Custodian fees 91,000 Printing and shareholder reports 73,439 Accounting services (Note 2) 35,921 Professional fees 31,131 Registration fees (Note 1f) 28,737 Transfer agent fees--Class A (Note 2) 21,255 Directors' fees and expenses 19,956 Amortization of organization expenses (Note 1f) 798 Pricing fees 798 Other 8,781 ------------ Total expenses 7,608,117 ------------ Investment income--net 6,091,828 ------------ Realized & Realized gain from: Unrealized Investments--net $ 61,211,346 Gain Foreign currency transactions--net 968,386 62,179,732 (Loss) on ------------ Investments Change in unrealized appreciation/depreciation on: & Foreign Investments--net (67,485,904) Currency Foreign currency transactions--net 31,186 (67,454,718) Transac- ------------ ------------ tions--Net Net realized and unrealized loss on investments and foreign currency Notes 1b, transactions (5,274,986) 1e & 3): ------------ Net Increase in Net Assets Resulting from Operations $ 816,842 ============ See Notes to Financial Statements.
FINANCIAL INFORMATION (continued) Statements of Changes in Net Assets
For the Six Months For the Ended Year Ended March 31, September 30, Increase (Decrease) in Net Assets: 1994 1993 Operations: Investment income--net $ 6,091,828 $ 16,570,858 Realized gain on investments and foreign currency transactions--net 62,179,732 82,929,610 Change in unrealized appreciation/depreciation on investments and foreign currency transactions--net (67,454,718) 14,121,027 ------------ ------------ Net increase in net assets resulting from operations 816,842 113,621,495 ------------ ------------ Dividends & Investment income--net: Distri- Class A (656,642) (994,119) butions to Class B (7,759,759) (17,314,603) Shareholders Realized gain on investments--net: (Note 1g): Class A (4,103,194) (1,508,643) Class B (75,192,306) (59,542,543) ------------ ------------ Net decrease in net assets resulting from dividends and distributions to shareholders (87,711,901) (79,359,908) ------------ ------------ Capital Share Net increase (decrease) in net assets derived from capital Transactions share transactions 15,692,257 (69,858,642) (Note 4): ------------ ------------ Net Assets: Total decrease in net assets (71,202,802) (35,597,055) Beginning of period 871,642,908 907,239,963 ------------ ------------ End of period* $800,440,106 $871,642,908 ============ ============ *Undistributed investment income--net $ 2,421,693 $ 4,746,266 ============ ============ See Notes to Financial Statements.
FINANCIAL INFORMATION (continued) Financial Highlights
Class A For the The following per share data and ratios have been Six Months derived from information provided in the financial statements. Ended March 31, For the Year Ended September 30, Increase (Decrease) in Net Asset Value: 1994 1993 1992 1991 1990 Per Share Net asset value, beginning of period $ 13.02 $ 12.57 $ 11.94 $ 10.61 $ 11.93 Operating -------- -------- -------- -------- -------- Performance: Investment income--net .17 .43 .47 .70 .64 Realized and unrealized gain (loss) on investments and foreign currency transactions (1)--net (.09) 1.29 .61 1.63 (1.41) -------- -------- -------- -------- -------- Total from investment operations .08 1.72 1.08 2.33 (.77) -------- -------- -------- -------- -------- Less dividends and distributions: Investment income--net (.20) (.39) (.45) (.62) (.55) Realized gain on investments--net (1.23) (.88) -- (.38) -- -------- -------- -------- -------- -------- Total dividends and distributions (1.43) (1.27) (.45) (1.00) (.55) -------- -------- -------- -------- -------- Net asset value, end of period $ 11.67 $ 13.02 $ 12.57 $ 11.94 $ 10.61 ======== ======== ======== ======== ======== Total Based on net asset value per share 0.24%++ 14.62% 9.23% 23.14% (6.86%) Investment ======== ======== ======== ======== ======== Return:** Ratios to Expenses .79%* .83% .81% .85% .83% Average ======== ======== ======== ======== ======== Net Assets: Investment income--net 2.38%* 3.09% 3.18% 3.64% 5.12% ======== ======== ======== ======== ======== Supplemental Net assets, end of period (in thousands) $ 40,175 $ 40,688 $ 20,320 $ 12,839 $ 4,511 Data: ======== ======== ======== ======== ======== Portfolio turnover 30.76% 79.55% 65.40% 173.76% 163.56% ======== ======== ======== ======== ======== *Annualized. **Total investment returns exclude the effects of sales loads. ++Aggregate total investment return. (1)Foreign currency transaction amounts have been reclassified to conform to the 1994 presentation. See Notes to Financial Statements.
FINANCIAL INFORMATION (concluded) Financial Highlights (concluded)
Class B For the The following per share data and ratios have been Six Months derived from information provided in the financial statements. Ended March 31, For the Year Ended September 30, Increase (Decrease) in Net Asset Value: 1994 1993 1992 1991 1990 Per Share Net asset value, beginning of period $ 13.09 $ 12.62 $ 11.99 $ 10.60 $ 11.91 Operating -------- -------- -------- -------- ---------- Performance: Investment income--net .09 .24 .29 .39 .50 Realized and unrealized gain (loss) on investments and foreign currency transactions (1)--net (.07) 1.37 .66 1.83 (1.39) -------- -------- -------- -------- ---------- Total from investment operations .02 1.61 .95 2.22 (.89) -------- -------- -------- -------- ---------- Less dividends and distributions: Investment income--net (.13) (.26) (.32) (.45) (.42) Realized gain on investments--net (1.23) (.88) -- (.38) -- -------- -------- -------- -------- ---------- Total dividends and distributions (1.36) (1.14) (.32) (.83) (.42) -------- -------- -------- -------- ---------- Net asset value, end of period $ 11.75 $ 13.09 $ 12.62 $ 11.99 $ 10.60 ======== ======== ======== ======== ========== Total Based on net asset value per share (0.23%)++ 13.49% 8.01% 21.91% (7.79%) Investment ======== ======== ======== ======== ========== Return:** Ratios to Expenses, excluding distribution fees .81%* .85% .85% .90% .86% Average ======== ======== ======== ======== ========== Net Assets: Expenses 1.81%* 1.85% 1.85% 1.90% 1.86% ======== ======== ======== ======== ========== Investment income--net 1.36%* 1.99% 2.10% 3.37% 3.90% ======== ======== ======== ======== ========== Supplemental Net assets, end of period (in thousands) $760,265 $830,955 $886,920 $986,895 $1,171,567 Data: ======== ======== ======== ======== ========== Portfolio turnover 30.76% 79.55% 65.40% 173.76% 163.56% ======== ======== ======== ======== ========== *Annualized. **Total investment returns exclude the effects of sales loads. ++Aggregate total investment return. (1)Foreign currency transaction amounts have been reclassified to conform to the 1994 presentation. See Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS 1. Significant Accounting Policies: Merrill Lynch Retirement Benefit Investment Program, Inc., Full Investment Portfolio does business under the name Merrill Lynch Balanced Fund for Investment and Retirement. Merrill Lynch Balan- ced Fund for Investment and Retirement (the "Fund") is registered under the Investment Company Act of 1940 as a diversified, open- end investment management company. The Fund offers both Class A and Class B Shares. Class A Shares are sold with a front-end sales charge. Class B Shares may be subject to a contingent de- ferred sales charge. Both classes of shares have identical vot- ing, dividend, liquidation and other rights and the same terms and conditions, except that Class B Shares bear certain expenses related to the distribution of such shares and have exclusive voting rights with respect to matters relating to such dis- tribution expenditures. The following is a summary of signifi- cant accounting policies followed by the Fund. (a) Valuation of investments--Portfolio securities and options which are traded on stock exchanges are valued at the last sale price 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 valu- ed at the last quoted bid prices at the close of trading on the New York Stock Exchange on each day by brokers that make markets in the securities. Portfolio securities which are traded both in the over-the-counter market and on a stock exchange are valued ac- cording to the broadest and most representative market. Short- term securities are valued at amortized cost, which approximates market. Securities and assets for which market quotations are not readily available are valued at fair value as determined in good faith by or under the direction of the Board of Directors of the Fund. (b) Foreign currency transactions--Transactions denominated in foreign currencies are recorded at the exchange rate prevailing when recognized. Assets and liabilities denominated in foreign cur- rencies are valued at the exchange rate at the end of the period. Foreign currency transactions are the result of settling (real- ized) and valuing (unrealized) assets and liabilities expressed in foreign currencies into US dollars. Realized and unrealized gains or losses from investments include the effects of foreign exchange sales on investments. The Fund is authorized to enter into forward foreign exchange con- tracts 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. The Fund may also purchase or sell listed or over-the-counter for- eign currency options, foreign currency futures and related options on foreign currency futures as a short or long hedge against possi- ble variations in foreign exchange rates. Such transactions may be effected with respect to hedges on non-US dollar denominated secur- ities owned by the Fund, sold by the Fund but not yet delivered, or committed or anticipated to be purchased by the Fund. (c) Options--When the Fund sells an option, an amount equal to the premium received by the Fund is reflected as an asset and an equiv- alent liability. The amount of the liability is subsequently marked to market to reflect the current market value of the option written. When a security is sold through an exercise of an option, the re- lated premium received is deducted from the basis 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 loss or gain to the extent the cost of the closing transaction is less than or greater than the premium paid or received). Written and purchased options are non-income producing investments. (d) Income taxes--It is the Fund's policy to comply with the re- quirements of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable income to its shareholders. Therefore, no Federal income tax provision is required. Under the applicable foreign tax law, a withholding tax may be imposed on interest, dividends and capital gains at various rates. (e) Security transactions and investment income--Security trans- actions are recorded on the dates the transactions are entered in- to (the trade dates). Dividend income is recorded on the ex-div- idend date, except that if the ex-dividend date has passed, certain dividends from foreign securities are recorded as soon as the Fund is informed of the ex-dividend date. Interest income (including amortization of discount) is recognized on the accrual basis. Realized gains and losses on security transactions are determined on the identified cost basis. NOTES TO FINANCIAL STATEMENTS (concluded) (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. Costs related to the organ- ization of the second class of shares are charged to expense over a period not exceeding five years. 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. (h) Reclassifications--Certain 1993 amounts have been reclassified to conform to the 1994 presentation. 2. Investment Advisory Agreement and Transaction with Affiliates: The Fund has entered into an Investment Advisory Agreement with Merrill Lynch Asset Management, L.P. ("MLAM"). Effective January 1, 1994, the investment advisory business of MLAM was reorganized from a corporation to a limited partnership. Both prior to and after the reorganization, ultimate control of MLAM was vested with Merrill Lynch & Co., Inc. ("ML & Co."). The general partner of MLAM is Princeton Services, Inc., an indirect wholly-owned sub- sidiary of ML & Co. The limited partners are ML & Co. and Merrill Lynch Investment Management, Inc. ("MLIM"), which is also an in- direct wholly-owned subsidiary of ML & Co. The Fund has also entered into a Distribution Agreement and a Distribution Plan with Merrill Lynch Funds Distributor, Inc. ("MLFD" or "Distri- butor"), a wholly-owned subsidiary of MLIM. 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 based upon the average daily value of the Fund's net assets at the following annual rates: 0.65% of the average daily net assets not exceeding $500 million; 0.60% of the average daily net assets exceeding $500 million but not exceeding $1.5 billion; 0.55% of the av- erage daily net assets exceeding $1.5 billion but not exceeding $2.5 billion; 0.50% of the average daily net assets exceeding $2.5 billion but not exceeding $3.5 billion; and 0.45% of the average daily net assets exceeding $3.5 billion. The most restrictive an- nual expense limitation requires that the Adviser reimburse the Fund to the extent the Fund's expenses (excluding interest, taxes, distribution fees, brokerage fees and commissions, and extraor- dinary items) exceed 2.5% of the Fund's first $30 million of av- erage 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. No payment will be made to MLAM during any fis- cal year which will cause such expenses to exceed the most restric- tive expense limitation applicable at the time of such payment. Pursuant to a Distribution Plan (the "Distribution Plan") adopted by the Fund in accordance with Rule 12b-1 under the Investment Company Act of 1940, the Fund pays the Distributor an ongoing account maintenance fee and distribution fee, which are accrued daily and paid monthly at the annual rates of 0.25% and 0.75%, respectively, of the average daily net assets of the Class B Shares of the Fund. Pursuant to a sub-agreement with the Dis- tributor, Merrill Lynch provides account maintenance and distri- bution services to the Fund with respect to Class B Shares. As authorized by the Plan, the Distributor has entered into an agree- ment with Merrill Lynch, Pierce, Fenner & Smith Inc. ("MLPF&S"), which provides for the compensation of MLPF&S for providing dis- tribution-related services to the Fund. For the six months ended March 31, 1994, MLFD earned under- writing discounts of $2,294, and MLPF&S received dealer con- cessions of $35,241 on sales of the Fund's Class A Shares. MLPF&S received contingent deferred sales charges of $78,329 relating to transactions in Class B Shares and $53,670 in com- missions on the execution of portfolio security transactions for the Fund during the period. Financial Data Services, Inc. ("FDS"), a wholly-owned subsidiary of ML & Co., is the Fund's transfer agent. Accounting services are provided to the Fund by MLAM at cost. Certain officers and/or directors of the Fund are officers and/ or directors of MLIM, MLPF&S, FDS, MLFD, and/or ML & Co. 3. Investments: Purchases and sales of investments, excluding short-term securi- ties, for the six months ended March 31, 1994 were $250,984,195 and $344,304,826, respectively. Net realized and unrealized gains (losses) as of March 31, 1994 were as follows: Unrealized Realized Gains Gains (Losses) Long-term investments $ 61,211,346 $ 38,598,510 Options written 21,243 -- Foreign currency transactions 947,143 (4,886) ------------ ------------ Total $ 62,179,732 $ 38,593,624 ============ ============ As of March 31, 1994, net unrealized appreciation for Federal in- come tax purposes aggregated $38,598,510, of which $75,149,692 re- lated to appreciated securities and $36,551,182 related to de- preciated securities. The aggregate cost of investments less premiums received for options written, at March 31, 1994 for Federal income tax purposes was $749,670,338. Transactions in call options written for the six months ended March 31, 1994 were as follows: Par Value/Shares Covered by Premiums Written Options Received Outstanding options at beginning of period -- -- Options written 25,800 $ 38,999 Options closed (10,400) (10,154) Options exercised (1,800) (15,010) Options expired (13,600) (13,835) ------------ ------------ Outstanding options at end of period -- $ -- ============ ============ 4. Capital Share Transactions: Net increase (decrease) in net assets derived from capital share transactions was $15,692,257 for the six months ended March 31, 1994 and ($69,858,642) for the year ended September 30, 1993, re- spectively. Transactions in capital shares for Class A and Class B Shares were as follows: Class A Shares for the Six Months Dollar Ended March 31, 1994 Shares Amount Shares sold 1,016,163 $ 12,847,884 Shares issued to sharehold- ers in reinvestment of dividends and distributions 376,995 4,535,252 ------------ ------------- Total issued 1,393,158 17,383,136 Shares redeemed (1,077,993) (13,288,826) ------------ ------------- Net increase 315,165 $ 4,094,310 ============ ============= Class A Shares for the Year Dollar Ended September 30, 1993 Shares Amount Shares sold 2,695,028 $ 33,091,210 Shares issued to share- holders in reinvestment of dividends 161,050 1,956,633 ------------ ------------- Total issued 2,856,078 35,047,843 Shares redeemed (1,346,924) (17,015,867) ------------ ------------- Net increase 1,509,154 $ 18,031,976 ============ ============= Class B Shares for the Six Months Dollar Ended March 31, 1994 Shares Amount Shares sold 1,673,591 $ 21,175,801 Shares issued to sharehold- ers in reinvestment of dividends and distributions 5,798,154 70,389,583 ------------ ------------- Total issued 7,471,745 91,565,384 Shares redeemed (6,265,393) (79,967,437) ------------ ------------- Net increase 1,206,352 $ 11,597,947 ============ ============= Class B Shares for the Year Dollar Ended September 30, 1993 Shares Amount Shares sold 2,722,243 $ 34,400,436 Shares issued to share- holders in reinvestment of dividends 5,336,253 65,136,704 ------------ ------------- Total issued 8,058,496 99,537,140 Shares redeemed (14,832,136) (187,427,758) ------------ ------------- Net decrease (6,773,640) $ (87,890,618) ============ ============= 5. Loan Securities: At March 31, 1994, the Fund held US Treasury Bonds having an aggregate value of approximately $5,300,000 as collateral for portfolio securities loaned having a market value of approximately $4,030,000. 6. Commitments: At March 31, 1994, the Fund had entered into forward exchange contracts under which it had agreed to sell various foreign currencies with approx- imate values of $765,000. APPENDIX: GRAPHIC AND IMAGE MATERIAL Item 1: Portfolio Summary Sector Representation As a Percentage of Equities As of March 31, 1994 A bar graph depicting the Fund's sector representation as a percentage of equities as of March 31, 1994. Basic Industry 10.6% Consumer Goods & Services 27.0% Energy 4.2% Capital Spending 28.2% Foreign 15.0% Credit-Sensitive & Financial Services 15.0% Security Diversification As of March 31, 1994 A bar graph depicting the Fund's security diverseification as of March 31, 1994. Stocks 57.3% US 48.7% Non US 8.6% Bonds 34.8% US 27.3% Non 7.5% Cash & Cash Equivalents 7.9% -----END PRIVACY-ENHANCED MESSAGE-----