MERRILL LYNCH
GLOBAL
HOLDINGS, INC.
FUND LOGO
Quarterly Report
August 31, 1996
This report is not authorized for use as an offer of sale or a
solicitation of an offer to buy shares of the Company unless
accompanied or preceded by the Company'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.
<PAGE>
Merrill Lynch
Global Holdings, Inc.
Box 9011
Princeton, NJ
08543-9011
Printed on post-consumer recycled paper
MERRILL LYNCH GLOBAL HOLDINGS, INC.
Officers and
Directors
Arthur Zeikel, President and Director
Donald Cecil, Director
Edward H. Meyer, Director
Charles C. Reilly, Director
Richard R. West, Director
Edward D. Zinbarg, Director
Terry K. Glenn, Executive Vice President
Norman R. Harvey, Senior Vice President
Philip L. Kirstein, Senior Vice President
Donald C. Burke, Vice President
Edward F. Korff, Vice President and Portfolio Manager
Gerald M. Richard, Treasurer
Robert Harris, Secretary
<PAGE>
Custodian
The Chase Manhattan Bank, N.A.
Global Securities Services
4 Chase MetroTech Center, 18th Floor
Brooklyn, New York 11245
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
DEAR SHAREHOLDER
The total return of the world's equity markets, as measured by the
unmanaged Morgan Stanley Capital International World Index, was
- -1.99% during the quarter ended August 31, 1996. This overall result
masked widely disparate performances among the various markets. For
example, the unmanaged Morgan Stanley Capital International Pacific
Basin Index's total return was about -7% during the August quarter.
However, within the region individual market returns varied
markedly. New Zealand gained 9%; Taiwan rose almost 6%; Hong Kong,
Australia, Malaysia and the Philippines were all essentially flat;
while Japan, Indonesia, Korea and Thailand declined 8%, 11%, 13% and
16%, respectively.
In the US market, overall volatility increased significantly. After
the highs of early June, the unmanaged Standard & Poor's 500 Index
declined over 9% by mid-July. During the following four weeks, 85%
of the decline was reversed. Interestingly, smaller stocks rose only
about half as much as the higher-quality blue chip stocks during the
recovery. This indicates to us that investors may have become less
certain about the investment environment and are becoming more risk
averse.
In our May 31, 1996 report to shareholders, we anticipated this
increase in equity market volatility. Our anticipation was based
upon economic and political considerations and a belief that the
massive capital flows that benefited markets earlier in the year
would moderate. Today, the issues are quite similar and thus we
expect a continuation of volatile market performance over the near
term. However, we believe that global economic prospects became
better defined and will help provide for improved market performance
later in 1996.
<PAGE>
Our economic thesis has been that the world's economies were in a
period of transition from slower to more rapid economic growth. In
such periods, economic indicators are often quite mixed and seem
contradictory at times. This was and continues to be the case. The
resultant uncertainty about the direction of these indicators leads
to greater market volatility. Fluctuations in the US equity market
during the quarter ended August 31, 1996 reflect this point. Early
in June, the majority of investors believed that economic growth was
slowing from the rapid pace of April and May and the outlook for
continued corporate earnings growth had diminished. Then, a series
of upbeat economic indicators raised the prospect of accelerating
growth and increased investor concerns about higher inflationary
rates. Short-term and long-term interest rates rose, and the stock
market declined; interest rates fell later in the quarter and helped
to stabilize the equity market. Currently, most economic indicators
point toward moderate growth and a relatively benign inflation
outlook.
In Europe, the economic outlook is increasingly better defined.
Growth is accelerating, although not at similar rates among the
individual economies. Improvement is most notable in Germany, the
Netherlands and the United Kingdom. France, Italy and Spain are
lagging somewhat because of tight fiscal policies as governments
attempt to comply with Maastricht criteria for the European Monetary
Union.
In Asia, the economic situation is mixed. The economies of The
People's Republic of China and Hong Kong are definitely
accelerating. In Japan, the trough passed but the recovery remains
fragile. Elsewhere in Asia, overall growth slowed somewhat but
levels still exceed worldwide averages. In these latter economies,
interest rates should decline later in 1996, leading to a
reacceleration of economic activity in 1997.
Political events around the globe continued to induce volatility in
equity markets. In Indonesia, there were riots in reaction to
repressive measures taken against opposing political parties. The
ruling coalition in Thailand disbanded and the prime minister could
not sustain a vote of confidence. In Korea, guilty verdicts against
former political leaders and business executives on bribery charges
impacted that market. Ongoing friction between The People's Republic
of China and both Taiwan and Hong Kong created uncertainty and
volatility.
In Latin America, political events at times overshadowed better-than-
expected economic progress. For example, Mexico's economic growth is
far exceeding earlier forecasts, but rebel attacks around the
country are impacting both currency and equity markets. In
Argentina, the popular minister of finance was dismissed to the
dismay of many equity investors. In Brazil, many economic reform
measures are being held hostage in a gridlocked congress.
<PAGE>
Political events within and related to the United States created
volatility in the domestic market. As discussed in earlier
shareholder reports, the rhetoric of presidential campaigns often
precipitates increased volatility. In addition, the United States'
involvement in such countries as Bosnia and Iraq can also lead to
economic and political uncertainty and negatively impact investor
psychology. In Europe, the economic and political turmoil in Russia
continued to affect currency and equity markets across the
continent.
There is a famous Chinese saying: "May you live in interesting
times." It seems that investors are currently experiencing this.
However, we are long-term investors and remain optimistic about
global markets. The worldwide economy is improving and political
concerns ebb and flow. Therefore, we will continue to view
volatility as an opportunity. We remain committed to offering
investors a diversified portfolio which reflects the many investment
opportunities around the globe.
Investment Environment
Japan
Amid worries over a domestic interest rate increase and an
oversupply of new issues, the Japanese stock market has been
unsettled since the end of June. The latest business confidence
survey by the Bank of Japan suggests that economic activity in Japan
is improving slowly and therefore earlier fears of monetary
tightening subsided. Nevertheless, equity investors' sentiment has
not improved as concerns over the state of the economy next year
(particularly in light of a potential consumption tax rate increase
and fiscal contraction) far outweigh the prospects of continued
monetary relaxation. It appears that a further postponement of
monetary tightening by the Bank of Japan was largely discounted in
the equity market. Instead, the fact that the economy still has not
improved to the degree investors anticipated led to a decline in
confidence. As a result, our investment outlook in Japan has not
changed. We will continue to maintain an underweighted position in
Japan until we see improved confidence in the sustainability of the
economic recovery and signs of positive revisions to corporate
earnings forecasts.
During the quarter ended August 31, 1996, we reduced our weighting
in Sumitomo Metal Industries Co., Ltd., and closed out our positions
in Sumitomo Chemical Co. and Makino Milling Machine Co., Ltd., whose
business performances are highly leveraged to the country's economic
growth. We redeployed the assets to increase our positions in
Mitsubishi Heavy Industries Ltd., Omron Corp. and Sanwa Shutter
Corporation, where we see better long-term growth potential. We also
established a new position in Minebea Co., Ltd. which we believe is
a strong beneficiary of the long-term global growth in personal
computers and other electronics goods. The company, the world's
largest miniature ball-bearing manufacturer, is highly cost
competitive on a global scale. Overall, our underweight exposure in
Japan has not changed. While the Nikkei 225 Index closed the August
quarter at a five-month low, declining 8.1% in yen terms, only four
of our Japanese holdings underperformed the index. Three of these
are in the financial sector where we remain heavily underweighted.
<PAGE>
Smaller Asian Markets
Asia's smaller markets performed poorly over the quarter ended
August 31, 1996, with Thai, Indonesian and Korean markets declining
sharply and the other markets flat or showing only slightly higher
gains. Factors influencing the poor performance included concerns
over higher interest rates, slowing export growth and political
unrest in many countries. The fund's Asian performance was hurt by
our overweight position in all of the smaller markets. In
particular, our large holdings in Thailand, Indonesia and India
underperformed each market's index as investors took profits. Since
we believe Asia offers an attractive long-term equity investment
climate, we used the downside volatility as an opportunity to
increase our exposure to these markets. Lately, many analysts and
observers have focused on the slowing growth of Asian exports,
citing a loss of external competitiveness caused by the structural
problems. However, we view the structural concerns as misplaced. We
believe the export slowdown is cyclical and country-specific because
of a sharp downturn in the semiconductor industry worldwide.
Thailand was Asia's worst-performing stock market so far this year.
Therefore, we increased our equity exposure moderately after the
sharp decline in share prices.
Europe
European economies continued to improve. However, there is a
significant divergence between Germany and northern European
economies, and France and southern European economies. Germany
registered particularly good economic performance in recent months.
Both domestic and export orders are strong, resulting in rising
industrial production. Southern European governments maintained
restrictive fiscal policies as they attempt to meet the criteria of
the European Union Agreement. These tight policies hindered growth,
but permitted ongoing monetary policy easing which will eventually
promote economic recovery.
The European equity markets, in local terms, were essentially
unchanged during the summer months. The unmanaged Morgan Stanley
Capital International European Index showed a decline of 0.2%
excluding dividends in local currency terms. The spread between the
best-performing market (Sweden, up 1.5%) and the worst-performing
market (Belgium with a loss of 2.1%) was minimal.
<PAGE>
Since there was little difference in country performance, country
weightings were of less consequence during the quarter ended August
31, 1996. However, stock selection did make a difference. We had
large gains in the international cleaning firm ISS International
Service Systems A/S, up 15%; software company Dassault Systemes
S.A., up 69%; dredger Koninklijke Boskalis Westminster N.V., up 12%;
and electronic component manufacturer Astec (BSR) PLC, up 12%.
Significant declines occurred in electronic component manufacturers:
Saes Getter S.p.A and Sensonor A/S fell 18% and 10%, respectively.
The two UK banks, National Westminster Bank PLC and The Royal Bank
of Scotland Group PLC, fell 4% and 6%, respectively.
North America
North American equity markets were quite turbulent during the
quarter ended August 31, 1996. Investors reacted strongly to even
minor fluctuations in interest rates. As noted, economic indicators
were mixed. Data which indicated any reacceleration of economic
activity raised investor fears of higher inflation rates and
resulted in higher interest rates and equity market weakness, while
contrary indications caused equity markets to improve. Against this
backdrop of economic transition, several companies reported
disappointing earnings which contributed to volatility across
industry segments.
In this difficult environment, our pharmaceutical and financial
services sector holdings contributed positively to overall fund
performance. Within the technology area, software companies
performed well, while technology and telecommunication equipment
sectors performed poorly. However, in these businesses we believe
order patterns and production schedules are currently at more
sustainable levels, which should benefit future stock performance.
During the quarter ended August 31, 1996, we eliminated our
positions in Viacom Inc. (Class A), United HealthCare Corp. and
Value Health Inc., where prospects for improved results will take
longer to materialize than we had anticipated. We initiated
positions in Sonat Offshore Drilling Inc., which should benefit from
increased demand for deep water oil and gas drilling equipment; and
Forest Laboratories, Inc., which is expected to receive approval
from the Federal Drug Administration to launch several new drugs by
early next year.
Latin America
In spite of increased risks of higher US interest rates, many of the
Latin American equity markets reached 52-week highs during the
quarter ended August 31, 1996, reflecting stronger economic growth.
Mexico and Brazil both reported healthy increases in second-quarter
gross domestic product. We initiated positions in two banks, Grupo
Financiero Banorte, S.A. de C.V. in Mexico, and Uniao de Bancos
Brasileiros S.A. in Brazil. Both banks should benefit from banking
industry consolidation and stronger economic growth in their
respective countries. Grupo Carso, S.A. de C.V. in Mexico
successfully completed the spin-off of its telecommunications and
financial services subsidiaries. Telecommunicacoes Brasileiras S.A.--
Telebras PN, which announced results that exceeded analysts'
expectations, was our best-performing Latin American stock for the
August quarter, up 13.6%.
<PAGE>
In Conclusion
In US dollar terms, the unmanaged Morgan Stanley Capital
International Index lost 1.99%. Merrill Lynch Global Holdings,
Inc.'s Class A, Class B, Class C and Class D Shares had total
returns during the August quarter of -3.84%, -4.08%, -4.08% and
- -3.92%, respectively, in US dollar terms, excluding dividends.
(Results shown do not reflect sales charges and would be lower if
sales charges were included. Complete performance data, including
average annual total returns, can be found on pages 5-7 of this
report to shareholders.)
We thank you for your investment in Merrill Lynch Global Holdings,
Inc., and we look forward to reviewing our outlook and strategy with
you again in our next report to shareholders.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Edward F. Koroff)
Edward F. Korff
Vice President and Portfolio Manager
September 30, 1996
PERFORMANCE DATA
<PAGE>
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. (There is no initial
sales charge for automatic share conversions.)
* 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*
<PAGE>
Year Ended 6/30/96 +17.19% +11.04%
Five Years Ended 6/30/96 +12.11 +10.91
Ten Years Ended 6/30/96 +13.23 + 9.39
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 6/30/96 +15.96% +11.96%
Five Years Ended 6/30/96 +10.96 +10.96
Inception (10/21/88)
through 6/30/96 + 9.08 + 9.08
[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 6/30/96 +16.04% +15.04%
Inception (10/21/94)
through 6/30/96 + 9.73 + 9.73
[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 6/30/96 +16.89% +10.76%
Inception (10/21/94)
through 6/30/96 +10.60 + 7.13
<PAGE>
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
PERFORMANCE DATA (concluded)
<TABLE>
Performance
Summary--
Class A Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <C> <C> <C> <C> <C>
7/2/84--12/31/84 $ 9.15 $ 9.32 -- $0.170 + 3.68%
1985 9.32 12.28 -- 0.340 +36.05
1986 12.28 14.28 $ 1.270 0.300 +30.25
1987 14.28 11.52 3.638 0.372 + 6.54
1988 11.52 11.01 1.275 0.337 +10.04
1989 11.01 11.77 1.492 0.212 +23.53
1990 11.77 10.28 0.188 0.261 - 9.20
1991 10.28 11.67 0.221 0.123 +17.12
1992 11.67 11.27 0.817 0.063 + 4.28
1993 11.27 13.14 0.443 0.371 +24.08
1994 13.14 12.18 0.514 0.007 - 3.25
1995 12.18 13.32 0.584 0.164 +15.56
1/1/96--8/31/96 13.32 14.03 -- -- + 5.33
------- ------
Total $10.442 Total $2.720
Cumulative total return as of 8/31/96: +331.17%**
<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
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <C> <C> <C> <C> <C>
10/21/88--12/31/88 $11.29 $11.00 $0.388 $0.147 + 2.22%
1989 11.00 11.71 1.492 0.138 +22.33
1990 11.71 10.20 0.188 0.166 -10.18
1991 10.20 11.56 0.221 0.036 +16.02
1992 11.56 11.09 0.817 0.001 + 3.15
1993 11.09 12.94 0.443 0.219 +22.87
1994 12.94 11.87 0.514 -- - 4.20
1995 11.87 12.82 0.584 0.164 +14.37
1/1/96--8/31/96 12.82 13.40 -- -- + 4.52
------ ------
Total $4.647 Total $0.871
Cumulative total return as of 8/31/96: +89.15%**
<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 C Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <C> <C> <C> <C> <C>
10/21/94--12/31/94 $13.08 $11.87 $0.514 -- - 5.23%
1995 11.87 12.82 0.584 $0.164 +14.37
1/1/96--8/31/96 12.82 13.41 -- -- + 4.60
------ ------
Total $1.098 Total $0.164
Cumulative total return as of 8/31/96: +13.38%**
<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
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <C> <C> <C> <C> <C>
10/21/94--12/31/94 $13.39 $12.18 $0.514 $0.003 - 5.09%
1995 12.18 13.29 0.584 0.164 +15.32
1/1/96--8/31/96 13.29 13.97 -- -- + 5.12
------ ------
Total $1.098 Total $0.167
Cumulative total return as of 8/31/96: +15.06%**
<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>
Recent
Performance
Results
<CAPTION>
12 Month 3 Month
8/31/96 5/31/96 8/31/95 % Change % Change
<S> <C> <C> <C> <C> <C>
ML Global Holdings, Inc. Class A Shares* $14.03 $14.59 $13.61 + 7.65%(1) -3.84%
ML Global Holdings, Inc. Class B Shares* 13.40 13.97 13.16 + 6.51(1) -4.08
ML Global Holdings, Inc. Class C Shares* 13.41 13.98 13.16 + 6.59(1) -4.08
ML Global Holdings, Inc. Class D Shares* 13.97 14.54 13.59 + 7.37(1) -3.92
ML Global Holdings, Inc. Class A Shares--Total Return* + 8.94(2) -3.84
ML Global Holdings, Inc. Class B Shares--Total Return* + 7.83(2) -4.08
ML Global Holdings, Inc. Class C Shares--Total Return* + 7.91(2) -4.08
ML Global Holdings, Inc. Class D Shares--Total Return* + 8.65(2) -3.92
World Stock Index--Total Return** +12.57 -1.99
<FN>
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included.
**The Morgan Stanley Capital International World Stock Index is an
unmanaged US dollar-denominated index of world stock markets
compiled by Capital International Perspective S.A. and published in
Morgan-Stanley Capital International Perspective.
(1)Percent change includes reinvestment of $0.584 per share capital
gains distributions.
(2)Percent change includes reinvestment of $0.164 per share ordinary
income dividends and $0.584 per share capital gains distributions.
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (in US Dollars)
<CAPTION>
LATIN Percent of
AMERICA Industries Shares Held Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Argentina Energy 120,000 Yacimientos Petroliferos Fiscales
S.A.--Sponsored (ADR)* $ 2,350,450 $ 2,535,000 0.6%
Multi-Industry 339,000 Compania Naviera Perez Companc
S.A.C.F.I.M.F.A. 1,396,267 1,940,244 0.5
Total Investments in Argentina 3,746,717 4,475,244 1.1
Brazil Banking 76,000,000 Uniao de Bancos Brasileiros S.A.
(Preferred) 2,056,000 1,944,308 0.5
Forest Products 397,500 Aracruz Celulose S.A. (ADR)* 3,624,750 3,527,813 0.8
& Paper
Telecommunications 36,000,000 Telecommunicacoes Brasileiras S.A
--Telebras PN (Preferred) 1,290,167 2,674,407 0.6
Total Investments in Brazil 6,970,917 8,146,528 1.9
Chile Multi-Industry 40,000 Madeco S.A. (ADR)* 1,031,413 945,000 0.2
Total Investments in Chile 1,031,413 945,000 0.2
Mexico Beverages & Tobacco 35,000 Panamerican Beverages, Inc. (Class A) 991,514 1,478,750 0.3
Holding Company 1,594,000 Grupo Financiero Banorte, S.A.
de C.V. (Class B) 1,653,141 1,846,348 0.4
Multi-Industry 600,000 Grupo Carso, S.A. de C.V. 3,448,736 2,754,617 0.7
Total Investments in Mexico 6,093,391 6,079,715 1.4
Total Investments in Latin America 17,842,438 19,646,487 4.6
NORTH
AMERICA
Canada Agriculture 245,000 Viridian, Inc. 3,195,498 2,928,608 0.7
<PAGE>
Industrial Materials 1 Westaim Corporation 3 3 0.0
Telecommunications 50,000 Northern Telecom Ltd. 1,474,875 2,493,750 0.6
Total Investments in Canada 4,670,376 5,422,361 1.3
United Banking 120,000 The Bank of New York Company, Inc. 3,130,284 3,345,000 0.8
States 45,000 Barnett Banks, Inc. 2,756,978 2,953,125 0.7
------------ ------------ ------
5,887,262 6,298,125 1.5
Broadcasting & 115,000 Time Warner Inc. 3,948,176 3,838,125 0.9
Publishing
Business & Public 30,000 Microsoft Corp. 1,250,000 3,675,000 0.9
Services 100,000 Molten Metal Technology, Inc. 2,354,895 3,050,000 0.7
75,000 Oracle Corporation (c) 557,917 2,634,375 0.6
30,000 Pacificare Health Systems Inc.
(Class B) 1,012,500 2,400,000 0.6
------------ ------------ ------
5,175,312 11,759,375 2.8
Chemicals 60,000 PPG Industries, Inc. 2,314,400 2,962,500 0.7
Electrical Equipment 60,000 Applied Materials, Inc. 2,160,562 1,447,500 0.3
80,000 Ultratech Stepper Inc. 1,395,265 1,220,000 0.3
------------ ------------ ------
3,555,827 2,667,500 0.6
Electronics/ 125,000 General Instrument Corp. 3,132,134 3,421,875 0.8
Components 60,000 Intel Corp. 1,305,000 4,785,000 1.1
50,000 Motorola, Inc. 2,694,300 2,668,750 0.6
60,000 Texas Instruments Inc. 2,492,028 2,805,000 0.7
------------ ------------ ------
9,623,462 13,680,625 3.2
Energy Sources 125,000 Enron Oil & Gas Co. 2,468,178 3,234,375 0.8
Food & Household 150,000 Performance Food Group Co. 1,678,096 2,400,000 0.6
Products
Health & Personal 100,000 Forest Laboratories, Inc. 4,023,062 4,112,500 1.0
Care 35,000 Merck & Co., Inc. 1,262,400 2,296,875 0.5
50,000 Pfizer, Inc. 2,427,678 3,550,000 0.8
------------ ------------ ------
7,713,140 9,959,375 2.3
Insurance 75,000 AFLAC, Inc. 1,524,004 2,578,125 0.6
75,000 Mercury General Corp. 2,626,000 3,375,000 0.8
------------ ------------ ------
4,150,004 5,953,125 1.4
<PAGE>
Leisure & Tourism 160,000 Mirage Resorts, Inc. 1,204,170 3,720,000 0.9
26,694 TCI Pacific Communications
(Convertible Preferred) 2,393,331 2,422,481 0.6
40,000 Walt Disney Co. 1,382,400 2,280,000 0.5
------------ ------------ ------
4,979,901 8,422,481 2.0
Machinery & Equipment 100,000 Harnischfeger Industries, Inc. 3,640,438 3,775,000 0.9
Merchandising 90,000 The Home Depot, Inc. 3,373,925 4,781,250 1.1
200,000 Office Depot, Inc. 3,970,750 3,175,000 0.8
------------ ------------ ------
7,344,675 7,956,250 1.9
Oil & Gas Producers 40,000 Sonat Offshore Drilling Inc. 2,096,400 2,185,000 0.5
Railroads 40,000 Consolidated Rail Corp. 2,384,900 2,725,000 0.7
60,000 Illinois Central Corp. 1,688,600 1,815,000 0.4
------------ ------------ ------
4,073,500 4,540,000 1.1
Telecommunications 70,445 AT&T Corp. 4,299,531 3,698,363 0.9
125,000 Airtouch Communications, Inc. 2,976,403 3,437,500 0.8
------------ ------------ ------
7,275,934 7,135,863 1.7
Total Investments in the
United States 75,924,705 96,767,719 22.9
Total Investments in North America 80,595,081 102,190,080 24.2
PACIFIC
BASIN/ASIA
Australia Banking 200,097 National Australia Bank, Ltd. 1,430,366 1,952,539 0.5
Broadcasting & 350,000 News Corp., Ltd. (Ordinary) 1,863,660 1,866,913 0.4
Publishing
Entertainment 1,000,000 Sydney Harbour Casino Holdings Ltd. 1,446,117 1,424,520 0.3
Insurance 104,674 Lend Lease Corp. 1,327,152 1,713,111 0.4
Metals 300,000 WMC Ltd. (a) 1,727,089 2,089,296 0.5
Total Investments in Australia 7,794,384 9,046,379 2.1
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US Dollars)
<CAPTION>
PACIFIC BASIN/
ASIA Shares Held/ Percent of
(continued) Industries Face Amount Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C>
Hong Kong Multi-Industry 1,512,573 First Pacific Co., Ltd. $ 1,248,973 $ 2,455,095 0.6%
400,000 Hutchison Whampoa Ltd. 1,949,838 2,421,107 0.6
500,000 Swire Pacific Ltd. `A' 2,453,484 4,445,810 1.0
------------ ------------ ------
5,652,295 9,322,012 2.2
Real Estate 400,000 Sun Hung Kai Properties, Ltd. 2,242,489 3,905,846 0.9
Utilities--Gas 1,440,000 Hong Kong and China Gas
Company Ltd. 1,873,089 2,327,988 0.6
120,000 Hong Kong and China Gas
Company Ltd. (Warrants) (b) 0 32,204 0.0
------------ ------------ ------
1,873,089 2,360,192 0.6
Total Investments in Hong Kong 9,767,873 15,588,050 3.7
India Machinery & 196,000 Larsen & Toubro Ltd. (GDR)** 3,008,600 2,979,200 0.7
Engineering
Total Investments in India 3,008,600 2,979,200 0.7
Indonesia Construction & 1,880,000 Jaya Real Property 2,924,702 2,649,584 0.6
Housing
Telecommunications 40,000 P.T. Indonesian Satellite
Corp. (ADR)* 1,256,238 1,250,000 0.3
50,800 P.T. Telekomunikasi Indonesia
(ADR)* 939,403 1,416,050 0.3
------------ ------------ ------
2,195,641 2,666,050 0.6
Textiles 600,000 P.T. Indorama Synthetics (Foreign) 1,217,976 1,447,790 0.4
Total Investments in Indonesia 6,338,319 6,763,424 1.6
Japan Automobiles 120,000 Toyota Motor Corp. 2,128,963 2,893,695 0.7
Banking 130,000 Bank of Tokyo-Mitsubishi 3,085,819 2,644,271 0.6
US$ 1,000,000 The Mitsubishi Bank, Ltd., 3% due
11/30/2002 (Convertible) 1,000,000 1,091,000 0.3
100,000 Sanwa Bank, Ltd. 1,844,583 1,767,142 0.4
------------ ------------ ------
5,930,402 5,502,413 1.3
<PAGE>
Broadcasting & 300,000 Tokyo Broadcasting System, Inc. 3,736,661 4,583,525 1.1
Publishing
Building Materials 200,000 Sanwa Shutter Corporation 1,848,010 1,803,958 0.4
Cable & Wire 270,000 Sumitomo Electric Industry, Ltd. 2,968,251 3,578,463 0.8
Chemicals 350,000 Asahi Chemical Industry Co. 2,503,914 2,351,588 0.6
Construction & 40,000 Sho-Bond Construction 1,327,862 1,413,714 0.3
Housing
Data Processing & 120,000 Canon Inc. 2,096,847 2,231,017 0.5
Reproduction
Electrical & 300,000 Hitachi Ltd. 3,154,652 2,755,637 0.6
Electronics 29,000 Keyence Corp. 2,038,471 3,683,387 0.9
200,000 Matsushita Electric Industrial Co. 2,837,637 3,368,615 0.8
85,000 Murata Manufacturing Co., Ltd. 2,448,383 3,019,788 0.7
220,000 NEC Corporation 2,822,889 2,348,827 0.6
150,000 Omron Corp. 2,717,395 2,747,354 0.6
180,000 Sharp Corp. 2,744,465 2,849,517 0.7
90,000 Tokyo Electron Ltd. 3,173,486 2,352,508 0.6
------------ ------------ ------
21,937,378 23,125,633 5.5
Entertainment 70,000 Sony Music Entertainment (Japan) Inc. 3,171,727 2,744,593 0.7
Financial Services 200,000 Daiwa Securities Co., Ltd. 2,519,694 2,264,151 0.5
Insurance 250,000 Tokio Marine & Fire Insurance
Co., Ltd. 3,142,441 2,853,198 0.7
Machinery & 150,000 Minebea Co., Ltd. 1,265,989 1,253,566 0.3
Engineering 400,000 Mitsubishi Heavy Industries Ltd. 2,988,558 3,162,448 0.7
------------ ------------ ------
4,254,547 4,416,014 1.0
Merchandising 50,000 Aoyama Trading Co. 2,716,597 1,320,755 0.3
60,000 Ito-Yokado Co., Ltd. 2,604,246 3,164,289 0.8
150,000 Marui Co., Ltd. 2,736,736 2,940,635 0.7
------------ ------------ ------
8,057,579 7,425,679 1.8
Metals 700,000 Nippon Steel Co. 2,407,627 2,216,291 0.5
400,000 Sumitomo Metal Industries Co., Ltd. 1,257,478 1,130,235 0.3
------------ ------------ ------
3,665,105 3,346,526 0.8
<PAGE>
Real Estate 250,000 Mitsui Fudosan Co., Ltd. 3,097,952 3,083,295 0.7
Telecommunications 350 DDI Corp. 2,617,101 2,786,470 0.7
307 Nippon Telephone & Telegraph
Corp. (Ordinary) 2,553,690 2,178,527 0.5
------------ ------------ ------
5,170,791 4,964,997 1.2
Wholesale & 250,000 Mitsui & Co. 1,780,475 2,109,986 0.5
International Trade
Total Investments in Japan 79,338,599 80,692,445 19.1
Malaysia Banking 583,333 Commerce Asset-Holding BHD 1,276,855 3,650,511 0.9
Building Materials 400,000 Sungei Way Holdings BHD 1,589,194 2,021,823 0.5
Telecommunications 300,000 Telekom Malaysia BHD 1,491,009 2,647,625 0.6
Total Investments in Malaysia 4,357,058 8,319,959 2.0
New Telecommunications 400,000 Telecom Corp. of New Zealand
Zealand Ltd. (Class C) (ADR)* 1,278,315 1,913,234 0.5
Total Investments in New Zealand 1,278,315 1,913,234 0.5
Singapore Banking 218,000 Overseas Chinese Banking Corp. 2,202,387 2,619,037 0.6
Broadcasting & 100,000 Singapore Press Holdings Limited 1,476,852 1,734,556 0.4
Publishing
Construction & 250,000 City Development Ltd. 1,562,010 2,079,335 0.5
Housing
Multi-Industry 200,000 Keppel Corp. Ltd. 1,502,011 1,521,291 0.4
Total Investments in Singapore 6,743,260 7,954,219 1.9
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US Dollars)
<CAPTION>
PACIFIC BASIN/
ASIA Percent of
(concluded) Industries Shares Held Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C>
South Korea Banking 91,875 Hanil Bank $ 1,273,823 $ 956,343 0.2%
Construction & 29,170 Hyundai Engineering and
Housing Construction Co. 601,548 1,240,295 0.3
1,534 Hyundai Engineering and
Construction Co. 48,114 47,750 0.0
------------ ------------ ------
649,662 1,288,045 0.3
<PAGE>
Electronics 46,283 LG Electronics Co. 1,725,155 864,416 0.2
Steel 31,300 Pohang Iron & Steel Co., Ltd.
(ADR)* 765,410 684,687 0.2
Utilities 40,000 Korea Electric Power Co. 1,097,115 1,416,016 0.3
Total Investments in South Korea 5,511,165 5,209,507 1.2
Thailand Banking 65,300 Bangkok Bank Public Company Ltd. 720,670 825,929 0.2
Building Materials 40,000 The Siam Cement Public Co. Ltd.
(Foreign Registered) 1,562,669 1,536,759 0.4
Telecommunications 170,000 Advanced Information Services Inc. 2,179,934 2,230,830 0.5
600,000 Total Access Communication Public
Co. Ltd. 3,787,500 4,380,000 1.0
------------ ------------ ------
5,967,434 6,610,830 1.5
Total Investments in Thailand 8,250,773 8,973,518 2.1
Total Investments in the
Pacific Basin/Asia 132,388,346 147,439,935 34.9
WESTERN
EUROPE
Denmark Business & Public 150,000 ISS International Service System
Services A/S (Class B) 3,289,437 3,908,709 0.9
Total Investments in Denmark 3,289,437 3,908,709 0.9
Finland Telecommunications 76,400 Nokia OY AS 'A' 2,163,900 3,249,390 0.8
Total Investments in Finland 2,163,900 3,249,390 0.8
France Banking 20,000 Cetelem S.A. 3,947,067 4,180,166 1.0
Business & Public 100,000 Dassault Systemes S.A. 2,292,986 3,891,742 0.9
Services
Cosmetics 33,000 Christian Dior S.A. 2,920,305 3,976,689 0.9
<PAGE>
Energy 42,785 Total S.A. (Class B) 2,673,402 3,148,442 0.8
Manufacturing 20,000 Bic S.A. 2,499,848 2,919,795 0.7
Total Investments in France 14,333,608 18,116,834 4.3
Germany Merchandising 32,000 Metro AG 3,124,165 3,038,864 0.7
Multi-Industry 10,000 Mannesmann AG 3,229,897 3,609,327 0.9
130,000 SKW Trostberg AG 2,783,475 3,492,734 0.8
80,000 Veba AG 3,264,237 4,198,716 1.0
------------ ------------ ------
9,277,609 11,300,777 2.7
Recreation 60,000 Adidas AG 3,119,053 5,160,527 1.2
Total Investments in Germany 15,520,827 19,500,168 4.6
Italy Electronics 95,000 Saes Getters S.p.A. (ADR)* 1,615,000 1,330,000 0.3
Telecommunications 6,000,000 Olivetti Group--Ing. 3,946,434 3,131,126 0.7
Total Investments in Italy 5,561,434 4,461,126 1.0
Netherlands Business & Public 140,000 Baan Company N.V. 2,254,885 4,516,401 1.1
Services
Construction & 229,017 Koninklijke Boskalis Westminster
Housing N.V. 3,567,844 4,446,664 1.1
Electrical & 205,000 BE Semiconductor Industries N.V. 2,898,753 2,511,250 0.6
Electronics 115,000 Philips Electronics N.V. 3,839,587 3,890,195 0.9
------------ ------------ ------
6,738,340 6,401,445 1.5
Merchandising 70,000 Koninklijke Ahold N.V. 3,556,485 3,917,028 0.9
Total Investments in the
Netherlands 16,117,554 19,281,538 4.6
Norway Automobiles 330,000 Sensonor A/S 2,555,005 2,368,618 0.6
Manufacturing 200,000 Tomra Systems A/S 1,907,841 2,184,496 0.5
Total Investments in Norway 4,462,846 4,553,114 1.1
Poland Food & Beverage 75,718 Agros Holdings S.A. 1,272,288 2,074,087 0.5
Total Investments in Poland 1,272,288 2,074,087 0.5
<PAGE>
Spain Banking 100,000 Banco Bilbao Vizcaya S.A. 3,858,654 4,207,327 1.0
Energy 50,000 Repsol S.A. 1,662,606 1,625,740 0.4
Total Investments in Spain 5,521,260 5,833,067 1.4
Sweden Automobiles 80,000 Autoliv AB 2,142,137 2,640,483 0.6
Health & Personal 60,000 Astra AB 'B' 1,096,951 2,483,384 0.6
Care
Total Investments in Sweden 3,239,088 5,123,867 1.2
Switzerland Health & Personal 871 Roche Holdings AG 4,203,474 6,645,499 1.6
Care
Total Investments in Switzerland 4,203,474 6,645,499 1.6
United Banking 250,097 National Westminster Bank PLC 1,993,581 2,588,066 0.6
Kingdom 308,117 The Royal Bank of Scotland
Group PLC 2,333,321 2,343,828 0.6
------------ ------------ ------
4,326,902 4,931,894 1.2
Broadcasting & 312,500 Carlton Communications PLC
Publishing (Ordinary) 1,292,970 2,338,119 0.5
Electronics 1,250,000 Astec (BSR) PLC 1,943,769 2,772,550 0.7
Energy 474,340 British Petroleum Co. PLC 2,419,842 4,597,403 1.1
Energy Sources 575,000 Enterprise Oil PLC 3,483,980 4,576,074 1.1
Merchandising 700,000 Harvey Nichols PLC 3,267,451 3,641,022 0.8
500,000 Next PLC 1,731,357 4,529,800 1.1
------------ ------------ ------
4,998,808 8,170,822 1.9
Multi-Industry 339,588 Siebe PLC 3,206,394 4,861,450 1.1
Telecommunications 1,000,000 Orange PLC 3,025,616 2,991,230 0.7
Total Investments in the
United Kingdom 24,698,281 35,239,542 8.3
Total Investments in
Western Europe 100,383,997 127,986,941 30.3
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US Dollars)
<CAPTION>
SHORT-TERM Percent of
SECURITIES Face Amount Issue Cost Value Net Assets
<S> <S> <C> <S> <C> <C>
United Commercial US$ 6,000,000 Delaware Funding Corp., 5.30%
States Paper*** due 10/17/1996 $ 5,958,483 $ 5,958,483 1.4%
17,582,000 General Electric Capital Corp.,
5.30% due 9/03/1996 17,574,235 17,574,235 4.1
5,000,000 National Fleet Funding Corp.,
5.37% due 9/06/1996 4,995,525 4,995,525 1.2
Total Investments in Short-Term
Securities 28,528,243 28,528,243 6.7
Total Investments $359,738,105 425,791,686 100.7
============
Liabilities in Excess of Other Assets (2,797,919) (0.7)
------------ ------
Net Assets $422,993,767 100.0%
============ ======
Net Asset Class A--Based on net assets of $373,234,995 and
Value: 26,600,491 shares outstanding $ 14.03
============
Class B--Based on net assets of $44,522,155 and
3,321,734 shares outstanding $ 13.40
============
Class C--Based on net assets of $817,204 and 60,951
shares outstanding $ 13.41
============
Class D--Based on net assets of $4,419,413 and
316,316 shares outstanding $ 13.97
============
<FN>
*American Depositary Receipts (ADR).
**Global Depositary Receipts (GDR).
***Commercial Paper is traded on a discount basis; the interest
rates shown are the discount rates paid at the time of purchase by
the Company.
(a)Formerly Western Mining Corp.
(b)Warrants entitle the Company to purchase a predetermined number
of shares of common stock. The purchase price and number of shares
are subject to adjustment under conditions until the expiration
date.
(c)Formerly Oracle Systems Corp.
</TABLE>
<PAGE>
EQUITY PORTFOLIO CHANGES
For the Quarter Ended August 31, 1996
Additions
Bic S.A.
Dassault Systemes S.A.
Forest Laboratories, Inc.
Grupo Financiero Banorte, S.A. de C.V.
(Class B)
ISS International Service System A/S (Class B)
Koninklijke Ahold N.V.
Metro AG
Minebea Co., Ltd.
Saes Getters S.p.A. (ADR)
Sonat Offshore Drilling Inc.
TCI Pacific Communications (Convertible
Preferred)
Uniao de Bancos Brasileiros S.A.
(Preferred)
Westaim Corporation
Deletions
Chubb Security PLC
Kymmene OY
Makino Milling Machine Co., Ltd.
Mo Och Domsjo AB 'B'
Sumitomo Chemical Co.
The Summit Bancorporation
Technology Resources Industries BHD
Telecommunicacoes Brasileiras S.A.--
Telebras PN (Rights)
United HealthCare Corp.
Value Health Inc.
Varity Corp.
Viacom Inc. (Class A)
PORTFOLIO INFORMATION
Worldwide
Investments
As of 8/31/96
<PAGE>
Percent of
Ten Largest Industries Net Assets
Telecommunications 9.5%
Banking 8.9
Multi-Industry 7.8
Merchandising 7.2
Electrical & Electronics 7.0
Business & Public Services 5.7
Health & Personal Care 4.5
Broadcasting & Publishing 3.3
Electronics/Components 3.2
Energy 2.9
Country of Percent of
Ten Largest Equity Holdings Origin Net Assets
Roche Holdings AG Switzerland 1.6%
Adidas AG Germany 1.2
Siebe PLC United Kingdom 1.1
Intel Corp. United States 1.1
The Home Depot, Inc. United States 1.1
British Petroleum Co. PLC United Kingdom 1.1
Tokyo Broadcasting System, Inc. Japan 1.1
Enterprise Oil PLC United Kingdom 1.1
Next PLC United Kingdom 1.1
Baan Company N.V. Netherlands 1.1
