MERRILL LYNCH
GLOBAL
HOLDINGS, INC.
[FUND LOGO]
STRATEGIC
Performance
Quarterly Report
August 31, 1997
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.
Merrill Lynch
Global Holdings, Inc.
Box 9011
Princeton, NJ
08543-9011 #10176 --8/97
[RECYCLE LOGO]
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
Philip M. Mandel, Secretary
Custodian
The Chase Manhattan Bank
Global Securities Services
4 Chase MetroTech Center, 18th Floor
Brooklyn, NY 11245
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
DEAR SHAREHOLDER
For the quarter ended August 31, 1997, total returns for Merrill Lynch
Global Holdings, Inc.'s Class A, Class B, Class C and Class D Shares
were +1.30%, +1.02%, +1.02% and +1.24%, respectively. During the same
period, the total return in US dollar terms for the unmanaged Morgan
Stanley Capital International (MSCI) World Index was +2.43%. (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.)
Unlike the May quarter when equity market returns were relatively
similar around the world, equity market returns varied markedly during
the August quarter. On a total return basis, the MSCI North American
Index rose 6.0% and the MSCI European Index gained 3.7%, while the MSCI
Pacific Index declined 6.6% in total returns during the August quarter.
Individual market returns were even more widely varied. For example, in
the Pacific Region, Indonesia, Malaysia and the Philippines declined
29%, 27% and 28%, respectively, while Taiwan and New Zealand gained 23%
and 4%, respectively (all in local currency terms). Asset allocation
continues to be an extremely important aspect of global portfolio
management.
In previous shareholder reports, we have commented extensively on
intermarket and intramarket volatility, concluding that "there appears
to be no persuasive reason to expect a lessening of volatility." This
point was validated during the August quarter. Economic problems in
Thailand led to political problems, a devaluation of the baht, and an
outflow of capital from the Thai stock market. These factors contributed
to a decline of more than 23% in the month of August alone. Despite
significantly different circumstances, the problems experienced by
Thailand were also experienced by other Asian and Pacific Rim economies,
with similar outcomes. Throughout Asia, virtually all currencies were
devalued relative to the dollar, virtually all forecasts of economic
growth were reduced as interest rates were increased to stabilize the
currencies, and virtually all equity markets dropped substantially.
Volatility was not limited to the Asian markets. The relative strength
of the US dollar is hurting corporate America's ability to export and is
also reducing profits on foreign sales. This is likely to negatively
impact the earnings of US multinationals, in our view. The realization
of this was partly responsible for the US market's 5.62% decline in
August, as measured by the Standard & Poor's 500 Index. For related
reasons, European markets also declined sharply in August. The relative
weakness of continental currencies led to fears of imminent interest
rate increases and an exodus from equity markets. The French, German and
Swiss markets all declined about 9% in August.
The world's economies are increasingly interconnected, but grow at
differing rates. This can cause currency pressures. Currency pressures
often result in changes in economic policy, political measures, or both.
Investor reaction to such measures can result in major shifts of
investment capital, potentially heightening volatility but, at the same
time, possibly increasing opportunity. Conditions for purchasing and
selling holdings are not always favorable in some of the smaller
markets, but our strategic goal remains constant. We want to invest in a
diversified portfolio of high-quality companies that benefit from
economic growth opportunities around the world.
Investment Environment
Europe
Economic activity in Europe is proceeding essentially as forecast in
previous quarterly reports. Growth, while somewhat constrained by
restrictive fiscal policies, has gradually accelerated. Primarily
export-led, this growth has resulted in higher domestic demand for
capital goods. Likewise, domestic consumption expenditures are beginning
to show some sign of recovery. Unemployment remains high, but
restructuring efforts are beginning to beneficially impact corporations.
Corporate profits are exceeding expectations.
An interest rate hike by the Bundesbank would be a negative development
for equity markets, but we believe this is unlikely over the near term.
The Bundesbank has achieved a more stabilized Deutschemark. The central
bankers are well aware that an interest rate hike could seriously impact
the French economy. Elsewhere, the smaller European economies are
enjoying moderate growth and minimal inflation.
During the August quarter, the unmanaged benchmark MSCI European Index
rose 3.7% in total returns in US dollar terms, excluding dividends. The
Fund's performance benefited from large gains in a few of our holdings:
Nokia OY AS 'A', +25%; Philips Electronics N.V., +38%; Akzo Nobel N.V.,
+23%; and Mannesmann AG, +21%. The switch we made during the May quarter
from Total S.A. into Societe Nationale Elf Aquitaine S.A. has been
positive to date. Societe Nationale Elf Aquitaine rose 17%, 10% more
than Total's gain. The small decline in the British pound against the
Deutschemark brought relief to the export-sensitive UK stocks. British
Petroleum Co. PLC rose 19%, BBA Group PLC gained 16% and Siebe PLC added
12%. On the other hand, Gucci Group N.V. declined 13%, Astec (BSR) PLC
lost 13% and Prosegur Compania de Seguridad S.A. ended the quarter 11%
lower.
We sold our investments in Tomra Systems ASA, Metro AG, Adidas AG and
Banco Bilbao Vizcaya S.A., because they had approached full value after
large gains. We also sold Endemol Entertainment N.V., which changed the
direction of its business. We sold a few small investments with modest
gains, to further concentrate our holdings. We also initiated a position
in BPI - SGPS S.A., the third-largest Portuguese bank. Portugal is one
of Europe's fastest-growing economies, driven by European Community
financial assistance and inexpensive labor costs. We also bought shares
of Ispat International N.V., the only steel company with operations
around the world. It is the most profitable and one of the fastest-
growing steel companies, in our view.
Japan
Investor sentiment in Japan has deteriorated since late July when a
series of weak economic data was released. Announcements of weaker-than-
expec-ted consumer spending, a decline in housing starts and a buildup
in inventories, especially automobiles, rekindled investor concerns that
the domestic eco-nomic recovery may be stalling. Although exports and
private capital investment continued to expand, slower growth of
consumer spending and the sharp rise in inventories have led many
economists to lower their growth forecasts for the year.
As a result, yields on Japanese bonds fell to record lows, and the yen
weakened on expectations that interest rates will remain low.
Against this backdrop, we expect companies to revise their earnings
estimates downward in the November quarter. In addition, the recent
turmoil in Asia could have a negative impact on the Japanese economy
given that exports are the major area of growth for Japan, with over 40%
of Japan's exports going to Asia. In response to these concerns, we
reduced our Japanese equity holdings substantially on a rally up to
July. We sold shares of DDI Corp. and Toyota Motor Corp. with gains, and
took partial profits in Tokyo Electron Ltd. and Canon Inc. after sharp
rises in their share prices. We also closed out our investments in Sharp
Corp., Nippon Steel Co. and Daiwa Securities Co., Ltd. because their
prospects deteriorated. The focus of our remaining investments continues
to be on globally competitive companies that have built up a strong
earnings base. In Japan, the trend of a polarized economy is continuing.
Large export-oriented manufacturers have been performing well, while
non-manufacturing and small companies that are more dependent on the
domestic market have been left behind. Despite the extremely favorable
monetary conditions, small companies and non-manufacturing sectors have
not benefited from the spillover effects, resulting in overall sluggish
growth. We believe the only way out of Japan's dilemma is through policy
makers' stepped-up structural reforms. Although financial sector reform
has started, overall prospects for structural reform appear to remain
uncertain. The Japanese stock market has lagged many global markets,
having declined 4.8% in the quarter, and it may continue to do so in the
near term. However, we think there are some Japanese companies that are
fundamentally attractive on a global scale. In this regard, we will
focus our attention on investing in individual companies rather than on
achieving a broad representation in the Japanese market.
Asia (ex Japan)
Asia's stock markets were badly rocked by currency instability during
the August quarter. After Thailand was forced to float its currency on
July 2, 1997, the Philippines, Indonesia, Malaysia and Singapore allowed
their currencies to depreciate. This wave of currency depreciations
shook investor confidence and sent the stock markets into a sharp
decline across Asia. The Thai baht is down 36% from the end of May, the
Malaysian ringgit 17%, the Indonesian rupiah 20% and the Singapore
dollar 6%.
Economists attribute the current Asian crisis in part to the countries'
fixed exchange rate regimes. Prior to the crisis, Southeast Asian
governments had linked their currencies to the US dollar to attract
foreign capital for rapid development of their economies. During the
boom period of 1994 -- 1995, the dollar-linked exchange policy caused
domestic liquidity to rise as foreign capital flowed into these
countries. Many international economists think that a large portion of
the economic growth in Southeast Asian countries was a result of the
strength of the yen up to mid-1995 in response to the resulting increase
of exports to Japan and direct investment into Southeast Asian countries
by Japan. However, since the summer of 1995 when the yen reversed trend,
Asian countries' competitiveness started to erode and the sharp
appreciation of the Asian currencies put a brake on foreign capital
inflows. The appreciation of Asian currencies was excessive in relation
to the strength of their economies, and when the business cycle turned
downward, Asian governments could not lower their interest rates to
defend their currencies for fear of capital outflow. As a result of not
allowing their exchange rates to adjust with the changing economic
conditions, they have exposed their overvalued currencies to a series of
speculative attacks.
Devaluations will inevitably create short-term distress for some of the
economies, in our view. However, we believe that the foundations are
being laid for better long-term results with a more flexible approach to
currency management and independent monetary control. Following the
devaluations, economic growth in Southeast Asia is expected to be lower
as a result of tight policies and reduced foreign capital inflows.
Devaluations will have a negative impact on corporate balance sheets,
particularly for some companies where foreign debt is high and largely
unhedged. Given that the recent currency and stock price drops were so
sharp and rapid (with the bulk of the decline occurring in the last two
weeks of August), we thought that the best strategy was to ride out the
turmoil in the intermediate term. Moreover, from an operational
standpoint, trading was very difficult. Liquidity declined significantly
in most Asian markets and trading restrictions were imposed in Malaysia.
During the month of August, the equity markets of Hong Kong, Malaysia,
Thailand and Indonesia declined 13.1%, 19.8%, 23.0% and 31.0%,
respectively (as measured by the principal market index in each
country). The only major changes we made during the August quarter were
the sale of First Pacific Co., Ltd. and the partial sale of Hong Kong
and China Gas Company Ltd. in Hong Kong with gains, and the sale of
Keppel Corp. Ltd. in Singapore. Relative valuations obviously have
changed between and within markets. This may result in increased
portfolio activity in the November quarter.
The Americas
The US economy continues to support favorable trends in the equity
market, which is why we significantly increased our exposure to the
Americas market over the course of the year. Growth is moderate,
inflation benign, and corporate profits growth has continued through
mid-year. The strong US dollar and the economic problems in Asia are
likely to keep downward pressure on inflation and interest rates, in our
view. Pundits have dubbed this the "Goldilocks Economy" because
everything is just right. However, if everything is just right, the next
change presumably is for the worse. We continue to monitor both domestic
and international economic and political events with regard to their
impact on the US market. We remain underweighted in the US market
compared to the MSCI Index as we believe there is greater potential for
upside surprises in many of the international markets.
Meanwhile, the US stock market rose 6.2% during the August quarter. The
US portion of Merrill Lynch Global Holdings substantially outperformed
the US stock market. Our oil service positions and certain technology
stocks were particularly beneficial. Global Industries Ltd. increased
64%, Transocean Offshore Inc. gained 31%, Texas Instruments Inc. rose
35% and Cisco Systems, Inc. added 17%. Mercury General Corp., an
insurance holding company, rose 21%. Kennametal, Inc., an industrial
manufacturer, was up 15%. Portfolio activity was minimal, but we
undertook to further concentrate our investments.
Our Latin American investments generally outperformed their respective
markets during the August quarter. Two banks were particularly helpful
to overall results. In Mexico, Grupo Financiero Banorte, S.A. de C.V.
rose 65%, and the Argentine bank, Banco de Galicia y Buenos Aires S.A.
de C.V. was up 15%.
In Conclusion
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 upcoming annual report to shareholders.
Sincerely,
/S/ARTHUR ZEIKEL
Arthur Zeikel
President
/S/EDWARD F. KORFF
Edward F. Korff
Vice President and Portfolio Manager
October 1, 1997
PERFORMANCE DATA
About Fund Performance
Investors are able to purchase shares of the fund through the Merrill
Lynch Select PricingSM System, which offers four pricing alternatives:
[bullet] 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.
[bullet] 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.)
[bullet] 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.
[bullet] 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. Figures shown in the "Average Annual Total Return"
tables as well as the total returns and cumulative total returns in the
"Performance Summary" tables assume reinvestment of all dividends and
capital gains distributions at net asset value on the ex-dividend date.
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.
<TABLE>
<CAPTION>
Recent Performance Results
12 Month 3 Month
8/31/97 5/31/97 8/31/96 % Change % Change
<S> <C> <C> <C> <C> <C>
ML Global Holdings, Inc. Class A Shares* $15.56 $15.36 $14.03 +16.33%(1) +1.30%
ML Global Holdings, Inc. Class B Shares* 14.83 14.68 13.40 +16.31(1) +1.02
ML Global Holdings, Inc. Class C Shares* 14.80 14.65 13.41 +16.00(1) +1.02
ML Global Holdings, Inc. Class D Shares* 15.49 15.30 13.97 +16.32(1) +1.24
ML Global Holdings, Inc. Class A Shares -- Total Return* +18.15(2) +1.30
ML Global Holdings, Inc. Class B Shares -- Total Return* +16.92(3) +1.02
ML Global Holdings, Inc. Class C Shares -- Total Return* +16.89(4) +1.02
ML Global Holdings, Inc. Class D Shares -- Total Return* +17.86(5) +1.24
World Stock Index -- Total Return** +22.33 +2.43
* 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 $0.684 per share capital gains distributions.
(2) Percent change includes reinvestment of $0.229 per share ordinary income dividends and $0.684 per share capital gains
distributions.
(3) Percent change includes reinvestment of $0.074 per share ordinary income dividends and $0.684 per share capital gains
distributions.
(4) Percent change includes reinvestment of $0.108 per share ordinary income dividends and $0.684 per share capital gains
distributions.
(5) Percent change includes reinvestment of $0.193 per share ordinary income dividends and $0.684 per share capital gains
distributions.
</TABLE>
<TABLE>
<CAPTION>
Performance
Summary --
Class A Shares
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
1996 13.32 14.08 0.684 0.229 +12.61
1/1/97 -- 8/31/97 14.08 15.56 -- -- +10.51
Total $11.126 Total $2.949
Cumulative total return as of 8/31/97: +409.41%**
* Figures may include short-term capital gains distributions.
** Figures do not include sales charge; results would be lower if sales charge was included.
</TABLE>
<TABLE>
<CAPTION>
Performance
Summary --
Class B Shares
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
1996 12.82 13.51 0.684 0.074 +11.33
1/1/97 -- 8/31/97 13.51 14.83 -- -- + 9.77
Total $5.331 Total $0.945
Cumulative total return as of 8/31/97: +121.15%**
* Figures may include short-term capital gains distributions.
** Figures do not reflect deduction of any sales charge; results would be lower if sales charge was deducted.
</TABLE>
<TABLE>
<CAPTION>
Performance
Summary --
Class C Shares
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
1996 12.82 13.48 0.684 0.108 +11.37
1/1/97 -- 8/31/97 13.48 14.80 -- -- + 9.79
Total $1.782 Total $0.272
Cumulative total return as of 8/31/97: +32.53%**
* Figures may include short-term capital gains distributions.
** Figures do not reflect deduction of any sales charge; results would be lower if sales charge was deducted.
</TABLE>
<TABLE>
<CAPTION>
Performance
Summary --
Class D Shares
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
1996 13.29 14.04 0.684 0.193 +12.29
1/1/97 -- 8/31/97 14.04 15.49 -- -- +10.33
Total $1.782 Total $0.360
Cumulative total return as of 8/31/97: +35.60%**
* Figures may include short-term capital gains distributions.
** Figures do not include sales charge; results would be lower if sales charge was included.
</TABLE>
Average Annual
Total Return
Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 6/30/97 +16.70% +10.58%
Five Years Ended 6/30/97 +12.96 +11.75
Ten Years Ended 6/30/97 + 9.05 + 8.47
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 6/30/97 +15.50% +11.50%
Five Years Ended 6/30/97 +11.82 +11.82
Inception (10/21/88)
through 6/30/97 + 9.81 + 9.81
* 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 6/30/97 +15.48% +14.48%
Inception (10/21/94)
through 6/30/97 +11.84 +11.84
* 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 6/30/97 +16.40% +10.29%
Inception (10/21/94)
through 6/30/97 +12.73 +10.50
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
<TABLE>
<CAPTION>
Merrill Lynch Global Holdings, Inc., August 31, 1997
SCHEDULE OF INVESTMENTS (in US dollars)
LATIN Shares Percent of
AMERICA Industries Held Investments Cost Value Net Assets
<S> <C> <C> <C> <C> <C> <C>
Argentina Banking 125,000 Banco de Galicia y Buenos Aires
S.A. de C.V. (ADR)* $3,084,280 $3,703,125 0.8%
Energy 100,000 Yacimientos Petroliferos Fiscales
S.A. (YPF) (ADR)* 2,354,250 3,256,250 0.7
Multi-Industry 278,810 Compania Naviera Perez Companc
S.A.C.F.I.M.F.A. 1,023,485 2,225,349 0.5
----------- ----------- -----
Total Investments in Argentina 6,462,015 9,184,724 2.0
=========== =========== =====
Brazil Forest Products
& Paper 100,000 Aracruz Celulose S.A. (ADR)* 1,835,000 2,037,500 0.4
Telecommunications 30,000,000 Telecommunicacoes Brasileiras S.A.
-- Telebras PN (Preferred) 1,069,928 3,516,806 0.8
----------- ----------- -----
Total Investments in Brazil 2,904,928 5,554,306 1.2
=========== =========== =====
Mexico Banking 2,000,000 Grupo Financiero Banorte, S.A.
de C.V. (Class B) 2,113,918 3,088,008 0.7
Multi-Industry 125,000 DESC, Sociedad de Fomento Industrial
S.A. de C.V. (ADR)* 3,668,116 4,156,250 0.9
----------- ----------- -----
Total Investments in Mexico 5,782,034 7,244,258 1.6
=========== =========== =====
Panama Banking 75,000 Banco Latinoamericano de
Exportaciones, S.A. (E Shares) 3,704,425 3,403,125 0.7
----------- ----------- -----
Total Investments in Panama 3,704,425 3,403,125 0.7
=========== =========== =====
Total Investments in Latin America 18,853,402 25,386,413 5.5
=========== =========== =====
MIDDLE
EAST
Israel Electrical &
Electronics 200,000 NICE - Systems Ltd. (ADR)* 4,548,254 7,987,500 1.7
----------- ----------- -----
Total Investments in the Middle East 4,548,254 7,987,500 1.7
=========== =========== =====
NORTH
AMERICA
Canada Chemicals 300,000 Agrium, Inc. 4,041,372 3,631,124 0.8
Telecommunications 50,000 Northern Telecom Ltd. 1,474,875 4,956,250 1.1
----------- ----------- -----
Total Investments in Canada 5,516,247 8,587,374 1.9
=========== =========== =====
United States Banking 120,000 Bank of New York, Inc. (The) 3,130,284 5,355,000 1.1
95,000 Northern Trust Corporation 3,777,776 5,011,250 1.1
65,000 Wachovia Corporation 4,173,124 4,046,250 0.9
----------- ----------- -----
11,081,184 14,412,500 3.1
Business & Public
Services 30,000 Microsoft Corp. 617,500 3,965,625 0.8
300,000 Molten Metal Technology, Inc. 4,511,661 1,537,500 0.3
187,500 Oracle Corporation 2,825,903 7,136,719 1.5
150,000 US Filter Corp. 4,588,753 5,400,000 1.2
----------- ----------- -----
12,543,817 18,039,844 3.8
Electronics/
Components 85,000 Cisco Systems, Inc. 4,271,875 6,401,563 1.4
85,000 Intel Corp. 1,087,344 7,814,688 1.7
45,000 Texas Instruments Inc. 2,012,563 5,113,125 1.1
----------- ----------- -----
7,371,782 19,329,376 4.2
Energy Sources 250,000 Global Industries Ltd. 4,605,101 9,109,375 1.9
75,000 Transocean Offshore Inc. 4,261,180 7,129,687 1.5
----------- ----------- -----
8,866,281 16,239,062 3.4
Health & Personal
Care 100,000 Forest Laboratories, Inc. 3,502,878 4,106,250 0.9
100,000 Johnson & Johnson 5,281,813 5,668,750 1.2
55,000 Merck & Co., Inc. 3,287,350 5,049,687 1.1
90,000 Pfizer, Inc. 2,529,031 4,983,750 1.1
100,000 Pharmacia & Upjohn Inc. 3,942,918 3,406,250 0.7
----------- ----------- -----
18,543,990 23,214,687 5.0
Insurance 90,300 Mercury General Corp. 3,440,181 7,901,250 1.7
80,000 The PMI Group, Inc. 4,385,425 4,625,000 1.0
----------- ----------- -----
7,825,606 12,526,250 2.7
Machinery &
Equipment 125,000 Harnischfeger Industries, Inc. 4,725,187 5,015,625 1.1
125,000 Kennametal, Inc. 5,048,372 5,851,562 1.3
----------- ----------- -----
9,773,559 10,867,187 2.4
Merchandising 100,000 CVS Corporation 5,065,309 5,637,500 1.2
150,000 Federated Department Stores, Inc. 4,921,701 6,300,000 1.3
150,000 Home Depot, Inc. 4,209,058 7,078,125 1.5
300,000 PETsMART, Inc. 4,929,293 2,550,000 0.5
----------- ----------- -----
19,125,361 21,565,625 4.5
Railroads 125,000 Illinois Central Corp. 3,777,500 4,195,312 0.9
Telecommunications 1 CommScope Inc. 12 17 0.0
Equipment ----------- ----------- -----
Total Investments in the United
States 98,909,092 140,389,860 30.0
=========== =========== =====
Total Investments in North America 104,425,339 148,977,234 31.9
=========== =========== =====
PACIFIC
BASIN/ASIA
Australia Broadcasting &
Publishing 351,883 News Corp., Ltd. (Ordinary) 1,873,092 1,585,296 0.3
Insurance 109,243 Lend Lease Corp. 1,405,161 2,355,816 0.5
----------- ----------- -----
Total Investments in Australia 3,278,253 3,941,112 0.8
=========== =========== =====
Hong Kong Multi-Industry 500,000 CITIC Pacific Ltd. 2,539,751 2,664,860 0.6
400,000 Hutchison Whampoa Ltd. 1,949,838 3,329,462 0.7
500,000 Swire Pacific Ltd. 'A' 2,453,484 3,823,074 0.8
----------- ----------- -----
6,943,073 9,817,396 2.1
Real Estate 400,000 Sun Hung Kai Properties, Ltd. 2,242,489 4,542,522 1.0
Utilities -- Gas 2,000,000 Hong Kong and China Gas Company Ltd. 2,523,782 3,716,609 0.8
----------- ----------- -----
Total Investments in Hong Kong 11,709,344 18,076,527 3.9
=========== =========== =====
Indonesia Conglomerates 500,000 P.T. Bimantara Citra 581,462 451,448 0.1
Construction &
Housing 1,880,000 Jaya Real Property 2,924,702 1,281,090 0.3
Telecommunications 60,000 P.T. Telekomunikasi Indonesia (ADR)* 1,190,805 1,177,500 0.3
Textiles 3,000,000 P.T. Indorama Synthetics (Foreign) 1,834,593 1,635,434 0.3
----------- ----------- -----
Total Investments in Indonesia 6,531,562 4,545,472 1.0
=========== =========== =====
Japan Banking 130,000 Bank of Tokyo -- Mitsubishi 3,085,819 2,370,722 0.5
US $1,000,000 The Mitsubishi Bank, Ltd., 3% due
11/30/2002 (Convertible) 1,000,000 1,080,000 0.2
150,000 Sanwa Bank, Ltd. 2,545,348 1,873,595 0.4
----------- ----------- -----
6,631,167 5,324,317 1.1
Broadcasting & 300,000 Tokyo Broadcasting System, Inc. 3,736,661 5,071,197 1.1
Publishing
Cable & Wire 270,000 Sumitomo Electric Industry, Ltd. 2,968,251 4,091,931 0.9
Data Processing & 100,000 Canon Inc. 1,758,792 2,772,920 0.6
Reproduction
Electrical &
Electronics 250,000 Hitachi Ltd. 2,636,635 2,310,767 0.5
35,000 Keyence Corp. 2,394,452 5,129,486 1.1
200,000 Matsushita Electric Industrial Co. 2,837,637 3,697,227 0.8
90,000 Murata Manufacturing Co., Ltd. 2,616,519 3,679,740 0.8
300,000 NEC Corporation 3,767,865 3,372,471 0.7
80,000 Tokyo Electron Ltd. 2,546,680 4,363,394 0.9
----------- ----------- -----
16,799,788 22,553,085 4.8
Entertainment 80,000 Sony Music Entertainment (Japan) Inc. 3,498,777 3,164,293 0.7
Insurance 260,000 Tokio Marine & Fire Insurance Co.,
Ltd. 3,242,469 2,987,759 0.6
Machinery &
Engineering 350,000 Minebea Co., Ltd. 2,942,184 3,497,377 0.8
500,000 Mitsubishi Heavy Industries Ltd. 3,654,177 3,326,672 0.7
----------- ----------- -----
6,596,361 6,824,049 1.5
Merchandising 80,000 Aoyama Trading Co. 3,433,890 2,158,381 0.5
60,000 Ito-Yokado Co., Ltd. 2,604,246 3,247,564 0.7
150,000 Marui Co., Ltd. 2,736,736 2,385,711 0.5
----------- ----------- -----
8,774,872 7,791,656 1.7
Real Estate 250,000 Mitsui Fudosan Co., Ltd. 3,097,952 2,914,481 0.6
Telecommunications 800 Nippon Telephone & Telegraph Corp.
(Ordinary) 3,217,188 3,763,844 0.8
Wholesale &
International Trade 300,000 Mitsui & Co. 2,133,754 2,458,156 0.5
----------- ----------- -----
Total Investments in Japan 62,456,032 69,717,688 14.9
=========== =========== =====
Malaysia Banking 1,440,799 Commerce Asset-Holding BHD 2,027,950 1,797,604 0.4
150,083 Commerce Asset-Holding BHD
(Warrants)(a) 95,215 49,899 0.0
----------- ----------- -----
2,123,165 1,847,503 0.4
Building Materials 1,000,000 Sungei Way Holdings BHD 2,085,002 1,179,092 0.3
Forest Products 1,500,000 Land & General BHD (Ordinary) 2,275,824 1,125,964 0.2
Multi-Industry 1,000,000 Sime Darby BHD 3,631,380 2,365,039 0.5
Telecommunications 450,000 Telekom Malaysia BHD 1,491,009 1,372,751 0.3
----------- ----------- -----
Total Investments in Malaysia 11,606,380 7,890,349 1.7
=========== =========== =====
New Zealand Telecommunications 400,000 Telecom Corp. of New Zealand Ltd.
(Class C) (ADR)* 1,278,315 1,973,232 0.4
----------- ----------- -----
Total Investments in New Zealand 1,278,315 1,973,232 0.4
=========== =========== =====
Singapore Banking 350,000 Overseas Chinese Banking Corp. 3,080,778 2,732,385 0.6
Broadcasting &
Publishing 170,000 Singapore Press Holdings Limited 2,723,560 2,148,197 0.4
Construction &
Housing 300,000 City Development Ltd. 2,010,983 1,895,468 0.4
----------- ----------- -----
Total Investments in Singapore 7,815,321 6,776,050 1.4
=========== =========== =====
South Korea Construction &
Housing 783 Hyundai Engineering and Construction
Co. 19,277 16,530 0.0
----------- ----------- -----
Total Investments in South Korea 19,277 16,530 0.0
=========== =========== =====
Thailand Banking 200,000 Bangkok Bank Public Company Ltd. 2,049,723 988,304 0.2
Building Materials 60,000 The Siam Cement Public Co. Ltd.
(Foreign Registered) 2,167,775 919,298 0.2
Energy Sources 116,600 PTT Exploration and Production
Public Co. (PTTEP) 1,451,644 1,241,006 0.3
Telecommunications 350,000 Total Access Communication Public
Co. Ltd. 2,209,375 1,400,000 0.3
----------- ----------- -----
Total Investments in Thailand 7,878,517 4,548,608 1.0
=========== =========== =====
Total Investments in the Pacific
Basin/Asia 112,573,001 117,485,568 25.1
=========== =========== =====
WESTERN
EUROPE
Denmark Business & Public
Services 150,000 ISS International Service System
A/S (Class B) 3,289,437 4,444,607 1.0
----------- ----------- -----
Total Investments in Denmark 3,289,437 4,444,607 1.0
=========== =========== =====
Finland Telecommunications 95,600 Nokia OY AS 'A' 3,283,620 7,420,771 1.6
----------- ----------- -----
Total Investments in Finland 3,283,620 7,420,771 1.6
=========== =========== =====
France Banking 46,000 Cetelem S.A. 4,689,077 4,659,286 1.0
Business &
Public Services 80,000 Dassault Systemes S.A. 1,834,389 5,217,449 1.1
Energy 60,000 Societe Nationale Elf Aquitane S.A. 5,819,442 6,692,003 1.4
----------- ----------- -----
Total Investments in France 12,342,908 16,568,738 3.5
=========== =========== =====
Germany Banking 50,000 Deutsche Bank AG 3,429,105 2,933,489 0.6
Multi-Industry 9,000 Mannesmann AG 3,089,410 4,184,184 0.9
210,000 SKW Trostberg AG 5,676,684 7,007,007 1.5
120,000 Veba AG 5,406,473 6,539,873 1.4
----------- ----------- -----
14,172,567 17,731,064 3.8
----------- ----------- -----
Total Investments in Germany 17,601,672 20,664,553 4.4
=========== =========== =====
Italy Textiles 100,000 Gucci Group N.V. 7,049,549 6,087,500 1.3
----------- ----------- -----
Total Investments in Italy 7,049,549 6,087,500 1.3
=========== =========== =====
Netherlands Business & Public 140,000 Baan Company N.V. 2,254,885 8,456,561 1.8
Services
Chemicals 41,000 Akzo Nobel N.V. 5,917,636 6,382,773 1.4
Electrical &
Electronics 70,000 Philips Electronics N.V. 2,440,144 5,002,716 1.1
Merchandising 216,342 Koninklijke Ahold N.V. 3,698,668 5,363,940 1.1
Steel 67,470 Ispat International N.V. 1,838,253 1,716,158 0.4
----------- ----------- -----
Total Investments in the Netherlands 16,149,586 26,922,148 5.8
=========== =========== =====
Norway Automobiles 350,000 Sensonor A/S 2,732,359 2,468,365 0.5
----------- ----------- -----
Total Investments in Norway 2,732,359 2,468,365 0.5
=========== =========== =====
Poland Food & Beverage 25,718 Agros Holdings S.A. 582,398 732,896 0.2
17,143 Agros Holdings S.A. (Series D) 391,393 488,531 0.1
----------- ----------- -----
Total Investments in Poland 973,791 1,221,427 0.3
=========== =========== =====
Portugal Building Products 200,000 Cimpor -- Cimentos de Portugal S.A. 4,062,517 4,821,389 1.0
Finance 200,000 BPI - SGPS S.A. (Registered Shares) 3,773,829 3,943,677 0.9
----------- ----------- -----
Total Investments in Portugal 7,836,346 8,765,066 1.9
=========== =========== =====
Spain Business & Public 350,000 Prosegur Compania de Seguridad S.A. 3,664,146 3,892,728 0.8
Services ----------- ----------- -----
Total Investments in Spain 3,664,146 3,892,728 0.8
=========== =========== =====
Sweden Automobiles 120,000 Autoliv, Inc. 3,866,477 4,687,500 1.0
----------- ----------- -----
Total Investments in Sweden 3,866,477 4,687,500 1.0
=========== =========== =====
Switzerland Health & Personal
Care 1,000 Roche Holdings Ltd. 5,320,796 8,456,873 1.8
----------- ----------- -----
Total Investments in Switzerland 5,320,796 8,456,873 1.8
=========== =========== =====
United Kingdom Banking 600,000 The Royal Bank of Scotland Group PLC 6,147,930 5,673,756 1.2
Business & Public
Services 775,000 Capita Group PLC 3,237,316 3,368,894 0.7
Electronics 1,850,000 Astec (BSR) PLC 3,274,984 3,840,896 0.8
Energy 404,575 British Petroleum Co. PLC 2,100,965 5,656,622 1.2
600,000 Enterprise Oil PLC 4,192,330 6,724,812 1.4
----------- ----------- -----
6,293,295 12,381,434 2.6
Home Building 500,000 The Berkeley Group PLC 5,527,107 6,098,720 1.3
Merchandising 900,000 Harvey Nichols PLC 4,355,691 4,021,749 0.9
Multi-Industry 911,944 BBA Group PLC 5,114,591 5,731,796 1.2
399,999 Siebe PLC 4,107,799 6,968,095 1.5
----------- ----------- -----
9,222,390 12,699,891 2.7
Restaurants 200,000 PizzaExpress PLC 2,178,256 2,228,628 0.5
----------- ----------- -----
Total Investments in the United
Kingdom 40,236,969 50,313,968 10.7
=========== =========== =====
Total Investments in Western Europe 124,347,656 161,914,244 34.6
=========== =========== =====
<CAPTION>
SHORT-TERM Face
SECURITIES Amount Issue
<S> <C> <C> <C> <C> <C> <C>
United States Commercial Paper** $6,163,000 Associates Corp. of North America,
5.63% due 9/02/1997 6,160,109 6,160,109 1.3
------------ ------------ -----
Total Investments in Short-Term
Securities 6,160,109 6,160,109 1.3
============ ============ =====
Total Investments $370,907,761 467,911,068 100.1
============
Liabilities in Excess of Other
Assets (346,814) (0.1)
------------ -----
Net Assets $467,564,254 100.0%
============ =====
Net Asset Value: Class A -- Based on net assets of $377,246,301
and 24,249,015 shares outstanding $15.56
============
Class B -- Based on net assets of $75,507,179
and 5,091,057 shares outstanding $14.83
============
Class C -- Based on net assets of $6,447,569
and 435,736 shares outstanding $14.80
============
Class D -- Based on net assets of $8,363,205
and 540,045 shares outstanding $15.49
============
* American Depositary Receipts (ADR).
** 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) 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.
</TABLE>
EQUITY PORTFOLIO CHANGES
Additions
For the Quarter Ended August 31, 1997
BPI - SGPS S.A. (Registered Shares)
CVS Corporation
Commerce Asset-Holding BHD (Warrants)
CommScope Inc.
DESC, Sociedad de Fomento Industrial
S.A. de C.V. (ADR)
Deutsche Bank AG
*Elec de Portugal
*General Semiconductor, Inc.
Ispat International N.V.
*NextLevel Systems, Inc.
P.T. Bimantara Citra
PizzaExpress PLC
*Sulzer Media (Registered)
Wachovia Corporation
Deletions
Adidas AG
Banco Bilbao Vizcaya S.A.
Barnett Banks, Inc.
Beijing Enterprises Holdings Ltd.
COLT Telecom Group PLC
DDI Corp.
Daiwa Securities Co., Ltd.
*Elec de Portugal
Endemol Entertainment N.V.
Enron Oil & Gas Co.
First Pacific Co., Ltd.
General Instrument Corp.
*General Semiconductor, Inc.
Grupo Carso, S.A. de C.V.
Keppel Corp. Ltd.
Keppel Corp. Ltd. (Class A)
McDonald's Corp.
Metro AG
Mobil Corp.
*NextLevel Systems, Inc.
Nippon Steel Co.
Performance Food Group Co.
Ryanair Holdings PLC (ADR)
Sharp Corp.
*Sulzer Media (Registered)
Tomra Systems ASA
Toyota Motor Corp.
*Added and deleted in the same quarter.
PORTFOLIO INFORMATION
Worldwide Investments
As of 8/31/97
Percent of
Ten Largest Equity Holdings Net Assets
Multi-Industry 10.5%
Banking 10.4
Business & Public Services 9.2
Merchandising 8.2
Electrical & Electronics 7.6
Health & Personal Care 6.8
Telecommunications 5.6
Energy 4.7
Electronics/Components 4.2
Insurance 3.8
Country of Percent of
Ten Largest Equity Holdings Origin Net Assets
Global Industries Ltd. United States 1.9%
Roche Holdings Ltd. Switzerland 1.8
Baan Company N.V. Netherlands 1.8
NICE -- Systems Ltd. (ADR) Israel 1.7
Mercury General Corp. United States 1.7
Intel Corp. United States 1.7
Nokia OY AS 'A' Finland 1.6
Oracle Corporation United States 1.5
Transocean Offshore Inc. United States 1.5
Home Depot, Inc. United States 1.5
