MERRILL LYNCH
GLOBAL
HOLDINGS, INC.
FUND LOGO
Quarterly Report
February 28, 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.
<PAGE>
Merrill Lynch
Global Holdings, Inc.
Box 9011
Princeton, NJ
08543-9011
Printed on post-consumer recycled paper
MERRILL LYNCH GLOBAL HOLDINGS, INC.
Worldwide
Investments
As of 2/28/97
Percent of
Ten Largest Industries Net Assets
Banking 9.8%
Multi-Industry 8.7
Telecommunications 7.5
Health & Personal Care 6.9
Merchandising 6.9
Electrical & Electronics 6.6
Business & Public Services 5.9
Energy 4.1
Electronics/Components 3.3
Insurance 3.1
<PAGE>
Country of Percent of
Ten Largest Equity Holdings Origin Net Assets
Roche Holdings AG Switzerland 1.6%
Intel Corp. United States 1.5
Enterprise Oil PLC United Kingdom 1.5
Baan Company N.V. Netherlands 1.4
Federated Department Stores, Inc. United States 1.3
The Home Depot, Inc. United States 1.3
Banco Bilbao Vizcaya S.A. Spain 1.3
Mercury General Corp. United States 1.2
Pfizer, Inc. United States 1.2
Siebe PLC United Kingdom 1.2
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
Custodian
The Chase Manhattan Bank
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
<PAGE>
DEAR SHAREHOLDER
During the quarter ended February 28, 1997, the total return for the
unmanaged Morgan Stanley Capital International (MSCI) World Stock
Index was +0.7%. This return was significantly less than the +10.4%
return for the quarter ended November 30, 1996. Intramarket
volatility continued to be a characteristic affecting markets
worldwide. One major cause of this volatility is a lack of breadth
within markets. Investors continued to focus on a limited number of
stocks or market segments.
Equity returns varied greatly both between and within geographic
regions. During the February quarter, the MSCI North America Index
gained 5.2%, the MSCI Europe Index increased 3.6%, and the MSCI Far
East Index declined 12.1%. In addition, the MSCI World Stock Index
(Ex-US) declined 3.0%, which indicates that the US stock market
continues to provide a significant positive impact on the overall
World Index, reinforcing asset allocation as an important
determinant of portfolio returns. For the quarter ended February
28, 1997, Merrill Lynch Global Holdings, Inc.'s total returns for
Class A, Class B, Class C and Class D Shares were +1.46%, +1.24%,
+1.21% and +1.41%, respectively, outperforming the MSCI World Stock
Index. (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 6--9
of this report to shareholders.)
Globally, economic growth was moderate and the inflation outlook
remained relatively benign. European economies continued to be
negatively impacted by the fiscal constraints imposed by the
individual governments as they attempt to meet conditions of the
Maastricht Treaty. Nonetheless, some acceleration of economic growth
is evident. In its latest fiscal year, Japan recorded the best
growth since 1991, albeit with some deceleration in the second half.
This deceleration negatively affected the export growth of many
Asian economies, and also contributed to a weakening of the yen
relative to the US dollar. US economic indicators were mixed, but
generally pointed to ongoing moderate growth. Some inflationary
signs were evident in labor markets, leading to Federal Reserve
Board Chairman Alan Greenspan's comment about preemptive interest
rate increases. In our opinion, any such increases would probably be
minimal.
<PAGE>
Political events around the world impacted both currency and equity
markets and, thus, are being closely monitored. The upcoming
national elections in Indonesia and the United Kingdom, the volatile
situation in Russia, tensions in the Mid-East and the Hong Kong
government change could result in market-impacting surprises.
Likewise, the litany of potential scandals in US politics could
impact domestic investor psychology. As noted in earlier reports,
investor psychology can become an increasingly important determinant
of stock market performance in periods of uncertainty.
Investment managers continued to receive record capital inflows
early in 1997, the vast majority of which was invested in the
domestic stock market. This contributed to the superior performance
of the US market and, more specifically, the outstanding performance
of a limited number of large-capitalization companies. We believe
that interest rates above 7.0% could divert some of the assets from
the equity markets into the bond markets, and that international
markets will benefit from an increase of new cash flow during the
year.
The fund's overall strategy remains constant: to provide a
geographically diversified portfolio of high-quality companies that
benefits from worldwide economic growth opportunities. We continue
to be value-oriented and price-sensitive. In volatile, fluctuating
markets, our cash position allows us to be opportunistic. At
February quarter-end, the fund's cash and cash equivalents were 9.1%
of net assets, which was caused by a significant increase of cash
inflows during the last two days of the February quarter.
Investment Environment
Europe
The European macroeconomic situation is largely unchanged: moderate
growth, low inflation, and declining interest rates. Individual
countries are growing at varying rates, but the trends are generally
upward. Uncertainty about the European Monetary Union (EMU) and the
relative strength of the US economy resulted in a 10% decline in the
value of the Deutschemark against the US dollar, which should
benefit German exporters. The EMU concept remained unpopular with
the European public, and it is questionable whether any country will
meet the guidelines set forth in the Maastricht Treaty. Governments
imposed increased fiscal discipline in order to meet the guidelines
and this, in itself, should provide economic benefits over the long
run, in our opinion.
In Europe, the slower economic growth and increasingly competitive
environment of the last few years fostered other positive results.
Labor laws are becoming more flexible, government regulations
declined, and return on capital considerations are becoming
paramount. Europe is becoming more capitalistic and European
companies more competitive in the global marketplace.
<PAGE>
Over the three months ended February 28, 1997, European equity
markets reflected these improved conditions. In local currency, the
MSCI European Index rose 11.2%, excluding dividends. The 9.8% rise
of the US dollar limited the gains of the Index, in US dollar terms,
to 3.1%. In US dollar terms, the fund's European investments gained
an estimated 7.7% in value, excluding dividends. Once again,
performance was boosted by large gains in most of our technology
stocks. Nokia OY AS gained 18%; Dassault Systemes S.A. was up 40%;
Philips Electronics N.V. rose 23%; and Baan Company N.V. increased
25%. Worldwide demand for increased recycling of bottles and cans
brought new share price highs for Tomra Systems ASA. Chemical and
pharmaceutical stocks generally performed well. Our investment in
SKW Trostberg AG rose 20%, and Roche Holdings AG gained 24%. Our two
consumer non-durable manufacturers also did well as BIC S.A. rose
18% and Adidas AG increased 21%.
We initiated new investments in Akzo Nobel N.V., a world leader in
fine chemicals, pharmaceuticals and man-made fibers; NICE--Systems
Ltd., a fast-growing manufacturer of products in the field of voice
logging and computer telephone integration; Prosegur Compania de
Seguridad S.A., Spain's largest provider of security services; The
Berkeley Group PLC, a UK developer of high-end housing; and COLT
Telecom Group PLC, Europe's first competitive access provider. We
sold our investments in Koninklijke Boskalis Westminster N.V.,
National Westminster Bank PLC, Next PLC, Montedison S.p.A. and
Carlton Communications PLC, as these stocks approached full
valuation. We also sold our holdings in Olivetti Group-Ing., since
we could not foresee further positive news after a string of good
developments.
North America
During the quarter ended February 28, 1997, many of our US holdings
in various industries announced earnings results that exceeded
expectations and caused significant stock appreciation. Performance
Food Group Co., Merck & Co., Inc., Airtouch Communications, Inc. and
Home Depot, Inc. achieved gains of 36.8%, 11.0%, 6.3% and 4.8%,
respectively. Our technology holdings also made positive
contributions to North American performance. Microsoft Corp., Texas
Instruments Inc., Intel Corp., Northern Telecom Ltd. and General
Instrument Corp. all outperformed the Standard & Poor's 500 (S&P
500) Index, gaining 24.3%, 21.0%, 11.8%, 9.3% and 7.3%,
respectively. Our banking and insurance sector holdings continued
their strong performance with Mercury General Corp., Bank of New
York, Inc. and Barnett Banks, Inc. gaining 7.7%, 7.7% and 5.1%,
respectively.
On the negative side, two of our energy-related holdings
underperformed the S&P 500 Index. Both Enron Oil & Gas Co. and
Transocean Offshore Inc. made announcements which had short-term
adverse consequences for their respective earnings outlook. Softer
energy markets also contributed to the declines in their share
prices during the February quarter. However, we remain optimistic
about the longer-term prospects for both companies, and used the
declines in share prices as opportunities to add to our positions.
<PAGE>
During the quarter ended February 28, 1997, we eliminated our
position in TCI Pacific Communications Inc. (Convertible Preferred)
and Time Warner Inc. In both cases, we believed that high debt
levels and deterioration in competitive environments could
negatively affect future earnings and cash flow growth. Profits were
taken in PPG Industries, Inc. and Ultratech Stepper Inc. because we
believed both companies faced slower earnings prospects. Finally, we
eliminated our position in Office Depot, Inc., which is facing
protracted merger discussions. We increased our weightings in
industry sectors that we believe have above-average prospects
relative to the rest of the US equity market. We initiated positions
in Global Industries Ltd. and Mobil Corp., which should benefit from
more activity within the energy-related sector of the economy. In
the pharmaceuticals sector, Johnson & Johnson and Pharmacia & Upjohn
Inc. were added, along with financial service companies Northern
Trust Corporation and The PMI Group, Inc. These companies should
benefit from increasing demand for their products caused by
demographic changes in our society. Kennametal, Inc., a machine tool
manufacturer and distributor, should experience a positive impact
from increased emphasis on, and market awareness of, its higher
value-added distribution business.
Latin America
Reflecting positive company fundamentals and better prospects for
economic and political reform in their respective countries, nearly
all of our Latin American holdings substantially added to overall
fund performance during the quarter ended February 28, 1997. In
Argentina, Yacimientos Petroliferos Fiscales S.A. (YPF) and Compania
Naviera Perez Companc S.A. C.F.I.M.F.A. continued their strong
performance, with YPF up 14.5%. Both companies benefited from
improving operating fundamentals and stronger energy markets.
Telecommunicaoes Brasileras S.A.--Telebras PN, Uniao de Bancos
Brasileras S.A, Grupo Carso, S.A. de C.V. and Panamerican Beverages,
Inc. turned in solid gains, mostly because of positive earnings
announcements. Aracruz Celulose S.A., one of the lowest-cost pulp
producers in the world, appreciated 19.4%, reflecting prospects of a
better pricing environment for its products. A disappointing
exception was the Mexican bank Grupo Financiero Banorte, S.A. de
C.V. which reported mediocre fourth-quarter results. Mexican banks
are now subject to additional disclosure requirements for bad loans.
However, Banorte is well positioned to benefit from the resumption
of economic growth in Mexico. Colombian retailer Almacenes Exito
S.A., which appreciated 20.4% since we initiated a small position in
the company several months ago, plans to list its shares on the more
liquid Bogota Stock Exchange and issue American Depositary Receipts
later this year.
<PAGE>
Japan
In US dollar terms, the Japanese stock market declined 15.1% over
the quarter ended February 28, 1997. Partially, this reflected
concern that substantial fiscal tightening scheduled for next year
will tilt the economy back into recession. In addition, the
Hashimoto government's deregulation initiatives are viewed by some
investors as being highly negative to the ongoing earnings prospects
for the industries slated for deregulation.
We believe that most of the structural reform and deregulation
proposals announced by the government seem not only necessary, but
overdue, for Japan to achieve a more dynamic performance over the
long term. However, investors have reacted to the authorities'
aggressive deregulatory stance negatively, perceiving that
deregulation is moving too fast, particularly in the financial
sector. Investors are concerned that deregulation will depress
profit margins, and increase foreign competition in the domestic
market. This could accelerate a shakeout of weaker Japanese
companies at a time when conditions are just beginning to improve
from a prolonged recession. Because of these concerns, investors
heavily sold shares of companies that had survived on the basis of
relationships or regulatory protection; including banks, non-life
insurance, brokerages and construction. The focus is now on globally
competitive companies which stand to benefit from increased
deregulation, such as electronics and autos.
We expect that deregulation will inevitably promote intensified
competition that will produce winners and losers. As deregulation
proceeds, the divergence of share price performance among strong and
weak companies in every sector should continue to widen. Thus, our
strategy of focusing on globally competitive and technologically
competent companies helped us to outperform the market.
<PAGE>
Asia (ex Japan)
Asian stock markets showed mixed results during the February
quarter. While the Hong Kong, Malaysia and Singapore markets posted
rather lackluster performances, the Taiwan, India and Indonesia
markets turned in strong results. Thailand and Korea continued to
perform poorly. Looking ahead, we expect the overall stock market
environment in Asia to improve in 1997. Some indications have
emerged that the severe export downturn, which dampened regional
economic and earnings growth in 1996, will begin to reverse shortly
as the electronic cycle improves and world trade picks up. In terms
of individual countries, we think Hong Kong and Malaysia offer the
most attractive investment opportunities in the region, despite
their excellent performance in 1996. Hong Kong's economy is
improving because of the booming property market and increasing
private consumption spending. Political momentum also looks positive
in Hong Kong. Following the death of China's leader, Deng Xiaoping,
in February, investors appear reassured that there will be no change
of policy direction in China and no change in politics toward Hong
Kong. We increased our Hong Kong exposure in Citic Pacific Ltd. The
company, the operating arm of the mainland China-owned Citic
Investment Group, has a well-defined China strategy in power,
transportation and infrastructure projects. We believe it is well
positioned to benefit from the long-term economic growth in China.
In Malaysia, economic growth moderated over the last year, such that
the prior overheating of the economy appears to no longer be a
potential problem. Corporate earnings growth in Malaysia is still
very solid. Thus, we increased holdings in Malaysia by purchasing
shares of Sime Darby BHD, the country's oldest and largest
conglomerate with interests in all sectors of the Malaysian economy.
On the other hand, Thailand and Korea still face significant
problems. In Thailand, although there were signs that manufacturing
production picked up, the economy appeared to be contracting. Asset
quality problems in the financial sector and extremely negative
investor sentiment toward the currency continued to drag down share
prices. However, we believe current share prices discount the
difficulties. Korea continued to suffer from weak economic
conditions, disappointing earnings, labor unrest and currency
concerns. With no recovery in sight near term, we decided to reduce
our exposure to Korea significantly during the three months ended
February 28, 1997. We took profits in Korea Electric Power Co.,
Hyundai Engineering and Construction Co. and sold our holdings in LG
Electronics Co.
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 the next report to shareholders.
<PAGE>
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Edward F. Korff)
Edward F. Korff
Vice President and Portfolio Manager
April 1, 1997
PERFORMANCE DATA
About Fund Performance
Investors are able to purchase shares of the fund through the
Merrill Lynch Select Pricing SM System, which offers four pricing
alternatives:
* Class A Shares incur a maximum initial sales charge (front-end load)
of 5.25% and bear no ongoing distribution or account maintenance
fees. Class A Shares are available only to eligible investors.
* Class B Shares are subject to a maximum contingent deferred sales
charge of 4% if redeemed during the first year, decreasing 1% each
year thereafter to 0% after the fourth year. In addition, Class B
Shares are subject to a distribution fee of 0.75% and an account
maintenance fee of 0.25%. These shares automatically convert to
Class D Shares after approximately 8 years. (There is no initial
sales charge for automatic share conversions.)
<PAGE>
* Class C Shares are subject to a distribution fee of 0.75% and an
account maintenance fee of 0.25%. In addition, Class C Shares are
subject to a 1% contingent deferred sales charge if redeemed within
one year of purchase.
* Class D Shares incur a maximum initial sales charge of 5.25% and an
account maintenance fee of 0.25% (but no distribution fee).
None of the past results shown should be considered a representation
of future performance. Investment return and principal value of
shares will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost. Dividends paid to each class
of shares will vary because of the different levels of account
maintenance, distribution and transfer agency fees applicable to
each class, which are deducted from the income available to be paid
to shareholders.
Average Annual
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 12/31/96 +12.61% +6.70%
Five Years Ended 12/31/96 +10.25 +9.07
Ten Years Ended 12/31/96 + 9.64 +9.05
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 12/31/96 +11.33% +7.33%
Five Years Ended 12/31/96 + 9.10 +9.10
Inception (10/21/88)
through 12/31/96 + 8.92 +8.92
<PAGE>
[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 12/31/96 +11.37% +10.37%
Inception (10/21/94)
through 12/31/96 + 8.96 + 8.96
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Sales Charge Sales Charge**
Class D Shares*
Year Ended 12/31/96 +12.29% +6.39%
Inception (10/21/94)
through 12/31/96 + 9.86 +7.19
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
<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
1996 13.32 14.08 0.684 0.229 +12.61
1/1/97--2/28/97 14.08 14.40 -- -- + 2.27
------- ------
Total $11.126 Total $2.949
<PAGE>
Cumulative total return as of 2/28/97: +371.44%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the ex-dividend date, and do not
include sales charge; results would be lower if sales charge was
included.
</TABLE>
<TABLE>
Performance
Summary--
Class B Shares
<CAPTION>
Net Asset Value Capital Gains
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--2/28/97 13.51 13.80 -- -- + 2.15
------ ------
Total $5.331 Total $0.945
Cumulative total return as of 2/28/97: +105.79%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the ex-dividend date, and do not
reflect deduction of any sales charge; results would be lower if
sales charge was deducted.
</TABLE>
PERFORMANCE DATA (concluded)
<PAGE>
<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
1996 12.82 13.48 0.684 0.108 +11.37
1/1/97--2/28/97 13.48 13.77 -- -- + 2.15
------ ------
Total $1.782 Total $0.272
Cumulative total return as of 2/28/97: +23.31%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the ex-dividend date, and do not
reflect deduction of any sales charge; results would be lower if
sales charge was deducted.
</TABLE>
<TABLE>
Performance
Summary--
Class D Shares
<CAPTION>
Net Asset Value Capital Gains
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--2/28/97 14.04 14.35 -- -- + 2.21
------ ------
Total $1.782 Total $0.360
Cumulative total return as of 2/28/97: +25.62%**
<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>
Recent
Performance
Results
<CAPTION>
12 Month 3 Month
2/28/97 11/30/96 2/29/96 % Change % Change
<S> <C> <C> <C> <C> <C>
ML Global Holdings, Inc. Class A Shares* $14.40 $15.12 $13.80 + 9.46%(1) -0.10%(1)
ML Global Holdings, Inc. Class B Shares* 13.80 14.40 13.25 + 9.46(1) +0.72(1)
ML Global Holdings, Inc. Class C Shares* 13.77 14.41 13.26 + 9.15(1) +0.44(1)
ML Global Holdings, Inc. Class D Shares* 14.35 15.04 13.76 + 9.41(1) +0.10(1)
ML Global Holdings, Inc. Class A Shares--Total Return* +11.16(2) +1.46(2)
ML Global Holdings, Inc. Class B Shares--Total Return* +10.03(3) +1.24(3)
ML Global Holdings, Inc. Class C Shares--Total Return* + 9.99(4) +1.21(4)
ML Global Holdings, Inc. Class D Shares--Total Return* +10.85(5) +1.41(5)
World Stock Index--Total Return** +13.42 +0.67
<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 $0.684 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>
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 $ 3,210,000 0.7%
Multi-Industry 339,000 Compania Naviera Perez Companc
S.A.C.F.I.M.F.A. 1,396,267 2,597,935 0.6
Total Investments in Argentina 3,746,717 5,807,935 1.3
<PAGE>
Brazil Banking 76,000,000 Uniao de Bancos Brasileiros S.A.
(Preferred) 2,056,001 3,037,397 0.7
Forest Products 397,500 Aracruz Celulose S.A. (ADR)* 3,624,750 3,676,875 0.8
& Paper
Telecommunications 30,000,000 Telecommunicacoes Brasileiras S.A
--Telebras PN (Preferred) 1,069,928 2,928,918 0.6
Total Investments in Brazil 6,750,679 9,643,190 2.1
Colombia Merchandising 25,000 Almacenes Exito S.A. 65,652 79,018 0.0
Total Investments in Colombia 65,652 79,018 0.0
Mexico Banking 2,000,000 Grupo Financiero Banorte, S.A.
de C.V. (Class B) 2,113,918 2,183,187 0.5
Beverages & 35,000 Panamerican Beverages, Inc.
Tobacco (Class A) 991,514 1,973,125 0.4
Multi-Industry 600,000 Grupo Carso, S.A. de C.V. 3,448,736 3,395,232 0.7
Total Investments in Mexico 6,554,168 7,551,544 1.6
Total Investments in Latin America 17,117,216 23,081,687 5.0
MIDDLE
EAST
Israel Electrical & 175,000 NICE--Systems Ltd. (ADR)* 4,147,103 3,696,875 0.8
Electronics
Total Investments in the Middle East 4,147,103 3,696,875 0.8
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
NORTH Shares Held/ Percent of
AMERICA Industries Face Amount Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Canada Chemicals 282,750 Agrium, Inc. $ 3,690,612 $ 3,879,949 0.8%
Telecommunications 50,000 Northern Telecom Ltd. 1,474,875 3,593,750 0.8
Total Investments in Canada 5,165,487 7,473,699 1.6
<PAGE>
United Banking 120,000 Bank of New York, Inc. (The) 3,130,284 4,650,000 1.0
States 90,000 Barnett Banks, Inc. 2,756,978 4,162,500 0.9
90,000 Northern Trust Corporation 3,479,901 3,802,500 0.8
------------ ------------ ------
9,367,163 12,615,000 2.7
Business & Public 50,000 Microsoft Corp. 1,039,167 4,868,750 1.1
Services 187,600 Molten Metal Technology, Inc. 3,423,007 2,110,500 0.5
100,000 Oracle Corporation 1,913,403 3,925,000 0.9
------------ ------------ ------
6,375,577 10,904,250 2.5
Electronics/ 150,000 General Instrument Corp. 3,670,446 3,562,500 0.8
Components 50,000 Intel Corp. 1,180,625 7,093,750 1.5
60,000 Texas Instruments Inc. 2,492,028 4,627,500 1.0
------------ ------------ ------
7,343,099 15,283,750 3.3
Energy Sources 200,000 Enron Oil & Gas Co. 4,128,678 4,050,000 0.9
146,400 Global Industries Ltd. 2,740,402 2,635,200 0.6
20,000 Mobil Corp. 2,591,200 2,455,000 0.5
75,000 Transocean Offshore Inc. 4,261,180 4,190,625 0.9
------------ ------------ ------
13,721,460 13,330,825 2.9
Food & Household 150,000 Performance Food Group Co. 1,678,096 2,475,000 0.5
Products
Health & 100,000 Forest Laboratories, Inc. 3,559,111 3,812,500 0.8
Personal Care 80,000 Johnson & Johnson 4,130,612 4,610,000 1.0
35,000 Merck & Co., Inc. 1,262,400 3,220,000 0.7
60,000 Pfizer, Inc. 3,267,028 5,497,500 1.2
125,000 Pharmacia & Upjohn Inc. 4,963,285 4,609,375 1.0
------------ ------------ ------
17,182,436 21,749,375 4.7
Insurance 90,000 Mercury General Corp. 3,421,900 5,523,750 1.2
80,000 The PMI Group, Inc. 4,385,425 4,380,000 1.0
------------ ------------ ------
7,807,325 9,903,750 2.2
Leisure/Tourism 125,000 Mirage Resorts, Inc. 929,000 3,109,375 0.7
Machinery & 115,000 Harnischfeger Industries, Inc. 4,284,587 5,045,625 1.1
Equipment 125,000 Kennametal, Inc. 5,048,372 5,125,000 1.1
------------ ------------ ------
9,332,959 10,170,625 2.2
Merchandising 175,000 Federated Department Stores, Inc. 5,738,826 6,081,250 1.3
110,000 Home Depot, Inc. 4,382,625 5,995,000 1.3
------------ ------------ ------
10,121,451 12,076,250 2.6
Railroads 100,000 Illinois Central Corp. 2,976,000 3,437,500 0.7
<PAGE>
Telecommunications 150,000 Airtouch Communications, Inc. 3,664,778 4,087,500 0.9
Total Investments in the
United States 90,499,344 119,143,200 25.9
Total Investments in North America 95,664,831 126,616,899 27.5
PACIFIC
BASIN/ASIA
Australia Banking 206,160 National Australia Bank, Ltd. 1,499,573 2,594,544 0.6
Broadcasting & 350,873 News Corp., Ltd. (Ordinary) 1,868,290 1,867,583 0.4
Publishing
Entertainment 1,000,000 Sydney Harbour Casino
Holdings Ltd. (Preferred) 1,446,117 1,823,365 0.4
Insurance 107,049 Lend Lease Corp. 1,365,040 1,956,878 0.4
Total Investments in Australia 6,179,020 8,242,370 1.8
Hong Kong Multi-Industry 200,000 Citic Pacific Ltd. 1,016,787 1,020,250 0.2
1,898,228 First Pacific Co., Ltd. 1,759,112 2,659,853 0.6
400,000 Hutchison Whampoa Ltd. 1,949,838 3,047,836 0.7
500,000 Swire Pacific Ltd. 'A' 2,453,484 4,294,090 0.9
------------ ------------ ------
7,179,221 11,022,029 2.4
Real Estate 400,000 Sun Hung Kai Properties, Ltd. 2,242,489 4,623,411 1.0
Utilities--Gas 2,000,000 Hong Kong and China Gas
Company Ltd. 2,950,199 3,796,880 0.8
120,000 Hong Kong and China Gas
Company Ltd.(Warrants)(a) 0 59,665 0.0
------------ ------------ ------
2,950,199 3,856,545 0.8
Total Investments in Hong Kong 12,371,909 19,501,985 4.2
India Machinery & 196,000 Larsen & Toubro Ltd. (GDR)** 3,008,600 2,763,600 0.6
Engineering
Total Investments in India 3,008,600 2,763,600 0.6
<PAGE>
Indonesia Construction & 1,880,000 Jaya Real Property 2,924,702 2,707,012 0.6
Housing
Telecommunications 50,800 P.T. Telekomunikasi Indonesia
(ADR)* 939,403 1,746,250 0.4
Textiles 2,160,000 P.T. Indorama Synthetics (Foreign) 1,217,976 1,848,080 0.4
Total Investments in Indonesia 5,082,081 6,301,342 1.4
Japan Automobiles 100,000 Toyota Motor Corp. 1,817,188 2,560,703 0.6
Banking 130,000 Bank of Tokyo--Mitsubishi 3,085,819 2,133,090 0.5
US$ 1,000,000 The Mitsubishi Bank, Ltd., 3%
due 11/30/2002 (Convertible) 1,000,000 1,018,000 0.2
100,000 Sanwa Bank, Ltd. 1,844,583 1,151,902 0.2
------------ ------------ ------
5,930,402 4,302,992 0.9
Broadcasting & 300,000 Tokyo Broadcasting System, Inc. 3,736,661 4,350,709 0.9
Publishing
Cable & Wire 270,000 Sumitomo Electric Industry, Ltd. 2,968,251 3,736,637 0.8
Chemicals 250,000 Asahi Chemical Industry Co. 1,825,928 1,352,863 0.3
Data Processing & 120,000 Canon Inc. 2,096,847 2,506,008 0.5
Reproduction
</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> <C>
Japan Electrical & 250,000 Hitachi Ltd. $ 2,636,635 $ 2,154,637 0.5%
(concluded) Electronics 29,000 Keyence Corp. 2,038,471 3,532,775 0.8
200,000 Matsushita Electric Industrial
Co. 2,837,637 3,082,788 0.7
90,000 Murata Manufacturing Co., Ltd. 2,616,519 3,154,885 0.7
300,000 NEC Corporation 3,767,865 3,480,567 0.7
180,000 Sharp Corp. 2,744,465 2,252,424 0.5
90,000 Tokyo Electron Ltd. 3,173,486 3,147,427 0.7
------------ ------------ ------
19,815,078 20,805,503 4.6
<PAGE>
Entertainment 70,000 Sony Music Entertainment
(Japan) Inc. 3,171,727 2,703,240 0.6
Financial Services 200,000 Daiwa Securities Co., Ltd. 2,519,694 1,571,227 0.3
Insurance 260,000 Tokio Marine & Fire Insurance
Co., Ltd. 3,242,469 2,477,832 0.5
Machinery & 300,000 Minebea Co., Ltd. 2,519,016 2,481,147 0.5
Engineering 400,000 Mitsubishi Heavy Industries Ltd. 2,988,558 2,880,583 0.6
------------ ------------ ------
5,507,574 5,361,730 1.1
Merchandising 50,000 Aoyama Trading Co. 2,716,597 1,255,490 0.3
60,000 Ito-Yokado Co., Ltd. 2,604,246 2,724,787 0.6
150,000 Marui Co., Ltd. 2,736,736 2,150,493 0.5
------------ ------------ ------
8,057,579 6,130,770 1.4
Metals 700,000 Nippon Steel Co. 2,407,627 1,862,103 0.4
Real Estate 250,000 Mitsui Fudosan Co., Ltd. 3,097,952 2,714,013 0.6
Telecommunications 350 DDI Corp. 2,617,101 2,108,643 0.5
400 Nippon Telephone & Telegraph Corp.
(Ordinary) 3,217,188 2,847,435 0.6
------------ ------------ ------
5,834,289 4,956,078 1.1
Wholesale & 250,000 Mitsui & Co. 1,780,475 1,852,159 0.4
International
Trade
Total Investments in Japan 73,809,741 69,244,567 15.0
Malaysia Banking 600,333 Commerce Asset-Holding BHD 1,409,468 4,618,876 1.0
Building Materials 1,000,000 Sungei Way Holdings BHD 2,085,002 2,900,302 0.6
Multi-Industry 300,000 Sime Darby BHD 1,177,554 1,135,952 0.2
Telecommunications 300,000 Telekom Malaysia BHD 1,491,009 2,429,003 0.5
Total Investments in Malaysia 6,163,033 11,084,133 2.3
New Telecommunications 400,000 Telecom Corp. of New Zealand Ltd.
Zealand (Class C) (ADR)* 1,278,315 1,795,134 0.4
Total Investments in New Zealand 1,278,315 1,795,134 0.4
<PAGE>
Singapore Banking 230,000 Overseas Chinese Banking Corp. 2,359,015 3,049,456 0.7
Broadcasting & 130,000 Singapore Press Holdings Limited 2,060,691 2,535,251 0.6
Publishing
Construction & 250,000 City Development Ltd. 1,562,010 2,472,817 0.5
Housing
Multi-Industry 300,000 Keppel Corp. Ltd. 2,247,664 2,167,660 0.5
Total Investments in Singapore 8,229,380 10,225,184 2.3
South Construction & Housing 783 Hyundai Engineering and
Korea Construction Co. 19,277 17,168 0.0
Steel 50,000 Pohang Iron & Steel Co., Ltd.
(ADR)* 1,140,157 975,000 0.2
Total Investments in South Korea 1,159,434 992,168 0.2
Thailand Banking 170,000 Bangkok Bank Public Company Ltd. 1,762,876 1,497,103 0.3
Building Materials 50,000 The Siam Cement Public Co. Ltd.
(Foreign Registered) 1,902,573 1,336,423 0.3
Telecommunications 600,000 Total Access Communication Public
Co Ltd. 3,787,500 3,900,000 0.9
Total Investments in Thailand 7,452,949 6,733,526 1.5
Total Investments in the
Pacific Basin/Asia 124,734,462 136,884,009 29.7
WESTERN
EUROPE
Denmark Business & Public 150,000 ISS International Service System
Services A/S (Class B) 3,289,437 4,309,475 0.9
Total Investments in Denmark 3,289,437 4,309,475 0.9
Finland Telecommunications 76,400 Nokia OY AS 'A' 2,163,900 4,586,035 1.0
Total Investments in Finland 2,163,900 4,586,035 1.0
<PAGE>
France Banking 40,302 Cetelem S.A. 3,980,734 4,993,106 1.1
Business & Public 80,000 Dassault Systemes S.A. 1,834,389 4,941,651 1.1
Services
Cosmetics 33,000 Christian Dior S.A. 2,920,305 4,794,946 1.0
Energy 42,785 Total S.A. (Class B) 2,673,402 3,412,439 0.7
Manufacturing 20,000 BIC S.A. 2,499,848 3,242,959 0.7
Total Investments in France 13,908,678 21,385,101 4.6
Germany Merchandising 55,000 Metro AG 5,068,620 4,819,420 1.1
Multi-Industry 13,000 Mannesmann AG 4,413,693 5,129,959 1.1
150,000 SKW Trostberg AG 3,682,992 4,564,831 1.0
80,000 Veba AG 3,264,237 4,575,488 1.0
------------ ------------ ------
11,360,922 14,270,278 3.1
Recreation 30,000 Adidas AG 1,646,257 2,868,561 0.6
Total Investments in Germany 18,075,799 21,958,259 4.8
Netherlands Business & Public 140,000 Baan Company N.V. 2,254,885 6,362,966 1.4
Services
Chemicals 21,000 Akzo Nobel N.V. 3,072,387 3,024,805 0.7
Electrical & 60,000 BE Semiconductor Industries N.V.
Electronics (NY Shares) 864,554 772,500 0.1
115,000 Philips Electronics N.V. 3,839,587 5,190,383 1.1
------------ ------------ ------
4,704,141 5,962,883 1.2
Merchandising 70,700 Koninklijke Ahold N.V. 3,595,653 4,568,617 1.0
Total Investments in the
Netherlands 13,627,066 19,919,271 4.3
<PAGE>
Norway Automobiles 350,000 Sensonor A/S 2,732,359 3,533,097 0.8
Manufacturing 200,000 Tomra Systems ASA 1,907,841 3,785,461 0.8
Total Investments in Norway 4,640,200 7,318,558 1.6
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
WESTERN EUROPE Percent of
(concluded) Industries Shares Held Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Poland Food & Beverage 75,718 Agros Holdings S.A. $ 1,272,288 $ 2,042,752 0.4%
Total Investments in Poland 1,272,288 2,042,752 0.4
Portugal Building Products 150,500 Cimpor--Cimentos de Portugal, S.A. 3,064,523 3,279,833 0.7
Total Investments in Portugal 3,064,523 3,279,833 0.7
Spain Banking 100,000 Banco Bilbao Vizcaya S.A. 3,858,654 5,896,720 1.3
Security Services 150,000 Prosegur Compania de Seguridad S.A. 1,486,508 1,612,003 0.3
Total Investments in Spain 5,345,162 7,508,723 1.6
Sweden Automobiles 80,000 Autoliv AB 2,142,137 3,640,246 0.8
Health & 60,000 Astra AB 'B' 1,096,951 2,810,248 0.6
Personal Care
Total Investments in Sweden 3,239,088 6,450,494 1.4
Switzerland Health & 871 Roche Holdings AG 4,203,474 7,330,169 1.6
Personal Care
Total Investments in Switzerland 4,203,474 7,330,169 1.6
United Automobile Parts 700,000 BBA Group PLC 3,848,287 3,975,982 0.9
Kingdom
Electronics 1,550,000 Astec (BSR) PLC 2,653,912 3,632,580 0.8
Energy 479,449 British Petroleum Co. PLC 2,467,392 5,302,161 1.2
700,000 Enterprise Oil PLC 4,780,279 7,086,135 1.5
------------ ------------ ------
7,247,671 12,388,296 2.7
<PAGE>
House Building 400,000 The Berkeley Group PLC 4,298,688 4,804,380 1.0
Merchandising 700,000 Harvey Nichols PLC 3,267,451 3,907,627 0.8
Multi-Industry 344,591 Siebe PLC 3,281,412 5,411,931 1.2
Telecommunications 800,000 COLT Telecom Group PLC 3,761,964 3,997,140 0.9
Total Investments in the
United Kingdom 28,359,385 38,117,936 8.3
Total Investments in
Western Europe 101,189,000 144,206,606 31.2
<CAPTION>
Face Amount Issue
United Commercial US$ 14,169,000 Associates Corp. of North
States Paper*** America, 5.38% due 3/03/1997 14,164,765 14,164,765 3.1
US Government 27,866,000 Federal Home Loan Mortgage Corp.,
& Agency 5.16% due 3/19/1997 27,794,106 27,794,106 6.0
Obligations***
Total Investments in Short-Term
Securities 41,958,871 41,958,871 9.1
Total Investments $384,811,483 476,444,947 103.3
============
Liabilities in Excess of Other Assets (15,233,962) (3.3)
------------ ------
Net Assets $461,210,985 100.0%
============ ======
Net Asset Value: Class A--Based on net assets of $396,833,480 and
27,550,104 shares outstanding $ 14.40
============
Class B--Based on net assets of $55,476,563 and
4,018,963 shares outstanding $ 13.80
============
Class C--Based on net assets of $3,308,579 and
240,225 shares outstanding $ 13.77
============
Class D--Based on net assets of $5,592,363 and
389,586 shares outstanding $ 14.35
============
<PAGE>
<FN>
*American Depositary Receipts (ADR).
**Global Depositary Receipts (GDR).
***Commercial Paper and certain US Government & Agency Obligations
are traded on a discount basis; the interest rates shown are the
discount rates paid at the time of purchase by the 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
For the Quarter Ended February 28, 1997
Additions
Agrium, Inc.
Akzo Nobel N.V.
The Berkeley Group PLC
COLT Telecom Group PLC
Citic Pacific Ltd.
Global Industries Ltd.
Johnson & Johnson
Kennametal, Inc.
Mobil Corp.
NICE--Systems Ltd. (ADR)
Northern Trust Corporation
The PMI Group, Inc.
Pharmacia & Upjohn Inc.
Prosegur Compania de Seguridad S.A.
Sime Darby BHD
Deletions
<PAGE>
Advanced Information Services Inc.
Carlton Communications PLC (Ordinary)
Hanil Bank
Hyundai Engineering and Construction
Co. (GDR)
Koninklijke Boskalis Westminster N.V.
Korea Electric Power Co.
LG Electronics Co.
Montedison S.p.A.
National Westminster Bank PLC
Next PLC
Office Depot, Inc.
Olivetti Group--Ing.
Omron Corp.
Orange PLC
PPG Industries, Inc.
Saes Getters S.p.A. (Sponsored)
Sanwa Shutter Corporation
Sho-Bond Corp.
TCI Pacific Communications (Convertible
Preferred)
Time Warner Inc.
Ultratech Stepper Inc.
Viacom Inc. (Class A)
Viridian, Inc.
WMC Ltd.
