MERRILL LYNCH
EUROFUND
FUND LOGO
Semi-Annual Report
April 30, 1995
This report is not authorized for use as an offer of
sale or a solicitation of an offer to buy shares of the
Fund unless accompanied or preceded by the Fund's
current prospectus. Past performance results shown
in this report should not be considered a representa-
tion 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.
<PAGE>
Merrill Lynch
EuroFund
Box 9011
Princeton, NJ
08543-9011
MERRILL LYNCH EUROFUND
Portfolio Information
Pie graph depicting Percentage of Stocks & Convertible Warrents As
of April 30, 1995
Netherlands 18.9%
Hungary 0.5%
Belgium 0.8%
Austria 1.1%
Finland 7.1%
Spain 5.2%
France 7.3%
Germany 11.0%
Switzerland 5.6%
Sweden 7.8%
Italy 3.0%
Ireland 2.1%
Norway 1.8%
Czech Republic 0.1%
United Kingdom 27.7%
<PAGE>
European Stock Market Performance
Bar Graph depicting Total Return for the Three-Month Period Ended
April 30, 1995 In US Dollars*
Italy - 5.5%
Norway + 4.6%
Austria + 5.4%
Ireland + 8.3%
Spain + 8.8%
Sweden + 8.8%
Germany + 9.8%
United Kingdom +10.0%
Finland +10.4%
Netherlands +12.6%
Switzerland +15.5%
France +16.0%
Belgium +17.6%
Source: Financial Times--Actuaries Index.
[FN]
*For the three-month period ended April 30, 1995, total
investment return for the Financial Times--Actuaries Europe Index
was +10.55%.
DEAR SHAREHOLDER
During the quarter ended April 30, 1995, European
stock markets rose modestly in local currency terms.
However, a large fall in the US dollar increased the
total return of the unmanaged Financial Times--
Actuaries Europe Index for the April quarter to
+10.55% in US dollar terms. For the three-month peri-
od ended April 30, 1995, Merrill Lynch EuroFund's
Class A, B, C and D Shares had total returns of
+8.85%, +8.54%, +8.54%, and +8.79%, respectively.
(Results do not reflect deduction of sales charges,
and would be lower if sales charges were included.)
<PAGE>
The key reasons for the Fund's underperformance
were the continued weakness in cyclical issues
where the Fund is heavily invested, and strength in
defensive issues where the Fund has limited expo-
sure. This performance differential resulted from the
collapse in investor confidence which was caused by
the sharp fall in the US dollar. Investors believed that
currency strength in Europe would erode competi-
tiveness, reduce economic growth and therefore
lessen the attractiveness of economically sensitive
issues (cyclicals). Although we believe this scenario
is correct, investor reaction was excessive relative
to the changes in the fundamental outlook, in our
view. As the US dollar stabilized in April, cyclical
stocks began to recover, but their valuations remain
extremely low.
During the April quarter, there was further divergence
between the hard and soft currency blocs in Europe.
Although all European currencies rose against the
US dollar, the hard currencies experienced the high-
est increases. Therefore, we expect economic growth,
inflation and interest rates will rise in the soft
currency bloc countries (Sweden, Norway, Finland,
Spain, Italy and Portugal). In the hard currency bloc
(Germany, Holland, Switzerland, Belgium, France
and Austria), we expect economic growth to slow,
inflation to ease and bond yields to fall. The eco-
nomic upswing in the hard currency bloc is likely
to be more sustainable than the upswing in the soft
currency bloc, in our opinion.
Investment Strategy
Equity valuations improved as corporate earnings
came in above expectations during the April quarter.
At the same time, bond yields fell sharply, making
equity market valuations even more attractive. The
missing factor was sentiment, which is now improving
as US stock market averages have reached new highs
and the US dollar has stabilized. The surprise cut in
German interest rates and the potential for another
decrease boosted investor sentiment further. Cash
being released by corporate takeover activity and
share buybacks should provide further support to
European markets. Therefore, the Fund is effectively
fully invested in this environment.
At this time, the Fund's currency exposure is un-
hedged. On a fundamental basis, the US dollar appears
undervalued, but technical and sentiment factors
are not favorable. The current upside potential for the
US dollar does not justify the risks and costs of
currency hedging, in our view.
<PAGE>
During the April quarter, we shifted from being over-
weighted in Germany to being underweighted. Our
actions were caused by the appreciation of the
Deutschemark and substantial pay increases in the
corporate sector, which have damaged earnings pros-
pects for many German companies. Therefore, we sig-
nificantly reduced the Fund's position in Volkswagen AG,
Veba AG and BASF AG. Philips Electronics N.V., a
Netherlands-based company, is now the Fund's largest
holding. The Fund is also currently overweighted in
Holland, Spain, Sweden, Finland and Norway, and
underweighted in the United Kingdom, Germany, France,
Switzerland, Belgium, Italy, Portugal and Denmark.
Our sectoral strategy has changed little since our last
report to shareholders. We are overweighted in cyclical
stocks, underweighted in defensive stocks and neutral
in financial stocks. We believe that defensive stocks
have little upside potential, while cyclical issues
could still rise substantially.
In Conclusion
Currently, all the components needed for a rising
European market are in place: healthy economic
growth with low inflation, rapid corporate earnings
growth, falling bond yields, low valuations, a reason-
able supply/demand balance, and improving investor
sentiment. The key risks to this positive outlook are
faltering US economic growth and persistent concerns
about currency markets. On balance, we believe that
the upcoming quarters could provide positive returns.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Adrian C. Holmes)
Adrian C. Holmes
Vice President and Portfolio Manager
June 2, 1995
<PAGE>
PERFORMANCE DATA
About Fund Performance
Since October 21, 1994, investors have been able to pur-
chase 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 distribu-
tion 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 8 years.
* Class C Shares are subject to a distribution fee of 0.75%
and an account maintenance fee of 0.25%. In addition,
Class C Shares are subject to a 1% contingent deferred
sales charge if redeemed within one year of purchase.
* Class D Shares incur a maximum initial sales charge of
5.25% and an account maintenance fee of 0.25% (but no
distribution fee).
Performance data for the Fund's Class A and Class B
Shares are presented in the "Performance Summary,"
"Recent Performance Results" and "Average Annual Total
Return" tables below and on page 4. Data for Class C and
Class D Shares are also presented in the "Recent Perfor-
mance Results" and "Aggregate Total Return" tables below
and on page 4.
The "Recent Performance Results" table shows invest-
ment results before the deduction of any sales charges
for Class A and Class B Shares for the 12-month and
3-month periods ended April 30, 1995 and for Class C and
Class D Shares for the since inception and 3-month peri-
ods ended April 30, 1995. All data in this table assume
imposition of the actual total expenses incurred by each
class of shares during the relevant period.
<PAGE>
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 mainte-
nance, distribution and transfer agency fees applicable
to each class, which are deducted from the income avail-
able to be paid to shareholders.
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 3/31/95 + 2.62% -2.77%
Five Years Ended 3/31/95 + 8.35 +7.19
Inception (10/26/88)
through 3/31/95 +10.29 +9.37
[FN]
*Maximum sales charge is 5.25%
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 3/31/95 +1.58% -2.03%
Five Years Ended 3/31/95 +7.25 +7.25
Inception (1/30/87)
through 3/31/95 +6.83 +6.83
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced
to 0% after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
<PAGE>
Aggregate Total Return
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Inception (10/21/94)
through 3/31/95 -2.47% -3.33%
[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*
Inception (10/21/94)
through 3/31/95 -2.14% -7.28%
[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 Dividends
Period Covered Beginning Ending Distributed Paid* % Change**
<C> <C> <C> <C> <C> <C>
10/26/88--12/31/88 $ 8.83 $ 8.83 $0.023 -- + 0.26%
1989 8.83 10.99 -- $0.087 +25.48
1990 10.99 10.53 -- 0.230 - 2.23
1991 10.53 11.75 -- 0.451 +16.20
1992 11.75 11.12 -- -- - 5.36
1993 11.12 14.67 -- -- +31.92
1994 14.67 13.62 0.737 0.889 + 4.29
1/1/95--4/30/95 13.62 14.63 -- -- + 7.42
------ ------
Total $0.760 Total $1.657
Cumulative total return as of 4/30/95: +99.89%**
<PAGE>
<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 Dividends
Period Covered Beginning Ending Distributed Paid* % Change**
<C> <C> <C> <C> <C> <C>
1/30/87--12/31/87 $10.00 $ 8.61 $0.737 $0.055 - 5.98%
1988 8.61 8.80 0.023 0.126 + 3.98
1989 8.80 10.85 -- 0.071 +24.13
1990 10.85 10.38 -- 0.124 - 3.26
1991 10.38 11.59 -- 0.332 +15.08
1992 11.59 10.85 -- -- - 6.38
1993 10.85 14.17 -- -- +30.60
1994 14.17 12.95 0.737 0.889 + 3.24
1/1/95--4/30/95 12.95 13.86 -- -- + 7.03
------ ------
Total $1.497 Total $1.597
Cumulative total return as of 4/30/95: +82.52%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital
gains distributions at net asset value on the ex-dividend
date, and do not reflect deduction of any sales charge;
results would be lower if sales charge was deducted.
</TABLE>
<TABLE>
Recent Performance Results*
<CAPTION>
12 Month 3 Month
4/30/95 1/31/95 4/30/94++ % Change++ % Change
<S> <C> <C> <C> <C> <C>
ML EuroFund Class A Shares $14.63 $13.44 $15.75 -1.92%(1) +8.85%
ML EuroFund Class B Shares 13.86 12.77 15.16 -3.20(1) +8.54
ML EuroFund Class C Shares 13.85 12.76 15.08 -2.76(1) +8.54
ML EuroFund Class D Shares 14.61 13.43 15.75 -2.05(1) +8.79
ML EuroFund Class A Shares--Total Return +4.34(2) +8.85
ML EuroFund Class B Shares--Total Return +3.28(2) +8.54
ML EuroFund Class C Shares--Total Return +3.75(2) +8.54
ML EuroFund Class D Shares--Total Return +4.21(2) +8.79
<PAGE>
<FN>
*Investment results do not reflect sales charges; results shown
would be lower if a sales charge was included.
++Performance results shown for Class C and Class D Shares are
since inception (10/21/94).
(1)Percent change includes reinvestment of $0.737 per share capital
gains distributions.
(2)Percent change includes reinvestment of $0.889 ordinary income
dividends and $0.737 per share capital gains distributions.
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS
<CAPTION>
Shares Value Percent of
Industry Held Investments Cost (Note 1a) Net Assets
<S> <C> <C> <C> <C> <C>
Austria
Utilities 183,950 Verbund Oesterreichische Elekrizitats AG $ 10,223,316 $ 12,150,583 1.1%
Total Investments in Austria 10,223,316 12,150,583 1.1
Belgium
Banking 29,350 Generale de Banque S.A. 7,163,490 9,267,986 0.8
Total Investments in Belgium 7,163,490 9,267,986 0.8
Czech Republic
Paper & Forest Products 28,911 ++Biocel Paskov AS 776,857 752,447 0.1
Total Investments in the Czech Republic 776,857 752,447 0.1
Finland
Banking 9,921,672 ++Kansallis-Osake-Pankki 17,104,769 9,965,913 0.9
2,116,800 ++Unitas Bank Ltd. 5,714,168 6,259,488 0.6
------------ -------------- ------
22,818,937 16,225,401 1.5
<PAGE>
Metals & Mining 687,700 Outokumpu OY 9,764,165 12,298,226 1.1
Paper & Forest 1,743,700 Enso-Gutzeit OY 'R' (Ordinary) (Registered) 12,175,093 15,714,170 1.4
Products 362,400 Metsa Serla OY 13,741,677 15,819,385 1.4
801,925 ++++Repola OY 'S' 12,642,630 16,128,837 1.5
------------ -------------- ------
38,559,400 47,662,392 4.3
Total Investments in Finland 71,142,502 76,186,019 6.9
France
Automobiles & Equipment 154,050 Peugeot S.A. 18,500,382 22,267,370 2.0
Building & Construction 97,000 Compagnie de Saint-Gobain S.A. 11,606,838 12,577,370 1.2
Diversified Companies 177,431 Compagnie de Fives-Lille 9,488,305 17,001,543 1.5
Financial Services 34,763 EuraFrance S.A. 10,200,148 10,949,813 1.0
Oil & Related 141,750 Societe Nationale Elf Aquitane 9,972,415 11,348,670 1.0
Steel 61,000 Ugine S.A. 4,132,982 4,327,829 0.4
Total Investments in France 63,901,070 78,472,595 7.1
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Shares Value Percent of
Industry Held Investments Cost (Note 1a) Net Assets
<S> <C> <C> <C> <C> <C>
Germany
Automobiles & Equipment 8,400 ++Continental AG (Warrants) (a) $ 469,291 $ 315,675 0.0%
75,000 Volkswagen AG 19,966,995 20,949,266 1.9
------------ -------------- ------
20,436,286 21,264,941 1.9
Capital Goods 321,783 ++Kloeckner Werke AG 14,985,368 21,743,666 2.0
65,654 Mannesmann AG 17,858,920 17,840,503 1.6
------------ -------------- ------
32,844,288 39,584,169 3.6
Chemicals 78,910 BASF AG 13,377,629 17,564,703 1.6
50,200 Bayer AG 9,932,780 12,371,323 1.1
------------ -------------- ------
23,310,409 29,936,026 2.7
Diversified Companies 85,000 ++Veba AG (Warrants) (a) 3,659,373 2,675,255 0.2
Electronics 21,800 Siemens AG 10,988,870 10,603,021 1.0
Insurance 6,800 Munich Reinsurance Co. 12,200,049 13,588,206 1.2
Total Investments in Germany 103,439,275 117,651,618 10.6
Hungary
Pharmaceuticals 30,168 ++Egis 559,452 618,113 0.1
275,000 Gedeon Richter 3,806,220 4,675,000 0.4
------------ -------------- ------
4,365,672 5,293,113 0.5
Total Investments in Hungary 4,365,672 5,293,113 0.5
Ireland
Banking 1,147,700 Allied Irish Banks PLC (Ordinary) 4,915,400 5,332,949 0.5
Building Materials 2,746,000 CRH PLC 15,439,028 16,565,190 1.5
Total Investments in Ireland 20,354,428 21,898,139 2.0
Italy
Building & Construction 2,571,700 ++Filippo Fochi S.p.A. 8,169,638 1,380,985 0.1
<PAGE>
Diversified Companies 13,030,335 ++Compagnie Industriali Riunite S.p.A. (CIR) 12,170,577 11,156,641 1.0
Utilities 8,649,051 Societa Finanziaria Telefonica S.p.A. (STET) 18,968,804 19,868,047 1.8
Total Investments in Italy 39,309,019 32,405,673 2.9
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Shares Value Percent of
Industry Held Investments Cost (Note 1a) Net Assets
<S> <C> <C> <C> <C> <C>
Netherlands
Automobiles & Equipment 352,000 Vredestein Groep N.V. $ 3,504,552 $ 3,590,909 0.3%
Banking 436,450 ABN Amro Holding N.V. 14,733,084 16,823,389 1.5
Capital Goods 91,800 Ahrend Groep N.V. 6,522,706 11,409,801 1.0
Chemicals 144,900 Akzo N.V. 15,161,543 16,840,134 1.5
214,950 ++European Vinyls Corporation
International N.V. 9,184,427 9,465,128 0.9
------------ -------------- ------
24,345,970 26,305,262 2.4
Electrical 1,397,200 Philips Electronics N.V. 34,444,546 53,405,372 4.8
Equipment
Insurance 312,450 ++Aegon N.V. 13,638,817 24,309,288 2.2
448,700 ++Amev N.V. 15,296,669 23,756,069 2.1
423,528 International Nederlanden Groep N.V. 15,831,917 22,368,666 2.0
------------ -------------- ------
44,767,403 70,434,023 6.3
Paper 434,530 ++KNP BT (Koninklijke) (Warrants) (a) 1,500,004 844,483 0.1
<PAGE>
Transportation 653,516 ++KLM Royal Dutch Airlines N.V. 12,912,312 19,916,035 1.8
Total Investments in the Netherlands 142,730,577 202,729,274 18.2
Norway
Oil & Gas Producers 228,200 ++Saga Petroleum A.S. (Class A) 2,697,694 3,317,340 0.3
1,102,400 ++Saga Petroleum A.S. (Class B) 12,575,675 15,140,182 1.4
------------ -------------- ------
15,273,369 18,457,522 1.7
Total Investments in Norway 15,273,369 18,457,522 1.7
Spain
Banking 86,553 Banco Popular Espanol S.A. 9,630,077 11,850,399 1.1
215,800 Banco Santander S.A. 9,375,237 7,895,979 0.7
------------ -------------- ------
19,005,314 19,746,378 1.8
Petroleum 766,268 Repsol S.A. 21,422,573 24,450,717 2.2
Utilities-- 240,000 Empresa Nacional de Electricidad S.A. 9,119,821 11,369,963 1.0
Electric
Total Investments in Spain 49,547,708 55,567,058 5.0
Sweden
Appliances 293,700 Electrolux AB 14,484,076 14,983,252 1.4
Automobiles & Equipment 729,900 Volvo AB 13,808,866 13,700,116 1.2
Engineering 598,600 SKF AB (Class A) 11,046,752 11,976,445 1.1
277,800 SKF AB (Class B) 5,353,782 5,596,263 0.5
314,000 ++++Svedala Industry AB 5,614,776 8,290,087 0.7
------------ -------------- ------
22,015,310 25,862,795 2.3
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Shares Value Percent of
Industry Held Investments Cost (Note 1a) Net Assets
<S> <C> <C> <C> <C> <C>
Sweden (concluded)
Financial 472,300 ++Stadshypotek AB $ 6,965,920 $ 6,494,507 0.6%
Services
Metals & Mining 543,500 Avesta-Sheffield AB 4,750,742 5,829,380 0.5
Paper & Forest Products 186,700 ++Mo och Domsjo AB 8,667,284 10,397,467 0.9
101,000 Stora Kopparbergs AB 6,022,968 6,749,722 0.6
------------ -------------- ------
14,690,252 17,147,189 1.5
Total Investments in Sweden 76,715,166 84,017,239 7.5
Switzerland
Electrical 18,810 BBC Brown Boveri & Cie (Bearer) 14,029,602 18,612,520 1.7
Equipment
Food & Beverage 6,783 Nestle AG 6,345,454 6,640,575 0.6
Pharmaceuticals 28,855 Ciba-Geigy AG 16,473,100 19,792,056 1.8
2,400 Roche Holdings AG 12,180,467 14,456,693 1.3
------------ -------------- ------
28,653,567 34,248,749 3.1
Total Investments in Switzerland 49,028,623 59,501,844 5.4
United Kingdom
Aerospace 4,944,296 Rolls Royce PLC 11,976,972 13,612,141 1.2
Airlines 1,312,400 British Airways PLC 8,143,747 8,462,421 0.8
<PAGE>
Banking & Financial Services 1,633,800 Standard Chartered PLC 7,693,542 7,917,558 0.7
Broadcast, 1,575,300 ++British Sky Broadcasting Group PLC 6,548,446 6,289,858 0.6
Radio & TV
Building Materials 2,643,000 Tarmac PLC (Ordinary) 6,084,152 4,999,895 0.4
Commercial Services 4,523,700 BET PLC 7,975,510 8,630,541 0.8
Conglomerates 4,233,400 Hanson PLC (Ordinary) 16,245,522 16,102,266 1.5
Consumer Goods 1,439,300 Vendome Luxury Group (Units) (b) 9,362,813 11,122,910 1.0
Electrical Equipment 3,208,300 General Electric Co. PLC 15,985,702 15,754,357 1.4
Food & Beverage 3,408,300 Grand Metropolitan PLC 22,105,265 21,922,015 2.0
897,400 Tate & Lyle PLC 5,868,055 6,256,045 0.6
737,900 Unilever PLC 11,330,640 14,576,993 1.3
------------ -------------- ------
39,303,960 42,755,053 3.9
Industrials 3,942,200 Tomkins PLC 14,155,374 14,851,844 1.3
Insurance 2,565,800 Prudential Corp. PLC 12,318,456 12,971,145 1.2
1,190,900 Sedgwick Group PLC 2,925,688 3,010,238 0.3
------------ -------------- ------
15,244,144 15,981,383 1.5
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded)
<CAPTION>
Shares Value Percent of
Industry Held Investments Cost (Note 1a) Net Assets
<S> <C> <C> <C> <C> <C>
United Kingdom (concluded)
Leisure 4,584,700 Forte PLC $ 16,721,440 $ 16,829,517 1.5%
1,834,050 Rank Organisation PLC 11,466,065 12,519,959 1.1
------------ -------------- ------
28,187,505 29,349,476 2.6
<PAGE>
Metals & Mining 864,400 The RTZ Corp. PLC 11,058,197 10,952,553 1.0
Oil & Related 1,927,700 The Shell Transport & Trading Co. PLC 21,224,610 22,857,992 2.1
Pharmaceuticals 4,088,700 SmithKline Beecham Corp. PLC (Class A) 27,842,045 32,354,496 2.9
Retail Trade 5,405,000 Asda Group PLC 4,980,734 7,092,171 0.6
Telecommunications 1,753,900 British Telecommunications PLC 10,366,927 10,970,381 1.0
1,443,300 Racal Electronics PLC 5,426,261 5,669,860 0.5
------------ -------------- ------
15,793,188 16,640,241 1.5
Utilities-- 1,737,000 Scottish Power PLC 9,108,468 9,452,407 0.9
Electric
Total Investments in the United Kingdom 276,914,631 295,179,563 26.7
Total Investments 930,885,703 1,069,530,673 96.5
<CAPTION>
Face
Amount Short-Term Securities
<S> <C> <S> <C> <C> <C>
Repurchase $12,979,000 HSBC Holdings PLC, purchased on 4/28/1995 to
Agreement* yield 5.90% to 5/01/1995 12,979,000 12,979,000 1.2
Total Investments in Short-Term Securities 12,979,000 12,979,000 1.2
<CAPTION>
Premiums
Shares Issue Received
<S> <C> <S> <C> <C> <C>
Call Options 2,229,500 SmithKline Beecham Corp. PLC, expiring
Written May 1995 at Pound Sterling 470 (783,792) (825,584) (0.1)
<PAGE>
Total Options Written (783,792) (825,584) (0.1)
Total Investments, Net of Options Written $943,080,911 1,081,684,089 97.6
============
Other Assets Less Liabilities 26,792,207 2.4
-------------- ------
Net Assets $1,108,476,296 100.0%
============== ======
<FN>
(a)Warrants entitle the Fund to purchase a predetermined
number of shares of common stock. The purchase price and
number of shares are subject to adjustment under certain
conditions until the expiration date.
(b)Each unit consists of one ordinary 5p Vendome PLC and one
ordinary NPC Vendome SA.
*Repurchase Agreements are fully collateralized by US
Government & Agency Obligations.
+Non-income producing securities.
++Restricted security as to resale. The value of the Fund's investment in
restricted securities was approximately $24,419,000, representing 2.2% of
net assets.
Acquisition Value
Issue Date Cost (Note 1a)
Repola OY 'S' 5/18/1993 $12,642,630 $16,128,837
Svedala Industry AB 6/17/1993 5,614,776 8,290,087
Total $18,257,406 $24,418,924
=========== ===========
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION
<PAGE>
<TABLE>
Statement of Assets and Liabilities as of April 30, 1995
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$943,864,703) (Note 1a) $1,082,509,673
Cash 68,587
Foreign cash 9,581,235
Receivables:
Securities sold $ 40,481,102
Dividends 10,053,495
Beneficial interest sold 2,299,099
Interest 2,127 52,835,823
--------------
Prepaid registration fees and other assets (Note 1f) 142,997
--------------
Total assets 1,145,138,315
--------------
Liabilities: Options written, at value (cost--$783,792) (Notes 1a & 1c) 825,584
Payables:
Securities purchased 29,482,827
Beneficial interest redeemed 4,913,161
Distributor (Note 2) 655,759
Investment adviser (Note 2) 625,350 35,677,097
--------------
Accrued expenses and other liabilities 159,338
--------------
Total liabilities 36,662,019
--------------
Net Assets: Net assets $1,108,476,296
==============
Net Assets Class A Shares of beneficial interest, $0.10 par value, unlimited number
Consist of: of shares authorized $ 1,338,012
Class B Shares of beneficial interest, $0.10 par value, unlimited number
of shares authorized 6,088,066
Class C Shares of beneficial interest, $0.10 par value, unlimited number
of shares authorized 17,288
Class D Shares of beneficial interest, $0.10 par value, unlimited number
of shares authorized 454,809
Paid-in capital in excess of par 968,596,044
Accumulated investment loss--net (239,738)
Accumulated realized capital losses on investments and foreign
currency transactions--net (6,979,610)
Unrealized appreciation on investments and foreign currency
transactions--net 139,201,425
--------------
Net assets $1,108,476,296
==============
<PAGE>
Net Asset Class A--Based on net assets of $195,763,584 and 13,380,124 shares of
Value: beneficial interest outstanding $ 14.63
==============
Class B--Based on net assets of $843,889,474 and 60,880,663 shares of
beneficial interest outstanding $ 13.86
==============
Class C--Based on net assets of $2,395,002 and 172,875 shares of
beneficial interest outstanding $ 13.85
==============
Class D--Based on net assets of $66,428,236 and 4,548,091 shares of
beneficial interest outstanding $ 14.61
==============
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations for the Six Months Ended April 30, 1995
<S> <S> <C> <C>
Investment Dividends (net of $1,633,558 foreign withholding tax) $ 10,087,793
Income Interest 620,016
(Notes 1d --------------
& 1e): Total income 10,707,809
--------------
Expenses: Distribution fees--Class B (Note 2) $ 4,519,043
Investment advisory fees (Note 2) 4,242,590
Transfer agent fees--Class B (Note 2) 975,930
Custodian fees 551,249
Transfer agent fees--Class A (Note 2) 178,824
Printing and shareholder reports 134,693
Accounting services (Note 2) 121,818
Registration fees (Note 1f) 82,202
Professional fees 40,012
Account maintenance fees--Class D (Note 2) 34,237
Transfer agent fees--Class D (Note 2) 25,568
Trustees' fees and expenses 17,827
Distribution fees--Class C (Note 2) 8,050
Pricing fees 3,367
Transfer agent fees--Class C (Note 2) 1,837
Other 10,300
--------------
Total expenses 10,947,547
--------------
Investment loss--net (239,738)
--------------
<PAGE>
Realized & Realized gain (loss) from:
Unrealized Investments--net 25,360,901
Gain (Loss) Foreign currency transactions--net (11,497,499) 13,863,402
on Investments --------------
& Foreign Change in unrealized appreciation/depreciation on:
Currency Investments--net (9,035,533)
Transactions Foreign currency transactions--net 13,515,527 4,479,994
- --Net (Notes -------------- --------------
1b, 1c, Net realized and unrealized gain on investments and
1e & 3): foreign currency transactions 18,343,396
--------------
Net Increase in Net Assets Resulting from Operations $ 18,103,658
==============
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Six For the Year
Months Ended Ended
Increase (Decrease) in Net Assets: April 30, 1995 Oct. 31, 1994
<S> <S> <C> <C>
Operations: Investment income (loss)--net $ (239,738) $ 4,476,269
Realized gain on investments and foreign currency transactions--net 13,863,402 145,799,258
Change in unrealized appreciation/depreciation on investments and foreign
currency transactions--net 4,479,994 5,122,748
-------------- --------------
Net increase in net assets resulting from operations 18,103,658 155,398,275
-------------- --------------
Distributions Realized gain on investments--net:
to Shareholders Class A (22,603,875) --
(Note 1g): Class B (109,092,276) --
Class C (135,910) --
Class D (1,742,480) --
-------------- --------------
Net decrease in net assets resulting from distribution to shareholders (133,574,541) --
-------------- --------------
Beneficial Net increase (decrease) in net assets derived from beneficial interest
Interest transactions (99,623,478) 220,281,320
Transactions -------------- --------------
(Note 4):
<PAGE>
Net Assets: Total increase (decrease) in net assets (215,094,361) 375,679,595
Beginning of period 1,323,570,657 947,891,062
-------------- --------------
End of period $1,108,476,296 $1,323,570,657
============== ==============
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Financial Highlights
<CAPTION>
The following per share data and ratios have been derived For the
from information provided in the financial statements. Six Months Class A
Ended April 30, For the Year Ended October 31,
Increase (Decrease) in Net Asset Value: 1995++ 1994++ 1993 1992 1991
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 15.96 $ 13.87 $ 10.53 $ 11.62 $ 10.70
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .06 .18 .26 .24 .25
Realized and unrealized gain (loss) on invest-
ments and foreign currency transactions--net .24 1.91 3.08 (1.02) .96
-------- -------- -------- -------- --------
Total from investment operations .30 2.09 3.34 (.78) 1.21
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net -- -- -- (.31) (.29)
Realized gain on investments--net (1.63) -- -- -- --
-------- -------- -------- -------- --------
Total dividends and distributions (1.63) -- -- (.31) (.29)
-------- -------- -------- -------- --------
Net asset value, end of period $ 14.63 $ 15.96 $ 13.87 $ 10.53 $ 11.62
======== ======== ======== ======== ========
Total Based on net asset value per share 2.97%+++ 15.07% 31.72% (6.90%) 11.54%
Investment ======== ======== ======== ======== ========
Return:**
Ratios to Expenses 1.10%* 1.03% 1.04% 1.09% 1.14%
Average ======== ======== ======== ======== ========
Net Assets: Investment income--net .79%* 1.17% 1.50% (2.69%) 2.94%
======== ======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $195,764 $236,288 $182,612 $ 87,865 $ 83,229
Data: ======== ======== ======== ======== ========
Portfolio turnover 33.39% 82.47% 115.10% 109.95% 124.64%
======== ======== ======== ======== ========
<PAGE>
<CAPTION>
The following per share data and ratios have been derived For the
from information provided in the financial statements. Six Months Class B
Ended April 30, For the Year Ended October 31,
Increase (Decrease) in Net Asset Value: 1995++ 1994++ 1993 1992 1991
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 15.28 $ 13.43 $ 10.30 $ 11.41 $ 10.51
Operating -------- ---------- -------- -------- --------
Performance: Investment income (loss)--net (.02) .02 .16 .12 .13
Realized and unrealized gain (loss) on invest-
ments and foreign currency transactions--net .23 1.83 2.97 (.98) .94
-------- ---------- -------- -------- --------
Total from investment operations .21 1.85 3.13 (.86) 1.07
-------- ---------- -------- -------- --------
Less dividends and distributions:
Investment income--net -- -- -- (.25) (.17)
Realized gain on investments--net (1.63) -- -- -- --
-------- ---------- -------- -------- --------
Total dividends and distributions (1.63) -- -- (.25) (.17)
-------- ---------- -------- -------- --------
Net asset value, end of period $ 13.86 $ 15.28 $ 13.43 $ 10.30 $ 11.41
======== ========== ======== ======== ========
Total Based on net asset value per share 2.47%+++ 13.78% 30.39% (7.73%) 10.35%
Investment ======== ========== ======== ======== ========
Return:**
Ratios to Expenses, excluding distribution fees 1.14%* 1.06% 1.08% 1.12% 1.17%
Average ======== ========== ======== ======== ========
Net Assets: Expenses 2.14%* 2.06% 2.08% 2.12% 2.17%
======== ========== ======== ======== ========
Investment income--net (.27%)* .14% .51% (3.37%) 1.94%
======== ========== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $843,889 $1,086,480 $765,279 $447,104 $484,031
Data: ======== ========== ======== ======== ========
Portfolio turnover 33.39% 82.47% 115.10% 109.95% 124.64%
======== ========== ======== ======== ========
<FN>
*Annualized.
**Total investment returns exclude the effect of sales loads.
++Based on average shares outstanding during the period.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (concluded)
<PAGE>
<TABLE>
Financial Highlights (concluded)
<CAPTION>
Class C Class D
For the For the For the For the
Six Period Six Period
The following per share data and ratios have been derived Months Oct. 21, Months Oct. 21,
from information provided in the financial statements. Ended 1994+ Ended 1994+
April 30, to Oct. 31, April 30, to Oct. 31,
Increase (Decrease) in Net Asset Value: 1995++++ 1994++++ 1995++++ 1994++++
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 15.28 $ 15.08 $ 15.96 $ 15.75
Operating -------- -------- -------- --------
Performance: Investment income (loss)--net 0.01 (0.01) 0.09 --
Realized and unrealized gain on investments and foreign
currency transactions--net 0.19 0.21 0.19 0.21
-------- -------- -------- --------
Total from investment operations 0.20 0.20 0.28 0.21
-------- -------- -------- --------
Less distributions from realized gain on investments
--net (1.63) -- (1.63) --
-------- -------- -------- --------
Net asset value, end of period $ 13.85 $ 15.28 $ 14.61 $ 15.96
======== ======== ======== ========
Total Based on net asset value per share 2.39%+++ 1.33%+++ 2.83%+++ 1.33%+++
Investment ======== ======== ======== ========
Return:**
Ratios to Expenses, excluding account maintenance
Average and distribution fees 1.15%* 1.86%* 1.11%* 1.86%*
Net Assets: ======== ======== ======== ========
Expenses 2.15%* 2.86%* 1.36%* 2.11%*
======== ======== ======== ========
Investment income--net .12%* (2.47%)* 1.42%* (1.70%)*
======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $ 2,395 $ 462 $ 66,428 $ 340
Data: ======== ======== ======== ========
Portfolio turnover 33.39% 82.47% 33.39% 82.47%
======== ======== ======== ========
<FN>
*Annualized.
**Total investment returns exclude the effect of sales loads.
+++Aggregate total investment return.
++Commencement of Operations.
++++Based on average shares outstanding during the period.
See Notes to Financial Statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch EuroFund (the "Fund") is registered
under the Investment Company Act of 1940 as a diver-
sified, open-end management investment company.
The unaudited financial statements reflect all adjust-
ments which are, in the opinion of management, neces-
sary to a fair statement of the results for the interim
period presented. All such adjustments are of a normal
recurring nature. The Fund offers four classes of shares
under the Merrill Lynch Select Pricing SM System. Shares
of Class A and Class D are sold with a front-end sales
charge. Shares of Class B and Class C may be subject to
a contingent deferred sales charge. All classes of shares
have identical voting, dividend, liquidation and other
rights and the same terms and conditions, except that
Class B, Class C and Class D Shares bear certain expenses
related to the account maintenance of such shares, and
Class B and Class C Shares also bear certain expenses
related to the distribution of such shares. Each class has
exclusive voting rights with respect to matters relating
to its account maintenance and distribution expendi-
tures. The following is a summary of significant account-
ing policies followed by the Fund.
<PAGE>
(a) Valuation of investments--Portfolio securities which
are traded on stock exchanges are valued at the last
sale price on the exchange on which such securities are
traded, as of the close of business on the day the
securities are being valued or, lacking any sales, at the
last available bid price. Securities traded in the over-
the-counter market are valued at the last available bid
price prior to the time of valuation. In cases where
securities are traded on more than one exchange, the
securities are valued on the exchange designated by or
under the authority of the Board of Trustees as the
primary market. Securities which are traded both in
the over-the-counter market and on a stock exchange
are valued according to the broadest and most repre-
sentative market. Options written are valued at the last
sale price in the case of exchanged-traded options or,
in the case of options traded in the over-the-counter
market, the last asked price. Options purchased are
valued at the last sale price in the case of exchange-
traded options or, in the case of options traded in the
over-the-counter market, the last bid price. Short-term
securities are valued at amortized cost, which approxi-
mates market value. Other investments, including
futures contracts and related options, are stated at
market value. Securities and assets for which market
quotations are not available are valued at fair value as
determined in good faith by or under the direction of
the Fund's Board of Trustees.
(b) Foreign currency transactions--Transactions
denominated in foreign currencies are recorded at the
exchange rate prevailing when recognized. Assets and
liabilities denominated in foreign currencies are valued
at the exchange rate at the end of the period. Foreign
currency transactions are the result of settling (realized)
or valuing (unrealized) receivables or payables expressed
in foreign currencies into US dollars. Realized and
unrealized gains or losses from investments include the
effects of foreign exchange rates on investments.
(c) Derivative financial instruments--The Fund may
engage in various portfolio strategies to seek to increase
its return by hedging its portfolio against adverse move-
ments in the equity, debt, and currency markets. Losses
may arise due to changes in the value of the contract or
if the counterparty does not perform under the contract.
<PAGE>
* Foreign currency options and futures--The Fund may
also purchase or sell listed or over-the-counter foreign
currency options, foreign currency futures and related
options on foreign currency futures as a short or long
hedge against possible variations in foreign exchange
rates. Such transactions may be effected with respect to
hedges on non-US dollar-denominated securities owned
by the Fund, sold by the Fund but not yet delivered,
or committed or anticipated to be purchased by
the Fund.
* Forward foreign exchange contracts--The Fund is
authorized to enter into forward foreign exchange
contracts as a hedge against either specific transactions
or portfolio positions. Such contracts are not entered
on the Fund's records. However, the effect on net opera-
tions is recorded from the date the Fund enters into
such contracts. Premium or discount is amortized over
the life of the contracts.
* Options--The Fund is authorized to write and purchase
call and put options. When the Fund writes an option,
an amount equal to the premium received by the Fund
is reflected as an asset and an equivalent liability. The
amount of the liability is subsequently marked to market
to reflect the current market value of the option written.
When a security is purchased or sold through an exer-
cise of an option, the related premium paid (or received)
is added to (or deducted from) the basis of the security
acquired or deducted from (or added to) the proceeds
of the security sold. When an option expires (or the
Fund enters into a closing transaction), the Fund
realizes a gain or loss on the option to the extent of
the premiums received or paid (or gain or loss to the
extent the cost of the closing transaction exceeds the
premium paid or received).
NOTES TO FINANCIAL STATEMENTS (continued)
Written and purchased options are non-income
producing investments.
<PAGE>
(d) Income taxes--It is the Fund's policy to comply
with the requirements of the Internal Revenue Code
applicable to regulated investment companies and to
distribute substantially all of its taxable income to its
shareholders. Therefore, no Federal income tax provi-
sion is required. Under the applicable foreign tax law, a
withholding tax may be imposed on interest, dividends,
and capital gains at various rates.
(e) Security transactions and investment income--
Security transactions are recorded on the dates the
transactions are entered into (the trade dates). Dividend
income is recorded on the ex-dividend dates, except that
if the ex-dividend date has passed, certain dividends
from foreign securities are recorded as soon as the Fund
is informed of the ex-dividend date. Interest income
is recognized on the accrual basis. Realized gains and
losses on security transactions are determined on the
identified cost basis.
(f) Prepaid registration fees--Prepaid registration fees
are charged to expense as the related shares are issued.
(g) Dividends and distributions--Dividends and distri-
butions paid by the Fund are recorded on the ex-dividend
dates.
2. Investment Advisory Agreement and Transactions
with Affiliates:
The Fund has entered into an Investment Advisory
Agreement with Merrill Lynch Asset Management, L.P.
("MLAM"). The general partner of MLAM is Princeton
Services, Inc. ("PSI"), an indirect wholly-owned subsidi-
ary of Merrill Lynch & Co., Inc. ("ML & Co."), which is the
limited partner. The Fund has also entered into a Distri-
bution Agreement and Distribution Plans with Merrill
Lynch Funds Distributor, Inc. ("MLFD" or "Distributor"),
a wholly-owned subsidiary of Merrill Lynch Group, Inc.
<PAGE>
MLAM is responsible for the management of the Fund's
portfolio and provides the necessary personnel, facili-
ties, equipment and certain other services necessary to
the operations of the Fund. For such services, the Fund
pays a monthly fee of 0.75% on an annual basis of the
average daily value of the Fund's net assets. MLAM has
entered into a Sub-Advisory Agreement with Merrill
Lynch Asset Management U.K., Ltd. ("MLAM U.K."), an
affiliate of MLAM, pursuant to which MLAM pays MLAM
U.K. a fee computed at the rate of 0.15% of the average
daily net assets of the Fund for providing investment
advisory services to MLAM with respect to the Fund.
Certain states in which the shares of the Fund are
qualified for sale impose limitations on the expenses
of the Fund. The most restrictive annual expense limita-
tion requires that the Investment Adviser reimburse the
Fund to the extent the Fund's expenses (excluding inter-
est, taxes, distribution fees, brokerage fees and com-
missions, and extraordinary items) exceed 2.5% of the
Fund's first $30 million of average daily net assets, 2.0%
of the next $70 million of average daily net assets and
1.5% of the average daily net assets in excess thereof.
MLAM's obligation to reimburse the Fund is limited to
the amount of the management fee. No fee payment will
be made to MLAM during any fiscal year which will
cause such expenses to exceed the most restrictive
expense limitation at the time of such payment.
Pursuant to the distribution plans (the "Distribution
Plans") adopted by the Fund in accordance with
Rule 12b-1 under the Investment Company Act of 1940,
the Fund pays the Distributor ongoing account mainte-
nance and distribution fees. The fees are accrued daily
and paid monthly at annual rates based upon the average
daily net assets of the shares as follows:
<PAGE>
Account Maintenance Fee Distribution Fee
Class B 0.25% 0.75%
Class C 0.25% 0.75%
Class D 0.25% --
Pursuant to a sub-agreement with the Distributor,
Merrill Lynch, Pierce, Fenner & Smith Inc. ("MLPF&S"),
a subsidiary of ML & Co., also provides account main-
tenance and distribution services to the Fund. The
ongoing account maintenance fee compensates the
Distributor and MLPF&S for providing account main-
tenance services to Class B, Class C and Class D share-
holders. The ongoing distribution fee compensates the
Distributor and MLPF&S for providing shareholder and
distribution-related services to Class B and Class C
shareholders.
For the six months ended April 30, 1995, MLFD earned
underwriting discounts and MLPF&S earned dealer
concessions on sales of the Fund's Class A and Class D
Shares as follows:
MLFD MLPF&S
Class A $1,779 $28,357
Class D $2,788 $56,169
For the six months ended April 30, 1995, MLPF&S
received contingent deferred sales charges of $1,346,585
and $1,008 relating to transactions in Class B and Class C
Shares, respectively.
In addition, MLPF&S received $39,478 in commissions
on the execution of portfolio security transactions for
the Fund for the six months ended April 30, 1995.
Merrill Lynch Financial Data Services, Inc. ("FDS"), a
wholly-owned subsidiary of ML & Co., is the Fund's
transfer agent.
Accounting services are provided to the Fund by MLAM
at cost.
Certain officers and/or trustees of the Fund are officers
and/or directors of MLAM, PSI, MLPF&S, FDS, MLFD,
and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-
term securities, for the six months ended April 30, 1995 were
$371,428,715 and $601,723,161, respectively.
<PAGE>
Net realized and unrealized gains (losses) as of April 30,
1995 were as follows:
Realized Unrealized
Gains Gains
(Losses) (Losses)
Investments:
Long-term $25,493,863 $ 138,644,970
Call options written (132,962) (41,792)
----------- -------------
Total investments 25,360,901 138,603,178
Currency transactions:
Put options purchased (13,083,500) --
Foreign currency transactions 1,586,001 598,247
----------- -------------
Total currency transactions (11,497,499) 598,247
----------- -------------
Total $13,863,402 $ 139,201,425
=========== =============
Transactions in call options written for the six months
ended April 30, 1995 were as follows:
Shares Premiums
Subject to Call Received
Outstanding call options
written at beginning of period -- --
Options written 2,972,700 $ 1,045,324
Options closed (743,200) (261,532)
----------- -------------
Outstanding call options
written at end of period 2,229,500 $ 783,792
=========== =============
As of April 30, 1995, net unrealized appreciation for
Federal income tax purposes aggregated $138,603,178, of
which $159,874,109 related to appreciated securities
and $21,270,931 related to depreciated securities.
The aggregate cost of investments at April 30, 1995 for
Federal income tax purposes was $943,080,911.
4. Shares of Beneficial Interest:
Net increase (decrease) in net assets derived from
beneficial interest transactions was $(99,623,478) and
$220,281,320 for the six months ended April 30, 1995
and the year ended October 31, 1994, respectively.
<PAGE>
Transactions in shares of beneficial interest for each
class were as follows:
Class A Shares for the
Six Months Ended Dollar
April 30, 1995 Shares Amount
Shares sold 1,684,418 $ 23,632,904
Shares issued to shareholders in
reinvestment of distributions 1,477,206 19,484,347
----------- -------------
Total issued 3,161,624 43,117,251
Shares redeemed (4,586,726) (64,951,811)
----------- -------------
Net decrease (1,425,102) $ (21,834,560)
=========== =============
Class A Shares for the
Year Ended Dollar
October 31, 1994 Shares Amount
Shares sold 12,530,353 $ 190,014,197
Shares redeemed (10,887,820) (167,629,564)
----------- -------------
Net increase 1,642,533 $ 22,384,633
=========== =============
Class B Shares for the
Six Months Ended Dollar
April 30, 1995 Shares Amount
Shares sold 2,506,571 $ 33,915,748
Shares issued to shareholders in
reinvestment of distributions 7,508,722 94,159,375
----------- -------------
Total issued 10,015,293 128,075,123
Automatic conversion of shares (3,544,128) (46,596,245)
Shares redeemed (16,678,411) (225,495,522)
----------- -------------
Net decrease (10,207,246) $(144,016,644)
=========== =============
<PAGE>
Class B Shares for the
Year Ended Dollar
October 31, 1994 Shares Amount
Shares sold 41,040,817 $ 596,780,681
Shares redeemed (26,955,193) (399,676,122)
----------- -------------
Net increase 14,085,624 $ 197,104,559
=========== =============
NOTES TO FINANCIAL STATEMENTS (concluded)
Class C Shares for the Six Dollar
Months Ended April 30, 1995 Shares Amount
Shares sold 166,955 $ 2,276,837
Shares issued to shareholders in
reinvestment of distributions 9,918 124,374
----------- -------------
Total issued 176,873 2,401,211
Shares redeemed (34,246) (465,591)
----------- -------------
Net increase 142,627 $ 1,935,620
=========== =============
Class C Shares for the Period Dollar
October 21, 1994++ to October 31, 1994 Shares Amount
Shares sold 30,249 $ 456,068
Shares redeemed (1) (15)
----------- -------------
Net increase 30,248 $ 456,053
=========== =============
[FN]
++Commencement of Operations.
Class D Shares for the Six Dollar
Months Ended April 30, 1995 Shares Amount
Shares sold 1,572,069 $ 23,673,492
Shares issued to shareholders in
reinvestment of distributions 122,002 1,607,984
Automatic conversion of shares 3,367,115 46,596,245
----------- -------------
Total issued 5,061,186 71,877,721
Shares redeemed (534,398) (7,585,615)
----------- -------------
Net increase 4,526,788 $ 64,292,106
=========== =============
<PAGE>
Class D Shares for the
Period October 21, 1994++ to Dollar
October 31, 1994 Shares Amount
Shares sold 24,171 $ 381,029
Shares redeemed (2,868) (44,954)
----------- -------------
Net increase 21,303 $ 336,075
=========== =============
[FN]
++Commencement of Operations.
5. Commitments:
At April 30, 1995, the Fund had outstanding forward
exchange contracts under which it had agreed to
purchase and sell foreign currency aggregating aproxi-
mately $13,200,000 and $24,244,000, respectively.
PORTFOLIO INFORMATION
Percent of
Ten Largest Equity Holdings Net Assets
Philips Electronics N.V. 4.8%
SmithKline Beecham Corp. PLC (Class A) 2.9
Repsol S.A. 2.2
Aegon N.V. 2.2
Amev N.V. 2.1
The Shell Transport & Trading Co. PLC 2.1
International Nederlanden Groep N.V. 2.0
Peugeot S.A. 2.0
Grand Metropolitan PLC 2.0
Kloeckner Werke AG 2.0
<PAGE>
Percent of
Ten Largest Industries Net Assets
Insurance 9.0%
Electrical Equipment 7.9
Pharmaceuticals 6.5
Banking 6.1
Paper & Forest Products 5.9
Automobiles & Equipment 5.4
Chemicals 5.1
Capital Goods 4.6
Food & Beverage 4.5
Oil & Related 3.1
PORTFOLIO CHANGES
For the Quarter Ended
April 30, 1995
Additions
BET PLC
Biocel Paskov A.S.
*British Land Company PLC
British Sky Broadcasting Group PLC
Compagnie de Saint-Gobain S.A.
Egis
Gedeon Richter
Hanson PLC (Ordinary)
Mo och Domsjo AB
*Pearson PLC
Racal Electronics PLC
Roche Holdings AG
*Rolls Royce PLC (Rights)
Scottish Power PLC
Sedgwick Group PLC
Siemens AG
Stadshypotek AB
Standard Chartered PLC
Stora Kopparbergs AB
Ugine S.A.
Volkswagen AG
<PAGE>
Deletions
BTR PLC
Baloise
Baloise (Warrants)
*British Land Company PLC
The British Petroleum Co. PLC
CRH PLC
CRH PLC (New Shares)
Commercial Union Assurance Co. PLC
Compagnie de Suez
Compagnie Financiere de Paribas
Compagnie Generale des Eaux
GAN S.A.
Glaverbel S.A. (Ordinary)
Iberdrola S.A.
Imperial Chemical Industries PLC (Ordinary)
*Pearson PLC
Pechiney International S.A.
Rhone Poulenc S.A.
*Rolls Royce PLC (Rights)
Royal Ptt Nederland N.V.
Skandia Group Forsakrings AB
Svenska Handelsbanken AB (Class A)
Telefonica Nacional de Espana S.A.
Thyssen AG
Thyssen AG (Warrants)
Turk Otomobil Fabrikasi A.S.
Volkswagen AG (Preferred) (Warrants)
[FN]
*Added and deleted in the same quarter.
OFFICERS AND TRUSTEES
Arthur Zeikel, President and Trustee
Donald Cecil, Trustee
Edward H. Meyer, Trustee
Charles C. Reilly, Trustee
Richard R. West, Trustee
Edward D. Zinbarg, Trustee
Terry K. Glenn, Executive Vice President
Norman R. Harvey, Senior Vice President
Alan J. Albert, Vice President
Donald C. Burke, Vice President
Adrian C. Holmes, Vice President and
Portfolio Manager
Gerald M. Richard, Treasurer
Robert Harris, Secretary
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Custodian
Brown Brothers Harriman & Co.
40 Water Street
Boston, Massachusetts 02109
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
