MERRILL LYNCH
EUROFUND
FUND LOGO
Quarterly Report
January 31, 1996
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
Custodian
Brown Brothers Harriman & Co.
40 Water Street
Boston, MA 02109
<PAGE>
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
This report is not authorized for use as an offer of sale or a
solicitation of an offer to buy shares of the Fund unless
accompanied or preceded by the Fund's current prospectus. Past
performance results shown in this report should not be considered a
representation of future performance. Investment return and
principal value of shares will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
Statements and other information herein are as dated and are subject
to change.
Merrill Lynch
EuroFund
Box 9011
Princeton, NJ
08543-9011
MERRILL LYNCH EUROFUND
PORTFOLIO INFORMATION
As a Percentage of Stocks &
Convertible Warrants
As of January 31, 1996
A pie chart illustrating the following percentages:
Netherlands 15.7%
Austria 0.3%
Denmark 0.6%
Poland 1.1%
Hungary 1.7%
Switzerland 3.0%
<PAGE>
Spain 5.7%
Finland 8.6%
France 12.8%
Sweden 10.7%
Germany 6.9%
Italy 6.8%
Norway 2.8%
Ireland 1.6%
Czech Republic 0.8%
Greece 0.4%
Turkey 0.2%
Portugal 0.1%
United Kingdom 20.2%
EUROPEAN STOCK MARKET PERFORMANCE
Total Return for the
Three-Month Period
Ended January 31, 1996
in US dollars*
A bar graph illustrating the following percentages:
Finland -19.2
Sweden - 1.2
Switzerland - 0.1
Norway + 0.2
United Kingdom + 2.8
Ireland + 5.9
France + 7.3
Netherlands + 7.9
Italy + 8.2
Germany + 8.4
Austria + 8.6
Spain +13.5
Source: Financial Times/
Standard & Poor's--
Actuaries Index.
<PAGE>
[FN]
*For the three-month period
ended January 31, 1996,
total investment return for
the Financial Times/
Standard & Poor's--
Actuaries Europe Index
was +4.66%.
DEAR SHAREHOLDER
During the quarter ended January 31, 1996, the unmanaged Financial
Times/Standard & Poor's--Actuaries Europe Index had a total return
of +4.66%. For the same period, Merrill Lynch EuroFund's Class A,
Class B, Class C and Class D Shares had total returns of +3.39%,
+3.17%, +3.09%, and +3.33%, respectively. (Results shown do not
reflect sales charges, and would be lower if sales charges were
included. Complete performance information, including average annual
total returns, can be found on pages 3, 4 and 5 of this report to
shareholders.) The early part of the quarter was characterized by
continued strong performance of growth, defensive and financial
stocks, three sectors in which the Fund is underweighted. However,
during the market rally in January, we believe market leadership
changed and cyclicals began to outperform the other sectors. This
change allowed the Fund to partially recover, in relative
performance terms, as the quarter progressed.
The economic environment in Europe deteriorated significantly during
the fourth quarter of 1995. The destocking of inventories that began
in the summer accelerated into the autumn months, leading to
declines in industrial production and new orders. In France, the
situation was aggravated by widespread industrial actions which
brought the country to a virtual standstill in December. Although
France and Germany experienced the sharpest growth slowdowns, other
countries in Europe experienced more subdued growth.
The legislative response to this sharp and unexpected slowdown was
rapid and reasonably aggressive. European governments seem aware
that if they are to meet Maastricht criteria for European Monetary
Union (EMU), they need moderate economic growth which will enable
budget deficits to be stabilized or reduced. Therefore, officials
aggressively relaxed monetary policy to stimulate growth. Current
budget deficits do not allow for the use of fiscal policy to
generate growth, so the entire burden of economic stimulus remains
centered on monetary policy. Monetary easing of this pace and
magnitude led to currency weakness, which should enhance the
competitive position of the European corporate sector and contribute
further to economic growth.
<PAGE>
Looking ahead into 1996, the impact of weaker currencies, lower
interest rates and an end to inventory destocking could lead to a
sustainable economic recovery. Investors are beginning to consider
this possibility as reflected in higher inflationary expectations,
an increase in bond yields and increased interest in economically
sensitive stocks in the equity market. The main risk to resuming
economic growth remains consumers, who, in spite of increasing
income, are dissuaded from spending by high levels of unemployment,
job insecurity and fears that they will have to make increasing
personal provisions for items that were previously provided by the
government. France began tackling this problem by introducing
measures to encourage consumer spending, and with approximately two-
thirds of European gross domestic product derived from consumer
spending, other countries may initiate similar measures.
The question of establishing the EMU remained at the forefront of
investors' concerns and caused considerable and heated political
debate in Europe. Therefore, it is highly likely that the process
will be delayed since the chances of altering required EMU criteria
are slight. As 1996 progresses, the path toward EMU should become
clearer, but the chances of a 1992-style breakdown in currency and
bond markets, with all the risks and opportunities that would ensue,
should not be excluded.
Investment Strategy
With certain markets and sectors looking fairly or even fully
valued, the percentage of net assets in cash reserves was kept at
higher-than-normal levels. At the close of the period ended January
31, 1996, cash and cash equivalents were 9.63% of net assets, and
cash holdings may remain at a high level unless further attractively
valued longer-term investment opportunities are found. However, we
believe that the Fund is currently invested in markets and sectors
that are attractively valued. Reasonable market valuations continue
to mask the overvaluation of consumer-related areas and
undervaluation in the industrial sectors. On a price/book value
basis, cyclical stocks were previously only this inexpensive,
compared to growth stocks, at the troughs of deep recessions.
Therefore, unless economic growth collapses, cyclicals are very
underpriced, in our estimation.
The recent rise in bond yields, if sustained or extended, poses a
threat to equity market valuations. However, the Fund is principally
exposed to market segments which tend to outperform the broader
indexes against a background of rising bond yields. At the currency
level, we hedged approximately 20% of the Fund's foreign currency
exposure using forward foreign exchange contracts. In addition, the
Fund's cash reserves are denominated in US dollars. Therefore, the
Fund had an approximate 30% US dollar exposure as of January 31,
1996.
<PAGE>
The geographic exposure of the Fund changed appreciably during the
quarter ended January 31, 1996. For valuation reasons, we reduced
the Fund's exposure in Germany, Switzerland and the United Kingdom
and increased exposure in France, Italy and emerging/eastern
European countries. The Fund is currently overweighted in the
Netherlands, Italy, Spain, Finland, Sweden and emerging/eastern
European countries, and underweighted in Germany, France,
Switzerland and the United Kingdom. The single largest deviation
from the benchmark is the United Kingdom, where high valuations
coupled with a poor political situation suggested a cautious
approach. At the sector level, we believe that the Fund is well-
positioned to benefit from the change in market leadership which
appears to be taking place. The Fund is heavily invested in
automobiles, capital goods, forestry and mining/metals stocks.
However, we are taking a negative stance on consumer, healthcare,
retail and service stocks.
In Conclusion
With the consensus on economic growth and sectoral strategy
beginning to move in line with our own views, the period of the
Fund's unfavorable relative performance may be coming to an end.
However, if economies do not recover as anticipated, further strains
will be placed on the EMU process, which could lead to volatile and
unpredictable stock market behavior.
We appreciate your ongoing interest in Merrill Lynch EuroFund, and
we look forward to assisting you with your financial needs in the
months and years to come.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Adrian C. Holmes)
Adrian C. Holmes
Vice President and Portfolio Manager
March 1, 1996
<PAGE>
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 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).
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.
<PAGE>
PERFORMANCE DATA (continued)
<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
1995 13.62 14.27 0.986 0.071 +12.72
1/1/96--1/31/96 14.27 14.50 -- -- + 1.61
------ ------
Total $1.746 Total $1.728
Cumulative total return as of 1/31/96: +113.14%**
</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
1995 12.95 13.36 0.986 0.071 +11.52
1/1/96--1/31/96 13.36 13.57 -- -- + 1.57
------ ------
Total $2.483 Total $1.668
Cumulative total return as of 1/31/96: +93.17%***
</TABLE>
<PAGE>
<TABLE>
Performance Summary--Class C Shares
<CAPTION>
Net Asset Value Capital Gains Dividends
Period Covered Beginning Ending Distributed Paid* % Change**
<C> <C> <C> <C> <C> <C>
10/21/94--12/31/94 $15.08 $12.94 $0.737 $0.889 - 3.07%
1995 12.94 13.35 0.986 0.071 +11.53
1/1/96--1/31/96 13.35 13.55 -- -- + 1.50
------ ------
Total $1.723 Total $0.960
Cumulative total return as of 1/31/96: +9.73%***
</TABLE>
<TABLE>
Performance Summary--Class D Shares
<CAPTION>
Net Asset Value Capital Gains Dividends
Period Covered Beginning Ending Distributed Paid* % Change**
<C> <C> <C> <C> <C> <C>
10/21/94--12/31/94 $15.75 $13.61 $0.737 $0.889 - 2.93%
1995 13.61 14.22 0.986 0.071 +12.44
1/1/96--1/31/96 14.22 14.44 -- -- + 1.55
------ ------
Total $1.723 Total $0.960
Cumulative total return as of 1/31/96: +10.83%**
<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.
***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>
Recent Performance Results*
<CAPTION>
12 Month 3 Month
1/31/96 10/31/95 1/31/95 % Change % Change
<S> <C> <C> <C> <C> <C>
ML EuroFund Class A Shares $14.50 $15.07 $13.44 +15.52%(1) +3.02%(1)
ML EuroFund Class B Shares 13.57 14.20 12.77 +14.29(1) +2.78(1)
ML EuroFund Class C Shares 13.55 14.19 12.76 +14.22(1) +2.71(1)
ML EuroFund Class D Shares 14.44 15.02 13.43 +15.15(1) +2.96(1)
ML EuroFund Class A Shares--Total Return +16.07(2) +3.39(3)
ML EuroFund Class B Shares--Total Return +14.87(2) +3.17(3)
ML EuroFund Class C Shares--Total Return +14.79(2) +3.09(3)
ML EuroFund Class D Shares--Total Return +15.71(2) +3.33(3)
<FN>
*Investment results do not reflect sales charges; results shown
would be lower if a sales charge was included.
(1)Percent change includes reinvestment of $0.986 per share capital
gains distributions.
(2)Percent change includes reinvestment of $0.071 ordinary income
dividends and $0.986 per share capital gains distributions.
(3)Percent change includes reinvestment of $0.053 ordinary income
dividends and $0.986 per share capital gains distributions.
</TABLE>
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 12/31/95 +12.72% + 6.80%
Five Years Ended 12/31/95 +11.27 +10.07
Inception (10/26/88)
through 12/31/95 +10.86 +10.03
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
<PAGE>
Class B Shares*
Year Ended 12/31/95 +11.52% + 7.52%
Five Years Ended 12/31/95 +10.13 +10.13
Inception (1/30/87) through 12/31/95 + 7.47 + 7.47
[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 12/31/95 +11.53% +10.53%
Inception (10/21/94)
through 12/31/95 + 6.74 + 6.74
[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 12/31/95 +12.44% +6.53%
Inception (10/21/94)
through 12/31/95 + 7.60 +2.85
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
PORTFOLIO INFORMATION
As of January 31, 1996 Percent of
Ten Largest Equity Holdings Net Assets
<PAGE>
Repsol S.A. 2.5%
Societa Finanziaria Telefonica S.p.A. (STET) 2.2
Philips Electronics N.V. 2.2
International Nederlanden Groep N.V. 2.2
Amev N.V. 2.0
Peugeot S.A. 1.9
Bayer AG 1.7
ABN AMRO Holding N.V. 1.7
EuraFrance S.A. 1.6
HSBC Holdings PLC 1.6
Percent of
Ten Largest Industries Net Assets
Paper & Forest Products 8.0%
Insurance 7.7
Financial Services 6.7
Engineering 6.6
Banking 6.5
Telecommunications 6.2
Automobiles & Equipment 4.8
Pharmaceuticals 4.5
Electrical Equipment 3.8
Chemicals 3.5
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
Shares Percent of
Industries Held Investments Cost Value Net Assets
<S> <C> <S> <C> <C> <C>
Austria
Engineering 21,800 V.A. Technologie AG $ 2,383,280 $ 2,858,060 0.3%
Total Investments in Austria 2,383,280 2,858,060 0.3
Czech Republic
Building & Construction 14,667 Metrostav AS 1,167,050 1,439,051 0.1
Metals & Mining 27,500 VSZ 389,875 431,747 0.0
Pharmaceuticals 30,797 Slovakofarma 1,875,976 1,681,595 0.2
<PAGE>
Telecommunications 48,205 SPT Telecom AS 4,593,971 4,782,769 0.5
Total Investments in the
Czech Republic 8,026,872 8,335,162 0.8
Denmark
Telecommunications 105,000 Tele Danmark AS (Class B) 5,565,360 5,795,869 0.5
Total Investments in Denmark 5,565,360 5,795,869 0.5
Finland
Banking 4,507,224 Merita Bank Ltd. (b) 20,040,398 11,779,581 1.1
Communication 227,760 Nokia OY 10,997,713 8,878,703 0.8
Equipment
Machine--Diversified 195,000 Rauma OY 3,519,206 3,683,043 0.4
Metals & Mining 687,700 Outokumpu OY 9,764,165 10,421,299 1.0
Paper & Forest 2,003,700 Enso-Gutzeit OY 'R'
Products (Ordinary) (Registered) 14,186,087 12,541,552 1.2
457,660 Kymmene OY 13,492,021 11,106,545 1.0
391,900 Metsa Serla OY (Class B) 14,945,500 10,758,680 1.0
801,925 Repola OY 'S' 12,642,630 13,913,442 1.3
-------------- -------------- ------
55,266,238 48,320,219 4.5
Total Investments in Finland 99,587,720 83,082,845 7.8
France
Automobiles & 141,315 Peugeot S.A. 17,468,422 20,635,984 1.9
Equipment
Banking 87,750 Societe Generale 9,244,244 10,306,150 1.0
Building & Construction 96,300 Compagnie de Saint-Gobain S.A. 11,144,465 12,045,511 1.1
Communication 136,850 Alcatel Alsthom Cie Generale
Equipment d'Electricite S.A. 13,026,056 12,493,998 1.2
Financial Services 134,600 Compagnie de Suez S.A. 5,295,872 5,187,867 0.5
110,800 Compagnie Financiere de
Paribas 5,604,913 5,829,981 0.5
48,020 EuraFrance S.A. 13,909,651 17,201,699 1.6
-------------- -------------- ------
24,810,436 28,219,547 2.6
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Shares Percent of
Industries Held Investments Cost Value Net Assets
<S> <C> <S> <C> <C> <C>
France (concluded)
Insurance 288,565 Assurances Generales de
France S.A. (AGF) $ 7,735,683 $ 8,184,839 0.7%
Machinery 177,431 Compagnie de Fives-Lille 9,488,305 15,976,639 1.5
Metal & Steel 706,150 Usinor-Sacilor 10,604,816 10,353,254 1.0
Oil & Related 74,050 Societe Nationale Elf
Aquitaine 5,209,575 5,538,603 0.5
Total Investments in France 108,732,002 123,754,525 11.5
Germany
Banking 94,300 Deutsche Bank AG 4,594,297 4,708,346 0.5
135,993 Deutsche Bank AG
(Warrants) (a) 2,264,746 2,513,143 0.2
-------------- -------------- ------
6,859,043 7,221,489 0.7
Chemicals 61,685 Bayer AG 12,936,346 18,446,223 1.7
26,055 Hoechst AG 6,795,214 7,695,163 0.7
-------------- -------------- ------
19,731,560 26,141,386 2.4
Diversified Companies 42,750 Veba AG (Warrants) (a) 1,840,449 4,424,098 0.4
Engineering 321,783 Kloeckner Werke AG 14,985,368 12,433,655 1.2
47,654 Mannesmann AG 12,941,208 16,540,079 1.5
-------------- -------------- ------
27,926,576 28,973,734 2.7
Total Investments in Germany 56,357,628 66,760,707 6.2
Greece
Beverages 35,750 Hellenic Bottling Co. 991,391 1,272,837 0.1
<PAGE>
Engineering & 80,666 AEGEK 945,100 722,108 0.1
Construction
Tobacco 60,000 Papastratos Cigarette Co. 1,825,929 1,843,262 0.2
Total Investments in Greece 3,762,420 3,838,207 0.4
Hungary
Natural Gas 385,000 Mol Re Hung Oil & Gas 3,306,122 4,817,589 0.4
Pharmaceuticals 131,001 Egis 2,764,956 4,063,478 0.4
251,167 Gedeon Richter (GDR)* 3,567,148 7,346,635 0.7
-------------- -------------- ------
6,332,104 11,410,113 1.1
Total Investments in Hungary 9,638,226 16,227,702 1.5
Ireland
Building Materials 701,600 CRH PLC 4,287,411 5,355,634 0.5
Paper & Forest 4,279,417 Jefferson Smurfit Group PLC 12,726,781 10,087,057 0.9
Products
Total Investments in Ireland 17,014,192 15,442,691 1.4
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Shares Percent of
Industries Held Investments Cost Value Net Assets
<S> <C> <S> <C> <C> <C>
Italy
Automobiles & 3,720,000 Fiat S.p.A. (Ordinary) $ 11,161,864 $ 12,497,567 1.2%
Equipment
Diversified 13,030,335 Compagnie Industriali
Companies Riunite S.p.A. (CIR) 12,170,577 7,421,499 0.7
22,730,000 Montedison S.p.A. 16,774,367 14,387,612 1.3
-------------- -------------- ------
28,944,944 21,809,111 2.0
Engineering 2,571,700 Filippo Fochi S.p.A. 8,169,638 613,667 0.1
Insurance 4,614,500 Istituto Nazionale delle
Assicurazioni (INA) 6,419,480 6,635,732 0.6
<PAGE>
Telecommunications 10,733,151 Societa Finanziaria
Telefonica S.p.A. (STET) 24,298,355 24,162,682 2.2
Total Investments in Italy 78,994,281 65,718,759 6.1
Netherlands
Automobiles & 352,000 Vredestein Groep N.V. 3,504,552 4,247,584 0.4
Equipment
Banking 405,850 ABN AMRO Holding N.V. 14,543,240 17,835,276 1.7
Capital Goods 459,000 Ahrend Groep N.V. 6,522,706 16,092,694 1.5
Chemicals 417,320 European Vinyls Corporation
International N.V. 16,299,362 11,775,254 1.1
Electrical Equipment 582,005 Philips Electronics N.V. 19,471,127 23,235,476 2.2
Insurance 407,225 Aegon N.V. 8,349,338 16,722,213 1.5
334,400 Amev N.V. 11,881,525 21,541,166 2.0
353,328 International Nederlanden
Groep N.V. 13,836,874 23,057,425 2.2
-------------- -------------- ------
34,067,737 61,320,804 5.7
Telecommunications 313,125 Royal Ptt Nederland N.V. 11,337,264 12,030,978 1.1
Transportation 202,108 KLM Royal Dutch Airlines N.V. 6,051,185 6,212,361 0.6
Total Investments in the
Netherlands 111,797,173 152,750,427 14.3
Norway
Banking 1,723,000 Christiania Bank OG Kreditkass 3,851,613 4,126,439 0.4
Oil & Gas Producers 1,102,400 Saga Petroleum A.S. (Class B) 12,575,675 12,100,709 1.1
Oil & Related 265,600 Norsk Hydro AS 11,124,622 10,927,692 1.0
Total Investments in Norway 27,551,910 27,154,840 2.5
Poland
Electrical Equipment 131,390 Bydgoska Fabryka Kabli S.A. 1,939,112 2,422,648 0.2
28,785 Fabryka Kotlow Rafako S.A. 269,032 354,590 0.0
-------------- -------------- ------
2,208,144 2,777,238 0.2
Engineering & 883,861 Elektrim S.A. 3,895,370 4,854,474 0.5
Construction 10,360 Mostostal Zabrze 37,252 47,553 0.0
-------------- -------------- ------
3,932,622 4,902,027 0.5
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Shares Percent of
Industries Held Investments Cost Value Net Assets
<S> <C> <S> <C> <C> <C>
Poland (concluded)
Rubber/Tires 68,112 Stomil Olsztyn S.A. $ 889,741 $ 956,614 0.1%
Wholesale 408,168 Polifarb Wroclaw S.A. 1,045,584 1,841,480 0.2
Total Investments in Poland 8,076,091 10,477,359 1.0
Portugal
Banking 65,825 Banco Totta & Acores, S.A. 1,274,421 1,279,315 0.1
Total Investments in Portugal 1,274,421 1,279,315 0.1
Spain
Banking 86,553 Banco Popular Espanol S.A. 9,630,077 15,492,863 1.5
Petroleum 766,268 Repsol S.A. 21,422,573 26,637,924 2.5
Utilities--Electric 240,000 Empresa Nacional de
Electricidad S.A. 9,119,821 13,203,636 1.2
Total Investments in Spain 40,172,471 55,334,423 5.2
Sweden
Appliances 320,800 Electrolux AB 15,488,929 13,537,425 1.3
Automobiles & 729,900 Volvo AB (Class B) 13,808,866 13,665,980 1.3
Equipment
Engineering 565,600 SKF AB (Class A) 10,412,644 10,549,047 1.0
277,800 SKF AB (Class B) 5,353,782 5,121,254 0.4
408,350 Svedala Industry AB 9,363,783 10,586,177 1.0
-------------- -------------- ------
25,130,209 26,256,478 2.4
<PAGE>
Financial Services 574,365 Stadshypotek AB 8,968,871 10,877,968 1.0
Metals & Steel 828,500 Avesta-Sheffield AB 7,384,277 6,801,449 0.6
Paper & Forest 250,350 Mo och Domsjo AB (Class B) 11,769,975 10,816,903 1.0
Products 7,313,800 Rottneros Bruks AB 10,774,603 6,688,841 0.6
961,500 Stora Kopparbergs AB 11,893,654 10,316,672 1.0
-------------- -------------- ------
34,438,232 27,822,416 2.6
Pharmaceuticals 125,700 Pharmacia & Upjohn Inc. 4,830,784 5,114,319 0.5
Total Investments in Sweden 110,050,168 104,076,035 9.7
Switzerland
Electrical Equipment 13,460 BBC Brown Boveri & Cie
(Bearer) 10,355,594 15,515,369 1.4
Pharmaceuticals 16,205 Ciba-Geigy AG 9,169,400 13,510,862 1.3
Total Investments in
Switzerland 19,524,994 29,026,231 2.7
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Shares Percent of
Industries Held Investments Cost Value Net Assets
<S> <C> <S> <C> <C> <C>
Turkey
Automotive 524,675 Otosan Otomobil Sanayii A.S. $ 102,533 $ 118,998 0.0%
Banking 5,238,000 Yapi Ve Kredi Bankasi A.S. 251,266 275,114 0.0
Beverages 550,000 Erciyas Biracilik Ve Malt
Sanayii A.S. 366,993 288,875 0.0
Building Materials 3,776,605 Turk Sise Ve Cam Fabrikalari A.S. 522,912 534,964 0.1
Electrical Equipment 267,140 Turk Siemens Kabb Ve Elektrik
Sanayii A.S. 54,714 60,588 0.0
Engineering & 367,127 Enka Holding Yatirim AS 129,911 92,030 0.0
Construction
<PAGE>
Financial Services 621,580 Eczacibasi Yatirim Holding
Ortakligi A.S. 115,789 145,922 0.0
Printing & Publishing 22,134,915 Hurriyet Gazetecilik Ve
Matbaacilik A.S. 859,700 898,361 0.1
Total Investments in Turkey 2,403,818 2,414,852 0.2
United Kingdom
Beverages 1,837,550 Cadbury Schweppes PLC 15,832,150 15,177,612 1.4
Electronics 1,962,250 General Electric Co. PLC
(Ordinary) 9,826,683 10,755,681 1.0
Engineering 4,968,400 T & N PLC 12,669,012 12,228,723 1.1
Financial Services 997,000 HSBC Holdings PLC 15,115,875 16,831,155 1.6
2,060,448 Lloyds TSB PLC 9,644,151 10,049,423 0.9
615,000 National Westminster Bank PLC 5,611,738 6,161,593 0.6
-------------- -------------- ------
30,371,764 33,042,171 3.1
Food & Beverage 2,004,900 Grand Metropolitan PLC 13,021,249 13,471,926 1.3
897,400 Tate & Lyle PLC 5,868,055 6,395,949 0.6
-------------- -------------- ------
18,889,304 19,867,875 1.9
Industrials 3,942,200 Tomkins PLC 14,155,374 16,399,749 1.5
Insurance 1,193,300 Prudential Corp. PLC 5,739,834 7,766,116 0.7
Oil & Related 1,245,300 The British Petroleum Co. PLC 9,137,083 9,947,332 0.9
Pharmaceuticals 1,048,600 Glaxo Holdings PLC 12,614,625 15,216,339 1.4
Retail Trade 1,269,000 J Sainsbury PLC 8,080,710 7,568,950 0.7
Shipping & 708,300 Peninsular & Oriental Steam
Construction Navigation Co. 5,666,308 5,871,736 0.5
Telecommunications 1,217,100 Racal Electronics PLC 4,866,303 5,697,245 0.5
4,140,200 Vodafone Group PLC 15,030,877 14,879,051 1.4
-------------- -------------- ------
19,897,180 20,576,296 1.9
Utilities-- 1,695,000 Cable & Wireless PLC 11,441,733 11,389,552 1.1
Communications
Utilities-- 517,175 Severn Trent PLC 5,282,947 4,822,269 0.5
Electric & Water 529,650 Yorkshire Water PLC 5,154,410 4,878,606 0.5
-------------- -------------- ------
10,437,357 9,700,875 1.0
Total Investments in the
United Kingdom 184,759,117 195,509,007 18.2
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
Face Percent of
Amount Short-Term Securities Cost Value Net Assets
Repurchase $20,000,000 Goldman Sachs & Co., purchased
Agreements** on 1/31/1996 to yield 5.55%
to 2/05/1996 $ 20,000,000 $ 20,000,000 1.9%
42,826,000 SBC Capital Markets, Inc.,
purchased on 1/31/1996 to
yield 5.90% to 2/01/1996 42,826,000 42,826,000 4.0
Total Investments in
Short-Term Securities 62,826,000 62,826,000 5.9
Total Investments $ 958,498,144 1,032,663,016 96.3
==============
Unrealized Appreciation on Forward Foreign Exchange Contracts++ 7,874,995 0.7
Other Assets Less Liabilities 31,607,766 3.0
-------------- ------
Net Assets $1,072,145,777 100.0%
============== ======
Net Asset Class A--Based on net assets of $198,110,351 and
Value: 13,661,618 shares of beneficial interest outstanding $ 14.50
==============
Class B--Based on net assets of $756,162,512 and
55,738,636 shares of beneficial interest outstanding $ 13.57
==============
Class C--Based on net assets of $10,817,045 and
798,532 shares of beneficial interest outstanding $ 13.55
==============
Class D--Based on net assets of $107,055,869 and
7,411,433 shares of beneficial interest outstanding $ 14.44
==============
<PAGE>
<FN>
(a)Warrants entitle the Fund to purchase a predetermined number of
shares of common stock. The purchase price and numbers of shares are
subject to adjustment under certain conditions until the expiration
date.
(b)Formerly known as Unitas Bank Ltd. (Class A).
*Global Depositary Receipts.
**Repurchase Agreements are fully collateralized by US Government &
Agency Obligations.
++Forward foreign exchange contracts sold as of January 31, 1996 were as follows:
<CAPTION>
Foreign Expiration Unrealized
Currency Sold Date Appreciation
<S> <C> <S> <C>
Chf 21,766,704 July 1996 $ 748,376
DM 53,033,950 July 1996 1,062,322
Frf 408,999,100 July 1996 2,667,722
Nlg 197,346,489 July 1996 3,396,575
Total Unrealized Appreciation on Forward Foreign Exchange
Contracts Sold (US$ Commitment--$262,000,000) $7,874,995
==========
</TABLE>
PORTFOLIO CHANGES
For the Quarter Ended
January 31, 1996
Additions
*Arbed S.A.
Banco Totta & Acores, S.A.
*British Gas PLC
Cable & Wireless PLC
Christiania Bank OG
Kreditkasse
*Debica S.A.
Deutsche Bank AG
Deutsche Bank AG (Warrants)
Eczacibasi Yatirim Holding
Ortakligi A.S.
*EuraFrance S.A. (Rights)
Fabryka Kotlow Rafako S.A.
<PAGE>
Fiat S.p.A. (Ordinary)
General Electric Co. PLC
(Ordinary)
Hellenic Bottling Co.
Hoechst AG
Hurriyet Gazetecilik Ve
Matbaacilik A.S.
Istituto Nazionale delle
Assicurazioni (INA)
Lloyds TSB PLC
Mostostal Zabrze
Nokia OY
Otosan Otomobil Sanayii A.S.
Peninsular & Oriental Steam
Navigation Co.
Pharmacia & Upjohn Inc.
Royal Ptt Nederland N.V.
*SGS-Thomson
Microelectronics N.V.
Severn Trent PLC
Stomil Olsztyn S.A.
Tele Danmark AS (Class B)
Turk Siemens Kabb Ve
Elektrik Sanayii A.S.
Turk Sise Ve Cam
Fabrikalari A.S.
VSZ
Yapi Ve Kredi Bankasi A.S.
Yorkshire Water PLC
Deletions
Akzo N.V.
*Arbed S.A.
Asda Group PLC
BASF AG
BET PLC
BTR PLC (Ordinary)
*British Gas PLC
CS Holdings AG (Registered)
*Debica S.A.
*EuraFrance S.A. (Rights)
Generale de Banque S.A.
KNP BT (Koninklijke) (Warrants)
Kansallis-Osake-Pankki
Roche Holdings AG
*SGS-Thomson
Microelectronics N.V.
Saga Petroleum A.S. (Class A)
Siemens AG
Unilever PLC
<PAGE>
[FN]
*Added and deleted in the same
quarter.
