MERRILL LYNCH
EUROFUND
FUND LOGO
Quarterly Report
July 31, 1998
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
Printed on post-consumer recycled paper
MERRILL LYNCH EUROFUND
PORTFOLIO INFORMATION
Pie graph depicting Portfolio Information As a Percentage of Stocks at Value
As of July 31, 1998
Ireland 0.7%
Spain 2.3%
Finland 3.9%
Sweden 6.2%
Netherlands 11.4%
United Kingdom 17.7%
France 16.6%
Italy 9.6%
Switzerland 3.3%
Norway 1.5%
Emerging Europe* 0.9%
Germany 25.9%
[FN]
*Countries include Hungary, Poland, Slovakia and Turkey.
EUROPEAN STOCK MARKET PERFORMANCE
Bar graph depicting European Stock Market Performance in terms of
Total Return for the Three-Month Period Ended July 31, 1998
In US dollars*
Norway -11.4%
Ireland -5.3%
United Kingdom -3.5%
Sweden +0.7%
Denmark +4.0%
Spain +6.5%
France +7.8%
Netherlands +7.8%
Italy +10.0%
Switzerland +11.6%
Germany +12.2%
Finland +13.9%
Source: Financial Times/Standard & Poor's--Actuaries Index.
[FN]
*For the three-month period ended July 31, 1998, total investment return for
the Financial Times/Standard & Poor's--Actuaries Europe Index was +4.66%.
Merrill Lynch EuroFund
July 31, 1998
DEAR SHAREHOLDER
During the quarter ended July 31, 1998, the unmanaged Financial
Times/Standard and Poor's--Actuaries Europe Index had a total return
of +4.66%, while the total return for the unmanaged Morgan Stanley
Capital International Europe Index was +5.18%. For the same period,
Merrill Lynch EuroFund's Class A, Class B, Class C and Class D
Shares' total returns were +0.47%, +0.23%, +0.23% and +0.42%,
respectively. The Fund's performance shortfall was principally the
result of our heavy cash position, significant industrial exposure,
and lack of exposure to financial, telecommunications and technology
stocks. Continued weakness in the oil and pharmaceutical sectors was
beneficial to the Fund because we were underweighted in those
sectors. (Fund results shown do not reflect sales charges, and would
be lower if sales charges were included. Complete performance
information can be found on pages 4 and 5 of this report to
shareholders.)
During the July quarter, investors chose to focus on positive
factors in the economic environment and to disregard the numerous
potentially negative factors, in our opinion. The Asian situation
deteriorated further, Russia reached a crisis point and looked for
help from the International Monetary Fund, and growth in the United
States and China declined. Federal Reserve Board Chairman Alan
Greenspan reaffirmed his belief that stock prices are too high, that
in spite of slowing growth there is a greater risk of inflation than
deflation, and that interest rates are more likely to move up than
down. However, investors--armed with abundant liquidity--focused on
the current low levels of inflation and interest rates, the
continued merger and acquisition boom, and extremely optimistic long-
term earnings projections. Should sentiment or liquidity flows
change, a major market adjustment could occur.
Meanwhile, in Europe, the economic environment changed little.
Export growth is still slowing but consumer confidence remains
robust, allowing the shift in the engines of growth to progress
relatively smoothly. Only in the United Kingdom is the economy
slowing so rapidly that recession is a near-term possibility. The
slowdown in the United Kingdom is likely to bring interest rate
increases to a halt. Interest rate increases look unlikely in any
major European country in the remainder of 1998.
Investment Strategy
With market trends changing little during the July quarter, our
strategy remained virtually the same.We maintained a very cautious
stance, and believed that large areas of the markets were extremely
overvalued, offering only speculative upside potential but major
downside risk on a fundamental basis. Generally, stock prices are
discounting that an ideal investment environment will be sustained
for some time. There is no allowance for negative change, in our
view. Therefore, we maintained a very high cash position for the
Fund. As of July 31, 1998, cash represented 24% of net assets and
was held principally in Deutschemark-denominated issues. In our
view, the Deutschemark is a defensive currency. We also held a short
futures position in Germany that amounted to 3.0% of net assets. The
invested position of the portfolio is still focused on industrial
stocks, which have discounted a more negative global picture, and
which we believe have limited downside risk as a result. We continue
to avoid investing in areas where price levels are principally
dictated by speculation (as in the financial sector) or where overly
optimistic long-term forecasts are implicit in stock prices (as in
the telecommunications and technology sectors).
Merrill Lynch EuroFund
July 31, 1998
In Conclusion
Overall, we see plenty of risk and little opportunity, causing us to
remain very defensive. Liquidity is currently the key motivating
force of stock markets, and its magnitude and duration are
notoriously difficult to anticipate. However, we believe that Europe
has received a disproportionately large share of cash flow, since
Europe continues to be the region favored by asset allocators
outside of the United States. When investor belief in the Asian
economies and currencies rebuilds, Europe is likely to see the
largest outflows of investment capital. At that time, investors may
question the historically high valuation levels accorded European
investments.
We thank you for your investment in Merrill Lynch EuroFund, and we
look forward to reviewing our outlook and strategy with you in the
next report to shareholders.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Adrian C. Holmes)
Adrian C. Holmes
Senior Vice President and Portfolio Manager
September 2, 1998
Merrill Lynch EuroFund
July 31, 1998
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.)
* 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. Figures shown in the "Recent Performance
Results" and "Average Annual Total Return" tables assume
reinvestment of all dividends and capital gains distributions at net
asset value on the ex-dividend date. Investment return and principal
value of shares will fluctuate so that shares, when redeemed, may be
worth more or less than their original cost. Dividends paid to each
class of shares will vary because of the different levels of account
maintenance, distribution and transfer agency fees applicable to
each class, which are deducted from the income available to be paid
to shareholders.
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 6/30/98 +36.37% +29.49%
Five Years Ended 6/30/98 +22.77 +21.45
Inception (10/26/88)
through 6/30/98 +15.68 +15.04
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 6/30/98 +35.22% +31.22%
Five Years Ended 6/30/98 +21.50 +21.50
Ten Years Ended 6/30/98 +14.52 +14.52
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Year Ended 6/30/98 +35.23% +34.23%
Inception (10/21/94)
through 6/30/98 +21.54 +21.54
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Sales Charge Sales Charge**
Class D Shares*
Year Ended 6/30/98 +36.32% +29.16%
Inception (10/21/94)
through 6/30/98 +22.52 +20.75
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
Merrill Lynch EuroFund
July 31, 1998
PERFORMANCE DATA (concluded)
<TABLE>
Recent Performance Results*
<CAPTION>
Ten Years/
12 Month 3 Month Since Inception
Total Return Total Return Total Return
<S> <C> <C> <C>
ML EuroFund Class A Shares +30.59% +0.47% +305.66%
ML EuroFund Class B Shares +29.31 +0.23 +277.69
ML EuroFund Class C Shares +29.20 +0.23 +103.40
ML EuroFund Class D Shares +30.29 +0.42 +109.77
<FN>
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included. Total
investment returns are based on changes in net asset values for the
periods shown, and assume reinvestment of all dividends and capital
gains distributions at net asset value on the ex-dividend date. The
Fund's ten year/inception dates are: Class A Shares, 10/26/88; Class
B Shares, ten years ended 7/31/98; and Class C and Class D Shares,
10/21/94.
</TABLE>
PORTFOLIO INFORMATION
As of July 31, 1998
Percent of
Ten Largest Equity Holdings Net Assets
Telecom Italia S.p.A. 4.8%
Elf Aquitaine S.A. 3.0
Volkswagen AG 2.4
MontEdison S.p.A. 2.4
Koninklijke KNP BT N.V. 2.2
Societe EuraFrance S.A. 2.2
Thyssen AG 2.1
National Westminster Bank PLC 2.1
Hoechst AG 2.0
Philips Electronics N.V. 1.9
Percent of
Ten Largest Industries Net Assets
Chemicals 7.6%
Banking 7.4
Paper & Forest Products 6.0
Telecommunications 5.3
Financial Services 4.2
Diversified Holdings 4.0
Automobiles 3.4
Energy 3.0
Electrical Equipment 2.9
Insurance 2.7
Equity Portfolio Changes for the
Quarter Ended July 31, 1998
Additions
*BTR PLC (Class B)
Banque Cantonale de Geneve
(BCG)
Deutsche Bank AG
Dresdner Bank AG
Fresenius AG (Preferred)
Jarvis PLC
Jungheinrich AG (Preferred)
Mol Magyar Olay-es Gazipari
Reszvenytarsasag (GDR)
Roche Holding AG
Royal & Sun Alliance
Insurance Group PLC
Royal Dutch Petroleum
Company
Shell Transport & Trading
Co. (The)
Siemens AG
Softbank S.A. (GDR)
*TNT Post Group N.V.
Veba AG
Volvo AB (B Shares)
Deletions
Accor S.A.
*BTR PLC (Class B)
Energy Group PLC
Euronet Services, Inc.
Fairey Group PLC
General Electric Company PLC
Matthew Clark PLC
NBM-Amstelland N.V.
Oerlikon-Buehrle Holding AG
Pliva D.D. (GDR)
Polifarb Wroclaw S.A.
Romanian Growth Fund
Royal PTT Nederland N.V.
SKB Banka (GDR)
*TNT Post Group N.V.
Unilever PLC
Volker Wessels Stevin N.V.
Zagrebacka Banka D.D. (GDR)
[FN]
*Added and deleted in the same quarter.
Merrill Lynch EuroFund
July 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
Shares Percent of
Industries Held Investments Cost Value Net Assets
Finland
<S> <C> <S> <C> <C> <C>
Metals & Mining 990,307 Outokumpu OY $ 14,892,711 $ 11,176,660 0.5%
Paper & Forest 1,642,749 Enso-Gutzeit OY 'R' (Ordinary)(Registered) 14,186,732 15,835,117 0.7
Products 2,266,341 Metsa Serla OY (Class B) 17,992,809 18,659,397 0.8
790,706 UPM-Kymmene Corp. 17,268,069 20,188,612 0.9
-------------- -------------- ------
49,447,610 54,683,126 2.4
Total Investments in Finland 64,340,321 65,859,786 2.9
France
Automobiles & 64,451 Peugeot S.A. 7,767,416 12,732,396 0.6
Equipment
Banking 140,413 Banque Nationale de Paris 6,207,685 13,021,699 0.6
55,740 Societe Generale de France S.A. 6,187,629 13,423,217 0.6
-------------- -------------- ------
12,395,314 26,444,916 1.2
Communication 36,295 Alcatel Alsthom Cie Generale
Equipment d'Electricite S.A. 4,175,140 7,212,741 0.3
Construction 141,380 Bouygues S.A. 12,740,403 28,214,355 1.3
Electronics 133,159 SGS-Thomson Microelectronics N.V. 7,698,605 8,715,740 0.4
Energy 524,484 Elf Aquitaine S.A. 65,253,992 67,990,295 3.0
Financial Services 150,200 Compagnie Financiere de Paribas S.A. 8,164,002 16,498,575 0.7
84,535 Societe EuraFrance S.A. 28,905,970 49,192,764 2.2
-------------- -------------- ------
37,069,972 65,691,339 2.9
Insurance 189,445 AXA-UAP 12,082,265 25,956,157 1.2
Machinery 177,431 Compagnie de Fives-Lille S.A. 9,488,305 13,657,694 0.6
Metals & Steel 1,756,676 Usinor-Sacilor 27,910,057 24,539,848 1.1
Total Investments in France 196,581,469 281,155,481 12.6
Germany
Automobiles 217,559 Daimler-Benz AG 15,043,924 22,263,568 1.0
604,010 Volkswagen AG 30,977,352 54,372,787 2.4
-------------- -------------- ------
46,021,276 76,636,355 3.4
Banking 148,248 Commerzbank AG 5,388,529 5,626,505 0.3
549,701 Deutsche Bank AG 45,468,854 43,271,375 1.9
176,601 Dresdner Bank AG 10,238,267 10,773,803 0.5
-------------- -------------- ------
61,095,650 59,671,683 2.7
</TABLE>
Merrill Lynch EuroFund
July 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Shares Percent of
Industries Held Investments Cost Value Net Assets
Germany (concluded)
<S> <C> <S> <C> <C> <C>
Chemicals 458,077 BASF AG $ 17,918,780 $ 21,055,831 0.9%
907,829 Bayer AG 35,814,480 41,193,028 1.8
77,016 Henkel KGaA 3,295,326 6,105,851 0.3
244,311 Henkel KGaA (Preferred) 10,378,328 22,391,168 1.0
988,278 Hoechst AG 36,885,114 44,009,906 2.0
-------------- -------------- ------
104,292,028 134,755,784 6.0
Construction 33,402 Philipp Holzmann AG 12,511,136 7,099,216 0.3
Electrical Equipment 196,075 Siemens AG 13,491,655 14,563,681 0.7
Engineering 321,783 Kloeckner Werke AG 14,985,368 24,154,080 1.1
Machinery & 21,757 Jungheinrich AG (Preferred) 4,412,664 3,988,070 0.2
Equipment
Medical Equipment 31,735 Fresenius AG (Preferred) 6,477,378 5,602,918 0.3
Mining 201,207 Thyssen AG 43,437,931 48,024,949 2.1
Oil--International 168,676 RWE AG 9,073,103 9,152,226 0.4
Retail Trade 31,732 Karstadt AG 11,171,623 14,906,992 0.7
55,190 Moebel Walther AG (Preferred) 2,067,520 2,311,867 0.1
13,239,143 17,218,859 0.8
-------------- -------------- ------
Utilities 625,206 Veba AG 41,690,089 36,911,234 1.6
Total Investments in Germany 370,727,421 437,779,055 19.6
Hungary
Oil & Gas Producers 345,780 Mol Magyar Olay-es Gazipari
Reszvenytarsasag (GDR)* 9,362,993 10,598,157 0.5
Total Investments in Hungary 9,362,993 10,598,157 0.5
Ireland
Building & 686,394 CRH PLC 7,454,519 9,115,470 0.4
Construction
Food 693,901 Greencore Group PLC 3,481,856 3,292,144 0.2
Total Investments in Ireland 10,936,375 12,407,614 0.6
Italy
Diversified Holdings 42,118,867 MontEdison S.p.A. 33,930,370 53,512,462 2.4
Telecommunications 18,332,698 Telecom Italia S.p.A. 83,173,608 108,155,816 4.8
Total Investments in Italy 117,103,978 161,668,278 7.2
</TABLE>
Merrill Lynch EuroFund
July 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Shares Percent of
Industries Held Investments Cost Value Net Assets
Netherlands
<S> <C> <S> <C> <C> <C>
Chemicals 532,560 Akzo Nobel $ 16,709,629 $ 27,137,830 1.2%
310,870 European Vinyls Corporation
International N.V. 11,599,987 4,619,030 0.2
-------------- -------------- ------
28,309,616 31,756,860 1.4
Diversified Holdings 285,466 Internatio-Mueller N.V. 7,753,277 8,184,232 0.4
Electrical Equipment 534,440 Philips Electronics N.V. 24,896,538 43,302,004 1.9
113,948 Twentsche Kabel Holding N.V. 4,695,441 4,459,971 0.2
-------------- -------------- ------
29,591,979 47,761,975 2.1
Financial Services 376,515 ING Groep N.V. 15,464,692 28,478,922 1.3
Oil 130,161 Royal Dutch Petroleum Company 6,917,037 6,645,635 0.3
Paper & Forest 2,075,564 Koninklijke KNP BT N.V. 46,927,579 50,502,355 2.2
Products
Steel 174,270 Ispat International N.V. 4,720,005 2,763,156 0.1
894,058 Ispat International N.V.
(NY Registered Shares) 17,921,432 13,522,627 0.6
-------------- -------------- ------
22,641,437 16,285,783 0.7
Transport Services 117,568 Koninklijke Pakhoed N.V. 4,561,548 3,581,674 0.2
Total Investments in the Netherlands 162,167,165 193,197,436 8.6
Norway
Computer Software 829,567 Merkantildata ASA 4,132,939 11,044,775 0.5
Oil & Gas Producers 786,098 Saga Petroleum ASA (Class B) 10,970,845 10,413,963 0.5
Publishing 262,196 Schibsted ASA 5,407,096 4,446,061 0.2
Total Investments in Norway 20,510,880 25,904,799 1.2
Poland
Banking 27,824 Softbank S.A. (GDR)* 512,309 512,309 0.0
Electrical Equipment 378,031 Bydgoska Fabryka Kabli S.A. 1,130,489 1,904,743 0.1
Plastics 43,130 Zaklady Lentex S.A. 422,034 339,161 0.0
Total Investments in Poland 2,064,832 2,756,213 0.1
Slovakia
Metals & Mining 121,700 Zavod SNP 1,835,272 354,228 0.0
Pharmaceuticals 21,349 Slovakofarma 1,652,618 1,562,722 0.1
Total Investments in Slovakia 3,487,890 1,916,950 0.1
</TABLE>
Merrill Lynch EuroFund
July 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Shares Percent of
Industries Held Investments Cost Value Net Assets
Spain
<S> <C> <S> <C> <C> <C>
Utilities--Electric 1,717,238 Endesa S.A. $ 34,244,143 $ 37,870,215 1.7%
Total Investments in Spain 34,244,143 37,870,215 1.7
Sweden
Appliances 1,581,170 Electrolux AB 16,817,344 25,332,230 1.1
Automotive & 549,126 Volvo AB (B Shares) 17,376,361 17,006,488 0.8
Equipment
Engineering 127,619 SKF AB (Class A) 2,229,577 1,996,311 0.1
189,250 Svedala Industry AB 2,485,262 4,058,597 0.2
-------------- -------------- ------
4,714,839 6,054,908 0.3
Insurance 1,144,073 Skandia Forsakrings AB 6,513,023 19,628,350 0.9
Metals & Steel 1,258,445 Avesta-Sheffield AB 10,665,001 5,461,146 0.2
Paper & Forest 510,201 Mo och Domsjo AB (Class B) 12,808,027 13,677,017 0.6
Products 6,095,550 Rottneros Bruks AB 8,904,861 4,037,043 0.2
1,005,923 Stora Kopparbergs AB 12,861,379 14,085,714 0.6
-------------- -------------- ------
34,574,267 31,799,774 1.4
Total Investments in Sweden 90,660,835 105,282,896 4.7
Switzerland
Banking 27,803 Banque Cantonale de Geneve (BCG) 9,263,274 8,895,541 0.4
Consumer Products 44,461 Societe Suisse pour la Microelectronique et
l'Horlogerie AG (Registered) 6,244,014 7,552,966 0.3
Drugs 11,331 Novartis AG (Registered) 17,641,064 19,127,197 0.9
Pharmaceuticals 1,889 Roche Holding AG 18,021,497 20,357,517 0.9
Total Investments in Switzerland 51,169,849 55,933,221 2.5
Turkey
Appliances 2,803,564 Ardem Pisirici Ve Isitici Cihazlar Sanayii A.S. 116,560 142,195 0.0
Total Investments in Turkey 116,560 142,195 0.0
</TABLE>
Merrill Lynch EuroFund
July 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Shares Percent of
Industries Held Investments Cost Value Net Assets
United Kingdom
<S> <C> <S> <C> <C> <C>
Automobiles & 4,695,205 LucasVarity PLC $ 15,057,063 $ 16,438,101 0.7%
Equipment
Banking 932,381 HSBC Holdings PLC 28,260,928 23,231,466 1.0
2,697,796 National Westminster Bank PLC 43,567,158 46,784,099 2.1
-------------- -------------- ------
71,828,086 70,015,565 3.1
Beverages 2,036,419 Allied Domecq PLC 15,293,731 18,656,856 0.9
856,906 Bass PLC (Ordinary) 12,693,421 13,920,849 0.6
-------------- -------------- ------
27,987,152 32,577,705 1.5
Building & 955,533 Jarvis PLC 11,336,396 10,161,138 0.5
Construction
Chemicals 1,495,500 Inspec Group PLC 6,707,529 5,382,604 0.2
Computer/ 79,511 Misys PLC 1,555,042 3,804,840 0.2
Commercial/Office
Diversified Holdings 10,877,952 BTR PLC 42,850,167 27,406,347 1.2
Food 1,825,174 Safeway PLC 10,383,035 10,779,405 0.5
Insurance 1,268,064 Royal & Sun Alliance Insurance Group PLC 13,534,526 13,816,521 0.6
Metals 1,000,326 Johnson Matthey PLC 9,572,778 7,094,372 0.3
Metals & Mining 858,187 Rio Tinto PLC (Registered) 13,701,314 9,659,478 0.4
Oil--Related 649,357 Expro International Group PLC 5,177,253 5,322,364 0.2
216,937 Shell Transport & Trading Company (The) 1,484,491 1,391,243 0.1
-------------- -------------- ------
6,661,744 6,713,607 0.3
Pharmaceuticals 955,560 SmithKline Beecham PLC 10,734,411 11,115,036 0.5
Retail 1,081,634 J. Sainsbury PLC 7,969,414 9,520,196 0.4
Steel 4,364,523 British Steel PLC 9,051,465 8,979,002 0.4
Telecommunications 797,631 Cable & Wireless PLC 6,266,983 10,295,853 0.5
Tobacco 2,976,639 B.A.T. Industries PLC 25,342,446 32,919,722 1.5
Utilities--Electric, 458,350 Anglian Water PLC 4,170,424 6,486,294 0.3
Gas & Water 450,247 United Utilities PLC 4,108,789 6,566,825 0.3
-------------- -------------- ------
8,279,213 13,053,119 0.6
Total Investments in the United Kingdom 298,818,764 299,732,611 13.4
</TABLE>
Merrill Lynch EuroFund
July 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
Face Percent of
Amount Short-Term Securities Cost Value Net Assets
<S> <C> <S> <C> <C> <C>
Repurchase US$ 25,538,000 SBC Warburg Dillion Read, Inc.,
Agreements** purchased on 7/31/1998 to yield
5.58% to 8/03/1998 $ 25,538,000 $ 25,538,000 1.1%
Total Investments in Short-Term Securities 25,538,000 25,538,000 1.1
Total Investments $1,457,831,475 1,717,742,907 76.8
==============
Foreign Time Deposits++ 768,492,633 34.4
Variation Margin on Financial Futures Contracts++++ 219,314 0.0
Liabilities in Excess of Other Assets (249,470,100) (11.2)
-------------- ------
Net Assets $2,236,984,754 100.0%
============== ======
Net Asset Class A-- Based on net assets of $880,815,406 and
Value: 45,628,034 shares outstanding $ 19.30
==============
Class B-- Based on net assets of $954,729,824 and
54,752,397 shares outstanding $ 17.44
==============
Class C-- Based on net assets of $59,384,089 and
3,434,168 shares outstanding $ 17.29
==============
Class D-- Based on net assets of $342,055,435 and
17,847,214 shares outstanding $ 19.17
==============
<FN>
*Global Depositary Receipts (GDR).
**Repurchase Agreements are fully collateralized by US Government &
Agency Obligations.
++Foreign time deposits bear interest at 3.187%, 3.187% and 3.312%
and mature on 8/01/1998, 8/04/1998, and 8/05/1998, respectively.
++++Financial futures contracts sold as of July 31, 1998 were as follows:
Number of Expiration
Contracts Issue Exchange Date Value
203 DAX Index DTB September 1998 $ 67,194,883
-------------
Total Financial Futures Contracts
Sold (Total Contract Price--$66,353,449) $ 67,194,883
=============
</TABLE>
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
Adrian C. Holmes, Senior Vice President
and Portfolio Manager
Alan J. Albert, Vice President
Donald C. Burke, Vice President
Gerald M. Richard, Treasurer
Philip M. Mandel, Secretary
Custodian
Brown Brothers Harriman & Co.
40 Water Street
Boston, MA 02109
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
