MERRILL LYNCH
EUROFUND
FUND LOGO
Quarterly Report
January 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
<PAGE>
MERRILL LYNCH EUROFUND
PORTFOLIO INFORMATION
Pie graph depicting Portfolio Information As a Percentage of Stocks
As of January 31, 1998
Denmark 0.2%
Ireland 0.9%
Emerging Europe* 1.5%
Switzerland 2.9%
Italy 8.7%
Germany 13.7%
France 19.6%
Netherlands 14.0%
Sweden 5.6%
Finland 4.3%
Norway 1.9%
Spain 1.8%
Portugal 0.5%
United Kingdom 24.4%
[FN]
*Countries include Croatia,
Hungary, Poland, Romania,
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 January 31, 1998 In US
dollars*
Norway -15.0%
Finland - 2.6%
Sweden + 1.1%
Netherlands + 3.4%
France + 9.5%
United Kingdom + 9.5%
Germany +10.9%
Denmark +11.3%
Ireland +12.6%
Switzerland +13.0%
Spain +17.8%
Italy +22.2%
<PAGE>
Source: Financial Times/
Standard & Poor's--
Actuaries Index.
[FN]
*For the three-month period
ended January 31, 1998,
total investment return for
the Financial Times/
Standard & Poor's--
Actuaries Europe Index
was +9.71%.
Merrill Lynch EuroFund
January 31, 1998
DEAR SHAREHOLDER
During the quarter ended January 31, 1998, the unmanaged Financial
Times/Standard and Poor's--Actuaries Europe Index had a total return
of +9.71%, while the total return for the unmanaged Morgan Stanley
Capital International Europe Index was +9.63%. For the same period,
Merrill Lynch EuroFund's Class A, Class B, Class C and Class D
Shares' total returns were +3.61%, +3.31%, +3.29% and +3.50%,
respectively. The Fund's underperformance was attributable to its
defensive cash position, its focus on value stocks and its
underexposure to those areas of the market which experienced or
anticipated significant mergers and acquisitions (principally
financials and pharmaceuticals). (Fund 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 4 to 6 of this report to
shareholders.)
While the European stock markets were very volatile during the
January quarter as expected, their overall strength surprised many
investors. For most of the quarter, in spite of the deteriorating
situation in Asia, significant corporate earnings risk and the
escalating tensions with Iraq, the markets were driven by abundant
liquidity. Investors focused on the benefits of lower bond yields,
lower inflation, more moderate economic growth, stable or falling
interest rates and a strong US dollar. In fact, with the Asian
financial crisis appearing to stabilize, many investors viewed the
scenario positively, with the Asian problems acting as a gentle
brake on a strong US economy.
<PAGE>
Within the markets, there has been a shift in sentiment. Prior to
October 1997, investors were beginning to focus on value stocks as a
result of rising economic growth in most areas of the world. Since
October, investment patterns have swung violently in the other
direction, with investors indiscriminately selling value/economically
sensitive stocks and channelling new investments into defensive
businesses such as pharmaceuticals, utilities and foods, which
were already richly valued before October. Effectively, expensive
stocks have become more expensive and inexpensive stocks
even more inexpensive. Defensive businesses currently have
aggressive valuations, while riskier businesses are valued on
recession ratings.
Ironically, the Asian financial crisis may have positive long-term
implications for economically sensitive stocks. Much of the pressure
on prices of global manufactured goods has been caused by rapid
growth of Asian capacity. Future investment projects are already
being cancelled, and those that proceed will have to do so on a
sound financial and commercial basis. The supply/demand situation
over the next few years could conceivably improve, putting upward
pressure on prices. Although deflationary in the short term, this
episode may well have longer-term inflationary consequences.
The economic growth outlook in Europe has been clouded by
developments in Asia, but as yet there is limited evidence of any
impact. Growth patterns are clearly diverging. In the United
Kingdom, the strength of sterling is impacting exports, and
successive interest rate increases have begun to dampen consumers'
appetites. In Continental Europe, growth continues to broaden. As
export prospects dim, we hope that consumer spending and investment
will accelerate to enable overall real growth to remain at about
2.5%. In peripheral European economies, historically low interest
rates are causing growth to accelerate. If, as expected, interest
rates fall further in preparation for the European Monetary Union,
growth could become uncomfortably strong with little chance of
further fiscal tightening to compensate.
A key feature of the last few months has been a further acceleration
in merger and acquisition activity, principally in the financial and
pharmaceutical sectors. Much of the performance in these sectors has
been driven by merger and acquisition announcements, and most stocks
in these sectors are discounting further activity. While more
corporate activity is likely, there are many speculatively priced
stocks where hopes could be unfulfilled, in our view.
Investment Strategy
As markets rose in the latter part of the year and valuations became
increasingly unattractive, we continued to raise the Fund's cash
level, which stood at 15.8% of net assets at January 31, 1998.
Additionally, the Fund had currency hedges in place in the United
Kingdom and Germany which covered approximately 3% of the Fund's net
assets. With the US dollar having benefited from its safe haven
status and with the US trade deficit likely to deteriorate, we held
the Fund's cash reserves primarily in Deutschemarks.
<PAGE>
Merrill Lynch EuroFund
January 31, 1998
At the geographic level, we made few changes to the Fund's
portfolio. We are currently reviewing the Fund's high exposure to
Italy, since this liquidity-driven market has begun to lose touch
with fundamentals, in our opinion. At the sector level, we further
reduced the Fund's exposure to defensive areas where valuations have
reached levels which we cannot justify regardless of the valuation
approach. At the same time, we began cautiously adding to our value
positions in the belief that as the Asian financial situation
stabilizes, these areas will once again attract investor attention,
with the added comfort that should valuations remain this low,
corporate activity in these sectors is likely to escalate.
In Conclusion
Markets in general have reached new highs, and valuations are very
extended by historical standards. In an ideal investment environment
this could be justified, but given the current uncertainties and
risks we believe that we should follow a cautious strategy.
Therefore, our overall stance is to focus on value situations, avoid
areas of speculative excess and retain an above-average cash
weighting in an attractively valued currency.
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
March 3, 1998
<PAGE>
Merrill Lynch EuroFund
January 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 "Average Annual Total
Return" tables as well as the total returns and cumulative total
returns in the "Performance Summary" tables assume reinvestment of
all dividends and capital gains distributions at net asset value on
the ex-dividend date. Investment return and principal value of
shares will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost. Dividends paid to each class
of shares will vary because of the different levels of account
maintenance, distribution and transfer agency fees applicable to
each class, which are deducted from the income available to be paid
to shareholders.
<PAGE>
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 12/31/97 +24.87% +18.31%
Five Years Ended 12/31/97 +19.39 +18.11
Inception (10/26/88)
through 12/31/97 +13.82 +13.15
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 12/31/97 +23.52% +19.52%
Five Years Ended 12/31/97 +18.16 +18.16
Ten Years Ended 12/31/97 +11.97 +11.97
[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 12/31/97 +23.54% +22.54%
Inception (10/21/94)
through 12/31/97 +17.09 +17.09
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
<PAGE>
% Return Without % Return With
Sales Charge Sales Charge**
Class D Shares*
Year Ended 12/31/97 +24.58% +18.04%
Inception (10/21/94)
through 12/31/97 +18.03 +16.06
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
Merrill Lynch EuroFund
January 31, 1998
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
1996 14.27 14.99 1.725 1.047 +25.26
1997 14.99 15.61 1.834 1.244 +24.87
1/1/98--1/31/98 15.61 15.96 -- -- + 2.24
------ ------
Total $5.305 Total $4.019
Cumulative total return as of 1/31/98: +235.46%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures do not include sales charge; results would be lower if
sales charge was included.
</TABLE>
<PAGE>
<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
1996 13.36 13.85 1.725 0.886 +24.00
1997 13.85 14.18 1.834 1.068 +23.52
1/1/98--1/31/98 14.18 14.49 -- -- + 2.19
------ ------
Total $6.042 Total $3.622
Cumulative total return as of 1/31/98: +197.65%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures do not reflect deduction of any sales charge; results
would be lower if sales charge was deducted.
</TABLE>
Merrill Lynch EuroFund
January 31, 1998
PERFORMANCE DATA (concluded)
<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
1996 13.35 13.77 1.725 0.940 +23.93
1997 13.77 14.07 1.834 1.081 +23.54
1/1/98--1/31/98 14.07 14.37 -- -- + 2.13
------ ------
Total $5.282 Total $2.981
Cumulative total return as of 1/31/98: +69.05%**
<PAGE>
<FN>
*Figures may include short-term capital gains distributions.
**Figures do not reflect deduction of any sales charge; results
would be lower if sales charge was deducted.
</TABLE>
<TABLE>
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
1996 14.22 14.92 1.725 1.006 +24.90
1997 14.92 15.52 1.834 1.205 +24.58
1/1/98--1/31/98 15.52 15.86 -- -- + 2.19
------ ------
Total $5.282 Total $3.171
Cumulative total return as of 1/31/98: +73.55%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures do not include sales charge; results would be lower if
sales charge was included.
</TABLE>
<TABLE>
Recent Performance Results*
<CAPTION>
12 Month 3 Month
1/31/98 10/31/97 1/31/97 % Change % Change
<S> <C> <C> <C> <C> <C>
ML EuroFund Class A Shares $15.96 $18.47 $15.36 +16.23%(1) -3.34%(1)
ML EuroFund Class B Shares 14.49 16.92 14.18 +15.51(1) -3.19(1)
ML EuroFund Class C Shares 14.37 16.82 14.10 +15.32(1) -3.33(1)
ML EuroFund Class D Shares 15.86 18.35 15.29 +16.10(1) -3.26(1)
ML EuroFund Class A Shares--Total Return +24.59(2) +3.61(2)
ML EuroFund Class B Shares--Total Return +23.27(3) +3.31(3)
ML EuroFund Class C Shares--Total Return +23.22(4) +3.29(4)
ML EuroFund Class D Shares--Total Return +24.22(5) +3.50(5)
<FN>
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included.
(1)Percent change includes reinvestment of $1.834 per share capital
gains distributions.
(2)Percent change includes reinvestment of $1.243 per share ordinary
income dividends and $1.834 per share capital gains distributions.
(3)Percent change includes reinvestment of $1.067 per share ordinary
income dividends and $1.834 per share capital gains distributions.
(4)Percent change includes reinvestment of $1.080 per share ordinary
income dividends and $1.834 per share capital gains distributions.
(5)Percent change includes reinvestment of $1.204 per share ordinary
income dividends and $1.834 per share capital gains distributions.
</TABLE>
<PAGE>
Merrill Lynch EuroFund
January 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
Shares Percent of
Industries Held Investments Cost Value Net Assets
Croatia
<S> <C> <S> <C> <C> <C>
Banking 90,000 Zagrebacka Banka D.D. (GDR)* $ 1,234,184 $ 2,711,250 0.2%
Pharmaceuticals 237,492 Pliva D.D. (GDR)* 2,053,449 3,799,872 0.2
Total Investments in Croatia 3,287,633 6,511,122 0.4
Denmark
Textiles 54,618 Carli Gry International A/S 1,634,028 3,203,517 0.2
Total Investments in Denmark 1,634,028 3,203,517 0.2
Finland
Food 73,092 Huhtamaki 'I' Group 3,284,993 3,231,147 0.2
Metals & Mining 637,680 Outokumpu OY 9,746,544 7,516,472 0.5
Paper & Forest 994,749 Enso-Gutzeit OY 'R' (Ordinary)
Products (Registered) 7,886,415 8,080,237 0.5
1,959,500 Metsa Serla OY (Class B) 14,945,500 14,678,830 1.0
642,706 UPM-Kymmene Corp. 13,246,254 14,153,709 0.9
-------------- -------------- ------
36,078,169 36,912,776 2.4
Telecommunications 113,936 Nokia Oyj (Class A) 7,780,615 8,987,533 0.6
Total Investments in Finland 56,890,321 56,647,928 3.7
France
Automobiles & 117,405 Peugeot S.A. 13,621,767 15,388,591 1.0
Equipment 67,084 Sommer-Allibert S.A. 1,992,759 2,280,243 0.1
-------------- -------------- ------
15,614,526 17,668,834 1.1
<PAGE>
Banking 215,431 Banque Nationale de Paris 9,524,245 11,119,246 0.7
132,740 Societe Generale de France S.A. 14,428,676 17,225,471 1.1
-------------- -------------- ------
23,952,921 28,344,717 1.8
Communication 202,514 Alcatel Alsthom Cie Generale
Equipment d'Electricite S.A. 19,117,289 26,841,194 1.7
Construction 211,631 Bouygues S.A. 19,941,371 26,911,017 1.7
Electronics 81,312 SGS-Thomson Microelectronics N.V. 3,745,574 5,566,174 0.4
Energy 205,252 Elf Aquitaine S.A. 22,846,684 23,155,263 1.5
Financial Services 150,200 Compagnie Financiere de Paribas S.A. 8,164,002 13,418,585 0.9
56,862 Societe EuraFrance S.A. 17,514,553 22,896,827 1.5
-------------- -------------- ------
25,678,555 36,315,412 2.4
Hotels 50,674 Accor S.A. 7,100,272 9,962,968 0.6
Insurance 447,410 Assurances Generales de France (AGF) 14,225,334 23,391,651 1.5
337,791 AXA-UAP 21,157,910 28,029,935 1.8
-------------- -------------- ------
35,383,244 51,421,586 3.3
</TABLE>
Merrill Lynch EuroFund
January 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Shares Percent of
Industries Held Investments Cost Value Net Assets
France (concluded)
<S> <C> <S> <C> <C> <C>
Machinery 177,431 Compagnie de Fives-Lille S.A. $ 9,488,305 $ 10,644,703 0.7%
Metals & Steel 1,460,786 Usinor-Sacilor 23,001,506 20,051,872 1.3
Total Investments in France 205,870,247 256,883,740 16.5
<PAGE>
Germany
Automobiles 197,781 Daimler-Benz AG 13,452,925 13,855,478 0.9
47,638 Volkswagen AG 22,283,651 27,489,469 1.8
-------------- -------------- ------
35,736,576 41,344,947 2.7
Chemicals 234,870 BASF AG 8,019,324 7,950,927 0.5
445,345 Bayer AG 16,266,592 16,718,689 1.1
77,016 Henkel KGaA 3,295,326 3,998,098 0.2
387,409 Henkel KGaA (Preferred) 16,360,407 23,075,181 1.5
229,224 Hoechst AG 7,590,623 8,054,155 0.5
-------------- -------------- ------
51,532,272 59,797,050 3.8
Construction 33,402 Philipp Holzmann AG 12,511,136 7,300,984 0.5
Engineering 321,783 Kloeckner Werke AG 14,985,368 20,696,098 1.3
Mining 181,069 Thyssen AG 39,083,719 37,925,545 2.4
Retail Trade 31,732 Karstadt AG 11,171,623 10,698,713 0.7
55,190 Moebel Walther AG (Preferred) 2,067,520 1,806,492 0.1
-------------- -------------- ------
13,239,143 12,505,205 0.8
Total Investments in Germany 167,088,214 179,569,829 11.5
Hungary
Financial Services 75,000 Euronet Services, Inc. 1,038,281 806,250 0.1
Total Investments in Hungary 1,038,281 806,250 0.1
Ireland
Building & 686,394 CRH PLC 7,454,519 8,098,711 0.5
Construction
Food 693,901 Greencore Group PLC 3,481,856 3,537,996 0.3
Total Investments in Ireland 10,936,375 11,636,707 0.8
Italy
Construction/ 771,200 Italcementi S.p.A 5,174,183 5,895,502 0.4
Building Materials
Diversified Holdings 45,173,130 MontEdison S.p.A. 37,082,335 43,141,190 2.8
Telecommunications 13,030,022 Telecom Italia S.p.A. 42,156,331 64,457,177 4.1
Total Investments in Italy 84,412,849 113,493,869 7.3
</TABLE>
<PAGE>
Merrill Lynch EuroFund
January 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 133,140 Akzo Nobel $ 16,709,629 $ 24,102,764 1.5%
310,870 European Vinyls Corporation
International N.V. 11,599,987 5,579,525 0.4
-------------- -------------- ------
28,309,616 29,682,289 1.9
Construction 160,201 NBM-Amstelland N.V. 4,257,207 4,056,508 0.3
112,725 Volker Wessels Stevin N.V. 2,455,437 3,625,354 0.2
-------------- -------------- ------
6,712,644 7,681,862 0.5
Diversified Holdings 169,026 Internatio-Mueller N.V. 3,606,779 5,165,480 0.3
Electrical Equipment 534,440 Philips Electronics N.V. 24,896,538 36,087,338 2.3
113,948 Twentsche Kabel Holding N.V. 4,695,441 5,499,794 0.4
-------------- -------------- ------
29,591,979 41,587,132 2.7
Financial Services 376,515 ING Groep N.V. 15,464,692 17,241,337 1.1
Paper & Forest 1,745,948 Koninklijke KNP BT N.V. 37,897,195 43,871,019 2.8
Products
Steel 174,270 Ispat International N.V. 4,720,005 3,770,285 0.3
311,726 Ispat International N.V.
(NY Registered Shares) 7,365,895 6,741,075 0.4
-------------- -------------- ------
12,085,900 10,511,360 0.7
Telecommunications 545,294 Royal PTT Nederland N.V. 19,395,059 23,568,128 1.5
Transport Services 117,568 Koninklijke Pakhoed N.V. 4,561,548 3,621,425 0.3
Total Investments in the Netherlands 157,625,412 182,930,032 11.8
Norway
<PAGE>
Computer Software 213,154 Merkantildata ASA 5,038,539 8,350,380 0.5
Oil & Gas Producers 786,098 Saga Petroleum A.S. (Class B) 10,970,845 12,287,156 0.8
Publishing 262,196 Schibsted ASA 5,407,096 4,288,487 0.3
Total Investments in Norway 21,416,480 24,926,023 1.6
Poland
Chemicals 387,805 Polifarb Wroclaw S.A. 991,199 1,500,403 0.1
Electrical Equipment 598,719 Bydgoska Fabryka Kabli S.A. 1,787,466 4,345,405 0.2
Plastics 70,000 Zaklady Lentex S.A. 684,961 968,653 0.1
Total Investments in Poland 3,463,626 6,814,461 0.4
Portugal
Construction/ 225,000 Cimpor-Cimentos de Portugal S.A. 4,581,513 6,198,943 0.4
Building Materials
Total Investments in Portugal 4,581,513 6,198,943 0.4
</TABLE>
Merrill Lynch EuroFund
January 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Shares Percent of
Industries Held Investments Cost Value Net Assets
Romania
<S> <C> <S> <C> <C> <C>
Investments 135,000 Romanian Growth Fund $ 1,390,500 $ 675,000 0.0%
Total Investments in Romania 1,390,500 675,000 0.0
Slovakia
Banking 17,853 SKB Banka (GDR)* 601,707 316,891 0.0
Metals & Mining 121,700 Zavod SNP 1,835,272 651,150 0.1
Pharmaceuticals 29,167 Slovakofarma 2,128,863 3,075,139 0.2
Total Investments in Slovakia 4,565,842 4,043,180 0.3
<PAGE>
Spain
Utilities--Electric 1,229,684 Endesa S.A. 20,903,532 23,724,062 1.5
Total Investments in Spain 20,903,532 23,724,062 1.5
Sweden
Appliances 237,683 Electrolux AB 10,316,447 17,323,663 1.1
Engineering 127,619 SKF AB (Class A) 2,229,577 2,486,718 0.2
189,250 Svedala Industry AB 2,485,262 3,127,482 0.2
-------------- -------------- ------
4,714,839 5,614,200 0.4
Insurance 310,132 Skandia Forsakrings AB 8,582,737 16,178,605 1.0
Metals & Steel 1,258,445 Avesta-Sheffield AB 10,665,001 7,837,539 0.5
Paper & Forest 410,201 Mo och Domsjo AB (Class B) 9,851,669 10,699,444 0.7
Products 6,095,550 Rottneros Bruks AB 8,904,861 4,548,020 0.3
877,923 Stora Kopparbergs AB 10,866,214 11,097,737 0.7
-------------- -------------- ------
29,622,744 26,345,201 1.7
Total Investments in Sweden 63,901,768 73,299,208 4.7
Switzerland
Banking 37,333 Credit Suisse Group (Registered) 3,752,564 5,941,407 0.4
Consumer Products 44,461 Societe Suisse pour la
Microelectronique et
l'Horlogerie AG (Registered) 6,244,014 5,714,781 0.4
Diversified Holdings 108,734 Oerlikon-Buehrle Holding AG 11,225,019 16,697,753 1.1
Machinery 10,515 Saurer AG (Registered) 5,184,656 8,692,552 0.5
Retail 2,572 Fotolabo S.A. 1,070,748 725,561 0.0
Total Investments in Switzerland 27,477,001 37,772,054 2.4
</TABLE>
Merrill Lynch EuroFund
January 31, 1998
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Shares Percent of
Industries Held Investments Cost Value Net Assets
Turkey
<S> <C> <S> <C> <C> <C>
Appliances 17,564,000 Ardem Pisirici Ve Isitici
Cihazlar Sanayii A.S. $ 2,067,213 $ 1,546,693 0.1%
Total Investments in Turkey 2,067,213 1,546,693 0.1
United Kingdom
Airlines 942,788 British Airways PLC 7,966,834 7,934,626 0.5
Automobiles & 5,259,274 LucasVarity PLC 16,920,886 17,791,040 1.1
Equipment
Banking 1,561,595 National Westminster Bank PLC 19,323,886 27,943,946 1.8
Beverages 1,741,419 Allied Domecq PLC 12,326,687 15,566,673 1.0
854,926 Bass PLC 11,136,382 13,552,065 0.9
617,140 Matthew Clark PLC 6,049,421 1,643,904 0.1
-------------- -------------- ------
29,512,490 30,762,642 2.0
Chemicals 940,697 Imperial Chemical Industries PLC 14,405,860 14,427,439 0.9
1,495,500 Inspec Group PLC 6,707,529 5,181,166 0.3
-------------- -------------- ------
21,113,389 19,608,605 1.2
Computer/ 189,231 Misys PLC 3,506,785 7,220,784 0.5
Commercial/Office
Diversified Holdings 10,488,189 BTR PLC 36,158,111 28,109,269 1.8
Electronics 466,294 Fairey Group PLC 3,936,939 3,581,483 0.2
2,162,162 General Electric Company PLC 14,158,564 13,532,942 0.9
-------------- -------------- ------
18,095,503 17,114,425 1.1
Financial Services 932,381 HSBC Holdings PLC 28,260,928 24,379,152 1.6
Food 1,404,882 Safeway PLC 7,830,588 8,816,095 0.6
Food & Beverage 3,609,169 Unilever PLC 19,516,576 28,414,116 1.8
<PAGE>
Metals 580,189 Johnson Matthey PLC 5,297,007 4,863,983 0.3
Metals & Mining 858,187 Rio Tinto PLC (Registered) 13,701,314 10,967,153 0.7
Oil--Related 541,998 Expro International Group PLC 4,287,214 4,561,526 0.3
Retail 1,082,901 W.H. Smith Group PLC 6,617,463 7,883,910 0.5
Steel 3,664,523 British Steel PLC 7,541,936 7,904,904 0.5
Telecommunications 1,730,855 Cable & Wireless PLC 12,596,679 16,462,238 1.1
Tobacco 2,976,639 B.A.T. Industries PLC 25,342,446 27,143,483 1.7
Utilities-- 458,350 Anglian Water PLC 4,170,424 6,396,764 0.4
Electric, Gas & 752,544 Energy Group PLC 7,984,002 9,242,003 0.6
Water 450,247 United Utilities PLC 4,108,789 6,022,471 0.4
16,263,215 21,661,238 1.4
-------------- -------------- ------
Total Investments in the
United Kingdom 299,853,250 319,543,135 20.5
</TABLE>
Merrill Lynch EuroFund
January 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$ 24,994,000 SBC Warburg Dillon Read, Inc.,
Agreements** purchased on 1/30/1998 to
yield 5.55% to 2/02/1998 $ 24,994,000 $ 24,994,000 1.6%
Total Investments in
Short-Term Securities 24,994,000 24,994,000 1.6
Total Investments $1,163,398,085 1,335,219,753 85.8
==============
Foreign Time Deposits++ 413,653,498 26.6
Variation Margin on Financial Futures Contracts++++ (1,168,364) (0.1)
Liabilities in Excess of Other Assets (191,637,112) (12.3)
-------------- ------
Net Assets $1,556,067,775 100.0%
============== ======
<PAGE>
Net Asset Class A--Based on net assets of $587,746,819 and
Value: 36,827,838 shares outstanding $ 15.96
==============
Class B--Based on net assets of $763,907,947 and
52,723,515 shares outstanding $ 14.49
==============
Class C--Based on net assets of $24,423,180 and
1,699,707 shares outstanding $ 14.37
==============
Class D--Based on net assets of $179,989,829 and
11,345,322 shares outstanding $ 15.86
==============
<FN>
*Global Depositary Receipts (GDR).
**Repurchase Agreements are fully collateralized by US Government &
Agency Obligations.
++Foreign time deposits bear interest at 3.50% and 3.25% with each
maturing on 2/02/1998 and 2/03/1998, respectively.
++++Financial futures contracts sold as of January 31, 1998 were as follows:
Number of Expiration
Contracts Issue Exchange Date Value
134 DAX Index DTB March 1998 $ 32,643,279
70 FTSE 100 LIFFE March 1998 15,606,201
------------
Total Financial Futures Contracts
Sold (Total Contract Price--$45,807,373) $ 48,249,480
============
</TABLE>
Merrill Lynch EuroFund
January 31, 1998
PORTFOLIO INFORMATION
As of January 31, 1998
Percent of
Ten Largest Equity Holdings Net Assets
Telecom Italia S.p.A. 4.1%
Koninklijke KNP BT N.V. 2.8
MontEdison S.p.A. 2.8
Thyssen AG 2.4
Philips Electronics N.V. 2.3
Unilever PLC 1.8
BRTPLC 1.8
AXA-UAP 1.8
National Westminster Bank PLC 1.8
Volkswagen AG 1.8
<PAGE>
Percent of
Ten Largest Industries Net Assets
Telecommunications 7.3%
Chemicals 7.0
Paper & Forest Products 6.9
Diversified Holdings 6.0
Financial Services 5.2
Insurance 4.3
Banking 4.2
Electrical Equipment 2.9
Construction 2.7
Automobiles 2.7
Equity Portfolio Changes for the
Quarter Ended January 31, 1998
Additions
British Airways PLC
British Steel PLC
Hoechst AG
Ispat International N.V. (NY Registered Shares)
*Lloyds TSB Group PLC
Nokia Oyj (Class A)
Safeway PLC
Deletions
ABN Amro Holding N.V.
Asda Group PLC
Assicurazioni Generali
British Telecommunications PLC
Cadbury Schweppes PLC
Castorama Dubois Investisse
Christian Dior S.A.
Compagnie Generale des Eaux
Compagnie Industriali Riunite S.p.A. (CIR)
France Telecom S.A.
Gallaher Group PLC
Gedeon Richter (GDR)
Istituto Nazionale delle Assicurazioni (INA)
*Lloyds TSB Group PLC
Muenchener Rueckversicherungs-Gesellschaft AG
Novartis AG (Registered)
Pilkington PLC
Plettac AG
Repsol S.A.
Seat S.p.A.
Severn Trent PLC
South West Water PLC
Tesco PLC
Tupras-Turkiye Petrol Rafinerileri A.S.
VEBA AG
<PAGE>
[FN]
*Added and deleted in the same quarter.
Merrill Lynch EuroFund
January 31, 1998
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
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
