MERRILL LYNCH
EUROFUND
FUND LOGO
Quarterly Report
July 31, 1999
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, 1999
Ireland 1.1%
Spain 1.3%
Switzerland 2.6%
Sweden 7.9%
France 15.2%
United Kingdom 19.5%
Norway 0.7%
Emerging Europe* 1.5%
Finland 4.7%
Italy 7.6%
Netherlands 9.5%
Germany 28.4%
[FN]
*Countries include Hungary, Poland 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, 1999 In US
dollars*
Italy -10.4%
Ireland - 7.6%
Spain - 3.8%
Germany - 3.3%
United Kingdom - 3.3%
Switzerland - 2.5%
Netherlands - 1.8%
Denmark + 2.5%
Norway + 3.0%
France + 3.3%
Sweden +10.2%
Finland +10.4%
Source: Financial Times/Standard & Poor's--Actuaries Index.
[FN]
*For the three-month period ended July 31, 1999, total investment
return for the Financial Times/Standard & Poor's--Actuaries Europe
Index was -1.93%.
Merrill Lynch EuroFund
July 31, 1999
Five-Star Morningstar Overall Rating TM--
International Equity Funds as of 8/31/99
Merrill Lynch EuroFund
Class A & B Shares
Merrill Lynch EuroFund's Class A and Class B Shares received a five-
star overall rating in the Morningstar International Equity Funds
class of 1,001 funds. Morningstar proprietary ratings performances
are as of August 31, 1999. The ratings are subject to change every
month. Past performance is no guarantee of future results.
Morningstar ratings are calculated from the Fund's three-, five-,
and ten-year average annual returns (if applicable) in excess of 90-
day Treasury-bill returns with appropriate fee adjustments and a
risk factor that reflects Fund performance below 90-day Treasury-
bill returns. Merrill Lynch EuroFund's Class A and Class B Shares
received five stars for the three-, five-, and ten-year periods,
respectively, ended August 31, 1999. The top 10% of the funds in a
broad asset class receive five stars, the next 22.5% receive four
stars, the next 35% receive three stars, the next 22.5% receive two
stars, and the bottom 10% receive one star. The Fund's Class A and
Class B Shares were rated against 1,001, 535 and 117 funds in the
Morningstar International Equity Funds class for the three-, five-,
and ten-year periods, respectively.
Ratings are only for the share classes cited; ratings for other
share classes may vary.
DEAR SHAREHOLDER
During the quarter ended July 31, 1999, the unmanaged Financial
Times/Standard & Poor's--Actuaries Europe Index had a total return
of -1.93%, while the total return for the unmanaged Morgan Stanley
Capital International Europe Index was -2.30%. For the same period,
Merrill Lynch EuroFund's Class A, Class B, Class C and Class D
Shares had total returns of +1.65%, +1.40%, +1.43% and +1.61%,
respectively, substantially outperforming the indexes. The Fund's
performance also was significantly better than the Lipper European
Region Funds Average, which had a -0.42% return for the three months
ended July 31, 1999.
The Fund's returns have not been achieved at the expense of higher
risk. As of August 31, 1999, the Fund's Class A and Class B Shares
achieved a Morningstar Overall Ratingtm of five stars, as outlined
below. (Fund results 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.)
Investment Environment
Global stock markets moved up during the July quarter, as more data
confirmed that global economic growth is improving, especially in
Asia. The first interest rate rise in the United States did not
affect stock markets very much, although the long-term bond yields
stayed at around the 6% level. In the United Kingdom as well as in
Continental European countries, liquidity and record-breaking merger
and acquisition activity helped the stock markets remain at
relatively high levels.
Although there are no dangerous signs of higher inflation yet, long-
term yields in Europe rose sharply in July after the German Business
Climate Index reported increased business confidence in Europe and a
further rise in oil and commodities prices. In addition, the
European Central Bank changed its stance from lower interest rates
to an expectation of flat/rising interest rates. The US dollar
declined in value as a result of this news and created a growing
trade gap in the United States, which we believe is dangerous for
European equities. These developments set back the major European
stock markets in July.
Economic Outlook
The global economic outlook continued to improve during the July
quarter. Strong gross domestic product (GDP) data, combined with an
improving manufacturing trend and a low unemployment rate in the
United States, resulted in the first interest rate hike since the
financial turmoil last year. A stronger-than-expected GDP figure and
a positive surprise in Japanese industrial activity convinced
investors that Japan could be poised for a long-term recovery. This
was also good news for neighboring countries in Asia to continue
their recovery. In Latin America, economic conditions continued to
bottom out. In Europe, the weak euro led to a positive turnaround
for French and German industrial production. Furthermore, the
upswing in construction confidence in Europe and a bottoming-out of
the decline of domestic orders in Italy were all signs of an
economic recovery in the United Kingdom and Europe.
Merrill Lynch EuroFund
July 31, 1999
The impact of a synchronized global inventory build could take real
yields higher than expected, as inventory building is one of the
most important factors for demand for working capital, and the
impact of Year 2000 issues could easily become an aggravating
factor. After Chairman Alan Greenspan's testimony in July it was not
surprising that a further US Federal Reserve Board tightening
occurred at the end of August. Worldwide, first-half corporate
earnings are in line with expectations, but significant upgrades are
only seen in the more economically sensitive sectors.
Current Valuations
Although the global economic outlook is good, the investment
environment has deteriorated during the quarter. In the United
States, markets retreated somewhat during July. However, stock
valuations are overextended on several measures. Historically, a
very good indicator is the market's earnings yield and cash earnings
yield as compared to the ten-year US Treasury bond yield. Therefore,
we expect the US markets to come off their highs significantly.
Market valuations appear unsustainable with further interest rate
increases expected from the US Federal Reserve Board in addition to
no major corporate earnings upgrades.
European equity markets did not seem expensive at the start of the
year. However, after the economic turnaround in Europe and higher
oil prices, bond yields rose significantly and made European stock
markets appear overvalued as well. US interest rates have been
slightly more important than European rates for determining the
direction of European stock markets in recent years. Therefore, we
expect the US and European stock markets to correct in tandem.
On a sector level, valuations of defensive and growth stocks
remained unchanged in recent months, but a sector rotation from
growth into cyclical has closed the valuation gap a little. However,
accelerating GDP growth rates in Europe, rising bond yields and
pricing power from commodity prices combined with an improving
manufacturing trend in the US and Japan supports further
outperformance of cyclical/value stocks, in our opinion.
Investment Strategy
During the July quarter, European stocks were trading higher but
ended the quarter lower, disregarding valuations in absolute terms
and relative to bond yields. These unjustifiable levels resulted in
our raising the Fund's cash position to a greater-than-normal level.
At the currency level, the Fund remained overweighted in the euro
and underweighted in the pound sterling, principally because of the
geographic exposures and the attractiveness of the euro. The Fund is
very underweighted in the UK market and overweighted in Continental
markets, especially Germany.
On a sector basis, we still favor cyclical/value stocks over large
cap/growth stocks. However, we did reduce some cyclical stocks,
which had moved too far too fast, and selectively bought some
defensive/growth stocks in order to seek to reduce portfolio risk.
If current trends of outperformance for cyclical stocks continue,
and growth stocks reach attractive levels, we may consider
reinvesting the Fund's cash and reintroduce more balance into the
portfolio.
In Conclusion
Prospects for European equities remain poor, in our view. Valuations
have discounted much of the good news and with European and US stock
markets at overvalued levels against bond yields, markets are
expected to give back performance. When valuations return to
attractive levels, we will then consider reinvesting the Fund's cash
reserves.
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,
(Terry K. Glenn)
Terry K. Glenn
Executive Vice President
(Adrian C. Holmes)
Adrian C. Holmes
Senior Vice President and Portfolio Manager
September 10, 1999
Merrill Lynch EuroFund
July 31, 1999
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 6/30/99 + 7.18% + 1.55%
Five Years Ended 6/30/99 +19.44 +18.16
Ten Years Ended 6/30/99 +15.24 +14.62
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 6/30/99 + 6.11% + 2.66%
Five Years Ended 6/30/99 +18.22 +18.22
Ten Years Ended 6/30/99 +14.06 +14.06
[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 6/30/99 + 6.10% + 5.24%
Inception (10/21/94)
through 6/30/99 +18.07 +18.07
[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 6/30/99 + 6.94% + 1.32%
Inception (10/21/94)
through 6/30/99 +19.02 +17.66
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
Merrill Lynch EuroFund
July 31, 1999
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 +11.69% +1.65% +287.02%
ML EuroFund Class B Shares +10.49 +1.40 +248.97
ML EuroFund Class C Shares +10.54 +1.43 +124.84
ML EuroFund Class D Shares +11.35 +1.61 +133.57
<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/since inception periods are ten years for Class A &
Class B Shares and from 10/21/94 for Class C & Class D Shares.
</TABLE>
PORTFOLIO INFORMATION
As of July 31, 1999
Percent of
Ten Largest Equity Holdings Net Assets
Telecom Italia SpA 3.8%
Societe Eurafrance SA 2.5
Buhrmann NV 2.4
Bayer AG 2.2
HypoVereinsbank AG 2.1
MontEdison SpA 1.9
Veba AG 1.9
Akzo Nobel NV 1.8
Usinor SA 1.7
Electrolux AB 'B' 1.7
Percent of
Ten Largest Industries Net Assets
Banking 12.1%
Chemicals 7.5
Paper & Forest Products 6.3
Insurance 6.0
Telecommunications 4.8
Mining 4.4
Utilities 3.5
Diversified Holdings 3.3
Retail 2.0
Automobiles & Equipment 1.8
Equity Portfolio Changes for the
Quarter Ended July 31, 1999
Additions
AstraZeneca Group PLC
Cadbury Schweppes PLC
Endesa SA
Nordbanken Holding AB
Northern Rock PLC
*Reed International PLC
Rentokil Initial PLC
*SmithKline Beecham PLC
*Unilever PLC
Deletions
ABB AG (Bearer)
Akbank T.A.S.
BorsodChem Rt. (GDR)
Credit Suisse Group (Registered Shares)
DaimlerChrysler AG
Imperial Chemical Industries PLC
Koninklijke (Royal) Philips Electronics NV
Mannesmann AG
Prudential Corporation PLC
*Reed International PLC
SPT Telecom AS (GDR)
Saga Petroleum ASA
*SmithKline Beecham PLC
*Unilever PLC
[FN]
*Added and deleted in the same quarter.
Merrill Lynch EuroFund
July 31, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
Shares Percent of
Industries Held Investments Cost Value Net Assets
<S> <C> <S> <C> <C> <C>
Finland
Metals & Mining 990,307 Outokumpu Oyj $ 14,892,711 $ 11,342,263 0.6%
Paper & Forest 2,266,341 Metsa-Serla Oyj 'B' 17,992,809 20,571,559 1.2
Products 511,300 Stora Enso Oyj 'A' 4,534,774 6,348,628 0.3
726,769 Stora Enso Oyj 'R' 7,187,246 9,140,719 0.5
453,952 UPM-Kymmene Oyj 9,899,207 15,306,172 0.9
-------------- -------------- ------
39,614,036 51,367,078 2.9
Total Investments in Finland 54,506,747 62,709,341 3.5
France
Automobiles & 85,068 PSA Peugeot Citroen 10,577,623 14,660,143 0.8
Equipment
Banking 260,404 Banque Nationale de Paris (BNP) 15,608,495 21,462,706 1.2
140,888 Compagnie Financiere de Paribas (CFP) 7,754,495 15,985,491 0.9
91,834 Societe Generale 'A' 12,320,300 17,261,324 1.0
-------------- -------------- ------
35,683,290 54,709,521 3.1
Building & 85,241 Compagnie de Saint Gobain 11,929,667 15,465,513 0.9
Construction
Energy 80,506 Elf Aquitaine SA 8,945,139 13,787,780 0.8
Financial Services 73,646 Societe Eurafrance SA 25,838,285 44,539,333 2.5
Machinery 137,845 Compagnie Fives-Lille 7,371,396 10,254,676 0.6
Mining 2,075,312 Usinor SA 30,384,734 31,099,796 1.7
Oil & Related 144,103 Total SA 'B' 14,717,758 18,355,494 1.0
Total Investments in France 145,447,892 202,872,256 11.4
Germany
Automobiles 20,212 Bayerische Motoren Werke (BMW) AG 13,905,830 16,009,844 0.9
254,391 Volkswagen AG 17,107,307 15,194,347 0.9
-------------- -------------- ------
31,013,137 31,204,191 1.8
Banking 148,248 Commerzbank AG 5,388,529 4,919,224 0.3
402,015 Deutsche Bank AG 30,572,005 25,474,758 1.4
176,601 Dresdner Bank AG 10,238,267 7,580,252 0.4
653,210 HypoVereinsbank AG 39,002,548 37,197,226 2.1
-------------- -------------- ------
85,201,349 75,171,460 4.2
Chemicals 253,318 BASF AG 10,927,557 11,469,712 0.6
912,731 Bayer AG 35,386,424 39,138,110 2.2
77,016 Henkel KGaA 3,295,326 4,830,863 0.3
290,660 Henkel KGaA (Preferred) 13,952,609 20,378,521 1.1
588,101 Hoechst AG 23,580,700 24,802,430 1.4
-------------- -------------- ------
87,142,616 100,619,636 5.6
Construction 33,402 Philipp Holzmann AG 12,511,136 6,793,165 0.4
Electrical Equipment 152,265 Siemens AG 9,936,994 12,598,699 0.7
Engineering 321,783 Kloeckner-Werke AG 14,985,368 23,008,360 1.3
</TABLE>
Merrill Lynch EuroFund
July 31, 1999
<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>
Insurance 149,660 Muenchener Rueckversicherungs-
Gesellschaft AG (Registered Shares) $ 29,224,934 $ 28,835,292 1.6%
Machinery & 133,568 Jungheinrich AG (Preferred) 2,708,970 1,901,517 0.1
Equipment
Medical Equipment 43,086 Fresenius AG (Preferred) 8,524,834 8,255,347 0.5
Mining 1,200,095 Thyssen Krupp AG 24,629,646 28,003,881 1.6
Utilities 668,578 RWE AG 32,284,581 28,339,577 1.6
555,137 Veba AG 36,046,725 34,108,150 1.9
-------------- -------------- ------
68,331,306 62,447,727 3.5
Total Investments in Germany 374,210,290 378,839,275 21.3
Hungary
Banking 168,537 OTP Bank Rt. (GDR)(a) 8,888,973 7,457,762 0.4
Oil & Gas Producers 329,741 MOL Magyar Olaj-es Gazipari Rt. (GDR)(a) 8,910,012 8,820,572 0.5
Total Investments in Hungary 17,798,985 16,278,334 0.9
Ireland
Banking 1,331,922 Bank of Ireland 10,180,373 12,546,066 0.7
Food 693,901 Greencore Group PLC 3,481,856 2,079,621 0.1
Total Investments in Ireland 13,662,229 14,625,687 0.8
Italy
Diversified Holdings 21,901,811 MontEdison SpA 33,930,370 34,579,455 1.9
Telecommunications 12,245,239 Telecom Italia SpA 61,690,951 66,847,250 3.8
Total Investments in Italy 95,621,321 101,426,705 5.7
Netherlands
Chemicals 736,470 Akzo Nobel NV 25,151,247 31,493,284 1.8
285,370 European Vinyls Corporation Inter-
national NV 10,474,473 2,138,220 0.1
-------------- -------------- ------
35,625,720 33,631,504 1.9
Diversified Holdings 327,079 Internatio-Muller NV 8,602,626 7,492,255 0.4
Insurance 463,869 ING Groep NV 18,655,960 23,733,913 1.3
Mining 174,270 Ispat International NV 4,720,005 1,986,636 0.1
1,161,001 Ispat International NV (NY
Registered Shares) 19,453,937 13,496,637 0.8
-------------- -------------- ------
24,173,942 15,483,273 0.9
Paper & Forest 2,108,845 Buhrmann NV 44,535,332 42,888,846 2.4
Products
Transport Services 117,568 Koninklijke Pakhoed NV 4,561,548 3,164,996 0.2
Total Investments in the Netherlands 136,155,128 126,394,787 7.1
</TABLE>
Merrill Lynch EuroFund
July 31, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Shares Percent of
Industries Held Investments Cost Value Net Assets
Norway
<S> <C> <S> <C> <C> <C>
Services 1,006,619 Merkantildata ASA $ 6,172,754 $ 9,578,834 0.6%
Total Investments in Norway 6,172,754 9,578,834 0.6
Poland
Banking & Financial 32,410 Bank Handlowy w Warszawie (GDR)(a) 356,510 503,976 0.0
Electrical Equipment 597,678 Bydgoska Fabryka Kabli SA 893,400 1,108,821 0.1
61,405 Elektrim Spolka Akcyjna SA 500,544 804,606 0.0
-------------- -------------- ------
1,393,944 1,913,427 0.1
Total Investments in Poland 1,750,454 2,417,403 0.1
Spain
Telecommunications 569,124 Telefonica SA 7,807,168 9,125,671 0.5
Utilities--Electric 422,858 Endesa SA 8,865,504 8,319,288 0.5
Total Investments in Spain 16,672,672 17,444,959 1.0
Sweden
Appliances 1,467,160 Electrolux AB 'B' 15,797,122 30,554,633 1.7
Automobiles & 549,126 Volvo AB 'B' 17,376,361 17,204,204 1.0
Equipment
Banking 1,567,731 Nordbanken Holding AB 9,947,801 9,248,981 0.5
858,705 Skandinaviska Enskilda Banken (SEB) 'A' 9,357,571 9,911,765 0.6
-------------- -------------- ------
19,305,372 19,160,746 1.1
Engineering 189,250 Svedala Industri AB 2,485,262 3,282,460 0.2
Insurance 645,491 Skandia Forsakrings AB 6,177,855 12,102,463 0.7
Mining 924,002 Avesta Sheffield AB 7,741,629 4,119,467 0.2
Paper & Forest 510,201 Mo och Domsjo AB (MoDo) 'B' 12,808,027 14,333,239 0.8
Products 6,095,550 Rottneros AB 8,904,861 4,616,149 0.2
-------------- -------------- ------
21,712,888 18,949,388 1.0
Total Investments in Sweden 90,596,489 105,373,361 5.9
Switzerland
Banking 27,803 Banque Cantonale de Geneve (BCG) 9,263,274 5,267,132 0.3
Banking & Financial 58,673 UBS AG (Registered Shares) 13,282,049 17,882,832 1.0
Drugs 8,233 Novartis AG (Registered Shares) 12,149,601 11,892,357 0.7
Total Investments in Switzerland 34,694,924 35,042,321 2.0
</TABLE>
Merrill Lynch EuroFund
July 31, 1999
<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>
Banking 84,013,725 Yapi ve Kredi Bankasi AS $ 832,619 $ 1,370,055 0.1%
Total Investments in Turkey 832,619 1,370,055 0.1
United Kingdom
Banking 484,691 Barclays PLC 11,511,879 14,314,185 0.8
782,461 National Westminster Bank PLC 14,128,645 15,451,883 0.9
1,244,164 Northern Rock PLC 8,930,569 8,908,712 0.5
-------------- -------------- ------
34,571,093 38,674,780 2.2
Building & 891,827 Jarvis PLC 10,634,239 4,132,013 0.2
Construction
Diversified 2,509,721 Rentokil Initial PLC 9,093,064 9,757,795 0.6
Companies
Diversified Holdings 3,378,255 Invensys PLC 21,211,380 18,279,062 1.0
Food & Drink 2,036,419 Allied Domecq PLC 15,293,731 18,309,443 1.0
925,199 Bass PLC 13,596,207 13,421,954 0.8
-------------- -------------- ------
28,889,938 31,731,397 1.8
Food & Household 697,351 Cadbury Schweppes PLC 4,473,546 4,439,755 0.3
Products
Healthcare 521,356 AstraZeneca Group PLC 20,893,530 19,391,941 1.1
Insurance 1,123,903 CGU PLC 15,707,578 15,649,113 0.9
3,187,354 Royal & Sun Alliance Insurance Group PLC 32,787,963 26,179,013 1.5
-------------- -------------- ------
48,495,541 41,828,126 2.4
Metals 404,523 Johnson Matthey PLC 4,116,786 3,800,898 0.2
Oil & Related 649,357 Expro International Group PLC 5,177,253 4,039,520 0.2
Pharmaceuticals 790,545 Glaxo Wellcome PLC 23,494,902 20,388,472 1.2
Retail 3,327,059 J Sainsbury PLC 19,926,338 20,346,629 1.1
2,332,866 Safeway PLC 12,415,385 8,692,259 0.5
2,743,493 Tesco PLC 7,336,681 7,211,134 0.4
-------------- -------------- ------
39,678,404 36,250,022 2.0
Steel 1,570,805 British Steel PLC 3,098,577 4,211,485 0.2
Telecommunications 797,631 Cable & Wireless PLC 6,266,983 9,729,982 0.5
Utilities--Electric, 399,277 PowerGen PLC 4,408,462 3,874,504 0.2
Gas, & Water 621,507 Severn Trent PLC 9,258,093 9,177,359 0.5
13,666,555 13,051,863 0.7
Total Investments in the United Kingdom 273,761,791 259,707,111 14.6
</TABLE>
Merrill Lynch EuroFund
July 31, 1999
<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$ 10,793,000 J.P. Morgan Securities Inc., purchased
Agreements* on 7/30/1999 to yield 5% to 8/02/1999 $ 10,793,000 $ 10,793,000 0.6%
Total Investments in Short-Term
Securities 10,793,000 10,793,000 0.6
Nominal Value
Covered by Premiums
Options Purchased Issue Received
<S> <C> <S> <C> <C> <C>
Options 21,897 DJ STOXX 50, expiring October 1999
Purchased at E3910 4,343,296 8,183,101 0.5
Total Options Purchased 4,343,296 8,183,101 0.5
Total Investments $1,277,020,591 1,353,056,530 76.1
==============
Variation Margin on Financial Futures Contracts** 1,433,828 0.1
Foreign Time Deposits*** 692,257,792 38.9
Liabilities in Excess of Other Assets (268,104,629) (15.1)
-------------- ------
Net Assets $1,778,643,521 100.0%
============== ======
Net Asset Class A--Based on net assets of $594,206,428 and 34,536,653
Value: shares outstanding $ 17.21
==============
Class B--Based on net assets of $764,697,957 and 50,443,660
shares outstanding $ 15.16
==============
Class C--Based on net assets of $52,591,919 and 3,521,201 shares
outstanding $ 14.94
==============
Class D--Based on net assets of $367,147,217 and 21,535,158
shares outstanding $ 17.05
==============
<FN>
(a)Global Depositary Receipts (GDR).
*Repurchase Agreements are fully collateralized by US
Government & Agency Obligations.
**Financial futures contracts sold as of July 31, 1999 were as
follows:
Number of Expiration
Contracts Issue Exchange Date Value
603 FTSE 100 FTSE September 1999 $ 60,965,832
1,402 CAC 40 CAC August 1999 65,355,520
Total Financial Futures Contracts Sold
(Total Contract Price--$130,248,073) $126,321,352
============
***Foreign time deposits bear interest at 2.50% and 2.48% and mature
on 8/02/1999 and 8/03/1999, respectively.
</TABLE>
Merrill Lynch EuroFund
July 31, 1999
OFFICERS AND TRUSTEES
Donald Cecil, Trustee
Edward H. Meyer, Trustee
Charles C. Reilly, Trustee
Richard R. West, Trustee
Arthur Zeikel, Trustee
Edward D. Zinbarg, Trustee
Terry K. Glenn, Executive Vice President
Robert C. Doll, Senior Vice President
Adrian C. Holmes, Senior Vice President
and Portfolio Manager
Donald C. Burke, Vice President and Treasurer
Robert E. Putney, III, 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
