MERRILL
LYNCH
INTERNATIONAL
EQUITY FUND
Quarterly Report February 28, 1994
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.
Merrill Lynch
International Equity Fund
Box 9011
Princeton, NJ
08543-9011
MERRILL LYNCH INTERNATIONAL EQUITY FUND
International
Stock Market
Performance
GRAPHIC MATERIAL APPEARS HERE. SEE APPENDIX, GRAPHIC AND IMAGE MATERIAL.
Item 1.
DEAR SHAREHOLDER
Merrill Lynch International Equity Fund continued to perform
strongly in the three-month period ended February 28, 1994.
During the period, the total returns for Class A and Class B
Shares were +13.77% and +13.51%, respectively. The total return
for the unmanaged Financial Times--Actuaries World (Ex-US) Index
was +16.02% during the same period. (Complete performance
information, including aggregate total returns, can be found on
page 5 of this report to shareholders.)
<PAGE>
Net assets of the Fund have continued to expand rapidly. By the
end of February, the Fund's net assets were $896.7 million,
compared with $510 million three months earlier. Although recent
volatility in world equity markets may have dented investor
confidence, the Fund's net new subscriptions have continued to be
positive. We believe that opportunities for long-term capital
appreciation still exist in most international equity markets.
Merrill Lynch International Equity Fund provides an excellent
diversified vehicle with which to participate in foreign equity
markets.
Portfolio Matters
Since inception, the Fund's investment strategy has changed
significantly. In December, the dramatic price rises in many Far
Eastern equity markets and in Germany and Switzerland provided an
opportunity for the Fund to adopt a more cautious investment
policy by taking profits and shifting investment weightings to
Japan and Australia. We also increased exposure in a number of
smaller markets that exhibit strong growth and good relative
value, such as Portugal, Finland, New Zealand, Brazil and
Argentina. In January we continued to apply new cash flows to
these markets, which further decreased the Fund's exposure to
some of the larger markets in Europe and the Far East. During
February, we used a portion of the portfolio's assets to purchase
a medium-term commodity-linked note, which accounts for 4% of the
Fund's net assets.
The Fund's country exposures have changed materially since the
November quarter. By the end of February, Hong Kong, Malaysian
and Thai investments had fallen in aggregate terms to 4.8% of the
portfolio from 10.6% at the end of November 1993. We effectively
reduced exposure to Hong Kong further via the sale of call
options on the Hang Seng Index. In contrast, Japanese investments
effectively now account for 42.4% of the portfolio compared with
25.1% three months earlier (including index futures in each
instance).
At the end of February, 12.9% of the Fund's assets were invested
in UK stocks or FTSE index futures, slightly more than three
months earlier. Although the portfolio is now underweighted in
Continental European markets, significant positions remain in the
Netherlands (4.0%), Germany (4.2%), Switzerland (3.4%), Italy
(1.9%), Sweden (1.5%) and Finland (1.4%). We reduced the Fund's
weighting in Mexico in favor of other smaller Latin American
markets. We increased the combined Australian, New Zealand and
South African weighting to 6.4%.
<PAGE>
Overall, these portfolio changes have reduced the Fund's exposure
to markets which have become relatively expensive and appear
exposed to either rising US short-term interest rates or rising
bond yields. We have increased our exposure to a potential
corporate earnings recovery in Japan and to commodity-related
stocks and stock markets. In part, our commodity-related
investments reflect a concern to protect the Fund against any
significant rise in energy or raw material prices. The sharp
appreciation of the yen in February provided an opportunity to
further increase our exposure to US dollars. About half of the
Fund's European currency position and almost three-quarters of
our Japanese currency exposure is hedged back into US dollars.
Economic Environment
World growth is accelerating, especially in the United States,
Australia and the United Kingdom. Growth prospects have also
improved in many of the smaller countries in Europe and Latin
America. Although current economic indicators in Japan, Germany
and France still suggest economic weakness, leading indicators
are more supportive of an economic upturn.
Inflation pressures outside of the United States and Southeast
Asia remain muted. Although commodity prices have lifted, high
unemployment in many developed economies and low levels of
capacity utilization in much of Europe and Japan suggest a weak
pricing environment. In the United States, reports of scattered
price increases (for example, in the steel, auto, cement and
paper industries) have been followed by higher producer price
data and consecutive rises in business surveys of pricing
intentions. Although these price pressures have yet to feed
through to broader measures of US consumption inflation, the
Federal Reserve Board anticipated inflationary pressures and
lifted interest rates in February.
The US bond market, which in January already had begun to respond
to concerns about inflation, subsequently sold off significantly.
In immediate response, global bond markets weakened, carrying
with them many equity markets. We believe that US monetary policy
will be tightened further and that interest rates in some Southeast
Asian markets will rise. In contrast, economic fundamentals in
Europe and Japan suggest further possible monetary policy easings.
In Germany, we expect gradual monetary policy easing, while in
Japan the continued impact of expansionary fiscal and monetary
policies should promote an improvement in economic demand, and
more significantly, a rebound in corporate profits.
As global demand conditions improve, we expect world trade growth
to expand more rapidly. We do not anticipate a further deterior-
ation in trade disputes; instead, we expect trade concessions
gained via the General Agreement on Tariffs and Trade, the North
American Free Trade Agreement (NAFTA), and a number of smaller
trade agreements to assist growth prospects, especially among
commodity exporters.
<PAGE>
Regional Views
The significant reweighting into Japan occurred during December
and early January. We initially purchased Nikkei 225 March
Futures traded on the Singapore International Monetary Exchange.
In early February we switched from the derivative contract into a
broad range of Japanese stocks, negotiating very favorable
execution terms for this $130 million transaction. As a result,
since November we more than tripled our positions in a number of
Japanese companies, including Canon, Inc., Fuji Photo Film Co.,
Ltd., Ito-Yokado Co., Ltd., Matsushita Electric Industrial Co.,
Ltd., Mitsubishi Heavy Industries, Ltd., Murata Manufacturing
Co., Ltd., Sumitomo Electric Industries, Ltd., and Suzuki Motor
Co.
Similarly, we have increased our holdings in Australia and New
Zealand, where economic growth is already strengthening. We
established new positions in BTR NYLEX, Goodman Fielder Wattie,
Ltd. and Carter Holt Harvey, Ltd. In contrast, we have reduced
our holdings in Hong Kong and Malaysia and eliminated our holding
in Singapore, by selling significant positions in Hopewell Hold-
ings, Ltd., United Overseas Bank Ltd. and Magnum Corp. Bhd. In
addition, we sold 10% out-of-the-money call options on the Hang
Seng Index. These call options expire in July.
The portfolio has received premium income in exchange for
providing the buyer of the option the right to buy the Hang Seng
Index at levels of 12,212 and 12,663. This investment strategy
has provided flexibility, allowing for a continued exposure to
the Chinese region, where we still favor long-term prospects, but
where we had become concerned with relative valuations.
The Fund retains an overweighted position in Latin American
markets, although between November and February our weightings
and stock positions changed. The significant appreciation of the
Mexican market following the passage of NAFTA provided an oppor-
tunity to increase exposure to other Latin American markets
which also appeared likely to benefit from stronger US growth,
economic reforms and a switch in liquidity flows from Southeast
Asia to the region. Significant new Latin American holdings were
established in Argentina, Brazil and Chile.
Within Europe, we reduced the portfolio's German and Swiss weight-
ings, allocating the assets to other regions and smaller markets
such as Finland, Sweden, Portugal and Italy. Total exposure to
the United Kingdom remains largely unchanged, although portfolio
structure has changed with significant share purchases of The Rank
Organisation PLC, General Electric Co., Ltd. PLC, and Smithkline
Beecham Corp. PLC, and sales of British Airways PLC and Dixons
Group PLC.
<PAGE>
In Conclusion
Overall world liquidity growth remains favorable, with the United
States and some Southeast Asian markets providing the exception.
In our view, the recent strong performance of equity markets now
demands a more conservative investment stance. As a result, we
have increased investments in commodity-rich regions and late-
cycle markets such as Japan. The US dollar is likely to strengthen
over the intermediate term as a relative tightening of monetary
policy and higher real bond yields assist the currency. We retain
an overweighted position in US dollars. We continue to expect
positive market performances in many markets and believe that the
Fund's broad diversification will limit risk while offering share-
holders the opportunity to participate in the investment potential
of international equity markets.
We thank you for your investment in Merrill Lynch International
Equity Fund, and we look forward to reviewing our performance,
outlook and strategy with you in our next report to shareholders.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Andrew Bascand)
Andrew Bascand
Vice President
Senior Portfolio Manager/
Asset Allocator
(Adrian C. Holmes)
Adrian Holmes
Co-Portfolio Manager--
European Investments
(Grace Pineda)
Grace Pineda
Co-Portfolio Manager--
Emerging Market Investments
(Stephen I. Silverman)
Stephen I. Silverman
Co-Portfolio Manager--
Pacific Basin Investments
March 30, 1994
<PAGE>
PERFORMANCE DATA
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.
<TABLE>
Recent
Performance
Results*
<CAPTION>
Since Inception 3 Month
2/28/94 11/30/93 7/30/93** % Change % Change
<S> <C> <C> <C> <C> <C>
ML International Equity Fund Class A Shares $11.73 $10.31 $10.00 +17.30% +13.77%
ML International Equity Fund Class B Shares 11.68 10.29 10.00 +16.80 +13.51
ML International Equity Fund Class A Shares--Total Return +17.30 +13.77
ML International Equity Fund Class B Shares--Total Return +16.80 +13.51
Financial Times--Actuaries World (Ex-US) Index++--Total Return +11.05 +16.02
<FN>
*Investment results shown for the 3-month and since
inception periods are before the deduction of any sales charges.
**Commencement of Operations.
++An unmanaged capitalization-weighted index comprised of over
1,800 companies in 24 countries, excluding the United States.
</TABLE>
Aggregate
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Inception (7/30/93)
through 12/31/93 +12.10% +4.81%
[FN]
*Maximum sales charge is 6.5%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Inception (7/30/93)
through 12/31/93 +11.80% +7.80%
[FN]
*Maximum contingent deferred sales charge is 4% and is
reduced to 0% after 4 years.
**Assuming payment of applicable contingent deferred sales
charge.
<TABLE>
SCHEDULE OF INVESTMENTS
<CAPTION>
Shares Held/ Percent of
AFRICA Industries Face Amount Stocks, Bonds, Warrants & Rights Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
South Africa Mining 330,000 De Beers Consolidated Mines Ltd. (ADR)(a) $ 7,844,153 $ 7,301,250 0.8%
Total Investments in Africa 7,844,153 7,301,250 0.8
LATIN
AMERICA
Argentina Banking 109,425 Banco de Galicia y Buenos Aires S.A. (ADR)(a) 2,983,033 4,158,150 0.5
Energy 161,600 Yacimientos Petroliferos Fiscales S.A.
(Sponsored)(ADR)(a) 4,030,726 4,403,600 0.5
Total Investments in Argentinean Stocks 7,013,759 8,561,750 1.0
Brazil Banking 69,000,000 Banco Bradesco PN 1,224,155 1,147,834 0.1
Mining 5,000,000 Companhia Vale do Rio Doce S.A. 652,634 604,206 0.1
Telecommuni- 39,069,200 Telecomunicacoes Brasileiras S.A.--
cations Telebras (Preferred) 1,392,160 1,845,548 0.2
55,100 Telecomunicacoes Brasileiras S.A.--
Telebras (ADR)(a) 1,925,087 2,458,562 0.3
16,605,580 Telecomunicacoes Brasileiras S.A.--
Telebras ON 626,531 620,234 0.1
------------ ------------ ------
3,943,778 4,924,344 0.6
Total Investments in Brazilian Stocks 5,820,567 6,676,384 0.8
Chile Building & 55,000 Maderas y Sinteticos S.A. (MASISA)(Sponsored)
Construction (ADR)(a) 977,412 1,430,000 0.2
Telecommuni- 20,000 Compania de Telefonos de Chile S.A. (ADR)(a) 2,406,988 2,335,000 0.3
cations
Total Investments in Chilean Stocks 3,384,400 3,765,000 0.5
<PAGE>
Mexico Beverages 278,000 Fomento Economico Mexicano, S.A. de C.V. (Femsa)
(ADR)(a) 1,742,736 1,765,300 0.2
356,000 Fomento Economico Mexicano, S.A. de C.V.
(Femsa)(Class B) 1,965,085 2,231,975 0.2
------------ ------------ ------
3,707,821 3,997,275 0.4
Building & 26,500 Cementos Mexicanos, S.A. de C.V. (Class B)
Construction (ADR)(a) 1,607,856 1,576,750 0.2
282,500 Cementos Mexicanos, S.A. de C.V. Nom 'B'
(Cemex) 6,646,928 8,324,451 0.9
208,821 Grupo Tribasa, S.A. de C.V. (ADR)(a) 4,678,350 7,569,761 0.8
------------ ------------ ------
12,933,134 17,470,962 1.9
Diversified 635,000 Grupo Carso, S.A. de C.V., Series A 4,892,500 6,469,436 0.7
Financial 119,700 Servicios Financieros Quadrum, S.A. de C.V.
Services (ADR)(a) 2,451,561 3,486,263 0.4
Leisure 75,000 Grupo Situr, S.A. (ADR)(a) 1,875,000 2,165,625 0.2
542,000 Grupo Situr, S.A. (Ordinary) 1,640,868 1,580,125 0.2
------------ ------------ ------
3,515,868 3,745,750 0.4
Retail Stores 921,000 Cifra, S.A. de C.V. (Class C) 2,498,768 2,436,752 0.3
500,000 Grupo Empresarial Fenix, S.A. de C.V.
Elektra 'L' Shares 4,366,420 4,937,304 0.5
------------ ------------ ------
6,865,188 7,374,056 0.8
Telecommuni- 143,600 Telefonos de Mexico, S.A. de C.V. (Telmex)
cations (ADR)(a) 8,385,205 9,639,150 1.1
Total Investments in Mexican Stocks 42,751,277 52,182,892 5.7
Peru Mining 177,000 Southern Peru Copper Corp. 728,471 754,252 0.1
Total Investments in Peruvian Stocks 728,471 754,252 0.1
Venezuela Foods 105,000 Mavesa S.A. (ADR)(a) 1,004,375 1,443,750 0.2
300,000 Mavesa S.A. (Ordinary) 137,354 215,073 0.0
------------ ------------ ------
1,141,729 1,658,823 0.2
Utilities-- 136,500 C.A. La Electricidad de Caracas S.A.I.C.A.--
Electric S.A.C.A 332,605 457,487 0.0
Total Investments in Venezuelan Stocks 1,474,334 2,116,310 0.2
Total Investments in Latin America 61,172,808 74,056,588 8.3
<PAGE>
NORTH
AMERICA
Canada Foreign Canadian Government Bonds:
Government C$12,750,000 6.50% due 8/01/1996 10,008,529 9,686,266 1.1
Obligations 28,400,000 5.75% due 3/01/1999 21,883,986 20,636,787 2.3
------------ ------------ ------
31,892,515 30,323,053 3.4
Total Investments in North America 31,892,515 30,323,053 3.4
PACIFIC
BASIN
Australia Diversified 2,067,000 BTR NYLEX 5,250,110 4,683,305 0.5
Engineering & 2,610,000 Australia National Industries, Ltd. (Ordinary) 3,405,001 4,425,908 0.5
Construction
Food & Beverage 612,069 Coca-Cola Amatil, Ltd. (Ordinary) 3,776,138 4,465,655 0.5
3,900,000 Goodman Fielder Wattie, Ltd. (Ordinary) 4,500,227 4,334,850 0.5
------------ ------------ ------
8,276,365 8,800,505 1.0
Food & 1,710,200 Burns Philp & Co., Ltd. (Ordinary) 5,248,031 5,483,329 0.6
Household
Products
Media 702,800 The News Corporation Ltd. 5,132,939 5,047,510 0.6
Natural Gas 372,000 Broken Hill Proprietary Co. 5,154,321 4,770,900 0.5
Real Estate 484,000 Lend Lease Corp. 5,835,839 6,014,184 0.7
Utilities--Gas 495,967 The Australian Gas Light Co. (Ordinary) 1,243,557 1,498,316 0.2
Total Investments in Australian Stocks 39,546,163 40,723,957 4.6
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
PACIFIC
BASIN Shares Held/ Percent of
(concluded) Industries Face Amount Stocks, Bonds, Warrants & Rights Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Hong Kong Banking 3,068,000 Winton Holdings $ 1,174,524 $ 992,752 0.1%
Diversified 1,980,000 Citic Pacific Ltd. (Ordinary) 5,086,910 5,791,872 0.6
Financial 4,835,000 Sun Hung Kai & Co., Ltd. (Ordinary) 3,296,131 3,222,916 0.4
Services
Property 2,588,000 Hang Lung Development Co., Ltd. (Ordinary) 4,128,204 5,359,565 0.6
Telecommuni- 2,638,000 Hong Kong Telecommunications Ltd. (Ordinary) 4,492,512 4,985,089 0.6
cations
Utilities 1,830,000 The Hong Kong & China Gas Co. (Ordinary) 3,963,130 4,760,937 0.5
Utilities-- 1,551,600 China Light & Power Co., Ltd. (Ordinary) 7,552,276 8,284,170 0.9
Electric
Total Investments in Hong Kong Stocks 29,693,687 33,397,301 3.7
Japan Automobiles 1,232,000 Suzuki Motor Co. (Ordinary) 12,935,058 15,973,876 1.8
503,000 Toyota Motor Corp. 9,135,299 9,758,548 1.1
------------ ------------ ------
22,070,357 25,732,424 2.9
Beverages 99,000 Chukyo Coca-Cola Bottling Co., Ltd. (Ordinary) 1,398,440 1,359,681 0.2
106,000 Hokkaido Coca-Cola Bottling Co., Ltd.
(Ordinary) 1,754,547 1,771,418 0.2
102,000 Kinki Coca-Cola Bottling Co., Ltd. (Ordinary) 1,893,379 1,900,499 0.2
111,000 Mikuni Coca-Cola Bottling Co., Ltd. 2,093,307 1,865,636 0.2
111,000 Sanyo Coca-Cola Bottling Co., Ltd. 1,874,646 1,993,565 0.2
------------ ------------ ------
9,014,319 8,890,799 1.0
Capital Goods 2,588,000 Mitsubishi Heavy Industries, Ltd. 16,666,156 17,573,146 2.0
Construction 383,000 Sanki Engineering Co., Ltd. 5,468,054 5,407,319 0.6
342,000 Taihei Dengyo Kaisha, Ltd. 8,825,670 9,919,708 1.1
------------ ------------ ------
14,293,724 15,327,027 1.7
Consumer 1,102,000 Matsushita Electric Industrial Co.,
Electronics Ltd. 15,931,329 18,839,416 2.1
180,000 Rohm Co. 6,017,907 7,243,565 0.8
------------ ------------ ------
21,949,236 26,082,981 2.9
<PAGE>
Diversified 804,000 Hitachi Ltd. 6,712,590 7,335,766 0.8
176,000 Sony Corp. (Ordinary) 9,822,656 10,818,287 1.2
------------ ------------ ------
16,535,246 18,154,053 2.0
Electric 181,000 Chudenko Corp. (Ordinary) 6,857,977 6,710,142 0.7
Construction
Electrical 379,000 Murata Manufacturing Co., Ltd. 13,844,538 17,654,149 2.0
Equipment 1,301,000 Sumitomo Electric Industries, Ltd. 18,098,791 20,367,173 2.3
490,000 The Nippon Signal Co., Ltd. 6,924,666 6,776,796 0.8
------------ ------------ ------
38,867,995 44,798,118 5.1
Iron & Steel 252,000 Maruichi Steel Tube, Ltd. (Ordinary) 4,581,621 4,429,120 0.5
Office 1,067,000 Canon, Inc. (Ordinary) 15,331,302 17,523,723 2.0
Equipment
Packaging 492,000 Toyo Seikan Kaisha, Ltd. (Ordinary) 14,495,654 14,175,951 1.6
Pharmaceuticals 638,000 Sankyo Co., Ltd. (Ordinary) 15,624,801 14,828,659 1.7
692,000 Taisho Pharmaceutical Co., Ltd. (Ordinary) 13,816,739 14,156,358 1.6
------------ ------------ ------
29,441,540 28,985,017 3.3
Photography 684,000 Fuji Photo Film Co., Ltd. 16,172,532 16,817,518 1.9
Property & 1,236,000 Dai-Tokyo Fire & Marine Insurance Co., Ltd. 9,479,766 9,140,607 1.0
Casualty 851,000 Fuji Fire & Marine Insurance Co., Ltd. 5,819,056 5,394,353 0.6
Insurance 1,136,000 Koa Fire & Marine Insurance Co., Ltd. 7,954,235 7,833,730 0.9
363,000 Mitsui Marine & Fire Insurance Co., Ltd. 2,929,014 3,026,162 0.3
1,412,000 Nichido Fire & Marine Insurance Co., Ltd. 10,854,104 10,794,775 1.2
351,000 Nippon Fire & Marine Insurance Co., Ltd. 2,500,899 2,524,962 0.3
1,365,000 Sumitomo Marine & Fire Insurance Co., Ltd. 11,751,325 11,864,435 1.3
1,202,000 Tokio Marine & Fire Insurance Co., Ltd. 14,894,738 15,584,902 1.7
1,119,000 Yasuda Fire & Marine Insurance Co., Ltd. 8,377,616 8,372,080 0.9
------------ ------------ ------
74,560,753 74,536,006 8.2
Retail Sales 347,000 Ito-Yokado Co., Ltd. (Ordinary) 17,335,407 19,796,197 2.2
Telecommuni- 278 Nippon Telephone & Telegraph Corp. (Ordinary) 2,565,202 2,605,916 0.3
cations 279,000 Nisshinbo Industries 2,604,696 2,813,580 0.3
------------ ------------ ------
5,169,898 5,419,496 0.6
Total Investments in Japanese Stocks 323,343,717 344,951,718 38.6
<PAGE>
Malaysia Leisure 157,000 Genting Bhd 1,450,561 1,785,400 0.2
Steel 1,032,000 Maruichi Malaysia Steel Tube Bhd 2,616,958 2,347,175 0.3
Telecommuni- 243,000 Telekom Malaysia Bhd 1,586,715 1,675,862 0.2
cations 118,000 Uniphone Telecommunications Bhd 462,197 627,660 0.1
------------ ------------ ------
2,048,912 2,303,522 0.3
Total Investments in Malaysian Stocks 6,116,431 6,436,097 0.8
New Zealand Paper & Forest 2,575,000 Carter Holt Harvey, Ltd. 6,005,321 5,611,569 0.6
Products
Telecommuni- 60,000 Telecom Corp. of New Zealand (Class C)
cations (ADR)(a) 2,698,682 2,947,500 0.3
Transportation 799,900 Ports of Auckland Ltd. 989,166 1,011,874 0.1
Total Investments in New Zealand Stocks 9,693,169 9,570,943 1.0
South Korea Financial 170,590 Hanyang Securities Co. 3,913,001 3,421,092 0.4
Services
Total Investments in South Korean Stocks 3,913,001 3,421,092 0.4
Thailand Banking 369,100 Bangkok Bank Co., Ltd. (Foreign Registered) 2,591,948 2,829,135 0.3
Total Investments in Thai Stocks 2,591,948 2,829,135 0.3
Total Investments in the Pacific Basin 414,898,116 441,330,243 49.4
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
SOUTHEAST Shares Held/ Percent of
ASIA Industries Face Amount Stocks, Bonds, Warrants & Rights Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
India Publishing & 380,000 Videocon International Ltd. $ 4,045,504 $ 3,325,000 0.4%
Broadcasting
Total Investments in Southeast Asia 4,045,504 3,325,000 0.4
<PAGE>
WESTERN
EUROPE
Austria Utilities 46,355 Energie-Versogung Niederoesterreich AG 2,625,340 2,698,565 0.3
Total Investments in Austrian Stocks 2,625,340 2,698,565 0.3
Belgium Banking 12,035 Generale de Banque S.A. (Ordinary) 2,941,651 2,916,120 0.3
Chemicals 3,200 Solvay Group (Ordinary) 1,240,133 1,354,618 0.1
Metals & 14,041 Union Miniere N.V. 930,558 1,052,675 0.1
Mining
Retail Trade 70,000 Delhaize 'le Lion' Group (Ordinary) 2,882,324 2,873,432 0.3
Total Investments in Belgian Stocks 7,994,666 8,196,845 0.8
Denmark Foreign Dkr12,500,000 Danish Government Bond, 7.00% due 12/15/2004 1,986,189 1,928,480 0.2
Government
Obligations
Total Investments in Danish Bonds 1,986,189 1,928,480 0.2
Finland Banking 800,000 Kansallis-Osake-Pankki 2,025,866 2,011,396 0.2
Diversified 235,000 Outokumpu OY 3,395,069 3,485,575 0.4
Paper & Forest 306,500 Enso-Gutzeit OY 1,987,636 2,361,744 0.3
Products 60,650 Metsa Serla OY 2,393,573 2,556,109 0.3
107,900 Repola OY S 1,627,001 2,185,909 0.2
------------ ------------ ------
6,008,210 7,103,762 0.8
Total Investments in Finnish Stocks 11,429,145 12,600,733 1.4
France Automobiles 19,750 Peugeot S.A. 2,314,747 2,901,957 0.3
Banking 23,720 Compagnie Financiere de Paribas 2,018,937 2,143,534 0.2
35,300 Compagnie Financiere de Suez (Ordinary) 2,018,337 2,100,285 0.2
19,000 Societe Generale de Surveillance S.A.
(Class A)(Ordinary) 2,052,425 2,342,847 0.3
------------ ------------ ------
6,089,699 6,586,666 0.7
Insurance 13,400 Societe Centrale du Groupe des Assurances
Nationales S.A. 1,179,328 1,247,909 0.1
Petroleum 40,500 Total S.A. (Class B) 2,047,886 2,276,968 0.3
Total Investments in French Stocks 11,631,660 13,013,500 1.4
<PAGE>
Germany Automobile 13,500 Continental AG 2,068,760 2,095,674 0.2
Parts 21,000 Continental AG (Warrants)(b) 1,195,162 1,178,157 0.1
------------ ------------ ------
3,263,922 3,273,831 0.3
Automobiles 5,529 Daimler-Benz AG 2,432,057 2,631,931 0.3
3,815 Volkswagen AG (Preferred) 711,409 800,662 0.1
21,912 Volkswagen AG (Preferred Warrants)(b) 1,912,186 2,074,562 0.2
------------ ------------ ------
5,055,652 5,507,155 0.6
Banking 13,867 Deutsche Bank AG (Ordinary) 6,786,387 6,568,493 0.7
Chemicals 15,212 BASF AG (Ordinary) 2,448,022 2,663,750 0.3
23,946 Bayer AG (Ordinary) 4,396,079 5,111,231 0.6
------------ ------------ ------
6,844,101 7,774,981 0.9
Health & 4,382 Schering AG 2,636,958 2,702,465 0.3
Personal Care
Insurance 3,650 Allianz AG Holding (Warrants)(b) 140,309 182,521 0.0
Machinery 68,200 Kloeckner Werke AG 3,365,767 5,197,561 0.6
Metal & Mining 15,360 Thyssen AG (Ordinary) 1,933,747 2,296,166 0.3
Utilities 10,106 Vereinigte Elektrizitaets & Bergwerks
AG (Veba)(Ordinary) 2,415,178 2,849,681 0.3
15,000 Vereinigte Elektrizitaets & Bergwerks AG (Veba)
(Warrants)(b) 850,851 1,406,964 0.2
------------ ------------ ------
3,266,029 4,256,645 0.5
Total Investments in German Stocks & Warrants 33,292,872 37,759,818 4.2
Greece Beverages 29,810 Hellenic Bottling Co. S.A. 792,760 1,032,930 0.1
Financial 44,800 Etva Leasing S.A. (Ordinary) 1,628,693 1,588,652 0.2
Services
Total Investments in Greek Stocks 2,421,453 2,621,582 0.3
<PAGE>
Ireland Banking 1,083,000 Bank of Ireland (Ordinary) 4,639,623 4,361,198 0.5
Building & 610,000 CRH PLC (Ordinary) 2,912,864 3,414,634 0.4
Construction
Closed-End 525,000 First Ireland Investment Co. 871,929 811,356 0.1
Funds
Foreign IEP3,500,000 Irish Gilts, 9.25% due 7/11/2003 5,950,560 5,827,668 0.6
Government
Obligations
Total Investments in Irish Stocks & Bonds 14,374,976 14,414,856 1.6
Italy Automobiles 1,346,000 Fiat S.p.A. (Ordinary) 2,312,437 2,240,134 0.2
1,775,800 Fiat S.p.A. (Preferred) 3,057,921 2,955,446 0.3
------------ ------------ ------
5,370,358 5,195,580 0.5
Diversified 2,969,500 Compagnie Industrial Riunite S.p.A. (CIR) 2,777,436 3,731,725 0.4
5,300,000 Montedison S.p.A. 3,072,238 3,608,913 0.4
------------ ------------ ------
5,849,674 7,340,638 0.8
Paper & Forest 202,050 Cartiere Burgo S.p.A. (Ordinary) 986,349 1,200,535 0.1
Products 202,050 Cartiere Burgo S.p.A. (Ordinary)(Rights)(c) 0 27,012 0.0
------------ ------------ ------
986,349 1,227,547 0.1
Telecommuni- 2,032,280 STET, Di Risp (Non Conv.) 4,123,619 4,542,744 0.5
cations
Total Investments in Italian Stocks 16,330,000 18,306,509 1.9
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
WESTERN
EUROPE Shares Held/ Percent of
(concluded) Industries Face Amount Stocks, Bonds, Warrants & Rights Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Netherlands Banking 66,950 ABN Amro Bank (Ordinary) $ 2,282,588 $ 2,408,802 0.3%
<PAGE>
Beverages 8,504 Heineken Holdings (Class A) 705,797 908,130 0.1
9,000 Heineken N.V. 949,291 1,090,339 0.1
------------ ------------ ------
1,655,088 1,998,469 0.2
Chemicals 35,725 Akzo N.V. (Ordinary) 3,330,102 3,982,918 0.4
Electrical 203,500 Philips Industries Inc. 4,727,765 5,026,397 0.6
Equipment
Insurance 79,282 AEGON N.V. (Ordinary) 3,874,041 4,106,932 0.5
89,840 Amev N.V. (Ordinary) 3,571,667 3,663,971 0.4
91,197 Internationale Nederlanden Groep N.V. 3,491,374 4,100,293 0.5
------------ ------------ ------
10,937,082 11,871,196 1.4
Metals & Mining 41,500 Dutch State Mining N.V. (Ordinary) 2,194,781 2,409,817 0.3
Paper & Forest 130,477 Koninklijke KNP 2,479,390 3,120,547 0.3
Products
Transportation 192,180 KLM Royal Dutch Airlines 3,769,039 4,837,115 0.5
Total Investments in Netherlands Stocks 31,375,835 35,655,261 4.0
Portugal Banking 341,700 Banco Commercial Portugues S.A. 5,019,557 5,445,536 0.6
89,000 Banco Commercial Portugues S.A. (ADR)(a) 1,289,946 1,357,250 0.2
------------ ------------ ------
6,309,503 6,802,786 0.8
Building & 37,800 Sociedade de Construses Soares da Costa S.A. 976,555 969,510 0.1
Construction
Retail Stores 7,600 Estabelecimentes Jeronimo Martins & Filho 592,841 643,919 0.1
Total Investments in Portuguese Stocks 7,878,899 8,416,215 1.0
Spain Banking 16,920 Banco Popular Espanol (Ordinary) 1,907,099 1,991,663 0.2
Oil--Related 112,640 Repsol S.A. (Ordinary) 3,018,225 3,697,901 0.4
Real Estate 3,527 Vallehermoso Espanola S.A. (New) 43,620 71,606 0.0
Telecommunications 328,940 Telefonica Nacional de Espana S.A. (Ordinary) 3,958,662 4,677,153 0.5
Total Investments in Spanish Stocks 8,927,606 10,438,323 1.1
<PAGE>
Sweden Building Related 115,600 Svedala Industry 2,053,238 2,665,831 0.3
Engineering 127,600 SKF AB 2,451,886 2,382,835 0.3
95,800 SKF AB 'B' Free 1,859,982 1,788,993 0.2
------------ ------------ ------
4,311,868 4,171,828 0.5
Metals & Mining 240,460 Trelleborg AB (Class B) 1,658,348 2,621,918 0.3
Pharmaceutical-- 151,750 Astra 'A' Fria 3,179,941 3,461,442 0.4
Prescription
Total Investments in Swedish Stocks 11,203,395 12,921,019 1.5
Switzerland Banking 10,633 Swiss Bank Corp. (Bearer) 3,488,485 3,354,259 0.4
Chemicals 5,512 Ciba-Geigy AG (Registered) 2,750,861 3,187,802 0.4
Electrical 10,481 BBC Brown Boveri & Cie 6,662,929 7,714,721 0.9
Equipment
Health & 1,055 Roche Holding Genusschein AG 3,967,937 5,177,007 0.6
Personal Care 2,392 Sandoz AG (Registered) 5,509,003 6,455,801 0.7
------------ ------------ ------
9,476,940 11,632,808 1.3
Insurance 7,861 Winterthur (Registered) 3,480,329 3,829,930 0.4
Total Investments in Swiss Stocks 25,859,544 29,719,520 3.4
United Aerospace 1,483,000 Rolls Royce PLC (Ordinary) 3,372,168 3,768,392 0.4
Kingdom
Banking 455,800 National Westminister Bank PLC (Ordinary) 3,618,593 3,376,434 0.4
Beverages 1,061,100 Grand Metropolitan PLC (Ordinary) 6,790,857 7,600,150 0.8
Building 999,250 Tarmac PLC (Ordinary) 2,248,643 2,888,102 0.3
Materials
Conglomerates 1,057,000 Hanson PLC (Ordinary) 4,468,269 4,350,845 0.5
Consumer--Goods 442,900 Vendome Luxury Group (Units) 2,433,775 2,810,298 0.3
Electrical 1,410,500 General Electric Co., Ltd. PLC (Ordinary) 7,330,563 6,717,690 0.7
Equipment
Food & 728,000 Tate & Lyle PLC (Ordinary) 4,399,437 4,619,320 0.5
Beverage
Food & 415,000 Cadbury Schweppes PLC (Ordinary) 3,315,705 3,114,285 0.3
Household
Products
Foods 473,000 Argyll Group PLC (Ordinary) 1,884,798 1,802,882 0.2
<PAGE>
Insurance 456,300 Commercial Union Assurance Co. PLC (Ordinary) 4,365,810 4,237,886 0.5
Leisure & 513,200 Granada Group PLC 4,433,633 4,232,514 0.5
Entertainment 462,500 The Rank Organisation PLC (Ordinary) 6,209,385 7,498,170 0.8
175,600 Thorn EMI (Ordinary) 2,625,146 2,857,311 0.3
------------ ------------ ------
13,268,164 14,587,995 1.6
Media/Publishing 111,300 Carlton Communications PLC (Ordinary) 1,557,329 1,565,433 0.2
422,000 Pearson PLC (Ordinary) 3,884,638 4,370,831 0.5
1,270,000 WPP Group PLC 1,865,806 2,359,025 0.3
------------ ------------ ------
7,307,773 8,295,289 1.0
Oil--Related 534,000 British Petroleum Co., Ltd. 2,667,099 2,912,233 0.3
Pharmaceuticals 1,091,300 Smithkline Beecham Corp. PLC (Class A) 6,606,311 6,519,121 0.7
Retail 1,640,700 Tesco PLC (Ordinary) 5,025,056 5,607,584 0.6
Retail Trade 549,000 Boots Co. PLC (Ordinary) 4,232,809 4,446,186 0.5
2,031,600 Sears Holdings 3,599,242 3,713,318 0.4
------------ ------------ ------
7,832,051 8,159,504 0.9
Telecommuni- 546,600 Cable & Wireless Public Co. Ltd. (Ordinary) 4,100,632 3,850,054 0.4
cations
Utilities--Gas 297,000 British Gas PLC (Ordinary) 1,432,631 1,425,535 0.2
Total Investments in United Kingdom Stocks 92,468,335 96,643,599 10.6
Total Investments in Western Europe 279,799,915 305,334,825 33.7
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded)
<CAPTION>
Percent of
Face Amount Issue Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Commodity US$36,000,000 Finnish Export Credit, 0.00% due 3/10/1997 $ 36,000,000 $ 35,758,800 4.0%
Linked Notes
Total Investments in Commodity Linked Notes 36,000,000 35,758,800 4.0
<PAGE>
SHORT-TERM Commercial US$ 3,271,000 General Electric Co., 3.40% due 3/01/1994 3,271,000 3,271,000 0.4
SECURITIES Paper*
Total Investments in Commercial Paper 3,271,000 3,271,000 0.4
US Government US Treasury Bills:
& Agency 30,000 2.706% due 3/24/1994 29,948 29,942 0.0
Obligations* 860,000 2.78% due 3/24/1994 858,473 858,337 0.1
11,700,000 2.965% due 3/24/1994 11,677,837 11,677,381 1.3
3,300,000 3.015% due 3/24/1994 3,293,643 3,293,620 0.4
5,900,000 3.05% due 3/24/1994 5,889,234 5,888,594 0.7
130,000 3.12% due 3/24/1994 129,750 129,749 0.0
700,000 3.105% due 7/07/1994 692,272 691,321 0.1
Total Investments in US Government & 22,571,157 22,568,944 2.6
Agency Obligations
Total Investments in Short-Term Securities 25,842,157 25,839,944 3.0
Total Investments $861,495,168 923,269,703 103.0
============
Put Options Purchased (Cost--$1,792,000)** 1,736,800 0.2
Put Options Written (Cost--$389,250)*** (50,940) (0.0)
Call Options Purchased (Cost--$389,250)**** 448,830 0.0
Call Options Written (Cost--$1,491,761)***** (880,459) (0.1)
Unrealized Depreciation on Forward Foreign Exchange Contracts++ (13,117,581) (1.5)
Variation Margin on Stock Index Futures Contracts++++ 1,101,555 0.1
Liabilities in Excess of Other Assets (15,798,835) (1.7)
------------ -----
Net Assets $896,709,073 100.0%
Net Asset Class A -- Based on net assets of $191,502,473 and 16,325,870 shares of
Value: beneficial interest outstanding $ 11.73
============
Class B -- Based on net assets of $705,206,600 and 60,380,341 shares of
beneficial interest outstanding $ 11.68
============
<FN>
(a) American Depositary Receipt (ADR).
(b) Warrants entitle the Fund to purchase a predetermined number of shares
of common stock. The purchase price and the number of shares are subject
to adjustment under certain conditions until the expiration date.
(c) The rights may be exercised until 12/31/1995.
* Commercial Paper and US Government Obligations are traded on a
discount basis; the interest rates shown are the discount rates paid at
the time of purchase by the Fund.
** Put options purchased as of February 28, 1994 are as follows:
<PAGE>
Par Value
Subject to Put Issue Cost Value
$80,000 Yen currency call option, strike
price 107, expiring 9/14/94 $1,792,000 $ 1,736,800
---------- -----------
Total Put Options Purchased $1,792,000 $ 1,736,800
========== ===========
*** Put options written as of February 28, 1994 are as follows:
Par Value
Subject to Put Issue Cost Value
$16,000,000 DM currency put option, strike
price 1.805, expiring 4/13/94 $(217,600) $(29,600)
12,000,000 Ffr currency put option, strike
price 6.114, expiring 4/11/94 (101,400) (12,840)
5,000,000 Nlg currency put option, strike
price 2.012, expiring 4/13/94 (70,250) (8,500)
---------- --------
Total Put Options Written $ (389,250) $(50,940)
========== ========
****Call options purchased as of February 28, 1994 are as follows:
Par Value
Subject to Call Issue Cost Value
$16,000,000 DM currency call option, strike
price 1.695, expiring 4/13/94 $ 217,600 $ 190,400
12,000,000 Ffr currency call option, strike
price 5.88, expiring 4/11/94 101,400 208,680
5,000,000 Nlg currency call option, strike
price 1.895, expiring 4/13/94 70,250 49,750
---------- ---------
Total Call Options Purchased $ 389,250 $ 448,830
========== =========
*****Call options written as of February 28, 1994 are as follows:
Par Value/
Shares Subject
to Call Issue Cost Value
HK$110,386,076 Hang Seng index option, strike
price 12,212.20, expiring 7/07/94 $(664,005) $(436,331)
HK$110,459,349 Hang Seng index option, strike
price 12,663, expiring 7/07/94 (678,688) (369,141)
999,250 Tarmac strike price 200,
expiring 4/11/94 (149,068) (74,987)
----------- ---------
Total Call Options Written $(1,491,761) $(880,459)
=========== =========
<PAGE>
++Forward foreign exchange contracts as of February 28, 1994 are as follows:
Foreign Expiration Unrealized
Currency Sold Date Depreciation
A$ 9,388,748 April 1994 $ (14,328)
Bf 110,950,300 April 1994 (117,699)
DM 33,651,062 April 1994 (404,078)
Fmk 10,185,848 April 1994 (75,204)
Frf 77,584,430 April 1994 (313,056)
Nlg 27,242,454 April 1994 (236,949)
Pta 745,950,500 April 1994 (249,677)
Skr 12,253,236 April 1994 (40,733)
Yen 20,094,217,000 April 1994 (11,665,857)
------------
Total (US Commitment--$239,989,821) $(13,117,581)
------------
Total Unrealized Depreciation on
Forward Foreign Exchange Contracts $(13,117,581)
============
++++Stock index futures contracts as of February 28, 1994 were as follows:
Number of Expiration
Contracts Issue Date Value
185 EOE20 Dutch 3/18/94 $ 8,157,389
169 FTSE 100 3/18/94 20,831,565
368 Nikkei 225 3/11/94 35,538,225
------------
Total Stock Index Futures Contracts
(Total Contract Price --$59,713,927) $ 64,527,179
============
</TABLE>
PORTFOLIO CHANGES
Additions
Banco Bradesco PN
Banco Commercial Portugues S.A.
Banco Commercial Portugues S.A. (ADR)
Broken Hill Proprietary Co.
BTR NYLEX
C.A. La Electricidad de Caracas
S.A.I.C.A.-S.A.C.A.
Cable & Wireless Public Co. Ltd. (Ordinary)
Cadbury Schweppes PLC (Ordinary)
Canadian Government Bonds:
6.50% due 8/01/1996
5.75% due 3/01/1999
<PAGE>
Carlton Communications PLC (Ordinary)
Carter Holt Harvey, Ltd.
Cartiere Burgo S.p.A. (Ordinary) (Rights)
Cementos Mexicanos, S.A. de C.V.
(Class B)(ADR)
Companhia Vale do Rio Doce S.A.
Compania de Telefonos de Chile S.A. (ADR)
Continental AG
Continental AG (Warrants)
Danish Government Bond, 7.00%
due 12/15/2004
De Beers Consolidated Mines Ltd. (ADR)
Delhaize 'le Lion' Group (Ordinary)
Estabelecimentes Jeronimo Martins & Filho
Etva Leasing (Ordinary)
Fiat S.p.A. (Ordinary)
Fiat S.p.A. (Preferred)
First Ireland Investment Co.
Goodman Fielder Wattie, Ltd. (Ordinary)
Granada Group PLC
Grupo Empresarial Fenix, S.A. de C.V.
Elektra 'L' Shares
Grupo Situr, S.A. (ADR)
Grupo Situr, S.A. (Ordinary)
Hanson PLC (Ordinary)
Hanyang Securities Co.
Hitachi Ltd.
Irish Gilts, 9.25% due 7/11/2003
Kansallis-Osake-Pankki
Mavesa S.A. (ADR)
Mitsui Marine & Fire Insurance Co., Ltd.
Montedison S.p.A.
The News Corporation Ltd.
Nippon Fire & Marine Insurance Co., Ltd.
Nippon Telephone & Telegraph Corp.
(Ordinary)
Nisshinbo Industries
Outokumpu OY
Philips Industries Inc.
Ports of Auckland Ltd.
Rohm Co.
* Royal Doulton
SKF AB
SKF AB 'B' Free
Smithkline Beecham Corp. PLC (Class A)
Societe Centrale du Groupe de Assurances
Nationales S.A.
Sony Corp. (Ordinary)
Southern Peru Copper Corp.
* Swedish Government Bonds, 10.25%
due 5/05/2003
Telecomunicacoes Brasileiras S.A.
(Preferred)
Toyota Motor Corp.
Videocon International Ltd.
Yacimientos Petroliferos Fiscales S.A.
(Sponsored)(ADR)
Yasuda Fire & Marine Insurance Co., Ltd.
<PAGE>
Deletions
Alusuisse-Lonza Holdings (Registered)
Baloise Holding Insurance
Barclays Bank, Ltd. (Ordinary)
Bayerische Motorenwerke AG (BMW)
(Bearer)
British Airways PLC (Ordinary)
British Telecommunications PLC
(Ordinary)
BTR PLC (Warrants)
* C.A. La Electricidad de Caracas S.A.I.C.A.-
S.A.C.A.
C.P. Pokphand Co., Ltd. (Ordinary)
Christian Dior S.A.
Chubb Security Group (Ordinary)
Consolidated Electric Power Ltd.
(Ordinary)
De Boer Winkelbedr N.V.
Den Danske Bank AF (Ordinary)
Denway Investment (Ordinary)
Dixons Group PLC (Ordinary)
Fuerzas Electricas de Cataluna, FECSA
(Class A)
GIB Group (Bearer)
GIO Australia Holdings Ltd.
Grasim Industries Limited (ADR)
Grupo Financiero Bancomer, S.A.
de C.V. (ADR)
Grupo Financiero Bancomer, S.A.
de C.V. 'B'
Grupo Posadas, S.A. de C.V. (GDS)
Hochtief AG
Holderbank Financiere Glarus AG
(Bearer)
Hopewell Holdings, Ltd.
Italgas (Sud) S.p.A.
J.C.G. Holdings
Landis & Gyr AG (Registered)
Magnum Corp. Bhd
Man AG (Ordinary)
Mannesmann AG (Ordinary)
Matra Hachette (Ordinary)
Nestle AG (Registered)
Nintendo Co., Ltd.
Oriental Press Holdings (Ordinary)
PanAmerican Beverages Inc. (Class A)
Pinault Printemps S.A.
Rhone-Poulenc S.A.
* Royal Doulton
<PAGE>
Societe Nationale Elf Aquitaine
(Ordinary)
Sulzer Gebrueder AG (Registered)
* Swedish Government Bonds, 10.25% due
5/05/2003
Union Miniere N.V. (Warrants)
United Overseas Bank Ltd.
(Foreign Registered)
Vallehermoso Espanola S.A.
Verbund Oesterreichische Elekrizitaets AG
Yapi Kredi Bankasi A.S. (Ordinary)
[FN]
* Added and deleted in the same quarter.
PORTFOLIO INFORMATION
Worldwide
Investments as of
February 28, 1994
Percent of
Ten Largest Countries Net Assets
Japan 38.6%
United Kingdom 10.6
Mexico 5.7
Australia 4.6
Germany 4.2
Netherlands 4.0
Hong Kong 3.7
Canada 3.4
Switzerland 3.4
Italy 1.9
Percent of
Asset Mix* Net Assets
Japan 38.6%
Europe (Ex. United Kingdom) 23.1
Other Emerging Markets 12.9
United Kingdom and Ireland 12.2
Pacific Basin (Ex. Japan) 10.8
Cash 3.0
[FN]
*Percent of net assets may not equal 100%.
<PAGE>
Percent of
Ten Largest Industries Net Assets
Property & Casualty Insurance 8.7%
Electrical Equipment 7.3
Banking 5.5
Telecommunications 4.8
Automobiles 4.3
Pharmaceuticals 4.0
Utilities 3.0
Consumer Electronics 2.9
Insurance 2.8
Building & Construction 2.6
Stock Index
Futures Contracts
Percent of
Country Issue Exchange Net Assets
Japan Nikkei 225 SIMEX 4.0%
United Kingdom FTSE 100 LIFFE 2.3%
Netherlands EOE20 EOE 0.9%
-------
7.2%
OFFICERS and TRUSTEES
Arthur Zeikel, President and Trustee
Donald Cecil, Trustee
Edward H. Meyer, Trustee
Charles C. Reilly, Trustee
Richard R. West, Trustee
Terry K. Glenn, Executive Vice President
Norman R. Harvey, Senior Vice President
Donald C. Burke, Vice President
Gerald M. Richard, Treasurer
Michael J. Hennewinkel, Secretary
Custodian
Brown Brothers Harriman & Co.
40 Water Street
Boston, Massachusetts 02109
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
<PAGE>
Merrill Lynch International Equity Fund Management Team
Andrew John Bascand--Senior Portfolio Manager/Asset
Allocator. As the Fund's Asset Allocator, Mr. Bascand is
primarily responsible for determining the allocation of the
Fund's assets among equity markets in Europe, the
emerging markets and the Pacific Basin.
Adrian Holmes--Co-Portfolio Manager--European
Investments. Mr. Holmes is primarily responsible for the
Fund's European investments.
Grace Pineda--Co-Portfolio Manager--Emerging Markets
Investments. Ms. Pineda is primarily responsible for
investments in emerging markets in Europe, Latin America
and the smaller markets in the Pacific Basin.
Stephen I. Silverman--Co-Portfolio Manager--Pacific
Basin Investments. Mr. Silverman is primarily responsible for
the Fund's investments in the larger Pacific Basin markets.
<PAGE>
APPENDIX GRAPHIC AND IMAGE MATERIAL.
ITEM 1:
International Stock Market Performance--Total Return in US
Dollars* of the Fund's Top Ten Country Positions for the Three-
Month Period Ended February 28, 1994
Bar Graph illustrating the following percentages:
Germany 1.9%
United Kingdom 7.4%
Netherlands 7.5%
France 11.2%
Mexico 11.6%
Switzerland 11.7%
Hong Kong 12.8%
Australia 17.7%
Italy 22.6%
Japan 24.0%
Source: Financial Times--Actuaries Index.
[FN]
*For the three-month period ended February 28, 1994, total
investment return in US dollars for the Financial Times--Actuaries
World (Ex-US) Index was +16.02%.
