MERRILL LYNCH
INTERNATIONAL
EQUITY FUND
FUND LOGO
Quarterly Report
August 31, 1995
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 re-
port 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.
<PAGE>
Merrill Lynch
International
Equity Fund
Box 9011
Princeton, NJ
08543-9011
MERRILL LYNCH INTERNATIONAL EQUITY FUND
International
Stock Market
Performance
Total Return in US Dollars* of the Fund's Top Ten Country Positions for the
Three-Month Period Ended August 31, 1995
A bar chart illustrating the following percentages:
Hong Kong - 2.2%
Japan - 1.7%
Netherlands + 1.0%
Italy + 2.0%
Germany + 3.0%
United Kingdom + 3.3%
Ireland + 7.1%
Sweden +10.7%
Austria +12.0%
Finland +23.4%
[FN]
*For the three-month period ended August 31, 1995, total investment return
in US dollars for the Financial Times/S&P--Actuaries World (Ex-US) Index was
+0.61%.
<PAGE>
DEAR SHAREHOLDER
During the three months ended August
31, 1995, relative market performances
were affected by the significant rebound
in the US dollar. Financial market devel-
opments were broadly in line with our
expectations. During the three-month
period ended August 31, 1995, the
US economy generally strengthened and,
despite an easing of official rates, expec-
tations of further US interest rate cuts
dissipated. However, elsewhere, eco-
nomic growth appeared sluggish. Inter-
est rates were lowered in both Japan
and Germany.
Against that background, most inter-
national equity markets posted strong
gains in local currency terms during the
three months ended August 31, 1995. For
instance, Japanese equity prices rose by
approximately 17%, and many European
markets recovered. However, reflecting
the appreciation of the US dollar, the US
dollar-based total return of the unman-
aged Financial Times/S&P--Actuaries
World (Ex-US) Index during the August
quarter was only +0.61%.
<PAGE>
For the quarter ended August 31, 1995,
total returns for Class A, Class B, Class C
and Class D Shares were +5.95%,
+5.69%, +5.64% and +5.84%, respec-
tively. (Results shown do not reflect
sales charges and would be lower if sales
charges were included. Complete
performance information, including
average annual and aggregate total
returns, can be found on pages 4 and
5 of this report to shareholders). The
Fund's outperformance during the
three-month period ended August 31,
1995 reflected positive contributions
from an overweighted US dollar stance,
outperformance of the Japanese equity
market, Japanese stock selection, and
the outperformance of several emerging
equity markets.
Portfolio Matters
We increased US dollar-denominated
holdings in June and at the same time
increased our Japanese equity weighting.
We also added to equity positions in
peripheral European markets, Hong
Kong and some emerging markets. As a
result of these shifts, the portfolio has
a slightly overweighted position in
Japanese stocks, as well as higher
European and emerging markets equity
weights. Toward the end of August, we
marginally reduced the Fund's over-
weighted US dollar position. At the end
of the August quarter, the Fund's
effective equity weighting overall was
about 94% of net assets as compared to
91% three months earlier.
<PAGE>
Despite our positive view on the Japa-
nese equity market, we continue to
invest in a broad range of markets.
We have further diversified the Fund's
holdings by purchasing securities in
Zimbabwe and Israel, although our
major emerging markets positions
remain in Brazil, Portugal, South Africa,
Korea and India. During the August
quarter, we sold our holdings in most
emerging market fixed-income securi-
ties, using the cash to increase the Fund's
emerging market equity weighting.
At the individual security level, signif-
icant purchases included Australasian
companies Coca-Cola Amatil, Ltd. and
Brierley Investments Ltd. and a number
of companies in Italy, including Monte-
dison S.p.A, Fiat S.p.A, Assicurazioni
Generali S.p.A as well as the purchase
of additional shares to our holding in
Compagnie Industrial Riunite S.p.A.
(CIR). Among emerging markets, signifi-
cant new holdings include the Taiwan-
ese company Advanced Semiconducter
Engineering Inc. and the Israeli com-
pany Bank Hapoalim Ltd. Significant
sales included stocks in Mexico and
Canada, where we took advantage of
the rebound in equity prices, choosing
to move into holdings in Brazil and
South Africa.
Economic and Investment
Environment
US economic trends are still signif-
icantly impacting on the international
investment environment. During the
three-month period ended August 31,
1995, the US Federal Reserve Board
eased the Federal Funds rate by 25 basis
points (0.25%). However, in the immedi-
ate aftermath, US economic indicators
identified a stronger activity path. As a
result, expectations of further interest
rate cuts dissipated. US Treasury yields,
having initially dipped, ended the period
largely unchanged.
<PAGE>
Perhaps more significantly, economic
data in Japan, Germany and the United
Kingdom portrayed a weaker-than-
expected tone. Against the background
of the previous sharp yen and
Deutschemark appreciation relative to
the US dollar in March and April, the
weaker-than-expected economic data
assisted a further round of interest rate
cuts in Japan and Europe. For instance,
the Bank of Japan lowered the call over-
night money rate to 0.8% from 1.25%.
Additionally, the Bank of Japan contin-
ued to intervene aggressively in foreign
exchange markets by selling yen for US
dollars. Over the same period, the Ger-
man Bundesbank cut the key Lombard
and discount rates by 50 basis points
and on two occasions joined other
central banks in concerted currency
intervention to support an established
uptrend in the US dollar. Overall, the US
dollar appreciated by 5.1% on a trade-
weighted basis during the August quarter.
Monetary conditions have eased appreci-
ably in Japan and Europe, and during
the August quarter financial markets
largely discounted this easing, in our
opinion. Our current portfolio anticipates
a further recovery in corporate profits in
Japan and some European countries
resulting from the US dollar recovery
and interest rate cuts. Additionally, we
retain a partial hedge out of yen into US
dollars in anticipation of further cur-
rency response to recent policy shifts
and the gradual reduction in Japan's
structural current account surplus.
The Fund's emerging markets positions
reflect our concern that US interest rate
expectations may rise, resulting in under-
performance in some US interest rate
sensitive markets like Malaysia, Thailand,
Mexico and Argentina. As a result, we
continue to emphasize markets like
Portugal, Korea, India, Taiwan and
South Africa.
<PAGE>
In Conclusion
International investment markets have
responded to a favorable shift in mone-
tary conditions in both Japan and
Germany. Our investment strategy cur-
rently anticipates further positive impli-
cations of this recent easing for equities
in Japan, some peripheral European
countries and some emerging markets.
We continue to favor a US dollar bias in
the Fund, and as a consequence we
anticipate maintaining a partial hedge
out of yen into US dollars. However, at
some stage in the upcoming quarter, we
may become more defensive in our
investment strategy and raise our US
cash exposure. A key factor will be the
strength of the US economy and the
path of US bond yields.
We thank you for your continued
interest in Merrill Lynch International
Equity Fund, and we look forward to
reviewing our strategy with you in our
upcoming semi-annual report to
shareholders.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Andrew Bascand)
Andrew Bascand
Senior Portfolio Manager/Asset Allocator
<PAGE>
(Adrian Holmes)
Adrian Holmes
Co-Portfolio Manager
European Investments
(Grace Pineda)
Grace Pineda
Co-Portfolio Manager
Emerging Markets Investments
(Stephen I. Silverman)
Stephen I. Silverman
Co-Portfolio Manager
Pacific Basin Investments
September 26, 1995
PERFORMANCE DATA
About Fund
Performance
Since October 21, 1994, investors have been 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, as detailed in the Fund's prospectus. If you were a
Class A shareholder on October 21, 1994, your Class A Shares
were redesignated to Class D Shares on October 21, 1994, which,
in the case of certain eligible investors, were simultaneously
exchanged for Class A Shares.
<PAGE>
* 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 addi-
tion, Class B Shares are subject to a distribution fee of 0.75%
and an account maintenance fee of 0.25%. These shares auto-
matically convert to Class D Shares after 8 years.
* Class C Shares are subject to a distribution fee of 0.75% and an
account maintenance fee of 0.25%. In addition, Class C Shares
are subject to a 1% contingent deferred sales charge if redeemed
within one year of purchase.
* Class D Shares incur a maximum initial sales charge of 5.25% and
an account maintenance fee of 0.25% (but no distribution fee).
Performance data for the Fund's Class B and Class D Shares are
presented in the "Performance Summary," and "Average Annual
Total Return" tables below and on page 5. Data for Class A and
Class C Shares are also presented in the "Aggregate Total Return"
table below. Data for all of the Fund's shares are presented
in the "Recent Performance Results" table on page 5.
The "Recent Performance Results" table shows investment results
before the deduction of any sales charges for Class B and Class D
Shares for the 12-month and 3-month periods ended August 31,
1995 and for Class A and Class C Shares for the since inception
and 3-month periods ended August 31, 1995. All data in this table
assume imposition of the actual total expenses incurred by
each class of shares during the relevant period.
None of the past results shown should be considered a repre-
sentation of future performance. Investment return and princi-
pal 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 % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 6/30/95 -5.42% -9.00%
Inception (7/30/93) through 6/30/95 +3.43 +1.90
<PAGE>
[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 Without % Return With
Sales Charge Sales Charge**
Class D Shares*
Year Ended 6/30/95 -4.70% -9.71%
Inception (7/30/93) through 6/30/95 +4.22 +1.33
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
Aggregate
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Inception (10/21/94) through 6/30/95 -7.51% -12.36%
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Inception (10/21/94) through 6/30/95 -8.18% -9.04%
[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>
<TABLE>
Performance
Summary--
Class B Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
7/30/93-12/31/93 $10.00 $11.18 -- -- +11.80%
1994 11.18 10.52 $0.091 $0.490 - 0.61
1/1/95-8/31/95 10.52 10.77 -- -- + 2.38
------ ------
Total $0.091 Total $0.490
Cumulative total return as of 8/31/95: +13.76%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains distributions at net asset value
on the ex-dividend date, and do not 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
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
7/30/93-12/31/93 $10.00 $11.21 -- -- +12.10%
1994 11.21 10.56 $0.091 $0.566 + 0.18
1/1/95-8/31/95 10.56 10.87 -- -- + 2.94
------ ------
Total $0.091 Total $0.566
Cumulative total return as of 8/31/95: +15.59%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains distributions at net asset value on the
ex-dividend date, and do not include sales charge; results would be lower if sales charge was included.
***As a result of the implementation of the Merrill Lynch Select Pricing SM System, Class A Shares of the
Fund outstanding prior to October 21, 1994 were redesignated to Class D Shares.
</TABLE>
<PAGE>
<TABLE>
Recent
Performance
Results
<CAPTION>
12 Month 3 Month
8/31/95 5/31/95 8/31/94++ % Change++ % Change
<S> <C> <C> <C> <C> <C>
ML International Equity Fund Class A Shares* $10.86 $10.25 $11.73 -6.60%(1) +5.95%
ML International Equity Fund Class B Shares* 10.77 10.19 11.89 -8.62(1) +5.69
ML International Equity Fund Class C Shares* 10.68 10.10 11.62 -7.27(1) +5.74
ML International Equity Fund Class D Shares* 10.87 10.27 11.99 -8.55(1) +5.84
ML International Equity Fund Class A Shares--Total Return* -1.23(2) +5.95
ML International Equity Fund Class B Shares--Total Return* -4.32(3) +5.69
ML International Equity Fund Class C Shares--Total Return* -2.04(4) +5.74
ML International Equity Fund Class D Shares--Total Return* -3.59(5) +5.84
Financial Times/S&P--Actuaries World (Ex-US) Index**--Total Return -0.16 +0.61
<FN>
*Investment results shown do not reflect sales charges; results shown would be lower if a sales charge was
included.
**An unmanaged capitalization-weighted index comprised of over 1,800 companies in 24 countries, excluding the
United States.
++Investment results shown for Class A and Class C Shares are since inception (10/21/94).
(1)Percent change includes reinvestment of $0.091 per share capital gains distributions.
(2)Percent change includes reinvestment of $0.599 per share ordinary income dividends and $0.091 per
share capital gains distributions.
(3)Percent change includes reinvestment of $0.490 per share ordinary income dividends and $0.091 per
share capital gains distributions.
(4)Percent change includes reinvestment of $0.582 per share ordinary income dividends and $0.091 per
share capital gains distributions.
(5)Percent change includes reinvestment of $0.566 per share ordinary income dividends and $0.091 per
share capital gains distributions.
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
Shares Held/ Percent of
AFRICA Industries Face Amount Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
South Africa Banking 130,790 Nedcor Ltd. $ 5,885,550 $ 6,670,290 0.5%
Diversified 660,870 Malbak Ltd. (GDR) (d) 3,800,003 4,031,307 0.3
Mining 93,900 Beatrix Mines Ltd. 831,576 828,190 0.1
22,000 Driefontein Consolidated Ltd. 335,320 325,803 0.0
139,000 Driefontein Consolidated Ltd. (ADR) (a) 2,108,217 2,050,250 0.2
188,000 Kinross Mines Ltd. 2,014,695 1,928,073 0.1
226,000 Vaal Reefs Exploration & Mining
Company, Ltd. (ADR) (a) 1,685,591 1,567,875 0.1
9,000 Western Areas Gold Mining Company, Ltd. 141,372 140,913 0.0
15,000 Western Areas Gold Mining Company, Ltd.
(ADR) (a) 225,254 230,625 0.0
-------------- -------------- ------
7,342,025 7,071,729 0.5
Transportation ZAL 32,000,000 Transnet Ltd., 15% due 10/01/1995 7,714,286 8,751,538 0.7
Total Investments in South Africa 24,741,864 26,524,864 2.0
Zimbabwe Beverages 1,591,000 Delta Corporation 2,530,373 2,485,218 0.2
Total Investments in Zimbabwe 2,530,373 2,485,218 0.2
Total Investments in Africa 27,272,237 29,010,082 2.2
LATIN
AMERICA
Brazil Banking 7,575,116 Banco Bradesco S.A. PN (Preferred) 56,481 72,999 0.0
Mining 21,528,000 Companhia Vale do Rio Doce S.A.
(Preferred) 2,229,324 3,310,256 0.3
Oil--Related 32,650,000 Petroleo Brasileiro S.A. (Preferred) 2,988,395 3,146,367 0.2
Telecommunications 41,000 Telecomunicacoes Brasileiras S.A.--
Telebras (ADR) (a) 1,609,477 1,691,250 0.1
Total Investments in Brazil 6,883,677 8,220,872 0.6
Mexico Multi-Industry 1,075,000 Grupo Carso, S.A. de C.V. 'A1' 5,346,585 6,898,487 0.5
Total Investments in Mexico 5,346,585 6,898,487 0.5
<PAGE>
Venezuela Foods 10,000 Mavesa S.A. (ADR) (a) 3,353 1,828 0.0
Utilities-- 874 C.A. La Electricidad de Caracas
Electric S.A.I.C.A.--S.A.C.A. 516 792 0.0
Total Investments in Venezuela 3,869 2,620 0.0
Total Investments in Latin America 12,234,131 15,121,979 1.1
MIDDLE
EAST
Israel Banking 1,162,000 Bank Hapoalim Ltd. 1,956,307 1,979,837 0.2
Computer Software 149,700 Scitex Corporation Ltd. 3,205,659 3,050,138 0.2
Engineering & 28,070 Koor Industries Ltd. 2,377,087 2,583,996 0.2
Construction
Total Investments in Israel 7,539,053 7,613,971 0.6
Total Investments in the Middle East 7,539,053 7,613,971 0.6
PACIFIC
BASIN Shares Held
Australia Food Processing 826,644 Coca-Cola Amatil, Ltd. 4,161,752 5,855,814 0.5
2,019,550 Coca-Cola Amatil, Ltd. (New Shares) 11,288,127 14,260,608 1.1
-------------- -------------- ------
15,449,879 20,116,422 1.6
Media 707,264 The News Corp., Ltd. 3,610,407 4,063,430 0.3
355,219 The News Corp., Ltd. (Preferred) 1,558,829 1,832,475 0.1
-------------- -------------- ------
5,169,236 5,895,905 0.4
Merchandising 155,100 Amway Asia Pacific Ltd. 4,808,000 6,165,225 0.5
Natural Gas 426,964 Broken Hill Proprietary Co. 5,384,042 6,196,785 0.5
Property 1,390,273 Lend Lease Corp. 17,476,661 19,864,221 1.6
Total Investments in Australia 48,287,818 58,238,558 4.6
<PAGE>
Hong Kong Banking 1,059,226 HSBC Holdings PLC 12,086,128 14,231,575 1.1
Diversified 816,500 Hutchison Whampoa Ltd. 4,003,239 3,934,559 0.3
Multi-Industry 1,823,000 Swire Pacific Ltd. (Class A) 12,042,312 13,659,841 1.1
Telecommuni- 5,471,000 Hong Kong Telecommunications, Ltd. 11,089,502 9,895,226 0.8
cations
Utilities 3,329,600 China Light & Power Co., Ltd. 16,813,200 16,345,817 1.3
Total Investments in Hong Kong 56,034,381 58,067,018 4.6
Japan Automobiles 1,879,000 Suzuki Motor Corp. 21,118,332 21,936,098 1.7
Beverages 139,000 Chukyo Coca-Cola Bottling Co., Ltd. 1,835,949 1,323,810 0.1
183,000 Hokkaido Coca-Cola Bottling Co., Ltd. 2,818,281 2,305,069 0.2
165,000 Kinki Coca-Cola Bottling Co., Ltd. 2,625,747 1,993,856 0.2
197,000 Mikuni Coca-Cola Bottling Co., Ltd. 3,160,732 2,380,543 0.2
153,000 Sanyo Coca-Cola Bottling Co., Ltd. 2,332,375 2,083,871 0.2
-------------- -------------- ------
12,773,084 10,087,149 0.9
Capital Goods 3,808,000 Mitsubishi Heavy Industries, Ltd. 25,615,591 27,258,495 2.1
Chemicals 733,000 Shin-Etsu Chemical Co., Ltd. 15,311,687 14,637,481 1.2
Containers 906,000 Toyo Seikan Kaisha, Ltd. 27,433,696 30,710,292 2.4
Electric 380,000 Chudenko Corp. 13,592,350 14,982,079 1.2
Construction 435,000 Sanki Engineering Co., Ltd. 6,151,018 4,160,676 0.3
408,000 Taihei Dengyo Kaisha, Ltd. 9,664,950 6,768,664 0.5
-------------- -------------- ------
29,408,318 25,911,419 2.0
Electrical 935,000 Murata Manufacturing Co., Ltd. 35,017,547 37,342,550 2.9
Equipment 569,000 The Nippon Signal Co., Ltd. 7,950,113 4,422,642 0.3
565,000 Rohm Co., Ltd. 21,622,066 34,889,401 2.7
476,000 Sumitomo Electric Industries, Ltd. 7,181,594 6,190,681 0.5
-------------- -------------- ------
71,771,320 82,845,274 6.4
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
PACIFIC BASIN Shares Held/ Percent of
(concluded) Industries Face Amount Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Japan Engineering & 830,000 Kinden Corp. $ 16,648,883 $ 14,704,557 1.2%
(concluded) Construction
Iron & Steel 330,000 Maruichi Steel Tube, Ltd. 5,881,382 6,049,155 0.5
Office Equipment 2,036,000 Canon Inc. 33,971,212 36,904,455 2.9
Pharmaceuticals 816,000 Sankyo Co., Ltd. 18,137,233 18,216,897 1.4
419,000 Taisho Pharmaceutical Co., Ltd. 8,298,783 7,466,052 0.6
-------------- -------------- ------
26,436,016 25,682,949 2.0
Property & 1,971,000 Dai-Tokyo Fire & Marine Insurance
Casualty Co., Ltd. 14,575,579 13,119,816 1.0
Insurance 851,000 Fuji Fire & Marine Insurance Co., Ltd. 5,819,056 4,627,558 0.4
1,268,000 Koa Fire & Marine Insurance Co., Ltd. 8,833,667 7,388,551 0.6
742,000 Mitsui Marine & Fire Insurance Co., Ltd. 6,045,628 4,977,061 0.4
1,696,000 Nichido Fire & Marine Insurance Co.,
Ltd. 12,951,468 13,460,317 1.1
783,000 Nippon Fire & Marine Insurance Co., Ltd. 5,748,509 4,530,415 0.4
1,681,000 Sumitomo Marine & Fire Insurance Co.,
Ltd. 14,196,547 12,807,619 1.0
1,781,000 Tokio Marine & Fire Insurance Co., Ltd. 21,375,308 21,156,784 1.7
1,257,000 Yasuda Fire & Marine Insurance Co., Ltd. 9,408,702 8,302,765 0.7
-------------- -------------- ------
98,954,464 90,370,886 7.3
Retailing 510,000 Ito-Yokado Co., Ltd. 26,237,875 27,210,445 2.1
138,000 Sangetsu Co., Ltd. 4,742,639 3,419,969 0.3
-------------- -------------- ------
30,980,514 30,630,414 2.4
Total Investments in Japan 416,304,499 417,728,624 33.0
Malaysia Banking 483,000 Public Bank (Malaysia) BHD 'Foreign' 1,072,993 1,064,943 0.1
Transportation 489,000 Malaysian International Shipping Co. BHD 1,393,767 1,401,624 0.1
Total Investments in Malaysia 2,466,760 2,466,567 0.2
New Zealand Finance 7,137,000 Brierley Investments Ltd. 5,532,807 5,292,585 0.4
Foreign New Zealand Government Bonds:
Government NZ $9,570,000 8% due 11/15/1995 6,012,580 6,206,454 0.5
Obligations NZ $8,200,000 9% due 11/15/1996 4,988,597 5,362,637 0.4
-------------- -------------- ------
11,001,177 11,569,091 0.9
Total Investments in New Zealand 16,533,984 16,861,676 1.3
<PAGE>
Philippines Banking 177,000 Metropolitan Bank and Trust Company 3,771,024 3,455,160 0.3
20,205 Metropolitan Bank and Trust Company
(New Shares) 158,907 394,415 0.0
-------------- -------------- ------
3,929,931 3,849,575 0.3
Multi-Industry 25,670 Benpres Holdings Corp. 252,033 179,690 0.0
Total Investments in the Philippines 4,181,964 4,029,265 0.3
Singapore Banking 352,000 Development Bank of Singapore Ltd. 4,192,643 4,015,775 0.3
Newspaper/Publishing 199,000 Singapore Press Holdings Ltd. 2,691,513 2,746,761 0.2
Real Estate 501,000 City Developments Ltd. 3,299,613 3,016,585 0.2
Transportation 359,000 Jurong Shipyard Ltd. 2,800,730 2,502,887 0.2
Total Investments in Singapore 12,984,499 12,282,008 0.9
South Korea Metals 34,000 Pohang Iron & Steel Company, Ltd. 3,696,418 3,311,327 0.3
Telecommunications 5,500 Korea Mobile Telecommunications Corp. 4,337,203 4,596,200 0.4
62,500 Korea Mobile Telecommunications Corp.
(GDR)(d) 2,111,812 1,953,125 0.2
-------------- -------------- ------
6,449,015 6,549,325 0.6
Utilities 255,000 Korea Electric Power Corp. 9,956,772 9,870,116 0.8
Total Investments in South Korea 20,102,205 19,730,768 1.7
Taiwan Electronics 298,800 Advanced Semiconductor Engineering Inc.
(GDR) (d) 4,651,282 4,033,800 0.3
Merchandising 151,275 Hocheng Group Corp. (ADR) (a) 3,458,835 1,172,381 0.1
Total Investments in Taiwan 8,110,117 5,206,181 0.4
Total Investments in the Pacific Basin 585,006,227 594,610,665 47.0
SOUTHEAST
ASIA
<PAGE>
India Automobiles 174,000 Ashok Leyland Ltd. (GDR) (d) 2,240,580 2,175,000 0.2
Chemicals 139,300 Reliance Industries Ltd. (ADR) (a) 2,581,221 2,629,288 0.2
Media 866,600 Videocon International Ltd. (GDR) (d) 7,097,723 2,989,770 0.2
Textiles 146,000 JCT Ltd. (GDR) (d) 2,597,436 1,861,500 0.1
62,000 Raymond Woolen Mills Ltd. (GDR) (d) 978,125 1,062,060 0.1
-------------- -------------- ------
3,575,561 2,923,560 0.2
Total Investments in India 15,495,085 10,717,618 0.8
Indonesia Food & 1,138,000 P.T. Wicaksana Overseas International 1,754,711 3,064,812 0.2
Household
Products
Telecommunications 128,580 P.T. Indonesian Satellite Corp. (ADR) (a) 4,606,215 4,516,373 0.4
1,506,500 P.T. Kabelmetal Indonesia 1,932,311 1,928,852 0.2
-------------- -------------- ------
6,538,526 6,445,225 0.6
Total Investments in Indonesia 8,293,237 9,510,037 0.8
Total Investments in Southeast Asia 23,788,322 20,227,655 1.6
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
WESTERN Percent of
EUROPE Industries Shares Held Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Austria Engineering & 7,300 V.A. Technologie AG $ 798,071 $ 806,552 0.1%
Construction
Utilities 52,905 Verbund Oesterreichische Elekrizitats AG 3,038,564 3,594,340 0.3
Total Investments in Austria 3,836,635 4,400,892 0.4
Belgium Banking 9,230 Generale de Banque S.A. (Ordinary) 2,268,755 2,772,515 0.2
Total Investments in Belgium 2,268,755 2,772,515 0.2
<PAGE>
Finland Banking 2,754,000 Kansallis-Osake-Pankki 4,133,835 2,670,858 0.2
605,000 Unitas Bank Ltd. 1,480,046 1,725,692 0.1
-------------- -------------- ------
5,613,881 4,396,550 0.3
Diversified 235,000 Outokumpu OY 3,395,069 4,386,509 0.3
Forest Products 81,700 Kymmene OY 2,471,891 2,404,970 0.2
Machinery 73,100 Rauma OY 1,317,437 1,768,158 0.1
Paper & Forest 471,500 Enso-Gutzeit OY 3,363,502 4,088,492 0.3
Products 123,000 Metsa Serla OY 4,764,160 4,855,669 0.4
269,600 Repola OY S 4,412,103 5,161,545 0.4
-------------- -------------- ------
12,539,765 14,105,706 1.1
Total Investments in Finland 25,338,043 27,061,893 2.0
France Automobiles 44,800 Peugeot S.A. 6,545,172 5,925,362 0.5
Banking 19,000 Societe Generale de Surveillance S.A.
(Class A) (Ordinary) 2,052,425 1,985,525 0.2
Building & 29,000 Compagnie de Saint-Gobain S.A. 3,470,085 3,686,100 0.3
Construction
Multi-Industry 11,192 EuraFrance S.A. 3,598,656 3,240,198 0.3
Oil--Related 22,225 Societe Nationale Elf Aquitane 1,563,576 1,628,423 0.1
Steel 38,400 Ugine S.A. 2,612,773 2,444,259 0.2
190,800 Usinor Sacilor S.A. 3,452,007 3,136,490 0.2
-------------- -------------- ------
6,064,780 5,580,749 0.4
Total Investments in France 23,294,694 22,046,357 1.8
Germany Automobiles 11,500 Volkswagen AG 2,953,983 3,522,296 0.3
Chemicals 17,500 BASF AG (Ordinary) 3,354,097 3,917,394 0.3
15,800 Bayer AG (Ordinary) 3,005,961 4,088,436 0.3
-------------- -------------- ------
6,360,058 8,005,830 0.6
Electronics 10,600 Siemens AG 5,325,819 5,404,800 0.4
Machinery & 77,450 Kloeckner Werke AG 3,951,498 5,212,270 0.4
Equipment 18,200 Mannesmann AG 4,519,528 5,748,152 0.5
-------------- -------------- ------
8,471,026 10,960,422 0.9
<PAGE>
Utilities 17,000 Vereinigte Elektrizitaets & Bergwerks
AG (Veba) (Warrants) (b) 731,875 862,751 0.1
Total Investments in Germany 23,842,761 28,756,099 2.3
Greece Banking 59,180 Ergo Bank S.A. (Registered) 2,619,453 2,722,737 0.2
Beverages 137,292 Hellenic Bottling Co. S.A. 2,763,631 4,406,990 0.3
Financial 3,100 Etba Leasing S.A. (Ordinary) 55,685 55,801 0.0
Services
Total Investments in Greece 5,438,769 7,185,528 0.5
Hungary Foods 10,000 Pick Szeged Reszvenytarsasag (ADR) (a) 627,990 485,050 0.0
5,500 Pick Szeged Reszvenytarsasag (Ordinary) 269,061 281,139 0.0
-------------- -------------- ------
897,051 766,189 0.0
Telecommunications 4,000 Magyar Tarkozlesi Reszvenytarsasag
(Ordinary) 851,768 615,858 0.0
Total Investments in Hungary 1,748,819 1,382,047 0.0
Ireland Banking 823,700 Allied Irish Banks PLC (Ordinary) 3,506,126 3,855,060 0.3
Building & 1,475,300 CRH PLC (Ordinary) 8,238,429 10,204,857 0.8
Construction
Closed-End Funds 900,000 First Ireland Investment Co. 1,281,789 1,632,782 0.1
Insurance 1,217,000 Irish Life PLC 4,006,737 4,131,849 0.3
Packaging & 2,182,375 Jefferson Smurfit Group PLC (Ordinary) 6,550,090 6,751,559 0.5
Containers
Total Investments in Ireland 23,583,171 26,576,107 2.0
Italy Automobiles 1,830,000 Fiat S.p.A. (Ordinary) 7,227,634 6,717,508 0.5
Building & 671,350 Fochi Filippo S.p.A. 2,130,531 411,073 0.0
Construction
Diversified 8,003,400 Compagnie Industrial Riunite S.p.A.
(CIR) 7,348,440 5,787,074 0.5
<PAGE>
Insurance 275,000 Assicurazioni Generali S.p.A. 6,963,833 6,608,462 0.5
Multi-Industry 8,950,000 Montedison S.p.A. 6,982,245 6,647,785 0.5
Telecommunications 2,732,800 STET, Di Risp (Non-Convertible) 6,506,277 6,676,441 0.5
Total Investments in Italy 37,158,960 32,848,343 2.5
Netherlands Banking 90,100 ABN Amro Bank (Ordinary) 3,018,860 3,469,390 0.3
120,000 Amev N.V. (Ordinary) 4,786,225 6,679,238 0.5
-------------- -------------- ------
7,805,085 10,148,628 0.8
Chemicals 17,900 Akzo N.V. (Ordinary) 2,106,155 2,112,416 0.2
99,465 European Vinyls Corporation
International N.V. 4,316,975 4,229,335 0.3
-------------- -------------- ------
6,423,130 6,341,751 0.5
Electrical 210,100 Philips Industries Inc. 6,730,946 9,432,070 0.7
Equipment
Finance 183,750 AEGON N.V. (Ordinary) 3,764,707 6,181,261 0.5
Insurance 105,500 Internationale Nederlanden Groep N.V. 4,342,817 5,865,746 0.5
Paper & Forest 125,677 Koninklijke KNP (Warrants) (b) 433,839 369,256 0.0
Products
Transportation 105,600 KLM Royal Dutch Airlines 2,481,298 3,488,095 0.3
Total Investments in the Netherlands 31,981,822 41,826,807 3.3
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
WESTERN EUROPE Percent of
(concluded) Industries Shares Held Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Norway Chemicals 84,350 Norsk Hydro A.S. $ 3,532,985 $ 3,567,236 0.3%
Oil & Gas 81,000 Saga Petroleum A.S. (Class A) 957,551 1,023,876 0.1
Producers 340,000 Saga Petroleum A.S. (Class B) 3,749,345 4,138,577 0.3
-------------- -------------- ------
4,706,896 5,162,453 0.4
Total Investments in Norway 8,239,881 8,729,689 0.7
<PAGE>
Poland Engineering & 341,503 Mostostal-Export S.A. 845,597 898,692 0.1
Construction
Tire & Rubber 97,200 Debica S.A. 1,310,106 1,180,567 0.1
Total Investments in Poland 2,155,703 2,079,259 0.2
Portugal Banking 132,800 Banco Comercial Portugues S.A. (ADR) (a) 1,892,060 1,643,400 0.1
363,195 Banco Comercial Portugues S.A.
(Registered) 5,225,469 4,493,773 0.4
-------------- -------------- ------
7,117,529 6,137,173 0.5
Forest Products 259,100 Sonae Investimentos--SGPS S.A. 5,727,239 5,889,795 0.5
Total Investments in Portugal 12,844,768 12,026,968 1.0
Spain Banking 24,500 Banco Popular Espanol (Ordinary) 2,677,926 3,772,840 0.3
Oil--Related 243,750 Repsol S.A. (Ordinary) 7,094,222 7,653,046 0.6
Total Investments in Spain 9,772,148 11,425,886 0.9
Sweden Appliances 102,705 Electrolux AB 4,981,607 4,486,688 0.4
Automobiles & 370,000 Volvo AB 6,780,616 7,358,589 0.6
Equipment
Building Related 62,000 Svedala Industry 1,333,284 1,713,529 0.1
Engineering 70,270 Celsius Industrier AB 1,035,437 1,007,189 0.1
174,350 SKF AB 3,255,938 3,575,098 0.3
95,800 SKF AB 'B' Free 1,859,982 1,944,697 0.1
-------------- -------------- ------
6,151,357 6,526,984 0.5
Finance 224,475 Stadshypotek AB 3,310,941 3,663,868 0.3
Forest Products 72,800 Mo och Domsjo AB 3,647,878 4,193,778 0.3
1,673,600 Rottneros Bruks AB 2,570,454 2,525,044 0.2
299,400 Stora Kopparbergs AB 3,864,464 3,695,891 0.3
-------------- -------------- ------
10,082,796 10,414,713 0.8
<PAGE>
Metals & Mining 149,100 Avesta Sheffield AB 1,303,286 1,584,908 0.1
Total Investments in Sweden 33,943,887 35,749,279 2.8
Switzerland Banking 43,000 CS Holding AG (Registered) 4,085,466 3,529,717 0.3
Chemicals 8,400 Ciba-Geigy AG (Registered) 4,520,209 5,956,110 0.5
Electrical Equipment 4,200 BBC Brown Boveri & Cie 3,744,722 4,437,407 0.3
Pharmaceuticals 1,155 Roche Holding Genusschein AG 6,092,464 7,748,005 0.6
Total Investments in Switzerland 18,442,861 21,671,239 1.7
Turkey Beverages 1,790,927 Erciyas Biracilik Ve Malt Sanayii A.S. 1,153,663 1,174,317 0.1
Building 2,711,135 Alarko Holdings A.S. 1,405,612 1,156,917 0.1
Materials 657,152 Cimentas Izmir Cimento Fabrikasi T.A.S. 465,286 362,501 0.0
-------------- -------------- ------
1,870,898 1,519,418 0.1
Food & Household 65,856 Dardanel Onentas Gida A.S. 133,262 138,457 0.0
Products
Insurance 7,372,500 Aksigorta A.S. 1,407,389 798,022 0.1
Retail Stores 2,578,236 Migros Turk A.S. 2,111,166 2,844,432 0.2
Steel 28,599,190 Izmir Demir Celik Sanayii A.S. 1,034,318 759,033 0.1
Total Investments in Turkey 7,710,696 7,233,679 0.6
United Aerospace 1,354,688 Rolls Royce PLC (Ordinary) 3,621,963 3,707,510 0.3
Kingdom
Automobile Parts 1,187,100 T & N PLC 3,190,926 3,432,938 0.3
Beverages 881,300 Grand Metropolitan PLC (Ordinary) 5,648,714 5,582,331 0.4
Broadcast--Media 858,400 British Sky Broadcasting Group PLC 3,625,979 4,525,519 0.4
Consumer--Goods 574,500 Vendome Luxury Group (Units) (c) 4,337,621 4,667,895 0.4
Electrical 1,041,700 The BICC Group PLC 5,437,448 5,209,214 0.4
Equipment
<PAGE>
Food & Beverage 328,000 Tate & Lyle PLC (Ordinary) 2,080,911 2,334,459 0.2
Food 304,100 Unilever Capital Corp. 4,935,583 5,752,757 0.5
Manufacturing
Industrial-- 1,797,600 Tomkins PLC 6,247,638 6,940,523 0.5
Other
Insurance 1,111,500 Prudential Corp. PLC 5,385,996 5,859,872 0.5
Leisure & 408,250 The Rank Organisation PLC (Ordinary) 2,567,333 2,779,012 0.2
Entertainment
Multi--Industry 1,357,200 BTR PLC (Ordinary) 7,506,617 7,176,257 0.6
Oil--Related 1,225,600 British Petroleum Co., Ltd. 8,950,186 9,198,010 0.7
Pharmaceuticals 685,200 Glaxo Holdings PLC 8,210,374 8,117,279 0.6
Retail 905,000 Tesco PLC (Ordinary) 4,567,339 4,581,752 0.4
Services 2,579,300 BET PLC 4,556,484 5,439,269 0.4
Telecommunications 664,900 NYNEX CableComms Group PLC 1,460,903 1,206,263 0.1
1,089,400 Racal Electronics PLC 3,798,064 4,586,242 0.4
1,408,400 Vodafone Group PLC 5,179,838 5,787,242 0.5
-------------- -------------- ------
10,438,805 11,579,747 1.0
Tobacco 700,000 BAT Industries PLC 5,382,771 5,470,517 0.4
Utilities 1,322,400 British Telecommunications PLC
(Ordinary) 8,165,110 8,294,327 0.7
Total Investments in the United Kingdom 104,857,798 110,649,188 8.9
Total Investments in Western Europe 376,460,171 404,421,775 31.8
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
SHORT-TERM Face Percent of
SECURITIES Amount Issue Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Commercial Pound 7,500,000 Abbey National PLC, 6.57% due 9/14/1995 $ 11,906,675 $ 11,608,253 0.9%
Paper-- Sterling
Foreign*
Total Investments in Commercial
Paper--Foreign 11,906,675 11,608,253 0.9
Foreign NZ$ 52,950,000 New Zealand Treasury Bill, 8.63% due
Government 9/06/1995 35,534,923 34,434,675 2.7
Obligations*
Total Investments in Foreign Government
Obligations 35,534,923 34,434,675 2.7
US Government United States Treasury Bills (e):
Obligations* US$ 4,000,000 5.25% due 10/26/1995 3,967,917 3,966,088 0.3
12,000,000 5.37% due 10/26/1995 11,901,550 11,898,264 0.9
15,000,000 5.39% due 10/26/1995 14,876,479 14,872,830 1.2
6,000,000 5.41% due 10/26/1995 5,950,408 5,949,132 0.5
320,000 5.42% due 10/26/1995 317,350 317,287 0.0
42,100,000 5.43% due 10/26/1995 41,750,746 41,743,076 3.3
Total Investments in US Government
Obligations 78,764,450 78,746,677 6.2
Total Investments in Short-Term
Securities 126,206,048 124,789,605 9.8
OPTIONS Number of Contracts/ Premiums
PURCHASED Face Amount Paid
Call Options 148,000 Nikkei, expiring May 1996 at
Purchased YEN18,388 1,506,046 1,545,930 0.1
300,436 Topix 2nd Section++, expiring
September 1995 at YEN2311.31 700,000 0 0.0
-------------- -------------- ------
2,206,046 1,545,930 0.1
Currency Put 93,000,000 Japanese Yen, expiring January 1996
Options at YEN86.15 2,555,800 10,729,968 0.9
Purchased
Total Options Purchased 4,761,846 12,275,898 1.0
Total Investments 1,163,268,035 1,208,071,630 95.1
<PAGE>
OPTIONS Premiums
WRITTEN Received
Call Options 9,600 Hang Seng Index, expiring October
Written 1995 at HK$1,000 (469,080) (106,660) 0.0
Currency Put 43,000,000 Japanese Yen, expiring December
Options 1995 at YEN87 (685,119) (143,362) 0.0
Written 50,000,000 Japanese Yen, expiring January 1996 at
YEN81.75 (1,661,400) (62,500) 0.0
-------------- -------------- ------
(2,346,519) (205,862) 0.0
Total Options Written (2,815,599) (312,522) 0.0
Total Investments, Net of Options Written $1,160,452,436 1,207,759,108 95.1
==============
Variation Margin on Financial Futures Contracts** (834,764) (0.1)
Unrealized Appreciation on Forward Foreign Exchange Contracts*** 6,349,949 0.5
Other Assets Less Liabilities 57,605,091 4.5
-------------- ------
Net Assets $1,270,879,304 100.0%
============== ======
Net Asset Class A--Based on net assets of $86,893,259 and 8,000,701
Value: shares outstanding $ 10.86
==============
Class B--Based on net assets of $964,697,638 and 89,557,986
shares outstanding $ 10.77
==============
Class C--Based on net assets of $30,999,308 and 2,903,762
shares outstanding $ 10.68
==============
Class D--Based on net assets of $188,289,179 and 17,318,631
shares outstanding $ 10.87
==============
<PAGE>
<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)Each unit consists of one ordinary 5p Vendome PLC and one ordinary
NPV Vendome SA.
(d)Global Depositary Receipt (GDR).
(e)Securities held as collateral in connection with open financial futures
contracts.
++All Topix 2nd Section OTCs are with Morgan Stanley & Co. International
Ltd. as counterparty.
*Commercial Paper, certain Foreign Government 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.
**Financial futures contracts purchased as of August 31, 1995 were as follows:
<CAPTION>
Number of Expiration
Contracts Issue Exchange Date Value
<C> <S> <S> <S> <C>
195 CAC40 MATIF Sept. 1995 $ 14,616,300
31 Nikkei 225 CME Sept. 1995 2,789,225
564 Nikkei 225 SIMEX Sept. 1995 52,241,475
352 Tokyo-Topix TFE Dec. 1995 51,691,551
Total Financial Futures Contracts Purchased
(Total Contract Price--$114,628,062) $121,338,551
============
***Forward foreign exchange contracts as of August 31, 1995 were as follows:
<CAPTION>
Unrealized
Foreign Currency Expiration Appreciation
Purchased Date (Depreciation)
<S> <C> <C> <C>
C$ 8,740,000 October 1995 $ 99,861
NZ$ 26,500,000 September 1995 107,988
YEN 1,688,169,000 October 1995 (1,586,289)
Total (US$ Commitment--$42,529,880) $(1,378,440)
-----------
<CAPTION>
Foreign
Currency Sold
<S> <C> <C> <C>
A$ 50,401,539 October 1995 $ (823,360)
Frf 49,565,100 October 1995 475,499
Nlg 32,270,000 October 1995 320,459
NZ$ 9,500,000 October 1995 249,596
YEN 1,786,017,500 September 1995 (212,812)
YEN 7,961,929,325 October 1995 7,719,007
Total (US$ Commitment--$181,648,142) $ 7,728,389
-----------
<PAGE>
Total Unrealized Appreciation--Net on
Forward Foreign Exchange Contracts $ 6,349,949
===========
</TABLE>
EQUITY PORTFOLIO CHANGES
For the Quarter Ended August 31, 1995
Additions
Advanced Semiconductor
Engineering Inc. (GDR)
Assicurazioni Generali S.p.A.
BTR PLC (Ordinary)
Bank Hapoalim Ltd.
Beatrix Mines Ltd.
Brierley Investments Ltd.
*British Gas PLC (Ordinary)
British Petroleum Co., Ltd.
CS Holding AG (Registered)
City Developments Ltd.
Coca-Cola Amatil, Ltd. (New Shares)
Debica S.A.
Delta Corporation
Development Bank of Singapore Ltd.
Driefontein Consolidated Ltd.
Driefontein Consolidated Ltd. (ADR)
Fiat S.p.A. (Ordinary)
Glaxo Holdings PLC
Hutchison Whampoa Ltd.
Irish Life PLC
Kinross Mines Ltd.
Koor Industries Ltd.
Korea Mobile Telecommunications
Corp. (GDR)
Kymmene OY
Malbak Ltd. (GDR)
Metropolitan Bank and Trust Company
Metropolitan Bank and Trust Company
(New Shares)
Montedison S.p.A.
Mostostal-Export S.A.
NYNEX CableComms Group PLC
Norsk Hydro A.S.
P.T. Kabelmetal Indonesia
Pohang Iron & Steel Company, Ltd.
Public Bank (Malaysia) BHD 'Foreign'
Rauma OY
Rottneros Bruks AB
Scitex Corporation Ltd.
Tesco PLC (Ordinary)
*US Industries, Inc.
Usinor Sacilor S.A.
Vaal Reefs Exploration & Mining
Company, Ltd. (ADR)
Vodafone Group PLC
Western Areas Gold Mining Company, Ltd.
Western Areas Gold Mining Company, Ltd.
(ADR)
<PAGE>
Deletions
American Barrick Resources Corp.
Anglo American Corp. of South Africa Ltd.
(ADR)
BMW AG
BTR Nylex Ltd.
Bangkok Bank Co., Ltd. 'Foreign'
*British Gas PLC (Ordinary)
Burns Philp & Co., Ltd.
CAPCO Automotive Products Corp. S.A.
C.P. Pokphand Co., Ltd.
Cementos Mexicanos, S.A. de C.V. (Cemex)
(Class B) (ADR)
Compania de Telefonos de Chile S.A. (ADR)
De Beers Consolidated Mines Ltd. (ADR)
Fomento Economico Mexicano, S.A. de C.V.
(Femsa) (ADR)
Forte PLC
General Electric Co., Ltd. PLC (Ordinary)
Genting BHD
Hanson PLC (Ordinary)
Hong Kong & China Gas Co., Ltd.
Horsham Corp.
Imperial Oil Ltd. (ADR)
Indian Tobacco Co. Ltd.
Mavesa S.A. (Ordinary)
The Morgan Stanley Africa Investment
Fund, Inc.
Munich Reinsurance Co. (Ordinary)
Nestle AG
New South Africa Fund, Inc.
Nippon Express Co., Ltd.
P.T. Supreme Cable Manufacturing
Company (GDR)
The RTZ Corp. PLC
Rembrandt Group Ltd.
The Shell Transport & Trading Co. PLC
Sime Darby (Malaysia) BHD
Sociedade de Construsoes Soares
da Costa S.A.
South Africa Iron & Steel Industrial Corp., Ltd.
South African Breweries Ltd.
Southern Africa Fund, Inc.
Standard Chartered PLC (Ordinary)
<PAGE>
Tarmac PLC (Ordinary)
Telecomunicacoes Brasileiras S.A.--
Telebras ON
Telecomunicacoes Brasileiras S.A.--
Telebras ON (Rights)
Telecomunicacoes Brasileiras S.A.--
Telebras PN (Preferred)
Telecomunicacoes Brasileiras S.A.--
Telebras PN (Preferred) (Rights)
Telefonos de Mexico, S.A. de C.V.
(Telmex) (ADR)
*US Industries, Inc.
United Overseas Bank Ltd. (Warrants)
Usinas Siderurgicas de Minas Gerais--
Usiminas S.A.
Yacimientos Petroliferos Fiscales S.A.
(Sponsored) (ADR)
[FN]
*Added and deleted in the same quarter.
PORTFOLIO INFORMATION
Worldwide
Investments as of
August 31, 1995
Ten Largest Industries Percent of
(Equity Investments) Net Assets
Electrical Equipment 7.8%
Property & Casualty Insurance 7.3
Banking 5.6
Telecommunications 3.5
Chemicals 3.3
Pharmaceuticals 3.2
Automobiles 3.2
Utilities 3.2
Multi-Industry 3.0
Office Equipment 2.9
Percent of
Ten Largest Countries Net Assets
Japan 33.0%
United Kingdom 8.9
Australia 4.6
Hong Kong 4.6
Netherlands 3.3
Sweden 2.8
Italy 2.5
Germany 2.3
Finland 2.0
Ireland 2.0
<PAGE>
Percent of
Asset Mix* Net Assets
Japan 33.0%
Europe (Ex-United Kingdom
and Ireland) 20.9
Pacific Basin (Ex-Japan) 14.0
United Kingdom and Ireland 10.9
Cash 9.8
Other Emerging Markets 5.5
[FN]
*Percent of net assets may not equal 100%, and
excludes the impact of futures and options.
Percent of
Ten Largest Equity Holdings Net Assets
Murata Manufacturing Co., Ltd. 2.9%
Canon Inc. 2.9
Rohm Co., Ltd. 2.7
Toyo Seikan Kaisha, Ltd. 2.4
Mitsubishi Heavy Industries, Ltd. 2.1
Ito-Yokado Co., Ltd. 2.1
Suzuki Motor Corp. 1.7
Tokio Marine & Fire
Insurance Co., Ltd. 1.7
Lend Lease Corp. 1.6
Sankyo Co., Ltd. 1.4
Financial Futures Contracts
Percent of
Country Issue Exchange Net Assets
France CAC40 MATIF 1.2%
Japan Nikkei 225 CME 0.2
Japan Nikkei 225 SIMEX 4.1
Japan Tokyo-Topix TFE 4.1
-----
9.6%
=====
<PAGE>
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
Andrew John Bascand, Vice President
Donald C. Burke, Vice President
Adrian Holmes, Vice President
Grace Pineda, Vice President
Stephen I. Silverman, Vice President
Gerald M. Richard, Treasurer
Michael J. Hennewinkel, Secretary
Custodian
Brown Brothers Harriman & Co.
40 Water Street
Boston, Massachusetts 02109
<PAGE>
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
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.
