MERRILL LYNCH
INTERNATIONAL
EQUITY FUND
FUND LOGO
Semi-Annual Report
November 30, 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
<PAGE>
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 November 30, 1994
GRAPHIC MATERIAL APPEARS HERE. SEE APPENDIX,
GRAPHIC AND IMAGE MATERIAL, ITEM 1.
Source: Financial Times--
Actuaries Index.
[FN]
*For the three-month period
ended November 30, 1994,
total investment return in
US dollars for the Financial
Times-Actuaries World
(Ex-US) Index was -4.61%.
DEAR SHAREHOLDER
Strong economic growth continues
to constrain the performance of inter-
national bond and equity markets. In
the three months ended November 30,
1994, total return for the unmanaged
Financial Times-Actuaries World
(Ex-US) Index was -4.6%, in US dollar
terms. The decline in world stock
markets was associated with the rise in
10-year US Treasury security yields
from around 7.5% to 8.0%.
<PAGE>
Among major equity markets, price
weakness was most evident in Japan,
where the total US dollar return fell
by around 6% during the three months
ended November 30, 1994. Over the
same period, European equity indexes
fell by about 4%, with the most pro-
nounced falls in Germany and Italy.
Elsewhere, Hong Kong equities
declined by over 15%, while in con-
trast South African equities rose by
about 8%. Major currencies generally
traded in a narrow range throughout
the three-month period ended
November 30. Significant currency
shifts were confined to the South
African Rand and the Australian and
New Zealand dollars, which all
appreciated significantly against
the US dollar.
Total returns for Merrill Lynch
International Equity Fund's Class B
and Class D Shares for the three-
month period ended November 30,
1994 were -6.31% and -6.17%, re-
spectively, and Class A and Class C
Shares since inception (October 21,
1994) through November 30, 1994
were -4.09% and -4.13%, respectively.
The Fund's underperformance rela-
tive to the benchmark reflected
an overweighted stance in some
underperforming emerging markets
and a relatively high exposure to
cyclical stocks in Europe.
Significant changes in portfolio
construction reflected a reduction in
cash exposure and subsequent allo-
cation to Continental Europe and
Hong Kong during periods of market
weakness. The Fund also switched
cash positions into UK gilts, South
African bonds and New Zealand
Treasury bills.
<PAGE>
The Fund continued to receive signi-
ficant net cash inflows. Net assets
stood at $1.3 billion at the end of
November, compared with $1.2 billion
three months earlier.
Portfolio Matters
At the beginning of the period under
review, we had built up the Fund's
cash position to about 12% of net
assets, reflecting reductions in
Japanese, Latin American, UK and
Australian positions.
The major investment category
remains Japanese equities, which
currently represent nearly 35% of
Fund net assets. Cash resources have
been applied progressively on market
weakness. Major asset shifts during
the three months ended November 30
included purchasing South African,
UK and New Zealand bonds; increas-
ing exposure to commodity-related
equities in Canada; and investing in
Hong Kong, Japan and Germany
during periods of market weakness.
Aside from the Japanese position, as
of November 30, 1994, the Fund had
21.1% of its net assets in Europe
(ex-United Kingdom and Ireland),
12.4% in the United Kingdom and
Ireland, 13.6% in the developed Pacific
Basin (ex-Japan) and about 5% in
Latin America. Other equity invest-
ments included positions in Canada,
South Africa and emerging Europe
and Asia.
<PAGE>
Economic and Investment
Environment
Our view of the broad economic
environment remains unchanged.
Global growth has recovered more
rapidly than generally expected, and
monetary policy tightening has
extended further. In particular, the
Federal Reserve Board lifted the
Federal Funds rate by 75 basis points
to 5.5% in November. We expect
further significant tightening of US
monetary policy in the course of the
next year. Less widely publicized
monetary tightening also occurred
over the reporting period in Australia,
Malaysia, Hong Kong, South Africa
and New Zealand. Meanwhile,
stronger-than-expected growth is
likely to induce further tightening
in the United Kingdom.
As growth strengthens ahead of
consensus expectations and monetary
policies continue to tighten world-
wide, the environment for equity
markets is likely to remain mixed.
In part, the poor performance of
markets in the past quarter reflected
increased pessimism about interest
rates. Against a background of rising
economic growth and interest rate
expectations, we favor commodity-
producing economies and those
regions where capacity pressures are
least likely to cause central banks to
raise interest rates.
As a result, we still favor a relatively
high exposure to Japanese equities,
as the domestic recovery remains on
track and inflationary pressures are
unlikely to become evident. Addi-
tionally, among the larger equity
markets, Japanese corporate profits
are highly sensitive to economic
growth. As the domestic Japanese
economic recovery gathers strength,
we expect an improvement in
investor sentiment.
<PAGE>
Mounting US inflationary pressures
and higher US bond yields have
significantly inhibited performance
of European financial markets in 1994
to date. However, over the three
months ended November 30, Euro-
pean bond yields, and particularly
UK gilt yields, managed to partly
decouple from rising US yields.
Throughout the next six months,
rising European capacity utilization
is likely to gradually place upward
pressure on European price inflation.
Already, further interest rate increases
are widely expected in the United
Kingdom. Over the course of the next
year, monetary tightening also seems
likely for the "core" European coun-
tries of Germany, Holland and France.
Among smaller markets, rising world
growth is significantly bolstering
trade-oriented economies in Latin
America, Southeast Asia and Austral-
asia. In the latter two regions, the
pace of expansion has created the
potential for accelerating price in-
flation. As a consequence, more for-
ward-looking central banks in the
region already have commenced a
significant monetary tightening.
Countries which fail to tighten mone-
tary policy in an appropriate time
frame are more likely to experience
economic overheating and pronounced
volatility in their financial markets.
Overall, the global economic cycle
has now shifted into high gear and
may require more significant policy
action to stem incipient cyclical in-
flationary pressures. We believe that
tighter monetary conditions will pre-
vent inevitable cyclical inflationary
pressures from turning into secular
inflationary pressures. Although we
have become encouraged by re-
cent monetary policy moves, addi-
tional interest rate increases may be
required to sufficiently enhance
credibility in US and UK policy.
<PAGE>
Major Equity Changes
Portfolio turnover remained subdued
in the November quarter, with most
activity confined to investing cash
in periods of significant market
weakness. In particular, we increased
the Fund's core holdings in a number
of Japanese cyclical and electronic
companies such as Toyo Seikan
Kaisha, Ltd., Suzuki Motor Co.,
Hitachi Ltd., Matsushita Electric
Industrial Co., Ltd., and Chudenko
Corp. In Canada, we continued
building the Fund's commodity equity
exposure by purchasing Horsham
Corp., Imperial Oil Ltd., and American
Barrick Resources Corp. During the
period, we partly rolled out of the
Fund's Canadian equity futures that
had been purchased in August
in anticipation of acquisition of
equities.
In South Africa, we perceived an
opportunity to increase country and
currency exposure by purchasing
corporate bonds issued by Transnet
Ltd., a domestic transport company.
Similarly, in anticipation of expected
policy tightening, we diversified the
Fund's US cash exposure by purchas-
ing New Zealand Treasury bills and
short-dated UK gilts.
In the United Kingdom, portfolio
shifts initially were confined to
switches out of Reuters Holdings PLC
and Cable & Wireless Public Co., Ltd.
into UK cash. At various times during
the three-month period, the Fund
held both long-term and short-term
UK FTSE100 equity futures positions
and benefited from excessive market
volatility. More recently, we purchased
Racal Electronics PLC and The Shell
Transport & Trading Co. PLC.
<PAGE>
Within Continental Europe, the most
significant changes reflected large
purchases of stocks across the region
in the third week of September, when
the Fund increased a number of
existing holdings. In total, about 3%
was added to the Fund's European
cyclical exposure. Subsequent Euro-
pean portfolio activity reflected more
specific stock-related transactions
and included acquiring a large hold-
ing in Volvo AB and lifting other
existing European automobile hold-
ings following significant relative
weakness.
Among other markets, the Fund in-
creased its small weighting in Hong
Kong and raised weightings in Brazil,
Turkey and Africa on market
weakness.
In Conclusion
The investment cycle continues to
strike a balance between accelerating
global growth and the increasing
likelihood of a more rapid monetary
policy tightening. Provided the long-
term prospect for subdued inflation
remains intact, we believe that an
internationally diversified portfolio
offers potential for capital gains
through the current business expan-
sion. We will continue to emphasize
laggard equity markets and gener-
ally prefer cyclical growth-oriented
stocks. We believe that the Fund
offers geographic diversification for a
US-based equity investor with the
added potential of attractive long-
term returns. We look forward to
reviewing our investment strategy
with you in our next report to share-
holders, and we thank you for your
continued support of Merrill Lynch
International Equity Fund.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
<PAGE>
(Andrew Bascand)
Andrew Bascand
Senior Portfolio Manager/
Asset Allocator
(Adrian 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
January 13, 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 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 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 on pages 5 and 6. Data
for all of the Fund's shares, including Class A and
Class C Shares, are presented in the "Recent Performance
Results" table.
The "Recent Performance Results" table on page 6 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 November 30, 1994 and for Class A and
Class C Shares for the period since inception through
November 30, 1994. 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
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.
Average Annual
Total Return
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 9/30/94 +13.93% + 9.93%
Inception (7/30/93)
through 9/30/94 +12.94 +10.42
<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 9/30/94 +14.81% +8.78%
Inception (7/30/93)
through 9/30/94 +13.78 +8.65
[FN]
*Maximum sales charge is 5.25%. On 10/21/94, Class A Shares were
redesignated to Class D Shares.
**Assuming maximum sales charge.
PERFORMANCE DATA (concluded)
<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%
1/1/94--11/30/94 11.18 11.14 -- -- - 0.36
Cumulative total return as of 11/30/94: 11.40%**
<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>
<PAGE>
<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%
1/1/94--11/30/94 11.21 11.25 -- -- + 0.36
Cumulative total return as of 11/30/94: +12.50%**
<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 have been
redesignated to Class D Shares.
</TABLE>
<TABLE>
Recent
Performance
Results
<CAPTION>
12 Month 3 Month
11/30/94 8/31/94++++ 11/30/93 % Change %Change++++
<S> <C> <C> <C> <C> <C>
ML International Equity Fund Class A Shares* $11.25 $11.73 -- -- -4.09%
ML International Equity Fund Class B Shares* 11.14 11.89 $10.29 8.26% -6.31
ML International Equity Fund Class C Shares* 11.14 11.62 -- -- -4.13
ML International Equity Fund Class D Shares* 11.25 11.99 10.31 9.12 -6.17
ML International Equity Fund Class A Shares--Total Return* -- -4.09
ML International Equity Fund Class B Shares--Total Return* 8.26 -6.31
ML International Equity Fund Class C Shares--Total Return* -- -4.13
ML International Equity Fund Class D Shares--Total Return* 9.12 -6.17
Financial Times--Actuaries World (Ex-US) Index++--Total Return 15.64 +4.61
<FN>
*Investment results shown do not reflect any 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).
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
Shares Held/ Value Percent of
AFRICA Industries Face Amount Investments Cost (Note 1a) Net Assets
<S> <S> <S> <C> <S> <C> <C> <C>
South Mining 11,000 De Beers Consolidated Mines Ltd. (ADR)
Africa (a) $ 245,732 $ 236,500 0.0%
Multi-Industry 15,000 ASA Ltd. 659,495 654,375 0.1
22,600 The Morgan Stanley Africa Investment
Fund, Inc. (e) 264,313 262,725 0.0
2,300 New South Africa Fund, Inc. 31,276 32,200 0.0
18,700 Southern Africa Fund, Inc. (e) 277,048 278,163 0.0
-------------- -------------- ------
1,232,132 1,227,463 0.1
Transportation ZAL 63,000,000 Transnet Ltd., 15% due 10/01/1995 15,187,500 15,435,766 1.2
Total Investments in Africa 16,665,364 16,899,729 1.3
LATIN
AMERICA
Argentina Banking 125,838 Banco de Galicia y Buenos Aires S.A.
(ADR)(a) 2,983,033 2,878,544 0.2
Oil & Related 200,600 Yacimientos Petroliferos Fiscales S.A.
(Sponsored) (ADR) (a) 5,027,566 4,538,575 0.4
Total Investments in Argentina 8,010,599 7,417,119 0.6
Brazil Automobiles 80,000 CAPCO Automotive Products Corp. S.A. (e) 964,050 1,040,000 0.1
Banking 226,587,754 Banco Bradesco S.A. PN 1,810,884 1,850,243 0.1
Mining 24,928,000 Companhia Vale do Rio Doce S.A. 2,673,114 4,779,096 0.4
Steel 100,000 Usinas Siderurgicas de Minas
Gerais--Usiminas S.A. 1,588,500 1,600,000 0.1
Telecommunications 5,000 Telecomunicacoes Brasileiras S.A.--
Telebras (ADR) (a) 263,167 235,000 0.0
16,937,793 Telecomunicacoes Brasileiras S.A.--
Telebras ON 641,293 649,650 0.1
249,093,546 Telecomunicacoes Brasileiras S.A.--
Telebras PN (Preferred) 10,730,792 11,938,803 0.9
405,915 Telecomunicacoes de Sao Paulo S.A.
(Preferred) 197,540 180,140 0.0
-------------- -------------- ------
11,832,792 13,003,593 1.0
Utilities--Electric 206,100 Companhia Energetica de Minas Gerais
S.A. (CEMIG) (ADR) (a) 4,780,061 5,410,125 0.4
Total Investments in Brazil 23,649,401 27,683,057 2.1
<PAGE>
Chile Building & Construction 55,000 Maderas y Sinteticos S.A. (MASISA)
(Sponsored) (ADR) (a) 977,412 1,546,875 0.1
Telecommunications 20,000 Compania de Telefonos de Chile S.A.
(ADR) (a) 2,406,988 1,720,000 0.1
Total Investments in Chile 3,384,400 3,266,875 0.2
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
LATIN
AMERICA Shares Held/ Value Percent of
(concluded)Industries Face Amount Investments Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
Mexico Beverages 278,000 Fomento Economico Mexicano, S.A. de C.V.
(Femsa) (ADR) (a) (d) $ 1,742,736 $ 1,167,600 0.1%
356,000 Fomento Economico Mexicano, S.A. de C.V.
(Femsa) (Class B) 1,965,085 1,512,029 0.1
149,800 Panamerican Beverages, Inc. (Class A) 4,649,545 5,243,000 0.4
-------------- -------------- ------
8,357,366 7,922,629 0.6
Building & Construction 89,437 Cementos Mexicanos, S.A. de C.V. (Cemex)
(Class B) (ADR) (a) 1,607,856 1,721,662 0.1
Financial Services 137,400 Servicios Financieros Quadrum, S.A.
de C.V. (ADR) (a) (d) 2,776,799 1,872,075 0.2
Food & 10,000 Sigma Alimentos, S.A. de C.V. (Class
Household Products B) (e) 167,601 167,273 0.0
Leisure 190,000 Grupo Carso, S.A. de C.V. (ADR) (a) (e) 3,693,774 4,275,000 0.3
75,000 Grupo Situr, S.A. de C.V. (ADR) (a) (d) 1,875,000 2,240,625 0.2
-------------- -------------- ------
5,568,774 6,515,625 0.5
Telecommunications 215,600 Telefonos de Mexico, S.A. de C.V.
(Telmex) (ADR) (a) 12,419,026 11,426,800 0.9
Total Investments in Mexico 30,897,422 29,626,064 2.3
Peru Mining 227,266 Southern Peru Copper Corp. S.A. 728,471 1,402,424 0.1
Total Investments in Peru 728,471 1,402,424 0.1
<PAGE>
Venezuela Foods 140,000 Mavesa S.A. (ADR) (a) (d) 1,004,375 647,500 0.1
400,000 Mavesa S.A. (Ordinary) 137,354 103,792 0.0
-------------- -------------- ------
1,141,729 751,292 0.1
Utilities--Electric 200,951 C.A. La Electricidad de Caracas
S.A.I.C.A.-S.A.C.A. 349,541 258,403 0.0
Total Investments in Venezuela 1,491,270 1,009,695 0.1
Total Investments in Latin America 68,161,563 70,405,234 5.4
NORTH
AMERICA
Canada Diversified 813,000 Horsham Corp. 13,159,293 11,077,125 0.9
Energy Sources 45,000 Imperial Oil Ltd. 1,463,945 1,496,250 0.1
272,000 Imperial Oil Ltd. (ADR) (a) 8,849,797 9,025,455 0.7
-------------- -------------- ------
10,313,742 10,521,705 0.8
Foreign Government Canadian Government Bonds:
Obligations C$ 12,750,000 6.50% due 8/01/1996 10,008,529 9,066,437 0.7
C$ 25,800,000 5.75% due 3/01/1999 18,644,485 16,845,993 1.3
-------------- -------------- ------
28,653,014 25,912,430 2.0
Multi-Industry 519,778 American Barrick Resources Corp. 13,318,718 10,868,085 0.8
53,570 American Barrick Resources Corp. (ADR)
(a) 1,359,340 1,118,274 0.1
-------------- -------------- ------
14,678,058 11,986,359 0.9
Total Investments in North America 66,804,107 59,497,619 4.6
PACIFIC
BASIN
Australia Diversified 4,545,600 BTR Nylex Ltd. 11,064,684 8,383,905 0.7
Food & Beverage 2,190,527 Burns Philp & Co., Ltd. 6,573,335 5,269,105 0.4
817,203 Coca-Cola Amatil, Ltd. 4,103,319 5,338,174 0.4
-------------- -------------- ------
10,676,654 10,607,279 0.8
<PAGE>
Media 705,456 The News Corp., Ltd. 3,601,925 2,819,143 0.2
352,728 The News Corp., Ltd. (Preferred) 1,548,196 1,225,243 0.1
-------------- -------------- ------
5,150,121 4,044,386 0.3
Merchandising 128,600 Amway Asia Pacific Ltd. 3,790,436 4,163,425 0.3
Natural Gas 382,293 Broken Hill Proprietary Co. 5,298,420 5,482,162 0.4
Property 923,065 Lend Lease Corp. 11,391,347 11,279,070 0.9
Total Investments in Australia 47,371,662 43,960,227 3.4
Hong Kong Foods 15,254,000 C.P. Pokphand Co., Ltd. 4,183,369 3,925,007 0.3
Multi-Industry 338,000 Swire Pacific Ltd. (Class A) 2,300,369 2,250,827 0.2
Property 2,588,000 Hang Lung Development Co., Ltd. 4,128,204 3,948,795 0.3
258,800 Hang Lung Development Co., Ltd.
(Warrants) (b) (e) 0 0 0.0
-------------- -------------- ------
4,128,204 3,948,642 0.3
Telecommunications 9,298,000 Hong Kong Telecommunications Ltd. 18,219,642 18,394,978 1.4
Utilities 4,647,600 China Light & Power Co., Ltd. 23,140,111 20,012,036 1.5
2,196,000 Hong Kong & China Gas Co. 3,963,130 3,577,842 0.3
-------------- -------------- ------
27,103,241 23,589,878 1.8
Total Investments in Hong Kong 55,934,825 52,109,485 4.0
Japan Automobiles 1,581,000 Suzuki Motor Co. 18,145,337 18,060,352 1.4
523,000 Toyota Motor Corp. 9,819,266 11,155,782 0.9
-------------- -------------- ------
27,964,603 29,216,134 2.3
Beverages 99,000 Chukyo Coca-Cola Bottling Co., Ltd. 1,398,440 1,080,873 0.1
106,000 Hokkaido Coca-Cola Bottling Co., Ltd. 1,754,547 1,435,908 0.1
102,000 Kinki Coca-Cola Bottling Co., Ltd. 1,893,379 1,422,968 0.1
111,000 Mikuni Coca-Cola Bottling Co., Ltd. 2,093,307 1,503,639 0.1
111,000 Sanyo Coca-Cola Bottling Co., Ltd. 1,874,646 1,615,851 0.1
-------------- -------------- ------
9,014,319 7,059,239 0.5
Capital Goods 3,558,000 Mitsubishi Heavy Industries, Ltd. 23,850,233 26,400,849 2.0
<PAGE>
Chemicals 733,000 Shin-Etsu Chemical Co., Ltd. 15,311,687 14,375,455 1.1
Consumer Electronics 1,090,000 Matsushita Electric Industrial Co., Ltd. 18,596,264 16,859,078 1.3
326,000 Sony Corp. 18,786,592 17,301,860 1.3
-------------- -------------- ------
37,382,856 34,160,938 2.6
Containers 727,000 Toyo Seikan Kaisha, Ltd. 21,804,552 24,546,907 1.9
Electric Construction 269,000 Chudenko Corp. 10,059,726 9,626,567 0.7
446,000 Sanki Engineering Co., Ltd. 6,307,262 5,049,737 0.4
371,000 Taihei Dengyo Kaisha, Ltd. 9,667,248 9,976,345 0.8
-------------- -------------- ------
26,034,236 24,652,649 1.9
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
PACIFIC Shares Held/ Value Percent of
BASIN Industries Face Amount Investments Cost (Note 1a) Net Assets
(concluded)
<S> <S> <S><C> <S> <C> <C> <C>
Japan Electrical Equipment 1,872,000 Hitachi Ltd. $ 18,134,570 $ 18,489,123 1.4%
(concluded) 687,600 Murata Manufacturing Co., Ltd. 25,680,547 27,804,286 2.1
569,000 The Nippon Signal Co., Ltd. 7,950,113 5,982,208 0.5
82,000 Rohm Co. 14,189,997 16,026,082 1.2
1,415,000 Sumitomo Electric Industries, Ltd. 19,791,497 19,740,194 1.5
-------------- -------------- ------
85,746,724 88,041,893 6.7
Iron & Steel 330,000 Maruichi Steel Tube, Ltd. 5,881,382 6,004,852 0.5
Office Equipment 1,931,000 Canon, Inc. 31,418,245 33,380,611 2.6
Pharmaceuticals 699,000 Sankyo Co., Ltd. 17,050,198 17,453,801 1.3
763,000 Taisho Pharmaceutical Co., Ltd. 15,232,435 13,729,681 1.1
-------------- -------------- ------
32,282,633 31,183,482 2.4
<PAGE>
Property & Casualty 1,475,000 Dai-Tokyo Fire & Marine Insurance Co.,
Insurance Ltd. 11,241,300 10,154,418 0.8
851,000 Fuji Fire & Marine Insurance Co., Ltd. 5,819,056 5,316,599 0.4
1,268,000 Koa Fire & Marine Insurance Co., Ltd. 8,833,667 8,460,170 0.6
742,000 Mitsui Marine & Fire Insurance Co.,
Ltd. 6,045,628 5,385,726 0.4
1,566,000 Nichido Fire & Marine Insurance Co.,
Ltd. 11,986,774 13,123,878 1.0
783,000 Nippon Fire & Marine Insurance Co.,
Ltd. 5,748,509 5,184,644 0.4
1,356,000 Sumitomo Marine & Fire Insurance Co.,
Ltd. 11,597,542 11,569,592 0.9
1,427,000 Tokio Marine & Fire Insurance Co.,
Ltd. 17,584,740 16,445,410 1.3
1,257,000 Yasuda Fire & Marine Insurance Co.,
Ltd. 9,408,702 8,933,188 0.7
-------------- -------------- ------
88,265,918 84,573,625 6.5
Retailing 530,000 Ito-Yokado Co., Ltd. 27,112,717 28,128,791 2.2
138,000 Sangetsu Co. 4,742,639 4,003,841 0.3
116,000 Shimachu Co. 4,860,372 3,658,714 0.3
-------------- -------------- ------
36,715,728 35,791,346 2.8
Transportation 1,098,000 Nippon Express Co., Ltd. 11,235,190 11,432,875 0.9
Total Investments in Japan 452,908,306 450,820,855 34.7
Malaysia Banking 507,000 Public Bank (Malaysia) BHD 'Foreign' 1,153,120 1,071,420 0.1
Leisure 235,500 Genting BHD 1,450,561 1,870,876 0.1
Total Investments in Malaysia 2,603,681 2,942,296 0.2
New Foreign Government New Zealand Government Bonds:
Zealand Obligations NZ$ 8,350,000 6.50% due 2/15/2000 4,665,647 4,705,552 0.4
NZ$ 8,200,000 9.00% due 11/15/1996 4,988,597 5,104,879 0.4
NZ$50,000,000 New Zealand Treasury Bill,
8.40%++++ due 1/11/1995 29,891,982 31,066,784 2.3
-------------- -------------- ------
39,546,226 40,877,215 3.1
Paper & Forest 6,351,000 Carter Holt Harvey, Ltd. 14,971,005 14,061,216 1.1
Products
Total Investments in New Zealand 54,517,231 54,938,431 4.2
<PAGE>
Philip- Multi-Industry 256,700 Benpres Holdings Corp. (e) 2,772,360 2,502,825 0.2
pines
Total Investments in the Philippines 2,772,360 2,502,825 0.2
South Financial Services 170,590 Hanyang Securities Co. 3,913,001 2,662,449 0.2
Korea
Foods 8,370 Lotte Confectionary Co. (Ordinary) (e) 1,130,764 1,205,196 0.1
Utilities 154,000 Korea Electric Power Corp. (e) 5,946,629 6,252,264 0.5
Total Investments in South Korea 10,990,394 10,119,909 0.8
Taiwan Merchandising 271,020 Hocheng Group Corp. (ADR) (a) 7,825,280 6,233,460 0.5
Total Investments in Taiwan 7,825,280 6,233,460 0.5
Thailand Real Estate 1,760,000 Bangkok Land Ltd. 'Foreign' 6,063,212 3,934,217 0.3
Total Investments in Thailand 6,063,212 3,934,217 0.3
Total Investments in the Pacific Basin 640,986,951 627,561,705 48.3
SOUTHEAST
ASIA
India Media 643,600 Videocon International Ltd. (GDR)
(e) (f) 6,184,111 2,574,400 0.2
Metals 162,500 Hindalco Industries Ltd. (e) 5,205,525 5,728,125 0.5
Tobacco 466,000 Indian Tobacco Co. Ltd. (e) 6,288,713 5,126,000 0.4
Total Investments in India 17,678,349 13,428,525 1.1
Indonesia Food & Household 1,138,000 PT Wicaksana Overseas International (e) 1,754,711 2,821,034 0.2
Products
Telecommunications 72,480 PT Indonesia Satellite (ADR) (a) 2,654,341 2,754,240 0.2
Total Investments in Indonesia 4,409,052 5,575,274 0.4
<PAGE>
Total Investments in Southeast Asia 22,087,401 19,003,799 1.5
WESTERN
EUROPE
Austria Utilities 52,905 Verbund Oesterreichische Elekrizitats
AG 3,038,564 3,182,436 0.3
Total Investments in Austria 3,038,564 3,182,436 0.3
Belgium Banking 15,000 Generale de Banque S.A. (Ordinary) 3,677,777 3,808,122 0.3
Building Materials 3,000 Glaverbel S.A. (Ordinary) 465,511 392,436 0.0
Total Investments in Belgium 4,143,288 4,200,558 0.3
Finland Banking 2,030,000 Kansallis-Osake-Pankki (e) 3,384,384 2,505,142 0.2
1,225,000 Unitas Bank Ltd. (e) 2,996,787 3,350,987 0.3
-------------- -------------- ------
6,381,171 5,856,129 0.5
Diversified 235,000 Outokumpu OY (e) 3,395,069 4,359,729 0.3
Paper & Forest 471,500 Enso-Gutzeit OY 3,363,502 3,636,621 0.3
Products 86,150 Metsa Serla OY 3,366,405 3,260,304 0.2
195,300 Repola OY S (d) 3,217,678 3,575,010 0.3
-------------- -------------- ------
9,947,585 10,471,935 0.8
Total Investments in Finland 19,723,825 20,687,793 1.6
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
WESTERN
EUROPE Shares Held/ Value Percent of
(continued)Industries Face Amount Investments Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
France Automobiles 57,350 Peugeot S.A. $ 8,014,768 $ 8,395,593 0.7%
Banking 43,992 Compagnie Financiere de Paribas 3,207,208 3,113,798 0.2
35,300 Compagnie Financiere de Suez (Ordinary) 2,018,337 1,737,850 0.1
19,000 Societe Generale de Surveillance S.A.
(Class A) (Ordinary) 2,052,425 2,174,333 0.2
-------------- -------------- ------
7,277,970 7,025,981 0.5
Chemicals 155,900 Rhone-Poulenc S.A. 3,910,519 3,869,406 0.3
Insurance 35,400 Societe Centrale du Groupe des
Assurances Nationales S.A. 3,149,239 2,032,139 0.2
Multi-Industry 8,850 EuraFrance S.A. 2,952,247 2,811,455 0.2
Packaging 55,120 Pechiney International S.A. 1,536,165 1,674,244 0.1
Total Investments in France 26,840,908 25,808,818 2.0
Germany Automobile Parts 16,080 Continental AG 2,423,253 2,218,532 0.2
28,100 Continental AG (Warrants) (b) (e) 1,597,366 1,181,876 0.1
-------------- -------------- ------
4,020,619 3,400,408 0.3
Automobiles 8,000 BMW AG 3,850,307 3,849,095 0.3
11,572 Daimler-Benz AG 5,372,539 5,475,535 0.4
18,700 Volkswagen AG 5,141,478 5,094,475 0.4
3,815 Volkswagen AG (Preferred) 711,409 825,384 0.1
26,212 Volkswagen AG (Preferred) (Warrants) (b)
(e) 2,406,624 2,321,863 0.2
-------------- -------------- ------
17,482,357 17,566,352 1.4
Banking 16,437 Deutsche Bank AG (Ordinary) 7,904,511 7,761,800 0.6
<PAGE>
Chemicals 25,000 BASF AG (Ordinary) 4,832,388 4,846,419 0.4
17,176 Bayer AG (Ordinary) 3,253,062 3,763,133 0.3
-------------- -------------- ------
8,085,450 8,609,552 0.7
Insurance 1,930 Munich Reinsurance Co. (Ordinary) (e) 3,350,470 3,456,092 0.3
Machinery & Equipment 68,200 Kloeckner Werke AG (e) 3,365,767 5,758,667 0.4
36,354 Mannesmann AG 9,454,434 9,498,560 0.7
-------------- -------------- ------
12,820,201 15,257,227 1.1
Metal & Mining 60,260 Thyssen AG (Ordinary) (e) 9,639,740 10,733,285 0.8
Utilities 41,000 Vereinigte Elektrizitaets & Bergwerks AG
(Veba) (Warrants) (b) (e) 1,765,109 1,680,812 0.1
Total Investments in Germany 65,068,457 68,465,528 5.3
Greece Beverages 113,495 Hellenic Bottling Co. S.A. 3,269,544 3,801,942 0.3
Financial Services 62,720 Etba Leasing S.A. (Ordinary) 1,950,587 1,263,219 0.1
Total Investments in Greece 5,220,131 5,065,161 0.4
Hungary Foods 7,000 Pick Szeged Reszvenytarsasag (ADR) (a) 487,095 416,080 0.0
Total Investments in Hungary 487,095 416,080 0.0
Ireland Banking 1,009,500 Bank of Ireland 4,589,086 4,537,911 0.4
Building & Construction 610,000 CRH PLC (Ordinary) 2,912,864 3,219,365 0.2
Closed-End Funds 2,990,000 First Ireland Investment Co. 4,453,231 4,775,074 0.4
Total Investments in Ireland 11,955,181 12,532,350 1.0
Italy Building & Construction 671,350 Fochi Filippo S.p.A. 2,130,531 1,668,363 0.1
Diversified 2,680,000 Compagnie Industrial Riunite S.p.A.
(CIR) 2,669,560 3,038,432 0.2
Telecommunications 2,458,000 STET, Di Risp (Non Convertible) 5,629,783 5,895,614 0.5
Total Investments in Italy 10,429,874 10,602,409 0.8
<PAGE>
Nether- Banking 164,500 ABN Amro Bank (Ordinary) 5,565,970 5,692,430 0.4
lands
Chemicals 58,125 Akzo N.V. (Ordinary) 5,938,183 6,450,982 0.5
50,100 European Vinyls Corporation
International N.V. (e) 2,211,730 2,189,915 0.2
-------------- -------------- ------
8,149,913 8,640,897 0.7
Electrical Equipment 437,000 Philips Industries Inc. 12,108,928 13,231,873 1.0
Insurance 96,982 AEGON N.V. (Ordinary) 4,890,138 5,988,928 0.5
132,665 Amev N.V. (Ordinary) 5,264,628 5,527,079 0.4
137,197 Internationale Nederlanden Groep N.V. 5,492,470 6,449,899 0.5
-------------- -------------- ------
15,647,236 17,965,906 1.4
Paper & Forest 43,492 Koninklijke KNP (Preferred) (e) 176,682 184,414 0.0
Products 125,677 Koninklijke KNP (Warrants) (b) (e) 433,839 429,176 0.0
-------------- -------------- ------
610,521 613,590 0.0
Telecommunications 77,620 Koninklijke Ptt Nederland N.V. 2,429,454 2,425,349 0.2
Transportation 217,809 KLM Royal Dutch Airlines 4,716,559 5,355,349 0.4
Total Investments in the Netherlands 49,228,581 53,925,394 4.1
Norway Oil & Gas Producers 81,000 Saga Petroleum A.S. (Class A) 957,551 931,648 0.1
369,300 Saga Petroleum A.S. (Class B) 4,067,047 4,004,132 0.3
-------------- -------------- ------
5,024,598 4,935,780 0.4
Total Investments in Norway 5,024,598 4,935,780 0.4
Portugal Banking 241,700 Banco Comercial Portugues S.A. 3,561,811 3,231,211 0.3
89,000 Banco Comercial Portugues S.A. (ADR) (a) 1,289,946 1,190,375 0.1
-------------- -------------- ------
4,851,757 4,421,586 0.4
Building & 76,900 Sociedade de Construsoes Soares da Costa
Construction S.A. 1,748,708 1,280,867 0.1
23,070 Sociedade de Construsoes Soares da Costa
S.A. (New) (Baby Shares) 96,185 384,260 0.0
-------------- -------------- ------
1,844,893 1,665,127 0.1
<PAGE>
Retail 50,700 Estabelecimentes Jeronimo Martins
& Filho S.A. 2,185,017 2,365,473 0.2
171,600 Sonae Investimentos-SGPS S.A. 3,559,893 4,099,988 0.3
-------------- -------------- ------
5,744,910 6,465,461 0.5
Total Investments in Portugal 12,441,560 12,552,174 1.0
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
WESTERN
EUROPE Shares Held/ Value Percent of
(concluded)Industries Face Amount Investments Cost (Note 1a) Net Assets
<S> <S> <S> <C> <S> <C> <C> <C>
Spain Banking 26,924 Banco Popular Espanol (Ordinary) $ 2,970,407 $ 3,385,025 0.3%
Oil--Related 265,492 Repsol S.A. (Ordinary) 7,748,853 7,640,495 0.6
Tele- 441,440 Telefonica Nacional de Espana S.A.
communications (Ordinary) 5,464,092 5,661,215 0.4
Total Investments in Spain 16,183,352 16,686,735 1.3
Sweden Automobiles & 666,100 Volvo AB 12,315,137 12,815,564 1.0
Equipment
Banking 225,500 Svenska Handelsbanken, Inc. (e) 3,009,657 3,096,829 0.2
Building Related 158,100 Svedala Industry (d) 3,038,534 3,545,266 0.3
Engineering 183,850 SKF AB (e) 3,438,484 3,268,878 0.3
95,800 SKF AB 'B' Free (e) 1,859,982 1,696,981 0.1
-------------- -------------- ------
5,298,466 4,965,859 0.4
Insurance 62,110 Skandia Group Forsakrings AB 934,145 1,133,169 0.1
Metals & Mining 343,500 Avesta Sheffield AB (e) 3,002,539 3,486,731 0.2
Total Investments in Sweden 27,598,478 29,043,418 2.2
<PAGE>
Switzer- Chemicals 5,512 Ciba-Geigy AG (Registered) 2,750,861 3,201,320 0.3
land
Electrical 11,216 BBC Brown Boveri & Cie 8,272,952 9,403,697 0.7
Equipment
Insurance 175 Baloise 291,247 330,226 0.0
4,820 Baloise (Warrants) (b) (e) 435,811 570,049 0.0
-------------- -------------- ------
727,058 900,275 0.0
Total Investments in Switzerland 11,750,871 13,505,292 1.0
Turkey Automobiles & 491,200 Turk Otomobil Fabrikasi A.S.(GDR) (e)
Equipment (f) 3,927,600 1,945,152 0.1
Beverages 223,000 Erciyas Biracilik Ve Malt Sanayii A.S. 219,759 192,399 0.0
Building Materials 106,000 Alarko Holdings A.S. 85,965 90,002 0.0
938,000 Cimentas Izmir Cimento Fabrikasi T.A.S.
(e) 681,361 680,819 0.1
-------------- -------------- ------
767,326 770,821 0.1
Insurance 4,749,000 Aksigorta A.S. 1,187,250 1,170,666 0.1
Steel 22,445,000 Izmir Demir Celik Sanayii A.S. (e) 1,587,667 1,567,646 0.1
Total Investments in Turkey 7,689,602 5,646,684 0.4
United Aerospace 1,985,000 Rolls Royce PLC (Ordinary) 5,564,973 5,547,627 0.4
Kingdom
Beverages 1,646,600 Grand Metropolitan PLC (Ordinary) 10,780,403 9,899,833 0.8
Building 1,315,450 Tarmac PLC (Ordinary) 3,537,337 2,512,712 0.2
Materials
Chemicals 664,800 Imperial Chemical Industries PLC
(Ordinary) 8,171,655 7,941,894 0.6
Consumer--Goods 1,072,900 Vendome Luxury Group (Units) (c) 7,137,167 8,499,988 0.7
Electrical 1,548,400 General Electric Co., Ltd. PLC
Equipment (Ordinary) 7,525,162 6,715,394 0.5
Food & Beverage 610,900 Tate & Lyle PLC (Ordinary) 3,764,300 4,026,807 0.3
Food 215,600 Unilever Capital Corp. 3,247,073 3,797,605 0.3
Manufacturing
Foreign Pound 16,700,000 UK Treasury Gilt, 8.75% due 9/01/1997 27,598,324 26,563,924 2.1
Government Sterling
Obligation
<PAGE>
Industrial-- 2,476,500 Tomkins PLC 8,567,614 8,646,727 0.7
Other
Insurance 672,700 Commercial Union Assurance Co. PLC
(Ordinary) 6,097,996 5,658,566 0.4
Leisure & 1,869,300 Forte PLC 6,881,729 6,936,428 0.5
Entertainment 990,350 The Rank Organisation PLC (Ordinary) 5,964,269 6,403,941 0.5
-------------- -------------- ------
12,845,998 13,340,369 1.0
Metals & Mining 114,400 The RTZ Corp. PLC 1,547,787 1,515,322 0.1
Multi-Industry 473,000 BTR PLC (Ordinary) 2,299,412 2,121,751 0.2
Oil--Related 608,800 British Petroleum Co., Ltd. 3,453,695 4,051,092 0.3
660,800 The Shell Transport & Trading Co. PLC 7,347,770 7,376,802 0.6
-------------- -------------- ------
10,801,465 11,427,894 0.9
Pharmaceuticals 1,552,800 SmithKline Beecham Corp. PLC (Class A) 9,622,001 10,332,681 0.8
Retail Trade 2,640,200 Sears PLC 4,730,391 4,485,131 0.3
Telecommunications 1,600,000 Racal Electronics PLC 5,414,413 5,761,776 0.4
Utilities 1,596,500 British Telecommunications PLC
(Ordinary) 9,445,209 9,498,632 0.7
Total Investments in the United
Kingdom 148,698,680 148,294,633 11.4
Total Investments in Western Europe 425,523,045 435,551,243 33.5
<PAGE>
SHORT-TERM Face
SECURITIES Amount Issue
<S> <S> <C> <S> <C> <C> <C>
US Government & US Treasury Bills:
Agency US$ 1,690,000 4.60% due 12/22/1994 1,685,465 1,684,423 0.2
Obligations* 9,000,000 4.655% due 12/22/1994 8,975,561 8,970,300 0.7
7,639,000 4.66% due 12/22/1994 7,618,235 7,613,791 0.6
440,000 4.68% due 12/22/1994 438,799 438,548 0.0
375,000 4.72% due 12/22/1994 373,967 373,762 0.0
10,000 4.78% due 12/22/1994 9,972 9,972 0.0
300,000 4.81% due 12/22/1994 299,158 299,158 0.0
150,000 4.83% due 12/22/1994 149,577 149,505 0.0
1,325,000 4.95% due 12/22/1994 1,321,174 1,321,174 0.2
440,000 4.96% due 12/22/1994 438,727 438,727 0.0
40,000,000 4.975% due 12/22/1994 39,883,917 39,883,917 3.1
300,000 5.06% due 12/22/1994 299,115 299,115 0.0
50,000 5.09% due 12/22/1994 49,868 49,868 0.0
400,000 5.175% due 12/22/1994 398,792 398,792 0.0
70,000 5.20% due 12/22/1994 69,788 69,788 0.0
Total Investments in Short-Term
Securities 62,012,115 62,000,840 4.8
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
OPTIONS Number of Contracts/ Premiums Value Percent of
PURCHASED Face Amount Paid (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
Call Options US$ 97,000 Nikkei, expiring December 1994
Purchased at Yen 20500 $ 702,696 $ 4,903 0.0%
59,000 Nikkei, expiring March 1995 at Yen
19500 198,653 178,933 0.0
188,501 Topix 2nd Section++, expiring May 1995
at Yen 2330 420,000 79,959 0.0
339,631 Topix 2nd Section++, expiring July 1995
at Yen 2512.93 917,849 144,408 0.0
344,060 Topix 2nd Section++, expiring August
1995 at Yen 2453.64 1,016,983 262,740 0.0
300,436 Topix 2nd Section++, expiring September
1995 at Yen 2311.10 700,000 296,791 0.1
-------------- -------------- ------
3,956,181 967,734 0.1
<PAGE>
Currency Put US$ 15,000,000 Japanese Yen, expiring February 1995
Options at Yen 101 300,000 109,500 0.0
Purchased US$ 50,000,000 Japanese Yen, expiring February 1995
at Yen 100 1,045,000 520,000 0.0
US$ 40,000,000 Japanese Yen, expiring March 1995 at
Yen 98.5 628,000 692,000 0.1
US$ 10,000,000 Japanese Yen, expiring June 1995 at Yen
100 302,000 166,000 0.0
-------------- -------------- ------
2,275,000 1,487,500 0.1
Total Options Purchased 6,231,181 2,455,234 0.2
Total Investments 1,308,471,727 1,293,375,403 99.6
<CAPTION>
OPTIONS Premiums
WRITTEN Received
<S> <S><C> <S> <C> <C> <C>
Currency Call 15,000,000 Japanese Yen, expiring February 1995
Options Written at Yen 95.75 (300,000) (139,500) 0.0
50,000,000 Japanese Yen, expiring February 1995
at Yen 94.6 (1,045,000) (295,000) (0.1)
40,000,000 Japanese Yen, expiring March 1995
at Yen 93.06 (628,000) (204,000) 0.0
-------------- -------------- ------
(1,973,000) (638,500) (0.1)
Put Options Written 6,820 FTSE, expiring January 1995 at
Pound Sterling 2800 (287,402) (169,034) 0.0
344,060 Topix 2nd Section++, expiring August
1995 at Yen 2453.64 (714,584) (1,322,329) (0.1)
-------------- -------------- ------
(1,001,986) (1,491,363) (0.1)
Currency Put US$10,000,000 Japanese Yen, expiring June 1995 at
Options Written Yen 108 (110,000) (28,000) 0.0
Total Options Written (3,084,986) (2,157,863) (0.2)
Total Investments, Net of Options Written $1,305,386,741 1,291,217,540 99.4
--------------
Variation Margin on Stock Index Futures Contracts** 968,178 0.1
Unrealized Depreciation on Forward Foreign Exchange Contracts*** (1,173,492) (0.1)
Other Assets Less Liabilities 7,614,039 0.6
-------------- ------
Net Assets $1,298,626,265 100.0%
============== ======
<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)Restricted securities as to resale. The value of the Fund's investments in
restricted securities was approximately $13,048,000, representing 1.0% of
net assets.
<CAPTION>
Acquisition Value
Issue Date Cost (Note 1a)
<S> <C> <C> <C>
Fomento Exonomico Mexicano,
S.A. de C.V. (Femsa) (ADR) 11/18/1993 $ 1,742,736 $ 1,167,600
Grupo Situr, S.A. de C.V. (ADR) 12/22/1993 1,875,000 2,240,625
Mavesa S.A. (ADR) 12/30/1993 1,004,375 647,500
Repola OY S 8/02/1993 3,217,678 3,575,010
Servicios Financieros Quadrum,
S.A. de C.V. (ADR) 9/15/1993 2,776,799 1,872,075
Svedala Industry 8/02/1993 3,038,534 3,545,266
Total $13,655,122 $13,048,076
=========== ===========
(e)Non-income producing security.
(f)Global Despositary Reciept (GDR).
++All Topix 2nd Section OTC's are with Morgan Stanley & Co. International Ltd.
as counterparty.
++++Represents the yield to maturity on this foreign discount security.
*Commercial Paper and certain 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.
**Stock index futures contracts purchased as of November 30, 1994 were
as follows:
<CAPTION>
Number of Expiration Value
Contracts Issue Exchange Date (Note 1d)
<C> <S> <S> <S> <C>
801 Nikkei 225 CME December 1994 $ 76,395,375
100 Nikkei 225 SIMEX December 1994 9,618,494
126 TSE 35 Toronto December 1994 9,837,164
Total Stock Index Futures Contracts Purchased
(Total Contract Price--$100,194,117) $ 95,851,033
============
**Stock index futures contracts sold as of November 30, 1994 were as follows:
<PAGE>
<CAPTION>
Number of Expiration Value
Contracts Issue Exchange Date (Note 1d)
<C> <S> <C> <S> <C>
142 E0E20 EOE December 1994 $ (6,620,093)
96 DAX DTB December 1994 (12,596,482)
Total Stock Index Futures Contracts Sold
(Total Contract Price--$19,462,736) $(19,216,575)
============
***Forward foreign exchange contracts as of November 30, 1994 were as follows:
Unrealized
Appreciation
Foreign Expiration (Depreciation)
Currency Sold Date (Note 1b)
DM 52,456,452 March 1995 631,147
Nlg 26,216,004 March 1995 253,891
Yen 5,518,100,000 December 1994 (1,814,177)
Yen 2,482,500,000 February 1995 (293,724)
Yen 10,039,617,000 March 1995 319,506
Yen 7,092,680,000 June 1995 (175,105)
Yen 816,270,000 August 1995 (95,030)
Total (US$ Commitment-$312,700,519) $(1,173,492)
===========
Total Unrealized Depreciation on
Forward Foreign Exchange Contracts $(1,173,492)
===========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
<CAPTION>
As of November 30, 1994
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$1,302,240,546) (Note 1a) $1,290,920,169
Put options purchased, at value (cost--$6,231,181) (Notes 1a & 1c) 2,455,234
Variation margin on stock index futures contracts (Note 1d) 968,178
Foreign cash (Note 1b) 23,210,938
Cash 2,008,402
Receivables:
Securities sold $ 9,615,282
Capital shares sold 7,652,394
Dividends 2,590,623
Interest 1,602,071
Forward foreign exchange contracts (Note 1b) 467,383
Options written 287,402 22,215,155
--------------
Deferred organization expenses (Note 1g) 56,896
Prepaid registration fees and other assets (Note 1g) 2,723,369
--------------
Total assets 1,344,558,341
--------------
Liabilities: Unrealized depreciation on forward foreign exchange contracts (Note 1b) 1,173,492
Put options written, at value (cost--$3,084,986) (Notes 1a & 1c) 2,157,863
Payables:
Securities purchased 36,182,695
Capital shares redeemed 2,751,403
Forward foreign exchange contracts (Note 1b) 1,104,032
Distributor (Note 2) 916,737
Investment adviser (Note 2) 808,556
Options purchased 198,653 41,962,076
--------------
Accrued expenses and other liabilities 638,645
--------------
Total liabilities 45,932,076
--------------
Net Assets: Net assets $1,298,626,265
==============
<PAGE>
Net Assets Class A Shares of beneficial interest, $0.10 par value, unlimited number of
Consist of: shares authorized $ 379,894
Class B Shares of beneficial interest, $0.10 par value, unlimited number of
shares authorized 9,332,171
Class C Shares of beneficial interest, $0.10 par value, unlimited number of
shares authorized 77,686
Class D Shares of beneficial interest, $0.10 par value, unlimited number of
shares authorized 1,846,689
Paid-in capital in excess of par 1,262,070,562
Undistributed investment income--net 288,067
Undistributed realized capital gains on investments and foreign currency
transactions--net 44,090,745
Unrealized depreciation on investments and foreign currency transactions--net (19,459,549)
--------------
Net assets $1,298,626,265
==============
Net Asset Class A--Based on net assets of $42,754,399 and 3,798,940 shares of beneficial
Value: interest outstanding $ 11.25
==============
Class B--Based on net assets of $1,039,435,482 and 93,321,712 shares of
beneficial interest outstanding $ 11.14
==============
Class C--Based on net assets of $8,653,620 and 776,857 shares of beneficial
interest outstanding $ 11.14
==============
Class D--Based on net assets of $207,782,764 and 18,466,893 shares of beneficial
interest outstanding $ 11.25
==============
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Six Months Ended November 30, 1994
<S> <S> <C> <C>
Investment Dividends (net of $794,895 foreign withholding tax) $ 6,682,654
Income Interest and discount earned 4,679,376
(Notes --------------
1e & 1f): Total income 11,362,030
--------------
<PAGE>
Expenses: Distribution fees--Class B (Note 2) 4,872,207
Investment advisory fees (Note 2) 4,513,950
Transfer agent fees--Class B (Note 2) 590,598
Custodian fees 339,639
Account maintenance fees--Class D (Note 2) 274,035
Transfer agent fees--Class D (Note 2) 106,651
Printing and shareholder reports 104,679
Registration fees (Note 1g) 74,410
Accounting services (Note 2) 72,645
Professional fees 31,908
Trustees' fees and expenses 11,351
Distribution fees--Class C (Note 2) 5,871
Transfer agent fees--Class A (Note 2) 5,502
Pricing fees 3,784
Amortization of organization expenses (Note 1g) 1,892
Transfer agent fees--Class C (Note 2) 809
Other 64,032
--------------
Total expenses 11,073,963
--------------
Investment income--net 288,067
--------------
Realized & Realized gain (loss) from:
Unrealized Investments--net 24,653,557
Gain (Loss) Foreign currency transactions--net (16,796,809) 7,856,748
on --------------
Investments Change in unrealized appreciation/depreciation on:
& Foreign Investments--net (48,107,781)
Currency Foreign currency transactions--net 1,712,226 (46,395,555)
Transactions-- -------------- --------------
Net (Notes Net realized and unrealized loss on investments and foreign currency transactions (38,538,807)
1b, 1f & 3): --------------
Net Decrease in Net Assets Resulting from Operations $ (38,250,740)
==============
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
For the Six For the Period
Months Ended July 30, 1993++
Nov. 30, 1994 to May 31, 1994
Increase (Decrease) in Net Assets:
<S> <S> <C> <C>
Operations: Investment income (loss)--net $ 288,067 $ (163,554)
Realized gain on investments and foreign currency transactions--net 7,856,748 36,397,551
Change in unrealized appreciation/depreciation on investments and
foreign currency transactions--net (46,395,555) 26,936,006
-------------- --------------
Net increase (decrease) in net assets resulting from operations (38,250,740) 63,170,003
-------------- --------------
Beneficial Net increase in net assets derived from beneficial interest transactions 284,575,313 989,031,689
Interest -------------- --------------
Transactions
(Note 4):
Net Assets: Total increase in net assets 246,324,573 1,052,201,692
Beginning of period 1,052,301,692 100,000
-------------- --------------
End of period* $1,298,626,265 $1,052,301,692
============== ==============
<FN>
*Undistributed investment income--net $ 288,067 $ 0
============== ==============
++Commencement of Operations.
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
Class A Class B
For the For the
Period For the Period
The following per share data and ratios have been derived Oct. 21, Six Months July 30,
from information provided in the financial statements. 1994++ to Ended 1993++ to
Nov. 30, Nov. 30, May 31,
Increase (Decrease) in Net Asset Value: 1994++++ 1994++++ 1994++++
<S> <S> <C> <C> <C>
Per Share Net asset value, beginning of period $ 11.73 $ 11.44 $ 10.00
Operating ---------- ---------- ----------
Performance: Investment loss--net -- (.01) (.02)
Realized and unrealized gain (loss) on investments and foreign
Currency transactions--net (.48) (.29) 1.46
---------- ---------- ----------
Total from investment operations (.48) (.30) 1.44
---------- ---------- ----------
Net asset value, end of period $ 11.25 $ 11.14 $ 11.44
========== ========== ==========
<PAGE>
Total Based on net asset value per share (4.09%)+++ (2.62%)+++ 14.40%+++
Investment ========== ========== ==========
Return:**
Ratios to Expenses, excluding account maintenance and distribution fees 1.02%* .99%* 1.07%*
Average ========== ========== ==========
Net Assets: Expenses 1.02%* 1.99%* 2.07%*
========== ========== ==========
Investment income--net 1.01%* (.10)%* (.19)%*
========== ========== ==========
Supplemental Net assets, end of period (in thousands) $ 42,754 $1,039,435 $ 844,295
Data: ========== ========== ==========
Portfolio turnover 26.82% 26.82% 50.63%
========== ========== ==========
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS (concluded)
<CAPTION>
Class C Class D
For the For the
Period For the Period
The following per share data and ratios have been derived Oct. 21, Six Months July 30,
from information provided in the financial statements. 1994++ to Ended 1993++ to
Nov. 30, Nov. 30, Nov. 30
Increase (Decrease) in Net Asset Value: 1994++++ 1994++++ 1994++++
<S> <S> <C> <C> <C>
Per Share Net asset value, beginning of period $ 11.62 $ 11.51 $ 10.00
Operating ---------- ---------- ----------
Performance: Investment income--net -- .04 .04
Realized and unrealized gain (loss) on investments and
foreign currency transactions--net (.48) (.30) 1.47
---------- ---------- ----------
Total from investment operations (.48) (.26) 1.51
---------- ---------- ----------
Net asset value, end of period $ 11.14 $ 11.25 $ 11.51
========== ========== ==========
Total Based on net asset value per share (4.13%)+++ (2.26%)+++ 15.10%+++
Investment ========== ========== ==========
Return:**
Ratios to Expenses, excluding account maintenance and distribution fees 1.04%* .96%* 1.06%*
Average ========== ========== ==========
Net Assets: Expenses 2.04%* 1.21%* 1.31%*
========== ========== ==========
Investment income--net .09%* .67%* .55%*
========== ========== ==========
<PAGE>
Supplemental Net assets, end of period (in thousands) $ 8,654 $ 207,783 $ 208,007
Data: ========== ========== ==========
Portfolio turnover 26.82% 26.82% 50.63%
========== ========== ==========
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
+++Aggregate total investment return.
++Commencement of Operations.
++++Based on average shares outstanding during the period.
See Notes to Financial Statements.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch International Equity Fund (the "Fund") is registered
under the Investment Company Act of 1940 as a diversified, open-
end management investment company. These unaudited interim
financial statements reflect all adjustments which are, in the opinion
of management, necessary to a fair statement of the results for the
interim period presented. All such adjustments are of a normal
recurring nature. The Fund offers four classes of shares under
the Merrill Lynch Select Pricing SM System. Shares of Class A and
Class D are sold with a front-end sales charge. Shares of Class B
and Class C may be subject to a contingent deferred sales charge.
All classes of shares have identical voting, dividend, liquidation
and other rights and the same terms and conditions, except that
Class B, Class C and Class D Shares bear certain expenses related to
the account maintenance of such shares, and Class B and Class C
Shares also bear certain expenses related to the distribution of
such shares. Each class has exclusive voting rights with respect to
matters relating to its account maintenance and distribution
expenditures. The following is a summary of significant accounting
policies followed by the Fund.
<PAGE>
(a) Valuation of investments--Portfolio securities which are traded
on stock exchanges are valued at the last sale price on the principal
market on which such securities are traded, as of the close of
business on the day the securities are being valued or, lacking any
sales, at the last available bid price. Securities traded in the over-
the-counter market are valued at the last available bid price in the
over-the-counter market prior to the time of valuation. In cases where
securties are traded on more than one exchange, the securities are valued
on the exchange designated by or under the authority of the Board of
Trustees as the primary market. Short-term securities are valued at
amortized cost, which approximates market value.
Options written by the Fund are valued at the last asked price in the
case of exchange-traded options or, in the case of options traded in
the over-the-counter market, the average of the last asked price as
obtained from one or more dealers. Options purchased by the Fund
are valued at their last bid price in the case of exchange-traded
options or, in the case of options traded in the over-the-counter
market, the average of the last bid price as obtained from two or
more dealers, unless there is only one dealer, in which case that
dealer's price is used.
Securities and assets for which market quotations are not readily
available are valued at fair value as determined in good faith by or
under the direction of the Board of Trustees of the Fund.
(b) Foreign currency transactions--Transactions denominated in
foreign currencies are recorded at the exchange rate prevailing when
recognized. Assets and liabilities denominated in foreign currencies
are valued at the exchange rate at the end of the period. Foreign cur-
rency transactions are the result of settling (realized) or valuing
(unrealized) assets or liabilities expressed in foreign currencies into
US dollars. Realized and unrealized gains or losses from investments
include the effects of foreign exchange rates on investments.
The Fund is authorized to enter into forward foreign exchange
contracts as a hedge against either specific transactions or portfolio
positions. Such contracts are not entered on the Fund's records.
However, the effect on operations is recorded from the date the
Fund enters into such contracts. Premium or discount is amortized
over the life of the contracts.
<PAGE>
The Fund may also purchase or sell listed or over-the-counter for-
eign currency options, foreign currency futures and related options
on foreign currency futures as a short or long hedge against possible
variations in foreign exchange rates. Such transactions may be
effected with respect to hedges on non-US dollar-denominated
securities owned by the Fund, sold by the Fund but not yet delivered,
or committed or anticipated to be purchased by the Fund.
(c) Options--The Fund is authorized to purchase and write call and
put options. When the Fund writes an option, an amount equal to
the premium received by the Fund is reflected as an asset and an
equivalent liability. The amount of the liability is subsequently
marked to market to reflect the current value of the option written.
When a security is sold or bought through an exercise of an option,
the related premium received (or paid) is deducted from (or added
to) the basis of the security sold. When an option expires (or the
Fund enters into a closing transaction), the Fund realizes a gain or
loss on the option to the extent of the premiums received or paid
(or gain or loss to the extent the cost of the closing transaction
exceeds the premium paid or received).
Written and purchased options are non-income producing investments.
(d) Futures contracts--The Fund may purchase or sell futures con-
tracts and options on such futures contracts. Upon entering into a
contract, the Fund deposits and maintains as collateral such initial
margin as required by the exchange on which the transaction is
effected. Pursuant to the contract, the Fund agrees to receive from
or pay to the broker an amount of cash equal to the daily fluctuation
in value of the contract. Such receipts or payments are known as
variation margin and are recorded by the Fund as unrealized gains
or losses. When the contract is closed, the Fund records a realized
gain or loss equal to the difference between the value of the contract
at the time it was opened and the value at the time it was closed.
(e) Income taxes--It is the Fund's policy to comply with the require-
ments of the Internal Revenue Code applicable to regulated invest-
ment companies and to distribute substantially all of its taxable
income to its shareholders. Therefore, no Federal income tax provi-
sion is required. Under the applicable foreign tax law, a withholding
tax may be imposed on interest, dividends, and capital gains at
various rates.
(f) Security transactions and investment income--Security transac-
tions are recorded on the dates the transactions are entered into
(the trade dates). Dividend income is recorded on the ex-dividend
dates except that if the ex-dividend date has passed, certain divi-
dends from foreign securities are recorded as soon as the Fund is
informed of the ex-dividend date. Interest income (including amorti-
zation of discount) is recognized on the accrual basis. Realized gains
and losses on security transactions are determined on the identified
cost basis.
<PAGE>
(g) Deferred organization expenses and prepaid registration fees--
Deferred organization expenses are charged to expense on a
straight-line basis over a five-year period. Prepaid registration fees
are charged to expense as the related shares are issued.
(h) Dividends and distributions--Dividends and distributions paid
by the Fund are recorded on the ex-dividend dates.
2. Investment Advisory Agreement and Transactions
with Affiliates:
The Fund has entered into an Investment Advisory Agreement with
Merrill Lynch Asset Management, L.P. ("MLAM"). The general partner
of MLAM is Princeton Services, Inc. ("PSI"), an indirect wholly-owned
subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."). The limited
partner is ML & Co. The Fund has also entered into a Distribution
Agreement and a Distribution Plan with Merrill Lynch Funds
Distributor, Inc. ("MLFD" or "Distributor"), a wholly-owned sub-
sidiary of Merrill Lynch Investment Management, Inc. ("MLIM"),
which is also an indirect wholly-owned subsidiary of ML & Co.
MLAM is responsible for the management of the Fund's portfolio
and provides the necessary personnel, facilities, equipment and
certain other services necessary to the operations of the Fund. For
such services, the Fund pays a monthly fee of 0.75%, on an annual
basis, of the average daily value of the Fund's net assets. MLAM has
entered into a Sub-Advisory Agreement with Merrill Lynch Asset
Management U.K., Ltd. ("MLAM U.K."), an affiliate of MLAM, pursu-
ant to which MLAM pays MLAM U.K. a fee in an amount to be
determined from time to time by the Investment Adviser and MLAM
U.K. but in no event in excess of the amount that the Investment
Adviser actually receives. For the six months ended November 30,
1994, MLAM paid MLAM U.K. a fee of $600,521 pursuant to such
Agreement. Certain of the states in which the shares of the Fund
are qualified for sale impose limitations on the expenses of the
Fund. The most restrictive annual expense limitation requires
that the Investment Adviser reimburse the Fund to the extent the
Fund's expenses (excluding interest, taxes, distribution fees,
brokerage fees and commissions, and extraordinary items) exceed
2.5% of the Fund's first $30 million of average daily net assets,
2.0% of the next $70 million of average daily net assets, and 1.5% of
the average daily net assets in excess thereof. MLAM's obligation to
reimburse the Fund is limited to the amount of the management
fee. No fee payment will be made to MLAM during any fiscal year
which will cause such expenses to exceed the most restrictive
expense limitation at the time of such payment.
<PAGE>
Pursuant to the distribution plans ("the Distribution Plans")
adopted by the Fund in accordance with Rule 12b-1 under the
Investment Company Act of 1940, the Fund pays the Distributor
ongoing account maintenance and distribution fees. The fees are
accrued daily and paid monthly at annual rates based upon average
daily net assets of the shares as follows:
Account Distribution
Maintenance Fee Fee
Class B 0.25% 0.75%
Class C 0.25% 0.75%
Class D 0.25% --
Pursuant to a sub-agreement with the Distributor, Merrill Lynch,
Pierce, Fenner & Smith Inc. ("MLPF&S"), a subsidiary of ML & Co.,
also provides account maintenance and distribution services to the
Fund. The ongoing account maintenance fee compensates the
Distributor and MLPF&S for providing account maintenance services
to Class B, Class C and Class D shareholders. The ongoing distribu-
tion fee compensates the Distributor and MLPF&S for providing
shareholders and distribution-related services to Class B and
Class C shareholders.
NOTES TO FINANCIAL STATEMENTS (concluded)
For the six months ended November 30, 1994, MLFD earned under-
writing discounts and MLPF&S earned dealer concessions on sales
of the Fund's Class A and Class D Shares as follows:
MLFD MLPF&S
Class A $ -- $ --
Class D $ 53,538 $752,677
MLPF&S received contingent deferred sales charges of $733,390
relating to transactions in Class B Shares, $60 relating to trans-
actions in Class C Shares, and $83,294 in commissions on the
execution of portfolio security transactions for the Fund for the six
months ended November 30, 1994.
Financial Data Services, Inc. ("FDS"), a wholly-owned subsidiary of
ML & Co., is the Fund's transfer agent.
Accounting services are provided to the Fund by MLAM at cost.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended November 30, 1994 were $605,714,452 and
$301,714,256, respectively.
<PAGE>
Net realized and unrealized gains (losses) as of November 30, 1994
were as follows:
Realized Unrealized
Gains Gains
(Losses) (Losses)
Investments:
Long-term $ 22,726,121 $(11,309,102)
Short-term (18,146) (11,275)
Stock index futures contracts 1,304,119 (4,077,209)
Options written 963,460 (489,377)
Options purchased (321,997) (2,988,447)
------------ ------------
Total Investments 24,653,557 (18,875,410)
Currency transactions:
Options written (282,522) 1,416,500
Options purchased (3,138,243) (787,500)
Forward foreign exchange contracts (13,516,065) (1,173,492)
Foreign currency transactions 140,021 (39,647)
------------ ------------
Total currency transactions (16,796,809) (584,139)
------------ ------------
Total $ 7,856,748 $(19,459,549)
============ ============
Transactions in call options written for the six months ended
November 30, 1994 were as follows:
Par Value
Covered by Premiums
Written Options Received
Outstanding call options written
at beginning of period 23,669,039 $ 826,781
Options written 105,734,340 2,297,843
Options closed (24,394,340) (487,619)
Options expired (9,039) (664,005)
------------ ------------
Outstanding call options written
at end of period 105,000,000 $ 1,973,000
============ ============
Transactions in put options written for the six months ended
November 30, 1994 were as follows:
<PAGE>
Par Value/
Number of
Contracts
Covered by Premiums
Written Options Received
Outstanding put options written
at beginning of period 194,819 $ 205,795
Options written 10,350,880 1,111,986
Options closed (194,819) (205,795)
------------ ------------
Outstanding put options written
at end of period 10,350,880 $ 1,111,986
============ ============
As of November 30, 1994, net unrealized depreciation for Federal
income tax purposes aggregated $14,798,201 of which $53,304,966
related to appreciated securities and $68,103,167 related to de-
preciated securities. At November 30, 1994, the aggregate cost of
investments plus premiums paid for options purchased for Federal
income tax purposes was $1,305,194,741.
4. Beneficial Interest Transactions:
Net increase in net assets derived from beneficial interest trans-
actions was $284,575,313 for the six months ended November 30,
1994 and $989,031,689 for the period July 30, 1993 to May 31, 1994.
Transactions in shares of beneficial interest for each class were
as follows:
Class A Shares for the Period
October 21, 1994++ to Dollar
November 30, 1994 Shares Amount
Shares sold 4,047,498 $ 47,271,220
Shares redeemed (248,558) (2,876,052)
------------ ------------
Net increase 3,798,940 $ 44,395,168
============ ============
[FN]
++Commencement of Operations.
<PAGE>
Class B Shares for the Six Months Dollar
Ended November 30, 1994 Shares Amount
Shares sold 27,443,654 $317,981,672
Shares redeemed (7,920,998) (91,354,610)
------------ ------------
Net increase 19,522,656 $226,627,062
============ ============
Class B Shares for the Period Dollar
July 30, 1993++ to May 31, 1994 Shares Amount
Shares sold 78,960,422 $853,108,016
Shares redeemed (5,166,366) (57,440,434)
------------ ------------
Net increase 73,794,056 $795,667,582
============ ============
[FN]
++Prior to July 30, 1993 (commencement of operations),
the Fund issued 5,000 shares to MLAM for $50,000.
Class C Shares for the Period
October 21, 1994++ to Dollar
November 30, 1994 Shares Amount
Shares sold 818,813 $ 9,379,339
Shares redeemed (41,956) (480,665)
------------ ------------
Net increase 776,857 $ 8,898,674
============ ============
[FN]
++Commencement of Operations.
Class D Shares for the Six Months Dollar
Ended November 30, 1994 Shares Amount
Shares sold 5,801,293 $ 67,512,197
Shares redeemed (5,402,849) (62,857,788)
------------ ------------
Net increase 398,444 $ 4,654,409
============ ============
Class D Shares for the Period Dollar
July 30, 1993++ to May 31, 1994 Shares Amount
Shares sold 22,000,407 $236,735,011
Shares redeemed (3,936,958) (43,370,904)
------------ ------------
Net increase 18,063,449 $193,364,107
============ ============
<PAGE>
[FN]
++Prior to July 30, 1993 (commencement of operations),
the Fund issued 5,000 shares to MLAM for $50,000.
As a result of the Merrill Lynch Select Pricing SM System, Class A
Shares of the Fund outstanding prior to October 21, 1994 have been
redesignated to Class D Shares. There were 20,292,011 shares redesig-
nated amounting to $219,466,427.
5. Commitments:
At November 30, 1994, the Fund had entered into forward foreign
exchange contracts under which it agreed to purchase and sell
foreign currency with an approximate value of $9,181,000 and
$5,257,000, respectively.
6. Subsequent Event:
On December 14, 1994, the Board of Directors of the Fund declared
an ordinary income dividend in the amount of $0.598903 per Class A
Share, $0.489532 per Class B Share, $0.582481 per Class C Share,
and $0.565841 per Class D Share, and a long-term capital gains
distribution of $0.090644 per Class A, Class B, Class C, and Class D
Shares payable on December 21, 1994 to shareholders on record as
of December 13, 1994.
PORTFOLIO CHANGES
For the Quarter Ended November 30, 1994
<PAGE>
Additions
ASA Ltd.
Aksigorta A.S.
Alarko Holdings A.S.
American Barrick Resources Corp.
American Barrick Resources Corp. (ADR)
Avesta Sheffield AB
BMW AG
BTR PLC (Ordinary)
Bangkok Land Ltd. 'Foreign'
*Beiren Printing Machinery Holdings PLC
Benpres Holdings Corp.
C.P. Pokphand Co., Ltd. (Ordinary)
CAPCO Automotive Products Corp. S.A.
Cimentas Izmir Cimento Fabrikasi T.A.S.
*Commercial Union PLC (Rights)
Erciyas Biracilik Ve Malt Sanayii A.S.
EuraFrance S.A.
European Vinyls Corporation
International N.V.
Fochi Filippo S.p.A.
Glaverbel S.A. (Ordinary)
Hang Lung Development Co., Ltd. (Warrants)
Horsham Corp.
Imperial Oil Ltd.
Imperial Oil Ltd. (ADR)
Izmir Demir Celik Sanayii A.S.
Koninklijke KNP (Warrants)
Koninklijke Ptt Nederland N.V.
The Morgan Stanley Africa Investment
Fund, Inc.
The News Corp., Ltd. (Preferred)
New South Africa Fund, Inc.
New Zealand Treasury Bill,
8.40% due 1/11/1995
PT Indonesia Satellite (ADR)
*Pakistan Telecommunications (GDS)
Pechiney International S.A.
Public Bank (Malaysia) BHD 'Foreign'
The RTZ Corp. PLC
Racal Electronics PLC
*Royal Insurance Holdings PLC
The Shell Transport & Trading Co. PLC
Sigma Alimentos, S.A. de C.V. (Class B)
Skandia Group Forsakrings AB
Sociedade de Construsoes
Soares da Costa S.A. (New) (Baby Shares)
Southern Africa Fund, Inc.
Swire Pacific Ltd. (Class A)
Telecomunicacoes Brasileiras S.A.--
Telebras (ADR)
*Thai Reinsurance Co., Ltd.
Transnet Ltd., 15.00% due 10/01/1995
UK Treasury Gilt, 8.75% due 9/01/1997
Usinas Siderurgicas de Minas Gerais--
Usiminas S.A.
Volvo AB
<PAGE>
Deletions
Alcatel Alsthom
Assicurazioni Generali S.p.A. (Ordinary)
Astra 'A' Fria
*Beiren Printing Machinery Holdings Ltd.
Blue Circle Industries PLC (Ordinary)
Cable & Wireless Public Co. Ltd. (Ordinary)
*Commercial Union PLC (Rights)
Fuji Photo Film Co., Ltd.
Granada Group PLC
Heineken Holdings (Class A)
Heineken N.V.
Koninklijke KNP
LVMH
National Westminster Bank PLC (Ordinary)
*Pakistan Telecommunications (GDS)
Reuters Holdings PLC
Royal Dutch Petroleum PLC (Warrants)
*Royal Insurance Holdings PLC
Scottish Power PLC (Ordinary)
Solvay Group (Ordinary)
Swiss Bank Corp. (Bearer)
Telecom Corp. of New Zealand (Class C)
(ADR)
*Thai Reinsurance Co., Ltd.
Thorn EMI (Ordinary)
Trelleborg AB (Class B)
[FN]
*Added and deleted in the same quarter.
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
Robert E. Putney III, Assistant Secretary
<PAGE>
Custodian
Brown Brothers Harriman & Co.
40 Waters Street
Boston Massachusetts 02109
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
Merrill Lynch
International
Equity Fund
Management
Team
Andrew John Bascand--Senior Portfolio Manager/Asset
Allocater. As the Fund's Asset Allocater, 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.
PORTFOLIO INFORMATION
Worldwide
Investments as of
November 30, 1994
<PAGE>
Ten Largest Industries Percent of
(Equity Investments) Net Assets
Electrical Equipment 7.5%
Property & Casualty Insurance 6.5
Utilities 4.8
Automobiles 4.5
Office Equipment 4.0
Banking 4.0
Telecommunications 3.7
Chemicals 3.7
Pharmaceuticals 3.2
Retailing 2.8
Percent of
Ten Largest Countries Net Assets
Japan 34.7%
United Kingdom 11.4
Germany 5.3
Canada 4.6
New Zealand 4.2
Netherlands 4.1
Hong Kong 4.0
Australia 3.4
Mexico 2.3
Sweden 2.2
Percent of
Asset Mix* Net Assets
Japan 34.7%
Europe (Ex. United Kingdom
and Ireland) 21.1
Pacific Basin (Ex. Japan) 13.6
Other Emerging Markets 12.8
United Kingdom and Ireland 12.4
Cash 4.8
[FN]
*Percent of net assets may not equal 100%, and
excludes the impact of futures and options.
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Stock Index
Futures Contracts
Percent of
Country Issue Exchange Net Assets
Japan Nikkei 225 CME 5.9%
Japan Nikkei 225 SIMEX 0.7
Canada TSE 35 Toronto 0.8
Germany DAX DTB (1.0)
Netherlands EOE 20 EOE (0.5)
-----
5.9%
=====
APPENDIX, GRAPHIC AND IMAGE MATERIAL.
ITEM 1.
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 November 30, 1994
Bar graph iluustrating the following percentages:
Hong Kong -15.9%
Australia - 6.5%
Germany - 6.5%
Mexico - 6.4%
Japan - 5.2%
Canada - 5.2%
United Kingdom - 3.0%
New Zealand + 0.4%
Netherlands + 0.4%
New Zealand - 1.3%
Sweden + 6.5%
Source: Financial Times--Actuaries Index
[FN]
*For the three-month period ended November 30, 1994,
total investment return in US dollars for the Financial
Times--Actuaries World (Ex-US) Index was -4.61%.
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