MERRILL LYNCH
INTERNATIONAL
EQUITY FUND
FUND LOGO
Quarterly Report
February 28, 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 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.
<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 February 28, 1995
Bar Graph illustrating the following percentages:
Japan -9.3%
Australia -0.5%
United Kingdom -0.5%
Canada 1.2%
New Zealand 1.6%
Hong Kong 1.8%
Sweden 2.7%
Netherlands 7.5%
Switzerland 7.6%
Germany 9.2%
Source: Financial Times--Actuaries Index.
[FN]
*For the three-month period ended February 28, 1995,
total investment return in US dollars for the Financial
Times--Actuaries World (Ex-US) Index was -4.6%.
DEAR SHAREHOLDER
Volatility in global markets rose sharply,
and performance differed greatly in indi-
vidual countries during the February
quarter. In the three months ended
February 28, 1995, the total return for
the unmanaged Financial Times--
Actuaries World Index (Ex-US) was
- -4.6% in US dollar terms. The decline
matched that of the prior three months.
Therefore, international equity markets
fell by about 10% during the past six
months.
<PAGE>
Equity price weakness was most evident
in Latin American and Japanese mar-
kets, which were affected by several
exceptional developments. In US dollar
terms, Latin American markets declined
about 34% during the period. The
Mexican peso devaluation caused most
of the decline. The subsequent down-
grading of growth expectations in the
region and higher interest rates led to
a sharp reappraisal of equity valuations.
During the February quarter, the total
return for Japanese equities was -9.3%
in US dollar terms. The decline reflected
the anticipated adverse impact of the
Kobe earthquake on earnings recovery
together with heightened market vola-
tility associated with the collapse of
Baring PLC, the British merchant bank.
Other Pacific Basin markets were mostly
flat, with Australia and New Zealand
outperforming other Asian markets. How-
ever, during the three months ended
February 28, 1995, Hong Kong equity
prices fell sharply before recovering.
European markets generally achieved
negative returns in local currency terms.
However, US dollar weakness resulted in
mildly positive equity returns.
Merrill Lynch International Equity
Fund's Class A, B, C and D Shares
provided total returns of -8.49%, -8.79%,
- -8.72% and -8.50%, respectively, for
the three-month period ended February
28, 1995. The Fund's underperformance
relative to the Financial Times--Actu-
aries World Index (Ex-US) reflected
the poor performance of Japanese and
emerging markets equities, and an
overweighted stance in US dollars and US
dollar-correlated assets. These negative
factors were offset by a relatively high
average cash weighting, a mildly under-
weighted stance in Japan, and an over-
weighted position in the Pacific Basin
(ex-Japan) markets.
<PAGE>
Looking forward, we may slightly increase
the Japanese weighting to reflect the
improvement in equity valuations follow-
ing recent market weakness. We also
expect to remain underweighted in
Continental European markets, and to
continue to hedge a portion of our yen
and European exposures into US dollars.
Economic and Investment
Environment
Stronger-than-expected economic growth
in the fourth quarter of 1994 prompted a
number of further monetary policy tight-
enings in Canada, the United Kingdom,
the United States, and many smaller
European and Pacific markets, as well
as South Africa. However, the recent
wave of monetary policy tightening was
followed by a range of indicators sug-
gesting that US economic growth may
slow in the first half of 1995. Against this
background, investor expectations of
future interest rate increases (as evi-
denced by financial interest rate futures)
declined in late January and February.
This decline in US short-term interest
rate expectations was associated with
a fall in the US dollar, and US bonds
also rallied. Interest rate expectations
declined in Germany, the United King-
dom and Japan.
Market expectations of a potential shift
to a less-restrictive monetary stance
across major financial markets should
assist equity valuations. The recent poor
performance in international equity mar-
kets resulted from a sequence of nega-
tive short-term factors, in our opinion,
such as the abrupt dislocation of capital
flows to emerging markets with high
sovereign credit risk, the Japanese earth-
quake and, more recently, the Baring's
collapse.
<PAGE>
We still believe that prospects for global
economic growth generally exceed inves-
tor expectations, except for the United
States and some smaller markets in the
Pacific Basin and Latin America. There-
fore, we favor markets where capacity
pressures are least likely to cause a
further tightening of interest rates. The
recent weakness in Japan equities pro-
vides an opportunity to adjust upward
our weighting there in order to gain
exposure to a potentially strong corpo-
rate profits recovery.
In contrast, Continental European inter-
est rates are likely to rise, as increasing
capacity utilization is likely to place
upward pressure on prices. The recent
appreciation of European currencies
against the US dollar may delay a Ger-
man interest rate rise. However, signifi-
cant currency weakness within Europe
relative to the Deutschemark also is
likely to place upward pressure on Euro-
pean interest rates.
In our last shareholder letter, we noted
that countries that fail to tighten mone-
tary policy ahead of rising inflation would
be more likely to experience economic
overheating and pronounced volatility in
their financial markets. Many countries
during the last three months increased
interest rates. In particular, monetary
policy tightened significantly in Canada,
South Africa and New Zealand. In the
Pacific Basin, there is still significant
scope for interest rates to rise. Aside
from Hong Kong equities, which have
already adjusted significantly and where
valuations appear more attractive, we
remain relatively cautious on investment
in the Pacific Basin.
<PAGE>
In Latin America, the sudden Mexican
peso devaluation resulted in a sharp
slowdown in capital flows to the entire
region. Although we favored the Brazil-
ian and Argentine markets, and had
reduced our weighting in Mexico, we
had not contemplated such a marked
change in general economic and market
conditions, nor the apparent lack of
monetary policy credibility in a number
of countries. We believe that long-term
structural adjustment programs in both
Brazil and Argentina will be beneficial
for financial asset prices, as they should
promote a shift toward higher domestic
savings and more foreign investment. As
a result, although both Brazil and Argen-
tina offer much higher risk than many
alternative emerging equity markets, we
retain small overweighted positions
because we believe that assets are gen-
erally attractively priced on a long-term
view.
Overall, we retained higher cash weight-
ings over the February quarter, and
intend to continue to pursue a relatively
defensive stance in markets where we
think monetary policy must tighten.
Major Fund Position Changes
During the three months ended Feb-
ruary 28, 1995, we focused on reducing
market exposure tactically in Japan
and strategically in Continental Europe.
We added significantly to equity market
exposure in Hong Kong, Australia and
the United Kingdom. Our most signifi-
cant portfolio shift was the switch from
Nikkei 225 equity futures, listed on the
Singapore Monetary Exchange, to Topix
equity futures listed on the Tokyo Stock
Exchange. This transaction occurred four
days prior to the Baring's collapse, and
largely reflected our short-term concerns
with the technical situation in the
Nikkei 225 futures market.
<PAGE>
Other significant portfolio changes
included sales of Matsushita Electric
Industrial Co., Ltd., Toyota Motor Corp.,
Sony Corp. and Sanki Engineering Co.,
Ltd., to fund tactical purchases of
Hong Kong equities such as Hong Kong &
China Gas Co., Ltd. The Fund has also
retained some yen cash awaiting a better
buying opportunity to emerge. We sold
about half of the Fund's Canadian and
South African bond exposures following
significant outperformance, and par-
tially rolled out these positions into
New Zealand cash and small positions
in Argentinean and Brazilian Brady
bonds. In Europe, we reduced or elimi-
nated a number of holdings such as
Mannesman AG, Thyssen AG and Philips
Industries Inc., and at the end of the
February period held short equity
futures positions in Germany (DAX)
and Holland (EOE20).
In Conclusion
Recent weakness in equity markets has
improved the intermediate-term outlook
for international equity market returns,
although market volatility could continue
for some time. Merrill Lynch Interna-
tional Equity Fund is strategically inves-
ted to benefit from continued economic
expansion and tactically invested in
recent underperforming markets. The
Fund continues to offer broad diversifi-
cation for a US-based equity investor.
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
March 31, 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.
*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.
<PAGE>
*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," "Recent Performance
Results" and "Average Annual Total Return" tables below and on
page 5. Data for Class A and Class C Shares are also presented
in the "Recent Performance Results" and "Aggregate Total
Return" tables below and 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 February
28, 1995 and for Class A and Class C Shares since inception and
3-month periods ended February 28, 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 12/31/94 -0.61% -4.38%
Inception (7/30/93) through 12/31/94 +7.70 +5.64
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced
to 0% after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
<PAGE>
% Return Without % Return With
Sales Charge Sales Charge**
Class D Shares*
Year Ended 12/31/94 +0.18% -5.08%
Inception (7/30/93) through 12/31/94 +8.50 +4.46
[FN]
*Maximum sales charge is 5.25%. On 10/21/94, Class A Shares were
redesignated to Class D Shares.
**Assuming maximum sales charge.
Aggregate
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Inception (10/21/94) through 12/31/94 -4.23% -9.26%
[FN]
*Maximum sales charge is 5.25%. On 10/21/94, Class A Shares were
redesignated to Class D Shares.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Inception (10/21/94) through 12/31/94 -4.33% -5.23%
[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
1/1/95-2/28/95 10.52 9.62 -- -- - 8.56
------ ------
Total $0.091 Total $0.490
Cumulative total return as of 2/28/95: +1.61%**
<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
1/1/95-2/28/95 10.56 9.68 -- -- -8.33
------ ------
Total $0.091 Total $0.566
Cumulative total return as of 2/28/95: +2.94%**
<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>
<PAGE>
<TABLE>
Recent
Performance
Results
<CAPTION>
12 Month 3 Month
2/28/95 11/30/94 2/28/94++ % Change++ % Change
<S> <C> <C> <C> <C> <C>
ML International Equity Fund Class A Shares* $9.65 $11.25 $11.73 -17.01%(1) -13.47%(1)
ML International Equity Fund Class B Shares* 9.62 11.14 11.68 -16.91(1) -12.89(1)
ML International Equity Fund Class C Shares* 9.54 11.14 11.62 -17.17(1) -13.60(1)
ML International Equity Fund Class D Shares* 9.68 11.25 11.73 -16.75(1) -13.20(1)
ML International Equity Fund Class A Shares--Total Return* -12.24(2) - 8.49(2)
ML International Equity Fund Class B Shares--Total Return* -13.00(3) - 8.79(3)
ML International Equity Fund Class C Shares--Total Return* -12.49(4) - 8.72(4)
ML International Equity Fund Class D Shares--Total Return* -12.24(5) - 8.50(5)
Financial Times--Actuaries World (Ex-US) Index**--Total Return - 4.93 - 4.61
<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 chane includes reinvestment of $0.566 per share ordinary income dividends
and $0.091 per share capital gains distributions.
</TABLE>
<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 Beverages 69,800 South African Breweries Ltd. $ 1,651,958 $ 1,666,799 0.2%
Closed-End Funds 52,500 The Morgan Stanley Africa Investment
Fund, Inc. 608,602 597,188 0.1
8,800 New South Africa Fund, Inc. 119,423 117,700 0.0
22,200 Southern Africa Fund, Inc. 328,445 294,150 0.0
-------------- -------------- ------
1,056,470 1,009,038 0.1
<PAGE>
Diversified 47,500 Rembrandt Group Ltd. 321,088 319,302 0.0
Mining 38,800 Anglo American Corp. of South Africa Ltd.
(ADR) (a) 1,866,238 1,935,150 0.2
11,000 De Beers Consolidated Mines Ltd. (ADR) (a) 245,732 228,250 0.0
-------------- -------------- ------
2,111,970 2,163,400 0.2
Steel 1,360,000 South Africa Iron & Steel Industrial
Corp., Ltd. 1,494,464 1,490,602 0.1
169,020 South Africa Iron & Steel Industrial
Corp., Ltd. (Rights) (e) 0 18,179 0.0
-------------- -------------- ------
1,494,464 1,508,781 0.1
Transportation ZAL 32,000,000 Transnet Ltd., 15% due 10/01/1995 7,714,286 8,219,206 0.7
Total Investments in South Africa 14,350,236 14,886,526 1.3
Total Investments in Africa 14,350,236 14,886,526 1.3
LATIN
AMERICA
Argentina Banking 92,838 Banco de Galicia y Buenos Aires S.A.
(ADR) (a) 2,238,241 812,333 0.1
Foreign Republic of Argentina:
Government ARS 13,250,000 4.25% due 3/31/2023 5,511,875 5,167,500 0.4
Obligations ARS 9,200,000 7.125% due 3/31/2023 5,400,750 4,703,500 0.4
-------------- -------------- ------
10,912,625 9,871,000 0.8
Oil & Related 172,600 Yacimientos Petroliferos Fiscales S.A.
(Sponsored) (ADR) (a) 4,331,570 3,279,400 0.3
Total Investments in Argentina 17,482,436 13,962,733 1.2
Brazil Automobiles 80,000 CAPCO Automotive Products Corp. S.A. 964,050 680,000 0.1
Banking 369,487,753 Banco Bradesco S.A. PN 2,861,783 2,907,159 0.2
Foreign BRC 8,250,000 Republic of Brazil, 6.687% due 4/15/2024 4,535,000 4,455,000 0.4
Government
Obligation
Mining 24,928,000 Companhia Vale do Rio Doce S.A. 2,673,114 3,640,839 0.3
<PAGE>
Oil & Related 33,400,000 Petroleo Brasileiro S.A. 3,213,442 3,403,338 0.3
Steel 200,000 Usinas Siderurgicas de Minas Gerais--
Usiminas S.A. 3,226,000 2,600,000 0.2
Telecommunications 54,920 Telecomunicacoes Brasileiras S.A.--
Telebras (ADR) (a) 2,408,594 1,592,680 0.1
332,213 Telecomunicacoes Brasileiras S.A.--
Telebras ON 14,762 7,983 0.0
21,524,346 Telecomunicacoes Brasileiras S.A.--
Telebras PN (Preferred) 958,572 636,350 0.1
-------------- -------------- ------
3,381,928 2,237,013 0.2
Utilities-- 12,930,000 Centrais Eletricas Brasileiras S.A.--
Electric Eletrobras 'B' (Preferred) 4,402,990 2,847,798 0.2
Total Investments in Brazil 25,258,307 22,771,147 1.9
Chile Telecommunications 10,000 Compania de Telefonos de Chile S.A.
(ADR) (a) 1,205,600 610,000 0.1
Total Investments in Chile 1,205,600 610,000 0.1
Mexico Beverages 278,000 Fomento Economico Mexicano, S.A. de C.V.
(Femsa) (ADR) (a) 1,742,736 361,400 0.0
356,000 Fomento Economico Mexicano, S.A. de C.V.
(Femsa) (Class B) 1,965,085 539,103 0.0
-------------- -------------- ------
3,707,821 900,503 0.0
Building & 444,500 Cementos Mexicanos, S.A. de C.V. (Cemex)
Construction (Class B) (ADR) (a) 2,153,334 1,121,369 0.1
Diversified 633,000 Grupo Carso, S.A. de C.V. 'A1' 4,447,200 2,348,398 0.2
Financial Services 22,400 Banca Quadrum, S.A. de C.V. (ADR) (a) 472,112 81,200 0.0
Telecommunications 74,050 Telefonos de Mexico, S.A. de C.V. (Telmex)
(ADR) (a) 2,858,223 2,045,631 0.2
Total Investments in Mexico 13,638,690 6,497,101 0.5
Venezuela Foods 140,000 Mavesa S.A. (ADR) (a) 1,004,375 446,250 0.0
400,000 Mavesa S.A. (Ordinary) 137,354 94,356 0.0
-------------- -------------- ------
1,141,729 540,606 0.0
<PAGE>
Utilities--Electric 267,934 C.A. La Electricidad de Caracas
S.A.I.C.A.-S.A.C.A. 349,541 274,934 0.0
Total Investments in Venezuela 1,491,270 815,540 0.0
Total Investments in Latin America 59,076,303 44,656,521 3.7
NORTH
AMERICA
Canada Diversified 813,000 Horsham Corp. 13,159,293 10,162,500 0.9
Energy Sources 45,000 Imperial Oil Ltd. 1,463,944 1,530,000 0.1
272,000 Imperial Oil Ltd. (ADR) (a) 8,849,797 9,257,184 0.8
-------------- -------------- ------
10,313,741 10,787,184 0.9
Foreign C$ 17,000,000 Canadian Government Bonds, 8% due
Government 3/15/1997 11,698,417 12,306,608 1.0
Obligation
Multi-Industry 519,778 American Barrick Resources Corp. 13,318,718 11,295,463 0.9
53,570 American Barrick Resources Corp.
(ADR) (a) 1,359,340 1,165,148 0.1
-------------- -------------- ------
14,678,058 12,460,611 1.0
Total Investments in Canada 49,849,509 45,716,903 3.8
Total Investments in North America 49,849,509 45,716,903 3.8
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
PACIFIC Shares Held/ Percent of
BASIN Industries Face Amount Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Australia Diversified 4,545,600 BTR Nylex Ltd. $ 11,064,684 $ 8,045,712 0.7%
Food & Beverage 2,190,527 Burns Philp & Co., Ltd. 6,573,335 5,250,419 0.4
817,203 Coca-Cola Amatil, Ltd. 4,103,319 5,092,707 0.4
-------------- -------------- ------
10,676,654 10,343,126 0.8
<PAGE>
Media 705,456 The News Corp., Ltd. 3,601,925 3,142,454 0.3
352,728 The News Corp., Ltd. (Preferred) 1,548,196 1,399,537 0.1
-------------- -------------- ------
5,150,121 4,541,991 0.4
Merchandising 128,600 Amway Asia Pacific Ltd. 3,790,436 4,468,850 0.4
Natural Gas 382,293 Broken Hill Proprietary Co. 5,298,421 5,249,743 0.4
Property 923,065 Lend Lease Corp. 11,391,347 11,559,312 1.0
Total Investments in Australia 47,371,663 44,208,734 3.7
Hong Kong Banking 308,000 HSBC Holdings PLC 3,188,907 3,236,968 0.3
Foods 22,107,000 C.P. Pokphand Co., Ltd. 5,870,559 5,461,696 0.5
Multi-Industry 1,633,000 Swire Pacific Ltd. (Class A) 10,663,521 11,459,093 1.0
Property 258,800 Hang Lung Development Co., Ltd.
(Warrants) (b) 0 45,527 0.0
Telecommunications 11,298,000 Hong Kong Telecommunications, Ltd. 22,159,283 20,313,310 1.7
Utilities 4,647,600 China Light & Power Co., Ltd. 23,140,111 22,663,888 1.9
5,070,000 Hong Kong & China Gas Co., Ltd. 8,776,084 8,853,318 0.7
-------------- -------------- ------
31,916,195 31,517,206 2.6
Total Investments in Hong Kong 73,798,465 72,033,800 6.1
Japan Automobiles 1,736,000 Suzuki Motor Corp. 19,706,557 16,362,092 1.4
Beverages 139,000 Chukyo Coca-Cola Bottling Co., Ltd. 1,835,948 1,482,859 0.1
128,000 Hokkaido Coca-Cola Bottling Co., Ltd. 2,039,618 1,604,143 0.1
152,000 Kinki Coca-Cola Bottling Co., Ltd. 2,479,962 1,716,002 0.1
138,000 Mikuni Coca-Cola Bottling Co., Ltd. 2,431,240 1,672,294 0.1
153,100 Sanyo Coca-Cola Bottling Co., Ltd. 2,334,048 2,251,704 0.2
-------------- -------------- ------
11,120,816 8,727,002 0.6
Capital Goods 3,808,000 Mitsubishi Heavy Industries, Ltd. 25,615,591 24,058,830 2.0
Chemicals 733,000 Shin-Etsu Chemical Co., Ltd. 15,311,687 11,843,397 1.0
Containers 768,000 Toyo Seikan Kaisha, Ltd. 23,064,582 22,033,765 1.9
Electric 269,000 Chudenko Corp. 10,059,726 10,392,232 0.9
Construction 435,000 Sanki Engineering Co., Ltd. 6,151,018 4,730,709 0.4
371,000 Taihei Dengyo Kaisha, Ltd. 9,667,248 6,955,049 0.6
-------------- -------------- ------
25,877,992 22,077,990 1.9
<PAGE>
Electrical 1,362,000 Hitachi Ltd. 13,851,557 11,920,145 1.0
Equipment 910,600 Murata Manufacturing Co., Ltd. 34,192,770 30,086,111 2.5
569,000 The Nippon Signal Co., Ltd. 7,950,113 5,245,054 0.4
565,000 Rohm Co., Ltd. 21,622,065 20,774,210 1.7
1,330,000 Sumitomo Electric Industries, Ltd. 18,725,703 15,152,771 1.3
-------------- -------------- ------
96,342,208 83,178,291 6.9
Iron & Steel 330,000 Maruichi Steel Tube, Ltd. 5,881,382 6,049,715 0.5
Office Equipment 2,036,000 Canon Inc. 33,971,212 30,366,028 2.5
Pharmaceuticals 742,000 Sankyo Co., Ltd. 18,142,064 17,445,262 1.5
653,000 Taisho Pharmaceutical Co., Ltd. 13,016,117 11,091,869 0.9
-------------- -------------- ------
31,158,181 28,537,131 2.4
Property & 1,896,000 Dai-Tokyo Fire & Marine Insurance Co., Ltd. 14,072,723 12,135,971 1.0
Casualty Insurance 851,000 Fuji Fire & Marine Insurance Co., Ltd. 5,819,056 4,433,485 0.4
1,268,000 Koa Fire & Marine Insurance Co., Ltd. 8,833,667 6,960,539 0.6
742,000 Mitsui Marine & Fire Insurance Co., Ltd. 6,045,627 4,841,636 0.4
1,696,000 Nichido Fire & Marine Insurance Co., Ltd. 12,951,468 12,208,389 1.0
783,000 Nippon Fire & Marine Insurance Co., Ltd. 5,748,509 4,500,932 0.4
1,681,000 Sumitomo Marine & Fire Insurance Co., Ltd. 14,196,547 13,092,822 1.1
1,781,000 Tokio Marine & Fire Insurance Co., Ltd. 21,375,308 18,630,865 1.6
1,257,000 Yasuda Fire & Marine Insurance Co., Ltd. 9,408,702 7,824,516 0.7
-------------- -------------- ------
98,451,607 84,629,155 7.2
Retailing 510,000 Ito-Yokado Co., Ltd. 26,237,875 23,241,844 2.0
138,000 Sangetsu Co., Ltd. 4,742,639 3,630,451 0.3
24,000 Shimachu Co., Ltd. 1,011,633 628,897 0.1
-------------- -------------- ------
31,992,147 27,501,192 2.4
Transportation 1,098,000 Nippon Express Co., Ltd. 11,235,190 9,780,218 0.8
Total Investments in Japan 429,729,152 375,144,806 31.5
Malaysia Leisure 235,500 Genting BHD 1,450,561 2,038,841 0.2
886,000 Sime Darby BHD 2,064,201 2,151,918 0.2
-------------- -------------- ------
3,514,762 4,190,759 0.4
Transportation 1,064,000 Malaysian International Shipping Co. BHD 3,055,962 2,917,695 0.2
Total Investments in Malaysia 6,570,724 7,108,454 0.6
<PAGE>
New Zealand Foreign New Zealand Government Bonds:
Government NZ$19,140,000 8% due 11/15/1995 11,934,089 12,004,156 1.0
Obligations NZ$ 8,200,000 9% due 11/15/1996 4,988,597 5,182,087 0.4
NZ$ 8,350,000 6.50% due 2/15/2000 4,665,647 4,810,855 0.4
-------------- -------------- ------
21,588,333 21,997,098 1.8
Paper & Forest 6,351,000 Carter Holt Harvey, Ltd. 14,971,005 13,990,237 1.2
Products
Total Investments in New Zealand 36,559,338 35,987,335 3.0
</TABLE>
<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>
Philippines Multi-Industry 256,700 Benpres Holdings Corp. $ 2,772,360 $ 2,053,600 0.2%
Total Investments in the Philippines 2,772,360 2,053,600 0.2
Singapore Banking 370,000 United Overseas Bank Ltd. (Warrants) (b) 1,993,262 1,851,277 0.1
Machinery 259,000 Jurong Shipyard Ltd. 2,090,007 2,162,802 0.2
Newspaper/Publishing 188,000 Singapore Press Holdings Ltd. 2,961,790 3,230,642 0.3
Total Investments in Singapore 7,045,059 7,244,721 0.6
South Korea Financial Services 73,900 Hanyang Securities Co. 1,736,925 945,635 0.1
Telecommunications 3,000 Korea Mobile Telecommunications Corp. 2,291,809 2,309,008 0.2
Utilities 154,000 Korea Electric Power Corp. 5,946,629 5,194,598 0.4
Total Investments in South Korea 9,975,363 8,449,241 0.7
Taiwan Merchandising 261,020 Hocheng Group Corp. (ADR) (a) 7,540,280 5,024,635 0.4
Total Investments in Taiwan 7,540,280 5,024,635 0.4
Thailand Banking 454,000 Bangkok Bank Co., Ltd. 'Foreign' 4,003,922 3,897,152 0.3
Total Investments in Thailand 4,003,922 3,897,152 0.3
Total Investments in the Pacific Basin 625,366,326 561,152,478 47.1
<PAGE>
SOUTHEAST
ASIA
India Media 643,600 Videocon International Ltd. (GDR) (d) 6,184,111 1,802,080 0.1
Tobacco 466,000 Indian Tobacco Co. Ltd. 6,288,713 3,555,580 0.3
Total Investments in India 12,472,824 5,357,660 0.4
Indonesia Food & Household 1,138,000 PT Wicaksana Overseas International 1,754,711 3,209,612 0.3
Products
Telecommunications 97,480 PT Indonesian Satellite Corp. (ADR) (a) 3,530,841 3,472,725 0.3
Total Investments in Indonesia 5,285,552 6,682,337 0.6
Total Investments in Southeast Asia 17,758,376 12,039,997 1.0
WESTERN
EUROPE
Austria Utilities 52,905 Verbund Oesterreichische Elekrizitats AG 3,038,564 3,262,886 0.3
Total Investments in Austria 3,038,564 3,262,886 0.3
Belgium Banking 13,500 Generale de Banque S.A. (Ordinary) 3,311,480 3,708,347 0.3
Building Materials 3,000 Glaverbel S.A. (Ordinary) 465,511 432,990 0.0
Total Investments in Belgium 3,776,991 4,141,337 0.3
Finland Banking 2,754,000 Kansallis-Osake-Pankki 4,133,835 2,906,483 0.2
605,000 Unitas Bank Ltd. 1,480,046 1,922,214 0.2
-------------- -------------- ------
5,613,881 4,828,697 0.4
Diversified 235,000 Outokumpu OY 3,395,069 3,821,987 0.3
Paper & Forest 471,500 Enso-Gutzeit OY 3,363,502 3,666,570 0.3
Products 86,150 Metsa Serla OY 3,366,405 3,483,670 0.3
195,300 Repola OY S 3,217,678 3,449,687 0.3
-------------- -------------- ------
9,947,585 10,599,927 0.9
Total Investments in Finland 18,956,535 19,250,611 1.6
<PAGE>
France Automobiles 52,000 Peugeot S.A. 7,378,548 7,086,951 0.6
Banking 32,500 Compagnie Financiere de Suez (Ordinary) 1,858,242 1,431,311 0.1
19,000 Societe Generale de Surveillance S.A.
(Class A) (Ordinary) 2,052,425 1,807,075 0.2
-------------- -------------- ------
3,910,667 3,238,386 0.3
Multi-Industry 9,293 EuraFrance S.A. 2,952,247 2,771,869 0.2
Oil & Related 42,525 Societe Nationale Elf Aquitane 2,991,724 3,049,328 0.3
Total Investments in France 17,233,186 16,146,534 1.4
Germany Automobile Parts 7,950 Continental AG (Warrants) (b) 451,002 393,446 0.0
Automobiles 7,200 BMW AG 3,465,277 3,735,779 0.3
3,815 Volkswagen AG (Preferred) 711,409 792,561 0.1
26,212 Volkswagen AG (Preferred) (Warrants) (b) 2,406,624 2,192,557 0.2
-------------- -------------- ------
6,583,310 6,720,897 0.6
Chemicals 22,000 BASF AG (Ordinary) 4,257,793 4,818,947 0.4
15,800 Bayer AG (Ordinary) 3,005,961 3,871,860 0.3
-------------- -------------- ------
7,263,754 8,690,807 0.7
Insurance 1,930 Munich Reinsurance Co. (Ordinary) 3,350,470 3,553,768 0.3
Machinery & Equipment 68,200 Kloeckner Werke AG 3,365,767 5,228,558 0.4
21,700 Mannesmann AG 5,450,869 6,298,035 0.5
-------------- -------------- ------
8,816,636 11,526,593 0.9
Utilities 17,000 Vereinigte Elektrizitaets & Bergwerks AG
(Veba) (Warrants) (b) 731,875 696,920 0.1
Total Investments in Germany 27,197,047 31,582,431 2.6
Greece Banking 21,780 Ergo Bank S.A. (Registered) 865,701 841,649 0.1
Beverages 124,395 Hellenic Bottling Co. S.A. 3,645,457 4,443,823 0.4
Financial Services 62,720 Etba Leasing S.A. (Ordinary) 1,950,587 1,184,921 0.1
Total Investments in Greece 6,461,745 6,470,393 0.6
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
WESTERN EUROPE Shares Held/ Percent of
(continued) Industries Face Amount Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Hungary Foods 10,000 Pick Szeged Reszvenytarsasag (ADR) (a) $ 627,990 $ 467,450 0.0%
5,500 Pick Szeged Reszvenytarsasag (Ordinary) 269,061 266,798 0.0
-------------- -------------- ------
897,051 734,248 0.0
Telecommunications 1,300 Matav Reszvenytarsasag (Ordinary) 271,103 273,684 0.0
Total Investments in Hungary 1,168,154 1,007,932 0.0
Ireland Banking 1,239,000 Allied Irish Banks PLC (Ordinary) 5,154,888 5,301,121 0.5
Building & 610,000 CRH PLC (Ordinary) 2,912,864 3,486,306 0.3
Construction
Closed-End Funds 2,990,000 First Ireland Investment Co. 4,453,231 4,916,277 0.4
Total Investments in Ireland 12,520,983 13,703,704 1.2
Italy Building & 671,350 Fochi Filippo S.p.A. 2,130,531 913,004 0.1
Construction
Diversified 2,680,000 Compagnie Industrial Riunite S.p.A. (CIR) 2,669,560 2,598,739 0.2
Telecommunications 2,458,000 STET, Di Risp (Non-Convertible) 5,629,782 5,659,820 0.5
Total Investments in Italy 10,429,873 9,171,563 0.8
Netherlands Banking 150,000 ABN Amro Bank (Ordinary) 5,114,591 5,445,394 0.5
Chemicals 45,500 Akzo N.V. (Ordinary) 4,781,143 5,316,199 0.4
53,700 European Vinyls Corporation
International N.V. 2,370,528 2,381,934 0.2
-------------- -------------- ------
7,151,671 7,698,133 0.6
Electrical Equipment 400,000 Philips Industries Inc. 11,247,177 13,227,578 1.1
Insurance 88,000 AEGON N.V. (Ordinary) 4,483,529 6,056,376 0.5
120,000 Amev N.V. (Ordinary) 4,786,225 5,337,401 0.5
125,500 Internationale Nederlanden Groep N.V. 5,074,825 6,133,343 0.5
-------------- -------------- ------
14,344,579 17,527,120 1.5
<PAGE>
Paper & Forest 125,677 Koninklijke KNP (Warrants) (b) 433,839 558,224 0.0
Products
Transportation 200,000 KLM Royal Dutch Airlines 4,369,918 5,796,217 0.5
Total Investments in the Netherlands 42,661,775 50,252,666 4.2
Norway Oil & Gas Producers 81,000 Saga Petroleum A.S. (Class A) 957,551 1,046,107 0.1
340,000 Saga Petroleum A.S. (Class B) 3,749,345 4,207,010 0.4
-------------- -------------- ------
4,706,896 5,253,117 0.5
Total Investments in Norway 4,706,896 5,253,117 0.5
Portugal Banking 241,700 Banco Comercial Portugues S.A. 3,561,811 3,034,412 0.3
89,000 Banco Comercial Portugues S.A. (ADR) (a) 1,289,946 1,145,875 0.1
-------------- -------------- ------
4,851,757 4,180,287 0.4
Building & 61,700 Sociedade de Construsoes Soares da
Construction Costa S.A. 1,358,161 1,221,375 0.1
23,070 Sociedade de Construsoes Soares
da Costa S.A. (New) (Baby Shares) 96,185 456,679 0.0
-------------- -------------- ------
1,454,346 1,678,054 0.1
Retail 13,500 Estabelecimentes Jeronimo Martins &
Filho S.A. 597,073 564,951 0.1
171,600 Sonae Investimentos--SGPS S.A. 3,559,893 3,899,794 0.3
-------------- -------------- ------
4,156,966 4,464,745 0.4
Total Investments in Portugal 10,463,069 10,323,086 0.9
Spain Banking 24,500 Banco Popular Espanol (Ordinary) 2,677,926 3,118,391 0.3
Oil--Related 260,750 Repsol S.A. (Ordinary) 7,587,349 7,413,821 0.6
Telecommunications 265,000 Telefonica Nacional de Espana S.A. (Ordinary) 3,336,533 3,310,684 0.3
Utilities--Electric 40,000 Empresa Nacional de Electricidad S.A. 1,519,970 1,745,124 0.1
24,900 Iberdrola S.A. 139,394 156,027 0.0
-------------- -------------- ------
1,659,364 1,901,151 0.1
Total Investments in Spain 15,261,172 15,744,047 1.3
<PAGE>
Sweden Appliances 101,205 Electrolux AB 5,058,868 5,101,462 0.4
Automobiles & 370,000 Volvo AB 6,780,616 7,419,887 0.6
Equipment
Banking 182,575 Stadshypotek AB 2,699,913 2,677,491 0.2
Building Related 144,000 Svedala Industry 2,795,410 3,614,586 0.3
Engineering 183,850 SKF AB 3,438,484 3,385,912 0.3
95,800 SKF AB 'B' Free 1,859,982 1,770,855 0.2
-------------- -------------- ------
5,298,466 5,156,767 0.5
Metals & Mining 316,000 Avesta Sheffield AB 2,762,161 3,340,927 0.3
Total Investments in Sweden 25,395,434 27,311,120 2.3
Switzerland Chemicals 8,400 Ciba-Geigy AG (Registered) 4,520,209 5,311,475 0.4
Electrical Equipment 6,050 BBC Brown Boveri & Cie 5,016,227 5,261,932 0.4
Food & Beverage 7,315 Nestle AG 7,034,888 7,053,307 0.6
Insurance 2,140 Baloise (Warrants) (b) 193,493 198,740 0.0
Pharmaceuticals 985 Roche Holding Genusschein AG 4,999,066 5,444,824 0.5
Total Investments in Switzerland 21,763,883 23,270,278 1.9
Turkey Automobiles & 445,150 Turk Otomobil Fabrikasi A.S. (GDR) (d) 3,547,687 1,684,893 0.1
Equipment
Beverages 223,000 Erciyas Biracilik Ve Malt Sanayii A.S. 219,759 166,981 0.0
Building Materials 526,000 Alarko Holdings A.S. 464,922 489,155 0.0
1,208,000 Cimentas Izmir Cimento Fabrikasi T.A.S. 884,318 641,932 0.1
-------------- -------------- ------
1,349,240 1,131,087 0.1
Food & Household 19,000 Dardanel Onentas Gida A.S. 27,583 28,913 0.0
Products
Insurance 4,749,000 Aksigorta A.S. 1,187,250 848,855 0.1
Retail Stores 316,000 Migros Turk A.S. 636,845 717,488 0.1
Steel 22,445,000 Izmir Demir Celik Sanayii A.S. 1,587,667 1,192,729 0.1
Total Investments in Turkey 8,556,031 5,770,946 0.5
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
WESTERN EUROPE Shares Held/ Percent of
(continued) Industries Face Amount Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
United Aerospace 1,985,000 Rolls Royce PLC (Ordinary) $ 5,564,973 $ 4,746,656 0.4%
Kingdom
Airlines 1,283,300 British Airways PLC 7,725,596 7,912,699 0.7
Beverages 1,762,600 Grand Metropolitan PLC (Ordinary) 11,332,223 10,659,015 0.9
Building Materials 1,315,450 Tarmac PLC (Ordinary) 3,537,337 2,194,111 0.2
Chemicals 369,200 Imperial Chemical Industries PLC
(Ordinary) 4,617,862 4,106,366 0.3
Consumer--Goods 665,500 Vendome Luxury Group (Units) (c) 4,911,773 4,682,092 0.4
Electrical 1,813,800 General Electric Co., Ltd. PLC (Ordinary) 8,780,326 8,316,092 0.7
Equipment
Food & Beverage 610,900 Tate & Lyle PLC (Ordinary) 3,764,300 4,182,056 0.4
Food Manufacturing 215,600 Unilever Capital Corp. 3,247,073 3,988,104 0.3
Foreign Pound 16,700,000 UK Treasury Gilt, 8.75% due 9/01/1997 27,598,324 26,707,994 2.2
Government Sterling
Obligation
Industrial--Other 2,476,500 Tomkins PLC 8,567,614 8,966,143 0.8
Insurance 130,300 Commercial Union Assurance Co. PLC
(Ordinary) 1,061,179 1,041,352 0.1
1,024,200 Prudential Corp. PLC 4,936,971 4,938,744 0.4
-------------- -------------- ------
5,998,150 5,980,096 0.5
Leisure & 2,276,800 Forte PLC 8,436,555 8,639,090 0.7
Entertainment 827,450 The Rank Organisation PLC (Ordinary) 5,050,357 4,820,711 0.4
-------------- -------------- ------
13,486,912 13,459,801 1.1
Metals & Mining 513,400 The RTZ Corp. PLC 6,464,383 5,978,063 0.5
Multi-Industry 981,000 BTR PLC (Ordinary) 4,844,630 4,862,263 0.4
Oil--Related 734,000 The Shell Transport & Trading Co. PLC 8,166,327 8,152,189 0.7
<PAGE>
Pharmaceuticals 1,066,800 SmithKline Beecham Corp. PLC (Class A) 6,717,070 8,466,786 0.7
Services 2,152,700 BET PLC 3,744,575 3,607,624 0.3
Telecommunications 1,600,000 Racal Electronics PLC 5,414,412 5,805,432 0.5
Utilities 1,284,400 British Telecommunications PLC (Ordinary) 7,647,248 7,665,652 0.6
Utilities--Electric 742,800 Scottish Power PLC (Ordinary) 3,895,094 3,851,923 0.3
Total Investments in the United Kingdom 156,026,202 154,291,157 12.9
Total Investments in Western Europe 385,617,540 396,953,808 33.3
<CAPTION>
SHORT-TERM Face
SECURITIES Amount
<S> <C> <S> <C> <C> <C>
Foreign Mexican Cetes (Certificados de la
Government Federacion):
Obligations* MxP 17,156,220 35.992% due 5/04/1995 2,909,751 2,626,666 0.2
2,622,790 35.995% due 5/11/1995 442,000 397,576 0.0
NZ$ 52,000,000 New Zealand Treasury Bills, 7.54%
due 6/21/1995 32,178,855 32,014,036 2.7
-------------- -------------- ------
35,530,606 35,038,278 2.9
US Government US Treasury Bills (f):
& Agency US$ 1,100,000 5.65% due 3/23/1995 1,096,202 1,096,073 0.1
Obligations* 300,000 5.68% due 3/23/1995 298,959 298,929 0.0
250,000 5.76% due 3/23/1995 249,120 249,108 0.0
30,000 4.70% due 3/30/1995 29,886 29,886 0.0
30,000 5.05% due 3/30/1995 29,878 29,878 0.0
1,990,000 5.25% due 3/30/1995 1,981,546 1,981,170 0.2
175,000 5.28% due 3/30/1995 174,256 174,256 0.0
2,150,000 5.30% due 3/30/1995 2,140,821 2,140,821 0.2
1,150,000 5.31% due 3/30/1995 1,145,081 1,144,756 0.1
1,820,000 5.345% due 3/30/1995 1,812,164 1,811,701 0.2
2,100,000 5.36% due 3/30/1995 2,090,933 2,090,424 0.2
3,700,000 5.67% due 5/25/1995 3,650,466 3,648,496 0.3
1,150,000 5.70% due 5/25/1995 1,134,523 1,133,934 0.1
1,650,000 5.74% due 5/25/1995 1,627,638 1,626,950 0.1
-------------- -------------- ------
17,461,473 17,456,382 1.5
Total Investments in Short-Term Securities 52,992,079 52,494,660 4.4
<PAGE>
<CAPTION>
OPTIONS Number of Contracts/ Premiums
PURCHASED Face Amount Paid
<S> <C> <S> <C> <C> <C>
Call Options 59,000 Nikkei, expiring March 1995 at YEN 19500 198,653 3,055 0.0
Purchased 188,501 Topix 2nd Section++, expiring May 1995 at
YEN 2330 420,000 137 0.0
339,631 Topix 2nd Section++, expiring July 1995 at
YEN 2512.93 917,849 2,638 0.0
344,060 Topix 2nd Section++, expiring August 1995
at YEN 2553.64 1,016,983 13,399 0.0
300,436 Topix 2nd Section++, expiring September
1995 at YEN 2311.31 700,000 23,058 0.0
-------------- -------------- ------
3,253,485 42,287 0.0
Currency Put 25,000,000 German Deutschemark, expiring August 1995
Options Purchased at DM 1.536 398,750 232,500 0.0
24,000,000 Japanese Yen, expiring March 1995
at YEN 98.1 240,000 36,000 0.0
40,000,000 Japanese Yen, expiring March 1995
at YEN 98.5 628,000 36,000 0.0
10,000,000 Japanese Yen, expiring June 1995
at YEN 100 302,000 64,000 0.0
65,000,000 Japanese Yen, expiring August 1995
at YEN 99 828,550 747,500 0.1
-------------- -------------- ------
2,397,300 1,116,000 0.1
Total Options Purchased 5,650,785 1,158,287 0.1
Total Investments 1,210,661,154 1,129,059,180 94.7
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
OPTIONS Number of Contracts/ Premiums Percent of
WRITTEN Face Amount Issue Received Value Net Assets
<S> <C> <S> <C> <C> <C>
Call Options 7,822 Hang Seng Index, expiring May 1995 at
Written HK$ 8500 $ (267,996) $ (357,155) 0.0%
7,600 Hang Seng Index, expiring May 1995 at
HK$ 8686 (278,008) (315,315) 0.0
862,700 SmithKline Beecham, Corp., expiring May
1995 at Pound Sterling 470 (303,361) (545,293) (0.1)
-------------- -------------- ------
(849,365) (1,217,763) (0.1)
<PAGE>
Currency Call 25,000,000 German Deutschemark, expiring August
Options Written 1995 at DM 1.433 (336,250) (542,500) 0.0
40,000,000 Japanese Yen, expiring March 1995 at
YEN 93.06 (628,000) (8,000) 0.0
50,000,000 Japanese Yen, expiring August 1995 at
YEN 91.29 (632,500) (660,000) (0.1)
15,000,000 Japanese Yen, expiring August 1995 at
YEN 91.38 (196,050) (204,000) 0.0
-------------- -------------- ------
(1,792,800) (1,414,500) (0.1)
Put Options 344,060 Topix 2nd Section++, expiring August
Written 1995 at YEN 2453.64 (714,584) (2,398,941) (0.2)
Currency Put 10,000,000 Japanese Yen, expiring June 1995 at
Options Written YEN 108 (110,000) (3,000) 0.0
Total Options Written (3,466,749) (5,034,204) (0.4)
Total Investments, Net of Options Written $1,207,194,405 1,124,024,976 94.3
==============
Variation Margin on Financial Futures Contracts** (1,920,353) (0.2)
Unrealized Depreciation on Forward Foreign Exchange Contracts*** (6,479,543) (0.5)
Other Assets Less Liabilities 76,459,079 6.4
-------------- ------
Net Assets $1,192,084,159 100.0%
============== ======
Net Asset Value: Class A--Based on net assets of $46,803,260 and
4,848,687 shares outstanding $ 9.65
==============
Class B--Based on net assets of $942,747,229 and
97,958,988 shares outstanding $ 9.62
==============
Class C--Based on net assets of $17,642,334 and
1,849,669 shares outstanding $ 9.54
==============
Class D--Based on net assets of $184,891,336 and
19,109,596 shares outstanding $ 9.68
==============
<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)The rights may be exercised until March 17, 1995.
(f)Securities held as collateral in connection with open financial futures
contracts.
++All Topix 2nd Section OTC's are with Morgan Stanley & Co. International Ltd.
as counterparty.
*Certain Foreign Government and US Government & Agency Obligations are
traded on a discount basis; the interest rates shown are the rates paid at the
time of purchase by the Fund.
**Financial futures contracts purchased as of February 28, 1995 were as follows:
<CAPTION>
Number of Expiration
Contracts Issue Exchange Date Value
<C> <S> <S> <S> <C>
304 CAC40 MATIF March 1995 $21,070,831
74 Nikkei 225 SIMEX March 1995 6,302,950
482 Tokyo-Topix TFE March 1995 67,395,132
Total Financial Futures Contracts Purchased
(Total Contract Price--$98,364,784) $94,768,913
===========
**Financial futures contracts sold as of February 28, 1995 were as follows:
<CAPTION>
Number of Expiration
Contracts Issue Exchange Date Value
<C> <S> <S> <S> <C>
130 EOE20 EOE March 1995 $(6,495,400)
163 DAX DTB March 1995 (23,503,286)
95 All Ords SFE March 1995 (3,392,777)
Total Financial Futures Contracts Sold
(Total Contract Price--$33,492,134) $(33,391,463)
============
***Forward foreign exchange contracts as of February 28, 1995 were as follows:
<PAGE>
<CAPTION>
Foreign Expiration Unrealized
Currency Sold Date Depreciation
<S> <S> <C>
DM 46,067,250 March 1995 $(1,546,774)
DM 30,090,000 July 1995 (683,611)
Nlg 26,216,004 March 1995 (788,897)
Nlg 33,749,400 July 1995 (673,762)
YEN 8,604,859,500 March 1995 (1,158,063)
YEN 8,058,880,000 June 1995 (1,423,412)
YEN 816,270,000 August 1995 (205,024)
Total (US$ Commitment--$264,588,065) $(6,479,543)
===========
Total Unrealized Depreciation on
Forward Foreign Exchange Contracts $(6,479,543)
===========
</TABLE>
PORTFOLIO INFORMATION
Worldwide
Investments as of
February 28, 1995
Ten Largest Industries Percent of
(Equity Investments) Net Assets
Electrical Equipment 9.1%
Property & Casualty Insurance 7.2
Utilities 4.0
Banking 4.0
Telecommunications 3.9
Pharmaceuticals 3.6
Chemicals 3.0
Multi-Industry 2.8
Automobiles 2.7
Office Equipment 2.5
Percent of
Ten Largest Countries Net Assets
Japan 31.5%
United Kingdom 12.9
Hong Kong 6.1
Netherlands 4.2
Canada 3.8
Australia 3.7
New Zealand 3.0
Germany 2.6
Sweden 2.3
Switzerland 1.9
<PAGE>
Percent of
Asset Mix* Net Assets
Japan 31.5%
Europe (Ex. United Kingdom
and Ireland) 19.2
Pacific Basin (Ex. Japan) 15.6
United Kingdom and Ireland 14.1
Other Emerging Markets 9.8
Cash 4.4
[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
Canon Inc. 2.5%
Murata Manufacturing Co., Ltd. 2.5
Mitsubishi Heavy Industries, Ltd. 2.0
Ito-Yokado Co., Ltd. 2.0
China Light & Power Co., Ltd. 1.9
Toyo Seikan Kaisha, Ltd. 1.9
Rohm Co., Ltd. 1.7
Hong Kong Telecommunications, Ltd. 1.7
Tokio Marine & Fire Insurance Co., Ltd. 1.6
Sankyo Co., Ltd. 1.5
Financial Futures Contracts
Percent of
Country Issue Exchange Net Assets
Japan Topix TFE 5.6%
Japan Nikkei 225 SIMEX 0.5
France CAC40 MATIF 1.8
Germany DAX DTB (2.0)
Netherlands EOE 20 EOE (0.5)
Australia All Ords. SFE (0.3)
-----
5.1%
=====
PORTFOLIO CHANGES
For the Quarter Ended February 28, 1995
<PAGE>
Additions
Allied Irish Banks PLC (Ordinary)
Anglo American Corp. of South Africa Ltd.
(ADR)
BET PLC
Bangkok Bank Co., Ltd. 'Foreign'
British Airways PLC
Canadian Government Bonds,
8% due 3/15/1997
Centrais Eletricas Brasileiras S.A.--
Eletrobras 'B' (Preferred)
Dardanel Onentas Gida A.S.
Electrolux AB
Empresa Nacional de Electricidad S.A.
Ergo Bank S.A. (Registered)
Grupo Carso, S.A. de C.V. 'A1'
HSBC Holdings PLC
Iberdrola S.A.
Jurong Shipyard Ltd.
Korea Mobile Telecommunications Corp.
Malaysian International Shipping Co. BHD
Matav Reszvenytarsasag (Ordinary)
Migros Turk A.S.
Nestle AG
New Zealand Government Bonds, 8%
due 11/15/1995
Petroleo Brasileiro S.A.
Pick Szeged Reszvenytarsasag (Ordinary)
Prudential Corp. PLC
Rembrandt Group Ltd.
Republic of Argentina:
4.25% due 3/31/2023
7.125% due 3/31/2023
Republic of Brazil, 6.687% due 4/15/2024
Roche Holding Genusschein AG
South Africa Iron & Steel Industrial
Corp., Ltd.
South Africa Iron & Steel Industrial
Corp., Ltd. (Rights)
Scottish Power PLC (Ordinary)
Sime Darby BHD
Singapore Press Holdings Ltd.
Societe Nationale Elf Aquitane
South African Breweries Ltd.
Stadshypotek AB
United Overseas Bank Ltd. (Warrants)
<PAGE>
Deletions
ASA Ltd.
Baloise
Bangkok Land Ltd. 'Foreign'
Bank of Ireland
British Petroleum Co., Ltd.
Canadian Government Bonds:
6.50% due 8/01/1996
5.75% due 3/01/1999
Compagnie Financiere de Paribas
Companhia Energetica de Minas Gerais
S.A. (CEMIG) (ADR)
Continental AG
Daimler-Benz AG
Deutsche Bank AG (Ordinary)
Grupo Carso, S.A. de C.V. (ADR)
Grupo Situr, S.A. de C.V. (ADR)
Hang Lung Development Co., Ltd.
Hindalco Industries Ltd.
Koninklijke KNP (Preferred)
Koninklijke Ptt Nederland N.V.
Lotte Confectionary Co. (Ordinary)
Maderas y Sinteticos S.A. (MASISA)
(Sponsored) (ADR)
Matsushita Electric Industrial Co., Ltd.
Panamerican Beverages, Inc. (Class A)
Pechiney International S.A.
Public Bank (Malaysia) BHD 'Foreign'
Rhone-Poulenc S.A.
Sears PLC
Sigma Alimentos, S.A. de C.V. (Class B)
Skandia Group Forsakrings AB
Societe Centrale du Groupe des Assurances
Nationales S.A.
Sony Corp.
Southern Peru Copper Corp. S.A.
Svenska Handelsbanken, Inc.
Telecomunicacoes de Sao Paulo S.A.
(Preferred)
Thyssen AG (Ordinary)
Toyota Motor Corp.
Volkswagen AG
