MERRILL LYNCH
INTERNATIONAL
EQUITY FUND
FUND LOGO
Semi-Annual Report
November 30, 1995
This report is not authorized for use as an offer of sale
or a solicitation of an offer to buy shares of the Fund
unless accompanied or preceded by the Fund's current
prospectus. Past performance results shown in this re-
port should not be considered a representation of future
performance. Investment return and principal value
of shares will fluctuate so that shares, when redeemed,
may be worth more or less than their original cost.
Statements and other information herein are dated and
are subject to change.
<PAGE>
Merrill Lynch
International
Equity Fund
Box 9011
Princeton, NJ
08543-9011
MERRILL LYNCH INTERNATIONAL EQUITY FUND
International
Stock Market
Performance
Bar Graph Depicting Total Return in US Dollars* of the Fund's
Top Ten Country Positions For the Three-Month Period Ended
November 30, 1995
Finland -13.2%
Italy -11.5%
Japan + 0.7%
Australia + 1.1%
Germany + 1.8%
United Kingdom + 4.2%
Ireland + 5.4%
Hong Kong + 6.1%
Netherlands + 7.2%
Sweden +13.1%
<PAGE>
Source: Financial Times/S&P--Actuaries Index.
[FN]
*For the three-month period ended November 30, 1995,
total investment return in US dollars for the Financial
Times/S&P--Actuaries World (Ex-US) Index was +2.04%.
DEAR SHAREHOLDER
International equity markets recovered
sharply in the latter half of the quar-
ter ended November 30, 1995, after
being generally weak in September
and early October. The rally in some
emerging markets was sparked by a
continued decline in US bond yields,
which improved investor sentiment in
emerging debt markets. The Japanese
equity market also continued to
recover. Japanese share prices and
trading volume rose in response to
earlier monetary easing, currency
weakness and positive profits
announcements. European markets,
although generally rising, underper-
formed Japan in local currency terms,
as expectations concerning European
profits growth faltered.
For the quarter ended November 30,
1995, total returns for the Fund's Class
A, Class B, Class C and Class D Shares
were -0.64%, -0.93%, -0.94% and
- -0.74%, respectively. (Results shown
do not reflect sales charges and would
be lower if sales charges were included.
Complete performance information,
including average annual and aggre-
gate total returns, can be found on
pages 4--6 of this report to share-
holders.) The Fund underperformed
the unmanaged Financial Times/
S&P--Actuaries World (Ex-US) Index
benchmark, which rose by 2.04% during
the quarter ended November 30, 1995.
The Fund's Japanese equity stance
and currency hedging added value rel-
ative to the unmanaged benchmark.
However, underperformance in Euro-
pean, Japanese and emerging markets
equity selection against local bench-
marks more than offset the Fund's
asset allocation gains.
<PAGE>
Over the six months ended November
30, 1995, Merrill Lynch International
Equity Fund's Class A, Class B,
Class C and Class D Shares returned
+5.27%, +4.71%, +4.75% and +5.06%,
respectively, compared with the un-
managed benchmark return of +2.66%.
During the six-month period ended
November 30, 1995, most of the
volatility in returns relative to the
benchmark stemmed from emerging
markets, especially those in Asia, as
well as European and Japanese stock
selection. We retained a number of
key strategies that we believe offer
value opportunities over the medium
term. For example, in Europe, the
Fund's portfolio is biased toward the
forestry, industrial and capital goods
sectors, where we believe valuations
are attractive. In Japan, we remain
concentrated in non-life insurers
and electronic and electrical
manufacturers.
Portfolio Matters
During the quarter ended November
30, 1995, our investment strategy
evolved as we increased equity expo-
sure, particularly in emerging and
Pacific Basin markets. The outperfor-
mance of Japanese equities led us to
take profits on some of our positions
including investments in electronic
companies such as Rohm Co., Ltd.
and Canon Inc. At November 30, 1995,
the Fund's effective exposure in
Japanese equities was 42%, against
the unmanaged benchmark weight
of 41.7%.
<PAGE>
Additionally, we reduced the Fund's
effective exposure to UK equities
through the sales of holdings in com-
panies such as Rolls Royce PLC, The
Rank Organisation PLC, British Tele-
communications PLC and BAT Indus-
tries PLC and through sales of FTSE
100 futures. The Fund's UK equity
weighting fell from 9.7% of net assets
to 4.1% at the end of the November
quarter. We also pared back the Fund's
Korean equity exposure by selling
Pohang Iron & Steel Company, Ltd.
The Fund's purchasing activity was
concentrated in two major strategies.
First, we bought a range of emerging
market equities, mainly in Latin
America, South Africa and Malaysia.
Additionally, we added to the Fund's
Hong Kong weighting with purchases
of Hang Seng equity futures, reflect-
ing our anticipation that the Hong
Kong market would rally along with
the US equity market.
Economic and Investment
Environment
During the three months ended
November 30, 1995, the US Treasury
ten-year benchmark bond yield
declined by approximately 40 basis
points (0.40%) to a redemption yield of
5.8%. Although the Federal Reserve
Board left the Federal Funds rate
unchanged for the November period,
investor expectations shifted to antici-
pate further cuts in official interest
rates, as it did on December 19, 1995,
and may do again in the first quarter
of 1996. This positive view in US inter-
est rate expectations reflected gen-
erally weak US economic data and
relatively stable inflation indicators.
<PAGE>
Elsewhere, the Bundesbank continued
to gradually lower interest rates, al-
though investor expectations for a
further cut in the discount or Lom-
bard interest rates were not met. In
Continental Europe interest rates gen-
erally fell, reflecting the combined
influence of stronger exchange rates
relative to the Deutschemark, and
weakening economic activity.
In Japan, the Bank of Japan lowered
the official discount rate from 1.25%
to 0.75%. More importantly, the Bank
of Japan has consistently injected
surplus liquidity, leaving overnight
interest rates around 0.5%. This
liquidity injection has supported a
sharp recovery in M-1 money supply
growth and bank profits. Additionally,
growth expectations for Japanese gross
domestic product were revised upward
for the first time in this business cycle.
Consistent with that upward revision
for expected economic activity, Japan-
ese companies generally reported
stronger-than-expected profits growth.
Significant underperformance of
equity markets in Malaysia, Thailand,
Argentina, Chile and Brazil from Sep-
tember to early November led us to
increase the Fund's exposure in those
markets. We became more confident
of a renewed interest on the part of
global investors in emerging markets.
Additionally, appropriate monetary
policy tightening programs are in place
in Malaysia, Thailand and Chile.
Finally, investor confidence in the
policy framework in Argentina and
Brazil continued to improve.
In Conclusion
We envisage a period of significant
outperformance in Pacific Basin and
emerging equity markets relative to
Europe. Additionally, we anticipate
that after a year of underperformance,
international equities, in general, may
outperform US equities. Our invest-
ment strategy favors a relatively fully
invested stance, with overweight posi-
tions in the Pacific Basin, emerging
markets and peripheral European
countries. We continued to reduce the
Fund's currency hedging strategies
back into US dollars, although in part
this reflects our increased exposure
to US dollar-linked markets.
<PAGE>
We believe that the recent strong rally
in US bond yields may be overdone.
As a result, if US economic activity
regains momentum, there is a signifi-
cant chance of disappointment in many
equity markets. Therefore, we are
closely monitoring developments in
the US economy and, at some stage in
1996, we may become more defensive
in our investment strategy.
We thank you for your continued inter-
est in Merrill Lynch International
Equity Fund, and we look forward to
presenting our investment results and
analysis in our upcoming quarterly
shareholder letter.
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
January 4, 1996
PERFORMANCE DATA
About Fund
Performance
Since October 21, 1994, investors have been able to purchase
shares of the Fund through the Merrill Lynch Select Pricing SM
System, which offers four pricing alternatives:
*Class A Shares incur a maximum initial sales charge (front-end
load) of 5.25% and bear no ongoing distribution or account
maintenance fees. Class A Shares are available only to eligible
investors, as detailed in the Fund's prospectus. If you were a
Class A shareholder on October 21, 1994, your Class A Shares
were redesignated to Class D Shares on October 21, 1994, which,
in the case of certain eligible investors, were simultaneously
exchanged for Class A Shares.
<PAGE>
*Class B Shares are subject to a maximum contingent deferred
sales charge of 4% if redeemed during the first year, decreasing
1% each year thereafter to 0% after the fourth year. In addi-
tion, Class B Shares are subject to a distribution fee of 0.75%
and an account maintenance fee of 0.25%. These shares auto-
matically convert to Class D Shares after 8 years.
*Class C Shares are subject to a distribution fee of 0.75% and an
account maintenance fee of 0.25%. In addition, Class C Shares
are subject to a 1% contingent deferred sales charge if redeemed
within one year of purchase.
*Class D Shares incur a maximum initial sales charge of 5.25% and
an account maintenance fee of 0.25% (but no distribution fee).
Performance data for all of the Fund's shares are presented in
the "Recent Performance Results" and "Performance Summary"
table on pages 4, 5 and 6. Data for Fund's Class B and Class D
Shares are presented in the "Average Annual Total Return"
tables on page 5. Data for Class A and Class C Shares are also
presented in the "Aggregate Total Returns" table on page 5.
The "Recent Performance Results" table shows investment results
before the deduction of any sales charges for all of the Fund's
shares for the 12-month and 3-month periods ended November
30, 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.
<TABLE>
Recent
Performance
Results
<CAPTION>
12 Month 3 Month
11/30/95 8/31/95 11/30/94 % Change % Change
<S> <C> <C> <C> <C> <C>
ML International Equity Fund Class A Shares* $10.79 $10.86 $11.25 -3.25%(1) -0.64%
ML International Equity Fund Class B Shares* 10.67 10.77 11.14 -3.38(1) -0.93
ML International Equity Fund Class C Shares* 10.58 10.68 11.14 -4.18(1) -0.94
ML International Equity Fund Class D Shares* 10.79 10.87 11.25 -3.25(1) -0.74
ML International Equity Fund Class A Shares--Total Return* +2.32(2) -0.64
ML International Equity Fund Class B Shares--Total Return* +1.17(3) -0.93
ML International Equity Fund Class C Shares--Total Return* +1.23(4) -0.94
ML International Equity Fund Class D Shares--Total Return* +1.99(5) -0.74
Financial Times/S&P--Actuaries World (Ex-US) Index**--Total Return +6.80 +2.04
<PAGE>
<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.
(1)Percent change includes reinvestment of $0.091 per share capital gains
distributions.
(2)Percent change includes reinvestment of $0.599 per share ordinary
income dividends and $0.091 per share capital gains distributions.
(3)Percent change includes reinvestment of $0.490 per share ordinary
income dividends and $0.091 per share capital gains distributions.
(4)Percent change includes reinvestment of $0.582 per share ordinary
income dividends and $0.091 per share capital gains distributions.
(5)Percent change includes reinvestment of $0.566 per share ordinary
income dividends and $0.091 per share capital gains distributions.
</TABLE>
Aggregate
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Inception (10/21/94) through 9/30/95 -0.41% -5.64%
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Inception (10/21/94) through 9/30/95 -1.39% -2.32%
[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>
Average Annual
Total Return
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 9/30/95 -0.60% -4.38%
Inception (7/30/93) through 9/30/95 +6.48 +5.62
[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 9/30/95 +0.22% -5.04%
Inception (7/30/93) through 9/30/95 +7.31 +4.68
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
<TABLE>
Performance
Summary--
Class A Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <C> <C> <C> <C> <C>
10/21/94--12/31/94 $11.73 $10.53 $0.091 $0.599 -4.23
1/1/95--11/30/95 10.53 10.79 -- -- +2.47
------ ------
Total $0.091 Total $0.599
Cumulative total return as of 11/30/95: -1.87%**
<PAGE>
<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.
</TABLE>
PEROFORMANCE DATA (concluded)
<TABLE>
Performance
Summary--
Class B Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <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--11/30/95 10.52 10.67 -- -- + 1.43
------ ------
Total $0.091 Total $0.490
Cumulative total return as of 11/30/95: +12.70%**
<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 C Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <C> <C> <C> <C> <C>
10/21/94--12/31/94 $11.62 $10.43 $0.091 $0.582 -4.33%
1/1/95--11/30/95 10.43 10.58 -- -- +1.44
------ ------
Total $0.091 Total $0.582
Cumulative total return as of 11/30/95: -2.95%**
<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**
<S> <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--11/30/95 10.56 10.79 -- -- + 2.18
------ ------
Total $0.091 Total $0.566
Cumulative total return as of 11/30/95:+14.74%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the ex-dividend date, and do
not include sales charge; results would be lower if sales charge
was included.
***As a result of the implementation of the Merrill Lynch Select
Pricing SM System, Class A Shares of the Fund outstanding prior
to October 21, 1994 were redesignated to Class D Shares.
</TABLE>
<PAGE>
EQUITY PORTFOLIO CHANGES
For the Quarter Ended November 30, 1995
Additions
Alcatel Alsthom Cie Generale d'Electricite S.A.
Assurances Generales de France S.A. (AGF)
Banco Frances del Rio de la Plata S.A. (ADR)
*Canadian National Rail Co.
Compagnie Financiere de Paribas
Compagnie Financiere de Suez (Ordinary)
Compania de Telefonos de Chile S.A. (ADR)
Enersis S.A. (ADR)
General Electric Co. PLC (Ordinary)
Housing Development Finance Corp., Ltd.
*Indian Tobacco Co.
Lane Walker Rudkin Industries, Ltd.
Lloyds Bank PLC
Malayan Banking BHD
NEC Corporation
Nedcor Ltd. (GDR)
Nedcor Ltd. (Warrants)
P.T. Hanjaya Mandala Sampoerna
P.T. Tambag Timah (GDR)
P.T. Telekomunikasi Indonesia
Phatra Thanakit Public Co., Ltd. 'Foreign'
Reliance Industries Ltd.
Resorts World BHD
Telecom Argentina Stet-France
Telecom S.A. (GDS)
Telecom Corporation of New Zealand
Telefonica de Argentina S.A. (Class B) (ADR)
Telekom Malaysia BHD
Thai Farmers Bank Co., Ltd. 'Foreign'
Unitas Bank Ltd. (Class A)
Wrightson Ltd.
<PAGE>
Deletions
Allied Irish Banks PLC (Ordinary)
BASF AG (Ordinary)
BAT Industries PLC
BET PLC
The BICC Group PLC
Banco Bradesco S.A. PN (Preferred)
Benpres Holdings Corp.
British Sky Broadcasting Group PLC
British Telecommunications PLC (Ordinary)
C.A. La Electricidad de Caracas
S.A.I.C.A.-S.A.C.A.
CS Holding AG (Registered)
*Canadian National Rail Co.
Celsius Industrier AB
Coca-Cola Amatil, Ltd. (New Shares)
Companhia Vale do Rio Doce S.A. (Preferred)
Etba Leasing S.A. (Ordinary)
Generale de Banque S.A. (Ordinary)
Hong Kong Telecommunications, Ltd.
*Indian Tobacco Co.
Koninklijke KNP (Warrants)
Mavesa S.A. (ADR)
NYNEX CableComms Group PLC
Nedcor Ltd.
Pohang Iron & Steel Company, Ltd.
The Rank Organisation PLC (Ordinary)
Rolls Royce PLC (Ordinary)
Saga Petroleum A.S. (Class A)
Siemens AG
Sumitomo Electric Industries, Ltd.
Tesco PLC (Ordinary)
Ugine S.A.
Unilever Capital Corp.
Unitas Bank Ltd.
Vendome Luxury Group (Units)
Verbund Oesterreichische Elektrizitats AG
Volkswagen AG
[FN]
*Added and deleted in the same quarter.
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
Shares Value Percent of
AFRICA Industries Held Investments Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
South Banking 523,160 Nedcor Ltd. (GDR) (d) (g) $ 5,570,789 $ 8,108,980 0.7%
Africa 130,790 Nedcor Ltd. (Warrants) (b) (g) 314,761 613,405 0.0
-------------- -------------- ------
5,885,550 8,722,385 0.7
<PAGE>
Diversified 669,460 Malbak Ltd. (GDR) (d) 3,856,093 4,284,544 0.4
Mining 148,755 Beatrix Mines Ltd. 1,316,860 1,318,750 0.1
22,000 Driefontein Consolidated Ltd. (e) 335,320 235,543 0.0
159,000 Driefontein Consolidated Ltd. (ADR) (a) 2,395,717 1,669,500 0.1
263,000 Kinross Mines Ltd. 2,711,745 2,313,625 0.2
226,000 Vaal Reefs Exploration & Mining Company,
Ltd. (ADR) (a) 1,685,591 1,440,750 0.1
55,000 Western Areas Gold Mining Company, Ltd. 854,806 888,912 0.1
117,920 Western Areas Gold Mining Company, Ltd.
(ADR) (a) 1,920,749 1,880,824 0.2
-------------- -------------- ------
11,220,788 9,747,904 0.8
Total Investments in South Africa 20,962,431 22,754,833 1.9
Zimbabwe Beverages 1,591,000 Delta Corporation Ltd. (e) 2,530,373 2,578,606 0.2
Total Investments in Zimbabwe 2,530,373 2,578,606 0.2
Total Investments in Africa 23,492,804 25,333,439 2.1
EUROPE
Austria Engineering & 7,300 V.A. Technologie AG 798,071 842,280 0.1
Construction
Total Investments in Austria 798,071 842,280 0.1
Finland Banking 2,754,000 Kansallis-Osake-Pankki (e) 4,133,835 2,307,392 0.2
485,500 Unitas Bank Ltd. (Class A) (e) 1,187,706 1,209,004 0.1
-------------- -------------- ------
5,321,541 3,516,396 0.3
Diversified 235,000 Outokumpu OY 3,395,069 3,888,592 0.3
Forest Products 175,400 Kymmene OY 4,977,312 4,776,066 0.4
Machinery 73,100 Rauma OY (e) 1,317,437 1,514,127 0.1
Paper & Forest 628,100 Enso-Gutzeit OY 4,574,740 4,531,535 0.4
Products 123,000 Metsa Serla OY (Class B) 4,764,160 4,150,763 0.4
269,600 Repola OY S (g) 4,412,103 5,251,704 0.4
-------------- -------------- ------
13,751,003 13,934,002 1.2
Total Investments in Finland 28,762,362 27,629,183 2.3
<PAGE>
France Automobiles 52,350 Peugeot S.A. 7,547,721 6,775,373 0.6
Banking 69,200 Compagnie Financiere de Paribas 3,508,929 3,847,684 0.3
94,500 Compagnie Financiere de Suez
(Ordinary) (e) 3,718,127 3,547,827 0.3
28,450 Societe Generale de Surveillance S.A.
(Class A) (Ordinary) (e) 3,018,733 3,328,186 0.3
-------------- -------------- ------
10,245,789 10,723,697 0.9
Building & 29,000 Compagnie de Saint-Gobain S.A. 3,470,085 3,351,794 0.3
Construction
Communication 37,100 Alcatel Alsthom Cie Generale
Equipment d'Electricite S.A. 3,574,282 3,095,389 0.2
Insurance 117,068 Assurances Generales de France S.A.
(AGF) (e) 2,985,825 3,770,249 0.3
Multi-Industry 15,017 EuraFrance S.A. 4,887,173 4,968,905 0.4
Oil & Related 51,825 Societe Nationale Elf Aquitane 3,582,356 3,635,529 0.3
Steel 190,800 Usinor Sacilor S.A. (e) 3,452,007 2,752,733 0.2
Total Investments in France 39,745,238 39,073,669 3.2
Germany Chemicals 15,800 Bayer AG (Ordinary) (e) 3,005,961 4,109,442 0.4
Machinery & 77,450 Kloeckner Werke AG (e) 3,951,498 2,944,256 0.2
Equipment 18,200 Mannesmann AG 4,519,528 5,858,266 0.5
-------------- -------------- ------
8,471,026 8,802,522 0.7
Utilities 14,000 Vereinigte Elektrizitaets & Bergwerks
AG (Veba) (Warrants) (b) 602,720 880,564 0.1
Total Investments in Germany 12,079,707 13,792,528 1.2
Greece Banking 59,180 Ergo Bank S.A. (Registered) 2,619,453 2,295,765 0.2
Food & Grocery 137,292 Hellenic Bottling Co. S.A. 2,763,631 4,010,337 0.3
Products
Total Investments in Greece 5,383,084 6,306,102 0.5
<PAGE>
Hungary Foods 10,000 Pick Szeged Reszvenytarsasag (GDR)
(d) (g) 627,990 430,000 0.0
5,500 Pick Szeged Reszvenytarsasag (Ordinary) 269,061 240,128 0.0
-------------- -------------- ------
897,051 670,128 0.0
Telecommunications 4,000 Magyar Tarkozlesi Reszvenytarsasag
(Ordinary) (e) 851,768 634,780 0.1
Total Investments in Hungary 1,748,819 1,304,908 0.1
Ireland Building & 633,300 CRH PLC (Ordinary) 3,857,467 4,442,539 0.4
Construction
Closed-End Funds 900,000 First Ireland Investment Co. 1,281,789 1,687,266 0.1
Insurance 1,217,000 Irish Life PLC 4,006,737 4,665,555 0.4
Packaging & 2,182,375 Jefferson Smurfit Group PLC (Ordinary) 6,550,090 5,327,151 0.4
Containers
Total Investments in Ireland 15,696,083 16,122,511 1.3
Italy Automobiles 1,180,000 Fiat S.p.A. (Ordinary) 3,540,591 3,562,793 0.3
Building & 671,350 Fochi Filippo S.p.A. (e) 2,130,531 167,869 0.0
Construction
Diversified 8,003,400 Compagnie Industrial Riunite S.p.A.
(CIR) (e) 7,348,440 4,747,907 0.4
Insurance 275,000 Assicurazioni Generali S.p.A. (e) 6,963,833 6,266,019 0.5
Multi-Industry 8,950,000 Montedison S.p.A. (e) 6,982,245 5,550,041 0.5
Utilities- 2,732,800 STET, Di Risp (Non-Convertible) 6,506,277 5,372,667 0.4
Communications
Total Investments in Italy 33,471,917 25,667,296 2.1
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
EUROPE
(con- Shares Value Percent of
cluded) Industries Held Investments Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
Nether- Banking 90,100 ABN AMRO Bank (Ordinary) $ 3,018,860 $ 4,011,987 0.3%
lands 103,970 Amev N.V. (Ordinary) (e) 4,156,208 6,947,600 0.6
-------------- -------------- ------
7,175,068 10,959,587 0.9
Chemicals 17,900 Akzo N.V. (Ordinary) 2,106,155 2,023,036 0.1
130,965 European Vinyls Corporation Inter-
national N.V. (g) 5,349,804 3,534,567 0.3
-------------- -------------- ------
7,455,959 5,557,603 0.4
Electrical 268,900 Philips Industries Inc. (e) 8,975,422 10,578,638 0.9
Equipment
Finance 183,750 AEGON N.V. (Ordinary) 3,764,707 7,489,810 0.6
Insurance 105,500 Internationale Nederlanden Groep N.V. 4,342,817 6,906,497 0.6
Transportation 60,500 KLM Royal Dutch Airlines 1,656,767 2,077,446 0.2
Total Investments in the Netherlands 33,370,740 43,569,581 3.6
Norway Oil & Gas 340,000 Saga Petroleum A.S. (Class B) 3,749,345 4,083,844 0.3
Producers
Oil & Related 84,350 Norsk Hydro A.S. 3,532,985 3,436,776 0.3
Total Investments in Norway 7,282,330 7,520,620 0.6
Poland Automotive & 97,200 T.C. Debica S.A. 1,310,106 1,589,143 0.1
Equipment
Engineering & 551,503 Mostostal-Export S.A. 1,344,823 1,181,792 0.1
Construction
Total Investments in Poland 2,654,929 2,770,935 0.2
<PAGE>
Portugal Banking 132,800 Banco Comercial Portugues S.A.
(ADR) (a) 1,892,060 1,709,800 0.1
363,195 Banco Comercial Portugues S.A.
(Registered) 5,225,469 4,755,868 0.4
-------------- -------------- ------
7,117,529 6,465,668 0.5
Forest Products 259,100 Sonae Investimentos--SGPS S.A. 5,727,239 5,469,490 0.5
Total Investments in Portugal 12,844,768 11,935,158 1.0
Spain Banking 24,500 Banco Popular Espanol (Ordinary) 2,677,926 4,118,149 0.3
Oil & Related 243,750 Repsol S.A. (Ordinary) 7,094,222 7,689,555 0.7
Total Investments in Spain 9,772,148 11,807,704 1.0
Sweden Appliances 102,705 Electrolux AB 4,981,607 4,408,108 0.4
Automobiles & 370,000 Volvo AB 6,780,616 7,672,252 0.6
Equipment
Building Related 134,950 Svedala Industry (g) 3,249,266 3,734,494 0.3
Engineering 174,350 SKF AB 3,255,938 3,522,249 0.3
95,800 SKF AB 'B' Free 1,859,982 1,971,885 0.2
-------------- -------------- ------
5,115,920 5,494,134 0.5
Finance 224,475 Stadshypotek AB (e) 3,310,941 4,517,770 0.4
Forest Products 72,800 Mo och Domsjo AB (Class B) (e) 3,647,878 3,640,722 0.3
2,297,200 Rottneros Bruks AB 3,542,973 2,766,993 0.2
299,400 Stora Kopparbergs AB 3,864,464 3,766,066 0.3
-------------- -------------- ------
11,055,315 10,173,781 0.8
Metals & Mining 272,200 Avesta Sheffield AB (e) 2,440,788 2,593,883 0.2
Total Investments in Sweden 36,934,453 38,594,422 3.2
Switzer- Chemicals 8,400 Ciba-Geigy AG (Registered) 4,520,209 7,492,085 0.6
land
Electrical 4,200 BBC Brown Boveri & Cie (e) 3,744,722 4,825,532 0.4
Equipment
Pharmaceuticals 911 Roche Holding Genusschein AG 4,854,117 6,884,834 0.6
Total Investments in Switzerland 13,119,048 19,202,451 1.6
<PAGE>
Turkey Beverages 1,790,927 Erciyas Biracilik Ve Malt Sanayii A.S. 1,153,663 945,855 0.1
Building 2,711,135 Alarko Holdings A.S. 1,405,612 1,012,170 0.1
Materials 657,152 Cimentas Izmir Cimento Fabrikasi T.A.S. 465,286 317,147 0.0
-------------- -------------- ------
1,870,898 1,329,317 0.1
Food & Household 2,041,536 Dardanel Onentas Gida A.S. 133,262 87,372 0.0
Products
Insurance 7,372,500 Aksigorta A.S. 1,407,389 671,326 0.1
Retail Stores 2,578,236 Migros Turk A.S. 2,111,166 2,629,416 0.2
Steel 28,599,190 Izmir Demir Celik Sanayii A.S. 1,034,318 572,921 0.0
Total Investments in Turkey 7,710,696 6,236,207 0.5
United Automobile Parts 1,551,900 T & N PLC 3,979,586 3,099,411 0.2
Kingdom
Banking 240,000 Lloyds Bank PLC 3,037,529 3,188,129 0.3
Beverages 661,300 Grand Metropolitan PLC (Ordinary) 4,128,114 4,473,277 0.4
Electronics 719,500 General Electric Co. PLC (Ordinary) 3,602,974 3,490,559 0.3
Food & Beverage 328,000 Tate & Lyle PLC (Ordinary) 2,080,911 2,294,008 0.2
Industrial--Other 1,397,600 Tomkins PLC 4,847,309 5,646,662 0.5
Insurance 487,500 Prudential Corp. PLC 2,379,631 3,211,831 0.3
Multi--Industry 692,200 BTR PLC (Ordinary) 3,797,020 3,538,205 0.3
Oil & Related 975,600 British Petroleum Co., Ltd. 7,140,240 7,689,250 0.6
Pharmaceuticals 310,200 Glaxo Holdings PLC 3,684,415 4,137,273 0.3
Telecommunications 1,089,400 Racal Electronics PLC 3,798,064 4,193,053 0.3
1,408,400 Vodafone Group PLC 5,179,838 5,043,672 0.4
-------------- -------------- ------
8,977,902 9,236,725 0.7
Total Investments in the United Kingdom 47,655,631 50,005,330 4.1
Total Investments in Europe 309,030,024 322,380,885 26.6
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
LATIN Shares Value Percent of
AMERICA Industries Held Investments Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
Argentina Banking 78,000 Banco Frances del Rio de la Plata S.A.
(ADR) (a) $ 2,009,301 $ 2,037,750 0.1%
Telecommunications 22,200 Telecom Argentina Stet-France Telecom
S.A. (GDS) (c) (g) 925,226 971,250 0.1
46,700 Telefonica de Argentina S.A. (Class B)
(ADR) (a) 1,137,452 1,144,150 0.1
-------------- -------------- ------
2,062,678 2,115,400 0.2
Total Investments in Argentina 4,071,979 4,153,150 0.3
Brazil Oil & Related 32,650,000 Petroleo Brasileiro S.A. (Preferred)
(e) 2,988,395 2,771,532 0.2
Telecommunications 172,900 Telecomunicacoes Brasileiras S.A.--
Telebras (ADR) (a) (e) 7,293,165 8,299,200 0.7
Total Investments in Brazil 10,281,560 11,070,732 0.9
Chile Telecommunications 70,800 Compania de Telefonos de Chile S.A.
(ADR) (a) 5,051,501 5,106,450 0.4
Utilities 80,000 Enersis S.A. (ADR) (a) 2,002,257 2,050,000 0.2
Total Investments in Chile 7,053,758 7,156,450 0.6
Mexico Multi-Industry 1,075,000 Grupo Carso, S.A. de C.V. 'A1' (e) 5,346,585 5,983,356 0.5
Total Investments in Mexico 5,346,585 5,983,356 0.5
Total Investments in Latin America 26,753,882 28,363,688 2.3
MIDDLE
EAST
<PAGE>
Israel Banking 1,162,000 Bank Hapoalim Ltd. (e) 1,956,307 1,907,519 0.2
Computer Software 149,700 Scitex Corporation Ltd. 3,205,659 2,151,938 0.2
Engineering & 30,775 Koor Industries Ltd. 2,624,700 2,777,883 0.2
Construction
Total Investments in Israel 7,786,666 6,837,340 0.6
Total Investments in the Middle East 7,786,666 6,837,340 0.6
PACIFIC
BASIN
Australia Food Processing 2,854,919 Coca-Cola Amatil, Ltd. 15,511,554 23,083,790 1.9
Media 458,847 The News Corp., Ltd. 2,356,360 2,403,031 0.2
260,450 The News Corp., Ltd. (Preferred) 1,148,701 1,244,220 0.1
-------------- -------------- ------
3,505,061 3,647,251 0.3
Merchandising 155,100 Amway Asia Pacific Ltd. 4,808,000 5,350,950 0.5
Natural Gas 191,964 Broken Hill Proprietary Co. 2,423,961 2,608,748 0.2
Property 1,421,552 Lend Lease Corp. 17,913,120 19,656,016 1.6
Total Investments in Australia 44,161,696 54,346,755 4.5
Hong Kong Banking 1,464,826 HSBC Holdings PLC 17,860,383 21,590,578 1.8
Diversified 2,758,325 Hutchison Whampoa Ltd. 14,332,323 15,584,764 1.3
Multi-Industry 1,823,000 Swire Pacific Ltd. (Class A) 12,042,312 13,788,464 1.1
Utilities 1,104,600 China Light & Power Co., Ltd. 5,498,909 5,198,521 0.4
Total Investments in Hong Kong 49,733,927 56,162,327 4.6
Japan Automobiles 1,879,000 Suzuki Motor Corp. 21,118,332 20,898,327 1.7
Beverages 139,000 Chukyo Coca-Cola Bottling Co., Ltd. 1,835,949 1,340,748 0.1
183,000 Hokkaido Coca-Cola Bottling Co., Ltd. 2,818,281 2,287,500 0.2
165,000 Kinki Coca-Cola Bottling Co., Ltd. 2,625,747 2,078,740 0.2
197,000 Mikuni Coca-Cola Bottling Co., Ltd. 3,160,732 2,481,890 0.2
153,000 Sanyo Coca-Cola Bottling Co., Ltd. 2,332,375 2,032,972 0.2
-------------- -------------- ------
12,773,084 10,221,850 0.9
<PAGE>
Capital Goods 3,238,000 Mitsubishi Heavy Industries, Ltd. 21,781,807 25,846,634 2.1
Chemicals 733,000 Shin-Etsu Chemical Co., Ltd. 15,311,687 15,150,591 1.2
Containers 906,000 Toyo Seikan Kaisha, Ltd. 27,433,696 27,554,528 2.3
Electric 380,000 Chudenko Corp. 13,592,350 13,127,953 1.1
Construction 435,000 Sanki Engineering Co., Ltd. 6,151,018 4,666,831 0.4
408,000 Taihei Dengyo Kaisha, Ltd. 9,664,950 6,826,772 0.6
-------------- -------------- ------
29,408,318 24,621,556 2.1
Electrical 935,000 Murata Manufacturing Co., Ltd. 35,017,547 33,590,059 2.8
Equipment 750,000 NEC Corporation 10,527,235 9,596,457 0.8
569,000 The Nippon Signal Co., Ltd. 7,950,113 4,385,108 0.4
440,000 Rohm Co., Ltd. 17,590,827 26,893,701 2.2
-------------- -------------- ------
71,085,722 74,465,325 6.2
Engineering & 830,000 Kinden Corp. 16,648,883 13,479,331 1.1
Construction
Iron & Steel 330,000 Maruichi Steel Tube, Ltd. 5,881,382 6,073,819 0.5
Office Equipment 1,586,000 Canon Inc. 27,383,187 27,942,323 2.3
Pharmaceuticals 701,000 Sankyo Co., Ltd. 15,327,748 15,662,106 1.3
419,000 Taisho Pharmaceutical Co., Ltd. 8,298,783 7,918,110 0.7
-------------- -------------- ------
23,626,531 23,580,216 2.0
Property & 1,971,000 Dai-Tokyo Fire & Marine Insurance
Casualty Co., Ltd. 14,575,579 12,706,742 1.0
Insurance 851,000 Fuji Fire & Marine Insurance Co., Ltd. 5,819,056 4,271,752 0.4
1,268,000 Koa Fire & Marine Insurance Co., Ltd. 8,833,667 7,063,858 0.6
742,000 Mitsui Marine & Fire Insurance Co.,
Ltd. 6,045,628 5,002,657 0.4
1,696,000 Nichido Fire & Marine Insurance Co.,
Ltd. 12,951,468 13,154,016 1.1
733,000 Nippon Fire & Marine Insurance Co.,
Ltd. 5,400,442 4,191,663 0.3
1,681,000 Sumitomo Marine & Fire Insurance
Co., Ltd. 14,196,547 13,021,132 1.1
1,428,000 Tokio Marine & Fire Insurance Co.,
Ltd. 16,830,484 16,303,937 1.3
1,257,000 Yasuda Fire & Marine Insurance Co.,
Ltd. 9,408,702 8,314,016 0.7
-------------- -------------- ------
94,061,573 84,029,773 6.9
<PAGE>
Retailing 510,000 Ito-Yokado Co., Ltd. 26,237,875 28,210,630 2.3
138,000 Sangetsu Co., Ltd. 4,742,639 2,988,189 0.2
-------------- -------------- ------
30,980,514 31,198,819 2.5
Total Investments in Japan 397,494,716 385,063,092 31.8
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
PACIFIC
BASIN (con- Shares Held/ Value Percent of
cluded) Industries Face Amount Investments Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
Malaysia Banking 262,000 Malayan Banking BHD $ 2,065,304 $ 2,076,168 0.2%
483,000 Public Bank (Malaysia) BHD 'Foreign' 1,072,993 898,782 0.1
-------------- -------------- ------
3,138,297 2,974,950 0.3
Leisure 397,000 Resorts World BHD 1,979,152 1,940,785 0.1
Telecommunications 109,000 Telekom Malaysia BHD 799,680 812,182 0.0
Transportation 340,000 Malaysian International Shipping Co. BHD 964,246 831,066 0.1
Total Investments in Malaysia 6,881,375 6,558,983 0.5
New Finance 8,758,000 Brierley Investments Ltd. 6,775,033 6,625,882 0.6
Zealand
Foods 878,600 Wrightson Ltd. (e) 687,736 670,437 0.1
Foreign NZ$ 8,200,000 New Zealand Government Bonds, 9%
Government due 11/15/1996 4,988,597 5,401,307 0.4
Obligations
Telecommunications 300,000 Telecom Corporation of New Zealand 1,251,246 1,254,181 0.1
Textiles 254,000 Lane Walker Rudkin Industries, Ltd. (e) 307,084 279,963 0.0
Total Investments in New Zealand 14,009,696 14,231,770 1.2
<PAGE>
Philip- Banking 177,000 Metropolitan Bank and Trust Company 3,771,024 3,027,231 0.3
pines 20,262 Metropolitan Bank and Trust Company
(New Shares) 159,355 346,541 0.0
Total Investments in the Philippines 3,930,379 3,373,772 0.3
Singapore Banking 352,000 Development Bank of Singapore Ltd. 4,195,726 4,119,149 0.3
Newspaper/Publishing 199,000 Singapore Press Holdings Ltd. 2,691,513 3,147,305 0.3
Real Estate 501,000 City Developments Ltd. 3,299,613 3,446,596 0.3
Transportation 359,000 Jurong Shipyard Ltd. 2,800,730 2,456,986 0.2
Total Investments in Singapore 12,987,582 13,170,036 1.1
South Telecommunications 5,500 Korea Mobile Telecommunications Corp. 4,337,203 4,694,913 0.4
Korea 62,500 Korea Mobile Telecommunications Corp.
(GDR) (d) 2,111,813 2,343,750 0.2
-------------- -------------- ------
6,449,016 7,038,663 0.6
Utilities 255,000 Korea Electric Power Corp. 9,956,772 11,138,464 0.9
Total Investments in South Korea 16,405,788 18,177,127 1.5
Taiwan Electronics 298,800 Advanced Semiconductor Engineering Inc.
(GDR) (d) 4,651,282 3,376,440 0.3
Merchandising 125,305 Hocheng Group Corp. (ADR) (a) (g) 2,875,389 1,033,766 0.1
Total Investments in Taiwan 7,526,671 4,410,206 0.4
Thailand Banking 258,900 Phatra Thanakit Public Co., Ltd.,
'Foreign' 2,120,475 2,100,023 0.2
70,000 Thai Farmers Bank Co., Ltd. 'Foreign' 619,313 623,459 0.0
Total Investments in Thailand 2,739,788 2,723,482 0.2
Total Investments in the Pacific Basin 555,871,618 558,217,550 46.1
SOUTHEAST
ASIA
<PAGE>
India Automobiles 246,000 Ashok Leyland Ltd. (GDR) (d) (g) 3,067,924 2,152,500 0.2
Banking 26,960 Housing Development Finance Corp.,
Ltd. (e) 2,099,128 1,847,316 0.1
Chemicals 142,000 Reliance Industries Ltd. (e) 1,025,496 871,216 0.1
139,300 Reliance Industries Ltd. (ADR) (a) (e) 2,581,221 1,950,200 0.2
-------------- -------------- ------
3,606,717 2,821,416 0.3
Media 516,600 Videocon International Ltd. (GDR)
(d) (e) 3,450,969 878,220 0.1
Textiles 146,000 JCT Ltd. (GDR) (d) 2,597,436 730,000 0.0
62,000 Raymond Woolen Mills Ltd. (GDR) (d) 978,125 806,000 0.1
-------------- -------------- ------
3,575,561 1,536,000 0.1
Total Investments in India 15,800,299 9,235,452 0.8
Indonesia Food & 1,138,000 P.T. Wicaksana Overseas International 1,754,711 2,990,802 0.2
Household
Products
Metals & Mining 272,400 P.T. Tambag Timah (GDR) (d) (e) (g) 3,467,652 3,168,012 0.3
Telecommunications 128,580 P.T. Indonesian Satellite Corp.
(ADR) (a) 4,606,215 4,403,865 0.4
2,980,000 P.T. Kabelmetal Indonesia (e) 3,771,842 2,577,968 0.2
42,000 P.T. Telekomunikasi Indonesia (e) 884,520 882,000 0.1
-------------- -------------- ------
9,262,577 7,863,833 0.7
Tobacco 24,000 P.T. Hanjaya Mandala Sampoerna (e) 231,657 240,736 0.0
Total Investments in Indonesia 14,716,597 14,263,383 1.2
Total Investments in Southeast Asia 30,516,896 23,498,835 2.0
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
SHORT-TERM Face Value Percent of
SECURITIES Amount Issue Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
Commercial US$ 32,078,000 General Electric Capital Corp., 5.90%
Paper* due 12/01/1995 $ 32,078,000 $ 32,078,000 2.7%
20,000,000 Goldman Sachs Group L.P., 5.75%
due 1/03/1996 19,894,583 19,894,583 1.6
6,980,000 Motorola, Inc., 5.68% due 12/07/1995 6,973,392 6,973,392 0.6
20,000,000 US West Communications, Inc., 5.73%
due 12/21/1995 19,936,333 19,936,333 1.6
Total Investments in Commercial Paper 78,882,308 78,882,308 6.5
Foreign MXP 17,190,250 Mexican Cetes, 52.375% due 2/08/1996 2,060,444 2,074,213 0.2
Government
Obligations*
Total Investments in Foreign
Government Obligations 2,060,444 2,074,213 0.2
US Government United States Treasury Bills (f):
Obligations* US$ 18,160,000 5.21% due 1/25/1996 18,015,452 18,009,145 1.4
72,000,000 5.225% due 1/25/1996 71,425,250 71,401,896 5.9
2,000,000 5.245% due 1/25/1996 1,983,974 1,983,386 0.2
1,000,000 5.30% due 1/25/1996 991,903 991,693 0.1
600,000 5.33% due 1/25/1996 595,114 595,016 0.0
2,000,000 5.34% due 1/25/1996 1,983,683 1,983,386 0.2
1,500,000 5.35% due 1/25/1996 1,487,740 1,487,540 0.1
8,000,000 5.40% due 1/25/1996 7,934,000 7,933,544 0.7
Total Investments in US Government
Obligations 104,417,116 104,385,606 8.6
Total Investments in Short-Term
Securities 185,359,868 185,342,127 15.3
OPTIONS Number of Contracts/ Premiums
PURCHASED Face Amount Paid
Call Options 21,090 CACA0, expiring February 1996 at
Purchased Frf 1,900 336,600 219,675 0.0
74,000 Nikkei, expiring May 1996 at YEN 18,388 753,023 817,933 0.1
160,440 Nikkei, expiring May 1996 at YEN 19,000 1,258,613 1,369,029 0.1
32,400 OMX, expiring April 1996 at Skr 1,491 166,372 152,285 0.0
-------------- -------------- ------
2,514,608 2,558,922 0.2
<PAGE>
Currency Put 93,000,000 Japanese Yen, expiring January 1996
Options Purchased at YEN 86.15 2,555,800 13,558,935 1.1
51,000,000 Japanese Yen, expiring September 1996
at YEN 105 1,198,500 1,188,300 0.1
-------------- -------------- ------
3,754,300 14,747,235 1.2
Total Options Purchased 6,268,908 17,306,157 1.4
Total Investments 1,145,080,666 1,167,280,021 96.4
OPTIONS Premiums
WRITTEN Received
Call Options 32,400 OMX, expiring April 1996 at Skr 1,491 (258,501) (152,285) 0.0
Written
Total Options Written (258,501) (152,285) 0.0
Total Investments, Net of Options Written $1,144,822,165 1,167,127,736 96.4
--------------
Variation Margin on Financial Futures Contracts** (368,322) 0.0
Unrealized Appreciation on Forward Foreign Exchange Contracts*** 472,010 0.0
Other Assets Less Liabilities 43,829,781 3.6
-------------- ------
Net Assets $1,211,061,205 100.0%
============== ======
<FN>
(a)American Depositary Receipts (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)Global Depositary Shares (GDS).
(d)Global Depositary Receipts (GDR).
(e)Non-income producing security.
(f)Securities held as collateral in connection with open futures contracts.
(g)Restricted securities as to resale. The value of the Fund's investments
in restricted securities was approximately $28,998,000, representing
2.4% of net assets.
<PAGE>
<CAPTION>
Acquisition Value
Issue Date(s) Cost (Note 1a)
<S> <C> <C> <C>
Ashok Leyland Ltd. (GDR) 3/09/1995-
10/23/1995 $ 3,067,924 $ 2,152,000
European Vinyls Corporation 11/18/1994-
International N.V. 11/16/1995 5,349,804 3,534,567
Hocheng Group Corp. (ADR) 10/20/1994-
11/04/1994 2,875,389 1,033,766
Nedcor Ltd. (GDR) 5/23/1995 5,570,789 8,108,980
Nedcor Ltd. (Warrants) 5/23/1995 314,761 613,405
Pick Szeged Reszvenytarsasag 5/31/1994-
(ADR) 2/14/1995 627,990 430,000
P.T. Tambag Timah (GDR) 10/06/1995 3,467,652 3,168,012
Repola OY S 8/02/1993 4,412,103 5,251,704
Svedala Industry 8/02/1993 3,249,266 3,734,494
Telecom Argentina Stet-
France Telecom S.A. (GDS) 11/27/1995 925,226 971,250
Total $29,860,904 $28,998,178
=========== ===========
*Commercial Paper, certain Foreign Government and US Government
Obligations are traded on a discount basis; the interest rates shown are the
discount rates paid at the time of purchase by the Fund.
**Financial futures contracts purchased as of November 30, 1995 were as follows:
<CAPTION>
Number of Expiration Value
Contracts Issue Exchange Date (Notes 1a & 1c)
<C> <S> <S> <S> <C>
169 Hang Seng HKFE Dec. 1995 $ 10,805,040
142 Nikkei 225 SIMEX Dec. 1995 13,123,819
534 Tokyo-Topix TFE March 1996 78,155,315
Total Financial Futures Contracts Purchased
(Total Contract Price--$100,759,237) $102,084,174
============
Financial futures contracts sold as of November 30, 1995 were as follows:
<PAGE>
<CAPTION>
Number of Expiration Value
Contracts Issue Exchange Date (Notes 1a & 1c)
<C> <S> <S> <S> <C>
89 FTSE 100 LIFFE March 1996 $12,571,777
Total Financial Futures Contracts Sold
(Total Contract Price--$12,599,018) $12,571,777
===========
***Forward foreign exchange contracts as of November 30, 1995 were as follows:
<CAPTION>
Unrealized
Appreciation
Foreign Currency Expiration (Depreciation)
Purchased Date (Note 1c)
<S> <C> <S> <C>
A$ 26,242,931 December 1995 $ (359,791)
YEN 2,549,652,000 April 1996 92,387
Total (US$ Commitment--$45,353,780) $ (267,404)
==========
<CAPTION>
Foreign
Currency Sold
<S> <C> <S> <C>
A$ 26,242,931 December 1995 $ 539,555
DM 17,208,960 December 1995 103,759
Frf 49,565,100 April 1996 81,173
Nlg 9,337,780 April 1996 188,323
YEN 3,945,204,125 April 1996 (173,396)
Total (US$ Commitment--$87,491,257) $ 739,414
==========
Total Unrealized Appreciation--Net on
Forward Foreign Exchange Contracts $ 472,010
==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
<CAPTION>
As of November 30, 1995
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$1,138,811,758) (Note 1a) $1,149,973,864
Unrealized appreciation on forward foreign exchange contracts (Note 1c) 472,010
Options purchased, at value (cost--$6,268,908) (Notes 1a & 1c) 17,306,157
Foreign cash (Note 1b) 41,437,865
Cash 445,566
Receivables:
Securities sold $27,320,294
Capital shares sold 2,043,080
Dividends 1,951,589
Options written 884,431
Forward foreign exchange contracts (Note 1c) 298,938
Interest 21,157 32,519,489
-----------
Deferred organization expenses (Note 1f) 31,466
Prepaid registration fees and other assets (Note 1f) 132,490
--------------
Total assets 1,242,318,907
--------------
Liabilities: Variation margin on stock index futures contracts (Note 1c) 368,322
Call options written, at value (premiums received--$258,501) (Notes 1a & 1c) 152,285
Payables:
Securities purchased 23,596,532
Capital shares redeemed 3,525,916
Options purchased 998,650
Distributor (Note 2) 805,971
Investment adviser (Note 2) 741,840 29,668,909
-----------
Accrued expenses 1,068,186
--------------
Total liabilities 31,257,702
--------------
Net Assets: Net assets $1,211,061,205
==============
Net Assets Class A Shares of beneficial interest, $0.10 par value, unlimited number of
Consist of: shares authorized $ 847,758
Class B Shares of beneficial interest, $0.10 par value, unlimited number of
shares authorized 8,488,376
Class C Shares of beneficial interest, $0.10 par value, unlimited number of
shares authorized 324,769
Class D Shares of beneficial interest, $0.10 par value, unlimited number of
shares authorized 1,660,389
Paid-in capital in excess of par 1,227,999,125
Undistributed investment income--net 1,415,928
Accumulated realized capital losses on investments and foreign currency
transactions--net (54,046,793)
Unrealized appreciation on investments and foreign currency transactions--net 24,371,653
--------------
Net assets $1,211,061,205
==============
<PAGE>
Net Asset Class A--Based on net assets of $91,468,908 and 8,477,579 shares of
Value: beneficial interest outstanding $ 10.79
==============
Class B--Based on net assets of $906,015,625 and 84,883,763 shares of
beneficial interest outstanding $ 10.67
==============
Class C--Based on net assets of $34,354,415 and 3,247,685 shares of
beneficial interest outstanding $ 10.58
==============
Class D--Based on net assets of $179,222,257 and 16,603,889 shares of
beneficial interest outstanding $ 10.79
==============
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Six Months Ended November 30, 1995
<S> <S> <C> <C>
Investment Dividends (net of $878,797 foreign withholding tax) $ 7,665,431
Income Interest and discount earned 5,997,862
(Notes 1d --------------
& 1e): Total income 13,663,293
--------------
Expenses: Account maintenance and distribution fees--Class B (Note 2) 4,755,941
Investment advisory fees (Note 2) 4,706,823
Transfer agent fees--Class B (Note 2) 989,684
Custodian fees 733,221
Account maintenance fees--Class D (Note 2) 232,982
Printing and shareholder reports 173,176
Transfer agent fees--Class D (Note 2) 163,961
Account maintenance and distribution fees--Class C (Note 2) 154,779
Registration fees (Note 1f) 92,964
Transfer agent fees--Class A (Note 2) 74,925
Accounting services (Note 2) 42,580
Professional fees 41,373
Transfer agent fees--Class C (Note 2) 33,034
Trustees' fees and expenses 20,896
Amortization of organization expenses (Note 1f) 13,665
Pricing fees 4,345
Other 13,016
--------------
Total expenses 12,247,365
--------------
Investment income--net 1,415,928
--------------
<PAGE>
Realized & Realized gain from:
Unrealized Investments--net $27,321,157
Gain (Loss) Foreign currency transactions--net 3,625,451 30,946,608
on Invest -----------
ments & Change in unrealized appreciation/depreciation on:
Foreign Investments--net (8,227,181)
Currency Foreign currency transactions--net 36,490,454 28,263,273
Transactions ----------- --------------
- --Net (Notes Net realized and unrealized gain on investments and foreign currency transactions 59,209,881
1b, 1c, --------------
1e & 3): Net Increase in Net Assets Resulting from Operations $ 60,625,809
==============
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
For the
Six Months For the
Ended Year Ended
Increase (Decrease) in Net Assets: Nov. 30, 1995 May 31, 1995
<S> <S> <C> <C>
Operations: Investment income--net $ 1,415,928 $ 5,814,078
Realized gain (loss) on investments and foreign currency transactions--net 30,946,608 (57,502,198)
Change in unrealized appreciation/depreciation on investments and foreign currency
transactions--net 28,263,273 (30,827,626)
-------------- --------------
Net increase (decrease) in net assets resulting from operations 60,625,809 (82,515,746)
-------------- --------------
<PAGE>
Dividends & Investment income--net:
Distributions Class A -- (599,105)
to Share- Class B -- (3,723,247)
holders Class C -- (112,393)
(Note 1g): Class D -- (2,136,488)
Realized gain on investments--net:
Class A -- (2,168,344)
Class B -- (50,410,142)
Class C -- (457,066)
Class D -- (9,932,493)
-------------- --------------
Net decrease in net assets resulting from dividends and distributions
to shareholders -- (69,539,278)
-------------- --------------
Beneficial Net increase (decrease) in net assets derived from beneficial
Interest interest transactions (100,387,725) 350,576,453
Transactions -------------- --------------
(Note 4):
Net Assets: Total increase (decrease) in net assets (39,761,916) 198,521,429
Beginning of period 1,250,823,121 1,052,301,692
-------------- --------------
End of period* $1,211,061,205 $1,250,823,121
============== ==============
<FN>
*Undistributed investment income--net $ 1,415,928 $ --
============== ==============
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
Class A Class B
For the For the For the For the
The following per share data and ratios have Six Period Six For the Period
been derived from information provided in the Months Oct. 21, Months Year July 30,
financial statements. Ended 1994++ to Ended Ended 1994++ to
Nov. 30, May 31, Nov. 30, May 31, May 31,
Increase (Decrease) in Net Asset Value: 1995++++ 1995 1995++++ 1995 1994++++
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 10.25 $ 11.73 $ 10.19 $ 11.44 $ 10.00
Operating -------- -------- -------- -------- --------
Performance: Investment income (loss)--net .06 .26 -- .02 (.02)
Realized and unrealized gain (loss) on investments
and foreign currency transactions--net .48 (1.05) .48 (.69) 1.46
-------- -------- -------- -------- --------
Total from investment operations .54 (.79) .48 (.67) 1.44
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net -- (.15) -- (.04) --
Realized gain on investments--net -- (.54) -- (.54) --
-------- -------- -------- -------- --------
Total dividends and distributions -- (.69) -- (.58) --
-------- -------- -------- -------- --------
Net asset value, end of period $ 10.79 $ 10.25 $ 10.67 $ 10.19 $ 11.44
======== ======== ======== ======== ========
<PAGE>
Total Based on net asset value per share 5.27%+++ (6.78%)+++ 4.71%+++ (5.91%) 14.40%+++
Investment ======== ======== ======== ======== ========
Return:**
Ratio to Expenses, excluding account maintenance and
Average distribution fees 1.10%* 1.23%* 1.14%* 1.13% 1.07%*
Net Assets: ======== ======== ======== ======== ========
Expenses 1.10%* 1.23%* 2.14%* 2.13% 2.07%*
======== ======== ======== ======== ========
Investment income--net 1.06%* 4.64%* .04%* .23% (.19%)*
======== ======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $ 91,469 $ 74,478 $906,016 $961,941 $844,295
Data: ======== ======== ======== ======== ========
Portfolio turnover 36.24% 63.95% 36.24% 63.95% 50.63%
======== ======== ======== ======== ========
<CAPTION>
Class C Class D
For the For the For the For the
The following per share data and ratios have Six Period Six For the Period
been derived from information provided in the Months Oct. 21, Months Year July 30,
financial statements. Ended 1994++ to Ended Ended 1994++ to
Nov. 30, May 31, Nov. 30, May 31, May 31,
Increase (Decrease) in Net Asset Value: 1995++++ 1995 1995++++ 1995 1994++++
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 10.10 $ 11.62 $ 10.27 $ 11.51 $ 10.00
Operating -------- -------- -------- -------- --------
Performance: Investment income--net -- .24 .04 .10 .04
Realized and unrealized gain (loss) on investments
and foreign currency transactions--net .48 (1.09) .48 (.68) 1.47
-------- -------- -------- -------- --------
Total from investment operations .48 (.85) .52 (.58) 1.51
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net -- (.13) -- (.12) --
Realized gain on investments--net -- (.54) -- (.54) --
-------- -------- -------- -------- --------
Total dividends and distributions -- (.67) -- (.66) --
-------- -------- -------- -------- --------
Net asset value, end of period $ 10.58 $ 10.10 $ 10.79 $ 10.27 $ 11.51
======== ======== ======== ======== ========
<PAGE>
Total Based on net asset value per share 4.75%+++ (7.36%)+++ 5.06%+++ (5.11%) 15.10%+++
Investment ======== ======== ======== ======== ========
Return:**
Ratios to Expenses, excluding account maintenance and
Average distribution fees 1.14%* 1.30%* 1.11%* 1.09% 1.06%*
Net Assets: ======== ======== ======== ======== ========
Expenses 2.14%* 2.30%* 1.36%* 1.34% 1.31%*
======== ======== ======== ======== ========
Investment income--net --%* 4.26%* .82%* .85% .55%*
======== ======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $ 34,354 $ 25,822 $179,222 $188,583 $208,007
Data: ======== ======== ======== ======== ========
Portfolio turnover 36.24% 63.95% 36.24% 63.95% 50.63%
======== ======== ======== ======== ========
<FN>
*Annualized.
**Total investment returns exclude the effect of sales loads.
+++Aggregate total investment return.
++Commencement of Operations.
++++Based on average shares outstanding during the period.
See Notes to Financial Statements.
</TABLE>
<PAGE>
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 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 relat-
ing to its account maintenance and distribution expenditures. The
following is a summary of significant accounting policies followed
by the Fund.
(a) Valuation of investments--Portfolio securities which are traded
on stock exchanges are valued at the last sale price on the exchange 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 prior to the time of valuation.
In cases where securities 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.
Securities which are traded both in the over-the-counter market and
on a stock exchange are valued according to the broadest and most
representative market. Options written are valued at the last sale
price in the case of exchange-traded options or, in the case of options
traded in the over-the-counter market, the last asked price. Options
purchased are valued at the last sale price in the case of exchange-
traded options or, in the case of options traded in the over-the-
counter market, the last bid price. Short-term securities are valued
at amortized cost, which approximates market value. Other invest-
ments, including futures contracts and related options, are stated
at market value. Securities and assets for which market quotations
are not available are valued at fair value as determined in good
faith by or under the direction of the Fund's Board of Trustees.
(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 invest-
ments include the effects of foreign exchange rates on investments.
<PAGE>
(c) Derivative financial instruments--The Fund may engage in
various portfolio strategies to seek to increase its return by hedg-
ing its portfolio against adverse movements in the equity, debt,
and currency markets. Losses may arise due to changes in the
value of the contract or if the counterparty does not perform under
the contract.
* Financial futures contracts--The Fund may purchase or sell
interest rate futures contracts and options on such futures contracts
for the purpose of hedging the market risk on existing securities
or the intended purchase of securities. Futures contracts are
contracts for delayed delivery of securities at a specific future date
and at a specific price or yield. 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.
* Foreign currency options and futures--The Fund may also
purchase or sell listed or over-the-counter foreign 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.
* Forward foreign exchange contracts--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 opera-
tions is recorded from the date the Fund enters into such contracts.
Premium or discount is amortized over the life of the contracts.
* Options--The Fund is authorized to write and purchase put and
call 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 market value of the option
written. When a security is purchased or sold through an exercise
of an option, the related premium paid (or received) is added to
(or deducted from) the basis of the security acquired or deducted
from (or added to) the proceeds 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).
<PAGE>
Written and purchased options are non-income producing investments.
(d) 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.
(e) Security transactions and investment income--Security trans-
actions 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.
(f) 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.
(g) 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."), which
is the limited partner. The Fund has also entered into a Distribution
Agreement and Distribution Plans with Merrill Lynch Funds Distrib-
utor, Inc. ("MLFD" or "Distributor"), a wholly-owned subsidiary
of Merrill Lynch Group, Inc.
<PAGE>
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 MLAM and MLAM U.K. but in
no event in excess of the amount that MLAM actually receives. For
the six months ended November 30, 1995, MLAM paid MLAM U.K. a
fee of $621,633 pursuant to such Agreement. Certain of the states
in which the shares of the Fund are qualified for sale impose limita-
tions on the expenses of the Fund. The most restrictive annual
expense limitation requires that MLAM 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.
NOTES TO FINANCIAL STATEMENTS (concluded)
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 the average daily net assets
of the shares as follows:
Account Maintenance Fee Distribution 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 distribution
fee compensates the Distributor and MLPF&S for providing share-
holder and distribution-related services to Class B and Class C
shareholders.
For the six months ended November 30, 1995, MLFD earned under-
writing discounts and commissions and MLPF&S earned dealer con-
cessions on sales of the Fund's Class A and Class D Shares as follows:
<PAGE>
MLFD MLPF&S
Class A $ 1,103 $ 13,751
Class D $10,709 $169,262
For the six months ended November 30, 1995, MLPF&S received
contingent deferred sales charges of $1,462,023 and $9,040 relating
to transactions in Class B and Class C Shares, respectively.
In addition, MLPF&S received $11,579 in commissions on the
execution of portfolio security transactions for the Fund for the six
months ended November 30, 1995.
Merrill Lynch Financial Data Services, Inc. ("MLFDS"), a wholly-
owned subsidiary of ML & Co., is the Fund's transfer agent.
Accounting services are provided to the Fund by MLAM at cost.
Certain officers and/or trustees of the Fund are officers and/or
directors of MLAM, PSI, MLPF&S, MLFDS, MLFD, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended November 30, 1995 were $386,836,300
and $538,292,813, respectively.
Net realized and unrealized gains (losses) as of November 30, 1995
were as follows:
Realized Unrealized
Gains Gains
(Losses) (Losses)
Investments:
Long-term $13,317,697 $11,179,847
Short-term 521,304 (17,741)
Stock index futures contracts 16,484,455 1,352,178
Options written (2,021,145) 106,216
Options purchased (981,154) 44,314
----------- -----------
Total Investments 27,321,157 12,664,814
Currency transactions:
Options written 4,935,919 --
Options purchased (1,056,052) 10,992,935
Forward foreign exchange contracts 6,475,932 472,010
Foreign currency transactions (6,730,348) 241,894
----------- -----------
Total currency transactions 3,625,451 11,706,839
----------- -----------
Total $30,946,608 $24,371,653
=========== ===========
<PAGE>
Transactions in call options written for the six months ended
November 30, 1995 were as follows:
Par Value
Covered by Premiums
Written Options Received
Outstanding call options written
at beginning of period $208,000,000 $3,776,319
Options written 51,074,200 2,434,251
Options closed (118,041,800) (3,683,119)
Options expired (141,000,000) (2,268,950)
------------ ----------
Outstanding call options written
at end of period $ 32,400 $ 258,501
============ ==========
Transactions in put options written for the six months ended
November 30, 1995 were as follows:
Par Value
Covered by Premiums
Written Options Received
Outstanding put options written
at beginning of period $ 10,344,060 $ 824,584
Options closed (344,060) (714,584)
Options expired (10,000,000) (110,000)
------------ ----------
Outstanding put options written
at end of period -- --
============ ==========
As of November 30, 1995, net unrealized appreciation for Federal
income tax purposes aggregated $11,312,636, of which $80,539,328
related to appreciated securities and $69,226,692 related to depreci-
ated securities. At November 30, 1995, the aggregate cost of invest-
ments for Federal income tax purposes was $1,141,067,865.
<PAGE>
4. Beneficial Interest Transactions:
Net increase (decrease) in net assets derived from beneficial interest
transactions was $(100,387,725) and $350,576,453 for the six
months ended November 30, 1995 and the year ended May 31, 1995,
respectively.
Transactions in shares of beneficial interest for each class were
as follows:
Class A Shares for the Six Months Dollar
Ended November 30, 1995 Shares Amount
Shares sold 5,067,750 $ 54,241,462
Shares redeemed (3,857,480) (41,731,873)
----------- -------------
Net increase 1,210,270 $ 12,509,589
=========== =============
Class A Shares for the Period Dollar
October 21, 1994++ to May 31, 1995 Shares Amount
Shares sold 8,250,116 $ 90,125,806
Shares issued to shareholders in
reinvestment of dividends and
distributions 214,636 2,215,037
----------- -------------
Total issued 8,464,752 92,340,843
Shares redeemed (1,197,443) (12,452,266)
----------- -------------
Net increase 7,267,309 $ 79,888,577
=========== =============
[FN]
++Commencement of Operations.
Class B Shares for the Six Months Dollar
Ended November 30, 1995 Shares Amount
Shares sold 11,062,228 $ 117,837,892
Shares redeemed (20,340,457) (216,757,417)
Automatic conversion of shares (227,207) (2,401,661)
----------- -------------
Net decrease (9,505,436) $(101,321,186)
=========== =============
<PAGE>
Class B Shares for the Year Dollar
Ended May 31, 1995 Shares Amount
Shares sold 39,671,147 $ 441,827,803
Shares issued to shareholders in
reinvestment of dividends and
distributions 4,695,329 48,408,841
----------- -------------
Total issued 44,366,476 490,236,644
Shares redeemed (23,278,562) (245,072,223)
Automatic conversion of shares (497,771) (5,021,412)
----------- -------------
Net increase 20,590,143 $ 240,143,009
=========== =============
Class C Shares for the Six Months Dollar
Ended November 30, 1995 Shares Amount
Shares sold 1,761,053 $ 18,573,153
Shares redeemed (1,069,946) (11,364,061)
----------- -------------
Net increase 691,107 $ 7,209,092
=========== =============
Class C Shares for the Period Dollar
October 21, 1994++ to May 31, 1995 Shares Amount
Shares sold 2,764,893 $ 28,810,393
Shares issued to shareholders in
reinvestment of dividends and
distributions 49,952 510,509
----------- -------------
Total issued 2,814,845 29,320,902
Shares redeemed (258,267) (2,631,066)
----------- -------------
Net increase 2,556,578 $ 26,689,836
=========== =============
[FN]
++Commencement of Operations.
Class D Shares for the Six Months Dollar
Ended November 30, 1995 Shares Amount
Shares sold 1,919,582 $ 20,598,046
Automatic conversion of shares 225,205 2,401,661
Shares redeemed (3,910,811) (41,784,927)
----------- -------------
Net decrease (1,766,024) $ (18,785,220)
=========== =============
<PAGE>
Class D Shares for the Year Dollar
Ended May 31, 1995 Shares Amount
Shares sold 8,565,081 $ 95,498,843
Automatic conversion of shares 494,928 5,021,412
Shares issued to shareholders in
reinvestment of dividends and
distributions 979,800 10,140,928
----------- -------------
Total issued 10,039,809 110,661,183
Shares redeemed (9,738,345) (106,806,152)
----------- -------------
Net increase 301,464 $ 3,855,031
=========== =============
As a result of the Merrill Lynch Select Pricing SM System, Class A
Shares of the Fund outstanding prior to October 21, 1994 were
redesignated to Class D Shares. There were 20,292,011 shares
redesignated to $219,466,427.
5. Commitments:
At November 30, 1995, the Fund had entered into foreign exchange
contracts, in addition to the contracts listed on the Schedule of
Investments, under which it had agreed to purchase and sell foreign
currency with an approximate value of $7,169,000 and $9,314,000,
respectively.
PORTFOLIO INFORMATION
Worldwide
Investments as of
November 30, 1995
<PAGE>
Percent of
Ten Largest Equity Holdings Net Assets
Murata Manufacturing Co., Ltd. 2.8%
Ito-Yokado Co., Ltd. 2.3
Canon Inc. 2.3
Toyo Seikan Kaisha, Ltd. 2.3
Rohm Co., Ltd. 2.2
Mitsubishi Heavy Industries, Ltd. 2.1
Coca-Cola Amatil, Ltd. 1.9
HSBC Holdings PLC 1.8
Suzuki Motor Corp. 1.7
Lend Lease Corp. 1.6
Percent of
Ten Largest Countries Net Assets
Japan 31.8%
Hong Kong 4.6
Australia 4.5
United Kingdom 4.1
Netherlands 3.6
France 3.2
Sweden 3.2
Finland 2.3
Italy 2.1
South Africa 1.9
Ten Largest Industries Percent of
(Equity Investments) Net Assets
Electrical Equipment 7.5%
Banking 7.4
Property & Casualty Insurance 6.9
Telecommunications 3.5
Chemicals 2.9
Pharmaceuticals 2.9
Multi-Industry 2.8
Automobiles 2.8
Retailing 2.5
Diversified 2.4
<PAGE>
Percent of
Asset Mix* Net Assets
Japan 31.8%
Europe (Ex-United Kingdom
and Ireland) 21.2
Cash 15.3
Pacific Basin (Ex-Japan) 14.3
Other Emerging Markets 7.0
United Kingdom and Ireland 5.4
[FN]
*Percent of net assets may not equal 100%, and excludes the impact
of futures and options.
Financial Futures
Contracts
Percent of
Country Issue Exchange Net Assets
Hong Kong Hang Seng HKFE 0.9%
Japan Nikkei 225 SIMEX 1.1
Japan Tokyo-Topix TFE 6.5
United Kingdom FTSE 100 LIFFE (1.0)
-----
7.5%
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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
<PAGE>
Custodian
Brown Brothers Harriman & Co.
40 Water Street
Boston, Massachusetts 02109
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
Merrill Lynch
International
Equity Fund
Management
Team
Andrew John Bascand--Senior Portfolio Manager/Asset Allocator.
As the Fund's Asset Allocator, Mr. Bascand is primarily
responsible for determining the allocation of the Fund's assets
among equity markets in Europe, the emerging markets and the
Pacific Basin.
Adrian Holmes--Co-Portfolio Manager--European Investments.
Mr. Holmes is primarily responsible for the Fund's European
investments.
Grace Pineda--Co-Portfolio Manager--Emerging Markets
Investments. Ms. Pineda is primarily responsible for investments
in emerging markets in Europe, Latin America and the smaller
markets in the Pacific Basin.
Stephen I. Silverman--Co-Portfolio Manager--Pacific Basin
Investments. Mr. Silverman is primarily responsible for the
Fund's investments in the larger Pacific Basin markets.
