MERRILL LYNCH
INTERNATIONAL
EQUITY FUND
FUND LOGO
Quarterly Report
August 31, 1996
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.
Statements and other information herein are as dated and are subject
to change.
<PAGE>
Merrill Lynch
International
Equity Fund
Box 9011
Princeton, NJ
08543-9011
Printed on post-consumer recycled paper
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 August 31, 1996
Italy -8.3%
Japan -8.1%
France -3.0%
Hong Kong -2.0%
Australia -0.1%
Mexico -0.1%
Sweden +3.3%
Germany +4.8%
United Kingdom +5.1%
Brazil +5.3%
<PAGE>
Source: Financial Times/S&P--Actuaries Index.
[FN]
*For the three-month period ended August 31, 1996, total investment
return in US dollars for the Financial Times/S&P--Actuaries World
(Ex-US) Index was -2.17%.
DEAR SHAREHOLDER
In aggregate, international equity markets declined during the three
months ended August 31, 1996. The decline, which reflected lower
share prices in Japan, Southeast Asia and parts of Europe, followed
a period marked by downgrades to expectations for profits and of
interest rate increases. Overall, during the August quarter, the
unmanaged Financial Times/Standard & Poor's--Actuaries World (Ex-US)
Index's total return was -2.17% in US dollar terms. The total return
for the unmanaged Financial Times/Standard & Poor's--Actuaries US
Index was -1.87%.
For the quarter ended August 31, 1996, total returns for Merrill
Lynch International Equity Fund's Class A, Class B, Class C and
Class D Shares were -2.76%, -3.06%, -3.09% and -2.93%, respectively.
(Results shown do not reflect sales charges, and would be lower if
sales charges were included. Complete performance information,
including average annual total returns, can be found on pages 4--6 of
this report to shareholders.) The Fund's underperformance during the
August quarter reflected its under-weightings in strong markets such
as the United Kingdom and Germany--both returned about 5% in the
quarter--and its overweightings of underperforming emerging markets.
Our decision to underweight Japanese stocks during the quarter ended
August 31, 1996 had a positive impact as the total return for
Japanese equities was -8.1% in US dollar terms.
Portfolio Matters
Our investment strategy remains defensive. We further reduced the
Fund's total effective equity exposure, after adjusting for the net
expected impact of warrants and options. As of August 31, 1996, the
Fund's effective equity position was about 85% of net assets, down
from 90% three months earlier. A reduction in exposure occurred in
Europe, where we reduced the Fund's effective exposure to around
17.9% of net assets from 20.1% through hedging transactions.
Significant sales during the August quarter included United Kingdom
and German stock index futures (Financial Times Stock Exchange 100
and Deutsche Aktien 30).
<PAGE>
The Fund also hedged its position in Japan, where the Fund sold
Topix futures. Overall, the Fund's exposure to Japanese equities
fell to about 36.7% of net assets from 39.3%. Elsewhere, in
developed Pacific Rim markets excluding Japan, we increased the
Fund's Hong Kong exposure and reduced its New Zealand exposure,
mainly in response to stock selection decisions. The Fund's
effective US dollar exposure fell to 24% of net assets from 28%, and
we anticipate reducing this currency exposure further should the US
dollar appreciate.
Economic and Investment
Environment
Economic activity indicators generally remained robust. In the past
three months, the US National Association of Purchasing Managers
Index of Manufacturing Activity averaged 52.3 as of August 31, 1996,
up from 48.8 during the May quarter. However, despite stronger
activity indicators in the United States, the United Kingdom, Japan
and Germany during the quarter ended August 31, 1996, global bond
yields traded in a narrow range. At August 31, 1996, the US ten-year
Treasury note yield was unchanged at 6.9%. Similarly, ten-year
Japanese government bond yields were essentially unchanged at around
3.1%. In Europe, ten-year German government bond yields declined
slightly to 6.4%, while in the United Kingdom the ten-year UK
government bond yield fell to 7.9%.
As we noted in our last shareholder letter, it seemed likely that
investors in US Treasury bonds have largely discounted a
strengthening in economic growth and potential inflationary risks.
However, US profit margins remain at peak levels, and there appears
to be little scope for a further expansion in US earnings per share,
especially in light of the US dollar's recent strengthening. During
the quarter ended August 31, 1996, the Institutional Broker Estimate
Service (IBES) consensus earnings per share forecasts for the S&P
500 declined for both 1996 and 1997. Against this background, US
equities may be exposed to any tightening in monetary policy and, as
a result, a number of other equity markets may experience
volatility.
In recent months, all major countries, except Japan, experienced
downgrades to IBES earnings expectations for 1996 and 1997. The
sharpest downward revisions occurred in France, Italy and emerging
Asian markets. Overall, against this background, our investment
strategy for the second half of 1996 is defensive. Our return
forecasts for the major markets remain quite conservative in the
near term.
<PAGE>
In Japan, the steady rise in economic growth expectations was
associated with rising expectations for both profits growth and
interest rates. The equity market has traded in a range between
20,000--22,000 (on the Nikkei 225), which we would characterize as
fair value if bond yields stay below 3.5%. However, recently
announced new securities issuance by both the Japanese government
and the banking system dampened local and foreign demand for
equities. As a result, we lowered our short-term return expectations
and reduced the Fund's weighting in Japan.
Many emerging markets continued to significantly underperform both
their local bond markets and the US equity market. While asset flows
to some emerging markets in early 1996 reignited a rally in equity
prices, that rise failed to materialize into a general recovery in
emerging markets equities. The Fund remained overweighted in
emerging markets equities, with current concentrations in Mexico and
South Africa. We reduced our weighting in Brazil following a period
of strong performance.
In Conclusion
Our investment strategy for the Fund remained defensive. We retained
a strategic diversified weighting in emerging markets and the
Pacific Rim. However, we believe many larger developed equity
markets are potentially overvalued currently. Much of our concern
reflects the potential correlation of these larger markets with the
US equity market, which our analysis suggests is probably
overvalued.
If the yen stabilizes between YEN 105--YEN 110 against the US
dollar, we believe the Japanese equity market potentially remains
the most attractive of the larger markets. However, in the short
term, even the Japanese equity market may pose risks. The risks
stem from likely government and bank sector stock issuance in
excess of potential near-term demand.
Overall, our defensive investment stance should provide some
protection from potential stock market volatility while affording an
opportunity to reinvest reserves should a correction occur. Against
that background, the Fund has about 15% of net assets in effective
cash. Looking ahead, the recovery in global economic activity should
provide many companies with reasonable earnings profiles through
1997 and 1998. Many emerging markets may be best placed to benefit
from a stronger global growth outlook.
We thank you for your continued interest in Merrill Lynch
International Equity Fund, and we look forward to reviewing our
investment outlook and strategy with you in our next shareholder
letter.
<PAGE>
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Andrew Bascand)
Andrew Bascand
Senior Portfolio Manager/
Asset Allocator
(Adrian Holmes)
Adrian Holmes
Co-Portfolio Manager
European Investments
(Grace Pineda)
Grace Pineda
Co-Portfolio Manager
Emerging Markets Investments
(Stephen Silverman)
Stephen Silverman
Co-Portfolio Manager
Pacific Basin Investments
<PAGE>
September 26, 1996
PERFORMANCE DATA
About Fund
Performance
Investors are 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 addition, Class B
Shares are subject to a distribution fee of 0.75% and an account
maintenance fee of 0.25%. These shares automatically convert to
Class D Shares after approximately 8 years. (There is no initial
sales charge for automatic share conversions.)
* 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).
None of the past results shown should be considered a representation
of future performance. Investment return and principal value of
shares will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost. 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.
<PAGE>
<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%
1995 10.53 11.13 -- -- +5.70
1/1/96--8/31/96 11.13 11.61 -- -- +4.31
------ ------
Total $0.091 Total $0.599
Cumulative total return as of 8/31/96: +5.59%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the ex-dividend date, and do not
include sales charge; results would be lower if sales charge was
included.
***As a result of the implementation of the Merrill Lynch Select
Pricing SM System, Class A Shares of the Fund outstanding prior to
October 21, 1994 were redesignated to Class D Shares.
</TABLE>
<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
1995 10.52 11.00 -- -- + 4.56
1/1/96--8/31/96 11.00 11.40 -- -- + 3.64
------ ------
Total $0.091 Total $0.490
Cumulative total return as of 8/31/96: +20.42%**
<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%
1995 10.43 10.90 -- -- + 4.51
1/1/96--8/31/96 10.90 11.29 -- -- + 3.58
------ ------
Total $0.091 Total $0.582
Cumulative total return as of 8/31/96: +3.56%**
<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
1995 10.56 11.13 -- -- + 5.40
1/1/96--8/31/96 11.13 11.59 -- -- + 4.13
------ ------
Total $0.091 Total $0.566
Cumulative total return as of 8/31/96: +23.25%**
<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>
PERFORMANCE DATA (concluded)
<TABLE>
Recent
Performance
Results
<CAPTION>
12 Month 3 Month
8/31/96 5/31/96 8/31/95 % Change % Change
<S> <C> <C> <C> <C> <C>
ML International Equity Fund Class A Shares* $11.61 $11.94 $10.86 +6.91% - 2.76%
ML International Equity Fund Class B Shares* 11.40 11.76 10.77 +5.85 - 3.06
ML International Equity Fund Class C Shares* 11.29 11.65 10.68 +5.71 - 3.09
ML International Equity Fund Class D Shares* 11.59 11.94 10.87 +6.62 - 2.93
ML International Equity Fund Class A Shares--Total Return* +6.91 - 2.76
ML International Equity Fund Class B Shares--Total Return* +5.85 - 3.06
ML International Equity Fund Class C Shares--Total Return* +5.71 - 3.09
ML International Equity Fund Class D Shares--Total Return* +6.62 - 2.93
Financial Times/S&P--Actuaries World (Ex-US) Index**--Total Return +8.36 - 2.17
<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.
</TABLE>
Average Annual
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 6/30/96 +18.19% +11.99%
Inception (10/21/94) through 6/30/96 + 5.40 + 2.10
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
<PAGE>
Class B Shares*
Year Ended 6/30/96 +17.13% +13.13%
Inception (7/30/93) through 6/30/96 + 7.93 + 7.33
[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 % Return
Without CDSC With CDSC**
Class C Shares*
Year Ended 6/30/96 +17.08% +16.08%
Inception (10/21/94) through 6/30/96 + 4.37 + 4.37
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Sales Charge Sales Charge**
Class D Shares*
Year Ended 6/30/96 +17.98% +11.78%
Inception (7/30/93) through 6/30/96 + 8.74 + 6.75
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
Percent of
AFRICA Industries Shares Held Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
South Banking 526,940 Nedcor Ltd. (GDR)(d) $ 5,620,874 $ 6,520,882 0.5%
Africa
Beverages 85,044 South African Breweries Ltd. 2,451,796 2,256,463 0.2
<PAGE>
Entertainment 2,100,000 Sun International (South Africa),
Ltd. 2,598,413 2,013,378 0.2
Mining 54,000 Anglo American Corp. of South Africa,
Ltd. 3,636,072 3,280,936 0.3
65,200 Anglo American Corp. of South Africa,
Ltd. (ADR)(a) 4,274,593 3,912,000 0.3
159,000 Driefontein Consolidated Ltd. (ADR)(a) 2,395,717 2,027,250 0.2
263,000 Kinross Mines Ltd. 2,711,745 2,638,796 0.2
-------------- -------------- ------
13,018,127 11,858,982 1.0
Total Investments in South Africa 23,689,210 22,649,705 1.9
Zimbabwe Beverages 1,624,918 Delta Corporation Ltd. 2,620,153 4,284,452 0.3
Total Investments in Zimbabwe 2,620,153 4,284,452 0.3
Total Investments in Africa 26,309,363 26,934,157 2.2
EUROPE
Finland Diversified 103,600 Outokumpu OY 1,582,507 1,959,618 0.2
Paper & Forest 628,100 Enso OY (Class A) 4,574,740 5,370,900 0.4
Products 615,000 Metsa Serla OY (Class B) 4,764,160 4,611,846 0.4
293,160 UPM-Kymmene Corporation 5,742,515 6,726,412 0.6
-------------- -------------- ------
15,081,415 16,709,158 1.4
Total Investments in Finland 16,663,922 18,668,776 1.6
France Automobiles 52,350 Peugeot S.A. 7,547,721 5,998,222 0.5
Banking 69,200 Compagnie Financiere de Paribas 3,508,929 4,351,316 0.4
94,500 Compagnie Financiere de Suez (Ordinary) 3,718,127 3,392,068 0.3
28,450 Societe Generale de Surveillance S.A.
(Class A)(Ordinary) 3,018,733 3,130,512 0.3
-------------- -------------- ------
10,245,789 10,873,896 1.0
Communication 40,200 Alcatel Alsthom Cie Generale
Equipment d'Electricite S.A. 3,848,764 3,113,078 0.3
<PAGE>
Engineering & 30,000 Bouygues S.A. 2,970,253 2,918,807 0.2
Construction
Financial Services 15,767 EuraFrance S.A. 4,887,174 6,385,292 0.5
Foods 21,200 Groupe Danone S.A. (ADR)(a) 3,367,962 2,927,460 0.2
Insurance 117,068 Assurances Generales de France
S.A. (AGF) 2,985,825 3,029,614 0.2
Oil & Related 57,400 Elf Aquitaine S.A. 4,142,295 4,181,968 0.4
Steel 219,640 Usinor Sacilor S.A. 3,279,715 3,015,603 0.2
Total Investments in France 43,275,498 42,443,940 3.5
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
EUROPE Percent of
(continued) Industries Shares Held Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Germany Automobiles 10,600 Volkswagen AG $ 3,971,409 $ 3,940,520 0.3%
Banking 17,800 Deutsche Bank AG (Ordinary) 867,216 879,352 0.1
117,000 Deutsche Bank AG (Warrants)(b) 1,003,241 846,164 0.1
-------------- -------------- ------
1,870,457 1,725,516 0.2
Chemicals 181,060 Bayer AG (Ordinary) 3,806,564 6,473,859 0.5
21,132 Henkel KGaA 907,822 894,129 0.1
190,188 Henkel KGaA (Preferred) 7,811,260 7,822,197 0.6
-------------- -------------- ------
12,525,646 15,190,185 1.2
Engineering & 8,315 Philipp Holzmann AG 3,181,247 2,062,592 0.2
Construction
Machinery & 77,450 Kloeckner Werke AG 3,951,498 2,659,317 0.2
Equipment 6,900 Mannesmann AG 1,713,447 2,490,436 0.2
-------------- -------------- ------
5,664,945 5,149,753 0.4
Retail 9,695 Karstadt AG 3,783,415 3,407,502 0.3
Total Investments in Germany 30,997,119 31,476,068 2.6
<PAGE>
Greece Banking 33,480 Ergo Bank S.A. (Registered) 1,594,105 1,990,451 0.2
Food & Household 137,292 Hellenic Bottling Co. S.A. 2,763,632 4,770,988 0.4
Products
Total Investments in Greece 4,357,737 6,761,439 0.6
Hungary Telecommunications 26,000 Magyar TarKozlesi Reszvenytarsasag
(Ordinary) 4,349,463 3,875,455 0.3
Total Investments in Hungary 4,349,463 3,875,455 0.3
Ireland Insurance 1,217,000 Irish Life PLC 4,006,737 4,685,852 0.4
Packaging & 1,161,675 Jefferson Smurfit Group PLC (Ordinary) 3,553,498 3,175,439 0.3
Containers
Total Investments in Ireland 7,560,235 7,861,291 0.7
Italy Automobiles 1,180,000 Fiat S.p.A. (Ordinary) 3,540,591 3,657,219 0.3
Building & 591,643 Fochi Filippo S.p.A. 1,874,417 86,200 0.0
Construction
Chemicals 6,623,000 Montedison S.p.A. 6,982,245 4,241,352 0.4
Diversified 8,003,400 Compagnie Industrial Riunite S.p.A.
(CIR) 7,348,440 4,240,212 0.3
Insurance 275,000 Assicurazioni Generali S.p.A. 6,963,833 6,091,887 0.5
2,227,400 Istituto Nazionale delle Assicurazioni
S.p.A. (INA) 3,156,353 3,178,839 0.3
-------------- -------------- ------
10,120,186 9,270,726 0.8
Oil & Related 583,920 Ente Nazionale Idrocarburi S.p.A. (ENI) 2,284,404 2,552,233 0.2
Telecommunications 2,764,400 STET, Di Risp (Non-Convertible) 6,501,552 6,673,005 0.6
Total Investments in Italy 38,651,835 30,720,947 2.6
Netherlands Chemicals 122,815 European Vinyls Corporation
International N.V. 4,990,011 3,621,354 0.3
Finance 63,100 AEGON N.V. (Ordinary) 1,391,625 3,081,946 0.3
<PAGE>
Financial Services 95,050 Fortis Amev N.V. 1,492,731 2,859,982 0.2
Insurance 108,125 Internationale Nederlanden Groep N.V. 1,881,465 3,370,756 0.3
Packaging & 128,600 Koninklijke KNP BT N.V. 3,005,375 2,977,713 0.3
Containers
Telecommunications 17,618 Royal PTT Nederland N.V. 640,891 618,287 0.0
Transportation 60,500 KLM Royal Dutch Airlines 1,656,767 1,667,179 0.1
Total Investments in the Netherlands 15,058,865 18,197,217 1.5
Norway Consumer Goods 60,600 Orkla A.S. (Class A) 3,061,837 3,352,063 0.3
Oil & Gas 169,475 Saga Petroleum A.S. (Class B) 1,876,383 2,340,304 0.2
Producers
Oil & Related 37,690 Norsk Hydro A.S. 1,578,100 1,731,947 0.1
Total Investments in Norway 6,516,320 7,424,314 0.6
Poland Automobiles & 97,200 T.C. Debica S.A. 1,310,106 2,112,272 0.2
Equipment
Engineering & 660,503 Mostostal-Export S.A. 1,679,914 1,881,637 0.1
Construction 13,210 Mostostal-Export S.A. (Series E) 4,860 4,825 0.0
-------------- -------------- ------
1,684,774 1,886,462 0.1
Total Investments in Poland 2,994,880 3,998,734 0.3
Portugal Diversified 224,900 Sonae Investimentos--SGPS S.A. 5,144,776 6,478,662 0.5
Total Investments in Portugal 5,144,776 6,478,662 0.5
Spain Engineering & 17,550 Fomento de Construcciones Y
Construction Contratas S.A. 1,453,057 1,375,700 0.1
Total Investments in Spain 1,453,057 1,375,700 0.1
Sweden Automobiles & 79,600 Volvo AB (Class B) 1,458,749 1,695,408 0.1
Equipment
<PAGE>
Banking 257,900 Sparbanken Sverige AB (Class A) 3,027,037 3,214,011 0.3
Electrical 102,705 Electrolux AB 4,981,607 5,973,025 0.5
Engineering & 107,300 SKF AB 1,967,545 2,447,477 0.2
Construction 38,050 SKF AB 'B' Free 738,751 893,773 0.1
140,795 Svedala Industry 1,848,943 2,424,566 0.2
-------------- -------------- ------
4,555,239 5,765,816 0.5
Finance 137,475 Stadshypotek AB 2,033,430 3,561,475 0.3
Forest Products 145,600 Mo och Domsjo AB (Class B) 3,647,878 4,211,843 0.4
2,297,200 Rottneros Bruks AB 3,542,973 2,932,227 0.2
299,400 Stora Kopparbergs AB 3,864,464 4,206,072 0.3
-------------- -------------- ------
11,055,315 11,350,142 0.9
Insurance 78,350 Skandia Forsakrings AB 1,786,973 1,840,396 0.2
Metals & Mining 272,200 Avesta Sheffield AB 2,440,788 2,754,894 0.2
Total Investments in Sweden 31,339,138 36,155,167 3.0
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
EUROPE Percent of
(concluded) Industries Shares Held Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Switzerland Banking 44,927 CS Holding AG (Registered Shares) $ 4,609,487 $ 4,666,621 0.4%
Chemicals 5,485 Ciba-Geigy AG (Registered) 3,825,119 6,932,901 0.6
7,005 Clariant AG 2,291,190 2,419,548 0.2
-------------- -------------- ------
6,116,309 9,352,449 0.8
Diversified 41,550 Oerlikon-Buehrle Holding AG 4,477,942 4,220,518 0.4
Jewelry 11,592 SMH AG (Societe Suisse pour la
Microelectonique et l'Horlogerie) 1,627,957 1,794,023 0.1
Leisure 3,682 Fotolabo S.A. 1,529,233 1,388,507 0.1
Pharmaceuticals 2,462 Sandoz AG 2,696,527 2,933,202 0.2
Total Investments in Switzerland 21,057,455 24,355,320 2.0
<PAGE>
Turkey Beverages 6,208,327 Erciyas Biracilik Ve Malt Sanayii A.S. 4,082,497 3,148,529 0.2
Metal 22,550,000 Eregli Demir Ve Celik Fabrikalari
Fabricating T.A.S. 2,537,377 2,001,325 0.2
Retail 4,640,824 Migros Turk A.S. 2,111,166 3,690,835 0.3
Total Investments in Turkey 8,731,040 8,840,689 0.7
United Beverages 546,300 Grand Metropolitan PLC (Ordinary) 3,378,498 4,040,473 0.3
Kingdom 128,650 Matthew Clark PLC 1,533,586 1,367,474 0.1
-------------- -------------- ------
4,912,084 5,407,947 0.4
Chemicals 287,000 Inspec Group PLC 896,471 921,244 0.1
143,500 Inspec Group PLC (Rights)(c) 0 51,554 0.0
-------------- -------------- ------
896,471 972,798 0.1
Computer Services 122,220 Misys PLC 1,509,825 1,614,124 0.1
Diversified 1,468,925 Hanson PLC (Ordinary) 4,327,926 3,619,512 0.3
677,600 Tomkins PLC 2,319,318 2,767,745 0.2
-------------- -------------- ------
6,647,244 6,387,257 0.5
Food & Beverage 532,220 Cadbury Schweppes PLC 4,103,079 4,264,711 0.4
Food Processing 249,920 Unilever PLC 4,614,951 4,955,811 0.4
Insurance 487,500 Prudential Corp. PLC 2,379,631 3,293,379 0.3
Pharmaceuticals 414,950 Glaxo Holdings PLC 5,152,579 5,953,275 0.5
Retail 708,000 Tesco PLC (Ordinary) 3,035,926 3,345,335 0.3
Telecommunications 1,110,200 British Telecommunications PLC
(Ordinary) 6,097,890 6,511,667 0.5
Utilities 953,900 British Gas PLC (Ordinary) 3,591,832 3,054,483 0.3
Total Investments in the
United Kingdom 42,941,512 45,760,787 3.8
Total Investments in Europe 281,092,852 294,394,506 24.4
<PAGE>
LATIN
AMERICA
Argentina Banking 168,569 Banco Frances del Rio de la Plata S.A.
(ADR)(a) 4,078,507 3,898,158 0.3
Oil & Related 790,000 Companhia Naviera Perez Companc
S.A.C.F.I.M.F.A. (Class B) 4,882,504 4,521,513 0.4
Telecommunications 46,700 Telefonica de Argentina S.A. (Class B)
(ADR)(a) 1,137,452 1,114,962 0.1
Total Investments in Argentina 10,098,463 9,534,633 0.8
Brazil Banking 573,750,000 Banco Bradesco S.A. PN (Preferred) 4,430,630 4,855,111 0.4
Beverages 10,344,000 Companhia Cervejaria Brahma S.A. PN
(Preferred) 5,032,202 6,564,873 0.5
Telecommunications 238,000 Telecomunicacoes Brasileiras S.A.--
Telebras (ADR)(a) 10,705,155 17,701,250 1.5
Utilities 103,250 Companhia Energetica de Minas Gerais S.A.
(CEMIG)(ADR)(a) 2,650,313 3,071,688 0.3
Total Investments in Brazil 22,818,300 32,192,922 2.7
Chile Telecommunications 52,825 Compania de Telecomunicaciones de Chile
S.A. (ADR)(a) 3,756,222 5,163,644 0.4
Utilities 80,000 Enersis S.A. (ADR)(a) 2,002,257 2,490,000 0.2
Total Investments in Chile 5,758,479 7,653,644 0.6
Mexico Beverages 116,600 Panamerican Beverages, Inc. (Class A) 5,234,832 4,926,350 0.4
Broadcast--Media 78,000 Grupo Televisa, S.A. de C.V. (GDR)(d) 2,010,348 2,369,250 0.2
Building & 815,550 Apasco, S.A. de C.V. 4,523,505 5,497,969 0.4
Construction
Forestry 216,000 Kimberly-Clark de Mexico, S.A. de C.V.
(ADR)(a) 7,896,272 8,046,000 0.7
Insurance 814,063 Invercorporacion, S.A. de C.V. 'A1' 107,255 105,248 0.0
<PAGE>
Multi-Industry 1,121,063 Grupo Carso, S.A. de C.V. 'A1' 5,661,341 5,146,833 0.4
Retail 431,000 Cifra, S.A. de C.V. 'C' 710,001 666,401 0.1
Telecommunications 814,063 Carso Global Telecom, S.A. de C.V. 'A1' 2,145,094 2,319,757 0.2
Total Investments in Mexico 28,288,648 29,077,808 2.4
Total Investments in Latin America 66,963,890 78,459,007 6.5
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
MIDDLE Percent of
EAST Industries Shares Held Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Israel Banking 2,099,000 Bank Hapoalim Ltd. $ 3,513,500 $ 3,004,594 0.3%
Engineering & 58,140 Koor Industries Ltd. 5,336,358 5,046,449 0.4
Construction
Total Investments in the Middle East 8,849,858 8,051,043 0.7
PACIFIC
BASIN
Australia Food & Beverage 2,877,315 Coca-Cola Amatil, Ltd. 15,727,203 37,458,412 3.1
Media 458,847 The News Corp., Ltd. (Ordinary) 2,356,360 2,447,506 0.2
260,450 The News Corp., Ltd. (Preferred) 1,148,701 1,174,885 0.1
-------------- -------------- ------
3,505,061 3,622,391 0.3
Merchandising 78,500 Amway Asia Pacific Ltd. 2,536,717 2,404,062 0.2
Property 1,556,541 Lend Lease Corp. 20,004,400 25,474,587 2.1
Resources 191,964 Broken Hill Proprietary Co. 2,423,961 2,616,068 0.2
Total Investments in Australia 44,197,342 71,575,520 5.9
Hong Kong Banking 1,564,826 HSBC Holdings PLC 19,354,506 27,018,142 2.2
132,000 J.C.G. Holdings Ltd. 124,849 112,675 0.0
-------------- -------------- ------
19,479,355 27,130,817 2.2
<PAGE>
Conglomerates 2,333,325 Hutchison Whampoa Ltd. 12,386,774 14,123,074 1.2
Diversified 2,136,000 Swire Pacific Ltd. (Class A) 14,470,683 18,992,499 1.6
Foods 2,040,000 C.P. Pokphand Co. Ltd. 714,790 692,576 0.1
20,838,000 Tingyi (Cayman Islands) Holdings Co. 5,493,255 4,878,011 0.4
-------------- -------------- ------
6,208,045 5,570,587 0.5
Insurance 698,000 National Mutual Asia Ltd. 733,581 582,268 0.0
Property 1,897,000 Cheung Kong (Holdings) Ltd. 13,189,233 13,309,913 1.1
18,166,000 China Overseas Land & Investment 5,085,987 5,697,433 0.5
-------------- -------------- ------
18,275,220 19,007,346 1.6
Total Investments in Hong Kong 71,553,658 85,406,591 7.1
Japan Automobiles 1,879,000 Suzuki Motor Corp. 21,118,332 21,444,639 1.8
Beverages 139,000 Chukyo Coca-Cola Bottling Co., Ltd. 1,835,949 1,496,825 0.1
183,000 Hokkaido Coca-Cola Bottling Co., Ltd.
(Class B) 2,818,281 2,391,716 0.2
165,000 Kinki Coca-Cola Bottling Co., Ltd. 2,625,747 2,308,329 0.2
197,000 Mikuni Coca-Cola Bottling Co., Ltd. 3,160,732 2,665,347 0.2
153,000 Sanyo Coca-Cola Bottling Co., Ltd. 2,332,375 2,210,861 0.2
-------------- -------------- ------
12,773,084 11,073,078 0.9
Capital Goods 4,072,000 Mitsubishi Heavy Industries, Ltd. 28,643,076 32,193,723 2.7
Chemicals 972,000 Shin-Etsu Chemical Co., Ltd. 19,279,710 17,176,622 1.4
Containers 906,000 Toyo Seikan Kaisha, Ltd. 27,433,696 29,102,071 2.4
Electric 380,000 Chudenko Corp. 13,592,350 12,171,192 1.0
Construction 935,000 Kinden Corp. 16,982,687 14,285,320 1.2
435,000 Sanki Engineering Co., Ltd. 6,151,018 5,445,007 0.4
448,000 Taihei Dengyo Kaisha, Ltd. 9,648,236 6,432,398 0.5
-------------- -------------- ------
46,374,291 38,333,917 3.1
Electrical 981,000 Murata Manufacturing Co., Ltd. 36,563,258 34,851,910 2.9
Equipment 1,042,000 NEC Corporation 14,026,740 11,124,896 0.9
532,000 Rohm Co., Ltd. 22,784,844 31,875,932 2.6
-------------- -------------- ------
73,374,842 77,852,738 6.4
<PAGE>
Iron & Steel 381,000 Maruichi Steel Tube, Ltd. 6,880,001 6,487,345 0.5
Office Equipment 1,792,000 Canon Inc. 31,370,583 33,316,521 2.8
Pharmaceuticals 883,000 Sankyo Co., Ltd. 19,663,821 21,942,936 1.8
633,000 Taisho Pharmaceutical Co., Ltd. 12,492,487 12,700,782 1.1
-------------- -------------- ------
32,156,308 34,643,718 2.9
Property & 2,080,000 Dai-Tokyo Fire & Marine Insurance
Casualty Co., Ltd. 15,360,286 13,860,285 1.1
Insurance 851,000 Fuji Fire & Marine Insurance Co.,
Ltd. 5,819,056 4,464,519 0.4
1,268,000 Koa Fire & Marine Insurance Co., Ltd. 8,833,667 7,690,861 0.6
742,000 Mitsui Marine & Fire Insurance Co.,
Ltd. 6,045,628 5,156,098 0.4
1,780,000 Nichido Fire & Marine Insurance Co.,
Ltd. 12,945,549 12,369,075 1.0
733,000 Nippon Fire & Marine Insurance Co.,
Ltd. 5,400,442 4,344,703 0.4
2,124,000 Sumitomo Marine & Fire Insurance Co.,
Ltd. 17,960,159 16,421,169 1.4
1,468,000 Tokio Marine & Fire Insurance Co.,
Ltd. 17,341,002 16,753,981 1.4
1,257,000 Yasuda Fire & Marine Insurance Co.,
Ltd. 9,408,702 8,191,035 0.7
-------------- -------------- ------
99,114,491 89,251,726 7.4
Retail 564,000 Ito-Yokado Co., Ltd. 29,397,786 29,744,317 2.5
138,000 Sangetsu Co., Ltd. 4,742,639 3,327,750 0.3
-------------- -------------- ------
34,140,425 33,072,067 2.8
Tire & Rubber 787,000 Bridgestone Corporation 14,319,984 12,893,327 1.1
Total Investments in Japan 446,978,823 436,841,492 36.2
Malaysia Banking 854,000 Malayan Banking BHD 7,214,839 8,119,304 0.7
2,434,667 Public Bank (Malaysia) BHD 'Foreign' 4,300,793 4,668,528 0.4
-------------- -------------- ------
11,515,632 12,787,832 1.1
Broadcasting & 956,000 New Straits Times Press (Malaysia) BHD 5,178,451 5,369,063 0.4
Publishing
Telecommunications 2,160,000 Technology Resources Industries BHD 6,854,862 6,238,768 0.5
Total Investments in Malaysia 23,548,945 24,395,663 2.0
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (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>
New Chemicals 60,000 Fernz Corporation Ltd. $ 163,272 $ 181,385 0.0%
Zealand
Electronics 25,000 PDL Holdings Ltd. 140,651 112,158 0.0
Finance 2,509,300 Wrightson Ltd. 1,911,453 1,957,068 0.2
Foreign NZ$ 12,200,000 New Zealand Government Bonds,
Government 9% due 11/15/1996 7,599,617 8,403,599 0.7
Obligations
Telecommunications 227,000 Telecom Corporation of New Zealand 970,676 1,085,760 0.1
Textiles 298,800 Lane Walker Rudkin Industries, Ltd. 356,852 350,594 0.0
Total Investments in New Zealand 11,142,521 12,090,564 1.0
South Telecommunications 447,900 Korea Mobile Telecommunications Corp.
Korea (ADR)(a) 7,031,105 7,054,425 0.6
Utilities 232,500 Korea Electric Power Corp. 9,203,172 8,230,591 0.7
Total Investments in South Korea 16,234,277 15,285,016 1.3
Thailand Banking 320,500 Finance One Public Co., Ltd. 'Foreign' 2,622,142 1,583,498 0.1
1,675,300 Krung Thai Bank Public Co., Ltd. 7,939,717 7,217,696 0.6
1,111,400 Phatra Thanakit Public Co., Ltd.
'Foreign' 10,496,114 6,589,328 0.6
Total Investments in Thailand 21,057,973 15,390,522 1.3
Total Investments in the
Pacific Basin 634,713,539 660,985,368 54.8
SOUTHEAST
ASIA
<PAGE>
India Automobiles 144,000 Ashok Leyland Ltd. (GDR)(d) 1,763,344 1,602,000 0.1
102,000 Ashok Leyland Ltd. (GDR)(d) 1,304,580 1,134,750 0.1
-------------- -------------- ------
3,067,924 2,736,750 0.2
Banking 285,000 State Bank of India 2,015,768 2,184,732 0.2
Chemicals 76,100 Reliance Industries Ltd. 485,816 452,951 0.0
Financial 1,000,400 Industrial Credit & Investment
Services Corporation of India 3,286,841 2,144,722 0.2
Hotels 100,000 East India Hotels Ltd. (GDR)(d) 2,772,888 2,087,500 0.2
Real Estate 44,280 Housing Development Finance Corp., Ltd. 3,461,023 3,426,547 0.3
Utilities 146,500 Bombay Suburban Electric Supply Co. Ltd
(GDR)(d) 2,711,447 2,765,187 0.2
Total Investments in India 17,801,707 15,798,389 1.3
Indonesia Food & Household 1,285,000 P.T. Wicaksana Overseas International 2,158,799 2,743,968 0.2
Products
Telecommunications 2,980,000 P.T. Kabelmetal Indonesia 3,771,842 1,240,871 0.1
Total Investments in Indonesia 5,930,641 3,984,839 0.3
Total Investments in Southeast Asia 23,732,348 19,783,228 1.6
SHORT-TERM Face
SECURITIES Amount
Commercial US$ 20,000,000 Delaware Funding Corp., 5.29%
Paper* due 9/09/1996 19,973,550 19,973,550 1.7
42,412,000 General Electric Capital Corp., 5.30%
due 9/03/1996 42,393,268 42,393,268 3.5
12,725,000 Greenwich Funding Corp., 5.32%
due 9/03/1996 12,719,359 12,719,359 1.0
Total Investments in Commercial Paper 75,086,177 75,086,177 6.2
Foreign C$ 43,030,000 Canadian Treasury Bills,
Government 4.935% due 10/24/1996 31,320,017 31,273,668 2.6
Obligations*
<PAGE>
Total Investments in Foreign
Government Obligations 31,320,017 31,273,668 2.6
US Government United States Treasury Bills (e):
& Agency US$ 800,000 4.90% due 10/24/1996 794,120 794,256 0.1
Obligations* 350,000 4.96% due 10/24/1996 347,396 347,487 0.0
250,000 5.13% due 10/24/1996 248,076 248,205 0.0
6,000,000 5.155% due 10/24/1996 5,953,605 5,956,920 0.5
2,000,000 5.165% due 10/24/1996 1,984,505 1,985,640 0.2
Total Investments in US Government &
Agency Obligations 9,327,702 9,332,508 0.8
Total Investments in Short-Term
Securities 115,733,896 115,692,353 9.6
OPTIONS Number of Contracts/ Premiums
PURCHASED Face Amount Paid
Call Options 150 Bovespa, expiring November 1996 at
Purchased US$55,198 450,000 106,918 0.0
138 Bovespa, expiring December 1996 at
US$58,143 738,023 409,572 0.0
-------------- -------------- ------
1,188,023 516,490 0.0
Currency Call 51,000,000 Japanese Yen, expiring September 1996
Options Purchased at YEN 105 1,198,500 1,611,600 0.2
Total Options Purchased 2,386,523 2,128,090 0.2
Total Investments 1,159,782,269 1,206,427,752 100.0
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
OPTIONS Premiums Percent of
WRITTEN Number of Contracts Issue Received Value Net Assets
<S> <C> <S> <C> <C> <C>
<PAGE>
Call Options 150 Bovespa, expiring November 1996 at
Written US$55,198 $ (450,000) $ (1,190,434) (0.1)%
138 Bovespa, expiring December 1996 at
US$58,143 (738,023) (802,534) (0.1)
Total Options Written (1,188,023) (1,992,968) (0.2)
Total Investments, Net of Options Written $1,158,594,246 1,204,434,784 99.8
==============
Variation Margin on Financial Futures Contracts** 712,957 0.1
Unrealized Depreciation on Forward Foreign Exchange Contracts*** (31,784) 0.0
Other Assets Less Liabilities 1,435,690 0.1
-------------- ------
Net Assets $1,206,551,647 100.0%
============== ======
Net Asset Value: Class A--Based on net assets of $115,099,563 and 9,917,133 shares
outstanding $ 11.61
==============
Class B--Based on net assets of $881,748,084 and 77,371,884 shares
outstanding $ 11.40
==============
Class C--Based on net assets of $45,664,462 and 4,043,948 shares
outstanding $ 11.29
==============
Class D--Based on net assets of $164,039,538 and 14,153,410 shares
outstanding $ 11.59
==============
<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)The rights may be exercised until 9/11/96.
(d)Global Depositary Receipts (GDR).
(e)Securities held as collateral in connection with open futures
contracts.
*Commercial Paper and certain Foreign Government and US Government &
Agency Obligations are traded on a discount basis; the interest
rates shown are the discount rates paid at the time of purchase by
the Fund.
**Financial futures contracts purchased as of August 31, 1996 were
as follows:
<PAGE>
<CAPTION>
Number of Expiration
Contracts Issue Exchange Date Value
<C> <S> <S> <S> <C>
48 Tokyo-Topix TFE September 1996 $ 6,812,333
Total Financial Futures Contracts Purchased
(Total Contract Price--$7,479,429) $ 6,812,333
===========
Financial futures contracts sold as of August 31, 1996 were as follows:
<CAPTION>
Number of Expiration
Contracts Issue Exchange Date Value
<C> <S> <S> <S> <C>
121 DAX Index DTB September 1996 $20,765,056
178 FTSE 100 LIFFE September 1996 26,969,492
112 Hang Seng HKFE September 1996 8,035,696
Total Financial Futures Contracts Sold
(Total Contract Price--$56,132,944) $55,770,244
===========
***Forward foreign exchange contracts as of August 31, 1996 were as
follows:
<CAPTION>
Foreign Unrealized
Currency Expiration Appreciation
Purchased Date (Depreciation)
<S> <C> <S> <C>
YEN 2,240,680,625 September 1996 $ (99,008)
Total (US$ Commitment--$20,750,000) $ (99,008)
-----------
Foreign
Currency Sold
YEN 804,947,962 November 1996 $ 63,886
NZ$ 12,500,000 November 1996 3,338
Total (US$ Commitment--$16,103,255) $ 67,224
-----------
Total Unrealized Depreciation--Net on
Forward Foreign Exchange Contracts $ (31,784)
===========
</TABLE>
<PAGE>
PORTFOLIO INFORMATION
Worldwide
Investments as of
August 31, 1996
Ten Largest Industries Percent of
(Equity Investments) Net Assets
Banking 8.4%
Property & Casualty Insurance 7.4
Electrical Equipment 6.4
Telecommunications 4.9
Chemicals 4.2
Retail 3.8
Property 3.7
Pharmaceuticals 3.6
Diversified 3.5
Food & Beverage 3.5
Percent of
Ten Largest Countries Net Assets
Japan 36.2%
Hong Kong 7.1
Australia 5.9
United Kingdom 3.8
France 3.5
Sweden 3.0
Brazil 2.7
Germany 2.6
Italy 2.6
Mexico 2.4
Percent of
Ten Largest Equity Holdings Net Assets
Coca-Cola Amatil, Ltd. 3.1%
Murata Manufacturing Co., Ltd. 2.9
Canon Inc. 2.8
Mitsubishi Heavy Industries, Ltd. 2.7
Rohm Co., Ltd. 2.6
Ito-Yokado Co., Ltd. 2.5
Toyo Seikan Kaisha, Ltd. 2.4
HSBC Holdings PLC 2.2
Lend Lease Corp. 2.1
Sankyo Co., Ltd. 1.8
<PAGE>
Percent of
Asset Mix* Net Assets
Japan 36.2%
Europe (Ex-United Kingdom
and Ireland) 19.9
Pacific Basin (Ex-Japan) 18.6
Other Emerging Markets 11.0
Cash 9.6
United Kingdom and Ireland 4.5
[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
Japan Tokyo-Topix TFE 0.6%
United Kingdom FTSE 100 LIFFE (2.2)
Germany DAX Index DTB (1.7)
Hong Kong Hang Seng HKFE (0.7)
-----
(4.0%)
=====
EQUITY PORTFOLIO CHANGES
For the Quarter Ended August 31, 1996
Additions
C.P. Pokphand Co. Ltd.
CS Holding AG (Registered Shares)
Cadbury Schweppes PLC
Carso Global Telecom, S.A. de C.V. 'A1'
China Overseas Land & Investment
Cifra, S.A. de C.V. 'C'
Elf Aquitaine S.A.
Fortis Amev N.V.
Henkel KGaA
Inspec Group PLC
Inspec Group PLC (Rights)
Invercorporacion, S.A. de C.V. 'A1'
Misys PLC
Mostostal-Export S.A. (Series E)
Technology Resources Industries BHD
Volkswagen AG
<PAGE>
Deletions
Amev N.V. (Ordinary)
Banco Comercial Portugues S.A. (ADR)
Banco O'Higgins S.A. (ADR)
Banco Popular Espanol (Ordinary)
Brierley Investments Ltd.
Compagnie de Saint-Gobain S.A.
Companhia Cervejaria Brahma S.A. PN
(Warrants)
Hellenic Tellecommunication
Organization S.A.
Lloyds Bank PLC
Reliance Industries Ltd. (GDS)
Repsol S.A. (Ordinary)
Telekom Malaysia BHD
Usinas Siderurgicas de Minas Gerais--
Usiminas S.A. (Preferred)
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
Ira P. Shapiro, Secretary
Custodian
Brown Brothers Harriman & Co.
40 Water Street
Boston, Massachusetts 02109
<PAGE>
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
Merrill Lynch
International
Equity Fund
Management
Team
Andrew John Bascand--Senior Portfolio Manager/Asset Allocator. As
the Fund's Asset Allocator, Mr. Bascand is primarily responsible for
determining the allocation of the Fund's assets among equity markets
in Europe, the emerging markets and the Pacific Basin.
Adrian Holmes--Co-Portfolio Manager--European Investments. Mr.
Holmes is primarily responsible for the Fund's European investments.
Grace Pineda--Co-Portfolio Manager--Emerging Markets Investments.
Ms. Pineda is primarily responsible for investments in emerging
markets in Europe, Latin America and the smaller markets in the
Pacific Basin.
Stephen I. Silverman--Co-Portfolio Manager--Pacific Basin
Investments. Mr. Silverman is primarily responsible for the Fund's
investments in the larger Pacific Basin markets.
