MERRILL LYNCH
INTERNATIONAL
EQUITY FUND
FUND LOGO
Quarterly Report
February 29, 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
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
February 29, 1996
Finland -16.6%
Japan + 1.3%
United Kingdom + 3.4%
Sweden + 6.2%
Netherlands + 6.9%
Australia + 9.3%
France +10.2%
Italy +12.9%
Hong Kong +16.5%
Thailand +18.4%
Source: Financial Times/S&P--Actuaries Index.
[FN]
*For the three-month period ended February 29, 1996,
total investment return in US dollars for the Financial
Times/S&P--Actuaries World (Ex-US) Index was +4.78%.
<PAGE>
DEAR SHAREHOLDER
During the three months ended February 29, 1996, financial market
developments reflected continued monetary policy easing in the major
countries. In December and January, interest rate declines,
especially in the United States and Germany, were increasingly
anticipated by investors. Despite a correction in interest rate
expectations in February, equity markets generally maintained a
positive tone reflecting continued easy liquidity conditions and
investor anticipation of a recovery in economic activity.
Overall, international equity markets returned 4.8% in US dollar
terms during the February quarter, as measured by the unmanaged
Financial Times/S&P--Actuaries World (Ex-US) Index. The strongest
performing markets were in Asia and Latin America. Despite a sharp
decline in bond prices, continental European equity markets staged a
rally at the close of the February quarter, buoyed by a mild
recovery in the US dollar and a narrowing of peripheral European
bond spreads.
In US dollar terms, the Japanese equity market underperformed most
other markets, reflecting a continued depreciation of the yen from
around YEN 101/$1 US at the end of November 1995, to YEN 105/$1 US
three months later. In local currency terms, the Japanese market
continued to rise, especially through December and early January.
However, by February, concerns over the Jusen bail-out package and
signs of a sharper-than-expected rise in economic activity
negatively affected the banking sector. Declines in bank stocks
suppressed an otherwise positive market tone.
For the quarter ended February 29, 1996, total returns for Merrill
Lynch International Equity Fund's Class A, Class B, Class C and
Class D Shares were +6.02%, +5.81%, +5.77% and +6.02%, 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 performance during the
three-month period ended February 29, 1996, in comparison to the
unmanaged Financial Times/S&P--Actuaries World (Ex-US) Index
reflectes a positive contribution from an overweighted strategic
stance in emerging markets, further tactical purchases of emerging
market equities, and an overweighted position in the US dollar.
Portfolio Matters
We shifted the Fund to a more fully invested position, especially
through an increased exposure to emerging markets and developed
Pacific Basin markets. In contrast, we reduced effective exposure in
Japan as the market rallied in January. At the end of the February
quarter, the effective equity weighting of the Fund was 94%, up from
about 91% three months earlier.
<PAGE>
At February 29, 1996, the Fund's exposure to emerging markets was
14% of net assets, a three percentage point increase from three
months earlier. This increased exposure resulted from our purchase
of equity securities in Latin America such as Telecomunicacoes
Brasileiras S.A.--Telebras, Telecom Argentina Stet--France Telecom
S.A., Grupo Televisa, S.A. de C.V. and Banco O'Higgins S.A. In
emerging markets, we increased the Fund's exposure in Hungary and
Israel. In Asia, we purchased a range of large-cap securities such
as Public Bank (Malaysia) BHD, Malayan Banking BHD, Telekom Malaysia
BHD, Thai Military Bank Public Co., Ltd., Phatra Thanakit Public
Co., Ltd. and Development Bank of Singapore Ltd.
In developed European markets, the Fund's overall exposure remained
at about 24% of net assets. The most significant change in portfolio
exposure reflected our decision to reduce or eliminate Swiss stocks,
such as Ciba-Geigy AG and Roche Holding Genusschein AG.
We reduced the Fund's exposure to US dollars by scaling back
currency hedges into the US dollar against the yen and Deutschemark.
At February 29, 1996, the Fund had a 39% exposure to US dollar bloc
currencies (down from 46% three months earlier), had a 29% exposure
to the yen (up from 24%), sustained its 25% exposure to core
European currencies, and increased its exposure to other currencies
to 8% (up from 5%).
Economic and Investment
Environment
Synchronized easy monetary conditions across the major three
economies--the United States, Japan and Germany--resulted in a
significant increase in global liquidity. Investor anticipation of
further monetary policy easing in mid-January, in the face of
continued weak economic indicators (particularly in the United
States but also across much of Europe), reflected the potential for
recession-like conditions to persist into 1996.
Inflationary pressures generally remained non-existent, so there may
be further room for interest rates to decline. However, the current
easy monetary policy stance, especially in Japan, but also in Europe
and the United States, continued to provide the potential for
accelerating growth in the later half of 1996. Signs of firmer US
demand growth, especially in the consumer and export sectors, led to
a sharp rise in short-term interest rate expectations in January,
and resulted in the US ten-year Treasury bond yield rising from
about 5.6% to over 6.0%.
Elsewhere, bond yields also rose in Japan, where economic indicators
and business confidence continued to improve. Easy monetary policy,
combined with the impact of public works fiscal expansion, resulted
in an acceleration of economic activity. To date, this is most
evident in rising orders and a strengthening growth of imports.
<PAGE>
European economic activity has generally remained weak, and consumer
inflation indicators are showing few signs of any commodity price or
unit labor cost inflation pressures. Margins, especially at the
retail level, remain under pressure. Economic policy in most
countries runs parallel to the German stance, where fiscal
tightening, designed to meet Maastricht guidelines and monetary
easing are pulling in different directions. In the absence of an
external stimulus, such as a strengthening US dollar or generally
rising global demand, it is unlikely that core European growth will
emerge significantly stronger by year end. As a result, we believe
interest rates are likely to remain low and peripheral European
economies in general are likely to experience lower interest rates.
Most emerging markets have benefited from lower global interest
rates. The positive impetus comes from both a narrowing of sovereign
yield spreads and greater access to global liquidity via both
capital raising and foreign direct investment.
In Conclusion
International equity markets have generally responded favorably to
continued policy easing, despite a recent decline in bond yields.
While central banks retain an easy stance, equity markets are likely
to increasingly discount more distant earnings prospects. We believe
that many Pacific Basin and emerging markets offer a good prospect
of strong performance in 1996. Therefore, we intend to maintain an
overweight stance and a fully invested position in these markets. We
also believe the main risk to global equity markets stems from the
expensive valuation of the US equity market relative to US Treasury
securities. Any sign of a more rapid-than-expected US economic
growth would carry risks for most international equity markets as
well.
We thank you for your continued interest in Merrill Lynch Interna-
tional Equity Fund, and we look forward to reviewing our strategy
with you in our upcoming annual shareholder report.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
<PAGE>
(Andrew Bascand)
Andrew Bascand
Senior Portfolio Manager/
Asset Allocator
(Adrian Holmes)
Adrian Holmes
Co-Portfolio Manager
European Investments
(Grace Pineda)
Grace Pineda
Co-Portfolio Manager
Emerging Markets Investments
(Stephen I. Silverman)
Stephen I. Silverman
Co-Portfolio Manager
Pacific Basin Investments
March 29, 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:
<PAGE>
* 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 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).
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.
<TABLE>
Recent
Performance
Results
<CAPTION>
12 Month 3 Month
2/29/96 11/30/95 2/28/95 % Change % Change
<S> <C> <C> <C> <C> <C>
ML International Equity Fund Class A Shares* $11.44 $10.79 $9.65 +18.55% +6.02%
ML International Equity Fund Class B Shares* 11.29 10.67 9.62 +17.36 +5.81
ML International Equity Fund Class C Shares* 11.19 10.58 9.54 +17.30 +5.77
ML International Equity Fund Class D Shares* 11.44 10.79 9.68 +18.18 +6.02
ML International Equity Fund Class A Shares--Total Return* +18.55 +6.02
ML International Equity Fund Class B Shares--Total Return* +17.36 +5.81
ML International Equity Fund Class C Shares--Total Return* +17.30 +5.77
ML International Equity Fund Class D Shares--Total Return* +18.18 +6.02
Financial Times/S&P--Actuaries World (Ex-US) Index**--Total Return +17.30 +4.78
<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.
</TABLE>
Average Annual
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 12/31/95 +5.70% +0.15%
Inception (10/21/94) through 12/31/95 +1.02 -3.44
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 12/31/95 +4.56% +0.56%
Inception (7/30/93) through 12/31/95 +6.39 +5.63
[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 12/31/95 +4.51% +3.51%
Inception (10/21/94) through 12/31/95 -0.02 -0.02
<PAGE>
[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 12/31/95 +5.40% -0.14%
Inception (7/30/93) through 12/31/95 +7.21 +4.85
[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**
<C> <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--2/29/96 11.13 11.44 -- -- +2.79
------ ------
Total $0.091 Total $0.599
Cumulative total return as of 2/29/96: +4.04%**
<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>
<PAGE>
<TABLE>
Performance
Summary--
Class B Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
7/30/93--12/31/93 $10.00 $11.18 -- -- +11.80%
1994 11.18 10.52 $0.091 $0.490 - 0.61
1995 10.52 11.00 -- -- + 4.56
1/1/96--2/29/96 11.00 11.29 -- -- + 2.64
------ ------
Total $0.091 Total $0.490
Cumulative total return as of 2/29/96: +19.25%**
<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
reflect deduction of any sales charge; results would be lower if
sales charge was deducted.
</TABLE>
<TABLE>
Performance
Summary--
Class C Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <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--2/29/96 10.90 11.19 -- -- +2.66
------ ------
Total $0.091 Total $0.582
Cumulative total return as of 2/29/96: +2.64%**
<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>
PERFORMANCE DATA (concluded)
<PAGE>
<TABLE>
Performance
Summary--
Class D Shares***
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
7/30/93--12/31/93 $10.00 $11.21 -- -- +12.10%
1994 11.21 10.56 $0.091 $0.566 +0.18
1995 10.56 11.13 -- -- +5.40
1/1/96--2/29/96 11.13 11.44 -- -- +2.79
------ ------
Total $0.091 Total $0.566
Cumulative total return as of 2/29/96: +21.66%**
<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>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
Percent of
AFRICA Industries Shares Held Investments Cost Value Net Assets
<S> <C> <C> <S> <C> <C> <C>
South Banking 523,160 Nedcor Ltd. (GDR)(d) $ 5,570,789 $ 8,762,930 0.7%
Africa
Diversified 669,461 Malbak Ltd. (GDR)(d) 3,856,093 3,682,036 0.3
Mining 148,755 Beatrix Mines Ltd. 1,316,860 1,383,767 0.1
159,000 Driefontein Consolidated Ltd.
(ADR)(a) 2,395,717 2,424,750 0.2
263,000 Kinross Mines Ltd. 2,711,745 3,160,078 0.2
317,000 Vaal Reefs Exploration & Mining
Company, Ltd. (ADR)(a) 2,621,526 3,130,375 0.2
118,703 Western Areas Gold Mining Company,
Ltd. (ADR)(a) 1,920,749 1,973,437 0.2
-------------- -------------- ------
10,966,597 12,072,407 0.9
Total Investments in South Africa 20,393,479 24,517,373 1.9
<PAGE>
Zimbabwe Beverages 1,591,000 Delta Corporation Ltd. 2,530,373 3,532,752 0.3
Total Investments in Zimbabwe 2,530,373 3,532,752 0.3
Total Investments in Africa 22,923,852 28,050,125 2.2
EUROPE
Austria Engineering & 7,300 V.A. Technologie AG 798,071 923,398 0.1
Construction
Total Investments in Austria 798,071 923,398 0.1
Finland Banking 1,197,600 Merita Bank Ltd. (Class A) 3,757,316 3,087,142 0.2
Diversified 226,000 Outokumpu OY 3,296,280 3,634,881 0.3
Electronics 72,510 Nokia AB 3,501,245 2,524,143 0.2
Forest Products 175,400 Kymmene OY 4,977,312 4,907,861 0.4
Machinery 73,100 Rauma OY 1,317,437 1,481,713 0.1
Paper & Forest 628,100 Enso-Gutzeit OY 4,574,740 4,469,822 0.4
Products 123,000 Metsa Serla OY (Class B) 4,764,160 3,821,054 0.3
269,600 Repola OY S 4,412,103 5,399,365 0.4
-------------- -------------- ------
13,751,003 13,690,241 1.1
Total Investments in Finland 30,600,593 29,325,981 2.3
France Automobiles 52,350 Peugeot S.A. 7,547,721 7,831,726 0.6
Banking 69,200 Compagnie Financiere de Paribas 3,508,929 3,866,413 0.3
94,500 Compagnie Financiere de Suez
(Ordinary) 3,718,127 3,667,500 0.3
28,450 Societe Generale de Surveillance S.A.
(Class A) (Ordinary) 3,018,733 3,245,784 0.2
-------------- -------------- ------
10,245,789 10,779,697 0.8
<PAGE>
Building & 27,600 Compagnie de Saint-Gobain S.A. 3,264,435 3,559,524 0.3
Construction
Communication 40,200 Alcatel Alsthom Cie Generale
Equipment d'Electricite S.A. 3,848,764 3,566,155 0.3
Diversified 15,767 EuraFrance S.A. 4,887,173 6,040,888 0.5
Foods 21,200 Groupe Danone S.A. (ADR)(a) 3,367,962 3,390,317 0.3
Insurance 117,068 Assurances Generales de France
S.A. (AGF) 2,985,825 3,321,572 0.2
Steel 219,640 Usinor Sacilor S.A. 3,279,715 3,434,054 0.3
Total Investments in France 39,427,384 41,923,933 3.3
Germany Banking 17,800 Deutsche Bank AG (Ordinary) 867,216 896,597 0.1
44,498 Deutsche Bank AG (Warrants)(b) 741,059 835,189 0.1
-------------- -------------- ------
1,608,275 1,731,786 0.2
Chemicals 15,800 Bayer AG (Ordinary) 3,005,961 4,818,973 0.4
7,930 Hoechst AG 2,077,141 2,492,517 0.2
-------------- -------------- ------
5,083,102 7,311,490 0.6
Machinery & 77,450 Kloeckner Werke AG 3,951,498 2,728,263 0.2
Equipment 18,200 Mannesmann AG 4,519,528 6,503,978 0.5
-------------- -------------- ------
8,471,026 9,232,241 0.7
Utilities 14,000 Vereinigte Elektrizitaets &
Bergwerks AG (Veba) (Warrants)(b) 602,720 1,780,347 0.1
Total Investments in Germany 15,765,123 20,055,864 1.6
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
EUROPE Percent of
(continued) Industries Shares Held Investments Cost Value Net Assets
<S> <C> <C> <S> <C> <C> <C>
Greece Banking 59,180 Ergo Bank S.A. (Registered) $ 2,619,453 $ 2,780,277 0.2%
Food & Household 137,292 Hellenic Bottling Co. S.A. 2,763,631 4,906,540 0.4
Products
Total Investments in Greece 5,383,084 7,686,817 0.6
<PAGE>
Hungary Telecommunications 26,000 Magyar Tarkozlesi Reszvenytarsasag
(Ordinary) 4,349,463 4,119,428 0.3
Total Investments in Hungary 4,349,463 4,119,428 0.3
Ireland Building & 158,350 CRH PLC (Ordinary) 967,662 1,333,386 0.1
Construction
Insurance 1,217,000 Irish Life PLC 4,006,737 4,695,332 0.4
Packaging & 2,182,375 Jefferson Smurfit Group PLC (Ordinary) 6,550,090 5,304,615 0.4
Containers
Total Investments in Ireland 11,524,489 11,333,333 0.9
Italy Automobiles 1,180,000 Fiat S.p.A. (Ordinary) 3,540,591 3,717,730 0.3
Building & 671,350 Fochi Filippo S.p.A. 2,130,531 215,833 0.0
Construction
Chemicals 8,950,000 Montedison S.p.A. 6,982,245 5,495,740 0.4
Diversified 8,003,400 Compagnie Industrial Riunite
S.p.A. (CIR) 7,348,440 4,605,718 0.4
Insurance 275,000 Assicurazioni Generali S.p.A. 6,963,833 6,728,018 0.5
2,227,400 Istituto Nazionale delle
Assicurazioni S.p.A. (INA) 3,156,353 3,007,581 0.2
-------------- -------------- ------
10,120,186 9,735,599 0.7
Telecommunications 3,992,800 STET, Di Risp (Non-Convertible) 9,227,495 9,088,257 0.7
Total Investments in Italy 39,349,488 32,858,877 2.5
Netherlands Banking 90,100 ABN AMRO Bank (Ordinary) 3,018,860 4,188,279 0.3
103,970 Amev N.V. (Ordinary) 4,156,208 6,936,809 0.5
-------------- -------------- ------
7,175,068 11,125,088 0.8
Chemicals 122,815 European Vinyls Corporation
International N.V. 4,990,011 3,977,663 0.3
Electrical Equipment 120,280 Philips Industries Inc. 4,281,661 5,006,490 0.4
<PAGE>
Finance 118,450 AEGON N.V. (Ordinary) 2,485,035 5,095,862 0.4
Insurance 105,500 Internationale Nederlanden Groep N.V. 4,342,817 7,006,836 0.6
Telecommunications 81,600 Royal PTT Nederland N.V. 2,983,887 3,277,487 0.3
Transportation 60,500 KLM Royal Dutch Airlines 1,656,767 2,014,583 0.2
Total Investments in the Netherlands 27,915,246 37,504,009 3.0
Norway Oil & Gas Producers 340,000 Saga Petroleum A.S. (Class B) 3,749,345 3,802,002 0.3
Oil & Related 84,350 Norsk Hydro A.S. 3,532,985 3,601,431 0.3
Total Investments in Norway 7,282,330 7,403,433 0.6
Poland Automobiles & 97,200 T.C. Debica S.A. 1,310,106 2,298,905 0.2
Equipment
Engineering & 582,573 Mostostal-Export S.A. 1,429,067 1,753,640 0.1
Construction
Total Investments in Poland 2,739,173 4,052,545 0.3
Portugal Banking 169,800 Banco Comercial Portugues S.A.
(ADR)(a) 2,430,067 2,334,750 0.2
363,195 Banco Comercial Portugues S.A.
(Registered) 5,225,469 5,068,833 0.4
-------------- -------------- ------
7,655,536 7,403,583 0.6
Diversified 279,900 Sonae Investimentos--SGPS S.A. 6,229,495 6,299,676 0.5
Total Investments in Portugal 13,885,031 13,703,259 1.1
Spain Banking 24,500 Banco Popular Espanol (Ordinary) 2,677,926 4,466,971 0.3
Engineering & 17,550 Fomento de Construcciones Y
Construction Contratas S.A. 1,453,056 1,488,515 0.1
Oil & Related 124,550 Repsol S.A. (Ordinary) 3,730,082 4,551,795 0.4
Total Investments in Spain 7,861,064 10,507,281 0.8
<PAGE>
Sweden Appliances 102,705 Electrolux AB 4,981,607 5,043,434 0.4
Automobiles & 171,200 Volvo AB 3,137,409 3,664,568 0.3
Equipment
Engineering & 174,350 SKF AB 3,255,938 3,809,475 0.3
Construction 38,050 SKF AB 'B' Free 738,751 834,195 0.1
134,950 Svedala Industry 3,249,266 4,158,028 0.3
-------------- -------------- ------
7,243,955 8,801,698 0.7
Finance 224,475 Stadshypotek AB 3,310,941 4,522,287 0.4
Forest Products 72,800 Mo och Domsjo AB (Class B) 3,647,878 3,591,094 0.3
2,297,200 Rottneros Bruks AB 3,542,973 2,228,904 0.2
299,400 Stora Kopparbergs AB 3,864,464 3,858,533 0.3
-------------- -------------- ------
11,055,315 9,678,531 0.8
Metals & Mining 272,200 Avesta Sheffield AB 2,440,788 2,520,109 0.2
Total Investments in Sweden 32,170,015 34,230,627 2.8
Switzerland Chemicals 4,380 Ciba-Geigy AG (Registered) 2,542,081 3,911,106 0.3
Electrical Equipment 2,450 BBC Brown Boveri & Cie 2,232,646 2,933,300 0.2
Total Investments in Switzerland 4,774,727 6,844,406 0.5
Turkey Beverages 1,790,927 Erciyas Biracilik Ve Malt Sanayii A.S. 1,153,663 1,175,723 0.1
Building Materials 2,711,135 Alarko Holdings A.S. 1,405,612 1,158,959 0.1
657,152 Cimentas Izmir Cimento
Fabrikasi T A.S. 465,286 371,216 0.0
-------------- -------------- ------
1,870,898 1,530,175 0.1
Food & Household 2,041,536 Dardanel Onentas Gida A.S. 133,262 101,298 0.0
Products
Insurance 7,372,500 Aksigorta A.S. 1,407,389 1,266,269 0.1
Retail Stores 3,093,883 Migros Turk A.S. 2,111,166 3,495,379 0.3
Steel 28,599,190 Izmir Demir Celik Sanayii A.S. 1,034,318 709,522 0.1
Total Investments in Turkey 7,710,696 8,278,366 0.7
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
EUROPE Percent of
(concluded) Industries Shares Held Investments Cost Value Net Assets
<S> <C> <C> <S> <C> <C> <C>
United Automobile Parts 1,592,900 T & N PLC $ 4,060,613 $ 3,889,774 0.3%
Kingdom
Banking 648,960 Lloyds Bank PLC 3,037,529 3,234,031 0.3
Beverages 546,300 Grand Metropolitan PLC (Ordinary) 3,378,498 3,629,912 0.3
Diversified 1,397,600 Tomkins PLC 4,847,309 5,627,478 0.4
Electronics 560,000 General Electric Co. PLC (Ordinary) 2,804,260 3,169,729 0.2
Insurance 487,500 Prudential Corp. PLC 2,379,631 3,293,325 0.3
Oil & Related 350,600 British Petroleum Co., Ltd. 2,554,414 2,892,066 0.2
Pharmaceuticals 310,200 Glaxo Holdings PLC 3,684,415 4,302,147 0.3
Telecommunications 800,000 British Telecommunications PLC
(Ordinary) 4,517,489 4,559,832 0.4
559,800 Racal Electronics PLC 2,005,894 2,626,870 0.2
-------------- -------------- ------
6,523,383 7,186,702 0.6
Utilities 953,900 British Gas PLC (Ordinary) 3,591,832 3,459,372 0.3
Total Investments in the
United Kingdom 36,861,884 40,684,536 3.2
Total Investments in Europe 288,397,861 311,436,093 24.6
LATIN
AMERICA
Argentina Banking 102,500 Banco Frances del Rio de la Plata
S.A. (ADR)(a) 2,380,657 2,665,000 0.2
Telecommunications 69,000 Telecom Argentina Stet--France
Telecom S.A. (GDS)(c) 3,110,138 2,984,250 0.2
46,700 Telefonica de Argentina S.A.
(Class B) (ADR)(a) 1,137,452 1,220,038 0.1
-------------- -------------- ------
4,247,590 4,204,288 0.3
Total Investments in Argentina 6,628,247 6,869,288 0.5
<PAGE>
Brazil Banking 382,500,000 Banco Bradesco S.A. PN (Preferred) 4,430,630 4,332,021 0.3
Beverages 10,344,000 Companhia Cervejaria Brahma S.A.
PN (Preferred) 5,032,202 4,675,551 0.4
608,470 Companhia Cervejaria Brahma S.A.
PN (Rights)(e) 0 0 0.0
-------------- -------------- ------
5,032,202 4,675,551 0.4
Telecommunications 238,000 Telecomunicacoes Brasileiras
S.A.--Telebras (ADR)(a) 10,705,155 12,495,000 1.0
Total Investments in Brazil 20,167,987 21,502,572 1.7
Chile Banking 100,000 Banco O'Higgins S.A. (ADR)(a) 2,450,920 2,425,000 0.2
Telecommunications 70,800 Compania de Telefonos de Chile
S.A. (ADR)(a) 5,051,501 5,858,700 0.5
Utilities 80,000 Enersis S.A. (ADR)(a) 2,002,257 2,270,000 0.2
Total Investments in Chile 9,504,678 10,553,700 0.9
Mexico Broadcast--Media 78,000 Grupo Televisa, S.A. de C.V. (ADR)(a) 2,010,348 1,911,000 0.1
Multi-Industry 1,142,000 Grupo Carso, S.A. de C.V. 'A1' 5,802,061 7,203,961 0.6
Total Investments in Mexico 7,812,409 9,114,961 0.7
Total Investments in Latin America 44,113,321 48,040,521 3.8
MIDDLE
EAST
Israel Banking 2,099,000 Bank Hapoalim Ltd. 3,513,500 3,312,499 0.3
Engineering & 58,140 Koor Industries Ltd. 5,336,358 5,877,983 0.5
Construction
Pharmaceuticals 40,000 Teva Pharmaceutical Industries Ltd.
(ADR)(a) 1,709,853 1,720,000 0.1
Total Investments in the Middle East 10,559,711 10,910,482 0.9
<PAGE>
PACIFIC
BASIN
Australia Food Processing 2,854,919 Coca-Cola Amatil, Ltd. 15,511,554 27,489,787 2.2
Media 458,847 The News Corp., Ltd. (Ordinary) 2,356,360 2,608,843 0.2
260,450 The News Corp., Ltd. (Preferred) 1,148,701 1,313,637 0.1
-------------- -------------- ------
3,505,061 3,922,480 0.3
Merchandising 155,100 Amway Asia Pacific Ltd. 4,808,000 5,118,300 0.4
Natural Gas 191,964 Broken Hill Proprietary Co. 2,423,961 2,779,944 0.2
Property 1,421,552 Lend Lease Corp. 17,913,120 21,813,909 1.7
Total Investments in Australia 44,161,696 61,124,420 4.8
Hong Kong Banking 1,564,826 HSBC Holdings PLC 19,354,506 25,100,696 2.0
132,000 J.C.G. Holdings Ltd. 124,849 128,920 0.0
-------------- -------------- ------
19,479,355 25,229,616 2.0
Diversified 2,892,325 Hutchison Whampoa Ltd. 15,111,169 18,333,324 1.4
Insurance 698,000 National Mutual Asia Ltd. 733,581 677,197 0.1
Multi-Industry 2,136,000 Swire Pacific Ltd. (Class A) 14,470,683 18,651,040 1.5
Total Investments in Hong Kong 49,794,788 62,891,177 5.0
Japan Automobiles 1,879,000 Suzuki Motor Corp. 21,118,332 21,990,200 1.7
Beverages 139,000 Chukyo Coca-Cola Bottling Co., Ltd. 1,835,949 1,415,128 0.1
183,000 Hokkaido Coca-Cola Bottling Co.,
Ltd. (Class B) 2,818,281 2,228,735 0.2
165,000 Kinki Coca-Cola Bottling Co., Ltd. 2,625,747 2,182,207 0.2
197,000 Mikuni Coca-Cola Bottling Co., Ltd. 3,160,732 2,436,727 0.2
153,000 Sanyo Coca-Cola Bottling Co., Ltd. 2,332,375 2,139,962 0.1
12,773,084 10,402,759 0.8
-------------- -------------- ------
Capital Goods 4,072,000 Mitsubishi Heavy Industries, Ltd. 28,643,076 32,971,189 2.6
Chemicals 926,000 Shin-Etsu Chemical Co., Ltd. 19,285,491 19,031,018 1.5
Containers 906,000 Toyo Seikan Kaisha, Ltd. 27,433,696 28,188,582 2.2
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
PACIFIC BASIN Percent of
(concluded) Industries Shares Held Investments Cost Value Net Assets
<S> <C> <C> <S> <C> <C> <C>
Japan Electric Construction 380,000 Chudenko Corp. $ 13,592,350 $ 13,196,955 1.1%
(concluded) 850,000 Kinden Corp. 16,982,687 14,800,190 1.2
-------------- -------------- ------
30,575,037 27,997,145 2.3
Electrical Equipment 981,000 Murata Manufacturing Co., Ltd. 36,563,258 32,295,528 2.6
1,042,000 NEC Corporation 14,026,740 12,392,959 1.0
496,000 Rohm Co., Ltd. 20,772,534 29,495,718 2.3
-------------- -------------- ------
71,362,532 74,184,205 5.9
Engineering & 435,000 Sanki Engineering Co., Ltd 6,151,018 5,421,979 0.4
Construction 408,000 Taihei Dengyo Kaisha, Ltd. 9,664,950 6,405,328 0.5
-------------- -------------- ------
15,815,968 11,827,307 0.9
Iron & Steel 370,000 Maruichi Steel Tube, Ltd. 6,672,254 7,040,913 0.6
Office Equipment 1,792,000 Canon Inc. 31,370,583 32,907,326 2.6
Pharmaceuticals 883,000 Sankyo Co., Ltd. 19,663,821 20,331,684 1.6
633,000 Taisho Pharmaceutical Co., Ltd. 12,492,487 12,647,954 1.0
-------------- -------------- ------
32,156,308 32,979,638 2.6
Property & Casualty 2,080,000 Dai-Tokyo Fire & Marine
Insurance Insurance Co., Ltd. 15,360,286 15,139,867 1.2
851,000 Fuji Fire & Marine Insurance
Co., Ltd. 5,819,056 4,250,951 0.3
1,268,000 Koa Fire & Marine Insurance Co.,
Ltd. 8,833,667 7,468,049 0.6
742,000 Mitsui Marine & Fire Insurance
Co., Ltd. 6,045,628 5,400,856 0.4
1,696,000 Nichido Fire & Marine Insurance
Co., Ltd. 12,951,468 12,941,884 1.0
733,000 Nippon Fire & Marine Insurance
Co., Ltd. 5,400,442 4,672,788 0.4
2,124,000 Sumitomo Marine & Fire Insurance
Co., Ltd. 17,960,159 18,127,764 1.4
1,468,000 Tokio Marine & Fire Insurance Co.,
Ltd. 17,341,002 17,738,915 1.4
1,257,000 Yasuda Fire & Marine Insurance
Co., Ltd. 9,408,702 8,970,029 0.7
-------------- -------------- ------
99,120,410 94,711,103 7.4
<PAGE>
Retailing 564,000 Ito-Yokado Co., Ltd. 29,397,786 31,553,949 2.5
138,000 Sangetsu Co., Ltd. 4,742,639 3,321,979 0.3
-------------- -------------- ------
34,140,425 34,875,928 2.8
Total Investments in Japan 430,467,196 429,107,313 33.9
Malaysia Banking 854,000 Malayan Banking BHD 7,214,839 7,809,341 0.6
3,613,000 Public Bank (Malaysia) BHD 'Foreign' 8,354,420 9,429,533 0.7
-------------- -------------- ------
15,569,259 17,238,874 1.3
Leisure 397,000 Resorts World BHD 1,979,152 2,228,061 0.2
Telecommunications 701,000 Telekom Malaysia BHD 5,408,374 6,025,078 0.5
Total Investments in Malaysia 22,956,785 25,492,013 2.0
New Zealand Chemicals 60,000 Fernz Corporation Ltd. 163,272 174,442 0.0
Diversified 8,758,000 Brierley Investments Ltd. 6,775,033 7,603,433 0.6
Electronics 25,000 PDL Holdings Ltd. 140,651 141,330 0.0
Foods 878,600 Wrightson Ltd. 687,736 697,731 0.1
Foreign NZ$12,200,000 New Zealand Government Bonds,
Government 9% due 11/15/1996 (f) 7,599,617 8,235,478 0.7
Obligations
Telecommunications 698,000 Telecom Corporation of New Zealand 3,007,863 3,128,562 0.2
Textiles 281,400 Lane Walker Rudkin Industries, Ltd. 338,233 359,826 0.0
Total Investments in New Zealand 18,712,405 20,340,802 1.6
Philippines Banking 20,205 Metropolitan Bank and Trust Company 158,907 456,217 0.0
Total Investments in the Philippines 158,907 456,217 0.0
<PAGE>
Singapore Banking 485,000 Development Bank of Singapore Ltd. 6,090,429 6,904,526 0.5
Newspaper/Publishing 297,000 Singapore Press Holdings Ltd. 4,577,736 5,995,113 0.5
Real Estate 785,000 City Developments Ltd. 5,660,296 6,393,866 0.5
Total Investments in Singapore 16,328,461 19,293,505 1.5
South Korea Telecommunications 169,000 Korea Mobile Telecommunications
Corp. (GDR)(d) 7,568,688 7,943,000 0.6
Utilities 274,900 Korea Electric Power Corp. 10,807,463 11,316,828 0.9
Total Investments in South Korea 18,376,151 19,259,828 1.5
Thailand Banking 437,500 Finance One Public Co., Ltd.
'Foreign' 3,552,627 3,211,806 0.3
1,675,300 Krung Thai Bank Public Co., Ltd. 7,939,717 7,911,139 0.6
1,111,400 Phatra Thanakit Public Co., Ltd.
'Foreign' 10,496,114 10,672,968 0.8
200,400 Thai Military Bank Public Co., Ltd. 1,053,765 1,033,810 0.1
-------------- -------------- ------
23,042,223 22,829,723 1.8
Telecommunications 1,100,000 TelecomAsia Corp. Public Co., Ltd. 3,436,017 3,121,032 0.3
Total Investments in Thailand 26,478,240 25,950,755 2.1
Total Investments in the
Pacific Basin 627,434,629 663,916,030 52.4
SOUTHEAST
ASIA
India Automobiles 246,000 Ashok Leyland Ltd. (GDR)(d) 3,067,924 2,890,500 0.2
Banking 41,710 Housing Development Finance Corp., Ltd. 3,248,746 3,312,620 0.3
444,950 State Bank of India 3,083,253 3,108,201 0.2
-------------- -------------- ------
6,331,999 6,420,821 0.5
Chemicals 265,000 Reliance Industries Ltd. 1,806,744 1,634,167 0.1
139,300 Reliance Industries Ltd. (ADR)(a) 2,581,221 1,950,200 0.2
-------------- -------------- ------
4,387,965 3,584,367 0.3
Textiles 146,000 JCT Ltd. (GDR)(d) 2,597,436 1,022,000 0.1
62,000 Raymond Woolen Mills Ltd. (GDR)(d) 978,125 1,286,500 0.1
-------------- -------------- ------
3,575,561 2,308,500 0.2
Total Investments in India 17,363,449 15,204,188 1.2
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
SOUTHEAST ASIA Percent of
(concluded) Industries Shares Held Investments Cost Value Net Assets
<S> <C> <C> <S> <C> <C> <C>
Indonesia Food & Household 1,285,000 P.T. Wicaksana Overseas
International $ 2,158,799 $ 3,607,991 0.3%
Products
Telecommunications 84,830 P.T. Indonesian Satellite Corp.
(ADR)(a) 2,946,781 3,170,521 0.2
2,980,000 P.T. Kabelmetal Indonesia 3,771,842 2,671,058 0.2
84,500 P.T. Telekumunikasi Indonesia
(ADR)(a) 1,933,495 2,651,188 0.2
-------------- -------------- ------
8,652,118 8,492,767 0.6
Tobacco 127,000 P.T. Hanjaya Mandala Sampoerna 1,319,321 1,386,577 0.1
Total Investments in Indonesia 12,130,238 13,487,335 1.0
Total Investments in Southeast Asia 29,493,687 28,691,523 2.2
SHORT-TERM Face
SECURITIES Amount Issue
Commercial US$ 59,400,000 General Electric Capital Corp.,
Paper* 5.42% due 3/01/1996 59,400,000 59,400,000 4.7
7,000,000 Transamerica Corp., 5.19% due
4/01/1996 6,968,716 6,968,716 0.5
Total Investments in Commercial Paper 66,368,716 66,368,716 5.2
<PAGE>
Foreign C$ 18,050,000 Canadian Treasury Bills, 5.1087%
Government due 5/09/1996 (f) 13,080,765 13,019,965 1.0
Obligations* ZAL 45,460,000 South African Treasury Bills, 13.878%
due 5/17/1996 12,098,488 11,406,936 1.0
Pound 8,575,000 United Kingdom Treasury Bills, 6%
Sterling due 4/09/1996 (f) 13,095,337 13,044,304 1.0
Total Investments in
Foreign Government Obligations 38,274,590 37,471,205 3.0
US Government United States Treasury Bills (f):
Obligations* US$ 380,000 4.45% due 4/25/1996 377,417 377,163 0.0
600,000 4.73% due 4/25/1996 595,664 595,520 0.0
180,000 4.865% due 4/25/1996 178,662 178,656 0.0
17,000,000 4.96% due 4/25/1996 16,871,178 16,873,061 1.4
14,500,000 4.98% due 4/25/1996 14,389,679 14,391,729 1.2
Total Investments in
US Government Obligations 32,412,600 32,416,129 2.6
Total Investments in
Short-Term Securities 137,055,906 136,256,050 10.8
OPTIONS Number of Contracts/ Premiums
PURCHASED Face Amount Paid
Call Options 74,000 Nikkei, expiring May 1996 at
Purchased YEN 18,388 753,023 1,272,293 0.1
3,655 NZ Top Ten, expiring August 1996
at YEN 10,900 180,690 130,352 0.0
32,400 OMX, expiring April 1996 at Skr 1,491 166,372 158,352 0.0
-------------- -------------- ------
1,100,085 1,560,997 0.1
Currency Put 22,000,000 French Franc, expiring April 1996
Options Purchased at Frf 5.02 267,300 325,600 0.0
120,000,000 Japanese Yen, expiring June 1996
at YEN 108 1,062,000 1,416,000 0.1
51,000,000 Japanese Yen, expiring September
1996 at YEN 105 1,198,500 1,326,000 0.1
-------------- -------------- ------
2,527,800 3,067,600 0.2
Total Options Purchased 3,627,885 4,628,597 0.3
Total Investments 1,163,606,852 1,231,929,421 97.2
OPTIONS Premiums
WRITTEN Received
<PAGE>
Call Options 32,400 OMX, expiring April 1996 at
Written Skr 1,491 (258,502) (158,353) 0.0
Put Options 3,655 NZ Top Ten, expiring August 1996
Written at YEN 10,900 (85,749) (108,261) 0.0
Total Options Written (344,251) (266,614) 0.0
Total Investments, Net of Options Written $1,163,262,601 1,231,662,807 97.2
==============
Variation Margin on Financial Futures Contracts** 370,140 0.0
Unrealized Appreciation on Forward Foreign Exchange Contracts*** 673,671 0.1
Other Assets Less Liabilities 33,989,114 2.7
-------------- ------
Net Assets $1,266,695,732 100.0%
============== ======
Net Asset Value: Class A--Based on net assets of $106,886,183 and
9,342,419 shares outstanding $ 11.44
==============
Class B--Based on net assets of $940,993,413 and
83,351,580 shares outstanding $ 11.29
==============
Class C--Based on net assets of $42,098,689 and
3,762,573 shares outstanding $ 11.19
==============
Class D--Based on net assets of $176,717,447 and
15,448,793 shares outstanding $ 11.44
==============
<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)The rights may be exercised until 3/28/1996.
(f)Securities held as collateral in connection with open financial
futures contracts.
*Commercial Paper and certain Foreign 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 February 29, 1996 were
as follows:
<PAGE>
Number of Expiration
Contracts Issue Exchange Date Value
182 CAC 40 MATIF March 1996 $14,401,111
21 FTSE 100 LIFFE March 1996 2,990,847
352 Tokyo-Topix TFE March 1996 52,113,416
Total Financial Futures Contracts Purchased
(Total Contract Price--$67,505,324) $69,505,374
===========
***Forward foreign exchange contracts as of February 29, 1996 were
as follows:
Foreign Unrealized
Currency Expiration Appreciation
Purchased Date (Depreciation)
Frf 66,626,763 April 1996 $ (101,484)
MYR 6,248,089 March 1996 (3,533)
YEN 20,810,453,840 April 1996 (2,094,626)
Total (US$ Commitment--$217,258,528) $(2,199,643)
===========
Foreign Currency Sold
C$ 18,050,000 May 1996 $ (136,038)
Chf 9,565,600 April 1996 (16,197)
Frf 88,727,200 April 1996 108,015
NZ$ 19,421,102 April 1996 (7,166)
YEN 22,871,513,802 April 1996 2,924,700
Total (US$ Commitment--$273,787,918) $ 2,873,314
-----------
Total Unrealized Appreciation--Net on
Forward Foreign Exchange Contracts $ 673,671
===========
</TABLE>
EQUITY PORTFOLIO CHANGES
For the Quarter Ended February 29, 1996
<PAGE>
Additions
Banco Bradesco S.A. PN (Preferred)
Banco O'Higgins S.A. (ADR)
British Gas PLC (Ordinary)
British Telecommunications PLC
(Ordinary)
Companhia Cervejaria Brahma S.A. PN
(Preferred)
Companhia Cervejaria Brahma S.A. PN
(Rights)
Deutsche Bank AG (Ordinary)
Deutsche Bank AG (Warrants)
Fernz Corporation Ltd.
Finance One Public Co., Ltd. 'Foreign'
Fomento de Construcciones Y Contratas
S.A.
Groupe Danone S.A. (ADR)
Grupo Televisa S.A. de C.V. (ADR)
Hoechst AG
Istituto Nazionale delle Assicurazioni
S.p.A. (INA)
J.C.G. Holdings Ltd.
Krung Thai Bank Public Co., Ltd.
National Mutual Asia Ltd.
Nokia AB
PDL Holdings Ltd.
Royal PTT Nederland N.V.
State Bank of India
TelecomAsia Corp. Public Co., Ltd.
Teva Pharmaceutical Industries Ltd.
(ADR)
Thai Military Bank Public Co., Ltd.
Deletions
Advanced Semiconductor Engineering
Inc. (GDR)
Akzo N.V. (Ordinary)
BTR PLC (Ordinary)
China Light & Power Co., Ltd.
Driefontein Consolidated Ltd.
First Ireland Investment Co.
Hocheng Group Corp. (ADR)
Jurong Shipyard Ltd.
Kansallis-Osake-Pankki
Korea Mobile Telecommunications Corp.
Malaysian International Shipping Co.
BHD
<PAGE>
Metropolitan Bank and Trust Company
(New Shares)
Nedcor Ltd. (Warrants)
The Nippon Signal Co., Ltd.
P.T. Tambang Timah (GDR)
Petroleo Brasileiro S.A. (Preferred)
Pick Szeged Reszvenytarsasag (GDR)
Pick Szeged Reszvenytarsasag (Ordinary)
Roche Holding Genusschein AG
Scitex Corporation Ltd.
Societe Nationale Elf Aquitane
Tate & Lyle PLC (Ordinary)
Thai Farmers Bank Co., Ltd. 'Foreign'
Videocon International Ltd. (GDR)
Vodafone Group PLC
Western Areas Gold Mining
Company, Ltd.
PORTFOLIO INFORMATION
Worldwide
Investments as of
February 29, 1996
Ten Largest Industries Percent of
(Equity Investments) Net Assets
Banking 11.2%
Property & Casualty Insurance 7.4
Electrical Equipment 6.5
Telecommunications 5.9
Diversified 4.4
Chemicals 3.4
Pharmaceuticals 3.0
Automobiles 2.8
Retailing 2.8
Capital Goods 2.6
<PAGE>
Percent of
Ten Largest Equity Holdings Net Assets
Mitsubishi Heavy Industries, Ltd. 2.6%
Canon Inc. 2.6
Murata Manufacturing Co., Ltd. 2.6
Ito-Yokado Co., Ltd. 2.5
Rohm Co., Ltd. 2.3
Toyo Seikan Kaisha, Ltd. 2.2
Coca-Cola Amatil, Ltd. 2.2
HSBC Holdings PLC 2.0
Suzuki Motor Corp. 1.7
Lend Lease Corp. 1.7
Percent of
Ten Largest Countries Net Assets
Japan 33.9%
Hong Kong 5.0
Australia 4.8
France 3.3
United Kingdom 3.2
Netherlands 3.0
Sweden 2.8
Italy 2.5
Finland 2.3
Thailand 2.1
Percent of
Asset Mix* Net Assets
Japan 33.9%
Europe(Ex-United Kingdom
and Ireland) 20.5
Pacific Basin (Ex-Japan) 18.5
Cash 10.8
Other Emerging Markets 9.1
United Kingdom and Ireland 4.1
[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
France CAC 40 MATIF 1.1%
Japan Tokyo-Topix TFE 4.1
United Kingdom FTSE 100 LIFFE 0.2
-----
5.4%
=====
<PAGE>
OFFICERS AND TRUSTEES
Arthur Zeikel, President and Trustee
Donald Cecil, Trustee
Edward H. Meyer, Trustee
Charles C. Reilly, Trustee
Richard R. West, Trustee
Edward D. Zinbarg, Trustee
Terry K. Glenn, Executive Vice President
Norman R. Harvey, Senior
Vice President
Andrew John Bascand, Vice President
Donald C. Burke, Vice President
Adrian Holmes, Vice President
Grace Pineda, Vice President
Stephen I. Silverman, Vice President
Gerald M. Richard, Treasurer
Michael J. Hennewinkel, Secretary
Custodian
Brown Brothers Harriman & Co.
40 Water Street
Boston, Massachusetts 02109
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.
<PAGE>
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.
