MERRILL LYNCH
INTERNATIONAL
EQUITY FUND
FUND LOGO
Quarterly Report
February 28, 1997
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
Total Return in US
Dollars* of the Fund's
Top Ten Country Positions
For the Three-Month Period
Ended February 28, 1997
A bar chart illustrating the following percentages:
<PAGE>
Japan -15.6%
Hong Kong - 2.9%
Australia - 1.3%
United Kingdom - 3.9%
Sweden + 4.1%
France + 4.2%
Germany + 4.8%
Netherlands + 5.9%
Malaysia + 9.1%
Mexico +15.5%
Source: Financial Times/S&P--Actuaries Index.
[FN]
*For the three-month period ended February 28, 1997, total
investment return in US dollars for the Financial Times/S&P--
Actuaries World (Ex-US) Index was -2.77%.
DEAR SHAREHOLDER
International equity markets generally continued to provide strong
returns, buoyed by low interest rates and the continued
diversification of US investors, especially into emerging markets.
For example, during the three months ended February 28, 1997, the
International Finance Corporation's Investables Index (an unmanaged
broad emerging markets index) returned +12.8%, in US dollar terms.
European equity market returns were strong in local currency terms,
with many markets rising by 15%. However, European currencies
declined significantly against the US dollar. As a result, European
markets only returned +4.1% in US dollar terms during the February
quarter. In contrast to other markets, the Japanese equity market
declined, particularly in January, in response to a sharp fall in
bank share prices. Although many large Japanese manufacturing
companies performed well during the February quarter, Japanese share
returns were -15.7% in US dollar terms.
During the February quarter, the Japanese, European and emerging
markets' overall market capitalization-weighted return was -2.8%, in
US dollars, according to the unmanaged Financial Times/ Standard &
Poor's--Actuaries World (Ex-US) Index for international equity
markets. In sharp contrast to the decline in the benchmark return,
Merrill Lynch International Equity Fund's Class A, Class B, Class C
and Class D Shares returned +2.31%, +2.02%, +2.09% and +2.26%,
respectively, during the three months ended February 28, 1997.
(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 outperformance for the
period reflected several factors, including:
<PAGE>
* Significant gains in several large-capitalization Japanese
manufacturing stocks, which outperformed the Japanese market.
* An overweighted position in emerging equity markets--particularly
Turkey, Brazil and India--which all performed strongly.
* Small hedges out of the yen and Deutschemark into the US dollar.
Investment Process Changes
In January 1997, Merrill Lynch International Equity Fund instituted
a change in the management of the Fund. In mid-February, direction
of the Fund's Japanese stock analysis shifted to Helen Gorton,
Director of Japanese Investments, and her team. She has managed
Japanese assets for the past ten years, and for the last two years
with Merrill Lynch Asset Management, L.P.
As part of the management change, we will use a new index for
monitoring Japanese stock performance--the unmanaged Goldman Sachs
Cross-Holdings Adjusted (GSCA) Index--which adjusts Japanese market
weights for extensive cross-holdings among companies in Japan. The
GSCA Index significantly reduces the effective benchmark weight of
Japanese banks in a neutral Japanese portfolio.
At the same time, we modified the Fund's investment decision-making
process to emphasize adding value primarily by effecting strategic
asset allocations among countries. We will also seek to generally
maintain a strategic overweighting in emerging and smaller markets.
Finally, we will use a combination of quantitative and fundamental
investment techniques to select stocks in larger, developed equity
markets such as Japan, the United Kingdom, Germany, France and
Australia.
Investment Activity
At February quarter-end, the Fund's effective equity exposure was
approximately 90% of net assets, up slightly from 88% three months
earlier. Most of the incremental investment in equities occurred in
emerging markets where, despite taking profits on stocks in Turkey,
Greece and Brazil, the Fund's aggregate equity exposure rose to 19%
of net assets. We also purchased a so-called look-back option in
Japan, which provides exposure to the Japanese market at the lowest
point it reaches before early April 1997. Currently, the Fund has an
additional 2% exposure at levels around 17,100 on the Nikkei 225.
Additionally, the Fund's management change resulted in significant
reductions in the holdings of a number of large Japanese export-
oriented companies such as Rohm Co., Ltd., Murata Manufacturing Co.,
Ltd., and Canon Inc. Many of these stocks rose sharply during the
quarter ended November 30, 1996, in significant contrast to the
overall Japanese market. At the end of February, the Fund's
effective Japanese exposure was approximately 31% of net assets,
down from 33% three months earlier.
<PAGE>
In Europe, we reduced the Fund's weighting in Italy, following
significant outperformance in January. Part of the Italian exposure
reduction reflected the partial sale of holdings in STET, Di Risp.
We also reduced the Fund's exposure in Spain.
Economic and Investment
Environment
We believe that global economic activity is accelerating; the
February quarter's data strengthened our view. The latest US
National Association of Purchasing Managers' business survey
continued to suggest that business activity is expanding above trend
growth rates. US employment growth was also robust, causing rapid
income expansion, which lifted retail and vehicle sales and
maintained a high level of residential building. In addition, the US
Conference Board's consumer confidence index hit a nine-year high in
January.
Against that background, and combined with the very significant
narrowing of equity and non-investment grade debt yields, US Federal
Reserve Board Chairman Alan Greenspan twice suggested that the
benign low-inflation/moderate growth scenario may be nearing an end.
US financial futures markets were discounting a 25 basis point
(0.25%) rise in US interest rates, and US bond yields rose recently.
In fact, the Federal Reserve Board did raise the Federal funds rate
0.25% on March 25, 1997. As a result, our expected medium-term
returns for US equities declined significantly.
The significant rise in many European equity markets also reduced
our return expectations in Europe compared with three months ago.
Specifically, in Germany, we saw a more rapid acceleration of
business activity than expected. The sharp decline of the
Deutschemark appeared to have caused an improvement in export
orders. We doubt whether German interest rates will be lowered
further and, despite potential upward revisions to corporate
earnings forecasts, we are more cautious on the German equity
market. Similarly, our return targets in several peripheral European
markets for 1997 were already met. The convergence of bond yields in
Spain and Italy with the core European markets carried these equity
markets significantly higher. Equity valuations are now generally
mildly expensive in Europe. Having reduced our peripheral European
equity market exposure, we expect to remain underweighted in Europe
overall.
In contrast, emerging markets' equity valuations generally remain
fair and offer relative attraction compared with Europe.
Specifically, our focus is on Chile, India, Korea and Argentina. We
are also significantly invested in several larger markets such as
Mexico, Malaysia and Brazil. In these latter markets, following
recent exceptional performance, we may move to reduce our exposures
should equity prices move higher. We might also upgrade our outlooks
for South Africa and the underperforming Thailand equity market.
<PAGE>
Looking ahead over the next six months, key issues for all equity
markets will be investor response to a continued firming of US
interest rates and a slowdown in Japanese foreign bond and equity
buying. Both factors could serve to dampen recently strong foreign
investment flows to Europe and emerging markets. In this
environment, portfolios focused on medium-term value, as opposed to
earnings growth and price momentum, may outperform. We may retain
larger than usual cash balances to provide a buffer in the face of a
possible global market correction.
In Conclusion
We remain positive on the medium-term potentials for most
international equity markets. Going forward, the investment process
for Merrill Lynch International Equity Fund will concentrate on
adding value primarily through appropriate country selection and
secondly by selecting portfolios of stocks in larger markets through
a combination of fundamental and quantitative analysis.
We thank you for your continued interest in Merrill Lynch
International Equity Fund, and we look forward to reviewing our
strategy and performance with you in our next report to
shareholders.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Andrew Bascand)
Andrew Bascand
Vice President and
Senior Portfolio Manager
<PAGE>
April 11, 1997
Andrew Bascand is the portfolio manager of Merrill Lynch
International Equity Fund (the "Fund") and will be responsible for
all aspects of the day-to-day portfolio management of the Fund. Mr.
Bascand was previously the Fund's asset allocator and co-portfolio
manager. Decisions concerning security selection, as well as asset
allocation, will be centralized under Mr. Bascand's supervision in
London.
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.
<PAGE>
* 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>
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
1996 11.13 11.33 0.288 0.286 + 7.01
1/1/97--2/28/97 11.33 11.65 -- -- + 2.82
------ ------
Total $0.379 Total $0.885
Cumulative total return as of 2/28/97: +11.38%**
<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>
<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
1996 11.00 11.22 0.288 0.142 + 5.95
1/1/97--2/28/97 11.22 11.52 -- -- + 2.67
------ ------
Total $0.379 Total $0.632
Cumulative total return as of 2/28/97: +26.40%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the ex-dividend date, and do not
reflect deduction of any sales charge; results would be lower if
sales charge was deducted.
</TABLE>
<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
1996 10.90 11.08 0.288 0.178 + 5.97
1/1/97--2/28/97 11.08 11.38 -- -- + 2.71
------ ------
Total $0.379 Total $0.760
Cumulative total return as of 2/28/97: +8.82%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the ex-dividend date, and do not
reflect deduction of any sales charge; results would be lower if
sales charge was deducted.
</TABLE>
<PAGE>
<TABLE>
Performance
Summary--
Class D Shares***
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<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
1996 11.13 11.35 0.288 0.250 + 6.87
1/1/97--2/28/97 11.35 11.66 -- -- + 2.73
------ ------
Total $0.379 Total $0.816
Cumulative total return as of 2/28/97: +29.95%**
<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
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>
PERFORMANCE DATA (concluded)
<TABLE>
Recent
Performance
Results
<CAPTION>
12 Month 3 Month
2/28/97 11/30/96 2/28/96 % Change % Change
<S> <C> <C> <C> <C>
ML International Equity Fund Class A Shares* $11.65 $11.97 $11.44 +4.46%(1) -0.17%(1)
ML International Equity Fund Class B Shares* 11.52 11.73 11.29 +4.69(1) +0.76(1)
ML International Equity Fund Class C Shares* 11.38 11.62 11.19 +4.37(1) +0.51(1)
ML International Equity Fund Class D Shares* 11.66 11.95 11.44 +4.54(1) +0.08(1)
ML International Equity Fund Class A Shares--Total Return* +7.05(2) +2.31(2)
ML International Equity Fund Class B Shares--Total Return* +5.99(3) +2.02(3)
ML International Equity Fund Class C Shares--Total Return* +6.02(4) +2.09(4)
ML International Equity Fund Class D Shares--Total Return* +6.81(5) +2.26(5)
Financial Times/S&P--Actuaries World (Ex-US) Index**--Total Return +4.17 -2.77
<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 $0.288 per share capital
gains distributions.
(2)Percent change includes reinvestment of $0.286 per share ordinary
income dividends and $0.288 per share capital gains distributions.
(3)Percent change includes reinvestment of $0.142 per share ordinary
income dividends and $0.288 per share capital gains distributions.
(4)Percent change includes reinvestment of $0.178 per share ordinary
income dividends and $0.288 per share capital gains distributions.
(5)Percent change includes reinvestment of $0.250 per share ordinary
income dividends and $0.288 per share capital gains distributions.
</TABLE>
Average Annual
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 12/31/96 +7.01% +1.40%
Inception (10/21/94) through 12/31/96 +3.71 +1.19
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 12/31/96 +5.95% +1.95%
Inception (7/30/93) through 12/31/96 +6.26 +6.01
[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**
<PAGE>
Class C Shares*
Year Ended 12/31/96 +5.97% +4.97%
Inception (10/21/94) through 12/31/96 +2.67 +2.67
[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 12/31/96 +6.87% +1.26%
Inception (7/30/93) through 12/31/96 +7.11 +5.43
[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 $ 8,894,747 1.0%
Africa
Beverages 85,044 South African Breweries Ltd. 2,451,796 2,543,727 0.3
Entertainment 2,100,000 Sun International (South Africa),
Ltd. 2,598,413 1,406,250 0.2
Mining 54,000 Anglo American Corp. of South
Africa, Ltd. 3,636,072 3,405,134 0.4
65,200 Anglo American Corp. of South
Africa, Ltd. (ADR) (a) 4,274,593 4,099,450 0.5
183,616 Evander Gold Mines Ltd. 1,861,029 1,147,600 0.1
-------------- -------------- ------
9,771,694 8,652,184 1.0
Total Investments in South Africa 20,442,777 21,496,908 2.5
<PAGE>
Zimbabwe Beverages 3,022,190 Delta Corporation Ltd. 1,651,465 4,734,855 0.5
Total Investments in Zimbabwe 1,651,465 4,734,855 0.5
Total Investments in Africa 22,094,242 26,231,763 3.0
Europe
Czech Broadcast--Media 42,500 Central European Media
Republic Enterprises Ltd. (Class A) 1,168,750 1,413,125 0.2
Total Investments in the Czech
Republic 1,168,750 1,413,125 0.2
Finland Diversified 109,783 Outokumpu OY 1,682,283 1,942,058 0.2
Paper & Forest 293,237 Enso OY (Class A) 2,350,596 2,535,392 0.3
Products 615,000 Metsa Serla OY (Class B) 4,764,160 5,134,066 0.6
171,331 UPM-Kymmene Corporation 3,365,894 3,596,143 0.4
-------------- -------------- ------
10,480,650 11,265,601 1.3
Total Investments in Finland 12,162,933 13,207,659 1.5
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
EUROPE Shares Held/ Percent of
(continued) Industries Face Amount Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
France Automobiles 26,176 Peugeot S.A. $ 3,858,416 $ 2,893,898 0.3%
Banking 32,200 Compagnie Financiere de Paribas 1,632,768 2,191,872 0.3
28,450 Societe Generale de Surveillance
S.A. (Class A) (Ordinary) 3,018,733 3,295,078 0.4
-------------- -------------- ------
4,651,501 5,486,950 0.7
Communication 42,381 Alcatel Alsthom Cie Generale
Equipment d'Electricite S.A. 4,039,604 4,350,774 0.5
Engineering & 38,440 Bouygues S.A. 3,774,027 3,669,625 0.4
Construction
Financial Services 13,267 EuraFrance S.A. 4,130,839 6,262,741 0.7
Foods 21,200 Groupe Danone S.A. (ADR) (a) 3,367,962 3,214,320 0.4
<PAGE>
Hotels 16,473 Accor S.A. 2,304,471 2,266,356 0.3
Oil & Related 46,240 Elf Aquitaine S.A. 3,404,045 4,422,357 0.5
Semiconductors 22,835 SGS-Thomson Microelectronics N.V. 1,061,477 1,500,694 0.2
Steel 234,743 Usinor Sacilor S.A. 3,502,481 3,625,056 0.4
Total Investments in France 34,094,823 37,692,771 4.4
Germany Airlines 70,005 Deutsche Lufthansa AG 987,685 928,426 0.1
Automobiles 10,657 Volkswagen AG 4,004,435 5,161,294 0.6
Banking 44,697 Commerzbank AG 1,019,659 1,149,049 0.1
17,800 Deutsche Bank AG (Ordinary) 867,216 923,197 0.1
-------------- -------------- ------
1,886,875 2,072,246 0.2
Chemicals 21,132 Henkel KGaA 907,822 1,080,998 0.1
105,623 Henkel KGaA (Preferred) 4,461,609 5,628,224 0.7
-------------- -------------- ------
5,369,431 6,709,222 0.8
Diversified 18,475 Thyssen AG 3,411,101 3,917,050 0.5
Engineering & 8,315 Philipp Holzmann AG 3,181,247 2,515,669 0.3
Construction
Insurance 1,420 Allianz AG Holding (Ordinary) 2,513,117 2,761,812 0.3
Machinery & 77,450 Kloeckner Werke AG 3,951,498 4,860,687 0.6
Equipment
Metals 4,850 Degussa AG 1,738,447 2,067,496 0.2
Retail 9,695 Karstadt AG 3,783,415 3,168,526 0.4
Total Investments in Germany 30,827,251 34,162,428 4.0
Greece Banking 46,313 Ergo Bank S.A. (Registered) 1,776,572 2,727,116 0.3
Food & Household 77,292 Hellenic Bottling Co. S.A. 1,585,390 2,553,636 0.3
Products
Total Investments in Greece 3,361,962 5,280,752 0.6
<PAGE>
Hungary Telecommuni- 20,100 Magyar TarKzlesi
cations Reszvenytarsasag (Ordinary) 3,195,621 6,524,487 0.8
Total Investments in Hungary 3,195,621 6,524,487 0.8
Ireland Insurance 319,474 Irish Life PLC 1,064,280 1,617,026 0.2
Packaging & 801,296 Jefferson Smurfit Group PLC
Containers (Ordinary) 2,495,283 2,021,369 0.2
Total Investments in Ireland 3,559,563 3,638,395 0.4
Italy Building Products 455,481 Italcementi S.p.A. 2,529,683 2,472,965 0.3
Chemicals 4,166,772 Montedison S.p.A. 4,239,042 3,008,161 0.3
Diversified 2,558,117 Compagnie Industrial Riunite
S.p.A. (CIR) 2,211,685 1,701,486 0.2
Insurance 2,065,900 Istituto Nazionale delle
Assicurazioni S.p.A. (INA) 2,935,224 2,701,722 0.3
Publishing 1,924,400 Seat S.p.A. 535,560 445,260 0.0
Telecommunications 1,166,821 STET, Di Risp (Non-Convertible) 2,519,979 4,080,687 0.5
Tire & Rubber Lit 4,131,384,400 Pirelli S.p.A., 5% due 12/31/1998
(Convertible) 2,910,789 3,129,300 0.4
Total Investments in Italy 17,881,962 17,539,581 2.0
Netherlands Chemicals 20,380 Akzo Nobel N.V. 2,518,949 2,935,501 0.3
122,815 European Vinyls Corporation
International N.V. 4,990,011 3,460,397 0.4
-------------- -------------- ------
7,508,960 6,395,898 0.7
Diversified 22,700 Internatio-Muller N.V. 501,925 686,212 0.1
Electronics 117,250 Philips Electronics N.V. 4,232,479 5,291,934 0.6
Insurance 214,805 Internationale Nederlanden
Groep N.V. 5,650,900 8,314,813 1.0
Packaging & 57,365 Koninklijke KNP BT N.V. 1,340,617 1,311,165 0.2
Containers
Transportation 60,500 KLM Royal Dutch Airlines 1,656,767 1,854,382 0.2
Total Investments in the
Netherlands 20,891,648 23,854,404 2.8
<PAGE>
Norway Consumer Goods 18,744 Orkla A.S. (Class A) 1,035,043 1,502,570 0.2
Oil & Gas 72,875 Saga Petroleum A.S. (Class B) 801,866 1,119,689 0.1
Producers
Total Investments in Norway 1,836,909 2,622,259 0.3
Poland Automobiles & 97,200 T.C. Debica S.A. 1,310,106 2,892,479 0.3
Equipment
Engineering & 660,503 Mostostal-Export S.A. 1,679,914 1,727,935 0.2
Construction 660,503 Mostostal-Export S.A. (Rights) (b) 0 30,239 0.0
-------------- -------------- ------
1,679,914 1,758,174 0.2
Total Investments in Poland 2,990,020 4,650,653 0.5
Portugal Diversified 114,687 Sonae Investimentos--SGPS S.A. 2,803,713 3,643,666 0.4
Total Investments in Portugal 2,803,713 3,643,666 0.4
Russia Natural Gas 68,000 RAO Gazprom (ADR) (a) 1,071,000 1,183,200 0.1
Total Investments in Russia 1,071,000 1,183,200 0.1
Spain Banking 48,150 Corporacion Bancaria de Espana
S.A. (Argentina) 2,057,222 1,928,688 0.2
Engineering & 15,418 Fomento de Construcciones Y
Construction Contratas S.A. 1,273,761 1,333,071 0.2
Total Investments in Spain 3,330,983 3,261,759 0.4
</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>
Sweden Electrical 85,205 Electrolux AB $ 4,104,428 $ 5,332,419 0.6%
Engineering & 63,300 SKF AB 1,122,067 1,495,076 0.2
Construction 65,751 Svedala Industry 863,453 1,289,751 0.1
-------------- -------------- ------
1,985,520 2,784,827 0.3
<PAGE>
Forest Products 79,683 Mo och DomsjAB (Class B) 2,117,827 2,530,632 0.3
1,912,200 Rottneros Bruks AB 2,952,746 2,232,686 0.3
159,206 Stora Kopparbergs AB 2,131,701 2,177,557 0.2
-------------- -------------- ------
7,202,274 6,940,875 0.8
Insurance 128,100 Skandia Forsakrings AB 3,010,385 3,897,358 0.5
Metals & Mining 188,686 Avesta Sheffield AB 1,710,791 1,913,549 0.2
Pharmaceuticals 36,996 Astra AB (Class A) 1,611,955 1,777,230 0.2
Total Investments in Sweden 19,625,353 22,646,258 2.6
Switzerland Banking 59,955 CS Holding AG (Registered Shares) 6,114,753 6,390,946 0.7
Chemicals 2,660 Clariant AG (Registered Shares) 887,977 1,271,217 0.1
Diversified 59,691 Oerlikon-Buehrle Holding AG 6,330,109 5,745,744 0.7
Leisure 3,682 Fotolabo S.A. 1,529,233 1,295,389 0.2
Machinery 2,030 Saurer AG (Registered Shares) 896,525 963,259 0.1
Total Investments in Switzerland 15,758,597 15,666,555 1.8
Turkey Beverages 24,833,308 Erciyas Biracilik Ve Malt
Sanayii A.S. 4,082,497 2,677,963 0.3
Total Investments in Turkey 4,082,497 2,677,963 0.3
United Beverages 546,300 Grand Metropolitan PLC (Ordinary) 3,378,498 4,032,083 0.5
Kingdom 169,650 Matthew Clark PLC 1,745,135 878,015 0.1
-------------- -------------- ------
5,123,633 4,910,098 0.6
Chemicals 153,758 Imperial Chemical Industries PLC
(Ordinary) 1,857,212 1,895,577 0.2
430,500 Inspec Group PLC 1,300,917 1,240,131 0.2
-------------- -------------- ------
3,158,129 3,135,708 0.4
<PAGE>
Computer Services 119,824 Misys PLC 1,480,177 2,398,667 0.3
Food & Beverage 262,963 Allied Domecq PLC (Ordinary) 1,822,184 1,870,239 0.2
335,221 Cadbury Schweppes PLC 2,597,814 2,768,779 0.3
-------------- -------------- ------
4,419,998 4,639,018 0.5
Food Processing 1,280,440 ASDA Group PLC 2,375,405 2,327,526 0.3
185,920 Unilever PLC 3,433,145 4,770,249 0.6
-------------- -------------- ------
5,808,550 7,097,775 0.9
Insurance 369,500 Prudential Corp. PLC 1,819,995 3,433,773 0.4
Pharmaceuticals 202,650 Glaxo Wellcome PLC 2,630,976 3,430,054 0.4
Retail 506,000 Tesco PLC (Ordinary) 2,169,743 2,791,716 0.3
Telecommunications 367,847 Cable & Wireless PLC 2,494,012 2,984,375 0.3
Utilities--Water 256,700 Anglian Water PLC 2,217,039 2,707,210 0.3
232,700 Severn Trent PLC 2,211,107 2,719,204 0.3
255,000 Thames Water PLC 2,226,873 2,851,136 0.3
244,500 United Utilities PLC 2,244,875 2,638,234 0.3
230,750 Yorkshire Water PLC 2,206,652 2,700,173 0.3
-------------- -------------- ------
11,106,546 13,615,957 1.5
Total Investments in the United
Kingdom 40,211,759 48,437,141 5.6
Total Investments in Europe 218,855,344 248,103,056 28.7
LATIN
AMERICA
Argentina Banking 143,854 Banco Frances del Rio de la Plata
S.A. (ADR) (a) 3,114,005 4,117,821 0.4
Oil & Related 658,600 Companhia Naviera Perez Companc
S.A.C.F.I.M.F.A. (Class B) 4,060,515 5,047,198 0.6
Telecommunications 46,700 Telefonica de Argentina S.A.
(Class B) (ADR) (a) 1,137,452 1,476,887 0.2
Total Investments in Argentina 8,311,972 10,641,906 1.2
<PAGE>
Brazil Banking 352,550,000 Banco Bradesco S.A. PN (Preferred) 2,796,651 2,952,174 0.4
Beverages 5,604,000 Companhia Cervejaria Brahma S.A.
PN (Preferred) 2,735,390 3,738,133 0.4
Telecommunications 140,768 Telecomunicaoes Brasileiras S.A.
--Telebras (ADR) (a) 6,821,597 13,654,496 1.6
Utilities 43,485 Companhia Energetica de Minas
Gerais S.A. ( CEMIG) (ADR) (a) 1,125,579 1,744,836 0.2
Total Investments in Brazil 13,479,217 22,089,639 2.6
Chile Telecommunications 224,506 Compania de Telecomunicaciones de
Chile S.A. (ADR) (a) 3,756,222 6,566,800 0.8
Total Investments in Chile 3,756,222 6,566,800 0.8
Mexico Beverages 116,600 Panamerican Beverages, Inc.
(Class A) 5,234,832 6,573,325 0.8
Building & 815,550 Apasco, S.A. de C.V. 'A' 4,523,505 5,894,063 0.7
Construction
Health & Personal 205,000 Kimberly-Clark de Mexico, S.A.
de C.V. (ADR) (a) 7,493,397 8,712,500 1.0
Multi-Industry 985,503 Grupo Carso, S.A. de C.V. 'A1' 4,997,167 5,576,686 0.6
Total Investments in Mexico 22,248,901 26,756,574 3.1
Total Investments in Latin America 47,796,312 66,054,919 7.7
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
PACIFIC Percent of
BASIN Industries Shares Held Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Australia Food & Beverage 713,315 Coca-Cola Amatil, Ltd. $ 4,007,170 $ 6,530,841 0.7%
Media 260,450 The News Corp., Ltd. (Preferred) 1,148,701 1,176,124 0.1
Merchandising 78,500 Amway Asia Pacific Ltd. 2,536,717 3,189,063 0.4
Property 1,396,541 Lend Lease Corp. 18,221,585 25,529,054 3.0
<PAGE>
Resources 191,964 Broken Hill Proprietary Co. 2,423,961 2,539,510 0.3
Total Investments in Australia 28,338,134 38,964,592 4.5
Hong Kong Banking 1,287,290 HSBC Holdings PLC 16,622,018 31,420,835 3.6
132,000 J.C.G. Holdings Ltd. 124,849 109,955 0.0
-------------- -------------- ------
16,746,867 31,530,790 3.6
Conglomerates 1,651,325 Hutchison Whampoa Ltd. 8,900,284 12,582,417 1.5
Foods 2,154,000 C.P. Pokphand Co. Ltd. 748,591 778,903 0.1
20,838,000 Tingyi (Cayman Islands)
Holdings Co. 5,493,255 5,113,157 0.6
-------------- -------------- ------
6,241,846 5,892,060 0.7
Insurance 698,000 National Mutual Asia Ltd. 733,581 761,713 0.1
Property 1,253,000 Cheung Kong (Holdings) Ltd. 8,688,615 11,974,636 1.4
18,166,000 China Overseas Land & Investment 5,085,987 10,615,915 1.2
-------------- -------------- ------
13,774,602 22,590,551 2.6
Total Investments in Hong Kong 46,397,180 73,357,531 8.5
Japan Automobiles 756,000 Mitsubishi Motors Corp. 5,593,668 5,544,543 0.7
239,000 Toyota Motor Corp. 6,580,156 6,120,080 0.7
-------------- -------------- ------
12,173,824 11,664,623 1.4
Banking 535,000 Mitsubishi Trust and Banking 5,663,853 5,896,660 0.7
523,000 Sumitomo Bank 6,056,913 6,587,884 0.8
-------------- -------------- ------
11,720,766 12,484,544 1.5
Capital Goods 855,000 Mitsubishi Heavy Industries, Ltd. 7,007,256 6,157,247 0.7
Chemicals 461,000 Kaneka Corp. 2,326,611 2,315,124 0.3
468,000 Sekisui Chemical Co. 4,529,453 4,847,932 0.6
381,000 Shin-Etsu Chemical Co., Ltd. 6,932,347 7,356,675 0.8
-------------- -------------- ------
13,788,411 14,519,731 1.7
Containers 35,000 Toyo Seikan Kaisha, Ltd. 1,201,545 820,834 0.1
Electric 220,000 Taihei Dengyo Kaisha, Ltd. 5,020,707 1,671,832 0.2
Construction
<PAGE>
Electrical 372,000 Anritsu Corp. 4,294,156 4,254,247 0.5
Equipment 710,000 Fujikura Ltd. 5,593,441 5,566,089 0.6
143,000 Murata Manufacturing Co., Ltd. 5,016,267 5,012,762 0.6
535,000 NEC Corporation 6,648,411 6,207,011 0.7
86,000 Rohm Co., Ltd. 4,848,880 6,164,747 0.7
473,000 Sharp Corporation 7,338,391 5,918,870 0.7
-------------- -------------- ------
33,739,546 33,123,726 3.8
Electronics 76,000 Advantest Corp. 4,329,672 4,295,351 0.5
606,000 Hitachi Ltd. 5,598,857 5,222,839 0.6
313,000 Pioneer Electronic Corp. 5,573,154 6,043,673 0.7
90,000 Sony Corp. 6,560,553 6,496,229 0.8
-------------- -------------- ------
22,062,236 22,058,092 2.6
Financial Services 78,000 Japan Associated Finance 4,402,493 3,962,377 0.4
430,000 Nomura Securities Co., Ltd. 5,646,853 5,737,134 0.7
77,000 Promise Co., Ltd. 3,350,277 3,254,330 0.4
-------------- -------------- ------
13,399,623 12,953,841 1.5
Glass 508,000 Asahi Glass Co., Ltd. 4,506,452 4,504,516 0.5
Machinery 967,000 NSK Ltd. 5,582,372 5,545,405 0.6
Manufacturing 1,587,000 Ube Industries Ltd. 4,541,586 4,432,079 0.5
Office Equipment 282,000 Canon Inc. 5,297,577 5,889,119 0.7
Pharmaceuticals 256,000 Sankyo Co., Ltd. 6,023,577 7,128,201 0.8
268,000 Taisho Pharmaceutical Co., Ltd. 5,272,869 6,174,194 0.7
-------------- -------------- ------
11,296,446 13,302,395 1.5
Property & Casualty 423,000 Tokio Marine & Fire Insurance
Insurance Co., Ltd. 4,632,864 4,031,242 0.5
Real Estate 510,000 Mitsubishi Estate Co., Ltd. 5,775,828 6,001,492 0.7
441,000 Mitsui Fudosan Co., Ltd. 4,564,545 4,787,520 0.5
-------------- -------------- ------
10,340,373 10,789,012 1.2
Retail 135,000 Ito-Yokado Co., Ltd. 7,444,885 6,130,770 0.7
470,000 Takashimaya Co. 4,827,950 5,180,244 0.6
-------------- -------------- ------
12,272,835 11,311,014 1.3
<PAGE>
Steel 2,161,000 Kawasaki Steel Corp. 5,758,545 5,784,395 0.6
2,196,000 Nippon Steel Co. 5,866,218 5,841,684 0.7
-------------- -------------- ------
11,624,763 11,626,079 1.3
Telecommunications 778 DDI Corp. 4,657,453 4,687,213 0.5
Textiles 1,146,000 Teijin Ltd. 4,552,690 4,558,547 0.5
Tire & Rubber 340,000 Bridgestone Corporation 6,200,205 6,086,020 0.7
Tobacco 837 Japan Tobacco, Inc. 5,404,655 5,618,381 0.7
Trading 750,000 Mitsui & Co. 5,498,656 5,556,476 0.7
728,000 Nissho Iwai Corp. 2,524,033 2,745,007 0.3
-------------- -------------- ------
8,022,689 8,301,483 1.0
Transportation 760,000 Nippon Express Co., Ltd. 4,490,727 4,893,677 0.6
Total Investments in Japan 223,537,601 221,030,652 25.6
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
PACIFIC
BASIN Percent of
(concluded) Industries Shares Held Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Malaysia Airlines 1,127,000 Malaysian Airline System BHD $ 2,866,092 $ 2,996,254 0.3%
Banking 658,000 Arab-Malaysian Merchant Bank
Holding BHD 4,607,482 6,202,296 0.7
767,000 Malayan Banking BHD 6,538,229 9,114,401 1.1
1,607,666 Public Bank (Malaysia) BHD
'Foreign' 2,880,585 3,756,078 0.4
-------------- -------------- ------
14,026,296 19,072,775 2.2
Broadcasting & 956,000 New Straits Times Press (Malaysia)
Publishing BHD 5,178,451 6,084,512 0.7
Building Products 780,500 Hume Industries (Malaysia) BHD 5,105,410 4,936,093 0.6
Diversified 1,995,000 Renong BHD 3,229,244 3,632,387 0.4
Utilities--Electric 233,000 Tenaga Nasional BHD 1,070,663 1,116,898 0.2
Total Investments in Malaysia 31,476,156 37,838,919 4.4
<PAGE>
New Zealand Chemicals 60,000 Fernz Corporation Ltd. 163,272 197,077 0.0
Electronics 69,000 PDL Holdings Ltd. 340,434 345,923 0.0
Finance 2,509,300 Wrightson Ltd. 1,911,453 1,856,644 0.2
Telecommunications 227,000 Telecom Corporation of New Zealand 970,676 1,018,739 0.1
Textiles 320,800 Lane Walker Rudkin Industries, Ltd. 381,689 359,370 0.1
Total Investments in New Zealand 3,767,524 3,777,753 0.4
South Telecommunications 154,393 Korea Mobile Telcommunications Corp.
Korea (ADR) (a) 2,561,162 1,910,613 0.2
Utilities 67,880 Korea Electric Power Corp. 2,753,162 1,952,928 0.2
Total Investments in South Korea 5,314,324 3,863,541 0.4
Thailand Banking 59,200 Finance One Public Co., Ltd.
'Foreign' 487,866 61,738 0.0
1,078,800 Krung Thai Bank Public Co., Ltd. 5,430,964 1,614,658 0.2
1,554,700 Phatra Thanakit Public Co., Ltd.
'Foreign' 11,840,696 3,032,536 0.4
Total Investments in Thailand 17,759,526 4,708,932 0.6
Total Investments in the Pacific
Basin 356,590,445 383,541,920 44.4
SOUTHEAST
ASIA
India Banking 285,000 State Bank of India 2,015,768 2,257,741 0.3
Chemicals 6,100 Reliance Industries Ltd. 39,340 46,324 0.0
Financial Services 426,400 Industrial Credit & Investment
Corporation of India Ltd. 1,386,341 743,375 0.1
Hotels 94,000 East India Hotels Ltd. (GDR) (d) 1,776,304 1,692,000 0.2
Real Estate 44,280 Housing Development Finance Corp.,
Ltd. 3,461,023 3,519,550 0.4
<PAGE>
Utilities--Electric 146,500 Bombay Suburban Electric Supply Co.
Ltd. (Registered Shares) (GDR)(d) 2,711,447 3,091,150 0.3
Total Investments in India 11,390,223 11,350,140 1.3
Indonesia Telecommunications 40,500 P.T. Telekomunikasi Indonesia
(ADR) (a) 1,313,769 1,392,187 0.2
Total Investments in Indonesia 1,313,769 1,392,187 0.2
Total Investments in Southeast Asia 12,703,992 12,742,327 1.5
SHORT-TERM Face
SECURITIES Amount Issue
Commercial US$ 27,682,000 General Motors Acceptance Corp.,
Paper* 5.43% due 3/03/1997 27,673,649 27,673,649 3.2
Total Investments in Commercial
Paper 27,673,649 27,673,649 3.2
Commercial A$ 42,000,000 Westpac Banking Corp., 6.257% due
Paper-- 5/15/1997 32,785,870 32,206,523 3.7
Foreign*
Total Investments in Commercial
Paper--Foreign 32,785,870 32,206,523 3.7
Foreign Pound 11,000,000 United Kingdom Treasury Bills,
Government Sterling 5.823% due 4/14/1997 17,683,025 17,768,231 2.1
Obligations*
Total Investments in Foreign
Government Obligations 17,683,025 17,768,231 2.1
US Government United States Treasury Bills (c):
& Agency US$ 600,000 4.88% due 4/24/1997 595,608 595,626 0.1
Obligations* 370,000 4.89% due 4/24/1997 367,300 367,303 0.0
3,840,000 4.92% due 4/24/1997 3,811,661 3,812,006 0.5
900,000 4.98% due 4/24/1997 893,277 893,439 0.1
2,900,000 5.118% due 4/24/1997 2,878,293 2,878,859 0.3
Total Investments in US Government
& Agency Obligations 8,546,139 8,547,233 1.0
Total Investments in Short-Term
Securities 86,688,683 86,195,636 10.0
<PAGE>
<CAPTION>
OPTIONS Nominal Value Covered Premiums
PURCHASED by Options Purchased Paid
Call Options 112,001 Nikkei Index, expiring January 1998
Purchased (3-month Look Back) 2,237,207 2,032,669 0.2
946 US Dollar Quanto Nikkei Index,
expiring June 1997 at 22,000 289,760 29,950 0.0
-------------- -------------- ------
2,526,967 2,062,619 0.2
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
OPTIONS PURCHASED Nominal Value Covered Premiums Percent of
(concluded) by Options Purchased Issue Paid Value Net Assets
<S> <C> <S> <C> <C> <C>
Currency Put 6,560,000 German Deutschemark, expiring
Options Purchased April 1997 at DM1.60 $ 43,624 $ 335,216 0.0%
14,000,000 German Deutschemark, expiring
July 1997 at DM1.55 162,120 1,050,000 0.1
25,000,000 Japanese Yen, expiring May 1997
at YEN 128 238,750 40,000 0.0
20,000,000 Japanese Yen, expiring July 1997
at YEN 115.50 307,000 827,000 0.1
20,000,000 Japanese Yen, expiring September
1997 at YEN 115.50 252,000 827,000 0.1
10,000,000 Swiss Franc, expiring July 1997
at Chf1.285 135,000 1,129,500 0.2
-------------- -------------- ------
1,138,494 4,208,716 0.5
Total Investments in Options
Purchased 3,665,461 6,271,335 0.7
Total Investments $ 748,394,479 829,140,956 96.0
==============
Variation Margin on Financial Futures Contracts** (1,238,172) (0.1)
Unrealized Depreciation on Forward Foreign Exchange Contracts*** (2,696,498) (0.3)
Other Assets Less Liabilities 38,147,900 4.4
-------------- ------
Net Assets $ 863,354,186 100.0%
============== ======
<PAGE>
Net Asset Class A--Based on net assets of $53,468,976
Value: and 4,591,644 shares of beneficial interest outstanding $ 11.65
==============
Class B--Based on net assets of $655,283,001
and 56,879,743 shares of beneficial interest shares outstanding $ 11.52
==============
Class C--Based on net assets of $30,104,205
and 2,646,514 shares of beneficial interest shares outstanding $ 11.38
==============
Class D--Based on net assets of $124,498,004
and 10,677,436 shares of beneficial interest shares outstanding $ 11.66
==============
<FN>
(a)American Depositary Receipts (ADR).
(b)The rights may be exercised until 3/17/1997.
(c)Securities held as collateral in connection with open futures
contracts.
(d)Global Depositary Receipts (GDR).
*Commercial Paper, Commercial Paper--Foreign, 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 February 28, 1997 were
as follows:
Number of Expiration
Contracts Issue Exchange Date Value
443 All Ordinaries SFE March 1997 $20,855,435
53 FTSE 100 LIFFE March 1997 9,240,334
242 Nikkei 225 SIMEX March 1997 18,640,839
258 Tokyo Topix TFE March 1997 29,804,591
Total Financial Futures Contracts Purchased
(Total Contract Price--$78,430,404) $78,541,199
===========
Financial futures contracts sold as of February 28, 1997 were as
follows:
Number of Expiration
Contracts Issue Exchange Date Value
<PAGE>
40 DAX Index DTB March 1997 $ 7,722,913
Total Financial Futures Contracts Sold
(Total Contract Price--$6,719,953) $ 7,722,913
===========
***Forward foreign exchange contracts as of February 28, 1997 were
as follows:
Foreign Unrealized
Currency Expiration Appreciation
Purchased Date (Depreciation)
Chf 6,425,000 July 1997 $ (239,852)
DM 118,683,935 April 1997 (1,925,898)
DM 10,517,857 July 1997 (288,515)
Pound 11,404,047 March 1997 (46,756)
Sterling
YEN 754,400,000 May 1997 57,432
YEN 2,310,000,000 July 1997 (458,339)
Total (US$ Commitment--$128,525,323) $(2,901,928)
-----------
Foreign
Currency Sold
DM 14,808,420 April 1997 $ 205,430
Total (US$ Commitment--$9,000,000) $ 205,430
-----------
Total Unrealized Depreciation--Net on
Forward Foreign Exchange Contracts $(2,696,498)
===========
</TABLE>
PORTFOLIO INFORMATION
Worldwide
Investments as of
February 28, 1997
Ten Largest Industries Percent of
(Equity Investments) Net Assets
<PAGE>
Banking 12.1%
Property 5.6
Telecommunications 5.2
Chemicals 4.0
Electrical Equipment 3.8
Electronics 3.2
Beverages 2.9
Insurance 2.8
Diversified 2.5
Financial Services 2.3
Percent of
Ten Largest Equity Holdings Net Assets
HSBC Holdings PLC 3.6%
Lend Lease Corp. 3.0
Telecomunicacoes Brasileiras
S.A.--Telebras (ADR) 1.6
Hutchison Whampoa Ltd. 1.5
Cheung Kong (Holdings) Ltd. 1.4
China Overseas Land & Investment 1.2
Malayan Banking BHD 1.1
Nedcor Ltd. (GDR) 1.0
Kimberly-Clark de Mexico, S.A. de
C.V. (ADR) 1.0
Internationale Nederlanden
Groep N.V. 1.0
Percent of
Asset Mix* Net Assets
Japan 25.6%
Europe (Ex-United Kingdom
and Ireland) 22.7
Pacific Basin (Ex-Japan) 18.8
Other Emerging Markets 12.2
Cash 10.0
United Kingdom and Ireland 6.0
[FN]
*Percent of net assets may not equal 100% and excludes the impact
of futures and options.
Percent of
Ten Largest Countries Net Assets
<PAGE>
Japan 25.6%
Hong Kong 8.5
United Kingdom 5.6
Australia 4.5
Malaysia 4.4
France 4.4
Germany 4.0
Mexico 3.1
Netherlands 2.8
Sweden 2.6
Financial Futures Contracts
Percent of
Country Issue Exchange Net Assets
Japan Tokyo-Topix TFE 3.4%
Australia All Ordinaries SFE 2.4
Japan Nikkei 225 SIMEX 2.2
United Kingdom FTSE 100 LIFFE 1.1
Germany DAX Index DTB (0.9)
-----
8.2%
=====
EQUITY PORTFOLIO CHANGES
For the Quarter Ended February 28, 1997
Additions
<PAGE>
Accor S.A.
Advantest Corp.
Allianz AG Holding (Ordinary)
Allied Domecq PLC (Ordinary)
Anritsu Corp.
Asahi Glass Co., Ltd.
*China Eastern Airlines Corp. Ltd. (ADR)
DDI Corp.
Deutsche Lufthansa AG
Fujikura Ltd.
Hitachi Ltd.
Imperial Chemical Industries PLC
(Ordinary)
Japan Associated Finance
Japan Tobacco, Inc.
Kaneka Corp.
Kawasaki Steel Corp.
Mitsubishi Estate Co., Ltd.
Mitsubishi Motors Corp.
Mitsubishi Trust and Banking
Mitsui & Co.
Mitsui Fudosan Co., Ltd.
Mostostal-Export S.A. (Rights)
NSK Ltd.
Nippon Express Co., Ltd.
Nippon Steel Co.
Nissho Iwai Corp.
Nomura Securities Co., Ltd.
Pioneer Electronic Corp.
Promise Co., Ltd.
Saurer AG (Registered Shares)
Seat S.p.A.
Sekisui Chemical Co.
Sony Corp.
Sumitomo Bank
Takashimaya Co.
Teijin Ltd.
Toyota Motor Corp.
Ube Industries Ltd.
Deletions
<PAGE>
Ashok Leyland Ltd. (GDR)
Assicurazioni Generali S.p.A.
Assurances Generales de France S.A.
(AGF)
Carso Global Telecom, S.A. de C.V. 'A1'
*China Eastern Airlines Corp. Ltd. (ADR)
Chudenko Corp.
Compagnie Financiere de Suez (Ordinary)
Dai-Tokyo Fire & Marine Insurance Co.,
Ltd.
Deutsche Bank AG (Warrants)
Driefontein Consolidated Ltd. (ADR)
Empresa Nacional de Electricidad S.A.
(Endesa)
Enersis S.A. (ADR)
Ente Nazionale Idrocarburi S.p.A. (ENI)
Eregli Demir Ve Celik Fabrikalari T.A.S.
Grupo Televisa, S.A. de C.V. (GDR)
Hanson PLC (Ordinary)
Imperial Tobacco Group PLC
Kinden Corp.
Koa Fire & Marine Insurance Co., Ltd.
Land Securities PLC
Migros Turk A.S.
Millennium Chemicals Inc.
Mitsui Marine & Fire Insurance Co., Ltd.
The News Corp., Ltd. (Ordinary)
Nichido Fire & Marine Insurance Co.,
Ltd.
P.T. Kabelmetal Indonesia
P.T. Wicaksana Overseas International
SMH AG (Societe Suisse pour
la Microelectonique et l'Horlogerie)
Sanki Engineering Co., Ltd.
Sparbanken Sverige AB (Class A)
Stadshypotek AB
Sumitomo Marine & Fire Insurance Co.,
Ltd.
Suzuki Motor Corp.
Swire Pacific Ltd. (Class A)
Technology Resources Industries BHD
Telefonica de Espana S.A.
Tomkins PLC
Yasudo Fire & Marine Insurance Co., Ltd.
[FN]
*Added and deleted in the same quarter.
OFFICERS AND TRUSTEES
<PAGE>
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
and Senior Portfolio Manager
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
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
