MERRILL LYNCH
INTERNATIONAL
EQUITY FUND
FUND LOGO
Semi-Annual Report
November 30, 1997
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, Senior Vice President
and Portfolio Manager
Donald C. Burke, Vice President
Gerald M. Richard, Treasurer
Ira P. Shapiro, Secretary
Custodian
Brown Brothers Harriman & Co.
40 Water Street
Boston, MA 02109
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
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.
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 November 30, 1997
Malaysia -43.9%
Hong Kong -27.5%
Japan -16.4%
Brazil -13.1%
Australia -11.1%
Sweden + 2.0%
Germany + 2.2%
United Kingdom + 5.2%
France + 7.2%
Italy +10.6%
Source: Financial Times/S&P--Actuaries Index.
[FN]
*For the three-month period ended November 30, 1997, total
investment return in US dollars for the Financial
Times/S&P--Actuaries World (Ex-US) Index was -4.32%.
Merrill Lynch International Equity Fund, November 30, 1997
DEAR SHAREHOLDER
During the three-month period ended November 30, 1997, international
equity market returns were significantly affected by the Asian
currency crisis. The loss of confidence in many Asian currencies
prompted a sharp rise in interest rates in many Asian countries.
Combined with subsequent planned cuts in government spending, higher
interest rates are likely to curb economic growth and import demand.
The Pacific Basin developed economies appear most exposed to these
developments. As a result, equity prices in the Pacific Basin and
the emerging Asian markets fell sharply. During the three months
ended November 30, 1997, Asian emerging equity returns in US dollar
terms were -34%, according to the unmanaged International Finance
Corporation's (IFC) Asian Investables Index. Pacific Basin developed
equity markets also declined, led by Hong Kong. Overall, developed
markets in the region declined 18%. The general rise in market
volatility also impacted emerging market returns, with both Latin
American and European emerging equity markets declining 8% in
aggregate during the three-month period ended November 30, 1997.
European developed equity markets were also volatile, and at one
point during the November quarter registered losses of more than
10%. However, a recovery late in the quarter and a generally
stronger Deutschemark relative to the dollar led European equity
markets to provide returns of +6% in US dollar terms in the three
months ended November 30, 1997, according to the unmanaged Financial
Times/Standard & Poor's (FT/S&P)--Actuaries European Index.
As outlined in our February 28, 1997 shareholder letter, the
investment process for Merrill Lynch International Equity Fund
changed during 1997. As part of this change, we adopted a new
Benchmark Index which combines the FT/S&P--Actuaries World (Ex-US)
Indexes and the unmanaged IFC Investables Indexes, using customized
weightings. This new Benchmark Index is consistent with the Fund's
strategy of seeking to add value over the intermediate term in that
it conducts strategic allocations between countries and generally
maintains an overweighted stance in smaller and emerging markets.
Using the Fund's Benchmark Index, international equity markets
returned -9.17% during the quarter ended November 30, 1997. The
Fund's Class A, Class B, Class C and Class D Shares returned -9.31%,
- -9.54%, -9.50% and -9.40%, respectively. Performance over the period
was negatively affected by the Fund's overweighted positions in some
developed Pacific Basin (particularly Australia) and Latin American
markets. The Fund's underweighted positions in emerging Asian
markets and Hong Kong positively impacted performance. (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--7 of this
report to shareholders.)
Portfolio Matters
The Fund's effective cash position rose significantly during the
November quarter from 9% of net assets as of August 31, 1997 to 14%
of net assets on November 30, 1997. Significant reductions in equity
exposure occurred in Japan, down from 30% of net assets to 25%, and
Continental Europe, down from 18% of net assets to 16%. Elsewhere,
significant asset allocation decisions included increasing the
Fund's weights in the United Kingdom and Canada to 15% and 4% of net
assets, respectively.
During the November quarter, we implemented new stock selection
strategies in Australia and France. These investment strategies are
designed to enhance stock selection in those countries by employing
quantitative screening techniques which seek to highlight attractive
stock opportunities. One consequence of implementing these new
strategies was an increased level of turnover activity associated
with the restructuring. This accounts for the significant element of
the trading activity shown on pages 34 and 35 of the report. Other
portfolio activity concentrated on reducing exposure to Asian
financial stocks and sales of Turkish securities.
Economic and Investment
Environment
The consensus expectation for global economic growth in 1998 fell
sharply in recent weeks as a result of the turmoil in Asian markets
and economies. Whereas a few months ago many analysts were expecting
global growth in 1998 to match or exceed this year's rise of about
4% in 1998, few now expect growth to exceed 3.25% in 1998. Against
this backdrop, company analysts have begun reducing earnings
forecasts. However, to the extent that weaker economic growth allows
global real bond yields to ease, the impact on equity markets of
slower earnings growth is likely to be softened. At this point,
global equity returns in 1998 look unlikely to reach the double-
digit levels of 1995--1996, but a widespread bear market probably
would require a rise in global inflationary pressures.
Not surprisingly, the sharpest economic growth downgrades for 1998
have come in Asia. While the region has seen its currencies
depreciate against the rest of the world in nominal terms, it
remains to be seen how much higher inflation in 1998 will reduce the
real depreciation. Meanwhile, many countries are entering 1998 with
much tighter interest rate and fiscal policies as well as weaker
financial systems. We have no plans to overweight Asia as a region
until current account positions improve, the cyclical growth outlook
brightens and structural improvements are delivered. There is also
the problem that many Asian countries' stock markets have large
weightings in property and/or financial stocks that are vulnerable
to asset price deflation. However, some markets do appear to offer
attractive intermediate-term returns, notably India, Taiwan and, to
a lesser extent, the Philippines.
Latin America has withstood the initial impact of the "Asian
contagion" relatively well. Our favored markets in the region are
Mexico and Argentina, in light of sound economic management and
recent noninflationary rises in domestic demand which have enhanced
the prospect for earnings growth in 1998. Furthermore, after a
period of sharp equity price increases, the recent correction in
equity prices has restored the attractiveness of Latin American
markets from a valuation perspective. Based upon relative valuation
measures spanning the next two years--three years, our expected
equity returns for Japan remain among the highest for developed
markets. However, the near-term growth outlook is poor, and a
sustained rally in the equity market probably would require a
package of measures to address the structural impediments to growth
(such as, a weak financial system and an inefficient property
market) as well as providing a boost to cyclical prospects (for
example, corporate tax cuts).
The economic recovery in Continental Europe has begun to spread from
exports to domestic demand, even in Germany and France. Twelve-month
forward earnings estimates have been revised upward over the past
six months. Exposure to the slowdown in Asia is likely to be
relatively limited, allowing the region to remain in what is often
viewed as a "sweetspot" for equity markets where there is above-par
economic growth with sufficient spare capacity to permit stable or
even falling inflation. While two of the larger markets, Switzerland
and Holland, already appear significantly overvalued on an
intermediate-term basis, better value appears to lie in France,
Italy and Spain. European Monetary Union is likely to be a major
focus in 1998. Interest rate convergence is largely complete but tax
reform and corporate restructuring should be durable themes next
year. The UK market looks well-positioned from both a value and flow
of funds viewpoints to benefit in the near term from a downturn in
interest rate expectations for 1998. Recent indicators have
suggested that consumer spending growth has peaked and that net
exports have finally begun to deteriorate in response to sterling's
over-valuation.
The US economy continues to exhibit late business cycle pressures.
Delivery lags and labor market indicators are above thresholds that
previously have coincided with higher inflation. The rally in the
stock market since the sharp decline in October may reflect a
widening view that the slowdown in Asia will feed through into lower
growth in the United States in 1998, allowing the Federal Reserve
Board to either leave interest rates unchanged for a prolonged
period or reduce them slightly. However, we find it difficult to see
how such a scenario remains consistent with analysts' long-term
earnings growth forecasts, which remain around 15% per year. US
profit margins already appear to be under some pressure from rising
labor costs, notwithstanding the impact of increased competition
from Asian imports and a generally stronger US dollar. If US
economic growth continues to expand rapidly, corporate earnings
could surprise on the upside in 1998. But in such an environment,
interest rates are likely to move higher than is currently
discounted. By contrast, intermediate-term return prospects in
Canada and Australia look relatively attractive, notwithstanding the
recent weakening in commodity prices.
The US dollar is currently supported against the Deutschemark and
yen by significant interest rate differentials. However, a risk to
the dollar in 1998 is that the US current account deficit becomes a
bigger market focus. While economists have been busy revising Asian
current account forecasts for 1998 in a favorable direction,
reflecting currency depreciations and tighter policy stances, it is
notable that this has not yet found its full counterpart in downward
revisions to developed countries' current account estimates. It is
conceivable that the US current account deficit could exceed 3% of
gross domestic product in 1998, which would leave the US currency
vulnerable to a change in relative interest rate trends.
Merrill Lynch International Equity Fund, November 30, 1997
In Conclusion
International equity markets provided significantly dispersed
returns in the quarter ended November 30, 1997, as the Asian
currency crisis impacted Pacific Basin equity markets in particular.
International equity markets also exhibited significant volatility
in the latter half of 1997. Although December and January usually
provide more stable and often positive returns, the Asian crisis may
produce a period of global profit margin contraction, lower profit
growth and could mark the beginning of a period of lower stock
market returns.
The Fund remained defensive with overweighted positions in Canada,
Australia, South Africa, India, Mexico and some European markets.
Effective cash weights are likely to remain between 10%--15% of net
assets during the coming months.
We thank you for your continuing in-terest in Merrill Lynch
International Equity Fund, and we look forward to reviewing our
strategy and performance with you in our upcoming quarterly report
to shareholders.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Andrew Bascand)
Andrew Bascand
Senior Vice President and
Portfolio Manager
January 13, 1998
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. However, in the
case of certain eligible investors, the shares 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. Figures shown in the "Average Annual Total
Return" tables as well as the total returns and cumulative total
returns in the "Performance Summary" tables assume reinvestment of
all dividends and capital gains distributions at net asset value on
the ex-dividend date. 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**
<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--11/30/97 11.33 11.10 -- -- -2.03
------ ------
Total $0.379 Total $0.885
Cumulative total return as of 11/30/97: +6.13%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures do not include sales charge; results would be lower if
sales charge was included.
</TABLE>
<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>
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--11/30/97 11.22 10.90 -- -- -2.85
------ ------
Total $0.379 Total $0.632
Cumulative total return as of 11/30/97: +19.59%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures 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>
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--11/30/97 11.08 10.76 -- -- -2.89
------ ------
Total $0.379 Total $0.760
Cumulative total return as of 11/30/97: +2.89%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures do not reflect deduction of any sales charge; results
would be lower if sales charge was deducted.
</TABLE>
Merrill Lynch International Equity Fund, November 30, 1997
PERFORMANCE DATA (concluded)
<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>
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--11/30/97 11.35 11.09 -- -- - 2.29
------ ------
Total $0.379 Total $0.816
Cumulative total return as of 11/30/97: +23.59%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures do not include sales charge; results would be lower if
sales charge was included.
</TABLE>
<TABLE>
Recent
Performance
Results
<CAPTION>
12 Month 3 Month
11/30/97 8/31/97 11/30/96 % Change % Change
<S> <C> <C> <C> <C>
ML International Equity Fund Class A Shares* $11.10 $12.24 $11.97 -4.88%(1) -9.31%
ML International Equity Fund Class B Shares* 10.90 12.05 11.73 -4.66(1) -9.54
ML International Equity Fund Class C Shares* 10.76 11.89 11.62 -4.97(1) -9.50
ML International Equity Fund Class D Shares* 11.09 12.24 11.95 -4.81(1) -9.40
ML International Equity Fund Class A Shares--Total Return* -2.52(2) -9.31
ML International Equity Fund Class B Shares--Total Return* -3.48(3) -9.54
ML International Equity Fund Class C Shares--Total Return* -3.47(4) -9.50
ML International Equity Fund Class D Shares--Total Return* -2.74(5) -9.40
Financial Times/S&P--Actuaries World (Ex-US) Index**--Total Return -1.24 -4.32
<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 9/30/97 +12.32% +6.42%
Inception (10/21/94) through 9/30/97 + 6.68 +4.74
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 9/30/97 +11.20% +7.20%
Inception (7/30/93) through 9/30/97 + 7.75 +7.75
[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 9/30/97 +11.22% +10.22%
Inception (10/21/94) through 9/30/97 + 5.61 + 5.61
[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 9/30/97 +12.16% +6.27%
Inception (7/30/93) through 9/30/97 + 8.58 +7.19
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
Shares Value Percent of
AFRICA Industries Held Investments Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
South Africa Banking 228,050 Nedcor Ltd. (GDR)(c)(e) $ 2,464,941 $ 5,165,287 0.9%
Beverages 86,493 South African Breweries Ltd. 2,492,316 2,120,014 0.3
Diversified 128,000 Sasol Ltd. 1,802,886 1,290,546 0.2
Insurance 88,600 Liberty Life Association of
Africa Ltd. 2,406,914 2,244,655 0.4
Mining 54,000 Anglo American Corp. of
South Africa, Ltd. 3,636,072 2,246,756 0.4
65,200 Anglo American Corp. of
South Africa, Ltd. (ADR) (a) 4,274,593 2,665,050 0.4
183,616 Evander Gold Mines Ltd. 1,861,029 330,925 0.1
------------- ------------- ------
9,771,694 5,242,731 0.9
Paper & 125,000 Sappi Ltd. 1,195,769 699,022 0.1
Forest Products
Total Investments in
South Africa 20,134,520 16,762,255 2.8
Zimbabwe Beverages 1,522,193 Delta Corporation Ltd. 856,251 1,601,200 0.3
Total Investments in Zimbabwe 856,251 1,601,200 0.3
Total Investments in Africa 20,990,771 18,363,455 3.1
EUROPE
Finland Diversified 93,283 Outokumpu OY 1,430,243 1,287,012 0.2
Paper & 92,578 Enso OY (Class A) 716,053 813,292 0.1
Forest Products 198,250 Metsa Serla OY (Class B) 1,504,575 1,700,679 0.3
40,626 UPM-Kymmene Corporation 769,245 873,177 0.2
------------- ------------- ------
2,989,873 3,387,148 0.6
Total Investments in Finland 4,420,116 4,674,160 0.8
France Aerospace & 2,200 Labinal S.A. 661,265 553,867 0.1
Defense
Agricultural 5,300 Eridania Beghin-Say S.A. 784,443 824,295 0.1
Operations
Automobiles 8,966 Peugeot S.A. 1,220,450 1,013,185 0.2
31,800 ++Renault S.A. 963,786 890,562 0.1
------------- ------------- ------
2,184,236 1,903,747 0.3
</TABLE>
Merrill Lynch International Equity Fund, November 30, 1997
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
EUROPE Shares Value Percent of
(continued) Industries Held Investments Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
France Automobiles & 14,600 Sommer-Allibert $ 556,610 $ 469,476 0.1%
(concluded) Equipment 12,100 Valeo S.A. 812,589 800,312 0.1
------------- ------------- ------
1,369,199 1,269,788 0.2
Banking 41,101 Banque Nationale de Paris 2,017,670 2,005,436 0.4
18,814 Compagnie Financiere de
Paribas 954,003 1,359,453 0.2
13,500 Credit Commercial de France 807,214 800,280 0.1
28,912 Societe Generale de Surveillance
S.A. (Class A) (Ordinary) 3,430,204 3,801,052 0.7
------------- ------------- ------
7,209,091 7,966,221 1.4
Beverages 14,900 Pernod Ricard 729,409 757,306 0.1
Building & 1,000 Compagnie de Saint Gobain S.A. 158,379 135,875 0.0
Construction
Chemicals 3,700 L'Air Liquide 621,112 582,347 0.1
4,900 Rhone-Poulenc (Class A) 219,779 220,324 0.0
------------- ------------- ------
840,891 802,671 0.1
Consumer--Goods 2,000 LVMH (Moet-Hennessy
Louis Vuitton) 426,479 344,939 0.1
Cosmetics & 6,600 Christian Dior S.A. 848,213 651,893 0.1
Toiletries 2,400 L'OREAL 940,983 918,933 0.2
------------- ------------- ------
1,789,196 1,570,826 0.3
Diversified 2,000 Compagnie Generale des Eaux S.A. 237,884 264,295 0.0
Electronics 16,300 Schneider S.A. 1,013,429 872,647 0.2
24,400 Thomson CSF 781,245 706,060 0.1
------------- ------------- ------
1,794,674 1,578,707 0.3
Engineering & 24,818 Bouygues S.A. 2,425,334 2,510,181 0.4
Construction
Financial Services 7,100 Credit National/Natexis 445,918 422,812 0.1
11,334 EuraFrance S.A. 3,545,896 4,570,084 0.8
------------- ------------- ------
3,991,814 4,992,896 0.9
Foods 1,600 Bongrain S.A. 605,274 669,547 0.1
900 Fromageries Bel S.A. 634,403 640,407 0.1
2,100 Groupe Danone S.A. 345,335 335,146 0.1
------------- ------------- ------
1,585,012 1,645,100 0.3
Hotels 5,411 Accor S.A. 756,346 1,023,071 0.2
Insurance 53,500 Assurances Generales de
France S.A. (AGF) 1,855,680 3,045,489 0.5
38,343 Axa-UAP 2,398,193 2,782,912 0.5
------------- ------------- ------
4,253,873 5,828,401 1.0
Leisure 7,900 ++Club Mediterranee S.A. 639,800 598,272 0.1
Metals 15,100 Pechiney S.A. (Class A) 779,869 593,000 0.1
Oil & Related 34,934 Elf Aquitaine S.A. 4,283,927 4,054,179 0.7
32,600 Total S.A. (Class B) 3,642,674 3,424,312 0.6
------------- ------------- ------
7,926,601 7,478,491 1.3
Retail 1,200 Carrefour S.A. 724,778 642,236 0.1
13,560 Castorama Dubois Investisse 1,665,369 1,621,916 0.3
13,000 Etablissements Economiques
du Casino Guichard-Perachon
S.A. (Preferred) 628,696 561,626 0.1
------------- ------------- ------
3,018,843 2,825,778 0.5
Steel 188,022 Usinor Sacilor S.A. 2,784,300 2,956,110 0.5
Telecommunication 28,144 Alcatel Alsthom Cie Generale 2,863,654 3,528,430 0.6
Equipment d'Electricite S.A.
Total Investments in France 49,210,592 51,952,267 8.9
Germany Apparel 400 Hugo Boss AG (Preferred) 554,061 532,940 0.1
Automobiles 200 Bayerische Motoren Werke AG
(BMW) 166,583 149,337 0.0
48,512 Daimler-Benz AG 3,511,544 3,435,281 0.6
6,428 Volkswagen AG 3,132,427 3,644,404 0.6
------------- ------------- ------
6,810,554 7,229,022 1.2
Banking 21,200 BHF-Bank AG 659,850 612,995 0.1
2,900 Bayerische Vereinsbank AG 181,879 172,228 0.0
4,000 Commerzbank AG 143,873 139,018 0.0
15,300 Deutsche Bank AG 1,130,313 981,081 0.2
33,900 Dresdner Bank AG 1,578,886 1,314,639 0.3
------------- ------------- ------
3,694,801 3,219,961 0.6
Batteries 3,400 ++Varta AG 530,167 520,467 0.1
Building & 16,000 Bilfinger & Berger Bau AG 591,084 588,729 0.1
Construction
Chemicals 32,799 BASF AG 1,134,988 1,160,368 0.2
66,476 Bayer AG 2,439,833 2,459,966 0.4
21,132 Henkel KGaA 907,822 1,186,114 0.2
51,202 Henkel KGaA (Preferred) 2,343,040 3,146,784 0.6
38,900 Hoechst AG 1,664,636 1,374,005 0.2
------------- ------------- ------
8,490,319 9,327,237 1.6
Computer Software 3,600 SAP AG (Systeme,
Anwendungen, Produkte in der
Datenverarbeitung) (Preferred) 1,112,123 1,108,289 0.2
Cosmetics & 15,900 Beiersdorf AG 675,267 667,082 0.1
Toiletries
Diversified 31,100 Metallgesellschaft AG 648,642 599,501 0.1
20,100 RWE AG 912,302 985,171 0.2
17,143 Thyssen AG 3,796,340 4,082,129 0.7
13,700 VEBA AG 711,893 814,015 0.1
200 Viag AG 98,727 101,621 0.0
------------- ------------- ------
6,167,904 6,582,437 1.1
Electronics 17,000 Siemens AG 1,161,189 998,044 0.2
Engineering & 8,315 ++Philipp Holzmann AG 3,055,645 2,300,556 0.4
Construction
Footwear 5,600 Adidas AG 768,527 788,978 0.1
3,400 ++Salamander AG 543,961 528,178 0.1
------------- ------------- ------
1,312,488 1,317,156 0.2
</TABLE>
Merrill Lynch International Equity Fund, November 30, 1997
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
EUROPE Shares Value Percent of
(continued) Industries Held Investments Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
Germany Insurance 600 AMB Aachener und Muenchener
(concluded) Beteiligungs AG $ 622,244 $ 615,376 0.1%
8,200 Allianz AG 1,952,028 1,945,629 0.3
2,827 Munich Re Group 825,205 883,137 0.2
------------- ------------- ------
3,399,477 3,444,142 0.6
Machinery & 26,200 ++AGIV-AG fuer Industrie und
Equipment Verkehrswesen 550,255 537,725 0.1
36,200 FAG Kugelfischer Georg
Schaefer AG 572,840 533,621 0.1
45,105 ++Kloeckner Werke AG 2,540,377 3,158,220 0.6
600 Mannesmann AG 281,495 279,283 0.0
------------- ------------- ------
3,944,967 4,508,849 0.8
Metals 15,200 Degussa AG 707,440 704,932 0.1
Pharmaceuticals 8,400 Altana AG 645,073 579,589 0.1
8,100 Schering AG 834,092 794,478 0.1
------------- ------------- ------
1,479,165 1,374,067 0.2
Publishing 800 Springer (Axel) Verlag AG 626,924 627,736 0.1
Telecommunications 4,400 Deutsche Telekom AG 86,992 89,182 0.0
Transportation 3,000 Harpen AG 558,154 501,758 0.1
Total Investments in Germany 44,958,721 45,642,586 7.8
Hungary Telecommuni- 1,000,000 ++Magyar TarKozlesi
cations Reszvenytarsasag (Ordinary) 1,589,861 3,961,687 0.7
Total Investments in Hungary 1,589,861 3,961,687 0.7
Ireland Building & 76,142 CRH PLC 826,936 893,821 0.1
Construction
Total Investments in Ireland 826,936 893,821 0.1
Italy Building Products 39,204 Italcementi S.p.A 217,403 249,437 0.0
Chemicals 5,651,555 Montedison S.p.A. 5,346,257 4,672,275 0.8
Diversified 2,558,117 ++Compagnie Industrial
Riunite S.p.A. (CIR) 2,211,686 1,972,681 0.3
Insurance 68,343 Assicurazioni Generali S.p.A. 1,246,927 1,533,197 0.3
946,101 Istituto Nazionale delle
Assicurazioni S.p.A. (INA) 1,354,588 1,648,679 0.3
------------- ------------- ------
2,601,515 3,181,876 0.6
Telecommuni- 1,101,688 Telecom Italia S.p.A. 2,717,968 4,343,481 0.8
cations
Total Investments in Italy 13,094,829 14,419,750 2.5
Netherlands Banking 30,956 ABN Amro Holding N.V. 586,761 590,395 0.1
Chemicals 15,761 Akzo Nobel N.V. 1,959,572 2,772,768 0.5
54,664 European Vinyls Corporation
International N.V. 2,077,567 1,279,124 0.2
------------- ------------- ------
4,037,139 4,051,892 0.7
Electronics 38,620 Philips Electronics N.V. 1,414,443 2,551,734 0.4
Insurance 31,062 ING Groep N.V. 1,275,816 1,262,988 0.2
Packaging & 95,358 Koninklijke KNP BT N.V. 2,147,909 2,058,604 0.4
Containers
Steel 21,000 ++Ispat International N.V. 568,773 470,260 0.1
20,783 ++Ispat International N.V.
(NY Registered Shares) 491,090 474,112 0.1
------------- ------------- ------
1,059,863 944,372 0.2
Telecommuni- 47,891 Royal PTT Nederland N.V. 1,716,817 1,923,159 0.3
cations
Total Investments in the
Netherlands 12,238,748 13,383,144 2.3
Norway Oil & Gas 72,875 Saga Petroleum A.S. (Class B) 801,866 1,195,902 0.2
Producers
Total Investments in Norway 801,866 1,195,902 0.2
Poland Automobiles & 68,788 T.C. Debica S.A. 927,906 1,508,082 0.2
Equipment
Total Investments in Poland 927,906 1,508,082 0.2
Portugal Building Products 7,500 Cimpor-Cimentos de Portugal
S.A. (SGPS) 193,436 189,956 0.0
Diversified 38,588 Sonae Investimentos--SGPS, S.A. 946,417 1,442,232 0.3
Total Investments in Portugal 1,139,853 1,632,188 0.3
Russia Closed-End Funds 3,700 Templeton Russia Fund, Inc. 149,362 125,569 0.0
Total Investments in Russia 149,362 125,569 0.0
Spain Oil & Related 3,943 Repsol S.A. 149,044 170,630 0.0
Utilities-- 109,431 Endesa S.A. 1,860,230 2,059,403 0.4
Electric
Total Investments in Spain 2,009,274 2,230,033 0.4
Sweden Electrical 25,964 Electrolux AB 1,096,513 2,044,648 0.3
Forest Products 44,636 Mo och Domsjo AB (Class B) 1,200,098 1,260,332 0.2
929,741 Rottneros Bruks AB 1,435,615 740,594 0.2
92,871 Stora Kopparbergs AB 1,238,849 1,232,955 0.2
------------- ------------- ------
3,874,562 3,233,881 0.6
Insurance 29,641 Skandia Forsakrings AB 728,908 1,562,538 0.3
Metals & Mining 188,686 Avesta Sheffield AB 1,710,791 1,331,924 0.2
Total Investments in Sweden 7,410,774 8,172,991 1.4
Switzerland Diversified 14,432 Oerlikon-Buehrle Holding AG 1,483,489 2,065,765 0.4
Leisure 2,961 Fotolabo S.A. 1,231,526 657,561 0.1
Pharmaceuticals 2,379 Novartis AG (Registered Shares) 3,403,698 3,802,527 0.6
Total Investments in
Switzerland 6,118,713 6,525,853 1.1
United Kingdom Advertising 440,300 Cordiant PLC 935,801 897,279 0.1
212,400 WPP Group PLC 989,532 944,392 0.2
------------- ------------- ------
1,925,333 1,841,671 0.3
Automobile 378,300 Thorn PLC 929,456 957,420 0.2
Rental
Automobiles & 590,671 LucasVarity PLC 1,893,627 1,890,135 0.3
Equipment 223,500 T & N PLC 899,603 944,811 0.2
------------- ------------- ------
2,793,230 2,834,946 0.5
</TABLE>
Merrill Lynch International Equity Fund, November 30, 1997
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
EUROPE Shares Value Percent of
(concluded) Industries Held Investments Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
United Kingdom Banking 78,000 Barclays PLC $ 2,002,503 $ 1,875,929 0.3%
(concluded) 137,596 HSBC Holdings PLC 3,801,853 3,496,944 0.6
288,350 Lloyds TSB Group PLC 3,630,489 3,278,064 0.6
161,802 National Westminister Bank
PLC (Ordinary) 1,770,515 2,447,112 0.4
------------- ------------- ------
11,205,360 11,098,049 1.9
Broadcast--Media 122,200 British Sky Broadcasting
Group PLC 878,374 905,561 0.1
123,600 Carlton Communications PLC 1,025,565 944,038 0.2
------------- ------------- ------
1,903,939 1,849,599 0.3
Building & 193,800 Hanson PLC 993,495 982,458 0.2
Construction 483,500 Tarmac PLC 953,628 936,457 0.1
------------- ------------- ------
1,947,123 1,918,915 0.3
Chemicals 81,913 Imperial Chemical
Industries PLC 1,250,068 1,208,511 0.2
219,920 Inspec Group PLC 643,151 825,968 0.1
------------- ------------- ------
1,893,219 2,034,479 0.3
Closed-End Funds 23,000 Alliance Trust PLC 939,253 923,771 0.2
178,100 Scottish Invest Trust PLC 950,072 926,864 0.2
172,800 Scottish Mortgage & Trust PLC 958,612 922,564 0.1
------------- ------------- ------
2,847,937 2,773,199 0.5
Computer Services 35,567 Misys PLC 437,604 1,006,353 0.2
Diversified 575,098 BTR PLC 2,055,891 1,990,432 0.3
205,900 Tomkins PLC 1,149,129 1,043,798 0.2
------------- ------------- ------
3,205,020 3,034,230 0.5
Food & Beverage 210,563 Allied Domecq PLC (Ordinary) 1,460,147 1,893,725 0.3
178,681 Cadbury Schweppes PLC 1,432,048 1,850,747 0.3
------------- ------------- ------
2,892,195 3,744,472 0.6
Food Processing 503,728 ASDA Group PLC 921,549 1,355,285 0.2
727,216 Unilever PLC 4,529,560 5,716,647 1.0
------------- ------------- ------
5,451,109 7,071,932 1.2
Foods 173,800 Booker PLC 936,772 916,195 0.1
93,200 Compass Group PLC 990,423 1,111,329 0.2
------------- ------------- ------
1,927,195 2,027,524 0.3
Gas Distribution 4,400 BG PLC 19,863 21,046 0.0
Health & Personal 355,600 London International Group PLC 916,008 913,325 0.2
Leisure 228,700 Ladbroke Group PLC 1,040,195 1,036,125 0.2
Metals & Mining 73,963 Rio Tinto PLC 1,071,610 890,665 0.2
Oil & Related 99,700 British Petroleum Co. PLC 1,510,631 1,360,109 0.2
157,000 Shell Transport & Trading
Co. PLC 1,236,717 1,065,610 0.2
------------- ------------- ------
2,747,348 2,425,719 0.4
Pharmaceuticals 56,100 Glaxo Wellcome PLC 1,289,699 1,228,287 0.2
59,300 SmithKline Beecham PLC 599,655 549,302 0.1
13,800 Zeneca Group PLC 482,299 439,273 0.1
------------- ------------- ------
2,371,653 2,216,862 0.4
Publishing 85,500 Pearson PLC 1,103,006 1,187,993 0.2
Real Estate 110,500 MEPC PLC 997,658 993,796 0.2
Investment Trusts 155,900 Slough Estates PLC 964,878 907,168 0.1
------------- ------------- ------
1,962,536 1,900,964 0.3
Retail 290,697 Safeway PLC 1,781,798 1,586,278 0.3
138,379 W.H. Smith Group PLC 845,618 899,604 0.1
------------- ------------- ------
2,627,416 2,485,882 0.4
Steel 386,500 British Steel PLC 1,048,178 899,929 0.2
Telecommuni- 61,300 British Telecommunications PLC 438,137 471,813 0.1
cations 207,516 Cable & Wireless PLC 1,429,157 1,880,302 0.3
------------- ------------- ------
1,867,294 2,352,115 0.4
Tobacco 322,092 B.A.T. Industries PLC 2,741,157 2,885,926 0.5
201,600 Gallaher Group PLC 985,492 1,089,906 0.2
158,700 Imperial Tobacco Group PLC 988,953 1,051,516 0.1
------------- ------------- ------
4,715,602 5,027,348 0.8
Transportation 124,800 BAA PLC 1,205,979 1,049,890 0.2
Utilities-- 162,385 Energy Group PLC 1,707,502 1,738,021 0.3
Electric 232,000 National Grid Group PLC 1,124,236 1,148,759 0.2
------------- ------------- ------
2,831,738 2,886,780 0.5
Utilities--Water 59,647 Anglian Water PLC 515,153 815,715 0.2
69,700 Severn Trent PLC 1,031,043 1,098,172 0.2
195,267 United Utilities PLC 2,049,123 2,502,691 0.4
------------- ------------- ------
3,595,319 4,416,578 0.8
Total Investments in the
United Kingdom 68,482,465 71,904,010 12.3
Total Investments in Europe 213,380,016 228,222,043 39.0
LATIN
AMERICA
Argentina Banking 13,560 Banco de Galicia y Buenos
Aires S.A. de C.V. (ADR) (a) 346,950 314,422 0.0
33,052 Banco Frances del Rio de la
Plata S.A. (ADR) (a) 816,220 890,338 0.2
------------- ------------- ------
1,163,170 1,204,760 0.2
Oil & Related 309,197 Perez Companc S.A. 1,704,558 2,202,364 0.4
17,180 Yacimientos Petroliferos
Fiscales S.A. (YPF) (ADR) (a) 509,834 576,604 0.1
------------- ------------- ------
2,214,392 2,778,968 0.5
Real Estate 4,500 IRSA Inversiones y
Representaciones S.A. (GDR) (c) 175,305 137,531 0.0
Telecommuni- 33,820 Telefonica de Argentina S.A.
cations (Class B) (ADR) (a) 1,215,243 1,118,174 0.2
Total Investments in Argentina 4,768,110 5,239,433 0.9
</TABLE>
Merrill Lynch International Equity Fund, November 30, 1997
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
LATIN AMERICA Shares Value Percent of
(concluded) Industries Held Investments Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
Brazil Beverages 4,038,960 Companhia Cervejaria Brahma
S.A. PN (Preferred) $ 1,972,801 $ 2,676,375 0.5%
Oil & Gas 5,900,000 Petroleo Brasileiro S.A.--
Producers Petrobras (Preferred) 1,551,794 1,292,553 0.2
Telecommuni- 39,325 Telecomunicacoes Brasileiras
cations S.A.--Telebras (ADR) (a) 3,314,151 4,104,547 0.7
Utilities-- 27,985 Companhia Energetica de
Electric Minas Gerais S.A. (CEMIG)
(ADR) (a) 727,189 1,381,759 0.2
35,500,000 Companhia Energetica de Minas
Gerais S.A. (CEMIG) (Preferred) 2,012,653 1,728,273 0.3
------------- ------------- ------
2,739,842 3,110,032 0.5
Total Investments in Brazil 9,578,588 11,183,507 1.9
Chile Telecommuni- 54,000 Compania de Telecomunicaciones
cations de Chile S.A. (ADR)(a) 1,799,761 1,461,375 0.2
Utilities-- 66,000 Chilgener S.A. (ADR)(a) 1,789,597 1,650,000 0.3
Electric
Total Investments in Chile 3,589,358 3,111,375 0.5
Mexico Beverages 223,900 Fomento Economico Mexicano,
S.A. de C.V. (Femsa) (Class B) 1,187,125 1,855,600 0.3
Building & 636,900 Empresas ICA Sociedad
Construction Controladora, S.A. de C.V. 1,544,145 1,668,903 0.3
Building 426,600 ++Cementos Mexicanos, S.A.
Products de C.V. (Cemex) (Class B) 1,755,508 2,105,704 0.4
Diversified 241,100 Alfa, S.A. de C.V. (Class A) 1,426,724 1,815,963 0.3
Health & Personal 64,650 Kimberly-Clark de Mexico,
S.A. de C.V. (ADR) (a) 1,173,629 1,389,975 0.2
Multi-Industry 315,800 Grupo Carso, S.A. de C.V. 'A1' 1,566,894 2,059,147 0.4
Telecommuni- 538,300 Carso Global Telecom, S.A.
cations de C.V. 'A1' 1,953,582 1,935,387 0.3
890,000 Telefonos de Mexico, S.A.
de C.V. (Series L) 1,980,638 2,223,644 0.4
------------- ------------- ------
3,934,220 4,159,031 0.7
Total Investments in Mexico 12,588,245 15,054,323 2.6
Total Investments in
Latin America 30,524,301 34,588,638 5.9
NORTH
AMERICA
Canada Building Products 410,000 Noranda Forest, Inc. 3,010,830 2,232,645 0.4
Metals & Mining 89,219 Alcan Aluminium Ltd. 3,101,152 2,409,980 0.4
129,000 Barrick Gold Corp. 2,922,974 2,116,463 0.4
279,000 Noranda, Inc. 5,952,644 4,685,287 0.8
------------- ------------- ------
11,976,770 9,211,730 1.6
Miscellaneous 48,000 MSCI Canada Opals (Class B) 7,565,827 7,279,200 1.3
Oil & Gas 255,700 Ranger Oil Ltd. 2,417,066 1,787,672 0.3
Producers
Telecommuni- 12,000 BC Telecom, Inc. 313,560 311,130 0.1
cations
Transportation 139,800 Canadian Pacific Ltd. 4,294,873 3,949,290 0.6
Total Investments in
North America 29,578,926 24,771,667 4.3
PACIFIC
BASIN
Australia Auto--Related 306,200 ++Orbital Engine Corporation Ltd. 202,196 163,459 0.0
Banking 256,000 Australia and New Zealand
Banking Group Ltd. 1,577,793 1,759,072 0.3
23,100 Commonwealth Bank of Australia 273,955 274,313 0.0
293,000 National Australia Bank Ltd. 3,842,092 3,884,251 0.7
366,900 Westpac Banking Corporation Ltd. 2,155,835 2,307,667 0.4
------------- ------------- ------
7,849,675 8,225,303 1.4
Beverages 6,700 Foster's Brewing Group Ltd. 14,192 12,427 0.0
Broadcast Media 90,400 Seven Network Ltd. 353,321 331,003 0.1
Building & 112,800 James Hardie Industries Ltd. 348,129 322,697 0.1
Construction
Building Products 476,775 Boral Ltd. 1,471,675 1,207,328 0.2
442,500 CSR Ltd. 1,702,598 1,453,666 0.2
------------- ------------- ------
3,174,273 2,660,994 0.4
Closed-End Funds 103,200 Franked Income Fund (Units) 307,049 316,423 0.1
Commercial 74,000 Mayne Nickless Ltd. 421,833 385,413 0.1
Services
Diversified 58,400 Email Ltd. 205,257 129,100 0.0
44,600 Smith (Howard) Ltd. 355,716 347,976 0.1
63,000 Southcorp Ltd. 215,581 194,459 0.0
45,100 Wesfarmers Ltd. 404,120 373,484 0.1
------------- ------------- ------
1,180,674 1,045,019 0.2
Food & Beverage 117,001 Coca-Cola Amatil, Ltd. 710,460 872,983 0.1
Foods 46,900 Arnotts Ltd. 313,350 318,416 0.1
112,400 Burns, Philp & Company Ltd. 205,483 23,078 0.0
40,900 Foodland Associated Ltd. 312,023 307,912 0.1
15,000 Goodman Fielder Ltd. 21,015 22,585 0.0
146,487 National Foods Ltd. 207,173 216,552 0.0
------------- ------------- ------
1,059,044 888,543 0.2
Hotels 321,000 AAPC Ltd. 204,570 107,649 0.0
Investment 108,700 Australian Foundation
Management Investment Company Ltd. 199,151 186,730 0.0
Media 193,496 The News Corp., Ltd. (Preferred) 854,983 943,157 0.2
Metals & Mining 71,000 Aberfoyle Ltd. 199,927 123,911 0.0
144,000 Ashton Mining Ltd. 200,569 133,047 0.0
85,800 Comalco Ltd. 360,009 330,602 0.1
81,700 Metal Manufactures Ltd. 199,358 109,035 0.0
79,500 Newcrest Mining Ltd. 200,819 79,438 0.0
351,400 Normandy Mining Ltd. 377,750 303,028 0.0
62,200 Plutonic Resources Ltd. 198,444 90,673 0.0
163,400 QCT Resources Ltd. 199,493 129,612 0.0
</TABLE>
Merrill Lynch International Equity Fund, November 30, 1997
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
PACIFIC BASIN Shares Value Percent of
(continued) Industries Held Investments Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
Australia Metals & Mining 53,300 RGC Ltd. $ 198,386 $ 78,429 0.0%
(concluded) (concluded) 405,500 Rio Tinto Ltd. 6,225,724 4,468,140 0.8
294,000 WMC Ltd. 1,869,153 942,686 0.2
------------- ------------- ------
10,229,632 6,788,601 1.1
Oil & Gas 58,800 Australian Gas Light Co., Ltd. 388,634 396,391 0.1
Producers 124,000 Australian Oil & Gas
Corporation Ltd. 203,609 157,001 0.0
136,000 Woodside Petroleum Ltd. 989,076 977,230 0.2
------------- ------------- ------
1,581,319 1,530,622 0.3
Packaging & 338,500 Amcor Ltd. 2,215,472 1,517,435 0.3
Containers
Pharmaceuticals 59,600 F.H. Faulding & Co. Ltd. 289,344 299,808 0.0
Property 104,041 Lend Lease Corp. 1,624,348 2,129,049 0.4
Publishing 71,500 PMP Communications Ltd. 166,993 144,357 0.0
Real Estate 110,100 Capital Property Trust 199,840 172,557 0.0
Investment Trusts 77,400 Stockland Trust Group 200,893 190,595 0.0
2,855 Stockland Trust Group
(New Shares) 7,331 6,643 0.0
100,500 Westfield Holdings Ltd. 405,646 388,619 0.1
------------- ------------- ------
813,710 758,414 0.1
Resources 125,342 Broken Hill Proprietary Co. 1,652,396 1,152,080 0.2
Retail 122,600 Coles Myer Ltd. 616,707 604,134 0.1
Steel 173,000 Australian National
Industries Ltd. 204,471 155,106 0.0
Telecommuni- 193,000 ++Telstra Corp. Ltd. 367,872 363,245 0.1
cations
Transportation 120,100 Brambles Industries Ltd. 2,284,747 2,302,076 0.4
Total Investments in Australia 38,926,561 34,206,727 5.9
Hong Kong Airlines 570,000 Cathay Pacific Airways 879,874 497,749 0.1
Banking 196,000 Dao Heng Bank Group Ltd. 924,947 464,022 0.1
112,200 HSBC Holdings PLC 1,724,207 2,707,095 0.4
122,400 Hang Seng Bank Ltd. 1,356,383 1,076,768 0.2
------------- ------------- ------
4,005,537 4,247,885 0.7
Conglomerates 227,325 Hutchison Whampoa Ltd. 1,285,072 1,514,559 0.3
Diversified 315,000 Citic Pacific Ltd. 1,706,032 1,255,142 0.2
187,500 Swire Pacific Ltd. (Class A) 1,546,403 938,737 0.1
581,500 Swire Pacific Ltd. (Class B) 766,292 552,928 0.1
------------- ------------- ------
4,018,727 2,746,807 0.4
Foods 2,154,000 C.P. Pokphand Co. Ltd. 748,591 390,126 0.1
Property 227,000 Cheung Kong (Holdings) Ltd. 1,628,621 1,600,494 0.3
242,000 Great Eagle Holdings Ltd. 717,303 363,166 0.0
48,400 Great Eagle Holdings Ltd.
(Warrants) (b) 0 17,532 0.0
586,000 Henderson Investment Ltd. 604,973 462,444 0.1
210,000 Henderson Land Development
Co. Ltd. 1,734,865 1,037,802 0.2
183,000 New World Development Co. Ltd. 1,007,002 678,278 0.1
135,000 Sun Hung Kai Properties Ltd. 1,447,923 1,030,428 0.2
314,000 Wharf (Holdings) Ltd. 1,184,658 639,797 0.1
------------- ------------- ------
8,325,345 5,829,941 1.0
Telecommuni- 41,800 ++China Telecom (Hong Kong)
cations Ltd. (ADR) (a) 1,347,477 1,410,750 0.2
1,759,200 Hong Kong Telecommunications
Ltd. 3,011,513 3,345,525 0.6
------------- ------------- ------
4,358,990 4,756,275 0.8
Utilities-- 523,000 China Light and Power Co. Ltd. 2,382,158 2,638,749 0.5
Electric 214,000 Hong Kong Electric Holdings Ltd. 746,766 723,964 0.1
------------- ------------- ------
3,128,924 3,362,713 0.6
Utilities--Gas 1,247,000 Hong Kong and China Gas
Co. Ltd. 2,043,031 2,242,400 0.4
Total Investments in Hong Kong 28,794,091 25,588,455 4.4
Japan Automobiles 813,000 Mitsubishi Motors Corp. 5,881,904 2,790,705 0.5
114,000 Toyota Motor Corp. 3,104,108 3,287,774 0.5
------------- ------------- ------
8,986,012 6,078,479 1.0
Banking 185,000 Fuji Bank Ltd. 2,251,555 993,143 0.2
7,500,000 Japanese Bank Knock Out
(Warrants) (b) 7,736,250 6,952,500 1.2
425,000 Mitsubishi Trust and
Banking Corp. 4,518,738 5,662,226 1.0
390,000 Sakura Bank Ltd. 2,790,344 1,363,166 0.2
------------- ------------- ------
17,296,887 14,971,035 2.6
Broadcast--Media 27,000 Nippon Broadcasting System Inc. 2,037,206 1,354,232 0.2
Building & 420,000 Nishimatsu Construction Co. Ltd. 2,133,233 1,688,558 0.3
Construction
Capital Goods 808,000 Mitsubishi Heavy
Industries, Ltd. 6,649,674 3,178,809 0.5
Chemicals 560,000 Kaneka Corp. 2,869,635 3,212,539 0.5
191,000 Shin-Etsu Chemical Co., Ltd. 3,494,847 4,535,502 0.8
------------- ------------- ------
6,364,482 7,748,041 1.3
Electric 220,000 Taihei Dengyo Kaisha, Ltd. 5,020,707 732,759 0.1
Construction
Electrical 347,000 Anritsu Corp. 4,003,623 3,671,238 0.6
Equipment 450,000 Fujikura Ltd. 3,474,564 3,240,987 0.5
92,000 Murata Manufacturing Co., Ltd. 3,154,267 2,761,442 0.5
380,000 NEC Corporation 4,738,711 4,020,376 0.7
40,000 Rohm Co., Ltd. 2,236,748 3,949,843 0.7
362,000 Sharp Corporation 5,603,967 2,422,790 0.4
------------- ------------- ------
23,211,880 20,066,676 3.4
Electronics 57,400 Advantest Corp. 2,941,343 3,972,116 0.7
497,000 Hitachi Ltd. 4,597,191 3,524,961 0.6
278,000 Pioneer Electronic Corp. 4,950,444 4,836,677 0.8
60,700 Sony Corp. 4,410,154 5,185,188 0.9
------------- ------------- ------
16,899,132 17,518,942 3.0
Financial 72,000 Jafco Co., Ltd. 4,066,033 2,567,398 0.4
Services
Glass 508,000 Asahi Glass Co., Ltd. 4,506,452 3,244,671 0.6
</TABLE>
Merrill Lynch International Equity Fund, November 30, 1997
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
PACIFIC BASIN Shares Value Percent of
(continued) Industries Held Investments Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
Japan Machinery 375,000 Daifuku Co., Ltd. $ 4,945,520 $ 2,321,708 0.4%
(concluded) 780,000 NSK Ltd. 4,515,521 3,233,699 0.6
------------- ------------- ------
9,461,041 5,555,407 1.0
Manufacturing 430,000 Dainippon Screen
Manufacturing Co., Ltd. 3,372,153 2,524,060 0.4
367,000 Ube Industries Ltd. 1,070,903 661,520 0.1
------------- ------------- ------
4,443,056 3,185,580 0.5
Office Equipment 274,000 Ricoh Co., Ltd. 3,290,416 3,306,897 0.6
Packaging & 3,000 Toyo Seikan Kaisha, Ltd. 93,627 50,078 0.0
Containers
Paper & Forest 571,000 Oji Paper Co., Ltd. 3,710,043 2,376,183 0.4
Products
Pharmaceuticals 475,000 Fujisawa Pharmaceutical
Co., Ltd. 4,367,310 4,429,859 0.8
184,000 Taisho Pharmaceutical
Co., Ltd. 3,604,125 4,614,420 0.8
------------- ------------- ------
7,971,435 9,044,279 1.6
Real Estate 284,000 Mitsubishi Estate Co., Ltd. 3,273,551 3,294,044 0.6
401,000 Mitsui Fudosan Co., Ltd. 4,157,404 4,242,555 0.7
------------- ------------- ------
7,430,955 7,536,599 1.3
Retail 110,000 Isetan Co., Ltd. 1,216,338 625,000 0.1
97,000 Ito-Yokado Co., Ltd. 5,415,075 4,378,683 0.8
370,000 Takashimaya Co. 3,885,286 2,957,680 0.5
120,000 Uny Co., Ltd. 1,991,583 1,768,025 0.3
------------- ------------- ------
12,508,282 9,729,388 1.7
Steel 1,561,000 Kawasaki Steel Corp. 4,179,147 2,569,044 0.4
1,891,000 Nippon Steel Corp. 5,069,989 3,497,461 0.6
------------- ------------- ------
9,249,136 6,066,505 1.0
Telecommuni- 727 DDI Corp. 4,400,795 2,222,022 0.4
cations 175,000 Uniden Corporation 2,438,638 1,782,915 0.3
------------- ------------- ------
6,839,433 4,004,937 0.7
Textiles 1,061,000 Teijin Ltd. 4,224,189 2,785,541 0.5
Tire & Rubber 184,000 Bridgestone Corporation 3,348,443 3,994,357 0.7
Tobacco 625 Japan Tobacco, Inc. 4,041,588 4,785,462 0.8
Trading 654,000 Mitsui & Co. 4,795,072 4,546,223 0.8
1,274,000 Nissho Iwai Corp. 4,454,051 4,063,621 0.7
------------- ------------- ------
9,249,123 8,609,844 1.5
Transportation 725,000 Nippon Express Co., Ltd. 4,283,642 3,795,455 0.6
500,000 Tobu Railway Co., Ltd. 2,416,593 1,743,730 0.3
800,000 Tokyu Corp. 4,912,056 3,416,928 0.6
------------- ------------- ------
11,612,291 8,956,113 1.5
Total Investments in Japan 194,644,756 159,136,770 27.2
Malaysia Agricultural 313,000 IOI Corporation BHD 394,904 159,822 0.0
Operations
Airlines 341,900 Malaysian Airline System BHD 787,787 253,041 0.1
Automobiles 77,000 Edaran Otomobil Nasional BHD 543,478 178,916 0.0
194,000 Perusahaan Otomobil Nasional BHD 780,641 261,560 0.1
------------- ------------- ------
1,324,119 440,476 0.1
Banking 66,000 Malayan Banking BHD 524,142 169,449 0.1
Chemicals 30,000 Malaysian Oxygen BHD 152,864 77,453 0.0
Diversified 457,000 Berjaya Group BHD 467,652 159,937 0.1
126,500 Malayan United Industries BHD 93,728 35,562 0.0
222,000 Multi-Purpose Holdings BHD 244,595 87,246 0.0
46,500 Sime Darby BHD 141,230 46,687 0.0
77,000 United Engineers (Malaysia) Ltd. 541,520 71,566 0.0
66,000 YTL Corporation BHD 261,830 64,372 0.0
33,000 YTL Corporation BHD (Class A) 0 30,671 0.0
------------- ------------- ------
1,750,555 496,041 0.1
Financial 205,000 ++Idris Hydraulic (Malaysia) BHD 233,818 58,807 0.0
Services
Foods 24,000 Nestle (Malaysia) BHD 185,302 123,236 0.0
Forest Products 109,000 Lingui Development BHD 188,914 53,781 0.0
Leisure 48,500 Berjaya Sports Toto BHD 192,778 106,433 0.0
Telecommuni- 76,800 Telekom Malaysia BHD 236,353 171,842 0.0
cations
Utilities-- 85,000 Tenaga Nasional BHD 284,239 158,491 0.0
Electric
Total Investments in Malaysia 6,255,775 2,268,872 0.4
New Zealand Beverages 120,000 DB Group Ltd. 178,681 181,222 0.0
Chemicals 72,900 Fernz Corporation Ltd. 207,719 206,704 0.0
Diversified 1,000,000 Brierley Investments Ltd. 713,677 708,860 0.1
Electronics 69,000 PDL Holdings Ltd. 340,434 344,506 0.1
Finance 2,680,700 Wrightson Ltd. 2,005,639 1,272,335 0.2
Forestry 3,130,000 Fletcher Challenge Forests 4,303,655 2,874,705 0.5
Investment 422,500 Infrastructure & Utilities 294,896 247,408 0.1
Companies NZ Ltd.
Leisure 30,000 Tourism Holdings Ltd. 40,407 23,115 0.0
Publishing 20,000 Independent Newspapers Ltd. 112,216 109,103 0.0
Restaurants 100,000 ++Restaurant Brands
New Zealand Ltd. 144,699 126,362 0.0
Retail 120,000 Hallenstein Glasson Holdings Ltd. 177,276 156,812 0.0
Textiles 577,500 Lane Walker Rudkin
Industries, Ltd. 630,520 473,441 0.1
Total Investments in
New Zealand 9,149,819 6,724,573 1.1
Singapore Airlines 140,000 Singapore Airlines Ltd.
'Foreign' 1,202,318 914,688 0.2
Auto & Truck 120,800 Inchcape BHD 440,982 323,287 0.1
Beverages 98,000 Fraser & Neave Ltd. (Ordinary) 709,035 489,446 0.1
Publishing 19,000 Singapore Press Holdings Ltd.
'Foreign' 383,583 260,209 0.0
</TABLE>
Merrill Lynch International Equity Fund, November 30, 1997
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
PACIFIC BASIN Shares Value Percent of
(concluded) Industries Held Investments Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
Singapore Real Estate 133,000 City Developments Ltd. $ 1,263,609 $ 655,893 0.1%
(concluded) Investment Trusts 181,000 DBS Land Ltd. 595,297 308,148 0.1
91,000 Singapore Land Ltd. 427,569 267,546 0.0
763,000 United Industrial
Corporation Ltd. 575,993 359,499 0.1
145,000 Wing Tai Holdings Ltd. 434,232 186,738 0.0
------------- ------------- ------
3,296,700 1,777,824 0.3
Shipbuilding 342,000 Keppel Corporation Ltd. 1,483,483 1,160,196 0.2
Steel 343,000 NatSteel Ltd. 901,687 724,011 0.1
Total Investments in Singapore 8,417,788 5,649,661 1.0
South Korea Electronics 6,700 Samsung Electronics
(GDR) (c) (e) 402,000 147,400 0.0
Telecommuni- 154,393 SK Telecom Co. Ltd. (ADR) (a) 2,561,162 916,708 0.2
cations
Utilities-- 67,880 Korea Electric Power Corp. 2,753,162 766,153 0.1
Electric
Total Investments in
South Korea 5,716,324 1,830,261 0.3
Total Investments in the
Pacific Basin 291,905,114 235,405,319 40.3
SOUTHEAST
ASIA
India Auto & Truck 32,500 Mahindra & Mahindra Ltd. 400,126 284,058 0.0
82,400 Tata Engineering &
Locomotive Co. Ltd. 1,057,491 672,042 0.1
------------- ------------- ------
1,457,617 956,100 0.1
Banking 169,100 State Bank of India 1,213,200 966,286 0.2
Chemicals 100,300 Indian Petrochemicals
Corporation Ltd. 397,090 179,107 0.0
279,000 Reliance Industries Ltd. 1,420,687 1,150,422 0.2
225,700 Tata Chemicals Ltd. 1,144,588 866,160 0.1
------------- ------------- ------
2,962,365 2,195,689 0.3
Cosmetics & 55,800 Reckitt & Coleman of India Ltd. 479,729 518,505 0.1
Toiletries
Diversified 47,600 Hindustan Lever Ltd. 1,845,442 1,719,782 0.3
Electrical 67,900 Bharat Heavy Electricals
Equipment Ltd. (BHEL) 739,463 600,077 0.1
Financial Services 1,359 Industrial Credit & Investment
Corporation of India Ltd. 4,205 2,559 0.0
Hotels 30,700 East India Hotels Ltd.
(GDR) (c) (e) 588,417 376,075 0.1
Metals & Mining 25,600 Hindalco Industries Ltd. 673,996 551,896 0.1
Oil & Related 77,500 Hindustan Petroleum
Corporation Ltd. 981,054 955,162 0.2
Pharmaceuticals 22,200 Ranbaxy Laboratories Ltd. 405,992 408,970 0.1
Real Estate 311 Housing Development Finance
Corp., Ltd. 25,978 24,125 0.0
Steel 1,432,400 Steel Authority of India Ltd. 830,064 465,065 0.1
126,000 Tata Iron and Steel Co. Ltd. 675,065 425,455 0.1
------------- ------------- ------
1,505,129 890,520 0.2
Telecommuni- 199,900 Mahanagar Telephone Nigam Ltd. 1,638,364 1,189,016 0.2
cations
Tobacco 89,400 ITC Ltd. 1,298,486 1,346,805 0.2
Utilities-- 12,900 Bombay Suburban Electric
Electric Supply Co. Ltd. (GDR) (c) 263,890 174,150 0.0
Total Investments in India 16,083,327 12,875,717 2.2
Indonesia Auto & Truck 406,000 P.T. Astra International Inc. 893,271 212,215 0.0
Banking 3,047,000 P.T. Bank Internasional
Indonesia 2,461,248 398,164 0.1
Foods 546,000 P.T. Indofood Sukses Makmur 1,277,715 360,495 0.0
Telecommuni- 1,469,000 P.T. Telekomunikasi Indonesia 2,514,069 1,081,038 0.2
cations 40,500 P.T. Telekomunikasi Indonesia
(ADR) (a) 1,313,769 592,312 0.1
------------- ------------- ------
3,827,838 1,673,350 0.3
Total Investments in Indonesia 8,460,072 2,644,224 0.4
Total Investments in
Southeast Asia 24,543,399 15,519,941 2.6
SHORT-TERM Face
SECURITIES Amount
Commercial US$ 12,394,000 General Motors Acceptance Corp.,
Paper* 5.75% due 12/01/1997 12,390,041 12,390,041 2.1
Total Investments in
Commercial Paper 12,390,041 12,390,041 2.1
US Government United States Treasury Bills (d):
Obligations* 1,000,000 4.65% due 12/04/1997 999,354 999,580 0.2
2,000,000 4.73% due 12/04/1997 1,998,686 1,999,160 0.3
1,000,000 4.82% due 12/04/1997 999,331 999,580 0.2
3,000,000 4.91% due 12/04/1997 2,997,954 2,998,740 0.5
Total Investments in
US Government Obligations 6,995,325 6,997,060 1.2
Total Investments in
Short-Term Securities 19,385,366 19,387,101 3.3
OPTIONS Nominal Value Covered Premiums
PURCHASED by Options Purchased Issue Paid
Call Options 51,386,053 Kopsi 200, expiring October
Purchased 1998 at US$.078873 513,860 5,138 0.0
3,469,627 Thailand Index, expiring April
1998 at US$1.9838 (European
Options) 520,444 347 0.0
------------- ------------- ------
1,034,304 5,485 0.0
Currency 11,000,000 German Deutschemark, expiring
Put Options February 1998 at DM1.95 74,250 12,100 0.0
Purchased 28,000,000 Japanese Yen, expiring February
1998 at YEN 120 418,600 1,514,800 0.3
492,850 1,526,900 0.3
Put Options 9,218,540 Nikkei 225 Index, expiring
Purchased January 1998 at YEN 15,000 228,412 228,412 0.0
Total Options Purchased 1,755,566 1,760,797 0.3
Total Investments 632,063,459 578,018,961 98.8
</TABLE>
Merrill Lynch International Equity Fund, November 30, 1997
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
OPTIONS Nominal Value Covered Premiums Value Percent of
WRITTEN by Options Written Issue Received (Note 1a) Net Assets
<S> <C> <S> <C> <C> <C>
Put Options 51,386,053 Kopsi 200, expiring October
Written 1998 at US$.078873 $ (513,861) $ (2,029,749) (0.3)%
3,469,627 Thailand Index, expiring
April 1998 at US$1.9838
(European Options) (520,444) (4,451,532) (0.8)
Total Options Written (1,034,305) (6,481,281) (1.1)
Total Investments, Net of Options Written $ 631,029,154 571,537,680 97.7
=============
Variation Margin on Financial Futures Contracts** (1,852,521) (0.3)
Unrealized Appreciation on Forward Foreign Exchange Contracts*** 190,954 0.0
Other Assets Less Liabilities 14,935,151 2.6
------------- ------
Net Assets $ 584,811,264 100.0%
============= ======
<FN>
(a)American Depositary Receipts (ADR).
(b)Warrants entitle the Fund to purchase a predetermined number of
shares of Common Stock. The purchase price and the number of shares
are subject to adjustment under certain conditions until the
expiration date.
(c)Global Depositary Receipts (GDR).
(d)Securities held as collateral in connection with open futures
contracts.
(e)The security may be offered and sold to "qualified institutional
buyers" under Rule 144A of the Securities Act of 1933.
++Non-income producing security.
*Commercial Paper and certain US Government Obligations are traded
on a discount basis; the interest rates shown are the discount rates
paid at the time of purchase by the Fund.
**Financial futures contracts purchased as of November 30, 1997 were
as follows:
<CAPTION>
Number of Expiration Value
Contracts Issue Exchange Date (Notes 1a & 1c)
<C> <S> <S> <S> <C>
55 FTSE 100 LIFFE December 1997 $11,266,245
-----------
Total Financial Futures Contracts Purchased
(Total Contract Price--$11,215,756) $11,266,245
===========
Financial futures contracts sold as of November 30, 1997 were as follows:
<CAPTION>
Number of Expiration Value
Contracts Issue Exchange Date (Notes 1a & 1c)
<C> <S> <S> <S> <C>
197 CAC 40 Index CAC December 1997 $19,110,919
147 DAX Index DTB December 1997 33,228,767
70 Nikkei Index SMX December 1997 4,572,492
55 Nikkei Index CME December 1997 4,562,250
-----------
Total Financial Futures Contracts Sold
(Total Contract Price--$61,468,698) $61,474,428
===========
***Forward foreign exchange contracts as of November 30, 1997 were as follows:
<CAPTION>
Unrealized Appreciation
Foreign Currency Expiration (Depreciation)
Sold Date (Note 1c)
<S> <C> <S> <C>
DM 6,916,082 December 1997 $ (7,552)
POUND STERLING 8,827,909 January 1998 (98,228)
YEN 1,385,437,500 January 1998 296,734
-----------
Total Unrealized Appreciation--Net on
Forward Foreign Exchange Contracts
(US$ Commitment--$29,895,248) $ 190,954
===========
See Notes to Financial Statements.
</TABLE>
PORTFOLIO INFORMATION
Worldwide
Investments as of
November 30, 1997
Percent of
Ten Largest Equity Holdings Net Assets
MSCI Canada Opals (Class B) 1.3%
Japanese Bank Knock Out
(Warrants) 1.2
Unilever PLC 1.0
Mitsubishi Trust and Banking Corp. 1.0
Sony Corp. 0.9
Nedcor Ltd. (GDR) 0.9
Pioneer Electronic Corp. 0.8
Japan Tobacco, Inc. 0.8
Noranda, Inc. 0.8
Montedison S.p.A. 0.8
Percent of
Ten Largest Countries Net Assets
Japan 27.2%
United Kingdom 12.3
France 8.9
Germany 7.8
Australia 5.9
Hong Kong 4.4
Canada 4.3
South Africa 2.8
Mexico 2.6
Italy 2.5
Percent of
Geographical Asset Mix* Net Assets
Japan 27.2%
Europe (Ex-United Kingdom
and Ireland) 26.6
Pacific Basin (Ex-Japan) 13.1
United Kingdom and Ireland 12.4
Other Emerging Markets 11.6
North America 4.3
Cash 3.3
[FN]
*Percent of net assets may not equal 100% and
excludes the impact of futures and options.
Ten Largest Industries Percent of
(Equity Investments) Net Assets
Banking 10.2%
Telecommunications 6.4
Chemicals 5.1
Diversified 4.4
Electronics 4.0
Electrical Equipment 3.5
Metals & Mining 3.2
Insurance 3.1
Pharmaceuticals 2.9
Transportation 2.8
Financial Futures Contracts
Percent of
Country Issue Exchange Net Assets
United Kingdom FTSE 100 LIFFE 1.9%
Germany DAX Index DTB (5.7)
France CAC 40 Index CAC (3.2)
Japan Nikkei Index SMX (0.8)
Japan Nikkei Index CME (0.8)
------
(8.6)%
======
Merrill Lynch International Equity Fund, November 30, 1997
<TABLE>
STATEMENT OF ASSETS ANDLIABILITIES
<CAPTION>
As of November 30, 1997
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$630,307,893) (Note 1a) $ 576,258,164
Unrealized appreciation on forward foreign exchange contracts (Note 1c) 190,954
Options purchased, at value (cost--$1,755,566) (Notes 1a & 1c) 1,760,797
Foreign cash (Note 1b) 21,616,634
Cash 10,899
Receivables:
Securities sold $ 4,403,572
Dividends 1,703,325
Beneficial interest sold 129,665
Forward foreign exchange contracts (Note 1c) 118,697 6,355,259
-------------
Deferred organization expenses (Note 1f) 29,541
Prepaid registration fees and other assets (Note 1f) 52,738
-------------
Total assets 606,274,986
-------------
Liabilities: Options written, at value (premiums received--$1,034,305)
(Notes 1a & 1c) 6,481,281
Payables:
Securities purchased 2,302,727
Beneficial interest redeemed 1,863,140
Variation margin (Note 1c) 1,852,521
Distributor (Note 2) 381,317
Forward foreign exchange contracts (Note 1c) 368,067
Investment adviser (Note 2) 349,324
Options purchased (Notes 1a & 1c) 228,412 7,345,508
-------------
Accrued expenses and other liabilities 7,636,933
-------------
Total liabilities 21,463,722
-------------
Net Assets: Net assets $ 584,811,264
=============
Net Assets Class A Shares of beneficial interest, $0.10 par value,
Consist of: unlimited number of shares authorized $ 323,920
Class B Shares of beneficial interest, $0.10 par value,
unlimited number of shares authorized 3,990,176
Class C Shares of beneficial interest, $0.10 par value,
unlimited number of shares authorized 183,172
Class D Shares of beneficial interest, $0.10 par value,
unlimited number of shares authorized 849,950
Paid-in capital in excess of par 539,645,715
Accumulated investment loss--net (77,423)
Undistributed realized capital gains on investments and
foreign currency transactions--net 99,437,439
Unrealized depreciation on investments and foreign
currency transactions--net (59,541,685)
-------------
Net assets $ 584,811,264
=============
Net Asset Class A--Based on net assets of $35,954,964 and 3,239,201
shares of beneficial interest outstanding $ 11.10
=============
Value: Class B--Based on net assets of $434,850,711 and 39,901,755
shares of beneficial interest outstanding $ 10.90
=============
Class C--Based on net assets of $19,707,362 and 1,831,724
shares of beneficial interest outstanding $ 10.76
=============
Class D--Based on net assets of $94,298,227 and 8,499,494
shares of beneficial interest outstanding $ 11.09
=============
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Six Months Ended November 30, 1997
<S> <S> <C> <C>
Investment Income Dividends (net of $413,740 foreign withholding tax) $ 5,571,777
(Notes 1d & 1e): Interest and discount earned 1,645,587
-------------
Total income 7,217,364
-------------
Expenses: Investment advisory fees (Note 2) 2,725,094
Account maintenance and distribution fees--Class B (Note 2) 2,724,000
Transfer agent fees--Class B (Note 2) 613,386
Custodian fees 432,546
Account maintenance fees--Class D (Note 2) 142,961
Account maintenance and distribution fees--Class C (Note 2) 118,941
Transfer agent fees--Class D (Note 2) 112,706
Accounting services (Note 2) 97,131
Printing and shareholder reports 89,075
Registration fees (Note 1f) 44,176
Transfer agent fees--Class A (Note 2) 43,168
Professional fees 39,972
Transfer agent fees--Class C (Note 2) 27,749
Trustees' fees and expenses 18,532
Amortization of organization expenses (Note 1f) 12,404
Pricing fees 11,937
Other 41,009
-------------
Total expenses 7,294,787
-------------
Investment loss--net (77,423)
-------------
Realized & Realized gain from:
Unrealized Gain Investments--net $ 68,987,943
(Loss) on Foreign currency transactions--net 162,986 69,150,929
Investments & -------------
Foreign Currency Change in unrealized appreciation/depreciation on:
Transactions--Net Investments--net (152,530,454)
(Notes 1b, 1c, Foreign currency transactions--net 13,777 (152,516,677)
1e & 3): ------------- -------------
Net realized and unrealized loss on investments and
foreign currency transactions (83,365,748)
-------------
Net Decrease in Net Assets Resulting from Operations $ (83,443,171)
=============
See Notes to Financial Statements.
</TABLE>
Merrill Lynch International Equity Fund, November 30, 1997
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
For the Six For the
Months Ended Year Ended
Increase (Decrease) in Net Assets: Nov. 30, 1997 May 31, 1997
<S> <S> <C> <C>
Operations: Investment income (loss)--net $ (77,423) $ 2,812,220
Realized gain on investments and foreign
currency transactions--net 69,150,929 70,558,271
Change in unrealized appreciation/depreciation on
investments and foreign currency transactions--net (152,516,677) (3,407,349)
------------- -------------
Net increase (decrease) in net assets resulting
from operations (83,443,171) 69,963,142
------------- -------------
Dividends & Investment income--net:
Distributions to Class A -- (2,005,712)
Shareholders Class B -- (7,119,954)
(Note 1g): Class C -- (484,716)
Class D -- (2,664,054)
In excess of investment income--net:
Class A -- (101,732)
Class B -- (361,132)
Class C -- (24,585)
Class D -- (135,124)
Realized gain on investments--net:
Class A -- (2,645,936)
Class B -- (21,542,693)
Class C -- (1,111,282)
Class D -- (4,085,666)
------------- -------------
Net decrease in net assets resulting from dividends
and distributions to shareholders -- (42,282,586)
------------- -------------
Beneficial Net decrease in net assets derived from beneficial
Interest interest transactions (103,380,818) (540,177,741)
Transactions ------------- -------------
(Note 4):
Net Assets: Total decrease in net assets (186,823,989) (512,497,185)
Beginning of period 771,635,253 1,284,132,438
------------- -------------
End of period $ 584,811,264 $ 771,635,253
============= =============
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
Class A
For the
The following per share data and ratios For the Period
have been derived from information provided Six Months For the Oct. 21,
in the financial statements. Ended Year Ended 1994++ to
Nov. 30, May 31, May 31,
Increase (Decrease) in Net Asset Value: 1997++++ 1997++++ 1996++++ 1995
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 12.58 $ 11.94 $ 10.25 $ 11.73
Operating -------- -------- -------- --------
Performance: Investment income--net .05 .12 .16 .26
Realized and unrealized gain (loss) on investments
and foreign currency transactions--net (1.53) 1.09 1.53 (1.05)
-------- -------- -------- --------
Total from investment operations (1.48) 1.21 1.69 (.79)
-------- -------- -------- --------
Less dividends and distributions:
Investment income--net -- (.24) -- (.15)
In excess of investment income--net -- (.01) -- --
Realized gain on investments--net -- (.32) -- (.54)
-------- -------- -------- --------
Total dividends and distributions -- (.57) -- (.69)
-------- -------- -------- --------
Net asset value, end of period $ 11.10 $ 12.58 $ 11.94 $ 10.25
======== ======== ======== ========
Total Investment Based on net asset value per share (11.76%)+++ 10.76% 16.49% (6.78%)+++
Return:** ======== ======== ======== ========
Ratios to Average Expenses 1.16%* 1.11% 1.06% 1.23%*
Net Assets: ======== ======== ======== ========
Investment income--net .82%* 1.04% 1.47% 4.64%*
======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $ 35,955 $ 44,624 $116,628 $ 74,478
Data: ======== ======== ======== ========
Portfolio turnover 62.05% 60.56% 71.86% 63.95%
======== ======== ======== ========
Average commission rate paid++++++ $ .0031 $ .0004 $ .0005 --
======== ======== ======== ========
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
+++Aggregate total investment return.
See Notes to Financial Statements.
++Commencement of operations.
++++Based on average shares outstanding.
++++++For fiscal years beginning on or after September 1, 1995, the
Fund is required to disclose its average commission rate per share
for purchases and sales of equity securities. The "Average
Commission Rate Paid" includes commissions paid in foreign
currencies, which have been converted into US dollars using the
prevailing exchange rate on the date of the transaction. Such
conversions may significantly affect the rate shown.
</TABLE>
Merrill Lynch International Equity Fund, November 30, 1997
<TABLE>
FINANCIAL HIGHLIGHTS (concluded)
<CAPTION>
Class B
The following per share data and ratios For the For the
have been derived from information provided Six Months Period
in the financial statements. Ended July 30, 1993++
Nov. 30, For the Year Ended May 31, to May 31,
Increase (Decrease) in Net Asset Value: 1997++++ 1997++++ 1996++++ 1995 1994++++
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 12.42 $ 11.76 $ 10.19 $ 11.44 $ 10.00
Operating -------- -------- -------- -------- --------
Performance: Investment income (loss)--net (.01) .01 .04 .02 (.02)
Realized and unrealized gain (loss)
on investments and foreign
currency transactions--net (1.51) 1.08 1.53 (.69) 1.46
-------- -------- -------- -------- --------
Total from investment operations (1.52) 1.09 1.57 (.67) 1.44
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net -- (.10) -- (.04) --
In excess of investment income--net -- (.01) -- -- --
Realized gain on investments--net -- (.32) -- (.54) --
-------- -------- -------- -------- --------
Total dividends and distributions -- (.43) -- (.58) --
-------- -------- -------- -------- --------
Net asset value, end of period $ 10.90 $ 12.42 $ 11.76 $ 10.19 $ 11.44
======== ======== ======== ======== ========
Total Investment Based on net asset value per share (12.24%)+++ 9.70% 15.41% (5.91%) 14.40%+++
Return:** ======== ======== ======== ======== ========
Ratios to Average Expenses 2.19%* 2.14% 2.09% 2.13% 2.07%*
Net Assets: ======== ======== ======== ======== ========
Investment income (loss)--net (.20%)* .08% .37% .23% (.19%)*
======== ======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $434,851 $583,213 $945,368 $961,941 $844,295
Data: ======== ======== ======== ======== ========
Portfolio turnover 62.05% 60.56% 71.86% 63.95% 50.63%
======== ======== ======== ======== ========
Average commission rate paid++++++ $ .0031 $ .0004 $ .0005 -- --
======== ======== ======== ======== ========
<CAPTION>
Class C
For the
The following per share data and ratios For the Period
have been derived from information provided Six Months For the Oct. 21,
in the financial statements. Ended Year Ended 1994++ to
Nov. 30, May 31, May 31,
Increase (Decrease) in Net Asset Value: 1997++++ 1997++++ 1996++++ 1995
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 12.26 $ 11.65 $ 10.10 $ 11.62
Operating -------- -------- -------- --------
Performance: Investment income (loss)--net (.01) --+++++ .05 .24
Realized and unrealized gain (loss) on investments
and foreign currency transactions--net (1.49) 1.08 1.50 (1.09)
-------- -------- -------- --------
Total from investment operations (1.50) 1.08 1.55 (.85)
-------- -------- -------- --------
Less dividends and distributions:
Investment income--net -- (.14) -- (.13)
In excess of investment income--net -- (.01) -- --
Realized gain on investments--net -- (.32) -- (.54)
-------- -------- -------- --------
Total dividends and distributions -- (.47) -- (.67)
-------- -------- -------- --------
Net asset value, end of period $ 10.76 $ 12.26 $ 11.65 $ 10.10
======== ======== ======== ========
Total Investment Based on net asset value per share (12.23%)+++ 9.71% 15.35% (7.36%)+++
Return:** ======== ======== ======== ========
Ratios to Average Expenses 2.20%* 2.15% 2.09% 2.30%*
Net Assets: ======== ======== ======== ========
Investment income (loss)--net (.22%)* .04% .45% 4.26%*
======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $ 19,707 $ 24,774 $ 46,985 $ 25,822
Data: ======== ======== ======== ========
Portfolio turnover 62.05% 60.56% 71.86% 63.95%
======== ======== ======== ========
Average commission rate paid++++++ $ .0031 $ .0004 $ .0005 --
======== ======== ======== ========
<CAPTION>
Class D
The following per share data and ratios For the For the
have been derived from information provided Six Months Period
in the financial statements. Ended July 30, 1993++
Nov. 30, For the Year Ended May 31, to May 31,
Increase (Decrease) in Net Asset Value: 1997++++ 1997++++ 1996++++ 1995 1994++++
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 12.59 $ 11.94 $ 10.27 $ 11.51 $ 10.00
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .04 .10 .13 .10 .04
Realized and unrealized gain (loss)
on investments and foreign
currency transactions (1.54) 1.09 1.54 (.68) 1.47
-------- -------- -------- -------- --------
Total from investment operations (1.50) 1.19 1.67 (.58) 1.51
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net -- (.21) -- (.12) --
In excess of investment income--net -- (.01) -- -- --
Realized gain on investments--net -- (.32) -- (.54) --
-------- -------- -------- -------- --------
Total dividends and distributions -- (.54) -- (.66) --
-------- -------- -------- -------- --------
Net asset value, end of period $ 11.09 $ 12.59 $ 11.94 $ 10.27 $ 11.51
======== ======== ======== ======== ========
Total Investment Based on net asset value per share (11.91%)+++ 10.50% 16.26% (5.11%) 15.10%+++
Return:** ======== ======== ======== ======== ========
Ratios to Average Expenses 1.41%* 1.36% 1.31% 1.34% 1.31%*
Net Assets: ======== ======== ======== ======== ========
Investment income--net .57%* .86% 1.13% .85% .55%*
======== ======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $ 94,298 $119,024 $175,151 $188,583 $208,007
Data: ======== ======== ======== ======== ========
Portfolio turnover 62.05% 60.56% 71.86% 63.95% 50.63%
======== ======== ======== ======== ========
Average commission rate paid++++++ $ .0031 $ .0004 $ .0005 -- --
======== ======== ======== ======== ========
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
+++Aggregate total investment return.
+++++Amount is less than $.01 per share.
++Commencement of operations.
See Notes to Financial Statements.
++++Based on average shares outstanding.
++++++For fiscal years beginning on or after September 1, 1995, the
Fund is required to disclose its average commission rate per share
for purchases and sales of equity securities. The "Average
Commission Rate Paid" includes commissions paid in foreign
currencies, which have been converted into US dollars using the
prevailing exchange rate on the date of the transaction. Such
conversions may significantly affect the rate shown.
</TABLE>
Merrill Lynch International Equity Fund, November 30, 1997
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch International Equity Fund (the "Fund") is registered
under the Investment Company Act of 1940 as a diversified, open-end
management investment company. These unaudited financial statements
reflect all adjustments which are, in the opinion of management,
necessary to a fair statement of the results for the interim period
presented. All such adjustments are of a normal recurring nature.
The Fund offers four classes of shares under the Merrill Lynch
Select Pricing SM System. Shares of Class A and Class D are sold
with a front-end sales charge. Shares of Class B and Class C may be
subject to a contingent deferred sales charge. All classes of shares
have identical voting, dividend, liquidation and other rights and
the same terms and conditions, except that Class B, Class C and
Class D Shares bear certain expenses related to the account
maintenance of such shares, and Class B and Class C Shares also bear
certain expenses related to the distribution of such shares. Each
class has exclusive voting rights with respect to matters relating
to its account maintenance and distribution expenditures. The
following is a summary of significant accounting policies followed
by the Fund.
(a) Valuation of investments--Portfolio securities which are traded
on stock exchanges are valued at the last sale price on the exchange
on which such securities are traded, as of the close of business on
the day the securities are being valued or, lacking any sales, at
the last available bid price. Securities traded in the over-the-
counter market are valued at the last available bid price prior to
the time of valuation. In cases where securities are traded on more
than one exchange, the securities are valued on the exchange
designated by or under the authority of the Board of Trustees as the
primary market. Securities which are traded both in the over-the-
counter market and on a stock exchange are valued according to the
broadest and most representative market. Options written are valued
at the last sale price in the case of exchange-traded options or, in
the case of options traded in the over-the-counter market, the last
asked price. Options purchased are valued at the last sale price in
the case of exchange-traded options or, in the case of options
traded in the over-the-counter market, the last bid price. Short-
term securities are valued at amortized cost, which approximates
market value. Other investments, including futures contracts and
related options, are stated at market value. Securities and assets
for which market quotations are not available are valued at fair
value as determined in good faith by or under the direction of the
Fund's Board of Trustees.
(b) Foreign currency transactions--Transactions denominated in
foreign currencies are recorded at the exchange rate prevailing when
recognized. Assets and liabilities denominated in foreign currencies
are valued at the exchange rate at the end of the period. Foreign
currency transactions are the result of settling (realized) or
valuing (unrealized) assets or liabilities expressed in foreign
currencies into US dollars. Realized and unrealized gains or losses
from investments include the effects of foreign exchange rates on
investments.
(c) Derivative financial instruments--The Fund may engage in various
portfolio strategies to seek to increase its return by hedging its
portfolio against adverse movements in the equity, debt, and
currency markets. Losses may arise due to changes in the value of
the contract or if the counterparty does not perform under the
contract.
* Financial futures contracts--The Fund may purchase or sell stock
index futures contacts and options on such futures contracts for the
purpose of hedging the market risk on existing securities or the
intended purchase of securities. Futures contracts are contracts for
delayed delivery of securities at a specific future date and at a
specific price or yield. Upon entering into a contract, the Fund
deposits and maintains as collateral such initial margin as required
by the exchange on which the transaction is effected. Pursuant to
the contract, the Fund agrees to receive from or pay to the broker
an amount of cash equal to the daily fluctuation in value of the
contract. Such receipts or payments are known as variation margin
and are recorded by the Fund as unrealized gains or losses. When the
contract is closed, the Fund records a realized gain or loss equal
to the difference between the value of the contract at the time it
was opened and the value at the time it was closed.
* Foreign currency options and futures--The Fund may also purchase
or sell listed or over-the-counter foreign currency options, foreign
currency futures and related options on foreign currency futures as
a short or long hedge against possible variations in foreign
exchange rates. Such transactions may be effected with respect to
hedges on non-US dollar denominated securities owned by the Fund,
sold by the Fund but not yet delivered, or committed or anticipated
to be purchased by the Fund.
* Forward foreign exchange contracts--The Fund is authorized to
enter into forward foreign exchange contracts as a hedge against
either specific transactions or portfolio positions. Such contracts
are not entered on the Fund's records. However, the effect on
operations is recorded from the date the Fund enters into such con-
tracts. Premium or discount is amortized over the life of the
contracts.
* Options--The Fund is authorized to write and purchase put and call
options. When the Fund writes an option, an amount equal to the
premium received by the Fund is reflected as an asset and an
equivalent liability. The amount of the liability is subsequently
marked to market to reflect the current market value of the option
written. When a security is purchased or sold through an exercise of
an option, the related premium paid (or received) is added to (or
deducted from) the basis of the security acquired or deducted from
(or added to) the proceeds of the security sold. When an option
expires (or the Fund enters into a closing transaction), the Fund
realizes a gain or loss on the option to the extent of the premiums
received or paid (or gain or loss to the extent the cost of the
closing transaction exceeds the premium paid or received).
Written and purchased options are non-income producing investments.
(d) Income taxes--It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its
taxable income to its shareholders. Therefore, no Federal income tax
provision is required. Under the applicable foreign tax law, a
withholding tax may be imposed on interest, dividends, and capital
gains at various rates.
(e) Security transactions and investment income--Security
transactions are recorded on the dates the transactions are entered
into (the trade dates). Dividend income is recorded on the ex-
dividend dates. Dividends from foreign securities where the ex-
dividend date may have passed are subsequently recorded when the
Fund has determined of the ex-dividend date. Interest income
(including amortization of discount) is recognized on the accrual
basis. Realized gains and losses on security transactions are
determined on the identified cost basis.
(f) Deferred organization expenses and prepaid registration
fees--Deferred organization expenses are charged to expense on a
straight-line basis over a five-year period. Prepaid registration
fees are charged to expense as the related shares are issued.
(g) Dividends and distributions--Dividends and distributions paid by
the Fund are recorded on the ex-dividend dates. Distributions in
excess of net investment income are due primarily to differing tax
treatments for foreign currency transactions.
2. Investment Advisory Agreement and Transactions with
Affiliates:
The Fund has entered into an Investment Advisory Agreement with
Merrill Lynch Asset Management, L.P. ("MLAM"). The general partner
of MLAM is Princeton Services, Inc. ("PSI"), an indirect wholly-
owned subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is
the limited partner. The Fund has also entered into a Distribution
Agreement and Distribution Plans with Merrill Lynch Funds
Distributor, Inc. ("MLFD" or "Distributor"), a wholly-owned
subsidiary of Merrill Lynch Group, Inc.
MLAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee of 0.75%, on an annual basis,
of the average daily value of the Fund's net assets. MLAM has
entered into a Sub-Advisory Agreement with Merrill Lynch Asset
Management U.K., Ltd. ("MLAM U.K."), an affiliate of MLAM, pursuant
to which MLAM pays MLAM U.K. a fee in an amount to be determined
from time to time by MLAM and MLAM U.K. but in no event in excess of
the amount that MLAM actually receives. For the six months ended
November 30, 1997, MLAM paid MLAM U.K. a fee of $363,255 pursuant to
such Agreement.
Pursuant to the Distribution Plans adopted by the Fund in accordance
with Rule 12b-1 under the Investment Company Act of 1940, the Fund
pays the Distributor ongoing account maintenance and distribution
fees. The fees are accrued daily and paid monthly at annual rates
based upon the average daily net assets of the shares as follows:
Account Distribution
Maintenance Fee Fee
Class B 0.25% 0.75%
Class C 0.25% 0.75%
Class D 0.25% --
Pursuant to a sub-agreement with the Distributor, Merrill Lynch,
Pierce, Fenner & Smith Inc. ("MLPF&S"), a subsidiary of ML & Co.,
also provides account maintenance and distribution services to the
Fund. The ongoing account maintenance fee compensates the
Distributor and MLPF&S for providing account maintenance services to
Class B, Class C and Class D shareholders. The ongoing distribution
fee compensates the Distributor and MLPF&S for providing shareholder
and distribution-related services to Class B and Class C
shareholders.
For the six months ended November 30, 1997, MLFD earned underwriting
discounts and commissions and MLPF&S earned dealer concessions on
sales of the Fund's Class A and Class D Shares as follows:
MLFD MLPF&S
Class A $ 76 $ 888
Class D $1,177 $17,755
Merrill Lynch International Equity Fund, November 30, 1997
NOTES TO FINANCIAL STATEMENTS (concluded)
For the six months ended November 30, 1997, MLPF&S received
contingent deferred sales charges of $630,414 and $1,134 relating to
transactions in Class B and Class C Shares, respectively.
In addition, MLPF&S received $24,733 in commissions on the execution
of portfolio security transactions for the Fund for the six months
ended November 30, 1997.
Merrill Lynch Financial Data Services, Inc. ("MLFDS"), a wholly-
owned subsidiary of ML & Co., is the Fund's transfer agent.
Accounting services are provided to the Fund by MLAM at cost.
Certain officers and/or trustees of the Fund are officers and/or
directors of MLAM, PSI, MLFDS, MLFD, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended November 30, 1997 were $400,214,671 and
$410,847,254, respectively.
Net realized and unrealized gains (losses) as of November 30, 1997
were as follows:
Realized Unrealized
Gains Gains
(Losses) (Losses)
Investments:
Long-term $ 60,092,423 $ (54,051,464)
Short-term (253) 1,735
Stock index futures contracts 9,902,769 44,759
Options written (403,474) (5,446,976)
Options purchased (603,522) (1,028,819)
------------- -------------
Total investments 68,987,943 (60,480,765)
Currency transactions:
Options purchased 2,624,987 1,034,050
Forward foreign exchange
contracts 701,275 190,954
Foreign currency transactions (3,163,276) (285,924)
------------- -------------
Total currency transactions 162,986 939,080
------------- -------------
Total $ 69,150,929 $ (59,541,685)
============= =============
Transactions in call options written for the six months ended
November 30, 1997 were as follows:
Nominal Value
Covered by Premiums
Written Options Received
Outstanding call options written
at beginning of period $ -- $ --
Options written 16,298 248,268
Options expired (16,298) (248,268)
------------ ------------
Outstanding call options
written at end of period $ -- $ --
============ ============
Transactions in put options written for the six months ended
November 30, 1997 were as follows:
Nominal Value
Covered By Premiums
Written Options Received
Outstanding put options written
at beginning of period $ 3,469,627 $ 520,444
Options written 102,736,697 1,027,367
Options closed (51,350,644) (513,506)
------------ ------------
Outstanding put options written
at end of period $ 54,855,680 $ 1,034,305
============ ============
As of November 30, 1997, net unrealized depreciation for Federal
income tax purposes aggregated $60,525,518, of which $46,149,765
related to appreciated securities and $106,675,283 related to
depreciated securities. At November 30, 1997, the aggregate cost of
investments, net of investment options, for Federal income tax
purposes was $630,536,305.
4. Beneficial Interest Transactions:
Net decrease in net assets derived from beneficial interest
transactions was $103,380,818 and $540,177,741 for the six months
ended November 30, 1997 and the year ended May 31, 1997,
respectively.
Transactions in shares of beneficial interest for each class were as
follows:
Class A Shares for the Six Months Dollar
Ended November 30, 1997 Shares Amount
Shares sold 707,657 $ 8,935,183
Shares redeemed (1,014,546) (12,664,556)
------------- -------------
Net decrease (306,889) $ (3,729,373)
============= =============
Class A Shares for the Year Dollar
Ended May 31, 1997 Shares Amount
Shares sold 5,010,009 $ 58,060,092
Shares issued to shareholders in
reinvestment of dividends and
distributions 282,319 3,161,968
------------- -------------
Total issued 5,292,328 61,222,060
Shares redeemed (11,515,661) (133,217,324)
------------- -------------
Net decrease (6,223,333) $ (71,995,264)
============= =============
Class B Shares for the Six Months Dollar
Ended November 30, 1997 Shares Amount
Shares sold 2,995,244 $ 37,211,377
Shares redeemed (9,801,661) (119,577,138)
Automatic conversion of shares (254,649) (3,218,498)
------------- -------------
Net decrease (7,061,066) $ (85,584,259)
============= =============
Class B Shares for the Year Dollar
Ended May 31, 1997 Shares Amount
Shares sold 8,217,094 $ 94,876,821
Shares issued to shareholders in
reinvestment of dividends and
distributions 2,266,047 25,175,777
------------- --------------
Total issued 10,483,141 120,052,598
Shares redeemed (43,718,602) (502,263,658)
Automatic conversion of shares (196,392) (2,257,596)
------------- --------------
Net decrease (33,431,853) $ (384,468,656)
============= ==============
Class C Shares for the Six Months Dollar
Ended November 30, 1997 Shares Amount
Shares sold 1,045,309 $ 12,915,478
Shares redeemed (1,234,099) (15,181,798)
------------- -------------
Net decrease (188,790) $ (2,266,320)
============= =============
Class C Shares for the Year Dollar
Ended May 31, 1997 Shares Amount
Shares sold 2,069,688 $ 23,614,446
Shares issued to shareholders in
reinvestment of dividends and
distributions 131,890 1,446,828
------------- -------------
Total issued 2,201,578 25,061,274
Shares redeemed (4,213,047) (47,925,938)
------------- -------------
Net decrease (2,011,469) $ (22,864,664)
============= =============
Class D Shares for the Six Months Dollar
Ended November 30, 1997 Shares Amount
Shares sold 2,317,681 $ 29,313,230
Automatic conversion of shares 250,743 3,218,498
------------- -------------
Total issued 2,568,424 32,531,728
Shares redeemed (3,520,182) (44,332,594)
------------- -------------
Net decrease (951,758) $ (11,800,866)
============= =============
Class D Shares for the Year Dollar
Ended May 31, 1997 Shares Amount
Shares sold 2,948,566 $ 34,763,784
Automatic conversion of shares 193,325 2,257,596
Shares issued to shareholders in
reinvestment of dividends and
distributions 526,815 5,910,863
------------- -------------
Total issued 3,668,706 42,932,243
Shares redeemed (8,890,251) (103,781,400)
------------- -------------
Net decrease (5,221,545) $ (60,849,157)
============= =============
5. Commitments:
At November 30, 1997, the Fund had entered into foreign exchange
contracts, in addition to the contracts listed on the Schedule of
Investments, under which it had agreed to purchase and sell foreign
currency with an approximate value of $1,743,000 and $8,900,000,
respectively.
6. Subsequent Event:
On December 1, 1997, the Fund's Board of Directors declared an
ordinary income dividend in the amount of $.624356 per Class A
Share, $.337641 per Class B Share, $.325966 per Class C Share and
$.559999 per Class D Share, and a long-term capital gains
distribution of $1.420848 per share for each of the four classes,
payable on December 23, 1997 to shareholders of record December 15,
1997.
Merrill Lynch International Equity Fund, November 30, 1997
PORTFOLIO CHANGES
For the Quarter Ended November 30, 1997
Additions
ABN Amro Holding N.V.
AGIV-AG fuer Industrie und Verkehrswesen
*AM Vescap (Ordinary)
AMB Aachener und Muenchener
Beteiligungs AG
Adidas AG
*Aggreko PLC
Alliance Trust PLC
Altana AG
*Argos PLC
*Axa Colonia Konzern AG
Australian Gas Light Co., Ltd.
BAA PLC
BC Telecom, Inc.
BG PLC
*BMW AG (Preferred)
Banque Nationale de Paris
Barclays PLC
Beiersdorf AG
*Berliner Kraft-und Licht (Bewag) AG
Bilfinger & Berger Bau AG
Bongrain S.A.
Booker PLC
*Boots Company PLC
*Bowthorpe PLC
Brierley Investments Ltd.
*Britannic Assurance PLC
*British Aerospace PLC
British Petroleum Co. PLC
British Sky Broadcasting Group PLC
British Steel PLC
Carlton Communications PLC
Carrefour S.A.
Chilgener S.A. (ADR)
China Telecom (Hong Kong) Ltd. (ADR)
Christian Dior S.A.
Club Mediterranee S.A.
*Cobham PLC
Coles Myer Ltd.
Comalco Ltd.
Commonwealth Bank of Australia
Compagnie de Saint Gobain S.A.
Compagnie Generale des Eaux S.A.
Companhia Energetica de Minas
Gerais S.A. (CEMIG) (Preferred)
Compania de Telecomunicaciones
de Chile S.A. (ADR)
Compass Group PLC
Cordiant PLC
Credit Commercial de France
Credit National/Natexis
*Custodia Holding AG
DB Group Ltd.
*De La Rue PLC
Degussa AG
*Deutz AG
*Didier-Werke AG
*Dixons Group PLC
*Electrocomponents PLC
Endesa S.A.
Energy Group PLC
*Enterprise Oil PLC
Eridania Beghin-Say S.A.
Etablissements Economiques du Casino
Guichard-Perachon S.A. (Preferred)
FAG Kugelfischer Georg Schaefer AG
F.H. Faulding & Co. Ltd.
Foodland Associated Ltd.
*France Telecom S.A.
Franked Income Fund (Units)
Fromageries Bel S.A.
Fuji Bank Ltd.
*GKN PLC
*Gehe AG (Ordinary)
*General Electric Company PLC (Ordinary)
*Gerresheimer Glas AG (Ordinary)
Glaxo Wellcome PLC
Goodman Fielder Ltd.
*Granada Group PLC
*Grand Metropolitan PLC (Ordinary)
HSBC Holdings PLC
*Halifax PLC
Hallenstein Glasson Holdings Ltd.
Hanson PLC
Harpen AG
*Hong Leong Credit BHD (Class A)
Hugo Boss AG (Preferred)
*IKB Deutsche Industriebank
Imperial Chemical Industries PLC
Imperial Tobacco Group PLC
Independent Newspapers Ltd.
Infrastructure & Utilities NZ Ltd.
Ispat International N.V. (NY Registered Shares)
*Iwka AG
James Hardie Industries Ltd.
*Kali und Salz Beteiligungs AG
*Klobenschmidt AG
*Koc Holdings A.S.
L'OREAL
LVMH (Moet-Hennessy Louis Vuitton)
Labinal S.A.
Ladbroke Group PLC
L'Air Liquide
*Legal & General Group PLC
*Leifheit AG
Lloyds TSB Group PLC
London International Group PLC
*MAN AG
MEPC PLC
MSCI Canada Opals (Class B)
*Mannheimer Versicherung AG
*Mercury Asset Management Group PLC
Metallgesellschaft AG
National Grid Group PLC
*Next PLC
Nishimatsu Construction Co. Ltd.
Normandy Mining Ltd.
Novartis AG (Registered Shares)
*Nycomed Amersham PLC
*P.T. Indofood Sukses Makmur 'Foreign'
Pearson PLC
Pechiney S.A. (Class A)
Pernod Ricard
*Provident Financial Group, Inc.
*Prudential Corp. PLC
*RWE AG (Preferred)
*Reckitt & Coleman PLC
*Reed International PLC
Renault S.A.
Repsol S.A.
Restaurant Brands New Zealand Ltd.
*Reuters Holdings PLC
*Rheinmetall AG
Rhone-Poulenc (Class A)
Rio Tinto PLC
*Roche Holdings AG
*SAP AG
*SCHMALBACH--LUBECA AG
Safeway PLC
Salamander AG
*Salvesen (Christian) PLC (Ordinary)
Sasol Ltd.
Schering AG
Schneider S.A.
Scottish Invest Trust PLC
Scottish Mortgage & Trust PLC
Shell Transport & Trading Co. PLC
*Siebe PLC
Slough Estates PLC
Smith (Howard) Ltd.
*Smith & Nephew PLC
SmithKline Beecham PLC
*Smiths Industries PLC
Sommer-Allibert
Southcorp. Ltd.
Springer (Axel) Verlag AG
*Standard Charted Bank (Ordinary)
Stockland Trust Group (New Shares)
T & N PLC
*TI Group PLC
Tarmac PLC
Telestra Corp. Ltd.
Templeton Russia Fund, Inc.
Thomson CSF
Thorn PLC
*Thyssen Industries AG (Ordinary)
Tomkins PLC
Total S.A. (Class B)
Tourism Holdings Ltd.
Valeo S.A.
Varta AG
*Victoria Holdings Ltd. (Ordinary)
*Vodafone Group PLC
*Volkswagon AG (Preferred)
WPP Group PLC
*Wella AG (Preferred)
Wesfarmers Ltd.
Westfield Holdings Ltd.
*Witan Investment Co. PLC (Ordinary)
YTL Corporation BHD (Class A)
Zeneca Group PLC
Deletions
*AM Vescap (Ordinary)
*Aggreko PLC
*Argos PLC
*Axa Colonia Konzern AG
*BMW AG (Preferred)
Banco Bradesco S.A. PN (Preferred)
Bank of Melbourne Ltd.
Bass PLC
Bayerische Hypotheken-und Wechsel-Bank AG
*Berliner Kraft-und Licht (Bewag) AG
*Boots Company PLC
*Bowthorpe PLC
*Britannic Assurance PLC
*British Aerospace PLC
Central European Media Enterprises Ltd.
(Class A)
*Cobham PLC
Commerce Asset Holding BHD
Credit Suisse Group (Registered Shares)
*Custodia Holding AG
*De La Rue PLC
*Deutz AG
Development Bank of Singapore Ltd.
'Foreign'
*Didier-Werke AG
*Dixons Group PLC
*Electrocomponents PLC
*Enterprise Oil PLC
Erciyas Biracilik Ve Malt Sanayii A.S.
Eregli Demir Ve Celik Fabrikalari T.A.S.
*France Telecom S.A.
*GKN PLC
Gazprom (ADR)
*Gehe AG (Ordinary)
*General Electric Company PLC (Ordinary)
Genting BHD
*Gerresheimer Glas AG (Ordinary)
*Granada Group PLC
*Grand Metropolitan PLC (Ordinary)
Guinness PLC
Guney Biracilik Ve Malt Sanayii A.S.
Haci Omer Sabanci Holding A.S.
*Halifax PLC
Hong Kong Land Holdings Ltd.
Hong Leong Credit BHD
*Hong Leong Credit BHD (Class A)
Hume Industries (Malaysia) BHD
*IKB Deutsche Industriebank
Internatio-Muller N.V.
*Iwka AG
Jardine Strategic Holdings Ltd.
*Kali und Salz Beteiligungs AG
Karstadt AG
Kedah Cement Holdings BHD
*Klobenschmidt AG
*Koc Holdings A.S.
Koc Yatirim Ve Sanayi Mamulleri Pazarlama
A.S.
Koninklijke Pakhoed N.V.
Kookmin Bank (GDR)
*Legal & General Group PLC
*Leifheit AG
Linde AG
*MAN AG
Magnum Corporation BHD
*Mannheimer Versicherung AG
Matthew Clark PLC
*Mercury Asset Management Group PLC
Metro AG
Nestle S.A. (Registered Shares)
*Next PLC
*Nycomed Amersham PLC
Overseas-Chinese Banking Corporation Ltd.
'Foreign'
Overseas Union Bank Ltd. 'Foreign'
*P.T. Indofood Sukses Makmur 'Foreign'
Pilkington PLC
*Provident Financial Group, Inc.
*Prudential Corp. PLC
Public Bank (Malaysia) BHD 'Foreign'
*RWE AG (Preferred)
Rashid Hussain BHD
*Reckitt & Coleman PLC
*Reed International PLC
Renong BHD
Resorts World BHD
*Reuters Holdings PLC
*Rheinmetall AG
*Roche Holdings AG
*SAP AG
*SCHMALBACH--LUBECA AG
SGS-Thomson Microelectronics N.V.
SKF AB
*Salvesen (Christian) PLC (Ordinary)
Seat S.p.A.
*Siebe PLC
*Smith & Nephew PLC
*Smiths Industries PLC
*Standard Charted Bank (Ordinary)
*TI Group PLC
Tesco PLC (Ordinary)
Thames Water PLC
*Thyssen Industries AG (Ordinary)
United Overseas Bank Ltd. 'Foreign'
*Victoria Holdings Ltd. (Ordinary)
*Vodafone Group PLC
*Volkswagon AG (Preferred)
*Wella AG (Preferred)
*Witan Investment Co. PLC (Ordinary)
[FN]
*Added and deleted in the same quarter.
