MERRILL LYNCH
INTERNATIONAL
EQUITY FUND
FUND LOGO
Quarterly Report
August 31, 1999
Officers and Trustees
Terry K. Glenn, President and Trustee
Donald Cecil, Trustee
Edward H. Meyer, Trustee
Charles C. Reilly, Trustee
Richard R. West, Trustee
Arthur Zeikel, Trustee
Edward D. Zinbarg, Trustee
Clive D. Lang, Senior Vice President and
Portfolio Manager
Donald C. Burke, Vice President and
Treasurer
Robert Harris, Secretary
Custodian
Brown Brothers Harriman & Co.
40 Water Street
Boston, MA 02109
Transfer Agent
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
Bar Graph Depicting Total Return in US Dollars* of the Fund's
Top Country Positions For the Three-Month Period Ended August 31, 1999
Italy -3.4%
Spain -1.5%
Australia -1.0%
United Kingdom +1.4%
Switzerland +2.1%
Canada +3.2%
Germany +5.7%
Netherlands +5.9%
France +7.3%
Japan +19.6%
Source: Morgan Stanley Capital International World (ex-US) Index.
[FN]
*For the three-month period ended August 31, 1999, total investment
return in US dollars for the Morgan Stanley Capital International
World (Ex-US) Index was +7.20%.
Merrill Lynch International Equity Fund, August 31, 1999
DEAR SHAREHOLDER
For the three-month period ended August 31, 1999, total returns for
Merrill Lynch International Equity Fund's Class A, Class B, Class C
and Class D Shares were +10.48%, +10.14%, +10.30% and +10.43%,
respectively. This compares to the total return of the unmanaged
Morgan Stanley Capital International (MSCI) World (Ex-US) Index of
+7.20% in US dollar terms for the same three-month period. (Fund
results do not reflect sales charges, and would be lower if sales
charges were included. Complete performance information can be found
on pages 4 and 5 of this report to shareholders.)
The Fund benefited from our decision to move to an underweight
position in the United Kingdom (which underperformed the benchmark
by more than 5% during the quarter) and to underweight markets in
Europe that are particularly interest rate sensitive (such as Italy,
Spain and Switzerland). (References to markets are measured by
Morgan Stanley indexes and are in US dollar terms.)
The other significant positive contribution to Fund performance came
from sector and stock selection in Japan. The continued strength of
the Japanese yen relative to the US dollar proved to be a strong
contributor to absolute Fund returns. Having fallen by 3.5% in the
previous three months, the US dollar fell by an additional 9.7%
against the yen during the August quarter.
Global equity markets started the August quarter strong, but
momentum waned after the US Federal Reserve Board raised interest
rates at the end of June by 25 basis points (0.25%) and again in
August by another quarter point. Other sources of uncertainty for
investors included the yen strength (with concern centering on
whether it may undermine the still fragile economic recovery in
Japan, with consequent impact on other Asian economies) and the
stretched valuations of some major equity markets relative to bond
yields.
The strongest returns among developed markets over the three months
ended August 31, 1999 were in the Asian markets of Japan and
Singapore (which returned +19.6% and +17.0%, respectively) and the
smaller Scandinavian markets of Finland and Sweden (both returning
more than +13%). Of the larger European markets, only France
outperformed the unmanaged MSCI World (Ex-US) Index and then only by
a narrow margin. The unmanaged MSCI Emerging Markets Composite Index
returned +9.3% over the three months ended August 31, 1999. While
the European and Asian components performed well (+11.2% and +22.0%,
respectively), the Latin American region declined by 6.2% over the
August quarter. This was a reflection of the uncertainty
characterizing the US interest rate cycle as well as political and
economic factors within the region.
Portfolio Matters
The Fund's effective equity exposure was markedly lower toward the
end of the August quarter than the 96% held in the earlier part of
the year. We increased cash levels of the Fund (up to 10%),
reflecting our perception of the short-term risks facing the world's
equity markets. The most significant change was the reduction in UK
holdings to below 16.5% of net assets, an underweighted position
relative to the benchmark. This was partly offset in the earlier
part of the period by an increase in the allocation to Japanese
equities, in particular to the smaller cap section of the market.
This proved particularly successful, since the local smaller
companies index (Tokyo Stock Exchange Index, Second Section)
outperformed the larger cap unmanaged MSCI Japan Index by 33.1% over
the August quarter. Overall, Japan became the largest country
exposure in the Fund, at 23.4% of net assets for the August quarter.
This represented a neutral-to-slightly underweighted position
relative to the unmanaged benchmark MSCI World (Ex-US) Index.
During August, we increased the Fund's weighting in Continental
European markets by 5% of net assets toward a neutral weight. This
coincided with most of these markets outperforming the benchmark, as
potential for positive earnings surprises and economic growth
momentum favored the region. The Fund remained invested in emerging
markets, primarily outside Latin America. However, we reduced the
amount invested in these markets over the period in light of a
flattening of the US yield curve, some easing in commodity price
momentum and the fading potential for further cuts in Asian short-
term interest rates.
At the sector level, we raised the Fund's exposure to the European
insurance sector because we expect this area to benefit from an
expected recovery in Western bond markets. In Japan, exposure to
basic materials and machinery sectors was achieved at the expense of
reducing exposure to exporters and the technology sector.
Economic and Investment Environment
Global growth has been on an upswing since the beginning of the
year. However, the pace of acceleration is expected to remain modest
relative to the last upturn in 1994. While some commodity prices may
continue to rise on the back of capacity reductions, a widespread
increase in consumer price inflation is not expected. Consensus
estimates for the positive impact of Year 2000 (Y2K) preparations on
global growth this year (from precautionary inventory-building and
preventative investment spending) and the negative impact in 2000
(primarily from unwinding of higher inventories and lost output from
non-compliant systems) are small.
A combination of steady, but no longer accelerating, growth plus
continuing modest inflation could be positive for international
equities, in our view. It also means that it is likely that some of
this year's shifts in the portfolio may be reversed as we go into
the fall. However, since most investors appear to be underweighted
in many of the areas in which the Fund has invested over the past
six months (for example, emerging markets, cyclicals and value
stocks) and appear to be looking to raise holdings, these changes
will be introduced only gradually. A flattening of yield curves will
be a key indicator for prompting action.
A shortage of bond issuance, combined with a growing preference for
safe havens, could contribute to a sharp rally in government bonds
in the final weeks of the year. Some leading indicators are already
signaling that the momentum of global growth is peaking, which
should independently give support to bonds. This is a trend that
would tend to favor a move from a value emphasis toward growth.
There are a number of risks to this optimistic scenario that will
require close monitoring. One is that markets may become more
concerned about Y2K disruptions to markets and economies, primarily
in Asian and emerging markets. Another Y2K-associated risk is that
inventory building may create shortages in some commodities, leading
to a sharp rise in prices. If this occurs, it should be viewed as a
one-time hike in price levels not a generalized inflation trend
since the effects should only be temporary. Conversely, any Y2K
problems that directly hit supply may also put upward pressure on
prices.
The consensus view is that emerging markets are more vulnerable to
the Y2K bug, with concern centering on public sector
telecommunications and electricity supply companies. However, some
countries with low levels of computerization (for example, India) or
recent installation (such as emerging Europe, Middle East, Africa
and Latin American regions) may experience reduced risk. Overall,
South Africa, Mexico, Israel and Taiwan are widely cited as being
relatively low risk with respect to Y2K problems. Given the expected
rise in risk, and assuming that any Y2K disruption is temporary in
most economies, the fourth quarter could represent a good buying
opportunity in certain emerging equity markets.
The other major risks center on US policy; specifically, the risk of
a looser fiscal/tighter monetary policy mix emerging. This could
push real bond yields up globally unless offset by looser
monetary/tighter fiscal policy elsewhere. It might also trigger a
slide in the dollar if foreign investors withhold their funding of
the US trade deficit as US asset prices correct. This could boost
the US dollar return of international equities, but might be
negative for the local currency returns of international markets
since the balance of global growth still seems to require a firm US
dollar.
Many analysts believe that the US dollar will benefit from safe-
haven status in the fourth quarter, partly as capital flows out of
emerging markets. There are reasons to be skeptical of this
viewpoint as it appears more likely that the United States' large
current account deficit will become more difficult to finance as
market liquidity dries up.
In Conclusion
Notwithstanding the near-term concerns we have discussed, it should
be emphasized that we are still positive on international equities
over the medium term--long term. We anticipate that the most likely
scenario is still one of modestly strong global growth with no
significant inflation increases over the next few quarters. Many of
the current concerns we detailed are related to what are believed to
be exaggerated fears of a prolonged spell of US monetary tightening.
Merrill Lynch International Equity Fund, August 31, 1999
The Y2K risks are real enough for markets, especially for some of
the emerging markets and certain global industries. Even so, an
overdone sell-off in some of these areas may offer attractive buying
opportunities for the astute investor. We will look to become more
fully invested as clear opportunities arise.
We thank you for your interest in Merrill Lynch International Equity
Fund, and we look forward to reviewing our outlook and strategy with
you in the our upcoming semi-annual report to shareholders.
Sincerely,
(Terry K. Glenn)
Terry K. Glenn
President and Director
(Clive Lang)
Clive Lang
Senior Vice President and
Portfolio Manager
October 6, 1999
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 "Recent Performance
Results" and "Average Annual Total Return" 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>
Recent
Performance
Results
<CAPTION>
3 Month 12 Month Since Inception
As of August 31, 1999 Total Return Total Return Total Return
<S> <C> <C> <C>
ML International Equity Fund Class A Shares* +10.48% +31.09% +24.44%
ML International Equity Fund Class B Shares* +10.14 +29.65 +37.66
ML International Equity Fund Class C Shares* +10.30 +29.86 +18.50
ML International Equity Fund Class D Shares* +10.43 +30.76 +44.37
Morgan Stanley Capital International World (Ex-US) Index** + 7.20 +26.17 +49.35/+74.15
<FN>
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included. Total
investment returns are based on changes in the Fund's net asset
values for the periods shown, and assume reinvestment of all
dividends and capital gains distributions at net asset value on the
ex-dividend date. The Fund's inception dates are from 10/21/94 for
Class A & Class C Shares and from 7/30/93 for Class B & Class D
Shares.
**An unmanaged capitalization-weighted index comprised of a
representative sampling of stocks in 21 countries, excluding the
United States. Since inception total returns are for the periods
from 10/31/94 and from 7/31/93, respectively.
Average Annual
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 6/30/99 +6.99% +1.37%
Inception (10/21/94) through 6/30/99 +3.78 +2.60
<FN>
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 6/30/99 +5.88% +1.88%
Five Years Ended 6/30/99 +3.18 +3.18
Inception (7/30/93) through 6/30/99 +4.79 +4.79
<FN>
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Year Ended 6/30/99 +5.84% +4.84%
Inception (10/21/94) through 6/30/99 +2.74 +2.74
<FN>
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Sales Charge Sales Charge**
Class D Shares*
Year Ended 6/30/99 +6.69% +1.08%
Five Years Ended 6/30/99 +3.99 +2.87
Inception (7/30/93) through 6/30/99 +5.61 +4.65
<FN>
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
Merrill Lynch International Equity Fund, August 31, 1999
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
Shares Held/ Percent of
AFRICA Industries Face Amount Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
South Africa Banks 100,000 ABSA Group Limited $ 555,618 $ 514,845 0.2%
20,000 Nedcor Limited 467,881 398,059 0.2
Total Investments in Africa 1,023,499 912,904 0.4
EUROPE
Austria Banks 8,000 Bank Austria AG 475,077 424,391 0.2
Building Products 9,600 Wienerberger Baustoffindustrie AG 222,217 227,930 0.1
Total Investments in Austria 697,294 652,321 0.3
Belgium Equity Basket 21,700 MSCI Belgium OPALS 'B' (c) 1,771,847 1,824,970 0.9
Total Investments in Belgium 1,771,847 1,824,970 0.9
Denmark Equity Basket 5,900 MSCI Denmark OPALS 'B' (c) 824,643 882,109 0.4
Marine 110 D/S 1912 'B' 1,066,921 1,062,636 0.5
Total Investments in Denmark 1,891,564 1,944,745 0.9
Finland Communications 27,500 Nokia Oyj 2,366,096 2,293,508 1.1
Equipment
Total Investments in Finland 2,366,096 2,293,508 1.1
France Aerospace & Defense 8,000 Thomson CSF 256,207 292,218 0.1
Automobiles 2,000 PSA Peugeot Citroen 377,174 367,384 0.2
Banks 5,600 Compagnie Financiere de
Paribas (CFP) 296,484 652,567 0.3
2,000 Societe Generale 'A' 379,110 391,242 0.2
------------- ------------- ------
675,594 1,043,809 0.5
Building Products 3,000 Compagnie de Saint Gobain 456,697 579,579 0.3
Communications 2,400 Alcatel 377,158 367,384 0.2
Equipment
Construction 2,300 Lafarge SA (Ordinary) 226,272 246,939 0.1
Materials
Diversified 14,700 France Telecom SA 1,023,585 1,143,735 0.5
Telecommunication
Services
Electrical Equipment 7,000 Schneider SA 406,146 469,259 0.2
Food Products 1,500 Danone 400,326 370,867 0.2
IT Consulting & 3,000 Cap Gemini SA 465,841 514,654 0.2
Services
Industrial 11,500 Lagardere S.C.A. 459,681 466,197 0.2
Conglomerates
Insurance 9,600 Axa 1,144,225 1,193,870 0.6
Multi-Utilities 5,500 Suez Lyonnaise des Eaux 1,049,671 916,823 0.4
9,600 Vivendi 715,355 740,848 0.4
------------- ------------- ------
1,765,026 1,657,671 0.8
Multiline Retail 5,300 Carrefour SA 621,656 861,662 0.4
3,400 Pinault-Printemps-Redoute SA 553,295 588,658 0.3
------------- ------------- ------
1,174,951 1,450,320 0.7
Oil & Gas 5,600 Elf Aquitaine SA 715,418 981,379 0.4
8,000 Total Fina SA 'B' 910,248 1,030,363 0.5
------------- ------------- ------
1,625,666 2,011,742 0.9
Personal Products 650 L'Oreal SA 344,017 419,614 0.2
Pharmaceuticals 6,000 Rhone-Poulenc SA 288,312 290,866 0.1
13,500 Sanofi-Synthelabo SA 543,846 561,527 0.3
------------- ------------- ------
832,158 852,393 0.4
Textiles & Apparel 1,200 LVMH (Louis Vuitton Moet
Hennessy) 215,675 364,977 0.2
1,500 LVMH (Louis Vuitton Moet
Hennessy)(Rights)(d) 0 45,210 0.0
------------- ------------- ------
215,675 410,187 0.2
Total Investments in France 12,226,399 13,857,822 6.5
Germany Airlines 25,000 Deutsche Lufthansa AG
(Registered Shares) 594,697 482,983 0.2
Automobiles 31,000 DaimlerChrysler AG 2,620,035 2,336,686 1.1
11,000 Volkswagen AG 853,181 663,085 0.3
------------- ------------- ------
3,473,216 2,999,771 1.4
Banks 25,461 Deutsche Bank AG (Registered) 1,691,074 1,739,083 0.8
16,400 HypoVereinsbank 1,208,965 971,286 0.5
------------- ------------- ------
2,900,039 2,710,369 1.3
Chemicals 16,000 BASF AG 762,565 724,632 0.4
26,200 Bayer AG 1,063,036 1,138,182 0.5
------------- ------------- ------
1,825,601 1,862,814 0.9
Diversified 60,000 Deutsche Telekom AG 2,085,294 2,654,030 1.2
Telecommunication
Services
Electric Utilities 28,500 RWE AG 1,350,097 1,229,072 0.6
10,400 RWE AG (Preferred) 312,319 331,574 0.1
------------- ------------- ------
1,662,416 1,560,646 0.7
Equity Basket 17,550 MSCI Euro Insurance
OPALS 'B' (c) 3,027,852 3,030,183 1.4
Foreign Bonds E 8,160,000 Deutscheland Republic,
4.50% due 7/04/2009 8,389,506 8,355,215 3.9
Industrial 19,500 Siemens AG 1,344,264 1,638,658 0.8
Conglomerates
Insurance 6,650 Allianz AG (Registered Shares) 2,007,417 1,750,187 0.8
5,350 Axa Colonia Konzern AG 589,391 519,616 0.3
2,100 Muenchener Rueckversicherungs-
Gesellschaft AG (Registered Shares) 427,464 398,611 0.2
------------- ------------- ------
3,024,272 2,668,414 1.3
Machinery 10,000 Linde AG 660,663 610,195 0.3
Metals & Mining 32,500 Thyssen Krupp AG 645,886 758,257 0.4
Multi-Utilities 17,500 Veba AG 1,116,987 1,114,027 0.5
Wireless Telecommuni- 12,750 Mannesmann AG 1,483,713 1,954,417 0.9
cations Services
Total Investments in Germany 32,234,406 32,399,979 15.2
</TABLE>
Merrill Lynch International Equity Fund, August 31, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
EUROPE Shares Percent of
(continued) Industries Held Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Hungary Banks 13,599 OTP Bank Rt. (GDR)(b) $ 616,982 $ 611,955 0.3%
Oil & Gas 22,915 MOL Magyar Olaj-es
Gazipari Rt. (GDR)(b) 515,941 575,166 0.3
Pharmaceuticals 3,500 EGIS Rt. 124,535 116,225 0.0
Total Investments in Hungary 1,257,458 1,303,346 0.6
Ireland Banks 55,000 Bank of Ireland 599,634 497,581 0.3
Construction 21,000 CRH PLC 229,577 472,434 0.2
Materials
Total Investments in Ireland 829,211 970,015 0.5
Italy Banks 100,000 San Paolo-IMI SpA 1,542,416 1,341,795 0.6
211,000 Unicredito Italiano SpA 1,144,359 973,429 0.5
------------- ------------- ------
2,686,775 2,315,224 1.1
Diversified 228,000 Telecom Italia Mobile
Telecommunication (TIM) SpA 1,355,493 1,326,255 0.6
Services 154,000 Telecom Italia SpA 1,619,675 1,549,366 0.8
2,975,168 2,875,621 1.4
Insurance 46,000 Assicurazioni Generali 1,912,466 1,551,562 0.7
Oil & Gas 285,000 ENI SpA 1,918,340 1,711,976 0.8
Total Investments in Italy 9,492,749 8,454,383 4.0
Netherlands Air Freight & 32,800 TNT Post Group NV 924,577 808,540 0.4
Couriers
Banks 66,800 ABN AMRO Holding NV 1,416,439 1,625,504 0.8
Diversified 19,800 ING Groep NV 1,140,603 1,084,858 0.5
Financials
Diversified 10,400 KPN NV 490,984 465,521 0.2
Telecommunication
Services
Food Products 10,200 Unilever NV 'A' 876,554 709,082 0.3
Household Durables 7,000 Koninklijke (Royal)
Philips Electronics NV 542,452 720,885 0.3
IT Consulting & 11,000 Getronics NV 540,755 538,249 0.2
Services
Insurance 13,600 Aegon NV 1,044,596 1,188,803 0.6
Marine 20,000 Koninklijke Nedlloyd NV 523,696 570,078 0.3
Oil & Gas 40,250 Royal Dutch Petroleum Company 2,062,294 2,473,030 1.2
Total Investments in the
Netherlands 9,562,950 10,184,550 4.8
Norway Equity Basket 9,400 MSCI Norway OPALS 'B' (c) 825,694 884,728 0.4
Total Investments in Norway 825,694 884,728 0.4
Poland Trading Companies & 47,000 Elektrim Spolka Akcyjna SA 611,737 590,452 0.3
Distributors
Total Investments in Poland 611,737 590,452 0.3
Portugal Equity Basket 23,200 MSCI Portugal OPALS 'B' (c) 1,908,523 1,494,312 0.7
Total Investments in Portugal 1,908,523 1,494,312 0.7
Spain Banks 144,000 Banco Santander Central
Hispano, SA 1,349,127 1,445,718 0.7
Construction & 4,650 Fomento de Construcciones y
Engineering Contratas SA 285,018 275,641 0.1
25,200 Grupo Dragados SA 273,191 309,400 0.1
------------- ------------- ------
558,209 585,041 0.2
Diversified 93,636 Telefonica SA 1,372,142 1,492,658 0.7
Telecommunication
Services
Electric Utilities 64,000 Endesa SA 1,534,158 1,283,731 0.6
Oil & Gas 29,400 Repsol-YPF, SA 541,637 615,475 0.3
Total Investments in Spain 5,355,273 5,422,623 2.5
Sweden Automobiles 13,000 Volvo AB 'B' 342,974 364,221 0.2
Banks 40,000 Skandinaviska Enskilda
Banken (SEB) 'A' 493,944 414,797 0.2
57,000 Svenska Handelsbanken AB 799,284 791,571 0.4
------------- ------------- ------
1,293,228 1,206,368 0.6
Communications 55,000 Telefonaktiebolaget LM
Equipment Ericsson 'B' 1,476,573 1,774,409 0.8
Diversified 42,000 Investor AB 'B' 490,988 511,947 0.2
Financials
Household Durables 32,000 Electrolux AB 'B' 320,540 644,269 0.3
Paper & Forest 19,000 Svenska Cellulosa AB (SCA) 'B' 497,621 553,062 0.3
Products
Total Investments in Sweden 4,421,924 5,054,276 2.4
Switzerland Banks 3,450 Credit Suisse Group
(Registered Shares) 391,197 651,201 0.3
3,000 UBS AG (Registered Shares) 679,122 846,423 0.4
------------- ------------- ------
1,070,319 1,497,624 0.7
Diversified 1,000 Swisscom AG (Registered Shares) 356,816 329,659 0.2
Telecommunication
Services
Equity Basket 3,100 MSCI Switerland OPALS 'B' (c) 1,042,034 1,044,917 0.5
Food Products 550 Nestle SA (Registered Shares) 1,121,182 1,085,335 0.5
Insurance 190 Schweizerische Rueckversicherungs-
Gesellschaft (Registered Shares) 475,839 370,545 0.2
600 Zurich Allied AG 388,861 352,033 0.2
------------- ------------- ------
864,700 722,578 0.4
Pharmaceuticals 950 Novartis AG (Registered Shares) 1,819,986 1,366,816 0.6
130 Roche Holding AG 1,531,761 1,503,168 0.7
------------- ------------- ------
3,351,747 2,869,984 1.3
Retailing 8,600 Charles Voegele Holding AG 1,255,189 1,498,416 0.7
Total Investments in Switzerland 9,061,987 9,048,513 4.3
United Aerospace & Defense 150,400 British Aerospace PLC 1,074,075 1,097,685 0.5
Kingdom 100,000 Rolls-Royce PLC 461,321 397,257 0.2
------------- ------------- ------
1,535,396 1,494,942 0.7
</TABLE>
Merrill Lynch International Equity Fund, August 31, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
EUROPE Shares Percent of
(concluded) Industries Held Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
United Banks 36,000 Alliance & Leicester PLC $ 476,309 $ 494,831 0.2%
Kingdom 32,000 Bank of Scotland 312,649 398,719 0.2
(concluded) 25,600 Barclays PLC 768,792 760,933 0.4
108,000 HSBC Holdings PLC 1,079,950 1,335,264 0.6
11,000 HSBC Holdings PLC (ADR)(a) 698,609 684,750 0.3
38,480 Halifax PLC 544,975 429,380 0.2
68,800 Lloyds TSB Group PLC 852,025 951,205 0.4
30,000 National Westminster Bank PLC 624,206 616,491 0.3
------------- ------------- ------
5,357,515 5,671,573 2.6
Beverages 46,000 Bass PLC 659,979 618,242 0.3
117,600 Diageo PLC 1,251,049 1,190,372 0.6
------------- ------------- ------
1,911,028 1,808,614 0.9
Construction 52,000 RMC Group PLC 520,564 851,776 0.4
Materials
Containers & 110,000 Rexam PLC 363,546 516,072 0.2
Packaging
Diversified 26,500 Provident Financial PLC 351,372 340,620 0.2
Financials
Diversified 88,000 British Telecommunications PLC 1,481,697 1,347,443 0.7
Telecommunication 28,000 Cable & Wireless Communications PLC 254,514 292,194 0.1
Services 20,000 Cable & Wireless PLC 228,156 229,437 0.1
------------- ------------- ------
1,964,367 1,869,074 0.9
Electric Utilities 62,708 British Energy PLC 733,711 521,904 0.2
70,000 British Energy PLC (Deferred Shares) 0 0 0.0
------------- ------------- ------
733,711 521,904 0.2
Food & Drug Retailing 60,000 J Sainsbury PLC 358,672 413,565 0.2
490,000 Tesco PLC 1,415,098 1,450,569 0.7
------------- ------------- ------
1,773,770 1,864,134 0.9
Food Products 85,000 Associated British Foods PLC 572,281 582,469 0.3
44,000 Cadbury Schweppes PLC 334,409 277,654 0.1
65,000 Unilever PLC 605,302 613,036 0.3
------------- ------------- ------
1,511,992 1,473,159 0.7
Gas Utilities 134,000 BG PLC 779,517 805,752 0.4
Health Care 99,200 Nycomed Amersham PLC 674,819 653,477 0.3
Equipment & Supplies 110,000 Shanks & McEwan Group PLC 352,754 417,099 0.2
------------- ------------- ------
1,027,573 1,070,576 0.5
Hotels Restaurants & 55,000 Compass Group PLC 536,780 513,421 0.2
Leisure 120,000 Hilton Group PLC 518,478 458,391 0.2
------------- ------------- ------
1,055,258 971,812 0.4
IT Consulting & 57,000 SEMA Group PLC 544,169 620,009 0.3
Services
Industrial 102,000 Tomkins PLC 506,535 445,763 0.2
Conglomerates
Insurance 40,000 Allied Zurich PLC 505,759 488,758 0.2
24,000 Prudential Corporation PLC 356,453 358,037 0.2
141,818 Royal & Sun Alliance Insurance
Group PLC 1,307,682 1,180,309 0.6
------------- ------------- ------
2,169,894 2,027,104 1.0
Internet & Catalog 44,000 The Great Universal Stores PLC 500,911 443,256 0.2
Retail
Machinery 48,000 BBA Group PLC 315,731 391,778 0.2
68,000 Invensys PLC 498,995 346,887 0.1
------------- ------------- ------
814,726 738,665 0.3
Media 42,000 Carlton Communications PLC 426,188 318,175 0.1
66,000 WPP Group PLC 555,124 618,226 0.3
------------- ------------- ------
981,312 936,401 0.4
Oil & Gas 182,000 BP Amoco PLC 2,745,772 3,377,444 1.6
Pharmaceuticals 28,000 AstraZeneca Group PLC 1,182,036 1,111,194 0.5
70,200 Glaxo Wellcome PLC 1,886,241 1,845,250 0.9
80,880 SmithKline Beecham PLC 939,983 1,053,244 0.5
------------- ------------- ------
4,008,260 4,009,688 1.9
Real Estate 70,000 The British Land Company PLC 575,454 585,963 0.3
Software & Services 88,000 Computacenter PLC 671,227 808,748 0.4
Transportation 22,500 BAA PLC 236,205 234,980 0.1
Infrastructure
Wireless Telecommuni- 84,000 Vodafone AirTouch PLC 1,585,243 1,692,433 0.8
cations Services
Total Investments in the
United Kingdom 34,225,317 35,180,462 16.5
Total Investments in Europe 128,740,429 131,561,005 61.9
LATIN AMERICA
Chile Financial Investment 13,000 Genesis Chile Fund 368,180 370,500 0.2
Fund
Total Investments in Chile 368,180 370,500 0.2
Mexico Foreign Bonds 1,923,000 Mexican Par Bond (Rights)(e) 0 19 0.0
Total Investments in Mexico 0 19 0.0
Total Investments in Latin America 368,180 370,519 0.2
MIDDLE EAST
Israel Industrial 22,000 Koor Industries Limited (ADR)(a) 508,726 387,750 0.2
Conglomerates
Total Investments in the Middle East 508,726 387,750 0.2
NORTH
AMERICA
Canada Aerospace & Defense 21,910 Bombardier Inc. 'B' 329,950 341,426 0.2
Airlines 35,660 Air Canada 215,112 216,302 0.1
Banks 7,310 Bank of Nova Scotia 156,353 158,743 0.1
10,180 Royal Bank of Canada 507,005 434,970 0.2
17,590 The Toronto-Dominion Bank 372,348 344,844 0.2
------------- ------------- ------
1,035,706 938,557 0.5
</TABLE>
Merrill Lynch International Equity Fund, August 31, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
NORTH AMERICA Shares Held/ Percent of
(concluded) Industries Face Amount Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Canada Communications 10,670 Newbridge Networks Corporation $ 341,129 $ 293,210 0.1%
(concluded) Equipment 31,430 Northern Telecom Ltd. 975,833 1,295,540 0.6
------------- ------------- ------
1,316,962 1,588,750 0.7
Diversified 11,890 BCE Inc. 538,233 554,654 0.3
Telecommunication
Services
Media 13,120 Rogers Communications, Inc. 'B' 237,045 230,831 0.1
12,090 Seagram Company Ltd. 546,887 642,180 0.3
------------- ------------- ------
783,932 873,011 0.4
Metals & Mining 15,050 Inco Limited 227,479 309,171 0.1
18,210 Placer Dome Inc. 232,730 189,179 0.1
------------- ------------- ------
460,209 498,350 0.2
Oil & Gas 19,740 Anderson Exploration Ltd. 255,685 284,457 0.1
17,200 Canadian Natural Resources Ltd. 437,191 426,542 0.2
7,490 Suncor Energy, Inc. 264,863 308,988 0.2
------------- ------------- ------
957,739 1,019,987 0.5
Paper & Forest 21,410 Abitibi-Consolidated Inc. 211,012 255,428 0.1
Products 23,950 Domtar, Inc. 245,846 261,652 0.1
------------- ------------- ------
456,858 517,080 0.2
Road & Rail 34,890 Laidlaw Inc. 266,696 219,816 0.1
Total Investments in North America 6,361,397 6,767,933 3.2
PACIFIC
BASIN/ASIA
Australia Banks 30,100 National Australia Bank Limited 479,090 454,938 0.2
45,000 Westpac Banking Corporation
Limited 263,144 272,745 0.1
------------- ------------- ------
742,234 727,683 0.3
Beverages 44,000 Foster's Brewing Group Limited 128,992 128,850 0.1
Chemicals 20,000 Orica Limited 104,637 103,739 0.0
Construction 65,000 Boral Limited 105,994 99,528 0.0
Materials 40,000 Pioneer International Limited 98,765 102,080 0.0
------------- ------------- ------
204,759 201,608 0.0
Diversified 32,000 Colonial Limited 124,747 120,230 0.1
Financials 24,700 Lend Lease Corporation Limited 310,759 301,651 0.1
------------- ------------- ------
435,506 421,881 0.2
Diversified 104,500 Telstra Corporation Limited 453,577 543,369 0.3
Telecommunication
Services
Food & Drug Retailing 70,000 Woolworths Limited 247,356 244,647 0.1
Hotels Restaurants
& Leisure 44,800 Jupiters Limited 114,444 104,326 0.0
Industrial 6,000 Brambles Industries Limited 126,371 167,085 0.1
Conglomerates 90,000 Pacific Dunlop Limited 137,436 133,789 0.1
------------- ------------- ------
263,807 300,874 0.2
Insurance 33,500 AMP Limited 401,545 333,611 0.2
33,800 QBE Insurance Group Limited 124,451 120,761 0.1
------------- ------------- ------
525,996 454,372 0.3
Media 69,000 The News Corporation Limited 462,655 504,052 0.2
31,500 The News Corporation Limited
(Preferred) 176,160 208,406 0.1
19,500 Publishing & Broadcasting Limited 131,298 114,706 0.1
------------- ------------- ------
770,113 827,164 0.4
Metals & Mining 35,700 Broken Hill Proprietary
Company Limited 281,238 383,786 0.2
55,000 Newcrest Mining 109,204 129,833 0.1
67,500 WMC Limited 258,654 297,450 0.1
------------- ------------- ------
649,096 811,069 0.4
Multiline Retail 18,800 Coles Myer Limited 88,247 104,843 0.0
Oil & Gas 23,600 Woodside Petroleum Limited 132,030 164,947 0.1
Real Estate 18,700 Westfield Holdings Limited 88,767 112,625 0.1
Total Investments in Australia 4,949,561 5,251,997 2.5
China Wireless 7,000 China Telecom (Hong Kong)
Telecommunications Limited (ADR)(a) 436,873 435,312 0.2
Services
Total Investments in China 436,873 435,312 0.2
Indonesia Equity Basket 22,000 MSCI Indonesian OPALS 'B' (c) 435,820 311,960 0.2
Total Investments in Indonesia 435,820 311,960 0.2
Japan Auto Components 28,000 Bridgestone Corp. 506,857 792,839 0.4
Automobiles 107,000 Fuji Heavy Industries, Ltd. 545,984 852,247 0.4
39,000 Toyota Motor Corporation 1,079,842 1,150,621 0.5
------------- ------------- ------
1,625,826 2,002,868 0.9
Banks 288,000 The Asahi Bank, Ltd. 1,571,729 1,762,514 0.8
US$ 1,070,000 MBL International Finance
(Bermuda), 3% due 11/30/2002 1,305,400 1,246,550 0.6
120,000,000 Sanwa International Finance Ltd.
(Convertible Preferred) 1,054,922 1,372,853 0.7
149,000 The Tokai Bank Ltd. 1,015,578 947,242 0.4
------------- ------------- ------
4,947,629 5,329,159 2.5
Broadcasting & 15,000 Nippon Broadcasting System,
Publishing Incorporated 727,011 930,307 0.4
Business & Public 350 Bellsystem 24, Inc. 133,290 175,831 0.1
Services 3,200 People Co., Ltd. 127,636 174,790 0.1
29,000 Square Co., Ltd. 1,056,789 1,438,345 0.7
1,000 Trend Micro Incorporated 130,464 235,659 0.1
------------- ------------- ------
1,448,179 2,024,625 1.0
</TABLE>
Merrill Lynch International Equity Fund, August 31, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
PACIFIC BASIN/ Shares Percent of
ASIA(continued) Industries Held Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Japan Chemicals 86,000 Kaneka Corporation $ 443,612 $ 981,914 0.5%
(concluded) 22,000 Shin-Etsu Chemical Co., Ltd. 489,959 896,237 0.4
1,000 Taiyo Ink Mfg. Co., Ltd. 112,682 112,349 0.0
------------- ------------- ------
1,046,253 1,990,500 0.9
Computers & 35,000 Fujitsu Limited 534,758 1,026,215 0.5
Peripherals 116,000 Toshiba Corporation 898,108 1,030,946 0.5
------------- ------------- ------
1,432,866 2,057,161 1.0
Construction & 77,000 Nishimatsu Construction Co., Ltd. 369,366 446,611 0.2
Engineering
Diversified 50,000 Daiwa Securities Group Inc. 226,633 452,594 0.2
Financials 35,000 Kokusai Securities Co., Ltd. 577,912 569,054 0.3
5,400 Nissin Co., Ltd. 182,841 345,269 0.1
8,900 Takefuji Corporation 671,533 1,431,577 0.7
105,000 The Toyo Trust & Banking Co., Ltd. 458,286 447,890 0.2
------------- ------------- ------
2,117,205 3,246,384 1.5
Diversified 38 NTT Mobile Communications
Network, Inc. 1,416,297 631,714 0.3
Telecommunication 152 NTT Mobile Communications
Network, Inc. 0 2,512,970 1.2
Services 116 Nippon Telegraph & Telephone
Corporation (NTT) 1,176,781 1,303,252 0.6
------------- ------------- ------
2,593,078 4,447,936 2.1
Electric Utilities 37,000 Tokyo Electric Power 873,426 861,801 0.4
Electrical & 500 Funai Electric Co., Ltd. 140,295 144,090 0.1
Electronics
Electrical Equipment 161,000 The Furukawa Electric Co., Ltd. 875,845 911,765 0.4
Electronic Equipment 6,300 Hakuto Company Ltd. 142,902 177,238 0.1
& Instruments 59,000 Ibiden Co., Ltd. 905,615 1,096,684 0.5
5,000 Keyence Corporation 558,407 1,134,910 0.5
5,000 Rohm Company Ltd. 279,487 995,616 0.5
------------- ------------- ------
1,886,411 3,404,448 1.6
Financial Services 2,100 Aiful Corporation 280,811 364,642 0.2
Food & Drug Retailing 16,000 FamilyMart Co., Ltd. 740,831 821,337 0.4
Food & Household 2,300 Hokuto Corporation 91,245 117,857 0.1
Products 2,000 Q'sai Co., Ltd. 68,603 124,224 0.0
------------- ------------- ------
159,848 242,081 0.1
Household Durables 12,300 Sony Corporation 1,321,197 1,593,113 0.7
Industrial Components 3,300 Sumida Electric Co., Ltd. 88,996 144,684 0.1
Insurance 136,000 Mitsui Marine and Fire
Insurance Company, Ltd. 728,750 746,584 0.4
Internet Software & 3,000 Softbank Corporation 404,806 1,030,325 0.5
Services
Leisure Equipment & 208,000 Mizuno Corporation 848,262 689,660 0.3
Products
Machinery 130,000 Komatsu Ltd. 754,110 831,202 0.4
177,000 NSK Limited 1,091,716 1,138,180 0.5
------------- ------------- ------
1,845,826 1,969,382 0.9
Machinery & 3,900 THK Co., Ltd. 72,242 126,461 0.1
Engineering
Media 1,870 Nippon Television Network Corp. 666,421 1,024,845 0.5
Merchandising 3,000 Art Vivant Co., Ltd. 77,376 120,844 0.0
22,300 Kojima Co. Limited 890,506 1,053,078 0.5
1,000 Ryohin Keikaku Company Limited 110,904 200,950 0.1
4,100 Sunkus & Associates Inc. 139,001 157,663 0.1
------------- ------------- ------
1,217,787 1,532,535 0.7
Metals & Mining 367,000 Mitsubishi Materials Corporation 897,275 1,035,833 0.5
324,000 Nippon Steel Corporation 891,751 849,361 0.4
------------- ------------- ------
1,789,026 1,885,194 0.9
Multiline Retail 13,000 Ito-Yokado Co., Ltd. 768,098 957,070 0.4
Non Index 660,099 Nikkei 225 (Warrants)(f) 521,969 444,307 0.2
Office Electronics 57,000 Ricoh Co., Ltd. 680,506 1,016,295 0.5
Pharmaceuticals 29,000 Sankyo Company, Ltd. 674,884 807,910 0.4
31,000 Takeda Chemical Industries, Ltd. 1,282,612 1,557,362 0.7
------------- ------------- ------
1,957,496 2,365,272 1.1
Real Estate 2,000 Able Inc. 77,705 132,627 0.1
79,000 Mitsui Fudosan Co., Ltd. 770,932 642,939 0.3
------------- ------------- ------
848,637 775,566 0.4
Recreation/Other 900 Avex Inc. 89,059 178,389 0.1
Consumer Goods 3,900 Roland Corporation 130,677 163,866 0.1
------------- ------------- ------
219,736 342,255 0.2
Road & Rail 134 East Japan Railway Company 627,606 811,491 0.4
123,000 Nippon Express Co., Ltd. 752,588 940,364 0.4
------------- ------------- ------
1,380,194 1,751,855 0.8
Software & Services 2,000 Oracle Corporation Japan 193,122 244,794 0.1
Specialty Retail 3,000 Yamada Denki 131,125 191,542 0.1
Tobacco 37 Japan Tobacco, Inc. 240,089 513,701 0.2
Trading Companies & 57,000 Mitsubishi Corporation 413,589 474,306 0.2
Distributors
Total Investments in Japan 38,109,611 49,838,300 23.4
Malaysia Index Related 81,252 Webs-Malaysia 503,227 457,042 0.2
Total Investments in Malaysia 503,227 457,042 0.2
New Zealand Diversified 125,610 Telecom Corporation of
Telecommunication New Zealand Limited 607,295 561,300 0.3
Services
Oil & Gas 97,340 Fletcher Challenge Energy 248,676 248,915 0.1
Paper & Forest 229,930 Carter Holt Harvey Limited 303,154 272,010 0.1
Products
Total Investments in New Zealand 1,159,125 1,082,225 0.5
</TABLE>
Merrill Lynch International Equity Fund, August 31, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
PACIFIC BASIN/ Shares Percent of
ASIA(concluded) Industries Held Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Singapore Diversified 151,000 Singapore Telecommunications,
Telecommuni- Ltd. $ 220,962 $ 268,281 0.1%
cation Services
Total Investments in Singapore 220,962 268,281 0.1
South Korea Household Durables 568 Samsung Electronics (GDR)(b) 12,680 52,540 0.0
Wireless Telecommuni- 1,125 SK Telecom Co. Ltd. (ADR)(a) 16,144 12,727 0.0
cations Services
Total Investments in South Korea 28,824 65,267 0.0
Total Investments in the
Pacific Basin/Asia 45,844,003 57,710,384 27.1
SOUTHEAST
ASIA
India Chemicals 308 Reliance Industries Ltd. 1,595 1,380 0.0
Diversified 18,500 Morgan Stanley Dean Witter
Financials India Investment Fund 208,946 230,094 0.1
Financial Investment 14,000 Indocam Himalayan Fund NV 210,000 217,000 0.1
Fund
Household Products 200 Reckitt & Coleman of India Ltd. 1,712 2,083 0.0
Tobacco 200 ITC Ltd. 2,905 4,735 0.0
Total Investments in Southeast Asia 425,158 455,292 0.2
SHORT-TERM Face
SECURITIES Amount Issue
Commercial US$ 2,117,000 General Electric Capital Corp.,
Paper* 5.53% due 9/01/1999 2,117,000 2,117,000 1.0
Total Investments in
Commercial Paper 2,117,000 2,117,000 1.0
US Government & 2,863,000 Federal Home Loan Mortgage
Agency Obligations* Corporation Participation
Certificates, 5.01% due 9/13/1999 2,858,219 2,858,219 1.3
US Treasury Bills:
500,000 4.64% due 9/23/1999 498,583 498,570 0.2
1,000,000 4.65% due 10/21/1999 (g) 993,819 993,370 0.5
Total Investments in US
Government & Agency Obligations 4,350,621 4,350,159 2.0
Total Investments in
Short-Term Securities 6,467,621 6,467,159 3.0
OPTIONS Nominal Value Covered Premiums
PURCHASED by Options Purchased Paid
Call Options 42,000 DBS, expiring March 2000 at
Purchased US$ 0.01 221,090 481,740 0.2
47,000 OCBC, expiring March 2000 at
US$ 0.01 222,280 312,550 0.2
50,000 SIA, expiring March 2000 at
US$ 0.01 221,375 457,500 0.2
50,000 UOB, expiring March 2000 at
US$ 0.01 219,443 356,500 0.2
Currency Put 12,000,000 Japanese Yen, expiring
Options October 1999 at YEN 150 107,400 120 0.0
Purchased
Put Options 1,020 FTSE, expiring September
1999 at Pound Sterling 632 377,404 270,408 0.1
Purchased
Total Options Purchased 1,368,992 1,878,818 0.9
Total Investments 191,108,005 206,511,764 97.1
OPTIONS Nominal Value Covered Premiums
WRITTEN by Options Written Received
Currency Call 12,000,000 Japanese Yen, expiring
Options Written October 1999 at YEN 96.45 (107,400) (13,200) 0.0
Put Options 1,020 FTSE, expiring September 1999 at
Written Pound Sterling 562 (144,531) (19,666) 0.0
Total Options Written (251,931) (32,866) 0.0
Total Investments, Net of Options Written $ 190,856,074 206,478,898 97.1
--------------
Time Deposits++ 6,266,130 2.9
Interest Rate Swaps 53,176 0.0
Variation Margin on Financial Futures Contracts** 7,440 0.0
Liabilities in Excess of Other Assets (97,508) 0.0
------------- ------
Net Assets $ 212,708,136 100.0%
============= ======
Net Asset Class A--Based on net assets of $24,667,725 and 2,436,517
Value: beneficial interest outstanding $ 10.12
=============
Class B--Based on net assets of $144,914,980 and 14,344,019
beneficial interest outstanding $ 10.10
=============
Class C--Based on net assets of $6,391,261 and 641,984
beneficial interest outstanding $ 9.96
=============
Class D--Based on net assets of $36,734,170 and 3,615,496
beneficial interest outstanding $ 10.16
=============
<FN>
(a)American Depositary Receipts (ADR).
(b)Global Depositary Receipts (GDR).
(c)Optimized Portfolio As Listed Securities (OPALS) are investments
that are exchange quoted and provide an equivalent investment
exposure to that of the specific Morgan Stanley Capital
International (MSCI) country index.
(d)The rights may be exercised until 9/21/1999.
(e)The rights may be exercised until 6/30/2003.
(f)Warrants entitle the Fund to purchase a predetermined number of
shares of common stock and are non-income producing. The purchase
price and number of shares are subject to adjustment under certain
conditions until the expiration date.
(g)All or a portion of security held as collateral in connection
with open financial futures contracts.
++Time deposit bears interest at 4.937% and matures on 9/22/1999.
*Commercial Paper and certain US Government & Agency Obligations are
traded on a discount basis; the interest rates shown reflect the
discount rates paid at the time of purchase by the Fund.
**Financial futures contracts sold as of August 31, 1999 were as
follows:
Number of Expiration
Contracts Issue Exchange Date Value
16 Dax Index DTB September 1999 $ 2,233,227
36 Nikkei 225 Index CME September 1999 3,153,600
14 Nikkei 225 Index SIMEX September 1999 1,124,361
-----------
Total Financial Futures Contracts Sold
(Total Contract Price--$6,464,237) $ 6,511,188
===========
Financial futures contracts purchased as of August 31, 1999 were as
follows:
Number of Expiration
Contracts Issue Exchange Date Value
44 CAC40 Index MATIF September 1999 $ 2,137,666
6 FIB30 Index MIB September 1999 1,068,453
36 Hang Sang Index HKFE September 1999 3,155,007
12 Taiwan MSCI Index SIMEX September 1999 435,960
-----------
Total Financial Futures Contracts Purchased
(Total Contract Price--$6,756,677) $ 6,797,086
===========
</TABLE>
Merrill Lynch International Equity Fund, August 31, 1999
EQUITY PORTFOLIO CHANGES
For the Quarter Ended August 31, 1999
Additions
ABSA Group Limited
Able Inc.
Aegon NV
Aiful Corporation
Air Canada
*Alcan Aluminum Ltd.
Alcatel
Alliance & Leicester PLC
Allied Zurich PLC
Anderson Exploration Ltd.
Associated British Foods PLC
Avex Inc.
BAA PLC
Bank of Nova Scotia
Bellsystem 24, Inc.
*Billiton PLC
Boral Limited
British Energy PLC (Deferred Shares)
The British Land Company PLC
Cable & Wireless Communications PLC
Canadian Natural Resources Ltd.
Carter Holt Harvey Limited
Charles Voegele Holding AG
China Telecom (Hong Kong) Limited
(ADR)
Colonial Limited
Compass Group PLC
D/S 1912 'B'
Domtar, Inc.
*Enterprise Oil PLC
FamilyMart Co., Ltd.
Funai Electric Co., Ltd.
The Furukawa Electric Co., Ltd.
Getronics NV
HSBC Holdings PLC (ADR)
Hakuto Company Ltd.
Hilton Group PLC
Hokuto Corporation
Indocam Himalayan Fund NV
Invensys PLC
Investor AB 'B'
Jupiters Limited
Kojima Co. Limited
Kokusai Securities Co., Ltd.
Koninklijke Nedlloyd NV
Lagardere S.C.A.
Linde AG
*MSCI Czech OPALS 'B'
MSCI Euro Insurance OPALS 'B'
MSCI Indonesian OPALS 'B'
*MSCI Mexican OPALS
MSCI Switerland OPALS 'B'
Mitsubishi Corporation
Mitsubishi Materials Corporation
Mizuno Corporation
Morgan Stanley Dean Witter India
Investment Fund
Muenchener Rueckversicherungs-
Gesellschaft AG (Registered Shares)
NTT Mobile Communications Network, Inc.
Nedcor Limited
Nissin Co., Ltd.
Nokia Oyj
Oracle Corporation Japan
Pacific Dunlop Limited
People Co., Ltd.
Provident Financial PLC
Q'sai Co., Ltd.
Roland Corporation
Rolls-Royce PLC
*Round One Corporation
Ryohin Keikaku Company Limited
SEMA Group PLC
Sumida Electric Co., Ltd.
Sunkus & Associates Inc.
*TD Waterhouse Group, Inc.
Taiyo Ink Mfg. Co., Ltd.
The Tokai Bank Ltd.
Tokyo Electric Power
The Toyo Trust & Banking Co., Ltd.
Tomkins PLC
Toshiba Corporation
Trend Micro Incorporated
Webs-Malaysia
Yamada Denki
Deletions
AAPT Limited
ASDA Group PLC
Abbey National PLC
Alberta Energy Company Ltd.
*Alcan Aluminum Ltd.
Anglo American PLC
AngloGold Limited (ADR)
BTR Siebe PLC
Bank Rozwoju Eksportu SA (BRE)
Bank of Montreal
Banque Nationale de Paris (BNP)
The Berkeley Group PLC
*Billiton PLC
British Airways PLC
Canadian Tire Corp. 'A'
Coflexip
Compagnie Generale des Etablissements
Michelin 'B'
Dixons Group PLC
*Enterprise Oil PLC
Fletcher Challenge Paper
Fujisawa Pharmacturical Co., Ltd.
GKN PLC
Hellenic Telecommunications Organization
SA (OTE)
Hennes & Mauritz AB 'B'
Hitachi Ltd.
Hoechst AG
Jafco Co., Ltd.
Karstadt AG
M.I.M. Holdings Limited
MSCI Brazil OPALS
*MSCI Czech OPALS 'B'
MSCI European Auto Sector OPALS 'B'
MSCI Finland OPALS 'B'
*MSCI Mexican OPALS
MSCI Philippines OPALS 'B'
MSCI Singapore OPALS 'B'
MSCI Spain OPALS 'B'
MSCI Sweden OPALS 'B'
MSCI Thailand OPALS
Mitsui & Co., Ltd.
Murata Manufacturing Co., Ltd.
National Mutual Holdings Limited
National Power PLC
Normandy Mining Limited
Promodes
Renaissance Energy Ltd.
Rio Tinto PLC (Registered Shares)
*Round One Corporation
Schroders PLC
Scottish Power PLC
Securicor PLC
Sekisui Chemical Co., Ltd.
Shohkoh Fund & Co., Ltd.
Sky Network Television Limited
Sun Life and Provincial Holdings PLC
*TD Waterhouse Group, Inc.
Taisho Pharmaceutical Company, Ltd.
Telefonica, SA (New Shares)
Teleglobe Inc.
Toray Industries, Inc.
Uny Co., Ltd.
Usinor SA
[FN]
*Added and deleted in the same quarter.
PORTFOLIO INFORMATION
Worldwide
Investments as of
August 31, 1999
Ten Largest Industries Percent of
(Equity Investments) Net Assets
Banks 12.8%
Diversified Telecommunication
Services 8.2
Oil & Gas 5.8
Insurance 5.3
Pharmaceuticals 4.7
Communications Equipment 2.8
Diversified Financials 2.7
Automobiles 2.7
Electric Utilities 1.9
Wireless Telecommunications
Services 1.9
Percent of
Ten Largest Countries Net Assets
Japan 23.4%
United Kingdom 16.5
Germany 15.2
France 6.5
Netherlands 4.8
Switzerland 4.3
Italy 4.0
Canada 3.2
Spain 2.5
Australia 2.5
Percent of
Ten Largest Equity Holdings Net Assets
BP Amoco PLC 1.6%
MSCI Euro Insurance OPALS 'B' 1.4
Deutsche Telekom AG 1.2
NTT Mobile Communications
Network, Inc. 1.2
Royal Dutch Petroleum Company 1.2
DaimlerChrysler AG 1.1
Nokia Oyj 1.1
Mannesmann AG 0.9
Glaxo Wellcome PLC 0.9
MSCI Belgium OPALS 'B' 0.9
Percent of
Geographical Asset Mix* Net Assets
Europe (Ex-United Kingdom
and Ireland) 44.9%
United Kingdom and Ireland 17.0
Japan 23.4
Pacific Basin (Ex-Japan) 3.7
North America 3.2
Other Emerging Markets 0.8
Latin America 0.2
[FN]
*Percent of net assets may not equal 100% and
excludes the impact of futures and options.
Financial Futures Contracts
Percent of
Country Issue Exchange Net Assets
Japan Nikkei 225 Index CME (1.5)%
Euro Dax Index DTB (1.0)
Japan Nikkei 225 Index SIMEX (0.5)
Hong Kong Hang Sang Index HKFE 1.5
Euro CAC 40 Index MATIF 1.0
Euro FIB 30 Index MIB 0.5
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0.0%
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