MERRILL LYNCH
INTERNATIONAL
EQUITY FUND
FUND LOGO
Quarterly Report
February 28, 1999
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 Ten
Country Positions For the Three-Month Period Ended February 28, 1999
Germany -4.4%
Switzerland -2.5%
Spain -0.5%
Netherlands -0.3%
France +0.1%
Italy +1.0%
Sweden +1.8%
Japan +2.3%
Australia +2.5%
United Kingdom +4.4%
Source: Morgan Stanley Capital International World (ex-US) Index.
[FN]
*For the three-month period ended February 28, 1999, total
investment return in US dollars for the Morgan Stanley Capital
International World (Ex-US) Index was +1.24%.
Merrill Lynch International Equity Fund, February 28, 1999
DEAR SHAREHOLDER
For the three-month period ended February 28, 1999, the unmanaged
Morgan Stanley Capital International (MSCI) World (Ex-US) Index had
a total return of +1.24%. (All performance results in this
shareholder letter are measured in US dollar terms.) Merrill Lynch
International Equity Fund's Class A, Class B, Class C and Class D
Shares had total returns of +1.18%, +0.94%, +0.95% and +1.05%,
respectively, for the same period. (Fund results shown 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 its
overweighted positions in the United Kingdom, France and peripheral
Continental European markets (such as Italy, Spain and Ireland) and
a small exposure to emerging Europe and South Korea. Hedges back
into US dollars of some of its Japanese yen exposure negatively
impacted the Fund. The dollar fell by 3.5% against the yen during
the February quarter, as a sharp narrowing of the gap between US and
Japanese bond yields gave support to the Japanese currency.
Global equity markets ended 1998 strongly following the widespread
easing of monetary policy during the quarter ended November 30,
1998. The markets began 1999 on a firm note, particularly in Europe,
where the smooth changeover to a single currency boosted optimism.
However, investor optimism tempered with the unexpectedly early
decision by the Brazilian authorities to float their currency,
combined with a sharp rise in Japanese bond yields. As the February
quarter came to a close, a sharp rise in US Government bond yields
became the major dampening factor for equity markets.
The strongest returns among developed markets during the three-month
period ended February 28, 1999 were in the smaller markets of
Finland, New Zealand and Ireland (all returning more than +10%). Of
the larger markets outside the United States, the United Kingdom was
the strongest, rising by 4.4%, aided by larger-than-expected
interest rate cuts by the Bank of England and signs of a soft-
landing for the economy. The weakest developed markets were Hong
Kong (down 7.4%, hit by high real interest rates), Norway (down
4.7%, still suffering from weak oil prices) and Germany (down 4.4%,
undermined by evidence of a sharp industrial slowdown and rising
unit labor costs). The resilience of the emerging markets in the
face of the Brazilian crisis was striking; both the emerging Asia
and emerging Europe/Africa regions produced bigger returns than the
developed markets' average for the February quarter.
Portfolio Matters
Overall, the Fund's effective equity exposure remained fairly steady
at about 96% of net assets during the three months ended February
28, 1999. The most significant change was an increase in UK holdings
to nearly 24% of net assets, an overweighted position relative to
the Fund's benchmark, the MSCI World (Ex-US) Index. This was partly
at the expense of our position in France, which we reduced to a
neutral position of approximately 9% of net assets by the end of the
February quarter. Among emerging markets not included in the
benchmark, we cut our exposure to Asia (particularly to South Korea
and China), but the overall exposure to this asset class was little
changed at approximately 2.5%--3% of net assets since we made
additions in emerging Europe and Africa. Japan remained the Fund's
second-largest country exposure after the United Kingdom, at
approximately 19% of net assets for most of the February quarter.
This represented an underweighted position relative to the benchmark
index.
We selectively raised the Fund's exposure to resource stocks,
principally energy and gold companies during the three months ended
February 28, 1999. In both the United Kingdom and Japan, we
accumulated greater exposure to domestic cyclical stocks in
anticipation of improving investor perceptions of economic growth
momentum in those countries.
Economic and Investment
Environment
The declining trend in global industrial output growth, underway
since mid-1997, appears to have come to an end in the final quarter
of 1998. Japanese industrial production growth is expected to
improve from -6.6% year over year in late 1999 to a flat or slightly
positive rate, as suggested by historically reliable leading
indicators. Elsewhere, improvement in other Asian economies is
offsetting deterioration in Latin America. We had previously
expected global production growth to remain in a downtrend in the
first half of 1999. This opinion was based on a number of leading
monetary indicators (such as the yield curve), which pointed to a
rebound in growth in the second half of 1999. However, a key factor
in 1999 could be the switch in developed countries' fiscal policies
away from the contractionary stance of the 1990s to a neutral or
slightly expansionary stance. We believe this is good news for
economic growth in the near term, although it may have negative
implications for financial markets over the longer term if it marks
an end to the declining interest rates that have done so much to
facilitate the expansion of price/earnings multiples in recent
years.
An improvement in the global economic cycle would represent positive
news at the margin for commodity producers, emerging markets,
industrial cyclical sectors and value stocks. However, the
sensitivity to rising economic growth within these asset classes is
likely to be very uneven. At the macroeconomic level, a significant
degree of spare capacity will be maintained for some time; output
growth has first to recover to trend levels before it can even begin
to fill the global output gap. The secular trend toward lower
inflation rates and interest rates is unlikely to be reversed for
long, if at all, in most economies. At the microeconomic level,
pricing power is likely to remain elusive for many industries long
into economic recovery, and many commodity prices will remain in
long-term downtrends in response to continuing excess inventory
positions.
The UK equity market looks to be in a cyclical "sweet spot." Survey
evidence suggest the United Kingdom's economy is close to bottoming,
but interest rates are likely to fall further as the Bank of England
acts to prevent a prolonged drop in retail price inflation below the
1.5% floor to the government-set inflation target band. Meanwhile,
the supply/demand picture appears supportive and analysts' long-term
profit expectations are more realistic than in other European
markets.
The outlook for the Japanese stock market continues to improve.
Consensus expectations for economic growth in 1999 (-1% in February,
according to Consensus Economics Inc.) look too low, judging by
official indicators and an easing of fiscal policy. Meanwhile,
authorities have acted to stabilize the financial system, and
Western-style company restructuring is beginning. We are looking for
opportunities to at least neutralize our underweighted position in
the Japanese market during the May 31, 1999 quarter. The yen may
rally briefly with an improved outlook for the equity market, but we
will likely remain bearish for the longer term on the Japanese
currency for as long as Japanese interest rates and bond yields
remain so low relative to other developed economies.
By contrast to the United Kingdom and Japan, it is difficult to find
a strong macroeconomic story for Continental European equity markets
at current relative valuations. Leading indicators of the industrial
cycle remain in a downtrend, but the European Central Bank (ECB)
appears reluctant to ease monetary policy further despite this and
inflation rates close to zero. Rising wage settlements in Germany
may be a concern for the ECB but in the current environment these
are deflationary (through the negative impact on corporate margins)
rather than inflationary. In an environment of zero inflation, stock
markets and sectors showing above-average earnings momentum are
likely to attract premium valuations. In Europe, earnings momentum
is likely to continue to be most visible in domestic demand-related
sectors in Italy, Spain, Portugal and Ireland. The trend toward
lower interest rates was accelerated in these countries by interest
rate convergence in advance of the euro's introduction on January 1,
1999.
Merrill Lynch International Equity Fund, February 28, 1999
In Conclusion
Global equity markets have shown no clear trend in recent months.
Prospects for an upturn in the global earnings cycle are being
offset by concerns that last year's liquidity boost for the markets
may be gradually withdrawn. We are optimistic that a more positive
scenario may develop in coming months, although much depends on
Japan adopting expansionary policies even as its economy shows signs
of a cyclical recovery. In this environment, we expect that emerging
markets, industrial cyclical sectors and value stocks may begin to
attract greater investor interest after performing poorly for some
time. However, country, industry and stock performance within these
areas is likely to be uneven, and as a result, we must choose our
investments carefully.
We thank you for your interest in Merrill Lynch International Equity
Fund, and we look forward to updating our outlook and strategy with
you in the next report to shareholders.
Sincerely,
(Terry Glenn)
Terry Glenn
President and Trustee
(Clive Lang)
Clive Lang
Senior Vice President and
Portfolio Manager
April 13, 1999
After more than 20 years of service, Arthur Zeikel recently retired
as Chairman of Merrill Lynch Asset Management, L.P. (MLAM). Mr.
Zeikel served as President of MLAM from 1977 to 1997 and as Chairman
since December 1997. Mr. Zeikel is one of the country's most
respected leaders in asset management and presided over the growth
of Merrill Lynch's asset management business. During his tenure,
client assets under management grew from $300 million to over $500
billion. Mr. Zeikel will remain on Merrill Lynch International
Equity Fund's Board of Trustees. We are pleased to announce that
Terry K. Glenn has been elected President and Trustee of the Fund.
Mr. Glenn has held the position of Executive Vice President of MLAM
since 1983.
Mr. Zeikel's colleagues at MLAM join the Fund's Board of Trustees in
wishing him well in his retirement from Merrill Lynch and are
pleased that he will continue as a member of the Fund's Board of
Trustees.
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>
12 Month 3 Month Since Inception
Total Return Total Return Total Return
<S> <C> <C> <C>
ML International Equity Fund Class A Shares* -4.96% +1.18% + 5.63%
ML International Equity Fund Class B Shares* -5.91 +0.94 +17.49
ML International Equity Fund Class C Shares* -6.01 +0.95 + 1.01
ML International Equity Fund Class D Shares* -5.28 +1.05 +22.63
Morgan Stanley Capital International World (Ex-US) Index** +4.27 +1.24 +35.05/+57.49
<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 periods are Class A & Class C
Shares, from 10/21/94 to 2/28/99 and Class B & Class D Shares, from
7/30/93 to 2/28/99.
**An unmanaged capitalization-weighted index comprised of a
representative sampling of stocks in 22 countries, excluding the
United States. Since inception total returns are for the periods
from 10/31/94 to 2/28/99 and from 7/31/93 to 2/28/99, respectively.
</TABLE>
Average Annual
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 12/31/98 +4.47% -1.01%
Inception (10/21/94) through 12/31/98 +1.73 +0.43
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 12/31/98 +3.36% -0.64%
Five Years Ended 12/31/98 +1.37 +1.37
Inception (7/30/93) through 12/31/98 +3.37 +3.37
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Year Ended 12/31/98 +3.40% +2.40%
Inception (10/21/94) through 12/31/98 +0.71 +0.71
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Sales Charge Sales Charge**
Class D Shares*
Year Ended 12/31/98 +4.30% -1.18%
Five Years Ended 12/31/98 +2.19 +1.09
Inception (7/30/93) through 12/31/98 +4.19 +3.15
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
Merrill Lynch International Equity Fund, February 28, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
Face Amount/ Percent of
AFRICA Industries Shares Held Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
South Foreign ZAL 9,000,000 Republic of South Africa, 13%
Africa Government due 8/31/2010 $ 1,325,805 $ 1,342,651 0.6%
Bonds
Gold Mines 45,000 AngloGold Limited (ADR)(a) 935,199 815,625 0.4
Metals--Nonferrous 33,500 Minorco SA (Minerals & Resources
Corporation Limited) 554,329 530,372 0.2
Total Investments in Africa 2,815,333 2,688,648 1.2
EUROPE
Finland Equity Basket 13,400 MSCI Finland OPALS 'B' (d) 2,641,006 3,455,592 1.5
Total Investments in Finland 2,641,006 3,455,592 1.5
France Aerospace & Military 10,000 Thomson CSF 320,258 296,379 0.1
Technology
Automobiles 2,500 PSA Peugeot Citroen 471,467 333,426 0.1
Banking 7,000 Banque Nationale de Paris (BNP) 620,881 558,620 0.2
7,000 Compagnie Financiere de Paribas 385,970 603,186 0.3
-------------- -------------- ------
1,006,851 1,161,806 0.5
Beverages & Tobacco 4,000 Pernod Ricard 257,124 236,664 0.1
Broadcasting & 1,500 Canal Plus 273,468 468,608 0.2
Publishing
Building Materials 4,900 Compagnie de Saint Gobain 798,256 761,628 0.4
& Components 5,600 Lafarge SA (Ordinary) 545,276 531,726 0.2
-------------- -------------- ------
1,343,532 1,293,354 0.6
Business & Public 6,900 Suez Lyonnaise des Eaux 1,294,400 1,379,249 0.6
Services 7,200 Vivendi 1,639,166 1,877,067 0.8
-------------- -------------- ------
2,933,566 3,256,316 1.4
Electrical & 5,300 Alcatel 722,473 570,145 0.3
Electronics 8,800 Schneider SA 510,583 516,797 0.2
-------------- -------------- ------
1,233,056 1,086,942 0.5
Energy Equipment 6,000 Coflexip 468,505 371,791 0.2
& Services
Energy Sources 10,938 Elf Aquitaine SA 1,446,408 1,140,631 0.5
12,700 Total SA 'B' 1,409,280 1,324,375 0.6
-------------- -------------- ------
2,855,688 2,465,006 1.1
Equity Basket 6,100 MSCI France OPALS 'B' (d) 993,873 1,157,963 0.5
Food & Household 1,600 Danone 374,905 398,509 0.2
Products
Health & Personal 1,100 L'Oreal 551,324 676,183 0.3
Care 7,500 Rhone-Poulenc SA 360,390 343,717 0.2
911,714 1,019,900 0.5
-------------- -------------- ------
Insurance 15,200 Axa 1,834,756 1,982,183 0.9
Merchandising 500 Carrefour SA 348,138 356,204 0.2
5,300 Pinault-Printemps-Redoute SA 839,432 879,071 0.4
850 Promodes SA 511,743 541,633 0.2
-------------- -------------- ------
1,699,313 1,776,908 0.8
Multi-Industry 5,000 Lagardere S.C.A. 213,955 192,098 0.1
Recreation/Other 6,300 LVMH (Louis Vuitton Moet Hennessy) 1,218,349 1,341,609 0.6
Consumer Goods
Telecommunications 13,782 France Telecom SA 871,937 1,289,705 0.6
Total Investments in France 19,282,317 20,129,167 9.0
Germany Automobiles 23,596 DaimlerChrysler AG 1,887,079 2,205,545 1.0
6,150 Volkswagen AG 484,536 397,625 0.1
-------------- -------------- ------
2,371,615 2,603,170 1.1
Banking 19,900 Deutsche Bank AG 1,416,564 1,038,693 0.5
14,200 HypoVereinsbank AG 1,067,618 804,307 0.4
-------------- -------------- ------
2,484,182 1,843,000 0.9
Business & Public 550 SAP AG (Systeme, Anwendungen,
Services Produkte in der Datenverarbeitung) 250,070 187,158 0.1
Chemicals 20,600 BASF AG 898,742 713,428 0.3
24,400 Bayer AG 986,891 863,780 0.4
-------------- -------------- ------
1,885,633 1,577,208 0.7
Electrical & 15,400 Siemens AG 1,011,677 972,013 0.4
Electronics
Insurance 5,150 Allianz AG (Registered Shares) 1,541,388 1,560,836 0.7
4,250 Axa Colonia Konzern AG 483,297 377,883 0.2
-------------- -------------- ------
2,024,685 1,938,719 0.9
Merchandising 775 Karstadt AG 370,335 292,221 0.1
2,350 Metro AG 142,464 166,126 0.1
7,400 Metro AG 318,389 281,055 0.1
-------------- -------------- ------
831,188 739,402 0.3
Metals--Steel 3,750 Thyssen AG 812,576 759,471 0.3
Recreation/Other 3,075 Adidas-Salomon AG 334,068 294,337 0.1
Consumer Goods
Telecommunications 27,000 Deutsche Telekom AG 767,874 1,238,864 0.5
8,000 Mannesmann AG 855,431 1,073,990 0.5
-------------- -------------- ------
1,623,305 2,312,854 1.0
Transportation-- 18,000 Deutsche Lufthansa AG (Registered
Airlines Shares) 428,232 396,160 0.2
Utilities-- 14,500 RWE AG 723,339 631,891 0.3
Electrical & Gas 9,000 RWE AG (Preferred) 271,503 261,801 0.1
19,500 VEBA AG 1,300,607 1,040,290 0.5
-------------- -------------- ------
2,295,449 1,933,982 0.9
Total Investments in Germany 16,352,680 15,557,474 6.9
</TABLE>
Merrill Lynch International Equity Fund, February 28, 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>
Greece Banking 1,009 Alpha Credit Bank $ 111,400 $ 115,920 0.1%
15,000 National Bank Of Greece SA (GDR)(c) 165,937 218,250 0.1
-------------- -------------- ------
277,337 334,170 0.2
Beverages & Tobacco 1,117 Hellenic Bottling Co. 37,034 37,278 0.0
Telecommunications 10,500 Hellenic Telecommunication
Organization SA (OTE) 300,227 276,750 0.1
Total Investments in Greece 614,598 648,198 0.3
Hungary Banking 5,799 OTP Bank Rt. (GDR)(c) 328,223 228,481 0.1
Energy Sources 19,194 MOL Magyar Olaj-es Gazipari Rt. (GDR)(c) 535,221 470,253 0.2
Health & Personal 3,500 EGIS Rt. 124,535 60,363 0.0
Care
Total Investments in Hungary 987,979 759,097 0.3
Ireland Banking 41,500 Bank of Ireland 904,986 857,191 0.4
Building Materials & 36,000 CRH PLC 393,561 666,409 0.3
Components
Insurance 39,553 Irish Permanent PLC 644,716 624,049 0.3
Total Investments in Ireland 1,943,263 2,147,649 1.0
Italy Banking 60,000 Istituto Bancario San Paolo di Torino 1,080,426 1,047,206 0.5
230,000 Unicredito Italiano SpA 1,283,688 1,209,336 0.5
-------------- -------------- ------
2,364,114 2,256,542 1.0
Energy Sources 310,000 ENI SpA 2,109,005 1,786,507 0.8
Equity Basket 19,400 MSCI Italy OPALS 'B' (d) 2,195,283 2,326,836 1.0
Insurance 50,000 Assicurazioni Generali 2,155,175 1,931,952 0.9
Telecommunications 170,000 Telecom Italia SpA (Ordinary) 1,808,038 1,789,580 0.8
272,230 Telecom Italia SpA (STET) Risp. 1,369,324 1,837,785 0.8
-------------- -------------- ------
3,177,362 3,627,365 1.6
Total Investments in Italy 12,000,939 11,929,202 5.3
Netherlands Appliances & 25,000 Koninklijke (Royal) Philips
Household Electronics NV 1,627,356 1,742,599 0.8
Durables
Banking 79,000 ABN AMRO Holding NV 1,669,061 1,608,624 0.7
Beverages & Tobacco 19,300 Heineken NV 1,048,897 1,008,435 0.4
Broadcasting & 5,600 Wolters Kluwer NV 'A' 1,089,765 1,078,820 0.5
Publishing
Energy Sources 35,000 Royal Dutch Petroleum Company 1,589,080 1,536,780 0.7
Financial Services 47,000 ING Groep NV 2,289,421 2,631,187 1.2
Food & Household 13,500 Unilever NV 'A' 1,084,814 973,605 0.4
Products
Total Investments in the Netherlands 10,398,394 10,580,050 4.7
Norway Business & Public 25,200 Merkantildata ASA 301,371 261,173 0.1
Services
Energy Sources 28,500 Saga Petroleum ASA 323,235 239,541 0.1
Total Investments in Norway 624,606 500,714 0.2
Poland Banking 14,000 BIG Bank Gdanski SA (GDR)(c) 313,190 155,400 0.1
14,000 Bank Rozwoju Eksportu SA (BRE) 454,573 238,071 0.1
-------------- -------------- ------
767,763 393,471 0.2
Multi-Industry 14,000 Elektrim Spolka Akcyjna SA 193,710 144,264 0.1
Total Investments in Poland 961,473 537,735 0.3
Portugal Equity Basket 39,000 MSCI Portugal OPALS 'B' (d) 3,404,288 2,945,670 1.3
Total Investments in Portugal 3,404,288 2,945,670 1.3
Spain Banking 50,000 Banco Central Hispanoamericano (BCH) 546,035 596,600 0.3
42,000 Banco Santander, SA 803,092 834,472 0.4
-------------- -------------- ------
1,349,127 1,431,072 0.7
Construction & 8,400 Dragados & Construcciones, SA 273,191 324,568 0.1
Housing 4,650 Fomento de Construcciones y
Contratas, SA 285,018 329,738 0.1
-------------- -------------- ------
558,209 654,306 0.2
Energy Sources 9,800 Repsol, SA 541,637 515,282 0.2
Equity Basket 26,900 MSCI Spain OPALS 'B' (d) 2,896,129 3,337,214 1.5
Telecommunications 30,600 Telefonica, SA 1,372,142 1,397,328 0.6
Utilities-- 64,000 Endesa, SA 1,534,158 1,695,903 0.8
Electrical & Gas
Total Investments in Spain 8,251,402 9,031,105 4.0
Sweden Appliances & 32,000 Electrolux AB 'B' 320,540 606,386 0.3
Household Durables
Banking 19,000 Svenska Handelsbanken 'A' 799,284 671,460 0.3
Electrical & 78,000 Telefonaktiebolaget LM Ericsson 'B' 2,029,733 2,062,637 0.9
Electronics
Equity Basket 11,100 MSCI Sweden OPALS 'B' (d) 2,019,396 2,273,613 1.0
Merchandising 7,000 Hennes & Mauritz AB (H&M) 'B' 621,203 539,118 0.2
Total Investments in Sweden 5,790,156 6,153,214 2.7
</TABLE>
Merrill Lynch International Equity Fund, February 28, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
EUROPE Face Amount/ Percent of
(concluded) Industries Shares Held Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Switzerland Banking 5,800 Credit Suisse Group (Registered
Shares) $ 657,664 $ 900,745 0.4%
5,000 UBS AG (Registered Shares) 1,231,276 1,556,461 0.7
-------------- -------------- ------
1,888,940 2,457,206 1.1
Food & Household 900 Nestle SA (Registered Shares) 1,785,383 1,698,992 0.7
Products
Health & Personal 1,575 Novartis AG (Registered Shares) 3,017,346 2,763,425 1.2
Care 225 Roche Holding AG 2,651,125 2,849,772 1.3
-------------- -------------- ------
5,668,471 5,613,197 2.5
Insurance 315 Schweizerische Rueckversicherungs-
Gesellschaft (Swiss Re) (Registered
Shares) 788,891 705,532 0.3
1,000 Zurich Allied AG 648,101 663,998 0.3
-------------- -------------- ------
1,436,992 1,369,530 0.6
Telecommunications 5,000 Swisscom AG (Registered Shares) 1,702,975 1,977,499 0.9
Total Investments in Switzerland 12,482,761 13,116,424 5.8
United Aerospace & Military 165,000 British Aerospace PLC 1,213,511 1,047,938 0.5
Kingdom Technology 210,000 Rolls-Royce PLC 870,194 917,471 0.4
-------------- -------------- ------
2,083,705 1,965,409 0.9
Banking 65,000 Bank of Scotland 643,468 939,135 0.4
65,000 HSBC Holdings PLC 1,723,324 1,877,631 0.8
86,000 Lloyds TSB Group PLC 1,046,912 1,232,217 0.6
100,000 National Westminster Bank PLC 1,920,712 2,069,526 0.9
-------------- -------------- ------
5,334,416 6,118,509 2.7
Beverages & 75,000 British American Tobacco PLC 653,592 684,169 0.3
Tobacco 27,500 Cadbury Schweppes PLC 418,012 421,554 0.2
125,000 Diageo PLC 1,304,349 1,380,551 0.6
45,000 Imperial Tobacco Group PLC 508,019 526,912 0.2
-------------- -------------- ------
2,883,972 3,013,186 1.3
Broadcasting & 39,000 Pearson PLC 817,700 857,091 0.4
Publishing
Building Materials & 87,500 RMC Group PLC 875,949 952,370 0.4
Components
Business & Public 66,000 Securicor PLC 709,443 636,691 0.3
Services 137,500 Shanks & McEwan Group PLC 439,604 534,100 0.2
36,000 United Utilities PLC 451,464 456,417 0.2
-------------- -------------- ------
1,600,511 1,627,208 0.7
Energy 60,000 British Energy PLC 690,635 641,521 0.3
Energy Sources 191,500 BP Amoco PLC 2,811,255 2,726,960 1.2
110,000 Enterprise Oil PLC 424,908 474,854 0.2
100,000 Shell Transport & Trading Co. PLC 499,008 558,227 0.3
-------------- -------------- ------
3,735,171 3,760,041 1.7
Equity Basket 33,800 MSCI United Kingdom OPALS 'B' (d) 6,738,326 7,510,022 3.4
Financial Services 55,000 Provident Financial PLC 870,545 848,393 0.4
Food & Household 100,000 Unilever PLC 1,017,802 961,080 0.4
Products
Health & Personal 49,000 Glaxo Wellcome PLC 1,340,866 1,562,700 0.7
Care 124,000 Nycomed Amersham PLC 847,113 821,803 0.4
206,100 SmithKline Beecham PLC 2,381,708 2,901,851 1.3
11,000 Zeneca Group PLC 413,980 457,410 0.2
-------------- -------------- ------
4,983,667 5,743,764 2.6
Industrial Components 75,000 BBA Group PLC 450,034 454,110 0.2
Insurance 105,000 Guardian Royal Exchange PLC 473,571 594,969 0.3
60,000 Prudential Corporation PLC 891,134 812,113 0.3
110,000 Royal & Sun Alliance Insurance
Group PLC 974,561 929,444 0.4
-------------- -------------- ------
2,339,266 2,336,526 1.0
Investment Trust 115,200 Fleming Japanese Investment Trust PLC 274,218 269,410 0.1
Leisure & Tourism 45,000 Carlton Communications PLC 454,901 444,019 0.2
Merchandising 38,500 Dixons Group PLC 478,625 725,539 0.3
55,000 The Great University Stores PLC 515,128 700,387 0.3
130,000 J Sainsbury PLC 900,113 750,684 0.4
93,000 Kingfisher PLC 743,149 1,172,373 0.5
155,000 Next PLC 1,292,562 1,798,781 0.8
300,000 Tesco PLC 894,877 850,556 0.4
-------------- -------------- ------
4,824,454 5,998,320 2.7
Metals--Nonferrous 39,000 Rio Tinto PLC (Registered Shares) 475,983 505,072 0.2
Multi-Industry 126,321 BTR Siebe PLC 891,688 532,663 0.2
Real Estate 80,000 The British Land Company PLC 591,948 659,301 0.3
Telecommunications 165,000 British Telecommunications PLC 2,697,243 2,857,051 1.3
157,000 Cable & Wireless PLC 1,859,885 2,146,404 1.0
31,500 Vodafone Group PLC 441,036 577,729 0.2
-------------- -------------- ------
4,998,164 5,581,184 2.5
Transportation-- 77,900 British Airways PLC 486,969 574,925 0.3
Airlines
Transportation-- 82,500 The Peninsular and Oriental Steam
Shipping Navigation Company 845,712 969,309 0.4
Utilities-- 127,000 Scottish Power PLC 1,149,657 1,172,766 0.5
Electrical & Gas
Total Investments in the
United Kingdom 49,415,393 53,496,199 23.8
Total Investments in Europe 145,151,255 150,987,490 67.1
LATIN
AMERICA
Mexico Foreign 1,923,000 Mexican Par Bond (Rights) 0 19 0.0
Government US$ 1,250,000 United Mexican States, Series C,
Bonds 6.201% due 12/31/2019 1,028,199 1,021,875 0.4
Total Investments in Latin America 1,028,199 1,021,894 0.4
</TABLE>
Merrill Lynch International Equity Fund, February 28, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
MIDDLE Face Amount/ Percent of
EAST Industries Shares Held Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Israel Multi-Industry 33,833 Koor Industries Limited (ADR)(a) $ 789,523 $ 640,712 0.3%
Total Investments in the Middle East 789,523 640,712 0.3
NORTH
AMERICA
Canada Aerospace & Military 30,070 Bombardier Inc. 'B' 440,016 441,825 0.2
Technology
Banking 12,780 Bank of Montreal 630,566 527,731 0.2
7,250 Royal Bank of Canada 374,964 351,078 0.2
-------------- -------------- ------
1,005,530 878,809 0.4
Beverages & Tobacco 13,700 Seagram Company 549,486 635,244 0.3
Broadcasting & 10,190 Rogers Communications, Inc. 'B' 139,054 160,877 0.1
Publishing
Electrical & 5,340 Newbridge Networks Corporation 192,381 129,825 0.1
Electronics 16,630 Northern Telecom Ltd. 921,749 968,567 0.4
-------------- -------------- ------
1,114,130 1,098,392 0.5
Energy Sources 4,300 Enbridge Inc. 186,342 202,521 0.1
7,460 Suncor Energy, Inc. 239,886 218,480 0.1
-------------- -------------- ------
426,228 421,001 0.2
Financial Services 15,980 Power Corporation of Canada 325,270 313,770 0.1
Forest Products 17,070 Abitibi-Consolidated Inc. 160,603 136,447 0.1
& Paper
Gold Mines 11,620 Placer Dome Inc. 169,835 127,184 0.1
Machinery & 12,130 United Dominion Industries Limited 349,641 234,554 0.1
Engineering
Merchandising 10,790 Canadian Tire Corp. 'A' 305,114 274,850 0.1
Metals--Nonferrous 10,330 Cominco Ltd. 134,853 142,187 0.1
8,150 Inco Limited 91,379 102,179 0.0
17,830 Noranda 213,262 192,197 0.1
-------------- -------------- ------
439,494 436,563 0.2
Multi-Industry 10,490 Imasco Limited 206,207 230,328 0.1
Telecommunications 13,840 BCE Inc. 554,050 560,945 0.2
7,480 Teleglobe Inc. 233,814 234,200 0.1
-------------- -------------- ------
787,864 795,145 0.3
Utilities-- 9,010 TransCanada PipeLines Limited 133,468 123,719 0.0
Electrical & Gas
Total Investments in Canada 6,551,940 6,308,708 2.8
United US Government US$ 1,250,000 United States Treasury Bonds, 5.25%
States Obligations due 11/15/2028 1,266,016 1,178,125 0.5
Total Investments in the United States 1,266,016 1,178,125 0.5
Total Investments in North America 7,817,956 7,486,833 3.3
PACIFIC BASIN/ASIA
Australia Banking 27,800 Australia and New Zealand Banking
Group Ltd. 157,271 179,428 0.1
85,000 National Australia Bank Limited 1,258,101 1,416,364 0.6
105,000 Westpac Banking Corporation Limited 657,964 693,790 0.3
-------------- -------------- ------
2,073,336 2,289,582 1.0
Beverages & Tobacco 55,000 Foster's Brewing Group Limited 131,500 157,694 0.1
17,000 Rothmans Holdings Ltd. 121,533 133,988 0.1
-------------- -------------- ------
253,033 291,682 0.2
Broadcasting & 58,000 Cable & Wireless Optus Limited 79,010 127,422 0.1
Publishing 160,000 The News Corporation Limited 1,045,201 1,122,045 0.5
54,000 The News Corporation Limited
(Preferred) 301,989 353,221 0.2
-------------- -------------- ------
1,426,200 1,602,688 0.8
Business & Public 10,000 Brambles Industries Limited 210,618 254,446 0.1
Services
Chemicals 54,000 Orica Limited 304,556 289,882 0.1
Energy Sources 56,000 Broken Hill Proprietary Company
Limited 454,819 420,171 0.2
40,000 Woodside Petroleum Limited 224,203 195,365 0.1
-------------- -------------- ------
679,022 615,536 0.3
Gold Mines 230,000 Newcrest Mining 350,564 343,999 0.2
158,000 Normandy Mining Limited 146,370 135,316 0.1
-------------- -------------- ------
496,934 479,315 0.3
Insurance 22,500 AMP Limited 291,103 254,610 0.1
72,000 National Mutual Holdings Ltd. 130,924 118,857 0.0
57,200 QBE Insurance Group Limited 214,259 214,765 0.1
-------------- -------------- ------
636,286 588,232 0.2
Leisure & Tourism 19,200 TABCORP Holdings Limited 118,825 134,645 0.1
Merchandising 32,000 Coles Myer Limited 145,715 170,789 0.1
Metals--Nonferrous 895,000 M.I.M. Holdings Limited 430,382 388,806 0.2
60,000 WMC Limited 192,414 186,180 0.1
-------------- -------------- ------
622,796 574,986 0.3
Real Estate 21,000 Lend Lease Corporation Limited 227,263 260,652 0.1
32,000 Westfield Holdings Limited 151,900 190,708 0.1
-------------- -------------- ------
379,163 451,360 0.2
Telecommunications 235,000 Telstra Corporation Limited 932,242 1,198,230 0.5
Total Investments in Australia 8,278,726 8,941,373 4.2
Hong Kong Equity Basket 12,300 MSCI Hong Kong OPALS 'B' (d) 780,804 698,394 0.3
Multi-Industry 325 Hutchison Whampoa Limited 1,886 2,255 0.0
Utilities--Electrical 700 Hong Kong and China Gas Company Ltd. 1,084 818 0.0
& Gas 62,350 Hong Kong and China Gas Company Ltd.
(Warrants)(b) 0 2,253 0.0
-------------- -------------- ------
1,084 3,071 0.0
Total Investments in Hong Kong 783,774 703,720 0.3
</TABLE>
Merrill Lynch International Equity Fund, February 28, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
PACIFIC
BASIN/ ASIA Shares Percent of
(concluded) Industries Held Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Japan Appliances & 68,000 Pioneer Electronic Corporation $ 1,226,663 $ 1,212,443 0.5%
Household Durables 16,100 Sony Corporation 1,407,429 1,218,833 0.5
-------------- -------------- ------
2,634,092 2,431,276 1.0
Automobiles 135,000 Fuji Heavy Industries, Ltd. 688,858 790,971 0.3
54,000 Toyota Motor Corporation 1,466,686 1,411,229 0.6
-------------- -------------- ------
2,155,544 2,202,200 0.9
Banking 185,000 The Asahi Bank, Ltd. 843,068 810,993 0.4
102,000 Mitsubishi Trust & Banking Corp. 1,103,895 866,768 0.4
-------------- -------------- ------
1,946,963 1,677,761 0.8
Beverages & Tobacco 141 Japan Tobacco, Inc. 914,932 1,283,764 0.6
Broadcasting & 24,000 Nippon Broadcasting System,
Publishing Incorporated 1,212,703 789,074 0.3
1,350 Nippon Television Network Corp. 406,228 381,829 0.2
-------------- -------------- ------
1,618,931 1,170,903 0.5
Building 116,000 Sekisui Chemical Co., Ltd. 610,575 733,435 0.3
Materials &
Components
Business & Public 134 NTT Data Corporation 576,413 773,816 0.3
Services 96,000 Ricoh Co., Ltd. 1,105,387 848,154 0.4
-------------- -------------- ------
1,681,800 1,621,970 0.7
Chemicals 111,000 Kaneka Corporation 572,651 823,470 0.4
33,000 Shin-Etsu Chemical Co., Ltd. 612,540 773,394 0.3
-------------- -------------- ------
1,185,191 1,596,864 0.7
Construction & 145,000 Nishimatsu Construction Co., Ltd. 725,861 701,652 0.3
Housing
Data Processing & 92,000 Fujitsu Limited 994,626 1,147,867 0.5
Reproduction
Electrical & 118,000 Hitachi Ltd. 1,097,970 746,080 0.3
Electronics 96,000 Uniden Corp. 1,339,430 773,698 0.3
-------------- -------------- ------
2,437,400 1,519,778 0.6
Electronic 83,000 Anritsu Corp. 954,948 606,651 0.3
Components & 6,800 Keyence Corporation 767,195 801,416 0.4
Instrumentation 19,000 Murata Manufacturing Co., Ltd. 637,142 855,336 0.4
61 NTT Mobile Communication Network, Inc. 2,012,861 2,478,671 1.1
9,000 Rohm Company Ltd. 503,077 880,121 0.4
13,000 TDK Corporation 941,639 932,642 0.4
-------------- -------------- ------
5,816,862 6,554,837 3.0
Financial 28,000 Jafco Co., Ltd. 1,588,776 944,192 0.4
Investment Company
Financial Services 220,000 Daiwa Securities Co., Ltd. 1,023,063 908,784 0.4
99,000,000 Sanwa International Finance Ltd.
(Convertible Preferred) 788,932 865,895 0.4
5,800 Takefuji Corporation 403,352 420,991 0.2
-------------- -------------- ------
2,215,347 2,195,670 1.0
Health & Personal 24,000 Banyu Pharmaceutical Co., Ltd. 430,521 384,623 0.2
Care 135,000 Fujisawa Pharmacturical Co., Ltd. 1,218,297 1,734,446 0.8
52,000 Taisho Pharmaceutical Company, Ltd. 1,016,737 1,380,880 0.6
35,000 Takeda Chemical Industries 1,184,261 1,203,844 0.5
-------------- -------------- ------
3,849,816 4,703,793 2.1
Industrial 38,000 Bridgestone Corporation 687,877 850,531 0.4
Components 67,000 Fujikura Ltd. 480,659 361,490 0.2
203,000 NSK Limited 1,201,997 922,416 0.4
-------------- -------------- ------
2,370,533 2,134,437 1.0
Merchandising 19,000 Ito-Yokado Co., Ltd. 1,115,218 1,108,413 0.5
55,000 Uny Co., Ltd. 922,024 881,428 0.4
-------------- -------------- ------
2,037,242 1,989,841 0.9
Metals--Steel 446,000 Nippon Steel Corporation 1,227,534 782,060 0.3
Miscellaneous 3,000 Toyo Seikan Kaisha, Ltd. 93,627 57,157 0.0
Materials &
Commodities
Multi-Industry 73,000 Ibiden Co., Ltd. 1,013,942 996,965 0.4
Non Index 660,099 Nikkei (Warrants)(b) 860,580 554,868 0.2
Real Estate 144,000 Mitsui Fudosan Co., Ltd. 1,523,472 1,154,477 0.5
Telecommunications 160 Nippon Telegraph & Telephone
Corporation (NTT) 1,404,038 1,319,170 0.6
Transportation-- 194 East Japan Railway Company 908,624 1,167,729 0.5
Road & Rail 116,000 Nippon Express Co., Ltd. 684,211 580,880 0.3
147,000 Tokyu Corporation 913,941 355,665 0.2
-------------- -------------- ------
2,506,776 2,104,274 1.0
Wholesale & 81,000 Mitsui & Co., Ltd. 594,130 441,123 0.2
International
Trade
Total Investments in Japan 44,008,590 42,020,334 18.5
New Broadcasting & 171,290 Sky Network Television Limited 326,027 295,072 0.1
Zealand Publishing
Forest Products & 308,510 Carter Holt Harvey Limited 330,237 282,688 0.1
Paper
Telecommunications 128,090 Telecom Corporation of New Zealand
Limited 652,118 647,206 0.3
Total Investments in New Zealand 1,308,382 1,224,966 0.5
Singapore Equity Basket 48,000 MSCI Singapore OPALS 'B' (d) 1,785,220 1,764,000 0.8
Total Investments in Singapore 1,785,220 1,764,000 0.8
South Appliances & 569 Samsung Electronics (GDR)(c) 12,713 23,557 0.0
Korea Household
Durables
Telecommunications 946 SK Telecom Co. Ltd. (ADR)(a) 14,546 9,574 0.0
Total Investments in South Korea 27,259 33,131 0.0
Total Investments in the Pacific
Basin/Asia 56,191,951 54,687,524 24.3
</TABLE>
Merrill Lynch International Equity Fund, February 28, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
SOUTHEAST Shares Percent of
ASIA Industries Held Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
India Banking 300 State Bank of India $ 2,095 $ 1,038 0.0%
Beverages & Tobacco 200 ITC Ltd. 2,905 3,644 0.0
Chemicals 100 Indian Petrochemicals Corp. Ltd. 396 289 0.0
1,298 Reliance Industries Ltd. 6,720 4,274 0.0
147 Tata Chemicals Limited 740 242 0.0
-------------- -------------- ------
7,856 4,805 0.0
Energy Sources 400 Hindustan Petroleum Corporation Ltd. 4,871 1,947 0.0
Health & Personal 40 Ranbaxy Laboratories Limited 378 346 0.0
Care 225 Reckitt & Coleman of India Ltd. 1,926 2,040 0.0
2,304 2,386 0.0
Metals--Steel 100 Steel Authority Of India 67 18 0.0
Telecommunications 40,000 Videsh Sanchar Nigam Ltd. (GDR)(c) 370,000 383,000 0.2
Total Investments in Southeast Asia 390,098 396,838 0.2
SHORT-TERM Face
SECURITIES Amount Issue
US Government US$ 1,500,000 United States Treasury Bills, 4.28%
Obligations* due 4/22/1999(e) 1,490,370 1,489,770 0.7
Total Investments in Short-Term
Securities 1,490,370 1,489,770 0.7
OPTIONS Nominal Value Covered Premiums
PURCHASED by Options Purchased Paid
Call Options 1,146 Stoxx 50, expiring March 1999 at E3900 176,525 9,062 0.0
Purchased
Currency Put 12,000,000 Japanese Yen, expiring October 1999
Options at YEN 150 107,400 52,800 0.0
Purchased
Total Options Purchased 283,925 61,862 0.0
Total Investments 215,958,610 219,461,571 97.5
OPTIONS Nominal Value Covered Premiums
WRITTEN by Options Written Received
Currency Call 12,000,000 Japanese Yen, expiring October 1999
Options Written at YEN 96.45 (107,400) (117,600) (0.0)
Total Options Written (107,400) (117,600) (0.0)
Total Investments, Net of Options Written $ 215,851,210 219,343,971 97.5
==============
Variation Margin on Financial Futures Contracts** (21,008) (0.0)
Unrealized Appreciation on Forward Foreign Exchange Contracts*** 153,082 0.1
Other Assets Less Liabilities 5,513,385 2.4
-------------- ------
Net Assets $ 224,989,430 100.0%
============== ======
Net Asset Class A--Based on net assets of $17,522,536 and
Value: 2,039,932 shares outstanding $ 8.59
==============
Class B--Based on net assets of $163,070,783 and
18,924,026 shares outstanding $ 8.62
==============
Class C--Based on net assets of $7,092,607 and
835,123 shares outstanding $ 8.49
==============
Class D--Based on net assets of $37,303,504 and
4,321,929 shares outstanding $ 8.63
==============
<FN>
(a)American Depositary Receipts (ADR).
(b)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.
(c)Global Depositary Receipts (GDR).
(d)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.
(e)Security held as collateral in connection with open financial
futures contracts.
*Certain US Government Obligations are traded on a discount basis;
the interest rate shown reflects the discount rate paid at the time
of purchase by the Fund.
**Financial futures contracts sold as of February 28, 1999 were as
follows:
Number of Expiration
Contracts Issue Exchange Date Value
26 SFE-- SFE-- March 1999 $ 1,165,797
Ordinary Ordinary
5 TSE-- TSE-- March 1999 582,090
35 Index 35 Index
Total Financial Futures Contracts Sold
(Total Contract Price--$1,765,245) $ 1,747,887
===========
Financial futures contracts purchased as of February 28, 1999 were
as follows:
Number of Expiration
Contracts Issue Exchange Date Value
7 MIB 30 MIB 30 March 1999 $ 1,394,403
Total Financial Futures Contracts Purchased
(Total Contract Price--$1,427,231) $ 1,394,403
===========
***Forward foreign exchange contracts as of February 28, 1999 were
as follows:
Foreign Expiration Unrealized
Currency Purchased Date Depreciation
E 3,446,588 March 1999 $ (245,690)
(US$ Commitment--$4,030,612) $ (245,690)
-----------
Foreign Expiration Unrealized
Currency Sold Date Depreciation
YEN 913,280,000 March 1999 $ 398,772
(US$ Commitment--$8,106,849) $ 398,772
Total Unrealized Appreciation on Forward
Foreign Exchange Contracts--Net $ 153,082
===========
</TABLE>
Merrill Lynch International Equity Fund, February 28, 1999
EQUITY PORTFOLIO CHANGES
For the Quarter Ended February 28, 1999
Additions
*Airtours PLC
Alpha Credit Bank
AngloGold Limited (ADR)
The Asahi Bank, Ltd.
Assicurazioni Generali
BBA Group PLC
Banco Central Hispanoamericano (BCH)
Banque Nationale de Paris (BNP)
Banyu Pharmaceutical Co., Ltd.
British Energy PLC
The British Land Company PLC
Carlton Communications PLC
Carter Holt Harvey Limited
Coflexip
Cominco Ltd.
Dixons Group PLC
Dragados & Construcciones, SA
ENI SpA
Enterprise Oil PLC
Fomento de Construcciones y Contratas, SA
Fuji Heavy Industries, Ltd.
The Great University Stores PLC
Hennes & Mauritz AB (H&M) 'B'
Imperial Tobacco Group PLC
Irish Permanent PLC
Istituto Bancario San Paolo di Torino
*J.D. Wetherspoon PLC
MSCI Hong Kong OPALS 'B'
*MSCI Thailand OPALS 'B'
Minorco SA (Minerals & Resources
Corporation Limited)
National Bank Of Greece SA (GDR)
National Mutual Holdings Ltd.
Newbridge Networks Corporation
Noranda
Pearson PLC
*Pohang Iron & Steel Company, Ltd. (ADR)
RMC Group PLC
RWE AG (Preferred)
*Reuters Group PLC
Rio Tinto PLC (Registered Shares)
Rogers Communications, Inc. 'B'
Royal Bank of Canada
*Samsung Fire & Marine Insurance
Sanwa International Finance Ltd.
(Convertible Preferred)
Securicor PLC
Shell Transport & Trading Co. PLC
Sky Network Television Limited
*Stora Enso Oyj 'A'
*Stora Enso Oyj 'R'
Svenska Handelsbanken 'A'
Takeda Chemical Industries
Takefuji Corporation
Telecom Corporation of New Zealand
Limited
Telefonaktiebolaget LM Ericsson 'B'
*Telefonica, SA (New)
Teleglobe Inc.
Unicredito Italiano SpA
Videsh Sanchar Nigam Ltd. (GDR)
Westfield Holdings Limited
*Woolwich PLC
Deletions
Abbey National
*Airtours PLC
Australian Gas Light Company Limited
Avesta-Sheffield AB
Bayerische Motoren Werke AG (BMW)
The Boots Company PLC
British Petroleum Company PLC (ADR)
Cable & Wireless Communications PLC
Cap Gemini SA
China Telecom (Hong Kong) Limited
(ADR)
Commonwealth Bank of Australia
GIO Australia Holdings, Ltd.
General Property Trust
Hanson PLC
Imperial Chemical Industries PLC
Irish Life PLC
*J.D. Wetherspoon PLC
Jarvis PLC
Korea Electric Power Corporation
Lane Walker Rudkin Industries, Ltd.
Leighton Holdings Ltd.
Liberty Life Association of Africa Limited
MSCI Denmark OPALS 'B'
MSCI Netherlands OPALS 'B'
MSCI Norway OPALS 'B'
MSCI South Korea OPALS 'B'
MSCI Switzerland OPALS 'B'
*MSCI Thailand OPALS 'B'
Marks & Spencer PLC
Misys PLC
Mo och Domsjo AB 'B' Free
MontEdison SpA
National Bank of Canada
PDL Holdings Limited
Poco Petroleums Limited
*Pohang Iron & Steel Company, Ltd. (ADR)
Preussag
Railtrack Group PLC
*Reuters Group PLC
Rio Algom Limited
Rottneros Bruks AB
SAP AG (Systeme, Anwendungen, Produkte
in der Datenverarbeitung) (Preferred)
*Samsung Fire & Marine Insurance
Sankyo Co., Ltd.
Sanwa Bank Ltd.
Shanghai Industrial Holdings Limited
Skandia Forsakrings AB
Societe Generale de Surveillance 'A'
Softbank SA
*Stora Enso Oyj 'A'
*Stora Enso Oyj 'R'
Stora Kopparbergs Bergslags AB
*Telefonica, SA (New)
The Thomson Corporation
Volvo AB 'B'
Williams PLC
*Woolwich PLC
Wrightson Ltd.
[FN]
*Added and deleted in the same quarter.
PORTFOLIO INFORMATION
Worldwide
Investments as of
February 28, 1999
Ten Largest Industries Percent of
(Equity Investments) Net Assets
Equity Basket 11.3%
Banking 11.0
Telecommunications 9.2
Health & Personal Care 7.7
Energy Sources 5.3
Merchandising 5.1
Insurance 4.8
Business & Public Services 3.1
Electronic Components &
Instrumentation 3.0
Electrical & Electronics 2.9
Percent of
Ten Largest Equity Holdings Net Assets
MSCI United Kingdom OPALS 'B' 3.4%
MSCI Finland OPALS 'B' 1.5
MSCI Spain OPALS 'B' 1.5
MSCI Portugal OPALS 'B' 1.3
SmithKline Beecham PLC 1.3
British Telecommunications PLC 1.3
Roche Holding AG 1.3
Novartis AG (Registered Shares) 1.2
BP Amoco PLC 1.2
ING Groep NV 1.2
Percent of
Geographical Asset Mix* Net Assets
Europe (Ex-United Kingdom
and Ireland) 42.0%
Japan 18.5
Pacific Basin (Ex-Japan) 5.8
United Kingdom and Ireland 25.1
Other Emerging Markets 2.1
North America 3.3
[FN]
*Percent of net assets may not equal 100% and excludes the impact
of futures and options.
Percent of
Ten Largest Countries Net Assets
United Kingdom 23.8%
Japan 18.5
France 9.0
Germany 6.9
Switzerland 5.8
Italy 5.3
Netherlands 4.7
Australia 4.2
Spain 4.0
Canada 2.8
Financial Futures Contracts
Percent of
Country Issue Exchange Net Assets
Australia SFE--Ordinary SFE--Ordinary (0.5)%
Canada TSE--35 Index TSE--35 Index (0.3)
Italy MIB 30 MIB 30 0.6
-------
(0.2)%
=======
OFFICERS AND TRUSTEES
Terry K. Glenn, President and Trustee
Donald Cecil, Trustee
Edward H. Meyer, Trustee
Roland M. Machold, 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
Ira P. Shapiro, 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
Gerald M. Richard, Treasurer and Norman R. Harvey, Senior Vice
President of Merrill Lynch International Equity Fund have recently
retired. Their colleagues at Merrill Lynch Asset Management, L.P.
join the Fund's Board of Trustees in wishing Mr. Richard and Mr.
Harvey well in their retirements.
