MERRILL LYNCH
INTERNATIONAL
EQUITY FUND
FUND LOGO
Semi-Annual Report
November 30, 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 Country Positions
For the Three-Month Period Ended November 30, 1999
Netherlands - 0.9%
Switzerland - 0.8%
Italy + 1.2%
United Kingdom + 2.5%
Australia + 3.3%
Germany + 6.9%
Spain + 8.3%
France +10.1%
Canada +14.2%
Japan +15.4%
Source: Morgan Stanley
Capital International World
(ex-US) Index.
[FN]
*For the three-month period ended November 30, 1999,
total investment return in US dollars for the Morgan Stanley
Capital International World (Ex-US) Index was +8.66%.
Merrill Lynch International Equity Fund, November 30, 1999
DEAR SHAREHOLDER
For the three-month period ended November 30, 1999, total returns
for Merrill Lynch International Equity Fund's Class A, Class B,
Class C and Class D Shares were +9.19%, +8.91%, +8.84% and +9.06%,
respectively. This compares to the total return of the unmanaged
Morgan Stanley Capital International (MSCI) World (Ex-US) Index of
+8.66% 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 5 and 6 of this report to shareholders.) Relative to the
MSCI World (Ex-US) Index, positive contributions to the Fund's
performance came from our decision to remain underweight in the UK
equity market while progressively increasing our exposure to
Continental European equities from an underweight to an overweight
position by the end of October. In addition, the Fund benefited from
our maintained exposure to emerging equity markets, albeit at a
slightly lower level than during the three months ended August 31,
1999. In particular, the Fund's positions in Latin America proved
beneficial since this was the best-performing equity region,
generating +17.0%. (References to markets are measured by Morgan
Stanley indexes and are in US dollar terms unless otherwise
specified.) Japanese stock selection continued to provide a positive
contribution to the Fund.
Global equity markets' performance was mixed during the November
quarter with a wide range of returns coming from markets within the
same regions. Overall positive returns from each of the broad
regions masked some marked divergences at individual country levels.
For example, within developed Europe, Finland and Sweden were the
top-performing markets for the second quarter in a row, returning
+53.5% and +22.6%, respectively. By contrast, Austria and Ireland
were the worst-performing developed equity markets falling by -10.6%
and -5.5%, respectively. Similar return differences were seen in
Asian markets, where the New Zealand market fell by -3.0%, while
Japan showed a +15.4% gain. However, Japan's return was almost
entirely the result of the strengthening yen, since the market only
rose by +7.5% in local currency terms. The market movements came
about in an environment of tightening monetary policy in the United
States and Europe. In the United States, the Federal Reserve Board
took back the remaining interest rate cuts that were made a year
earlier. These interest rate increases were made as the US economy
continued to evidence growth above the long-term equilibrium rate,
and asset price inflation was largely unabated. In Europe, both the
Bank of England and the European Central Bank (ECB) also raised
interest rates. In the United Kingdom, inflationary concerns were
triggered by strong year-on-year rises in house prices and a
tightening labor market. In November, the ECB also increased
interest rates by 50 basis points.
As the November quarter progressed, there were distinct signs that
the strong run in cyclical stocks that had been underway since the
fourth quarter of 1998 was petering out and that a narrow group of
international telecommunication and technology stocks was taking the
lead.
Portfolio Matters
For the three months ended November 30, 1999, the Fund's average
effective equity exposure was at 95% of net assets, where it had
been for much of the earlier part of the year. However, the Fund's
cash position was slightly higher at the beginning of the quarter
and slightly lower at the mid-point of the quarter at 2%. This shift
reflected our increasingly bullish outlook for bonds. The most
significant change was the progressive increase in Continental
European equities, from underweight to overweight relative to the
benchmark, largely at the expense of exposure to Japan.
Japan remained the largest country exposure in the Fund throughout
the three-month period ended November 30, 1999, despite a reduction
in the weighting. Our shift away from Japan toward Europe during the
quarter proved timely in local currency terms as Europe outperformed
Japan by almost 10% over the three months ended November 30, 1999.
However, once currency movements are taken into account, Europe
underperformed Japan by nearly 8%. Nevertheless, overweight
positions in two of the three strongest developed markets (Finland
and Sweden) helped returns relative to the Index. This was partially
offset by an underweight in Hong Kong, returning +14.2%, which was
boosted by progress on China's entry to the World Trade
Organization. We maintained an underweight position in UK equities
throughout the three-month period ended November 30, 1999, which was
beneficial since the United Kingdom underperformed the benchmark
by more than 6%.
At the sector level, we built an overweight position in interest
rate-sensitive areas such as insurance and other financials,
particularly in Europe, as investors appeared to have over-
discounted likely interest rate hikes. We also added to growth
sectors (particularly telecommunications rather than
pharmaceuticals) in anticipation of a bond market rally in the
United States and Europe (which actually started to come through
during the quarter). In the last weeks of the November quarter, we
started to look for opportunities to raise exposure to some cyclical
sectors, to take advantage of the stronger domestic growth outlook,
perhaps in the new year, once bond yields are nearer to fair value.
Economic and Investment Environment
Global growth has been on an upswing throughout 1999 and this
momentum looks set to carry over into 2000. However, the rate of
growth is expected to moderate later in the year in response to
monetary policy tightening, as foreshadowed by some flattening of
yield curves in recent months. While the prices of some commodities,
such as oil and selected metals, have risen on the back of capacity
reductions, these increases are not expected to flow through
significantly into consumer price inflation because of the
overcapacity in many areas of final production.
An environment of modest growth in nearly all markets coupled with a
very subdued inflationary outlook provides a good backdrop for
international equities. As we suggested what might happen in our
August 30, 1999 shareholder report, during the fall there was a
dramatic swing back to growth stocks, in particular the
telecommunications and technology sectors. Once the euphoria of the
new millennium is past, investors may review the ratings of many of
these companies whose prices are discounting many years of very high
earnings growth. The result may be a swing back again toward those
cyclical or value stocks that have some pricing power, including the
resource and basic materials sectors.
Looking ahead, the emerging equity markets also look relatively
favorable, especially Latin America and select Asian markets. These
countries are benefiting from upgrades in their gross domestic
product estimates and good earnings forecasts. Eastern European
emerging markets also stand to benefit from the upswing in economic
activity in developed European countries, notably Germany.
For most of the past year concerns have been expressed about
potential year 2000 (Y2K) disruptions to markets and economies,
primarily in Asia and emerging markets. In recent weeks, many of
these concerns have become less prominent. This has been evident in
the steep rise in the prices of stocks in sectors that had
previously been thought to be vulnerable to Y2K problems.
In Conclusion
During the six months ended November 30, 1999, the return from
developed markets outside the United States exceeded the return from
the US market by 9.6% (in US dollar terms). This is the first six-
month period since 1994 that international markets have produced
such a significant outperformance of the US domestic market. In our
opinion, there are strong reasons for believing this to be the
beginning of an era in which international equity markets do offer
better returns, as well as diversification to US investors.
Merrill Lynch International Equity Fund, November 30, 1999
The bullish cyclical case for international markets is based on the
economic recovery in the rest of the world arriving at a time when
US growth may be peaking. Earnings revisions are also likely to turn
in favor of the MSCI World (Ex-US) Index for the first time since
1995. In addition, capital is being withdrawn back to Japan and
Europe, leaving the United States struggling to finance its large
trade deficit without higher real bond yields and/or a weaker
dollar. Of course, a lower US dollar adds to the returns from
international investment.
We are also seeing that value favors international equities. Ten
years ago, price/book and price/cash earnings ratios in the United
States were only around 75% of those in the MSCI World (Ex-US)
Index, while the dividend yield was almost double. Now those two
ratios are much higher in the United States: the price/book value
ratio is 5.0 versus 2.8 internationally. At the same time, the
dividend yield is lower.
We thank you for your interest in Merrill Lynch International Equity
Fund, and we look forward to reviewing our investment strategy with
you in our next report to shareholders.
Sincerely,
(Terry K. Glenn)
Terry K. Glenn
President and Trustee
(Clive Lang)
Clive Lang
Senior Vice President and
Portfolio Manager
January 7, 2000
To reduce shareholders' expenses, Merrill Lynch International Equity
Fund will no longer be printing and mailing quarterly reports to
shareholders. We will continue to provide you with reports on a semi-
annual and annual basis.
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 November 30, 1999 Total Return Total Return Total Return
<S> <C> <C> <C>
ML International Equity Fund Class A Shares* +9.19% +30.15% +35.88%
ML International Equity Fund Class B Shares* +8.91 +28.81 +49.93
ML International Equity Fund Class C Shares* +8.84 +28.89 +28.97
ML International Equity Fund Class D Shares* +9.06 +29.74 +57.44
Morgan Stanley Capital International World (Ex-US) Index** +8.66 +21.65 +62.27/+89.23
<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
10/31/94 and from 7/31/93, respectively.
</TABLE>
Merrill Lynch International Equity Fund, November 30, 1999
PERFORMANCE DATA (concluded)
Average Annual
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 9/30/99 +40.22% +32.86%
Inception (10/21/94) through 9/30/99 + 4.79 + 3.66
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 9/30/99 +38.67% +34.67%
Five Years Ended 9/30/99 + 3.85 + 3.85
Inception (7/30/93) through 9/30/99 + 5.52 + 5.52
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Year Ended 9/30/99 +38.71% +37.71%
Inception (10/21/94) through 9/30/99 + 3.72 + 3.72
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Sales Charge Sales Charge**
Class D Shares*
Year Ended 9/30/99 +39.67% +32.34%
Five Years Ended 9/30/99 + 4.66 + 3.54
Inception (7/30/93) through 9/30/99 + 6.33 + 5.41
[FN]
*Maximum sales charge is 5.25%. Prior to October 21, 1994, Class D
Shares (formerly Class A Shares) were offered at a higher than
maximum sales charge. Thus, actual returns would have been somewhat
lower than noted for the five-year and inception periods.
**Assuming maximum sales charge.
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
Shares Percent of
EUROPE Industries Held Investments Value Net Assets
<S> <S> <C> <S> <C> <C>
Belgium Equity Basket 34,700 MSCI Belgium OPALS 'B' (c) $ 2,694,108 1.1%
Total Investments in Belgium 2,694,108 1.1
Denmark Marine 110 D/S 1912 'B' 1,161,516 0.5
Total Investments in Denmark 1,161,516 0.5
Finland Communications 37,500 Nokia Oyj 5,308,353 2.1
Equipment
Equity Basket 1,100 MSCI Finland OPALS (c) 523,985 0.2
Total Investments in Finland 5,832,338 2.3
France Banks 8,120 Banque Nationale de Paris (BNP) 743,945 0.3
6,350 Societe Generale 'A' 1,368,141 0.5
------------ ------
2,112,086 0.8
Building Products 4,500 Compagnie de Saint Gobain 765,671 0.3
Communications 4,000 Alcatel 775,236 0.3
Equipment
Diversified 17,600 France Telecom SA 2,039,535 0.8
Telecommunication
Services
Electrical Equipment 12,000 Schneider SA 809,467 0.3
Food Products 2,250 Groupe Danone (ADR) (a) 521,699 0.2
IT Consulting & 4,500 Cap Gemini SA 795,573 0.3
Services
Industrial 17,500 Lagardere S.C.A. 824,569 0.3
Conglomerates
Insurance 14,000 Axa 1,887,347 0.8
Metals & Mining 67,000 Usinor SA 1,025,325 0.4
Multi-Utilities 12,500 Suez Lyonnaise des Eaux 1,841,186 0.7
20,700 Vivendi 1,646,420 0.7
------------ ------
3,487,606 1.4
Multiline Retail 8,300 Carrefour SA 1,445,664 0.6
2,500 Pinault-Printemps-Redoute SA 521,019 0.2
------------ ------
1,966,683 0.8
Oil & Gas 22,685 Total Fina SA 'B' 3,017,066 1.2
Personal Products 1,000 L'Oreal SA 657,944 0.3
Pharmaceuticals 15,500 Rhone-Poulenc SA 959,732 0.4
11,000 ++Sanofi-Synthelabo SA 452,959 0.2
------------ ------
1,412,691 0.6
Textiles & Apparel 2,000 LVMH (Louis Vuitton Moet Hennessy) 648,782 0.3
Total Investments in France 22,747,280 9.1
Germany Airlines 21,250 Deutsche Lufthansa AG (Registered Shares) 467,684 0.2
Automobiles 16,200 DaimlerChrysler AG 1,102,567 0.4
9,350 Volkswagen AG 438,673 0.2
------------ ------
1,541,240 0.6
Banks 21,611 Deutsche Bank AG (Registered Shares) 1,424,058 0.6
13,900 HypoVereinsbank 862,062 0.3
------------ ------
2,286,120 0.9
Business & Public 825 SAP AG (Systeme, Anwendungen, Produkte in
Services der Services Datenverarbeitung) (Preferred) 333,490 0.1
Chemicals 13,600 BASF AG 629,169 0.2
22,250 Bayer AG 940,855 0.4
------------ ------
1,570,024 0.6
Diversified 49,000 Deutsche Telekom AG 2,804,592 1.1
Telecommunication
Services
Electric Utilities 24,200 RWE AG 925,853 0.4
8,850 RWE AG (Preferred) 267,305 0.1
------------ ------
1,193,158 0.5
</TABLE>
Merrill Lynch International Equity Fund, November 30, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
EUROPE Shares Percent of
(continued) Industries Held Investments Value Net Assets
<S> <S> <C> <S> <C> <C>
Germany Industrial 12,300 Siemens AG $ 1,239,602 0.5%
(concluded) Conglomerates
Insurance 5,650 Allianz AG (Registered Shares) 1,653,908 0.7
4,550 Axa Colonia Konzern AG 428,318 0.2
3,900 Muenchener Rueckversicherungs-Gesellschaft
AG (Registered Shares) 812,790 0.3
------------ ------
2,895,016 1.2
Metals & Mining 27,600 Thyssen Krupp AG 725,258 0.3
Multi-Utilities 14,850 Veba AG 725,123 0.3
Telecommunications 15,500 Mannesmann AG 3,220,955 1.3
Total Investments in Germany 19,002,262 7.6
Hungary Banks 13,599 OTP Bank Rt. (GDR)(b) 635,073 0.3
Oil & Gas 22,915 ++MOL Magyar Olaj-es Gazipari Rt. (GDR)(b) 436,531 0.2
Pharmaceuticals 3,500 EGIS Rt. 109,492 0.0
Total Investments in Hungary 1,181,096 0.5
Ireland Banks 55,000 Bank of Ireland 452,682 0.2
Construction 21,000 CRH PLC 420,319 0.1
Materials
Total Investments in Ireland 873,001 0.3
Italy Banks 135,000 San Paolo-IMI SpA 1,685,383 0.7
285,000 Unicredito Italiano SpA 1,328,523 0.5
------------ ------
3,013,906 1.2
Diversified 360,000 Telecom Italia Mobile (TIM) SpA 2,827,094 1.1
Telecommunication 160,000 Telecom Italia SpA 1,762,303 0.7
Services 125,000 Telecom Italia SpA (Registered) 673,298 0.3
------------ ------
5,262,695 2.1
Financial Services 135,000 ++Beni Stabili 47,435 0.0
Insurance 62,000 Assicurazioni Generali 1,785,258 0.7
Oil & Gas 470,000 ENI SpA 2,574,186 1.1
Total Investments in Italy 12,683,480 5.1
Netherlands Banks 76,000 ABN AMRO Holding NV 1,849,411 0.7
Commercial Services 75,000 Vedior NV 'A' 826,835 0.3
& Supplies
Diversified 22,500 ING Groep NV 1,265,170 0.5
Financials
Food Products 11,700 Unilever NV 'A' 644,342 0.3
IT Consulting & 12,500 Getronics NV 764,539 0.3
Services
Insurance 15,500 Aegon NV 1,404,486 0.6
Marine 23,000 Koninklijke Nedlloyd NV 610,171 0.3
Media 19,200 Wolters Kluwer NV 'A' 578,950 0.2
Oil & Gas 60,000 Royal Dutch Petroleum Company 3,529,639 1.4
Total Investments in the Netherlands 11,473,543 4.6
Pan-Europe Equity Basket 20,050 MSCI Euro Banking OPALS (c) 5,452,598 2.2
20,250 MSCI Euro Insurance OPALS 'B' (c) 3,580,403 1.4
Total Investments in Pan-Europe 9,033,001 3.6
Portugal Equity Basket 23,200 MSCI Portugal OPALS 'B' (c)(f) 1,471,344 0.6
Total Investments in Portugal 1,471,344 0.6
Spain Banks 175,000 Banco Santander Central Hispano, SA 1,922,233 0.8
Construction & 12,000 Fomento de Construcciones y Contratas SA 253,593 0.1
Engineering 30,000 Grupo Dragados SA 274,856 0.1
------------ ------
528,449 0.2
Diversified 115,000 ++Telefonica SA 2,394,372 1.0
Telecommunication 2,300 ++Telefonica SA (New) 44,067 0.0
------------ ------
Services 2,438,439 1.0
Electric Utilities 77,000 Endesa SA 1,527,215 0.6
Metals & Mining 10,000 Acerinox SA 307,577 0.1
Oil & Gas 35,000 Repsol-YPF, SA 764,665 0.3
Transportation-- 40,000 ++Amadeus Global Travel Distribution SA 314,122 0.1
Airlines
Total Investments in Spain 7,802,700 3.1
Sweden Automobiles 13,000 Volvo AB 'B' 315,898 0.1
Banks 40,000 Skandinaviska Enskilda Banken (Rights) (d) 43,304 0.0
40,000 Skandinaviska Enskilda Banken (SEB) 'A' 381,266 0.2
57,000 Svenska Handelsbanken AB 778,065 0.3
------------ ------
1,202,635 0.5
Communications 55,000 Telefonaktiebolaget LM Ericsson 'B' 2,669,746 1.1
Equipment
Diversified 42,000 Investor AB 'B' 565,898 0.2
Financials
Household Durables 32,000 Electrolux AB 'B' 625,088 0.3
Paper & Forest 19,000 Svenska Cellulosa AB (SCA) 'B' 528,771 0.2
Products
Total Investments in Sweden 5,908,036 2.4
Switzerland Banks 5,350 Credit Suisse Group (Registered Shares) 1,000,644 0.4
4,150 UBS AG (Registered Shares) 1,134,949 0.5
------------ ------
2,135,593 0.9
Diversified 3,200 Swisscom AG (Registered Shares) 1,086,383 0.4
Telecommunication
Services
Equity Basket 6,600 MSCI Switzerland OPALS 'B' (c) 2,213,772 0.9
</TABLE>
Merrill Lynch International Equity Fund, November 30, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
EUROPE Shares Percent of
(concluded) Industries Held Investments Value Net Assets
<S> <S> <C> <S> <C> <C>
Switzerland Food Products 785 Nestle SA (Registered Shares) $ 1,412,467 0.6%
(concluded)
Insurance 290 Schweizerische Rueckversicherungs-Gesellschaft
(Registered Shares) 591,632 0.2
1,000 Zurich Allied AG 572,740 0.2
------------ ------
1,164,372 0.4
Pharmaceuticals 1,385 Novartis AG (Registered Shares) 2,158,566 0.9
190 Roche Holding AG 2,293,474 0.9
------------ ------
4,452,040 1.8
Retailing 5,750 ++Charles Voegele Holding AG 974,239 0.4
Total Investments in Switzerland 13,438,866 5.4
United Aerospace & 150,000 British Aerospace PLC 856,587 0.3
Kingdom Defense 250,000 Rolls-Royce PLC 758,095 0.3
------------ ------
1,614,682 0.6
Appliances & 85,000 Reckitt Benckiser PLC 1,033,715 0.4
Household Products
Banks 60,000 Alliance & Leicester PLC 821,369 0.3
36,000 Barclays PLC 1,037,217 0.4
187,500 HSBC Holdings PLC 2,416,054 1.0
11,000 HSBC Holdings PLC (ADR) (a) 717,063 0.3
135,000 Lloyds TSB Group PLC 1,724,516 0.7
35,000 Standard Chartered PLC 474,118 0.2
------------ ------
7,190,337 2.9
Beverages 58,000 Bass PLC 652,734 0.2
75,000 Diageo PLC 678,107 0.3
------------ ------
1,330,841 0.5
Construction 50,000 Blue Circle Industries PLC 286,325 0.1
Materials 52,000 RMC Group PLC 634,874 0.3
------------ ------
921,199 0.4
Containers & 185,000 Rexam PLC 733,999 0.3
Packaging
Diversified 26,500 Provident Financial PLC 288,108 0.1
Financials
Diversified 80,000 British Telecommunications PLC 1,602,624 0.6
Telecommunication 115,000 ++Cable & Wireless PLC 1,473,609 0.6
------------ ------
Services 3,076,233 1.2
Electric Utilities 130,000 British Energy PLC 735,650 0.3
70,000 British Energy PLC (Deferred Shares) 1 0.0
------------ ------
735,651 0.3
Food & Drug 110,000 Safeway PLC 323,056 0.1
Retailing 425,000 Tesco PLC 1,146,693 0.5
------------ ------
1,469,749 0.6
Food Products 75,000 Unilever PLC 546,783 0.2
Health Care 135,000 Shanks & McEwan Group PLC 543,679 0.2
Equipment & Supplies
Hotels Restaurants 60,000 Compass Group PLC 725,861 0.3
& Leisure 135,000 Hilton Group PLC 433,009 0.2
------------ ------
1,158,870 0.5
Insurance 40,000 Allied Zurich PLC 483,270 0.2
32,000 CGU PLC 483,907 0.2
115,000 Prudential Corporation PLC 1,884,572 0.7
200,000 Royal & Sun Alliance Insurance Group PLC 1,227,278 0.5
------------ ------
4,079,027 1.6
Marine 26,500 The Peninsular and Oriental Steam
Navigation Company 388,503 0.2
Media 19,500 Pearson PLC 464,981 0.2
Multiline Retail 80,000 Kingfisher PLC 737,322 0.3
Oil & Gas 477,500 BP Amoco PLC 4,849,339 1.9
55,000 Enterprise Oil PLC 393,971 0.2
------------ ------
5,243,310 2.1
Pharmaceuticals 25,500 AstraZeneca Group PLC 1,135,733 0.5
63,000 Glaxo Wellcome PLC 1,883,322 0.7
80,880 SmithKline Beecham PLC 1,078,881 0.4
------------ ------
4,097,936 1.6
Real Estate 80,000 The British Land Company PLC 576,232 0.2
49,000 ++Canary Wharf Finance PLC 302,048 0.1
------------ ------
878,280 0.3
Software & Services 63,000 Computacenter PLC 890,517 0.4
Specialty Retail 20,000 Dixons Group PLC 434,880 0.2
Wireless 455,000 Vodafone AirTouch PLC 2,138,404 0.9
Telecommunications
Services
Total Investments in the United Kingdom 39,997,006 16.0
Total Investments in Europe
(Cost--$146,622,457) 155,299,577 62.2
LATIN
AMERICA
Argentina Diversified 9,000 Telefonica de Argentina SA (ADR) (a) 236,813 0.1
Telecommunication
Services
Equity Basket 5,500 MSCI Argentina OPALS (c) 336,270 0.1
Total Investments in Argentina 573,083 0.2
Brazil Equity Basket 40,000 MSCI Brazil OPALS (c) 1,769,200 0.7
Telecommunications 9,600 Telecomunicacoes Brasileiras SA-Telebras
(Preferred Block) (ADR) (a) 871,200 0.3
Total Investments in Brazil 2,640,400 1.0
</TABLE>
Merrill Lynch International Equity Fund, November 30, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
LATIN AMERICA Shares Percent of
(concluded) Industries Held Investments Value Net Assets
<S> <S> <C> <S> <C> <C>
Mexico Diversified 6,800 Telefonos de Mexico SA (ADR) (a) $ 629,425 0.3%
Telecommunication
Services
Equity Basket 5,700 MSCI Mexican OPALS (c) 565,212 0.2
Foreign Bonds 1,923,000 Mexican Par Bond (Rights) (e) 19 0.0
Total Investments in Mexico 1,194,656 0.5
Peru Diversified 18,000 Telefonica del Peru SAA (ADR) (a) 232,875 0.1
Telecommunication
Services
Total Investments in Peru 232,875 0.1
Venezuela Telecommunications 9,000 Compania Anonima Nacional Telefonos de
Venezuela (CANTV) (ADR) (a) 215,437 0.1
Total Investments in Venezuela 215,437 0.1
Total Investments in Latin America
(Cost--$4,381,154) 4,856,451 1.9
NORTH AMERICA
Canada Aerospace & 31,060 Bombardier Inc. 'B' 615,801 0.2
Defense 33,490 CAE, Inc. 206,925 0.1
------------ ------
822,726 0.3
Banks 10,850 Bank of Montreal 391,183 0.1
16,700 Bank of Nova Scotia 360,578 0.1
3,770 Royal Bank of Canada 170,223 0.1
17,590 The Toronto-Dominion Bank 423,985 0.2
------------ ------
1,345,969 0.5
Communications 1,410 ++JDS Uniphase Corporation 322,630 0.1
Equipment 35,320 Nortel Networks Corporation 2,601,996 1.1
------------ ------
2,924,626 1.2
Data Processing & 4,950 ++Certicom Corporation 154,603 0.1
Reproduction
Diversified 18,300 BCE Inc. 1,230,106 0.5
Telecommunication
Services
Electrical & 6,130 ++Celestica Inc. 424,538 0.2
Electronics
Media 18,940 ++Rogers Communications, Inc. 'B' 430,162 0.2
8,940 Seagram Company 389,092 0.1
------------ ------
819,254 0.3
Metals & Mining 15,050 ++Inco Limited 275,903 0.1
18,210 Placer Dome Inc. 207,100 0.1
------------ ------
483,003 0.2
Oil & Gas 19,740 ++Anderson Exploration Ltd. 219,810 0.1
13,230 ++Canadian Natural Resources Ltd. 299,579 0.1
7,490 Suncor Energy, Inc. 281,740 0.1
------------ ------
801,129 0.3
Paper & Forest 23,950 Domtar, Inc. 268,315 0.1
Products
Total Investments in Canada 9,274,269 3.7
United Media 2,100,000 MediaOne Group Inc., 7% (Preferred) 939,750 0.4
States
Total Investments in the United States 939,750 0.4
Total Investments in North America
(Cost--$8,148,264) 10,214,019 4.1
PACIFIC BASIN/
ASIA
Australia Banks 37,000 National Australia Bank Limited 534,008 0.2
60,000 Westpac Banking Corporation Limited 403,797 0.2
------------ ------
937,805 0.4
Beverages 85,200 Foster's Brewing Group Limited 228,436 0.1
Chemicals 35,000 Orica Limited 181,941 0.1
Construction 126,200 Boral Limited 186,955 0.1
Materials
Diversified 47,000 Colonial Limited 187,364 0.1
Financials 30,000 Lend Lease Corporation Limited 382,434 0.1
------------ ------
569,798 0.2
Diversified 77,600 ++Cable & Wireless Optus Limited 202,286 0.1
Telecommunication 100,000 ++Telstra Corporation Limited 582,393 0.2
Services 42,000 ++Telstra Corporation Limited
(Installment Receipts) (h) 155,735 0.1
------------ ------
940,414 0.4
Gas Utilities 28,000 Australian Gas Light Company Limited 155,913 0.1
Hotels Restaurants 16,500 Aristocrat Leisure Limited 208,765 0.1
& Leisure
Industrial 6,000 Brambles Industries Limited 164,593 0.1
Conglomerates
Insurance 40,000 AMP Limited 375,122 0.1
Media 96,000 The News Corporation Limited 830,711 0.3
31,500 The News Corporation Limited (Preferred) 244,738 0.1
19,500 Publishing & Broadcasting Limited 128,196 0.1
------------ ------
1,203,645 0.5
Metals & Mining 35,700 Broken Hill Proprietary Company Limited 391,473 0.1
55,000 ++Newcrest Mining 175,195 0.1
30,000 WMC Limited 137,714 0.1
------------ ------
704,382 0.3
Multiline Retail 28,000 Coles Myer Limited 142,419 0.0
Real Estate 23,000 Westfield Holdings Limited 142,505 0.0
Total Investments in Australia 6,142,693 2.5
</TABLE>
Merrill Lynch International Equity Fund, November 30, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
PACIFIC BASIN/ ASIA Shares Held/ Percent of
(continued) Industries Face Amount Investments Value Net Assets
<S> <S> <C> <S> <C> <C>
China Wireless 7,000 ++China Telecom (Hong Kong)
Telecommunications Limited (ADR) (a) $ 735,875 0.3%
Services
Total Investments in China 735,875 0.3
Japan Auto Components 28,000 Bridgestone Corp. 690,479 0.3
Automobiles 107,000 Fuji Heavy Industries, Ltd. 796,820 0.3
39,000 Toyota Motor Corporation 1,320,482 0.5
------------ ------
2,117,302 0.8
Banks 288,000 The Asahi Bank, Ltd. 2,015,070 0.8
US$ 1,070,000 MBL International Finance (Bermuda),
3% due 11/30/2002 1,222,475 0.5
120,000,000 ++Sanwa International Finance Ltd.,
1.25% (Convertible Preferred) 1,279,969 0.5
149,000 The Tokai Bank Ltd. 1,030,854 0.4
------------ ------
5,548,368 2.2
Broadcasting & 15,000 Nippon Broadcasting System, Incorporated 1,100,891 0.4
Publishing
Business & Public 2,000 People Co., Ltd. 156,571 0.1
Services 20,200 Square Co., Ltd. 1,219,630 0.5
2,500 ++Trend Micro Incorporated 525,981 0.2
------------ ------
1,902,182 0.8
Chemicals 101,000 Kaneka Corporation 1,285,850 0.5
27,000 Shin-Etsu Chemical Co., Ltd. 1,064,781 0.4
1,000 Taiyo Ink Mfg. Co., Ltd. 137,000 0.1
------------ ------
2,487,631 1.0
Communications 3,000 Matsushita Communication Industrial
Equipment Co., Ltd. 575,399 0.2
Computers & 35,000 Fujitsu Limited 1,239,847 0.5
Peripherals 35,000 NEC Corporation 816,861 0.3
194,000 Toshiba Corporation 1,425,717 0.6
------------ ------
3,482,425 1.4
Data Processing & 45,600 Miroku Jyoho Service Co., Ltd. 1,008,474 0.4
Reproduction
Diversified 4,100 Acom Co., Ltd. 502,319 0.2
Financials 71,000 Kokusai Securities Co., Ltd. 1,129,024 0.5
5,700 Takefuji Corporation 814,365 0.3
105,000 The Toyo Trust & Banking Co., Ltd. 556,904 0.2
------------ ------
3,002,612 1.2
Diversified 97 ++NTT Mobile Communications Network, Inc. 3,398,180 1.3
Telecommunication 247 Nippon Telegraph & Telephone
Services Corporation (NTT) 4,423,231 1.8
------------ ------
7,821,411 3.1
Electric Utilities 37,000 Tokyo Electric Power 1,040,953 0.4
Electrical & 400 Funai Electric Co., Ltd. 250,122 0.1
Electronics
Electrical Equipment 95,000 The Furukawa Electric Co., Ltd. 1,014,238 0.4
Electronic Equipment 5,145 Hakuto Company Ltd. 135,938 0.1
& Instruments 74,000 Ibiden Co., Ltd. 1,057,246 0.4
2,000 Keyence Corporation 567,570 0.2
5,000 Rohm Company Ltd. 1,354,340 0.6
7,000 TDK Corporation 767,198 0.3
------------ ------
3,882,292 1.6
Financial Services 1,600 Aiful Corporation 259,908 0.1
Food & Drug 16,000 FamilyMart Co., Ltd. 1,003,621 0.4
Retailing
Food & Household 1,900 Hokuto Corporation 126,245 0.0
Products
Food Products 48,000 Katokichi Co., Ltd. 1,204,815 0.5
Household Durables 12,300 Sony Corporation 2,274,880 0.9
Insurance 136,000 Mitsui Marine and Fire Insurance Company, Ltd. 761,249 0.3
Internet Software & 3,000 Softbank Corporation 2,163,617 0.9
Services
Leisure & Tourism 10,800 Capcom Company, Ltd. 635,170 0.3
Machinery 201,000 Komatsu Ltd. 1,130,982 0.5
177,000 NSK Limited 1,505,167 0.6
------------ ------
2,636,149 1.1
Media 400 Kadokawa Shoten Publishing Co., Ltd. 148,351 0.1
1,160 Nippon Television Network Corp. 1,102,221 0.4
------------ ------
1,250,572 0.5
Merchandising 22,300 Kojima Co. Limited 1,049,643 0.4
500 Ryohin Keikaku Company Limited 117,673 0.1
3,200 Sunkus & Associates Inc. 194,148 0.1
------------ ------
1,361,464 0.6
Metals & Mining 367,000 Mitsubishi Materials Corporation 790,097 0.3
451,000 Nippon Steel Corporation 1,015,070 0.4
------------ ------
1,805,167 0.7
Multiline Retail 13,000 Ito-Yokado Co., Ltd. 1,399,354 0.6
Office Electronics 32,000 Ricoh Co., Ltd. 591,839 0.2
Pharmaceuticals 17,000 Takeda Chemical Industries, Ltd. 1,001,468 0.4
Real Estate 93,000 Mitsui Fudosan Co., Ltd. 739,887 0.3
Recreation/Other 3,000 Roland Corporation 76,328 0.0
Consumer Goods
Road & Rail 180,000 Nippon Express Co., Ltd. 1,039,241 0.4
Specialty Retail 2,000 Yamada Denki 201,585 0.1
Trading Companies 108,000 Mitsubishi Corporation 941,658 0.4
& Distributors
Total Investments in Japan 57,398,996 23.0
</TABLE>
Merrill Lynch International Equity Fund, November 30, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
PACIFIC BASIN/ ASIA Shares Percent of
(concluded) Industries Held Investments Value Net Assets
<S> <S> <C> <S> <C> <C>
Malaysia Closed End 20,200 Genesis Malaysia Maju Fund Limited $ 379,760 0.1%
Investment Fund
Open End 81,252 Webs-Malaysia 436,730 0.2
Investment Fund
Total Investments in Malaysia 816,490 0.3
New Zealand Diversified 125,610 Telecom Corporation of New Zealand Limited 536,411 0.2
Telecommunication
Services
Total Investments in New Zealand 536,411 0.2
Singapore Diversified 151,000 Singapore Telecommunications, Ltd. 285,685 0.1
Telecommunication
Services
Total Investments in Singapore 285,685 0.1
South Korea Electric Utilities 25,000 Korea Electric Power Corporation (ADR) (a) 500,000 0.2
Household Durables 568 Samsung Electronics (GDR) (b)(f) 58,760 0.0
Wireless 1,125 SK Telecom Co. Ltd. (ADR) (a)(f) 26,648 0.0
Telecommunications
Services
Total Investments in South Korea 585,408 0.2
Thailand Equity Basket 6,000 MSCI Thailand OPALS (c) 553,500 0.2
Total Investments in Thailand 553,500 0.2
Total Investments in the Pacific Basin/Asia
(Cost--$50,120,008) 67,055,058 26.8
SOUTHEAST ASIA
India Chemicals 208 Reliance Industries Ltd.
(Compulsory Demat Shares) 1,066 0.0
100 ++Reliance Industries Ltd. 512 0.0
------------ ------
1,578 0.0
Diversified 18,500 ++Morgan Stanley Dean Witter India
Financials Investment Fund 249,750 0.1
Financial Investment 7,000 Indocam Himalayan Fund NV 132,650 0.1
Fund
Household Products 200 Reckitt & Coleman of India Ltd. 1,565 0.0
Tobacco 200 ITC Ltd. 3,250 0.0
Total Investments in Southeast Asia
(Cost--$321,033) 388,793 0.2
SHORT-TERM Face
SECURITIES Amount Issue
Commercial US$ 9,169,000 General Motors Acceptance Corp.,
Paper* 5.75% due 12/01/1999 9,169,000 3.7
Total Investments in Commercial Paper 9,169,000 3.7
US Government 1,000,000 US Treasury Bills, 4.985% due 1/20/2000 (g) 993,076 0.4
Obligations*
Total Investments in US Government Obligations 993,076 0.4
Total Investments in Short-Term Securities
(Cost--$10,162,076) 10,162,076 4.1
OPTIONS Nominal Value Covered
PURCHASED by Options Purchased
Call Options 42,000 DBS, expiring March 2000 at US$ 0.01 544,491 0.2
Purchased 49,350 OCBC, expiring March 2000 at US$ 0.01 369,656 0.2
50,000 SIA, expiring March 2000 at US$ 0.01 505,415 0.2
52,500 UOB, expiring March 2000 at US$ 0.01 468,216 0.2
------------ ------
1,887,778 0.8
Put Options 1,377 CAC, expiring February 2000 at US$ 492 110,909 0.0
Purchased
Total Options Purchased
(Premiums Paid--$1,082,867) 1,998,687 0.8
Total Investments (Cost--$220,837,859) 249,974,661 100.1
Interest Rate Swaps 107,943 0.0
Variation Margin on Financial Futures Contracts** 40,776 0.0
Unrealized Depreciation on Forward Foreign Exchange Contracts*** (339,155) (0.1)
Liabilities in Excess of Other Assets (124,590) 0.0
------------ ------
Net Assets $249,659,635 100.0%
============ ======
<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 12/17/1999.
(e)The rights may be exercised until 6/30/2003.
(f)The security may be offered and sold to "qualified institutional
buyers" under Rule 144A of the Securities Act of 1933.
(g)All or a portion of security held as collateral in connection
with open financial futures contracts.
(h)Receipts evidence payment by the Fund of 61% of the purchase
price of common stock of Telestra Corporation Limited. The Fund is
obligated to pay the remaining 39%, approximately $77,000, over the
next year.
++Non-income producing security.
*Commercial Paper and certain US Government 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 November 30, 1999 were as
follows:
Number of Expiration
Contracts Issue Exchange Date Value
4 FIB 30 Index MIB December 1999 $ 726,205
14 Nikkei 225 Index SIMEX December 1999 1,272,384
------------
Total Financial Futures Contracts Sold
(Total Contract Price--$1,952,708) $ 1,998,589
============
Financial futures contracts purchased as of November 30, 1999 were
as follows:
Number of Expiration
Contracts Issue Exchange Date Value
7 Dax Index DTB December 1999 $ 1,038,288
15 IBEX 35 MEFF December 1999 1,657,218
-----------
Total Financial Futures Contracts Purchased
(Total Contract Price--$2,608,647) $ 2,695,506
===========
***Forward foreign exchange contracts as of November 30, 1999 were
as follows:
Foreign Expiration Unrealized
Currency Sold Date Depreciation
YEN 1,055,240,000 December 1999 $ (339,155)
-----------
Total Unrealized Depreciation on Forward
Foreign Exchange Contracts--Net
(US$ Commitment--$10,000,000) $ (339,155)
===========
See Notes to Financial Statements.
</TABLE>
Merrill Lynch International Equity Fund, November 30, 1999
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
<CAPTION>
As of November 30, 1999
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$219,754,992) $ 247,975,974
Options purchased, at value (cost--$1,082,867) 1,998,687
Interest rate swaps, at value 107,943
Foreign cash 29,130
Receivables:
Securities sold $ 6,456,109
Dividends 611,661
Options written 381,019
Beneficial interest sold 159,695
Variation margin 40,776
Forward foreign exchange contracts 20,747
Interest 11,787 7,681,794
--------------
Prepaid registration fees and other assets 69,527
--------------
Total assets 257,863,055
--------------
Liabilities: Unrealized depreciation on forward foreign exchange contracts 339,155
Payables:
Securities purchased 6,194,693
Beneficial interest redeemed 859,811
Options purchased 198,679
Distributor 160,466
Investment adviser 20,900
Interest rate swap contracts 3,195 7,437,744
--------------
Accrued expenses and other liabilities 426,521
--------------
Total liabilities 8,203,420
--------------
Net Assets: Net assets $ 249,659,635
==============
Net Assets Class A Shares of beneficial interest, $.10 par value,
Consist of: unlimited number of shares authorized $ 325,820
Class B Shares of beneficial interest, $.10 par value,
unlimited number of shares authorized 1,484,048
Class C Shares of beneficial interest, $.10 par value,
unlimited number of shares authorized 84,935
Class D Shares of beneficial interest, $.10 par value,
unlimited number of shares authorized 371,794
Paid-in capital in excess of par 262,284,741
Accumulated investment loss--net (621,232)
Accumulated distributions in excess of realized capital
gains on investments and foreign currency transactions--net (43,207,590)
Unrealized appreciation on investments and foreign currency
transactions--net 28,937,119
--------------
Net assets $ 249,659,635
==============
Net Asset Class A--Based on net assets of $36,007,503 and 3,258,195 shares of
Value: beneficial interest outstanding $ 11.05
==============
Class B--Based on net assets of $163,236,303 and 14,840,475 shares of
beneficial interest outstanding $ 11.00
==============
Class C--Based on net assets of $9,205,654 and 849,351 shares of
beneficial interest outstanding $ 10.84
==============
Class D--Based on net assets of $41,210,175 and 3,717,936 shares of
beneficial interest outstanding $ 11.08
==============
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Six Months Ended November 30, 1999
<S> <S> <C> <C>
Investment Income: Dividends (net of $168,740 foreign withholding tax) $ 1,449,095
Interest and discount earned 455,762
--------------
Total income 1,904,857
--------------
Expenses: Investment advisory fees $ 860,155
Account maintenance and distribution fees--Class B 778,643
Transfer agent fees--Class B 237,081
Custodian fees 148,931
Accounting services 58,527
Interest rate swap expense 58,403
Printing and shareholder reports 58,272
Transfer agent fees--Class D 51,413
Account maintenance fees--Class D 47,612
Professional fees 44,554
Registration fees 39,020
Account maintenance and distribution fees--Class C 38,031
Transfer agent fees--Class A 37,289
Pricing fees 27,632
Trustees' fees and expenses 22,251
Transfer agent fees--Class C 12,010
Other 6,265
--------------
Total expenses 2,526,089
--------------
Investment loss--net (621,232)
--------------
Realized & Realized gain from:
Unrealized Gain Investments--net 16,254,651
(Loss) on Foreign currency transactions--net 184,715 16,439,366
Investments & --------------
Foreign Currency Change in unrealized appreciation/depreciation on:
Transactions--Net: Investments--net 25,524,284
Foreign currency transactions--net (407,549) 25,116,735
-------------- --------------
Net realized and unrealized gain on investments and
foreign currency transactions 41,556,101
--------------
Net Increase in Net Assets Resulting from Operations $ 40,934,869
==============
See Notes to Financial Statements.
</TABLE>
Merrill Lynch International Equity Fund, November 30, 1999
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
For the Six For the
Months Ended Year Ended
November 30, May 31,
Increase (Decrease) in Net Assets: 1999 1999
<S> <S> <C> <C>
Operations: Investment income (loss)--net $ (621,232) $ 1,782,248
Realized gain (loss) on investments and
foreign currency transactions--net 16,439,366 (5,906,040)
Change in unrealized appreciation/depreciation on investments
and foreign currency transactions--net 25,116,735 (14,391,084)
-------------- --------------
Net increase (decrease) in net assets resulting from operations 40,934,869 (18,514,876)
-------------- --------------
Distributions to In excess of realized gain on investments--net:
Shareholders: Class A -- (938,942)
Class B -- (8,734,187)
Class C -- (406,931)
Class D -- (2,160,659)
-------------- --------------
Net decrease in net assets resulting from
distributions to shareholders -- (12,240,719)
-------------- --------------
Beneficial Net increase (decrease) in net assets derived from
Interest beneficial interest transactions 2,966,226 (191,371,781)
Transactions: -------------- --------------
Net Assets: Total increase (decrease) in net assets 43,901,095 (222,127,376)
Beginning of period 205,758,540 427,885,916
-------------- --------------
End of period $ 249,659,635 $ 205,758,540
============== ==============
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
Class A++
For the
Six
The following per share data and ratios have been derived Months
from information provided in the financial statements. Ended
Nov. 30, For the Year Ended May 31,
Increase (Decrease) in Net Asset Value: 1999 1999 1998 1997 1996
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value,
Operating beginning of period $ 9.16 $ 9.57 $ 12.58 $ 11.94 $ 10.25
Performance: --------- --------- --------- --------- ---------
Investment income--net .01 .13 .12 .12 .16
Realized and unrealized gain (loss)
on investments and foreign currency
transactions--net 1.88 (.18) (1.08) 1.09 1.53
--------- --------- --------- --------- ---------
Total from investment operations 1.89 (.05) (.96) 1.21 1.69
--------- --------- --------- --------- ---------
Less dividends and distributions:
Investment income--net -- -- -- (.24) --
In excess of investment income--net -- -- -- (.01) --
Realized gain on investments--net -- -- (1.08) (.32) --
In excess of realized gain on
investments--net -- (.36) (.97) -- --
--------- --------- --------- --------- ---------
Total dividends and distributions -- (.36) (2.05) (.57) --
--------- --------- --------- --------- ---------
Net asset value, end of period $ 11.05 $ 9.16 $ 9.57 $ 12.58 $ 11.94
========= ========= ========= ========= =========
Total Investment Based on net asset value per share 20.63%+++ (.35%) (6.02%) 10.76% 16.49%
Return:** ========= ========= ========= ========= =========
Ratios to Average Expenses 1.41%* 1.33% 1.16% 1.11% 1.06%
Net Assets: ========= ========= ========= ========= =========
Investment income--net .26%* 1.54% 1.08% 1.04% 1.47%
========= ========= ========= ========= =========
Supplemental Net assets, end of period
Data: (in thousands) $ 36,008 $ 19,540 $ 33,960 $ 44,624 $ 116,628
========= ========= ========= ========= =========
Portfolio turnover 83.93% 132.43% 107.50% 60.56% 71.86%
========= ========= ========= ========= =========
<FN>
*Annualized.
**Total investment returns exclude the effects of sales charges.
++Based on average shares outstanding.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch International Equity Fund, November 30, 1999
<TABLE>
FINANCIAL HIGHLIGHTS (continued)
<CAPTION>
Class B++
For the
Six
The following per share data and ratios have been derived Months
from information provided in the financial statements. Ended
Nov. 30, For the Year Ended May 31,
Increase (Decrease) in Net Asset Value: 1999 1999 1998 1997 1996
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value,
Operating beginning of period $ 9.17 $ 9.62 $ 12.42 $ 11.76 $ 10.19
Performance: --------- --------- --------- --------- ---------
Investment income (loss)--net (.04) .04 --+++++ .01 .04
Realized and unrealized gain (loss)
on investments and foreign currency
transactions--net 1.87 (.19) (1.04) 1.08 1.53
--------- --------- --------- --------- ---------
Total from investment operations 1.83 (.15) (1.04) 1.09 1.57
--------- --------- --------- --------- ---------
Less dividends and distributions:
Investment income--net -- -- -- (.10) --
In excess of investment income--net -- -- -- (.01) --
Realized gain on investments--net -- -- (.93) (.32) --
In excess of realized gain on
investments--net -- (.30) (.83) -- --
--------- --------- --------- --------- ---------
Total dividends and distributions -- (.30) (1.76) (.43) --
--------- --------- --------- --------- ---------
Net asset value, end of period $ 11.00 $ 9.17 $ 9.62 $ 12.42 $ 11.76
========= ========= ========= ========= =========
Total Investment Based on net asset value per share 19.96%+++ (1.36%) (7.01%) 9.70% 15.41%
Return:** ========= ========= ========= ========= =========
Ratios to Average Expenses 2.45%* 2.39% 2.20% 2.14% 2.09%
Net Assets: ========= ========= ========= ========= =========
Investment income (loss)--net (.79%)* .41% (.01%) .08% .37%
========= ========= ========= ========= =========
Supplemental Net assets, end of period
Data: (in thousands) $ 163,236 $ 144,681 $ 311,520 $ 583,213 $ 945,368
========= ========= ========= ========= =========
Portfolio turnover 83.93% 132.43% 107.50% 60.56% 71.86%
========= ========= ========= ========= =========
<FN>
*Annualized.
**Total investment returns exclude the effects of sales charges.
++Based on average shares outstanding.
+++Aggregate total investment return.
+++++Amount is less than $.01 per share.
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS (continued)
<CAPTION>
Class C++
For the
Six
The following per share data and ratios have been derived Months
from information provided in the financial statements. Ended
Nov. 30, For the Year Ended May 31,
Increase (Decrease) in Net Asset Value: 1999 1999 1998 1997 1996
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value,
Operating beginning of period $ 9.03 $ 9.49 $ 12.26 $ 11.65 $ 10.10
Performance: --------- --------- --------- --------- ---------
Investment income (loss)--net (.04) .03 --+++++ --+++++ .05
Realized and unrealized gain (loss)
on investments and foreign currency
transactions--net 1.85 (.19) (1.02) 1.08 1.50
--------- --------- --------- --------- ---------
Total from investment operations 1.81 (.16) (1.02) 1.08 1.55
--------- --------- --------- --------- ---------
Less dividends and distributions:
Investment income--net -- -- -- (.14) --
In excess of investment income--net -- -- -- (.01) --
Realized gain on investments--net -- -- (.92) (.32) --
In excess of realized gain on
investments--net -- (.30) (.83) -- --
--------- --------- --------- --------- ---------
Total dividends and distributions -- (.30) (1.75) (.47) --
--------- --------- --------- --------- ---------
Net asset value, end of period $ 10.84 $ 9.03 $ 9.49 $ 12.26 $ 11.65
========= ========= ========= ========= =========
Total Investment Based on net asset value per share 20.04%+++ (1.50%) (6.96%) 9.71% 15.35%
Return:** ========= ========= ========= ========= =========
Ratios to Average Expenses 2.46%* 2.40% 2.21% 2.15% 2.09%
Net Assets: ========= ========= ========= ========= =========
Investment income (loss)--net (.83%)* .40% (.01%) .04% .45%
========= ========= ========= ========= =========
Supplemental Net assets, end of period
Data: (in thousands) $ 9,206 $ 6,328 $ 14,717 $ 24,774 $ 46,985
========= ========= ========= ========= =========
Portfolio turnover 83.93% 132.43% 107.50% 60.56% 71.86%
========= ========= ========= ========= =========
<FN>
*Annualized.
**Total investment returns exclude the effects of sales charges.
++Based on average shares outstanding.
+++Aggregate total investment return.
+++++Amount is less than $.01 per share.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch International Equity Fund, November 30, 1999
<TABLE>
FINANCIAL HIGHLIGHTS (concluded)
<CAPTION>
Class D++
For the
Six
The following per share data and ratios have been derived Months
from information provided in the financial statements. Ended
Nov. 30, For the Year Ended May 31,
Increase (Decrease) in Net Asset Value: 1999 1999 1998 1997 1996
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value,
Operating beginning of period $ 9.20 $ 9.63 $ 12.59 $ 11.94 $ 10.27
Performance: --------- --------- --------- --------- ---------
Investment income (loss)--net --++ .11 .09 .10 .13
Realized and unrealized gain (loss)
on investments and foreign currency
transactions 1.88 (.20) (1.07) 1.09 1.54
--------- --------- --------- --------- ---------
Total from investment operations 1.88 (.09) (.98) 1.19 1.67
--------- --------- --------- --------- ---------
Less dividends and distributions:
Investment income--net -- -- -- (.21) --
In excess of investment income--net -- -- -- (.01) --
Realized gain on investments--net -- -- (1.04) (.32) --
In excess of realized gain on
investments--net -- (.34) (.94) -- --
--------- --------- --------- --------- ---------
Total dividends and distributions -- (.34) (1.98) (.54) --
--------- --------- --------- --------- ---------
Net asset value, end of period $ 11.08 $ 9.20 $ 9.63 $ 12.59 $ 11.94
========= ========= ========= ========= =========
Total Investment Based on net asset value per share 20.43%+++ (.70%) (6.18%) 10.50% 16.26%
Return:** ========= ========= ========= ========= =========
Ratios to Average Expenses 1.67%* 1.59% 1.42% 1.36% 1.31%
Net Assets: ========= ========= ========= ========= =========
Investment income (loss)--net (.02%)* 1.23% .77% .86% 1.13%
========= ========= ========= ========= =========
Supplemental Net assets, end of period
Data: (in thousands) $ 41,210 $ 35,210 $ 67,689 $ 119,024 $ 175,151
========= ========= ========= ========= =========
Portfolio turnover 83.93% 132.43% 107.50% 60.56% 71.86%
========= ========= ========= ========= =========
<FN>
*Annualized.
**Total investment returns exclude the effects of sales charges.
++Amount is less than $.01 per share.
++++Based on average shares outstanding.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch International Equity Fund, November 30, 1999
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch International Equity Fund (the "Fund") is registered
under the Investment Company Act of 1940 as a diversified, open-end
management investment company. The Fund's financial statements are
prepared in accordance with generally accepted accounting
principles, which may require the use of management accruals and
estimates. These unaudited financial statements reflect all
adjustments which are, in the opinion of management, necessary to a
fair statement of the results for the interim period presented. The
Fund offers four classes of shares under the Merrill Lynch Select
Pricing SM System. Shares of Class A and Class D are sold with a
front-end sales charge. Shares of Class B and Class C may be subject
to a contingent deferred sales charge. All classes of shares have
identical voting, dividend, liquidation and other rights and the
same terms and conditions, except that Class B, Class C and Class D
Shares bear certain expenses related to the account maintenance of
such shares, and Class B and Class C Shares also bear certain
expenses related to the distribution of such shares. Each class has
exclusive voting rights with respect to matters relating to its
account maintenance and distribution expenditures. The following is
a summary of significant accounting policies followed by the Fund.
(a) Valuation of investments--Portfolio securities that are traded
on stock exchanges are valued at the last sale price on the exchange
on which such securities are traded, as of the close of business on
the day the securities are being valued or, lacking any sales, at
the last available bid price. Securities traded in the over-the-
counter market are valued at the last available bid price prior to
the time of valuation. In cases where securities are traded on more
than one exchange, the securities are valued on the exchange
designated by or under the authority of the Board of Trustees as the
primary market. Securities that are traded both in the over-the-
counter market and on a stock exchange are valued according to the
broadest and most representative market. Options written or
purchased are valued at the last sale price in the case of exchange-
traded options. In the case of options traded in the over-the-
counter market, valuation is the last asked price (options written)
or the last bid price (options purchased). Short-term securities are
valued at amortized cost, which approximates market value. Other
investments, including futures contracts and related options, are
stated at market value. Securities and assets for which market
quotations are not available are valued at fair value as determined
in good faith by or under the direction of the Fund's Board of
Trustees.
(b) Foreign currency transactions--Transactions denominated in
foreign currencies are recorded at the exchange rate prevailing when
recognized. Assets and liabilities denominated in foreign currencies
are valued at the exchange rate at the end of the period. Foreign
currency transactions are the result of settling (realized) or
valuing (unrealized) assets or liabilities expressed in foreign
currencies into US dollars. Realized and unrealized gains or losses
from investments include the effects of foreign exchange rates on
investments.
(c) Derivative financial instruments--The Fund may engage in various
portfolio strategies to seek to increase its return by hedging its
portfolio against adverse movements in the equity, debt, and
currency markets. Losses may arise due to changes in the value of
the contract or if the counterparty does not perform under the
contract.
* Financial futures contracts--The Fund may purchase or sell
financial futures contracts and options on such futures contracts
for the purpose of hedging the market risk on existing securities or
the intended purchase of securities. Futures contracts are contracts
for delayed delivery of securities at a specific future date and at
a specific price or yield. Upon entering into a contract, the Fund
deposits and maintains as collateral such initial margin as required
by the exchange on which the transaction is effected. Pursuant to
the contract, the Fund agrees to receive from or pay to the broker
an amount of cash equal to the daily fluctuation in value of the
contract. Such receipts or payments are known as variation margin
and are recorded by the Fund as unrealized gains or losses. When the
contract is closed, the Fund records a realized gain or loss equal
to the difference between the value of the contract at the time it
was opened and the value at the time it was closed.
* Foreign currency options and futures--The Fund may also purchase
or sell listed or over-the-counter foreign currency options, foreign
currency futures and related options on foreign currency futures as
a short or long hedge against possible variations in foreign
exchange rates. Such transactions may be effected with respect to
hedges on non-US dollar denominated securities owned by the Fund,
sold by the Fund but not yet delivered, or committed or anticipated
to be purchased by the Fund.
* Forward foreign exchange contracts--The Fund is authorized to
enter into forward foreign exchange contracts as a hedge against
either specific transactions or portfolio positions. Such contracts
are not entered on the Fund's records. However, the effect on
operations is recorded from the date the Fund enters into such
contracts.
Merrill Lynch International Equity Fund, November 30, 1999
NOTES TO FINANCIAL STATEMENTS (continued)
* Interest rate swaps--The Fund is authorized to enter into equity
swap agreements, which are over-the-counter contracts in which one
party agrees to make periodic payments based on the change in market
value of a specified equity security, basket of equity securities or
equity index in return for periodic payments based on a fixed or
variable interest rate of the change in market value of a different
equity security, basket of equity securities or equity index. Swap
agreements may be used to obtain exposure to an equity or market
without owning or taking physical custody of securities in
circumstances in which direct investment is restricted by local law
or is otherwise impractical.
* Options--The Fund is authorized to write and purchase put and call
options. When the Fund writes an option, an amount equal to the
premium received by the Fund is reflected as an asset and an
equivalent liability. The amount of the liability is subsequently
marked to market to reflect the current market value of the option
written. When a security is purchased or sold through an exercise of
an option, the related premium paid (or received) is added to (or
deducted from) the basis of the security acquired or deducted from
(or added to) the proceeds of the security sold. When an option
expires (or the Fund enters into a closing transaction), the Fund
realizes a gain or loss on the option to the extent of the premiums
received or paid (or gain or loss to the extent the cost of the
closing transaction exceeds the premium paid or received).
Written and purchased options are non-income producing investments.
(d) Income taxes--It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its
taxable income to its shareholders. Therefore, no Federal income tax
provision is required. Under the applicable foreign tax law, a
withholding tax may be imposed on interest, dividends, and capital
gains at various rates.
(e) Security transactions and investment income--Security
transactions are recorded on the dates the transactions are entered
into (the trade dates). Dividend income is recorded on the ex-
dividend dates. Dividends from foreign securities where the ex-
dividend date may have passed are subsequently recorded when the
Fund has determined the ex-dividend date. Interest income (including
amortization of discount) is recognized on the accrual basis.
Realized gains and losses on security transactions are determined on
the identified cost basis.
(f) Prepaid registration fees--Prepaid registration fees are charged
to expense as the related shares are issued.
(g) Dividends and distributions--Dividends and distributions paid by
the Fund are recorded on the ex-dividend dates. Distributions in
excess of realized capital gains are due primarily to differing tax
treatments for post-October losses.
2. Investment Advisory Agreement and Transactions with
Affiliates:
The Fund has entered into an Investment Advisory Agreement with
Merrill Lynch Asset Management, L.P. ("MLAM"). The general partner
of MLAM is Princeton Services, Inc. ("PSI"), an indirect wholly-
owned subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is
the limited partner. The Fund has also entered into a Distribution
Agreement and Distribution Plans with Merrill Lynch Funds
Distributor ("MLFD" or the "Distributor"), a division of Princeton
Funds Distributor, Inc. ("PFD"), which is a wholly-owned subsidiary
of Merrill Lynch Group, Inc.
MLAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee of .75%, on an annual basis,
of the average daily value of the Fund's net assets. MLAM has
entered into a Sub-Advisory Agreement with Merrill Lynch Asset
Management U.K., Ltd. ("MLAM U.K."), an affiliate of MLAM, pursuant
to which MLAM pays MLAM U.K. a fee in an amount to be determined
from time to time by MLAM and MLAM U.K. but in no event in excess of
the amount that MLAM actually receives. For the six months ended
November 30, 1999, MLAM paid MLAM U.K. a fee of $95,915 pursuant to
such Agreement.
Pursuant to the Distribution Plans adopted by the Fund in accordance
with Rule 12b-1 under the Investment Company Act of 1940, the Fund
pays the Distributor ongoing account maintenance and distribution
fees. The fees are accrued daily and paid monthly at annual rates
based upon the average daily net assets of the shares as follows:
Account Distribution
Maintenance Fee Fee
Class B .25% .75%
Class C .25% .75%
Class D .25% --
Pursuant to a sub-agreement with the Distributor, Merrill Lynch,
Pierce, Fenner & Smith Incorporated ("MLPF&S"), a subsidiary of ML &
Co., also provides account maintenance and distribution services to
the Fund. The ongoing account maintenance fee compensates the
Distributor and MLPF&S for providing account maintenance services to
Class B, Class C and Class D shareholders. The ongoing distribution
fee compensates the Distributor and MLPF&S for providing shareholder
and distribution-related services to Class B and Class C
shareholders.
For the six months ended November 30, 1999, MLFD earned underwriting
discounts and direct commissions and MLPF&S earned dealer
concessions on sales of the Fund's Class A and Class D Shares as
follows:
MLFD MLPF&S
Class A $ 11 $ 154
Class D $713 $10,281
For the six months ended November 30, 1999, MLPF&S received
contingent deferred sales charges of $48,150 and $1,014 relating to
transactions in Class B and Class C Shares, respectively.
In addition, MLPF&S received $6,251 in commissions on the execution
of portfolio security transactions for the Fund for the six months
ended November 30, 1999.
Financial Data Services, Inc. ("FDS"), a wholly-owned subsidiary of
ML & Co., is the Fund's transfer agent.
Accounting services are provided to the Fund by MLAM at cost.
Certain officers and/or trustees of the Fund are officers and/or
directors of MLAM, PFD, PSI, FDS, MLFD, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended November 30, 1999 were $183,862,222 and
$178,765,415, respectively.
Net realized gains (losses) for the six months ended November 30,
1999 and net unrealized gains (losses) as of November 30, 1999 were
as follows:
Realized Unrealized
Gains (Losses) Gains (Losses)
Investments:
Long-term $ 15,273,041 $ 28,220,982
Short-term (567) --
Financial futures contracts 620,449 40,978
Interest rate swaps -- 107,943
Options written 254,175 --
Options purchased 107,553 915,820
------------ -------------
Total investments 16,254,651 29,285,723
------------ -------------
Currency transactions:
Options written 107,400 --
Options purchased (107,400) --
Forward foreign exchange contracts 99,894 (339,155)
Foreign currency transactions 84,821 (9,449)
------------ -------------
Total currency transactions 184,715 (348,604)
------------ -------------
Total $ 16,439,366 $ 28,937,119
============ =============
The Fund has entered into the following equity swaps as of November
30, 1999:
Interest Paid
Notional Return Current Expiration
Amount Received Rate Type Date
$594,615 Price return++ 6.90825% Variable* 5/02/2000
[FN]
++Hang Seng China-Affiliated Corporations Index.
*3-month US$ LIBOR plus 1.50% at reset date.
Transactions in call options written for the six months ended
November 30, 1999 were as follows:
Nominal Value
Covered by
Written Premiums
Options Received
Outstanding call options written
at beginning of period $ 12,000,000 $ 107,400
Options written 272,985 2,040
Options expired (12,000,000) (107,400)
Options closed (272,985) (2,040)
------------ ------------
Outstanding call options written
at end of period $ -- $ --
============ ============
As of November 30, 1999, net unrealized appreciation for Federal
income tax purposes aggregated $29,136,802, of which $38,929,667
related to appreciated securities and $9,792,865 related to
depreciated securities. At November 30, 1999, the aggregate cost of
investments for Federal income tax purposes was $220,837,859.
4. Beneficial Interest Transactions:
Net increase (decrease) in net assets derived from beneficial
interest transactions was $2,966,226 and $(191,371,781) for the six
months ended November 30, 1999 and the year ended May 31, 1999,
respectively.
Transactions in shares of beneficial interest for each class were as
follows:
Class A Shares for the Six Months Dollar
Ended November 30, 1999 Shares Amount
Shares sold 1,643,546 $ 16,909,895
Shares redeemed (518,354) (5,374,720)
------------ -------------
Net increase 1,125,192 $ 11,535,175
============ =============
Merrill Lynch International Equity Fund, November 30, 1999
NOTES TO FINANCIAL STATEMENTS (concluded)
Class A Shares for the Year Dollar
Ended May 31, 1999 Shares Amount
Shares sold 2,821,668 $ 24,743,753
Shares issued to shareholders in
reinvestment of distributions 89,014 770,857
------------ -------------
Total issued 2,910,682 25,514,610
Shares redeemed (4,324,572) (38,209,253)
------------ -------------
Net decrease (1,413,890) $ (12,694,643)
============ =============
Class B Shares for the Six Months Dollar
Ended November 30, 1999 Shares Amount
Shares sold 2,437,190 $ 25,161,320
Shares redeemed (3,050,000) (30,915,132)
Automatic conversion of shares (330,506) (3,386,241)
------------ -------------
Net decrease (943,316) $ (9,140,053)
============ =============
Class B Shares for the Year Dollar
Ended May 31, 1999 Shares Amount
Shares sold 1,609,034 $ 14,026,196
Shares issued to shareholders in
reinvestment of distributions 865,770 7,566,829
------------ -------------
Total issued 2,474,804 21,593,025
Shares redeemed (18,505,828) (160,465,559)
Automatic conversion of shares (557,225) (4,801,584)
------------ -------------
Net decrease (16,588,249) $(143,674,118)
============ =============
Class C Shares for the Six Months Dollar
Ended November 30, 1999 Shares Amount
Shares sold 339,361 $ 3,432,061
Shares redeemed (190,497) (1,878,993)
------------ -------------
Net increase 148,864 $ 1,553,068
============ =============
Class C Shares for the Year Dollar
Ended May 31, 1999 Shares Amount
Shares sold 1,353,123 $ 11,684,660
Shares issued to shareholders in
reinvestment of distributions 42,444 365,869
------------ -------------
Total issued 1,395,567 12,050,529
Shares redeemed (2,246,127) (19,457,861)
------------ -------------
Net decrease (850,560) $ (7,407,332)
============ =============
Class D Shares for the Six Months Dollar
Ended November 30, 1999 Shares Amount
Shares sold 354,722 $ 3,648,105
Automatic conversion of shares 328,494 3,386,241
------------ -------------
Total issued 683,216 7,034,346
Shares redeemed (792,617) (8,016,310)
------------ -------------
Net decrease (109,401) $ (981,964)
============ =============
Class D Shares for the Year Dollar
Ended May 31, 1999 Shares Amount
Shares sold 519,404 $ 4,483,336
Automatic conversion of shares 557,482 4,801,584
Shares issued to shareholders in
reinvestment of distributions 217,407 1,895,784
------------ -------------
Total issued 1,294,293 11,180,704
Shares redeemed (4,499,271) (38,776,392)
------------ -------------
Net decrease (3,204,978) $ (27,595,688)
============ =============
5. Commitments:
At November 30, 1999, the Fund had entered into foreign exchange
contracts, in addition to the contracts listed on the Schedule of
Investments, under which it had agreed to purchase and sell various
foreign currencies with approximate values of $488,000 and $126,000,
respectively.
6. Capital Loss Carryforward:
At May 31, 1999, the Fund had a net capital loss carryforward of
approximately $54,741,000, all of which expires in 2007. This amount
will be available to offset like amounts of any future taxable
gains.
7. Reorganization Plan:
On October 20, 1999, the Fund's Board of Trustees approved a plan of
reorganization, subject to approval by Merrill Lynch Consults
International Portfolio shareholders, and certain other conditions,
whereby the Fund would acquire substantially all of the assets and
liabilities of Merrill Lynch Consults International Portfolio in
exchange for newly issued shares of the Fund. These Funds are
registered, diversified, open-end management investment companies.
Both entities have a similar investment objective. Merrill Lynch
Consults International Portfolio is managed by Merrill Lynch
(Suisse) Investment Management S.A., an affiliate of MLAM, which
manages the Fund.
PORTFOLIO INFORMATION
Worldwide
Investments as of
November 30, 1999
Percent of
Ten Largest Equity Holdings Net Assets
Nokia Oyj 2.1%
BP Amoco PLC 1.9
Nippon Telegraph & Telephone
Corporation (NTT) 1.8
Royal Dutch Petroleum Company 1.4
NTT Mobile Communications
Network, Inc. 1.3
Mannesmann AG 1.3
Total Fina SA 'B' 1.2
Telecom Italia Mobile (TIM) SpA 1.1
Deutsche Telekom AG 1.1
Telefonaktiebolaget LM Ericsson 'B' 1.1
Ten Largest Industries Percent of
(Equity Investments) Net Assets
Banks 12.3%
Diversified Telecommunication
Services 11.4
Oil & Gas 6.6
Insurance 5.7
Communications Equipment 4.9
Pharmaceuticals 4.4
Diversified Financials 2.3
Media 2.1
Metals & Mining 2.0
Electric Utilities 2.0
Percent of
Ten Largest Countries Net Assets
Japan 23.0%
United Kingdom 16.0
France 9.1
Germany 7.6
Switzerland 5.4
Italy 5.1
Netherlands 4.6
Canada 3.7
Spain 3.1
Australia 2.5
Percent of
Geographical Asset Mix* Net Assets
Europe (Ex-United Kingdom and
Ireland) 45.9%
United Kingdom and Ireland 16.3
Japan 23.0
Pacific Basin (Ex-Japan) 3.8
North America 4.1
Latin America 1.9
Other Emerging Markets 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
Germany DAX Index DTB 0.4%
Italy FIB30 Index MIB (0.3)
Japan Nikkei 225 Index SIMEX (0.5)
Spain IBEX 35 MEFF 0.7
------
0.3%
======
Merrill Lynch International Equity Fund, November 30, 1999
OFFICERS AND TRUSTEES
Terry K. Glenn, President and Trustee
Charles C. Reilly, Trustee
Richard R. West, Trustee
Arthur Zeikel, Trustee
Edward D. Zinbarg, Trustee
Robert C. Doll, Senior Vice President
Clive D. Lang, Senior Vice President and
Portfolio Manager
Donald C. Burke, Vice President and Treasurer
Robert Harris, Secretary
Donald Cecil and Edward H. Meyer, Trustees of Merrill
Lynch International Equity Fund have recently retired.
The Fund's Board of Trustees wishes Mr. Cecil and Mr.
Meyer well in their retirements.
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
