MERRILL LYNCH
CONSULTS
INTERNATIONAL
PORTFOLIO
FUND LOGO
Semi-Annual Report
April 30, 1995
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.
Merrill Lynch Consults
International Portfolio
Box 9011
Princeton, NJ
08543-9011
<PAGE>
MERRILL LYNCH CONSULTS INTERNATIONAL PORTFOLIO
Officers and
Trustees
Arthur Zeikel, President and Trustee
Herbert I. London, Trustee
Robert R. Martin, Trustee
Joseph L. May, Trustee
Andre F. Perold, Trustee
Terry K. Glenn, Executive Vice President
Bernard J. Durnin, Senior Vice President
Donald C. Burke, Vice President
Jurg Boller, Vice President
Gerald M. Richard, Treasurer
Mark B. Goldfus, Secretary
Custodian
Brown Brothers Harriman & Co.
40 Water Street
Boston, Massachusetts 02109
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
Transfer Agency Mutual Fund Operations Department
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
Worldwide
Investments as of
April 30, 1995
Ten Largest Industries Percent of
(Equity Investments) Net Assets
Conglomerates 7.2%
Pharmaceuticals 6.6
Automobile & Equipment 5.9
Machinery 5.7
Oil & Related 4.9
Building & Construction 4.6
Telecommunications 4.2
Chemicals 4.2
Apparel 3.9
Utility 3.9
<PAGE>
DEAR SHAREHOLDER
The six-month period ended April 30, 1995 was a difficult one for
international equity markets and therefore for the Fund's
performance. The weakness of the world financial markets was
affected by several factors, including the Mexican financial crisis
in December 1994; the devastating earthquake in Kobe, Japan in
January; and the collapse of Barings Securities PLC, the highly
respected British investment bank, in February. These difficulties
surrounding non-US equity markets were offset to some extent for US
dollar-based investors given the significant weakness of the US
dollar versus most major currencies. For example, a weaker US dollar
means higher returns for dollar-based investors in Japan and
Germany.
After showing strong performance during the first half of 1994, the
Japanese market weakened again. In the aftermath of the Kobe
earthquake Japanese equities have experienced continued sizable
declines as investors assessed the costs of rebuilding the region,
financing the rebuilding, and the impact on the economy. In
addition, with the yen rising, Japanese equities found little
support, especially the exporters where currency levels play an
important role in profitability ratios. Investors also focused on
Japan's weak economic recovery that would be jeopardized under a
strong yen. During the six-month period ended April 30, 1995, the
Japanese market declined by 16% as measured by the Nikkei Dow Jones
Index and by 3% in US dollar terms.
Throughout Europe, the general trend in equity markets has been
downward, although at a more moderate rate than other regions. These
declines were more in response to factors such as rising US interest
rates and the collapse of the US dollar rather than reflective of
any major change in Europe's economic outlook. Only the Italian and
French markets were subject to additional pressures caused by
political uncertainty. The instability of the Italian government and
the French presidential election, which was held in May, added
volatility to those bond and equity markets.
The emerging markets of Southeast Asia and Latin America were the
most volatile markets, registering the sharpest declines over the
period. A market downtrend was already in place across these regions
in reaction to the rise in US interest rates, when devaluation of
the Mexican peso led to massive outflows of investors' money from
the Latin American and Southeast Asian equity markets.
<PAGE>
The greatest area of concern is Latin America, particularly Mexico.
Latin American equities reacted negatively to the Mexican
government's decision to devalue the peso against the US dollar in
December 1994. The ensuing financial panic and loss of confidence
led the United States and the International Monetary Fund to
announce a Mexican rescue package in order to gradually reestablish
the liquidity imbalance and the confidence in Mexico's economy.
Between October 31, 1994 and early March 1995, its lowest point, the
Mexican equity market lost 43% in peso terms and 67% in US dollar
terms. Since then, the market has recovered a portion of the losses.
Regarding the Asian emerging markets, the Kobe earthquake only
accelerated the downturn as investors anticipated that Japan would
reduce its direct investments in the Asian region in order to
rebuild the Kobe area. Concerns that the inflationary pressures in
China would spread across the entire region, coupled with the ill
health of Deng Xiao Ping of China, also affected investor
confidence. In addition, after many years of booming property prices
in Hong Kong, higher interest rates, for the first time, led to
weaker real estate prices. The collapse of Barings investment bank,
which was caused by speculation in derivative contracts, also
affected overall confidence. Investors also focused on the strength
of the yen and the ability of Asian companies and governments to
repay their yen-denominated debt. Finally, these markets also
suffered from the brief panic following the Mexican crisis as
investors reduced holdings believing that Asian local currencies
would also be at risk of devaluation.
Looking ahead, we believe that investors appear to be rethinking
their investment exposures to different markets. Given the free
movement of capital across country borders, such a rapid withdrawal
from global equity markets has accelerated the declines over the
past months. We do not believe that the global economic trend has
been altered significantly. However, it could take some time before
investors move away from the risk-averse atmosphere that has
impacted many markets following the different crises that occurred
during the first months of 1995.
European and Japanese markets have strengthened since March
following the negative returns posted in previous months. With the
exception of Hong Kong, Asian markets continued to decline as
investors focus on the impact of the strong yen. Most of the
commentary regarding the financial arena revolves around the
currency markets, particularly the yen/dollar relationship where the
pressure on the US dollar was almost relentless until recently.
<PAGE>
In Latin America, the equity markets appear less volatile than
earlier in 1995. The markets have recovered from their recent lows
as investors try to determine if the worst is over. Although we
expect it will take time to work through the problems brought on by
the devaluation of the Mexican peso, we believe progress was made.
We are encouraged by Mexico's improving trade figures, which have
shown a surplus for two consecutive months. Although there may be an
additional setback, the Latin American markets probably have seen
the worst with further stabilization expected.
Investment Strategy
Concerning our investment strategy, we made some modifications to
our relative country allocations. In January, we slightly increased
our weighting in Japan while reducing our exposure to Europe and the
emerging markets. We maintained our modestly underweighted position
in Europe, where we see more limited potential in the near term.
Nevertheless, we remain positive on Europe as a whole as the
different economies are recovering. Weightings in emerging markets
were reduced by leaving commitments at the levels which resulted
from market declines during the related period.
By the end of 1994, we increased the currency hedge already in place
on Japanese equities, which are currently put in percentage hedged
versus the US dollar. This reflected our view that most of the
prolonged decline in the US dollar is behind us. Despite the further
decline of the US dollar against all major currencies, particularly
against the yen, we maintain our expectations for a stronger US
dollar in the long term. We believe the US dollar's recent collapse
versus the yen and the Deutschemark is overdone. The currency market
seems to be ignoring the positive fundamentals of the US economy.
The hedging of the yen into US dollars should allow us to keep a
sizable position in Japanese equities while limiting the risk of a
possible weakening in the Japanese currency.
Our equity allocation reflects a continued overweighting in the
Asian and Latin American emerging markets. The European markets
remain somewhat underweight, on a relative basis, and the weighting
in Japan remains neutral relative to market index weighting.
In Conclusion
We appreciate your continued interest in Merrill Lynch Consults
International Portfolio, and we look forward to reviewing our
strategy with you again in our upcoming annual report to
shareholders.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
<PAGE>
(Jurg Boller)
Jurg Boller
Portfolio Manager
June 8, 1995
PERFORMANCE DATA
None of the past results shown should be considered a representation
of future performance. Investment return and principal value of
shares will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost.
Average Annual
Total Return
Period Covered % Return
Year Ended 3/31/95 -7.17%
Inception (9/14/92) through 3/31/95 +6.06
<TABLE>
Recent
Performance
Results
<CAPTION>
12 Month 3 Month
4/30/95 1/31/95 4/30/94 % Change % Change
<S> <C> <C> <C> <C> <C>
ML Consults International Portfolio $11.47 $11.19 $12.82 -9.17%(1) +2.50%
ML Consults International Portfolio--Total Return -8.10(2) +2.50
<FN>
(1)Percent change includes reinvestment of $0.178 per share capital
gains distributions.
(2)Percent change includes reinvestment of $0.139 per share income
dividends and $0.178 per share capital gains distributions.
</TABLE>
<PAGE>
<TABLE>
Performance
Summary
<CAPTION>
Net Asset Value Capital Gains Dividends
Period Covered Beginning Ending Distributed Paid* % Change**
<C> <C> <C> <C> <C> <C>
9/14/92--12/31/92 $10.00 $ 9.79 -- -- - 2.10%
1993 9.79 11.93 -- $0.050 +22.37
1994 11.93 11.84 $0.178 0.139 + 1.94
1/1/95--4/30/95 11.84 11.47 -- -- - 3.13
------ ------
Total $0.178 Total $0.189
Cumulative total return as of 4/30/95: +18.31%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the ex-dividend date. There are
no sales charges associated with the Portfolio.
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS
<CAPTION>
LATIN Shares Value Percent of
AMERICA Industries Held Stocks Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
Argentina Banking 124,027 Banco de Galicia y Buenos Aires
S.A. (ADR)* $ 2,750,621 $ 1,999,935 0.9%
Oil & Related 127,000 YPF S.A. (ADR)* 2,978,847 2,571,750 1.2
Total Investments in Argentinean Stocks 5,729,468 4,571,685 2.1
Chile Glass Packaging 50,000 Cristalerias de Chile S.A. (ADR)* 1,024,719 925,000 0.4
Total Investments in Chilean Stocks 1,024,719 925,000 0.4
Mexico Banking 130,000 Grupo Financiero Bancomer, S.A. de
C.V. (ADR)* 3,813,032 763,750 0.4
Beverage 417,000 Fomento Economico Mexicano, S.A. de
C.V. 'B'(Femsa) 1,802,298 909,437 0.4
<PAGE>
Building & 90,000 Empresas ICA Sociedad Controladora,
Construction S.A. de C.V. (ADR)* 1,975,312 765,000 0.4
Telecommuni- 55,000 Telefonos de Mexico, S.A. de C.V. (ADR)* 2,896,991 1,663,750 0.8
cations
Total Investments in Mexican Stocks 10,487,633 4,101,937 2.0
Total Investments in Latin America 17,241,820 9,598,622 4.5
NORTH
AMERICA
Canada Metals 132,700 Noranda, Inc. 2,176,720 2,330,082 1.1
Total Investments in North America 2,176,720 2,330,082 1.1
PACIFIC
BASIN
Australia Metals 252,000 Broken Hill Proprietary, Ltd. 2,767,090 3,671,913 1.7
Publishing 650,000 News Corporation, Ltd. 2,831,904 3,157,068 1.5
Total Investments in Australian Stocks 5,598,994 6,828,981 3.2
Hong Kong Machinery 1,130,000 Johnson Electric Holdings, Ltd. 2,788,394 2,459,695 1.2
Multi- 500,000 Hutchison Whampoa, Ltd. 2,336,145 2,170,262 1.0
Industry 200,000 Swire Pacific Ltd. (Class A) 1,547,267 1,337,037 0.6
-------------- -------------- ------
3,883,412 3,507,299 1.6
Total Investments in Hong Kong Stocks 6,671,806 5,966,994 2.8
Indonesia Telecommuni- 5,610 P.T. Indonesian Satellite (ADR)* 180,097 202,661 0.1
cations
Total Investments in Indonesian Stocks 180,097 202,661 0.1
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
PACIFIC
BASIN Shares Value Percent of
(concluded) Industries Held Stocks Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
Japan Apparel 270,000 Tokyo Style $ 4,641,901 $ 4,145,935 1.9%
600,000 Toray Industries, Inc. 4,569,260 4,192,358 2.0
-------------- -------------- ------
9,211,161 8,338,293 3.9
Automobile & 240,000 Honda Motor Co., Ltd. 3,143,878 3,885,252 1.8
Equipment 502,000 Yamaha Motors Co., Ltd. 4,309,498 4,230,639 2.0
-------------- -------------- ------
7,453,376 8,115,891 3.8
Building & 235,000 Daiwa House Industry Co., Ltd. 3,554,974 3,916,200 1.8
Construction 360,000 Okumura Corp. 2,939,585 3,329,604 1.6
-------------- -------------- ------
6,494,559 7,245,804 3.4
Chemicals 470,000 Mitsui Petrochemical Industries 2,917,288 4,453,279 2.1
350,000 Sekisui Chemical Co., Ltd. 3,353,200 4,374,479 2.1
-------------- -------------- ------
6,270,488 8,827,758 4.2
Electric 110,000 Kansai Electric Power Co., Inc. 3,037,494 3,011,546 1.4
Utilities
Electrical 478,000 Hitachi, Ltd. 3,874,488 4,864,778 2.3
Equipment
Electronic 500,000 Hitachi Cable, Ltd. 3,871,452 3,898,345 1.8
Components
Electronics 257,000 Matsushita Electric Industrial Co., Ltd. 3,522,654 4,313,415 2.0
Financial 213,000 Nomura Securities Co., Ltd. 4,746,603 4,310,201 2.0
Services
Household 350,000 Kao Corp. 3,913,740 4,249,494 2.0
Products
Insurance 572,000 Nippon Fire & Marine Insurance Co., Ltd. 4,139,948 3,744,792 1.8
International 500,000 Sumitomo Corp. 4,473,924 4,969,646 2.3
Trade
Leisure 57,000 Nintendo Co., Ltd. 3,779,753 3,657,065 1.7
<PAGE>
Machinery 520,000 Mitsubishi Heavy Industries, Ltd. 3,349,314 3,775,741 1.8
Merchandising 79,000 Ito-Yokado Co., Ltd. 3,630,720 4,259,850 2.0
Metals 570,000 Sumitomo Metal Industries, Ltd. (a) 1,746,735 1,872,634 0.9
Office 256,000 Canon, Inc. 3,522,859 4,235,686 2.0
Equipment
Pharmaceuticals 170,000 Yamanouchi Pharmaceutical Co., Ltd. 3,538,322 3,824,545 1.8
Printing 200,000 Dai Nippon Printing, Ltd. 3,371,268 3,356,743 1.6
Transportation 430,000 Kamigumi Co., Ltd. 4,915,841 4,273,896 2.0
Total Investments in Japanese Stocks 88,864,699 95,146,123 44.7
Malaysia Conglomerates 1,800,000 Sime Darby BHD 3,815,475 4,592,023 2.2
Total Investments in Malaysian Stocks 3,815,475 4,592,023 2.2
Singapore Food 2,000,000 Dairy Farm International Holdings Ltd. 3,172,752 2,120,000 1.0
Shipbuilding 550,000 Jurong Shipyard, Ltd. 4,403,226 4,224,695 2.0
Total Investments in Singaporean Stocks 7,575,978 6,344,695 3.0
Thailand Agriculture 333,000 Charoen Pokphand Feedmill Co., Ltd. 1,608,648 2,028,290 0.9
Real Estate 297,300 MDX Co., Ltd.--Foreign 1,961,787 616,730 0.3
Total Investments in Thai Stocks 3,570,435 2,645,020 1.2
Total Investments in the Pacific Basin 116,277,484 121,726,497 57.2
WESTERN
EUROPE
<PAGE>
France Advertising 19,000 Havas S.A. 1,457,872 1,645,505 0.8
Automobile & 102,000 Michelin (C.G.D.E.) (Class B) (a) 3,467,404 4,585,321 2.1
Equipment
Oil & 47,000 Societe Nationale Elf Aquitaine (Ordinary) 3,500,155 3,762,875 1.8
Related
Total Investments in French Stocks 8,425,431 9,993,701 4.7
Germany Conglomerates 15,000 Preussag AG 3,885,955 4,347,041 2.0
Utility 13,000 Veba AG 3,768,049 4,847,872 2.3
Total Investments in German Stocks 7,654,004 9,194,913 4.3
Italy Building 90,000 Italcementi S.p.A. (Warrants) (a)(b) 0 22,500 0.0
Materials
Telecommuni- 1,750,000 Societa Finanziara Telefonica S.p.A.
cations (STET) 4,550,716 4,991,050 2.3
Total Investments in Italian Stocks 4,550,716 5,013,550 2.3
Netherlands Food 27,000 Unilever N.V. 2,920,835 3,608,600 1.7
Food Chains 100,000 Koninklijke Ahold N.V. 2,579,877 3,447,831 1.6
Total Investments in Netherlands Stocks 5,500,712 7,056,431 3.3
Norway Pharmaceuticals 190,000 Hafslund Nycomed 'B' Fria 3,382,716 4,135,411 1.9
Shipbuilding 85,000 Kvaerner A.S. 'B' Shares 4,252,335 3,686,451 1.7
Total Investments in Norwegian Stocks 7,635,051 7,821,862 3.6
Spain Oil & Related 125,000 Repsol S.A. 3,817,302 3,988,604 1.9
Utility 70,000 Empresa Nacional de Electricidad S.A. 2,724,152 3,316,239 1.6
Total Investments in Spanish Stocks 6,541,454 7,304,843 3.5
Switzerland Machinery 4,000 Sulzer Gebruder AG (Registered) 2,922,103 2,414,698 1.1
Pharmaceuticals 9,000 Ciba-Geigy AG (Registered) 4,597,311 6,172,791 2.9
Total Investments in Swiss Stocks 7,519,414 8,587,489 4.0
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded)
<CAPTION>
WESTERN
EUROPE Shares Value Percent of
(concluded) Industries Held Stocks Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
United Beverage 500,000 Grand Metropolitan PLC (Ordinary) $ 3,277,061 $ 3,215,975 1.5%
Kingdom
Building & 355,000 Hepworth PLC 2,113,370 1,737,512 0.8
Construction
Conglomerates 750,000 BTR PLC 4,302,732 3,972,675 1.9
600,000 Hanson PLC (Ordinary) 2,261,242 2,282,175 1.1
-------------- -------------- ------
6,563,974 6,254,850 3.0
Leisure 173,600 Thorn EMI PLC (Ordinary) 2,552,714 3,177,870 1.5
Machinery 380,000 Siebe PLC (Ordinary) 3,076,015 3,444,434 1.6
Natural Gas 390,000 British Gas PLC 1,848,274 1,889,979 0.9
Utilities
Publishing 175,000 Reed International PLC (Ordinary) 1,773,302 2,254,000 1.1
Telecommunications 343,000 British Telecommunications PLC 2,224,660 2,145,414 1.0
Total Investments in United Kingdom
Stocks 23,429,370 24,120,034 11.4
Total Investments in Western Europe 71,256,152 79,092,823 37.1
<CAPTION>
Face Amount Short-Term Securities
<S> <S> <C> <S> <C> <C> <C>
United Commercial $9,619,000 Associates Corp. of North America,
States Paper** 5.90% due 5/01/1995 9,615,847 9,615,847 4.5
2,000,000 KFW International Finance Inc., 5.96%
due 5/19/1995 1,993,378 1,993,378 0.9
-------------- -------------- ------
11,609,225 11,609,225 5.4
Total Investments in Short-Term
Securities 11,609,225 11,609,225 5.4
<PAGE>
Total Investments $ 218,561,401 224,357,249 105.3
==============
Unrealized Depreciation on Forward Foreign Exchange Contracts*** (11,211,215) (5.3)
Other Assets Less Liabilities 12,778 0.0
-------------- ------
Net Assets $ 213,158,812 100.0%
============== ======
<FN>
(a)Non-income producing security.
(b)Warrants entitle the fund to purchase a predetermined number of
shares of common stock. The purchase price and the number of shares
are subject to adjustment under certain conditions until the
expiration date.
*American Depositary Receipt (ADR).
**Commercial Paper is traded on a discount basis; the interest rate
shown is the discount rate paid at the time of purchase by the fund.
***Forward foreign exchange contracts as of April 30, 1995 were as
follows:
Foreign Currency Expiration Unrealized
Sold Date Depreciation
YEN 6,920,000,000 July 1995 $(11,211,215)
Total (US Commitment--$72,005,971) $(11,211,215)
============
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
<CAPTION>
As of April 30, 1995
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$218,561,401) (Note 1a) $224,357,249
Cash 2,372
Foreign cash (Note 1b) 2,681
Receivables:
Dividends $ 1,230,424
Beneficial interest sold 310,318 1,540,742
------------
Deferred organization expenses (Note 1f) 75,974
Prepaid registration fees and other assets (Note 1f) 14,709
------------
Total assets 225,993,727
------------
<PAGE>
Liabilities: Unrealized depreciation on forward foreign exchange
contracts (Note 1c) 11,211,215
Payables:
Beneficial interest purchased 1,142,008
Distributor (Note 2) 162,321
Investment adviser (Note 2) 121,741
Administration fee (Note 2) 40,580 1,466,650
------------
Accrued expenses and other liabilities 157,050
------------
Total liabilities 12,834,915
------------
Net Assets: Net assets $213,158,812
============
Net Assets Common shares of beneficial interest, $.10 par value, unlimited
Consist of: number of shares authorized $ 1,858,301
Paid-in capital in excess of par 212,106,253
Accumulated investment loss--net (792,268)
Undistributed realized capital gains on investments and foreign
currency transactions--net 5,337,597
Unrealized depreciation on investments and foreign currency
transactions--net (5,351,071)
------------
Net assets--Equivalent to $11.47 per share based on 18,583,011
shares of beneficial interest outstanding $213,158,812
============
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Six Months Ended April 30, 1995
<S> <S> <C> <C>
Investment Dividends (net of $283,228 foreign withholding tax) $ 1,747,396
Income Interest and discount earned 144,084
(Notes 1d ------------
& 1e): Total income 1,891,480
------------
<PAGE>
Expenses: Distribution fees (Note 2) $ 865,216
Investment advisory fees (Note 2) 865,216
Account maintenance fees (Note 2) 288,404
Administration fees (Note 2) 288,404
Custodian fees 129,527
Professional fees 36,478
Transfer agent fees (Note 2) 34,932
Registration fees (Note 1f) 29,058
Printing and shareholder reports 28,440
Trustees' fees 17,002
Amortization of organization expenses (Note 1f) 13,602
Other 87,469
------------
Total expenses 2,683,748
------------
Investment loss--net (792,268)
------------
Realized & Realized gain from:
Unrealized Gain Investments--net 5,350,126
(Loss) on Foreign currency transactions--net 5,086 5,355,212
Investments & ------------ ------------
Foreign Change in unrealized appreciation/depreciation on:
Currency Investments--net (16,410,216)
Transactions Foreign currency transactions--net (10,966,214) (27,376,430)
- --Net (Notes ------------ ------------
1b, 1c, Net Decrease in Net Assets Resulting from Operations $(22,813,486)
1e & 3): ============
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
For the Six For the Year
Months Ended Ended
April 30, October 31,
Increase (Decrease) in Net Assets: 1995 1994
<S> <S> <C> <C>
Operations: Investment loss--net $ (792,268) $ (1,326,690)
Realized gain on investments and foreign currency
transactions--net 5,355,212 7,972,536
Change in unrealized appreciation on investments and
foreign currency transactions--net (27,376,430) 13,095,611
------------ ------------
Net increase (decrease) in net assets resulting from operations (22,813,486) 19,741,457
------------ ------------
<PAGE>
Distributions Realized gain on investments--net (6,621,521) (834,656)
to Share- ------------ ------------
holders Net decrease in net assets resulting from distributions
(Note 1g): to shareholders (6,621,521) (834,656)
------------ ------------
Beneficial Net increase (decrease) in net assets derived from beneficial
Interest interest transactions (29,893,094) 77,824,155
Transactions ------------ ------------
(Note 4):
Net Assets: Total increase (decrease) in net assets (59,328,101) 96,730,956
Beginning of period 272,486,913 175,755,957
------------ ------------
End of period $213,158,812 $272,486,913
============ ============
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
For the For the
The following per share data and ratios have Six Period
been derived from information provided in the Months Sept 14,
financial statements. Ended For the Year Ended 1992++ to
April 30, October 31, Oct. 31,
Increase (Decrease) in Net Asset Value: 1995++++ 1994++++ 1993++++ 1992++++
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 12.83 $ 11.74 $ 9.60 $ 10.00
Operating -------- -------- -------- --------
Performance: Investment loss--net (0.04) (0.12) (0.08) (0.02)
Realized and unrealized gain (loss) on
investments--net (1.00) 1.26 2.22 (0.38)
-------- -------- -------- --------
Total from investment operations (1.04) 1.14 2.14 (0.40)
-------- -------- -------- --------
Less distributions from realized gain on
investments--net (0.32) (0.05) -- --
-------- -------- -------- --------
Net asset value, end of period $ 11.47 $ 12.83 $ 11.74 $ 9.60
======== ======== ======== ========
Total Investment Based on net asset value per share (8.17%)+++ 9.74% 22.29% (4.00%)+++
Return: ======== ======== ======== ========
<PAGE>
Ratios to Average Expenses, net of reimbursement, and excluding
Net Assets: account maintenance and distribution fees 1.33%* 1.27% 1.76% 2.50%*
======== ======== ======== ========
Expenses, net of reimbursement 2.33%* 2.27% 2.76% 3.50%*
======== ======== ======== ========
Expenses 2.33%* 2.27% 2.76% 4.45%*
======== ======== ======== ========
Investment loss--net (.69%)* (.56%) (.86%) (2.77%)*
======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $213,159 $272,487 $175,756 $ 16,636
Data: ======== ======== ======== ========
Portfolio turnover 4.48% 24.64% 32.54% 0.00%
======== ======== ======== ========
<FN>
*Annualized.
++Commencement of Operations.
++++Based on average shares outstanding during the period.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch Consults International Portfolio (the "Fund") is
registered under the Investment Company Act of 1940 as a
diversified, open-end investment company. These unaudited financial
statements reflect all adjustments which are, in the opinion of
management, necessary to a fair statement of the results for the
interim period presented. All such adjustments are of a normal
recurring nature. The following is a summary of significant
accounting policies followed by the Fund.
(a) Valuation of investments--Portfolio securities which are traded
on stock exchanges are valued at the last sale price on the exchange
on which such securities are traded, as of the close of business on
the day the securities are being valued or, lacking any sales, at
the last available bid price. Securities traded in the over-the-
counter market are valued at the last available bid price prior to
the time of valuation. In cases where securities are traded on more
than one exchange, the securities are valued on the exchange
designated by or under the authority of the Board of Trustees as the
primary market. Securities which are traded both in the over-the-
counter market and on a stock exchange are valued according to the
broadest and most representative market. Options written are valued
at the last sale price in the case of exchange-traded options or, in
the case of options traded in the over-the-counter market, the last
asked price. Options purchased are valued at the last sale price in
the case of exchange-traded options or, in the case of options
traded in the over-the-counter market, the last bid price. Short-
term securities are valued at amortized cost, which approximates
market value. Other investments, including futures contracts and
related options, are stated at market value. Securities and assets
for which market value quotations are not available are valued at
their fair value as determined in good faith by or under the
direction of the Fund's Board of Trustees.
<PAGE>
(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. Realized
and unrealized gains/losses on foreign currency transactions are the
result of settling (realized) or valuing (unrealized) receivables or
payables 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.
* 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. Premium or discount is amortized over the life of the
contract.
* 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.
* Financial futures contracts--The Fund may purchase or sell
interest rate 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
know as variation margin and are recorded by the 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.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (concluded)
* Options--The Fund is authorized to write covered call options and
purchase put 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, except that if the ex-dividend date has passed,
certain dividends from foreign securities are recorded as soon as
the Fund is informed of the ex-dividend date. Interest income
(including amortization of discount) is recognized on the accrual
basis. Realized gains and losses on security transactions are
determined on the identified cost basis.
(f) Deferred organization expenses and prepaid registration fees--
Costs related to the organization of the Fund are charged to expense
over a five-year period. Prepaid registration fees are charged to
expense as the related shares are issued.
<PAGE>
(g) Dividends and distributions--Dividends and distributions paid by
the Fund are recorded on the ex-dividend date.
2. Investment Advisory Agreement and Transactions with
Affiliates:
The Fund has entered into an Investment Advisory Agreement with
Merrill Lynch (Suisse) Investment Management S.A. (the "Investment
Adviser"). The Investment Adviser is a subsidiary of Merrill Lynch
Bank (Suisse) S.A. which is, in turn, an indirect subsidiary of
Merrill Lynch & Co., Inc. ("ML & Co."). Fund Asset Management, L.P.
("FAM") and Merrill Lynch Asset Management U.K. Limited ("MLAM
U.K.") have been retained as sub-advisers (the "Sub-Advisers") to
the Fund. Pursuant to sub-advisory agreements, the Sub-Advisers will
provide investment advisory services with respect to the management
of the Fund's cash position.
As compensation for its services to the Fund, the Investment Adviser
receives monthly compensation at the annual rate of 0.75% of the
average daily assets of the Fund. The Fund will not pay any
incremental fee to the Sub-Advisers for their services.
Certain states in which shares of the Fund qualify for sale impose
limitations on the expenses of the Fund. The most restrictive annual
expense limitation requires that the Investment Adviser reimburse
the Fund to the extent that expenses (excluding interest, taxes,
distribution fees, brokerage fees and commissions, and extraordinary
items) exceed 2.5% of the Fund's first $30 million of average daily
net assets, 2.0% of the Fund's next $70 million of average daily net
assets, and 1.5% of the average daily net assets in excess thereof.
The Investment Adviser's obligation to reimburse the Fund is limited
to the amount of the investment advisory fee. No fee payment will be
made to the Investment Adviser during any fiscal year which will
cause such expenses to exceed the most restrictive expense
limitation applicable at the time of such payment.
The Fund has an Administrative Agreement with Princeton
Administrators, Inc. (the "Administrator"), an indirect subsidiary
of ML & Co. The Administrator performs or arranges for the
performance of certain administrative services (i.e., services other
than investment advice and related portfolio activities) necessary
for the operation of the Fund, including maintaining the books and
records of the Fund, preparing reports and other documents required
by United States Federal, state and other applicable laws and
regulations to maintain the registration of the Fund and its shares
and providing the Fund with administrative office facilities. For
the services rendered to the Fund and the facilities furnished, the
Fund pays the Administrator a monthly fee equal to 0.25% of the
Fund's average daily net assets. Also, accounting services are
provided to the Fund by the Administrator, and the Fund reimburses
the Administrator for its costs in connection with such services on
a semi-annual basis.
<PAGE>
The Fund has adopted a Plan of Distribution (the "Plan") pursuant to
Rule 12b-1 under the Investment Company Act of 1940 pursuant to
which Merrill Lynch Funds Distributor, Inc. ("MLFD" or
"Distributor"), which is an indirect subsidiary of ML & Co.,
receives ongoing distribution and account maintenance fees, which
are accrued daily and paid monthly at the annual rates of 0.75% and
0.25%, respectively, of the average daily net assets of the Fund.
Pursuant to a sub-agreement with the Distributor, Merrill Lynch,
Pierce, Fenner, & Smith Inc. ("MLPF&S"), a subsidiary of ML & Co.,
also provides account maintenance activities and distribution
services to the Fund. The ongoing account maintenance fee
compensates the Distributor and MLPF&S for providing account
maintenance activities to the Fund's shareholders. The ongoing
distribution fee compensates the Distributor and MLPF&S for
providing shareholder and distribution services and bearing
distribution-related expenses of the Fund, including payments to
financial consultants for selling shares of the Fund.
As authorized by the Plan, the Distributor has entered into an
agreement with MLPF&S, an affiliate of the Investment Adviser, which
provides for the compensation of MLPF&S for providing account
maintenance and distribution-related services to the Fund. For the
six months ended April 30, 1995, MLFD earned $1,442,025 under the
Plan, all of which was paid to MLPF&S pursuant to the agreement.
Merrill Lynch Financial Data Services, Inc. ("FDS"), a wholly-owned
subsidiary of ML & Co., acts as the Fund's transfer agent.
In addition, MLPF&S received $6,673 in commissions on the execution
of portfolio security transactions for the Fund for the six months
ended April 30, 1995.
Certain officers and/or trustees of the Fund are officers and/or
directors of FAM, the Investment Adviser (including their affiliated
companies), MLPF&S, FDS, MLFD, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended April 30, 1995 were $10,410,156 and
$51,299,852, respectively.
Net realized and unrealized gains (losses) as of April 30, 1995,
were as follows:
<PAGE>
Realized Unrealized
Gains Gains (Losses)
Long-term investments $ 5,350,126 $ 5,795,848
Foreign currency transactions 5,086 64,296
Forward foreign exchange contracts -- (11,211,215)
------------ ------------
Total $ 5,355,212 $ (5,351,071)
============ ============
As of April 30, 1995, net unrealized appreciation on investments for
Federal income tax purposes aggregated $5,795,848, of which
$21,228,125 related to appreciated securities and $15,432,277
related to depreciated securities. The aggregate cost of investments
at April 30, 1995 for Federal income tax purposes was $218,561,401.
4. Beneficial Interest Transactions:
Transactions in shares of beneficial interest were as follows:
For the Six Months Dollar
Ended April 30, 1995 Shares Amount
Shares sold 1,019,408 $ 11,904,426
Shares issued to shareholders in
reinvestments of distributions 501,370 5,855,982
------------ ------------
Total issued 1,520,778 17,760,408
Shares redeemed (4,180,366) (47,653,502)
------------ ------------
Net decrease (2,659,588) $(29,893,094)
============ ============
<PAGE>
For the Year Dollar
Ended October 31, 1994 Shares Amount
Shares sold 10,276,710 $128,040,343
Shares issued to shareholders in
reinvestments of distributions 56,819 680,122
------------ ------------
Total issued 10,333,529 128,720,465
Shares redeemed (4,065,998) (50,896,310)
------------ ------------
Net increase 6,267,531 $ 77,824,155
============ ============
