MERRILL LYNCH
CONSULTS
INTERNATIONAL
PORTFOLIO
FUND LOGO
Semi-Annual Report
April 30, 1996
<PAGE>
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 Consults
International Portfolio
Box 9011
Princeton, NJ
08543-9011
MERRILL LYNCH CONSULTS INTERNATIONAL PORTFOLIO
Worldwide
Investments as of
April 30, 1996
<PAGE>
Percent of
Ten Largest Industries Net Assets
Telecommunications 6.6%
Machinery 6.0
Metals 6.0
Oil & Related 4.9
Pharmaceuticals 4.8
Electronics 3.9
Apparel 3.8
Conglomerates 3.7
Utility 3.5
Automobile & Equipment 3.5
Percent of
Ten Largest Holdings Country Net Assets
Societa Finanziara
Telefonica S.p.A. (STET) Italy 2.4%
Sumitomo Corp. Japan 2.4
Veba AG Germany 2.3
Matsushita Electric
Industrial Co., Ltd. Japan 2.3
Kamigumi Co., Ltd. Japan 2.2
Toray Industries, Inc. Japan 2.2
Hitachi, Ltd. Japan 2.1
Mitsubishi Heavy Industries, Ltd. Japan 2.1
Nomura Securities Co., Ltd. Japan 2.1
Sumitomo Metal Industries, Ltd. Japan 2.1
Officers and
Trustees
Arthur Zeikel, President and Trustee
James H. Bodurtha, Trustee
Herbert I. London, Trustee
Robert R. Martin, Trustee
Joseph L. May, Trustee
Andre F. Perold, Trustee
Terry K. Glenn, Executive Vice President
Donald C. Burke, Vice President
Christine L. Pinto, Vice President
Gerald M. Richard, Treasurer
Mark B. Goldfus, Secretary
<PAGE>
Custodian
Brown Brothers Harriman & Co.
40 Water Street
Boston, Massachusetts 02109
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
DEAR SHAREHOLDER
Equity markets outside of the United States continued to benefit
from a surge of investor interest as global liquidity trends
improved dramatically. There has not been a single key central bank
around the world which has not participated in efforts to reflate
local financial market conditions. For the past six months in
particular, the double-digit broad money supply growth in Germany
and balance sheet expansion by the Bank of Japan dispelled fears
that the slow growth conditions of the past few years would persist.
This basic trend in liquidity growth transformed recently dormant
markets in Europe and Japan back into the leadership ranks,
outdistancing the returns available in the United States during the
six-month period ended April 30, 1996. During the first half of this
six-month period, the Pacific indexes such as Hong Kong, Singapore
and Japan led the unmanaged Morgan Stanley Europe, Australia and Far
East (EAFE) Index, while Europe lagged.
However, there was a noticeable shift in momentum toward several
European markets from February to April, along with Japan, which
reached its best levels in four years. Merrill Lynch Consults
International Portfolio returned +17.8%, outperforming the unmanaged
Morgan Stanley EAFE Index's total return of +13.2% during the six-
month period ended April 30, 1996. (Complete performance
information, including average annual total returns, can be found on
page 1 of this report to shareholders.)
Investment Strategy
Our investment strategy benefited the Portfolio's performance
beginning in the latter part of 1995 and continuing through the last
several weeks. We were gradually increasing our overweighted
position in the emerging markets, maintaining a slight overweighted
position in Japan and generally underweighting our European position
since last summer. Early in the year, we reduced our exposure to
Switzerland, underweighting our position, in response to poor
valuations and currency concerns in favor of France, Germany and the
Netherlands. In March, we reduced our UK position in favor of
Continental Europe, especially bolstering the Scandinavian
countries.
<PAGE>
Our rationale is that many European industrial issues that dominate
these stock markets remain inexpensive relative to their domestic
markets and those in the United Kingdom. Several indications of an
end to the underperformance of European cyclicals may be at hand,
such as a steeper yield curve in Germany and stronger performances
by peripheral currencies and their bond markets which may allow more
persistent interest rate cuts in those economies, namely France,
Spain, Italy and Sweden. We do not believe Europe should be
underestimated because under a scenario of stronger global growth
tendencies, European labor markets and capital stock remain
underutilized and therefore in a position to play a relatively
stronger role in the future. In contrast, the United States appears
to be showing signs of constrained capacity and labor markets.
In Japan, there are four main arguments for continued strong stock
market performance. First, individual investors are likely to return
to the Japanese equity market in a significant way as very low rates
of return on savings instruments prompt a search for higher returns.
Individuals own historically low amounts of local equities and there
would appear to be significant buying power from this important
source. In addition, there are significantly overcapitalized
companies in Japan with low-yielding cash reserves which may now be
used to repurchase shares as a result of a key tax rule change,
generating yet another source of support for the equity market.
Also, many Japanese equities exhibit substantial discounts when
compared to equities in similar sectors in the United States, using
measures such as price/book, price/sales and price/cash flow ratios.
Finally, we believe Japan's equity leadership will continue to show
a tendency to favor the "value-oriented" investment approach, which
is adhered to by Merrill Lynch Consults International Portfolio.
Following a strong start to the year in the emerging Pacific Rim and
Latin American stock markets on a wave of foreign buying, higher US
interest rates and concerns that a similar trend would develop in
these countries began to impair investor psychology somewhat.
Nevertheless, emerging Asian stock markets contributed twice the
performance of Latin America as asset flows into Asia significantly
exceeded those into Latin America. Investors may begin to question
the sustainability of rising current account deficits in Southeast
Asia, ranging from 3.8% of gross domestic product in Indonesia to
more than 8% for Thailand and Malaysia. It will be very important
for these countries to continue to attract long-term capital
investment and its corollary, robust export growth.
<PAGE>
We have taken aggressive steps to reduce the Portfolio's exposure to
Hong Kong, beginning with the property and conglomerates stocks
earlier in the year. We are not convinced that Hong Kong should be
an overweighted position in the region in advance of the 1997
takeover by The People's Republic of China and most-favored nation
tensions between China and the United States. Turning to Latin
America, this region would be a beneficiary of rising global growth
trends and the revival of pricing in commodity-sensitive markets is
an event to anticipate.
Our investment strategy over the past six months reaffirms the
importance of currency hedging. Although the returns available from
many indexes in local currency terms were quite high, a rising US
dollar over much of the period had the potential to shave several
percentage points off realized returns when translated back into US
dollars. Therefore, the forward sale of yen we implemented to hedge
most of our yen equity exposure during the second half of 1995 was a
very significant contributor to Portfolio performance as the yen
fell more than 20% in value against the US dollar. By mid-January,
when our contracts came due, the yen appeared to be very oversold
and we lowered our hedge ratio to only 50% of our Japanese equity
exposure. There was also a risk that some fiscal year-end
repatriation pressures would temporarily strengthen the yen. As the
bond market sell-off in the United States picked up momentum,
Japanese selling of these US dollar-denominated securities could
also serve to pressure the yen upward. Recently, as these
crosscurrents subsided, the yen fell through the lower end of its
recent range, and we ended the April period nearly two-thirds
hedged. The yen has remained stable, neither significantly
contributing to nor detracting from Portfolio performance.
The previously hard currencies of the Deutschemark bloc (for
example, the French franc and Swiss franc) have become weaker.
Interestingly, as the tensions surrounding European Monetary Union
subsided following a key German interest rate cut, some of the
peripheral markets like Sweden and Italy were very strong in local
index terms while experiencing appreciating currencies versus the US
dollar and the Deutschemark. We were comfortably overweighted in
these two markets in particular.
Looking ahead, we believe that international equities will continue
to substantially outperform fixed-income securities. Traditionally,
equity returns have exceeded those from fixed-income markets over
time but this has not been the case thus far in the 1990s.
Increasingly, evidence is confirming a pickup in global growth
expectations and potentially increasing inflationary pressures. The
above-trend performance of bonds globally in the first half of the
decade may have set the stage for a sustained period of
international equity outperformance relative to bonds in the second
half. We are encouraged that international equity markets have
weathered the bond market corrections so impressively.
<PAGE>
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
(Christine L. Pinto)
Christine L. Pinto
Vice President and Portfolio Manager
June 10, 1996
We are pleased to announce that Christine L. Pinto is responsible
for the day-to-day management of Merrill Lynch Consults
International Portfolio. Ms. Pinto has served as Portfolio Manager
and Deputy Manager of Merrill Lynch Bank (Suisse) S.A. since 1993.
Prior thereto, she was Senior Investment Strategist in the Global
Research & Economics Group from 1983 to 1993.
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.
<PAGE>
Average Annual
Total Return
<TABLE>
Period Covered % Return
<S> <C>
Year Ended 3/31/96 +20.30%
Inception (9/14/92) through 3/31/96 + 9.89
</TABLE>
<TABLE>
Recent
Performance
Results
<CAPTION>
12 Month 3 Month
4/30/96 1/31/96 4/30/95 % Change % Change
<S> <C> <C> <C> <C> <C>
ML Consults International Portfolio $13.03 $12.47 $11.47 +18.04%(1) +4.49%
ML Consults International Portfolio--Total Return +22.22(2) +4.49
<FN>
(1)Percent change includes reinvestment of $0.464 per share capital
gains distributions.
(2)Percent change includes reinvestment of $0.437 per share income
dividends and $0.464 per share capital gains distributions.
</TABLE>
<TABLE>
Performance
Summary
<CAPTION>
Net Asset Value Capital Gains Dividends
Period Covered Beginning Ending Distributed Paid* % Change**
<S> <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
1995 11.84 12.07 0.464 0.437 + 9.68
1/1/96--4/30/96 12.07 13.03 -- -- + 7.95
------ ------
Total $0.642 Total $0.626
Cumulative total return as of 4/30/96: +44.60%**
<PAGE>
<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> <C> <C> <S> <C> <C> <C>
Argentina Banking 146,351 Banco de Galicia y Buenos Aires
S.A. (ADR)* $ 2,750,621 $ 3,439,248 1.6%
Oil & Related 127,000 YPF S.A. (ADR)* 2,978,847 2,778,125 1.3
Total Investments in Argentine
Stocks 5,729,468 6,217,373 2.9
Chile Glass Packaging 50,000 Cristalerias de Chile S.A. (ADR)* 1,024,719 1,187,500 0.5
Total Investments in Chilean Stocks 1,024,719 1,187,500 0.5
Mexico Beverage 24,200 Panamerican Beverages Inc. 825,015 1,061,775 0.5
Building & 400,000 Cemex S.A. 1,591,100 1,692,184 0.8
Construction 175,000 Empresas ICA Sociedad Controladora,
S.A. de C.V. (ADR)* 2,646,374 2,428,125 1.1
------------ ------------ ------
4,237,474 4,120,309 1.9
Telecommunications 55,000 Telefonos de Mexico, S.A. de C.V.
(ADR)* 2,896,991 1,870,000 0.8
Transportation 150,000 Transportacion Maritima Mexicana,
S.A. de C.V. (ADR)* 1,352,126 1,256,250 0.6
Total Investments in Mexican Stocks 9,311,606 8,308,334 3.8
Total Investments in Latin America 16,065,793 15,713,207 7.2
<PAGE>
NORTH
AMERICA
Canada Metals 132,700 Noranda, Inc. 2,176,720 2,969,149 1.4
Total Investments in North America 2,176,720 2,969,149 1.4
PACIFIC
BASIN
Australia Metals 277,200 Broken Hill Proprietary, Ltd. 2,767,090 4,265,538 1.9
Publishing 560,000 News Corporation, Ltd. (Ordinary) 2,410,336 3,281,505 1.5
Total Investments in Australian
Stocks 5,177,426 7,547,043 3.4
Hong Kong Real Estate 150,000 Sun Hung Kai Properties Ltd. 1,391,314 1,430,095 0.6
Telecommunications 1,100,000 Hong Kong Telecommunications Ltd.
(ADR)* 2,251,729 2,097,473 1.0
Total Investments in Hong Kong Stocks 3,643,043 3,527,568 1.6
Indonesia Telecommunications 52,000 P.T. Indonesian Satellite (ADR)* 1,942,400 1,813,500 0.8
Total Investments in Indonesian
Stocks 1,942,400 1,813,500 0.8
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
PACIFIC BASIN Shares Value Percent of
(concluded) Industries Held Stocks Cost (Note 1a) Net Assets
<S> <C> <C> <S> <C> <C> <C>
Japan Apparel 200,000 Tokyo Style Co., Ltd. $ 3,475,066 $ 3,558,106 1.6%
700,000 Toray Industries, Inc. 5,212,767 4,767,097 2.2
------------ ------------ ------
8,687,833 8,325,203 3.8
Automobile 33,000 Autobacs Seven Co., Ltd. 2,696,558 3,187,948 1.5
& Equipment 400,000 Yamaha Motors Co., Ltd. 3,477,603 4,361,549 2.0
------------ ------------ ------
6,174,161 7,549,497 3.5
<PAGE>
Banking 38,000 Sanwa Bank, Ltd. 767,838 770,540 0.4
Beverage 220,000 Kirin Brewery Co., Ltd. 2,688,369 2,861,789 1.3
Building & 245,000 Okumura Corp. 2,020,587 2,343,376 1.1
Construction
Chemicals 460,000 Mitsui Petrochemical Industries, Ltd. 2,891,381 3,885,031 1.8
Electric Utilities 111,100 Kansai Electric Power Co., Inc. 3,037,494 2,699,130 1.2
Electrical Equipment 435,000 Hitachi, Ltd. 3,600,724 4,701,578 2.1
Electronic Components 500,000 Hitachi Cable, Ltd. 3,871,452 4,275,466 2.0
Electronics 15,000 Advantest Corporation 762,849 744,620 0.3
287,000 Matsushita Electric Industrial
Co., Ltd. 4,025,173 5,078,431 2.3
------------ ------------ ------
4,788,022 5,823,051 2.6
Financial Services 213,000 Nomura Securities Co., Ltd. 4,746,603 4,645,050 2.1
Food Processing 200,000 Nippon Meat Packers, Inc. 2,679,349 3,175,514 1.5
Household Products 310,000 Kao Corp. 3,553,422 4,151,124 1.9
Insurance 572,000 Nippon Fire & Marine Insurance
Co., Ltd. 4,139,948 4,185,366 1.9
International Trade 440,000 Sumitomo Corp. 3,919,593 5,260,641 2.4
Machinery 160,000 Makita Corporation 2,438,536 2,586,322 1.2
520,000 Mitsubishi Heavy Industries, Ltd. 3,349,314 4,645,433 2.1
------------ ------------ ------
5,787,850 7,231,755 3.3
Merchandising 50,000 Ito-Yokado Co., Ltd. 2,465,299 2,950,741 1.3
Metals 1,400,000 Sumitomo Metal Industries, Ltd. 4,064,328 4,499,283 2.1
Office Equipment 190,000 Canon, Inc. 2,745,437 3,780,010 1.7
Paper & Forest 200,000 Hokuetsu Paper Mills, Ltd. 1,869,114 1,951,220 0.9
Products
Pharmaceuticals 145,000 Yamanouchi Pharmaceutical Co., Ltd. 2,961,571 3,439,503 1.6
Printing 225,000 Dai Nippon Printing, Ltd. 3,803,168 4,239,598 1.9
<PAGE>
Transportation 470,000 Kamigumi Co., Ltd. 5,304,578 4,855,093 2.2
Total Investments in Japanese Stocks 86,568,121 97,599,559 44.6
Malaysia Conglomerates 700,000 Land & General BHD 1,748,183 1,866,854 0.9
1,200,000 Sime Darby BHD 2,737,495 3,320,634 1.5
Total Investments in Malaysian Stocks 4,485,678 5,187,488 2.4
Singapore Shipbuilding 550,000 Jurong Shipyard, Ltd. 4,403,226 3,150,125 1.4
Total Investments in Singaporean
Stocks 4,403,226 3,150,125 1.4
Thailand Agriculture 333,000 Charoen Pokphand Feedmill Co., Ltd. 1,608,648 1,939,422 0.9
Banking 120,000 Bangkok Bank Co., Ltd.--Foreign 1,380,245 1,740,095 0.8
Real Estate 147,300 ++MDX Co., Ltd.--Foreign 942,049 230,521 0.1
Total Investments in Thai Stocks 3,930,942 3,910,038 1.8
Total Investments in the
Pacific Basin 110,150,836 122,735,321 56.0
WESTERN
EUROPE
France Advertising 52,000 Havas S.A. 4,140,514 4,308,987 2.0
Oil & Related 60,000 Societe Nationale Elf Aquitaine
(Ordinary) 4,473,191 4,451,781 2.0
Total Investments in French Stocks 8,613,705 8,760,768 4.0
Germany Chemicals 7,000 BASF AG 1,679,923 1,908,676 0.9
Conglomerates 2,500 Preussag AG 740,731 672,701 0.3
Utility 103,000 Veba AG 3,114,393 5,113,046 2.3
Total Investments in German Stocks 5,535,047 7,694,423 3.5
<PAGE>
Italy Building Materials 230,000 Italcementi S.p.A. 1,496,298 1,667,135 0.8
Financial Services 240,000 Istituto Mobiliare Italiano S.p.A.
(Ordinary) 1,503,756 1,901,391 0.9
Telecommunications 1,580,000 Societa Finanziara Telefonica
S.p.A. (STET) 4,198,505 5,330,028 2.4
Total Investments in Italian Stocks 7,198,559 8,898,554 4.1
Netherlands Electronics 80,000 Philips Electronics N.V. 3,142,684 2,820,020 1.3
Total Investments in Netherlands
Stocks 3,142,684 2,820,020 1.3
Norway Pharmaceuticals 100,000 Hafslund Nycomed 'B' Fria 2,421,209 2,789,474 1.3
Shipbuilding 105,000 Kvaerner A.S. 'B' Shares 5,085,432 4,046,258 1.8
Total Investments in Norwegian
Stocks 7,506,641 6,835,732 3.1
Spain Oil & Related 100,000 Repsol S.A. 3,109,463 3,658,824 1.6
Utility 41,000 Empresa Nacional de Electricidad S.A. 1,716,082 2,569,333 1.2
Total Investments in Spanish Stocks 4,825,545 6,228,157 2.8
Sweden Household Products 50,000 Electrolux AB 2,397,099 2,517,668 1.1
Machinery 50,000 Atlas Copco AB (Class A) 919,997 938,604 0.4
Metals 55,000 SKF AB 1,072,658 1,279,446 0.6
Total Investments in Swedish Stocks 4,389,754 4,735,718 2.1
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded)
<CAPTION>
WESTERN
EUROPE Shares Value Percent of
(concluded) Industries Held Stocks Cost (Note 1a) Net Assets
<S> <C> <C> <S> <C> <C> <C>
Switzerland Machinery 2,100 Sulzer Gebruder AG (Registered) $ 1,544,641 $ 1,412,360 0.6%
Pharmaceuticals 3,500 Ciba-Geigy AG (Registered) 1,999,193 4,047,753 1.9
Total Investments in Swiss Stocks 3,543,834 5,460,113 2.5
United Beverage 410,000 Grand Metropolitan PLC (Ordinary) 2,663,875 2,684,618 1.2
Kingdom
Conglomerates 450,000 BTR PLC (Ordinary) 2,564,218 2,155,834 1.0
Consumer & 100,000 Williams Holdings PLC 520,578 515,117 0.2
Industrial Products
Entertainment 235,000 Rank Organisation PLC 1,646,891 1,895,197 0.9
& Leisure
Machinery 280,000 Siebe PLC (Ordinary) 2,276,580 3,612,129 1.7
Natural Gas 390,000 British Gas PLC (Ordinary) 1,848,274 1,381,554 0.6
Utilities
Retail 400,000 Boots Company PLC 3,588,607 3,814,572 1.8
Telecommunications 650,000 British Telecommunications PLC 4,044,346 3,563,020 1.6
Total Investments in
United Kingdom Stocks 19,153,369 19,622,041 9.0
Total Investments in Western Europe 63,909,138 71,055,526 32.4
Face
Amount Short-Term Securities
United Commercial Paper** $6,350,000 Associates Corp. of North America,
States 5.35% due 5/01/1996 6,350,000 6,350,000 2.9
Total Investments in
Short-Term Securities 6,350,000 6,350,000 2.9
Total Investments $198,652,487 218,823,203 99.9
============
Unrealized Depreciation on Forward Foreign Exchange Contracts*** (399,326) (0.2)
Other Assets Less Liabilities 559,898 0.3
------------ ------
Net Assets $218,983,775 100.0%
============ ======
<PAGE>
<FN>
++Non-income producing security.
*American Depositary Receipts (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
Portfolio.
***Forward foreign exchange contracts as of April 30, 1996 were as
follows:
Unrealized
Foreign Expiration Depreciation
Currency Sold Date (Note 1c)
YEN 6,371,280,000 June 1996 $ (399,326)
Total (US$ Commitment--$60,899,006) $ (399,326)
===========
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
<CAPTION>
As of April 30, 1996
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$198,652,487) (Note 1a) $218,823,203
Cash 413
Foreign cash (Note 1b) 8,641
Receivables:
Securities sold $ 1,221,203
Dividends 802,134
Beneficial interest sold 428,061 2,451,398
------------
Deferred organization expenses (Note 1f) 49,367
Prepaid registration fees and other assets (Note 1f) 20,128
------------
Total assets 221,353,150
------------
<PAGE>
Liabilities: Unrealized depreciation on forward foreign exchange
contracts (Note 1c) 399,326
Payables:
Securities purchased 764,496
Beneficial interest redeemed 655,768
Distributor (Note 2) 188,808
Investment adviser (Note 2) 141,808
Administration fee (Note 2) 88,367
Commissions 8,853 1,848,100
------------
Accrued expenses and other liabilities 121,949
------------
Total liabilities 2,369,375
------------
Net Assets: Net assets $218,983,775
============
Net Assets Common shares of beneficial interest, $.10 par value,
Consist of: unlimited number of shares authorized $ 1,680,369
Paid-in capital in excess of par 191,146,759
Accumulated investment loss--net (8,528,896)
Undistributed realized capital gains on investments and
foreign currency transactions--net 14,905,699
Unrealized appreciation on investments and foreign currency
transactions--net 19,779,844
------------
Net assets--Equivalent to $13.03 per share based on 16,803,685
shares of beneficial interest outstanding $218,983,775
============
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Six Months Ended April 30, 1996
<S> <S> <C> <C>
Investment Dividends (net of $228,633 foreign withholding tax) $ 1,422,517
Income Interest and discount earned 220,239
(Notes 1d & 1e): ------------
Total income 1,642,756
------------
<PAGE>
Expenses: Distribution fees (Note 2) $ 765,151
Investment advisory fees (Note 2) 765,151
Account maintenance fees (Note 2) 255,050
Administration fees (Note 2) 255,050
Custodian fees 188,431
Professional fees 36,987
Transfer agent fees (Note 2) 30,090
Registration fees (Note 1f) 21,576
Printing and shareholder reports 20,492
Amortization of organization expenses (Note 1f) 13,422
Trustees' fees 11,478
Pricing fees 4,994
Other 43,786
------------
Total expenses 2,411,658
------------
Investment loss--net (768,902)
------------
Realized & Realized gain from:
Unrealized Gain Investments--net 6,446,594
(Loss) on Foreign currency transactions--net 15,662,017 22,108,611
Investments and ------------
Foreign Currency Change in unrealized appreciation/depreciation on:
Transactions--Net Investments--net 18,789,665
(Notes 1b, 1c, Foreign currency transactions (12,859,689) 5,929,976
1e & 3): ------------ ------------
Net realized and unrealized gain on investments and
foreign currency transactions--net 28,038,587
------------
Net Increase in Net Assets Resulting from Operations $ 27,269,685
============
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
For the Six For the
Months Ended Year Ended
Increase (Decrease) in Net Assets: April 30, 1996 Oct. 31, 1995
<S> <S> <C> <C>
Operations: Investment loss--net $ (768,902) $ (897,752)
Realized gain on investments and foreign currency
transactions--net 22,108,611 102,593
Change in unrealized appreciation/depreciation on
investments and foreign currency transactions--net 5,929,976 (8,175,491)
------------ ------------
Net increase (decrease) in net assets resulting
from operations 27,269,685 (8,970,650)
------------ ------------
<PAGE>
Dividends & Investment income--net (6,862,242) --
Distributions to Realized gain on investments--net (7,287,890) (6,621,521)
Shareholders ------------ ------------
(Note 1g): Net decrease in net assets resulting from dividends and
distributions to shareholders (14,150,132) (6,621,521)
------------ ------------
Beneficial Net increase (decrease) in net assets derived from
Interest beneficial interest transactions 8,787,087 (59,817,607)
Transactions ------------ ------------
(Note 4):
Net Assets: Total increase (decrease) in net assets 21,906,640 (75,409,778)
Beginning of period 197,077,135 272,486,913
------------ ------------
End of period $218,983,775 $197,077,135
============ ============
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
The following per share data and ratios have For the For the Period
been derived from information provided in the Six Months Sept. 14,
financial statements. Ended 1992++ to
April 30, For the Year Ended October 31, Oct. 31,
Increase (Decrease) in Net Asset Value: 1996++++ 1995++++ 1994++++ 1993++++ 1992++++
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 12.28 $ 12.83 $ 11.74 $ 9.60 $ 10.00
Operating -------- -------- -------- -------- --------
Performance: Investment loss--net (.05) (.05) (.12) (.08) (.02)
Realized and unrealized gain (loss)
on investments--net 1.70 (.18) 1.26 2.22 (.38)
-------- -------- -------- -------- --------
Total from investment operations 1.65 (.23) 1.14 2.14 (.40)
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.44) -- -- -- --
Realized gain on investments--net (.46) (.32) (.05) -- --
-------- -------- -------- -------- --------
Total dividends and distributions (.90) (.32) (.05) -- --
-------- -------- -------- -------- --------
Net asset value, end of period $ 13.03 $ 12.28 $ 12.83 $ 11.74 $ 9.60
======== ======== ======== ======== ========
<PAGE>
Total Investment Based on net asset value per share 14.16%+++ (1.68%) 9.74% 22.29% (4.00%)+++
Return: ======== ======== ======== ======== ========
Ratios to Expenses, net of reimbursement 2.36%* 2.35% 2.27% 2.76% 3.50%*
Average ======== ======== ======== ======== ========
Net Assets: Expenses 2.36%* 2.35% 2.27% 2.76% 4.45%*
======== ======== ======== ======== ========
Investment loss--net (.75%)* (.41%) (.56%) (.86%) (2.77%)*
======== ======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $218,984 $197,077 $272,487 $175,756 $ 16,636
Data: ======== ======== ======== ======== ========
Portfolio turnover 16.32% 17.31% 24.64% 32.54% --
======== ======== ======== ======== ========
Average commission rate paid+++++ $ .0349 -- -- -- --
======== ======== ======== ======== ========
<FN>
*Annualized.
++Commencement of Operations.
++++Based on average shares outstanding during the period.
+++Aggregate total investment return.
+++++For fiscal years beginning on or after September 1, 1995, the
Fund is required to disclose its average commission rate per share
for purchases and sales of equity securities.
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 management investment company. These unaudited
financial statements reflect all adjustments which are, in the
opinion of management, necessary to a fair statement of the results
for the interim period presented. All such adjustments are of a
normal recurring nature. The following is a summary of significant
accounting policies followed by the Fund.
<PAGE>
(a) Valuation of investments--Portfolio securities, including
depositary receipts, which are traded on stock exchanges are valued
at the last sale price on the exchange on which such securities are
traded, as of the close of business on the day the securities are
being valued or, lacking any sales, at the last available bid price.
Securities traded in the over-the-counter market are valued at the
last available bid price prior to the time of valuation. In cases
where securities are traded on more than one exchange, the
securities are valued on the exchange designated by or under the
authority of the Board of Trustees as the primary market. Securities
which are traded both in the over-the-counter market and on a stock
exchange are valued according to the broadest and most
representative market. Options written are valued at the last sale
price in the case of exchange-traded options or, in the case of
options traded in the over-the-counter market, the last asked price.
Options purchased are valued at the last sale price in the case of
exchange-traded options or, in the case of options traded in the
over-the-counter market, the last bid price. Short-term securities
are valued at amortized cost, which approximates market value. Other
investments, including futures contracts and related options, are
stated at market value. Securities and assets for which market
quotations are not available are valued at fair value as determined
in good faith by or under the direction of the Fund's Board of
Trustees.
(b) Foreign currency transactions--Transactions denominated in
foreign currencies are recorded at the exchange rate prevailing when
recognized. Assets and liabilities denominated in foreign currencies
are valued at the exchange rate at the end of the period. Realized
and unrealized gains/losses on 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.
* 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.
<PAGE>
* Foreign currency options and futures--The Fund may 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
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.
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.
<PAGE>
(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.
(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 net 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.
<PAGE>
The Fund has an Administrative Agreement with Princeton
Administrators, L.P. (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.
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, 1996, MLFD earned $1,020,201 under the
Plan, all of which was paid to MLPF&S pursuant to the agreement.
Merrill Lynch Financial Data Services, Inc. ("MLFDS"), a wholly-
owned subsidiary of ML & Co., acts as the Fund's transfer agent.
In addition, MLPF&S received $58,312 in commissions on the execution
of portfolio security transactions for the Fund for the six months
ended April 30, 1996.
<PAGE>
Certain officers and/or trustees of the Fund are officers and/or
directors of FAM, the Investment Adviser (including their affiliated
companies), MLPF&S, MLFDS, MLFD, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended April 30, 1996 were $37,998,763 and
$31,434,229, respectively.
Net realized and unrealized gains (losses) as of April 30, 1996,
were as follows:
Realized Unrealized
Gains (Losses) Gains (Losses)
Long-term investments $ 6,446,586 $20,170,716
Short-term investments 8 --
Foreign currency transactions (26,070) 8,454
Forward foreign exchange
contracts 15,688,087 (399,326)
----------- -----------
Total $22,108,611 $19,779,844
=========== ===========
As of April 30, 1996, net unrealized appreciation for Federal income
tax purposes aggregated $20,170,716, of which $28,259,091 related to
appreciated securities and $8,088,375 related to depreciated
securities. The aggregate cost of investments at April 30, 1996
for Federal income tax purposes was $198,652,487.
4. Beneficial Interest Transactions:
Transactions in shares of beneficial interest were as follows:
<PAGE>
For the Six Months Ended Dollar
April 30, 1996 Shares Amount
Shares sold 2,367,392 $29,431,942
Shares issued to shareholders in
reinvestments of dividends and
distributions 1,089,865 12,925,796
----------- -----------
Total issued 3,457,257 42,357,738
Shares redeemed (2,704,044) (33,570,651)
----------- -----------
Net increase 753,213 $ 8,787,087
=========== ===========
For the Year Ended Dollar
October 31, 1995 Shares Amount
Shares sold 1,857,251 $ 21,980,972
Shares issued to shareholders in
reinvestments of distributions 501,369 5,855,982
----------- ------------
Total issued 2,358,620 27,836,954
Shares redeemed (7,550,747) (87,654,561)
----------- ------------
Net decrease (5,192,127) $(59,817,607)
=========== ============
5. Commitments:
At April 30, 1996, the Fund had 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 $779,000 and $1,244,000,
respectively.
