MERRILL LYNCH
GLOBAL SMALLCAP
FUND, INC.
FUND LOGO
Quarterly Report
March 31, 1995
This report is not authorized for use as an offer of sale
or 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 re-
port 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
Global SmallCap
Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
<PAGE>
MERRILL LYNCH GLOBAL SMALLCAP FUND, INC.
Officers and
Directors
Arthur Zeikel, President and Director
Donald Cecil, Director
Edward H. Meyer, Director
Charles C. Reilly, Director
Richard R. West, Director
Edward D. Zinbarg, Director
Terry K. Glenn, Executive Vice President
Norman R. Harvey, Senior Vice President
Andrew John Bascand, Vice President
Donald C. Burke, Vice President
Ken Chiang, Vice President
Adrian Holmes, Vice President
Grace Pineda, Vice President
James Russell, Vice President
Dennis W. Stattman, Vice President
Gerald M. Richard, Treasurer
Robert Harris, Secretary
Custodian
Brown Brothers Harriman & Co.
40 Water Street
Boston, Massachusetts 02109
Transfer Agent
Financial Data Services, Inc.
Transfer Agency Mutual Fund Operations
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
Merrill Lynch
Global SmallCap
Fund., Inc.
Management Team
Andrew John Bascand--Senior Portfolio Manager/Asset
Allocator. As the Fund's Asset Allocator, Mr. Bascand is
primarily responsible for determining the allocation of the
Fund's assets among equity markets in the United States,
Europe, the emerging markets and the Pacific Basin.
Kenneth Chiang--Co-Portfolio Manager--Emerging Markets
Investments. Mr. Chiang is primarily responsible for the
Fund's investments in emerging markets in Asia.
Adrian Holmes--Co-Portfolio Manager--European
Investments. Mr. Holmes is primarily responsible for the
Fund's European investments.
<PAGE>
Grace Pineda--Co-Portfolio Manager--Emerging Markets
Investments. Ms. Pineda is primarily responsible for
investments in emerging markets in Europe and Latin
America.
James Russell--Co-Portfolio Manager--Japanese
Investments. Mr. Russell is primarily responsible for
the Fund's Japanese investments.
Dennis Stattman--Co-Portfolio Manager--US Investments.
Mr. Stattman is primarily responsible for the Fund's
investments in the United States.
DEAR SHAREHOLDER
Global small cap stocks produced
positive returns in US dollar terms
during the March quarter. A sharp
recovery in international equity and
bond markets in the month of March
followed price weakness experienced
earlier in the quarter. The weakness
of the US dollar also boosted returns.
The Salomon Brothers Extended
Market Index (SEMI), an unmanaged
global small cap index which provides
returns from stocks in 22 markets,
rose 2.8% in US dollar terms during
the quarter ended March 31, 1995.
Among the major markets, returns
were highest in the United States and
Hong Kong, while significant currency
appreciation lifted the US dollar-
based returns for most European
markets. Japanese small cap issues
significantly underperformed during
the March quarter, declining 4.1% in
US dollar terms. Over the same
period, among emerging countries,
the weakest equity markets were
those in Latin America, largely
reflecting significant price and
currency depreciation in January
in Mexico.
<PAGE>
Total returns for Merrill Lynch Global
SmallCap Fund, Inc.'s Class A, B, C
and D Shares for the three-month
period ended March 31, 1995 were
-7.15%, -7.49%, -7.49% and -7.26%,
respectively. (Results do not reflect
the deduction of sales charges, and
would be lower if sales charges were
included. Complete performance
information, including aggregate total
returns, can be found on pages 5 and
6 of this report to shareholders.)
During the first quarter of 1995, the
Fund's significant underperformance
relative to the SEMI benchmark
largely reflected the combination of
an underweighted stance in the US
equity market, small overweighted
positions in Latin America and Japan,
and significant stock underperform-
ance in Japan and Latin America.
During the March quarter, we retained
an underweighted stance toward US
equities. The Fund's underweighted
US equity position remains our most
important investment strategy. We
continue to view US small caps as
expensive relative to Japanese and
European small caps. Despite evi-
dence of a slowdown in US eco-
nomic growth, we anticipate tighter
US monetary conditions by year-end
which will adversely impact US
stock prices.
Portfolio Matters
As of March 31, 1995, we had 79% of
net assets invested in equities, up
from 70% three months earlier. We
had 25% invested in Japanese small
cap equities, futures and options,
slightly down from 26% as of Decem-
ber 31, 1994. In addition, we had 19%
invested in Continental Europe, 9.5%
invested in the United Kingdom and
5% in the developed Pacific Rim and
emerging Asian markets. These posi-
tions remained largely close to
neutral, or benchmark market capi-
talization, weightings. The Fund had
only 19% invested in US small caps,
representing a major underweighting
relative to the SEMI benchmark. A
defensive stance is reflected
in 14% cash and 6% bond exposures.
<PAGE>
Economic Outlook
In our most recent shareholder letter,
we highlighted the strength of the
global economic environment at the
end of 1994, led by a buoyant US
economy. We also noted how consensus
expectations for global economic
growth and interest rates had risen
fairly steadily over the course of 1994.
Against this background of robust
economic growth, a number of central
banks, notably the US Federal Reserve
Board, raised interest rates over the
course of last year.
The first three months of 1995 have
been in marked contrast to the pat-
tern of 1994. During the first quarter
of 1995, expectations for global eco-
nomic growth flattened out, and in
the case of Japan probably fell, while
interest rate expectations declined
in the major economies. The impetus
for the change in growth and interest
rate expectations came initially from
the United States. A range of US eco-
nomic indicators released in the first
few months of 1995 pointed to a
slowing of the growth rates of both US
demand and output from the rapid
pace of the fourth quarter. Weaker
US economic activity was most evi-
dent in the interest rate-sensitive
areas of the economy, such as the
housing and auto sectors. Perceptions
of slowing growth were reinforced by
trade data which showed a collapse
of exports to Mexico.
The apparent slowing in the US econ-
omy to a more sustainable rate, the
so-called "soft landing" scenario, re-
sulted in a significant reassessment by
investors of the outlook for US interest
rates. Between the end of December
1994 and the end of March 1995, expec-
tations for US interest rates fell by
more than 150 basis points (1.50%).
<PAGE>
A reassessment of the US economic
outlook contributed to the leveling
out of investors' expectations for
growth in the rest of the world. The
key factor causing the lower expec-
tations for other world economies
was the collapse of the US dollar that
accompanied lower US interest rate
expectations during the first quarter
of 1995.
The big shift in currencies has had a
negative impact on growth expecta-
tions in the core European countries,
specifically Germany and Switzer-
land, and also in Japan, because their
competitive positions have been
eroded. In effect, economies experi-
encing rising exchange rates had
undergone a tightening of monetary
conditions. The most significant
downgrade to consensus growth
expectations has occurred in Japan.
The downgrade reflects the fact that
the consensus has consistently
assumed a weaker yen in making eco-
nomic forecasts. The 20% rise in the
yen since the start of the year has
prompted most forecasters to reduce
Japanese 1995 growth forecasts.
The other major shift in consensus
expectations for growth has been in
Latin America. Following the collapse
of the Mexican peso, there has been
a dramatic downgrading of growth
expectations across the region. Apart
from Mexico, the most significant
reduction in growth expectations has
been in Argentina. Investors became
uncertain as to whether the Argentine
authorities were committed to their
exchange rate parity with the US
dollar, and capital flight ensued.
Argentine authorities were forced
to raise interest rates aggressively
and tighten fiscal policy to maintain
the currency peg with the US dollar.
<PAGE>
Our opinion is that the risk to the
consensus views on global economic
growth remains tilted to the upside.
The slowing in the US economy in
the first quarter largely reflects an
inevitable cooling from the unsus-
tainable pace of expansion in the
fourth quarter of 1994. We believe the
consensus is too complacent in
believing the soft landing scenario in
the United States. In Europe, there
has also been a slowing from a
frenetic rate of growth in the second
half of 1994, but growth momentum
across Europe also remains intact.
The outlook for Japan is more un-
certain. If the yen maintains its
current level, then the pessimistic
growth outlook currently expected
by the consensus would probably be
warranted. However, we anticipate a
significant policy response from the
Japanese authorities which would
result in a weakened yen and, ulti-
mately, would boost Japanese growth
expectations.
Turning to the outlook for inflation,
the published consensus on infla-
tionary expectations has not changed
materially over the last three months.
However, the currency shifts noted
above will inevitably feed into lower
inflationary expectations in core
Europe and Japan, while those coun-
tries experiencing currency deprecia-
tion, notably the United States and
peripheral European countries, will
experience rising inflationary expec-
tations. Our most significant view
versus the consensus on inflation
remains in the United States, where
we expect inflation to rise faster than
generally expected.
<PAGE>
In regard to monetary policy, the
appreciation of the Deutschemark
and a more favorable inflationary
outlook in Germany prompted the
Bundesbank to cut interest rates, a
move followed by a number of other
European central banks. In Japan,
interest rate expectations fell sig-
nificantly as the yen firmed. The
Bank of Japan eased money market
interest rates in response to the
stronger yen, as authorities became
increasingly concerned that the 20%
rise in the yen (versus the US dollar)
since the end of the year would
materially damage growth prospects
in Japan.
Not surprisingly, interest rate expec-
tations have come down in most
major economies over the last three
months, the first time expectations
have eased since the US Federal
Reserve Board began raising interest
rates in early 1994. While the decline
is probably justified in Japan, we
continue to believe that consensus
expectations for US interest rates are
too optimistic. The US market is now
pricing in no further interest rate
increases in this cycle, an unrealistic
expectation in our view. In Europe,
the consensus continues to look for
higher interest rates over the next 12
months, albeit from lower levels than
three months ago. We broadly concur
with the consensus view on European
interest rates.
In Conclusion
The economic backdrop of steady
growth and relatively low inflation is
supportive of equities. However, the
uncertainties generated by the weak-
ness of the US dollar and possible
rising interest rates in the United
States and Europe are likely to nega-
tively impact equity markets from
time to time. Central banks and
governments have made preemptive
strikes against inflation in the last
year or so by raising interest rates
ahead of rising inflation. This pre-
emptive policy action should enable
a steady and enduring global eco-
nomic expansion. Positive and sus-
tainable economic growth in an
environment of deregulation and
falling trade barriers is an excellent
backdrop for small cap issues.
<PAGE>
During the three-month period ended
March 31, 1995, the Fund suffered
from the weakness in the Latin
American and Japanese equity
markets, as well as from the decline
of the US dollar. We have retained
our exposure to these markets, and
also to the US currency, because we
believe all three offer good value on
an intermediate-term view. In par-
ticular, we continue to believe that
the business cycle position of the
Japanese economy strongly favors the
Japanese small cap sector. Various
Latin American equity markets have
been sold off indiscriminately by
investors. The US dollar looks inex-
pensive on a range of valuation
indicators. We also retain an over-
weighted stance toward Asian and
Continental European small cap
issues. The Fund remains under-
weighted in US small cap issues
because we believe the advanced
stage of the US business cycle is not
conducive to continued appreciation
of US equity prices.
We thank you for your continued
support of Merrill Lynch Global
SmallCap Fund, Inc., and we look
forward to reviewing our investment
strategy with you in our next report
to shareholders.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Andrew Bascand)
Andrew Bascand
Senior Portfolio Manager/
Asset Allocator
<PAGE>
(Kenneth Chiang)
Kenneth Chiang
Co-Portfolio Manager
Emerging Markets Investments--Asia
(Adrian Holmes)
Adrian Holmes
Co-Portfolio Manager
European Investments
(Grace Pineda)
Grace Pineda
Co-Portfolio Manager
Emerging Markets Investments--
Latin America and Europe
(James Russell)
James Russell
Co-Portfolio Manager
Japanese Investments
(Dennis Stattman)
Dennis Stattman
Co-Portfolio Manager
US Investments
May 3, 1995
<PAGE>
PERFORMANCE DATA
About Fund
Performance
Since October 21, 1994, investors have been 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 prior to October 21, 1994, your Class A
Shares were redesignated to Class D Shares on October 21, 1994,
which, in the case of certain eligible investors, were simultane-
ously 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 8 years.
*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).
Performance data for all of the Fund's shares are presented in
the "Recent Performance Results" and "Aggregate Total Return"
tables below and on page 6.
The "Recent Performance Results" table shows investment
results before the deduction of any sales charges for Class B
and Class D Shares for the since inception (August 5, 1994) and
3-month periods ended March 31, 1995 and for Class A and
Class C Shares for the since inception (October 21, 1994) and
3-month periods ended March 31, 1995. All data in this table
assume imposition of the actual total expenses incurred by each
class of shares during the relevant period.
<PAGE>
None of the past results shown should be considered a represen-
tation 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. 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.
Aggregate
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Inception (10/21/94) through 3/31/95 -11.36% -16.01%
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Inception (8/5/94) through 3/31/95 -13.55% -17.01%
[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*
Inception (10/21/94) through 3/31/95 -11.79% -12.67%
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced
to 0% after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
<PAGE>
% Return Without % Return With
Sales Charge Sales Charge**
Class D Shares*
Inception (8/5/94) through 3/31/95 -13.05% -17.62%
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
PERFORMANCE DATA (concluded)
<TABLE>
Recent
Performance
Results*
<CAPTION>
Since
Inception 3 Month
3/31/95 12/31/94 Inception++ % Change++ % Change
<S> <C> <C> <C> <C> <C>
Class A Shares $8.70 $9.37 $ 9.82 -11.36%(1) -7.15%
Class B Shares 8.64 9.34 10.00 -13.55(1) -7.49
Class C Shares 8.64 9.34 9.80 -11.79(1) -7.49
Class D Shares 8.69 9.37 10.00 -13.05(1) -7.26
Class A Shares--Total Return -11.36(1) -7.15
Class B Shares--Total Return -13.55(1) -7.49
Class C Shares--Total Return -11.79(1) -7.49
Class D Shares--Total Return -13.05(1) -7.26
<FN>
*Investment results shown do not reflect any sales charges; results shown would be
lower if a sales charge was included.
++Class A and Class C Shares commenced operations on October 21, 1994. Class B and
Class D Shares commenced operations on August 5, 1994.
(1)Percent change includes reinvestment of $0.005 per share capital gains distributions.
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
Shares Held/ Percent of
EUROPE Industries Face Amount Stocks, Bonds & Warrants Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Austria Capital Goods 15,000 Bohler Uddeholm A.G. $ 849,543 $ 849,543 0.5%
Utilities--Electric 55,000 Oesterreichische Elektrizitats AG (Verbund) 3,338,505 3,392,510 2.0
Total Investments in Austria 4,188,048 4,242,053 2.5
Belgium Building Materials 6,300 Glaverbel SA (Ordinary) 1,001,340 856,137 0.5
15,770 Terca Brick Industries 758,455 883,591 0.5
Total Investments in Belgium 1,759,795 1,739,728 1.0
Denmark Engineering & 12,500 FLS Industries A/S 901,389 1,208,252 0.7
Construction
Total Investments in Denmark 901,389 1,208,252 0.7
Finland Chemicals 140,000 Kemira OY 995,598 1,079,327 0.6
Engineering & 75,000 Valmet Corporation 'A' 1,502,031 1,449,842 0.9
Construction
Holding Company 29,000 Fiskars OY AB 1,479,062 1,388,167 0.8
Total Investments in Finland 3,976,691 3,917,336 2.3
France Advertising 14,500 Euro RSCG Worldwide, S.A. 1,314,199 1,681,203 1.0
Holding Company 3,722 Societe EuraFrance S.A. 1,182,561 1,100,175 0.6
Total Investments in France 2,496,760 2,781,378 1.6
Germany Machinery & 39,100 Kloeckner Werke AG 3,734,471 2,528,186 1.4
Engineering
Total Investments in Germany 3,734,471 2,528,186 1.4
<PAGE>
Ireland Banking & Finance 700,000 Anglo Irish Bank Corp. PLC 607,595 550,635 0.3
Foods 157,100 Greencore PLC 984,094 1,095,642 0.6
Total Investments in Ireland 1,591,689 1,646,277 0.9
Italy Building & 434,600 Fochi Filippo S.p.A. (Ordinary) 1,346,030 153,479 0.1
Construction 250,000 Fochi Filippo S.p.A. (Warrants) (b) 138,508 1,471 0.0
------------ ------------ ------
1,484,538 154,950 0.1
Consumer Goods 205,000 Merloni Elettrodomestici S.p.A. 337,062 348,102 0.2
Diversified 1,850,000 Compagnie Industriali Riunite S.p.A.
Companies (CIR) 2,071,370 1,502,649 0.9
Total Investments in Italy 3,892,970 2,005,701 1.2
Netherlands Capital Goods 13,000 Ahrend Groep NV 1,340,569 1,670,921 1.0
Retail Trade 26,250 Deboer Winkelbedrijven 1,044,419 1,247,721 0.7
Total Investments in the Netherlands 2,384,988 2,918,642 1.7
Spain Chemicals 61,500 Aragonesas 262,311 274,198 0.1
Forest Products 22,000 Empresa National de Celulosas S.A. 492,992 486,957 0.3
Real Estate 98,000 Vallehermoso S.A. 1,603,094 1,355,731 0.8
Total Investments in Spain 2,358,397 2,116,886 1.2
Sweden Engineering & 72,900 Svedala Industri AB 1,742,255 1,717,789 1.0
Construction
Total Investments in Sweden 1,742,255 1,717,789 1.0
Switzerland Engineering & 1,160 Daetwyler Holdings AG 2,025,613 1,992,952 1.1
Construction 1,725 Swheizerische Industrie--Gasellschaft
Holdings AG (SIG) 1,802,127 1,595,815 0.9
------------ ------------ ------
3,827,740 3,588,767 2.0
Metal Fabricating 1,300 Georg Fisher AG 1,486,977 1,488,987 0.9
Total Investments in Switzerland 5,314,717 5,077,754 2.9
<PAGE>
Turkey Beverages 163,500 Erciyas Biracilik Ve Malt Sanayii A.S. 120,909 171,695 0.1
Building & 258,500 Alarko Holdings A.S. 190,265 302,303 0.2
Construction
Building Materials 53,400 Cimentas Izmir Cimento Fabrikasi T.A.S. 41,435 31,862 0.0
Insurance 477,000 Aksigorta A.S. 119,250 125,227 0.1
Steel 795,000 Izmir Demir Celik Sanayii A.S. 61,111 57,870 0.0
Total Investments in Turkey 532,970 688,957 0.4
United Automobile Parts 195,000 Croda International PLC (Ordinary) 1,118,968 1,038,669 0.6
Kingdom
Brewery 467,000 Boddington Group PLC 1,845,711 1,912,865 1.1
Building & 450,000 Amec PLC 820,536 517,271 0.3
Construction
Diversified 889,000 Howden Group PLC 1,262,630 1,165,826 0.7
Food & Beverage 667,000 Hazlewood Foods PLC 1,271,988 982,684 0.5
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
EUROPE Shares Held/ Percent of
(concluded) Industries Face Amount Stocks, Bonds & Warrants Cost Value Net Assets
<S> <S> <S> <C> <S> <C> <C> <C>
United Foreign United Kingdom Gilt:
Kingdom Government Pound 1,100,000 10.50% due 2/21/1997 $ 1,791,649 $ 1,866,606 1.1%
(concluded) Obligations Sterling
Pound 2,000,000 8.75% due 9/01/1997 3,305,189 3,293,655 1.9
Sterling ------------ ------------ ------
5,096,838 5,160,261 3.0
Health/ 930,000 London International Group (Ordinary) 1,333,025 1,490,613 0.8
Personal Care
Manufacturing 260,000 Low & Bonar PLC (Ordinary) 1,718,738 1,839,508 1.1
Media/Publishing 300,000 International Business Communications
(Ordinary) 1,043,116 1,180,251 0.7
Transportation 230,000 Ocean Group PLC (Ordinary) 977,405 1,163,656 0.7
Total Investments in the United Kingdom 16,488,955 16,451,604 9.5
Total Investments in Europe 51,364,095 49,040,543 28.3
<PAGE>
LATIN
AMERICA
Argentina Beverages 19,000 Buenos Aires Embotelladora, S.A.
(BAESA) (ADR) (a) 495,140 494,000 0.3
Foreign Republic of Argentina, Floating Rate Bonds:
Government Ars 250,000 7.312% due 3/31/2005 125,625 134,687 0.1
Obligations Ars 1,300,000 7.125% due 3/31/2023 759,250 682,500 0.4
Ars 1,000,000 Republic of Argentina 'L', 5% due
3/31/2023 402,500 407,500 0.2
------------ ------------ ------
1,287,375 1,224,687 0.7
Total Investments in Argentina 1,782,515 1,718,687 1.0
Brazil Appliances 36,800,000 Refrigeracao Parana S.A. (Preferred) 120,025 70,895 0.0
Automotive 14,700 Capco Automotive Products Corp. S.A.
(ADR) (a) 124,950 123,112 0.1
Foreign BrL 1,500,000 Republic of Brazil, 6.687% due 4/15/2024 828,750 753,750 0.4
Government
Obligations
Total Investments in Brazil 1,073,725 947,757 0.5
Chile Banking 57,000 Banco Osorno y La Union S.A. (ADR) (a) 769,500 726,750 0.4
Beverages 10,700 Vina Concha y Toro S.A. (ADR) (a) 198,592 187,250 0.1
Total Investments in Chile 968,092 914,000 0.5
Colombia Paper 185,000 Papeles Nacionales C.A. (ADR) (a) 3,330,000 1,341,250 0.8
Retail 27,000 Gran Cadena de Almacenes Colombianos S.A.
(CADENALCO) (ADR) (a) 472,500 411,750 0.2
Total Investments in Colombia 3,802,500 1,753,000 1.0
Mexico Broadcasting & 253,000 Grupo Fernandez Editores, S.A. de C.V.--BCP 404,963 133,744 0.1
Publishing
Leisure 30,000 Grupo Posadas, S.A. de C.V. (ADR) (a) 536,850 157,500 0.1
Paper & Forest 75,000 Kimberly-Clark de Mexico, S.A. de C.V. 567,404 615,639 0.4
Products
Total Investments in Mexico 1,509,217 906,883 0.6
Venezuela Building 20,000 Corimon C.A. S.A.C.A. (ADR) (a) 91,000 142,500 0.1
Materials
Total Investments in Venezuela 91,000 142,500 0.1
Total Investments in Latin America 9,227,049 6,382,827 3.7
MIDDLE EAST/
AFRICA
South Africa Diversified 37,616 Morgan Stanley Africa Investment Fund 413,776 432,584 0.2
42,000 New South Africa Fund, Inc. 582,635 598,500 0.4
42,000 Southern Africa Fund, Inc. 592,838 588,000 0.3
Total Investments in South Africa 1,589,249 1,619,084 0.9
Total Investments in the Middle East/
Africa 1,589,249 1,619,084 0.9
<PAGE>
NORTH
AMERICA
Canada Foreign C$ 2,500,000 Canadian Government Bond, 8% due 3/15/1997 1,720,355 1,790,985 1.0
Government
Obligations
Insurance 52,300 Cambior Inc. 787,929 601,450 0.4
Leisure 116,384 Four Seasons Hotels Ltd. 1,319,172 1,259,162 0.7
Utilities--Gas 131,400 British Columbia Gas Inc. 1,425,996 1,304,131 0.8
Total Investments in Canada 5,253,452 4,955,728 2.9
United Aerospace 110,000 UNC, Inc. 637,625 605,000 0.3
States
Apparel 115,000 Farah, Inc. 1,148,408 876,875 0.5
10,000 Jones Apparel Group, Inc. 221,850 270,000 0.1
15,000 Marisa Christina, Inc. 168,950 174,375 0.1
------------ ------------ ------
1,539,208 1,321,250 0.7
Banking & Finance 7,500 Bankers Corp. 113,738 123,750 0.1
59,000 Charter One Financial, Inc. 1,225,870 1,187,375 0.7
50,000 The Co-Operative Bank of Concord 833,688 800,000 0.4
66,100 Roosevelt Financial Group, Inc. 1,071,451 1,032,812 0.6
------------ ------------ ------
3,244,747 3,143,937 1.8
Biotechnology 40,000 Cephalon, Inc. 294,703 270,000 0.1
15,000 Cor Therapeutics, Inc. 168,375 191,250 0.1
10,000 Genetic Therapy, Inc. 100,050 100,000 0.0
------------ ------------ ------
563,128 561,250 0.2
Building & 12,000 Blount, Inc. (Class A) 523,696 534,000 0.3
Building 16,600 Oakwood Homes Corporation 436,073 437,825 0.3
Materials 51,000 Redman Industries, Inc. 913,875 981,750 0.6
15,300 Ryland Group, Inc. 206,580 219,937 0.1
39,800 Washington Homes, Inc. 199,396 139,300 0.1
------------ ------------ ------
2,279,620 2,312,812 1.4
Business Services 119,600 Applied Bioscience International, Inc. 693,407 642,850 0.4
Computers 15,000 Storage Technology Corporation 295,425 286,875 0.2
20,000 Stratus Computer, Inc. 650,070 625,000 0.4
------------ ------------ ------
945,495 911,875 0.6
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
NORTH AMERICA Shares Held/ Percent of
(concluded) Industries Face Amount Stocks, Bonds & Warrants Cost Value Net Assets
<S> <S> <S> <C> <S> <C> <C> <C>
United Data Processing 15,000 Cognos, Inc. $ 181,875 $ 326,250 0.2%
States 16,300 Landmark Graphics Corp. 294,474 297,475 0.2
(concluded) 25,000 SHL Systemhouse, Inc. 125,000 146,875 0.1
20,000 Sterling Software, Inc. 639,468 697,500 0.4
40,000 Symantec Corp. 691,876 915,000 0.5
------------ ------------ ------
1,932,693 2,383,100 1.4
Electrical 20,000 Comptek Research, Inc. 238,700 270,000 0.2
Equipment
Electronics 20,000 VLSI Technology, Inc. 235,000 357,500 0.2
Healthcare-- 60,000 Beverly Enterprises, Inc. 810,553 870,000 0.5
Products/ 50,000 Charter Medical Corp. 874,658 931,250 0.5
Services 53,800 Ramsay Health Care, Inc. 330,777 383,325 0.2
------------ ------------ ------
2,015,988 2,184,575 1.2
Home Furnishing 30,000 Crown Crafts, Inc. 447,788 510,000 0.3
Insurance 54,000 Ace, Ltd. 1,236,340 1,363,500 0.8
63,700 Capital Guaranty Corp. 957,847 1,090,862 0.6
50,000 First Colony Corp. 1,052,037 1,131,250 0.7
22,500 Harleysville Group, Inc. 459,037 540,000 0.3
30,000 PXRE Corp. 705,200 720,000 0.4
56,000 PartnerRe Holdings Ltd. 1,141,426 1,176,000 0.7
47,500 Security-Connecticut Corp. 1,003,162 1,181,562 0.7
------------ ------------ ------
6,555,049 7,203,174 4.2
Natural Resources 40,000 Tom Brown, Inc. 478,300 610,000 0.4
100,000 Coho Resources, Inc. 466,689 487,500 0.3
51,600 Plains Resources, Inc. 322,500 399,900 0.2
50,000 Total Petroleum of North America Ltd. 613,000 612,500 0.4
55,000 TransTexas Gas Corp. 605,000 605,000 0.3
------------ ------------ ------
2,485,489 2,714,900 1.6
Real Estate 27,000 Carr Realty Corp. 539,996 469,125 0.3
Investment 50,000 Crown American Realty Trust 726,750 650,000 0.4
Trust ------------ ------------ ------
1,266,746 1,119,125 0.7
Restaurants 80,000 TPI Enterprises, Inc. 456,270 430,000 0.2
<PAGE>
Retailing 55,000 J. Baker, Inc. 970,300 818,125 0.5
70,000 Catherines Stores Corp. 596,740 577,500 0.3
40,000 Hancock Fabrics, Inc. 371,281 405,000 0.2
8,300 OfficeMax, Inc. 157,700 212,687 0.1
20,000 Pier 1 Imports, Inc. 166,000 185,000 0.1
15,000 Rex Stores Corp. 195,900 210,000 0.1
165,000 Service Merchandise Co., Inc. 890,012 825,000 0.5
------------ ------------ ------
3,347,933 3,233,312 1.8
Textiles 75,000 Burlington Industries, Inc. 873,330 853,125 0.5
Transportation 11,300 Kirby Corp. 185,715 197,750 0.1
US Government US$ 1,800,000 US Treasury Note, 7.50% due 12/31/1996 1,793,813 1,822,212 1.1
Obligations
Utilities-- 10,000 American Water Works Company, Inc. 276,850 290,000 0.2
Water
Total Investments in the United States 32,014,594 33,067,747 19.1
Total Investments in North America 37,268,046 38,023,475 22.0
PACIFIC
BASIN
Australia Insurance 107,000 QBE Insurance Group 402,707 390,213 0.2
Merchandising 33,300 Amway Asia Pacific Ltd. 1,021,139 1,240,425 0.7
Total Investments in Australia 1,423,846 1,630,638 0.9
Hong Kong Broadcasting & 1,347,000 Ming Pao Enterprise Corp. Ltd. 1,015,477 818,845 0.5
Publishing
Financial US$ 920,000 Goldlion Capital Corp., 4.875% due
Services 2/01/1999 698,199 708,400 0.4
2,860,000 Winton Holdings Ltd. 1,040,875 717,636 0.4
------------ ------------ ------
1,739,074 1,426,036 0.8
Machinery 1,347,000 Beiren Printing Machinery Holdings Ltd.
(Class H) 687,070 290,951 0.2
Total Investments in Hong Kong 3,441,621 2,535,832 1.5
<PAGE>
Indonesia Banking-- 713,000 PT Bank Bali 1,669,504 1,338,668 0.8
International
Consumer--Goods 17,000 PT Wicaksana Overseas International 29,430 38,757 0.0
Telecommunications 57,100 PT Supreme Cable Manufacturing Company
(Foreign) 160,879 158,257 0.1
Telecommunications 654,000 PT Kabelmetal Indonesia 920,457 1,037,863 0.6
& Equipment
Total Investments in Indonesia 2,780,270 2,573,545 1.5
Japan Apparel 100,000 Goldwin Inc. 1,289,360 907,003 0.5
Automobile Parts 25,300 Murakami Corp. 705,739 435,706 0.2
71,000 Sanoh Industrial 963,400 717,336 0.4
110,000 Showa Corp. 1,098,685 890,356 0.5
79,000 Yamakawa Industrial Co. 976,098 890,677 0.5
------------ ------------ ------
3,743,922 2,934,075 1.6
Banks 17,000 Bank of the Ryukyus, Ltd. 988,951 897,819 0.5
Beverages 79,000 Hokkaido Coca-Cola Bottling Co., Ltd. 1,298,058 1,106,544 0.6
74,800 Sanyo Coca-Cola Bottling Co., Ltd. 1,130,306 1,133,594 0.7
------------ ------------ ------
2,428,364 2,240,138 1.3
Chemicals 70,000 Katakura Chikkarin Co., Ltd. 830,212 618,829 0.4
Computer Services 37,800 TKC Corp. 1,253,015 946,085 0.5
Construction 62,590 Japan Foundation Engineering 1,385,819 1,430,013 0.8
58,400 Tsuchiya Home Co. 1,667,047 1,039,265 0.6
25,200 USK Corp. 423,913 486,062 0.3
117,000 Yondenko Corp. 1,136,840 1,175,373 0.7
------------ ------------ ------
4,613,619 4,130,713 2.4
Consumer Electricals 59,000 Roland Corp. 1,429,975 1,185,419 0.7
Electrical Equipment 84,000 Energy Support Corp. 642,525 549,713 0.3
38,000 Maspro Denkoh Corp. 1,272,483 894,374 0.5
26,000 Shinmei Electric Co. 1,340,491 564,179 0.3
52,000 Sukegawa Electric Co. 682,343 582,090 0.4
------------ ------------ ------
3,937,842 2,590,356 1.5
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
PACIFIC BASIN Shares Held/ Percent of
(concluded) Industries Face Amount Stocks, Bonds & Warrants Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Japan Engineering & 24,000 Kyowa Engineering Consulting $ 479,335 $ 363,720 0.2%
(concluded) Construction
Foods/Food 33,000 Ariake Japan Co. Ltd. 1,408,764 1,212,400 0.7
Processing 108,000 Fuji Oil Co., Ltd. 983,191 908,886 0.5
------------ ------------ ------
2,391,955 2,121,286 1.2
Health Services 40,000 Kanto Biomedical Laboratory 845,365 619,977 0.4
62,000 SRL Inc. 1,416,697 925,373 0.5
------------ ------------ ------
2,262,062 1,545,350 0.9
Industrials 22,000 Roki Techno Co., Ltd. 757,111 565,786 0.3
Iron & Steel 164,000 Nippon Chutesukan 1,089,881 941,447 0.5
Leasing 56,000 Marufuji Sheet Piling Co., Ltd. 617,486 433,984 0.2
51,700 Nissho Iwai Steel Leasing Co. 624,366 445,178 0.3
------------ ------------ ------
1,241,852 879,162 0.5
Machinery 46,640 Giken Seisakusho Co. Inc. 1,454,121 926,374 0.5
Metal Fabrication 115,000 Mory Industries Inc. 953,698 792,193 0.5
86,000 Toyo Kohan Co., Ltd. 775,891 696,096 0.4
------------ ------------ ------
1,729,589 1,488,289 0.9
Packaging 41,800 Chuo Kagaku Co. Ltd. 1,834,309 959,816 0.6
Paper 109,000 Tomoku Co., Ltd. 859,183 619,460 0.4
Pharmaceuticals 17,600 Towa Pharmaceutical Co. 1,335,217 838,576 0.5
Pollution Control 107,000 Organo Corp. 1,254,931 1,068,772 0.6
Real Estate 53,000 Keihanshin Real Estate Co. Ltd. 525,507 432,032 0.3
56,000 TOC Corp. 596,958 588,289 0.3
------------ ------------ ------
1,122,465 1,020,321 0.6
<PAGE>
Restaurants 36,000 Aim Services Co., Ltd. 1,152,053 694,374 0.4
38,500 Mos Food Services, Inc. 1,393,549 1,100,631 0.6
74,800 Ohsho Food Service Corp. 2,066,844 1,717,566 1.0
------------ ------------ ------
4,612,446 3,512,571 2.0
Retail Specialty 60,000 ADO Electric Industrial Co., Ltd. 1,956,905 1,239,954 0.7
50,000 Arcland Sakamoto 964,197 815,155 0.5
91,000 Daika Corporation 1,444,684 835,821 0.5
53,900 Home Wide Corp. 1,078,769 674,524 0.4
34,800 Nitori Co. 1,257,950 918,944 0.5
------------ ------------ ------
6,702,505 4,484,398 2.6
Retail Stores 119,000 Sotetsu Rosen Co., Ltd. 1,112,252 1,052,009 0.6
Services 63,800 Ichinen Co., Ltd. 1,690,116 1,706,705 1.0
Textiles 77,000 Komatsu Seiren Co., Ltd. 1,179,255 990,126 0.6
Trading 31,000 Japan CBM Corp. 1,200,936 711,825 0.4
Trucking 108,000 Nippon Konpo Unyu Soko 1,045,185 1,005,603 0.6
70,000 Tonami Transportation Co., Ltd. 558,383 486,223 0.3
------------ ------------ ------
1,603,568 1,491,826 0.9
Total Investments in Japan 56,428,349 43,738,256 25.2
Malaysia Broadcasting 178,000 Sistem Televisyen Malaysia BHD 536,830 373,107 0.2
Foods 92,000 Nestle (Malaysia) BHD 600,581 607,633 0.3
Newspaper/ 307,000 New Straits Times Press BHD 1,258,675 831,699 0.5
Publishing
Total Investments in Malaysia 2,396,086 1,812,439 1.0
New Zealand Broadcasting & 229,000 Independent News Ltd. 711,948 742,249 0.4
Publishing
Electronics 46,500 PDL Industries Ltd. 218,223 249,675 0.2
Foreign NZ$ 5,650,000 New Zealand Government Bonds, 8%
Government due 11/15/1995 3,521,747 3,672,613 2.1
Obligations
Transportation 70,600 Ports of Auckland Ltd. 121,831 122,507 0.1
--Marine
Total Investments in New Zealand 4,573,749 4,787,044 2.8
<PAGE>
Thailand Household Products 53,000 Srithai Superware Public Company Ltd. 320,257 333,740 0.2
Telecommunications 21,800 United Communication Industry Ltd.
(Foreign) 8,682 306,431 0.2
Total Investments in Thailand 328,939 640,171 0.4
Total Investments in the Pacific Basin 71,372,860 57,717,925 33.3
SOUTHEAST
ASIA
India Hotels 61,000 East India Hotels Ltd 887,000 915,000 0.5
Tobacco 30,500 Indian Tobacco Co. Ltd. (ADR) (a) 392,687 236,375 0.2
Total Investments in India 1,279,687 1,151,375 0.7
Total Investments in Southeast Asia 1,279,687 1,151,375 0.7
SHORT-TERM Face
SECURITIES Amount Issue
Commercial US$ 2,507,000 General Electric Capital Corp., 6.25%
Paper* due 4/03/1995 2,506,130 2,506,130 1.5
Total Investments in Commercial Paper 2,506,130 2,506,130 1.5
Foreign NZ$ 6,200,000 New Zealand Treasury Bills,
Government 8.961% due 6/21/1995 3,867,662 3,980,749 2.3
Obligations*
Total Investments in Foreign
Government Obligations 3,867,662 3,980,749 2.3
US Government & US$ 7,860,000 Federal Home Loan Mortgage Corp.,
Agency 5.90% due 4/03/1995 7,857,424 7,857,424 4.5
Obligations* US Treasury Bills:
5,000,000 5.40% due 4/06/1995 4,996,250 4,996,250 2.9
85,000 5.65% due 5/25/1995 84,280 84,279 0.1
570,000 5.70% due 5/25/1995 565,127 565,161 0.3
60,000 5.71% due 5/25/1995 59,486 59,491 0.0
<PAGE>
Total Investments in US Government &
Agency Obligations 13,562,567 13,562,605 7.8
Total Investments in Short-Term Securities 19,936,359 20,049,484 11.6
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
OPTIONS Number of Contracts/ Premiums Percent of
PURCHASED Face Amount Issue Paid Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Call Options 85,839 Topix, 2nd Section, expiring September
Purchased 1995 at Yen 231.31 $ 200,000 $ 3,390 0.0%
Currency Put Yen 2,000,000 Japanese Yen, expiring January 1996
Options at Yen 86.15 66,456 63,200 0.0
Purchased Yen 17,000,000 Japanese Yen, expiring August 1995 at
Yen 99 219,250 32,300 0.0
------------ ------------ ------
285,706 95,500 0.0
Total Options Purchased 485,706 98,890 0.0
Total Investments 192,523,051 174,083,603 100.5
OPTIONS Premiums
WRITTEN Received
Currency Call Yen 7,000,000 Japanese Yen, expiring August 1995
Options at Yen 91.29 (88,550) (569,800) (0.3)
Written Yen 10,000,000 Japanese Yen, expiring August 1995
at Yen 91.38 (130,700) (556,000) (0.3)
Yen 2,000,000 Japanese Yen, expiring January 1996
at Yen 81.75 (66,456) (73,600) (0.1)
Total Options Written (285,706) (1,199,400) (0.7)
Total Investments $192,237,345 172,884,203 99.8
============
Variation Margin on Stock Index Futures Contracts** (28,297) 0.0
Unrealized Depreciation on Forward Foreign Exchange Contracts*** (1,381,743) (0.8)
Other Assets Less Liabilities 1,819,641 1.0
------------ ------
Net Assets $173,293,804 100.0%
============ ======
<PAGE>
Net Asset Class A--Based on net assets of $3,608,588 and 414,926 shares
Value: outstanding $ 8.70
============
Class B--Based on net assets of $139,908,241 and 16,189,184
shares outstanding $ 8.64
============
Class C--Based on net assets of $4,633,957 and 536,295 shares
outstanding $ 8.64
============
Class D--Based on net assets of $25,143,018 and 2,894,129
shares outstanding $ 8.69
============
<FN>
(a)American Depositary Receipt (ADR).
(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.
*Commercial Paper and certain US Government & Agency Obligations are
traded on a discount basis; the interest rates shown are the discount rates
paid at the time of purchase by the Fund.
**Stock index futures contracts purchased as of March 31, 1995 were as follows:
Number of Expiration
Contracts Issue Exchange Date Value
12 CAC 40 MATIF April 1995 $ 930,724
5 Nikkei 225 SIMEX June 1995 463,117
Total Stock Index Futures Contracts Purchased
(Total Contract Price--$1,438,236) $1,393,841
==========
The market value of pledged securities is $9,975,584.
***Forward foreign exchange contracts as of March 31, 1995 were as follows:
Foreign Expiration Unrealized
Currency Sold Date Appreciation (Depreciation)
Ats 21,193,600 July 1995 $ (191,085)
Bf 34,000,000 September 1995 (44,139)
Chf 4,116,000 July 1995 (133,297)
Fmk 16,044,000 April 1995 (193,383)
Frf 4,956,510 July 1995 (44,449)
Yen 2,580,916,250 June 1995 (1,973,222)
NLG 4,187,470 July 1995 (157,697)
Total (US$ Commitment--$41,628,953) $(2,737,272)
<PAGE> -----------
Foreign Currency Purchased
Pound Sterling 724,329 September 1995 $ 2,481
Yen 1,888,681,000 June 1995 1,353,048
Total (US$ Commitment--$21,667,980) $ 1,355,529
-----------
Total Unrealized Depreciation on Forward Foreign
Exchange Contracts--Net $(1,381,743)
===========
</TABLE>
PORTFOLIO CHANGES
For the Quarter Ended March 31, 1995
Additions
Aragonesas
Bohler Uddeholm AG
Buenos Aires Embotelladora, S.A.
(BAESA) (ADR)
Canadian Government Bond, 8%
due 3/15/1997
Corimon C.A. S.A.C.A. (ADR)
East India Hotels Ltd.
Euro RSCG Worldwide, S.A.
Goldlion Capital Corp., 4.875% due 2/01/1999
Gran Cadena de Almacenes Colombianos
S.A. (CADENALCO) (ADR)
Hancock Fabrics, Inc.
Kemira OY
Kimberly-Clark de Mexico, S.A. de C.V.
Kyowa Engineering Consulting
Marisa Christina, Inc.
New Zealand Government Bonds, 8%
due 11/15/1995
Oakwood Homes Corporation
PDL Industries Ltd.
PT Kabelmetal Indonesia
PT Supreme Cable Manufacturing Company
(Foreign)
Ports of Auckland Ltd.
QBE Insurance Group
Rex Stores Corp.
Republic of Argentina, Floating Rate Bonds:
7.312% due 3/31/2005
7.125% due 3/31/2023
Republic of Argentina 'L', 4.25%
due 3/31/2023
Republic of Brazil, 6.687% due 4/15/2024
Ryland Group, Inc.
Storage Technology Corporation
<PAGE>
Deletions
Autoliv AB
Bangkok Land Co., Ltd.
Brasmotor Group S.A. (Preferred)
Canadian Government Bond, 7.75%
due 9/15/1996
Ceval Alimentos S.A. (Preferred)
Clayton Homes, Inc.
Compania Argentina de Petroleo S.A.
Coram Healthcare Corp.
Costain Group PLC (Ordinary)
Grupo Financiero (GBM) Atlantico, S.A.
de C.V. (Class L)
Hylsamex, S.A. de C.V.--BCP
New Zealand Treasury Bonds, 7.54%
due 1/11/1995
Nobleza Piccardo S.A.
Rottneros Bruks AB Free
Rottneros Bruks AB Free (Rights)
Servicios Financieros Quadrum,
S.A. de C.V. (ADR)
The Sports Authority, Inc.
Telecommunicacoes Brasileiras
S.A.--Telebras (ADR)
Videocon International Ltd. (ADR)
PORTFOLIO INFORMATION
Worldwide
Investments
As of 3/31/95
Country of Percent of
Ten Largest Equity Holdings Origin Net Assets
Oesterreichische Elektrizitats
AG (Verbund) Austria 2.0%
Kloeckner Werke AG Germany 1.4
Daetwyler Holdings AG Switzerland 1.1
Boddington Group PLC United Kingdom 1.1
Low & Bonar PLC (Ordinary) United Kingdom 1.1
Svedala Industri AB Sweden 1.0
Ohsho Food Service Corp. Japan 1.0
Ichinen Co., Ltd. Japan 1.0
Euro RSCG Worldwide, S.A. France 1.0
Ahrend Groep NV Netherlands 1.0
<PAGE>
Percent of
Ten Largest Industries Net Assets
Insurance 4.9%
Engineering & Construction 4.8
Retail Specialty 2.9
Automobile Parts 2.2
Restaurants 2.2
Banking & Finance 2.1
Retail Stores 2.1
Natural Resources 2.1
Utilities--Electric 2.0
Computer Services 1.8
