MERRILL LYNCH
GLOBAL SMALLCAP
FUND, INC.
FUND LOGO
Quarterly Report
September 30, 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 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.
<PAGE>
Merrill Lynch
Global SmallCap
Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
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
Kenneth 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
<PAGE>
Custodian
Brown Brothers Harriman & Co.
40 Water Street
Boston, Massachusetts 02109
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
Transfer Agency Mutual Fund Operations
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
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.
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.
<PAGE>
DEAR SHAREHOLDER
The September quarter was marked
by a significant easing of monetary
policy in Japan. A decline in Japanese
interest rates, and a sharp recovery
in the US dollar and Deutschemark
relative to the yen, impacted small
cap equity performance. In the aggre-
gate, global small cap equity returns,
as measured by the unmanaged
Salomon Brothers Extended Market
Index (SEMI), were +6.8% in US
dollar terms over the quarter. Small
cap issues slightly outperformed large
cap issues which rose by 5.7% over
the quarter, as measured by the
Financial Times/S&P--Actuaries
World Index.
The strongest market in local cur-
rency terms was Japan, where small
cap issues rose by 19%. Elsewhere,
US and UK small cap equities rose by
around 10%, while equity markets in
Continental Europe, the Pacific Basin
(excluding Japan), and emerging
economies were generally weak.
The Fund performed in line with the
benchmark as the positive impact of
overweighted positions in the US
dollar and Japanese equities were
offset by an underweighted US equity
position and the underperformance
of stock selections in Europe. For
the quarter ended September 30,
1995, total returns for Class A,
Class B, Class C and Class D Shares
were +6.28%, +6.00%, +6.00%
and +6.17%, respectively. (Results
shown do not reflect sales charges, and
would be lower if sales charges were
included. Complete performance
information, including aggregate
total returns, can be found on
pages 4 and 5 of this report to
shareholders.)
<PAGE>
Portfolio Changes
Our strategic investment stance
remained unchanged over the Sep-
tember quarter. Most significantly, we
continued to favor Japanese small
caps over US small caps. Additionally,
we continued to invest in a broad
range of emerging markets issues to
provide diversified exposure to
potentially more dynamic growth
opportunities. Over the course of the
September quarter, we tactically
increased the Fund's exposure to
Continental European and emerging
European small cap issues, reflecting
our expectation of continued Euro-
pean economic expansion and the
underperformance of this region
during the previous three months.
We reduced the Fund's exposure
to Latin American and Canadian
small cap issues, switching exposure
to Hong Kong and Korean small
cap issues.
Specific equity purchases during the
September quarter included Korea
Mobile Telecommunications Corp.,
Pohang Iron & Steel Company, Ltd.
and Samsung Electronics Co., and the
Portuguese stock Efacec Fabril de
Maquinas Electricas, S.A. In devel-
oped markets, significant purchases
included Scandinavian companies
Rottneros Bruk AB Free and America
Group Ltd. and US companies Neorx
Corp., Progress Software Corporation,
Newpark Resources, Inc. and Ampal-
American Israel Corp. During the
quarter, we reduced or eliminated
positions in British Columbia Gas
Inc., Ace, Ltd., Micro Focus Group
PLC, Symantec Corp. and Charter
One Financial, Inc.
These asset allocation and stock
changes resulted in our increasing
the Fund's European equity weighting
to 32% at the outset of the September
quarter from 29% of net assets at
September 30, 1995, and its Pacific
Basin equity weighting to 8% from 6%
over the same period. The Japanese
and US equity weightings remained
largely unchanged at 27% and 21%,
respectively. Overall, the Fund's
effective equity exposure rose to 93%
from 88%.
<PAGE>
During the September quarter, we
retained an overweight US dollar
stance. Including currency options
and forward positions, the Fund's
average US dollar bloc position was
around 64%, about 13% overweighted
as compared to the unmanaged bench-
mark US dollar bloc weight.
Economic and Investment
Environment
US economic trends are still signifi-
cantly impacting on the international
investment environment. During the
six-month period ended September
30, 1995, the US Federal Reserve
Board eased the Federal Funds rate
by 25 basis points (0.25%). However,
in the immediate aftermath, US
economic indicators identified a
stronger activity path and expecta-
tions of further interest rate cuts
dissipated.
Perhaps more significantly, economic
data in Japan, Germany and the
United Kingdom portrayed a weaker-
than-expected tone. Against the back-
ground of the previous sharp yen and
Deutschemark appreciation in March
and April, the weaker-than-expected
economic data caused a further round
of interest rate cuts in Japan and
Europe. For instance, the Bank of
Japan lowered the call overnight
money rate to 0.8% from 1.25%. Addi-
tionally, the Bank of Japan continued
to intervene aggressively in foreign
exchange markets, selling yen for
US dollars. Over the same period, the
Bundesbank cut the key Lombard
and discount rates by 50 basis points,
and on two occasions joined other
central banks in concerted currency
intervention to support the US dollar.
Monetary conditions have eased
appreciably in Japan and Europe, and
over the September quarter financial
markets largely discounted this eas-
ing. Our current portfolio reflects our
anticipation of a further recovery in
profits expectations in Japan and
some European countries resulting
from the US dollar recovery and
interest rate cuts.
<PAGE>
The Fund's emerging markets stance
reflects our concern that US interest
rate expectations may rise, resulting
in underperformance in some US
interest-rate sensitive markets like
Malaysia, Thailand, Mexico and
Argentina. As a result, we continued
to emphasize markets like Brazil,
Portugal, Korea, India and South
Africa in the Fund's portfolio.
In Conclusion
International small cap issues have
risen much in line with large cap
issues, with both responding to a
favorable shift in monetary conditions
in both Japan and Germany. Our
investment strategy currently antici-
pates further positive implications of
this recent monetary easing for small
cap equities in Japan, some peripheral
European countries and some emerg-
ing markets. We remain underweight-
ed in US and UK small cap issues.
We continue to favor a US dollar bias
in the Fund, and as a consequence
we anticipate maintaining a partial
hedge out of yen into US dollars.
However, at some stage in the upcom-
ing December quarter, we may become
more defensive in our investment
strategy. A key factor will be the
strength of the US economy and the
path of US bond yields. Looking
further ahead into 1996, we believe
that small cap issues outside the
United States are likely to outperform
larger cap issues as profit growth
accelerates.
We thank you for your continued
interest in Merrill Lynch Global
SmallCap Fund, Inc., and we look
forward to reviewing our strategy
with you in our upcoming annual
report to shareholders.
<PAGE>
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Andrew Bascand)
Andrew Bascand
Senior Portfolio Manager/
Asset Allocator
(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--
Europe and Latin America
(James Russell)
James Russell
Co-Portfolio Manager
Japanese Investments
(Dennis Stattman)
Dennis Stattman
Co-Portfolio Manager
US Investments
October 24, 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 simulta-
neously 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" table on page 5. Data for
Class B and Class D Shares are presented in the "Performance
Summary" and "Average Annual Return" tables below and on
page 5. Data for Class A and Class C Shares are also presented in
the "Aggregate Total Return" tables below.
The "Recent Performance Results" table shows investment
results before the deduction of any sales charges for Class B
and Class D Shares for the 12-month and 3-month periods ended
September 30, 1995 and for Class A and Class C Shares for the
since inception (October 21, 1994) and 3-month periods ended
September 30, 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 9/30/95 -3.41% -8.48%
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Inception (10/21/94) through 9/30/95 -4.33% -5.29%
[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>
Average Annual
Total Return
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 9/30/95 -5.01% -8.81%
Inception (8/5/94) through 9/30/95 -5.44 -7.90
[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 Without % Return With
Sales Charge Sales Charge**
Class D Shares*
Year Ended 9/30/95 -4.29% -9.32%
Inception (8/5/94) through 9/30/95 -4.65 -9.01
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
<TABLE>
Performance
Summary--
Class B Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
8/5/94--12/31/94 $10.00 $9.34 $0.005 -- -6.55%
1/1/95--9/30/95 9.34 9.37 -- -- +0.32
------
Total $0.005
Cumulative total return as of 9/30/95: -6.25%**
<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, and
do not reflect the deduction of any sales charge; results would
be lower if sales charge was deducted.
</TABLE>
<TABLE>
Performance
Summary--
Class D Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
8/5/94--12/31/94 $10.00 $9.37 $0.005 -- -6.25%
1/1/95--9/30/95 9.37 9.46 -- -- +0.96
------
Total $0.005
Cumulative total return as of 9/30/95: -5.35%**
<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, and
do not include sales charge; results would be lower if sales
charge was included.
</TABLE>
<TABLE>
Recent
Performance
Results*
<CAPTION>
12 Month 3 Month
9/30/95 6/30/95 9/30/94++ % Change++ % Change
<S> <C> <C> <C> <C> <C>
Class A Shares $9.48 $8.92 $9.82 -3.41%(1) +6.28%
Class B Shares 9.37 8.84 9.87 -5.01(1) +6.00
Class C Shares 9.37 8.84 9.80 -4.33(1) +6.00
Class D Shares 9.46 8.91 9.89 -4.29(1) +6.17
Class A Shares--Total Return -3.41(1) +6.28
Class B Shares--Total Return -5.01(1) +6.00
Class C Shares--Total Return -4.33(1) +6.00
Class D Shares--Total Return -4.29(1) +6.17
<PAGE>
<FN>
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included.
++Investment results shown for Class A and Class C are since
inception (10/21/94).
(1)Percent change includes reinvestment of $0.005 per share
capital gains distributions.
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
Percent of
EUROPE Industries Shares Held Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Austria Utilities--Electric 12,700 Oesterreichische Elektrizitats AG
(Verbund) $ 783,569 $ 847,088 0.6%
Total Investments in Austria 783,569 847,088 0.6
Belgium Building Materials 20,420 Terca Brick Industries 1,016,106 1,002,234 0.7
Total Investments in Belgium 1,016,106 1,002,234 0.7
Denmark Engineering & 12,500 FLS Industries A/S 901,389 1,108,308 0.7
Construction
Total Investments in Denmark 901,389 1,108,308 0.7
Finland Airlines 225,000 Finnair OY 1,533,951 1,763,117 1.1
Chemicals 91,500 Kemira OY 650,694 731,983 0.5
Holding Company 60,000 America Group Ltd. 1,079,450 1,150,850 0.7
29,000 Fiskars OY AB 1,479,062 1,594,115 1.0
------------ ------------ ------
2,558,512 2,744,965 1.7
Total Investments in Finland 4,743,157 5,240,065 3.3
France Advertising 14,500 Euro RSCG Worldwide, S.A. 1,314,199 1,369,480 0.9
Holding Company 3,722 Societe EuraFrance S.A. 1,182,561 1,103,807 0.7
Total Investments in France 2,496,760 2,473,287 1.6
<PAGE>
Germany Machinery & 39,100 Kloeckner Werke AG 3,734,471 1,313,734 0.9
Engineering
Total Investments in Germany 3,734,471 1,313,734 0.9
Greece Banking 6,970 Ergo Bank S.A. (Registered) 325,290 337,953 0.2
Building & 7,990 Titan Cement Co. S.A. 302,811 342,649 0.2
Construction
Foods 17,129 Delta Dairy S.A. (Ordinary) 395,650 380,522 0.3
Total Investments in Greece 1,023,751 1,061,124 0.7
Ireland Banking & Finance 700,000 Anglo Irish Bank Corp. PLC 607,595 664,128 0.4
Foods 214,100 Greencore PLC 1,530,369 1,676,888 1.1
Total Investments in Ireland 2,137,964 2,341,016 1.5
Italy Building & 434,600 Fochi Filippo S.p.A. (Ordinary) 1,346,030 188,488 0.1
Construction 250,000 Fochi Filippo S.p.A. (Warrants) (b) 138,508 1,549 0.0
------------ ------------ ------
1,484,538 190,037 0.1
Consumer Goods 205,000 Merloni Elettrodomestici S.p.A. 337,062 219,734 0.1
Diversified 1,850,000 Compagnie Industriali Riunite S.p.A. (CIR) 2,071,370 1,196,654 0.8
Total Investments in Italy 3,892,970 1,606,425 1.0
Netherlands Capital Goods 65,000 Ahrend Groep NV 1,340,569 2,316,204 1.5
Retail Trade 26,250 Deboer Winkelbedrijven 1,044,419 1,288,213 0.8
Total Investments in the Netherlands 2,384,988 3,604,417 2.3
Poland Engineering & 131,800 Elektrim Towarzystwo Handlowe S.A. 462,537 487,947 0.3
Construction
Tire & Rubber 30,000 T.C. Debica 399,679 431,921 0.3
Total Investments in Poland 862,216 919,868 0.6
<PAGE>
Portugal Building & 47,000 Efacec Fabril de Maquinas Electricas S.A. 556,813 414,420 0.3
Construction
Retail Sales 12,600 Estabelecimentos Jeronimo Martins
& Filho S.A. 644,835 631,135 0.4
Total Investments in Portugal 1,201,648 1,045,555 0.7
Spain Glass 25,800 Cristaleria Espanola S.A. 1,136,587 1,607,802 1.1
Real Estate 98,000 Vallehermoso S.A. 1,603,094 1,729,039 1.1
Textiles 115,000 Algodonera de San Antonio 1,269,666 949,336 0.6
Total Investments in Spain 4,009,347 4,286,177 2.8
Sweden Engineering & 34,600 Celsius Industrier AB 509,836 591,449 0.4
Construction 67,500 Lundbergforetagen AB ('B' Shares) 800,969 793,568 0.5
72,900 Svedala Industri AB 1,742,255 2,197,842 1.4
------------ ------------ ------
3,053,060 3,582,859 2.3
Forest Products/ 1,153,500 Rottneros Bruk AB Free 1,779,027 1,996,740 1.3
Paper & Packaging
Total Investments in Sweden 4,832,087 5,579,599 3.6
Switzerland Engineering & 1,210 Daetwyler Holdings AG 2,108,607 2,229,498 1.5
Construction 1,725 Swheizerische Industrie--Gasellschaft
Holdings AG (SIG) 1,802,127 1,850,346 1.2
Total Investments in Switzerland 3,910,734 4,079,844 2.7
Turkey Beverage 62,475 Ege Biracilik Ve Malt Sanayii A.S. 24,973 38,706 0.0
Building & 726,881 Alarko Holdings A.S. 280,927 295,300 0.2
Construction
Insurance 596,250 Aksigorta A.S. 119,250 83,569 0.1
Total Investments in Turkey 425,150 417,575 0.3
<PAGE>
United Automobile Parts 195,000 Croda International PLC (Ordinary) 1,118,968 1,084,855 0.7
Kingdom
Brewery 357,000 Boddington Group PLC 1,406,763 1,495,232 1.0
Computers 400,000 Acorn Computer Group PLC 569,441 689,098 0.5
Diversified 889,000 Howden Group PLC 1,262,630 1,194,305 0.8
Food & Beverage 667,000 Hazlewood Foods PLC 1,271,988 1,286,116 0.8
Health/ 780,000 London International Group (Ordinary) 1,200,235 1,627,283 1.1
Personal Care
Manufacturing 221,500 Low & Bonar PLC (Ordinary) 1,458,747 1,753,905 1.1
Media/Publishing 300,000 International Business Communications
(Ordinary) 1,043,116 1,588,403 1.0
Transportation 230,000 Ocean Group PLC (Ordinary) 977,405 1,288,661 0.8
Total Investments in the United Kingdom 10,309,293 12,007,858 7.8
Total Investments in Europe 48,665,600 48,934,174 31.8
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
LATIN Percent of
AMERICA Industries Shares Held Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Brazil Appliances 3,200,000 Brasmotor Group S.A. (Preferred) $ 641,325 $ 819,307 0.6%
363,400,000 Refrigeracao Parana S.A. (Preferred) 734,319 953,305 0.6
------------ ------------ ------
1,375,644 1,772,612 1.2
Automotive 14,700 CAPCO Automotive Products Corp. S.A.
(ADR) (a) 124,950 135,975 0.1
Textiles 2,054,000 Companhia de Tecidos Norte de Minas S.A.
(Preferred) 652,560 672,453 0.4
Total Investments in Brazil 2,153,154 2,581,040 1.7
Colombia Retail 27,000 Gran Cadena de Almacenes Colombianos S.A.
(CADENALCO) (ADR) (a) 472,500 357,750 0.2
Total Investments in Colombia 472,500 357,750 0.2
<PAGE>
Mexico Broadcasting & 253,000 Grupo Fernandez Editores, S.A. de C.V.--BCP 404,963 126,897 0.1
Publishing
Building & 38,500 Corporacion Geo, S.A. de C.V. 'B' (ADR) (a) 476,532 505,890 0.3
Construction
Retail Stores 100,000 Sears Roebuck de Mexico, S.A.
de C.V. 'B' (ADR) (a) 655,400 725,000 0.5
Total Investments in Mexico 1,536,895 1,357,787 0.9
Peru Foods 356,300 Companhia Industrial Peru Pacifico S.A. 383,299 427,750 0.3
Total Investments in Peru 383,299 427,750 0.3
Venezuela Building Materials 60,000 Corimon C.A. S.A.C.A. (ADR) (a) 367,200 330,000 0.2
Total Investments in Venezuela 367,200 330,000 0.2
Total Investments in Latin America 4,913,048 5,054,327 3.3
MIDDLE EAST/
AFRICA
South Africa Diversified 37,616 Morgan Stanley Africa Investment Fund 413,776 460,796 0.3
29,000 New South Africa Fund, Inc. 398,675 416,875 0.2
29,000 Southern Africa Fund, Inc. 409,625 427,750 0.3
------------ ------------ ------
1,222,076 1,305,421 0.8
Mining 38,000 Kinross Mines Ltd. 407,226 416,324 0.3
Total Investments in South Africa 1,629,302 1,721,745 1.1
Zimbabwe Beverages 249,000 Delta Corporation 396,017 381,989 0.3
Total Investments in Zimbabwe 396,017 381,989 0.3
Total Investments in the
Middle East/Africa 2,025,319 2,103,734 1.4
<PAGE>
NORTH
AMERICA
Canada Insurance 67,925 Cambior Inc. 987,616 730,194 0.5
Leisure 100,384 Four Seasons Hotels Ltd. 1,144,986 1,268,040 0.8
Total Investments in Canada 2,132,602 1,998,234 1.3
United Aerospace 110,000 UNC, Inc. 637,625 687,500 0.4
States
Apparel 115,000 Farah, Inc. 1,148,408 848,125 0.6
15,000 Marisa Christina, Inc. 168,950 232,500 0.1
32,000 Norton McNaughton, Inc. 499,699 712,000 0.5
------------ ------------ ------
1,817,057 1,792,625 1.2
Banking & 6,200 Bankers Corp. 94,023 110,050 0.1
Finance 39,300 Charter One Financial, Inc. 800,438 1,154,438 0.8
9,200 The Co-Operative Bank of Concord 132,250 167,900 0.1
33,000 Roosevelt Financial Group, Inc. 535,963 581,625 0.4
------------ ------------ ------
1,562,674 2,014,013 1.4
Biotechnology 15,000 COR Therapeutics, Inc. 168,375 166,875 0.1
16,000 Cytel Corp. 96,656 108,000 0.1
15,000 Scios Nova, Inc. 74,025 59,062 0.0
------------ ------------ ------
339,056 333,937 0.2
Building & Building 33,000 Oakwood Homes Corporation 869,607 1,163,250 0.8
Materials 51,000 Redman Industries, Inc. 913,875 1,313,250 0.9
15,300 Ryland Group, Inc. 206,581 237,150 0.2
39,800 Washington Homes, Inc. 199,396 199,000 0.1
------------ ------------ ------
2,189,459 2,912,650 2.0
Business Services 123,300 Applied Bioscience International, Inc. 713,757 786,037 0.5
Chemicals 3,000 Arcadian Corp. 46,500 61,125 0.0
Computer Software 32,000 Information Resources, Inc. 452,000 424,000 0.3
8,000 Progress Software Corporation 469,730 532,000 0.3
28,000 VMARK Software, Inc. 439,368 416,500 0.3
------------ ------------ ------
1,361,098 1,372,500 0.9
<PAGE>
Computers 10,500 Storage Technology Corporation 206,798 257,250 0.2
25,000 Stratus Computer, Inc. 787,870 656,250 0.4
------------ ------------ ------
994,668 913,500 0.6
Data Processing 10,000 Cognos, Inc. 121,250 340,000 0.2
25,000 SHL Systemhouse, Inc. 125,000 312,500 0.2
20,000 Sterling Software, Inc. 639,467 910,000 0.6
------------ ------------ ------
885,717 1,562,500 1.0
Electrical Equipment 20,000 Comptek Research, Inc. 238,700 347,500 0.2
Electronics 10,000 Analogic Corporation 171,250 195,000 0.1
Environmental Control 20,000 Newpark Resources, Inc. 342,500 350,000 0.2
Financial Services 60,000 Ampal-American Israel Corp. 418,839 345,000 0.2
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
NORTH AMERICA Shares Held/ Percent of
(concluded) Industries Face Amount Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C>
United Healthcare-- 60,000 Beverly Enterprises, Inc. $ 810,553 $ 825,000 0.5%
States Products/Services 50,000 Charter Medical Corp. 874,658 1,025,000 0.7
(concluded) 53,800 Ramsay Health Care, Inc. 330,777 195,025 0.1
14,038 Ramsey Managed Care, Inc. 31,585 31,585 0.0
------------ ------------ ------
2,047,573 2,076,610 1.3
Home Furnishing 21,000 Crown Crafts, Inc. 312,248 273,000 0.2
Insurance 35,000 Ace, Ltd. 788,700 1,203,125 0.8
56,700 Capital Guaranty Corp. 849,802 1,261,575 0.8
50,000 First Colony Corp. 1,052,037 1,350,000 0.9
22,500 Harleysville Group, Inc. 459,037 652,500 0.4
60,000 PXRE Corp. 1,375,075 1,605,000 1.0
48,000 Security-Connecticut Corp. 1,037,380 1,326,000 0.9
------------ ------------ ------
5,562,031 7,398,200 4.8
<PAGE>
Natural 30,000 Brown (Tom), Inc. 364,775 408,750 0.3
Resources 100,000 Coho Resources, Inc. 466,689 500,000 0.3
35,000 Plains Resources, Inc. 218,750 277,812 0.2
50,000 Total Petroleum of North America 613,000 512,500 0.3
55,000 TransTexas Gas Corp. 605,000 996,875 0.6
------------ ------------ ------
2,268,214 2,695,937 1.7
Oil & Related 4,000 Core Laboratories N.V. 48,000 48,000 0.0
Pharmaceuticals 19,800 Neorx Corp. 133,175 136,125 0.1
15,000 Univax Biologics, Inc. 103,584 95,625 0.1
10,000 Vical, Inc. 81,077 113,750 0.1
------------ ------------ ------
317,836 345,500 0.3
Real Estate Investment 27,000 Carr Realty Corp. 539,996 506,250 0.3
Trust 50,000 Crown American Realty Trust 726,750 412,500 0.3
------------ ------------ ------
1,266,746 918,750 0.6
Restaurants 67,500 TPI Enterprises, Inc. 377,458 295,312 0.2
Retailing 55,000 Baker (J.), Inc. 970,300 433,125 0.3
70,000 Catherines Stores Corp. 596,740 787,500 0.5
40,000 Hancock Fabrics, Inc. 371,281 400,000 0.3
21,000 Pier 1 Imports, Inc. 166,000 212,625 0.1
15,000 Rex Stores Corp. 195,900 281,250 0.2
80,000 Service Merchandise Co., Inc. 437,637 570,000 0.4
------------ ------------ ------
2,737,858 2,684,500 1.8
Textiles 75,000 Burlington Industries, Inc. 873,330 946,875 0.6
Transportation 20,000 Kirby Corp. 318,656 310,000 0.2
Utilities--Water 10,000 American Water Works Company, Inc. 276,850 306,250 0.2
Total Investments in the United States 28,125,700 31,972,822 20.8
Total Investments in North America 30,258,302 33,971,056 22.1
<PAGE>
PACIFIC
BASIN
Australia Insurance 146,734 QBE Insurance Group 564,034 623,880 0.4
Merchandising 25,800 Amway Asia Pacific Ltd. 806,761 964,275 0.6
Mining 227,660 QCT Resources Ltd. 225,663 275,086 0.2
Total Investments in Australia 1,596,458 1,863,241 1.2
Hong Kong Broadcasting & 480,000 Ming Pao Enterprise Corp. Ltd. 361,863 225,062 0.1
Publishing
Financial US$ 920,000 Goldlion Capital Corp., 4.875%
Services due 2/01/1999 698,199 880,900 0.6
2,860,000 Winton Holdings Ltd. 1,040,875 654,775 0.4
------------ ------------ ------
1,739,074 1,535,675 1.0
Packaging 1,672,600 Sinocan Holdings Ltd. 477,907 616,581 0.4
Total Investments in Hong Kong 2,578,844 2,377,318 1.5
Indonesia Banking-- 163,000 PT Bank Bali 337,016 399,404 0.3
International
Telecommunications 204,000 PT Kabelmetal Indonesia 287,351 231,921 0.2
& Equipment
Total Investments in Indonesia 624,367 631,325 0.5
Japan Apparel 100,000 Goldwin Inc. 1,289,360 737,374 0.5
Automobile Parts 58,300 Murakami Corp. 1,156,073 865,667 0.5
71,000 Sanoh Industrial 963,400 606,010 0.4
110,000 Showa Corp. 1,098,685 777,778 0.5
89,000 Yamakawa Industrial Co. 1,085,484 728,182 0.5
------------ ------------ ------
4,303,642 2,977,637 1.9
Banks 17,000 Bank of the Ryukyus, Ltd. 988,951 667,980 0.4
Beverages 79,000 Hokkaido Coca-Cola Bottling Co., Ltd. 1,298,058 1,021,414 0.7
74,800 Sanyo Coca-Cola Bottling Co., Ltd. 1,130,306 974,667 0.6
------------ ------------ ------
2,428,364 1,996,081 1.3
Chemicals 70,000 Katakura Chikkarin Co., Ltd. 830,212 552,222 0.3
Computer Services 47,080 TKC Corp. 1,376,809 1,146,089 0.7
<PAGE>
Construction 77,590 Japan Foundation Engineering 1,657,836 1,614,499 1.1
75,920 Tsuchiya Home Co. 1,667,047 1,035,273 0.7
35,200 USK Corp. 597,627 568,889 0.4
143,000 Yondenko Corp. 1,395,662 1,300,000 0.8
------------ ------------ ------
5,318,172 4,518,661 3.0
Consumer Electricals 59,000 Roland Corp. 1,429,975 1,072,727 0.7
Electrical Equipment 84,000 Energy Support Corp. 642,525 477,697 0.3
45,600 Maspro Denkoh Corp. 1,272,483 824,485 0.5
26,000 Shinmei Electric Co. 1,340,491 302,020 0.2
52,000 Sukegawa Electric Co. 682,343 512,121 0.3
------------ ------------ ------
3,937,842 2,116,323 1.3
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
PACIFIC BASIN Shares Held/ Percent of
(concluded) Industries Face Amount Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Japan Foods/Food 36,000 Ariake Japan Co., Ltd. $ 1,533,040 $ 1,174,545 0.8%
(concluded) Processing
Health Services 40,000 Kanto Biomedical Laboratory 845,365 537,374 0.4
26,000 SRL Inc. 557,018 724,848 0.5
------------ ------------ ------
1,402,383 1,262,222 0.9
Industrials 27,000 Roki Techno Co., Ltd. 870,024 610,909 0.4
Iron & Steel 199,000 Nippon Chutesukan 1,262,444 918,616 0.6
Leasing 28,000 Marufuji Sheet Piling Co., Ltd. 301,153 189,495 0.1
51,700 Nissho Iwai Steel Leasing Co. 624,366 292,444 0.2
------------ ------------ ------
925,519 481,939 0.3
Machinery 54,102 Giken Seisakusho Co. Inc. 1,454,121 847,058 0.6
Metal Fabrication 115,000 Mory Industries Inc. 953,698 665,606 0.4
124,000 Toyo Kohan Co., Ltd. 1,057,406 926,869 0.6
------------ ------------ ------
2,011,104 1,592,475 1.0
Packaging 45,800 Chuo Kagaku Co. Ltd. 1,931,203 763,333 0.5
<PAGE>
Paper 109,000 Tomoku Co., Ltd. 859,183 560,414 0.4
Pharmaceuticals 21,600 Towa Pharmaceutical Co. 1,529,792 1,101,818 0.7
Pollution Control 163,000 Organo Corp. 1,788,702 1,606,949 1.1
Real Estate 53,000 Keihanshin Real Estate Co. Ltd. 525,507 376,354 0.2
56,000 TOC Corp. 596,958 538,505 0.4
------------ ------------ ------
1,122,465 914,859 0.6
Restaurants 47,000 Aim Services Co., Ltd. 1,405,610 1,020,707 0.7
41,500 Mos Food Services, Inc. 1,468,614 1,068,939 0.7
83,800 Ohsho Food Service Corp. 2,268,651 1,692,929 1.1
------------ ------------ ------
5,142,875 3,782,575 2.5
Retail Specialty 60,000 ADO Electric Industrial Co., Ltd. 1,956,905 1,515,152 1.0
50,000 Arcland Sakamoto 964,197 666,667 0.4
91,000 Daika Corporation 1,444,684 625,051 0.4
53,900 Home Wide Corp. 1,078,769 615,222 0.4
34,800 Nitori Co. 1,257,950 1,110,788 0.7
------------ ------------ ------
6,702,505 4,532,880 2.9
Retail Stores 119,000 Sotetsu Rosen Co., Ltd. 1,112,252 937,576 0.6
Services 63,800 Ichinen Co., Ltd. 1,690,116 1,353,333 0.9
Textiles 79,000 Komatsu Seiren Co., Ltd. 1,166,141 730,949 0.5
Trading 31,000 Japan CBM Corp. 1,200,936 814,141 0.5
Trucking 108,000 Nippon Konpo Unyu Soko 1,045,185 871,636 0.5
95,000 Tonami Transportation Co., Ltd. 743,587 590,152 0.4
------------ ------------ ------
1,788,772 1,461,788 0.9
Total Investments in Japan 57,396,904 41,233,473 26.8
Malaysia Broadcasting 158,000 Sistem Televisyen Malaysia BHD 477,231 481,362 0.3
Newspaper/ 132,000 New Straits Times Press BHD 541,189 373,238 0.2
Publishing
Total Investments in Malaysia 1,018,420 854,600 0.5
<PAGE>
New Zealand Broadcasting & 229,000 Independent News Ltd. 711,948 662,598 0.4
Publishing
Electronics 46,500 PDL Industries Ltd. 218,223 247,685 0.2
Foreign NZ$ 5,925,000 New Zealand Government Bonds, 8%
Government due 11/15/1995++ 3,776,833 3,889,734 2.5
Obligations
Transportation-- 154,400 Ports of Auckland Ltd. 270,171 338,106 0.2
Marine
Total Investments in New Zealand 4,977,175 5,138,123 3.3
South Korea Electronics 4,456 Samsung Electronics Co. 435,574 630,524 0.4
Iron/Steel 15,385 Pohang Iron & Steel Company, Ltd. 442,780 505,782 0.3
Telecommunications 29,000 Korea Mobile Telecommunications Corp.
(GDR) (c) 1,004,125 1,029,500 0.7
Total Investments in South Korea 1,882,479 2,165,806 1.4
Total Investments in the Pacific Basin 70,074,647 54,263,886 35.2
SOUTHEAST
ASIA
India Hotels 49,000 East India Hotels Ltd. 713,000 931,000 0.6
Media 170,000 Videocon International Ltd. (GDR) (c) 670,888 433,500 0.3
Total Investments in Southeast Asia 1,383,888 1,364,500 0.9
SHORT-TERM Face
SECURITIES Amount Issue Cost
Commercial US$ 919,000 General Electric Capital Corp., 6.45%
Paper* due 10/02/1995 918,671 918,671 0.6
Total Investments in Commercial Paper 918,671 918,671 0.6
US Government US Treasury Bills++++:
& Agency 4,000,000 5.25% due 10/26/1995 3,984,833 3,983,652 2.6
Obligations* 50,000 5.29% due 10/26/1995 49,809 49,796 0.0
40,000 5.38% due 10/26/1995 39,844 39,836 0.0
80,000 5.42% due 10/26/1995 79,687 79,673 0.1
200,000 5.43% due 10/26/1995 199,216 199,183 0.1
Total Investments in US Government &
Agency Obligations 4,353,389 4,352,140 2.8
Total Investments in Short-Term
Securities 5,272,060 5,270,811 3.4
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
OPTIONS Face Premiums Percent of
PURCHASED Amount Issue Paid Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Currency YEN 2,000,000 Japanese Yen, expiring January 1996
Put Options at YEN 86.15 $ 66,456 $ 242,844 0.0%
Purchased 5,000,000 Japanese Yen, expiring September 1996
at YEN 105 117,500 72,000 0.2
Total Investments in Options Purchased 183,956 314,844 0.2
Total Investments $162,776,820 151,277,332 98.3
============
Variation Margin on Stock Index Futures Contracts** (3,666) 0.0
Unrealized Appreciation on Forward Foreign Exchange Contracts*** 2,737,838 1.8
Liabilities in Excess of Other Assets (57,945) (0.1)
------------ ------
Net Assets $153,953,559 100.0%
============ ======
Net Asset Class A--Based on net assets of $1,752,887 and
Value: 184,863 shares outstanding $ 9.48
============
Class B--Based on net assets of $123,537,750 and
13,183,043 shares outstanding $ 9.37
============
Class C--Based on net assets of $4,275,146 and
456,311 shares outstanding $ 9.37
============
Class D--Based on net assets of $24,387,776 and
2,578,670 shares outstanding $ 9.46
============
<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.
(c)Global Depositary Receipt (GDR).
++Security represents collateral in connection with open options.
++++Securities represent collateral in connection with stock index futures contracts.
*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 September 30, 1995 were as follows:
<PAGE>
<CAPTION>
Number of Expiration
Contracts Issue Exchange Date Value
<S> <S> <S> <S> <C>
21 Hang Seng Hong Kong October 1995 $1,311,685
Securities
Exchange
Total Stock Index Futures Contracts Purchased
(Total Contract Price--$1,297,017) $1,311,685
==========
***Forward foreign exchange contracts as of September 30, 1995 were as follows:
<CAPTION>
Unrealized
Foreign Currency Expiration Appreciation
Purchased Date (Depreciation)
<S> <C> <S> <C>
YEN 395,672,550 October 1995 $ (239,469)
Total (US$ Commitment--$4,250,000) $ (239,469)
-----------
Foreign Currency Sold
Ats 21,193,600 October 1995 $ 79,109
Chf 3,613,332 October 1995 37,570
DM 2,439,415 October 1995 64,925
Fmk 16,044,000 October 1995 63,481
Frf 4,956,510 October 1995 23,934
Nlg 3,998,518 October 1995 (2,538)
YEN 3,071,455,000 October 1995 2,710,826
Total (US$ Commitment--$48,324,338) $ 2,977,307
-----------
Total Unrealized Appreciation--Net on Forward
Foreign Exchange Contracts $ 2,737,838
===========
</TABLE>
<PAGE>
EQUITY PORTFOLIO CHANGES
Additions
America Group Ltd.
Ampal-American Israel Corp.
Arcadian Corp.
*Astea International, Inc.
Core Laboratories N.V.
Corporacion Geo, S.A. de C.V. 'B' (ADR)
Cytel Corp.
Delta Corporation
*Desktop Data, Inc.
Efacec Fabril de Maquinas Electricas, S.A.
Elektrim Towarzystwo Handlowe S.A.
Estabelecimentos Jeronimo Martins & Filho
S.A.
*Harbinger Corp.
Information Resources, Inc.
*Jayhawk Acceptance Corp.
Kinross Mines Ltd.
Korea Mobile Telecommunications Corp.
(GDR)
Lundbergforetagen AB ('B' Shares)
Neorx Corp.
*Netscape Communications Corp.
Newpark Resources, Inc.
Norton McNaughton, Inc.
*Novadigm, Inc.
*Oakley, Inc.
*Pediatrix Medical Group
Progress Software Corporation
*Redhook Ale Brewery, Inc.
Rottneros Bruk AB Free
Sears Roebuck de Mexico, S.A. de C.V. 'B'
*Smartflex Systems Inc.
T.C. Debica
*TelCom Semiconductor, Inc.
Univax Biologics, Inc.
VMARK Software, Inc.
Deletions
*Astea International, Inc.
Banco Osorno y La Union S.A. (ADR)
Beiren Printing Machinery Holdings Ltd.
(Class H)
Blount, Inc. (Class A)
Bohler Uddeholm A.G.
Brembo S.p.A.
British Columbia Gas Inc.
*Desktop Data, Inc.
Fuji Oil Co., Ltd.
Genetic Therapy, Inc.
George Fisher AG
*Harbinger Corp.
Indian Tobacco Co. Ltd. (ADR)
<PAGE>
*Jayhawk Acceptance Corp.
Jones Apparel Group, Inc.
Kimberly-Clark de Mexico, S.A. de C.V.
Kyowa Engineering Consulting
Landmark Graphics Corp.
Micro Focus Group PLC
*Netscape Communications Corp.
*Novadigm, Inc.
*Oakley, Inc.
OfficeMax, Inc.
Papeles Nacionales C.A. (ADR)
ParnterRe Holdings Ltd.
*Pediatrix Medical Group
*Redhook Ale Brewery, Inc.
*Smartflex Systems Inc.
Symantec Corp.
*TelCom Semiconductor, Inc.
VLSI Technology, Inc.
Valmet Corporation 'A'
[FN]
*Added and deleted in the same quarter.
<PAGE>
PORTFOLIO INFORMATION
Worldwide
Investments
As of 9/30/95
Country of Percent of
Ten Largest Equity Holdings Origin Net Assets
Ahrend Groep NV Netherlands 1.5%
Daetwyler Holdings AG Switzerland 1.5
Svedala Industri AB Sweden 1.4
Rottneros Bruk AB Free Sweden 1.3
Swheizerische Industrie--
Gasellschaft Holdings AG (SIG) Switzerland 1.2
Finnair OY Finland 1.1
Low & Bonar PLC (Ordinary) United Kingdom 1.1
Vallehermoso S.A. Spain 1.1
Ohsho Food Service Corp. Japan 1.1
Greencore PLC Ireland 1.1
Percent of
Ten Largest Industries Net Assets
Engineering & Construction 6.0%
Insurance 5.8
Construction 3.0
Retail Specialty 2.9
Restaurants 2.7
Automobile Parts 2.6
Holding Company 2.4
Diversified 2.4
Textiles 2.1
Building & Building Materials 2.0
