MERRILL LYNCH
GLOBAL SMALLCAP
FUND, INC.
[FUND LOGO]
STRATEGIC
Performance
Semi-Annual Report
December 31, 1997
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
Hubertus Aarts, Vice President
Andrew John Bascand, Vice President
R. Elise Baum, Vice President
Donald C. Burke, Vice President
Grace Pineda, Vice President
James E. Russell, Vice President
Gerald M. Richard, Treasurer
Philip M. Mandel, Secretary
Custodian
Brown Brothers Harriman & Co.
40 Water Street
Boston, MA 02109
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
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
Global SmallCap
Fund, Inc.
Box 9011
Princeton, NJ
08543-9011 #18177 -- 12/97
[RECYCLE LOGO]
Printed on post-consumer recycled paper
MERRILL LYNCH GLOBAL SMALLCAP FUND, INC.
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.
R. Elise Baum -- Co-Portfolio Manager -- North American Investments.
Ms. Baum is primarily responsible for the Fund's investments in the
United States and Canada.
Hubertus Aarts -- Co-Portfolio Manager -- European Investments. Mr.
Aarts 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.
Worldwide
Investments
As of 12/21/97
Country of Percent of
Ten Largest Equity Holdings Origin Net Assets
Grupo Radio Centro, S.A.
de C.V. (ADR) Mexico 2.0%
Ariake Japan Co., Ltd. Japan 1.5
Four Seasons Hotels Inc. Canada 1.5
Roland Corporation Japan 1.2
Structural Dynamics Research Corp. United States 1.1
Centrais Eletricas de Santa Catarina
S.A. (CELESC) 'B' (Preferred) Brazil 1.1
Sybase, Inc. United States 1.0
Grupo Profesional Planeacion y
Proyectos, S.A. de C.V. (Class B) Mexico 1.0
Inspec Group PLC United Kingdom 0.9
Vimpel-Communications (ADR) Russia 0.9
Percent of
Ten Largest Industries Net Assets
Computer Software 4.3%
Data Processing 3.4
Telecommunications & Equipment 2.9
Insurance 2.9
Electronics 2.9
Textiles 2.7
Computer Services 2.7
Retailing 2.6
Computers & Computer Services 2.5
Metals 2.5
Merrill Lynch Global SmallCap Fund, Inc., December 31, 1997
DEAR SHAREHOLDER
Global small cap equities weakened in the second half of 1997. The
period was characterized by the Asian currency crisis, which initially
impacted Asian equity returns, but subsequently negatively affected
cyclical and smaller company shares globally. Overall, Merrill Lynch
Global SmallCap Fund, Inc.'s benchmark index -- which is a composite
of the Salomon Brothers Extended Market Index (SEMI, a global smaller
companies index) and the International Finance Corporation's
Investables Index (an emerging market index) -- returned -12.9% in US
dollar terms for the six months ended December 31, 1997.
The US dollar continued to appreciate over the six-month period,
reaching 130.6 relative to the yen, up from 114.6 six months earlier.
The US dollar also appreciated relative to the Deutschemark, rising to
almost 1.80 from 1.745 at the end of June 1997.
The best-performing small cap issues in the six months ended December
31, 1997 were generally located in Europe, especially in the
peripheral markets such as Spain, Italy and Scandinavia. Overall,
European small caps rose by 4.4% in the six-month period in US dollar
terms, according to the SEMI.
In contrast, the worst-performing markets were concentrated in the
Pacific Basin, with returns in US dollar terms impacted both by very
weak local equity returns and significant currency depreciations.
Overall, Asian and Pacific market issues were particularly weak, with
the SEMI regional index declining by 43.1% in the six months ended
December 31, 1997.
Merrill Lynch Global SmallCap Fund, Inc.'s total returns for the six
months ended December 31, 1997 were -16.38%, -16.86%, -16.82% and -
16.58% for Class A, Class B, Class C and Class D Shares, respectively.
(Fund results shown do not reflect sales charges, and would be lower
if included. Complete performance information, including average
annual total returns, can be found on pages 4 -- 6 of this report to
shareholders.) The key factor impacting the Fund's underperformance
was our emerging equity market exposure in Asia. Additionally, over
the period, stock returns in both Europe and the United States
underperformed local benchmark indexes, principally reflecting the
poor relative performance of cyclical and technology stocks,
respectively. A positive factor for performance continued to be the
Fund's hedging out of the yen into US dollars. With the yen above 130
relative to the dollar, we may reduce the hedge.
Portfolio Matters
The Fund's exposures have changed significantly relative to six months
earlier. Although the Fund retains a broad global geographical mix, we
reduced exposure to Asia in favor of the United States over the
period. Regional exposures as of December 31, 1997 were: North
America, 36% of net assets; Europe, 32%; Japan, 14%; Pacific Basin
(ex-Japan), 5%; Latin America, 7%; and emerging Europe and Africa, 2%.
During the six months ended December 31, 1997, we made changes within
specific regional portfolios. In the United States, we reduced
investments in the electronic and metal fabrication industries in
favor of investments in home building and diversified manufacturing
sectors. In Europe, we reduced cyclical exposure with proceeds moved
to stocks in the support services sector. At a country level, we
increased UK exposure at the expense of equities in Sweden, Germany
and Switzerland.
Economic and Investment
Environment
Global economic growth in 1998 is likely to fall short of 1997's rate
as Asian economies adjust to higher interest rates and lower asset
prices. However, to the extent that weaker growth permits a decline in
global real bond yields, equity markets should be supported. Moreover,
since the impact on earnings should take longer to emerge than the
impact on bond yields, markets may enjoy a buoyant start to 1998,
assuming policy initiatives in South Korea and Japan avert renewed
deterioration in Asian markets.
The scope for upside surprises for economic and earnings growth in the
first half of 1998 is probably greatest in Continental Europe. There
are signs that the recovery in Europe is spreading from exports to
domestic demand, while the region is less exposed than the United
States or Japan to Asia. European Monetary Union will be a major focus
in 1998. Tax reform, corporate restructuring and merger and
acquisition activity should also be important themes.
Our strategy remains to overweight small cap equities in Europe and
Latin America, and we have increased North American exposure to a
small overweight. However, looking out over a 12-month timeframe,
potential policy initiatives in Japan could provide an impetus to
growth and improved performance of small caps in that market.
Global small cap companies have returned to their previous trend of
underperforming large caps, mainly because small cap earnings are more
closely related to economic expansion, which may be less durable.
Although economic growth may slow in 1998, small cap valuations now
appear significantly low, especially in Europe.
In Conclusion
The Fund has significantly reduced its exposure in the Asian markets
and moved investment weights toward both the United States and Europe.
However, we retain a globally diversified strategy, and anticipate a
more positive outlook for small cap stocks in 1998 as fears of global
deflation dissipate and investors come to recognize the excellent
value in small cap issues relative to many large cap issues.
We thank you for your continued interest in Merrill Lynch Global
SmallCap Fund, Inc., and we look forward to reviewing our outlook and
strategy in our next report to shareholders.
Sincerely,
/S/ARTHUR ZEIKEL
Arthur Zeikel
President
/S/ANDREW BASCAND
Andrew Bascand
Senior Portfolio Manager/Asset Allocator
/S/HUBERTUS AARTS
Hubertus Aarts
Co-Portfolio Manager
European Investments
/S/R. ELISE BAUM
R. Elise Baum
Co-Portfolio Manager
North American Investments
/S/GRACE PINEDA
Grace Pineda
Co-Portfolio Manager
Emerging Markets Investments
/S/JAMES RUSSELL
James Russell
Co-Portfolio Manager
Japanese Investments
February 13, 1998
PERFORMANCE DATA
About Fund Performance
Investors are able to purchase shares of the Fund through the Merrill
Lynch Select PricingSM System, which offers four pricing alternatives:
[bullet] 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 simultaneously exchanged for Class
A Shares.
[bullet] Class B Shares are subject to a maximum contingent deferred
sales charge of 4% if redeemed during the first year, decreasing 1% each
year thereafter to 0% after the fourth year. In addition, Class B Shares
are subject to a distribution fee of 0.75% and an account maintenance fee
of 0.25%. These shares automatically convert to Class D Shares after
approximately 8 years. (There is no initial sales charge for automatic
share conversions.)
[bullet] 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.
[bullet] Class D Shares incur a maximum initial sales charge of 5.25%
and an account maintenance fee of 0.25% (but no distribution fee).
None of the past results shown should be considered a representation
of future performance. Figures shown in the "Average Annual Total
Return" tables as well as the total returns and cumulative total
returns in the "Performance Summary" tables assume reinvestment of all
dividends and capital gains distributions at net asset value on the
ex-dividend date. Investment return and principal value of shares will
fluctuate so that shares, when redeemed, may be worth more or less
than their original cost. Dividends paid to each class of shares will
vary because of the different levels of account maintenance,
distribution and transfer agency fees applicable to each class, which
are deducted from the income available to be paid to shareholders.
<TABLE>
<CAPTION>
Performance
Summary --
Class A Shares
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <C> <C> <C> <C> <C>
10/21/94 -- 12/31/94 $9.82 $9.37 $0.005 -- - 4.53%
1995 9.37 9.27 0.053 $0.105 + 0.66
1996 9.27 9.81 0.185 0.710 +15.61
1997 9.81 8.51 -- 0.421 - 8.88
Total $0.243 Total $1.236
Cumulative total return as of 12/31/97: +1.23%**
* Figures may include short-term capital gains distributions.
** Figures do not include sales charge; results would be lower if sales charge was included.
</TABLE>
<TABLE>
<CAPTION>
Performance
Summary --
Class B Shares
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <C> <C> <C> <C> <C>
8/5/94 -- 12/31/94 $10.00 $9.34 $0.005 -- - 6.55%
1995 9.34 9.19 0.053 $0.052 - 0.45
1996 9.19 9.72 0.185 0.601 +14.43
1997 9.72 8.40 -- 0.357 - 9.85
Total $0.243 Total $1.010
Cumulative total return as of 12/31/97: - 4.03%**
* Figures may include short-term capital gains distributions.
** Figures do not reflect deduction of any sales charge; results would be lower if sales charge was deducted.
</TABLE>
<TABLE>
<CAPTION>
Performance
Summary --
Class C Shares
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <C> <C> <C> <C> <C>
10/21/94 -- 12/31/94 $9.80 $9.34 $0.005 -- - 4.64%
1995 9.34 9.19 0.053 $0.052 - 0.46
1996 9.19 9.71 0.185 0.611 +14.43
1997 9.71 8.38 -- 0.364 - 9.88
Total $0.243 Total $1.027
Cumulative total return as of 12/31/97: - 2.12%**
* Figures may include short-term capital gains distributions.
** Figures do not reflect deduction of any sales charge; results would be lower if sales charge was deducted.
</TABLE>
<TABLE>
<CAPTION>
Performance
Summary --
Class D Shares
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <C> <C> <C> <C> <C>
8/5/94 -- 12/31/94 $10.00 $9.37 $0.005 -- - 6.25%
1995 9.37 9.25 0.053 $0.093 + 0.31
1996 9.25 9.79 0.185 0.683 +15.34
1997 9.79 8.48 -- 0.406 - 9.17
Total $0.243 Total $1.182
Cumulative total return as of 12/31/97: - 1.47%**
* Figures may include short-term capital gains distributions.
** Figures do not include sales charge; results would be lower if sales charge was included.
</TABLE>
<TABLE>
<CAPTION>
Recent
Performance
Results*
12 Month 3 Month
12/31/97 9/30/97 12/31/96 % Change % Change
<S> <C> <C> <C> <C> <C>
Class A Shares $8.51 $10.60 $9.81 -13.25% -19.72%
Class B Shares 8.40 10.42 9.72 -13.58 -19.39
Class C Shares 8.38 10.40 9.71 -13.70 -19.42
Class D Shares 8.48 10.56 9.79 -13.38 -19.70
Class A Shares -- Total Return - 8.88(1) -15.67(1)
Class B Shares -- Total Return - 9.85(2) -15.91(2)
Class C Shares -- Total Return - 9.88(3) -15.86(3)
Class D Shares -- Total Return - 9.17(4) -15.79(4)
* Investment results shown do not reflect sales charges; results shown would be lower if a sales charge was included.
(1) Percent change includes reinvestment of $0.421 per share ordinary income dividends.
(2) Percent change includes reinvestment of $0.357 per share ordinary income dividends.
(3) Percent change includes reinvestment of $0.364 per share ordinary income dividends.
(4) Percent change includes reinvestment of $0.406 per share ordinary income dividends.
</TABLE>
Average Annual
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 12/31/97 -8.88% -13.67%
Inception (10/21/94)
through 12/31/97 +0.38 - 1.30
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 12/31/97 -9.85% -13.31%
Inception (8/5/94)
through 12/31/97 -1.20 - 1.45
* Maximum contingent deferred sales charge is 4% and is reduced to
0% after 4 years.
** Assuming payment of applicable contingent deferred sales charge.
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Year Ended 12/31/97 -9.88% -10.75%
Inception (10/21/94)
through 12/31/97 -0.67 - 0.67
* Maximum contingent deferred sales charge is 1% and is reduced to
0% after 1 year.
** Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Sales Charge Sales Charge**
Class D Shares*
Year Ended 12/31/97 -9.17% -13.94%
Inception (8/5/94)
through 12/31/97 -0.44 - 2.00
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
<TABLE>
<CAPTION>
Merrill Lynch Global SmallCap Fund, Inc., December 31, 1997
SCHEDULE OF INVESTMENTS (in US dollars)
Value Percent of
EUROPE Industries Shares Held Investments Cost (Note 1a) Net Assets
<S> <C> <C> <C> <C> <C> <C>
Denmark Marking Devices 9,720 + Olicom A/S $308,053 $256,940 0.3%
Textiles 8,882 Carli Grey International A/S 267,698 499,164 0.5
----------- ----------- ------
Total Investments in Denmark 575,751 756,104 0.8
=========== =========== ======
Finland Holding Company 3,926 Fiskars OY AB (Class A) 203,002 425,212 0.5
Household Products 7,244 Huhtamaki OY 325,534 299,201 0.3
----------- ----------- ------
Total Investments in Finland 528,536 724,413 0.8
=========== =========== ======
France Automobile Parts 8,000 Bertrand Faure S.A. 434,883 568,732 0.6
Computer Software 1,788 Altran Technologies S.A. 537,046 546,589 0.6
20,000 + Business Objects S.A. (ADR)(a) 243,702 205,000 0.2
----------- ----------- ------
780,748 751,589 0.8
Electrical Components 12,000 Cofidur S.A. 488,534 343,911 0.4
Holding Company 1,399 Societe EuraFrance S.A. 423,366 569,455 0.6
Home Furnishings 4,896 Castorama Dubois Investissements
S.C.A. 664,530 593,800 0.6
Insurance 2,437 Union des Asurances Federales S.A. 295,206 319,859 0.4
Manufacturing 17,170 Sommer-Allibert S.A. 510,514 595,915 0.6
Plastics 2,437 Compagnie Plastic Omnium S.A. 289,123 321,478 0.4
Steel 8,800 Vallourec S.A. 549,943 524,871 0.6
----------- ----------- ------
Total Investments in France 4,436,847 4,589,610 5.0
=========== =========== ======
Germany Auto & Truck 4,800 Koegel Fahrzeugwerke AG (Preferred) 621,179 493,662 0.5
Machine Tools
& Machinery 2,120 Walter AG 574,925 707,138 0.8
Machinery & Engineering 8,033 + Kloeckner Werke AG 723,566 538,123 0.6
Manufacturing 3,680 Escada AG (Preferred) 610,130 415,299 0.5
3,087 KSB AG (Preferred) 442,057 686,458 0.7
------------ ----------- ------
1,052,187 1,101,757 1.2
Retail Specialty 13,794 Moebel Walther AG 590,239 444,770 0.5
----------- ----------- ------
Total Investments in Germany 3,562,096 3,285,450 3.6
=========== =========== ======
Ireland Containers 68,000 + Clondalkin Group PLC 667,110 541,612 0.6
Foods 59,608 Greencore Group PLC 299,101 280,991 0.3
----------- ----------- ------
Total Investments in Ireland 966,211 822,603 0.9
=========== =========== ======
Netherlands Building & Construction 15,441 NBM-Amstelland NV 410,332 398,286 0.4
Computer Software 36,455 + DOCdata NV 516,725 629,278 0.7
Electrical Equipment 7,799 Twentsche Kabel Holding NV 309,938 386,565 0.4
Engineering & Construction 11,056 + Volker Wessels Stevin NV 235,136 343,523 0.4
Holding Company 16,972 Internatio-Muller NV 342,789 534,037 0.6
Industrial Services 21,563 Koninklijke Pakhoed NV 805,805 622,132 0.7
----------- ----------- ------
Total Investments in the Netherlands 2,620,725 2,913,821 3.2
=========== =========== ======
Norway Computer Software 10,420 Merkantildata ASA 246,308 359,652 0.4
Newspaper/Publishing 16,244 Schibsted ASA 337,559 279,232 0.3
----------- ----------- ------
Total Investments in Norway 583,867 638,884 0.7
=========== =========== ======
Poland Engineering & Construction 54,607 Elektrim Towarzystwo Handlowe S.A. 189,787 529,005 0.6
----------- ----------- ------
Total Investments in Poland 189,787 529,005 0.6
=========== =========== ======
Portugal Retail Sales 9,122 Establecimentos Jeronimo Martins
& Filho S.A. 106,068 289,839 0.3
----------- ----------- ------
Total Investments in Portugal 106,068 289,839 0.3
=========== =========== ======
Russia Cellular Telephones 24,360 + Vimpel-Communications (ADR)(a) 733,336 867,825 0.9
Utilities --
Communications 652 Nizhnovenergo 42,380 18,256 0.0
----------- ----------- ------
Total Investments in Russia 775,716 886,081 0.9
=========== =========== ======
Spain Automotive & Equipment 21,000 Estacionamientos Subterraneos,
S.A. (Ordinary) 403,390 412,817 0.4
----------- ----------- ------
Total Investments in Spain 403,390 412,817 0.4
=========== =========== ======
Sweden Engineering 24,800 Kalmar Industries AB 515,945 399,824 0.4
Engineering &
Construction 17,546 Svedala Industri AB 230,417 289,505 0.3
Forest Products/ 629,500 Rottneros Bruks AB Free 970,956 487,616 0.5
Paper & Packaging
Hotels 17,850 + Scandic Hotels AB 323,991 436,161 0.5
----------- ----------- ------
Total Investments in Sweden 2,041,309 1,613,106 1.7
=========== =========== ======
Switzerland Advertising 1,920 Edipresse S.A. (Bearer) 413,501 557,780 0.6
Banking 1,730 Banque Cantonale Vaudois (BCV) 495,373 591,483 0.6
Industrials 3,885 Oerlikon-Buehrle Holdings AG 418,893 545,683 0.6
Machinery 567 Saurer AG (Registered) 240,813 411,799 0.5
Medical Supplies 186 Disetronic Holding AG 404,135 407,811 0.4
Paper & Forest Products 24,800 Mercer International, Inc. (ADR)(a) 422,910 217,000 0.2
Photography 1,197 Fotolabo S.A. 401,670 266,547 0.3
Retailing 860 Grands Magasins Jelmoli S.A. 487,840 742,446 0.8
----------- ----------- ------
Total Investments in Switzerland 3,285,135 3,740,549 4.0
=========== =========== ======
United
Kingdom Aerospace 17,700 DONCASTERS PLC (ADR)(a) 323,541 373,913 0.4
Beverages 131,500 Matthew Clark PLC 1,188,993 345,582 0.4
Chemicals 231,246 Inspec Group PLC 940,173 892,581 0.9
Computer Services 32,850 Logica PLC 493,115 627,510 0.7
24,461 Misys PLC 241,862 739,260 0.8
------------ ----------- ------
734,977 1,366,770 1.5
Computers 158,600 + Acorn Group PLC 231,981 351,676 0.4
Electronic Components 36,455 Fairey Group PLC 309,973 305,374 0.3
Electronics 64,000 Premier Farnell PLC 558,170 460,426 0.5
Employee Services 161,500 Corporate Services Group PLC 485,710 565,012 0.6
Industrial Services 48,000 Select Appointments (Holdings) PLC 467,928 441,504 0.5
Merchandising 61,958 Smith (W.H.) Group PLC 378,619 395,870 0.4
Metals 50,288 Johnson Matthey PLC 546,365 450,159 0.5
Oil Services 40,000 Expro International Group PLC 330,488 350,181 0.4
Pharmaceuticals 162,300 + Oxford Molecular Group PLC 828,101 645,118 0.7
Rental Services 141,400 Ashtead Group PLC 331,499 441,274 0.5
Textiles 144,380 Dewhirst Group PLC 404,828 578,632 0.6
----------- ----------- ------
Total Investments in the
United Kingdom 8,061,346 7,964,072 8.6
=========== =========== ======
Total Investments in Europe 28,136,784 29,166,354 31.5
=========== =========== ======
LATIN
AMERICA
Argentina Retailing 24,889 Grimoldi S.A. 95,150 62,235 0.1
----------- ----------- ------
Total Investments in Argentina 95,150 62,235 0.1
=========== =========== ======
Brazil Textiles 2,054,000 + de Tecidos Norte de Minas S.A.
(COTEMINAS) (Preferred) 652,560 737,729 0.8
2,054,000 Empresa Nacional de Comercio S.A. 0 0 0.0
----------- ----------- ------
652,560 737,729 0.8
Utilities -- Electric 822,478 Centrais Eletricas de Santa
Catarina S.A. (CELESC) 'B'
(Preferred) 729,222 1,024,413 1.1
----------- ----------- ------
Total Investments in Brazil 1,381,782 1,762,142 1.9
=========== =========== ======
Colombia Banking 31,701 Banco Ganadero S.A. (Class A)
(Preferred) (ADR)(a) 621,492 760,824 0.8
----------- ----------- ------
Total Investments in Colombia 621,492 760,824 0.8
=========== =========== ======
Mexico Banking 350,850 + Grupo Financiero Banorte, S.A. de C.V.
(Class B) 387,614 613,051 0.7
Broadcasting -- Media 129,000 Grupo Radio Centro, S.A. de C.V.
(ADR)(a) 1,527,535 1,838,250 2.0
Engineering & Construction 243,450 Grupo Profesional Planeacion y
Proyectos, S.A. de C.V. (Class B) 1,084,045 947,153 1.0
----------- ----------- ------
Total Investments in Mexico 2,999,194 3,398,454 3.7
=========== =========== ======
Peru Foods 250,947 + Consorcio Alimentos Fabril
Pacifico S.A. 268,537 227,547 0.2
----------- ----------- ------
Total Investments in Peru 268,537 227,547 0.2
=========== =========== ======
Venezuela Textiles 68,880 + Sudamtex de Venezuela S.A.C.A.
(ADR)(a)(c) 984,000 619,920 0.7
----------- ----------- ------
Total Investments in Venezuela 984,000 619,920 0.7
=========== =========== ======
Total Investments in Latin America 6,350,155 6,831,122 7.4
=========== =========== ======
MIDDLE EAST/
AFRICA
Egypt Industrial -- Other 83,200 Paints & Chemicals Industries Co.
S.A.E. (GDR)(b)(c) 977,600 867,360 0.9
----------- ----------- ------
Total Investments in Egypt 977,600 867,360 0.9
=========== =========== ======
South
Africa Newspaper/Publishing 41,035 Nasionale Pers Beperk 468,429 337,459 0.4
Retailing 468,000 Metro Cash & Carry Ltd. 450,022 408,923 0.4
----------- ----------- ------
Total Investments in South Africa 918,451 746,382 0.8
=========== =========== ======
Total Investments in the Middle
East/Africa 1,896,051 1,613,742 1.7
=========== =========== ======
NORTH
AMERICA
Canada Leisure 42,384 Four Seasons Hotels Inc. 495,789 1,332,737 1.5
Mining 32,925 Cambior Inc. 457,703 193,434 0.2
----------- ----------- ------
Total Investments in Canada 953,492 1,526,171 1.7
=========== =========== ======
United
States Air Transportation 13,950 Air Express International Corporation 252,271 420,244 0.5
Apparel 13,200 + Farah, Inc. 111,210 73,425 0.1
50,100 + Norton McNaughton, Inc. 538,399 263,025 0.3
----------- ----------- ------
649,609 336,450 0.4
Automobile Parts 27,000 Walbro Corp. 494,287 357,750 0.4
Banking & Finance 7,087 Charter One Financial, Inc. 117,313 444,709 0.5
27,930 + Civic BanCorp 330,916 520,196 0.5
11,600 Haven Bancorp, Inc. 164,925 258,100 0.3
----------- ----------- ------
613,154 1,223,005 1.3
Biotechnology 9,200 + COR Therapeutics, Inc. 108,187 205,850 0.2
13,000 + Cephalon, Inc. 133,730 147,875 0.2
4,100 + Gilead Sciences, Inc. 108,019 156,825 0.2
33,575 + NeoRx Corp. 227,194 184,663 0.2
18,500 + Scios, Inc. 118,537 185,000 0.2
----------- ----------- ------
695,667 880,213 1.0
Broadcasting 90,300 + Paxson Communications Corp. 961,885 665,963 0.7
Building & Building
Materials 16,500 + Giant Cement Holding, Inc. 227,850 379,500 0.4
10,000 Oakwood Homes Corporation 199,225 331,875 0.4
26,800 Ryland Group, Inc. 376,002 633,150 0.7
12,300 + Toll Brothers, Inc. 247,648 329,025 0.3
----------- ----------- ------
1,050,725 1,673,550 1.8
Cable 13,100 General Cable Corporation 275,100 474,056 0.5
Computer Software 9,800 + Cylink Corporation 140,722 95,550 0.1
11,250 + Harbinger Corporation 232,005 313,594 0.3
33,900 + Mentor Graphics Corporation 346,082 328,406 0.4
22,700 + Software Spectrum, Inc. 360,426 266,725 0.3
3,963 + Sterling Commerce, Inc. 56,142 152,328 0.2
46,600 + Structural Dynamics Research Corp. 931,486 1,048,500 1.1
----------- ----------- ------
2,066,863 2,205,103 2.4
Computers & Computer
Services 9,600 + BISYS Group, Inc. (The) 312,561 319,200 0.3
12,550 + Boole & Babbage, Inc. 269,919 374,931 0.4
10,700 + Ikos Systems, Inc. 106,112 65,538 0.1
9,200 National Data Corporation 338,324 332,350 0.4
20,300 + Phoenix Technologies Ltd. 277,500 246,138 0.3
8,050 + Storage Technology Corporation 320,766 498,597 0.5
7,800 + Vanstar Corporation 69,721 88,238 0.1
19,000 + Wang Laboratories, Inc. 411,092 420,375 0.4
----------- ----------- ------
2,105,995 2,345,367 2.5
Data Processing 30,600 + Axiom, Inc. 381,651 122,400 0.2
27,100 + Metromail Corporation 451,527 484,413 0.5
10,000 + Platinum Technology, Inc. 130,665 282,500 0.3
15,800 + Primark Corp. 434,580 642,862 0.7
73,000 + Sybase, Inc. 1,214,081 971,813 1.0
81,300 + VMARK Software, Inc. 603,910 619,912 0.7
----------- ----------- ------
3,216,414 3,123,900 3.4
Diversified 18,000 + ACX Technologies, Inc. 383,079 439,875 0.5
Electronics 10,600 + Alpha Industries, Inc. 72,605 170,925 0.2
50,500 + C.P. Clare Corp. 420,437 650,187 0.7
13,500 + CHS Electronics, Inc. 285,750 226,125 0.2
26,200 + DII Group, Inc. 290,567 704,125 0.8
11,600 + Nu Horizons Electronics Corp. 95,633 72,500 0.1
11,300 + Triumph Group, Inc. 309,978 375,725 0.4
----------- ----------- ------
1,474,970 2,199,587 2.4
Environmental Control 14,114 BHA Group Inc. (Class A) 198,583 264,637 0.3
34,000 + Envirosource, Inc. 124,533 102,000 0.1
----------- ----------- ------
323,116 366,637 0.4
Gaming 15,800 + WMS Industries, Inc. 307,818 333,775 0.4
Healthcare -- 18,300 + Magainin Pharmaceuticals, Inc. 193,027 147,544 0.2
Products/Services 27,400 + Magellan Health Services, Inc. 776,534 589,100 0.6
46,800 + Ramsay Health Care, Inc. 287,902 140,400 0.2
12,000 + Sierra Health Services, Inc. 381,993 403,500 0.4
----------- ----------- ------
1,639,456 1,280,544 1.4
Industrial Outsourcing 50,700 + SITEL Corporation 474,026 462,637 0.5
Insurance 6,600 American National Insurance Co. 570,555 613,800 0.7
42,000 + Gryphon Holdings, Inc. 611,539 698,250 0.7
21,000 PXRE Corp. 473,475 696,937 0.7
8,496 Reliastar Financial Corporation++ 135,132 349,929 0.4
----------- ----------- ------
1,790,701 2,358,916 2.5
Machinery 14,000 AGCO Corporation 328,730 409,500 0.4
25,500 Stewart & Stevenson Services, Inc. 617,389 650,250 0.7
----------- ----------- ------
946,119 1,059,750 1.1
Medical 6,450 + Biomatrix, Inc. 91,014 187,050 0.2
14,400 + Genome Therapeutics Corporation 123,171 91,800 0.1
25,000 + HCIA Inc. 312,439 296,875 0.3
33,000 + NABI, Inc. 222,517 113,437 0.1
42,600 + Physician Computer Network, Inc. 277,090 170,400 0.2
7,200 + VISX, Inc. 183,523 156,600 0.2
19,000 + Vivus, Inc. 490,891 201,875 0.2
----------- ----------- ------
1,700,645 1,218,037 1.3
Metals 8,150 Applied Industrial Technologies, Inc. 155,388 218,012 0.2
15,800 Castle (A.M.) & Company 291,876 361,425 0.4
17,700 + Citation Corporation 238,490 287,625 0.3
17,400 Commonwealth Industries, Inc. 327,256 254,475 0.3
28,000 + Shiloh Industries, Inc. 377,537 532,000 0.6
6,700 + Wolverine Tube, Inc. 192,590 207,700 0.2
----------- ----------- ------
1,583,137 1,861,237 2.0
Natural Resources 22,700 + Benton Oil and Gas Company 427,019 293,681 0.3
18,300 + Brown (Tom), Inc. 210,967 352,275 0.4
22,000 + Plains Resources, Inc. 137,500 378,125 0.4
15,500 + TransTexas Gas Corp. 170,500 229,594 0.2
40,263 + Zemex Corporation 344,670 352,301 0.4
----------- ----------- ------
1,290,656 1,605,976 1.7
Pharmaceuticals 5,900 + Neurogen Corporation 78,712 79,650 0.1
16,000 + Pharmaceutical Product
Development, Inc. 216,371 246,000 0.3
----------- ----------- ------
295,083 325,650 0.4
Restaurants 21,500 + Au Bon Pain Company, Inc. (Class A) 138,629 162,594 0.2
Retailing 30,900 Baker (J.), Inc. 276,568 173,812 0.2
16,500 + Department 56, Inc. 375,676 474,375 0.5
18,200 Fingerhut Companies, Inc. 364,195 389,025 0.4
14,500 + Micro Warehouse, Inc. 270,472 202,094 0.2
----------- ----------- ------
1,286,911 1,239,306 1.3
Steel 3,600 + Novamerican Steel Inc. 39,000 40,500 0.0
Telecommunications & 7,200 + Allen Telecom Inc. 127,512 132,750 0.1
Equipment 96,800 + Applied Digital Access, Inc. 499,074 562,650 0.6
33,200 + Comdial Corporation 204,775 307,100 0.3
15,200 + MasTec, Inc. 368,448 347,700 0.4
63,600 + Metromedia International Group, Inc. 775,534 604,200 0.7
51,300 + Network Equipment Technologies, Inc. 738,108 750,262 0.8
----------- ----------- ------
2,713,451 2,704,662 2.9
Transportation 10,000 Circle International Group, Inc. 252,349 229,375 0.2
Wire & Cable Products 28,500 + Anixter International Inc. 462,092 470,250 0.5
----------- ----------- ------
Total Investments in the
United States 29,483,208 32,064,909 34.6
=========== =========== ======
Total Investments in North America 30,436,700 33,591,080 36.3
=========== =========== ======
PACIFIC
BASIN
Hong Kong Appliances 332,000 Guangdong Kelon Electrical Holdings
Company Ltd. (Class H) 471,804 340,678 0.4
Cement Manufacturers 1,188,000 + Anhui Conch Cement Co. Ltd. (Class H) 353,773 207,009 0.2
Electrical Equipment 1,368,000 Harbin Power Equipment Company Ltd. 248,460 165,979 0.2
Electronic Components 1,498,000 QPL International Holdings Ltd. 1,592,944 667,067 0.7
Foods/Food Processing 4,136,700 Tingyi (Cayman Islands) Holdings Co. 886,928 539,279 0.6
Packaging 2,392,400 Sinocan Holdings Ltd. 860,560 663,912 0.7
Telecommunications 262,000 Smartone Telecommunications 510,017 505,570 0.5
----------- ----------- ------
Total Investments in Hong Kong 4,924,486 3,089,494 3.3
=========== =========== ======
Indonesia Banking --
International 606,000 PT Bank Bali (Foreign) 634,023 81,361 0.1
Consumer -- Goods 1,589,080 PT Wicaksana Overseas International 1,186,891 58,855 0.1
----------- ----------- ------
Total Investments in Indonesia 1,820,914 140,216 0.2
=========== =========== ======
Japan Automobile Parts 58,000 Murakami Corporation 1,148,025 258,273 0.3
25,000 Showa Corporation 254,422 143,954 0.1
------------ ----------- ------
1,402,447 402,227 0.4
Beverages 79,000 Hokkaido Coca-Cola Bottling
Co., Ltd. 1,298,058 576,200 0.6
81,400 Sanyo Coca-Cola Bottling Co., Ltd. 1,118,168 687,447 0.8
------------ ----------- ------
2,416,226 1,263,647 1.4
Chemicals 33,000 Canon Chemicals, Inc. 573,804 233,850 0.2
45,000 Shin-Etsu Polymer Co., Ltd. 188,582 148,560 0.2
------------ ----------- ------
762,386 382,410 0.4
Computer Services 15,000 Sumisho Computer Systems Corp. 249,015 302,879 0.3
51,700 TKC Corporation 1,374,367 789,889 0.9
------------ ----------- ------
1,623,382 1,092,768 1.2
Construction 89,600 Japan Foundation Engineering
Co., Ltd. 1,735,016 502,173 0.5
164,000 Yondenko Corp. 1,510,731 551,493 0.6
------------ ----------- ------
3,245,747 1,053,666 1.1
Consumer Electricals 59,000 Roland Corporation 1,429,975 1,087,140 1.2
Electrical Equipment 16,000 Shinmei Electric Co. 799,257 233,397 0.2
37,000 Sukegawa Electric Co. 476,115 60,507 0.1
------------ ----------- ------
1,275,372 293,904 0.3
Electronic Components 35,000 Chiyoda Integre Co., Ltd. 220,393 119,040 0.1
Foods/Food 43,000 Ariake Japan Co., Ltd. 1,525,975 1,403,071 1.5
Processing
Health Services 25,000 Kanto Biomedical Laboratory Co. 528,125 119,002 0.1
Industrials 14,500 Nitto Kohki Company Ltd. 488,740 150,288 0.1
Iron & Steel 218,000 Nippon Chutetsukan K.K. 1,367,147 363,194 0.4
Machinery 27,000 Miura Co., Ltd. 449,645 275,701 0.3
5,000 Towa Corporation 208,085 104,031 0.1
------------ ----------- ------
657,730 379,732 0.4
Metal Fabrication 124,000 Toyo Kohan Co., Ltd. 1,057,406 552,169 0.6
Pollution Control 88,000 Organo Corporation 907,607 241,198 0.3
Real Estate 53,000 Keihanshin Real Estate Co. Ltd. 525,507 215,255 0.2
56,000 TOC Company Ltd. 596,958 425,643 0.5
------------ ----------- ------
1,122,465 640,898 0.7
Restaurants 18,000 Aim Services Co., Ltd. 404,458 171,363 0.2
44,000 Mos Food Services, Inc. 1,279,994 510,096 0.6
83,000 Ohsho Food Service Corp. 2,244,318 694,587 0.7
------------ ----------- ------
3,928,770 1,376,046 1.5
Retail Specialty 62,000 ADO Electric Industrial Co., Ltd. 1,832,223 290,365 0.3
28,000 Nitori Co. 846,860 145,965 0.2
----------- ----------- ------
2,679,083 436,330 0.5
Services 69,000 Ichinen Co., Ltd. 1,656,095 529,750 0.6
Trading 34,000 Japan CBM Corp. 1,197,480 574,280 0.6
Trucking 108,000 Nippon Konpo Unyu Soko Co. 1,045,185 628,514 0.7
----------- ----------- ------
Total Investments in Japan 30,537,736 13,089,274 14.1
=========== =========== ======
Malaysia Advertising 221,000 Seni Jaya Corporation BHD 708,918 119,459 0.1
Newspaper/Publishing 143,000 New Straits Times Press BHD 602,723 177,416 0.2
----------- ----------- ------
Total Investments in Malaysia 1,311,641 296,875 0.3
=========== =========== ======
New Zealand Agriculture 1,090,500 Wrightson Ltd. 808,404 506,254 0.6
Chemicals 146,000 Fernz Corporation Ltd. 439,021 377,021 0.4
Textiles 176,150 Lane Walker Rudkin Industries, Ltd. 196,618 117,553 0.1
----------- ----------- ------
Total Investments in New Zealand 1,444,043 1,000,828 1.1
=========== =========== ======
Philippines Financial Services 46,128 Far East Bank & Trust Company 82,959 56,507 0.1
----------- ----------- ------
Total Investments in the Philippines 82,959 56,507 0.1
=========== =========== ======
Thailand Financial Services 93,200 Industrial Finance Corporation of
Thailand 179,847 14,504 0.0
Transportation 62,000 Thoresen Thai Agency PLC 'Express'
(Warrants)(d) 0 1,043 0.0
----------- ----------- ------
Total Investments in Thailand 179,847 15,547 0.0
=========== =========== ======
Total Investments in the
Pacific Basin 40,301,626 17,688,741 19.1
=========== =========== ======
SOUTHEAST
ASIA
India Financial Services 24,764 Industrial Credit & Investment
Corporation of India Ltd.
(ICICI) (GDR)(b) 277,849 321,932 0.4
Recreation & Consumer
Goods 182,000 + Su-Raj Diamonds Ltd. 252,312 41,893 0.0
----------- ----------- ------
Total Investments in Southeast Asia 530,161 363,825 0.4
=========== =========== ======
SHORT-TERM Face
SECURITIES Amount Issue
Commercial Paper* US$ 253,000 General Motors Acceptance Corp., 6.75%
due 1/02/98 252,953 252,953 0.3
----------- ----------- ------
Total Investments in Commercial Paper 252,953 252,953 0.3
=========== =========== ======
US Government Agency 2,000,000 Federal National Mortgage Association,
Obligations* 5.62% due 1/08/1998 1,997,814 1,997,814 2.1
----------- ----------- ------
Total Investments in US Government
Agency Obligations 1,997,814 1,997,814 2.1
=========== =========== ======
Total Investments in Short-Term
Securities 2,250,767 2,250,767 2.4
=========== =========== ======
OPTIONS Nominal Value Covered Premiums Value Percent of
PURCHASED by Options Purchased Issue Paid (Note 1a) Net Assets
Currency Put Options 2,000,000 German Deutschemark, expiring February
Purchased 1998 at DM1.95 13,500 1,400 0.0
5,200,000 Japanese Yen, expiring February
1998 at (yen)120 77,740 388,960 0.4
----------- ----------- ------
Total Investments in Options Purchased 91,240 390,360 0.4
=========== =========== ======
Total Investments $109,993,484 91,895,991 99.2
============
Unrealized Depreciation on Forward Foreign Exchange Contracts** (66,179) (0.1)
Variation Margin on Financial Futures Contracts*** 900 0.0
Other Assets Less Liabilities 809,255 0.9
----------- ------
Net Assets $92,639,967 100.0%
=========== ======
(a) American Depositary Receipts (ADR).
(b) Global Depositary Receipts (GDR).
(c) The security may be offered and sold to "qualified institutional
buyers" under Rule 144A of the Securities Act of 1933.
(d) Warrants entitle the Fund to purchase a predetermined number of
shares of stock/face amount of bonds at a predetermined price until
the expiration date.
+ Non-income producing security.
++ Acquired shares of Security-Connecticut Corp.
* 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.
** Forward foreign exchange contracts as of December 31, 1997 were
as follows:
Unrealized
Foreign Currency Expiration Depreciation
Purchased Date (Note 1c)
(yen) 312,000,000 February 1998 $(66,179)
----------
Total Unrealized Depreciation on Forward
Foreign Exchange Contracts -- Net
(US$ Commitment -- $2,476,377) $(66,179)
==========
*** Financial futures contracts sold as of December 31, 1997 were as
follows:
Number of Expiration Value
Contracts Issue Exchange Date (Note 1a)
18 S&P Index CME March 1998 $4,405,950
Total Financial Futures Contracts Sold ----------
(Total Contract Price -- $4,434,525) $4,405,950
==========
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
As of December 31, 1997
<S> <C> <C> <C>
Assets: Investments, at value (identified cost -- $109,902,244) (Note 1a) $91,505,631
Options purchased, at value (preiums paid -- $91,240) (Notes 1a & 1c) 390,360
Foreign cash (Note 1d) 380,734
Cash on deposit for financial futures contracts 525,000
Cash 698
Receivables
Capital shares sold $712,645
Securities sold 183,561
Dividends 145,998
Forward foreign exchange contracts (Note 1c) 11,144
Variation margin (Note 1c) 900 1,054,248
--------
Deferred organization expenses (Note 1g) 76,377
Prepaid registration fees and other assets (Note 1g) 57,410
-----------
Total assets 93,990,458
-----------
Liabilities: Unrealized depreciation on forward foreign exchange
contracts -- net (Note 1c) 66,179
Payables:
Capital shares redeemed 766,600
Distributor (Note 2) 75,759
Investment adviser (Note 2) 75,106
Securities purchased 53,715
Forward foreign exchange contracts (Note 1c) 21,012 992,192
Accrued expenses and other liabilities ----------- 292,120
-----------
Total liabilities 1,350,491
-----------
Net Assets: Net assets $92,639,967
===========
Net Assets Class A Common Stock, $0.10 par value, 100,000,000 shares authorized $43,710
Consist of: Class B Common Stock, $0.10 par value, 100,000,000 shares authorized 848,687
Class C Common Stock, $0.10 par value, 100,000,000 shares authorized 52,061
Class D Common Stock, $0.10 par value, 100,000,000 shares authorized 156,639
Paid-in capital in excess of par 112,335,055
Accumulated investment loss -- net (732,591)
Accumulated realized capital losses on investments and foreign
currency transactions -- net (1,851,882)
Unrealized depreciation on investments and foreign currency
transactions -- net (18,211,712)
-----------
Net assets $92,639,967
===========
Net Asset Class A -- Based on net assets of $3,718,757 and 437,097 shares outstanding $8.51
Value: -----------
Class B -- Based on net assets of $71,272,869 and 8,486,874 shares outstanding $8.40
===========
Class C -- Based on net assets of $4,360,863 and 520,610 shares outstanding $8.38
===========
Class D -- Based on net assets of $13,287,478 and 1,566,389 shares outstanding $8.48
===========
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
For the Six Months Ended December 31, 1997
<S> <C> <C> <C>
Investment Dividends (net of $59,485 foreign withholding tax) $683,390
Income Interest and discount earned 134,606
(Notes 1e & 1f): --------
Total income 817,996
--------
Expenses: Investment advisory fees (Note 2) $531,940
Account maintenance and distribution fees -- Class B (Note 2) 488,054
Transfer agent fees -- Class B (Note 2) 121,138
Custodian fees 72,213
Printing and shareholder reports 69,579
Accounting services (Note 2) 60,376
Professional fees 36,466
Registration fees (Note 1g) 35,109
Account maintenance and distribution fees -- Class C (Note 2) 27,175
Account maintenance fees -- Class D (Note 2) 21,689
Directors' fees and expenses 20,278
Amortization of organization expenses (Note 1g 19,379
Transfer agent fees -- Class D (Note 2) 18,227
Pricing fees 11,017
Transfer agent fees -- Class C (Note 2) 7,108
Transfer agent fees -- Class A (Note 2) 5,013
Other 5,826
--------
Total expenses 1,550,587
------------
Investment loss -- net (732,591)
------------
Realized & Realized gain from:
Unrealized Gain Investments -- net 592,946
(Loss) on Foreign currency transactions -- net 760,332 1,353,278
Investments & ------------
Foreign Currency Change in unrealized appreciation/depreciation on:
Transactions -- Net Investments -- net (22,081,395)
(Notes 1c, 1d, Foreign currency transactions -- net 137,722 (21,943,673)
1f & 3): ------------ ------------
Net realized and unrealized loss on investments and foreign
currency transactions (20,590,395)
------------
Net Decrease in Net Assets Resulting from Operations $(21,322,986)
============
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
<S> <C> <C> <C>
For the Six For the
Months Ended Year Ended
December 31, June 30,
Increase (Decrease) in Net Assets: 1997 1997
Operations: Investment loss -- net $(732,591) $(1,273,307)
Realized gain on investments and foreign currency transactions -- net 1,353,278 5,253,606
Change in unrealized appreciation/depreciation on investments
and foreign currency transactions -- net (21,943,673) 4,475,472
------------ ------------
Net increase (decrease) in net assets resulting from operations (21,322,986) 8,455,771
------------ ------------
Dividends & Investment income -- net:
Distributions to Class A -- (27,732)
Shareholders Class B -- (680,759)
(Note 1h): Class C -- (34,097)
Class D -- (163,840)
In excess of investment income -- net:
Class A -- (66,906)
Class B -- (1,642,412)
Class C -- (82,264)
Class D -- (395,284)
Realized gain on investments -- net:
Class A (179,237) (179,170)
Class B (3,120,853) (6,808,450)
Class C (186,701) (324,707)
Class D (615,104) (1,160,558)
------------ ------------
Net decrease in net assets resulting from dividends
and distributions to shareholders (4,101,895) (11,566,179)
------------ ------------
Capital Share Net decrease in net assets derived from capital share transactions (24,107,361) (17,802,460)
Transactions ------------ ------------
(Note 4):
Net Assets: Total decrease in net assets (49,532,242) (20,912,868)
Beginning of period 142,172,209 163,085,077
------------ ------------
End of period $ 92,639,967 $142,172,209
============ ============
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Class A
----------------------------------------
For the For the
Six For the Period
Months Year Ended Oct. 21,
The following per share data and ratios have been derived Ended June 30, 1994+ to
from information provided in the financial statements. Dec. 31, ----------------- June 30,
1997++ 1997++ 1996 1995
Increase (Decrease) in Net Asset Value:
<S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $10.69 $10.86 $8.92 $9.82
Operating ------ ------ ------ ------
Performance: Investment income (loss) -- net (.01) .01 .13 .04
Realized and unrealized gain (loss)
on investments and foreign currency
transactions -- net (1.75) .72 1.97 (.93)
------ ------ ------ ------
Total from investment operations (1.76) .73 2.10 (.89)
------ ------ ------ ------
Less dividends and distributions:
Investment income -- net -- (.09) (.10) --
In excess of investment income -- net -- (.22) -- --
Realized gain on investments -- net (.42) (.59) (.06) --
In excess of realized gain on investments -- net -- -- -- (.01)
------ ------ ------ ------
Total dividends and distributions (.42) (.90) (.16) (.01)
------ ------ ------ ------
Net asset value, end of period $8.51 $10.69 $10.86 $8.92
====== ====== ====== ======
Total Investment Based on net asset value per share (16.38%)++++ 7.53% 23.87% (9.11%)++++
Return:** ====== ====== ====== ======
Ratios to Average
Net Asets: Expenses 1.59%* 1.53% 1.55% 1.62%*
====== ====== ====== ======
Investment income (loss) -- net (.26%)* .13% .46% 1.06%*
====== ====== ====== ======
Supplemental Net assets, end of period (in thousands) $3,719 $5,508 $3,083 $5,992
Data ====== ====== ====== ======
Portfolio turnover 23.23% 63.17% 60.33% 47.96%
====== ====== ====== ======
Average commission rate paid+++++ $.0081 $.0104 $.0011 --
====== ====== ====== ======
* Annualized.
** Total investment returns exclude the effects of sales loads.
++++ 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. The "Average Commission Rate
Paid" includes commissions paid in foreign currencies, which have been converted into US dollars using
the prevailing exchange rate on the date of the transaction. Such conversions may significantly affect
the rate shown.
+ Commencement of operations.
++ Based on average shares outstanding.
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Class B
----------------------------------------
For the For the
Six For the Period
Months Year Ended Oct. 21,
The following per share data and ratios have been derived Ended June 30, 1994+ to
from information provided in the financial statements. Dec. 31, ----------------- June 30,
1997++ 1997++ 1996 1995
Increase (Decrease) in Net Asset Value:
<S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $10.54 $10.71 $8.84 $10.00
Operating ------- -------- -------- --------
Performance: Investment income (loss) -- net (.07) (.10) (.06) .01
Realized and unrealized gain (loss) on investments
and foreign currency transactions -- net (1.71) .72 2.04 (1.16)
------- -------- -------- --------
Total from investment operations (1.78) .62 1.98 (1.15)
------- -------- -------- --------
Less dividends and distributions:
Investment income -- net -- (.06) (.05) --
In excess of investment income -- net -- (.14) -- --
Realized gain on investments -- net (.36) (.59) (.06) --
In excess of realized gain on investments -- net -- -- -- (.01)
------- -------- -------- --------
Total dividends and distributions (.36) (.79) (.11) (.01)
------- -------- -------- --------
Net asset value, end of period $8.40 $10.54 $10.71 $8.84
======= ======== ======== ========
Total Investment Based on net asset value per share (16.86%)++++ 6.47% 22.57% (11.55%)++++
Return ======= ======== ======== ========
Ratios to Average Expenses 2.63%* 2.58% 2.61% .83%*
Net Assets: ======= ======== ======== ========
Investment income (loss) -- net (1.32%)* (1.00%) (.66%) .10%*
======= ======== ======== ========
Supplemental Net assets, end of period (in thousands) $71,273 $111,261 $131,656 $132,296
Data: ======= ======== ======== ========
Portfolio turnover 23.23% 63.17% 60.33% 47.96%
======= ======== ======== ========
Average commission rate paid+++++ $.0081 $.0104 $.0011 --
======= ======== ======== ========
* Annualized.
** Total investment returns exclude the effects of sales loads.
++++ 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. The "Average Commission Rate
Paid" includes commissions paid in foreign currencies, which have been converted into US dollars using
the prevailing exchange rate on the date of the transaction. Such conversions may significantly affect
the rate shown.
+ Commencement of operations.
++ Based on average shares outstanding.
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Class C
----------------------------------------
For the For the
Six For the Period
Months Year Ended Oct. 21,
The following per share data and ratios have been derived Ended June 30, 1994+ to
from information provided in the financial statements. Dec. 31, ----------------- June 30,
1997++ 1997++ 1996 1995
Increase (Decrease) in Net Asset Value:
<S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $10.52 $10.71 $8.84 $9.80
Operating ------ ------ ------ ------
Performance: Investment income (loss) -- net (.07) (.10) (.05) .01
Realized and unrealized gain (loss) on investments
and foreign currency transactions -- net (1.71) .71 2.03 (.96)
------ ------ ------ ------
Total from investment operations (1.78) .61 1.98 (.95)
------ ------ ------ ------
Less dividends and distributions:
Investment income -- net -- (.06) (.05) --
In excess of investment income -- net -- (.15) -- --
Realized gain on investments -- net (.36) (.59) (.06) --
In excess of realized gain on investments -- net -- -- -- (.01)
------ ------ ------ ------
Total dividends and distributions (.36) (.80) (.11) (.01)
====== ====== ====== ======
Net asset value, end of period $8.38 $10.52 $10.71 $8.84
====== ====== ====== ======
Total Investment Based on net asset value per share (16.82%)++++ 6.38% 22.56% (9.75%)++++
Return:** ====== ====== ====== ======
Ratios to Average Expenses 2.64%* 2.60% 2.63% 2.66%*
Net Assets: ====== ====== ====== ======
Investment income (loss) -- net (1.33%)* (1.00%) (.64%) .20%*
====== ====== ====== ======
Supplemental Net assets, end of period (in thousands) $4,361 $5,962 $5,753 $4,924
Data: ====== ====== ====== ======
Portfolio turnover 23.23% 64.17% 60.33% 47.96%
====== ====== ====== ======
Average commission rate paid+++++ $.0081 $.0104 $.0011 --
====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
Class D
----------------------------------------
For the For the
Six For the Period
Months Year Ended Oct. 21,
The following per share data and ratios have been derived Ended June 30, 1994+ to
from information provided in the financial statements. Dec. 31, ----------------- June 30,
1997++ 1997++ 1996 1995
Increase (Decrease) in Net Asset Value:
<S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $10.66 $10.83 $8.91 $10.00
Operating ------- ------- ------- -------
Performance: Investment income (loss) -- net (.03) (.02) .02 .08
Realized and unrealized gain (loss) on investments
and foreign currency transactions -- net (1.74) .72 2.05 (1.16)
------- ------- ------- -------
Total from investment operations (1.77) .70 2.07 (1.08)
------- ------- ------- -------
Less dividends and distributions:
Investment income -- net -- (.08) (.09) --
In excess of investment income -- net -- (.20) -- --
Realized gain on investments -- net (.41) (.59) (.06) --
In excess of realized gain on investments -- net -- -- -- (.01)
------- ------- ------- -------
Total dividends and distributions (.41) (.87) (.15) (.01)
------- ------- ------- -------
Net asset value, end of period $8.48 $10.66 $10.83 $8.91
======= ======= ======= =======
Total Investment Based on net asset value per share (16.58%)++++ 7.27% 23.50% (10.85%)++++
Return:** ======= ======= ======= =======
Ratios to Average Expenses 1.84%* 1.80% 1.83% 1.77%*
Net Assets: ======= ======= ======= =======
Investment income (loss) -- net (.54%)* (.21%) .10% .90%*
======= ======= ======= =======
Supplemental Net assets, end of period (in thousands) $13,287 $19,441 $22,593 $23,928
Data: ======= ======= ======= =======
Portfolio turnover 23.23% 63.17 60.33% 47.96%
======= ======= ======= =======
Average commission rate paid+++++ $.0081 $.0104 $.0011 --
======= ======= ======= =======
* Annualized.
** Total investment returns exclude the effects of sales loads.
++++ 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. The "Average Commission Rate
Paid" includes commissions paid in foreign currencies, which have been converted into US dollars using
the prevailing exchange rate on the date of the transaction. Such conversions may significantly affect
the rate shown.
+ Commencement of operations.
++ Based on average shares outstanding.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Global SmallCap Fund, Inc., December 31, 1997
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch Global SmallCap Fund, Inc. (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
Fund offers four classes of shares under the Merrill Lynch Select
PricingSM System. Shares of Class A and Class D are sold with a front-
end sales charge. Shares of Class B and Class C may be subject to a
contingent deferred sales charge. All classes of shares have identical
voting, dividend, liquidation and other rights and the same terms and
conditions, except that Class B, Class C and Class D Shares bear
certain expenses related to the account maintenance of such shares,
and Class B and Class C Shares also bear certain expenses related to
the distribution of such shares. Each class has exclusive voting
rights with respect to matters relating to its account maintenance and
distribution expenditures. The following is a summary of significant
accounting policies followed by the Fund.
(a) Valuation of investments -- Portfolio securities 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 Directors as the primary market.
Securities which are traded both in the over-the-counter market and on
a stock exchange are valued according to the broadest and most
representative market. Options written are valued at the last sale
price in the case of exchange-traded options or, in the case of
options traded in the over-the-counter market, the last asked price.
Options purchased are valued at the last sale price in the case of
exchange-traded options or, in the case of options traded in the over-
the-counter market, the last bid price. Short-term securities are
valued at amortized cost, which approximates market value. Other
investments, including futures contracts and related options, are
stated at market value. Securities and assets for which market value
quotations are not available are valued at their fair value as
determined in good faith by or under the direction of the Fund's Board
of Directors.
(b) Repurchase agreements -- The Fund invests in US Government
securities pursuant to repurchase agreements with a member bank of the
Federal Reserve System or a primary dealer in US Government
securities. Under such agreements, the bank or primary dealer agrees
to repurchase the security at a mutually agreed upon time and price.
The Fund takes possession of the underlying securities, marks to
market such securities and, if necessary, receives additions to such
securities daily to ensure that the contract is fully collateralized.
(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.
[bullet] 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 Funds' 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
contracts.
[bullet] Foreign currency options and futures -- The Fund may also
purchase or sell listed or over-the-counter foreign currency options,
foreign currency futures and related options on foreign currency
futures as a short or long hedge against possible variations in
foreign exchange rates. Such transactions may be effected with respect
to hedges on non-US dollar-denominated securities owned by the Fund,
sold by the Fund but not yet delivered, or committed or anticipated to
be purchased by the Fund.
[bullet] Options -- The Fund is authorized to purchase and write call
and 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 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 transactions exceeds the
premium paid or received).
Written and purchased options are non-income producing investments.
[bullet] 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.
(d) Foreign currency transactions -- Transactions denominated in
foreign currencies are recorded at the exchange rate prevailing when
recognized. Assets and liabilities denominated in foreign currencies
are valued at the exchange rate at the end of the period. Foreign
currency transactions are the result of settling (realized) or valuing
(unrealized) assets or liabilities expressed in foreign currencies
into US dollars. Realized and unrealized gains or losses from
investments include the effects of foreign exchange rates on
investments.
(e) 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.
(f) Security transactions and investment income -- Security
transactions are recorded on the dates the transactions are entered
into (the trade dates). Dividend income is recorded on the ex-dividend
dates. Dividends from foreign securities where the ex-dividend date
may have passed are subsequently recorded when the Fund has determined
the ex-dividend date. Interest income (including amortization of
discount) is recognized on the accrual basis. Realized gains and
losses on security transactions are determined on the identified cost
basis.
(g) Deferred organization expenses and prepaid registration fees --
Deferred organization expenses are charged to expense on a straight-
line basis over a five-year period. Prepaid registration fees are
charged to expense as the related shares are issued.
(h) Dividends and distributions -- Dividends and distributions paid by
the Fund are recorded on the ex-dividend dates. Distributions in
excess of investment are due primarily to differing tax treatments for
foreign currency transactions.
2. Investment Advisory Agreement and Transactions
with Affiliates:
The Fund has entered into an Investment Advisory Agreement with
Merrill Lynch Asset Management, L.P. ("MLAM" or "Investment Adviser").
The general partner of MLAM is Princeton Services, Inc. ("PSI"), an
indirect wholly-owned subsidiary of Merrill Lynch & Co., Inc. ("ML &
Co."), which is the limited partner. The Fund has also entered into a
Distribution Agreement and Distribution Plans with Merrill Lynch Funds
Distributor, Inc. ("MLFD" or "Distributor"), a wholly-owned subsidiary
of Merrill Lynch Group, Inc.
MLAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee of 0.85%, on an annual basis, of
the average daily net assets of the Fund. MLAM has entered into a Sub-
Advisory Agreement with Merrill Lynch Asset Management U.K., Ltd.
("MLAM U.K."), an affiliate of MLAM, pursuant to which MLAM pays MLAM
U.K. a fee in an amount to be determined from time to time by MLAM and
MLAM U.K. but in no event in excess of the amount that MLAM actually
receives. For the six months ended December 31, 1997, MLAM paid MLAM
U.K. a fee of $131,538 pursuant to such Agreement.
Pursuant to the Distribution Plans adopted by the Fund in accordance
with Rule 12b-1 under the Investment Company Act of 1940, the Fund
pays the Distributor ongoing account maintenance and distribution
fees. The fees are accrued daily and paid monthly at annual rates
based upon the average daily net assets of the shares as follows:
Account Distribution
Maintenance Fee Fee
Class B 0.25% 0.75%
Class C 0.25% 0.75%
Class D 0.25% --
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 and distribution services to the Fund. The
ongoing account maintenance fee compensates the Distributor and MLPF&S
for providing account maintenance services to Class B, Class C and Class
D shareholders. The ongoing distribution fee compensates the Distributor
and MLPF&S for providing shareholder and distribution-related services to
Class B and Class C shareholders.For the six months ended December 31,
1997, MLFD earned underwriting discounts and MLPF&S earned dealer
concessions on sales of the Fund's Class A and Class D Shares as follows:
MLFD MLPF&S
Class A $1 $11
Class D $1,152 $14,819
For the six months ended December 31, 1997, MLPF&S received contingent
deferred sales charges of $178,102 and $654 relating to transactions
in Class B and Class C Shares, respectively.
In addition, MLPF&S received $14,891 in commissions on the execution
of portfolio security transactions for the six months ended December
31, 1997.
Merrill Lynch Financial Data Services, Inc. ("MLFDS"), a wholly-owned
subsidiary of ML & Co., is the Fund's transfer agent.
Accounting services are provided to the Fund by MLAM at cost.
Certain officers and/or directors of the Fund are officers and/or
directors of MLAM, PSI, MLAM U.K., MLFD, MLFDS, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended December 31, 1997 were $27,684,806 and
$61,983,712, respectively.
Net realized and unrealized gains (losses) as of December 31, 1997
were as follows:
Realized Unrealized
Gains (Losses) Gains (Losses)
Investments:
Long-term $1,240,780 $(18,396,613)
Financial futures contracts (647,834) 28,575
---------- ------------
Total investments 592,946 (18,368,038)
---------- ------------
Currency transactions:
Options purchased (98,727) 299,120
Foreign currency transactions 292,250 (76,615)
Forward foreign exchange contracts 566,809 (66,179)
---------- ------------
Total currency transactions 760,332 156,326
---------- ------------
Total $1,353,278 $(18,211,712)
========== ============
As of December 31, 1997, net unrealized depreciation for Federal
income tax purposes aggregated $18,396,613, of which $12,466,297
related to appreciated securities and $30,862,910 related to
depreciated securities. The aggregate cost of investments at December
31, 1997 for Federal income tax purposes was $109,902,244.
4. Capital Share Transactions:
Net decrease in net assets derived from capital share transactions was
$24,107,361 and $17,802,460 for the six months ended December 31, 1997
and for the year ended June 30, 1997, respectively.
Transactions in capital shares for each class were as follows:
Class A Shares for the Six Months Dollar
Ended December 31, 1997 Shares Amount
Shares sold 77,655 $777,861
Shares issued to shareholders in
reinvestment of distributions 20,207 169,131
---------- ------------
Total issued 97,862 946,992
Shares redeemed (175,899) (1,780,130)
---------- ------------
Net decrease (78,037) $(833,138)
========== ============
Class A Shares for the Year Dollar
Ended June 30, 1997 Shares Amount
Shares sold 640,103 $6,302,473
Shares issued to shareholders
in reinvestment of dividends
and distributions 25,500 247,091
---------- ------------
Total issued 665,603 6,549,564
Shares redeemed (434,307) (4,334,013)
---------- ------------
Net increase 231,296 $2,215,551
========== ============
Class B Shares for the Six Months Dollar
Ended December 31, 1997 Shares Amount
Shares sold 569,688 $5,813,087
Shares issued to shareholders in
reinvestment of distributions 232,742 1,922,455
---------- ------------
Total issued 802,430 7,735,542
Automatic conversion of shares (37,190) (380,660)
Shares redeemed (2,836,843) (27,507,641)
---------- ------------
Net decrease (2,071,603) $(20,152,759)
========== ============
Class B Shares for the Year Dollar
Ended June 30, 1997 Shares Amount
Shares sold 2,372,220 $24,001,485
Shares issued to shareholders
in reinvestment of dividends
and distributions 555,932 5,336,945
---------- ------------
Total issued 2,928,152 29,338,430
Automatic conversion of shares (31,361) (318,122)
Shares redeemed (4,628,694) (46,586,988)
---------- ------------
Net decrease (1,731,903) $(17,566,680)
========== ============
Class C Shares for the Six Months Dollar
Ended December 31, 1997 Shares Amount
Shares sold 53,759 $546,612
Shares issued to shareholders in
reinvestment of distributions 20,458 168,573
---------- ------------
Total issued 74,217 715,185
Shares redeemed (120,281) (1,182,627)
---------- ------------
Net decrease (46,064) $(467,442)
========== ============
Class C Shares for the Year Dollar
Ended June 30, 1997 Shares Amount
Shares sold 251,158 $2,498,757
Shares issued to shareholders
in reinvestment of dividends
and distributions 41,482 397,810
---------- ------------
Total issued 292,640 2,896,567
Shares redeemed (263,160) (2,632,858)
---------- ------------
Net increase 29,480 $263,709
========== ============
Class D Shares for the Six Months Dollar
Ended December 31, 1997 Shares Amount
Shares sold 677,492 $6,671,030
Automatic conversion of shares 36,727 380,660
Shares issued to shareholders in
reinvestment of distributions 46,480 387,646
---------- ------------
Total issued 760,699 7,439,336
Shares redeemed (1,018,518) (10,093,358)
---------- ------------
Net decrease (257,819) $(2,654,022)
========== ============
Class D Shares for the Year Dollar
Ended June 30, 1997 Shares Amount
Shares sold 599,650 $6,180,271
Automatic conversion of shares 31,011 318,122
Shares issued to shareholders
in reinvestment of dividends
and distributions 99,660 963,719
---------- ------------
Total issued 730,321 7,462,112
Shares redeemed (992,678) (10,177,152)
---------- ------------
Net decrease (262,357) $(2,715,040)
========== ============
5. Commitments:
At December 31, 1997, the Fund had entered into foreign exchange
contracts, in addition to the contracts listed on the Schedule of
Investments, under which it had agreed to sell various foreign
currencies with an approximate value of $72,000.
EQUITY PORTFOLIO CHANGES
For the Quarter Ended December 31, 1997
Additions
*Adana Cimento Sanayii Turk Anonim Sirketi
Allen Telecom Inc.
Anhui Conch Cement Co. Ltd. (Class H)
Banque Cantonale Vaudois (BCV)
Benton Oil and Gas Company
Bertrand Faure S.A.
Business Objects S.A. (ADR)
Cephalon, Inc.
Compagnie Plastic Omnium S.A.
Disetronic Holding AG
*GEA AG
HCIA Inc.
Harbin Power Equipment Company Ltd.
Harbinger Corporation
*Hoganas AB
Ikos Systems, Inc.
Logica PLC
MasTec, Inc.
*Meritor Automotive, Inc.
*Netas Northern Electric
Telekomunikasyon A.S.
Neurogen Corporation
Novamerican Steel Inc.
Olicom A/S
Pharmaceutical Product Development, Inc.
Premier Farnell PLC
SITEL Corporation
Select Appointments (Holdings) PLC
Shin-Etsu Polymer Co., Ltd.
*Stoneridge, Inc.
*Texlon Corporation
Towa Corporation
Union des Asurances Federales S.A.
*Veterinary Centers of America, Inc.
Deletions
ASKO OY (Class A)
*Adana Cimento Sanayii Turk Anonim Sirketi
Agie Carmilles Holdings AG
Amway (Malaysia) Holdings BHD
Analogic Corporation
Aramex International, Limited
Asas Dunia BHD
Bashinformsvyaz
Belimo Automation AG
Burswood Property Trust
Celltech Group PLC
Chemical Company of Malaysia BHD
Cho-Hung Bank Co. Ltd.
Damart S.A.
Delta Corporation Ltd.
Dover Downs Entertainment, Inc.
Dynatech Corporation
EIH Limited (GDR)
Finansierings Instituttet for Industri og Handvarek A/S (FIH)
(Class B)
*GEA AG
*Hoganas AB
Instrumentarium OY (Group A)
Korea Kumho Petrochemical Co.
Landair Services, Inc.
Latas de Aluminio S.A. (GDR)
Lenenergo
Mandator AB (B Shares)
Marshall Industries
*Meritor Automotive, Inc.
*Netas Northern Electric
Telekomunikasyon A.S.
Nizhny Novgorod Svyazinform
OTP Bank (GDR)
Ostex International, Inc.
PT Ciputra Development (Foreign)
Plettac AG
Premenos Technology Corp.
Quanex Corporation
Reno Air, Inc.
SRL Inc.
Sequana Therapeutics, Inc.
Serco Group PLC (Ordinary)
*Stoneridge, Inc.
TEGE S.A.
*Texlon Corporation
Thoresen Thai Agency PLC (Foreign)
Titan Cement Co. S.A.
Tjumenteleom
*Veterinary Centers of America, Inc.
West Australian Newspaper Holdings Ltd.
*Added and deleted in the same quarter.
