MERRILL LYNCH PACIFIC FUND, INC.
Annual Report December 31, 1993
This report is not authorized for use as an offer of sale
or a solicitation of an offer to buy shares of the Fund
unless accompanied or preceded by the Fund's current
prospectus. Past performance results shown in this report
should not be considered a representation of future
performance. Investment return and principal value of
shares will fluctuate so that shares, when redeemed,
may be worth more or less than their original cost.
Merrill Lynch
Pacific Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
MERRILL LYNCH PACIFIC FUND, INC.
TO OUR SHAREHOLDERS
Merrill Lynch Pacific Fund, Inc.'s Class A and Class B
Shares appreciated slightly during the December quar-
ter by +1.66% and +1.39%, respectively, compared to
a decline of -7.74% in the unmanaged Market-Weighted
Index. This quarter's results sufficiently improved
total returns for 1993 as a whole so that the Fund's
Class A and Class B Shares outperformed the Index
for the twelve-month period after trailing this
benchmark for most of the year. (See the "Recent
Performance Results" table on page 4 of this report
to shareholders.)
Underweighting Japanese stocks through the final
quarter of 1993 made the single greatest contribution
to the Fund's investment results for the year, since
Japanese stocks declined by -16.06% in US-dollar
terms during the three-month period and posted a
return of +23.44% for the entire year. (Japanese stocks
began to rise again early in 1994.) At the same time,
overweighting the Hong Kong and Malaysian stock
markets through fiscal year-end--both of which
turned in exceptionally strong performances during
the December quarter and were among the top-
performing world stock markets for the entire year--
also benefited total returns for the Fund.
<PAGE>
Investment Strategy
The strong rise in the Hong Kong and Malaysian stock
markets in 1993 (especially during the final quarter of
the year) is primarily the result of extraordinary cash
flows into mutual funds stressing southeast Asian
investments. The economic fundamentals of the
developing Southeast Asian countries have been and
continue to be better than most areas of the world.
However, the greater than 100% appreciation in Hong
Kong and Malaysian stocks in 1993 is much more a
function of improved investor perception and
increased cash flows than any change in the funda-
mental outlook of these markets.
Although the rapid rise in these markets was liquidity-
driven, the Fund continues to be overweighted in
Hong Kong and Malaysia and relatively underweighted
in Japan. While the Japanese stock market may enter
a recovery phase and Hong Kong and Malaysia may
experience a correction in the short term, we believe
that the Japanese stock market is unlikely to outper-
form these smaller Asian stock markets over the
longer term. On the other hand, we do not believe
that Japan is mired in an intractable recession and
that Japanese stocks will undergo a sharp correction.
Our current view is that economic growth and stock
market prospects over the intermediate to long term
(that is, over the next three years--ten years) are
higher in the developing Southeast Asian markets
than they are in Japan.
Hong Kong companies have better growth prospects,
and their shares are more attractively valued, than is
the case in Japan. In addition, Hong Kong is more
closely connected to economic growth in the People's
Republic of China, and many Hong Kong companies
are likely to be more direct beneficiaries of China's
economic development than most Japanese firms.
Nevertheless, some Japanese companies will develop
significant business ties in China. How successful
they are will depend on political developments in
China and the degree to which China and Japan will
achieve bilateral trade and political cooperation.
However, even with ongoing disputes between China
and the United Kingdom over the political future of
Hong Kong, many Hong Kong companies have estab-
lished significant businesses in China and seem more
likely to derive economic benefit from these enter-
prises than their counterparts from Japan.
<PAGE>
Malaysia's stock market rise has been fueled both by
foreign investors and a very buoyant domestic retail
investor sector. With Malaysian stocks declining in
early January, there is the possibility that domestic
retail investors will withdraw from the market. Al-
though this would be a negative near-term develop-
ment, there are still positive long-term fundamentals
for Malaysia. The economy has continued to grow
substantially, primarily in infrastructure areas such as
communications, transportation and power. This
growth is government initiated and supported.
Malaysian stock market valuations are much higher
than Hong Kong's, leading us to be somewhat cautious
about Malaysian investments in general. However, we
believe that the Fund's Malaysian investments have
good business prospects and that their shares are
reasonably valued.
Despite the rapid growth of the smaller Asian stock
markets, Japan is and will continue (for the fore-
seeable future) to be far and away the largest stock
market in Asia. However, over the past four years the
Japanese stock market has declined by over 50% in
local currency terms. In 1993 the Japanese stock
market posted a positive total return in local currency
terms after declining in each of the preceding three
years. At the beginning of January 1994, the Japanese
stock market was steadily appreciating. Those issues
which are advancing the most rapidly are cyclical and
more speculative, which leads us to be cautious
regarding the sustainability of the Japanese stock
market rally. Our concern is that investor enthusiasm
will eventually be forced to confront lackluster eco-
nomic and corporate business prospects. Nonethe-
less, since we do not believe a stock market crash is
likely, the Fund does not currently own any put
options on the Nikkei Index. Conversely, since we do
not anticipate a significant and sustainable Japanese
stock market rally, we continue to be underweighted
in Japanese stocks.
A potentially significant development for Japanese
companies would be an appreciable weakening of the
yen relative to other major currencies. Many of the
Japanese "blue chip" companies once had very profit-
able export operations. However, since the yen has
moved from 250 yen/$1 US (in 1984) to the current
rate of 110 yen/$1 US, these companies can no longer
generate profits in their exporting businesses. This
trend, coupled with a domestic economy in recession,
has caused the collapse in Japanese corporate profit-
ability. If the yen were to depreciate by 10%-20%, we
would expect that the profitability of many Japanese
corporations would dramatically improve. Currently,
the portfolio's approximate 30% exposure to yen is
much lower than the market weighting. We hedged a
portion of our yen-denominated investments by
selling yen forward.
<PAGE>
We continue to expand the Fund's investments in
Australia slowly and steadily. We expect to continue
to do so as we accumulate positions in a few
Australian stocks.
Over the course of 1994, we anticipate building our
exposure to China and India as these stock markets
continue to develop. The economic growth prospects
of these countries are much too great to ignore. We
will seek to invest in reasonably valued companies
which will allow us to participate in this growth.
In Conclusion
We thank you for your continued investment in
Merrill Lynch Pacific Fund, Inc., and we look forward
to continuing to serve your financial needs throughout
the Fund's new fiscal year and beyond.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Stephen I. Silverman)
Stephen I. Silverman
Vice President and Portfolio Manager
February 2, 1994
PERFORMANCE DATA
Total Return Based on a $10,000 Investment
GRAPHIC MATERIAL APPEARS HERE. SEE APPENDIX: ITEM 1.
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 12/31/93 +34.41% +25.67%
Five Years Ended 12/31/93 + 8.53 + 7.08
Ten Years Ended 12/31/93 +19.18 +18.38
[FN]
*Maximum sales charge is 6.5%.
**Assuming maximum sales charge.
<PAGE>
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 12/31/93 +33.05% +29.05%
Five Years Ended 12/31/93 + 7.44 + 7.44
Inception (10/21/88) through 12/31/93 + 9.76 + 9.76
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to
0% after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
PERFORMANCE DATA (continued)
None of the past results shown should be considered a representation of
future performance. Investment return and principal value of Class A
and Class B Shares will fluctuate so that shares, when redeemed, may
be worth more or less than their original cost. "Results of a $1,000
Investment Since Inception" chart measures performance since inception
and may not reflect results of investments made at any other time.
Results of a $1,000 Investment Since Inception--Class A Shares
GRAPHIC MATERIAL APPEARS HERE. SEE APPENDIX: ITEM 2.
<TABLE>
Recent Performance Results*
<CAPTION>
Market Performance Market Capitalization
In Local Currency/In US Dollars (as of 9/30/93)
------------------------------- ---------------------------
3 Month 12 Month In US Dollars % of Total
% Change % Change (Billions) (100.0%)
<S> <C> <C> <C> <C>
ML Pacific Fund, Inc. Class A Shares +1.53% +34.24%
ML Pacific Fund, Inc. Class B Shares +1.39 +33.05
ML Pacific Fund, Inc. Class A Shares--Total Investment Return +1.66(1) +34.41(1)
ML Pacific Fund, Inc. Class B Shares--Total Investment Return +1.39 +33.05
Market-Weighted Index** -7.74(2) +31.14(3)
Japan** -11.50/-16.06 +10.22/+23.44 $3,406 84.3%
Australia** +10.65/+16.41 +39.29/+38.35 168 4.2
Singapore** +15.67/+13.85 +63.72***/+67.69*** 72 1.8
Malaysia** +49.36/+41.21 -- 147 3.6
Hong Kong** +54.87/+55.09 +118.63/+119.15 247 6.1
<PAGE>
<FN>
(1) Percent change includes reinvestment of $0.027 per share ordinary income dividends.
(2) 9/30/93 market weights used in this computation. The Market-Weighted Index return and
individual country returns do not include dividends.
(3) 12/31/92 market weights used in this computation. The Market-Weighted Index return and
individual country returns do not include dividends.
*Investment results shown for the 3-month and 12-month periods are before the deduction of any sales charges.
**Unmanaged. The Market-Weighted Index weights the US dollar-adjusted Pacific Basin stock market returns by
the relative market capitalization of each individual country on the appropriate date.
***The Index is for Singapore and Malaysia combined.
</TABLE>
<TABLE>
PERFORMANCE DATA (concluded)
<CAPTION>
Performance Summary--Class A Shares
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
9/23/76-12/31/76 $ 9.30 $ 9.81 -- -- + 5.48%
1977 9.81 9.20 -- $0.050 - 5.73
1978 9.20 14.48 $ 0.070 0.020 +58.87
1979 14.48 8.96 3.340 0.120 -23.40
1980 8.96 12.11 -- 0.220 +38.49
1981 12.11 12.78 1.460 0.230 +22.22
1982 12.78 12.07 0.420 0.320 + 0.46
1983 12.07 16.04 0.180 0.290 +38.54
1984 16.04 15.43 0.950 0.090 + 2.92
1985 15.43 19.59 1.380 0.160 +40.96
1986 19.59 34.32 0.190 0.110 +77.78
1987 34.32 16.15 22.154 0.183 +10.77
1988 16.15 19.11 2.064 0.196 +34.38
1989 19.11 20.65 1.042 0.061 +14.49
1990 20.65 16.52 1.668 0.766 -8.39
1991 16.52 18.34 0.521 0.433 +17.04
1992 18.34 15.80 0.221 0.741 - 8.75
1993 15.80 21.21 -- 0.027 +34.41
------- ------
Total $35.660 Total $4.017
Cumulative total return as of 12/31/93: +1,547.66%**
<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.
<PAGE>
<CAPTION>
Performance Summary--Class B Shares
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
10/21/88-12/31/88 $17.93 $19.09 $1.034 $0.171 +13.37%
1989 19.09 20.49 1.042 -- +13.39
1990 20.49 16.30 1.668 0.653 - 9.29
1991 16.30 18.01 0.521 0.322 +15.87
1992 18.01 15.34 0.221 0.726 - 9.72
1993 15.34 20.41 -- -- +33.05
------ ------
Total $4.486 Total $1.872
Cumulative total return as of 12/31/93: +62.28%**
<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 deduction of any
sales charge; results would be lower if sales charge was deducted.
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS
<CAPTION>
Shares Held/ Value Percent of
Industry Face Amount Investments Cost (Note 1a) Net Assets
<S> <C> <S> <C> <C> <C>
Japanese Securities
Automobile 2,276,000 Suzuki Motor Corp. $ 20,103,059 $ 21,402,472 2.18%
840,000 Toyota Motor Corp. 10,216,818 13,390,650 1.37
------------ ------------ ------
30,319,877 34,793,122 3.55
Beverage 363,000 Chukyo Coca-Cola Bottling Co., Ltd. 5,223,326 4,063,675 0.41
421,000 Hokkaido Coca-Cola Bottling Co., Ltd. 6,354,142 5,806,376 0.59
381,000 Kinki Coca-Cola Bottling Co., Ltd. 7,350,583 6,244,224 0.64
433,000 Mikuni Coca-Cola Bottling Co., Ltd. 7,892,009 6,669,891 0.68
428,000 Sanyo Coca-Cola Bottling Co., Ltd. 7,040,767 6,132,903 0.63
------------ ------------ ------
33,860,827 28,917,069 2.95
Capital Goods 3,774,000 Mitsubishi Heavy Industries, Ltd. 24,110,222 20,786,405 2.12
36,000 Mitsubishi Heavy Industries, Ltd. #3 US$
(Warrants) (a) 588,000 189,000 0.02
------------ ------------ ------
24,698,222 20,975,405 2.14
Chemicals 644,000 Shin-Etsu Chemical Co., Ltd. 7,686,564 9,516,389 0.97
Construction 135,000 Daiwa House #4 US$ (Warrants) (a) 2,201,890 489,375 0.05
Consumer 1,862,000 Matsushita Electric Industrial Co., Ltd. 23,194,345 24,846,677 2.53
Electronics yen 409,000,000 Matsushita Electric Works, Ltd.--C.E.W. #8,
2.70% due 5/30/2002 4,543,869 4,157,397 0.42
115,000 Nintendo Co., Ltd. 10,087,145 7,394,770 0.76
------------ ------------ ------
37,825,359 36,398,844 3.71
<PAGE>
Containers 1,271,000 Toyo Seikan Kaisha, Ltd. 15,986,597 31,871,754 3.25
Electric 610,000 Chudenko Corp. 17,010,002 19,120,545 1.95
Construction 159,000 Kyudenko Corp. 2,802,952 2,378,023 0.24
539,000 Sanki Engineering Co., Ltd. 6,161,337 5,744,313 0.59
713,000 Taihei Dengyo Kaisha, Ltd. 17,365,061 15,388,949 1.57
------------ ------------ ------
43,339,352 42,631,830 4.35
Electric Equipment 1,010,000 Hitachi, Ltd. 9,589,494 7,435,250 0.76
1,845,000 Sumitomo Electric Industries, Ltd. 20,873,045 21,480,387 2.19
169,000,000 Sumitomo Electric Industries #1 Yen (Warrants) (a) 185,351 195,245 0.02
923,000 The Nippon Signal Co., Ltd. 13,935,321 11,159,323 1.14
------------ ------------ ------
44,583,211 40,270,205 4.11
Electronics 744,000 Murata Manufacturing Co., Ltd. 19,570,980 25,519,613 2.60
Iron & Steel 450,000 Maruichi Steel Tube, Ltd. 5,588,979 7,052,660 0.72
Leisure 200,000 Heiwa Corp. 9,445,110 4,459,968 0.45
Office Equipment 1,563,000 Canon, Inc. 19,004,087 21,556,690 2.20
14,250 Canon, Inc. #2 DM (Warrants) (a) 1,741,131 1,172,131 0.12
112,500 Canon, Inc. #4 US$ (Warrants) (a) 2,434,375 1,617,187 0.16
------------ ------------ ------
23,179,593 24,346,008 2.48
Pharmaceuticals 1,100,000 Sankyo Co., Ltd. 27,248,940 21,771,449 2.22
672,000 Taisho Pharmaceutical Co., Ltd. 9,783,498 12,939,280 1.32
------------ ------------ ------
37,032,438 34,710,729 3.54
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Shares Held/ Value Percent of
Industry Face Amount Investments Cost (Note 1a) Net Assets
<S> <C> <S> <C> <C> <C>
Japanese Securities (concluded)
Photography 885,000 Fuji Photo Film Co., Ltd. $ 20,866,376 $ 19,576,840 2.00%
Property &
Casualty
Insurance 4,495,000 Dai-Tokyo Fire & Marine Insurance Co., Ltd. 22,835,890 29,105,185 2.97
4,467,000 Fuji Fire & Marine Insurance Co., Ltd. 16,116,389 23,803,197 2.43
4,633,000 Koa Fire & Marine Insurance Co., Ltd. 27,152,420 25,974,010 2.65
4,582,000 Nichido Fire & Marine Insurance Co., Ltd. 20,766,227 26,262,583 2.67
2,359,000 Tokio Marine & Fire Insurance Co., Ltd. 19,718,607 25,774,494 2.63
------------ ------------ ------
106,589,533 130,919,469 13.35
<PAGE>
Retailing 554,000 Ito-Yokado Co., Ltd. 17,758,652 25,303,600 2.58
362,000 Sangetsu Co., Ltd. 8,312,345 12,027,763 1.23
354,000 Senshukai Co., Ltd. 6,286,430 10,715,744 1.09
208,000 Shimachu Co., Ltd. 3,046,441 7,451,191 0.76
------------ ------------ ------
35,403,868 55,498,298 5.66
Textile 603,000 Nisshinbo Industries, Inc. 3,301,761 4,428,264 0.45
Total Investments in Japan 501,480,537 552,375,842 56.33
Australian Securities
Food & Beverage 4,200,670 Burns Philp & Co., Ltd. 11,696,127 13,627,755 1.39
2,239,001 Coca-Cola Amatil, Ltd. 8,469,439 17,475,515 1.78
------------ ------------ ------
20,165,566 31,103,270 3.17
Property 621,772 Lend Lease Corp. 8,038,708 7,469,341 0.76
Utilities 310,273 The Australian Gas Light Company 635,559 947,620 0.10
Total Investments in Australia 28,839,833 39,520,231 4.03
Hong Kong Securities
Construction 7,500,000 Paul Y-ITC Construction Holdings, Inc. 2,595,588 2,354,979 0.24
Diversified 7,736,000 Citic Pacific, Ltd. 19,732,726 25,542,924 2.61
Property 4,874,000 Hang Lung Development Co., Ltd. 3,852,318 11,927,826 1.22
400,000 Hang Lung Development Co., Ltd. (Warrants) (a) 0 403,988 0.04
------------ ------------ ------
3,852,318 12,331,814 1.26
Services 917,400 Hong Kong Aircraft Engineering 5,499,090 5,701,826 0.58
Utilities 7,143,800 China Light & Power Co., Ltd. 7,606,117 52,262,683 5.33
157,669 Consolidated Electric Power, Ltd. 257,747 273,568 0.03
8,804,000 Hong Kong & China Gas Co. 18,640,984 25,535,362 2.60
6,446,800 Hong Kong Telecommunications, Ltd. 11,199,792 13,606,479 1.39
223,500 Hong Kong Telecommunications, Ltd. (ADR) (b) 4,896,660 13,912,875 1.42
------------ ------------ ------
42,601,300 105,590,967 10.77
Total Investments in Hong Kong 74,281,022 151,522,510 15.46
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Shares Held/ Value Percent of
Industry Face Amount Investments Cost (Note 1a) Net Assets
<S> <C> <S> <C> <C> <C>
Indian Securities
Non-Ferrous Metals $ 480,000 Sterlite Industries, Ltd., 3.50% due 6/30/1999 $ 480,000 $ 571,200 0.06%
Total Investments in India 480,000 571,200 0.06
<PAGE>
Indonesian Securities
Pharmaceuticals 742,000 Kalbe Farma, PT 5,070,605 5,800,995 0.59
Total Investments in Indonesia 5,070,605 5,800,995 0.59
Malaysian Securities
Building & 266,000 Malayan Cement BHD 430,035 543,361 0.05
Construction 1,350,000 Sungei Way Holdings BHD 4,718,897 5,966,574 0.61
------------ ------------ ------
5,148,932 6,509,935 0.66
Building Materials 1,410,000 Aokam Perdana BHD (Ordinary) 11,324,720 15,186,630 1.55
Diversified 2,000,000 Sime Darby BHD 4,726,798 5,608,171 0.57
Leisure 800,000 Genting BHD 1,876,683 11,194,030 1.14
1,000,000 Granite Industries BHD 4,807,897 5,756,732 0.59
4,470,000 Magnum Corp. BHD 4,762,131 13,281,337 1.36
2,300,000 Resorts World BHD 3,704,646 14,778,087 1.51
------------ ------------ ------
15,151,357 45,010,186 4.60
Retail 2,300,000 Berjaya Singer BHD 6,338,321 6,064,995 0.62
MYR 1,387,000 Berjaya Singer BHD, 5.00% due 9/15/1998 437,533 414,683 0.04
295,000 Berjaya Singer TSR 326,647 321,021 0.03
------------ ------------ ------
7,102,501 6,800,699 0.69
Total Investments in Malaysia 43,454,308 79,115,621 8.07
Singaporean Securities
Airlines 1,260,000 Singapore Airlines, Ltd.--Foreign Registered 6,673,879 10,578,358 1.08
Banking 317,500 Development Bank of Singapore, Ltd.--
Foreign Registered 2,411,221 3,593,595 0.37
Electronics 305,000 Creative Technology, Ltd. 7,609,990 9,531,250 0.97
Food 3,600,000 Cerebos Pacific Ltd. 5,153,632 17,910,448 1.83
Property 888,000 City Developments Ltd. 4,164,079 4,335,075 0.44
905,000 First Capital Corp. Ltd. 3,465,885 3,348,725 0.34
------------ ------------ ------
7,629,964 7,683,800 0.78
<PAGE>
Publishing 200,000 Times Publishing, Ltd. 334,576 547,264 0.06
Transportation 300,000 Singapore Bus Co. Ltd.--Foreign Registered 1,060,285 2,089,553 0.21
Total Investments in Singapore 30,873,547 51,934,268 5.30
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded)
<CAPTION>
Shares Held/ Value Percent of
Industry Face Amount Investments Cost (Note 1a) Net Assets
<S> <C> <S> <C> <C> <C>
South Korean Securities
Automobile 61,547 ++Kia Motors Corp. (GDS) (c) $ 2,034,000 $ 2,154,145 0.22%
Banking 294,660 Hanil Bank 4,295,682 3,796,883 0.39
410,000 Korea First Bank 6,491,192 6,095,899 0.62
58,040 Shin Han Bank 1,020,073 978,000 0.10
------------ ------------ ------
11,806,947 10,870,782 1.11
Textiles 3,080 Taekwang Industrial Co. 716,353 1,747,788 0.18
Total Investments in South Korea 14,557,300 14,772,715 1.51
Taiwanese Securities
Steel 135,000 ++China Steel Corp. (ADR) (b) 2,457,000 3,391,875 0.35
Total Investments in Taiwan 2,457,000 3,391,875 0.35
Thai Securities
Banking 822,100 Bangkok Bank Co., Ltd. 5,873,326 8,114,736 0.83
509,400 Thai Farmers Bank Limited 2,262,452 2,793,419 0.28
------------ ------------ ------
8,135,778 10,908,155 1.11
Communications 650,000 TelecomAsia Corp. 1,420,109 3,895,417 0.40
Total Investments in Thailand 9,555,887 14,803,572 1.51
Short-Term Securities
Commercial Paper*
$35,928,000 General Electric Capital Corp.,
3.22% due 1/03/1994 35,921,573 35,921,573 3.67
Total Investments in Short-Term Securities 35,921,573 35,921,573 3.67
Total Investments $746,971,612 949,730,402 96.88
============
Put Options Purchased (Cost-$2,872,000)** 8,000 0.00
Unrealized Appreciation on Forward Foreign Exchange Contracts*** 6,076,070 0.62
Other Assets Less Liabilities 24,514,895 2.50
------------ ------
Net Assets $980,329,367 100.00%
============ ======
<PAGE>
<FN>
(a) Warrants entitle the Fund to purchase a predetermined number of shares of Common Stock.
The purchase price and number of shares are subject to adjustment under certain conditions
until the expiration date.
(b) ADR--American Depositary Receipts.
(c) GDS--Global Depositary Shares.
++Restricted securities as to resale. At December 31, 1993, the value of the Fund's investment
in restricted securities was approximately $5,546,000, representing 0.57% of net assets.
Acquisition Value
Issue Date Cost (Note 1a)
China Steel Corp. (ADR) May 21, 1992 $ 2,457,000 $ 3,391,875
Kia Motors Corp. (GDS) Jan. 15, 1991 2,034,000 2,154,145
Total $ 4,491,000 $ 5,546,020
=========== ===========
*Commercial Paper is traded on a discount basis; the interest rates
shown are the discount rates paid at the time of purchase by the Fund.
**Put options purchased as of December 31, 1993 are as follows:
Market Value Value
Subject to Put Issue (Notes 1a & 1g)
Yen 80,000,000 Yen currency put option, strike price
Yen 127, expiring January 14, 1994 $ 4,000
Yen 80,000,000 Yen currency put option, strike price
Yen 124, expiring February 18, 1994 4,000
Total Put Options Purchased (Cost--$2,872,000) $ 8,000
==========
<FN>
***Forward foreign exchange contracts as of December 31, 1993 are as follows:
Expiration Unrealized
Date Appreciation
Foreign Currency Sold
Yen 20,999,550,000 May 1994 $6,076,070
Total (US$ Commitment--$195,000,000) $6,076,070
==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL INFORMATION
<CAPTION>
Statement of Assets and Liabilities as of December 31, 1993
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$746,971,612) (Note 1a) $949,730,402
Put options purchased, at value (identified cost--$2,872,000) (Notes 1a & 1g) 8,000
Unrealized appreciation on forward foreign exchange contracts (Note 1b) 6,076,070
Foreign cash 27,458,095
Cash 419,140
Receivables:
Capital shares sold $ 9,901,277
Securities sold 1,450,714
Dividends 594,707
Interest 11,909 11,958,607
------------
Prepaid registration fees and other assets (Note 1e) 31,300
------------
Total assets 995,681,614
------------
Liabilities: Payables:
Capital shares redeemed 12,980,642
Securities purchased 901,920
Investment adviser (Note 2) 490,095
Distributor (Note 2) 416,880
Dividends to shareholders 5,832 14,795,369
------------
Accrued expenses and other liabilities 556,878
------------
Total liabilities 15,352,247
------------
Net Assets: Net assets $980,329,367
============
Net Assets Class A Shares of Common Stock, $0.10 par value, 50,000,000 shares authorized $ 2,226,777
Consist of: Class B Shares of Common Stock, $0.10 par value, 50,000,000 shares authorized 2,488,423
Paid-in capital in excess of par 777,415,888
Accumulated realized capital losses and foreign currency
transactions--net (7,754,541)
Unrealized appreciation on investments and foreign currency
transactions--net 205,952,820
------------
Net assets $980,329,367
============
Net Asset Value: Class A--Based on net assets of $472,321,833 and 22,267,767 shares outstanding $ 21.21
============
Class B--Based on net assets of $508,007,534 and 24,884,228 shares outstanding $ 20.41
============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL INFORMATION (continued)
<CAPTION>
Statement of Operations for the Year Ended December 31, 1993
<S> <S> <C> <C>
Investment Dividends (net of $820,306 foreign withholding tax) $ 7,835,757
Income Interest and discount earned (net of $6,787 foreign withholding tax) 1,684,980
(Notes 1c & 1d): ------------
Total income 9,520,737
------------
Expenses: Investment advisory fees (Note 2) 4,179,008
Distribution fees--Class B (Note 2) 3,135,389
Custodian fees 682,510
Transfer agent fees--Class A (Note 2) 469,771
Transfer agent fees--Class B (Note 2) 447,024
Registration fees (Note 1e) 209,175
Printing and shareholder reports 144,395
Accounting services (Note 2) 68,896
Professional fees 67,845
Directors' fees and expenses 39,408
Amortization of organization expenses (Note 1e) 13,172
Other 19,854
------------
Total expenses 9,476,447
------------
Investment income--net 44,290
------------
Realized & Realized gain (loss) from:
Unrealized Gain Investments--net $ (1,960,363)
(Loss) on Foreign currency transactions (95,945) (2,056,308)
Investments & ------------
Foreign Currency Change in unrealized appreciation on:
Transactions--Net Investments--net 146,329,573
Notes 1b, 1c & 3): Foreign currency transactions 21,971,841 168,301,414
------------ ------------
Net realized and unrealized gain on investments and foreign currency
transactions 166,245,106
------------
Net Increase in Net Assets Resulting from Operations $166,289,396
============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL INFORMATION (continued)
<CAPTION>
Statements of Changes in Net Assets
For the Year Ended December 31,
Increase (Decrease) in Net Assets: 1993 1992
<S> <S> <C> <C>
Operations: Investment income (loss)--net $ 44,290 $ (34,597)
Realized gain (loss) on investments and foreign currency transactions--net (2,056,308) 25,659,845
Change in unrealized appreciation/depreciation on investments and foreign
currency transactions--net 168,301,414 (63,981,580)
------------ ------------
Net increase (decrease) in net assets resulting from operations 166,289,396 (38,356,332)
------------ ------------
Dividends & Investment income--net:
Distributions to Class A (44,290) (256,888)
Shareholders In excess of investment income--net:
(Note 1f): Class A (559,299) --
Realized gain on investments--net:
Class A -- (16,280,294)
Class B -- (9,723,817)
------------ ------------
Net decrease in net assets resulting from dividends and distributions
to shareholders (603,589) (26,260,999)
------------ ------------
Capital Share Net increase in net assets derived from capital share transactions 364,954,305 103,926,145
Transactions ------------ ------------
(Note 4):
Net Assets: Total increase in net assets 530,640,112 39,308,814
Beginning of year 449,689,255 410,380,441
------------ ------------
End of year $980,329,367 $449,689,255
============ ============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL INFORMATION (continued)
<CAPTION>
Financial Highlights
Class A
The following per share data and ratios have been derived For the Year Ended December 31,
from information provided in the financial statements. 1993 1992 1991 1990 1989
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year $ 15.80 $ 18.34 $ 16.52 $ 20.65 $ 19.11
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .07 .05 .04 .10 .07
Realized and unrealized gain (loss) on investments
and foreign currency transactions--net 5.37 (1.63) 2.73 (1.80) 2.57
-------- -------- -------- -------- --------
Total from investment operations 5.44 (1.58) 2.77 (1.70) 2.64
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net -- (.01) (.11) (.11) (.06)
In excess of investment income--net (.03) -- -- -- --
Realized gain on investments--net -- (.95) (.84) (2.32) (1.04)
-------- -------- -------- -------- --------
Total dividends and distributions (.03) (.96) (.95) (2.43) (1.10)
-------- -------- -------- -------- --------
Net asset value, end of year $ 21.21 $ 15.80 $ 18.34 $ 16.52 $ 20.65
======== ======== ======== ======== ========
Total Investment Based on net asset value per share 34.41% (8.75%) 17.04% (8.39%) 14.49%
Return:* ======== ======== ======== ======== ========
Ratios to Average Expenses .90% .98% 1.02% 1.07% 1.06%
Net Assets: ======== ======== ======== ======== ========
Investment income--net .47% .40% .43% .94% .36%
======== ======== ======== ======== ========
Supplemental Net assets, end of year (in thousands) $472,322 $284,674 $304,712 $242,104 $318,613
Data: ======== ======== ======== ======== ========
Portfolio turnover 13.25% 7.62% 5.91% 31.06% 18.14%
======== ======== ======== ======== ========
<FN>
*Total investment returns exclude the effects of sales loads.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL INFORMATION (concluded)
<CAPTION>
Financial Highlights (concluded)
Class B
The following per share data and ratios have been derived For the Year Ended December 31,
from information provided in the financial statements. 1993++ 1992++ 1991++ 1990++ 1989
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year $ 15.34 $ 18.01 $ 16.30 $ 20.49 $ 19.09
Operating -------- -------- -------- -------- --------
Performance: Investment loss--net (.10) (.12) (.14) (.09) (.06)
Realized and unrealized gain (loss) on investments
and foreign currency transactions--net 5.17 (1.60) 2.69 (1.78) 2.50
-------- -------- -------- -------- --------
Total from investment operations 5.07 (1.72) 2.55 (1.87) 2.44
-------- -------- -------- -------- --------
Less distributions:
Realized gain on investments--net -- (.95) (.84) (2.32) (1.04)
-------- -------- -------- -------- --------
Total distributions -- (.95) (.84) (2.32) (1.04)
-------- -------- -------- -------- --------
Net asset value, end of year $ 20.41 $ 15.34 $ 18.01 $ 16.30 $ 20.49
======== ======== ======== ======== ========
Total Investment Based on net asset value per share 33.05% (9.72%) 15.87% (9.29%) 13.39%
Return:* ======== ======== ======== ======== ========
Ratios to Average Expenses, excluding distribution fees .92% 1.00% 1.04% 1.10% 1.10%
Net Assets: ======== ======== ======== ======== ========
Expenses 1.92% 2.00% 2.04% 2.10% 2.10%
======== ======== ======== ======== ========
Investment loss--net (.56%) (.61%) (.60%) (.05%) (.64%)
======== ======== ======== ======== ========
Supplemental Net assets, end of year (in thousands) $508,008 $165,015 $105,669 $58,013 $59,090
Data: ======== ======== ======== ======== ========
Portfolio turnover 13.25% 7.62% 5.91% 31.06% 18.14%
======== ======== ======== ======== ========
<FN>
*Total investment returns exclude the effects of sales loads.
++Based on average number of shares outstanding during the period.
See Notes to Financial Statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch Pacific Fund, Inc. (the "Fund") is regis-
tered under the Investment Company Act of 1940 as a
diversified, open-end management investment company.
The Fund offers both Class A and Class B Shares. Class
A Shares are sold with a front-end sales charge. Class B
Shares may be subject to a contingent deferred sales
charge. Both classes of shares have identical voting,
dividend, liquidation and other rights and the same
terms and conditions, except that Class B Shares bear
certain expenses related to the distribution of such
shares and have exclusive voting rights with respect to
matters relating to such distribution expenditures. The
following is a summary of significant accounting poli-
cies 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 securi-
ties are being valued or, lacking any sales, at the last
available bid price. However, in certain circumstances,
the Fund will value a security traded on a Japanese
stock exchange based upon the last bid or ask price as
reported on such exchange after trading in such secur-
ity has been halted for the day. Japanese stock
exchanges may impose limits, based on a percentage of
a security's value, on the amount such security may
move in a single day. If the security reaches its limit
during the day, further trading is halted. However, a bid
or ask quotation may be reported following the suspen-
sion of trading. In situations where both a bid and ask
price are reported following a trading suspension due to
the circumstances described above, the Fund will uti-
lize the bid price for valuation purposes. 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 traded in the over-the-
counter market are valued at the last available bid price
in the over-the-counter market prior to the time of
valuation. Options written by the Company are based
upon the last asked price in the case of exchange-traded
options or, in the case of options traded in the over-the-
counter market, the average of the last asked price as
obtained from two or more dealers unless there is only
one dealer, in which case that dealer's price is used.
Options purchased by the Fund are valued at their last
bid price in the case of exchange-traded options or, in
the case of options traded in the over-the-counter mar-
ket, the average of the last bid price as obtained from
one or more dealers unless there is only one dealer, in
which case that dealer's price is used. Short-term secu-
rities are valued at amortized cost, which approximates
market. Securities and assets for which market quota-
tions are not readily available are valued at fair value as
determined in good faith by or under the direction of
the Board of Directors of the Fund.
<PAGE>
(b) Foreign currency transactions--Transactions denom-
inated 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 (real-
ized) or valuing (unrealized) such transactions ex-
pressed in foreign currencies into US dollars. Realized
and unrealized gains or losses from investments include
the effects of foreign exchange rates on investments.
The Fund is authorized to enter into forward foreign
exchange contracts as a hedge against either specific
transactions or portfolio positions. Such contracts are
not entered on the Fund's records. However, the effect
on operations is recorded from the date the Fund enters
into such contracts. Premium or discount is amortized
over the life of the contracts.
(c) Security transactions and investment income--
Security transactions are recorded on the dates the
transactions are entered into (the trade dates). Divi-
dend income is recorded on the ex-dividend date,
except that if the ex-dividend date has passed, certain
dividends from foreign securities are recorded as soon
as the funds are informed of the ex-dividend date. Inter-
est income (including amortization of discount) is rec-
ognized on the accrual basis. Realized gains and losses
on security transactions are determined on the identi-
fied cost basis.
(d) Income taxes--It is the Fund's policy to comply with
the requirements of the Internal Revenue Code applica-
ble to regulated investment companies and to distribute
substantially all of its taxable income to its share-
holders. Therefore, no Federal income tax provision is
required. Under the applicable foreign tax law, a with-
holding tax may be imposed on dividends and interest at
various rates. There is no tax imposed on capital gains
arising from the sale of foreign investments.
(e) Prepaid registration fees and deferred organization
expenses--Prepaid registration fees are charged to
expense as the related shares are issued. Expenses
related to the organization of the second class of shares
are charged to expense over a five-year period.
(f) Dividends and distributions to shareholders--
Dividends and distributions paid by the Fund are re-
corded on the ex-dividend dates. Dividends in the amount
of approximately $600,000 were paid due to the recognition
of taxable income relating to hedging transactions.
<PAGE>
(g) Options--The Fund can write covered call options
and purchase put options. When the Fund writes an
option, an amount equal to the premium received by the
Fund is reflected as an asset and an equivalent liability.
The amount of the liability is subsequently marked to
market to reflect the current value of the option written.
When a security is sold through an exercise of an
option, the related premium received (or paid) is
deducted from (or added to) the basis 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 premium paid or received).
Written and purchased options are non-income produc-
ing investments.
(h) Reclassifications--Certain 1992 amounts have been
reclassified to conform to the 1993 presentation.
2. Investment Advisory Agreement and Transactions
with Affiliates:
The Fund has entered into an Investment Advisory
Agreement with Merrill Lynch Asset Management
("MLAM"). MLAM is the name under which Merrill
Lynch Investment Management, Inc. ("MLIM") does
business. MLIM is an indirect wholly-owned subsidiary
of Merrill Lynch & Co., Inc. The Fund has also entered
into a Distribution Agreement and a Distribution Plan
with Merrill Lynch Funds Distributor, Inc. ("MLFD" or
"Distributor"), a wholly-owned subsidiary of MLIM.
MLAM is responsible for the management of the Fund's
portfolio and provides the necessary personnel, facili-
ties, equipment and certain other services necessary to
the operations of the Fund. For such services, the Fund
pays a monthly fee of 0.60% of the average daily net
assets of the Fund. The Management Agreement obli-
gates MLAM to reimburse the Fund to the extent the
Fund's expenses (excluding interest, taxes, distribution
fees, brokerage fees and commissions, and extraordi-
nary items) exceed 2.5% of the Fund's first $30 million
of average daily net assets, 2.0% of the next $70 million
of average daily net assets and 1.5% of the average daily
net assets in excess thereof. MLAM's obligation to reim-
burse the Fund is limited to the amount of the manage-
ment fee. No fee payment will be made to MLAM during
any fiscal year which will cause such expenses to
exceed the most restrictive expense limitation applica-
ble at the time of such payment.
<PAGE>
Effective January 1, 1994, the investment advisory busi-
ness of MLAM reorganized from a corporation to a
limited partnership. The general partner of MLAM is
Princeton Services, Inc., an indirect wholly-owned
subsidiary of Merrill Lynch & Co.
The Fund has adopted a Plan of Distribution (the
"Plan") pursuant to Rule 12b-1 under the Investment
Company Act of 1940 pursuant to which MLFD receives
a fee from the Fund at the end of each month at an
annual rate of 1.0% of the average daily net assets of the
Class B Shares of the Fund. This fee is to compensate
the Distributor for the services it provides and the
expenses borne by the Distributor under the Distribu-
tion Agreement. As authorized by the Plan, the Distrib-
utor has entered into an agreement with Merrill Lynch,
Pierce, Fenner & Smith Inc. ("MLPF&S"), an affiliate of
MLIM, which provides for the compensation of MLPF&S
for providing distribution-related services to the Fund.
For the year ended December 31, 1993, MLFD earned
$3,135,389 under the Plan, all of which was paid to
MLPF&S pursuant to the agreement.
For the year ended December 31, 1993, MLFD earned
underwriting discounts of $223,158, and MLPF&S
earned dealer concessions of $3,412,884 on the sale of
the Fund's Class A Shares.
MLPF&S received contingent deferred sales charges of
$1,036,912 relating to capital share transactions for the
sale of Class B Shares and $27,267 in commissions on
the execution of portfolio security transactions for
the Fund during the year.
Financial Data Services, Inc. ("FDS"), a wholly-owned
subsidiary of Merrill Lynch & Co., Inc., 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 MLIM, MLPF&S, FDS, MLFD and/or
Merrill Lynch & Co., Inc.
3. Investments:
Purchases and sales of investments, excluding short-
term securities, for the year ended December 31, 1993
were $412,294,367 and $83,872,660, respectively.
<PAGE>
Transactions in foreign currency put options purchased
for the year ended December 31, 1993 were as follows:
Premiums
Par Value Paid
Outstanding put options purchased
at beginning of year $152,070,000 $ 19,743,012
Options purchased 160,000,000 2,872,000
Options terminated in closing sale
transactions (152,070,000) (19,743,012)
------------ ------------
Outstanding put options purchased
at end of year $160,000,000 $ 2,872,000
============ ============
Net realized and unrealized gains (losses) as of
December 31, 1993 were as follows:
Realized Unrealized
Gains (Losses) Gains (Losses)
Long-term investments $ 16,248,149 $202,758,790
Put options purchased (18,208,512) (2,864,000)
Foreign currency transactions (95,945) 6,058,030
------------ ------------
Total $ (2,056,308) $205,952,820
============ ============
As of December 31, 1993, net unrealized appreciation
for Federal income tax purposes aggregated $202,758,790,
of which $240,446,901 related to appreciated securities
and $37,688,111 related to depreciated securities. At
December 31, 1993, the aggregate cost of investments,
including put options purchased, for Federal income
tax purposes was $746,971,612.
4. Capital Share Transactions:
Net increase in net assets derived from capital share
transactions was $364,954,305 and $103,926,145 for the
years ended December 31, 1993 and December 31,
1992, respectively.
<PAGE>
Transactions in capital shares for Class A and Class B
Shares were as follows:
Class A Shares for the Dollar
Year Ended December 31, 1993 Shares Amount
Shares sold 10,009,773 $199,420,932
Shares issued to shareholders in
reinvestment of dividends 24,089 502,981
------------ ------------
Total issued 10,033,862 199,923,913
Shares redeemed (5,781,892) (111,793,605)
------------ ------------
Net increase 4,251,970 $ 88,130,308
============ ============
Class A Shares for the Dollar
Year Ended December 31, 1992 Shares Amount
Shares sold 4,746,853 $ 80,862,615
Shares issued to shareholders in
reinvestment of dividends and
distributions 832,079 13,537,922
------------ ------------
Total issued 5,578,932 94,400,537
Shares redeemed (4,175,238) (71,318,655)
------------ ------------
Net increase 1,403,694 $23,081,882
============ ============
Class B Shares for the Dollar
Year Ended December 31, 1993 Shares Amount
Shares sold 20,303,772 $393,836,066
Shares redeemed (6,173,424) (117,012,069)
------------ ------------
Net increase 14,130,348 $276,823,997
============ ============
Class B Shares for the Dollar
Year Ended December 31, 1992 Shares Amount
Shares sold 6,958,286 $115,698,519
Shares issued to shareholders in
reinvestment 505,287 7,983,533
------------ ------------
Total issued 7,463,573 123,682,052
Shares redeemed (2,576,860) (42,837,789)
------------ ------------
Net increase 4,886,713 $ 80,844,263
============ ============
5. Capital Loss Carryforward:
At December 31, 1993, the Fund had a net capital loss
carryforward of approximately $3,332,000, all of which
expires in 2001. This amount will be available to offset
like amounts of any future taxable gains.
<AUDIT-REPORT>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders,
Merrill Lynch Pacific Fund, Inc.:
We have audited the accompanying statement of
assets and liabilities, including the schedule of invest-
ments, of Merrill Lynch Pacific Fund, Inc. as of
December 31, 1993, the related statements of opera-
tions for the year then ended and changes in net
assets for each of the years in the two-year period
then ended, and the financial highlights for each of
the years in the five-year period then ended. These
financial statements and the financial highlights are
the responsibility of the Fund's management. Our
responsibility is to express an opinion on these
financial statements and the financial highlights
based on our audits.
<PAGE>
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require
that we plan and perform the audit to obtain reason-
able assurance about whether the financial statements
and the financial highlights are free of material mis-
statement. An audit includes examining, on a test
basis, evidence supporting the amounts and dis-
closures in the financial statements. Our procedures
included confirmation of securities owned at Decem-
ber 31, 1993, by correspondence with the custodian
and brokers. An audit also includes assessing the ac-
counting principles used and significant estimates
made by management, as well as evaluating the overall
financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial
highlights present fairly, in all material respects,
the financial position of Merrill Lynch Pacific Fund,
Inc. as of December 31, 1993, the results of its opera-
tions, the changes in its net assets, and the financial
highlights for the respective stated periods in con-
formity with generally accepted accounting principles.
Deloitte & Touche
Princeton, New Jersey
February 4, 1994
</AUDIT-REPORT>
<TABLE>
IMPORTANT TAX INFORMATION (unaudited)
The following information summarizes all per share distributions paid by Merrill Lynch Pacific Fund, Inc.
during the year ended December 31, 1993:
<CAPTION>
Qualifying Non-Qualifying Foreign Taxes
Record Payable Domestic Domestic Foreign Total Paid or Long-Term
Date Date Ordinary Income Ordinary Income Source Income Ordinary Income Withheld Capital Gains
<C> <C> <C> <C> <C> <C> <C> <C>
Class A Shares:
12/20/93 12/30/93 $0.014875 $0.006019 $0.005737 $0.026631 $0.035311 $ --
</TABLE>
The foreign taxes paid or withheld per share represent
taxes incurred by the Fund on interest and dividends
received by the Fund from foreign sources. Foreign
taxes paid or withheld should be included in taxable
income with an offsetting deduction from gross
income, or as a credit for taxes paid to foreign govern-
ments. You should consult your tax counsel or other
tax advisers regarding the appropriate treatment of
foreign taxes paid.
Please retain this information for your records.
<PAGE>
PORTFOLIO INFORMATION
For the Quarter Ended December 31, 1993
Percent of
Ten Largest Equity Holdings Net Assets
China Light & Power Co., Ltd. 5.33%
Toyo Seikan Kaisha, Ltd. 3.25
Dai-Tokyo Fire & Marine Insurance Co., Ltd. 2.97
Nichido Fire & Marine Insurance Co., Ltd. 2.67
Koa Fire & Marine Insurance Co., Ltd. 2.65
Tokio Marine & Fire Insurance Co., Ltd. 2.63
Citic Pacific, Ltd. 2.61
Hong Kong & China Gas Co., Ltd. 2.60
Murata Manufacturing Co., Ltd. 2.60
Ito-Yokado Co., Ltd. 2.58
Additions
Berjaya Singer BHD
Berjaya Singer BHD, 5.00% due 9/15/1998
Berjaya Singer TSR
Citic Pacific, Ltd.
City Developments Ltd.
Consolidated Electric Power, Ltd.
First Capital Corp. Ltd.
Granite Industries BHD
Hong Kong Aircraft Engineering
Hong Kong & China Gas Co.
Kalbe Farma, PT
Paul Y-ITC Construction Holdings, Inc.
Sime Darby BHD
Sterlite Industries, Ltd., 3.50% due 6/30/1999
TelecomAsia Corp.
Deletions
Genting International Public Limited Co.
Hopewell Holdings, Ltd.
Rashid Hussain BHD
Semi-Tech Co., Ltd.
United Overseas Bank--Foreign Registered
OFFICERS AND DIRECTORS
Arthur Zeikel, President and Director
Donald Cecil, Director
Edward H. Meyer, Director
Charles C. Reilly, Director
Richard R. West, Director
Terry K. Glenn, Executive Vice President
Norman R. Harvey, Executive Vice President
Donald C. Burke, Vice President
Stephen I. Silverman, Vice President
Gerald M. Richard, Treasurer
Robert Harris, Secretary
<PAGE>
Custodian
Brown Brothers Harriman & Co.
40 Water Street
Boston, Massachusetts 02109
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
APPENDIX GRAPHIC AND IMAGE MATERIALS: ITEM 1.
Total Return Based on a $10,000 Investment--Class A Shares*
A line graph depicting the growth of an investment in the Fund's
Class A Shares compared to growth of an investment in the Morgan
Stanley Capital International Pacific Region Index. Beginning and
ending values are:
12/83 12/31/93
ML Pacific Fund, Inc.++--Class A $ 9,350 $54,036
Morgan Stanley Capital Inter-
national Pacific Region Index++++ $10,000 $48,518
[FN]
*Assuming maximum sales charge, transaction costs and other
operating expenses, including advisory fees.
++ML Pacific Fund invests primarily in equities of corporations
domiciled in Far Eastern or Western Pacific countries, including
Japan, Australia, Hong Kong, and Singapore.
++++This unmanaged market capitalization-weighted Index is comprised
of a representative sampling of stocks of large-, medium-, and
small-capitalization companies in Australia, Hong Kong, Japan,
Malaysia, New Zealand, and Singapore.
Total Return Based on a $10,000 Investment--Class B Shares*
A line graph depicting the growth of an investment in the Fund's
Class B Shares compared to growth of an investment in the Morgan
Stanley Capital International Pacific Region Index. Beginning and
ending values are:
10/21/88** 12/31/93
ML Pacific Fund, Inc.++--Class B $10,000 $16,228
Morgan Stanley Capital Inter-
national Pacific Region Index++++ $10,000 $ 9,114
<PAGE>
[FN]
*Assuming maximum sales charge, transaction costs and other
operating expenses, including advisory fees.
**Commencement of Operations.
++ML Pacific Fund invests primarily in equities of corporations
domiciled in Far Eastern or Western Pacific countries, including
Japan, Australia, Hong Kong, and Singapore.
++++This unmanaged market capitalization-weighted Index is comprised
of a representative sampling of stocks of large-, medium-, and
small-capitalization companies in Australia, Hong Kong, Japan,
Malaysia, New Zealand, and Singapore.
Past performance is not predictive of future performance.
ITEM 2.
Results of a $1,000 Investment Since Inception--Class A Shares
(6.5% sales charge--$935 net amount invested; assuming
reinvestment of all dividends and capital gains distributions)
A mountain chart depicting the growth of an investment in the
Fund's Class A Shares from $935.00 on September 23, 1976 to
$15,406.00 on December 31, 1993.
