MERRILL
LYNCH
PACIFIC
FUND, INC.
Quarterly Report March 31, 1994
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
Although Merrill Lynch Pacific Fund, Inc.
underperformed the +9.76% total return of the
unmanaged Market-Weighted Index during the
three months ended March 31, 1994, the +3.87% and
+3.63% total returns for the Fund's Class A and
Class B Shares, respectively, were achieved within
a turbulent market environment. (See the "Recent
Performance Results" table on page 5 of this report to
shareholders. Complete performance information, includ-
ing average annual total returns, can be found on
pages 3 and 4.)
<PAGE>
The Fund's underperformance relative to the Market-
Weighted Index is attributable to three factors. First,
we believed that the yen was likely to weaken relative
to the US dollar, so we hedged a significant portion of
the Fund's yen-denominated investments. However,
this strategy hedged away much of the appreciation
that occurred as the yen rose relative to the US dollar.
Thus the Tokyo Stock Exchange Index was up 8.61%
in the local currency and 18.20% in US dollars. As a
result, the Fund's Japanese investments did not
appreciate as much as the Japanese component of the
Market-Weighted Index in US-dollar terms. Second,
we are always underweighted in Japan compared to
the Market-Weighted Index because of the over-
whelming dominance of its stock market in the total
Pacific Basin market capitalization. The Japanese
stock market was the only market to provide a
positive total return among Pacific Basin stock mar-
kets during the quarter. As a result, we did not benefit
as much from the positive performance of Japanese
stocks. (The section "A Closer Look at Market Weight-
ings" outlines another reason why we are typically
underweighted in Japanese stocks relative to the
Market-Weighted Index.) Finally, most of the best-
performing Japanese stocks were those of companies
that currently earn very little (or even negative) net
incomes. Therefore, even though these stocks have
performed well, they do not meet our value-oriented
investment criteria.
Japanese Currency Appreciates
We did not anticipate the strengthening of the yen
relative to the US dollar which occurred during the
March quarter and therefore we sold much of our yen
exposure forward. As a manufacturer, Japan is not
internationally competitive with the yen at current
levels, and we believe that if the yen were to continue
to strengthen, many Japanese manufacturers would
be forced to substantially expand output of their
products outside of Japan to remain competitive in
world markets. However, Japan still runs a trade
account surplus, especially with the United States,
along with a significant current account surplus, even
as the yen appreciates. Nevertheless, since we believe
there continues to be a risk to the US-dollar value of
our yen-denominated investments if the yen were to
weaken significantly, we have now hedged some of
these investments with yen put options, rather
than selling the yen forward as we had previously.
We still believe that over the longer term the yen
must weaken; however, we now take a more con-
servative strategy of buying yen puts rather than
selling yen forward.
<PAGE>
A Closer Look at Market Weightings
One of the reasons for our less-than-market weight-
ing in Japan is because of the effect of corporate
cross-ownership on market valuations. Since many
large Japanese corporations own significant portions
of each other's shares, which therefore are not
available for sale on the open market, the amount of
money needed to purchase the entire Japanese stock
market is actually much lower than the Japanese
stock market capitalization. For example, Jeff
Bahrenburg, Merrill Lynch's Senior Japan Equity
Strategist, estimates that adjusting for cross-
ownership would decrease the Japanese stock mar-
ket's capitalization, as defined by Morgan Stanley
Capital International, by about one-third. Using this
estimate, we view a neutral Japanese stock market
weighting for Merrill Lynch Pacific Fund, Inc. as more
in the 60%-70% range rather than the 80%-90% range.
The Fund's Japanese weighting at the end of the
quarter was 66.22%.
Share Prices Anticipate Cyclical Upturn
The rise in Japanese share prices during the March
quarter reflects the widespread belief that the econ-
omy is turning upward, since the best-performing
issues were those of companies with cyclically de-
pressed businesses. Some of our holdings--such as
Sumitomo Electric Industries, Ltd., Murata Manufac-
turing Co., Ltd., and Matsushita Electric Industrial
Co., Ltd.--participated in the rally. However, many of
our large Japanese investments, such as those in
Toyo Seikan Kaisha, Ltd., Chudenko Corp., and the
property and casualty insurance companies, provided
below-market returns. We expect that they will catch
up eventually.
We share the view that the Japanese recession is
ending. Furthermore, the unduly bearish posture of
Japanese institutional investors may also be changing
for the better. However, we still believe that the
economic improvement in Japan will be insufficient
to provide adequate economic benefit to companies
comprising large sectors of the Japanese stock mar-
ket. Many of these companies lack the control over
their cost structuring necessary to enable them to
become and remain viable economic entities. Their
long-term returns on invested capital will not be
enough to justify investing in their shares, except at
large discounts to book value. We do not plan on
committing assets to them, despite interim improve-
ment in their businesses and share prices. In con-
trast, we continue to invest only in those issues
where we perceive clear undervaluation relative to
the Japanese market.
<PAGE>
Nevertheless, the outlook for the Japanese stock
market overall has improved somewhat in recent
months. The economy is beginning to recover slowly,
and although the stock market has risen from its
recent lows, it is further below its historic high than
any other major stock market. With an improving
domestic economy and continued growth in intra-
Asian trade, the Japanese stock market has a reason-
able chance to appreciate, especially if the yen
weakens sufficiently to permit Japanese blue-chip
exporting companies to post good business results. By
conventional measures of profitability our Japanese
investments are more profitable than the average
Japanese company, with better managements and
stronger businesses. At the same time, their shares
are much more reasonably valued than the average
Japanese stock, although they are not sharply
undervalued.
Our Other Markets
We trimmed some positions in Malaysia and slightly
decreased some Hong Kong holdings at the beginning
of the March quarter. However, those investments that
we retained fell along with their overall stock markets,
although to a slightly lesser degree.
Even with the smaller Southeast Asian stock markets
substantially lower than at the end of 1993, we are
still not increasing our weightings, since we believe
caution is warranted during periods of extreme
market volatility. We continue to maintain that over
the long term these stock markets will provide higher
investment returns than the Japanese stock market.
However, in the near term, significant risks remain,
such as an overheating economy in the People's
Republic of China and reduced foreign cash inflows
into emerging Asian markets. If share prices continue
to decline significantly, we are likely to become
aggressive buyers of shares in the smaller Asian
markets. However, for the near term, we believe the
largest Asian market will provide more reasonable
and stable returns.
During the March quarter we increased our invest-
ments in Australia, since we identified several compa-
nies as attractive long-term investment opportunities.
In upcoming reports to shareholders, we will highlight
some of these holdings, along with selected issues in
other markets, as we establish our full positions.
<PAGE>
In Conclusion
We thank you for your investment in Merrill Lynch
Pacific Fund, Inc., and we look forward to reviewing our
outlook and strategy with you again in our next report
to shareholders.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Stephen I. Silverman)
Stephen I. Silverman
Vice President and Portfolio Manager
April 29, 1994
PERFORMANCE DATA
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 APPEAR HERE. SEE APPENDIX GRAPHIC AND IMAGE
MATERIALS ITEM 1.
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 3/31/94 +25.76% +17.58%
Five Years Ended 3/31/94 +10.27 + 8.80
Ten Years Ended 3/31/94 +18.46 +17.67
[FN]
*Maximum sales charge is 6.5%.
**Assuming maximum sales charge.
<PAGE>
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 3/31/94 +24.48% +20.48%
Five Years Ended 3/31/94 + 9.15 + 9.15
Inception (10/21/88) through 3/31/94 +10.02 +10.02
[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)
<TABLE>
Performance Summary--Class A Shares
<CAPTION>
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
1/1/94--3/31/94 21.21 22.03 -- -- + 3.87
------- ------
Total $35.660 Total $4.017
Cumulative total return as of 3/31/94: +1,611.36%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains distributions at net asset value on the ex-dividend date, and do
not include sales charge; results would be lower if sales charge was included.
</TABLE>
<PAGE>
<TABLE>
Performance Summary--Class B Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
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
1/1/94--3/31/94 20.41 21.15 -- -- + 3.63
------ ------
Total $4.486 Total $1.872
Cumulative total return as of 3/31/94: +68.16%**
<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>
PERFORMANCE DATA (concluded)
<TABLE>
Recent Performance Results*
<CAPTION>
Market Performance Market Capitalization
In Local Currency/In US Dollars (as of 12/31/93)
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 +3.87% +25.60%
ML Pacific Fund, Inc. Class B Shares +3.63 +24.48
ML Pacific Fund, Inc. Class A Shares--Total Investment Return +3.87 +25.76(1)
ML Pacific Fund, Inc. Class B Shares--Total Investment Return +3.63 +24.48
Market-Weighted Index** +9.76(2) +20.30(3)
Japan** +8.61/+18.20 +6.25/+18.27 $2,885 76.7%
Australia** -5.54/-2.41 +23.03/+23.81 196 5.2
Singapore** -13.41/-11.15 +29.13***/+34.98*** 95 2.5
Malaysia** -25.30/-25.00 -- 202 5.4
Hong Kong** -24.04/-24.09 +40.90/+40.97 383 10.2
<PAGE>
<FN>
(1)Percent change includes reinvestment of $0.027 per share ordinary income dividends.
(2)12/31/93 market weights used in this computation. The Market-Weighted Index return and individual country returns do not include
dividends.
(3)3/31/93 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>
SCHEDULE OF INVESTMENTS
<CAPTION>
Shares Held/ Percent of
Industry Face Amount Investments Cost Value Net Assets
<S> <C> <S> <C> <C> <C>
Japanese Securities
Automobile 2,376,000 Suzuki Motor Corp. $ 21,327,772 $ 28,947,368 2.50%
840,000 Toyota Motor Corp. 10,216,818 16,128,655 1.39
------------ ------------ -------
31,544,590 45,076,023 3.89
Beverage 363,000 Chukyo Coca-Cola Bottling Co., Ltd. 5,223,326 5,130,117 0.44
421,000 Hokkaido Coca-Cola Bottling Co., Ltd. 6,354,142 7,385,965 0.64
381,000 Kinki Coca-Cola Bottling Co., Ltd. 7,350,583 7,464,035 0.64
433,000 Mikuni Coca-Cola Bottling Co., Ltd. 7,892,009 7,258,869 0.63
428,000 Sanyo Coca-Cola Bottling Co., Ltd. 7,040,767 7,967,641 0.69
------------ ------------ -------
33,860,827 35,206,627 3.04
Capital Goods 4,242,000 Mitsubishi Heavy Industries, Ltd. 27,136,351 26,915,614 2.32
36,000 Mitsubishi Heavy Industries, Ltd. #3 US$
(Warrants) (a) 588,000 360,000 0.03
------------ ------------ -------
27,724,351 27,275,614 2.35
Chemicals 694,000 Shin-Etsu Chemical Co., Ltd. 8,673,108 12,987,135 1.12
Construction 135,000 Daiwa House #4 US$ (Warrants) (a) 2,201,890 556,875 0.05
Consumer 1,894,000 Matsushita Electric Industrial Co., Ltd. 23,636,780 31,382,066 2.71
Electronics YEN 409,000,000 Matsushita Electric Works, Ltd.--C.E.W. #8,
2.70% due 5/31/2002 4,543,869 4,907,203 0.43
489,000 Sony Corp. 26,242,474 27,881,579 2.41
------------ ------------ -------
54,423,123 64,170,848 5.55
<PAGE>
Containers 1,419,000 Toyo Seikan Kaisha, Ltd. 20,237,079 40,246,491 3.47
Electric 610,000 Chudenko Corp. 17,010,002 21,046,784 1.82
Construction 539,000 Sanki Engineering Co., Ltd. 6,161,337 7,197,174 0.62
713,000 Taihei Dengyo Kaisha, Ltd. 17,365,061 21,334,405 1.84
------------ ------------ -------
40,536,400 49,578,363 4.28
Electric Equipment 1,749,000 Hitachi, Ltd. 15,658,533 15,853,509 1.37
744,000 Murata Manufacturing Co., Ltd. 19,570,980 35,169,591 3.04
470,000 Rohm Co., Ltd. 15,551,738 17,865,497 1.54
2,045,000 Sumitomo Electric Industries, Ltd. 23,549,160 29,897,661 2.58
169,000,000 Sumitomo Electric Industries, Ltd. #1 Yen
(Warrants) (a) 185,351 324,493 0.03
923,000 The Nippon Signal Co., Ltd. 13,935,321 12,324,659 1.06
------------ ------------ -------
88,451,083 111,435,410 9.62
Iron & Steel 470,000 Maruichi Steel Tube, Ltd. 5,931,543 8,428,850 0.73
Leisure 200,000 Heiwa Corp. 9,445,110 4,775,828 0.41
Office Equipment 1,563,000 Canon, Inc. 19,004,087 24,678,947 2.13
14,250 Canon, Inc. #2 DM (Warrants) (a) 1,741,131 1,597,093 0.14
112,500 Canon, Inc. #4 US$ (Warrants) (a) 2,434,375 2,165,625 0.19
------------ ------------ -------
23,179,593 28,441,665 2.46
Pharmaceuticals 1,164,000 Sankyo Co., Ltd. 28,615,316 25,866,667 2.23
672,000 Taisho Pharmaceutical Co., Ltd. 9,783,498 13,361,404 1.16
------------ ------------ -------
38,398,814 39,228,071 3.39
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Shares Held/ Percent of
Industry Face Amount Investments Cost Value Net Assets
<S> <C> <S> <C> <C> <C>
Japanese Securities
(concluded)
Photography 885,000 Fuji Photo Film Co., Ltd. $ 20,866,376 $ 19,752,924 1.71%
Property & 4,495,000 Dai-Tokyo Fire & Marine Insurance Co., Ltd. 22,835,890 32,376,267 2.79
Casualty 4,492,000 Fuji Fire & Marine Insurance Co., Ltd. 16,261,457 27,275,984 2.35
Insurance 4,633,000 Koa Fire & Marine Insurance Co., Ltd. 27,152,420 31,157,602 2.69
4,623,000 Nichido Fire & Marine Insurance Co., Ltd. 21,014,425 38,750,292 3.35
2,559,000 Tokio Marine & Fire Insurance Co., Ltd. 22,166,312 30,678,070 2.65
------------ ------------ -------
109,430,504 160,238,215 13.83
Retailing 554,000 Ito-Yokado Co., Ltd. 17,758,652 29,319,883 2.53
362,000 Sangetsu Co., Ltd. 8,312,345 13,407,407 1.16
389,400 Senshukai Co., Ltd. 6,286,430 13,017,953 1.12
208,000 Shimachu Co., Ltd. 3,046,441 9,447,174 0.82
------------ ------------ -------
35,403,868 65,192,417 5.63
Telecommunications 410,000 Nippon Telegraph & Telephone Corp. 3,693,947 3,624,464 0.31
Textile 603,000 Nisshinbo Industries, Inc. 3,301,761 5,935,965 0.51
Transportation 540,000 Nippon Express Co., Ltd. 5,349,181 5,368,421 0.46
Total Investments in Japan 562,653,148 727,520,206 62.81
Australian Securities
Diversified 2,250,000 BTR Nylex Ltd. 4,919,240 4,717,323 0.40
Food & Beverage 5,141,989 Burns Philp & Co., Ltd. 14,772,915 15,576,031 1.34
2,680,220 Coca-Cola Amatil, Ltd. 11,722,254 19,921,325 1.72
7,965,000 Goodman Fielder Ltd. 9,848,229 8,656,840 0.75
------------ ------------ -------
36,343,398 44,154,196 3.81
Paper & Packaging 1,599,415 AMCOR Ltd. 11,900,695 10,643,128 0.92
Property 1,061,222 Lend Lease Corp. 13,885,549 12,665,073 1.09
1,500,000 Lend Lease Finance International,
4.75% due 6/01/2003 1,736,250 1,702,500 0.15
------------ ------------ -------
15,621,799 14,367,573 1.24
<PAGE>
Total Investments in Australia 68,785,132 73,882,220 6.37
Hong Kong Securities
Construction 8,634,000 Paul Y-ITC Construction Holdings, Inc. 2,991,704 2,145,287 0.19
Diversified 7,736,000 Citic Pacific, Ltd. 19,732,726 21,724,432 1.88
Property 4,407,000 Hang Lung Development Co., Ltd. 3,560,209 8,440,671 0.73
400,000 Hang Lung Development Co., Ltd. (Warrants) (a) 0 199,293 0.02
------------ ------------ -------
3,560,209 8,639,964 0.75
Service 917,400 Hong Kong Aircraft Engineering 5,499,090 4,986,321 0.43
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Shares Held/ Percent of
Industry Face Amount Investments Cost Value Net Assets
<S> <C> <S> <C> <C> <C>
Hong Kong Securities (concluded)
Utilities 6,623,800 China Light & Power Co., Ltd. $ 7,321,120 $ 34,073,486 2.94%
8,686,000 Hong Kong & China Gas Co. 18,409,415 21,694,486 1.88
6,446,800 Hong Kong Telecommunications, Ltd. 11,199,792 10,678,897 0.92
223,500 Hong Kong Telecommunications, Ltd. (ADR) (b) 4,896,660 11,370,563 0.98
------------ ------------ -------
41,826,987 77,817,432 6.72
Total Investments in Hong Kong 73,610,716 115,313,436 9.97
Indian Securities
Banking 250,000 SCICI, Ltd. 1,345,257 1,195,505 0.10
Fertilizer 222,000 Indo Gulf Fertilizer (GDR) (d) 1,001,220 854,700 0.07
Insurance 56,000 Indian Rayon & Industries, Ltd. (GDR) (d) 1,260,560 1,064,000 0.09
Non-Ferrous Metals $ 545,000 Sterlite Industries, 3.50% due 6/30/1999 552,800 610,400 0.05
Shipping 179,500 Great Eastern Shipping (ADR) 2,861,230 2,154,000 0.19
250,000 Great Eastern Shipping (Foreign) 1,057,768 597,752 0.05
100,000 Great Eastern Shipping (New) 31,880 239,101 0.02
------------ ------------ -------
3,950,878 2,990,853 0.26
Total Investments in India 8,110,715 6,715,458 0.57
<PAGE>
Indonesian Securities
Food 200,000 PT Charoen Pokphand Indonesian 914,709 928,505 0.08
Pharmaceuticals 817,000 PT Kalbe Farma 5,525,626 4,399,814 0.38
Total Investments in Indonesia 6,440,335 5,328,319 0.46
Malaysian Securities
Building & 80,000 Malayan Cement Bhd 129,334 128,263 0.01
Construction 1,600,000 Sungei Way Holdings Bhd 5,728,884 6,621,924 0.57
------------ ------------ -------
5,858,218 6,750,187 0.58
Building Materials 1,030,000 Aokam Perdana Bhd (Ordinary) 8,985,868 9,985,086 0.87
Diversified 3,000,000 Sime Darby Bhd 7,022,934 6,823,266 0.59
Leisure 750,000 Genting Bhd 1,759,320 7,227,186 0.62
1,450,000 Resorts World Bhd 2,382,084 6,974,273 0.60
------------ ------------ -------
4,141,404 14,201,459 1.22
Retail 2,700,000 Berjaya Singer Bhd 7,369,730 4,167,785 0.36
MYR 1,387,000 Berjaya Singer Bhd, 5.00% due 9/15/1998 437,534 434,407 0.04
1,000,000 Berjaya Singer Bhd (Rights) (e) 0 0 0.00
295,000 Berjaya Singer TSR 326,647 155,090 0.01
------------ ------------ -------
8,133,911 4,757,282 0.41
Total Investments in Malaysia 34,142,335 42,517,280 3.67
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Percent of
Industry Shares Held Investments Cost Value Net Assets
<S> <C> <S> <C> <C> <C>
Singaporean Securities
Airlines 1,260,000 Singapore Airlines, Ltd.--Foreign Registered $ 6,673,879 $ 9,086,152 0.78%
Banking 317,500 Development Bank of Singapore, Ltd.--
Foreign Registered 2,411,221 2,816,369 0.24
Electronics 305,000 Creative Technology, Ltd. 7,609,990 7,853,750 0.68
Food 3,600,000 Cerebos Pacific Ltd. 5,153,632 16,885,769 1.46
Property 888,000 City Development 4,164,079 3,910,147 0.34
905,000 First Capital Corp. Ltd. 3,465,885 2,795,278 0.24
------------ ------------ -------
7,629,964 6,705,425 0.58
Publishing 200,000 Times Publishing, Ltd. 334,576 479,898 0.04
Transportation 300,000 Singapore Bus Co. Ltd.--Foreign Registered 1,060,285 2,278,239 0.20
Total Investments in Singapore 30,873,547 46,105,602 3.98
South Korean Securities
Automobile 63,086 Kia Motors Corp. (GDS) (c) 2,034,000 1,592,922 0.14
Banking 294,660 Hanil Bank 4,295,682 3,596,086 0.31
410,000 Korea First Bank 6,491,192 5,537,108 0.48
58,040 Shin Han Bank 1,020,073 1,121,824 0.10
------------ ------------ -------
11,806,947 10,255,018 0.89
Textiles 3,080 Taekwang Industries Co. 716,353 1,393,270 0.12
Total Investments in South Korea 14,557,300 13,241,210 1.15
Taiwanese Securities
Steel 135,000 China Steel Corp. (ADR) (b) 2,457,000 2,649,375 0.23
Total Investments in Taiwan 2,457,000 2,649,375 0.23
Thai Securities
Banking 822,100 Bangkok Bank Co., Ltd. 5,873,326 5,802,292 0.50
509,400 Thai Farmers Bank Limited 2,262,452 2,484,385 0.22
------------ ------------ -------
8,135,778 8,286,677 0.72
Total Investments in Thailand 8,135,778 8,286,677 0.72
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded)
<CAPTION>
Percent of
Face Amount Short-Term Securities Cost Value Net Assets
<S> <C> <S> <C> <C> <C>
Commercial $10,000,000 American General Finance Corp.,
3.57% due 4/28/1994 $ 9,973,225 $ 9,973,225 0.86%
Paper* 10,000,000 B.A.T. Capital Corp., 3.50% due 4/15/1994 9,986,389 9,986,389 0.86
45,000,000 Corporate Asset Funding Co., 3.52% due 4/19/1994 44,920,800 44,920,800 3.88
28,134,000 General Electric Capital Corp., 3.53%
due 4/04/1994 28,125,724 28,125,724 2.43
15,000,000 Goldman Sachs & Co., 3.63% due 4/29/1994 14,957,650 14,957,650 1.29
------------ ------------ -------
107,963,788 107,963,788 9.32
US Government & 4,000,000 US Treasury Bills, 3.49% due 6/16/1994 3,970,529 3,969,884 0.34
Agency Obligations*
Total Investments in Short-Term Securities 111,934,317 111,933,672 9.66
<CAPTION>
Par Value Issue
<S> <C> <S> <C> <C> <C>
Put Options Purchased
480,000,000 Japanese Yen Expiring March 1995 at YEN 106.5 11,808,000 1.01
Total Put Options Purchased (Cost $13,344,000) 11,808,000 1.01
Total Investments $935,044,323 1,165,301,455 100.60
============
Unrealized Depreciation on Forward Foreign Exchange Contracts** (242,969) (0.02)
Variation Margin on Stock Index Futures Contracts*** 1,254,196 0.11
Liabilities in Excess of Other Assets (8,025,210) (0.69)
-------------- -------
Net Assets $1,158,287,472 100.00%
============== =======
Net Asset Class A--Based on net assets of $531,714,777 and 24,137,404 shares outstanding $ 22.03
Value: ==============
Class B--Based on net assets of $626,572,695 and 29,626,796 shares outstanding $ 21.15
<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.
(d)GDR--Global Depositary Receipts.
(e)The rights may be exercised until April 11, 1994.
*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.
<PAGE>
**Forward foreign exchange contracts as of March 31, 1994 are as follows:
Foreign Expiration Unrealized
Currency Sold Date Depreciation
YEN 94,747,817,300 May 1994 ($41,038,485)
Total (US$ Commitment--$883,400,000) ($41,038,485)
Foreign Expiration Unrealized
Currency Purchased Date Appreciation
YEN 121,319,664,100 May 1994 $40,795,516
Total (US$ Commitment--$1,142,900,000) $40,795,516
Total Unrealized Depreciation on Forward
Foreign Exchange Contracts--Net ($242,969)
===========
***Stock index futures contracts as of March 31, 1994 are as follows:
Number of Expiration
Contracts Issue Date Value
423 Simex Nikkei June 1994 $38,351,244
Total Stock Index Futures Contracts Purchased
(Total Contract Price--$40,308,762) $38,351,244
===========
</TABLE>
PORTFOLIO INFORMATION
For the Quarter Ended March 31, 1994
Percent of
Ten Largest Equity Holdings Net Assets
Toyo Seikan Kaisha, Ltd. 3.47%
Nichido Fire & Marine Insurance Co., Ltd. 3.35
Murata Manufacturing Co., Ltd. 3.04
China Light & Power Co., Ltd. 2.94
Dai-Tokyo Fire & Marine Insurance Co., Ltd. 2.79
Matsushita Electric Industrial Co., Ltd. 2.71
Koa Fire & Marine Insurance Co., Ltd. 2.69
Tokio Marine & Fire Insurance Co., Ltd. 2.65
Sumitomo Electric Industries, Ltd. 2.58
Ito Yokado Co., Ltd. 2.53
<PAGE>
Additions
AMCOR Ltd.
BTR Nylex Ltd.
Berjaya Singer Bhd (Rights)
Goodman Fielder Ltd.
Great Eastern Shipping (ADR)
Great Eastern Shipping (Foreign)
Great Eastern Shipping (New)
Indian Rayon & Industries, Ltd. (GDR)
Indo Gulf Fertilizer (GDR)
Lend Lease Finance International, 4.75% due 6/01/2003
Nippon Express Co., Ltd.
Nippon Telegraph & Telephone Corp.
PT Charoen Pokphand Indonesian
Rohm Co., Ltd.
SCICI, Ltd.
Sony Corp.
Deletions
The Australian Gas Light Company
Consolidated Electric Power, Ltd.
Granite Industries Bhd
Kyudenko Corp.
Magnum Corp. Bhd
Nintendo Co., Ltd.
TelecomAsia Corp.
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 and Portfolio Manager
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:
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 on September 23, 1976 to $16,001.22
on March 31, 1994.
