MERRILL LYNCH
PACIFIC FUND, INC.
FUND LOGO
Semi-Annual Report
June 30, 1995
<PAGE>
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, Executive Vice President
Donald C. Burke, Vice President
Stephen I. Silverman, Vice President and
Portfolio Manager
Gerald M. Richard, Treasurer
Robert Harris, Secretary
Custodian
Brown Brothers Harriman & Co.
40 Water Street
Boston, MA 02109
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
Transfer Agency Mutual Fund Operations
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.
<PAGE>
Merrill Lynch
Pacific Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
MERRILL LYNCH PACIFIC FUND, INC.
DEAR SHAREHOLDER
Merrill Lynch Pacific Fund, Inc. outperformed its unmanaged
Benchmark Index during the three-month period ended June 30, 1995.
The Fund's outperformance relative to the Benchmark Index primarily
reflects the better performance of our Japanese holdings relative to
the Japanese stock market as a whole. Our other equity investments
have performed in line with their respective stock markets. However,
since the Fund's major Japanese holdings have not appreciated, the
Fund's total returns have not been positive thus far in 1995.
(Complete performance information, including average annual total
returns, can be found on pages 3--6 of this report to shareholders.)
Developments in Japan
The major macroeconomic news in Japan during the quarter was the US-
Japan bilateral trade dispute. While the situation deteriorated to
the point where the United States was very close to imposing
punitive tariffs on Japanese luxury automobiles, eventually a
settlement was reached.
The Japanese economy remains very weak, and Japanese banks continue
to hold unrecognized bad loans, many of which are attributable to
the ongoing collapse of the Tokyo, Osaka and Nagoya real estate
markets. There is still no credible plan to reignite the Japanese
economy, promote an orderly real estate market, and begin to mend
bank balance sheets. However, if the present government continues to
prove incapable of handling the job, it seems likely that a new one
will evolve before the end of the year.
<PAGE>
Investment Activities
Despite the current uncertainty in the outlook for Japan, we
continue to be very positive on the long-term capital appreciation
prospects for the Fund's major Japanese holdings. As noted in our
last report to shareholders, we expected the portfolio to become
somewhat more concentrated as a result of the Fund's change from a
diversified to a non-diversified fund. During the June quarter, our
most significant investment activities focused on this strategy.
As has been the case for some time, the Fund is significantly
overweighted in Japanese non-life insurance stocks. As of June 30,
1995, property and casualty insurance companies comprised
approximately one-quarter of our Japanese investments. The Fund's
technology-related holdings--Murata Manufacturing Co., Ltd., Rohm
Co., Ltd., Canon, Inc., and Shin-Etsu Chemical Co., Ltd.--make up
over 20% of the Fund's Japanese exposure. Our Kinden Corp. and
Chudenko Corp. holdings account for about 9% of Japanese
investments, as does the long-term holding Toyo Seikan Kaisha, Ltd.
Just four more companies--Mitsubishi Heavy Industries, Ltd., Ito-
Yokado Co., Ltd., Suzuki Motor Corp. and Sankyo Co., Ltd.--comprise
another 25% of our Japanese holdings.
In aggregate, all of these companies make up approximately 91% of
the Fund's overall exposure to Japan. We have chosen to incur this
specific risk because we believe that over the long term these
Japanese holdings will substantially outperform the Japanese stock
market. Furthermore, it is important for shareholders to understand
that our Japanese investments do not mirror the Japanese stock
market as a whole. There are many major sectors of the Japanese
stock market in which we have no holdings, such as banks, which
account for one-quarter of Japanese stock market capitalization, and
electric utilities, which make up 10%. On the other hand, non-life
insurance companies comprise less than 2% of overall market
capitalization, and account for 25% of our Japanese investments.
Furthermore, our Japanese investments differ from the typical
Japanese stock in one of two ways: They either could be liquidated
at much higher prices per share than they currently sell for (such
as the property and casualty insurance companies) or their shares
are undervalued using standard measures such as price/earnings,
price/cash flow and price/book value. In addition, returns on equity
are superior to the average for Japanese companies. We also believe
that our Japanese holdings are well-run companies in reasonable
businesses with competent managements. Provided that the Japanese
stock market does not decline appreciably, in our view shares of
these companies should provide reasonable investment returns to long-
term shareholders.
<PAGE>
Our Other Markets
Overall, we have a market-weighted exposure in Hong Kong, while on a
sector basis we are somewhat overweighted in utilities and somewhat
underweighted in companies with exposure to the real estate sector.
We have begun to reassess our Hong Kong investments and have
decreased our position in China Light & Power Co., Ltd., and added
shares of HSBC Holdings PLC. We will continue to evaluate the longer-
term profitability characteristics of various companies and
industries in Hong Kong as we approach 1997, when control shifts to
the People's Republic of China.
In Australia, we have a large position in Lend Lease Corp. and
medium-sized positions in Coca-Cola Amatil, Ltd. and Village
Roadshow Ltd. We believe that Lend Lease is well-positioned to
garner a disproportionately large share of the superannuation
(pension) management business. Government legislation has served to
ensure significant long-term com-pound annual growth of this
business as Australian authorities try to increase a low national
savings rate. Coca-Cola Amatil and Village Roadshow both have
thriving, cash-generating businesses in Australia. They are using
these cash flows to build businesses in Asian and European markets
which have much higher growth rates and provide attractive returns
on their invested capital. We will discuss these companies'
prospects in greater depth in future reports to shareholders.
In Conclusion
We thank you for your continued 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
August 7, 1995
<PAGE>
PROXY RESULTS
During the six-month period ended June 30, 1995, Merrill Lynch
Pacific Fund, Inc. shareholders voted on the following proposals.
Proposals 1, 2 and 4 were approved at a special shareholders'
meeting on September 28, 1994. Proposals 3 and 5 were passed at a
special shareholders' meeting on January 31, 1995. The description
of each proposal and number of shares voted are as follows:
<TABLE>
<CAPTION>
Shares Voted Shares Voted
For Without Authority
<S> <S> <C> <C>
1. To elect the Fund's Board of Directors: Donald Cecil 62,889,255 1,430,114
Edward H. Meyer 62,888,945 1,430,423
Charles C. Reilly 62,889,410 1,429,959
Richard R. West 62,879,156 1,440,212
Arthur Zeikel 62,884,157 1,435,211
<CAPTION>
Shares Voted Shares Voted Shares Voted
For Against Abstain
<S> <C> <C> <C>
2. To select Deloitte & Touche LLP as the Fund's independent auditors. 62,083,571 658,690 1,577,108
3. To approve certain changes to the Fund's fundamental investment restrictions. 31,120,470 1,637,230 1,654,994
4. To amend the Fund's articles of incorporation to implement the
Merrill Lynch Select Pricing SM System. 55,823,614 4,562,399 3,933,355
5. To consider and act upon a proposal to change that Fund's investment policy
from being a diversified fund to being a non-diversified fund. 29,984,118 2,924,437 1,504,139
</TABLE>
PERFORMANCE DATA
About Fund Performance
Since October 21, 1994, investors have been able to purchase shares
of the Fund through the Merrill Lynch Select Pricing SM System,
which offers four pricing alternatives:
<PAGE>
* 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.
* Class B Shares are subject to a maximum contingent deferred sales
charge of 4% if redeemed during the first year, decreasing 1% each
year thereafter to 0% after the fourth year. In addition, Class B
Shares are subject to a distribution fee of 0.75% and an account
maintenance fee of 0.25%. These shares automatically convert to
Class D Shares after 8 years.
* Class C Shares are subject to a distribution fee of 0.75% and an
account maintenance fee of 0.25%. In addition, Class C Shares are
subject to a 1% contingent deferred sales charge if redeemed within
one year of purchase.
* Class D Shares incur a maximum initial sales charge of 5.25% and an
account maintenance fee of 0.25% (but no distribution fee).
Performance data for the Fund's Class A and Class B Shares are
presented in the "Performance Summary" and "Average Annual Total
Return" tables on pages 4 and 5. The "Results of a $1,000 Investment
Since Inception--Class A Shares" chart on page 4 illustrates the
performance of a $1,000 investment in Class A Shares made at the
Fund's inception (assuming the maximum initial sales charge of
5.25%) through June 30, 1995. "Aggregate Total Return" tables for
Class C and Class D Shares are also presented on page 4. Data for
all of the Fund's shares are presented in the "Recent Performance
Results" table on page 6.
The "Recent Performance Results" table shows investment results
before the deduction of any sales charges for Class A and Class B
Shares for the 12-month and 3-month periods ended June 30, 1995 and
for Class C and Class D Shares for the since inception and 3-month
periods ended June 30, 1995. All data in this table assume
imposition of the actual total expenses incurred by each class of
shares during the relevant period.
None of the past results shown should 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. 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.
<PAGE>
PERFORMANCE DATA (continued)
Results of a $1,000 Investment Since Inception--Class A Shares
(5.25% sales charge--$947.50 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 $947.50 on September 23, 1976 to
$15,721.58 on June 30, 1995.
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 6/30/95 - 8.29% -13.10%
Five Years Ended 6/30/95 + 7.84 + 6.68
Ten Years Ended 6/30/95 +16.68 +16.06
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 6/30/95 -9.20% -12.74%
Five Years Ended 6/30/95 +6.74 + 6.74
Inception (10/21/88) through 6/30/95 +7.37 + 7.37
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced
to 0% after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
<PAGE>
Aggregate Total Return
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Inception (10/21/94)
through 6/30/95 - 6.57% - 7.47%
[FN]
*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*
Inception (10/21/94)
through 6/30/95 - 6.07% - 11.00%
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
PERFORMANCE DATA (continued)
<PAGE>
<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
1994 21.21 21.12 0.469 0.219 + 2.90
1/1/95--6/30/95 21.12 20.67 -- -- - 2.13
------- ------
Total $36.129 Total $4.236
Cumulative total return as of 6/30/95: +1,559.27%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the ex-dividend date, and do not
include sales charge; results would be lower if sales charge was
included.
</TABLE>
<TABLE>
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
1994 20.41 20.27 0.469 0.041 + 1.87
1/1/95--6/30/95 20.27 19.74 -- -- - 2.61
------ ------
Total $4.955 Total $1.913
Cumulative total return as of 6/30/95: +60.99%**
<PAGE>
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the ex-dividend date, and do not
reflect 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 3/31/95)
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* +0.15% - 9.23%(1)
ML Pacific Fund, Inc. Class B Shares* -0.10 - 9.38(1)
ML Pacific Fund, Inc. Class C Shares* -0.15 - 7.44(1)
ML Pacific Fund, Inc. Class D Shares* +0.05 - 7.01(1)
ML Pacific Fund, Inc. Class A Shares--Total Investment Return* +0.15 - 8.29(2)
ML Pacific Fund, Inc. Class B Shares--Total Investment Return* -0.10 - 9.20(3)
ML Pacific Fund, Inc. Class C Shares--Total Investment Return* -0.15 - 6.57(4)
ML Pacific Fund, Inc. Class D Shares--Total Investment Return* +0.05 - 6.07(5)
Market-Weighted Index** -3.73(6) -13.31(7)
Benchmark Index*** -2.09 -10.17
Japan - 8.48/-5.90 -28.46/-16.77 $2,099 81.9%
Australia + 5.79/+2.50 + 1.40/-1.49 120 4.7
Hong Kong + 7.21/+7.13 + 5.12/+5.00 141 5.5
Malaysia + 4.32/+8.22 + 1.49/+8.39 108 4.2
Singapore + 0.17/+1.18 - 8.47/-0.18 56 2.2
Thailand +14.64/+14.34 + 9.54/+11.09 39 1.5
<PAGE>
<FN>
++Investment results shown for Class C and Class D Shares are since
inception (10/21/94).
(1)Percent change includes reinvestment of $0.469 per share capital
gains distributions.
(2)Percent change includes reinvestment of $0.219 per share ordinary
income dividends and $0.469 per share capital gains distributions.
(3)Percent change includes reinvestment of $0.041 per share ordinary
income dividends and $0.469 per share capital gains distributions.
(4)Percent change includes reinvestment of $0.191 per share ordinary
income dividends and $0.469 per share capital gains distributions.
(5)Percent change includes reinvestment of $0.213 per share ordinary
income dividends and $0.469 per share capital gains distributions.
(6)3/31/95 market weights used in this computation. The Market-Weighted
Index return and individual country returns do not include dividends.
(7)6/30/94 market weights used in this computation. The Market-Weighted
Index return and individual country returns do not include dividends.
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included.
**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.
***Unmanaged. The Benchmark Index weights US dollar-adjusted returns
based on 68% Japan, 7% Australia, 14% Hong Kong, 5% Malaysia,
4% Singapore and 2% Thailand.
</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 5,386,000 Suzuki Motor Corp. $ 55,993,880 $ 60,084,642 4.1%
Beverage 380,000 Chukyo Coca-Cola Bottling Co., Ltd. 5,420,506 3,902,727 0.3
424,000 Hokkaido Coca-Cola Bottling Co., Ltd. 6,399,350 6,206,587 0.4
386,000 Kinki Coca-Cola Bottling Co., Ltd. 7,430,096 5,513,635 0.4
476,000 Mikuni Coca-Cola Bottling Co., Ltd. 8,487,432 6,181,088 0.4
470,800 Sanyo Coca-Cola Bottling Co., Ltd. 7,040,767 7,669,744 0.5
-------------- -------------- ------
34,778,151 29,473,781 2.0
Capital Goods 9,765,000 Mitsubishi Heavy Industries, Ltd. 69,147,008 66,398,772 4.5
Chemicals 1,400,000 Shin-Etsu Chemical Co., Ltd. 24,090,347 24,625,192 1.7
<PAGE>
Consumer Electronics YEN 409,000,000 Matsushita Electric Works, Ltd.--C.E.W.
#8, 2.70% due 5/31/2002 4,543,869 5,161,386 0.3
Containers 2,691,000 Toyo Seikan Kaisha, Ltd. 59,461,536 78,782,670 5.3
Electric 1,226,750 Chudenko Corp. 38,520,215 48,658,718 3.3
Construction 1,978,700 Kinden Corp. 35,354,949 37,840,798 2.6
1,120,500 Taihei Dengyo Kaisha, Ltd. 24,799,538 17,063,452 1.2
-------------- -------------- ------
98,674,702 103,562,968 7.1
Electric Equipment 2,369,900 Murata Manufacturing Co., Ltd. 78,936,191 89,804,970 6.1
923,000 The Nippon Signal Co., Ltd. 13,935,321 6,058,175 0.4
862,000 Rohm Co., Ltd. 32,696,434 44,570,417 3.0
169 Sumitomo Electric Industries, Ltd.,
#1 YEN (Warrants)(a) 185,351 89,777 0.0
-------------- -------------- ------
125,753,297 140,523,339 9.5
Iron & Steel 475,000 Maruichi Steel Tube, Ltd. 6,023,843 9,252,154 0.6
Office Equipment 3,352,000 Canon, Inc. 49,271,196 54,607,012 3.7
Pharmaceuticals 2,377,100 Sankyo Co., Ltd. 53,328,237 55,281,395 3.7
Property & 7,268,000 Dai-Tokyo Fire & Marine Insurance Co.,
Casualty Ltd. 43,498,092 51,479,164 3.5
Insurance 4,492,000 Fuji Fire & Marine Insurance Co., Ltd. 16,261,457 25,135,262 1.7
5,911,000 Koa Fire & Marine Insurance Co., Ltd. 35,879,186 36,285,208 2.5
5,777,000 Nichido Fire & Marine Insurance Co., Ltd. 30,379,166 46,715,205 3.2
3,912,000 Sumitomo Marine & Fire Insurance Co.,
Ltd. 35,456,850 31,079,873 2.1
4,330,000 Tokio Marine & Fire Insurance Co., Ltd. 43,250,099 49,684,335 3.4
-------------- -------------- ------
204,724,850 240,379,047 16.4
Retailing 1,189,000 Ito-Yokado Co., Ltd. 57,048,890 62,741,471 4.3
364,000 Sangetsu Co., Ltd. 8,382,717 9,668,280 0.7
389,400 Senshukai Co., Ltd. 6,286,430 7,033,196 0.5
-------------- -------------- ------
71,718,037 79,442,947 5.5
Total Investments in Japan 857,508,953 947,575,305 64.4
</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>
Australian Securities
Food & 1,553,804 Burns Philp & Co., Ltd. $ 3,922,601 $ 3,241,126 0.2%
Beverage 5,398,287 Coca-Cola Amatil, Ltd. 24,682,296 33,321,736 2.3
1,349,571 Coca-Cola Amatil, Ltd. (Rights)(d) 0 1,541,608 0.1
-------------- -------------- ------
28,604,897 38,104,470 2.6
Leisure 13,447,500 Village Roadshow Ltd. 'A' (Preferred) 23,429,102 29,100,054 2.0
Paper & Packaging 2,689,039 Amcor Ltd. 19,394,022 19,841,881 1.3
Property 5,306,001 Lend Lease Corp. 66,311,678 67,687,647 4.6
US$ 1,500,000 Lend Lease Finance International,
4.75% due 6/01/2003 1,736,250 1,650,000 0.1
-------------- -------------- ------
68,047,928 69,337,647 4.7
Total Investments in Australia 139,475,949 156,384,052 10.6
Hong Kong Securities
Banking 3,897,894 HSBC Holdings PLC 44,935,496 50,000,127 3.4
Diversified 4,410,500 Swire Pacific Ltd. 'A' 36,772,778 33,631,822 2.3
Utilities--Electric 10,032,300 China Light & Power Co., Ltd. 41,230,806 51,605,281 3.5
Utilities-- 15,741,800 Hong Kong Telecommunications, Ltd. 29,991,994 31,128,370 2.1
Telecommunications 670,500 Hong Kong Telecommunications, Ltd.
(ADR)(b) 4,896,660 13,326,188 0.9
-------------- -------------- ------
34,888,654 44,454,558 3.0
Total Investments in Hong Kong 157,827,734 179,691,788 12.2
<PAGE>
Indian Securities
Banking 9,800 SCICI, Ltd. 44,127 21,382 0.0
Broadcast/Media 620,000 BITV 3,557,823 3,554,706 0.2
Diversified 1,705,000 Master Plus (e) 1,083,668 706,004 0.0
Mutual Funds
Total Investments in India 4,685,618 4,282,092 0.2
Indonesian Securities
Pharmaceuticals 1,634,000 PT Kalbe Farma 5,525,626 7,487,332 0.5
Total Investments in Indonesia 5,525,626 7,487,332 0.5
Malaysian Securities
Diversified 14,896,800 Sime Darby BHD 35,217,136 41,558,252 2.8
Leisure 1,125,000 Genting BHD 1,759,320 11,113,100 0.8
1,450,000 Resorts World BHD 2,382,084 8,506,667 0.6
-------------- -------------- ------
4,141,404 19,619,767 1.4
Transportation 3,661,000 Malaysian International Shipping BHD 12,515,710 10,738,933 0.7
Total Investments in Malaysia 51,874,250 71,916,952 4.9
</TABLE>
<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>
Pakistan Securities
<PAGE>
Utilities 43,298 ++Pakistan Telecommunications (GDR)
(c)(e) $ 7,783,681 $ 4,308,151 0.3%
Total Investments in Pakistan 7,783,681 4,308,151 0.3
Singaporean Securities
Food 3,600,000 Cerebos Pacific Ltd. 5,153,632 21,130,995 1.4
Transportation 300,000 Singapore Bus Co. Ltd.--Foreign
Registered 1,060,285 2,093,772 0.1
Total Investments in Singapore 6,213,917 23,224,767 1.5
South Korean Securities
Textiles 3,080 Taekwang Industries Co. 716,353 2,356,107 0.2
Total Investments in South Korea 716,353 2,356,107 0.2
Short-Term Securities
Commercial Paper* US$ 8,590,000 General Electric Capital Corp., 6.20%
due 7/03/1995 8,587,041 8,587,041 0.6
Total Investments in Short-Term Securities 8,587,041 8,587,041 0.6
Face Premiums
Amount Paid
Currency Put Options Purchased
US$ 323,000,000 Japanese Yen expiring January 1996 at
YEN 102 5,963,200 113,050 0.0
156,010,000 Japanese Yen expiring January 1996 at
YEN 102 2,752,016 78,005 0.0
120,848,684 Japanese Yen expiring February 1996 at
YEN 102 1,836,900 72,509 0.0
275,641,027 Japanese Yen expiring March 1996 at
YEN 92 6,450,000 2,246,474 0.2
Total Currency Put Options Purchased 17,002,116 2,510,038 0.2
Total Investments $1,257,201,238 1,408,323,625 95.6
<PAGE> ==============
Other Assets Less Liabilities 65,297,633 4.4
-------------- ------
Net Assets $1,473,621,258 100.0%
============== ======
(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 Receipt.
(c)GDR--Global Depositary Receipt.
(d)The rights may be exercised until 7/11/1995.
(e)Non-income producing security.
*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.
++Restricted securities as to resale. The value of the Fund's
investment in restricted securities was approximately $4,308,000,
representing 0.3% of net assets.
Acquisition Value
Issue Date Cost (Note 1a)
Pakistan
Telecommunications
(GDR) 9/16/1994 $7,783,681 $4,308,151
Total $7,783,681 $4,308,151
========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
FINANCIAL INFORMATION
<TABLE>
Statement of Assets and Liabilities as of June 30, 1995
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$1,240,199,122) (Note 1a) $1,405,813,587
Options purchased, at value (cost--$17,002,116) (Notes 1a & 1b) 2,510,038
Foreign cash (Note 1c) 60,370,430
Receivables:
Dividends $ 6,045,832
Capital shares sold 5,048,396
Securities sold 1,551,700
Interest 15,805 12,661,733
--------------
Prepaid registration fees and other assets (Note 1f) 51,365
--------------
Total assets 1,481,407,153
--------------
Liabilities: Payables:
Capital shares redeemed 5,547,216
Distributor (Note 2) 743,964
Investment adviser (Note 2) 737,144
Securities purchased 444,154 7,472,478
--------------
Accrued expenses and other liabilities 313,417
--------------
Total liabilities 7,785,895
--------------
Net Assets: Net assets $1,473,621,258
==============
Net Assets Class A Shares of Common Stock, $0.10 par value, 100,000,000
Consist of: shares authorized $ 2,671,924
Class B Shares of Common Stock, $0.10 par value, 100,000,000
shares authorized 4,357,813
Class C Shares of Common Stock, $0.10 par value, 100,000,000
shares authorized 96,909
Class D Shares of Common Stock, $0.10 par value, 100,000,000
shares authorized 204,718
Paid-in capital in excess of par 1,343,883,948
Undistributed investment income--net 1,886,380
Accumulated realized capital losses on investments and foreign
currency transactions--net (12,800,684)
Distributions in excess of realized capital gains on investments and
foreign currency transactions--net (18,224,428)
Unrealized appreciation on investments and foreign currency
transactions--net 151,544,678
--------------
Net assets $1,473,621,258
==============
<PAGE>
Net Asset Value: Class A--Based on net assets of $552,281,294 and 26,719,245 shares
outstanding $ 20.67
==============
Class B--Based on net assets of $860,096,738 and 43,578,134 shares
outstanding $ 19.74
==============
Class C--Based on net assets of $18,984,030 and 969,092 shares
outstanding $ 19.59
==============
Class D--Based on net assets of $42,259,196 and 2,047,183 shares
outstanding $ 20.64
==============
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations for the Six Months Ended June 30, 1995
<S> <S> <C> <C>
Investment Dividends (net of $966,161 foreign withholding tax) $ 11,701,335
Income Interest and discount earned (net of $6,129 foreign
(Notes 1d & 1e): withholding tax) 1,842,468
--------------
Total income 13,543,803
--------------
Expenses: Investment advisory fees (Note 2) $ 4,485,520
Account maintenance and distribution fees--Class B (Note 2) 4,431,806
Transfer agent fees--Class B (Note 2) 1,000,716
Custodian fees 664,737
Transfer agent fees--Class A (Note 2) 543,328
Printing and shareholder reports 156,073
Account maintenance and distribution fees--Class C (Note 2) 71,467
Accounting services (Note 2) 64,017
Registration fees (Note 1f) 61,784
Professional fees 46,400
Account maintenance fees--Class D (Note 2) 40,703
Transfer agent fees--Class D (Note 2) 31,874
Directors' fees and expenses 23,324
Transfer agent fees--Class C (Note 2) 17,064
Pricing fees 3,722
Other 14,888
--------------
Total expenses 11,657,423
--------------
Investment income--net 1,886,380
--------------
<PAGE>
Realized & Realized gain (loss) from:
Unrealized Gain Investments--net 39,365
(Loss) on Foreign currency transactions--net (12,840,049) (12,800,684)
Investments & --------------
Foreign Currency Change in unrealized appreciation/depreciation on:
Transactions Investments--net (24,331,909)
- --Net (Notes 1b, Foreign currency transactions--net 1,224,891 (23,107,018)
1c, 1d & 3): -------------- --------------
Net realized and unrealized loss on investments and foreign
currency transactions (35,907,702)
--------------
Net Decrease in Net Assets Resulting from Operations $ (34,021,322)
==============
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Six For the
Months Ended Year Ended
Increase (Decrease) in Net Assets: June 30, 1995 Dec. 31, 1994
<S> <S> <C> <C>
Operations: Investment income (loss)--net $ 1,886,380 $ (1,579,329)
Realized gain (loss) on investments and foreign currency
transactions--net (12,800,684) 33,063,391
Change in unrealized appreciation/depreciation on
investments and foreign currency transactions--net (23,107,018) (31,301,124)
-------------- --------------
Net increase (decrease) in net assets resulting from operations (34,021,322) 182,938
-------------- --------------
<PAGE>
Dividends & In excess of investment income--net:
Distributions to Class A -- (5,944,755)
Shareholders Class B -- (1,798,546)
(Note 1g): Class C -- (67,122)
Class D -- (185,967)
Realized gain on investments--net:
Class A -- (8,886,236)
Class B -- (14,441,473)
Class C -- (115,222)
Class D -- (286,591)
In excess of realized gain on investments--net:
Class A -- (3,830,198)
Class B -- (6,224,649)
Class C -- (49,664)
Class D -- (123,527)
-------------- --------------
Net decrease in net assets resulting from dividends and
distributions to shareholders -- (41,953,950)
-------------- --------------
Capital Share Net increase (decrease) in net assets derived from capital
Transactions share transactions (24,668,292) 593,752,517
(Note 4): -------------- --------------
Net Assets: Total increase (decrease) in net assets (58,689,614) 551,981,505
Beginning of period 1,532,310,872 980,329,367
-------------- --------------
End of period* $1,473,621,258 $1,532,310,872
============== ==============
*Undistributed investment income--net $ 1,886,380 $ --
============== ==============
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<PAGE>
<TABLE>
Financial Highlights
<CAPTION>
The following per share data and ratios have been derived Class A
from information provided in the financial statements. For the Six
Months Ended For the Year Ended December 31,
Increase (Decrease) in Net Asset Value: June 30, 1995++ 1994++ 1993 1992 1991
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 21.12 $ 21.21 $ 15.80 $ 18.34 $ 16.52
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .09 .10 .07 .05 .04
Realized and unrealized gain (loss) on
investments and foreign currency
transactions--net (.54) .50 5.37 (1.63) 2.73
-------- -------- -------- -------- --------
Total from investment operations (.45) .60 5.44 (1.58) 2.77
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net -- -- -- (.01) (.11)
In excess of investment income--net -- (.22) (.03) -- --
Realized gain on investments--net -- (.33) -- (.95) (.84)
In excess of realized gain on
investments--net -- (.14) -- -- --
-------- -------- -------- -------- --------
Total dividends and distributions -- (.69) (.03) (.96) (.95)
-------- -------- -------- -------- --------
Net asset value, end of period $ 20.67 $ 21.12 $ 21.21 $ 15.80 $ 18.34
======== ======== ======== ======== ========
Total Based on net asset value per share (2.13%)+++ 2.90% 34.41% (8.75%) 17.04%
Investment ======== ======== ======== ======== ========
Return:**
Ratios to Expenses .93%* .91% .90% .98% 1.02%
Average ======== ======== ======== ======== ========
Net Assets: Investment income--net .88%* .47% .47% .40% .43%
======== ======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $552,281 $587,107 $472,322 $284,674 $304,712
Data: ======== ======== ======== ======== ========
Portfolio turnover 12.76% 23.84% 13.25% 7.62% 5.91%
======== ======== ======== ======== ========
<FN>
*Annualized.
**Total investment return excludes the effects of sales loads.
++Based on average shares outstanding during the period.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
<PAGE>
FINANCIAL INFORMATION (continued)
<TABLE>
Financial Highlights (continued)
<CAPTION>
The following per share data and ratios have been derived Class B
from information provided in the financial statements. For the Six
Months Ended For the Year Ended December 31,
Increase (Decrease) in Net Asset Value: June 30, 1995++ 1994++ 1993 1992 1991
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 20.27 $ 20.41 $ 15.34 $ 18.01 $ 16.30
Operating -------- -------- -------- -------- --------
Performance: Investment loss--net (.01) (.12) (.10) (.12) (.14)
Realized and unrealized gain (loss) on
investments and foreign currency
transactions--net (.52) .49 5.17 (1.60) 2.69
-------- -------- -------- -------- --------
Total from investment operations (.53) .37 5.07 (1.72) 2.55
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net -- (.04) -- -- --
Realized gain on investments--net -- (.33) -- (.95) (.84)
In excess of realized gain on
Investments--net -- (.14) -- -- --
-------- -------- -------- -------- --------
Total dividends and distributions -- (.51) -- (.95) (.84)
-------- -------- -------- -------- --------
Net asset value, end of period $ 19.74 $ 20.27 $ 20.41 $ 15.34 $ 18.01
======== ======== ======== ======== ========
Total Investment Based on net asset value per share (2.61%)+++ 1.87% 33.05% (9.72%) 15.87%
Return:** ======== ======== ======== ======== ========
Ratios to Average Expenses, excluding account maintenance and
Net Assets: distribution fees .96%* .94% .92% 1.00% 1.04%
======== ======== ======== ======== ========
Expenses 1.96%* 1.94% 1.92% 2.00% 2.04%
======== ======== ======== ======== ========
Investment loss--net (.15%)* (.56%) (.56%) (.61%) (.60%)
======== ======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $860,097 $915,351 $508,008 $165,015 $105,669
Data: ======== ======== ======== ======== ========
Portfolio turnover 12.76% 23.84% 13.25% 7.62% 5.91%
======== ======== ======== ======== ========
<PAGE>
<FN>
*Annualized.
**Total investment return excludes the effects of sales loads.
++Based on average shares outstanding during the period.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights (concluded)
<CAPTION>
Class C Class D
For the For the For the For the
Six Period Six Period
The following per share data and ratios have been derived Months Oct. 21, Months Oct. 21,
from information provided in the financial statements. Ended 1994++ to Ended 1994++ to
June 30, Dec. 31, June 30, Dec. 31,
Increase (Decrease) in Net Asset Value: 1995++++ 1994++++ 1995++++ 1994++++
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 20.12 $ 21.67 $ 21.11 $ 22.70
Operating -------- -------- -------- --------
Performance: Investment income (loss)--net (.01) (.03) .07 --
Realized and unrealized loss on investments and
foreign currency transactions--net (.52) (.86) (.54) (.91)
-------- -------- -------- --------
Total from investment operations (.53) (.89) (.47) (.91)
-------- -------- -------- --------
Less dividends and distributions:
In excess of investment income--net -- (.19) -- (.21)
Realized gain on investments--net -- (.33) -- (.33)
In excess of realized gain on investments--net -- (.14) -- (.14)
-------- -------- -------- --------
Total dividends and distributions -- (.66) -- (.68)
-------- -------- -------- --------
Net asset value, end of period $ 19.59 $ 20.12 $ 20.64 $ 21.11
======== ======== ======== ========
Total Investment Based on net asset value per share (2.63%)+++ (4.04%)+++ (2.23%)+++ (3.93%)+++
Return:** ======== ======== ======== ========
<PAGE>
Ratios to Expenses, excluding account maintenance and
Average Net distribution fees .98%* 1.17%* .94%* 1.17%*
Assets: ======== ======== ======== ========
Expenses 1.98%* 2.17%* 1.19%* 1.42%*
======== ======== ======== ========
Investment income (loss)--net (.10%)* (.79%)* .64%* .12%*
======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $ 18,984 $ 7,841 $ 42,259 $ 22,012
Data: ======== ======== ======== ========
Portfolio turnover 12.76% 23.84% 12.76% 23.84%
======== ======== ======== ========
<FN>
*Annualized.
**Total investment return excludes the effects of sales loads.
++Commencement of Operations.
++++Based on average shares outstanding during the period.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch Pacific Fund, Inc. (the "Fund") is registered under
the Investment Company Act of 1940 as a non-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 Pricing SM 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.
<PAGE>
(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. 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 security 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 suspension 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 utilize 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
markets are valued at the last available bid price prior to the time
of valuation. 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 quotations are not readily 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) 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.
* 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 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.
<PAGE>
* Options--The Fund can write and purchase 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 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 extent the cost of the closing
transaction exceeds the premium paid or received).
Written and purchased options are non-income producing investments.
* Financial futures contracts--The Fund may purchase or sell stock
index futures contracts and options on such futures contracts. 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.
(c) 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.
(d) 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 date, except that if the ex-dividend date has passed,
certain dividends from foreign securities are recorded as soon as
the Fund is informed of 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.
<PAGE>
(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 dividends and interest at various
rates. There is no tax imposed on capital gains arising from the
sale of foreign investments.
(f) Prepaid registration fees--Prepaid registration fees are charged
to expense as the related shares are issued.
(g) Dividends and distributions to shareholders--Dividends and
distributions paid by the Fund are recorded on the ex-dividend dates.
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"). 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 0.60% of the average daily
net assets of the Fund. The Management Agreement obligates MLAM to
reimburse the Fund to the extent the Fund's expenses (excluding
interest, taxes, distribution fees, brokerage fees and commissions,
and extraordinary 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 reimburse the Fund is limited to the
amount of the management 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 applicable at the time of such
payment.
Pursuant to the distribution plans ("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:
<PAGE>
Account Distribution
Maintenance Fee Fee
Class B 0.25% 0.75%
Class C 0.25% 0.75%
Class D 0.25% --
NOTES TO FINANCIAL STATMENTS (concluded)
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 June 30, 1995, 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 $ 8,933 $129,341
Class D $21,865 $335,350
MLPF&S received contingent deferred sales charges of $1,634,418
relating to capital share transactions for the sale of Class B
Shares, $4,677 relating to capital share transactions for the sale
of Class C Shares, and $33,863 in commissions on the execution of
portfolio security transactions for the Fund for the six months
ended June 30, 1995.
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, MLPF&S, MLFDS, MLFD, and/or ML & Co.
<PAGE>
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for six months ended June 30, 1995 were $ 180,264,774 and $ 209,673,470,
respectively.
Net realized and unrealized gains (losses) as of June 30, 1995 were
as follows:
Realized Unrealized
Gains (Losses) Gains (Losses)
Long-term investments $ 39,891 $165,614,465
Short-term investments (526) --
Currency options
purchased (16,928,250) (14,492,078)
Foreign currency
transactions 4,088,201 422,291
------------ ------------
Total $(12,800,684) $151,544,678
============ ============
As of June 30, 1995, net unrealized appreciation for Federal income
tax purposes aggregated $165,614,465, of which $203,946,343 related
to appreciated securities and $38,331,878 related to depreciated
securities. At June 30, 1995, the aggregate cost of investments for
Federal income tax purposes was $1,240,199,122.
4. Capital Share Transactions:
Net increase (decrease) in net assets derived from capital share
transactions was $(24,668,292) and $593,752,517 for the six months
ended June 30, 1995 and the year ended December 31, 1994,
respectively.
Transactions in capital shares for each class were as follows:
Class A Shares for the Six Months Dollar
Ended June 30, 1995 Shares Amount
Shares sold 4,499,007 $ 91,577,596
Shares redeemed (5,584,847) (114,510,960)
------------ ------------
Net decrease (1,085,840) $(22,933,364)
============ ============
<PAGE>
Class A Shares for the Year Dollar
Ended December 31, 1994 Shares Amount
Shares sold 10,984,489 $247,288,984
Shares issued to shareholders
in reinvestment of dividends
and distributions 768,428 15,860,370
------------ ------------
Total issued 11,752,917 263,149,354
Shares redeemed (6,215,599) (138,930,148)
------------ ------------
Net increase 5,537,318 $124,219,206
============ ============
Class B Shares for the Six Months Dollar
Ended June 30, 1995 Shares Amount
Shares sold 7,857,578 $151,583,451
Shares redeemed (9,090,278) (177,703,723)
Automatic conversion of
shares (355,690) (7,010,859)
------------ ------------
Net decrease (1,588,390) $(33,131,131)
============ ============
Class B Shares for the Year Dollar
Ended December 31, 1994 Shares Amount
Shares sold 28,150,808 $607,930,382
Shares issued to shareholders
in reinvestment of dividends
and distributions 983,066 19,484,381
------------ ------------
Total issued 29,133,874 627,414,763
Shares redeemed (8,356,463) (178,494,709)
Automatic conversion of
shares (495,115) (10,418,140)
------------ ------------
Net increase 20,282,296 $438,501,914
============ ============
Class C Shares for the Six Months Dollar
Ended June 30, 1995 Shares Amount
Shares sold 909,895 $ 17,502,449
Shares redeemed (330,569) (6,463,062)
------------ ------------
Net increase 579,326 $ 11,039,387
============ ============
<PAGE>
Class C Shares for the Period
October 21, 1994++ to Dollar
December 31, 1994 Shares Amount
Shares sold 405,281 $ 8,528,274
Shares issued to shareholders
in reinvestment of dividends
and distributions 10,503 205,553
------------ ------------
Total issued 415,784 8,733,827
Shares redeemed (26,018) (537,293)
------------ ------------
Net increase 389,766 $ 8,196,534
============ ============
[FN]
++Commencement of Operations.
Class D Shares for the Six Months Dollar
Ended June 30, 1995 Shares Amount
Shares sold 1,372,659 $ 27,871,003
Automatic conversion
of shares 340,724 7,010,859
------------ ------------
Total issued 1,713,383 34,881,862
Shares redeemed (708,748) (14,525,046)
------------ ------------
Net increase 1,004,635 $ 20,356,816
============ ============
Class D Shares for the Period Dollar
Oct. 21, 1994++ to Dec. 31, 1994 Shares Amount
Shares sold 624,623 $ 13,638,511
Automatic conversion of
shares 472,533 10,418,140
Shares issued to shareholders
in reinvestment of dividends
and distributions 26,192 537,989
------------ ------------
Total issued 1,123,348 24,594,640
Shares redeemed (80,800) (1,759,777)
------------ ------------
Net increase 1,042,548 $ 22,834,863
============ ============
[FN]
++Commencement of Operations.
<PAGE>
PORTFOLIO INFORMATION
For the Quarter Ended June 30, 1995
Percent of
Ten Largest Equity Holdings Net Assets
Murata Manufacturing Co., Ltd. 6.1%
Toyo Seikan Kaisha, Ltd. 5.3
Lend Lease Corp. 4.6
Mitsubishi Heavy Industries, Ltd. 4.5
Ito-Yokado Co., Ltd. 4.3
Suzuki Motor Corp. 4.1
Sankyo Co., Ltd. 3.7
Canon, Inc. 3.7
China Light & Power Co., Ltd. 3.5
Dai-Tokyo Fire & Marine Insurance Co., Ltd. 3.5
Percent of
Ten Largest Industries Net Assets
Property & Casualty Insurance 16.4%
Electric Equipment 9.5
Electric Construction 7.1
Retailing 5.5
Containers 5.3
Diversified 5.1
Property 4.7
Capital Goods 4.5
Pharmaceuticals 4.2
Automobile 4.1
Addition
Coca-Cola Amatil, Ltd. (Rights)
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Deletions
BTR Nylex Ltd.
Creative Technology, Ltd.
Canon, Inc., #2 DM (Warrants)
Canon, Inc., #4 US$ (Warrants)
Hitachi, Ltd.
Hong Kong & China Gas Co., Ltd.
Mitsubishi Heavy Industries, Ltd., #3 US$ (Warrants)
Nippon Express Co., Ltd.
Sumitomo Electric Industries, Ltd.
