MERRILL LYNCH
PACIFIC FUND, INC.
FUND LOGO
Quarterly Report
March 31, 1995
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
<PAGE>
MERRILL LYNCH PACIFIC FUND, INC.
DEAR SHAREHOLDER
During the March quarter, Merrill Lynch Pacific Fund Inc.'s Class A,
B, C and D Shares had total investment returns of -2.27%, -2.52%,
- -2.49% and -2.27%, respectively, marginally outperforming its
unmanaged Benchmark Index, which declined -2.67%. (Fund results do
not include the deduction of sales charges, and would be lower if
sales charges were included. Complete performance information,
including average annual total returns, can be found on pages 4--7
of this report to shareholders.)
During the March quarter, the major factors affecting the Fund's
performance were the decline of the Japanese stock market and the
strength of the yen relative to the US dollar.
Divergent Performance for Japanese
Stocks and Bonds
The decline in the Japanese stock market is attributable to several
key developments. First, the Kobe earthquake and the negative
economic impact from the exceptionally strong yen depressed investor
confidence. The outlook was eroded further by continued banking
scandals involving the current political leadership and bad debt
problems, which neither politicians nor bureaucrats appear capable
of resolving. In contrast to the stock market, the Japanese
government bond market rallied strongly, with the 10-year bond now
yielding well below 3.5% and appearing likely to reach 3.0%. A
strong rally in a country's bond market does not usually coincide
with a sharp fall in its stock market.
Even as lackluster as corporate profits are in Japan, the companies
in the Fund's portfolio possess good returns on equity and sell at
modest price/book value ratios. Therefore, they appear very
attractive compared to the current low Japanese government bond
yields. When we look at the Merrill Lynch Pacific Fund's Japanese
investments, we find many companies with returns on equity ranging
from 7% to 12% (even after paying the full tax rate of approximately
50%), with shares trading at price/earnings ratios ranging from 11
to 25, price/book value ratios between 1.1 to 2.0, and price/cash
flow ratios ranging from 5 to 15. These all represent excellent
values relative to the only appropriate benchmark, the long-term
Japanese fixed-income alternative.
<PAGE>
For example, one of our Japanese investments, Chudenko Corp., is a
profitable electric construction company currently trading at 3,000
yen/share. The company has no debt, a bond portfolio that we
estimate to be worth 2,500 yen/share at current market value, pre-
tax operating earnings of about 400 yen/share and after-tax
operating earnings of about 200 yen/share. Therefore, given the
value of Chudenko's bond portfolio, it costs approximately 500
yen/share (3,000 yen/share market value minus 2,500 yen/share bond
portfolio value) for 400 yen/share in pre-tax operating earnings.
Chudenko is one of the most impressive examples of undervaluation in
the portfolio. It rivals the undervaluation seen in our Japanese non-
life insurance holdings, which we have discussed in past reports to
shareholders. There are many other examples of value in our Japanese
investments, such as the electric equipment manufacturer Mura-ta
Manufacturing Co., Ltd., with a return on equity of over 8% and its
shares selling at 1.8 times consolidated book value, 22 times
earnings, and 12 times cash flow. In our view, stocks such as
Chudenko and Murata are very attractive compared to the returns
currently available on Japanese government bonds. On this basis, we
believe our investments represent the most attractive values we have
seen since 1986.
In our judgment, it is critical to view the Japanese government bond
market as the fixed-income investment alternative available to the
Japanese investor. While Japanese investors have always been free to
purchase higher-yielding US Government debt--for that matter, they
can buy German bonds, Australian dollar bonds, and so forth--they
incur significant foreign exchange risk in doing so. William P.
Sterling, Merrill Lynch's Manager of International Economics,
calculated that a Japanese investor in US long-term Government bonds
from the beginning of 1985 through March month-end 1995 would have a
compound annual return of -3% in yen terms. Moreover, this investor
would have had this terrible investment experience with an increase
of volatility (risk). So by diversifying from yen to US dollar
bonds, the Japanese investor got the worst of both worlds: low
negative investment returns and high risk.
We calculated the compound annual return from the beginning of 1985
through the end of March 1995 for a Japanese investor who invested
the same yen amount each month in an index of Japanese stocks. The
result was a dismal -4% per year. Thus Japanese investors have also
experienced negative long-term returns in their own stock market.
Perhaps this is why Japanese bonds have rallied so strongly. Japa-
nese government bonds represented one of the few profitable
investment alternatives for Japanese investors over the past ten
years. Only time will tell whether there are more profitable days
ahead for Japanese equity investors in general. Nevertheless, as we
have already stated, what is most important to us is that the stocks
in the portfolio represent what we consider to be extraordinary
investment values.
<PAGE>
Investment Activities
Since we are so positive on the prospects for the Japanese stocks we
own, we took advantage of the opportunity that price weakness
afforded and added gradually to many of them, such as Toyo Seikan
Kaisha, Ltd., Murata Manufacturing Co., Ltd., Sankyo Co., Ltd. and
Suzuki Motor Corp.
We also established a new position in Kinden Corp., which is in the
electric construction business. In addition to our existing holdings
in Chudenko Corp. and Taihei Dengyo Kaisha, Ltd., the portfolio now
has a significant exposure to electric construction-related
businesses in Japan, which we expect to profit as physical
infrastructure is rebuilt following the Kobe earthquake. Our
investment in Kinden increases exposure to the infrastructure
rebuilding, since the company operates in the Kansai area, which
includes Osaka, Kyoto and Kobe. The company earns about 10% on book
value and its shares sell for 1.5 times book value and 20 times this
year's earnings. Kinden's earnings have been steadily growing over
the years, and we believe they will do so more rapidly as Japan
rebuilds from the Kobe earthquake.
Outside of Japan, we made few changes to the portfolio. We sold our
investment in Hong Kong & China Gas Co., Ltd. because its valuation
(price/earnings ratio) and future growth prospects were not more
attractive than the overall Hong Kong market. In Australia, we
increased our investment in Village Roadshow Ltd.
Yen Strength Continues
The yen, along with the Deutschemark, continued to strengthen
relative to the US dollar during the March quarter, even as US
interest rates fell and the US bond market rallied. The US current
account and budget deficits, which were once so worrisome to
investors, now apparently are of little concern. However, these
deficits imply that the United States must continue to depend on
foreign capital for its financing needs. It is illogical to us that
those foreign investors who are so negative on the US dollar (at
least relative to the yen and the Deutschemark) that they have
demanded cheaper and cheaper dollars, somehow are willing to buy US
Government debt even as yields decline. Therefore, why the
adjustment is only occurring to the US currency and not to US
interest rates is puzzling. Either the US bond and equity markets or
the US currency is sending out the "wrong" message, in our view.
<PAGE>
As far as we can ascertain, it appears that only the very best of
Japanese companies will be able to continue to exist as ongoing
enterprises, much less do well, at 80 yen to the US dollar.
Moreover, in our assessment, Japanese nonexport industries are by
and large not competitive with their counterparts in other advanced
countries, such as the United States. If Japan were to suddenly
become a truly "open" economy--as the United States is currently
arguing for--it would risk wholesale enterprise failure and the
attendant problems of sharply rising unemployment and possible
social unrest. The US trade negotiations continue to put pressure on
Japan because it remains the major country with a current account
surplus. However, we do not believe Japan can afford to accede to
this pressure, and therefore as constructive as we are on the
valuation of our Japanese portfolio we are just as cautious on the
macroeconomic picture. Given the stresses on and anomalies within
the international financial system, it suggests to us that sooner or
later something must "give." We hope that all that happens is the US
dollar appreciates, the Japanese trade and current account surpluses
are reduced, and US interest rates stabilize. This would be an
environment conducive to a rising Japanese stock market. Unless the
yen strengthens from current levels, we are confident that our
portfolio of Japanese stocks represents excellent value and offers
attractive capital appreciation potential.
In Conclusion
We plan to continue to utilize periods of share price weakness to
gradually increase positions in our most attractively valued
investments. As discussed in our last report to shareholders,
Merrill Lynch Pacific Fund now qualifies as a non-diversified fund
and will not be limited to a 5% maximum purchase of any one stock in
50% of its total portfolio. Therefore, if we encounter more
opportunities to increase holdings of our favorite stocks, we would
expect the portfolio will become slightly more concentrated. During
the March quarter, our investments outside of Japan did not
experience the price weakness that would prompt us to increase our
weightings there, although the same idea of concentrating our
portfolio more applies to stocks outside of Japan as well.
We thank you for your investment in Merrill Lynch Pacific Fund,
Inc., and 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
<PAGE>
May 3, 1995
PERFORMANCE DATA
About Fund Performance
Since October 21, 1994, investors have been able to purchase shares
of the Fund through the Merrill Lynch Select Pricing SM System, which
offers four pricing alternatives:
* Class A Shares incur a maximum initial sales charge (front-end
load) of 5.25% and bear no ongoing distribution or account
maintenance fees. Class A Shares are available only to eligible
investors.
* 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 "Recent Performance Results", "Performance Summary"
and "Average Annual Total Return" tables on pages 5, 6 and 7. The
"Results of a $1,000 Investment Since Inception--Class A Shares"
chart on page 5 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 March 31, 1995. "Recent
Performance Results" and "Aggregate Total Return" tables for Class C
and Class D Shares are also presented on pages 5 and 7.
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 March 31, 1995 and
for Class C and Class D Shares for the since inception and 3-month
periods ended March 31, 1995. All data in this table assume
imposition of the actual total expenses incurred by each class of
shares during the relevant period.
<PAGE>
None of the past results shown should be considered a 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.
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 $15,698.75 on
March 31, 1995.
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 3/31/95 - 3.18% - 8.27%
Five Years Ended 3/31/95 +10.32 + 9.13
Ten Years Ended 3/31/95 +17.69 +17.05
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 3/31/95 -4.17% -7.91%
Five Years Ended 3/31/95 +9.20 +9.20
Inception (10/21/88) through 3/31/95 +7.69 +7.69
<PAGE>
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
Aggregate Total Return
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Inception (10/21/94)
through 3/31/95 -6.42% -7.33%
[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 3/31/95 -6.12% -11.05%
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
<PAGE>
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
1994 21.21 21.12 0.469 0.219 + 2.90
1/1/95--3/31/95 21.12 20.64 -- -- - 2.27
------- ------
Total $36.129 Total $4.236
Cumulative total return as of 3/31/95: +1,556.86%**
<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
1994 20.41 20.27 0.469 0.041 + 1.87
1/1/95--3/31/95 20.27 19.76 -- -- - 2.52
------ ------
Total $4.955 Total $1.913
Cumulative total return as of 3/31/95: +61.15%**
<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 12/31/94)
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* -2.27% -4.18%(1)
ML Pacific Fund, Inc. Class B Shares* -2.52 -4.36(1)
ML Pacific Fund, Inc. Class C Shares* -2.49 -7.30(1)
ML Pacific Fund, Inc. Class D Shares* -2.27 -7.05(1)
ML Pacific Fund, Inc. Class A Shares--Total Investment Return* -2.27 -3.18(2)
ML Pacific Fund, Inc. Class B Shares--Total Investment Return* -2.52 -4.17(3)
ML Pacific Fund, Inc. Class C Shares--Total Investment Return* -2.49 -6.42(4)
ML Pacific Fund, Inc. Class D Shares--Total Investment Return* -2.27 -6.12(5)
Market-Weighted Index** -3.48(6) -1.10(7)
Benchmark Index*** -2.67 -1.18
Japan*** -16.11/-4.17 -16.34/-1.45 $3,624 81.1%
Australia*** - 0.32/-5.84 - 7.14/-3.02 212 4.7
Hong Kong*** + 4.84/+4.90 - 4.90/-4.95 241 5.4
Malaysia*** + 1.32/+2.29 + 3.29/+9.56 182 4.1
Singapore*** - 4.34/-1.25 - 5.13/+5.36 139 3.1
Thailand*** -10.54/-8.80 - 1.88/+0.53 71 1.6
<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)12/31/94 market weights used in this computation. The Market-
Weighted Index return and individual country returns do not include
dividends.
(7)3/31/94 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 weighs the US dollar-adjusted
returns based on 68% Japan, 7% Australia, 14% Hong Kong, 5%
Malaysia, 4% Singapore and 2% Thailand.
</TABLE>
PORTFOLIO INFORMATION
For the Quarter Ended March 31, 1995
Percent of
Ten Largest Equity Holdings Net Assets
Murata Manufacturing Co., Ltd. 5.4%
Toyo Seikan Kaisha, Ltd. 4.9
China Light & Power Co., Ltd. 4.5
Mitsubishi Heavy Industries, Ltd. 4.5
Lend Lease Corp. 4.1
Ito-Yokado Co., Ltd. 3.8
Suzuki Motor Corp. 3.7
Sankyo Co., Ltd. 3.5
Canon, Inc. 3.5
Dai-Tokyo Fire & Marine Insurance Co., Ltd. 3.5
<PAGE>
Additions
HSBC Holdings PLC
Kinden Corp.
Deletions
Great Eastern Shipping
Hang Lung Development Co., Ltd.
Hang Lung Development Co., Ltd. (Warrants)
Hong Kong & China Gas Co., Ltd. (Warrants)
Shimachu Co., Ltd.
Sony Corp.
<TABLE>
SCHEDULE OF INVESTMENTS
<CAPTION>
Shares Held/ Percent of
Industry Face Amount Investments Cost Value Net Assets
<S> <S> <C> <C> <C> <C>
Japanese Securities
Automobile 5,317,000 Suzuki Motor Corp. $ 55,312,927 $ 56,710,597 3.7%
Beverage 380,000 Chukyo Coca-Cola Bottling Co., Ltd. 5,420,506 4,362,801 0.3
424,000 Hokkaido Coca-Cola Bottling Co., Ltd. 6,399,350 5,938,921 0.4
386,000 Kinki Coca-Cola Bottling Co., Ltd. 7,430,096 5,318,025 0.3
476,000 Mikuni Coca-Cola Bottling Co., Ltd. 8,487,431 6,120,781 0.4
470,800 Sanyo Coca-Cola Bottling Co., Ltd. 7,040,767 7,134,971 0.5
-------------- -------------- ------
34,778,150 28,875,499 1.9
Capital Goods 9,765,000 Mitsubishi Heavy Industries, Ltd. 69,147,008 69,846,096 4.5
720 Mitsubishi Heavy Industries, Ltd., #3 US$
(Warrants) (a) 588,000 180 0.0
-------------- -------------- ------
69,735,008 69,846,276 4.5
Chemicals 1,400,000 Shin-Etsu Chemical Co., Ltd. 24,090,347 26,199,770 1.7
Consumer YEN 409,000,000 Matsushita Electric Works, Ltd.--C.E.W. #8,
Electronics 2.70% due 5/31/2002 4,543,869 5,306,200 0.3
Containers 2,466,000 Toyo Seikan Kaisha, Ltd. 52,376,351 76,443,169 4.9
<PAGE>
Electric 1,002,750 Chudenko Corp. 30,357,321 39,718,571 2.6
Construction 1,870,700 Kinden Corp. 33,154,861 38,230,149 2.5
984,500 Taihei Dengyo Kaisha, Ltd. 22,583,118 18,084,960 1.2
-------------- -------------- ------
86,095,300 96,033,680 6.3
Electric Equipment 3,152,000 Hitachi, Ltd. 31,597,842 32,569,460 2.1
2,148,900 Murata Manufacturing Co., Ltd. 70,991,933 83,143,433 5.4
923,000 The Nippon Signal Co., Ltd. 13,935,321 8,795,522 0.6
862,000 Rohm Co., Ltd. 32,696,434 37,409,414 2.4
1,162,000 Sumitomo Electric Industries, Ltd. 13,859,147 14,941,906 1.0
169 Sumitomo Electric Industries, Ltd., #1 YEN
(Warrants) (a) 185,351 109,627 0.0
-------------- -------------- ------
163,266,028 176,969,362 11.5
Iron & Steel 475,000 Maruichi Steel Tube, Ltd. 6,023,843 9,216,418 0.6
Office Equipment 3,270,000 Canon, Inc. 48,090,271 53,686,567 3.5
14,250 Canon, Inc., #2 DM (Warrants) (a) 1,741,131 56,183 0.0
2,250 Canon, Inc., #4 US$ (Warrants) (a) 2,434,375 56,250 0.0
-------------- -------------- ------
52,265,777 53,799,000 3.5
Pharmaceuticals 2,377,100 Sankyo Co., Ltd. 53,328,237 54,583,238 3.5
Property & 7,183,000 Dai-Tokyo Fire & Marine Insurance Co., Ltd. 42,907,120 53,604,478 3.5
Casualty 4,492,000 Fuji Fire & Marine Insurance Co., Ltd. 16,261,457 23,981,401 1.5
Insurance 5,454,000 Koa Fire & Marine Insurance Co., Ltd. 33,002,486 35,065,901 2.3
5,632,000 Nichido Fire & Marine Insurance Co., Ltd. 29,200,845 45,327,577 2.9
3,622,000 Sumitomo Marine & Fire Insurance Co., Ltd. 33,075,495 30,730,861 2.0
4,330,000 Tokio Marine & Fire Insurance Co., Ltd. 43,250,099 48,967,279 3.2
-------------- -------------- ------
197,697,502 237,677,497 15.4
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Shares Held/ Percent of
Industry Face Amount Investments Cost Value Net Assets
<S> <S> <C> <C> <C> <C>
Japanese Securities (concluded)
<PAGE>
Retailing 1,189,000 Ito-Yokado Co., Ltd. $ 57,048,890 $ 58,699,196 3.8%
364,000 Sangetsu Co., Ltd. 8,382,717 10,698,507 0.7
389,400 Senshukai Co., Ltd. 6,286,430 7,644,937 0.5
-------------- -------------- ------
71,718,037 77,042,640 5.0
Transportation 2,444,000 Nippon Express Co., Ltd. 24,955,299 24,103,284 1.6
Total Investments in Japan 896,186,675 992,806,630 64.4
Australian Securities
Diversified 3,900,000 BTR Nylex Ltd. 8,805,671 7,054,246 0.5
Food & Beverage 8,591,845 Burns Philp & Co., Ltd. 23,804,447 20,133,786 1.3
5,398,287 Coca-Cola Amatil, Ltd. 24,682,296 32,811,274 2.1
-------------- -------------- ------
48,486,743 52,945,060 3.4
Leisure 13,447,500 Village Roadshow Ltd. 'A' (Preferred) 23,429,102 28,558,052 1.8
Paper & Packaging 2,689,039 AMCOR Ltd. 19,394,022 18,431,555 1.2
Property 5,271,567 Lend Lease Corp. 65,861,326 64,159,325 4.1
US$ 1,500,000 Lend Lease Finance International, 4.75%
due 6/01/2003 1,736,250 1,560,000 0.1
-------------- -------------- ------
67,597,576 65,719,325 4.2
Total Investments in Australia 167,713,114 172,708,238 11.1
Hong Kong Securities
Banking 2,070,000 HSBC Holdings PLC 23,358,030 23,359,956 1.5
Diversified 4,410,500 Swire Pacific Ltd. 'A' 36,772,778 30,091,687 2.0
Utilities--Electric 14,482,300 China Light & Power Co., Ltd. 46,079,050 70,243,323 4.5
<PAGE>
Utilities--Gas 744,200 Hong Kong & China Gas Co., Ltd. 1,404,906 1,328,327 0.1
Utilities-- 15,741,800 Hong Kong Telecommunications, Ltd. 29,991,994 30,642,707 2.0
Telecommunications 670,500 Hong Kong Telecommunications, Ltd. (ADR) (b) 4,896,660 12,990,938 0.8
-------------- -------------- ------
34,888,654 43,633,645 2.8
Total Investments in Hong Kong 142,503,418 168,656,938 10.9
Indian Securities
Banking 9,800 SCICI, Ltd. 44,127 26,139 0.0
Broadcast/Media 620,000 Shivalik Projects Ltd. 3,557,823 3,554,140 0.2
Diversified Mutual 1,705,000 Master Plus 1,083,668 760,191 0.0
Fund
Total Investments in India 4,685,618 4,340,470 0.2
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Shares Held/ Percent of
Industry Face Amount Investments Cost Value Net Assets
<S> <S> <C> <C> <C> <C>
Indonesian Securities
Pharmaceuticals 1,634,000 PT Kalbe Farma $ 5,525,626 $ 6,263,545 0.4%
Total Investments in Indonesia 5,525,626 6,263,545 0.4
Malaysian Securities
Diversified 14,896,800 Sime Darby BHD 35,217,136 37,116,804 2.4
Leisure 1,125,000 Genting BHD 1,759,320 10,205,528 0.7
1,450,000 Resorts World BHD 2,382,084 7,512,359 0.5
-------------- -------------- ------
4,141,404 17,717,887 1.2
<PAGE>
Transportation 3,661,000 Malaysian International Shipping BHD 12,515,710 10,569,626 0.7
Total Investments in Malaysia 51,874,250 65,404,317 4.3
Pakistan Securities
Utilities 43,298 Pakistan Telecommunications (GDR) (c) 7,783,681 3,896,820 0.3
Total Investments in Pakistan 7,783,681 3,896,820 0.3
Singaporean Securities
Electronics 610,000 Creative Technology, Ltd. 7,609,991 7,472,500 0.5
Food 3,600,000 Cerebos Pacific Ltd. 5,153,632 20,793,763 1.4
Transportation 300,000 Singapore Bus Co. Ltd.--Foreign Registered 1,060,285 1,913,537 0.1
Total Investments in Singapore 13,823,908 30,179,800 2.0
South Korean Securities
Textiles 3,080 Taekwang Industries Co. 716,353 2,888,497 0.2
Total Investments in South Korea 716,353 2,888,497 0.2
Short-Term Securities
Commercial Paper* $ 65,216,000 General Electric Capital Corp.,
6.25% due 4/03/1995 65,193,356 65,193,356 4.2
12,000,000 TransAmerica Corporation, 5.98% due 4/03/1995 11,996,013 11,996,013 0.8
Total Investments in Short-Term Securities 77,189,369 77,189,369 5.0
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded)
<CAPTION>
Premiums Percent of
Face Amount Issue Paid Value Net Assets
<S> <S> <C> <C> <C> <C>
Currency Put Options Purchased
US$ 120,848,684 Japanese Yen expiring February 1996 at YEN 102 $ 1,836,900 $ 398,801 0.0%
323,000,000 Japanese Yen expiring January 1996 at YEN 102 5,914,450 1,001,300 0.0
156,010,000 Japanese Yen expiring January 1996 at YEN 102 2,752,016 421,227 0.0
275,641,027 Japanese Yen expiring March 1996 at YEN 92 6,450,000 5,292,308 0.1
Total Currency Put Options Purchased 16,953,366 7,113,636 0.1
Total Investments $1,384,955,378 1,531,448,260 98.9
==============
Other Assets Less Liabilities 17,657,222 1.1
-------------- ------
Net Assets $1,549,105,482 100.0%
============== ======
Net Asset Class A--Based on net assets of $579,566,778 and 28,075,667
Value: shares outstanding $ 20.64
==============
Class B--Based on net assets of $919,591,640 and 46,532,923
shares outstanding $ 19.76
==============
Class C--Based on net assets of $15,593,737 and 794,970 shares
outstanding $ 19.62
==============
Class D--Based on net assets of $34,353,327 and 1,665,395
shares outstanding $ 20.63
==============
<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 Receipt.
(c)GDR--Global Depositary Receipt.
*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.
</TABLE>
<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, Massachusetts 02109
Transfer Agent
Financial Data Services, Inc.
Transfer Agency Mutual Fund Operations
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
