MERRILL LYNCH
PACIFIC FUND, INC.
FUND LOGO
Quarterly Report
September 30, 1996
This report is not authorized for use as an offer of sale or a
solicitation of an offer to buy shares of the Fund unless
accompanied or preceded by the Fund's current prospectus. Past
performance results shown in this report should not be considered a
representation of future performance. Investment return and
principal value of shares will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
Statements and other information herein are as dated and are subject
to change.
<PAGE>
Merrill Lynch
Pacific Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
Printed on post-consumer recycled paper
MERRILL LYNCH PACIFIC FUND, INC.
DEAR SHAREHOLDER
Merrill Lynch Pacific Fund, Inc.'s Class A, Class B, Class C and
Class D Shares' total returns were -1.56%, -1.80%, -1.83% and
- -1.64%, respectively, during the quarter ended September 30, 1996.
Despite the decline experienced during the September quarter, the
Fund's results remain positive thus far in 1996, with total returns
of +8.53%, +7.68%, +7.73% and +8.36%, for Class A, Class B, Class C
and Class D Shares, respectively. For the quarter and, to a greater
extent for the year-to-date, the Fund has outperformed the unmanaged
Benchmark Index, which had a -3.74% total return for the September
quarter and a +0.63% total return for the year-to-date. (Fund
results do not reflect sales charges, and would be lower if sales
charges were included. Complete performance information, including
average annual total returns, can be found on pages 3--6 of this
report to shareholders.)
Performance Highlights
During the September quarter, the Japanese stock market declined by
5% in US dollar terms, as measured by the Tokyo Stock Exchange
Index, which caused the overall Benchmark Index to decline. Hong
Kong continued to be a strong stock market, and Malaysia gave up
some of its gains from the first half of 1996.
<PAGE>
For US dollar-based investors, the Japanese stock market's positive
return in yen terms thus far in 1996 has been erased by the
depreciation of the Japanese yen relative to the US dollar.
Therefore, our hedging of the Fund's yen risk largely accounts for
the Fund's positive total returns and outperformance relative to the
unmanaged Benchmark Index thus far in 1996.
We continue to hedge the Fund's yen exposure through the purchase of
yen puts, since we believe that there is still the risk of further
yen depreciation. It is important to note that we periodically
restrike the yen puts once they go "in the money," since at that
point they perform like a short position in yen. (That is, the put
options take on the characteristics of currency forwards.) Therefore,
when this occurs, we choose to realize profits on the old puts and
establish new puts that provide the currency hedging that we seek.
In terms of stock performance during the September quarter, most of
our holdings had returns for the period that were in line with their
respective stock markets. However, two of the Fund's largest holdings
performed exceptionally well during the period. In Australia, Coca-Cola
Amatil, Ltd. rose by 17.5%, while the Australian stock market appreciated
only 2.2%. In Hong Kong--a stock market which appreciated by 8% during
the quarter--our largest position in a stock outside of Japan, HSBC
Holdings PLC, rose over 22%.
Investment Activities
We made few changes to the portfolio during the September quarter.
Therefore, our geographic asset allocation does not differ markedly
from the end of the June quarter. The few adjustments we made to the
portfolio were to increase our investments in Bridgestone
Corporation and Mitsubishi Heavy Industries, Ltd. (Japan); add to
our investment in C.P. Pokphand Co. Ltd. (Hong Kong); and take some
profits in our positions in Coca-Cola Amatil, Ltd. and Toyo Seikan
Kaisha, Ltd. While these portfolio changes are not significant in
and of themselves, they do illustrate our view of current
developments in the markets in which we invest.
In past reports to shareholders, we discussed a new trend that is
potentially emerging in Japan. It appeared to us that Japanese
corporate managements were beginning to focus on how to enhance the
economic value of their companies, thereby benefiting their
shareholders. Although we still believe that this reorientation is
likely to become widespread, it is nonetheless occurring less
rapidly and uniformly than we had hoped. However, we view this not
as a disappointment, but as an opportunity. For those investors like
us who are willing and able to perform detailed investigative
analysis, we believe that this trend provides another important way
to seek out individual stocks that will substantially outperform the
vast majority of Japanese companies that are content to do business
the same old way.
<PAGE>
Both Bridgestone Corporation and Mitsubishi Heavy Industries, Ltd.
are examples of companies that have succeeded through the most
recent economic recession in Japan and appear to be emerging from it
not only stronger than they were before, but also more prosperous
than their peer Japanese companies. Therefore, we chose to add to
these holdings during the September quarter.
On the other hand, Toyo Seikan Kaisha, Ltd.--although it remains a
superior company both in terms of profitability and balance sheet
strength--has proved less capable of changing with the times. Its
business, the manufacture of cans, bottles, and various other types
of packaging, now appears to be increasingly international and, as a
result, is more competitive and less profitable.
For a US corporation in this position, we would expect management to
trim staff, exit unprofitable lines of business, and engineer
certain costs out of production. Toyo Seikan's response, however,
has been more in line with what we expect from an old-line, family-
controlled, Japanese public corporation. Management has not laid off
any employees, and has spent aggressively to build a manufacturing
method that it believes makes the world's most superior can.
Unfortunately, this can is more expensive to manufacture than other
alternatives, if we include depreciation costs. Toyo Seikan has
created a superior product, but since the market will not pay the
incremental costs associated with producing it, the company must
sell it at a reduced operating margin. The only beneficiaries are
the consumers of these new superior cans. Although we are now less
confident regarding Toyo Seikan's long-term competitive position, we
maintain an investment in the company, as noted above, because of
its ongoing profitability and strong financial position.
Although Coca-Cola Amatil, Ltd. is the single most promising growth
stock in the portfolio, we trimmed our position during the September
quarter. The stock has appreciated so much that we are not
comfortable holding quite so large a position at such a high
valuation.
In Hong Kong, we remain neutrally weighted. This reflects our belief
that the transition of Hong Kong to The People's Republic of China
will be smooth. However, since we also believe that current Hong
Kong stock market valuations already reflect a smooth transition, we
do not have an overweighted position in Hong Kong. We continue to
evaluate economic, political and stock market developments in Hong
Kong to determine whether we should either increase or decrease our
exposure there. We added to our position in C.P. Pokphand Co. Ltd.
because it is a leading, well-managed agribusiness in Asia. As a
result, we believe the company is well-positioned to benefit from
income growth in the region.
<PAGE>
In Conclusion
We thank you for your continued investment in Merrill Lynch Pacific
Fund, Inc., and look forward to reviewing our outlook and strategy
with you again in our upcoming annual report to shareholders.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Stephen I. Silverman)
Stephen I. Silverman
Vice President and Portfolio Manager
October 25, 1996
PERFORMANCE DATA
About Fund Performance
Investors are 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 approximately 8 years. (There is no initial
sales charge for automatic share conversions.)
<PAGE>
* 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).
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.
<TABLE>
Recent Performance Results
<CAPTION>
Market Performance Market Capitalization
In Local Currency/In US Dollars (as of 6/30/96)
3 Month 12 Month In US Dollars % of Total
% Change % Change (Billions) (100.0%)
<S> <C> <C> <C> <C>
ML Pacific Fund, Inc. Class A Shares* -1.56% +11.29%(1)
ML Pacific Fund, Inc. Class B Shares* -1.80 +11.12(1)
ML Pacific Fund, Inc. Class C Shares* -1.83 +10.67(1)
ML Pacific Fund, Inc. Class D Shares* -1.64 +11.22(1)
ML Pacific Fund, Inc. Class A Shares--Total Investment Return* -1.56 +12.79(2)
ML Pacific Fund, Inc. Class B Shares--Total Investment Return* -1.80 +11.64(3)
ML Pacific Fund, Inc. Class C Shares--Total Investment Return* -1.83 +11.62(4)
ML Pacific Fund, Inc. Class D Shares--Total Investment Return* -1.64 +12.50(5)
Market-Weighted Index** -4.87(6) +3.19(7)
Benchmark Index*** -3.74 +5.11
Japan - 4.96/-6.63 +13.17/+0.48 $3,667 78.5%
Australia + 2.15/+2.71 + 7.24/+12.33 262 5.6
Hong Kong + 8.00/+8.11 +23.39/+23.36 311 6.7
Malaysia - 0.09/-0.56 +13.46/+13.70 249 5.3
Singapore - 7.57/-7.37 + 6.24/+7.26 143 3.1
Thailand -11.87/-11.94 -15.08/-16.19 40 0.8
<FN>
(1)Percent change includes reinvestment of $0.382 per share capital
gains distributions.
(2)Percent change includes reinvestment of $0.298 per share ordinary
income dividends and $0.382 per share capital gains distributions.
<PAGE>
(3)Percent change includes reinvestment of $0.099 per share ordinary
income dividends and $0.382 per share capital gains distributions.
(4)Percent change includes reinvestment of $0.179 per share ordinary
income dividends and $0.382 per share capital gains distributions.
(5)Percent change includes reinvestment of $0.255 per share ordinary
income dividends and $0.382 per share capital gains distributions.
(6)6/30/96 market weights used in this computation. The Market-
Weighted Index return and individual country returns do not include
dividends.
(7)9/30/95 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>
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 $18,864.25 on
September 30, 1996.
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 9/30/96 +12.79% + 6.87%
Five Years Ended 9/30/96 + 8.25 + 7.08
Ten Years Ended 9/30/96 +11.08 +10.49
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
<PAGE>
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 9/30/96 +11.64% +7.64%
Five Years Ended 9/30/96 + 7.14 +7.14
Inception (10/21/88) through 9/30/96 + 8.46 +8.46
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Year Ended 9/30/96 +11.62% +10.62%
Inception (10/21/94)
through 9/30/96 + 5.36 + 5.36
[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*
Year Ended 9/30/96 +12.50% +6.59%
Inception (10/21/94)
through 9/30/96 + 6.18 +3.28
[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**
<S> <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
1995 21.12 22.16 0.382 0.298 + 8.20
1/1/96--9/30/96 22.16 24.05 -- -- + 8.53
------- ------
Total $36.511 Total $4.534
Cumulative total return as of 9/30/96: +1,890.95%**
<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**
<S> <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
1995 20.27 21.22 0.382 0.099 + 7.10
1/1/96--9/30/96 21.22 22.85 -- -- + 7.68
------ ------
Total $5.337 Total $2.012
<PAGE>
Cumulative total return as of 9/30/96: +90.66%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the ex-dividend date, and do not
reflect deduction of any sales charge; results would be lower if
sales charge was deducted.
</TABLE>
PERFORMANCE DATA (concluded)
<TABLE>
Performance Summary--Class C Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <C> <C> <C> <C> <C>
10/21/94--12/31/94 $21.67 $20.12 $0.469 $0.191 -4.04%
1995 20.12 20.97 0.382 0.179 +7.07
1/1/96--9/30/96 20.97 22.59 -- -- +7.73
------ ------
Total $0.851 Total $0.370
Cumulative total return as of 9/30/96: +10.68%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the ex-dividend date, and do not
reflect deduction of any sales charge; results would be lower if
sales charge was deducted.
</TABLE>
<TABLE>
Performance Summary--Class D Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <C> <C> <C> <C> <C>
10/21/94--12/31/94 $22.70 $21.11 $0.469 $0.213 -3.93%
1995 21.11 22.14 0.382 0.255 +7.95
1/1/96--9/30/96 22.14 23.99 -- -- +8.36
------ ------
Total $0.851 Total $0.468
Cumulative total return as of 9/30/96: +12.37%**
<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>
PORTFOLIO INFORMATION
For the Quarter Ended September 30, 1996
Percent of
Ten Largest Equity Holdings Net Assets
Murata Manufacturing Co., Ltd. 5.6%
Canon, Inc. 5.3
HSBC Holdings PLC 5.1
Mitsubishi Heavy Industries, Ltd. 4.7
Lend Lease Corp. 4.1
Ito-Yokado Co., Ltd. 3.7
Bridgestone Corporation 3.6
Cheung Kong (Holdings) Ltd. 3.3
Rohm Co., Ltd. 3.1
Sankyo Co., Ltd. 3.0
Percent of
Ten Largest Industries Net Assets
Property & Casualty Insurance 12.9%
Electric Equipment 10.0
Property 7.5
Banking 7.0
Electric Construction 5.3
Office Equipment 5.3
Conglomerates 4.8
Capital Goods 4.7
Retailing 4.3
Diversified 4.0
Addition
Industrial Development Bank of India
<TABLE>
SCHEDULE OF INVESTMENTS
<CAPTION>
Shares Held/ Percent of
Industry Face Amount Investments Cost Value Net Assets
Japanese Securities
<S> <C> <S> <C> <C> <C>
Automobile 4,794,000 Suzuki Motor Corp. $ 50,657,289 $ 58,473,901 2.5%
<PAGE>
Beverage 380,000 Chukyo Coca-Cola Bottling Co., Ltd. 5,420,506 3,919,283 0.2
424,000 Hokkaido Coca-Cola Bottling Co., Ltd. 6,399,350 5,475,874 0.2
386,000 Kinki Coca-Cola Bottling Co., Ltd. 7,430,096 5,296,682 0.2
476,000 Mikuni Coca-Cola Bottling Co., Ltd. 8,487,431 6,488,969 0.3
470,000 Sanyo Coca-Cola Bottling Co., Ltd. 7,028,799 6,702,242 0.3
-------------- -------------- ------
34,766,182 27,883,050 1.2
Capital Goods 13,543,000 Mitsubishi Heavy Industries, Ltd. 99,257,428 110,165,928 4.7
Chemicals 3,311,000 Shin-Etsu Chemical Co., Ltd. 59,267,110 59,390,135 2.6
Consumer YEN 409,000,000 Matsushita Electric Works, Ltd.--C.E.W.
Electronics #8, 2.70% due 5/31/2002 (Convertible) 4,543,868 4,357,776 0.2
Containers 2,029,000 Toyo Seikan Kaisha, Ltd. 58,939,111 66,420,179 2.9
Electric 1,697,000 Chudenko Corp. 54,855,011 56,313,004 2.4
Construction 3,232,000 Kinden Corp. 51,823,588 48,987,265 2.1
1,232,000 Taihei Dengyo Kaisha, Ltd. 24,789,475 17,678,924 0.8
-------------- -------------- ------
131,468,074 122,979,193 5.3
Electric Equipment 3,657,000 Murata Manufacturing Co., Ltd. 125,919,983 130,536,861 5.6
2,557,000 NEC Corporation 37,256,072 30,041,883 1.3
1,138,000 Rohm Co., Ltd. 51,505,961 71,750,135 3.1
169 Sumitomo Electric Industries, Ltd.,
#1 YEN (Warrants) (a) 185,351 219,776 0.0
-------------- -------------- ------
214,867,367 232,548,655 10.0
Iron & Steel 475,000 Maruichi Steel Tube, Ltd. 6,023,843 8,434,978 0.4
Office Equipment 6,250,000 Canon, Inc. 101,729,125 122,757,848 5.3
Pharmaceuticals 2,764,000 Sankyo Co., Ltd. 62,555,171 70,649,327 3.0
Property & Casualty 8,790,000 Dai-Tokyo Fire & Marine Insurance
Co., Ltd. 53,840,330 60,623,408 2.6
Insurance 4,492,000 Fuji Fire & Marine Insurance
Co., Ltd. 16,261,457 24,051,336 1.0
7,539,000 Koa Fire & Marine Insurance
Co., Ltd. 45,292,612 47,397,659 2.0
8,191,000 Nichido Fire & Marine Insurance
Co., Ltd. 46,307,188 57,447,193 2.5
7,119,000 Sumitomo Marine & Fire Insurance
Co., Ltd. 61,618,176 56,058,135 2.4
4,662,000 Tokio Marine & Fire Insurance
Co., Ltd. 46,990,608 55,191,390 2.4
-------------- -------------- ------
270,310,371 300,769,121 12.9
Retailing 1,524,000 Ito-Yokado Co., Ltd. 75,480,112 86,519,462 3.7
364,000 Sangetsu Co., Ltd. 8,382,717 8,455,247 0.4
352,000 Senshukai Co., Ltd. 5,696,494 5,335,247 0.2
-------------- -------------- ------
89,559,323 100,309,956 4.3
<PAGE>
Tires & Rubber 4,660,000 Bridgestone Corporation 79,461,992 84,005,381 3.6
Total Investments in Japan 1,263,406,254 1,369,145,428 58.9
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Shares Held/ Percent of
Industry Face Amount Investments Cost Value Net Assets
Australian Securities
<S> <C> <S> <C> <C> <C>
Food & Beverage 5,068,222 Coca-Cola Amatil, Ltd. $ 29,049,370 $ 66,548,796 2.9%
Leisure 4,400,000 Village Roadshow Ltd. 'A' (New Shares)
(Preferred) 12,640,320 13,399,540 0.6
13,840,684 Village Roadshow Ltd. 'A' (Preferred) 24,574,258 43,791,924 1.9
-------------- -------------- ------
37,214,578 57,191,464 2.5
Property 5,958,480 Lend Lease Corp. 75,968,947 96,619,732 4.1
US$ 1,500,000 Lend Lease Finance International, Ltd.,
4.75% due 6/01/2003 1,736,250 2,041,950 0.1
-------------- -------------- ------
77,705,197 98,661,682 4.2
Total Investments in Australia 143,969,145 222,401,942 9.6
Hong Kong Securities
Banking 6,370,687 HSBC Holdings PLC 90,448,914 118,222,841 5.1
Conglomerates 8,691,035 Hutchison Whampoa Ltd. 49,044,910 58,443,749 2.5
Diversified 7,752,500 Swire Pacific Ltd. 'A' 64,199,930 69,426,421 3.0
Food & Beverage 60,770,000 C.P. Pokphand Co. Ltd. (Ordinary) 21,400,982 19,253,892 0.8
Property 10,004,000 Cheung Kong (Holdings) Ltd. 72,546,868 76,975,740 3.3
Transportation 301,000 Guangshen Railway Company Ltd. (ADR) (c) 5,719,000 5,719,000 0.2
Total Investments in Hong Kong 303,360,604 348,041,643 14.9
Indian Securities
Banking 3,057,000 Industrial Development Bank of India 10,590,002 9,679,781 0.4
5,100 SCICI, Ltd. 15,309 4,604 0.0
-------------- -------------- ------
10,605,311 9,684,385 0.4
<PAGE>
Broadcast/Media 620,000 BITV 3,557,822 3,148,096 0.2
Diversified Mutual Fund 1,929,400 Master Plus 1,146,844 761,963 0.0
Financial Services 72,000 Housing Development Finance Corp. Ltd. 5,781,901 4,668,829 0.2
Total Investments in India 21,091,878 18,263,273 0.8
Indonesian Securities
Pharmaceuticals 1,634,000 P.T. Kalbe Farma 5,525,626 3,903,874 0.2
Total Investments in Indonesia 5,525,626 3,903,874 0.2
Malaysian Securities
Conglomerates 34,564,000 Renong BHD 57,253,457 52,969,533 2.3
Transportation 3,661,000 Malaysian International Shipping BHD 12,515,710 11,250,229 0.5
Total Investments in Malaysia 69,769,167 64,219,762 2.8
</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>
New Zealand Securities
Diversified 44,621,500 Guiness Peat Group PLC $ 17,806,200 $ 23,382,782 1.0%
Total Investments in New Zealand 17,806,200 23,382,782 1.0
Pakistan Securities
Utilities-- 43,298 Pakistan Telecommunications Corp.
Telecommunications (GDR) (b) 7,783,681 3,701,979 0.2
Total Investments in Pakistan 7,783,681 3,701,979 0.2
Singaporean Securities
Food 3,600,000 Cerebos Pacific Ltd. 5,153,632 30,436,945 1.3
Transportation 300,000 Singapore Bus Co. Ltd.--Foreign Registered 1,060,285 1,555,950 0.1
Total Investments in Singapore 6,213,917 31,992,895 1.4
<PAGE>
South Korean Securities
Textiles 3,080 Taekwang Industries Co. 716,353 1,249,909 0.0
Total Investments in South Korea 716,353 1,249,909 0.0
Thailand Securities
Banking US$ 12,631,000 Bangkok Bank Public Company Ltd., 3.25%
due 3/03/2004 (Convertible) 15,233,380 14,020,410 0.6
US$ 19,535,000 Siam Commercial Bank Public Co., 3.25%
due 1/24/2004 (Convertible) 25,441,125 21,293,150 0.9
Total Investments in Thailand 40,674,505 35,313,560 1.5
Face Amount
Short-Term Securities
Commercial Paper* US$ 37,579,000 General Electric Capital Corp., 5.80%
due 10/01/1996 37,579,000 37,579,000 1.6
Total Investments in Short-Term Securities 37,579,000 37,579,000 1.6
Nominal Value Premiums
Covered by Options Issue Paid
Currency Put Options Purchased
US$ 300,000,000 Japanese Yen, expiring December 1996
at YEN 107 10,155,000 12,105,000 0.5
300,000,000 Japanese Yen, expiring January 1997
at YEN 107 10,440,000 12,105,000 0.5
250,000,000 Japanese Yen, expiring February 1997
at YEN 107 5,075,000 10,087,500 0.4
152,000,000 Japanese Yen, expiring July 1997
at YEN 113 2,606,800 2,219,200 0.1
381,922,622 Japanese Yen, expiring September 1997
at YEN 112.35 5,843,416 7,046,472 0.3
Total Currency Put Options Purchased 34,120,216 43,563,172 1.8
Total Investments 1,952,016,546 2,202,759,219 94.7
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded)
<CAPTION>
Nominal Value Premiums Percent of
Covered by Options Issue Received Value Net Assets
<PAGE>
Call Options Written
<S> <C> <S> <C> <C> <C>
US$ 3,876,250 Swire Pacific 'A', expiring November
1996 at HK$74.3204 $ (248,375) $ (265,674) 0.0%
Total Call Options Written (248,375) (265,674) 0.0
Total Investments, Net of Options Written $1,951,768,171 2,202,493,545 94.7
==============
Unrealized Appreciation on Forward Foreign Exchange Contracts** 1,127,299 0.0
Other Assets Less Liabilities 122,281,615 5.3
-------------- ------
Net Assets $2,325,902,459 100.0%
============== ======
Net Asset Value: Class A--Based on net assets of $697,352,213 and 28,994,476 shares
outstanding $ 24.05
==============
Class B--Based on net assets of $1,349,099,850 and 59,034,543 shares
outstanding $ 22.85
==============
Class C--Based on net assets of $107,184,878 and 4,744,685 shares
outstanding $ 22.59
==============
Class D--Based on net assets of $172,265,518 and 7,180,036 shares
outstanding $ 23.99
==============
<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)Global Depositary Receipts (GDR).
(c)American Depositary Receipts (ADR).
*Commercial Paper is traded on a discount basis; the interest rate
shown is the discount rate paid at the time of purchase by the Fund.
**Forward foreign exchange contracts as of September 30, 1996 were
as follows:
Unrealized
Expiration Appreciation
Foreign Currency Purchased Date (Depreciation)
YEN 7,957,445,461 April 1997 $(2,891,872)
Total (US$ Commitment--$76,133,940) $(2,891,872)
-----------
Foreign Currency Sold
<PAGE>
YEN 7,957,445,461 April 1997 $ 4,019,171
Total (US$ Commitment--$77,261,239) $ 4,019,171
-----------
Total Unrealized Appreciation--Net on
Forward Foreign Exchange Contracts $ 1,127,299
===========
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
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
</TABLE>
