MERRILL LYNCH
PACIFIC FUND, INC.
FUND LOGO
Semi-Annual Report
June 30, 1998
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.
Merrill Lynch
Pacific Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
Printed on post-consumer recycled paper
MERRILL LYNCH PACIFIC FUND, INC.
DEAR SHAREHOLDER
For the quarter ended June 30, 1998, Merrill Lynch Pacific Fund,
Inc.'s Class A, Class B, Class C and Class D Shares had total
returns of -8.23%, -8.46%, -8.44% and -8.23%, respectively,
outperforming the -12.35% total return for the unmanaged Benchmark
Index of Pacific Basin stock markets. The Fund's outperformance
relative to the Benchmark Index was attributable to our
underweighting in Southeast Asian stock markets and hedging the
Fund's yen exposure back to the US dollar. Fund holdings performed
slightly worse than their respective local markets during the
quarter. (Fund results do not reflect sales charges, and would be
lower if sales charges were included. Complete performance
information can be found on pages 3 and 4 of this report to
shareholders.)
Unsettled Conditions Prevail in Asia
Economic and stock market conditions in Asia remain unsettled.
Outside of Japan, Asian stock prices plummeted at the beginning of
1998 only to appreciate substantially soon thereafter.
Unfortunately, the rally proved short-lived and these stock markets
again depreciated, as did most Asian currencies.
Typically, our analysis does not focus on macroeconomic issues.
However, the general economic malaise in Asia is so pervasive that
it warrants comment. The value of companies bears a strong
relationship to the economic value they create, normally quantified
in measures such as net income or cashflows. Asian companies
currently find themselves in the position of being unable to create
much value in such a bleak macroeconomic environment.
For example, private consumption in Japan has been weak for years
and appears likely to remain so, even though interest rates are at
extremely low levels. Japan's economy is not reviving, and is not
likely to recover just because interest rates are low, since
individuals are not inclined to do anything with any extra money
they may have other than save. Consumption is low because people are
not confident in the future. Moreover, since Japan still has a large
current account surplus (largely because of a large trade surplus),
these assets appear to be recycled into buying US equity and fixed-
income securities. This is not surprising considering Japanese
demographics (a rapidly aging population with insufficient public
and private pension assets), a history of poor returns in domestic
equity investments, and the very low interest rates available on yen-
denominated fixed-income securities. In addition, Japanese people
are worried about their continued employment prospects and future
salary increases. Clearly, this is not an environment in which
consumption is likely to increase.
Japan's lackluster rate of consumption is important because not only
is consumption the largest component of the country's gross domestic
product (GDP), it also has a material effect on the business
prospects of many Asian companies based outside of Japan. However,
the problems of Asia's largest economy and their impact on the rest
of the region go beyond consumption. As has been well documented in
the press, many Japanese banks are in very fragile financial
condition. Since Japanese banks have excessive non-performing and
bad loans, they have become increasingly hesitant to extend credit
to potential borrowers. In the meantime, the Japanese government
continues to struggle with bank rescue packages (some of which will
close certain banks). The unwillingness to lend on the part of
Japanese banks is creating problems in the rest of Asia as well as
in Japan. The banks spent much of the past decade establishing
themselves as active and aggressive lenders. Therefore, the drying
up of liquidity is not only affecting Japan but also the rest of
Asia. Property and stock prices are declining and confidence is
eroding. UK banks are also pulling back their lending activities in
Southeast Asia (particularly Hong Kong) which is exacerbating the
problem.
Since the yen had been depreciating, Asian economies outside of
Japan faced significant competitive pressures on the trade front.
However, most of the other Asian currencies have collapsed relative
to the US dollar over the past year, and have even materially
depreciated against the weak yen. Unfortunately, the economies,
stock markets, and borrowing abilities of these countries have also
collapsed. Although some of these countries have significant export
sectors, they also have a need for products that must be paid for in
US dollars and, more critically, they have extensive US dollar-
denominated debt. With the substantial devaluation of their
currencies, these countries cannot service their debt. The two
countries that were hit hardest were Indonesia and Korea.
Merrill Lynch Pacific Fund, Inc.
June 30, 1998
Unfortunately, the problems in Asia do not appear to be completely
behind us. The United States and The People's Republic of China have
been pushing a plan to get the Japanese government to implement
internal changes that would hopefully stabilize the region. The plan
is for Japan to institute permanent income tax and consumption tax
cuts as well as a viable plan to deal with the non-performing loans
plaguing Japanese banks. The belief is if all of these changes are
implemented, Japan's currency should stabilize (and potentially
appreciate) relative to the US dollar, and Japan's GDP should begin
to grow again, led by domestic consumption. This renewed growth in
Japan would function as a catalyst to help restore both stability
and growth to the rest of Asia. Japan would function as the
locomotive for growth in a revitalized Asia. So far, the Japanese
government has not shown the resolve to implement such a plan.
Over the longer term, we believe that Asian countries and companies
possess many valuable attributes. Many of these economies have hard-
working and well-educated workforces, and economic progress will
eventually occur. Furthermore, we remain positive on the long-term
prospects for Merrill Lynch Pacific Fund investments. They appear to
represent good investment value, and in our view have less downside
risk than Japanese stocks in general, even in the very weak Japanese
economic environment.
Corporate Japan Shows Little Change
For us to become very positive for the longer-term prospects for
Japanese stocks in general, we continue to await some real signs
that corporate managements are making decisions that benefit their
shareholders. In past letters to our shareholders, we expressed our
hope that a confluence of factors would benefit Japanese stocks over
the longer term:
* Japanese companies would recognize the enormity of the pension
liabilities that have resulted because pension funds have not earned
competitive investment returns.
* These same companies would realize that in order to meet these
obligations they would have to ensure that their pension funds were
competently managed.
* Competent pension fund management would take the form of portfolio
managers seeking to invest in companies that exhibit attractive
profitability characteristics (good operating margins, reasonable
sales growth, appropriate returns on invested capital, sound capital
structures, and so forth) and are reasonably valued in relation to
their profitability.
As this process continued, we reasoned, it would inevitably lead
Japanese corporate managements to make decisions that would benefit
their shareholders. However, we have yet to see meaningful progress
in this area, although more Japanese corporations are discussing
shareholder-oriented initiatives such as share buybacks and
controlling costs. To date, such initiatives appear to be more form
than substance, in our view. Nevertheless, we remain hopeful that
more Japanese corporations will eventually make decisions that
benefit their shareholders. Perhaps the recent defeat of the Liberal
Democratic Party in the Japanese elections--which forced the
resignation of Prime Minister Hashimoto--will signal the beginning
of an era of reform in Japan. No matter how positive the long-term
implications of such a shift, it seems likely that in the near term
political uncertainty in Japan may translate into further economic
uncertainty for Asia as a whole. At this time, the surprise defeat
of the ruling political party in the largest, most important economy
in Asia--just when the rest of Asia is looking to Japan for
leadership--could be regarded as another negative development, even
if it is ultimately good for the region.
Nonetheless, the attractive valuations--especially price/book
value, price/net current asset, and enterprise value/earnings before
interest, taxes, depreciation and amortization--make us believe
that while the macroeconomic environment looks bleak, current
valuations largely reflect the difficulties of the current
environment. Many Asian stocks (including Japanese stocks) are
inexpensive to very inexpensive on conventional valuation measures,
and therefore have the prospect for good "snap back" performance.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Stephen I. Silverman)
Stephen I. Silverman
Senior Vice President and Portfolio Manager
August 11, 1998
Merrill Lynch Pacific Fund, Inc.
June 30, 1998
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.)
* 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. Figures shown in the "Recent Performance
Results" and "Average Annual Total Return" tables assume
reinvestment of all dividends and capital gains distributions at net
asset value on the ex-dividend date. 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 3/31/98)
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--Total Investment Return* - 8.23% -21.45%(1)
ML Pacific Fund, Inc. Class B Shares--Total Investment Return* - 8.46 -22.26(2)
ML Pacific Fund, Inc. Class C Shares--Total Investment Return* - 8.44 -22.24(3)
ML Pacific Fund, Inc. Class D Shares--Total Investment Return* - 8.23 -21.62(4)
Market-Weighted Index** -10.94 -37.23
Benchmark Index*** -12.35 -37.80
Japan - 1.70/-5.60 -20.82/-34.59 $2,242 69.8%
Australia - 2.76/-8.96 - 2.11/-19.09 316 9.8
Hong Kong -25.83/-25.83 -43.78/-43.79 412 12.8
Malaysia -36.67/-44.51 -57.71/-74.23 123 3.8
Singapore -25.64/-28.96 -32.82/-43.13 107 3.4
Thailand -41.77/-45.91 -49.30/-68.92 12 0.4
<FN>
(1)Percent change includes reinvestment of $1.000 per share ordinary
income dividends and $2.206 per share capital gains distributions.
(2)Percent change includes reinvestment of $0.740 per share ordinary
income dividends and $2.206 per share capital gains distributions.
(3)Percent change includes reinvestment of $0.756 per share ordinary
income dividends and $2.206 per share capital gains distributions.
(4)Percent change includes reinvestment of $0.940 per share ordinary
income dividends and $2.206 per share capital gains distributions.
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included.
**Unmanaged. The Market-Weighted Index represents the market-
weighted, US dollar-denominated percentage change in each of the
individual country indexes as shown in the table (which exclude
dividends), using Morgan Stanley Capital International data. March
31, 1998 market weights are used for the 3-month results, and June
30, 1997 market weights are used for the 12-month results.
***Unmanaged. The Benchmark Index is a customized index used to
measure the Fund's relative performance, comprised as follows: 68%
Tokyo Stock Exchange Index, 7% Australia All Ordinaries Index, 14%
Hang Seng Index (Hong Kong), 5% Kuala Lumpur Stock Exchange
Composite Index (Malaysia), 4% DBS 50 Index (Singapore), and 2% SET
(Thailand). The Benchmark Index represents the percentage change in
each of these indexes in US dollar terms (excluding dividends),
multiplied by the market weights shown.
</TABLE>
Merrill Lynch Pacific Fund, Inc.
June 30, 1998
PERFORMANCE DATA (concluded)
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 $17,136.77 on
June 30, 1998
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 6/30/98 -21.45% -25.57%
Five Years Ended 6/30/98 + 3.74 + 2.63
Ten Years Ended 6/30/98 + 6.98 + 6.41
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 6/30/98 -22.26% -24.88%
Five Years Ended 6/30/98 + 2.67 + 2.67
Inception (10/21/88) through 6/30/98 + 5.63 + 5.63
[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 6/30/98 -22.24% -22.89%
Inception (10/21/94)
through 6/30/98 - 0.34 - 0.34
[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 6/30/98 -21.62% -25.73%
Inception (10/21/94)
through 6/30/98 + 0.45 - 1.01
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
Merrill Lynch Pacific Fund, Inc.
June 30, 1998
<TABLE>
SCHEDULE OF INVESTMENTS
<CAPTION>
Shares Held/ Value Percent of
Industry Face Amount Investments Cost (Note 1a) Net Assets
Japanese Securities
<S> <C> <S> <C> <C> <C>
Automobile 3,538,000 Suzuki Motor Corp. $ 39,518,483 $ 32,170,600 2.5%
Beverage 380,000 Chukyo Coca-Cola Bottling Co., Ltd. 5,420,506 3,126,218 0.2
424,000 Hokkaido Coca-Cola Bottling Co., Ltd. 6,399,350 4,589,738 0.4
386,000 Kinki Coca-Cola Bottling Co., Ltd. 7,430,096 4,679,801 0.4
476,000 Mikuni Coca-Cola Bottling Co., Ltd. 8,487,431 8,175,507 0.6
517,000 Sanyo Coca-Cola Bottling Co., Ltd. 7,028,799 5,566,602 0.4
-------------- -------------- ------
34,766,182 26,137,866 2.0
Capital Goods 931,000 Mitsubishi Heavy Industries, Ltd. 5,514,579 3,520,560 0.3
Chemicals 2,204,000 Shin-Etsu Chemical Co., Ltd. 42,829,588 38,172,765 3.0
Consumer YEN 409,000,000 Matsushita Electric Works, Ltd.--C.E.W.
Electronics #8, 2.70% due 5/31/2002 (Convertible) 4,543,869 3,748,503 0.3
547,500 Sony Corporation 50,737,723 47,215,306 3.7
-------------- -------------- ------
55,281,592 50,963,809 4.0
Containers 1,766,000 Toyo Seikan Kaisha, Ltd. 49,371,128 21,665,584 1.7
Electric 1,887,000 Chudenko Corp. 55,433,121 39,423,144 3.1
Construction 3,141,000 Kinden Corp. 50,306,149 38,080,970 3.0
1,232,000 Taihei Dengyo Kaisha, Ltd. 24,789,475 4,712,131 0.3
-------------- -------------- ------
130,528,745 82,216,245 6.4
Electric Equipment 2,104,000 Murata Manufacturing Co., Ltd. 76,957,866 68,326,478 5.3
3,910,000 NEC Corporation 56,508,104 36,484,304 2.9
440,000 Rohm Co., Ltd. 24,387,301 45,247,889 3.5
-------------- -------------- ------
157,853,271 150,058,671 11.7
Office Equipment 3,293,000 Canon, Inc. 58,843,215 74,857,112 5.8
Pharmaceuticals 1,411,000 Sankyo Co., Ltd. 32,671,343 32,176,950 2.5
2,418,000 Yamanouchi Pharmaceutical Co., Ltd. 61,660,320 50,429,530 3.9
-------------- -------------- ------
94,331,663 82,606,480 6.4
Property & Casualty 8,790,000 Dai-Tokyo Fire & Marine Insurance Co., Ltd. 53,840,330 30,638,450 2.4
Insurance 4,492,000 Fuji Fire & Marine Insurance Co., Ltd. 16,261,457 10,178,884 0.8
7,539,000 Koa Fire & Marine Insurance Co., Ltd. 45,292,612 29,052,652 2.3
8,191,000 Nichido Fire & Marine Insurance Co., Ltd. 46,307,188 42,855,416 3.3
8,062,000 Sumitomo Marine & Fire Insurance Co., Ltd. 67,721,997 45,147,665 3.5
4,662,000 Tokio Marine & Fire Insurance Co., Ltd. 46,990,608 47,975,839 3.7
-------------- -------------- ------
276,414,192 205,848,906 16.0
Retailing 1,012,000 Ito Yokado Co., Ltd. 54,243,397 47,689,687 3.7
364,000 Sangetsu Co., Ltd. 8,382,717 4,702,028 0.4
-------------- -------------- ------
62,626,114 52,391,715 4.1
Tires & Rubber 1,741,000 Bridgestone Corporation 30,050,264 41,210,074 3.2
Total Investments in Japan 1,037,929,016 861,820,387 67.1
</TABLE>
Merrill Lynch Pacific Fund, Inc.
June 30, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Shares Value Percent of
Industry Held Investments Cost (Note 1a) Net Assets
Australian Securities
<S> <C> <S> <C> <C> <C>
Leisure 14,055,889 Village Roadshow Ltd. 'A' (Preferred) $ 31,688,289 $ 20,898,296 1.6%
Property 3,888,584 Lend Lease Corp. 52,040,667 78,653,125 6.1
Total Investments in Australia 83,728,956 99,551,421 7.7
Hong Kong Securities
Banking 2,215,228 HSBC Holdings plc 45,728,371 54,179,180 4.2
Conglomerates 8,703,035 Hutchison Whampoa Ltd. 69,098,861 45,940,828 3.6
Property 5,539,000 Cheung Kong (Holdings) Ltd. 38,749,900 27,237,116 2.1
Total Investments in Hong Kong 153,577,132 127,357,124 9.9
Indian Securities
Banking 3,257,000 Industrial Development Bank of India 11,173,586 4,981,747 0.4
Broadcast/Media 620,000 ++BITV 3,557,823 0 0.0
Diversified Mutual Fund 1,929,200 ++Master Plus 1,146,713 789,011 0.1
Financial Services 77,300 Housing Development Finance Corp. Ltd. 6,255,618 5,469,478 0.4
Total Investments in India 22,133,740 11,240,236 0.9
New Zealand Securities
Diversified 31,103,606 Guinness Peat Group plc 20,761,901 23,218,717 1.8
Total Investments in New Zealand 20,761,901 23,218,717 1.8
Singaporean Securities
Banking 4,988,000 Overseas Chinese Banking Corporation
Ltd.--Foreign 26,771,711 16,986,082 1.3
6,835,000 United Overseas Bank Group--Foreign 34,826,458 21,251,851 1.7
Total Investments in Singapore 61,598,169 38,237,933 3.0
South Korean Securities
Banking 462,360 Hana Bank (GDR)(a) 7,001,895 1,629,819 0.1
Total Investments in South Korea 7,001,895 1,629,819 0.1
</TABLE>
Merrill Lynch Pacific Fund, Inc.
June 30, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (concluded)
<CAPTION>
Shares Value Percent of
Industry Held Investments Cost (Note 1a) Net Assets
Thailand Securities
<S> <C> <S> <C> <C> <C>
Broadcast/Media 2,192,000 BEC World Public Company Limited $ 17,579,558 $ 8,466,730 0.6%
Total Investments in Thailand 17,579,558 8,466,730 0.6
<CAPTION>
Face
Amount
Short-Term Securities
<S> <S> <C> <S> <C> <C> <C>
Commercial Paper* US$ 63,905,000 General Motors Acceptance Corp.,
6.50% due 7/01/1998 63,905,000 63,905,000 5.0
Total Investments in Short-Term Securities 63,905,000 63,905,000 5.0
<CAPTION>
Nominal Value Premium
Covered by Options Issue Paid
Currency Put Options Purchased
<S> <S> <C> <S> <C> <C> <C>
US$ 640,000,000 Japanese Yen, expiring December 1998
at YEN 137 20,000,000 22,528,000 1.8
224,625,000 Japanese Yen, expiring February 1999
at YEN 130.5 6,705,056 14,847,713 1.2
Total Currency Put Options Purchased 26,705,056 37,375,713 3.0
Total Investments 1,494,920,423 1,272,803,080 99.1
<CAPTION>
Premiums
Received
Call Options Written
<C> <S> <C> <C> <C>
930,947 Mitsubishi Heavy Industries Call Option,
expiring September 1998 at YEN 632.74 (233,935) (34,935) 0.0
Total Call Options Written (233,935) (34,935) 0.0
Total Investments, Net of Options Written $1,494,686,488 1,272,768,145 99.1
==============
Unrealized Depreciation on Forward Foreign Exchange Contracts** (670,391) (0.1)
Other Assets Less Liabilities 12,389,113 1.0
-------------- ------
Net Assets $1,284,486,867 100.0%
============== ======
<FN>
(a)Global Depositary Receipts (GDR).
++Non-income producing security.
*Commercial Paper is traded on a discount basis; the interest rate
shown is the discount rate paid at the time of purchase by the Fund.
**Forward foreign exchange contracts as of June 30, 1998 were as
follows:
Expiration Unrealized
Foreign Currency Sold Date Depreciation
HK$ 683,843,567 October 1998 $ (670,391)
Total Unrealized Depreciation on
Forward Foreign Exchange Contracts
(US$ Commitment--$86,530,973) $ (670,391)
===========
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Pacific Fund, Inc.
June 30, 1998
FINANCIAL INFORMATION
<TABLE>
Statement of Assets and Liabilities as of June 30, 1998
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$1,468,215,367) (Note 1a) $1,235,427,367
Options purchased, at value (premiums paid--$26,705,056)
(Notes 1a & 1b) 37,375,713
Foreign cash (Note 1c) 16,233,836
Cash 826
Receivables:
Capital shares sold $ 2,448,584
Dividends 1,078,569
Interest 6,091 3,533,244
--------------
Prepaid registration fees and other assets (Note 1f) 44,296
--------------
Total assets 1,292,615,282
--------------
Liabilities: Options written, at value (premiums received--$233,935)
(Notes 1a & 1b) 34,935
Unrealized depreciation on forward foreign exchange
contracts (Note 1b) 670,391
Payables:
Capital shares redeemed 4,885,985
Investment adviser (Note 2) 669,431
Distributor (Note 2) 581,847 6,137,263
--------------
Accrued expenses and other liabilities 1,285,826
--------------
Total liabilities 8,128,415
--------------
Net Assets: Net assets $1,284,486,867
==============
Net Assets Class A Shares of Common Stock, $0.10 par value,
Consist of: 100,000,000 shares authorized $ 3,232,782
Class B Shares of Common Stock, $0.10 par value,
200,000,000 shares authorized 3,624,460
Class C Shares of Common Stock, $0.10 par value,
100,000,000 shares authorized 378,872
Class D Shares of Common Stock, $0.10 par value,
100,000,000 shares authorized 620,849
Paid-in capital in excess of par 1,492,188,039
Undistributed investment income--net 2,013,595
Undistributed realized capital gains on investments
and foreign currency transactions--net 5,041,133
Unrealized depreciation on investments and foreign
currency transactions--net (222,612,863)
--------------
Net assets $1,284,486,867
==============
Net Asset Value: Class A--Based on net assets of $544,406,102 and 32,327,820 shares
outstanding $ 16.84
==============
Class B--Based on net assets of $576,408,631 and 36,244,595 shares
outstanding $ 15.90
==============
Class C--Based on net assets of $59,204,294 and 3,788,715 shares
outstanding $ 15.63
==============
Class D--Based on net assets of $104,467,840 and 6,208,489 shares
outstanding $ 16.83
==============
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Pacific Fund, Inc.
June 30, 1998
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations for the Six Months Ended June 30, 1998
<S> <S> <C> <C>
Investment Dividends (net of $888,609 foreign withholding tax) $ 12,087,163
Income Interest and discount earned (net of $4,157 foreign
(Notes 1d & 1e): withholding tax) 1,083,319
--------------
Total income 13,170,482
--------------
Expenses: Investment advisory fees (Note 2) $ 4,579,659
Account maintenance and distribution fees--Class B (Note 2) 3,610,229
Transfer agent fees--Class B (Note 2) 845,524
Transfer agent fees--Class A (Note 2) 604,620
Custodian fees 422,405
Account maintenance and distribution fees--Class C (Note 2) 360,642
Account maintenance fees--Class D (Note 2) 157,004
Printing and shareholder reports 143,843
Transfer agent fees--Class D (Note 2) 125,099
Transfer agent fees--Class C (Note 2) 86,689
Accounting services (Note 2) 65,174
Registration fees (Note 1f) 60,855
Professional fees 50,697
Directors' fees and expenses 19,332
Pricing fees 2,997
Other 22,118
--------------
Total expenses 11,156,887
--------------
Investment income--net 2,013,595
--------------
Realized & Realized gain (loss) from:
Unrealized Gain Investments--net (24,076,521)
(Loss) on Foreign currency transactions--net 67,674,096 43,597,575
Investments & --------------
Foreign Currency Change in unrealized appreciation/depreciation on:
Transactions--Net Investments--net (24,471,155)
(Notes 1b, 1c, Foreign currency transactions--net (31,532,671) (56,003,826)
1d & 3): -------------- --------------
Net realized and unrealized loss on investments and foreign
currency transactions (12,406,251)
--------------
Net Decrease in Net Assets Resulting from Operations $ (10,392,656)
==============
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Pacific Fund, Inc.
June 30, 1998
FINANCIAL INFORMATION (continued)
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Six For the
Months Ended Year Ended
June 30, December 31,
Increase (Decrease) in Net Assets: 1998 1997
<S> <S> <C> <C>
Operations: Investment income (loss)--net $ 2,013,595 $ (5,278,859)
Realized gain on investments and foreign currency
transactions--net 43,597,575 212,231,176
Change in unrealized appreciation/depreciation on
investments and foreign currency transactions--net (56,003,826) (339,605,598)
-------------- --------------
Net decrease in net assets resulting from operations (10,392,656) (132,653,281)
-------------- --------------
Dividends & In excess of investment income--net:
Distributions to Class A -- (27,000,302)
Shareholders Class B -- (31,032,915)
(Note 1g): Class C -- (3,030,621)
Class D -- (5,689,871)
Realized gain on investments--net:
Class A -- (60,379,477)
Class B -- (94,138,978)
Class C -- (8,987,943)
Class D -- (13,553,109)
-------------- --------------
Net decrease in net assets resulting from dividends and
distributions to shareholders -- (243,813,216)
-------------- --------------
Capital Share Net decrease in net assets derived from capital
Transactions share transactions (210,734,409) (213,542,368)
(Note 4): -------------- --------------
Net Assets: Total decrease in net assets (221,127,065) (590,008,865)
Beginning of period 1,505,613,932 2,095,622,797
-------------- --------------
End of period* $1,284,486,867 $1,505,613,932
============== ==============
<FN>
*Undistributed investment income--net $ 2,013,595 $ --
============== ==============
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Pacific Fund, Inc.
June 30, 1998
FINANCIAL INFORMATION (continued)
<TABLE>
Financial Highlights
<CAPTION>
Class A++
For the
The following per share data and ratios have been derived Six Months
from information provided in the financial statements. Ended
June 30, For the Year Ended December 31,
Increase (Decrease) in Net Asset Value: 1998 1997 1996 1995 1994
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 16.97 $ 21.58 $ 22.16 $ 21.12 $ 21.21
Operating ---------- ---------- ---------- ---------- ----------
Performance: Investment income--net .08 .08 .11 .11 .10
Realized and unrealized gain (loss)
on investments and foreign currency
transactions--net (.21) (1.48) 1.21 1.61 .50
---------- ---------- ---------- ---------- ----------
Total from investment operations (.13) (1.40) 1.32 1.72 .60
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
In excess of investment income--net -- (.99) (1.22) -- (.22)
Realized gain on investments--net -- (2.22) (.68) (.55) (.33)
In excess of realized gain on
investments--net -- -- -- (.13) (.14)
---------- ---------- ---------- ---------- ----------
Total dividends and distributions -- (3.21) (1.90) (.68) (.69)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 16.84 $ 16.97 $ 21.58 $ 22.16 $ 21.12
========== ========== ========== ========== ==========
Total Investment Based on net asset value per share (.77%)+++ (6.35%) 6.09% 8.20% 2.90%
Return:** ========== ========== ========== ========== ==========
Ratios to Average Expenses .90%* .87% .87% .93% .91%
Net Assets: ========== ========== ========== ========== ==========
Investment income--net .86%* .37% .47% .53% .47%
========== ========== ========== ========== ==========
Supplemental Net assets, end of period (in
Data: thousands) $ 544,406 $ 537,671 $ 642,523 $ 607,598 $ 587,107
========== ========== ========== ========== ==========
Portfolio turnover 7.92% 19.69% 10.65% 26.73% 23.84%
========== ========== ========== ========== ==========
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Based on average shares outstanding.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Pacific Fund, Inc.
June 30, 1998
FINANCIAL INFORMATION (continued)
<TABLE>
Financial Highlights (continued)
<CAPTION>
Class B++
For the
The following per share data and ratios have been derived Six Months
from information provided in the financial statements. Ended
June 30, For the Year Ended December 31,
Increase (Decrease) in Net Asset Value: 1998 1997 1996 1995 1994
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 16.11 $ 20.59 $ 21.22 $ 20.27 $ 20.41
Operating ---------- ---------- ---------- ---------- ----------
Performance: Investment loss--net (.02) (.14) (.13) (.10) (.12)
Realized and unrealized gain (loss)
on investments and foreign currency
transactions--net (.19) (1.39) 1.17 1.53 .49
---------- ---------- ---------- ---------- ----------
Total from investment operations (.21) (1.53) 1.04 1.43 .37
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
In excess of investment income--net -- (.73) (.99) -- (.04)
Realized gain on investments--net -- (2.22) (.68) (.38) (.33)
In excess of realized gain on
investments--net -- -- -- (.10) (.14)
---------- ---------- ---------- ---------- ----------
Total dividends and distributions -- (2.95) (1.67) (.48) (.51)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 15.90 $ 16.11 $ 20.59 $ 21.22 $ 20.27
========== ========== ========== ========== ==========
Total Investment Based on net asset value per share (1.30%)+++ (7.31%) 5.00% 7.10% 1.87%
Return:** ========== ========== ========== ========== ==========
Ratios to Average Expenses 1.94%* 1.90% 1.90% 1.96% 1.94%
Net Assets: ========== ========== ========== ========== ==========
Investment loss--net (.24%)* (.66%) (.56%) (.50%) (.56%)
========== ========== ========== ========== ==========
Supplemental Net assets, end of period (in
Data: thousands) $ 576,409 $ 775,068 $1,217,549 $1,041,763 $ 915,351
========== ========== ========== ========== ==========
Portfolio turnover 7.92% 19.69% 10.65% 26.73% 23.84%
========== ========== ========== ========== ==========
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Based on average shares outstanding.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Pacific Fund, Inc.
June 30, 1998
FINANCIAL INFORMATION (continued)
<TABLE>
Financial Highlights (continued)
<CAPTION>
Class C++++
For the
For the Period
The following per share data and ratios have been derived Six Months Oct. 21,
from information provided in the financial statements. Ended For the Year Ended 1994++ to
June 30, December 31, Dec. 31,
Increase (Decrease) in Net Asset Value: 1998 1997 1996 1995 1994
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 15.83 $ 20.30 $ 20.97 $ 20.12 $ 21.67
Operating ---------- ---------- ---------- ---------- ----------
Performance: Investment loss--net (.02) (.14) (.13) (.12) (.03)
Realized and unrealized gain (loss)
on investments and foreign currency
transactions--net (.18) (1.36) 1.16 1.53 (.86)
---------- ---------- ---------- ---------- ----------
Total from investment operations (.20) (1.50) 1.03 1.41 (.89)
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
In excess of investment income--net -- (.75) (1.02) -- (.19)
Realized gain on investments--net -- (2.22) (.68) (.45) (.33)
In excess of realized gain on
investments--net -- -- -- (.11) (.14)
---------- ---------- ---------- ---------- ----------
Total dividends and distributions -- (2.97) (1.70) (.56) (.66)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 15.63 $ 15.83 $ 20.30 $ 20.97 $ 20.12
========== ========== ========== ========== ==========
Total Investment Based on net asset value per share (1.26%)+++ (7.28%) 5.00% 7.07% (4.04%)+++
Return:** ========== ========== ========== ========== ==========
Ratios to Average Expenses 1.94%* 1.90% 1.91% 1.97% 2.17%*
Net Assets: ========== ========== ========== ========== ==========
Investment loss--net (.23%)* (.67%) (.58%) (.59%) (.79%)*
========== ========== ========== ========== ==========
Supplemental Net assets, end of period (in thousands) $ 59,204 $ 73,656 $ 98,925 $ 46,092 $ 7,841
Data: ========== ========== ========== ========== ==========
Portfolio turnover 7.92% 19.69% 10.65% 26.73% 23.84%
========== ========== ========== ========== ==========
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Commencement of operations.
++++Based on average shares outstanding.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Pacific Fund, Inc.
June 30, 1998
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights (concluded)
<CAPTION>
Class D++++
For the
For the Period
The following per share data and ratios have been derived Six Months Oct. 21,
from information provided in the financial statements. Ended For the Year Ended 1994++ to
June 30, December 31, Dec. 31,
Increase (Decrease) in Net Asset Value: 1998 1997 1996 1995 1994
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 16.98 $ 21.57 $ 22.14 $ 21.11 $ 22.70
Operating ---------- ---------- ---------- ---------- ----------
Performance: Investment income--net .05 .03 .04 .07 --
Realized and unrealized gain (loss)
on investments and foreign currency
transactions--net (.20) (1.47) 1.23 1.60 (.91)
---------- ---------- ---------- ---------- ----------
Total from investment operations (.15) (1.44) 1.27 1.67 (.91)
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
In excess of investment income--net -- (.93) (1.16) -- (.21)
Realized gain on investments--net -- (2.22) (.68) (.51) (.33)
In excess of realized gain on
investments--net -- -- -- (.13) (.14)
---------- ---------- ---------- ---------- ----------
Total dividends and distributions -- (3.15) (1.84) (.64) (.68)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 16.83 $ 16.98 $ 21.57 $ 22.14 $ 21.11
========== ========== ========== ========== ==========
Total Investment Based on net asset value per share (.88%)+++ (6.55%) 5.84% 7.95% (3.93%)+++
Return:** ========== ========== ========== ========== ==========
Ratios to Average Expenses 1.15%* 1.12% 1.12% 1.18% 1.42%*
Net Assets: ========== ========== ========== ========== ==========
Investment income--net .58%* .11% .16% .31% .12%*
========== ========== ========== ========== ==========
Supplemental Net assets, end of period (in thousands) $ 104,468 $ 119,219 $ 136,626 $ 97,946 $ 22,012
Data: ========== ========== ========== ========== ==========
Portfolio turnover 7.92% 19.69% 10.65% 26.73% 23.84%
========== ========== ========== ========== ==========
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Commencement of operations.
++++Based on average shares outstanding.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Pacific Fund, Inc.
June 30, 1998
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.
(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 market
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.
* Options--The Fund is authorized to 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.
Merrill Lynch Pacific Fund, Inc.
June 30, 1998
NOTES TO FINANCIAL STATEMENTS (continued)
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 proceeds 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
financial 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 dates. Dividends from foreign securities where the ex-
dividend date may have passed are subsequently recorded when the
Fund has determined 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.
(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, interest and capital
gains at various rates.
(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 ("MLFD" or "Distributor"), a division of Princeton Funds
Distributor, Inc. ("PFD"), which is 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.
Merrill Lynch Pacific Fund, Inc.
June 30, 1998
Pursuant to 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:
Account Distribution
Maintenance Fee Fee
Class B 0.25% 0.75%
Class C 0.25% 0.75%
Class D 0.25% --
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, 1998, MLFD earned underwriting
discounts and direct commissions 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 $ 2,799 $ 23,866
Class D $19,893 $149,044
For the six months ended June 30, 1998, MLPF&S received contingent
deferred sales charges of $1,379,381 and $29,582 relating to
transactions in Class B and Class C Shares, respectively.
Furthermore, MLPF&S received contingent deferred sales charges of
$105,225 and $50,000 relating to transactions subject to front-end
sales charge waivers in Class A and Class D Shares, respectively.
In addition, MLPF&S received $63,120 in commissions on the execution
of portfolio security transactions for the Fund for the six months
ended June 30, 1998.
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, MLFDS, PFD, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended June 30, 1998 were $114,266,331 and
$323,950,652, respectively.
Net realized gains (losses) for the six months ended June 30, 1998
and net unrealized gains (losses) as of June 30, 1998 were as
follows:
Realized Unrealized
Gains (Losses) Gains (Losses)
Investments:
Long-term $ (24,756,753) $ (232,788,000)
Options written 680,232 199,000
-------------- --------------
Total investments (24,076,521) (232,589,000)
-------------- --------------
Currency transactions:
Options purchased 17,606,185 10,670,657
Foreign currency
transactions 50,067,911 (24,129)
Forward foreign
exchange contracts -- (670,391)
-------------- --------------
Total currency
transactions 67,674,096 9,976,137
-------------- --------------
Total $ 43,597,575 $ (222,612,863)
============== ==============
As of June 30, 1998, net unrealized depreciation for Federal income
tax purposes aggregated $232,589,000, of which $86,738,611 related
to appreciated securities and $319,327,611 related to depreciated
securities. At June 30, 1998, the aggregate cost of investments for
Federal income tax purposes was $1,468,215,367.
Transactions in options written for the six months ended June 30,
1998 were as follows:
Nominal Value
Covered by Premiums
Call Options Written Options Received
Outstanding call options
written, beginning of
period -- --
Options written 5,294,441 $ 914,167
Options expired (4,363,494) (680,232)
-------------- --------------
Outstanding call options
written, end of period 930,947 $ 233,935
============== ==============
Merrill Lynch Pacific Fund, Inc.
June 30, 1998
NOTES TO FINANCIAL STATEMENTS (concluded)
4. Capital Share Transactions:
Net decrease in net assets derived from capital share transactions
was $210,734,409 and $213,542,368 for the six months ended June 30,
1998 and for the year ended December 31, 1997, respectively.
Transactions in capital shares for each class were as follows:
Class A Shares for the Six Months Dollar
Ended June 30, 1998 Shares Amount
Shares sold 13,528,471 $ 245,893,394
Shares redeemed (12,885,783) (229,753,634)
-------------- --------------
Net increase 642,688 $ 16,139,760
============== ==============
Class A Shares for the Year Dollar
Ended December 31, 1997 Shares Amount
Shares sold 14,127,645 $ 327,775,139
Shares issued to share-
holders in reinvestment
of dividends and
distributions 4,661,662 78,315,908
-------------- --------------
Total issued 18,789,307 406,091,047
Shares redeemed (16,882,980) (377,134,106)
-------------- --------------
Net increase 1,906,327 $ 28,956,941
============== ==============
Class B Shares for the Six Months Dollar
Ended June 30, 1998 Shares Amount
Shares sold 4,398,155 $ 74,245,023
Automatic conversion of
shares (604,876) (9,982,423)
Shares redeemed (15,667,594) (261,619,807)
-------------- --------------
Net decrease (11,874,315) $ (197,357,207)
============== ==============
Class B Shares for the Year Dollar
Ended December 31, 1997 Shares Amount
Shares sold 14,830,822 $ 331,048,648
Shares issued to
shareholders in reinvest-
ment of dividends
and distributions 6,717,128 107,138,188
-------------- --------------
Total issued 21,547,950 438,186,836
Automatic conversion of
shares (811,495) (17,665,750)
Shares redeemed (31,761,943) (669,542,234)
-------------- --------------
Net decrease (11,025,488) $ (249,021,148)
============== ==============
Class C Shares for the Six Months Dollar
Ended June 30, 1998 Shares Amount
Shares sold 2,119,723 $ 34,987,331
Shares redeemed (2,984,665) (49,077,993)
-------------- --------------
Net decrease (864,942) $ (14,090,662)
============== ==============
Class C Shares for the Year Dollar
Ended December 31, 1997 Shares Amount
Shares sold 6,025,528 $ 129,855,715
Shares issued to
shareholders in reinvest-
ment of dividends and
distributions 670,250 10,502,817
-------------- --------------
Total issued 6,695,778 140,358,532
Shares redeemed (6,914,495) (146,099,256)
-------------- --------------
Net decrease (218,717) $ (5,740,724)
============== ==============
Class D Shares for the Six Months Dollar
Ended June 30, 1998 Shares Amount
Shares sold 4,844,698 $ 84,721,914
Automatic conversion of
shares 572,922 9,982,423
-------------- --------------
Total issued 5,417,620 94,704,337
Shares redeemed (6,232,165) (110,130,637)
-------------- --------------
Net decrease (814,545) $ (15,426,300)
============== ==============
Class D Shares for the Year Dollar
Ended December 31, 1997 Shares Amount
Shares sold 6,780,045 $ 155,519,039
Shares issued to
shareholders in reinvest-
ment of dividends and
distributions 1,008,234 16,948,419
Automatic conversion of
shares 771,378 17,665,750
-------------- --------------
Total issued 8,559,657 190,133,208
Shares redeemed (7,870,337) (177,870,645)
-------------- --------------
Net increase 689,320 $ 12,262,563
============== ==============
Merrill Lynch Pacific Fund, Inc.
June 30, 1998
PORTFOLIO INFORMATION
For the Quarter Ended June 30, 1998
Percent of
Ten Largest Equity Holdings Net Assets
Lend Lease Corp. 6.1%
Canon Inc. 5.8
Murata Manufacturing Co., Ltd. 5.3
HSBC Holdings plc 4.2
Yamanouchi Pharmaceutical Co., Ltd. 3.9
Tokio Marine & Fire Insurance Co., Ltd. 3.7
Ito Yokado Co., Ltd. 3.7
Sony Corporation 3.7
Hutchison Whampoa Ltd. 3.6
Rohm Co., Ltd. 3.5
Percent of
Ten Largest Industries Net Assets
Property & Casualty Insurance 16.0%
Electric Equipment 11.7
Property 8.2
Banking 7.7
Pharmaceuticals 6.4
Electric Construction 6.4
Office Equipment 5.8
Retailing 4.1
Consumer Electronics 4.0
Conglomerates 3.6
Deletions (Equity Investments)
C.P. Pokphand Co. Ltd. (Ordinary)
Coca-Cola Amatil, Ltd.
P.T. Kalbe Farma
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
Stephen I. Silverman, Senior Vice President
and Portfolio Manager
Donald C. Burke, Vice President
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.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
