MERRILL LYNCH
PACIFIC FUND, INC.
FUND LOGO
Semi-Annual Report
June 30, 1999
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
Merrill Lynch Pacific Fund, Inc. outperformed its unmanaged
Benchmark Index of Pacific Basin stock markets in the quarter ended
June 30, 1999. The June quarter was one of the strongest periods for
Asian equities in many years. When compared to the Benchmark Index
gain of +11.82%, the Fund's Class A, Class B, Class C and Class D
Shares had total returns of +12.74%, +12.42%, +12.38% and +12.63%,
respectively. For the first half of 1999, the Fund's Class A, Class
B, Class C and Class D Shares had total returns of +24.43%, +23.84%,
+23.81% and +24.31%, respectively, compared to the +24.15% return
for the Benchmark Index. (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 and 4 of this report to shareholders.)
Conditions Improve in Pacific Basin Stock Markets
All markets in the Pacific region rose significantly during the June
quarter following a strong start to the year. It appears that signs
of economic stabilization and liquidity have returned. Corporate
restructuring news, a buoyant US stock market and relatively steady
exchange rates contributed to the positive investment environment.
Sentiment was further boosted by the surprisingly robust economic
growth of 7.9% announced by Japan for the first calendar quarter. It
is our view that, by the end of the period, it was clear that the
worst prophecies of an Asian economic collapse had been avoided and
financial markets signaled that, at the very least, business
activity would stabilize.
Over the course of the first half of 1999, we added several new
positions to the Fund. We expect to broaden the Fund's holdings
slightly over the balance of the year as more attractive investment
candidates appear to be emerging. There is also a very active
calendar of new equity offerings from around the Pacific region.
Although not all the Fund's investments can be categorized easily,
our current investments and research efforts focus on three main
areas. These three categories represented over one-third of the
Fund's investments at the end of the June quarter and have made
significant contributions to its returns:
The Fund remains heavily weighted in high-quality, Japanese
exporters, mostly in the electronics industry, which we believe
offer good relative value and proven management capability. These
companies, which were somewhat affected by the Asian downturn last
year, are once again seeing normal growth in their orders and a
return of regional demand. Examples of these holdings are Murata
Manufacturing Co., Ltd., Rohm Company Ltd., Canon, Inc., Shin-Etsu
Chemical Co., Ltd. and Sony Corporation.
We continue to investigate candidates for corporate restructuring in
Japan and see positive indications that some companies have greater
shareholder awareness. If this trend continues, we expect to make
further investments in this category.
We seek to identify potential beneficiaries of the Internet
revolution, such as Fund holdings Softbank Corporation and NIIT
Limited, as well as select telecommunications stocks.
Closer Look at Three Key Areas
Although Japanese electronics-related blue chip stocks have been a
long-term commitment of the Fund, they began to perform strongly
beginning in early 1999. This appreciation reflects their relative
value in comparison with their international peers, restructuring
initiatives, a general upturn in their business activity, and large
net buying from foreign investors in the Japanese market. Virtually
every major segment of the electronics industry appeared to recover
in the first half of the year, including audio-video, personal
computers, wireless and other telecommunications-related products.
Many investors pay more attention to the higher value-added makers
of systems and integrated circuits. However, in our view, the volume
demand growth in electronic products has had a particularly strong
positive impact on the makers of discrete and passive components
such as capacitors, connectors, diodes and simple transistors, all
of which still are needed in nearly every product. Two of the Fund's
largest holdings, Murata Manufacturing Co., Ltd. and Rohm Company
Ltd., benefit from this demand and are world-class suppliers of
miniature capacitors, as well as such higher-value parts as high-
frequency filters and mixed signal integrated circuits. Both of
these companies have stood out in Japan for many years because of
their superior management and ability to sustain relatively high
profitability. Rohm, for example, was able to attain a consolidated
return on equity of over 12% in 1998 in the face of weak markets and
a strong yen, while maintaining its strong balance sheet.
Merrill Lynch Pacific Fund, Inc.
June 30, 1999
We are finally seeing signs of meaningful restructuring in major
Japanese companies. In the next year, we anticipate that there will
be changes in both accounting practices and tax laws that should
promote more transparent reporting and a greater emphasis on returns
to shareholders. We believe that there will be increased recognition
of the strategic advantage of maintaining the interests of
shareholders at a time when bank financing is less available. Many
companies in Asia have rolled out plans for restructuring their
businesses, which require them to close or sell off non-competitive
ventures. We will continue to track these developments closely and
expect to invest in some of the better cases. However, there are
concerns that an economic recovery may relax pressure on companies
and slow the restructuring effort. While this may take place in
certain cases, we see the Internet as another force that will push
companies toward dramatic changes in their operations.
The Pacific region lags North America in market penetration of
personal computers, use of the Internet and the disruptive forces
that these technologies have unleashed elsewhere on traditional
business patterns. The "new economy" has yet to arrive in Asia,
where physical assets still take priority and industrial
manufacturing remains the area's foremost sector. In Japan, language
and regulations have held back development. A critical mass of
useful, on-line information is not yet available. However, a few
companies such as Softbank Corporation aim to take advantage of
their knowledge of US practices to position themselves ahead of the
competition in this potentially enormous market. In our opinion, the
changes that will occur should prompt further restructuring and
reshuffle the hierarchy of corporate Asia in the same way that it is
reshaping American life. Already the rise in value of Softbank's
shares and the realization of profits from its Internet-related
ventures are allowing the company to expand by using tools not
available to its competitors. Economists have often remarked on the
need to simplify the Japanese distribution system and reduce its
expensive overheads. The Internet is a very powerful tool for
achieving exactly these aims. In financial services, Asian companies
have traditionally acted as gatekeepers to information and the
ability to transact. Access to these services can be immensely
facilitated with much lower overheads through the use of programs
already tested outside the region. E-commerce is starting to
penetrate Asian markets, but based on the low penetration rate of
users, the development of the Internet is generally seen as lagging
the United States by about three years. This offers substantial
investment opportunity, in our view.
In Conclusion
The introduction of the new models is just beginning in Asia. We are
encouraged to see that traditional beneficiaries of the closed
economies still deny the possibility that change can occur in their
domains, but the new, more entrepreneurial companies quickly stake
out the field. The speed of these changes is dramatic and, in our
view, will hit Asia with particular suddenness because most
companies have been preoccupied with their recovery from last year's
economic downturn. One piece of evidence that the focus has changed
is the growth in Japanese personal computer shipments, which in the
first half of the year have been running at rates of over 40% at
major companies. We expect that patterns first seen in the United
States will spread to Asia as Internet access costs come down and
deregulation continues in financial markets. This should have a
stimulating effect on the regional economies as productivity gains
boost growth.
We thank you for your investment in Merrill Lynch Pacific Fund,
Inc., and we look forward to reviewing our outlook and strategy with
you again in our next report to shareholders.
Sincerely,
(Terry K. Glenn)
Terry K. Glenn
President and Director
(Stephen I. Silverman)
Stephen I. Silverman
Senior Vice President and Portfolio Manager
August 16, 1999
Merrill Lynch Pacific Fund, Inc.
June 30, 1999
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 6/30/99)
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* +12.74% +36.00%(1)
ML Pacific Fund, Inc. Class B Shares--Total Investment Return* +12.42 +34.62(2)
ML Pacific Fund, Inc. Class C Shares--Total Investment Return* +12.38 +34.50(3)
ML Pacific Fund, Inc. Class D Shares--Total Investment Return* +12.63 +35.63(4)
Benchmark Index** +11.82 +39.16
Japan + 9.98/+7.51 + 14.63/+31.31*** $1,890 67.0%
Australia + 1.33/+6.12 + 12.40/+20.09*** 226 8.0
Hong Kong +23.42/+23.27 + 53.53/+53.32*** 200 7.0
Taiwan +24.26/+27.45 + 27.01/+35.12**** 223 8.0
India +10.67/+8.22 + 31.03/+27.97**** 68 2.0
South Korea +55.12/+64.30 +242.45/+305.32**** 134 5.0
Singapore +32.01/+33.91 + 94.15/+92.68*** 75 3.0
<FN>
(1)Percent change includes reinvestment of $0.763 per share ordinary
income dividends.
(2)Percent change includes reinvestment of $0.543 per share ordinary
income dividends.
(3)Percent change includes reinvestment of $0.558 per share ordinary
income dividends.
(4)Percent change includes reinvestment of $0.710 per share ordinary
income dividends.
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included.
**Unmanaged. The Benchmark Index is a customized index used to
measure the Fund's relative performance, comprised as follows: 68%
Morgan Stanley Capital International (MSCI) Japan, 10% MSCI
Australia, 10% MSCI Hong Kong, 6% MSCI Taiwan, 2% MSCI India, 2%
MSCI Korea, and 2% MSCI Singapore; indexes are net of dividends and
"free" when available.
***The market performance (by country) in local currency and US
dollars represents the four-month return (6/30/98-10/31/98) of the
Topix Index (Japan), all Ordinaries Index (Australia), Hang Seng
Index (Hong Kong), and the DBS 50 Index (Singapore) linked to the
eight-month performance (10/31/98-6/30/99) of the MSCI Japan, MSCI
Australia, MSCI Hong Kong, and MSCI Singapore.
****The market performances in local currency and US dollars
represent the 12-month MSCI Index returns for countries added to the
unmanaged Benchmark Index in October 1998. These countries include
Taiwan, India and South Korea. Malaysia and Thailand were removed
from the unmanaged Benchmark Index in October 1998.
</TABLE>
Merrill Lynch Pacific Fund, Inc.
June 30, 1999
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 $23,306.42 on
June 30, 1999.
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 6/30/99 +36.00% +28.86%
Five Years Ended 6/30/99 + 6.34 + 5.20
Ten Years Ended 6/30/99 + 9.44 + 8.86
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 6/30/99 +34.62% +30.62%
Five Years Ended 6/30/99 + 5.25 + 5.25
Ten Years Ended 6/30/99 + 8.33 + 8.33
[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 6/30/99 +34.50% +33.50%
Inception (10/21/94)
through 6/30/99 + 6.24 + 6.24
[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 6/30/99 +35.63% +28.51%
Inception (10/21/94)
through 6/30/99 + 7.09 + 5.87
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
Merrill Lynch Pacific Fund, Inc.
June 30, 1999
<TABLE>
SCHEDULE OF INVESTMENTS
<CAPTION>
Shares Value Percent of
Industry Held Investments Cost (Note 1a) Net Assets
<S> <C> <S> <C> <C> <C>
Japan
Automobile 1,717,000 Suzuki Motor Corporation $ 18,391,785 $ 27,320,425 2.0%
Beverage 380,000 Chukyo Coca-Cola Bottling Co., Ltd. 5,420,506 5,333,444 0.4
424,000 Hokkaido Coca-Cola Bottling Co., Ltd. 6,399,350 5,607,538 0.4
386,000 Kinki Coca-Cola Bottling Co., Ltd. 7,430,096 6,700,281 0.5
476,000 Mikuni Coca-Cola Bottling 8,487,431 9,678,955 0.7
517,000 Sanyo Coca-Cola Bottling Co., Ltd. 7,028,799 15,994,266 1.2
-------------- -------------- ------
34,766,182 43,314,484 3.2
Chemicals 1,144,000 Shin-Etsu Chemical Co., Ltd. 22,117,770 38,297,239 2.8
Consumer Electronics 503,500 Sony Corporation 46,709,133 54,312,076 4.0
Containers 1,666,000 Toyo Seikan Kaisha, Ltd. 46,760,776 37,456,770 2.7
Electric Construction 1,943,000 Chudenko Corporation 55,422,110 35,493,718 2.6
2,836,000 Kinden Corporation 45,637,272 30,591,668 2.2
1,232,000 Taihei Dengyo Kaisha, Ltd. 24,789,475 4,124,318 0.3
-------------- -------------- ------
125,848,857 70,209,704 5.1
Electrical Equipment 1,285,000 Murata Manufacturing Co., Ltd. 46,870,402 84,547,859 6.2
355,000 Rohm Company Ltd. 20,345,119 55,606,299 4.1
-------------- -------------- ------
67,215,521 140,154,158 10.3
Internet 330,000 Softbank Corporation 42,530,231 66,856,505 4.9
Office Equipment 1,998,000 Canon, Inc. 35,922,354 57,472,640 4.2
Pharmaceuticals 198,000 Ono Pharmaceutical Co. Ltd. 7,061,320 6,873,864 0.5
1,810,000 Yamanouchi Pharmaceutical Co., Ltd. 48,605,915 69,270,127 5.1
-------------- -------------- ------
55,667,235 76,143,991 5.6
Property & Casualty 9,351,000 Dai-Tokyo Fire and Marine Insurance
Insurance Co., Ltd. 55,540,249 33,622,789 2.5
4,062,000 Fuji Fire and Marine Insurance
Company, Ltd. 15,558,215 7,991,040 0.6
7,539,000 Koa Fire & Marine Insurance Co., Ltd. 45,292,612 23,867,061 1.8
7,621,000 Nichido Fire & Marine Insurance Co., Ltd. 45,352,704 39,245,189 2.9
6,568,000 Sumitomo Marine & Fire Insurance Co., Ltd. 53,695,584 39,631,675 2.9
3,413,000 Tokio Marine & Fire Insurance Co. Ltd. 36,317,746 37,097,826 2.7
-------------- -------------- ------
251,757,110 181,455,580 13.4
Retailing 702,000 Ito-Yokado Co., Ltd. 38,118,759 47,001,157 3.5
364,000 Sangetsu Co., Ltd. 8,382,717 7,747,562 0.6
-------------- -------------- ------
46,501,476 54,748,719 4.1
Telecommunications 2,040 NTT Mobile Communications Network, Inc. 13,414,264 27,316,912 2.0
510 ++NTT Mobile Communications Network, Inc.
(New) 3,414,571 6,913,539 0.5
-------------- -------------- ------
16,828,835 34,230,451 2.5
Tires & Rubber 1,460,000 Bridgestone Corp. 24,961,990 44,169,284 3.2
Total Investments in Japan 835,979,255 926,142,026 68.0
</TABLE>
Merrill Lynch Pacific Fund, Inc.
June 30, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Shares Value Percent of
Industry Held Investments Cost (Note 1a) Net Assets
<S> <C> <S> <C> <C> <C>
Australia
Leisure 14,055,889 Village Roadshow Limited 'A' (Preferred) $ 31,688,289 $ 21,026,120 1.5%
Property 5,233,000 Lend Lease Corporation Limited 36,535,643 71,848,000 5.3
Total Investments in Australia 68,223,932 92,874,120 6.8
Hong Kong
Banking 1,338,873 HSBC Holdings plc 31,861,465 48,836,267 3.6
Conglomerates 6,304,035 Hutchison Whampoa Limited 48,498,609 57,079,687 4.2
8,170,000 Wharf Holdings Ltd. 26,193,419 25,483,206 1.8
-------------- -------------- ------
74,692,028 82,562,893 6.0
Total Investments in Hong Kong 106,553,493 131,399,160 9.6
India
Banking 3,257,000 Industrial Development Bank of India 11,173,586 2,519,268 0.2
Broadcast/Media 620,000 ++BITV 3,557,823 0 0.0
Computer Software 423,371 NIIT Limited 18,115,888 19,873,314 1.4
Diversified Mutual Funds 7,000 UTI Master Plus 91-B 2,346 3,297 0.0
Financial Services 77,300 Housing Development Finance Corporation
Ltd. (HDFC) 6,255,618 3,965,842 0.3
Total Investments in India 39,105,261 26,361,721 1.9
New Zealand
Diversified 34,616,484 Guinness Peat Group plc 21,093,216 27,682,664 2.0
Total Investments in New Zealand 21,093,216 27,682,664 2.0
Singapore
Airlines 958,000 Singapore Airlines Ltd. 'Foreign' 4,339,793 9,121,128 0.7
Banking 2,084,000 Oversea-Chinese Banking Corporation Ltd.
'Foreign' 7,419,622 17,392,183 1.3
Total Investments in Singapore 11,759,415 26,513,311 2.0
South Korea
Banking 125,400 Hana Bank 1,024,517 1,841,728 0.2
392,515 Hana Bank (GDR)(b) 5,076,020 5,475,584 0.4
-------------- -------------- ------
6,100,537 7,317,312 0.6
Telecommunications 655,400 Korea Telecom Corporation (ADR)(a) 18,062,824 26,216,000 1.9
Total Investments in South Korea 24,163,361 33,533,312 2.5
</TABLE>
Merrill Lynch Pacific Fund, Inc.
June 30, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (concluded)
<CAPTION>
Shares Value Percent of
Industry Held Investments Cost (Note 1a) Net Assets
<S> <C> <S> <C> <C> <C>
Taiwan
Banking 15,864,000 United World Chinese Commercial Bank $ 26,354,446 $ 24,564,881 1.8%
Total Investments in Taiwan 26,354,446 24,564,881 1.8
Thailand
Broadcast/Media 789,900 BEC World Public Company Limited `Foreign' 6,330,027 4,930,176 0.4
Total Investments in Thailand 6,330,027 4,930,176 0.4
Face
Amount
Short-Term Securities
Commercial Paper* US$ 7,051,000 General Electric Capital Corp., 5.75% due
7/01/1999 7,051,000 7,051,000 0.5
Total Investments in Short-Term Securities 7,051,000 7,051,000 0.5
Nominal Value Premiums
Covered by Options Issue Paid
Currency Put Options Purchased
US$ 120,000,000 Japanese Yen, expiring June 2000 at YEN 123 2,988,000 3,276,000 0.2
100,000,000 Japanese Yen, expiring June 2000 at YEN 124 2,515,000 2,476,000 0.2
100,000,000 Japanese Yen, expiring June 2000 at YEN 124 2,470,000 2,457,000 0.2
Total Currency Put Options Purchased 7,973,000 8,209,000 0.6
Total Investments $1,154,586,406 1,309,261,371 96.1
==============
Unrealized Appreciation on Forward Foreign Exchange Contracts** 16,843,142 1.3
Other Assets Less Liabilities 35,816,938 2.6
-------------- ------
Net Assets $1,361,921,451 100.0%
============== ======
<FN>
(a)American Depositary Receipts (ADR).
(b)Global Depositary Receipts (GDR).
++Non-income producing security.
*Commercial Paper is traded on a discount basis; the interest rate
shown reflects the discount rate paid at the time of purchase by the
Fund.
**Forward foreign exchange contracts as of June 30, 1999 were as
follows:
Unrealized
Foreign Appreciation
Currency Expiration (Depreciation)
Purchased Date (Note 1b)
YEN 774,092,319 October 1999 $ (427,888)
(US$ Commitment--$6,936,311) (427,888)
------------
Foreign Currency Sold
YEN 35,619,702,002 October 1999 17,271,030
(US$ Commitment--$316,754,808) 17,271,030
------------
Total Unrealized Appreciation on Forward
Foreign Exchange Contracts--Net $ 16,843,142
============
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Pacific Fund, Inc.
June 30, 1999
FINANCIAL INFORMATION
<TABLE>
Statement of Assets and Liabilities as of June 30, 1999
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$1,146,613,406) (Note 1a) $1,301,052,371
Options purchased, at value (premiums paid--$7,973,000)
(Notes 1a & 1b) 8,209,000
Unrealized appreciation on forward foreign exchange contracts
(Note 1b) 16,843,142
Foreign cash (Note 1c) 10,522,222
Cash 6,499
Receivables:
Capital shares sold $ 19,224,456
Securities sold 14,651,773
Dividends 3,909,036 37,785,265
--------------
Prepaid registration fees and other assets (Note 1f) 40,312
--------------
Total assets 1,374,458,811
--------------
Liabilities: Payables:
Securities purchased 7,923,782
Capital shares redeemed 2,454,310
Investment adviser (Note 2) 695,074
Distributor (Note 2) 553,364 11,626,530
--------------
Accrued expenses and other liabilities 910,830
--------------
Total liabilities 12,537,360
--------------
Net Assets: Net assets $1,361,921,451
==============
Net Assets Class A Shares of Common Stock, $.10 par value, 100,000,000 shares
Consist of: authorized $ 2,724,039
Class B Shares of Common Stock, $.10 par value, 200,000,000 shares
authorized 2,605,500
Class C Shares of Common Stock, $.10 par value, 100,000,000 shares
authorized 342,998
Class D Shares of Common Stock, $.10 par value, 100,000,000 shares
authorized 703,740
Paid-in capital in excess of par 1,264,160,782
Undistributed investment income--net 51,136
Accumulated realized capital losses on investments and foreign
currency transactions--net (Note 6) (80,190,198)
Unrealized appreciation on investments and foreign currency
transactions--net 171,523,454
--------------
Net assets $1,361,921,451
==============
Net Asset Value: Class A--Based on net assets of $597,790,827 and 27,240,386 shares
outstanding $ 21.95
==============
Class B--Based on net assets of $540,016,197 and 26,055,001 shares
outstanding $ 20.73
==============
Class C--Based on net assets of $69,746,629 and 3,429,980 shares
outstanding $ 20.33
==============
Class D--Based on net assets of $154,367,798 and 7,037,399 shares
outstanding $ 21.94
==============
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Pacific Fund, Inc.
June 30, 1999
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations for the Six Months Ended June 30, 1999
<S> <S> <C> <C>
Investment Dividends (net of $830,637 foreign withholding tax) $ 7,728,526
Income Interest and discount earned 387,297
(Notes 1d & 1e): --------------
Total income 8,115,823
--------------
Expenses: Investment advisory fees (Note 2) $ 3,495,248
Account maintenance and distribution fees--Class B (Note 2) 2,412,041
Transfer agent fees--Class B (Note 2) 486,301
Transfer agent fees--Class A (Note 2) 439,350
Custodian fees 355,019
Account maintenance and distribution fees--Class C (Note 2) 279,749
Account maintenance fees--Class D (Note 2) 133,654
Transfer agent fees--Class D (Note 2) 89,709
Printing and shareholder reports 82,947
Accounting services (Note 2) 78,408
Registration fees (Note 1f) 63,446
Transfer agent fees--Class C (Note 2) 57,226
Professional fees 52,516
Directors' fees and expenses 23,886
Pricing fees 3,108
Other 12,079
--------------
Total expenses 8,064,687
--------------
Investment income--net 51,136
--------------
Realized & Realized gain (loss) from:
Unrealized Gain Investments--net 30,390,234
(Loss) on Foreign currency transactions--net (6,286,328) 24,103,906
Investments & --------------
Foreign Currency Change in unrealized appreciation/depreciation on:
Transactions--Net Investments--net 199,315,453
(Notes 1b, 1c, Foreign currency transactions--net 34,631,274 233,946,727
1d & 3): -------------- --------------
Net realized and unrealized gain on investments and foreign
currency transactions 258,050,633
--------------
Net Increase in Net Assets Resulting from Operations $ 258,101,769
==============
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Pacific Fund, Inc.
June 30, 1999
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: 1999 1998
<S> <S> <C> <C>
Operations: Investment income--net $ 51,136 $ 79,202
Realized gain (loss) on investments and foreign currency
transactions--net 24,103,906 (24,974,867)
Change in unrealized appreciation/depreciation on investments
and foreign currency transactions--net 233,946,727 104,185,764
-------------- --------------
Net increase in net assets resulting from operations 258,101,769 79,290,099
-------------- --------------
Dividends & Investment income--net:
Distributions to Class A -- (37,819)
Shareholders Class B -- (30,572)
(Note 1g): Class C -- (3,473)
Class D -- (7,338)
In excess of investment income--net:
Class A -- (19,464,054)
Class B -- (15,734,354)
Class C -- (1,787,636)
Class D -- (3,776,752)
-------------- --------------
Net decrease in net assets resulting from dividends and
distributions to shareholders -- (40,841,998)
-------------- --------------
Capital Share Net increase (decrease) in net assets derived from capital
Transactions share transactions 14,048,400 (454,290,751)
(Note 4): -------------- --------------
Net Assets: Total increase (decrease) in net assets 272,150,169 (415,842,650)
Beginning of period 1,089,771,282 1,505,613,932
-------------- --------------
End of period* $1,361,921,451 $1,089,771,282
============== ==============
<FN>
*Undistributed investment income--net $ 51,136 $ --
============== ==============
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Pacific Fund, Inc.
June 30, 1999
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: 1999 1998 1997 1996 1995
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 17.64 $ 16.97 $ 21.58 $ 22.16 $ 21.12
Operating ---------- --------- ---------- ---------- ----------
Performance: Investment income--net .05 .10 .08 .11 .11
Realized and unrealized gain (loss) on
investments and foreign currency
transactions--net 4.26 1.33 (1.48) 1.21 1.61
---------- --------- ---------- ---------- ----------
Total from investment operations 4.31 1.43 (1.40) 1.32 1.72
---------- --------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net -- --++++ -- -- --
In excess of investment income--net -- (.76) (.99) (1.22) --
Realized gain on investments--net -- -- (2.22) (.68) (.55)
In excess of realized gain on
investments--net -- -- -- -- (.13)
---------- --------- ---------- ---------- ----------
Total dividends and distributions -- (.76) (3.21) (1.90) (.68)
---------- --------- ---------- ---------- ----------
Net asset value, end of period $ 21.95 $ 17.64 $ 16.97 $ 21.58 $ 22.16
========== ========= ========== ========== ==========
Total Investment Based on net asset value per share 24.43%+++ 8.46% (6.35%) 6.09% 8.20%
Return:** ========== ========= ========== ========== ==========
Ratios to Average Expenses .88%* .88% .87% .87% .93%
Net Assets: ========== ========= ========== ========== ==========
Investment income--net .52%* .57% .37% .47% .53%
========== ========= ========== ========== ==========
Supplemental Net assets, end of period (in
Data: thousands) $ 597,791 $ 449,725 $ 537,671 $ 642,523 $ 607,598
========== ========= ========== ========== ==========
Portfolio turnover 13.66% 12.26% 19.69% 10.65% 26.73%
========== ========= ========== ========== ==========
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Based on average shares outstanding.
++++Amount is less than $.01 per share.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Pacific Fund, Inc.
June 30, 1999
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: 1999 1998 1997 1996 1995
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 16.74 $ 16.11 $ 20.59 $ 21.22 $ 20.27
Operating ---------- --------- ---------- ---------- ----------
Performance: Investment loss--net (.05) (.08) (.14) (.13) (.10)
Realized and unrealized gain (loss)
on investments and foreign currency
transactions--net 4.04 1.25 (1.39) 1.17 1.53
---------- --------- ---------- ---------- ----------
Total from investment operations 3.99 1.17 (1.53) 1.04 1.43
---------- --------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net -- --++++ -- -- --
In excess of investment income--net -- (.54) (.73) (.99) --
Realized gain on investments--net -- -- (2.22) (.68) (.38)
In excess of realized gain on
investments--net -- -- -- -- (.10)
---------- --------- ---------- ---------- ----------
Total dividends and distributions -- (.54) (2.95) (1.67) (.48)
---------- --------- ---------- ---------- ----------
Net asset value, end of period $ 20.73 $ 16.74 $ 16.11 $ 20.59 $ 21.22
========== ========= ========== ========== ==========
Total Investment Based on net asset value per share 23.84%+++ 7.29% (7.31%) 5.00% 7.10%
Return:** ========== ========= ========== ========== ==========
Ratios to Average Expenses 1.92%* 1.92% 1.90% 1.90% 1.96%
Net Assets: ========== ========= ========== ========== ==========
Investment loss--net (.53%)* (.50%) (.66%) (.56%) (.50%)
========== ========= ========== ========== ==========
Supplemental Net assets, end of period (in
Data: thousands) $ 540,016 $ 489,047 $ 775,068 $1,217,549 $1,041,763
========== ========= ========== ========== ==========
Portfolio turnover 13.66% 12.26% 19.69% 10.65% 26.73%
========== ========= ========== ========== ==========
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Based on average shares outstanding.
++++Amount is less than $.01 per share.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Pacific Fund, Inc.
June 30, 1999
FINANCIAL INFORMATION (continued)
<TABLE>
Financial Highlights (continued)
<CAPTION>
Class C++++
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: 1999 1998 1997 1996 1995
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 16.42 $ 15.83 $ 20.30 $ 20.97 $ 20.12
Operating ---------- --------- ---------- ---------- ----------
Performance: Investment loss--net (.05) (.08) (.14) (.13) (.12)
Realized and unrealized gain (loss) on
investments and foreign currency
transactions--net 3.96 1.23 (1.36) 1.16 1.53
---------- --------- ---------- ---------- ----------
Total from investment operations 3.91 1.15 (1.50) 1.03 1.41
---------- --------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net -- --++ -- -- --
In excess of investment income--net -- (.56) (.75) (1.02) --
Realized gain on investments--net -- -- (2.22) (.68) (.45)
In excess of realized gain on
investments--net -- -- -- -- (.11)
---------- --------- ---------- ---------- ----------
Total dividends and distributions -- (.56) (2.97) (1.70) (.56)
---------- --------- ---------- ---------- ----------
Net asset value, end of period $ 20.33 $ 16.42 $ 15.83 $ 20.30 $ 20.97
========== ========= ========== ========== ==========
Total Investment Based on net asset value per share 23.81%+++ 7.26% (7.28%) 5.00% 7.07%
Return:** ========== ========= ========== ========== ==========
Ratios to Average Expenses 1.92%* 1.92% 1.90% 1.91% 1.97%
Net Assets: ========== ========= ========== ========== ==========
Investment loss--net (.54%)* (.50%) (.67%) (.58%) (.59%)
========== ========= ========== ========== ==========
Supplemental Net assets, end of period (in thousands) $ 69,746 $ 53,116 $ 73,656 $ 98,925 $ 46,092
Data: ========== ========= ========== ========== ==========
Portfolio turnover 13.66% 12.26% 19.69% 10.65% 26.73%
========== ========= ========== ========== ==========
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Amount is less than $.01 per share.
++++Based on average shares outstanding.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Pacific Fund, Inc.
June 30, 1999
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights (concluded)
<CAPTION>
Class D++++
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: 1999 1998 1997 1996 1995
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 17.65 $ 16.98 $ 21.57 $ 22.14 $ 21.11
Operating ---------- --------- ---------- ---------- ----------
Performance: Investment income--net .02 .05 .03 .04 .07
Realized and unrealized gain (loss) on
investments and foreign currency
transactions--net 4.27 1.33 (1.47) 1.23 1.60
---------- --------- ---------- ---------- ----------
Total from investment operations 4.29 1.38 (1.44) 1.27 1.67
---------- --------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net -- --++ -- -- --
In excess of investment income--net -- (.71) (.93) (1.16) --
Realized gain on investments--net -- -- (2.22) (.68) (.51)
In excess of realized gain on
investments--net -- -- -- -- (.13)
---------- --------- ---------- ---------- ----------
Total dividends and distributions -- (.71) (3.15) (1.84) (.64)
---------- --------- ---------- ---------- ----------
Net asset value, end of period $ 21.94 $ 17.65 $ 16.98 $ 21.57 $ 22.14
========== ========= ========== ========== ==========
Total Investment Based on net asset value per share 24.31%+++ 8.14% (6.55%) 5.84% 7.95%
Return:** ========== ========= ========== ========== ==========
Ratios to Average Expenses 1.13%* 1.13% 1.12% 1.12% 1.18%
Net Assets: ========== ========= ========== ========== ==========
Investment income--net .23%* .29% .11% .16% .31%
========== ========= ========== ========== ==========
Supplemental Net assets, end of period (in thousands) $ 154,368 $ 97,883 $ 119,219 $ 136,626 $ 97,946
Data: ========== ========= ========== ========== ==========
Portfolio turnover 13.66% 12.26% 19.69% 10.65% 26.73%
========== ========= ========== ========== ==========
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Amount is less than $.01 per share.
++++Based on average shares outstanding.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Pacific Fund, Inc.
June 30, 1999
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. The Fund's financial statements are
prepared in accordance with generally accepted accounting
principles, which may require the use of management accruals and
estimates. 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 that 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 that 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 or purchased are
valued at the last sale price in the case of exchange-traded
options. In the case of options traded in the over-the-counter
market, valuation is the last asked price (options written) or the
last bid price (options purchased). 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.
* 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.
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).
Merrill Lynch Pacific Fund, Inc.
June 30, 1999
NOTES TO FINANCIAL STATEMENTS (continued)
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 expenses 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. Distributions in excess of realized capital gains are due
primarily to differing tax treatments for post-October losses.
Distributions in excess of net investment income are due primarily
to differing tax treatments for foreign currency transactions.
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 the "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.
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:
Merrill Lynch Pacific Fund, Inc.
June 30, 1999
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 Incorporated ("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, 1999, 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 $ 2,976 $ 19,780
Class D $17,567 $451,097
For the six months ended June 30, 1999, MLPF&S received contingent
deferred sales charges of $494,312 and $14,928 relating to
transactions in Class B and Class C Shares, respectively.
In addition, MLPF&S received $44,374 in commissions on the execution
of portfolio security transactions for the Fund for the six months
ended June 30, 1999.
Financial Data Services, Inc. ("FDS"), 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, FDS, PFD, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended June 30, 1999 were $156,651,241 and
$181,666,454, respectively.
Net realized gains (losses) for the six months ended June 30, 1999
and net unrealized gains as of June 30, 1999 were as follows:
Realized
Gains Unrealized
(Losses) Gains
Long-term investments $ 30,390,234 $ 154,438,965
------------- -------------
Currency transactions:
Options purchased (6,705,056) 236,000
Foreign currency
transactions 418,728 5,347
Forward foreign
exchange contracts -- 16,843,142
------------- -------------
Total currency
transactions (6,286,328) 17,084,489
------------- -------------
Total $ 24,103,906 $ 171,523,454
============= =============
As of June 30, 1999, net unrealized appreciation for Federal income
tax purposes aggregated $154,438,965, of which $275,615,882 related
to appreciated securities and $121,176,917 related to depreciated
securities. At June 30, 1999, the aggregate cost of investments for
Federal income tax purposes was $1,146,613,406.
4. Capital Share Transactions:
Net increase (decrease) in net assets derived from capital share
transactions was $14,048,400 and $(454,290,751) for the six months
ended June 30, 1999 and the year ended December 31, 1998,
respectively.
Transactions in capital shares for each class were as follows:
Class A Shares for the Six Months Dollar
Ended June 30, 1999 Shares Amount
Shares sold 9,460,211 $ 179,354,517
Shares redeemed (7,721,591) (149,376,232)
-------------- --------------
Net increase 1,738,620 $ 29,978,285
============== ==============
Merrill Lynch Pacific Fund, Inc.
June 30, 1999
NOTES TO FINANCIAL STATEMENTS (concluded)
Class A Shares for the Year Dollar
Ended December 31, 1998 Shares Amount
Shares sold 21,360,897 $ 371,499,972
Shares issued to share-
holders in reinvestment
of dividends 1,007,319 17,708,664
-------------- --------------
Total issued 22,368,216 389,208,636
Shares redeemed (28,551,582) (487,957,041)
-------------- --------------
Net decrease (6,183,366) $ (98,748,405)
============== ==============
Class B Shares for the Six Months Dollar
Ended June 30, 1999 Shares Amount
Shares sold 3,258,440 $ 61,771,072
Automatic conversion of
shares (512,551) (9,453,176)
Shares redeemed (5,903,860) (105,177,582)
-------------- --------------
Net decrease (3,157,971) $ (52,859,686)
============== ==============
Class B Shares for the Year Dollar
Ended December 31, 1998 Shares Amount
Shares sold 6,513,095 $ 108,012,258
Shares issued to
shareholders in reinvest-
ment of dividends 798,549 13,327,783
-------------- --------------
Total issued 7,311,644 121,340,041
Automatic conversion of
shares (988,935) (15,920,268)
Shares redeemed (25,228,647) (412,142,288)
-------------- --------------
Net decrease (18,905,938) $ (306,722,515)
============== ==============
Class C Shares for the Six Months Dollar
Ended June 30, 1999 Shares Amount
Shares sold 1,197,186 $ 22,141,198
Shares redeemed (1,001,074) (17,600,647)
-------------- --------------
Net increase 196,112 $ 4,540,551
============== ==============
Class C Shares for the Year Dollar
Ended December 31, 1998 Shares Amount
Shares sold 2,901,093 $ 47,238,874
Shares issued to
shareholders in reinvest-
ment of dividends 94,275 1,544,218
-------------- --------------
Total issued 2,995,368 48,783,092
Shares redeemed (4,415,157) (71,183,999)
-------------- --------------
Net decrease (1,419,789) $ (22,400,907)
============== ==============
Class D Shares for the Six Months Dollar
Ended June 30, 1999 Shares Amount
Shares sold 2,591,373 $ 52,130,605
Automatic conversion of
shares 485,079 9,453,176
-------------- --------------
Total issued 3,076,452 61,583,781
Shares redeemed (1,584,993) (29,194,531)
-------------- --------------
Net increase 1,491,459 $ 32,389,250
============== ==============
Class D Shares for the Year Dollar
Ended December 31, 1998 Shares Amount
Shares sold 7,661,092 $ 132,326,874
Shares issued to
shareholders in reinvest-
ment of dividends 186,188 3,275,058
Automatic conversion of
shares 935,297 15,920,268
-------------- --------------
Total issued 8,782,577 151,522,200
Shares redeemed (10,259,671) (177,941,124)
-------------- --------------
Net decrease $ (1,477,094) $ (26,418,924)
============== ==============
5. Commitments:
At June 30, 1999, the Fund had entered into foreign exchange
contracts, in addition to the contracts listed on the Schedule of
Investments, under which it agreed to sell various foreign
currencies with an approximate value of $14,658,000.
6. Capital Loss Carryforward:
At December 31, 1998, the Fund had a net capital loss carryforward
of approximately $100,857,000, all of which expires in 2006. This
amount will be available to offset like amounts of any future
taxable gains.
Merrill Lynch Pacific Fund, Inc.
June 30, 1999
PORTFOLIO INFORMATION
As of June 30, 1999
Percent of
Ten Largest Equity Holdings Net Assets
Murata Manufacturing Co., Ltd. 6.2%
Lend Lease Corporation Limited 5.3
Yamanouchi Pharmaceutical Co., Ltd. 5.1
Softbank Corporation 4.9
Canon, Inc. 4.2
Hutchison Whampoa Limited 4.2
Rohm Company Ltd. 4.1
Sony Corporation 4.0
HSBC Holdings plc 3.6
Ito-Yokado Co., Ltd. 3.5
Percent of
Ten Largest Industries Net Assets
Property & Casualty Insurance 13.4%
Electrical Equipment 10.3
Banking 7.5
Conglomerates 6.0
Pharmaceuticals 5.6
Property 5.3
Electric Construction 5.1
Internet 4.9
Telecommunications 4.4
Office Equipment 4.2
Equity Portfolio Changes
For the Quarter Ended June 30, 1999
Additions
Korea Telecom Corporation (ADR)
NIIT Limited
Softbank Corporation
United World Chinese Commercial Bank
Wharf Holdings Ltd.
OFFICERS AND DIRECTORS
Terry K. Glenn, President and Director
Donald Cecil, Director
Roland M. Machold, Director
Edward H. Meyer, Director
Charles C. Reilly, Director
Richard R. West, Director
Arthur Zeikel, Director
Edward D. Zinbarg, Director
Stephen I. Silverman, Senior Vice President
and Portfolio Manager
Donald C. Burke, Vice President and Treasurer
Robert Harris, Secretary
Custodian
Brown Brothers Harriman & Co.
40 Water Street
Boston, MA 02109
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
