MERRILL LYNCH
PACIFIC FUND, INC.
FUND LOGO
Annual Report
December 31, 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
Fiscal Year in Review
Merrill Lynch Pacific Fund, Inc. significantly outperformed its
unmanaged Benchmark Index for the year ended December 31, 1999. This
outperformance was especially pronounced during the final three
months of the year, with the Fund's Class A, Class B, Class C and
Class D Shares providing total returns of +36.58%, +36.19%, +36.17%
and +36.44%, respectively, compared to a +16.50% return for the
unmanaged Benchmark Index. For the year ended December 31, the
Fund's Class A, Class B, Class C and Class D Shares had total
returns of +87.76%, +85.90%, +85.93% and +87.31%, respectively,
compared to a +57.59% total return for the unmanaged Benchmark
Index. (Fund performance does not reflect sales charges, and would
be lower if sales charges were included. Complete performance
information can be found on pages 4--6 of this report to
shareholders.)
The Fund's outperformance relative to the Benchmark Index is
largely the result of having large positions in six Japanese
technology/telecommunications/ Internet stocks: Softbank
Corporation, The Furukawa Electric Co., Ltd., Murata Manufacturing
Co., Ltd., Sony Corporation, Rohm Company Ltd. and NTT Mobile
Communications Network, Inc. Returns for these stocks ranged from
87% to 144% during the December quarter, versus the approximate 10%
rise in the Japanese stock market.
In 1999, the Japanese stock market was similar to the US stock
market in that a small number of stocks (very often centered in a
few dynamic industries) provided most of the total market return. It
is true that these companies are vigorously striving to create value
relative to average companies with more complacent attitudes.
However, we are nonetheless somewhat cautious that so much of the
hopes of stock market investors are pinned on such a small sampling
of companies.
Some of most profitable investments in 1999 have been in the Fund
for some time. For example, Murata Manufacturing was one of the
Fund's largest positions as long ago as December 1983 and was the
Fund's largest holding during periods from 1994 onward. Rohm Company
was already a large position in 1995, and NTT Mobile Communications
Network was a reasonably large position in 1998. Sony Corporation
has been one of the Fund's largest positions off and on over the
past two decades. However, Softbank, the premier Internet investment
company in Japan, is new to the portfolio this year. Furukawa
Electric was also added to the portfolio this past year.
Although the Fund had very high absolute and relative returns in
1999, we are more optimistic regarding future appreciation potential
than we normally would expect to be. Japan has yet to begin to
demonstrate any appreciable economic rebound and the rest of Asia is
still recovering from the economic collapse experienced in 1998. It
appears that the economic and stock market recovery in Asia is more
likely to "pick up steam" than peak in 2000. Although we cannot cite
convincing reasons for the positives to still outweigh the
negatives, the momentum is real enough and the desire to solve
Japan's economic problems appears strong enough for us to maintain a
constructive investment outlook. This means that we are certainly
not bearish--and probably not bullish--but cautiously optimistic
that Japan will remain on a positive track.
The rest of Asia certainly seems to be continuing in an economic
recovery, which will both benefit their own economies and stock
markets as well as those of their trading partners. We maintain
investments in South Korea and India that appear to be participating
in the growth of their economies.
Merrill Lynch Pacific Fund, Inc.
December 31, 1999
In particular, many of the technology-related trends that are
occurring in the United States have some investment implications for
companies in South Korea, India, Taiwan, and of course, Japan. These
trends include the proliferation of cellular telephones and various
other mobile communications devices. The use of these devices will
multiply as broadband wireless access becomes more widespread. In
addition, outsourcing of software, production of all sorts of
semiconductors, and various other industrial and consumer products
(along with electronic components) are also likely to increase.
These technology-related trends have very positive implications for
fueling future economic growth across Asia.
Focus on Two Holdings
In this report to shareholders, we would like to focus on two of our
large positions that were new to the Fund during the past fiscal
year: Softbank and Furukawa Electric.
With our investment in Softbank, Merrill Lynch Pacific Fund
participates in the Internet economy in Japan and Asia. The company
is an investment holding company, venture capital firm, and
operating company. We believe that the company is likely to garner
the largest share of the Internet-related business value in Japan
and possibly the rest of Asia in the years ahead.
To date, the company's largest success is Yahoo! Inc., of which it
controls nearly one-quarter of the outstanding shares, and Yahoo-
Japan, of which it controls approximately half of the outstanding
shares. Softbank's management is very savvy, focused, driven to
succeed and very much in touch with the Internet. Our investment in
Softbank is predicated on the view that the Internet spawns
businesses and companies with substantial value and that Softbank's
management will be involved as either investors or operators of many
of these companies. We view Softbank as a company with a proven
record of success that can evolve into the biggest "Internet play"
in Asia. In particular, it appears that many of the lessons learned
from the expansion of Internet-related businesses in the United
States can be successfully applied to the Asian nations, which still
have Internet penetration levels found in the United States two
years ago. Softbank is the only Asian-based company to have
experienced the US developments directly through its own substantial
investments over many years. Its contacts in the industry are
outstanding and its community of companies have surpassed critical
mass in terms of both size and market shares.
Furukawa Electric is an old-line electric wire and cable producer
that has expanded into information equipment. This latter business
includes manufacturing optical fiber cables. In addition, it is also
Japan's largest Internet protocol router manufacturer. However, of
paramount importance to our investment rationale is Furukawa
Electric's 20% ownership of JDS Uniphase Corp. The value of JDS
Uniphase stock is appreciably greater than the entire market
capitalization of Furukawa Electric. This--coupled with a number of
moves that Furukawa has made to operate more profitably and generate
better returns for shareholders--explains why we continue to own
this stock even after its recent strong appreciation.
In Conclusion
Although we are cautiously optimistic on the prospects for Japan's
economy and stock market, what we would like to see is evidence of
entrepreneurial behavior by some of the larger, more established
electronic manufacturing companies in Japan. Many of these remain
"value" propositions awaiting catalysts that might unlock higher
returns of their substantial assets and technical capabilities.
However, for the most part, "old Japan" appears relatively slow to
change its traditional focus from volume and size to maximizing
profits and enhancing productivity. In fact, for those industries
that we expect to lead in growth during the decade ahead, we are
seeing much greater drive and flexibility in countries such as
Taiwan, South Korea and India.
We thank you for your investment in Merrill Lynch Pacific Fund,
Inc., and we look forward to serving you throughout the Fund's new
fiscal year and beyond.
Merrill Lynch Pacific Fund, Inc.
December 31, 1999
Sincerely,
(Terry K. Glenn)
Terry K. Glenn
President and Director
(Stephen I. Silverman)
Stephen I. Silverman
Senior Vice President and Portfolio Manager
February 15, 2000
To reduce shareholder expenses, Merrill Lynch Pacific Fund, Inc.
will no longer be printing and mailing quarterly reports to
shareholders. We will continue to provide you with reports on a semi-
annual and annual basis.
Merrill Lynch Pacific Fund, Inc.
December 31, 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.
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 12/31/99 +87.76% +77.90%
Five Years Ended 12/31/99 +16.97 +15.71
Ten Years Ended 12/31/99 +11.47 +10.87
*Maximum sales charge is 5.25%. (Prior to October 21, 1994, Class A
Shares were offered at a higher sales charge. Thus, actual returns
would have been lower than shown for the ten-year period.)
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 12/31/99 +85.90% +81.90%
Five Years Ended 12/31/99 +15.77 +15.77
Ten Years Ended 12/31/99 +10.34 +10.34
*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 12/31/99 +85.93% +84.93%
Five Years Ended 12/31/99 +15.76 +15.76
Inception (10/21/94)
through 12/31/99 +14.22 +14.22
*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 12/31/99 +87.31% +77.48%
Five Years Ended 12/31/99 +16.68 +15.43
Inception (10/21/94)
through 12/31/99 +15.12 +13.93
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
Merrill Lynch Pacific Fund, Inc.
December 31, 1999
PERFORMANCE DATA (continued)
Total Return Based on a $10,000 Investment
A line graph depicting the growth of an investment in the Fund's
Class A Shares and Class B Shares compared to growth of an investment
in the Morgan Stanley Capital Internationl Pacific Region Index.
Beginning and ending values are:
12/89 12/99
ML Pacific Fund, Inc.++--
Class A Shares* $ 9,475 $28,068
ML Pacific Fund, Inc.++--
Class B Shares* $10,000 $26,738
Morgan Stanley Capital International
Pacific Region Index++++ $10,000 $10,310
A line graph depicting the growth of an investment in the Fund's
Class C Shares and Class D Shares compared to growth of an investment
in the Morgan Stanley Capital Internationl Pacific Region Index.
Beginning and ending values are:
10/21/94** 12/98
ML Pacific Fund, Inc.++--
Class C Shares* $10,000 $19,949
ML Pacific Fund, Inc.++--
Class D Shares* $ 9,475 $19,686
Morgan Stanley Capital International
Pacific Region Index++++ $10,000 $10,747
*Assuming maximum sales charge, transaction costs and other
operating expenses, including advisory fees.
**Commencement of operations.
++ML Pacific Fund, Inc. invests primarily in equities of
corporations domiciled in Far Eastern or Western Pacific countries,
including Japan, Australia, Hong Kong and Singapore.
++++This unmanaged market capitalization-weighted Index is comprised
of a representative sampling of stocks of large-, medium-, and small-
capitalization companies in Australia, Hong Kong, Japan, Malaysia,
New Zealand and Singapore. The starting date for the Index in the
Class C & Class D Shares' graph is from 10/31/94.
Past performance is not predictive of future performance.
Merrill Lynch Pacific Fund, Inc.
December 31, 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 $35,166.65 on December 31, 1999.
<TABLE>
Recent Performance Results
<CAPTION>
Market Performance
In Local Currency/In US Dollars
3 Month 12 Month
As of December 31, 1999 % Change % Change
<S> <C> <C>
ML Pacific Fund, Inc. Class A Shares--Total Investment Return* +36.58% +87.76%
ML Pacific Fund, Inc. Class B Shares--Total Investment Return* +36.19 +85.90
ML Pacific Fund, Inc. Class C Shares--Total Investment Return* +36.17 +85.93
ML Pacific Fund, Inc. Class D Shares--Total Investment Return* +36.44 +87.31
Benchmark Index** +16.50 +57.59
Japan +11.04/+15.63 +46.57/+61.72
Australia + 8.36/+ 8.56 +10.25/+17.51
Hong Kong +29.51/+29.42 +60.06/+59.53
Taiwan +14.69/+15.68 +48.60/+52.34
India +12.77/+12.88 +91.84/+87.12
South Korea +11.42/+19.37 +81.26/+91.64
Singapore +21.93/+24.45 +61.72/+60.12
*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.
</TABLE>
Merrill Lynch Pacific Fund, Inc.
December 31, 1999
<TABLE>
SCHEDULE OF INVESTMENTS
<CAPTION>
Shares Percent of
Industry Held Investments Value Net Assets
<S> <C> <S> <C> <C>
Japan
Automobile 1,717,000 Suzuki Motor Corporation $ 25,051,835 1.1%
Banking 1,922,000 The Asahi Bank, Ltd. 11,849,105 0.5
354,000,000 Sanwa International Finance Ltd.
(Convertible Preferred) 3,797,385 0.2
3,237,000 The Tokai Bank Ltd. 20,399,530 0.9
-------------- ------
36,046,020 1.6
Beverage 380,000 Chukyo Coca-Cola Bottling Co., Ltd. 4,053,234 0.2
281,248 Coca-Cola West Japan Company Limited 11,834,489 0.5
424,000 Hokkaido Coca-Cola Bottling Co., Ltd. 5,771,445 0.2
386,000 Kinki Coca-Cola Bottling Co., Ltd. 5,477,053 0.2
476,000 Mikuni Coca-Cola Bottling 8,337,802 0.4
-------------- ------
35,474,023 1.5
Chemicals 1,064,000 Shin-Etsu Chemical Co., Ltd. 45,812,702 2.0
Consumer Electronics 383,500 Sony Corporation 113,710,246 4.9
Containers 1,581,000 Toyo Seikan Kaisha, Ltd. 22,897,348 1.0
Electric Construction 1,943,000 Chudenko Corporation 29,528,124 1.3
2,836,000 Kinden Corporation 21,785,498 1.0
1,200,000 Matsushita Electric Industrial Company, Ltd. 33,232,215 1.5
1,232,000 Taihei Dengyo Kaisha, Ltd. 3,050,161 0.1
-------------- ------
87,595,998 3.9
Electrical Equipment 6,050,000 The Furukawa Electric Co., Ltd. 91,765,339 4.0
884,000 Murata Manufacturing Co., Ltd. 207,613,269 9.0
355,000 Rohm Company Ltd. 145,904,687 6.3
-------------- ------
445,283,295 19.3
Internet 247,900 Softbank Corporation 237,250,416 10.3
Machinery 940,000 Toyoda Automatic Loom Works, Ltd. 19,638,908 0.9
Office Equipment 1,758,000 Canon, Inc. 69,845,190 3.0
1,600,000 Fujitsu Limited 72,962,129 3.2
-------------- ------
142,807,319 6.2
Pharmaceuticals 1,720,000 Yamanouchi Pharmaceutical Co., Ltd. 60,088,071 2.6
Property & Casualty 9,351,000 The Dai-Tokyo Fire and Marine Insurance Co., Ltd. 38,158,010 1.7
Insurance 4,062,000 The Fuji Fire and Marine Insurance Company, Limited 9,897,622 0.4
7,539,000 The Koa Fire & Marine Insurance Co., Ltd. 22,501,174 1.0
7,621,000 The Nichido Fire & Marine Insurance Co., Ltd. 43,851,140 1.9
6,568,000 The Sumitomo Marine & Fire Insurance Co., Ltd. 40,491,633 1.8
3,413,000 The Tokio Marine & Fire Insurance Co. Ltd. 39,911,293 1.7
-------------- ------
194,810,872 8.5
Retailing 847,000 Ito-Yokado Co., Ltd. 92,002,153 4.0
364,000 Sangetsu Co., Ltd. 7,658,284 0.3
-------------- ------
99,660,437 4.3
Telecommunications 2,550 NTT Mobile Communications Network, Inc. 98,067,326 4.3
552 Nippon Telegraph & Telephone Corporation (NTT) 9,452,980 0.4
-------------- ------
107,520,306 4.7
Total Investments in Japan (Cost--$943,512,858) 1,673,647,796 72.8
</TABLE>
Merrill Lynch Pacific Fund, Inc.
December 31, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Shares Percent of
Industry Held Investments Value Net Assets
<S> <C> <S> <C> <C>
Australia
Leisure 14,055,889 Village Roadshow Limited 'A' (Preferred) $ 23,797,787 1.0%
Property 5,315,514 Lend Lease Corporation Limited 74,151,197 3.2
Telecommunications 466,000 ++Austar United Communications Limited 1,858,208 0.1
5,594,000 ++Telstra Corporation Limited 19,637,004 0.9
-------------- ------
21,495,212 1.0
Total Investments in Australia (Cost--$87,782,367) 119,444,196 5.2
Hong Kong
Banking 3,400,729 HSBC Holdings PLC 47,688,082 2.1
Conglomerates 4,974,035 Hutchison Whampoa Limited 72,310,042 3.1
12,056,000 Wharf Holdings Ltd. 27,995,729 1.2
-------------- ------
100,305,771 4.3
Total Investments in Hong Kong (Cost--$103,904,881) 147,993,853 6.4
India
Banking 2,360,000 Industrial Development Bank of India 1,991,538 0.1
Broadcast/Media 620,000 ++BITV 0 0.0
Diversified Mutual 7,000 UTI Master Plus 91-B 3,839 0.0
Funds
Finance 773,000 ++Housing Development Finance Corporation Ltd. (HDFC) 5,083,421 0.2
Software 396,371 NIIT Limited 30,218,163 1.3
587,000 ++Satyam Computer Services Limited 29,680,685 1.3
-------------- ------
59,898,848 2.6
Total Investments in India (Cost--$64,145,480) 66,977,646 2.9
New Zealand
Diversified 34,616,484 Guinness Peat Group PLC 27,460,841 1.2
Total Investments in New Zealand (Cost--$21,093,216) 27,460,841 1.2
Singapore
Banking 5,132,400 Oversea-Chinese Banking Corporation Ltd. 47,162,595 2.0
Electrical Equipment 2,112,000 ++Chartered Semiconductor Manufacturing Limited 11,543,063 0.5
Transportation 1,188,000 Singapore Airlines Limited 13,485,405 0.6
Total Investments in Singapore (Cost--$40,106,756) 72,191,063 3.1
</TABLE>
Merrill Lynch Pacific Fund, Inc.
December 31, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (concluded)
<CAPTION>
Shares Held/ Percent of
Industry Face Amount Investments Value Net Assets
<S> <C> <S> <C> <C>
South Korea
Banking 502,540 Hana Bank $ 3,918,484 0.2%
92,515 ++Hana Bank (GDR)(b) 721,617 0.0
-------------- ------
4,640,101 0.2
Iron & Steel 325,000 Pohang Iron & Steel Company Ltd. (ADR)(a) 11,375,000 0.5
Telecommunications 605,400 Korea Telecom Corporation (ADR)(a) 45,253,650 2.0
2,040 SK Telecom Co. Ltd. 7,315,242 0.3
92,700 SK Telecom Co. Ltd. (ADR)(a)(c) 3,557,362 0.1
-------------- ------
56,126,254 2.4
Total Investments in South Korea (Cost--$41,766,019) 72,141,355 3.1
Taiwan
Banking 20,847,680 United World Chinese Commercial Bank 25,179,320 1.1
Computers 668,860 Synnex Technology International Corporation (GDR)(b) 17,256,588 0.8
Electrical Equipment 3,050,000 D-Link Corporation 6,609,305 0.3
4,050,000 ++United Microelectronics Corporation, Ltd. 14,455,067 0.6
US$ 3,050,000 Winbond Electronics Corporation, 1% due 11/04/2002
(Convertible) 5,185,000 0.2
-------------- ------
26,249,372 1.1
Total Investments in Taiwan (Cost--$63,034,113) 68,685,280 3.0
Short-Term Securities
Commercial Paper* US$ 18,008,000 General Motors Acceptance Corp., 5% due 1/03/2000 18,002,998 0.8
Total Investments in Short-Term Securities
(Cost--$18,002,998) 18,002,998 0.8
Nominal Value
Covered by Options Issue
Currency Put Options Purchased
120,000,000 Japanese Yen, expiring June 2000 at YEN 123 132,000 0.0
100,000,000 Japanese Yen, expiring June 2000 at YEN 124 43,000 0.0
100,000,000 Japanese Yen, expiring June 2000 at YEN 124 47,000 0.0
Total Currency Put Options Purchased
(Premiums Paid--$7,973,000) 222,000 0.0
Total Investments (Cost--$1,391,321,688) 2,266,767,028 98.5
Unrealized Depreciation on Forward Foreign Exchange Contracts--Net** (4,654,886) (0.2)
Other Assets Less Liabilities 38,422,648 1.7
-------------- ------
Net Assets $2,300,534,790 100.0%
============== ======
(a)American Depositary Receipts (ADR).
(b)Global Depositary Receipts (GDR).
(c)The security may be offered and sold to "qualified institutional
buyers" under Rule 144A of the Securities Act of 1933.
++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 December 31, 1999 were as
follows:
Foreign Expiration Unrealized
Currency Sold Date Depreciation
YEN 34,845,609,701 October 2000 $ (4,654,886)
------------
Total Unrealized Depreciation on Forward
Foreign Exchange Contracts--Net
(US$ Commitment--$353,529,499) $ (4,654,886)
============
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Pacific Fund, Inc.
December 31, 1999
FINANCIAL INFORMATION
<TABLE>
Statement of Assets and Liabilities as of December 31, 1999
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$1,383,348,688) $2,266,545,028
Options purchased, at value (premiums paid--$7,973,000) 222,000
Foreign cash 35,878,037
Receivables:
Capital shares sold $ 8,903,140
Dividends 534,035
Securities sold 27,535
Interest 23,005 9,487,715
--------------
Prepaid registration fees and other assets 58,404
--------------
Total assets 2,312,191,184
--------------
Liabilities: Unrealized depreciation on forward foreign
exchange contracts 4,654,886
Payables:
Capital shares redeemed 3,673,481
Investment adviser 1,161,312
Distributor 820,479 5,655,272
--------------
Accrued expenses and other liabilities 1,346,236
--------------
Total liabilities 11,656,394
--------------
Net Assets: Net assets $2,300,534,790
==============
Net Assets Class A Shares of Common Stock, $.10 par value,
Consist of: 100,000,000 shares authorized $ 2,979,914
Class B Shares of Common Stock, $.10 par value,
200,000,000 shares authorized 2,855,944
Class C Shares of Common Stock, $.10 par value,
100,000,000 shares authorized 491,812
Class D Shares of Common Stock, $.10 par value,
100,000,000 shares authorized 830,948
Paid-in capital in excess of par 1,425,989,719
Accumulated realized capital losses on investments
and foreign currency transactions--net (3,578,752)
Unrealized appreciation on investments and foreign currency
transactions--net 870,965,205
--------------
Net assets $2,300,534,790
==============
Net Asset Value: Class A--Based on net assets of $986,913,287 and 29,799,135 shares
outstanding $ 33.12
==============
Class B--Based on net assets of $888,734,542 and 28,559,436 shares
outstanding $ 31.12
==============
Class C--Based on net assets of $150,152,931 and 4,918,124 shares
outstanding $ 30.53
==============
Class D--Based on net assets of $274,734,030 and 8,309,484 shares
outstanding $ 33.06
==============
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Pacific Fund, Inc.
December 31, 1999
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations for the Year Ended December 31, 1999
<S> <S> <C> <C>
Investment Dividends (net of $1,317,244 foreign withholding tax) $ 14,495,382
Income: Interest and discount earned 1,582,058
--------------
Total income 16,077,440
--------------
Expenses: Investment advisory fees $ 8,600,136
Account maintenance and distribution fees--Class B 5,690,460
Custodian fees 876,320
Transfer agent fees--Class B 835,105
Account maintenance and distribution fees--Class C 773,599
Transfer agent fees--Class A 756,798
Account maintenance fees--Class D 379,063
Transfer agent fees--Class D 178,925
Accounting services 139,125
Printing and shareholder reports 130,687
Registration fees 125,168
Transfer agent fees--Class C 114,720
Professional fees 111,926
Directors' fees and expenses 45,236
Pricing fees 15,692
Other 490,636
--------------
Total expenses 19,263,596
--------------
Investment loss--net (3,186,156)
--------------
Realized & Realized gain (loss) from:
Unrealized Gain Investments--net 112,135,902
(Loss) on Foreign currency transactions--net (29,306,524) 82,829,378
Investments & --------------
Foreign Currency Change in unrealized appreciation/depreciation on:
Transactions--Net: Investments--net 928,072,828
Foreign currency transactions--net 5,315,650 933,388,478
-------------- --------------
Net realized and unrealized gain on investments and foreign
currency transactions 1,016,217,856
--------------
Net Increase in Net Assets Resulting from Operations $1,013,031,700
==============
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Pacific Fund, Inc.
December 31, 1999
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Changes in Net Assets
<CAPTION>
For the Year Ended
December 31,
Increase (Decrease) in Net Assets: 1999 1998
<S> <S> <C> <C>
Operations: Investment income (loss)--net $ (3,186,156) $ 79,202
Realized gain (loss) on investments and foreign
currency transactions--net 82,829,378 (24,974,867)
Change in unrealized appreciation/depreciation on
investments and foreign currency transactions--net 933,388,478 104,185,764
-------------- --------------
Net increase in net assets resulting from operations 1,013,031,700 79,290,099
-------------- --------------
Dividends to Investment income--net:
Shareholders: Class A -- (37,819)
Class B -- (30,572)
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 to shareholders -- (40,841,998)
-------------- --------------
Capital Share Net increase (decrease) in net assets derived from
Transactions: capital share transactions 197,731,808 (454,290,751)
-------------- --------------
Net Assets: Total increase (decrease) in net assets 1,210,763,508 (415,842,650)
Beginning of year 1,089,771,282 1,505,613,932
-------------- --------------
End of year $2,300,534,790 $1,089,771,282
============== ==============
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Pacific Fund, Inc.
December 31, 1999
FINANCIAL INFORMATION (continued)
<TABLE>
Financial Highlights
<CAPTION>
The following per share data and ratios have been derived
from information provided in the financial statements. Class A++
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,
Operating beginning of year $ 17.64 $ 16.97 $ 21.58 $ 22.16 $ 21.12
Performance: ---------- ---------- ---------- ---------- ----------
Investment income--net .06 .10 .08 .11 .11
Realized and unrealized gain (loss) on
investments and foreign currency
transactions--net 15.42 1.33 (1.48) 1.21 1.61
---------- ---------- ---------- ---------- ----------
Total from investment operations 15.48 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 year $ 33.12 $ 17.64 $ 16.97 $ 21.58 $ 22.16
========== ========== ========== ========== ==========
Total Investment Based on net asset value per share 87.76% 8.46% (6.35%) 6.09% 8.20%
Return:* ========== ========== ========== ========== ==========
Ratios to Average Expenses .85% .88% .87% .87% .93%
Net Assets: ========== ========== ========== ========== ==========
Investment income--net .28% .57% .37% .47% .53%
========== ========== ========== ========== ==========
Supplemental Net assets, end of year
Data: (in thousands) $ 986,913 $ 449,725 $ 537,671 $ 642,523 $ 607,598
========== ========== ========== ========== ==========
Portfolio turnover 28.84% 12.26% 19.69% 10.65% 26.73%
========== ========== ========== ========== ==========
*Total investment returns exclude the effects of sales charges.
++Based on average shares outstanding.
++++Amount is less than $.01 per share.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Pacific Fund, Inc.
December 31, 1999
FINANCIAL INFORMATION (continued)
<TABLE>
Financial Highlights (continued)
<CAPTION>
The following per share data and ratios have been derived
from information provided in the financial statements. Class B++
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 year $ 16.74 $ 16.11 $ 20.59 $ 21.22 $ 20.27
Operating ---------- ---------- ---------- ---------- ----------
Performance: Investment loss--net (.16) (.08) (.14) (.13) (.10)
Realized and unrealized gain (loss)
on investments and foreign currency
transactions--net 14.54 1.25 (1.39) 1.17 1.53
---------- ---------- ---------- ---------- ----------
Total from investment operations 14.38 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 year $ 31.12 $ 16.74 $ 16.11 $ 20.59 $ 21.22
========== ========== ========== ========== ==========
Total Investment Based on net asset value per share 85.90% 7.29% (7.31%) 5.00% 7.10%
Return:* ========== ========== ========== ========== ==========
Ratios to Average Expenses 1.88% 1.92% 1.90% 1.90% 1.96%
Net Assets: ========== ========== ========== ========== ==========
Investment loss--net (.76%) (.50%) (.66%) (.56%) (.50%)
========== ========== ========== ========== ==========
Supplemental Net assets, end of year
Data: (in thousands) $ 888,735 $ 489,047 $ 775,068 $1,217,549 $1,041,763
========== ========== ========== ========== ==========
Portfolio turnover 28.84% 12.26% 19.69% 10.65% 26.73%
========== ========== ========== ========== ==========
*Total investment returns exclude the effects of sales charges.
++Based on average shares outstanding.
++++Amount is less than $.01 per share.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Pacific Fund, Inc.
December 31, 1999
FINANCIAL INFORMATION (continued)
<TABLE>
Financial Highlights (continued)
<CAPTION>
The following per share data and ratios have been derived
from information provided in the financial statements. Class C++
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 year $ 16.42 $ 15.83 $ 20.30 $ 20.97 $ 20.12
Operating ---------- ---------- ---------- ---------- ----------
Performance: Investment loss--net (.17) (.08) (.14) (.13) (.12)
Realized and unrealized gain (loss)
on investments and foreign currency
transactions--net 14.28 1.23 (1.36) 1.16 1.53
---------- ---------- ---------- ---------- ----------
Total from investment operations 14.11 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 year $ 30.53 $ 16.42 $ 15.83 $ 20.30 $ 20.97
========== ========== ========== ========== ==========
Total Investment Based on net asset value per share 85.93% 7.26% (7.28%) 5.00% 7.07%
Return:* ========== ========== ========== ========== ==========
Ratios to Average Expenses 1.88% 1.92% 1.90% 1.91% 1.97%
Net Assets: ========== ========== ========== ========== ==========
Investment loss--net (.79%) (.50%) (.67%) (.58%) (.59%)
========== ========== ========== ========== ==========
Supplemental Net assets, end of year
Data: (in thousands) $ 150,153 $ 53,116 $ 73,656 $ 98,925 $ 46,092
========== ========== ========== ========== ==========
Portfolio turnover 28.84% 12.26% 19.69% 10.65% 26.73%
========== ========== ========== ========== ==========
*Total investment returns exclude the effects of sales charges.
++Based on average shares outstanding.
++++Amount is less than $.01 per share.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Pacific Fund, Inc.
December 31, 1999
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights (concluded)
<CAPTION>
The following per share data and ratios have been derived
from information provided in the financial statements. Class D++
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 year $ 17.65 $ 16.98 $ 21.57 $ 22.14 $ 21.11
Operating ---------- ---------- ---------- ---------- ----------
Performance: Investment income--net --++++ .05 .03 .04 .07
Realized and unrealized gain (loss) on
investments and foreign currency
transactions--net 15.41 1.33 (1.47) 1.23 1.60
---------- ---------- ---------- ---------- ----------
Total from investment operations 15.41 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 year $ 33.06 $ 17.65 $ 16.98 $ 21.57 $ 22.14
========== ========== ========== ========== ==========
Total Investment Based on net asset value per share 87.31% 8.14% (6.55%) 5.84% 7.95%
Return:* ========== ========== ========== ========== ==========
Ratios to Average Expenses 1.10% 1.13% 1.12% 1.12% 1.18%
Net Assets: ========== ========== ========== ========== ==========
Investment income (loss)--net (.02%) .29% .11% .16% .31%
========== ========== ========== ========== ==========
Supplemental Net assets, end of year
Data: (in thousands) $ 274,734 $ 97,883 $ 119,219 $ 136,626 $ 97,946
========== ========== ========== ========== ==========
Portfolio turnover 28.84% 12.26% 19.69% 10.65% 26.73%
========== ========== ========== ========== ==========
*Total investment returns exclude the effects of sales charges.
++Based on average shares outstanding.
++++Amount is less than $.01 per share.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Pacific Fund, Inc.
December 31, 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. 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
Merrill Lynch Pacific Fund, Inc.
December 31, 1999
NOTES TO FINANCIAL STATEMENTS (continued)
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. Distributions in excess of net investment income are due
primarily to differing tax treatments for foreign currency
transactions.
(h) Reclassification--Generally accepted accounting prinicples
require that certain components of net assets be adjusted to reflect
permanent differences between financial and tax reporting.
Accordingly, current year's permanent book/tax differences of
$3,186,156 have been reclassified between accumulated net realized
capital losses and accumulated net investment loss and $21,072,131
has been reclassified between paid-in capital in excess of par and
accumulated net realized capital losses. These reclassifications
have no effect on net assets or net asset values per share.
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 .60% of the average daily
net assets of the Fund.
Merrill Lynch Pacific Fund, Inc.
December 31, 1999
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 .25% .75%
Class C .25% .75%
Class D .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 year ended December 31, 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 $ 6,115 $ 51,257
Class D $44,215 $835,279
For the year ended December 31, 1999, MLPF&S received contingent
deferred sales charges of $863,023 and $36,780 relating to
transactions in Class B and Class C Shares, respectively.
Furthermore, MLPF&S received contingent deferred sales charges of
$245 and $412 relating to transactions subject to front-end sales
charge waivers in Class A and Class D Shares, respectively.
In addition, MLPF&S received $98,881 in commissions on the execution
of portfolio security transactions for the Fund for the year ended
December 31, 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 year ended December 31, 1999 were $526,274,483 and
$408,802,905, respectively.
Net realized gains (losses) for the year ended December 31, 1999 and
net unrealized gains (losses) as of December 31, 1999 were as
follows:
Realized Gains Unrealized
(Losses) Gains (Losses)
Investments:
Long-term $ 112,135,568 $ 883,196,340
Short-term 334 --
------------- --------------
Total investments 112,135,902 883,196,340
------------- --------------
Currency transactions:
Options purchased (6,705,056) (7,751,000)
Foreign currency
transactions (22,601,468) 174,751
Forward foreign exchange
contracts -- (4,654,886)
------------- --------------
Total currency transactions (29,306,524) (12,231,135)
------------- --------------
Total $ 82,829,378 $ 870,965,205
============= ==============
As of December 31, 1999, net unrealized appreciation for Federal
income tax purposes aggregated $874,975,555, of which $1,077,668,893
related to appreciated securities and $202,693,338 related to
depreciated securities. At December 31, 1999, the aggregate cost of
investments for Federal income tax purposes was $1,391,569,473.
Merrill Lynch Pacific Fund, Inc.
December 31, 1999
NOTES TO FINANCIAL STATEMENTS (concluded
4. Capital Share Transactions:
Net increase (decrease) in net assets derived from capital share
transactions was $197,731,808 and $(454,290,751) for the years ended
December 31, 1999 and December 31, 1998, respectively.
Transactions in capital shares for each class were as follows:
Class A Shares for the Year Dollar
Ended December 31, 1999 Shares Amount
Shares sold 19,608,935 $ 432,209,205
Shares redeemed (15,311,566) (344,528,395)
------------- --------------
Net increase 4,297,369 $ 87,680,810
============= ==============
Class A Shares for the Year Dollar
Ended December 31, 1998 Shares Amount
Shares sold 21,360,897 $ 371,499,972
Shares issued to shareholders
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 Year Dollar
Ended December 31, 1999 Shares Amount
Shares sold 10,091,024 $ 223,461,220
Automatic conversion of
shares (1,076,563) (22,631,130)
Shares redeemed (9,667,997) (194,321,010)
------------- --------------
Net increase (decrease) (653,536) $ 6,509,080
============= ==============
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 reinvestment 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 Year Dollar
Ended December 31, 1999 Shares Amount
Shares sold 3,426,762 $ 74,395,683
Shares redeemed (1,742,506) (34,953,502)
------------- --------------
Net increase 1,684,256 $ 39,442,181
============= ==============
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 reinvestment 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 Year Dollar
Ended December 31, 1999 Shares Amount
Shares sold 4,462,837 $ 100,318,751
Automatic conversion of
shares 1,016,993 22,631,130
------------- --------------
Total issued 5,479,830 122,949,881
Shares redeemed (2,716,286) (58,850,144)
------------- --------------
Net increase 2,763,544 $ 64,099,737
============= ==============
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 reinvestment 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 December 31, 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 foreign currency with an
approximate value of $20,071,000.
Merrill Lynch Pacific Fund, Inc.
December 31, 1999
<AUDIT-REPORT>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders,
Merrill Lynch Pacific Fund, Inc.:
We have audited the accompanying statement of assets and
liabilities, including the schedule of investments, of Merrill Lynch
Pacific Fund, Inc. as of December 31, 1999, the related statements
of operations for the year then ended and changes in net assets for
each of the years in the two-year period then ended, and the
financial highlights for each of the years in the five-year period
then ended. These financial statements and the financial highlights
are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and the
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements and the financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.
Our procedures included confirmation of securities owned at December
31, 1999 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of
Merrill Lynch Pacific Fund, Inc. as of December 31, 1999, the
results of its operations, the changes in its net assets, and the
financial highlights for the respective stated periods in conformity
with generally accepted accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
February 18, 2000
</AUDIT-REPORT>
Merrill Lynch Pacific Fund, Inc.
December 31, 1999
PORTFOLIO INFORMATION (unaudited)
As of December 31, 1999
Percent of
Ten Largest Holdings Net Assets
Softbank Corporation 10.3%
Murata Manufacturing Co., Ltd. 9.0
Rohm Company Ltd. 6.3
Sony Corporation 4.9
NTT Mobile Communications Network, Inc. 4.3
Ito-Yokado Co., Ltd. 4.0
The Furukawa Electric Co., Ltd. 4.0
Lend Lease Corporation Limited 3.2
Fujitsu Limited 3.2
Hutchison Whampoa Limited 3.1
Percent of
Ten Largest Industries Net Assets
Electrical Equipment 20.9%
Internet 10.3
Property & Casualty Insurance 8.5
Telecommunications 8.1
Banking 7.1
Office Equipment 6.2
Consumer Electronics 4.9
Conglomerates 4.3
Retailing 4.3
Electric Construction 3.9
Merrill Lynch Pacific Fund, Inc.
December 31, 1999
OFFICERS AND DIRECTORS
Terry K. Glenn, President and Director
Charles C. Reilly, Director
Richard R. West, Director
Arthur Zeikel, Director
Edward D. Zinbarg, Director
Robert C. Doll, Senior Vice President
Stephen I. Silverman, Senior Vice President and
Portfolio Manager
Donald C. Burke, Vice President and Treasurer
Lori A. Martin, Secretary
Donald Cecil and Edward H. Meyer, Directors of Merrill Lynch Pacific
Fund, Inc. have recently retired. The Fund's Board of Directors
wishes Mr. Cecil and Mr. Meyer well in their retirements.
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
