MERRILL LYNCH
DEVELOPING
CAPITAL MARKETS
FUND, INC.
FUND LOGO
Quarterly Report
September 30, 1995
Investing in emerging market securities involves a number of risk
factors and special considerations, including restrictions on
foreign investments and on repatriation of capital invested in
emerging markets, currency fluctuations, and potential price
volatility and less liquidity of securities traded in emerging
markets. In addition, there may be less publicly available
information about the issuers of securities, and such issuers may
not be subject to accounting, auditing and financial reporting
standards and requirements comparable to those to which US companies
are subject. Therefore, the Fund is designed as a long-term
investment for investors capable of assuming the risks of investing
in emerging markets. The Fund should be considered as a vehicle for
diversification and not as a complete investment program. Please
refer to the prospectus for details.
<PAGE>
This report is not authorized for use as an offer of sale or
solicitation of an offer to buy shares of the Fund unless
accompanied or preceded by the Fund's current prospectus. Past
performance results shown in this report should not be considered a
representation of future performance. Investment return and
principal value of shares will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
Merrill Lynch
Developing
Capital Markets
Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
Merrill Lynch Developing Capital Markets Fund, Inc,
Asset Allocation
As a Percentage* of
Net Assets as of
September 30, 1995
A map illustrating the following percentages:
Ecuador 0.2%
Panama 0.5%
Venezuela 0.6%
Brazil 10.2%
Portugal 3.2%
Hungary 1.8%
Czech Republic 0.3%
Poland 0.8%
Russia 0.9%
Greece 2.7%
Turkey 3.9%
Pakistan 0.2%
India 5.1%
China 0.5%
South Korea 10.1%
Taiwan 1.9%
<PAGE>
Mexico 6.6%
Peru 0.3%
Chile 0.9%
Argentina 4.3%
Morocco 2.2%
South Africa 12.3%
Israel 1.5%
Zimbabwe 1.0%
Sri Lanke 0.1%
Malaysia 3.3%
Singapore 4.9%
Indonesia 6.0%
Hong Kong 4.4%
Philippines 1.4%
Australia 5.3%
[FN]
*Total may not equal 100%.
DEAR SHAREHOLDER
During the quarter ended September 30, 1995, total returns for
Merrill Lynch Developing Capital Markets Fund, Inc.'s Class A, Class
B, Class C and Class D Shares were +2.47%, +2.11%, +2.19% and
+2.40%, respectively. For the same period, the unmanaged Morgan
Stanley Emerging Markets Free Index declined 1.06%. The Fund's
outperformance is mainly attributed to our investments in both the
Pacific and Latin American regions. However, these gains were
moderated by declines in the emerging European, Middle East and
African equity markets.
<PAGE>
Investment Outlook & Activities
A short-term interest rate cut by the Federal Reserve Board in July
sparked a liquidity-led rally in Hong Kong and Southeast Asian
markets. However, the run-up proved to be short-lived, especially in
Southeast Asia, as there were no further interest rate reductions,
resulting in investors turning their attention to local issues.
Concerns over inflation and current account deficits hit the stock
markets in Malaysia, the Philippines and Thailand particularly hard.
The Thai market was also negatively affected by political
uncertainties introduced by the installation of a new coalition
government. Strained China-Taiwan relations rocked the Taiwan stock
market, while a canceled power project deal in India unnerved many
foreign investors.
Since our June report to shareholders, we added to investments in
the Pacific Rim, namely in Australia, Taiwan, Indonesia, South
Korea, India and Singapore. In these markets, valuations are
attractive relative to earnings growth, the direction of interest
rates and historical valuation trends. For example, we purchased
shares in National Australia Bank Ltd. (NAB), an Australian bank
with overseas operations in New Zealand, the United Kingdom and the
United States. NAB's single-digit price/earnings ratio and high
dividend yield make it very attractive, especially as Australia's
economic outlook continues to improve. In Korea, where a "soft
landing" for the economy looks increasingly likely, we increased our
position in Korea Mobile Telecommunications Corp. This monopoly
provider of cellular phone services in South Korea is one of the
most attractively valued cellular firms in the world.
We expect to continue to hold an overweighted position in the Hong
Kong stock market. We believe that the market is reasonably valued;
furthermore, we have invested in stocks which are less expensive
than the market as a whole. Although the stock market may be more
vulnerable to adverse developments in China than others in the
region, the valuations of Hong Kong stocks already reflect this. At
the same time, stock valuations in other countries in the region
indicate that investors believe these markets can be insulated from
any problems related to China. In our view, uncertainties in China
will affect the region's stock markets indiscriminately. As
indicated during the Mexican crisis, in a world of free-flowing
capital, a country's problems cannot be confined within its borders.
In other regions of the world, we added to investments in Argentina,
Brazil, Poland, Russia, Israel, Turkey and South Africa, and took
profits in the Greek and Portuguese markets. One of the Fund's
recent equity purchases is Koor Industries, Ltd., a diversified
holding company in Israel. The company is Israel's largest
conglomerate, with interests in electronics, steel, chemicals, tele-
communications, energy and food. The company's stock gives the Fund
broad exposure to the Israeli economy, which has been improving. The
economic growth of 6.5% was above investors' expectations. With the
country's inflation rate now under 9%, Israel has been one of the
better-performing equity markets this past quarter.
<PAGE>
In Latin America, the sharp rallies of the previous quarter proved
to be unsustainable. In the past three months, the region has been
racked by a number of political as well as economic events. In
Argentina, the stock market fell by 10% in three hours on rumors
that Minister of the Economy Domingo Cavallo would resign. In
Brazil, President Cardoso faced intense political pressure when one
of his chief supporters in congress vehemently protested the
intervention of a major bank in the congressman's home state. On the
economic front, the news was mixed, with its resultant impacts on
the local equity markets. Investors in Mexican equities tried to
digest what had been, for the most part, poor corporate earnings. In
Chile, the perception that electric utilities would be adversely
affected by the construction of two natural gas pipelines led to a
severe decline in the market as a whole.
We increased our position in Companhia Cervejaria Brahma S.A. PN. A
Brazilian company, Brahma, is among the seven largest beer companies
in the world. It is also one of the most attractively valued,
publicly traded brewers. Buoyant demand for consumer non-durables, a
positive pricing environment and decreasing costs from investments
should translate into strong operating cash flow growth in the
remainder of 1995 and in 1996. We also added Brasmotor Group S.A., a
company with interests in the home appliance manufacturing business.
The stock had been a big underperformer in the Brazilian market in
the first half of 1995 as a result of negative sentiment toward the
Brazilian consumer durables sector. However, the low valuation,
strong balance sheet and positive long-term outlook make it a
compelling long-term investment.
In Conclusion
Our outlook for emerging markets is positive, and we will continue
to carefully select our investments for the Fund. We appreciate your
ongoing interest in Merrill Lynch Developing Capital Markets Fund,
Inc., and we look forward to assisting you with your financial needs
in the months and years ahead.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Grace Pineda)
Grace Pineda
Vice President and Portfolio Manager
<PAGE>
October 24, 1995
PERFORMANCE DATA
About Fund
Performance
Since October 21, 1994, investors have been able to purchase shares
of the Fund through the Merrill Lynch Select Pricing SM System,
which offers four pricing alternatives:
* Class A Shares incur a maximum initial sales charge (front-end
load) of 5.25% and bear no ongoing distribution or account
maintenance fees. Class A Shares are available only to eligible
investors.
* Class B Shares are subject to a maximum contingent deferred sales
charge of 4% if redeemed during the first year, decreasing 1% each
year thereafter to 0% after the fourth year. In addition, Class B
Shares are subject to a distribution fee of 0.75% and an account
maintenance fee of 0.25%. These shares automatically convert to
Class D Shares after approximately 8 years.
* Class C Shares are subject to a distribution fee of 0.75% and an
account maintenance fee of 0.25%. In addition, Class C Shares are
subject to a 1% contingent deferred sales charge if redeemed within
one year of purchase.
* Class D Shares incur a maximum initial sales charge of 5.25% and
an account maintenance fee of 0.25% (but no distribution fee).
Performance data for the Fund's Class Aand Class B Shares are
presented in the "Performance Summary" and "Average Annual Total
Return" tables below and on page 5. "Aggregate Total Return" tables
for Class C and Class D Shares are also presented on page 5. Data
for all of the Fund's shares are presented in the "Recent
Performance Results" table on page 5.
<PAGE>
The "Recent Performance Results" table shows investment results
before the deduction of any sales charges for Class A and Class B
Shares for the 12-month and 3-month periods ended September 30, 1995
and for Class C and Class D Shares for the since inception (October
21, 1994) and 3-month periods ended September 30, 1995. All data in
this table assume imposition of the actual total expenses incurred
by each class of shares during the relevant period.
None of the past results shown should be considered a representation
of future performance. Investment return and principal value of
shares will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost. Dividends paid to each class
of shares will vary because of the different levels of account
maintenance, distribution and transfer agency fees applicable to
each class, which are deducted from the income available to be paid
to shareholders.
<TABLE>
Performance
Summary--
Class A Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
9/1/89--12/31/89 $ 9.60 $10.13 $0.004 $0.132 + 6.97%
1990 10.13 9.04 -- 0.640 - 5.33
1991 9.04 10.89 -- 0.252 +23.35
1992 10.89 10.18 0.324 0.518 + 0.85
1993 10.18 16.80 0.278 0.069 +68.96
1994 16.80 13.90 0.653 0.447 -10.97
1/1/95--9/30/95 13.90 13.68 -- -- - 1.58
------ ------
Total $1.259 Total $2.058
Cumulative total return as of 9/30/95: +86.53%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the ex-dividend date, and do not
include sales charge;results would be lower if sales charge was
included.
</TABLE>
<PAGE>
<TABLE>
Performance
Summary--
Class B Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
7/1/94--12/31/94 $14.54 $13.86 $0.653 $0.412 +2.36%
1/1/95--9/30/95 13.86 13.52 -- -- -2.45
------ ------
Total $0.653 Total $0.412
Cumulative total return as of 9/30/95: -0.15%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the ex-dividend date, and do not
reflect deduction of any sales charge; results would be lower if
sales charge was deducted.
</TABLE>
<TABLE>
Recent
Performance
Results*
<CAPTION>
12 Month 3 Month
9/30/95 6/30/95 9/30/94++ % Change++ % Change
<S> <C> <C> <C> <C> <C>
ML Developing Capital Markets Fund Class A Shares $13.68 $13.35 $17.02 -16.00%(1) +2.47%
ML Developing Capital Markets Fund Class B Shares 13.52 13.24 16.97 -16.72(1) +2.11
ML Developing Capital Markets Fund Class C Shares 13.51 13.22 16.71 -15.49(1) +2.19
ML Developing Capital Markets Fund Class D Shares 13.65 13.33 16.77 -14.93(1) +2.40
ML Developing Capital Markets Fund Class A Shares--Total Return -13.51(2) +2.47
ML Developing Capital Markets Fund Class B Shares--Total Return -14.45(3) +2.11
ML Developing Capital Markets Fund Class C Shares--Total Return -13.10(4) +2.19
ML Developing Capital Markets Fund Class D Shares--Total Return -12.44(5) +2.40
<FN>
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included.
++Investment results shown for Class C and Class D Shares are since
inception (10/21/94).
(1)Percent change includes reinvestment of $0.653 per share capital
gains distributions.
(2)Percent change includes reinvestment of $0.447 per share ordinary
income dividends and $0.653 per share capital gains distributions.
(3)Percent change includes reinvestment of $0.412 per share ordinary
income dividends and $0.653 per share capital gains distributions.
(4)Percent change includes reinvestment of $0.425 per share ordinary
income dividends and $0.653 per share capital gains distributions.
(5)Percent change includes reinvestment of $0.442 per share ordinary
income dividends and $0.653 per share capital gains distributions.
</TABLE>
<PAGE>
Average Annual
Total Return
% Return Without % Return With
Class A Shares* Sales Charge Sales Charge**
Year Ended 9/30/95 -13.51% -18.05%
Five Years Ended 9/30/95 +13.46 +12.24
Inception (9/1/89) through 9/30/95 +10.79 + 9.82
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Class B Shares* Without CDSC With CDSC**
Year Ended 9/30/95 -14.45% -17.62%
Inception (7/1/94) to 9/30/95 - 0.12 - 2.35
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
Aggregate
Total Return
% Return % Return
Class C Shares* Without CDSC With CDSC**
Inception (10/21/94) to 9/30/95 -13.10% -13.91%
[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
Class D Shares* Sales Charge Sales Charge**
Inception (10/21/94) to 9/30/95 -12.44% -17.04%
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
<PAGE>
<TABLE>
CONSOLIDATED SCHEDULE OF INVESTMENTS (in US Dollars)
<CAPTION>
Shares Held/ Percent of
AFRICA Industries Face Amount Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Morocco Banking 150,000 Wafa Bank $ 5,810,251 $ 6,240,713 1.1%
Building Materials 8,000 Les Ciments de l'Oriental 272,020 270,074 0.0
Multi-Industry 161,154 Groupe Omnium Nord Africain 6,606,902 6,608,990 1.1
Total Investments in Morocco 12,689,173 13,119,777 2.2
South Beverage 193,300 South African Breweries Ltd. 4,536,254 6,088,606 1.0
Africa 45,955 South African Breweries Ltd. (ADR)(a) 976,696 1,447,583 0.3
------------ ------------ ------
5,512,950 7,536,189 1.3
Gold Mining 571,100 Beatrix Mines Ltd. 4,980,435 5,474,801 0.9
595,900 Kinross Mines Ltd. 6,385,941 6,528,622 1.1
9,200 Vaal Reefs Exploration & Mining
Co. Ltd. 682,419 604,766 0.1
32,000 Western Areas Gold Mining Company Ltd. 464,817 552,177 0.1
183,900 Western Areas Gold Mining Company Ltd.
(ADR)(a) 2,518,063 3,149,288 0.6
------------ ------------ ------
15,031,675 16,309,654 2.8
Mining 95,000 De Beers Consolidated Mines Ltd.
(ADR)(a) 2,201,328 2,565,000 0.4
518,900 Driefontein Consolidated Ltd. (ADR)(a) 7,581,381 7,070,013 1.2
------------ ------------ ------
9,782,709 9,635,013 1.6
Multi-Industry 834,782 Malbak Ltd. (GDR)(b) 4,799,997 5,426,083 0.9
289,400 The Morgan Stanley Africa Investment
Fund, Inc. 3,357,059 3,545,150 0.6
106,600 New South Africa Fund, Inc. 1,495,194 1,532,375 0.3
90,900 Southern Africa Fund, Inc. 1,331,240 1,340,775 0.2
------------ ------------ ------
10,983,490 11,844,383 2.0
Steel 2,479,706 South Africa Iron & Steel Industrial
Corp., Ltd. 2,693,511 2,682,782 0.5
<PAGE>
Transportation ZAL 87,100,000 Transnet Ltd., 15% due 10/01/1995 21,325,967 23,856,478 4.1
Total Investments in South Africa 65,330,302 71,864,499 12.3
Zimbabwe Beverages & 3,829,000 Delta Corporation 6,089,752 5,874,034 1.0
Tobacco
Total Investments in Zimbabwe 6,089,752 5,874,034 1.0
Total Investments in Africa 84,109,227 90,858,310 15.5
EUROPE
Czech Banking 13,500 Komercni Banka 2,034,490 768,151 0.1
Republic
Electrical & 9,206 Podnik Vypocetni Techniky (PVT)
Electronics (Preferred) 1,903,926 1,012,723 0.2
Total Investments in the
Czech Republic 3,938,416 1,780,874 0.3
Greece Banking 84,650 Ergo Bank (Registered) S.A. 3,038,469 4,104,408 0.7
Beverage 93,750 Hellenic Bottling Co. S.A. (Bearer) 1,855,162 3,159,208 0.5
Food 352,768 Delta Dairy S.A. (Ordinary) 7,032,632 7,836,765 1.4
45,287 Delta Dairy S.A. (Preferred) 1,170,377 798,039 0.1
------------ ------------ ------
8,203,009 8,634,804 1.5
Total Investments in Greece 13,096,640 15,898,420 2.7
Hungary Food 56,807 Pick Szeged Reszvenytarsasag (ADR)(a) 2,947,401 2,840,350 0.5
Health/ 12,000 Gedeon Richter Ltd. 199,500 219,240 0.0
Personal Care 230,000 Pharmauti Gyogyszer es Elelmiszeripari
Reszvenytarsasag (ADR)(a) 2,638,750 1,925,100 0.4
------------ ------------ ------
2,838,250 2,144,340 0.4
Merchandising 1,062,000 FOTEX RT--Fotex Elso Amerikai-Magyar
Fotoszolgaltatasi Reszvenytarsasag 5,205,763 1,236,974 0.2
Telecommunications 26,510 Magyar TavKozlesi Reszvenytarsasag
(Ordinary) 5,403,627 4,168,559 0.7
Total Investments in Hungary 16,395,041 10,390,223 1.8
<PAGE>
Poland Appliances & 89,000 Swarzedzkie Fabryki Mebli S.A. 2,102,193 475,936 0.1
Household
Durables
Automotive 112,400 T.C. Debica 1,567,776 1,618,264 0.3
Banking 243,029 Wielkopolski Bank Kredytowy 1,809,800 579,831 0.1
Beverage 907 Zaklady Piwowarskie w Zywcu S.A.
(Zywiec) 69,462 74,620 0.0
Electrical & 150,000 Elektrim Towarzystow Handlowe S.A. 1,916,544 555,327 0.1
Electronics
Food 15,000 International Fast Food Corp. 125,625 14,063 0.0
Multi-Industry 385,032 Mostostal-Export S.A. 995,772 1,013,659 0.2
Total Investments in Poland 8,587,172 4,331,700 0.8
Portugal Construction 224,000 Soares da Costa S.A. 3,742,164 3,271,927 0.6
107,200 Sociedade de Empreitadas Somague S.A. 755,699 679,250 0.1
------------ ------------ ------
4,497,863 3,951,177 0.7
Machinery & 122,500 Efacec S.A. 2,180,290 1,080,137 0.2
Engineering
Merchandising 125,200 Jeronimo Martins S.A. 2,895,368 6,271,273 1.1
Multi-Industry 314,150 Sonae Investimentos-SGPS S.A. 6,802,343 7,354,542 1.2
Total Investments in Portugal 16,375,864 18,657,129 3.2
Russia Foreign Government US$ 9,000,000 Russian Ven Loan due 12/30/2004 2,610,000 2,925,000 0.5
Obligations
Multi-Industry 158,700 Templeton Russia Fund, Inc. 2,309,085 2,479,688 0.4
Total Investments in Russia 4,919,085 5,404,688 0.9
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued) (in US Dollars)
<CAPTION>
EUROPE Shares Held/ Percent of
(concluded) Industries Face Amount Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Turkey Automotive 5,600,000 Tofas Turk Otomobil Fabrikasi A.S. $ 1,266,868 $ 819,013 0.1%
Beverage 3,928,768 Ege Biracilik Ve Malt Sanayii A.S. 472,057 1,456,429 0.3
Construction 5,630,940 Alarko Holdings A.S. 2,083,732 2,287,605 0.4
Food 8,685,725 Kerevitas Gida Sanayii Ve Ticaret
A.S. 397,272 1,058,589 0.2
Insurance 11,138,750 Aksigorta A.S. 2,227,750 1,561,190 0.2
Merchandising 5,401,500 Migros Turk A.S. 3,320,905 5,815,143 1.0
Multi-Industry 796,000 Erciyas Biracilik Ve Malt Sanayii A.S. 10,706,200 9,950,000 1.7
Total Investments in Turkey 20,474,784 22,947,969 3.9
Total Investments in Europe 83,787,002 79,411,003 13.6
LATIN
AMERICA
Argentina Automobiles 187,740 Compania Interamericana de
Automoviles S.A. (CINA) 2,147,283 732,259 0.1
Energy Sources 1,206,300 Astra Compania Argentina de
Petroleo S.A. 2,586,595 2,099,172 0.4
Foreign US$ 15,250,000 Republic of Argentina, 6.812%
Government due 3/31/2005 9,718,500 9,455,000 1.6
Obligations
Oil & Related 194,700 Yacimientos Petroliferos Fiscales S.A.
(Sponsored)(ADR)(a) 3,717,964 3,504,600 0.6
Real Estate 49,000 Inversiones y Representaciones S.A.
(GDR)(b) 1,270,753 1,176,000 0.2
Telecommunications 208,700 Telefonica de Argentina S.A. (Class B) 509,721 500,930 0.1
316,200 Telefonica de Argentina S.A. (Class B)
(ADR)(a) 8,797,418 7,549,275 1.3
------------ ------------ ------
9,307,139 8,050,205 1.4
Total Investments in Argentina 28,748,234 25,017,236 4.3
<PAGE>
Brazil Appliances & 2,640,000 Brasmotor Group S.A. (Preferred) 572,456 675,929 0.1
Household
Durables
Banking 672,365,239 Banco Bradesco S.A. (Preferred) 4,586,919 6,420,276 1.1
42,567,626 Banco Nacional S.A. (Preferred) 892,993 859,839 0.1
------------ ------------ ------
5,479,912 7,280,115 1.2
Beverage 13,866,513 Companhia Cervejaria Brahma S.A. PN
(Preferred) 3,808,080 5,652,823 1.0
Chemicals 46,963,333 Petroleo Brasileiro S.A. (Preferred) 6,380,127 4,977,226 0.9
Electrical & 17,753,900 Light--Servicios de Eletricidade S.A. 6,393,851 6,613,467 1.1
Electronics
Merchandising 1,500,000 Mesbla S.A. (Preferred) 350,350 24,554 0.0
Steel 4,756,900,000 Usinas Siderurgicas de Minas
Gerais--Usiminas S.A.(Preferred) 3,918,468 5,290,990 0.9
Telecommunications 296,500 Telecomunicacoes Brasileiras
S.A.--Telebras (ADR)(a) 11,494,897 14,009,625 2.4
54,431,403 Telecomunicacoes Brasileiras
S.A.--Telebras ON 1,772,853 2,187,537 0.4
150,111,413 Telecomunicacoes Brasileiras
S.A.--Telebras PN (Preferred) 6,708,628 7,159,039 1.2
------------ ------------ ------
19,976,378 23,356,201 4.0
Utilities-- 4,242,400 Centrais Eletricas Brasileiras
Electrical & Gas S.A.--Eletrobras (Preferred) 1,180,141 1,308,778 0.2
216,740 Companhia Energetica de Minas Gerais
S.A. (CEMIG)(ADR)(a) 5,141,012 4,768,280 0.8
------------ ------------ ------
6,321,153 6,077,058 1.0
Total Investments in Brazil 53,200,775 59,948,363 10.2
Chile Apparel 6,800,201 Bata Chile S.A. 1,920,913 1,006,805 0.2
Broadcasting & 5,072,871 Editorial Lord Cochrane S.A. 2,830,178 2,355,034 0.4
Publishing
Telecommunications 28,000 Compania de Telefonos de Chile S.A.
(ADR)(a) 3,037,806 1,935,500 0.3
Total Investments in Chile 7,788,897 5,297,339 0.9
<PAGE>
Ecuador Construction 4,825 La Cemento Nacional C.A. 1,449,510 1,013,250 0.2
Total Investments in Ecuador 1,449,510 1,013,250 0.2
Mexico Beverage 809,000 Fomento Economico Mexicano, S.A.
de C.V. (Femsa) 'B' 1,884,922 2,049,129 0.4
180,000 Fomento Economico Mexicano, S.A.
de C.V. (Femsa) 'B' (ADR)(a) 403,200 444,600 0.1
------------ ------------ ------
2,288,122 2,493,729 0.5
Building 1,078,000 Apasco, S.A. de C.V. 3,827,100 4,257,931 0.7
Materials
Construction 167,000 Cementos Mexicanos, S.A. de C.V.
(Class B) (ADR)(a) 1,509,987 667,476 0.1
Electrical & 151,800 Grupo Empresarial Fenix, S.A. de
Electronics C.V. (ELEKTRA) 'L' Shares 1,288,655 761,379 0.1
Financial Services 155,250 Banca Quadrum, S.A. de C.V. (ADR)(a) 2,012,895 892,688 0.2
Food 1,600,000 Grupo Herdez, S.A. de C.V. 'A' 1,450,009 411,285 0.1
Health & Personal 590,800 Kimberly-Clark de Mexico, S.A. de C.V. 7,174,776 8,241,567 1.4
Care
Merchandising 2,375,000 Cifra, S.A. de C.V. 'C' 4,796,743 2,754,702 0.5
Multi-Industry 1,072,987 Grupo Carso, S.A. de C.V. 'A' 8,198,380 6,357,196 1.1
271,000 Grupo Carso, S.A. de C.V. 'A' (ADR)(a) 3,199,875 3,150,375 0.5
------------ ------------ ------
11,398,255 9,507,571 1.6
Telecommunications 266,550 Telefonos de Mexico, S.A. de
C.V. (ADR)(a) 14,534,412 8,462,963 1.4
Total Investments in Mexico 50,280,954 38,451,291 6.6
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued) (in US Dollars)
<CAPTION>
LATIN
AMERICA Shares Held/ Percent of
(concluded) Industries Face Amount Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Panama Beverage 105,750 Panamerican Beverages, Inc. (Class A) $ 3,034,784 $ 2,842,031 0.5%
Total Investments in Panama 3,034,784 2,842,031 0.5
Peru Banking 180,420 Banco de Credito de Peru S.A. 94,494 336,934 0.1
Metals & Steel 355,331 Southern Peru Copper Corp. S.A. 1,471,094 1,387,197 0.2
110,418 Southern Peru Copper Corp. S.A.,
'T' Shares 350,031 323,300 0.0
------------ ------------ ------
1,821,125 1,710,497 0.2
Total Investments in Peru 1,915,619 2,047,431 0.3
Venezuela Textiles 625,032 Mantex S.A.C.A. 74,978 53,447 0.0
Utilities-- 3,648,672 C.A. La Electricidad de Caracas
Electrical & Gas S.A.I.C.A.--S.A.C.A. 4,407,191 3,249,098 0.6
Total Investments in Venezuela 4,482,169 3,302,545 0.6
Total Investments in Latin America 150,900,942 137,919,486 23.6
MIDDLE
EAST
Israel Banking 596,928 Bank Hapoalim Ltd. 949,965 1,008,842 0.2
3,843,099 Bank Leumi Israel 5,460,273 5,559,869 1.0
------------ ------------ ------
6,410,238 6,568,711 1.2
Merchandising 76,873 Blue Square Chain Stores 438,729 540,691 0.1
Multi-Industry 15,465 Koor Industries Ltd. 1,277,860 1,432,777 0.2
Total Investments in Israel 8,126,827 8,542,179 1.5
Pakistan Electrical 1,299,490 Karachi Electric Supply Corp. Ltd. 1,121,386 1,298,727 0.2
Components
Total Investments in Pakistan 1,121,386 1,298,727 0.2
Total Investments in the Middle East 9,248,213 9,840,906 1.7
<PAGE>
PACIFIC
BASIN/ASIA
Australia Banking 971,000 National Australia Bank Ltd. 8,569,255 8,594,267 1.5
Entertainment 230,000 Burswood Property Trust Ltd. 279,375 295,283 0.1
Merchandising 293,850 Amway Asia Pacific Ltd. 8,599,737 10,982,644 1.9
Multi-Industry 2,878,900 Pacific Dunlop Ltd. 6,760,433 7,174,679 1.2
Recreation 2,527,571 Crown Casino Ltd. 3,180,826 3,550,408 0.6
Total Investments in Australia 27,389,626 30,597,281 5.3
China Appliances & 8,935,500 Shenzhen China Bicycles Co.
Household (Holdings) Ltd. 'B' 4,685,279 2,947,217 0.5
Durables
Total Investments in China 4,685,279 2,947,217 0.5
Hong Kong Automotive 7,336,000 Sime Darby (Hong Kong) Ltd. 9,722,808 8,872,051 1.5
Financial Services 20,747,000 Winton Holdings Ltd. 6,398,529 4,749,869 0.8
Food 21,439,000 C.P. Pokphand Co. Ltd. (Ordinary) 5,782,063 8,735,106 1.5
Real Estate 400,000 Sun Hung Kai Properties Ltd. 3,008,183 3,246,585 0.6
Total Investments in Hong Kong 24,911,583 25,603,611 4.4
India Banking 320,000 State Bank of India 2,004,987 2,076,084 0.4
Broadcasting & 680,600 Videocon International Ltd. (GDR)(b) 5,926,107 1,735,530 0.3
Publishing
Building 15,250 The Associated Cement Co. Ltd. 1,444,825 1,477,330 0.3
Materials
Chemicals 321,500 Mardia Chemical Ltd. 1,397,697 630,485 0.1
Energy Sources 661,000 Bombay Suburban Electric Supply
Co. Ltd. 3,596,013 2,534,061 0.4
333,000 Cochin Refinery Ltd. 2,604,742 1,649,779 0.3
------------ ------------ ------
6,200,755 4,183,840 0.7
Financial 40,570 Housing Development Finance Corp. 3,128,857 3,104,664 0.5
Services 2,111,000 Industrial Credit & Investment
Corporation of India Ltd. 8,138,060 5,789,531 1.0
------------ ------------ ------
11,266,917 8,894,195 1.5
<PAGE>
Recreation & 580,000 Suraj Diamonds Ltd. 1,564,340 1,171,631 0.2
Consumer Goods
Textiles 79,000 Grasim Industries Ltd. 1,526,946 1,374,521 0.2
710,000 JCT Ltd. 1,242,175 910,793 0.2
103,900 Raymond Woolen Mills Ltd. 758,836 870,174 0.1
345,100 Reliance Industries Ltd. 2,945,066 2,788,481 0.5
------------ ------------ ------
6,473,023 5,943,969 1.0
Utilities-- 667,500 Kec International Ltd. 5,050,805 2,401,504 0.4
Electrical & Gas 333,750 Kec International Ltd. (Bonus Shares) 0 1,200,752 0.2
------------ ------------ ------
5,050,805 3,602,256 0.6
Total Investments in India 41,329,456 29,715,320 5.1
Indonesia Banking 2,790,500 P.T. Bank Bali 7,645,923 6,837,649 1.2
Broadcasting & US$ 4,245,000 P.T. Surya Citra Television, 4%
Publishing due 7/01/1997 (Convertible) 4,411,585 4,245,471 0.7
Building 3,400,000 P.T. Mulia Industrindo 7,233,704 8,443,709 1.4
Materials
Energy Equipment 5,197,000 P.T. Kabelmetal Indonesia 8,139,759 5,908,289 1.0
& Services 1,684,200 P.T. Supreme Cable Manufacturing Corp.
(Sucaco) 5,008,807 4,535,815 0.8
------------ ------------ ------
13,148,566 10,444,104 1.8
Food & Tobacco 48,000 P.T. Wicaksana Overseas International 137,339 128,212 0.0
Telecommunications 147,420 P.T. Indonesian Satellite Corp.
(ADR)(a) 5,600,335 5,178,127 0.9
Total Investments in Indonesia 38,177,452 35,277,272 6.0
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED SCHEDULE OF INVESTMENTS (concluded) (in US Dollars)
<CAPTION>
PACIFIC
BASIN/ASIA Shares Held/ Percent of
(concluded) Industries Face Amount Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Malaysia Broadcasting & 1,256,000 New Straits Times Press BHD $ 5,118,753 $ 3,551,414 0.6%
Publishing 1,792,000 Sistem Televisyen Malaysia BHD 5,245,284 5,459,498 0.9
------------ ------------ ------
10,364,037 9,010,912 1.5
Steel 2,706,000 Maruichi (Malaysia) Steel Tube BHD 6,417,204 10,453,286 1.8
Total Investments in Malaysia 16,781,241 19,464,198 3.3
Philippines Banking US$ 4,000,000 Metropolitan Bank and Trust Company,
2.75% due 9/10/2000 (Convertible) 4,000,000 4,060,000 0.7
Telecommunications 4,500,100 Pilipino Telephone Corp. 4,825,120 4,277,169 0.7
Total Investments in the Philippines 8,825,120 8,337,169 1.4
Singapore Automobiles 520,000 Cycle & Carriage Ltd. 5,117,680 4,647,431 0.8
Banking 420,000 Development Bank of Singapore Ltd. 5,024,638 4,788,177 0.8
Broadcasting & 507,000 Singapore Press Holdings Ltd. 7,554,596 7,778,044 1.3
Publishing
Real Estate 765,000 City Developments Ltd. 5,090,971 4,737,509 0.8
Shipping 943,000 Jurong Shipyard Ltd. 7,453,030 6,768,895 1.2
Total Investments in Singapore 30,240,915 28,720,056 4.9
South Korea Automotive 65,106 Dong Ah Tire Industries 3,645,738 4,321,611 0.7
Food 29,390 Lotte Confectionery Corp. 3,401,600 3,816,759 0.7
Telecommunications 24,157 Korea Mobile Telecommunications Corp. 14,556,675 24,128,695 4.1
187,290 Korea Mobile Telecommunications Corp.
(GDR)(b) 6,339,329 6,648,795 1.1
------------ ------------ ------
20,896,004 30,777,490 5.2
Utilities-- 483,470 Korea Electric Power Corp. 17,725,759 20,373,593 3.5
Electrical & Gas
Total Investments in South Korea 45,669,101 59,289,453 10.1
<PAGE>
Sri Lanka Appliances & 262,500 Lankan Tiles 337,398 225,300 0.0
Household
Durables
Leisure & Tourism 90,625 Aitken Spence 518,247 304,215 0.1
Total Investments in Sri Lanka 855,645 529,515 0.1
Taiwan Building Materials 306,091 Hocheng Group Corp. (ADR)(a) 6,742,166 2,984,387 0.5
Electrical & 275,000 Advanced Semiconductor Engineering,
Electronics Inc. (GDR)(b) 4,193,750 3,679,500 0.6
Multi-Industry 213,800 Taiwan Fund, Inc. 4,527,279 4,783,775 0.8
Total Investments in Taiwan 15,463,195 11,447,662 1.9
Total Investments in
Pacific Basin/Asia 254,328,613 251,928,754 43.0
SHORT-TERM Face
SECURITIES Amount
Commercial US$ 3,941,000 General Electric Capital Corp.,
Paper* 6.45% due 10/02/1995 3,939,588 3,939,588 0.7
Foreign DM 13,000,000 Russian Ven Loan due 12/21/1995 2,703,996 3,162,187 0.5
Government
Obligations*
Total Investments in
Short-Term Securities 6,643,584 7,101,775 1.2
Total Investments $589,017,581 577,060,234 98.6
============
Unrealized Depreciation on Forward Foreign Exchange Contracts** (7,404) (0.0)
Other Assets Less Liabilities 7,890,125 1.4
------------ ------
Net Assets $584,942,955 100.0%
============ ======
<PAGE>
Net Asset Value: Class A--Based on net assets of $341,806,991
and 24,994,988 shares outstanding $ 13.68
============
Class B--Based on net assets of $191,892,018
and 14,189,112 shares outstanding $ 13.52
============
Class C--Based on net assets of $23,372,973
and 1,730,105 shares outstanding $ 13.51
============
Class D--Based on net assets of $27,870,973
and 2,042,251 shares outstanding $ 13.65
============
<FN>
(a)American Depositary Receipt (ADR).
(b)Global Depositary Receipt (GDR).
*Commercial Paper and certain Foreign Government Obligations are
traded on a discount basis; the interest rates shown are the
discount rates paid at the time of purchase by the Fund.
**Forward foreign exchange contracts as of September 30, 1995 were
as follows:
Expiration Unrealized
Date Depreciation
Foreign Currency Purchased
A$6,718,056 October 1995 $ (336)
Total (US$ Commitment--$5,073,812) $ (336)
--------
Foreign Currency Sold
A$1,140,057 October 1995 $ (7,068)
Total (US$ Commitment--$853,902) $ (7,068)
--------
Total Unrealized Depreciation on Forward
Foreign Exchange Contracts--Net $ (7,404)
========
</TABLE>
<PAGE>
EQUITY PORTFOLIO CHANGES
For the Quarter Ended September 30, 1995
Additions
Advanced Semiconductor Engineering, Inc.
(GDR)
Bank Leumi Israel
Beatrix Mines Ltd.
Blue Square Chain Stores
Brasmotor Group S.A. (Preferred)
Burswood Property Trust Ltd.
City Developments Ltd.
Crown Casino Ltd.
Cycle & Carriage Ltd.
Delta Corporation
Development Bank of Singapore Ltd.
Driefontein Consolidated Ltd. (ADR)
Erciyas Biracilik Ve Malt Sanayii A.S.
Jurong Shipyard Ltd.
Kec International Ltd. (Bonus Shares)
Kinross Mines Ltd.
Malbak Ltd. (GDR)
National Australia Bank Ltd.
P.T. Mulia Industrindo
Pacific Dunlop Ltd.
Pilipino Telephone Corp.
Singapore Press Holdings Ltd.
State Bank of India
Sun Hung Kai Properties Ltd.
Taiwan Fund, Inc.
Telefonica de Argentina S.A. (Class B)
Telefonica de Argentina S.A. (Class B)
(ADR)
Vaal Reefs Exploration & Mining Co. Ltd.
Western Areas Gold Mining Co. Ltd.
Western Areas Gold Mining Co. Ltd. (ADR)
Yacimientos Petroliferos Fiscales S.A.
(Sponsored) (ADR)
<PAGE>
Deletions
Banco Bradesco S.A. (Preferred) (Receipts)
Banco Comercial Portugues S.A.
(Registered)
Banco Totta E Acores S.A.
Banco Wiese Limitado S.A. (ADR)
Benpres Holdings Corp.
CAPCO Automotive Products Corporation S.A.
Ceska General Food A.S.
Companhia Cervejaria Brahma S.A.
(Preferred) (Warrants)
Companhia Vale do Rio Doce S.A. PN
(Preferred)
La Bombril S.A. PN (Preferred)
MelPaper S.A. (Preferred)
Nestle (Malaysia) BHD
Ports of Auckland Ltd.
Portugal Telecom S.A. (ADR)
Rembrandt Group Ltd.
SEPAP A.S.
Turk Siemens Kablo Ve Elektrik Sanayii A.S.
PORTFOLIO INFORMATION
Ten Largest Equity Holdings Percent of
As of September 30, 1995 Net Assets
Korea Mobile Telecommunications Corp. 4.1%
Telecomunicacoes Brasileiras S.A.--Telebras* 4.0
Korea Electric Power Corp. 3.5
Amway Asia Pacific Ltd. 1.9
Maruichi (Malaysia) Steel Tube BHD 1.8
Erciyas Biracilik Ve Malt Sanayii A.S. 1.7
Sime Darby (Hong Kong) Ltd. 1.5
C.P. Pokphand Co. Ltd. (Ordinary) 1.5
National Australia Bank Ltd. 1.5
Telefonos de Mexico, S.A. de C.V. (ADR) 1.4
[FN]
*Includes combined holdings.
<PAGE>
OFFICERS AND DIRECTORS
Arthur Zeikel, President and Director
Donald Cecil, Director
Edward H. Meyer, Director
Charles C. Reilly, Director
Richard R. West, Director
Edward D. Zinbarg, Director
Terry K. Glenn, Executive Vice President
Norman R. Harvey, Senior Vice President
Donald C. Burke, Vice President
Grace Pineda, Vice President and Portfolio Manager
Gerald M. Richard, Treasurer
Mark B. Goldfus, Secretary
Custodian
The Chase Manhattan Bank, N.A.
Global Securities Services
4 Chase MetroTech Center, 18th Floor
Brooklyn, New York 11245
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
