MERRILL LYNCH
DEVELOPING
CAPITAL MARKETS
FUND, INC.
FUND LOGO
Quarterly Report
March 31, 1996
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 Funds 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
Developing
Capital Markets
Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
MERRILL LYNCH DEVELOPING CAPITAL MARKETS FUND, INC.
<PAGE>
Asset Allocation
As a Percentage* of
Net Assets as of
March 31, 1996
A map illustrating the following percentages:
Panama 0.5%
Venezuela 0.5%
Brazil 12.3%
Portugal 1.1%
Hungary 1.6%
Czech Republic 0.2%
Poland 1.0%
Russia 0.3%
Greece 2.9%
Turkey 3.6%
Pakistan 0.3%
India 6.1%
Thailand 5.8%
South Korea 7.8%
Taiwan 0.2%
Mexico 9.8%
Peru 0.2%
Chile 0.8%
Argentina 3.8%
Morocco 1.9%
South Africa 7.4%
Israel 1.6%
Zimbabwe 1.2%
Sri Lanka 0.0%
Malaysia 9.8%
Singapore 2.2%
Indonesia 2.4%
Hong Kong 6.1%
Australia 1.7%
[FN]
*Total may not equal 100%.
DEAR SHAREHOLDER
During the quarter ended March 31, 1996, total returns for Merrill
Lynch Developing Capital Markets Fund, Inc.s Class A, Class B, Class
C and Class D Shares were +10.17%, +9.99%, +10.02% and +10.10%,
respectively. For the same period, the total return for the
unmanaged Morgan Stanley Capital International Emerging Markets Free
Index was +6.23%. Driving the Funds performance during this period
were its investments in Hong Kong, South Korea, South Africa,
Turkey, Brazil, Zimbabwe and Russia.
<PAGE>
Investment Outlook & Activities
In contrast with most of 1995, during the past three months,
investor attitudes became more optimistic concerning the outlook for
developing markets. While all political and economic events were not
positive, and corporate earnings were disappointing in some
instances, there is the overall feeling that 1996 will be a year of
improved stability in emerging markets. This feeling is based on an
improved economic outlook for Latin America (estimated gross
domestic product growth of 3.3% for the region as compared to only
0.90% for 1995); an outlook for declining inflation and interest
rates in emerging Europe; attractive valuations in certain of the
Asian markets, despite an overall concern about international
interest rates; and, optimism about key markets in the Middle
East/Africa region, such as Turkey, as the political outlook becomes
clearer and inflation and interest rates decline.
Historically, investors views on the direction of interest rates
have played an important role in the performance of developing
markets. During the quarter ended March 31, 1996, interest rates
showed considerable volatility. When interest rates were expected to
rise, they had a negative effect on many of the emerging markets,
most notably Hong Kong and Argentina. Whenever there was the
expectation for an easing of US interest rates, these markets
responded positively. However, several of the markets in which we
invest were somewhat insensitive to these short-term swings, and
rose regardless of the trend in global interest rates. Notable
examples were Hungary, Poland, Turkey, Zimbabwe, India and
Venezuela, which together constituted 14.0% of Merrill Lynch
Developing Capital Markets Fund, Inc.s net assets as of March 31,
1996.
During the March quarter, the Funds cash position increased to 6.9%
of net assets from 0.4% at December 31, 1995, as we reduced some of
our holdings in South African, Russian and Hong Kong securities in
order to secure profits. The proceeds are being reinvested in
equities in other regions. For example, we added to the Funds
investment in Usinas Siderurgicas de Minas Gerais--Usiminas S.A.
(Preferred), the Brazilian steel company whose cost of production is
among the lowest in the world. In Poland, we purchased more shares
of Elektrim Towarzystow Handlowe S.A., whose core activities in
power, roadway construction and telecommunications are expected to
help the company participate in and accelerate the growth of the
Polish economy.
<PAGE>
A new name that we added to our list of holdings is Sun
International, Ltd., a South African hotel and gambling concern. Sun
International owns a popular resort complex, Sun City, which is
located an hours flight from Johannesburg. Tourism has experienced
dramatic growth since the end of apartheid in 1994, and is further
boosted by the weakness of the rand, the South African currency. Sun
International generates 80% of its revenues from gambling. The South
African governments plan to increase the number of gambling licenses
is expected to lead to an expansion of the tourism industry. For Sun
City, this means that it could become a major player in a larger
industry, although it might initially lose some market share.
Another stock that we introduced to the Fund during the March
quarter is Technology Resources Industries BHD, the dominant
cellular services provider in Malaysia. We believe that investors
have underestimated potential cellular phone penetration in that
country. Throughout the world, cellular communications have
exhibited excellent growth. In developing countries, it has proved
to be a rapid and cost-effective means of establishing
communications. In addition, future telecommunications industry
consolidation could benefit the companys cellular and international
gateway operations.
In Conclusion
We remind our shareholders that the emerging markets are more
volatile than the securities markets of more developed countries.
However, we believe that the improving trend in the fundamentals of
the countries and companies in which we invest warrants an
optimistic long-term view.
We appreciate your ongoing interest in Merrill Lynch Developing
Capital Markets Fund, Inc., and we look forward to reviewing our
outlook and strategy with you in our upcoming annual report to
shareholders.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Grace Pineda)
Grace Pineda
Vice President and Portfolio Manager
May 1, 1996
<PAGE>
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.
* Class C Shares are subject to a distribution fee of 0.75% and an
account maintenance fee of 0.25%. In addition, Class C Shares are
subject to a 1% contingent deferred sales charge if redeemed within
one year of purchase.
* Class D Shares incur a maximum initial sales charge of 5.25% and
an account maintenance fee of 0.25% (but no distribution fee).
None of the past results shown should be considered a representation
of future performance. Investment return and principal value of
shares will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost. Dividends paid to each class
of shares will vary because of the different levels of account
maintenance, distribution and transfer agency fees applicable to
each class, which are deducted from the income available to be paid
to shareholders.
PERFORMANCE DATA (concluded)
<PAGE>
<TABLE>
Performance
Summary--
Class A Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <C> <C> <C> <C> <C>
9/1/89--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
1995 13.90 13.18 -- 0.238 - 3.43
1/1/96--3/31/96 13.18 14.52 -- -- +10.17
------ ------
Total $1.259 Total $2.296
Cumulative total return as of 3/31/96: +101.64%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the ex-dividend date, and do not
include sales charge; results would be lower if sales charge was
included.
</TABLE>
<TABLE>
Performance
Summary--
Class B Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <C> <C> <C> <C> <C>
7/1/94--12/31/94 $14.54 $13.86 $0.653 $0.412 +2.36%
1995 13.86 13.11 -- 0.124 -4.50
1/1/96--3/31/96 13.11 14.42 -- -- +9.99
------ ------
Total $0.653 Total $0.536
Cumulative total return as of 3/31/96: +7.53%**
<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
reflect deduction of any sales charge; results would be lower if
sales charge was deducted.
</TABLE>
<PAGE>
<TABLE>
Performance
Summary--
Class C Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <C> <C> <C> <C> <C>
10/21/94--12/31/94 $16.71 $13.84 $0.653 $0.425 -10.98%
1995 13.84 13.08 -- 0.137 - 4.48
1/1/96--3/31/96 13.08 14.39 -- -- +10.02
------ ------
Total $0.653 Total $0.562
Cumulative total return as of 3/31/96: - 6.45%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the ex-dividend date, and do not
reflect deduction of any sales charge; results would be lower if
sales charge was deducted.
</TABLE>
<TABLE>
Performance
Summary--
Class D Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <C> <C> <C> <C> <C>
10/21/94--12/31/94 $16.77 $13.90 $0.653 $0.442 -10.84%
1995 13.90 13.17 -- 0.214 - 3.68
1/1/96--3/31/96 13.17 14.50 -- -- +10.10
------ ------
Total $0.653 Total $0.656
Cumulative total return as of 3/31/96: - 5.44%**
<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>
Recent
Performance
Results*
<CAPTION>
12 Month 3 Month
3/31/96 12/31/95 3/31/95 % Change % Change
<S> <C> <C> <C> <C> <C>
ML Developing Capital Markets Fund Class A Shares $14.52 $13.18 $12.82 +13.26% +10.17%
ML Developing Capital Markets Fund Class B Shares 14.42 13.11 12.74 +13.19 + 9.99
ML Developing Capital Markets Fund Class C Shares 14.39 13.08 12.73 +13.04 +10.02
ML Developing Capital Markets Fund Class D Shares 14.50 13.17 12.81 +13.19 +10.10
ML Developing Capital Markets Fund Class A Shares--Total Return +15.35(1) +10.17
ML Developing Capital Markets Fund Class B Shares--Total Return +14.28(2) + 9.99
ML Developing Capital Markets Fund Class C Shares--Total Return +14.25(3) +10.02
ML Developing Capital Markets Fund Class D Shares--Total Return +15.07(4) +10.10
<FN>
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included.
(1)Percent change includes reinvestment of $0.238 per share ordinary
income dividends.
(2)Percent change includes reinvestment of $0.124 per share ordinary
income dividends.
(3)Percent change includes reinvestment of $0.137 per share ordinary
income dividends.
(4)Percent change includes reinvestment of $0.214 per share ordinary
income dividends.
</TABLE>
Average Annual
Total Return
% Return Without % Return With
Class A Shares* Sales Charge Sales Charge**
Year Ended 3/31/96 +15.35% + 9.30%
Five Years Ended 3/31/96 +12.27 +11.07
Inception (9/1/89) through 3/31/96 +11.24 +10.33
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
<PAGE>
% Return % Return
Class B Shares* Without CDSC With CDSC**
Year Ended 3/31/96 +14.28% +10.28%
Inception (7/1/94) to 3/31/96 + 4.23 + 2.56
[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
Class C Shares* Without CDSC With CDSC**
Year Ended 3/31/96 +14.25% +13.25%
Inception (10/21/94) to 3/31/96 - 4.52 - 4.52
[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**
Year Ended 3/31/96 +15.07% + 9.03%
Inception (10/21/94) to 3/31/96 - 3.80 - 7.33
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (in US Dollars)
<CAPTION>
Percent of
AFRICA Industries Shares Held Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Morocco Banking 146,500 Wafa Bank $ 5,674,678 $ 6,477,022 0.9%
Building Materials 8,000 Les Ciments de l'Oriental 272,020 314,602 0.0
Multi-Industry 161,154 Groupe Omnium Nord Africain 6,606,902 6,656,157 1.0
Total Investments in Morocco 12,553,600 13,447,781 1.9
South Beverage 194,300 South African Breweries Ltd. 4,569,475 6,160,493 0.9
Africa 46,193 South African Breweries Ltd. (ADR)(a) 984,639 1,455,080 0.2
------------ ------------ ------
5,554,114 7,615,573 1.1
Entertainment 1,151,897 Sun International, Ltd. 1,729,930 1,565,235 0.2
Financial Services 884,200 First National Bank Holdings Ltd. 8,540,288 7,509,248 1.1
Mining 369,100 Beatrix Mines Ltd. 3,247,494 2,995,338 0.4
95,000 De Beers Consolidated Mines Ltd.
(ADR)(a) 2,201,328 2,980,625 0.4
518,900 Driefontein Consolidated Ltd. (ADR)(a) 7,581,381 8,237,538 1.2
362,900 Kinross Mines Ltd. 3,840,151 4,383,291 0.6
9,200 Vaal Reefs Exploration & Mining Co.
Ltd. 682,419 900,554 0.1
32,000 Western Areas Gold Mining
Company Ltd. 464,817 523,402 0.1
185,121 Western Areas Gold Mining Company
Ltd. (ADR)(a) 2,518,063 2,961,936 0.4
------------ ------------ ------
20,535,653 22,982,684 3.2
Multi-Industry 845,634 Malbak Ltd. (GDR)(b) 4,870,860 4,760,919 0.7
900 Southern Africa Fund, Inc. 12,509 15,413 0.0
------------ ------------ ------
4,883,369 4,776,332 0.7
Steel 7,874,706 South Africa Iron & Steel
Industrial Corp., Ltd. 7,485,234 7,450,653 1.1
Total Investments in South Africa 48,728,588 51,899,725 7.4
<PAGE>
Zimbabwe Beverage & 3,667,000 Delta Corporation Ltd. 5,832,103 8,136,275 1.2
Tobacco
Total Investments in Zimbabwe 5,832,103 8,136,275 1.2
Total Investments in Africa 67,114,291 73,483,781 10.5
EUROPE
Czech Electrical & 9,206 Podnik Vypocetni Techniky (PVT)
Republic Electronics (Preferred) 1,903,926 1,275,502 0.2
Total Investments in the
Czech Republic 1,903,926 1,275,502 0.2
Greece Banking 222,900 Ergo Bank S.A. (Ordinary) 9,402,129 10,933,738 1.5
Beverage 122,660 Hellenic Bottling Co. S.A. 2,854,032 4,583,943 0.7
Food 315,668 Delta Dairy S.A. (Ordinary) 6,236,224 4,605,897 0.7
45,287 Delta Dairy S.A. (Preferred)
(Non-Convertible) 1,170,377 493,232 0.0
------------ ------------ ------
7,406,601 5,099,129 0.7
Total Investments in Greece 19,662,762 20,616,810 2.9
Hungary Health/Personal 67,000 Gedeon Richter Ltd. 2,159,888 2,495,750 0.4
Care 47,000 Gedeon Richter Ltd. (GDR)(b) 1,224,499 1,750,750 0.2
------------ ------------ ------
3,384,387 4,246,500 0.6
Oil & Related 495,000 Mol Magyar Olay-es Gazipari
Rt.(GDR)(b) 5,541,394 5,271,750 0.7
Telecommunications 12,000 Magyar TavKozlesi Reszvenytarsasag
(Ordinary) 2,338,938 1,883,239 0.3
Total Investments in Hungary 11,264,719 11,401,489 1.6
Poland Automotive 174,900 T.C. Debica 2,590,425 4,267,506 0.6
Electrical & 238,000 Elektrim Towarzystow Handlowe S.A. 2,442,163 1,410,302 0.2
Electronics
Multi-Industry 385,032 Mostostal-Export S.A. 995,772 1,133,324 0.2
Total Investments in Poland 6,028,360 6,811,132 1.0
<PAGE>
Portugal Multi-Industry 314,150 Sonae Investimentos-SGPS S.A. 6,802,343 7,519,899 1.1
Total Investments in Portugal 6,802,343 7,519,899 1.1
Russia Multi-Industry 158,700 Templeton Russia Fund, Inc. 2,309,085 2,162,288 0.3
Total Investments in Russia 2,309,085 2,162,288 0.3
Turkey Automotive 5,600,000 Tofas Turk Otomobil Fabrikasi A.S. 1,266,868 648,130 0.1
Beverage 796,000 Erciyas Biracilik Ve Malt Sanayii
& Tobacco A.S. (GDR)(b) 10,706,200 9,552,000 1.3
Construction 5,630,940 Alarko Holdings A.S. 2,083,732 2,066,400 0.3
Insurance 11,138,750 Aksigorta A.S. 2,227,750 2,987,103 0.4
Merchandising 7,002,600 Migros Turk A.S. 3,813,901 7,511,610 1.1
Metal 24,500,000 Eregli Demir Ve Celik Fabrikalari
Fabricating T.A.S. 2,995,633 2,870,148 0.4
Total Investments in Turkey 23,094,084 25,635,391 3.6
Total Investments in Europe 71,065,279 75,422,511 10.7
LATIN
AMERICA
Argentina Banking 232,300 Banco Frances del Rio de la Plata
S.A. (ADR)(a) 6,262,916 6,359,212 0.9
Oil & Related 885,350 Companhia Naviera Perez Companc
S.A.C.F.I.M.F.A. (Class B) 4,798,054 5,011,582 0.7
197,600 Yacimientos Petroliferos Fiscales S.A.
(Sponsored) (ADR)(a) 3,868,978 3,976,700 0.6
------------ ------------ ------
8,667,032 8,988,282 1.3
Real Estate 172,824 Inversiones y Representaciones S.A. 495,217 483,956 0.1
31,611 Inversiones y Representaciones S.A.
(GDR)(b) 781,929 889,059 0.1
------------ ------------ ------
1,277,146 1,373,015 0.2
<PAGE>
Telecommunications 208,700 Telefonica de Argentina S.A.
(Class B) 509,721 536,413 0.1
374,800 Telefonica de Argentina S.A.
(Class B) (ADR)(a) 10,530,312 9,604,250 1.3
------------ ------------ ------
11,040,033 10,140,663 1.4
Total Investments in Argentina 27,247,127 26,861,172 3.8
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US Dollars)
<CAPTION>
LATIN
AMERICA Percent of
(concluded) Industries Shares Held Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Brazil Banking 881,986,490 Banco Bradesco S.A. (Preferred) $ 6,935,066 $ 9,243,175 1.3%
42,567,626 Banco Nacional S.A. (Preferred) 892,993 0 0.0
------------ ------------ ------
7,828,059 9,243,175 1.3
Beverage 14,326,513 Companhia Cervejaria Brahma S.A.
PN (Preferred) 4,061,645 6,919,549 1.0
842,736 Companhia Cervejaria Brahma S.A.
PN (Warrants)(c) 42,718 42,666 0.0
------------ ------------ ------
4,104,363 6,962,215 1.0
Mining 3,693,000 Companhia Vale do Rio Doce S.A.
(Preferred) 666,931 579,602 0.1
Oil & Related 20,963,333 Petroleo Brasileiro S.A. (Preferred) 2,666,555 2,504,732 0.4
Steel 113,350,000 Companhia Siderurgica Nacional S.A. 3,241,454 3,311,207 0.5
7,456,900,000 Usinas Siderurgicas de Minas Gerais
--Usiminas S.A. (Preferred) 7,041,371 8,230,076 1.1
------------ ------------ ------
10,282,825 11,541,283 1.6
Telecommunications 411,000 Telecomunicacoes Brasileiras
S.A.--Telebras (ADR)(a) 17,481,759 20,447,250 2.9
58,731,403 Telecomunicacoes Brasileiras S.A.
--Telebras ON 1,935,581 2,325,231 0.3
150,111,413 Telecomunicacoes Brasileiras
S.A.--Telebras PN (Preferred) 6,708,628 7,478,211 1.1
105,160,500 Telecomunicacoes de Minejeros
S.A.--TELEMIG (Class B)(Preferred) 7,035,638 8,304,442 1.2
------------ ------------ ------
33,161,606 38,555,134 5.5
<PAGE>
Utilities 17,753,900 Light Participacoes S.A. 1,616,186 2,102,568 0.3
17,753,900 Light--Servicios de Eletricidade
S.A. 6,393,851 5,986,279 0.9
------------ ------------ ------
8,010,037 8,088,847 1.2
Utilities-- 216,740 Companhia Energetica de Minas
Electrical & Gas Gerais S.A. (CEMIG) (ADR)(a) 5,141,012 6,068,720 0.8
92,500,000 Companhia Energetica de Minas
Gerais S.A. (CEMIG) (Preferred) 2,527,304 2,594,421 0.4
------------ ------------ ------
7,668,316 8,663,141 1.2
Total Investments in Brazil 74,388,692 86,138,129 12.3
Chile Apparel 6,000,000 Bata Chile S.A. 1,698,653 875,274 0.1
Automotive 27,375 Chilectra Generacion S.A.
(Chilgener) (ADR)(a) 665,375 636,469 0.1
Broadcasting 5,072,871 Editorial Lord Cochrane S.A. 2,830,178 2,158,406 0.3
& Publishing
Telecommunications 21,000 Compania de Telecomunicaciones
de Chile S.A. (ADR)(a) 2,198,800 1,779,750 0.3
Total Investments in Chile 7,393,006 5,449,899 0.8
Mexico Beverage 859,000 Fomento Economico Mexicano,
& Tobacco S.A. de C.V. (Femsa) 'B' 1,993,943 2,427,584 0.4
583,000 Fomento Economico Mexicano, S.A.
de C.V. (Femsa) 'B' (ADR)(a) 1,295,680 1,632,400 0.2
------------ ------------ ------
3,289,623 4,059,984 0.6
Broadcasting 170,000 Grupo Televisa, S.A. de C.V.
--Media (ADR)(a) 4,275,800 4,228,750 0.6
Building & 1,155,200 Apasco, S.A. de C.V. 4,165,528 5,824,280 0.8
Construction
<PAGE>
Financial Services 155,250 Banca Quadrum, S.A. de C.V. (ADR)(a) 2,012,895 805,359 0.1
Health/ 936,000 Kimberly-Clark de Mexico, S.A. de C.V. 12,775,944 17,882,977 2.6
Personal Care 21,000 Kimberly-Clark de Mexico, S.A.
de C.V. (ADR)(a) 548,375 795,375 0.1
------------ ------------ ------
13,324,319 18,678,352 2.7
Multi-Industry 2,171,787 Grupo Carso, S.A. de C.V. 'A' 15,417,630 16,943,224 2.4
348,900 Grupo Carso, S.A. de C.V. (ADR)(a) 4,028,200 5,320,725 0.8
------------ ------------ ------
19,445,830 22,263,949 3.2
Retail 3,227,000 Cifra, S.A. de C.V. 'C' 5,644,060 4,221,603 0.6
Telecommunications 266,550 Telefonos de Mexico, S.A. de
C.V. (ADR)(a) 14,534,412 8,762,831 1.2
Total Investments in Mexico 66,692,467 68,845,108 9.8
Panama Beverage & Tobacco 92,950 Panamerican Beverages, Inc. (Class A) 2,616,720 3,752,856 0.5
Total Investments in Panama 2,616,720 3,752,856 0.5
Peru Metals & Mining 87,916 Southern Peru Copper Corp. S.A. 1,440,459 1,373,688 0.2
Total Investments in Peru 1,440,459 1,373,688 0.2
Venezuela Building 15,930 Venezolana de Cementos S.A.C.A.
Materials (Vencemos) 28,303 25,361 0.0
Steel 1,561,472 Siderurgica Venezolana SIVENSA,
S.A.I.C.A.--S.A.C.A. 573,061 702,662 0.1
200,000 Siderurgica Venezolana SIVENSA,
S.A.I.C.A.--S.A.C.A. (ADR)(a) 390,000 390,000 0.1
------------ ------------ ------
963,061 1,092,662 0.2
Textiles 1,023,882 Mantex S.A.C.A. 118,975 101,364 0.0
Utilities 3,328,670 C.A. La Electricidad de Caracas
--Electrical S.A.I.C.A.--S.A.C.A. 3,572,081 2,236,866 0.3
& Gas
Total Investments in Venezuela 4,682,420 3,456,253 0.5
Total Investments in Latin America 184,460,891 195,877,105 27.9
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US Dollars)
<CAPTION>
MIDDLE Percent of
EAST Industries Shares Held Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Israel Banking 2,447,402 Bank Hapoalim Ltd. $ 3,997,347 $ 3,531,265 0.5%
3,843,099 Bank Leumi Israel 5,460,273 4,534,630 0.6
------------ ------------ ------
9,457,620 8,065,895 1.1
Merchandising 76,873 Blue Square Chain Stores Properties
& Investments Ltd. 438,729 554,832 0.1
Multi-Industry 26,308 Koor Industries Ltd. 2,291,571 2,503,258 0.4
Total Investments in Israel 12,187,920 11,123,985 1.6
Pakistan Electrical 1,444,701 Karachi Electric Supply Corp. Ltd. 1,121,386 1,214,897 0.1
Components
Telecommunications 14,050 Pakistan Telecommunications Corp. 1,489,569 1,430,036 0.2
Total Investments in Pakistan 2,610,955 2,644,933 0.3
Total Investments in the Middle East 14,798,875 13,768,918 1.9
PACIFIC
BASIN/ASIA
Australia Leisure & Tourism 1,724,871 Crown Casino Ltd. 2,319,645 3,196,364 0.5
Merchandising 257,050 Amway Asia Pacific Ltd. (ADR) (a) 7,944,509 8,579,044 1.2
Total Investments in Australia 10,264,154 11,775,408 1.7
Hong Kong Automotive 5,596,000 Sime Darby (Hong Kong) Ltd. 6,737,352 5,209,620 0.8
Banking 134,000 HSBC Holdings PLC (Warrants)(c) 85,859 80,133 0.0
6,915,666 JCG Holdings, Ltd. 5,141,460 6,304,040 0.9
------------ ------------ ------
5,227,319 6,384,173 0.9
<PAGE>
Food 23,939,000 C.P. Pokphand Co. Ltd. (Ordinary) 6,782,211 11,375,204 1.6
50,947,000 Tingyi (Cayman Islands) Holdings,
Co. 14,192,540 13,339,498 1.9
------------ ------------ ------
20,974,751 24,714,702 3.5
Industrial 15,560,000 Sinocan Holdings Ltd. 5,731,645 5,884,794 0.9
Property 1,090,000 Henderson Land Development Co.,
Ltd. (Warrants)(c) 219,407 288,919 0.0
Total Investments in Hong Kong 38,890,474 42,482,208 6.1
India Banking 836,000 State Bank of India 4,945,834 5,854,462 0.8
Energy Sources 704,350 Bombay Suburban Electric Supply
Co. Ltd. 3,760,708 3,464,697 0.6
60,000 Bombay Suburban Electric Supply
Co. Ltd. (GDR) (b) 993,000 967,800 0.1
500 Cochin Refinery Ltd. 3,764 2,533 0.0
------------ ------------ ------
4,757,472 4,435,030 0.7
Financial Services 86,230 Housing Development Finance Corp. 6,786,690 8,229,314 1.2
2,291,950 Industrial Credit & Investment
Corporation of India Ltd. 8,566,161 6,379,655 0.9
------------ ------------ ------
15,352,851 14,608,969 2.1
Leisure 250,000 East India Hotels Ltd. 4,272,543 4,639,175 0.7
& Tourism
Recreation & 580,000 Suraj Diamonds Ltd. 1,522,715 956,701 0.1
Consumer Goods
Telecommunications 1,240,000 Mahanagar Telephone Nigam Ltd. 6,114,328 6,501,325 0.9
Textiles 130,300 Grasim Industries Ltd. 2,326,978 2,149,278 0.3
3,600 JCT Ltd. 5,877 2,147 0.0
480,100 Reliance Industries Ltd. 3,764,249 2,941,408 0.4
------------ ------------ ------
6,097,104 5,092,833 0.7
<PAGE>
Utilities-- 114,100 Kec International Ltd. 863,366 378,093 0.1
Electric & Gas 43,750 Kec International Ltd. (Bonus
Shares) 0 144,974 0.0
------------ ------------ ------
863,366 523,067 0.1
Total Investments in India 43,926,213 42,611,562 6.1
Indonesia Banking 2,790,500 P.T. Bank Bali 7,645,923 5,970,261 0.8
Broadcasting & US$ 4,645,000 P.T. Surya Citra Television, 4%
Publishing due 7/01/1997 (Convertible) 4,856,085 4,646,393 0.7
Building 1,890,000 P.T. Mulia Industrindo 1,914,804 3,295,571 0.5
Materials
Energy Equipment 4,048,700 P.T. Kabelmetal Indonesia 6,607,930 3,205,004 0.4
& Services
Total Investments in Indonesia 21,024,742 17,117,229 2.4
Malaysia Banking 1,312,000 Malayan Banking BHD 11,547,090 12,245,679 1.7
Broadcasting 2,662,000 New Straits Times Press BHD 11,479,457 13,686,375 1.9
& Publishing 2,424,000 Sistem Televisyen Malaysia BHD 7,644,685 9,778,446 1.4
------------ ------------ ------
19,124,142 23,464,821 3.3
Steel 1,510,000 Maruichi (Malaysia) Steel Tube BHD 4,196,539 5,315,009 0.8
Telecommunications 5,394,000 Technology Resources Industries BHD 18,467,460 19,412,853 2.8
916,400 Telekom Malaysia BHD 6,999,338 8,444,580 1.2
------------ ------------ ------
25,466,798 27,857,433 4.0
Total Investments in Malaysia 60,334,569 68,882,942 9.8
Singapore Banking 410,000 Development Bank of Singapore Ltd. 4,907,532 5,041,222 0.7
Broadcasting 507,000 Singapore Press Holdings Ltd. 7,554,596 10,125,586 1.5
& Publishing
Total Investments in Singapore 12,462,128 15,166,808 2.2
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US Dollars)
<CAPTION>
PACIFIC BASIN
ASIA Percent of
(concluded) Industries Shares Held Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
South Korea Automotive 66,214 Dong Ah Tire Industries $ 3,636,388 $ 4,882,669 0.7%
Chemicals 416,160 Hanwha Chemical Corp. 6,223,258 6,331,250 1.0
25,450 Korea Kumho Petrochemical Co., Ltd. 264,499 263,545 0.0
------------ ------------ ------
6,487,757 6,594,795 1.0
Food 9,120 Lotte Confectionery Corp. 1,300,327 979,391 0.1
Telecommunications 57,764 Korea Mobile Telecommunications Corp. 22,101,808 35,447,098 5.0
Utilities-- 163,300 Korea Electric Power Corp. 6,418,476 6,813,213 1.0
Electrical
& Gas
Total Investments in South Korea 39,944,756 54,717,166 7.8
Sri Lanka Appliances & 262,500 Lankan Tiles 337,398 212,838 0.0
Household
Durables
Total Investments in Sri Lanka 337,398 212,838 0.0
Taiwan Multi-Industry 72,000 Taiwan Fund, Inc. 1,484,811 1,638,000 0.2
Total Investments in Taiwan 1,484,811 1,638,000 0.2
Thailand Banking 1,456,000 Krung Thai Bank Public Co. Ltd. 6,874,574 6,867,380 1.0
690,800 Phatra Thanakit Public Co. Ltd. 7,324,993 6,352,184 0.9
920,700 Thai Farmers Bank, Ltd. 9,389,253 10,801,712 1.5
------------ ------------ ------
23,588,820 24,021,276 3.4
Financial 881,000 Finance One Public Company
Services Ltd., 'Foreign' 6,343,251 6,599,643 1.0
Telecommunications 530,000 Advanced Info Service Public
Company Ltd. 'Foreign' 9,978,887 10,167,261 1.4
Total Investments in Thailand 39,910,958 40,788,180 5.8
Total Investments in the
Pacific Basin/Asia 268,580,203 295,392,341 42.1
<PAGE>
SHORT-TERM Face
SECURITIES Amount
Commercial US$ 15,000,000 Corporate Asset Funding Co.
Paper* Inc., 5.35% due 5/02/1996 14,926,438 14,926,438 2.1
29,973,000 Ford Motor Credit Co., 5.50% due
4/01/1996 29,963,842 29,963,842 4.3
1,189,000 Matterhorn Capital Corp., 5.20%
due 4/08/1996 1,187,454 1,187,454 0.2
Total Investments in Short-Term
Securities 46,077,734 46,077,734 6.6
Total Investments $652,097,273 700,022,390 99.7
============
Other Assets Less Liabilities 1,856,197 0.3
------------ ------
Net Assets $701,878,587 100.0%
============ ======
Net Asset Value: Class A--Based on net assets of $337,892,372 and
23,263,159 shares outstanding $ 14.52
============
Class B--Based on net assets of $273,098,376 and
18,945,402 shares outstanding $ 14.42
============
Class C--Based on net assets of $39,736,533 and
2,762,321 shares outstanding $ 14.39
============
Class D--Based on net assets of $51,151,306 and
3,526,491 shares outstanding $ 14.50
============
<FN>
*Commercial Paper is traded on a discount basis; the interest rates
shown are the discount rates paid at the time of purchase by the
Fund.
(a)American Depositary Receipts (ADR).
(b)Global Depositary Receipts (GDR).
(c)Warrants entitle the Fund to purchase a predetermined number of
shares of stock at a predetermined price until the expiration date.
</TABLE>
<PAGE>
PORTFOLIO INFORMATION
Ten Largest Equity Holdings Percent of
As of March 31, 1996 Net Assets
Korea Mobile Telecommunications Corp. 5.0%
Telecomunicacoes Brasileiras S.A.--Telebras* 4.3
Grupo Carso, S.A. de C.V.* 3.2
Technology Resources Industries BHD 2.8
Kimberly-Clark de Mexico, S.A. de C.V.* 2.7
New Straits Times Press BHD 1.9
Tingyi (Cayman Islands) Holdings, Co. 1.9
Malayan Banking BHD 1.7
C.P. Pokphand Co. Ltd. (Ordinary) 1.6
Ergo Bank S.A. (Ordinary) 1.5
[FN]
*Includes combined holdings.
EQUITY PORTFOLIO CHANGES
For the Quarter Ended March 31, 1996
Additions
<PAGE>
Advanced Info Service Public Company
Ltd. 'Foreign'
Bombay Suburban Electric Supply Co.
Ltd. (GDR)
Chilectra Generacion S.A. (Chilgener)
(ADR)
Companhia Cervejaria Brahma S.A. PN
(Warrants)
Companhia Energetica de Minas Gerais
S.A. (CEMIG) (Preferred)
Companhia Naviera Perez Companc
S.A.C.F.I.M.F.A. (Class B)
Companhia Siderurgica Nacional S.A.
Companhia Vale do Rio Doce S.A.
(Preferred)
East India Hotels Ltd.
Eregli Demir Ve Celik Fabrikalari T.A.S.
First National Bank Holdings Ltd.
Gedeon Richter Ltd.
Grupo Televisa, S.A. de C.V. (ADR)
Hanwha Chemical Corp.
Inversiones y Representaciones S.A.
Korea Kumho Petrochemical Co., Ltd.
Krung Thai Bank Public Co. Ltd.
Light Participacoes S.A.
Mahanagar Telephone Nigam Ltd.
Mol Magyar Olay-es Gazipari Rt. (GDR)
Pakistan Telecommunications Corp.
Phatra Thanakit Public Co. Ltd.
Siderurgica Venezolana SIVENSA,
S.A.I.C.A.--S.A.C.A. (ADR)
Sinocan Holdings Ltd.
Sun International, Ltd.
Technology Resources Industries BHD
*TelecomAsia Corporation Public Co. Ltd.
Telecomunicacoes de Minejeros S.A.--
TELEMIG (Class B) (Preferred)
Tingyi (Cayman Islands) Holdings, Co.
<PAGE>
Deletions
Advanced Semiconductor Engineering, Inc.
(GDR)
Aitken Spence
The Associated Cement Co. Ltd.
Astra Compania Argentina de Petroleo S.A.
Banco Bradesco S.A. (Preferred)
(Receipts)
Brasmotor Group S.A. (Preferred)
Burswood Property Trust Ltd.
Cementos Mexicanos, S.A. de C.V.
(Class B)(ADR)
Centrais Eletricas Brasileiras S.A.--
Eletrobras (Preferred)
Cheung Kong (Holdings) Ltd. (Warrants)
Chilectra Generacion S.A. (Chilgener)
China Light & Power Co., Ltd. (Warrants)
Citic Pacific Ltd. (Warrants)
City Developments Ltd.
Credicorp S.A.
Cycle & Carriage Ltd.
Editorial Lord Cochrane S.A. (Rights)
Ege Biracilik Ve Malt Sanayii A.S.
Establecimentos Jeronimo Martins &
Filho S.A.
Hang Seng Bank Ltd. (Warrants)
Hong Kong & China Gas Co., Ltd. (Warrants)
Hong Kong Electric Holdings, Ltd.
(Warrants)
Hutchison Whampoa Ltd. (Warrants)
Jurong Shipyard Ltd.
Kerevitas Gida Sanayii Ve Ticaret A.S.
Korea Mobile Telecommunications Corp.
(GDR)
La Cemento Nacional C.A. (GDR)
Mardia Chemical Ltd.
The Morgan Stanley Africa Investment
Fund, Inc.
National Australia Bank Ltd.
New South Africa Fund, Inc.
P.T. Indonesian Satellite Corp. (ADR)
P.T. Supreme Cable Manufacturing Corp.
(Sucaco)
P.T. Tambang Timah (GDR)
Pacific Dunlop Ltd.
Pick Szeged Reszvenytarsasag (ADR)
Raymond Woolen Mills Ltd.
Shenzhen China Bicycles Co. (Holdings)
Ltd. 'B'
Sociedade de Construcoes Soares da
Costa S.A.
Sociedade de Empreitadas Somague S.A.
Southern Peru Copper Corp. S.A.
(T Shares)
Sun Hung Kai Properties Ltd. (Warrants)
Swarzedzkie Fabryki Mebli S.A.
*TelecomAsia Corporation Public Co. Ltd.
Tenaga Nasional BHD
Videocon International Ltd. (GDR)
Wharf (Holdings) Ltd. (Warrants)
Wielkopolski Bank Kredytowy
<PAGE>
[FN]
*Added and deleted in the same quarter.
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
