MERRILL
LYNCH
LATIN
AMERICA
FUND, INC.
FUND LOGO
Semi-Annual Report May 31, 1994
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 fluctua-
tions, 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 com-
panies 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.
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.
Merrill Lynch
Latin America Fund, Inc.
Box 9011
Princeton, NJ 08543-9011
<PAGE>
MERRILL LYNCH LATIN AMERICA FUND, INC.
Asset Allocation
As a Percentage* of
Net Assets as of
May 31, 1994
GRAPHIC MATERIAL APPEARS HERE. SEE APPENDIX:
GRAPHIC AND IMAGE MATERIALS. ITEM 1.
DEAR SHAREHOLDER
During the six-month period ended May 31, 1994, Merrill Lynch
Latin America Fund, Inc.'s Class A and Class B Shares rose 10.76%
and 10.36%, respectively. During the same period, the unmanaged
Morgan Stanley Latin America Free Index rose 16.19%. However,
during the three-month period ended May 31, 1994, Class A and
Class B Shares' total returns were -10.18% and -10.31%, respec-
tively. This resulted from the general weakness in world markets
related to tightening liquidity in the United States and to
the political concerns in Mexico and Brazil related to presi-
dential elections in those countries. We expected this vola-
tility, as discussed in our last report to shareholders. (Com-
plete performance information, including average annual total
returns, can be found on pages 4 and 5 of this report to share-
holders.)
Although cash inflows into our portfolio increased significantly
in the beginning of the year, we refrained from investing aggres-
sively and allowed our cash position to build. This muted some-
what the volatility of our per share net asset values this year
and enabled us to purchase stocks at more attractive prices.
<PAGE>
Investment Overview
In our annual report dated November 30, 1993, we noted that 1993
was a quiet year for Latin American stock markets, compared to
the turbulent market swings of past years. In 1994, however, we
have seen a resurgence of volatility, suggesting to some that
our targeted markets have become less attractive for investment.
On the contrary, we feel that Latin American markets will perform
very well for the following reasons. In the near term, stock valu-
ations have become more attractive because stock prices have de-
clined at the same time that corporate earnings are generally
improving and, with domestic inflation rates still declining (with
the exception of Brazil), short-term interest rates can decouple
from those of the United States. In the long term, the countries
in which we invest remain on track with fundamental improvements
in productivity, inflation, fiscal discipline and democrati-
zation. Furthermore, potential and sustainable growth rates are
superior to those of the major economies, particularly the United
States. But, as we have frequently noted before, a country's trans-
ition to "first world" status takes place over years and during
that time it will experience economic, political and market traumas.
These events do not necessarily reverse the country's past
achievements or halt its progress. It is during these periods that
we find the most attractive opportunities to invest.
Thus, having accumulated a large cash position of more than 15%
of net assets during the first fiscal quarter of this year, we
have more recently been steadily accumulating stock through-
out the region. Among our recent purchases was Cementos Diamante
S.A., a Colombian cement producer. This company has been invest-
ing actively to expand production capacity in recent years;
therefore, although it does not command the largest market share
in the country, it will be in the best position to supply the
market just as demand is starting to accelerate.
<PAGE>
Over the past six months, the Fund was underweighted in the Mexi-
can market. In large part, this was because of our concerns
regarding the delayed recovery of the economy, the potential
oversupply of equity issues, and the normal market nervousness
that we expect before elections, which will take place in August.
Of course, we had not expected the Chiapas uprising or the
assassination of the leading presidential candidate. These
magnified the market's correction and aggravated speculation
against the peso. As a result, the Mexican stock market's per-
formance has lagged that of the region. During this period
of uncertainty, we increased our investments in Mexico. One
of the stocks that we purchased was Vitro, S.A. de C.V., a com-
pany which provides glass to the automotive and construction
industries in Mexico and owns Anchor Glass in the United States.
For several years, it has underperformed the Mexican stock
market, but with economic recovery underway in both the United
States and Mexico, we expect Vitro's stock to prove to be an
outperformer.
In Conclusion
We appreciate your ongoing interest in Merrill Lynch Latin Amer-
ica Fund, Inc., and we look forward to assisting you with your
financial needs and objectives in the months and years ahead.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Grace Pineda)
Grace Pineda
Vice President and Portfolio Manager
June 30, 1994
<PAGE>
Officers and
Directors
Arthur Zeikel, President and Director
Donald Cecil, Director
Edward H. Meyer, Director
Charles C. Reilly, Director
Richard R. West, 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
Chase MetroTech Center
Brooklyn, New York 11245
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
PERFORMANCE DATA
None of the past results shown should be considered a representation
of future performance. Investment return and principal value of
Class A and Class B Shares will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
<PAGE>
<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>
9/27/91--12/31/91 $10.00 $10.31 -- $0.125 + 4.40%
1992 10.31 10.19 -- 0.326 + 2.15
1993 10.19 16.62 -- 0.108 +64.27
1/1/94--5/31/94 16.62 15.89 -- -- - 4.39
------
Total $0.559
Cumulative total return as of 5/31/94: +67.50%**
<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**
<C> <C> <C> <C> <C> <C>
9/27/91--12/31/91 $10.00 $10.32 -- $0.098 + 4.22%
1992 10.32 10.22 -- 0.227 + 1.34
1993 10.22 16.61 -- 0.048 +63.05
1/1/94--5/31/94 16.61 15.83 -- -- - 4.70
------
Total $0.373
Cumulative total return as of 5/31/94: +64.12%**
<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>
Recent
Performance
Results*
<CAPTION>
12 Month 3 Month
5/31/94 2/28/94 5/31/93 % Change % Change
<S> <C> <C> <C> <C> <C>
Class A Shares $15.89 $17.69 $10.59 +50.05% -10.18%
Class B Shares 15.83 17.65 10.59 +49.48 -10.31
Class A Shares--Total Return +51.13(1) -10.18
Class B Shares--Total Return +49.96(2) -10.31
<FN>
*Investment results shown for the 3-month and 12-month periods are before
the deduction of any sales charges.
(1) Percent change includes reinvestment of $0.108 per share income dividends.
(2) Percent change includes reinvestment of $0.048 per share income dividends.
</TABLE>
Average Annual
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 3/31/94 +55.72% +49.49%
Inception (9/27/91) through 3/31/94 +24.52 +22.52
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 3/31/94 +54.58% +50.58%
Inception (9/27/91) through 3/31/94 +23.58 +23.00
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0% after
4 years.
**Assuming payment of applicable contingent deferred sales charge.
<PAGE>
<TABLE>
CONSOLIDATED SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
Value Percent of
COUNTRY Industries Shares Held Long-Term Investments Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
Argentina Automobiles 737,802 Compania Interamericana de Automoviles
S.A. $ 9,869,984 $ 10,940,256 1.2%
Banking 521,826 Banco de Galicia y Buenos Aires S.A.
(ADR)(2) 3,250,066 4,930,187 0.6
51,750 Banco de Galicia y Buenos Aires S.A.
(Preferred) (ADR)(2) 1,049,513 1,953,563 0.2
185,000 Banco del Sud S.A. 3,224,461 3,243,663 0.4
658,180 Banco Frances del Rio de la Plata S.A. 3,854,286 6,877,885 0.8
------------ ------------ ------
11,378,326 17,005,298 2.0
Beverages 1,746 Buenos Aires Embotelladora S.A.(BAESA) 1,759,894 3,008,837 0.3
91,000 Buenos Aires Embotelladora S.A.(BAESA)
(ADR)(2) 2,575,194 3,162,250 0.4
------------ ------------ ------
4,335,088 6,171,087 0.7
Food 231,860 Quilmes Industrial S.A.(1) 2,433,587 5,506,675 0.6
Oil & Related 3,366,341 Astra Compania Argentina de Petroleo
S.A.(1) 7,867,080 7,656,141 0.9
1,818,621 Compania Naviera Perez Companc
S.A.C.F.I.M.F.A. 10,376,142 9,875,690 1.1
------------ ------------ ------
18,243,222 17,531,831 2.0
Real Estate 1,203,565 Inversiones y Representaciones S.A. (IRSA) 3,138,864 4,847,542 0.5
Tobacco 49,980 Massalin Particulares S.A. 508,374 741,112 0.1
Utilities 9,500 Central Costanera S.A.(Class B)(1) 228,000 353,875 0.0
866,000 Telecom Argentina Stet-France Telecom S.A. 5,307,028 5,596,333 0.6
270,580 Telecom Argentina Stet-France Telecom S.A.
(ADR)(1)(2) 15,682,783 17,587,700 2.0
525,000 Telefonica de Argentina S.A. 3,009,246 3,787,196 0.4
70,276 Telefonica de Argentina S.A.(ADR)(2) 2,132,935 5,068,657 0.6
100,000 Transportadora de Gas del Sur S.A.--
(ADR)(2) 1,374,370 1,400,000 0.2
------------ ------------ ------
27,734,362 33,793,761 3.8
Total Long-Term Investments in Argentina 77,641,807 96,537,562 10.9
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Value Percent of
COUNTRY Industries Shares Held Long-Term Investments Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
Brazil Appliances & 13,980,500 Brasmotor Group S.A.(Preferred) $ 1,730,444 $ 3,511,490 0.4%
Household Durables 1,016,000 Multibras S.A.(Preferred) 527,444 758,524 0.1
------------ ------------ ------
2,257,888 4,270,014 0.5
Automotive 210,500 Clark Automotive Products Corp.(ADR)(2) 2,278,777 2,262,875 0.3
Banking 1,607,384,620 Banco Bradesco S.A. 12,903,698 11,143,226 1.2
286,000,000 Banco Bradesco S.A.(Preferred) 2,022,206 1,982,701 0.2
48,703,753 Banco Bradesco S.A.(Rights)(b) 0 0 0.0
15,500,400 Banco Itau S.A.(Preferred) 2,460,710 3,141,046 0.4
148,566,371 Banco Nacional S.A. PN 8,610,290 6,338,088 0.7
5,745,718 Uniao de Bancos Brasileiros S.A.
(UNIBANCO) 397,694 413,643 0.0
------------ ------------ ------
26,394,598 23,018,704 2.5
Beverages 18,467,072 Companhia Cervejaria Brahma S.A.
(Preferred) 3,657,137 4,234,717 0.5
1,880,905 ++Companhia Cervejaria Brahma S.A.
(Warrants)(a) 48,935 3,324 0.0
------------ ------------ ------
3,706,072 4,238,041 0.5
Building & 547,000 Companhia Cimento Portland Itau S.A. PN 134,354 134,182 0.0
Construction
Electrical & 675,841 Companhia Energetica de Sao Paulo S.A.
Electronics (CESP) 416,613 803,706 0.1
30,028,000 Light-Servicios de Electricidade S.A. 9,998,926 6,645,418 0.7
------------ ------------ ------
10,415,539 7,449,124 0.8
Food 11,130,409 Sadia Concordia S.A. Industria e Comercio
(Preferred) 9,486,950 10,090,387 1.1
Machinery 8,709,000 Iochpe-Maxion S.A.(Ordinary) 3,583,312 3,715,404 0.4
33,699,765 Iochpe-Maxion S.A.(Preferred) 13,685,869 17,791,388 2.0
------------ ------------ ------
17,269,181 21,506,792 2.4
<PAGE>
Mining 119,256,800 Companhia Vale do Rio Doce S.A. 11,706,662 12,083,271 1.4
Oil & Related 196,280,000 Petroleo Brasileiro S.A. 25,605,391 19,364,021 2.2
Paper 364,851 Aracruz Celulose S.A.(Preferred) 647,358 705,296 0.1
Retail 2,910,880 Casa Anglo Brasileira S.A. 720,608 564,256 0.1
10,778,600 Lojas Americanas S.A. 2,125,943 2,644,040 0.3
13,896,600 Mesbla S.A. 3,127,325 2,000,876 0.2
------------ ------------ ------
5,973,876 5,209,172 0.6
Steel 3,192,700 Acos Industria Villares S.A. 714,377 664,004 0.1
272,560,000 Companhia Metalurgica Barbara S.A. 267,266 232,557 0.0
111,018,000 Companhia Siderurgica Nacional S.A.--CSN 3,016,081 2,989,734 0.3
11,911,682,013 Usinas Siderurgicas de Minas Gerais--
Usiminas S.A.(Preferred) 6,628,103 12,513,734 1.4
------------ ------------ ------
10,625,827 16,400,029 1.8
Telecommuni- 37,000 Telecomunicacoes Brasileiras S.A.--
cations Telebras (ADR)(1)(2) 1,267,125 1,387,500 0.2
45,827,897 Telecomunicacoes Brasileiras S.A.--
Telebras (Ordinary) 1,515,919 1,344,372 0.2
448,718,300 Telecomunicacoes Brasileiras S.A.--
Telebras (Preferred) 15,012,875 17,228,761 1.9
60,723,102 Telecomunicacoes de Minejeros S.A.--
TELEMIG (Ordinary) 2,682,475 1,505,756 0.2
30,839,600 Telecomunicacoes de Sao Paulo S.A.--TELESP
(Preferred) 9,329,264 8,962,992 1.0
4,430,936 Telecomunicacoes Parana S.A.--TELEPAR
(Preferred) 754,996 811,652 0.1
------------ ------------ ------
30,562,654 31,241,033 3.6
Textiles 873,000 Brasperola Industria e Comercio S.A. 931,692 833,326 0.1
3,697,363 Companhia de Tecidos Norte de Minas S.A. 895,127 867,546 0.1
------------ ------------ ------
1,826,819 1,700,872 0.2
Transportation 165,000 Marcopolo S.A. Carrocerias E Onibus 'B'
(Preferred) 25,066 30,180 0.0
<PAGE>
Utilities 26,910,700 Centrais Eletricas Brasileiras S.A.--
'B'(Preferred) 6,721,678 5,338,457 0.6
4,387,500 Centrais Eletricas da Santa Catarina S.A.
(CELESC) 764,541 2,035,538 0.2
34,321,009 Companhia Energetica de Minas Gerais S.A.
(CEMIG) 1,625,256 2,086,473 0.2
203,820,000 Companhia Paulista de Forca e Luz S.A. 11,896,753 7,504,044 0.8
------------ ------------ ------
21,008,228 16,964,512 1.8
Total Long-Term Investments in Brazil 179,925,240 176,668,505 19.8
Chile Apparel 2,894,106 Bata Chile S.A. 816,779 755,462 0.1
Banking 202,900 Banco O'Higgins S.A.(ADR)(2) 3,101,779 3,576,113 0.4
Beverages 29,500 Embotelladora Andina S.A. 114,926 102,557 0.0
2,704,625 Vina Concha y Toro S.A. 1,176,792 994,819 0.1
------------ ------------ ------
1,291,718 1,097,376 0.1
Building & 338,225 Empresas Pizarreno S.A. 644,310 597,151 0.1
Construction 102,100 Maderas y Sinteticos S.A.(MASISA)
(Foreign)(ADR)(2) 1,911,656 2,807,750 0.3
128,445 Maderas y Sinteticos S.A.(MASISA)
(Ordinary) 57,151 115,826 0.0
------------ ------------ ------
2,613,117 3,520,727 0.4
Chemicals 341,000 Sociedad Quimica y Minera de Chile S.A.
(ADR)(2) 10,825,726 9,633,250 1.1
Closed-End Funds 194,984 The Chile Fund, Inc. 5,611,483 9,286,113 1.0
Food & Household 37,500 Cristalerias de Chile S.A.(ADR)(2) 895,312 759,375 0.1
Products
Pharmaceutical 2,838,804 Laboratorio Chile S.A.(LABCHILE) 2,115,737 2,223,079 0.2
Retail Sales 400,000 Santa Isabel S.A. 281,952 256,289 0.0
Steel 509,056 Compania de Acero del Pacifico S.A.
de Inv.(CAP) 2,879,914 2,621,385 0.3
Telecommuni- 213,118 Empresa Nacional de Telecomunicaciones S.A.
cations (Entel) 1,449,275 2,730,985 0.3
<PAGE>
Utilities 213,325 Compania de Telefonos de Chile S.A.
(ADR)(2) 24,485,793 19,412,575 2.2
144,000 Distribuidora Chilectra Metropolitana S.A.
(Chilectra)(ADR)(1)(2) 3,815,919 6,246,000 0.7
5,531,748 Empresa Nacional de Electricidad S.A.--
ENDESA 2,255,686 4,095,646 0.5
34,000 Enersis S.A.(ADR)(2) 618,250 782,000 0.1
------------ ------------ ------
31,175,648 30,536,221 3.5
Total Long-Term Investments in Chile 63,058,440 66,996,375 7.5
</TABLE>
<TABLE>
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Shares Held/ Value Percent of
COUNTRY Industries Face Amount Long-Term Investments Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
Colombia Banking 397,971 Banco de Bogota S.A. $ 1,449,888 $ 2,673,264 0.3%
10,995,000,000 Banco de Colombia S.A. 1,033,874 823,525 0.1
US$ 9,000,000 Banco de Colombia, 5.20% due
2/01/1999 (1) 11,347,500 10,777,500 1.2
------------ ------------ ------
13,831,262 14,274,289 1.6
Beverages & 582,642 La Compania Cervecera Bavaria S.A. 3,376,697 2,909,331 0.3
Tobacco
Building 177,500 Cementos Diamante S.A. 2,722,850 3,106,250 0.3
Products
Retail 1,428,814 Gran Cadena de Almacenes Colombianos S.A.
(CADENALCO) 4,043,019 3,737,149 0.4
Tobacco 69,200 La Compania Colombiano de Tabaco S.A.
(COLTABACO) 356,988 374,334 0.0
Total Long-Term Investments in Colombia 24,330,816 24,401,353 2.6
Mexico Banking 144,800 Grupo Financiero Bancomer, S.A. de C.V.
(ADR)(1)(2) 4,418,248 4,325,900 0.5
350,000 Grupo Financiero Bancomer, S.A. de C.V.
'B' (Ordinary) 547,559 365,593 0.0
826,528 Grupo Financiero Probursa, S.A. de C.V.
'C' 898,015 933,016 0.1
581,900 Servicios Financieros Quadrum, S.A. de
C.V. (ADR)(2) 10,311,887 10,474,200 1.2
------------ ------------ ------
16,175,709 16,098,709 1.8
<PAGE>
Beverages & 25,600 Coca-Cola Femsa S.A. de C.V.(ADR)(2) 543,499 796,800 0.1
Tobacco 449,000 Fomento Economico Mexicano, S.A. de C.V.
(Femsa)(ADR)(1)(2) 2,483,860 2,115,913 0.2
683,500 Fomento Economico Mexicano, S.A. de C.V.
(Femsa)(Ordinary) 2,530,446 3,353,718 0.4
226,250 Grupo Embotellador de Mexico, S.A. de C.V.
(GGEMEX)(ADR)(1)(2) 4,301,661 6,504,687 0.7
180,000 Grupo Embotellador de Mexico, S.A. de C.V.
(GGEMEX)(Ordinary) 3,310,000 2,573,751 0.3
------------ ------------ ------
13,169,466 15,344,869 1.7
Building & 952,000 Apasco, S.A. de C.V.'A' 3,981,143 7,852,137 0.9
Construction 67,500 Bufete Industrial, S.A.(ADR)(2) 1,552,500 2,278,125 0.3
162,000 Cementos Mexicanos, S.A. de C.V.(Class B)
(Cemex)(ADR)(1)(2) 2,912,366 2,308,500 0.3
1,665,562 Cementos Mexicanos, S.A. de C.V. Nom
'B'(Cemex) 11,388,997 12,308,714 1.4
1,918,500 Grupo Financiero Banamex-Accival,
S.A. de C.V. 18,565,861 14,380,087 1.6
565,542 Grupo Tribasa, S.A. de C.V. (ADR) (2) 11,750,104 15,693,790 1.8
126,795 Internacional de Ceramica, S.A. de C.V.
'B' 433,309 724,434 0.1
251,000 Internacional de Ceramica, S.A. de C.V.
'C' 1,040,715 1,428,025 0.2
968,500 Tolmex, S.A. de C.V.'B' 7,811,843 11,078,567 1.2
------------ ------------ ------
59,436,838 68,052,379 7.8
Chemicals 972,300 Grupo Cydsa, S.A. de C.V. 3,467,300 3,348,318 0.4
Diversified 105,000 Grupo Carso, S.A. de C.V.'A' 2,035,998 2,100,000 0.2
3,113,500 Grupo Carso, S.A. de C.V.(ADR)(2) 27,436,678 31,022,532 3.5
------------ ------------ ------
29,472,676 33,122,532 3.7
Electrical 1,118,000 Groupo Empresarial Fenix, S.A. de C.V.
Elektra 'L' Shares 10,234,015 10,803,070 1.2
Engineering & 77,200 Grupo Mexicano de Desarrollo, S.A. de
Construction C.V.(Class B) 1,312,400 1,244,850 0.1
127,200 Grupo Mexicano de Desarrollo, S.A. de C.V.
(Class L)(ADR)(2) 2,286,025 2,194,200 0.2
------------ ------------ ------
3,598,425 3,439,050 0.3
Financial 195,000 Grupo Financiero (GBM) Atlantico, S.A.
Services de C.V. 4,145,147 3,778,125 0.4
<PAGE>
Food 3,253,846 Grupo Herdez, S.A. de C.V.'A' 3,295,834 2,791,530 0.3
5,012,461 Grupo Herdez, S.A. de C.V.'B' 6,285,722 6,231,627 0.7
6,249,189 Grupo Industrial Maseca, S.A. de C.V.
'B2' 7,035,714 10,271,093 1.1
------------ ------------ ------
16,617,270 19,294,250 2.1
Glass 1,590,938 Vitro, S.A. de C.V. 11,381,655 10,895,196 1.2
Manufacturing 306,305 Vitro, S.A. de C.V.(ADR)(2) 6,092,934 6,317,541 0.7
------------ ------------ ------
17,474,589 17,212,737 1.9
Health & 134,500 Controladora de Farmacias, S.A. de
Personal Care C.V.(COFAR) 199,608 202,438 0.0
1,322,250 Kimberly-Clark de Mexico, S.A. de C.V.
'A' 17,536,911 27,742,572 3.1
940,500 Nacional de Drogas, S.A. de C.V. (Nadro)
'L' 3,973,720 6,228,477 0.7
------------ ------------ ------
21,710,239 34,173,487 3.8
Leisure 1,882,500 Grupo Posadas, S.A. de C.V.'A' 1,819,673 1,354,357 0.2
434,300 Grupo Posadas, S.A. de C.V.(ADR)(1)(2) 6,723,293 7,763,112 0.9
547,040 Grupo Situr, S.A. de C.V.(ADR)(1)(2) 7,514,491 15,795,780 1.8
------------ ------------ ------
16,057,457 24,913,249 2.9
Merchandising 656,000 Farmacias Benavides, S.A. de C.V. 2,926,674 3,278,025 0.4
Metals & Steel 393,000 Grupo Industrial Alfa, S.A. de C.V. 3,610,739 3,495,831 0.4
US$ 16,000,000 Grupo Sidek, S.A. de C.V., 6.73%
due 7/27/1994 15,831,359 15,851,392 1.8
543,000 Grupo Sidek, S.A. de C.V.'B' 2,566,839 2,428,952 0.3
338,500 Grupo Simec, S.A. de C.V.(ADR)(2) 8,485,259 8,462,500 0.9
1,830,000 Grupo Simec, S.A. de C.V.(Ordinary) 1,645,949 2,258,579 0.3
422,000 Tubos de Acero de Mexico, S.A. de C.V.
(Tamsa) 3,637,953 2,337,387 0.3
65,000 Tubos de Acero de Mexico, S.A. de C.V.
(Tamsa)(ADR)(2) 361,385 357,500 0.0
------------ ------------ ------
36,139,483 35,192,141 4.0
Retail 4,650,000 Cifra, S.A. de C.V.'C' 9,166,230 12,233,895 1.4
1,675,000 Controladora Comercial Mexicana, S.A. de
C.V.(COMERCI) 2,568,678 2,974,865 0.3
2,650,000 El Puerto de Liverpool, S.A. de C.V.
(Non-Voting)(Series C1) 3,531,930 3,988,561 0.4
8,740,000 Grupo Gigante, S.A. de C.V. 6,700,899 5,367,128 0.6
137,500 Sears Roebuck de Mexico, S.A. de C.V.'B' 1,280,978 1,821,192 0.2
------------ ------------ ------
23,248,715 26,385,641 2.9
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
Shares Held/ Value Percent of
COUNTRY Industries Face Amount Long-Term Investments Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
Mexico Transportation 232,000 Transportacion Maritima Mexicana, S.A.
(concluded) de C.V. 'L'(TMM) $ 2,281,781 $ 1,969,416 0.2%
Utilities 701,400 Telefonos de Mexico, S.A. de C.V.
(Telmex)(ADR)(2) 43,706,765 43,574,475 4.9
Total Long-Term Investments in Mexico 319,862,549 359,980,473 40.4
Panama Banking 80,000 Banco Latinoamericano de Exportaciones,
S.A. ("BLADEX")'E' 1,992,245 2,760,000 0.3
Beverages & 275,360 Panamerican Beverages Inc.(Class A) 8,479,005 8,226,380 0.9
Tobacco
Total Long-Term Investments in Panama 10,471,250 10,986,380 1.2
Peru Banking 1,483,823 Banco de Credito de Peru S.A. 2,033,580 4,208,464 0.5
1,976,058 Banco Wiese Limitado S.A. 7,194,477 8,452,032 0.9
------------ ------------ ------
9,228,057 12,660,496 1.4
Building & 666,282 Cementos Lima S.A. 660,209 1,356,338 0.2
Construction
Food 1,996,578 La Fabril S.A. 4,989,105 4,566,738 0.5
Mining 1,513,304 Southern Peru Copper Corp. S.A. 4,689,412 5,815,075 0.7
Total Long-Term Investments in Peru 19,566,783 24,398,647 2.8
Venezuela Building & 857,397 Corporacion Ceramica Carabobo 'B' 2,173,661 1,240,969 0.1
Construction 881,460 Corporacion Ceramica Carabobo C.A. 2,526,679 1,130,820 0.1
------------ ------------ ------
4,700,340 2,371,789 0.2
Cement 413,663 Venezolana de Cementos S.A.C.A.(Vencemos) 560,121 843,655 0.1
Food & Household 10,052,924 Mavesa S.A. 2,587,936 3,373,021 0.4
Products 366,666 Mavesa S.A.(ADR)(1)(2) 4,010,625 2,383,329 0.3
380,000 Mavesa S.A.(ADR)(2) 3,519,375 2,470,000 0.3
------------ ------------ ------
10,117,936 8,226,350 1.0
<PAGE>
Foreign Government US$ 5,750,000 Republic of Venezuela, Floating Rate
Obligations Notes, 4.625% due 12/18/2007 (4) 4,300,625 3,148,125 0.4
Multi-Industry 2,756,823 Venaseta S.A. 711,151 222,178 0.0
1,378,411 Venaseta S.A.'B' Shares 178,227 107,008 0.0
------------ ------------ ------
889,378 329,186 0.0
Steel 216,000 ++Siderurgica Venezolana SIVENSA,
S.A.I.C.A.-S.A.C.A.(ADR)(2) 1,231,384 351,000 0.0
168,500 Venezolana de Prerreducidos Caroni
'Venprecar' C.A.(GDS)(1)(3) 1,230,050 1,232,156 0.1
------------ ------------ ------
2,461,434 1,583,156 0.1
Utilities 6,099,641 C.A. La Electricidad de Caracas
S.A.I.C.A.-S.A.C.A. 18,948,589 15,369,490 1.7
Total Long-Term Investments in Venezuela 41,978,423 31,871,751 3.5
Total Long-Term Investments in Latin
America 736,835,308 791,841,046 88.7
<CAPTION>
Short-Term Investments
<S> <S> <C> <S> <C> <C> <C>
United Commercial Paper* US$ 20,755,000 General Electric Capital Corp., 4.22%
States due 6/01/1994 20,755,000 20,755,000 2.3
Matterhorn Capital Corp.:
20,000,000 3.87% due 6/10/1994 19,980,650 19,980,650 2.2
20,000,000 4.20% due 6/14/1994 19,969,667 19,969,667 2.2
38,000,000 Xerox Corp., 3.95% due 6/14/1994 37,945,797 37,945,797 4.2
------------ ------------ ------
98,651,114 98,651,114 10.9
Total Short-Term Investments 98,651,114 98,651,114 10.9
Total Investments $835,486,422 890,492,160 99.6
============
Other Assets Less Liabilities 3,542,111 0.4
------------ ------
Net Assets $894,034,271 100.0%
============ ======
<PAGE>
<FN>
(1) Restricted security pursuant to Rule 144A. The value of the Fund's
investment in restricted securities was approximately $91,945,000,
representing 10.3% of net assets.
(2) American Depositary Receipt (ADR).
(3) Global Depositary Receipt (GDS).
(4) The interest rate is subject to change periodically based on the change
in the LIBOR (London Interbank Offered Rate). The interest rate shown
is the rate in effect as of May 31, 1994.
*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) Warrants entitle the Fund to purchase a predetermined number of
shares of Common Stock. The purchase price and number of shares are
subject to adjustment under certain conditions until the expiration date.
(b) The rights may be exercised until 7/14/1994. The rights entitle the holder
to purchase one preferred share of Bancho Bradesco S.A., at BRC5, for
every right held.
++Non-income producing security.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENT OF ASSETS AND LIABILITIES
<CAPTION>
As of May 31, 1994
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$835,486,422) (Note 1a) $890,492,160
Foreign cash 225,505
Receivables:
Capital shares sold $ 9,380,801
Dividends 1,901,979
Securities sold 1,387,373
Interest 268,891 12,939,044
------------
Deferred organization expenses (Note 1g) 65,924
Prepaid registration fees and other assets (Note 1g) 39,603
------------
Total assets 903,762,236
<PAGE>
Liabilities: Payables:
Securities purchased 4,842,264
Capital shares redeemed 1,239,798
Investment adviser (Note 2) 738,549
Distributor (Note 2) 632,366 7,452,977
------------
Accrued expenses and other liabilities 2,274,988
------------
Total liabilities 9,727,965
------------
Net Assets: Net assets $894,034,271
============
Net Assets Class A Common Stock, $0.10 par value, 100,000,000 shares authorized $ 1,080,989
Consist of: Class B Common Stock, $0.10 par value, 100,000,000 shares authorized 4,561,377
Paid-in capital in excess of par 827,652,412
Undistributed investment income--net 2,293,114
Undistributed realized capital gains and foreign currency transactions (Note 5) 4,304,474
Unrealized appreciation on investments and foreign currency transactions 54,141,905
------------
Net assets $894,034,271
============
Net Asset Class A--Based on net assets of $171,813,724 and 10,809,892 shares outstanding $ 15.89
Value: ============
Class B--Based on net assets of $722,220,547 and 45,613,769 shares outstanding $ 15.83
============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENT OF OPERATIONS
<CAPTION>
For the Six Months Ended May 31, 1994
<S> <S> <C> <C>
Investment Dividends (net of $856,315 foreign withholding tax) $ 8,580,984
Income Interest and discount earned 2,428,830
(Notes 1e & 1f): ------------
Total income 11,009,814
------------
Expenses: Investment advisory fees (Note 2) 3,934,708
Distribution fees--Class B (Note 2) 3,154,737
Custodian fees 485,765
Foreign tax expense (Note 1e) 361,368
Transfer agent fees--Class B (Note 2) 301,830
Account maintenance fees--Class A (Note 2) 194,993
Registration fees (Note 1g) 131,745
Printing and shareholder reports 96,665
Transfer agent fees--Class A (Note 2) 67,010
Accounting services (Note 2) 41,687
Professional fees 28,405
Directors' fees and expenses 11,661
Amortization of organization expenses (Note 1g) 8,699
Other 10,305
------------
Total expenses 8,829,578
------------
Investment income--net 2,180,236
------------
Realized & Realized gain from:
Unrealized Investments--net $ 6,827,573
Gain on Foreign currency transactions--net 388,213 7,215,786
Investments-- ------------
Net & Foreign Change in unrealized appreciation/depreciation on:
Currency Investments--net (22,784,656)
Transactions Foreign currency transactions--net (846,191) (23,630,847)
(Notes 1c, ------------ ------------
1f & 3): Net realized and unrealized loss on investments and foreign currency transactions (16,415,061)
------------
Net Decrease in Net Assets Resulting from Operations $(14,234,825)
============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CHANGES OF NET ASSETS
<CAPTION>
For the Six For the
Months Ended Year Ended
May 31, 1994 Nov. 30, 1993
Increase (Decrease) in Net Assets:
<S> <S> <C> <C>
Operations: Investment income--net $ 2,180,236 $ 2,584,432
Realized gain on investments and foreign currency transactions--net 7,215,786 3,297,579
Change in unrealized appreciation/depreciation on investments and
foreign currency transactions--net (23,630,847) 88,016,931
------------ ------------
Net increase (decrease) in net assets resulting from operations (14,234,825) 93,898,942
------------ ------------
Dividends & Investment income--net:
Distributions Class A (624,870) (714,383)
to Share- Class B (1,113,310) (1,699,059)
holders Realized gain on investments--net:
(Note 1h): Class A -- (289,614)
Class B -- (1,200,960)
------------ ------------
Net decrease in net assets resulting from dividends and distributions to shareholders (1,738,180) (3,904,016)
------------ ------------
Capital Share Net increase in net assets derived from capital share transactions 529,621,634 133,361,981
Transactions ------------ ------------
(Note 4):
Net Assets: Total increase in net assets 513,648,629 223,356,907
Beginning of period 380,385,642 157,028,735
------------ ------------
End of period* $894,034,271 $380,385,642
============ ============
<FN>
*Undistributed investment income--net $ 2,293,114 $ 1,851,058
============ ============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED FINANCIAL HIGHLIGHTS
<CAPTION>
Class A
For the
Period
The following per share data and ratios have been derived Sept. 27,
from information provided in the financial statements. For the Six For the Year Ended 1991++
Months Ended November 30, to Nov. 30,
Increase (Decrease) in Net Asset Value: May 31, 1994 1993 1992 1991
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 14.45 $ 9.90 $ 9.81 $ 10.00
Operating ---------- ---------- ---------- ----------
Performance: Investment income--net .07 .18 .15 .06
Realized and unrealized gain (loss) on investments
and foreign currency transactions--net 1.47 4.69 .06 (.25)
---------- ---------- ---------- ----------
Total from investment operations 1.54 4.87 .21 (.19)
---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.10) (.23) (.12) --
Realized gain on investments--net -- (.09) --++++ --
---------- ---------- ---------- ----------
Total dividends and distributions (.10) (.32) (.12) --
---------- ---------- ---------- ----------
Net asset value, end of period $ 15.89 $ 14.45 $ 9.90 $ 9.81
========== ========== ========== ==========
Total Based on net asset value per share 10.76%+++ 50.86% 2.19% (1.90%)+++
Investment ========== ========== ========== ==========
Return:**
Ratios to Expenses, excluding account maintenance fees 1.38%* 1.58% 1.64% 1.72%*
Average ========== ========== ========== ==========
Net Assets: Expenses 1.63%* 1.83% 1.89% 1.97%*
========== ========== ========== ==========
Investment income--net 1.12%* 1.83% 2.18% 4.05%*
========== ========== ========== ==========
Supplemental Net assets, end of period (in thousands) $ 171,814 $ 75,085 $ 30,685 $ 18,074
Data: ========== ========== ========== ==========
Portfolio turnover 11.12% 24.74% 36.50% 0%
========== ========== ========== ==========
<PAGE>
<CAPTION>
Class B
For the
Period
The following per share data and ratios have been derived Sept. 27,
from information provided in the financial statements. For the Six For the Year Ended 1991++
Months Ended November 30, to Nov. 30,
Increase (Decrease) in Net Asset Value: May 31, 1994 1993 1992 1991
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 14.39 $ 9.83 $ 9.80 $ 10.00
Operating ---------- ---------- ---------- ----------
Performance: Investment income--net .02 .10 .08 .04
Realized and unrealized gain (loss) on investments
and foreign currency transactions--net 1.47 4.68 .05 (.24)
---------- ---------- ---------- ----------
Total from investment operations 1.49 4.78 .13 (.20)
---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.05) (.13) (.10) --
Realized gain on investments--net -- (.09) --++++ --
---------- ---------- ---------- ----------
Total dividends and distributions (.05) (.22) (.10) --
---------- ---------- ---------- ----------
Net asset value, end of period $ 15.83 $ 14.39 $ 9.83 $ 9.80
========== ========== ========== ==========
Total Based on net asset value per share 10.36%+++ 49.80% 1.30% (2.00%)+++
Investment ========== ========== ========== ==========
Return:**
Ratios to Expenses, excluding account maintenance and
Average distribution fees 1.39%* 1.59% 1.65% 1.73%*
Net Assets: ========== ========== ========== ==========
Expenses 2.39%* 2.59% 2.65% 2.73%*
========== ========== ========== ==========
Investment income--net .41%* 1.09% 1.30% 3.28%*
========== ========== ========== ==========
Supplemental Net assets, end of period (in thousands) $ 722,221 $ 305,301 $ 126,344 $ 63,012
Data: ========== ========== ========== ==========
Portfolio turnover 11.12% 24.74% 36.50% 0%
========== ========== ========== ==========
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Commencement of Operations.
++++Amount less than $0.01 per share.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch Latin America Fund, Inc. (the "Fund") is registered
under the Investment Company Act of 1940 as a non-diversified,
open-end management investment company. The shares of the Fund
are divided into Class A Shares and Class B Shares. Class A Shares
are sold with a front-end sales charge. Class B Shares may be subject
to a contingent deferred sales charge. Both classes of shares have
identical voting, dividend, liquidation and other rights and the same
terms and conditions, except that Class A Shares bear the expenses
of the ongoing account maintenance fee with respect to the Class A
Shares and Class B Shares bear the expenses of the ongoing account
maintenance and distribution fees with respect to the Class B
Shares, and each class has exclusive voting rights with respect to
matters relating to their respective account maintenance and dis-
tribution plans. The following is a summary of significant accounting
policies followed by the Fund.
(a) Valuation of investments--Portfolio securities which are traded
on stock exchanges are valued at the last sale price on the principal
market 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. Securities traded in the over-the-counter
market are valued at the last available bid prices obtained from one
or more dealers in the over-the-counter market prior to the time of
valuation. Portfolio securities which are traded both in the over-the-
counter market and on a stock exchange are valued according to the
broadest and most representative market. Portfolio securities which
are traded on both the over-the-counter market and on a stock
exchange are valued at the closing bid price on such exchanges on
the day the securities are being valued or, if closing prices are
unavailable, at the last traded bid price available prior to the time of
valuation. Short-term securities with a remaining maturity of sixty
days or less are valued at amortized cost, which approximates market
value. Options written by the Fund are valued at the last asked price
in the case of exchange-traded options or, in the case of options
traded in the over-the-counter market, the average of the last asked
price as obtained from one or more dealers. Options purchased by
the Fund are valued at their last bid price in the case of exchange-
traded options or, in the case of options traded in the over-the-
counter market, the average of the last bid price as obtained from
two or more dealers, unless there is only one dealer, in which case
that dealer's price is used. 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 fair value as determined in good faith by or under the
direction of the Board of Directors of the Fund.
<PAGE>
(b) Repurchase agreements--The Fund invests in US Government
securities pursuant to repurchase agreements with a member bank
of the Federal Reserve System or a primary dealer in US Government
securities. Under such agreements, the bank or primary dealer agrees
to repurchase the security at a mutually agreed upon time and price.
The Fund takes possession of the underlying securities, marks to
market such securities and, if necessary, receives additions to such
securities daily to ensure that the contract is fully collateralized.
(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 and 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.
The Fund is authorized to enter into forward foreign exchange
contracts as a hedge against either specific transactions or portfolio
positions. Such contracts are not entered on the Fund's records.
However, the effect on operations is recorded from the date the Fund
enters into such contracts. Premium or discount is amortized over
the life of the contracts.
(d) Options--The Fund can write covered call options and purchase
put options. When the Fund sells 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 proceeds of the security sold. When an option
expires (or the Fund enters into a closing transaction), the Fund
realizes a gain or loss on the option to the extent of the premiums
received or paid (or gain or loss to the extent the cost of the closing
transaction exceeds the premium paid or received).
Written and purchased options are non-income producing
investments.
(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 interest, dividends and capital
gains at various rates.
<PAGE>
(f) Security transactions and investment income--Security trans-
actions are recorded on the dates the transactions are entered into
(the trade dates). Dividend income is recorded on the ex-dividend
dates except that if the ex-dividend date has passed, certain divi-
dends from foreign securities are recorded as soon as the Fund is
informed of the ex-dividend date. Interest income (including amor-
tization of discount) is recognized on the accrual basis. Realized
gains and losses on security transactions are determined on the
identified cost basis.
(g) Deferred organization expenses and prepaid registration fees--
Deferred organization expenses are charged to expense on a straight-
line basis over a five-year period. Prepaid registration fees are
charged to expense as the related shares are issued.
(h) Dividends and distributions--Dividends and distributions paid
by the Fund are recorded on the ex-dividend dates.
(i) Basis of consolidation--The accompanying consolidated financial
statements include the accounts of ML Latin America Fund Chile
Ltd., a wholly-owned subsidiary, which primarily invests in Chilean
securities. Intercompany accounts and transactions have been
eliminated.
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"). Effective January 1,
1994, the investment advisory business of MLAM was reorganized
from a corporation to a limited partnership. Both prior to and after
the reorganization, ultimate control of MLAM was vested with
Merrill Lynch & Co., Inc. ("ML & Co."). The general partner of MLAM
is Princeton Services, Inc., an indirect wholly-owned subsidiary of
ML & Co. The limited partners are ML & Co. and Merrill Lynch
Investment Management, Inc. ("MLIM"), which is also an indirect
wholly-owned subsidiary of ML & Co. The Fund has entered into a
Distribution Agreement and a Distribution Plan with Merrill Lynch
Funds Distributor, Inc. ("MLFD" or "Distributor"), a wholly-owned
subsidiary of MLIM.
<PAGE>
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 1.0%, on an annual
basis, of the average daily value of the Fund's net assets. Certain
of the states in which the shares of the Fund are qualified for sale
impose limitations on the expenses of the Fund. The most restrictive
annual expense limitation requires that the Investment Adviser
reimburse the Fund to the extent the Fund's expenses (excluding
interest, taxes, distribution fees, brokerage fees and commissions,
and extraordinary items) exceed 2.5% of the Fund's first $30 million
of average daily net assets, 2.0% of the next $70 million of average
daily net assets, and 1.5% of the average daily net assets in excess
thereof. MLAM's obligation to reimburse the Fund is limited to
the amount of the management fee. No fee payment will be made
to MLAM during any fiscal year which will cause such expenses
to exceed the most restrictive expense limitation at the time of
such payment.
The Fund has adopted separate Plans of Distribution (the "Distribu-
tion Plans") for Class A and Class B Shares in accordance with
Rule 12b-1 under the Investment Company Act of 1940 pursuant
to which MLFD receives from the Fund at the end of each month
(a) an account maintenance fee, at an annual rate of 0.25% of the
average daily net assets of the Fund's Class A Shares in order to
compensate the Distributor in connection with account maintenance
activities, and (b) an account maintenance and distribution fee at an
annual rate of 0.25% and 0.75%, respectively, of the average daily
net assets of the Fund's Class B Shares in order to compensate the
Distributor for the services it provides and the expenses borne by
the Distributor under the Distribution Agreement. As authorized by
the Distribution Plans, the Distributor has entered into an agree-
ment with Merrill Lynch, Pierce, Fenner & Smith Inc. ("MLPF&S"),
which provides for the compensation of MLPF&S in connection with
account maintenance activities for Class A Shares and for providing
distribution-related services to the Fund for Class B Shares. For the
six months ended May 31, 1994, MLFD earned $194,993 and
$3,154,737 for Class A and Class B Shares, respectively, under the
Distribution Plans, all of which was paid to MLPF&S pursuant to
the agreement.
For the six months ended May 31, 1994, MLFD earned underwriting
discounts of $167,497, and MLPF&S earned dealer concessions of
$2,047,663, on sales of the Fund's Class A Shares.
For the six months ended May 31, 1994, MLPF&S received contingent
deferred sales charges of $555,812, relating to transactions in Class B
Shares and $49,875 in commissions on the execution of portfolio
security transactions for the Fund during the period.
<PAGE>
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 directors of the Fund are officers and directors
of MLIM, MLPF&S, FDS, MLFD, and/or ML & Co.
NOTES TO FINANCIAL STATEMENTS (concluded)
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended May 31, 1994 were $533,077,271 and
$69,845,550, respectively.
Net realized and unrealized gains (losses) as of May 31, 1994 were
as follows:
Realized Unrealized
Gains (Losses) Gains (Losses)
Long-term investments $ 6,827,940 $ 55,005,738
Short-term investments (367) --
Foreign currency transactions 388,213 (863,833)
------------ ------------
Total $ 7,215,786 $ 54,141,905
============ ============
As of May 31, 1994, net unrealized appreciation for Federal income
tax purposes aggregated $55,005,738, of which $107,965,471 related
to appreciated securities and $52,959,733 related to depreciated
securities. At May 31, 1994, the aggregate cost of investments for
Federal income tax purposes was $835,486,422.
4. Capital Share Transactions:
Net increase in net assets derived from capital share transactions
was $529,621,634 and $133,361,981 for the six months ended May 31,
1994 and the year ended November 30, 1993, respectively.
<PAGE>
Transactions in capital shares for Class A and Class B Shares were
as follows:
Class A Shares for the Six Months Dollar
Ended May 31, 1994 Shares Amount
Shares sold 8,149,612 $141,508,759
Shares issued to shareholders in
reinvestment of dividends &
distributions to shareholders 36,001 543,613
----------- ------------
Total issued 8,185,613 142,052,372
Shares redeemed (2,572,611) (42,644,371)
----------- ------------
Net increase 5,613,002 $ 99,408,001
=========== ============
Class A Shares for the Year Ended Dollar
November 30, 1993 Shares Amount
Shares sold 2,937,106 $ 36,285,613
Shares issued to shareholders in
reinvestment of dividends &
distributions to shareholders 91,657 890,902
----------- ------------
Total issued 3,028,763 37,176,515
Shares redeemed (932,700) (10,899,696)
----------- ------------
Net increase 2,096,063 $ 26,276,819
=========== ============
Class B Shares for the Six Months Dollar
Ended May 31, 1994 Shares Amount
Shares sold 28,823,471 $503,509,101
Shares issued to shareholders in
reinvestment of dividends &
distributions to shareholders 65,453 987,681
----------- ------------
Total issued 28,888,924 504,496,782
Shares redeemed (4,489,655) (74,283,149)
----------- ------------
Net increase 24,399,269 $430,213,633
=========== ============
<PAGE>
Class B Shares for the Year Ended Dollar
November 30, 1993 Shares Amount
Shares sold 10,861,570 $136,390,183
Shares issued to shareholders in
reinvestment of dividends &
distributions to shareholders 253,359 2,472,784
----------- ------------
Total issued 11,114,929 138,862,967
Shares redeemed (2,748,458) (31,777,805)
----------- ------------
Net increase 8,366,471 $107,085,162
=========== ============
5. Capital Loss Carryforward:
At November 30, 1993, the Fund had a capital loss carryforward of
approximately $1,104,000, all of which expires in 2001 and will be
available to offset like amounts of any future taxable gains.
PORTFOLIO CHANGES
For the Quarter Ended May 31, 1994
Additions Banco Bradesco S.A.(Preferred)
Banco Bradesco S.A.(Rights)
Banco de Colombia S.A.
Banco O'Higgins S.A.(ADR)
Cementos Diamante S.A.
Clark Automotive Products Corp.(ADR)
Companhia Metalurgica Barbara S.A.
Grupo Carso, S.A. de C.V.'A'
Grupo Embotellador de Mexico, S.A. de C.V.(GGEMEX)(ADR)
Grupo Financiero(GBM)Atlantico, S.A. de C.V.
Grupo Sidek, S.A. de C.V., 6.73% due 7/27/94
Iochpe-Maxion S.A.(Preferred)
La Compania Cervecera Bavaria S.A.
La Compania Colombiano de Tabaco S.A.(COLTABACO)
Mavesa S.A.(ADR)
Multibras S.A.(Preferred)
Transportadora de Gas del Sur S.A.--(ADR)
Vitro, S.A. de C.V.
Deletions Alcatel Indetel, S.A. de C.V.'B'
Consul S.A.
Compania Nacional de Cerveza S.A.
Empresas ICA Sociedad Controladora, S.A. de C.V.(ADR)
Yacimientos Petroliferos Fiscales S.A.--Sponsored (ADR)
<PAGE>
PORTFOLIO INFORMATION
Ten Largest Equity Holdings Percent of
As of May 31, 1994 Net Assets
Telefonos de Mexico, S.A. de C.V.(Telmex)(ADR) 4.9%
Grupo Carso, S.A. de C.V.(a) 3.7
Kimberly-Clark de Mexico, S.A. de C.V.'A' 3.1
Telecom Argentina Stet-France Telecom S.A.(b) 2.6
Iochpe-Maxion S.A.(c) 2.4
Telecomunicacoes Brasileiras S.A.-Telebras(d) 2.3
Compania de Telefonos de Chile S.A.(ADR) 2.2
Petroleo Brasileiro S.A. 2.2
Grupa Sidek, S.A. de C.V.(e) 2.1
Vitro, S.A. de C.V.(f) 1.9
[FN]
(a) Includes 'A' and ADR.
(b) Includes stock and ADR.
(c) Includes Ordinary and Preferred shares.
(d) Includes Ordinary and Preferred shares and ADR.
(e) Includes 'B' and bond.
(f) Includes stock and ADR.
<PAGE>
APPENDIX: GRAPHIC AND IMAGE MATERIALS.
ITEM 1.
Asset Allocation as a Percentage* of Net Assets as of May 31, 1994.
A map illustrating the following percentages:
Mexico 40.4%
Panama 1.2%
Venezula 3.5%
Columbia 2.6%
Peru 2.8%
Brazil 19.8%
Argentina 10.9%
Chile 7.5%
[FN]
*Total may not equal 100%.
