MERRILL LYNCH
LATIN AMERICA
FUND, INC.
FUND LOGO
Quarterly Report
August 31, 1995
<PAGE>
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.
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
MERRILL LYNCH LATIN AMERICA FUND, INC.
<PAGE>
Asset Allocation*
As a Percentage of
Net Assets as of
August 31, 1995
A map illustrating the following percentages:
Mexico 23.3%
Panama 2.2%
Venezuela 3.3%
Colombia 2.6%
Ecuador 1.5%
Peru 6.0%
Brazil 35.0%
Uraguay 0.1%
Argentina 13.6%
Chile 6.6%
[FN]
*Total may not equal 100% and does not include short-term
securities.
<PAGE>
DEAR SHAREHOLDER
Investment results for the major Latin American stock markets were
mixed during the quarter ended August 31, 1995. Markets in Argentina
and Chile declined 3.5% and 10.7%, respectively, while Brazilian and
Mexican markets rose by 5.8% and 23.5%, respectively. Among the
smaller markets, Peru performed well, rising 9.2%, while Colombia
and Venezuela varied only slightly from the beginning to the end of
the August quarter.
During the quarter ended August 31, 1995, the Fund's Class A, Class
B, Class C and Class D Shares had total returns of +5.85%, +5.55%,
+5.55% and +5.76%, respectively. The Fund's performance benefited
from our underweighting the Chilean market and to stock selection in
Mexico, where the Fund was overweighted in several industries which
outperformed the market such as building materials, financial
services, health and personal care, and shipping.
Investment Overview
The sharp rallies of the previous quarter proved to be unsustainable.
In the past three months, the region was wracked by political and
economic events. In Argentina, the stock market fell by 10% in three
hours because of rumors that Minister of the Economy Domingo Cavallo
would resign. The Colombian market was impacted by continued accusa-
tions that President Ernesto Samper accepted drug money in his
presidential campaign as well as by recent guerrilla activity.
Brazilian 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. In
Mexico, continuing dissension among the leading political party's
members led to the resignation of the party's chairperson.
Throughout the region economic news was mixed and impacted local
equity markets. In Argentina, the market rallied sharply after the
announcement of a new International Monetary Fund agreement and the
successful launch of an international bond issue. The market
subsequently fell on news of declining international reserves. The
Brazilian market was buoyed by the relaxation of certain credit
restrictions in the banking sector, only to react negatively to a
recent proposed capital gains tax for foreign investors. Investors
in the Mexican market are still trying to digest poor corporate
earnings, as well as ponder the implications of recently announced
measures for the banking sector. In Chile, the perception that
electric utilities would be adversely affected by the possible
construction of two new natural gas pipelines led to a severe
decline in the market as a whole.
<PAGE>
Most of the region's markets were volatile during the August period.
We used this volatility to our advantage by accumulating positions
in those stocks where we see long-term value. Therefore, we
increased the Fund's investments in equities and fixed-income
securities from 86.3% of total net assets at the beginning of the
August quarter to 94.2% on August 31, 1995.
During the August quarter, we bought shares of CPT Telefonica Del
Peru S.A., a product of the merger of two formerly state-controlled
companies which were privatized and purchased by Telefonica de
Espana. This Peruvian company has an attractive concession to
provide basic and long distance telephone services, which will
remain closed to competition until 1999. In the meantime, revenue
growth is very strong because of extremely low penetration rates,
3.3 lines per 100 inhabitants, years of pent-up demand, rising
disposable incomes, and a booming Peruvian economy.
We added to our investment in Transportacion Maritima Mexicana S.A.
de C.V. 'L' (TMM), a Mexican shipping company that suffered from
excess capacity and high fixed costs two years ago. Since then, much
of the excess capacity was eliminated. This enabled utilization
levels to improve and shipping rates to increase. In upcoming
months, while many Mexican companies will be constrained by weak
domestic demand, TMM is likely to show good earnings growth because
of further increases on its Pacific route rates and as gains are
recorded from the sales of vessels. Financially, TMM is very solid
with $225 million in cash and the majority of its debt due after the
year 2000.
Investment Outlook
The global growth and interest rate environment is favorable for
emerging markets investments. We believe any stock market declines
are likely to be minimal and would encourage a flow of portfolio
capital to the Latin American markets.
Among the Fund's main country exposures--Mexico, Argentina and
Brazil--government policies remain on track which will benefit long-
term growth and stability in these countries' economies and
corporate earnings. We expect the Mexican government to sustain its
economic austerity program, although this will be balanced with
public spending to support the economic recovery. We do not expect a
quick end to the Mexican recession, nor do we expect a strong
recovery in operating earnings. However, we believe that for many
companies the worst is over, and a more realistic assessment of
fundamentals can now be made. Given these factors, we will continue
to buy very selectively in Mexico, emphasizing those companies with
strong managements and attractive valuations.
<PAGE>
In Argentina, notwithstanding investors' uneasiness about Minister
of the Economy Cavallo's possible departure, we are encouraged by
the country's positive financial and economic developments.
Financially, the outlook has improved for reducing the cost of
Argentina's debt as it regains access to the international capital
markets. Economically, both the trade and current account balances
improved dramatically, and this should alleviate pressure on the
currency. The political uncertainties are likely, however, to
postpone the country's return to growth. Therefore, our main stock
investments in Argentina are in the more defensive industries such
as telecommunications and energy.
In Brazil, administrative and fiscal reforms should occur at the
sporadic pace that many long-term investors in this market are
already accustomed to. In the near term, the tight credit
environment, augmented by controls on the flow of capital into the
country, appear to have effectively cooled the overheated economy.
We believe that some monetary easing and currency weakness can now
be expected. Given this, we believe that the economy has bottomed
out and that corporate earnings performance in Brazil will top that
of others in the region for the rest of the year. We also believe
Brazilian stock valuations are still the most attractive in Latin
America.
In Conclusion
While we are cautiously optimistic about investments in the region,
we remind our shareholders that the Latin American securities
markets are more volatile than their counterparts in many other
countries and regions. A long-term view is necessary for any
investments in these markets.
We appreciate your ongoing interest in Merrill Lynch Latin America
Fund, Inc., and we look forward to reviewing our outlook and
strategy with you again in our upcoming annual report to
shareholders.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Grace Pineda)
Grace Pineda
Vice President and Portfolio Manager
<PAGE>
September 21, 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, as detailed in the Fund's prospectus. If you were a Class
A shareholder prior to October 21, 1994, your Class A Shares were
redesignated to Class D Shares on October 21, 1994, which, in the
case of certain eligible investors, were simultaneously exchanged
for Class A Shares.
* 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 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 B and Class D Shares are
presented in the "Performance Summary," "Recent Performance Results"
and "Average Annual Total Return" tables below and on page 5. Data
for Class A and Class C Shares are also presented in the "Recent
Performance Results" and "Aggregate Total Return" tables below and
on page 5.
<PAGE>
The "Recent Performance Results" table shows investment results
before the deduction of any sales charges for Class B and Class D
Shares for the 12-month and 3-month periods ended August 31, 1995
and for Class A and Class C Shares for the since inception and the 3-
month periods ended August 31, 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>
Recent
Performance
Results*
<CAPTION>
12 Month 3 Month
8/31/95 5/31/95 8/31/94++ % Change++ % Change
<S> <C> <C> <C> <C> <C>
Class A Shares $11.40 $10.77 $18.22 -35.93%(1) +5.85%
Class B Shares 11.22 10.63 17.89 -35.76(1) +5.55
Class C Shares 11.22 10.63 18.10 -36.51(1) +5.55
Class D Shares 11.38 10.76 17.99 -35.22(1) +5.76
Class A Shares--Total Return -35.48(2) +5.85
Class B Shares--Total Return -35.31(2) +5.55
Class C Shares--Total Return -36.06(2) +5.55
Class D Shares--Total Return -34.77(2) +5.76
<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 A and Class C Shares are since
inception (10/21/94).
(1)Percent change includes reinvestment of $0.396 per share capital
gains distributions.
(2)Percent change includes reinvestment of $0.118 per share ordinary
income dividends and $0.396 per share capital gains distributions.
</TABLE>
<PAGE>
Average Annual
Total Return
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 6/30/95 -25.67% -28.51%
Inception (9/27/91) through 6/30/95 + 3.39 + 3.15
[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 Without % Return With
Sales Charge Sales Charge**
Class D Shares*
Year Ended 6/30/95 -25.07% -29.00%
Inception (9/27/91) through 6/30/95 + 4.20 + 2.72
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
Aggregate
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Inception (10/21/94) through 6/30/95 -39.10% -42.30%
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
<PAGE>
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Inception (10/21/94) through 6/30/95 -39.54% -40.11%
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
<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
1994 16.61 13.55 $0.396 0.118 -15.86
1/1/95--8/31/95 13.55 11.22 -- -- -17.20
------ ------
Total $0.396 Total $0.491
Cumulative total return as of 8/31/95: +19.98%**
<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 D 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
1994 16.62 13.66 $0.396 0.118 -15.24
1/1/95--8/31/95 13.66 11.38 -- -- -16.69
------ ------
Total $0.396 Total $0.677
Cumulative total return as of 8/31/95: +23.70%**
<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.
***As a result of the implementation of the Merrill Lynch Select
Pricing SM System, Class A Shares of the Fund outstanding prior to
October 21, 1994 were redesignated to Class D Shares.
</TABLE>
<TABLE>
CONSOLIDATED SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
Shares Held/ Percent of
COUNTRY Industries Face Amount Long-Term Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Argentina Automotive 290,000 Mirgor S.A. C.I.F.I.A. (ADR)(2) $ 743,125 $ 687,300 0.1%
Banking 59,000 Banco de Galicia y Buenos Aires
S.A. (ADR)(2) 1,010,375 1,069,375 0.1
84,231 Banco del Sud S.A. 1,508,748 530,921 0.1
92,500 Banco Frances del Rio de la Plata S.A. 1,891,188 1,861,563 0.2
------------ ------------ ------
4,410,311 3,461,859 0.4
Beverages 1,746 Buenos Aires Embotelladora S.A.
(BAESA) 1,759,894 2,078,779 0.3
426,300 Buenos Aires Embotelladora S.A.
(BAESA) (ADR)(2) 11,186,019 10,124,625 1.3
------------ ------------ ------
12,945,913 12,203,404 1.6
<PAGE>
Foreign ARS 27,820,000 Republic of Argentina, Floating
Government Rate Notes, 7.312% due 3/31/2005 17,558,200 16,865,875 2.1
Obligations
Oil & Related 7,141,840 Astra Compania Argentina de
Petroleo S.A. 13,777,284 12,397,291 1.6
2,969,257 Compania Naviera Perez Companc
S.A.C.F.I.M.F.A. 13,741,018 13,903,074 1.8
481,200 Yacimientos Petroliferos Fiscales
S.A. (Sponsored) (ADR)(2) 9,902,483 8,481,150 1.1
------------ ------------ ------
37,420,785 34,781,515 4.5
Real Estate 2,106,241 Inversiones y Representaciones
S.A. (IRSA) 5,637,874 4,593,902 0.6
200,000 Inversiones y Representaciones
S.A. (IRSA) (GDS)(3) 5,500,000 4,425,000 0.6
------------ ------------ ------
11,137,874 9,018,902 1.2
Retail 407,744 Grimoldi S.A. (Class B) 2,635,321 1,896,958 0.2
Telecommunications 259,000 Telecom Argentina Stet--France
Telecom S.A. (ADR)(2) 13,152,271 11,266,500 1.4
545,700 Telefonica de Argentina S.A.
(ADR)(2) 15,444,768 13,506,075 1.7
525,000 Telefonica de Argentina S.A.
(Class B) 1,497,352 1,328,914 0.2
------------ ------------ ------
30,094,391 26,101,489 3.3
Utilities 700,000 Central Costanera S.A. 2,052,791 1,841,921 0.2
9,500 Central Costanera S.A. (Class B)
(ADR)(2) 228,000 247,000 0.0
------------ ------------ ------
2,280,791 2,088,921 0.2
Total Long-Term Investments
in Argentina 119,226,711 107,106,223 13.6
Brazil Appliances & 29,455,500 Brasmotor Group S.A. (Preferred) 8,992,598 7,569,397 1.0
Household 1,644,300,000 Refrigeracao Parana S.A.
Durables (Preferred) 6,322,762 4,000,350 0.5
------------ ------------ ------
15,315,360 11,569,747 1.5
Automotive 715,400 CAPCO Automotive Products Corp.
S.A. (ADR)(2) 8,531,979 5,902,050 0.7
1,062,000 Confab Industrial S.A. (Preferred) 1,909,375 715,829 0.1
------------ ------------ ------
10,441,354 6,617,879 0.8
<PAGE>
Banking 1,886,719,322 Banco Bradesco S.A. (Preferred) 15,022,652 18,181,656 2.3
28,720,400 Banco Itau S.A. (Preferred) 5,717,840 9,044,128 1.1
361,229,908 Banco Nacional S.A. PN 9,848,468 6,581,651 0.8
17,237,154 Uniao de Bancos Brasileiros S.A.
(UNIBANCO) 397,694 590,003 0.1
------------ ------------ ------
30,986,654 34,397,438 4.3
Beverages 50,431,159 Companhia Cervejaria Brahma S.A.
(Preferred) 14,391,659 18,855,252 2.4
Chemicals 12,300,000 La Bombril S.A. (Preferred) 282,747 185,893 0.0
Energy 800 Companhia Energetica de Sao Paulo
S.A. (CESP) (ADR)(2) 9,182 8,900 0.0
2,488,510 Companhia Energetica de Sao Paulo
S.A. (CESP) (Preferred)(ADR)(2) 89,162 93,041 0.0
------------ ------------ ------
98,344 101,941 0.0
Food 130,400,000 Ceval Alimentos S.A. (Preferred) 1,982,542 1,895,229 0.2
12,275,410 Sadia Concordia S.A. Industria e
Comercio (Preferred) 10,627,282 12,928,289 1.6
------------ ------------ ------
12,609,824 14,823,518 1.8
Forest Products 41,196 Bardella Industrial S.A. (Preferred) 10,514,838 5,467,202 0.7
& Paper 519,000 Industrias Klabin de Papel e
Celulose S.A. (Preferred) 746,632 765,245 0.1
16,802,000 MelPaper S.A. (Preferred) 10,233,320 3,539,126 0.5
------------ ------------ ------
21,494,790 9,771,573 1.3
Machinery 8,709,000 Iochpe Maxion S.A. (Ordinary) 3,583,312 5,292,357 0.7
9,711,765 Iochpe Maxion S.A. (Preferred) 4,326,020 3,252,597 0.4
9,273,000 Weg Exportadora S.A. (Preferred) 5,597,682 4,765,902 0.6
------------ ------------ ------
13,507,014 13,310,856 1.7
Metals & Steel 197,000 Companhia Siderurgica de Tubarao
S.A. (CST) 6,621,877 5,343,625 0.7
Mining 44,001,200 Companhia Vale do Rio Doce S.A.
(Preferred) 8,179,197 6,765,851 0.9
Oil & Related 55,520,000 Petroleo Brasileiro S.A. (Preferred) 7,056,177 5,350,269 0.7
<PAGE>
Retail 4,188,934 Casa Anglo Brasileira S.A. 865,348 392,644 0.1
118,564,600 Lojas Americanas S.A. 2,125,943 3,059,329 0.4
13,896,600 Mesbla S.A. 3,127,325 450,633 0.1
------------ ------------ ------
6,118,616 3,902,606 0.6
Steel 562,000 Acos Industria Villares, S.A.
(Preferred) 110,584 207,754 0.0
255,060,000 Companhia Metalurgica Barbara S.A. 247,899 182,665 0.0
191,318,000 Companhia Siderurgica Nacional
S.A.--CSN 6,838,186 4,271,660 0.5
8,811,482,013 Usinas Siderurgicas de Minas
Gerais--Usiminas S.A. (Preferred) 5,858,452 9,001,722 1.1
------------ ------------ ------
13,055,121 13,663,801 1.6
</TABLE>
<TABLE>
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Shares Held/ Percent of
COUNTRY Industries Face Amount Long-Term Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Brazil Telecommunications 443,667 Telecomunicacoes Brasileiras S.A.--
(concluded) Telebras (ADR)(2) $ 19,412,100 $ 19,077,681 2.4%
34,034,909 Telecomunicacoes Brasileiras S.A.--
Telebras (Ordinary) 1,235,528 1,254,578 0.2
416,636,656 Telecomunicacoes Brasileiras S.A.--
Telebras (Preferred) 18,540,480 18,078,389 2.3
60,723,102 Telecomunicacoes de Minejeros S.A.--
TELEMIG (Ordinary) 2,682,475 3,901,116 0.5
5,886,228 Telecomunicacoes de Minejeros S.A.--
TELEMIG (Preferred) 304,154 331,724 0.0
101,193,965 Telecomunicacoes de Sao Paulo S.A.--
TELESP (Preferred) 13,363,205 16,625,865 2.1
4,465,929 Telecomunicacoes Parana S.A.--
TELEPAR (Preferred) 770,051 1,528,622 0.2
------------ ------------ ------
56,307,993 60,797,975 7.7
Textiles 873,000 Brasperola Industria e Comerico S.A. 931,692 465,692 0.1
33,727,363 Companhia de Tecidos Norte de
Minas S.A. 9,078,176 11,366,778 1.4
------------ ------------ ------
10,009,868 11,832,470 1.5
<PAGE>
Utilities 55,100,467 Centrais Eletricas Brasileiras S.A.
Eletrobras 'B' (Preferred) 16,082,093 15,204,131 1.9
478,000 Centrais Eletricas Brasileiras S.A.
Eletrobras (Preferred)(ADR)(2) 7,325,140 6,512,750 0.8
4,387,500 Centrais Eletricas da Santa Catarina
S.A. (CELESC) 'B' (Preferred) 764,541 3,511,848 0.4
76,000 Companhia Energetica de Minas
Gerais S.A. (CEMIG) 1,628,295 1,700,500 0.2
28,470 Companhia Energetica de Minas
Gerais S.A. (CEMIG) (ADR)(2) 638,750 637,016 0.1
125,271,686 Companhia Energetica de Minas Gerais
S.A. (CEMIG) (Preferred) 1,625,256 2,836,589 0.4
203,820,000 Companhia Paulista de Forca e Luz
S.A. 11,896,752 11,484,329 1.5
50,122,000 Light--Servicios de Electricidade
S.A. 18,156,844 17,736,695 2.2
------------ ------------ ------
58,117,671 59,623,858 7.5
Total Long-Term Investments in
Brazil 284,594,266 276,914,552 35.0
Chile Apparel 1,206,231 Bata Chile S.A. 340,424 199,656 0.0
Banking 202,900 Banco O'Higgins S.A. (ADR)(2) 3,101,779 4,793,513 0.6
Beverages 4,084,632 Vina Concha y Toro S.A. 1,694,797 1,414,591 0.2
217,700 Vina Concha y Toro S.A. (ADR)(2) 4,138,538 3,782,538 0.5
------------ ------------ ------
5,833,335 5,197,129 0.7
Building & 338,225 Empresas Pizarreno S.A. 644,310 689,025 0.1
Construction
Closed-End Funds 435,368 The Chile Fund, Inc. 10,907,120 10,285,569 1.3
Food & Household 138,650 Cristalerias de Chile S.A. (ADR)(2) 3,035,094 3,396,925 0.4
Products
Multi-Industry 776,044 Forestal Terranova S.A. 1,285,948 1,314,157 0.2
Publishing 4,916,262 Editorial Lord Cochrane S.A. 2,645,715 2,065,656 0.3
Retail Sales 528,846 Santa Isabel S.A. 430,047 740,681 0.1
Steel 509,056 Compania de Acero del Pacifico S.A.
de Inv. (CAP) 1,641,453 2,994,447 0.4
509,056 Invercap S.A. 363,675 1,024,075 0.1
------------ ------------ ------
2,005,128 4,018,522 0.5
<PAGE>
Telecommunications 157,225 Compania de Telefonos de Chile S.A.
(ADR)(2) 15,443,096 11,477,425 1.5
98,732 Empresa Nacional de Tele-
comunicaciones S.A. (ENTEL) 677,828 1,003,159 0.1
------------ ------------ ------
16,120,924 12,480,584 1.6
Utilities 4,965,953 Empresa Nacional de Electricidad
S.A. (ENDESA) 2,530,323 3,211,999 0.4
1,900,000 Enersis S.A. 842,297 933,792 0.1
92,000 Enersis S.A. (ADR)(2) 2,169,084 2,334,500 0.3
------------ ------------ ------
5,541,704 6,480,291 0.8
Total Long-Term Investments in Chile 51,891,528 51,661,708 6.6
Colombia Banking 245,271 Banco de Bogota S.A. 903,609 1,358,591 0.2
1,035,700 Banco de Colombia S.A. 974,829 360,605 0.0
------------ ------------ ------
1,878,438 1,719,196 0.2
Beverages & Tobacco 587,154 La Compania Cervecera Bavaria S.A. 3,401,356 1,672,627 0.2
Building Products 90,000 Cementos Diamante S.A 590,537 522,262 0.1
250,137 Cementos Paz Del Rio S.A. 373,682 224,326 0.0
94,000 Cementos Paz Del Rio S.A. (ADR)(2) 1,973,875 1,198,500 0.2
------------ ------------ ------
2,938,094 1,945,088 0.3
Forest Products 559,325 Papeles Nacionales S.A. 9,463,126 4,055,106 0.5
& Paper
Merchandising 309,805 Carulla y CIA S.A. 3,218,690 2,631,283 0.3
429,420 Carulla y CIA S.A. (ADR)(2) 4,484,071 4,938,330 0.6
------------ ------------ ------
7,702,761 7,569,613 0.9
Multi-Industry 65,000 Corporacion Financiera del Valle
S.A. (ADR)(2) 1,053,750 780,000 0.1
Retail 1,428,814 Gran Cadena de Almacenes Colombianos
S.A. (CADENALCO) 4,043,018 2,306,484 0.3
35,000 Gran Cadena de Almacenes Colombianos
S.A. (CADENALCO) (ADR)(2)(a) 611,250 551,250 0.1
------------ ------------ ------
4,654,268 2,857,734 0.4
<PAGE>
Tobacco 69,200 La Compania Colombiano de Tabaco
S.A. (COLTABACO) 356,988 197,130 0.0
Total Long-Term Investments in
Colombia 31,448,781 20,796,494 2.6
Ecuador Building 60,072 La Cemento Nacional C.A. 10,693,757 12,014,400 1.5
Materials &
Components
Total Long-Term Investments in
Ecuador 10,693,757 12,014,400 1.5
</TABLE>
<TABLE>
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Shares Held/ Percent of
COUNTRY Industries Face Amount Long-Term Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Mexico Banking 975,000 Grupo Financiero Banamex-Accival,
S.A. de C.V. (Banacci) $ 2,126,670 $ 1,943,790 0.2%
Beverages 3,926,000 Fomento Economico Mexicano,
S.A. de C.V. (Femsa) (ADR)(2) 8,832,008 10,717,980 1.4
3,901,000 Fomento Economico Mexicano,
S.A. de C.V. (Femsa) (Ordinary) 'B' 9,828,769 10,746,385 1.4
------------ ------------ ------
18,660,777 21,464,365 2.8
Broadcasting & 3,215,000 Grupo Fernandez Editores, S.A.
Publishing de C.V. 4,709,988 1,822,516 0.2
Building & 2,687,000 Apasco, S.A. de C.V. 'A' 8,865,768 11,894,682 1.5
Construction 332,000 Corporacion Geo, S.A. de C.V.
'B' (ADR)(2) 9,485,500 5,009,880 0.6
441,000 Tolmex, S.A. de C.V. 'B' 2,040,787 2,521,003 0.3
------------ ------------ ------
20,392,055 19,425,565 2.4
Building 2,175,000 Cementos Mexicanos, S.A. de C.V.
Materials Nom 'B' (Cemex) 12,246,129 9,991,839 1.3
Construction & 51,000 Empresas ICA Sociedad Controladora,
Housing S.A. de C.V. (ADR)(2) 630,467 612,000 0.1
Engineering & 378,000 Grupo Profesional Planeacion y
Construction Proyectos, S.A. de C.V. (PYP)
(Class B) 5,457,192 2,711,608 0.3
<PAGE>
Financial 533,900 Banca Quadrum, S.A. de C.V. (ADR)(2) 9,916,217 3,270,138 0.4
Services 380,000 Grupo Financiero (GBM) Atlantico,
S.A. de C.V. 2,270,875 315,860 0.0
220,000 Grupo Financiero (GBM) Atlantico,
S.A. de C.V. 'L' 4,742,022 660,000 0.1
US$ 8,500,000 Grupo Financiero InverMexico,
S.A. de C.V., 7.50% due 6/16/2001 8,500,000 2,975,000 0.4
------------ ------------ ------
25,429,114 7,220,998 0.9
Food & Household 3,253,846 Grupo Herdez, S.A. de C.V. 'A' 3,295,834 922,268 0.1
Products 5,012,461 Grupo Herdez, S.A. de C.V. 'B' 6,285,722 1,636,233 0.2
754,189 Grupo Industrial Maseca, S.A.
de C.V. 'B2' 1,225,349 593,263 0.1
312,518 Sigma Alimentos, S.A. de C.V. 5,569,354 2,488,201 0.3
------------ ------------ ------
16,376,259 5,639,965 0.7
Health & 1,983,450 Kimberly-Clark de Mexico, S.A.
Personal Care de C.V. 'A' 20,662,781 27,540,898 3.5
Leisure 179,000 Grupo Posadas, S.A. de C.V. 'A' 149,627 72,683 0.0
395,300 Grupo Posadas, S.A. de C.V. (ADR)(2) 6,138,293 3,508,288 0.4
3,350,000 Grupo Situr, S.A. de C.V. 1,907,393 1,867,038 0.2
------------ ------------ ------
8,195,313 5,448,009 0.6
Merchandising 134,500 Controladora de Farmacias, S.A.
de C.V. (COFAR) 199,610 56,756 0.0
616,000 Farmacias Benavides, S.A. de C.V. 2,767,171 784,713 0.1
1,418,000 Grupo Empresarial Fenix, S.A.
de C.V. (ELEKTRA) 'L' Shares 13,024,645 6,751,306 0.9
------------ ------------ ------
15,991,426 7,592,775 1.0
Metals & Steel 1,930,000 Grupo Sidek, S.A. de C.V. 'B' 1,972,183 1,708,726 0.2
Multi-Industry 1,167,000 Desc Sociedad de Fomento
Industrial, S.A. de C.V. 8,735,843 4,645,701 0.6
607,400 Desc Sociedad de Fomento
Industrial, S.A. de C.V.
(Class B) 5,072,389 2,476,025 0.3
361,750 Grupo Carso, S.A. de C.V. 'A' 3,564,705 4,567,094 0.6
3,161,625 Grupo Carso, S.A. de C.V. (ADR)(2) 33,164,587 20,288,772 2.6
------------ ------------ ------
50,537,524 31,977,592 4.1
<PAGE>
Retail 10,445,750 Cifra, S.A. de C.V. 'C' 15,612,138 12,475,020 1.6
1,705,000 El Puerto de Liverpool, S.A.
de C.V. (Non-Voting) (Series C1) 2,372,047 1,113,137 0.1
988,500 Sears Roebuck de Mexico, S.A. de
C.V. 'B' 6,010,030 3,305,494 0.4
547,500 Sears Roebuck de Mexico, S.A. de
C.V. 'B' (ADR)(2) 14,403,127 3,627,187 0.5
------------ ------------ ------
38,397,342 20,520,838 2.6
Telecommuni- 359,700 Telefonos de Mexico, S.A. de C.V.
cations (ADR)(2) 14,075,357 11,780,175 1.5
Transportation 797,700 Transportacion Maritima Mexicana,
S.A. de C.V. 'L' (TMM) (ADR)(2) 6,832,864 6,860,312 0.9
Total Long-Term Investments in
Mexico 262,693,441 184,261,971 23.3
Panama Banking 80,000 Banco Latinoamericano de Exporta-
ciones S.A. ('BLADEX') 'E' 1,992,245 3,180,000 0.4
Beverages & 480,260 Panamerican Beverages Inc. (Class A) 13,690,703 14,287,735 1.8
Tobacco
Total Long-Term Investments in Panama 15,682,948 17,467,735 2.2
Peru Banking 5,448,796 Banco de Credito de Peru S.A. 5,771,448 10,634,765 1.3
4,034,029 Banco Wiese Limitado S.A. 7,805,853 7,477,097 0.9
------------ ------------ ------
13,577,301 18,111,862 2.2
Beverages 77,556 Cerveceria Backus Y Johnson S.A. 111,704 147,214 0.0
Building Materials 2,117,280 Cementos Norte Pacasmayo S.A. 5,488,368 6,146,637 0.8
Food 2,513,818 La Fabril S.A. 4,644,998 3,016,334 0.4
Mining 2,262,663 Southern Peru Copper Corp. S.A. 7,424,255 9,782,304 1.2
525,682 Southern Peru Copper Corp. S.A.
(Working Labor Shares) 1,666,418 1,704,534 0.2
------------ ------------ ------
9,090,673 11,486,838 1.4
Miscellaneous 200,000 Minsur Sociedad Limitada S.A.
Materials & (T Shares) 2,555,655 2,786,958 0.4
Commodities
<PAGE>
Utilities-- 809,036 CPT Telefonica Del Peru S.A.
Communications (A Shares) 1,458,354 1,575,434 0.2
2,266,436 CPT Telefonica Del Peru S.A.
(B Shares) 4,240,922 4,443,794 0.6
------------ ------------ ------
5,699,276 6,019,228 0.8
Total Long-Term Investments
in Peru 41,167,975 47,715,071 6.0
</TABLE>
<TABLE>
CONSOLIDATED SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
Shares Held/ Percent of
COUNTRY Industries Face Amount Long-Term Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Uruguay Banking 64,500 Banco Commercial S.A. $ 1,211,625 $ 1,080,375 0.1%
Total Long-Term Investments
in Uruguay 1,211,625 1,080,375 0.1
Venezuela Building & 1,124,607 Corporacion Ceramica Carabobo
Construction S.A.'B' 2,294,951 1,027,977 0.1
1,129,218 Corporacion Ceramica Carabobo
S.A.C.A. 2,606,928 1,050,505 0.1
------------ ------------ ------
4,901,879 2,078,482 0.2
Building 147,600 Corimon C.A. S.A.C.A. 1,091,848 811,800 0.1
Materials 463,734 Venezolana de Cementos S.A.C.A.
(Vencemos) 616,435 618,057 0.1
------------ ------------ ------
1,708,283 1,429,857 0.2
Food & Household 10,304,247 Mavesa S.A. 2,587,935 1,883,775 0.2
Products 389,500 Mavesa S.A. (ADR)(2) 3,519,375 1,217,187 0.2
375,832 Mavesa S.A. (ADR)(2) 4,010,625 1,207,360 0.2
------------ ------------ ------
10,117,935 4,308,322 0.6
Foreign VEB 5,750,000 Republic of Venezuela, Floating Rate
Government Notes, 6.812% due 12/18/2007 (1) 4,300,625 2,810,312 0.4
Obligations
<PAGE>
Steel 108,000 Siderurgica Venezolana SIVENSA,
S.A.I.C.A.--S.A.C.A. 35,345 40,762 0.0
216,000 Siderurgica Venezolana SIVENSA,
S.A.I.C.A.--S.A.C.A. (ADR)(2) 1,231,384 324,000 0.0
169,940 Venezolana de Prerreducidos Caroni
Venprecar C.A. (GDS)(3) 1,239,230 870,942 0.1
------------ ------------ ------
2,505,959 1,235,704 0.1
Textiles 1,290,000 Mantex S.A.C.A. 152,879 125,523 0.0
243,600 Mantex S.A.C.A. (ADR)(2) 1,003,100 852,600 0.1
------------ ------------ ------
1,155,979 978,123 0.1
Utilities 14,367,596 C.A. La Electricidad de Caracas
S.A.I.C.A.--S.A.C.A. 19,686,959 13,027,174 1.7
Total Long-Term Investments in
Venezuela 44,377,619 25,867,974 3.3
Total Long-Term Investments in
Latin America 862,988,651 744,886,503 94.2
<CAPTION>
Face Amount Short-Term Investments
United Commercial US$ 10,484,000 General Electric Capital Corp.,
States Paper* 5.82% due 9/01/1995 10,484,000 10,484,000 1.3
US Government 23,065,000 Federal National Mortgage
Agency Association, 5.65% due 9/12/1995 23,025,181 23,025,181 2.9
Obligations*
Total Short-Term Investments 33,509,181 33,509,181 4.2
Total Investments $896,497,832 778,395,684 98.4
============
Other Assets Less Liabilities 12,600,475 1.6
------------ ------
Net Assets $790,996,159 100.0%
============ ======
<PAGE>
Net Asset Value: Class A--Based on net assets of $26,670,905
and 2,338,679 shares outstanding $ 11.40
============
Class B--Based on net assets of $602,294,186
and 53,668,360 shares outstanding $ 11.22
============
Class C--Based on net assets of $16,279,955 and
1,450,591 shares outstanding $ 11.22
============
Class D--Based on net assets of $145,751,113
and 12,807,201 shares outstanding $ 11.38
============
<FN>
(1)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 August 31, 1995.
(2)American Depositary Receipts (ADR).
(3)Global Depositary Shares (GDS).
*Commercial Paper and certain US Government Agency Obligations are
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.
</TABLE>
PORTFOLIO INFORMATION
Ten Largest EquityHoldings Percent of
As of August 31, 1995 Net Assets
Telecomunicacoes Brasileiras S.A.--Telebras* 4.9%
Kimberly-Clark de Mexico, S.A. de C.V. 'A' 3.5
Grupo Carso, S.A. de C.V.* 3.2
Fomento Economico Mexicano, S.A. de C. V.
(Femsa)* 2.8
Centrais Eletricas Brasileiras S.A.--Eletrobras* 2.7
Companhia Cervejaria Brahma S.A. (Preferred) 2.4
Banco Bradesco S.A. (Preferred) 2.3
Light--Servicios de Electricidade S.A. 2.2
Telecomunicacoes de Sa' Paulo S.A.--
TELESP (Preferred) 2.1
Telefonica de Argentina S.A. 1.9
[FN]
* Represents combined holdings in the Fund's portfolio.
<PAGE>
Percent of
Ten Largest Industries Net Assets
Telecommunications 14.1%
Utilities 10.2
Banking 8.4
Beverages 7.5
Oil & Related 5.2
Multi-Industry 4.4
Retail 3.8
Health & Personal Care 3.5
Building & Construction 2.7
Mining 2.3
PORTFOLIO CHANGES
For the Quarter Ended August 31, 1995
Additions
Banco de Galicia y Buenos Aires S.A. (ADR)
CPT Telefonica Del Peru S.A. (A Shares)
CPT Telefonica Del Peru S.A. (B Shares)
Cementos Norte Pacasmayo S.A.
*Coca-Cola Femsa, S.A. de C.V.
Companhia Energetica de Minas Gerais S.A. (CEMIG)
(Preferred)
Corporacion Financiera del Valle S.A.
Empresas ICA Sociedad Controladora, S.A. de C.V. (ADR)
Enersis S.A.
Enersis S.A. (ADR)
Grupo Financiero Banamex-Accival, S.A. de C.V. (Banacci)
Grupo Sidek, S.A. de C.V. 'B'
Grupo Situr, S.A. de C.V.
La Fabril S.A. (T Shares)
Minsur Sociedad Limitada S.A. (T Shares)
Southern Peru Copper Corp. S.A. (Working Labor Shares)
Telecom Argentina Stet--France Telecom S.A. (ADR)
Telefonica de Argentina S.A. (ADR)
Tolmex, S.A. de C.V. 'B'
*Transportadora de Gas del Sur S.A.
<PAGE>
Deletions
Central Puerto S.A.
*Coca-Cola Femsa, S.A. de C.V.
Companhia Cervejaria Brahma S.A. (Preferred) (Pro Rata)
Companhia Cervejaria Brahma S.A. (Warrants)
Companhia Cimento Portland Itau S.A. PN
Grupo Simec, S.A. de C.V. (Ordinary)
Hylsamex, S.A. de C.V.
Maderas y Sinteticos S.A. (MASISA)(Foreign)(ADR)
*Transportadora de Gas del Sur S.A.
[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 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
