MERRILL LYNCH
LATIN AMERICA
FUND, INC.
FUND LOGO
Semi-Annual Report
May 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 a
solicitation of an offer to buy shares of the Fund unless
accompanied or preceded by the Fund's current prospectus. Past
performance results shown in this report should not be considered a
representation of future performance. Investment return and
principal value of shares will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
Statements and other information herein are as dated and are subject
to change.
Merrill Lynch
Latin America
Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
MERRILL LYNCH LATIN AMERICA FUND, INC.
Asset Allocation*
As a Percentage of
Net Assets as of
May 31, 1996
A map illustrating the following percentages:
Mexico 27.6%
Panama 0.6%
Venezuela 2.9%
Colombia 1.7%
Peru 3.9%
Brazil 36.8%
Argentina 13.0%
Chile 7.7%
[FN]
*Total may not equal 100% and does not include short-term
securities.
<PAGE>
DEAR SHAREHOLDER
During the six-month period ended May 31, 1996, total returns for
Merrill Lynch Latin America Fund, Inc.'s Class A, Class B, Class C
and Class D Shares were +19.24%, +18.62%, +18.62% and +19.10%,
respectively. The total return of the unmanaged Morgan Stanley
Capital International Latin America Free Index was +18.09% during
the same period. The Fund's performance is attributed largely to the
outperformance of our investments in Mexico and Chile, where the
value of our investments rose 32.83% and 8.70%, respectively,
compared to their local markets which rose 20.15% and 3.71%,
respectively (in US dollar terms). (Investment results shown do not
reflect sales charges, and would be lower if sales charges were
included. Complete performance information, including average annual
total returns, can be found on pages 4--6 of this report to
shareholders.)
We also achieved a higher level of investment during the six-month
period ended May 31, 1996 by reducing the Fund's cash position from
7.7% of net assets to 2.0%. Constraining performance were the Fund's
underweighting in Argentina and, at the beginning of the May period,
its overweighting in Venezuela whose official exchange rate devalued
steeply in December 1995. Also detrimental to the Fund's performance
was the write-down of its holdings in Banco Nacional S.A. (Brazil)
after intervention by the central bank of Brazil and the sale of
Banco Nacional's assets to another institution.
Investment Overview
Many of the trends that we noted in our shareholder letter for the
quarter ended February 29, 1996 continued. For example, for the most
part investor sentiment toward Latin America continued to be
positive, although not without some setbacks. During the six-month
period ended May 31, 1996, macroeconomic factors were critical to
local stock market performance. For Argentina, the driving forces
were the economic turnaround, the rise of US interest rates, and the
political conflict between President Menem and Economy Minister
Domingo Cavallo. While industrial production and unemployment
figures remained depressed, they were not as dire as predicted, and
hence left room for more optimism on the Argentine economy for the
rest of 1996 and into 1997. On the other hand, the impact of
movements in US interest rates was most acutely felt on the
Argentine bolsa, because of the monetary constraints which the
convertibility model--by using a fixed exchange rate--imposes on the
Argentine economy.
<PAGE>
For Brazil, the progress of fiscal reforms dominated investor
concerns. We noted in our February 29, 1996 quarterly shareholder
letter that there was much optimism in Brazil as investors
anticipated congressional passage of reforms to reduce the country's
fiscal deficit. There was also much enthusiasm over the possible
privatization of Light-Servicios de Electricidade S.A. (Light), an
electric utility. However, beginning in the second quarter of 1996,
investor optimism over the rapid passage of fiscal reforms began to
wane as various measures became stalled in the congress. Although
corporate earnings for certain sectors, such as white goods
manufacturers, remained good, it became apparent that concern over
the fiscal situation and its subsequent impact on high real interest
rates was dampening expectations.
For Mexico, the economic turnaround, the movement of US interest
rates and, to a lesser extent, the progress of the US stock market
were the key factors influencing the trend in stock prices. During
the quarter ended May 31, 1996, there were few political
developments of consequence. Progress on the economic front was
evidenced by a gradual decline in interest rates. Furthermore, after
a period of volatility in the exchange rate in the fall of 1995, the
peso was more stable for most of the May period. A related concern
was the fragility of the Mexican banking system. For the most part,
bank earnings were discouraging, but not unexpected, given the
economic environment since the devaluation of the peso in December
1994. However, with the implementation of various government support
programs for the banking sector, including the recent mortgage
support program, investors are now beginning to look past 1996 in
the belief that when the economic turnaround gains momentum, the
banks will be well-positioned.
During the three months ended May 31, 1996, the Venezuelan stock
market rallied significantly, even when considered in US dollar
terms. The country suffered from an economic crisis for three years,
and its stock market is now being driven by the economic reform
process and the movement of local interest rates. Examples of
economic reform were the liberalization of the foreign exchange rate
and the resumption of negotiations with the International Monetary
Fund. Interest rates on Venezuelan government bonds declined over
the May period. While we are encouraged by events in Venezuela, we
caution our shareholders that until substantial fiscal reforms are
implemented, we should expect stock market and currency volatility
to continue.
<PAGE>
Investment Activities
During the quarter ended May 31, 1996, we added to our equity
investments in Argentina, Brazil and Mexico. In Brazil, we increased
our holdings in Petroleo Brasileiro S.A. (Petrobras), the state-
owned petroleum company, because of its very attractive valuation
when compared to international petroleum companies, and because of
new legislation permitting it to establish foreign alliances.
In Peru, we added Compania de Minas Buenaventura S.A., a gold mining
company with low-cost production, to the portfolio.
In Conclusion
We continue to believe that in the long term, Latin American
securities markets will outperform those in more developed countries
albeit with greater volatility. We are encouraged by the incipient
signs of recovery in the Mexican and Argentine economies, and the
movement toward economic reform in Venezuela. On a long-term basis,
Brazilian companies have great potential, but it would be prudent to
acknowledge the detrimental impact that delayed fiscal reforms would
have in the country's economic stability. Over the past six months,
except for Colombia, the region was spared serious political
upheaval, but it should not be forgotten that this too, like the
economic forces mentioned earlier, can also become decisive in the
region.
We appreciate your ongoing interest in Merrill Lynch Latin America
Fund, Inc., and we look forward to assisting you with your financial
needs in the months and years ahead.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Grace Pineda)
Grace Pineda
Vice President and Portfolio Manager
<PAGE>
July 3, 1996
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
<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, 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 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.
<PAGE>
Average Annual
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 3/31/96 +19.75% +13.46%
Inception (10/21/94) through 3/31/96 -25.64 -28.36
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 3/31/96 +18.63% +14.63%
Inception (9/27/91) through 3/31/96 + 4.22 + 4.22
[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
Without CDSC With CDSC**
Class C Shares*
Year Ended 3/31/96 +18.51% +17.51%
Inception (10/21/94) through 3/31/96 -26.41 -26.41
[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
Sales Charge Sales Charge**
Class D Shares*
Year Ended 3/31/96 +19.46% +13.19%
Inception (9/27/91) through 3/31/96 + 5.03 + 3.78
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
<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>
10/21/94--12/31/94 $18.22 $13.67 $0.396 $0.118 -22.63%
1995 13.67 10.41 -- -- -23.85
1/1/96--5/31/96 10.41 12.52 -- -- +20.27
------ ------
Total $0.396 Total $0.118
Cumulative total return as of 5/31/96: -29.14%**
<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>
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
1995 13.55 10.21 -- -- -24.65
1/1/96--5/31/96 10.21 12.23 -- -- +19.78
------ ------
Total $0.396 Total $0.491
Cumulative total return as of 5/31/96: +30.78%**
<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 $18.10 $13.55 $0.396 $0.118 -22.78%
1995 13.55 10.21 -- -- -24.65
1/1/96--5/31/96 10.21 12.23 -- -- +19.78
------ ------
Total $0.396 Total $0.118
Cumulative total return as of 5/31/96: -30.30%**
<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>
PERFORMANCE DATA (concluded)
<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>
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
1995 13.66 10.38 -- -- -24.01
1/1/96--5/31/96 10.38 12.47 -- -- +20.13
------ ------
Total $0.396 Total $0.677
Cumulative total return as of 5/31/96: +35.55%**
<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>
<PAGE>
<TABLE>
Recent
Performance
Results*
<CAPTION>
12 Month 3 Month
5/31/96 2/29/96 5/31/95 % Change % Change
<S> <C> <C> <C> <C> <C>
Class A Shares $12.52 $11.14 $10.77 +16.25% +12.39%
Class B Shares 12.23 10.91 10.63 +15.05 +12.10
Class C Shares 12.23 10.90 10.63 +15.05 +12.20
Class D Shares 12.47 11.10 10.76 +15.89 +12.34
Class A Shares--Total Return +16.25 +12.39
Class B Shares--Total Return +15.05 +12.10
Class C Shares--Total Return +15.05 +12.20
Class D Shares--Total Return +15.89 +12.34
<FN>
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
Shares Held/ Value Percent of
COUNTRY Industries Face Amount Long-Term Investments Cost (Note 1a) Net Assets
<S> <S> <S> <C> <S> <C> <C> <C>
Argentina Automotive 265,000 Mirgor S.A. C.I.F.I.A. (ADR)(2)(b) $ 679,062 $ 735,375 0.1%
Banking 69,620 Banco de Galicia y Buenos Aires S.A.
(ADR)(2) 1,010,375 1,627,368 0.2
208,075 Banco Frances del Rio de la
Plata S.A. 4,784,517 5,852,109 0.8
------------ ------------ ------
5,794,892 7,479,477 1.0
Beverages & 637,000 Quilmes Industrial S.A. 6,688,500 7,803,250 1.0
Tobacco
Energy Sources 630,267 Yacimientos Petroliferos Fiscales
S.A. (Sponsored) (ADR)(2) 12,722,346 13,865,874 1.9
Foreign ARS 8,400,000 Republic of Argentina, Floating
Government Rate Notes, 6.312% due
Obligations 3/31/2005 (1) 5,854,289 6,468,000 0.9
Merchandising 358,469 Grimoldi S.A. (Class B) 2,189,332 1,971,875 0.3
Multi-Industry 2,330,533 Compania Naviera Perez Companc
S.A.C.F.I.M.F.A. (b) 9,347,518 14,871,031 2.0
Real Estate 1,166,915 +++Inversiones y Representaciones
S.A. (IRSA) 3,126,377 3,816,385 0.5
111,361 +++Inversiones y Representaciones S.A.
(IRSA) (GDR)(3) 2,974,708 3,605,312 0.5
------------ ------------ ------
6,101,085 7,421,697 1.0
Telecommuni- 254,800 Telecom Argentina Stet--France
cations Telecom S.A. (ADR)(2) 12,948,581 11,848,200 1.6
776,300 Telefonica de Argentina S.A.
(ADR)(2) 22,248,409 22,609,738 3.0
525,000 Telefonica de Argentina S.A.
(Class B) 1,497,352 1,533,230 0.2
------------ ------------ ------
36,694,342 35,991,168 4.8
Total Long-Term Investments in
Argentina 86,071,366 96,607,747 13.0
Brazil Appliances & 263,225,000 Refrigeracao Parana S.A. (Preferred) 719,971 603,993 0.1
Household
Durables
Banking 2,293,534,640 Banco Bradesco S.A. (Preferred) 19,445,548 26,658,317 3.6
29,140,400 Banco Itau S.A. (Preferred) 5,867,813 11,810,914 1.6
364,129,908 Banco Nacional S.A. PN 9,903,203 365 0.0
------------ ------------ ------
35,216,564 38,469,596 5.2
<PAGE>
Beverages & 61,552,159 Companhia Cervejaria Brahma S.A.
Tobacco (Preferred) 19,377,805 36,696,928 5.0
3,603,656 Companhia Cervejaria Brahma S.A.
(Warrants)(a) 182,667 180,544 0.0
------------ ------------ ------
19,560,472 36,877,472 5.0
Energy Sources 111,520,000 Petroleo Brasileiro S.A. (Preferred) 13,542,832 13,465,090 1.8
Forest Products 32,733 Bardella Industrial S.A. (Preferred) 8,713,171 3,115,867 0.4
& Paper
Machinery & 8,304,000 Iochpe-Maxion S.A. (Ordinary)(b) 3,421,870 956,874 0.1
Engineering 11,209,765 Iochpe-Maxion S.A. (Preferred)(b) 4,748,793 1,505,119 0.2
9,273,000 Weg Exportadora S.A. (Preferred) 5,597,682 4,227,577 0.6
------------ ------------ ------
13,768,345 6,689,570 0.9
Merchandising 207,264,600 Lojas Americanas S.A. 4,476,775 3,906,460 0.5
</TABLE>
<TABLE>
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Shares Value Percent of
COUNTRY Industries Held Long-Term Investments Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
Brazil Metals & Steel 405,509,000 Companhia Siderurgica Nacional S.A.
(concluded) --CSN (b) $ 11,716,998 $ 10,235,242 1.4%
319,120 Companhia Vale do Rio Doce S.A.
(Preferred) 7,195,289 6,698,962 0.9
15,881,741,007 Usinas Siderurgicas de Minas Gerais
--Usiminas S.A. (Preferred) 16,976,532 17,345,783 2.3
------------ ------------ ------
35,888,819 34,279,987 4.6
Telecommuni- 572,285 Telecomunicacoes Brasileiras S.A.
cations --Telebras (ADR)(2) 27,390,129 36,840,847 5.0
22,217,454 Telecomunicacoes Brasileiras S.A.
--Telebras (Ordinary) 920,306 1,108,647 0.1
198,590,596 Telecomunicacoes Brasileiras S.A.
--Telebras (Preferred) 8,915,759 12,844,712 1.7
8,608,791 Telecomunicacoes Brasileiras S.A.
--Telebras (Rights)(c) 0 0 0.0
103,831,379 Telecomunicacoes de Minejeros S.A.
--TELEMIG (Preferred) 6,946,715 10,247,887 1.4
1,420,199 Telecomunicacoes de Minejeros S.A.
--TELEMIG (Rights)(d) 0 0 0.0
76,193,965 Telecomunicacoes de Sao Paulo S.A.
--TELESP (Preferred) 9,902,003 16,109,145 2.2
3,265,379 Telecomunicacoes de Sao Paulo S.A.
--TELESP (Rights)(e) 0 0 0.0
------------ ------------ ---
54,074,912 77,151,238 10.4
<PAGE>
Textiles & 58,822,363 Companhia de Tecidos Norte de
Apparel Minas S.A. 20,133,967 25,462,185 3.5
Utilities 4,387,500 Centrais Eletricas da Santa Catarina
S.A. (CELESC) 'B'(Preferred)(b) 764,541 3,648,923 0.5
76,000 ++Companhia Energetica de Minas
Gerais S.A. (CEMIG) (ADR)(2) 1,628,295 1,976,000 0.3
28,470 Companhia Energetica de Minas
Gerais S.A. (CEMIG) (ADR)(2) 638,750 740,220 0.1
403,000,000 Companhia Energetica de Minas
Gerais S.A. (CEMIG) (Preferred) 10,590,238 10,680,711 1.4
173,020,000 Companhia Paulista de Forca e Luz
S.A. (b) 10,106,226 12,048,988 1.6
27,707,000 Light Participacoes S.A. 2,522,244 3,402,020 0.5
------------ ------------ ------
26,250,294 32,496,862 4.4
Total Long-Term Investments in
Brazil 232,346,122 272,518,320 36.8
Chile Banking 164,000 Banco O'Higgins S.A. (ADR)(2) 2,507,154 3,731,000 0.5
Beverages & 318,165 Vina Concha y Toro S.A. 121,145 105,121 0.0
Tobacco 47,400 Vina Concha y Toro S.A. (ADR)(2) 890,094 805,800 0.1
------------ ------------ ------
1,011,239 910,921 0.1
Closed-End Funds 418,468 The Chile Fund, Inc. 10,695,683 9,886,307 1.3
Merchandising 528,846 Santa Isabel S.A. 430,047 928,004 0.1
Multi-Industry 138,650 Cristalerias de Chile S.A. (ADR)(2) 3,035,094 3,310,269 0.5
Publishing 4,916,262 Editorial Lord Cochrane S.A. 2,645,715 1,564,156 0.2
Telecommuni- 134,169 Compania de Telecomunicaciones de
cations Chile S.A.(ADR)(2) 12,154,511 12,242,921 1.7
98,732 Empresa Nacional de Telecomuni-
caciones S.A. (ENTEL) 677,828 918,212 0.1
------------ ------------ ------
12,832,339 13,161,133 1.8
<PAGE>
Utilities 302,400 Chilgener Inc. S.A. 6,755,902 7,144,200 1.0
35,000 ++Distribuidora Chilectra Metropolitan
S.A. (ADR)(2)(b) 1,473,750 1,820,000 0.2
3,724,465 Empresa Nacional de Electricidad
S.A. (ENDESA) 2,032,168 2,306,142 0.3
2,057,425 Enersis S.A. 930,264 1,165,673 0.2
380,200 Enersis S.A. (ADR)(2) 9,341,910 11,168,375 1.5
------------ ------------ ------
20,533,994 23,604,390 3.2
Total Long-Term Investments in
Chile 53,691,265 57,096,180 7.7
Colombia Banking 1,376,204 Banco de Bogota S.A. 7,327,647 7,876,852 1.1
26,951 Banco Industrial Colombiano S.A. 98,851 96,725 0.0
------------ ------------ ------
7,426,498 7,973,577 1.1
Beverages & 587,154 La Compania Cervecera Bavaria S.A. 3,401,356 2,079,874 0.3
Tobacco
Building 90,000 Cementos Diamante S.A. 590,537 453,041 0.0
Materials
Merchandising 1,428,814 Gran Cadena de Almacenes Colombianos
S.A. (CADENALCO) 4,043,019 1,405,172 0.2
35,000 ++Gran Cadena de Almacenes Colombianos
S.A. (CADENALCO)(ADR)(2) 611,250 551,250 0.1
------------ ------------ ------
4,654,269 1,956,422 0.3
Total Long-Term Investments in
Colombia 16,072,660 12,462,914 1.7
Mexico Banking 1,730,143 Grupo Financiero Banamex--Accival,
S.A. de C.V. (Banacci)(b) 3,675,406 3,646,343 0.5
9,584,000 Grupo Financiero Bancomer, S.A.
de C.V. 'B' (Ordinary)(b) 2,626,470 4,298,687 0.6
------------ ------------ ------
6,301,876 7,945,030 1.1
Beverages 641,660 Panamerican Beverages Inc. (Class A) 20,478,455 26,949,720 3.6
Beverages & 2,134,000 ++Fomento Economico Mexicano, S.A.
Tobacco de C.V. (Femsa)(ADR)(2) 6,019,389 6,209,940 0.8
3,276,000 Fomento Economico Mexicano, S.A.
de C.V. (Femsa)(Ordinary) 'B' 8,789,415 9,714,699 1.3
------------ ------------ ------
14,808,804 15,924,639 2.1
<PAGE>
Broadcasting & 3,215,000 Grupo Fernandez Editores, S.A. 4,709,988 1,129,289 0.1
Publishing de C.V. (b)
Building & 332,000 ++Corporacion Geo, S.A. de C.V. 'B'
Construction (ADR)(2)(b) 9,485,500 5,750,240 0.8
Building 3,992,100 Apasco, S.A. de C.V. 'A' 13,724,655 21,573,088 2.9
Materials 1,968,000 Cementos Mexicanos, S.A. de C.V.
'B' (Cemex) 8,247,056 7,923,048 1.1
500,000 Cementos Mexicanos, S.A. de C.V.
'B' (Cemex) (ADR)(2) 4,468,750 3,937,500 0.5
------------ ------------ ------
26,440,461 33,433,636 4.5
</TABLE>
<TABLE>
CONSOLIDATED SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
Shares Value Percent of
COUNTRY Industries Held Long-Term Investments Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
Mexico Construction/Housing 378,000 Grupo Profesional Planeacion y Proy-
(concluded) ectos,S.A. de C.V. (PYP)(Class B) $ 5,457,192 $ 2,195,893 0.3%
Financial Services 651,900 Banca Quadrum, S.A. de C.V.
(ADR)(2)(b) 10,545,780 3,585,450 0.5
Food & Household 312,518 Sigma Alimentos, S.A. de C.V. 5,569,354 2,849,901 0.4
Products
Health & Personal 1,765,450 Kimberly-Clark de Mexico, S.A.
Care de C.V. 'A' 17,975,852 32,652,000 4.4
Leisure and Tourism 179,000 Grupo Posadas, S.A. de C.V. 'A' (b) 149,627 82,463 0.0
395,300 ++Grupo Posadas, S.A. de C.V.
(ADR)(2)(b) 6,138,293 3,458,875 0.5
------------ ------------ ------
6,287,920 3,541,338 0.5
Merchandising 12,066,750 Cifra, S.A. de C.V. 'C' 17,413,104 17,932,214 2.4
988,500 Sears Roebuck de Mexico, S.A.
de C.V. 'B' (b) 6,010,030 2,670,900 0.4
547,500 ++Sears Roebuck de Mexico, S.A.
de C.V. 'B' (ADR)(2)(b) 14,403,127 2,805,938 0.4
------------ ------------ ------
37,826,261 23,409,052 3.2
Multi-Industry 3,785,625 Grupo Carso, S.A. de C.V. (b) 37,874,585 28,026,513 3.8
117,750 ++Grupo Carso, S.A. de C.V.
(ADR)(2)(b) 1,269,344 1,766,250 0.2
------------ ------------ ------
39,143,929 29,792,763 4.0
<PAGE>
Telecommuni- 121,900 Grupo Televisa, S.A. de C.V.
cations (GDS)(4)(b) 3,835,802 3,748,425 0.5
359,700 Telefonos de Mexico, S.A. de C.V.
(ADR)(2) 14,075,357 11,870,100 1.6
------------ ------------ ------
17,911,159 15,618,525 2.1
Total Long-Term Investments in
Mexico 222,942,531 204,777,476 27.6
Panama Banking 80,000 Banco Latinoamericano de Exporta-
ciones S.A.('BLADEX') 'E' 1,992,245 4,590,000 0.6
Total Long-Term Investments in
Panama 1,992,245 4,590,000 0.6
Peru Banking 337,825 Banco Wiese Limitado S.A. 814,160 570,972 0.1
Building Materials 237,407 Cementos Norte Pacasmayo S.A. 523,799 368,797 0.0
Financial Services 214,257 Credicorp Ltd. S.A. 3,315,305 3,963,759 0.5
Food & Household 2,885,636 Consorcio Alimentos Fabril Pacifico 5,303,100 3,765,432 0.5
Products S.A. (b)
Metals--Non-Ferrous 323,000 Compania de Minas Buenaventura S.A. 5,248,750 6,298,500 0.9
376,305 Minsur Sociedad Limitada S.A.
(T Shares) 2,555,655 3,351,515 0.5
------------ ------------ ------
7,804,405 9,650,015 1.4
Telecommunications 5,231,144 CPT Telefonica Del Peru Pacifico
S.A. (B Shares)(b) 10,179,002 10,358,272 1.4
Total Long-Term Investments in Peru 27,939,771 28,677,247 3.9
Venezuela Building Materials 1,242,139 Corporacion Ceramica Carabobo
S.A. 'A' 2,606,929 1,333,929 0.2
1,237,067 Corporacion Ceramica Carabobo
S.A. 'B' 2,294,951 1,289,022 0.2
577,792 Venezolana de Cementos S.A.C.A.
(Vencemos) 800,775 1,186,916 0.2
------------ ------------ ------
5,702,655 3,809,867 0.6
<PAGE>
Food & Household 15,456,371 Mavesa S.A. 2,587,936 3,212,887 0.4
Products
Metals & Steel 4,640,166 Siderurgica Venezolana SIVENSA,
S.A.I.C.A.--S.A.C.A. 2,203,931 3,340,130 0.4
Utilities 12,994,393 C.A. La Electricidad de Caracas
S.A.I.C.A.--S.A.C.A. 15,446,652 11,329,508 1.5
Total Long-Term Investments in
Venezuela 25,941,174 21,692,392 2.9
Total Long-Term Investments in
Latin America 666,997,134 698,422,276 94.2
Face
Amount Short-Term Investments
Commercial US$ 14,737,000 Ford Motor Credit Co., 5.40% due
Paper* 6/03/1996 14,732,579 14,732,579 2.0
Total Short-Term Investments 14,732,579 14,732,579 2.0
Total Investments $681,729,713 713,154,855 96.2
============
Other Assets Less Liabilities 27,987,136 3.8
------------ ------
Net Assets $741,141,991 100.0%
============ ======
<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 May 31, 1996.
(2)American Depositary Receipts (ADR).
(3)Global Depositary Receipts (GDR).
(4)Global Despositary Shares (GDS).
*Commercial Paper is traded on a discount basis; the interest rate
shown is the discount rate 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)Non-income producing security.
(c)The rights may be exercised until 6/18/1996.
(d)The rights may be exercised until 6/19/1996.
(e)The rights may be exercised until 6/19/1996.
++Restricted securities as to resale. The value of the Fund's
investment in restricted securities was approximately $24,338,000,
representing 3.3% of net assets.
<PAGE>
<CAPTION>
Acquisition Value
Issue Date(s) Cost (Note 1a)
<S> <C> <C> <C>
Companhia Energetica de Minas Gerais
S.A. (CEMIG) (ADR) 7/20/1995-8/01/1995 $ 1,628,295 $ 1,976,000
Corporacion Geo, S.A. de C.V. 'B' (ADR) 9/28/1994 9,485,500 5,750,240
Distribuidora Chilectra Metropolitan
S.A. (ADR) 10/24/1995-10/26/1995 1,473,750 1,820,000
Fomento Economico Mexicano, S.A.
de C.V. (Femsa) (ADR) 8/03/1995-10/12/1995 6,019,389 6,209,940
Gran Cadena de Almacenes Colombianos
S.A. (CADENALCO) (ADR) 2/14/1995 611,250 551,250
Grupo Carso, S.A. de C.V. (ADR) 5/13/1994 1,269,344 1,766,250
Grupo Posadas, S.A. de C.V. (ADR) 3/23/1992 6,138,293 3,458,875
Sears Roebuck de Mexico, S.A. de C.V.
'B' (ADR) 8/09/1994 14,403,127 2,805,938
Total $41,028,948 $24,338,493
=========== ===========
+++Investment in companies 5% or more of whose outstanding
securities are held by the Fund (such companies are defined as
'Affiliated Companies' in Section 2(a)(3) of the Investment Company
Act of 1940) is as follows:
<CAPTION>
Net Share Net Dividend
Industry Affiliate Activity Cost Income
<S> <S> <C> <C> <C>
Real Estate Inversiones y Representaciones
S.A. (IRSA) 1,700 $ -- $195,042
Real Estate Inversiones y Representaciones
S.A. (IRSA) (GDR) 161 -- 185,040
Total $ --
=====
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENT OF ASSETS AND LIABILITIES
<CAPTION>
As of May 31, 1996
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$681,729,713) (Note 1a) $ 713,154,855
Cash 6,673,223
Foreign cash (Note 1b) 16,764,214
Receivables:
Securities sold $ 4,848,873
Dividends 3,062,174
Capital shares sold 1,534,536
Interest 94,075 9,539,658
-------------
Deferred organization expenses (Note 1f) 19,390
Prepaid registration fees and other assets (Note 1f) 150,156
-------------
Total assets 746,301,496
-------------
Liabilities: Payables:
Capital shares redeemed 1,792,460
Securities purchased 1,048,392
Investment adviser (Note 2) 619,585
Distributor (Note 2) 510,954 3,971,391
-------------
Accrued expenses and other liabilities 1,188,114
-------------
Total liabilities 5,159,505
-------------
Net Assets: Net assets $ 741,141,991
=============
Net Assets Class A Common Stock, $0.10 par value, 100,000,000
Consist of: shares authorized $ 335,357
Class B Common Stock, $0.10 par value, 100,000,000
shares authorized 4,568,231
Class C Common Stock, $0.10 par value, 100,000,000
shares authorized 178,046
Class D Common Stock, $0.10 par value, 100,000,000
shares authorized 952,543
Paid-in capital in excess of par 938,985,538
Undistributed investment income--net 8,984,049
Accumulated realized capital losses on investments and
foreign currency transactions--net (Note 6) (243,390,958)
Accumulated distributions in excess of realized capital
gains--net (601,566)
Unrealized appreciation on investments and foreign currency
transactions--net 31,130,751
-------------
Net assets $ 741,141,991
=============
<PAGE>
Net Asset Class A--Based on net assets of $41,992,185 and 3,353,573
Value: shares outstanding $ 12.52
=============
Class B--Based on net assets of $558,558,238 and 45,682,309
shares outstanding $ 12.23
=============
Class C--Based on net assets of $21,767,298 and 1,780,462
shares outstanding $ 12.23
=============
Class D--Based on net assets of $118,824,270 and 9,525,433
shares outstanding $ 12.47
=============
See Notes to Consolidated Financial Statements.
</TABLE>
<TABLE>
CONSOLIDATED STATEMENT OF OPERATIONS
<CAPTION>
For the Six Months Ended May 31, 1996
<S> <S> <C>
Investment Income Dividends (net of $1,667,637 foreign withholding tax) $ 15,586,291
(Notes 1d & 1e): Interest and discount earned 1,928,936
-------------
Total income 17,515,227
-------------
Expenses: Investment advisory fees (Note 2) 3,437,636
Account maintenance and distribution fees--Class B (Note 2) 2,626,739
Transfer agent fees--Class B (Note 2) 952,706
Custodian fees 660,973
Transfer agent fees--Class D (Note 2) 169,895
Printing and shareholder reports 139,253
Account maintenance fees--Class D (Note 2) 136,907
Account maintenance and distribution fees--Class C (Note 2) 93,046
Accounting services (Note 2) 80,346
Registration fees (Note 1f) 55,299
Transfer agent fees--Class A (Note 2) 53,022
Professional fees 37,014
Transfer agent fees--Class C (Note 2) 34,847
Directors' fees and expenses 22,537
Amortization of organization expenses (Note 1f) 10,004
Pricing fees 5,956
Other 14,998
-------------
Total expenses 8,531,178
-------------
Investment income--net 8,984,049
-------------
<PAGE>
Realized & Realized loss from:
Unrealized Gain Investments--net $ (53,189,772)
(Loss) on Foreign currency transactions--net (1,293,107) (54,482,879)
Investments & -------------
Foreign Currency Change in unrealized appreciation/depreciation on:
Transactions--Net Investments--net 162,417,596
(Notes 1b, 1c, Foreign currency transactions--net 132,181 162,549,777
1e & 3): ------------- -------------
Net realized and unrealized gain on investments and
foreign currency transactions 108,066,898
-------------
Net Increase in Net Assets Resulting from Operations $ 117,050,947
=============
See Notes to Consolidated Financial Statements.
</TABLE>
<TABLE>
CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS
<CAPTION>
For the Six For the
Months Ended Year Ended
May 31, November 30,
Increase (Decrease) in Net Assets: 1996 1995
<S> <S> <C> <C>
Operations: Investment income--net $ 8,984,049 $ 4,492,110
Realized loss on investments and foreign currency
transactions--net (54,482,879) (207,424,067)
Change in unrealized appreciation/depreciation on
investments and foreign currency transactions--net 162,549,777 (238,787,654)
------------- -------------
Net increase (decrease) in net assets resulting from operations 117,050,947 (441,719,611)
------------- -------------
Distributions to Realized gain on investments--net:
Shareholders Class A -- (313,934)
(Note 1g): Class B -- (27,341,609)
Class C -- (170,047)
Class D -- (5,914,915)
In excess of realized gain on investments--net:
Class A -- (5,597)
Class B -- (487,479)
Class C -- (3,032)
Class D -- (105,458)
------------- -------------
Net decrease in net assets resulting from distributions
to shareholders -- (34,342,071)
------------- -------------
<PAGE>
Capital Shares Net decrease in net assets derived from capital shares
Transactions transactions (27,469,997) (29,924,043)
(Note 4): ------------- -------------
Net Assets: Total increase (decrease) in net assets 89,580,950 (505,985,725)
Beginning of period 651,561,041 1,157,546,766
------------- -------------
End of period* $ 741,141,991 $ 651,561,041
============= =============
<FN>
*Undistributed investment income--net $ 8,984,049 --
============= =============
See Notes to Consolidated Financial Statements.
</TABLE>
<TABLE>
CONSOLIDATED FINANCIAL HIGHLIGHTS
<CAPTION>
Class A++++
For the For the
Six For the Period
The following per share data and ratios have been derived Months Year Oct. 21,
from information provided in the financial statements. Ended Ended 1994++ to
May 31, Nov. 30, Nov. 30,
Increase (Decrease) in Net Asset Value: 1996 1995 1994
<S> <S> <C> <C> <C>
Per Share Net asset value, beginning of period $ 10.50 $ 17.37 $ 18.22
Operating -------- -------- --------
Performance: Investment income--net .20 .16 --
Realized and unrealized gain (loss) on investments and
foreign currency transactions--net 1.82 (6.52) (.85)
-------- -------- --------
Total from investment operations 2.02 (6.36) (.85)
-------- -------- --------
Less distributions:
Realized gain on investments--net -- (.50) --
In excess of realized gain on investments--net -- (.01) --
-------- -------- --------
Total distributions -- (.51) --
-------- -------- --------
Net asset value, end of period $ 12.52 $ 10.50 $ 17.37
======== ======== ========
Total Investment Based on net asset value per share 19.24%+++ (37.66%) (4.66%)+++
Return:** ======== ======== ========
<PAGE>
Ratios to Average Expenses 1.61%* 1.66% 1.85%*
Net Assets: ======== ======== ========
Investment income (loss)--net 3.48%* 1.40% (.20%)*
======== ======== ========
Supplemental Net assets, end of period (in thousands) $ 41,992 $ 26,034 $ 10,350
Data: ======== ======== ========
Portfolio turnover 32.63% 54.86% 30.15%
======== ======== ========
Average commission rate paid++++++ $ .0001 -- --
======== ======== ========
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Commencement of Operations.
++++Based on average shares outstanding during the period.
++++++For fiscal years beginning on or after September 1, 1995, the
Fund is required to disclose its average commission rate per share
for purchases and sales of equity securities.
+++Aggregate total investment return.
See Notes to Consolidated Financial Statements.
</TABLE>
<TABLE>
CONSOLIDATED FINANCIAL HIGHLIGHTS (concluded)
<CAPTION>
Class B
The following per share data and ratios have
been derived from information provided For the Six
in the financial statements. Months Ended For the Year
May 31, Ended November 30,
Increase (Decrease) in Net Asset Value: 1996++++ 1995++++ 1994++++ 1993 1992
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 10.31 $ 17.24 $ 14.39 $ 9.83 $ 9.80
Operating -------- -------- -------- -------- --------
Performance: Investment income (loss)--net .14 .05 (.09) .10 .08
Realized and unrealized gain (loss) on
investments and foreign currency
transactions--net 1.78 (6.47) 2.99 4.68 .05
-------- -------- -------- -------- --------
Total from investment operations 1.92 (6.42) 2.90 4.78 .13
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net -- -- (.05) (.13) (.10)
Realized gain on investments--net -- (.50) -- (.09) --+++++
In excess of realized gain on investments
--net -- (.01) -- -- --
-------- -------- -------- -------- --------
Total dividends and distributions -- (.51) (.05) (.22) (.10)
-------- -------- -------- -------- --------
Net asset value, end of period $ 12.23 $ 10.31 $ 17.24 $ 14.39 $ 9.83
======== ======== ======== ======== ========
<PAGE>
Total Investment Based on net asset value per share 18.62%+++ (38.32%) 20.19% 49.80% 1.30%
Return:** ======== ======== ======== ======== ========
Ratios to Average Expenses 2.65% 2.71% 2.51% 2.59% 2.65%
Net Assets: ======== ======== ======== ======== ========
Investment income (loss)--net 2.43% .43% (.54%) 1.09% 1.30%
======== ======== ======== ======== ========
Supplemental Net assets, end of year (in thousands) $558,558 $505,038 $937,221 $305,301 $126,344
Data: ======== ======== ======== ======== ========
Portfolio turnover 32.63% 54.86% 30.15% 24.74% 36.50%
======== ======== ======== ======== ========
Average commission rate paid++++++ $ .0001 -- -- -- --
======== ======== ======== ======== ========
<CAPTION>
Class C++++
For the
For the For the Period
The following per share data and ratios have been derived Six Months Year Oct. 21,
from information provided in the financial statements. Ended Ended 1994++ to
May 31, Nov. 30, Nov. 30,
Increase (Decrease) in Net Asset Value: 1996 1995 1994
<S> <S> <C> <C> <C>
Per Share Net asset value, beginning of period $ 10.31 $ 17.24 $ 18.10
Operating -------- -------- --------
Performance: Investment income (loss)--net .14 .03 (.02)
Realized and unrealized gain (loss) on investments
and foreign currency transactions--net 1.78 (6.45) (.84)
-------- -------- --------
Total from investment operations 1.92 (6.42) (.86)
-------- -------- --------
Less distributions:
Realized gain on investments--net -- (.50) --
In excess of realized gain on investments--net -- (.01) --
-------- -------- --------
Total distributions -- (.51) --
-------- -------- --------
Net asset value, end of period $ 12.23 $ 10.31 $ 17.24
======== ======== ========
Total Investment Based on net asset value per share 18.62%+++ (38.32%) (4.75%)+++
Return:** ======== ======== ========
Ratios to Average Expenses 2.67%* 2.72% 2.93%*
Net Assets: ======== ======== ========
Investment income (loss)--net 2.44%* .30% (1.22%)*
======== ======== ========
<PAGE>
Supplemental Net assets, end of period (in thousands) $ 21,768 $ 14,659 $ 5,069
Data: ======== ======== ========
Portfolio turnover 32.63% 54.86% 30.15%
======== ======== ========
Average commission rate paid++++++ $ .0001 -- --
======== ======== ========
<CAPTION>
Class D
The following per share data and ratios have
been derived from information provided For the Six
in the financial statements. Months Ended For the Year
May 31, Ended November 30,
Increase (Decrease) in Net Asset Value: 1996++++ 1995++++ 1994++++ 1993 1992
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 10.47 $ 17.37 $ 14.45 $ 9.90 $ 9.81
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .18 .14 .03 .18 .15
Realized and unrealized gain (loss) on
investments and foreign currency
transactions--net 1.82 (6.53) 3.00 4.69 .06
-------- -------- -------- -------- --------
Total from investment operations 2.00 (6.39) 3.03 4.87 .21
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net -- -- (.11) (.23) (.12)
Realized gain on investments--net -- (.50) -- (.09) --+++++
In excess of realized gain on investments
--net -- (.01) -- -- --
-------- -------- -------- -------- --------
Total dividends and distributions -- (.51) (.11) (.32) (.12)
-------- -------- -------- -------- --------
Net asset value, end of period $ 12.47 $ 10.47 $ 17.37 $ 14.45 $ 9.90
======== ======== ======== ======== ========
Total Investment Based on net asset value per share 19.10%++ (37.84%) 21.07% 50.86% 2.19%
Return:** ======== ======== ======== ======== ========
Ratios to Average Expenses 1.85%* 1.91% 1.73% 1.83% 1.89%
Net Assets: ======== ======== ======== ======== ========
Investment income--net 3.20%* 1.18% .23% 1.83% 2.18%
======== ======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $118,824 $105,830 $204,907 $ 75,085 $ 30,685
Data: ======== ======== ======== ======== ========
Portfolio turnover 32.63% 54.86% 30.15% 24.74% 36.50%
======== ======== ======== ======== ========
Average commission rate paid++++++ $ .0001 -- -- -- --
======== ======== ======== ======== ========
<PAGE>
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Commencement of Operations.
++++Based on average shares outstanding during the period.
++++++For fiscal years beginning on or after September 1, 1995, the
Fund is required to disclose its average commission rate per share
for purchases and sales of equity securities.
+++Aggregate total investment return.
+++++Amount is less than $.01 per share.
See Notes to Consolidated Financial Statements.
</TABLE>
NOTES TO CONSOLIDATED 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. These unaudited financial
statements reflect all adjustments which are, in the opinion of
management, necessary to a fair statement of the results for the
interim period presented. All such adjustments are of a normal
recurring nature. The Fund offers four classes of shares under the
Merrill Lynch Select Pricing SM System. Shares of Class A and Class D
are sold with a front-end sales charge. Shares of Class B and Class
C may be subject to a contingent deferred sales charge. All classes
of shares have identical voting, dividend, liquidation and other
rights and the same terms and conditions, except that Class B, Class
C and Class D Shares bear certain expenses related to the account
maintenance of such shares, and Class B and Class C Shares also bear
certain expenses related to the distribution of such shares. Each
class has exclusive voting rights with respect to matters relating
to its account maintenance and distribution expenditures. The
following is a summary of significant accounting policies followed
by the Fund.
(a) Valuation of investments--Portfolio securities which are traded
on stock exchanges are valued at the last sale price on the exchange
on which such securities are traded, as of the close of business on
the day the securities are being valued or, lacking any sales, at
the last available bid price. Securities traded in the over-the-
counter market are valued at the last available bid price prior to
the time of valuation. In cases where securities are traded on more
than one exchange, the securities are valued on the exchange
designated by or under the authority of the Board of Directors as
the primary market. Securities 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. Options written are valued
at the last sale price in the case of exchange-traded options or, in
the case of options traded in the over-the-counter market, the last
asked price. Options purchased are valued at the last sale price in
the case of exchange-traded options or, in the case of options
traded in the over-the-counter market, the last bid price. Short-
term securities are valued at amortized cost, which approximates
market value. Other investments, including futures contracts and
related options, are stated at market value. Securities and assets
for which market value quotations are not available are valued at
their fair value as determined in good faith by or under the
direction of the Fund's Board of Directors.
(b) Foreign currency transactions--Transactions denominated in
foreign currencies are recorded at the exchange rate prevailing when
recognized. Assets and liabilities denominated in foreign currencies
are valued at the exchange rate at the end of the period. Foreign
currency transactions are the result of settling (realized) or
valuing (unrealized) assets or liabilities expressed in foreign
currencies into US dollars. Realized and unrealized gains or losses
from investments include the effects of foreign exchange rates on
investments.
(c) Derivative financial instruments--The Fund may engage in various
portfolio strategies to seek to increase its return by hedging its
portfolio against adverse movements in the equity, debt and currency
markets. Losses may arise due to changes in the value of the
contract or if the counterparty does not perform under the contract.
* Options--The Fund is authorized to write and purchase call and
put options. When the Fund writes an option, an amount equal to the
premium received by the Fund is reflected as an asset and an
equivalent liability. The amount of the liability is subsequently
marked to market to reflect the current market value of the option
written.
When a security is purchased or sold through an exercise of an
option, the related premium paid (or received) is added to (or
deducted from) the basis of the security acquired or deducted from
(or added to) the proceeds of the security sold. When an option
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.
* Forward foreign exchange contracts--The Fund is authorized to
enter into forward foreign exchange contracts as a hedge against
either specific transactions or portfolio positions. Such contracts
are not entered on the Fund's records. However, the effect on
operations is recorded from the date the Fund enters into such
contracts. Premium or discount is amortized over the life of the
contracts.
* Foreign currency options and futures--The Fund may also purchase
or sell listed or over-the-counter foreign currency options, foreign
currency futures and related options on foreign currency futures as
a short or long hedge against possible variations in foreign
exchange rates. Such transactions may be effected with respect to
hedges on non-US dollar denominated securities owned by the Fund,
sold by the Fund but not yet delivered, or committed or anticipated
to be purchased by the Fund.
* Financial futures contracts--The Fund may purchase or sell
interest rate futures contracts and options on such futures
contracts for the purpose of hedging the market risk on existing
securities or the intended purchase of securities. Futures contracts
are contracts for delayed delivery of securities at a specific
future date and at a specific price or yield. Upon entering into a
contract, the Fund deposits and maintains as collateral such initial
margin as required by the exchange on which the transaction is
effected. Pursuant to the contract, the Fund agrees to receive from
or pay to the broker an amount of cash equal to the daily
fluctuation in value of the contract. Such receipts or payments are
known as variation margin and are recorded by the Fund as unrealized
gains or losses. When the contract is closed, the Fund records a
realized gain or loss equal to the difference between the value of
the contract at the time it was opened and the value at the time it
was closed.
(d) 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.
(e) Security transactions and investment income--Security
transactions are recorded on the dates the transactions are entered
into (the trade dates). Dividend income is recorded on the ex-
dividend dates except that if the ex-dividend date has passed,
certain dividends from foreign securities are recorded as soon as
the Fund is informed of the ex-dividend date. Interest income
(including amortization of discount) is recognized on the accrual
basis. Realized gains and losses on security transactions are
determined on the identified cost basis.
<PAGE>
(f) 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.
(g) Dividends and distributions--Dividends and distributions paid by
the Fund are recorded on the ex-dividend dates. Distributions in
excess of realized capital gains are due primarily to differing tax
treatments for futures transactions and post-October losses.
(h) Basis of consolidation--The accompanying consolidated financial
statements include the accounts of Merrill Lynch 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"). The general partner
of MLAM is Princeton Services, Inc. ("PSI"), an indirect wholly-
owned subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is
the limited partner. The Fund has entered into a Distribution
Agreement and Distribution Plans with Merrill Lynch Funds
Distributor, Inc. ("MLFD" or "Distributor"), a wholly-owned
subsidiary of Merrill Lynch Group, Inc.
MLAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee of 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 MLAM 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.
Pursuant to the distribution plans (the "Distribution Plans")
adopted by the Fund in accordance with Rule 12b-1 under the
Investment Company Act of 1940, the Fund pays the Distributor
ongoing account maintenance and distribution fees. The fees are
accrued daily and paid monthly at annual rates based upon the
average daily net assets of the shares as follows:
<PAGE>
Account Distribution
Maintenance Fee Fee
Class B 0.25% 0.75%
Class C 0.25% 0.75%
Class D 0.25% --
Pursuant to a sub-agreement with the Distributor, Merrill Lynch,
Pierce, Fenner & Smith Inc. ("MLPF&S"), a subsidiary of ML & Co.,
also provides account maintenance and distribution services to the
Fund. The ongoing account maintenance fee compensates the
Distributor and MLPF&S for providing account maintenance services to
Class B, Class C and Class D shareholders. The ongoing distribution
fee compensates the Distributor and MLPF&S for providing shareholder
and distribution-related services to Class B and Class C
shareholders.
For the six months ended May 31, 1996, MLFD earned underwriting
discounts and MLPF&S earned dealer concessions and direct
commissions on sales of the Fund's Class A and Class D Shares as
follows:
MLFD MLPF&S
Class A $ 130 $ 1,553
Class D $11,206 $119,083
For the six months ended May 31, 1996, MLPF&S received contingent
deferred sales charges of $818,586 and $11,212 relating to
transactions in Class B and Class C Shares, respectively.
In addition, MLPF&S received $130,760 in commissions on the
execution of portfolio security transactions for the Fund for the
six months ended May 31, 1996.
Merrill Lynch Financial Data Services, Inc. ("MLFDS"), a wholly-
owned subsidiary of ML & Co., is the Fund's transfer agent.
Accounting services are provided to the Fund by MLAM at cost.
Certain officers and/or directors of the Fund are officers and/or
directors of MLAM, PSI, MLPF&S, MLFDS, MLFD, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended May 31, 1996 were $208,245,831 and
$220,983,712, respectively.
<PAGE>
Net realized and unrealized gains (losses) as of May 31, 1996 were
as follows:
Realized Unrealized
Losses Gains (Losses)
Long-term investments $(53,189,772) $ 31,425,142
Foreign currency transactions (1,293,107) (294,391)
------------ ------------
Total $(54,482,879) $ 31,130,751
============ ============
As of May 31, 1996, net unrealized appreciation for Federal income
tax purposes aggregated $31,425,142, of which $123,513,242 related
to appreciated securities and $92,088,100 related to depreciated
securities. At May 31, 1996, the aggregate cost of investments for
Federal income tax purposes was $681,729,713.
4. Capital Share Transactions:
Net decrease in net assets derived from capital share transactions
was $27,469,997 and $29,924,043 for the six months ended May 31,
1996 and for the year ended November 30, 1995, respectively.
Transactions in capital shares for each class were as follows:
Class A Shares for the Six Months Dollar
Ended May 31, 1996 Shares Amount
Shares sold 1,524,810 $ 17,669,214
Shares redeemed (650,173) (7,545,467)
----------- -------------
Net increase 874,637 $ 10,123,747
=========== =============
Class A Shares for the Year Dollar
Ended November 30, 1995 Shares Amount
Shares sold 3,438,542 $ 37,843,792
Shares issued to shareholders in
reinvestment of distributions 18,463 304,264
----------- -------------
Total issued 3,457,005 38,148,056
Shares redeemed (1,573,862) (16,786,743)
----------- -------------
Net increase 1,883,143 $ 21,361,313
=========== =============
<PAGE>
Class B Shares for the Six Months Dollar
Ended May 31, 1996 Shares Amount
Shares sold 7,260,187 $ 80,498,942
Automatic conversion of shares (97,702) (1,082,625)
Shares redeemed (10,479,357) (114,639,282)
----------- -------------
Net decrease (3,316,872) $ (35,222,965)
=========== =============
Class B Shares for the Year Dollar
Ended November 30, 1995 Shares Amount
Shares sold 18,702,609 $ 208,392,855
Shares issued to shareholders in
reinvestment of distributions 1,527,757 24,963,542
----------- -------------
Total issued 20,230,366 233,356,397
Automatic conversion of shares (381,355) (4,102,038)
Shares redeemed (25,227,391) (278,539,083)
----------- -------------
Net decrease (5,378,380) $ (49,284,724)
=========== =============
Class C Shares for the Six Months Dollar
Ended May 31, 1996 Shares Amount
Shares sold 773,798 $ 8,691,436
Shares redeemed (415,507) (4,687,773)
----------- -------------
Net increase 358,291 $ 4,003,663
=========== =============
Class C Shares for the Year Dollar
Ended November 30, 1995 Shares Amount
Shares sold 1,762,120 $ 19,860,125
Shares issued to shareholders in
reinvestment of distributions 9,124 149,092
----------- -------------
Total issued 1,771,244 20,009,217
Shares redeemed (643,180) (6,956,487)
----------- -------------
Net increase 1,128,064 $ 13,052,730
=========== =============
<PAGE>
Class D Shares for the Six Months Dollar
Ended May 31, 1996 Shares Amount
Shares sold 4,433,306 $ 49,055,112
Automatic conversion of shares 95,946 1,082,625
----------- -------------
Total issued 4,529,252 50,137,737
Shares redeemed (5,109,531) (56,512,179)
----------- -------------
Net decrease (580,279) $ (6,374,442)
=========== =============
Class D Shares for the Year Dollar
Ended November 30, 1995 Shares Amount
Shares sold 7,252,530 $ 81,328,489
Automatic conversion of shares 376,941 4,102,038
Shares issued to shareholders in
reinvestment of distributions 319,791 5,266,950
----------- -------------
Total issued 7,949,262 90,697,477
Shares redeemed (9,641,073) (105,750,839)
----------- -------------
Net decrease (1,691,811) $ (15,053,362)
=========== =============
5. Commitments:
At May 31, 1996, the Fund had entered into foreign exchange
contracts under which it agreed to purchase and sell various foreign
currency with approximate values of $591,000 and $846,000,
respectively.
6. Capital Loss Carryforward:
At November 30, 1995, the Fund had a net capital loss carryforward
of approximately $145,157,000, all of which expires in 2003. This
amount will be available to offset like amounts of any future
taxable gains.
<PAGE>
PORTFOLIO INFORMATION
As of May 31, 1996
Percent of
Ten Largest Equity Holdings Net Assets
Telecomunicacoes Brasileiras S.A.--Telebras* 6.8%
Companhia Cervejaria Brahma S.A. PN (Preferred) 5.0
Kimberly-Clark de Mexico, S.A. de C.V. 'A' 4.4
Grupo Carso, S.A. de C.V.* 4.0
Panamerican Beverages Inc. (Class A) 3.6
Banco Bradesco S.A. (Preferred) 3.6
Companhia de Tecidos Norte de Minas S.A. 3.5
Telefonica de Argentina S.A.* 3.2
Apasco, S.A. de C.V. 'A' 2.9
Cifra, S.A. de C.V. 'C' 2.4
[FN]
*Includes combined holdings.
Percent of
Ten Largest Industries Net Assets
Telecommunications 20.6%
Banking 9.6
Utilities 9.1
Beverages & Tobacco 8.5
Multi-Industry 6.5
Building Materials 5.1
Metals & Steel 5.0
Health & Personal Care 4.4
Merchandising 4.4
Energy Sources 3.7
<PAGE>
PORTFOLIO CHANGES
For the Quarter Ended May 31, 1996
Additions
Banco Industrial Colombiano S.A.
Cementos Mexicanos, S.A. de C.V. 'B'
(Cemex)
Cementos Mexicanos, S.A. de C.V. 'B'
(Cemex)(ADR)
Companhia Cervejaria Brahma S.A.
(Warrants)
Companhia Energetica de Minas Gerais S.A.
(CEMIG)(Preferred)
Compania de Minas Buenaventura S.A.
Consorcio Alimentos Fabril Pacifico S.A.
Grupo Televisa, S.A. de C.V. (GDS)
Quilmes Industrial S.A.
Telecomunicacoes Brasileiras S.A.--
Telebras (Rights)
Telecomunicacoes de Minejeros S.A.--
TELEMIG (Rights)
Telecomunicacoes de Sao Paulo S.A.--
TELESP (Rights)
Deletions
Banco Commercial S.A. (ADR)
Brasmotor Group S.A. (Preferred)
Buenos Aires Embotelladora S.A. (BAESA)
Buenos Aires Embotelladora S.A. (BAESA)
(ADR)
CAPCO Automotive Products Corp. S.A.
CPT Telefonica Del Peru S.A. (A Shares)
Centrais Electricas Brasileiras S.A.--
Eletrobras 'B' (Preferred)
Centrais Electricas Brasileiras S.A.--
Eletrobras (Preferred) (ADR)
Central Costanera S.A. (Class B) (ADR)
Companhia Cervejaria Brahma S.A. (Rights)
Companhia Industrial Peru Pacifico S.A.
Light-Servicios de Electricidad S.A.
Mantex S.A.C.A.
Mavesa S.A. (ADR)
Papeles Nacionales S.A. (ADR)
Sadia Concordia S.A. Industria e Comercio
(Preferred)
Southern Peru Copper Corp. S.A.
Transportacion Maritima Mexicana, S.A.
de C.V.
Transportacion Maritima Mexicana, S.A.
de C.V. 'L' (ADR)
Venezolana de Prerreducidos Caroni
Venprecar C.A. (GDS)
