MERRILL LYNCH
LATIN AMERICA
FUND, INC.
FUND LOGO
Quarterly Report
August 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
Printed on post-consumer recycled paper
MERRILL LYNCH LATIN AMERICA FUND, INC.
Asset Allocation*
As a Percentage of
Net Assets as of
August 31, 1996
<PAGE>
A map illustrating the following percentages:
Mexico 32.7%
Panama 0.6%
Venezuela 2.9%
Columbia 1.5%
Peru 6.3%
Brazil 35.9%
Argentina 10.5%
Chile 5.9%
[FN]
*Total may not equal 100% and does not include short-term
securities.
DEAR SHAREHOLDER
During the three months ended August 31, 1996, total returns for
Merrill Lynch Latin America Fund, Inc.'s Class A, Class B, Class C
and Class D Shares were +1.84%, +1.55%, +1.55% and +1.84%,
respectively. (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 3-5 of this report to shareholders.) The total
return of the unmanaged Morgan Stanley Capital International Latin
America Free Index was +1.30% during the August quarter. The Fund's
performance benefited from its overweighted positions in Brazil and
Peru, whose markets had total returns of +5.75% and +9.99%,
respectively (in US-dollar terms). During the quarter ended August
31, 1996, we increased the Fund's cash position from 2.0% of net
assets to 2.8%.
Investment Overview
Speculation on global interest rates continued to strongly impact
the Latin American equity markets during the past three months. In
addition to the specific economic factors affecting the markets in
each country, political concerns once again came to the forefront in
many countries, most notably in Argentina and Mexico.
Major Latin American Markets
In Argentina, the stock market initially rose to a 21-month high,
buoyed by optimism that the weak economic recovery would become more
robust during the second half of 1996. However, the political event
which has long haunted the Argentine market--the impending departure
of Economics Minister Domingo Cavallo--took place and triggered a
correction. Caution once again prevails as investors weigh the
balance between closing the fiscal deficit for 1996 against the need
for economic growth to combat high unemployment levels. The
Argentine market was the worst performer among the Latin American
markets for the quarter ended August 31, 1996, declining by
approximately 13%.
<PAGE>
In contrast, among the major Latin American markets, Brazil was the
strongest performer for the August quarter. In June and early July,
the market was buoyed by legislation regarding the privatization of
electric utilities in Sao Paulo and by the strong earnings of the
bellwether enterprise Telecomunicacoes Brasileiras S.A. (Telebras).
However, by August, poor corporate earnings for other high-profile
companies, coupled with anticipated delays in approval of key
economic reforms by the Brazilian congress, put a damper on the
market.
Mexico began to show signs of a weak economic recovery during the
first quarter of 1996. However, as in Argentina, political concerns
moved to the forefront during the August quarter. A new guerrilla
group, the Popular Revolutionary Army, staged armed attacks in
southern Mexico and the stock market corrected. Political
uncertainty is likely to prevail in the upcoming months since the
Pacto--the annual social and economic agreement between labor,
government and business--must be negotiated.
Smaller Latin American Markets
The smaller markets outperformed most of the major markets in the
region. For the three-month period ended August 31, 1996, Peru
reported the best performance in Latin America. Encouraging gross
domestic product growth estimates (+4.5%), coupled with attractive
valuations in the banking and mining sectors, gave the initial
impetus for the market's rally. These economic indicators were
followed by the global offering of shares in the national telephone
company, Telefonica del Peru S.A. At approximately $1 billion, it
was one of the largest offerings in Latin America in the last three
years. The success of this issue further bolstered investor
confidence in Peru.
Investment Activities
During the quarter ended August 31, 1996, we added to our equity
investments in Mexico and Peru. In Mexico, we purchased shares in
Grupo Casa Autrey, S.A. de C.V., one of the largest pharmaceuticals
distributors in Mexico. The company's restructuring and emphasis on
improved inventory management and quality control made it a leader
in this sector. We also increased our holdings in Cifra, S.A. de
C.V., a leading retailer. This Wal-Mart affiliate is considered one
of the best-run companies in Mexico. In Peru, we participated in the
global offering of Telefonica del Peru S.A. We also increased our
holdings in Credicorp Ltd. S.A., the holding company for Banco de
Credito, one of the major Peruvian banks. We believe that the
improving economy will permit growth in earnings from increased
lending activities and a reduction in problem loans in the near
term.
<PAGE>
In Conclusion
We remind our investors that the near-term outlook for several Latin
American markets still remains very volatile. Nevertheless, we
continue to believe that in the long term, Latin American securities
markets will outperform those in more developed countries.
We appreciate your ongoing interest in Merrill Lynch Latin America
Fund, Inc., and we look forward to reviewing our outlook and
strategy with you in the upcoming quarters.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Grace Pineda)
Grace Pineda
Vice President and Portfolio Manager
September 25, 1996
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.
<PAGE>
* 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. (There is no initial
sales charge for automatic share conversions.)
* Class C Shares are subject to a distribution fee of 0.75% and an
account maintenance fee of 0.25%. In addition, Class C Shares are
subject to a 1% contingent deferred sales charge if redeemed within
one year of purchase.
* Class D Shares incur a maximum initial sales charge of 5.25% and
an account maintenance fee of 0.25% (but no distribution fee).
None of the past results shown should be considered a representation
of future performance. Investment return and principal value of
shares will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost. Dividends paid to each class
of shares will vary because of the different levels of account
maintenance, distribution and transfer agency fees applicable to
each class, which are deducted from the income available to be paid
to shareholders.
PERFORMANCE DATA (concluded)
Average Annual
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 6/30/96 +18.22% +12.01%
Inception (10/21/94) through 6/30/96 -17.64 -20.22
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
<PAGE>
Class B Shares*
Year Ended 6/30/96 +17.08% +13.08%
Inception (9/27/91) through 6/30/96 + 6.13 + 6.13
[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 6/30/96 +16.97% +15.97%
Inception (10/21/94) through 6/30/96 -18.50 -18.50
[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 6/30/96 +17.97% +11.78%
Inception (9/27/91) through 6/30/96 + 6.96 + 5.75
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
<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--8/31/96 10.41 12.75 -- -- +22.48
------ ------
Total $0.396 Total $0.118
Cumulative total return as of 8/31/96: -27.84%**
<PAGE>
<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>
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--8/31/96 10.21 12.42 -- -- +21.65
------ ------
Total $0.396 Total $0.491
Cumulative total return as of 8/31/96: +32.82%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the ex-dividend date, and do not
reflect deduction of any sales charge; results would be lower if
sales charge was deducted.
</TABLE>
<TABLE>
Performance
Summary--
Class 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--8/31/96 10.21 12.42 -- -- +21.65
------ ------
Total $0.396 Total $0.118
<PAGE>
Cumulative total return as of 8/31/96: -29.22%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the ex-dividend date, and do not
reflect deduction of any sales charge; results would be lower if
sales charge was deducted.
</TABLE>
<TABLE>
Performance
Summary--
Class D Shares***
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <C> <C> <C> <C> <C>
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--8/31/96 10.38 12.70 -- -- +22.35
------ ------
Total $0.396 Total $0.677
Cumulative total return as of 8/31/96: +38.05%**
<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
8/31/96 5/31/96 8/31/95 % Change % Change
<S> <C> <C> <C> <C> <C>
Class A Shares $12.75 $12.52 $11.40 +11.84% +1.84%
Class B Shares 12.42 12.23 11.22 +10.70 +1.55
Class C Shares 12.42 12.23 11.22 +10.70 +1.55
Class D Shares 12.70 12.47 11.38 +11.60 +1.84
Class A Shares-Total Return +11.84 +1.84
Class B Shares-Total Return +10.70 +1.55
Class C Shares-Total Return +10.70 +1.55
Class D Shares-Total Return +11.60 +1.84
<FN>
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included.
</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 Banking 69,620 Banco de Galicia y Buenos Aires
S.A. (ADR) (2) $ 1,010,375 $ 1,435,913 0.2%
208,075 Banco Frances del Rio de la Plata
S.A. (ADR) (2) 4,784,517 4,811,734 0.6
------------ ------------ ------
5,794,892 6,247,647 0.8
Beverages & 637,000 Quilmes Industrial S.A. 6,688,500 6,370,000 0.9
Tobacco
Foreign ARS 47,533,000 Republic of Argentina, Floating Rate
Government Notes, 6.312% due 3/31/2005 (1) 35,758,541 36,897,491 5.0
Obligations
Merchandising 563,144 Grimoldi S.A. (Class B) 3,318,671 2,761,062 0.4
Multi-Industry 2,387,533 Compania Naviera Perez Companc
S.A.C.F.I.M.F.A. 9,655,290 13,664,888 1.8
Real Estate 1,166,915 Inversiones y Representaciones S.A.
(IRSA) 3,126,377 3,234,295 0.4
134,981 Inversiones y Representaciones S.A.
(IRSA) (GDR) (3) 3,742,358 3,728,850 0.5
------------ ------------ ------
6,868,735 6,963,145 0.9
<PAGE>
Telecommunications 159,300 Telefonica de Argentina S.A. (ADR) (2) 4,992,344 3,803,288 0.5
525,000 Telefonica de Argentina S.A. (Class B) 1,497,352 1,234,491 0.2
------------ ------------ ------
6,489,696 5,037,779 0.7
Total Long-Term Investments in
Argentina 74,574,325 77,942,012 10.5
Brazil Banking 2,278,270,217 Banco Bradesco S.A. (Preferred) 13,024,887 19,278,878 2.6
31,410,050 Banco Itau S.A. (Preferred) 6,757,023 12,918,824 1.7
364,129,908 Banco Nacional S.A. PN (Preferred) 9,903,203 358 0.0
------------ ------------ ------
29,685,113 32,198,060 4.3
Beverages & 61,552,159 Companhia Cervejaria Brahma S.A.
Tobacco PN (Preferred) 19,377,805 39,064,393 5.3
Diversified 1,106,400 Souza Cruz S.A. 8,336,307 7,783,883 1.1
Energy Sources 111,520,000 Petroleo Brasileiro S.A. (Preferred) 13,542,832 13,332,363 1.8
Forest Products & 17,462 Bardella Industrial S.A. (Preferred) 4,473,233 1,701,012 0.2
Paper
Machinery & 8,304,000 Iochpe-Maxion S.A. (Ordinary) 3,421,870 939,644 0.1
Engineering 9,273,000 Weg Exportadora S.A. (Preferred) 5,597,682 4,288,409 0.6
------------ ------------ ------
9,019,552 5,228,053 0.7
Merchandising 248,114,600 Lojas Americanas S.A. (Preferred) 5,293,651 4,296,779 0.6
Metals & Steel 729,397,000 Companhia Siderurgica de Tubarao S.A.
'B' (Preferred) 11,553,259 11,626,716 1.6
405,509,000 Companhia Siderurgica Nacional
S.A.--CSN 11,716,998 9,356,672 1.3
109,120 Companhia Vale do Rio Doce S.A.
(Preferred) 2,463,534 2,115,186 0.3
15,881,741,007 Usinas Siderurgicas de Minas Gerais--
Usiminas S.A. (Preferred) 16,976,532 16,564,640 2.2
------------ ------------ ------
42,710,323 39,663,214 5.4
Telecommunications 358,585 Telecomunicacoes Brasileiras S.A.--
Telebras(ADR) (2) 18,688,710 26,669,759 3.6
136,517,454 Telecomunicacoes Brasileiras S.A.--
Telebras(Ordinary) 7,929,737 8,259,823 1.1
198,590,596 Telecomunicacoes Brasileiras S.A.--
Telebras(Preferred) 8,915,759 14,753,114 2.0
99,937,288 Telecomunicacoes de Minejeros S.A.--
TELEMIG(Class B)(Preferred) 7,132,438 11,357,627 1.5
11,883,965 Telecomunicacoes de Sao Paulo S.A.--
TELESP(Preferred) 1,950,620 2,280,206 0.3
3,265,379 Telecomunicacoes de Sao Paulo S.A.--
TELESP 524,948 549,424 0.1
------------ ------------ ------
45,142,212 63,869,953 8.6
<PAGE>
Textiles & 58,702,363 Companhia de Tecidos Norte de Minas
Apparel S.A. (Preferred) 20,107,723 19,928,652 2.7
Utilities 3,484,193 Centrais Eletricas da Santa Catarina
S.A. (CELESC) 'B' (Preferred) 607,136 2,948,348 0.4
76,000 Companhia Energetica de Minas Gerais
S.A (CEMIG) (ADR) (2) 1,628,295 2,261,000 0.3
28,470 Companhia Energetica de Minas Gerais
S.A.(CEMIG) (ADR) (2) 638,750 846,983 0.1
403,000,000 Companhia Energetica de Minas Gerais
S.A.(CEMIG) (Preferred) 10,590,238 12,134,016 1.7
173,020,000 Companhia Paulista de Forca e Luz S.A. 10,106,226 15,577,418 2.1
27,707,000 Light Participacoes S.A. 2,522,244 4,479,248 0.6
------------ ------------ ------
26,092,889 38,247,013 5.2
Total Long-Term Investments in Brazil 223,781,640 265,313,375 35.9
Chile Closed-End Funds 229,968 The Chile Fund, Inc. 5,993,326 5,289,264 0.7
Merchandising 528,846 Santa Isabel S.A. 430,047 897,943 0.1
521,716 Santa Isabel S.A. (ADR) (2) 14,267,791 13,238,543 1.8
------------ ------------ ------
14,697,838 14,136,486 1.9
Multi-Industry 138,650 Cristalerias de Chile S.A. (ADR) (2) 3,035,094 3,015,637 0.4
Publishing 2,713,062 Editorial Lord Cochrane S.A. 1,385,552 597,468 0.1
Telecommunications 21,742 Compania de Telecomunicaciones de Chile
S.A.(ADR) (2) 1,846,746 2,125,280 0.3
98,732 Empresa Nacional de Telecomunicaciones
S.A. (ENTEL) 677,828 886,303 0.1
------------ ------------ ------
2,524,574 3,011,583 0.4
Utilities 35,000 Distribuidora Chilectra Metropolitana
S.A. (ADR) (2) 1,473,750 1,942,500 0.3
3,724,465 Empresa Nacional de Electricidad S.A.
(ENDESA) 2,032,168 2,354,443 0.3
2,057,425 Enersis S.A. 930,264 1,245,481 0.2
380,200 Enersis S.A. (ADR) (2) 9,341,910 11,833,725 1.6
------------ ------------ ------
13,778,092 17,376,149 2.4
Total Long-Term Investments in Chile 41,414,476 43,426,587 5.9
Colombia Banking 1,376,204 Banco de Bogota S.A. 7,327,647 7,439,298 1.0
26,951 Banco Industrial Colombiano S.A. 98,851 91,864 0.0
------------ ------------ ------
7,426,498 7,531,162 1.0
<PAGE>
Beverages & Tobacco 587,154 La Compania Cervecera Bavaria S.A. 3,401,356 2,114,093 0.3
Building Materials 90,000 Cementos Diamante S.A 590,537 328,373 0.0
</TABLE>
<TABLE>
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Percent of
COUNTRY Industries Shares Held Long-Term Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Colombia Merchandising 1,428,814 Gran Cadena de Almacenes Colombianos
(concluded) S.A. (CADENALCO) $ 4,043,019 $ 1,236,065 0.2%
35,000 Gran Cadena de Almacenes Colombianos
S.A. (CADENALCO) (ADR) (2) 611,250 332,500 0.0
------------ ------------ ------
4,654,269 1,568,565 0.2
Total Long-Term Investments in
Colombia 16,072,660 11,542,193 1.5
Mexico Banking 1,730,143 Grupo Financiero Banamex-Accival, S.A.
de C.V.(Banacci) 3,675,406 3,551,586 0.5
9,584,000 Grupo Financiero Bancomer, S.A. de C.V.
'B' (Ordinary) 2,626,470 4,665,562 0.6
------------ ------------ ------
6,301,876 8,217,148 1.1
Beverages 641,660 Panamerican Beverages Inc. (Class A) 20,478,455 27,110,135 3.7
Beverages & 2,373,000 Fomento Economico Mexicano, S.A. de
Tobacco C.V. (Femsa)(ADR) (2) 6,951,750 7,000,350 0.9
1,679,000 Fomento Economico Mexicano, S.A. de
C.V. (Femsa)(Ordinary) 'B' 4,255,011 5,017,065 0.7
------------ ------------ ------
11,206,761 12,017,415 1.6
Building & 282,000 Corporacion Geo, S.A. de C.V. 'B'
Construction (ADR) (2) 8,029,875 5,640,000 0.8
Building Materials 4,002,600 Apasco, S.A. de C.V. 'A' 13,779,318 26,983,227 3.7
2,318,000 Cementos Mexicanos, S.A. de C.V.
'B' (Cemex) 9,544,015 9,602,269 1.3
901,000 Cementos Mexicanos, S.A. de C.V.
'B' (Cemex)(ADR) (2) 7,864,424 7,433,250 1.0
------------ ------------ ------
31,187,757 44,018,746 6.0
<PAGE>
Chemicals 155,000 Desc, S.A. de C.V. (ADR) (2) 3,309,779 3,177,500 0.4
Construction/Housing 369,000 Grupo Profesional Planeacion y
Proyectos,(S.A. de C.V. PYP)
(Class B) 5,325,962 1,752,507 0.2
Distribution 515,500 Grupo Casa Autrey, S.A. de C.V.
(ADR) (2) 10,761,890 12,243,125 1.7
Financial Services 651,900 Banca Quadrum, S.A. de C.V. (ADR) (2) 10,545,780 3,096,525 0.4
Food & Household 165,518 Sigma Alimentos, S.A. de C.V. 2,953,657 1,506,694 0.2
Products
Health & Personal 1,765,450 Kimberly-Clark de Mexico, S.A.
Care de C.V. 'A' 17,975,852 32,420,929 4.4
Leisure & Tourism 197,700 Grupo Posadas, S.A. de C.V. (ADR) (2) 3,351,122 1,680,450 0.2
Merchandising 14,381,950 Cifra, S.A. de C.V. 'C' 20,584,835 22,236,999 3.0
250,000 Cifra, S.A. de C.V. 'C' (ADR) (2) 338,325 387,500 0.1
26,100 Sears Roebuck de Mexico, S.A.
de C.V. 'B' 85,547 74,375 0.0
401,160 Sears Roebuck de Mexico, S.A.
de C.V. 'B' (ADR) (2) 10,666,915 2,206,380 0.3
------------ ------------ ------
31,675,622 24,905,254 3.4
Multi-Industry 88,704 Grupo Carso, S.A. de C.V. 'A'
(ADR) (2) 983,267 820,512 0.1
4,142,625 Grupo Carso, S.A. de C.V. 'A1' 40,027,012 19,018,912 2.6
4,054,625 Invercorporacion, S.A. de C.V. 'A1' 534,206 524,213 0.1
88,704 Invercorporacion, S.A. de C.V.
(ADR) (2) 12,419 10,644 0.0
------------ ------------ ------
41,556,904 20,374,281 2.8
Telecommunications 4,054,625 Carso Global Telecom, S.A. de C.V. 'A1' 10,684,124 11,554,077 1.5
88,704 Carso Global Telecom, S.A. de C.V.
(ADR) (2) 421,344 498,960 0.1
243,900 Grupo Televisa, S.A. de C.V. (GDS) (4) 6,819,405 7,408,463 1.0
725,700 Telefonos de Mexico, S.A. de C.V.
(ADR) (2) 25,246,879 23,857,387 3.2
------------ ------------ ------
43,171,752 43,318,887 5.8
Total Long-Term Investments in Mexico 247,833,044 241,479,596 32.7
Panama Banking 80,000 Banco Latinoamericano de Exportaciones
S.A. ('BLADEX') 'E' 1,992,245 4,270,000 0.6
<PAGE>
Total Long-Term Investments in Panama 1,992,245 4,270,000 0.6
Peru Banking 337,825 Banco Wiese Limitado S.A. 814,160 584,487 0.1
Building Materials 237,407 Cementos Norte Pacasmayo S.A. 523,799 403,053 0.1
Financial Services 377,872 Credicorp Ltd. S.A. 6,665,789 7,368,504 1.0
Food & Household 2,885,636 Consorcio Alimentos Fabril Pacifico S.A. 5,303,100 4,279,347 0.6
Products
Metals--Non-Ferrous 323,000 Compania de Minas Buenaventura S.A. 5,248,750 6,096,625 0.8
376,305 Minsur Sociedad Limitada S.A.
(T Shares) 2,555,655 3,339,173 0.5
------------ ------------ ------
7,804,405 9,435,798 1.3
Telecommunications 503,000 Telefonica del Peru S.A. 10,776,265 11,757,625 1.6
5,042,339 Telefonica del Peru S.A. (B Shares) 9,849,127 11,788,613 1.6
------------ ------------ ------
20,625,392 23,546,238 3.2
Total Long-Term Investments in Peru 41,736,645 45,617,427 6.3
Venezuela Building Materials 1,242,139 Corporacion Ceramica Carabobo S.A. 'A' 2,606,929 1,202,534 0.2
1,237,067 Corporacion Ceramica Carabobo S.A. 'B' 2,294,951 1,153,364 0.2
593,722 Venezolana de Cementos S.A.C.A.
(Vencemos) 830,945 1,211,998 0.2
------------ ------------ ------
5,732,825 3,567,896 0.6
Food & Household 15,456,370 Mavesa S.A. 2,587,936 3,903,534 0.5
Products
Metals & Steel 4,640,166 Siderurgica Venezolana Sivensa,
S.A.I.C.A.--S.A.C.A. 2,203,931 2,880,878 0.4
84,367 Siderurgica Venezolana Sivensa,
S.A.I.C.A.--S.A.C.A. (ADR) (2) 22,256 232,009 0.0
------------ ------------ ------
2,226,187 3,112,887 0.4
Utilities 12,993,275 C.A. La Electricidad de Caracas
S.A.I.C.A.--S.A.C.A. 15,446,652 10,555,412 1.4
Total Long-Term Investments in
Venezuela 25,993,600 21,139,729 2.9
Total Long-Term Investments in Latin
America 673,398,635 710,730,919 96.3
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
Percent of
Face Amount Short-Term Investments Cost Value Net Assets
<S> <C> <S> <C> <C> <C>
Commercial US$ 4,882,000 General Electric Capital Corp.,
Paper* 5.30% due 9/03/1996 $ 4,879,844 $ 4,879,844 0.7%
Commercial CLP 6,474,735,760 Central Bank of Chile, 7.25% due
Paper-- 9/24/1996 15,713,365 15,839,835 2.1
Foreign*
Total Short-Term Investments 20,593,209 20,719,679 2.8
Total Investments $693,991,844 731,450,598 99.1
============
Other Assets Less Liabilities 6,602,906 0.9
------------ ------
Net Assets $738,053,504 100.0%
============ ======
Net Asset Value: Class A--Based on net assets of $44,756,120 and
3,509,877 shares outstanding $ 12.75
============
Class B--Based on net assets of $552,127,096 and
44,458,141 shares outstanding $ 12.42
============
Class C--Based on net assets of $23,036,589 and
1,855,202 shares outstanding $ 12.42
============
Class D--Based on net assets of $118,133,699 and
9,305,114 shares outstanding $ 12.70
============
<FN>
*Commercial Paper and Commercial Paper--Foreign are traded on a
discount basis; the interest rates shown are the discount rates paid
at the time of purchase by the Fund.
(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, 1996.
(2)American Depositary Receipts (ADR).
(3)Global Depositary Receipts (GDR).
(4)Global Depositary Shares (GDS).
</TABLE>
<PAGE>
PORTFOLIO INFORMATION
As of August 31, 1996
Percent of
Ten Largest Equity Holdings Net Assets
Telecomunicacoes Brasileiras S.A.--Telebras* 6.7%
Companhia Cervejaria Brahma S.A. PN (Preferred) 5.3
Kimberly-Clark de Mexico, S.A. de C.V. 'A' 4.4
Panamerican Beverages Inc. (Class A) 3.7
Apasco, S.A. de C.V. 'A' 3.7
Telefonos de Mexico, S.A. de C.V. (ADR) 3.2
Telefonica del Peru S.A.* 3.2
Cifra, S.A. de C.V.* 3.1
Companhia de Tecidos Norte de Minas S.A. (Preferred) 2.7
Grupo Carso, S.A. de C.V.* 2.7
[FN]
*Includes combined holdings.
Percent of
Ten Largest Industries Net Assets
Telecommunications 17.2%
Utilities 9.0
Beverages & Tobacco 8.1
Banking 7.9
Building Materials 6.7
Multi-Industry 6.5
Merchandising 6.5
Metals & Steel 5.8
Health & Personal Care 4.4
Beverages 3.7
<PAGE>
PORTFOLIO CHANGES
For the Quarter Ended August 31, 1996
Additions
Carso Global Telecom, S.A. de C.V. 'A1'
Carso Global Telecom, S.A. de C.V. (ADR)
Cifra, S.A. de C.V. 'C' (ADR)
Companhia Siderurgica Tubarao S.A. 'B'
(Preferred)
Desc, S.A. de C.V. (ADR)
Grupo Carso, S.A. de C.V. 'A' (ADR)
Grupo Casa Autrey, S.A. de C.V. (ADR)
Grupo Televisa, S.A. de C.V. (GDS)
Invercorporacion, S.A. de C.V. `A1'
Invercorporacion, S.A. de C.V. (ADR)
Santa Isabel S.A. (ADR)
Siderurgica Venezolana Sivensa, S.A.I.C.A--
S.A.C.A. (ADR)
Souza Cruz S.A.
Telecomunicacoes de Sao Paulo S.A.--
TELESP
Telefonica del Peru S.A.
Telefonos de Mexico, S.A. de C.V. (ADR)
Deletions
Banco O'Higgins S.A. (ADR)
Chilgener Inc. S.A.
Companhia Cervejaria Brahma S.A.
(Warrants)
Grupo Fernandez Editores, S.A. de C.V.
Grupo Posadas, S.A. de C.V. 'A'
Iochpe-Maxion S.A. (Preferred)
Mirgor S.A. C.I.F.I.A. (ADR)
Refrigeracao Parana S.A. (Preferred)
Telecom Argentina Stet--France
Telecom S.A. (ADR)
Telecomunicacoes Brasileiras S.A.--
Telebras (Rights)
Telecomunicacoes de Minejeros S.A.--
TELEMIG (Rights)
Telecomunicacoes de Sao Paulo S.A.--
TELESP (Rights)
Vina Concha y Toro S.A.
Vina Concha y Toro S.A. (ADR)
Yacimientos Petroliferos Fiscales S.A.
(Sponsored) (ADR)
<PAGE>
OFFICERS AND DIRECTORS
Arthur Zeikel, President and Director
Donald Cecil, Director
Edward H. Meyer, Director
Charles C. Reilly, Director
Richard R. West, Director
Edward D. Zinbarg, Director
Terry K. Glenn, Executive Vice President
Norman R. Harvey, Senior Vice President
Donald C. Burke, Vice President
Grace Pineda, Vice President and Portfolio Manager
Gerald M. Richard, Treasurer
Mark B. Goldfus, Secretary
Custodian
The Chase Manhattan Bank, N.A.
Global Securities Services
4 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
