MERRILL LYNCH
LATIN AMERICA
FUND, INC.
FUND LOGO
Annual Report
November 30, 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
November 30, 1996
A map illustrating the following percentages:
<PAGE>
Mexico 29.7%
Panama 0.6%
Venezuela 2.7%
Colombia 1.9%
Peru 5.5%
Brazil 41.2%
Argentina 10.2%
Chile 5.1%
[FN]
*Total may not equal 100% and does not include short-term securities.
DEAR SHAREHOLDER
During the three-month period ended November 30, 1996, total returns
for Merrill Lynch Latin America Fund, Inc.'s Class A, Class B, Class
C and Class D Shares were +0.63%, +0.32%, +0.32% and +0.55%,
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--6 of this report to shareholders.) The
unmanaged Morgan Stanley Capital International Latin America Free
Index rose 2.25% during the same period. Helping the Fund's
performance were its investments in Venezuela, although this was
offset by the weak performance of investments in Brazil and Mexico.
Investment Overview
Venezuela led the region's stock markets during the quarter ended
November 30, 1996, rising close to 35%. The Fund's overweighted
position in this market allowed it to benefit from this rise. This
rally was the culmination of events that resulted in a 157% upsurge
(in US dollar terms) over the past year. First, Venezuela's
currency, the bolivar, was allowed to float more freely early this
year. Second, the government announced various market opening
measures, such as permitting foreign participation in oil
exploration and production. Third, oil prices rose at the same time
that Venezuelan oil production was running at historically high
levels. Fourth, the long-awaited privatization program appeared
imminent. Finally, investment capital flooded in and bolstered the
currency. Investors turned extremely optimistic on the outlook for
the Venezuelan market, viewing the past 12 months' performance as
only the beginning of a dramatic turnaround.
<PAGE>
Some of our Brazilian stock holdings declined during the quarter
ended November 30, 1996, although the Brazilian stock market rose
4.8%. In part, this was caused by investors' disappointment with
earnings reports including that of Telecomunicacoes Brasileiras S.A.
(Telebras) and Companhia Cervejaria Brahma S.A., two of the Fund's
largest holdings.
The Mexican stock market's decline of 2.1% (in US dollar terms) also
negatively impacted the Fund's performance during the November
quarter. The market declined as investors anticipated a correction
of the peso at year-end, an event which has occurred in each of the
past two years. This was aggravated by investors' nervousness
relating to inflation, political rifts within the ruling party, and
corporate earnings results which reflected a lack-luster economic
recovery.
Fiscal Year in Review
During the fiscal year ended November 30, 1996, total returns for
Merrill Lynch Latin America Fund, Inc.'s Class A, Class B, Class C
and Class D Shares were +22.19%, +20.85%, +20.85% and +21.97%,
respectively. The unmanaged Morgan Stanley Capital International
Latin America Free Index rose 22.31% during the year.
The Fund's performance benefited from its investments in Mexico,
where we maintained a large weighting throughout the year. In
addition, several stocks in which the Fund held major positions
performed very strongly over the 12-month period. These holdings
included Apasco, S.A. de C.V., a highly efficient cement producer
which reduced its costs during the Mexican crisis. Another holding
was Grupo Carso Industrial S.A., a proxy for the Mexican economy,
which increased revenues and maintained profit margins despite
weakness in the economy, especially consumer spending. Hurting
performance was the Fund's overweighted position in Peru, one of the
worst performers during the 12-month period with a total return in
US dollar terms of +5.92%.
In Conclusion
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,
<PAGE>
(Arthur Zeikel)
Arthur Zeikel
President
(Grace Pineda)
Grace Pineda
Vice President and
Portfolio Manager
January 6, 1997
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. (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.
<PAGE>
* 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 (continued)
Total Return
Based on a $10,000
Investment
A line graph depicting the growth of an investment in the Fund's
Class A and Class C Shares compared to growth of an investment in
the Emerging Markets Free Latin America Index. Beginning and ending
values are:
10/21/94** 11/96
ML Latin America Fund, Inc.++--
Class A Shares*+++ $ 9,475 $6,881
ML Latin America Fund, Inc.++--
Class C Shares* $10,000 $7,101
Emerging Markets Free Latin
America Index++++ $10,000 $8,551
A line graph depicting the growth of an investment in the Fund's
Class B and Class D Shares compared to growth of an investment in
the Emerging Latin Markets Free Latin America Index. Beginning and
ending values are:
9/27/91** 11/96
ML Latin America Fund, Inc.++--
Class B Shares* $10,000 $13,324
<PAGE>
ML Latin America Fund, Inc.++--
Class D Shares*+++ $ 9,475 $13,153
Emerging Markets Free Latin
America Index++++ $10,000 $21,004
[FN]
*Assuming maximum sales charge, transaction costs and other
operating expenses, including advisory fees.
**Commencement of Operations.
++ML Latin America Fund, Inc. invests primarily in Latin America
equity and debt securities.
++++This unmanaged market capitalization-weighted Index by Morgan
Stanley Capital International is comprised of a representative
sampling of stocks of large-, medium-, and small-capitalization
companies in Argentina, Brazil, Chile and Mexico which are freely
purchasable by foreign investors.
+++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.
Past performance is not predictive of future performance.
Average Annual
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 9/30/96 +13.88% + 7.90%
Inception (10/21/94) through 9/30/96 -15.00 -17.32
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 9/30/96 +12.77% +8.77%
Five Years Ended 9/30/96 + 6.04 +6.04
Inception (9/27/91) through 9/30/96 + 6.03 +6.03
<PAGE>
[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 9/30/96 +12.77% +11.77%
Inception (10/21/94) through 9/30/96 -15.86 -15.86
[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 9/30/96 +13.74% +7.77%
Five Years Ended 9/30/96 + 6.88 +5.73
Inception (9/27/91) through 9/30/96 + 6.87 +5.72
[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--11/30/96 10.41 12.83 -- -- +23.25
------ ------
Total $0.396 Total $0.118
Cumulative total return as of 11/30/96: -27.39%**
<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--11/30/96 10.21 12.46 -- -- +22.04
------ ------
Total $0.396 Total $0.491
Cumulative total return as of 11/30/96: +33.24%**
<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 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--11/30/96 10.21 12.46 -- -- +22.04
------ ------
Total $0.396 Total $0.118
<PAGE>
Cumulative total return as of 11/30/96: -28.99%**
<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--11/30/96 10.38 12.77 -- -- +23.03
------ ------
Total $0.396 Total $0.677
Cumulative total return as of 11/30/96: +38.81%**
<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
11/30/96 8/31/96 11/30/95 % Change % Change
<S> <C> <C> <C> <C> <C>
Class A Shares $12.83 $12.75 $10.50 +22.19% +0.63%
Class B Shares 12.46 12.42 10.31 +20.85 +0.32
Class C Shares 12.46 12.42 10.31 +20.85 +0.32
Class D Shares 12.77 12.70 10.47 +21.97 +0.55
Class A Shares-Total Return +22.19 +0.63
Class B Shares-Total Return +20.85 +0.32
Class C Shares-Total Return +20.85 +0.32
Class D Shares-Total Return +21.97 +0.55
<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/ Value Percent of
COUNTRY Industries Face Amount Long-Term Investments Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
Argentina Banking 82,847 Banco de Galicia y Buenos Aires
S.A. (ADR)(1) $ 1,010,375 $ 1,832,990 0.3%
208,075 Banco Frances del Rio de la Plata
S.A. (ADR)(1) 4,784,517 6,294,269 0.9
------------ ------------ ------
5,794,892 8,127,259 1.2
Beverages & 637,000 Quilmes Industrial S.A. 6,688,500 6,608,875 0.9
Tobacco
Foreign ARS 20,139,000 Republic of Argentina, Floating
Government Rate Bond, 6.625% due 3/31/2005
Obligations (4) (5) 15,591,823 17,396,068 2.5
Merchandising 563,144 Grimoldi S.A. (Class B) 3,318,672 2,366,222 0.3
Multi-Industry 3,500,533 Compania Naviera Perez Companc
S.A.C.F.I.M.F.A. 16,362,581 23,813,864 3.4
Real Estate 1,166,915 Inversiones y Representaciones
S.A. (IRSA) 3,126,377 3,595,644 0.5
134,981 Inversiones y Representaciones S.A.
(IRSA)(GDR)(2) 3,742,358 4,184,411 0.6
------------ ------------ ------
6,868,735 7,780,055 1.1
<PAGE>
Telecommunications 159,300 Telefonica de Argentina S.A.
(ADR)(1) 4,992,344 4,062,150 0.6
525,000 Telefonica de Argentina S.A.
(Class B) 1,497,352 1,339,326 0.2
------------ ------------ ------
6,489,696 5,401,476 0.8
Total Long-Term Investments in
Argentina 61,114,899 71,493,819 10.2
Brazil Automobiles 293,900 ++Companhia Fabricadora de Pecas
S.A.(COFAP)(Preferred) 2,450,495 2,404,352 0.3
Banking 2,278,270,217 Banco Bradesco S.A. (Preferred) 13,024,887 16,542,768 2.4
31,410,050 Banco Itau S.A. (Preferred) 6,757,023 12,407,107 1.8
364,129,908 Banco Nacional S.A. PN (Preferred) 9,903,203 352 0.0
------------ ------------ ------
29,685,113 28,950,227 4.2
Beverages & 61,552,159 Companhia Cervejaria Brahma S.A.
Tobacco PN (Preferred) 19,377,805 36,321,077 5.2
Diversified 1,106,400 Souza Cruz S.A. 8,336,307 6,309,126 0.9
Energy Sources 111,520,000 Petroleo Brasileiro S.A.
(Preferred) 13,542,832 15,276,372 2.2
Machinery & 8,304,000 ++Iochpe-Maxion S.A. (Ordinary) 3,421,870 924,543 0.1
Engineering 9,273,000 Weg Exportadora S.A. (Preferred) 5,597,682 4,399,042 0.6
------------ ------------ ------
9,019,552 5,323,585 0.7
</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 729,397,000 Companhia Siderurgica de Tubarao
(concluded) S.A. 'B' (Preferred) $ 11,553,259 $ 10,733,696 1.5%
477,009,000 Companhia Siderurgica Nacional
S.A.--CSN 13,431,428 13,023,191 1.9
1,104,720 Companhia Vale do Rio Doce S.A.
(Preferred) 23,025,915 23,198,157 3.3
15,881,741,007 Usinas Siderurgicas de Minas Gerais
--Usiminas S.A. (Preferred) 16,976,532 15,683,394 2.2
------------ ------------ ------
64,987,134 62,638,438 8.9
<PAGE>
Telecommuni- 172,000 Multicanal Participacoes S.A.
cations (ADR)(1) 2,408,000 2,408,000 0.3
268,885 Telecomunicacoes Brasileiras S.A.
--Telebras (ADR)(1) 14,220,231 20,368,039 2.9
136,517,454 Telecomunicacoes Brasileiras S.A.
--Telebras (Ordinary) 7,929,737 8,802,461 1.3
198,590,596 Telecomunicacoes Brasileiras S.A.
--Telebras (Preferred) 8,915,759 15,054,355 2.1
99,937,288 Telecomunicacoes de Minejeros S.A.
--TELEMIG (Class B)(Preferred) 7,132,438 11,173,161 1.6
3,265,379 ++Telecomunicacoes de Sao Paulo S.A.
--TELESP 524,948 576,950 0.1
------------ ------------ ------
41,131,113 58,382,966 8.3
Textiles & 58,702,363 Companhia de Tecidos Norte de Minas
Apparel S.A. (Preferred) 20,107,723 20,175,563 2.9
Utilities 80,800 ++Centrais Eletricas de Santa
Catarina S.A. (CELESC)(ADR)(1)++++ 6,499,552 6,595,300 0.9
2,267,199 Centrais Eletricas de Santa Catarina
S.A. (CELESC) 'B' (Preferred) 662,053 1,865,736 0.3
76,000 Companhia Energetica de Minas Gerais
S.A. (CEMIG) (ADR)(1)++++ 1,628,295 2,356,000 0.3
28,470 Companhia Energetica de Minas Gerais
S.A. (CEMIG) (ADR)(1) 638,750 882,570 0.1
403,000,000 Companhia Energetica de Minas Gerais
S.A. (CEMIG)(Preferred) 10,590,238 12,797,367 1.8
173,020,000 ++Companhia Paulista de Forca e
Luz S.A. 10,106,226 17,270,173 2.5
198,000 ++Globex Utilidades S.A. (Preferred) 3,579,246 3,412,141 0.5
44,397,251 ++Light Participacoes S.A. 5,144,362 8,343,021 1.2
------------ ------------ ------
38,848,722 53,522,308 7.6
Total Long-Term Investments in
Brazil 247,486,796 289,304,014 41.2
Chile Closed-End Funds 229,968 The Chile Fund, Inc. 5,993,326 5,145,534 0.7
Merchandising 528,846 Santa Isabel S.A. 430,047 886,229 0.1
521,716 Santa Isabel S.A. (ADR)(1) 14,267,791 13,108,115 1.9
------------ ------------ ------
14,697,838 13,994,344 2.0
<PAGE>
Multi-Industry 138,650 Cristalerias de Chile S.A. (ADR)(1) 3,035,094 2,686,344 0.4
Publishing 1,675,421 Editorial Lord Cochrane S.A. 783,815 334,527 0.0
Telecommuni- 21,742 Compania de Telecomunicaciones de
cations Chile S.A. (ADR)(1) 1,846,746 2,068,208 0.3
98,732 Empresa Nacional de Telecomunicaciones
S.A. (ENTEL) 677,828 844,866 0.1
------------ ------------ ------
2,524,574 2,913,074 0.4
Utilities 35,000 Distribuidora Chilectra Metropolitana
S.A. (ADR)(1)++++ 1,473,750 1,890,000 0.3
3,724,465 Empresa Nacional de Electricidad S.A.
(ENDESA) 2,032,168 2,022,915 0.3
2,057,425 Enersis S.A. 930,264 1,134,591 0.2
190,300 Enersis S.A. (ADR)(1) 4,797,095 5,375,975 0.8
------------ ------------ ------
9,233,277 10,423,481 1.6
Total Long-Term Investments in Chile 36,267,924 35,497,304 5.1
Colombia Banking 1,431,252 Banco de Bogota S.A. 7,327,647 8,493,735 1.2
26,951 Banco Industrial Colombiano S.A. 98,851 93,524 0.0
------------ ------------ ------
7,426,498 8,587,259 1.2
Beverages & Tobacco 587,154 La Compania Cervecera Bavaria S.A. 3,401,356 2,356,435 0.3
Building Materials 90,000 Cementos Diamante S.A. 590,537 383,015 0.1
Merchandising 1,428,814 Gran Cadena de Almacenes Colombianos
S.A. (CADENALCO) 4,043,019 1,279,076 0.2
35,000 Gran Cadena de Almacenes Colombianos
S.A. (CADENALCO)(ADR)(1)++++ 611,250 420,000 0.1
------------ ------------ ------
4,654,269 1,699,076 0.3
Total Long-Term Investments in
Colombia 16,072,660 13,025,785 1.9
Mexico Banking 1,730,143 Grupo Financiero Banamex-Accival,
S.A. de C.V. (Banacci) 3,675,406 3,121,008 0.4
9,584,000 ++Grupo Financiero Bancomer, S.A. de
C.V. 'B' (Ordinary) 2,626,470 3,860,796 0.6
------------ ------------ ------
6,301,876 6,981,804 1.0
Beverages 641,660 Panamerican Beverages Inc. (Class A) 20,478,455 29,997,605 4.3
<PAGE>
Beverages & Tobacco 2,419,000 Fomento Economico Mexicano, S.A. de
C.V. (Femsa) (ADR)(1)++++ 7,091,035 8,176,220 1.2
1,679,000 Fomento Economico Mexicano, S.A. de
C.V. (Femsa) (Ordinary) 'B' 4,255,011 5,742,716 0.8
------------ ------------ ------
11,346,046 13,918,936 2.0
Building Materials 3,763,000 Apasco, S.A. de C.V. 'A' 12,906,646 24,930,948 3.6
2,318,000 Cementos Mexicanos, S.A. de C.V. 'B'
(Cemex) 9,544,015 8,412,807 1.2
901,000 Cementos Mexicanos, S.A. de C.V. 'B'
(Cemex) (ADR)(1) 7,864,424 6,419,625 0.9
------------ ------------ ------
30,315,085 39,763,380 5.7
Chemicals 193,700 Desc, S.A. de C.V. (ADR)(1) 4,125,948 4,188,763 0.6
Distribution 404,000 Grupo Casa Autrey, S.A. de C.V.
(ADR)(1) 8,544,799 7,827,500 1.1
</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 Financial Services 651,900 ++Banca Quadrum, S.A. de C.V. (ADR)(1) $ 10,545,780 $ 2,689,087 0.4%
(concluded) 248,539 Grupo Financiero Inbursa, S.A. de
C.V. 'B' 889,303 790,262 0.1
6,107 Grupo Financiero Inbursa, S.A. de
C.V. 'B' (ADR)(1) 106,089 94,659 0.0
------------ ------------ ------
11,541,172 3,574,008 0.5
Health & Personal 1,765,450 Kimberly-Clark de Mexico, S.A. de
Care C.V. 'A' 17,975,852 34,262,344 4.9
Merchandising 11,565,950 ++Cifra, S.A. de C.V. 'C' 14,127,154 15,911,606 2.3
250,000 ++Cifra, S.A. de C.V. 'C' (ADR)(1) 338,325 332,500 0.0
291,160 ++Sears Roebuck de Mexico, S.A. de
C.V. 'B' (ADR)(1)++++ 7,681,175 909,875 0.1
------------ ------------ ------
22,146,654 17,153,981 2.4
Multi-Industry 88,704 Grupo Carso, S.A. de C.V. 'A' (ADR)(1) 983,267 887,040 0.1
6,123,125 Grupo Carso, S.A. de C.V. 'A1' 49,270,574 31,298,213 4.5
------------ ------------ ------
50,253,841 32,185,253 4.6
<PAGE>
Telecommunications 4,054,625 ++Carso Global Telecom, S.A. de
C.V. 'A1' 10,684,124 9,245,408 1.3
88,704 ++Carso Global Telecom, S.A. de C.V.
(ADR)(1) 421,344 388,080 0.1
243,900 ++Grupo Televisa, S.A. de C.V. (GDS)(3) 6,819,405 6,646,275 0.9
64,200 Telefonos de Mexico, S.A. de C.V.
(ADR)(1) 1,979,289 1,950,075 0.3
------------ ------------ ------
19,904,162 18,229,838 2.6
Total Long-Term Investments in Mexico 202,933,890 208,083,412 29.7
Panama Banking 80,000 Banco Latinoamericano de Exportaciones
S.A. ('BLADEX') 'E' 1,992,245 3,910,000 0.6
Total Long-Term Investments in Panama 1,992,245 3,910,000 0.6
Peru Financial Services 377,872 Credicorp Ltd. S.A. 6,665,789 6,518,292 0.9
Food & Household 2,885,636 ++Consorcio Alimentos Fabril
Products Pacifico S.A. 5,303,100 3,965,934 0.6
Metals--Non-Ferrous 323,000 Compania de Minas Buenaventura S.A. 5,248,750 5,289,125 0.8
376,305 Minsur Sociedad Limitada S.A.
(T Shares) 2,555,655 3,175,938 0.4
------------ ------------ ------
7,804,405 8,465,063 1.2
Telecommunications 503,000 Telefonica del Peru S.A. 10,776,265 9,745,625 1.4
5,042,339 Telefonica del Peru S.A. (B Shares) 9,849,127 9,877,753 1.4
------------ ------------ ------
20,625,392 19,623,378 2.8
Total Long-Term Investments in Peru 40,398,686 38,572,667 5.5
Venezuela Building Materials 593,722 Venezolana de Cementos S.A.C.A.
(Vencemos) 830,945 1,610,688 0.2
Food & Household 15,456,370 Mavesa S.A. 2,587,936 4,812,003 0.7
Products
Metals & Steel 4,640,166 Siderurgica Venezolana Sivensa,
S.A.I.C.A.--S.A.C.A. 2,203,931 3,312,438 0.5
84,367 Siderurgica Venezolana Sivensa,
S.A.I.C.A.--S.A.C.A. (ADR)(1)++++ 22,256 269,974 0.0
------------ ------------ ------
2,226,187 3,582,412 0.5
<PAGE>
Utilities 8,194,775 C.A. La Electricidad de Caracas
S.A.I.C.A.--S.A.C.A. 9,054,040 9,288,372 1.3
Total Long-Term Investments in
Venezuela 14,699,108 19,293,475 2.7
Total Long-Term Investments in
Latin America 620,966,208 679,180,476 96.9
Face
Amount Short-Term Investments
Commercial US$ 1,472,000 General Electric Capital Corp.,
Paper* 5.70% due 12/02/1996 1,471,534 1,471,534 0.2
Total Short-Term Investments 1,471,534 1,471,534 0.2
Total Investments $622,437,742 680,652,010 97.1
============
Other Assets Less Liabilities 20,597,899 2.9
------------ ------
Net Assets $701,249,909 100.0%
============ ======
<FN>
*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.
(1)American Depositary Receipts (ADR).
(2)Global Depositary Receipts (GDR).
(3)Global Despositary Shares (GDS).
(4)The interest rate is subject to change periodically based on the
change in the LIBOR (London Interbank Offered Rate). The interest
rate shownis the rate in effect as of November 30, 1996.
++Non-income producing security.
(5)The risk associated with Brady Bonds is the amount of any
uncollateralized principal or interest payments since there
is a high default rate of commercial bank loans by countries
issuing these securities.
++++Restricted securities as to resale. The value of the Fund's
investment in restricted securities was approximately $20,617,000,
representing 2.9% of net assets.
<PAGE>
<CAPTION>
Acquisition Value
Issue Date(s) Cost (Note 1a)
<S> <C> <C> <C>
Centrais Eletricas de Santa Catarina S.A.
(CELESC) (ADR) 9/25/1996 $ 6,499,552 $ 6,595,300
Companhia Energetica de Minas Gerais
S.A. (CEMIG) (ADR) 7/20/1995--8/01/1995 1,628,295 2,356,000
Distribuidora Chilectra Metropolitana
S.A. (ADR) 10/24/1995--10/26/1995 1,473,750 1,890,000
Fomento Economico Mexicano, S.A.
de C.V. (Femsa) (ADR) 8/04/1995--9/04/1996 7,091,035 8,176,220
Gran Cadena de Almacenes Colombianos
S.A. (CADENALCO) (ADR) 2/14/1995 611,250 420,000
Sears Roebuck de Mexico, S.A. de C.V.
'B' (ADR) 8/23/1994--9/03/1994 7,681,175 909,875
Siderurgica Venezolana Sivensa,
S.A.I.C.A.--S.A.C.A. (ADR) 8/05/1996 22,256 269,974
Total $25,007,313 $20,617,369
=========== ===========
</TABLE>
<TABLE>
CONSOLIDATED STATEMENT OF ASSETS AND LIABILITIES
<CAPTION>
As of November 30, 1996
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$622,437,742) (Note 1a) $ 680,652,010
Foreign cash (Note 1b) 23,265,619
Receivables:
Dividends $ 620,626
Capital shares sold 372,784
Interest 226,074 1,219,484
-------------
Prepaid registration fees and other assets (Note 1f) 59,915
-------------
Total assets 705,197,028
-------------
Liabilities: Payables:
Capital shares redeemed 2,019,591
Investment adviser (Note 2) 566,859
Distributor (Note 2) 461,729 3,048,179
-------------
Accrued expenses and other liabilities 898,940
-------------
Total liabilities 3,947,119
-------------
<PAGE>
Net Assets: Net assets $ 701,249,909
=============
Net Assets Class A Common Stock, $0.10 par value, 100,000,000 shares
Consist of: authorized $ 361,426
Class B Common Stock, $0.10 par value, 100,000,000 shares
authorized 4,163,353
Class C Common Stock, $0.10 par value, 100,000,000 shares
authorized 186,050
Class D Common Stock, $0.10 par value, 100,000,000 shares
authorized 883,883
Paid-in capital in excess of par 884,257,152
Undistributed investment income--net 17,612,088
Accumulated realized capital losses on investments and foreign
currency transactions--net (Note 5) (263,705,203)
Accumulated distributions in excess of realized capital gains--
net (Note 1g) (601,566)
Unrealized appreciation on investments and foreign currency
transactions--net 58,092,726
-------------
Net assets $ 701,249,909
=============
Net Asset Class A--Based on net assets of $46,369,262 and 3,614,256
Value: shares outstanding $ 12.83
=============
Class B--Based on net assets of $518,864,442 and 41,633,526
shares outstanding $ 12.46
=============
Class C--Based on net assets of $23,183,190 and 1,860,500
shares outstanding $ 12.46
=============
Class D--Based on net assets of $112,833,015 and 8,838,830
shares outstanding $ 12.77
=============
See Notes to Consolidated Financial Statements.
</TABLE>
<TABLE>
CONSOLIDATED STATEMENT OF OPERATIONS
<CAPTION>
For the Year Ended November 30, 1996
<S> <S> <C> <C>
Investment Income Dividends (net of $1,861,171 foreign withholding tax) $ 32,823,997
(Notes 1d & 1e): Interest and discount earned 4,348,169
-------------
Total income 37,172,166
-------------
<PAGE>
Expenses: Investment advisory fees (Note 2) 7,092,959
Account maintenance and distribution fees--Class B (Note 2) 5,360,673
Transfer agent fees--Class B (Note 2) 1,503,999
Custodian fees 1,334,120
Account maintenance fees--Class D (Note 2) 283,093
Transfer agent fees--Class D (Note 2) 260,412
Account maintenance and distribution fees--Class C (Note 2) 207,045
Printing and shareholder reports 143,934
Accounting services (Note 2) 128,292
Registration fees (Note 1f) 103,001
Professional fees 93,357
Transfer agent fees--Class A (Note 2) 88,172
Transfer agent fees--Class C (Note 2) 59,633
Directors' fees and expenses 37,812
Amortization of organization expenses (Note 1f) 19,390
Pricing fees 3,984
Other 36,438
-------------
Total expenses 16,756,314
-------------
Investment income--net 20,415,852
-------------
Realized & Realized loss from:
Unrealized Gain Investments--net $ (75,788,697)
(Loss) on Foreign currency transactions--net (2,146,815) (77,935,512)
Investments & -------------
Foreign Currency Change in unrealized appreciation/depreciation on:
Transactions--Net Investments--net 189,206,722
(Notes 1b, 1c, Foreign currency transactions--net 305,030 189,511,752
1e & 3): ------------- -------------
Net realized and unrealized gain on investments and foreign
currency transactions 111,576,240
-------------
Net Increase in Net Assets Resulting from Operations $ 131,992,092
=============
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
For the Year Ended November 30,
Increase (Decrease) in Net Assets: 1996 1995
<S> <S> <C> <C>
Operations: Investment income--net $ 20,415,852 $ 4,492,110
Realized loss on investments and foreign currency transactions
--net (77,935,512) (207,424,067)
Change in unrealized appreciation/depreciation on investments
and foreign currency transactions--net 189,511,752 (238,787,654)
------------- -------------
Net increase (decrease) in net assets resulting from operations 131,992,092 (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)
------------- -------------
Capital Share Net decrease in net assets derived from capital share
Transactions transactions (82,303,224) (29,924,043)
(Note 4): ------------- -------------
Net Assets: Total increase (decrease) in net assets 49,688,868 (505,985,725)
Beginning of year 651,561,041 1,157,546,766
------------- -------------
End of year* $ 701,249,909 $ 651,561,041
============= =============
<FN>
*Undistributed investment income--net (Note 1i) $ 17,612,088 --
============= =============
See Notes to Consolidated Financial Statements.
</TABLE>
<TABLE>
CONSOLIDATED FINANCIAL HIGHLIGHTS
<CAPTION>
Class A++++
<PAGE>
For the
Period
The following per share data and ratios have been derived Oct. 21,
from information provided in the financial statements. For the Year 1994++ to
Ended November 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 .46 .16 --
Realized and unrealized gain (loss) on investments
and foreign currency transactions--net 1.87 (6.52) (.85)
-------- -------- --------
Total from investment operations 2.33 (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 $ 12.83 $ 10.50 $ 17.37
======== ======== ========
Total Investment Based on net asset value per share 22.19% (37.66%) (4.67%)+++
Return:** ======== ======== ========
Ratios to Average Expenses 1.48% 1.66% 1.85%*
Net Assets: ======== ======== ========
Investment income (loss)--net 3.74% 1.40% (.20%)*
======== ======== ========
Supplemental Net assets, end of period (in thousands) $ 46,369 $ 26,034 $ 10,350
Data: ======== ======== ========
Portfolio turnover 66.14% 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. The "Average
Commission Rate Paid" includes commissions paid in foreign
currencies, which have been converted into US dollars using the
prevailing exchange rate on the date of the transaction. Such
conversions may significantly affect the rate shown.
+++Aggregate total investment return.
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED FINANCIAL HIGHLIGHTS (concluded)
<CAPTION>
The following per share data and ratios have Class B
been derived from information provided in the
financial statements.
For the Year 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 year $ 10.31 $ 17.24 $ 14.39 $ 9.83 $ 9.80
Operating -------- -------- -------- -------- --------
Performance: Investment income (loss)--net .32 .05 (.09) .10 .08
Realized and unrealized gain (loss) on
investments and foreign currency transactions
--net 1.83 (6.47) 2.99 4.68 .05
-------- -------- -------- -------- --------
Total from investment operations 2.15 (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 year $ 12.46 $ 10.31 $ 17.24 $ 14.39 $ 9.83
======== ======== ======== ======== ========
Total Investment Based on net asset value per share 20.85% (38.32%) 20.19% 49.80% 1.30%
Return:** ======== ======== ======== ======== ========
Ratios to Average Expenses 2.54% 2.71% 2.51% 2.59% 2.65%
Net Assets: ======== ======== ======== ======== ========
Investment income (loss)--net 2.69% .43% (.54%) 1.09% 1.30%
======== ======== ======== ======== ========
Supplemental Net assets, end of year (in thousands) $518,865 $505,038 $937,221 $305,301 $126,344
Data: ======== ======== ======== ======== ========
Portfolio turnover 66.14% 54.86% 30.15% 24.74% 36.50%
======== ======== ======== ======== ========
Average commission rate paid++++++ $ .0001 -- -- -- --
======== ======== ======== ======== ========
<CAPTION>
Class C++++
<PAGE>
For the
Period
The following per share data and ratios have been derived Oct. 21,
from information provided in the financial statements. For the Year 1994++ to
Ended November 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 .32 .03 (.02)
Realized and unrealized gain (loss) on investments
and foreign currency transactions--net 1.83 (6.45) (.84)
-------- -------- --------
Total from investment operations 2.15 (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 $ 12.46 $ 10.31 $ 17.24
======== ======== ========
Total Investment Based on net asset value per share 20.85% (38.32%) (4.75%)+++
Return:** ======== ======== ========
Ratios to Average Expenses 2.54% 2.72% 2.93%*
Net Assets: ======== ======== ========
Investment income (loss)--net 2.68% .30% (1.22%)*
======== ======== ========
Supplemental Net assets, end of period (in thousands) $ 23,183 $ 14,659 $ 5,069
Data: ======== ======== ========
Portfolio turnover 66.14% 54.86% 30.15%
======== ======== ========
Average commission rate paid++++++ $ .0001 -- --
======== ======== ========
<CAPTION>
The following per share data and ratios have Class D
been derived from information provided in the
financial statements.
For the Year 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 year $ 10.47 $ 17.37 $ 14.45 $ 9.90 $ 9.81
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .42 .14 .03 .18 .15
Realized and unrealized gain (loss) on
investments and foreign currency transactions
--net 1.88 (6.53) 3.00 4.69 .06
-------- -------- -------- -------- --------
Total from investment operations 2.30 (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 year $ 12.77 $ 10.47 $ 17.37 $ 14.45 $ 9.90
======== ======== ======== ======== ========
<PAGE>
Total Investment Based on net asset value per share 21.97% (37.84%) 21.07% 50.86% 2.19%
Return:** ======== ======== ======== ======== ========
Ratios to Average Expenses 1.74% 1.91% 1.73% 1.83% 1.89%
Net Assets: ======== ======== ======== ======== ========
Investment income--net 3.47% 1.18% .23% 1.83% 2.18%
======== ======== ======== ======== ========
Supplemental Net assets, end of year (in thousands) $112,833 $105,830 $204,907 $ 75,085 $ 30,685
Data: ======== ======== ======== ======== ========
Portfolio turnover 66.14% 54.86% 30.15% 24.74% 36.50%
======== ======== ======== ======== ========
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. The "Average
Commission Rate Paid" includes commissions paid in foreign
currencies, which have been converted into US dollars using the
prevailing exchange rate on the date of the transaction. Such
conversions may significantly affect the rate shown.
+++Aggregate total investment return.
+++++Amount is less than $.01 per share.
See Notes to Consolidated Financial Statements.
</TABLE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
1. Significant Accounting Policies:
Merrill Lynch Latin America Fund, Inc. (the "Fund") is registered
under the Investment Company Act of 1940 as a non-diversified, open-
end management investment company. The 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.
<PAGE>
* 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.
<PAGE>
(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.
(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 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.
(i) Reclassification--Generally accepted accounting principles
require that certain components of net assets be reclassified to
reflect permanent differences between financial and tax reporting.
Accordingly, current year's permanent book/tax differences of
$3,138,389 has been reclassified between undistributed net
investment income and accumulated net realized capital losses and
$334,625 has been reclassified between paid-in capital in excess of
par and undistributed net investment income. These reclassifications
have no effect on net assets or net asset values per share.
<PAGE>
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.
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:
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 year ended November 30, 1996, MLFD earned underwriting
discounts and direct commissions and MLPF&S earned dealer
concessions on sales of the Fund's Class A and Class D Shares as
follows:
MLFD MLPF&S
Class A $ 189 $ 2,334
Class D $15,673 $183,545
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (concluded)
For the year ended November 30, 1996, MLPF&S received contingent
deferred sales charges of $1,557,160 and $17,371 relating to
transactions in Class B and Class C Shares, respectively.
In addition, MLPF&S received $173,055 in commissions on the
execution of portfolio security transactions for the Fund for the
year ended November 30, 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 year ended November 30, 1996 were $445,114,153 and
$482,277,663, respectively.
Net realized and unrealized gains (losses) as of November 30, 1996
were as follows:
Realized Unrealized
Losses Gains (Losses)
Long-term investments $(75,788,697) $ 58,214,268
Foreign currency transactions (2,146,815) (121,542)
------------ ------------
Total $(77,935,512) $ 58,092,726
============ ============
As of November 30, 1996, net unrealized appreciation for Federal
income tax purposes aggregated $56,003,055, of which $124,772,466
related to appreciated securities and $68,769,411 related to
depreciated securities. At November 30, 1996, the aggregate cost of
investments for Federal income tax purposes was $624,648,955.
4. Capital Share Transactions:
Net decrease in net assets derived from capital share transactions
was $82,303,224 and $29,924,043 for the years ended November 30,
1996 and November 30, 1995, respectively.
<PAGE>
Transactions in capital shares for each class were as follows:
Class A Shares for theYear Dollar
Ended November 30, 1996 Shares Amount
Shares sold 2,334,477 $ 27,998,108
Shares redeemed (1,199,157) (14,535,235)
------------ ------------
Net increase 1,135,320 $ 13,462,873
============ ============
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
============ ============
Class B Shares for the Year Dollar
Ended November 30, 1996 Shares Amount
Shares sold 10,055,825 $115,213,232
Automatic conversion of shares (137,908) (1,581,919)
Shares redeemed (17,283,572) (199,308,905)
------------ ------------
Net decrease (7,365,655) $(85,677,592)
============ ============
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)
============ ============
<PAGE>
Class C Shares for the Year Dollar
Ended November 30, 1996 Shares Amount
Shares sold 1,248,519 $ 14,588,140
Shares redeemed (810,190) (9,591,529)
------------ ------------
Net increase 438,329 $ 4,996,611
============ ============
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
============ ============
Class D Shares for the Year Dollar
Ended November 30, 1996 Shares Amount
Shares sold 5,255,871 $ 59,496,466
Automatic conversion of shares 135,283 1,581,919
------------ ------------
Total issued 5,391,154 61,078,385
Shares redeemed (6,658,036) (76,163,501)
------------ ------------
Net decrease (1,266,882) $(15,085,116)
============ ============
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)
============ ============
<PAGE>
5. Capital Loss Carryforward:
At November 30, 1996, the Fund had a net capital loss carryforward
of approximately $261,094,000, of which $145,157,000 expires in 2003
and $115,937,000 expires in 2004. This amount will be available to
offset like amounts of any future taxable gains.
6. Subsequent Event:
On December 1, 1996, the Board of Directors declared an ordinary
income dividend in the amount of $.435475 per share for Class A,
$.297372 per share for Class B, $.315761 per share for Class C and
$.401284 per share for Class D payable on December 30, 1996 to
shareholders of record as of December 19, 1996.
<AUDIT-REPORT>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders of
Merrill Lynch Latin America Fund, Inc.:
We have audited the accompanying consolidated statement of assets
and liabilities, including the consolidated schedule of investments,
of Merrill Lynch Latin America Fund, Inc. and its subsidiary as of
November 30, 1996, the related consolidated statements of operations
for the year then ended and changes in net assets for each of the
years in the two-year period then ended, and the consolidated
financial highlights for the five-year period then ended. These
financial statements and the financial highlights are the
responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and the financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements and the financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.
Our procedures included confirmation of securities owned at November
30, 1996, by correspondence with the custodian. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
<PAGE>
In our opinion, such consolidated financial statements and
consolidated financial highlights present fairly, in all material
respects, the financial position of Merrill Lynch Latin America
Fund, Inc. and its subsidiary as of November 30, 1996, the results
of their operations, the changes in their net assets, and the
consolidated financial highlights for the respective stated periods
in conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
January 6, 1997
</AUDIT-REPORT>
EQUITY PORTFOLIO CHANGES (unaudited)
For the Quarter Ended November 30, 1996
Additions
Centrais Eletricas de Santa
Catarina S.A. (CELESC) (ADR)
Companhia Fabricadora de Pecas S.A.
(COFAP) (Preferred)
Globex Utilidades S.A. (Preferred)
Grupo Financiero Inbursa,
S.A. de C.V. 'B'
Grupo Financiero Inbursa,
S.A. de C.V. 'B' (ADR)
Multicanal Participacoes S.A.
Deletions
Banco Wiese Limitado S.A.
Bardella Industrial S.A. (Preferred)
Cementos Norte Pacasmayo S.A.
Corporacion Ceramica Carabobo S.A. 'A'
Corporacion Ceramica Carabobo S.A. 'B'
Corporacion Geo, S.A. de C.V. 'B'(ADR)
Grupo Posadas, S.A. de C.V. (ADR)
Grupo Profesional Planeacion y
Proyectos, S.A. de C.V. (PYP) (Class B)
Invercorporacion, S.A. de C.V. 'A1'
Invercorporacion, S.A. de C.V. (ADR)
Lojas Americanas S.A. (Preferred)
Sigma Alimentos, S.A. de C.V.
Telecomunicacoes de Sao Paulo
S.A.--TELESP (Preferred)
<PAGE>
PORTFOLIO INFORMATION (unaudited)
As of November 30, 1996
Percent of
Ten Largest Equity Holdings Net Assets
Telecomunicacoes Brasileiras S.A.--
Telebras (ADR)* 6.3%
Companhia Cervejaria Brahma S.A. PN (Preferred) 5.2
Kimberly-Clark de Mexico, S.A. de C.V. 'A' 4.9
Grupo Carso, S.A. de C.V. 'A1'* 4.6
Panamerican Beverages Inc. (Class A) 4.3
Apasco, S.A. de C.V. 'A' 3.6
Compania Naviera Perez Companc S.A.C.F.I.M.F.A. 3.4
Companhia Vale do Rio Doce S.A. (Preferred) 3.3
Companhia de Tecidos Norte de Minas S.A. (Preferred) 2.9
Telefonica del Peru S.A.* 2.8
Percent of
Ten Largest Industries Net Assets
Telecommunications 14.9%
Utilities 10.5
Metals & Steel 9.4
Beverages & Tobacco 8.4
Multi-Industry 8.4
Banking 8.2
Building Materials 6.0
Merchandising 5.0
Health & Personal Care 4.9
Beverages 4.3
[FN]
*Includes combined holdings.
OFFICERS AND DIRECTORS
<PAGE>
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
Brown Brothers Harriman & Co.
40 Water Street
Boston, Massachusetts 02109
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
