MERRILL LYNCH
LATIN AMERICA
FUND, INC.
[GRAPHIC OMITTED]
STRATEGIC
Performance
Annual Report
November 30, 1999
<PAGE>
MERRILL LYNCH LATIN AMERICA FUND, INC.
Asset Allocation As a Percentage* of Net Assets as of November 30, 1999
A map illustrating the following percentages:
Mexico 41.4%
Panama 0.8%
Venezuela 2.2%
Colombia 3.1%
Peru 2.3%
Brazil 42.6%
Argentina 2.6%
Chile 3.5%
* Total may not equal 100% and does not include short-term securities.
<PAGE>
Merrill Lynch Latin America Fund, Inc., November 30, 1999
DEAR SHAREHOLDER
For the three-month period ended November 30, 1999, total returns for Merrill
Lynch Latin America Fund, Inc.'s Class A, Class B, Class C and Class D Shares
were +18.91%, +18.56%, +18.66% and +18.91%, respectively. (Investment results
shown do not reflect sales charges and would be lower if sales charges were
included. Complete performance information can be found on pages 4-6 of this
report to shareholders.) The unmanaged Morgan Stanley Capital International
(MSCI) Latin America Free Index rose 17.03% and the J.P. Morgan Latin Brady Bond
Index rose 12.04% for the same three-month period. (References to securities
markets of all countries in this letter to shareholders correspond to those
countries' market weightings in the MSCI Latin America Free Index, unless
otherwise noted, and are for the three-month period ended November 30, 1999.)
The Fund's outperformance is attributable to its overweighted positions in both
Brazil and Mexico whose markets rose 29.21% and 18.52%, respectively. Because
the Fund was underweighted in Argentina and Chile, performance was not hindered
by those countries' returns of +2.58% and +1.07%, respectively, which lagged the
rest of the region.
Investment Overview
Latin American stock market gains in the November quarter more than reversed the
decline in the August quarter and resulted in a 37.28% rise during 1999. We
believe this rally was firmly based on fundamental factors and not driven by
speculation or by excessive inflows of foreign funds. One of these factors was
that the perception of risk in Latin American markets improved. This allowed
interest rates to decline and stocks to rally. This was particularly true in
Brazil where the stock market was up 32.96% (in US dollar terms) despite the
devaluation of its currency early in the year. In addition, global economic
growth is recovering and the clearest beneficiary has been Mexico, whose market
rose 57.84%, the highest in the region. Another factor is the positive
reassessment of Latin American companies' potential to generate returns in
telecommunications and Internet services. We expect this revaluation of
companies in these businesses to sustain rallies in the coming months and have
therefore positioned our Fund in several of these companies.
We continue to be very optimistic about our investments in the Mexican media
sector. We see a secular trend toward higher advertising rates in Mexico.
Furthermore, we see 2000 as a potentially strong year for advertising in
response to political elections and the Summer Olympics. We believe TV Azteca,
SA de CV's damaged credibility is overdiscounted in the price of the stock. The
company made some progress in controlling its programming costs in the November
quarter. Unefon, a subsidiary of TV Azteca, is scheduled to launch service on
December 16, 1999. We will be monitoring this launch closely. If all goes well,
we believe that TV Azteca will benefit from a substantial re-rating in 2000.
To seek to participate in the upturn in the global economic cycle and the rising
prices of commodities, we have investments in companies such as Tubos de Acero
de Mexico SA (Tamsa). We believe that Tamsa, a Mexican seamless pipe producer,
may benefit from the cycle upswing of two commodities: oil and steel. For most
of the year, the stock had languished at all-time lows given the poor outlook
for both of these sectors. However, the recent surge in oil prices has prompted
oil companies to expand their rig drilling projects for next year. This bodes
well for Tamsa as it dominates the deep well pipe market. We also like the fact
that each of a few producers affects the market in the seamless pipe industry
but does not control it. This prevented the huge price declines witnessed
earlier in the year for other more commodity-like steels. Tamsa is a subsidiary
of the Italian DST group, which controls more than 30% of the global market and
therefore enjoys a certain amount of price protection. Tamsa stock has begun to
move given the turnaround in sentiment, and we expect more positive news on the
company in 2000 earnings.
In Conclusion
We believe that the long-term potential of Latin American markets is just
starting to be realized, and that recent years' crises have set the stage for
stronger performance. We thank you for your continued interest in Merrill Lynch
Latin America Fund, Inc.
Sincerely,
/s/ Terry K. Glenn
Terry K. Glenn
President and Director
/s/ Grace Pineda
Grace Pineda
Senior Vice President and
Portfolio Manager
December 30, 1999
================================================================================
To reduce shareholders' expenses, Merrill Lynch Latin America Fund, Inc. will no
longer be printing and mailing quarterly reports to shareholders. We will
continue to provide you with reports on a semi-annual and annual basis.
================================================================================
OFFICERS AND DIRECTORS
Terry K. Glenn, President and Director
Donald Cecil, Director
Edward H. Meyer, Director
Charles C. Reilly, Director
Richard R. West, Director
Arthur Zeikel, Director
Edward D. Zinbarg, Director
Robert C. Doll, Senior Vice President
Grace Pineda, Senior Vice President and
Portfolio Manager
Donald C. Burke, Vice President and Treasurer
Susan B. Baker, Secretary
Custodian
Brown Brothers Harriman & Co.
40 Water Street
Boston, MA 02109
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
2 & 3
<PAGE>
Merrill Lynch Latin America Fund, Inc., November 30, 1999
PERFORMANCE DATA
About Fund Performance
Investors are able to purchase shares of the Fund through the Merrill
Lynch Select PricingSM System, which offers four pricing alternatives:
o 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. However, in the case of certain eligible investors, the shares
were simultaneously exchanged for Class A Shares.
o 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 automati cally convert to Class D Shares after
approximately 8 years. (There is no initial sales charge for automatic
share conversions.)
o 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.
o 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. Figures shown in the "Recent Performance Results" and
"Average Annual Total Return" tables assume reinvestment of all dividends
and capital gains distributions at net asset value on the ex-dividend
date. 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.
Recent Performance Results*
<TABLE>
<CAPTION>
3 Month 12 Month Since Inception
As of November 30, 1999 Total Return Total Return Total Return
============================================================================================================
<S> <C> <C> <C>
ML Latin America Fund, Inc. Class A Shares +18.91% +28.74% - 20.00%
- ------------------------------------------------------------------------------------------------------------
ML Latin America Fund, Inc. Class B Shares +18.56 +27.32 +42.24
- ------------------------------------------------------------------------------------------------------------
ML Latin America Fund, Inc. Class C Shares +18.66 +27.42 - 24.18
- ------------------------------------------------------------------------------------------------------------
ML Latin America Fund, Inc. Class D Shares +18.91 +28.47 +51.78
============================================================================================================
</TABLE>
* Investment results shown do not reflect sales charges; results shown would be
lower if a sales charge was included. Total investment returns are based on
changes in net asset values for the periods shown, and assume reinvestment of
all dividends and capital gains distributions at net asset value on the
ex-dividend date. The Fund's since inception dates are from 10/21/94 for Class A
& Class C Shares and from 9/27/91 for Class B & Class D Shares.
Class A & Class C Shares
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 Latin America Free
Index. Beginning and ending values are:
10/21/94** 11/99
ML Latin America Fund, Inc.+--
Class A Shares*+++ $ 9,475 $ 7,580
ML Latin America Fund, Inc.+--
Class C Shares* $10,000 $ 7,582
Latin America Free Index++ $10,000 $10,323
* 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 American 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. The starting date for the Index is 10/31/94.
+++ 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.
Class A & Class C Shares
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
================================================================================
Class A Shares*
================================================================================
Year Ended 9/30/99 +31.12% +24.24%
- --------------------------------------------------------------------------------
Inception (10/21/94) through 9/30/99 - 7.35 - 8.35
- --------------------------------------------------------------------------------
* Maximum sales charge is 5.25%. Prior to October 21, 1994, Class A Shares
were offered at a higher sales charge. Thus, actual returns would have
been lower than shown for the five-year and ten-year periods.
** Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
================================================================================
Class C Shares*
================================================================================
Year Ended 9/30/99 +29.55% +28.55%
- --------------------------------------------------------------------------------
Inception (10/21/94) through 9/30/99 - 8.33 - 8.33
- --------------------------------------------------------------------------------
* Maximum contingent deferred sales charge is 1% and is reduced to 0% after
1 year.
** Assuming payment of applicable contingent deferred sales charge.
4 & 5
<PAGE>
Merrill Lynch Latin America Fund, Inc., November 30, 1999
PERFORMANCE DATA (concluded)
Class B & Class D Shares
Total Return Based on a $10,000 Investment.
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 Latin America Free
Index. Beginning and ending values are:
9/27/91** 11/99
ML Latin America Fund, Inc.+--
Class B Shares* $10,000 $14,224
ML Latin America Fund, Inc.+--
Class D Shares*+++ $ 9,475 $14,382
Emerging Markets Free Latin
America Index++ $10,000 $25,359
* 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 American 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. The starting date for the Index is 9/30/91.
+++ 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.
Class B & Class D Shares
Average Annual Total Return
% Return % Return
Without CDSC With CDSC**
================================================================================
Class B Shares*
================================================================================
Year Ended 9/30/99 +29.66% +25.66%
- --------------------------------------------------------------------------------
Five Years Ended 9/30/99 - 8.66 - 8.66
- --------------------------------------------------------------------------------
Inception (9/27/91) through 9/30/99 + 2.53 + 2.53
- --------------------------------------------------------------------------------
* Maximum contingent deferred sales charge is 4% and is reduced to 0% after
4 years.
** Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Sales Charge Sales Charge**
================================================================================
Class D Shares*
================================================================================
Year Ended 9/30/99 +30.76% +23.90%
- --------------------------------------------------------------------------------
Five Years Ended 9/30/99 - 7.92 - 8.91
- --------------------------------------------------------------------------------
Inception (9/27/91) through 9/30/99 + 3.34 + 2.65
- --------------------------------------------------------------------------------
* Maximum sales charge is 5.25%. Prior to October 21, 1994, Class A Shares
were offered at a higher sales charge. Thus, actual returns would have
been lower than shown for the five-year and ten-year periods.
** Assuming maximum sales charge.
CONSOLIDATED SCHEDULE OF INVESTMENTS (in US dollars)
<TABLE>
<CAPTION>
Shares Held/ Percent of
COUNTRY Industries Face Amount Long-Term Investments Value Net Assets
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
Argentina Beverages 115,089 Quilmes Industrial SA (Quinsa) (ADR)* $ 1,337,910 0.6%
---------------------------------------------------------------------------------------------------------------------
Merchandising 557,659 +Grimoldi SA 'B' 680,453 0.3
---------------------------------------------------------------------------------------------------------------------
Real Estate 57,648 IRSA Inversiones y Representaciones SA 'B' 184,505 0.1
57,407 IRSA Inversiones y Representaciones SA (GDR)** 1,833,431 0.8
------------ -----
2,017,936 0.9
---------------------------------------------------------------------------------------------------------------------
Telecommunications 22,233 Telefonica de Argentina SA (ADR)* 585,006 0.2
525,000 Telefonica de Argentina SA 'B' 1,344,215 0.6
------------ -----
1,929,221 0.8
---------------------------------------------------------------------------------------------------------------------
Total Long-Term Investments in Argentina 5,965,520 2.6
====================================================================================================================================
Brazil Banking 95,899,592 Banco Bradesco SA (Preferred) 536,938 0.3
29,806,550 Banco Itau SA (Preferred) 1,878,278 0.8
------------ -----
2,415,216 1.1
---------------------------------------------------------------------------------------------------------------------
Beverages & Tobacco 6,114,125 Companhia Cervejaria Brahma (Preferred) 3,935,968 1.7
---------------------------------------------------------------------------------------------------------------------
Diversified 257,461 Souza Cruz SA 1,843,796 0.8
---------------------------------------------------------------------------------------------------------------------
Energy Sources 177,312 Companhia Paranaense de Energia -- Copel (ADR)* 1,363,086 0.6
11,742,244 Petroleo Brasileiro SA -- Petrobras (Preferred) 2,375,970 1.1
------------ -----
3,739,056 1.7
---------------------------------------------------------------------------------------------------------------------
Foreign Government US$ 3,724,000 Federal Republic of Brazil, 14.50% due 10/15/2009 3,932,622 1.7
Obligations Republic of Brazil:
US$ 1,614,000 10.125% due 5/15/2027 1,287,165 0.6
US$ 3,523,162 'C', 8% due 4/15/2014 (a) 2,395,750 1.0
------------ -----
7,615,537 3.3
---------------------------------------------------------------------------------------------------------------------
Forest Products 128,381,412 Votorantim Celulose e Papel SA (Preferred) 4,305,458 1.9
---------------------------------------------------------------------------------------------------------------------
Machinery & 9,081,000 Weg SA (Preferred) 4,871,578 2.2
Engineering
---------------------------------------------------------------------------------------------------------------------
Metals & Steel 149,015,000+ Companhia Siderurgica de Tubarao (Preferred) 2,118,031 1.0
949 Companhia Siderurgica Nacional 33 0.0
BRL 1,099,391 Companhia Vale do Rio Doce, 0% due 12/31/2049 (c) 0 0.0
349,366 Companhia Vale do Rio Doce 'A' (Preferred) 8,419,357 3.7
------------ -----
10,537,421 4.7
---------------------------------------------------------------------------------------------------------------------
</TABLE>
6 & 7
<PAGE>
Merrill Lynch Latin America Fund, Inc., November 30, 1999
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<TABLE>
<CAPTION>
Shares Percent of
COUNTRY Industries Held Long-Term Investments Value Net Assets
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
Brazil Multi-Industry 3,384,000 Itausa-Investimentos Itau SA $ 2,502,750 1.1%
(concluded) ---------------------------------------------------------------------------------------------------------------------
Retail 256,864 Companhia Brasileira de Distribuicao Grupo
Pao de Acucar (ADR)* 6,855,058 3.0
---------------------------------------------------------------------------------------------------------------------
Telecommunications 5,828,582 Coteminas PN (Rights) 30 0.0
148,905,637 Embratel Participacoes SA 1,705,435 0.8
149,205,637 Tele Celular Sul Participacoes SA 235,465 0.1
149,205,637 Tele Centro Oeste Celular Participacoes SA 186,507 0.1
178,700 Tele Centro Oeste Celular Participacoes SA (ADR)* 714,800 0.3
149,205,637 Tele Centro Sul Participacoes SA 1,383,261 0.6
149,205,637 Tele Leste Celular Participacoes SA 83,151 0.0
15,200 Tele Leste Celular Participacoes SA (ADR)* 456,000 0.2
149,205,637 Tele Nordeste Celular Participacoes SA 190,393 0.1
23,800 Tele Nordeste Celular Participacoes SA (ADR)* 618,800 0.3
149,205,637 Tele Norte Celular Participacoes SA 130,555 0.1
32,650 Tele Norte Celular Participacoes SA (ADR)* 975,419 0.4
307,091,637 Tele Norte Leste Participacoes SA 4,481,619 2.0
338,346 Tele Norte Leste Participacoes SA (ADR)* 6,026,788 2.7
149,205,637 Tele Sudeste Celular Participacoes SA 391,665 0.2
241,765,637+ Telecomunicacoes Brasileiras SA -- Telebras 5,037 0.0
92,294,000 Telecomunicacoes Brasileiras SA -- Telebras 5,839,999 2.6
47,995+ Telecomunicacoes Brasileiras SA -- Telebras (ADR)* 750 0.0
47,995 Telecomunicacoes Brasileiras SA -- Telebras
(Preferred Block) (ADR)* 4,355,546 1.9
9,845,775 Telecomunicacoes de Minas Gerais -- Telemig 235,888 0.1
735,140 Telecomunicacoes de Minas Gerais --
Telemig 'B' (Preferred) 22,590 0.0
149,205,637 Telemig Celular Participacoes SA 261,887 0.1
3,200 Telemig Celular Participacoes SA (ADR)* 106,000 0.0
9,845,775+ Telemig Celular SA 104,611 0.0
735,140+ Telemig Celular SA 'C' (Preferred) 9,572 0.0
149,205,637 Telesp Celular Participacoes SA 1,032,006 0.5
152,005,637 Telesp Participacoes SA 1,797,150 0.8
------------ -----
31,350,924 13.9
---------------------------------------------------------------------------------------------------------------------
Textiles & Apparel 22,971,686 Companhia de Tecidos Norte de Minas --
Coteminas (Preferred) 1,794,663 0.8
21,491,685 +Empresa Nasional de Comercio SA 20,148 0.0
------------ -----
1,814,811 0.8
---------------------------------------------------------------------------------------------------------------------
Utilities 1,122,012 Centrais Eletricas de Santa Catarina SA --
CELESC 'B' (Preferred) 461,661 0.2
39,955 Centrais Eletricas de Santa Catarina SA --
CELESC (GDR)** (b) 1,643,117 0.7
27,891 Companhia Energetica de Minas Gerais SA --
CEMIG (ADR)* 518,326 0.2
72,502 Companhia Energetica de Minas Gerais SA --
CEMIG (ADR)* (b) 1,347,377 0.6
213,720,264 Companhia Energetica de Minas Gerais SA --
CEMIG (Preferred) 4,025,065 1.8
285,800 Globex Utilidades SA (Preferred) 1,786,250 0.8
------------ -----
9,781,796 4.3
---------------------------------------------------------------------------------------------------------------------
Utilities -- Electric 1,196,500,000 Companhia Energetica do Ceara-- Coelce 'A' (Preferred) 3,053,568 1.3
57,400 Espirito Santo Centrais Eletricas SA-- Escelsa 1,793,750 0.8
------------ -----
4,847,318 2.1
---------------------------------------------------------------------------------------------------------------------
Total Long-Term Investments in Brazil 96,416,687 42.6
====================================================================================================================================
Chile Telecommunications 267,958 Compania de Telecomunicaciones de Chile SA (ADR)* 4,923,728 2.2
---------------------------------------------------------------------------------------------------------------------
Utilities 75,000 Chilectra SA (ADR)* (b) 1,298,490 0.6
1,649,656 Empresa Nacional de Electricidad SA (ENDESA) 729,213 0.3
1,014,657 Enersis SA 457,824 0.2
25,055 Enersis SA (ADR)* 579,397 0.2
------------ -----
3,064,924 1.3
---------------------------------------------------------------------------------------------------------------------
Total Long-Term Investments in Chile 7,988,652 3.5
====================================================================================================================================
Colombia Banking 1,049,984 Banco de Bogota 2,737,185 1.2
83,802 Banco Ganadero SA (Preferred) (ADR)* 565,664 0.3
------------ -----
3,302,849 1.5
---------------------------------------------------------------------------------------------------------------------
Beverages & Tobacco 475,510 Bavaria SA 2,035,669 0.9
---------------------------------------------------------------------------------------------------------------------
Financial Services 534,984 Valores Bavaria SA 390,499 0.2
534,984 Valores Bavaria SA (Rights) -- 0.0
------------ -----
390,499 0.2
---------------------------------------------------------------------------------------------------------------------
Merchandising 526,622 Almacenes Exito SA 1,180,644 0.5
---------------------------------------------------------------------------------------------------------------------
Total Long-Term Investments in Colombia 6,909,661 3.1
====================================================================================================================================
Mexico Banking 63,000 +Grupo Financiero Banamex -- Accival,
SA de CV (Banacci) 'L' 190,737 0.1
1,595,873 +Grupo Financiero Banamex -- Accival,
SA de CV (Banacci) 'O' 5,398,552 2.4
------------ -----
5,589,289 2.5
---------------------------------------------------------------------------------------------------------------------
Beverages 286,501 Panamerican Beverages, Inc. 'A' (US Registered Shares) 5,371,894 2.4
---------------------------------------------------------------------------------------------------------------------
Beverages & Tobacco 132,646 Fomento Economico Mexicano, SA de CV (ADR)* 5,023,967 2.2
---------------------------------------------------------------------------------------------------------------------
Broadcasting & 224,534 +Grupo Televisa SA (GDR)** 10,960,066 4.9
Publishing
---------------------------------------------------------------------------------------------------------------------
Building Materials 147,275 Cemex, SA de CV 721,538 0.3
212,773 Cemex, SA de CV (ADR)* 5,226,237 2.3
------------ -----
5,947,775 2.6
---------------------------------------------------------------------------------------------------------------------
Chemicals 178,719 Desc, SA de CV (ADR)* 3,082,903 1.4
---------------------------------------------------------------------------------------------------------------------
Diversified 766,268 Alfa, SA 'A' 3,290,971 1.4
357,900 +Grupo Sanborns SA 'B1' 630,025 0.3
------------ -----
3,920,996 1.7
---------------------------------------------------------------------------------------------------------------------
Foods 1,092,953 Grupo Industrial Bimbo, SA de CV 'A' 2,280,945 1.0
---------------------------------------------------------------------------------------------------------------------
</TABLE>
8 & 9
<PAGE>
Merrill Lynch Latin America Fund, Inc., November 30, 1999
CONSOLIDATED SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<TABLE>
<CAPTION>
Shares Held/ Percent of
COUNTRY Industries Face Amount Long-Term Investments Value Net Assets
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
Mexico Foreign Government US$ 2,862,000 United Mexican States, 11.50% due 5/15/2026 $ 3,321,351 1.5%
(concluded) Obligations
---------------------------------------------------------------------------------------------------------------------
Health & Personal Care 957,412 Kimberly-Clark de Mexico, SA de CV 'A' 3,583,949 1.6
---------------------------------------------------------------------------------------------------------------------
Industrial -- 167,300 Tubos de Acero de Mexico SA (ADR)* 2,101,706 0.9
Manufacturing
---------------------------------------------------------------------------------------------------------------------
Internet Content 2,800 +Terra Networks, SA 96,439 0.1
---------------------------------------------------------------------------------------------------------------------
Merchandising 2,298,478 +Cifra, SA de CV 'C' 4,026,602 1.8
4,613,200 Grupo Elektra, SA de CV 3,081,989 1.3
------------ -----
7,108,591 3.1
---------------------------------------------------------------------------------------------------------------------
Multi-Industry 810,829 +Grupo Carso, SA de CV 'A1' 3,778,996 1.7
38,557 +Grupo Carso, SA de CV (ADR)* 359,544 0.1
------------ -----
4,138,540 1.8
---------------------------------------------------------------------------------------------------------------------
Music 643,700 +Corporacion Interamericana de Entretenimiento SA 'B' 2,129,739 1.0
---------------------------------------------------------------------------------------------------------------------
Telecommunications 172,000 +Carso Global Telecom (ADR)* 2,722,984 1.2
195,901 Telefonos de Mexico SA (ADR)* 18,133,086 8.0
------------ -----
20,856,070 9.2
---------------------------------------------------------------------------------------------------------------------
Television 1,426,807 TV Azteca, SA de CV (ADR)* 7,936,614 3.5
---------------------------------------------------------------------------------------------------------------------
Total Long-Term Investments in Mexico 93,450,834 41.4
====================================================================================================================================
Panama Banking 70,876 Banco Latinoamericano de Exportaciones, SA 'E' 1,701,024 0.8
---------------------------------------------------------------------------------------------------------------------
Total Long-Term Investments in Panama 1,701,024 0.8
====================================================================================================================================
Peru Financial Services 102,021 Credicorp Limited 1,103,102 0.5
---------------------------------------------------------------------------------------------------------------------
Food & Household 6,824,882 +Alicorp SA 1,271,474 0.5
Products
---------------------------------------------------------------------------------------------------------------------
Metals -- Non-Ferrous 176,685 Compania de Minas Buenaventura SA (ADR)* 2,904,260 1.3
1 Minsur SA 2 0.0
------------ -----
2,904,262 1.3
---------------------------------------------------------------------------------------------------------------------
Total Long-Term Investments in Peru 5,278,838 2.3
====================================================================================================================================
Venezuela Building Materials 1,497,199 Corporacion Venezolana de Cementos I, SACA 434,481 0.2
989,726 Corporacion Venezolana de Cementos II, SACA 287,215 0.1
------------ -----
721,696 0.3
---------------------------------------------------------------------------------------------------------------------
Food & Household 27,571,157 Mavesa SA 1,332,065 0.6
Products
---------------------------------------------------------------------------------------------------------------------
Metal Processing 46,750 International Briquettes Holding, Inc. 93,500 0.0
---------------------------------------------------------------------------------------------------------------------
Telecommunications 101,000 Compania Anonima Nacional Telefonos de
Venezuela (CANTV) (ADR)* 2,417,688 1.1
---------------------------------------------------------------------------------------------------------------------
Textiles 765,505 +Sudamtex de Venezuela (ADR)* (b) 479,972 0.2
---------------------------------------------------------------------------------------------------------------------
Total Long-Term Investments in Venezuela 5,044,921 2.2
====================================================================================================================================
Total Long-Term Investments (Cost -- $255,482,110) 222,756,137 98.5
====================================================================================================================================
Short-Term Investments
====================================================================================================================================
United States Commercial Paper*** US$6,647,000 General Motors Acceptance Corp., 5.75% due 12/01/1999 6,647,000 2.9
---------------------------------------------------------------------------------------------------------------------
Total Short-Term Investments (Cost -- $6,647,000) 6,647,000 2.9
====================================================================================================================================
Total Investments (Cost -- $262,129,110) 229,403,137 101.4
Liabilities in Excess of Other Assets (3,168,426) (1.4)
------------ -----
Net Assets $226,234,711 100.0%
============ =====
====================================================================================================================================
</TABLE>
+ Non-income producing security.
* American Depositary Receipts (ADR).
** Global Depositary Receipts (GDR).
*** Commercial Paper is traded on a discount basis; the interest rate shown
reflects the discount rate paid at the time of purchase by the Fund.
(a) Represents a Brady Bond. Brady Bonds are securities which have been issued
to refinance commercial bank loans and other debt. The risk associated
with these instruments 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.
(b) The security may be offered and sold to "qualified institutional buyers"
under Rule 144A of the Securities Act of 1933.
(c) Received through a bonus issue from Companhia Vale do Rio Doce. As of
November 30, 1999, the bonds have not commenced trading and the coupon
rate has not been determined.
See Notes to Consolidated Financial Statements.
10 & 11
<PAGE>
Merrill Lynch Latin America Fund, Inc., November 30, 1999
CONSOLIDATED STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
As of November 30, 1999
====================================================================================================================================
<S> <C> <C> <C>
Assets: Investments, at value (identified cost -- $262,129,110) ................................ $229,403,137
Cash ................................................................................... 30,777
Foreign cash ........................................................................... 92,437
Receivables:
Securities sold ...................................................................... $1,137,385
Dividends ............................................................................ 665,243
Capital shares sold .................................................................. 242,712
Interest ............................................................................. 107,630 2,152,970
----------
Prepaid registration fees and other assets ............................................. 80,007
------------
Total assets ........................................................................... 231,759,328
------------
====================================================================================================================================
Liabilities: Payables:
Securities purchased ................................................................. 3,966,478
Capital shares redeemed .............................................................. 660,579
Distributor .......................................................................... 135,672
Investment adviser ................................................................... 25,085 4,787,814
----------
Accrued expenses ....................................................................... 736,803
------------
Total liabilities ...................................................................... 5,524,617
------------
====================================================================================================================================
Net Assets: Net assets ............................................................................. $226,234,711
============
====================================================================================================================================
Net Assets Class A Common Stock, $.10 par value, 100,000,000 shares authorized .................... $ 248,462
Consist of: Class B Common Stock, $.10 par value, 100,000,000 shares authorized .................... 1,085,200
Class C Common Stock, $.10 par value, 100,000,000 shares authorized .................... 84,933
Class D Common Stock, $.10 par value, 100,000,000 shares authorized .................... 371,844
Paid-in capital in excess of par ....................................................... 424,503,009
Undistributed investment income -- net ................................................. 2,133,632
Accumulated realized capital losses on investments and foreign currency
transactions -- net .................................................................... (169,346,506)
Unrealized depreciation on investments and foreign currency transactions -- net ........ (32,845,863)
------------
Net assets ............................................................................. $226,234,711
============
====================================================================================================================================
Net Asset Class A -- Based on net assets of $32,022,863 and 2,484,616 shares outstanding ......... $ 12.89
Value: ============
Class B -- Based on net assets of $135,883,114 and 10,851,997 shares outstanding ....... $ 12.52
============
Class C -- Based on net assets of $10,638,096 and 849,332 shares outstanding ........... $ 12.53
============
Class D -- Based on net assets of $47,690,638 and 3,718,440 shares outstanding ......... $ 12.83
============
====================================================================================================================================
</TABLE>
See Notes to Consolidated Financial Statements.
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the Year Ended November 30, 1999
====================================================================================================================================
<S> <C> <C> <C>
Investment Dividends (net of $450,265 foreign withholding tax) .................................... $ 6,526,165
Income: Interest and discount earned ........................................................... 1,914,009
-----------
Total income ........................................................................... 8,440,174
-----------
====================================================================================================================================
Expenses: Investment advisory fees ............................................................... $2,220,264
Account maintenance and distribution fees -- Class B ................................... 1,442,714
Transfer agent fees -- Class B ......................................................... 519,018
Custodian fees ......................................................................... 503,914
Accounting services .................................................................... 169,034
Printing and shareholder reports ....................................................... 125,494
Transfer agent fees -- Class D ......................................................... 120,593
Professional fees ...................................................................... 110,820
Account maintenance fees -- Class D .................................................... 102,825
Account maintenance and distribution fees -- Class C ................................... 99,579
Foreign capital gains tax .............................................................. 97,803
Transfer agent fees -- Class A ......................................................... 76,141
Registration fees ...................................................................... 61,192
Directors' fees and expenses ........................................................... 44,787
Transfer agent fees -- Class C ......................................................... 35,034
Pricing fees ........................................................................... 7,063
Other .................................................................................. 3,788
----------
Total expenses ......................................................................... 5,740,063
-----------
Investment income -- net ............................................................... 2,700,111
-----------
====================================================================================================================================
Realized & Realized loss from:
Unrealized Gain Investments -- net ................................................................... (20,367,689)
(Loss) on Foreign currency transactions -- net ................................................. (1,784,345) (22,152,034)
----------
Investments & Change in unrealized appreciation/depreciation on:
Foreign Currency Investments -- net ................................................................... 65,037,095
Transactions -- Foreign currency transactions -- net ................................................. 431,981 65,469,076
---------- -----------
Net: Net realized and unrealized gain on investments and foreign currency transactions ...... 43,317,042
-----------
Net Increase in Net Assets Resulting from Operations ................................... $46,017,153
===========
====================================================================================================================================
</TABLE>
See Notes to Consolidated Financial Statements.
12 & 13
<PAGE>
Merrill Lynch Latin America Fund, Inc., November 30, 1999
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the Year Ended November 30,
--------------------------------
Increase (Decrease) in Net Assets: 1999 1998
====================================================================================================================================
<S> <C> <C> <C>
Operations: Investment income -- net .................................................. $ 2,700,111 $ 10,678,832
Realized loss on investments and foreign currency
transactions -- net ....................................................... (22,152,034) (51,669,645)
Change in unrealized appreciation/depreciation on investments
and foreign currency transactions -- net .................................. 65,469,076 (129,842,425)
------------ -------------
Net increase (decrease) in net assets resulting from operations ........... 46,017,153 (170,833,238)
------------ -------------
====================================================================================================================================
Dividends to Investment income -- net:
Shareholders: Class A ................................................................. (1,332,021) --
Class B ................................................................. (6,005,561) --
Class C ................................................................. (362,386) --
Class D ................................................................. (2,282,954) --
------------ -------------
Net decrease in net assets resulting from dividends to shareholders ....... (9,982,922) --
------------ -------------
====================================================================================================================================
Capital Share Net decrease in net assets derived from capital share transactions ........ (89,007,857) (320,024,018)
Transactions: ------------ -------------
====================================================================================================================================
Net Assets: Total decrease in net assets .............................................. (52,973,626) (490,857,256)
Beginning of year ......................................................... 279,208,337 770,065,593
------------ -------------
End of year* .............................................................. $226,234,711 $ 279,208,337
============ =============
====================================================================================================================================
* Undistributed investment income -- net .................................... $ 2,133,632 $ 9,768,146
============ =============
====================================================================================================================================
</TABLE>
See Notes to Consolidated Financial Statements.
CONSOLIDATED FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
The following per share data and ratios have been derived Class A+
from information provided in the financial statements. -------------------------------------------------
For the Year Ended November 30,
-------------------------------------------------
Increase (Decrease) in Net Asset Value: 1999 1998 1997 1996 1995
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year ......................... $ 10.61 $ 15.10 $ 12.83 $ 10.50 $ 17.37
Operating -------- -------- ------- ------- --------
Performance: Investment income -- net ................................... .20 .38 .17 .46 .16
Realized and unrealized gain (loss) on investments and
foreign currency
transactions -- net ........................................ 2.63 (4.87) 2.54 1.87 (6.52)
-------- -------- ------- ------- --------
Total from investment operations ........................... 2.83 (4.49) 2.71 2.33 (6.36)
-------- -------- ------- ------- --------
Less dividends and distributions:
Investment income -- net ................................. (.55) -- (.44) -- --
Realized gain on investments -- net ...................... -- -- -- -- (.50)
In excess of realized gain on investments -- net ......... -- -- -- -- (.01)
Total dividends and distributions .......................... (.55) -- (.44) -- (.51)
-------- -------- ------- ------- --------
Net asset value, end of year ............................... $ 12.89 $ 10.61 $ 15.10 $ 12.83 $ 10.50
======== ======== ======= ======= ========
====================================================================================================================================
Total Investment Based on net asset value per share ......................... 28.74% (29.74%) 21.79% 22.19% (37.66%)
Return:* ======== ======== ======= ======= ========
====================================================================================================================================
Ratios to Average Expenses ................................................... 1.77% 1.53% 1.46% 1.48% 1.66%
Net Assets: ======== ======== ======= ======= ========
Investment income -- net ................................... 1.84% 2.12% 1.03% 3.74% 1.40%
======== ======== ======= ======= ========
====================================================================================================================================
Supplemental Net assets, end of year (in thousands) ..................... $ 32,023 $ 26,249 $77,086 $46,369 $ 26,034
Data: ======== ======== ======= ======= ========
Portfolio turnover ......................................... 29.91% 31.92% 84.91% 66.14% 54.86%
======== ======== ======= ======= ========
====================================================================================================================================
</TABLE>
* Total investment returns exclude the effects of sales charges.
+ Based on average shares outstanding.
See Notes to Consolidated Financial Statements.
14 & 15
<PAGE>
Merrill Lynch Latin America Fund, Inc., November 30, 1999
CONSOLIDATED FINANCIAL HIGHLIGHTS (concluded)
<TABLE>
<CAPTION>
The following per share data and ratios have been derived Class B+
from information provided in the financial statements. -------------------------------------------------
For the Year Ended November 30,
-------------------------------------------------
Increase (Decrease) in Net Asset Value: 1999 1998 1997 1996 1995
====================================================================================================================================
<C> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year ......................... $ 10.20 $ 14.66 $ 12.46 $ 10.31 $ 17.24
Operating -------- -------- -------- -------- --------
Performance: Investment income (loss) -- net ............................ .10 .23 --++ .32 .05
Realized and unrealized gain (loss) on investments and
foreign currency transactions -- net ....................... 2.56 (4.69) 2.50 1.83 (6.47)
-------- -------- -------- -------- --------
Total from investment operations ........................... 2.66 (4.46) 2.50 2.15 (6.42)
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income -- net ................................. (.34) -- (.30) -- --
Realized gain on investments -- net ...................... -- -- -- -- (.50)
In excess of realized gain on investments -- net ......... -- -- -- -- (.01)
Total dividends and distributions .......................... (.34) -- (.30) -- (.51)
-------- -------- -------- -------- --------
Net asset value, end of year ............................... $ 12.52 $ 10.20 $ 14.66 $ 12.46 $ 10.31
======== ======== ======== ======== ========
====================================================================================================================================
Total Investment Based on net asset value per share ......................... 27.32% (30.42%) 20.51% 20.85% (38.32%)
Return:* ======== ======== ======== ======== ========
====================================================================================================================================
Ratios to Average Expenses ................................................... 2.87% 2.57% 2.50% 2.54% 2.71%
Net Assets: ======== ======== ======== ======== ========
Investment income (loss) -- net ............................ .98% 1.76% (.03%) 2.69% .43%
======== ======== ======== ======== ========
====================================================================================================================================
Supplemental Net assets, end of year (in thousands) ..................... $135,883 $190,670 $527,520 $518,865 $505,038
Data: ======== ======== ======== ======== ========
Portfolio turnover ......................................... 29.91% 31.92% 84.91% 66.14% 54.86%
======== ======== ======== ======== ========
====================================================================================================================================
<CAPTION>
<C> <S> <C> <C> <C> <C> <C>
The following per share data and ratios have been derived Class C+
from information provided in the financial statements. -------------------------------------------------
For the Year Ended November 30,
-------------------------------------------------
Increase (Decrease) in Net Asset Value: 1999 1998 1997 1996 1995
====================================================================================================================================
Per Share Net asset value, beginning of year ......................... $ 10.18 $ 14.64 $ 12.46 $ 10.31 $ 17.24
Operating -------- -------- -------- -------- --------
Performance: Investment income (loss) -- net ............................ .09 .23 (.02) .32 .03
Realized and unrealized gain (loss) on investments and
foreign currency transactions -- net ....................... 2.58 (4.69) 2.52 1.83 (6.45)
-------- -------- -------- -------- --------
Total from investment operations ........................... 2.67 (4.46) 2.50 2.15 (6.42)
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income -- net ................................. (.32) -- (.32) -- --
Realized gain on investments -- net ...................... -- -- -- -- (.50)
In excess of realized gain on investments -- net ......... -- -- -- -- (.01)
-------- -------- -------- -------- --------
Total dividends and distributions .......................... (.32) -- (.32) -- (.51)
-------- -------- -------- -------- --------
Net asset value, end of year ............................... $ 12.53 $ 10.18 $ 14.64 $ 12.46 $ 10.31
======== ======== ======== ======== ========
====================================================================================================================================
Total Investment Based on net asset value per share ......................... 27.42% (30.46%) 20.52% 20.85% (38.32%)
Return:* ======== ======== ======== ======== ========
====================================================================================================================================
Ratios to Average Expenses ................................................... 2.85% 2.57% 2.50% 2.54% 2.72%
Net Assets: ======== ======== ======== ======== ========
Investment income (loss) -- net ............................ .89% 1.77% (.11%) 2.68% .30%
======== ======== ======== ======== ========
====================================================================================================================================
Supplemental Net assets, end of year (in thousands) ..................... $ 10,638 $ 12,196 $ 37,027 $ 23,183 $ 14,659
Data: ======== ======== ======== ======== ========
Portfolio turnover ......................................... 29.91% 31.92% 84.91% 66.14% 54.86%
======== ======== ======== ======== ========
====================================================================================================================================
<CAPTION>
<C> <S> <C> <C> <C> <C> <C>
The following per share data and ratios have been derived Class D+
from information provided in the financial statements. -------------------------------------------------
For the Year Ended November 30,
-------------------------------------------------
Increase (Decrease) in Net Asset Value: 1999 1998 1997 1996 1995
====================================================================================================================================
Per Share Net asset value, beginning of year ......................... $ 10.53 $ 15.02 $ 12.77 $ 10.47 $ 17.37
Operating -------- -------- -------- -------- --------
Performance: Investment income -- net ................................... .18 .34 .11 .42 .14
Realized and unrealized gain (loss) on investments and
foreign currency transactions -- net ....................... 2.62 (4.83) 2.54 1.88 (6.53)
-------- -------- -------- -------- --------
Total from investment operations ........................... 2.80 (4.49) 2.65 2.30 (6.39)
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income -- net ................................. (.50) -- (.40) -- --
Realized gain on investments -- net ...................... -- -- -- -- (.50)
In excess of realized gain on investments -- net ......... -- -- -- -- (.01)
-------- -------- -------- -------- --------
Total dividends and distributions .......................... (.50) -- (.40) -- (.51)
-------- -------- -------- -------- --------
Net asset value, end of year ............................... $ 12.83 $ 10.53 $ 15.02 $ 12.77 $ 10.47
======== ======== ======== ======== ========
====================================================================================================================================
Total Investment Based on net asset value per share ......................... 28.47% (29.89%) 21.40% 21.97% (37.84%)
Return:* ======== ======== ======== ======== ========
====================================================================================================================================
Ratios to Average Expenses ................................................... 2.04% 1.78% 1.71% 1.74% 1.91%
Net Assets: ======== ======== ======== ======== ========
Investment income -- net ................................... 1.73% 2.54% .72% 3.47% 1.18%
======== ======== ======== ======== ========
====================================================================================================================================
Supplemental Net assets, end of year (in thousands) ..................... $ 47,691 $ 50,093 $128,433 $112,833 $105,830
Data: ======== ======== ======== ======== ========
Portfolio turnover ......................................... 29.91% 31.92% 84.91% 66.14% 54.86%
======== ======== ======== ======== ========
</TABLE>
* Total investment returns exclude the effects of sales charges.
+ Based on average shares outstanding.
++ Amount is less then $.01 per share.
See Notes to Consolidated Financial Statements.
16 & 17
<PAGE>
Merrill Lynch Latin America Fund, Inc., November 30, 1999
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. The Fund's financial statements are prepared in accordance
with generally accepted accounting principles, which may require the use of
management accruals and estimates. The Fund offers four classes of shares under
the Merrill Lynch Select Pricingsm 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 that 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
that 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
or purchased are valued at the last sale price in the case of exchange-traded
options. In the case of options traded in the over-the-counter market, valuation
is the last asked price (options written) or the last bid price (options
purchased). 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.
o 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.
o 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.
o 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.
o Financial futures contracts -- The Fund may purchase or sell financial 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. Dividends from foreign
securities where the ex-dividend date may have passed are subsequently recorded
when the Fund has determined 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) Prepaid registration fees -- 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.
(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 adjusted to reflect permanent differences
between financial and tax reporting. Accordingly, current year's permanent
book/tax differences of $351,703 have been reclassified between undistributed
net investment income and accumulated net realized capital losses. These
reclassifications have no effect on net assets or net asset values per share.
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 ("MLFD" or the "Distributor"), a division of Princeton Funds
Distributor, Inc. ("PFD"), which is 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 adopted by the Fund in accordance with Rule
12b-1 under the Investment Company
18 & 19
<PAGE>
Merrill Lynch Latin America Fund, Inc., November 30, 1999
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (concluded)
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 ................................... .25% .75%
Class C ................................... .25% .75%
Class D ................................... .25% --
- --------------------------------------------------------------------------------
Pursuant to a sub-agreement with the Distributor, Merrill Lynch, Pierce, Fenner
& Smith Incorporated ("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, 1999, 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 ................................... $ 106 $ 1,376
Class D ................................... $1,802 $24,244
- --------------------------------------------------------------------------------
For the year ended November 30, 1999, MLPF&S received contingent deferred sales
charges of $309,692 and $2,654 relating to transactions in Class B and Class C
Shares, respectively. Furthermore, MLPF&S received contingent deferred sales
charges of $500 relating to transactions subject to front-end sales charge
waivers in Class D Shares.
In addition, MLPF&S received $24,951 in commissions on the execution of
portfolio security transactions for the Fund for the year ended November 30,
1999.
Financial Data Services, Inc. ("FDS"), a wholly-owned subsidiary of ML & Co., is
the Fund's transfer agent.
Accounting services are provided to the Fund by MLAM at cost.
Certain officers and/or directors of the Fund are officers and/or directors of
MLAM, PSI, FDS, PFD, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the
year ended November 30, 1999 were $65,336,188 and $161,757,553, respectively.
Net realized losses for the year ended November 30, 1999 and net unrealized
losses as of November 30, 1999 were as follows:
- --------------------------------------------------------------------------------
Realized Unrealized
Losses Losses
- --------------------------------------------------------------------------------
Long-term investments ..................... $(20,367,442) $(32,725,973)
Short-term investments .................... (247) --
Foreign currency transactions ............. (1,784,345) (119,890)
------------ ------------
Total ..................................... $(22,152,034) $(32,845,863)
============ ============
- --------------------------------------------------------------------------------
As of November 30, 1999, net unrealized depreciation for Federal income tax
purposes aggregated $34,686,669, of which $31,844,152 related to appreciated
securities and $66,530,821 related to depreciated securities. At November 30,
1999, the aggregate cost of investments for Federal income tax purposes was
$264,089,806.
4. Capital Share Transactions:
Net decrease in net assets derived from capital share trans-actions was
$89,007,857 and $320,024,018 for the years ended November 30, 1999 and November
30, 1998, respectively.
Transactions in capital shares for each class were as follows:
- --------------------------------------------------------------------------------
Class A Shares for the Year Dollar
Ended November 30, 1999 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ............................... 1,210,003 $ 12,934,241
Shares issued to shareholders in
reinvestment of dividends ................. 105,420 977,240
--------- ------------
Total issued .............................. 1,315,423 13,911,481
Shares redeemed ........................... (1,304,078) (13,422,919)
--------- ------------
Net increase .............................. 11,345 $ 488,562
========= ============
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class A Shares for the Year Dollar
Ended November 30, 1998 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ............................... 1,577,185 $ 22,145,415
Shares redeemed ........................... (4,210,322) (55,944,438)
---------- -------------
Net decrease .............................. (2,633,137) $ (33,799,023)
========== =============
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class B Shares for the Year Dollar
Ended November 30, 1999 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ............................... 1,134,597 $ 12,098,486
Shares issued to shareholders in
reinvestment of dividends ................. 547,877 4,985,678
---------- ------------
Total issued .............................. 1,682,474 17,084,164
Automatic conversion of shares ............ (977,681) (10,571,440)
Shares redeemed ........................... (8,546,113) (83,167,432)
---------- ------------
Net decrease .............................. (7,841,320) $(76,654,708)
========== ============
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class B Shares for the Year Dollar
Ended November 30, 1998 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ............................... 1,556,359 $ 19,875,348
Automatic conversion of shares ............ (293,075) (3,687,837)
Shares redeemed ........................... (18,547,103) (236,009,202)
----------- --------------
Net decrease .............................. (17,283,819) $ (219,821,691)
=========== ==============
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class C Shares for the Year Dollar
Ended November 30, 1999 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ............................... 262,327 $ 2,973,939
Shares issued to shareholders in
reinvestment of dividends ................. 33,177 301,912
-------- -------------
Total issued .............................. 295,504 3,275,851
Shares redeemed ........................... (643,977) (6,282,624)
-------- -------------
Net decrease .............................. (348,473) $ (3,006,773)
======== =============
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class C Shares for the Year Dollar
Ended November 30, 1998 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ............................... 895,290 $ 12,279,809
Shares redeemed ........................... (2,227,053) (29,118,637)
---------- ------------
Net decrease .............................. (1,331,763) $(16,838,828)
========== ============
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class D Shares for the Year Dollar
Ended November 30, 1999 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ............................... 311,136 $ 3,350,984
Shares issued to shareholders in
reinvestment of dividends ................. 204,442 1,891,084
Automatic conversion of shares ............ 955,945 10,571,440
---------- -------------
Total issued .............................. 1,471,523 15,813,508
Shares redeemed ........................... (2,508,144) (25,648,446)
---------- -------------
Net decrease .............................. (1,036,621) $ (9,834,938)
========== =============
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class D Shares for the Year Dollar
Ended November 30, 1998 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ............................... 4,311,892 $ 63,507,567
Automatic conversion of shares ............ 285,021 3,687,837
---------- -------------
Total issued .............................. 4,596,913 67,195,404
Shares redeemed ........................... (8,391,830) (116,759,880)
---------- -------------
Net decrease .............................. (3,794,917) $ (49,564,476)
========== =============
- --------------------------------------------------------------------------------
5. Commitments:
At November 30, 1999, the Fund had entered into foreign exchange contracts under
which it agreed to purchase and sell foreign currency with approximate values of
$2,425,000 and $420,000, respectively.
6. Capital Loss Carryforward:
At November 30, 1999, the Fund had a net capital loss carryforward of
approximately $167,472,000, of which $88,329,000 expires in 2004, $52,462,000
expires in 2006 and $26,681,000 expires in 2007. This amount will be available
to offset like amounts of any future taxable gains.
7. Subsequent Event:
On December 17, 1999, the Fund's Board of Directors declared an ordinary income
dividend in the amount of $.226719 per Class A Share, $.082000 per Class B
Share, $.100421 per Class C Share and $.199138 per Class D Share payable on
December 23, 1999 to shareholders of record as of December 17, 1999.
20 & 21
<PAGE>
Merrill Lynch Latin America Fund, Inc., November 30, 1999
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders,
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, 1999, 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 each of the years in the five-year
period then ended. These consolidated financial statements and the consolidated
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, 1999, by correspondence with the custodian and brokers. 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.
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, 1999, 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, 2000
PORTFOLIO INFORMATION (unaudited)
As of November 30, 1999
================================================================================
Percent of
Ten Largest Holdings (Equity Investments) Net Assets
Telefonos de Mexico SA (ADR) ...................................... 8.0%
Grupo Televisa SA (GDR) ........................................... 4.9
Tele Norte Leste Participacoes SA* ................................ 4.7
Telecomunicacoes Brasileiras SA -- Telebras* ...................... 4.5
Companhia Vale do Rio Doce 'A' (Preferred) ........................ 3.7
TV Azteca, SA de CV (ADR) ......................................... 3.5
Companhia Brasileira de Distribuicao Grupo
Pao de Acucar (ADR) ............................................. 3.0
Cemex, SA de CV* .................................................. 2.6
Companhia Energetica de Minas
Gerais SA -- CEMIG* ............................................. 2.6
Grupo Financiero Banamex -- Accival,
SA de CV (Banacci)* ............................................. 2.5
* Includes combined holdings.
Percent of
Ten Largest Industries (Equity Investments) Net Assets
Telecommunications ................................................ 27.2%
Banking ........................................................... 5.9
Utilities ......................................................... 5.6
Broadcasting & Publishing ......................................... 4.9
Beverages & Tobacco ............................................... 4.8
Metals & Steel .................................................... 4.7
Merchandising ..................................................... 3.9
Television ........................................................ 3.5
Retail ............................................................ 3.0
Beverages ......................................................... 3.0
IMPORTANT TAX INFORMATION (unaudited)
The following information summarizes all per share distributions paid by Merrill
Lynch Latin America Fund, Inc. during the fiscal year ended November 30, 1999.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Foreign Total Foreign
Record Payable Source Ordinary Taxes
Date Date Income Income Paid or Withheld*
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A Shares 12/18/1998 12/29/1998 $.553057 $.553057 $.055818
Class B Shares 12/18/1998 12/29/1998 $.339205 $.339205 $.055818
Class C Shares 12/18/1998 12/29/1998 $.320334 $.320334 $.055818
Class D Shares 12/18/1998 12/29/1998 $.503215 $.503215 $.055818
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
* The foreign taxes paid or withheld represent taxes incurred by the Fund on
dividends received by the Fund from foreign sources. Foreign taxes paid or
withheld should be included in taxable income with an offsetting deduction
from gross income or as a credit for taxes paid to foreign governments.
You should consult your tax adviser regarding the appropriate treatment of
foreign taxes paid.
Additionally, the Fund paid no long-term capital gains distributions
during the fiscal year ended November 30, 1999.
Please retain this information for your records.
22 & 23
<PAGE>
Investing in emerging market securities involves a number of risk factors and
special considerations, including restrictions on foreign investments and on
repatriation of capital invested in emerging markets, currency fluctuations, and
potential price volatility and less liquidity of securities traded in emerging
markets. In addition, there may be less publicly available information about the
issuers of securities, and such issuers may not be subject to accounting,
auditing and financial reporting standards and requirements comparable to those
to which US companies are subject. Therefore, the Fund is designed as a
long-term investment for investors capable of assuming the risks of investing in
emerging markets. The Fund should be considered as a vehicle for diversification
and not as a complete investment program. Please refer to the prospectus for
details.
This report is not authorized for use as an offer of sale or a solicitation of
an offer to buy shares of the Fund unless accompanied or preceded by the Fund's
current prospectus. Past performance results shown in this report should not be
considered a representation of future performance. Investment return and
principal value of shares will fluctuate so that shares, when redeemed, may be
worth more or less than their original cost. 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 #16140 -- 11/99
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