MERRILL LYNCH
LATIN AMERICA
FUND, INC.
[GRAPHIC OMITTED]
STRATEGIC
Performance
Annual Report
November 30, 2000
<PAGE>
MERRILL LYNCH LATIN AMERICA FUND, INC.
Asset Allocation As a Percentage* of Net Assets as of November 30, 2000
A map illustrating the following percentages:
MEXICO 49.6%
VENEZUELA 2.5%
COLOMBIA 1.9%
PERU 1.6%
BRAZIL 38.0%
ARGENTINA 1.0%
CHILE 3.2%
* Total may not equal 100% and does not include short-term securities.
<PAGE>
Merrill Lynch Latin America Fund, Inc., November 30, 2000
DEAR SHAREHOLDER
For the six-month period ended November 30, 2000, total returns for Merrill
Lynch Latin America Fund, Inc.'s Class A, Class B, Class C and Class D Shares
were -5.42%, -5.93%, -5.93% and -5.59%, respectively. (Fund 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 Fund's returns were better than the -9.73% total return of
the unmanaged Morgan Stanley Capital International (MSCI) Latin America Free
Index and the -10.18% median return of the Lipper Latin American Funds Average,
the Fund's peer group, for the same 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 six-month period ended November 30, 2000.)
Fiscal Year in Review
For the fiscal year ended November 30, 2000, the Fund's Class A, Class B, Class
C and Class D Shares had total returns of +3.04%, +1.94%, +1.90% and +2.71%,
respectively. This compared favorably with the -7.86% total return of the MSCI
Latin America Free Index and the -6.00% median return of the Lipper Latin
American Funds Average. The Fund's above-average performance during the fiscal
year was largely attributed to our stock investments in Brazil, particularly an
overweighting in telecommunications companies throughout most of the period, and
to our equity investments in Mexico, where we maintained a large weighting in
media stocks. The Fund's underweighted position in Argentina, with just 1% of
net assets in this market throughout the period, also benefited performance, as
we were able to limit the effect of its negative results.
Investment Overview
Like other emerging markets, Latin American markets have taken their cue over
the past 12 months from the NASDAQ Composite Index. Last year,
telecommunications and media stocks rallied as "Internet plays." However, during
the past six months, a broader spectrum of stocks declined with the NASDAQ. The
common driver of these movements since spring has been investors' growing
aversion to risk. This sentiment was fueled by a myriad of fears, including
those of a hard landing of the US economy, the continuation of high interest
rates and a drop-off in information technology investments.
While both emerging markets and the NASDAQ declined more than 23% during the six
months ended November 30, 2000, Latin American markets declined less than 10%
over the same period. Consequently, the valuation disparities that earlier in
the year had made Latin American stocks attractive became less compelling. This
was particularly true with regard to Brazilian telecommunications stocks and, as
a result, we substantially reduced our overweighted positions in these
companies.
The past six months have also been marked by escalating concerns with regard to
Argentina. The issues focus specifically on the country's fiscal deficit, the
sustainability of its currency regime, and its ability to meet debt payments in
the context of very weak domestic growth and rising interest rates. The
Argentinean market declined 20.54% over the six months ended November 30, 2000.
Because we held only a small portion of the Fund's assets in Argentina, we were
able to avoid any direct repercussions. Argentina's neighbor and dominant
trading partner, Brazil, was indirectly affected by troubled Argentina, causing
that country's stock market to decline 12.60%. However, the impact on the Fund
was muted by the outperformance of our stock holdings in Brazil.
During market corrections, we had the opportunity to accumulate stocks whose
prices we believe have been unjustifiably punished. During this period, we
identified and invested in a number of such bargains. One example is Pepsi-Gemex
SA, a Pepsi bottler in Mexico and Pepsi's largest bottler outside the United
States. Gemex has acquired several Pepsi franchises, which, in our view, enables
it to benefit from a national beverage platform. We also added Companhia de
Bebidas das Americas, the dominant brewer in Brazil and the third-largest beer
company in the world. This stock, in which the Fund has combined holdings of
2.8% of net assets, is one of the best-performing stocks in the region.
We increased our investment in Petroleo Brasileiro SA--Petrobras, a company we
like because we believe that it has one of the highest production growth
profiles of any major integrated oil company in the world and because it is in
the early stages of a major corporate restructuring and cost-rationalization
program. In our view, these attributes should support the company's cash flow
and earnings growth regardless of the price of oil.
In Conclusion
Although we anticipate continued volatility in Latin American markets, we will
seek to maintain the Fund's positive performance through a strict adherence to
our disciplined, value-oriented approach to stock selection. We thank you for
your continued interest in Merrill Lynch Latin America Fund, Inc., and we look
forward to updating you again in our next report to shareholders.
Sincerely,
/s/ Terry K. Glenn
Terry K. Glenn
President and Director
/s/ Grace Pineda
Grace Pineda
Senior Vice President and
Portfolio Manager
December 22, 2000
PROXY RESULTS
During the six-month period ended November 30, 2000, Merrill Lynch Latin America
Fund, Inc.'s shareholders voted on the following proposals. The proposals were
approved at a shareholders' meeting on July 25, 2000. The description of each
proposal and number of shares voted are as follows:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
Shares Voted
For
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. To elect the Fund's Board of Directors: Terry K. Glenn 15,442,016
Ronald W. Forbes 15,436,427
Cynthia A. Montgomery 15,395,534
Charles C. Reilly 15,429,053
Kevin A. Ryan 15,393,527
Roscoe S. Suddarth 15,395,623
Richard R. West 15,397,984
Arthur Zeikel 15,430,342
Edward D. Zinbarg 15,395,743
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
Shares Voted Shares Voted Shares Voted
For Against Abstain
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
2. To ratify the selection of Deloitte & Touche LLP as the Fund's
independent auditors for the current fiscal year. 15,282,771 237,081 505,117
----------------------------------------------------------------------------------------------------------------------
3. To convert the Fund to "master/feeder" structure. 13,987,759 1,014,485 10,227,205
----------------------------------------------------------------------------------------------------------------------
</TABLE>
2 & 3
<PAGE>
Merrill Lynch Latin America Fund, Inc., November 30, 2000
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:
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 automatically 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>
6 Month 12 Month Since Inception
As of November 30, 2000 Total Return Total Return Total Return
=======================================================================================================
<S> <C> <C> <C>
ML Latin America Fund, Inc. Class A Shares -5.42% +3.04% -17.57%
-------------------------------------------------------------------------------------------------------
ML Latin America Fund, Inc. Class B Shares -5.93 +1.94 +44.99
-------------------------------------------------------------------------------------------------------
ML Latin America Fund, Inc. Class C Shares -5.93 +1.90 -22.73
-------------------------------------------------------------------------------------------------------
ML Latin America Fund, Inc. Class D Shares -5.59 +2.71 +55.89
=======================================================================================================
</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 MSCI Latin America
Free Index. Beginning and ending values are:
10/21/94** 11/00
ML Latin America Fund, Inc.+--
Class A Shares*+++ $ 9,475 $7,810
ML Latin America Fund, Inc.+--
Class C Shares* $10,000 $7,727
MSCI Latin
America Free Index++ $10,000 $9,512
* 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 from 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.
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
================================================================================
Class A Shares*
================================================================================
One Year Ended 9/30/00 +40.79% +33.40%
--------------------------------------------------------------------------------
Five Years Ended 9/30/00 + 8.57 + 7.40
--------------------------------------------------------------------------------
Inception (10/21/94) through 9/30/00 - 0.59 - 1.49
--------------------------------------------------------------------------------
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
================================================================================
Class C Shares*
================================================================================
One Year Ended 9/30/00 +39.39% +38.39%
--------------------------------------------------------------------------------
Five Years Ended 9/30/00 + 7.43 + 7.43
--------------------------------------------------------------------------------
Inception (10/21/94) through 9/30/00 - 1.63 - 1.63
--------------------------------------------------------------------------------
* 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, 2000
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 MSCI Latin America
Free Index. Beginning and ending values are:
9/27/91** 11/00
ML Latin America Fund, Inc.+--
Class B Shares* $10,000 $14,499
ML Latin America Fund, Inc.+--
Class D Shares*+++ $ 9,475 $14,772
MSCI Latin
America Free Index++ $10,000 $23,366
* 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 from 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.
Average Annual Total Return
% Return % Return
Without CDSC With CDSC**
================================================================================
Class B Shares*
================================================================================
One Year Ended 9/30/00 +39.40% +35.40%
--------------------------------------------------------------------------------
Five Years Ended 9/30/00 + 7.44 + 7.44
--------------------------------------------------------------------------------
Inception (9/27/91) through 9/30/00 + 6.08 + 6.08
--------------------------------------------------------------------------------
* 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*
================================================================================
One Year Ended 9/30/00 +40.43% +33.06%
--------------------------------------------------------------------------------
Five Years Ended 9/30/00 + 8.31 + 7.15
--------------------------------------------------------------------------------
Inception (9/27/91) through 9/30/00 + 6.92 + 6.28
--------------------------------------------------------------------------------
* Maximum sales charge is 5.25%. (Prior to October 21, 1994, Class D Shares
(formerly Class A Shares) were offered at a higher than maximum sales
charge. Thus, actual returns would have been somewhat lower than noted for
the inception period.)
** Assuming maximum sales charge.
CONSOLIDATED SCHEDULE OF INVESTMENTS (in US dollars)
<TABLE>
<CAPTION>
Shares Percent of
COUNTRY Industries Held Long-Term Investments Value Net Assets
====================================================================================================================================
<C> <C> <C> <S> <C> <C>
Argentina Real Estate 51,676 +IRSA Inversiones y Representaciones SA 'B' $ 88,383 0.1%
53,871 +IRSA Inversiones y Representaciones SA (GDR)** 936,011 0.5
----------- -----
1,024,394 0.6
-----------------------------------------------------------------------------------------------------------------------
Textiles & Apparel 531,359 +Grimoldi SA 'B' 637,758 0.4
-----------------------------------------------------------------------------------------------------------------------
Total Long-Term Investments in Argentina 1,662,152 1.0
====================================================================================================================================
Brazil Aerospace & Defense 27,685 Embraer--Empresa Brasileira de Aeronautica SA
(ADR)* 763,068 0.4
-----------------------------------------------------------------------------------------------------------------------
Banking 25,900,544 Banco Itau SA (Preferred) 1,975,130 1.2
99,875,514 +Bradespar SA (Preferred) 49,252 0.0
----------- -----
2,024,382 1.2
-----------------------------------------------------------------------------------------------------------------------
Beverages & Tobacco 17,676,800 Companhia de Bebidas das Americas (Preferred) 3,729,472 2.2
50,670 Companhia de Bebidas das Americas (Preferred)
(ADR)* 1,070,404 0.6
----------- -----
4,799,876 2.8
-----------------------------------------------------------------------------------------------------------------------
Diversified Financials 3,006,435 Itausa--Investimentos Itau SA (Preferred) 2,430,214 1.4
-----------------------------------------------------------------------------------------------------------------------
Diversified 47,220,550 Tele Norte Leste Participacoes SA 649,373 0.4
Telecommunications 135,829 Tele Norte Leste Participacoes SA (ADR)* 2,461,901 1.4
Services 7,859,823 Tele Norte Leste Participacoes SA (Preferred) 143,051 0.1
241,765,637 +Telecomunicacoes Brasileiras SA--Telebras 3,687 0.0
----------- -----
3,258,012 1.9
-----------------------------------------------------------------------------------------------------------------------
Electric Utilities 24,861 Companhia Energetica de Minas Gerais SA--CEMIG
(ADR)* 318,517 0.2
54,953 Companhia Energetica de Minas Gerais SA--CEMIG
(ADR)* (b) 704,052 0.4
193,549,258 Companhia Energetica de Minas Gerais SA--CEMIG
(Preferred) 2,479,635 1.4
1,087,714,750 Companhia Energetica do Ceara--Coelce 'A'
(Preferred) 2,626,662 1.5
153,486 Companhia Paranaense de Energia--Copel (ADR)* 1,189,517 0.7
43,090 +Espirito Santo Centrais Eletricas SA--Escelsa 2,212,333 1.3
----------- -----
9,530,716 5.5
-----------------------------------------------------------------------------------------------------------------------
Food & Drug Retailing 80,833 Companhia Brasileira de Distribuicao Grupo
Pao de Acucar (ADR)* 2,723,062 1.6
-----------------------------------------------------------------------------------------------------------------------
Forest Products 52,735 Aracruz Celulose SA (ADR)* 613,044 0.4
102,751,012 Votorantim Celulose e Papel SA (Preferred) 2,689,182 1.6
----------- -----
3,302,226 2.0
-----------------------------------------------------------------------------------------------------------------------
IT Consulting Services 2,800 +Terra Networks, SA 39,096 0.0
-----------------------------------------------------------------------------------------------------------------------
Machinery & Engineering 7,633,987 Weg SA (Preferred) 5,006,529 2.9
-----------------------------------------------------------------------------------------------------------------------
</TABLE>
6 & 7
<PAGE>
Merrill Lynch Latin America Fund, Inc., November 30, 2000
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<TABLE>
<CAPTION>
Shares Held/ Percent of
COUNTRY Industries Face Amount Long-Term Investments Value Net Assets
====================================================================================================================================
<C> <C> <C> <S> <C> <C>
Brazil Metals & Minng 949 Companhia Siderurgica Nacional $ 25 0.0%
(concluded) BRL 1,099,391 Companhia Vale do Rio Doce, 0% due
12/31/2049 (a) 0 0.0
----------- -----
25 0.0
----------------------------------------------------------------------------------------------------------------------
Oil & Gas 506,815 Petroleo Brasileiro SA (ADR)* 13,050,486 7.6
52,715 Petroleo Brasileiro SA--Petrobras 1,366,516 0.8
----------- -----
14,417,002 8.4
----------------------------------------------------------------------------------------------------------------------
Specialty Retailing 250,625 Globex Utilidades SA (Preferred) 2,637,487 1.5
----------------------------------------------------------------------------------------------------------------------
Textiles & Apparel 25,580,878 Companhia de Tecidos Norte de Minas--Coteminas
(Preferred) 1,547,338 0.9
21,491,685 +Empresa Nasional de Comercio SA 62,825 0.0
----------- -----
1,610,163 0.9
----------------------------------------------------------------------------------------------------------------------
Wireless 2,839,285 +Celular CRT Participacoes SA (Preferred) 779,468 0.5
Telecommunications 193,342,087 Tele Celular Sul Participacoes SA 321,418 0.2
Services 176,994,387 Tele Centro Oeste Celular Participacoes SA 776,544 0.5
221,710 Tele Centro Oeste Celular Participacoes SA (ADR)* 1,953,819 1.1
379,771,497 Tele Centro Sul Participacoes SA 2,531,166 1.5
216,330,087 Tele Leste Celular Participacoes SA 186,966 0.1
13,253 Tele Leste Celular Participacoes SA (ADR)* 371,084 0.2
166,404,987 Tele Nordeste Celular Participacoes SA 300,324 0.2
20,446 Tele Nordeste Celular Participacoes SA (ADR)* 654,272 0.4
216,330,087 Tele Norte Celular Participacoes SA 186,966 0.1
29,344 Tele Norte Celular Participacoes SA (ADR)* 880,320 0.5
210,918,304 Telemig Celular Participacoes SA 643,371 0.4
5,600 Telemig Celular Participacoes SA (ADR)* 287,000 0.2
9,845,775 +Telemig Celular SA 150,164 0.1
735,140 Telemig Celular SA 'C' (Preferred) 13,828 0.0
46,711,550 Telesp Celular Participacoes SA 273,098 0.2
89,519 Telesp Celular Participacoes SA (ADR)* 1,896,684 1.1
----------- -----
12,206,492 7.3
----------------------------------------------------------------------------------------------------------------------
Wireline 9,114,975 Telecomunicacoes de Minas Gerais--Telemig 333,644 0.2
Telecommunications 735,140 Telecomunicacoes de Minas Gerais--Telemig 'B'
Services (Preferred) 29,899 0.0
----------- -----
363,543 0.2
----------------------------------------------------------------------------------------------------------------------
Total Long-Term Investments in Brazil 65,111,893 38.0
====================================================================================================================================
Chile Diversified 232,248 Compania de Telecomunicaciones de Chile SA
Telecommunications (ADR)* 3,338,565 2.0
Services
----------------------------------------------------------------------------------------------------------------------
Electric Utilities 65,961 Chilectra SA (ADR)* (b) 1,004,197 0.6
1,649,656 +Empresa Nacional de Electricidad SA (Endesa) 593,596 0.3
1,399,629 +Enersis SA 485,469 0.3
----------- -----
2,083,262 1.2
----------------------------------------------------------------------------------------------------------------------
Total Long-Term Investments in Chile 5,421,827 3.2
====================================================================================================================================
Colombia Banking 997,820 Banco de Bogota 916,974 0.5
68,267 Banco de Bogota (Rights) 0 0.0
79,702 Banco Ganadero SA (Preferred) (ADR)* 99,628 0.1
----------- -----
1,016,602 0.6
----------------------------------------------------------------------------------------------------------------------
Beverages 404,119 Bavaria SA 1,278,356 0.7
----------------------------------------------------------------------------------------------------------------------
Diversified Financials 467,943 +Valores Bavaria SA 237,705 0.1
----------------------------------------------------------------------------------------------------------------------
Multiline Retailing 477,252 Almacenes Exito SA 826,257 0.5
----------------------------------------------------------------------------------------------------------------------
Total Long-Term Investments in Colombia 3,358,920 1.9
====================================================================================================================================
Mexico Airlines 58,160 +Grupo Aeroportuario del Sureste, SA de CV (ADR)* 836,050 0.5
941,380 +Grupo Aeroportuario del Sureste, SA de CV 'B' 1,360,477 0.8
----------- -----
2,196,527 1.3
----------------------------------------------------------------------------------------------------------------------
Banking 62,966 Banco Latinoamericano de Exportaciones, SA 'E' 1,719,759 1.0
4,316,489 +Grupo Financiero Banamex Accival, SA de CV
(Ordinary) 5,935,430 3.5
----------- -----
7,655,189 4.5
----------------------------------------------------------------------------------------------------------------------
Beverages 140,692 Fomento Economico Mexicano, SA de CV (ADR)* 4,809,908 2.8
491,967 Panamerican Beverages, Inc. 'A'
(US Registered Shares) 6,856,790 4.0
1,129,550 +Pepsi-Gemex SA (GDR)** 5,012,378 2.9
----------- -----
16,679,076 9.7
----------------------------------------------------------------------------------------------------------------------
Construction Material 152,283 Cemex, SA de CV 600,361 0.4
239,722 Cemex, SA de CV (ADR)* 4,629,631 2.7
13,298 Cemex, SA de CV (ADR)* (Warrants) (c) 23,272 0.0
9,000 Cemex, SA de CV (Warrants) (c) 3,539 0.0
----------- -----
5,256,803 3.1
----------------------------------------------------------------------------------------------------------------------
Diversified Financials 659,463 +Grupo Carso, SA de CV 'A1' 1,751,934 1.0
56,078 +Grupo Carso, SA de CV (ADR)* 311,670 0.2
----------- -----
2,063,604 1.2
----------------------------------------------------------------------------------------------------------------------
Diversified 343,489 Telefonos de Mexico SA (ADR)* 16,101,047 9.4
Telecommunications
Services
----------------------------------------------------------------------------------------------------------------------
Food Products 968,175 Grupo Industrial Bimbo, SA de CV 'A' 1,388,913 0.8
----------------------------------------------------------------------------------------------------------------------
Industrial Conglomerates 659,622 Alfa, SA 'A' 1,016,367 0.6
156,339 Desc, SA de CV (ADR)* 1,309,339 0.8
----------- -----
2,325,706 1.4
----------------------------------------------------------------------------------------------------------------------
</TABLE>
8 & 9
<PAGE>
Merrill Lynch Latin America Fund, Inc., November 30, 2000
CONSOLIDATED SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<TABLE>
<CAPTION>
Shares Percent of
COUNTRY Industries Held Long-Term Investments Value Net Assets
====================================================================================================================================
<C> <C> <C> <S> <C> <C>
Mexico Machinery & Engineering 99,851 Tubos de Acero de Mexico SA (ADR)* $ 1,352,981 0.8%
(concluded) -------------------------------------------------------------------------------------------------------------------
Media 561,843 +Corporacion Interamericana de Entretenimiento
SA 'B' 2,298,598 1.3
121,118 +Grupo Televisa SA (GDR)** 5,639,557 3.3
15,110,400 TV Azteca, SA de CV 9,473,605 5.5
50,922 TV Azteca, SA de CV (ADR)* 509,220 0.3
------------ ------
17,920,980 10.4
-------------------------------------------------------------------------------------------------------------------
Multiline Retailing 334,819 +Grupo Sanborns SA 'B1' 494,552 0.3
1,495,597 +Wal-Mart de Mexico, SA de CV 'C' 2,921,107 1.7
------------ ------
3,415,659 2.0
-------------------------------------------------------------------------------------------------------------------
Non-Ferrous Metals 547,975 +Nuevo Grupo Mexico SA 'B' 1,513,984 0.9
-------------------------------------------------------------------------------------------------------------------
Paper & Forest Products 833,967 Kimberly-Clark de Mexico, SA de CV 'A' 2,060,436 1.2
-------------------------------------------------------------------------------------------------------------------
Specialty Retailing 1,113,961 Controladora Comercial Mexicana, SA de CV 1,065,368 0.6
4,000,086 Grupo Elektra, SA de CV 3,953,116 2.3
------------ ------
5,018,484 2.9
-------------------------------------------------------------------------------------------------------------------
Total Long-Term Investments in Mexico 84,949,389 49.6
====================================================================================================================================
Peru Banking 87,676 Credicorp Limited 531,536 0.3
-------------------------------------------------------------------------------------------------------------------
Beverages 6,133,738 +Alicorp SA 399,728 0.2
-------------------------------------------------------------------------------------------------------------------
Metals & Mining 154,545 Compania de Minas Buenaventura SA (ADR)* 1,796,586 1.1
-------------------------------------------------------------------------------------------------------------------
Total Long-Term Investments in Peru 2,727,850 1.6
====================================================================================================================================
Venezuela Construction Material 1,454,270 Corporacion Venezolana de Cementos I, SACA 542,794 0.3
1,027,441 Corporacion Venezolana de Cementos II, SACA 379,059 0.2
682,805 +Sudamtex de Venezuela (ADR)* (b) 213,718 0.1
------------ ------
1,135,571 0.6
-------------------------------------------------------------------------------------------------------------------
Diversified 88,375 Compania Anonima Nacional Telefonos de
Telecommunications Venezuela (CANTV) (ADR)* 1,408,477 0.8
Services
-------------------------------------------------------------------------------------------------------------------
Food Products 23,131,232 Mavesa SA 1,676,898 1.0
-------------------------------------------------------------------------------------------------------------------
Metals & Mining 46,750 International Briquettes Holding, Inc. 87,656 0.1
-------------------------------------------------------------------------------------------------------------------
Total Long-Term Investments in Venezuela 4,308,602 2.5
-------------------------------------------------------------------------------------------------------------------
Total Long-Term Investments (Cost--$217,705,360) 167,540,633 97.8
====================================================================================================================================
<CAPTION>
Face
Amount Short-Term Investments
====================================================================================================================================
<C> <C> <C> <C> <S> <C> <C>
United States Commercial Paper*** US$ 4,219,000 General Electric Capital Corp., 6.54%
due 12/01/2000 4,219,000 2.5
-------------------------------------------------------------------------------------------------------------------
Total Short-Term Investments (Cost--$4,219,000) 4,219,000 2.5
====================================================================================================================================
Total Investments (Cost--$221,924,360) 171,759,633 100.3
Liabilities in Excess of Other Assets (462,309) (0.3)
------------ ------
Net Assets $171,297,324 100.0%
============ ======
====================================================================================================================================
</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) Received through a bonus issue from Companhia Vale do Rio Doce. As of
November 30, 2000, the bonds have not commenced trading and the coupon
rate has not been determined.
(b) The security may be offered and sold to "qualified institutional buyers"
under Rule 144A of the Securities Act of 1933.
(c) Warrants entitle the Fund to purchase a predetermined number of shares of
common stock and are non-income producing. The purchase price and number
of shares are subject to adjustment under certain conditions until the
expiration date.
See Notes to Consolidated Financial Statements.
10 & 11
<PAGE>
Merrill Lynch Latin America Fund, Inc., November 30, 2000
CONSOLIDATED STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
As of November 30, 2000
===================================================================================================================================
<S> <C> <C> <C>
Assets: Investments, at value (identified cost--$221,924,360) ........................ $ 171,759,633
Cash ......................................................................... 1,835
Foreign cash ................................................................. 238,164
Receivables:
Dividends .................................................................. $ 590,941
Capital shares sold ........................................................ 70,410
Securities sold ............................................................ 16,056 677,407
-------------
Prepaid expenses and other assets ............................................ 106,966
-------------
Total assets ................................................................. 172,784,005
-------------
===================================================================================================================================
Liabilities: Payables:
Capital shares redeemed .................................................... 741,512
Investment adviser ......................................................... 137,706
Distributor ................................................................ 95,491 974,709
-------------
Accrued expenses and other liabilities ....................................... 511,972
-------------
Total liabilities ............................................................ 1,486,681
-------------
===================================================================================================================================
Net Assets: Net assets ................................................................... $ 171,297,324
=============
===================================================================================================================================
Net Assets Class A Common Stock, $.10 par value, 100,000,000 shares authorized .......... $ 232,997
Consist of: Class B Common Stock, $.10 par value, 100,000,000 shares authorized .......... 687,871
Class C Common Stock, $.10 par value, 100,000,000 shares authorized .......... 55,194
Class D Common Stock, $.10 par value, 100,000,000 shares authorized .......... 357,704
Paid-in capital in excess of par ............................................. 355,552,347
Accumulated realized capital losses on investments and
foreign currency transactions--net ........................................... (135,334,414)
Unrealized depreciation on investments and foreign currency
transactions--net ............................................................ (50,254,375)
-------------
Net assets ................................................................... $ 171,297,324
=============
===================================================================================================================================
Net Asset Class A--Based on net assets of $30,466,636 and 2,329,966 shares outstanding . $ 13.08
Value: =============
Class B--Based on net assets of $87,316,899 and 6,878,708 shares outstanding . $ 12.69
=============
Class C--Based on net assets of $6,999,688 and 551,942 shares outstanding .... $ 12.68
=============
Class D--Based on net assets of $46,514,101 and 3,577,039 shares outstanding . $ 13.00
=============
===================================================================================================================================
</TABLE>
See Notes to Consolidated Financial Statements.
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the Year Ended November 30, 2000
===================================================================================================================================
<S> <C> <C> <C>
Investment Income: Dividends (net of $459,648 foreign withholding tax) .......................... $ 4,349,283
Interest and discount earned ................................................. 455,848
-------------
Total income ................................................................. 4,805,131
-------------
===================================================================================================================================
Expenses: Investment advisory fees ..................................................... $ 2,380,355
Account maintenance and distribution fees--Class B ........................... 1,300,154
Transfer agent fees--Class B ................................................. 251,545
Foreign capital gains tax .................................................... 228,287
Accounting services .......................................................... 172,475
Account maintenance fees--Class D ............................................ 147,539
Custodian fees ............................................................... 139,262
Account maintenance and distribution fees--Class C ........................... 109,573
Transfer agent fees--Class D ................................................. 90,313
Professional fees ............................................................ 87,751
Transfer agent fees--Class A ................................................. 58,137
Printing and shareholder reports ............................................. 48,563
Directors' fees and expenses ................................................. 39,573
Registration fees ............................................................ 38,636
Transfer agent fees--Class C ................................................. 20,711
Other ........................................................................ 21,892
-------------
Total expenses ............................................................... 5,134,766
-------------
Investment loss--net ......................................................... (329,635)
-------------
===================================================================================================================================
Realized & Unreal- Realized gain (loss) from:
ized Gain (Loss) on Investments--net ........................................................... 34,102,741
Investments & Foreign currency transactions--net ......................................... (255,803) 33,846,938
Foreign Currency -------------
Transactions--Net: Change in unrealized depreciation on:
Investments--net ........................................................... (17,438,754)
Foreign currency transactions--net ......................................... 30,242 (17,408,512)
------------- -------------
Net Increase in Net Assets Resulting from Operations ......................... $ 16,108,791
=============
===================================================================================================================================
</TABLE>
See Notes to Consolidated Financial Statements.
12 & 13
<PAGE>
Merrill Lynch Latin America Fund, Inc., November 30, 2000
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the Year Ended November 30,
-------------------------------
Increase (Decrease) in Net Assets: 2000 1999
===================================================================================================================================
<S> <C> <C> <C>
Operations: Investment income (loss)--net ............................................... $ (329,635) $ 2,700,111
Realized gain (loss) on investments and foreign currency transactions--net .. 33,846,938 (22,152,034)
Change in unrealized appreciation/depreciation on investments
and foreign currency transactions--net ...................................... (17,408,512) 65,469,076
-------------- -------------
Net increase in net assets resulting from operations ........................ 16,108,791 46,017,153
-------------- -------------
===================================================================================================================================
Dividends to Investment income--net:
Shareholders: Class A ................................................................... (447,048) (1,332,021)
Class B ................................................................... (694,790) (6,005,561)
Class C ................................................................... (67,269) (362,386)
Class D ................................................................... (594,890) (2,282,954)
In excess of investment income--net:
Class A ................................................................... (110,841) --
Class B ................................................................... (172,266) --
Class C ................................................................... (16,678) --
Class D ................................................................... (147,496) --
-------------- -------------
Net decrease in net assets resulting from dividends to shareholders ......... (2,251,278) (9,982,922)
-------------- -------------
===================================================================================================================================
Capital Share Net decrease in net assets derived from capital share transactions .......... (68,794,900) (89,007,857)
Transactions: -------------- -------------
===================================================================================================================================
Net Assets: Total decrease in net assets ................................................ (54,937,387) (52,973,626)
Beginning of year ........................................................... 226,234,711 279,208,337
-------------- -------------
End of year* ................................................................ $ 171,297,324 $ 226,234,711
============== =============
===================================================================================================================================
*Undistributed investment income--net ........................................ $ -- $ 2,133,632
============== =============
===================================================================================================================================
</TABLE>
See Notes to Consolidated Financial Statements.
CONSOLIDATED FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Class A+
The following per share data and ratios have been derived -----------------------------------------------------
from information provided in the financial statements. For the Year Ended November 30,
-----------------------------------------------------
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997 1996
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year .................. $ 12.89 $ 10.61 $ 15.10 $ 12.83 $ 10.50
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .............................. .07 .20 .38 .17 .46
Realized and unrealized gain (loss) on investments
and foreign currency transactions--net .............. .35 2.63 (4.87) 2.54 1.87
-------- -------- -------- -------- --------
Total from investment operations .................... .42 2.83 (4.49) 2.71 2.33
-------- -------- -------- -------- --------
Less dividends:
Investment income--net ........................... (.18) (.55) -- (.44) --
In excess of investment income--net .............. (.05) -- -- -- --
-------- -------- -------- -------- --------
Total dividends ..................................... (.23) (.55) -- (.44) --
-------- -------- -------- -------- --------
Net asset value, end of year ........................ $ 13.08 $ 12.89 $ 10.61 $ 15.10 $ 12.83
======== ======== ======== ======== ========
===================================================================================================================================
Total Investment Based on net asset value per share .................. 3.04% 28.74% (29.74%) 21.79% 22.19%
Return:* ======== ======== ======== ======== ========
===================================================================================================================================
Ratios to Expenses ............................................ 1.48% 1.77% 1.53% 1.46% 1.48%
Average ======== ======== ======== ======== ========
Net Assets: Investment income--net .............................. .48% 1.84% 2.12% 1.03% 3.74%
======== ======== ======== ======== ========
===================================================================================================================================
Supplemental Net assets, end of year (in thousands) .............. $ 30,466 $ 32,023 $ 26,249 $ 77,086 $ 46,369
Data: ======== ======== ======== ======== ========
Portfolio turnover .................................. 41.70% 29.91% 31.92% 84.91% 66.14%
======== ======== ======== ======== ========
===================================================================================================================================
</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, 2000
CONSOLIDATED FINANCIAL HIGHLIGHTS (concluded)
<TABLE>
<CAPTION>
Class B+
The following per share data and ratios have been derived -------------------------------------------------------
from information provided in the financial statements. For the Year Ended November 30,
-------------------------------------------------------
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997 1996
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year ............... $ 12.52 $ 10.20 $ 14.66 $ 12.46 $ 10.31
Operating -------- -------- -------- -------- --------
Performance: Investment income (loss)--net .................... (.07) .10 .23 --++ .32
Realized and unrealized gain (loss) on investments
and foreign currency transactions--net ........... .32 2.56 (4.69) 2.50 1.83
-------- -------- -------- -------- --------
Total from investment operations ................. .25 2.66 (4.46) 2.50 2.15
-------- -------- -------- -------- --------
Less dividends:
Investment income--net ........................ (.06) (.34) -- (.30) --
In excess of investment income--net ........... (.02) -- -- -- --
-------- -------- -------- -------- --------
Total dividends .................................. (.08) (.34) -- (.30) --
-------- -------- -------- -------- --------
Net asset value, end of year ..................... $ 12.69 $ 12.52 $ 10.20 $ 14.66 $ 12.46
======== ======== ======== ======== ========
===================================================================================================================================
Total Based on net asset value per share ............... 1.94% 27.32% (30.42%) 20.51% 20.85%
Investment ======== ======== ======== ======== ========
Return:*
===================================================================================================================================
Ratios to Expenses ......................................... 2.51% 2.87% 2.57% 2.50% 2.54%
Average ======== ======== ======== ======== ========
Net Assets: Investment income (loss)--net .................... (.44%) .98% 1.76% (.03%) 2.69%
======== ======== ======== ======== ========
===================================================================================================================================
Supplemental Net assets, end of year (in thousands) ........... $ 87,317 $135,883 $190,670 $527,520 $518,865
Data: ======== ======== ======== ======== ========
Portfolio turnover ............................... 41.70% 29.91% 31.92% 84.91% 66.14%
======== ======== ======== ======== ========
===================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Class C+
The following per share data and ratios have been derived -------------------------------------------------------
from information provided in the financial statements. For the Year Ended November 30,
-------------------------------------------------------
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997 1996
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year ............... $ 12.53 $ 10.18 $ 14.64 $ 12.46 $ 10.31
Operating -------- -------- -------- -------- --------
Performance: Investment income (loss)--net .................... (.07) .09 .23 (.02) .32
Realized and unrealized gain (loss) on investments
and foreign currency transactions--net ........... .32 2.58 (4.69) 2.52 1.83
-------- -------- -------- -------- --------
Total from investment operations ................. .25 2.67 (4.46) 2.50 2.15
-------- -------- -------- -------- --------
Less dividends:
Investment income--net ........................ (.08) (.32) -- (.32) --
In excess of investment income--net ........... (.02) -- -- -- --
-------- -------- -------- -------- --------
Total dividends .................................. (.10) (.32) -- (.32) --
-------- -------- -------- -------- --------
Net asset value, end of year ..................... $ 12.68 $ 12.53 $ 10.18 $ 14.64 $ 12.46
======== ======== ======== ======== ========
===================================================================================================================================
Total Based on net asset value per share ............... 1.90% 27.42% (30.46%) 20.52% 20.85%
Investment ======== ======== ======== ======== ========
Return:*
===================================================================================================================================
Ratios to Expenses ......................................... 2.51% 2.85% 2.57% 2.50% 2.54%
Average ======== ======== ======== ======== ========
Net Assets: Investment income (loss)--net .................... (.48%) .89% 1.77% (.11%) 2.68%
======== ======== ======== ======== ========
===================================================================================================================================
Supplemental Net assets, end of year (in thousands) ........... $ 7,000 $ 10,638 $ 12,196 $ 37,027 $ 23,183
Data: ======== ======== ======== ======== ========
Portfolio turnover ............................... 41.70% 29.91% 31.92% 84.91% 66.14%
======== ======== ======== ======== ========
===================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Class D+
The following per share data and ratios have been derived -------------------------------------------------------
from information provided in the financial statements. For the Year Ended November 30,
-------------------------------------------------------
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997 1996
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year .................. $ 12.83 $ 10.53 $ 15.02 $ 12.77 $ 10.47
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .............................. .03 .18 .34 .11 .42
Realized and unrealized gain (loss) on investments
and foreign currency transactions--net .............. .34 2.62 (4.83) 2.54 1.88
-------- -------- -------- -------- --------
Total from investment operations .................... .37 2.80 (4.49) 2.65 2.30
-------- -------- -------- -------- --------
Less dividends:
Investment income--net ........................... (.16) (.50) -- (.40) --
In excess of investment income--net .............. (.04) -- -- -- --
-------- -------- -------- -------- --------
Total dividends ..................................... (.20) (.50) -- (.40) --
-------- -------- -------- -------- --------
Net asset value, end of year ........................ $ 13.00 $ 12.83 $ 10.53 $ 15.02 $ 12.77
======== ======== ======== ======== ========
====================================================================================================================================
Total Based on net asset value per share .................. 2.71% 28.47% (29.89%) 21.40% 21.97%
Investment ======== ======== ======== ======== ========
Return:*
===================================================================================================================================
Ratios to Expenses ............................................ 1.73% 2.04% 1.78% 1.71% 1.74%
Average ======== ======== ======== ======== ========
Net Assets: Investment income--net .............................. .20% 1.73% 2.54% .72% 3.47%
======== ======== ======== ======== ========
===================================================================================================================================
Supplemental Net assets, end of year (in thousands) .............. $ 46,514 $ 47,691 $ 50,093 $128,433 $112,833
Data: ======== ======== ======== ======== ========
Portfolio turnover .................................. 41.70% 29.91% 31.92% 84.91% 66.14%
======== ======== ======== ======== ========
===================================================================================================================================
</TABLE>
* Total investment returns exclude the effects of sales charges.
+ Based on average shares outstanding.
++ Amount is less than $.01 per share.
See Notes to Consolidated Financial Statements.
16 & 17
<PAGE>
Merrill Lynch Latin America Fund, Inc., November 30, 2000
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 conformity
with accounting principles generally accepted in the United States of America,
which may require the use of management accruals and estimates. 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 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
investment strategies to increase or decrease the level of risk to which the
Fund is exposed more quickly and efficiently than transactions in other types of
instruments. 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. Distributions in excess of net investment
income are due primarily to differing tax treatments for foreign currency
transactions. The Fund will adopt the provisions of the AICPA Audit and
Accounting Guide for Investment Companies, as revised, effective for fiscal
years beginning after December 15, 2000. As required, the Fund will begin
amortizing premiums and discounts on debt securities effective December 1, 2001.
Prior to this date, the Fund did not amortize premiums or discounts on debt
securities. The cumulative effect of this accounting change will have no impact
on the total net assets of the Fund. The impact of this accounting change has
not been determined but will result in an adjustment to cost of securities and a
corresponding adjustment in net unrealized appreciation/depreciation, based on
securities held as of November 30, 2001.
(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--Accounting principles generally accepted in the United
States of America require that certain components of net assets be adjusted to
reflect permanent differences between financial and tax reporting. Accordingly,
the current year's permanent book/tax differences of $612,434 have been
reclassified between paid-in capital in excess of par and accumulated net
investment loss and $165,153 has been reclassified between accumulated net
investment loss 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
Investment Managers, L.P.
18 & 19
<PAGE>
Merrill Lynch Latin America Fund, Inc., November 30, 2000
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
("MLIM"). The general partner of MLIM 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 FAM Distributors, Inc. ("FAMD" or the
"Distributor"), which is a wholly-owned subsidiary of Merrill Lynch Group, Inc.
MLIM 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 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, 2000, FAMD earned underwriting discounts and
direct commissions and MLPF&S earned dealer concessions on sales of the Fund's
Class D Shares as follows:
--------------------------------------------------------------------------------
FAMD MLPF&S
--------------------------------------------------------------------------------
Class D ................................ $2,417 $9,837
--------------------------------------------------------------------------------
For the year ended November 30, 2000, MLPF&S received contingent deferred sales
charges of $167,100 and $4,411 relating to transactions in Class B and Class C
Shares, respectively.
Furthermore, MLPF&S received contingent deferred sales charges of $16,812 and
$48,582 relating to transactions subject to front-end sales charge waivers in
Class A and Class D Shares, respectively.
In addition, MLPF&S received $52,512 in commissions on the execution of
portfolio security transactions for the Fund for the year ended November 30,
2000.
Financial Data Services, Inc. ("FDS"), a wholly-owned subsidiary of ML & Co., is
the Fund's transfer agent.
Accounting services were provided to the Fund by MLIM.
Certain officers and/or directors of the Fund are officers and/or directors of
MLIM, PSI, FDS, FAMD, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the
year ended November 30, 2000 were $94,750,468 and $166,851,643, respectively.
Net realized gains (losses) for the year ended November 30, 2000 and net
unrealized losses as of November 30, 2000 were as follows:
--------------------------------------------------------------------------------
Realized Unrealized
Gains (Losses) Losses
--------------------------------------------------------------------------------
Long-term investments .................. $ 34,102,932 $(50,164,727)
Short-term investments ................. (191) --
Foreign currency transactions .......... (255,803) (89,648)
------------ ------------
Total .................................. $ 33,846,938 $(50,254,375)
============ ============
--------------------------------------------------------------------------------
As of November 30, 2000, net unrealized depreciation for Federal income tax
purposes aggregated $51,928,628, of which $24,647,367 related to appreciated
securities and $76,575,995 related to depreciated securities. At November 30,
2000, the aggregate cost of investments for Federal income tax purposes was
$223,688,261.
4. Capital Share Transactions:
Net decrease in net assets derived from capital share transactions was
$68,794,900 and $89,007,857 for the years ended November 30, 2000 and November
30, 1999, respectively.
Transactions in capital shares for each class were as follows:
--------------------------------------------------------------------------------
Class A Shares for the Year Dollar
Ended November 30, 2000 Shares Amount
--------------------------------------------------------------------------------
Shares sold .............................. 875,569 $ 13,634,762
Shares issued to shareholders in
reinvestment of dividends ................ 36,804 539,541
---------- ------------
Total issued ............................. 912,373 14,174,303
Shares redeemed .......................... (1,067,023) (16,417,626)
---------- ------------
Net decrease ............................. (154,650) $ (2,243,323)
========== ============
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
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 B Shares for the Year Dollar
Ended November 30, 2000 Shares Amount
--------------------------------------------------------------------------------
Shares sold .............................. 461,598 $ 6,950,650
Shares issued to shareholders in
reinvestment of dividends ................ 50,093 719,843
---------- ------------
Total issued ............................. 511,691 7,670,493
Automatic conversion of shares ........... (989,482) (15,013,042)
Shares redeemed .......................... (3,495,498) (52,183,279)
---------- ------------
Net decrease ............................. (3,973,289) $(59,525,828)
========== ============
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
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 C Shares for the Year Dollar
Ended November 30, 2000 Shares Amount
--------------------------------------------------------------------------------
Shares sold .............................. 90,271 $ 1,370,770
Shares issued to shareholders in
reinvestment of dividends ................ 4,894 70,284
-------- -----------
Total issued ............................. 95,165 1,441,054
Shares redeemed .......................... (392,555) (5,877,594)
-------- -----------
Net decrease ............................. (297,390) $(4,436,540)
======== ===========
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
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 D Shares for the Year Dollar
Ended November 30, 2000 Shares Amount
--------------------------------------------------------------------------------
Shares sold .............................. 593,877 $ 8,582,001
Shares issued to shareholders in
reinvestment of dividends ................ 42,408 619,582
Automatic conversion of shares ........... 969,584 15,013,042
---------- ------------
Total issued ............................. 1,605,869 24,214,625
Shares redeemed .......................... (1,747,270) (26,803,834)
---------- ------------
Net decrease ............................. (141,401) $ (2,589,209)
========== ============
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
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)
========== ============
--------------------------------------------------------------------------------
5. Short-Term Borrowings:
On December 3, 1999, the Fund, along with certain other funds managed by MLIM
and its affiliates, entered into a $1,000,000,000 credit agreement with Bank of
America, N.A. and certain other lenders. The Fund may borrow under the credit
agreement to fund shareholder redemptions and for
20 & 21
<PAGE>
Merrill Lynch Latin America Fund, Inc., November 30, 2000
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (concluded)
other lawful purposes other than for leverage. The Fund may borrow up to the
maximum amount allowable under the Fund's current prospectus and statement of
additional information, subject to various other legal, regulatory or
contractual limits. The Fund pays a commitment fee of .09% per annum based on
the Fund's pro rata share of the unused portion of the facility. Amounts
borrowed under the facility bear interest at a rate equal to, at each fund's
election, the Federal Funds rate plus .50% or a base rate as determined by Bank
of America, N.A. The Fund did not borrow under the facility during the year
ended November 30, 2000. On December 1, 2000, this credit agreement was renewed
and amended with Bank One, N.A., replacing Bank of America, N.A., as the
administrative agent.
6. Capital Loss Carryforward:
At November 30, 2000, the Fund had a net capital loss carryforward of
approximately $132,617,000, of which $53,474,000 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.
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, 2000, 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 auditing standards generally accepted
in the United States of America. 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, 2000 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.
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, 2000, the results of their operations, the changes in their net
assets, and the consolidated financial highlights for the respective stated
periods in conformity with accounting principles generally accepted in the
United States of America.
Deloitte & Touche LLP
Princeton, New Jersey
January 9, 2001
PORTFOLIO INFORMATION (unaudited)
As of November 30, 2000
Percent of
Ten Largest Holdings (Equity Investments) Net Assets
Telefonos de Mexico SA (ADR) .................................... 9.4%
Petroleo Brasileiro SA* ......................................... 8.4
TV Azteca, SA de CV* ............................................ 5.8
Panamerican Beverages, Inc. 'A'
(US Registered Shares) ........................................ 4.0
Grupo Financiero Banamex Accival,
SA de CV (Ordinary) ........................................... 3.5
Grupo Televisa SA (GDR) ......................................... 3.3
Cemex, SA de CV* ................................................ 3.1
Pepsi-Gemex SA (GDR) ............................................ 2.9
Weg SA (Preferred) .............................................. 2.9
Fomento Economico Mexicano, SA de CV (ADR) ...................... 2.8
* Includes combined holdings.
Percent of
Ten Largest Industries (Equity Investments) Net Assets
Diversified Telecommunications Services ........................ 14.1%
Beverages ...................................................... 10.6
Media .......................................................... 10.4
Oil & Gas ...................................................... 8.4
Wireless Telecommunications Services ........................... 7.3
Electric Utilities ............................................. 6.7
Banking ........................................................ 6.3
Specialty Retailing ............................................ 4.4
Construction Material .......................................... 3.7
Machinery & Engineering ........................................ 3.7
IMPORTANT TAX INFORMATION (unaudited)
All of the net investment income distributions paid by Merrill Lynch Latin
America Fund, Inc. to shareholders of record on December 17, 1999 represents
income from foreign sources. Additionally, there was $.025586 per share of
foreign taxes associated with this distribution.
The foreign taxes represent taxes incurred by the Fund on dividends and/or
interest received by the Fund from foreign sources. Foreign taxes paid or
withheld should be included as foreign 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, there were no capital gains distributions paid by the Fund during
the year.
Please retain this information for your records.
22 & 23
<PAGE>
Officers and Directors
Terry K. Glenn, President and Director
Ronald W. Forbes, Director
Cynthia A. Montgomery, Director
Charles C. Reilly, Director
Kevin A. Ryan, Director
Roscoe S. Suddarth, Director
Richard R. West, Director
Arthur Zeikel, Director
Edward D. Zinbarg, Director
Robert C. Doll, Jr., 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
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--11/00
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