UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-06349
Name of Fund: Merrill Lynch Latin America Fund, Inc.
Fund Address: P.O. Box 9011
Princeton, NJ 08543-9011
Name and address of agent for service: Robert C. Doll, Jr., Chief Executive
Officer, Merrill Lynch Latin America Fund, Inc., 800 Scudders Mill Road,
Plainsboro, NJ 08536. Mailing address: P.O. Box 9011, Princeton, NJ
08543-9011
Registrant's telephone number, including area code: (609) 282-2800
Date of fiscal year end: 11/30/05
Date of reporting period: 12/01/04 - 11/30/05
Item 1 - Report to Stockholders
Merrill Lynch
Latin America Fund, Inc.
Annual Report
November 30, 2005
Merrill Lynch Latin America Fund, Inc.
Portfolio Information as of November 30, 2005
Ten Largest Holdings Percent of
(Equity Investments) Net Assets
- --------------------------------------------------------------------------------
Petroleo Brasileiro SA ....................................... 13.8%
Companhia Vale do Rio Doce
(Preference 'A' Shares) ................................... 10.7
America Movil, SA de CV ...................................... 7.6
Cemex, SA de CV .............................................. 5.8
Banco Bradesco SA ............................................ 4.7
Wal-Mart de Mexico, SA de CV ................................. 3.6
Telefonos de Mexico, SA de CV ................................ 3.3
Banco Itau Holding Financeira SA ............................. 3.1
Grupo Televisa, SA ........................................... 2.9
Usinas Siderurgicas de Minas
Gerais SA Preferred Class A ............................... 2.5
- --------------------------------------------------------------------------------
Five Largest Industries Percent of
(Equity Investments) Net Assets
- --------------------------------------------------------------------------------
Metals & Mining .............................................. 15.4%
Oil & Gas .................................................... 14.1
Banks ........................................................ 11.8
Wireless Telecommunication
Services .................................................. 8.2
Multiline Retail ............................................. 6.6
- --------------------------------------------------------------------------------
For Fund compliance purposes, the Fund's industry classifications refer to
any one or more of the industry sub-classifications used by one or more
widely recognized market indexes or ratings group indexes, and/or as
defined by Fund management. This definition may not apply for the purposes
of this report, which may combine industry sub-classifications for
reporting ease.
Percent of Total
Geographic Allocation Investments
- --------------------------------------------------------------------------------
Brazil ....................................................... 59.2%
Mexico ....................................................... 30.7
Chile ........................................................ 5.4
Argentina .................................................... 2.1
Colombia ..................................................... 0.8
Venezuela .................................................... 0.2
Other* ....................................................... 1.6
- --------------------------------------------------------------------------------
* Includes portfolio holdings in short-term securities.
2 MERRILL LYNCH LATIN AMERICA FUND, INC. NOVEMBER 30, 2005
A Letter From the President
Dear Shareholder
As the financial markets continued to muddle their way through 2005, the Federal
Reserve Board (the Fed) advanced its monetary tightening campaign full steam
ahead. The 13th consecutive interest rate hike since June 2004 came on December
13, bringing the target federal funds rate to 4.25%. Oil prices, after reaching
record highs on more than one occasion over the past several months, moderated
somewhat by period-end, as did inflation expectations. Against this backdrop,
most major market indexes managed to post positive results for the current
reporting period:
Total Returns as of November 30, 2005 6-month 12-month
======================================================================================
U.S. equities (Standard & Poor's 500 Index) + 5.88% + 8.44%
- --------------------------------------------------------------------------------------
Small-cap U.S. equities (Russell 2000 Index) +10.47 + 8.14
- --------------------------------------------------------------------------------------
International equities (MSCI Europe Australasia Far East Index) +11.23 +13.25
- --------------------------------------------------------------------------------------
Fixed income (Lehman Brothers Aggregate Bond Index) - 0.48 + 2.40
- --------------------------------------------------------------------------------------
Tax-exempt fixed income (Lehman Brothers Municipal Bond Index) + 0.36 + 3.88
- --------------------------------------------------------------------------------------
High yield bonds (Credit Suisse First Boston High Yield Index) + 2.33 + 2.94
- --------------------------------------------------------------------------------------
With the kick-off of the holiday shopping season, attention turned to the
consumer, who has remained resilient even amid high energy prices and rising
interest rates. Some observers surmise that a slowdown in residential real
estate may ultimately contribute to a weakening in consumer spending. At this
juncture, the outlook remains unclear.
Equity markets moved sideways for much of 2005, notwithstanding a strong rally
in the middle of the fourth quarter. Corporate earnings have continued to
surprise on the upside and company profit margins remain high, as does
productivity. On the other hand, high energy prices, more Fed interest rate
hikes, a consumer slowdown and/or the potential for slower earnings growth pose
the greatest risks to U.S. stocks. Internationally, many markets have benefited
from strong economic statistics, trade surpluses and solid finances. Emerging
markets have had a particularly strong year, partly reflecting high economic
growth rates and positive financial reforms.
The bond market continued to be characterized by a flattening yield curve. The
difference between the two-year and 10-year Treasury yield was just seven basis
points (.07%) at period-end, compared to 40 basis points six months ago and 134
basis points 12 months ago.
Navigating the financial markets can be a challenge, particularly during
uncertain times. With that in mind, we invite you to visit our online magazine
at www.mlim.ml.com/shareholdermagazine. Shareholder is a publication designed to
provide insights on investing and timely "food for thought" for investors. We
are pleased to make the magazine available online, where we are able to expand
our reach in terms of content and readership.
As always, we thank you for trusting Merrill Lynch Investment Managers with your
investment assets, and we look forward to serving you in the months and years
ahead.
Sincerely,
/s/ Robert C. Doll, Jr.
Robert C. Doll, Jr.
President and Director
MERRILL LYNCH LATIN AMERICA FUND, INC. NOVEMBER 30, 2005 3
A Discussion With Your Fund's Portfolio Manager
The Fund provided excellent total returns for the fiscal year, outpacing
its benchmark and the Lipper Latin American Funds category average with 12-month
returns exceeding 65%.
How did the Fund perform during the fiscal year in light of the existing market
conditions?
For the 12-month period ended November 30, 2005, Merrill Lynch Latin America
Fund, Inc.'s Class A, Class B, Class C and Class I Shares had total returns of
+67.10%, +65.91%, +65.90% and +67.55%, 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 6 and 7 of this report to
shareholders.) The Fund outperformed the +60.93% return of its benchmark, the
Morgan Stanley Capital International Emerging Markets (MSCI EM) Latin America
Index, and the +64.00% average return of the Lipper Latin American Funds
category for the 12-month period. (Funds in this Lipper category concentrate
their investments in equity securities with primary trading markets or
operations in the Latin American region or in a single country within this
region.) The bulk of the outperformance relative to the MSCI EM Latin America
Index was the result of strong stock selection across our three major markets --
Brazil, Mexico and Chile -- as well as maintaining an overweight position in
Brazil and an underweight position in Chile.
For the third year in a row, Latin America ranked among the top-performing
equity markets in the world. The region continued to benefit from improved
fiscal discipline and an aggregate current account surplus. At the company
level, the combination of attractive valuations, healthy balance sheets,
increased focus on corporate governance and strong earnings growth made Latin
America a target for dedicated regional investors and global investors alike.
Overall, the markets enjoyed strong liquidity combined with attractive
valuations and positive macro/micro scenarios.
What changes were made to the portfolio during the period?
During the past year, we maintained our largest overweight position in Brazil,
varying between roughly 600 and 750 basis points (6% - 7.50%) above the
benchmark allocation. Our position in Mexico remained close to neutral
throughout the year, at plus or minus 100 basis points. We maintained a nearly
300 basis point underweight position in Chile for most of the year. In general,
we found that the remaining markets in the region offered few compelling
investment opportunities. While we rotated some of the positions intra-country,
the overall make-up of the portfolio remained relatively stable throughout the
year.
In Brazil, we finished the year toward the high end of our overweight range at
around 700 basis points. Over the course of the 12 months, we maintained our
overweight in stocks benefiting from the strong commodity cycle, such as iron
ore giant Companhia Vale do Rio Doce (CVRD) and Brazil's highly efficient steel
producers. Our two largest positions in Brazil are Petrobras and CVRD. Oil giant
Petrobras continues to trade at a large discount to its emerging markets peers
despite strong growth and an aggressive capital expenditure program to increase
production. CVRD, the world's largest iron ore producer, should benefit as we
expect iron ore prices to remain strong for at least another two to three years.
As the Brazilian central bank started easing monetary policy in September 2005,
we increased our exposure to stocks that we believe should benefit from a
domestic economic recovery -- retailers, construction and consumer staples, to
name a few.
4 MERRILL LYNCH LATIN AMERICA FUND, INC. NOVEMBER 30, 2005
In Mexico, we finished the year with an overweight of approximately 100 basis
points. We maintained above- average exposure to the homebuilding sector
throughout the year, added infrastructure-related stocks, and increased our
exposure to the cement sector. We expect that these sectors will be least
affected by any Mexican economic slowdown that may arise from a deceleration in
the U.S. economy. The government's infrastructure account, funded with
above-budget oil revenues, should allow these sectors to continue to do well
into next year's presidential election.
In Chile, we were able to add a few new names to the portfolio through equity
offerings, but continue to find valuations in that country to be excessive.
Colombia is our favorite small market, but continues to offer few liquid
opportunities.
How would you characterize the portfolio's position at the close of the period?
The Fund is positioned to benefit from the combination of attractive valuations,
strong earnings growth, and falling interest rates in Brazil. In our view,
Brazil's 2006 election will not come close to being the market-moving event
experienced with the 2002 election. Brazilians view President Lula as a proven
commodity and his re-election should be priced in by the markets. On the other
hand, if former President Cardoso's party, the Brazilian Social Democracy Party,
returns to the presidency, we believe this could be a positive catalyst for
further re-rating of the Brazilian market. In addition, we have been able to
further diversify our holdings in Brazil through the many initial public
offerings and secondary offerings taking place in that market, increasing market
depth as well as overall liquidity. For all these reasons, we continue to have a
majority of the Fund's holdings in Brazil, our largest country overweight.
In Mexico, the Fund is positioned to benefit from infrastructure spending as
well as further growth in home ownership. We expect that the homebuilders in the
portfolio will continue to experience margin expansion as larger portions of
their revenues come from the middle-income segment, due to an increase in
mortgage availability from the private banking system. Our weighting in Mexico
is similar to that of our benchmark, based on what we believe to be fair
valuations and the expectation for some market volatility surrounding the July
2006 presidential elections.
In Chile, we are positioned to benefit from increased economic activity. Copper
prices have remained high (and moved much higher than market expectations),
which should result in continued strong growth in the Chilean economy. While
there are no liquid copper miners in the Chilean stock exchange, our holdings
tend to be consumer related and should benefit from the country's economic
strength. In addition, many of our Chilean holdings provide us with exposure to
the recovering Argentine economy.
We thank you for your interest in Merrill Lynch Latin America Fund, Inc., and we
look forward to updating you again in our next report to shareholders.
William M. Landers, CFA
Vice President and Portfolio Manager
December 13, 2005
MERRILL LYNCH LATIN AMERICA FUND, INC. NOVEMBER 30, 2005 5
Performance Data
About Fund Performance
Investors are able to purchase shares of the Fund through multiple pricing
alternatives:
o Class A Shares incur a maximum initial sales charge (front-end load) of
5.25% and an account maintenance fee of 0.25% per year (but no
distribution fee).
o Class B Shares are subject to a maximum contingent deferred sales charge
of 4% declining to 0% after six years. In addition, Class B Shares are
subject to a distribution fee of 0.75% per year and an account maintenance
fee of 0.25% per year. These shares automatically convert to Class A
Shares after approximately eight years. (There is no initial sales charge
for automatic share conversions.) All returns for periods greater than
eight years reflect this conversion.
o Class C Shares are subject to a distribution fee of 0.75% per year and an
account maintenance fee of 0.25% per year. In addition, Class C Shares are
subject to a 1% contingent deferred sales charge if redeemed within one
year of purchase.
o Class I Shares incur a maximum initial sales charge (front-end load) of
5.25% and bear no ongoing distribution or account maintenance fees. Class
I Shares are available only to eligible investors, as detailed in the
Fund's prospectus.
None of the past results shown should be considered a representation of future
performance. Current performance may be lower or higher than the performance
data quoted. Refer to www.mlim.ml.com to obtain performance data current to the
most recent month-end. Performance results do not reflect the deduction of taxes
that a shareholder would pay on fund distributions or the redemption of fund
shares. The Fund may charge a 2% redemption fee for sales or exchanges of shares
within 30 days of purchase or exchange. Performance data does not reflect this
potential fee. Figures shown in each of the following tables assume reinvestment
of all dividends and capital gain distributions, if any, 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
6-Month 12-Month 10-Year
As of November 30, 2005 Total Return Total Return Total Return
==========================================================================================
ML Latin America Fund, Inc. Class A Shares* +41.71% +67.10% +303.20%
- ------------------------------------------------------------------------------------------
ML Latin America Fund, Inc. Class B Shares* +41.21 +65.91 +277.81
- ------------------------------------------------------------------------------------------
ML Latin America Fund, Inc. Class C Shares* +41.18 +65.90 +272.05
- ------------------------------------------------------------------------------------------
ML Latin America Fund, Inc. Class I Shares* +41.93 +67.55 +313.26
- ------------------------------------------------------------------------------------------
MSCI EM Latin America Index** +39.81 +60.93 +297.55
- ------------------------------------------------------------------------------------------
* Investment results shown do not reflect sales charges; results shown would
be lower if a sales charge was included. Cumulative 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.
** 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.
6 MERRILL LYNCH LATIN AMERICA FUND, INC. NOVEMBER 30, 2005
Performance Data (concluded)
A line graph depicting the growth of an investment in the Fund's Class A, Class
B, Class C and Class I Shares compared to growth of an investment in the MSCI EM
Latin America Index. Values are from November 1995 to November 2005:
Total Return Based on a $10,000 Investment
ML Latin ML Latin ML Latin ML Latin MSCI EM
America Fund, Inc.+-- America Fund, Inc.+-- America Fund, Inc.+-- America Fund, Inc.+-- Latin America
Class A Shares* Class B Shares* Class C Shares* Class I Shares* Index++
10/95 $ 9,475 $10,000 $10,000 $ 9,475 $10,000
10/96 $11,556 $12,085 $12,085 $11,578 $12,231
10/97 $14,030 $14,564 $14,566 $14,100 $15,544
10/98 $ 9,836 $10,133 $10,128 $ 9,908 $11,658
10/99 $12,636 $12,901 $12,905 $12,755 $14,767
10/00 $12,978 $13,151 $13,151 $13,143 $13,607
10/01 $11,541 $11,607 $11,606 $11,716 $12,777
10/02 $10,133 $10,104 $10,102 $10,306 $10,781
10/03 $15,729 $15,556 $15,557 $16,037 $17,237
10/04 $22,862 $22,609 $22,426 $23,370 $24,703
10/05 $38,204 $37,781 $37,205 $39,157 $39,755
* Assuming maximum sales charge, transaction costs and other operating
expenses, including advisory fees.
+ 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.
Past performance is not predictive of future results.
Average Annual Total Return
Return Without Return With
Sales Charge Sales Charge**
==========================================================================
Class A Shares*
==========================================================================
One Year Ended 11/30/05 +67.10% +58.33%
- --------------------------------------------------------------------------
Five Years Ended 11/30/05 +24.10 +22.77
- --------------------------------------------------------------------------
Ten Years Ended 11/30/05 +14.96 +14.34
- --------------------------------------------------------------------------
Return Return
Without CDSC With CDSC++
==========================================================================
Class B Shares+
==========================================================================
One Year Ended 11/30/05 +65.91% +61.91%
- --------------------------------------------------------------------------
Five Years Ended 11/30/05 +23.12 +22.95
- --------------------------------------------------------------------------
Ten Years Ended 11/30/05 +14.22 +14.22
- --------------------------------------------------------------------------
Return Return
Without CDSC With CDSC++
==========================================================================
Class C Shares+++
==========================================================================
One Year Ended 11/30/05 +65.90% +64.90%
- --------------------------------------------------------------------------
Five Years Ended 11/30/05 +23.12 +23.12
- --------------------------------------------------------------------------
Ten Years Ended 11/30/05 +14.04 +14.04
- --------------------------------------------------------------------------
Return Without Return With
Sales Charge Sales Charge**
==========================================================================
Class I Shares*
==========================================================================
One Year Ended 11/30/05 +67.55% +58.75%
- --------------------------------------------------------------------------
Five Years Ended 11/30/05 +24.40 +23.07
- --------------------------------------------------------------------------
Ten Years Ended 11/30/05 +15.25 +14.63
- --------------------------------------------------------------------------
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
+ Maximum contingent deferred sales charge is 4% and is reduced to 0% after
six years.
++ Assuming payment of applicable contingent deferred sales charge.
+++ Maximum contingent deferred sales charge is 1% and is reduced to 0% after
one year.
MERRILL LYNCH LATIN AMERICA FUND, INC. NOVEMBER 30, 2005 7
Disclosure of Expenses
Shareholders of this Fund may incur the following charges: (a) expenses related
to transactions, including sales charges, redemption fees and exchange fees; and
(b) operating expenses including advisory fees, distribution fees including
12(b)-1 fees, and other Fund expenses. The following example (which is based on
a hypothetical investment of $1,000 invested on June 1, 2005 and held through
November 30, 2005) is intended to assist shareholders both in calculating
expenses based on an investment in the Fund and in comparing these expenses with
similar costs of investing in other mutual funds.
The first table below provides information about actual account values and
actual expenses. In order to estimate the expenses a shareholder paid during the
period covered by this report, shareholders can divide their account value by
$1,000 and then multiply the result by the number in the first line under the
heading entitled "Expenses Paid During the Period."
The second table below provides information about hypothetical account values
and hypothetical expenses based on the Fund's actual expense ratio and an
assumed rate of return of 5% per year before expenses. In order to assist
shareholders in comparing the ongoing expenses of investing in this Fund and
other funds, compare the 5% hypothetical example with the 5% hypothetical
examples that appear in other funds' shareholder reports.
The expenses shown in the table are intended to highlight shareholders ongoing
costs only and do not reflect any transactional expenses, such as sales charges,
redemption fees or exchange fees. Therefore, the second table is useful in
comparing ongoing expenses only, and will not help shareholders determine the
relative total expenses of owning different funds. If these transactional
expenses were included, shareholder expenses would have been higher.
Expenses Paid
Beginning Ending During the Period*
Account Value Account Value June 1, 2005 to
June 1, 2005 November 30, 2005 November 30, 2005
=================================================================================================================
Actual
=================================================================================================================
Class A $1,000 $1,417.10 $10.18
- -----------------------------------------------------------------------------------------------------------------
Class B $1,000 $1,412.10 $14.88
- -----------------------------------------------------------------------------------------------------------------
Class C $1,000 $1,411.80 $14.81
- -----------------------------------------------------------------------------------------------------------------
Class I $1,000 $1,419.30 $ 8.67
=================================================================================================================
Hypothetical (5% annual return before expenses)**
=================================================================================================================
Class A $1,000 $1,016.68 $ 8.49
- -----------------------------------------------------------------------------------------------------------------
Class B $1,000 $1,012.77 $12.41
- -----------------------------------------------------------------------------------------------------------------
Class C $1,000 $1,012.82 $12.36
- -----------------------------------------------------------------------------------------------------------------
Class I $1,000 $1,017.93 $ 7.23
- -----------------------------------------------------------------------------------------------------------------
* For each class of the Fund, expenses are equal to the annualized expense
ratio for the class (1.68% for Class A, 2.46% for Class B, 2.45% for Class
C and 1.43% for Class I), multiplied by the average account value over the
period, multiplied by 183/365 (to reflect the one-half year period shown).
** Hypothetical 5% annual return before expenses is calculated by pro-rating
the number of days in the most recent fiscal half year divided by 365.
8 MERRILL LYNCH LATIN AMERICA FUND, INC. NOVEMBER 30, 2005
Consolidated Schedule of Investments (in U.S. dollars)
Shares
Country Industry Common Stocks Held Value
================================================================================
Argentina--2.1%
Electric Utilities--0.1%
Endesa Costanera SA (b) 300,498 $ 381,922
--------------------------------------------------------------------
Integrated Telecommunication
Services--0.5%
Telecom Argentina Stet--France
Telecom SA (a)(b)(d) 109,000 1,452,970
--------------------------------------------------------------------
Oil--1.5%
Tenaris SA (a) 41,500 4,639,700
--------------------------------------------------------------------
Total Common Stocks in Argentina 6,474,592
================================================================================
Brazil--58.8%
Airlines--0.8%
Gol-Linhas Aereas Inteligentes SA (a) 41,500 1,888,665
Tam SA (b) 30,671 536,687
------------
2,425,352
--------------------------------------------------------------------
Apparel, Accessories & Luxury
Goods--0.0%
Empresa Nacional de Comercio
Redito e Participacoes SA
(Preferred) (b) 12,284,085 83,725
--------------------------------------------------------------------
Banks--10.0%
Banco Bradesco SA (a) 239,000 14,674,600
Banco Itau Holding Financeira SA (a) 379,000 9,611,440
Uniao de Bancos Brasileiros SA (a) 109,000 6,740,560
------------
31,026,600
--------------------------------------------------------------------
Beverages--2.4%
Cia de Bebidas das Americas (a) 29,500 977,925
Cia de Bebidas das Americas
(Preferred) (a) 166,000 6,507,200
------------
7,485,125
--------------------------------------------------------------------
Chemicals--0.5%
Braskem SA 185,000 1,672,801
--------------------------------------------------------------------
Cosmetics & Toiletries--0.8%
Natura Cosmeticos SA 61,500 2,623,978
--------------------------------------------------------------------
Diversified Consumer
Services--0.6%
Bradespar SA 66,000 1,799,346
--------------------------------------------------------------------
Diversified Telecommunication
Services--3.2%
Brasil Telecom Participacoes SA 84,666,000 1,034,858
Tele Norte Leste Participacoes SA 227,000 5,672,937
Telemar Norte Leste SA
(Preferred, Class A) 110,000 3,248,319
------------
9,956,114
--------------------------------------------------------------------
Electric Utilities--2.8%
AES Tiete SA 77,610,000 1,692,693
CPFL Energia SA (a) 56,500 1,936,255
Cia Energetica de Minas Gerais (a) 71,000 2,885,440
EDP--Energias do Brasil SA (b) 178,001 2,143,323
------------
8,657,711
--------------------------------------------------------------------
Foods--0.6%
Perdigao SA (Preferred) 62,500 1,976,554
--------------------------------------------------------------------
Industrial Materials--0.2%
Marcopolo SA 353,000 761,882
--------------------------------------------------------------------
Insurance--0.7%
Porto Seguro SA 178,000 2,086,696
--------------------------------------------------------------------
Internet & Catalog Retail--0.5%
Submarino SA (b) 91,000 1,529,071
--------------------------------------------------------------------
Machinery--0.8%
Iochpe Maxion SA 105,000 749,046
Weg SA 477,000 1,636,382
------------
2,385,428
--------------------------------------------------------------------
Metals & Mining--13.9%
Cia Siderurgica Belgo Mineira 3,595,000 2,170,917
Companhia Vale do Rio Doce
(Preference 'A' Shares) (a) 882,000 33,374,880
Usinas Siderurgicas de Minas Gerais
SA (Preferred, Class A) 331,000 7,775,672
------------
43,321,469
--------------------------------------------------------------------
Multiline Retail--2.0%
Lojas Americanas SA 83,658,000 2,326,367
Lojas Renner SA 114,000 3,833,152
------------
6,159,519
--------------------------------------------------------------------
Oil & Gas--14.1%
Petroleo Brasileiro SA (a) 700,000 43,120,000
Ultrapar Participacoes SA 57,500 927,504
------------
44,047,504
--------------------------------------------------------------------
Paper--0.8%
Klabin SA 578,000 1,129,317
Suzano Bahia Sul Papel e Celulose SA 241,000 1,390,721
------------
2,520,038
--------------------------------------------------------------------
Public Thoroughfares--1.4%
Cia de Concessoes Rodoviarias 103,000 3,130,998
Obrascon Huarte Lain Brasil SA (b) 119,000 1,243,638
------------
4,374,636
--------------------------------------------------------------------
Real Estate--0.7%
Cyrela Brazil Realty SA 206,000 2,293,257
--------------------------------------------------------------------
Transportation--1.1%
All America Latina Logistica SA 82,000 3,453,926
--------------------------------------------------------------------
Water--0.3%
Companhia de Saneamento Basico
do Estado de Sao Paulo (a) 60,500 950,455
--------------------------------------------------------------------
Wireless Telecommunication
Services--0.6%
Tim Participacoes SA 163,000,000 474,750
Tim Participacoes SA (Preferred) 483,800,000 1,244,233
------------
1,718,983
--------------------------------------------------------------------
Total Common Stocks in Brazil 183,310,170
================================================================================
Chile--5.4%
Beverages--0.2%
Embotelladora Andina SA Class B (a) 39,000 592,800
--------------------------------------------------------------------
Commercial Banks--0.6%
Banco Santander Chile SA (a) 44,500 1,924,625
--------------------------------------------------------------------
Electric Utilities--2.3%
Empresa Nacional de
Electricidad SA (a) 169,500 5,078,220
Enersis SA (a) 194,000 2,225,180
------------
7,303,400
--------------------------------------------------------------------
Multiline Retail--1.0%
Centros Comerciales
Sudamericanos SA 1,450,000 2,940,235
MERRILL LYNCH LATIN AMERICA FUND, INC. NOVEMBER 30, 2005 9
Consolidated Schedule of Investments (concluded) (in U.S. dollars)
Shares
Country Industry Common Stocks Held Value
================================================================================
Chile (concluded)
Specialty Retail--0.4%
Ripley Corp. SA (b) 1,227,000 $ 1,154,739
--------------------------------------------------------------------
Water--0.9%
Inversiones Aguas Metropolitanas
SA (a)(b) 150,000 2,712,720
--------------------------------------------------------------------
Total Common Stocks in Chile 16,628,519
================================================================================
Colombia--0.8%
Banks--0.8%
BanColombia SA (a) 103,000 2,647,100
--------------------------------------------------------------------
Total Common Stocks
in Colombia 2,647,100
================================================================================
Mexico--30.5%
Banks--1.0%
Grupo Financiero Banorte,
SA de CV 'O' 1,424,000 3,053,759
--------------------------------------------------------------------
Beverages--0.8%
Fomento Economico Mexicano,
SA de CV (a) 35,500 2,413,645
--------------------------------------------------------------------
Broadcasting & Cable TV--2.9%
Grupo Televisa, SA (a) 113,000 8,972,200
--------------------------------------------------------------------
Building--Home
Builders--2.8%
Corp GEO, SA de CV Series B (b) 2,086,000 7,129,872
Urbi, Desarrollos Urbanos,
SA de CV (b) 227,000 1,619,093
--------------------------------------------------------------------
Construction &
Engineering--0.4%
Empresas ICA Sociedad Controladora,
SA de CV (b) 2,976,000 1,237,042
--------------------------------------------------------------------
Construction Materials--5.8%
Cemex, SA de CV (a) 322,000 18,128,600
--------------------------------------------------------------------
Food & Staples Retailing--0.2%
Alsea SA 188,800 472,658
--------------------------------------------------------------------
Food Products--0.6%
Gruma, SA de CV. 104,000 316,365
Grupo Bimbo, SA de CV Series A 472,000 1,669,909
------------
1,986,274
--------------------------------------------------------------------
Integrated Telecommunication
Services--3.3%
Telefonos de Mexico, SA de CV (a) 463,000 10,385,090
--------------------------------------------------------------------
Metals & Mining--1.5%
Grupo Mexico, SA de CV 2,187,000 4,698,272
--------------------------------------------------------------------
Multiline Retail--3.6%
Wal-Mart de Mexico, SA de CV 2,076,000 11,237,788
--------------------------------------------------------------------
Wireless Telecommunication
Services--7.6%
America Movil, SA de CV (a) 828,000 23,780,160
--------------------------------------------------------------------
Total Common Stocks in Mexico 95,114,453
================================================================================
Venezuela--0.2%
Integrated Telecommunication
Services--0.2%
Cia Anonima Nacional Telefonos de
Venezuela--CANTV (a) 38,000 541,120
--------------------------------------------------------------------
Metals & Mining--0.0%
International Briquettes Holding (b) 27,350 --
--------------------------------------------------------------------
Total Common Stocks in Venezuela 541,120
--------------------------------------------------------------------
Total Common Stocks
(Cost--$187,862,837)--97.8% 304,715,954
================================================================================
Short-Term Beneficial
Securities Interest Value
================================================================================
Merrill Lynch Liquidity Series, LLC
Cash Sweep Series I (c) $ 4,961,142 4,961,142
--------------------------------------------------------------------
Total Short-Term Securities
(Cost--$4,961,142)--1.6% 4,961,142
================================================================================
Total Investments
(Cost--$192,823,979*)--99.4% $309,677,096
Other Assets Less Liabilities--0.6% 1,878,789
------------
Net Assets--100.0% $311,555,885
============
For Fund compliance purposes, the Fund's industry classifications refer to
any one or more of the industry sub-classifications used by one or more
widely recognized market indexes or ratings group indexes, and/or as
defined by Fund management. This definition may not apply for the purposes
of this report, which may combine industry sub-classifications for
reporting ease. Industries are shown as a percent of net assets. These
industry classifications are unaudited.
* The cost and unrealized appreciation (depreciation) of investments, as of
November 30, 2005, as computed for federal income tax purposes, were as
follows:
Aggregate cost ......................................... $ 193,070,543
=============
Gross unrealized appreciation .......................... $ 118,586,952
Gross unrealized depreciation .......................... (1,980,399)
-------------
Net unrealized appreciation ............................ $ 116,606,553
=============
(a) Depositary receipts.
(b) Non-income producing security.
(c) Investments in companies considered to be an affiliate of the Fund, for
purposes of Section 2(a)(3) of the Investment Company Act of 1940, were as
follows:
--------------------------------------------------------------------------
Net Interest
Affiliate Activity Income
--------------------------------------------------------------------------
Merrill Lynch Liquidity Series, LLC
Cash Sweep Series I $2,910,323 $ 93,369
--------------------------------------------------------------------------
(d) The security may be offered and sold to "qualified institutional buyers"
under Rule 144A of the Securities Act of 1933.
See Notes to Consolidated Financial Statements.
10 MERRILL LYNCH LATIN AMERICA FUND, INC. NOVEMBER 30, 2005
Consolidated Statement of Assets and Liabilities
As of November 30, 2005
===================================================================================================================================
Assets
- -----------------------------------------------------------------------------------------------------------------------------------
Investments in unaffiliated securities, at value
(identified cost--$187,862,837) .................................... $ 304,715,954
Investments in affiliated securities, at value
(identified cost--$4,961,142) ...................................... 4,961,142
Foreign cash (cost--$81,145) ........................................ 85,071
Receivables:
Capital shares sold .............................................. $ 2,418,957
Dividends ........................................................ 1,063,834
Securities sold .................................................. 57,318 3,540,109
-------------
Prepaid expenses .................................................... 24,285
-------------
Total assets ........................................................ 313,326,561
-------------
===================================================================================================================================
Liabilities
- -----------------------------------------------------------------------------------------------------------------------------------
Payables:
Securities purchased ............................................. 710,741
Capital shares redeemed .......................................... 643,940
Investment adviser ............................................... 212,374
Distributor ...................................................... 56,232
Other affiliates ................................................. 52,452 1,675,739
-------------
Accrued expenses .................................................... 94,937
-------------
Total liabilities ................................................... 1,770,676
-------------
===================================================================================================================================
Net Assets
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets .......................................................... $ 311,555,885
=============
===================================================================================================================================
Net Assets Consist of
- -----------------------------------------------------------------------------------------------------------------------------------
Class A Shares of Common Stock, $.10 par value,
100,000,000 shares authorized ...................................... $ 376,526
Class B Shares of Common Stock, $.10 par value,
100,000,000 shares authorized ...................................... 34,378
Class C Shares of Common Stock, $.10 par value,
100,000,000 shares authorized ...................................... 71,494
Class I Shares of Common Stock, $.10 par value,
100,000,000 shares authorized ...................................... 362,978
Paid-in capital in excess of par .................................... 293,687,003
Undistributed investment income ..................................... $ 3,345,041
Accumulated realized capital losses--net ............................ (103,195,109)
Unrealized appreciation--net ........................................ 116,873,574
-------------
Total accumulated earnings--net ..................................... 17,023,506
-------------
Net Assets .......................................................... $ 311,555,885
=============
===================================================================================================================================
Net Asset Value
- -----------------------------------------------------------------------------------------------------------------------------------
Class A--Based on net assets of $139,062,477 and
3,765,260 shares outstanding ....................................... $ 36.93
=============
Class B--Based on net assets of $12,143,948 and
343,777 shares outstanding ......................................... $ 35.33
=============
Class C--Based on net assets of $25,070,662 and
714,941 shares outstanding ......................................... $ 35.07
=============
Class I--Based on net assets of $135,278,798 and
3,629,784 shares outstanding ....................................... $ 37.27
=============
See Notes to Consolidated Financial Statements.
MERRILL LYNCH LATIN AMERICA FUND, INC. NOVEMBER 30, 2005 11
Consolidated Statements of Operations
For the Year Ended November 30, 2005
===================================================================================================================================
Investment Income
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends (net of $590,266 foreign withholding tax) ................. $ 7,123,978
Interest from affiliates ............................................ 93,369
-------------
Total income ........................................................ 7,217,347
-------------
===================================================================================================================================
Expenses
- -----------------------------------------------------------------------------------------------------------------------------------
Investment advisory fees ............................................ $ 2,087,493
Account maintenance fees--Class A ................................... 262,554
Custodian fees ...................................................... 195,059
Transfer agent fees--Class A ........................................ 147,264
Account maintenance and distribution fees--Class C .................. 128,956
Accounting services ................................................. 123,216
Account maintenance and distribution fees--Class B .................. 116,995
Transfer agent fees--Class I ........................................ 111,085
Professional fees ................................................... 80,227
Registration fees ................................................... 66,794
Printing and shareholder reports .................................... 61,202
Directors' fees and expenses ........................................ 44,387
Transfer agent fees--Class C ........................................ 21,279
Transfer agent fees--Class B ........................................ 19,915
Pricing fees ........................................................ 3,319
Other ............................................................... 27,909
-------------
Total expenses ...................................................... 3,497,654
-------------
Investment income--net .............................................. 3,719,693
-------------
===================================================================================================================================
Realized & Unrealized Gain (Loss)--Net
- -----------------------------------------------------------------------------------------------------------------------------------
Realized gain on:
Investments--net ................................................. 23,705,298
Foreign currency transactions--net ............................... 97,922 23,803,220
-------------
Change in unrealized appreciation on:
Investments--net ................................................. 83,094,053
Foreign currency transactions--net ............................... (9,034) 83,085,019
---------------------------------
Total realized and unrealized gain--net ............................. 106,888,239
-------------
Net Increase in Net Assets Resulting from Operations ................ $ 110,607,932
=============
See Notes to Consolidated Financial Statements.
12 MERRILL LYNCH LATIN AMERICA FUND, INC. NOVEMBER 30, 2005
Consolidated Statements of Changes in Net Assets
For the Year Ended
November 30,
---------------------------------
Increase (Decrease) in Net Assets: 2005 2004
===================================================================================================================================
Operations
- -----------------------------------------------------------------------------------------------------------------------------------
Investment income--net .............................................. $ 3,719,693 $ 1,898,846
Realized gain--net .................................................. 23,803,220 18,278,689
Change in unrealized appreciation/depreciation--net ................. 83,085,019 25,801,241
---------------------------------
Net increase in net assets resulting from operations ................ 110,607,932 45,978,776
---------------------------------
===================================================================================================================================
Dividends to Shareholders
- -----------------------------------------------------------------------------------------------------------------------------------
Investment income--net:
Class A .......................................................... (1,333,099) (1,086,038)
Class B .......................................................... (85,843) (131,947)
Class C .......................................................... (80,874) (47,405)
Class I .......................................................... (926,811) (551,604)
---------------------------------
Net decrease in net assets resulting from dividends to
shareholders ....................................................... (2,426,627) (1,816,994)
---------------------------------
===================================================================================================================================
Capital Share Transactions
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets derived from
capital share transactions ......................................... 54,977,709 (5,279,918)
---------------------------------
===================================================================================================================================
Redemption Fees
- -----------------------------------------------------------------------------------------------------------------------------------
Redemption fees ..................................................... 355,418 1,063
---------------------------------
===================================================================================================================================
Net Assets
- -----------------------------------------------------------------------------------------------------------------------------------
Total increase in net assets ........................................ 163,514,432 38,882,927
Beginning of year ................................................... 148,041,453 109,158,526
---------------------------------
End of year* ........................................................ $ 311,555,885 $ 148,041,453
=================================
* Undistributed investment income--net ........................... $ 3,345,041 $ 478,534
=================================
See Notes to Consolidated Financial Statements.
MERRILL LYNCH LATIN AMERICA FUND, INC. NOVEMBER 30, 2005 13
Consolidated Financial Highlights
Class A
------------------------------------------------------------
For the Year Ended November 30,
The following per share data and ratios have been derived ------------------------------------------------------------
from information provided in the financial statements. 2005 2004 2003 2002 2001
==================================================================================================================================
Per Share Operating Performance
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year ....... $ 22.45 $ 15.71 $ 10.15 $ 11.56 $ 13.00
------------------------------------------------------------
Investment income--net** ................. .51 .29 .19 .16 .09
Realized and unrealized gain (loss)--net . 14.29 6.72 5.40 (1.57) (1.53)
------------------------------------------------------------
Total from investment operations ......... 14.80 7.01 5.59 (1.41) (1.44)
------------------------------------------------------------
Less dividends from investment income--net (.37) (.27) (.03) -- --
------------------------------------------------------------
Redemption fees .......................... .05 --+ -- -- --
------------------------------------------------------------
Net asset value, end of year ............. $ 36.93 $ 22.45 $ 15.71 $ 10.15 $ 11.56
============================================================
==================================================================================================================================
Total Investment Return*
- ----------------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share ....... 67.10% 45.35% 55.23% (12.20%) (11.08%)
============================================================
==================================================================================================================================
Ratios to Average Net Assets
- ----------------------------------------------------------------------------------------------------------------------------------
Expenses ................................. 1.68% 1.85% 2.07% 2.10% 1.98%
============================================================
Investment income--net ................... 1.81% 1.60% 1.52% 1.37% .69%
============================================================
==================================================================================================================================
Supplemental Data
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (in thousands) ... $139,062 $ 81,969 $ 62,145 $ 42,062 $ 39,508
============================================================
Portfolio turnover ....................... 47.35% 56.80% 57.86% 45.85% 43.74%
============================================================
* Total investment returns exclude the effects of sales charges.
** Based on average shares outstanding.
+ Includes redemption fees, which are less than $.01 per share.
See Notes to Consolidated Financial Statements.
14 MERRILL LYNCH LATIN AMERICA FUND, INC. NOVEMBER 30, 2005
Consolidated Financial Highlights (continued)
Class B
------------------------------------------------------------
For the Year Ended November 30,
The following per share data and ratios have been derived ------------------------------------------------------------
from information provided in the financial statements. 2005 2004 2003 2002 2001
==================================================================================================================================
Per Share Operating Performance
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year ....... $ 21.45 $ 15.01 $ 9.75 $ 11.20 $ 12.69
------------------------------------------------------------
Investment income (loss)--net** .......... .29 .15 .08 .07 --+
Realized and unrealized gain (loss)--net . 13.70 6.43 5.18 (1.52) (1.49)
------------------------------------------------------------
Total from investment operations ......... 13.99 6.58 5.26 (1.45) (1.49)
------------------------------------------------------------
Less dividends from investment income--net (.16) (.14) -- -- --
------------------------------------------------------------
Redemption fees .......................... .05 --++ -- -- --
------------------------------------------------------------
Net asset value, end of year ............. $ 35.33 $ 21.45 $ 15.01 $ 9.75 $ 11.20
============================================================
==================================================================================================================================
Total Investment Return*
- ----------------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share ....... 65.91% 44.16% 53.95% (12.95%) (11.74%)
============================================================
==================================================================================================================================
Ratios to Average Net Assets
Expenses ................................. 2.46% 2.64% 2.89% 2.91% 2.78%
============================================================
Investment income (loss)--net ............ 1.10% .86% .75% .62% (.04%)
============================================================
==================================================================================================================================
Supplemental Data
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (in thousands) ... $ 12,144 $ 11,497 $ 15,129 $ 18,259 $ 49,253
============================================================
Portfolio turnover ....................... 47.35% 56.80% 57.86% 45.85% 43.74%
============================================================
* Total investment returns exclude the effects of sales charges.
** Based on average shares outstanding.
+ Amount is less than $(.01) per share.
++ Includes redemption fees, which are less than $.01 per share.
See Notes to Consolidated Financial Statements.
MERRILL LYNCH LATIN AMERICA FUND, INC. NOVEMBER 30, 2005 15
Consolidated Financial Highlights (continued)
Class C
------------------------------------------------------------
For the Year Ended November 30,
The following per share data and ratios have been derived ------------------------------------------------------------
from information provided in the financial statements. 2005 2004 2003 2002 2001
==================================================================================================================================
Per Share Operating Performance
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year ....... $ 21.38 $ 15.00 $ 9.74 $ 11.19 $ 12.68
------------------------------------------------------------
Investment income (loss)--net** .......... .25 .14 .08 .07 (.01)
Realized and unrealized gain (loss)--net . 13.64 6.41 5.18 (1.52) (1.48)
------------------------------------------------------------
Total from investment operations ......... 13.89 6.55 5.26 (1.45) (1.49)
------------------------------------------------------------
Less dividends from investment income--net (.25) (.17) -- -- --
------------------------------------------------------------
Redemption fees .......................... .05 --+ -- -- --
------------------------------------------------------------
Net asset value, end of year ............. $ 35.07 $ 21.38 $ 15.00 $ 9.74 $ 11.19
============================================================
==================================================================================================================================
Total Investment Return*
- ----------------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share ....... 65.90% 44.15% 54.00% (12.96%) (11.75%)
============================================================
==================================================================================================================================
Ratios to Average Net Assets
- ----------------------------------------------------------------------------------------------------------------------------------
Expenses ................................. 2.45% 2.63% 2.88% 2.91% 2.78%
============================================================
Investment income (loss)--net ............ .94% .80% .71% .59% (.06%)
============================================================
==================================================================================================================================
Supplemental Data
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (in thousands) ... $ 25,071 $ 6,655 $ 4,074 $ 3,084 $ 4,538
============================================================
Portfolio turnover ....................... 47.35% 56.80% 57.86% 45.85% 43.74%
============================================================
* Total investment returns exclude the effects of sales charges.
** Based on average shares outstanding.
+ Includes redemption fees, which are less than $.01 per share.
See Notes to Consolidated Financial Statements.
16 MERRILL LYNCH LATIN AMERICA FUND, INC. NOVEMBER 30, 2005
Consolidated Financial Highlights (concluded)
Class I
------------------------------------------------------------
For the Year Ended November 30,
The following per share data and ratios have been derived ------------------------------------------------------------
from information provided in the financial statements. 2005 2004 2003 2002 2001
==================================================================================================================================
Per Share Operating Performance
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year ....... $ 22.64 $ 15.83 $ 10.23 $ 11.66 $ 13.08
------------------------------------------------------------
Investment income--net** ................. .57 .33 .22 .19 .13
Realized and unrealized gain (loss)--net . 14.42 6.79 5.44 (1.59) (1.55)
------------------------------------------------------------
Total from investment operations ......... 14.99 7.12 5.66 (1.40) (1.42)
------------------------------------------------------------
Less dividends from investment income--net (.41) (.31) (.06) (.03) --
------------------------------------------------------------
Redemption fees .......................... .05 --+ -- -- --
------------------------------------------------------------
Net asset value, end of year ............. $ 37.27 $ 22.64 $ 15.83 $ 10.23 $ 11.66
============================================================
==================================================================================================================================
Total Investment Return*
- ----------------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share ....... 67.55% 45.73% 55.61% (12.04%) (10.86%)
============================================================
==================================================================================================================================
Ratios to Average Net Assets
- ----------------------------------------------------------------------------------------------------------------------------------
Expenses ................................. 1.43% 1.60% 1.81% 1.85% 1.73%
============================================================
Investment income--net ................... 1.98% 1.81% 1.78% 1.63% .97%
============================================================
==================================================================================================================================
Supplemental Data
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (in thousands) ... $135,279 $ 47,921 $ 27,811 $ 17,018 $ 22,753
============================================================
Portfolio turnover ....................... 47.35% 56.80% 57.86% 45.85% 43.74%
============================================================
* Total investment returns exclude the effects of sales charges.
** Based on average shares outstanding.
+ Includes redemption fees, which are less than $.01 per share.
See Notes to Consolidated Financial Statements.
MERRILL LYNCH LATIN AMERICA FUND, INC. NOVEMBER 30, 2005 17
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 amended, as a non-diversified, open-end
management investment company. The Fund's financial statements are prepared in
conformity with U.S. generally accepted accounting principles, which may require
the use of management accruals and estimates. Actual results may differ from
these estimates. The Fund offers multiple classes of shares. Shares of Class A
and Class I 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 A, Class B and Class C 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 (except that Class B
shareholders may vote on certain changes to the Class A distribution plan).
Income, expenses (other than expenses attributable to a specific class) and
realized and unrealized gains and losses are allocated daily to each class based
on its relative net assets. The following is a summary of significant accounting
policies followed by the Fund.
(a) Valuation of investments -- Equity securities that are held by the Fund that
are traded on stock exchanges or the Nasdaq National Market are valued at the
last sale price or official close price on the exchange, as of the close of
business on the day the securities are being valued or, lacking any sales, at
the last available bid price for long positions, and at the last available asked
price for short positions. In cases where equity securities are traded on more
than one exchange, the securities are valued on the exchange designated as the
primary market by or under the authority of the Board of Directors of the Fund.
Long positions traded in the over-the-counter ("OTC") market, Nasdaq Small Cap
or Bulletin Board are valued at the last available bid price or yield equivalent
obtained from one or more dealers or pricing services approved by the Board of
Directors of the Fund. Short positions traded in the OTC market are valued at
the last available asked price. Portfolio securities that are traded both in the
OTC market and on a stock exchange are valued according to the broadest and most
representative market.
Options written are valued at the last sale price in the case of exchange-traded
options or, in the case of options traded in the OTC market, the last asked
price. Options purchased are valued at their last sale price in the case of
exchange-traded options or, in the case of options traded in the OTC market, the
last bid price. Swap agreements are valued based upon quoted fair valuations
received daily by the Fund from a pricing service or counterparty. Financial
futures contracts and options thereon, which are traded on exchanges, are valued
at their last sale price as of the close of such exchanges. Obligations with
remaining maturities of 60 days or less are valued at amortized cost unless the
Investment Adviser believes that this method no longer produces fair valuations.
Repurchase agreements are valued at cost plus accrued interest. The Fund employs
pricing services to provide certain securities prices for the Fund. Securities
and assets for which market quotations are not readily available are valued at
fair value as determined in good faith by or under the direction of the Board of
Directors of the Fund, including valuations furnished by the pricing services
retained by the Fund, which may use a matrix system for valuations. The
procedures of a pricing service and its valuations are reviewed by the officers
of the Fund under the general supervision of the Fund's Board of Directors. Such
valuations and procedures will be reviewed periodically by the Board of
Directors of the Fund.
Generally, trading in foreign securities, as well as U.S. government securities,
money market instruments and certain fixed income securities, is substantially
completed each day at various times prior to the close of business on the New
York Stock Exchange ("NYSE"). The values of such securities used in computing
the net asset value of the Fund's shares are determined as of such times.
Foreign currency exchange rates also are generally determined prior to the close
of business on the NYSE. Occasionally, events affecting the values of such
securities and such exchange rates may occur between the times at which they are
determined and the close of business on the NYSE that may not be reflected in
the computation of the Fund's net asset value. If events (for example, a company
announcement, market volatility or a natural disaster) occur during such periods
that are expected to materially affect the value of such securities, those
securities may be valued at their fair value as determined in good faith by the
Fund's Board of Directors or by the Investment Adviser using a pricing service
and/or procedures approved by the Fund's Board of Directors.
18 MERRILL LYNCH LATIN AMERICA FUND, INC. NOVEMBER 30, 2005
Notes to Consolidated Financial Statements (continued)
(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 U.S. dollars. Realized and unrealized gains or losses
from investments include the effects of foreign exchange rates on investments.
The Fund invests in foreign securities, which may involve a number of risk
factors and special considerations not present with investments in securities of
U.S. corporations.
(c) Derivative financial instruments -- The Fund may engage in various portfolio
investment strategies both to increase the return of the Fund and to hedge, or
protect, its exposure to interest rate movements and movements in the securities
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 may 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 may enter into forward
foreign exchange contracts as a hedge against either specific transactions
or portfolio positions. The contract is marked-to-market daily and the
change in market value is recorded by the Fund as an unrealized gain or
loss. When the contract is closed, the Fund records a realized gain or
loss equal to the difference between the value at the time it was opened
and the value at the time it was closed.
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-U.S.
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. 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).
Realized gains and losses on security transactions are determined on the
identified cost basis. 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 is recognized on the accrual basis.
(f) Prepaid registration fees -- Prepaid registration fees are charged to
expense as the related shares are issued.
MERRILL LYNCH LATIN AMERICA FUND, INC. NOVEMBER 30, 2005 19
Notes to Consolidated Financial Statements (continued)
(g) Dividends and distributions -- Dividends and distributions paid by the Fund
are recorded on the ex-dividend dates.
(h) Securities lending -- The Fund may lend securities to financial institutions
that provide cash or securities issued or guaranteed by the U.S. government as
collateral, which will be maintained at all times in an amount equal to at least
100% of the current market value of the loaned securities. The market value of
the loaned securities is determined at the close of business of the Fund and any
additional required collateral is delivered to the Fund on the next business
day. Where the Fund receives securities as collateral for the loaned securities,
it collects a fee from the borrower. The Fund typically receives the income on
the loaned securities but does not receive the income on the collateral. Where
the Fund receives cash collateral, it may invest such collateral and retain the
amount earned on such investment, net of any amount rebated to the borrower.
Loans of securities are terminable at any time and the borrower, after notice,
is required to return borrowed securities within five business days. The Fund
may pay reasonable finder's, lending agent, administrative and custodial fees in
connection with its loans. In the event that the borrower defaults on its
obligation to return borrowed securities because of insolvency or for any other
reason, the Fund could experience delays and costs in gaining access to the
collateral. The Fund also could suffer a loss where the value of the collateral
falls below the market value of the borrowed securities, in the event of
borrower default or in the event of losses on investments made with cash
collateral.
(i) 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.
(j) Reclassifications -- U.S. generally accepted accounting principles require
that certain components of net assets be adjusted to reflect permanent
differences between financial and tax reporting. Accordingly, during the current
year, $1,800 has been reclassified between accumulated realized capital losses
and paid-in capital in excess of par, and $1,573,441 has been reclassified
between accumulated realized capital losses and undistributed net investment
income as a result of permanent differences attributable to the expiration of
capital loss carryforwards, passive foreign investment companies and foreign
currency transactions. These reclassifications had 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. ("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 Plan 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.
MLIM has entered into a Sub-Advisory Agreement with Merrill Lynch Asset
Management U.K. Limited ("MLAM U.K."), an affiliate of MLIM, pursuant to which
MLAM U.K. provides investment advisory services to MLIM with respect to the
Fund. There is no increase in the aggregate fees paid by the Fund for these
services.
Pursuant to the Distribution Plan adopted by the Fund in accordance with Rule
12(b)-1 under the Investment Company Act, 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 A ........................... .25% --
Class B ........................... .25% .75%
Class C ........................... .25% .75%
- ------------------------------------------------------------------------
Pursuant to a sub-agreement with the Distributor, Merrill Lynch, Pierce, Fenner
& Smith Incorporated ("MLPF&S"), an affiliate of MLIM, 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 A, Class B and Class C 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, 2005, FAMD earned underwriting discounts and
direct commissions and MLPF&S
20 MERRILL LYNCH LATIN AMERICA FUND, INC. NOVEMBER 30, 2005
Notes to Consolidated Financial Statements (continued)
earned dealer concessions on sales of the Fund's Class A and Class I Shares as
follows:
- --------------------------------------------------------------------
FAMD MLPF&S
- --------------------------------------------------------------------
Class A ........................... $8,355 $119,941
Class I ........................... $ 73 $ 880
- --------------------------------------------------------------------
For the year ended November 30, 2005, MLPF&S received contingent deferred sales
charges of $2,673 and $10,418 relating to transactions in Class B and Class C
Shares, respectively. Furthermore, MLPF&S received contingent deferred sales
charges of $1,188 relating to transactions subject to front-end sales charge
waivers in Class I Shares.
The Fund has received an exemptive order from the Securities and Exchange
Commission permitting it to lend portfolio securities to MLPF&S or its
affiliates. Pursuant to that order, the Fund also has retained Merrill Lynch
Investment Managers, LLC ("MLIM, LLC"), an affiliate of MLIM, as the securities
lending agent for a fee based on a share of the returns on investment of cash
collateral. MLIM, LLC may, on behalf of the Fund, invest cash collateral
received by the Fund for such loans, among other things, in a private investment
company managed by MLIM, LLC or in registered money market funds advised by MLIM
or its affiliates.
In addition, MLPF&S received $119,038 in commissions on the execution of
portfolio security transactions for the Fund for the year ended November 30,
2005.
Financial Data Services, Inc. ("FDS"), a wholly-owned subsidiary of ML & Co., is
the Fund's transfer agent.
For the year ended November 30, 2005, the Fund reimbursed MLIM $4,592 for
certain accounting services.
Certain officers and/or directors of the Fund are officers and/or directors of
MLIM, PSI, MLAM U.K., FDS, FAMD, ML & Co., and/or MLIM, LLC.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the
year ended November 30, 2005 were $152,567,293 and $98,140,481, respectively.
4. Capital Share Transactions:
Net increase (decrease) in net assets derived from capital share transactions
was $54,977,709 and $(5,279,918) for the years ended November 30, 2005 and
November 30, 2004, respectively.
Transactions in capital shares for each class were as follows:
- -------------------------------------------------------------------------------
Class A Shares for the Year Dollar
Ended November 30, 2005 Shares Amount
- -------------------------------------------------------------------------------
Shares sold ................................ 1,485,104 $ 40,057,939
Automatic conversion of shares ............. 206,329 5,718,018
Shares issued to shareholders in
reinvestment of dividends ................. 46,522 1,077,449
---------------------------
Total issued ............................... 1,737,955 46,853,406
Shares redeemed ............................ (1,624,528) (43,327,517)
---------------------------
Net increase ............................... 113,427 $ 3,525,889
===========================
- -------------------------------------------------------------------------------
Class A Shares for the Year Dollar
Ended November 30, 2004 Shares Amount
- -------------------------------------------------------------------------------
Shares sold ................................ 238,048 $ 4,381,885
Automatic conversion of shares ............. 328,350 5,758,766
Shares issued to shareholders in
reinvestment of dividends ................. 54,762 879,468
---------------------------
Total issued ............................... 621,160 11,020,119
Shares redeemed ............................ (924,723) (16,642,917)
---------------------------
Net decrease ............................... (303,563) $ (5,622,798)
===========================
- -------------------------------------------------------------------------------
Class B Shares for the Year Dollar
Ended November 30, 2005 Shares Amount
- -------------------------------------------------------------------------------
Shares sold ................................ 158,749 $ 4,289,555
Shares issued to shareholders in
reinvestment of dividends ................. 3,129 69,840
---------------------------
Total issued ............................... 161,878 4,359,395
---------------------------
Automatic conversion of shares ............. (214,990) (5,718,018)
Shares redeemed ............................ (139,045) (3,746,823)
---------------------------
Total redeemed ............................. (354,035) (9,464,841)
---------------------------
Net decrease ............................... (192,157) $ (5,105,446)
===========================
- -------------------------------------------------------------------------------
Class B Shares for the Year Dollar
Ended November 30, 2004 Shares Amount
- -------------------------------------------------------------------------------
Shares sold ................................ 39,609 $ 707,486
Shares issued to shareholders in
reinvestment of dividends ................. 7,013 108,484
---------------------------
Total issued ............................... 46,622 815,970
---------------------------
Automatic conversion of shares ............. (342,243) (5,758,766)
Shares redeemed ............................ (176,172) (3,029,226)
---------------------------
Total redeemed ............................. (518,415) (8,787,992)
---------------------------
Net decrease ............................... (471,793) $ (7,972,022)
===========================
- -------------------------------------------------------------------------------
Class C Shares for the Year Dollar
Ended November 30, 2005 Shares Amount
- -------------------------------------------------------------------------------
Shares sold ................................ 560,993 $ 15,756,268
Shares issued to shareholders in
reinvestment of dividends ................. 2,999 66,431
---------------------------
Total issued ............................... 563,992 15,822,699
Shares redeemed ............................ (160,291) (4,260,680)
---------------------------
Net increase ............................... 403,701 $ 11,562,019
===========================
MERRILL LYNCH LATIN AMERICA FUND, INC. NOVEMBER 30, 2005 21
Notes to Consolidated Financial Statements (concluded)
- -------------------------------------------------------------------------------
Class C Shares for the Year Dollar
Ended November 30, 2004 Shares Amount
- -------------------------------------------------------------------------------
Shares sold ................................ 119,223 $ 2,160,655
Shares issued to shareholders in
reinvestment of dividends ................. 2,431 37,462
---------------------------
Total issued ............................... 121,654 2,198,117
Shares redeemed ............................ (82,043) (1,383,354)
---------------------------
Net increase ............................... 39,611 $ 814,763
===========================
- -------------------------------------------------------------------------------
Class I Shares for the Year Dollar
Ended November 30, 2005 Shares Amount
- -------------------------------------------------------------------------------
Shares sold ................................ 2,655,231 $ 76,713,225
Shares issued to shareholders in
reinvestment of dividends ................. 37,478 873,985
---------------------------
Total issued ............................... 2,692,709 77,587,210
Shares redeemed ............................ (1,179,987) (32,591,963)
---------------------------
Net increase ............................... 1,512,722 $ 44,995,247
===========================
- -------------------------------------------------------------------------------
Class I Shares for the Year Dollar
Ended November 30, 2004 Shares Amount
- -------------------------------------------------------------------------------
Shares sold ................................ 1,051,400 $ 20,042,093
Shares issued to shareholders in
reinvestment of dividends ................. 31,287 505,596
---------------------------
Total issued ............................... 1,082,687 20,547,689
Shares redeemed ............................ (722,213) (13,047,550)
---------------------------
Net increase ............................... 360,474 $ 7,500,139
===========================
The Fund charges a 2% redemption fee on the proceeds (calculated at market
value) of a redemption (either by sale or exchange) of Fund shares made within
30 days of purchase or exchange. The redemption fee is paid to the Fund and is
intended to offset the trading costs, market impact and other costs associated
with short-term trading into and out of the Fund.
5. Short-Term Borrowings:
The Fund, along with certain other funds managed by MLIM and its affiliates, is
a party to a $500,000,000 credit agreement with a group of other lenders. The
Fund may borrow under the credit agreement to fund shareholder redemptions and
for 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 .07% per annum based on
the Fund's pro rata share of the unused portion of the credit agreement. Amounts
borrowed under the credit agreement bear interest at a rate equal to, at each
portfolio's election, the federal funds rate plus .50% or a base rate as defined
in the credit agreement. The Fund did not borrow under the credit agreement
during the year ended November 30, 2005. On November 23, 2005, the credit
agreement was renewed for one year under substantially the same terms.
6. Commitments:
At November 30, 2005, the Fund had entered into foreign exchange contracts,
under which it had agreed to purchase and sell a foreign currency with
approximate values of $528,300 and $40,100, respectively.
7. Distributions to Shareholders:
The Fund paid an ordinary income dividend in the amount of $.491914 per Class A
Share, $.204954 per Class B Share, $.387451 per Class C Share and $.561175 per
Class I Share on December 22, 2005 to shareholders of record on December 16,
2005.
The tax character of distributions paid during the fiscal years ended November
30, 2005 and November 30, 2004 was as follows:
- --------------------------------------------------------------------------------
11/30/2005 11/30/2004
- --------------------------------------------------------------------------------
Distributions paid from:
Ordinary income ........................... $2,426,627 $1,816,994
----------------------------
Total taxable distributions ................ $2,426,627 $1,816,994
============================
As of November 30, 2005, the components of accumulated earnings on a tax basis
were as follows:
- -----------------------------------------------------------------------------
Undistributed ordinary income--net ...................... $ 4,324,862
Undistributed long-term capital gains--net .............. --
-------------
Total undistributed earnings--net ....................... 4,324,862
Capital loss carryforward ............................... (102,736,929)*
Unrealized gains--net ................................... 115,435,573**
-------------
Total accumulated earnings--net ......................... $ 17,023,506
=============
* On November 30, 2005, the Fund had a net capital loss carryforward of
$102,736,929, of which $30,244,212 expires in 2006, $26,681,113 expires in
2007, $4,233,519 expires in 2009, $30,609,327 expires in 2010 and
$10,968,758 expires in 2011. This amount will be available to offset like
amounts of any future taxable gains.
** The difference between book-basis and tax-basis net unrealized gains is
attributable primarily to the tax deferral of losses on wash sales, the
realization for tax purposes of unrealized gains (losses) on certain
foreign currency contracts, the deferral of post-October capital losses
for tax purposes and other book/tax temporary differences.
22 MERRILL LYNCH LATIN AMERICA FUND, INC. NOVEMBER 30, 2005
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of
Merrill Lynch Latin America Fund, Inc.:
We have audited the accompanying consolidated statement of assets and
liabilities, including the consolidated schedule of investments, of Merrill
Lynch Latin America Fund, Inc. and its subsidiary as of November 30, 2005, and
the related consolidated statement of operations for the year then ended, the
consolidated statements of changes in net assets for each of the two years in
the period then ended, and the consolidated financial highlights for each of the
five years in the period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. The Fund
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Fund's internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of November 30, 2005, by correspondence with the
custodian and brokers; where replies were not received from brokers, we
performed other auditing procedures. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements and consolidated financial
highlights referred to above present fairly, in all material respects, the
financial position of Merrill Lynch Latin America Fund, Inc. and its subsidiary
as of November 30, 2005, the results of their operations for the year then
ended, the changes in their net assets for each of the two years in the period
then ended, and their financial highlights for each of the five years in the
period then ended, in conformity with U.S. generally accepted accounting
principles.
Deloitte & Touche LLP
Princeton, New Jersey
January 18, 2006
Important Tax Information (unaudited)
The following information is provided with respect to the ordinary income
distribution paid by Merrill Lynch Latin America Fund, Inc. to shareholders of
record on December 17, 2004:
- ----------------------------------------------------------------------------
Qualified Dividend Income for Individuals ................. 100%
Foreign Source Income ..................................... 90.09%*
Foreign Taxes Paid Per Share .............................. $ .070226
- ----------------------------------------------------------------------------
* Expressed as a percentage of the distribution grossed-up for foreign
taxes. The Fund hereby designates the percentage indicated above or the
maximum amount allowable by law.
The foreign taxes paid represent taxes incurred by the Fund on income received
by the Fund from foreign sources. Foreign taxes paid may be included in taxable
income with an offsetting deduction from gross income or may be taken as a
credit for taxes paid to foreign governments. You should consult your tax
adviser regarding the appropriate treatment of foreign taxes paid.
MERRILL LYNCH LATIN AMERICA FUND, INC. NOVEMBER 30, 2005 23
Officers and Directors
Number of
Portfolios in Other Public
Position(s) Length of Fund Complex Directorships
Held with Time Overseen by Held by
Name Address & Age Fund Served Principal Occupation(s) During Past 5 Years Director Director
====================================================================================================================================
Interested Director
- ------------------------------------------------------------------------------------------------------------------------------------
Robert C. P.O. Box 9011 President 2005 to President of the MLIM/FAM-advised funds since 2005; 131 Funds None
Doll, Jr.* Princeton, NJ and present President of MLIM and FAM since 2001; Co-Head 177 Portfolios
08543-9011 Director (Americas Region) thereof from 2000 to 2001 and
Age: 51 Senior Vice President from 1999 to 2001; President
and Director of Princeton Services, Inc. ("Princeton
Services") since 2001; President of Princeton
Administrators, L.P. ("Princeton Administrators")
since 2001; Chief Investment Officer of Oppenheimer-
Funds, Inc. in 1999 and Executive Vice President
thereof from 1991 to 1999.
------------------------------------------------------------------------------------------------------------------------
* Mr. Doll is a director, trustee or member of an advisory board of certain other investment companies for which MLIM or
FAM acts as investment adviser. Mr. Doll is an "interested person," as described in the Investment Company Act, of the
Fund based on his current positions with MLIM, FAM, Princeton Services and Princeton Administrators. Directors serve
until their resignation, removal or death, or until December 31 of the year in which they turn 72. As Fund President,
Mr. Doll serves at the pleasure of the Board of Directors.
====================================================================================================================================
Independent Directors*
- ------------------------------------------------------------------------------------------------------------------------------------
Ronald W. P.O. Box 9095 Director 2000 to Professor Emeritus of Finance, School of Business, 49 Funds None
Forbes** Princeton, NJ present State University of New York at Albany since 2000 50 Portfolios
08543-9095 and Professor thereof from 1989 to 2000; Interna-
Age: 65 tional Consultant, Urban Institute, Washington, D.C.
from 1995 to 1999.
- ------------------------------------------------------------------------------------------------------------------------------------
Cynthia A. P.O. Box 9095 Director 2000 to Professor, Harvard Business School since 1989; 49 Funds Newell
Montgomery Princeton, NJ present Associate Professor, J.L. Kellogg Graduate School of 50 Portfolios Rubbermaid,
08543-9095 Management, Northwestern University from 1985 to Inc.
Age: 53 1989; Associate Professor, Graduate School of (manufac-
Business Administration, University of Michigan from turing)
1979 to 1985; Director, Harvard Business School of
Publishing since 2005.
- ------------------------------------------------------------------------------------------------------------------------------------
Jean Margo P.O. Box 9095 Director 2004 to Self-employed consultant since 2001; Counsel of 49 Funds None
Reid Princeton, NJ present Alliance Capital Management (investment adviser) in 50 Portfolios
08543-9095 2000; General Counsel, Director and Secretary of
Age: 60 Sanford C. Bernstein & Co., Inc. (investment
adviser/broker-dealer) from 1997 to 2000; Secretary,
Sanford C. Bernstein Fund, Inc. from 1994 to 2000;
Director and Secretary of SCB, Inc. since 1998;
Director and Secretary of SCB Partners, Inc. since
2000; and Director of Covenant House from 2001 to
2004.
- ------------------------------------------------------------------------------------------------------------------------------------
Roscoe S. P.O. Box 9095 Director 2000 to President, Middle East Institute from 1995 to 2001; 49 Funds None
Suddarth Princeton, NJ present Foreign Service Officer, United States Foreign 50 Portfolios
08543-9095 Service, from 1961 to 1995 and Career Minister from
Age: 70 1989 to 1995; Deputy Inspector General, U.S.
Department of State from 1991 to 1994; U.S.
Ambassador to the Hashemite Kingdom of Jordan from
1987 to 1990.
- ------------------------------------------------------------------------------------------------------------------------------------
24 MERRILL LYNCH LATIN AMERICA FUND, INC. NOVEMBER 30, 2005
Officers and Directors (concluded)
Number of
Portfolios in Other Public
Position(s) Length of Fund Complex Directorships
Held with Time Overseen by Held by
Name Address & Age Fund Served Principal Occupation(s) During Past 5 Years Director Director
====================================================================================================================================
Independent Directors* (concluded)
- ------------------------------------------------------------------------------------------------------------------------------------
Richard R. P.O. Box 9095 Director 1991 to Professor of Finance from 1984 to 1995, Dean from 49 Funds Bowne &
West Princeton, NJ present 1984 to 1993 and since 1995 Dean Emeritus of 50 Portfolios Co., Inc.
08543-9095 New York University's Leonard N. Stern School of (financial
Age: 67 Business Administration. printers);
Vornado
Realty Trust
(real estate
company);
Alexander's,
Inc. (real
estate
company)
- ------------------------------------------------------------------------------------------------------------------------------------
Edward D. P.O. Box 9095 Director 1994 to Self-employed financial consultant since 1994; 49 Funds None
Zinbarg Princeton, NJ present Executive Vice President of the Prudential Insurance 50 Portfolios
08543-9095 Company of America from 1988 to 1994; Former Director
Age: 71 of Prudential Reinsurance Company and former Trustee
of the Prudential Foundation.
------------------------------------------------------------------------------------------------------------------------
* Directors serve until their resignation, removal or death, or until December 31 of the year in which they turn 72.
** Chairman of the Board and the Audit Committee.
- ------------------------------------------------------------------------------------------------------------------------------------
Position(s) Length of
Held with Time
Name Address & Age Fund Served Principal Occupation(s) During Past 5 Years
====================================================================================================================================
Fund Officers*
- ------------------------------------------------------------------------------------------------------------------------------------
Donald C. P.O. Box 9011 Vice 1993 to First Vice President of MLIM and FAM since 1997 and Treasurer thereof since 1999;
Burke Princeton, NJ President present Senior Vice President and Treasurer of Princeton Services since 1999 and Director
08543-9011 and and 1999 since 2004; Vice President of FAM Distributors, Inc. ("FAMD") since 1999 and
Age: 45 Treasurer to Director since 2004; Vice President of MLIM and FAM from 1990 to 1997;
present Director of Taxation of MLIM from 1990 to 2001; Vice President, Treasurer and
Secretary of the IQ Funds since 2004.
- ------------------------------------------------------------------------------------------------------------------------------------
William P.O. Box 9011 Vice 2002 to Director of MLIM since 2004; Vice President of MLIM from 2002 to 2004; Latin
Landers Princeton, NJ President present American research analyst at Credit Suisse First Boston from 1999 to 2001.
08543-9011
Age: 36
- ------------------------------------------------------------------------------------------------------------------------------------
Jeffrey P.O. Box 9011 Chief 2004 to Chief Compliance Officer of the MLIM/FAM-advised funds and First Vice President and
Hiller Princeton, NJ Compliance present Chief Compliance Officer of MLIM (Americas Region) since 2004; Chief Compliance
08543-9011 Officer Officer of the IQ Funds since 2004; Global Director of Compliance at Morgan Stanley
Age: 54 Investment Management from 2002 to 2004; Managing Director and Global Director of
Compliance at Citigroup Asset Management from 2000 to 2002; Chief Compliance
Officer at Soros Fund Management in 2000; Chief Compliance Officer at Prudential
Financial from 1995 to 2000; Senior Counsel in the Commission's Division of
Enforcement in Washington, D.C. from 1990 to 1995.
- ------------------------------------------------------------------------------------------------------------------------------------
Alice A. P.O. Box 9011 Secretary 2004 to Director (Legal Advisory) of MLIM since 2002; Vice President of MLIM from 1999 to
Pellegrino Princeton, NJ present 2002; Attorney associated with MLIM since 1997. Secretary of MLIM, FAM, FAMD and
08543-9011 Princeton Services since 2004.
Age: 45
------------------------------------------------------------------------------------------------------------------------
* Officers of the Fund serve at the pleasure of the Board of Directors.
- ------------------------------------------------------------------------------------------------------------------------------------
Further information about the Fund's Officers and Directors is available in the Fund's Statement of Additional
Information, which can be obtained without charge by calling 1-800-MER-FUND.
- ------------------------------------------------------------------------------------------------------------------------------------
Custodian
Brown Brothers Harriman & Co.
40 Water Street
Boston, MA 02109-3661
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
800-637-3863
MERRILL LYNCH LATIN AMERICA FUND, INC. NOVEMBER 30, 2005 25
Availability of Quarterly Schedule of Investments
The Fund files its complete schedule of portfolio holdings with the Securities
and Exchange Commission ("SEC") for the first and third quarters of each fiscal
year on Form N-Q. The Fund's Forms N-Q are available on the SEC's Web site at
http://www.sec.gov. The Fund's Forms N-Q may also be reviewed and copied at the
SEC's Public Reference Room in Washington, DC. Information on the operation of
the Public Reference Room may be obtained by calling 1-800-SEC-0330.
Electronic Delivery
The Fund offers electronic delivery of communications to its shareholders. In
order to receive this service, you must register your account and provide us
with e-mail information. To sign up for this service, simply access this Web
site at http://www.icsdelivery.com/live and follow the instructions. When you
visit this site, you will obtain a personal identification number (PIN). You
will need this PIN should you wish to update your e-mail address, choose to
discontinue this service and/or make any other changes to the service. This
service is not available for certain retirement accounts at this time.
26 MERRILL LYNCH LATIN AMERICA FUND, INC. NOVEMBER 30, 2005
[LOGO] Merrill Lynch Investment Managers
www.mlim.ml.com
- --------------------------------------------------------------------------------
Mercury Advisors
A Division of Merrill Lynch Investment Managers
www.mercury.ml.com
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 U.S. 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.
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available (1) without
charge, upon request, by calling toll-free 1-800-MER-FUND (1-800-637-3863); (2)
at www.mutualfunds.ml.com; and (3) on the Securities and Exchange Commission's
Web site at http://www.sec.gov. Information about how the Fund voted proxies
relating to securities held in the Fund's portfolio during the most recent
12-month period ended June 30 is available (1) at www.mutualfunds.ml.com and (2)
on the Securities and Exchange Commission's Web site at http://www.sec.gov.
Merrill Lynch Latin America Fund, Inc.
Box 9011
Princeton, NJ 08543-9011
#16140 -- 11/05
Item 2 - Code of Ethics - The registrant has adopted a code of ethics, as of the
end of the period covered by this report, that applies to the
registrant's principal executive officer, principal financial officer
and principal accounting officer, or persons performing similar
functions. A copy of the code of ethics is available without charge
upon request by calling toll-free 1-800-MER-FUND (1-800-637-3863).
Item 3 - Audit Committee Financial Expert - The registrant's board of directors
has determined that (i) the registrant has the following audit
committee financial experts serving on its audit committee and (ii)
each audit committee financial expert is independent: (1) Ronald W.
Forbes, (2) Richard R. West, and (3) Edward D. Zinbarg.
Item 4 - Principal Accountant Fees and Services
(a) Audit Fees - Fiscal Year Ending November 30, 2005 - $35,000
Fiscal Year Ending November 30, 2004 - $33,000
(b) Audit-Related Fees - Fiscal Year Ending November 30, 2005 - $0
Fiscal Year Ending November 30, 2004 - $0
(c) Tax Fees - Fiscal Year Ending November 30, 2005 - $7,400
Fiscal Year Ending November 30, 2004 - $7,300
The nature of the services include tax compliance, tax advice and tax
planning.
(d) All Other Fees - Fiscal Year Ending November 30, 2005 - $0
Fiscal Year Ending November 30, 2004 - $0
(e)(1) The registrant's audit committee (the "Committee") has adopted
policies and procedures with regard to the pre-approval of services.
Audit, audit-related and tax compliance services provided to the
registrant on an annual basis require specific pre-approval by the
Committee. The Committee also must approve other non-audit services
provided to the registrant and those non-audit services provided to the
registrant's affiliated service providers that relate directly to the
operations and the financial reporting of the registrant. Certain of
these non-audit services that the Committee believes are a) consistent
with the SEC's auditor independence rules and b) routine and recurring
services that will not impair the independence of the independent
accountants may be approved by the Committee without consideration on a
specific case-by-case basis ("general pre-approval"). However, such
services will only be deemed pre-approved provided that any individual
project does not exceed $5,000 attributable to the registrant or
$50,000 for all of the registrants the Committee oversees. Any proposed
services exceeding the pre-approved cost levels will require specific
pre-approval by the Committee, as will any other services not subject
to general pre-approval (e.g., unanticipated but permissible services).
The Committee is informed of each service approved subject to general
pre-approval at the next regularly scheduled in-person board meeting.
(e)(2) 0%
(f) Not Applicable
(g) Fiscal Year Ending November 30, 2005 - $5,738,110
Fiscal Year Ending November 30, 2004 - $12,448,225
(h) The registrant's audit committee has considered and determined that
the provision of non-audit services that were rendered to the
registrant's investment adviser and any entity controlling, controlled
by, or under common control with the investment adviser that provides
ongoing services to the registrant that were not pre-approved pursuant
to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible
with maintaining the principal accountant's independence.
Regulation S-X Rule 2-01(c)(7)(ii) - $1,227,000, 0%
Item 5 - Audit Committee of Listed Registrants - Not Applicable
Item 6 - Schedule of Investments - Not Applicable
Item 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies - Not Applicable
Item 8 - Portfolio Managers of Closed-End Management Investment Companies -
Not Applicable
Item 9 - Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers - Not Applicable
Item 10 - Submission of Matters to a Vote of Security Holders - Not Applicable
Item 11 - Controls and Procedures
11(a) - The registrant's certifying officers have reasonably designed such
disclosure controls and procedures to ensure material information
relating to the registrant is made known to us by others particularly
during the period in which this report is being prepared. The
registrant's certifying officers have determined that the registrant's
disclosure controls and procedures are effective based on our
evaluation of these controls and procedures as of a date within 90 days
prior to the filing date of this report.
11(b) - There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the Act (17 CFR
270.30a-3(d)) that occurred during the second fiscal half-year of the
period covered by this report that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting.
Item 12 - Exhibits attached hereto
12(a)(1) - Code of Ethics - See Item 2
12(a)(2) - Certifications - Attached hereto
12(a)(3) - Not Applicable
12(b) - Certifications - Attached hereto
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Merrill Lynch Latin America Fund, Inc.
By: /s/ Robert C. Doll, Jr.
----------------------------------
Robert C. Doll, Jr.,
Chief Executive Officer of
Merrill Lynch Latin America Fund, Inc.
Date: January 25, 2006
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Robert C. Doll, Jr.
----------------------------------
Robert C. Doll, Jr.,
Chief Executive Officer of
Merrill Lynch Latin America Fund, Inc.
Date: January 25, 2006
By: /s/ Donald C. Burke
----------------------------------
Donald C. Burke,
Chief Financial Officer of
Merrill Lynch Latin America Fund, Inc.
Date: January 25, 2006