MERRILL LYNCH
LATIN AMERICA
FUND, INC.
[GRAPHIC OMITTED]
STRATEGIC
Performance
Quarterly Report
February 28, 1998
<PAGE>
MERRILL LYNCH LATIN AMERICA FUND, INC.
Asset Allocation
As a Percentage* of
Net Assets as of
February 28, 1998
A map illustrating the following percentages:
MEXICO 29.2%
VENEZUELA 5.7%
COLOMBIA 2.1%
PERU 2.0%
BRAZIL 42.9%
ARGENTINA 10.6%
CHILE 4.5%
*Total may not equal 100% and does not include short-term securities.
<PAGE>
Merrill Lynch Latin America Fund, Inc., February 28, 1998
DEAR SHAREHOLDER
During the three-month period ended February 28, 1998, total returns for Merrill
Lynch Latin America Fund, Inc.'s Class A, Class B, Class C and Class D Shares
were -0.60%, -0.82%, -0.89% and -0.67%, respectively. (Investment results shown
do not reflect sales charges, and would be lower if sales charges were included.
Complete performance information, including average annual total returns, can be
found on pages 4 and 5 of this report to shareholders.) The unmanaged Morgan
Stanley Capital International (MSCI) Latin America Free Index declined 0.22%,
and the unmanaged J.P. Morgan Latin Brady Bond Index rose 6.14% during the same
period. Beneficial to Fund performance was our overweighted position in Brazil
and underweighted position in Chile, whose markets produced total returns of
+7.78% and -7.29%, respectively, as measured by MSCI. Detrimental to performance
was the Fund's overweighted position in Venezuela, whose market fell by 17.23%
as measured by MSCI during the February quarter.
Investment Overview
The Brazilian market was the best performer of the February quarter, registering
a total return of +7.78%. This market appears to be recovering slowly from the
Asian crisis with the Bovespa trading in the 9,000-10,500 range for the
three-month period. Among the positive factors influencing the market were the
decline in interest rates since last October; less concern about the current
account deficit in Brazil, since the lower level of economic activity projected
for 1998 would imply a slowdown in imports; and continuing advances in the
privatization process. As investors' confidence increased, the country witnessed
sustained capital inflows. The combination of positive factors has led many
economists to upgrade their outlook for gross domestic product (GDP) growth for
1998 from zero or negative growth to a modest +1.0%.
Among the better-performing sectors of the Brazilian market during the February
quarter were: banking, represented in the Fund by our holdings in Banco Bradesco
S.A., Banco Itau S.A. and Uniao de Bancos Brasileiros S.A. (Unibanco); mining,
represented by Companhia de Vale do Rio Doce S.A.; and telecommunications,
represented by the bellwether Telecomunicacoes Brasileiros S.A.--Telebras. Banco
Bradesco, Banco Itau and Unibanco are the three largest private sector banks in
Brazil. With a banking penetration of only 35%, as represented by loans/GDP, the
potential for the banking sector in Brazil is enormous. Furthermore, the
regulatory/ supervisory environment in Brazil has improved in recent years, thus
giving potential investors in the banking sector a higher level of confidence.
All three institutions represent true financial services groups, with
significant market shares in insurance and asset management as well. The
valuations of these three banks, especially after the market correction
following the Asian crisis, were especially attractive. Companhia Vale do Rio
Doce is a conglomerate with holdings in the natural resources and transportation
sectors. Its iron ore mining facilities are among the largest in the world. In
addition, the company has holdings in bauxite mining, pulp, aluminum and steel
production and railways.
During the February quarter, the second strongest market was Argentina with a
total return of +1.76%, as measured by MSCI. Just like Brazil, the concerns
which most troubled investors three months ago have abated, although they have
not totally disappeared. The belief is that the decline in world commodity
prices and the economic slowdown in neighboring Brazil will help to curb
Argentine GDP growth this year, and hence improve the current account outlook
for Argentina. Furthermore, recent global bond offerings have highlighted the
fact that Argentina still enjoys access to the international debt markets.
Exports of agricultural goods, which account for approximately one-quarter of
all Argentine exports, are expected to be strong in 1998. The outlook is still
for very low inflation, but also for stubbornly high unemployment. More
noticeable in Argentina is the decline in domestic interest rates, which are now
approaching pre-Asian financial crisis levels. In Brazil, real rates remain
high, although they are declining.
The Mexican market, which for most of 1997 was the best performer, declined by
3.81% in the February quarter as measured by MSCI. Investors felt that the
Mexican recovery was unraveling because of sharp global oil price declines
(declines which prompted the Mexican government itself to revise its budget) and
surprisingly stagnant economic growth in the fourth quarter of 1997. Although on
the trade front Mexico's main problem has been oil, investors have also taken
note of import acceleration and the rising monthly trade deficits. However, the
overall general outlook for Mexico remains fairly positive, with interest rates
and inflation continuing to trend downward and expectations for certain sectors,
such as banking, continuing to improve.
Of the smaller markets, the Andean markets (Chile, Colombia, Peru and Venezuela)
all reported significant declines for the three months ended February 28, 1998.
For both Chile and Venezuela, which declined 7.29% and 17.23%, respectively, as
measured by MSCI, declines in commodity prices during the quarter played a major
role. In Chile, copper prices declined while petroleum prices dropped in
Venezuela. Unfortunately, diminished Asian demand will probably continue to have
negative implications for Chile since about half of the country's copper exports
are shipped to Asia. For Venezuela, investors are also concerned that economic
reforms have stalled. Thus, the country has a high rate of inflation by recent
Latin American standards, an overvalued currency, a significant fiscal deficit,
and accelerating capital outflows. Our major holding in Venezuela continues to
be Compania Anonima Nacional Telefonos de Venezuela (CANTV), the national
telecommunications company. Although the stock performed poorly during the
February quarter, we believe that the company's restructuring and cost-cutting
efforts, combined with the tariff rebalancing outlook, enhance CANTV's value and
long-term prospects.
In Conclusion
The Asian financial crisis during late 1997 left its mark on Latin American
markets, although not in terms of sharp devaluations or major upheavals. The
overall effect has been to slow the fast economic growth experienced throughout
much of the region for most of 1997. This growth was achieved with relatively
low rates of inflation. Of particular concern is the anticipated decrease in
demand for certain key commodities produced by Latin American nations. We would
remind our shareholders that the markets in this region remain volatile, and as
the recent crisis has demonstrated, often severely affected by external
developments. Nevertheless, our long-term outlook for the region remains
positive.
We appreciate your ongoing interest in Merrill Lynch Latin America Fund, Inc.,
and we look forward to reviewing our outlook and strategy with you in our
upcoming semi-annual report to shareholders.
Sincerely,
/s/ Arthur Zeikel
Arthur Zeikel
President
/s/ Grace Pineda
Grace Pineda
Senior Vice President and
Portfolio Manager
March 26, 1998
2 & 3
<PAGE>
Merrill Lynch Latin America Fund, Inc., February 28, 1998
PERFORMANCE DATA
About Fund Performance
Investors are able to purchase shares of the Fund through the Merrill
Lynch Select Pricing(SM) System, which offers four pricing alternatives:
o Class A Shares incur a maximum initial sales charge (front-end load) of
5.25% and bear no ongoing distribution or account maintenance fees. Class
A Shares are available only to eligible investors, as detailed in the
Fund's prospectus. If you were a Class A shareholder prior to October 21,
1994, your Class A Shares were redesignated to Class D Shares on October
21, 1994. However, in the case of certain eligible investors, the shares
were simultaneously exchanged for Class A Shares.
o Class B Shares are subject to a maximum contingent deferred sales charge
of 4% if redeemed during the first year, decreasing 1% each year
thereafter to 0% after the fourth year. In addition, Class B Shares are
subject to a distribution fee of 0.75% and an account maintenance fee of
0.25%. These shares automati cally convert to Class D Shares after
approximately 8 years. (There is no initial sales charge for automatic
share conversions.)
o Class C Shares are subject to a distribution fee of 0.75% and an account
maintenance fee of 0.25%. In addition, Class C Shares are subject to a 1%
contingent deferred sales charge if redeemed within one year of purchase.
o Class D Shares incur a maximum initial sales charge of 5.25% and an
account maintenance fee of 0.25% (but no distribution fee).
None of the past results shown should be considered a representation of
future performance. Figures shown in the "Average Annual Total Return"
tables assume reinvestment of all dividends and capital gains
distributions at net asset value on the ex-dividend date. Investment
return and principal value of shares will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost. Dividends
paid to each class of shares will vary because of the different levels of
account maintenance, distribution and transfer agency fees applicable to
each class, which are deducted from the income available to be paid to
shareholders.
Recent Performance Results*
<TABLE>
<CAPTION>
12 Month 3 Month Since Inception
Total Return Total Return Total Return
==================================================================================================
<S> <C> <C> <C>
ML Latin America Fund, Inc. Class A Shares +0.67% -0.60% -12.09%
- --------------------------------------------------------------------------------------------------
ML Latin America Fund, Inc. Class B Shares -0.34 -0.82 +59.25
- --------------------------------------------------------------------------------------------------
ML Latin America Fund, Inc. Class C Shares -0.41 -0.89 -15.18
- --------------------------------------------------------------------------------------------------
ML Latin America Fund, Inc. Class D Shares +0.40 -0.67 +67.40
- --------------------------------------------------------------------------------------------------
</TABLE>
* Investment results shown do not reflect sales charges; results shown would
be lower if a sales charge was included. Total investment returns are
based on changes in net asset values for the periods shown, and assume
reinvestment of all dividends and capital gains distributions at net asset
value on the ex-dividend date. The Fund's inception dates are: Class A and
Class C Shares, 10/21/94; and Class B and Class D Shares, 9/27/91.
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
================================================================================
Class A Shares*
================================================================================
Year Ended 12/31/97 +25.32% +18.74%
- --------------------------------------------------------------------------------
Inception (10/21/94) through 12/31/97 - 2.32 - 3.96
- --------------------------------------------------------------------------------
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
================================================================================
Class B Shares*
================================================================================
Year Ended 12/31/97 +24.05% +20.05%
- --------------------------------------------------------------------------------
Five Years Ended 12/31/97 + 9.77 + 9.77
- --------------------------------------------------------------------------------
Inception (9/27/91) through 12/31/97 + 8.68 + 8.68
- --------------------------------------------------------------------------------
* Maximum contingent deferred sales charge is 4% and is reduced to 0% after
4 years.
** Assuming payment of applicable contingent deferred sales charge.
================================================================================
% Return % Return
Without CDSC With CDSC**
================================================================================
Class C Shares*
================================================================================
Year Ended 12/31/97 +24.09% +23.09%
- --------------------------------------------------------------------------------
Inception (10/21/94) through 12/31/97 - 3.34 - 3.34
- --------------------------------------------------------------------------------
* Maximum contingent deferred sales charge is 1% and is reduced to 0% after
1 year.
** Assuming payment of applicable contingent deferred sales charge.
================================================================================
% Return Without % Return With
Sales Charge Sales Charge**
================================================================================
Class D Shares*
================================================================================
Year Ended 12/31/97 +24.98% +18.42%
- --------------------------------------------------------------------------------
Five Years Ended 12/31/97 +10.64 + 9.45
- --------------------------------------------------------------------------------
Inception (9/27/91) through 12/31/97 + 9.53 + 8.59
- --------------------------------------------------------------------------------
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
4 & 5
<PAGE>
Merrill Lynch Latin America Fund, Inc., February 28, 1998
CONSOLIDATED SCHEDULE OF INVESTMENTS (in US dollars)
<TABLE>
<CAPTION>
Percent
Shares Held/ of Net
COUNTRY Industries Face Amount Long-Term Investments Cost Value Assets
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Argentina Automobile Parts 193,875 Mirgor S.A.C.I.F.I.A. (ADR) (1) $ 630,094 $ 411,984 0.1%
----------------------------------------------------------------------------------------------------------------------
Banking 239,093 Banco de Galicia y Buenos Aires S.A. (ADR) (1) 5,100,718 5,887,665 0.8
----------------------------------------------------------------------------------------------------------------------
Beverages 120,800 Quilmes Industrial S.A. (ADR) (1) 1,648,400 1,426,950 0.2
----------------------------------------------------------------------------------------------------------------------
Merchandising 547,144 Grimoldi S.A. (Class B) 3,174,556 1,204,343 0.2
----------------------------------------------------------------------------------------------------------------------
Multi-Industry 1,789,255 Compania Naviera Perez Companc S.A.C.F.I.M.F.A. 9,073,724 11,779,423 1.7
----------------------------------------------------------------------------------------------------------------------
Oil & Gas Producers 960,778 Yacimientos Petroliferos Fiscales S.A. (YPF)
(ADR) (1) 26,576,017 30,384,604 4.3
----------------------------------------------------------------------------------------------------------------------
Real Estate 1,166,915 Inversiones y Representaciones S.A. (IRSA) 3,126,377 4,051,302 0.6
131,962 Inversiones y Representaciones S.A. (IRSA)
(GDR) (2) 3,694,542 4,602,175 0.6
----------- ----------- ----
6,820,919 8,653,477 1.2
----------------------------------------------------------------------------------------------------------------------
Telecommunications 149,632 Telecom Argentina Stet--France Telecom S.A.
(GDR) (2) 3,179,182 5,489,624 0.8
207,894 Telefonica de Argentina S.A. (ADR) (1) 6,281,215 7,484,184 1.0
525,000 Telefonica de Argentina S.A. (Class B) 1,497,352 1,890,983 0.3
----------- ----------- ----
10,957,749 14,864,791 2.1
----------------------------------------------------------------------------------------------------------------------
Total Long-Term Investments in Argentina 63,982,177 74,613,237 10.6
====================================================================================================================================
Brazil Banking 1,078,590,217 Banco Bradesco S.A. (Preferred) 6,736,347 9,163,244 1.3
26,488,357 Banco Itau S.A. (Preferred) 12,760,298 15,658,604 2.2
712,900 Uniao de Bancos Brasileiros S.A. (Unibanco)
(GDR) (2) 20,708,075 24,416,825 3.5
15,000,000 Uniao de Bancos Brasileiros S.A. (Unibanco)
(Units) (3) 1,198,257 1,022,124 0.1
----------- ----------- ----
41,402,977 50,260,797 7.1
----------------------------------------------------------------------------------------------------------------------
Beverages & Tobacco 33,793,982 Companhia Cervejaria Brahma S.A. PN (Preferred) 16,656,794 25,419,953 3.6
27,200 Companhia Cervejaria Brahma S.A. PN
(Preferred) (ADR) (1) 397,933 408,000 0.1
----------- ----------- ----
17,054,727 25,827,953 3.7
----------------------------------------------------------------------------------------------------------------------
Diversified 969,200 Souza Cruz S.A. 7,243,874 8,448,336 1.2
----------------------------------------------------------------------------------------------------------------------
Energy Sources 1,336,507 Companhia Paranaense de Energia S.A.
(Copel) (ADR) (1) 23,924,182 17,040,464 2.4
92,676,398 Petroleo Brasileiro S.A. (Preferred) 22,497,442 20,995,715 3.0
----------- ----------- ----
46,421,624 38,036,179 5.4
----------------------------------------------------------------------------------------------------------------------
Foreign Government US$ 9,107,000 Republic of Brazil, Global Bonds, 10.125%
Obligations due 5/15/2027 7,888,939 8,845,174 1.3
----------------------------------------------------------------------------------------------------------------------
Forest Products 186,500 Aracruz Celulose S.A. (ADR) (1) 3,082,364 2,552,719 0.4
288,086,000 Votorantim Celulose e Papel S.A. (Preferred) 7,636,997 4,206,566 0.6
----------- ----------- ----
10,719,361 6,759,285 1.0
----------------------------------------------------------------------------------------------------------------------
Machinery & 8,848,000 Weg Exportadora S.A. (Preferred) 5,385,285 5,246,159 0.7
Engineering
----------------------------------------------------------------------------------------------------------------------
Metals & Steel US$ 1,099,391 Companhia de Vale do Rio Doce S.A., 0.0%
due 12/31/2049** 0 0 0.0
499,795 Companhia de Vale do Rio Doce S.A. (Preferred) 10,198,329 10,880,493 1.6
665,575,000 Companhia Siderurgica de Tubarao S.A.
(Preferred) 10,471,275 8,658,365 1.2
107,914,949 Companhia Siderurgica Nacional S.A.--CSN 2,764,579 2,798,149 0.4
1,048,239 Usinas Siderurgicas de Minas Gerais S.A.--
Usiminas (Preferred) 11,996,707 7,096,485 1.0
----------- ----------- ----
35,430,890 29,433,492 4.2
----------------------------------------------------------------------------------------------------------------------
Retail 125,100 Companhia Brasileira de Distribuicao Grupo
Pao de Acucar S.A.(ADR) (1) 2,571,085 2,877,300 0.4
81,640,000 Lojas Arapua S.A. (Preferred) 1,482,172 209,519 0.0
----------- ----------- ----
4,053,257 3,086,819 0.4
----------------------------------------------------------------------------------------------------------------------
Telecommunications 313,651 Telecomunicacoes Brasileiras S.A.--Telebras
(ADR) (1) 34,175,385 38,402,644 5.5
149,205,637 Telecomunicacoes Brasileiras S.A.--Telebras
(Ordinary) 9,932,085 14,787,203 2.1
9,845,775 Telecomunicacoes de Minas Gerais S.A.--
TELEMIG (Ordinary) 837,551 914,873 0.1
3,265,379 Telecomunicacoes de Sao Paulo S.A.--TELESP 524,948 677,638 0.1
10,134,543 Telecomunicacoes de Sao Paulo S.A.--
TELESP (Preferred) 2,305,024 2,807,179 0.4
----------- ----------- ----
47,774,993 57,589,537 8.2
----------------------------------------------------------------------------------------------------------------------
Textiles & Apparel 21,231,686 Companhia de Tecidos Norte de Minas S.A.--
Coteminas (Preferred) 8,827,208 5,448,840 0.8
21,491,685 Empresa Nasional de Comercio S.A. 6,971 53,254 0.0
----------- ----------- ----
8,834,179 5,502,094 0.8
----------------------------------------------------------------------------------------------------------------------
Utilities 224,887,350 Centrais Eletricas Brasileiras S.A.
(Eletrobras) 11,718,392 10,109,980 1.4
74,917 Centrais Eletricas de Santa Catarina S.A.
(CELESC) (ADR) (1) 6,026,323 6,827,778 1.0
1,122,012 Centrais Eletricas de Santa Catarina S.A.
(CELESC) 'B' (Preferred) 591,246 1,022,719 0.2
28,470 Companhia Energetica de Minas Gerais S.A.
(CEMIG) (ADR) (1) 638,750 1,217,093 0.2
56,630 Companhia Energetica de Minas Gerais S.A.
(CEMIG) (ADR) (1) 1,321,702 2,430,242 0.3
390,409,000 Companhia Energetica de Minas Gerais S.A.
(CEMIG) (Preferred) 13,759,899 16,756,492 2.4
60,873,712 Companhia Paulista de Forca e Luz S.A. 3,586,717 7,275,217 1.0
39 Companhia Paulista de Forca e Luz S.A.
(Preferred) 3 4 0.0
163,811 Companhia Paulista de Forca e Luz S.A.
(Rights) 0 944 0.0
288,000 Globex Utilidades S.A. (Preferred) 5,061,120 2,217,345 0.3
19,301,766 Light Participacoes S.A. 2,761,094 4,475,277 0.6
----------- ----------- ----
45,465,246 52,333,091 7.4
----------------------------------------------------------------------------------------------------------------------
Utilities--Electric 4,200,000 Companhia Energetica de Sao Paulo S.A.
(CESP) (Preferred) 195,962 204,425 0.0
1,143,900,000 Companhia Energetica do Ceara S.A.
(Preferred) 4,912,770 3,947,973 0.6
55,930 Espirito Santo Centrais Eletricas S.A.
(Escelsa) 10,012,656 6,186,947 0.9
----------- ----------- ----
15,121,388 10,339,345 1.5
----------------------------------------------------------------------------------------------------------------------
Total Long-Term Investments in Brazil 292,796,740 301,708,261 42.9
----------------------------------------------------------------------------------------------------------------------
</TABLE>
6 & 7
<PAGE>
Merrill Lynch Latin America Fund, Inc., February 28, 1998
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<TABLE>
<CAPTION>
Percent
Shares Held/ of Net
COUNTRY Industries Face Amount Long-Term Investments Cost Value Assets
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Chile Telecommunications 616,813 Compania de Telecomunicaciones de Chile S.A.
(ADR) (1) $14,744,358 $16,885,256 2.4%
436,373 Quinenco S.A. (ADR) (1) 7,825,408 4,691,010 0.7
----------- ----------- ----
22,569,766 21,576,266 3.1
----------------------------------------------------------------------------------------------------------------------
Utilities 75,000 Distribuidora Chilectra Metropolitana S.A.
(ADR) (1) 1,263,750 1,888,133 0.3
3,724,465 Empresa Nacional de Electricidad S.A. (ENDESA) 2,032,167 2,225,231 0.3
2,057,425 Enersis S.A. 930,264 1,178,876 0.2
157,400 Enersis S.A. (ADR) (1) 3,985,648 4,584,275 0.6
----------- ----------- ----
8,211,829 9,876,515 1.4
Total Long-Term Investments in Chile 30,781,595 31,452,781 4.5
====================================================================================================================================
Colombia Banking 1,470,336 Banco de Bogota S.A. 7,261,871 6,131,875 0.9
115,971 Banco Ganadero S.A. (Preferred) (ADR) (1) 2,682,068 2,203,449 0.3
----------- ----------- ----
9,943,939 8,335,324 1.2
----------------------------------------------------------------------------------------------------------------------
Beverages & Tobacco 488,354 La Compania Cervecera Bavaria S.A. 1,797,411 3,018,572 0.4
----------------------------------------------------------------------------------------------------------------------
Financial Services 488,354 Valores Bavaria S.A. 1,033,615 1,600,207 0.2
----------------------------------------------------------------------------------------------------------------------
Merchandising 1,485,966 Gran Cadena de Almacenes Colombianos S.A.
(CADENALCO) 4,043,018 1,427,537 0.2
36,400 Gran Cadena de Almacenes Columbianos S.A.
(CADENALCO) (ADR) (1) 611,250 288,619 0.1
----------- ----------- ----
4,654,268 1,716,156 0.3
----------------------------------------------------------------------------------------------------------------------
Total Long-Term Investments in Colombia 17,429,233 14,670,259 2.1
====================================================================================================================================
Mexico Banking 3,875,557 Grupo Financiero Banamex--Accival, S.A.
de C.V. 'B' (Banacci) 9,304,182 9,757,124 1.4
63,000 Grupo Financiero Banamex--Accival, S.A.
de C.V. 'L' (Banacci) 140,485 135,317 0.0
7,263,204 Grupo Financiero Bancomer, S.A. de C.V. 'B'
(Ordinary) 1,987,808 4,211,294 0.6
----------- ----------- ----
11,432,475 14,103,735 2.0
----------------------------------------------------------------------------------------------------------------------
Beverages 193,800 Coca-Cola Femsa, S.A. de C.V. (Series L) 3,071,254 3,706,425 0.5
240,787 Panamerican Beverages Inc. (Class A) 4,581,872 8,773,676 1.3
----------- ----------- ----
7,653,126 12,480,101 1.8
----------------------------------------------------------------------------------------------------------------------
Beverages & Tobacco 345,960 Fomento Economico Mexicano, S.A. de C.V.
(Femsa) (ADR) (1) 1,060,276 2,609,853 0.3
649,625 Fomento Economico Mexicano, S.A. de C.V.
(Femsa) (Ordinary) 'B' 1,449,545 4,841,689 0.7
----------- ----------- ----
2,509,821 7,451,542 1.0
----------------------------------------------------------------------------------------------------------------------
Broadcast--Media 2,870,000 Grupo Radio Centro, S.A. de C.V. 4,647,848 4,951,761 0.7
64,400 Grupo Radio Centro, S.A. de C.V. (ADR) (1) 905,464 1,002,225 0.1
----------- ----------- ----
5,553,312 5,953,986 0.8
----------------------------------------------------------------------------------------------------------------------
Building Materials 769,700 Cementos Mexicanos, S.A. de C.V. 'B' (Cemex) 3,739,531 3,685,887 0.5
1,410,782 Cementos Mexicanos, S.A. de C.V. 'B' (Cemex)
(ADR) (1) 13,031,782 13,226,081 1.9
----------- ----------- ----
16,771,313 16,911,968 2.4
----------------------------------------------------------------------------------------------------------------------
Chemicals 195,537 Desc, S.A. de C.V. (ADR) (1) 4,167,170 5,695,015 0.8
----------------------------------------------------------------------------------------------------------------------
Construction 769,200 Grupo Tribasa, S.A. de C.V. 'A1' (ADR) (1) 4,828,690 3,990,225 0.6
----------------------------------------------------------------------------------------------------------------------
Diversified 766,268 Alfa, S.A. de C.V. (Class A) 6,379,316 4,361,972 0.6
----------------------------------------------------------------------------------------------------------------------
Financial Services 63,052 Grupo Financiero Bancomer, S.A. de C.V.
(Series L) 22,760 21,905 0.0
----------------------------------------------------------------------------------------------------------------------
Foreign Government US$ 20,440,000 United Mexican States, Global Bonds,
Obligations 11.50% due 5/15/2026 23,312,419 25,115,650 3.6
----------------------------------------------------------------------------------------------------------------------
Health & Personal Care 1,515,980 Kimberly-Clark de Mexico, S.A. de C.V. 'A' 3,994,088 6,885,965 1.0
----------------------------------------------------------------------------------------------------------------------
Merchandising 7,668,387 Cifra, S.A. de C.V. 'C' 9,058,845 13,680,690 2.0
892,988 Cifra, S.A. de C.V. 'V' 1,834,981 1,727,282 0.2
----------- ----------- ----
10,893,826 15,407,972 2.2
----------------------------------------------------------------------------------------------------------------------
Multi-Industry 3,645,179 Grupo Carso, S.A. de C.V. `A1' 22,183,832 22,333,139 3.2
48,979 Grupo Carso, S.A. de C.V. (ADR) (1) 548,854 579,911 0.1
----------- ----------- ----
22,732,686 22,913,050 3.3
----------------------------------------------------------------------------------------------------------------------
Telecommunications 772,171 Grupo Televisa, S.A. de C.V. (GDR) (2) 21,731,549 27,025,985 3.9
726,335 Telefonos de Mexico, S.A. de C.V. (ADR) (1) 36,654,079 36,816,105 5.2
----------- ----------- ----
58,385,628 63,842,090 9.1
----------------------------------------------------------------------------------------------------------------------
Total Long-Term Investments in Mexico 178,636,630 205,135,176 29.2
====================================================================================================================================
Peru Financial Services 293,920 Credicorp Ltd. S.A. 4,748,674 4,739,460 0.7
----------------------------------------------------------------------------------------------------------------------
Food & Household 3,148,325 Consorcio Alimentos Fabril Pacifico S.A. 5,483,960 1,791,366 0.2
Products
----------------------------------------------------------------------------------------------------------------------
Metals--Non-Ferrous 408,900 Compania de Minas Buenaventura S.A. (ADR) (1) 7,052,139 5,520,150 0.8
1,125,917 Minsur S.A. (T Shares) 2,575,220 2,005,990 0.3
----------- ----------- ----
9,627,359 7,526,140 1.1
----------------------------------------------------------------------------------------------------------------------
Total Long-Term Investments in Peru 19,859,993 14,056,966 2.0
====================================================================================================================================
Venezuela Building Materials 359,137 Corporacion Venezolana de Cementos I, S.A.C.A. 307,742 491,177 0.1
771,285 Corporacion Venezolana de Cementos II, S.A.C.A. 559,240 1,060,907 0.1
----------- ----------- ----
866,982 1,552,084 0.2
----------------------------------------------------------------------------------------------------------------------
Food & Household 18,707,438 Mavesa S.A. 1,748,791 2,429,890 0.3
Products
----------------------------------------------------------------------------------------------------------------------
Metal Processing 46,750 International Briquettes Holding, Inc. 610,672 455,813 0.1
----------------------------------------------------------------------------------------------------------------------
Telecommunications 623,927 Compania Anonima Nacional Telefonos de
Venezuela (CANTV) (ADR) (1) 24,973,472 22,110,413 3.1
----------------------------------------------------------------------------------------------------------------------
Textiles 710,561 Sudamtex de Venezuela S.A.C.A. (ADR) (1) 10,150,880 3,197,525 0.5
----------------------------------------------------------------------------------------------------------------------
Utilities 11,764,534 C.A. La Electricidad de Caracas S.A.I.C.A.
--S.A.C.A. 11,999,590 10,802,559 1.5
----------------------------------------------------------------------------------------------------------------------
Total Long-Term Investments in Venezuela 50,350,387 40,548,284 5.7
====================================================================================================================================
Total Long-Term Investments in Latin America 653,836,755 682,184,964 97.0
====================================================================================================================================
</TABLE>
8 & 9
<PAGE>
Merrill Lynch Latin America Fund, Inc., February 28, 1998
CONSOLIDATED SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<TABLE>
<CAPTION>
Percent
of Net
COUNTRY Industries Face Amount Short-Term Investments Cost Value Assets
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
United States Commercial Paper* US$ 2,568,000 General Motors Acceptance Corp., 5.69%
due 3/02/1998 $ 2,567,188 $ 2,567,188 0.4%
10,000,000 Lexington Parker Capital Company LLC,
5.60% due 3/05/1998 9,992,222 9,992,222 1.4
5,750,000 Preferred Receivables Funding Corp.,
5.50% due 3/02/1998 5,748,243 5,748,243 0.8
----------------------------------------------------------------------------------------------------------------------
Total Short-Term Investments 18,307,653 18,307,653 2.6
====================================================================================================================================
Total Investments $672,144,408 700,492,617 99.6
============
Other Assets Less Liabilities 2,515,576 0.4
------------ -----
Net Assets $703,008,193 100.0%
============ =====
====================================================================================================================================
Net Asset Value: Class A--Based on net assets of $75,378,969 and 5,022,914 shares outstanding $ 15.01
=========
Class B--Based on net assets of $476,061,292 and 32,744,244 shares outstanding $ 14.54
=========
Class C--Based on net assets of $33,439,160 and 2,303,957 shares outstanding $ 14.51
=========
Class D--Based on net assets of $118,128,772 and 7,915,445 shares outstanding $ 14.92
=========
====================================================================================================================================
</TABLE>
* Commercial Paper is traded on a discount basis; the interest
rates shown are the discount rates paid at the time of
purchase by the Fund.
** Received through a bonus issue from Companhia de Vale do Rio
Doce S.A. As of February 28, 1998, the bonds have not
commenced trading and the coupon rate has not been determined.
(1) American Depositary Receipts (ADR).
(2) Global Depositary Receipts (GDR).
(3) Each unit represents one preferred share of Uniao de Bancos
Brasileiros S.A. (Unibanco) and one preferred "B" share of
Unibanco Holdings S.A.
PORTFOLIO INFORMATION
As of February 28, 1998
================================================================================
Percent of
Ten Largest Holdings (Equity Investments) Net Assets
Telecomunicacoes Brasileiras S.A.--Telebras* ............................ 7.6%
Telefonos de Mexico, S.A. de C.V. (ADR) ................................. 5.2
Yacimientos Petroliferos Fiscales S.A. (YPF) (ADR) ...................... 4.3
Grupo Televisa, S.A. de C.V. (GDR) ...................................... 3.9
Companhia Cervejaria Brahma S.A. PN (Preferred)* ........................ 3.7
Uniao de Bancos Brasileiros S.A. (Unibanco)* ............................ 3.6
Grupo Carso, S.A. de C.V.* .............................................. 3.3
Compania Anonima Nacional Telefonos
de Venezuela (CANTV) (ADR) ........................................... 3.1
Petroleo Brasileiro S.A. (Preferred) .................................... 3.0
Companhia Energetica de Minas Gerais S.A. (CEMIG)* ...................... 2.9
* Includes combined holdings.
Percent of
Ten Largest Industries (Equity Investments) Net Assets
Telecommunications ..................................................... 25.6%
Banking ................................................................ 11.1
Utilities .............................................................. 10.3
Energy Sources ......................................................... 5.4
Beverages & Tobacco .................................................... 5.1
Multi-Industry ......................................................... 5.0
Oil & Gas Producers .................................................... 4.3
Metals & Steel ......................................................... 4.2
Merchandising .......................................................... 2.7
Building Materials ..................................................... 2.6
EQUITY PORTFOLIO CHANGES
For the Quarter Ended February 28, 1998
================================================================================
Additions
Cifra, S.A. de C.V. 'V'
Companhia Energetica de Sao Paulo S.A.
(CESP) (Preferred)
Companhia Siderurgica de Tubarao S.A.
(Preferred)
International Briquettes Holding, Inc.
Mirgor S.A.C.I.F.I.A. (ADR)
Telecomunicacoes de Minas Gerais S.A.--
TELEMIG (Ordinary)
Telecomunicacoes de Sao Paulo S.A.--
TELESP (Preferred)
Valores Bavaria S.A.
================================================================================
Deletions
Bufete Industrial, S.A. de C.V. (ADR)
Companhia Siderurgica de Tubarao S.A.
'B' (Preferred)
Latas de Aluminio S.A. (GDR)
OFFICERS AND DIRECTORS
Arthur Zeikel, President and Director
Donald Cecil, Director
Edward H. Meyer, Director
Charles C. Reilly, Director
Richard R. West, Director
Edward D. Zinbarg, Director
Terry K. Glenn, Executive Vice President
Norman R. Harvey, Senior Vice President
Grace Pineda, Senior Vice President and Portfolio Manager
Donald C. Burke, Vice President
Gerald M. Richard, Treasurer
Barbara G. Fraser, Secretary
Custodian
Brown Brothers Harriman & Co.
40 Water Street
Boston, MA 02109
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
10 & 11
<PAGE>
Investing in emerging market securities involves a number of risk factors and
special considerations, including restrictions on foreign investments and on
repatriation of capital invested in emerging markets, currency fluctuations, and
potential price volatility and less liquidity of securities traded in emerging
markets. In addition, there may be less publicly available information about the
issuers of securities, and such issuers may not be subject to accounting,
auditing and financial reporting standards and requirements comparable to those
to which US companies are subject. Therefore, the Fund is designed as a
long-term investment for investors capable of assuming the risks of investing in
emerging markets. The Fund should be considered as a vehicle for diversification
and not as a complete investment program. Please refer to the prospectus for
details.
This report is not authorized for use as an offer of sale or a solicitation of
an offer to buy shares of the Fund unless accompanied or preceded by the Fund's
current prospectus. Past performance results shown in this report should not be
considered a representation of future performance. Investment return and
principal value of shares will fluctuate so that shares, when redeemed, may be
worth more or less than their original cost. Statements and other information
herein are as dated and are subject to change.
Merrill Lynch
Latin America
Fund, Inc.
Box 9011
Princeton, NJ
08543-9011 #16140--2/98
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