MERRILL LYNCH
LATIN AMERICA
FUND, INC.
[GRAPHIC OMITTED]
STRATEGIC
Performance
Quarterly Report
February 28, 1999
<PAGE>
MERRILL LYNCH LATIN AMERICA FUND, INC.
Asset Allocation As a Percentage* of Net Assets as of February 28, 1999
[GRAPHIC OMITTED]
A map illustrating the following percentages:
Mexico 35.7%
Panama 0.8%
Venezuela 1.8%
Colombia 3.9%
Peru 3.8%
Brazil 35.1%
Argentina 9.8%
Chile 6.1%
*Total may not equal 100% and does not include short-term securities.
<PAGE>
Merrill Lynch Latin America Fund, Inc., February 28, 1999
DEAR SHAREHOLDER
During the three-month period ended February 28, 1999, total returns for Merrill
Lynch Latin America Fund, Inc.'s Class A, Class B, Class C and Class D Shares
were -15.11%, -15.39%, -15.39% and -15.19%, respectively. (Investment results
shown do not reflect sales charges and would be lower if sales charges were
included. Complete performance information can be found on pages 5 and 6 of this
report to shareholders.) The unmanaged Morgan Stanley Capital International
(MSCI) Latin America Free Index declined 13.46% and the J.P. Morgan Latin Brady
Bond Index declined 6.67% for the same three-month period. (References to
securities markets of all countries in this letter to shareholders correspond to
those countries' market weightings in the MSCI Latin America Free Index.)
Detrimental to relative performance was the Fund's overweighted position in
Brazil, the worst performer in the region, which declined 36.57% (in US dollar
terms) for the quarter. Also contributing to the Fund's underperformance was
stock selection in Mexico and fixed-income instruments.
Investment Overview
In January 1999, the Brazilian currency policy was abandoned and the real was
allowed to float. This was the dominant driver of the region's markets during
the February quarter. A reflationary bias in the US economy was also important,
particularly to Mexico, as were corporate developments in Chile. In US dollar
terms, for the three months ended February 28, 1999, the Brazilian market
declined 36.57%, and the Argentine, Peruvian and Colombian markets declined
12.07%, 15.20% and 12.23%, respectively, for the same three-month period. The
Mexican market, moving independently, rose 13.97%, and the Chilean market
declined a modest 7.96%, also for the three-month period ended February 28,
1999.
When the former Brazilian currency policy linking the real to the US dollar was
introduced in July 1994, it stabilized the currency, eliminated the use of
indexation and thus dispelled inflationary expectations. However, over the
years, the currency became increasingly overvalued as its rate of decline
relative to the US dollar lagged the rise in domestic costs and as the US dollar
became stronger. Investor concerns were quelled by Brazil's massive foreign
exchange reserves of more than $80 billion during those years and the argument
that Brazil had sufficient ammunition to defend its currency.
However, with the onset of the currency crises in Southeast Asia, South Korea
and, particularly, Russia, a change in Brazil's currency policy became
inevitable. These crises amplified the real's over valuation and heightened the
perception of risk in emerging markets. The volume of Brazil's foreign exchange
reserves started to decline as capital left the country and new cash flows from
foreign investors stopped. Unlike the currency devaluations in Asia and Russia,
the real devaluation was widely expected and largely discounted in the prices of
stocks. This explains the relatively small impact the real devaluation had on
other emerging markets. The problem was seen as an isolated, domestic one.
However, the domestic problem in Brazil is a huge one, and Brazil's leaders have
a full agenda. This includes the passage of structural reforms in the context of
shifting politics and a deepening economic recession. Add to that the ongoing
negotiations with the International Monetary Fund, an unstable currency despite
high interest rates, burgeoning domestic public debt, and a likely pick-up in
inflation if the currency remains weak. It is important to note that progress is
being made in two areas that are critical in the short term. One is in
reestablishing credibility among investors. The approval of Arminho Fraga as
central bank president raised expectations, and his clarification of monetary
policy (toward tightening) may bolster confidence. Another is in renegotiating
the debt between the federal, state and municipal governments. The continuation
of these discussions is encouraging, in our opinion.
Outside of Brazil, the debate continues on whether the world is in a
deflationary or reflationary trend. We believe that there are investments in
Latin America that are attractive in either event. These investments have value
to protect them in a global economic downturn and earnings growth if the global
economic cycle is bottoming out. For example, Companhia Brasileira de
Distribuicao Grupo Pao de Acucar SA (CBD) is the dominant supermarket operator
in Brazil's Sao Paolo region, and has been competing with Wal-Mart Stores, Inc.
and Carrefour in Brazil for several years. CBD is benefiting from the economic
turmoil by acquiring weaker competitors at attractive prices and turning around
their operations. When one looks at CBD's operating statistics--margins, growth,
and sales per square meter--it does not look any different from leading
supermarket operators in the United States. Yet, its shares trade at about
one-fourth the valuation of these major retailers. Although short-term earnings
will be affected by the devaluation and the slowdown in consumption, we believe
the attractive valuation and long-term outlook more than compensate for the
risk.
During the February quarter, the Mexican stock market was resilient and less
vulnerable to the Brazil crisis than many strategists had expected. This
relative strength is rooted in expected improvement in economic performance,
particularly in its trade balance. More than 80% of its exports are directed to
the United States, and at the same time, Mexican domestic demand has been
slowing at a more gradual pace than originally anticipated. In addition, the
inflation rate was announced at rates in line or below expectations, which
suggests that if perceptions of emerging market risks improve, interest rates
may decline.
We believe that lower inflation and interest rates should prop up consumer
spending. After robust consumption last year, 1999 could still prove to be a
growth year. January retail sales growth was stronger than anticipated,
indicating that consumer confidence has not yet eroded. Companies with exposure
to the Mexican consumer, such as Cifra, SA de CV, a food retailer, and Fomento
Economico Mexicano, SA de CV, a beverage bottler and distributor, should benefit
from the improved outlook.
One of our favorite stocks in Mexico is Grupo Televisa, SA de CV. Televisa is
the leading television programming producer and broadcaster in Mexico. It
dominates roughly 70% of TV advertising spending and over 50% of total
advertising spending. The company has undergone very positive changes over the
past two years under chief executive officer, Emilio Azcarraga Jean. Mr. Jean
has attracted highly experienced and talented top management, and their efforts
in the areas of cost cutting, programming, sales and marketing are beginning to
translate into growing profitability and market share. We believe that the trend
has a long way to go as the company shifts its focus to restructuring
unprofitable operations that have been a drag on earnings.
Increasing cross-border merger and acquisition activity continues to focus
international investors' attention on value in Latin American equities. The
value has already been recognized by international strategic investors. For
example, two Chilean utilities, Enersis SA and Empresa Nacional de Electricidad
SA (Endesa), were recent acquisition targets by Endesa (a company in Spain) and
Duke Energy Corporation (US), respectively. Both Endesa (Spain) and Duke have
been long-term investors in the region, allowing the companies to gain an
appreciation for the risks inherent in the business. The attractiveness of the
two Chilean utilities partially lies in their high future growth potential,
especially in comparison to the bidders' home markets.
During the February quarter, a more unusual corporate development and one that
illustrates the value was the partial spin off of Carso Global Telecom, SA de
CV's stake in Prodigy, the Internet service provider. Carso Global Telecom is a
Mexican holding company whose primary asset is a controlling stake in Telefonos
de Mexico, SA de CV. Several years ago, Carso Global Telecom acquired a 65%
stake in Prodigy from Sears Roebuck and Co. and International Business Machines
Corporation at very depressed levels. As indicated by the performance of Carso
Global Telecom's stock, the market ignored the company's Internet investment.
Carso Global Telecom's stock commonly traded at a discount to net asset value,
and traded as low as a 25% discount to net asset value during the quarter, with
its Prodigy investment being carried at a book value of $222 million. In
January, Prodigy raised
2 & 3
<PAGE>
Merrill Lynch Latin America Fund, Inc., February 28, 1999
new capital in the public market. At the initial public offering price, Carso
Global Telecom's stake was valued at $460 million. At the current prices, the
company's stake in Prodigy is valued at approximately $1 billion.
In Conclusion
The quarter ended February 28, 1999 proved once again how volatile Latin
American markets can be. We see value throughout the region with security
valuations in Latin America comparing favorably to those elsewhere in the world.
However, we would like to remind shareholders that because of the volatility,
there may be periods of downturns and, therefore, investing in these markets
requires a long-term view.
We thank you for your ongoing interest in Merrill Lynch Latin America Fund,
Inc., and we look forward to reviewing our strategy with you again in our next
report to shareholders.
Sincerely,
/s/ Terry K. Glenn
Terry K. Glenn
President and Director
/s/ Grace Pineda
Grace Pineda
Senior Vice President and
Portfolio Manager
April 6, 1999
================================================================================
After more than 20 years of service, Arthur Zeikel recently retired as Chairman
of Merrill Lynch Asset Management, L.P. (MLAM). Mr. Zeikel served as President
of MLAM from 1977 to 1997 and as Chairman since December 1997. Mr. Zeikel is one
of the country's most respected leaders in asset management and presided over
the growth of Merrill Lynch's asset management business. During his tenure,
client assets under management grew from $300 million to over $500 billion. Mr.
Zeikel will remain on Merrill Lynch Latin America Fund, Inc.'s Board of
Directors. We are pleased to announce that Terry K. Glenn has been elected
President and Director of the Fund. Mr. Glenn has held the position of Executive
Vice President of MLAM since 1983.
Mr. Zeikel's colleagues at MLAM join the Fund's Board of Directors in wishing
him well in his retirement from Merrill Lynch and are pleased that he will
continue as a member of the Fund's Board of Directors.
================================================================================
OFFICERS AND DIRECTORS
Terry K. Glenn, President and Director
Donald Cecil, Director
Roland M. Machold, Director
Edward H. Meyer, Director
Charles C. Reilly, Director
Richard R. West, Director
Arthur Zeikel, Director
Edward D. Zinbarg, Director
Grace Pineda, Senior Vice President and
Portfolio Manager
Donald C. Burke, Vice President and Treasurer
Barbara G. Fraser, Secretary
- --------------------------------------------------------------------------------
Gerald M. Richard, Treasurer and Norman R. Harvey, Senior Vice President of
Merrill Lynch Latin America Fund, Inc. have recently retired. Their colleagues
at Merrill Lynch Asset Management, L.P. join the Fund's Board of Directors in
wishing Mr. Richard and Mr. Harvey well in their retirements.
- --------------------------------------------------------------------------------
Custodian
Brown Brothers Harriman & Co.
40 Water Street
Boston, MA 02109
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
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 main tenance fees. Class
A Shares are available only to eligible investors, as detailed in the
Fund's prospectus. If you were a Class A shareholder prior to October 21,
1994, your Class A Shares were redesignated to Class D Shares on October
21, 1994. However, in the case of certain eligible investors, the shares
were simultaneously exchanged for Class A Shares.
o Class B Shares are subject to a maximum contingent deferred sales charge
of 4% if redeemed during the first year, decreasing 1% each year
thereafter to 0% after the fourth year. In addition, Class B Shares are
subject to a distribution fee of 0.75% and an account maintenance fee of
0.25%. These shares automatically convert to Class D Shares after
approximately 8 years. (There is no initial sales charge for automatic
share conversions.)
o Class C Shares are subject to a distribution fee of 0.75% and an account
maintenance fee of 0.25%. In addition, Class C Shares are subject to a 1%
contingent deferred sales charge if redeemed within one year of purchase.
o Class D Shares incur a maximum initial sales charge of 5.25% and an
account maintenance fee of 0.25% (but no distribution fee).
None of the past results shown should be considered a representation of
future performance. Figures shown in the "Recent Performance Results" and
"Average Annual Total Return" tables assume reinvestment of all dividends
and capital gains distributions at net asset value on the ex-dividend
date. Investment return and principal value of shares will fluctuate so
that shares, when redeemed, may be worth more or less than their original
cost. Dividends paid to each class of shares will vary because of the
different levels of account maintenance, distribution and transfer agency
fees applicable to each class, which are deducted from the income
available to be paid to shareholders.
Recent Performance Results*
<TABLE>
<CAPTION>
12 Month 3 Month Since Inception
Total Return Total Return Total Return
====================================================================================================
<S> <C> <C> <C>
ML Latin America Fund, Inc. Class A Shares -39.99% -15.11% -47.25%
- ----------------------------------------------------------------------------------------------------
ML Latin America Fund, Inc. Class B Shares -40.65 -15.39 - 5.48
- ----------------------------------------------------------------------------------------------------
ML Latin America Fund, Inc. Class C Shares -40.64 -15.39 -49.65
- ----------------------------------------------------------------------------------------------------
ML Latin America Fund, Inc. Class D Shares -40.14 -15.19 + 0.20
====================================================================================================
</TABLE>
* Investment results shown do not reflect sales charges; results shown would
be lower if a sales charge was included. Total investment returns are
based on changes in net asset values for the periods shown, and assume
reinvestment of all dividends and capital gains distributions at net asset
value on the ex-dividend date. The Fund's since inception periods are
Class A & Class C Shares, from 10/21/94 to 2/28/99 and Class B & Class D
Shares, from 9/27/91 to 2/28/99.
4 & 5
<PAGE>
Merrill Lynch Latin America Fund, Inc., February 28, 1999
PERFORMANCE DATA (concluded)
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
================================================================================
Class A Shares*
================================================================================
Year Ended 12/31/98 -38.65% -41.88%
- --------------------------------------------------------------------------------
Inception (10/21/94) through 12/31/98 -12.57 -13.69
- --------------------------------------------------------------------------------
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
================================================================================
% Return % Return
Without CDSC With CDSC**
================================================================================
Class B Shares*
================================================================================
Year Ended 12/31/98 -39.26% -41.60%
- --------------------------------------------------------------------------------
Five Years Ended 12/31/98 - 9.90 - 9.90
- --------------------------------------------------------------------------------
Inception (9/27/91) through 12/31/98 + 0.31 + 0.31
- --------------------------------------------------------------------------------
* 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 12/31/98 -39.30% -39.89%
- --------------------------------------------------------------------------------
Inception (10/21/94) through 12/31/98 -13.49 -13.49
- --------------------------------------------------------------------------------
* 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 12/31/98 -38.78% -42.00%
- --------------------------------------------------------------------------------
Five Years Ended 12/31/98 - 9.18 -10.15
- --------------------------------------------------------------------------------
Inception (9/27/91) through 12/31/98 + 1.10 + 0.35
- --------------------------------------------------------------------------------
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
CONSOLIDATED SCHEDULE OF INVESTMENTS (in US dollars)
<TABLE>
<CAPTION>
Shares Held/ Percent of
COUNTRY Industries Face Amount Long-Term Investments Cost Value Net Assets
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Argentina Banking 73,665 Banco de Galicia y Buenos Aires SA (ADR)* $ 1,890,677 $ 925,417 0.5%
----------------------------------------------------------------------------------------------------------------------
Beverages 400,749 Quilmes Industrial SA (Quinsa) (ADR)* 4,630,821 3,456,460 1.8
----------------------------------------------------------------------------------------------------------------------
Merchandising 547,144 Grimoldi SA 'B' 3,174,556 738,925 0.4
----------------------------------------------------------------------------------------------------------------------
Oil & Gas 314,078 YPF Sociedad Anonima (ADR)* 9,413,978 9,108,262 4.8
Producers
----------------------------------------------------------------------------------------------------------------------
Real Estate 197,329 IRSA Inversiones y Representaciones SA 'B' 521,356 459,951 0.3
76,507 IRSA Inversiones y Representaciones SA (GDR)** 1,782,812 1,774,006 0.9
------------ ------------ -----
2,304,168 2,233,957 1.2
----------------------------------------------------------------------------------------------------------------------
Telecommunications 22,918 Telefonica de Argentina SA (ADR)* 699,918 670,351 0.3
525,000 Telefonica de Argentina SA 'B' 1,497,352 1,530,957 0.8
------------ ------------ -----
2,197,270 2,201,308 1.1
----------------------------------------------------------------------------------------------------------------------
Total Long-Term Investments in Argentina 23,611,470 18,664,329 9.8
====================================================================================================================================
Brazil Banking 102,599,592 Banco Bradesco SA (Preferred) 763,381 405,442 0.2
2,980,655 Banco Itau SA (Preferred) 1,764,001 1,029,550 0.6
203,020 Uniao de Bancos Brasileiros SA (Unibanco)
(GDR)** 5,800,521 2,740,770 1.4
15,000,000 Uniao de Bancos Brasileiros SA (Unibanco)
(Units) (b) 1,198,257 394,928 0.2
------------ ------------ -----
9,526,160 4,570,690 2.4
----------------------------------------------------------------------------------------------------------------------
Beverages & 9,300,356 Companhia Cervejaria Brahma SA (Preferred) 6,269,632 3,459,553 1.8
Tobacco
----------------------------------------------------------------------------------------------------------------------
Diversified 466,671 Souza Cruz SA 3,408,615 2,930,784 1.5
----------------------------------------------------------------------------------------------------------------------
Energy Sources 554,407 Companhia Paranaense de Energia SA (Copel)
(ADR)* 9,749,649 2,494,832 1.3
16,325,244 Petroleo Brasileiro SA--Petrobras (Preferred) 4,302,350 1,270,609 0.7
------------ ------------ -----
14,051,999 3,765,441 2.0
----------------------------------------------------------------------------------------------------------------------
Foreign Republic of Brazil:
Government US$ 1,884,000 10.125% due 5/15/2027 1,632,015 1,196,340 0.6
Obligations US$ 11,434,690 'C', 6.72% due 4/15/2014 (a)(d)(e) 6,641,103 6,474,893 3.4
------------ ------------ -----
8,273,118 7,671,233 4.0
----------------------------------------------------------------------------------------------------------------------
Forest Products 233,248,558 Votorantim Celulose e Papel SA (Preferred) 6,424,396 2,647,991 1.4
----------------------------------------------------------------------------------------------------------------------
Machinery & 9,098,000 Weg SA (Preferred) 5,446,083 3,164,522 1.7
Engineering
----------------------------------------------------------------------------------------------------------------------
Metals & Steel 306,895,000 Companhia Siderurgica de Tubarao SA (Preferred) 4,977,258 1,037,809 0.6
949 Companhia Siderurgica Nacional SA 23 8 0.0
BRL 1,099,391 Companhia Vale do Rio Doce SA,
0% due 12/31/2049 (c) 0 0 0.0
529,148 Companhia Vale do Rio Doce SA 'A' (Preferred) 9,876,234 6,659,085 3.5
------------ ------------ -----
14,853,515 7,696,902 4.1
----------------------------------------------------------------------------------------------------------------------
Retail 356,690 Companhia Brasileira de Distribuicao Grupo Pao
de Acucar SA (ADR)* 5,532,850 3,990,469 2.1
----------------------------------------------------------------------------------------------------------------------
Telecommunications 152,005,637 Embratel Participacoes SA 2,372,234 1,012,637 0.5
149,205,637 Tele Celular Sul Participacoes SA 294,154 143,439 0.1
149,205,637 Tele Centro Oeste Celular Participacoes SA 126,486 99,470 0.1
178,700 Tele Centro Oeste Celular Participacoes SA (ADR)* 604,435 469,088 0.2
149,205,637 Tele Centro Sul Participacoes SA 1,767,868 558,620 0.3
149,205,637 Tele Leste Celular Participacoes SA 91,188 50,456 0.0
15,200 Tele Leste Celular Participacoes SA (ADR)* 421,951 318,250 0.2
149,205,637 Tele Nordeste Celular Participacoes SA 132,369 93,704 0.1
23,800 Tele Nordeste Celular Participacoes SA (ADR)* 421,629 362,950 0.2
149,205,637 Tele Norte Celular Participacoes SA 73,539 57,664 0.0
33,400 Tele Norte Celular Participacoes SA (ADR)* 620,722 812,037 0.4
151,905,637 Tele Norte Leste Participacoes SA 2,074,966 741,182 0.4
114,660 Tele Norte Leste Participacoes SA (ADR)* 1,258,267 1,146,600 0.6
149,205,637 Tele Sudeste Celular Participacoes SA 588,309 263,092 0.1
149,205,637 Telecomunicacoes Brasileiras SA--Telebras 29,415 15,858 0.0
47,995 Telecomunicacoes Brasileiras SA--Telebras
(Preferred Block) (ADR)* 3,793,525 3,098,677 1.6
92,960,000 Telecomunicacoes Brasileiras SA--Telebras
(Receipts) 5,146,359 3,166,029 1.7
9,845,775 Telecomunicacoes de Minas Gerais SA--Telemig 837,551 90,847 0.1
149,205,637 Telemig Celular Participacoes SA 294,154 108,120 0.1
3,200 Telemig Celular Participacoes SA (ADR)* 83,992 59,200 0.0
9,845,775 Telemig Celular SA 343,357 65,686 0.0
</TABLE>
6 & 7
<PAGE>
Merrill Lynch Latin America Fund, Inc., February 28, 1999
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<TABLE>
<CAPTION>
Shares Held/ Percent of
COUNTRY Industries Face Amount Long-Term Investments Cost Value Net Assets
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Brazil Telecommunications 149,205,637 Telesp Celular Participacoes SA $1,176,618 $ 633,583 0.3%
(concluded) (concluded) 152,005,637 Telesp Participacoes SA 3,997,614 1,329,131 0.7
------------ ------------ -----
26,550,702 14,696,320 7.7
----------------------------------------------------------------------------------------------------------------------
Textiles & Apparel 21,051,686 Companhia de Tecidos Norte de Minas--Coteminas
(Preferred) 8,532,545 1,423,786 0.8
21,491,685 Empresa Nasional de Comercio SA 6,971 16,612 0.0
------------ ------------ -----
8,539,516 1,440,398 0.8
----------------------------------------------------------------------------------------------------------------------
Utilities 1,122,012 Centrais Eletricas de Santa Catarina SA--
CELESC 'B' (Preferred) 591,246 287,278 0.2
74,899 Centrais Eletricas de Santa Catarina SA--
CELESC (GDR)** 5,986,518 1,985,243 1.0
29,288 Companhia Energetica de Minas Gerais SA--
CEMIG (ADR)* 536,560 376,857 0.2
72,502 Companhia Energetica de Minas Gerais SA--
CEMIG (ADR)* 1,416,102 932,905 0.5
213,720,264 Companhia Energetica de Minas Gerais SA--
CEMIG (Preferred) 7,894,751 2,767,006 1.5
163,811 Companhia Paulista de Forca e Luz SA (Rights) 14,058 4,748 0.0
295,600 Globex Utilidades SA (Preferred) 5,080,471 785,411 0.4
------------ ------------ -----
21,519,706 7,139,448 3.8
----------------------------------------------------------------------------------------------------------------------
Utilities-- 1,196,500,000 Companhia Energetica do Ceara-Coelce 'A'
Electric (Preferred) 4,959,310 1,734,058 0.9
57,400 Espirito Santo Centrais Eletricas SA--Escelsa 10,006,434 1,719,227 0.9
------------ ------------ -----
14,965,744 3,453,285 1.8
----------------------------------------------------------------------------------------------------------------------
Total Long-Term Investments in Brazil 145,362,036 66,627,036 35.1
====================================================================================================================================
Chile Telecommunications 298,615 Compania de Telecomunicaciones de Chile
SA (ADR)* 7,633,546 6,606,857 3.5
----------------------------------------------------------------------------------------------------------------------
Utilities 75,000 Chilectra SA (ADR)* 1,263,750 1,479,022 0.8
3,724,465 Empresa Nacional de Electricidad SA (Endesa) 2,032,168 1,559,597 0.8
2,057,425 Enersis SA 930,264 1,005,123 0.5
41,442 Enersis SA (ADR)* 1,011,167 1,010,149 0.5
------------ ------------ -----
5,237,349 5,053,891 2.6
----------------------------------------------------------------------------------------------------------------------
Total Long-Term Investments in Chile 12,870,895 11,660,748 6.1
====================================================================================================================================
Colombia Banking 1,024,158 Banco de Bogota 4,800,815 2,943,923 1.6
83,802 Banco Ganadero SA (Preferred) (ADR)* 1,884,467 754,218 0.4
------------ ------------ -----
6,685,282 3,698,141 2.0
----------------------------------------------------------------------------------------------------------------------
Beverages & 488,354 Bavaria SA 1,797,411 2,027,660 1.1
Tobacco
----------------------------------------------------------------------------------------------------------------------
Financial Services 488,354 Valores Bavaria SA 1,033,615 561,506 0.3
----------------------------------------------------------------------------------------------------------------------
Merchandising 540,808 Almacenes Exito SA 4,043,019 1,019,089 0.5
36,400 Cadenalco SA (ADR)* 611,250 77,350 0.0
------------ ------------ -----
4,654,269 1,096,439 0.5
----------------------------------------------------------------------------------------------------------------------
Total Long-Term Investments in Colombia 14,170,577 7,383,746 3.9
====================================================================================================================================
Mexico Banking 3,411,420 Grupo Financiero Banamex--Accival, SA de CV
(Banacci) 'B' 8,067,320 5,234,617 2.8
63,000 Grupo Financiero Banamex--Accival, SA de CV
(Banacci) 'L' 140,485 86,534 0.0
------------ ------------ -----
8,207,805 5,321,151 2.8
----------------------------------------------------------------------------------------------------------------------
Beverages 139,501 Panamerican Beverages, Inc. 'A'
(US Registered Shares) 2,950,050 2,205,860 1.2
----------------------------------------------------------------------------------------------------------------------
Beverages & 202,133 Fomento Economico Mexicano, SA de CV (ADR)* 2,620,272 5,318,625 2.7
Tobacco
----------------------------------------------------------------------------------------------------------------------
Building 29,019 Cemex, SA de CV (ADR)* 223,537 164,990 0.1
Materials 410,030 Cemex, SA de CV 'B' 2,090,049 1,261,631 0.7
963,069 Cemex, SA de CV 'B' (ADR)* 8,970,858 5,910,932 3.1
28,491 Cemex, SA de CV--CPO 106,996 82,365 0.0
------------ ------------ -----
11,391,440 7,419,918 3.9
----------------------------------------------------------------------------------------------------------------------
Chemicals 179,483 Desc, SA de CV (ADR)* 3,823,110 3,443,830 1.8
----------------------------------------------------------------------------------------------------------------------
Construction 99,300 Grupo Tribasa, SA de CV (ADR)* 657,819 136,537 0.1
----------------------------------------------------------------------------------------------------------------------
Diversified 766,268 Alfa, SA de CV 'A' 6,379,317 1,887,739 1.0
----------------------------------------------------------------------------------------------------------------------
Foreign US$ 2,862,000 United Mexican States, 11.50% due 5/15/2026 3,191,771 2,997,945 1.6
Government
Obligations
----------------------------------------------------------------------------------------------------------------------
Health & 957,412 Kimberly-Clark de Mexico, SA de CV 'A' 2,812,265 2,960,324 1.6
Personal Care
----------------------------------------------------------------------------------------------------------------------
Merchandising 4,982,299 Cifra, SA de CV 'C' 5,875,685 6,312,415 3.3
----------------------------------------------------------------------------------------------------------------------
Multi-Industry 2,051,554 Grupo Carso, SA de CV 'A1' 9,666,065 6,828,199 3.6
41,728 Grupo Carso, SA de CV (ADR)* 404,518 278,747 0.1
------------ ------------ -----
10,070,583 7,106,946 3.7
----------------------------------------------------------------------------------------------------------------------
Steel 1,506,003 Hylsamex SA 6,844,398 2,044,348 1.1
----------------------------------------------------------------------------------------------------------------------
Telecommunications 172,000 Carso Global Telecom, SA de CV (ADR)* 1,134,134 1,472,062 0.8
268,997 Grupo Televisa, SA de CV (GDR)** 5,647,401 7,565,541 4.0
202,882 Telefonos de Mexico, SA de CV (ADR)* 9,914,660 11,602,314 6.1
------------ ------------ -----
16,696,195 20,639,917 10.9
----------------------------------------------------------------------------------------------------------------------
Total Long-Term Investments in Mexico 81,520,710 67,795,555 35.7
====================================================================================================================================
Panama Banking 70,876 Banco Latinoamericano de Exportaciones SA 'E' 1,209,098 1,607,999 0.8
----------------------------------------------------------------------------------------------------------------------
Total Long-Term Investments in Panama 1,209,098 1,607,999 0.8
====================================================================================================================================
Peru Financial 202,842 Credicorp Limited SA 3,133,272 1,787,545 0.9
Services
----------------------------------------------------------------------------------------------------------------------
Food & Household 6,996,882 Alicorp SA 5,483,960 1,142,348 0.6
Products
----------------------------------------------------------------------------------------------------------------------
Metals-- 176,685 Compania de Minas Buenaventura SA (ADR)* 3,269,570 2,374,205 1.3
Non-Ferrous 1,173,498 Minsur SA 2,575,220 1,984,341 1.0
------------ ------------ -----
5,844,790 4,358,546 2.3
----------------------------------------------------------------------------------------------------------------------
Total Long-Term Investments in Peru 14,462,022 7,288,439 3.8
====================================================================================================================================
</TABLE>
8 & 9
<PAGE>
Merrill Lynch Latin America Fund, Inc., February 28, 1999
CONSOLIDATED SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<TABLE>
<CAPTION>
Shares Held/ Percent of
COUNTRY Industries Face Amount Long-Term Investments Cost Value Net Assets
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Venezuela Building Materials 1,156,927 Corporacion Venezolana de Cementos I, SACA $ 505,161 $ 473,655 0.2%
764,789 Corporacion Venezolana de Cementos II, SACA 361,820 319,772 0.2
------------ ------------ -----
866,981 793,427 0.4
----------------------------------------------------------------------------------------------------------------------
Food & Household 28,061,157 Mavesa SA 1,748,791 1,503,276 0.8
Products
----------------------------------------------------------------------------------------------------------------------
Metal Processing 46,750 International Briquettes Holding, Inc. 610,672 210,375 0.1
----------------------------------------------------------------------------------------------------------------------
Textiles 765,505 Sudamtex de Venezuela (ADR)* 10,150,880 892,579 0.5
----------------------------------------------------------------------------------------------------------------------
Total Long-Term Investments in Venezuela 13,377,324 3,399,657 1.8
====================================================================================================================================
Total Long-Term Investments 306,584,132 184,427,509 97.0
====================================================================================================================================
<CAPTION>
Face Amount Short-Term Investments
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
United Commercial US$ 1,104,000 General Motors Acceptance Corp.,
States Paper*** 4.88% due 3/01/1999 1,103,701 1,103,701 0.6
====================================================================================================================================
Total Investments in Short-Term Investments 1,103,701 1,103,701 0.6
====================================================================================================================================
Total Investments $307,687,833 185,531,210 97.6
============
Other Assets Less Liabilities 4,485,220 2.4
------------ -----
Net Assets $190,016,430 100.0%
============ =====
====================================================================================================================================
Net Asset Value: Class A--Based on net assets of $20,099,663 and 2,365,761 shares
outstanding $ 8.50
============
Class B--Based on net assets of $127,186,186 and 15,286,004 shares
outstanding $ 8.32
============
Class C--Based on net assets of $7,877,236 and 946,465 shares
outstanding $ 8.32
============
Class D--Based on net assets of $34,853,345 and 4,114,586 shares
outstanding $ 8.47
============
====================================================================================================================================
</TABLE>
* American Depositary Receipts (ADR).
** Global Depositary Receipts (GDR).
*** Commercial Paper is traded on a discount basis; the interest rate
shown reflects the discount rate paid at the time of purchase by the
Fund.
(a) Represents a pay-in-kind security which may pay interest/dividends
in additional face amount/shares.
(b) Each unit represents one preferred share of Uniao de Bancos
Brasileiros SA (Unibanco) and one preferred share of Unibanco
Holdings SA.
(c) Received through a bonus issue from Companhia Vale do Rio Doce SA.
As of February 28, 1999, the bonds have not commenced trading and
the coupon rate has not been determined.
(d) Represents a Brady Bond. Brady Bonds are securities which have been
issued to refinance commercial bank loans and other debt. The risk
associated with these instruments is the amount of any
uncollateralized principal or interest payments since there is a
high default rate of commercial bank loans by countries issuing
these securities.
(e) Floating rate note.
PORTFOLIO INFORMATION
As of February 28, 1999
Percent of
Ten Largest Holdings (Equity Investments) Net Assets
Telefonos de Mexico, SA de CV (ADR) ................................. 6.1%
YPF Sociedad Anonima (ADR) .......................................... 4.8
Grupo Televisa, SA de CV (GDR) ...................................... 4.0
Cemex, SA de CV * ................................................... 3.9
Grupo Carso, SA de CV* .............................................. 3.7
Companhia Vale do Rio Doce SA 'A' (Preferred) ....................... 3.5
Compania de Telecomunicaciones de Chile SA (ADR) .................... 3.5
Cifra, SA de CV 'C' ................................................. 3.3
Telecomunicacoes Brasileiras SA--Telebras* .......................... 3.3
Grupo Financiero Banamex--Accival, SA de CV
(Banacci)* ........................................................ 2.8
* Includes combined holdings.
Percent of
Ten Largest Industries (Equity Investments) Net Assets
Telecommunications .................................................. 23.2%
Banking ............................................................. 8.5
Utilities ........................................................... 6.4
Beverages & Tobacco ................................................. 5.6
Oil & Gas Producers ................................................. 4.8
Building Materials .................................................. 4.3
Merchandising ....................................................... 4.2
Metals & Steel ...................................................... 4.1
Multi-Industry ...................................................... 3.7
Beverages ........................................................... 3.0
EQUITY PORTFOLIO CHANGES
For the Quarter Ended February 28, 1999
Additions
Banco Latinoamericano de
Exportaciones SA 'E'
Carso Global Telecom, SA de CV (ADR)
Tele Norte Leste Participacoes SA (ADR)
Deletions
Companhia Cervejaria Brahma SA PN
(Preferred) (ADR)
Companhia Energetica de Sao Paulo SA
(CESP) (Preferred)
Grupo Radio Centro, SA de CV
Grupo Radio Centro, SA de CV (ADR)
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--2/99
[LOGO] Printed on post-consumer recycled paper
