MERRILL
LYNCH
AMERICAS
INCOME
FUND, INC.
Quarterly Report March 31, 1994
The Fund is leveraged to provide shareholders with a
potentially higher rate of return. However, leveraging
may exaggerate changes in the net asset value of the
Fund's shares and in the yield on the Fund's portfolio.
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 fluctua-
tions, 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 com-
panies 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.
Merrill Lynch
Americas Income Fund, Inc.
Box 9011
Princeton, NJ 08543-9011
<PAGE>
MERRILL LYNCH AMERICAS INCOME FUND, INC.
The Benefits and
Risks of
Leveraging
The Fund is authorized to borrow money from banks in an
amount up to 33 1/3% of the Fund's total assets (including the
amount borrowed), less all liabilities and indebtedness other
than the bank borrowing. The Fund is also authorized to
borrow an additional 5% of its total assets without regard
to this limitation for temporary purposes.
Borrowings by the Fund create an opportunity for greater
total return but, at the same time, increase exposure to
capital risk. For example, leveraging may exaggerate changes
in the net asset value of Fund shares and in the yield on the
Fund's portfolio. Although the principal of such borrowings
will be fixed, the Fund's assets may change in value during
the time the borrowings are outstanding. Borrowing will create
interest expenses for the Fund which can exceed the income
from the assets retained. To the extent the income derived
from securities purchased with borrowed funds exceeds the in-
terest the Fund will have to pay, the Fund's net income will
be greater than if borrowing were not used. Conversely, if
the income from the assets retained with borrowed funds is
not sufficient to cover the cost of borrowing, the net income
of the Fund will be less than if borrowing were not used,
and therefore the amount available for distribution to share-
holders as dividends will be reduced.
Officers and
Directors
Arthur Zeikel, President and Director
Donald Cecil, Director
Edward H. Meyer, Director
Charles C. Reilly, Director
Richard R. West, Director
Terry K. Glenn, Executive Vice President
Joseph T. Monagle, Jr., Senior Vice President
Alex V. Bouzakis, Vice President
Donald C. Burke, Vice President
Paolo H. Valle, Vice President
Gerald M. Richard, Treasurer
Mark B. Goldfus, Secretary
Custodian
Brown Brothers Harriman & Co.
40 Water Street
Boston, Massachusetts 02109
<PAGE>
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
DEAR SHAREHOLDER
Global financial markets reversed the bullish trends experienced
throughout 1993, and the emerging Latin American debt markets were
no exception. A combination of factors led to price declines in
these markets, but the key factor triggering the sell-off was the
monetary policy tightening by the US Federal Reserve Board on Feb-
ruary 4 and March 22. The successive 25 basis point (0.25%) in-
creases in the Federal Funds rate impacted the US bond market as
well as bond markets around the world. The uncertainty over poss-
ible additional US central bank tightening continues to create a
lack of conviction among fixed-income investors.
In addition, heavy selling by large institutional hedge funds into
markets with limited liquidity helped to fuel the crisis. Some an-
alysts have indicated that a number of hedge funds with large
losses on European and Japanese investments were forced to sell
their emerging markets investments to cover these losses. As fixed-
income prices declined, smaller investors also had to liquidate
positions in emerging markets in order to meet margin calls.
The third factor which aggravated the decline in Latin American debt
prices was selling by Japanese banks. With a March 31 fiscal year-
end, the months of February and March usually represent a time when
Japanese institutions take profits in their investment portfolios.
Finally, the amount of unsettling news worldwide contributed to de-
clining prices. In Mexico, the Zapatista rebel movement in the
state of Chiapas, followed by the assassination of Donaldo Colosio,
the leading presidential candidate, exacerbated investor nervous-
ness. In Venezuela, the new government is contending with a fragile
financial system, while in Argentina there are persistent rumors of
the possible resignation of Finance Minister Cavallo, the archi-
tect of the country's successful economic reforms. In Brazil the
political uncertainties initially increased investor concerns,
followed by the International Monetary Fund's (IMF's) failure to
endorse Finance Minister Cardoso's economic program.
<PAGE>
In our opinion, the long-term economic fundamentals of the Latin
American countries remain generally positive. There have been clear
improvements in Mexico and Argentina. Much-needed steps toward eco-
nomic reform are being taken in Brazil and Venezuela, but it remains
to be seen if they are sufficient to solve the problems of these
countries. Therefore, the economies of Brazil and Venezuela are like-
ly to muddle through with visible, but slow, improvements.
The abrupt decline in prices of Latin American debt was the result
of unwinding significant speculative investments in markets with little
liquidity. During the sell-off, emerging markets' debt underperformed
relative to bonds in more developed countries, as reflected in the
significant widening of yield spreads between Latin American debt
and US Treasuries. This widening occurred in fixed-rate as well as
floating-rate instruments. This anomaly suggests that this market sell-
off was not only the result of higher interest rates, but panic sell-
ing on the part of some investors as well.
Investment Activities
During the March quarter we diversified the Fund's holdings outside of
Latin America and invested 11% of total assets in US high-yield securi-
ties. These investments provide attractive current returns and, in some
cases, capital appreciation potential. As the US economy continues to
advance, improved creditworthiness and credit rating upgrades may bene-
fit some of these holdings.
As of March 31, 1994, we had reduced the Fund's leverage from 20.5% to
11.3% of net assets, a shift we deemed appropriate given the volatility
in the financial markets. Additionally, in anticipation of a possible
increase in shareholder redemptions, we raised the Fund's cash position
through the sale of securities with lower current yields. Cash reserves,
which accounted for 9.0% of total assets at quarter-end, were invested
in two-day US dollar-linked Mexican repurchase agreements. The return
on these securities is higher than the Fund's leveraging costs. (For
a complete explanation of leveraging, see page 1 of this report to
shareholders.)
Investment Environment
Mexico
Our long-term investment outlook for Mexico continues to be positive
despite recent bond and currency market turmoil. Following the Colosio
assassination, the ruling PRI party nominated Ernesto Zedillo as its
presidential candidate. At this time, Zedillo seems likely to win the
August election and continue to follow the economic policies of
President Salinas, with whom he has close ties. The major US rating
agencies reaffirmed their ratings of Mexican debt after recent events,
underscoring the strength of the country's long-term prospects. Now
that the North American Free Trade Agreement has been enacted, investment
and economic growth are likely to accelerate. We believe that Mexico
is entering a period of greater economic integration with the United
States and the rest of the world. Mexico possesses the demographics
and natural resources, along with a firmly established trend toward
economic reform, which set the stage for attractive long-term invest-
ment opportunities.
<PAGE>
The recent performance of Mexican capital markets reflects the turbu-
lence that took place in emerging markets worldwide. The 28-day Cetes
rate rose from 10.67% at the end of 1993 to 18.00% by the middle of
April. Over the same period, the one-year Cetes rate rose from 10.45%
to 16.83%. Further increases in interest rates appear likely to help
support the peso, which has devalued to the upper level of its trading
band relative to the US dollar. The peso ended 1993 at 3.105 pesos/
US dollar, and by April 4, 1994 had depreciated to 3.3576 pesos/
US dollar.
The government has continued to stress its commitment to defend the
peso and keep it within the prescribed trading band. In addition,
in an effort to stabilize Mexico's capital markets following the
Colosio assassination, the Mexican central bank obtained a US $6
billion swap facility with the US Treasury. The central bank became
an independent entity as of April 1, which lends further credence to
Mexico's long-term fiscal and economic stability.
The country continues to make progress on the inflation front, which
is reported to be below an annualized 7.5% for the first two months of
1994. Although economic growth was lackluster in 1993, the government
is currently trying to stimulate business activity.
Argentina
Argentina continues to show strong growth and lower inflation in 1994.
At the same time, there are ongoing structural economic reforms and more
market-oriented economic policies. Politically, the constitutional
reforms which will permit President Menem's 1995 reelection bid are on
schedule and likely to pass at the upcoming constitutional convention.
We expect gross domestic product (GDP) and inflation to do well in 1994.
GDP forecasts for the year range from 3.5% to 5.0%, based on expected
strong investment and consumer spending. On the inflation front, for
the 12 months ended March 31, the rate of inflation was only 5.2%.
Wholesale prices declined during this period, and the government is
anticipating deflation in retail prices in the coming months.
The country continues to show a fiscal surplus as tax revenues are
exceeding government projections and continued privatization has
further decreased expenditures. Consistent with Standard & Poor's
Corporation's recent upgrade of the country's debt rating from "stable"
to "positive," Argentina experienced strong capital inflows in 1993.
These inflows continued to easily finance the current account deficit.
Argentina's trade deficit widened in 1993, despite an increase in
exports, primarily because of a large increase in imported capital
goods. Capital goods account for a substantial portion of all imports,
evidence of the strength of the industrial investment taking place.
<PAGE>
Brazil
Despite an accelerating rate of inflation, Brazil's GDP grew at a
5% rate in 1993 with strong domestic demand and exports. Heading into
a two-round presidential election in October and November, the govern-
ment has taken several steps to improve inflation and the budget
deficit, as well as to complete the restructuring of its external debt.
Brazil showed a strong trade surplus in 1993 and growth in inter-
national reserves to US$29 billion.
On the fiscal front, the government's objective is to eliminate the
fiscal imbalance in 1994 through tax increases and spending cuts, and
to minimize inflationary expectations by introducing a new US dollar-
linked inflation index known as URV. The second stage of this plan is
to adopt the URV as Brazil's currency, thus attempting to "dollarize"
the economy and achieve price stability. The plan was not endorsed by
the IMF. Nevertheless, Brazil has obtained a waiver from its inter-
national commercial bank creditors to conclude its Brady-plan re-
structuring. In addition, the country has reportedly purchased the
US Treasury issues that collateralize the new Brady bonds with part
of its large international reserves.
Venezuela
The administration of President Rafael Caldera is demonstrating its
willingness and ability to work with opposition parties to reduce the
country's budget deficit and inflation through tax revenues and aus-
terity measures. These goals are closely linked, since success in in-
flation reduction will depend on control of the budget deficit. At
the same time, it seems that President Caldera will continue most of
the economic reforms begun by his predecessors, and may expand them
to allow foreign investment in previously restricted areas such as
mining and petroleum.
The fiscal deficit, low crude oil prices and the banking system
crisis remained the major problems for the Venezuelan economy. The
prolonged weakness in oil prices will likely reduce Venezuela's
trade surplus in 1994. The government has shown determination in
supporting the banking system, and the crisis seems under control.
At the end of March, estimated international reserves were above
US$10.5 billion, which represents the value of approximately 11
months of imports, one of the highest ratios in Latin America.
Under opposition party Accion Democratica's initiative, an enabling
bill has been approved by congress. The enabling bill will allow the
government to legislate by decree, for a limited period of time, on
specific urgent matters such as tax reform, federal budget, banking
system and public concessions, thus expediting the reduction of the
fiscal deficit.
<PAGE>
Despite near-term difficulties, we believe that Venezuela's economy
will improve its performance by the end of 1994. In our estimation,
the country's Brady and Eurobond obligations are currently trading
below their fundamental values.
In Conclusion
We thank you for your investment in Merrill Lynch Americas Income
Fund, Inc., and we look forward to reviewing our outlook and strategy
with you again in our next report to shareholders.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Paolo Valle)
Paolo Valle
Vice President and Portfolio Manager
April 26, 1994
PERFORMANCE DATA
Aggregate
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Inception (8/27/93) through 3/31/94 -3.60% -6.49%
[FN]
*Maximum sales charge is 3%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Inception (8/27/93) through 3/31/94 -3.97% -6.97%
[FN]
*Maximum contingent deferred sales charge is 3% and is reduced to 0% after
3 years.
**Assuming payment of applicable contingent deferred sales charge.
<PAGE>
<TABLE>
Recent
Performance
Results*
<CAPTION>
Since
Inception 3 Month
3/31/94 12/31/93 8/27/93** % Change % Change
<S> <C> <C> <C> <C> <C>
ML Americas Income Fund Class A Shares $ 9.18 $10.84 $10.00 -8.20% -15.31%
ML Americas Income Fund Class B Shares 9.18 10.84 10.00 -8.20 -15.31
ML Americas Income Fund Class A Shares--Total Return -3.60(1) -13.53(2)
ML Americas Income Fund Class B Shares--Total Return -3.97(3) -13.71(4)
ML Americas Income Fund Class A Shares--Standardized
30-day Yield 9.82%
ML Americas Income Fund Class B Shares--Standardized
30-day Yield 9.58%
<FN>
*Investment results shown for the 3-month and since inception periods are before the
deduction of any sales charges.
**Commencement of Operations.
(1) Percent change includes reinvestment of $0.470 per share ordinary income dividends.
(2) Percent change includes reinvestment of $0.170 per share ordinary income dividends.
(3) Percent change includes reinvestment of $0.441 per share ordinary income dividends.
(4) Percent change includes reinvestment of $0.160 per share ordinary income dividends.
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS
<CAPTION> (in US dollars)
Interest Maturity Percent of
COUNTRY Face Amount Issue Rate Date Value Net Assets
<S> <S> <C> <S> <C> <C> <C> <C>
Argentina Bonds $ 6,000,000 Banco de Credito Argentino (2) 8.50 % 10/29/1998 $ 5,647,500 4.6%
6,000,000 Banco de Galicia y Buenos Aires S.A.
--Yankee (2) 9.00 11/01/2003 5,475,000 4.5
1,000,000 Banco Rio de la Plata S.A. (2) 8.50 7/15/1998 962,500 0.8
6,000,000 Banco Rio de la Plata S.A.--Yankee (2) 8.75 12/15/2003 5,415,000 4.4
4,000,000 Republic of Argentina--Global (1) 8.375 12/20/2003 3,580,000 2.9
3,000,000 Telecom Argentina Stet S.A. (4) 8.375 10/18/2000 2,805,000 2.3
5,000,000 Telefonica de Argentina S.A. (4) 8.375 10/01/2000 4,700,000 3.9
Brady Bonds 15,000,000 Argentina Par Series "L" (1)* 4.25 3/31/2023 7,781,250 6.4
5,000,000 Republic of Argentina FLRB (1)* 5.00 3/31/2005 3,531,250 2.9
Corporate Bonds 2,000,000 Sociedad Commercial del Plata (16) 8.75 12/14/1998 1,927,500 1.6
Total Investments in Argentina
(Cost--$46,326,987) 41,825,000 34.3
<PAGE>
Brazil Bonds 4,000,000 Banco de Estada de Parana (2) 10.00 2/27/1996 3,885,000 3.2
4,000,000 Banco de Estada Sao Paulo
(Banespa) (2) 9.25 10/04/1996 3,910,000 3.2
1,500,000 Banco Real, S.A. (2) 10.00 5/27/1995 1,518,750 1.2
3,000,000 Brazil Exit Bonds (1) 6.00 9/15/2013 1,492,500 1.2
3,000,000 Uniao de Bancos Brasileiros S.A.
(UNIBANCO) (2) 8.50 7/29/1996 2,895,000 2.4
Corporate Bonds 1,000,000 Celulose Nipo-Brasileira S.A.
(CENIBRA) (12) 9.375 12/21/2003 955,000 0.8
1,000,000 Compania Brazileira de Petroleo
Ipiranga (8) 8.625 2/25/2002 950,000 0.8
1,000,000 Klabine Fabricadora Papel (12) 10.00 12/20/2001 930,000 0.8
850,000 Usinas Siderurgicas de Minas
Gerais-Usiminas S.A. (2) 10.00 1/15/1996 838,312 0.7
Total Investments in Brazil
(Cost--$18,291,534) 17,374,562 14.3
Colombia Bonds 2,000,000 Banco de Colombia (2) 7.50 10/21/1998 1,930,000 1.6
Total Investments in Colombia
(Cost--$1,952,500) 1,930,000 1.6
Mexico Bonds 1,000,000 Banco de Atlantico, S.A. (2) 7.875 11/05/1998 933,750 0.8
1,000,000 Grupo Financiero Bancomer, S.A.
de C.V. (2) 8.00 7/07/1998 985,000 0.8
2,000,000 Grupo Simec, S.A. de C.V., guaran-
teed by Grupo Sidek, S.A. (5) 8.875 12/15/1998 1,920,000 1.6
3,500,000 Grupo Situr, S.A. de C.V., guaran-
teed by Grupo Sidek, S.A. (6) 8.75 9/14/1998 3,360,000 2.8
Brady Bonds 10,000,000 United Mexican States Par "A" (1) 6.25 12/31/2019 3,456,250 2.8
40,000,000 United Mexican States Par "B" (1)* 6.25 12/31/2019 13,825,000 11.3
Cetes 10,814,040 Mexican Cetes (1) 12.80++ 10/20/1994 3,018,787 2.5
Corporate Bonds 1,500,000 Banamex Eurobond, S.A. (1) 9.125 4/06/2000 1,466,250 1.2
Repurchase 8,000,000 Banco de Mexico, purchased on
Agreements 3/30/1994 5.756 4/05/1994 8,007,674 6.6
Total Investments in Mexico
(Cost--$39,848,135) 36,972,711 30.4
<PAGE>
United States Corporate Bonds 2,000,000 ADT Operations (3) 9.25 8/01/2003 1,910,000 1.6
1,000,000 Chiquita Brands International,
Inc. (10) 9.125 3/01/2004 930,000 0.8
2,000,000 Flagstar Companies, Inc. (13) 11.375 9/15/2003 1,960,000 1.6
1,000,000 Fort Howard Corporation (12) 9.00 2/01/2006 900,000 0.7
1,000,000 Fresh Del Monte Produce N.V. (10) 10.00 5/01/2003 940,000 0.8
1,000,000 Gulf Canada Resources, Ltd. (15) 9.25 1/15/2004 920,000 0.7
1,000,000 Reliance Group Holdings, Inc. (2) 9.75 11/15/2003 940,000 0.8
2,000,000 Riverwood International
Corporation (12) 11.25 6/15/2002 2,130,000 1.7
2,000,000 Sequa Corporation (9) 9.375 12/15/2003 1,920,000 1.6
500,000 Trump Plaza Funding Inc. (11) 10.875 6/15/2001 467,500 0.4
1,500,000 WestPoint Stevens, Inc. (14) 9.375 12/15/2005 1,413,750 1.2
Total Investments in the United
States (Cost--$15,499,750) 14,431,250 11.9
Venezuela Bonds 1,000,000 Bariven, S.A. (8) 10.625 3/17/2002 965,000 0.8
750,000 Venezolana de Cementos S.A.C.A.
(VENCEMOS) (7) 9.25 11/22/1996 740,625 0.6
Brady Bonds 10,050,000 Republic of Venezuela Par "A" (1) 6.75 3/31/2020 4,950,000 4.1
21,105,000 Republic of Venezuela Par "B" (1) 6.75 3/31/2020 10,395,000 8.5
Total Investments in Venezuela
(Cost--$23,710,205) 17,050,625 14.0
SHORT-TERM
SECURITIES
United States Commercial Paper** 461,000 General Electric Capital Corp. 3.53 4/04/1994 461,000 0.4
Total Investments in Short-Term
Securities (Cost--$461,000) 461,000 0.4
Total Investments (Cost--$146,090,111) 130,045,148 106.9
Liabilities in Excess of Other Assets (8,348,299) (6.9)
------------ ------
Net Assets $121,696,849 100.0%
============ ======
<PAGE>
Net Asset Value: Class A--Based on net assets of $17,459,234 and
1,902,796 shares outstanding $ 9.18
============
Class B--Based on net assets of $104,237,615 and
11,359,663 shares outstanding $ 9.18
============
<FN>
Corresponding industry groups for securities (percent of net assets):
(1) Sovereign Government Obligations-43.8%
(2) Banking--29.0%
(3) Industrial--1.6%
(4) Telecommunications--6.2%
(5) Steel--1.6%
(6) Tourism--2.8%
(7) Cement--0.6%
(8) Oil--1.6%
(9) Capital Goods--1.6%
(10) Food & Beverage--1.6%
(11) Hotels & Casinos--0.4%
(12) Paper--4.0%
(13) Restaurants--1.6%
(14) Textiles--1.2%
(15) Energy--0.7%
(16) Conglomerate-Energy--1.6%
*Security represents collateral in connection with reverse repurchase
agreements.
**Commercial Paper is traded on a discount basis; the interest rate shown is
the discount rate paid at the time of purchase by the Fund.
++The interest rate shown represents the yield-to-maturity on this zero coupon
issue.
</TABLE>
