MERRILL
LYNCH
AMERICAS
INCOME
FUND, INC.
Quarterly Report September 30, 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 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.
<PAGE>
Merrill Lynch
Americas Income Fund, Inc.
Box 9011
Princeton, NJ 08543-9011
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
interest 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 shareholders as dividends will be reduced.
<PAGE>
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
Transfer Agent
Financial Data Services, Inc.
Transfer Agency Mutual Fund Operation
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
DEAR SHAREHOLDER
Investment Activities
During the quarter ended September 30, 1994 our most significant
investment decision for Merrill Lynch Americas Income Fund, Inc. was
to increase the allocation in Brazilian Brady bonds from 6.8% of
total assets to 24.6%. We also reduced our allocation in Mexican
Brady bonds to 11.8% from 13.8%, and eliminated our position in
Argentine Brady bonds from 9.4% of total assets. In addition, we
reduced our Venezuelan Brady bonds allocation to 7.1% from 9.5%.
During the three-month period ended September 30, 1994, the
allocation to the US high-yield bond market, as a percent of total
assets, declined to 8.4% from 9.8%. This quarter this market
underperformed the emerging bond markets. Additionally, the level of
cash reserves was increased to 8.4% of total assets.
Argentine Investment Environment
Argentina's positive fundamentals are based on solid economic growth
and low inflation. The country and investors are increasingly
focused on the May 1995 presidential elections. As a result,
economic policy is taking backstage to politics.
<PAGE>
Despite strong growth in the first half of 1994 of 8%, some signs of
weakness recently surfaced in industrial production, loan demand and
value-added tax collections. The fiscal accounts deteriorated but
are still almost balanced because of strong fiscal surplus in the
first half of 1994. The 1994 deficit is mainly the result of an
increase in capital expenditures, lower tax revenues caused by the
privatization of the pension fund system, and fiscal stimulus
consisting of export and payroll tax breaks. However, the main
concern is the 1995 budget, which is expected to experience higher
expenditures in such areas as the public education, foreign debt
service payments, and social security outlays. In response to all
this, the government announced a strategy to raise revenues and
reduce expenses through measures such as an attack on tax evasion,
more privatizations and a reduction in federal expenses. This task
appears difficult to achieve because of elections in May 1995.
Exports are now growing at a healthy pace resulting in a lower trade
deficit, easing concerns evident earlier in 1994. The prospects for
the trade balance have improved and should increasingly benefit from
the potential demand coming from Brazil because of the success of
the Real plan, and from the Mercosur trade agreement starting in
1995. Foreign reserves are estimated at $15 billion.
Brazilian Investment Environment
Presidential front-runner Cardoso pushed forward in the polls. The
poll released on September 25, 1994 showed Cardoso with a 47 to 22
lead over his closest rival Luiz Inacio da Silva (Lula) and a nine-
point lead over all his opponents. After the close of the September
quarter, it was announced that Cardoso won a first-round victory, as
the polls indicated.
<PAGE>
The Real economic plan has proven to be a success so far and
continues to meet general expectations. August inflation came in at
1.85% and indications are that September inflation will be below
1.0%. However, inflationary pressures are building as a result of
increased consumption and wage pressures. The administration has
managed these pressures by maintaining high domestic interest rates
and tough wage negotiations, but these are short-term measures.
Inflation will continue to be a concern until structural reforms can
be put in place by the new president. During his campaign, Cardoso
indicated that he would propose critical fiscal and structural
reforms, most of which would require constitutional reform.
These reforms are critical as pressures on the 1995 fiscal budget
are already evident. Another source of concern is the strong
currency. The current strong exchange rate policy is unsustainable
over the long term, since pressures will surface after the elections
from the private sector, primarily exporters. Finally, Brazil state
banks are facing difficult times under a low-inflation environment.
The government is expected to continue assisting the state banks.
However, a reform will be required from the new government. Cardoso
needs to negotiate and build coalitions to support his agenda for
change. With an early election victory, he will have more time and a
stronger mandate.
Mexican Investment Environment
The successful conclusion of the Mexican Presidential election
marked the removal of a major uncertainty hanging over the financial
markets. President-elect Ernesto Zedillo is expected to maintain the
bulk of President Salina's economic policies which should continue
to strengthen Mexico's economic profile. This trend was also
confirmed with renewal of the Pacto, which stressed the objectives
of reducing inflation to US levels, unchanged foreign exchange rate
policy, and emphasis on improving productivity.
Recent economic indicators suggest the Mexican economy is emerging
from recession with low inflation and a federal budget which remains
in balance. Inflation for 1994 is estimated at below 6.7%. While
first-half 1994 imports and exports rose 18.9% and 16.6%, respec-
tively, the government has also indicated that it expects the
federal budget to be in balance for the year.
The major economic test for Mexico in the months ahead will be
attracting capital to finance its large trade deficit which reached
$8.86 billion in the first half of 1994. Despite a 25% increase in
manufactured exports over 1993, the trade gap has widened as imports
are driven by the growing economy and the need to modernize Mexico's
industrial base. We believe Mexico will be able to attract the
necessary capital, although the price will likely be relatively high
local interest rates.
<PAGE>
On September 29, 1994 Francisco Ruiz, the Secretary General of the
ruling PRI political party, was assassinated. Many theories
explaining his assassination have emerged. Whatever the motivation,
we believe that the political events of 1994 occurred because of
dramatic political changes in Mexico. Unfortunately, the change of
entrenched political structures in Mexico come with high cost to the
Mexican society. The government under domestic and international
pressures proposed and implemented reforms in the electoral laws,
permitting the opposition to begin to share in the political
decision-making process. We expect continued decisive intervention
by the Mexican government in these areas, however, the assassination
of Mr. Ruiz will probably slow down the promised process of internal
reform in the PRI. The strong economic fundamentals remain in place
and therefore, at this time, our outlook remains positive.
Venezuelan Investment
Environment
The long-awaited economic plan, prepared by Planning Minister
Corrales, was released on September 12, 1994 by Finance Minister
Sosa and, as anticipated, fell short of market expectations. A
mixture of market-oriented and populist policies, the plan
identifies the origin of the Venezuelan crisis and sets economic
targets for 1994 and for 1995. They include reduction of inflation
to 25% in 1995, increased tax collection, the privatization of state-
owned companies and the opening of the energy sector to foreign
investment. This plan also assesses a major role for the state in
the economy, such as setting price and exchange rate controls.
The plan is incomplete as a number of important fiscal measures are
deferred, such as the reduction in federal expenses and the reform
of the severance benefit system. According to the plan, the
adjustment of domestic fuel prices will be part of a further plan
involving public transportation subsidies and the conversion of the
buses from gasoline to natural gas combustion.
The Foreign Exchange Commission is working to make controls more
flexible to allow for the payment of the private commercial debt.
August monthly inflation was down to 5.2% from a high of 9.0% in
June. International oil prices are expected to remain stable, and
international reserves now total over US $11 billion. In our
estimation, Venezuela's Brady bonds and Eurobonds are trading below
their fundamental value based on the country's ability and
willingness to service its foreign debt.
<PAGE>
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Paolo Valle)
Paolo Valle
Vice President and Portfolio Manager
October 28, 1994
PERFORMANCE DATA
<TABLE>
Performance
Summary--
Class A Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
8/27/93--12/31/93 $10.00 $10.84 -- $0.300 +11.49%
1/1/94--9/30/94 10.84 9.18 -- 0.570 - 9.81
------
Total $0.870
Cumulative total return as of 9/30/94: + 0.55%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the ex-dividend date, and do
not include sales charge; results would be lower if sales charge
was included.
</TABLE>
<PAGE>
<TABLE>
Performance
Summary--
Class B Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
8/27/93--12/31/93 $10.00 $10.84 -- $0.281 +11.30%
1/1/94--9/30/94 10.84 9.18 -- 0.535 -10.15
------
Total $0.816
Cumulative total return as of 9/30/94: 0.00%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the ex-dividend date, and
do not reflect the deduction of any sales charge; results would
be lower if sales charge was deducted.
</TABLE>
<TABLE>
Recent
Performance
Results
<CAPTION>
12 Month 3 Month
9/30/94 6/30/94 9/30/93 % Change % Change
<S> <C> <C> <C> <C> <C>
ML Americas Income Fund Class A Shares* $9.18 $8.81 $9.99 -8.11% +4.20%
ML Americas Income Fund Class B Shares* 9.18 8.81 9.99 -8.11 +4.20
ML Americas Income Fund Class A Shares--Total Return* +0.08(1) +6.53(2)
ML Americas Income Fund Class B Shares--Total Return* -0.33(3) +6.39(4)
ML Americas Income Fund Class A Shares--Standardized 30-day Yield 10.64%
ML Americas Income Fund Class B Shares--Standardized 30-day Yield 10.40%
<FN>
*Investment results shown do not reflect sales charges; results shown would be lower
if a sales charge was included.
(1)Percent change includes reinvestment of $0.843 per share ordinary income dividends.
(2)Percent change includes reinvestment of $0.210 per share ordinary income dividends.
(3)Percent change includes reinvestment of $0.793 per share ordinary income dividends.
(4)Percent change includes reinvestment of $0.198 per share ordinary income dividends.
</TABLE>
<PAGE>
Average Annual
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 9/30/94 +0.08% - 2.92%
Inception (8/27/93) through 9/30/94 +0.50 - 2.26
[FN]
*Maximum sales charge is 3%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 9/30/94 -0.33% -3.07%
Inception (8/27/93) through 9/30/94 0.00 -1.67
[FN]
*Maximum contingent deferred sales charge is 3% and is reduced to 0%
after 3 years.
**Assuming payment of applicable contingent deferred sales charge.
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
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 $ 5,595,000 3.8%
6,000,000 Banco de Galica y Buenos Aires S.A.--
Yankee (2) 9.00 11/01/2003 4,972,500 3.4
1,000,000 Banco Rio de la Plata S.A. (2) 8.50 7/l5/1998 945,000 0.6
6,000,000 Banco Rio de la Plata S.A.--Yankee (2) 8.75 12/15/2003 4,890,000 3.3
4,000,000 Republic of Argentina--Global (1) 8.375 12/20/2003 3,280,000 2.2
2,000,000 Sociedad Commercial del Plata (16) 8.75 12/14/1998 1,865,000 1.3
3,000,000 Telecom Argentina Stet S.A. (4) 8.375 10/18/2000 2,722,500 1.8
5,000,000 Telefonica de Argentina S.A. (4) 8.375 10/01/2000 4,587,500 3.1
Total Investments in Argentina
(Cost--$33,059,210) 28,857,500 19.5
<PAGE>
Brazil Bonds 4,000,000 Banco de Estado de Parana (2) 10.00 2/27/1996 3,870,000 2.6
1,500,000 Banco Real, S.A. (2) 10.00 5/27/1995 1,524,375 1.0
1,000,000 Celulose Nipo-Brasileira, S.A.
(CENIBRA) (15) 9.375 12/21/2003 909,310 0.6
1,000,000 Compania Brazileira de Petroleo Ipiranga
(8) 8.625 2/25/2002 926,250 0.6
1,000,000 Klabine Fabricadora Papel (12) 10.00 12/20/2001 917,500 0.6
3,000,000 Uniao de Bancos Brasileiros S.A.
(UNIBANCO)(2) 8.50 7/29/1996 2,917,500 2.0
850,000 Usinas Siderurgicas de Minas Gerais--
Usiminas S.A. (2) 10.00 1/15/1996 816,000 0.6
Brady 2,500,000 Brazil Exit Bonds (1) 5.187 4/15/2006 1,756,250 1.2
Bonds 5,000,000 Brazil Exit Bonds (1) 6.00 9/15/2013 2,675,000 1.8
17,000,000 Republic of Brazil (1) DCB* 5.25 4/15/2012 11,092,500 7.5
24,000,000 Republic of Brazil C Bonds (1)* 8.00 4/15/2014 13,290,000 9.0
4,900,000 Republic of Brazil IDU Bond (1)* 6.062 1/01/2001 4,060,875 2.8
9,500,000 Republic of Brazil (1) New Money 5.25 4/15/2009 6,281,875 4.3
Total Investments in Brazil
(Cost--$47,810,572) 51,037,435 34.6
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
Interest Maturity Percent of
COUNTRY Face Amount Issue Rate Date Value Net Assets
<S> <S> <C> <S> <C> <C> <C> <C>
Colombia Bonds $ 2,000,000 Banco de Colombia (2) 7.50 % 10/21/1998 $ 1,860,000 1.3%
Total Investments in Colombia
(Cost--$1,952,500 ) 1,860,000 1.3
Ecuador Loan 3,000,000 Banco Central de Equador Consolidated
Agreement Agreement (17) 10.00 3/09/2024 1,860,000 1.3
Total Investments in Ecuador
(Cost--$1,795,876 ) 1,860,000 1.3
<PAGE>
Mexico Bonds 1,500,000 Banamex Eurobond, S.A. (1) 9.125 4/06/2000 1,490,625 1.0
1,000,000 Banco de Atlantico, S.A. (2) 7.875 11/05/1998 922,500 0.6
3,000,000 Cementos Mexicanos, S.A. de C.V. (Cemex)
(7) 10.00 11/15/1996 3,086,250 2.1
2,000,000 Fomento Economico Mexicano, S.A. de C.V.
(Femsa)(10) 9.50 7/22/1997 2,030,000 1.4
1,900,000 Gruma, S.A. de C.V.(1) 9.75 3/09/1998 1,921,375 1.3
2,000,000 Grupo Simec, S.A. de C.V., guaranteed by
Grupo Sidek, S.A. (5) 8.875 12/15/1998 1,830,000 1.2
3,500,000 Grupo Situr, S.A. de C.V., guaranteed by
Grupo Sidek, S.A. (6) 8.75 9/14/1998 3,220,000 2 2
Brady 10,000,000 United Mexican States Par 'A' (1) 6.25 12/31/2019 3,237,500 2.2
Bonds 48,001,000 United Mexican States Par 'B' (1)* 6.25 12/31/2019 15,540,000 10.5
Cetes 10,814,040 Mexican Cetes (1) 12.80 10/20/1994 3,164,065 2.1
Total Investments in Mexico
(Cost--$40,419,022) 36,442,315 24.6
United Bonds 2,000,000 ADT Operations (3) 9.25 8/01/2003 1,900,000 1.3
States 1,000,000 Chiquita Brands International, Inc. (10) 9.125 3/01/2004 930,000 0.6
2,000,000 Flagstar Companies, Inc. (13) 11.375 9/15/2003 1,720,000 1.2
1,000,000 Fort Howard Corporation (12) 9.00 2/01/2006 855,000 0.6
1,000,000 Fresh Del Monte Produce N.V. (10) 10.00 5/01/2003 850,000 0.6
1,000,000 Gulf Canada Resources, Ltd. (15) 9.25 1/15/2004 930,000 0.6
1,000,000 Reliance Group Holdings, Inc. (2) 9.75 11/15/2003 905,000 0.6
2,000,000 Riverwood International Corporation (12) 11.25 6/15/2002 2,090,000 1.4
2,000,000 Sequa Corp. (9) 9.375 12/15/2003 1,850,000 1.3
500,000 Trump Plaza Funding Inc. (11) 10.875 6/15/2001 357,500 0.2
1,500,000 WestPoint Stevens, Inc. (14) 9.375 12/15/2005 1,353,750 0.9
Total Investments in the United States
(Cost--$15,499,750 ) 13,741,250 9.3
Venezuela Bonds 1,000,000 Bariven, S.A. (8) 10.625 3/17/2002 850,000 0.6
Brady 11,055,000 Republic of Venezuela Par 'A' (1) 6.75 3/31/2020 5,458,750 3.7
Bonds 12,060,000 Republic of Venezuela Par 'B' (1) 6.75 3/31/2020 5,955,000 4.0
Total Investments in Venezuela
(Cost--$14,877,791 ) 12,263,750 8.3
<PAGE>
SHORT-TERM
SECURITIES
United Commercial 5,384,000 General Electric Capital Corp. 4.95 10/03/1994 5,384,000 3.6
States Paper**
US Government 8,000,000 Federal Home Loan Mortgage Corp. 4.73 10/17/1994 7,985,284 5.4
& Agency
Obligations**
Total Investments in Short-Term Securities
(Cost--$13,369,284) 13,369,284 9.0
<CAPTION>
PUT OPTIONS Par Strike Expiration
PURCHASED Value Price Date
<S> <S> <C> <S> <C> <C> <C> <C>
$40,000,000 US Treasury Bonds $102.50 Nov. 1994 357,600 0.2
Total Put Options Purchased
(Cost--$339,388) 357,600 0.2
Total Investments (Cost--$169,123,393) 159,789,134 108.1
OPTIONS
WRITTEN
Call Options 4,072,000 Republic of Brazil C Bonds 53.00 Nov. 1994 (143,335) (0.1)
Written 10,000,000 Republic of Venezuela Par 'A' 51.063 Dec. 1994 (163,000) (0.1)
Put Options 10,000,000 Republic of Venezuela Par 'B' 47.625 Oct. 1994 (137,500) (0.1)
Written 10,000,000 US Treasury Bonds Future Contracts 101.00 Nov. 1994 (32,013) (0.0)
Total Options Written
(Premiums Received--($387,989)) (475,848) (0.3)
Total Investments, Net of Options Written (Cost--$168,735,404) 159,313,286 107.8
Liabilities in Excess of Other Assets (11,492,782) (7.8)
------------ ------
Net Assets $147,820,504 100.0%
============ ======
Net Asset Value: Class A--Based on net assets of $21,086,292
and 2,296,105 shares outstanding $ 9.18
============
Class B--Based on net assets of $126,734,212
and 13,799,620 shares outstanding $ 9.18
============
<PAGE>
<FN>
*Security represents collateral in connection with reverse
repurchase agreements.
**Commercial Paper and certain US Government & Agency Obligations
are traded on a discount basis; the interest rates shown are the
discount rates paid at the time of purchase by the Fund.
Corresponding industry groups for securities (percent of net
assets):
(1)Sovereign Government Obligations--53.6%
(2)Banking--19.8%
(3)Industrials--1.3%
(4)Telecommunications--4.9%
(5)Steel--1.2%
(6)Tourism--2.2%
(7)Building & Construction--2.1%
(8)Oil--1.2%
(9)Capital Goods--1.3%
(10)Food & Beverage--2.6%
(11)Hotels & Casinos--0.2%
(12)Paper--2.6%
(13)Restaurants--1.2%
(14)Textiles--0.9%
(15)Energy--1.2%
(16)Conglomerate-Energy--1.3%
(17)Loan Agreement--1.3%
</TABLE>
