MERRILL
LYNCH
AMERICAS
INCOME
FUND, INC.
Annual Report December 31, 1993
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.
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.
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 tempo-
rary purposes.
<PAGE>
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 out-
standing. 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 distribu-
tion to shareholders 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
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.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
DEAR SHAREHOLDER
We are pleased to provide you with this first annual report
for Merrill Lynch Americas Income Fund, Inc. In this and future
shareholder reports, we will highlight the Fund's performance,
describe recent investment activities, and examine some of the
important market developments that helped shape our investment
strategy during the period under review.
Merrill Lynch Americas Income Fund, Inc. seeks to provide
shareholders with a high level of current income, consistent
with prudent investment risk, by investing primarily in debt
securities denominated in a currency of a country located in the
Western Hemisphere.
<PAGE>
Here is an overview of developments in the Latin American debt
markets since the Fund's inception (August 27, 1993) through
December 31, 1993.
Mexican Investment Environment
The passage of the North American Free Trade Agreement (NAFTA)
strengthened investor confidence by removing a major economic
uncertainty which had been hanging over Mexico. Now more than
ever, investor focus has shifted to the positive fundamentals
of the Mexican economy. A fiscal surplus, falling inflation
and interest rates, high international reserves and heavy
foreign capital inflows all contribute to the formation of
an attractive investment picture. The NAFTA, a newly indepen-
dent central bank and the recently passed foreign investment
law not only add to the positive investment picture but
strengthen the foundation of already impressive progress.
The Mexican economy should begin to rebound in 1994 after
growing approximately 1.3% in 1993. Inflation has fallen
steadily over the past few years and will be near 8% for 1993.
The government's inflation forecast for 1994 is 5%, and movement
in that direction should continue the downward trend in nominal
interest rates. The trade balance has also shown signs of
improvement throughout 1993 as Mexican exporters became more
efficient. A strengthening US economy should reinforce this
trend. The ruling party's candidate, Luis Donaldo Colosio,
is favored to win the 1994 Presidential election and maintain
current economic policies. The government has announced its
intention to stimulate the economy by eliminating the fiscal
surplus and balancing the budget. Against this positive economic
backdrop lies the strong possibility that Mexico will achieve
investment-grade status for its foreign currency denominated
debt. This will be a major achievement for Mexico and will
enable the country to more easily attract a broader base of
investors at a lower cost and to continue its economic
renaissance.
<PAGE>
Venezuelan Investment Environment
The Venezuelan economy had a lackluster year: inflation up to
45.9% from 31.9% in 1992, growth rate down to -1%, from 6.8%
growth in 1992 and an estimated fiscal deficit of 4% of gross
domestic product (GDP) widened by weak oil prices. Venezuela
is due for an improvement. President-elect Rafael Caldera
is taking office on February 2, 1994 and is likely to continue
moving toward a free, integrated economy with some social con-
cessions to reduce the burden of the adjustment. His past
record is of a pragmatic and responsible administrator. Gen-
erally, it is likely that President Caldera will continue the
structural economic reforms, as he and his advisers have indi-
cated. Also opposition parties, which control Congress, implemented
the opening of the economy. There will be adjustments, such as
a new tax policy and efforts to control waste and inefficiency in
the public and private sectors. The main emphasis will remain the
reduction of the fiscal deficit and inflation through austerity
measures. The newly independent central bank should continue
defending international reserves (US$12.7 billion as of December 31,
1993) and the currency. Under these conditions, the economy is
expected to rebound modestly in 1994, and inflation will depend
on the success in controlling the budget deficit. Despite
disappointing 1993 growth, Venezuela still has the lowest debt
service burden (24% of exports) of all the major Latin American
countries after Chile (23% of exports).
Brazilian Investment Environment
President Franco recently submitted the 1994 budget to congress.
The budget, which contains spending cuts and tax increases, is
aimed at reducing the deep federal deficit which lies at the root
of Brazil's high inflation. Success in bringing the federal
budget and inflation under control should lead to completion of
an agreement with the International Monetary Fund (IMF) and a
Brady debt restructuring agreement. This would give a credibility
boost to the Brazilian economy, whose vast natural and human
resources make it by far the largest economy in Latin America.
Brazil has persevered in spite of its high inflation. The
economy grew an estimated 4.5% in 1993, the central bank boasts
international reserves of approximately $27 billion and the
nation enjoys a healthy $13 billion annual trade surplus. The
government also has made progress with its fiscal problems as
federal subsidies and the fiscal deficit, as a percentage of
gross domestic product, have been reduced. Presidential elec-
tions are scheduled for year-end 1994. The winning candi-
date will most likely depend on the health of the economy.
Argentine Investment Environment
This year was one of notable achievements for Argentina. The country
managed to sustain an estimated 6% GDP growth rate (down from 8.7% in
1992) while reducing the inflation rate to an estimated 7.5% from 17.5%
the previous year, in both cases posting the best performance of major
Latin American countries. The key to these achievements was the success
of the convertibility plan, privatization and fiscal reform.
<PAGE>
Under its convertibility plan, Argentina had fixed the peso to the
US dollar at par, while committing to maintaining sufficient international
reserves to cover the entire monetary base. In 1993, international reserves
were up to approximately US$12.8 billion from US$12.5 billion in 1992.
The successful privatization program raised US$3.5 billion in 1993,
helping to retire foreign debt and almost approximately halving
government subsidies to US$1.2 billion. The government is now focusing
on measures to increase the international competitiveness of Argentine
products. These measures include reducing companies' payroll taxes
and planning to reform the labor laws.
Argentina maintained fiscal discipline and posted a budget surplus of
around 0.8% of GDP, excluding privatization revenues, exceeding the
targets agreed upon with the IMF as of September 1993. The government
is now emphasizing fiscal discipline in provincial and local governments.
Finally, the country will be implementing a private pension system which
should boost private domestic savings and further develop the local
capital markets.
The continuation of these improvements seems likely in view of the
support for the ruling Peronist Party evidenced in recent Congressional
elections and the recent approval to reform the constitution to allow the
reelection of President Menem in the 1995 elections.
Fiscal Year in Review
During the last quarter of 1993, several political and economic events
affected the performance of the Latin American fixed-income markets. One
of the most important events which affected the whole area, but princi-
pally Mexico, was the approval of NAFTA by the United States, Canada
and Mexico. Over time the approval of NAFTA not only will bring clear
benefits to Mexico, but also will benefit the whole Latin American
area, as other countries are invited to join the free-trade agreement.
NAFTA will help to consolidate and secure the continuity of structural
economic reforms implemented by Mexico. It will also encourage other
countries such as Chile, Colombia, Argentina and Peru to proceed with
their structural economic reforms.
The second factor that affected the Latin American financial markets
was the perception by institutional investors that the creditworthiness of
Latin American countries had continued to improve. This was translated
into strong capital inflows to the area. For the year, debt issuance by
the area accelerated and reached $25 billion, more than twice as much
as in 1992. At the same time, new debt funds dedicated to emerging markets
were created, demanding much of the supply of new corporate and
sovereign debt. Also, there was increased demand from a broad base
of institutional investors such as pension funds, insurance companies,
domestic and foreign funds. The ten largest debt markets in Latin
America will receive over $49 billion in net capital inflows in 1993, an
impressive amount considering the $52 billion they received in 1992.
It is likely that capital inflows will remain high over the next years
as these countries continue to improve their creditworthiness and
continue to demand capital for their investment needs.
<PAGE>
Declining interest rates in the United States gave further support to
the positive environment for Latin American debt. The yield on the
30-year US Treasury bond declined from 7.40% on December 31, 1992, to
6.35% on December 31, 1993. Despite the back-up in yields during the last
quarter of 1993 from the low of 5.79% on October 15, 1993 (in response to
market concerns of stronger growth of the US economy), the yields on
Latin American debt, particularly Brady bonds, continued to decline.
We believe that the improving creditworthiness of the region has a
stronger correlation to the yields of the Latin American debt than the
behavior of interest rates in the United States.
Within this investment environment we decided on a country asset alloca-
tion that concentrated on Latin America. Within Latin America we
overweighted our investment allocation in Mexico (25.2% of total assets)
and Argentina (33.7% of total assets), the two countries with the largest
capital appreciation potential resulting from their significant improving
creditworthiness. Also, we invested 17.9% of total assets in Brazil, since
we believe yields on Brazilian public and private debt more than compen-
sate investors for the current political risks. In addition, there was a
clear perception that the political uncertainty created by corruption cases
and political party fragmentation in the Brazilian congress was fading.
A political consensus is beginning to form to solve the problem of the
fiscal deficit and subsequently reach agreement with the IMF on an
economic program to clear the way for closing the Brady Plan in 1994.
We also invested in Venezuela (15.3% of total assets), another country
affected by political uncertainty. In this case the fears that President-
elect Caldera would drastically change the course of economic reform
dissipated when he and his advisors publicly indicated that they will
implement austerity measures to achieve fiscal discipline and reduce
inflation. Yields on Venezuelan debt also well compensated investors for
the increased risks associated with this market.
Given the US interest rate environment and the improving creditworthi-
ness of the Latin American area, we decided to overweight investments
in Brady bonds. In Brazil, where a Brady Plan is not yet in place, we
selected other types of sovereign debt. In both cases, we believe the
bonds have the highest liquidity in the market and the highest potential
for capital appreciation. These investments made up 48.9% of total assets
of fiscal year-end. Since the Fund's objective is current income,
we initially overweighted the investments in fixed-rate Brady bonds
(33.8% of total assets as of December 31), because of their higher current
yields. As concerns of higher interest rates in the United States evolved,
we increased the weight of investments in floating rate Brady bonds to
15% of total assets as of year-end. Despite their lower current yields,
they were undervalued and therefore experienced a good capital apprecia-
tion. The remaining portion of the portfolio was invested in Eurobonds
with high current yields but also with the potential for capital
appreciation given the environment of shrinking yields resulting from
improving creditworthiness. As of December 31, the portfolio's modified
duration was 6.6 years.
Finally, we have invested a small position in Peru, a pre-Brady country,
which has performed well. Our position is small, since it provides no
current yield. We also actively traded issues when appropriate, realizing
profits given the high volatility of the market.
<PAGE>
These strategies enabled the Fund's Class A and Class B Shares to achieve
total investment returns of +11.49% and +11.30% since inception in August
through December 31, 1993. As of December 31, the standardized 30-day yield
for Class A Shares and Class B Shares was 9.61% and 9.35%, respectively.
Given our conviction the NAFTA would be passed, we chose to leverage
the Fund to enhance total return. This strategy also benefited per-
formance during the period. As of December 31, 1993, 20% of the Fund's
total assets were leveraged. As the positive investment environment for
Latin American debt continues, we expect to leverage the portfolio
further in the first quarter of 1994. While leveraging creates the oppor-
tunity for greater total returns, it also increases its exposure to capital
risk. For a complete explanation, see page 1 of this report to shareholders.
Investment Outlook
Looking ahead, in the United States we expect GDP to grow 3%-3.5%
during 1994. This pace of moderate economic growth is consistent with
an environment of low inflation, and we expect the consumer price index
to accelerate less than 3% in 1994. In 1994 we expect the Federal Reserve
Board to tighten monetary policy and short-term interest rates to rise.
However, we expect long-term interest rates to remain stable, and it is
likely they may fall below 6% at some time during 1994.
With respect to Latin America, we expect a continuation of the struc-
tural economic reforms, increased capital inflows to the area, and
improved political stability with emphasis on social programs across
the area. In summary, we expect the creditworthiness in the area to con-
tinue to improve. We expect Mexico to reach investment-grade rating
during the coming year. The yields of Latin American debt will continue
to shrink in 1994, providing the potential for capital appreciation.
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
in our upcoming quarterly report to shareholders.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Paolo Valle)
Paolo Valle
Vice President and Portfolio Manager
February 3, 1994
<PAGE>
PERFORMANCE DATA
Average Annual
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Inception (8/27/93) through 12/31/93 +11.49% +8.15%
[FN]
*Maximum sales charge is 3%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Inception (8/27/93) through 12/31/93 +11.30% +8.30%
[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>
Recent
Performance
Results*
<CAPTION>
Since
Inception 3 Month
12/31/93 9/30/93 8/27/93** % Change % Change
<S> <C> <C> <C> <C> <C>
ML Americas Income Fund Class A Shares $10.84 $9.99 $10.00 + 8.40% + 8.51%
ML Americas Income Fund Class B Shares 10.84 9.99 10.00 + 8.40 + 8.51
ML Americas Income Fund Class A Shares--Total Return +11.49(1) +10.97(2)
ML Americas Income Fund Class B Shares--Total Return +11.30(3) +10.92(4)
ML Americas Income Fund Class A Shares--Standardized 30-day Yield +9.61%
ML Americas Income Fund Class B Shares--Standardized 30-day Yield +9.35%
<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 $0.300 per share ordinary income dividends.
(2) Percent change includes reinvestment of $0.273 per share ordinary income dividends.
(3) Percent change includes reinvestment of $0.281 per share ordinary income dividends.
(4) Percent change includes reinvestment of $0.258 per share ordinary income dividends.
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
Interest Maturity Value Percent of
Face Amount Issue Rate Date (Note 1a) 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 $ 6,015,000 5.3%
6,000,000 Banco de Galicia y Buenos Aires S.A.
--Yankee (2) 9.00 11/01/2003 6,090,000 5.4
6,000,000 Banco Frances del Rio de la Plata S.A.
--Yankee (2) 8.75 12/15/2003 6,075,000 5.3
1,000,000 Compania Naviera Perez Companc (3) 8.375 7/30/1998 1,021,250 0.9
3,000,000 Republic of Argentina--Global (1) 8.375 12/20/2003 3,041,250 2.7
3,000,000 Telecom Argentina Stet S.A. (4) 8.375 10/18/2000 3,075,000 2.7
5,000,000 Telefonica de Argentina S.A. (4) 8.375 10/01/2000 5,118,750 4.5
Brady Bonds 15,000,000 Argentina Par Series "L" (1)* 4.00 3/31/2023 10,293,750 9.0
5,000,000 Republic of Argentina FLRB (1)* 4.187 3/31/2005 4,387,500 3.9
Total Investments in Argentina
(Cost--$43,260,729) 45,117,500 39.7
Brazil Bonds 4,000,000 Banco de Estada Sao Paulo
(Banespa) (2) 9.25 10/04/1996 4,015,000 3.5
4,000,000 Banco do Estada do Parana (2) 10.00 2/27/1996 4,005,000 3.5
1,500,000 Banco Real, S.A. (2) 10.00 5/27/1995 1,526,250 1.4
2,000,000 Brazil Exit Bonds(1) 6.00 9/15/2013 1,415,000 1.2
12,000,000 Republic of Brazil, IDU (1) 8.75 1/01/2001 9,975,000 8.8
3,000,000 Uniao de Bancos Brasileiros S.A.
(UNIBANCO) (2) 8.50 7/29/1996 2,996,400 2.6
Total Investments in Brazil
(Cost--$23,139,398) 23,932,650 21.0
Colombia Bonds 2,000,000 Banco de Colombia (2) 7.50 10/21/1998 1,955,000 1.7
Total Investments in Colombia
(Cost--$1,952,500) 1,955,000 1.7
Mexico Bonds 1,000,000 Banco de Atlantico, S.A. (2) 7.875 11/05/1998 1,010,000 0.9
2,000,000 Banco Nacional de Mexico, S.A. (2) 9.125 4/06/2000 2,187,500 1.9
1,000,000 Bancomer, S.A. (2) 8.00 7/07/1998 1,045,000 0.9
2,000,000 ++Grupo Simec, S.A. de C.V., guaranteed
by Grupo Sidek, S.A. (5) 8.875 12/15/1998 2,025,000 1.8
3,500,000 Grupo Situr, S.A. de C.V., guaranteed
by Grupo Sidek, S.A. (6) 8.75 9/14/1998 3,543,750 3.1
Brady Bonds 4,000,000 United Mexican States Discount "A"(1)* 4.187 12/31/2019 3,835,000 3.4
2,000,000 United Mexican States Discount "D"(1) 4.328 12/31/2019 1,917,500 1.7
5,000,000 United Mexican States Par "A"(1) 6.25 12/31/2019 4,162,500 3.6
13,000,000 United Mexican States Par "B"(1)* 6.25 12/31/2019 10,822,500 9.5
<PAGE>
Cetes 10,814,040 Mexican Cetes (1) 12.80 10/20/1994 3,207,291 2.8
Repurchase
Agreement 5,600,000 Banco de Mexico, purchased on 12/29/93 5.25 1/03/1994 5,604,083 4.9
Total Investments in Mexico
(Cost--$37,327,692) 39,360,124 34.5
Peru Loan Agreement $ 4,000,000 Republic of Peru--Citibank (1) 5.00 11/15/2013 2,760,000 2.4
Total Investments in Peru
(Cost--$2,020,000) 2,760,000 2.4
Venezuela Bonds 1,000,000 Bariven, S.A. (8) 10.625 3/17/2002 1,051,250 0.9
750,000 ++Venezolana de Cementos S.A.C.A.
(VENCEMOS) (7) 9.25 11/22/1996 753,750 0.7
Brady Bonds 15,000,000 Republic of Venezuela Par "A"(1) 6.75 3/31/2020 11,156,250 9.8
10,000,000 Republic of Venezuela Par "B"(1) 6.75 3/31/2020 7,437,500 6.5
Total Investments in Venezuela
(Cost--$19,535,522) 20,398,750 17.9
United States Commercial Paper** 4,948,000 General Electric Capital Corp. 3.22 1/03/1994 4,948,000 4.3
Total Investments in the United States
(Cost--$4,948,000) 4,948,000 4.3
Total Investments (Cost--$132,183,841) 138,472,024 121.5
Liabilities in Excess of Other Assets (24,547,852) (21.5)
------------ ------
Net Assets $113,924,172 100.0%
============ ======
<FN>
++Restricted securities as to resale. The value of the Fund's investment in
restricted securities was approximately $2,779,000, representing 2.44% of
net assets.
Acquisition Value
Issue Date Cost (Note 1a)
Grupo Simec, S.A. de C.V., guaranteed
by Grupo Sidek, S.A. 12/02/93 $1,990,880 $2,025,000
Venezolana de Cementos S.A.C.A.
(VENCEMOS) 12/23/93 753,750 753,750
Total $2,744,630 $2,778,750
========== ==========
<PAGE>
*Security represents collateral in connection with reverse repurchase
agreements (Note 5).
**Commercial Paper is traded on a discount basic; the interest rate shown is the
discount rate paid at the time of purchase by the Fund.
Corresponding industry groups for securities (percent of net assets):
(1) Sovereign Government Obligations--65.3%
(2) Banking--32.4%
(3) Industrial--0.9%
(4) Telecommunications--7.2%
(5) Steel--1.8%
(6) Tourism--3.1%
(7) Cement--0.7%
(8) Oil--0.9%
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
<CAPTION>
As of December 31, 1993
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$132,183,841) (Note 1a) $138,472,024
Cash 761,259
Receivables:
Securities sold $ 2,875,000
Interest 2,489,503
Beneficial interest sold 1,094,887
Investment adviser (Note 2) 273,010 6,732,400
------------
Deferred organization expenses (Note 1f) 97,151
Prepaid registration fees and other assets (Note 1f) 27,695
------------
Total assets 146,090,529
------------
<PAGE>
Liabilities: Payables:
Reverse repurchase agreement (Note 5) 21,546,000
Securities purchased 9,382,101
Dividends to shareholders (Note 1g) 799,284
Interest expense (Note 5) 111,492
Beneficial interest redeemed 87,238
Distributor (Note 2) 66,498 31,992,613
------------
Accrued expenses and other liabilities 173,744
------------
Total liabilities 32,166,357
------------
Net Assets: Net assets $113,924,172
============
Net Assets Class A Shares of Common Stock, $0.10 par value, 100,000,000 shares authorized $ 139,114
Consist of: Class B Shares of Common Stock, $0.10 par value, 100,000,000 shares authorized 912,091
Paid-in capital in excess of par 104,942,477
Undistributed realized capital gains on investments and foreign currency
transactions--net 1,642,291
Unrealized appreciation on investments and foreign currency transactions--net 6,288,199
------------
Net assets $113,924,172
============
Net Asset Class A--Based on net assets of $15,075,848 and 1,391,143 shares outstanding $ 10.84
Value: ============
Class B--Based on net assets of $98,848,324 and 9,120,906 shares outstanding $ 10.84
============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Period
August 27, 1993++ to
December 31, 1993
<S> <S> <C> <C>
Investment Interest and amortization of premium and discount earned $ 2,587,246
Income ------------
(Notes
1d & 1e):
Expenses: Distribution and account maintenance fees--Class B (Note 2) 206,464
Investment advisory fees (Note 2) 197,936
Interest expense (Note 5) 111,492
Registration fees (Note 1e) 110,828
Custodian fees 64,100
Transfer agent fees--Class B (Note 2) 22,682
Printing and shareholder reports 21,986
Accounting services (Note 2) 21,800
Account maintenance fee--Class A (Note 2) 13,652
Directors' fees and expenses 11,450
Professional fees 9,285
Amortization of organization expenses (Note 1e) 7,447
Transfer agent fees--Class A (Note 2) 4,254
Other 4,878
------------
Total expenses before reimbursement 808,254
Reimbursement of expenses (Note 2) (470,946)
------------
Total expenses after reimbursement 337,308
------------
Investment income--net 2,249,938
------------
Realized & Realized gain from:
Unrealized Investments--net $ 2,019,841
Gain (Loss) Foreign currency transactions 4,058 2,023,899
on Invest- ------------
ments & Unrealized appreciation on:
Foreign Investments--net 6,288,183
Currency Foreign currency transactions 16 6,288,199
Trans- ------------ ------------
actions--Net Net realized and unrealized gain on investments and foreign currency transactions 8,312,098
(Notes 1b, ------------
1d & 3): Net Increase in Net Assets Resulting from Operations $ 10,562,036
============
<FN>
++Commencement of Operations.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<CAPTION>
For the Period
August 27, 1993++ to
December 31, 1993
Increase (Decrease) in Net Assets:
<S> <S> <C>
Operations: Investment income--net $ 2,249,938
Realized gain on investments and foreign currency transactions--net 2,023,899
Unrealized appreciation on investments and foreign currency transactions--net 6,288,199
------------
Net increase in net assets resulting from operations 10,562,036
------------
Dividends & Investment income--net:
Distribu- Class A (390,108)
tions to Class B (1,859,830)
Shareholders Realized gain on investments--net:
(Note 1g): Class A (50,931)
Class B (330,677)
------------
Net decrease in net assets resulting from dividends and distributions to shareholders (2,631,546)
------------
Capital Share Net increase in net assets derived from capital share transactions 105,893,682
Transactions ------------
(Note 4):
Net Assets: Total increase in net assets 113,824,172
Beginning of period 100,000
------------
End of period $113,924,172
============
<FN>
++Commencement of Operations.
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF CASH FLOWS
<CAPTION>
For the Period
August 27, 1993++ to
December 31, 1993
<S> <S> <C>
Cash Used Net increase in net assets resulting from operations $ 10,562,036
for Operating Adjustments to reconcile net increase (decrease) in net assets resulting from operations
Activities: to net cash used for operating activities:
Increase in receivables (2,762,513)
Increase in other assets (124,846)
Increase in other liabilities 351,734
Amortization of organization expenses 7,447
Realized and unrealized gain on investments and foreign currency transactions--net (8,312,098)
------------
Net cash used for operating activities (278,240)
------------
Cash Used Proceeds from sales of long-term securities 50,369,843
for Investing Purchases of long-term securities (166,510,759)
Activities: Purchases of short-term investments (931,476,943)
Proceeds from sales and maturities of short-term investments 923,957,587
------------
Net cash used for investing activities (123,660,272)
------------
Cash Provided Cash receipts from issuance of Common Stock 116,426,916
by Financing Cash receipts from Reverse Repurchase Agreements 21,546,000
Activities: Cash payments on capital shares redeemed (12,611,006)
Dividends paid to shareholders (762,139)
------------
Net cash provided by financing activities 124,599,771
------------
Cash: Net increase (decrease) in cash 661,259
Cash at beginning of period 100,000
------------
Cash at end of period $ 761,259
============
Cash Flow Cash paid for interest $ 111,492
Information: ============
Noncash Capital shares issued in reinvestment of dividends paid to shareholders $ 1,070,123
Financing ============
Activities:
<FN>
++Commencement of Operations.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
For the Period
The following per share data and ratios have been derived August 27, 1993++ to
from information provided in the financial statements. December 31, 1993
Increase (Decrease) in Net Asset Value: Class A Class B
<S> <S> <C> <C>
Per Share Net asset value, beginning of period $ 10.00 $ 10.00
Operating ------- -------
Performance: Investment income--net .26 .24
Realized and unrealized gain on investments
and foreign currency transactions--net .88 .88
------- -------
Total from investment operations 1.14 1.12
------- -------
Less dividends and distributions:
Investment income--net (.26) (.24)
Realized gain on investments--net (.04) (.04)
------- -------
Total dividends and distributions (.30) (.28)
------- -------
Net asset value, end of period $ 10.84 $ 10.84
======= =======
Total Based on net asset value per share 11.49%+++ 11.30%+++
Investment ======= =======
Return:**
Ratios to Expenses, net of reimbursement and excluding account
Average maintenance and distribution fees .35%* .35%*
Net Assets: ======= =======
Expenses, net of reimbursement .60%* 1.10%*
======= =======
Expenses 2.03%* 2.53%*
======= =======
Investment income--net 7.14%* 6.76%*
======= =======
Supplemental Net assets, end of period (in thousands) $15,076 $98,848
Data: ======= =======
Portfolio turnover 75.18% 75.18%
======= =======
<FN>
++Commencement of Operations.
*Annualized.
**Total investment returns exclude the effects of sales loads.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch Americas Income Fund, Inc. (the "Fund") is registered
under the Investment Company Act of 1940 as a non-diversified,
open-end management investment company. Prior to commencement
of operations on August 27, 1993, the Fund had no operations other
than those relating to organizational matters and the issuance of
5,000 Class A Shares of beneficial interest and 5,000 Class B Shares
of beneficial interest of the Fund to Merrill Lynch Asset Management,
Inc. ("MLAM") for $100,000. The Fund offers both Class A and
Class B Shares. Class A Shares are sold with a front-end sales charge.
Class B Shares may be subject to a contingent deferred sales charge.
Both classes of shares have identical voting, dividend, liquidation
and other rights and the same terms and conditions, except that
Class A Shares bear the expenses of their account maintenance
fee and Class B Shares bear certain expenses related to their dis-
tribution of such shares. Each class has exclusive voting rights
with respect to matters relating to their respective distribution and
account maintenance expenditures. The following is a summary of
significant accounting policies followed by the Fund.
(a) Valuation of Securities--Securities traded in the over-the-
counter market are valued at the last available bid price or yield
equivalents obtained from one or more dealers in the over-the-counter
market prior to the time of valuation. Portfolio securities which are
traded on stock exchanges are valued at the last sale price on the
principal market on which such securities are traded, as of the close
of business on the day the securities are being valued or, lacking
any sales, at the last available bid price.
Options written are valued based upon the last asked price in the
case of exchange-traded options or, in the case of options traded in
the over-the-counter market, the average of the last asked price as
obtained from one or more dealers. Options purchased by the Fund
are valued at their last bid price in the case of exchange-traded
options or, in the case of options traded in the over-the-counter
market, the average of the last bid price as obtained from two or
more dealers.
Other investments, including futures contracts and related options,
are stated at market value or at the fair value at which it
is expected they may be resold, as determined in good faith by or
under the direction of the Board of Directors of the Fund.
Securities and assets for which market quotations are not readily
available are valued at fair value as determined in good faith by or
under the direction of the Directors of the Fund.
<PAGE>
(b) Foreign Currency Transactions--Transactions denominated in
foreign currencies are recorded at the exchange rate prevailing when
recognized. Assets and liabilities denominated in foreign currencies
are valued at the exchange rate at the end of the period. Foreign
currency transactions are the result of settling (realized) or valuing
(unrealized) such transactions expressed in foreign currencies into
US dollars. Realized and unrealized gains or losses from investments
include the effects of foreign exchange rates on investments.
The Fund is authorized to enter into forward foreign exchange
contracts as a hedge against either specific transactions or portfolio
positions. Such contracts are not entered on the Fund's records.
However, the effect on operations is recorded from the date the Fund
enters into such contracts. Premium or discount is amortized over
the life of the contracts.
(c) Options--When the Fund writes an option, an amount equal to
the premium received by the Fund is reflected as an asset and an
equivalent liability. The amount of the liability is subsequently
marked to market to reflect the current market value of the option
written. When a security is purchased or sold through an exercise of
an option, the related premium paid (or received) is added to (or
deducted from) the basis of the security acquired or deducted from
(or added to) the proceeds of the security sold. When an option
expires (or the Fund enters into a closing transaction), the Fund
realizes a gain or loss on the option to the extent of the premiums
received or paid (or gain or loss to the extent the cost of the closing
transaction is less than or exceeds the premium paid or received).
Written and purchased options are non-income producing
investments.
(d) Income Taxes--It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable income to
its shareholders. Therefore, no Federal income tax provision is
required. Under the applicable foreign tax law, a withholding tax
may be imposed on interest and capital gains at various rates.
(e) Security Transactions and Investment Income--Security
transactions are recorded on the dates the transactions are entered
into (the trade dates). Interest income (including amortization of
discount) is recognized on the accrual basis. Realized gains and
losses on security transactions are determined on the identified
cost basis.
(f) Deferred Organization Expenses and Prepaid Registration Fees--
Deferred organization expenses and expenses relating to the organi-
zation of the second class of shares are charged to expense over a
five-year period. Prepaid registration fees are charged to expense
as the related shares are issued.
(g) Dividends and Distributions--Dividends from net investment
income are declared daily and paid monthly. Distribution of capital
gains are recorded on the ex-dividend dates.
<PAGE>
(h) Financial Futures Contracts--The Fund may purchase or sell
financial futures contracts and options on such futures contracts
as a hedge against adverse changes in interest rates. A futures
contract is an agreement between two parties to buy and sell a
security, respectively, for a set price on a future date. Upon entering
into a contract, the Fund deposits and maintains as collateral such
initial margin as required by the exchange on which the transaction
is effected. Pursuant to the contract, the Fund agrees to receive
from or pay to the broker an amount of cash equal to the daily
fluctuation in value of the contract. Such receipts or payments are
known as variation margin and are recorded by the Fund as unreal-
ized gains or losses. When the contract is closed, the Fund records
a realized gain or loss equal to the difference between the value
of the contract at the time it was opened and the value at the time it
was closed.
NOTES TO FINANCIAL STATEMENTS (concluded)
2. Investment Advisory Agreement and Transactions
with Affiliates:
The Fund has entered into an Investment Advisory Agreement
with Merrill Lynch Asset Management ("MLAM"). MLAM is the
name under which Merrill Lynch Investment Management, Inc.
("MLIM") does business. MLIM is an indirect wholly-owned sub-
sidiary of Merrill Lynch & Co., Inc. The Fund has also entered into a
Distribution Agreement and a Distribution Plan with Merrill Lynch
Funds Distributor, Inc. ("MLFD" or "Distributor"), a wholly-owned
subsidiary of MLIM.
Effective January 1, 1994, the investment advisory business of MLAM
was reorganized from a corporation to a limited partnership. The
general partner of MLAM is Princeton Services, Inc., an indirect
wholly-owned subsidiary of Merrill Lynch & Co.
MLAM is responsible for the management of the Fund's portfolio
and provides the necessary personnel, facilities, equipment and
certain other services necessary to the operation of the Fund.
For such services, the Fund pays a monthly fee of 0.60%, on an annual
basis, of the average daily value of the Fund's net assets. The most
restrictive annual expense limitation requires that the Investment
Adviser reimburse the Fund to the extent the Fund's expenses
(excluding interest, taxes, distribution fees, brokerage fees and com-
missions, and extraordinary items) exceed 2.5% of the Fund's first
$30 million of average daily net assets, 2.0% of the next $70 million of
average daily net assets, and 1.5% of the average daily net assets in
excess thereof. The Investment Adviser's obligation to reimburse
the Fund is limited to the amount of the investment advisory fee.
No fee payment will be made to the Investment Adviser during any
fiscal year which will cause such expenses to exceed the most
restrictive expense limitation at the time of such payment. For the
period August 27, 1993 to December 31, 1993, MLAM earned fees of
$197,936, all of which was voluntarily waived. In addition, MLAM
voluntarily reimbursed the Fund $273,010 for additional expenses.
<PAGE>
The Fund has adopted Plans of Distribution (the "Distribution Plans")
pursuant to Rule 12b-1 under the Investment Company Act of 1940
pursuant to which MLFD receives a fee from the Fund at the end of
each month at the annual rate of 0.25% of average daily net assets of
the Fund attributable to Class A Shares in order to compensate the
distributor and Merrill Lynch for account maintenance activities, and
0.50% and 0.25%, respectively, of average daily net assets of the Fund
attributable to Class B Shares. This fee is to compensate the Distributor
for the services it provides and the expenses borne by the Distributor
under the Distribution Agreement. As authorized by the Plan, the
Distributor has entered into an agreement with Merrill Lynch,
Pierce, Fenner & Smith Inc. ("MLPF&S") which provides for the
compensation of MLPF&S for providing distribution-related services
to the Fund. For the period August 27, 1993 to December 31, 1993,
MLFD earned $220,116 under the Plan, all of which was paid to
MLPF&S pursuant to the agreement.
For the period August 27, 1993 to December 31, 1993, MLFD earned
underwriting discounts of $5,926, and MLPF&S earned dealer
concessions of $311,817 on sales of Class A Shares. MLPF&S also
received contingent deferred sales charges of $51,471 relating to
Class B Share transactions.
Financial Data Services, Inc. (FDS), a wholly-owned subsidiary of
Merrill Lynch & Co., Inc., is the Fund's transfer agent.
Accounting services are provided to the Fund by MLAM at cost.
Certain officers and/or directors of the Fund are officers and/or
directors of MLIM, MLPF&S, MLFD, FDS, and/or Merrill Lynch &
Co., Inc.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the period ended December 31, 1993 were $175,892,860 and
$54,339,234, respectively.
Realized and unrealized gains as of December 31, 1993 were as
follows:
Realized Unrealized
Gains Gains
Long-term investments $2,019,841 $6,288,183
Foreign currency transactions 4,058 16
---------- ----------
Total $2,023,899 $6,288,199
========== ==========
As of December 31, 1993, net unrealized appreciation for Federal
income tax purposes aggregated $6,288,183, of which $6,339,433
related to appreciated securities and $51,250 related to depreciated
securities. At December 31, 1993, the aggregate cost of investments,
including options purchased less premiums received for options
written, for Federal income tax purposes was $132,183,841.
<PAGE>
4. Beneficial Interest Transactions:
Net increase in net assets derived from beneficial interest transactions
was $105,893,682 for the period December 31, 1993.
Transactions in shares of beneficial interest were as follows:
Class A Shares for the Period
Aug. 27, 1993++ Dollar
To December 31, 1993 Shares Amount
Shares sold 1,903,377 $19,440,340
Shares issued to shareholders
in reinvestment of dividends
and distributions 13,895 147,557
--------- -----------
Total issued 1,917,272 19,587,897
Shares redeemed (531,129) (5,477,202)
--------- -----------
Net increase 1,386,143 $14,110,695
========= ===========
[FN]
++ Prior to August 27, 1993 (commencement of operations), the
Fund issued 5,000 shares to MLAM for $50,000.
Class B Shares for the Period
Aug. 27, 1993++ Dollar
To December 31, 1993 Shares Amount
Shares sold 9,729,435 $98,081,463
Shares issued to shareholders
in reinvestment of dividends
and distributions 86,577 922,566
--------- -----------
Total issued 9,816,012 99,004,029
Shares redeemed (700,106) (7,221,042)
--------- -----------
Net increase 9,115,906 $91,782,987
========= ===========
[FN]
++ Prior to August 27, 1993 (commencement of operations), the
Fund issued 5,000 shares to MLAM for $50,000.
5. Reverse Repurchase Agreements:
Under a reverse repurchase agreement, the Fund sells securities
and agrees to repurchase them at a mutually agreed upon date and
price. At the time the Fund enters into a reverse repurchase agree-
ment, it may establish a segregated account with the custodian
containing cash, cash equivalents or liquid high grade debt securities
having a value at least equal to the repurchase price.
As of December 31, 1993, the Fund had entered into reverse repur-
chase agreements in the amount of $21,546,000. For the period
August 27, 1993 to December 31, 1993, the maximum amount
entered into was $21,546,000, the average amount outstanding was
$18,977,362, and the daily weighted average interest rate was 4.50%.
<PAGE>
<AUDIT-REPORT>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders,
Merrill Lynch Americas Income Fund, Inc.:
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of Merrill Lynch Americas
Income Fund, Inc. as of December 31, 1993, the related statements
of operations, changes in net assets, and cash flows and the financial
highlights for the period August 27, 1993 (commencement of operations)
to December 31, 1993. These financial statements and the financial
highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements
and the financial highlights based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and per-
form the audit to obtain reasonable assurance about whether the
financial statements and the financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.
Our procedures included confirmation of securities owned at
December 31, 1993 by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of
Merrill Lynch Americas Income Fund, Inc. as of December 31, 1993,
the results of its operations, the changes in its net assets, it cash
flows, and the financial highlights for the period August 27, 1993 to
December 31, 1993 in conformity with generally accepted accounting
principles.
Deloitte & Touche
Princeton, New Jersey
February 14, 1994
</AUDIT-REPORT>
