MERRILL LYNCH
AMERICAS INCOME
FUND, INC.
[FUND LOGO]
STRATEGIC
Performance
Annual Report
December 31, 1997
The Fund has the ability to leverage to seek 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 fluc-tuations, 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 diversi-fication 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
Americas Income Fund, Inc.
Box 9011
Princeton, NJ
08543-9011 #16801 -- 12/97
[RECYCLE LOGO]
Printed on post-consumer recycled paper
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 that 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
borrow-ing, 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.
Merrill Lynch Americas Income Fund, Inc., December 31, 1997
DEAR SHAREHOLDER
The Asian crisis seems to have reached its peak, in our opinion. The
region in general has experienced severe economic distress resulting
in significant currency depreciation and massive loss of stock market
capitalizations. However, we believe that the worst may be behind us
in the emerging bond markets. South Korea, Indonesia and Thailand have
already sought and received financial assistance from the
International Monetary Fund (IMF). Malaysia, the Philippines and, to a
lesser extent, Hong Kong are still dealing with the crisis without
external assistance. South Korea, Thailand, Malaysia and Indonesia
have been downgraded to "junk" status by the international rating
agencies.
Asia will have to undergo large-scale structural changes in order to
overcome the current crisis. The economies in the region will have to
practice severe financial austerity, restructure their banking systems
and eliminate entrenched subsidies. This prescription to regain
economic competitiveness will require political courage and finesse,
as it will result in an initial surge of bankruptcies and
unemployment. If handled improperly, the repair and reform process
could cause severe inflation and social problems. We will continue to
monitor the impact on the global economy of an immediate slowdown in
Asia in the short term and a more competitive Asia in the intermediate
term.
The Asian experience has dampened the risk appetite of investors for
emerging market investments and has focused attention on Russia and
Brazil, which are most prone to contagion from Asia. Russia
experienced a loss of $5 billion in foreign exchange reserves as a
result of a loss of investor confidence. Russia has responded by
allowing domestic interest rates to increase substantially to meet
levels demanded by the market. Short-term interest rates have risen
from 18% to 35%. This is likely to increase pressure on the fiscal
deficit. Russia is also trying to bolster tax collection to offset the
fiscal pressures. We believe that Russia is responding appropriately
to the situation. Given the strategic geo-political importance of
Russia to the global economy and the constructive relationship between
Russia and the IMF, we believe Russia should be able to overcome the
current adversity. The portfolio had a 19.7% exposure to Russia as of
December 31, 1997. Brazil also has experienced loss of investor
confidence and foreign exchange reserves. Brazil has responded with
higher interest rates and a fiscal package to offset the impact of
higher domestic interest rates. Brazil is trying to push through
structural reforms and an aggressive privatization program to overcome
the loss of investor confidence. In the absence of additional external
shocks, we believe Brazil and Russia should be able to muddle through
this period without currency devaluations.
Among other key emerging markets, Mexico, Argentina and Venezuela are
relatively more insulated from the Asian fall out. These countries do
not have, in our opinion, significant short-term borrowing needs.
Another important factor which we will monitor is the ability of
emerging countries to tap global capital markets.
Fiscal Year in Review
Our investment outlook for the fiscal year ended December 31, 1997 was
based on several factors. First, we had a negative view on interest
rates. The US economy was growing at a rapid pace, substantially above
noninflationary trend growth. Actual economic growth was consistently
exceeding estimates, and unemployment was at historic lows. Our
outlook was for continued strong growth, which we believed would
increase inflationary pressures. Federal Reserve Board Chairman Alan
Greenspan warned investors of inflationary pressures late in 1996 and
again in early 1997. The Federal Reserve Board increased interest
rates in March as a preemptive measure. While economic fundamentals in
Latin America were generally positive, our experience in 1994
indicated that a trend of rising interest rates in the United States
would overshadow constructive fundamentals in Latin America.
Second, abundant global liquidity had resulted in financial asset
inflation as evidenced by strength in most global stock and bond
markets. Chairman Greenspan warned investors of "irrational
exuberance" in February 1997. Asia was showing many signs of excesses.
Asian economies were posting large current account deficits fueled by
consumer imports. The real estate bubble which had been building for a
few years was showing signs of strain. We believed that Asia would
experience problems which could spread within Asia initially and
emerge as a much larger problem.
Based on our outlook, our strategy was focused on preservation of
principal. We positioned the Fund for a potentially bearish
environment by shortening duration and raising our cash position. At
mid-year, 37% of the Fund's net assets were invested in short-term US
securities. While our outlook in terms of faster economic growth in
the United States and problems in Asia were accurate, the strain on
global capital markets was unraveling at a slower pace than we had
anticipated. By mid-year, despite more evidence of problems in Asia,
an abundance of global liquidity was supporting markets at higher
levels than at the start of the year. We were more convinced at mid-
year that the problems in Asia would threaten global markets and that
financial assets globally were too expensive. We stuck to our
conviction and waited for the problems to materialize. When the Asian
crisis materialized in late summer, it introduced a substantial amount
of volatility into our markets. After experiencing a sharp drop in
prices, the market began stabilizing based on IMF-led rescue packages
for the distressed Asian countries. Global liquidity has continued to
be supportive for non-Asian financial markets.
At the start of the fiscal year ended December 31, 1997, the portfolio
was fully invested, primarily in short-duration bonds. As the Asian
crisis unfolded, we liquidated a substantial portion of the short-
duration assets in anticipation of increasing the duration of the
portfolio. As spreads widened, we increased our exposure to
intermediate-duration and long-duration assets in Argentina, Brazil,
Russia and Mexico. We doubled the average maturity of the portfolio
and ended the year with a cash level of 31% of net assets.
For the fiscal year ended December 31, 1997, the total return of the
Fund's Class A, Class B, Class C and Class D Shares were +1.74%,
+1.12%, +1.06% and +1.65%, respectively. (Results shown do not reflect
the deduction of any sales charges, and would be lower if sales
charges were included.) The Fund's limited total return for the year
was consistent with our strategy of principal preservation which
limited the Fund's risk exposure during a critical period.
In January 1998, we reassessed our intermediate-term outlook for
emerging markets. Based on the quick response of the IMF and the major
industrialized nations to the situation in Asia and the continued
abundance of global liquidity, our intermediate-term outlook on the
markets is positive. We have shifted our investment strategy to
reflect our more positive intermediate-term outlook.
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,
/S/ARTHUR ZEIKEL
Arthur Zeikel
President
/S/PAOLO VALLE
Paolo Valle
Senior Vice President and
Portfolio Manager
February 20, 1998
PERFORMANCE DATA
About Fund
Performance
Investors are able to purchase shares of the Fund through the Merrill
Lynch Select PricingSM System, which offers four pricing alternatives:
[bullet] Class A Shares incur a maximum initial sales charge
(front-end load) of 4% and bear no ongoing distribution or account
maintenance fees. Class A Shares are available only to eligible
investors, as detailed in the Fund's prospectus. If you were a Class A
shareholder prior to October 21, 1994, your Class A Shares were
redesignated to Class D Shares on October 21, 1994, which, in the case
of certain eligible investors, were simultaneously exchanged for Class
A Shares.
[bullet] 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 0.50% and an account
maintenance fee of 0.25%. These shares automatically convert to Class
D Shares after approximately 10 years. (There is no initial sales
charge for automatic share conversions.)
[bullet] Class C Shares are subject to a distribution fee of 0.55% 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.
[bullet] Class D Shares incur a maximum initial sales charge of
4% and an account maintenance fee of 0.25% (but no
distribution fee).
None of the past results shown should be considered a representation
of future performance. Figures shown in the "Average Annual Total
Return" tables as well as the total returns and cumulative total
returns in the "Performance Summary" tables assume reinvestment of all
dividends and capital gains distributions at net asset value on the
payable 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.
<TABLE>
<CAPTION>
Performance
Summary --
Class A Shares
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <C> <C> <C> <C> <C>
10/21/94 -- 12/31/94 $9.08 $8.51 -- $0.168 - 4.45%
1995 8.51 9.70 -- 0.944 +27.27
1996 9.70 11.36 -- 1.450 +33.64
1997 11.36 9.60 $0.054 1.891 + 1.74
Total $0.054 Total $4.453
Cumulative total return as of 12/31/97: +65.34%**
* Figures may include short-term capital gains distributions.
** Figures do not reflect deduction of any sales charge; results would be lower if sales charge was included.
</TABLE>
<TABLE>
<CAPTION>
Performance
Summary --
Class B Shares
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <C> <C> <C> <C> <C>
8/27/93 -- 12/31/93 $10.00 $10.84 -- $0.281 +11.30%
1994 10.84 8.48 -- 0.754 -15.08
1995 8.48 9.65 -- 0.875 +26.10
1996 9.65 11.31 -- 1.365 +32.75
1997 11.31 9.57 $0.054 1.804 + 1.12
Total $0.054 Total $5.079
Cumulative total return as of 12/31/97: +59.98%**
* Figures may include short-term capital gains distributions.
** Figures do not reflect deduction of any sales charge; results would be lower if sales charge was deducted.
</TABLE>
<TABLE>
<CAPTION>
Performance
Summary --
Class C Shares
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <C> <C> <C> <C> <C>
10/21/94 -- 12/31/94 $9.08 $8.47 -- $0.152 - 5.06%
1995 8.47 9.65 -- 0.870 +26.18
1996 9.65 11.31 -- 1.358 +32.66
1997 11.31 9.57 $0.054 1.797 + 1.06
Total $0.054 Total $4.177
Cumulative total return as of 12/31/97: +60.61%**
* Figures may include short-term capital gains distributions.
** Figures do not reflect deduction of any sales charge; results would be lower if sales charge was deducted.
</TABLE>
<TABLE>
<CAPTION>
Performance
Summary --
Class D Shares
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <C> <C> <C> <C> <C>
8/27/93 -- 12/31/93 $10.00 $10.84 -- $0.300 +11.49%
1994 10.84 8.48 -- 0.802 -14.65
1995 8.48 9.65 -- 0.919 +26.75
1996 9.65 11.31 -- 1.420 +33.44
1997 11.31 9.57 $0.054 1.860 + 1.65
Total $0.054 Total $5.301
Cumulative total return as of 12/31/97: +63.60%**
* Figures may include short-term capital gains distributions.
** Figures do not include sales charges; results would be lower if sales charge was included.
</TABLE>
[GRAPHIC OMITTED: TOTAL RETURN BASED ON A $10,000 INVESTMENT]
Merrill Lynch Americas Income Fund, Inc.
Total Return Based on a $10,000 Investment
A line graph depicting the growth of an investment in the Fund's Class A
Shares and Class C Shares compared to growth of an investment in the JP
Morgan Latin Brady Bond Index:
10/21/94** 12/97
ML Americas Income Fund, Inc.+--
Class A Shares* $9,600 $15,873
ML Americas Income Fund, Inc.+--
Class C Shares* $10,000 $16,061
JP Morgan Latin Brady Bond
Index++ $10,000 $18,403
A line graph depicting the growth of an investment in the Fund's Class B
Shares and Class D Shares compared to growth of an investment in the JP
Morgan Latin Brady Bond Index. Beginning and ending values are:
8/27/93** 12/97
ML Americas Income Fund, Inc.+--
Class B Shares* $10,000 $15,998
ML Americas Income Fund, Inc.+--
Class D Shares* $9,600 $15,706
JP Morgan Latin Brady Bond
Index++ $10,000 $18,305
* Assuming maximum sales charge, transaction costs and other operating
expenses, including advisory fees.
** Commencement of operations.
+ ML Americas Income Fund, Inc. invests primarily in debt securities
denominated in a currency of a country located in the Western
Hemisphere (i.e., North and South America and the surrounding waters).
++ This unmanaged Index is comprised of dollar-denominated restructured
sovereign bonds, the securities created through the restructuring of
commercial bank debt. It includes a large percentage of Brady bonds.
Past performance is not predictive of future performance.
Average Annual
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 12/31/97 + 1.74% - 2.33%
Inception (10/21/94) through 12/31/97 +17.05 +15.56
* Maximum sales charge is 4%.
** Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 12/31/97 + 1.12% - 2.24%
Inception (8/27/93) through 12/31/97 +11.42 +11.42
* Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
** Assuming payment of applicable contingent deferred sales charge.
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Year Ended 12/31/97 + 1.06% + 0.22%
Inception (10/21/94) through 12/31/97 +15.99 +15.99
* Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 year.
** Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Sales Charge Sales Charge**
Class D Shares*
Year Ended 12/31/97 + 1.65% - 2.42%
Inception (8/27/93) through 12/31/97 +12.00 +10.95
* Maximum sales charge is 4%.
** Assuming maximum sales charge.
<TABLE>
<CAPTION>
Recent
Performance
Results
12 Month 3 Month
12/31/97 9/30/97 12/31/96 % Change % Change
<S> <C> <C> <C> <C> <C>
ML Americas Income Fund Class A Shares* $9.60 $10.92 $11.36 -15.02%(1) -11.59%(1)
ML Americas Income Fund Class B Shares* 9.57 10.87 11.31 -14.91(1) -11.46(1)
ML Americas Income Fund Class C Shares* 9.57 10.87 11.31 -14.91(1) -11.46(1)
ML Americas Income Fund Class D Shares* 9.57 10.87 11.31 -14.91(1) -11.46(1)
ML Americas Income Fund Class A Shares -- Total Return* + 1.74(2) + 0.98(3)
ML Americas Income Fund Class B Shares -- Total Return* + 1.12(4) + 0.96(5)
ML Americas Income Fund Class C Shares -- Total Return* + 1.06(6) + 0.95(7)
ML Americas Income Fund Class D Shares -- Total Return* + 1.65(8) + 1.10(9)
ML Americas Income Fund Class A Shares -- Standardized 30-day Yield 9.42%
ML Americas Income Fund Class B Shares -- Standardized 30-day Yield 8.97%
ML Americas Income Fund Class C Shares -- Standardized 30-day Yield 8.90%
ML Americas Income Fund Class D Shares -- Standardized 30-day Yield 9.15%
* 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 $0.054 per share capital gains distributions.
(2) Percent change includes reinvestment of $1.891 per share ordinary income dividends and $0.054 per share capital gains
distributions.
(3) Percent change includes reinvestment of $1.396 per share ordinary income dividends and $0.054 per share capital gains
distributions.
(4) Percent change includes reinvestment of $1.804 per share ordinary income dividends and $0.054 per share capital gains
distributions.
(5) Percent change includes reinvestment of $1.372 per share ordinary income dividends and $0.054 per share capital gains
distributions.
(6) Percent change includes reinvestment of $1.797 per share ordinary income dividends and $0.054 per share capital gains
distributions.
(7) Percent change includes reinvestment of $1.370 per share ordinary income dividends and $0.054 per share capital gains
distributions.
(8) Percent change includes reinvestment of $1.860 per share ordinary income dividends and $0.054 per share capital gains
distributions.
(9) Percent change includes reinvestment of $1.388 per share ordinary income dividends and $0.054 per share capital gains
distributions.
</TABLE>
<TABLE>
<CAPTION>
Merrill Lynch Americas Income Fund, Inc., December 31, 1997
SCHEDULE OF INVESTMENTS (in US dollars)
Interest Maturity Value Percent of
COUNTRY Industry Face Amount Bonds Rate Date (Note 1a) Net Assets
<S> <C> <C> <C> <C> <C> <C> <C>
Argentina Industrials US$ 3,000,000 Banco Hipotecario
Nacional S.A. 8.00% 6/04/1999 $2,940,000 2.9%
------------- ------
Total Bonds in Argentina
(Cost -- $3,007,500) 2,940,000 2.9
============= ======
Mexico Banking 2,500,000 Banco Nacional S.A. 8.00 4/14/2000 2,482,412 2.5
Industrials 5,000,000 Cemex S.A. 10.75 7/15/2000 5,244,150 5.2
2,450,000 Controladero Comercial
Mexicana S.A. 8.75 4/21/1998 2,450,000 2.5
------------- ------
7,694,150 7.7
Paper 3,000,000 Grupo Industrial Durango
S.A. de C.V. (c) 12.625 8/01/2003 3,367,500 3.4
------------- ------
Total Bonds in Mexico
(Cost -- $13,751,624) 13,544,062 13.6
============= ======
Russia Financial
Services 2,000,000 SBS-AGRO Finance B.V. 10.25 7/21/2000 1,740,000 1.7
------------- ------
Total Bonds in Russia
(Cost -- $2,002,000) 1,740,000 1.7
============= ======
United States US Government 3,000,000 United States Treasury
Obligations Notes 6.125 11/15/2027 3,082,980 3.1
------------- ------
Total Bonds in the United
States (Cost -- $3,076,875) 3,082,980 3.1
============= ======
Total Investments in Bonds
(Cost -- $21,837,999) 21,307,042 21.3
============= ======
Brady Bonds*
Argentina Sovereign 5,000,000 Republic of Argentina,
Government Global Bonds 8.375 12/20/2003 4,750,000 4.7
Obligations 3,000,000 Republic of Argentina,
Global Bonds 9.75 9/19/2027 2,869,500 2.9
------------- ------
Total Brady Bonds in
Argentina (Cost --
$7,756,700) 7,619,500 7.6
============= ======
Brazil Sovereign 12,542,860 Republic of Brazil,
Government Floating Rate 'C' Bond
Obligations (b) 8.00 4/15/2014 9,814,788 9.8
1,000,000 Republic of Brazil, Global
Bonds 10.125 5/15/2027 934,375 1.0
------------- ------
Total Brady Bonds in
Brazil (Cost --
$10,400,629) 10,749,163 10.8
============= ======
Mexico Sovereign 5,000,000 Republic of Mexico, Par
Government 'B' Bonds, Recovery
Obligations Rights 6.25 12/31/2019 4,162,500 4.2
1,000 United Mexican States,
Value Recovery Rights (a) 0.00 0 0.0
------------- ------
Total Brady Bonds in Mexico
(Cost -- $4,181,250) 4,162,500 4.2
============= ======
Russia Sovereign 29,500,000 Republic of Russia,
Government Principal Loan (b) 6.71875 12/15/2020 17,999,660 18.0
Obligations ------------- ------
Total Brady Bonds in Russia
(Cost -- $17,907,875) 17,999,660 18.0
============= ======
Venezuela Sovereign 4,761,905 Republic of Venezuela, DCB,
Government Floating Rate Bond+ 6.812 12/18/2007 4,255,952 4.3
Obligations 3,000,000 Republic of Venezuela,
Global Bonds 9.25 9/15/2027 2,688,000 2.7
------------- ------
Total Brady Bonds in
Venezuela (Cost --
$6,617,619) 6,943,952 7.0
============= ======
Total Investments in Brady
Bonds (Cost -- $46,864,073) 47,474,775 47.6
============= ======
Short-Term Securities
Brazil Certificates of 3,000,000 Banco Excel S.A. 7.875 7/15/1998 2,790,000 2.8
Deposit ------------- ------
Total Short-Term
Investments in Brazil
(Cost -- $2,881,187) 2,790,000 2.8
============= ======
Ecuador Certificates of 2,000,000 Banco Popular of Ecuador 7.875 2/20/1998 1,980,504 2.0
Deposit ------------- ------
Total Short-Term
Investments in Ecuador
(Cost -- $1,979,366) 1,980,504 2.0
============= ======
United States US Government 6,996,000 Federal Home Loan Banks 5.10 1/02/1998 6,996,000 7.0
Agency 20,000,000 Federal Home Loan Mortgage
Obligations** Corp. 5.72 1/09/1998 19,977,756 20.0
21,760,000 Federal National Mortgage
Association 5.54 1/15/1998 21,716,468 21.7
------------- ------
Total Short-Term
Investments in the United
States (Cost --
$48,690,224) 48,690,224 48.7
============= ======
Total Investments in
Short-Term Securities
(Cost -- $53,550,777) 53,460,728 53.5
============= ======
Total Investments (Cost --
$122,252,849) 122,242,545 122.4
============= ======
Variation Margin on
Financial Futures
Contracts*** 71,250 0.1
Liabilities in Excess of
Other Assets (22,450,336) (22.5)
------------- ------
Net Assets $99,863,459 100.0%
============= ======
(a) The rights may be exercised until 3/31/2020.
(b) Represents a pay-in-kind security which may pay interest in
additional shares/face.
(c) The security may be offered and sold to "qualified institutional
buyers" under Rule 144A of the Securities Act of 1933.
+ Portion of securities held as collateral for open financial
futures contracts.
* 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.
** 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.
*** Financial Futures Contracts purchased as of December 31, 1997 were
as follows:
Number of Expiration Value
Contracts Issue Date (Note 1a)
120 US Treasury Bonds March 1998 $14,456,250
------------
Total Financial Futures Contracts Purchased
(Total Contract Price -- $14,380,000) $14,456,250
============
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
As of December 31, 1997
<S> <C> <C> <C>
Assets: Investments, at value (identified cost -- $122,252,849) (Note 1a) $122,242,545
Cash 2,107
Receivables:
Interest $1,346,428
Capital shares sold 108,392
Variation margin (Note 1b) 71,250
Securities sold 6,317 1,532,387
------------
Deferred organization expenses (Note 1f) 13,461
Prepaid registration fees and other assets (Note 1f) 23,613
------------
Total assets 123,814,113
------------
Liabilities: Payables:
Securities purchased 17,709,390
Distributions to shareholders (Note 1g) 5,737,663
Capital shares redeemed 193,139
Distributor (Note 2) 58,751
Investment adviser (Note 2) 53,583 23,752,526
------------
Accrued expenses and other liabilities 198,128
------------
Total liabilities 23,950,654
------------
Net Assets: Net assets $99,863,459
============
Net Assets Class A Common Stock, $0.10 par value, 100,000,000 shares authorized $50,436
Consist of: Class B Common Stock, $0.10 par value, 100,000,000 shares authorized 822,551
Class C Common Stock, $0.10 par value, 100,000,000 shares authorized 44,110
Class D Common Stock, $0.10 par value, 100,000,000 shares authorized 126,125
Paid-in capital in excess of par 101,630,733
Accumulated distributions in excess of capital gains on investments
-- net (Note 1g) (2,876,442)
Unrealized appreciation on investments -- net 65,946
------------
Net assets $99,863,459
============
Net Asset Class A -- Based on net assets of $4,842,349 and 504,361 shares outstanding $9.60
Value: ============
Class B -- Based on net assets of $78,732,985 and 8,225,505 shares outstanding $9.57
============
Class C -- Based on net assets of $4,221,731 and 441,099 shares outstanding $9.57
============
Class D -- Based on net assets of $12,066,394 and 1,261,248 shares outstanding $9.57
============
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1997
<S> <C> <C> <C>
Investment Income Interest and discount earned $13,814,783
(Note 1e):
Expenses: Investment advisory fees (Note 2) $1,056,656
Account maintenance and distribution fees -- Class B (Note 2) 923,998
Interest on short sales (Note 1h) 550,685
Transfer agent fees -- Class B (Note 2) 256,130
Interest expense (Note 5) 178,311
Printing and shareholder reports 109,181
Registration fees (Note 1f) 82,370
Accounting services (Note 2) 77,610
Account maintenance and distribution fees -- Class C (Note 2) 69,103
Custodian fees 68,696
Professional fees 63,860
Transfer agent fees -- Class A (Note 2) 46,593
Account maintenance fees -- Class D (Note 2) 40,772
Directors' fees and expenses 37,384
Transfer agent fees -- Class D (Note 2) 29,833
Amortization of organization expenses (Note 1f) 20,908
Transfer agent fees -- Class C (Note 2) 19,327
Other 8,122
------------
Total expenses 3,639,539
------------
Investment income -- net 10,175,244
------------
Realized & Realized gain on investments -- net 7,854,219
Unrealized Gain Change in unrealized appreciation on investments -- net (16,504,979)
(Loss) on ------------
Investments -- Net Net Increase in Net Assets Resulting from Operations $1,524,484
(Notes 1b, 1c, 1e & 3): ============
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
For the
Year Ended
December 31,
Increase (Decrease) in Net Assets: 1997 1996
<S> <C> <C> <C>
Operations: Investment income -- net $10,175,244 $15,396,353
Realized gain on investments and foreign currency transactions -- net 7,854,219 22,082,753
Change in unrealized appreciation on investments and foreign currency
transactions -- net (16,504,979) 14,959,382
-------------- --------------
Net increase in net assets resulting from operations 1,524,484 52,438,488
-------------- --------------
Dividends & Investment income -- net:
Distributions to Class A (1,563,878) (1,756,766)
Shareholders Class B (7,096,209) (12,358,235)
(Note 1g): Class C (487,460) (678,129)
Class D (1,027,697) (1,554,156)
In excess of investment income -- net:
Class A -- (236,371)
Class B -- (1,662,785)
Class C -- (91,241)
Class D -- (209,110)
Realized gain on investments -- net:
Class A (416,733) (801,439)
Class B (7,162,455) (4,369,170)
Class C (379,099) (310,794)
Class D (1,075,432) (512,917)
In excess of realized gain on investments -- net:
Class A (132,693) --
Class B (2,280,609) --
Class C (120,710) --
Class D (342,430) --
-------------- --------------
Net decrease in net assets resulting from dividends and distributions
to shareholders (22,085,405) (24,541,113)
-------------- --------------
Capital Share Net increase (decrease) in net assets derived from capital share
Transactions transactions (97,754,082) 70,086,193
(Note 4): -------------- --------------
Net Assets: Total increase (decrease) in net assets (118,315,003) 97,983,568
Beginning of year 218,178,462 120,194,894
-------------- --------------
End of year $99,863,459 $218,178,462
============== ==============
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF CASH FLOWS
For the Year Ended December 31, 1997
<S> <C> <C>
Cash Provided by Net increase in net assets resulting from operations $1,524,484
Operating Activities: Adjustments to reconcile net increase in net assets resulting from operations to net
cash provided by operating activities:
Decrease in receivables 3,661,219
Decrease in other assets 56,999
Decrease in other liabilities (161,979)
Realized and unrealized loss on investments -- net 8,650,760
Amortization of discount (4,246,881)
--------------
Net cash provided by operating activities 9,484,602
--------------
Cash Provided by Proceeds from sales of long-term securities 1,407,911,625
Investing Activities: Purchases of long-term securities (1,229,662,485)
Purchases of short-term investments (6,447,923,473)
Proceeds from sales and maturities of short-term investments 6,401,730,994
--------------
Net cash provided by investing activities 132,056,661
--------------
Cash Used for Cash receipts from issuance of capital shares 108,068,352
Financing Activities: Cash receipts from borrowings 94,300,700
Cash payments on borrowings (116,651,000)
Cash payments on shares of capital shares redeemed (217,328,766)
Dividends paid to shareholders (9,928,442)
--------------
Net cash used for financing activities (141,539,156)
--------------
Cash: Net increase in cash 2,107
Cash at beginning of year --
--------------
Cash at end of year $2,107
==============
Cash Flow Cash paid for interest $741,102
Information: ==============
Non-Cash Capital shares issued on reinvestment of dividends paid to shareholders $10,642,141
Financing Activities: ==============
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Class A
For the
For the Period
The following per share data and Year Ended Oct. 21,
ratios have been derived from information December 31, 1994+ to
provided in the financial statements. Dec. 31,
1997 1996+++++ 1995 1994
Increase (Decrease) in Net Asset Value:
<S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $11.36 $9.70 $8.51 $9.08
Operating --------- --------- --------- ---------
Performance: Investment income -- net .72 .97 .94 .17
Realized and unrealized gain (loss) on
investments and foreign currency
transactions -- net (.54) 2.14 1.19 (.57)
--------- --------- --------- ---------
Total from investment operations .18 3.11 2.13 (.40)
--------- --------- --------- ---------
Less dividends and distributions:
Investment income -- net (.72) (1.00) (.94) (.14)
In excess of investment income -- net -- (.13) -- --
Realized gain on investments -- net (.93) (.32) -- (.03)
In excess of realized gain on investments
-- net (.29) -- -- --
--------- --------- --------- ---------
Total dividends and distributions (1.94) (1.45) (.94) (.17)
--------- --------- --------- ---------
Net asset value, end of period $9.60 $11.36 $9.70 $8.51
========= ========= ========= =========
Total Investment Based on net asset value per share 1.74% 33.64% 27.27% (4.45%)++++
Return:** ========= ========= ========= =========
Ratios to Average Expenses, excluding interest expense 1.38% 1.05% 1.20% 1.22%*
Net Assets: ========= ========= ========= =========
Expenses 1.48% 1.32% 1.36% 1.91%*
========= ========= ========= =========
Investment income -- net 6.31% 8.97% 11.25% 8.63%*
========= ========= ========= =========
Supplemental Net assets, end of period (in thousands) $4,842 $28,136 $1,165 $253
Data: ========= ========= ========= =========
Portfolio turnover 942.74% 420.35% 127.17% 353.33%
========= ========= ========= =========
Leverage: Amount of reverse repurchase agreements
outstanding, end of period (in thousands) $-- $22,350 $10,265 $17,058
========= ========= ========= =========
Average amount of reverse repurchase
agreements outstanding during the period
(in thousands) $3,185 $8,277 $2,640 $17,315
========= ========= ========= =========
Average amount of reverse repurchase
agreements per share during the period $.80 $.48 $.20 $1.19
========= ========= ========= =========
* Annualized.
** Total investment returns exclude the effects of sales loads.
+ Commencement of operations.
++++ Aggregate total investment return.
+++++ Based on average shares outstanding.
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Class B
For the
For the Period
The following per share data and ratios Year Ended Aug. 27,
have been derived from information December 31, 1993+ to
provided in the financial statements. Dec. 31,
1997 1996+++++ 1995 1994 1993
Increase (Decrease) in Net Asset Value:
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $11.31 $9.65 $8.48 $10.84 $10.00
Operating ---------- ---------- ---------- ---------- ----------
Performance
Investment income -- net .63 .88 .88 .75 .24
Realized and unrealized gain (loss)
on investments and foreign currency
transactions -- net (.52) 2.15 1.17 (2.36) .88
---------- ---------- ---------- ---------- ----------
Total from investment operations .11 3.03 2.05 (1.61) 1.12
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income -- net (.63) (.93) (.88) (.64) (.24)
In excess of investment income --
net -- (.12) -- -- --
Realized gain on investments -- net (.93) (.32) -- (.11) (.04)
In excess of realized gain on
investments -- net (.29) -- -- -- --
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (1.85) (1.37) (.88) (.75) (.28)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $9.57 $11.31 $9.65 $8.48 $10.84
========== ========== ========== ========== ==========
Total Investment Based on net asset value per share 1.12% 32.75% 26.10% (15.08%) 11.30%++++
Return:** ========== ========== ========== ========== ==========
Ratios to Average Expenses, excluding interest expense
Net Assets: and net of reimbursement 2.16% 1.83% 1.97% 1.79% 1.03%*
========== ========== ========== ========== ==========
Expenses, excluding interest expense 2.16% 1.83% 1.97% 2.00% 2.45%*
========== ========== ========== ========== ==========
Expenses 2.26% 2.10% 2.13% 2.70% 2.53%*
========== ========== ========== ========== ==========
Investment income -- net 5.76% 8.36% 10.40% 8.14% 6.76%*
========== ========== ========== ========== ==========
Supplemental Net assets, end of period (in
Data: thousands) $78,733 $160,204 $103,465 $101,933 $98,848
========== ========== ========== ========== ==========
Portfolio turnover 942.74% 420.35% 127.17% 353.33% 75.18%
========== ========== ========== ========== ==========
Leverage: Amount of reverse repurchase
agreements outstanding, end of
period (in thousands) $-- $22,350 $10,265 $17,058 $21,546
========== ========== ========== ========== ==========
Average amount of reverse
repurchase agreements outstanding
during the period (in thousands) $3,185 $8,277 $2,640 $17,315 $18,977
========== ========== ========== ========== ==========
Average amount of reverse repurchase
agreements per share during the
period $.80 $.48 $.20 $1.19 $1.81
========== ========== ========== ========== ==========
* Annualized.
** Total investment returns exclude the effects of sales loads.
+ Commencement of operations.
++++ Aggregate total investment return.
+++++ Based on average shares outstanding.
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Class C
For the
For the Period
The following per share data and Year Ended Oct. 21,
ratios have been derived from information December 31, 1994+ to
provided in the financial statements. Dec. 31,
1997 1996+++++ 1995 1994
Increase (Decrease) in Net Asset Value:
<S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $11.31 $9.65 $8.47 $9.08
Operating --------- --------- --------- ---------
Performance: Investment income -- net .63 .87 .87 .15
Realized and unrealized gain (loss) on
investments and foreign currency
transactions -- net (.52) 2.15 1.18 (.61)
--------- --------- --------- ---------
Total from investment operations .11 3.02 2.05 (.46)
--------- --------- --------- ---------
Less dividends and distributions:
Investment income -- net (.63) (.92) (.87) (.13)
In excess of investment income -- net -- (.12) -- --
Realized gain on investments -- net (.93) (.32) -- (.02)
In excess of realized gain on investments
-- net (.29) -- -- --
--------- --------- --------- ---------
Total dividends and distributions (1.85) (1.36) (.87) (.15)
--------- --------- --------- ---------
Net asset value, end of period $9.57 $11.31 $9.65 $8.47
========= ========= ========= =========
Total Investment Based on net asset value per share 1.06% 32.66% 26.18% (5.06%)++++
Return:** ========= ========= ========= =========
Ratios to Average Expenses, excluding interest expense 2.23% 1.90% 2.05% 2.24%*
Net Assets: ========= ========= ========= =========
Expenses 2.23% 2.17% 2.19% 3.05%*
========= ========= ========= =========
Investment income -- net 5.64% 8.17% 10.23% 8.87%*
========= ========= ========= =========
Supplemental Net assets, end of period (in thousands) $4,222 $11,436 $1,396 $75
Data: ========= ========= ========= =========
Portfolio turnover 942.74% 420.35% 127.17% 353.33%
========= ========= ========= =========
Leverage: Amount of reverse repurchase agreements
outstanding, end of period (in thousands) $-- $22,350 $10,265 $17,058
========= ========= ========= =========
Average amount of reverse repurchase
agreements outstanding during the period
(in thousands) $3,185 $8,277 $2,640 $17,315
========= ========= ========= =========
Average amount of reverse repurchase
agreements per share during the period $.80 $.48 $.20 $1.19
========= ========= ========= =========
* Annualized.
** Total investment returns exclude the effects of sales loads.
+ Commencement of operations.
++++ Aggregate total investment return.
+++++ Based on average shares outstanding.
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Class D
For the
For the Period
The following per share data and ratios Year Ended Aug. 27,
have been derived from information December 31, 1993+ to
provided in the financial statements. Dec. 31,
1997 1996+++++ 1995 1994 1993
Increase (Decrease) in Net Asset Value:
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $11.31 $9.65 $8.48 $10.84 $10.00
Operating ---------- ---------- ---------- ---------- ----------
Performance: Investment income -- net .69 .95 .92 .80 .26
Realized and unrealized gain (loss)
on investments and foreign currency
transactions -- net (.52) 2.13 1.17 (2.36) .88
---------- ---------- ---------- ---------- ----------
Total from investment operations .17 3.08 2.09 (1.56) 1.14
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income -- net (.69) (.97) (.92) (.68) (.26)
In excess of investment income -- net -- (.13) -- -- --
Realized gain on investments -- net (.93) (.32) -- (.12) (.04)
In excess of realized gain on
investments -- net (.29) -- -- -- --
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (1.91) (1.42) (.92) (.80) (.30)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $9.57 $11.31 $9.65 $8.48 $10.84
========== ========== ========== ========== ==========
Total Investment Based on net asset value per share 1.65% 33.44% 26.75% (14.65%) 11.49%++++
Return:** ========== ========== ========== ========== ==========
Ratios to Average Expenses, excluding interest expense
Net Assets: and net of reimbursement 1.63% 1.31% 1.44% 1.28% .50%*
========== ========== ========== ========== ==========
Expenses, excluding interest expense 1.63% 1.31% 1.44% 1.48% 1.93%*
========== ========== ========== ========== ==========
Expenses 1.73% 1.58% 1.60% 2.17% 2.03%*
========== ========== ========== ========== ==========
Investment income -- net 6.30% 8.92% 10.85% 8.65% 7.14%*
========== ========== ========== ========== ==========
Supplemental Net assets, end of period (in
Data: thousands) $12,066 $18,402 $14,169 $14,938 $15,076
========== ========== ========== ========== ==========
Portfolio turnover 942.74% 420.35% 127.17% 353.33% 75.18%
========== ========== ========== ========== ==========
Leverage: Amount of reverse repurchase
agreements outstanding, end of
period (in thousands) $-- $22,350 $10,265 $17,058 $21,546
========== ========== ========== ========== ==========
Average amount of reverse repurchase
agreements outstanding during the
period (in thousands) $3,185 $8,277 $2,640 $17,315 $18,977
========== ========== ========== ========== ==========
Average amount of reverse repurchase
agreements per share during the
period $.80 $.48 $.20 $1.19 $1.81
========== ========== ========== ========== ==========
* Annualized.
** Total investment returns exclude the effects of sales loads.
+ Commencement of operations.
++++ Aggregate total investment return.
+++++ Based on average shares outstanding.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Americas Income Fund, Inc., December 31, 1997
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. The Fund offers four classes of
shares under the Merrill Lynch Select PricingSM System. Shares of
Class A and Class D are sold with a front-end sales charge. Shares of
Class B and Class C may be subject to a contingent deferred sales
charge. All classes of shares have identical voting, dividend,
liquidation and other rights and the same terms and conditions, except
that Class B, Class C and Class D Shares bear certain expenses related
to the account maintenance of such shares, and Class B and Class C
Shares also bear certain expenses related to the distribution of such
shares. Each class has exclusive voting rights with respect to matters
relating to its account maintenance and distribution expenditures. The
following is a summary of significant accounting policies followed by
the Fund.
(a) Valuation of securities -- Portfolio securities which are traded
on stock exchanges are valued at the last sale price on the exchange
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. Securities traded in the over-the-counter
market are valued at the last available bid price prior to the time of
valuation. In cases where securities are traded on more than one
exchange, the securities are valued on the exchange designated by or
under the authority of the Board of Directors as the primary market.
Securities which are traded both in the over-the-counter market and on
a stock exchange are valued according to the broadest and most
representative market. Options written are valued at the last sale
price in the case of exchange-traded options or, in the case of
options traded in the over-the-counter market, the last asked price.
Options purchased are valued at the last sale price in the case of
exchange-traded options or, in the case of options traded in the over-
the-counter market, the last bid price. Short-term securities are
valued at amortized cost, which approximates market value. Other
investments, including futures contracts and related options, are
stated at market value. Securities and assets for which market value
quotations are not available are valued at their fair value as
determined in good faith by or under the direction of the Fund's Board
of Directors.
(b) Derivative financial instruments -- The Fund may engage in various
portfolio strategies to seek to increase its return by hedging its
portfolio against adverse movements in the debt and currency markets.
Losses may arise due to changes in the value of the contract or if the
counterparty does not perform under the contract.
[bullet] Forward foreign exchange contracts -- 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.
[bullet] Options -- The Fund is authorized to write and purchase call
and put 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 exceeds the
premium paid or received).
Written and purchased options are non-income producing investments.
[bullet] 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 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 unrealized 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.
(c) 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) assets or liabilities expressed in foreign currencies
into US dollars. Realized and unrealized gains or losses from
investments include the effects of foreign exchange rates on
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 are charged to expense on a straight-
line basis 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. Distributions of capital
gains are recorded on the ex-dividend dates. Distributions in excess
of realized capital gains are due primarily to differing tax
treatments for post-October losses.
2. Investment Advisory Agreement and Transactions
with Affiliates:
The Fund has entered into an Investment Advisory Agreement with
Merrill Lynch Asset Management, L.P. ("MLAM"). The general partner of
MLAM is Princeton Services, Inc. ("PSI"), an indirect wholly-owned
subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is the
limited partner. The Fund has also entered into a Distribution
Agreement and Distribution Plans with Merrill Lynch Funds Distributor,
Inc. ("MLFD" or "Distributor"), a wholly-owned subsidiary of Merrill
Lynch Group, Inc.
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 plus the principal
amount of borrowings incurred by the Fund for leverage purposes.
Pursuant to the Distribution Plans adopted by the Fund in accordance
with Rule 12b-1 under the Investment Company Act of 1940, the Fund
pays the Distributor ongoing account maintenance and distribution
fees. The fees are accrued daily and paid monthly at annual rates
based upon the average daily net assets of the shares as follows:
Account
Maintenance Distribution
Fee Fee
Class B 0.25% 0.50%
Class C 0.25% 0.55%
Class D 0.25% --
Pursuant to a sub-agreement with the Distributor, Merrill Lynch,
Pierce, Fenner & Smith Inc. ("MLPF&S"), a subsidiary of ML & Co., also
provides account maintenance and distribution services to the Fund.
The ongoing account maintenance fee compensates the Distributor and
MLPF&S for providing account maintenance services to Class B, Class C
and Class D shareholders. The ongoing distribution fee compensates the
Distributor and MLPF&S for providing shareholder and distribution-
related services to Class B and Class C shareholders.
For the year ended December 31, 1997, MLFD earned underwriting
discounts and direct commissions and MLPF&S earned dealer concessions
on sales of the Fund's Class A and Class D Shares as follows:
MLFD MLPF&S
Class A $72 $921
Class D $2,989 $28,129
For the year ended December 31, 1997, MLPF&S received contingent
deferred sales charges of $525,474 and $7,621 relating to transactions
in Class B and Class C Shares, respectively.
Merrill Lynch Financial Data Services, Inc. ("MLFDS"), a wholly-owned
subsidiary of ML & Co., 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 MLAM, PSI, MLFD, MLFDS, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the year ended December 31, 1997 were $1,031,908,164 and
$1,194,743,101, respectively.
Realized and unrealized gains (losses) as of December 31, 1997 were as
follows:
Realized Unrealized
Gains (Losses) Gains (Losses)
Long-term investments $10,227,847 $79,745
Short-term investments (128,233) (90,049)
Short sales (2,288,870) --
Financial future contracts 43,475 76,250
------------- -------------
Total $7,854,219 $65,946
============= =============
As of December 31, 1997, net unrealized depreciation for Federal
income tax purposes aggregated $1,318,661, of which $444,746 related
to appreciated securities and $1,763,407 related to depreciated
securities. At December 31, 1997, the aggregate cost of investments
for Federal income tax purposes was $123,561,206.
4. Capital Share Transactions:
Net increase (decrease) in net assets derived from capital share
transactions was $(97,754,082) and $70,086,193 for the years ended
December 31, 1997 and December 31, 1996, respectively.
Transactions in shares of capital were as follows:
Class A Shares for the Year Dollar
Ended December 31, 1997 Shares Amount
Shares sold 5,151,636 $56,403,293
Shares issued to shareholders
in reinvestment of dividends
and distributions 51,107 445,703
------------ ------------
Total issued 5,202,743 56,848,996
Shares redeemed (7,175,214) (79,112,077)
------------ ------------
Net decrease (1,972,471) $(22,263,081)
============ ============
Class A Shares for the Year Dollar
Ended December 31, 1996 Shares Amount
Shares sold 3,188,362 $33,640,007
Shares issued to shareholders
in reinvestment of dividends
and distributions 223,634 2,467,894
------------ ------------
Total issued 3,411,996 36,107,901
Shares redeemed (1,055,288) (11,591,124)
------------ ------------
Net increase 2,356,708 $24,516,777
============ ============
Class B Shares for the Year Dollar
Ended December 31, 1997 Shares Amount
Shares sold 3,167,804 $34,931,742
Shares issued to shareholders
in reinvestment of dividends
and distributions 820,562 8,237,832
------------ ------------
Total issued 3,988,366 43,169,574
Automatic conversion of shares (47,292) (520,368)
Shares redeemed (9,878,218) (107,912,244)
------------ ------------
Net decrease (5,937,144) $(65,263,038)
============ ============
Class B Shares for the Year Dollar
Ended December 31, 1996 Shares Amount
Shares sold 9,423,373 $97,739,290
Shares issued to shareholders
in reinvestment of dividends
and distributions 874,443 9,531,248
------------ ------------
Total issued 10,297,816 107,270,538
Automatic conversion of shares (481,977) (1,098,316)
Shares redeemed (6,374,330) (71,172,295)
------------ ------------
Net increase 3,441,509 $34,999,927
============ ============
Class C Shares for the Year Dollar
Ended December 31, 1997 Shares Amount
Shares sold 402,764 $4,445,980
Shares issued to shareholders
in reinvestment of dividends
and distributions 54,337 552,404
------------ ------------
Total issued 457,101 4,998,384
Shares redeemed (1,027,069) (11,235,615)
------------ ------------
Net decrease (569,968) $(6,237,231)
============ ============
Class C Shares for the Year Dollar
Ended December 31, 1996 Shares Amount
Shares sold 1,097,995 $11,420,812
Shares issued to shareholders
in reinvestment of dividends
and distributions 67,079 736,136
------------ ------------
Total issued 1,165,074 12,156,948
Shares redeemed (298,711) (3,200,889)
------------ ------------
Net increase 866,363 $8,956,059
============ ============
Class D Shares for the Year Dollar
Ended December 31, 1997 Shares Amount
Shares sold 1,019,918 $11,315,694
Automatic conversion of shares 47,304 520,368
Shares issued to shareholders
in reinvestment of dividends
and distributions 139,825 1,406,202
------------ ------------
Total issued 1,207,047 13,242,264
Shares redeemed (1,573,362) (17,232,996)
------------ ------------
Net decrease (366,315) $(3,990,732)
============ ============
Class D Shares for the Year Dollar
Ended December 31, 1996 Shares Amount
Shares sold 1,242,352 $12,804,879
Automatic conversion of shares 95,879 1,045,958
Shares issued to shareholders
in reinvestment of dividends
and distributions 104,699 1,098,316
------------ ------------
Total issued 1,442,930 14,949,153
Shares redeemed (1,284,258) (13,335,723)
------------ ------------
Net increase 158,672 $1,613,430
============ ============
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 agreement, 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, 1997, the Fund owned no outstanding reverse
repurchase agreements. For the year ended December 31, 1997, the
maximum amount entered into was $55,151,000, the average amount
outstanding was approximately $3,185,000, and the daily weighted
average interest rate was 5.60%.
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, 1997, the related statements of
operations and cash flows for the year then ended, changes in net
assets for each of the years in the two-year period then ended and the
financial highlights for each of the years in the four-year period
then ended and 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform 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, 1997 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 audits provide 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, 1997, the
results of its operations, the changes in its net assets, its cash
flows and the financial highlights for the respective stated periods
in conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
February 23, 1998
IMPORTANT TAX INFORMATION (unaudited)
Of the net investment income distributions paid monthly by Merrill
Lynch Americas Income Fund, Inc. during the year ended December 31,
1997, 86.49% are attributable to income received by the Fund from
foreign sources. Additionally, the Fund paid an ordinary income
distribution of $1.169688 per share and a long-term capital gain
distribution of $0.053894 to shareholders of record on December 22,
1997. All of the long-term capital gain distribution is subject to a
28% tax rate.
The law varies in each state as to whether and what percentage of
dividend income attributable to Federal obligations is exempt from
state income tax. We recommend that you consult your tax adviser to
determine if any portion of the dividends you received is exempt from
state income tax.
Listed below are the percentages of total assets of the Fund invested
in Federal obligations as of the end of each quarter
of the fiscal year:
For the Percentage of
Quarter Ended Federal Obligations*
March 31, 1997 0.00%
June 30, 1997 28.08%
September 30, 1997 0.00%
December 31, 1997 5.65%
Of the Fund's ordinary income dividends paid during the fiscal year
ended December 31, 1997, 8.46% was attributable to Federal
obligations. In calculating the foregoing percentage, Fund expenses
have been allocated on a pro rata basis.
Please retain this information for your records.
* For purposes of this calculation, Federal obligations include US
Treasury notes, US Treasury bills and US Treasury bonds. Also
included are obligations issued by the following agencies: Banks for
Cooperatives, Federal Intermediate Credit Banks, Federal Land Banks,
Federal Home Loan Banks and the Student Loan Marketing Association.
Repurchase agreements are not included in this calculation.
OFFICERS AND DIRECTORS
Arthur Zeikel, President and Director
Donald Cecil, Director
Edward H. Meyer, Director
Charles C. Reilly, Director
Richard R. West, Director
Edward D. Zinbarg, Director
Terry K. Glenn, Executive Vice President
Joseph T. Monagle Jr., Senior Vice President
Paolo H. Valle, Senior Vice President
Alex V. Bouzakis, Vice President
Donald C. Burke, Vice President
Gerald M. Richard, Treasurer
Barbara G. Fraser, Secretary
Custodian
Brown Brothers Harriman & Co.
40 Water Street
Boston, MA 02109
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
