MERRILL LYNCH
AMERICAS INCOME
FUND, INC.
FUND LOGO
Quarterly Report
March 31, 1998
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 fluctuations, and potential price
volatility and less liquidity of securities traded in emerging
markets. In addition, there may be less publicly available
information about the issuers of securities, and such issuers may
not be subject to accounting, auditing and financial reporting
standards and requirements comparable to those to which US companies
are subject. Therefore, the Fund is designed as a long-term
investment for investors capable of assuming the risks of investing
in emerging markets. The Fund should be considered as a vehicle for
diversification and not as a complete investment program. Please
refer to the prospectus for details.
This report is not authorized for use as an offer of sale or a
solicitation of an offer to buy shares of the Fund unless
accompanied or preceded by the Fund's current prospectus. Past
performance results shown in this report should not be considered a
representation of future performance. Investment return and
principal value of shares will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
Statements and other information herein are as dated and are subject
to change.
Merrill Lynch
Americas Income Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
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 borrowing, the net income of the Fund will be
less than if borrowing were not used, and therefore the amount
available for distribution to shareholders as dividends will be
reduced.
Merrill Lynch Americas Income Fund, Inc., March 31, 1998
DEAR SHAREHOLDER
The J.P. Morgan Emerging Markets Bond Index tightened approximately
150 basis points (1.50%) from mid-January to mid-March in response
to a rally. Since then, the Index has remained in a 50 basis point
trading range with some volatility in response to uncertainties in
Asia and the US markets.
As it became apparent that the emerging market countries were making
a fast and effective policy response to contain the contagion of the
Asian crisis, yield spreads over comparable US Treasury bonds
tightened. These macroeconomic responses were inspired and supported
in many cases by the International Monetary Fund (IMF). The abundant
global liquidity and the constructive fundamental and market outlook
in the United States and Europe supported this rally. During this
period, the ability of emerging market countries to access global
capital markets was remarkable. All of the major Latin American
countries were able to issue long-term bonds successfully in the
market, and capital inflows resumed with vigor.
Brazil and Russia, the countries most exposed to the "Asian
contagion," continued to be the focus of investor attention.
Brazil's fiscal and monetary tightening and Russia's improved
macroeconomic policy coordination with the IMF, coupled with its
geopolitical importance, allowed both countries to contain the
currency crisis. Both experienced substantial capital inflows since
early in 1998. In Brazil, interest rates that were increased to high
levels to defend the currency have dropped faster than investors
anticipated, on the back of these very strong capital inflows.
Capital inflows to Brazil were so impressive that the country not
only recovered all the reserves lost during last year's Asian
crisis, but reserves are now at record highs and regulations on
short-term capital inflows have been tightened. In Russia, inflows
were briefly reversed while the uncertainties over the confirmation
of the new Prime Minister were weighing on the market.
In Asia, the prompt actions of the IMF and the eventual agreement of
most countries to follow politically difficult courses of adjustment
led to a stabilization of macroeconomic variables. This credit risk
improvement was recognized not only with sovereign spread tightening
but also with a rating upgrade for South Korea.
Lately, several issues have kept emerging market bonds around the
weaker end of the trading range. Among those concerns, there
continues to be some market uncertainties about the possibility of
recovery of the Japanese economy, the weakness of its banking system
and its effect on the rest of Asian countries; the speed and depth
of structural reform in Indonesia; the follow-through of the reform
effort in South Korea and other East Asian countries; the risk of a
preemptive monetary tightening by the US Federal Reserve Board; the
implementation risks in the European Monetary Policy; and concerns
regarding valuations of US and European equities.
Despite these risks, we remain constructive in emerging market bonds
for the long term. Emerging market policies remain conducive to
further credit improvements. Brazil's financial vulnerability, for
example, has continued to decrease. Similarly, Mexico has adjusted
fiscal and monetary policies; Venezuela is studying similar
alternatives; and Argentina is ahead of its refunding schedule. In
Eastern Europe, Russia continues to focus on fiscal efforts.
Portfolio Matters
During the March quarter, we extended the Fund's duration to 6.72
years, and overweighted our exposure to countries which we believed
presented the most significant appreciation potential. We increased
the Fund's duration through the replacement of short-term securities
with longer-term issues, and through the use of leverage. We
increased the average leverage to 22.19% of net assets, which
increased the Fund's current yield to 11.65% as of March 31, 1998.
During the March quarter, we favored Brazil for many reasons. Among
them, Brazil had demonstrated determination in defending the Real
Plan, and had positive political and economic prospects underpinned
by a strong privatization effort expected to occur in the next few
months. In addition, Brazil has maintained its continued long-term
structural reform and has maintained a strong international reserves
position. We also favored Russia and Venezuela. Russia has put in
place a new reform-oriented cabinet and is working closely with
multilateral organizations to continue consolidating its fiscal
accounts. Venezuela's strong reserve position makes this country
very resistant to Asian-style speculative attacks on its currency.
We expect to see favorable developments in this year's Venezuelan
presidential and regional elections.
In Conclusion
We thank you for your continued investment in Merrill Lynch Americas
Income Fund, Inc., and we look forward to reviewing our outlook and
strategy with you again in our next report to shareholders.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Paolo Valle)
Paolo Valle
Senior Vice President and
Portfolio Manager
May 14, 1998
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
Merrill Lynch Americas Income Fund, Inc., March 31, 1998
PERFORMANCE DATA
About Fund
Performance
Investors are able to purchase shares of the Fund through the
Merrill Lynch Select Pricing SM System, which offers four pricing
alternatives:
* 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. However, in the case of certain
eligible investors, the shares were simultaneously exchanged for
Class A Shares.
* 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.)
* 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.
* 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 repre-
sentation of future performance. Figures shown in the "Average
Annual Total Return" 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.
Average Annual
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 3/31/98 +12.68% + 8.17%
Inception (10/21/94) through 3/31/98 +17.64 +16.25
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 3/31/98 +11.95% + 8.20%
Inception (8/27/93) through 3/31/98 +12.10 +12.10
[FN]
*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 3/31/98 +11.88% +10.94%
Inception (10/21/94) through 3/31/98 +16.59 +16.59
[FN]
*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 3/31/98 +12.52% + 8.02%
Inception (8/27/93) through 3/31/98 +12.65 +11.65
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
<TABLE>
Recent
Performance
Results*
<CAPTION>
Standardized
12 Month 3 Month Since Inception 30-Day Yield
Total Return Total Return Total Return As of 3/31/98
<S> <C> <C> <C> <C>
ML Americas Income Fund Class A Shares +12.68% +5.78% +74.89% 10.54%
ML Americas Income Fund Class B Shares +11.95 +5.59 +68.93 10.21
ML Americas Income Fund Class C Shares +11.88 +5.58 +69.57 10.15
ML Americas Income Fund Class D Shares +12.52 +5.62 +72.79 10.30
<FN>
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included. Total
investment returns are based on changes in net asset values for the
periods shown, and assume reinvestment of all dividends and capital
gains distributions at net asset value on the payable date. The
Fund's inception dates are: Class A and Class C Shares, 10/21/94;
and Class B and Class D Shares, 8/27/93.
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
Face Interest Maturity Percent of
COUNTRY Industry Amount Bonds Rate Date Value Net Assets
<S> <S> <C> <S> <C> <C> <C> <C>
Argentina Industrials US$ 3,000,000 Banco Hipotecario
Nacional S.A. 8.00 % 6/04/1999 $ 2,992,500 3.2%
Total Bonds in Argentina
(Cost--$3,007,500 ) 2,992,500 3.2
Brazil Industrials 1,000,000 MRS Logistica S.A. 10.625 8/15/2005 985,000 1.0
Media & 2,000,000 Globo Comunicacoes e
Communications Participacoes S.A. 10.625 12/05/2008 2,037,500 2.2
Steel 3,500,000 CSN Iron S.A. 9.125 6/01/2007 3,281,250 3.5
Utilities-- 4,500,000 Espirito Santo
Electric Centrais 10.00 7/15/2007 4,387,500 4.6
Total Bonds in Brazil
(Cost--$10,511,875) 10,691,250 11.3
Mexico Banking 2,500,000 Banco Nacional S.A. 8.00 4/14/2000 2,509,297 2.7
Financial Services 1,000,000 Sanluis Corporation,
S.A. de C.V. 8.875 3/18/2008 981,250 1.0
Industrials 4,500,000 Cemex S.A. 10.75 7/15/2000 4,780,305 5.1
2,450,000 Controladero Comercial
Mexicana S.A. 8.75 4/21/1998 2,446,937 2.6
4,000,000 Petroleos Mexicanos 9.50 9/15/2027 4,090,000 4.3
------------ ------
11,317,242 12.0
Paper 3,000,000 Grupo Industrial
Durango, S.A. de C.V. 12.625 8/01/2003 3,405,000 3.6
Total Bonds in Mexico
(Cost--$18,251,425) 18,212,789 19.3
Russia Financial 2,000,000 SBS-AGRO Finance B.V. 10.25 7/21/2000 1,820,000 1.9
Services
Total Bonds in Russia
(Cost--$2,002,000) 1,820,000 1.9
</TABLE>
Merrill Lynch Americas Income Fund, Inc., March 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
Face Interest Maturity Percent of
COUNTRY Industry Amount Bonds Rate Date Value Net Assets
<S> <S> <C> <S> <C> <C> <C> <C>
United US Government US$ 10,000,000 United States Treasury
States Obligations Notes 6.125 % 11/15/2027 $ 10,254,700 10.8%
Total Bonds in the
United States (Cost--$10,400,625) 10,254,700 10.8
Total Investments in Bonds
(Cost--$44,173,425) 43,971,239 46.5
Brady Bonds*
Argentina Sovereign 5,000,000 Republic of Argentina,
Government Global Bonds 9.75 9/19/2027 4,956,250 5.2
Obligations
Total Brady Bonds in Argentina
(Cost--$4,997,500) 4,956,250 5.2
Brazil Sovereign 25,655,850 Republic of Brazil,
Government Floating Rate 'C'
Obligations Bond (b) 8.00 4/15/2014 21,567,077 22.8
8,000,000 Republic of Brazil,
Global Bonds 10.125 5/15/2027 7,930,000 8.4
Total Brady Bonds in Brazil
(Cost--$28,010,716) 29,497,077 31.2
Ecuador Sovereign 6,676,020 Republic of Ecuador,
Government PDI (Registered)(b) 6.625 2/27/2015 4,301,894 4.6
Obligations
Total Brady Bonds in Ecuador
(Cost--$4,161,643) 4,301,894 4.6
Mexico Sovereign 1,000 United Mexican
Government States, Value Recovery
Obligations Rights (a) 0.00 0 0.0
Total Brady Bonds in Mexico
(Cost--$0) 0 0.0
Panama Sovereign 2,000,000 Republic of Panama,
Government Global Bonds 8.875 9/30/2027 2,007,500 2.1
Obligations
Total Brady Bonds in Panama
(Cost--$1,980,000) 2,007,500 2.1
Peru Sovereign 2,000,000 Republic of Peru,
Government Floating Rate
Obligations Reduction Bond 3.25 3/07/2017 1,255,000 1.3
Total Brady Bonds in Peru
(Cost--$1,230,256) 1,255,000 1.3
Russia Sovereign 30,500,000 Republic of Russia,
Government Principal Loan (b) 6.71875 12/15/2020 19,367,500 20.5
Obligations
Total Brady Bonds in Russia
(Cost--$18,174,401) 19,367,500 20.5
Venezuela Sovereign 21,500,000 Republic of Venezuela,
Government Global Bonds 9.25 9/15/2027 19,618,750 20.8
Obligations
Total Brady Bonds in Venezuela
(Cost--$19,044,000) 19,618,750 20.8
Total Investments in Brady Bonds
(Cost--$77,598,516) 81,003,971 85.7
Short-Term Securities
Brazil Certificates of 3,000,000 Banco Excel S.A. 7.875 7/15/1998 2,902,500 3.1
Deposit
Total Short-Term Investments in Brazil
(Cost--$2,935,694) 2,902,500 3.1
Mexico Foreign MXP 17,185,290 Mexican Cetes 19.40 4/08/1998 2,008,960 2.1
Government 25,709,540 Mexican Cetes 18.75 4/16/1998 2,992,041 3.2
Obligations** 5,076,280 Mexican Cetes 18.75 4/23/1998 588,961 0.6
6,736,060 Mexican Cetes 20.10 12/17/1998 687,251 0.7
Total Short-Term Investments in Mexico
(Cost--$6,413,583) 6,277,213 6.6
United Commercial US$ 3,701,000 General Motors
States Paper** Acceptance Corp. 6.13 4/01/1998 3,701,000 3.9
US Government 4,000,000 Federal Home Loan
Agency Mortgage Corp. 5.90 4/01/1998 4,000,000 4.2
Obligations**
Total Short-Term Investment in the United States
(Cost--$7,701,000 ) 7,701,000 8.1
Total Investments in Short-Term Securities
(Cost--$17,050,277) 16,880,713 17.8
Total Investments (Cost--$138,822,218 ) 141,855,923 150.0
Nominal Value
Covered by Options Options Written
Currency Call 10,000,000 Russian Principal,
Options Written expiring April 1998 at RUB 65.50 (50,000) 0.0
Total Options Written (Premiums Received--$(43,000)) (50,000) 0.0
Total Investments (Cost--$138,779,218) 141,805,923 150.0
Liabilities in Excess of Other Assets (47,242,048) (50.0)
------------- ------
Net Assets $ 94,563,875 100.0%
============= ======
Net Asset Value: Class A--Based on net assets of $5,206,156 and
523,912 shares outstanding $ 9.94
=============
Class B--Based on net assets of $73,799,600 and
7,449,125 shares outstanding $ 9.91
=============
Class C--Based on net assets of $3,973,982 and
401,155 shares outstanding $ 9.91
=============
Class D--Based on net assets of $11,584,137 and
1,169,832 shares outstanding $ 9.90
=============
<FN>
(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.
*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.
**Commercial Paper and certain Foreign Government and 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.
</TABLE>
