MERRILL LYNCH
AMERICAS INCOME
FUND, INC.
FUND LOGO
Quarterly Report
March 31, 1999
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 willfluctuate 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.
Officers and
Directors
Terry K. Glenn, President and Director
Donald Cecil, Director
Roland M. Machold, Director
Edward H. Meyer, Director
Charles C. Reilly, Director
Richard R. West, Director
Arthur Zeikel, Director
Edward D. Zinbarg, Director
Joseph T. Monagle Jr., Senior Vice President
Romualdo Roldan, Vice President
Donald C. Burke, Vice President and Treasurer
Barbara G. Fraser, Secretary
Gerald M. Richard, Treasurer of Merrill Lynch Americas Income Fund,
Inc. has recently retired. His colleagues at Merrill Lynch Asset
Management, L.P. join the Fund's Board of Directors in wishing Mr.
Richard well in his retirement.
Custodian
Brown Brothers Harriman & Co.
40 Water Street
Boston, MA 02109
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
Merrill Lynch Americas Income Fund, Inc., March 31, 1999
DEAR SHAREHOLDER
By March 31, 1999, investor sentiment turned sharply positive,
reflecting the view that systemic risks have declined after the
Brazilian devaluation in January, and that Brazil is staging a
significant turnaround on several fronts. In addition, Russian
economic worries were contained, there were signs of an incipient
recovery in some of the Asian economies, and the sharp recovery in
oil prices from year-end lows created a financial windfall for
several key emerging economies. This situation translated into
strong positive results for emerging markets bonds for the quarter
ended March 31, 1999. The yield spread between the unmanaged J.P.
Morgan Emerging Markets Bond Index (EMBI+) and US Treasury
securities widened from 1,122 basis points (11.22%) on December 31,
1998 to 1,522 basis points on the January 14 aftermath of the
Brazilian devaluation, and compressed to 1,030 basis points on March
31, 1999.
For the quarter ended March 31, 1999, Merrill Lynch Americas Income
Fund, Inc.'s Class A, Class B, Class C and Class D Shares had total
returns of +6.85%, +6.67%, +6.65% and +6.99%, respectively, compared
to a total return of +5.30% for the unmanaged EMBI+. (Results shown
do not reflect sales charges; results shown would be lower if a
sales charge was included.) During the quarter ended March 31, 1999,
the Fund's performance was aided by an early overweighted position
in Brazil after the real devaluation, an elimination of our US high
yield positions, and a reduction in the Fund's levels of uninvested
cash. By quarter-end, the Fund's major country allocations were:
Argentina, 17.4% of net assets; Brazil, 33.4%; and Mexico, 23.2%.
The Brazilian devaluation in mid-January 1999, coming only five
months after the Russian devaluation and local debt default, was
seen by investors as another casualty of an inexorable financial
contagion that would sooner or later involve every emerging market
economy. Instead, currency disruptions and interest rates spikes
were short lived almost everywhere. Investor reaction indicated that
those risks are being judged as negligible, and that other
economies, hardened by conservative fiscal policies and high real
interest rates, were unlikely to suffer disabling capital flight and
lack of investor confidence. For example, Argentina and Mexico saw
their reserves increasing instead of decreasing, and their interest
rates continued to decline, after a short spike, under the weight of
declining internal inflation and sharp economic slowdown. The
Mexican peso is now at its strongest level since the 1995 Mexican
crisis, and the Argentinian peso convertibility regime continues
unchallenged.
Brazilian policymakers reacted quickly and efficiently to the
foreign currency dislocation. The fiscal conflict with dissenting
states, which precipitated the crisis, was defused in short order,
and the Brazilian congress passed the pending fiscal austerity
legislation, paving the way for the renewal of International
Monetary Fund (IMF) and Group of Seven Industrialized Nations (G-7)
financial assistance. The real appreciated significantly from its
low on March 3, 1999 of $2.15 per US dollar, and short-term interest
rates, set initially at 45%, allowed the continued rollover of the
local currency debt. The inflationary consequences of the
devaluation were muted and well below market expectations,
reflecting the sharp recession that the economy has been
experiencing since the last quarter in 1998. Skillful foreign
exchange intervention and public debt refunding by economic
authorities reinforced lower inflation and interest rate
expectations, which are critically important to keep the fiscal debt
burden under control. These positive dynamics provided a needed
respite to evaluate the implementation of the vital fiscal austerity
effort.
Emerging markets bonds were also buoyed by the quick recovery in
South Korea, where economic activity provided some vitality and
whose balance of payments and foreign reserve gains warranted a
reinstatement of its early investment grade status. Other Asian
economies, such as Japan, also showed signs of stability, if not
outright economic gains, which may contribute in the future to a
more dynamic international economic environment where commodity
prices could recover. In the March quarter, oil prices benefited
from some demand recovery and the threat of lower production by the
main oil producing nations. The price consequences thus far have
been dramatic. West Texas Intermediate crude oil prices reached a
low of $11.64 per barrel on February 16, 1999 and have since
increased to $16.76 per barrel by quarter end, a 44% recovery.
Should oil prices during 1999 remain at current levels, or at least
average current market expectations, the financial outlook of
several countries, among them Mexico and Venezuela, will be
considerably better than what was expected at the beginning of the
year. In Venezuela, spot prices for oil reached $13.40 per barrel by
March 31, 1999, up from below $9 per barrel at the beginning of the
year. Considering that every $1 per barrel of the Venezuela oil mix
represents approximately 0.85% of gross domestic product in extra
fiscal revenues, the conclusion is that if prices were to remain
close to these levels for the remainder of the year, Venezuela's
external finance needs will be met.
Ecuador, where oil remains a major contributor to its balance of
payments, will no doubt benefit from the current oil price trend.
However, in many other ways, Ecuador remains a painful exception to
the almost generalized picture of continued structural reforms and
steady fundamental improvements that characterizes most Latin
American sovereign creditors. Intractable political make-up is at
the root of continued failure to pursue bare minimum state and
economic governance. Thus, currency weakness, the collapse of its
banking sector, and political upheaval led us to eliminate our
exposure to Ecuador.
In Conclusion
While we believe that emerging market risks have not evaporated, we
believe that the benign investment climate will continue in the
short term on the strength of the trends already in place and from
better underlying fundamentals in emerging markets. Potential for
further price appreciation exists if the perception of risk in the
asset class declines and cross-over buyers enter the market in
greater numbers. We believe that consolidation of those gains and a
return to spreads existing prior to the advent of the Asian crisis
will be dependent on the following developments. First, we will look
for verification that positive growth trends in the world economy
have reasserted themselves, facilitating commodity price increases
and growing markets for third world exports. Second, Brazil must
find a permanent solution of its endemic fiscal problems. Third, the
economic recovery in emerging Asia and Japan needs to continue. In
the near term, we will closely monitor the potential threat of
deflation and worldwide excess capacity, which could become the
source of another bout of contagion or economic ills, compromising
emerging markets' credit standing.
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,
(Terry K. Glenn)
Terry K. Glenn
President and Director
(Aldo Roldan)
Aldo Roldan
Vice President and Portfolio Manager
May 14, 1999
After more than 20 years of service, Arthur Zeikel recently retired
as Chairman of Merrill Lynch Asset Management, L.P. (MLAM). Mr.
Zeikel served as President of MLAM from 1977 to 1997 and as Chairman
since December 1997. Mr. Zeikel is one of the country's most
respected leaders in asset management and presided over the growth
of Merrill Lynch's asset management business. During his tenure,
client assets under management grew from $300 million to over $500
billion. Mr. Zeikel will remain on Merrill Lynch Americas Income
Fund, Inc.'s Board of Directors. We are pleased to announce that
Terry K. Glenn has been elected President and Director of the Fund.
Mr. Glenn has held the position of Executive Vice President of MLAM
since 1983.
Mr. Zeikel's colleagues at MLAM join the Fund's Board of Directors
in wishing him well in his retirement from Merrill Lynch and are
pleased that he will continue as a member of the Fund's Board of
Directors.
Merrill Lynch Americas Income Fund, Inc., March 31, 1999
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 eligi-ble 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 representation
of future performance. Figures shown in the "Recent Performance
Results" and "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 3/31/99 -35.53% -38.11%
Inception (10/21/94) through 3/31/99 + 2.74 + 1.80
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 3/31/99 -35.96% -38.26%
Five Years Ended 3/31/99 + 2.41 + 2.41
Inception (8/27/93) through 3/31/99 + 1.42 + 1.42
[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 3/31/99 -36.00% -36.57%
Inception (10/21/94) through 3/31/99 + 1.86 + 1.86
[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 3/31/99 -35.54% -38.12%
Five Years Ended 3/31/99 + 2.93 + 2.09
Inception (8/27/93) through 3/31/99 + 1.95 + 1.20
[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 3/31/99
<S> <C> <C> <C> <C>
ML Americas Income Fund Class A Shares -35.53% +6.85% +12.75% 8.54%
ML Americas Income Fund Class B Shares -35.96 +6.67 + 8.19 8.12
ML Americas Income Fund Class C Shares -36.00 +6.65 + 8.53 8.06
ML Americas Income Fund Class D Shares -35.54 +6.99 +11.37 8.30
<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 since inception periods are Class A & Class C Shares, from
10/21/94 to 3/31/99 and Class B & Class D Shares, from 8/27/93 to
3/31/99.
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
Face Interest Maturity Percent of
COUNTRY Industry Amount Bonds Rate Date Value Net Assets
<S> <C> <C> <S> <C> <S> <C> <C>
Argentina Industrials US$ 2,000,000 Perez Companc SA 8.125% 7/15/2007 $ 1,780,000 4.7%
Sovereign 1,025,000 Republic of Argentina 9.75 9/19/2027 852,031 2.2
Government
Obligations
Telecommunications 1,900,000 Telefonica de Argentina 9.125 5/07/2008 1,790,750 4.7
Total Bonds in Argentina
(Cost--$4,258,625) 4,422,781 11.6
Brazil Metals 2,200,000 CSN Iron SA 9.125 6/01/2007 1,694,000 4.4
Sovereign 750,000 Republic of Brazil 9.375 4/07/2008 574,687 1.5
Government
Obligations
Utilities-- 1,900,000 Cent Electrobras Brasileiras SA 10.00 7/06/2004 1,748,000 4.6
Electric 2,200,000 Companie Paranaense de Energy 9.75 5/02/2005 1,826,000 4.8
------------ ------
3,574,000 9.4
Total Bonds in Brazil
(Cost--$5,697,750) 5,842,687 15.3
Mexico Broadcasting-- 1,000,000 Grupo Televisa, SA de CV (d) 11.72 5/15/2008 835,000 2.2
Radio & Television
Industrials 900,000 Cemex SA 12.75 7/15/2006 1,020,375 2.7
2,000,000 Petroleos Mexicanos 8.85 9/15/2007 1,845,000 4.8
------------ ------
2,865,375 7.5
Sovereign 1,150,000 United Mexican States 11.50 5/15/2026 1,280,813 3.4
Government
Obligations
Total Bonds in Mexico
(Cost--$4,798,360) 4,981,188 13.1
</TABLE>
Merrill Lynch Americas Income Fund, Inc., March 31, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
Face Interest Maturity Percent of
COUNTRY Industry Amount Bonds Rate Date Value Net Assets
<S> <C> <C> <S> <C> <S> <C> <C>
Panama Sovereign US$ 630,000 Republic of Panama 8.875% 9/30/2027 $ 582,750 1.5%
Government
Obligations
Total Bonds in Panama
(Cost--$573,300) 582,750 1.5
Poland Telecommunications 1,500,000 TPSA Finance BV 7.75 12/10/2008 1,462,538 3.8
Total Bonds in Poland
(Cost--$1,489,230) 1,462,538 3.8
Russia Financial 2,000,000 SBS-AGRO Finance BV (a) 10.25 7/21/2000 20,000 0.1
Services
Sovereign 1,034,335 Vnesheconombank, Interest
Government Accrual Note (a)(c) 5.969 12/15/2015 82,747 0.2
Obligations
Total Bonds in Russia
(Cost--$2,442,214) 102,747 0.3
Venezuela Sovereign 750,000 Republic of Venezuela 13.625 8/15/2018 611,250 1.6
Government 2,370,000 Republic of Venezuela (b) 9.25 9/15/2027 1,463,475 3.8
Obligations
Total Bonds in Venezuela
(Cost--$2,042,450) 2,074,725 5.4
Total Investments in Bonds
(Cost--$21,301,929) 19,469,416 51.0
Brady Bonds*
Argentina Sovereign 3,200,000 Republic of Argentina,
Government Par 'L' (b) 6.00 3/31/2023 2,224,000 5.8
Obligations
Total Brady Bonds in Argentina
(Cost--$2,145,846) 2,224,000 5.8
Brazil Sovereign 3,000,000 Brazil NMB (c) 6.188 4/15/2009 1,893,750 5.0
Government 4,710,480 Republic of Brazil 'C' (c) 8.00 4/15/2014 2,982,323 7.8
Obligations 750,000 Republic of Brazil, Discount (c) 6.125 4/15/2024 451,875 1.2
2,160,000 Republic of Brazil 'EI' (c) 6.125 4/15/2006 1,571,400 4.1
Total Brady Bonds in Brazil
(Cost--$6,084,012) 6,899,348 18.1
Bulgaria Sovereign 760,000 Republic of Bulgaria,
Government Discount 'A' (c) 5.875 7/28/2024 511,100 1.4
Obligations 760,000 Republic of Bulgaria,
Front-Loaded Interest Rate
Reduction Bonds (c) 2.50 7/28/2012 432,250 1.1
700,000 Republic of Bulgaria,
Interest Arrears Bond (c) 5.875 7/28/2011 463,750 1.2
Total Brady Bonds in Bulgaria
(Cost--$1,412,035) 1,407,100 3.7
Mexico Sovereign 2,500,000 United Mexican States 'W-A' 6.25 12/31/2019 1,965,625 5.2
Government 2,380,000 United Mexican States 'W-B' 6.25 12/31/2019 1,871,275 4.9
Obligations
Total Brady Bonds in Mexico
(Cost--$3,567,000) 3,836,900 10.1
Panama Sovereign 500,000 Republic of Panama, Interest
Government Reduction Bonds (c) 4.00 7/17/2014 393,437 1.0
Obligations
Total Brady Bonds in Panama
(Cost--$355,000) 393,437 1.0
Peru Sovereign 1,220,000 Republic of Peru, Front-Loaded
Government Interest Rate Reduction
Obligations Bonds (c) 3.75 3/07/2017 722,850 1.9
800,000 Republic of Peru, Past Due
Interest (c) 4.50 3/07/2017 507,200 1.3
Total Brady Bonds in Peru
(Cost--$1,170,294) 1,230,050 3.2
Poland Sovereign 700,000 Republic of Poland, Par 3.00 10/27/2024 455,000 1.2
Government
Obligations
Total Brady Bonds in Poland
(Cost--$466,781) 455,000 1.2
Venezuela Sovereign 1,499,995 Republic of Venezuela, DCB (c) 5.938 12/18/2007 1,051,871 2.8
Government
Obligations
Total Brady Bonds in Venezuela
(Cost--$942,586) 1,051,871 2.8
Total Investments in Brady Bonds
(Cost--$16,143,554) 17,497,706 45.9
Short-Term Securities
United US Government 3,910,000 Federal Home Loan Mortgage
States Agency Corporation 4.82 4/01/1999 3,910,000 10.2
Obligations**
Total Investments in
Short-Term Securities (Cost--$3,910,000) 3,910,000 10.2
Total Investments (Cost--$41,355,483) 40,877,122 107.1
Liabilities in Excess of Other Assets (2,722,256) (7.1)
------------- ------
Net Assets $ 38,154,866 100.0%
============= ======
Net Asset Value: Class A--Based on net assets of $1,626,682 and
279,893 shares outstanding $ 5.81
=============
Class B--Based on net assets of $29,820,014 and
5,142,882 shares outstanding $ 5.80
=============
Class C--Based on net assets of $1,336,020 and
230,431 shares outstanding $ 5.80
=============
Class D--Based on net assets of $5,372,150 and
927,024 shares outstanding $ 5.80
=============
<FN>
*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 rate shown reflects the discount rate paid at
the time of purchase by the Fund.
(a)Due to uncertainty of financial and economic conditions in
Russia, effective September 29, 1998, interest accrual ceased.
(b)Represents a pay-in-kind security which may pay interest in
additional face amount.
(c)Floating Rate Note.
(d)Represents a zero coupon or step bond; the interest rate shown is
the effective yield at the time of purchase by the Fund.
</TABLE>
