MERRILL LYNCH
AMERICAS INCOME
FUND, INC.
FUND LOGO
Semi-Annual Report
June 30, 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 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., June 30, 1999
DEAR SHAREHOLDER
During the quarter ended June 30, 1999, the investment environment
continued to be dominated by concerns over rising international
interest rates. To some extent this was the result of the US Federal
Reserve Board's adopting a tightening stance in May, which
culminated in a 25 basis point (0.25%) increase in the Federal Funds
rate by the end of June, the first such increase since March 25,
1997. This increase caused a sharp decline in the price of US
Treasury issues since investors began to anticipate further interest
rate hikes. US equities, high-yield securities and emerging markets
fixed-income prices declined in unison in May and began a slow
rebound during the remainder of the June quarter.
Emerging markets fixed-income returns continued to outperform other
fixed-income classes, as measured by the unmanaged J.P. Morgan
Emerging Markets Bond (EMBI) Index. For the quarter ended June 30,
1999, Merrill Lynch Americas Income Fund, Inc.'s Class A, Class B,
Class C and Class D Shares had total returns of +1.76%, +1.56%,
+1.55% and +1.52%, respectively, as compared to a total return of
+1.83% for the unmanaged EMBI. (Results shown do not reflect sales
charges; results shown would be lower if sales charges were
included. Complete performance information can be found on pages 4
and 5 of this report to shareholders.) An early overweight exposure
to Brazil after the devaluation of the real, a reduction in the
Fund's exposure to Argentina and a small increase in the Fund's cash
position all benefited Fund performance. By June quarter-end, the
Fund's major country allocations were: Argentina, 13.2% of net
assets; Brazil, 33.3%; and Mexico, 24.2%. The Fund had a cash
position of 5.8% of net assets at June 30, 1999.
Despite the somewhat bearish sentiment created by the recent price
action, several positive trends continue to establish themselves in
emerging markets. The risk of financial contagion that led to
destabilizing foreign exchange outflows and currency devaluations in
the last two years has declined significantly. Major emerging
markets currencies have remained relatively stable after the
floating of the Brazilian real in January 1999. In general, emerging
market economies are now more resilient, have better economic
management, more conservative fiscal policies, more flexible foreign
exchange regimes, and in general, better fundamentals than two years
ago, when spreads on their debt were substantially tighter. The
economic slowdown triggered in emerging markets by the 1998
financial disturbances is reducing domestic inflation and import
demand, which diminish foreign financing requirements and alleviates
pressures on foreign exchange rates. Local interest rates are
declining, which bodes well for investments in local currency
instruments. In some countries, such as Mexico, economic activity is
being propped up by the strong demand for the country's exports. In
other countries, such as Brazil, domestic activity has begun
bottoming out, signaling that economic recessions may be milder than
originally anticipated, preventing an undue deterioration in private
sector credit risk.
Commodity prices have begun to recover in reaction to better growth
prospects in the Group of Seven Industrialized Nations. Commodity
exporters, many of them emerging markets, are benefiting. Oil, in
particular, is up over 60% from its lows in February, substantially
improving the financial outlook for Mexico and Venezuela, among
others.
Technical factors indicate emerging markets bond prices may be
establishing a solid base of support. The market is inexpensive.
Emerging markets spreads, as measured by the EMBI Index, are trading
in excess of 1,000 basis points over Treasury issues (compared to
450 basis points in May 1997), reflecting unrealistically high
probabilities of sovereign default. Also, the investor base is
beginning to widen as crossover, opportunistic buyers, many of them
insurance companies and pension funds, are becoming mainstream
investors. Finally, leverage and market speculation has been
severely curtailed, which may prevent the excessive and
destabilizing market volatility witnessed in 1998.
Our positive intermediate-term outlook does not negate short-term
concerns that potentially higher international interest rates could
delay emerging markets' economic recovery and their full access to
international capital markets. In the current situation, we believe
there are some offsetting factors that may partly cushion this
negative impact. A prolonged period of rising interest rates is
likely to be caused, or be accompanied by, higher economic activity
in the United States and other industrialized countries, which would
undoubtedly imply higher demand and higher prices for commodities
and emerging markets manufactured goods, strengthening their balance
of payments.
We are keeping a close watch on other short-term risks to the
markets in which we invest. In particular, we are monitoring
Brazil's fiscal austerity program, its compliance with the
International Monetary Fund program, and its success in establishing
the long-term foundations for sound tax and social security systems
that would put an end to chronic fiscal profligacy. Argentina's
foreign exchange convertibility system will be tested with the
advent of a new presidential administration and by the sharp
economic slowdown and political pressures involved in maintaining a
stimulative fiscal policy. Venezuela's new government has embarked
on an ambitious process of overhauling its political structures, but
its strategy to overcome social problems, domestic recession, and
its excessive dependence on oil revenues remains to be articulated.
In Mexico, short-term risks appear to be firmly under control, given
the country's solid export performance, signs of an incipient
domestic activity recovery, realized oil revenues in excess of its
budgeted figures, and its contingent planning to ensure a smooth
presidential transition in the year 2000.
In Conclusion
We appreciate your ongoing investment in Merrill Lynch Americas
Income Fund, Inc., and we look forward to assisting you with your
financial needs in the months and years ahead.
Sincerely,
(Terry K. Glenn)
Terry K. Glenn
President and Director
(Aldo Roldan)
Aldo Roldan
Vice President and
Portfolio Manager
August 11, 1999
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
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., June 30, 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 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 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 6/30/99 -22.28% -25.39%
Inception (10/21/94) through 6/30/99 + 2.97 + 2.08
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 6/30/99 -22.84% -25.67%
Five Years Ended 6/30/99 + 3.17 + 3.17
Inception (8/27/93) through 6/30/99 + 1.63 + 1.63
[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 6/30/99 -22.88% -23.59%
Inception (10/21/94) through 6/30/99 + 2.10 + 2.10
[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 6/30/99 -22.55% -25.65%
Five Years Ended 6/30/99 + 3.68 + 2.84
Inception (8/27/93) through 6/30/99 + 2.13 + 1.41
[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 6/30/99
<S> <C> <C> <C> <C>
ML Americas Income Fund Class A Shares -22.28% +1.76% +14.73% 8.74%
ML Americas Income Fund Class B Shares -22.84 +1.56 + 9.88 8.31
ML Americas Income Fund Class C Shares -22.88 +1.55 +10.21 8.25
ML Americas Income Fund Class D Shares -22.55 +1.52 +13.07 8.50
<FN>
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included. Total
reinvestment 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 from 10/21/94 for Class A &
Class C Shares and from 8/27/93 for Class B & Class D Shares.
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
Interest Maturity Value Percent of
COUNTRY Industry Face Amount Bonds Rate Date (Note 1a) Net Assets
<S> <S> <S> <C> <S> <C> <C> <C> <C>
Argentina Industrials US$ 1,800,000 Perez Companc SA 8.125% 7/15/2007 $ 1,537,319 4.4%
Telecommuni- 1,750,000 Telefonica de Argentina SA 9.125 5/07/2008 1,522,500 4.3
cations
Total Bonds in Argentina (Cost--$3,125,938) 3,059,819 8.7
Brazil Metals 2,200,000 CSN Iron SA 9.125 6/01/2007 1,650,000 4.7
Sovereign 75,000 Republic of Brazil 9.375 4/07/2008 60,000 0.2
Government 150,000 Republic of Brazil 10.125 5/15/2027 112,500 0.3
Obligations ----------- ------
172,500 0.5
Utilities-- 1,700,000 Centrais Electricas Brasileiras SA 10.00 7/06/2004 1,632,000 4.6
Electric 1,925,000 Compania Paranaense de Energia 9.75 5/02/2005 1,674,750 4.8
----------- ------
3,306,750 9.4
Total Bonds in Brazil (Cost--$4,892,463) 5,129,250 14.6
Mexico Broadcasting-- 1,000,000 Grupo Televisa SA (c) 11.72 5/15/2008 810,000 2.3
Radio &
Television
Industrials 2,000,000 Petroleos Mexicanos 9.50 9/15/2027 1,685,000 4.8
Sovereign 1,350,000 United Mexican States 11.50 5/15/2026 1,485,000 4.2
Government
Obligations
Total Bonds in Mexico (Cost--$4,123,792) 3,980,000 11.3
Panama Sovereign 630,000 Republic of Panama 8.875 9/30/2027 516,600 1.5
Government
Obligations
Total Bonds in Panama (Cost--$573,300) 516,600 1.5
</TABLE>
Merrill Lynch Americas Income Fund, Inc., June 30, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
Interest Maturity Value Percent of
COUNTRY Industry Face Amount Bonds Rate Date (Note 1a) Net Assets
<S> <S> <S> <C> <S> <C> <C> <C> <C>
Poland Telecommuni- US$ 1,500,000 TPSA Finance BV (b) 7.75 % 12/10/2008 $ 1,455,749 4.1%
cations
Total Bonds in Poland (Cost--$1,489,230) 1,455,749 4.1
Russia Sovereign 375,000 Russian Federation Bonds
Government (Regulation S) 11.00 7/24/2018 184,687 0.5
Obligations
Total Bonds in Russia (Cost--$152,498) 184,687 0.5
Venezuela Sovereign 750,000 Republic of Venezuela 13.625 8/15/2018 675,000 1.9
Government 2,100,000 Republic of Venezuela 9.25 9/15/2027 1,359,750 3.9
Obligations
Total Bonds in Venezuela (Cost--$1,877,860) 2,034,750 5.8
Total Investments in Bonds (Cost--$16,235,081) 16,360,855 46.5
Brady Bonds*
Argentina Sovereign 790,500 Republic of Argentina FRB (a) 5.938 3/31/2005 675,482 1.9
Government 1,450,000 Republic of Argentina, Par 'L' 6.00 3/31/2023 915,313 2.6
Obligations
Total Brady Bonds in Argentina
(Cost--$1,602,065) 1,590,795 4.5
Brazil Sovereign 3,585,840 Republic of Brazil 'C' (a) 8.00 4/15/2014 2,337,519 6.6
Government 750,000 Republic of Brazil, Discount (a) 5.875 4/15/2024 475,313 1.4
Obligations 2,137,500 Republic of Brazil 'EI' (a) 5.875 4/15/2006 1,688,625 4.8
3,000,000 Republic of Brazil NMB (a) 5.9375 4/15/2009 2,092,500 5.9
Total Brady Bonds in Brazil
(Cost--$5,702,504) 6,593,957 18.7
Bulgaria Sovereign 760,000 Republic of Bulgaria, Discount
Government 'A' (a) 5.875 7/28/2024 513,000 1.5
Obligations 510,000 Republic of Bulgaria, Front-
Loaded Interest Rate Reduction
Bonds, Series A (a) 2.50 7/28/2012 304,087 0.9
700,000 Republic of Bulgaria, Interest
Arrears Bond (a) 5.875 7/28/2011 472,500 1.3
Total Brady Bonds in Bulgaria
(Cost--$1,268,808) 1,289,587 3.7
Mexico Sovereign 3,750,000 United Mexican States 'W-A' 6.25 12/31/2019 2,784,375 7.9
Government 2,380,000 United Mexican States 'W-B' 6.25 12/31/2019 1,767,150 5.0
Obligations
Total Brady Bonds in Mexico
(Cost--$4,499,969) 4,551,525 12.9
Panama Sovereign 500,000 Republic of Panama, Interest
Government Reduction Bonds (a) 4.00 7/17/2014 366,875 1.0
Obligations
Total Brady Bonds in Panama
(Cost--$355,000) 366,875 1.0
Peru Sovereign 1,020,000 Republic of Peru, Front-Loaded
Government Interest Rate Reduction Bonds (a) 3.75 3/07/2017 563,550 1.6
Obligations 800,000 Republic of Peru, Past Due
Interest (a) 4.50 3/07/2017 490,000 1.4
Total Brady Bonds in Peru
(Cost--$1,049,870) 1,053,550 3.0
Poland Sovereign 700,000 Republic of Poland, Par 3.00 10/27/2024 427,000 1.2
Government
Obligations
Total Brady Bonds in Poland
(Cost--$467,319) 427,000 1.2
Venezuela Sovereign 1,214,280 Republic of Venezuela, DCB (a) 6.3125 12/18/2007 936,513 2.7
Government
Obligations
Total Brady Bonds in Venezuela
(Cost--$767,526) 936,513 2.7
Total Investments in Brady Bonds
(Cost--$15,713,061) 16,809,802 47.7
Total Investments (Cost--$31,948,142) 33,170,657 94.2
Other Assets Less Liabilities 2,047,932 5.8
----------- ------
Net Assets $35,218,589 100.0%
=========== ======
<FN>
*Brady Bonds are securities that 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.
(a)Floating rate note.
(b)The security may be offered and sold to "qualified institutional
buyers" under Rule 144A of the Securities Act of 1933.
(c)Represents a zero coupon or step bond; the interest rate shown is
the effective yield at the time of purchase by the Fund.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Americas Income Fund, Inc., June 30, 1999
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
<CAPTION>
As of June 30, 1999
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$31,948,142) (Note 1a) $ 33,170,657
Cash 30,843
Receivables:
Securities sold $ 3,141,149
Interest 757,004
Capital shares sold 24,995 3,923,148
------------
Prepaid registration fees (Note 1f) 20,670
------------
Total assets 37,145,318
------------
Liabilities: Payables:
Securities purchased 1,575,334
Capital shares redeemed 112,139
Dividends to shareholders (Note 1g) 90,824
Distributor (Note 2) 18,743
Investment adviser (Note 2) 17,543 1,814,583
------------
Accrued expenses 112,146
------------
Total liabilities 1,926,729
------------
Net Assets: Net assets $ 35,218,589
============
Net Assets Class A Common Stock, $.10 par value, 100,000,000 shares authorized $ 32,633
Consist of: Class B Common Stock, $.10 par value, 100,000,000 shares authorized 465,691
Class C Common Stock, $.10 par value, 100,000,000 shares authorized 22,102
Class D Common Stock, $.10 par value, 100,000,000 shares authorized 88,226
Paid-in capital in excess of par 71,130,724
Accumulated capital losses on investments--net (Note 5) (34,866,860)
Accumulated distributions in excess of capital gains on
investments--net (Note 1g) (2,876,442)
Unrealized appreciation on investments--net 1,222,515
------------
Net assets $ 35,218,589
============
Net Asset Class A--Based on net assets of $1,892,512 and 326,325 shares
Value: outstanding $ 5.80
============
Class B--Based on net assets of $26,945,463 and 4,656,906
shares outstanding $ 5.79
============
Class C--Based on net assets of $1,278,756 and 221,015 shares
outstanding $ 5.79
============
Class D--Based on net assets of $5,101,858 and 882,256 shares
outstanding $ 5.78
============
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Six Months Ended June 30, 1999
<S> <S> <C> <C>
Investment Income Interest and discount earned $ 1,818,125
(Note 1e): ------------
Expenses: Investment advisory fees (Note 2) $ 112,496
Account maintenance and distribution fees--Class B (Note 2) 108,837
Accounting services (Note 2) 51,996
Professional fees 37,843
Printing and shareholder reports 32,724
Registration fees (Note 1f) 30,853
Transfer agent fees--Class B (Note 2) 28,721
Directors' fees and expenses 23,227
Custodian fees 17,463
Account maintenance fees--Class D (Note 2) 6,727
Account maintenance and distribution fees--Class C (Note 2) 5,564
Transfer agent fees--Class D (Note 2) 4,391
Transfer agent fees--Class C (Note 2) 1,438
Transfer agent fees--Class A (Note 2) 1,391
Pricing fees 492
Other 2,114
------------
Total expenses 466,277
------------
Investment income--net 1,351,848
------------
Realized Realized loss on investments--net (1,953,358)
& Unrealized Change in unrealized appreciation/depreciation on investments--net 3,651,927
Gain (Loss) on ------------
Investments--Net Net realized and unrealized gain on investments 1,698,569
(Notes 1b, ------------
1e & 3): Net Increase in Net Assets Resulting from Operations $ 3,050,417
============
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Americas Income Fund, Inc., June 30, 1999
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<CAPTION>
For the Six For the
Months Ended Year Ended
June 30, December 31,
Increase (Decrease) in Net Assets: 1999 1998
<S> <S> <C> <C>
Operations: Investment income--net $ 1,351,848 $ 6,501,860
Realized loss on investments and foreign currency
transactions--net (1,953,358) (33,355,834)
Change in unrealized appreciation/depreciation on
investments--net 3,651,927 (2,495,358)
------------ ------------
Net increase (decrease) in net assets resulting from
operations 3,050,417 (29,349,332)
------------ ------------
Dividends to Investment income--net:
Shareholders Class A (67,076) (326,017)
(Note 1g): Class B (1,030,248) (4,624,675)
Class C (49,011) (240,731)
Class D (205,513) (868,105)
Return of capital--net:
Class A -- (23,798)
Class B -- (337,591)
Class C -- (17,573)
Class D -- (63,370)
------------ ------------
Net decrease in net assets resulting from dividends to
shareholders (1,351,848) (6,501,860)
------------ ------------
Capital Share Net decrease in net assets derived from capital share
Transactions transactions (9,888,207) (20,604,040)
(Note 4): ------------ ------------
Net Assets: Total decrease in net assets (8,189,638) (56,455,232)
Beginning of period 43,408,227 99,863,459
------------ ------------
End of period $ 35,218,589 $ 43,408,227
------------ ------------
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
Class A
For the
Six
The following per share data and ratios have been derived Months
from information provided in the financial statements. Ended
June 30, For the Year Ended December 31,
Increase (Decrease) in Net Asset Value: 1999 1998 1997 1996+++ 1995
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 5.54 $ 9.60 $ 11.36 $ 9.70 $ 8.51
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .22 .76 .72 .97 .94
Realized and unrealized gain (loss) on
investments and foreign currency
transactions--net .26 (4.06) (.54) 2.14 1.19
-------- -------- -------- -------- --------
Total from investment operations .48 (3.30) .18 3.11 2.13
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.22) (.71) (.72) (1.00) (.94)
In excess of investment income--net -- -- -- (.13) --
Return of capital--net -- (.05) -- -- --
Realized gain on investments--net -- -- (.93) (.32) --
In excess of realized gain on
investments--net -- -- (.29) -- --
-------- -------- -------- -------- --------
Total dividends and distributions (.22) (.76) (1.94) (1.45) (.94)
-------- -------- -------- -------- --------
Net asset value, end of period $ 5.80 $ 5.54 $ 9.60 $ 11.36 $ 9.70
======== ======== ======== ======== ========
Total Investment Based on net asset value per share 8.74%++ (36.18%) 1.74% 33.64% 27.27%
Return:** ======== ======== ======== ======== ========
Ratios to Average Expenses, excluding interest expense 1.81%* 1.70% 1.38% 1.05% 1.20%
Net Assets: ======== ======== ======== ======== ========
Expenses 1.81%* 2.66% 1.48% 1.32% 1.36%
======== ======== ======== ======== ========
Investment income--net 7.88%* 9.59% 6.31% 8.97% 11.25%
======== ======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $ 1,893 $ 1,988 $ 4,842 $ 28,136 $ 1,165
Data: ======== ======== ======== ======== ========
Portfolio turnover 115.16% 618.06% 942.74% 420.35% 127.17%
======== ======== ======== ======== ========
Leverage: Amount of reverse repurchase agreements
outstanding, end of period (in thousands) -- -- -- $ 22,350 $ 10,265
======== ======== ======== ======== ========
Average amount of reverse repurchase
agreements outstanding during the
period (in thousands) -- $ 14,306 $ 3,185 $ 8,277 $ 2,640
======== ======== ======== ======== ========
Average amount of reverse repurchase
agreements per share during the period -- $ 1.56 $ .20 $ .48 $ .20
======== ======== ======== ======== ========
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Aggregate total investment return.
+++Based on average shares outstanding.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Americas Income Fund, Inc., June 30, 1999
<TABLE>
FINANCIAL HIGHLIGHTS (continued)
<CAPTION>
Class B
For the
Six
The following per share data and ratios have been derived Months
from information provided in the financial statements. Ended
June 30, For the Year Ended December 31,
Increase (Decrease) in Net Asset Value: 1999 1998 1997 1996+++ 1995
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 5.53 $ 9.57 $ 11.31 $ 9.65 $ 8.48
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .20 .70 .63 .88 .88
Realized and unrealized gain (loss) on
investments and foreign currency
transactions--net .26 (4.04) (.52) 2.15 1.17
-------- -------- -------- -------- --------
Total from investment operations .46 (3.34) .11 3.03 2.05
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.20) (.65) (.63) (.93) (.88)
In excess of investment income--net -- -- -- (.12) --
Return of capital--net -- (.05) -- -- --
Realized gain on investments--net -- -- (.93) (.32) --
In excess of realized gain on
investments--net -- -- (.29) -- --
-------- -------- -------- -------- --------
Total dividends and distributions (.20) (.70) (1.85) (1.37) (.88)
-------- -------- -------- -------- --------
Net asset value, end of period $ 5.79 $ 5.53 $ 9.57 $ 11.31 $ 9.65
======== ======== ======== ======== ========
Total Investment Based on net asset value per share 8.34%++ (36.60%) 1.12% 32.75% 26.10%
Return:** ======== ======== ======== ======== ========
Ratios to Average Expenses, excluding interest expense 2.60%* 2.21% 2.16% 1.83% 1.97%
Net Assets: ======== ======== ======== ======== ========
Expenses 2.60%* 3.47% 2.26% 2.10% 2.13%
======== ======== ======== ======== ========
Investment income--net 7.10%* 8.93% 5.76% 8.36% 10.40%
======== ======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $ 26,945 $ 33,374 $ 78,733 $160,204 $103,465
Data: ======== ======== ======== ======== ========
Portfolio turnover 115.16% 618.06% 942.74% 420.35% 127.17%
======== ======== ======== ======== ========
Leverage: Amount of reverse repurchase agreements
outstanding, end of period (in thousands) -- -- -- $ 22,350 $ 10,265
======== ======== ======== ======== ========
Average amount of reverse repurchase
agreements outstanding during the
period (in thousands) -- $ 14,306 $ 3,185 $ 8,277 $ 2,640
======== ======== ======== ======== ========
Average amount of reverse repurchase
agreements per share during the period -- $ 1.56 $ .20 $ .48 $ .20
======== ======== ======== ======== ========
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS (continued)
<CAPTION>
Class C
For the
Six
The following per share data and ratios have been derived Months
from information provided in the financial statements. Ended
June 30, For the Year Ended December 31,
Increase (Decrease) in Net Asset Value: 1999 1998 1997 1996+++ 1995
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 5.53 $ 9.57 $ 11.31 $ 9.65 $ 8.47
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .20 .69 .63 .87 .87
Realized and unrealized gain (loss) on
investments and foreign currency
transactions--net .26 (4.04) (.52) 2.15 1.18
-------- -------- -------- -------- --------
Total from investment operations .46 (3.35) .11 3.02 2.05
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.20) (.64) (.63) (.92) (.87)
In excess of investment income--net -- -- -- (.12) --
Return of capital--net -- (.05) -- -- --
Realized gain on investments--net -- -- (.93) (.32) --
In excess of realized gain on
investments--net -- -- (.29) -- --
-------- -------- -------- -------- --------
Total dividends and distributions (.20) (.69) (1.85) (1.36) (.87)
-------- -------- -------- -------- --------
Net asset value, end of period $ 5.79 $ 5.53 $ 9.57 $ 11.31 $ 9.65
======== ======== ======== ======== ========
Total Investment Based on net asset value per share 8.31%++ (36.64%) 1.06% 32.66% 26.18%
Return:** ======== ======== ======== ======== ========
Ratios to Average Expenses, excluding interest expense 2.66%* 2.25% 2.23% 1.90% 2.05%
Net Assets: ======== ======== ======== ======== ========
Expenses 2.66%* 3.52% 2.33% 2.17% 2.19%
======== ======== ======== ======== ========
Investment income--net 7.05%* 8.85% 5.64% 8.17% 10.23%
======== ======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $ 1,279 $ 1,730 $ 4,222 $ 11,436 $ 1,396
Data: ======== ======== ======== ======== ========
Portfolio turnover 115.16% 618.06% 942.74% 420.35% 127.17%
======== ======== ======== ======== ========
Leverage: Amount of reverse repurchase agreements
outstanding, end of period (in thousands) -- -- -- $ 22,350 $ 10,265
======== ======== ======== ======== ========
Average amount of reverse repurchase
agreements outstanding during the
period (in thousands) -- $ 14,306 $ 3,185 $ 8,277 $ 2,640
======== ======== ======== ======== ========
Average amount of reverse repurchase
agreements per share during the period -- $ 1.56 $ .20 $ .48 $ .20
======== ======== ======== ======== ========
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Aggregate total investment return.
+++Based on average shares outstanding.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Americas Income Fund, Inc., June 30, 1999
<TABLE>
FINANCIAL HIGHLIGHTS (concluded)
<CAPTION>
Class D
For the
Six
The following per share data and ratios have been derived Months
from information provided in the financial statements. Ended
June 30, For the Year Ended December 31,
Increase (Decrease) in Net Asset Value: 1999 1998 1997 1996+++ 1995
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 5.52 $ 9.57 $ 11.31 $ 9.65 $ 8.48
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .21 .74 .69 .95 .92
Realized and unrealized gain (loss) on
investments and foreign currency
transactions--net .26 (4.05) (.52) 2.13 1.17
-------- -------- -------- -------- --------
Total from investment operations .47 (3.31) .17 3.08 2.09
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.21) (.69) (.69) (.97) (.92)
In excess of investment income--net -- -- -- (.13) --
Return of capital--net -- (.05) -- -- --
Realized gain on investments--net -- -- (.93) (.32) --
In excess of realized gain on
investments--net -- -- (.29) -- --
-------- -------- -------- -------- --------
Total dividends and distributions (.21) (.74) (1.91) (1.42) (.92)
-------- -------- -------- -------- --------
Net asset value, end of period $ 5.78 $ 5.52 $ 9.57 $ 11.31 $ 9.65
======== ======== ======== ======== ========
Total Investment Based on net asset value per share 8.62%++ (36.37%) 1.65% 33.44% 26.75%
Return:** ======== ======== ======== ======== ========
Ratios to Average Expenses, excluding interest expense 2.06%* 1.84% 1.63% 1.31% 1.44%
Net Assets: ======== ======== ======== ======== ========
Expenses 2.06%* 2.88% 1.73% 1.58% 1.60%
======== ======== ======== ======== ========
Investment income--net 7.64%* 9.51% 6.30% 8.92% 10.85%
======== ======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $ 5,102 $ 6,316 $ 12,066 $ 18,402 $ 14,169
Data: ======== ======== ======== ======== ========
Portfolio turnover 115.16% 618.06% 942.74% 420.35% 127.17%
======== ======== ======== ======== ========
Leverage: Amount of reverse repurchase agreements
outstanding, end of period (in thousands) -- -- -- $ 22,350 $ 10,265
======== ======== ======== ======== ========
Average amount of reverse repurchase
agreements outstanding during the
period (in thousands) -- $ 14,306 $ 3,185 $ 8,277 $ 2,640
======== ======== ======== ======== ========
Average amount of reverse repurchase
agreements per share during the period -- $ 1.56 $ .20 $ .48 $ .20
======== ======== ======== ======== ========
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Aggregate total investment return.
+++Based on average shares outstanding.
See Notes to Financial Statements.
</TABLE>
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's financial statements
are prepared in accordance with generally accepted accounting
principles, which may require the use of management accruals and
estimates. These unaudited financial statements reflect all
adjustments which are, in the opinion of management, necessary to a
fair statement of the results for the interim period presented. All
such adjustments are of a normal recurring nature. The Fund offers
four classes of shares under the Merrill Lynch Select Pricing SM
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 that 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 that 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 or purchased are valued at
the last sale price in the case of exchange-traded options. In the
case of options traded in the over-the-counter market, valuation is
the last asked price (options written) or the last bid price
(options purchased). 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.
* 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.
* 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.
* 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.
Merrill Lynch Americas Income Fund, Inc., June 30, 1999
NOTES TO FINANCIAL STATEMENTS (continued)
(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) Prepaid registration fees--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. A portion of the net investment
income dividends paid by the Fund for the year ended December 31,
1998 is characterized as a return of capital.
(h) Short sales--When the Fund engages in a short sale, an amount
equal to the proceeds 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 market value of the
short sale. The Fund maintains a segregated account of securities as
collateral for the short sales. The Fund is exposed to market risk
based on the amount, if any, that the market value of the stock
exceeds the market value of the securities in the segregated
account.
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 ("MLFD" or the "Distributor"), a division of Princeton
Funds Distributor, Inc. ("PFD"), which is 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 Incorporated ("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 six months ended June 30, 1999, MLFD earned underwriting
discounts and direct commissions and MLPF&S earned dealer
concessions on sales of the Fund's Class D Shares as follows:
MLFD MLPF&S
Class D $17 $52
For the six months ended June 30, 1999, MLPF&S received contingent
deferred sales charges of $56,514 and $2,677 relating to
transactions in Class B and Class C Shares, respectively.
For the six months ended June 30, 1999, the Fund paid Merrill Lynch
Security Pricing Service, an affiliate of MLPF&S, $117 for security
price quotations to compute the net asset value of the Fund.
Financial Data Services, Inc. ("FDS"), 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, PFD, FDS, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended June 30, 1999 were $41,782,148 and
$52,037,704, respectively.
Net realized losses for the six months ended June 30, 1999 and net
unrealized gains as of June 30, 1999 were as follows:
Realized Unrealized
Losses Gains
Long-term investments $ (1,953,358) $ 1,222,515
------------ ------------
Total $ (1,953,358) $ 1,222,515
============ ============
As of June 30, 1999, net unrealized appreciation for Federal income
tax purposes aggregated $1,222,515, of which $1,792,917 related to
appreciated securities and $570,402 related to depreciated
securities. At June 30, 1999, the aggregate cost of investments for
Federal income tax purposes was $31,948,142.
4. Capital Share Transactions:
Net decrease in net assets derived from capital share transactions
was $9,888,207 and $20,604,040 for the six months ended June 30,
1999 and the year ended December 31, 1998, respectively.
Transactions in shares of capital were as follows:
Class A Shares for the Six Months Dollar
Ended June 30, 1999 Shares Amount
Shares sold 258,298 $ 1,480,078
Shares issued to shareholders
in reinvestment of dividends 4,118 23,811
----------- ------------
Total issued 262,416 1,503,889
Shares redeemed (295,012) (1,652,709)
----------- ------------
Net decrease (32,596) $ (148,820)
=========== ============
Class A Shares for the Year Dollar
Ended December 31, 1998 Shares Amount
Shares sold 637,752 $ 4,323,664
Shares issued to shareholders
in reinvestment of dividends 25,916 212,222
----------- ------------
Total issued 663,668 4,535,886
Shares redeemed (809,108) (5,986,803)
----------- ------------
Net decrease (145,440) $ (1,450,917)
=========== ============
Class B Shares for the Six Months Dollar
Ended June 30, 1999 Shares Amount
Shares sold 292,899 $ 1,647,593
Shares issued to shareholders
in reinvestment of dividends 71,874 414,158
----------- ------------
Total issued 364,773 2,061,751
Automatic conversion of shares (9,939) (56,858)
Shares redeemed (1,737,358) (9,772,827)
----------- ------------
Net decrease (1,382,524) $ (7,767,934)
=========== ============
Class B Shares for the Year Dollar
Ended December 31, 1998 Shares Amount
Shares sold 1,507,682 $ 9,930,127
Shares issued to shareholders
in reinvestment of dividends 277,781 2,120,932
----------- ------------
Total issued 1,785,463 12,051,059
Automatic conversion of shares (19,336) (160,511)
Shares redeemed (3,952,202) (29,827,935)
----------- ------------
Net decrease (2,186,075) $(17,937,387)
=========== ============
Merrill Lynch Americas Income Fund, Inc., June 30, 1999
NOTES TO FINANCIAL STATEMENTS (concluded)
Class C Shares for the Six Months Dollar
Ended June 30, 1999 Shares Amount
Shares sold 16,102 $ 95,610
Shares issued to shareholders
in reinvestment of dividends 3,018 17,336
----------- ------------
Total issued 19,120 112,946
Shares redeemed (111,154) (623,816)
----------- ------------
Net decrease (92,034) $ (510,870)
=========== ============
Class C Shares for the Year Dollar
Ended December 31, 1998 Shares Amount
Shares sold 122,254 $ 792,384
Shares issued to shareholders
in reinvestment of dividends 14,160 108,908
----------- ------------
Total issued 136,414 901,292
Shares redeemed (264,464) (2,036,673)
----------- ------------
Net decrease (128,050) $ (1,135,381)
=========== ============
Class D Shares for the Six Months Dollar
Ended June 30, 1999 Shares Amount
Shares sold 35,436 $ 201,920
Automatic conversion of shares 9,942 56,858
Shares issued to shareholders
in reinvestment of dividends 12,666 72,988
----------- ------------
Total issued 58,044 331,766
Shares redeemed (319,511) (1,792,349)
----------- ------------
Net decrease (261,467) $ (1,460,583)
=========== ============
Class D Shares for the Year Dollar
Ended December 31, 1998 Shares Amount
Shares sold 530,485 $ 4,307,175
Automatic conversion of shares 19,190 160,511
Shares issued to shareholders
in reinvestment of dividends 51,880 396,219
----------- ------------
Total issued 601,555 4,863,905
Shares redeemed (719,080) (4,944,260)
----------- ------------
Net decrease (117,525) $ (80,355)
=========== ============
5. Capital Loss Carryforward:
At December 31, 1998, the Fund had a net capital loss carryforward
of approximately $11,724,000, all of which expires in 2006. This
amount will be available to offset like amounts of any future
taxable gains.
