<PAGE>
CBA MONEY FUND
BOX 9011
PRINCETON, NEW JERSEY 08543-9011
NOTICE OF MEETING OF SHAREHOLDERS
FEBRUARY 25, 1994
To The Shareholders of
CBA Money Fund:
Notice is hereby given that a Meeting of Shareholders (the "Meeting") of CBA
Money Fund (the "Fund") will be held at the offices of Merrill Lynch Asset
Management, 800 Scudders Mill Road, Plainsboro, New Jersey, on Friday, February
25, 1994 at 9:00 A.M. for the following purposes:
(1) To elect six Trustees to serve for an indefinite term;
(2) To consider and act upon a proposal to ratify the selection of
Deloitte & Touche to serve as independent auditors of the Fund for
its fiscal year ending February 28, 1994;
(3) To consider and act upon a proposal to amend the fundamental
investment restrictions of the Fund relating to investments in
restricted or unmarketable securities and securities of unseasoned
issuers; and
(4) To transact such other business as may properly come before the
Meeting or any adjournment thereof.
The Trustees have fixed the close of business on December 20, 1993 as the
record date for the determination of shareholders entitled to notice of and to
vote at the Meeting or any adjournment thereof.
A complete list of the shareholders of the Fund entitled to vote at the
Meeting will be available and open to the examination of any shareholder of the
Fund for any purpose germane to the Meeting during ordinary business hours from
and after February 11, 1994 at the office of the Fund, 800 Scudders Mill Road,
Plainsboro, New Jersey 08536. You are cordially invited to attend the Meeting.
Shareholders who do not expect to attend the Meeting in person are requested to
complete, date and sign the enclosed form of proxy and return it promptly in
the envelope provided for that purpose. The enclosed proxy is being solicited
on behalf of the Board of Trustees of the Fund.
By Order of the Board of
Trustees
Robert Harris
Secretary
Plainsboro, New Jersey
Dated: January 7, 1994
<PAGE>
PROXY STATEMENT
----------------
CBA MONEY FUND
BOX 9011
PRINCETON, NEW JERSEY 08543-9011
----------------
MEETING OF SHAREHOLDERS
FEBRUARY 25, 1994
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Trustees of CBA Money Fund, a Massachusetts
business trust (the "Fund"), to be voted at a Meeting of Shareholders of the
Fund (the "Meeting"), to be held at the offices of Merrill Lynch Asset
Management ("MLAM"), 800 Scudders Mill Road, Plainsboro, New Jersey, on Friday,
February 25, 1994 at 9:00 A.M. The approximate mailing date of this Proxy
Statement is January 12, 1994.
All properly executed proxies received prior to the Meeting will be voted at
the Meeting in accordance with the instructions marked thereon or otherwise as
provided therein. Unless instructions to the contrary are marked, proxies will
be voted for the election of the six Trustees named herein to serve for an
indefinite term, for the ratification of the selection of independent auditors
to serve for the Fund's current fiscal year and for the proposal to amend the
fundamental investment restrictions of the Fund relating to investments in
restricted or unmarketable securities and securities of unseasoned issuers. Any
proxy may be revoked at any time prior to the exercise thereof by giving
written notice to the Secretary of the Fund.
The Trustees have fixed the close of business on December 20, 1993 as the
record date for the determination of shareholders entitled to notice of and to
vote at the Meeting and at any adjournment thereof. Shareholders on the record
date will be entitled to one vote for each share held, with no shares having
cumulative voting rights. As of December 20, 1993, the Fund had outstanding
1,236,269,989 shares of beneficial interest, par value $0.10 per share. To the
knowledge of the Fund, as of December 20, 1993 no person was the beneficial
owner of more than five per cent of its outstanding shares.
The Trustees of the Fund know of no business other than that mentioned in
Items 1 through 3 of the Notice of Meeting which will be presented for
consideration at the Meeting. If any other matter is properly presented, it is
the intention of the persons named in the enclosed proxy to vote in accordance
with their best judgment.
<PAGE>
ELECTION OF TRUSTEES
At the Meeting, six Trustees will be elected to serve for an indefinite term
until their successors are elected and qualified.
There normally will be no meeting of shareholders for the purpose of electing
Trustees unless and until such time as less than a majority of the Trustees
holding office have been elected by shareholders, at which time the Trustees
then in office will call a special meeting of shareholders for the election of
Trustees. Shareholders may, in accordance with the terms of the Declaration of
Trust of the Trust, cause a meeting of shareholders to be held for the purpose
of voting on the removal of Trustees at the request of 10% of the outstanding
shares of the Fund. A Trustee may be removed at a special meeting of
shareholders by a vote of two-thirds of the outstanding shares. See "Additional
Information--Meetings of Shareholders" below.
It is the intention of the persons named in the enclosed proxy to nominate
and vote in favor of the election of the persons listed below.
Each nominee listed below has consented to serve as a Trustee. The Trustees
of the Fund know of no reason why any of these nominees will be unable to
serve, but in the event of any such unavailability, the proxies received will
be voted for such substitute nominee or nominees as the Trustees may recommend.
Certain information concerning the nominees is set forth as follows:
<TABLE>
<CAPTION>
SHARES OF THE FUND
PRINCIPAL OCCUPATIONS BENEFICIALLY
DURING PAST FIVE YEARS TRUSTEE OWNED AT
NAME AND ADDRESS OF NOMINEE AGE AND PUBLIC DIRECTORSHIPS(1) SINCE DECEMBER 20, 1993
--------------------------- --- --------------------------- ------- ------------------
<C> <C> <S> <C> <C>
Ronald W. Forbes(1)(2)...... 53 Professor of Finance, School of 1989 -0-
School of Business BA 309 Business, State University of
State University of New New York at Albany, since 1989,
York and Associate Professor prior
at Albany thereto; Member, Task Force on
1400 Washington Avenue Municipal Securities Markets,
Albany, New York 12222 Twentieth Century Fund.
Cynthia A. Montgomery(1).... 41 Professor, Harvard Business -- -0-
Harvard Business School School since 1989; Associate
Soldiers Field Road Professor, J.L. Kellogg Graduate
Boston, Massachusetts 02163 School of Management, Northwest-
ern University, 1985-1989; As-
sistant Professor, Graduate
School of Business Administra-
tion, the University of Michi-
gan, 1979-1985; Director, UNUM
Corporation.
Charles C. Reilly(1)(2)..... 62 President and Chief Investment 1990 -0-
9 Hampton Harbor Road Officer of Verus Capital, Inc.
Hampton Bays, New York from 1979 to 1990; Senior Vice
11946 President of Arnhold and S.
Bleichroeder, Inc. from 1973 to
1990; Adjunct Professor, Colum-
bia University Graduate School
of Business since 1990; Adjunct
Professor, Wharton School, Uni-
versity of Pennsylvania, 1990;
Director, Harvard Business
School Alumni Association, since
1991.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
SHARES OF THE
PRINCIPAL OCCUPATIONS FUND BENEFICIALLY
DURING PAST FIVE YEARS TRUSTEE OWNED AT
NAME AND ADDRESS OF NOMINEE AGE AND PUBLIC DIRECTORSHIPS(1) SINCE DECEMBER 20, 1993
--------------------------- --- --------------------------- ------- -----------------
<C> <C> <S> <C> <C>
Kevin A. Ryan(1)(2)......... 61 Professor of Education at Boston 1992 -0-
127 Commonwealth Avenue University since 1982; Founder
Chestnut Hill, and current Director of The Bos-
Massachusetts 02167 ton University Center for the
Advancement of Ethics and Char-
acter.
Richard R. West(1)(2)....... 55 Professor of Finance, and Dean 1989 -0-
482 Tepi Drive from 1984 to 1993, New York Uni-
Southbury, Connecticut versity Leonard N. Stern School
06488 of Business Administration; Pro-
fessor of Finance at the Amos
Tuck School of Business Adminis-
tration from 1976 to 1984 and
Dean from 1976 to 1983; Director
of Vornado, Inc. (real estate
holding corporation), Bowne &
Co., Inc. (printer), Smith Co-
rona Corporation (manufacturer
of typewriters and word proces-
sors) and Alexander's Inc.
Arthur Zeikel(1)(3)......... 61 President of MLAM since 1977, 1989 -0-
P.O. Box 9011 Chief Investment Officer thereof
Princeton, New Jersey since 1976 and Director thereof
08543-9011 from 1976 to 1993; President and
Chief Investment Officer of Fund
Asset Management ("FAM") since
1977 and Director thereof from
1977 to 1993; Director of
Princeton Services, Inc.
("Princeton Services") since
1993; an Executive Vice Presi-
dent of Merrill Lynch & Co.,
Inc. ("ML & Co.") since 1990; an
Executive Vice President of Mer-
rill Lynch, Pierce, Fenner &
Smith Incorporated ("Merrill
Lynch") since 1990 and a Senior
Vice President from 1985 to
1990.
</TABLE>
- --------
(1) Each of the nominees is a director or trustee of certain other investment
companies for which MLAM or FAM acts as investment adviser. See "Merrill
Lynch Investment Company Directorships" below.
(2) Member of Audit Committee of the Board of Trustees.
(3) Interested person, as defined in the Investment Company Act of 1940, as
amended (the "Investment Company Act"), of the Fund.
3
<PAGE>
Committee's and Trustees' Meetings. The Board of Trustees has a standing
Audit Committee, which consists of the Trustees who are not "interested
persons" of the Fund within the meaning of the Investment Company Act. The
principal purpose of the Audit Committee is to review the scope of the annual
audit conducted by the Fund's independent auditors and the evaluation by such
auditors of the accounting procedures followed by the Fund. The non-interested
Trustees have retained independent legal counsel to assist them in connection
with these duties. The Board of Trustees does not have a nominating committee.
During the fiscal year ended February 28, 1993, the Board of Trustees held
four meetings and the Audit Committee held four meetings. Each of the Trustees
then serving attended at least 75% of the total number of meetings of the Board
of Trustees, and, if a member, the total number of meetings of the Audit
Committee, held during such period.
Interested Persons. The Fund considers Mr. Zeikel to be an "interested
person" of the Fund within the meaning of Section 2(a)(19) of the Investment
Company Act as a result of the position he holds with FAM and its affiliates.
Mr. Zeikel is the President of the Fund, the President of MLAM and FAM, and a
Director of Princeton Services, the general partner of MLAM and FAM.
Compensation of Trustees. FAM, the investment adviser, pays all compensation
of all officers of the Fund and all Trustees of the Fund who are affiliated
with ML & Co. or its subsidiaries. The Fund pays each Trustee not affiliated
with the investment adviser a fee of $3,000 per year plus $800 per meeting
attended, together with such Trustee's actual out-of-pocket expenses relating
to attendance at meetings. The Fund also pays each member of its Audit
Committee, which consists of all of the non-affiliated Trustees, a fee of
$1,500 per year, together with such Trustee's out-of-pocket expenses relating
to attendance at meetings. In addition, the Chairman of the Audit Committee
receives an annual fee of $1,000. These fees and expenses aggregated $19,747
for the fiscal year ended February 28, 1993.
Merrill Lynch Investment Company Directorships. FAM and MLAM act as the
investment adviser for over 90 other registered investment companies. Mr.
Zeikel is a trustee or director of each of these companies except for Merrill
Lynch Series Fund, Inc., Merrill Lynch Institutional Intermediate Fund, Merrill
Lynch Funds for Institutions Series and Merrill Lynch Institutional Tax-Exempt
Fund. Each of the nominees is a director or trustee of Merrill Lynch Utility
Income Fund, MuniVest Fund, Inc., MuniVest Fund II, Inc., Senior High Income
Portfolio, Inc., Senior High Income Portfolio II, Inc., Taurus MuniCalifornia
Holdings, Inc. and Taurus MuniNewYork Holdings, Inc. Messrs. Forbes, Reilly,
Ryan and West are trustees or directors of and Ms. Montgomery is nominated to
be a trustee or director of CMA Money Fund, CMA Treasury Fund, CMA Tax-Exempt
Fund, CMA Government Securities Fund, CMA Multi-State Municipal Series Trust,
Merrill Lynch Strategic Dividend Fund, Merrill Lynch Municipal Series Trust,
Merrill Lynch Corporate Bond Fund, Inc., Merrill Lynch Municipal Bond Fund,
Inc., The Corporate Fund Accumulation Program, Inc., The Municipal Fund
Accumulation Program, Inc., Merrill Lynch Prime Fund, Inc., Merrill Lynch
Global Utility Fund, Inc., Merrill Lynch High Income Municipal Bond Fund, Inc.,
and Merrill Lynch Fund For Tomorrow, Inc. In addition, Messrs. Reilly and West
are directors of Merrill Lynch Healthcare Fund, Inc., Merrill Lynch
International Holdings, Inc., Merrill Lynch Latin America Fund, Inc., Merrill
Lynch Short-Term Global Income Fund, Inc., Merrill Lynch Technology Fund, Inc.,
Merrill Lynch Global Bond Fund for Investment and Retirement, Merrill Lynch
Global Allocation Fund, Inc., Merrill Lynch Pacific Fund, Inc., Merrill Lynch
Developing Capital Markets Fund, Inc., Merrill Lynch EuroFund, Merrill
4
<PAGE>
Lynch Dragon Fund, Inc., Merrill Lynch International Equity Fund, and Merrill
Lynch Americas Income Fund, Inc.
Officers of the Fund. The Board of Trustees has elected eight officers of the
Fund. The following sets forth information concerning each of these officers:
<TABLE>
<CAPTION>
OFFICER
NAME AND PRINCIPAL OCCUPATION OFFICE AGE SINCE
----------------------------- ------ --- -------
<S> <C> <C> <C>
Arthur Zeikel....................................... President 61 1984
President of MLAM since 1977, Chief Investment
Officer thereof since 1976 and Director thereof
from 1976 to 1993; President and Chief Investment
Officer of FAM since 1977 and Director thereof
from 1977 to 1993; Director of Princeton Services
since 1993; Executive Vice President of ML & Co.
since 1990; Executive Vice President of Merrill
Lynch since 1990 and a Senior Vice President from
1985 to 1990.
Terry K. Glenn...................................... Executive Vice 53 1986
Executive Vice President of MLAM and FAM since 1983 President
and Director thereof from 1992 to 1993; Director
of Princeton Services since 1993; President of
Merrill Lynch Funds Distributor, Inc. ("MLFD")
since 1986 and Director thereof since 1991;
President of Princeton Administrators.
Joseph T. Monagle Jr................................ Vice President 45 1984
Senior Vice President of FAM and MLAM since 1990
and Vice President of MLAM from 1978 to 1990.
Donald C. Burke..................................... Vice President 33 1993
Vice President of MLAM since 1990; employee of
Deloitte & Touche from 1982 to 1990.
Carlo J. Giannini................................... Vice President 49 1992
Vice President of MLAM since 1981.
Kevin J. McKenna.................................... Vice President 36 1990
Vice President of MLAM since 1985.
Gerald M. Richard................................... Treasurer 44 1984
Senior Vice President and Treasurer of MLAM and FAM
since 1984; Treasurer of MLFD since 1984 and Vice
President since 1981.
Robert Harris....................................... Secretary 41 1984
Vice President of MLAM since 1984; Secretary of
MLFD since 1982.
</TABLE>
Share Ownership. On December 20, 1993, the Trustees and officers of the Fund
as a group (thirteen persons) owned an aggregate of less than 1/4 of 1% of the
outstanding shares of beneficial interest of the Fund. On such date, Mr.
Zeikel, a Trustee of the Fund, and the officers of the Fund owned an aggregate
of less than 1/4 of 1% of the outstanding shares of common stock of ML & Co.
5
<PAGE>
SELECTION OF INDEPENDENT AUDITORS
The Trustees of the Fund, including a majority of the Trustees who are not
interested persons of the Fund, have selected the firm of Deloitte & Touche
("D&T"), independent auditors, to examine the financial statements of the Fund
for the current fiscal year. The Fund knows of no direct or indirect financial
interest of such firm in the Fund. Such appointment is subject to ratification
or rejection by the shareholders of the Fund. Unless a contrary specification
is made, the accompanying proxy will be voted in favor of ratifying the
selection of such auditors.
D&T also acts as independent auditors for ML & Co. and all of its
subsidiaries and for substantially all of the other investment companies for
which MLAM or FAM acts as investment adviser. The fees received by D&T from
these other entities are substantially greater, in the aggregate, than the
total fees received by it from the Fund. The Trustees of the Fund considered
the fact that D&T has been retained as the independent auditors for ML & Co.
and the other entities described above in its evaluation of the independence of
D&T with respect to the Fund.
Representatives of D&T are expected to be present at the Meeting and will
have the opportunity to make a statement if they so desire and to respond to
questions from shareholders.
PROPOSAL TO AMEND THE FUNDAMENTAL INVESTMENT RESTRICTIONS OF THE FUND RELATING
TO INVESTMENTS IN RESTRICTED OR UNMARKETABLE SECURITIES AND SECURITIES OF
UNSEASONED ISSUERS
The Fund currently is restricted from investing in securities with legal or
contractual restrictions on resale (except for repurchase agreements) or for
which no readily available market exists or in securities of issuers (other
than issuers of U.S. Government agency securities) having a record, together
with predecessors, of less than three years of continuous operations if,
regarding all such securities, more than 5% of the Fund's total assets (taken
at market value) would be invested in such securities. At the meeting held on
December 8, 1993, the Trustees of the Fund voted to approve an amendment to
this restriction and determined to recommend that shareholders approve such
amendment.
As amended, the current restriction would be separated into two investment
restrictions. One investment restriction would increase the Fund's ability to
invest in restricted or unmarketable securities by permitting the Fund to
invest up to 10% of its total assets in such securities. The other restriction
would limit investments in unseasoned issuers alone to not more than 5% of
total assets. The net result of the changes would be an increase in the Fund's
ability to invest in restricted or unmarketable securities and unseasoned
issuers. The amended restrictions as set forth in the Fund's Statement of
Additional Information would read as follows:
The Money Fund may not: . . . (11) invest in securities with legal or
contractual restrictions on resale (except for repurchase agreements) or
for which no readily available market exists if, regarding all such
securities, more than 10% of its total assets (taken at market value) would
be invested in such securities; (12) invest in securities of issuers (other
than issuers of U.S. Government agency securities) having a record,
together with predecessors, of less than three years of continuous
operation if, regarding
6
<PAGE>
all such securities, more than 5% of its total assets (taken at market
value) would be invested in such securities; . . . .
These changes to the investment restrictions will provide the Fund with
greater flexibility in making portfolio investments and bring the Fund's
investment restrictions on restricted or unmarketable securities and securities
of unseasoned issuers more in conformity with the investment restrictions of
more recently organized money market funds. The Trustees recommend that the
shareholders vote in favor of the proposal to amend the fundamental investment
restrictions.
THE MANAGEMENT AGREEMENT
On March 29, 1984 the Fund entered into a management agreement (the
"Management Agreement") with FAM. On June 2, 1993, the Trustees of the Fund
approved the continuance of the Management Agreement for a period of one year.
INFORMATION CONCERNING FAM
Effective January 1, 1994, FAM was reorganized as a Delaware limited
partnership. FAM (the general partner of which is Princeton Services, a wholly-
owned subsidiary of ML & Co.) is owned and controlled by ML & Co. and is
located at 800 Scudders Mill Road, Plainsboro, New Jersey 08536. ML & Co. is
located at 250 Vesey Street, New York, New York 10281. The reorganization did
not result in a change of management of FAM, in any of its personnel, or in an
adverse change in its financial condition. Prior to the reorganization, FAM
(which was known as Fund Asset Management, Inc.) was a Delaware corporation
which was incorporated in 1976. FAM was a wholly-owned subsidiary of MLAM (a
Delaware corporation, which was also reorganized as a Delaware limited
partnership effective January 1, 1994) prior to its reorganization. MLAM was a
wholly-owned subsidiary of ML & Co. prior to its reorganization and continues
to be owned and controlled by ML & Co. after its reorganization. MLAM is also
located at 800 Scudders Mill Road, Plainsboro, New Jersey 08536. MLAM or FAM
acts as the investment adviser for more than 90 other registered investment
companies. In addition, MLAM offers portfolio management and portfolio analysis
services to individuals and institutions. FAM's audited balance sheet for its
fiscal year ended December 28, 1992 is appended to this Proxy Statement as
Exhibit A. An unaudited balance sheet for FAM as of September 24, 1993 is
appended to this Proxy Statement as Exhibit B. FAM represents that, to its
knowledge, there has been no material adverse change in its financial condition
since September 24, 1993.
Securities held by the Fund may also be held by, or be appropriate
investments for, other funds or clients (collectively referred to as "clients")
for which MLAM or FAM acts as an investment adviser. Because of different
investment objectives or other factors, a particular security may be bought for
one or more clients when one or more clients are selling the security. If
purchases or sales of securities for the Fund or other clients arise for
consideration at or about the same time, transactions in such securities will
be made, insofar as feasible, for the respective clients in a manner deemed
equitable to all by MLAM or FAM. To the extent that transactions on behalf of
more than one client of MLAM or FAM during the same period may increase the
demand for securities being purchased or the supply of securities being sold,
there may be an adverse effect on price.
7
<PAGE>
The following table set forth the name, title and principal occupation of the
principal executive officer of FAM and the directors of Princeton Services, the
general partner of FAM:
<TABLE>
<CAPTION>
NAME TITLE PRINCIPAL OCCUPATION
---- ----- --------------------
<S> <C> <C>
Arthur Zeikel*............ President of FAM and President of MLAM and FAM
Director of Princeton
Services
Terry K. Glenn............ Executive Vice President Executive Vice President
of FAM and Director of of MLAM and FAM
Princeton Services
Philip L. Kirstein........ Senior Vice President and Senior Vice President and
General Counsel of FAM General Counsel of MLAM
and Director of Princeton and FAM
Services
</TABLE>
- --------
* Mr Zeikel is presently a Trustee and the President of the Fund. The address
of Messrs. Zeikel, Glenn and Kirstein is P.O. Box 9011, Princeton, New Jersey
08543-9011, which is also the address of FAM and MLAM.
TERMS OF MANAGEMENT AGREEMENT
Management Agreement. The Management Agreement provides that, subject to the
direction of the Trustees of the Fund, FAM is responsible for the actual
management of the Fund's portfolio and for the review of the Fund's holdings in
light of its own research analysis and analyses from other relevant sources.
The responsibility for making decisions to buy, sell or hold a particular
security rests with FAM, subject to review by the Trustees. FAM provides the
portfolio management for the Fund. Such portfolio management considers analyses
from various sources, makes the necessary investment decisions and places
transactions accordingly. FAM is also obligated to perform certain
administrative services and to provide all the office space, facilities,
equipment and necessary personnel for portfolio management of the Fund.
Management Fees. The Management Agreement provides that as compensation for
its services to the Fund, FAM receives from the Fund at the end of each month a
fee at an annual rate of 0.50% of the first $500 million of average daily net
assets of the Fund, 0.425% of average daily net assets in excess of $500
million but not exceeding $1 billion, and 0.375% of average daily net assets in
excess of $1 billion. For the fiscal year ended February 28, 1993, the total
management fee payable, prior to any reimbursement, by the Fund to FAM was
$5,474,676 (based on average net assets of $1.23 billion) and the effective fee
rate was 0.44%. During the same period, FAM reimbursed $523,052 to the Fund
pursuant to arrangements to limit the Fund's operating expenses, and the
effective fee rate after such reimbursement was 0.40%. There can be no
assurance that the investment adviser will continue to reimburse fees in the
future. At November 30, 1993, the Fund had net assets of approximately $1.2
billion. At this asset level the Fund's annual management fee would aggregate
approximately $5.4 million.
Payment of Expenses. The Management Agreement, as described above, obligates
FAM to pay all compensation of and furnish office space for officers and
employees of the Fund connected with investment and economic research, trading
and investment management of the Fund, as well as the fees of all Trustees of
the Fund who are affiliated persons of ML & Co. or any of its subsidiaries. The
Fund pays all other expenses incurred in the operation of the Fund, including
among other things, expenses for legal and auditing services, taxes, cost of
printing proxies, shareholder reports, prospectuses and statements of
additional
8
<PAGE>
information (except to the extent paid by the distributors), charges of the
custodian and transfer agent, expenses of redemption of shares, expenses of
registering the shares under Federal and State securities laws, Securities and
Exchange Commission fees, fees and expenses of unaffiliated Trustees,
accounting and pricing costs, insurance, interest, expenses of portfolio
transactions, litigation and other extraordinary or non-recurring expenses,
mailing and other expenses properly payable by the Fund. Accounting services
are provided to the Fund by FAM, and the Fund reimburses FAM for its costs in
connection with such services. For the fiscal year ended February 28, 1993, the
Fund reimbursed $65,800 to FAM for such accounting services.
Duration and Termination. The Management Agreement will continue in effect
from year to year if approved annually (a) by the Trustees of the Fund or by a
majority of the outstanding shares of voting securities of the Fund and (b) by
a majority of the Trustees who are not parties to such agreement or interested
persons (as defined in the Investment Company Act) of any such party. Such
agreement is not assignable and may be terminated without penalty on 60 days'
written notice at the option of either party thereto or by the vote of the
shareholders of the Fund. The Management Agreement will continue in effect for
an indefinite term but is not assignable and may be terminated without penalty
on 60 days' written notice at the option of either party thereto.
PORTFOLIO TRANSACTIONS
The Fund has no obligation to deal with any dealer or group of dealers in the
execution of transactions in portfolio securities. Subject to policy
established by the Trustees and officers of the Fund, FAM is primarily
responsible for the Fund's portfolio decisions and the placing of the Fund's
portfolio transactions. In placing orders, it is the policy of the Fund to
obtain the best net results taking into account such factors as price
(including the applicable dealer spread), the size, type and difficulty of the
transaction involved, the firm's general execution and operational facilities,
and the firm's risk in positioning the securities involved. While FAM generally
seeks reasonably competitive spreads or commissions, the Fund will not
necessarily be paying the lowest spread or commission available. The Fund's
policy of investing in securities with short maturities will result in high
portfolio turnover.
The money market securities in which the Fund invests are traded primarily in
the over-the-counter market. Bonds and debentures are usually traded over-the-
counter, but may be traded on an exchange. Where possible, the Fund will deal
directly with the dealers who make a market in the securities involved except
in those circumstances where better prices and execution are available
elsewhere. Such dealers usually are acting as principal for their own accounts.
On occasion, securities may be purchased directly from the issuer. The money
market securities in which the Fund invests are generally traded on a net basis
and do not normally involve either brokerage commissions or transfer taxes. The
cost of executing portfolio securities transactions of the Fund will primarily
consist of dealer spreads and underwriting commissions. Under the Investment
Company Act, persons affiliated with the Fund are prohibited from dealing with
the Fund as a principal in the purchase and sale of securities unless a
permissive order allowing such transactions is obtained from the Securities and
Exchange Commission. Since over-the-counter transactions are usually principal
transactions, affiliated persons of the Fund, may not serve as the Fund dealer
in connection with such transactions, except pursuant to the permissive order
described below. However, affiliated persons of the Fund may serve as its
9
<PAGE>
broker in over-the-counter transactions conducted on an agency basis. The Fund
may not purchase securities from any underwriting syndicate of which Merrill
Lynch is a member. Of the money market securities in which the Money Fund
invests, generally only United States Government agency securities are sold in
underwritings.
The Securities and Exchange Commission has issued an exemptive order
permitting all Merrill Lynch-sponsored money market funds, including the Fund,
to conduct principal transactions with Merrill Lynch Government Securities Inc.
("GSI") in United States Government agency securities, with Merrill Lynch Money
Markets Inc. ("MMI") in certificates of deposit and other short-term bank money
instruments and commercial paper and with Merrill Lynch in fixed income
securities including medium-term notes. This order contains a number of
conditions, including conditions designed to insure that the price to the Fund
from GSI, MMI or Merrill Lynch is at least as favorable as that available from
other sources. GSI, MMI and Merrill Lynch have informed the Fund that they will
in no way, at any time, attempt to influence or control the activities of the
Fund or FAM in placing such principal transactions. The permissive order allows
GSI, MMI or Merrill Lynch to receive a dealer spread on any transaction with
the Fund no greater than its customary dealer spread for transactions of the
type involved. Generally such spreads do not exceed 0.25% of the principal
amount of the securities involved. During the fiscal year ended February 28,
1993, the Fund engaged in 50 such transactions aggregating approximately $622.2
million.
The Trustees of the Fund have considered the possibilities of recapturing for
the benefit of the Fund expenses of possible portfolio transactions, such as
dealer spreads and underwriting commissions, by conducting such portfolio
transactions through affiliated entities, including GSI, MMI and Merrill Lynch.
For example, dealer spreads received by GSI, MMI or Merrill Lynch on
transactions conducted pursuant to the permissive order described above could
be offset against the management fee payable by the Fund to FAM. After
considering all factors deemed relevant, the Trustees made a determination not
to seek such recapture. The Trustees will reconsider this matter from time to
time. FAM has arranged for the custodian to receive any tender offer
solicitation fees on behalf of the Fund payable with respect to portfolio
securities of the Fund.
The Fund does not expect to use one particular dealer, but, subject to
obtaining the best price and execution, dealers who provide supplemental
investment research (such as information concerning money market securities,
economic data and market forecasts) to FAM may receive orders for transactions
of the Fund. Information so received will be in addition to and not in lieu of
the services required to be performed by FAM under its Management Agreement and
the expenses of FAM will not necessarily be reduced as a result of the receipt
of such supplemental information.
ADDITIONAL INFORMATION
The expenses of preparation, printing and mailing of the enclosed form of
proxy and accompanying Notice and Proxy Statement will be borne by the Fund.
The Fund will reimburse banks, brokers and others for their reasonable expenses
in forwarding proxy solicitation material to the beneficial owners of the
shares of the Fund. The Fund may also hire proxy solicitors at the expense of
the Fund.
10
<PAGE>
In order to obtain the necessary quorum at the Meeting (i.e., a majority of
the shares of the Fund entitled to vote at the Meeting, present in person or by
proxy), supplementary solicitation may be made by mail, telephone, telegraph or
personal interview by officers of the Fund. It is anticipated that the cost of
such supplementary solicitation, if any, will be nominal.
The proposal to elect the Fund's Trustees (Item 1) and the proposal to ratify
the selection of the Fund's independent auditors (Item 2) may be approved by
majority vote of the shareholders, present in person or by proxy, at a meeting
at which a quorum is duly constituted. The proposal to amend the fundamental
investment restrictions of the Fund relating to investments in restricted or
unmarketable securities and securities of unseasoned issuers (Item 3) requires
the affirmative vote of the lesser of (i) 67% of the shares represented at a
meeting at which more than 50% of the outstanding shares are represented or
(ii) more than 50% of the outstanding shares.
All shares represented by properly executed proxies, unless such proxies have
previously been revoked, will be voted at the Meeting in accordance with the
directions on the proxies; if no direction is indicated, the shares will be
voted "FOR" the six Trustee nominees, "FOR" the ratification of D&T as
independent auditors for the Fund and "FOR" the proposal to amend the
fundamental investment restrictions of the Fund. Shares will not be voted for
any of the aforementioned proposals, however, unless (i) in the judgment of the
Fund's Trustees, there has been no material adverse change in the financial
condition of FAM between September 24, 1993 and the date of FAM's most recently
completed fiscal quarter and (ii) the Fund shall have received a certificate of
the President or a Senior Vice President of FAM, dated the Meeting date,
attesting that, to the knowledge of such officer, there has been no material
adverse change in the financial condition of FAM unless such material adverse
change has been disclosed to shareholders in additional proxy solicitation
materials.
Broker-dealer firms, including Merrill Lynch, holding Fund shares in "street
name" for the benefit of their customers and clients will request the
instructions of such customers and clients on how to vote their shares on the
items before the Meeting. The Fund understands that, under the rules of the New
York Stock Exchange, such broker-dealer firms may, without instructions from
their customers and clients, grant authority to the proxies designated to vote
on the election of Trustees (Item 1) and ratification of the selection of
independent auditors (Item 2) if no instructions have been received prior to
the date specified in the broker-dealer firm's request for voting instructions.
Merrill Lynch has advised that it intends to exercise discretion over shares
held in its name for which no instructions are received by voting such shares
in the same proportion as it has voted shares for which it has received
instructions. Broker-dealer Firms, including Merrill Lynch, will not be
permitted to grant voting authority without instructions with respect to Item
3. The Fund will include shares held of record by broker-dealers as to which
such authority has been granted in its tabulation of the total number of votes
present for purposes of determining whether the necessary quorum of
shareholders exists. The Fund also will count towards a quorum shares as to
which proxies are returned by record shareholders but which are marked
"abstain" on any Item. Accordingly, a failure to instruct or an abstention will
have no effect with respect to the vote on Item 1 or Item 2; however, such a
failure or abstention with respect to the vote on Item 3 will have the same
effect as a vote against the proposal.
A copy of the Declaration of Trust, which was amended and restated on June
13, 1984, together with all amendments thereto, is on file in the office of the
Secretary of the Commonwealth of Massachusetts, provides that the name of the
Trust refers to the Trustees under the Declaration collectively as Trustees,
but
11
<PAGE>
not as individuals or personally; and no Trustee, shareholder, officer,
employee or agent of the Trust shall be held to any personal liability, nor
shall resort be had to their private property for the satisfaction of any
obligation or claim of the Trust but the Trust Estate only shall be liable.
MEETINGS OF SHAREHOLDERS
The Declaration of Trust of the Fund does not require that the Fund hold an
annual meeting of shareholders. However, the Fund will be required to call
special meetings of shareholders in accordance with the requirements of the
Investment Company Act to seek approval of new management and advisory
arrangements or of a change in the fundamental policies, objectives or
restrictions of the Fund. The Fund also would be required to hold a special
shareholders' meeting to elect new Trustees at such time as less than a
majority of the Trustees holding office have been elected by shareholders. The
Declaration of Trust of the Fund provides that a shareholders' meeting may be
called for any reason at the request of 10% of the outstanding shares of the
Fund or by a majority of the Trustees.
By Order of the Board of
Trustees
Robert Harris
Secretary
Dated: January 7, 1994
12
<PAGE>
EXHIBIT A
INDEPENDENT AUDITORS' REPORT
Fund Asset Management, Inc.:
We have audited the accompanying balance sheet of Fund Asset Management, Inc.
(the "Company") as of December 25, 1992. This balance sheet is the
responsibility of the Company's management. Our responsibility is to express an
opinion on the balance sheet based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the balance sheet is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the balance sheet. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall balance sheet presentation. We
believe that our audit provides a reasonable basis for our opinion.
In our opinion, such balance sheet presents fairly, in all material respects,
the financial position of the Company at December 25, 1992 in conformity with
generally accepted accounting principles.
DELOITTE & TOUCHE
Parsippany, New Jersey
February 19, 1993
A-1
<PAGE>
FUND ASSET MANAGEMENT, INC.
BALANCE SHEET, DECEMBER 25, 1992
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Cash............................................................. $ 21,356
Receivable from affiliated companies:
Lease transactions.............................................. 46,734,122
Fund management fees receivable.................................. 20,435,376
Investments in leases:
Leveraged leases................................................ 121,508,161
Sales-type lease................................................ 12,831,711
Investments in affiliated investment companies at the lower of
cost or market
(market: $33,307,413)........................................... 32,952,761
Investment in affiliated Limited Partnership..................... 32,293,647
Deferred charges................................................. 586,166
------------
Total Assets..................................................... $267,363,300
============
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities:
Payable to Merrill Lynch Investment Management, Inc. and affili-
ates............................................................ $ 54,881,755
Deferred income taxes:
Arising from leveraged leases................................... 111,585,182
Arising from sales-type lease................................... 5,245,721
Other........................................................... 15,892,806
Other............................................................ 6,000
------------
Total liabilities................................................ 187,611,464
------------
Stockholder's Equity:
Common stock, par value $1.00 per share--authorized 25,000
shares;
outstanding 1,000 shares........................................ 1,000
Additional paid-in capital....................................... 684,594,627
Retained earnings................................................ 79,271,257
Proceeds receivable from ML & Co. from sale of subsidiary........ (684,115,048)
------------
Total stockholder's equity....................................... 79,751,836
------------
Total Liabilities and Stockholder's Equity....................... $267,363,300
============
</TABLE>
See notes to balance sheet.
A-2
<PAGE>
FUND ASSET MANAGEMENT, INC.
NOTES TO BALANCE SHEET
DECEMBER 25, 1992
1. Summary of Significant Accounting Policies
Organization--Fund Asset Management, Inc. (the "Company"), a wholly-owned
subsidiary of Merrill Lynch Investment Management, Inc. (the "Parent"), which
is an indirect wholly-owned subsidiary of Merrill Lynch & Co., Inc. ("ML &
Co."), serves as an investment adviser to various registered open-end
investment companies. The Company is also a lessor participant in certain
leveraged and sales-type lease agreements.
Income Taxes--The results of the operations of the Company are included in
the consolidated Federal and combined state and local income tax returns filed
by ML & Co. It is the policy of ML & Co. to allocate the tax associated with
such operating results to each respective subsidiary in a manner which
approximates the separate company method. Effective in the first quarter of
1992, ML & Co. adopted Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" ("SFAS 109") which requires an asset and
liability method in recording income taxes on all transactions that have been
recognized in the financial statements. SFAS 109 provides that deferred taxes
be adjusted to reflect tax rates at which future tax liabilities or assets are
expected to be settled or realized. Previously, the Company accounted for
income taxes in accordance with SFAS 96. The current year's impact on adopting
SFAS 109 was minimal.
2. Transactions with Affiliates
The Company serves as an investment adviser for certain affiliated investment
companies. The Company maintains investments in certain of these investment
companies. Such investments are carried at the lower of cost or market value.
Market value is determined based upon quoted market prices.
During 1992, the Company sold its investment in Merrill Lynch Interfunding,
Inc. an investor in select credit instruments, and Merlease Leasing Corp., a
lessor participant in lease agreements, to an affiliate at book value,
resulting in a receivable from ML & Co. This receivable is reflected as a
reduction to stockholder's equity.
The Company has an arrangement with Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("MLPF&S") which provides that the Company, which receives revenue
as investment adviser to certain investment companies (the "Funds"), reimburse
MLPF&S for certain costs incurred in processing transactions involving shares
of the Funds.
The "Receivable from affiliated companies" arising from lease transactions is
summarized as follows:
<TABLE>
<S> <C>
Monies advanced to fund lease transactions................ $(117,240,047)
Tax benefits allocated to the Company by ML & Co. ........ 150,407,083
Other..................................................... 13,567,086
-------------
Total................................................. $ 46,734,122
=============
</TABLE>
The Company has a 49 percent limited partnership interest in ML Plainsboro
Limited Partnership ("MLP"), whose general partner is an affiliate. Profits and
losses are allocated to the Company based on its percentage interest.
A-3
<PAGE>
FUND ASSET MANAGEMENT, INC.
NOTES TO BALANCE SHEET--CONTINUED
DECEMBER 25, 1992
ML & Co. is the holder of the Company's excess cash, which is available on
demand to meet current liabilities. ML & Co. credits the Company for interest,
at a floating rate approximating ML & Co.'s average borrowing rate, based on
the Company's average daily balances due to/from ML & Co.
3. Investments in Leases
The Company is a lessor participant in leveraged leases. The Company's net
investment in leveraged leases is summarized as follows:
<TABLE>
<S> <C>
Rentals receivable (net of principal and interest on non-
recourse debt)........................................... $117,309,811
Estimated residual values of leased assets................ 40,329,738
Less:
Unearned and deferred income............................ (34,891,388)
Allowance for uncollectibles............................ (1,240,000)
------------
Investment in leveraged leases............................ 121,508,161
Less deferred taxes arising from leveraged leases......... (111,585,182)
------------
Net investment in leveraged leases........................ $ 9,922,979
============
</TABLE>
Pertinent information relating to the Company's investments in leveraged
leases is summarized as follows:
<TABLE>
<CAPTION>
ESTIMATED
LENGTH OF RESIDUAL VALUE
LEASE EQUITY OF LEASED
TYPE OF PROPERTY (YEARS) INVESTMENT PROPERTY
---------------- --------- ---------- --------------
<S> <C> <C> <C>
Chemical tanker....................... 20 42.75% 15.0%
Generating plant...................... 24-25 34.06% 15.0%
</TABLE>
Financing beyond the Company's equity interest in the purchase price of the
properties was furnished by outside parties in the form of long-term debt that
provides for no recourse against the Company and is secured by a first lien on
the properties and related rentals. At the end of the respective lease terms,
ownership of the properties remains with the Company.
The Company's investment in the sales-type leases consisted of the following
elements at December 25, 1992:
<TABLE>
<S> <C>
Minimum lease payments receivable............................ $13,612,690
Less--unearned income........................................ (780,979)
-----------
Investment in sales-type financing leases.................... $12,831,711
===========
</TABLE>
At December 25, 1992 minimum lease payments receivable are $9,941,000 for
1993, $3,672,000 for 1994.
For Federal income tax purposes, the Company receives the investment tax
credit and has the benefit of tax deductions for (i) depreciation on the entire
amount of leased assets and (ii) interest on the outstanding long-term debt.
For state and local tax purposes, the Company also receives the benefits of tax
deductions
A-4
<PAGE>
FUND ASSET MANAGEMENT, INC.
NOTES TO BALANCE SHEET--CONTINUED
DECEMBER 25, 1992
from (i) and (ii) above. Since, during the early years of the leases, those
deductions exceed the Company's lease rental income, substantial excess
deductions are available to be applied against the Company's other income and
the consolidated income of ML & Co. In the later years of these leases, rental
income will exceed the related deductions and taxes will be payable (to the
extent that net deductions arising from additional leveraged lease transactions
do not offset such net lease income). Deferred taxes have been provided to
reflect these temporary differences.
4. Income Taxes
As part of the consolidated group, the Company transfers its current Federal
and state tax liabilities to MLIM. No such amounts were due to MLIM at December
25, 1992.
5. Pension Plan
The Company participates in the ML & Co. Comprehensive Retirement Program
(the "Program"), consisting of the Retirement Accumulation Plan ("RAP") and the
Employee Stock Ownership Plan (the "ESOP"). Under the Program, cash
contributions made by the Company and the ML & Co. stock held by the ESOP will
be allocated quarterly to participant's accounts. Allocations will be based on
years of service, age and eligible compensation. Actuarial data regarding the
Company's Plan participants is not separately available.
6. Postretirement Benefits Other Than Pensions
The Company provides certain health care and life insurance benefits for
retired employees. The Company reserves the right to amend or terminate this
program at any time. Substantially all of the Company's employees become
eligible for these benefits upon attainment of age 55 and completion of 10
years of service. The cost of these benefits is expensed as claims are paid.
In December 1990, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 106, Employers' Accounting for
Postretirement Benefits Other Than Pensions ("SFAS 106"). SFAS 106, effective
for fiscal year 1993, will require that the Company change its method of
accounting for postretirement health care and life insurance benefits from
expensing these costs on a pay-as-you-go basis to an accrual basis. This change
in accounting will require the recognition of a transition obligation which
represents the actuarial present value of benefits attributed to prior employee
service. The Company has not yet determined what effect the adoption of SFAS
106 will have on its financial condition, results of operations or liquidity.
7. Name Change
Effective December 28, 1991, the Parent, through an amendment of its
certificate of incorporation, changed its name to Merrill Lynch Investment
Management, Inc. ("MLIM"). MLIM will do business under the name "Merrill Lynch
Asset Management".
A-5
<PAGE>
EXHIBIT B
FUND ASSET MANAGEMENT, INC.
BALANCE SHEET
SEPTEMBER 24, 1993
ASSETS
<TABLE>
<CAPTION>
(UNAUDITED)
<S> <C>
Cash............................................................. $ 561,297
Receivable from Affiliated Companies--Lease transactions......... 63,526,920
Investment in Affiliated Limited Partnership..................... 31,483,140
Investment in Leases:
Leveraged leases............................................... 118,273,550
Sales-type lease............................................... 8,152,491
Investment in Affiliated Investment Companies--at the lower of
cost or market
(market: $18,285,362)........................................... 16,702,798
Fund Management Fees Receivable.................................. 22,057,239
------------
TOTAL ASSETS..................................................... $260,757,435
============
LIABILITIES AND STOCKHOLDER'S EQUITY
LIABILITIES
Payable to Merrill Lynch Investment Management, Inc. and Affili-
ates............................................................ $ 19,667,011
Other Payables................................................... 11,400
Deferred Income Taxes:
Arising from leveraged leases.................................. 111,401,573
Arising from sales-type lease.................................. 2,333,002
Other.......................................................... 15,876,124
------------
Total Liabilities................................................ 149,289,110
------------
STOCKHOLDER'S EQUITY
Common Stock, par value $1.00 per share--authorized 25,000
shares; outstanding
1,000 shares.................................................... 1,000
Additional Paid-in Capital....................................... 684,594,627
Retained Earnings................................................ 110,987,716
Proceeds Receivable from ML&Co. from Sale of Subsidiary.......... (684,115,018)
------------
Total Stockholder's Equity....................................... 111,468,325
------------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY....................... $260,757,435
============
</TABLE>
B-1
<PAGE>
CBA MONEY FUND PROXY
Box 9011, Princeton, New Jersey 08543-9011
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
The undersigned hereby appoints Arthur Zeikel, Terry K. Glenn and Robert Harris
as proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote, as designated below, all shares of beneficial
interest of CBA Money Fund (the "Fund") held of record by the undersigned on
December 20, 1993 at a special meeting of shareholders of the Fund to be held on
February 25, 1994 or any adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1, 2 AND 3.
FOR WITHHOLD To withold authority to vote for
1. Election of Trustees. [_] [_] any individual nominee, write the
name on the following line:
----------------------------------
Nominees: Ronald W. Forbes, Cynthia A. Montgomery, Charles C. Reilly, Kevin
A. Ryan, Richard R. West, Arthur Zeikel
2. Proposal to ratify the selection of Deloitte & Touche as the independent
auditors of the Fund to serve for the current fiscal year.
FOR AGAINST ABSTAIN
[_] [_] [_]
3. Proposal to amend the fundamental investment restrictions of the Fund
relating to investments in restricted or unmarketable securities and
securities of unseasoned issuers.
FOR AGAINST ABSTAIN
[_] [_] [_]
4. In the discretion of such proxies, upon such other business as may properly
come before the meeting or any adjournment thereof.
Please sign exactly as name appears hereon. When shares are held by
joint tenants, both should sign. When signing as attorney or as
executor, administrator, trustee or guardian, please give full title as such.
If a corporation, please sign in full corporate name by president or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
- ----------------------------------------------------
Signature Date
- ----------------------------------------------------
Signature, if held jointly Date
Please mark boxes in blue or black ink.
<PAGE>
- -------------------------------------------------------------------------------
BY SIGNING AND PROMPTLY RETURNING THE ENCLOSED PROXY YOU MAY SAVE
YOUR FUND THE EXPENSE OF ADDITIONAL SOLICITATION COSTS.
- -------------------------------------------------------------------------------
THE ENCLOSED PROXY CARD HAS BEEN FORWARDED TO YOU BECAUSE YOU
WERE A SHAREHOLDER ON THE RECORD DATE.
IT IS IMPORTANT THAT YOU VOTE AND SIGN THIS PROXY AND RETURN
IT IN THE ENCLOSED ENVELOPE AS SOON AS POSSIBLE.
- -------------------------------------------------------------------------------
