<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 30, 1995
REGISTRATION NOS. 2-87036
811-3871
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / /
Pre-Effective Amendment No. / /
Post-Effective Amendment No. 15 /X/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 / /
Amendment No. 16 /X/
------------------------------------
MERRILL LYNCH FUND FOR TOMORROW, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
<TABLE>
<S> <C>
P.O. BOX 9011
PRINCETON, NEW JERSEY 08543-9011
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (609) 282-2800
ARTHUR ZEIKEL
MERRILL LYNCH FUND FOR TOMORROW, INC.
800 SCUDDERS MILL ROAD, PLAINSBORO, NEW JERSEY 08536
MAILING ADDRESS: P.O. BOX 9011, PRINCETON, NEW JERSEY 08543-9011
(NAME AND ADDRESS OF AGENT FOR SERVICE)
------------------------------------
Copies to:
<TABLE>
<S> <C>
COUNSEL FOR THE FUND:
JOEL H. GOLDBERG, ESQ. PHILIP L. KIRSTEIN, ESQ.
SHEREFF, FRIEDMAN, HOFFMAN & GOODMAN, LLP MERRILL LYNCH ASSET MANAGEMENT
919 THIRD AVENUE P.O. BOX 9011
NEW YORK, NEW YORK 10022 PRINCETON, NEW JERSEY 08543-9011
</TABLE>
It is proposed that this filing will become effective:
/ / immediately upon filing pursuant to paragraph (b)
/X/ on May 30, 1995 pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(i)
/ / on (date) pursuant to paragraph (a)(i)
/ / 75 days after filing pursuant to paragraph (a)(ii)
/ / on (date) pursuant to paragraph (a)(ii) of rule 485.
If appropriate, check the following box:
/ / this post-effective amendment designates a new effective
date for a previously filed post-effective amendment.
------------------------------------
CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
AMOUNTS OF PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SECURITIES SHARES BEING OFFERING PRICE AGGREGATE AMOUNT OF
BEING REGISTERED REGISTERED PER UNIT OFFERING PRICE* REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares of Common Stock (par value
$0.10 per share)................. 6,373,914 $15.20 $289,985.60 $100
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
*(1) The calculation of the maximum aggregate offering price is made pursuant to
Rule 24e-2 under the Investment Company Act of 1940.
(2) The total amount of securities redeemed or repurchased during Registrant's
previous fiscal year was 6,354,836 shares.
(3) None of the shares described in (2) above have been used for reduction
pursuant to Rule 24e-2(a) or Rule 24f-2(c) under the Investment Company Act
of 1940 in previous filings during Registrant's current fiscal year.
(4) All of the shares redeemed during Registrant's previous fiscal year are
being used for the reduction of the registration fee in this amendment to
the Registration Statement.
------------------------------------
Registrant has previously elected to register an indefinite number of
shares of its Common Stock pursuant to Rule 24f-2 under the Investment Company
Act. A Rule 24f-2 notice was last filed on March 20, 1995.
- --------------------------------------------------------------------------------
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<PAGE> 2
MERRILL LYNCH FUND FOR TOMORROW, INC.
POST-EFFECTIVE AMENDMENT NO. 15 ON FORM N-1A
CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 495(A))
<TABLE>
<CAPTION>
N-1A ITEM
NO. LOCATION
- ------------ -------------------------------------
<C> <S> <C>
PART A
Item 1. Cover Page........................... Cover Page
Item 2. Synopsis............................. Fee Table
Item 3. Condensed Financial Information...... Financial Highlights; Additional
Information
Item 4. General Description of Registrant.... Investment Objective and Policies;
The Fund and Its Management;
Investment Practices and
Restrictions
Item 5. Management of the Fund............... The Fund and Its Management;
Additional Information
Item 5A. Management's Discussion of Fund
Performance........................ Not Applicable
Item 6. Capital Stock and Other Securities... Cover Page; Fee Table; Merrill Lynch
Select Pricing(SM) System; Purchase
of Shares; Dividends, Distributions
and Taxes; Additional Information
Item 7. Purchase of Securities Being Cover Page; Fee Table; Merrill Lynch
Offered............................ Select Pricing(SM) System; Purchase
of Shares; Repurchase and
Redemption of Shares; Shareholder
Services
Item 8. Redemption or Repurchase............. Cover Page; Fee Table; Alternative
Sales Arrangements; Repurchase and
Redemption of Shares
Item 9. Pending Legal Proceedings............ Not Applicable
PART B
Item 10. Cover Page........................... Cover Page
Item 11. Table of Contents.................... Table of Contents
Item 12. General Information and History...... Not Applicable
Item 13. Investment Objectives and Policies... Investment Objective and Policies;
Investment Practices and
Restrictions
Item 14. Management of the Fund............... Management of the Fund; Directors and
Officers
Item 15. Control Persons and Principal Holders
of Securities...................... Directors and Officers
Item 16. Investment Advisory and Other Management of the Fund; Additional
Services........................... Information
Item 17. Brokerage Allocation................. Investment Practices and Restrictions
Item 18. Capital Stock and Other Securities... Cover Page; Purchase of Shares;
Additional Information
Item 19. Purchase, Redemption and Pricing of Cover Page; Purchase of Shares;
Securities Being Offered........... Determination of Net Asset Value;
Redemptions; Shareholder Services
Item 20. Tax Status........................... Dividends, Distributions and Taxes
Item 21. Underwriters......................... Cover Page; Purchase of Shares
Item 22. Calculations of Performance Data..... Additional Information
Item 23. Financial Statements................. Financial Statements
</TABLE>
PART C
Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Post-Effective Amendment to the
Registration Statement.
<PAGE> 3
PROSPECTUS
MAY 30, 1995
MERRILL LYNCH FUND FOR TOMORROW, INC.
P.O. BOX 9011, PRINCETON, NEW JERSEY 08543-9011 - PHONE NO. (609) 282-2800
------------------------
Merrill Lynch Fund For Tomorrow, Inc. (the "Fund") is a diversified,
open-end management investment company (commonly known as a mutual fund),
seeking long-term growth of capital by investing in a quality-oriented portfolio
of securities, primarily common stocks, of companies that the Fund's management
believes are particularly well positioned to benefit from demographic and
cultural changes, primarily as they affect future consumer markets. The Fund is
designed primarily, but not exclusively, for younger investors who desire a
long-term investment in the stock market. For more information on the Fund's
investment objective and policies, please see "Investment Objective and
Policies" on page 10.
------------------------
Pursuant to the Merrill Lynch Select Pricing(SM) System, the Fund offers
four classes of shares, each with a different combination of sales charges,
ongoing fees and other features. The Merrill Lynch Select Pricing(SM) System
permits an investor to choose the method of purchasing shares that the
investor believes is most beneficial given the amount of the purchase, the
length of time the investor expects to hold the shares and other relevant
circumstances. See "Merrill Lynch Select Pricing(SM) System" on page 3.
Shares may be purchased directly from Merrill Lynch Funds Distributor, Inc.
(the "Distributor" or "MLFD"), P.O. Box 9011, Princeton, New Jersey 08543-9011,
(609) 282-2800, or from securities dealers which have entered into selected
dealer agreements with the Distributor, including Merrill Lynch, Pierce, Fenner
& Smith Incorporated ("Merrill Lynch"). The minimum initial purchase is $1,000
and the minimum subsequent purchase is $50, except that for retirement plans,
the minimum initial purchase is $100, and the minimum subsequent purchase is $1.
Merrill Lynch may charge its customers a processing fee (presently $4.85) for
confirming purchases and repurchases. Purchases and redemptions directly through
the Fund's Transfer Agent are not subject to the processing fee. See "Purchase
of Shares" and "Repurchase and Redemption of Shares."
------------------------
This Prospectus tells you briefly the information you should know before
investing in the Fund. You should read it and keep it for future reference. A
Statement of Additional Information, dated May 30, 1995, has been filed with the
Securities and Exchange Commission and contains further information about the
Fund. You can obtain a copy without charge by contacting your broker or by
calling or writing the Fund at the telephone number and address printed above.
The Statement of Additional Information is hereby incorporated by reference into
this Prospectus.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
MERRILL LYNCH ASSET MANAGEMENT--INVESTMENT ADVISER
MERRILL LYNCH FUNDS DISTRIBUTOR, INC.--DISTRIBUTOR
<PAGE> 4
FEE TABLE
A general comparison of the sales arrangements and other nonrecurring and
recurring expenses applicable to shares of the Fund follows:
<TABLE>
<CAPTION>
CLASS A(A) CLASS B(B) CLASS C CLASS D
---------- -------------------------------- ----------- ---------
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price)....... 5.25%(c) None None 5.25%(c)
Sales Charge Imposed on Dividend
Reinvestments............................. None None None None
Deferred Sales Charge (as a percentage of
original purchase price or redemption
proceeds, whichever is lower)............. None(d) 4.0% during the first year, 1% for one None(d)
decreasing 1.0% annually year
thereafter to 0.0% after the
fourth year
Exchange Fee................................ None None None None
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)(E):
Investment Advisory Fees(f)................. 0.65% 0.65% 0.65% 0.65%
12b-1 Fees(g):
Account Maintenance Fees.................. None 0.25% 0.25% 0.25%
Distribution Fees......................... None 0.75% 0.75% None
(Class B shares convert to
Class D shares automatically
after approximately eight years
and cease being subject to
distribution fees)
OTHER EXPENSES:
Custodian Fees............................ 0.01% 0.01% 0.01% 0.01%
Shareholder Servicing Costs(h)............ 0.20% 0.21% 0.21% 0.20%
Other..................................... 0.12% 0.12% 0.12% 0.12%
----- ----- ----- -----
Total Other Expenses.................. 0.33% 0.34% 0.34% 0.33%
----- ----- ----- -----
TOTAL FUND OPERATING EXPENSES............. 0.98% 1.99% 1.99% 1.23%
----- ----- ----- -----
----- ----- ----- -----
</TABLE>
- ------------------
(a) Class A shares are sold to a limited group of investors including existing
Class A shareholders, certain retirement plans and investment programs. See
"Purchase of Shares--Initial Sales Charge Alternatives--Class A and Class D
Shares"--page 15.
(b) Class B shares convert to Class D shares automatically approximately eight
years after initial purchase. See "Purchase of Shares-- Deferred Sales
Charge Alternatives--Class B and Class C Shares"--page 17.
(c) Reduced for purchases of $25,000 and over, and waived for purchases of Class
A shares by certain retirement plans in connection with certain investment
programs. Class A or Class D purchases of $1,000,000 or more may not be
subject to an initial sales charge. See "Purchase of Shares--Initial Sales
Charge Alternatives--Class A and Class D Shares"--page 15.
(d) Class A and Class D shares are not subject to a contingent deferred sales
charge ("CDSC"), except that certain purchases of $1,000,000 or more which
are not subject to an initial sales charge will instead be subject to a CDSC
of 1.0% of amounts redeemed within the first year of purchase.
(e) Information for Class A and Class B shares is stated for the fiscal year
ended January 31, 1995. Information under "Other Expenses" for Class C and
Class D shares is estimated for the fiscal year ending January 31, 1996.
(f) See "The Fund and Its Management--Advisory Fee"--page 11.
(g) See "Purchase of Shares--Distribution Plans"--page 20.
(h) See "The Fund and Its Management--Transfer Agency Services Fee"--page 12.
2
<PAGE> 5
EXAMPLE:
<TABLE>
<CAPTION>
CUMULATIVE EXPENSES PAID FOR THE
PERIOD OF:
-------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
An investor would pay the following expenses on a $1,000
investment including the maximum $52.50 initial sales
charge (Class A and Class D shares only) and assuming
(1) the Total Fund Operating Expenses for each class
set forth above; (2) a 5% annual return throughout the
periods; and (3) redemption at the end of the period:
Class A............................................. $62.00 $82.00 $104.00 $166.00
Class B............................................. $60.00 $82.00 $107.00 $212.00 *
Class C............................................. $30.00 $62.00 $107.00 $232.00
Class D............................................. $64.00 $89.00 $117.00 $194.00
An investor would pay the following expenses on the same
$1,000 investment assuming no redemption at the end of
the period:
Class A............................................. $62.00 $82.00 $104.00 $166.00
Class B............................................. $20.00 $62.00 $107.00 $212.00 *
Class C............................................. $20.00 $62.00 $107.00 $232.00
Class D............................................. $64.00 $89.00 $117.00 $194.00
</TABLE>
- ------------------
* Assumes conversion to Class D shares approximately eight years after purchase.
The foregoing Fee Table is intended to assist investors in understanding
the costs and expenses that a shareholder in the Fund will bear directly or
indirectly. The Example set forth above assumes reinvestment of all dividends
and distributions and utilizes a 5% annual rate of return as mandated by
Securities and Exchange Commission ("Commission") regulations. THE EXAMPLE
SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR ANNUAL
RATES OF RETURN, AND ACTUAL EXPENSES OR ANNUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE ASSUMED FOR PURPOSES OF THE EXAMPLE. Class B and Class C
shareholders who own their shares for an extended period of time may pay more in
Rule 12b-1 distribution fees than the economic equivalent of the maximum
front-end sales charge permitted under the Rules of Fair Practice of the
National Association of Securities Dealers, Inc. ("NASD"). Merrill Lynch may
charge its customers a processing fee (presently $4.85) for confirming purchases
and repurchases. Purchases and redemptions directly through the Fund's Transfer
Agent are not subject to the processing fee. See "Purchase of Shares" and
"Repurchase and Redemption of Shares."
MERRILL LYNCH SELECT PRICING(SM) SYSTEM
The Fund offers four classes of shares under the Merrill Lynch Select
Pricing(SM) System. The shares of each class may be purchased at a price equal
to the next determined net asset value per share subject to the sales charges
and ongoing fee arrangements described below. Shares of Class A and Class D
are sold to investors choosing the initial sales charge alternatives, and
shares of Class B and Class C are sold to investors choosing the deferred
sales charge alternatives. The Merrill Lynch Select Pricing(SM) System is used
by more than 50 mutual funds advised by Merrill Lynch Asset Management, L.P.,
doing business as Merrill Lynch Asset Management ("MLAM" or the "Investment
Adviser") or an affiliate of MLAM, Fund Asset
3
<PAGE> 6
Management, L.P. ("FAM"). Funds advised by MLAM or FAM are referred to herein as
"MLAM-advised mutual funds."
Each Class A, Class B, Class C or Class D share of the Fund represents an
identical interest in the investment portfolio of the Fund and has the same
rights, except that Class B, Class C and Class D shares bear the expenses of the
ongoing account maintenance fees and Class B and Class C shares bear the
expenses of the ongoing distribution fees and the additional incremental
transfer agency costs resulting from the deferred sales charge arrangements. The
deferred sales charges and account maintenance fees that are imposed on Class B
and Class C shares, as well as the account maintenance fees that are imposed on
the Class D shares, will be imposed directly against those classes and not
against all assets of the Fund and, accordingly, such charges will not affect
the net asset value of any other class or have any impact on investors choosing
another sales charge option. Dividends paid by the Fund for each class of shares
will be calculated in the same manner at the same time and will differ only to
the extent that account maintenance and distribution fees and any incremental
transfer agency costs relating to a particular class are borne exclusively by
that class. Each class has different exchange privileges. See "Shareholder
Services -- Exchange Privilege."
Investors should understand that the purpose and function of the initial
sales charges with respect to the Class A and Class D shares are the same as
those of the deferred sales charges with respect to the Class B and Class C
shares in that the sales charges applicable to each class provide for the
financing of the distribution of the shares of the Fund. The
distribution-related revenues paid with respect to a class will not be used to
finance the distribution expenditures of another class. Sales personnel may
receive different compensation for selling different classes of shares.
The following table sets forth a summary of the distribution arrangements
for each class of shares under the Merrill Lynch Select Pricing(SM) System,
followed by a more detailed description of each class and a discussion of the
factors that investors should consider in determining the method of purchasing
shares under the Merrill Lynch Select Pricing(SM) System that the investor
believes is most beneficial under the investor's particular circumstances. More
detailed information as to each class of shares is set forth under "Purchase of
Shares."
4
<PAGE> 7
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
ACCOUNT
MAINTENANCE DISTRIBUTION
CLASS SALES CHARGE(1) FEE FEE CONVERSION FEATURE
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
A Maximum 5.25% initial sales No No No
charge(2)(3)
- -------------------------------------------------------------------------------------------------------
B CDSC for a period of 4 years, 0.25% 0.75% B shares convert to D shares
at a rate of 4.0% during the automatically after
first year, decreasing 1.0% approximately eight years(4)
annually to 0.0%
- -------------------------------------------------------------------------------------------------------
C 1.0% CDSC for one year 0.25% 0.75% No
- -------------------------------------------------------------------------------------------------------
D Maximum 5.25% initial sales 0.25% No No
charge(3)
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- ------------------
(1) Initial sales charges are imposed at the time of purchase as a percentage of
the offering price. Contingent deferred sales charges ("CDSCs") are imposed
if the redemption occurs within the applicable CDSC time period. The charge
will be assessed on an amount equal to the lesser of the proceeds of
redemption or the cost of the shares being redeemed.
(2) Offered only to eligible investors. See "Purchase of Shares--Initial Sales
Charge Alternatives--Class A and Class D Shares-- Eligible Class A
Investors."
(3) Reduced for purchases of $25,000 or more, and waived for purchases of Class
A shares by certain retirement plans in connection with certain investment
programs. Class A and Class D share purchases of $1,000,000 or more may not
be subject to an initial sales charge but instead will be subject to a 1.0%
CDSC for one year. See "Class A" and "Class D" below.
(4) The conversion period for dividend reinvestment shares and certain
retirement plans is modified. Also, Class B shares of certain other
MLAM-advised mutual funds into which exchanges may be made have a ten-year
conversion period. If Class B shares of the Fund are exchanged for Class B
shares of another MLAM-advised mutual fund, the conversion period applicable
to the Class B shares acquired in the exchange will apply, and the holding
period for the shares exchanged will be tacked onto the holding period for
the shares acquired.
Class A: Class A shares incur an initial sales charge when they are purchased
and bear no ongoing distribution or account maintenance fees. Class A
shares are offered to a limited group of investors and also will be
issued upon reinvestment of dividends on outstanding Class A shares.
Investors that currently own Class A shares of the Fund in a
shareholder account are entitled to purchase additional Class A shares
of the Fund in that account. Other eligible investors include certain
retirement plans and participants in certain investment programs. In
addition, Class A shares will be offered to directors and employees of
Merrill Lynch & Co., Inc. ("ML & Co.") and its subsidiaries (the term
"subsidiaries," when used herein with respect to ML & Co., includes
MLAM, FAM and certain other entities directly or indirectly
wholly-owned and controlled by ML & Co.) and to members of the Boards
of MLAM-advised mutual funds. The maximum initial sales charge is
5.25%, which is reduced for purchases of $25,000 and over, and waived
for purchases by certain retirement plans in connection with certain
investment programs. Purchases of $1,000,000 or more may not be subject
to an initial sales charge but if the initial sales charge is waived
such purchases will be subject to a CDSC of 1.0% if the shares are
redeemed within one year after purchase. Sales charges also are reduced
under a right of accumulation which takes into account the investor's
holdings of all classes of all MLAM-advised mutual funds. See "Purchase
of Shares--Initial Sales Charge Alternatives--Class A and Class D
Shares."
5
<PAGE> 8
Class B: Class B shares do not incur a sales charge when they are purchased, but
they are subject to an ongoing account maintenance fee of 0.25% and an
ongoing distribution fee of 0.75% of the Fund's average net assets
attributable to the Class B shares, and a CDSC if they are redeemed
within four years of purchase. Approximately eight years after
issuance, Class B shares will convert automatically into Class D shares
of the Fund, which are subject to an account maintenance fee but no
distribution fee; Class B shares of certain other MLAM-advised mutual
funds into which exchanges may be made convert into Class D shares
automatically after approximately ten years. If Class B shares of the
Fund are exchanged for Class B shares of another MLAM-advised mutual
fund, the conversion period applicable to the Class B shares acquired
in the exchange will apply, and the holding period for the shares
exchanged will be tacked onto the holding period for the shares
acquired. Automatic conversion of Class B shares to Class D shares will
occur at least once a month on the basis of the relative net asset
values of the shares of the two classes on the conversion date, without
the imposition of any sales load, fee or other charge. Conversion of
Class B shares to Class D shares will not be deemed a purchase or sale
of the shares for Federal income tax purposes. Shares purchased through
reinvestment of dividends on Class B shares also will convert
automatically to Class D shares. The conversion period for dividend
reinvestment shares, and the conversion and holding period for certain
retirement plans, is modified as described under "Purchase of Shares--
Deferred Sales Charge Alternatives--Class B and Class C
Shares--Conversion of Class B Shares to Class D Shares."
Class C: Class C shares do not incur a sales charge when they are purchased, but
they are subject to an ongoing account maintenance fee of 0.25% and an
ongoing distribution fee of 0.75% of the Fund's average net assets
attributable to Class C shares. Class C shares are also subject to a
CDSC if they are redeemed within one year of purchase. Although Class C
shares are subject to a 1.0% CDSC for only one year (as compared to
four years for Class B), Class C shares have no conversion feature and,
accordingly, an investor that purchases Class C shares will be subject
to distribution fees that will be imposed on Class C shares for an
indefinite period subject to annual approval by the Fund's Board of
Directors and regulatory limitations.
Class D: Class D shares incur an initial sales charge when they are purchased
and are subject to an ongoing account maintenance fee of 0.25% of the
Fund's average net assets attributable to Class D shares. Class D
shares are not subject to an ongoing distribution fee or any CDSC when
they are redeemed. Purchases of $1,000,000 or more may not be subject
to an initial sales charge but if the initial sales charge is waived
such purchase will be subject to a CDSC of 1.0% if the shares are
redeemed within one year after purchase. The schedule of initial sales
charges and reductions for Class D shares is the same as the schedule
for Class A shares, except that there is no waiver for purchases by
retirement plans in connection with certain investment programs. Class
D shares also will be issued upon conversion of Class B shares as
described above under "Class B." See "Purchase of Shares--Initial Sales
Charge Alternatives--Class A and Class D Shares."
The following is a discussion of the factors that investors should consider
in determining the method of purchasing shares under the Merrill Lynch Select
Pricing(SM) System that the investor believes is most beneficial under his
particular circumstances.
Initial Sales Charge Alternatives. Investors who prefer an initial sales
charge alternative may elect to purchase Class D shares or, if an eligible
investor, Class A shares. Investors choosing the initial sales charge
6
<PAGE> 9
alternative who are eligible to purchase Class A shares should purchase Class A
shares rather than Class D shares because of the account maintenance fee imposed
on Class D shares. Investors qualifying for significantly reduced initial sales
charges may find the initial sales charge alternative particularly attractive
because similar sales charge reductions are not available with respect to the
deferred sales charges imposed in connection with purchases of Class B or Class
C shares. Investors not qualifying for reduced initial sales charges who expect
to maintain their investment for an extended period of time also may elect to
purchase Class A or Class D shares, because over time the accumulated ongoing
account maintenance and distribution fees on Class B or Class C shares may
exceed the initial sales charge and, in the case of Class D shares, the account
maintenance fee. Although some investors that previously purchased Class A
shares may no longer be eligible to purchase Class A shares of other
MLAM-advised mutual funds, those previously purchased Class A shares, together
with Class B, Class C and Class D share holdings, will count toward a right of
accumulation which may qualify the investor for reduced initial sales charges on
new initial sales charge purchases. In addition, the ongoing Class B and Class C
account maintenance and distribution fees will cause Class B and Class C shares
to have higher expense ratios, pay lower dividends and have lower total returns
than the initial sales charge shares. The ongoing Class D account maintenance
fees will cause Class D shares to have a higher expense ratio, pay lower
dividends and have a lower total return than Class A shares.
Deferred Sales Charge Alternatives. Because no initial sales charges are
deducted at the time of purchase, Class B and Class C shares provide the benefit
of putting all of the investor's dollars to work from the time the investment is
made. The deferred sales charge alternatives may be particularly appealing to
investors who do not qualify for a reduction in initial sales charges. Both
Class B and Class C shares are subject to ongoing account maintenance fees and
distribution fees; however, the ongoing account maintenance and distribution
fees potentially may be offset to the extent any return is realized on the
additional funds initially invested in Class B or Class C shares. In addition,
Class B shares will be converted into Class D shares of the Fund after a
conversion period of approximately eight years, and thereafter investors will be
subject to lower ongoing fees.
Certain investors may elect to purchase Class B shares if they determine it
to be most advantageous to have all their funds invested initially and intend to
hold their shares for an extended period of time. Investors in Class B shares
should take into account whether they intend to redeem their shares within the
CDSC period and, if not, whether they intend to remain invested until the end of
the conversion period and thereby take advantage of the reduction in ongoing
fees resulting from the conversion into Class D shares. Other investors,
however, may elect to purchase Class C shares if they determine that it is
advantageous to have all their assets invested initially and they are uncertain
as to the length of time they intend to hold their assets in MLAM-advised mutual
funds. Although Class C shareholders are subject to a shorter CDSC period at a
lower rate, they forgo the Class B conversion feature, making their investment
subject to account maintenance and distribution fees for an indefinite period of
time. In addition, while both Class B and Class C distribution fees are subject
to the limitations on asset-based sales charges imposed by the NASD, the Class B
distribution fees are further limited under a voluntary waiver of asset-based
sales charges. See "Purchase of Shares--Limitations on the Payment of Deferred
Sales Charges."
7
<PAGE> 10
FINANCIAL HIGHLIGHTS
The financial information in the table below has been audited in conjunction
with the annual audits of the Fund by Deloitte & Touche LLP, independent
auditors. Financial statements for the year ended January 31, 1995 and the
independent auditors' report thereon are included in the Statement of Additional
Information. The following per share data and ratios have been derived from
information provided in the financial statements. Further information about the
performance of the Fund is contained in the Fund's most recent annual report to
shareholders which may be obtained, without charge, by calling or writing the
Fund at the telephone number or address on the front cover of this Prospectus.
<TABLE>
<CAPTION>
CLASS A
---------------------------------------------------------------------
FOR THE YEAR ENDED JANUARY 31,
---------------------------------------------------------------------
1995* 1994 1993 1992 1991 1990 1989+
------ ------- ------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in
Net Asset Value:
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning
of period............................. $16.39 $ 16.29 $ 16.84 $15.49 $15.26 $14.96 $16.05
------ ------- ------- ------ ------ ------ ------
Investment income (loss)--
net................................... .09 .15 .25 .36 .41 .30 .08
Realized and unrealized gain (loss) on
investments and foreign currency
transactions--net..................... (1.97) 2.18 .49 3.74 .59 1.45 .43
------ ------- ------- ------ ------ ------ ------
Total from investment operations....... (1.88) 2.33 .74 4.10 1.00 1.75 .51
------ ------- ------- ------ ------ ------ ------
Less dividends and distributions:
Investment income--net................ -- -- (.23) (.35) (.40) (.41) (.13)
Realized gain on
investments--net.................... (.96) (2.23) (1.06) (2.40) (.37) (1.04) (1.47)
------ ------- ------- ------ ------ ------ ------
Total dividends and
distributions......................... (.96) (2.23) (1.29) (2.75) (.77) (1.45) (1.60)
------ ------- ------- ------ ------ ------ ------
Net asset value, end of period......... $13.55 $ 16.39 $ 16.29 $16.84 $15.49 $15.26 $14.96
======== ========= ========= ======== ======== ======== ========
TOTAL INVESTMENT RETURN:**
Based on net asset value
per share............................. (11.23)% 15.78% 4.79% 28.35% 6.64% 10.92% 3.90%#
======== ========= ========= ======== ======== ======== ========
RATIOS TO AVERAGE NET ASSETS:
Expenses, excluding distribution
fees.................................. .98% .88% .90% .95% .96% .89% .91%++
======== ========= ========= ======== ======== ======== ========
Expenses............................... .98% .88% .90% .95% .96% .89% .91%++
======== ========= ========= ======== ======== ======== ========
Investment income (loss)--net.......... .59% .95% 1.35% 1.81% 2.58% 2.20% 1.87%++
======== ========= ========= ======== ======== ======== ========
SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands)........................ $8,665 $10,942 $11,394 $8,846 $5,478 $4,466 $ 476
======== ========= ========= ======== ======== ======== ========
Portfolio turnover..................... 45.86% 48.63% 40.58% 48.28% 25.57% 15.23% 10.26%
======== ========= ========= ======== ======== ======== ========
<CAPTION>
CLASS B
--------------------------------------------------------
FOR THE YEAR ENDED JANUARY 31,
--------------------------------------------------------
1995* 1994* 1993 1992 1991
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Increase (Decrease) in
Net Asset Value:
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning
of period............................. $ 16.30 $ 16.28 $ 16.82 $ 15.48 $ 15.24
-------- -------- -------- -------- --------
Investment income (loss)--
net................................... (.06) (.01) .06 .14 .24
Realized and unrealized gain (loss) on
investments and foreign currency
transactions--net..................... (1.96) 2.17 .52 3.77 .60
-------- -------- -------- -------- --------
Total from investment operations....... (2.02) 2.16 .58 3.91 .84
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net................ -- -- (.06) (.17) (.23)
Realized gain on
investments--net.................... (.95) (2.14) (1.06) (2.40) (.37)
-------- -------- -------- -------- --------
Total dividends and
distributions......................... (.95) (2.14) (1.12) (2.57) (.60)
-------- -------- -------- -------- --------
Net asset value, end of period......... $ 13.33 $ 16.30 $ 16.28 $ 16.82 $ 15.48
========== ========== ========== ========== ==========
TOTAL INVESTMENT RETURN:**
Based on net asset value
per share............................. (12.22)% 14.60% 3.75% 26.96% 5.59%
========== ========== ========== ========== ==========
RATIOS TO AVERAGE NET ASSETS:
Expenses, excluding distribution
fees.................................. .99% .91% .92% .98% 1.00%
========== ========== ========== ========== ==========
Expenses............................... 1.99% 1.91% 1.92% 1.98% 2.00%
========== ========== ========== ========== ==========
Investment income (loss)--net.......... (.38)% (.07)% .36% .83% 1.53%
========== ========== ========== ========== ==========
SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands)........................ $119,186 $396,424 $447,186 $476,106 $442,944
========== ========== ========== ========== ==========
Portfolio turnover..................... 45.86% 48.63% 40.58% 48.28% 25.57%
========== ========== ========== ========== ==========
<CAPTION>
CLASS B
--------------------------------------------------------
FOR THE YEAR ENDED JANUARY 31,
--------------------------------------------------------
1990 1989 1988 1987 1986
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Increase (Decrease) in
Net Asset Value:
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning
of period............................. $ 14.94 $ 13.78 $ 16.74 $ 13.34 $ 11.89
-------- -------- -------- -------- --------
Investment income (loss)--
net................................... .21 .20 .15 .09 .11
Realized and unrealized gain (loss) on
investments and foreign currency
transactions--net..................... 1.36 2.72 (1.51) 3.49 1.72
-------- -------- -------- -------- --------
Total from investment operations....... 1.57 2.92 (1.36) 3.58 1.83
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net................ (.23) (.20) (.16) (.10) (.13)
Realized gain on
investments--net.................... (1.04) (1.56) (1.44) (.08) (.25)
-------- -------- -------- -------- --------
Total dividends and
distributions......................... (1.27) (1.76) (1.60) (.18) (.38)
-------- -------- -------- -------- --------
Net asset value, end of period......... $ 15.24 $ 14.94 $ 13.78 $ 16.74 $ 13.34
========== ========== ========== ========== ==========
TOTAL INVESTMENT RETURN:**
Based on net asset value
per share............................. 9.77% 22.11% (8.63)% 26.99% 15.87%#
========== ========== ========== ========== ==========
RATIOS TO AVERAGE NET ASSETS:
Expenses, excluding distribution
fees.................................. .93% .96% .87% .87% .98%++
========== ========== ========== ========== ==========
Expenses............................... 1.93% 1.96% 1.87% 1.87% 1.98%++
========== ========== ========== ========== ==========
Investment income (loss)--net.......... 1.20% 1.18% .92% .65% 1.30%++
========== ========== ========== ========== ==========
SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands)........................ $516,402 $562,899 $669,402 $723,907 $348,147
========== ========== ========== ========== ==========
Portfolio turnover..................... 15.23% 10.26% 23.03% 30.03% 6.69%
========== ========== ========== ========== ==========
</TABLE>
- ------------------------
* Based on average shares outstanding during the year.
** Total investment returns exclude the effects of sales loads.
+ Class A shares commenced operations on October 26, 1988.
++ Annualized.
# Aggregate total investment return.
8
<PAGE> 11
FINANCIAL HIGHLIGHTS (CONCLUDED)
The following per share data and ratios have been derived from information
provided in the financial statements.
<TABLE>
<CAPTION>
FOR THE PERIOD
OCTOBER 21, 1994+
TO JANUARY 31,
1995*
-----------------
CLASS C CLASS D
------- -------
<S> <C> <C>
Increase (Decrease) in Net Asset Value:
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period............................................................ $14.08 $ 14.26
------ --------
Investment loss--net............................................................................ (.04) (.01)
Realized and unrealized loss on investments
and foreign currency transactions--net........................................................ (.54) (.49)
------ --------
Total from investment operations................................................................ (.58) (.50)
------ --------
Less distributions:
Realized gain on investments--net............................................................. (.22) (.22)
------ --------
Total distributions............................................................................. (.22) (.22)
------ --------
Net asset value, end of period.................................................................. $13.28 $ 13.54
====== =========
TOTAL INVESTMENT RETURN:**
Based on net asset value per share.............................................................. (4.12)%# (3.50)%#
====== =========
RATIOS TO AVERAGE NET ASSETS:
Expenses, excluding account maintenance and distribution fees................................... 1.26%++ 1.18%++
====== =========
Expenses........................................................................................ 2.26%++ 1.43%++
====== =========
Investment loss--net............................................................................ (.87)%++ (.23)%++
====== =========
SUPPLEMENTAL DATA:
Net assets, end of period (in thousands)........................................................ $ 80 $156,947
====== =========
Portfolio turnover.............................................................................. 45.86% 45.86%
====== =========
</TABLE>
- ------------------------
* Based on average shares outstanding during the period.
** Total investment returns exclude the effects of sales loads.
+ Commencement of operations.
++ Annualized.
# Aggregate total investment return.
9
<PAGE> 12
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is long-term growth of capital. The Fund
seeks to achieve its objective by investing in a quality-oriented portfolio of
securities of companies that the Fund's management believes are particularly
well positioned to benefit from demographic and cultural changes, primarily as
they affect future consumer markets in the United States and, to a lesser
extent, foreign consumer markets. Management will seek to identify and analyze
demographic trends, such as the aging of the "baby boom" generation and shifts
in geographical population growth rates, as well as cultural trends, such as the
changing composition and needs of the work force, and to evaluate the effect of
such factors on the demand for particular products and services. Based on such
analysis, management will seek to identify companies whose products and services
respond to the changing needs of consumers, and thus are believed to represent
attractive investment opportunities. It is anticipated that the Fund will invest
primarily in common stocks of such companies. However, when management believes
it is advisable to do so, the Fund may invest in other securities, including,
but not limited to, convertible securities, preferred stocks and bonds. The Fund
does not presently intend to purchase bonds rated lower than BBB by Standard &
Poor's Ratings Group ("S&P") or Baa by Moody's Investors Service, Inc.
("Moody's"). See "Investment Practices and Restrictions--Investment Grade Debt
Securities." While no one can predict the prices of securities from day to day,
the Fund attempts to reduce overall exposure to risk from declines in securities
prices by spreading its investments over many different companies in a variety
of industries. The Fund's investment objective is non-fundamental and may be
changed by the Board of Directors without a vote of the shareholders. No
assurance can be given that the Fund will be able to achieve its investment
objective.
In seeking to identify quality companies, particular emphasis is placed by
management on common stocks of companies which, in addition to being considered
well positioned to benefit from cultural and demographic factors, are believed
to have internal strengths, such as good financial resources, a satisfactory
rate of return on capital, a good industry position and superior management
skills. Management believes that companies with these characteristics have a
good chance of achieving consistent earnings growth, which in turn should make
it likely that the prices of their stocks will increase over time.
The Fund may invest in securities issued by large, medium and small
capitalized companies. Investments in securities of smaller capitalized
companies involve special considerations and risks, including risks associated
with limited product lines, markets or financial and management resources; risks
associated with lesser frequency and volume of trading of stocks of smaller
capitalized issuers as compared to larger capitalized issuers and the greater
effect of abrupt or erratic price movements on smaller capitalized issuers; and
risks associated with the sensitivity of smaller capitalized issuers to market
changes.
The Fund may invest up to 25% of its assets in the securities of foreign
issuers, including issuers in foreign countries with smaller capital markets.
The Fund reserves the right to invest, temporarily, all or a portion of its
assets in high quality money market securities (such as U.S. Treasury bills,
bank certificates of deposit, commercial paper and repurchase agreements) for
purposes of enhancing liquidity and avoiding the effects of declining stock
prices when it seems advisable to do so in light of prevailing market or
economic conditions. The proportion of the Fund's assets that is invested in
money market securities will vary from time to time.
10
<PAGE> 13
THE FUND AND ITS MANAGEMENT
The Fund is a mutual fund, technically known as an open-end, diversified,
management investment company. The Fund was incorporated under the laws of the
State of Maryland on October 5, 1983. When you buy shares in the Fund your
investment is combined with the investments of others and used to buy various
securities, mainly common stocks. Through your ownership of shares, you
participate in the investment performance of those securities. The Fund is
designed primarily, but not exclusively, for younger investors who desire a
long-term investment in the stock market.
The Board of Directors of the Fund consists of six individuals, five of
whom are not "interested persons" of the Fund as defined in the Investment
Company Act of 1940, as amended (the "Investment Company Act"). The Board of
Directors of the Fund is responsible for the overall supervision of the
operations of the Fund and performs the various duties imposed on the directors
of investment companies by the Investment Company Act.
The Directors of the Fund are:
ARTHUR ZEIKEL*--President of the Investment Adviser and its affiliate, FAM;
President and Director of Princeton Services, Inc.; Executive Vice President of
ML & Co., and Executive Vice President of Merrill Lynch; Director of Merrill
Lynch Funds Distributor, Inc.
RONALD W. FORBES--Professor of Finance, School of Business, State
University of New York at Albany.
CYNTHIA A. MONTGOMERY--Professor, Harvard Business School.
CHARLES C. REILLY--Self-employed financial consultant; Adjunct Professor,
Columbia University School of Business; Former President and Chief Investment
Officer of Verus Capital, Inc.; Former Senior Vice President of Arnhold and S.
Bleichroeder, Inc.
KEVIN A. RYAN--Professor of Education at Boston University since 1982;
Founder and current Director of The Boston University Center for the Advancement
of Ethics and Character.
RICHARD R. WEST--Professor of Finance, and Dean from 1984 to 1993, of New
York University, Leonard N. Stern School of Business Administration.
- ------------------
* Interested person, as defined in the Investment Company Act of 1940, of the
Fund.
The Investment Adviser, with offices at 800 Scudders Mill Road, Plainsboro,
New Jersey 08536 (mailing address: P.O. Box 9011, Princeton, New Jersey
08543-9011), is owned and controlled by ML & Co., a financial services holding
company, and the parent of Merrill Lynch. The Investment Adviser manages the
investment of the Fund's assets, provides administrative services and manages
the Fund's business affairs. These services are subject to general oversight by
the Fund's Board of Directors. The Investment Adviser or its affiliate, FAM,
currently serves as the investment adviser to over 130 other registered
investment companies, as well as to numerous pension plans and other
institutions. As of April 30, 1995, the Investment Adviser and FAM had a total
of approximately $172.7 billion in investment company and other portfolio assets
under management, including accounts of certain affiliates of the Investment
Adviser.
Vincent P. Dileo is the portfolio manager for the Fund. Mr. Dileo is a Vice
President of the Investment Adviser and has been employed by the Investment
Adviser in this capacity since 1984. For the past five years, Mr. Dileo has
acted as portfolio manager of one or more other registered investment companies
sponsored by the Investment Adviser, and continues to act in such capacity.
11
<PAGE> 14
Advisory Fee. The shareholders have approved an Investment Advisory
Agreement (the "Advisory Agreement") pursuant to which the Fund pays the
Investment Adviser a monthly fee based upon the average daily value of the
portfolio's net assets at the following annual rates: 0.65% of the average daily
net assets not exceeding $750 million; 0.60% of the average daily net assets
exceeding $750 million but not exceeding $1 billion; and 0.55% of the average
daily net assets exceeding $1 billion. For the fiscal year ended January 31,
1995, the fee paid by the Fund to the Investment Adviser was $2,169,115 (based
on average net assets of approximately $414.7 million). At April 30, 1995, the
net assets of the Fund aggregated approximately $285.1 million. At this level,
the annual management fee would aggregate approximately $1.9 million. For the
fiscal year ended January 31, 1995, the ratio of total expenses to average net
assets was 0.98% for the Class A shares and 1.99% for the Class B shares. For
Class C and D shares for the period October 21, 1994 (commencement of
operations) to January 31, 1995, the ratio of total expenses to average net
assets was 2.26% for Class C shares and 1.43% for Class D shares.
Transfer Agency Services Fee. Merrill Lynch Financial Data Services, Inc.
(the "Transfer Agent"), which is a wholly-owned subsidiary of ML & Co., acts as
the Fund's Transfer Agent pursuant to a Transfer Agency, Dividend Disbursing
Agency and Shareholder Servicing Agency Agreement (the "Transfer Agency
Agreement"). Pursuant to the Transfer Agency Agreement, the Transfer Agent is
responsible for the issuance, transfer and redemption of shares and the opening
and maintenance of shareholder accounts. Pursuant to the Transfer Agency
Agreement, the Transfer Agent receives a fee of $11.00 per Class A or Class D
shareholder account and $14.00 per Class B or Class C shareholder account and is
entitled to reimbursement for out-of-pocket expenses incurred by it under the
Transfer Agency Agreement. For the year ended January 31, 1995, the total fee
paid by the Fund to the Transfer Agent was $741,468. At April 30, 1995, the Fund
had 1,010 Class A shareholder accounts, 17,353 Class B shareholder accounts, 37
Class C shareholder accounts and 30,498 Class D shareholder accounts. At this
level of accounts, the annual fee payable to the Transfer Agent would aggregate
approximately $590,048 plus out-of-pocket expenses.
Reimbursement for Portfolio Accounting Services. Accounting services are
provided to the Fund by the Investment Adviser, and the Fund reimburses the
Investment Adviser for its costs in connection with such services on a
semi-annual basis. For the fiscal year ended January 31, 1995, the Fund
reimbursed the Investment Adviser $69,693 for accounting services.
Code of Ethics. The Board of Directors of the Fund has adopted a Code of
Ethics under Rule 17j-1 of the Investment Company Act which incorporates the
Code of Ethics of the Investment Adviser (together, the "Codes"). The Codes
significantly restrict the personal investing activities of all employees of the
Investment Adviser and, as described below, impose additional, more onerous,
restrictions on fund investment personnel.
The Codes require that all employees of the Investment Adviser preclear any
personal securities investment (with limited exceptions, such as government
securities). The preclearance requirement and associated procedures are designed
to identify any substantive prohibition or limitation applicable to the proposed
investment. The substantive restrictions applicable to all employees of the
Investment Adviser include a ban on acquiring any securities in a "hot" initial
public offering and a prohibition from profiting on short-term trading in
securities. In addition, no employee may purchase or sell any security which at
the time is being purchased or sold (as the case may be), or to the knowledge of
the employee is being considered for purchase or sale, by any fund advised by
the Investment Adviser. Furthermore, the Codes provide for trading "blackout
periods" which prohibit trading by investment personnel of the Fund within
periods of trading by the Fund in the same (or equivalent) security (15 or 30
days depending upon the transaction).
12
<PAGE> 15
PURCHASE OF SHARES
Merrill Lynch Funds Distributor, Inc. (the "Distributor"), an affiliate of
both the Investment Adviser and Merrill Lynch, acts as the Distributor of the
shares of the Fund. Shares of the Fund are offered continuously for sale by the
Distributor and other eligible securities dealers (including Merrill Lynch).
Shares of the Fund may be purchased from securities dealers or by mailing a
purchase order directly to the Transfer Agent. The minimum initial purchase is
$1,000 and the minimum subsequent purchase is $50, except that for retirement
plans, the minimum initial purchase is $100, and the minimum subsequent purchase
is $1.
The Fund is offering its shares in four classes at a public offering
price equal to the next determined net asset value per share plus sales charges
imposed either at the time of purchase or on a deferred basis depending upon
the class of shares selected by the investor under the Merrill Lynch Select
Pricing(SM) System, as described below. The applicable offering price for
purchase orders is based upon the net asset value of the Fund next determined
after receipt of the purchase orders by the Distributor. As to purchase orders
received by securities dealers prior to the close of business on the New York
Stock Exchange (generally 4:00 P.M., New York time), which include orders
received after the close of business on the previous day, the applicable
offering price will be based on the net asset value determined as of 15 minutes
after the close of business on the New York Stock Exchange on the day the
orders are placed with the Distributor, provided the Distributor in turn
receives orders from the securities brokers prior to 30 minutes after the close
of business on the New York Stock Exchange on that day. If the purchase orders
are not received prior to 30 minutes after the close of business on the New
York Stock Exchange, such orders shall be deemed received on the next business
day. The Fund or the Distributor may suspend the continuous offering of the
Fund's shares of any class at any time in response to conditions in the
securities markets or otherwise and may thereafter resume such offering from
time to time. Any order may be rejected by the Distributor or the Fund. Neither
the Distributor nor the dealers are permitted to withhold placing orders to
benefit themselves by a price change. Merrill Lynch may charge its customers a
processing fee (presently $4.85) to confirm a sale of shares to such customers.
Purchases directly through the Fund's Transfer Agent are not subject to the
processing fee.
The Fund issues four classes of shares under the Merrill Lynch Select
Pricing(SM) System, which permits each investor to choose the method of
purchasing shares that the investor believes is most beneficial given the
amount of the purchase, the length of time the investor expects to hold the
shares and other relevant circumstances. Shares of Class A and Class D are sold
to investors choosing the initial sales charge alternatives and shares of Class
B and Class C are sold to investors choosing the deferred sales charge
alternatives. Investors should determine whether under their particular
circumstances it is more advantageous to incur an initial sales charge or to
have the entire initial purchase price invested in the Fund with the investment
thereafter being subject to a CDSC and ongoing distribution fees. A discussion
of the factors that investors should consider in determining the method of
purchasing shares under the Merrill Lynch Select Pricing(SM) System is set
forth under "Merrill Lynch Select Pricing(SM) System" on page 3.
Each Class A, Class B, Class C and Class D share of the Fund represents an
identical interest in the investment portfolio of the Fund and has the same
rights, except that Class B, Class C and Class D shares bear the expenses of the
ongoing account maintenance fees, and Class B and Class C shares bear the
expenses of the ongoing distribution fees and the additional incremental
transfer agency costs resulting from the deferred sales charge arrangements. The
deferred sales charges and account maintenance fees that are imposed on Class B
and Class C shares, as well as the account maintenance fees that are imposed on
Class D shares, will be imposed directly against those classes and not against
all assets of the Fund and, accordingly,
13
<PAGE> 16
such charges will not affect the net asset value of any other class or have any
impact on investors choosing another sales charge option. Dividends paid by the
Fund for each class of shares will be calculated in the same manner at the same
time and will differ only to the extent that account maintenance and
distribution fees and any incremental transfer agency costs relating to a
particular class are borne exclusively by that class. Class B, Class C and Class
D shares each have exclusive voting rights with respect to the Rule 12b-1
distribution plan adopted with respect to such class pursuant to which account
maintenance and/or distribution fees are paid. See "Distribution Plans" below.
Each class has different exchange privileges. See "Shareholder
Services--Exchange Privilege."
Investors should understand that the purpose and function of the initial
sales charges with respect to Class A and Class D shares are the same as those
of the deferred sales charges with respect to Class B and Class C shares in that
the sales charges applicable to each class provide for the financing of the
distribution of the shares of the Fund. The distribution-related revenues paid
with respect to a class will not be used to finance the distribution
expenditures of another class. Sales personnel may receive different
compensation for selling different classes of shares. Investors are advised that
only Class A and Class D shares may be available for purchase through securities
dealers, other than Merrill Lynch, which are eligible to sell shares.
The following table sets forth a summary of the distribution arrangements
for each class of shares under the Merrill Lynch Select Pricing(SM) System.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
ACCOUNT
MAINTENANCE DISTRIBUTION
CLASS SALES CHARGE(1) FEE FEE CONVERSION FEATURE
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
A Maximum 5.25% initial sales No No No
charge(2)(3)
- -------------------------------------------------------------------------------------------------------
B CDSC for a period of 4 years, 0.25% 0.75% B shares convert to D shares
at a rate of 4.0% during the automatically after
first year, decreasing 1.0% approximately eight years(4)
annually to 0.0%
- -------------------------------------------------------------------------------------------------------
C 1.0% CDSC for one year 0.25% 0.75% No
- -------------------------------------------------------------------------------------------------------
D Maximum 5.25% initial sales 0.25% No No
charge(3)
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
</TABLE>
- ------------------
(1) Initial sales charges are imposed at the time of purchase as a percentage of
the offering price. CDSCs may be imposed if the redemption occurs within the
applicable CDSC time period. The charge will be assessed on an amount equal
to the lesser of the proceeds of redemption or the cost of the shares being
redeemed.
(2) Offered only to eligible investors. See "Initial Sales Charge
Alternatives--Class A and Class D Shares--Eligible Class A Investors."
(3) Reduced for purchases of $25,000 or more, and waived for purchases of Class
A shares by certain retirement plans in connection with certain investment
programs. Class A and Class D share purchases of $1,000,000 or more may not
be subject to an initial sales charge but instead will be subject to a 1.0%
CDSC for one year.
(4) The conversion period for dividended reinvestment shares and certain
retirement plans is modified. Also, Class B shares of certain other
MLAM-advised mutual funds into which exchanges may be made have a ten-year
conversion period. If Class B shares of the Fund are exchanged for Class B
shares of another MLAM-advised mutual fund, the conversion period applicable
to the Class B shares acquired in the exchange will apply, and the holding
period for the shares exchanged will be tacked onto the holding period for
the shares acquired.
14
<PAGE> 17
INITIAL SALES CHARGE ALTERNATIVES--CLASS A AND CLASS D SHARES
Investors choosing the initial sales charge alternatives who are eligible
to purchase Class A shares should purchase Class A rather than Class D shares
because there is an account maintenance fee imposed on Class D shares.
The public offering price of Class A and Class D shares for purchasers
choosing the initial sales charge alternatives is the next determined net asset
value plus varying sales charges (i.e., sales loads), as set forth below:
<TABLE>
<CAPTION>
SALES LOAD AS
SALES LOAD AS PERCENTAGE* DISCOUNT TO
PERCENTAGE OF OF THE NET SELECTED DEALERS
OFFERING AMOUNT AS PERCENTAGE OF
AMOUNT OF PURCHASE PRICE INVESTED THE OFFERING PRICE
--------------------------------------------- ------------- -------------- ------------------
<S> <C> <C> <C>
Less than $25,000............................ 5.25% 5.54% 5.00%
$25,000 but less than $50,000................ 4.75 4.99 4.50
$50,000 but less than $100,000............... 4.00 4.17 3.75
$100,000 but less than $250,000.............. 3.00 3.09 2.75
$250,000 but less than $1,000,000............ 2.00 2.04 1.80
$1,000,000 and over**........................ 0.00 0.00 0.00
</TABLE>
- ------------------
* Rounded to the nearest one-hundredth percent.
** The initial sales charge may be waived on Class A and Class D purchases of
$1,000,000 or more made on or after October 21, 1994, and on Class A
purchases by certain retirement plan investors in connection with certain
investment programs. If the sales charge is waived in connection with a
purchase of $1,000,000 or more, such purchases will be subject to a CDSC of
1.0% if the shares are redeemed within one year after purchase. Class A
purchases made prior to October 21, 1994 may be subject to a CDSC, in lieu of
an initial sales charge, if the shares are redeemed within one year of
purchase at the following rates: 1.00% on purchases of $1,000,000 to
$2,500,000; 0.60% on purchases of $2,500,001 to $3,500,000; 0.40% on
purchases of $3,500,001 to $5,000,000; and 0.25% on purchases of more than
$5,000,000. The charge will be assessed on an amount equal to the lesser of
the proceeds of redemption or the cost of the shares being redeemed. A sales
charge of 0.75% will be charged on purchases of $1 million or more of Class A
or Class D shares by certain Employer Sponsored Retirement or Savings Plans.
The Distributor may reallow discounts to selected dealers and retain the
balance over such discounts. At times the Distributor may reallow the entire
sales charge to such dealers. Since securities dealers selling Class A and Class
D shares of the Fund will receive a concession equal to most of the sales
charge, they may be deemed to be underwriters under the Securities Act of 1933,
as amended (the "Securities Act"). During the fiscal year ended January 31,
1995, the Fund sold 140,801 Class A shares for aggregate net proceeds of
$2,045,990. The gross sales charges for the sale of Class A shares of the Fund
for that year were $6,725, of which $354 and $6,371 were received by the
Distributor and Merrill Lynch, respectively. No CDSCs were received with respect
to Class A shares for which the initial sales charge was waived during the
fiscal year ended January 31, 1995. During the period October 21, 1994
(commencement of operations for Class D shares) to January 31, 1995, the Fund
sold 70,886 Class D shares for aggregate net proceeds of $970,143. The gross
sales charges for the sale of Class D shares of the Fund for that period were
$9,400, of which $772 and $8,628 were received by the Distributor and Merrill
Lynch, respectively. For the same period, no CDSCs were received with respect to
Class D shares for which the initial sales charge was waived.
Eligible Class A Investors. Class A shares are offered to a limited group
of investors and also will be issued upon reinvestment of dividends on
outstanding Class A shares. Investors that currently own Class A shares of the
Fund in a shareholder account, including participants in the Merrill Lynch
Blueprint(SM) Program, are entitled to purchase additional Class A shares of the
Fund in that account. Certain employer sponsored
15
<PAGE> 18
retirement or savings plans, including eligible 401(k) plans, may
purchase Class A shares at net asset value provided such plans meet the
required minimum number of eligible employees or required amount of assets
advised by MLAM or any of its affiliates. Class A shares are available at net
asset value to corporate warranty insurance reserve fund programs provided that
the program has $3 million or more initially invested in MLAM-advised mutual
funds. Also eligible to purchase Class A shares at net asset value are
participants in certain investment programs including TMA(SM) Managed Trusts to
which Merrill Lynch Trust Company provides discretionary trustee services and
certain purchases made in connection with the Merrill Lynch Mutual Fund Adviser
program. In addition, Class A shares are offered at net asset value to ML & Co.
and its subsidiaries and their directors and employees and to members of the
Boards of MLAM-advised investment companies, including the Fund. Certain
persons who acquired shares of certain MLAM-advised closed-end funds who wish
to reinvest the net proceeds from a sale of their closed-end fund shares of
common stock in shares of the Fund also may purchase Class A and Class D shares
of the Fund if certain conditions set forth in the Statement of Additional
Information are met for closed-end funds that commenced operations prior to
October 21, 1994. For example, Class A shares of the Fund and certain other
MLAM-advised mutual funds are offered at net asset value to shareholders of
Merrill Lynch Senior Floating Rate Fund, Inc. who wish to reinvest the net
proceeds from a sale of certain of their shares of common stock of Merrill
Lynch Senior Floating Rate Fund, Inc. in shares of such funds.
Reduced Initial Sales Charges. No initial sales charges are imposed upon
Class A and Class D shares issued as a result of the automatic reinvestment of
dividends or capital gains distributions. Class A and Class D sales charges also
may be reduced under a Right of Accumulation and a Letter of Intention.
Class A shares are offered at net asset value to certain eligible Class A
investors as set forth above under "Eligible Class A Investors."
Class D shares are offered at net asset value to an investor who has a
business relationship with a financial consultant who joined Merrill Lynch from
another investment firm within six months prior to the date of purchase if
certain conditions set forth in the Statement of Additional Information are met.
Class D shares may be offered at net asset value in connection with the
acquisition of assets of other investment companies. Class D shares also are
offered at net asset value, without sales charge, to an investor who has a
business relationship with a Merrill Lynch financial consultant and who has (i)
invested in a mutual fund sponsored by a non-Merrill Lynch company for which
Merrill Lynch has served as a selected dealer and where Merrill Lynch has either
received or given notice that such arrangement will be terminated, or (ii)
invested in a mutual fund sponsored by a non-Merrill Lynch company for which
Merrill Lynch has not served as a selected dealer, if certain conditions set
forth in the Statement of Additional Information are met.
Class D shares are offered with reduced sales charges and, in certain
circumstances, at net asset value, to participants in the Merrill Lynch
Blueprint(SM) Program.
Additional information concerning these reduced initial sales charges,
including information regarding investments by Employee Sponsored Retirement or
Savings Plans, is set forth in the Statement of Additional Information.
16
<PAGE> 19
DEFERRED SALES CHARGE ALTERNATIVES--CLASS B AND CLASS C SHARES
Investors choosing the deferred sales charge alternatives should consider
Class B shares if they intend to hold their shares for an extended period of
time and Class C shares if they are uncertain as to the length of time they
intend to hold their assets in MLAM-advised mutual funds.
The public offering price of Class B and Class C shares for investors
choosing the deferred sales charge alternatives is the next determined net asset
value per share without the imposition of a sales charge at the time of
purchase. As discussed below, Class B shares are subject to a four-year CDSC,
while Class C shares are subject only to a one year 1.00% CDSC. On the other
hand, approximately eight years after Class B shares are issued, such Class B
shares, together with shares issued upon dividend reinvestment with respect to
those shares, are automatically converted into Class D shares of the Fund and
thereafter will be subject to lower continuing fees. See "Conversion of Class B
Shares to Class D Shares" below. Both Class B and Class C shares are subject to
an account maintenance fee of 0.25% of net assets and a distribution fee of
0.75% of net assets as discussed below under "Distribution Plans."
Class B and Class C shares are sold without an initial sales charge so that
the Fund will receive the full amount of the investor's purchase payment.
Merrill Lynch compensates its financial consultants for selling Class B and
Class C shares at the time of purchase from its own funds. See "Distribution
Plans" below.
Proceeds from the CDSC and the distribution fee are paid to the Distributor
and are used in whole or in part by the Distributor to defray the expenses of
dealers (including Merrill Lynch) related to providing distribution-related
services to the Fund in connection with the sale of the Class B and Class C
shares, such as the payment of compensation to financial consultants for selling
Class B and Class C shares, from its own funds. The combination of the CDSC and
the ongoing distribution fee facilitates the ability of the Fund to sell the
Class B and Class C shares without a sales charge being deducted at the time of
purchase. Approximately eight years after issuance, Class B shares will convert
automatically into Class D shares of the Fund, which are subject to an account
maintenance fee but no distribution fee; Class B shares of certain other
MLAM-advised mutual funds into which exchanges may be made convert into Class D
shares automatically after approximately ten years. If Class B shares of the
Fund are exchanged for Class B shares of another MLAM-advised mutual fund, the
conversion period applicable to the Class B shares acquired in the exchange will
apply, and the holding period for the shares exchanged will be tacked onto the
holding period for the shares acquired.
Imposition of the CDSC and the distribution fee on Class B and Class C
shares is limited by the NASD asset-based sales charge rule. See "Limitations on
the Payment of Deferred Sales Charges" below. The proceeds from the ongoing
account maintenance fee are used to compensate Merrill Lynch for providing
continuing account maintenance activities. Class B shareholders of the Fund
exercising the exchange privilege described under "Shareholder
Services--Exchange Privilege" will continue to be subject to the Fund's CDSC
schedule if such schedule is higher than the CDSC schedule relating to the Class
B shares acquired as a result of the exchange.
Contingent Deferred Sales Charges--Class B Shares. Class B shares which
are redeemed within four years of purchase may be subject to a CDSC at the rates
set forth below charged as a percentage of the dollar amount subject thereto.
The charge will be assessed on an amount equal to the lesser of the proceeds of
redemption or the cost of the shares being redeemed. Accordingly, no CDSC will
be imposed on increases in net asset value above the initial purchase price. In
addition, no CDSC will be assessed on shares derived from reinvestment of
dividends or capital gains distributions.
17
<PAGE> 20
The following table sets forth the rates of the Class B CDSC:
<TABLE>
<CAPTION>
CLASS B CDSC
AS A PERCENTAGE
OF DOLLAR
AMOUNT
YEAR SINCE PURCHASE SUBJECT TO
PAYMENT MADE CHARGE
------------- -----------------
<S> <C>
0-1............................................................ 4.00%
1-2............................................................ 3.00%
2-3............................................................ 2.00%
3-4............................................................ 1.00%
4 and thereafter............................................... 0.00%
</TABLE>
For the fiscal year ended January 31, 1995, the Distributor received CDSCs
of $94,070 with respect to redemptions of Class B shares, all of which were paid
to Merrill Lynch.
In determining whether a CDSC is applicable to a redemption, the
calculation will be determined in the manner that results in the lowest possible
rate being charged. Therefore, it will be assumed that the redemption is first
of shares held for over four years or shares acquired pursuant to reinvestment
of dividends or distributions and then of shares held longest during the
four-year period. The charge will not be applied to dollar amounts representing
an increase in the net asset value since the time of purchase. A transfer from a
shareholder's account to another account will be assumed to be made in the same
order as a redemption.
To provide an example, assume an investor purchased 100 shares at $10 per
share (at a cost of $1,000) and in the third year after purchase, the net asset
value per share is $12 and, during such time, the investor has acquired 10
additional shares through dividend reinvestment. If at such time the investor
makes his or her first redemption of 50 shares (proceeds of $600), 10 shares
will not be subject to a CDSC because of dividend reinvestment. With respect to
the remaining 40 shares, the CDSC is applied only to original cost of $10 per
share and not to the increase in net asset value of $2 per share. Therefore,
$400 of the $600 redemption proceeds will be charged at a rate of 2.00% (the
applicable rate in the third year after purchase).
In the event that Class B shares are exchanged by certain retirement plans
for Class A shares in connection with a transfer to the Merrill Lynch Mutual
Fund Adviser ("MFA") program, the time period that such Class A shares are held
in the MFA program will be included in determining the holding period of Class B
shares reacquired upon termination of participation in the MFA program (see
"Shareholder Services--Exchange Privilege").
The Class B CDSC is waived on redemptions of shares in connection with
certain post-retirement withdrawals from an Individual Retirement Account
("IRA") or other retirement plan or following the death or disability (as
defined in the Internal Revenue Code of 1986, as amended) of a shareholder. The
Class B CDSC also is waived on redemptions of shares by certain eligible 401(a)
and eligible 401(k) plans and in connection with certain group plans placing
orders through the Merrill Lynch Blueprint(SM) Program. The CDSC also is waived
for any Class B shares which are purchased by eligible 401(k) or eligible 401(a)
plans which are rolled over into a Merrill Lynch or Merrill Lynch Trust Company
custodied IRA and held in such account at the time of redemption. The Class B
CDSC also is waived for any Class B shares which are purchased by a Merrill
Lynch rollover IRA that was funded by a rollover from a terminated 401(k) plan
managed by the MLAM Private Portfolio Group and held in such account at the time
of redemption.
18
<PAGE> 21
Additional information concerning the waiver of the Class B CDSC is set forth in
the Statement of Additional Information.
Contingent Deferred Sales Charges--Class C Shares. Class C shares which
are redeemed within one year of purchase may be subject to a 1.0% CDSC charged
as a percentage of the dollar amount subject thereto. The charge will be
assessed on an amount equal to the lesser of the proceeds of redemption or the
cost of the shares being redeemed. Accordingly, no Class C CDSC will be imposed
on increases in net asset value above the initial purchase price. In addition,
no Class C CDSC will be assessed on shares derived from reinvestment of
dividends or capital gains distributions.
In determining whether a Class C CDSC is applicable to a redemption, the
calculation will be determined in the manner that results in the lowest possible
rate being charged. Therefore, it will be assumed that the redemption is first
of shares held for over one year or shares acquired pursuant to reinvestment of
dividends or distributions and then of shares held longest during the one-year
period. The charge will not be applied to dollar amounts representing an
increase in the net asset value since the time of purchase. A transfer of shares
from a shareholder's account to another account will be assumed to be made in
the same order as a redemption.
For the fiscal period October 21, 1994 (commencement of operations for
Class C shares) to January 31, 1995, the Distributor received no CDSCs with
respect to Class C shares.
Conversion of Class B Shares to Class D Shares. After approximately eight
years (the "Conversion Period"), Class B shares will be converted automatically
into Class D shares of the Fund. Class D shares are subject to an ongoing
account maintenance fee of 0.25% of net assets but are not subject to the
distribution fee that is borne by Class B shares. Automatic conversion of Class
B shares into Class D shares will occur at least once each month (on the
"Conversion Date") on the basis of the relative net asset values of the shares
of the two classes on the Conversion Date, without the imposition of any sales
load, fee or other charge. Conversion of Class B shares to Class D shares will
not be deemed a purchase or sale of the shares for Federal income tax purposes.
In addition, shares purchased through reinvestment of dividends on Class B
shares also will convert automatically to Class D shares. The Conversion Date
for dividend reinvestment shares will be calculated taking into account the
length of time the shares underlying such dividend reinvestment shares were
outstanding. If at a Conversion Date the conversion of Class B shares to Class D
shares of the Fund in a single account will result in less than $50 worth of
Class B shares being left in the account, all of the Class B shares of the Fund
held in the account on the Conversion Date will be converted to Class D shares
of the Fund.
Share certificates for Class B shares of the Fund to be converted must be
delivered to the Transfer Agent at least one week prior to the Conversion Date
applicable to those shares. In the event such certificates are not received by
the Transfer Agent at least one week prior to the Conversion Date, the related
Class B shares will convert to Class D shares on the next scheduled Conversion
Date after such certificates are delivered.
In general, Class B shares of equity MLAM-advised mutual funds will convert
approximately eight years after initial purchase, and Class B shares of taxable
and tax-exempt fixed income MLAM-advised mutual funds will convert approximately
ten years after initial purchase. If, during the Conversion Period, a
shareholder exchanges Class B shares with an eight-year Conversion Period for
Class B shares with a ten-year Conversion Period, or vice versa, the Conversion
Period applicable to the Class B shares acquired in the exchange will apply, and
the holding period for the shares exchanged will be tacked onto the holding
period for the shares acquired.
19
<PAGE> 22
The Conversion Period is modified for shareholders who purchased Class B
shares through certain retirement plans which qualified for a waiver of the CDSC
normally imposed on purchases of Class B shares ("Class B Retirement Plans").
When the first share of any MLAM-advised mutual fund purchased by a Class B
Retirement Plan has been held for ten years (i.e., ten years from the date the
relationship between MLAM-advised mutual funds and the Class B Retirement Plan
was established), all Class B shares of all MLAM-advised mutual funds held in
that Class B Retirement Plan will be converted into Class D shares of the
appropriate funds. Subsequent to such conversion, that Class B Retirement Plan
will be sold Class D shares of the appropriate funds at net asset value per
share.
The Conversion Period also is modified for retirement plan investors which
participate in the MFA program. While participating in the MFA program, such
investors will hold Class A shares. If these Class A shares were acquired
through exchange of Class B shares (see "Shareholder Services--Exchange
Privilege"), then the holding period for such Class A shares will be "tacked" to
the holding period of the Class B shares originally held for purposes of
calculating the Conversion Period on Class B shares acquired upon termination of
participation in the MFA program.
DISTRIBUTION PLANS
The Fund has adopted separate distribution plans for Class B, Class C and
Class D shares pursuant to Rule 12b-1 under the Investment Company Act (each, a
"Distribution Plan") with respect to the account maintenance and/or distribution
fees paid by the Fund to the Distributor with respect to such classes. The Class
B and Class C Distribution Plans provide for the payment of account maintenance
fees and distribution fees, and the Class D Distribution Plan provides for the
payment of account maintenance fees.
The Distribution Plans for Class B, Class C and Class D shares each provide
that the Fund pays the Distributor an account maintenance fee relating to the
shares of the relevant class, accrued daily and paid monthly, at the annual rate
of 0.25% of the average daily net assets of the Fund attributable to shares of
the relevant class in order to compensate the Distributor and Merrill Lynch
(pursuant to a sub-agreement) in connection with account maintenance activities.
The Distribution Plans for Class B and Class C shares each provide that the
Fund also pays the Distributor a distribution fee relating to the shares of the
relevant class, accrued daily and paid monthly, at the annual rate of 0.75% of
the average daily net assets of the Fund attributable to the shares of the
relevant class in order to compensate the Distributor and Merrill Lynch
(pursuant to a sub-agreement) for providing shareholder and distribution
services, and bearing certain distribution-related expenses of the Fund,
including payments to financial consultants for selling Class B and Class C
shares of the Fund. The Distribution Plans relating to Class B and Class C
shares are designed to permit an investor to purchase Class B and Class C shares
through dealers without the assessment of an initial sales charge and at the
same time permit the dealer to compensate its financial consultants in
connection with the sale of the Class B and Class C shares. In this regard, the
purpose and function of the ongoing distribution fees and the CDSC are the same
as those of the initial sales charge with respect to the Class A and Class D
shares of the Fund in that the deferred sales charges provide for the financing
of the distribution of the Fund's Class B and Class C shares.
Prior to July 6, 1993, the Fund paid the Distributor an ongoing
distribution fee, accrued daily and payable monthly, at the annual rate of 1.00%
of average daily net assets of the Class B shares of the Fund under a
distribution plan previously adopted by the Fund (the "Prior Plan") to
compensate the Distributor and Merrill Lynch for providing account maintenance
and distribution-related activities and services to Class B
20
<PAGE> 23
shareholders. The fee rate payable and the services provided under the Prior
Plan are identical to the aggregate fee rate payable and the services provided
under the Class B Distribution Plan, the difference being that the account
maintenance and distribution services have been unbundled.
For the fiscal year ended January 31, 1995, the Fund paid the Distributor
$2,927,385 (based on average net assets relating to the Class B shares of
approximately $292.7 million) pursuant to the Class B Distribution Plan, all of
which was paid to Merrill Lynch for providing account maintenance and
distribution-related services in connection with the Class B shares. For the
period October 21, 1994 (commencement of operations for Class C and Class D
shares) to January 31, 1995, the Fund paid the Distributor $93 (based on average
net assets relating to the Class C shares of approximately $33,475) pursuant to
the Class C Distribution Plan, all of which was paid to Merrill Lynch for
providing account maintenance and distribution-related services in connection
with the Class C shares. For the same period, the Fund paid the Distributor
$78,494 (based on average net assets relating to the Class D shares of
approximately $112.4 million) pursuant to the Class D Distribution Plan, all of
which was paid to Merrill Lynch for providing account maintenance-related
services in connection with the Class D shares. At April 30, 1995, the net
assets of the Fund subject to the Class B Distribution Plan aggregated
approximately $89.2 million. At this net asset level, the annual fee payable
pursuant to the Class B Distribution Plan would aggregate approximately
$668,679. At April 30, 1995, the net assets of the Fund subject to the Class C
Distribution Plan aggregated approximately $90,187. At this asset level, the
annual fee payable pursuant to the Class C Distribution Plan would aggregate
approximately $676. At April 30, 1995, the net assets of the Fund subject to the
Class D Distribution Plan aggregated approximately $188.0 million. At this asset
level, the annual fee payable pursuant to the Class D Distribution Plan would
aggregate approximately $469,982.
The payments under the Distribution Plans are based upon a percentage of
average daily net assets attributable to the shares regardless of the amount of
expenses incurred and, accordingly, distribution-related revenues from the
Distribution Plans may be more or less than distribution-related expenses.
Information with respect to the distribution-related revenues and expenses is
presented to the Directors for their consideration in connection with their
deliberations as to the continuance of the Class B and Class C Distribution
Plans. This information is presented annually as of December 31 of each year on
a "fully allocated accrual" basis and quarterly on a "direct expense and
revenue/cash" basis. On the fully allocated accrual basis, revenues consist of
the account maintenance fees, distribution fees, the CDSC and certain other
related revenues, and expenses consist of financial consultant compensation,
branch office and regional operation center selling and transaction processing
expenses, advertising, sales promotion and marketing expenses, corporate
overhead and interest expense. On the direct expense and revenue/cash basis,
revenues consist of the account maintenance fees, distribution fees and CDSCs
and the expenses consist of financial consultant compensation. With respect to
Class B shares, as of December 31, 1994, the last date for which fully allocated
accrual data is available, the fully allocated accrual revenues incurred by the
Distributor and Merrill Lynch since the Class B shares commenced operations on
March 5, 1984 exceeded fully allocated accrual expenses for such period by
approximately $9,534,000 (7.4% of Class B net assets at that date). For the
Class B shares, as of December 31, 1994, direct cash revenues for the same
period exceeded direct cash expenses by approximately $44,461,722 (35.00% of
Class B net assets at that date). As of January 31, 1995, direct cash revenues
for the period since commencement of the offering of Class B shares exceeded
direct cash expenses by $44,570,605 (37.00% of Class B net assets at that date).
With respect to Class C shares, as of December 31, 1994, direct cash expenses
for the period since October 21, 1994 (commencement of operations for Class C
shares) exceeded direct cash revenues by $227 (.45% of Class C net assets at
that date).
21
<PAGE> 24
The Fund has no obligation with respect to distribution and/or account
maintenance-related expenses incurred by the Distributor and Merrill Lynch in
connection with Class B, Class C and Class D shares, and there is no assurance
that the Directors of the Fund will approve the continuance of the Distribution
Plans from year to year. However, the Distributor intends to seek annual
continuation of the Distribution Plans. In their review of the Distribution
Plans, the Directors will be asked to take into consideration expenses incurred
in connection with the account maintenance and/or distribution of each class of
shares separately. The initial sales charges, the account maintenance fee,
distribution fee and/or the CDSCs received with respect to one class will not be
used to subsidize the sale of shares of another class. Payments of the
distribution fee on Class B shares will terminate upon conversion of those Class
B shares into Class D shares as set forth under "Deferred Sales Charge
Alternatives-- Class B and Class C Shares--Conversion of Class B Shares to Class
D Shares."
LIMITATIONS ON THE PAYMENT OF DEFERRED SALES CHARGES
The maximum sales charge rule in the Rules of Fair Practice of the NASD
imposes a limitation on certain asset-based sales charges such as the
distribution fee and the CDSC borne by the Class B and Class C shares, but not
the account maintenance fee. The maximum sales charge rule is applied separately
to each class. As applicable to the Fund, the maximum sales charge rule limits
the aggregate of distribution fee payments and CDSCs payable by the Fund to (1)
6.25% of eligible gross sales of Class B shares and Class C shares, computed
separately (defined to exclude shares issued pursuant to dividend reinvestment
and exchanges), plus (2) interest on the unpaid balance for the respective
class, computed separately, at the prime rate plus 1% (the unpaid balance being
the maximum amount payable minus amounts received from the payment of the
distribution fee and the CDSC). In connection with the Class B shares, the
Distributor has voluntarily agreed to waive interest charges on the unpaid
balance in excess of 0.50% of eligible gross sales. Consequently, the maximum
amount payable to the Distributor (referred to as the "voluntary maximum") in
connection with the Class B shares is 6.75% of eligible gross sales. The
Distributor retains the right to stop waiving the interest charges at any time.
To the extent payments would exceed the voluntary maximum, the Fund will not
make further payments of the distribution fee with respect to Class B shares,
and any CDSCs will be paid to the Fund rather than to the Distributor; however,
the Fund will continue to make payments of the account maintenance fee. In
certain circumstances, the amount payable pursuant to the voluntary maximum may
exceed the amount payable under the NASD formula. In such circumstances payment
in excess of the amount payable under the NASD formula will not be made.
REPURCHASE AND REDEMPTION OF SHARES
The Fund is required to redeem for cash all shares of the Fund upon receipt
of a written request in proper form. The redemption price is the net asset value
per share next determined after the initial receipt of proper notice of
redemption. Except for any CDSC which may be applicable, there will be no charge
for redemption if the redemption request is sent directly to the Transfer Agent.
Shareholders liquidating their holdings will receive upon redemption all
dividends reinvested through the date of redemption. The value of shares at the
time of redemption may be more or less than the shareholder's cost, depending on
the market value of the securities held by the Fund at such time.
REPURCHASE
The Fund will repurchase shares through a shareholder's listed securities
dealer. The Fund will normally accept orders to repurchase shares by wire or
telephone from dealers for their customers at the net asset value
22
<PAGE> 25
next computed after receipt of the order by the dealer, less any applicable
CDSC, provided that the request for repurchase is received by the dealer prior
to the close of business on the New York Stock Exchange (generally 4:00 P.M.,
New York time) on the day received, and such request is received by the Fund
from such dealer not later than 30 minutes after the close of business on the
New York Stock Exchange on the same day.
These repurchase arrangements are for the convenience of shareholders and
do not involve a charge by the Fund (other than any applicable CDSC); however,
non-affiliated securities dealers may impose a service charge on the shareholder
for effecting such repurchases. Merrill Lynch may charge its customers a
processing fee (presently $4.85) to confirm the repurchase of shares to such
customers. Redemptions directly through the Transfer Agent are not subject to
the processing fee. The Fund reserves the right to reject any order for
repurchase, which right of rejection might adversely affect shareholders seeking
redemption through the repurchase procedure. However, a shareholder whose order
for repurchase is rejected by the Fund may redeem shares as set forth below.
REDEMPTION
A shareholder wishing to redeem shares may do so without charge by
tendering the shares directly to the Transfer Agent, Merrill Lynch Financial
Data Services, Inc., Transfer Agency Mutual Fund Operations, P.O. Box 45289,
Jacksonville, Florida 32232-5289. Redemption requests delivered other than by
mail should be delivered to Merrill Lynch Financial Data Services, Inc.,
Transfer Agency Mutual Fund Operations, 4800 Deer Lake Drive East, Jacksonville,
Florida 32246-6484. Redemption requests should not be sent to the Fund. Except
for any CDSC which may be applicable, there will be no charge for redemption if
you send your request directly to the Transfer Agent.
To redeem through the Transfer Agent you must send a written request in
proper form. The request for redemption must be signed by all persons in whose
names the shares are registered, and the names must be exactly the same as the
names which were signed when the shares were bought. The signatures must also be
guaranteed. A "guaranteed" signature does not mean the same thing as a
"notarized" signature. The signature(s) on the redemption request must be
guaranteed by an "eligible guarantor institution" as such is defined in Rule
17Ad-15 under the Securities Exchange Act of 1934, the existence and validity of
which may be verified by the Transfer Agent through the use of industry
publications.
Generally, the properly signed written request, with the signatures
guaranteed, will be all you need to send to redeem your shares. In some cases,
however, other documents may be necessary. For example, although the Fund
normally does not issue certificates for shares, it will do so if you make a
special request to the Transfer Agent. If you have asked for and received
certificates for your shares, certificates for the shares being redeemed must
accompany your redemption request. In other cases, the Transfer Agent might
require additional documents, such as trust instruments, death certificates,
appointments as executor or administrator of an estate or certificates of
corporate authority.
The payment for your redemption will be mailed to you within seven days
after the Transfer Agent receives the request in proper form. Exceptions to this
are if normal trading is not taking place on the New York Stock Exchange, or if
the shares to be redeemed have recently been purchased by check and the check
has not yet cleared. If the purchase check has not yet cleared, the Transfer
Agent may delay mailing a redemption check until the purchase check has cleared,
which is usually within ten days after payment of the purchase price.
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<PAGE> 26
REINSTATEMENT PRIVILEGE--CLASS A AND CLASS D SHARES
Shareholders who have redeemed their Class A or Class D shares have a
one-time privilege to reinstate their accounts by purchasing Class A or Class D
shares, as the case may be, of the Fund at net asset value without a sales
charge up to the dollar amount redeemed. The reinstatement privilege may be
exercised by sending a notice of exercise along with a check for the amount to
be reinstated to the Transfer Agent within 30 days after the date the request
for redemption was accepted by the Transfer Agent or the Distributor. The
reinstatement will be made at the net asset value per share next determined
after the notice of reinstatement is received and cannot exceed the amount of
the redemption proceeds. A redemption and subsequent purchase that qualify for
the reinstatement privilege will otherwise be processed in the same manner as
other redemptions and purchases of Fund shares. The reinstatement privilege is a
one-time privilege and may be exercised by the Class A or Class D shareholder
only the first time such shareholder makes a redemption.
SHAREHOLDER SERVICES
The Fund offers a number of shareholder services and investment plans
described below which are designed to facilitate investment in its shares. Full
details as to each of such services, copies of the various plans described below
and instructions as to how to participate in the various plans and services, or
to change options with respect thereto, can be obtained from the Fund by calling
the telephone number on the cover page of this Prospectus or from the
Distributor or Merrill Lynch.
Investment Account. Each shareholder whose account is maintained at the
Transfer Agent has an Investment Account and will receive, at least quarterly,
statements from the Transfer Agent. These statements will serve as transaction
confirmations for automatic investment purchases and the reinvestment of
ordinary income dividends and long-term capital gain distributions. The
statements will also show any other activity in the account since the preceding
statement. Shareholders will receive separate transaction confirmations for each
purchase or sale transaction other than automatic investment purchases and the
reinvestment of ordinary income dividends and long-term capital gain
distributions.
Shareholders may make additions to their Investment Account at any time by
mailing a check directly to the Transfer Agent. Shareholders may also maintain
their accounts through Merrill Lynch. Upon the transfer of shares out of a
Merrill Lynch brokerage account, an Investment Account in the transferring
shareholder's name may be opened at the Transfer Agent. Shareholders considering
transferring their Class A or Class D shares from Merrill Lynch to another
brokerage firm or financial institution should be aware that, if the firm to
which the Class A or Class D shares are to be transferred will not take delivery
of shares of the Fund, a shareholder either must redeem the Class A or Class D
shares (paying any applicable CDSC) so that the cash proceeds can be transferred
to the account at the new firm or such shareholder must continue to maintain an
Investment Account at the Transfer Agent for those Class A or Class D shares.
Shareholders interested in transferring their Class B or Class C shares from
Merrill Lynch and who do not wish to have an Investment Account maintained for
such shares at the Transfer Agent may request their new brokerage firm to
maintain such shares in an account registered in the name of the brokerage firm
for the benefit of the shareholder at the Transfer Agent. Shareholders
considering transferring a tax-deferred retirement account such as an individual
retirement account from Merrill Lynch to another brokerage firm or financial
institution should be aware that, if the firm to which the retirement account is
to be transferred will not take delivery of shares of the Fund, a shareholder
must either redeem the shares (paying any applicable CDSC) so that the cash
proceeds can be transferred to the account at the new firm, or such shareholder
must continue to maintain a retirement account at Merrill Lynch for those
shares.
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Automatic Reinvestment of Dividends and Capital Gains Distributions. All
dividends and capital gains distributions are reinvested automatically in full
and fractional shares of the Fund at the net asset value per share next
determined after the close of the New York Stock Exchange on the ex-dividend
date of such dividend or distribution. A shareholder may at any time, by written
notification or by telephone (1-800-MER-FUND) to the Transfer Agent, elect to
have subsequent dividends or both dividends and capital gains distributions paid
in cash, rather than reinvested, in which event payment will be mailed on or
about the payment date. Cash payments can also be directly deposited to the
shareholder's bank account. No CDSC will be imposed on redemption of shares
issued as a result of the automatic reinvestment of dividends or capital gains
distributions.
Systematic Withdrawal Plans. A Class A or Class D shareholder may elect to
receive systematic withdrawal payments from such shareholder's Investment
Account in the form of payments by check or through automatic payment by direct
deposit to such shareholder's bank account on either a monthly or quarterly
basis. A Class A or Class D shareholder whose shares are held within a CMA(R),
CBA(R) or Retirement Account may elect to have shares redeemed on a monthly,
bi-monthly, quarterly, semi-annual or annual basis through the Systematic
Redemption Program, subject to certain conditions.
Automatic Investment Plans. Regular additions of Class A, Class B, Class C
or Class D shares may be made to an investor's Investment Account by
pre-arranged charges of $50 or more to his regular bank account. Investors who
maintain CMA(R) accounts may arrange to have periodic investments made to the
Fund in their CMA(R) accounts or in certain related accounts in amounts of $100
or more through the CMA(R) Automated Investment Program.
Retirement Plans. Self-directed individual retirement accounts and other
retirement plans are available from Merrill Lynch. Under these plans,
investments may be made in the Fund and certain other mutual funds whose shares
are distributed by the Distributor, as well as in other securities. Merrill
Lynch charges an initial establishment fee and an annual custodial fee for each
account. The minimum initial purchase to establish any such plan is $100 and the
minimum subsequent purchase is $1.
Shareholders considering transferring a tax-deferred retirement account
such as an individual retirement account from Merrill Lynch to another brokerage
firm or financial institution should be aware that if the firm to which the
retirement account is being transferred will not take delivery of shares of the
Fund, the shareholder must either redeem the shares (paying any applicable CDSC)
so that the cash proceeds can be transferred to the account at the new firm, or
continue to maintain a retirement account at Merrill Lynch for those shares.
Exchange Privilege. Shareholders of each class of shares of the Fund have
an exchange privilege with certain other MLAM-advised mutual funds. There is
currently no limitation on the number of times a shareholder may exercise the
exchange privilege. The exchange privilege may be modified or terminated at any
time in accordance with the rules of the Commission.
Under the Merrill Lynch Select Pricing(SM) System, Class A shareholders may
exchange Class A shares of the Fund for Class A shares of a second MLAM-advised
mutual fund if the shareholder holds any Class A shares of the second fund in
his account in which the exchange is made at the time of the exchange or is
otherwise eligible to purchase Class A shares of the second fund. If the Class A
shareholder wants to exchange Class A shares for shares of a second MLAM-advised
mutual fund, and the shareholder does not hold Class A shares of the second fund
in his account at the time of the exchange and is not otherwise eligible to
acquire Class A shares of the second fund, the shareholder will receive Class D
shares of the second fund as a result of the exchange. Class D shares also may
be exchanged for Class A shares of a second MLAM-advised mutual fund at any time
as long as, at the time of the exchange, the shareholder holds Class A shares of
the second
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<PAGE> 28
fund in the account in which the exchange is made or is otherwise eligible to
purchase Class A shares of the second fund.
Exchanges of Class A and Class D shares are made on the basis of the
relative net asset values per Class A or Class D share, respectively, plus an
amount equal to the difference, if any, between the sales charge previously paid
on the Class A or Class D shares being exchanged and the sales charge payable at
the time of the exchange on the shares being acquired.
Class B, Class C and Class D shares are exchangeable for shares of the same
class of other MLAM-advised mutual funds.
Shares of the Fund which are subject to a CDSC are exchangeable on the
basis of relative net asset value per share without the payment of any CDSC that
might otherwise be due upon redemption of the shares of the Fund. For purposes
of computing the CDSC that may be payable upon a disposition of the shares
acquired in the exchange, the holding period for the previously owned shares of
the Fund is "tacked" to the holding period of the newly acquired shares of the
other Fund.
Class A, Class B, Class C and Class D shares also are exchangeable for
shares of certain MLAM-advised money market funds specifically designated as
available for exchange by holders of Class A, Class B, Class C or Class D
shares. The period of time that Class A, Class B, Class C or Class D shares are
held in a money market fund, however, will not count toward satisfaction of the
holding period requirement for reduction of any CDSC imposed on such shares, if
any, and, with respect to Class B shares, toward satisfaction of the Conversion
Period.
Class B shareholders of the Fund exercising the exchange privilege will
continue to be subject to the Fund's CDSC schedule if such schedule is higher
than the CDSC schedule relating to the new Class B shares. In addition, Class B
shares of the Fund acquired through use of the exchange privilege will be
subject to the Fund's CDSC schedule if such schedule is higher than the CDSC
schedule relating to the Class B shares of the MLAM-advised mutual fund from
which the exchange has been made.
Exercise of the exchange privilege is treated as a sale for Federal income
tax purposes. For further information, see "Shareholder Services--Exchange
Privilege" in the Statement of Additional Information.
The exchange privilege is modified with respect to certain retirement plans
which participate in the MFA program. Such retirement plans may exchange Class
B, Class C or Class D shares that have been held for at least one year for Class
A shares of the same Fund on the basis of relative net asset values in
connection with the commencement of participation in the MFA program, i.e., no
CDSC will apply. The one year holding period does not apply to shares reacquired
through reinvestment of dividends. Upon termination of participation in the MFA
program, Class A shares will be reexchanged for the class of shares originally
held. For purposes of computing any CDSC that may be payable upon redemption of
Class B or Class C shares so reacquired, or the Conversion Period for Class B
shares so acquired, the holding period for the Class A shares will be "tacked"
to the holding period for the Class B or Class C shares originally held. The
Fund's exchange privilege is also modified with respect to purchases of Class A
and Class D shares by non-retirement plan investors under the MFA program.
First, the initial allocation of assets is made under the MFA program. Then, any
subsequent exchange under the MFA program of Class A or Class D shares of a
MLAM-advised mutual fund for Class A or Class D shares of the Fund will be made
solely on the basis of the relative net asset values of the shares being
exchanged. Therefore, there will not be a charge for any difference between the
sales
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<PAGE> 29
charge previously paid on the shares of the other MLAM-advised mutual fund and
the sales charge payable on the shares of the Fund being acquired in the
exchange under the MFA program.
DIVIDENDS, DISTRIBUTIONS AND TAXES
In addition to any increase in the value of your shares, you may receive
two kinds of return from the Fund: dividends and capital gains distributions.
Dividends. Dividends from stocks and interest earned from other
investments are the Fund's main sources of income. Substantially all of this
income, less expenses, is distributed at least semi-annually to shareholders.
The per share dividends and distributions on each class of shares will be
reduced as a result of any account maintenance, distribution and transfer agency
fees applicable to that class. See "Additional Information--Determination of Net
Asset Value."
Your dividends will be automatically applied to purchase additional shares
of the Fund through our shareholder reinvestment program at the net asset value
per share on the ex-dividend date, unless you notify your Merrill Lynch
financial consultant or the Transfer Agent in writing that you would rather
receive dividends in cash. There is no sales charge for purchases of additional
shares through our reinvestment program. If you give instructions to pay your
dividends in cash, your instructions will take effect 10 days after Merrill
Lynch or the Transfer Agent receives them. Dividends and distributions are
taxable to shareholders as described below whether they are reinvested in shares
of the Fund or received in cash.
Capital Gains. When the Fund sells securities from its portfolio, it can
realize capital gains or losses, depending on whether the prices for which the
securities are sold are higher or lower than the prices the Fund paid to
purchase them. Net realized capital gains represent the total profit from sales
of securities, minus total losses from sales of securities, including any losses
carried forward from prior years. The Fund distributes any net realized capital
gains to shareholders at least annually. As in the case of income dividends,
capital gains distributions will be automatically reinvested in additional
shares of the Fund at the net asset value per share in effect on the ex-dividend
date, without a sales charge, unless you give your Merrill Lynch financial
consultant or the Transfer Agent 10 days' prior instructions to pay them in
cash.
Taxes. The Fund intends to continue to qualify as a regulated investment
company ("RIC") under the Internal Revenue Code of 1986, as amended (the "Code")
and as a condition of such election the Fund intends to distribute substantially
all of its net investment income and net capital gains to shareholders. If the
Fund qualifies as a RIC, it will not be required to pay Federal income tax on
the portion of its investment company taxable income and net capital gains which
is distributed to its shareholders.
Shareholders will be subject to tax on dividends and distributions even
though a shareholder chooses to reinvest any dividends and distributions in
additional shares of the Fund. Not later than 60 days after the close of its
taxable year, the Fund will provide its shareholders with a written notice
designating the amounts of any ordinary income dividends or capital gains
distributions. A portion of the Fund's ordinary income dividends may be eligible
for the dividends received deduction allowed to corporate shareholders under the
Code, if certain requirements are met. If the Fund pays a dividend in January
which was declared in the previous October, November or December to shareholders
of record on a date during one of such months, then such dividend or
distribution will be treated for tax purposes as being paid by the Fund and
received by its shareholders on December 31 of the year in which the dividend
was declared.
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In addition, all RICs are required to pay a nondeductible 4% excise tax to
the extent the RIC does not distribute, during each calendar year, (i) 98% of
its ordinary income, determined on a calendar year basis, (ii) 98% of its
capital gains, determined, in general, on an October 31 year end, and (iii) all
ordinary income and net capital gains for previous years that were not
distributed during such years. While the Fund intends to distribute its income
and capital gains in the manner necessary to avoid imposition of the 4% excise
tax, there can be no assurance that sufficient amounts of a taxable income and
gain will be distributed to avoid imposition of the tax. In such event, the Fund
will be liable for the excise tax only on the amount by which the Fund does not
meet the foregoing distribution requirement.
Pursuant to the Fund's investment objectives, the Fund may invest in
foreign securities. Foreign taxes may be paid by the Fund as a result of tax
laws of countries in which the Fund may invest. It is impossible to determine
the amount of any such withholding at this time. Because the Fund limits its
investments in foreign securities, shareholders will not be entitled to claim
foreign tax credits with respect to their share of foreign taxes paid by the
Fund on income from investments of foreign securities held by the Fund.
To avoid being subject to a 31% Federal back-up withholding tax on
reportable dividend and capital gains distributions and on the proceeds of
redemptions, a shareholder must furnish the Fund with his taxpayer
identification number and must certify under penalty of perjury that such number
is correct. The taxpayer identification number of a shareholder who is an
individual is his social security number. An investor must also certify whether
he or she is currently subject to back-up withholding or has been notified by
the IRS that he or she will be subject to back-up withholding.
If a shareholder exercises an exchange privilege within 90 days of
acquiring shares of the Fund, then any loss recognized on the exchange will be
reduced (or any gain increased) to the extent the sales charge paid to the Fund
reduces any sales charge that would have been owed upon the purchase of the new
shares in the absence of the exchange privilege. Instead, such sales will be
treated as an amount paid for the new shares.
A loss realized on a sale or exchange of shares of the Fund will be
disallowed if other Fund shares are acquired (whether through the automatic
reinvestment of dividends or otherwise) within a 61-day period beginning 30 days
before and ending 30 days after the date the shares are disposed of. In such a
case, the basis of the shares acquired will be adjusted to reflect the
disallowed loss.
A loss on the sale or exchange of shares of the Fund held by a shareholder
for less than six months will be capital loss to the extent of any long-term
capital gains distributions paid with respect to such shares.
No gain or loss will be recognized by Class B shareholders on the
conversion of their Class B shares into Class D shares. A shareholder's basis in
the Class D shares acquired will be the same as such shareholder's basis in the
Class B shares converted, and the holding period of the acquired Class D shares
will include the holding period for the converted Class B shares.
The foregoing is a general and abbreviated summary of the applicable
provisions of the Code and Treasury regulations presently in effect. The laws of
the various states may vary as to the taxation of distributions of the Fund.
Shareholders are urged to consult their own tax advisers regarding specific
questions regarding the Federal, state or local taxation of distributions from
the Fund. For a further discussion of the tax considerations with respect to
owning Fund shares, see the discussion in the Statement of Additional
Information under "Dividends, Distributions and Taxes."
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<PAGE> 31
INVESTMENT PRACTICES AND RESTRICTIONS
Lending of Portfolio Securities. The Fund may from time to time lend
securities from its portfolio, with a value not exceeding 33 1/3% of its total
assets, to banks, brokers and other financial institutions. This practice is
intended to help the Fund increase the yield on its portfolio.
Writing of Covered Call Options. The Fund may, from time to time, sell
(i.e., "write") covered call options where the Investment Adviser determines
that such transactions will further the Fund's investment objective. A covered
call option is an option where the Fund, in return for a premium, gives another
party a right to buy particular securities owned by the Fund at a specified
price for a certain period of time. By writing a covered call option, the Fund,
in return for the premium income realized from the sale of the option, gives up
the opportunity to profit from a price increase in the underlying security above
the option exercise price, where the price increase occurs while the option is
in effect. In addition, the Fund's ability to sell the underlying security will
be limited while the option is in effect. The Fund may not write covered call
options on underlying securities having a value exceeding 15% of the value of
its total assets.
Foreign Securities. Investments in the securities of foreign issuers
involve certain considerations and risks not ordinarily associated with
investments in securities of domestic issuers. Foreign companies are not
generally subject to uniform accounting, auditing and financial standards and
requirements comparable to those applicable to U.S. companies. Foreign
securities exchanges, brokers and listed companies may be subject to less
government supervision and regulation than exists in the United States. Dividend
and interest income may be subject to withholding and other foreign taxes which
may adversely affect the net return on such investments. In addition, with
respect to certain countries, there are risks of expropriation, confiscatory
taxation, political or social instability or diplomatic developments which could
affect assets of the Fund held in foreign countries.
There may be less publicly available information about a foreign company
than a U.S. company. Foreign securities markets may have substantially less
volume than U.S. securities markets and some foreign company securities are less
liquid and more volatile than comparable securities of U.S. companies. A
portfolio of foreign securities may also be adversely affected by fluctuations
in the rates of exchange between the currencies of different nations and by
exchange control regulations. Foreign markets also have different clearance and
settlement procedures, and in certain markets there have been times when
settlements have failed to keep pace with the volume of securities transactions,
making it difficult to conduct such transactions. Delays in settlement could
result in temporary periods when assets of the Fund are uninvested and no return
is earned thereon. The inability of the Fund to make intended security purchases
due to settlement problems could cause the Fund to miss attractive investment
opportunities. Inability to dispose of a portfolio security due to settlement
problems could result either in losses to the Fund due to subsequent declines in
value of such portfolio security or, if the Fund has entered into a contract to
sell the security, could result in possible liability to the purchaser. In
addition, a portfolio which includes foreign securities can expect to have a
higher expense ratio because of the increased transaction costs on non-U.S.
securities markets and the increased costs of maintaining the custody of foreign
securities.
Like investment in foreign markets generally, investment in foreign
countries with smaller capital markets involves risks not involved in domestic
investment, including fluctuations in foreign exchange rates, less liquidity and
greater price volatility in these markets, future political and economic
developments, different legal systems and the existence or possible imposition
of exchange contracts or other foreign or U.S.
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<PAGE> 32
governmental laws or restrictions applicable to such investments. However, the
risks associated with foreign investment are heightened for investments in
smaller capital markets.
Portfolio Brokerage. Orders for transactions in portfolio securities are
placed for the Fund with a number of brokers and dealers, including Merrill
Lynch. Merrill Lynch has advised the Fund that, in transactions with Merrill
Lynch, the Fund receives a commission rate at least as favorable as the rate
Merrill Lynch charges its other customers in similar transactions.
Investment Grade Debt Securities. The Fund has no present intention of
investing in bonds rated lower than BBB by S&P or Baa by Moody's. Bonds rated
BBB (or Baa) may have speculative characteristics. In addition, changes in
economic conditions or other circumstances are more likely to lead to a weakened
capacity to make principal and interest payments than is the case with higher
grade bonds. If the rating of an instrument held by the Fund is changed so that
the instrument would no longer qualify for investment by the Fund, the Fund will
seek to dispose of that instrument as soon as practicable in light of the
circumstances and consistent with the interests of the Fund.
Illiquid Securities. The Fund may invest up to 15% of its total assets in
illiquid securities, although it will limit such investments to 10% of its total
assets to the extent required by state law. Pursuant to that restriction the
Fund may not invest in securities which cannot be readily resold because of
legal or contractual restrictions or which cannot otherwise be marketed,
redeemed, put to the issuer or a third party, or which do not mature within
seven days, or which the Board of Directors has not determined to be liquid, if,
regarding all such securities, more than 15% of its total assets, taken at
market value, would be invested in such securities.
The Fund may purchase, without regard to the above limitation, securities
that are not registered under the Securities Act of 1933, as amended (the
"Securities Act") but that can be offered and sold to "qualified institutional
buyers" under Rule 144A under the Securities Act, provided that the Fund's Board
of Directors, or the Manager pursuant to guidelines adopted by the Board,
continuously determines, based on the trading markets for the specific Rule 144A
security, that it is liquid. The Board of Directors, however, will retain
oversight and is ultimately responsible for the determinations. Since it is not
possible to predict with assurance exactly how this market for restricted
securities sold and offered under Rule 144A will develop, the Board of Directors
will carefully monitor the Fund's investments in these securities, focusing on
such factors, among others, as valuation, liquidity and availability of
information. This investment practice could have the effect of increasing the
level of illiquidity in the Fund to the extent that qualified institutional
buyers become for a time uninterested in purchasing these securities.
Investment Restrictions. The Fund has adopted certain investment
restrictions which may not be changed without the approval of the holders of a
majority of the Fund's outstanding voting securities, as defined in the
Investment Company Act. Among its more significant restrictions, the Fund may
not:
- With respect to 75% of its total assets, invest more than 5% of its
assets in the securities of any one issuer or purchase more than 10% of the
outstanding voting securities of any one company or more than 10% of any
class of a company's securities, except that such restrictions shall not
apply to securities issued or guaranteed by the U.S. Government, its
agencies and instrumentalities.
- Additional investment restrictions adopted by the Fund, which may be
changed by the Board of Directors without a vote of shareholders, provide
that the Fund may not: (1) borrow amounts in excess of 5% of the value of
the Fund's assets; (2) pledge any of its assets, except that the Fund may
pledge securities having a value of not more than 10% of its total assets
in order to secure permitted borrowings
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<PAGE> 33
from banks; (3) invest more than 5% of its assets in companies having a
record, together with its predecessors, of less than three years of
continuous operation, if more than 5% of the Fund's assets would be
invested in such securities; or (4) invest in securities which can not be
readily resold because of legal or contractual restrictions, or which can
not be marketed, redeemed or put to the issuer or a third party, if at the
time of the acquisition more than 15% of its total assets (or 10% to the
extent required by state law) would be invested in such securities.
The full text of the Fund's investment restrictions is set forth under
"Investment Objective and Policies-- Investment Restrictions" in the Statement
of Additional Information.
ADDITIONAL INFORMATION
Determination of Net Asset Value. Net asset value per share for all
classes is computed once daily as of 15 minutes after the close of business on
the New York Stock Exchange (generally 4:00 P.M., New York time) on each day the
New York Stock Exchange is open. Any assets or liabilities initially expressed
in terms of non-U.S. dollar currencies will be translated into U.S. dollars at
the prevailing market rates as quoted by one or more banks or dealers on the day
of valuation. Net asset value is determined by adding together the total market
value of all portfolio securities, cash and other assets held by the Fund, and
interest and dividends accrued. All liabilities, including accrued expenses, are
subtracted. The resulting amount is divided by the total number of shares
outstanding to arrive at the net asset value of each share. In order to
determine the price you will pay for your shares, the Fund uses the first net
asset value figure computed after the Distributor receives your order. The per
share net asset value of Class A shares generally will be higher than the per
share net asset value of shares of the other classes, reflecting the daily
expense accruals of the account maintenance, distribution and higher transfer
agency fees applicable with respect to Class B and Class C shares and the daily
expense accruals of the account maintenance fees applicable with respect to
Class D shares; moreover, the per share net asset value of Class D shares
generally will be higher than the per share net asset value of Class B and Class
C shares, reflecting the daily expense accruals of the distribution and higher
transfer agency fees applicable with respect to Class B and Class C shares. It
is expected, however, that the per share net asset value of the classes will
tend to converge (although not necessarily meet) immediately after the payment
of dividends or distributions which will differ by approximately the amount of
the expense accrual differential between the classes.
Portfolio securities which are traded on stock exchanges are valued at the
last sale price (regular way) 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 in the
over-the-counter market prior to the time of valuation. Portfolio securities
which are traded both in the over-the-counter market and on a stock exchange are
valued according to the broadest and most representative market. Securities and
assets for which market quotations are not readily available are valued at fair
value as determined in good faith by or under the direction of the Board of
Directors of the Fund.
Performance Data. The Fund may from time to time include its average
annual total return in advertisements or information furnished to present or
prospective shareholders. Average annual total return is computed separately for
Class A, Class B, Class C and Class D shares in accordance with a formula
specified by the Securities and Exchange Commission.
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<PAGE> 34
Average annual total return quotations for the specified periods will be
computed by finding the average annual compounded rates of return (based on net
investment income and any capital gains or losses on portfolio investments over
such periods) that would equate the initial amount invested to the redeemable
value of such investment at the end of each period. Average annual total return
will be computed assuming all dividends and distributions are reinvested and
taking into account all applicable recurring and nonrecurring expenses,
including any CDSC that would be applicable to a complete redemption of the
investment at the end of the specified period such as in the case of Class B and
Class C shares and the maximum initial sales charge in the case of Class A and
Class D shares. Dividends paid by the Fund with respect to all shares, to the
extent any dividends are paid, will be calculated in the same manner at the same
time on the same day and will be in the same amount, except that account
maintenance fees and distribution charges and any incremental transfer agency
costs relating to each class of shares will be borne exclusively by that class.
The Fund will include performance data for all classes of shares of the Fund in
any advertisement or information including performance data of the Fund.
The Fund also may quote total return and aggregate total return performance
data for various specified time periods. Such data will be calculated
substantially as described above, except that (1) the rates of return calculated
will not be average annual rates, but rather, actual annual, annualized or
aggregate rates of return and (2) the maximum applicable sales charge will not
be included with respect to annual or annualized rates of return calculations.
Aside from the impact on the performance data calculations of including or
excluding the maximum applicable sales charges, actual annual or annualized
total return data generally will be lower than average annual total return data
since the average annual rates of return reflect compounding; aggregate total
return data generally will be higher than average annual total return data since
the aggregate rates of return reflect compounding over a longer period of time.
In advertisements directed to investors whose purchases are subject to waiver of
the CDSC in the case of Class B and Class C shares (such as investors in certain
retirement plans) or reduced sales charges in the case of Class A and Class D
shares, performance data may take into account the reduced, and not the maximum,
sales charge or may not take into account the CDSC and therefore may reflect
greater total return since, due to the reduced sales charges or waiver of the
CDSC, a lower amount of expenses may be deducted. See "Purchase of Shares." The
Fund's total return may be expressed either as a percentage or as a dollar
amount in order to illustrate the effect of such total return on a hypothetical
$1,000 investment in the Fund at the beginning of each specified period.
Total return figures are based on the Fund's historical performance and are
not intended to indicate future performance. The Fund's total return will vary
depending on market conditions, the securities comprising the Fund's portfolio,
the Fund's operating expenses and the amount of realized and unrealized net
capital gains or losses during the period. The value of an investment in the
Fund will fluctuate and an investor's shares, when redeemed, may be worth more
or less than their original cost.
On occasion, the Fund may compare its performance to that of the Standard &
Poor's 500 Composite Stock Price Index, the Value Line Composite Index, the Dow
Jones Industrial Average, Lipper Analytical Services, Inc., or performance data
published by Morningstar Publications, Inc., Money Magazine, U.S. News & World
Report, Business Week, CDA Investment Technology, Inc., Forbes Magazine and
Fortune Magazine. From time to time, the Fund may include the Fund's Morningstar
risk-adjusted performance ratings in advertisements or supplemental sales
literature. As with other performance data, performance comparisons should not
be considered indicative of the Fund's relative performance for any future
period.
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<PAGE> 35
The Fund's average annual total return will vary depending upon market
conditions, the securities comprising the Fund's portfolio, the Fund's operating
expenses and the amount of net capital gains or losses realized by the Fund
during the period. An investment in the Fund will fluctuate and an investor's
shares, when redeemed, may be worth more or less than their original cost.
Organization of the Fund. The Fund was incorporated under Maryland law on
October 5, 1983. It has an authorized capital of 400,000,000 shares of Common
Stock, par value $0.10 per share, divided into four classes, designated Class A,
Class B, Class C and Class D Common Stock, each of which consists of 100,000,000
shares. Class A, Class B, Class C and Class D Common Stock represent interests
in the same assets of the Fund and are identical in all respects except that
Class B, Class C and Class D shares bear certain expenses related to the account
maintenance associated with such shares and Class B and Class C shares bear
certain expenses related to the distribution of such shares. Each class has
exclusive voting rights with respect to matters relating to account maintenance
and distribution expenditures, as applicable. See "Purchase of Shares." The Fund
has received an order from the Commission permitting the issuance and sale of
multiple classes of Common Stock. The Directors of the Fund may classify and
reclassify the shares of the Fund into additional classes of Common Stock at a
future date.
Shareholders are entitled to one vote for each share held and to fractional
votes for fractional shares held and will vote on the election of Directors and
any other matter submitted to a shareholder vote. The Fund does not intend to
hold meetings of shareholders in any year in which the Investment Company Act
does not require shareholders to act upon any of the following matters: (i)
election of Directors; (ii) approval of an investment advisory agreement; (iii)
approval of a distribution agreement; or (iv) ratification of selection of
independent auditors. Voting rights for Directors are not cumulative. Shares
issued are fully paid and non-assessable and have no preemptive rights. Shares
have the conversion rights described in this Prospectus. Each share of Common
Stock is entitled to participate equally in dividends and distributions declared
by the Fund and in the net assets of the Fund upon liquidation or dissolution
after satisfaction of outstanding liabilities, except that, as noted above, the
Class B, Class C and Class D shares bear certain additional expenses.
Shareholder Inquiries. Shareholder inquiries should be directed to the
Fund at the telephone number or address set forth on the cover page of this
Prospectus.
Shareholder Reports. Only one copy of each shareholder report and certain
shareholder communications will be mailed to each identified shareholder
regardless of the number of accounts such shareholder has. If a shareholder
wishes to receive separate copies of each report and communication for each of
the shareholder's related accounts the shareholder should notify in writing:
Merrill Lynch Financial Data Services, Inc.
Attn: TAMFO
P.O. Box 45289
Jacksonville, Florida 32232-5289
The written notification should include the shareholder's name, address,
tax identification number and Merrill Lynch, and/or Fund account number. If you
have any questions regarding this please call your Merrill Lynch financial
consultant or Merrill Lynch Financial Data Services, Inc. at 800-637-3863.
33
<PAGE> 36
[This page intentionally left blank]
34
<PAGE> 37
MERRILL LYNCH FUND FOR TOMORROW, INC.--AUTHORIZATION FORM (PART 1)
- --------------------------------------------------------------------------------
Note: This form may not be used for purchases through the Merrill Lynch
Blueprint(SM) Program. You may request a Merrill Lynch Blueprint(SM)
Program application by calling (800) 637-3766.
- --------------------------------------------------------------------------------
1. SHARE PURCHASE APPLICATION
I, being of legal age, wish to purchase: (choose one)
<TABLE>
<S> <C> <C> <C>
/ / Class A shares / / Class B shares / / Class C shares / / Class D shares
</TABLE>
of Merrill Lynch Fund For Tomorrow, Inc. and establish an Investment Account as
described in the Prospectus. In the event that I am not eligible to purchase
Class A shares, I understand that Class D shares will be purchased.
Basis for establishing an Investment Account:
A. I enclose a check for $.......... payable to Merrill Lynch Financial
Data Services, Inc. as an initial investment (minimum $1,000). I understand
that this purchase will be executed at the applicable offering price next to
be determined after this Application is received by you.
B. I already own shares of the following Merrill Lynch mutual funds that
would qualify for the right of accumulation as outlined in the Statement of
Additional Information: (Please list all funds. Use a separate sheet of paper
if necessary.)
<TABLE>
<S> <C>
1. ............................................................ 4. ..........................................................
2. ............................................................ 5. ..........................................................
3. ............................................................ 6. ..........................................................
</TABLE>
Name ...........................................................................
First Name Initial Last Name
Name of Co-Owner (if any) ......................................................
First Name Initial Last Name
<TABLE>
<S> <C>
Address ........................................................
................................................................ Name and Address of Employer....................................
(Zip Code)
Occupation ..................................................... ................................................................
............................................................... ................................................................
Signature of Owner Signature of Co-Owner (if any)
</TABLE>
(In the case of co-owner, a joint tenancy with right of survivorship will be
presumed unless otherwise specified.)
- --------------------------------------------------------------------------------
2. DIVIDEND AND CAPITAL GAIN DISTRIBUTION OPTIONS
<TABLE>
<S> <C> <C> <C>
Ordinary Income Dividends Long-Term Capital Gains
----------------------------- -----------------------------
SELECT / / Reinvest SELECT / / Reinvest
ONE: / / Cash ONE: / / Cash
----------------------------- -----------------------------
</TABLE>
If no election is made, dividends and capital gains will be automatically
reinvested at net asset value without a sales charge.
IF CASH, SPECIFY HOW YOU WOULD LIKE YOUR DISTRIBUTIONS PAID TO YOU: / / Check
or / / Direct Deposit to bank account
IF DIRECT DEPOSIT TO BANK ACCOUNT IS SELECTED, PLEASE COMPLETE BELOW:
I hereby authorize payment of dividend and capital gain distributions by direct
deposit to my bank account and, if necessary, debit entries and adjustments for
any credit entries made to my account in accordance with the terms I have
selected on the Merrill Lynch Fund For Tomorrow, Inc. Authorization Form.
SPECIFY TYPE OF ACCOUNT (CHECK ONE) / / checking / / savings
Name on your Account............................................................
Bank Name.......................................................................
Bank Number ............................. Account Number........................
Bank Address....................................................................
I AGREE THAT THIS AUTHORIZATION WILL REMAIN IN EFFECT UNTIL I PROVIDE WRITTEN
NOTIFICATION TO MERRILL LYNCH FINANCIAL DATA SERVICES, INC. AMENDING OR
TERMINATING THIS SERVICE.
Signature of Depositor..........................................................
Signature of Depositor ......................... Date..........................
(If joint account, both must sign)
NOTE: IF DIRECT DEPOSIT TO BANK ACCOUNT IS SELECTED, YOUR BLANK, UNSIGNED CHECK
MARKED "VOID" OR A DEPOSIT SLIP FROM YOUR SAVINGS ACCOUNT SHOULD ACCOMPANY THIS
APPLICATION.
35
<PAGE> 38
- --------------------------------------------------------------------------------
3. SOCIAL SECURITY NUMBER OR TAXPAYER IDENTIFICATION NUMBER
--------------------------------------------------------
--------------------------------------------------------
Social Security Number or Taxpayer Identification Number
Under penalty of perjury, I certify (1) that the number set forth above is my
correct Social Security Number or Taxpayer Identification Number and (2) that I
am not subject to backup withholding (as discussed under "Additional
Information--Taxes") either because I have not been notified that I am subject
thereto as a result of a failure to report all interest or dividends, or the
Internal Revenue Service ("IRS") has notified me that I am no longer subject
thereto.
INSTRUCTION: YOU MUST STRIKE OUT THE LANGUAGE IN (2) ABOVE IF YOU HAVE BEEN
NOTIFIED THAT YOU ARE SUBJECT TO BACKUP WITHHOLDING DUE TO UNDER-REPORTING AND
IF YOU HAVE NOT RECEIVED A NOTICE FROM THE IRS THAT BACKUP WITHHOLDING HAS BEEN
TERMINATED. THE UNDERSIGNED AUTHORIZES THE FURNISHING OF THIS CERTIFICATION TO
OTHER MERRILL LYNCH SPONSORED MUTUAL FUNDS.
<TABLE>
<S> <C>
......................................................... ...........................................................
Signature of Owner Signature of Co-Owner (if any)
</TABLE>
- --------------------------------------------------------------------------------
4. LETTER OF INTENTION--CLASS A AND D SHARES ONLY (SEE TERMS AND CONDITIONS IN
THE STATEMENT OF ADDITIONAL INFORMATION)
Dear Sir/Madam:
.............................., 19.....
Date of initial purchase
Although I am not obligated to do so, I intend to purchase shares of Merrill
Lynch Fund For Tomorrow, Inc. or any other investment company with an initial
sales charge or deferred sales charge for which Merrill Lynch Funds Distributor,
Inc. acts as distributor over the next 13 month period which will equal or
exceed:
<TABLE>
<S> <C> <C> <C> <C>
/ / $25,000 / / $50,000 / / $100,000 / / $250,000 / / $1,000,000
</TABLE>
Each purchase will be made at the then reduced offering price applicable to
the amount checked above, as described in the Merrill Lynch Fund For Tomorrow,
Inc. Prospectus.
I agree to the terms and conditions of this Letter of Intention. I hereby
irrevocably constitute and appoint Merrill Lynch Funds Distributor, Inc.,
my attorney, with full power of substitution, to surrender for redemption any or
all shares of Merrill Lynch Fund For Tomorrow, Inc. held as security.
<TABLE>
<S> <C>
By ........................................................ ...........................................................
Signature of Owner Signature of Co-Owner
(If registered in joint names, both must sign)
</TABLE>
In making purchases under this letter, the following are the related accounts
on which reduced offering prices are to apply:
<TABLE>
<S> <C>
(1) Name................................................... (2) Name...................................................
Account Number............................................. Account Number.............................................
</TABLE>
- --------------------------------------------------------------------------------
5. FOR DEALER ONLY
Branch Office, Address, Stamp
This form when completed should be mailed to:
Merrill Lynch Fund For Tomorrow, Inc.
c/o Merrill Lynch Financial Data Services, Inc.
Transfer Agency Mutual Fund Operations
P.O. Box 45289
Jacksonville, Florida 32232-5289
We hereby authorize Merrill Lynch Funds Distributor, Inc. to act as our agent in
connection with transactions under this authorization form and agree to notify
the Distributor of any purchases made under a Letter of Intention or Systematic
Withdrawal Plan. We guarantee the shareholder's signature.
.........................................................
Dealer Name and Address
By .............................................................................
Authorized Signature of Dealer
<TABLE>
<S> <C>
- ---------- ------------
- ---------- ------------ ............................
Branch-Code F/C No. F/C Last Name
- ---------- ---------------
- ---------- ---------------
Dealer's Customer Account No.
</TABLE>
36
<PAGE> 39
- --------------------------------------------------------------------------------
MERRILL LYNCH FUND FOR TOMORROW, INC.--AUTHORIZATION FORM (PART 2)
- --------------------------------------------------------------------------------
Note: This form is required to apply for the Systematic Withdrawal or Automatic
Investment Plans only.
- --------------------------------------------------------------------------------
1. ACCOUNT REGISTRATION
<TABLE>
<S> <C>
Name of Owner.............................................. -------------------------------------------
-------------------------------------------
Social Security No.
or Taxpayer Identification No.
Name of Co-Owner (if any)..................................
Address.................................................... Account Number...............................................
(if existing account)
...........................................................
</TABLE>
- --------------------------------------------------------------------------------
2. SYSTEMATIC WITHDRAWAL PLAN--CLASS A AND CLASS D SHARES ONLY (SEE TERMS AND
CONDITIONS IN THE STATEMENT OF ADDITIONAL INFORMATION)
MINIMUM REQUIREMENTS: $10,000 for monthly disbursements, $5,000 for
quarterly, of / / Class A or / / Class D shares in Merrill Lynch Fund For
Tomorrow, Inc. at cost or current offering price. Withdrawals to be made either
(check one) / / Monthly on the 24th day of each month, or N Quarterly on the
24th day of March, June, September and December. If the 24th falls on a weekend
or holiday, the next succeeding business day will be utilized. Begin systematic
withdrawal on ............ or as soon as possible thereafter.
(month)
SPECIFY HOW YOU WOULD LIKE YOUR WITHDRAWAL PAID TO YOU (CHECK ONE):
/ / $........ or / / ........% of the current value of / / Class A or
/ / Class D shares in the account.
SPECIFY WITHDRAWAL METHOD: / / check or / / direct deposit to bank account
(check one and complete part (a) or (b) below):
DRAW CHECKS PAYABLE (CHECK ONE):
(a) I hereby authorize payment by check
/ / as indicated in Item 1.
/ / to the order of..........................................................
Mail to (check one)
/ / the address indicated in Item 1.
/ / Name (please print)......................................................
Address.........................................................................
.........................................................................
Signature of Owner
........................................................... Date.........
Signature of Co-Owner (if any).............................................
(b) I HEREBY AUTHORIZE PAYMENT BY DIRECT DEPOSIT TO BANK ACCOUNT AND, IF
NECESSARY, DEBIT ENTRIES AND ADJUSTMENTS FOR ANY CREDIT ENTRIES MADE TO MY
ACCOUNT. I AGREE THAT THIS AUTHORIZATION WILL REMAIN IN EFFECT UNTIL I PROVIDE
WRITTEN NOTIFICATION TO MERRILL LYNCH FINANCIAL DATA SERVICES, INC. AMENDING OR
TERMINATING THIS SERVICE.
Specify type of Account (check one): / / checking / / savings
Name on your account............................................................
Bank Name.......................................................................
Bank Number ............................................ Account Number.........
Bank Address....................................................................
................................................................................
Signature of Depositor
................................................................. Date..........
Signature of Depositor..........................................................
(If joint account, both must sign)
NOTE: IF DIRECT DEPOSIT IS ELECTED, YOUR BLANK, UNSIGNED CHECK MARKED "VOID" OR
A DEPOSIT SLIP FROM YOUR SAVINGS ACCOUNT SHALL ACCOMPANY THIS APPLICATION.
37
<PAGE> 40
- --------------------------------------------------------------------------------
3. APPLICATION FOR AUTOMATIC INVESTMENT PLAN
I hereby request that Merrill Lynch Financial Data Services, Inc. draw an
automated clearing house ("ACH") debit on my checking account as described below
each month to purchase (choose one):
/ / Class A shares / / Class B shares / / Class C shares / / Class D shares
of Merrill Lynch Fund For Tomorrow, Inc. subject to the terms set forth below.
In the event that I am not eligible to purchase Class A shares, I understand
that Class D shares will be purchased.
MERRILL LYNCH FINANCIAL DATA SERVICES, INC.
You are hereby authorized to draw an ACH debit each month on my bank account for
investment in Merrill Lynch Fund For Tomorrow, Inc., as indicated below:
Amount of each ACH debit $...................................................
Account Number...............................................................
Please date and invest ACH debits on the 20th of each month beginning
.......................... or as soon as thereafter as possible.
(month)
I agree that you are preparing these ACH debits voluntarily at my request and
that you shall not be liable for any loss arising from any delay in preparing or
failure to prepare any such debit. If I change banks or desire to terminate or
suspend this program, I agree to notify you promptly in writing. I hereby
authorize you to take any action to correct erroneous ACH debits of my bank
account or purchases of fund shares including liquidating shares of the Fund and
crediting my bank account. I further agree that if a debit is not honored upon
presentation, Merrill Lynch Financial Data Services, Inc. is authorized to
discontinue immediately the Automatic Investment Plan and to liquidate
sufficient shares held in my account to offset the purchase made with the
dishonored debit.
.................. ...........................................
Date Signature of Depositor
...........................................
Signature of Depositor
(If joint account, both must sign)
AUTHORIZATION TO
HONOR ACH DEBITS
DRAWN BY MERRILL LYNCH FINANCIAL
DATA SERVICES, INC.
To..........................................................................Bank
(Investor's Bank)
Bank Address....................................................................
City ............ State ............ Zip Code...................................
As a convenience to me, I hereby request and authorize you to pay and charge to
my account ACH debits drawn on my account by and payable to Merrill Lynch
Financial Data Services, Inc. I agree that your rights in respect to each such
debit shall be the same as if it were a check drawn on you and signed personally
by me. This authority is to remain in effect until revoked by me in writing.
Until you receive such notice, you shall be fully protected in honoring any such
debit. I further agree that if any such debit be dishonored, whether with or
without cause and whether intentionally or inadvertently, you shall be under no
liability.
................... ...........................................
Date Signature of Depositor
................... ...........................................
Bank Account Number Signature of Depositor
(If joint account, both must sign)
NOTE: IF AUTOMATIC INVESTMENT PLAN IS ELECTED, YOUR BLANK, UNSIGNED CHECK MARKED
"VOID" SHOULD ACCOMPANY THIS APPLICATION.
38
<PAGE> 41
Investment Adviser
Merrill Lynch Asset Management
Administrative Offices:
800 Scudders Mill Road
Plainsboro, New Jersey
Mailing Address:
P.O. Box 9011
Princeton, New Jersey 08543-9011
Distributor
Merrill Lynch Funds Distributor, Inc.
Administrative Offices:
800 Scudders Mill Road
Plainsboro, New Jersey
Mailing Address:
P.O. Box 9011
Princeton, New Jersey 08543-9011
Custodian
The Bank of New York
90 Washington Street, 12th Floor
New York, New York 10286
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
Administrative Offices:
Transfer Agency Mutual Fund Operations
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
Mailing Address:
P.O. Box 45289
Jacksonville, Florida 32232-5289
Independent Auditors
Deloitte & Touche LLP
117 Campus Drive
Princeton, New Jersey 08540
Counsel
Shereff, Friedman, Hoffman & Goodman, LLP
919 Third Avenue
New York, New York 10022
<PAGE> 42
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, IN CONNECTION
WITH THE OFFER CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH OTHER
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE FUND, THE INVESTMENT ADVISER OR THE DISTRIBUTOR. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFERING IN ANY STATE IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE
MADE.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Fee Table.............................. 2
Merrill Lynch Select Pricing(SM)
System............................... 3
Financial Highlights................... 8
Investment Objective and Policies...... 10
The Fund and Its Management............ 11
Purchase of Shares..................... 13
Initial Sales Charge
Alternatives--Class A and Class D
Shares............................ 15
Deferred Sales Charge Alternatives--
Class B and Class C Shares........ 17
Distribution Plans................... 20
Limitations on the Payment of
Deferred Sales Charges............ 22
Repurchase and Redemption of Shares.... 22
Repurchase........................... 22
Redemption........................... 23
Reinstatement Privilege--Class A and
Class D Shares.................... 24
Shareholder Services................... 24
Dividends, Distributions and Taxes..... 27
Investment Practices and
Restrictions......................... 29
Additional Information................. 31
Determination of Net Asset Value..... 31
Performance Data..................... 31
Organization of the Fund............. 33
Shareholder Inquiries................ 33
Shareholder Reports.................. 33
Authorization Form..................... 35
</TABLE>
Code #10227-0595
[LOGO]
MERRILL LYNCH FUND
FOR TOMORROW, INC.
ART WORK
PROSPECTUS
May 30, 1995
Distributor:
Merrill Lynch
Funds Distributor, Inc.
This prospectus should be
retained for future reference.
<PAGE> 43
STATEMENT OF ADDITIONAL INFORMATION
MAY 30, 1995
MERRILL LYNCH FUND FOR TOMORROW, INC.
P.O. BOX 9011, PRINCETON, NEW JERSEY 08543-9011 - PHONE NO. (609) 282-2800
---------------------
Merrill Lynch Fund For Tomorrow, Inc. (the "Fund") is a mutual fund that
has as its primary investment objective long-term growth of capital. In seeking
to accomplish its objective the Fund invests in a quality-oriented portfolio of
securities, primarily common stocks, of companies that the Fund's management
believes are well positioned to benefit from demographic and cultural changes,
primarily as they affect future consumer markets. The Fund is designed
primarily, but not exclusively, for younger investors who desire a long-term
investment in the stock market.
Pursuant to the Merrill Lynch Select Pricing(SM) System, the Fund offers
four classes of shares, each with a different combination of sales charges,
ongoing fees and other features. The Merrill Lynch Select Pricing(SM) System
permits an investor to choose the method of purchasing shares that the
investor believes is most beneficial given the amount of the purchase, the
length of time the investor expects to hold the shares and other relevant
circumstances.
---------------------
A Prospectus for the Fund dated May 30, 1995, which provides the basic
information you should know before investing in the Fund, may be obtained
without charge from Merrill Lynch Funds Distributor, Inc. (the "Distributor" or
"MLFD"), P.O. Box 9011, Princeton, New Jersey 08543-9011, (609) 282-2800 or from
your securities dealer. This Statement of Additional Information contains
information in addition to and more detailed than that set forth in the
Prospectus. It is intended to provide you additional information regarding the
activities and operations of the Fund, and should be read in conjunction with
the Prospectus.
---------------------
MERRILL LYNCH ASSET MANAGEMENT--INVESTMENT ADVISER
MERRILL LYNCH FUNDS DISTRIBUTOR, INC.--DISTRIBUTOR
<PAGE> 44
INVESTMENT OBJECTIVE AND POLICIES
As discussed in the Prospectus, the Fund may invest in convertible
securities, preferred stocks and bonds when management determines it is
advisable to do so. Such securities will be issued by companies which satisfy
the criteria, set forth in the Prospectus, utilized by management in identifying
quality companies. The Fund has no present intention of investing in bonds rated
lower than BBB by Standard & Poor's Ratings Group ("S&P") or Baa by Moody's
Investors Service, Inc. ("Moody's"). See "Investment Practices and
Restrictions--Investment Grade Debt Securities" in the Prospectus.
As also discussed in the Prospectus, the Fund may, under certain
circumstances, invest all or a portion of its assets in high quality money
market securities which, for this purpose, shall include the following: (1) U.S.
Treasury bills; (2) bankers' acceptances and certificates of deposit of the 50
largest commercial banks in the United States, measured by total assets as shown
by their most recent annual financial statements; (3) commercial paper rated A-1
or A-2 by S&P or P-1 or P-2 by Moody's, or, if not rated, issued by companies
having an outstanding debt issue rated AA or better by S&P or Aa or better by
Moody's; and (4) repurchase agreements with respect to the foregoing.
MANAGEMENT OF THE FUND
Reference is made to "The Fund and Its Management" in the Prospectus for
certain information concerning management and advisory arrangements of the Fund.
The Investment Adviser. Merrill Lynch Asset Management, L.P., doing
business as Merrill Lynch Asset Management ("MLAM" or the "Investment Adviser"),
is the investment adviser of the Fund. The Investment Adviser or its affiliate,
Fund Asset Management, L.P. ("FAM"), is also the investment adviser to over 130
other registered investment companies as well as to numerous pension plans and
other institutions. The Investment Adviser is a Delaware limited partnership and
is owned and controlled by Merrill Lynch & Co., Inc., a financial services
holding company ("ML & Co.").
The Advisory Agreement. Under its investment advisory agreement with the
Fund (the "Advisory Agreement"), the Investment Adviser is responsible for the
actual management of the Fund's portfolio. Responsibility for making decisions
to buy, sell or hold a particular security rests with the Investment Adviser,
subject to review by the Board of Directors. The Investment Adviser provides the
portfolio managers for the Fund, who make investment decisions and place orders
to effect portfolio transactions for the Fund. In this regard, the Investment
Adviser has access to the total securities research and economic research
facilities of Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill
Lynch"). Pursuant to the Advisory Agreement, the Investment Adviser also
performs certain administrative and management services for the Fund. The
Advisory Agreement obligates the Investment Adviser 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,
and to pay the fees of all Directors of the Fund who are affiliated with ML &
Co. or any of its subsidiaries. Portfolio accounting services are provided for
the Fund by the Investment Adviser and the Fund reimburses the Investment
Adviser for its costs in connection with such services.
The Advisory Agreement will continue in effect until March 31, 1996.
Thereafter, it may continue in effect from year to year if approved at least
annually by the vote of a majority of Directors of the Fund or by the holders of
a majority of the Fund's outstanding shares. Any such continuation also requires
approval by a majority of the Directors who are not parties to the Advisory
Agreement or "interested persons" of any such party as defined in the Act by
vote cast in person at a meeting called for such purpose. The Advisory
2
<PAGE> 45
Agreement may be terminated at any time, without penalty, on sixty days' written
notice by the Fund's Board of Directors, by the holders of a majority of the
Fund's outstanding voting securities or by the Investment Adviser. The Advisory
Agreement automatically terminates in the event of its assignment (as defined in
the Investment Company Act and the rules thereunder).
The Advisory Agreement provides that the Fund will pay the Investment
Adviser a monthly fee based upon the average daily value of the Fund's net
assets at the following annual rate: 0.65% of the average daily net assets not
exceeding $750 million; 0.60% of the average daily net assets exceeding $750
million but not exceeding $1 billion; and 0.55% of the average daily net assets
exceeding $1 billion. Certain states in which the shares of the Fund are
qualified for sale impose limitations on the expenses of the Fund. At the date
of this Statement of Additional Information, the most restrictive annual expense
limitations require that the Investment Adviser reimburse the Fund in any amount
necessary (up to the amount of the advisory fee) to prevent the Fund's aggregate
ordinary operating expenses (excluding interest, taxes, distribution and
brokerage fees and commissions, and extraordinary charges such as litigation
costs) from exceeding in any fiscal year 2.5% of the Fund's first $30,000,000 of
average net assets, 2.0% of the next $70,000,000 of average net assets and 1.5%
of the remaining average net assets. No payment of the investment advisory fee
will be made to the Investment Adviser which would result in Fund expenses
exceeding on a cumulative annualized basis the most restrictive applicable
expense limitation in effect at the time of such payment. To date, no
reimbursement of expenses has been required pursuant to the applicable expense
limitation provisions discussed above. For the Fund's fiscal years ended January
31, 1995, January 31, 1994 and January 31, 1993, the Investment Adviser earned a
fee of $2,169,115, $2,782,877 and $3,019,482, respectively, from the Fund. At
April 30, 1995, the net assets of the Fund aggregated approximately $285.6
million. At this level, the annual management fee would aggregate approximately
$1.9 million.
DIRECTORS AND OFFICERS
The Directors and executive officers of the Fund and their principal
occupations for at least the last five years are set forth below. Unless
otherwise noted, the address of each Director and executive officer is P.O. Box
9011, Princeton, New Jersey 08543-9011.
ARTHUR ZEIKEL (62)--President and Director (1)--President of the Investment
Adviser (which term as used herein includes its corporate predecessors) since
1977; President of FAM (which term as used herein includes its corporate
predecessors) since 1977; President and Director of Princeton Services since
1993; Executive Vice President of ML & Co. since 1990; Executive Vice President
of Merrill Lynch since 1990 and Senior Vice President from 1985 to 1990;
Director of Merrill Lynch Funds Distributor, Inc. ("MLFD" or the "Distributor").
RONALD W. FORBES (53)--Director--School of Business, BA 309, SUNY Albany,
1400 Washington Avenue, Albany, New York 12222. Professor of Finance, School of
Business, State University of New York at Albany, since 1989.
CYNTHIA A. MONTGOMERY (42)--Director--Harvard Business School, Soldiers
Field Road, Boston, Massachusetts 02163. Professor, Harvard Business School
since 1989; Associate Professor, J.L.--Kellogg Graduate School of Management,
Northwestern University, 1985-1989; Assistant Professor, Graduate School of
Business Administration, The University of Michigan, 1979-1985; Director, UNUM
Corporation.
3
<PAGE> 46
CHARLES C. REILLY(63)--Director--9 Hampton Harbor Road, Hampton Bays, New
York 11946. Self-employed financial consultant since 1990; President and Chief
Investment Officer of Verus Capital, Inc. from 1979-1990; Senior Vice President
of Arnhold and S. Bleichroeder, Inc. from 1973-1990; Adjunct Professor, Columbia
University Graduate School of Business, 1990; Adjunct Professor, Wharton School,
University of Pennsylvania, 1990.
KEVIN A. RYAN (62)--Director--127 Commonwealth Avenue, Chestnut Hill,
Massachusetts 02167. Professor of Education at Boston University since 1982;
Founder and current Director of The Boston University Center for the Advancement
of Ethics and Character; Formerly taught on the faculties of the University of
Chicago, Stanford University and The Ohio State University.
RICHARD R. WEST (56)--Director--482 Tepi Drive, Southbury, Connecticut
06488. Professor of Finance, and Dean from 1984 to 1993, of New York University
Leonard N. Stern School of Business Administration; Professor of Finance at the
Amos Tuck School of Business Administration, Dartmouth College, from 1976-1984
and Dean from 1976-1983; Director of Bowne & Co., Inc., Vornado, Inc. (real
estate holding company), Smith Corona Inc. (manufacturer of typewriters and word
processors) and Alexander's, Inc. (retailer).
TERRY K. GLENN (54)--Executive Vice President (1)--Executive Vice President
of the Investment Adviser and FAM since 1983; Executive Vice President of
Princeton Services since 1993; President of Distributor since 1986 and Director
thereof since 1991.
NORMAN R. HARVEY (61)--Senior Vice President (1)--Senior Vice President of
the Investment Adviser and FAM since 1982.
VINCENT P. DILEO (55)--Vice President (1)--Portfolio Manager of the
Investment Adviser since 1984.
DONALD C. BURKE (34)--Vice President (1)--Vice President and Director of
Taxation of the Investment Adviser since 1990; Employee with Deloitte & Touche
LLP from 1982 until 1990.
GERALD M. RICHARD (45)--Treasurer (1)--Senior Vice President and Treasurer
of the Investment Adviser and FAM; Senior Vice President and Treasurer of
Princeton Services since 1993; Vice President of the Distributor since 1981, and
Treasurer since 1984.
SUSAN B. BAKER (36)--Secretary (1)--Vice President of the Investment
Adviser since 1993; attorney associated with the Investment Adviser since 1987;
attorney in private practice from 1985-1987.
- ---------------
(1) Interested person, as defined in the Act, of the Fund.
Mr. Zeikel, a Director of the Fund, and the officers of the Fund owned on
April 30, 1995 an aggregate of less than 1% of the outstanding shares of Common
Stock of ML & Co.
The Fund has an Audit and Nominating Committee consisting of all of the
Directors of the Fund who are not interested persons of the Fund.
As of April 30, 1995, the officers and Directors of the Fund as a group (12
persons) owned less than 1% of the outstanding shares of the Fund. Each
unaffiliated Director is paid a fee by the Fund of $1,000 per year plus $400 per
meeting, plus actual out-of-pocket expenses for each meeting of the Board of
Directors attended. The Fund also compensates each member of the Audit and
Nominating Committee of the Board of Directors, with a fee of $1,000 per year.
In addition, the Chairman of the Committee receives an annual fee of $1,000 for
serving as Chairman of the Committee. These fees and expenses aggregated $20,420
for the fiscal year ended January 31, 1995.
4
<PAGE> 47
The following table sets forth the compensation paid by the Fund to the
non-interested Directors for the fiscal year ended January 31, 1995 and the
aggregate compensation paid by all investment companies advised by MLAM and its
affiliate, FAM ("MLAM/FAM Advised Funds") to the non-interested Directors for
the calendar year ended December 31, 1994.
<TABLE>
<CAPTION>
TOTAL
COMPENSATION
FROM FUND AND
AGGREGATE PENSION OR RETIREMENT MLAM/FAM ADVISED
COMPENSATION BENEFITS ACCRUED AS FUNDS PAID TO
NAME OF DIRECTOR FROM FUND PART OF FUND EXPENSES DIRECTORS(1)
- ---------------------------------- ------------ ---------------------- ----------------
<S> <C> <C> <C>
Ronald W. Forbes.................. $ 6,500.00 None $154,400
Cynthia A. Montgomery............. $ 1,233.34 None $133,817
Charles C. Reilly................. $ 6,500.00 None $276,900
Kevin A. Ryan..................... $ 6,500.00 None $154,400
Richard R. West................... $ 7,500.00 None $300,900
</TABLE>
- ---------------
(1) In addition to the Fund, the Directors served on other MLAM/FAM Advised
Funds as follows: Mr. Forbes (36 funds); Ms. Montgomery (36 funds); Mr.
Reilly (54 funds); Mr. Ryan (36 funds); and Mr. West (54 funds).
PURCHASE OF SHARES
Reference is made to "Purchase of Shares" in the Prospectus for certain
information as to the purchase of Fund shares.
The Fund issues four classes of shares under the Merrill Lynch Select
PricingSM System: shares of Class A and Class D are sold to investors choosing
the initial sales charge alternatives, and shares of Class B and Class C are
sold to investors choosing the deferred sales charge alternatives. Each Class A,
Class B, Class C and Class D share of the Fund represents an identical interest
in the investment portfolio of the Fund and has the same rights, except that
Class B, Class C and Class D shares bear the expenses of the ongoing account
maintenance fees, and Class B and Class C shares bear the expenses of the
ongoing distribution fees and the additional incremental transfer agency costs
resulting from the deferred sales charge arrangements. Class B, Class C and
Class D shares each have exclusive voting rights with respect to the Rule 12b-1
distribution plan adopted with respect to such class pursuant to which the
account maintenance and/or distribution fees are paid. Each class has different
exchange privileges. See "Shareholder Services--Exchange Privilege."
The Merrill Lynch Select PricingSM System is used by more than 50 mutual
funds advised by MLAM or its affiliate, FAM. Funds advised by MLAM or FAM are
referred to herein as "MLAM-advised mutual funds."
The Fund has entered into separate distribution agreements with the
Distributor in connection with the continuous offering of each class of shares
of the Fund (the "Distribution Agreements"). The Distribution Agreements
obligate the Distributor to pay certain expenses in connection with the offering
of each class of shares of the Fund. After the prospectuses, statements of
additional information and periodic reports have been prepared, set in type and
mailed to shareholders, the Distributor pays for the printing and distribution
of copies thereof used
5
<PAGE> 48
in connection with the offering to dealers and investors. The Distributor also
pays for other supplementary sales literature and advertising costs. The
Distribution Agreements are subject to the same renewal requirements and
termination provisions as the Advisory Agreement described above.
INITIAL SALES CHARGE ALTERNATIVES--CLASS A AND CLASS D SHARES
The gross sales charges for the sale of Class A shares for the fiscal years
ended January 31, 1995, 1994 and 1993 were $6,725, $44,720 and $83,818, of which
the Distributor received $354, $2,638 and $5,098 and Merrill Lynch received
$6,371, $42,082 and $78,720, respectively. During the fiscal year ended January
31, 1995, the Distributor received no CDSCs with respect to Class A shares for
which the initial sales charge was waived. The gross sales charges for the sale
of Class D shares of the Fund for the fiscal period October 21, 1994
(commencement of operations for Class D shares) to January 31, 1995 were $9,400,
of which $772 and $8,628 were received by the Distributor and Merrill Lynch,
respectively. For the same period, no CDSCs were received with respect to Class
D shares for which the initial sales charge was waived.
The term "purchase," as used in the Prospectus and this Statement of
Additional Information in connection with an investment in Class A and Class D
shares of the Fund, refers to a single purchase by an individual, or to
concurrent purchases, which in the aggregate are at least equal to the
prescribed amounts, by an individual, his spouse and their children under the
age of 21 years purchasing shares for his or their own account and to single
purchases by a trustee or other fiduciary purchasing shares for a single trust
estate or single fiduciary account although more than one beneficiary is
involved. The term "purchase" also includes purchases by any "company," as that
term is defined in the Investment Company Act, but does not include purchases by
any such company which has not been in existence for at least six months or
which has no purpose other than the purchase of shares of the Fund or shares of
other registered investment companies at a discount; provided, however, that it
shall not include purchases by any group of individuals whose sole
organizational nexus is that the participants therein are credit cardholders of
a company, policyholders of an insurance company, customers of either a bank or
broker-dealer or clients of an investment adviser.
REDUCED INITIAL SALES CHARGES
Right of Accumulation. Reduced sales charges are applicable through a
right of accumulation under which eligible investors are permitted to purchase
shares of the Fund subject to an initial sales charge at the offering price
applicable to the total of (a) the public offering price of the shares then
being purchased plus (b) an amount equal to the then current net asset value or
cost, whichever is higher, of the purchaser's combined holdings of all classes
of shares of the Fund and of other MLAM-advised mutual funds. For any such right
of accumulation to be made available, the Distributor must be provided at the
time of purchase, by the purchaser or the purchaser's securities dealer, with
sufficient information to permit confirmation of qualification. Acceptance of
the purchase order is subject to such confirmation. The right of accumulation
may be amended or terminated at any time. Shares held in the name of a nominee
or custodian under pension, profit-sharing, or other employee benefit plans may
not be combined with other shares to qualify for the right of accumulation.
Letter of Intention. Reduced sales charges are applicable to purchases
aggregating $25,000 or more of Class A or Class D shares of the Fund, or any
other MLAM-advised mutual funds, made within a 13-month period starting with the
first purchase pursuant to a Letter of Intention in the form provided in the
Prospectus. The Letter of Intention is available only to investors whose
accounts are maintained at Financial Data Services, Inc., the Fund's transfer
agent. The Letter of Intention is not available to employee benefit plans for
6
<PAGE> 49
which Merrill Lynch provides plan participant record-keeping services. The
Letter of Intention is not a binding obligation to purchase any amount of Class
A or Class D shares; however, its execution will result in the purchaser paying
a lower sales charge at the appropriate quantity purchase level. A purchase not
originally made pursuant to a Letter of Intention may be included under a
subsequent Letter of Intention executed within 90 days of such purchase if the
Distributor is informed in writing of this intent within such 90-day period. The
value of Class A and Class D shares of the Fund and of other MLAM-advised mutual
funds presently held, at cost or maximum offering price (whichever is higher),
on the date of the first purchase under the Letter of Intention, may be included
as a credit toward the completion of such Letter, but the reduced sales charge
applicable to the amount covered by such Letter will be applied only to new
purchases. If the total amount of shares does not equal the amount stated in the
Letter of Intention (minimum of $25,000), the investor will be notified and must
pay, within 20 days of the expiration of such Letter, the difference between the
sales charge on the Class A or Class D shares purchased at the reduced rate and
the sales charge applicable to the shares actually purchased through the Letter.
Class A or Class D shares equal to at least five percent of the intended amount
will be held in escrow during the 13-month period (while remaining registered in
the name of the purchaser) for this purpose. The first purchase under the Letter
of Intention must be at least five percent of the dollar amount of such Letter.
If a purchase during the term of such Letter would otherwise be subject to a
further reduced sales charge based on the right of accumulation, the purchaser
will be entitled on that purchase and subsequent purchases to that further
reduced percentage sales charge but there will be no retroactive reduction of
the sales charges on any previous purchase. The value of any shares redeemed or
otherwise disposed of by the purchaser prior to termination or completion of the
Letter of Intention will be deducted from the total purchases made under such
Letter. An exchange from a MLAM-advised money market fund into the Fund that
creates a sales charge will count toward completing a new or existing Letter of
Intention from the Fund.
Merrill Lynch Blueprint(SM) Program. Class D shares of the Fund are
offered to participants in the Merrill Lynch Blueprint(SM) Program
("Blueprint"). In addition, participants in Blueprint who own Class A shares of
the Fund may purchase additional Class A shares of the Fund through Blueprint.
The Blueprint Program is directed to small investors, group IRAs and
participants in certain affinity groups such as benefit plans, credit unions
and trade associations. Investors placing orders to purchase Class A or Class D
shares of the Fund through Blueprint will acquire the Class A or Class D shares
at net asset value plus a sales charge calculated in accordance with the
Blueprint sales charge schedule (i.e., up to $300 at 4.25%, $300.01 to $5,000
at 3.25% plus $3.00, and $5,000.01 or more at the standard sales charge rates
disclosed in the Prospectus). In addition, Class A or Class D shares of the
Fund are being offered at net asset value plus a sales charge of 1/2 of 1% for
corporate or group IRA programs placing orders to purchase their Class A or
Class D shares through Blueprint. Services, including the exchange privilege,
available to Class A and Class D investors through Blueprint, however, may
differ from those available to other investors in Class A and Class D shares.
Class A and Class D shares are offered at net asset value, to participants
in Blueprint through the Merrill Lynch Directed IRA Rollover Program ("IRA
Rollover Program") available from Merrill Lynch Business Financial Services, a
business unit of Merrill Lynch. The IRA Rollover Program is available to
custodian rollover assets from Employer Sponsored Retirement and Savings Plans
(see definition below) whose Trustee and/or Plan Sponsor offers the Merrill
Lynch Directed IRA Rollover Program.
Orders for purchases and redemptions of Class A or Class D shares of the
Fund may be grouped for execution purposes which, in some circumstances, may
involve the execution of such orders two business days
7
<PAGE> 50
following the day such orders are placed. The minimum initial purchase price is
$100, with a $50 minimum for subsequent purchases through Blueprint. There are
no minimum initial or subsequent purchase requirements for participants who are
part of an automatic investment plan. Additional information concerning
purchases through Blueprint, including any annual fees and transaction charges,
is available from Merrill Lynch, Pierce, Fenner & Smith Incorporated, The
Blueprint(SM) Program, P.O. Box 30441, New Brunswick, New Jersey 08989-0441.
TMA(SM) Managed Trusts. Class A shares are offered to TMA(SM) Managed
Trusts to which Merrill Lynch Trust Company provides discretionary trustee
services at net asset value.
Employer Sponsored Retirement and Savings Plans. Class A and Class D
shares are offered at net asset value to employer sponsored retirement or
savings plans, such as tax qualified retirement plans within the meaning of
Section 401(a) of the Internal Revenue Code of 1986, as amended (the "Code"),
deferred compensation plans within the meaning of Section 403(b) and 457 of the
Code, other deferred compensation arrangements, Voluntary Employee Benefits
Association ("VEBA") plans, and non-qualified After Tax Savings and Investment
programs, maintained on the Merrill Lynch Group Employee Services system, herein
referred to as "Employer Sponsored Retirement or Savings Plans," provided the
plan has accumulated at least $20 million in MLAM-advised mutual funds (in the
case of Class A shares) or $5 million in MLAM-advised mutual funds (in the case
of Class D shares). Class D shares may be offered at net asset value to new
Employer Sponsored Retirement or Savings Plans, provided the plan has $3 million
or more initially invested in MLAM-advised mutual funds. Assets of Employer
Sponsored Retirement or Savings Plans sponsored by the same sponsor or an
affiliated sponsor may be aggregated. Class A shares and Class D shares also are
offered at net asset value to Employer Sponsored Retirement or Savings Plans
that have at least 1,000 employees eligible to participate in the plan (in the
case of Class A shares) or between 500 and 999 employees eligible to participate
in the plan (in the case of Class D shares). Employees eligible to participate
in Employer Sponsored Retirement or Savings Plans of the same sponsoring
employer or its affiliates may be aggregated. Tax qualified retirement plans
within the meaning of Section 401(a) of the Code meeting any of the foregoing
requirements and which are provided specialized services (e.g., plans whose
participants may direct on a daily basis their plan allocations among a wide
range of investments including individual corporate equities and other
securities in addition to mutual fund shares) by the Merrill Lynch
Blueprint(SM) Program, are offered Class A shares at a price equal to net asset
value per share plus a reduced sales charge of 0.50%.
Any Employer Sponsored Retirement or Savings Plan which does not meet the
above described qualifications to purchase Class A or Class D shares at net
asset value has the option of (i) purchasing Class D shares at the initial sales
charge schedule disclosed in the Prospectus for purchases of up to $1,000,000
and at 0.75% for purchases of $1,000,000 or more, (ii) if the Employer Sponsored
Retirement or Savings Plan meets the specified requirements, purchasing Class B
shares with a waiver of the CDSC upon redemption, or (iii) if the Employer
Sponsored Retirement or Savings Plan does not qualify to purchase Class B shares
with a waiver upon redemption, purchasing Class B or Class C shares at their
respective CDSC schedule disclosed in the Prospectus.
Certain Employer Sponsored Retirement or Savings Plans, which were
permitted prior to October 21, 1994, to purchase Class A shares at the initial
sales charge schedule in the then current prospectus for purchases up to
$1,000,000 and at 0.75% for purchases of $1,000,000 or more, may purchase Class
A shares at the initial sales charge schedule disclosed in the Prospectus for
purchases of up to $1,000,000 and at 0.75% for
8
<PAGE> 51
purchases of $1,000,000 or more. The minimum initial and subsequent purchase
requirements are waived in connection with all the above-referenced Employer
Sponsored Retirement or Savings Plans.
Purchase Privilege of Certain Persons. Directors of the Fund, members of
the Boards of other MLAM-advised investment companies, directors and employees
of ML & Co. and its subsidiaries (the term "subsidiaries," when used herein with
respect to ML & Co., includes MLAM, FAM and certain other entities directly or
indirectly wholly-owned and controlled by ML & Co.), and any trust, pension,
profit-sharing or other benefit plan for such persons, may purchase Class A
shares of the Fund at net asset value. Under such programs, the Fund realizes
economies of scale and reduction of sales-related expenses by virtue of
familiarity with the Fund.
Employees and directors or trustees wishing to purchase shares of the Fund
must satisfy the Fund's suitability standards.
Class D shares of the Fund are offered at net asset value, without sales
charge, to an investor who has a business relationship with a Merrill Lynch
financial consultant and who has invested in a mutual fund for which Merrill
Lynch has not served as a selected dealer if the following conditions are
satisfied. First, the investor must advise Merrill Lynch that it will purchase
Class D shares of the Fund with proceeds from a redemption of such shares of
other mutual funds and that such shares have been outstanding for a period of no
less than 6 months. Second, such purchase of Class D shares must be made within
60 days after the redemption and the proceeds from the redemption must have been
maintained in the interim in cash or a money market fund.
Class D shares of the Fund are offered at net asset value, without sales
charge, to an investor who has a business relationship with a financial
consultant who joined Merrill Lynch from another investment firm within six
months prior to the date of purchase by such investor, if the following
conditions are satisfied. First, the investor must advise Merrill Lynch that it
will purchase Class D shares of the Fund with proceeds from a redemption of a
mutual fund that was sponsored by the financial consultant's previous firm and
was subject to a sales charge either at the time of purchase or on a deferred
basis. Second, the investor must also establish that such redemption had been
made within 60 days prior to the investment in the Fund, and the proceeds from
the redemption had been maintained in the interim in cash or a money market
fund.
Class D shares of the Fund also are offered at net asset value, without
sales charge, to an investor who has a business relationship with a Merrill
Lynch financial consultant and who has invested in a mutual fund sponsored by a
non-Merrill Lynch company for which Merrill Lynch has served as a selected
dealer and when Merrill Lynch has either received or given notice that such
arrangement will be terminated ("notice"), if the following conditions are
satisfied. First, the investor must purchase Class D shares of the Fund with
proceeds from a redemption of shares of such other mutual fund and such fund was
subject to a sales charge either at the time of purchase or on a deferred basis.
Second, such purchase of Class D shares must be made within 90 days after such
notice.
Closed-End Fund Investment Option. Class A shares of the Fund and other
MLAM-advised mutual funds ("Eligible Class A Shares") are offered at net asset
value to shareholders of certain closed-end funds advised by the Investment
Adviser or FAM who purchased such closed-end fund shares prior to October 21,
1994 and wish to reinvest the net proceeds from a sale of their closed-end fund
shares of common stock in Eligible Class A Shares if the conditions set forth
below are satisfied. Alternatively, closed-end fund shareholders who purchased
such shares on or after October 21, 1994 and wish to reinvest the net proceeds
9
<PAGE> 52
from a sale of their closed-end fund shares are offered Class A shares (if
eligible to buy Class A shares) or Class D shares of the Fund and other
MLAM-advised mutual funds ("Eligible Class D Shares"), if the following
conditions are met. First, the sale of the closed-end fund shares must be made
through Merrill Lynch, and the net proceeds therefrom must be immediately
reinvested in Eligible Class A or Class D Shares. Second, the closed-end fund
shares must either have been acquired in the initial public offering or be
shares representing dividends from shares of common stock acquired in such
offering. Third, the closed-end fund shares must have been continuously
maintained in a Merrill Lynch securities account. Fourth, there must be a
minimum purchase of $250 to be eligible for the investment option. Class A
shares of the Fund are offered at net asset value to shareholders of Merrill
Lynch Senior Floating Rate Fund, Inc. ("Senior Floating Rate Fund") who wish to
reinvest the net proceeds from a sale of certain of their shares of common stock
of Senior Floating Rate Fund in shares of the Fund. In order to exercise this
investment option, Senior Floating Rate Fund shareholders must sell their Senior
Floating Rate Fund shares to the Senior Floating Rate Fund in connection with a
tender offer conducted by the Senior Floating Rate Fund and reinvest the
proceeds immediately in the Fund. This investment option is available only with
respect to the proceeds of Senior Floating Rate Fund shares as to which no Early
Withdrawal Charge (as defined in the Senior Floating Rate Fund prospectus) is
applicable. Purchase orders from Senior Floating Rate Fund shareholders wishing
to exercise this investment option will be accepted only on the day that the
related Senior Floating Rate Fund tender offer terminates and will be effected
at the net asset value of the Fund at such day.
Acquisition of Certain Investment Companies. The public offering price of
Class D shares may be reduced to the net asset value per Class D share in
connection with the acquisition of the assets of or merger or consolidation with
a personal holding company or a public or private investment company. The value
of the assets or company acquired in a tax-free transaction may be adjusted in
appropriate cases to reduce possible adverse tax consequences to the Fund which
might result from an acquisition of assets having net unrealized appreciation
which is disproportionately higher at the time of acquisition than the realized
or unrealized appreciation of the Fund. The issuance of Class D shares for
consideration other than cash is limited to bona fide reorganizations, statutory
mergers or other acquisitions of portfolio securities which (i) meet the
investment objectives and policies of the Fund; (ii) are acquired for investment
and not for resale (subject to the understanding that the disposition of the
Fund's portfolio securities shall at all times remain within its control); and
(iii) are liquid securities, the value of which is readily ascertainable, which
are not restricted as to transfer either by law or liquidity of market (except
that the Fund may acquire through such transactions restricted or illiquid
securities to the extent the Fund does not exceed the applicable limits on
acquisition of such securities set forth under "Investment Objective and
Policies" herein).
DISTRIBUTION PLANS
Reference is made to "Purchase of Shares--Distribution Plans" in the
Prospectus for certain information with respect to the separate distribution
plans for Class B, Class C and Class D shares pursuant to Rule 12b-1 under the
Act (each, a "Distribution Plan") with respect to the account maintenance and/or
distribution fees paid by the Fund to the Distributor with respect to such
classes.
Payments of the account maintenance fees and/or distribution fees are
subject to the provisions of Rule 12b-1 under the Act. Among other things, each
Distribution Plan provides that the Distributor shall provide and the Directors
shall review quarterly reports of the disbursement of the account maintenance
fees and/or distribution fees paid to the Distributor. In their consideration of
each Distribution Plan, the Directors
10
<PAGE> 53
must consider all factors they deem relevant, including information as to the
benefits of the Distribution Plan to the Fund and its related class of
shareholders. Each Distribution Plan further provides that, so long as the
Distribution Plan remains in effect, the selection and nomination of Directors
who are not "interested persons" of the Fund, as defined in the Act (the
"Independent Directors"), shall be committed to the discretion of the
Independent Directors then in office. In approving each Distribution Plan in
accordance with Rule 12b-1, the Independent Directors concluded that there is
reasonable likelihood that such Distribution Plan will benefit the Fund and its
related class of shareholders. Each Distribution Plan can be terminated at any
time, without penalty, by the vote of a majority of the Independent Directors or
by the holders of a majority of the outstanding related class of voting
securities of the Fund. A Distribution Plan cannot be amended to increase
materially the amount to be spent by the Fund without the approval of the
related class of shareholders, and all material amendments are required to be
approved by the vote of the Directors, including a majority of the Independent
Directors who have no direct or indirect financial interest in such Distribution
Plan, cast in person at a meeting called for that purpose. Rule 12b-1 further
requires that the Fund preserve copies of each Distribution Plan and any report
made pursuant to such plan for a period of not less than six years from the date
of such Distribution Plan or such report, the first two years in an easily
accessible place.
For the fiscal year ended January 31, 1995, the Fund paid the Distributor
$2,927,385 (based on average net assets relating to the Class B shares of
approximately $292.7 million) pursuant to the Class B Distribution Plan, all of
which was paid to Merrill Lynch for providing account maintenance and
distribution-related services in connection with the Class B shares. For the
period October 21, 1994 (commencement of operations) to January 31, 1995, the
Fund paid the Distributor $93 (based on average net assets relating to the Class
C shares of approximately $33,475) pursuant to the Class C Distribution Plan,
all of which was paid to Merrill Lynch for providing account maintenance and
distribution-related services in connection with the Class C shares. For the
same period, the Fund paid the Distributor $78,494 (based on average net assets
relating to the Class D shares of approximately $112.4 million) pursuant to the
Class D Distribution Plan, all of which was paid to Merrill Lynch for providing
account maintenance-related services in connection with the Class D shares. At
April 30, 1995, the net assets of the Fund subject to the Class B Distribution
Plan aggregated approximately $89.2 million. At this asset level, the annual fee
payable pursuant to the Class B Distribution Plan would aggregate approximately
$668,679. At April 30, 1995, the net assets of the Fund subject to the Class C
Distribution Plan aggregated approximately $90,187. At this asset level, the
annual fee payable pursuant to the Class C Distribution Plan would aggregate
approximately $676. At April 30, 1995, the net assets of the Fund subject to the
Class D Distribution Plan aggregated approximately $188.0 million. At this asset
level, the annual fee pursuant to the Class D Distribution Plan would aggregate
approximately $469,982.
LIMITATIONS ON THE PAYMENT OF DEFERRED SALES CHARGES
The maximum sales charge rule in the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. ("NASD") imposes a limitation on certain
asset-based sales charges such as the distribution fee and the CDSC borne by the
Class B and Class C shares, but not the account maintenance fee. The maximum
sales charge rule is applied separately to each class. As applicable to the
Fund, the maximum sales charge rule limits the aggregate of distribution fee
payments and CDSCs payable by the Fund to (1) 6.25% of eligible gross sales of
Class B shares and Class C shares, computed separately (defined to exclude
shares issued pursuant to dividend reinvestments and exchanges), plus (2)
interest on the unpaid balance for the respective class, computed separately, at
the prime rate plus 1% (the unpaid balance being the maximum amount
11
<PAGE> 54
payable minus amounts received from the payment of the distribution fee and the
CDSC). In connection with the Class B shares, the Distributor has voluntarily
agreed to waive interest charges on the unpaid balance in excess of 0.50% of
eligible gross sales. Consequently, the maximum amount payable to the
Distributor (referred to as the "voluntary maximum") in connection with the
Class B shares is 6.75% of eligible gross sales. The Distributor retains the
right to stop waiving the interest charges at any time. To the extent payments
would exceed the voluntary maximum, the Fund will not make further payments of
the distribution fee with respect to Class B shares, and any CDSCs will be paid
to the Fund rather than to the Distributor; however, the Fund will continue to
make payments of the account maintenance fee. In certain circumstances the
amount payable pursuant to the voluntary maximum may exceed the amount payable
under the NASD formula. In such circumstances payment in excess of the amount
payable under the NASD formula will not be made.
The following table sets forth comparative information as of January 31,
1995, with respect to the Class B and Class C shares of the Fund indicating the
maximum allowable payments that can be made under the NASD maximum sales charge
rule and the Distributor's voluntary maximum (Class B shares only) for the
period March 5, 1984 (commencement of the public offering of Class B shares) to
January 31, 1995, with respect to Class B shares, and for the period October 21,
1994 (commencement of public offering of Class C shares) to January 31, 1995,
with respect to Class C shares.
<TABLE>
<CAPTION>
DATA CALCULATED AS OF JANUARY 31, 1995
------------------------------------------------------------------------------------------
CLASS B
(IN THOUSANDS)
ANNUAL
DISTRIBUTION
ALLOWABLE AMOUNTS FEE AT
ELIGIBLE AGGREGATE INTEREST MAXIMUM PREVIOUSLY AGGREGATE CURRENT
GROSS SALES ON UNPAID AMOUNT PAID TO UNPAID NET ASSET
SALES(1) CHARGES BALANCE(2) PAYABLE DISTRIBUTOR(3) BALANCE LEVEL(4)
---------- --------- ---------- -------- -------------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Under NASD Rule as Adopted........ $1,132,000 $70,811 $ 43,575 $114,386 $ 53,403 $60,983 $893,898
Under Distributor's Voluntary
Waiver.......................... $1,132,000 $70,811 $ 5,664 $ 76,475 $ 53,403 $23,072 $893,898
</TABLE>
<TABLE>
<CAPTION>
CLASS C
(NOT IN THOUSANDS)
ANNUAL
DISTRIBUTION
ALLOWABLE ALLOWABLE AMOUNTS FEE AT
ELIGIBLE AGGREGATE INTEREST MAXIMUM PREVIOUSLY AGGREGATE CURRENT
GROSS SALES ON UNPAID AMOUNT PAID TO UNPAID NET ASSET
SALES(1) CHARGES BALANCE(2) PAYABLE DISTRIBUTOR(3) BALANCE LEVEL(4)
---------- --------- ---------- -------- -------------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Under NASD Rule as Adopted........ $65,334 $4,083 $50 $4,133 $70 $4,063 $597
</TABLE>
- ---------------
(1) Purchase price of all eligible Class B shares sold since March 5, 1984
(commencement of the public offering of Class B shares) and all eligible
Class C shares sold since October 21, 1994 (commencement of public offering
of Class C shares) other than shares acquired through dividend reinvestment
and the exchange privilege.
(2) Interest is computed on a monthly basis based upon the prime rate, as
reported in The Wall Street Journal, plus 1.0% as permitted under the NASD
Rule.
(3) Consists of CDSC payments, distribution fee payments and accruals. Of the
distribution fee payments made prior to July 6, 1993 under a prior plan
applicable to Class B shares at the 1.0% rate, 0.75% of average daily net
assets has been treated as a distribution fee and 0.25% of average daily net
assets has been deemed to have been a service fee and not subject to the
NASD maximum sales charge rule. See "Purchase of Shares--Distribution Plans"
in the Prospectus.
(4) Provided to illustrate the extent to which the current level of distribution
fee payments (not including any CDSC payments) is amortizing the unpaid
balance. No assurance can be given that payments of the distribution fee
will reach either the voluntary maximum or the NASD maximum.
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<PAGE> 55
REDEMPTIONS
Reference is made to "Repurchase and Redemption of Shares" in the
Prospectus for certain information as to the redemption and repurchase of Fund
shares.
Redemption Payments. Payment for shares presented for redemption will be
made by check sent within seven days after receipt by the Transfer Agent of a
shareholder's written request in proper form and, if issued, certificates for
the shares being redeemed. Such payment may be postponed or the right of
redemption suspended: (a) when the New York Stock Exchange is closed for other
than customary weekends and holidays; (b) when trading on that Exchange is
restricted; (c) when an emergency exists as a result of which disposal by the
Fund of securities owned by it is not reasonably practicable or it is not
reasonably practicable for the Fund fairly to determine the value of its net
assets; or (d) during any other period when the Securities and Exchange
Commission by order so permits. Applicable rules and regulations of the
Securities and Exchange Commission govern as to whether the conditions described
in (b) or (c) above exist.
DEFERRED SALES CHARGES--CLASS B AND CLASS C SHARES
As discussed in the Prospectus under "Purchase of Shares--Deferred Sales
Charge Alternatives-- Class B and Class C Shares," while Class B shares redeemed
within four years of purchase are subject to a CDSC under most circumstances,
the charge is waived on redemptions of Class B shares in connection with certain
post-retirement withdrawals from an Individual Retirement Account ("IRA") or
other retirement plan or on redemptions of Class B shares following the death or
disability of a Class B shareholder. Redemptions for which the waiver applies
are: (a) any partial or complete redemption in connection with a distribution
following retirement under a tax-deferred retirement plan which is permitted to
be made without tax penalty under the Internal Revenue Code of 1986, as amended
(the "Code"), or attaining age 59 1/2 in the case of an IRA or other retirement
plan, or part of series of equal periodic payments (not less frequently than
annually) made for life (or life expectancy) or any redemption resulting from
the tax-free return of an excess contribution to an IRA; or (b) any partial or
complete redemption following the death or disability (as defined in the Code)
of a Class B shareholder (including one who owns the Class B shares as joint
tenant with his or her spouse), provided the redemption is requested within one
year of the death or initial determination of disability. For the years ended
January 31, 1995, 1994 and 1993, the Distributor received contingent deferred
sales charges of $94,070, $172,596 and $218,627, respectively, with respect to
redemption of Class B shares, all of which was paid to Merrill Lynch. For the
period October 21, 1994 (commencement of operations of Class C shares) to
January 31, 1995, the Distributor received no CDSCs with respect to redemption
of Class C shares.
Merrill Lynch Blueprint(SM) Program. Class B shares are offered to certain
participants in Blueprint. Blueprint is directed to small investors and
participants in certain affinity groups such as trade associations and credit
unions. Class B shares of the Fund are offered through Blueprint only to members
of certain affinity groups. The CDSC is waived in connection with purchase
orders placed through Blueprint. Services, including the exchange privilege,
available to Class B investors through Blueprint, however, may differ from those
available to other Class B investors. Orders for purchases and redemptions of
Class B shares of the Fund will be grouped for execution purposes which, in some
circumstances, may involve the execution of such orders two business days
following the day such orders are placed. The minimum initial purchase price is
$100, with a $50 minimum for subsequent purchases through Blueprint. There is no
minimum initial or subsequent purchase requirement for investors who are part of
the Blueprint automatic investment plan. Additional
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<PAGE> 56
information concerning these Blueprint programs, including any annual fees or
transaction charges, is available from Merrill Lynch, Pierce, Fenner & Smith
Incorporated, The Blueprint(SM) Program, P.O. Box 30441, New Brunswick, New
Jersey 08989-0441.
Retirement Plans. Any Retirement Plan which does not meet the
qualifications to purchase Class A or Class D shares at net asset value has the
option of purchasing Class A or Class D shares at the sales charge schedule
disclosed in the Prospectus, or if the Retirement Plan meets the following
requirements, then it may purchase Class B shares with a waiver of the CDSC upon
redemption. The CDSC is waived for any Eligible 401(k) Plan redeeming Class B
shares. "Eligible 401(k) Plan" is defined as a retirement plan qualified under
Section 401(k) of the Code with a salary reduction feature offering a menu of
investments to plan participants. The CDSC is also waived for redemptions from a
401(a) plan qualified under the Code, provided, however, that each such plan has
the same or an affiliated sponsoring employer as an Eligible 401(k) Plan
purchasing Class B shares of MLAM-advised mutual funds ("Eligible 401(a) Plan").
Other tax qualified retirement plans within the meaning of Section 401(a) and
403(b) of the Code which are provided specialized services (e.g., plans whose
participants may direct on a daily basis their plan allocations among a menu of
investments) by independent administration firms contracted through Merrill
Lynch may also purchase Class B shares with a waiver of CDSC. The CDSC also is
waived for any Class B shares which are purchased by an Eligible 401(k) Plan or
Eligible 401(a) Plan and are rolled over into a Merrill Lynch or Merrill Lynch
Trust Company custodied IRA and held in such account at the time of redemption.
The Class B CDSC also is waived for any Class B shares which are purchased by a
Merrill Lynch rollover IRA, that was funded by a rollover from a terminated
401(k) plan managed by the MLAM Private Portfolio Group and held in such account
at the time of redemption. The minimum initial and subsequent purchase
requirements are waived in connection with all the above-referenced Retirement
Plans.
DETERMINATION OF NET ASSET VALUE
Reference is made to "Additional Information--Determination of Net Asset
Value" in the Prospectus for certain information concerning the determination of
net asset value.
The net asset value of the shares of the Fund is determined once daily
Monday through Friday as of 15 minutes after the close of business on the New
York Stock Exchange (generally 4:00 P.M., New York time) on each day during
which the New York Stock Exchange is open for trading. The New York Stock
Exchange is open weekdays except New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
Any assets or liabilities initially expressed in terms of non-U.S. dollar
currencies will be translated into U.S. dollars at the prevailing market rates
quoted by one or more banks or dealers on the day of valuation. Net asset value
will also be calculated on each other day on which there is a sufficient degree
of trading in the Fund's portfolio securities that the net asset value per share
might be materially affected, but only if on such day the Fund receives a
request to purchase or redeem its shares. The net asset value is computed by
dividing the value of the securities held by the Fund plus any cash or other
assets (including interest and dividends accrued but not received) minus all
liabilities (including accrued expenses) by the total number of shares
outstanding at such time. Expenses of the Fund, including investment advisory
fees and any account maintenance and/or distribution fees, are accrued daily.
The per share net asset value of the Class B, Class C and Class D shares
generally will be lower than the per share net asset value of the Class A shares
reflecting the daily expense accruals of the account maintenance, distribution
and higher transfer agency fees applicable with respect to the Class B and Class
C
14
<PAGE> 57
shares and the daily expense accruals of the account maintenance fees applicable
with respect to the Class D shares; moreover, the per share net asset value of
the Class B and Class C shares generally will be lower than the per share net
asset value of its Class D shares reflecting the daily expense accruals of the
distribution fees and higher transfer agency fees applicable with respect to the
Class B and Class C shares of the Fund. It is expected, however, that the per
share net asset value of the four classes will tend to converge (although not
necessarily meet) immediately after the payment of dividends or distributions,
which will differ by approximately the amount of the expense accrual
differential between the classes.
In determining net asset value per share, portfolio securities which are
traded on stock exchanges are valued at the last sale price (regular way) 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 bid price in the over-the-counter
market prior to the time of valuation. Portfolio securities which are traded
both in the over-the-counter market and on a stock exchange are valued based
upon the prices or quotes obtained from the broadest and most representative
market. Securities for which market quotations are not readily available and
other assets are valued at fair value as determined in good faith by or under
the direction of the Board of Directors of the Fund.
SHAREHOLDER SERVICES
The Fund offers a number of shareholder services described below which are
designed to facilitate investment in its shares. Full details as to each of such
services and copies of the various plans described below can be obtained from
the Fund, the Distributor or Merrill Lynch.
INVESTMENT ACCOUNT
Each shareholder whose account is maintained at the Transfer Agent has an
Investment Account and will receive statements, at least quarterly, from the
Transfer Agent. These statements will serve as transaction confirmations for
automatic investment purchases and the reinvestment of ordinary income dividends
and long-term capital gains distributions. The statements will also show any
other activity in the account since the preceding statement. Shareholders will
receive separate transaction confirmations for each purchase or sale transaction
other than automatic investment purchases and the reinvestment of ordinary
income dividends and long-term capital gains distributions. Shareholders may
make additions to their Investment Account at any time by mailing a check
directly to the Transfer Agent.
Share certificates are issued only for full shares and only upon the
specific request of the shareholder who has an Investment Account. Issuance of
certificates representing all or only part of the full shares in an Investment
Account may be requested by a shareholder directly from the Transfer Agent.
AUTOMATIC INVESTMENT PLANS
A shareholder may make additions to an Investment Account at any time by
purchasing Class A shares (if he or she is an eligible Class A investor as
described in the Prospectus) or Class B, Class C or Class D shares at the
applicable public offering price either through the shareholder's securities
dealer, or by mail directly to the Transfer Agent, acting as agent for such
securities dealer. Voluntary accumulation also can be made through a service
known as the Automatic Investment Plan whereby the Transfer Agent is authorized
through pre-authorized checks or automated clearing house debits of $50 or more
to charge the regular bank account of the
15
<PAGE> 58
shareholder on a regular basis to provide systematic additions to the Investment
Account of such shareholder. For investors who buy shares of the Fund through
the Merrill Lynch Blueprint(SM) Program, no minimum charge to the investor's
bank account is required. Investors who maintain CMA(R) accounts may arrange to
have periodic investments made in the Fund, in CMA(R) accounts or in certain
related accounts in the amounts of $100 or more ($1 for retirement accounts)
through the CMA(R) Automated Investment Program.
AUTOMATIC REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
Unless specific instructions are given as to the method of payment of
dividends and capital gains distributions, dividends and distributions will be
reinvested automatically in additional shares of the Fund. Such reinvestment
will be at the net asset value of shares of the Fund, without sales charge, as
of the close of business on the ex-dividend date of the dividend or
distribution. Shareholders may elect in writing to receive either their
dividends or capital gains distributions, or both, in cash, in which event
payment will be mailed or direct deposited on the payment date.
Shareholders may, at any time, notify the Transfer Agent in writing or by
telephone (1-800-MER-FUND) that they no longer wish to have their dividends
and/or capital gains distributions reinvested in shares of the Fund or vice
versa and, commencing ten days after the receipt by the Transfer Agent of such
notice, those instructions will be effected.
SYSTEMATIC WITHDRAWAL PLANS--CLASS A AND CLASS D SHARES
A Class A or Class D shareholder may elect to make systematic withdrawals
from an Investment Account in the form of payments by check or through automatic
payment by direct deposit to such shareholder's bank account, on either a
monthly or quarterly basis as provided below. Quarterly withdrawals are
available for shareholders who have acquired Class A or Class D shares of the
Fund having a value, based on cost or the current offering price of $5,000 or
more, and monthly withdrawals are available for shareholders with Class A or
Class D shares with such a value of $10,000 or more.
At the time of each withdrawal payment, sufficient Class A or Class D
shares are redeemed from those on deposit in the shareholder's account to
provide the withdrawal payment specified by the shareholder. The shareholder may
specify either a dollar amount or a percentage of the value of his Class A or
Class D shares. Redemptions will be made at net asset value determined as
described herein on the 24th day of each month or the 24th day of the last month
of each calendar quarter, whichever is applicable. If the Exchange is not open
for business on such date, the Class A or Class D shares will be redeemed at the
close of business on the following business day. The check for the withdrawal
payment will be mailed, or the direct deposit for withdrawal payment will be
made, on the next business day following redemption. When a shareholder is
making systematic withdrawals, dividends and distributions on all Class A or
Class D shares in the Investment Account are reinvested automatically in Fund
Class A or Class D shares, respectively. A shareholder's Systematic Withdrawal
Plan may be terminated at any time, without charge or penalty, by the
shareholder, the Fund, the Fund's Transfer Agent or the Distributor. Withdrawal
payments should not be considered as dividends, yield or income. Each withdrawal
is a taxable event. If periodic withdrawals continuously exceed reinvested
dividends, the shareholder's original investment may be reduced correspondingly.
Purchases of additional Class A or Class D shares concurrent with withdrawals
are ordinarily disadvantageous to the shareholder because of sales charges and
tax liabilities. The Fund will not knowingly accept purchase orders for Class A
or Class D shares of the Fund from investors who maintain a Systematic
Withdrawal Plan unless
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<PAGE> 59
such purchase is equal to at least one year's scheduled withdrawals or $1,200,
whichever is greater. Periodic investments may not be made into an Investment
Account in which the shareholder has elected to make systematic withdrawals.
A Class A or Class D shareholder whose shares are held within a CMA(R),
CBA(R) or Retirement Account may elect to have shares redeemed on a monthly,
bi-monthly, quarterly, semi-annual or annual basis through the Systematic
Redemption Program. The minimum fixed dollar amount redeemable is $25. The
proceeds of systematic redemptions will be posted to the shareholder's account
five business days after the date the shares are redeemed. Monthly systematic
redemptions will be made at net asset value on the first Monday of each month,
bi-monthly systematic redemptions will be made at net asset value on the first
Monday of every other month, and quarterly, semi-annual or annual redemptions
are made at net asset value on the first Monday of months selected at the
shareholder's option. If the first Monday of the month is a holiday, the
redemption will be processed at net value on the next business day. The
Systematic Redemption Program is not available if Fund shares are being
purchased within the account pursuant to the Automatic Investment Program. For
more information on the Systematic Redemption Program, eligible shareholders
should contact their financial consultant.
RETIREMENT PLANS
Self-directed individual retirement accounts and other retirement plans are
available from Merrill Lynch. Under these plans, investments may be made in the
Fund and certain of the other mutual funds sponsored by Merrill Lynch as well as
in other securities. Merrill Lynch charges an initial establishment fee and an
annual custodial fee for each account. Information with respect to these plans
is available on request from Merrill Lynch. The minimum initial purchase to
establish any such plan is $100 and the minimum subsequent purchase is $1.
Capital gains and income received in each of the plans referred to above
are exempt from Federal taxation until distributed from the plans. Investors
considering participation in any such plan should review specific tax laws
relating thereto and should consult their attorneys or tax advisers with respect
to the establishment and maintenance of any such plan.
EXCHANGE PRIVILEGE
Shareholders of each class of shares of the Fund have an exchange privilege
with certain other MLAM-advised mutual funds listed below. Under the Merrill
Lynch Select Pricing(SM) System, Class A shareholders may exchange Class A
shares of the Fund for Class A shares of a second MLAM-advised mutual fund if
the shareholder holds any Class A shares of the second fund in his account in
which the exchange is made at the time of the exchange or is otherwise eligible
to purchase Class A shares of the second fund. If the Class A shareholder wants
to exchange Class A shares for shares of a second MLAM-advised mutual fund, and
the shareholder does not hold Class A shares of the second fund in his account
at the time of the exchange and is not otherwise eligible to acquire Class A
shares of the second fund, the shareholder will receive Class D shares of the
second fund as a result of the exchange. Class D shares also may be exchanged
for Class A shares of a second MLAM-advised mutual fund at any time as long as,
at the time of the exchange, the shareholder holds Class A shares of the second
fund in the account in which the exchange is made or is otherwise eligible to
purchase Class A shares of the second fund. Class B, Class C and Class D shares
will be exchangeable with shares of the same class of other MLAM-advised mutual
funds. For purposes of computing the CDSC that
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<PAGE> 60
may be payable upon a disposition of the shares acquired in the exchange, the
holding period for the previously owned shares of the Fund is "tacked" to the
holding period of the newly acquired shares of the other Fund as more fully
described below. Class A, Class B, Class C and Class D shares also will be
exchangeable for shares of certain MLAM-advised money market funds specifically
designated below as available for exchange by holders of Class A, Class B, Class
C or Class D shares. Shares with a net asset value of at least $100 are required
to qualify for the exchange privilege, and any shares utilized in an exchange
must have been held by the shareholder for 15 days. It is contemplated that the
exchange privilege may be applicable to other new mutual funds whose shares may
be distributed by the Distributor.
Exchanges of Class A or Class D shares outstanding ("outstanding Class A or
Class D shares") for Class A shares or Class D shares of another MLAM-advised
mutual fund ("new Class A or Class D shares") are transacted on the basis of
relative net asset value per Class A or Class D share, respectively, plus an
amount equal to the difference, if any, between the sales charge previously paid
on the outstanding Class A or Class D shares and the sales charge payable at the
time of the exchange on the new Class A or Class D shares. With respect to
outstanding Class A or Class D shares as to which previous exchanges have taken
place, the "sales charge previously paid" shall include the aggregate of the
sales charges paid with respect to such Class A or Class D shares in the initial
purchase and any subsequent exchange. Class A or Class D shares issued pursuant
to dividend reinvestment are sold on a no-load basis in each of the funds
offering Class A or Class D shares. For purposes of the exchange privilege,
dividend reinvestment Class A or Class D shares shall be exchanged into the
Class A or Class D shares of the other funds or into shares of the Class A or
Class D money market funds without a sales charge.
In addition, each of the funds with Class B and Class C shares outstanding
("outstanding Class B or Class C shares") offers to exchange its Class B or
Class C shares for Class B or Class C shares, respectively, of another
MLAM-advised mutual fund ("new Class B or Class C shares") on the basis of
relative net asset value per Class B or Class C share, without the payment of
any CDSC that might otherwise be due on redemption of the outstanding shares.
Class B shareholders of the Fund exercising the exchange privilege will continue
to be subject to the Fund's CDSC schedule if such schedule is higher than the
CDSC schedule relating to the new Class B shares acquired through use of the
exchange privilege. In addition, Class B shares of the Fund acquired through use
of the exchange privilege will be subject to the Funds' CDSC schedule if such
schedule is higher than the CDSC schedule relating to the Class B shares of the
fund from which the exchange has been made. For purposes of computing the sales
charge that may be payable on a disposition of the new Class B or Class C
shares, the holding period for the outstanding Class B or Class C shares is
"tacked" to the holding period of the new Class B or Class C shares. For
example, an investor may exchange Class B shares of the Fund for those of
Merrill Lynch Special Value Fund, Inc. ("Special Value Fund") after having held
the Fund Class B shares for two and a half years. The 2% sales charge that
generally would apply to a redemption would not apply to the exchange. Three
years later the investor may decide to redeem the Class B shares of Special
Value Fund and receive cash. There will be no CDSC due on this redemption, since
by "tacking" the two and a half year holding period of Fund Class B shares to
the three-year holding period for the Special Value Fund Class B shares, the
investor will be deemed to have held the new Class B shares for more than five
years.
The exchange privilege is modified with respect to certain retirement plans
which participate in the Merrill Lynch Mutual Fund Adviser ("MFA") program. Such
retirement plans may exchange Class B, Class C or Class D shares that have been
held for at least one year for Class A shares of the same Fund on the
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<PAGE> 61
basis of relative net asset values in connection with the commencement of
participation in the MFA program, i.e., no CDSC will apply. The one year holding
period does not apply to shares acquired through reinvestment of dividends. Upon
termination of participation in the MFA program, Class A shares will be
reexchanged for the class of shares originally held. For purposes of computing
any CDSC that may be payable upon redemption of Class B or Class C shares so
reacquired, the holding period for the Class A shares will be "tacked" to the
holding period for the Class B or Class C shares originally held.
Shareholders also may exchange shares of the Fund into shares of a money
market fund advised by the Investment Adviser or its affiliates, but the period
of time that Class B or Class C shares are held in a money market fund will not
count towards satisfaction of the holding period requirement for purposes of
reducing the CDSC or, with respect to Class B shares, towards satisfaction of
the conversion period. However, shares of a money market fund which were
acquired as a result of an exchange for Class B or Class C shares of the Fund
may, in turn, be exchanged back into Class B or Class C shares, respectively, of
any fund offering such shares, in which event the holding period for Class B or
Class C shares of the fund will be aggregated with previous holding periods for
purposes of reducing the CDSC. Thus, for example, an investor may exchange Class
B shares of the Fund for shares of Merrill Lynch Institutional Fund
("Institutional Fund") after having held the Fund Class B shares for two and a
half years and three years later decide to redeem the shares of Institutional
Fund for cash. At the time of this redemption, the 2% CDSC that would have been
due had the Class B shares of the Fund been redeemed for cash rather than
exchanged for shares of Institutional Fund will be payable. If instead of such
redemption the shareholder exchanged such shares for Class B shares of a fund
which the shareholder continued to hold for an additional two and a half years,
any subsequent redemption will not incur a CDSC.
Set forth below is a description of the investment objectives of the other
funds into which exchanges can be made are as follows:
Funds issuing Class A, Class B, Class C and Class D Shares:
<TABLE>
<S> <C>
MERRILL LYNCH ADJUSTABLE RATE SECURITIES FUND,
INC. ....................................... High current income consistent with a policy
of limiting the degree of fluctuation in net
asset value by investing primarily in a
portfolio of adjustable rate securities,
consisting principally of mortgage- backed
and asset-backed securities.
MERRILL LYNCH AMERICAS INCOME FUND, INC. ..... A high level of current income, consistent
with prudent investment risk, by investing
primarily in debt securities denominated in
a currency of a country located in the
Western Hemisphere (i.e., North and South
America and the surrounding waters).
MERRILL LYNCH ARIZONA LIMITED MATURITY
MUNICIPAL BOND FUND......................... A portfolio of Merrill Lynch Multi-State
Limited Maturity Municipal Series Trust, a
series fund, whose objective is to provide
as high a level of income exempt from
Federal and Arizona income taxes as is
consistent with prudent investment
</TABLE>
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<PAGE> 62
<TABLE>
<S> <C>
management through investment in a
portfolio primarily of intermediate-term
investment grade Arizona Municipal Bonds.
MERRILL LYNCH ARIZONA MUNICIPAL BOND FUND..... A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund, whose
objective is to provide investors with as
high a level of income exempt from Federal
and Arizona income taxes as is consistent
with prudent investment management.
MERRILL LYNCH ARKANSAS MUNICIPAL BOND FUND.... A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series Fund, whose
objective is to provide as high a level of
income exempt from Federal and Arkansas
income taxes as is consistent with prudent
investment management.
MERRILL LYNCH ASSET GROWTH FUND, INC. ........ High total investment return, consistent with
prudent risk, from investment in United
States and foreign equity, debt and money
market securities the combination of which
will be varied both with respect to types
of securities and markets in response to
changing market and economic trends.
MERRILL LYNCH ASSET INCOME FUND, INC. ........ A high level of current income through
investment primarily in United States fixed
income securities.
MERRILL LYNCH BALANCED FUND FOR INVESTMENT AND
RETIREMENT, INC............................. As high a level of total investment return as
is consistent with a relatively low level of
risk through investment in common stock and
other types of securities, including fixed
income securities and convertible
securities.
MERRILL LYNCH BASIC VALUE FUND, INC. ......... Capital appreciation and, secondarily, income
by investing in securities, primarily
equities, that are undervalued and
therefore represent basic investment value.
MERRILL LYNCH CALIFORNIA INSURED MUNICIPAL
BOND FUND................................... A portfolio of Merrill Lynch California
Municipal Series Trust, a series fund, whose
objective is to provide as high a level of
insured income exempt from Federal and
California income taxes as is consistent
with prudent investment management.
</TABLE>
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<PAGE> 63
<TABLE>
<S> <C>
MERRILL LYNCH CALIFORNIA LIMITED MATURITY
MUNICIPAL BOND FUND......................... A portfolio of Merrill Lynch Multi-State
Limited Maturity Municipal Series Trust, a
series fund, whose objective is to provide
shareholders with as high a level of income
exempt from Federal and California income
taxes as is consistent with prudent
investment management through investment in
a portfolio primarily of intermediate-term
investment grade California Municipal
Bonds.
MERRILL LYNCH CALIFORNIA MUNICIPAL BOND
FUND........................................ A portfolio of Merrill Lynch California
Municipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal and California
income taxes as is consistent with prudent
investment management.
MERRILL LYNCH CAPITAL FUND, INC............... The highest total investment return
consistent with prudent risk through a fully
managed investment policy utilizing equity,
debt and convertible securities.
MERRILL LYNCH COLORADO MUNICIPAL BOND FUND.... A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal and Colorado
income taxes as is consistent with prudent
investment management.
MERRILL LYNCH CONNECTICUT MUNICIPAL BOND
FUND........................................ A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal and Connecticut
income taxes as is consistent with prudent
investment management.
MERRILL LYNCH CORPORATE BOND FUND, INC. ...... Current income from three separate
diversified portfolios of fixed income
securities.
MERRILL LYNCH DEVELOPING CAPITAL MARKETS FUND,
INC. ....................................... Long-term capital appreciation through
investment in securities, principally
equities, of issuers in countries having
smaller capital markets.
MERRILL LYNCH DRAGON FUND, INC. .............. Capital appreciation primarily through
investment in equity and debt securities of
issuers domiciled in developing countries
located in Asia and Pacific
</TABLE>
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<PAGE> 64
<TABLE>
<S> <C>
Basin other than Japan, Australia and New
Zealand.
MERRILL LYNCH EUROFUND........................ Capital appreciation primarily through
investment in equity securities of
corporations domiciled in Europe.
MERRILL LYNCH FEDERAL SECURITIES TRUST........ High current return through investments in
U.S. Government and Government agency
securities, including GNMA mortgage-backed
certificates and other mortgage-backed
Government securities.
MERRILL LYNCH FLORIDA LIMITED MATURITY
MUNICIPAL BOND FUND......................... A portfolio of Merrill Lynch Multi-State
Limited Maturity Municipal Series Trust, a
series fund, whose objective is to provide
as high a level of income exempt from
Federal income taxes as is consistent with
prudent investment management while seeking
to offer shareholders the opportunity to
own securities exempt from Florida
intangible personal property taxes through
investment in a portfolio primarily of
intermediate-term investment grade Florida
Municipal Bonds.
MERRILL LYNCH FLORIDA MUNICIPAL
BOND FUND................................... A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal income taxes as
is consistent with prudent investment
management while seeking to offer
shareholders the opportunity to own
securities exempt from Florida intangible
personal property taxes.
MERRILL LYNCH FUNDAMENTAL GROWTH
FUND, INC. ................................. Long-term growth through investment in a
diversified portfolio of equity securities in
placing particular emphasis on companies
that have exhibited an above-average growth
rate in earnings.
MERRILL LYNCH FUNDAMENTAL VALUE
PORTFOLIO (Available only for exchanges by
certain individual retirement accounts for
which Merrill Lynch acts as custodian)...... A portfolio of Merrill Lynch Retirement Asset
Builder Program, Inc., a series fund, whose
objective is to provide capital
appreciation and income by investing in
securities, with at least 65% of the
portfolio's assets being invested in
equities.
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MERRILL LYNCH GLOBAL ALLOCATION
FUND, INC. ................................. High total return consistent with prudent
risk, through a fully managed investment
policy utilizing United States and foreign
equity, debt and money market securities,
the combination of which will be varied
from time to time both with respect to
types of securities and markets in response
to changing market and economic trends.
MERRILL LYNCH GLOBAL BOND FUND FOR
INVESTMENT AND RETIREMENT................... High total investment return from investment
in government and corporate bonds denominated
in various currencies and multi-national
currency units.
MERRILL LYNCH GLOBAL CONVERTIBLE
FUND, INC. ................................. High total return from investment primarily
in an internationally diversified portfolio
of convertible debt securities, convertible
preferred stock and "synthetic" convertible
securities consisting of a combination of
debt securities or preferred stock and
warrants or options.
MERRILL LYNCH GLOBAL HOLDINGS, INC.
(residents of Arizona must meet investor
suitability standards)...................... The highest total investment return
consistent with prudent risk through
worldwide investment in an internationally
diversified portfolio of securities.
MERRILL LYNCH GLOBAL OPPORTUNITY
PORTFOLIO (Available only for exchanges by
certain individual retirement accounts for
which Merrill Lynch acts as custodian)...... A portfolio of Merrill Lynch Retirement Asset
Builder Program, Inc., a series fund, whose
objective is to provide a high total
investment return through an investment
policy utilizing United States and foreign
equity, debt and money market securities,
the combination of which will vary
depending upon changing market and economic
trends.
MERRILL LYNCH GLOBAL RESOURCES TRUST.......... Long-term growth and protection of capital
from investment in securities of domestic and
foreign companies that possess substantial
natural resource assets.
MERRILL LYNCH GLOBAL SMALLCAP FUND, INC. ..... Long-term growth of capital by investing
primarily in equity securities of companies
with relatively small
</TABLE>
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market capitalizations located in various
foreign countries and in the United States.
MERRILL LYNCH GLOBAL UTILITY FUND, INC. ...... Capital appreciation and current income
through investment of at least 65% of its
total assets in equity and debt securities
issued by domestic and foreign companies
primarily engaged in the ownership or
operation of facilities used to generate,
transmit or distribute electricity,
telecommunications, gas or water.
MERRILL LYNCH GROWTH FUND FOR INVESTMENT AND
RETIREMENT.................................. Growth of capital and, secondarily, income
from investment in a diversified portfolio of
equity securities placing principal
emphasis on those securities which
management of the fund believes to be
undervalued.
MERRILL LYNCH HEALTHCARE FUND, INC. (residents
of Wisconsin must meet investor suitability
standards).................................. Capital appreciation through worldwide
investment in equity securities of companies
that are expected to derive a substantial
portion of their sales from products and
services in healthcare.
MERRILL LYNCH INTERNATIONAL EQUITY FUND....... Capital appreciation and, secondarily, income
by investing in a diversified portfolio of
equity securities of issuers located in
countries other than the United States.
MERRILL LYNCH LATIN AMERICA FUND, INC. ....... Capital appreciation by investing primarily
in Latin American equity and debt securities.
MERRILL LYNCH MARYLAND MUNICIPAL BOND FUND.... A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal and Maryland
income taxes as is consistent with prudent
investment management.
MERRILL LYNCH MASSACHUSETTS LIMITED MATURITY
MUNICIPAL BOND FUND......................... A portfolio of Merrill Lynch Multi-State
Limited Maturity Municipal Series Trust, a
series fund, whose objective is to provide
as high a level of income exempt from
Federal and Massachusetts income taxes as
is consistent with prudent investment
management through investment in a
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portfolio primarily of intermediate-term
investment grade Massachusetts Municipal
Bonds.
MERRILL LYNCH MASSACHUSETTS MUNICIPAL BOND
FUND........................................ A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund, whose
objective is to provide investors with as
high a level of income exempt from both
Federal and Massachusetts income taxes as
is consistent with prudent investment
management.
MERRILL LYNCH MICHIGAN LIMITED MATURITY
MUNICIPAL BOND FUND......................... A portfolio of Merrill Lynch Multi-State
Limited Maturity Municipal Series Trust, a
series fund, whose objective is to provide
as high a level of income exempt from
Federal and Michigan income taxes as is
consistent with prudent investment
management through investment in a
portfolio primarily of intermediate-term
investment grade Michigan Municipal Bonds.
MERRILL LYNCH MICHIGAN MUNICIPAL
BOND FUND................................... A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal and Michigan
income taxes as is consistent with prudent
investment management.
MERRILL LYNCH MINNESOTA MUNICIPAL
BOND FUND................................... A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal and Minnesota
personal income taxes as is consistent with
prudent investment management.
MERRILL LYNCH MUNICIPAL BOND FUND, INC........ Tax-exempt income from three separate
diversified portfolios of municipal bonds.
MERRILL LYNCH MUNICIPAL INTERMEDIATE TERM
FUND........................................ Currently the only portfolio of Merrill Lynch
Municipal Series Trust, a series fund, whose
objective is to provide as high a level as
possible of income exempt from Federal
income taxes by investing in investment
grade obligations with a dollar weighted
average maturity of five to twelve years.
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MERRILL LYNCH NEW JERSEY LIMITED
MATURITY MUNICIPAL BOND FUND................ A portfolio of Merrill Lynch Multi-State
Limited Maturity Municipal Series Trust, a
series fund, whose objective is to provide
as high a level of income exempt from
Federal and New Jersey income taxes as is
consistent with prudent investment
management through a portfolio primarily of
intermediate-term investment grade New
Jersey Municipal Bonds.
MERRILL LYNCH NEW JERSEY MUNICIPAL
BOND FUND................................... A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal and New Jersey
state income taxes as is consistent with
prudent investment management.
MERRILL LYNCH NEW MEXICO MUNICIPAL
BOND FUND................................... A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal and New Mexico
income taxes as is consistent with prudent
investment management.
MERRILL LYNCH NEW YORK LIMITED MATURITY
MUNICIPAL BOND FUND......................... A portfolio of Merrill Lynch Multi-State
Limited Maturity Municipal Series Trust, a
series fund, whose objective is to provide
as high a level of income exempt from
Federal, New York State and New York City
income taxes as is consistent with prudent
investment management through investment in
a portfolio primarily of intermediate-term
investment grade New York Municipal Bonds.
MERRILL LYNCH NEW YORK MUNICIPAL
BOND FUND................................... A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal, New York State
and New York City income taxes as is
consistent with prudent investment
management.
MERRILL LYNCH NORTH CAROLINA
MUNICIPAL BOND FUND......................... A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from
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Federal and North Carolina income taxes
as is consistent with prudent investment
management.
MERRILL LYNCH OHIO MUNICIPAL BOND FUND........ A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund, whose
objective is to provide investors with as
high a level of income exempt from both
Federal and Ohio income taxes as is
consistent with prudent investment
management.
MERRILL LYNCH OREGON MUNICIPAL
BOND FUND................................... A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund, whose
objective is to provide investors with as
high a level of income exempt from both
Federal and Oregon income taxes as is
consistent with prudent investment man-
agement.
MERRILL LYNCH PACIFIC FUND, INC. ............. Capital appreciation by investing in equity
securities of corporations domiciled in Far
Eastern and Western Pacific countries,
including Japan, Australia, Hong Kong,
Singapore and the Philippines.
MERRILL LYNCH PENNSYLVANIA LIMITED
MATURITY MUNICIPAL BOND FUND................ A portfolio of Merrill Lynch Multi-State
Limited Maturity Municipal Series Trust, a
series fund, whose objective is to provide
as high a level of income exempt from
Federal and Pennsylvania income taxes as is
consistent with prudent investment
management through investment in a portfo-
lio of intermediate-term investment grade
Pennsylvania Municipal Bonds.
MERRILL LYNCH PENNSYLVANIA MUNICIPAL BOND
FUND........................................ A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal and Pennsylvania
state income taxes as is consistent with
prudent investment management.
MERRILL LYNCH PHOENIX FUND, INC. ............. Long-term growth of capital by investing in
equity and fixed income securities, including
tax-exempt securities, of issuers in weak
financial condition or experiencing poor
operating results believed to be
undervalued relative to the current or
prospective condition of such issuer.
</TABLE>
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MERRILL LYNCH QUALITY BOND PORTFOLIO
(Available only for exchanges by certain
individual retirement accounts for which
Merrill Lynch acts as custodian) ........... A portfolio of Merrill Lynch Retirement Asset
Builder Program, Inc., a series fund, whose
objective is to provide a high level of
current income through investment in a
diversified portfolio of debt obligations,
such as corporate bonds and notes,
convertible securities, preferred stocks
and governmental obligations.
MERRILL LYNCH SHORT-TERM GLOBAL INCOME FUND,
INC. ....................................... As high a level of current income as is
consistent with prudent investment management
from a global portfolio of high quality
debt securities denominated in various
currencies and multi-currency units having
remaining maturities not exceeding three
years.
MERRILL LYNCH SPECIAL VALUE FUND, INC. ....... Long-term growth of capital from investments
in securities, primarily common stocks, of
relatively small companies believed to have
special investment value and emerging
growth companies regardless of size.
MERRILL LYNCH STRATEGIC DIVIDEND FUND......... Long-term total return from investment in
dividend paying common stocks which yield
more than Standard & Poor's 500 Composite
Stock Price Index.
MERRILL LYNCH TECHNOLOGY FUND................. Long-term capital appreciation through
worldwide investment in equity securities of
companies that, in the opinion of
management, derive or are expected to
derive a substantial portion of their sales
from products and services in technology.
MERRILL LYNCH TEXAS MUNICIPAL BOND FUND....... A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund, whose
objective is to provide investors with as
high a level of income exempt from Federal
income taxes as is consistent with prudent
investment management by investing
primarily in a portfolio of long-term,
investment grade
</TABLE>
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obligations issued by the State of Texas,
its political subdivisions, agencies and
instrumentalities.
MERRILL LYNCH U.S. GOVERNMENT SECURITIES
PORTFOLIO (Available only for exchanges by
certain individual retirement accounts for
which Merrill Lynch acts as custodian) ..... A portfolio of Merrill Lynch Retirement Asset
Builder Program, Inc., a series fund, whose
objective is to provide a high current
return through investments in U.S.
Government and government agency
securities, including GNMA mortgage-backed
certificates and other mortgage-backed gov-
ernment securities.
MERRILL LYNCH UTILITY INCOME FUND, INC. ...... High current income through investment
primarily in equity and debt securities
issued by companies primarily engaged in
the ownership or operation of facilities
used to generate, transmit or distribute
electricity, telecommunications, gas or
water.
MERRILL LYNCH WORLD INCOME FUND, INC. ........ High current income by investing in a global
portfolio of fixed income securities
denominated in various currencies,
including multinational currencies.
Class A Share Money Market Funds:
MERRILL LYNCH READY ASSETS TRUST.............. Preservation of capital, liquidity and the
highest possible current income consistent
with the foregoing objectives from the
short-term money market securities in which
the Trust invests.
MERRILL LYNCH RETIREMENT RESERVES MONEY FUND
(available only for exchanges within
certain retirement plans)................... Currently the only portfolio of Merrill Lynch
Retirement Series Trust, a series fund, whose
objectives are current income, preservation
of capital and liquidity available from
investing in a diversified portfolio of
short-term money market securities.
MERRILL LYNCH U.S.A. GOVERNMENT RESERVES...... Preservation of capital, current income and
liquidity available from investing in direct
obligations of the U.S. Government and
repurchase agreements relating to such
securities.
MERRILL LYNCH U.S. TREASURY MONEY FUND........ Preservation of capital, liquidity and
current income through investment exclusively
in a diversified portfolio of short-term
marketable securities which are direct
obligations of the U.S. Treasury.
</TABLE>
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Class B, Class C and Class D Share
Money Market Funds:
MERRILL LYNCH GOVERNMENT FUND................. A portfolio of Merrill Lynch Funds for
Institutions Series, a series fund, whose
objective is to provide current income
consistent with liquidity and security of
principal from investment in securities
issued or guaranteed by the U.S.
Government, its agencies and
instrumentalities and in repurchase
agreements secured by such obligations.
MERRILL LYNCH INSTITUTIONAL FUND.............. A portfolio of Merrill Lynch Funds for
Institutions Series, a series fund, whose
objective is to provide maximum current
income consistent with liquidity and the
maintenance of a high-quality portfolio of
money market securities.
MERRILL LYNCH INSTITUTIONAL
TAX-EXEMPT FUND............................. A portfolio of Merrill Lynch Funds for
Institutions Series, a series fund, whose
objective is to provide current income
exempt from Federal income taxes,
preservation of capital and liquidity
available from investing in a diversified
portfolio of short-term, high quality
municipal bonds.
MERRILL LYNCH TREASURY FUND................... A portfolio of Merrill Lynch Funds for
Institutions Series, a series fund, whose
objective is to provide current income
consistent with liquidity and security of
principal from investment in direct obliga-
tions of the U.S. Treasury and up to 10% of
its total assets in repurchase agreements
secured by such obligations.
</TABLE>
Before effecting an exchange, shareholders should obtain a currently
effective prospectus of the fund into which the exchange is to be made.
To exercise the exchange privilege, shareholders should contact their
Merrill Lynch financial consultant who will advise the Fund of the exchange.
Shareholders of the Fund, and shareholders of the other funds described above
with shares for which certificates have not been issued, may exercise the
exchange privilege by wire through their securities dealers. The Fund reserves
the right to require a properly completed Exchange Application. This exchange
privilege may be modified or terminated in accordance with the rules of the
Commission. The Fund reserves the right to limit the number of times an investor
may exercise the exchange privilege. Certain funds may suspend the continuous
offering of their shares to the general public at any time and may thereafter
resume such offering from time to time. The exchange privilege is available only
to U.S. shareholders in states where the exchange legally may be made.
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<PAGE> 73
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund intends to continue to qualify as a regulated investment company
(a "RIC") under the provisions of the Code. If so qualified, the Fund will not
be subject to Federal income tax on that part of its net investment income and
net realized capital gains which it distributes to shareholders. To qualify for
such tax treatment, the Fund must, among other things and in general, derive in
each taxable year at least 90% of its gross income from dividends, interest,
payments with respect to securities loans, gains from the sale or other
disposition of securities, and certain other related income and derive less than
30% of its gross income from gains (without deduction for losses) from the sale
or other disposition of securities held for less than three months.
Even if reinvested in additional Fund shares, dividends paid by the Fund
from its ordinary income and distributions of the Fund's net realized short-term
capital gains are taxable to shareholders as ordinary income but may be eligible
in part for the 70% dividends received deduction allowed to corporations
provided under the Code if certain requirements are met. Not later than sixty
days after the end of each fiscal year, the Fund will send to its shareholders a
written notice required by the Code designating the amount of any distributions
made during such year which may be taken into account by corporate shareholders
for purposes of that deduction. For this purpose, the Fund will allocate
dividends eligible for the dividends received deduction among the Class A, Class
B, Class C and Class D shareholders according to a method (which it believes is
consistent with the Securities and Exchange Commission's exemptive order
permitting the issuance and sale of multiple classes of stock) that is based on
the average daily net assets of each class (taking into account the incremental
expenses of the Class B shares) during the taxable year, or such other method as
the Internal Revenue Service may prescribe.
The per share dividends on Class B and Class C shares will be lower than
the per share dividends and distributions on Class A and Class D shares as a
result of the account maintenance, distribution and higher transfer agency fees
applicable with respect to the Class B and Class C shares; similarly, the per
share dividends and distributions on Class D shares will be lower than the per
share dividends and distributions on Class A shares as a result of the account
maintenance fees applicable with respect to the Class D shares. See
"Determination of Net Asset Value."
Under the Code, any distributions attributable to the Fund's net realized
long-term capital gains are taxable to shareholders (even if reinvested in
additional Fund shares) as long-term capital gains, regardless of the holding
period of shares of the Fund. However, a loss incurred by the shareholder upon
the sale or other disposition of shares of the Fund held for six months or less
will, to the extent the shareholder has received capital gains distributions, be
treated as a long-term capital loss. Such distributions of long-term capital
gains will be designated as a capital gains distribution in a written notice to
shareholders which accompanies the distribution payment.
No gain or loss will be recognized by Class B shareholders on the
conversion of their Class B shares for Class D shares. A shareholder's basis in
the Class D shares acquired will be the same as such shareholder's basis in the
Class B shares converted, and the holding period of the acquired Class D shares
will include the holding period of the converted Class B shares.
If a shareholder exercises an exchange privilege within 90 days of
acquiring the shares, then the loss the shareholder can recognize on the
exchange will be reduced (or the gain increased) to the extent the sales charge
paid to the Fund reduces any sales charge the shareholder would have owed upon
the purchase of the
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new shares in the absence of the exchange privilege. Instead, such sales charge
will be treated as an amount paid for the new shares.
A loss realized on a sale or exchange of shares of the Fund will be
disallowed if other Fund shares are acquired (whether through the automatic
reinvestment of dividends or otherwise) within a 61-day period beginning 30 days
before and ending 30 days after the date that the shares are disposed of. In
such a case, the basis of the shares acquired will be adjusted to reflect the
disallowed loss.
Under certain provisions of the Code, some shareholders may be subject to
31% withholding on ordinary income dividends, capital gains distributions and
redemption payments ("back-up withholding"). Generally, shareholders subject to
back-up withholding will be those for whom a certified taxpayer identification
number is not on file with the Fund or who, to the Fund's knowledge, have
furnished an incorrect number. When establishing an account, an investor must
certify under penalty of perjury that such number is correct and that he is not
otherwise subject to back-up withholding.
Dividends and short-term capital gains distributions paid by the Fund to
shareholders who are non-resident aliens or foreign entities generally are
subject to withholding at the rate of 30% unless a reduced rate of withholding
or a withholding exemption is provided under applicable treaty law. Non-resident
shareholders are urged to consult their own tax advisers concerning the
applicability of the United States withholding tax.
Dividends and interest received by the Fund may give rise to withholding
and other taxes imposed by foreign countries. Tax conventions between certain
countries and the United States may reduce or eliminate such taxes. Because the
Fund limits its investments in foreign securities, shareholders will not be
entitled to claim foreign tax credits with respect to their share of foreign
taxes paid by the Fund on income from investments of foreign securities held by
the Fund.
The foregoing is a general and abbreviated summary of the applicable
provisions of the Code and Treasury Regulations currently in effect.
Shareholders are urged to consult their tax advisers regarding specific
questions as to Federal, foreign, state and local taxes. Qualification as a
regulated investment company under the Code for income tax purposes does not
entail government supervision of management or investment policies.
INVESTMENT PRACTICES AND RESTRICTIONS
Lending of Portfolio Securities. As discussed in the Prospectus, the Fund
may from time to time lend its portfolio securities in order to increase the
total yield on its portfolio. Such loans will be effected in accordance with
applicable regulatory guidelines and will at all times be secured by cash
collateral or securities issued or guaranteed by the United States government in
an amount that is at least equal to the market value, determined daily, of the
loaned securities. Cash collateral received by the Fund is invested in
short-term money market securities, and a portion of the yield earned on such
securities is retained by the Fund. Where securities, instead of cash, are
delivered to the Fund as collateral, the Fund earns its return in the form of a
loan premium paid by the borrower. The Fund retains the right to regain record
ownership of loaned securities to exercise beneficial rights such as voting
rights, subscription rights and rights to dividends, interest or other
distributions. Securities loans can be terminated by the Fund at any time. The
Fund may pay reasonable finders', administrative and custodial fees in
connection with such loans. In the event that the borrower defaults on its
obligation to return borrowed securities, because of insolvency or otherwise,
the Fund could experience delays and costs in gaining access to collateral and
could suffer a loss to the extent that the value of the collateral falls below
the market value of the securities.
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<PAGE> 75
Writing of Covered Call Options. As discussed in the Prospectus, the Fund
may from time to time sell (i.e., "write") covered call options on its portfolio
securities. The term option, as used herein, means a call option issued by The
Options Clearing Corporation (the "Clearing Corporation") and traded on a
national securities exchange. A call option gives the purchaser of the option
the right to buy and obligates the writer (seller) to sell the underlying
security at the exercise price during the option period. When the Fund writes an
option it receives a premium. This premium is the price of such option on the
exchange on which it is traded. At the time the option is written, the exercise
price of the option may be lower, equal to or higher than the market price of
the security on which the option is written.
A covered call option is an option where the Fund already owns securities
subject to the option ("underlying securities") or has an absolute and immediate
right to acquire that security without additional cash consideration upon
conversion or exchange of other securities held in its portfolio. By writing a
covered call option, the Fund, in return for the premium income realized from
the sale of the option, gives up the opportunity to profit from any increase in
the price of the underlying security above the option exercise price during the
period until the option expires, is exercised or the Fund effects a "closing
purchase transaction" as described below. For example, assume that the Fund
owned 100 shares of stock that was trading at $50. If the Fund were to write a
call option on such stock with an exercise price of $50 for which it received
premium income of $500, in the event that the price of the underlying stock were
to increase to $55 during the term of the option, the option would most likely
be exercised and the Fund would be required to sell the underlying stock at $50
per share. If the price of the stock were to decline to below $50, however, the
option would most likely expire unexercised in which case the Fund would be able
to retain the underlying stock. In addition, the Fund will not be able to sell
the security during the period of the option without taking special steps
described below which will involve expense. If the option expires unexercised,
the Fund realizes a gain (short-term capital gain for Federal income tax
purposes) in the amount of the premium received for the option. This gain may be
offset by a decline in the market price of the underlying security during the
option period.
The Fund can terminate its obligation under an option prior to the
expiration date of the option by effecting a "closing purchase transaction."
This is done by purchasing on an exchange an option of the same series (i.e.,
same underlying security, exercise price and expiration date) as the option
previously written. This can be done, however, only on an exchange which
provides a secondary market for an option of the same series and there is no
assurance that a secondary market will exist for any particular option. In the
event the Fund is unable to effect a closing purchase transaction, it will not
be able to dispose of the underlying securities until the option expires or
until the underlying securities are delivered upon exercise of the option, with
the result that the Fund will be subject to the risk of decline in the price of
the underlying securities during such period. The Fund writes options on
securities only if management believes that secondary markets will exist on an
exchange for options of the same series which will permit the Fund to effect
closing purchase transactions. Depending on the premium paid by the Fund in
effecting a closing transaction and transaction costs, the cost of a closing
purchase transaction may exceed the premium received by the Fund from writing
the original option, in which case the transaction will result in a loss to the
Fund.
The Fund may not write a covered call option on any of its portfolio's
securities if, as a result of writing such option, portfolio securities having a
value in excess of 15% of the Fund's total assets would be subject to such
options.
Repurchase Agreements. The Fund may invest in securities pursuant to
repurchase agreements. Repurchase agreements may be entered into only with a
member bank of the Federal Reserve System or a primary
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<PAGE> 76
dealer in U.S. Government securities or an affiliate thereof. Under such
agreements, the bank or primary dealer or an affiliate thereof agrees, upon
entering into the contract, to repurchase the security at a mutually agreed upon
time and price, thereby determining the yield during the term of the agreement.
This results in a fixed rate of return insulated from market fluctuations during
such period. Repurchase agreements usually cover short periods, such as under
one week. Repurchase agreements may be construed to be collateralized loans by
the purchaser to the seller secured by the securities transferred to the
purchaser. The Fund will require the seller to provide additional collateral if
the market value of the securities falls below the repurchase price at any time
during the term of the repurchase agreement. In the event of default by the
seller under a repurchase agreement construed to be a collateralized loan, the
underlying securities are not owned by the Fund but only constitute collateral
for the seller's obligation to pay the repurchase price. Therefore, the Fund may
suffer time delays and incur costs or possible losses in connection with the
disposition of the collateral.
Illiquid Securities. The Fund may purchase securities that are not
registered ("restricted securities") under the Securities Act of 1933 as amended
(the "Securities Act"), but can be offered and sold to "qualified institutional
buyers" under Rule 144A under the Securities Act. However, the Fund will not
invest more than 15% of its total assets in illiquid investments (or 10% to the
extent required by state law), which includes securities for which there is no
readily available market, securities subject to contractual restrictions on
resale, certain investments in asset-backed and receivable-backed securities and
restricted securities, unless the Fund's Board of Directors continuously
determines, based on the trading markets for the specific restricted security,
that it is liquid. The Board of Directors may adopt guidelines and delegate to
the Manager the daily function of determining and monitoring liquidity of
restricted securities. The Board of Directors, however, will retain sufficient
oversight and be ultimately responsible for the determinations.
The Board of Directors monitors the Fund's investments in these securities
purchased pursuant to Rule 144A, focusing on such factors, among others, as
valuation, liquidity and availability of information. These investments in
securities purchased pursuant to Rule 144A could have the effect of increasing
the level of illiquidity in the Fund to the extent that qualified institutional
buyers become for a time uninterested in purchasing these restricted securities.
Portfolio Turnover. The Fund has not placed any limit on its rate of
portfolio turnover and securities may be sold without regard to the time they
have been held when, in the opinion of the Investment Adviser, investment
considerations warrant such action. As a result, the portfolio turnover rate may
vary greatly from year to year or during periods within a year. Also, the use of
covered call options at times when the underlying securities are appreciating in
value may result in higher portfolio turnover than would otherwise be the case.
The Fund pays brokerage commissions in connection with writing call options and
effecting closing purchase transactions, as well as in connection with purchases
and sales of portfolio securities. A high rate of portfolio turnover would
result in correspondingly greater brokerage commission expenses. The Fund's
portfolio turnover rate for the fiscal years ended January 31, 1995 and January
31, 1994 were 45.86% and 48.63%, respectively. Portfolio turnover rate is
calculated by dividing the lesser of the Fund's annual sales or purchases of
portfolio securities (exclusive of securities, including options, whose
maturities or expiration dates, at the time of acquisition, were one year or
less) by the monthly average value of the securities in the Fund's portfolio
during the year.
Portfolio Brokerage. Subject to policies established by the Board of
Directors of the Fund, the Investment Adviser is responsible for the Fund's
portfolio decisions and the placing of orders to effect the Fund's portfolio
transactions. With respect to such transactions, the Investment Adviser seeks to
obtain the
34
<PAGE> 77
best net results for the Fund taking into account such factors as price
(including the applicable brokerage commission or dealer spread), size of order,
difficulty of execution and operational facilities of the firm involved and the
firm's risk in positioning a block of securities. While the Investment Adviser
generally seeks reasonably competitive commission rates, the Fund will not
necessarily be paying the lowest commission or spread available. The Fund has no
obligation to deal with any broker or dealer in the execution of its portfolio
transactions. The Fund has been informed by Merrill Lynch that it will not
attempt to influence or control the placing by the Investment Adviser or by the
Fund of orders for brokerage transactions. Consistent with the Rules of Fair
Practice of the NASD, the Investment Adviser may consider sales of shares of the
Fund as a factor in the selection of brokers or dealers to execute portfolio
transactions of the Fund.
Brokers and dealers, including Merrill Lynch, who provide supplemental
investment research (such as economic data and market forecasts) to the
Investment Adviser may receive orders for transactions by the Fund. Information
so received is in addition to, and not in lieu of, the services required to be
performed by the Investment Adviser under the Advisory Agreement with the Fund.
If in the judgment of the Investment Adviser the Fund will be benefitted by
supplemental research services, the Investment Adviser is authorized to pay
brokerage commissions to a broker furnishing such services which are in excess
of commissions which another broker may have charged for effecting the same
transaction. The expenses of the Investment Adviser are not necessarily reduced
as a result of the receipt of such supplemental information. Supplemental
investment research received by the Investment Adviser may also be used in
connection with other investment advisory accounts of the Investment Adviser and
its affiliates.
The Fund may invest in securities traded in the over-the-counter market.
Transactions in the over-the-counter market are generally principal transactions
with dealers and the costs of such transactions involve dealer spreads rather
than brokerage commissions. With respect to over-the-counter transactions, the
Fund deals directly with dealers who make markets in the securities involved
where possible, except in circumstances where better prices and execution are
available elsewhere. Under the Investment Company Act, Merrill Lynch and its
affiliates are generally prohibited from dealing with the Fund as principal in
the purchase and sale of securities. Since transactions in the over-the-counter
market usually involve transactions with dealers acting as principal for their
own account, neither Merrill Lynch nor any affiliate of Merrill Lynch may serve
as the Fund's dealer in connection with such transactions. However, such
companies may serve as broker for the Fund in over-the-counter transactions
conducted on an agency basis.
The aggregate dollar amounts of brokerage commissions paid by the Fund for
the fiscal years ended January 31, 1995, January 31, 1994 and January 31, 1993
were $537,039, $526,282 and $539,478, respectively. For these periods, brokers
providing research services received $470,758, $508,466 and $461,717,
respectively, in commissions on portfolio transactions effected for the Fund.
The aggregate dollar amounts of such portfolio transactions were $257,925,421,
$310,251,162 and $319,206,559, respectively. During those periods, the aggregate
dollar amounts of brokerage commissions paid by the Fund to Merrill Lynch were
$16,500, $29,058 and $25,500, respectively. These amounts represent 3.1%, 5.5%
and 4.7%, respectively, of the Fund's aggregate brokerage commissions paid to
all brokers during those periods. The Fund's aggregate dollar amounts of
transactions involving the payment of commissions effected through Merrill Lynch
during those periods were 3.2%, 4.9% and 5.7%, respectively, of the aggregate
dollar amount of all Fund transactions involving the payment of commissions.
The Fund, and one or more of the other investment companies or accounts
which the Investment Adviser or its affiliate FAM manage, may own the same
investments from time to time. Similarly, a particular security
35
<PAGE> 78
may be bought for one or more companies or accounts at the same time that one or
more companies or accounts are selling the same security. If purchases or sales
of securities for the Fund and other companies or accounts arise for
consideration at or about the same time, transactions in such securities will be
made, insofar as feasible, for the respective companies and accounts in a manner
deemed equitable to all. To the extent that transactions on behalf of more than
one company or account 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 the price of the security being purchased or sold for the
Fund.
Pursuant to Section 11(a) of the Securities Exchange Act of 1934, as
amended, Merrill Lynch may execute transactions for the Fund on the floor of any
national securities exchange, provided that prior authorization of such
transactions is obtained and Merrill Lynch furnishes a statement to the Fund at
least annually setting forth the compensation it has received in connection with
such transactions.
Investment Restrictions. The Fund has adopted certain fundamental
investment restrictions which may not be changed without the prior approval of
the holders of the majority of the Fund's outstanding shares. A majority for
this purpose means: (a) more than 50% of the outstanding shares, or (b) 67% of
the shares represented at a meeting where more than 50% of the outstanding
shares are represented, whichever is less. For purposes of the following
restrictions and the restrictions set forth in the Prospectus, all percentage
limitations apply immediately after a purchase or initial investment and any
subsequent change in any applicable percentage resulting from market
fluctuations does not require elimination of any security from the Fund's
portfolio. Under its fundamental investment restrictions, the Fund may not:
1. Make any investment inconsistent with the Fund's classification as
a diversified company under the Investment Company Act.
2. Invest more than 25% of its assets, taken at market value, in the
securities of issuers in any particular industry (excluding the U.S.
Government and its agencies and instrumentalities).
3. Make investments for the purpose of exercising control or
management.
4. Purchase or sell real estate, except that, to the extent permitted
by applicable law, the Fund may invest in securities directly or indirectly
secured by real estate or interests therein or issued by companies which
invest in real estate or interests therein.
5. Make loans to other persons, except that the acquisition of bonds,
debentures or other corporate debt securities and investment in government
obligations, commercial paper, pass-through instruments, certificates of
deposit, bankers' acceptances, repurchase agreements or any similar
instruments shall not be deemed to be the making of a loan, and except
further that the Fund may lend its portfolio securities, provided that the
lending of portfolio securities may be made only in accordance with
applicable law and the guidelines set forth in the Fund's Prospectus and
Statement of Additional Information, as they may be amended from time to
time.
6. Issue senior securities to the extent such issuance would violate
applicable law.
7. Borrow money, except that (i) the Fund may borrow from banks (as
defined in the Investment Company Act) in amounts up to 33 1/3% of its
total assets (including the amount borrowed), (ii) the Fund may borrow up
to an additional 5% of its total assets for temporary purposes, (iii) the
Fund may obtain such short-term credit as may be necessary for the
clearance of purchases and sales of portfolio securities
36
<PAGE> 79
and (iv) the Fund may purchase securities on margin to the extent permitted
by applicable law. The Fund may not pledge its assets other than to secure
such borrowings or, to the extent permitted by the Fund's investment
policies as set forth in its Prospectus and Statement of Additional
Information, as they may be amended from time to time, in connection with
hedging transactions, short sales, when-issued and forward commitment
transactions and similar investment strategies.
8. Underwrite securities of other issuers except insofar as the Fund
technically may be deemed an underwriter under the Securities Act of 1933,
as amended (the "Securities Act") in selling portfolio securities.
9. Purchase or sell commodities or contracts on commodities, except to
the extent that the Fund may do so in accordance with applicable law and
the Fund's Prospectus and Statement of Additional Information, as they may
be amended from time to time, and without registering as a commodity pool
operator under the Commodity Exchange Act.
The Fund has also adopted certain non-fundamental investment
restrictions, which may be changed by the Investment Adviser without
approval by the shareholders, subject to the supervision of the Board of
Directors. Under the non-fundamental investment restrictions, the Fund may
not:
a. Purchase securities of other investment companies, except to the
extent such purchases are permitted by applicable law.
b. Make short sales of securities or maintain a short position, except
to the extent permitted by applicable law. The Fund currently does not
intend to engage in short sales, except short sales "against the box."
c. Invest in securities which cannot be readily resold because of
legal or contractual restrictions or which cannot otherwise be marketed,
redeemed or put to the issuer or a third party, if at the time of
acquisition more than 15% of its total assets would be invested in such
securities. This restriction shall not apply to securities which mature
within seven days or securities which the Board of Directors of the Fund
has otherwise determined to be liquid pursuant to applicable law.
Notwithstanding the 15% limitation herein, to the extent the laws of any
state in which the Fund's shares are registered or qualified for sale
require a lower limitation, the Fund will observe such limitation. As of
the date hereof, therefore, the Fund will not invest more than 10% of its
total assets in securities which are subject to this investment restriction
(c). Securities purchased in accordance with Rule 144A under the Securities
Act (a "Rule 144A security") and determined to be liquid by the Fund's
Board of Directors are not subject to the limitations set forth in this
investment restriction (c). Notwithstanding the fact that the Board may
determine that a Rule 144A security is liquid and not subject to
limitations set forth in this investment restriction (c), the State of Ohio
does not recognize Rule 144A securities as securities that are free of
restrictions as to resale. To the extent required by Ohio law, the Fund
will not invest more than 50% of its total assets in securities of issuers
that are restricted as to disposition, including Rule 144A securities.
d. Invest in warrants if, at the time of acquisition, its investments
in warrants, valued at the lower of cost or market value, would exceed 5%
of the Fund's net assets; included within such limitation, but not to
exceed 2% of the Fund's net assets, are warrants which are not listed on
the New York Stock Exchange or American Stock Exchange or a major foreign
exchange. For purposes of this restriction, warrants acquired by the Fund
in units or attached to securities may be deemed to be without value.
37
<PAGE> 80
e. Invest in securities of companies having a record, together with
predecessors, of less than three years of continuous operation, if more
than 5% of the Fund's total assets would be invested in such securities.
This restriction shall not apply to mortgage-backed securities,
asset-backed securities or obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities.
f. Purchase or retain the securities of any issuer, if those
individual officers and directors of the Fund, the officers and general
partner of the Investment Adviser, the directors of such general partner or
the officers and directors of any subsidiary thereof each owning
beneficially more than one-half of one percent of the securities of such
issuer own in the aggregate more than 5% of the securities of such issuer.
g. Invest in real estate limited partnership interests or interests in
oil, gas or other mineral leases, or exploration or development programs,
except that the Fund may invest in securities issued by companies that
engage in oil, gas or other mineral exploration or development activities.
h. Write, purchase or sell puts, calls, straddles, spreads or
combinations thereof, except to the extent permitted in the Fund's
Prospectus and Statement of Additional Information, as they may be amended
from time to time.
i. Notwithstanding fundamental restriction (7) above, borrow amounts
in excess of 5% of the Fund's assets. In addition, the Fund may not pledge
any of its assets, except that the Fund may pledge securities having a
value of not more than 10% of the Fund's assets to secure permitted
borrowings.
---------------
Because of the affiliation of Merrill Lynch with the Fund, the Fund is
prohibited from engaging in certain transactions involving Merrill Lynch except
pursuant to a permissive order or otherwise in compliance with the provisions of
the Investment Company Act and the rules and regulations thereunder. Included
among such restricted transactions are purchases from or sales to Merrill Lynch
of securities in transactions in which it acts as principal and purchases of
securities from underwriting syndicates of which Merrill Lynch is a member.
ADDITIONAL INFORMATION
Performance Data. From time to time the Fund may include its average
annual total return and other total return data in advertisements or information
furnished to present or prospective investors. Total return figures are based on
the Fund's historical performance and are not intended to indicate future
performance. Average annual total return is determined separately for Class A,
Class B, Class C and Class D shares in accordance with a formula specified by
the Securities and Exchange Commission.
Average annual total return quotations for the specified periods are
computed by finding the average annual compounded rates of return (based on net
investment income and any realized and unrealized capital gains or losses on
portfolio investments over such periods) that would equate the initial amount
invested to the redeemable value of such investment at the end of each period.
Average annual total return is computed assuming all dividends and distributions
are reinvested and taking into account all applicable recurring and nonrecurring
expenses, including the sales charge in the case of Class A and Class D shares
and the CDSC that would be applicable to a complete redemption of the investment
at the end of each specified period in the case of Class B and Class C shares.
The Fund also may quote annual, average annual and annualized total return
and aggregate total return performance data, both as a percentage and as a
dollar amount based on a hypothetical $1,000 investment, for
38
<PAGE> 81
various periods other than those noted below. Such data will be computed as
described above, except that (1) the rates of return calculated will not be
average annual rates, but rather, actual annual, annualized or aggregate total
return and (2) the maximum applicable sales charges will not be included with
respect to annual or annualized rates of return calculations. Aside from the
impact on the performance calculation of including or excluding the maximum
applicable sales charges, actual annual or annualized total return data
generally will be lower than average annual total return data since the average
rates of return reflect compounding of return; aggregate total return data
generally will be higher than average annual total return data since the
aggregate rates of return reflect compounding over a longer period of time.
Set forth below is total return information for both Class A, Class B,
Class C and Class D shares of the Fund for the periods indicated.
AVERAGE ANNUAL TOTAL RETURN
(INCLUDING MAXIMUM APPLICABLE SALES CHARGES)
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES
------------------------------------------ ------------------------------------------
EXPRESSED AS A REDEEMABLE VALUE EXPRESSED AS A REDEEMABLE VALUE
PERCENTAGE BASED OF A HYPOTHETICAL PERCENTAGE BASED OF A HYPOTHETICAL
ON A HYPOTHETICAL $1,000 INVESTMENT AT ON A HYPOTHETICAL $1,000 INVESTMENT AT
PERIOD $1,000 INVESTMENT THE END OF THE PERIOD $1,000 INVESTMENT THE END OF THE PERIOD
- ----------------------------- ----------------- --------------------- ----------------- ---------------------
<S> <C> <C> <C> <C>
One Year Ended January 31,
1995....................... (15.90)% $ 841.00 (15.50)% $ 845.00
Five Years Ended January 31,
1995....................... 6.91 % $1,396.60 6.95 % $1,399.10
Ten Years Ended January 31,
1995....................... -- -- 9.69 % $2,521.40
Inception (October 26, 1988)
to January 31, 1995........ 7.89 % $1,609.40 -- $ --
</TABLE>
ANNUAL TOTAL RETURN
(EXCLUDING MAXIMUM APPLICABLE SALES CHARGES)
<TABLE>
<S> <C> <C> <C> <C>
FOR YEAR ENDED JANUARY 31,
- -----------------------------
1995......................... (11.23)% $ 887.70 (12.22)% $ 887.80
1994......................... 15.78 % 1,157.80 14.60 % 1,146.00
1993......................... 4.79 % 1,047.90 3.75 % 1,037.50
1992......................... 28.35 % 1,283.50 26.96 % 1,269.60
1991......................... 6.64 % 1,066.40 5.59 % 1,055.90
1990......................... 10.92 % 1,109.20 9.77 % 1,097.70
1989......................... 3.90 %* 1,039.00 22.11 % 1,221.10
1988......................... (8.63)% 913.70
1987......................... 26.99 % 1,269.90
1986......................... 15.87 % 1,158.70
1985......................... 20.33 %** 1,203.30
</TABLE>
- ---------------
*Commencement of operations of Class A shares was October 26, 1988.
**Commencement of operations of Class B shares was March 5, 1984.
39
<PAGE> 82
AGGREGATE TOTAL RETURN
(INCLUDING MAXIMUM APPLICABLE SALES CHARGES)
<TABLE>
<S> <C> <C> <C> <C>
Inception (October 26, 1988)
to January 31, 1995................... 60.94 % $ 1,609.40
Inception (March 5, 1984)
to January 31, 1995................... 203.40 % $ 3,034.00
</TABLE>
<TABLE>
<CAPTION>
CLASS C SHARES* CLASS D SHARES*
------------------------------------------ ------------------------------------------
EXPRESSED AS A REDEEMABLE VALUE EXPRESSED AS A REDEEMABLE VALUE
PERCENTAGE BASED OF A HYPOTHETICAL PERCENTAGE BASED OF A HYPOTHETICAL
ON A HYPOTHETICAL $1,000 INVESTMENT AT ON A HYPOTHETICAL $1,000 INVESTMENT AT
PERIOD $1,000 INVESTMENT THE END OF THE PERIOD $1,000 INVESTMENT THE END OF THE PERIOD
- ----------------------------- ----------------- --------------------- ----------------- ---------------------
AVERAGE ANNUAL TOTAL RETURN
(INCLUDING MAXIMUM APPLICABLE SALES CHARGES)
<S> <C> <C> <C> <C>
Inception (October 21, 1994)
to January 31, 1995........ (16.95)% $949.40 (27.42)% $914.30
<CAPTION>
ANNUAL TOTAL RETURN
(EXCLUDING MAXIMUM APPLICABLE SALES CHARGES)
<S> <C> <C> <C> <C>
Inception (October 21, 1994)
to January 31, 1995........ (4.12)% $958.80 (3.50)% $965.00
<CAPTION>
AGGREGATE TOTAL RETURN
(INCLUDING MAXIMUM APPLICABLE SALES CHARGES)
<S> <C> <C> <C> <C>
Inception (October 21, 1994)
to January 31, 1995........ (5.06)% $949.40 (8.57)% $914.30
</TABLE>
- ---------------
*Class C shares and D shares commenced operations on October 21, 1994.
In order to reflect the reduced sales charges in the case of Class A or
Class D shares or the waiver of the CDSC in the case of Class B or Class C
shares applicable to certain investors, as described under "Purchase of Shares"
and "Redemptions," respectively, the total return data quoted by the Fund, in
advertisements directed to such investors, may not take into account the
contingent deferred sales charge and therefore may reflect greater total return
since, due to the reduced sales charges or the waiver of sales charges, a lower
amount of expenses may be deducted.
From time to time, the Fund may include the Fund's Morningstar's
risk-adjusted performance rating in advertisements or supplemental sales
literature.
Common Stock. The Fund has authorized capital of 400,000,000 shares of
Common Stock, par value $0.10 per share, divided into four classes, designated
Class A, Class B, Class C and Class D Common Stock, each of which consists of
100,000,000 shares. Class A, Class B, Class C and Class D Common Stock represent
an interest in the same assets of the Fund and are identical in all respects
except that the Class B, Class C and Class D shares bear certain expenses
related to the account maintenance and/or distribution of such shares and have
exclusive voting rights with respect to matters relating to such account
maintenance and/or distribution expenditures. Voting rights are not cumulative.
This means that the holders of more than 50% of the shares can elect all of the
Directors of the Fund if they choose to do so and, in such event, the holders of
the remaining less than 50% of the shares voting will not be able to elect any
person or persons to the Board of Directors. The Fund does not intend to hold
meetings of shareholders in any year in which the Investment Company Act does
not require shareholders to act upon any of the following matters: (i) election
of Directors; (ii) approval of an investment advisory agreement; (iii) approval
of a distribution agreement; or
40
<PAGE> 83
(iv) ratification of selection of independent auditors. Generally, under
Maryland law, a meeting of shareholders may be called for any purpose on the
written request of the holders of at least 25% of the outstanding shares of the
Fund. Shares are issued fully paid and nonassessable and have no preemptive
rights.
To the knowledge of the Fund, no person or entity owned beneficially 5% or
more of the Fund's shares on May 1, 1995.
Computation of Offering Price Per Share. The offering price for Class A,
Class B, Class C and Class D shares of the Fund, based on the value of the
Fund's net assets and number of shares outstanding as of January 31, 1995, is
calculated as set forth below.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS D
---------- ------------ ------- ------------
<S> <C> <C> <C> <C>
Net Assets................................... $8,665,188 $119,186,282 $79,868 $156,946,996
========= =========== ======= ===========
Number of Shares Outstanding................. 639,660 8,939,516 6,013 11,593,928
========= =========== ======= ===========
Net Asset Value Per Share (net assets divided
by number
of shares outstanding)..................... $ 13.55 $ 13.33 $ 13.28 $ 13.54
Sales Charge* (for Class A shares: 5.25% of
offering price;
5.54% of net asset value).................. .75 ** ** .75
---------- ------------ ------- ------------
Offering Price............................... $ 14.30 $ 13.33 $ 13.28 $ 14.29
========= =========== ======= ===========
</TABLE>
- ---------------
* Rounded to the nearest one-hundredth percent; assumes maximum sales charge is
applicable.
** Class B and Class C shares are not subject to an initial sales charge but may
be subject to a CDSC on redemption. See "Purchase of Shares -- Deferred Sales
Charge Alternatives -- Class B and Class C Shares" in the Prospectus and
"Redemption of Shares -- Deferred Sales Charges -- Class B and Class C
Shares" herein.
Independent Auditors. Deloitte & Touche LLP, 117 Campus Drive, Princeton,
New Jersey 08540, has been selected as the independent auditors of the Fund. The
independent auditors are responsible for auditing the annual financial
statements of the Fund.
Custodian. The Bank of New York, 90 Washington Street, 12th floor, New
York, New York 10286, acts as custodian of the Fund's assets. The Custodian is
responsible for, among other things, safeguarding and controlling the Fund's
cash and securities, handling the receipt and delivery of securities, and
collecting interest and dividends on the Fund's investments.
Transfer Agent. Merrill Lynch Financial Data Services, Inc., 4800 Deer
Lake Drive East, Jacksonville, Florida 32246-6484, acts as the Fund's Transfer
Agent. The Transfer Agent is responsible for the issuance, transfer and
redemption of shares and the opening, maintenance and servicing of shareholder
accounts. See "The Fund and Its Management -- Transfer Agency Services Fee" in
the Prospectus.
Reports to Shareholders. The Fund's fiscal year ends on January 31 of each
year. The Fund distributes reports at least semi-annually to its shareholders.
Each year an annual report, containing financial statements audited by the
Fund's independent auditors, is sent to shareholders.
Legal Counsel. Shereff, Friedman, Hoffman & Goodman, LLP, 919 Third
Avenue, New York, New York 10022, is counsel for the Fund.
41
<PAGE> 84
Registration Statement. This Statement of Additional Information and the
Prospectus do not contain all of the information set forth in the Registration
Statement the Fund has filed with the Securities and Exchange Commission. The
complete Registration Statement may be obtained from the Securities and Exchange
Commission upon payment of the fee prescribed by the rules and regulations of
the Commission.
42
<PAGE> 85
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders,
MERRILL LYNCH FUND FOR TOMORROW, INC.:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of Merrill Lynch Fund For Tomorrow, Inc., as of
January 31, 1995, the related statements of operations for the year then ended
and changes in net assets for each of the years in the two-year period then
ended, and the financial highlights for each of the years in the five-year
period then ended. These financial statements and the financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and the financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at January
31, 1995, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Merrill Lynch Fund
For Tomorrow, Inc., as of January 31, 1995, the results of its operations, the
changes in its net assets, and the financial highlights for the respective
stated periods in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Princeton, New Jersey
March 8, 1995
43
<PAGE> 86
<TABLE>
SCHEDULE OF INVESTMENTS
<CAPTION>
Shares Value Percent of
Concept Tomorrow Held Stocks Cost (Note 1a) Net Assets
<S> <C> <S> <C> <C> <C>
Computer Technologies
Electronics 50,000 American Power Conversion Corp. $ 918,750 $ 768,750 0.3%
Personal Computers 100,000 Apple Computer, Inc. 4,868,130 4,037,500 1.4
Components 140,000 Creative Technology, Ltd. (Ordinary) 1,965,000 1,645,000 0.6
Information Systems 50,000 ++Sun Microsystems, Inc. 1,096,250 1,625,000 0.6
Semiconductor 100,000 ++VLSI Technology, Inc. 1,160,000 1,250,000 0.4
Components 1,400,000 ++Videologic Group PLC (b) 971,040 1,083,880 0.4
Information Systems 50,000 ++Wonderware Corp. 1,025,000 1,437,500 0.5
------------ ------------ ------
12,004,170 11,847,630 4.2
Demographic Trends
Health & Fitness 307,350 CML Group Inc. 5,535,775 3,265,594 1.1
Leisure & Entertainment 50,000 Carnival Corp., (Class A) 1,055,190 1,050,000 0.4
Leisure & Entertainment 100,000 Mirage Resorts, Inc. 2,025,375 2,237,500 0.8
Leisure & Entertainment 50,000 The Promus Companies, Inc. 1,724,875 1,700,000 0.6
Leisure & Entertainment 100,000 ++WMS Industries Inc. 2,696,774 1,787,500 0.6
------------ ------------ ------
13,037,989 10,040,594 3.5
Developing Foreign Economies
Telecommunications 3,000,000 Champion Technology Holdings
Ltd. (b) 997,434 558,500 0.2
Multi-Industry 300,000 Grupo Carso, S.A. de C.V. "A1" 1,192,885 1,747,826 0.6
Financial Services 60,100 Istituto Mobiliare Italiano
S.p.A. (ADR)* 1,363,199 1,179,462 0.4
Telecommunications 190,000 Telefonos de Mexico, S.A. de
C.V. (ADR)* 7,183,836 6,721,250 2.4
------------ ------------ ------
10,737,354 10,207,038 3.6
Environmental Solutions
Energy 178,000 Kenetech Corp. 2,589,357 2,803,500 1.0
Pollution Technology 250,000 ++Molten Metal Technology, Inc. 4,087,770 4,343,750 1.5
Pollution Technology 7,200 ++Thermo Ecotek (Rights)(a) 4,500 900 0.0
Pollution Technology 180,000 Thermo Electron Corp. 6,840,000 8,032,500 2.8
------------ ------------ ------
13,521,627 15,180,650 5.3
Extended Economic Cycles
Metals 50,000 ++Bethlehem Steel Corp. 1,137,500 781,250 0.3
Machinery 50,000 Caterpillar, Inc. 2,695,963 2,575,000 0.9
Machinery 50,000 Deere & Co. 3,405,500 3,562,500 1.3
Chemicals 50,000 Eastman Chemical Co. 2,679,687 2,487,500 0.9
Chemicals 100,000 Imperial Chemical Industries PLC
(ADR)* 5,251,425 4,662,500 1.6
Chemicals 50,000 Lyondell Petrochemical Co. 1,605,311 1,106,250 0.4
Chemicals 50,000 Rohm & Haas Co. 3,329,500 2,712,500 0.9
------------ ------------ ------
20,104,886 17,887,500 6.3
</TABLE>
44
<PAGE> 87
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Shares Value Percent of
Concept Tomorrow Held Stocks Cost (Note 1a) Net Assets
<S> <C> <S> <C> <C> <C>
Future Retailing
Specialty Retail 100,000 Authentic Fitness Corp. $ 1,556,250 $ 1,325,000 0.5%
Specialty Retail 19,500 ++Cannondale Corp. 253,500 234,000 0.1
Private Label 160,000 Cott Corp. 5,005,002 1,400,000 0.5
Specialty Retail 30,000 ++Daisytek International Corp. 450,000 495,000 0.2
Private Label 65,300 ++Nutramax Products, Inc. 898,900 571,375 0.2
Specialty Retail 88,400 ++OfficeMax, Inc. 1,679,600 2,298,400 0.8
Private Label 100,000 The Perrigo Company, Inc. 2,235,781 1,287,500 0.4
Specialty Retail 75,000 ++Variflex, Inc. 1,152,500 1,106,250 0.4
Specialty Retail 200,000 Wal-Mart Stores, Inc. 5,258,570 4,600,000 1.6
------------ ------------ ------
18,490,103 13,317,525 4.7
Global Market Expansion
Power Systems 50,000 ++ASEA AB 3,667,955 3,664,517 1.3
Household Products 74,600 Colgate-Palmolive Co. 1,548,920 4,690,475 1.6
Household Products 50,000 Kimberly-Clark Corp. 2,419,312 2,406,250 0.8
Food & Beverage 180,000 PepsiCo, Inc. 6,356,632 6,637,500 2.3
Electronics 100,000 ++Philips Electronics N.V. (ADR)* 3,231,000 3,150,000 1.1
Building Materials 250,000 ++Royal Plastic Group Limited (b) 2,049,180 l,910,636 0.7
Consumer Appliances 50,000 Whirlpool Corp. 2,543,663 2,493,750 0.9
------------ ------------ ------
21,816,662 24,953,128 8.7
Healthcare Cost Containment
Biotechnology 40,136 ++Chiron Corp. 2,272,701 2,739,282 1.0
Pharmaceuticals 150,900 Merck & Co., Inc. 5,685,639 6,073,725 2.1
Generic Drugs 100,000 Mylan Labratories Inc. 2,757,780 2,800,000 1.0
Pharmaceuticals 50,000 Pfizer, Inc. 1,517,486 4,087,500 1.4
Pharmaceuticals 137,200 Schering-Plough Corp. 3,180,566 10,770,200 3.8
Medical Equipment 100,000 Thermotrex Corp. 1,529,330 1,325,000 0.5
Medical Equipment 100,000 United States Surgical Corp. 6,799,013 2,325,000 0.8
------------ ------------ ------
23,742,515 30,120,707 10.6
Industrial Outsourcing
Specialty Services 82,400 Interim Services, Inc. 1,778,775 1,926,100 0.7
Automotive Components 185,000 Magna International, Inc. 2,968,125 6,660,000 2.3
Specialty Services 100,000 Olsten Corp. 3,190,200 3,312,500 1.2
------------ ------------ ------
7,937,100 11,898,600 4.2
Industrial Renaissance
Automotive 285,600 Chrysler Corp. 8,522,582 12,852,000 4.5
Automotive 200,000 Ford Motor Co. 4,590,380 5,050,000 1.8
Automotive 200,000 General Motors Corp. 7,896,900 7,750,000 2.7
Information Systems 130,000 International Business Machines
Corp. 7,445,257 9,376,250 3.3
------------ ------------ ------
28,455,119 35,028,250 12.3
</TABLE>
45
<PAGE> 88
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Shares Value Percent of
Concept Tomorrow Held Stocks Cost (Note 1a) Net Assets
<S> <C> <S> <C> <C> <C>
Multimedia
Wireless Cable Television 55,000 ++American Telecasting, Inc. $ 990,000 $ 605,000 0.2%
Wireless Cable Television 102,000 CAI Wireless Systems, Inc. 1,172,000 994,500 0.3
Cable/Telephone 75,000 Comcast UK Cable Partners, Ltd. 1,125,000 1,171,875 0.4
Broadcasting & Publishing 450,000 The News Corp. Ltd. (ADR)* 6,907,690 6,975,000 2.5
Broadcasting & Publishing 225,000 The News Corp. Ltd. (Conv. Pfd.)
(ADR)* 2,122,560 3,206,250 1.1
Wireless Cable Television 50,000 ++Preferred Entertainment, Inc. 938,500 612,500 0.2
Entertainment 125,000 Time Warner, Inc. 3,491,400 4,500,000 1.6
Leisure & Entertainment 54,400 The Walt Disney Co. 1,424,668 2,767,600 1.0
------------ ------------ ------
18,171,818 20,832,725 7.3
Progressive Education
Education Services 175,000 ++Education Alternatives, Inc. 5,308,522 2,843,750 1.0
Education Products 90,000 ++Scholastic Corporation 3,539,749 4,477,500 1.6
Education Products 42,500 ++Westcott Communications, Inc. 627,580 600,312 0.2
------------ ------------ ------
9,475,851 7,921,562 2.8
Strategic Growth Opportunities
Apparel 225,000 ++Chic by H.I.S., Inc. 2,846,059 2,418,750 0.8
Restaurant 100,000 Wendy's International, Inc. 1,642,712 1,612,500 0.6
------------ ------------ ------
4,488,771 4,031,250 1.4
Telecommunications
Telecommunications 140,700 ++ALC Communications Corp. 2,157,975 4,080,300 1.4
Components 150,000 ++ANTEC Corp. 3,557,150 2,512,500 0.9
Cellular Communications 200,000 AirTouch Communications, Inc. 4,600,000 5,500,000 1.9
Components 150,000 ++Inter-Tel, Inc. 1,383,862 1,612,500 0.6
Telecommunications 150,000 MCI Communications Corp. 3,895,310 2,737,500 1.0
Telecommunications 100,000 ++MFS Communications Co., Inc. 2,536,850 3,800,000 1.3
Paging Systems 225,000 ++Metrocall, Inc. 3,473,127 3,375,000 1.2
Components 50,000 Motorola, Inc. 2,925,000 2,956,250 1.0
Components 150,000 Nokia Corp. AB (Conv. Pfd.) (ADR)* 9,756,375 10,968,750 3.9
Paging Systems 300,000 USA Mobile Communications
Holdings, Inc. 2,837,500 3,525,000 1.2
------------ ------------ ------
37,123,149 41,067,800 14.4
Total Stocks 239,107,114 254,334,959 89.3
</TABLE>
46
<PAGE> 89
<TABLE>
SCHEDULE OF INVESTMENTS (concluded)
<CAPTION>
Value Percent of
Face Amount Short-Term Securities Cost (Note 1a) Net Assets
<S> <C> <S> <C> <C> <C>
Commercial Paper** $ 12,000,000 AMRO North American Finance,
5.80% due 2/23/1995 $ 11,957,467 $ 11,957,467 4.2%
5,985,000 General Electric Capital Corp.,
5.80% due 2/01/1995 5,985,000 5,985,000 2.1
US Government & 5,000,000 Federal National Mortgage
Agency Obligations** Association, 5.71% due 3/08/1995 4,972,243 4,972,243 1.7
Total Short-Term Securities 22,914,710 22,914,710 8.0
Total Investments $262,021,824 277,249,669 97.3
============
Other Assets Less Liabilities 7,628,665 2.7
------------ ------
Net Assets $284,878,334 100.0%
============ ======
<FN>
*American Depositary Receipts (ADR).
**Commercial Paper and certain US Government & Agency Obligations
are traded on a discount basis; the interest rates shown are the
discount rates paid at the time of purchase by the Fund.
++Non-income producing security.
(a)The rights may be exercised until 2/21/1995.
(b)Restricted securities as to resale. The value of the Fund's
investment in restricted securities was approximately $3,553,000,
representing 1.25% of net assets.
Acquisition Value
Issue Dates Cost (Note 1a)
Champion Technology
Holdings Ltd. 11/01/1994--11/11/1994 $ 997,434 $ 558,500
Royal Plastic
Group Limited 11/23/1994 2,049,180 1,910,636
Videologic Group PLC 7/01/1994 971,040 1,083,880
Total $4,017,654 $3,553,016
========== ==========
See Notes to Financial Statements.
</TABLE>
47
<PAGE> 90
FINANCIAL INFORMATION
Statement of Assets and Liabilities as of January 31, 1995
<TABLE>
<CAPTION>
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$262,021,824) (Note 1a) $277,249,669
Receivables:
Securities sold $ 14,799,647
Dividends 289,260
Capital shares sold 122,503 15,211,410
------------
Prepaid registration fees and other assets (Note 1f) 31,345
------------
Total assets 292,492,424
------------
Liabilities: Payables:
Securities purchased 5,816,670
Capital shares redeemed 997,339
Investment adviser (Note 2) 166,016
Distributor (Note 2) 143,699 7,123,724
------------
Accrued expenses and other liabilities 490,366
------------
Total liabilities 7,614,090
------------
Net Assets: Net assets $284,878,334
============
Net Assets Class A Shares of Common Stock, $0.10 par value, 100,000,000
Consist of: shares authorized $ 63,966
Class B Shares of Common Stock, $0.10 par value, 100,000,000
shares authorized 893,952
Class C Shares of Common Stock, $0.10 par value, 100,000,000
shares authorized 601
Class D Shares of Common Stock, $0.10 par value, 100,000,000
shares authorized 1,159,393
Paid-in capital in excess of par 257,004,879
Accumulated investment loss--net (512,355)
Undistributed realized capital gains on investments and
foreign currency transactions--net 11,040,176
Unrealized appreciation on investments and foreign currency
transactions--net 15,227,722
------------
Net assets $284,878,334
============
Net Asset Value: Class A--Based on net assets of $8,665,188 and 639,660 shares
outstanding $ 13.55
============
Class B--Based on net assets of $119,186,282 and 8,939,516 shares
outstanding $ 13.33
============
Class C--Based on net assets of $79,868 and 6,013 shares outstanding $ 13.28
============
Class D--Based on net assets of $156,946,996 and 11,593,928 shares
outstanding $ 13.54
============
See Notes to Financial Statements.
</TABLE>
48
<PAGE> 91
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations for the Year Ended January 31, 1995
<CAPTION>
<S> <S> <C> <C>
Investment Dividends (net of $59,292 foreign withholding tax) $ 4,101,437
Income Interest and discount earned 832,897
(Notes 1d & 1e): Other income 304,376
------------
Total income 5,238,710
------------
Expenses: Distribution fees--Class B (Note 2) $ 2,927,385
Investment advisory fees (Note 2) 2,169,115
Transfer agent fees--Class B (Note 2) 626,543
Printing and shareholder reports 183,061
Transfer agent fees--Class D (Note 2) 96,585
Account maintenance fees--Class D (Note 2) 78,494
Professional fees 70,341
Accounting services (Note 2) 69,693
Registration fees (Note 1f) 62,585
Custodian fees 42,904
Directors' fees and expenses 20,420
Transfer agent fees--Class A (Note 2) 18,305
Distribution fees--Class C (Note 2) 93
Transfer agent fees--Class C (Note 2) 35
Other 3,585
------------
Total expenses 6,369,144
------------
Investment loss--net (1,130,434)
------------
Realized & Realized gain (loss) on:
Unrealized Gain Investments--net 16,365,222
(Loss) on Foreign currency transactions--net (31,963) 16,333,259
Investments & ------------
Foreign Currency Change in unrealized appreciation/depreciation on:
Transactions Investments--net (62,921,879)
- --Net (Notes Foreign currency transactions--net 9,481 (62,912,398)
1b, 1c, 1e & 3): ------------ ------------
Net realized and unrealized loss on investments and
foreign currency transactions (46,579,139)
------------
Net Decrease in Net Assets Resulting from Operations $(47,709,573)
============
See Notes to Financial Statements.
</TABLE>
49
<PAGE> 92
FINANCIAL INFORMATION (continued)
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Year Ended
January 31,
Increase (Decrease) in Net Assets: 1995 1994
<S> <S> <C> <C>
Operations: Investment loss--net $ (1,130,434) $ (203,942)
Realized gain on investments and foreign currency trans-
actions--net 16,333,259 46,285,020
Change in unrealized appreciation/depreciation on investments
and foreign currency transactions--net (62,912,398) 9,227,443
------------ ------------
Net increase (decrease) in net assets resulting from operations (47,709,573) 55,308,521
------------ ------------
Distributions to Realized gain on investments--net:
Shareholders Class A (629,067) (1,437,834)
(Note 1g): Class B (18,732,811) (52,604,277)
Class C (311) --
Class D (2,376,409) --
------------ ------------
Net decrease in net assets resulting from distributions to
shareholders (21,738,598) (54,042,111)
Capital Share Net decrease in net assets derived from capital share
Transactions transactions (53,039,480) (52,481,091)
(Note 4): ------------ ------------
Net Assets: Total decrease in net assets (122,487,651) (51,214,681)
Beginning of year 407,365,985 458,580,666
------------ ------------
End of year $284,878,334 $407,365,985
============ ============
See Notes to Financial Statements.
</TABLE>
50
<PAGE> 93
FINANCIAL INFORMATION (continued)
<TABLE>
Financial Highlights
<CAPTION>
The following per share data and ratios have been derived
from information provided in the financial statements. Class A
For the Year Ended January 31,
Increase (Decrease) in Net Asset Value: 1995++ 1994 1993 1992 1991
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year $ 16.39 $ 16.29 $ 16.84 $ 15.49 $ 15.26
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .09 .15 .25 .36 .41
Realized and unrealized gain (loss) on
investments and foreign currency
transactions--net (1.97) 2.18 .49 3.74 .59
-------- -------- -------- -------- --------
Total from investment operations (1.88) 2.33 .74 4.10 1.00
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net -- -- (.23) (.35) (.40)
Realized gain on investments--net (.96) (2.23) (1.06) (2.40) (.37)
-------- -------- -------- -------- --------
Total dividends and distributions (.96) (2.23) (1.29) (2.75) (.77)
-------- -------- -------- -------- --------
Net asset value, end of year $ 13.55 $ 16.39 $ 16.29 $ 16.84 $ 15.49
======== ======== ======== ======== ========
Total Investment Based on net asset value per share (11.23%) 15.78% 4.79% 28.35% 6.64%
Return:* ======== ======== ======== ======== ========
Ratios to Average Expenses .98% .88% .90% .95% 96%
Net Assets: ======== ======== ======== ======== ========
Investment income--net .59% .95% 1.35% 1.81% 2.58%
======== ======== ======== ======== ========
Supplemental Net assets, end of year (in thousands) $ 8,665 $ 10,942 $ 11,394 $ 8,846 $ 5,478
Data: ======== ======== ======== ======== ========
Portfolio turnover 45.86% 48.63% 40.58% 48.28% 25.57%
======== ======== ======== ======== ========
<FN>
*Total investment return excludes the effect of sales loads.
++Based on average shares outstanding during the year.
See Notes to Financial Statements.
</TABLE>
51
<PAGE> 94
FINANCIAL INFORMATION (continued)
<TABLE>
Financial Highlights (continued)
<CAPTION>
The following per share data and ratios have been derived
from information provided in the financial statements. Class B
For the Year Ended January 31,
Increase (Decrease) in Net Asset Value: 1995++ 1994++ 1993 1992 1991
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year $ 16.30 $ 16.28 $ 16.82 $ 15.48 $ 15.24
Operating -------- -------- -------- -------- --------
Performance: Investment income (loss)--net (.06) (.01) .06 .14 .24
Realized and unrealized gain (loss) on
investments and foreign currency
transactions--net (1.96) 2.17 .52 3.77 .60
-------- -------- -------- -------- --------
Total from investment operations (2.02) 2.16 .58 3.91 .84
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net -- -- (.06) (.17) (.23)
Realized gain on investments--net (.95) (2.14) (1.06) (2.40) (.37)
-------- -------- -------- -------- --------
Total dividends and distributions (.95) (2.14) (1.12) (2.57) (.60)
-------- -------- -------- -------- --------
Net asset value, end of year $ 13.33 $ 16.30 $ 16.28 $ 16.82 $ 15.48
======== ======== ======== ======== ========
Total Based on net asset value per share (12.22%) 14.60% 3.75% 26.96% 5.59%
Investment ======== ======== ======== ======== ========
Return:*
Ratios to Expenses, excluding distribution fees .99% .91% .92% .98% 1.00%
Average ======== ======== ======== ======== ========
Net Assets: Expenses 1.99% 1.91% 1.92% 1.98% 2.00%
======== ======== ======== ======== ========
Investment income (loss)--net (.38%) (.07%) .36% .83% 1.53%
======== ======== ======== ======== ========
Supplemental Net assets, end of year (in thousands) $119,186 $396,424 $447,186 $476,106 $442,944
Data: ======== ======== ======== ======== ========
Portfolio turnover 45.86% 48.63% 40.58% 48.28% 25.57%
======== ======== ======== ======== ========
<FN>
*Total investment return excludes the effect of sales loads.
++Based on average shares outstanding during the year.
See Notes to Financial Statements.
</TABLE>
52
<PAGE> 95
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights (concluded)
<CAPTION>
The following per share data and ratios have been derived For the Period
from information provided in the financial statements. October 21, 1994++ to
January 31, 1995++++
Increase (Decrease) in Net Asset Value: Class C Class D
<S> <S> <C> <C>
Per Share Net asset value, beginning of period $ 14.08 $ 14.26
Operating ------------ ------------
Performance: Investment loss--net (.04) (.01)
Realized and unrealized loss on investments and foreign currency
transactions--net (.54) (.49)
------------ ------------
Total from investment operations (.58) (.50)
------------ ------------
Less distributions:
Realized gain on investments--net (.22) (.22)
------------ ------------
Total distributions (.22) (.22)
------------ ------------
Net asset value, end of period $ 13.28 $ 13.54
============ ============
Total Investment Based on net asset value per share (4.12%)+++ (3.50%)+++
Return:** ============ ============
Ratios to Expenses, excluding account maintenance and distribution fees 1.26%* 1.18%*
Average Net ============ ============
Assets: Expenses 2.26%* 1.43%*
============ ============
Investment loss--net (.87%)* (.23%)*
============ ============
Supplemental Net assets, end of period (in thousands) $ 80 $ 156,947
Data: ============ ============
Portfolio turnover 45.86% 45.86%
============ ============
<FN>
*Annualized.
**Total investment return excludes the effect of sales loads.
++Commencement of Operations.
++++Based on average shares outstanding during the period.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
53
<PAGE> 96
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch Fund For Tomorrow, Inc. (the "Fund") is registered
under the Investment Company Act of 1940 as a diversified, open-end
management investment company. 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 investments--Portfolio securities which are traded
on stock exchanges are valued at their last sale prices as of the
close of business on the day the securities are being valued or,
lacking any sales on that day, at the last available bid price.
Securities traded in the over-the-counter market are valued at the
last bid prices quoted by brokers that make markets in the
securities at the close of trading on the New York Stock Exchange.
Portfolio securities which are traded both in the over-the-counter
market and on a stock exchange are valued based upon the prices or
quotes obtained from the broadest and most representative market.
Options, which are traded on exchanges, are valued at their last
sale price as of the close of such exchanges or, lacking any sales,
at the last available bid price. Securities and other assets for
which market quotations are not readily available are valued at fair
value as determined in good faith by or under the direction of the
Board of Directors of the Fund. Short-term securities are valued at
amortized cost, which approximates market value.
(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 equity, 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.
* Options--The Fund can write covered call 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
sold through an exercise of an option, the related premium received
is deducted from the basis 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 premium
received (or gain or loss to the extent of the cost of the closing
transaction is less than or exceeds the premium received).
(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 substantially 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, dividends 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). Dividend income is recorded on the ex-
dividend date except that if the ex-dividend date has passed,
certain dividends from foreign securities are recorded as soon as
the Fund is informed of the ex-dividend date. 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 to shareholders--Dividends and
distributions paid by the Fund are recorded on the ex-dividend
dates.
54
<PAGE> 97
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 and Co., Inc. ("ML & Co."), which
is the general partner. The Fund has also entered into a
Distribution Agreement and Distribution Plans with Merrill Lynch
Funds Distributor, Inc. ("MLFD" or "Distributor"), a wholly-owned
subsidiary of Merrill Lynch Group, Inc.
MLAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee based upon the average daily
value of the Fund's net assets at the following annual rates: 0.65%
of the average daily net assets not exceeding $750 million; 0.60% of
the average daily net assets exceeding $750 million but not
exceeding $1 billion, and 0.55% of the average daily net assets
exceeding $1 billion. The Investment Advisory Agreement obligates
MLAM to reimburse the Fund to the extent the Fund's expenses
(excluding interest, taxes, distribution fees, brokerage fees and
commissions, and extraordinary items) exceed 2.5% of the Fund's
first $30 million of average daily net assets, 2.0% of the next $70
million of average daily net assets, and 1.5% of the average daily
net assets in excess thereof. No fee payment will be made to the
Investment Adviser which would result in Fund expenses exceeding, on
a cumulative annualized basis, the most restrictive applicable
expense limitation in effect at the time of such payment.
Pursuant to the distribution plans (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% 0.75%
Class C 0.25% 0.75%
Class D 0.25% --
Pursuant to a sub-agreement with the Distributor, Merrill Lynch,
Pierce, Fenner & Smith Inc. ("MLPF&S"), a subsidiary of ML & Co.,
also provides account maintenance and distribution services to the
Fund. The ongoing account maintenance fee compensates the
Distributor and MLPF&S for providing account maintenance services to
Class B, Class C and Class D shareholders. The ongoing distribution
fee compensates the Distributor and MLPF&S for providing shareholder
and distribution-related services to Class B and Class C
shareholders.
For the year ended January 31, 1995, MLFD earned underwriting
discounts and MLPF&S earned dealer concessions on sales of the
Fund's Class A and Class D Shares as follows:
MLFD MLPF&S
Class A $354 $6,371
Class D $772 $8,628
MLPF&S also received contingent deferred sales charges of $94,070
relating to transactions in Class B Shares, and $16,500 in
commissions on the execution of portfolio security transactions for
the Fund for the year ended January 31, 1995.
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, MLPF&S, FDS, MLFD, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the year ended January 31, 1995 were $144,185,022 and
$219,397,319, respectively.
Net realized and unrealized gains (losses) as of January 31, 1995
were as follows:
Realized Unrealized
Gains Gains
(Losses) (Losses)
Long-term investments $ 16,365,261 $ 15,227,845
Short-term investments (39) --
Foreign currency transactions (31,963) (123)
------------- -------------
Total $ 16,333,259 $ 15,227,722
============= =============
As of January 31, 1995, net unrealized appreciation for Federal
income tax purposes aggregated $15,227,845, of which $40,287,464
related to appreciated securities
55
<PAGE> 98
NOTES TO FINANCIAL STATEMENTS (concluded)
and $25,059,619 related to depreciated securities. The aggregate cost of
investments at January 31, 1995 for Federal income tax purposes was
$262,021,824.
4. Capital Stock Transactions:
Net decrease in net assets derived from capital share transactions
was $53,039,480 and $52,481,091 for the years ended January 31, 1995
and January 31, 1994, respectively.
Transactions in capital shares for each class were as follows:
Class A Shares for the Year Dollar
Ended January 31, 1995 Shares Amount
Shares sold 140,801 $ 2,045,990
Shares issued to shareholders
in reinvestment of
distributions 42,701 565,182
Total issued 183,502 2,611,172
Shares redeemed (211,252) (3,023,836)
------------- -------------
Net decrease (27,750) $ (412,664)
============= =============
Class A Shares for the Year Dollar
Ended January 31, 1994 Shares Amount
Shares sold 188,941 $ 3,088,274
Shares issued to shareholders
in reinvestment of
distributions 82,693 1,266,935
------------- -------------
Total issued 271,634 4,355,209
Shares redeemed (303,511) (4,894,524)
------------- -------------
Net decrease (31,877) $ (539,315)
============= =============
Class B Shares for the Year Dollar
Ended January 31, 1995 Shares Amount
Shares sold 1,037,837 $ 15,121,525
Shares issued to shareholders
in reinvestment of
distributions 1,252,531 16,408,961
------------- -------------
Total issued 2,290,368 31,530,486
Shares redeemed (5,496,974) (78,448,291)
Conversion of shares (12,176,864) (169,494,498)
------------- -------------
Net decrease (15,383,470) $(216,412,303)
============= =============
Class B Shares for the
Year Ended Dollar
January 31, 1994 Shares Amount
Shares sold 2,491,455 $ 40,734,290
Shares issued to shareholders
in reinvestment of
distributions 3,009,988 45,992,774
------------- -------------
Total issued 5,501,443 86,727,064
Shares redeemed (8,646,525) (138,668,840)
------------- -------------
Net decrease (3,145,082) $ (51,941,776)
============= =============
Class C Shares for the
Period October 21, 1994++ to Dollar
January 31, 1995 Shares Amount
Shares sold 6,002 $ 80,820
Shares issued to shareholders
in reinvestment of
distributions 12 157
------------- -------------
Total issued 6,014 80,977
Shares redeemed (1) (14)
------------- -------------
Net increase 6,013 $ 80,963
============= =============
[FN]
++Commencement of Operations.
Class D Shares for the
Period October 21, 1994++ to Dollar
January 31, 1995 Shares Amount
Shares sold 70,886 $ 970,143
Conversion of shares 12,012,646 169,494,498
Shares issued to shareholders
in reinvestment of
distributions 157,005 2,075,598
------------- -------------
Total issued 12,240,537 172,540,239
Shares redeemed (646,609) (8,835,715)
------------- -------------
Net increase 11,593,928 $ 163,704,524
============= =============
[FN]
++Commencement of Operations.
5. Loaned Securities:
At January 31, 1995, the Fund held US Treasury Notes and US Treasury
Bonds having an aggregate value of approximately $12,234,000 as
collateral for portfolio securities loaned having a market value of
approximately $10,375,000.
56
<PAGE> 99
[This page is intentionally left blank.]
<PAGE> 100
[This page is intentionally left blank.]
<PAGE> 101
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Investment Objective and Policies.... 2
Management of the Fund............... 2
The Investment Adviser............. 2
The Advisory Agreement............. 2
Directors and Officers............... 3
Purchase of Shares................... 5
Initial Sales Charge
Alternatives -- Class A and
Class D Shares.................. 6
Reduced Initial Sales Charges...... 6
Distribution Plans................. 10
Limitations on the Payment of
Deferred Sales Charges.......... 11
Redemptions.......................... 13
Deferred Sales Charge -- Class B
and Class C Shares.............. 13
Determination of Net Asset Value..... 14
Shareholder Services................. 15
Investment Account................. 15
Automatic Investment Plans......... 15
Automatic Reinvestment of Dividends
and Capital Gains
Distributions................... 16
Systematic Withdrawal
Plans -- Class A and Class D
Shares.......................... 16
Retirement Plans................... 17
Exchange Privilege................. 17
Dividends, Distributions and Taxes... 31
Investment Practices and
Restrictions....................... 32
Additional Information............... 38
Performance Data................... 38
Common Stock....................... 40
Computation of Offering Price Per
Share........................... 41
Independent Auditors............... 41
Custodian.......................... 41
Transfer Agent..................... 41
Reports to Shareholders............ 41
Legal Counsel...................... 41
Registration Statement............. 42
Independent Auditors' Report......... 43
Financial Statements................. 44
</TABLE>
Code#10228-0595
[LOGO]
MERRILL LYNCH FUND
FOR TOMORROW, INC.
ARTWORK
STATEMENT OF
ADDITIONAL
INFORMATION
May 30, 1995
Distributor:
Merrill Lynch
Funds Distributor, Inc.
<PAGE> 102
APPENDIX FOR GRAPHIC AND IMAGE MATERIAL
Pursuant to Rule 304 of Regulation S-T, the following table presents
fair and accurate narrative descriptions of graphic and image material omitted
from this EDGAR Submission File due to ASCII-incompatibility and
cross-references this material to the location of each occurrence in the text.
DESCRIPTION OF OMITTED LOCATION OF GRAPHIC
GRAPHIC OR IMAGE OR IMAGE IN TEXT
- ---------------------- -------------------
Compass plate, circular Back cover of Prospectus and
graph paper and Merrill Lynch back cover of Statement of
logo including stylized market Additional Information
bull
<PAGE> 103
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
(A) FINANCIAL STATEMENTS:
(1) Included in Prospectus (Part A):
Financial Highlights (selected per share data and ratios) for each of
the periods in the ten-year period ended January 31, 1995.
(2) Included in Statement of Additional Information (Part B):
Financial Statements:
Schedule of Investments as of January 31, 1995.
Statement of Assets and Liabilities as of January 31, 1995.
Statement of Operations for the year ended January 31, 1995.
Statements of Changes in Net Assets for the years ended January 31,
1995 and 1994.
Financial Highlights for each of the periods in the five-year period
ended January 31, 1995.
(3) Included in Part C:
None.
(B) EXHIBITS:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- ----------------------------------------------------------------------------
<C> <S> <C> <C>
1 (a)* -- Articles of Incorporation of Registrant.
(b)-- -- Articles of Amendment dated October, 1988.
(c)++ -- Articles Supplementary dated April 18, 1990.
(d) -- Articles of Amendment dated October 18, 1994.
(e) -- Articles Supplementary dated October 18, 1994.
2 () -- Amended and Restated By-Laws of Registrant.
3 -- Not applicable.
4 (a) -- Instruments Defining Rights of Shareholders. Incorporated by reference to
Exhibits 1 and 2.
5 -- -- Investment Advisory Agreement between Registrant and Merrill Lynch Asset
Management.
6 (a)** -- Distribution Agreement between Registrant and Merrill Lynch Funds
Distributor, Inc.
(b)+ -- Class A Distribution Agreement between Registrant and Merrill Lynch Funds
Distributor, Inc.
(c)+ -- Class C Distribution Agreement between Registrant and Merrill Lynch Funds
Distributor, Inc.
(d)+ -- Class D Distribution Agreement between Registrant and Merrill Lynch Funds
Distributor, Inc.
7 -- Not applicable.
8 ** -- Form of Custody Agreement between Registrant and The Bank of New York.
9 - -- Transfer Agency, Dividend Disbursing Agency and Shareholder Servicing Agency
Agreement between Registrant and Financial Data Services, Inc. (formerly,
Merrill Lynch Financial Data Service, Inc.).
10 -- Opinion and consent of Shereff, Friedman, Hoffman & Goodman, counsel for the
Registrant.
11 (a) -- Consent of Deloitte & Touche LLP, independent auditors to Registrant.
(b)*** -- Consent of Morningstar, Inc.
12 -- Not applicable.
13 ** -- Certificate of Merrill Lynch Asset Management.
14 -- Not applicable.
</TABLE>
C-1
<PAGE> 104
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- ----------------------------------------------------------------------------
<C> <S> <C> <C>
15 (a)() -- Amended and Restated Plan of Distribution pursuant to Rule 12b-1 under the
Investment Company Act of 1940 and Distribution Plan Sub-Agreement.
(b)+ -- Class C Distribution Plan and Class C Distribution Plan Sub-Agreement.
(c)+ -- Class D Distribution Plan and Class D Distribution Plan Sub-Agreement.
16 (a)-- -- Schedule for computation of each performance quotation for Class A and Class
B shares provided in the Registration Statement in response to Item 22.
(b) -- Schedules for computation of each performance quotation for Class C and
Class D shares provided in the Registration Statement in response to Item
22.
17 (a) -- Other Exhibits
Powers of Attorney for Officers and Directors
Arthur Zeikel++
Gerald M. Richard++
Ronald W. Forbes++
Cynthia A. Montgomery+
Charles C. Reilly++
Kevin A. Ryan++
Richard R. West++
(b) -- Financial Data Schedule for Class A Shares.
(c) -- Financial Data Schedule for Class B Shares.
(d) -- Financial Data Schedule for Class C Shares.
(e) -- Financial Data Schedule for Class D Shares.
</TABLE>
- ---------------
* Filed electronically herewith. Initially filed as identically numbered
Exhibit to the initial Registration Statement, filed October 7, 1983 (File
No. 2-87036).
** Filed electronically herewith. Initially filed as identically numbered
Exhibit to Pre-Effective Amendment No. 1 to the Registration Statement (File
No. 2-87036).
*** Filed electronically herewith. Initially filed as identically numbered
Exhibit to Post-Effective Amendment No. 11 to the Registration Statement
(File No. 2-87036).
- - Filed electronically herewith. Initially filed as identically numbered
Exhibit to Post-Effective Amendment No. 5 to the Registration Statement
(File No. 2-87036).
- -- Filed electronically herewith. Initially filed as identically numbered
Exhibit to Post-Effective Amendment No. 8 to the Registration Statement
(File No. 2-87036).
() Incorporated by reference to identically numbered Exhibits to
Post-Effective Amendment No. 13 to the Registration Statement (File No.
2-87036).
() Incorporated by reference to Exhibit 2(b) to Post-Effective Amendment No. 14
to Registration Statement (File No. 2-87036).
+ Filed electronically herewith. Initially filed as identically numbered
Exhibit to Post-Effective Amendment No. 14 to Registration Statement (File
No. 2-87036).
++ Filed electronically herewith. Initially filed as identically numbered
Exhibit to Post-Effective Amendment No. 12 to Registration Statement (File
No. 2-87036).
C-2
<PAGE> 105
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
Not applicable.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
<TABLE>
<CAPTION>
NUMBER OF RECORD
HOLDERS AT
TITLE OF CLASS APRIL 30, 1995
------------------------------------------------------------------ ------------------
<S> <C>
Class A Common Stock, par value $.10 per share.................... 80
Class B Common Stock, par value $.10 per share.................... 2,304
Class C Common Stock, par value $.10 per share.................... 2
Class D Common Stock, par value $.10 per share.................... 2,534
</TABLE>
ITEM 27. INDEMNIFICATION.
Reference is made to Article VI of Registrant's Articles of Incorporation,
as amended to date, Article VI of Registrant's Amended By-Laws (the "By-Laws")
and Section 2-418 of the Maryland General Corporation Law.
Article VI of the By-Laws provides that each officer and director of the
Registrant shall be indemnified by the Registrant to the full extent permitted
under the General Laws of the State of Maryland, except that such indemnity
shall not protect any such person against any liability to the Registrant or any
stockholder thereof to which such person would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office. Absent a court determination that
an officer or director seeking indemnification was not liable on the merits or
guilty of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his office, the decision by the
Registrant to indemnify such person must be based upon the reasonable
determination of independent counsel or non-party independent directors, after
review of the facts, that such officer or director is not guilty of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office.
The Registrant may purchase insurance on behalf of an officer or director
protecting such person, to the full extent permitted under the General Laws of
the State of Maryland, from liability arising from his activities as officer or
director of the Registrant. The Registrant, however, may not purchase insurance
on behalf of any officer or director of the Registrant that protects or purports
to protect such person from liability to the Registrant or to its stockholders
to which such officer or director would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office.
The Registrant may indemnify or purchase insurance to the extent provided
in Article VI on behalf of an employee or agent who is not an officer or
director of the Registrant.
Insofar as the conditional advancing of indemnification monies for actions
based upon the Investment Company Act of 1940 may be concerned, such payments
will be made only on the following conditions: (i) the advances must be limited
to amounts used, or to be used, for the preparation or presentation of a defense
to the action, including costs connected with the preparation of a settlement;
(ii) advances may be made only upon receipt of: (a) a written affirmation by the
director of the director's good faith belief that the standard of conduct
necessary for indemnification by the corporation as authorized in this section
has been met, and (b) a written promise by, or on behalf of, the recipient to
repay that amount of the advance which exceeds the amount to which it is
ultimately determined that he is entitled to receive from the Registrant by
reason of indemnification; and (iii) (a) such promise must be secured by a
surety bond, other suitable insurance or an equivalent form of security which
assures that any repayments may be obtained by the Registrant without delay or
litigation, which bond, insurance or other form of security must be provided by
the recipient of the advance, or (b) a majority of a quorum of the Registrant's
disinterested, non-party directors,
C-3
<PAGE> 106
or an independent legal counsel in a written opinion, shall determine, based
upon a view of readily available facts, that the recipient of the advance
ultimately will be found entitled to indemnification.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the Registrant and the principal underwriter pursuant to the
foregoing provisions or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification is against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a director,
officer, or controlling person of the Registrant and the principal underwriter
in connection with the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person or the principal
underwriter in connection with the shares being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
See "The Fund and its Management" in the Prospectus and "Management of the
Fund" in the Statement of Additional Information for information regarding the
business of the investment adviser.
Merrill Lynch Asset Management, L.P. (the "Investment Adviser" or "MLAM"),
acts as the investment adviser for the following open-end investment companies:
Merrill Lynch Adjustable Rate Securities Fund, Inc., Merrill Lynch Americas
Income Fund, Inc., Merrill Lynch Asset Growth Fund, Inc., Merrill Lynch Asset
Income Fund, Inc., Merrill Lynch Balanced Fund for Investment and Retirement,
Inc., Merrill Lynch Capital Fund, Inc., Merrill Lynch Developing Capital Markets
Fund, Inc., Merrill Lynch Dragon Fund, Inc., Merrill Lynch EuroFund, Merrill
Lynch Fundamental Growth Fund, Inc., Merrill Lynch Fund For Tomorrow, Inc.,
Merrill Lynch Global Bond Fund for Investment and Retirement, Merrill Lynch
Global Allocation Fund, Inc., Merrill Lynch Global Convertible Fund, Inc.,
Merrill Lynch Global Holdings, Inc., Merrill Lynch Global Resources Trust,
Merrill Lynch Global SmallCap Fund, Inc., Merrill Lynch Global Utility Fund,
Inc., Merrill Lynch Growth Fund for Investment and Retirement, Merrill Lynch
Healthcare Fund, Inc., Merrill Lynch Institutional Intermediate Fund, Merrill
Lynch International Equity Fund, Merrill Lynch Latin America Fund, Inc., Merrill
Lynch Middle East/Africa Fund, Inc., Merrill Lynch Municipal Series Trust,
Merrill Lynch Pacific Fund, Inc., Merrill Lynch Ready Assets Trust, Merrill
Lynch Retirement Asset Builder Program, Inc., Merrill Lynch Retirement Series
Trust, Merrill Lynch Series Fund, Inc., Merrill Lynch Short-Term Global Income
Fund, Inc., Merrill Lynch Strategic Dividend Fund, Merrill Lynch Technology
Fund, Inc., Merrill Lynch U.S. Treasury Money Fund, Merrill Lynch U.S.A.
Government Reserves, Merrill Lynch Utility Income Fund, Inc. and Merrill Lynch
Variable Series Funds, Inc.; and the following closed-end investment companies:
Convertible Holdings, Inc., Merrill Lynch High Income Municipal Bond Fund, Inc.
and Merrill Lynch Senior Floating Rate Fund, Inc. Fund Asset Management, L.P.
("FAM"), an affiliate of the Investment Adviser, acts as the investment adviser
for the following open-end investment companies: CBA Money Fund, CMA Government
Securities Fund, CMA Money Fund, CMA Multi-State Municipal Series Trust, CMA
Tax-Exempt Fund, CMA Treasury Fund, The Corporate Fund Accumulation Program,
Inc., Financial Institutions Series Trust, Merrill Lynch Basic Value Fund, Inc.,
Merrill Lynch California Municipal Series Trust, Merrill Lynch Corporate Bond
Fund, Inc., Merrill Lynch Federal Securities Trust, Merrill Lynch Funds for
Institutions Series, Merrill Lynch Multi-State Municipal Series Trust, Merrill
Lynch Multi-State Limited Maturity Municipal Series Trust, Merrill Lynch
Municipal Bond Fund, Inc., Merrill Lynch Phoenix Fund, Inc., Merrill Lynch
Special Value Fund, Inc., Merrill Lynch World Income Fund, Inc. and The
Municipal Fund Accumulation Program, Inc.; and the following closed-end
investment companies: Apex Municipal Fund, Inc., Corporate High Yield Fund,
Inc., Corporate High Yield Fund II, Inc., Emerging Tigers Fund, Inc., Income
Opportunities Fund 1999, Inc., Income Opportunities Fund 2000, Inc., MuniAssets
Fund, Inc., MuniBond Income Fund, Inc., MuniEnhanced Fund, Inc., MuniInsured
Fund, Inc., MuniVest Fund, Inc., MuniVest Fund II, Inc., MuniVest California
Insured Fund,
C-4
<PAGE> 107
Inc., MuniVest Florida Fund, MuniVest Michigan Insured Fund, Inc., MuniVest New
Jersey Fund, Inc., MuniVest New York Insured Fund, Inc., MuniVest Pennsylvania
Insured Fund, MuniYield Arizona Fund, Inc., MuniYield Arizona Fund II, Inc.,
MuniYield California Fund, Inc., MuniYield California Insured Fund, Inc.,
MuniYield California Insured Fund II, Inc., MuniYield Florida Fund, MuniYield
Florida Insured Fund, MuniYield Fund, Inc., MuniYield Insured Fund, Inc.,
MuniYield Insured Fund II, Inc., MuniYield Michigan Fund, Inc., MuniYield
Michigan Insured Fund, Inc., MuniYield New Jersey Fund, Inc., MuniYield New
Jersey Insured Fund, Inc., MuniYield New York Insured Fund, Inc., MuniYield New
York Insured Fund II, Inc., MuniYield New York Insured Fund III, Inc., MuniYield
Pennsylvania Fund, MuniYield Quality Fund, Inc., MuniYield Quality Fund II,
Inc., Emerging Tigers Fund, Inc., Senior High Income Portfolio, Inc., Senior
High Income Portfolio II, Inc., Senior Strategic Income Fund, Inc., Taurus
MuniCalifornia Holdings, Inc., Taurus MuniNew York Holdings, Inc., and Worldwide
DollarVest, Inc. The address of each of these investment companies is P.O. Box
9011, Princeton, New Jersey 08543-9011, except that the address of Merrill Lynch
Funds for Institutions Series and Merrill Lynch Institutional Intermediate Fund
is One Financial Center, 15th Floor, Boston, Massachusetts 02111-2646. The
address of MLAM, FAM Princeton Services, Inc. ("Princeton Services"), Merrill
Lynch Funds Distributor, Inc. ("MLFD") and Princeton Administrator L.P.
("Princeton Administrators") is also P.O. Box 9011, Princeton, New Jersey
08543-9011. The address of Merrill Lynch, Pierce, Fenner & Smith Incorporated
("Merrill Lynch") and Merrill Lynch & Co., Inc. ("ML & Co.") is World Financial
Center, North Tower, 250 Vesey Street, New York, New York 10281. The address of
Financial Data Services, Inc. ("FDS") is 4800 Deer Lake Drive East,
Jacksonville, Florida 32246-6484.
Set forth below is a list of each executive officer and partner of the
Investment Adviser indicating each business, profession, vocation or employment
of a substantial nature in which each such person or entity has been engaged
since January 31, 1993, for such person's or entity's own account or in the
capacity of director, officer, partner or trustee. In addition, Mr. Zeikel is
President, Mr. Richard is Treasurer and Mr. Glenn is Executive Vice President of
all or substantially all of the investment companies described in the preceding
paragraph. Mr. Zeikel is a director of substantially all of such companies, and
Mr. Glenn is a director of certain of such companies. Messrs. Durnin, Giordano,
Harvey, Hewitt, Monagle and Ms. Griffin are directors or officers of one or more
of such companies.
<TABLE>
<CAPTION>
POSITION WITH OTHER SUBSTANTIAL BUSINESS,
NAME THE INVESTMENT ADVISER PROFESSION, VOCATION OR EMPLOYMENT
- ------------------------ ----------------------------- ------------------------------------------
<S> <C> <C>
ML & Co. ............... Limited Partner Financial Services Holding Company
</TABLE>
<TABLE>
<S> <C> <C>
Princeton Services, Inc.
("Princeton
Services")............ General Partner General Partner of FAM
Arthur Zeikel........... President President of FAM; President and Director
of Princeton Services; Director of Merrill
Lynch Funds Distributor, Inc. ("MLFD");
Executive Vice President of ML & Co.;
Executive Vice President of Merrill
Lynch
Terry K. Glenn.......... Executive Vice President Executive Vice President of FAM; Executive
Vice President and Director of Princeton
Services; President and Director of
MLFD; President of Princeton
Administrators; Director of FDS
Bernard J. Durnin....... Senior Vice President Senior Vice President of FAM; Senior Vice
President of Princeton Services
Vincent R. Giordano..... Senior Vice President Senior Vice President of FAM; Senior Vice
President of Princeton Services
</TABLE>
C-5
<PAGE> 108
<TABLE>
<CAPTION>
POSITION WITH OTHER SUBSTANTIAL BUSINESS,
NAME THE INVESTMENT ADVISER PROFESSION, VOCATION OR EMPLOYMENT
- ------------------------ ----------------------------- ------------------------------------------
<S> <C> <C>
Elizabeth Griffin....... Senior Vice President Senior Vice President of FAM; Senior Vice
President of Princeton Services
Norman R. Harvey........ Senior Vice President Senior Vice President of FAM; Senior Vice
President of Princeton Services
N. John Hewitt.......... Senior Vice President Senior Vice President of FAM; Senior Vice
President of Princeton Services
Philip L. Kirstein...... Senior Vice President, Senior Vice President, General Counsel and
General Counsel and Secretary of FAM; Senior Vice President,
Secretary General Counsel, Director and Secretary
of Princeton Services; Director of MLFD
Ronald M. Kloss......... Senior Vice President and Senior Vice President and Controller of
Controller FAM; Senior Vice President and Controller
of Princeton Services
Stephen M. M. Miller.... Senior Vice President Executive Vice President of Princeton
Administrators, L.P.
Joseph T. Monagle, Senior Vice President Senior Vice President of FAM; Senior Vice
Jr.................... President of Princeton Services
Gerald M. Richard....... Senior Vice President and Senior Vice President and Treasurer of
Treasurer FAM; Senior Vice President and Treasurer
of Princeton Services; Vice President
and Treasurer of MLFD
Ronald L. Welburn....... Senior Vice President Senior Vice President of FAM; Senior Vice
President of Princeton Services
Anthony Wiseman......... Senior Vice President Senior Vice President of FAM; Senior Vice
President of Princeton Services
</TABLE>
ITEM 29. PRINCIPAL UNDERWRITERS.
(a) MLFD acts as the principal underwriter for the Registrant and for each
of the open-end investment companies referred to in the second paragraph of Item
28 except CBA Money Fund, CMA Government Securities Fund, CMA Money Fund, CMA
Multi-State Municipal Series Trust, CMA Tax-Exempt Fund, CMA Treasury Fund, The
Corporate Fund Accumulation Program, Inc. and The Municipal Fund Accumulation
Program, Inc., and also acts as principal underwriter for the following
closed-end funds: Merrill Lynch High Income Municipal Bond Fund, Inc. and
Merrill Lynch Senior Floating Rate Fund, Inc.
(b) Set forth below is information concerning each director and officer of
MLFD. The principal business address of each such person is P.O. Box 9011,
Princeton, New Jersey 08543-9011, except that the address of Messrs. Crook,
Aldrich, Graczyk, Fatseas, Maguire and Wasel and Ms. Schera is 125 High Street,
15th Floor, Boston, Massachusetts 02110-2721.
<TABLE>
<CAPTION>
(2) (3)
(1) POSITIONS AND OFFICES POSITIONS AND OFFICES
NAME WITH THE DISTRIBUTOR WITH REGISTRANT
- --------------------------------------- ------------------------------ -------------------------
<S> <C> <C>
Terry K. Glenn......................... President Executive Vice President
Arthur Zeikel.......................... Director President and Director
Philip L. Kirstein..................... Director None
William E. Aldrich..................... Senior Vice President None
Robert W. Crook........................ Senior Vice President None
Kevin P. Boman......................... Vice President None
</TABLE>
C-6
<PAGE> 109
<TABLE>
<CAPTION>
(2) (3)
(1) POSITIONS AND OFFICES POSITIONS AND OFFICES
NAME WITH THE DISTRIBUTOR WITH REGISTRANT
- --------------------------------------- ------------------------------ -------------------------
<S> <C> <C>
William M. Breen....................... Vice President None
Michael J. Brady....................... Vice President None
Sharon Creveling....................... Vice President and None
Assistant Treasurer
Mark A. DeSario........................ Vice President None
James T. Fatseas....................... Vice President None
Debra W. Landsman-Yaros................ Vice President None
Stanley Graczyk........................ Vice President None
Michelle T. Lau........................ Vice President None
Gerald M. Richard...................... Vice President and Treasurer
Treasurer
Salvatore Venezia...................... Vice President None
Lisa Gobora............................ Assistant Vice President None
Susan Kibler........................... Assistant Vice President None
Mark A. Maguire........................ Assistant Vice President None
Richard Romm........................... Assistant Vice President None
Patricia A. Schera..................... Assistant Vice President None
William Wasel.......................... Vice President None
Robert Harris.......................... Secretary None
</TABLE>
(c) Not applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
All accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940, as amended, and the Rules
thereunder will be maintained at the offices of the Registrant and its Transfer
Agent, FDS.
ITEM 31. MANAGEMENT SERVICES.
Not applicable.
ITEM 32. UNDERTAKINGS.
(a) Not applicable.
(b) Not applicable.
(c) The Registrant will furnish each person to whom a Prospectus is
delivered with a copy of Registrant's latest annual report to
shareholders, upon request and without charge.
C-7
<PAGE> 110
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933 AND THE
INVESTMENT COMPANY ACT OF 1940, THE REGISTRANT CERTIFIES THAT IT MEETS ALL OF
THE REQUIREMENTS FOR EFFECTIVENESS OF THIS POST-EFFECTIVE AMENDMENT TO THE
REGISTRATION STATEMENT PURSUANT TO RULE 485(b) UNDER THE SECURITIES ACT OF 1933
AND HAS DULY CAUSED THIS POST-EFFECTIVE AMENDMENT TO THE REGISTRATION STATEMENT
TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE
TOWNSHIP OF PLAINSBORO, AND THE STATE OF NEW JERSEY, ON THE 30TH DAY OF MAY,
1995.
MERRILL LYNCH FUND FOR TOMORROW, INC.
By /s/ ARTHUR ZEIKEL
------------------------------------
(ARTHUR ZEIKEL, PRESIDENT)
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
POST-EFFECTIVE AMENDMENT TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE
FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ -------------------------------- -------------
<S> <C> <C>
/s/ ARTHUR ZEIKEL President (Principal Executive May 30, 1995
- ------------------------------------------ Officer) and Director
(ARTHUR ZEIKEL)
/s/ GERALD M. RICHARD Treasurer (Principal Financial May 30, 1995
- ------------------------------------------ and Accounting Officer)
(GERALD M. RICHARD)
* Director
- ------------------------------------------
(RONALD W. FORBES)
* Director
- ------------------------------------------
(CYNTHIA A. MONTGOMERY)
* Director
- ------------------------------------------
(CHARLES C. REILLY)
* Director
- ------------------------------------------
(KEVIN A. RYAN)
* Director
- ------------------------------------------
(RICHARD R. WEST)
*This Amendment has been signed by each of the persons so indicated by the undersigned as
Attorney-in-Fact.
*By /s/ ARTHUR ZEIKEL May 30, 1995
- ------------------------------------------
(ARTHUR ZEIKEL, ATTORNEY-IN-FACT)
</TABLE>
C-8
<PAGE> 111
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
------ ------------------------------------------------------------------------------- ----
<C> <C> <S> <C>
1(d) -- Articles of Amendment dated October 18, 1994.
(e) -- Articles Supplementary dated October 18, 1994.
10 -- Opinion and consent of Shereff, Friedman, Hoffman & Goodman, LLP, counsel for
Registrant.
11(a) -- Consent of Deloitte & Touche LLP, independent auditors for the Registrant.
16(b) -- Schedule for computation of each performance quotation for Class C and Class D
Shares provided in the Registration Statement in response to Item 22.
17(b) -- Financial Data Schedule for Class A Shares.
(c) -- Financial Data Schedule for Class B Shares.
(d) -- Financial Data Schedule for Class C Shares.
(e) -- Financial Data Schedule for Class D Shares.
</TABLE>
<PAGE> 1
EX99.1(a)
ARTICLES OF INCORPORATION
OF
MERRILL LYNCH FUND FOR TOMORROW INC.
ARTICLE I
THE UNDERSIGNED, LISA SCHOENFELD, whose post-office address is 101 Park
Avenue, New York, New York 10178, being at least eighteen years of age, does
hereby act as an incorporator, under and by virtue of the General Laws of the
State of Maryland authorizing the formation of corporations and with the
intention of forming a corporation.
ARTICLE II
NAME
The name of the Corporation is MERRILL LYNCH FUND FOR TOMORROW INC.
ARTICLE III
PURPOSES AND POWERS
The purpose or purposes for which the Corporation is formed and the
business or objects to be transacted, carried on and promoted by it are as
follows.:
<PAGE> 2
(1) To conduct and carry on the business of an investment company of
the open-end, management type as defined in the Investment Company Act of 1940
as amended and to engage in all activities incident thereto.
(2) To hold, invest and reinvest its assets in securities, and in
connection therewith to hold part or all of its assets in cash.
(3) To issue and sell shares of its own capital stock in such amounts
and on such terms and conditions for such purposes and for such amount or kind
of consideration now or hereafter permitted by the General Laws of the State of
Maryland and by these Articles of Incorporation, as its Board of Directors may
determine, consistent with all applicable laws and regulations, including the
Investment Company Act of 1940, as amended.
(4) To redeem, purchase or otherwise acquire, hold, dispose of, resell,
transfer, reissue or cancel (all without the vote or consent of the stockholders
of the Corporation) shares of its capital stock, in any manner and to the
extent now or hereafter permitted by the General Laws of the State of Maryland
and by these Articles of Incorporation.
(5) To do any and all such further acts or things and to exercise any
and all such further powers or rights as
-2-
<PAGE> 3
may be necessary, incidental, relative, conducive, appropriate or desirable
for the accomplishment, carrying out or attainment of all or any of the
foregoing purposes or objects.
The Corporation shall be authorized to exercise and enjoy all of the
powers, rights and privileges granted to, or conferred upon, corporations by the
General Laws of the State of Maryland now or hereafter in force, and the
enumeration of the foregoing shall not be deemed to exclude any powers, rights
or privileges so granted or conferred.
ARTICLE IV
PRINCIPAL OFFICE AND RESIDENT AGENT
The post-office address of the principal office of the Corporation in
the State of Maryland is c/o The Corporation Trust Incorporated, 32 South
Street, Baltimore, Maryland 21202. The name of the resident agent of the
Corporation in this State is The Corporation Trust Incorporated, a corporation
of this State, whose post-office address is 32 South Street, Baltimore, Maryland
21202.
ARTICLE V
CAPITAL STOCK
(1) The total number of shares of capital stock
-3-
<PAGE> 4
which the Corporation shall have authority to issue is one Hundred Million
(100,000,000) shares, all of one class called Common Stock, of the par value of
Ten Cents ($0.10) per share and of the aggregate par value of Ten Million
Dollars ($10,000,000).
(2) The Corporation may issue, sell, redeem, repurchase and otherwise
deal in and with said shares of Common Stock in fractional shares, and any such
fractional shares shall carry proportionately all the rights of a whole share,
excepting any right to receive a certificate evidencing such fractional
shares, but including, without limitation, the right to vote, the right to
receive dividends and distributions, and the right to participate upon
liquidation of the Corporation.
(3) All persons who shall acquire stock in the Corporation shall
acquire the same subject to the provisions of these Articles of Incorporation
and the By-Laws of the Corporation.
ARTICLE VI
PROVISIONS FOR DEFINING, LIMITING AND
REGULATING CERTAIN POWERS OF THE CORPORA-
TION AND OF THE DIRECTORS AND STOCKHOLDERS
(1) The number of directors of the Corporation shall be three (3),
which number may be increased pursuant
-4-
<PAGE> 5
to the By-Laws of the Corporation but shall never be less than three (3). The
names of the directors who shall act until the first annual meeting or until
their successors are duly elected and qualify are:
Joel J. Matcovsky
Robert Harris
Michael J. Hennewinkel
(2) The Board of Directors of the Corporation is hereby empowered to
authorize the issuance from time to time of shares of capital stock, whether now
or hereafter authorized, for such consideration as the Board of Directors may
deem advisable, subject to such limitations as may be set forth in these
Articles of Incorporation or in the By-Laws of the Corporation or in the General
Laws of the State of Maryland.
(3) No holder of stock of the Corporation shall, as such holder, have
any right to purchase or subscribe for any shares of the capital stock of the
Corporation or any other security of the Corporation which it may issue or sell
(whether out of the number of shares authorized by these Articles of
Incorporation, or out of any shares of the capital stock of the Corporation
acquired by it after the issue thereof, or otherwise) other than such right, if
any, as the Board of Directors, in its discretion, may determine.
-5-
<PAGE> 6
(4) Each director and each officer of the Corporation shall be
indemnified by the Corporation to the full extent permitted by the General Laws
of the State of Maryland, subject to any limitations arising under the
Investment Company Act of 1940, as amended.
(5) The Board of Directors of the Corporation may make, alter or repeal
from time to time any of the By-Laws of the Corporation except any particular
By-Law which is specified as not subject to alteration or repeal by the Board of
Directors, subject to the requirements of the Investment Company Act of 1940, as
amended.
ARTICLE VII
REDEMPTION
Each holder of shares of capital stock of the Corporation shall be
entitled to require the Corporation to redeem all or any part of the shares of
capital stock of the Corporation standing in the name of such holder on the
books of the Corporation, and all shares of capital stock issued by the
Corporation shall be subject to redemption by the Corporation, at the redemption
price of such shares as in effect from time to time as may be determined by the
Board of Directors of the Corporation in accordance with the provisions hereof,
subject to the right of the Board of
-6-
<PAGE> 7
Directors of the Corporation to suspend the right of redemption of shares of
capital stock of the Corporation or postpone the date of payment of such
redemption price in accordance with provisions of applicable law. The redemp-
tion price of shares of capital stock of the Corporation shall be the net asset
value thereof as determined by the Board of Directors of the Corporation from
time to time in accordance with the provisions of applicable law, less such
redemption fee or other charge, if any, as may be fixed by resolution of the
Board of Directors of the Corporation. Payment of the redemption price shall be
made in cash by the Corporation at such time and in such manner as may be
determined from time to time by the Board of Directors of the Corporation.
The Corporation may in its discretion redeem, at such current net asset
value, outstanding shares of its capital stock not offered for redemption which
are held by any stockholder whose shares in the aggregate have a then total net
asset value of less than such amount as set forth in the By-Laws, provided that
prior to any such proposed redemption the Corporation shall have given such
stockholder written notice that such then current net asset value is less than
the amount set forth in the By-Laws as aforesaid and allowed such stockholder to
make additional investments in order to increase such then current net asset
value to
-7-
<PAGE> 8
the amount so set forth. The Corporation may also in its discretion redeem the
shares of its capital stock held by a stockholder or stockholders to the extent
deemed necessary by the Board of Directors to avoid taxation of the Fund as a
"personal holding company."
ARTICLE VIII
VOTING
Notwithstanding any provision of Article 23 of the General Corporation
Law of the State of Maryland requiring a greater proportion than a majority of
the votes of all classes or of any class of capital stock entitled to be cast to
take or authorize any action, the Corporation may take or authorize any such
action upon the concurrence of a majority of the aggregate number of the votes
entitled to be cast thereon, all as permitted by Section 2-104(b) of the General
Corporation Law of the State of Maryland or any comparable successor provision.
ARTICLE IX
DETERMINATION BINDING
Any determination made in good faith, so far as accounting matters are
involved, in accordance with accepted accounting practice by or pursuant to the
direction of the
-8-
<PAGE> 9
Board of Directors, as to the amount of assets, obligations or liabilities of
the Corporation, as to the amount of net income of the Corporation from
dividends and interest for any period or amounts at any time legally available
for the payment of dividends, as to the amount of any reserves or charges set up
and the propriety thereof, as to the time of or purpose for creating reserves or
as to the use, alteration or cancellation of any reserves or charges (whether or
not any obligation or liability for which such reserves or charges shall have
been created shall have been paid or discharged), as to the price of any
security owned by the Corporation or as to any other matters relating to the
issuance, sale, redemption or other acquisition or disposition of securities or
shares of capital stock of the Corporation, and any reasonable determination
made in good faith by the Board of Directors as to whether any transaction
constitutes a purchase of securities on "margin", a sale of securities "short",
or an underwriting of the sale of, or a participation in any underwriting or
selling group in connection with the public distribution of, any securities,
shall be final and conclusive, and shall be binding upon the Corporation and all
holders of its capital stock, past, present and future, and shares of the
capital stock of the Corporation are issued and sold on the condition and
understanding, evidenced by the purchase of shares of capital stock or
acceptance of share
-9-
<PAGE> 10
certificates, that any and all such determinations shall be binding as
aforesaid.
ARTICLE X
PERPETUAL EXISTENCE
The duration of the Corporation shall be perpetual.
ARTICLE XI
AMENDMENT
The Corporation reserves the right from time to time to make any
amendment of its Articles of Incorporation, now or hereafter authorized by law,
including any amendment which alters the contract rights, as expressly set forth
in its Articles of Incorporation, of any outstanding stock.
IN WITNESS WHEREOF, the undersigned incorporator of MERRILL LYNCH FUND
FOR TOMORROW INC. hereby executes the foregoing Articles of Incorporation and
acknowledges the same to be her act and further acknowledges that, to the best
of her knowledge, the matters and facts set forth therein are true in all
material respects under the penalties of perjury.
Dated this 4th day of October, 1983.
/s/ Lisa Schoenfeld
-------------------
-10-
<PAGE> 1
Exhibit 99.1(b)
MERRILL LYNCH FUND FOR TOMORROW, INC.
ARTICLES OF AMENDMENT
MERRILL LYNCH FUND FOR TOMORROW, INC., a Maryland corporation, having
its principal office c/o The Corporation Trust Incorporated, 32 South Street,
Baltimore, Maryland 21202 (hereinafter called the "Corporation"), hereby
certifies to the State Department of Assessments and Taxation of Maryland that:
FIRST: The charter of the Corporation is hereby amended by amending
ARTICLE V thereof in its entirety to read as follows:
ARTICLE V
CAPITAL STOCK
1. The total number of shares of capital stock which the Corporation
shall have authority to issue is One Hundred Million (100,000,000) shares of the
par value of Ten Cents ($.10) per share and of the aggregate par value of Ten
Million Dollars
<PAGE> 2
($10,000,000). The capital stock initially is classified into two classes,
consisting of Fifty Million (50,000,000) shares of Class A Common Stock and
Fifty Million (50,000,000) shares of Class B Common Stock.
2. The Board of Directors may classify and reclassify any unissued
shares of capital stock into one or more additional or other classes or series
as may be established from time to time by setting or changing in any one or
more respects the designations, conversion or other rights, restrictions,
limitations as to dividends, qualifications or terms or conditions of redemption
of such shares of stock and pursuant to such classification or reclassification
to increase or decrease the number of authorized shares of any existing class or
series, provided, however, that no such classification or reclassification
shall result in the creation of a class or series of capital stock having a
preference as to dividends, distributions or a preference in the event of any
liquidation, dissolution or winding up of the Corporation.
3. Unless otherwise expressly provided in the charter of the
Corporation, including any Articles Supplementary creating any class or series
of capital stock, the holders of each class or series of capital stock shall be
entitled to dividends and distributions in such amounts and at such times as may
be determined by the Board of Directors, and the dividends and distributions
paid with respect to the various classes or series
-2-
<PAGE> 3
of capital stock may vary among such classes and series. Expenses related to the
distribution of, and other identified expenses that should properly be allocated
to, the shares of a particular class or series of capital stock may be charged
to and borne solely by such class or series and the bearing of expenses solely
by a class or series of capital stock may be appropriately reflected (in a
manner determined by the Board of Directors) and cause differences in the net
asset value attributable to, and the dividend, redemption and liquidation rights
of, the shares of each class or series of capital stock.
4. On each matter submitted to a vote of stockholders, each holder of
a share of capital stock of the Corporation shall be entitled to one vote for
each share standing in such holder's name on the books of the Corporation,
irrespective of the class or series thereof, and all shares of all classes and
series shall vote together as a single class; provided, however, that (a) as to
any matter with respect to which a separate vote of any class or series is
required by the Investment Company Act of 1940, as amended, and in effect from
time to time, or any rules, regulations or orders issued thereunder, or by the
Maryland General Corporation Law, such requirement as to a separate vote by that
class or series shall apply in lieu of a general vote of all classes and series
as described above, (b) in the event that the separate vote requirements
referred to in (a) above apply with respect to one or more classes or series,
then, subject to
-3-
<PAGE> 4
paragraph (c) below, the shares of all other classes and series not entitled to
a separate class vote shall vote as a single class, and (c) as to any matter
which does not affect the interest of a particular class or series, such class
or series shall not be entitled to any vote and only the holders of shares of
the one or more affected classes and series shall be entitled to vote.
5. Unless otherwise expressly provided in the charter of the
Corporation, including any Articles Supplementary creating any class or series
of capital stock, in the event of any liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary, the holders of all classes
and series of capital stock of the Corporation shall be entitled, after payment
or provision for payment of the debts and other liabilities of the Corporation,
to share ratably in the remaining net assets of the Corporation.
6. The Corporation may issue, sell, redeem, repurchase and otherwise
deal in and with said shares of Common Stock in fractional shares, and any such
fractional shares shall carry proportionately all the rights of a whole share,
excepting any right to receive a certificate evidencing such fractional share,
but including, without limitation, the right to vote, the right to receive
dividends and distributions, and the right to participate upon liquidation of
the Corporation.
-4-
<PAGE> 5
7. All persons who shall acquire stock in the Corporation shall
acquire the same subject to the provisions of the charter and By-Laws of the
Corporation. All shares of Common Stock of the Corporation issued on or before
October _, 1988 shall without further act be considered Class B Common Stock. As
used in the charter of the Corporation, the terms "charter" and "Articles of
Incorporation" shall mean and include the Articles of Incorporation of the
Corporation as amended, supplemented and restated from time to time by Articles
of Amendment, Articles Supplementary, Articles of Restatement or otherwise.
SECOND: The foregoing amendment does not increase the authorized
capital stock of the Corporation.
THIRD: The foregoing amendment to the charter of the Corporation has
been advised by the Board of Directors and approved by the stockholders of the
Corporation.
-5-
<PAGE> 6
IN WITNESS WHEREOF, Merrill Lynch Fund For Tomorrow, Inc. has caused
these Articles of Amendment to be signed in its name and in its behalf by its
Executive Vice President and attested by its Secretary on October , 1988.
ATTEST: MERRILL LYNCH FUND FOR TOMORROW,
INC.
/s/ Michael J. Hennewinkel By /s/ Terry K. Glenn
- -------------------------- ------------------------
Michael J Hennewinkel Terry K. Glenn
Secretary Executive Vice President
THE UNDERSIGNED, Executive Vice President of Merrill Lynch Fund For
Tomorrow, Inc., who executed on behalf of said Corporation the foregoing
Articles of Amendment, of which this certificate is made a part, hereby
acknowledges, in the name and on behalf of said Corporation, the foregoing
Articles of Amendment to be the corporate act of said Corporation, and further
certifies that, to the best of his knowledge, information and belief, the
matters and facts set forth therein with respect to the approval thereof are
true in all material respects, under the penalties of perjury.
/s/ Terry K. Glenn
------------------------
Terry K. Glenn
Executive Vice President
<PAGE> 1
EX99.1(c)
MERRILL LYNCH FUND FOR TOMORROW, INC.
Articles Supplementary
MERRILL LYNCH FUND FOR TOMORROW, INC., a Maryland corporation, having
its principal office c/o The Corporation Trust Incorporated, 32 South Street,
Baltimore, Maryland 21202 (hereinafter called the "Corporations"), hereby
certifies to the State Department of Assessments and Taxation of Maryland that:
1. (i) The total number of shares of capital stock which the
Corporation shall have the authority to issue has been increased from One
Hundred Million (100,000,000) shares to Two Hundred Million (200,000,000)
shares.
(ii) The authorized capital stock of the Corporation formerly was
classified into two classes consisting of Fifty Million (50,000,000) shares of
Class A Common Stock and Fifty Million (50,000,000) shares of Class B Common
Stock. The increased authorized shares of capital stock of the Corporation is
classified into two classes consisting of one Hundred Million (100,000,000)
shares of Class A Common Stock and One Hundred Million (100,000,000) shares of
Class B Common Stock.
(iii) The par value of the Class A Common Stock and the Class B Common
Stock is Ten Cents ($.10) per share and has not been changed.
<PAGE> 2
(iv) The aggregate par value of all shares of all classes of stock has
been increased from One Million dollars ($1,000,000) to Two Million dollars
($2,000,000).
2. The Corporation is registered as an open-end company under the
Investment Company Act of 1940.
3. The Board of Directors of the Corporation has increased the total
number of shares of capital stock that the Corporation has authority to issue in
accordance with the Charter of the Corporation and Section 2-105(c) of the
Maryland General Corporation Law.
The undersigned, Executive Vice President of Merrill Lynch Fund For
Tomorrow, Inc., has signed these Articles Supplementary in the Corporation's
name and on its behalf and acknowledges that these Articles Supplementary are
the act of the Corporation, that to the best of his knowledge, information and
belief all matters and facts set forth therein relating to the authorization and
approval of the Articles Supplementary are true in all material respects and
that this statement is made under the penalties of perjury.
IN WITNESS WHEREOF, these Articles Supplementary have been executed on
behalf of Merrill Lynch Fund For Tomorrow, Inc. this 18th day of April, 1990.
ATTEST: MERRILL LYNCH FUND FOR
TOMORROW, INC.
/s/ Michael Hennewinkel By /s/ Terry Glenn
- ----------------------- -------------------------
Michael Hennewinkel, Terry Glenn,
Secretary Executive Vice President
2
<PAGE> 3
STATE OF MARYLAND
M.A. State Department of Assessment and Taxation
Gene L. Burner, Director
DOCUMENT CODE 16 BUSINESS CODE 03 COUNTY 74
------- ------ ------
#D1619642 P.A. Religious Close Stock Nonstock
-------- --- --- --- --- ---
Merging Surviving
(Transferor) (Transferee)
--------------------------- -------------------------
- --------------------------------------- -------------------------------------
- --------------------------------------- -------------------------------------
- --------------------------------------- -------------------------------------
<TABLE>
<CAPTION>
CODE AMOUNT FEE REMITTED
- ---- ------ ------------
<S> <C> <C>
10 Exepidited Fee
20 200 Organ. & Capitilization
61 Rec. Fee (Arts. of Inc.)
62 20 Rec. Fee (Amendment)
63 Rec. Fee (Merger or
Consolidation)
64 Rec. Fee (Transfer)
65 Rec. Fee (Dissolution)
66 Rec. Fee (Revival)
52 Foreign Qualification
50 Cert. of Qual. or Reg.
51 Foreign Name Registration
13 16 3 Certified Copy 6p
56 Penalty
54 For. Supplemental Cert.
53 Foreign Resolution
73 Certificate of Conveyance
_______________________________
_______________________________
76 Certificate of Merger/Transfer
_______________________________
_______________________________
75 Special Fee
80 For. Limited Partnership
83 Cert. Limited Partnership
84 Amendment to Limited Partnership
85 Termination of Limited Partnership
21 Recordation Tax
22 State Transfer Tax
23 Local Transfer Tax
31 ________Corp. Good Standing
NA Foreign Corp. Registration
87 ________Limited Part. Good Standing
71 Financial
600 ______________________________Personal
Property Reports and
late filing penalties_________________
70 Change of P.O., R.A. or R.A.A.
91 Amend/Cancellation, For. Limited Part.
Other_________________________________
Other_________________________________
</TABLE>
Name Change
(New Name)______________________________________________
________________________________________________________
________________________________________________________
_____ Change of Name
_____ Change of Principal Office
_____ Change of Resident Agent
_____ Change of Resident Agent
Address
_____ Registration of Resident Agent
_____ Designation of Residents Agent
and Resident Agent's Address
_____ Other Change________________________________
____________________________________________
Code_______
ATTENTION:
--------------------------------------
------------------------------------------------
------------------------------------------------
MAIL TO ADDRESS:
---------------------------------
Jack Murphy
-------------------------------------------------
Shereff, Freidman
-------------------------------------------------
919 Third Ave.
-------------------------------------------------
New York, NY 10022-9998
-------------------------------------------------
<PAGE> 1
EXHIBIT 99.1(d)
MERRILL LYNCH FUND FOR TOMORROW, INC.
ARTICLES OF AMENDMENT
TO THE ARTICLES OF INCORPORATION
MERRILL LYNCH FUND FOR TOMORROW, INC., a Maryland corporation having
its principal Maryland office c/o The Corporation Trust Incorporated, South
Street, Baltimore, Maryland 21202 (hereinafter called the "Corporation"), hereby
certifies to the State Department of Assessments and Taxation of Maryland that:
FIRST: The charter of the Corporation is hereby amended by
adding the following provision at the end of Article V:
8. The Board of Directors may classify and reclassify any issued
shares of capital stock into one or more additional or other classes or series
as may be established from time to time by setting or changing in any one or
more respects the designations, preferences, conversion or other rights, voting
powers, restrictions, limitations as to dividends, qualifications or terms or
conditions of redemption of such shares of stock and pursuant to such
classification or reclassification to increase or decrease the number of
authorized shares of any existing class or series; provided, however, that any
such classification or reclassification shall not substantially adversely affect
the rights of holderi of such issued shares. The Board's authority pursuant to
this paragraph shall include, but not be limited to, the power to vary among all
the holders of a particular class or series (a) the length of time shares must
be field prior to reclassification to shares of another class or series (the
"Holding Period(s)"), (b) the manner in which the time for such Holding
Period(s) is determined and (c) the class or series into which the particular
class or series is being reclassified; provided, however, that, subject to the
first sentence of this section, with respect to holders of the Corporation's
shares issued on or after the date of the Corporation's first effective
prospectus which sets forth Holding Period(s) (the "First Holding Period
Prospectus"), the Holding Period(s), the manner in which the time for such
Holding Period(s) is determined and the class or series into which the
particular class or series is being reclassified shall be disclosed in the
Corporation's prospectus or statement of additional information in effect at the
time such shares, which are the subject of the reclassification, were issued;
and provided, further, that, subject to the first sentence of this section, with
respect to holders of the Corporation's Class B shares issued prior to the date
of the Corporation's First Holding Period Prospectus, the Holding Period shall
be ten (10) years for retirement plan (as recognized by the Internal Revenue
Code of 1986, as amended from time to time) holders of issued Class B shares
purchased without a contingent deferred sales charge (a "CDSC-Waived Retirement
Plan") and shall be the Holding Period set forth in the Corporation's First
Holding Period Prospectus, for all other holders of issued Class B shares; Class
B shares held by a CDSC-Waived Retirement Plan shall be reclassified to Class D
<PAGE> 2
shares in the month following the month in which the first Class B share of any
mutual fund advised by Merrill Lynch Asset Management, L.P., Fund Asset
Management, L.P., or their affiliates or successors, held by such CDSC-Waived
Retirement Plan has been held for the ten (10) year Holding Period established
by the Corporation's Board of Directors for such CDSC-Waived Retirement Plan
Class B shareholder; and the Class B shares of every shareholder other than
CDSC-Waived Retirement Plans shall be reclassified' to Class D shares in the
month following the month in which such shares have been held for the Holding
Period established by the Corporation's Board of Directors for shareholders
other than CDSC-Waived Retirement Plans in the Corporation's First Holding
Period Prospectus.
SECOND: The foregoing amendment has been effected in the
manner and by the vote required by the Corporation's charter and the laws of
the State of Maryland. Pursuant to Section 2-604 of the Maryland Corporations
and Associations Code, the amendment was advised by the Board of Directors of
the Corporation and approved by the stockholders.
THIRD: Except as amended hereby, the Corporation's charter
shall remain in full force and effect.
FOURTH: The authorized capital stock of the Corporation has
not been increased by these Articles of Amendment.
FIFTH: These Articles of Amendment shall be effective at
the very beginning of the day on October 21, 1994.
The President acknowledges these Articles of Amendment to be the
corporate act of the Corporation and states that to the best of his knowledge,
information and belief, the matters set forth in these Articles of Amendment
with respect to the authorization and approval of the amendment of the
Corporation's charter are true in all material respects, and that this
statement is made under the penalties for perjury.
-2-
<PAGE> 3
IN WITNESS WHEREOF, MERRILL LYNCH FUND FOR TOMORROW, INC. has caused
these Article of Amendment to be signed in its name and on its behalf by its
President, a duly authorized officer of the Corporation, and attested by its
Secretary as of the 18 day of October, 1994.
MERRILL LYNCH FUND For Tomorrow, INC.
/s/ Arthur Zeikel
-------------------------------------
Arthur Zeikel, President
Attest:
/s/ Susan B. Baker
- -----------------------------
Susan B. Baker, Secretary
-3-
<PAGE> 1
EX99.1(e)
MERRILL LYNCH FUND FOR TOMORROW, INC.
ARTICLES SUPPLEMENTARY TO ARTICLES OF INCORPORATION INCREASING
THE AUTHORIZED CAPITAL STOCK OF THE CORPORATION AND
CREATING TWO ADDITIONAL CLASSES OF COMMON STOCK
MERRILL LYNCH FUND FOR TOMORROW, INC., a Maryland corporation having
its principal Maryland office c/o The Corporation Trust Incorporated, 32 South
Street, Baltimore, Maryland 21202 (hereinafter called the "Corporation"), hereby
certifies to the State Department of Assessments and Taxation, that:
FIRST: The Corporation is registered as an open-end investment
company under the Investment Company Act of 1940, as amended, with authority to
issue Two Hundred Million (200,000,000) shares of capital stock. The Corporation
has two classes of capital stock consisting of One Hundred Million (100,000,000)
shares of Class A Common Stock and One Hundred Million (100,000,000) shares of
Class B Common Stock. All shares of all classes and series of the Corporation's
capital stock have a par value of Ten Cents ($. 10) per share and an aggregate
par value of Twenty Million Dollars ($20,000,000.00).
SECOND: The Board of Directors of the Corporation, acting in
accordance with Section 2-105(c) of the Maryland Corporations and Associations
Code, hereby increases the total number of authorized shares of Class B Common
Stock of the Corporation by Two Hundred Million (200,000,000) shares.
THIRD: After this increase in the number of authorized shares of
capital stock of the Corporation, the Corporation will have authority to issue
Four Hundred Million (400,000,000) shares of capital stock and the capital stock
will consist of One Hundred Million (100,000,000) shares of Class A Common Stock
and Three Hundred Million (300,000,000) shares of Class B Common Stock.
FOURTH: After this increase in the number of authorized shares of
capital stock of the Corporation, all shares of all classes and series of the
Corporation's capital stock will have a par value of Ten Cents ($. 10) per share
and an aggregate par value of Forty Million Dollars ($40,000,000.00).
FIFTH: Pursuant to authority expressly vested in the Board of
Directors of the Corporation by its charter, the Board of Directors has
reclassified One Hundred Million (100,000,000) authorized and unissued shares of
the Class B Common Stock of the Corporation as Class C Common Stock of the par
value of Ten Cents ($. 10) per share and of the aggregate par value of Ten
Million Dollars ($10,000,000.00).
SIXTH: The preferences, designations, conversion or other
rights, voting powers, restrictions, limitations as to dividends, qualifications
or terms or conditions of redemption of Class C Common Stock are as follows:
<PAGE> 2
The Class C Common Stock of the Corporation shall represent the same
interest in the Corporation and have identical preferences, designations,
conversion or other rights, voting powers, restrictions, limitations as to
dividends, qualifications, or terms or conditions of redemption as the Class B
Common Stock as of the date of these Articles Supplementary, except as otherwise
set forth in the Corporation's charter and furthur except that:
(i) Expenses related to the distribution of the Class C Common Stock
shall be borne solely by such class and such class shall have exclusive voting
rights with respect to matters relating to the expenses being borne solely by
such class;
(ii) Such distribution expenses borne solely by Class C Common Stock
shall be appropriately reflected (in the manner determined by the Board of
Directors) in the net asset value, dividends, distribution and liquidation
rights of the shares of such class; and
(iii) Class C Common Stock shall not be reclassified into Class D
shares.
SEVENTH: Pursuant to authority expressly vested in the Board of
Directors of the Corporation by its charter, the Board of Directors has
reclassified One Hundred Million (100,000,000) authorized and unissued shares of
the Class B Common Stock of the Corporation as Class D Common Stock of the par
value of Ten Cents ($. 10) per share and of the aggregate par value of Ten
Million Dollars ($10,000,000.00).
EIGHTH: The preferences, designations, conversion or other
rights, voting powers, restrictions, limitations as to dividends, qualifications
or terms or conditions of redemption of Class D Common Stock are as follows:
The Class D Common Stock of the Corporation shall represent the same
interest in the Corporation and have identical preferences, designations,
conversion or other rights, voting powers, restrictions, limitations as to
dividends, qualifications, or terms or conditions of redemption as the Class B
Common Stock as of the date of these Articles Supplementary, except as otherwise
set forth in the Corporation's charter and further except that:
(i) Expenses related to the distribution of the Class D Common
Stock shall be borne solely by such class and such class shall have exclusive
voting rights with respect to matters relating to the expenses being borne
solely by such class; and
(ii) Such distribution expenses borne solely by Class D Common Stock
shall be appropriately reflected (in the manner determined by the Board of
Directors) in the net asset value, dividends, distribution and liquidation
rights of the shares of such class.
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<PAGE> 3
IN WITNESS WHEREOF, MERRILL LYNCH FUND FOR TOMORROW, INC. has caused
these Articles Supplementary to be signed in its name and on its behalf by its
President and attested by its Secretary on October 18th, 1994.
MERRILL LYNCH FUND FOR TOMORROW, INC.
By /s/ Arthur Zeikel
-----------------------------------------
Attest: Arthur Zeikel, President
/s/ Susan B. Baker
- -----------------------------
Susan B. Baker, Secretary
THE UNDERSIGNED, President of MERRILL LYNCH FUND FOR TOMORROW, INC.,
who executed on behalf of said Corporation the foregoing Articles Supplementary,
of which this certificate is made a part, hereby acknowledges, in the name and
on behalf of said Corporation, the foregoing Articles Supplementary to be the
corporate act of said Corporation and further certifies that, to the best of his
knowledge, information and belief, the matters and facts set forth therein with
respect to the authorization and approval thereof are true in all material
respects, and that this statement is made under the penalties for perjury.
/s/ Arthur Zeikel
-------------------------------------
Arthur Zeikel, President
<PAGE> 1
EX99.5
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 11th day of January, 1984, by and between MERRILL
LYNCH FUND FOR TOMORROW, INC., a Maryland corporation (hereinafter referred to
as the "Fund"), and MERRILL LYNCH ASSET MANAGEMENT, INC., a Delaware corporation
(hereinafter referred to as the "Investment Adviser").
W I T N E S S E T H:
WHEREAS, the Fund intends to engage in business as a diversified, open-end,
management investment company registered under the Investment Company Act of
1940, as amended (hereinafter referred to as the "Investment Company Act"); and
WHEREAS, the Investment Adviser is engaged principally in rendering
management and investment advisory services and is registered as an investment
adviser under the Investment Advisers Act of 1940; and
WHEREAS, the Fund desires to retain the Investment Adviser to render
management and investment advisory services to the Fund in the manner and on the
terms hereinafter set forth; and
WHEREAS, the Investment Adviser is willing to provide management and
investment advisory services to the Fund on the terms and conditions hereinafter
set forth.
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<PAGE> 2
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Fund and the Investment Adviser hereby agree as
follows:
ARTICLE I
Duties of the Investment Adviser
The Fund hereby employs the Investment Adviser to act as the manager
and investment adviser of the Fund and to furnish, or arrange for affiliates to
furnish, the management and investment advisory services described below,
subject to the supervision of the Board of Directors of the Fund, for the period
and on the terms and conditions set forth in this Agreement. The Investment
Adviser hereby accepts such employment and agrees during such period, at its own
expense, to render, or arrange for the rendering of, such services and to assume
the obligations herein set forth for the compensation provided for herein. the
Investment Adviser and its affiliates shall for all purposes herein be deemed to
be an independent contractor and shall, unless otherwise expressly provided or
authorized, have no authority to act for or represent the Fund in any way or
otherwise be deemed an agent of the Fund.
(a) Management Services. The Investment Adviser shall perform (or
arrange for the performance by affiliates
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<PAGE> 3
of) the management and administrative services necessary for the operation of
the Fund including processing shareholder orders, administering shareholder
accounts and handling shareholder relations, except to the extent that the
Investment Adviser is required to render such services pursuant to its separate
Administrative and Sub-Accounting Services Agreement with the Fund.
The Investment Adviser shall provide the Fund with office space, equipment and
facilities and such other services as the Investment Adviser, subject to review
by the Board of Directors of the Fund, shall from time to time determine to be
necessary or useful to perform its obligations under this Agreement. The
Investment Adviser shall also, on behalf of the Fund, conduct relations with
custodians, depositories, transfer agents, dividend disbursing agents, other
shareholder service agents, accountants, attorneys, underwriters,
brokers and dealers, corporate fiduciaries, insurers, banks and such other
persons in any such other capacity deemed to be necessary or desirable. The
Investment Adviser shall make reports to the Board of Directors of the Fund of
its performance of obligations hereunder and furnish advice and recommendations
with respect to such other aspects of the business and affairs of the Fund as
it shall determine to be desirable.
(b) Investment Advisory Services. The Investment Adviser shall
provide the Fund with such investment research,
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<PAGE> 4
advice and supervision as the latter may from time to time consider necessary
for the proper supervision of the assets of the Fund, shall furnish continuously
an investment program for the Fund and shall determine from time to time which
securities shall be purchased, sold or exchanged and what portion of the Fund
shall be held in the various securities in which the Fund invests or cash,
subject always to the restrictions of the Articles of Incorporation and By-Laws
of the Fund, as amended from time to time, the provisions of the Investment
Company Act and the statements relating to the Fund's investment objectives,
investment policies and investment restrictions as the same are set forth in the
currently effective prospectus relating to the shares of the Fund under the
Securities Act of 1933, as amended (the "Prospectus"). The Investment Adviser
shall also make decisions for the Fund as to the manner in which voting rights,
rights to consent to corporate action and any other rights pertaining to the
Fund's portfolio securities shall be exercised. Should the Board of Directors
of the Fund at any time, however, make any definite determination as to
investment policy and notify the Investment Adviser thereof in writing, the
Investment Adviser shall be bound by such determination for the period, if any,
specified in such notice or until similarly notified that such determination has
been revoked. The Investment Adviser shall take, on behalf of the Fund, all
actions which
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<PAGE> 5
it deems necessary to implement the investment policies determined as provided
above, and in particular to place all orders for the purchase or sale of
portfolio securities for the Fund's account with brokers or dealers selected by
it, and to that end, the Investment Adviser is authorized as the agent of the
Fund to give instructions to the Custodian of the Fund as to deliveries of
securities and payments of cash for the account of the Fund. In connection with
the selection of such brokers or dealers and the placing of such orders with
respect to assets of the Fund, the Investment Adviser is directed at all times
to seek to obtain execution and price within the policy guidelines determined by
the Board of Directors of the Fund and set forth in the Prospectus. Subject to
this requirement and the provisions of the Investment Company Act, the
Securities Exchange Act of 1934, as amended, and other applicable provisions of
law, the Investment Adviser may select brokers or dealers with which it or the
Fund is affiliated.
ARTICLE II
Allocation of Charges and Expenses
(a) The Investment Adviser. The Investment Adviser assumes the
expense of and shall pay for maintaining the staff and personnel necessary to
perform its obligations under this Agreement, and shall at its own expense,
provide
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<PAGE> 6
the office space, equipment and facilities which it is obligated to provide
under Article I hereof, and shall pay all compensation of officers of the Fund
and all directors of the Fund who are affiliated persons of the Investment
Adviser.
(b) The Fund. The Fund assumes and shall pay or cause to be paid all
other expenses of the Fund (except for the expenses incurred by the
Distributor), including, without limitation: taxes, expenses for legal and
auditing services, costs of printing proxies, stock certificates, shareholder
reports and prospectuses (except to the extent paid by the Distributor), charges
of the Custodian and Transfer Agent, expenses of redemption of shares,
Securities and Exchange Commission fees, expenses of registering the shares
under Federal and state securities laws, fees and actual out-of-pocket expenses
of directors who are not affiliated persons of the Investment Adviser,
accounting and pricing costs (including the daily calculation of the net asset
value), insurance, interest, brokerage costs, litigation and other extraordinary
or non-recurring expenses, and other expenses properly payable by the Fund. It
is also understood that the Fund will reimburse the Investment Adviser for its
costs in providing accounting services to the Fund. The Distributor will pay
certain of the expenses of the Fund incurred in connection with the continuous
offering of Fund shares.
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<PAGE> 7
ARTICLE III
Compensation of the Investment Adviser
(a) Investment Advisory Fee. For the services rendered, the
facilities furnished and expenses assumed by the Investment Adviser, the Fund
shall pay to the Investment Adviser at the end of each calendar month a fee
based upon the average daily value of the net assets of the Fund, as determined
and computed in accordance with the description of the determination of the net
asset value contained in the Prospectus, at the annual rate of .65% of the
average daily net assets of the Fund, commencing on the day following
effectiveness hereof. During any period when the determination of net asset
value is suspended by the Board of Directors of the Fund, the net asset value
of a share as of the last business day prior to such suspension shall for this
purpose be deemed to be the net asset value at the close of each succeeding
business day until it is again determined.
(b) Expense Limitations. In the event the operating expenses of the
Fund, including amounts payable to the Investment Adviser pursuant to
subsection (a) hereof, for any fiscal year ending on a date on which this
Agreement is in effect exceed the expense limitations applicable to the Fund
imposed by applicable state securities laws or regulations thereunder, as such
limitations may be raised or lowered from
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<PAGE> 8
time to time, the Investment Adviser shall reduce its management fee by the
extent of such-excess and, if required pursuant to any such laws or
regulations, will reimburse the Fund in the amount of such excess, provided,
however, to the extent permitted by law, there shall be excluded from such
expenses the amount of any interest, taxes, brokerage commissions, distribution
fees and extraordinary expenses (including but not limited to legal claims and
liabilities and litigation costs and any indemnification related thereto) paid
or payable by the Fund. Whenever the expenses of the Fund exceed a pro rata
portion of the applicable annual expense limitations, the estimated amount of
reimbursement under such limitations shall be applicable as an offset against
the monthly payment of the fee due to the Investment Adviser. Should two or
more such expense limitations be applicable as at the end of the last business
day of the month, that expense limitation which results in the largest
reduction in the Investment Adviser's fee shall be applicable.
ARTICLE IV
Limitation of Liability of the Investment Adviser
The Investment Adviser shall not be liable for any error of judgment or
mistake of law or for any loss arising out of any investment or for any act or
omission in the
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<PAGE> 9
management of the Fund, except for willful misfeasance, bad faith or gross
negligence in the performance of its duties, or by reason of reckless disregard
of its obligations and duties hereundcer. As used in this Article IV, the term
"Investment Adviser" shall include any affiliates of the Investment Adviser
performing services for the Fund contemplated hereby and directors, officers
and employees of the Investment Adviser and such affiliates.
ARTICLE V
Activities of the Investment Adviser
The services of the Investment Adviser to the Fund are not to be deemed
to be exclusive, the Investment Adviser being free to render services to
others. It is understood that directors, officers, employees and shareholders
of the Fund are or may become interested in the Investment Adviser, as
directors, officers, employees and shareholders or otherwise and that directors,
officers, employees and shareholders of the Investment Adviser are or may
become similarly interested in the Fund, and that the Investment Adviser may
become interested in the Fund as a shareholder or otherwise.
ARTICLE VI
Duration and Termination of this Agreement
This Agreement shall become effective as of the date first above
written and shall remain in full force until
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<PAGE> 10
_____________________ ___, 198__ and thereafter, but only so long as such
continuance is specifically approved at least annually by (i) the Board of
Directors of the Fund, or by the vote of a majority of the outstanding voting
securities of the Fund, and (ii) a majority of those directors who are not
parties to this Agreement or interested persons of any such party cast in
person at a meeting called for the purpose of voting on such approval.
This Agreement may be terminated at any time, without the payment of
any penalty, by the Board of Directors of the Fund or by vote of a majority of
the outstanding voting securities of the Fund, or by the Investment Adviser, on
sixty days' written notice to the other party. This Agreement shall
automatically terminate in the event of its assignment.
ARTICLE VII
Amendments of this Agreement
This Agreement may be amended by the parties only if such amendment is
specifically approved by (i) the Board of Directors of the Fund, or by the
vote of a majority of outstanding voting securities of the Fund, and (ii) a
majority of those directors who are not parties to this Agreement or interested
persons of any such party cast in person at a meeting called for the purpose of
voting on such approval.
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<PAGE> 11
ARTICLE VIII
Definitions of Certain Terms
The terms "vote of a majority of the outstanding voting securities",
"assignment", "affiliated person" and "interested person", when used in this
Agreement, shall have the respective meanings specified in the Investment
Company Act.
ARTICLE IX
Governing Law
This Agreement shall be construed in accordance with laws of the State
of New York, and the applicable provisions of the Investment Company Act. To
the extent that the applicable laws of the State of New York, or any of the
provisions herein, conflict with the applicable provisions of the Investment
Company Act, the latter shall control.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
MERRILL LYNCH FUND FOR
TOMORROW, INC.
By /s/ Arthur Zeikel
-----------------------------
MERRILL LYNCH ASSET
MANAGEMENT, INC.
By /s/ Terry Glenn
-----------------------------
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<PAGE> 1
EX99.6(a)
DISTRIBUTION AGREEMENT
AGREEMENT made as of the 11 day of January, 1984. between MERRILL LYNCH
FUND FOR TOMORROW, INC., a Maryland corporation (the 'Fund"), and MERRILL
LYNCH FUNDS DISTRIBUTOR, INC., a Delaware corporation (the "Distributor").
W I T N E S S E T H:
WHEREAS, the Fund is registered under the Investment Company Act of
1940, as amended to date (the "Investment Company Act"), as a diversified,
open-end, management investment company and it is affirmatively in the
interest of the Fund to offer its shares for sale continuously; and
WHEREAS, the Distributor is a securities firm engaged in the business
of selling shares of investment companies either directly to purchasers or
through other securities dealers; and
WHEREAS, the Fund and the Distributor wish to enter into an agreement
with each other with respect to the continuous offering of the Fund's shares
in order to promote the growth of the Fund and facilitate the distribution of
its shares.
NOW, THEREFORE, the parties agree as follows:
<PAGE> 2
Section 1. Appointment of the Distributor
The Fund hereby appoints the Distributor as the principal underwriter
and distributor of the Fund to sell shares of Common Stock of the Fund
(sometimes herein referred to as "shares") to the public and hereby agrees
during the term of this Agreement to sell shares of the Fund to the Distributor
upon the terms and conditions herein set forth.
Section 2. Exclusive Nature of Duties
The Distributor shall be the exclusive representative of the Fund to
act as principal underwriter and distributor, except that:
(a) Subject to receipt of all necessary regulatory clearances from
Canadian authorities, Merrill Lynch Canada Inc. shall be appointed principal
underwriter of the Fund's shares in Canada.
(b) The Fund may, upon written notice to the Distributor, from time
to time designate other principal underwriters and distributors of its shares
with respect to areas other than the United States as to which the Distributor
may have expressly waived in writing its right to act as such. if such
designation is deemed exclusive, the right of the Distributor under this
Agreement to sell shares in the areas so designated shall terminate, but this
Agreement shall re-
-2-
<PAGE> 3
main otherwise in full effect until terminated in accordance with the other
provisions hereof.
(c) The exclusive rights granted to the Distributor to purchase shares
from the Fund shall not apply to shares of the Fund issued in connection with
the merger or consolidation of any other investment company or personal holding
company with the Fund or the acquisition by purchase or otherwise of all (or
substantially all) the assets or the outstanding shares of any such company by
the Fund.
(d) Such exclusive rights shall also not apply to shares issued by
the Fund pursuant to reinvestment of divi dends or capital gains distributions.
Section 3. Purchase of Shares from the Fund
(a) Prior to the continuous offering of the shares, commencing on a
date agreed to by the Fund and the Distributor, it is contemplated that the
Distributor will solicit subscriptions for shares during a subscription period
which shall last for such period as may be agreed upon by the parties hereto.
The subscriptions will be payable on the fifth business day after the
termination of the subscription period, at which time the Fund will commence
operations.
(b) Immediately after the completion of the subscription offering
the Fund will commence an offering of its shares and thereafter the Distributor
shall have the right to
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<PAGE> 4
buy from the Fund the shares needed, but not more than the shares needed (except
for clerical errors in transmission) to fill unconditional orders for shares of
the Fund placed with the Distributor by investors or securities dealers. The
price which the Distributor shall pay for the shares so purchased from the
Fund shall be the net asset value, determined, as set forth in the currently
effective prospectus of the Fund under the Securities Act of 1933 (the
"Prospectus") relating to such shares.
(c) The shares are to be resold by the Distributor or selected dealers,
as described in Section 6(d) hereof, to investors at net asset value, as set
forth in the Prospectus.
(d) The Fund shall have the right to suspend the sale of its shares at
times when redemption is suspended pursuant to the conditions set forth in
Section 4(b) hereof. The Fund shall also have the right to suspend the sale of
its shares if trading on the New York Stock Exchange shall have been suspended,
if a banking moratorium shall have been declared by Federal or New York
authorities, or if there shall have been some other event, which, in the
judgment of the Fund, makes it impracticable or inadvisable to sell the shares.
(e) The Fund, or any agent of the Fund designated in writing by the
Fund, shall be promptly advised of all
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<PAGE> 5
purchase orders for shares received by the Distributor. Any order may be
rejected by the Fund; provided, however, that the Fund will not arbitrarily or
without reasonable cause refuse to accept or confirm orders for the purchase of
shares. The Fund (or its agent) will confirm orders upon their receipt, will
make appropriate book entries and upon receipt by the Fund (or its agent) of
payment therefor, will deliver deposit receipts or certificates for such shares
pursuant to the instructions of the Distributor. Payment shall be made
to the Fund in New York Clearing House funds. The Distributor agrees to cause
such payment and such instructions to be delivered promptly to the Fund (or
its agent).
Section 4. Repurchase or Redemption of Shares by the Fund
(a) Any of the outstanding shares may be tendered for redemption at
any time, and the Fund agrees to repurchase or redeem the shares so tendered in
accordance with its obligations as set forth in Article VII of its Articles of
Incorporation, as amended from time to time, and in accordance with the
applicable provisions set forth in the prospectus of the Fund. The price to be
paid to redeem or repurchase the shares shall be equal to the net asset value
determined as set forth in the Prospectus of the Fund. All
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<PAGE> 6
payments by the Fund hereunder shall be made in the manner set forth below.
The Fund shall pay the total amount of the redemption price as
defined in the above paragraph pursuant to the instructions of the Distributor
in New York Clearing House funds on or before the seventh business day
subsequent to its having received the notice of redemption in proper form. The
proceeds of any redemption of shares shall be paid by the Fund as follows: (i)
any applicable contingent deferred sales charge shall be paid to the
Distributor and (ii) the balance shall be paid to or for the account of the
redeeming shareholder, in each case in accordance with applicable provisions of
the Prospectus in New York Clearing House funds.
(b) Redemption of shares or payment may be sus pended at times when
the New York Stock Exchange is closed, when trading on said Exchange is closed,
when trading on said Exchange is restricted, when an emergency exists as a
result of which disposal by the Fund of securities owned by it is not reasonably
practicable or it is not reasonably practicable for the Fund fairly to determine
the value of its net assets, or during any other period when the Securities and
Exchange Commission, by order, so permits.
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<PAGE> 7
Section 5. Duties of the Fund
(a) The Fund shall furnish to the Distributor copies of all
information, financial statements and other papers which the Distributor may
reasonably request for use in connection with the distribution of shares of the
Fund, and this shall include one certified copy, upon request by the
Distributor, of all financial statements prepared for the Fund by independent
public accountants. The Fund shall make available to the Distributor such number
of copies of its prospectus as the Distributor shall reasonably request.
(b) The Fund shall take,, from time to time, but subject to the
necessary approval of the shareholders, all necessary action to fix the number
of authorized shares and such steps as may be necessary to register the same
under the Securities Act of 1933 (the "Securities Act"), to the end that there
will be available for sale such number of shares as the Distributor reasonably
may be expected to sell.
(c) The Fund shall use its best efforts to qualify and maintain the
qualification of any appropriate number of its shares for sales under the
securities laws of such states as the Distributor and the Fund may approve. Any
such qualification may be withheld, terminated or withdrawn by the Fund at any
time in its discretion. As provided in Section
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<PAGE> 8
7(c) hereof, the expense of qualification and maintenance of qualification shall
be borne by the Fund. The Distributor shall furnish such information and other
material relating to its affairs and activities as may be required by the Fund
in connection with such qualification.
(d) The Fund will furnish, in reasonable quantities upon request by
the Distributor, copies of annual and interim reports of the Fund.
Section 6. Duties of the Distributor
(a) The Distributor shall devote reasonable time and effort to effect
sales of shares of the Fund, but shall not be obligated to sell any specific
number of shares. The services of the Distributor to the Fund hereunder are not
to be deemed exclusive and nothing herein contained shall prevent the
Distributor from entering into like arrangements with other investment companies
so long as the performance of their obligations hereunder is not impaired
thereby.
(b) In selling the shares of the Fund, the Distributor shall use its
best efforts in all respects duly to conform with the requirements of all
federal and state laws relating to the sale of such securities. Neither the
Distributor nor any selected dealer nor any other person is authorized by the
Fund to give any information or to make any
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<PAGE> 9
representations, other than those contained in the registration statement,or
related prosppectus and any sales literature specifically approved by the Fund.
(c) The Distributor shall adopt and follow procedures, as approved
by the officers of the Fund, for the confirmation of sales to investors and
selected dealers, the collection of amounts payable by investors and selected
dealers on such sales, and the cancellation of unsettled transactions, as may be
necessary to comply with the requirements of the National Association of
Securities Dealers, Inc. (the "NASD"), as such requirements may from time to
time exist.
(d) The Distributor shall have the right to enter into selected dealers
agreements with securities dealers of its choice ("selected dealers") for the
sale of shares, provided that the Fund shall approve the forms of agreements
with dealers. Within the United States, the Distributor shall offer and sell
shares only to such selected delaers as are members in good standing of the
NASD. Shares sold to selected dealers shall be for resale by such dealers only
at net asset value determined as set forth in the Prospectus. The Distributor
may allocate the proceeds of any applicable contingent deferred sales charge to
the dealer(s) which sold the shares being redeemed. The initial form of the
agree-
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<PAGE> 10
ment with selected dealers to be used in the continuous offering of
the shares is attached hereto as Exhibit A.
Section 7. Payment of Expenses
(a) The Distributor shall bear all expenses incurred by it in
connection with its duties and activities under this Agreement, including; 1)
the expense of reimbursing Merrill Lynch and other selected dealers for their
expenses associated with their payment of sales commissions to account
executives for sales of the Fund's shares and 2) the costs and expenses of
preparing, printing and distributing any other literature used by the
Distributor or furnished by it for use by selected dealers in connection with
the offering of the shares for sale to the public and any expenses of ad-
vertising in connection with such offering, except such expenses as are
specifically undertaken herein by the Fund or are borne by Merrill Lynch Canada
Inc. under its Distribution Agreement with the Fund. In addition, after'the
prospectuses, statements of additional information and annual and interim
reports have been prepared and set in type, the Distributor shall bear the
costs and expenses of printing and distributing any copies thereof which are
to be used in connection with the offering of shares to selected dealers or
investors. It is understood and agreed that, so long as the Fund's Plan of
Distribution pursuant to Rule 12b-1 under the Investment Company Act continues
in effect, any expenses in-
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<PAGE> 11
curred by the Distributor hereunder may be paid from amounts received by it from
the Fund under such Plan.
(b) The Fund shall bear all costs and expenses of the Fund, including
fees and disbursements of its counsel and auditors, in connection with the
preparation and filing of any required registration statements and/or
prospectuses or statements of additional information under the Investment
Company Act, the Securities Act, and all amendments and supplements thereto,
and preparing and mailing annual and interim reports and proxy materials to
shareholders (including but not limited to the expense of setting in type any
such registration statements, prospectuses, statements of additional
information, annual or interim reports or proxy materials).
(c) The Fund shall bear the cost of expenses of qualification of the
shares for sale, and, if necessary or advisable in connection therewith, of
qualifying the Fund as a broker or dealer, in such states of the United States
or other jurisdictions as shall be selected by the Fund and the Distributor
pursuant to Section 5(c) hereof and the cost and expense payable to each such
state for continuing qualification therein until the Fund decides to
discontinue such qualification pursuant to Section 5(c) hereof.
Section 8. Indemnification
(a) The Fund shall indemnify and hold harmless the
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<PAGE> 12
Distributor and each person, if any, who controls the Distributor, against any
loss, liability, claim, damage or expense (including the reasonable cost of
investigating or defending any alleged loss, liability, claim, damage or expense
and reasonable counsel fees incurred in connection therewith), arising by reason
of any person acquiring any shares, which may be based upon the Securities Act,
or on any other statute or at common law, on the ground that the registration
statement or related prospectus, as from time to time amended and
supplemented, or an annual or interim report to shareholders of the Fund,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary in order to make the statements
therein not misleading, unless such statement or omission was made in reliance
upon, and in conformity with, information furnished to the Fund in connection
therewith by or on behalf of the Distributor; provided, however, that in no case
(i) is the indemnity of the Fund in favor of the Distributor and any such
controlling persons to be deemed to protect such Distributor or any such
controlling persons thereof against any liability to the Fund or its security
holders to which the Distributor or any such controlling persons would otherwise
be subject by reason of willful misfeasance, bad faith or gross negligence in
the performance of their duties or by reason of the reckless disregard of their
obligations and duties under this Agreement; or (ii) is the Fund to be liable
-12-
<PAGE> 13
under its indemnity agreement contained in this paragraph with respect to any
claim made against the Distributor or any controlling persons, unless the
Distributor or such controlling persons, as the case may be, shall have
notified the Fund in writing within a reasonable time after the summons or other
first legal process giving information of the nature of the claim shall have
been served upon the Distributor or such controlling persons (or after the
Distributor or such controlling persons shall have received notice of such
service on any designated agent), but failure to notify the Fund of any such
claim shall not relieve it from any liability which it may have to the person
against whom such action is brought otherwise than on account of its indemnity
agreement contained in this paragraph. The Fund will be entitled to partici-
pate at its own expense in the defense, or, if it so elects, to assume the
defense of any suit brought to enforce any such liability, but if the Fund
elects to assume the defense, such defense shall be conducted by counsel chosen
by it and satisfactory to the Distributor or such controlling person or per-
sons, defendant or defendants in the suit. In the event the Fund elects to
assume the defense of any such suit and retain such counsel, the Distributor or
such controlling person or persons, defendant or defendants in the suit, shall
bear the fees and expenses of any additional counsel retained by them, but, in
case the Fund does not elect to assume the defense of
-13-
<PAGE> 14
any such suit, it will reimburse the Distributor or such controlling. person or
persons, defendant or defendants in the suit, for the reasonable fees and
expenses of any counsel retained by them. The Fund shall promptly notify the
Distributor of the commencement of any litigation or proceedings against it or
any of its officers or directors in connection with the issuance or sale of any
of the shares.
(b) The Distributor shall indemnify and hold harmless the Fund and each
of its directors and officers and each person, if any, who controls the Fund
against any loss, liability, claim, damage or expense described in the forego-
ing indemnity contained in subsection (a) of this Section 8, but only with
respect to statements or omissions made in reliance upon, and in conformity
with, information furnished to the Fund in writing by or on behalf of the
Distributor for use in connection with the registration statement or related
prospectus, as from time to time amended, or the annual or interim reports to
shareholders. In case any action shall be brought against the Fund or any person
so indemnified, in respect of which indemnity may be sought against the Dis-
tributor, the Distributor shall have the rights and duties given to the Fund,
and the Fund and each person so indemnified shall have the rights and duties
given to the Distributor by the provisions of subsection (a) of this Section
8.
-14-
<PAGE> 15
Section 9. Duration and Termination of this
Agreement
This Agreement shall become effective as of the date first above
written and shall remain in force until 198_ and thereafter, but only so long as
such continuance is specifically approved at least annually by (i) the Board of
Directors of the Fund, or by the vote of a majority of the outstanding voting
securities of the Fund, and (ii) by the vote of a majority of those directors
who are not parties to this Agreement or interested persons of any such party
cast in person at a meeting called for the purpose of voting on such approval.
This Agreement may be terminated at any time, without the payment of
any penalty, by the Board of Directors of the Fund or by vote of a majority of
the outstanding voting securities of the Fund, or by the Distributor, on sixty
days' written notice to the other party. This Agreement shall automatically
terminate in the event of its assignment.
The terms "vote of a majority of the outstanding voting securities",
"assignment", "affiliated person" and "interested person", when used in this
Agreement, shall have the respective meanings specified in the Investment
Company Act.
-15-
<PAGE> 16
Section 10. Amendments of this Agreement
This Agreement may be amended by the parties only if such amendment. is
specifically approved by (i) the Board of Directors of the Fund, or by the vote
of a majority of outstanding voting securities of the Fund, and (ii) by the vote
of a majority of those directors of the Fund who are not parties to this
Agreement or interested persons of any such party cast in person at a meeting
called for the purpose of voting on such approval.
Section 11. Governing Law
The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of the State of New York as the time in effect and the
applicable provisions of the Investment Company Act. To the extent that the
applicable law of the State of New York, or any of the provisions herein,
conflict with the applicable provisions of the Investment Company Act, the
latter shall control.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
MERRILL LYNCH FUND FOR
TOMORROW, Inc.
By /s/ Arthur Zeikel
----------------------------------------
MERRILL LYNCH FUNDS
DISTRIBUTOR, INC.
By /s/
----------------------------------------
-16-
<PAGE> 1
EXHIBIT 99.6(b)
CLASS A SHARES
DISTRIBUTION AGREEMENT
AGREEMENT made as of the 21st day of October 1994 between MERRILL
LYNCH FUND FOR TOMORROW, INC., a Maryland corporation (the "Fund"), and MERRILL
LYNCH FUNDS DISTRIBUTOR, INC., a Delaware corporation (the "Distributor").
W I T N E S S E T H :
WHEREAS, the Fund is registered under the Investment Company Act of
1940, as amended (the "Investment Company Act"), as an open-end investment
company, and it is affirmatively in the interest of the Fund to offer its
shares for sale continuously; and
WHEREAS, the Distributor is a securities firm engaged in the business
of selling shares of investment companies either directly to purchasers or
through other securities dealers; and
WHEREAS, the Fund and the Distributor wish to enter into an agreement
with each other with respect to the continuous offering of the Class A shares
of common stock in the Fund.
NOW, THEREFORE, the parties agree as follows:
Section 1. Appointment of the Distributor. The Fund hereby appoints
the Distributor as the principal underwriter and distributor of the Fund to sell
Class A shares of common stock in the
<PAGE> 2
Fund (sometimes herein referred to as "Class A shares") to eligible investors
(as defined below) and hereby agrees during the term of this Agreement to sell
Class A shares of the Fund to the Distributor upon the terms and conditions
herein set forth.
Section 2. Exclusive Nature of Duties. The Distributor shall be the
exclusive representative of the Fund to act as principal underwriter and
distributor, except that:
A. The Fund may, upon written notice to the Distributor, from time to
time designate other principal underwriters and distributors of Class A shares
with respect to areas other than the United States as to which the Distributor
may have expressly waived in writing its right to act as such. If such
designation is deemed exclusive, the right of the Distributor under this
Agreement to sell Class A shares in the areas so designated shall terminate,
but this Agreement shall remain otherwise in full effect until terminated in
accordance with the other provisions hereof.
B. The exclusive right granted to the Distributor to purchase Class A
shares from the Fund shall not apply to Class A shares issued in connection
with the merger or consolidation of any other investment company or personal
holding company with the Fund or the acquisition by purchase or otherwise of
all (or substantially all) the assets or the outstanding Class A shares of any
such company by the Fund.
2
<PAGE> 3
C. Such exclusive right also shall not apply to Class A shares issued
by the Fund pursuant to reinvestment of dividends or capital gains
distributions.
D. Such exclusive right also shall not apply to Class A shares issued
by the Fund pursuant to any conversion, exchange or reinstatement privilege
afforded redeeming shareholders or to any other Class A shares as shall be
agreed between the Fund and the Distributor from time to time.
Section 3. Purchase of Class A shares from the Fund.
(a) The Distributor shall have the right to buy from the Fund the
Class A shares needed, but not more than the Class A shares needed (except for
clerical errors in transmission) to fill unconditional orders for Class A
shares of the Fund placed with the Distributor by eligible investors or
securities dealers. Investors eligible to purchase Class A shares shall be
those persons so identified in the currently effective prospectus and statement
of additional information of the Fund (the "prospectus" and "statement of
additional information", respectively) under the Securities Act of 1933, as
amended (the "Securities Act"), relating to such Class A shares ("eligible
investors"). The price which the Distributor shall pay for the Class A shares
so purchased from the Fund shall be the net asset value, determined as set
forth in Section 3(d) hereof, used in determining the public offering price on
which such orders were based.
(b) The Class A shares are to be resold by the Distributor to
eligible investors at the public offering price, as set forth
3
<PAGE> 4
in Section 3(c) hereof, or to securities dealers having agreements with the
Distributor upon the terms and conditions set forth in Section 7 hereof.
(c) The public offering price(s) of the Class A shares, i.e., the
price per share at which the Distributor or selected dealers may sell Class A
shares to eligible investors, shall be the public offering price as set forth in
the prospectus and statement of additional information relating to such Class A
shares, but not to exceed the net asset value at which the Distributor is to
purchase the Class A shares, plus a sales charge not to exceed 5.25% of the
public offering price (5.54% of the net amount invested), subject to reductions
for volume purchases. Class A shares may be sold to certain officers and
employees of the Fund, directors and employees of Merrill Lynch & Co., Inc. and
its subsidiaries, and to certain other persons described in the prospectus and
statement of additional information, without a sales charge or at a reduced
sales charge, upon terms and conditions set forth in the prospectus and
statement of additional information. If the public offering price does not
equal an even cent, the public offering price may be adjusted to the nearest
cent. All payments to the Fund hereunder shall be made in the manner set forth
in Section 3(f).
(d) The net asset value of Class A shares shall be determined by the
Fund or any agent of the Fund in accordance with the method set forth in the
prospectus and statement of additional
4
<PAGE> 5
information of the Fund and guidelines established by the Directors.
(e) The Fund shall have the right to suspend the sale of its Class A
shares at times when redemption is suspended pursuant to the conditions set
forth in Section 4(b) hereof. The Fund shall also have the right to suspend
the sale of its Class A shares if trading on the New York Stock Exchange shall
have been suspended, if a banking moratorium shall have been declared by
Federal or New York authorities, or if there shall have been some other event,
which, in the judgment of the Fund, makes it impracticable or inadvisable to
sell the Class A shares.
(f) The Fund, or any agent of the Fund designated in writing by the
Fund, shall be promptly advised of all purchase orders for Class A shares
received by the Distributor. Any order may be rejected by the Fund; provided,
however, that the Fund will not arbitrarily or without reasonable cause refuse
to accept or confirm orders for the purchase of Class A shares from eligible
investors. The Fund (or its agent) will confirm orders upon their receipt,
will make appropriate book entries and, upon receipt by the Fund (or its agent)
of payment therefor, will deliver deposit receipts or certificates for such
Class A shares pursuant to the instructions of the Distributor. Payment shall
be made to the Fund in New York Clearing House funds. The Distributor agrees
to cause such payment and such instructions to be delivered promptly to the
Fund (or its agent).
5
<PAGE> 6
Section 4. Repurchase or Redemption of Class A shares by the Fund.
(a) Any of the outstanding Class A shares may be tendered for
redemption at any time, and the Fund agrees to repurchase or redeem the Class A
shares so tendered in accordance with its obligations as set forth in Article
VII of its Articles of Incorporation, as amended from time to time, and in
accordance with the applicable provisions set forth in the prospectus and
statement of additional information. The price to be paid to redeem or
repurchase the Class A shares shall be equal to the net asset value calculated
in accordance with the provisions of Section 3(d) hereof, less any contingent
deferred sales charge ("CDSC"), redemption fee or other charge(s), if any, set
forth in the prospectus and statement of additional information of the Fund.
All payments by the Fund hereunder shall be made in the manner set forth below.
The redemption or repurchase by the Fund of any of the Class A shares purchased
by or through the Distributor will not affect the sales charge secured by the
Distributor or any selected dealer in the course of the original sale, except
that if any Class A shares are tendered for redemption or repurchase within
seven business days after the date of the confirmation of the original
purchase, the right to the sales charge shall be forfeited by the Distributor
and the selected dealer which sold such Class A shares.
The Fund shall pay the total amount of the redemption price as defined
in the above paragraph pursuant to the instructions of
6
<PAGE> 7
the Distributor in New York Clearing House funds on or before the seventh
business day subsequent to its having received the notice of redemption in
proper form. The proceeds of any redemption of shares shall be paid by the
Fund as follows: (i) any applicable CDSC shall be paid to the Distributor, and
(ii) the balance shall be paid to or for the account of the shareholder, in
each case in accordance with the applicable provisions of the prospectus and
statement of additional information.
(b) Redemption of Class A shares or payment may be suspended at times
when the New York Stock Exchange is closed, when trading on said Exchange is
suspended, when trading on said Exchange is restricted, when an emergency
exists as a result of which disposal by the Fund of securities owned by it is
not reasonably practicable or it is not reasonably practicable for the Fund
fairly to determine the value of its net assets, or during any other period
when the Securities and Exchange Commission, by order, so permits.
Section 5. Duties of the Fund.
(a) The Fund shall furnish to the Distributor copies of all
information, financial statements and other papers which the Distributor may
reasonably request for use in connection with the distribution of Class A
shares of the Fund, and this shall include, upon request by the Distributor,
one certified copy of all financial statements prepared for the Fund by
independent public accountants. The Fund shall make available to the
Distributor
7
<PAGE> 8
such number of copies of the prospectus and statement of additional information
as the Distributor shall reasonably request.
(b) The Fund shall take, from time to time, but subject to any
necessary approval of the Class A shareholders, all necessary action to fix the
number of authorized Class A shares and such steps as may be necessary to
register the same under the Securities Act, to the end that there will be
available for sale such number of Class A shares as the Distributor may
reasonably be expected to sell.
(c) The Fund shall use its best efforts to qualify and maintain the
qualification of an appropriate number of its Class A shares for sale under the
securities laws of such states as the Distributor and the Fund may approve.
Any such qualification may be withheld, terminated or withdrawn by the Fund at
any time in its discretion. As provided in Section 8(c) hereof, the expense of
qualification and maintenance of qualification shall be borne by the Fund. The
Distributor shall furnish such information and other material relating to its
affairs and activities as may be required by the Fund in connection with such
qualification.
(d) The Fund will furnish, in reasonable quantities upon request by
the Distributor, copies of annual and interim reports of the Fund.
Section 6. Duties of the Distributor.
(a) The Distributor shall devote reasonable time and effort to effect
sales of Class A shares of the Fund but shall not be obligated to sell any
specific number of Class A shares. The
8
<PAGE> 9
services of the Distributor to the Fund hereunder are not to be deemed
exclusive and nothing herein contained shall prevent the Distributor from
entering into like arrangements with other investment companies so long as the
performance of its obligations hereunder is not impaired thereby.
(b) In selling the Class A shares of the Fund, the Distributor shall
use its best efforts in all respects duly to conform with the requirements of
all Federal and state laws relating to the sale of such securities. Neither
the Distributor nor any selected dealer, as defined in Section 7 hereof, nor
any other person is authorized by the Fund to give any information or to make
any representations, other than those contained in the registration statement
or related prospectus and statement of additional information and any sales
literature specifically approved by the Fund.
(c) The Distributor shall adopt and follow procedures, as approved by
the officers of the Fund, for the confirmation of sales to eligible investors
and selected dealers, the collection of amounts payable by eligible investors
and selected dealers on such sales, and the cancellation of unsettled
transactions, as may be necessary to comply with the requirements of the
National Association of Securities Dealers, Inc. (the "NASD"), as such
requirements may from time to time exist.
Section 7. Selected Dealers Agreements.
(a) The Distributor shall have the right to enter into selected
dealers agreements with securities dealers of its choice
9
<PAGE> 10
("selected dealers") for the sale of Class A shares and fix therein the portion
of the sales charge which may be allocated to the selected dealers; provided
that the Fund shall approve the forms of agreements with dealers and the dealer
compensation set forth therein. Class A shares sold to selected dealers shall
be for resale by such dealers only at the public offering price(s) set forth in
the prospectus and statement of additional information. The form of agreement
with selected dealers to be used during the continuous offering of the Class A
shares is attached hereto as Exhibit A.
(b) Within the United States, the Distributor shall offer and sell
Class A shares only to such selected dealers as are members in good standing of
the NASD.
Section 8. Payment of Expenses.
(a) The Fund shall bear all costs and expenses of the Fund, including
fees and disbursements of its counsel and auditors, in connection with the
preparation and filing of any required registration statements and/or
prospectuses and statements of additional information under the Investment
Company Act, the Securities Act, and all amendments and supplements thereto,
and preparing and mailing annual and interim reports and proxy materials to
Class A shareholders (including but not limited to the expense of setting in
type any such registration statements, prospectuses, statements of additional
information, annual or interim reports or proxy materials).
10
<PAGE> 11
(b) The Distributor shall be responsible for any payments made to
selected dealers as reimbursement for their expenses associated with payments
of sales commissions to financial consultants. In addition, after the
prospectuses, statements of additional information and annual and interim
reports have been prepared and set in type, the Distributor shall bear the
costs and expenses of printing and distributing any copies thereof which are to
be used in connection with the offering of Class A shares to selected dealers
or eligible investors pursuant to this Agreement. The Distributor shall bear
the costs and expenses of preparing, printing and distributing any other
literature used by the Distributor or furnished by it for use by selected
dealers in connection with the offering of the Class A shares for sale to
eligible investors and any expenses of advertising incurred by the Distributor
in connection with such offering.
(c) The Fund shall bear the cost and expenses of qualification of the
Class A shares for sale pursuant to this Agreement and, if necessary or
advisable in connection therewith, of qualifying the Fund as a broker or dealer
in such states of the United States or other jurisdictions as shall be selected
by the Fund and the Distributor pursuant to Section 5(c) hereof and the cost
and expenses payable to each such state for continuing qualification therein
until the Fund decides to discontinue such qualification pursuant to Section
5(c) hereof.
Section 9. Indemnification.
11
<PAGE> 12
(a) The Fund shall indemnify and hold harmless the Distributor and
each person, if any, who controls the Distributor against any loss, liability,
claim, damage or expense (including the reasonable cost of investigating or
defending any alleged loss, liability, claim, damage or expense and reasonable
counsel fees incurred in connection therewith), as incurred, arising by reason
of any person acquiring any Class A shares, which may be based upon the
Securities Act, or on any other statute or at common law, on the ground that
the registration statement or related prospectus and statement of additional
information, as from time to time amended and supplemented, or an annual or
interim report to shareholders of the Fund, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein
or necessary in order to make the statements therein not misleading, unless
such statement or omission was made in reliance upon, and in conformity with,
information furnished to the Fund in connection therewith by or on behalf of
the Distributor; provided, however, that in no case (i) is the indemnity of the
Fund in favor of the Distributor and any such controlling persons to be deemed
to protect such Distributor or any such controlling persons thereof against any
liability to the Fund or its security holders to which the Distributor or any
such controlling persons would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of their duties
or by reason of the reckless disregard of their obligations and duties under
this
12
<PAGE> 13
Agreement; or (ii) is the Fund to be liable under its indemnity agreement
contained in this paragraph with respect to any claim made against the
Distributor or any such controlling persons, unless the Distributor or such
controlling persons, as the case may be, shall have notified the Fund in
writing within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon the
Distributor or such controlling persons (or after the Distributor or such
controlling persons shall have received notice of such service on any
designated agent), but failure to notify the Fund of any such claim shall not
relieve it from any liability which it may have to the person against whom such
action is brought otherwise than on account of its indemnity agreement
contained in this paragraph. The Fund will be entitled to participate at its
own expense in the defense or, if it so elects, to assume the defense of any
suit brought to enforce any such liability, but if the Fund elects to assume
the defense, such defense shall be conducted by counsel chosen by it and
satisfactory to the Distributor or such controlling person or persons,
defendant or defendants in the suit. In the event the Fund elects to assume
the defense of any such suit and retain such counsel, the Distributor or such
controlling person or persons, defendant or defendants in the suit shall bear
the fees and expenses of any additional counsel retained by them, but in case
the Fund does not elect to assume the defense of any such suit, it will
reimburse the Distributor or such controlling
13
<PAGE> 14
person or persons, defendant or defendants in the suit, for the reasonable fees
and expenses of any counsel retained by them. The Fund shall promptly notify
the Distributor of the commencement of any litigation or proceedings against it
or any of its officers or Directors in connection with the issuance or sale of
any of the Class A shares.
(b) The Distributor shall indemnify and hold harmless the Fund and
each of its Directors and officers and each person, if any, who controls the
Fund against any loss, liability, claim, damage or expense described in the
foregoing indemnity contained in subsection (a) of this Section, but only with
respect to statements or omissions made in reliance upon, and in conformity
with, information furnished to the Fund in writing by or on behalf of the
Distributor for use in connection with the registration statement or related
prospectus and statement of additional information, as from time to time
amended, or the annual or interim reports to Class A shareholders. In case any
action shall be brought against the Fund or any person so indemnified, in
respect of which indemnity may be sought against the Distributor, the
Distributor shall have the rights and duties given to the Fund, and the Fund
and each person so indemnified shall have the rights and duties given to the
Distributor by the provisions of subsection (a) of this Section 9.
Section 10. Merrill Lynch Mutual Fund Advisor Program. In connection
with the Merrill Lynch Mutual Fund Adviser Program, the Distributor and its
affiliate, Merrill Lynch, Pierce, Fenner
14
<PAGE> 15
& Smith Incorporated, are authorized to offer and sell shares of the Fund, as
agent for the Fund, to participants in such program. The terms of this
Agreement shall apply to such sales, including terms as to the offering price
of shares, the proceeds to be paid to the Fund, the duties of the Distributor,
the payment of expenses and indemnification obligations of the Fund and the
Distributor.
Section 11. Duration and Termination of this Agreement. This
Agreement shall become effective as of the date first above written and shall
remain in force until October 21, 1995 and thereafter, but only for so long as
such continuance is specifically approved at least annually by (i) the
Directors or by the vote of a majority of the outstanding voting securities of
the Fund and (ii) by the vote of a majority of those Directors who are not
parties to this Agreement or interested persons of any such party cast in
person at a meeting called for the purpose of voting on such approval.
This Agreement may be terminated at any time, without the payment of
any penalty, by the Directors or by vote of a majority of the outstanding
voting securities of the Fund, or by the Distributor, on sixty days' written
notice to the other party. This Agreement shall automatically terminate in the
event of its assignment.
The terms "vote of a majority of the outstanding voting securities",
"assignment", "affiliated person" and "interested
15
<PAGE> 16
person", when used in this Agreement, shall have the respective meanings
specified in the Investment Company Act.
Section 12. Amendments of this Agreement. This Agreement may be
amended by the parties only if such amendment is specifically approved by (i)
the Directors or by the vote of a majority of outstanding voting securities of
the Fund and (ii) by the vote of a majority of those Directors of the Fund who
are not parties to this Agreement or interested persons of any such party cast
in person at a meeting called for the purpose of voting on such approval.
Section 13. Governing Law. The provisions of this Agreement shall be
construed and interpreted in accordance with the laws of the State of New York
as at the time in effect and the applicable provisions of the Investment
Company Act. To the extent that the applicable law of the State of New York,
or any of the provisions herein, conflict with the applicable provisions of the
Investment Company Act, the latter shall control.
Section 14. This Agreement supersedes the prior Distribution
Agreement entered into by the parties hereto with respect to the Class A shares
of the Fund.
16
<PAGE> 17
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
MERRILL LYNCH FUND FOR TOMORROW, INC.
By /s/Susan B. Baker
--------------------------------------
Title:
MERRILL LYNCH FUNDS DISTRIBUTOR, INC.
By /s/Gerald M. Richard
--------------------------------------
Title:
17
<PAGE> 18
EXHIBIT A
MERRILL LYNCH FUND FOR TOMORROW, INC.
CLASS A SHARES OF COMMON STOCK
SELECTED DEALERS AGREEMENT
Gentlemen:
Merrill Lynch Funds Distributor, Inc. (the "Distributor") has an
agreement with MERRILL LYNCH FUND FOR TOMORROW, INC., a Maryland corporation
(the "Fund"), pursuant to which it acts as the distributor for the sale of
Class A shares of common stock, par value $0.10 per share (herein referred to
as "Class A shares"), of the Fund and as such has the right to distribute Class
A shares of the Fund for resale. The Fund is an open-end investment company
registered under the Investment Company Act of 1940, as amended, and its Class
A shares are registered under the Securities Act of 1933, as amended. You have
received a copy of the Class A shares Distribution Agreement (the "Distribution
Agreement") between ourself and the Fund and reference is made herein to
certain provisions of such Distribution Agreement. The terms "Prospectus" and
"Statement of Additional Information" used herein refer to the prospectus and
statement of additional information, respectively, on file with the Securities
and Exchange Commission which is part of the most recent effective registration
statement pursuant to the Securities Act of 1933, as amended. We offer to sell
to you, as a member of the Selected Dealers Group, Class A shares of the Fund
for resale to investors identified in the Prospectus and Statement of
Additional Information as eligible to purchase Class A shares ("eligible
investors") upon the following terms and conditions:
1. In all sales of these Class A shares to eligible investors,
you shall act as dealer for your own account and in no transaction shall you
have any authority to act as agent for the Fund, for us or for any other member
of the Selected Dealers Group, except in connection with the Merrill Lynch
Mutual Fund Adviser program and such other special programs as we from time to
time agree, in which case you shall have authority to offer and sell shares, as
agent for the Fund, to participants in such program.
2. Orders received from you will be accepted through us only at
the public offering price applicable to each order, as set forth in the current
Prospectus and Statement of Additional
1
<PAGE> 19
Information of the Fund. The procedure relating to the handling of orders
shall be subject to Section 5 hereof and instructions which we or the Fund
shall forward from time to time to you. All orders are subject to acceptance
or rejection by the Distributor or the Fund in the sole discretion of either.
The minimum initial and subsequent purchase requirements are as set forth in
the current Prospectus and Statement of Additional Information of the Fund.
3. The sales charges for sales to eligible investors, computed as
percentages of the public offering price and the amount invested, and the
related discount to Selected Dealers are as follows:
<TABLE>
<CAPTION>
Discount to
Selected
Sales Charge Dealers as
Sales Charge as Percentage* Percentage
as Percentage of the Net of the
of the Amount Offering
Amount of Purchase Offering Price Invested Price
------------------ -------------- -------------- -----------
<S> <C> <C> <C>
Less than $25,000.......... 5.25% 5.54% 5.00%
$25,000 but less
than $50,000.............. 4.75 4.99 4.50
$50,000 but less
than $100,000............. 4.00 4.17 3.75
$100,000 but less
than $250,000............. 3.00 3.09 2.75
$250,000 but less
than $1,000,000.. 2.00 2.04 1.80
$1,000,000 and over**...... 0.00 0.00 0.00
</TABLE>
___________________
* Rounded to the nearest one-hundredth percent.
** Initial sales charges will be waived for certain classes of offerees as set
forth in the current Prospectus and Statement of Additional Information of the
Fund. Such purchases may be subject to a contingent deferred sales charge as
set forth in the current Prospectus and Statement of Additional Information.
2
<PAGE> 20
The term "purchase" refers to a single purchase by an individual, or
to concurrent purchases, which in the aggregate are at least equal to the
prescribed amounts, by an individual, his spouse and their children under the
age of 21 years purchasing Class A shares for his or their own account and to
single purchases by a trustee or other fiduciary purchasing Class A shares for
a single trust estate or single fiduciary account although more than one
beneficiary is involved. The term "purchase" also includes purchases by any
"company" as that term is defined in the Investment Company Act of 1940, as
amended, but does not include purchases by any such company which has not been
in existence for at least six months or which has no purpose other than the
purchase of Class A shares of the Fund or Class A shares of other registered
investment companies at a discount; provided, however, that it shall not
include purchases by any group of individuals whose sole organizational nexus
is that the participants therein are credit cardholders of a company,
policyholders of an insurance company, customers of either a bank or
broker-dealer or clients of an investment adviser.
The reduced sales charges are applicable through a right of
accumulation under which certain eligible investors are permitted to purchase
Class A shares of the Fund at the offering price applicable to the total of (a)
the public offering price of the shares then being purchased plus (b) an amount
equal to the then current net asset value or cost, whichever is higher, of the
purchaser's combined holdings of Class A, Class B, Class C and Class D shares
of the Fund and of any other investment company with an initial sales charge
for which the Distributor acts as the distributor. For any such right of
accumulation to be made available, the Distributor must be provided at the time
of purchase, by the purchaser or you, with sufficient information to permit
confirmation of qualification, and acceptance of the purchase order is subject
to such confirmation.
The reduced sales charges are applicable to purchases aggregating
$25,000 or more of Class A shares or of Class D shares of any other investment
company with an initial sales charge for which the Distributor acts as the
distributor made through you within a thirteen-month period starting with the
first purchase pursuant to a Letter of Intention in the form provided in the
Prospectus. A purchase not originally made pursuant to a Letter of Intention
may be included under a subsequent letter executed within 90 days of such
purchase if the Distributor is informed in writing of this intent within such
90-day period. If the intended amount of shares is not purchased within the
thirteen-month period, an appropriate price adjustment will be made pursuant to
the terms of the Letter of Intention.
You agree to advise us promptly at our request as to amounts of any
sales made by you to eligible investors qualifying for reduced sales charges.
Further information as to the reduced sales charges pursuant
3
<PAGE> 21
to the right of accumulation or a Letter of Intention is set forth in the
Prospectus and Statement of Additional Information.
4. You shall not place orders for any of the Class A shares
unless you have already received purchase orders for such Class A shares at the
applicable public offering prices and subject to the terms hereof and of the
Distribution Agreement. You agree that you will not offer or sell any of the
Class A shares except under circumstances that will result in compliance with
the applicable Federal and state securities laws and that in connection with
sales and offers to sell Class A shares you will furnish to each person to whom
any such sale or offer is made a copy of the Prospectus and, if requested, the
Statement of Additional Information (as then amended or supplemented) and will
not furnish to any person any information relating to the Class A shares of the
Fund which is inconsistent in any respect with the information contained in the
Prospectus and Statement of Additional Information (as then amended or
supplemented) or cause any advertisement to be published in any newspaper or
posted in any public place without our consent and the consent of the Fund.
5. As a selected dealer, you are hereby authorized (i) to place
orders directly with the Fund for Class A shares of the Fund to be resold by us
to you subject to the applicable terms and conditions governing the placement
of orders by us set forth in Section 3 of the Distribution Agreement and
subject to the compensation provisions of Section 3 hereof and (ii) to tender
Class A shares directly to the Fund or its agent for redemption subject to the
applicable terms and conditions set forth in Section 4 of the Distribution
Agreement.
6. You shall not withhold placing orders received from your
customers so as to profit yourself as a result of such withholding: e.g., by a
change in the "net asset value" from that used in determining the offering
price to your customers.
7. If any Class A shares sold to you under the terms of this
Agreement are repurchased by the Fund or by us for the account of the Fund or
are tendered for redemption within seven business days after the date of the
confirmation of the original purchase by you, it is agreed that you shall
forfeit your right to, and refund to us, any discount received by you on such
Class A shares.
8. No person is authorized to make any representations concerning
Class A shares of the Fund except those contained in the current Prospectus and
Statement of Additional Information of the Fund and in such printed information
subsequently issued by us or the Fund as information supplemental to such
Prospectus and Statement of Additional Information. In purchasing Class A
shares through us you shall rely solely on the representations contained in the
Prospectus and Statement of Additional Information and supplemental information
above mentioned.
4
<PAGE> 22
Any printed information which we furnish you other than the Fund's Prospectus,
Statement of Additional Information, periodic reports and proxy solicitation
material is our sole responsibility and not the responsibility of the Fund, and
you agree that the Fund shall have no liability or responsibility to you in
these respects unless expressly assumed in connection therewith.
9. You agree to deliver to each of the purchasers making purchases
from you a copy of the then current Prospectus and, if requested, the
Statement of Additional Information at or prior to the time of offering or sale
and you agree thereafter to deliver to such purchasers copies of the annual and
interim reports and proxy solicitation materials of the Fund. You further
agree to endeavor to obtain proxies from such purchasers. Additional copies of
the Prospectus and Statement of Additional Information, annual or interim
reports and proxy solicitation materials of the Fund will be supplied to you in
reasonable quantities upon request.
10. We reserve the right in our discretion, without notice, to
suspend sales or withdraw the offering of Class A shares entirely or to certain
persons or entities in a class or classes specified by us. Each party hereto
has the right to cancel this agreement upon notice to the other party.
11. We shall have full authority to take such action as we may deem
advisable in respect of all matters pertaining to the continuous offering. We
shall be under no liability to you except for lack of good faith and for
obligations expressly assumed by us herein. Nothing contained in this
paragraph is intended to operate as, and the provisions of this paragraph shall
not in any way whatsoever constitute, a waiver by you of compliance with any
provision of the Securities Act of 1933, as amended, or of the rules and
regulations of the Securities and Exchange Commission issued thereunder.
12. You represent that you are a member of the National Association
of Securities Dealers, Inc. and, with respect to any sales in the United
States, we both hereby agree to abide by the Rules of Fair Practice of such
Association.
13. Upon application to us, we will inform you as to the states in
which we believe the Class A shares have been qualified for sale under, or are
exempt from the requirements of, the respective securities laws of such states,
but we assume no responsibility or obligation as to your right to sell Class A
shares in any jurisdiction. We will file with the Department of State in New
York a Further State Notice with respect to the Class A shares, if necessary.
5
<PAGE> 23
14. All communications to us should be sent to the address below.
Any notice to you shall be duly given if mailed or telegraphed to you at the
address specified by you below.
15. Your first order placed pursuant to this Agreement for the
purchase of Class A shares of the Fund will represent your acceptance of this
Agreement.
16. This Agreement supersedes any prior Selected Dealers Agreement
entered into by the parties hereto with respect to the Class A shares of the
Fund.
MERRILL LYNCH FUNDS DISTRIBUTOR, INC.
By /s/Gerald M. Richard
-----------------------------------
(Authorized Signature)
Please return one signed copy
of this agreement to:
MERRILL LYNCH FUNDS DISTRIBUTOR, INC.
Box 9011
Princeton, New Jersey 08543-9011
Accepted:
Firm Name: Merrill Lynch, Pierce, Fenner & Smith Inc.
----------------------------------------------------
By: /s/David Conine
-----------------------------------------------------------
Address: 800 Scudders Mill Road
------------------------------------------------------
Plainsboro, New Jersey 08536
--------------------------------------------------------------
Date: October __, 1994
---------------------------------------------------------
6
<PAGE> 1
Exhibit 99.6(c)
CLASS C SHARES
DISTRIBUTION AGREEMENT
AGREEMENT made as of the 21st day of October 1994, between
MERRILL LYNCH FUND FOR TOMORROW, INC., a Maryland corporation (the "Fund"), and
MERRILL LYNCH FUNDS DISTRIBUTOR, INC., a Delaware corporation (the
"Distributor").
W I T N E S S E T H :
---------------------
WHEREAS, the Fund is registered under the Investment Company
Act of 1940, as amended (the "Investment Company Act"), as an open-end
investment company, and it is affirmatively in the interest of the Fund to offer
its shares for sale continuously; and
WHEREAS, the Distributor is a securities firm engaged in the
business of selling shares of investment companies either directly to purchasers
or through other securities dealers; and
WHEREAS, the Fund and the Distributor wish to enter into an
agreement with each other with respect to the continuous offering of the Fund's
Class C shares in order to promote the growth of the Fund and facilitate the
distribution of its Class C shares.
NOW, THEREFORE, the parties agree as follows:
Section 1. Appointment of the Distributor. The Fund
hereby appoints the Distributor as the principal underwriter and distributor of
the Fund to sell Class C shares of common stock in the Fund (sometimes herein
referred to as "Class C shares") to the
<PAGE> 2
public and hereby agrees during the term of this Agreement to sell shares of the
Fund to the Distributor upon the terms and conditions herein set forth.
Section 2. Exclusive Nature of Duties. The Distributor
shall be the exclusive representative of the Fund to act as principal
underwriter and distributor of the Class C shares, except that:
(a) The Fund may, upon written notice to the Distributor, from
time to time designate other principal underwriters and distributors of Class C
shares with respect to areas other than the United States as to which the
Distributor may have expressly waived in writing its right to act as such. If
such designation is deemed exclusive, the right of the Distributor under this
Agreement to sell Class C shares in the areas so designated shall terminate, but
this Agreement shall remain otherwise in full effect until terminated in
accordance with the other provisions hereof.
(b) The exclusive right granted to the Distributor to purchase
Class C shares from the Fund shall not apply to Class C shares of the Fund
issued in connection with the merger or consolidation of any other investment
company or personal holding company with the Fund or the acquisition by purchase
or otherwise of all (or substantially all) the assets or the outstanding Class C
shares of any such company by the Fund.
(c) Such exclusive right also shall not apply to Class C shares
issued by the Fund pursuant to reinvestment of dividends or capital gains
distributions.
2
<PAGE> 3
(d) Such exclusive right also shall not apply to Class C shares
issued by the Fund pursuant to any conversion, exchange or reinstatement
privilege afforded redeeming shareholders or to any other Class C shares as
shall be agreed between the Fund and the Distributor from time to time.
Section 3. Purchase of Class C Shares from the Fund.
(a) It is contemplated that the Fund will commence an offering
of its Class C shares, and thereafter the Distributor shall have the right to
buy from the Fund the Class C shares needed, but not more than the Class C
shares needed (except for clerical errors in transmission) to fill unconditional
orders for Class C shares of the Fund placed with the Distributor by eligible
investors or securities dealers. Investors eligible to purchase Class C shares
shall be those persons so identified in the currently effective prospectus and
statement of additional information of the Fund (the "prospectus" and "statement
of additional information", respectively) under the Securities Act of 1933, as
amended (the "Securities Act"), relating to such Class C shares. The price which
the Distributor shall pay for the Class C shares so purchased from the Fund
shall be the net asset value, determined as set forth in Section 3(c) hereof.
(b) The Class C shares are to be resold by the Distributor to
investors at net asset value, as set forth in Section 3(c) hereof, or to
securities dealers having agreements with the Distributor upon the terms and
conditions set forth in Section 7 hereof.
3
<PAGE> 4
(c) The net asset value of Class C shares of the Fund shall be
determined by the Fund or any agent of the Fund in accordance with the method
set forth in the prospectus and statement of additional information and
guidelines established by the Board of Directors.
(d) The Fund shall have the right to suspend the sale of its
Class C shares at times when redemption is suspended pursuant to the conditions
set forth in Section 4(b) hereof. The Fund shall also have the right to suspend
the sale of its Class C shares if trading on the New York Stock Exchange shall
have been suspended, if a banking moratorium shall have been declared by Federal
or New York authorities, or if there shall have been some other event, which, in
the judgment of the Fund, makes it impracticable or inadvisable to sell the
Class C shares.
(e) The Fund, or any agent of the Fund designated in writing by
the Fund, shall be promptly advised of all purchase orders for Class C shares
received by the Distributor. Any order may be rejected by the Fund; provided,
however, that the Fund will not arbitrarily or without reasonable cause refuse
to accept or confirm orders for the purchase of Class C shares. The Fund (or its
agent) will confirm orders upon their receipt, will make appropriate book
entries and, upon receipt by the Fund (or its agent) of payment therefor, will
deliver deposit receipts or certificates for such Class C shares pursuant to the
instructions of the Distributor. Payment shall be made to the Fund in New York
Clearing House funds. The Distributor agrees to cause such payment and such
instructions to be delivered promptly to the Fund (or its agent).
4
<PAGE> 5
Section 4. Repurchase or Redemption of Class C Shares by the
Fund.
(a) Any of the outstanding Class C shares may be tendered for
redemption at any time, and the Fund agrees to repurchase or redeem the Class C
shares so tendered in accordance with its obligations as set forth in Article
VII of its Articles of Incorporation, as amended from time to time, and in
accordance with the applicable provisions set forth in the prospectus and
statement of additional information of the Fund. The price to be paid to redeem
or repurchase the Class C shares shall be equal to the net asset value
calculated in accordance with the provisions of Section 3(c) hereof, less any
contingent deferred sales charge ("CDSC"), redemption fee or other charge(s), if
any, set forth in the prospectus and statement of additional information of the
Fund. All payments by the Fund hereunder shall be made in the manner set forth
below.
The Fund shall pay the total amount of the redemption price as
defined in the above paragraph pursuant to the instructions of the Distributor
on or before the seventh business day subsequent to its having received the
notice of redemption in proper form. The proceeds of any redemption of shares
shall be paid by the Fund as follows: (i) any applicable CDSC shall be paid to
the Distributor, and (ii) the balance shall be paid to or for the account of the
shareholder, in each case in accordance with the applicable provisions of the
prospectus and statement of additional information.
5
<PAGE> 6
(b) Redemption of Class C shares or payment may be suspended at
times when the New York Stock Exchange is closed, when trading on said Exchange
is suspended, when trading on said Exchange is restricted, when an emergency
exists as a result of which disposal by the Fund of securities owned by it is
not reasonably practicable or it is not reasonably practicable for the Fund
fairly to determine the value of its net assets, or during any other period when
the Securities and Exchange Commission, by order, so permits.
Section 5. Duties of the Fund.
(a) The Fund shall furnish to the Distributor copies of all
information, financial statements and other papers which the Distributor may
reasonably request for use in connection with the distribution of Class C shares
of the Fund, and this shall include, upon request by the Distributor, one
certified copy of all financial statements prepared for the Fund by independent
public accountants. The Fund shall make available to the Distributor such number
of copies of its prospectus and statement of additional information as the
Distributor shall reasonably request.
(b) The Fund shall take, from time to time, but subject to any
necessary approval of the shareholders, all necessary action to fix the number
of authorized shares and such steps as may be necessary to register the same
under the Securities Act to the end that there will be available for sale such
number of Class C shares as the Distributor reasonably may be expected to sell.
(c) The Fund shall use its best efforts to qualify and
maintain the qualification of an appropriate number of its Class C
6
<PAGE> 7
shares for sale under the securities laws of such states as the Distributor and
the Fund may approve. Any such qualification may be withheld, terminated or
withdrawn by the Fund at any time in its discretion. As provided in Section 8(c)
hereof, the expense of qualification and maintenance of qualification shall be
borne by the Fund. The Distributor shall furnish such information and other
material relating to its affairs and activities as may be required by the Fund
in connection with such qualification.
(d) The Fund will furnish, in reasonable quantities upon
request by the Distributor, copies of annual and interim reports of the Fund.
Section 6. Duties of the Distributor.
(a) The Distributor shall devote reasonable time and effort to
effect sales of Class C shares of the Fund but shall not be obligated to sell
any specific number of shares. The services of the Distributor to the Fund
hereunder are not to be deemed exclusive and nothing herein contained shall
prevent the Distributor from entering into like arrangements with other
investment companies so long as the performance of its obligations hereunder is
not impaired thereby.
(b) In selling the Class C shares of the Fund, the Distributor
shall use its best efforts in all respects duly to conform with the requirements
of all Federal and state laws relating to the sale of such securities. Neither
the Distributor nor any selected dealer, as defined in Section 7 hereof, nor any
other person is authorized by the Fund to give any information or to make any
representations, other than those contained in the
7
<PAGE> 8
registration statement or related prospectus and statement of additional
information and any sales literature specifically approved by the Fund.
(c) The Distributor shall adopt and follow procedures, as
approved by the officers of the Fund, for the confirmation of sales to investors
and selected dealers, the collection of amounts payable by investors and
selected dealers on such sales, and the cancellation of unsettled transactions,
as may be necessary to comply with the requirements of the National Association
of Securities Dealers, Inc. (the "NASD"), as such requirements may from time to
time exist.
Section 7. Selected Dealer Agreements.
(a) The Distributor shall have the right to enter into selected
dealer agreements with securities dealers of its choice ("selected dealers") for
the sale of Class C shares; provided, that the Fund shall approve the forms of
agreements with dealers. Class C shares sold to selected dealers shall be for
resale by such dealers only at net asset value determined as set forth in
Section 3(c) hereof. The form of agreement with selected dealers to be used
during the continuous offering of the shares is attached hereto as Exhibit A.
(b) Within the United States, the Distributor shall offer and
sell Class C shares only to such selected dealers that are members in good
standing of the NASD.
Section 8. Payment of Expenses.
(a) The Fund shall bear all costs and expenses of the Fund,
including fees and disbursements of its counsel and auditors,
8
<PAGE> 9
in connection with the preparation and filing of any required registration
statements and/or prospectuses and statements of additional information under
the Investment Company Act, the Securities Act, and all amendments and
supplements thereto, and preparing and mailing annual and interim reports and
proxy materials to Class C shareholders (including but not limited to the
expense of setting in type any such registration statements, prospectuses,
statements of additional information, annual or interim reports or proxy
materials).
(b) The Distributor shall be responsible for any payments made
to selected dealers as reimbursement for their expenses associated with payments
of sales commissions to financial consultants. In addition, after the
prospectuses, statements of additional information and annual and interim
reports have been prepared and set in type, the Distributor shall bear the costs
and expenses of printing and distributing any copies thereof which are to be
used in connection with the offering of Class C shares to selected dealers or
investors pursuant to this Agreement. The Distributor shall bear the costs and
expenses of preparing, printing and distributing any other literature used by
the Distributor or furnished by it for use by selected dealers in connection
with the offering of the Class C shares for sale to the public and any expenses
of advertising incurred by the Distributor in connection with such offering. It
is understood and agreed that so long as the Fund's Class C Shares Distribution
Plan pursuant to Rule 12b-1 under the Investment Company Act remains in effect,
any
9
<PAGE> 10
expenses incurred by the Distributor hereunder may be paid from amounts
recovered by it from the Fund under such Plan.
(c) The Fund shall bear the cost and expenses of qualification
of the Class C shares for sale pursuant to this Agreement and, if necessary or
advisable in connection therewith, of qualifying the Fund as a broker or dealer
in such states of the United States or other jurisdictions as shall be selected
by the Fund and the Distributor pursuant to Section 5(c) hereof and the cost and
expenses payable to each such state for continuing qualification therein until
the Fund decides to discontinue such qualification pursuant to Section 5(c)
hereof.
Section 9. Indemnification.
(a) The Fund shall indemnify and hold harmless the Distributor
and each person, if any, who controls the Distributor against any loss,
liability, claim, damage or expense (including the reasonable cost of
investigating or defending any alleged loss, liability, claim, damage or expense
and reasonable counsel fees incurred in connection therewith), as incurred,
arising by reason of any person acquiring any Class C shares, which may be based
upon the Securities Act, or on any other statute or at common law, on the ground
that the registration statement or related prospectus and statement of
additional information, as from time to time amended and supplemented, or an
annual or interim report to Class C shareholders of the Fund, includes an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary in order to make the statements therein not
misleading, unless such statement or omission was made in
10
<PAGE> 11
reliance upon, and in conformity with, information furnished to the Fund in
connection therewith by or on behalf of the Distributor; provided, however, that
in no case (i) is the indemnity of the Fund in favor of the Distributor and any
such controlling persons to be deemed to protect such Distributor or any such
controlling persons thereof against any liability to the Fund or its security
holders to which the Distributor or any such controlling persons would otherwise
be subject by reason of willful misfeasance, bad faith or gross negligence in
the performance of their duties or by reason of the reckless disregard of their
obligations and duties under this Agreement; or (ii) is the Fund to be liable
under its indemnity agreement contained in this paragraph with respect to any
claim made against the Distributor or any such controlling persons, unless the
Distributor or such controlling persons, as the case may be, shall have notified
the Fund in writing within a reasonable time after the summons or other first
legal process giving information of the nature of the claim shall have been
served upon the Distributor or such controlling persons (or after the
Distributor or such controlling persons shall have received notice of such
service on any designated agent), but failure to notify the Fund of any such
claim shall not relieve it from any liability which it may have to the person
against whom such action is brought otherwise than on account of its indemnity
agreement contained in this paragraph. The Fund will be entitled to participate
at its own expense in the defense or, if it so elects, to assume the defense of
any suit brought to enforce any such liability, but if the Fund elects to assume
the defense, such defense shall be
11
<PAGE> 12
conducted by counsel chosen by it and satisfactory to the Distributor or such
controlling person or persons, defendant or defendants in the suit. In the event
the Fund elects to assume the defense of any such suit and retain such counsel,
the Distributor or such controlling person or persons, defendant or defendants
in the suit shall bear the fees and expenses, as incurred, of any additional
counsel retained by them, but in case the Fund does not elect to assume the
defense of any such suit, it will reimburse the Distributor or such controlling
person or persons, defendant or defendants in the suit, for the reasonable fees
and expenses, as incurred, of any counsel retained by them. The Fund shall
promptly notify the Distributor of the commencement of any litigation or
proceedings against it or any of its officers or Directors in connection with
the issuance or sale of any of the Class C shares.
(b) The Distributor shall indemnify and hold harmless the Fund
and each of its Directors and officers and each person, if any, who controls the
Fund against any loss, liability, claim, damage or expense, as incurred,
described in the foregoing indemnity contained in subsection (a) of this
Section, but only with respect to statements or omissions made in reliance upon,
and in conformity with, information furnished to the Fund in writing by or on
behalf of the Distributor for use in connection with the registration statement
or related prospectus and statement of additional information, as from time to
time amended, or the annual or interim reports to shareholders. In case any
action shall be brought against the Fund or any person so indemnified, in
respect of which indemnity may be sought against the Distributor, the
12
<PAGE> 13
Distributor shall have the rights and duties given to the Fund, and the Fund and
each person so indemnified shall have the rights and duties given to the
Distributor by the provisions of subsection (a) of this Section 9.
Section 10. Merrill Lynch Mutual Fund Advisor Program.
In connection with the Merrill Lynch Mutual Fund Adviser Program, the
Distributor and its affiliate, Merrill Lynch, Pierce, Fenner & Smith
Incorporated, are authorized to offer and sell shares of the Fund, as agent for
the Fund, to participants in such program. The terms of this Agreement shall
apply to such sales, including terms as to the offering price of shares, the
proceeds to be paid to the Fund, the duties of the Distributor, the payment of
expenses and indemnification obligations of the Fund and the Distributor.
Section 11. Duration and Termination of this Agreement.
This Agreement shall become effective as of the date first above written and
shall remain in force until October __, 1995 and thereafter, but only for so
long as such continuance is specifically approved at least annually by (i) the
Directors or by the vote of a majority of the outstanding voting securities of
the Fund and (ii) by the vote of a majority of those Directors who are not
parties to this Agreement or interested persons of any such party cast in person
at a meeting called for the purpose of voting on such approval.
This Agreement may be terminated at any time, without the
payment of any penalty, by the Directors or by vote of a majority of the
outstanding voting securities of the Fund, or by the Distributor, on sixty days'
written notice to the other party.
13
<PAGE> 14
This Agreement shall automatically terminate in the event of its assignment.
The terms "vote of a majority of the outstanding voting
securities", "assignment", "affiliated person" and "interested person", when
used in this Agreement, shall have the respective meanings specified in the
Investment Company Act.
Section 12. Amendments of this Agreement. This
Agreement may be amended by the parties only if such amendment is specifically
approved by (i) the Directors or by the vote of a majority of outstanding voting
securities of the Fund and (ii) by the vote of a majority of those Directors of
the Fund who are not parties to this Agreement or interested persons of any such
party cast in person at a meeting called for the purpose of voting on such
approval.
Section 13. Governing Law. The provisions of this
Agreement shall be construed and interpreted in accordance with the laws of the
State of New York as at the time in effect and the applicable provisions of the
Investment Company Act. To the extent that the applicable law of the State of
New York, or any of the provisions herein, conflict with the applicable
provisions of the Investment Company Act, the latter shall control.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
MERRILL LYNCH FUND FOR TOMORROW, INC.
By: /s/Susan B. Baker
-------------------------------------
Title:
14
<PAGE> 15
MERRILL LYNCH FUNDS DISTRIBUTOR, INC.
By: /s/Gerald M. Richard
-------------------------------------
Title:
15
<PAGE> 16
EXHIBIT A
MERRILL LYNCH FUND FOR TOMORROW, INC.
CLASS C SHARES OF COMMON STOCK
SELECTED DEALER AGREEMENT
Gentlemen:
Merrill Lynch Funds Distributor, Inc. (the "Distributor") has
an agreement with Merrill Lynch Fund For Tomorrow, Inc., a Maryland corporation
(the "Fund"), pursuant to which it acts as the distributor for the sale of Class
C shares of common stock, par value $0.10 per share (herein referred to as the
"Class C shares"), of the Fund and as such has the right to distribute Class C
shares of the Fund for resale. The Fund is an open-end investment company
registered under the Investment Company Act of 1940, as amended, and its Class C
shares being offered to the public are registered under the Securities Act of
1933, as amended. You have received a copy of the Class C Shares Distribution
Agreement (the "Distribution Agreement") between ourself and the Fund and
reference is made herein to certain provisions of such Distribution Agreement.
The terms "Prospectus" and "Statement of Additional Information" as used herein
refer to the prospectus and statement of additional information, respectively,
on file with the Securities and Exchange Commission which is part of the most
recent effective registration statement pursuant to the Securities Act of 1933,
as amended. We offer to sell to you, as a member of the Selected Dealers Group,
Class C shares of the Fund upon the following terms and conditions:
1. In all sales of these Class C shares to the public, you
shall act as dealer for your own account and in no transaction shall you have
any authority to act as agent for the Fund, for us or for any other member of
the Selected Dealers Group, except in connection with the Merrill Lynch Mutual
Fund Adviser program and such other special programs as we from time to time
agree, in which case you shall have authority to offer and sell shares, as agent
for the Fund, to participants in such program.
2. Orders received from you will be accepted through us only at
the public offering price applicable to each order, as set forth in the current
Prospectus and Statement of Additional Information of the Fund. The procedure
relating to the handling of orders shall be subject to Section 4 hereof and
instructions which we or the Fund shall forward from time to time to you. All
orders are subject to acceptance or rejection by the Distributor or the Fund in
the sole discretion of either. The minimum initial and subsequent purchase
requirements are as set forth in the current Prospectus and Statement of
Additional Information of the Fund.
3. You shall not place orders for any of the Class C shares
unless you have already received purchase orders for such
1
<PAGE> 17
Class C shares at the applicable public offering prices and subject to the terms
hereof and of the Distribution Agreement. You agree that you will not offer or
sell any of the Class C shares except under circumstances that will result in
compliance with the applicable Federal and state securities laws and that in
connection with sales and offers to sell Class C shares you will furnish to each
person to whom any such sale or offer is made a copy of the Prospectus and, if
requested, the Statement of Additional Information (as then amended or
supplemented) and will not furnish to any person any information relating to the
Class C shares of the Fund which is inconsistent in any respect with the
information contained in the Prospectus and Statement of Additional Information
(as then amended or supplemented) or cause any advertisement to be published in
any newspaper or posted in any public place without our consent and the consent
of the Fund.
4. As a selected dealer, you are hereby authorized (i) to place
orders directly with the Fund for Class C shares of the Fund to be resold by us
to you subject to the applicable terms and conditions governing the placement of
orders by us set forth in Section 3 of the Distribution Agreement and (ii) to
tender Class C shares directly to the Fund or its agent for redemption subject
to the applicable terms and conditions set forth in Section 4 of the
Distribution Agreement.
5. You shall not withhold placing orders received from your
customers so as to profit yourself as a result of such withholding:
e.g., by a change in the "net asset value" from that used in
determining the offering price to your customers.
6. No person is authorized to make any representations
concerning Class C shares of the Fund except those contained in the current
Prospectus and Statement of Additional Information of the Fund and in such
printed information subsequently issued by us or the Fund as information
supplemental to such Prospectus and Statement of Additional Information. In
purchasing Class C shares through us you shall rely solely on the
representations contained in the Prospectus and Statement of Additional
Information and supplemental information above mentioned. Any printed
information which we furnish you other than the Fund's Prospectus, Statement of
Additional Information, periodic reports and proxy solicitation material is our
sole responsibility and not the responsibility of the Fund, and you agree that
the Fund shall have no liability or responsibility to you in these respects
unless expressly assumed in connection therewith.
7. You agree to deliver to each of the purchasers making
purchases from you a copy of the then current Prospectus and, if requested, the
Statement of Additional Information at or prior to the time of offering or sale
and you agree thereafter to deliver to such purchasers copies of the annual and
interim reports and proxy solicitation materials of the Fund. You further agree
to endeavor to obtain proxies from such purchasers. Additional copies of the
Prospectus and Statement of Additional Information, annual or
2
<PAGE> 18
interim reports and proxy solicitation materials of the Fund will be supplied to
you in reasonable quantities upon request.
8. We reserve the right in our discretion, without notice, to
suspend sales or withdraw the offering of Class C shares entirely or to certain
persons or entities in a class or classes specified by us. Each party hereto has
the right to cancel this Agreement upon notice to the other party.
9. We shall have full authority to take such action as we may
deem advisable in respect of all matters pertaining to the continuous offering.
We shall be under no liability to you except for lack of good faith and for
obligations expressly assumed by us herein. Nothing contained in this paragraph
is intended to operate as, and the provisions of this paragraph shall not in any
way whatsoever constitute, a waiver by you of compliance with any provision of
the Securities Act of 1933, as amended, or of the rules and regulations of the
Securities and Exchange Commission issued thereunder.
10. You represent that you are a member of the National
Association of Securities Dealers, Inc. and, with respect to any sales in the
United States, we both hereby agree to abide by the Rules of Fair Practice of
such Association.
11. Upon application to us, we will inform you as to the states
in which we believe the Class C shares have been qualified for sale under, or
are exempt from the requirements of, the respective securities laws of such
states, but we assume no responsibility or obligation as to your right to sell
Class C shares in any jurisdiction. We will file with the Department of State in
New York a Further State Notice with respect to the Class C shares, if
necessary.
12. All communications to us should be sent to the address
below. Any notice to you shall be duly given if mailed or telegraphed to you at
the address specified by you below.
3
<PAGE> 19
13. Your first order placed pursuant to this Agreement for the
purchase of Class C shares of the Fund will represent your acceptance of this
Agreement.
MERRILL LYNCH FUNDS DISTRIBUTOR, INC.
By: /s/Gerald M. Richard
------------------------------------
(Authorized Signature)
Please return one signed copy
of this agreement to:
MERRILL LYNCH FUNDS DISTRIBUTOR, INC.
Box 9011
Princeton, New Jersey 08543-9011
Accepted:
Firm Name: Merrill Lynch, Pierce, Fenner & Smith Inc.
-----------------------------------------------------
By: /s/David Conine
------------------------------------------------------------
Address: 800 Scudders Mill Road
-------------------------------------------------------
Plainsboro, New Jersey 08536
---------------------------------------------------------------
Date: October __, 1994
----------------------------------------------------------
4
<PAGE> 20
CLASS C DISTRIBUTION PLAN
OF
MERRILL LYNCH FUND FOR TOMORROW, INC.
PURSUANT TO RULE 12b-1
DISTRIBUTION PLAN made as of the 21st day of October 1994, by and
between Merrill Lynch Fund for Tomorrow, Inc., a Maryland corporation (the
"Fund"), and Merrill Lynch Funds Distributor, Inc., a Delaware corporation
("MLFD").
W I T N E S S E T H:
--------------------
WHEREAS, the Fund is engaged in business as an open-end investment
company registered under the Investment Company Act of 1940, as amended (the
"Investment Company Act"); and
WHEREAS, MLFD is a securities firm engaged in the business of selling
shares of investment companies either directly to purchasers or through other
securities dealers; and
WHEREAS, the Fund proposes to enter into a Class C Shares Distribution
Agreement with MLFD, pursuant to which MLFD will act as the exclusive
distributor and representative of the Fund in the offer and sale of Class C
shares of common stock, par value $0.10 per share (the "Class C shares"), of the
Fund to the public; and
WHEREAS, the Fund desires to adopt this Class C Distribution Plan (the
"Plan") pursuant to Rule 12b-1 under the Investment Company Act, pursuant to
which the Fund will pay an account maintenance fee and a distribution fee to
MLFD with respect to the Fund's Class C shares; and
WHEREAS, the Directors of the Fund have determined that there is a
reasonable likelihood that adoption of the Plan will benefit the Fund and its
shareholders.
NOW, THEREFORE, the Fund hereby adopts, and MLFD hereby agrees to the
terms of, the Plan in accordance with Rule 12b-1 under the Investment Company
Act on the following terms and conditions:
<PAGE> 21
1. The Fund shall pay MLFD an account maintenance fee under the Plan at
the end of each month at the annual rate of 0.25% of average daily net assets of
the Fund relating to Class C shares to compensate MLFD and securities firms with
which MLFD enters into related agreements pursuant to Paragraph 3 hereof
("Sub-Agreements") for providing account maintenance activities with respect to
Class C shareholders of the Fund. Expenditures under the Plan may consist of
payments to financial consultants for maintaining accounts in connection with
Class C shares of the Fund and payment of expenses incurred in connection with
such account maintenance activities including the costs of making services
available to shareholders including assistance in connection with inquiries
related to shareholder accounts.
2. The Fund shall pay MLFD a distribution fee under the Plan at the end
of each month at the annual rate of .75% of average daily net assets of the Fund
relating to Class C shares to compensate MLFD and securities firms with which
MLFD enters into related Sub-Agreements for providing sales and promotional
activities and services. Such activities and services will relate to the sale,
promotion and marketing of the Class C shares of the Fund. Such expenditures may
consist of sales commissions to financial consultants for selling Class C shares
of the Fund, compensation, sales incentives and payments to sales and marketing
personnel, and the payment of expenses incurred in its sales and promotional
activities, including advertising expenditures related to the Fund and the costs
of preparing and distributing promotional materials. The distribution fee may
also be used to pay the financing costs of carrying the unreimbursed
expenditures described in this Paragraph 2. Payment of the distribution fee
described in this Paragraph 2 shall be subject to any limitations set forth in
any applicable regulation of the National Association of Securities Dealers,
Inc.
3. The Fund hereby authorizes MLFD to enter into Sub-Agreements with
certain securities firms ("Securities Firms"), including Merrill Lynch, Pierce,
Fenner & Smith Incorporated, to provide compensation to such Securities Firms
for activities and services of the type referred to in Paragraphs 1 and 2
hereof. MLFD may reallocate all or a portion of its account maintenance fee or
distribution fee to such Securities Firms as compensation for the
above-mentioned activities and services. Such Sub-Agreement shall provide that
the Securities Firms shall provide MLFD with such information as is reasonably
necessary to permit MLFD to comply with the reporting requirements set forth in
Paragraph 4 hereof.
2
<PAGE> 22
4. MLFD shall provide the Fund for review by the Board of Directors,
and the Directors shall review, at least quarterly, a written report complying
with the requirements of Rule 12b-1 regarding the disbursement of the account
maintenance fee and the distribution fee during such period.
5. This Plan shall not take effect until it has been approved by a vote
of at least a majority, as defined in the Investment Company Act, of the
outstanding Class C voting securities of the Fund.
6. This Plan shall not take effect until it has been approved, together
with any related agreements, by votes of a majority of both (a) the Directors of
the Fund and (b) those Directors of the Fund who are not "interested persons" of
the Fund, as defined in the Investment Company Act, and have no direct or
indirect financial interest in the operation of this Plan or any agreements
related to it (the "Rule 12b-1 Directors"), cast in person at a meeting or
meetings called for the purpose of voting on the Plan and such related
agreements.
7. The Plan shall continue in effect for so long as such continuance is
specifically approved at least annually in the manner provided for approval of
the Plan in Paragraph 6.
8. The Plan may be terminated at any time by vote of a majority of the
Rule 12b-1 Directors, or by vote of a majority of the outstanding Class C voting
securities of the Fund.
9. The Plan may not be amended to increase materially the rate of
payments provided for herein unless such amendment is approved by at least a
majority, as defined in the Investment Company Act, of the outstanding Class C
voting securities of the Fund, and by the Directors of the Fund in the manner
provided for in Paragraph 6 hereof, and no material amendment to the Plan shall
be made unless approved in the manner provided for approval and annual renewal
in Paragraph 6 hereof.
10. While the Plan is in effect, the selection and nomination of
Directors who are not interested persons, as defined in the Investment Company
Act, of the Fund shall be committed to the discretion of the Directors who are
not interested persons.
11. The Fund shall preserve copies of the Plan and any related
agreements and all reports made pursuant to Paragraph 4 hereof, for a period of
not less than six years from the date of
3
<PAGE> 23
the Plan, or the agreements or such report, as the case may be, the first two
years in an easily accessible place.
IN WITNESS WHEREOF, the parties hereto have executed this Distribution
Plan as of the date first above written.
MERRILL LYNCH FUND FOR TOMORROW, INC.
By /s/Susan B. Baker
-----------------------------------------
Title:
MERRILL LYNCH FUNDS DISTRIBUTOR, INC.
By /s/Gerald M. Richard
------------------------------------------
Title:
4
<PAGE> 24
CLASS C SHARES DISTRIBUTION PLAN SUB-AGREEMENT
AGREEMENT made as of the 21st day of October 1994, by and between
Merrill Lynch Funds Distributor, Inc., a Delaware corporation ("MLFD"), and
Merrill Lynch, Pierce, Fenner & Smith Incorporated, a Delaware corporation
("Securities Firm").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, MLFD has entered into an agreement with Merrill Lynch Fund For
Tomorrow, Inc., a Maryland corporation (the "Fund"), pursuant to which it acts
as the exclusive distributor for the sale of Class C shares of common stock, par
value $0.10 per share (the "Class C shares"), of the Fund; and
WHEREAS, MLFD and the Fund have entered into a Class C Shares
Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Investment
Company Act of 1940, as amended (the "Act"), pursuant to which MLFD receives an
account maintenance fee from the Fund at the annual rate of 0.25% of average
daily net assets of the Fund relating to Class C shares for account maintenance
activities related to Class C shares of the Fund and a distribution fee from the
Fund at the annual rate of .75% of average daily net assets of the Fund relating
to Class C shares for providing sales and promotional activities and services
related to the distribution of Class C shares; and
WHEREAS, MLFD desires the Securities Firm to perform certain account
maintenance activities and sales and promotional activities and services for the
Fund's Class C shareholders and the Securities Firm is willing to perform such
activities and services;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties hereby agree as follows:
1. The Securities Firm shall provide account maintenance activities and
services with respect to the Class C shares of the Fund and incur expenditures
in connection with such activities and services of the types referred to in
Paragraph 1 of the Plan.
2. The Securities Firm shall provide sales and promotional activities
and services with respect to the sale of the Class C shares of the Fund, and
incur distribution expenditures, of the types referred to in Paragraph 2 of the
Plan.
3. As compensation for its activities and services performed under this
Agreement, MLFD shall pay the Securities Firm an account maintenance fee and a
distribution fee at the end
<PAGE> 25
of each calendar month in an amount agreed upon by the parties hereto.
4. The Securities Firm shall provide MLFD, at least quarterly, such
information as reasonably requested by MLFD to enable MLFD to comply with the
reporting requirements of Rule 12b-1 regarding the disbursement of the account
maintenance fee and the distribution fee during such period referred to in
Paragraph 4 of the Plan.
5. This Agreement shall not take effect until it has been approved by
votes of a majority of both (a) the Directors of the Fund and (b) those
Directors of the Fund who are not "interested persons" of the Fund, as defined
in the Act, and have no direct or indirect financial interest in the operation
of the Plan, this Agreement or any agreements related to the Plan or this
Agreement (the "Rule 12b-1 Directors"), cast in person at a meeting or meetings
called for the purpose of voting on this Agreement.
6. This Agreement shall continue in effect for as long as such
continuance is specifically approved at least annually in the manner provided
for approval of the Plan in Paragraph 6.
7. This Agreement shall automatically terminate in the event of its
assignment or in the event of the termination of the Plan or any amendment to
the Plan that requires such termination.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
MERRILL LYNCH FUNDS DISTRIBUTOR, INC.
By /s/Gerald M. Richard
--------------------------------------
Title:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By /s/David Conine
--------------------------------------
Title:
2
<PAGE> 1
Exhibit 99.6(d)
CLASS D SHARES
DISTRIBUTION AGREEMENT
AGREEMENT made as of the 21st day of October 1994 between
MERRILL LYNCH FUND FOR TOMORROW, INC., a Maryland corporation (the "Fund"), and
MERRILL LYNCH FUNDS DISTRIBUTOR, INC., a Delaware corporation (the
"Distributor").
W I T N E S S E T H :
---------------------
WHEREAS, the Fund is registered under the Investment Company
Act of 1940, as amended (the "Investment Company Act"), as an open-end
investment company, and it is affirmatively in the interest of the Fund to offer
its shares for sale continuously; and
WHEREAS, the Distributor is a securities firm engaged in the
business of selling shares of investment companies either directly to purchasers
or through other securities dealers; and
WHEREAS, the Fund and the Distributor wish to enter into an
agreement with each other with respect to the continuous offering of the Class D
shares of common stock in the Fund.
NOW, THEREFORE, the parties agree as follows:
Section 1. Appointment of the Distributor. The Fund
hereby appoints the Distributor as the principal underwriter and distributor of
the Fund to sell Class D shares of common stock in the Fund (sometimes herein
referred to as "Class D shares") to the public and hereby agrees during the term
of this Agreement to sell
<PAGE> 2
Class D shares of the Fund to the Distributor upon the terms and conditions
herein set forth.
Section 2. Exclusive Nature of Duties. The Distributor
shall be the exclusive representative of the Fund to act as principal
underwriter and distributor, except that:
A. The Fund may, upon written notice to the Distributor, from
time to time designate other principal underwriters and distributors of Class D
shares with respect to areas other than the United States as to which the
Distributor may have expressly waived in writing its right to act as such. If
such designation is deemed exclusive, the right of the Distributor under this
Agreement to sell Class D shares in the areas so designated shall terminate, but
this Agreement shall remain otherwise in full effect until terminated in
accordance with the other provisions hereof.
B. The exclusive right granted to the Distributor to purchase
Class D shares from the Fund shall not apply to Class D shares issued in
connection with the merger or consolidation of any other investment company or
personal holding company with the Fund or the acquisition by purchase or
otherwise of all (or substantially all) the assets or the outstanding Class D
shares of any such company by the Fund.
C. Such exclusive right also shall not apply to Class D shares
issued by the Fund pursuant to reinvestment of dividends or capital gains
distributions.
D. Such exclusive right also shall not apply to Class D shares
issued by the Fund pursuant to any conversion, exchange or reinstatement
privilege afforded redeeming shareholders or to any
2
<PAGE> 3
other Class D shares as shall be agreed between the Fund and the Distributor
from time to time.
Section 3. Purchase of Class D Shares from the Fund.
(a) It is contemplated that the Fund will commence an offering
of its Class D shares, and thereafter the Distributor shall have the right to
buy from the Fund the Class D shares needed, but not more than the Class D
shares needed (except for clerical errors in transmission) to fill unconditional
orders for Class D shares of the Fund placed with the Distributor by eligible
investors or securities dealers. Investors eligible to purchase Class D shares
shall be those persons so identified in the currently effective prospectus and
statement of additional information of the Fund (the "prospectus" and "statement
of additional information", respectively) under the Securities Act of 1933, as
amended (the "Securities Act"), relating to such Class D shares. The price which
the Distributor shall pay for the Class D shares so purchased from the Fund
shall be the net asset value, determined as set forth in Section 3(d) hereof,
used in determining the public offering price on which such orders were based.
(b) The Class D shares are to be resold by the Distributor to
investors at the public offering price, as set forth in Section 3(c) hereof, or
to securities dealers having agreements with the Distributor upon the terms and
conditions set forth in Section 7 hereof.
(c) The public offering price(s) of the Class D shares,
i.e., the price per share at which the Distributor or selected
dealers may sell Class D shares to the public, shall be the public
3
<PAGE> 4
offering price as set forth in the prospectus and statement of additional
information relating to such Class D shares, but not to exceed the net asset
value at which the Distributor is to purchase the Class D shares, plus a sales
charge not to exceed 5.25% of the public offering price (5.54% of the net amount
invested), subject to reductions for volume purchases. Class D shares may be
sold to certain Directors, officers and employees of the Fund, directors and
employees of Merrill Lynch & Co., Inc. and its subsidiaries, and to certain
other persons described in the prospectus and statement of additional
information, without a sales charge or at a reduced sales charge, upon terms and
conditions set forth in the prospectus and statement of additional information.
If the public offering price does not equal an even cent, the public offering
price may be adjusted to the nearest cent. All payments to the Fund hereunder
shall be made in the manner set forth in Section 3(f).
(d) The net asset value of Class D shares shall be determined
by the Fund or any agent of the Fund in accordance with the method set forth in
the prospectus and statement of additional information of the Fund and
guidelines established by the Directors.
(e) The Fund shall have the right to suspend the sale of its
Class D shares at times when redemption is suspended pursuant to the conditions
set forth in Section 4(b) hereof. The Fund shall also have the right to suspend
the sale of its Class D shares if trading on the New York Stock Exchange shall
have been suspended, if a banking moratorium shall have been declared by Federal
or New
4
<PAGE> 5
York authorities, or if there shall have been some other event, which, in the
judgment of the Fund, makes it impracticable or inadvisable to sell the Class D
shares.
(f) The Fund, or any agent of the Fund designated in writing by
the Fund, shall be promptly advised of all purchase orders for Class D shares
received by the Distributor. Any order may be rejected by the Fund; provided,
however, that the Fund will not arbitrarily or without reasonable cause refuse
to accept or confirm orders for the purchase of Class D shares. The Fund (or its
agent) will confirm orders upon their receipt, will make appropriate book
entries and, upon receipt by the Fund (or its agent) of payment therefor, will
deliver deposit receipts or certificates for such Class D shares pursuant to the
instructions of the Distributor. Payment shall be made to the Fund in New York
Clearing House funds. The Distributor agrees to cause such payment and such
instructions to be delivered promptly to the Fund (or its agent).
Section 4. Repurchase or Redemption of Class D Shares by
the Fund.
(a) Any of the outstanding Class D shares may be tendered for
redemption at any time, and the Fund agrees to repurchase or redeem the Class D
shares so tendered in accordance with its obligations as set forth in Article
VII of its Articles of Incorporation, as amended from time to time, and in
accordance with the applicable provisions set forth in the prospectus and
statement of additional information. The price to be paid to redeem or
repurchase the Class D shares shall be equal to the net asset value calculated
in accordance with the provisions of Section 3(d) here-
5
<PAGE> 6
of, less any contingent deferred sales charge ("CDSC"), redemption fee or other
charge(s), if any, set forth in the prospectus and statement of additional
information of the Fund. All payments by the Fund hereunder shall be made in the
manner set forth below. The redemption or repurchase by the Fund of any of the
Class D shares purchased by or through the Distributor will not affect the sales
charge secured by the Distributor or any selected dealer in the course of the
original sale, except that if any Class D shares are tendered for redemption or
repurchase within seven business days after the date of the confirmation of the
original purchase, the right to the sales charge shall be forfeited by the
Distributor and the selected dealer which sold such Class D shares.
The Fund shall pay the total amount of the redemption price as
defined in the above paragraph pursuant to the instructions of the Distributor
in New York Clearing House funds on or before the seventh business day
subsequent to its having received the notice of redemption in proper form. The
proceeds of any redemption of shares shall be paid by the Fund as follows: (i)
any applicable CDSC shall be paid to the Distributor, and (ii) the balance shall
be paid to or for the account of the shareholder, in each case in accordance
with the applicable provisions of the prospectus and statement of additional
information.
(b) Redemption of Class D shares or payment may be suspended at
times when the New York Stock Exchange is closed, when trading on said Exchange
is suspended, when trading on said Exchange is restricted, when an emergency
exists as a result of which disposal by the Fund of securities owned by it is
not
6
<PAGE> 7
reasonably practicable or it is not reasonably practicable for the Fund fairly
to determine the value of its net assets, or during any other period when the
Securities and Exchange Commission, by order, so permits.
Section 5. Duties of the Fund.
(a) The Fund shall furnish to the Distributor copies of all
information, financial statements and other papers which the Distributor may
reasonably request for use in connection with the distribution of Class D shares
of the Fund, and this shall include, upon request by the Distributor, one
certified copy of all financial statements prepared for the Fund by independent
public accountants. The Fund shall make available to the Distributor such number
of copies of the prospectus and statement of additional information as the
Distributor shall reasonably request.
(b) The Fund shall take, from time to time, but subject to any
necessary approval of the Class D shareholders, all necessary action to fix the
number of authorized Class D shares and such steps as may be necessary to
register the same under the Securities Act, to the end that there will be
available for sale such number of Class D shares as the Distributor may
reasonably be expected to sell.
(c) The Fund shall use its best efforts to qualify and maintain
the qualification of an appropriate number of its Class D shares for sale under
the securities laws of such states as the Distributor and the Fund may approve.
Any such qualification may be withheld, terminated or withdrawn by the Fund at
any time in its discretion. As provided in Section 8(c) hereof, the expense of
7
<PAGE> 8
qualification and maintenance of qualification shall be borne by the Fund. The
Distributor shall furnish such information and other material relating to its
affairs and activities as may be required by the Fund in connection with such
qualification.
(d) The Fund will furnish, in reasonable quantities upon
request by the Distributor, copies of annual and interim reports of the Fund.
Section 6. Duties of the Distributor.
(a) The Distributor shall devote reasonable time and effort to
effect sales of Class D shares of the Fund but shall not be obligated to sell
any specific number of Class D shares. The services of the Distributor to the
Fund hereunder are not to be deemed exclusive and nothing herein contained shall
prevent the Distributor from entering into like arrangements with other
investment companies so long as the performance of its obligations hereunder is
not impaired thereby.
(b) In selling the Class D shares of the Fund, the Distributor
shall use its best efforts in all respects duly to conform with the requirements
of all Federal and state laws relating to the sale of such securities. Neither
the Distributor nor any selected dealer, as defined in Section 7 hereof, nor any
other person is authorized by the Fund to give any information or to make any
representations, other than those contained in the registration statement or
related prospectus and statement of additional information and any sales
literature specifically approved by the Fund.
8
<PAGE> 9
(c) The Distributor shall adopt and follow procedures, as
approved by the officers of the Fund, for the confirmation of sales to investors
and selected dealers, the collection of amounts payable by investors and
selected dealers on such sales, and the cancellation of unsettled transactions,
as may be necessary to comply with the requirements of the National Association
of Securities Dealers, Inc. (the "NASD"), as such requirements may from time to
time exist.
Section 7. Selected Dealers Agreements.
(a) The Distributor shall have the right to enter into selected
dealers agreements with securities dealers of its choice ("selected dealers")
for the sale of Class D shares and fix therein the portion of the sales charge
which may be allocated to the selected dealers; provided that the Fund shall
approve the forms of agreements with dealers and the dealer compensation set
forth therein. Class D shares sold to selected dealers shall be for resale by
such dealers only at the public offering price(s) set forth in the prospectus
and statement of additional information. The form of agreement with selected
dealers to be used during the continuous offering of the Class D shares is
attached hereto as Exhibit A.
(b) Within the United States, the Distributor shall offer and
sell Class D shares only to such selected dealers as are members in good
standing of the NASD.
Section 8. Payment of Expenses.
(a) The Fund shall bear all costs and expenses of the Fund,
including fees and disbursements of its counsel and auditors,
9
<PAGE> 10
in connection with the preparation and filing of any required registration
statements and/or prospectuses and statements of additional information under
the Investment Company Act, the Securities Act, and all amendments and
supplements thereto, and preparing and mailing annual and interim reports and
proxy materials to Class D shareholders (including but not limited to the
expense of setting in type any such registration statements, prospectuses,
statements of additional information, annual or interim reports or proxy
materials).
(b) The Distributor shall be responsible for any payments made
to selected dealers as reimbursement for their expenses associated with payments
of sales commissions to financial consultants. In addition, after the
prospectuses, statements of additional information and annual and interim
reports have been prepared and set in type, the Distributor shall bear the costs
and expenses of printing and distributing any copies thereof which are to be
used in connection with the offering of Class D shares to selected dealers or
investors pursuant to this Agreement. The Distributor shall bear the costs and
expenses of preparing, printing and distributing any other literature used by
the Distributor or furnished by it for use by selected dealers in connection
with the offering of the Class D shares for sale to the public and any expenses
of advertising incurred by the Distributor in connection with such offering. It
is understood and agreed that so long as the Fund's Class D Shares Distribution
Plan pursuant to Rule 12b-1 under the Investment Company Act remains in effect,
any expenses incurred by the Distributor hereunder in connection with
10
<PAGE> 11
account maintenance activities may be paid from amounts recovered by it from the
Fund under such plan.
(c) The Fund shall bear the cost and expenses of qualification
of the Class D shares for sale pursuant to this Agreement and, if necessary or
advisable in connection therewith, of qualifying the Fund as a broker or dealer
in such states of the United States or other jurisdictions as shall be selected
by the Fund and the Distributor pursuant to Section 5(c) hereof and the cost and
expenses payable to each such state for continuing qualification therein until
the Fund decides to discontinue such qualification pursuant to Section 5(c)
hereof.
Section 9. Indemnification.
(a) The Fund shall indemnify and hold harmless the Distributor
and each person, if any, who controls the Distributor against any loss,
liability, claim, damage or expense (including the reasonable cost of
investigating or defending any alleged loss, liability, claim, damage or expense
and reasonable counsel fees incurred in connection therewith), as incurred,
arising by reason of any person acquiring any Class D shares, which may be based
upon the Securities Act, or on any other statute or at common law, on the ground
that the registration statement or related prospectus and statement of
additional information, as from time to time amended and supplemented, or an
annual or interim report to shareholders of the Fund, includes an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary in order to make the statements therein not
misleading, unless such statement or omission was made in
11
<PAGE> 12
reliance upon, and in conformity with, information furnished to the Fund in
connection therewith by or on behalf of the Distributor; provided, however, that
in no case (i) is the indemnity of the Fund in favor of the Distributor and any
such controlling persons to be deemed to protect such Distributor or any such
controlling persons thereof against any liability to the Fund or its security
holders to which the Distributor or any such controlling persons would otherwise
be subject by reason of willful misfeasance, bad faith or gross negligence in
the performance of their duties or by reason of the reckless disregard of their
obligations and duties under this Agreement; or (ii) is the Fund to be liable
under its indemnity agreement contained in this paragraph with respect to any
claim made against the Distributor or any such controlling persons, unless the
Distributor or such controlling persons, as the case may be, shall have notified
the Fund in writing within a reasonable time after the summons or other first
legal process giving information of the nature of the claim shall have been
served upon the Distributor or such controlling persons (or after the
Distributor or such controlling persons shall have received notice of such
service on any designated agent), but failure to notify the Fund of any such
claim shall not relieve it from any liability which it may have to the person
against whom such action is brought otherwise than on account of its indemnity
agreement contained in this paragraph. The Fund will be entitled to participate
at its own expense in the defense or, if it so elects, to assume the defense of
any suit brought to enforce any such liability, but if the Fund elects to assume
the defense, such defense shall be
12
<PAGE> 13
conducted by counsel chosen by it and satisfactory to the Distributor or such
controlling person or persons, defendant or defendants in the suit. In the event
the Fund elects to assume the defense of any such suit and retain such counsel,
the Distributor or such controlling person or persons, defendant or defendants
in the suit shall bear the fees and expenses of any additional counsel retained
by them, but in case the Fund does not elect to assume the defense of any such
suit, it will reimburse the Distributor or such controlling person or persons,
defendant or defendants in the suit, for the reasonable fees and expenses of any
counsel retained by them. The Fund shall promptly notify the Distributor of the
commencement of any litigation or proceedings against it or any of its officers
or Directors in connection with the issuance or sale of any of the Class D
shares.
(b) The Distributor shall indemnify and hold harmless the Fund
and each of its Directors and officers and each person, if any, who controls the
Fund against any loss, liability, claim, damage or expense described in the
foregoing indemnity contained in subsection (a) of this Section, but only with
respect to statements or omissions made in reliance upon, and in conformity
with, information furnished to the Fund in writing by or on behalf of the
Distributor for use in connection with the registration statement or related
prospectus and statement of additional information, as from time to time
amended, or the annual or interim reports to Class D shareholders. In case any
action shall be brought against the Fund or any person so indemnified, in
respect of which indemnity may be sought against the Distributor, the
Distributor
13
<PAGE> 14
shall have the rights and duties given to the Fund, and the Fund and each person
so indemnified shall have the rights and duties given to the Distributor by the
provisions of subsection (a) of this Section 9.
Section 10. Merrill Lynch Mutual Fund Advisor Program.
In connection with the Merrill Lynch Mutual Fund Adviser Program, the
Distributor and its affiliate, Merrill Lynch, Pierce, Fenner & Smith
Incorporated, are authorized to offer and sell shares of the Fund, as agent for
the Fund, to participants in such program. The terms of this Agreement shall
apply to such sales, including terms as to the offering price of shares, the
proceeds to be paid to the Fund, the duties of the Distributor, the payment of
expenses and indemnification obligations of the Fund and the Distributor.
Section 11. Duration and Termination of this Agreement.
This Agreement shall become effective as of the date first above written and
shall remain in force until October __, 1995 and thereafter, but only for so
long as such continuance is specifically approved at least annually by (i) the
Directors or by the vote of a majority of the outstanding voting securities of
the Fund and (ii) by the vote of a majority of those Directors who are not
parties to this Agreement or interested persons of any such party cast in person
at a meeting called for the purpose of voting on such approval.
This Agreement may be terminated at any time, without the
payment of any penalty, by the Directors or by vote of a majority of the
outstanding voting securities of the Fund, or by the Distributor, on sixty days'
written notice to the other party. This
14
<PAGE> 15
Agreement shall automatically terminate in the event of its assignment.
The terms "vote of a majority of the outstanding voting
securities", "assignment", "affiliated person" and "interested person", when
used in this Agreement, shall have the respective meanings specified in the
Investment Company Act.
Section 12. Amendments of this Agreement. This
Agreement may be amended by the parties only if such amendment is specifically
approved by (i) the Directors or by the vote of a majority of outstanding voting
securities of the Fund and (ii) by the vote of a majority of those Directors of
the Fund who are not parties to this Agreement or interested persons of any such
party cast in person at a meeting called for the purpose of voting on such
approval.
Section 13. Governing Law. The provisions of this
Agreement shall be construed and interpreted in accordance with the laws of the
State of New York as at the time in effect and the applicable provisions of the
Investment Company Act. To the extent that the applicable law of the State of
New York, or any of the provisions herein, conflict with the applicable
provisions of the Investment Company Act, the latter shall control.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
MERRILL LYNCH FUND FOR TOMORROW, INC.
By: /s/Susan B. Baker
------------------------------------
Title:
15
<PAGE> 16
MERRILL LYNCH FUNDS DISTRIBUTOR, INC.
By: /s/Gerald M. Richard
-------------------------------------
Title:
16
<PAGE> 17
EXHIBIT A
MERRILL LYNCH FUND FOR TOMORROW, INC.
CLASS D SHARES OF COMMON STOCK
SELECTED DEALERS AGREEMENT
Gentlemen:
Merrill Lynch Funds Distributor, Inc. (the "Distributor") has
an agreement with Merrill Lynch Fund For Tomorrow, Inc., a Maryland corporation
(the "Fund"), pursuant to which it acts as the distributor for the sale of Class
D shares of common stock, par value $0.10 per share (herein referred to as
"Class D shares"), of the Fund and as such has the right to distribute Class D
shares of the Fund for resale. The Fund is an open-end investment company
registered under the Investment Company Act of 1940, as amended, and its Class D
shares being offered to the public are registered under the Securities Act of
1933, as amended. You have received a copy of the Class D Shares Distribution
Agreement (the "Distribution Agreement") between ourself and the Fund and
reference is made herein to certain provisions of such Distribution Agreement.
The terms "Prospectus" and "Statement of Additional Information" used herein
refer to the prospectus and statement of additional information, respectively,
on file with the Securities and Exchange Commission which is part of the most
recent effective registration statement pursuant to the Securities Act of 1933,
as amended. We offer to sell to you, as a member of the Selected Dealers Group,
Class D shares of the Fund upon the following terms and conditions:
1. In all sales of these Class D shares to the public, you
shall act as dealer for your own account and in no transaction shall you have
any authority to act as agent for the Fund, for us or for any other member of
the Selected Dealers Group, except in connection with the Merrill Lynch Mutual
Fund Adviser program and such other special programs as we from time to time
agree, in which case you shall have authority to offer and sell shares, as agent
for the Fund, to participants in such program.
2. Orders received from you will be accepted through us only at
the public offering price applicable to each order, as set forth in the current
Prospectus and Statement of Additional Information of the Fund. The procedure
relating to the handling of orders shall be subject to Section 5 hereof and
instructions which we or the Fund shall forward from time to time to you. All
orders
1
<PAGE> 18
are subject to acceptance or rejection by the Distributor or the Fund in the
sole discretion of either. The minimum initial and subsequent purchase
requirements are as set forth in the current Prospectus and Statement of
Additional Information of the Fund.
3. The sales charges for sales to the public, computed as
percentages of the public offering price and the amount invested, and the
related discount to Selected Dealers are as follows:
<TABLE>
<CAPTION>
Discount to
Sales Charge Selected
Sales Charge as Percentage* Dealers as
as Percentage of the Net Percentage
of the Amount of the
Amount of Purchase Offering Price Invested Offering Price
------------------ -------------- --------------- --------------
<S> <C> <C> <C>
Less than $25,000 .................... 5.25% 5.54% 5.00%
$25,000 but less
than $50,000 ......................... 4.75 4.99 4.50
$50,000 but less
than $100,000 ........................ 4.00 4.17 3.75
$100,000 but less
than $250,000 ........................ 3.00 3.09 2.75
$250,000 but less
than $1,000,000 ...................... 2.00 2.04 1.80
$1,000,000 and over** ................ 0.00 0.00 0.00
</TABLE>
- -------------------
* Rounded to the nearest one-hundredth percent.
** Initial sales charges will be waived for certain classes of offerees as
set forth in the current Prospectus and Statement of Additional
Information of the Fund. Such purchases may be subject to a contingent
deferred sales charge as set forth in the current Prospectus and
Statement of Additional Information.
2
<PAGE> 19
The term "purchase" refers to a single purchase by an
individual, or to concurrent purchases, which in the aggregate are at least
equal to the prescribed amounts, by an individual, his spouse and their children
under the age of 21 years purchasing Class D shares for his or their own account
and to single purchases by a trustee or other fiduciary purchasing Class D
shares for a single trust estate or single fiduciary account although more than
one beneficiary is involved. The term "purchase" also includes purchases by any
"company" as that term is defined in the Investment Company Act of 1940, as
amended, but does not include purchases by any such company which has not been
in existence for at least six months or which has no purpose other than the
purchase of Class D shares of the Fund or Class D shares of other registered
investment companies at a discount; provided, however, that it shall not include
purchases by any group of individuals whose sole organizational nexus is that
the participants therein are credit cardholders of a company, policyholders of
an insurance company, customers of either a bank or broker-dealer or clients of
an investment adviser.
The reduced sales charges are applicable through a right of
accumulation under which eligible investors are permitted to purchase Class D
shares of the Fund at the offering price applicable to the total of (a) the
public offering price of the shares then being purchased plus (b) an amount
equal to the then current net asset value or cost, whichever is higher, of the
purchaser's combined holdings of Class A, Class B, Class C and Class D shares of
the Fund and of any other investment company with an initial sales charge for
which the Distributor acts as the distributor. For any such right of
accumulation to be made available, the Distributor must be provided at the time
of purchase, by the purchaser or you, with sufficient information to permit
confirmation of qualification, and acceptance of the purchase order is subject
to such confirmation.
The reduced sales charges are applicable to purchases
aggregating $25,000 or more of Class A shares or of Class D shares of any other
investment company with an initial sales charge for which the Distributor acts
as the distributor made through you within a thirteen-month period starting with
the first purchase pursuant to a Letter of Intention in the form provided in the
Prospectus. A purchase not originally made pursuant to a Letter of Intention may
be included under a subsequent letter executed within 90 days of such purchase
if the Distributor is informed in writing of this intent within such 90-day
period. If the intended amount of shares is not purchased within the
thirteen-month period, an appropriate price adjustment will be made pursuant to
the terms of the Letter of Intention.
You agree to advise us promptly at our request as to amounts of
any sales made by you to the public qualifying for reduced sales charges.
Further information as to the reduced sales charges pursuant
3
<PAGE> 20
to the right of accumulation or a Letter of Intention is set forth in the
Prospectus and Statement of Additional Information.
4. You shall not place orders for any of the Class D shares
unless you have already received purchase orders for such Class D shares at the
applicable public offering prices and subject to the terms hereof and of the
Distribution Agreement. You agree that you will not offer or sell any of the
Class D shares except under circumstances that will result in compliance with
the applicable Federal and state securities laws and that in connection with
sales and offers to sell Class D shares you will furnish to each person to whom
any such sale or offer is made a copy of the Prospectus and, if requested, the
Statement of Additional Information (as then amended or supplemented) and will
not furnish to any person any information relating to the Class D shares of the
Fund which is inconsistent in any respect with the information contained in the
Prospectus and Statement of Additional Information (as then amended or
supplemented) or cause any advertisement to be published in any newspaper or
posted in any public place without our consent and the consent of the Fund.
5. As a selected dealer, you are hereby authorized (i) to place
orders directly with the Fund for Class D shares of the Fund to be resold by us
to you subject to the applicable terms and conditions governing the placement of
orders by us set forth in Section 3 of the Distribution Agreement and subject to
the compensation provisions of Section 3 hereof and (ii) to tender Class D
shares directly to the Fund or its agent for redemption subject to the
applicable terms and conditions set forth in Section 4 of the Distribution
Agreement.
6. You shall not withhold placing orders received from your
customers so as to profit yourself as a result of such withholding:
e.g., by a change in the "net asset value" from that used in
determining the offering price to your customers.
7. If any Class D shares sold to you under the terms of this
Agreement are repurchased by the Fund or by us for the account of the Fund or
are tendered for redemption within seven business days after the date of the
confirmation of the original purchase by you, it is agreed that you shall
forfeit your right to, and refund to us, any discount received by you on such
Class D shares.
8. No person is authorized to make any representations
concerning Class D shares of the Fund except those contained in the current
Prospectus and Statement of Additional Information of the Fund and in such
printed information subsequently issued by us or the Fund as information
supplemental to such Prospectus and Statement of Additional Information. In
purchasing Class D shares through us you shall rely solely on the
representations contained in the Prospectus and Statement of Additional
Information and supplemental information above mentioned.
4
<PAGE> 21
Any printed information which we furnish you other than the Fund's Prospectus,
Statement of Additional Information, periodic reports and proxy solicitation
material is our sole responsibility and not the responsibility of the Fund, and
you agree that the Fund shall have no liability or responsibility to you in
these respects unless expressly assumed in connection therewith.
9. You agree to deliver to each of the purchasers making
purchases from you a copy of the then current Prospectus and, if requested, the
Statement of Additional Information at or prior to the time of offering or sale
and you agree thereafter to deliver to such purchasers copies of the annual and
interim reports and proxy solicitation materials of the Fund. You further agree
to endeavor to obtain proxies from such purchasers. Additional copies of the
Prospectus and Statement of Additional Information, annual or interim reports
and proxy solicitation materials of the Fund will be supplied to you in
reasonable quantities upon request.
10. We reserve the right in our discretion, without notice, to
suspend sales or withdraw the offering of Class D shares entirely or to certain
persons or entities in a class or classes specified by us. Each party hereto has
the right to cancel this agreement upon notice to the other party.
11. We shall have full authority to take such action as we may
deem advisable in respect of all matters pertaining to the continuous offering.
We shall be under no liability to you except for lack of good faith and for
obligations expressly assumed by us herein. Nothing contained in this paragraph
is intended to operate as, and the provisions of this paragraph shall not in any
way whatsoever constitute, a waiver by you of compliance with any provision of
the Securities Act of 1933, as amended, or of the rules and regulations of the
Securities and Exchange Commission issued thereunder.
12. You represent that you are a member of the National
Association of Securities Dealers, Inc. and, with respect to any sales in the
United States, we both hereby agree to abide by the Rules of Fair Practice of
such Association.
13. Upon application to us, we will inform you as to the states
in which we believe the Class D shares have been qualified for sale under, or
are exempt from the requirements of, the respective securities laws of such
states, but we assume no responsibility or obligation as to your right to sell
Class D shares in any jurisdiction. We will file with the Department of State in
New York a Further State Notice with respect to the Class D shares, if
necessary.
5
<PAGE> 22
14. All communications to us should be sent to the address
below. Any notice to you shall be duly given if mailed or telegraphed to you at
the address specified by you below.
15. Your first order placed pursuant to this Agreement for the
purchase of Class D shares of the Fund will represent your acceptance of this
Agreement.
MERRILL LYNCH FUNDS DISTRIBUTOR, INC.
By: /s/Gerald M. Richard
-------------------------------------
(Authorized Signature)
Please return one signed copy
of this agreement to:
MERRILL LYNCH FUNDS DISTRIBUTOR, INC.
Box 9011
Princeton, New Jersey 08543-9011
Accepted:
Firm Name: Merrill Lynch, Pierce, Fenner & Smith Inc.
-----------------------------------------------------
By: /s/David Conine
------------------------------------------------------------
Address: 800 Scudders Mill Road
-------------------------------------------------------
Plainsboro, New Jersey 08536
-------------------------------------------------------
Date: October __, 1994
-------------------------------------------------------
6
<PAGE> 23
CLASS D DISTRIBUTION PLAN
OF
MERRILL LYNCH FUND FOR TOMORROW, INC.
PURSUANT TO RULE 12b-1
DISTRIBUTION PLAN made as of the 21st day of October 1994, by and
between Merrill Lynch Fund For Tomorrow, Inc. a Maryland corporation (the
"Fund"), and Merrill Lynch Funds Distributor, Inc., a Delaware corporation
("MLFD").
W I T N E S S E T H :
WHEREAS, the Fund is engaged in business as an open-end investment
company registered under the Investment Company Act of 1940, as amended (the
"Investment Company Act"); and
WHEREAS, MLFD is a securities firm engaged in the business of selling
shares of investment companies either directly to purchasers or through other
securities dealers; and
WHEREAS, the Fund proposes to enter into a Class D Shares Distribution
Agreement with MLFD, pursuant to which MLFD will act as the exclusive
distributor and representative of the Fund in the offer and sale of Class D
shares of common stock, par value $0.10 per share (the "Class D shares"), of the
Fund to the public; and
WHEREAS, the Fund desires to adopt this Class D Distribution Plan (the
"Plan") pursuant to Rule 12b-1 under the Investment Company Act, pursuant to
which the Fund will pay an account maintenance fee to MLFD with respect to the
Fund's Class D shares; and
WHEREAS, the Directors of the Fund have determined that there is a
reasonable likelihood that adoption of the Plan will benefit the Fund and its
shareholders.
NOW, THEREFORE, the Fund hereby adopts, and MLFD hereby agrees to the
terms of, the Plan in accordance with Rule 12b-1 under the Investment Company
Act on the following terms and conditions:
<PAGE> 24
1. The Fund shall pay MLFD an account maintenance fee under the Plan at
the end of each month at the annual rate of 0.25% of average daily net assets of
the Fund relating to Class D shares to compensate MLFD and securities firms with
which MLFD enters into related agreements ("Sub-Agreements") pursuant to
Paragraph 2 hereof for providing account maintenance activities with respect to
Class D shareholders of the Fund. Expenditures under the Plan may consist of
payments to financial consultants for maintaining accounts in connection with
Class D shares of the Fund and payment of expenses incurred in connection with
such account maintenance activities including the costs of making services
available to shareholders including assistance in connection with inquiries
related to shareholder accounts.
2. The Fund hereby authorizes MLFD to enter into Sub-Agreements with
certain securities firms ("Securities Firms"), including Merrill Lynch, Pierce,
Fenner & Smith Incorporated, to provide compensation to such Securities Firms
for activities of the type referred to in Paragraph 1. MLFD may reallocate all
or a portion of its account maintenance fee to such Securities Firms as
compensation for the above-mentioned activities. Such Sub-Agreement shall
provide that the Securities Firms shall provide MLFD with such information as is
reasonably necessary to permit MLFD to comply with the reporting requirements
set forth in Paragraph 3 hereof.
3. MLFD shall provide the Fund for review by the Board of Directors,
and the Directors shall review, at least quarterly, a written report complying
with the requirements of Rule 12b-1 regarding the disbursement of the account
maintenance fee during such period.
4. This Plan shall not take effect until it has been approved by a vote
of at least a majority, as defined in the Investment Company Act, of the
outstanding Class D voting securities of the Fund.
5. This Plan shall not take effect until it has been approved, together
with any related agreements, by votes of a majority of both (a) the Directors of
the Fund and (b) those Directors of the Fund who are not "interested persons" of
the Fund, as defined in the Investment Company Act, and have no direct or
indirect financial interest in the operation of this Plan or any agreements
related to it (the "Rule 12b-1 Directors"), cast in person at a meeting or
meetings called for the purpose of voting on the Plan and such related
agreements.
6. The Plan shall continue in effect for so long as such continuance is
specifically approved at least annually in the manner provided for approval of
the Plan in Paragraph 5.
2
<PAGE> 25
7. The Plan may be terminated at any time by vote of a majority of the
Rule 12b-1 Directors, or by vote of a majority of the outstanding Class D voting
securities of the Fund.
8. The Plan may not be amended to increase materially the rate of
payments provided for in Paragraph 1 hereof unless such amendment is approved by
at least a majority, as defined in the Investment Company Act, of the
outstanding Class D voting securities of the Fund, and by the Directors of the
Fund in the manner provided for in Paragraph 5 hereof, and no material amendment
to the Plan shall be made unless approved in the manner provided for approval
and annual renewal in Paragraph 5 hereof.
9. While the Plan is in effect, the selection and nomination of
Directors who are not interested persons, as defined in the Investment Company
Act, of the Fund shall be committed to the discretion of the Directors who are
not interested persons.
10. The Fund shall preserve copies of the Plan and any related
agreements and all reports made pursuant to Paragraph 3 hereof, for a period of
not less than six years from the date of the Plan, or the agreements or such
report, as the case may be, the first two years in an easily accessible place.
IN WITNESS WHEREOF, the parties hereto have executed this Distribution
Plan as of the date first above written.
MERRILL LYNCH FUND FOR TOMORROW, INC.
By /s/Susan B. Baker
--------------------------------------
Title:
MERRILL LYNCH FUNDS DISTRIBUTOR, INC.
By /s/Gerald M. Richard
-------------------------------------
Title:
3
<PAGE> 26
CLASS D SHARES DISTRIBUTION PLAN SUB-AGREEMENT
AGREEMENT made as of the 21st day of October 1994, by and between
Merrill Lynch Funds Distributor, Inc. a Delaware corporation ("MLFD"), and
Merrill Lynch, Pierce, Fenner & Smith Incorporated, a Delaware corporation
("Securities Firm").
W I T N E S S E T H :
WHEREAS, MLFD has entered into an agreement with Merrill Lynch Fund For
Tomorrow, Inc., a Maryland corporation (the "Fund"), pursuant to which it acts
as the exclusive distributor for the sale of Class D shares of common stock, par
value $0.10 per share (the "Class D shares"), of the Fund; and
WHEREAS, MLFD and the Fund have entered into a Class D Shares
Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Investment
Company Act of 1940, as amended (the "Act"), pursuant to which MLFD receives an
account maintenance fee from the Fund at the annual rate of 0.25% of average
daily net assets of the Fund relating to Class D shares for providing account
maintenance activities and services with respect to Class D shares; and
WHEREAS, MLFD desires the Securities Firm to perform certain account
maintenance activities and services, including assistance in connection with
inquiries related to shareholder accounts, for the Fund's Class D shareholders
and the Securities Firm is willing to perform such services;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties hereby agree as follows:
1. The Securities Firm shall provide account maintenance activities and
services with respect to the Class D shares of the Fund and incur expenditures
in connection with such activities and services, of the types referred to in
Paragraph 1 of the Plan.
2. As compensation for its services performed under this Agreement,
MLFD shall pay the Securities Firm a fee at the end of each calendar month in an
amount agreed upon by the parties hereto.
<PAGE> 27
3. The Securities Firm shall provide MLFD, at least quarterly, such
information as reasonably requested by MLFD to enable MLFD to comply with the
reporting requirements of Rule 12b-1 regarding the disbursement of the fee
during such period referred to in Paragraph 3 of the Plan.
4. This Agreement shall not take effect until it has been approved by
votes of a majority of both (a) the Directors of the Fund and (b) those
Directors of the Fund who are not "interested persons" of the Fund, as defined
in the Act, and have no direct or indirect financial interest in the operation
of the Plan, this Agreement or any agreements related to the Plan or this
Agreement (the "Rule 12b-1 Directors"), cast in person at a meeting or meetings
called for the purpose of voting on this Agreement.
5. This Agreement shall continue in effect for as long as such
continuance is specifically approved at least annually in the manner provided
for approval of the Plan in Paragraph 5.
6. This Agreement shall automatically terminate in the event of its
assignment or in the event of the termination of the Plan or any amendment to
the Plan that requires such termination.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
MERRILL LYNCH FUNDS DISTRIBUTOR, INC.
By /s/Gerald M. Richard
--------------------------------------
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By /s/David Conine
--------------------------------------
2
<PAGE> 1
Exhibit 99.8
030284
CUSTODY AGREEMENT
Agreement made as of this 5th day of January, 1984 between
MERRILL LYNCH FUND FOR TOMORROW, INC., a corporation organized and
existing under the laws of the State of Maryland, having its
principal office and place of business at 633 Third Avenue, New York,
New York 10017 (hereinafter called the "Fund"), and THEF BANK OF NEW
YORK, a New york corporation authorized to do a banking business,
having its principal office and place of business at 48 Wall Street,
New York, New York 10015; (hereinafter called the "Custodian").
W I T N E S S E T H
that for and in consideration of the mutual promises hereinafter set
forth the Fund and the Custodian agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and
phrases, unless the context otherwise requires, shall have the
following meanings:
1. "Authorized Person" shall be deemed to include the Treasurer,
the Controller or any other person, whether or not any such person is
an Officer or employee of the Fund, duly authorized by the Board of
Directors of the Fund to give Oral Instructions and Written
Instructions on behalf of the Fund and listed in the Certificate
annexed hereto as Appendix A or such other Certificate as may be
received by the Custodian from time to time.
2. "Book-Entry System" shall mean the Federal
Reserve/Treasury book-entry system for United States and
federal agency securities, its successor or successors and
Its nominee or nominees.
3. "Certificate" shall mean any notice, instruction, or other
instrument in writing, authorized or required by this Agreement to be
given to the Custodian which is actually received by the Custodian
and signed on behalf of the Fund by any two Officers of the Fund.
<PAGE> 2
4. "Covered Call Option" shall mean an exchange traded option
entitling the holder, upon timely exercise and payment of the
exercise price, as specified therein, to purchase from the writer
thereof the specified underlying Securities which are owned by the
writer thereof and subject to appropriate restrictions.
5. "Depository" shall mean The Depository Trust Company
("DTC"), a clearing agency registered with the Securities and
Exchange Commission, its successor or successors and its nominee
or nominees, provided the Custodian has received a certified copy
of a resolution of the Fund's Board of Directors specifically
approving deposits in DTC. The term "Depository" shall further
mean and include any other person authorized to act as a
depository under the Investment Company Act of 1940, its successor
or successors and its nominee or nominees, specifically identified
in a certified copy of a resolution of the Fund's Board of
Directors specifically approving deposits therein by the
Custodian.
6. "Money Market Security" shall be deemed to
include, without limitation, debt obligations issued or
guaranteed as to principal and interest by the government of
the United States or agencies or instrumentalities thereof,
commerical paper, certificates of deposit and bankers'
acceptances, repurchase and reverse repurchase agreements
with respect to the same and bank time deposits, where the
purchase and sale of such securities normally requires set-
tlement in federal funds on the same day as such purchase or
sale.
7. "Officers" shall be deemed to include the President, any
Vice President, the Secretary, the Treasurer, the Controller, any
Assistant Secretary, any Assistant Treasurer or any other person
or persons duly authorized by the Board of Directors of the Fund
to execute any Certificate, instruction, notice or other
instrument on behalf of the Fund and listed in the Certificate
annexed hereto as Appendix B or such other Certificate as may be
received by the Custodian from time to time.
8. "Oral Instructions" shall mean verbal instructions
actually received by the Custodian from an Authorized Person or
from a person reasonably believed by the Custodian to be an
Authorized Person.
9. "Security" shall be deemed to include, without
limitation, Money Market Securities, Covered Call Options,
common stocks and other securities having characteristics
- 2 -
<PAGE> 3
similar to common stocks, including those of issuers domiciled in
foreign countries, preferred stock bonds, debentures, corporate
debt securities, notes, mortgages or other obligations, and any
certificates, receipts, warrants or other instruments representing
rights to receive, purchase or subscribe for the same, or
evidencing or representing any other rights or interest therein,
or any property or assets.
10. "Written Instructions" shall mean written communications
actually received by the Custodian from an Authorized Person or
from a person reasonably believed by the Custodian to be an
Authorized Person by telex or any other such system whereby the
receiver of such communications is able to verify by codes or
otherwise with a reasonable degree of certainty the authenticity
of the sender of such communication.
ARTICLE II
APPOINTMENT OF CUSTODIAN
1. The Fund hereby constitutes and appoints the Custodian as
custodian of all the Securities and moneys at any time owned by
the Fund during the period of this Agreement.
2. The Custodian hereby accepts appointment as such
custodian and agrees to perform the duties thereof as hereinafter
set forth.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
1. The Fund will deliver or cause to be delivered to the
Custodian all Securities and all moneys owned by it, including
cash received for the issuance of its shares, at any time during
the period of this Agreement. The Custodian will not be
responsible for such Securities and such moneys until actually
received by it. The Custodian will be entitled to reverse any
credits made on the Fund's behalf where such credits have been
previously made and moneys are not finally collected. The Fund
shall deliver to the Custodian a certified resolution of the Board
of Directors of the
- 3 -
<PAGE> 4
Fund, substantially in the form of Exhibit A hereto, approving,
authorizing and instructing the Custodian on a continuous and
on-going basis to deposit in the Book-Entry System all Securities
eligible for deposit therein and to utilize the Book-Entry System
to the extent possible in connection with its performance
hereunder, including, without limitation, in connection with
settlements of purchases and sales of Securities, loans of
Securities, and deliveries and returns of Securities collateral.
Prior to a deposit of Securities of the Fund in the Depository the
Fund shall deliver to the Custodian a certified resolution of the
Board of Directors of the Fund, substantially in the form of
Exhibit B hereto, approving, authorizing and instructing the
Custodian on a continuous and on-going basis until instructed to
the contrary by a Certificate actually received by the Custodian
to deposit in the Depository all Securities eligible for deposit
therein and to utilize the Depository to the extent possible in
connection with its performance hereunder, including, without
limitation, in connection with settlements of purchases and sales
of Securities, loans of Securities, and deliveries and returns of
Securities collateral. Securities and moneys of the Fund deposited
in either the Book-Entry System or the Depository will be
represented in accounts which include only assets held by the
Custodian for customers, including, but not limited to, accounts
in which the Custodian acts in a fiduciary or representative
capacity.
2. The Custodian shall credit to a separate account in the
name of the Fund all moneys received by it for the account of the
Fund, and shall disburse the same only:
(a) In payment for Securities purchased, as pro-
vided in Article IV hereof;
(b) In payment for Covered Call Options purchased in
transactions designated "Closing Purchase Transactions", as
provided in Article V hereof;
(c) In payment of dividends or distributions as
provided in Article VI hereof;
(d) In payment of original issue or other taxes,
as provided in Article VII hereof;
(e) In payment for capital stock of the Fund
redeemed by it, as provided in Article VII hereof;
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<PAGE> 5
(g) Pursuant to Certificates setting forth the name and
address of the person to whom the payment is to be made, and the
purpose for which payment is to be made; or
(h) In payment of the fees and in reimbursement
of the expenses and liabilities of the Custodian, as
provided in Article X hereof.
3. Promptly after the close of business on each day the
Custodian shall furnish the Fund with confirmations and a summary
of all transfers to or from the account of the Fund during said
day. Where Securities are transferred to the account of the Fund,
the Custodian shall also by book entry or otherwise identify as
belonging to the Fund a quantity of Securities in a fungible bulk
of Securities registered in the name of the Custodian (or its
nominee) or shown on the Custodian's account on the books of the
Book-Entry System or the Depository. At least monthly and from time
to time, the Custodian shall furnish the Fund with a detailed
statement of the Securities and moneys held for the Fund under this
Agreement.
4. All Securities held for the Fund, which are issued or
issuable only in bearer form, except such Securities as are held in
the Book-Entry System, shall be held by the Custodian in that form;
all other Securities held for the Fund may be registered in the
name of the Fund, in the name of any duly appointed registered
nominee of the Custodian as the Custodian may from time to time
determine, or in the name of the Book-Entry System or the
Depository or their successor or successors, or their nominee or
nominees. The Fund agrees to furnish to the Custodian appropriate
instruments to enable the Custodian to hold or deliver in proper
form for transfer, or to register in the name of its registered
nominee or in the name of the Book-Entry System or the Depository
any Securities which it may hold for the account of the Fund and
which may from time to time be registered in the name of the Fund.
The Custodian shall hold all such Securities which are not held in
the Book-Entry System or in the Depository in a separate account
in the name of the Fund physically segregated at all times from
those of any other person or persons.
5. Unless otherwise instructed to the contrary by a
Certificate, the Custodian by itself, or through the use of the
Book-Entry System or the Depository with respect to Securities
therein deposited, shall with respect to all Securities held for
the Fund in accordance with this Agreement:
(a) Collect all income due or payable;
- 5 -
<PAGE> 6
(b) Present for payment and collect the amount payable
upon all Securities which may mature or be called redeemed, or
retired, or otherwise become payable;
(e) Surrender Securities in temporary form for
definitive Securities;
(d) Execute, as custodian, any necessary declarations or
certificates of ownership under the Federal Income Tax Laws or the
laws or regulations of any other taxing authority now or hereafter
in effect; and
(e) Hold directly, or through the Book-Entry System or
the Depository with respect to Securities therein deposited, for
the account of the Fund all rights and similar securities issued
with respect to any Securities held by the Custodian hereunder.
6. Upon receipt of a Certificate and not otherwise,
the Custodian, directly or through the use of the Book-Entry
System or the Depository shall:
(a) Execute and deliver to such persons as may be
designated in such Certificate proxies, consents, authorizations,
and any other instruments whereby the authority of the Fund as
owner of any Securities may be exercised;
(b) Deliver any Securities held for the Fund in exchange
for other Securities or cash issued or paid in connection with the
liquidation, reorganization, refinancing, merger, consolidation or
recapitalization of any corporation, or the exercise of any
conversion privilege;
(c) Deliver any Securities held for the Fund to any
protective committee, reorganization committee or other person in
connection with the reorganization, refinancing, merger,
consolidation, recapitalization or sale of assets of any
corporation, and receive and hold under the terms of this Agreement
such certificates of deposit, interim receipts or other instruments
or documents as may be issued to it to evidence such delivery; and
(d) Make such transfers or exchanges of the assets of
the Fund and take such other steps as shall be stated in said
Certificate to be for the purpose of effectuating any duly
authorized plan of liquidation, reorganization, merger,
consolidation or recapitalization of the Fund.
- 6 -
<PAGE> 7
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
1. Promptly after each purchase of Securities by the Fund,
other than a purchase of a call option by the Fund in a "Closing
Purchase Transaction" (as provided for in Article V hereof), the
Fund shall deliver to the Custodian (i) with respect to each
purchase of Securities which are not Money Market Securities, a
Certificate, and (ii) with respect to each purchase of Money
Market Securities, a Certificate, Oral Instructions, or Written
Instructions, specifying with respect to each such purchase: (a)
the name of the issuer and the title of the Securities, (b) the
number of shares or the principal amount purchased and accrued
interest, if any, (c) the date of purchase and settlement, (d) the
purchase price per unit, (e) the total amount payable upon such
purchase, and (f) the name of the person from whom or the broker
through whom the purchase was made. The Custodian shall, upon
receipt of Securities purchased by or for the Fund, pay out of the
moneys held for the account of the Fund the total amount payable
to the person from whom or the broker through whom the purchase
was made, provided that the same conforms to the total amount
payable as set forth in such Certificate, Oral Instructions, or
Written Instructions.
2. Promptly after each sale by the Fund of Securities other
than a sale of a Covered Call Option written by the Fund or a sale
of Securities underlying such a Covered Call Option, the Fund
shall deliver to the Custodian (i) with respect to each sale of
Securities which are not Money Market Securities, a Certificate,
and (ii) with respect to each sale of Money Market Securities, a
Certificate, Oral Instructions, or Written Instructions,
specifying with respect to each such sale: (a) the name of the
issuer and the title of the Security, (b) the number of shares or
principal amount sold, and accrued interest, if any, (a) the date
of sale, (d) the sale price per unit, (e) the total amount payable
to the Fund upon such sale, and (f) the name of the broker through
whom or the person to whom the sale was made. The Custodian shall
deliver the Securities upon receipt of the total amount payable to
the Fund upon such sale, provided that the same conforms to the
total amount payable as set forth in such Certificate, Oral
Instructions, or Written Instructions. Subject to the foregoing,
the Custodian may accept payment in such form as shall be
satisfactory to it, and may deliver Securities and arrange for
payment in accordance with the customs prevailing among dealers in
Securities.
- 7 -
<PAGE> 8
ARTICLE V
WRITING COVERED CALLS
1. Whenever the Fund writes a Covered Call Option, the Fund
shall promptly deliver to the Custodian a Certificate specifying
with respect to such Covered Call Option: (a) the name of the
issuer and the title and number of shares for which the Covered
Call Option was written and which underlie the same; (b) the
expiration date; (c) the exercise price; (d) the premium to be
received by the Fund; and (e) the name of the person or broker
through whom the premium is to be received. The Custodian shall
deliver or cause to be delivered, in exchange for the premium
specified in the Certificate with respect to such Covered Call
Option, such receipts as are required in accordance with the
customs prevailing among dealers in such Covered Call Options, and
shall impose, or direct the Depository to impose, upon the
underlying Securities specified in the Certificate such
restrictions as may be required by such receipts. Notwithstanding
the foregoing, the Custodian has the right, upon prior written
notification to the Fund, at any time to refuse to issue any
receipts for Securities, in the possession of the Custodian and
not deposited with the Depository, underlying a Covered Call
Option. Subject to the foregoing, the Custodian may deliver
receipts in connection with Covered Call Options and arrange for
payment of the premium in accordance with the customs prevailing
among dealers in Covered Call Options.
2. Whenever a Covered Call Option written by the Fund is
exercised, the Fund shall promptly deliver to the Custodian a
Certificate instructing the Custodian to deliver, or to direct the
Depository to deliver, the Securities subject to such Covered Call
Option and specifying: (a) the name of the issuer and the title
and number of shares subject to the Covered Call Option; (b) the
person to whom the underlying Securities are to be delivered; and
(c) the total amount payable to the Fund upon such delivery. Upon
the return and/or cancellation of any receipts delivered pursuant
to paragraph 1 of this Article, the Custodian shall deliver, or
cause the Depository to deliver, the underlying Securities as
specified in the Certificate for the amount to be received as set
forth in such Certificate. Subject to the foregoing, the Custodian
may accept payment in such form as shall be satisfactory to it,
and may deliver Securities and arrange for payment in accordance
with the customs prevailing among dealers in Covered Call Options.
- 8 -
<PAGE> 9
3. Whenever a Covered Call Option written by the Fund expires,
the Fund shall promptly deliver to the Custodian a Certificate
specifying the information required in a Certificate delivered in
accordance with paragraph 1 of this Article and instructing the
Custodian (a) to delete such option from the statements delivered
to the Fund pursuant to paragraph 3 of Article III herein and (b)
to free, or instruct the Depository to free, the Securities
underlying such Covered Call Option from the restrictions imposed
by receipts issued in connection therewith.
4. Whenever the Fund purchases any option identical to a
previously written Covered Call Option in a transaction expressly
designated as a "Closing Purchase "Transaction" in order to
liquidate its position as a writer of a Covered Call Option, the
Fund shall promptly deliver to the custodian a Certificate
specifying with respect to the Covered Call Option being purchased
(a) that the transaction Is a Closing Purchase Transaction; (b)
the name of the issuer and the title and number of shares of the
security subject to the Covered Call Option; (c) the exercise
price; (d) the premium to be paid by the Fund; (e) the expiration
date; and (f) the name of the person to whom the premium is to be
paid. Upon the return to the Custodian and/or the cancellation of
any receipt issued pursuant to paragraph 1 of this Article with
respect to the Covered Call Option intended to be liquidated
through the Closing Purchase Transaction, the Custodian shall make
payment of the premium and shall (A) remove, or direct the
Depository to remove, the previously imposed restrictions on the
Securities underlying the Covered Call Option, and (B) delete
such option from statements delivered to the Fund by the
Custodian pursuant to paragraph 3 of Article III herein.
ARTICLE VI
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. The Fund shall furnish to the Custodian a copy of the
resolution of the Board of Directors, certified by the Secretary
or any Assistant Secretary, either (i) setting forth the date of
the declaration of a dividend or distribution, the date of payment
thereof, the record date as of which shareholders entitled to
payment shall be determined, the amount payable per share to the
shareholders of record as of that date and the total amount
payable to the Dividend Agent of the Fund on the payment date, or
(ii) authorizing the declaration of dividends and distributions on
a daily basis and authorizing the Custodian to rely on a Certifi-
- 9 -
<PAGE> 10
cate, Oral Instructions or Written Instructions setting forth the
date of the declaration of such dividend or distribution, the
date of payment thereof, the record date as of which shareholders
entitled to payment shall be determined, the amount payable per
share to the shareholders of record as of that date and the total
amount payable to the Dividend Disbursing Agent on the payment
date.
2. Upon the payment date specified in such resolution,
Certificate, Oral Instructions, or Written Instructions, as the
case may be, the Custodian shall pay out of the moneys held for
the account of the Fund the total amount payable to the Dividend
Disbursing Agent of the Fund.
ARTICLE VII
SALE AND REDEMPTION OF SHARES OF CAPITAL STOCK OF THE FUND
1. Whenever the Fund shall sell any shares of its capital
stock, it shall deliver to the Custodian a Certificate duly
specifying:
(a) The number of shares sold, trade date, and
price; and
(b) The amount of money to be received by the
Custodian for the sale of such shares.
2. Upon receipt of such money from the Transfer Agent, the
Custodian shall notify the Transfer Agent that such money has
been received and shall credit such money to the account of the
Fund.
3. Upon issuance of any shares of the capital stock of the
Fund in accordance with the foregoing provisions of this Article,
the Custodian shall pay, out of the money held for the account of
the Fund, all original issue or other taxes required to be paid
by the Fund in connection with such issuance upon the receipt of
a Certificate specifying the amount to be paid.
4. Except as provided hereinafter, whenever the Fund shall
hereafter redeem any shares of its capital stock, it shall
furnish to the Custodian a Certificate specifying:
(a) The number of shares of capital stock
redeemed; and
- 10 -
<PAGE> 11
(b) The amount to be paid for the shares of capi-
tal stock redeemed.
5. Upon receipt from the Transfer Agent of an advice setting
forth the number of shares of capital stock received by the
Transfer Agent for redemption and that such shares are in good form
for redemption, the Custodian shall make payment to the Transfer
Agent out of the moneys held for the account of the Fund of the
total amount specified in the Certificate issued pursuant to the
foregoing paragraph 4 of this Article.
6. Notwithstanding the above provisions regarding the
redemption of any shares of the capital stock of the Fund, whenever
shares of the capital stock of the Fund are redeemed pursuant to
any check redemption privilege which may from time to time be
offered by the Fund, the Custodian, unless otherwise instructed by
a Certificate, shall, upon receipt of an advice from the Fund or
its agent setting forth that the redemption is in good form for
redemption in accordance with the check redemption procedure, honor
the check presented as part of such check redemption privilege out
of the money held in the account of the Fund for such purposes.
ARTICLE VIII
OVERDRAFTS OR INDEBTEDNESS
1. If the Custodian should in its sole discretion advance
funds on behalf of the Fund which results in an overdraft because
the moneys held by the Custodian for the account of the Fund shall
be insufficient to pay the total amount payable upon a purchase of
Securities as set forth in a Certificate or Oral Instructions
issued pursuant to Article IV, or which results in an overdraft for
some other reason, or if the Fund is for any other reason indebted
to the Custodian (except for other borrowings or for temporary or
emergency purposes using Securities as collateral pursuant to a
separate agreement and subject to the provisions of paragraph 2 of
this Article IX), such overdraft or indebtedness shall be deemed to
be a loan made by the Custodian to the Fund payable on demand and
shall bear interest from the date incurred at a rate per annum
(based on a 360-day year for the actual number of days involved)
equal to 1/2% over Custodian's prime commercial lending rate in
effect from time to time, such rate to be adjusted on the effective
date of any change in such prime commercial lending rate but in
- 11 -
<PAGE> 12
no event to be less than 6% per annum. In addition, the Fund
hereby agrees that the Custodian shall have a continuing lien and
security interest in and to any property at any time held by it
for the benefit of the Fund or in which the Fund may have an
interest which is then in the Custodian's possession or control or
in possession or control of any third party acting in the
Custodian's behalf. The Fund authorizes the Custodian, in its sole
discretion, at any time to charge any such overdraft or
indebtedness together with interest due thereon against any
balance of account standing to the Fund's credit on the
Custodian's books.
2. The Fund will cause to be delivered to the Custodian by
any bank (including, if the borrowing is pursuant to a separate
agreement, the Custodian) from which it borrows money for
temporary or emergency purposes using Securities as collateral for
such borrowings, a notice or undertaking in the form currently
employed by any such bank setting forth the amount which such bank
will loan to the Fund against delivery of a stated amount of
collateral. The Fund shall promptly deliver to the Custodian a
Certificate specifying with respect to each such borrowing: (a)
the name of the bank, (b) the amount and terms of the borrowing,
which may be set forth by incorporating by reference an attached
promissory note, duly endorsed by the Fund, or other loan
agreement, (c) the time and date, if known, on which the loan is
to be entered into, (d) the date on which the loan becomes due and
payable, (e) the total amount payable to the Fund on the borrowing
date, (f) the market value of Securities to be delivered as
collateral for such loan, including the name of the issuer, the
title and the number of shares or the principal amount of any
particular Securities, and (g) a statement specifying whether such
loan is for temporary or emergency purposes and that such loan is
in conformance with the Investment Company Act of 1940 and the
Fund's prospectus. The Custodian shall deliver on the borrowing
date specified in a Certificate the specified collateral and the
executed promissory note, if any, against delivery by the lending
bank of the total amount of the loan payable, provided that the
same conforms to the total amount payable as set forth in the
Certificate. The Custodian may, at the option of the lending bank,
keep such collateral in its possession, but such collateral shall
be subject to all rights therein given the lending bank by virtue
of any promissory note or loan agreement. The Custodian shall
deliver such Securities as additional collateral as may be
specified in a Certificate to collateralize further any
transaction described in this paragraph. The Fund shall cause all
Securities released from collateral status to be returned directly
to the Custodian, and the Custodian shall, receive from
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<PAGE> 13
time to time such return of collateral as may be tendered to it.
In the event that the Fund fails to specify in a Certificate the
name of the issuer, the title and number of shares or the
principal amount of any particular Securities to be delivered as
collateral by the Custodian, the Custodian shall not be under any
obligation to deliver any Securities.
ARTICLE IX
LOAN OF PORTFOLIO SECURITIES OF THE FUND
1. If the Fund is permitted by the terms of its Articles of
Incorporation and as disclosed in its most recent and currently
effective prospectus to lend its portfolio Securities, within 24
hours after each loan of portfolio Securities the Fund shall
deliver or cause to be delivered to the Custodian a Certificate
specifying with respect to each such loan: (a) the name of the
issuer and the title of the Securities, (b) the number of shares
or the principal amount loaned, (c) the date of loan and delivery,
(d) the total amount to be delivered to the Custodian against the
loan of the Securities, including the amount of cash collateral
and the premium, if any, separately identified, and (e) the name
of the broker, dealer, or financial institution to which the loan
was made. The Custodian shall deliver the Securities thus
designated to the broker, dealer or financial institution to which
the loan was made upon receipt of the total amount designated as
to be delivered against the loan of Securities. The Custodian may
accept payment in connection with a delivery otherwise than
through the Book-Entry System or Depository only in the form of a
certified or bank cashier's check payable to the order of the Fund
or the Custodian drawn on New York Clearing House funds and may
deliver Securities in accordance with the customs prevailing among
dealers in securities.
2. Promptly after each termination of the loan of Securities
by the Fund, the Fund shall deliver or cause to be delivered to
the Custodian a Certificate specifying with respect to each such
loan termination and return of securities: (a) the name of the
issuer and the title of the Securities to be returned, (b) the
number of shares or the principal amount to be returned, (c) the
date of termination, (d) the total amount to be delivered by the
Custodian (including the cash collateral for such Securities minus
any offsetting credits as described in said Certificate), and (e)
the name of the broker, dealer, or financial institution
- 13 -
<PAGE> 14
from which the Securities will be returned. The Custodian shall
receive all Securities returned from the broker, dealer, or
financial institution to which such Securities were loaned and upon
receipt thereof shall pay, out of the moneys held for the account
of the Fund, the total amount payable upon such return of
Securities as set forth in the Certificate.
ARTICLE X
CONCERNING THE CUSTODIAN
1. Except as hereinafter provided, neither the Custodian nor
its nominee shall be liable for any loss or damage, including
counsel fees, resulting from its action or omission to act or
otherwise, except for any such loss or damage arising out of its
own negligence or willful misconduct. The Custodian may, with
respect to questions of law, apply for and obtain the advice and
opinion of counsel to the Fund or of its own counsel and shall be
fully protected with respect to anything done or omitted by it in
good faith in conformity with such advice or opinion. Upon the
prior agreement of the Fund, the costs of any such advice or
opinion shall be borne by the Fund. The Custodian shall be liable
to the Fund for any loss or damage resulting from the use of the
Book-Entry System or any Depository arising by reason of any
negligence, misfeasance or willful misconduct on the part of the
Custodian or any of its employees or agents.
2. Without limiting the generality of the foregoing, the
Custodian shall be under no obligation to inquire into, and shall
not be liable for:
(a) The validity of the issue of any Securities
purchased, or any Covered Call Option written, by or for the Fund,
the legality of the purchase thereof, or the propriety of the
amount paid therefor;
(b) The legality of the sale of any Securities including
the writing of any Covered Call Option by or for the Fund, or the
propriety of the amount for which the same are written or sold;
(c) The legality of the issue or sale of any
shares of the capital stock of the Fund, or the sufficiency
of the amount to be received therefor;
- 14 -
<PAGE> 15
(d) The legality of the redemption of any shares
of capital stock of the Fund, or the propriety of the amount
to be paid therefor;
(e) The legality of the declaration or payment of
any dividend by the Fund;
(f) The legality of any borrowing by the Fund
using Securities as collateral; or
(g) The legality of any loan of portfolio Securities
pursuant to Article XI of this Agreement, nor shall the Custodian
be under any duty or obligation to see to it that any cash
collateral delivered to it by a broker, dealer, or financial
institution or held by it at any time as a result of such loan of
portfolio Securities of the Fund is adequate collateral for the
Fund against any loss it might sustain as a result of such loan.
The Custodian specifically, but not by way of limitation, shall not
be under any duty or obligation periodically to check or notify the
Fund that the amount of such cash collateral held by it for the
Fund is sufficient collateral for the Fund, but such duty or
obligation shall be the sole responsibility of the Fund. In
addition, the Custodian shall be under no duty or obligation to see
that any broker, dealer or financial institution to which portfolio
Securities of the Fund are lent pursuant to Article IX of this
Agreement makes payment to it of any dividends or interest which
are payable to or for the account of the Fund during the period of
such loan or at the termination of such loan, provided, however,
that the Custodian shall promptly notify the Fund in the event that
such dividends or interest are not paid and received when due.
3. The Custodian shall not be liable for, or considered to be
the Custodian of, any money, whether or not represented by any
check, draft, or other instrument for the payment of money,
received by It on behalf of the Fund until the Custodian actually
receives and collects such money directly or by the final crediting
of the account representing the Fund's interest at the Book-Entry
System or the Depository.
4. The Custodian shall not be under any duty or obligation to
take action to effect collection of any amount due to the Fund from
the Transfer Agent of the Fund nor to take any action to effect
payment or distribution by the Transfer Agent of the Fund of any
amount paid by the Custodian to the Transfer Agent of the Fund in
accordance with this Agreement.
- 15 -
<PAGE> 16
5. The Custodian shall not be under any duty or obligation to
take action to effect collection of any amount, if the Securities
upon which such amount is payable are in default, or if payment is
refused after due demand or presentation, unless and until (i) it
shall be directed to take such action by a Certificate and (ii) it
shall be assured to its satisfaction of reimbursement of its costs
and expenses in connection with any such action.
6. The Custodian may appoint one or more banking institutions
as Depository or Depositories or as Sub-Custodian or
Sub-Custodians, including, but not limited to, banking institutions
located in foreign countries, of Securities and moneys at any time
owned by the Fund, upon terms and conditions approved in a
Certificate.
7. The Custodian shall not be under any duty or obligation to
ascertain whether any Securities at any time delivered to or held
by it for the account of the Fund are such as properly may be held
by the Fund under the provisions of its Articles of Incorporation.
B. The Custodian shall be entitled to receive and the Fund
agrees to pay to the Custodian all out-of-pocket expenses and such
compensation as may be agreed upon from time to time between the
Custodian and the Fund. The Custodian may charge such compensation
and any expenses incurred by the Custodian in the performance of
its duties pursuant to such agreement against any money held by it
for the account of the Fund. The Custodian shall also be entitled
to charge against any money held by it for the account of the Fund
the amount of any loss, damage, liability or expense, including
counsel fees, for which it shall be entitled to reimbursement under
the provisions of this Agreement. The expenses which the
Custodian may charge against the account of the Fund include, but
are not limited to, the expenses of Sub-Custodians and foreign
branches of the Custodian incurred in settling outside of New
York City transactions involving the purchase and sale of
Securities of the Fund.
9. The Custodian shall be entitled to rely upon any
Certificate, notice or other instrument in writing received by the
Custodian and reasonably believed by the Custodian to be a
Certificate. The Custodian shall be entitled to rely upon any Oral
Instructions and any Written Instructions actually received by the
Custodian pursuant to Articles IV or V hereof. The Fund agrees to
forward to the Custodian a Certificate or facsimile thereof
confirming such Oral Instructions or Written Instructions in such
manner so that
- 16 -
<PAGE> 17
such Certificate or facsimile thereof is received by the
Custodian, whether by hand delivery telecopier or other similar
device, or otherwise, by the close of business of the same day
that such Oral Instructions or Written Instructions are given to
the Custodian. The Fund agrees that the fact that such confirming
Certificate or facsimile thereof is not received by the Custodian
shall in no way affect the validity of the transactions or
enforceability of the transactions hereby authorized by the Fund.
The Fund agrees that the Custodian shall incur no liability to the
Fund in acting upon Oral Instructions or Written Instructions
given to the Custodian hereunder concerning such transactions
provided such instructions reasonably appear to have been received
from an Authorized Person.
10. The books and records pertaining to the Fund which are in
the possession of the Custodian shall be the property of the Fund.
Such books and records shall be prepared and maintained as
required by the Investment Company Act of 1940, as amended, and
other applicable securities laws and rules and regulations. The
Fund, or the Fund's authorized representatives, shall have access
to such books and records during the Custodian's normal business
hours. Upon the reasonable request of the Fund, copies of any such
books and records shall be provided by the Custodian to the Fund
or the Fund's authorized representative at the Fund's expense.
11. The Custodian shall provide the Fund with any report
obtained by the Custodian on the system of internal accounting
control of the Book-Entry System or the Depository and with such
reports on its own systems of internal accounting control as the
Fund may reasonably request from time to time.
12. The Fund agrees to indemnify the Custodian against and save
the Custodian harmless from all liability, claims, losses and
demands whatsoever, including attorney's fees, howsoever arising
or incurred because of or in connection with the Custodian's
payment or non-payment of checks pursuant to paragraph 6 of
Article VI as part of any check redemption privilege program of
the Fund, except for any such liability, claim, loss and demand
arising out of the Custodian's own negligence or willful
misconduct.
13. The Custodian shall have no duties or responsibilities
whatsoever except such duties and responsibilities as are
specifically set forth in this Agreement, and no covenant or
obligation shall be implied in this Agreement against the
Custodian.
- 17 -
<PAGE> 18
ARTICLE XI
TERMINATION
1. Either of the parties hereto may terminate this Agreement
by giving to the other party a notice in writing specifying the
date of such termination, which shall be not less than sixty (60)
days after the date of giving of such notice. In the event such
notice is given by the Fund, it shall be accompanied by a copy of
a resolution of the Board of Directors of the Fund, certified by
the Secretary or any Assistant Secretary, electing to teminate
this Agreement and designating a successor custodian or
custodians, each of which shall be a bank or trust company having
not less than $2,000,000 aggregate capital, surplus and undivided
profits. In the event such notice is given by the Custodian, the
Fund shall, on or before the termination date, deliver to the
Custodian a copy of a resolution of its Board of Directors,
certified by the Secretary or any Assistant Secretary, designating
a successor custodian or custodians. In the absence of such
designation by the Fund, the Custodian may designate a successor
custodian which shall be a bank or trust company having not less
than $2,000,000 aggregate capital, surplus and undivided profits.
Upon the date set forth in such notice this Agreement shall
terminate, and the Custodian shall upon receipt of a notice of
acceptance by the successor custodian on that date deliver
directly to the successor custodian all Securities and moneys then
owned by the Fund and held by it as Custodian, after deducting
all fees, expenses and other amounts for the payment or
reimbursement of which it shall then be entitled.
2. If a successor custodian is not designated by the Fund or
the Custodian in accordance with the preceding paragraph, the Fund
shall upon the date specified in the notice of termination of this
Agreement and upon the delivery by the Custodian of all Securities
(other than Securities held in the Book-Entry System which cannot
be delivered to the Fund) and moneys then owned by the Fund be
deemed to be its own custodian and the Custodian shall thereby be
relieved of all duties and responsibilities pursuant to this
Agreement, other than the duty with respect to Securities held in
the Book Entry System which cannot be delivered to the Fund to
hold such Securities hereunder in accordance with this Agreement.
- 18 -
<PAGE> 19
ARTICLE XII
MISCELLANEOUS
1. Annexed hereto as Appendix A is a Certificate signed by two
of the present Officers of the Fund under its corporate seal,
setting forth the names and the signatures of the present
Authorized Persons. The Fund agrees to furnish to the Custodian a
new Certificate in similar form in the event that any such present
Authorized Person ceases to be an Authorized Person or in the event
that other or additional Authorized Persons are elected or
appointed. Until such new Certificate shall be received, the
Custodian shall be fully protected in acting under the provisions
of this Agreement upon Oral Instructions or signatures of the
present Authorized Persons as set forth in the last delivered
Certificate.
2. Annexed hereto as Appendix B is a Certificate signed by two
of the present Officers of the Fund under its corporate seal,
setting forth the names and the signatures of the present Officers
of the Fund. The Fund agrees to furnish to the Custodian a new
Certificate in similar form in the event any such present Officer
ceases to be an Officer of the Fund, or in the event that other or
additional Officers are elected or appointed. Until such new
Certificate shall be received, the Custodian shall be fully
protected in acting under the provisions of this Agreement upon the
signatures of the Officers as set forth in the last delivered
Certificate.
3. Any notice or other instrument in writing, authorized or
required by this Agreement to be given to the Custodian, shall be
sufficiently given if addressed to the Custodian and mailed or
delivered to it at its offices at 90 Washington Street, New York,
New York 10015, or at such other place as the Custodian may from
time to time designate in writing.
4. Any notice or other instrument In writing, authorized or
required by this Agreement to be given to the Fund shall be
sufficiently given if addressed to the Fund and mailed or delivered
to it at its office at 633 Third Avenue, New York, New York 10017
or at such other place as the Fund may from time to time designate
in writing.
5. This Agreement may not be amended or modified in
any manner except by a written agreement executed by both
parties with the same formality as this Agreement and
- 19 -
<PAGE> 20
approved by a resolution of the Board of Directors of the
Fund.
6. This Agreement shall extend to and shall be binding upon the
parties hereto, and their respective successors and assigns;
provided, however, that this Agreement shall not be assignable by the
Fund without the written consent of the Custodian, or by the
Custodian without the written consent of the Fund, authorized or
approved by a resolution of its Board of Directors.
7. This Agreement shall be construed in accordance
with the laws of the State of New York.
8. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but such
counterparts shall, together, constitute only one instrument.
9. The performance and provisions of this Agreement are intended
to benefit only the Custodian and the Fund, and no rights shall be
granted to any other person by virtue of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective corporate Officers,
thereunto duly authorized and their respective corporate seals to be
hereunto affixed, as of the day and year first above written.
MERRILL LYNCH FUND FOR TOMORROW, INC.
By: /s/ Arthur Zeikel
--------------------------------------
Attest: /s/ Michael Hennewinkel
-----------------------
THE BANK OF NEW YORK
By: /s/
-------------------------------------
Attest: /s/
----------------------
- 20 -
<PAGE> 21
APPENDIX A
I, , President and I, , Secretary of
MERRILL LYNCH FUND FOR TOMORROW, INC., a Maryland Corporation
(the "Fund"), do hereby certify that:
The following individuals have been duly authorized by the
Board of Directors of the Fund in conformity with the Fund's
Articles of Incorporation and By-Laws to give Oral Instructions and
Written Instructions on behalf of the Fund, and the signatures set
forth opposite their respective names are their true and correct
signatures:
Name Signature
---------------------------- ------------------------------
<PAGE> 22
APPENDIX B
I, , President and I, ,
Secretary of MERRILL LYNCH FUND FOR TOMORROW, INC., a
Maryland Corporation (the "Fund"), do hereby certify that:
The following individuals serve in the following posi-
tions with the Fund and each individual has been duly
elected or appointed by the Board of Directors of the Fund
to each such position and qualified therefor in conformity
with the Fund's Articles of Incorporation and By-Laws, and
the signatures set forth opposite their respective names are
their true and correct signatures:
Name Position Signature
------------------- ------------ ----------------------------
<PAGE> 23
EXHIBIT A
CERTIFICATION
The undersigned, , hereby, certifies that he or she is
the duly elected and acting Secretary of MERRILL LYNCH FUND FOR
TOMORROW, INC., a Maryland corporation (the "Fund"), and further
certifies that the following resolution was adopted by the Board of
Directors of the Fund at a meeting duly held on , 198 ,
at which a quorum was at all times present and that such resolution
has not been modified or rescinded and is in full force and effect
as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian
pursuant to a Custody Agreement between The Bank of New York
and the Fund dated as of , 198 , (the "Custody
Agreement") is authorized and instructed on a continuous and
ongoing basis to deposit in the Book-Entry System, as defined
in the Custody Agreement, all securities eligible for deposit
therein, and to utilize the Book-Entry System to the extent
possible in connection with its performance thereunder,
including, without limitation, in connection with settlements
of purchases and sales of securities, loans of securities,
and deliveries and returns of securities collateral.
IN WITNESS WHEREOF, I have hereunto set my band and the seal
of MERRILL LYNCH FUND FOR TOMORROW, INC., as of the
day of , 198 .
---------------------------------
,Secretary
<PAGE> 24
EXHIBIT B
CERTIFICATION
The undersigned, , hereby, certifies that he or
she is the duly elected and acting Secretary of MERRILL LYNCH FUND
FOR TOMORROW, INC., a Maryland corporation (the "Fund"), and further
certifies that the following resolution was adopted by the Board of
Directors of the Fund at a meeting duly held on , 198 , at
which a quorum was at all times present and that such resolution
has not been modified or rescinded and is in full force and effect
as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian
pursuant to a Custody Agreement between The Bank of New York
and the Fund dated as of ,198 , (the "Custody
Agreement") is authorized and instructed on a continuous and
ongoing basis until such time as it receives a Certificate,
as defined in the Custody Agreement, to the contrary to
deposit in the Depository, as defined in the Custody
Agreement, all securities eligible for deposit therein, and
to utilize the Depository to the extent possible in
connection with its performance thereunder, including,
without limitation, in connection with settlements of
purchases and sales of securities, loans of securities, and
deliveries and returns of securities collateral.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal
of MERRILL LYNCH FUND FOR TOMORROW, INC., as of the
day of , 198 .
--------------------------
,Secretary
<PAGE> 1
Exhibit 99.9
TRANSFER AGENCY, DIVIDEND DISBURSING AGENCY
AND SHAREHOLDER SERVICING AGENCY AGREEMENT
THIS AGREEMENT made as of the 1st day of August, 1987 by
and between Merrill Lynch Fund For Tomorrow, Inc. (the "Fund") and
Merrill Lynch Financial Data Service, Inc. ("MLFDS"), a New Jersey
corporation.
WITNESSETH:
WHEREAS, the Fund wishes to appoint MLFDS to be the Transfer
Agent, Dividend Disbursing Agent and Shareholder Servicing Agent upon,
and subject to, the terms and provisions of this Agreement, and MLFDS
is desirous of accepting such appointment upon, and subject to, such
terms and provisions:
NOW THEREFORE, in consideration of mutual covenants
contained in this Agreement, the Fund and MLFDS agree as follows:
1. APPOINTMENT OF MLFDS AS TRANSFER AGENT, DIVIDEND
DISBURSING AGENT AND SHAREHOLDER SERVICING AGENT.
(a) The Fund hereby appoints MLFDS to act as Transfer Agent,
Dividend Disbursing Agent and Shareholder Servicing Agent Fund upon,
and subject to, the terms and provisions of this Agreement.
(b) MLFDS hereby accepts the appointment as Transfer Agent,
Dividend Disbursing Agent and Shareholder Servicing Agent for the Fund,
and agrees to act as such upon, and subject to, the terms
and provisions of the Agreement.
2. DEFINITIONS.
(a) In this Agreement:
(I) The term "Act" means the Investment Company Act of 1940
as amended from time to time and any rule or regulation thereunder;
(II) The term "Account" means any account of a Shareholder,
or, if the shares are held in an account in the name of MLPF&S for
benefit of an identified customer, such account, including a Plan
Account, any account under a plan (by whatever name referred to in the
Prospectus) pursuant to the Self-Employed Individuals Retirement Act
of 1962 ("Keogh Act Plan") and any plan (by whatever name referred to
in the Prospectus) in conjunction with Section 401 of the Internal
Revenue Code ("Corporation Master Plan");
<PAGE> 2
(III) The term "application" means an application made by
a Shareholder or prospective Shareholder respecting the opening of an
Account;
(IV) The term "MLFD" means Merrill Lynch Funds
Distributor, Inc., a Delaware corporation;
(V) The term "MLPF&S" means Merrill Lynch, Pierce,
Fenner & Smith Incorporated, a Delaware corporation;
(VI) The term "Officer's Instruction" means an
instruction in writing given on behalf of the Fund to MLFDS, and signed
on behalf of the Fund by the President, any Vice President, the
Secretary or the Treasurer of the Fund;
(VII) The term "Prospectus" means the Prospectus and the
Statement of Additional Information of the Fund as from time to time in
effect;
(VIII) The term "Shares" means shares of stock or
beneficial interest, as the case may be, of the Fund, irrespective of
class or series;
(IX) The term "Shareholder" means the holder of record
of Shares;
(X) The term "Plan Account" means an account opened by
a Shareholder or prospective Shareholder in respect to an open account,
monthly payment or withdrawal plan (in each case by whatever name
referred to in the Prospectus), and may also include an account
relating to any other Plan if and when provision is made for such plan
in the Prospectus.
3. DUTIES OF MLFDS AS TRANSFER AGENT, DIVIDEND DISBURSING
AGENT AND SHAREHOLDER SERVICING AGENT.
(a) Subject to the succeeding provisions of the Agreement,
MLFDS hereby agrees to perform the following functions as Transfer
Agent, Dividend Disbursing Agent and Shareholder
Servicing Agent for the Fund;
(I) Issuing, transferring and redeeming Shares;
(II) Opening, maintaining, servicing and closing
Accounts;
- 2 -
<PAGE> 3
(III) Acting as agent for the Fund Shareholders and/or
customers of MLPF&S in connection with Plan Accounts, upon the terms and
subject to the conditions contained in the Prospectus and application
relating to the specific Plan Account;
(IV) Acting as agent of the Fund and/or MLPF&S, maintaining
such records as may permit the imposition of such contingent deferred
sales charges as may be described in the Prospectus, including such
reports as may be reasonably requested by the Fund with respect to such
Shares as may be subject to a contingent deferred sales charge;
(V) Upon the redemption of Shares subject to such a
contingent deferred sales charge, calculating and deducting from the
redemption proceeds thereof the amount of such charge in the manner set
forth in the Prospectus. MLFDS shall pay, on behalf of MLFD, to MLPF&S
such deducted contingent deferred sales charges imposed upon all Shares
maintained in the name of MLPF&S, or maintained in the name of an account
identified as a customer account of MLPF&S. Sales charges imposed upon
any other Shares shall be paid by MLFDS to MLFD.
(VI) Exchanging the investment of an investor into, or from
the shares of other open-end investment companies or other series
portfolios of the Fund, if any, if and to the extent permitted by the
Prospectus at the direction of such investor.
(VII) Processing redemptions;
(VIII) Examining and approving legal transfers;
(IX) Replacing lost, stolen or destroyed certificates
representing Shares, in accordance with, and subject to, procedures and
conditions adopted by the Fund;
(X) Furnishing such confirmations of transactions
relating to their. Shares as required by applicable law;
(XI) Acting as agent for the Fund and/or MLPF&S, furnishing
such appropriate periodic statements relating to Accounts, together with
additional enclosures, including appropriate income tax information and
income tax forms duly completed, as required by applicable law;
(XII) Acting as agent for the Fund and/or MLPF&S, mailing
annual, semi-annual and quarterly reports prepared by or on behalf of the
Fund, and mailing new Prospectuses upon their issue to Shareholders as
required by applicable law;
(XIII) Furnishing such periodic statements of transactions
effected by MLFDS, reconciliations, balances and summaries as the Fund
may reasonably request;
- 3 -
<PAGE> 4
(XIV) Maintaining such books and records relating to
transactions effected by MLFDS as are required by the Act, or by any
other applicable provision of law, rule or regulation, to be maintained
by the Fund or its transfer agent with respect to such transactions and
preserving, or causing to be preserved any such books and records for
such periods as may be required by any such law, rule or regulation and
as may be agreed upon from time to time between MLFDS and the Fund. In
addition, MLFDS agrees to maintain and preserve master files and
historical computer tapes on a daily basis in multiple separate
locations a sufficient distance apart to insure preservation of at least
one copy of such information;
(XV) Withholding taxes on non-resident alien Accounts,
preparing and filing U.S. Treasury Department Form 1099 and other
appropriate forms as required by applicable law with respect to
dividends and distributions; and
(XVI) Reinvesting dividends for full and fractional shares
and disbursing cash dividends, as applicable.
(b) MLFDS agrees to act as proxy agent in connection with the
holding of annual, if any, and special meetings of Shareholders, mailing
such notices, proxies and proxy statements in connection with the
holding of such meetings as may be required by applicable law, receiving
and tabulating votes cast by proxy and communicating to the Fund the
results of such tabulation accompanied by appropriate certifications,
and preparing and furnishing to the Fund certified lists of Shareholders
as of such date, in such form and containing such information as may be
required by the Fund.
(c) MLFDS agrees to deal with, and answer in a timely manner,
all correspondence and inquiries relating to the functions of MLFDS
under this Agreement with respect to Accounts.
(d) MLFDS agrees to furnish to the Fund such information and
at such intervals as is necessary for the Fund to comply with the
registration and/or the reporting requirements (including applicable
escheat laws) of the Securities and Exchange Commission, Blue Sky
authorities or other governmental authorities.
- 4 -
<PAGE> 5
(e) MLFDS agrees to provide to the Fund such information as may
reasonably be required to enable the Fund to reconcile the number of
outstanding Shares between MLFDS's records and the account books of the
Fund.
(f) Notwithstanding anything in the foregoing provisions of
this paragraph, MLFDS agrees to perform its functions thereunder subject
to such modification (whether in respect of particular cases or in any
particular class of cases) as may from time to time be contained in an
Officer's Instruction.
4. Compensation.
The charges for services described in this Agreement, including
"out-of-pocket" expenses, will be set forth in the Schedule of
Fees attached hereto.
5. Right of Inspection.
MLFDS agrees that it will in a timely manner make available to,
and permit, any officer, accountant, attorney or authorized agent of the
Fund to examine and make transcripts and copies (including photocopies
and computer or other electronical information storage media and
print-outs) of any and all of its books and records which relate to any
transaction or function performed by MFLDS under or pursuant to this
Agreement.
6. Confidential Relationship.
MLFDS agrees that it will, on behalf of itself and its officers
and employees, treat all transactions contemplated by this Agreement, and
all information germane thereto, as confidential and not to be disclosed
to any person (other than the Shareholder concerned, or the Fund, or as
may be disclosed in the examination of any books or records by any person
lawfully entitled to examine the same) except as may be authorized by the
Fund by way of an Officer's Instruction.
7. Indemnification.
The Fund shall indemnify and hold MLFDS harmless from any loss,
costs, damage and reasonable expenses, including reasonable attorney's
fees (provided that such attorney is appointed with the Fund's consent,
which consent shall not be unreasonably withheld), incurred by it
resulting from any claim, demand, action, or suit in connection with the
performance of its duties hereunder,
- 5 -
<PAGE> 6
provided that this indemnification shall not apply to actions or
omissions of MLFDS in cases of willful misconduct, failure to act in
good faith or negligence by MLFDS, its officers, employees or agents,
and further provided, that prior to confessing any claim against it
which may be subject to this indemnification, MLFDS shall give the Fund
reasonable opportunity to defend against said claim in its own name or
in the name of MLFDS. An action taken by MLFDS upon any Officer's
Instruction reasonably believed by it to have been properly executed
shall not constitute willful misconduct, failure to act in good faith or
negligence under this Agreement.
8. Regarding MLFDS.
(a) MLFDS hereby agrees to hire, purchase, develop and maintain
such dedicated personnel, facilities, equipment, software, resources and
capabilities as may be reasonably determined by the Fund to be necessary
for the satisfactory performance of the duties and responsibilities of
MLFDS. MLFDS warrants and represents that its officers and supervisory
personnel charged with carrying out its functions as Transfer Agent,
Dividend Disbursing Agent and Shareholder Servicing Agent for the Fund
possess the special skill and technical knowledge appropriate for that
purpose. MLFDS shall at all times exercise due care and diligence in the
performance of its functions as Transfer Agent, Dividend Disbursing
Agent and Shareholder Servicinq Agent for the Fund. MLFDS agrees that,
in determining whether it has exercised due care and diligence, its
conduct shall be measured by the standard applicable to persons
possessing such special skill and technical knowledge.
(b) MLFDS warrants and represents that is duly authorized and
permitted to act as Transfer Agent, Dividend Disbursing Agent, and
Shareholder Servicing Agent under all applicable laws and that it will
immediately notify the Fund of any revocation of such authority or
permission or of the commencement of any proceeding or other action
which may lead to such revocation.
9. Termination.
(a) This Agreement shall become effective as of the date first
above written and shall thereafter continue from year to year. This
Agreement may be terminated by the Fund or MLFDS (without penalty to the
Fund or MLFDS) provided that the terminating party gives the other party
written notice of such termination at least sixty (60) days in advance,
except that the Fund may terminate this Agreement immediately upon
written notice to MLFDS if the authority or permission of MLFDS to act
as Transfer Agent, Dividend Disbursing Agent and Shareholder Servicing
Agent has been revoked or if any proceeding or other action which the
Fund reasonably believes will lead to such revocation has been
commenced.
- 6 -
<PAGE> 7
(b) Upon termination of this Agreement, MLFDS shall deliver all
unissued and canceled stock certificates representing Shares
remaining in its possession, and all Shareholder records, books,
stock ledgers, instruments and other documents (including
computerized or other electronically stored information) made or
accumulated in the performance of its duties as Transfer Agent,
Disbursing Agent and Shareholder Servicing Agent for the Fund along
with a certified locator document clearly indicating the complete
contents therein, to such successor as may be specified in a notice
of termination or Officer's Instruction; and the Fund assumes all
responsibility for failure thereafter to produce any paper, record or
documents so delivered and identified in the locator document, if and
when required to be produced.
10. Amendment.
Except to the extent that the performance by MLFDS or its
functions under this Agreement may from time to time be modified by
an Officer's Instruction, this Agreement may be amended or modified
only by further written Agreement between the parties.
11. Governing Law.
This Agreement shall be governed by the laws of the State
of New Jersey.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their respective duly authorized officers
and their respective corporate seals hereunto duly affixed and
attested, as of the day and year above written.
MERRIL LYNCH FUND FOR TOMORROW, INC.
By: /s/ Gerald Richard
-------------------------
Title: Treasurer
----------------------
MERRILL LYNCH FINANCIAL DATA SERVICE, INC.
By: /s/
----------------------------------
Title: President
-------------------------------
- 7 -
<PAGE> 1
Exhibit 99.11(b)
CONSENT OF MORNINGSTAR, INC.
We consent to the reference to our firm under the caption
"Performance Data" appearing in the Prospectus of Merrill Lynch Fund
for Tomorrow, Inc.
The use of our ratings and information in advertisements and
sales literature is permissible upon approval by Morningstar.
Morningstar, Inc.
Date: 11/28/92 By: /s/ Mariann Lindsey
--------------------- -------------------------------------
Mariann Lindsey
Morningstar, Inc.
53 West Jackson Blvd.
Suite 460
Chicago, IL 60604
<PAGE> 1
Exhibit 99.13
CERTIFICATE OF SOLE STOCKHOLDER
Merrill Lynch Asset Management, Inc., the holder of 10,000
shares of Common Stock, par value $0.10 per share, of Merrill Lynch
Fund For Tomorrow, Inc., a Maryland corporation (the "Fund"), does
hereby confirm to the Fund its representation that it purchased such
shares for investment purposes with no present intention of redeeming
or reselling any portion thereof, and does further agree that if it
redeems any portion of such shares prior to the amortization of the
Fund's organizational expenses, the proceeds thereof will be reduced
by the proportionate amount that the total unamortized balance bears
to the number of shares being redeemed.
MERRILLL LYNCH ASSET MANAGEMENT, INC.
By /s/ Arthur Zeikel
------------------------------------------
Dated: January 6, 1984
<PAGE> 1
Exhibit 99.15(b)
CLASS C DISTRIBUTION PLAN
OF
MERRILL LYNCH FUND FOR TOMORROW, INC.
PURSUANT TO RULE 12b-1
DISTRIBUTION PLAN made as of the 21st day of October 1994, by and
between Merrill Lynch Fund for Tomorrow, Inc., a Maryland corporation (the
"Fund"), and Merrill Lynch Funds Distributor, Inc., a Delaware corporation
("MLFD").
W I T N E S S E T H:
WHEREAS, the Fund is engaged in business as an open-end investment
company registered under the Investment Company Act of 1940, as amended (the
"Investment Company Act"); and
WHEREAS, MLFD is a securities firm engaged in the business of selling
shares of investment companies either directly to purchasers or through other
securities dealers; and
WHEREAS, the Fund proposes to enter into a Class C Shares Distribution
Agreement with MLFD, pursuant to which MLFD will act as the exclusive
distributor and representative of the Fund in the offer and sale of Class C
shares of common stock, par value $0.10 per share (the "Class C shares"), of the
Fund to the public; and
WHEREAS, the Fund desires to adopt this Class C Distribution Plan (the
"Plan") pursuant to Rule 12b-1 under the Investment Company Act, pursuant to
which the Fund will pay an account maintenance fee and a distribution fee to
MLFD with respect to the Fund's Class C shares; and
WHEREAS, the Directors of the Fund have determined that there is a
reasonable likelihood that adoption of the Plan will benefit the Fund and its
shareholders.
NOW, THEREFORE, the Fund hereby adopts, and MLFD hereby agrees to the
terms of, the Plan in accordance with Rule 12b-1 under the Investment Company
Act on the following terms and conditions:
<PAGE> 2
1. The Fund shall pay MLFD an account maintenance fee under the Plan at
the end of each month at the annual rate of 0.25% of average daily net assets of
the Fund relating to Class C shares to compensate MLFD and securities firms with
which MLFD enters into related agreements pursuant to Paragraph 3 hereof
("Sub-Agreements") for providing account maintenance activities with respect to
Class C shareholders of the Fund. Expenditures under the Plan may consist of
payments to financial consultants for maintaining accounts in connection with
Class C shares of the Fund and payment of expenses incurred in connection with
such account maintenance activities including the costs of making services
available to shareholders including assistance in connection with inquiries
related to shareholder accounts.
2. The Fund shall pay MLFD a distribution fee under the Plan at the end
of each month at the annual rate of .75% of average daily net assets of the Fund
relating to Class C shares to compensate MLFD and securities firms with which
MLFD enters into related Sub-Agreements for providing sales and promotional
activities and services. Such activities and services will relate to the sale,
promotion and marketing of the Class C shares of the Fund. Such expenditures may
consist of sales commissions to financial consultants for selling Class C shares
of the Fund, compensation, sales incentives and payments to sales and marketing
personnel, and the payment of expenses incurred in its sales and promotional
activities, including advertising expenditures related to the Fund and the costs
of preparing and distributing promotional materials. The distribution fee may
also be used to pay the financing costs of carrying the unreimbursed
expenditures described in this Paragraph 2. Payment of the distribution fee
described in this Paragraph 2 shall be subject to any limitations set forth in
any applicable regulation of the National Association of Securities Dealers,
Inc.
3. The Fund hereby authorizes MLFD to enter into Sub-Agreements with
certain securities firms ("Securities Firms"), including Merrill Lynch, Pierce,
Fenner & Smith Incorporated, to provide compensation to such Securities Firms
for activities and services of the type referred to in Paragraphs 1 and 2
hereof. MLFD may reallocate all or a portion of its account maintenance fee or
distribution fee to such Securities Firms as compensation for the
above-mentioned activities and services. Such Sub-Agreement shall provide that
the Securities Firms shall provide MLFD with such information as is reasonably
necessary to permit MLFD to comply with the reporting requirements set forth in
Paragraph 4 hereof.
2
<PAGE> 3
4. MLFD shall provide the Fund for review by the Board of Directors,
and the Directors shall review, at least quarterly, a written report complying
with the requirements of Rule 12b-1 regarding the disbursement of the account
maintenance fee and the distribution fee during such period.
5. This Plan shall not take effect until it has been approved by a vote
of at least a majority, as defined in the Investment Company Act, of the
outstanding Class C voting securities of the Fund.
6. This Plan shall not take effect until it has been approved, together
with any related agreements, by votes of a majority of both (a) the Directors of
the Fund and (b) those Directors of the Fund who are not "interested persons" of
the Fund, as defined in the Investment Company Act, and have no direct or
indirect financial interest in the operation of this Plan or any agreements
related to it (the "Rule 12b-1 Directors"), cast in person at a meeting or
meetings called for the purpose of voting on the Plan and such related
agreements.
7. The Plan shall continue in effect for so long as such continuance is
specifically approved at least annually in the manner provided for approval of
the Plan in Paragraph 6.
8. The Plan may be terminated at any time by vote of a majority of the
Rule 12b-1 Directors, or by vote of a majority of the outstanding Class C voting
securities of the Fund.
9. The Plan may not be amended to increase materially the rate of
payments provided for herein unless such amendment is approved by at least a
majority, as defined in the Investment Company Act, of the outstanding Class C
voting securities of the Fund, and by the Directors of the Fund in the manner
provided for in Paragraph 6 hereof, and no material amendment to the Plan shall
be made unless approved in the manner provided for approval and annual renewal
in Paragraph 6 hereof.
10. While the Plan is in effect, the selection and nomination of
Directors who are not interested persons, as defined in the Investment Company
Act, of the Fund shall be committed to the discretion of the Directors who are
not interested persons.
11. The Fund shall preserve copies of the Plan and any related
agreements and all reports made pursuant to Paragraph 4 hereof, for a period of
not less than six years from the date of
3
<PAGE> 4
the Plan, or the agreements or such report, as the case may be, the first two
years in an easily accessible place.
IN WITNESS WHEREOF, the parties hereto have executed this Distribution
Plan as of the date first above written.
MERRILL LYNCH FUND FOR TOMORROW, INC.
By /s/Susan B. Baker
------------------------------------------
MERRILL LYNCH FUNDS DISTRIBUTOR, INC.
By /s/Gerald M. Richard
------------------------------------------
Title:
4
<PAGE> 5
CLASS C SHARES DISTRIBUTION PLAN SUB-AGREEMENT
AGREEMENT made as of the 21st day of October 1994, by and between
Merrill Lynch Funds Distributor, Inc., a Delaware corporation ("MLFD"), and
Merrill Lynch, Pierce, Fenner & Smith Incorporated, a Delaware corporation
("Securities Firm").
W I T N E S S E T H :
WHEREAS, MLFD has entered into an agreement with Merrill Lynch Fund For
Tomorrow, Inc., a Maryland corporation (the "Fund"), pursuant to which it acts
as the exclusive distributor for the sale of Class C shares of common stock, par
value $0.10 per share (the "Class C shares"), of the Fund; and
WHEREAS, MLFD and the Fund have entered into a Class C Shares
Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Investment
Company Act of 1940, as amended (the "Act"), pursuant to which MLFD receives an
account maintenance fee from the Fund at the annual rate of 0.25% of average
daily net assets of the Fund relating to Class C shares for account maintenance
activities related to Class C shares of the Fund and a distribution fee from the
Fund at the annual rate of .75% of average daily net assets of the Fund relating
to Class C shares for providing sales and promotional activities and services
related to the distribution of Class C shares; and
WHEREAS, MLFD desires the Securities Firm to perform certain account
maintenance activities and sales and promotional activities and services for the
Fund's Class C shareholders and the Securities Firm is willing to perform such
activities and services;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties hereby agree as follows:
1. The Securities Firm shall provide account maintenance activities and
services with respect to the Class C shares of the Fund and incur expenditures
in connection with such activities and services of the types referred to in
Paragraph 1 of the Plan.
2. The Securities Firm shall provide sales and promotional activities
and services with respect to the sale of the Class C shares of the Fund, and
incur distribution expenditures, of the types referred to in Paragraph 2 of the
Plan.
3. As compensation for its activities and services performed under this
Agreement, MLFD shall pay the Securities Firm an account maintenance fee and a
distribution fee at the end
<PAGE> 6
of each calendar month in an amount agreed upon by the parties hereto.
4. The Securities Firm shall provide MLFD, at least quarterly, such
information as reasonably requested by MLFD to enable MLFD to comply with the
reporting requirements of Rule 12b-1 regarding the disbursement of the account
maintenance fee and the distribution fee during such period referred to in
Paragraph 4 of the Plan.
5. This Agreement shall not take effect until it has been approved by
votes of a majority of both (a) the Directors of the Fund and (b) those
Directors of the Fund who are not "interested persons" of the Fund, as defined
in the Act, and have no direct or indirect financial interest in the operation
of the Plan, this Agreement or any agreements related to the Plan or this
Agreement (the "Rule 12b-1 Directors"), cast in person at a meeting or meetings
called for the purpose of voting on this Agreement.
6. This Agreement shall continue in effect for as long as such
continuance is specifically approved at least annually in the manner provided
for approval of the Plan in Paragraph 6.
7. This Agreement shall automatically terminate in the event of its
assignment or in the event of the termination of the Plan or any amendment to
the Plan that requires such termination.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
MERRILL LYNCH FUNDS DISTRIBUTOR, INC.
By /s/Gerald M. Richard
---------------------------------
Title:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By /s/David Conine
---------------------------------
Title:
2
<PAGE> 1
Exhibit 99.15(c)
CLASS D DISTRIBUTION PLAN
OF
MERRILL LYNCH FUND FOR TOMORROW, INC.
PURSUANT TO RULE 12b-1
DISTRIBUTION PLAN made as of the 21st day of October 1994, by and
between Merrill Lynch Fund For Tomorrow, Inc. a Maryland corporation (the
"Fund"), and Merrill Lynch Funds Distributor, Inc., a Delaware corporation
("MLFD").
W I T N E S S E T H :
WHEREAS, the Fund is engaged in business as an open-end investment
company registered under the Investment Company Act of 1940, as amended (the
"Investment Company Act"); and
WHEREAS, MLFD is a securities firm engaged in the business of selling
shares of investment companies either directly to purchasers or through other
securities dealers; and
WHEREAS, the Fund proposes to enter into a Class D Shares Distribution
Agreement with MLFD, pursuant to which MLFD will act as the exclusive
distributor and representative of the Fund in the offer and sale of Class D
shares of common stock, par value $0.10 per share (the "Class D shares"), of the
Fund to the public; and
WHEREAS, the Fund desires to adopt this Class D Distribution Plan (the
"Plan") pursuant to Rule 12b-1 under the Investment Company Act, pursuant to
which the Fund will pay an account maintenance fee to MLFD with respect to the
Fund's Class D shares; and
WHEREAS, the Directors of the Fund have determined that there is a
reasonable likelihood that adoption of the Plan will benefit the Fund and its
shareholders.
NOW, THEREFORE, the Fund hereby adopts, and MLFD hereby agrees to the
terms of, the Plan in accordance with Rule 12b-1 under the Investment Company
Act on the following terms and conditions:
<PAGE> 2
1. The Fund shall pay MLFD an account maintenance fee under the Plan at
the end of each month at the annual rate of 0.25% of average daily net assets of
the Fund relating to Class D shares to compensate MLFD and securities firms with
which MLFD enters into related agreements ("Sub-Agreements") pursuant to
Paragraph 2 hereof for providing account maintenance activities with respect to
Class D shareholders of the Fund. Expenditures under the Plan may consist of
payments to financial consultants for maintaining accounts in connection with
Class D shares of the Fund and payment of expenses incurred in connection with
such account maintenance activities including the costs of making services
available to shareholders including assistance in connection with inquiries
related to shareholder accounts.
2. The Fund hereby authorizes MLFD to enter into Sub-Agreements with
certain securities firms ("Securities Firms"), including Merrill Lynch, Pierce,
Fenner & Smith Incorporated, to provide compensation to such Securities Firms
for activities of the type referred to in Paragraph 1. MLFD may reallocate all
or a portion of its account maintenance fee to such Securities Firms as
compensation for the above-mentioned activities. Such Sub-Agreement shall
provide that the Securities Firms shall provide MLFD with such information as is
reasonably necessary to permit MLFD to comply with the reporting requirements
set forth in Paragraph 3 hereof.
3. MLFD shall provide the Fund for review by the Board of Directors,
and the Directors shall review, at least quarterly, a written report complying
with the requirements of Rule 12b-1 regarding the disbursement of the account
maintenance fee during such period.
4. This Plan shall not take effect until it has been approved by a vote
of at least a majority, as defined in the Investment Company Act, of the
outstanding Class D voting securities of the Fund.
5. This Plan shall not take effect until it has been approved, together
with any related agreements, by votes of a majority of both (a) the Directors of
the Fund and (b) those Directors of the Fund who are not "interested persons" of
the Fund, as defined in the Investment Company Act, and have no direct or
indirect financial interest in the operation of this Plan or any agreements
related to it (the "Rule 12b-1 Directors"), cast in person at a meeting or
meetings called for the purpose of voting on the Plan and such related
agreements.
6. The Plan shall continue in effect for so long as such continuance is
specifically approved at least annually in the manner provided for approval of
the Plan in Paragraph 5.
2
<PAGE> 3
7. The Plan may be terminated at any time by vote of a majority of the
Rule 12b-1 Directors, or by vote of a majority of the outstanding Class D voting
securities of the Fund.
8. The Plan may not be amended to increase materially the rate of
payments provided for in Paragraph 1 hereof unless such amendment is approved by
at least a majority, as defined in the Investment Company Act, of the
outstanding Class D voting securities of the Fund, and by the Directors of the
Fund in the manner provided for in Paragraph 5 hereof, and no material amendment
to the Plan shall be made unless approved in the manner provided for approval
and annual renewal in Paragraph 5 hereof.
9. While the Plan is in effect, the selection and nomination of
Directors who are not interested persons, as defined in the Investment Company
Act, of the Fund shall be committed to the discretion of the Directors who are
not interested persons.
10. The Fund shall preserve copies of the Plan and any related
agreements and all reports made pursuant to Paragraph 3 hereof, for a period of
not less than six years from the date of the Plan, or the agreements or such
report, as the case may be, the first two years in an easily accessible place.
IN WITNESS WHEREOF, the parties hereto have executed this Distribution
Plan as of the date first above written.
MERRILL LYNCH FUND FOR TOMORROW, INC.
By /s/Susan B. Baker
------------------------------------------
Title:
MERRILL LYNCH FUNDS DISTRIBUTOR, INC.
By /s/Gerald M. Richard
-----------------------------------------
Title:
3
<PAGE> 4
CLASS D SHARES DISTRIBUTION PLAN SUB-AGREEMENT
AGREEMENT made as of the 21st day of October 1994, by and between
Merrill Lynch Funds Distributor, Inc. a Delaware corporation ("MLFD"), and
Merrill Lynch, Pierce, Fenner & Smith Incorporated, a Delaware corporation
("Securities Firm").
W I T N E S S E T H :
WHEREAS, MLFD has entered into an agreement with Merrill Lynch Fund For
Tomorrow, Inc., a Maryland corporation (the "Fund"), pursuant to which it acts
as the exclusive distributor for the sale of Class D shares of common stock, par
value $0.10 per share (the "Class D shares"), of the Fund; and
WHEREAS, MLFD and the Fund have entered into a Class D Shares
Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Investment
Company Act of 1940, as amended (the "Act"), pursuant to which MLFD receives an
account maintenance fee from the Fund at the annual rate of 0.25% of average
daily net assets of the Fund relating to Class D shares for providing account
maintenance activities and services with respect to Class D shares; and
WHEREAS, MLFD desires the Securities Firm to perform certain account
maintenance activities and services, including assistance in connection with
inquiries related to shareholder accounts, for the Fund's Class D shareholders
and the Securities Firm is willing to perform such services;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties hereby agree as follows:
1. The Securities Firm shall provide account maintenance activities and
services with respect to the Class D shares of the Fund and incur expenditures
in connection with such activities and services, of the types referred to in
Paragraph 1 of the Plan.
2. As compensation for its services performed under this Agreement,
MLFD shall pay the Securities Firm a fee at the end of each calendar month in an
amount agreed upon by the parties hereto.
<PAGE> 5
3. The Securities Firm shall provide MLFD, at least quarterly, such
information as reasonably requested by MLFD to enable MLFD to comply with the
reporting requirements of Rule 12b-1 regarding the disbursement of the fee
during such period referred to in Paragraph 3 of the Plan.
4. This Agreement shall not take effect until it has been approved by
votes of a majority of both (a) the Directors of the Fund and (b) those
Directors of the Fund who are not "interested persons" of the Fund, as defined
in the Act, and have no direct or indirect financial interest in the operation
of the Plan, this Agreement or any agreements related to the Plan or this
Agreement (the "Rule 12b-1 Directors"), cast in person at a meeting or meetings
called for the purpose of voting on this Agreement.
5. This Agreement shall continue in effect for as long as such
continuance is specifically approved at least annually in the manner provided
for approval of the Plan in Paragraph 5.
6. This Agreement shall automatically terminate in the event of its
assignment or in the event of the termination of the Plan or any amendment to
the Plan that requires such termination.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
MERRILL LYNCH FUNDS DISTRIBUTOR, INC.
By /s/Gerald M. Richard
----------------------------------
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By /s/David Conine
----------------------------------
2
<PAGE> 1
EX99.16(a)
MERRILL LYNCH FUND FOR TOMORROW, INC.
CLASS A
TOTAL RETURN
Exhibit 16
<TABLE>
<CAPTION>
Period from
10/26/88 Annual
(inception) Total
1 Year to 01/31/90 Return*
--------- --------- ---------
<S> <C> <C> <C>
Initial Investment $ 1,000.00 $ 1,000.00 $1,000.00
Divided by
Maximum Offering Price 16.00 17.13
--------- ---------
Divided by Net Asset Value 62.50 58.38 14.96
---------
Equals Shares Purchased 66.84
Plus Shares Acquired through
Dividend Reinvestment 5.46 12.36 5.85
--------- --------- ---------
Equals Shares Held
at 01/31/90 67.96 70.74 72.69
Multiplied by Net Asset
Value at 01/31/90 15.26 15.26 15.26
--------- --------- ---------
Equals Ending Redeemable
Value at $1,000
Investment (ERV) at 01/31/90 $ 1,037.10 $ 1,079.50 $ 1,109.20
Divided by $1,000 (P) 1.0371 1.0795 1.1092
Subtract 1 0.0371 0.0795 0.1092
Expressed as a percentage
equals the Aggregate Total
Return for the Period (T) 3.71% 7.95%
========== =========
Expressed as a percentage
equals the Aggregate Total
Return for the Period 10.92%
==========
ERV divided by P 1.0371 1.0795
Raise to the power of 1 1/1.2657
Equals 1.0371 1.0623
Subtract 1 0.0371 0.0623
Expressed as a percentage
equals the Average
Annualized Total Return 3.71% 6.23%
====== ========
</TABLE>
* Does not include sales charge for the period.
<PAGE> 2
MERRILL LYNCH FUND FOR TOMORROW, INC.
CLASS B
TOTAL RETURN
Exhibit 16
<TABLE>
<CAPTION>
Period from
03/05/84 Annual
(inception) Total
I Year 5 Year to 01/31/90 Return*
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Initial Investment $ 1,000.00 $ 1,000.00 $ 1,000.00 $ 1,000.00
Divided by Net Asset Value 14.94 11.89 10.00 14.94
--------- --------- --------- ---------
Equals Shares Purchased 66.93 84.10 100.00 66.93
Plus Shares Acquired through
Dividend Reinvestment 5.10 34.15 42.29 5.10
--------- --------- --------- ---------
Equals Shares Held
at 01/31/90 72.03 118.25 142.29 72.03
Multiplied by Net Asset
Value at 01/31/90 15.24 15.24 15.24 15.24
--------- --------- --------- ---------
Equals Ending Value before
deduction for contingent
deferred sales charge 1,097.70 1,802.20 2,168.50 1,097.70
Less deferred sales charge (40.00) 0.00 0.00 0.00
--------- --------- --------- ---------
Equals Ending Redeemable
Value of a $1,000
Investment (ERV) $ 1,057.70 $ 1,802.20 $ 2,168.50 $ 1,097.70
--------- --------- --------- ---------
Divided by $1,000 (P) 1.0577 1.8022 2.1685 1.0977
Subtract 1 0.0577 0.8022 1.1685 0.0977
Expressed as a percentage
equals the Aggregate Total
Return for the Period (T) 5.77% 80.22% 116.85%
======= ======= =======
Expressed as a percentage
equals the Aggregate Total
Return for the Period 9.77%
========
ERV divided by P 1.0577 1.8022 2.1685
Raise to the power of 1 5 1/ 5.9123
Equals 1.0577 1.1250 1.1399
Subtract 1 0.0577 0.1250 0.1399
Expressed as a percentage
equals the Average
Annualized Total Return 5.77% 12.50% 13.99%
===== ======== =======
</TABLE>
* Does not include sales charge for the period.
<PAGE> 1
EXHIBIT 99.17(a)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose name appears
below hereby nominates, constitutes and appoints Arthur Zeikel, Terry K. Glenn,
and Gerald M. Richard (with full power to each of them to act alone) his true
and lawful attorney-in-fact and agent, for him and on his behalf and in his
place and stead in any and all capacities, to make, execute and sign all
amendments and supplements to the Registration Statement on Form N-1A under the
Securities Act of 1933 and the Investment Company Act of 1940 of MERRILL LYNCH
FUND FOR TOMORROW, INC. (the "Fund"), and to file the same with the Securities
and Exchange Commission, and any other regulatory authority having jurisdiction
over the offer and sale of shares of common stock, par value $.10 per share, of
the Fund, and any and all exhibits and other documents requisite in connection
therewith, granting unto said attorneys and each of them, full power and
authority to perform each and every act and thing requisite and necessary to be
done in and about the premises as fully to all intents and purposes as the
undersigned Director himself might or could do.
IN WITNESS WHEREOF, the undersigned Director has hereunto set his hand
this 17th day of March, 1993.
/s/ Kevin A. Ryan
--------------------------------------
Kevin A. Ryan
Director
<PAGE> 2
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Post-Effective Amendment to its
Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933
and has duly caused this Post-Effective Amendment to the Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of New York, State of New York, on the 16th day of July, 1984.
MERRILL LYNCH FUND FOR TOMORROW, INC.
(REGISTRANT)
By /s/ Arthur Zeikel
----------------------------------
Arthur Zeikel, President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Arthur Zeikel and Gerald M. Richard and
each of them, his true and lawful attorney-in-fact and agent, with full power
of substitution and resubstitution, for him and in his name, place and stead,
in any and all capacities, to sign any and all Post-Effective Amendments to
this Registration Statement, and to file the same, with all exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agents or any of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registration Statement has been signed below by
the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Arthur Zeikel President and Director July 16, 1984
- -------------------------------------- (Principal Executive Officer)
Arthur Zeikel
/s/ Gerald M. Richard Treasurer (Principal Financial July 16, 1984
- -------------------------------------- and Accounting Officer)
Gerald M. Richard
/s/ Howard O. Colgan, Jr. Director July 16, 1984
- ---------------------------------------
Howard O. Colgan, Jr.
/s/ Ronald W. Forbes Director July 16, 1984
- ----------------------------------------
Ronald W. Forbes
/s/ Thomas H. Lenagh Director July 16, 1984
- ----------------------------------------
Thomas H. Lenagh
/s/ Richard T. O'Reilly Director July 16, 1984
- -----------------------------------------
Richard T. O'Reilly
/s/ Richard R. West Director July 16, 1984
- -----------------------------------------
Richard R. West
/s/ Marc A. White Director July 16, 1984
- -----------------------------------------
Marc A. White
</TABLE>
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this
Post-Effective Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the Township of
Plainsboro, and State of New Jersey, on the 29th day of May, 1991.
MERRILL LYNCH FUND FOR TOMORROW, INC.
By /s/ Arthur Zeikel
----------------------------------
Arthur Zeikel, President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Arthur Zeikel and Gerald M. Richard and
each of them, his true and lawful attorney-in-fact and agent, with full power
of substitution and resubstitution, for him and in his name, place and stead,
in any and all capacities, to sign any and all Post-Effective Amendments to
this Registration Statement, and to file the same, with all exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agents or any of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registration Statement has been signed below by
the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Arthur Zeikel President and Director May 29, 1991
- -------------------------------------- (Principal Executive Officer)
(Arthur Zeikel)
/s/ Gerald M. Richard Treasurer (Principal Financial May 29, 1991
- -------------------------------------- and Accounting Officer)
(Gerald M. Richard)
* Director May 29, 1991
- ---------------------------------------
(Howard O. Colgan, Jr.)
* Director May 29, 1991
- ----------------------------------------
(Ronald W. Forbes)
* Director May 29, 1991
- ----------------------------------------
(Thomas H. Lenagh)
/s/ Charles C. Reilly Director May 29, 1991
- -----------------------------------------
(Charles C. Reilly)
* Director May 29, 1991
- -----------------------------------------
(Richard R. West)
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
* Director May 29, 1991
- ----------------------------------------
(Marc A. White)
</TABLE>
* This Amendment has been signed by each of the persons so indicated by the
undersigned as Attorney-in-Fact.
*By /s/ Gerald M. Richard
---------------------------------------
(Gerald M. Richard, Attorney-in-Fact)
<PAGE> 1
EXHIBIT 10
SHEREFF, FRIEDMAN, HOFFMAN & GOODMAN, LLP
919 Third Avenue
New York, New York 10022-9998
(212) 758-9500
May 26, 1995
Merrill Lynch Fund For Tomorrow, Inc.
P.O. Box 9011
Princeton, New Jersey 08540-9011
Dear Sirs:
Merrill Lynch Fund For Tomorrow, Inc., a Maryland corporation (the
"Fund"), is filing with the Securities and Exchange Commission Post-Effective
Amendment No. 15 to its Registration Statement under the Securities Act of
1933, as amended (the "1933 Act") and the Investment Company Act of 1940, as
amended (the "1940 Act") on Form N-1A (1933 Act File No. 2-87036, 1940 Act File
No. 811-3871) relating to the registration under the 1933 Act of 6,373,914
additional shares of common stock, par value $0.10 per share (the "Additional
Shares"), which are to be offered and sold by the Fund in the manner and on the
terms set forth in the prospectus of the Fund current at the time of sale.
6,354,836 of the Additional Shares are previously outstanding shares of common
stock of the Fund, par value $0.10 per share, which were redeemed by the Fund
during its fiscal year ended January 31, 1995. According to Post-Effective
Amendment No. 15 to the Fund's Registration Statement, none of the Additional
Shares have previously been used by the Fund for reduction pursuant to
paragraph (a) of Rule 24e-2 under the 1940 Act on previous filings of
post-effective amendments to the Fund's Registration Statement during the
current fiscal year, or for reduction, pursuant to paragraph (c) of Rule 24f-2
under the 1940 Act during the Fund's current fiscal year, of the registration
fee payable by the Fund for the registration of shares for sale under the 1933
Act.
We have, as counsel, participated in various corporate and other
proceedings relating to the Fund and to the proposed issuance of the Additional
Shares. We have examined copies, either certified or otherwise proven to our
satisfaction to be genuine, of its Articles of Incorporation and By-Laws, as
currently in effect, and other documents relating to its organization and
operation. We have received a certificate from the Office of the Maryland State
Department of Assessments & Taxation, dated May 22, 1995, confirming that the
Fund is currently in good standing in that State. We have also reviewed the
above-mentioned Registration Statement, as amended, and the documents filed as
exhibits thereto. We are generally familiar with the corporate affairs of the
fund.
Based upon the foregoing, it is our opinion that:
1. The Fund has been duly organized and is validly existing under
the laws of the State of Maryland.
<PAGE> 2
Merrill Lynch Fund For Tomorrow, Inc.
May 26, 1995
Page 2
2. The Fund is authorized to issue an unlimited number of shares
of common stock.
3. Subject to the effectiveness of the above-mentioned
Post-Effective Amendment No. 15 to the Fund's Registration Statement and
compliance with applicable state securities laws, upon the issuance of the
Additional Shares for a consideration not less than the par value thereof, and
not less than the net asset value thereof as required by the 1940 Act and in
accordance with the terms of the Registration Statement, such shares will be
legally issued and outstanding and fully paid and non-assessable.
We hereby consent to the filing of this opinion with the Securities
and Exchange Commission as part of the above-mentioned Post-Effective Amendment
No. 15 to the Registration Statement and with any state securities commission
where such filing is required. In giving this consent we do not admit that we
come within the category of persons whose consent is required under Section 7
of the 1933 Act.
We are members of the Bar of the State of New York and do not hold
ourselves out as being conversant with the laws of any jurisdiction other than
those of the United States of America and the State of New York. We note that
we are not licensed to practice law in the State of Maryland, and to the extent
that any opinion herein involves the law of Maryland, such opinion should be
understood to be based solely upon our review of the documents referred to
above, the published statutes of the State of Maryland and, where applicable,
published cases, rules or regulations of regulatory bodies of the State.
Very truly yours,
Shereff, Friedman, Hoffman & Goodman, LLP
SFHG:JHG:MKN:VAZ:wgn
<PAGE> 1
EXHIBIT (11)(A)
INDEPENDENT AUDITORS' CONSENT
MERRILL LYNCH FUND FOR TOMORROW, INC.:
We consent to the use in Post-Effective Amendment No. 15 to Registration
Statement No. 2-87036 of our report dated March 8, 1995 appearing in the
Statement of Additional Information, which is a part of such Registration
Statement, and to the reference to us under the caption "Financial Highlights"
appearing in the Prospectus, which also is a part of such Registration
Statement.
DELOITTE & TOUCHE LLP
Princeton, New Jersey
May 23, 1995
<PAGE> 1
EXHIBIT 16
FUND FOR TOMORROW - C
10/21/94 - 1/31/95
<TABLE>
<CAPTION>
Since Since
Inception Inception
Average Annual Total
Total Return Return*
-------------- ---------
<S> <C> <C>
Initial Investment $1,000.00 $1,000.00
Divided by Net Asset Value 14.08 14.08
--------- ----------
Equals Shares Purchased 71.023 71.023
Plus Shares Acquired through
Dividend Reinvestment 1.179 1.179
--------- ----------
Equals Shares Held at 1/31/95 72.202 72.202
Multiplied by Net Asset Value at 1/31/95 13.28 13.28
--------- ----------
Equals Ending Value before deduction for
contingent deferred sales charge 958.84 958.84
Less deferred sales charge (9.42) 0.00
--------- ----------
Equals Ending Redeemable Value at
$1000 Investment (ERV) at 1/31/95 949.42 958.84
--------- ----------
Divided by $1,000 (P) 0.9494 0.9588
Subtract 1 -0.0506 -0.0412
Expressed as a percentage equals the
Aggregate Total Return for the Period (T) -5.06%
=========
Expressed as a percentage equals the
Aggregate Total Return for the Period -4.12%
==========
ERV divided by P 0.9494
Raise to the power of 3.5784
Equals 0.8305
Subtract 1 -0.1695
Expressed as a percentage equals the
Average Annualized Total Return -16.95%
=========
</TABLE>
* Does not include sales charge for the period.
<PAGE> 2
30 DAYS STANDARDIZED YIELD
FOR THE PERIOD ENDING 1-31-95
FUND FOR TOMORROW - CLASS C
<TABLE>
<S> <C>
Long term income generally based on yield to
maturity times market value of each security $65
Plus short term income accrued for the past
thirty days 18
------------
Equals Total Income 83
Less expenses for the past thirty days -263
------------
Equals net monthly income for yield calculation -181
------------
Average shares outstanding for 30 days 4,434
Times the Net Asset Value 13.24
------------
Equals total dollars $58,712
============
Net monthly income divided by total dollars equals -0.003075202
Add 1 0.996924798
Raise to the power of 6 0.981690060
Subtract 1 -0.018309940
Times 2 -0.036619880
Expressed as a percentage equals the
standardized yield for the 30 day period -3.66%
============
Tax Rate 28.00%
X = 1 minus Tax Rate 72.00%
Standardized Yield divided by X equals
Tax Equivalent Yield for 30 day period -5.08%
============
</TABLE>
<PAGE> 3
EXHIBIT 16
FUND FOR TOMORROW - D
10/21/94 - 1/31/95
<TABLE>
<S> <C> <C>
Since Since
Inception Inception
Average Annual Total
Total Return Return*
-------------- ---------
Initial Investment $1,000.00 $1,000.00
Divided by Initial Maximum Offering Price 15.05
---------
Divided by Net Asset Value 14.26
----------
Equals Shares Purchased 66.445 70.126
Plus Shares Acquired through
Dividend Reinvestment 1.085 1.145
--------- ----------
Equals Shares Held at 1/31/95 67.529 71.271
Multiplied by Net Asset Value at 1/31/95 13.54 13.54
--------- ----------
Equals Ending Redeemable Value at
$1000 Investment (ERV) at 1/31/95 914.3486 965.01
Divided by $1,000 (P) 0.9143 0.9650
Subtract 1 -0.0857 -0.0350
Expressed as a percentage equals the
Aggregate Total Return for the Period (T) -8.57%
=========
Expressed as a percentage equals the
Aggregate Total Return for the Period -3.50%
==========
ERV divided by P 0.9143
Raise to the power of 3.5784
Equals 0.7258
Subtract 1 -0.2742
Expressed as a percentage equals the
Average Annualized Total Return -27.42%
=========
</TABLE>
* Does not include sales charge for the period.
<PAGE> 4
30 DAYS STANDARDIZED YIELD
FOR THE PERIOD ENDING 1-31-95
FUND FOR TOMORROW - CLASS D
<TABLE>
<S> <C>
Long term income generally based on yield to
maturity times market value of each security $155,395
Plus short term income accrued for the past
thirty days 41,932
------------
Equals Total Income 197,327
Less expenses for the past thirty days -196,874
------------
Equals net monthly income for yield calculation 453
------------
Average shares outstanding for 30 days 11,591,268
Times the Maximum Offering Price 13.24
------------
Equals total dollars $153,468,383
============
Net monthly income divided by total dollars equals 0.000002953
Add 1 1.000002953
Raise to the power of 6 1.000017719
Subtract 1 0.000017719
Times 2 0.000035438
Expressed as a percentage equals the
standardized yield for the 30 day period 0.00%
============
Tax Rate 28.00%
X = 1 minus Tax Rate 72.00%
Standardized Yield divided by X equals
Tax Equivalent Yield for 30 day period 0.00%
============
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000730168
<NAME> MERRILL LYNCH FUND FOR TOMORROW, INC.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JAN-31-1995
<PERIOD-START> FEB-01-1994
<PERIOD-END> JAN-31-1995
<INVESTMENTS-AT-COST> 262021824
<INVESTMENTS-AT-VALUE> 277249669
<RECEIVABLES> 15211410
<ASSETS-OTHER> 31345
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 292492424
<PAYABLE-FOR-SECURITIES> 5816670
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1797420
<TOTAL-LIABILITIES> 7614090
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 259122791
<SHARES-COMMON-STOCK> 639660
<SHARES-COMMON-PRIOR> 667410
<ACCUMULATED-NII-CURRENT> (512355)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 11040176
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 15227722
<NET-ASSETS> 8665188
<DIVIDEND-INCOME> 4101437
<INTEREST-INCOME> 832897
<OTHER-INCOME> 304376
<EXPENSES-NET> 6369144
<NET-INVESTMENT-INCOME> (1130434)
<REALIZED-GAINS-CURRENT> 16333259
<APPREC-INCREASE-CURRENT> (62912398)
<NET-CHANGE-FROM-OPS> (47709573)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 629067
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 140801
<NUMBER-OF-SHARES-REDEEMED> 211252
<SHARES-REINVESTED> 42701
<NET-CHANGE-IN-ASSETS> (122487651)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 17063594
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<GROSS-ADVISORY-FEES> 2169115
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 6369144
<AVERAGE-NET-ASSETS> 9564675
<PER-SHARE-NAV-BEGIN> 16.39
<PER-SHARE-NII> .09
<PER-SHARE-GAIN-APPREC> (1.97)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> .96
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.55
<EXPENSE-RATIO> .98
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000730168
<NAME> MERRILL LYNCH FUND FOR TOMORROW, INC.
<S> <C>
<PERIOD-TYPE> 12-MOS
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<PERIOD-START> FEB-01-1994
<PERIOD-END> JAN-31-1995
<INVESTMENTS-AT-COST> 262021824
<INVESTMENTS-AT-VALUE> 277249669
<RECEIVABLES> 15211410
<ASSETS-OTHER> 31345
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 292492424
<PAYABLE-FOR-SECURITIES> 5816670
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1797420
<TOTAL-LIABILITIES> 7614090
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 259122791
<SHARES-COMMON-STOCK> 8939516
<SHARES-COMMON-PRIOR> 24322986
<ACCUMULATED-NII-CURRENT> (512355)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 11040176
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 15227722
<NET-ASSETS> 119186282
<DIVIDEND-INCOME> 4101437
<INTEREST-INCOME> 832897
<OTHER-INCOME> 304376
<EXPENSES-NET> 6369144
<NET-INVESTMENT-INCOME> (1130434)
<REALIZED-GAINS-CURRENT> 16333259
<APPREC-INCREASE-CURRENT> (62912398)
<NET-CHANGE-FROM-OPS> (47709573)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 18732811
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1037837
<NUMBER-OF-SHARES-REDEEMED> 17673838
<SHARES-REINVESTED> 1252531
<NET-CHANGE-IN-ASSETS> (122487651)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 17063594
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2169115
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 6369144
<AVERAGE-NET-ASSETS> 292738468
<PER-SHARE-NAV-BEGIN> 16.30
<PER-SHARE-NII> (.06)
<PER-SHARE-GAIN-APPREC> (1.96)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> .95
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.33
<EXPENSE-RATIO> 1.99
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000730168
<NAME> MERRILL LYNCH FUND FOR TOMORROW, INC.
<S> <C>
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<PERIOD-START> OCT-21-1994
<PERIOD-END> JAN-31-1995
<INVESTMENTS-AT-COST> 262021824
<INVESTMENTS-AT-VALUE> 277249669
<RECEIVABLES> 15211410
<ASSETS-OTHER> 31345
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 292492424
<PAYABLE-FOR-SECURITIES> 5816670
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1797420
<TOTAL-LIABILITIES> 7614090
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 259122791
<SHARES-COMMON-STOCK> 6013
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> (512355)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 11040176
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 15227722
<NET-ASSETS> 79868
<DIVIDEND-INCOME> 4101437
<INTEREST-INCOME> 832897
<OTHER-INCOME> 304376
<EXPENSES-NET> 6369144
<NET-INVESTMENT-INCOME> (1130434)
<REALIZED-GAINS-CURRENT> 16333259
<APPREC-INCREASE-CURRENT> (62912398)
<NET-CHANGE-FROM-OPS> (47709573)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 311
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6002
<NUMBER-OF-SHARES-REDEEMED> 1
<SHARES-REINVESTED> 12
<NET-CHANGE-IN-ASSETS> (122487651)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 17063594
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2169115
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 6369144
<AVERAGE-NET-ASSETS> 33475
<PER-SHARE-NAV-BEGIN> 14.08
<PER-SHARE-NII> (.04)
<PER-SHARE-GAIN-APPREC> (.54)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> .22
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.28
<EXPENSE-RATIO> 2.26
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000730168
<NAME> MERRILL LYNCH FUND FOR TOMORROW, INC.
<S> <C>
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<PERIOD-START> OCT-21-1994
<PERIOD-END> JAN-31-1995
<INVESTMENTS-AT-COST> 262021824
<INVESTMENTS-AT-VALUE> 277249669
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<SENIOR-EQUITY> 0
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<ACCUMULATED-NET-GAINS> 11040176
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 15227722
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<DIVIDEND-INCOME> 4101437
<INTEREST-INCOME> 832897
<OTHER-INCOME> 304376
<EXPENSES-NET> 6369144
<NET-INVESTMENT-INCOME> (1130434)
<REALIZED-GAINS-CURRENT> 16333259
<APPREC-INCREASE-CURRENT> (62912398)
<NET-CHANGE-FROM-OPS> (47709573)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 2376409
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 12083532
<NUMBER-OF-SHARES-REDEEMED> 646609
<SHARES-REINVESTED> 157005
<NET-CHANGE-IN-ASSETS> (122487651)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 17063594
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<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 6369144
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<PER-SHARE-NAV-BEGIN> 14.26
<PER-SHARE-NII> (.01)
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<PER-SHARE-NAV-END> 13.54
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<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
