AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 28, 1995
SECURITIES ACT FILE NO. 2-89834
INVESTMENT COMPANY ACT FILE NO. 811-4351
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
PRE-EFFECTIVE AMENDMENT NO. / /
POST-EFFECTIVE AMENDMENT NO. 14 X
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
AMENDMENT NO. 15 X
(CHECK APPROPRIATE BOX OR BOXES)
-------------------
MERRILL LYNCH GLOBAL HOLDINGS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
800 SCUDDERS MILL ROAD
PLAINSBORO, NEW JERSEY 08536
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (609) 282-2800
ARTHUR ZEIKEL
MERRILL LYNCH GLOBAL HOLDINGS, INC.
800 SCUDDERS MILL ROAD, PLAINSBORO, NEW JERSEY
MAILING ADDRESS: P.O. BOX 9011, PRINCETON, NEW JERSEY 08543-9011
(NAME AND ADDRESS OF AGENT FOR SERVICE)
COPIES TO:
COUNSEL FOR THE COMPANY:
BROWN & WOOD
PHILIP L. KIRSTEIN, ESQ. ONE WORLD TRADE CENTER
MERRILL LYNCH ASSET MANAGEMENT NEW YORK, NEW YORK 10048-0557
P.O. BOX 9011 ATTENTION: THOMAS R. SMITH, JR., ESQ.
PRINCETON, NEW JERSEY 08543-9011 FRANK P. BRUNO, ESQ.
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK APPROPRIATE BOX)
X Immediately upon filing pursuant to paragraph (b)
/ / On (date) pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)
/ / 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.
-------------------
THE REGISTRANT HAS REGISTERED AN INDEFINITE NUMBER OF ITS SHARES OF COMMON
STOCK UNDER THE SECURITIES ACT OF 1933 PURSUANT TO RULE 24F-2 UNDER THE
INVESTMENT COMPANY ACT OF 1940. THE NOTICE REQUIRED BY SUCH RULE FOR THE
REGISTRANT'S MOST RECENT FISCAL YEAR WAS FILED ON JANUARY 26, 1995.
-------------------
CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
<TABLE><CAPTION>
AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
BEING OFFERING PRICE AGGREGATE REGISTRATION
TITLE OF SECURITIES BEING REGISTERED REGISTERED PER SHARE OFFERING PRICE FEE
<S> <C> <C> <C> <C>
Shares of Common Stock (par value
$.10 per share)....................... 3,790,917 $12.54 $289,987.50 * $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 8,134,339 shares of Common Stock.
(3) 4,366,547 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) 3,767,792 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.
================================================================================
<PAGE>
MERRILL LYNCH GLOBAL HOLDINGS, INC.
REGISTRATION STATEMENT ON FORM N-1A
CROSS REFERENCE SHEET
<TABLE><CAPTION>
N-1A ITEM NO. LOCATION
------------------------------------- -------------------------------------
<S> <C> <C>
PART A
Item 1. Cover Page........................... Cover Page
Item 2. Synopsis............................. Fee Table
Item 3. Condensed Financial Information...... Financial Highlights; Performance
Data
Item 4. General Description of Registrant.... Investment Objective and Policies;
Additional Information
Item 5. Management of the Fund............... Fee Table; Investment Objective and
Policies; Portfolio Transactions;
Management of the Company; Inside
Back Cover Page
Item 5A. Management's Discussion of Fund
Performance.......................... Not Applicable
Item 6. Capital Stock and Other Securities... Cover Page; Additional Information
Item 7. Purchase of Securities Being
Offered.............................. Cover Page; Fee Table; Merrill Lynch
Select PricingSM System; Purchase of
Shares; Shareholder Services;
Additional Information; Inside Back
Cover Page
Item 8. Redemption or Repurchase............. Fee Table; Merrill Lynch Select
PricingSM System; Shareholder
Services; Purchase of Shares;
Redemption of Shares
Item 9. Pending Legal Proceedings............ Not Applicable
PART B
Item 10. Cover Page........................... Cover Page
Item 11. Table of Contents.................... Back Cover Page
Item 12. General Information and History...... General Information
Item 13. Investment Objectives and Policies... Investment Objective and Policies
Item 14. Management of the Fund............... Management of the Company
Item 15. Control Persons and Principal Holders
of Securities........................ Management of the Company
Item 16. Investment Advisory and Other
Services............................. Management of the Company; Purchase
of Shares; General Information
Item 17. Brokerage Allocation and Other
Practices............................ Portfolio Transactions and Brokerage
Item 18. Capital Stock and Other Securities... General Information
Item 19. Purchase, Redemption and Pricing of
Securities Being Offered............. Purchase of Shares; Redemption of
Shares; Determination of Net Asset
Value; Shareholder Services; General
Information
Item 20. Tax Status........................... Dividends and Distributions; Taxes
Item 21. Underwriters......................... Purchase of Shares
Item 22. Calculation of Performance Data...... Performance Data
Item 23. Financial Statements................. Financial Statements
PART C
Information required to be included in Part C is set forth under the appropriate Item,
so numbered, in Part C to this Registration Statement.
</TABLE>
<PAGE>
PROSPECTUS
MARCH 28, 1995
MERRILL LYNCH GLOBAL HOLDINGS, INC.
P.O. BOX 9011, PRINCETON, NEW JERSEY 08543-9011 . PHONE NO. (609) 282-2800
-------------------
Merrill Lynch Global Holdings, Inc. (the "Company"), is a diversified,
open-end management investment company seeking the highest total investment
return consistent with prudent risk through worldwide investment in an
internationally diversified portfolio of securities. Total investment return is
the aggregate of income and capital value changes. The Company will utilize a
fully managed investment policy which permits management of the Company to take
a flexible investment approach and vary its policies as to geographic
diversification and types of securities based upon its evaluation of changes in
economic and market trends throughout the world. Accordingly, investments may be
shifted among the various capital markets of the world and among different types
of equity, debt and convertible securities depending upon management's outlook
with respect to prevailing trends and developments. It is presently contemplated
that the Company's assets will be primarily invested in equity securities of
companies located in the United States, Japan and Western Europe.
-------------------
Pursuant to the Merrill Lynch Select PricingSM System, the Company offers
four classes of shares, each with a different combination of sales charges,
ongoing fees and other features. The Merrill Lynch Select PricingSM 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 PricingSM System" on page 4.
Shares may be purchased directly from Merrill Lynch Funds Distributor, Inc.
(the "Distributor"), P.O. Box 9011, Princeton, New Jersey 08543-9011 [(609)
282-2800], or from securities dealers which have entered into 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
Company's transfer agent are not subject to the processing fee. See "Purchase of
Shares" and "Redemption of Shares".
-------------------
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.
-------------------------------
This Prospectus is a concise statement of information about the Company that
is relevant to making an investment in the Company. This Prospectus should be
retained for future reference. A statement containing additional information
about the Company, dated March 28, 1995 (the "Statement of Additional
Information"), has been filed with the Securities and Exchange Commission and is
available, without charge, by calling or by writing the Company at the above
telephone number or address. The Statement of Additional Information is hereby
incorporated by reference into this Prospectus.
-------------------
MERRILL LYNCH ASSET MANAGEMENT--INVESTMENT ADVISER
MERRILL LYNCH FUNDS DISTRIBUTOR, INC.--DISTRIBUTOR
<PAGE>
FEE TABLE
A general comparison of the sales arrangements and other nonrecurring and
recurring expenses applicable to shares of the Company 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 1.0% for one None(d)
first year, year
decreasing 1.0%
annually thereafter
to 0.0% after the
fourth year
<S> <C> <C> <C> <C>
Exchange Fee...................... None None None None
ANNUAL COMPANY OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET
ASSETS)(E):
Investment Advisory Fees(f)..... 1.00% 1.00% 1.00% 1.00%
12b-1 Fees(g):
Account Maintenance Fees...... None 0.25% 0.25% 0.25%
Distribution Fees............. None 0.75% 0.75% None
<CAPTION>
(Class B shares
convert to Class D
shares automatically
after approximately
eight years and
cease being subject
to distribution
fees)
<S> <C> <C> <C> <C>
Other Expenses:
Custodial Fees................ 0.09% 0.09% 0.09% 0.09%
Shareholder Servicing Costs(h) 0.16% 0.20% 0.20% 0.16%
Other......................... 0.19% 0.19% 0.19% 0.19%
----- ----- ----- -----
Total Other Expenses........ 0.44% 0.48% 0.48% 0.44%
----- ----- ----- -----
TOTAL COMPANY OPERATING EXPENSES... 1.44% 2.48% 2.48% 1.69%
----- ----- ----- -----
----- ----- ----- -----
</TABLE>
- ------------
<TABLE>
<C> <S>
(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 26.
(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 28.
(c) Reduced for purchases of $25,000 and over. Class A or Class D purchases of $1,000,000 or
more are not subject to an initial sales charge. See "Purchase of Shares--Initial Sales
Charge Alternatives--Class A and Class D Shares"--page 26.
</TABLE>
(footnotes continued on following page)
2
<PAGE>
(footnotes continued from preceding page)
<TABLE>
<S> <C>
(d) Class A and Class D shares are not subject to a contingent deferred sales charge
("CDSC"), except that purchases of $1,000,000 or more which are not subject to an
initial sales charge may 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 November
30, 1994. Information under "Other Expenses" for Class C and Class D shares is estimated
for the fiscal year ending November 30, 1995.
(f) See "Management of the Company--Advisory and Management Arrangements"--page 22.
(g) See "Purchase of Shares--Distribution Plans"--page 32.
(h) See "Management of the Company--Transfer Agency Services"--page 24.
</TABLE>
<TABLE><CAPTION>
CUMULATIVE EXPENSES PAID
FOR THE PERIOD OF:
----------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
EXAMPLE:
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 Company 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............................................... $ 66 $ 96 $ 127 $216
Class B............................................... $ 65 $ 97 $ 132 $263*
Class C............................................... $ 35 $ 77 $ 132 $282
Class D............................................... $ 69 $ 103 $ 139 $242
An investor would pay the following expenses on the
same $1,000 investment assuming no redemption at the
end of the period:
Class A............................................... $ 66 $ 96 $ 127 $216
Class B............................................... $ 25 $ 77 $ 132 $263*
Class C............................................... $ 25 $ 77 $ 132 $282
Class D............................................... $ 69 $ 103 $ 139 $242
</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 Company 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 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
hold 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
charges 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 redemptions.
Purchases and redemptions directly through the Company's transfer agent are not
subject to the processing fee. See "Purchase of Shares" and "Redemption of
Shares".
3
<PAGE>
MERRILL LYNCH SELECT PRICING SM SYSTEM
The Company offers four classes of shares under the Merrill Lynch Select
PricingSM 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 PricingSM System is used by more than 50
mutual funds advised by Merrill Lynch Asset Management, L.P. ("MLAM" or the
"Investment Adviser") or an affiliate of MLAM, Fund Asset 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 Company represents an
identical interest in the investment portfolio of the Company 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, are imposed directly against those classes and not against
all assets of the Company and, accordingly, such charges do 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 Company for each class of shares are
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 Company. 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 PricingSM 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 PricingSM System that the investor
believes is the most beneficial
4
<PAGE>
under his particular circumstances. More detailed information as to each class
of shares is set forth under "Purchase of Shares".
<TABLE><CAPTION>
ACCOUNT
MAINTENANCE DISTRIBUTION
CLASS SALES CHARGE(1) FEE FEE CONVERSION FEATURE
<C> <S> <C> <C> <C>
A Maximum 5.25% initial sales charge(2)(3) No No No
B CDSC for a period of 4 years, at a rate 0.25% 0.75% B shares convert to
of 4.0% during the first year, D shares
decreasing 1.0% annually to 0.0% automatically after
approximately eight
years(4)
C 1.0% CDSC for one year 0.25% 0.75% No
D Maximum 5.25% initial sales charge(3) 0.25% No No
</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. 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 Company 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.
<TABLE>
<CAPTION>
<S> <C>
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 of the Company
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 in a shareholder account are entitled to purchase additional
Class A shares of the Company 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. and its subsidiaries (the term "subsidiaries" when used herein
with respect to Merrill Lynch & Co., Inc. includes MLAM, FAM and certain other
entities directly or indirectly wholly owned and controlled by Merrill Lynch &
Co., Inc.) 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. 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 1% CDSC if the shares are redeemed within one year after purchase. Sales
charges are also 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".
</TABLE>
5
<PAGE>
<TABLE>
<S> <C>
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 Company'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 Company, 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 Company 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 into 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 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 Company's average net assets attributable to the
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 Company'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 Company'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 the Class D shares is the same as the
schedule for Class A shares. 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".
</TABLE>
The following is a discussion of the factors that investors should consider
in determining the method of purchasing shares under the Merrill Lynch Select
PricingSM 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
alternative who are eligible to purchase Class A shares should purchase Class A
shares rather than Class D shares because there is an 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
6
<PAGE>
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 Company 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>
FINANCIAL HIGHLIGHTS
The financial information in the table below has been audited in conjunction
with the annual audits of the financial statements of the Company by Deloitte &
Touche LLP, independent auditors. Financial statements for the fiscal year ended
November 30, 1994, and the independent auditors' report thereon are included in
the Statement of Additional Information. Further information about the
performance of the Company is contained in the Company's most recent annual
report to shareholders which may be obtained, without charge, by calling or by
writing the Company at the telephone number or address on the front cover of
this Prospectus.
The following per share data and ratios have been derived from information
provided in the financial statements.
<TABLE><CAPTION>
CLASS A
------------------------------------------------------------------------------------------------------
FOR THE
SEVEN-
MONTH
PERIOD
FOR THE YEAR ENDED NOVEMBER 30, ENDED FOR THE YEAR ENDED APRIL 30,
--------------------------------------- NOV. 30, ------------------------------------------------
1994++## 1993++ 1992++ 1991 1990 1990# 1989 1988 1987 1986
--------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET
ASSET VALUE:
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning of
period..................... $ 13.07 $ 11.78 $ 10.95 $ 10.48 $ 10.91 $ 11.79 $ 12.23 $ 16.90 $ 14.73 $ 9.77
--------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Investment income--net....... .03 .04 .10 .16 .17 .20 .29 .43 .25 .32
Realized and unrealized gain
on investments and foreign
currency transactions--net.. .53 2.07 1.05 .53 (.30) .62 .88 (1.09) 3.49 4.98
--------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total from investment
operations.................. .56 2.11 1.15 .69 (.13) .82 1.17 (.66) 3.74 5.30
--------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Less dividends and
distributions:
Investment income--net...... (.01) -- (.10) (.21) (.13) (.21) (.34) (.37) (.30) (.34)
Realized gain on
investments--net............ (.80) (.82) (.22) (.01) (.17) (1.49) (1.27) (3.64) (1.27) --
--------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total dividends and
distributions............... (.81) (.82) (.32) (.22) (.30) (1.70) (1.61) (4.01) (1.57) (.34)
--------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Net asset value, end of
period..................... $ 12.82 $ 13.07 $ 11.78 $ 10.95 $ 10.48 $ 10.91 $ 11.79 $ 12.23 $ 16.90 $ 14.73
--------- -------- -------- -------- -------- -------- -------- -------- -------- --------
--------- -------- -------- -------- -------- -------- -------- -------- -------- --------
TOTAL INVESTMENT RETURN**
Based on net asset value per
share....................... 4.39% 19.16% 10.67% 6.77% (1.45)%+++ 6.93% 10.99% (4.43)% 28.50% 55.67%
--------- -------- -------- -------- -------- -------- -------- -------- -------- --------
--------- -------- -------- -------- -------- -------- -------- -------- -------- --------
RATIOS TO AVERAGE NET ASSETS:
Expenses, excluding account
maintenance and/or
distribution fees........... 1.44% 1.43% 1.49% 1.48% 1.59%* 1.49% 1.47% 1.31% 1.41% 1.45%
--------- -------- -------- -------- -------- -------- -------- -------- -------- --------
--------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Expenses..................... 1.44% 1.43% 1.49% 1.48% 1.59%* 1.49% 1.47% 1.31% 1.41% 1.45%
--------- -------- -------- -------- -------- -------- -------- -------- -------- --------
--------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Investment income
(loss)--net................. .23% .32% (.19)% 1.31% 2.63%* 1.65% 2.04% 2.90% 1.78% 2.71%
--------- -------- -------- -------- -------- -------- -------- -------- -------- --------
--------- -------- -------- -------- -------- -------- -------- -------- -------- --------
SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands).................. $330,132 $256,203 $166,947 $165,687 $176,898 $187,843 $195,932 $249,736 $356,964 $282,733
--------- -------- -------- -------- -------- -------- -------- -------- -------- --------
--------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Portfolio turnover........... 40.18% 56.98% 65.93% 63.94% 34.44% 84.21% 102.77% 109.68% 88.54% 72.75%
--------- -------- -------- -------- -------- -------- -------- -------- -------- --------
--------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<CAPTION>
FOR THE
PERIOD
JULY 2,
1984+TO
APRIL 30,
1985
---------
<S> <C>
INCREASE (DECREASE) IN NET
ASSET VALUE:
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning of
period...................... $ 9.15
---------
Investment income--net....... .34
Realized and unrealized gain
on investments and foreign
currency transactions--net.. .45
---------
Total from investment
operations.................. .79
---------
Less dividends and
distributions:
Investment income--net...... (.17)
Realized gain on
investments--net............. --
---------
Total dividends and
distributions............... (.17)
---------
Net asset value, end of
period...................... $ 9.77
---------
---------
TOTAL INVESTMENT RETURN**
Based on net asset value per
share....................... 8.69%+++
---------
---------
RATIOS TO AVERAGE NET ASSETS:
Expenses, excluding account
maintenance and/or
distribution fees........... 1.40%*
---------
---------
Expenses..................... 1.40%*
---------
---------
Investment income
(loss)--net................. 4.27%*
---------
---------
SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands).................. $ 199,760
---------
---------
Portfolio turnover........... 94.34%
---------
---------
</TABLE>
- ------------
* Annualized.
** Total investment returns exclude the effects of sales loads.
# On February 1, 1990, the Company terminated investment advisory agreements
with Nomura Capital Management, Inc. and Lombard Odier International
Portfolio Management Limited; such agreements were in addition to an
investment advisory agreement with the Investment Adviser.
## On April 1, 1994, certain of the Company's investment advisory relationships
changed. See "Management of the Company-- Advisory and Management
Arrangements" in the Statement of Additional Information.
+ Commencement of Operations for Class A shares.
++ Based on average shares outstanding during the period.
+++ Aggregate total investment return.
8
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE><CAPTION>
CLASS B
---------------------------------------------------------------------------------
FOR THE
SEVEN-
MONTH FOR THE
PERIOD PERIOD
ENDED FOR THE OCT. 21,
FOR THE YEAR ENDED NOVEMBER 30, NOV. YEAR ENDED 1988+ TO
--------------------------------------- 30, APRIL 30, APRIL 30,
1994++## 1993++ 1992++ 1991 1990 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.......... $ 12.74 $ 11.62 $ 10.82 $ 10.36 $ 10.82 $ 11.74 $ 11.29
--------- ------- ------- ------- ------- ----- ---------
Investment income (loss)--net................. (.10) (.08) (.03) .04 .10 .16 .06
Realized and unrealized gain (loss) on
investments and foreign currency
transactions--net............................ .52 2.02 1.05 .54 (.30) .55 .93
--------- ------- ------- ------- ------- ----- ---------
Total from investment operations.............. .42 1.94 1.02 .58 (.20) .71 .99
--------- ------- ------- ------- ------- ----- ---------
Less dividends and distributions:
Investment income--net....................... -- -- -- (.11) (.09) (.14) (.15)
Realized gain on investments--net............ (.66) (.82) (.22) (.01) (.17) (1.49) (.39)
--------- ------- ------- ------- ------- ----- ---------
Total dividends and distributions............. (.66) (.82) (.22) (.12) (.26) (1.63) (.54)
--------- ------- ------- ------- ------- ----- ---------
Net asset value, end of period................ $ 12.50 $ 12.74 $ 11.62 $ 10.82 $ 10.36 $ 10.82 $ 11.74
--------- ------- ------- ------- ------- ----- ---------
--------- ------- ------- ------- ------- ----- ---------
TOTAL INVESTMENT RETURN**
Based on net asset value per share............ 3.32% 17.87% 9.58% 5.67% (2.08)%+++ 5.91% 9.10%+++
--------- ------- ------- ------- ------- ----- ---------
--------- ------- ------- ------- ------- ----- ---------
RATIOS TO AVERAGE NET ASSETS:
Expenses, excluding account maintenance
and distribution fees........................ 1.48% 1.46% 1.52% 1.51% 1.63%* 1.53% 1.50%*
--------- ------- ------- ------- ------- ----- ---------
--------- ------- ------- ------- ------- ----- ---------
Expenses...................................... 2.48% 2.46% 2.52% 2.51% 2.63%* 2.53% 2.50%*
--------- ------- ------- ------- ------- ----- ---------
--------- ------- ------- ------- ------- ----- ---------
Investment income (loss)--net................. (.80)% (.72)% (1.19)% .25% 1.54%* .65% .10%*
--------- ------- ------- ------- ------- ----- ---------
--------- ------- ------- ------- ------- ----- ---------
SUPPLEMENTAL DATA:
Net assets, end of period (in thousands)...... $49,647 $34,241 $22,925 $24,960 $22,623 $ 16,342 $ 1,476
--------- ------- ------- ------- ------- ----- ---------
--------- ------- ------- ------- ------- ----- ---------
Portfolio turnover............................ 40.18% 56.98% 65.93% 63.94% 34.44% 84.21% 102.77%
--------- ------- ------- ------- ------- ----- ---------
--------- ------- ------- ------- ------- ----- ---------
</TABLE>
- ------------
* Annualized
** Total investment returns exclude the effects of sales loads.
# On February 1, 1990, the Company terminated investment advisory agreements
with Nomura Capital Management, Inc. and Lombard Odier International
Portfolio Management Limited; such agreements were in addition to an
investment advisory agreement with the Investment Adviser.
## On April 1, 1994, certain of the Company's investment advisory relationships
changed. See "Management of the Company-- Advisory and Management
Arrangements" in the Statement of Additional Information.
+ Commencement of Operations for Class B shares.
++ Based on average shares outstanding during the period.
+++ Aggregate total investment return.
9
<PAGE>
FINANCIAL HIGHLIGHTS (CONCLUDED)
<TABLE><CAPTION>
FOR THE PERIOD
OCTOBER 21, 1994++
TO OCTOBER 31, 1994*
------------------------
CLASS C CLASS D
------- -------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSET VALUE:
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period...................................... $ 13.08 $ 13.39
------- -------
Investment loss--net..................................................... (.02) (.01)
Realized and unrealized loss on investments and foreign currency
transactions--net....................................................... (.55) (.57)
------- -------
Total from investment operations.......................................... (.57) (.58)
------- -------
Less dividends and distributions:
Investment income--net................................................... -- --
Realized gain on investments--net........................................ -- --
------- -------
Total dividends and distributions......................................... -- --
------- -------
Net asset value, end of period............................................ $ 12.51 $ 12.81
------- -------
------- -------
TOTAL INVESTMENT RETURN:**
Based on net asset value per share....................................... (4.36)%# (4.33)%#
------- -------
------- -------
RATIOS TO AVERAGE NET ASSETS:
Expenses, excluding account maintenance and/or distribution fees.......... 2.00%*** 1.98%***
------- -------
------- -------
Expenses.................................................................. 3.00%*** 2.23%***
------- -------
------- -------
Investment loss--net...................................................... (1.31)%*** (.67)%***
------- -------
------- -------
SUPPLEMENTAL DATA:
Net assets, end of period (in thousands).................................. $ 177 $ 1,591
------- -------
------- -------
Portfolio turnover........................................................ 40.18% 40.18%
------- -------
------- -------
</TABLE>
- -------------------
* Based on average shares outstanding during the period.
** Total investment returns exclude the effects of sales loads.
*** Annualized.
++ Commencement of operations.
# Aggregate total investment return.
10
<PAGE>
INTERNATIONAL DIVERSIFICATION
The Company, utilizing the combined purchasing power of its shareholders'
funds, provides the investor with the opportunity to participate with a minimum
investment of $1,000 ($100 for retirement plans) in a diversified portfolio of
securities in foreign markets which typically would require substantially larger
commitments. The Investment Adviser believes that, based upon past performance,
an internationally diversified portfolio offers the possibility of a higher
expected return than a portfolio comprised of securities from one securities
market. The reason for this is that historically the securities markets of many
countries have moved relatively independently of one another due to different
economic, financial, political and social factors. When such lack of
correlation, or negative correlation, in movements of these securities markets
occurs, it may reduce risk for the Company's portfolio as a whole. Other
advantages include professional management and administrative convenience.
Investments on an international basis involve certain risks not typically
involved in domestic investments, including, but not limited to, fluctuations in
foreign exchange rates, future political and economic developments, and the
possible imposition of exchange controls or other foreign governmental laws or
restrictions applicable to such investments. Securities prices in different
countries are subject to different economic, financial, political and social
factors. Since the Company will invest heavily in securities denominated or
quoted in currencies other than the U.S. dollar, changes in foreign currency
exchange rates will affect the value of securities in the portfolio and the
unrealized appreciation or depreciation of investments so far as U.S. investors
are concerned. Changes in foreign currency exchange rates relative to the U.S.
dollar will affect the U.S. dollar value of the Company's assets denominated in
that currency and the Company's yield on such assets. The rate of exchange
between the dollar and other currencies is determined by forces of supply and
demand in the foreign exchange markets. These forces are, in turn, affected by
the international balance of payments, the level of interest and inflation rates
and other economic and financial conditions, government intervention,
speculation and other factors. Moreover, individual foreign economies may differ
favorably or unfavorably from the U.S. economy in such respects as growth of
gross national product, rate of inflation, capital reinvestment, resources,
self-sufficiency and balance of payments position. Also, many of the securities
held by the Company will not be registered with the Securities and Exchange
Commission nor will the issuers thereof be subject to the reporting requirements
of such agency.
With respect to certain foreign countries, there is the possibility of
expropriation of assets, confiscatory taxation, political or social instability
or diplomatic developments which could affect investments in those countries.
There may be less publicly available information about a foreign company than
about a U.S. company, and foreign companies may not be subject to accounting,
auditing and financial reporting standards and requirements comparable to those
of U.S. companies. In addition, certain foreign investments may be subject to
foreign withholding taxes. See "Additional Information-- Taxes".
11
<PAGE>
Foreign financial markets, while generally growing in volume, typically have
substantially less volume than U.S. markets, and securities of many foreign
companies are less liquid and their prices more volatile than securities of
comparable domestic companies. The foreign markets also have different clearance
and settlement procedures, and in certain markets there have been times when
settlements have been unable to keep pace with the volume of securities
transactions making it difficult to conduct such transactions. Delays or other
problems in settlement could result in temporary periods when assets of the
Company are uninvested and no return is earned thereon. The inability of the
Company to make intended security purchases due to settlement problems could
cause the Company to miss attractive investment opportunities. Inability to
dispose of a portfolio security due to settlement problems either could result
in losses to the Company due to subsequent declines in value of the portfolio
security or, if the Company has entered into a contract to sell the security,
could result in possible liability to a purchaser. Brokerage commissions and
other transaction costs on foreign securities exchanges are generally higher
than in the United States. There is generally less governmental supervision and
regulation of exchanges, brokers and issuers in foreign countries than there is
in the United States.
The Company has made and may continue to make substantial investments in the
securities of issuers in lesser developed capital markets. The risks of
investment in foreign securities described above tend to be particularly
significant when investing in lesser developed capital markets.
The operating expense ratio of the Company can be expected to be higher than
that of an investment company investing exclusively in U.S. securities since the
expenses of the Company, such as custodial costs and the advisory fee, are
higher.
Other special considerations are that the Company may invest up to 15% (10%
to the extent required by certain state laws) of its total assets in illiquid or
otherwise not readily marketable securities and that certain foreign investments
may be subject to foreign withholding taxes.
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Company is to seek the highest total
investment return consistent with prudent risk through worldwide investment in
an internationally diversified portfolio of securities. Total investment return
is the aggregate of income and capital value changes. In pursuing this
objective, management of the Company will utilize a fully managed investment
policy which permits the Company to take a flexible investment approach and vary
its policies as to geographic diversification and types of securities based upon
its evaluation of economic and market trends throughout the world. Accordingly,
investments may be shifted among the various capital markets of the world and
among different types of equity, debt and convertible securities depending upon
management's outlook with respect to prevailing trends and developments. The
investment objective of the Company described in this paragraph is a fundamental
policy of the Company and may not be changed without the approval of the holders
of a majority of the Company's outstanding voting securities.
12
<PAGE>
The Company will invest in a diversified international portfolio of
securities of companies located throughout the world. While there are no
prescribed limits on geographic asset distribution and the Company has the
authority to invest in any country in the world, it is expected that the
Company's assets will be invested in several countries, primarily the U.S.,
Japan and Western European nations. The allocation of the Company's assets among
the various securities markets of the world will be determined by the Investment
Adviser as described under "Management of the Company". In making the allocation
of assets among the securities markets, the Investment Adviser will consider
such factors as the condition and growth potential of the various economies and
securities markets, currency and taxation considerations and other pertinent
financial, social, national and political factors. Investments on an
international basis involve certain risks not typically involved in domestic
investments. See "International Diversification". Under certain adverse
investment conditions, the Company may restrict the securities markets in which
its assets will be invested and may increase the proportion of assets invested
in the U.S. securities markets.
As of the date of this Prospectus, investment emphasis is placed on equity
securities (i.e., common stocks) or securities convertible into equities.
However, the flexible fully managed investment approach enables the Company to
switch its emphasis to debt and convertible securities or non-convertible
preferred stocks if, in the opinion of the Investment Adviser, prevailing market
or economic conditions warrant. The Investment Adviser will determine the
emphasis among equity and debt securities, including convertible securities,
based upon its evaluation as to the types of securities presently providing the
opportunity for the highest total investment return consistent with the
Company's investment objective. Accordingly, while investment emphasis is
currently on equity securities, substantial portions of the Company's assets may
be invested in debt or convertible securities.
The Company has no established rating criteria for the debt securities in
which it may invest. Fixed income investments involve credit risk, which is the
risk that an issuer of such securities will not make timely payments of interest
or principal. Credit risk is greater in lower-rated securities. Fixed income
investments also involve interest rate risk, which is the risk that the value of
such an investment may fall when interest rates rise and rise when interest
rates fall. In general, fixed income securities with longer maturities will be
subject to greater volatility resulting from interest rate fluctuations than
will fixed income securities with shorter maturities.
As described above, the Investment Adviser will allocate the Company's
assets among the various securities markets of the world. In making these
allocations, the Investment Adviser will consider the factors described in the
preceding paragraphs in seeking to realize the Company's investment objective.
The Company reserves the right, as a temporary defensive measure and to provide
for redemptions, to hold cash or cash equivalents (in U.S. dollars or foreign
currencies) and short-term securities including money market securities. The
Company may invest in the securities of foreign issuers in the form of American
Depositary Receipts (ADRs), European Depositary Receipts (EDRs), Global
Depositary Receipts (GDRs) or other securities convertible into securities of
foreign issuers.
The Company may purchase securities that are not registered ("restricted
securities") under the Securities Act of 1933, as amended, but can be offered
and sold to "qualified institutional buyers" under Rule 144A under that Act.
However, the Company will not invest more than 15% (10% to the extent required
by certain state laws) of its total assets in illiquid investments, which
includes securities for
13
<PAGE>
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 Company'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 Investment Adviser 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.
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 Company'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 Company to the extent that qualified
institutional buyers become for a time uninterested in purchasing these
restricted securities.
HEDGING TECHNIQUES
The Company may engage in various portfolio strategies to hedge its
portfolio against investment, interest rate and currency risks. These strategies
include the use of options on portfolio securities, stock index options, stock
index futures, financial futures, currency options, currency futures, options on
such futures and forward foreign exchange transactions. The Company may enter
into such transactions only in connection with its hedging strategies. While the
Company's net asset value will continue to fluctuate and no assurance can be
given that the Company's hedging transactions will be effective, the Investment
Adviser believes that the ability of the Company to engage in these hedging
transactions would enhance the Company's ability to reduce the volatility of the
net asset value of Company shares. Furthermore, the Company will only engage in
hedging activities from time to time and may not necessarily be engaging in
hedging activities when movements in the equity markets, interest rates or
currency exchange rates occur. When the Company engages in transactions
denominated in foreign currencies, it will be subject to the risks of adverse
changes in the exchange rates between such foreign currencies and the U.S.
dollar, the currency used to value the Company's assets. Reference is made to
the Statement of Additional Information for further information concerning these
strategies.
Although certain risks are involved in options and futures transactions (as
discussed below in "Risk Factors in Options, Futures and Currency
Transactions"), the Investment Adviser believes that, because the Company will
only engage in these transactions for hedging purposes, the options and futures
portfolio strategies of the Company will not subject the Company to the risks
frequently associated with the speculative use of options and futures
transactions. Tax requirements may limit the Company's ability to engage in the
hedging transactions and strategies discussed below.
Set forth below is a description of the hedging instruments the Company may
utilize with respect to investment, interest rate and currency risks.
Writing Covered Call Options. The Company is authorized to write (i.e.,
sell) covered call options on the securities in which it may invest and to enter
into closing purchase transactions with respect to certain of such options. A
covered call option is an option where the Company, in return for a premium,
14
<PAGE>
gives another party a right to buy specified securities owned by the Company at
a specified future date and price set at the time of the contract. By writing
covered call options, the Company gives up the opportunity, while the option is
in effect, to profit from any price increase in the underlying security above
the option exercise price. In addition, the Company's ability to sell the
underlying security will be limited while the option is in effect unless the
Company effects a closing purchase transaction. A closing purchase transaction
cancels out the Company's position as the writer of an option by means of an
offsetting purchase of an identical option prior to the expiration of the option
it has written. Covered call options serve as a partial hedge against the price
of the underlying security declining.
Purchasing Put Options. The Company is authorized to purchase put options to
hedge against a decline in the market value of its securities. By buying a put
option the Company has a right to sell the underlying security at the stated
exercise price, thus limiting the Company's risk of loss through a decline in
the market value of the security until the put option expires. The amount of any
appreciation in the value of the underlying security will be partially offset by
the amount of the premium paid for the put option and any related transaction
costs. Prior to its expiration, a put option may be sold in a closing sale
transaction and profit or loss from the sale will depend on whether the amount
received is more or less than the premium paid for the put option plus the
related transaction costs. A closing sale transaction cancels out the Company's
position as the purchaser of an option by means of an offsetting sale of an
identical option prior to the expiration of the option it has purchased. The
Company will not purchase put options on securities (including stock index
options discussed below) if, as a result of such purchase, the aggregate cost of
all outstanding options on securities held by the Company would exceed 5% of the
market value of the Company's total assets.
Stock Index Options and Futures and Financial Futures. The Company is
authorized to engage in transactions in stock index options and futures and
financial futures and related options on such futures. The Company may purchase
or write put and call options on stock indices to hedge against the risks of
market-wide stock price movements in the securities in which the Company
invests. Options on indices are similar to options on securities except that, on
settlement, the parties to the contract pay or receive an amount of cash equal
to the difference between the closing value of the index on the relevant
valuation date and the exercise price of the option times a specified multiple.
The Company may invest in stock index options based on a broad market index,
e.g., the S&P 500 Index, or on a narrow index representing an industry or market
segment, e.g., the AMEX Oil & Gas Index.
The Company may also purchase and sell stock index futures contracts and
financial futures contracts ("futures contracts") as a hedge against adverse
changes in the market value of its portfolio securities as described below. A
futures contract is an agreement between two parties which obligates the
purchaser of the futures contract to buy and the seller of a futures contract to
sell a particular commodity for a set price on a future date. Unlike most other
futures contracts, a stock index futures contract does not require actual
delivery of a commodity, in this case securities, but results in cash settlement
based upon the difference in value of the stock index between the time the
contract was entered into and the time of its settlement. The Company may effect
transactions in stock index futures contracts in connection with equity
securities in which it invests and in financial futures contracts in connection
with the debt securities in which it invests. Transactions by the Company in
stock index futures and financial futures are subject to limitations as
described below under "Restrictions on the Use of Futures Transactions".
15
<PAGE>
The Company may sell financial futures contracts in anticipation of an
increase in the general level of interest rates. Generally, as interest rates
rise, the market values of fixed-income securities which may be held by the
Company as a temporary defensive measure will fall, thus reducing the net asset
value of the Company. However, as interest rates rise, the value of the
Company's short position in the futures contract will also tend to increase,
thus offsetting all or a portion of the depreciation in the market value of the
Company's investments which are being hedged. While the Company will incur
commission expenses in selling and closing out futures positions, these
commissions are generally less than the transaction expenses which the Company
would have incurred had the Company sold portfolio securities in order to reduce
its exposure to increases in interest rates. The Company also may purchase
financial futures contracts in anticipation of a decline in interest rates when
it is not fully invested in a particular market in which it intends to make
investments to gain market exposure that may in part or entirely offset an
increase in the cost of securities it intends to purchase. It is anticipated
that, in a substantial majority of these transactions, the Company will purchase
securities upon termination of the futures contract.
The Company is authorized to sell futures contracts in anticipation of or
during a market decline to attempt to offset the decrease in market value of the
Company's securities portfolio that might otherwise result. When the Company is
not fully invested in the securities markets and anticipates a significant
market advance, it would be able to purchase futures in order to gain rapid
market exposure that may in part or entirely offset increases in the cost of
securities that the Company intends to purchase. As such purchases are made, an
equivalent amount of futures contracts will be terminated by offsetting sales.
The Company does not consider purchases of futures contracts to be a speculative
practice under these circumstances. It is anticipated that, in a substantial
majority of these transactions, the Company will purchase such securities upon
termination of the long futures position, whether the long position is the
purchase of a futures contract or the purchase of a call option or the writing
of a put option on a future, but under unusual circumstances (e.g., the Company
experiences a significant amount of redemptions), a long futures position may be
terminated without the corresponding purchase of securities.
The Company also is authorized to purchase and write call and put options on
futures contracts and stock indices in connection with its hedging activities.
Generally, these strategies would be utilized under the same market and market
sector conditions (i.e., conditions relating to specific types of investments)
in which the Company enters into futures transactions. The Company may purchase
put options or write call options on futures contracts and stock indices rather
than selling the underlying futures contract in anticipation of a decrease in
the market value of its securities. Similarly, the Company can purchase call
options, or write put options on futures contracts and stock indices, as a
substitute for the purchase of such futures to hedge against the increased cost
resulting from an increase in the market value of securities which the Company
intends to purchase.
The Company is also authorized to engage in options and futures transactions
on U.S. and foreign exchanges and in options in the over-the-counter markets
("OTC options"). In general, exchange traded contracts are third-party contracts
(i.e., performance of the parties' obligations is guaranteed by an exchange or
clearing corporation) with standardized strike prices and expiration dates. OTC
options transactions are two-party contracts with prices and terms negotiated by
the buyer and seller. See "Restrictions on OTC Options" below for information as
to restrictions on the use of OTC options.
16
<PAGE>
To trade futures contracts, the Company is not required to deposit funds
equal to the value of the futures contract. The Company need only make a
deposit, called an "initial margin deposit", equal to a small percentage
(typically between 2% and 15%) of the value of the futures contract. As a
result, a relatively small adverse move in the price of a futures contract may
result in immediate and substantial losses to the Company. For example, if at
the time of purchase 10% of the price of a futures contract is deposited as
margin, a 10% decrease in the price of that contract would, if the contract were
then closed out, result in a total loss of the initial margin deposit before any
deduction for brokerage commissions and other transaction costs. A decrease of
more than 10% would result in a loss of more than the total initial margin
deposit.
To some extent, options on futures contracts are even more highly leveraged
than futures contracts. For example, if an in-the-money call (put) option is
sold for its intrinsic value plus a premium representing the time value of that
option, a 10% rise (drop) in the value of the underlying futures contract does
not create a loss equal to just 10% of the value of the option. Such a rise
(drop) creates a loss approximately equal to 10% of the value of the underlying
interest, less the time value, which loss may be many times greater than the
price for which the Company sold the option. In addition, investors who sell
options are required only to deposit a percentage of the value of the option at
the time of sale as margin, thereby leveraging the investment even further.
The Company is authorized to purchase or sell listed or over-the-counter
foreign currency options, foreign currency futures and related options on
foreign currency futures as a short or long hedge against possible variations in
foreign exchange rates. Such transactions could be effected with respect to
hedges on non-U.S. dollar denominated securities owned by the Company, sold by
the Company but not yet delivered, or committed or anticipated to be purchased
by the Company. As an illustration, the Company may use such techniques to hedge
the stated value in U.S. dollars of an investment in a yen denominated security.
In such circumstances, for example, the Company can purchase a foreign currency
put option enabling it to sell a specified amount of yen for dollars at a
specified price by a future date. To the extent the hedge is successful, a loss
in the value of the yen relative to the dollar will tend to be offset by an
increase in the value of the put option. To offset, in whole or in part, the
cost of acquiring such a put option, the Company may also sell a call option
which, if exercised, requires it to sell a specified amount of yen for dollars
at a specified price by a future date (a technique called a "straddle"). By
selling such a call option in this illustration, the Company gives up the
opportunity to profit without limit from increases in the relative value of the
yen to the dollar. The Investment Adviser believes that "straddles" of the type
which may be utilized by the Company constitute hedging transactions and are
consistent with the policies described above.
Certain differences exist between these foreign currency hedging
instruments. Foreign currency options provide the holder thereof the right to
buy or sell a currency at a fixed price on a future date. A futures contract on
a foreign currency is an agreement between two parties to buy and sell a
specified amount of a currency for a set price on a future date. Futures
contracts and options on futures contracts are traded on boards of trade or
futures exchanges. The Company will not speculate in foreign currency options,
futures or related options. Accordingly, the Company will not hedge a currency
substantially in excess of the market value of the securities denominated in
such currency which it owns, the expected acquisition price of securities which
it has committed or anticipates to purchase which are denominated in such
currency and, in the case of securities which have been sold by the Company but
not yet
17
<PAGE>
delivered, the proceeds thereof in its denominated currency. Further, the
Company will segregate at its custodian U.S. Government or other high quality
securities having a market value substantially representing any subsequent net
decrease in the market value of such hedged positions, including net positions
with respect to cross-currency hedges. The Company will not incur potential net
liabilities of more than 20% of its total assets from foreign currency options,
futures or related options.
Forward Foreign Exchange Transactions. The Company has authority to deal in
forward foreign exchange between currencies of the different countries in which
it will invest as a hedge against possible variations in the foreign exchange
rate between these currencies. This is accomplished through contractual
agreements to purchase or sell a specified currency at a specified future date
(up to one year) and price set at the time of the contract. The Company's
dealings in forward foreign exchange will be limited to hedging involving either
specific transactions or portfolio positions. Transaction hedging is the
purchase or sale of forward foreign currency with respect to specific
receivables or payables of the Company accruing in connection with the purchase
and sale of its portfolio securities, the sale and redemption of shares of the
Company or the payment of dividends and distributions by the Company. Position
hedging is the sale of forward foreign currency with respect to portfolio
security positions denominated or quoted in such foreign currency. The Company
will not speculate in forward foreign exchange. The Company will not attempt to
hedge all of its foreign portfolio positions. The Company may not commit more
than 15% of its assets to position hedging contracts.
In connection with its trading in forward foreign currency contracts, the
Company will contract with a foreign or domestic bank, or foreign or domestic
securities dealer, to make or take future delivery of a specified amount of a
particular currency. There are no limitations on daily price moves in such
forward contracts, and banks and dealers are not required to continue to make
markets in such contracts. There have been periods during which certain banks
or dealers have refused to quote prices for such forward contracts or have
quoted prices with an unusually wide spread between the price at which the bank
or dealer is prepared to buy and that at which it is prepared to sell.
Governmental imposition of credit controls might limit any such forward
contract trading. With respect to its trading of forward contracts, if any, the
Company will be subject to the risk of bank or dealer failure and the inability
of, or refusal by, a bank or dealer to perform with respect to such contacts.
Any such default would deprive the Company of any profit potential or force the
Company to cover its commitments for resale, if any, at the then-market price
and could result in a loss to the Company.
Restrictions on the Use of Futures Transactions. Regulations of the
Commodity Futures Trading Commission ("CFTC") applicable to the Company provide
that the futures trading activities described herein will not result in the
Company being deemed a "commodity pool", as defined under such regulations if
the Company adheres to certain restrictions. In particular, the Company may
purchase and sell futures contracts and options thereon (i) for bona fide
hedging purposes, and (ii) for non-hedging purposes, if the aggregate initial
margin and premiums required to establish positions in such contracts and
options does not exceed 5% of the liquidation value of the Company's portfolio,
after taking into account unrealized profits and unrealized losses on any such
contracts and options.
When the Company purchases a futures contract, or writes a put option or
purchases a call option thereon, an amount of cash and cash equivalents will be
deposited in a segregated account with the Company's custodian so that the
amount so segregated, plus the amount of initial and variation margin
18
<PAGE>
held in the account of its broker, equals the market value of the futures
contract, thereby ensuring that the use of such futures contract is unleveraged.
Restrictions on OTC Options. The Company will engage in OTC options,
including over-the-counter stock index options, over-the-counter foreign
currency options and options on foreign currency futures, only with member banks
of the Federal Reserve System and primary dealers in U.S. Government securities
or with affiliates of such banks or dealers which have capital of at least $50
million or whose obligations are guaranteed by an entity having capital of at
least $50 million.
The staff of the Securities and Exchange Commission has taken the position
that purchased OTC options and the assets used as cover for written OTC options
are illiquid securities. Therefore, the Company has adopted an investment policy
pursuant to which it will not purchase or sell OTC options (including OTC
options on futures contracts) if, as a result of such transactions, the sum of
the market value of OTC options currently outstanding which are held by the
Company, the market value of the underlying securities covered by OTC call
options currently outstanding which were sold by the Company and margin deposits
on the Company's existing OTC options on futures contracts exceeds 15% (10% to
the extent required by certain state laws) of the total assets of the Company,
taken at market value, together with all other assets of the Company which are
illiquid or are not otherwise readily marketable. However, if an OTC option is
sold by the Company to a primary U.S. Government securities dealer recognized by
the Federal Reserve Bank of New York and if the Company has the unconditional
contractual right to repurchase such OTC option from the dealer at a
predetermined price, then the Company will treat as illiquid such amount of the
underlying securities as is equal to the repurchase price less the amount by
which the option is "in-the-money" (i.e., the current market value of the
underlying security minus the option's strike price). The repurchase price with
primary dealers is typically a formula price which is generally based on a
multiple of the premium received for the option, plus the amount by which the
option is "in-the-money". This policy as to OTC options is not a fundamental
policy of the Company and may be amended by the Board of Directors of the
Company without the approval of the Company's shareholders. However, the Company
will not change or modify this policy prior to change or modification by the
Securities and Exchange Commission staff of its position.
Risk Factors in Options, Futures and Currency Transactions. Utilization of
options and futures transactions to hedge the portfolio involves the risk of
imperfect correlation in movements in the price of options and futures and
movements in the price of the securities or currencies which are the subject of
the hedge. If the price of the options or futures moves more or less than the
price of hedged securities or currencies, the Company will experience a gain or
loss which will not be completely offset by movements in the price of the
subject of the hedge. The successful use of options and futures also depends on
the Investment Adviser's ability to correctly predict price movements in the
market involved in a particular options or futures transaction. To compensate
for imperfect correlations, the Company may purchase or sell stock index options
or futures contracts in a greater dollar amount than the hedged securities if
the volatility of the hedged securities is historically greater than the
volatility of the stock index options or futures contracts. Conversely, the
Company may purchase or sell fewer stock index options or futures contracts if
the volatility of the price of the hedged securities is historically less than
that of the stock index options or futures contracts. The risk of imperfect
correlation generally tends to diminish as the maturity date of the stock index
option or futures contract approaches.
19
<PAGE>
The Company intends to enter into options and futures transactions, on an
exchange or in the over-the-counter market, only if there appears to be a liquid
secondary market for such options or futures or, in the case of over-the-counter
transactions, the Investment Adviser believes the Company can receive on each
business day at least two independent bids or offers. However, there can be no
assurance that a liquid secondary market will exist at any specific time. Thus,
it may not be possible to close an options or futures position. The inability to
close options and futures positions also could have an adverse impact on the
Company's ability to hedge effectively its portfolio. There is also the risk of
loss by the Company of margin deposits or collateral in the event of bankruptcy
of a broker with whom the Company has an open position in an option, a futures
contract or related option.
The exchanges on which options on portfolio securities and currency options
are traded have generally established limitations governing the maximum number
of call or put options on the same underlying security or currency (whether or
not covered) which may be written by a single investor, whether acting alone or
in concert with others (regardless of whether such options are written on the
same or different exchanges or are held or written in one or more accounts or
through one or more brokers). "Trading limits" are imposed on the maximum number
of contracts which any person may trade on a particular trading day. The
Investment Adviser does not believe that these trading and position limits will
have any adverse impact on the portfolio strategies for hedging the Company's
portfolio.
Because the Company will engage in the options and futures transactions
described above solely in connection with its hedging activities, the Investment
Adviser does not believe that such options and futures transactions necessarily
will have any significant effect on the Company's portfolio turnover.
OTHER INVESTMENT PRACTICES
Portfolio Transactions. In executing portfolio transactions, the Investment
Adviser seeks to obtain the best net results for the Company, 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 Company does not necessarily pay the lowest commission or
spread available. The Company has no obligation to deal with any broker or group
of brokers in the execution of transactions in portfolio securities. Under the
Investment Company Act, persons affiliated with the Company and persons who are
affiliated with such affiliated persons, including Merrill Lynch, are prohibited
from dealing with the Company as a principal in the purchase and sale of
securities unless a permissive order allowing such transactions is obtained from
the Securities and Exchange Commission. Affiliated persons of the Company, and
affiliated persons of such affiliated persons, may serve as the Company's broker
in transactions conducted on an exchange and in over-the-counter transactions
conducted on an agency basis and may receive brokerage commissions from the
Company. In addition, consistent with the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., the Company may consider sales of
shares of the Company as a factor in the selection of brokers or dealers to
execute portfolio transactions for the Company. It is expected that the majority
of the shares of the Company will be sold by Merrill Lynch. Brokerage
commissions and other
20
<PAGE>
transaction costs on foreign stock exchange transactions
are generally higher than in the U.S., although the Company will endeavor to
achieve the best net results in effecting its portfolio transactions.
Lending of Portfolio Securities. The Company 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 and receive
collateral in cash or securities issued or guaranteed by the U.S. Government
which will be maintained at all times in an amount equal to at least 100% of the
current market value of the loaned securities. During the period of such a loan,
the Company receives the income on both the loaned securities and the collateral
and thereby increases its yield. In the event that the borrower defaults on its
obligation to return borrowed securities because of insolvency or otherwise, the
Company could experience delays and costs in gaining access to the collateral
and could suffer a loss to the extent the value of the collateral falls below
the market value of the borrowed securities.
INVESTMENT RESTRICTIONS
The Company has adopted a number of restrictions and policies relating to
the investment of its assets and its activities, which are fundamental policies
and may not be changed without the approval of the holders of a majority of the
Company's outstanding voting securities, as defined in the Investment Company
Act. Among the more significant restrictions, the Company may not:
. Make any investment inconsistent with the Company's classification as a
diversified company under the Investment Company Act.
. 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).
MANAGEMENT OF THE COMPANY
BOARD OF DIRECTORS
The Board of Directors of the Company consists of six individuals, five of
whom are not "interested persons" of the Company as defined in the Investment
Company Act. The Board of Directors of the Company is responsible for the
overall supervision of the operations of the Company and performs the various
duties imposed on the directors of investment companies by the Investment
Company Act.
The Directors of the Company are:
ARTHUR ZEIKEL*--President of the Investment Adviser; President and
Director of Princeton Services, Inc.; Executive Vice President of Merrill
Lynch & Co., Inc. ("ML & Co."); Executive Vice President of Merrill Lynch;
Director of the Distributor.
DONALD CECIL--Special Limited Partner of Cumberland Partners (an
investment partnership).
- ------------
* Interested person, as defined in the Investment Company Act, of the Company.
21
<PAGE>
EDWARD H. MEYER--Chairman of the Board, President and Chief Executive
Officer of Grey Advertising Inc.
CHARLES C. REILLY--Self-employed financial consultant; former President
and Chief Investment Officer of Verus Capital, Inc.; former Senior Vice
President of Arnhold and S. Bleichroeder, Inc.; Adjunct Professor, Columbia
University Graduate School of Business.
RICHARD R. WEST--Professor of Finance, and Dean from 1984 to 1993, New
York University Leonard N. Stern School of Business Administration.
EDWARD D. ZINBARG--Former Executive Vice President of The Prudential
Insurance Company of America.
ADVISORY AND MANAGEMENT ARRANGEMENTS
The Company's investment adviser is Merrill Lynch Asset Management, L.P.,
which does business as Merrill Lynch Asset Management (the "Investment
Adviser"). The investment advisory agreement with the Investment Adviser (the
"Investment Advisory Agreement") provides that, subject to the direction of the
Board of Directors of the Company, the Investment Adviser is responsible for the
actual management of the Company's portfolio. The 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, located at 800 Scudders Mill Road, Plainsboro, New
Jersey 08536, is owned and controlled by ML & Co., a financial services holding
company and the parent of Merrill Lynch. The Investment Adviser, or an
affiliate, Fund Asset Management, L.P. ("FAM"), acts as the investment adviser
to more than 130 other registered investment companies and provides investment
advisory services to individual and institutional accounts. As of February 28,
1995, the Investment Adviser and FAM had a total of approximately $168.2 billion
in investment company and other portfolio assets under management, including
accounts of certain affiliates of the Investment Adviser.
As permitted by the Investment Advisory Agreement, the Investment Adviser
had entered into separate investment research agreements with Nomura Capital
Management, Inc. ("NCM") and Lombard Odier International Portfolio Management
Limited ("LOIPM") (the "Investment Research Agreements") pursuant to which NCM
and LOIPM had furnished the Investment Adviser with economic research,
securities analyses and investment recommendations and had reviewed and rendered
investment research with respect to the Company. The Investment Research
Agreement between the Investment Adviser and NCM recognized that NCM could enter
into a separate investment research agreement (the "Sub-Research Agreement")
with Nomura Investment Management Co., Ltd. ("NIMCO"). The Investment Research
Agreements and related Sub-Research Agreement terminated on April 1, 1994. The
Investment Adviser continues to provide services to the Company pursuant to the
Investment Advisory Agreement.
As compensation for its services to the Company, the Investment Adviser
receives monthly compensation at the annual rate of 1.0% of the average daily
net assets of the Company. This fee is higher than that charged most mutual
funds, but the Company believes it is justified by the special international
nature of the Company. Until April 1, 1994, the Investment Adviser compensated
NCM
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<PAGE>
and LOIPM for investment research pursuant to the Investment Research
Agreements at the annual rates of 0.20% and 0.15%, respectively, of the
Company's average daily net assets. Under the Sub-Research Agreement, NCM
compensated NIMCO for investment research in an amount determined by NCM and
NIMCO, but not in excess of the amount of compensation NCM received from the
Investment Adviser. For the fiscal year ended November 30, 1994, the Investment
Adviser earned fees of $3,780,445, of which $175,156 was paid to LOIPM and
$233,542 was paid to NCM under the terms of their respective Investment Research
Agreements. At February 28, 1995, the Company's net assets were approximately
$359.1 million. At such level, the annual advisory fee would aggregate
approximately $3.6 million.
Peter A. Lehman is responsible for the day-to-day management of the
Company's portfolio. Mr. Lehman has been a portfolio manager for global natural
resource funds managed by the Investment Adviser since 1994 and was a senior
fund analyst of the Company from 1992 until 1994. Prior thereto, Mr. Lehman was
a global equity and natural resources portfolio manager and basic industry
analyst for the Prudential Insurance Company. Mr. Lehman has been primarily
responsible for the management of the Company's portfolio since June 1994.
The Company pays certain expenses incurred in its operations, including,
among other things, the investment advisory fees, legal and audit fees,
unaffiliated directors' fees and expenses, registration fees, custodian and
transfer agency fees, accounting and pricing costs, and certain of the costs of
printing proxies, shareholder reports, prospectuses and statements of additional
information. Also, accounting services are provided to the Company by the
Investment Adviser, and the Company reimburses the Investment Adviser for its
costs in connection with such services on a semi-annual basis. For the fiscal
year ended November 30, 1994, the amount of such reimbursement was $138,310. For
the fiscal year ended November 30, 1994, the ratio of total expenses to average
net assets for Class A shares was 1.44%, and the ratio of total expenses to
average net assets for Class B shares was 2.48%. For the fiscal
period October 21, 1994 (commencement of operations for Class C and Class D
shares) to November 30, 1994, the ratio of total expenses to average net assets
for Class C shares was 3.00% (annualized), and the ratio of total expenses to
average net assets for Class D shares was 2.23% (annualized).
CODE OF ETHICS
The Board of Directors of the Company 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
23
<PAGE>
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 Company within
periods of trading by the Company in the same (or equivalent) security (15 or 30
days depending upon the transaction).
TRANSFER AGENCY SERVICES
Financial Data Services, Inc. (the "Transfer Agent"), which is a
wholly-owned subsidiary of ML & Co., acts as the Company'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
an annual fee of $11.00 per Class A or Class D shareholder account and $14.00
per Class B or Class C shareholder account, nominal miscellaneous fees (e.g.,
account closing fees) and is entitled to reimbursement for out-of-pocket
expenses incurred by it under the Transfer Agency Agreement. For the fiscal year
ended November 30, 1994, the Company paid $632,037 to the Transfer Agent
pursuant to the Transfer Agency Agreement. At February 28, 1995, the Company had
46,924 Class A shareholder accounts, 5,527 Class B shareholder accounts
(including certain subaccounts on which the standard annual transfer agency fees
are assessed), 42 Class C shareholder accounts and 269 Class D shareholder
accounts. At this level of accounts, the annual fee payable to the Transfer
Agent would aggregate approximately $597,089, plus miscellaneous and
out-of-pocket expenses.
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 Company. Shares of the Company are offered continuously for sale
by the Distributor and other eligible securities dealers (including Merrill
Lynch). Shares of the Company 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 Company 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
PricingSM System, as described below. 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 includes 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 that day, provided the Distributor in
turn receives the orders from the securities dealer 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 Company or the
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<PAGE>
Distributor may suspend the continuous offering of the Company'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 Company. 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 Transfer Agent are not subject to the processing fee.
Shares of the Company may be purchased by residents of Arizona only if such
investors have (i) a net worth (exclusive of home, home furnishings and
automobiles) of not less than $100,000 or (ii) a net worth (as computed above)
of not less than $30,000 and an annual gross income of not less than $30,000.
The Company issues four classes of shares under the Merrill Lynch Select
PricingSM 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 Company with the investment thereafter being
subject to a contingent deferred sales charge 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 PricingSM System is
set forth under "Merrill Lynch Select PricingSM System" on page 4.
Each Class A, Class B, Class C and Class D share of the Company represents
identical interests in the investment portfolio of the Company 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, are imposed directly against those classes and not against all
assets of the Company and, accordingly, such charges do 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 Company for each class of shares are
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
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<PAGE>
distribution of the shares of the Company. 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 PricingSM System,
followed by a more detailed description of each class.
[CAPTION]
<TABLE><CAPTION>
ACCOUNT
MAINTENANCE DISTRIBUTION
CLASS SALES CHARGE(1) FEE FEE CONVERSION FEATURE
<S> <C> <C> <C> <C>
A Maximum 5.25% initial sales charge(2)(3) No No No
B CDSC for a period of 4 years, at a rate 0.25% 0.75% B shares convert to
of 4.0% during the first year, D shares
decreasing 1.0% annually to 0.0% automatically
after
approximately
eight years(4)
C 1.0% CDSC for one year 0.25% 0.75% No
D Maximum 5.25% initial sales charge(3) 0.25% No No
</TABLE>
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(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. Class A and Class D share
purchases of $1,000,000 or more will 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 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 Company 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.
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 shares rather than Class D
shares because there is an account maintenance fee imposed on Class D shares.
(footnotes continued on following page)
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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. If the 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. Class A purchases made prior to
October 21, 1994, may be subject to a CDSC 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 in lieu of paying an initial sales charge. 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 $1,000,000 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 Company will receive a concession equal to most of the sales
charge, they may be deemed to be underwriters under the Securities Act. During
the fiscal year ended November 30, 1994, the Company sold 11,383,578 Class A
shares for aggregate net proceeds of $152,341,771. The gross sales charges for
the sale of Class A shares of the Company for that year were $142,376, of which
$8,688 and $133,688 were received by the Distributor and Merrill Lynch,
respectively. For such fiscal year, the Distributor received no CDSCs with
respect to redemption within one year after purchase of Class A
shares purchased subject to front-end sales charge waivers. During the fiscal
period October 21, 1994 (commencement of operations for Class D shares) to
November 30, 1994, the Company sold 24,298 Class D shares for aggregate net
proceeds of $323,555. The gross sales charges for the sale of Class D shares of
the Company for that period were $2,724, of which $154 and $2,570 were received
by the Distributor and Merrill Lynch, respectively. During such period, the
Distributor did not receive CDSCs with respect to redemption within one year
after purchase of Class D shares purchased subject to front-end sales charge
waivers.
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 who currently own Class A shares of the Company in a
shareholder account, including participants in the Merrill Lynch BlueprintSM
Program, are entitled to purchase additional Class A shares of the Company in
that account. Certain employer sponsored 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
27
<PAGE>
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 TMASM 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 will be 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
Company. 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 Company also may purchase Class A shares
of the Company if certain conditions set forth in the Statement of Additional
Information are met. For example, Class A shares of the Company 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 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, without sales charge, to an
investor who has a business relationship with a Merrill Lynch financial
consultant, 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 are offered with reduced sales charges and, in certain
circumstances, at net asset value, to participants in the Merrill Lynch
BlueprintSM 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.
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,
28
<PAGE>
while Class C shares are subject only to a one year 1.0% 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 Company 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". The proceeds
from the account maintenance fees are used to compensate Merrill Lynch for
providing continuing account maintenance activities.
Class B and Class C shares are sold without an initial sales charge so that
the Company 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 Company 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 Company 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 Company, 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
Company 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 Company
exercising the exchange privilege described under "Shareholder
Services--Exchange Privilege" will continue to be subject to the Company'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 current market
value 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.
29
<PAGE>
The following table sets forth the rates of the Class B CDSC:
<TABLE><CAPTION>
CLASS B CDSC
AS A PERCENTAGE
YEAR SINCE PURCHASE OF DOLLAR AMOUNT
PAYMENT MADE SUBJECT TO 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 November 30, 1994, the Distributor received CDSCs of
$54,858 with respect to redemptions of Class B shares, all of which were paid to
Merrill Lynch. For the fiscal period October 21, 1994 (commencement of
operations for Class C shares) to November 30, 1994, the Distributor received no
CDSCs with respect to the redemption of Class C shares.
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 of shares
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 the 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 2.0% (the
applicable rate in the third year after purchase for shares purchased on or
after October 21, 1994).
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 BlueprintSM 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
30
<PAGE>
such account at the time of redemption. 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 after 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.
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 Company. 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 Company 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
Company held in the account on the Conversion Date will be converted to Class D
shares of the Company.
Share certificates for Class B shares of the Company 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
31
<PAGE>
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.
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.
DISTRIBUTION PLANS
The Company 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 Company 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 Company 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 Company 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
Company 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 Company 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 Company,
including payments to financial consultants for selling Class B and Class C
shares of the Company. 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 Company in that the
deferred sales charges provide for the financing of the distribution of the
Company's Class B and Class C shares.
For the fiscal year ended November 30, 1994, the Company paid the
Distributor $501,902 pursuant to the Class B Distribution Plan (based on average
net assets subject to the Class B Distribution Plan of approximately $50.2
million), all of which was paid to Merrill Lynch for providing
32
<PAGE>
account maintenance and distribution-related activities and services in
connection with Class B shares. For the fiscal period October 21, 1994
(commencement of operations for Class C shares) to November 30, 1994, the
Company paid the Distributor $159 pursuant to the Class C Distribution Plan
(based on average net assets subject to the Class C Distribution Plan of
approximately $153,115), all of which was paid to Merrill Lynch for providing
account maintenance and distribution-related activities and services in
connection with Class C shares. For the fiscal period October 21, 1994
(commencement of operations for Class D shares) to November 30, 1994, the
Company paid the Distributor $180 pursuant to the Class D Distribution Plan
(based on average net assets subject to such Distribution Plan of approximately
$692,564), all of which was paid to Merrill Lynch for providing account
maintenance services in connection with Class D shares. At February 28, 1995,
the net assets of the Company subject to the Class B Distribution Plan
aggregated approximately $45.2 million. At this asset level, the annual fee
payable pursuant to the Class B Distribution Plan would aggregate approximately
$452,166. At February 28, 1995, the net assets of the Company subject to the
Class C Distribution Plan aggregated approximately $254,749. At this asset
level, the annual fee payable pursuant to the Class C Distribution Plan would
aggregate approximately $2,547. At February 28, 1995, the net assets of the
Company subject to the Class D Distribution Plan aggregated approximately
$2.9 million. At this asset level, the annual fee payable pursuant to the Class
D Distribution Plan would aggregate approximately $7,346.
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 CDSCs 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.
At December 31, 1994, the fully allocated accrual expenses incurred by the
Distributor and Merrill Lynch for the period since the commencement of the
offering of Class B shares exceeded fully allocated accrual revenues for such
period by approximately $796,000 (1.64% of Class B net assets at that date). As
of December 31, 1994, for Class B shares, direct cash revenues for the period
since commencement of the offering of Class B shares exceeded direct cash
expenses by $829,568 (1.71% of Class B net assets at that date). Similar fully
allocated accrual data is not yet available with respect to Class C shares
which the Company commenced offering to the public on October 21, 1994. As of
December 31, 1994, for Class C shares, direct cash expenses for the period since
commencement of the offering of Class C shares exceeded direct cash revenues by
$934 (0.40% of Class C net assets at that date).
33
<PAGE>
The Company 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 Company 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, the 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 Company, the maximum sales charge rule
limits the aggregate of distribution fee payments and CDSCs payable by the
Company to (1) 6 1/4% 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 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 interest charges at any
time. To the extent payments would exceed the voluntary maximum, the Company
will not make further payments of the distribution fee with respect to Class B
shares, and any CDSC will be paid to the Company rather than to the Distributor;
however, the Company 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.
REDEMPTION OF SHARES
The Company is required to redeem for cash all full and fractional shares of
the Company on 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
34
<PAGE>
or less than the shareholder's cost, depending on the market value of the
securities held by the Company at such time.
REDEMPTION
A shareholder wishing to redeem shares may do so by tendering the shares
directly to the Transfer Agent, 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
Financial Data Services, Inc., Transfer Agency Mutual Fund Operations, 4800 Deer
Lake Drive East, Jacksonville, Florida 32246-6484. Proper notice of redemption
in the case of shares deposited with the Transfer Agent may be accomplished by a
written letter requesting redemption. Proper notice of redemption in the case of
shares for which certificates have been issued may be accomplished by a written
letter as noted above accompanied by certificates for the shares to be redeemed.
The notice in either event requires the signatures of all persons in whose names
the shares are registered, signed exactly as their names appear on the Transfer
Agent's register or on the certificate, as the case may be. The signature(s) on
the redemption request must be guaranteed by an "eligible guarantor institution"
(including, for example, Merrill Lynch branch offices and certain other
financial institutions) as such is defined in Rule 17Ad-15 under the Securities
Exchange Act of 1934, as amended, the existence and validity of which may be
verified by the Transfer Agent through the use of industry publications.
Notarized signatures are not sufficient. In certain instances, the Transfer
Agent may require additional documents, such as, but not limited to, trust
instruments, death certificates, appointments as executor or administrator, or
certificates of corporate authority. For shareholders redeeming directly with
the Transfer Agent, payment will be mailed within seven days of receipt of a
proper notice of redemption.
At various times the Company may be requested to redeem shares for which it
has not yet received good payment. The Company may delay or cause to be delayed
the mailing of a redemption check until such time as good payment (e.g., cash or
certified check drawn on a U.S. bank) has been collected for the purchase of
such shares, which will not exceed 10 days.
REPURCHASE
The Company also will repurchase shares through a shareholder's listed
securities dealer. The Company normally will accept orders to repurchase shares
by wire or telephone from dealers for their customers at the net asset value
next computed after receipt of the order by the dealer, provided that the
request for repurchase is received by the dealer prior to the close of business
on the New York Stock Exchange on the day received and that such request is
received by the Company from such dealer not later than 30 minutes after the
close of business on the New York Stock Exchange (generally, 4:00 p.m., New York
time) on the same day. Dealers have the responsibility of submitting such
repurchase requests to the Company not later than 30 minutes after the close of
business on the New York Stock Exchange in order to obtain that day's closing
price.
The foregoing repurchase arrangements are for the convenience of
shareholders and do not involve a charge by the Company (other than any
applicable CDSC). Securities firms which do not have selected dealer agreements
with the Distributor, however, may impose a transaction charge on the
35
<PAGE>
shareholder for transmitting the notice of repurchase to the Company. Merrill
Lynch may charge its customers a processing fee (presently $4.85) to confirm a
repurchase of shares to such customers. Redemptions directly through the
Transfer Agent are not subject to the processing fee. The Company reserves the
right to reject any order for repurchase, which right of rejection might
adversely affect shareholders seeking redemption through the repurchase
procedure. A shareholder whose order for repurchase is rejected by the Company
may redeem shares as set forth above.
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 Company 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. 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 Company offers a number of shareholder services and investment plans
designed to facilitate investment in shares of the Company. Certain of such
services are not available to investors who place purchase orders for the Fund's
shares through the Merrill Lynch BlueprintSM Program. 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 services or plans, or to change options
with respect thereto, can be obtained from the Company by calling the telephone
number on the cover page hereof or from the Distributor or Merrill Lynch.
Certain of these services are available only to U.S. investors.
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 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. A shareholder may make additions to his Investment Account at any
time by mailing a check directly to the Transfer Agent. Shareholders also may
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 will be opened automatically, without charge, 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
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<PAGE>
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.
If the new brokerage firm is willing to accommodate the shareholder in this
manner, the shareholder must request that he be issued certificates for his
shares and then must turn the certificates over to the new firm for
re-registration as described in the preceding sentence. 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 Company, 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.
Systematic Withdrawals and Automatic Investment Plans. A Class A or Class D
shareholder may elect to receive systematic withdrawal payments from his
Investment Account in the form of payments by check or through automatic payment
by direct deposit to his 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, bimonthly,
quarterly, semiannual or annual basis through the CMA(R)/CBA(R) Systematic
Redemption Program, subject to certain conditions.
Automatic Investment Plans. Regular additions of Class A, Class B, Class C
and 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) or CBA(R) accounts may arrange to have periodic investments made
in the Company in their CMA(R) or CBA(R) accounts or in certain related accounts
in amounts of $100 or more through the CMA(R)/CBA(R) Automated Investment
Program.
Automatic Reinvestment of Dividends and Distributions. All dividends and
capital gains distributions are automatically reinvested in full and fractional
shares of the Company, without sales charge, 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 to Merrill Lynch if the shareholder's account is
maintained with Merrill Lynch or by written notification or by telephone
(1-800-MER-FUND) to the Transfer Agent if the shareholder's account is
maintained with 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 redemptions of shares issued as a result of the
automatic reinvestment of dividends or capital gains distributions. The
Automatic Investment Program is not available to shareholders whose shares are
held in a brokerage account with Merrill Lynch other than a CMA(R) account.
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<PAGE>
EXCHANGE PRIVILEGE
Shareholders of each class of shares of the Company 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 in accordance
with the rules of the Commission.
Under the Merrill Lynch Select PricingSM System, Class A shareholders may
exchange Class A shares of the Company 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.
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 with shares of the same
class of other MLAM-advised mutual funds.
Shares of the Company 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 Company. 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 Company 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 Company exercising the exchange privilege will
continue to be subject to the Company'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 Company acquired through use of the exchange privilege will be
subject to the Company'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.
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<PAGE>
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 Company's exchange privilege is modified with respect to purchases of
Class A and Class D shares under the Merrill Lynch Mutual Fund Adviser ("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 Company 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 charge previously paid on the shares of the other MLAM-advised mutual fund
and the sales charge payable on the shares of the Company being acquired in the
exchange under the MFA program.
PERFORMANCE DATA
From time to time the Company may include its average annual total return
for various specified time periods 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.
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 sales charge in the case of Class A and Class D
shares. Dividends paid by the Company 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 fees and any incremental transfer agency costs relating to
each class of shares will be borne exclusively by that class. The Company will
include performance data for all classes of shares of the Company in any
advertisement or information including performance data of the Company.
The Company may also 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
charges 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
39
<PAGE>
than average annual total return data since the aggregate rates of return
reflect compounding over longer periods of time. In advertisements directed to
investors whose purchases are subject to reduced sales charges in the case of
Class A or Class D shares or waiver of the CDSC in the case of Class B or Class
C shares (such as investors in certain retirement plans), 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 Company'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
Company at the beginning of each specified period.
Total return figures are based on the Company's historical performance and
are not intended to indicate future performance. The Company's total return will
vary depending on market conditions, the securities comprising the Company's
portfolio, the Company'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 Company will fluctuate, and an investor's shares, when
redeemed, may be worth more or less than their original cost.
On occasion, the Company may compare its performance to the Standard &
Poor's 500 Composite Stock Price Index, the Dow Jones Industrial Average, or to
performance data published by Lipper Analytical Services, Inc., Morningstar
Publications, Inc., Money Magazine, U.S. News & World Report, Business Week, CDA
Investment Technology, Inc., Forbes Magazine, Fortune Magazine or other industry
publications. In addition, from time to time the Company may include its
risk-adjusted performance ratings assigned by Morningstar Publications, Inc. in
advertising or supplemental sales literature. As with other performance data,
performance comparisons should not be considered indicative of the Company's
relative performance for any future period.
ADDITIONAL INFORMATION
DIVIDENDS AND DISTRIBUTIONS
It is the Company's intention to distribute all its net investment income,
if any. Dividends from such net investment income will be paid at least
annually. All net realized long- or short-term capital gains, if any, will be
distributed to the Company's shareholders at least annually. The per share
dividends and distributions on each class of shares will be reduced as a result
of the account maintenance, distribution and transfer agency fees applicable to
that class. See "Additional Information--Determination of Net Asset Value".
Dividends and distributions may be reinvested automatically in shares of the
Company at net asset value without a sales charge. Shareholders may elect in
writing to receive any such dividends or distributions, or both, in cash.
Dividends and distributions are taxable to shareholders as discussed below
whether they are reinvested in shares of the Company or received in cash.
Certain gains or losses attributable to foreign currency gains or losses
from certain forward contracts may increase or decrease the amount of the
Company's income available for distribution to
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<PAGE>
shareholders. If such losses exceed other income during a taxable year, (a) the
Company would not be able to make any ordinary income dividend distributions,
and (b) distributions made before the losses were realized would be
recharacterized as a return of capital to shareholders, rather than as an
ordinary income dividend, reducing each shareholder's tax basis in the Company
shares for Federal income tax purposes. See "Additional Information--Taxes".
TAXES
The Company intends to continue to qualify for the special tax treatment
afforded regulated investment companies ("RICs") under the Internal Revenue Code
of 1986, as amended (the "Code"). If it so qualifies, the Company (but not its
shareholders) will not be subject to Federal income tax on the part of its net
ordinary income and net realized capital gains which it distributes to Class A,
Class B, Class C and Class D shareholders (together, the "shareholders"). The
Company intends to distribute substantially all of such income.
Dividends paid by the Company from its ordinary income and distributions of
the Company's net realized short-term capital gains (together referred to
hereafter as "ordinary income dividends") are taxable to shareholders as
ordinary income. Distributions made from the Company's net realized long-term
capital gains (including long-term gains from certain transactions in futures
and options) ("capital gain dividends") are taxable to shareholders as long-term
capital gains, regardless of the length of time the shareholder has owned
Company shares. Distributions in excess of the Company's earnings and profits
will first reduce the adjusted tax basis of a holder's shares and, after such
adjusted tax basis is reduced to zero, will constitute capital gains to such
holder (assuming the shares are held as a capital asset).
Dividends are taxable to shareholders even though they are reinvested in
additional shares of the Company. Not later than 60 days after the close of its
taxable year, the Company will provide its shareholders with a written notice
designating the amounts of any ordinary income dividends or capital gain
dividends. A portion of the Company's ordinary income dividends may be eligible
for the dividends received deduction allowed to corporations under the Code, if
certain requirements are met. If the Company pays a dividend in January which
was declared in the previous October, November or December to shareholders of
record on a specified date in one of such months, then such dividend will be
treated for tax purposes as being paid by the Company and received by its
shareholders on December 31 of the year in which such dividend was declared.
Ordinary income dividends paid by the Company to shareholders who are
nonresident aliens or foreign entities will be subject to a 30% U.S. withholding
tax under existing provisions of the Code applicable to foreign individuals and
entities unless a reduced rate of withholding or a withholding exemption is
provided under applicable treaty law. Nonresident shareholders are urged to
consult their own tax advisers concerning the applicability of the U.S.
withholding tax.
Dividends and interest received by the Company may give rise to withholding
and other taxes imposed by foreign countries. Tax conventions between certain
countries and the U.S. may reduce or eliminate such taxes. Shareholders may be
able to claim U.S. foreign tax credits with respect to such
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<PAGE>
taxes, subject to certain conditions and limitations contained in the Code. For
example, certain retirement accounts cannot claim foreign tax credits on
investments in foreign securities held in the Company. If more than 50% in value
of the Company's total assets at the close of its taxable year consists of
securities of foreign corporations, the Company will be eligible, and intends,
to file an election with the Internal Revenue Service pursuant to which
shareholders of the Company will be required to include their proportionate
shares of such withholding taxes in their U.S. income tax returns as gross
income, treat such proportionate shares as taxes paid by them, and deduct such
proportionate shares in computing their taxable incomes or, alternatively, use
them as foreign tax credits against their U.S. income taxes. No deductions for
foreign taxes, however, may be claimed by noncorporate shareholders who do not
itemize deductions. A shareholder that is a nonresident alien individual or a
foreign corporation may be subject to U.S. withholding tax on the income
resulting from the Company's election described in this paragraph but may not be
able to claim a credit or deduction against such U.S. tax for the foreign taxes
treated as having been paid by such shareholder. The Company will report
annually to its shareholders the amount per share of such withholding taxes.
Under certain provisions of the Code, some shareholders may be subject to a
31% withholding tax on ordinary income dividends, capital gain dividends and
redemption payments ("backup withholding"). Generally, shareholders subject to
backup withholding will be those for whom no certified taxpayer identification
number is on file with the Company or who, to the Company'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 such
investor is not otherwise subject to backup withholding.
Under Code Section 988, foreign currency gains or losses from certain debt
instruments, from certain forward contracts, from futures contracts that are not
"regulated futures contracts" and from unlisted options will generally be
treated as ordinary income or loss. Such Code Section 988 gains or losses will
generally increase or decrease the amount of the Company's investment company
taxable income available to be distributed to shareholders as ordinary income.
Additionally, if Code Section 988 losses exceed other investment company taxable
income during a taxable year, the Company would not be able to make any ordinary
income dividend distributions, and any distributions made before the losses were
realized but in the same taxable year would be recharacterized as a return of
capital to shareholders, thereby reducing the basis of each shareholder's
Company shares, and resulting in a capital gain for any shareholder who received
a distribution greater than such shareholder's basis in Company shares (assuming
the shares were held as a capital asset).
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 the 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.
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 any sales charge paid to the
Company on the exchanged shares reduces any sales charge the shareholder
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<PAGE>
would have owed upon purchase of the 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 Company will be
disallowed if other Company 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.
The foregoing is a general and abbreviated summary of the applicable
provisions of the Code and Treasury regulations presently in effect. For the
complete provisions, reference should be made to the pertinent Code sections and
the Treasury regulations promulgated thereunder. The Code and the Treasury
regulations are subject to change by legislative or administrative action either
prospectively or retroactively.
Ordinary income and capital gain dividends may also be subject to state and
local taxes.
Certain states exempt from state income taxation dividends paid by RICs
which are derived from interest on U.S. Government obligations. State law varies
as to whether dividend income attributable to U.S. Government obligations is
exempt from state income tax.
Shareholders are urged to consult their tax advisers regarding specific
questions as to Federal, foreign, state or local taxes. Foreign investors should
consider applicable foreign taxes in their evaluation of an investment in the
Company.
DETERMINATION OF NET ASSET VALUE
Net asset value per share of all classes of the Company is determined 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 during which the New
York Stock Exchange is open for trading. Any assets or liabilities initially
expressed in terms of non-U.S. dollar currencies are translated into U.S.
dollars at the prevailing market rates as quoted by one or more banks or dealers
on the day of valuation. The net asset value is computed by dividing the value
of the securities held by the Company plus any cash or other assets (including
interest and dividends accrued but not yet received) minus all liabilities
(including accrued expenses) by the total number of shares outstanding at such
time. Expenses, including the fee payable to the Investment Adviser and any
account maintenance and/or distribution fees payable to the Distributor, are
accrued daily. The per share net asset value of Class A shares will generally be
higher than the per share net asset value of shares of the other classes,
reflecting the daily expense accruals of the account maintenance and transfer
agency fees applicable with respect to the Class B, Class C and Class D shares;
in addition, the per share net asset value of the Class D shares generally will
be higher than the per share net asset value of the Class B and Class C shares,
reflecting the daily expense accruals of the distribution 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.
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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. In cases where
securities are traded on more than one exchange, the securities are valued on
the exchange designated by or under the authority of the Board of Directors as
the primary market. Securities 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. When the Company writes a call option, the amount of the premium
received is recorded on the books of the Company as an asset and an equivalent
liability. The amount of the liability is subsequently valued to reflect the
current market value of the option written, based upon the last sale price in
the case of exchange-traded options or, in the case of options traded in the
over-the-counter market, the last asked price. Options purchased by the Company
are valued at their last sale price in the case of exchange-traded options or,
in the case of options traded in the over-the-counter market, the last bid
price.
Securities and assets for which market quotations are not readily available
are valued at fair market value as determined in good faith by or under the
direction of the Board of Directors of the Company.
ORGANIZATION OF THE COMPANY
The Company was incorporated under Maryland law on March 7, 1984. 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. Shares of Class A,
Class B, Class C and Class D Common Stock represent an interest in the same
assets of the Company 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
Company has received an order from the Securities and Exchange Commission (the
"Commission") permitting the issuance and sale of multiple classes of Common
Stock. The Directors of the Company may classify and reclassify the shares of
the Company into additional classes of Common Stock at a future date.
Shareholders are entitled to one vote for each share held and fractional
votes for fractional shares held and will vote on the election of Directors and
any other matter submitted to a shareholder vote. The Company 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; and (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 Company and in the net assets of the Company upon liquidation or
dissolution after satisfaction of outstanding liabilities, and except as noted
above, the Class B, Class C and Class D shares bear certain additional expenses.
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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:
Financial Data Services, Inc.
Attn: TAMFO
P.O. Box 45289
Jacksonville, FL 32232-5289
The written notification should include the shareholder's name, address, tax
identification number and Merrill Lynch and/or mutual fund account numbers. If
you have any questions regarding this, please call your Merrill Lynch financial
consultant or Financial Data Services, Inc. at 1-800-637-3863.
SHAREHOLDER INQUIRIES
Shareholder inquiries may be addressed to the Company at the address or
telephone number set forth on the cover page of this Prospectus.
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46
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MERRILL LYNCH GLOBAL HOLDINGS, INC.--AUTHORIZATION FORM (PART 1)
- --------------------------------------------------------------------------------
NOTE: THIS FORM MAY NOT BE USED FOR PURCHASES THROUGH THE MERRILL LYNCH
BLUEPRINTSM PROGRAM. YOU MAY REQUEST A MERRILL LYNCH BLUEPRINTSM PROGRAM
APPLICATION BY CALLING TOLL FREE (800) 637-3766.
- --------------------------------------------------------------------------------
1. SHARE PURCHASE APPLICATION
I, being of legal age, wish to purchase: (choose one)
/ / Class A shares / / Class B shares / / Class C
shares / / Class D shares
of Merrill Lynch Global Holdings, 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 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.....................................................................................
............................................. Date.........................................
(Zip Code) Name and Address of Employer.................
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>
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 Global Holdings, 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 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.
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<PAGE>
MERRILL LYNCH GLOBAL HOLDINGS, INC.--AUTHORIZATION FORM (PART 1)--(CONTINUED)
- --------------------------------------------------------------------------------
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 in the Prospectus 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 UNDERREPORTING 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 Global Holdings, Inc. or any other investment company with an initial
sales charge or deferred sales charge for which the Merrill Lynch Funds
Distributor, Inc. acts as distributor over the next 13-month period which will
equal or exceed:
/ / $25,000 / / $50,000 / / $100,000 / / $250,000 / / $1,000,000
Each purchase will be made at the then reduced offering price applicable to
the amount checked above, as described in the Merrill Lynch Global Holdings,
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 Global Holdings, Inc. held as security.
<TABLE>
<S> <C>
By............................................. ...............................................
Signature of Owner Signature of Co-Owner (If registered in joint
parties, 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
<TABLE>
<S> <C>
Branch Office, Address, Stamp 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
This form, when completed, should be mailed to:
Merrill Lynch Global Holdings, Inc.
c/o Financial Data Services, Inc. / / / / / / / / / .......................
Transfer Agency Mutual Fund Operations Branch Code F/C No. F/C Last Name
P.O. Box 45289
Jacksonville, Florida 32232-5289 / / / / / / / / / /
Dealer's Customer Account No.
</TABLE>
48
<PAGE>
MERRILL LYNCH GLOBAL HOLDINGS, INC.--AUTHORIZATION FORM (PART 2)
- --------------------------------------------------------------------------------
Note: This form is required to apply for the Systematic Withdrawal or Automatic
Investment Plans only.
- --------------------------------------------------------------------------------
1. ACCOUNT REGISTRATION
Name of Owner...................................................................
Social Security Number
or Taxpayer Identification Number
Name of Co-Owner (if any)...................... Account Number.................
Address........................................ (if existing account)
..............................................
- --------------------------------------------------------------------------------
2. SYSTEMATIC WITHDRAWAL PLAN--CLASS A AND 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 Global
Holdings, Inc. at cost or current offering price. Withdrawals to be made either
(check one) / / Monthly on the 24th day of each month, or / / 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 ________ (month), or as soon as possible thereafter.
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 MY 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 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.
49
<PAGE>
MERRILL LYNCH GLOBAL HOLDINGS, INC.--AUTHORIZATION FORM (PART 2)--(CONTINUED)
- --------------------------------------------------------------------------------
3. APPLICATION FOR AUTOMATIC INVESTMENT PLAN
I hereby request that 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 Global Holdings, 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.
FINANCIAL DATA SERVICES, INC.
You are hereby authorized to draw an ACH
debit each month on my bank account for
investment in Merrill Lynch Global
Holdings, Inc. as indicated below:
Amount of each check or ACH debit $...................
Account Number........................................
Please date and invest ACH debits on the 20th of each
month beginning ............... or as soon thereafter
(month)
as possible.
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 credit my bank account. I further agree that if a debit is not honored
upon presentation, 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 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 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
.................................
..................... Signature of Depositor
Bank Account Number (If joint account, both must sign)
NOTE: IF AUTOMATIC INVESTMENT PLAN IS ELECTED, YOUR BLANK, UNSIGNED CHECK MARKED
"VOID" SHOULD ACCOMPANY THIS APPLICATION.
50
<PAGE>
INVESTMENT ADVISOR
Merrill Lynch Asset Management
Administrative Offices:
800 Scudders Mill Road
Plainsboro, New Jersey 08536
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 08536
Mailing Address:
P.O. Box 9011
Princeton, New Jersey 08543-9011
TRANSFER AGENT
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
CUSTODIAN
The Chase Manhattan Bank, N.A.
Global Securities Services
4 Chase MetroTech Center, 18th Floor
Brooklyn, New York 11245
INDEPENDENT AUDITORS
Deloitte & Touche LLP
117 Campus Drive
Princeton, New Jersey 08540-6400
COUNSEL
Brown & Wood
One World Trade Center
New York, New York 10048-0557
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER Prospectus
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
COMPANY, 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.
------------------- [INSERT ART HERE]
TABLE OF CONTENTS
PAGE
----
Fee Table............................. 2
Merrill Lynch Select PricingSM
System.............................. 4
Financial Highlights.................. 8
International Diversification......... 11
Investment Objective and Policies..... 12
Management of the Company............. 21
Board of Directors.................. 21
Advisory and Management
Arrangements...................... 22 ------------------------------
Code of Ethics...................... 23
Transfer Agency Services............ 24 MERRILL LYNCH
Purchase of Shares.................... 24 GLOBAL
Initial Sales Charge Alternatives-- HOLDINGS, INC.
Class A and Class D Shares........ 26
Deferred Sales Charge Alternatives--
Class B and Class C Shares........ 28
Distribution Plans.................. 32
Limitations on the Payment of
Deferred Sales Charges............ 34
Redemption of Shares.................. 34
Shareholder Services.................. 36
Performance Data...................... 39
Additional Information................ 40
Dividends and Distributions......... 40
Taxes............................... 41
Determination of Net Asset Value.... 43
Organization of the Company......... 44 March 28, 1995
Shareholder Reports................. 45
Shareholder Inquiries............... 45 Distributor:
Authorization Form.................... 47 Merrill Lynch
Funds Distributor, Inc.
This prospectus should be
Code #10244-0395 retained for future reference
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
MERRILL LYNCH GLOBAL HOLDINGS, INC.
P.O. BOX 9011, PRINCETON, NEW JERSEY 08543-9011 . PHONE NO. (609) 282-2800
-------------------
Merrill Lynch Global Holdings, Inc. (the "Company"), is a diversified,
open-end management investment company seeking the highest total investment
return consistent with prudent risk through worldwide investment in an
internationally diversified portfolio of securities. Total investment return is
the aggregate of income and capital value changes. The Company will utilize a
fully managed investment policy which permits management of the Company to take
a flexible investment approach and vary its policies as to geographic
diversification and types of securities based upon its evaluation of changes in
economic and market trends throughout the world. Accordingly, investments may be
shifted among the various capital markets of the world and among different types
of equity, debt and convertible securities depending upon management's outlook
with respect to prevailing trends and developments. It is presently contemplated
that the Company's assets will be primarily invested in equity securities of
companies located in the United States, Japan and Western Europe.
Pursuant to the Merrill Lynch Select PricingSM System, the Company offers
four classes of shares each with a different combination of sales charges,
ongoing fees and other features. The Merrill Lynch Select PricingSM 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.
-------------------
This Statement of Additional Information of the Company is not a prospectus
and should be read in conjunction with the prospectus of the Company, dated
March 28, 1995 (the "Prospectus"), which has been filed with the Securities and
Exchange Commission and can be obtained, without charge, by calling or writing
the Company at the above telephone number or address. This Statement of
Additional Information has been incorporated by reference into the Prospectus.
-------------------
MERRILL LYNCH ASSET MANAGEMENT--INVESTMENT ADVISER
MERRILL LYNCH FUNDS DISTRIBUTOR, INC.--DISTRIBUTOR
-------------------
The date of this Statement of Additional Information is March 28, 1995.
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Company is to seek the highest total
investment return consistent with prudent risk through worldwide investment in
an internationally diversified portfolio of securities. Reference is made to
"Investment Objective and Policies" in the Prospectus for a discussion of the
investment objective and policies of the Company.
The securities markets of many countries have at times in the past moved
relatively independently of one another due to different economic, financial,
political and social factors. When such lack of correlation, or negative
correlation, in movements of these securities markets occurs, it may reduce risk
for the Company's portfolio as a whole. This negative correlation also may
offset unrealized gains the Company has derived from movements in a particular
market. To the extent the various markets move independently, total portfolio
volatility is reduced when the various markets are combined into a single
portfolio. Of course, movements in the various securities markets may be offset
by changes in foreign currency exchange rates. Exchange rates frequently move
independently of securities markets in a particular country. As a result, gains
in a particular securities market may be affected by changes in exchange rates.
While it is the policy of the Company generally not to engage in trading for
short-term gains, Merrill Lynch Asset Management, L.P., doing business as
Merrill Lynch Asset Management (the "Investment Adviser"), will effect portfolio
transactions without regard to holding period if, in its judgment, such
transactions are advisable in light of a change in circumstances of a particular
company or within a particular industry or in general market, economic or
financial conditions. As a result of the investment policies described in the
Prospectus, including changes in asset allocation under certain market
conditions, the Company's portfolio turnover rate may be higher than that of
other investment companies. Accordingly, while the Company anticipates that its
annual portfolio turnover rate should not exceed 100% under normal conditions,
it is impossible to predict portfolio turnover rates. The portfolio turnover
rate is calculated by dividing the lesser of the Company's annual sales or
purchases of portfolio securities (exclusive of purchases or sales of securities
whose maturities at the time of acquisition were one year or less) by the
monthly average value of the securities in the portfolio during the year. For
the fiscal years ended November 30, 1994, and 1993, the rate of portfolio
turnover was 40.18% and 56.98%, respectively. The Company is subject to the
Federal income tax requirement that less than 30% of the Company's gross income
be derived from gains from the sale or other disposition of securities held for
less than three months.
The Company may invest in the securities of foreign issuers in the form of
American Depositary Receipts (ADRs), European Depositary Receipts (EDRs), Global
Depositary Receipts (GDRs) or other securities convertible into securities of
foreign issuers. These securities may not necessarily be denominated in the same
currency as the securities into which they may be converted. ADRs are receipts
typically issued by an American bank or trust company which evidence ownership
of underlying securities issued by a foreign corporation. EDRs are receipts
issued in Europe which evidence a similar ownership arrangement. GDRs are
receipts issued throughout the world which evidence a similar ownership
arrangement. Generally, ADRs, in registered form, are designed for use in the
U.S. securities markets, and EDRs, in bearer form, are designed for use in
European securities markets. GDRs are tradeable both in the U.S. and Europe and
are designed for use throughout the world.
2
<PAGE>
HEDGING TECHNIQUES
Reference is made to the discussion under the caption "Investment Objective
and Policies-- Hedging Techniques" in the Prospectus for information with
respect to various portfolio strategies involving options and futures. The
Company may seek to hedge its portfolio against movements in the equity markets,
interest rates and exchange rates between currencies through the use of options
and futures transactions and forward foreign exchange transactions. The Company
has authority to write (i.e., sell) covered call options on its portfolio
securities, purchase put options on securities and engage in transactions in
stock index options, stock index futures and financial futures, and related
options on such futures. The Company may also deal in forward foreign exchange
transactions and foreign currency options and futures, and related options on
such futures. The Company is authorized to enter into such options and futures
transactions either on exchanges or in the over-the-counter ("OTC") markets.
Each of such portfolio strategies is described in the Prospectus. Although
certain risks are involved in options and futures transactions (as discussed in
the Prospectus and below), the Investment Adviser believes that, because the
Company will only engage in these transactions for hedging purposes, the options
and futures portfolio strategies of the Company will not subject the Company to
the risks frequently associated with the speculative use of options and futures
transactions. While the Company's use of hedging strategies is intended to
reduce the volatility of the net asset value of its shares, the net asset value
of the Company's shares will fluctuate. There can be no assurance that the
Company's hedging transactions will be effective. The following is further
information relating to portfolio strategies involving options and futures that
the Company may utilize.
Hedging Investment and Interest Rate Risks. The Company may write (i.e.,
sell) covered call options on the equity securities in which it may invest and
may enter into closing purchase transactions with respect to certain of such
options. Covered call options serve as a partial hedge against the decline in
price of the underlying security. A covered call option is an option where the
Company, in return for a premium, gives another party a right to buy specified
securities owned by the Company at a specified future date and price set at the
time of the contract. By writing covered call options, the Company gives up the
opportunity, while the option is in effect, to profit from any price increase in
the underlying security above the option exercise price. In addition, the
Company's ability to sell the underlying security will be limited while the
option is in effect unless the Company effects a closing purchase transaction. A
closing purchase transaction cancels out the Company's position as the writer of
an option by means of an offsetting purchase of an identical option prior to the
expiration of the option it has written. The writer of a covered call option has
no control over when he may be required to sell his securities since he may be
assigned an exercise notice at any time prior to the termination of his
obligation as a writer. If an option expires unexercised, the writer realizes a
gain in the amount of the premium. Such a gain, of course, may be offset by a
decline in the market value of the underlying security during the option period.
If a call option is exercised, the writer realizes a gain or loss from the sale
of the underlying security.
The Company may also purchase put options to hedge against a decline in the
market value of its securities holdings. By buying a put the Company has a right
to sell the underlying security at the exercise price, thus limiting the
Company's risk of loss through a decline in the market value of the security
until the put option expires. The amount of any appreciation in the value of the
underlying security will be offset partially by the amount of the premium paid
for the put option and any related
3
<PAGE>
transaction costs. Prior to its expiration, a put option may be sold in a
closing sale transaction, and profit or loss from the sale will depend on
whether the amount received is more or less than the premium paid for the put
option plus the related transaction cost. A closing sale transaction cancels out
the Company's position as the purchaser of an option by means of an offsetting
sale of an identical option prior to the expiration of the option it has
purchased.
The Company also may engage in transactions in stock index options and
futures, financial futures in U.S. and foreign agency and government securities
and corporate debt securities, and related options on such futures. A futures
contract is an agreement between two parties to buy and sell a particular
commodity, such as a security, or, in the case of an index-based futures
contract, to make and accept a cash settlement for a set price on a future date.
A majority of transactions in futures contracts, however, do not result in the
actual delivery of the underlying instrument or cash settlement but are settled
through liquidation, i.e., by entering into an offsetting transaction. Futures
contracts have been designed by boards of trade which have been designated
"contracts markets" by the Commodity Futures Trading Commission ("CFTC").
The purchase or sale of a futures contract differs from the purchase or sale
of a security in that no price or premium is paid or received. Instead, an
amount of cash or securities acceptable to the broker and the relevant contract
market, which varies, but is typically between 2% to 15% of the contract amount,
must be deposited with the broker. This amount is known as "initial margin" and
represents a "good faith" deposit assuring the performance of both the purchaser
and seller under the futures contract. Subsequent payments to and from the
broker, called "variation margin", are required to be made on a daily basis as
the price of the futures contracts fluctuates making the long and short
positions in the futures contracts more or less valuable, a process known as
"mark to the market". At any time prior to the settlement date of the futures
contract, the position may be closed out by taking an opposite position which
will operate to terminate the position in the futures contract. A final
determination of variation margin is then made, additional cash is required to
be paid to or released by the broker and the purchaser realizes a loss or gain.
In addition, a nominal commission is paid on each completed sale transaction.
The Company has received an order from the Securities and Exchange
Commission exempting it from the provisions of Section 17(f) and Section 18(f)
of the Investment Company Act of 1940, as amended (the "Investment Company
Act"), in connection with its strategy of investing in futures contracts.
Section 17(f) relates to the custody of securities and other assets of an
investment company and may be deemed to prohibit certain arrangements between
the Company and commodities brokers with respect to initial and variation
margin. Section 18(f) of the Investment Company Act prohibits an open-end
investment company such as the Company from issuing a "senior security" other
than a borrowing from a bank. The staff of the Securities and Exchange
Commission has in the past indicated that a futures contract may be a "senior
security" under the Investment Company Act.
Risk Factors in Options and Futures Transactions. Utilization of options and
futures transactions involves the risk of imperfect correlation in movements in
the prices of options and futures contracts and movements in the prices of the
securities and currencies which are the subject of the hedge. If the price of
the options and futures contract moves more or less than the prices of the
hedged securities or
4
<PAGE>
currencies, the Company will experience a gain or loss which will not be
completely offset by movements in the prices of the securities and currencies
which are the subject of the hedge.
Prior to exercise or expiration, an exchange-traded option position can only
be terminated by entering into a closing purchase or sale transaction. This
requires a secondary market on an exchange for call or put options of the same
series. The Company will enter into an option or futures transaction on an
exchange only if there appears to be a liquid secondary market for such options
or futures. However, there can be no assurance that a liquid secondary market
will exist for any particular call or put option or futures contract at any
specific time. Thus, it may not be possible to close an option or futures
position. The Company will acquire only over-the-counter options for which
management believes the Company can receive on each business day at least two
independent bids or offers (one of which will be from an entity other than a
party to the option). In the case of a futures position or an option on a
futures position written by the Company, in the event of adverse price
movements, the Company would continue to be required to make daily cash payments
of variation margin. In such situations, if the Company has insufficient cash,
it may have to sell portfolio securities to meet daily variation margin
requirements at a time when it may be disadvantageous to do so. In addition, the
Company may be required to take or make delivery of the security or currency
underlying the futures contracts it holds. The inability to close options and
futures positions also could have an adverse impact on the Company's ability to
effectively hedge its portfolio. There is also the risk of loss by the Company
of margin deposits in the event of bankruptcy of a broker with whom the Company
has an open position in a futures contract or related option. The risk of loss
from investing in futures transactions is theoretically unlimited.
The exchanges on which the Company intends to conduct options transactions
have generally established limitations governing the maximum number of call or
put options on the same underlying currency (whether or not covered) which may
be written by a single investor, whether acting alone or in concert with others
(regardless of whether such options are written on the same or different
exchanges or are held or written on one or more accounts or through one or more
brokers). "Trading limits" are imposed on the maximum number of contracts which
any person may trade on a particular trading day. An exchange may order the
liquidation of positions found to be in violation of these limits, and it may
impose other sanctions or restrictions. The Investment Adviser does not believe
that these trading and position limits will have any adverse impact on the
portfolio strategies for hedging the Company's portfolio.
Hedging Foreign Currency Risks. Generally, the foreign exchange transactions
of the Company will be conducted on a spot, i.e., cash, basis at the spot rate
then prevailing for purchasing or selling currency in the foreign exchange
market. This rate under normal market conditions differs from the prevailing
exchange rate in an amount generally less than 1/10 of 1% due to the costs of
converting from one currency to another. However, the Company has authority to
deal in forward foreign exchange between currencies of Far Eastern and Western
Pacific countries and the dollar as a hedge against possible variations in the
foreign exchange rates between these currencies. This is accomplished through
contractual agreements to purchase or to sell a specified currency at a
specified future date and price set at the time of the contract. The Company's
dealings in forward foreign exchange will be limited to hedging involving either
specific transactions or portfolio positions. Transaction hedging is the
purchase or sale of forward foreign currency with respect to specific
receivables or payables of the Company
5
<PAGE>
accruing in connection with the purchase and sale of its portfolio securities,
the sale and redemption of shares of the Company or the payment of dividends and
distributions by the Company. Position hedging is the sale of forward currency
with respect to portfolio security positions denominated or quoted in such
foreign currency. The Company will not speculate in forward foreign exchange.
All dealings in forward exchange will be limited to contracts involving
currencies of Far Eastern and Western Pacific countries and the dollar. The
Company may not position hedge with respect to the currency of a particular
country to an extent greater than the aggregate market value (at the time of
making such sale) of the securities held in its portfolio denominated or quoted
in that particular foreign currency. If the Company enters into a position
hedging transaction, its custodian bank will place cash or liquid securities in
a separate account of the Company in an amount equal to the value of the
Company's total assets committed to the consummation of such forward contract.
If the value of the securities placed in the separate account declines,
additional cash or securities will be placed in the account so that the value of
the account will equal the amount of the Company's commitment with respect to
such contracts. The Company will not attempt to hedge all of its portfolio
positions and will enter into such transactions only to the extent, if any,
deemed appropriate by the Investment Adviser of the Company. The Company will
not enter into a position hedging commitment if, as a result thereof, the
Company would have more than 15% of the value of its assets committed to such
contracts. The Company will not enter into a forward contract with a term of
more than one year.
As discussed in the Prospectus, the Company may also purchase or sell listed
or OTC foreign currency options, foreign currency futures and related options on
foreign currency futures as a short or long hedge against possible variations in
foreign exchange rates.
Hedging against a decline in the value of a currency does not eliminate
fluctuations in the price of portfolio securities or prevent losses if the
prices of such securities decline. Such transactions also preclude the
opportunity for gain if the value of the hedged currency should rise. Moreover,
it may not be possible for the Company to hedge against a devaluation that is so
generally anticipated that the Company is not able to contract to sell the
currency at a price above the devaluation level it anticipates. It is possible
that, under certain circumstances, the Company may have to limit its currency
transactions to qualify for the special tax treatment afforded regulated
investment companies under the Internal Revenue Code; in this regard, the
Company presently intends to limit its gross income from currency hedging
transactions to less than 10% of its gross income in any taxable year until such
time as the Company determines that income from the transaction need not be
subject to this restriction. The cost to the Company of engaging in foreign
currency transactions varies with such factors as the currencies involved, the
length of the contract period and the market conditions then prevailing. Since
transactions in foreign currency exchange usually are conducted on a principal
basis, no fees or commissions are involved.
The U.S. Government has from time to time in the past imposed restrictions,
through taxation and otherwise, on foreign investments by U.S. investors such as
the Company. If such restrictions should be reinstituted, it might become
necessary for the Company to invest all or substantially all of its assets in
U.S. securities. In such event, the Company would review its investment
objective and investment policies to determine whether changes are appropriate.
6
<PAGE>
The Company's ability and decisions to purchase or sell portfolio securities
may be affected by laws or regulations relating to the convertibility and
repatriation of assets. Because the shares of the Company are redeemable on a
daily basis in U.S. dollars, the Company intends to manage its portfolio so as
to give reasonable assurance that it will be able to obtain U.S. dollars to the
extent necessary to meet anticipated redemptions. Under present conditions, it
is not believed that these considerations will have any significant effect on
its portfolio strategy.
High Yield Bonds. The Company is authorized to invest in fixed income
securities rated below investment grade by a nationally recognized statistical
rating agency or in unrated debt securities which, in the Investment Adviser's
judgment, possess similar credit characteristics ("high yield bonds"). Issuers
of high yield bonds may be highly leveraged and may not have available to them
more traditional methods of financing. Therefore, the risks associated with
acquiring the securities of such issuers generally are greater than is the case
with higher rated securities. For example, during an economic downturn or a
sustained period of rising interest rates, issuers of high yield bonds may be
more likely to experience financial stress, especially if such issuers are
highly leveraged. During such periods, such issuers may not have sufficient
revenues to meet their interest payment obligations. The issuer's ability to
service its debt obligations also may be adversely affected by specific issuer
developments or the issuer's inability to meet specific projected business
forecasts or the unavailability of additional financing. The risk of loss due to
default by the issuer is significantly greater for the holder of high yield
bonds because such securities may be unsecured and may be subordinated to other
creditors of the issuer.
High yield bonds frequently have call or redemption features which would
permit issuers to repurchase such securities from the Company. If a call were
exercised by an issuer during a period of declining interest rates, the Company
likely would have to replace such called security with a lower yielding
security, thus decreasing the net investment income to the Company and dividends
to shareholders.
The Company may have difficulty disposing of certain high yield bonds
because there may be a thin trading market for such securities. The secondary
trading market for high yield bonds is generally not as liquid as the secondary
market for higher rated securities. Reduced secondary market liquidity may have
an adverse impact on market price and the Company's ability to dispose of
particular issues when necessary to meet the Company's liquidity needs or in
response to a specific economic event such as a deterioration in the
creditworthiness of the issuer.
Adverse publicity and investor perceptions, which may not be based on
fundamental analysis, also may decrease the value and liquidity of high yield
bonds, particularly in a thinly traded market. Factors adversely affecting the
market value of high yield bonds are likely to affect adversely the Company's
net asset value. In addition the Company may incur additional expenses to the
extent it is required to seek recovery upon a default on a portfolio holding or
participate in the restructuring of the obligation.
INVESTMENT RESTRICTIONS
The Company has adopted a number of fundamental and non-fundamental
restrictions and policies relating to the investment of its assets and its
activities. The fundamental policies set forth below may
7
<PAGE>
not be changed without the approval of the holders of a majority of the
Company's outstanding voting securities (which for this purpose and under the
Investment Company Act means the lesser of (i) 67% of the shares represented at
a meeting at which more than 50% of the outstanding shares are represented or
(ii) more than 50% of the outstanding shares).
Under the fundamental investment restrictions, the Company may not:
1. Make any investment inconsistent with the Company'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 Company 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 Company 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 Company'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 Company 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 Company may borrow up to an
additional 5% of its total assets for temporary purposes, (iii) the Company
may obtain such short-term credit as may be necessary for the clearance of
purchases and sales of portfolio securities and (iv) the Company may
purchase securities on margin to the extent permitted by applicable law. The
Company may not pledge its assets other than to secure such borrowings or,
to the extent permitted by the Company'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 Company
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 Company may do so in accordance with applicable law and
the Company's Prospectus and
8
<PAGE>
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.
In addition, the Company has adopted non-fundamental restrictions which may
be changed by the Board of Directors. Under the non-fundamental investment
restrictions, the Company 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 Company 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 Company 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
Company's shares are registered or qualified for sale require a lower
limitation, the Company will observe such limitation. As of the date hereof,
therefore, the Company 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, or in securities having a record, together
with predecessors, of less than three years of continuous operation.
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 Company's net assets; included within such limitation, but not to exceed
2% of the Company'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 Company in units
or attached to securities may be deemed to be without value.
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 Company'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 Company, the officers and general partner of
the Investment Adviser, the director of such
9
<PAGE>
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 Company 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 Company's
Prospectus and Statement of Additional Information, as they may be amended
from time to time.
i. Notwithstanding fundamental investment restrictions (7) above, borrow
amounts in excess of 20% of its total assets, taken at market value, and
then only from banks as a temporary measure for extraordinary or emergency
purposes such as the redemption of Company shares. The Company will not
purchase securities while borrowings are outstanding except to exercise
prior commitments and to exercise subscription rights.
Portfolio securities of the Company may not be purchased from, sold or
loaned to the Investment Adviser or its affiliates or any of its directors,
general partners, officers or employees, acting as principal.
The staff of the Securities and Exchange Commission has taken the position
that purchased OTC options and the assets used as cover for written OTC options
are illiquid securities. Therefore, the Company has adopted an investment policy
pursuant to which it will not purchase or sell OTC options if, as a result of
such transaction, the sum of the market value of OTC options currently
outstanding which are held by the Company, the market value of the underlying
securities covered by OTC call options currently outstanding which were sold by
the Company and margin deposits on the Company's existing OTC options on futures
contracts exceeds 15% of the total assets of the Company (10% to the extent
required by certain state laws), taken at market value, together with all other
assets of the Company which are illiquid or are not otherwise readily
marketable. However, if the OTC option is sold by the Company to a primary U.S.
Government securities dealer recognized by the Federal Reserve Bank of New York
and if the Company has the unconditional contractual right to repurchase such
OTC option from the dealer at a predetermined price, then the Company will treat
as illiquid such amount of the underlying securities as is equal to the
repurchase price less the amount by which the option is "in-the-money" (i.e.,
current market value of the underlying securities minus the option's strike
price). The repurchase price with the primary dealers is typically a formula
price which is generally based on a multiple of the premium received for the
option, plus the amount by which the option is "in-the-money". This policy as to
OTC options is not a fundamental policy of the Company and may be amended by the
Board of Directors of the Company without the approval of the Company's
shareholders. However, the Company will not change or modify this policy prior
to the change or modification by the Securities and Exchange Commission staff of
its position.
Because of the affiliation of the Investment Adviser with the Company, the
Company is prohibited from engaging in certain transactions involving such firm
or its affiliates except for brokerage transactions permitted under the
Investment Company Act involving only usual and customary commissions or
transactions pursuant to an exemptive order under the Investment Company Act.
See "Portfolio
10
<PAGE>
Transactions and Brokerage". Without such an exemptive order, the Company would
be prohibited from engaging in portfolio transactions with the Investment
Adviser or its affiliates acting as principal and from purchasing securities in
public offerings which are not registered under the Securities Act in which such
firm or any of its affiliates participate as an underwriter or dealer.
The investment restrictions contain an exception that permits the Company to
purchase securities pursuant to the exercise of subscription rights, subject to
the condition that such purchase will not result in the Company ceasing to be a
diversified investment company. Japanese and European corporations frequently
issue additional capital stock by means of subscription rights offerings to
existing shareholders at a price substantially below the market price of the
shares. The failure to exercise such rights would result in the Company's
interest in the issuing company being diluted. The market for such rights is not
well developed, and accordingly, the Company may not always realize full value
on the sale of rights. Therefore, the exception applies in cases where the
limits set forth in the investment restrictions would otherwise be exceeded by
exercising rights or have already been exceeded as a result of fluctuations in
the market value of the Company's portfolio securities with the result that the
Company would otherwise be forced either to sell securities at a time when it
might not otherwise have done so or to forego exercising the rights.
-------------------
Because of the affiliation of Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch") with the Company, the Company 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.
MANAGEMENT OF THE COMPANY
DIRECTORS AND OFFICERS
The Directors and executive officers of the Company, their ages and their
principal occupations for at least the last five years are set forth below.
Unless otherwise noted, the address of each executive officer and Director is
P.O. Box 9011, Princeton, New Jersey 08543-9011.
ARTHUR ZEIKEL (62)--President and Director (1)(2)--President of the
Investment Adviser (which term as used herein includes its corporate
predecessors) since 1977; President of Fund Asset Management, L.P. ("FAM")
(which term as used herein includes its corporate predecessors) since 1977;
President and Director of Princeton Services, Inc. ("Princeton Services") since
1993; Executive Vice President of Merrill Lynch since 1990 and a Senior Vice
President thereof from 1985 to 1990; Executive Vice President of Merrill Lynch &
Co., Inc. ("ML & Co.") since 1990; Director of the Distributor.
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<PAGE>
DONALD CECIL (68)--Director (2)--1114 Avenue of the Americas, New York,
New York 10036. Special Limited Partner of Cumberland Partners (investment
partnership) since 1982; Member of Institute of Chartered Financial Analysts;
Member and Chairman of Westchester County (N.Y.) Board of Transportation.
EDWARD H. MEYER (68)--Director (2)--777 Third Avenue, New York, New York
10017. President of Grey Advertising Inc. since 1968, Chief Executive Officer
since 1970, and Chairman of the Board of Directors since 1972; Director of The
May Department Stores Company, Bowne & Co., Inc. (financial printers), Ethan
Allen Interiors Inc. and Harman International Industries, Inc.
CHARLES C. REILLY (63)--Director (2)--9 Hampton Harbor Road, Hampton
Bays, N.Y. 11946. Self-employed financial consultant since 1990; President and
Chief Investment Officer of Verus Capital, Inc. from 1979 to 1990; former Senior
Vice President of Arnhold and S. Bleichroeder, Inc. from 1973 to 1990; Adjunct
Professor, Columbia University Graduate School of Business since 1990; Adjunct
Professor, Wharton School, University of Pennsylvania, 1990; Director, Harvard
Business School Alumni Association.
RICHARD R. WEST (57)--Director (2)--482 Tepi Drive, Southbury,
Connecticut 06488. Professor of Finance since 1984, and Dean from 1984 to 1993,
New York University Leonard N. Stern School of Business Administration; Director
of Re Capital Corp. (reinsurance holding company), Bowne & Co., Inc. (financial
printers), Vornado, Inc. (real estate holding company), Smith-Corona Corporation
(manufacturer of typewriters and word processors) and Alexander's, Inc. (real
estate company).
EDWARD D. ZINBARG (60)--Director (2)--5 Hardwell Road, Short Hills, New
Jersey 07078-2117. Executive Vice President of The Prudential Insurance Company
of America from 1988 to 1994; former Director of Prudential Reinsurance Company
and former Trustee of the Prudential Foundation.
TERRY K. GLENN (54)--Executive Vice President (1)(2)--Executive Vice
President of the Investment Adviser and FAM since 1983; Executive Vice President
and Director of Princeton Services since 1993; President and Director of the
Distributor since 1986.
NORMAN R. HARVEY (61)--Senior Vice President (1)(2)--Senior Vice
President of the Investment Adviser and FAM since 1982; Senior Vice President of
Princeton Services since 1993.
PHILIP L. KIRSTEIN (49)--Senior Vice President (1)(2)--Senior Vice
President and General Counsel of the Investment Adviser and FAM since 1984;
Senior Vice President, General Counsel, Director and Secretary of Princeton
Services; Secretary of the Investment Adviser since 1984; Secretary of FAM since
1982; Director of the Distributor.
DONALD C. BURKE (34)--Vice President (1)(2)--Vice President and Director
of Taxation of the Investment Adviser since 1990; employee of Deloitte & Touche
LLP from 1982 to 1990.
GERALD M. RICHARD (45)--Treasurer (1)(2)--Senior Vice President and
Treasurer of the Investment Adviser and FAM since 1984; Senior Vice President
and Treasurer of Princeton Services since 1993; Vice President of the
Distributor since 1981 and Treasurer since 1984.
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<PAGE>
ROBERT HARRIS (43)--Secretary (1)(2)--Vice President of the Investment
Adviser since 1984 and attorney associated with the Investment Adviser since
1980; Secretary of the Distributor since 1982.
- ------------
(1) Interested person, as defined in the Investment Company Act, of the Company.
(2) Such Director or officer is a director, trustee or officer of one or more
additional investment companies for which the Investment Adviser or an
affiliate, FAM, acts as investment adviser or manager.
At February 28, 1995, the officers and Directors of the Company as a group
(12 persons) owned an aggregate of less than 1% of the outstanding shares of the
Company. At such date, Mr. Zeikel, a Director of the Company, and the other
officers of the Company, owned less than 1% of the outstanding shares of common
stock of ML & Co.
COMPENSATION OF DIRECTORS
The Company pays each Director not affiliated with the Investment Adviser a
fee of $3,500 per year plus $500 per meeting attended, together with such
Director's actual out-of-pocket expenses relating to attendance at meetings. The
Company also compensates members of its Audit and Nominating Committee (the
"Committee"), which consists of all of the non-affiliated Directors at a rate of
$500 per meeting attended. The Chairman of the Committee receives an additional
fee of $250 per meeting attended. Fees and expenses paid to the unaffiliated
Directors aggregated $34,995+ for the fiscal year ended November 30, 1994.
The following table sets forth for the fiscal year ended November 30, 1994,
compensation paid by the Company to the non-interested Directors and for the
calendar year ending December 31, 1994, the aggregate compensation paid by all
investment companies advised by the Investment Adviser and its affiliate, FAM
("MLAM/FAM Advised Funds") to the non-interested Directors.
<TABLE><CAPTION>
PENSION OR
RETIREMENT
BENEFITS TOTAL COMPENSATION
AGGREGATE ACCRUED AS PART FROM COMPANY AND OTHER
COMPENSATION OF COMPANY MLAM/FAM ADVISED FUNDS
NAME OF DIRECTOR FROM COMPANY EXPENSES PAID TO DIRECTORS(1)
- ------------------------------------------- ------------ --------------- ----------------------
<S> <C> <C> <C>
Donald Cecil............................... $9,750 None $276,350
Edward H. Meyer............................ $8,500 None $251,600
Charles C. Reilly.......................... $8,500 None $276,900
Richard R. West............................ $8,500 None $300,900
Edward D. Zinbarg*......................... $8,500 None $121,500
</TABLE>
- ------------
* Projected annual compensation for the Company's current fiscal year. Mr.
Zinbarg was elected to the Company's Board of Directors effective October 25,
1994.
(1) In addition to the Company, the Directors serve on the boards of other
MLAM/FAM Advised Funds as follows: Mr. Cecil (34 boards); Mr. Meyer (34
boards); Mr. Reilly (40 boards); Mr. West (40 boards); and Mr. Zinbarg (16
boards).
- ------------
+ During most of the fiscal year ended November 30, 1994, the Board consisted of
five Directors, four of whom were non-interested.
13
<PAGE>
ADVISORY AND MANAGEMENT ARRANGEMENTS
Reference is made to "Management of the Company--Advisory and Management
Arrangements" in the Prospectus for certain information concerning the
management and advisory arrangements of the Company.
Securities held by the Company may also be held by, or be appropriate
investments for, other funds or other investment advisory clients for which the
Investment Adviser or its affiliates act as an adviser. Because of different
objectives or other factors, a particular security may be bought for one or more
clients when one or more clients are selling the same security. If purchases or
sales of securities by the Investment Adviser for the Company or other funds for
which it acts as investment adviser or for its other advisory clients arise for
consideration at or about the same time, transactions in such securities will be
made, insofar as feasible, for the respective funds and clients in a manner
deemed equitable to all. To the extent that transactions on behalf of more than
one client of the Investment Adviser or its affiliates during the same period
may increase the demand for securities being purchased or the supply of
securities being sold, there may be an adverse effect on price.
The Company has entered into an investment advisory agreement with the
Investment Adviser (the "Investment Advisory Agreement"). As discussed in the
Prospectus, the Investment Advisory Agreement provides that the Investment
Adviser is entitled to receive for its services to the Company monthly
compensation at the annual rate of 1.0% of the Company's average daily net
assets. Until April 1, 1994, the Investment Adviser compensated Nomura Capital
Management, Inc. ("NCM") and Lombard Odier International Portfolio Management
Limited ("LOIPM") for investment research, pursuant to separate investment
research agreements between the Investment Adviser and NCM and LOIPM (the
"Investment Research Agreements"), at the annual rates of 0.20% and 0.15%,
respectively, of the Company's average daily net assets. The Investment Research
Agreement between the Investment Adviser and NCM recognized that NCM could enter
into a separate investment research agreement with Nomura Investment Management
Co., Ltd. ("NIMCO") under which NCM could compensate NIMCO for investment
research in an amount determined by NCM and NIMCO but not in excess of the
amount of compensation NCM received from the Investment Adviser. The Investment
Research Agreements and related Sub-Research Agreement terminated on April 1,
1994. The Investment Adviser continues to provide services to the Company
pursuant to the Investment Advisory Agreement.
For the fiscal year ended November 30, 1992, the Investment Adviser, NCM and
LOIPM earned fees of $1,957,647, $391,529 and $293,647, respectively. For the
fiscal year ended November 30, 1993, the Investment Adviser, NCM and LOIPM
earned fees of $1,514,112, $465,880 and $349,410, respectively. For the fiscal
year ended November 30, 1994, the Investment Adviser, NCM and LOIPM earned fees
of $3,780,445, $233,542, and $175,156, respectively.
California imposes limitations on the expenses of the Company. These expense
limitations require that the Investment Adviser reimburse the Company in an
amount necessary to prevent the ordinary operating expenses of the Company
(excluding interest, taxes, distribution fees, brokerage fees and commissions
and extraordinary charges such as litigation costs) from exceeding 2.5% of the
Company'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 remaining average daily net
assets. The Investment Adviser's obligation to reimburse the Company is limited
to the amount of the investment advisory fee. No fee payment will be made to the
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<PAGE>
Investment Adviser during any fiscal year which will cause such expenses to
exceed the most restrictive expense limitation applicable at the time of such
payment. For the fiscal years ended November 30, 1992, 1993 and 1994, no such
reimbursement was required.
The Investment Advisory Agreement obligates the Investment Adviser to
provide investment advisory services and to pay all compensation of and furnish
office space for officers and employees of the Company connected with investment
and economic research, trading and investment management of the Company, as well
as the fees of all Directors of the Company who are affiliated persons of the
Investment Adviser. The Company pays all other expenses incurred in its
operation, including, among other things, taxes; expenses for legal and auditing
services; costs of printing proxies, stock certificates, shareholder reports and
prospectuses and statements of additional information (except to the extent paid
by the Distributor); charges of the custodian, any sub-custodian and transfer
agent; expenses of redemption of shares; Securities and Exchange Commission
fees; expenses of registering the shares under Federal, state or foreign laws;
fees and expenses of unaffiliated Directors; accounting and pricing costs
(including the daily calculation of net asset value); insurance; interest;
brokerage costs; litigation and other extraordinary or non-recurring expenses;
and other expenses properly payable by the Company. Accounting services are
provided to the Company by the Investment Adviser, and the Company reimburses
the Investment Adviser for its costs in connection with such services on a semi-
annual basis. For the fiscal years ended November 30, 1992, 1993 and 1994, the
amount of such reimbursement was $103,432, $111,045 and $138,310, respectively.
As required by the Company's distribution agreements, the Distributor will pay
certain of the promotional expenses of the Company incurred in connection with
the offering of its shares. Certain expenses will be financed by the Company
pursuant to distribution plans in compliance with Rule 12b-1 under the
Investment Company Act. See "Purchase of Shares--Distribution Plans".
ML & Co. and Princeton Services are "controlling persons" of the Investment
Adviser as defined under the Investment Company Act because of their ownership
of its voting securities or their power to exercise a controlling influence over
its management or policies.
Duration and Termination. Unless earlier terminated as described herein, the
Investment Advisory Agreement will remain in effect from year to year if
approved annually (a) by the Board of Directors of the Company or by a majority
of the outstanding shares of the Company and (b) by a majority of the Directors
who are not parties to such contract or interested persons (as defined in the
Investment Company Act) of any such party. Such contract is not assignable and
may be terminated without penalty on 60 days' written notice at the option of
either party thereto or by the vote of a majority of the shareholders of the
Company.
PURCHASE OF SHARES
Reference is made to "Purchase of Shares" in the Prospectus for certain
information as to the purchase of Company shares.
The Company 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 Company represents indentical
interests in the investment
15
<PAGE>
portfolio of the Company 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 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 the Investment Adviser, or an affiliate of the Investment
Adviser, FAM. Funds advised by MLAM or the Investment Adviser are referred to
herein as "MLAM-advised mutual funds".
The Company has entered into separate distribution agreements with Merrill
Lynch Funds Distributor, Inc. (the "Distributor") in connection with the
continuous offering of each class of shares of the Company (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
Company. 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 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 Investment Advisory Agreement described under "Management of
the Company--Advisory and Management Arrangements".
INITIAL SALES CHARGE ALTERNATIVES--CLASS A AND CLASS D SHARES
For the fiscal years ended November 30, 1992, 1993 and 1994, the Company
sold its Class A shares through the Distributor and Merrill Lynch, as dealers.
The gross sales charges for the sale of Class A shares of the Company for the
fiscal year ended November 30, 1992, were $108,884, of which $106,091 was
received by Merrill Lynch, and $2,793 was received by the Distributor. The gross
sales charges for the sale of Class A shares of the Company for the fiscal year
ended November 30, 1993, were $126,144, of which $118,953 was received by
Merrill Lynch, and $7,191 was received by the Distributor. The gross sales
charges for the sale of Class A shares for the fiscal year ended November 30,
1994, were $142,376, of which $133,688 was received by Merrill Lynch, and $8,688
was received by the Distributor. The gross sales charges for the sale of its
Class D shares for the fiscal period October 21, 1994 (commencement of
operations) to November 30, 1994, were $2,724, of which $2,570 was received by
Merrill Lynch, and $154 was received by the Distributor. During such periods,
the Distributor received no contingent deferred sales charges with respect to
redemptions within one year after purchase of Class A or Class D shares
purchased subject to front-end sales charge waivers.
The term "purchase" as used in the Prospectus and this Statement of
Additional Information 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 single
purchases by a trustee or other fiduciary purchasing shares for a single trust
estate or single fiduciary account (including a pension, profit-sharing or other
employee benefit trust created pursuant to a plan qualified under Section 401 of
the Code) although more than one beneficiary is involved. The term "purchase"
also includes purchases by
16
<PAGE>
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 Company 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.
The term "purchase" also includes purchases by employee benefit plans not
qualified under Section 401 of the Code, including purchases by employees or by
employers on behalf of employees, by means of a payroll deduction plan or
otherwise, of shares of the Company. Purchases by such a company or
non-qualified employee benefit plan will qualify for the quantity discounts
discussed above only if the Company and the Distributor are able to realize
economies of scale in sales effort and sales related expense by means of the
company, employer or plan making the Company's Prospectus available to
individual investors or employees and forwarding investments by such persons to
the Company and by any such employer or plan bearing the expense of any payroll
deduction plan.
Closed-End Fund Investment Option. Class A shares of the Company 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 (the date the Merrill Lynch Select PricingSM System commenced operations)
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
from a sale of their closed-end fund shares are offered Class A shares (if
eligible to purchase Class A shares) or Class D shares of the Company and other
MLAM-advised mutual funds ("Eligible Class D Shares"), if the following
conditions are met. First, the sale of 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 Company 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 Company. 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 Company. 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 Company at such day.
17
<PAGE>
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 Company 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 Company 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, and
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 Company 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 the Company's transfer agent. The Letter of Intention
is not available to employee benefit plans for 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 Company 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
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 five percent of the intended amount will be held in escrow
during the 13-month period (while 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 the reduced percentage sales charge which
would be applicable to a single purchase equal to the total dollar value of the
Class A or Class D shares then being purchased under such Letter, 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.
18
<PAGE>
An exchange from a MLAM-advised money market fund into the Company that creates
a sales charge will count toward completing a new or existing Letter of
Intention from the Company.
Merrill Lynch BlueprintSM Program. Class D shares of the Company are offered
to participants in the Merrill Lynch BlueprintSM 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. Blueprint is
directed to small investors, group IRAs and participants in certain affinity
groups such as credit unions, trade associations and benefit plans. Investors
placing orders to purchase Class D shares of the Company through Blueprint will
acquire the 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). Class D shares of the Company
are 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 D shares through
Blueprint. Services, including the exchange privilege, available to Class A and
Class D shareholders through Blueprint, however, may differ from those available
to other investors in Class D shares.
Class A and Class D shares are offered at net asset value, to Blueprint
participants 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
(as defined 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
Company may 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 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 BlueprintSM Program,
P.O. Box 30441, New Brunswick, New Jersey 08989-0041.
TMASM Managed Trusts. Class A shares are offered to TMASM 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 Code, deferred compensation plans within the meaning of Sections
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 $20 million or more in MLAM-advised
mutual funds (in the case of Class A shares) or $5 million or more 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
19
<PAGE>
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 in addition to mutual fund shares) by Blueprint,
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 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 Company, 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 Company at net asset value.
Class D shares of the Company 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 Company 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 also must establish that such redemption had been
made within 60 days prior to the investment in the Company, and the proceeds
from the redemption had been maintained in the interim in cash or a money market
fund.
20
<PAGE>
Class D shares of the Company are also 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 where 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 Company with
proceeds from a redemption of shares of such other mutual fund, and the shares
of such other fund were 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.
Class D shares of the Company are offered at net asset value, without a
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 Company with proceeds from the redemption of such
shares of other mutual funds and that such shares have been outstanding for a
period of no less than six months. Second, such purchase of Class D shares must
be made within 60 days after the redemption, and the proceeds from the
redemption must be maintained in the interim in cash or a money market fund.
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 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 Company 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 Company. 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 Company, (ii) are acquired for
investment and not for resale (subject to the understanding that the disposition
of the Company'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 Company may acquire through such
transactions restricted or illiquid securities to the extent the Company does
not exceed the applicable limits on acquisition of such securities set forth
under "Investment Objective and Policies" herein).
Reductions in or exemptions from the imposition of a sales load are due to
the nature of the investors and/or the reduced sales efforts that will be needed
in obtaining such investments.
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
Investment Company Act (each a "Distribution Plan") with respect to the account
maintenance and/or distribution fees paid by the Company to the Distributor with
respect to such classes.
21
<PAGE>
Payments of the account maintenance fees and/or distribution fees are
subject to the provisions of Rule 12b-1 under the Investment Company 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 must consider all
factors they deem relevant, including information as to the benefits of the
Distribution Plan to the Company 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 Company, as defined in the Investment Company 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 a
reasonable likelihood that such Distribution Plan will benefit the Company 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 vote of the holders of a majority of the outstanding related
class of voting securities of the Company. A Distribution Plan cannot be amended
to increase materially the amount to be spent by the Company without the
approval of the related class of shareholder, 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 for that purpose. Rule 12b-1
further requires that the Company 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.
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
Company, the maximum sales charge rule limits the aggregate of distribution fee
payments and CDSCs payable by the Company 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 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
waivering the interest charges at any time. To the extent payments would exceed
the voluntary maximum, the Company will not make further payments of the
distribution fee with respect to Class B shares, and any CDSCs will be paid to
the Company rather than to the Distributor; however, the Company 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.
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<PAGE>
The following table sets forth comparative information as of November 30,
1994, with respect to the Class B and Class C shares of the Company indicating
the maximum allowable payments that can be made under the NASD maximum sales
charge rule and, with respect to Class B shares, the Distributor's voluntary
maximum.
<TABLE><CAPTION>
DATA CALCULATED AS OF NOVEMBER 30, 1994
---------------------------------------------------------------------------------------
(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>
Class B Shares (for the fiscal
period October 21, 1988
(commencement of public offering)
to November 30, 1994):
Under NASD Rule As Adopted......... $ 63,255 $ 3,953 $671 $4,624 $1,386 $ 3,238 $372
Under Distributor's Voluntary
Waiver............................. $ 63,255 $ 3,953 $316 $4,269 $1,386 $ 2,883 $372
Class C Shares (for the fiscal
period October 21, 1994
(commencement of public offering)
to November 30, 1994):
Under NASD Rule As Adopted......... $ 214 $ 13 $ 0 $ 13 $ 0 $ 13 $ 1
</TABLE>
- ------------
(1) Purchase price of all eligible Class B or Class C shares sold during period
indicated 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%, as permitted under the NASD
Rule.
(3) Consists of CDSC payments, distribution fee payments and accruals. Of the
distribution fee payments made with respect to Class B shares prior to July
7, 1993, under the distribution plan in effect at that time, 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.
(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 NASD maximum or, with respect to Class B shares, the
voluntary maximum.
REDEMPTION OF SHARES
Reference is made to "Redemption of Shares" in the Prospectus for certain
information as to the redemption and repurchase of Company shares.
The right to redeem shares or to receive payment with respect to any such
redemption may be suspended for more than seven days only for periods during
which trading on the New York Stock Exchange is restricted as determined by the
Securities and Exchange Commission or such Exchange is closed (other than
customary weekend and holiday closings), for any period during which an
emergency exists, as defined by the Securities and Exchange Commission, as a
result of which disposal of portfolio securities or determination of the net
asset value of the Company is not reasonably practicable, and for such other
periods as the Securities and Exchange Commission may by order permit for the
protection of shareholders of the Company.
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
Company at such time.
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<PAGE>
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 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 tax-free distribution following
retirement under a tax-deferred retirement plan or attaining age 59 1/2 in the
case of an IRA or other retirement plan, or part of a series of equal periodic
payments (not less frequently than annually) made for the 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 fiscal years ended November 30, 1992, 1993
and 1994, the Distributor received CDSCs of $80,948, $33,249 and $54,858,
respectively, with regard to redemptions of Class B shares, all of which was
paid to Merrill Lynch. For the fiscal period October 21, 1994 (commencement of
operations) to November 30, 1994, there were no redemptions of Class C shares
resulting in payments of CDSCs.
Merrill Lynch BlueprintSM Program. Class B shares are offered to certain
participants in Blueprint. Blueprint is directed to small investors, group IRAs
and participants in certain affinity groups such as trade associations and
credit unions. Class B shares of the Company 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 investors in Class B shares. Orders for purchases
and redemptions of Class B shares of the Company 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 order 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
information concerning these Blueprint programs, including any annual fees or
transaction charges, is available from Merrill Lynch, Pierce, Fenner & Smith
Incorporated, The BlueprintSM 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
24
<PAGE>
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 also may purchase Class B shares with a waiver
of the CDSC. The CDSC is also 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.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to policies established by the Board of Directors of the Company,
the Investment Adviser is primarily responsible for the execution of the
Company's portfolio transactions and the allocation of brokerage. In executing
such transactions, the Investment Adviser seeks to obtain the best net results
for the Company, 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 Company does not necessarily pay
the lowest commission or spread available. The Company has no obligation to deal
with any broker or group of brokers in execution of transactions in portfolio
securities. Subject to obtaining the best price and execution, brokers who
provide supplemental investment research to the Investment Adviser may receive
orders for transactions by the Company. Information so received will be in
addition to and not in lieu of the services required to be performed by the
Investment Adviser under the Investment Advisory Agreement, and the expenses of
the Investment Adviser will not necessarily be reduced as a result of the
receipt of such supplemental information. It is possible that certain of the
supplementary investment research so received will primarily benefit one or more
other investment companies or other accounts for which investment discretion is
exercised. Conversely, the Company may be the primary beneficiary of the
research or services received as a result of portfolio transactions effected for
such other accounts or investment companies. In addition, consistent with the
Rules of Fair Practice of the NASD and policies established by the Board of
Directors of the Company, the Investment Adviser may consider sales of shares of
the Company as a factor in the selection of brokers or dealers to execute
portfolio transactions for the Company.
The Company anticipates that its brokerage transactions involving securities
of companies domiciled in countries other than the United States will be
conducted primarily on the principal stock exchanges of such countries.
Brokerage commissions and other transaction costs on foreign stock exchange
transactions are generally higher than in the United States, although the
Company will endeavor to achieve the best net results in effecting its portfolio
transactions. There is generally less government supervision and regulation of
foreign stock exchanges and brokers than in the United States.
25
<PAGE>
Foreign equity securities may be held by the Company in the form of American
Depositary Receipts (ADRs), European Depositary Receipts (EDRs), Global
Depositary Receipts (GDRs) or other securities convertible into foreign equity
securities. ADRs, EDRs and GDRs may be listed on stock exchanges or traded in
over-the-counter markets in the U.S. or Europe, as the case may be. ADRs, like
other securities traded in the U.S., as well as GDRs traded in the U.S., will be
subject to negotiated commission rates.
The Company may invest in securities traded in the over-the-counter markets
and intends to deal directly with the dealers who make markets in the securities
involved except in those circumstances where better prices and execution are
available elsewhere. Under the Investment Company Act, persons affiliated with
the Company and persons who are affiliated with such affiliated persons are
prohibited from dealing with the Company as principal in the purchase and sale
of securities unless a permissive order allowing such transactions is obtained
from the Securities and Exchange Commission. Since transactions in the
over-the-counter market usually involve transactions with dealers acting as
principal for their own account, the Company will not deal with affiliated
persons, including Merrill Lynch and its affiliates, in connection with such
transactions. However, affiliated persons of the Company may serve as its broker
in over-the-counter transactions conducted on an agency basis provided that,
among other things, the fee or commission received by such affiliated broker is
reasonable and fair compared to the fee or commission received by non-affiliated
brokers in connection with comparable transactions. See "Investment Objective
and Policies--Investment Restrictions".
For the fiscal year ended November 30, 1992, the Company paid brokerage
commissions of $688,167. Merrill Lynch and its affiliates received $32,076, or
4.7%, of such amount for effecting transactions involving 4.0% of the aggregate
dollar amount of transactions in which the Company paid brokerage commissions.
For the fiscal year ended November 30, 1993, the Company paid brokerage
commissions of $138,617. Merrill Lynch and its affiliates received $4,128, or
3.0%, of such amount for effecting transactions involving 3.4% of the aggregate
dollar amount of transactions in which the Company paid brokerage commissions.
For the fiscal year ended November 30, 1994, the Company paid brokerage
commissions of $994,994. Merrill Lynch and its affiliates received $20,959, or
2.1%, of such amount for effecting transactions involving 2.1% of the aggregate
dollar amount of transactions in which the Company paid brokerage commissions.
The Board of Directors has considered the possibilities of seeking to
recapture for the benefit of the Company brokerage commissions and other
expenses of possible portfolio transactions by conducting portfolio transactions
through affiliated entities. For example, brokerage commissions received by
affiliated brokers could be offset against the advisory fee paid by the Company.
After considering all factors deemed relevant, the Board of Directors made a
determination not to seek such recapture. The Board will reconsider this matter
from time to time.
Section 11(a) of the Securities Exchange Act of 1934, as amended, generally
prohibits members of the U.S. national securities exchanges from executing
exchange transactions for their affiliates and
26
<PAGE>
institutional accounts which they manage unless the member (i) has obtained
prior express authorization from the account to effect such transactions, (ii)
at least annually furnishes the account with a statement disclosing the
aggregate compensation received by the member in effecting such transactions,
and (iii) complies with any rules the Securities and Exchange Commission has
prescribed with respect to the requirements of clauses (i) and (ii). To the
extent Section 11(a) would apply to Merrill Lynch acting as a broker for the
Company in any of its portfolio transactions executed on any such securities
exchange of which it is a member, appropriate consents have been obtained from
the Company and annual statements as to aggregate compensation will be provided
to the Company.
DETERMINATION OF NET ASSET VALUE
The net asset value of the shares of the Company 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 not open on 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 are
translated into U.S. dollars at the prevailing market rates as quoted by one or
more banks or dealers on the day of valuation. The Company also will determine
its net asset value on any day in which there is sufficient trading in its
portfolio securities that the net asset value might be affected materially, but
only if on any such day the Company is required to sell or redeem shares. Net
asset value is computed by dividing the value of the securities held by the
Company plus any cash or other assets (including interest and dividends accrued
but not yet received) minus all liabilities (including accrued expenses) by the
total number of shares outstanding at such time. Expenses, including the fee
payable to the Investment Adviser 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 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 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 Class B and Class C shares of the Company. 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 accrued differentials among 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. In cases where
securities are traded on more than one exchange, the securities are valued on
the exchange designated by or under the authority of the Board of Directors as
the primary market. Securities 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. When the Company writes a call option, the amount of the premium
received is recorded on
27
<PAGE>
the books of the Company as an asset and an equivalent liability. The amount of
the liability is subsequently valued to reflect the current market value of the
option written, based upon the last sale price in the case of exchange-traded
options or, in the case of options traded in the over-the-counter market, the
last asked price. Options purchased by the Company are valued at their last sale
price in the case of exchange-traded options or, in the case of options traded
in the over-the-counter market, the last bid price.
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 Company.
Generally, trading in foreign securities, as well as corporate bonds, U.S.
Government securities and money market instruments, is substantially completed
each day at various times prior to the close of the New York Stock Exchange. The
values of such securities used in computing the net asset value of the Company's
shares are determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the New York Stock Exchange.
Occasionally, events affecting the values of such securities and such exchange
rates may occur between the times at which they are determined and the close of
the New York Stock Exchange which will not be reflected in the computation of
the Company's net asset value. If events materially affecting the value of such
securities occur during such period, then these securities will be valued at
their fair value as determined in good faith by the Directors.
SHAREHOLDER SERVICES
The Company offers a number of shareholder services described below which
are designed to facilitate investment in its shares. Certain of such services
are not available to investors who place orders for the Company's shares through
the Merrill Lynch BlueprintSM Program. Full details as to each of such services
and copies of the various plans described below can be obtained from the
Company, the Distributor or Merrill Lynch. Certain of these services are
available only to U.S. investors.
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 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. A shareholder may
make additions to his Investment Account at any time by mailing a check directly
to the Fund's transfer agent.
Share certificates are issued only for full shares and only upon the
specific request of the shareholder. 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.
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<PAGE>
Shareholders considering transferring their Class A 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 Company, 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. If
the new brokerage firm is willing to accommodate the shareholder in this manner,
the shareholder must request that he be issued certificates for his shares, and
then must turn the certificates over to the new firm for re-registration as
described in the preceding sentence. 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 Company, 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.
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 Company's Automatic Investment Plan whereby the Company is
authorized through pre-authorized checks or automated clearing house debits of
$50 or more to charge the regular bank account of the shareholder on a regular
basis to provide systematic additions to the Investment Account of such
shareholder. An investor whose shares of the Company are held within a CMA(R) or
CBA(R) account may arrange to have periodic investments made in the Company in
amounts of $100 or more ($1 for retirement accounts) through the CMA(R)/CBA(R)
Automated Investment Program.
AUTOMATIC REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
Unless specific instructions to the contrary 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
Company. Such reinvestment will be at the net asset value of shares of the
Company 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 or about 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 distributions reinvested in shares of the
29
<PAGE>
Company or vice versa, and commencing ten days after 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 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 Company having a value, based upon 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 as determined as of 15
minutes after the close of business of the New York Stock Exchange (generally,
4:00 p.m., New York time) on the 24th day of each month or the 24th day of the
last month of each 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 preceding business day. The check for the withdrawal
payment will be mailed, or the direct deposit of the 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 automatically reinvested in Class A
or Class D shares of the Company, respectively. A shareholder's Systematic
Withdrawal Plan may be terminated at any time, without charge or penalty, by the
shareholder, the Company, the Company'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
correspondingly reduced. 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 Company will not knowingly
accept purchase orders for Class A or Class D shares of the Company from
investors who maintain a Systematic Withdrawal Plan unless 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.
Alternatively, a Class A or Class D shareholder whose shares are held with a
CMA(R), CBA(R) or Retirement Account may elect to have shares redeemed on a
monthly, bimonthly, quarterly, semiannual or annual basis through the
CMA(R)/CBA(R) 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; bimonthly systematic redemptions will be made at net asset
value on the first Monday of every other month; and quarterly, semiannual or
annual redemptions are made at net asset value on the first Monday of months
selected at
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<PAGE>
the shareholder's option. If the first Monday of the month is a holiday, the
redemption will be processed at net asset value on the next business day. The
CMA(R)/CBA(R) Systematic Redemption Program is not available if Company shares
are being purchased within the account pursuant to the Automatic Investment
Program. For more information on the CMA(R)/CBA(R) Systematic Redemption
Program, eligible shareholders should contact their Financial Consultant.
EXCHANGE PRIVILEGE
Shareholders of each class of shares of the Company have an exchange
privilege with certain other MLAM-advised mutual funds listed below. Under the
Merrill Lynch Select PricingSM System, Class A shareholders may exchange Class A
shares of the Company 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, but
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 are exchangeable
with shares of the same class of other MLAM-advised mutual funds. For purposes
of computing the CDSC that may be payable upon disposition of the shares
acquired in the exchange, the holding period for the previously owned shares of
the Company 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 are 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 at
least 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 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 charge 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,
Class A and Class D shares acquired through dividend reinvestment shall be
deemed to have been sold with a sales charge equal to the sales charge
previously paid on the Class A or Class D shares on which the dividend was paid.
Based on this formula, Class A and Class D shares of the Company generally
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<PAGE>
may be exchanged into the Class A or Class D shares of the other funds or into
shares of the Class A and Class D money market funds with a reduced or 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, ("new Class B or
Class C shares") of another MLAM-advised mutual fund 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 Company exercising the exchange privilege will continue to
be subject to the Company'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 Company acquired through
use of the exchange privilege will be subject to the Company's 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 Company for those of
Merrill Lynch Special Value Fund, Inc. ("Special Value Fund") after having held
the Company Class B shares for two and a half years. The 2% CDSC 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 Company 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.
Shareholders also may exchange shares of the Company 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 Company 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 Company 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 Company for shares of Merrill Lynch Institutional Fund
("Institutional Fund") after having held the Company 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 Company 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.
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<PAGE>
Set forth below is a description of the investment objectives of the other
funds into which exchanges can be made:
Funds issuing Class A, Class B, Class C and Class D Shares:
<TABLE>
<CAPTION>
<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
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 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.
</TABLE>
33
<PAGE>
<TABLE>
<S> <C>
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 reasonable risk by
investing in common stocks and other types
of securities, including fixed income
securities and convertible securities.
MERRILL LYNCH BASIC VALUE FUND, INC. ........ Capital appreciation and, secondarily, income
through investment 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 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 consisting primarily of insured
California Municipal Bonds.
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
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.
</TABLE>
34
<PAGE>
<TABLE>
<S> <C>
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 the Pacific Basin,
other than Japan, Australia and New
Zealand.
MERRILL LYNCH EUROFUND....................... Capital appreciation primarily through
investment in equity securities of
corporations domiciled in Europe.
</TABLE>
35
<PAGE>
<TABLE>
<S> <C>
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 serving
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 FUND FOR TOMORROW, INC. ....... Long-term growth through investment in a
portfolio of good quality securities,
primarily common stock, potentially
positioned to benefit from demographic and
cultural changes as they affect consumer
markets.
MERRILL LYNCH FUNDAMENTAL GROWTH
FUND, INC. ................................ Long-term growth of capital through
investment in a diversified portfolio of
equity securities placing particular
emphasis on companies that have exhibited
an above-average growth rate in earnings.
</TABLE>
36
<PAGE>
<TABLE>
<S> <C>
MERRILL LYNCH GLOBAL ALLOCATION FUND,
INC. ...................................... High total return consistent with prudent
risk, through a fully managed investment
policy utilizing U.S. and foreign equity,
debt and money market securities, the
combination of which will be varied from
time to time both with respect to the types
of securities and markets in response to
changing market and economic trends.
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.
MERRILL LYNCH GLOBAL BOND FUND FOR INVESTMENT
AND RETIREMENT............................. High total investment return from investment
in a global portfolio of debt instruments
denominated in various currencies and
multinational 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 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.
</TABLE>
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<TABLE>
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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 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
which are 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 derive or 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.
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
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
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 as high a
level of income exempt from 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.
</TABLE>
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<TABLE>
<S> <C>
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 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.
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 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.
</TABLE>
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<TABLE>
<S> <C>
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 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 as high a
level of income exempt from 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 as high a
level of income exempt from Federal and
Oregon income taxes as is consistent with
prudent investment management.
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 and
Singapore.
</TABLE>
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<TABLE>
<S> <C>
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
portfolio 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 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.
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 multinational currency units
and having remaining maturities not
exceeding three years.
</TABLE>
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<TABLE>
<S> <C>
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, INC. ......... Capital appreciation through worldwide
investment in equity securities of
companies that 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 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 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
government securities.
MERRILL LYNCH UTILITY INCOME FUND, INC. ..... High current income through investment in
equity and debt securities issued by
companies which are primarily engaged in
the ownership or operation of facilities
used to generate, transmit or distribute
electricity, telecommunications, gas or
water.
</TABLE>
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<TABLE>
<S> <C>
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.
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.
</TABLE>
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<TABLE>
<S> <C>
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
obligations 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 Company of the exchange.
Shareholders of the Company, 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 Company
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 Securities and Exchange 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 at any time and thereafter
may 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.
45
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TAXES
The Company intends to continue to qualify for the special tax treatment
afforded regulated investment companies ("RICs") under the Internal Revenue Code
of 1986, as amended (the "Code"). If it so qualifies, the Company (but not its
shareholders) will not be subject to Federal income tax on the part of its net
ordinary income and net realized capital gains which it distributes to Class A,
Class B, Class C and Class D shareholders (together, the "shareholders"). The
Company intends to distribute substantially all of such income.
Dividends paid by the Company from its ordinary income and distributions of
the Company's net realized short-term capital gains (together referred to
hereafter as "ordinary income dividends") are taxable to shareholders as
ordinary income. Distributions made from the Company's net realized long-term
capital gains (including long-term gains from certain transactions in futures
and options) ("capital gain dividends") are taxable to shareholders as long-term
capital gains, regardless of the length of time the shareholder has owned
Company shares. Any loss upon the sale or exchange of Company shares held for
six months or less will be treated as long-term capital loss to the extent of
any capital gain dividends received by the shareholder. Distributions in excess
of the Company's earnings and profits will first reduce the adjusted tax basis
of a holder's shares and, after such adjusted tax basis is reduced to zero, will
constitute capital gains to such holder (assuming the shares are held as a
capital asset).
Dividends are taxable to shareholders even though they are reinvested in
additional shares of the Company. Not later than 60 days after the close of its
taxable year, the Company will provide its shareholders with a written notice
designating the amounts of any ordinary income dividends or capital gain
dividends. A portion of the Company's ordinary income dividends may be eligible
for the dividends received deduction allowed to corporations under the Code, if
certain requirements are met. For this purpose, the Company 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 gross income allocable to Class A, Class B, Class C and Class D shareholders
during the taxable year or such other method as the Internal Revenue Service may
prescribe. If the Company pays a dividend in January that was declared in the
previous October, November or December to shareholders of record on a specified
date in one of such months, then such dividend will be treated for tax purposes
as being paid by the Company and received by its shareholders on December 31 of
the year in which such dividend was declared.
Ordinary income dividends paid by the Company to shareholders who are
nonresident aliens or foreign entities will be subject to a 30% United States
withholding tax under existing provisions of the Code applicable to foreign
individuals and entities unless a reduced rate of withholding or a withholding
exemption is provided under applicable treaty law. Nonresident shareholders are
urged to consult their own tax advisers concerning the applicability of the U.S.
withholding tax.
Under certain provisions of the Code, some shareholders may be subject to a
31% withholding tax on ordinary income dividends, capital gain dividends and
redemption payments ("backup withholding"). Generally, shareholders subject to
backup withholding will be those for whom no certified taxpayer identification
number is on file with the Company or who, to the Company's knowledge, have
furnished an incorrect number. When establishing an account, an investor must
certify under penalty of
46
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perjury that such number is correct and that such investor is not otherwise
subject to backup withholding.
Dividends and interest received by the Company may give rise to withholding
and other taxes imposed by foreign countries. Tax conventions between certain
countries and the U.S. may reduce or eliminate such taxes. Shareholders may be
able to claim U.S. foreign tax credits with respect to such taxes, subject to
certain conditions and limitations contained in the Code. For example, certain
retirement accounts cannot claim foreign tax credits on investments in foreign
securities held in the Company. If more than 50% in value of the Company's total
assets at the close of its taxable year consists of securities of foreign
corporations, the Company will be eligible, and intends, to file an election
with the Internal Revenue Service pursuant to which shareholders of the Company
will be required to include their proportionate shares of such withholding taxes
in their U.S. income tax returns as gross income, treat such proportionate
shares as taxes paid by them and deduct such proportionate shares in computing
their taxable incomes or, alternatively, use them as foreign tax credits against
their U.S. income taxes. No deductions for foreign taxes, however, may be
claimed by noncorporate shareholders who do not itemize deductions. A
shareholder that is a nonresident alien individual or a foreign corporation may
be subject to U.S. withholding tax on the income resulting from the Company's
election described in this paragraph but may not be able to claim a credit or
deduction against such U.S. tax for the foreign taxes treated as having been
paid by such shareholder. The Company will report annually to its shareholders
the amount per share of such withholding taxes. For this purpose, the Company
will allocate foreign taxes and foreign source income among the Class A, Class
B, Class C and Class D shareholders according to a method similar to that
described above for the allocation of dividends eligible for the dividends
received deduction.
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.
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 any sales charge paid to the
Company on the exchanged shares reduces any sales charge the shareholder would
have owed upon purchase of the 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 Company will be
disallowed if other Company 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.
The Code requires the RIC to pay a nondeductible 4% excise tax to the extent
the RIC does not distribute, during each calendar year, 98% of its ordinary
income, determined on a calendar year basis, and 98% of its capital gains,
determined, in general, on an October 31 year end, plus certain undistributed
amounts from previous years. While the Company 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 the Company's taxable
income and capital gains will be distributed to avoid
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entirely the imposition of the tax. In such event, the Company will be liable
for the tax only on the amount by which it does not meet the foregoing
distribution requirements.
The Company may invest in securities rated in the medium to lower rating
categories of nationally recognized rating organizations, and in unrated
securities ("high yield securities"), as previously described. Some of these
high yield securities may be purchased at a discount and may therefore cause the
Company to accrue income before amounts due under the obligations are paid. In
addition, a portion of the interest payments on such high yield securities may
be treated as dividends for Federal income tax purposes and may be eligible for
the dividends received deduction allowed to domestic corporations under the
Code.
TAX TREATMENT OF OPTIONS, FUTURES AND FORWARD FOREIGN EXCHANGE TRANSACTIONS
The Company may write, purchase or sell options, futures and forward foreign
exchange contracts. Options and futures contracts that are "Section 1256
contracts" will be "marked to market" for Federal income tax purposes at the end
of each taxable year, i.e., each such options or futures contract will be
treated as sold for its fair market value on the last day of the taxable year.
Unless such contract is a forward foreign exchange contract, or is a non-equity
option or a regulated futures contract for a non-U.S. currency for which the
Company elects to have gain or loss treated as ordinary gain or loss under Code
Section 988 (as described below), gain or loss from Section 1256 contracts will
be 60% long-term and 40% short-term capital gain or loss. The mark-to-market
rules outlined above, however, will not apply to certain transactions entered
into by the Company solely to reduce the risk of changes in price or interest or
currency exchange rates with respect to its investments.
A forward foreign exchange contract that is a Section 1256 contract will be
marked to market, as described above. However, the character of gain or loss
from such a contract will generally be ordinary under Code Section 988. The
Company may, nonetheless, elect to treat the gain or loss from certain forward
foreign exchange contracts as capital. In this case, gain or loss realized in
connection with a forward foreign exchange contract that is a Section 1256
contract will be characterized as 60% long-term and 40% short-term capital gain
or loss.
Code Section 1092, which applies to certain "straddles", may affect the
taxation of the Company's transactions in options, futures and forward foreign
exchange contracts. Under Section 1092, the Company may be required to postpone
recognition for tax purposes of losses incurred in certain closing transactions
in options, futures and forward foreign exchange contracts.
One of the requirements for qualification as a RIC is that less than 30% of
the Company's gross income be derived from gains from the sale or other
disposition of securities held for less than three months. Accordingly, the
Company may be restricted in effecting closing transactions within three months
after entering into an option or futures contract.
SPECIAL RULES FOR CERTAIN FOREIGN CURRENCY TRANSACTIONS
In general, gains from "foreign currencies" and from foreign currency
options, foreign currency futures and forward foreign exchange contracts
relating to investments in stock, securities or foreign currencies will be
qualifying income for purposes of determining whether the Company qualifies as a
RIC. It is currently unclear, however, who will be treated as the issuer of a
foreign currency instrument
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or how foreign currency options, foreign currency futures and forward foreign
exchange contracts will be valued for purposes of the RIC diversification
requirements applicable to the Company.
Under Code Section 988, special rules are provided for certain transactions
in a currency other than the taxpayer's functional currency (i.e., unless
certain special rules apply, currencies other than the U.S. dollar). In general,
foreign currency gains or losses from certain debt instruments, from certain
forward contracts, from futures contracts that are not "regulated futures
contracts" and from unlisted options will be treated as ordinary income or loss
under Code Section 988. In certain circumstances, the Company may elect capital
gain or loss treatment for such transactions. Regulated futures contracts, as
described above, will be taxed under Code Section 1256 unless application of
Section 988 is elected by the Company. In general, however, Code Section 988
gains or losses will increase or decrease the amount of the Company's investment
company taxable income available to be distributed to shareholders as ordinary
income. Additionally, if Code Section 988 losses exceed other investment company
taxable income during a taxable year, the Company would not be able to make any
ordinary income dividend distributions, and any distributions made before the
losses were realized but in the same taxable year would be recharacterized as a
return of capital to shareholders, thereby reducing the basis of each
shareholder's Company shares, and resulting in a capital gain for any
shareholder who received a distribution greater than such shareholder's basis in
Company shares (assuming the shares were held as a capital asset). These rules
and the mark-to-market rules described above, however, will not apply to certain
transactions entered into by the Company solely to reduce the risk of currency
fluctuations with respect to its investments.
The foregoing is a general and abbreviated summary of the applicable
provisions of the Code and Treasury regulations presently in effect. For the
complete provisions, reference should be made to the pertinent Code sections and
the Treasury regulations promulgated thereunder. The Code and the Treasury
regulations are subject to change by legislative or administrative action either
prospectively or retroactively.
Ordinary income and capital gain dividends may also be subject to state and
local taxes.
Certain states exempt from state income taxation dividends paid by RICs
which are derived from interest on U.S. Government obligations. State law varies
as to whether dividend income attributable to U.S. Government obligations is
exempt from state income tax.
Shareholders are urged to consult their own tax advisers regarding specific
questions as to Federal, foreign, state or local taxes. Foreign investors should
consider applicable foreign taxes in their evaluation of an investment in the
Company.
PERFORMANCE DATA
From time to time the Company may include its average annual total return
and other total return data in advertisements or information furnished to
present or prospective shareholders. Total return figures are based on the
Company'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.
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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 maximum 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 the specified period in the case of Class B and Class C
shares.
The Company 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 various periods
other than those noted below. Such data will be computed as described above,
except that (1) as required by the periods of the quotations, actual annual,
annualized or aggregate data, rather than average annual data, may be quoted,
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 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
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 longer periods of time.
Set forth in the tables below is total return information for the Class A,
Class B, Class C and Class D shares of the Company for the periods indicated.
<TABLE><CAPTION>
CLASS A SHARES CLASS B SHARES
--------------------------------- ---------------------------------
REDEEMABLE REDEEMABLE
VALUE OF A VALUE OF A
HYPOTHETICAL HYPOTHETICAL
EXPRESSED AS A $1,000 EXPRESSED AS A $1,000
PERCENTAGE BASED INVESTMENT PERCENTAGE BASED INVESTMENT
ON A HYPOTHETICAL AT THE END ON A HYPOTHETICAL AT THE END OF
PERIOD $1,000 INVESTMENT OF THE PERIOD $1,000 INVESTMENT THE PERIOD
- ----------------------------------------------- ----------------- ------------- ----------------- -------------
AVERAGE ANNUAL TOTAL RETURN
(INCLUDING MAXIMUM APPLICABLE SALES CHARGES)
<S> <C> <C> <C> <C>
One Year Ended November 30, 1994............... (1.09)% $ 989.10 (0.60)% $ 994.00
Five Years Ended November 30, 1994............. 5.78% $1,324.30 5.83% $1,327.30
Ten Years Ended November 30, 1994.............. 12.63% $3,285.50
Inception (October 21, 1988) to November 30,
1994.......................................... 7.94% $1,595.50
50
<PAGE>
</TABLE>
<TABLE><CAPTION>
ANNUAL TOTAL RETURN
(EXCLUDING MAXIMUM APPLICABLE SALES CHARGES)
<S> <C> <C> <C> <C>
Year Ended November 30,
1994.......................................... 4.39% $1,043.90 3.32% $1,033.20
1993.......................................... 19.16% $1,191.60 17.87% $1,178.70
1992.......................................... 10.67% $1,106.70 9.58% $1,095.80
1991.......................................... 6.77% $1,067.70 5.67% $1,056.70
1990.......................................... (4.90)% $ 951.00 (5.88)% $ 941.20
1989.......................................... 19.36% $1,193.60 18.22% $1,182.20
1988.......................................... 17.59% $1,175.90
1987.......................................... 0.67% $1,006.70
1986.......................................... 33.34% $1,333.40
1985.......................................... 31.69% $1,316.90
Inception (October 21, 1988) to November 30,
1988.......................................... 1.68% $1,016.80
<CAPTION>
AGGREGATE TOTAL RETURN
(INCLUDING MAXIMUM APPLICABLE SALES CHARGES)
<S> <C> <C> <C> <C>
Inception (July 2, 1984) to November 30,
1994.......................................... 238.45% 3,384.50
Inception (October 21, 1988) to November 30,
1994.......................................... 59.55% $1,595.50
</TABLE>
<TABLE><CAPTION>
CLASS C SHARES CLASS D SHARES
--------------------------------- ---------------------------------
REDEEMABLE REDEEMABLE
VALUE OF A VALUE OF A
HYPOTHETICAL HYPOTHETICAL
EXPRESSED AS A $1,000 EXPRESSED AS A $1,000
PERCENTAGE BASED INVESTMENT PERCENTAGE BASED INVESTMENT
ON A HYPOTHETICAL AT THE END OF ON A HYPOTHETICAL AT THE END OF
PERIOD $1,000 INVESTMENT THE PERIOD $1,000 INVESTMENT THE PERIOD
- ---------------------------------------------- ----------------- ------------- ----------------- -------------
AVERAGE ANNUAL TOTAL RETURN
(INCLUDING MAXIMUM APPLICABLE SALES CHARGES)
<S> <C> <C> <C> <C>
Inception (October 21, 1994) to November 30,
1994......................................... (39.24)% $946.90 (59.19)% $906.50
<CAPTION>
ANNUAL TOTAL RETURN
(EXCLUDING MAXIMUM APPLICABLE SALES CHARGES)
<S> <C> <C> <C> <C>
Inception (October 21, 1994) to November 30,
1994......................................... (4.36)% $956.40 (4.33)% $956.70
<CAPTION>
AGGREGATE TOTAL RETURN
(INCLUDING MAXIMUM APPLICABLE SALES CHARGES)
<S> <C> <C> <C> <C>
Inception (October 21, 1994) to November 30,
1994......................................... (5.31)% $946.90 (9.35)% $906.50
</TABLE>
51
<PAGE>
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 "Redemption of Shares", respectively, the total return data quoted by the
Company in advertisements directed to such investors may take into account a
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 the waiver of sales charges, a lower amount of expenses may be
deducted.
GENERAL INFORMATION
DESCRIPTION OF SHARES
The Company was incorporated under Maryland law on March 7, 1984. It has an
authorized capital of 400,000,000 shares of Common Stock, par value of $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
Company 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 that they have exclusive voting rights with
respect to matters relating to such account maintenance and/or distribution
expenditures. The Company has received an order from the Securities and Exchange
Commission permitting the issuance and sale of multiple classes of Common Stock.
The Board of Directors of the Company may classify and reclassify the shares of
the Company into additional classes of Common Stock at a future date.
Shareholders are entitled to one vote for each share held and fractional
votes for fractional shares held and will vote on the election of Directors and
any other matter submitted to a shareholder vote. The Company 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; and (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 Company. Voting rights for Directors are
not cumulative. Shares issued are fully paid and non-assessable and have no
preemptive rights. Redemption and conversion rights are discussed elsewhere
herein and in the Prospectus. Each share is entitled to participate equally in
dividends and distributions declared by the Company and in the net assets of the
Company upon liquidation or dissolution after satisfaction of outstanding
liabilities. Stock certificates are issued by the transfer agent only on
specific request. Certificates for fractional shares are not issued in any case.
Shareholders may, in accordance with Maryland law, cause a meeting of
shareholders to be held for the purpose of voting on the removal of Directors at
the request of 25% of the outstanding shares of the Company. A Director may be
removed at a special meeting of shareholders by a vote of a majority of the
votes entitled to be cast for the election of Directors.
The Company was incorporated under the name "Merrill Lynch International
Holdings, Inc." On November 1, 1993, the Company commenced doing business under
the name "Merrill Lynch Global Holdings" and on October 21, 1994, changed its
name to Merrill Lynch Global Holdings, Inc. As investing in overseas markets has
become more common, the term "international fund" has widely come
52
<PAGE>
to mean one which invests exclusively outside the United States, whereas a
"global fund" is one which may invest within the United States as well as in
other markets. Management of the Company believes that the name "Merrill Lynch
Global Holdings, Inc." better portrays the Company's worldwide investment
capabilities, which include the ability to invest both within the United States
and abroad.
COMPUTATION OF OFFERING PRICE PER SHARE
An illustration of the computation of the offering price for Class A, Class
B, Class C and Class D shares of the Company based on the value of the Company's
net assets on November 30, 1994, and its shares outstanding on that date is as
follows:
<TABLE><CAPTION>
CLASS A CLASS B CLASS C CLASS D
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Net Assets....................... $330,132,381 $49,646,500 $ 176,892 $ 1,590,669
------------ ----------- ------------ -----------
------------ ----------- ------------ -----------
Number of Shares Outstanding..... 25,749,344 3,970,722 14,145 124,135
------------ ----------- ------------ -----------
------------ ----------- ------------ -----------
Net Asset Value Per Share (net
assets divided by number of
shares outstanding)............. $ 12.82 $ 12.50 $ 12.51 $ 12.81
Sales Charge (for Class A and
Class D shares: 5.25% of
offering price (5.54% of net
amount invested*)).............. 0.71 ** ** 0.71
------------ ----------- ------------ -----------
Offering Price................... $ 13.53 $ 12.50 $ 12.51 $ 13.52
------------ ----------- ------------ -----------
------------ ----------- ------------ -----------
</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 of shares. 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 Company. The selection of
independent auditors is subject to ratification by the shareholders of the
Company. The independent auditors are responsible for auditing the annual
financial statements of the Company.
CUSTODIAN
The Chase Manhattan Bank, N.A., Global Securities Services, 4 Chase
MetroTech Center, 18th Floor, Brooklyn, New York 11245 (the "Custodian"), acts
as the custodian of the Company's assets. Under its contract with the Company,
the Custodian is authorized to establish separate accounts in foreign currencies
and to cause foreign securities owned by the Company to be held in its offices
outside the U.S. and with certain foreign banks and securities depositories. The
Custodian is responsible for safeguarding and controlling the Company's cash and
securities, handling the receipt and delivery of securities and collecting
interest and dividends on the Company's investments.
53
<PAGE>
TRANSFER AGENT
Financial Data Services, Inc., Transfer Agency Mutual Fund Operations, 4800
Deer Lake Drive East, Jacksonville, Florida 32246-6484, acts as the Company's
transfer agent (the "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 "Management of the Company--Transfer
Agency Services" in the Prospectus.
LEGAL COUNSEL
Brown & Wood, One World Trade Center, New York, New York 10048-0557, is
counsel for the Company.
REPORTS TO SHAREHOLDERS
The fiscal year of the Company ends on November 30 of each year. The Company
sends to its shareholders at least semi-annually reports showing the Company's
portfolio and other information. An annual report, containing financial
statements audited by independent auditors, is sent to shareholders each year.
After the end of each year shareholders will receive Federal income tax
information regarding dividends and capital gains distributions.
ADDITIONAL INFORMATION
The Prospectus and this Statement of Additional Information do not contain
all the information set forth in the Registration Statement and the exhibits
relating thereto, which the Company has filed with the Securities and Exchange
Commission, Washington, D.C., under the Securities Act of 1933 and the
Investment Company Act, to which reference is hereby made.
Certain Record Holders. On February 28, 1995, the name, and percentage
ownership of each investor that, to the Company's knowledge, owned of record or
beneficially 5% or more of the outstanding shares of the Company were as
follows:
PERCENT OF
THE
COMPANY'S
COMMON STOCK
NAME OF BENEFICIAL OWNER OWNED
-------------------------------------- ------------
Merrill Lynch Trust Company 17.0%
Trustee for Benefit of
DuPont Plan Account
Merrill Lynch Trust Company (7.0%)
Trustee for Benefit of
Conoco Plan Account
Merrill Lynch Trust Company (5.1%)
Trustee for Benefit of
Tandem Computers
The address of Merrill Lynch Trust Company is P.O. Box 30532, New Brunswick,
NJ 08989.
54
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders,
MERRILL LYNCH GLOBAL HOLDINGS, INC.:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of Merrill Lynch Global Holdings, Inc. as of
November 30, 1994, 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 the periods presented. These financial
statements and the financial highlights are the responsibility of the Company'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 November
30, 1994 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 Global
Holdings, Inc. as of November 30, 1994, 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
January 12, 1995
55
<PAGE>
<TABLE><CAPTION>
SCHEDULE OF INVESTMENTS
Shares Held/ Value Percent of
Industries Face Amount Investments Cost (Note 1a) Net Assets
<S> <C> <S> <C> <C> <C>
LATIN AMERICA
Argentina
Beverages & Tobacco 47,000 Buenos Aires Embotelladora S.A. (BAESA) (ADR)* $ 1,427,640 $ 1,821,250 0.5%
Energy 70,000 Yacimientos Petroliferos Fiscales S.A.
--Sponsored (ADR)* 1,458,700 1,583,750 0.4
Multi-Industry 187,500 Compania Naviera Perez Companc S.A.C.F.I.M.F.A. 1,047,194 910,012 0.2
Telecommunications 40,000 ++++Telecom Argentina Stet--France Telecom
S.A. (ADR)* 1,400,296 2,210,000 0.6
Utilities 30,000 Central Puerto (ADR)* 795,000 877,500 0.2
Total Investments in Argentina 6,128,830 7,402,512 1.9
Brazil
Telecommunications 20,957,793 Telecomunicacoes Brasileiras S.A.--Telebras PN
(Preferred) 670,658 1,004,486 0.3
Total Investments in Brazil 670,658 1,004,486 0.3
Chile
Chemicals 45,000 Sociedad Quimica y Minera de Chile S.A.
(B Shares) (ADR)* 1,158,750 1,260,000 0.3
Metals 35,000 Madeco S.A. (ADR)* 525,000 1,015,000 0.3
Multi-Industry 40,000 GT Chilean Growth Fund (ADR)* 1,365,000 1,260,000 0.3
Utilities 40,000 Enersis S.A. (ADR)* 779,762 1,195,000 0.3
Total Investments in Chile 3,828,512 4,730,000 1.2
Mexico
Beverages & Tobacco 20,000 Coca-Cola Femsa S.A. (ADR)* 454,318 632,500 0.2
30,000 Empresa La Moderna, S.A. de C.V. (ADR)* 992,735 843,750 0.2
20,000 Panamerican Beverages, Inc. (Class A) (ADR)* 525,114 700,000 0.2
------------ ------------ ------
1,972,167 2,176,250 0.6
Broadcasting & 30,000 ++++Grupo Televisa, S.A. de C.V. (ADR)* 953,349 1,357,500 0.4
Publishing
Engineering & 72,000 Grupo Mexicano de Desarrollo S.A. (Class B) (ADR)* 1,184,535 1,332,000 0.4
Construction 5,335 Grupo Mexicano de Desarrollo S.A. (Class L) (ADR)* 85,973 110,702 0.0
------------ ------------ ------
1,270,508 1,442,702 0.4
Multi-Industry 150,000 Grupo Carso, S.A. de C.V. 1,320,769 1,688,727 0.4
Steel 67,400 Grupo Simec, S.A. de C.V. (ADR)* 946,876 1,550,200 0.4
Telecommunications 30,000 Telefonos de Mexico, S.A. de C.V. (ADR)* 1,109,350 1,590,000 0.4
Total Investments in Mexico 7,573,019 9,805,379 2.6
Venezuela
Steel 52,000 ++++Venezolana de Prerreducidos Caroni 'Venprecar'
C.A. (GDS)** 379,600 302,250 0.1
Total Investments in Venezuela 379,600 302,250 0.1
Total Investments in Latin America 18,580,619 23,244,627 6.1
NORTH AMERICA
Canada
Telecommunications 55,000 Newbridge Networks Corp. 855,730 1,849,375 0.5
50,000 Northern Telecom 1,474,875 1,600,000 0.4
------------ ------------ ------
2,330,605 3,449,375 0.9
</TABLE>
56
<PAGE>
<TABLE><CAPTION>
Total Investments in Canada 2,330,605 3,449,375 0.9
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <S> <C> <C> <C>
United States
Appliances 70,000 Corning Inc. 2,278,075 2,100,000 0.5
& Household 50,000 River Oaks Furniture Inc. 941,875 687,500 0.2
------------ ------------ ------
3,219,950 2,787,500 0.7
Automobiles 30,000 Ford Motor Co. (8.40% Conv. Pfd.) 1,500,000 2,643,750 0.7
50,000 General Motors Corp. 2,284,800 1,906,250 0.5
------------ ------------ ------
3,784,800 4,550,000 1.2
Banking 37,500 Mercantile Bancorp., Inc. 949,375 1,139,063 0.3
60,000 Midlantic National Bank 1,473,090 1,590,000 0.4
70,000 Signet Banking Corp. 2,632,262 2,091,250 0.5
70,600 UJB Financial Corp. 1,434,893 1,720,875 0.5
------------ ------------ ------
6,489,620 6,541,188 1.7
Broadcasting & 15,000 Clear Channel Communications Inc. 424,500 686,250 0.1
Publishing 100,000 Time Warner Inc. 2,832,156 3,375,000 0.9
54,000 ++Viacom Inc. (Class A) 1,629,189 2,153,250 0.6
26,000 ++Viacom Inc. (Class B) 993,241 1,001,000 0.3
80,000 ++Viacom Inc. (VCR) (Rights) (a) 104,325 120,000 0.0
------------ ------------ ------
5,983,411 7,335,500 1.9
Building Materials 30,000 Owens-Corning Fiberglass Corp. 1,266,112 870,000 0.2
Business & Public 36,000 Microsoft Corp. 1,503,000 2,259,000 0.6
Services 100,000 Molten Metal Technology, Inc. 1,920,613 1,875,000 0.5
60,000 Oracle Systems Corp. 956,437 2,475,000 0.6
30,000 ++PacifiCare Health Systems (Class B) 1,012,500 1,980,000 0.5
19,800 ++Sierra Health Services Inc. 315,444 608,850 0.2
44,800 United HealthCare Corp. 737,136 2,128,000 0.6
30,000 US HealthCare Inc. 1,217,025 1,335,000 0.3
------------ ------------ ------
7,662,155 12,660,850 3.3
Chemicals 60,000 PPG Industries, Inc. 2,376,100 2,160,000 0.6
Electrical Equipment 60,000 Ultratech Stepper Inc. 1,159,400 2,310,000 0.6
Electronics/Components 30,000 Intel Corp. 887,187 1,886,250 0.5
35,000 Motorola, Inc. 1,617,865 1,973,125 0.5
20,000 Texas Instruments Inc. 1,297,950 1,510,000 0.4
------------ ------------ ------
3,803,002 5,369,375 1.4
Energy Sources 20,000 Anadarko Petroleum, Inc. 724,326 800,000 0.2
30,000 Chevron Corp. 1,323,615 1,308,750 0.4
70,000 Enron Oil & Gas Co. 1,110,128 1,268,750 0.3
------------ ------------ ------
3,158,069 3,377,500 0.9
Food & Household 85,000 Performance Food Group Co. 1,323,720 956,250 0.3
Products
Forest Products/ 25,000 Georgia-Pacific Corp. 1,820,250 1,787,500 0.5
Paper & Packaging
Industrial--Other 52,500 Johnson Controls, Inc. 2,141,875 2,546,250 0.7
67,500 Varity Corp. 2,071,277 2,514,375 0.6
------------ ------------ ------
4,213,152 5,060,625 1.3
</TABLE>
57
<PAGE>
<TABLE><CAPTION>
SCHEDULE OF INVESTMENTS (continued)
Shares Held/ Value Percent of
Industries Face Amount Investments Cost (Note 1a) Net Assets
NORTH AMERICA (concluded)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <S> <C> <C> <C>
United States (concluded)
Insurance 170,000 AFLAC, Inc. $ 4,370,715 $ 5,758,750 1.5%
40,000 Mercury General Corp. 1,118,100 1,135,000 0.3
------------ ------------ ------
5,488,815 6,893,750 1.8
Leisure & Tourism 98,400 McDonald's Corp. 2,349,152 2,792,100 0.7
125,000 Mirage Resorts, Inc. 1,927,525 2,468,750 0.7
50,000 Walt Disney Co. 1,653,250 2,181,250 0.6
------------ ------------ ------
5,929,927 7,442,100 2.0
Merchandising 50,000 The Home Depot, Inc. 1,259,675 2,312,500 0.6
100,000 Home Shopping Network, Inc. 1,322,973 1,062,500 0.3
37,500 Sports & Recreation Inc. 972,500 853,125 0.2
30,000 ++Toys 'R' Us, Inc. 750,858 1,098,750 0.3
40,000 Wal-Mart Stores, Inc. 658,900 925,000 0.2
------------ ------------ ------
4,964,906 6,251,875 1.6
Metals--Non-Ferrous 40,000 Phelps Dodge Corp. 2,297,400 2,290,000 0.6
Multi-Industry 40,000 Tenneco Inc. 2,032,438 1,555,000 0.4
Oil-Field Equipment 30,000 Schlumberger Ltd. 1,752,332 1,593,750 0.4
Pharmaceuticals 20,000 ++ALZA Corp. 356,200 385,000 0.1
US$1,500,000 ICN Pharmaceuticals, Inc., 8.50% due 11/15/1999 1,500,000 1,680,000 0.4
36,900 Merck & Co. 1,331,389 1,374,525 0.4
------------ ------------ ------
3,187,589 3,439,525 0.9
Railroads 30,000 CSX Corp. 1,993,665 2,085,000 0.5
20,000 Consolidated Rail Corp. 931,200 1,040,000 0.3
------------ ------------ ------
2,924,865 3,125,000 0.8
Recreation US$1,500,000 United Gaming, Inc., 7.50% due 9/15/2003 1,500,000 1,050,000 0.3
Telecommunications 105,000 Airtouch Communications, Inc. 2,420,203 2,848,125 0.7
Total Investments in the United States 78,758,216 92,255,413 24.1
- ---------------------------------------------------------------------------------------------------------------------------------
Total Investments in North America 81,088,821 95,704,788 25.0
- ---------------------------------------------------------------------------------------------------------------------------------
PACIFIC BASIN
- ---------------------------------------------------------------------------------------------------------------------------------
Australia
Banking 200,000 ANZ Banking Group 746,255 608,653 0.2
105,076 National Australia Bank, Ltd. 647,467 847,884 0.2
------------ ------------ ------
1,393,722 1,456,537 0.4
Broadcasting 150,272 News Corp., Ltd. (Ordinary) 764,065 600,517 0.1
& Publishing 75,136 News Corp., Ltd. (Preferred) 328,393 260,994 0.1
------------ ------------ ------
1,092,458 861,511 0.2
Industrial--Other 400,000 Pacific BBA Ltd. 1,058,558 829,980 0.2
Metals 1,000,000 MIM Holdings, Ltd. 1,985,497 1,875,140 0.5
251,600 Western Mining Corp. 1,449,361 1,430,824 0.4
------------ ------------ ------
3,434,858 3,305,964 0.9
Real Estate 102,371 Lend Lease Corp. 1,295,017 1,250,886 0.3
</TABLE>
58
<PAGE>
<TABLE><CAPTION>
Total Investments in Australia 8,274,613 7,704,878 2.0
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Hong Kong
Broadcasting 380,000 Television Broadcast, Ltd. 1,477,469 1,523,223 0.4
& Publishing
Multi-Industry 1,300,000 First Pacific Co., Ltd. 915,272 899,323 0.2
500,000 Swire Pacific 'A' Ltd. 2,453,484 3,329,626 0.9
------------ ------------ ------
3,368,756 4,228,949 1.1
Real Estate 500,000 China Strategic Investment Ltd. 409,452 227,901 0.1
600,000 Sun Hung Kai Properties, Ltd. 2,889,008 3,855,902 1.0
------------ ------------ ------
3,298,460 4,083,803 1.1
Telecommunications 600,000 Hong Kong Telecommunications Ltd. 1,236,727 1,187,028 0.3
Utilities 800,000 China Light & Power Co., Ltd. 3,660,894 3,444,709 0.9
Total Investments in Hong Kong 13,042,306 14,467,712 3.8
- ---------------------------------------------------------------------------------------------------------------------------------
Indonesia
Automobiles 500,000 Astra International Inc. 1,011,781 998,462 0.3
Telecommunications 5,050 P.T. Indonesia Satellite (ADR)* 161,853 191,900 0.1
Textiles 330,000 Indorama Synthetics (Foreign) 975,477 1,310,396 0.3
Total Investments in Indonesia 2,149,111 2,500,758 0.7
- ---------------------------------------------------------------------------------------------------------------------------------
Japan
Appliances 200,000 Matsushita Electric Industrial Co. 2,837,637 3,093,409 0.8
53,700 Rinnai Corp. 901,260 1,183,441 0.3
20,000 Sony Corp. 1,189,833 1,061,464 0.3
100,000 Victor Co. of Japan, Ltd. 1,414,421 1,364,739 0.4
------------ ------------ ------
6,343,151 6,703,053 1.8
Automobiles 70,000 Honda Motor Co., Ltd. 1,279,114 1,174,686 0.3
200,000 Toyota Motor Corp. 2,884,634 4,266,074 1.1
------------ ------------ ------
4,163,748 5,440,760 1.4
Banking 200,000 The Asahi Bank, Ltd. 2,108,622 2,304,893 0.6
100,000 The Bank of Tokyo, Ltd. 1,301,028 1,496,158 0.4
50,000 The Mitsubishi Bank, Ltd. 1,389,313 1,117,065 0.3
------------ ------------ ------
Broadcasting 300,000 Tokyo Broadcasting System 3,736,661 5,064,699 1.3
& Publishing
Business Services 150,000 Kamigumi Co., Ltd. 1,805,921 1,592,196 0.4
Chemicals 300,000 Asahi Chemical Industry 2,135,530 2,244,238 0.6
350,000 Sumitomo Chemical Co. 1,829,587 2,027,396 0.5
200,000 Toray Industries, Inc. 1,520,350 1,490,093 0.4
------------ ------------ ------
5,485,467 5,761,727 1.5
Construction & Housing 200,000 Shimizu Corp. 1,920,325 1,975,334 0.5
125,000 Taisei Prefab Construction Co. 1,946,480 1,086,736 0.3
------------ ------------ ------
3,866,805 3,062,070 0.8
</TABLE>
59
<PAGE>
<TABLE><CAPTION>
SCHEDULE OF INVESTMENTS (continued)
Shares Held/ Value Percent of
Industries Face Amount Investments Cost (Note 1a) Net Assets
PACIFIC BASIN (concluded)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Japan (concluded)
Electrical Equipment 48,000 Daimei Telecom Engineering $ 668,600 $ 567,732 0.1%
270,000 Sumitomo Electric Industry, Ltd. 2,968,251 3,766,680 1.0
------------ ------------ ------
3,636,851 4,334,412 1.1
Electronics 150,000 Casio Computer Co. 1,853,397 1,895,471 0.5
200,000 Hitachi Ltd. 2,079,745 1,975,334 0.5
29,000 Keyence Corp. 2,038,471 3,312,778 0.8
85,000 Murata Manufacturing Co., Ltd. 2,448,383 3,437,121 0.9
200,000 Sharp Corp. 3,027,869 3,477,558 0.9
70,000 Uniden Corp. 2,226,522 1,769,106 0.5
------------ ------------ ------
13,674,387 15,867,368 4.1
Financial Services 300,000 Daiwa Securities Co., Ltd. 3,725,815 3,912,253 1.0
170,000 Mitsubishi Trust & Banking Corp. 2,229,016 2,405,985 0.7
310,000 Yamaichi Securities Company Ltd. 2,982,597 2,275,171 0.6
------------ ------------ ------
8,937,428 8,593,409 2.3
Industrial Components 100,000 Futaba Industrial Co. 1,670,788 2,072,382 0.5
40,000 Mabuchi Motor Co. 2,349,535 2,931,662 0.8
------------ ------------ ------
4,020,323 5,004,044 1.3
Insurance 200,000 Tokio Marine & Fire Insurance Co., Ltd. 2,573,815 2,304,892 0.6
Machinery & Engineering 300 Aichi Corp. 3,401 3,184 0.0
200,000 Makino Milling Machine 1,422,848 1,781,237 0.5
100,000 ++Okuma Corp. 988,096 933,078 0.2
------------ ------------ ------
2,414,345 2,717,499 0.7
Machinery & Equipment 300,000 Mitsubishi Heavy Industries Ltd. 2,198,026 2,226,041 0.6
Merchandising 35,000 Aoyama Trading Co. 2,287,334 781,945 0.2
60,000 Ito--Yokado Co., Ltd. 2,604,247 3,184,391 0.9
100,000 Marui Co., Ltd. 1,855,053 1,688,233 0.4
------------ ------------ ------
6,746,634 5,654,569 1.5
Metals 1,000,000 NKK Corp. 2,741,551 2,759,806 0.7
500,000 Sumitomo Metal Industries Co., Ltd. 1,679,618 1,632,632 0.5
------------ ------------ ------
4,421,169 4,392,438 1.2
Real Estate 200,000 Mitsui Fudosan 2,482,763 2,062,273 0.5
Recreation 65,000 Sony Music Entertainment (Japan) Inc. 2,980,367 3,285,483 0.9
Utilities-- 200 Nippon Telephone & Telegraph Corp. (Ordinary) 1,772,271 1,698,342 0.4
Telecommunications
Wholesale & 200,000 Mitsui & Co. 1,346,038 1,736,757 0.5
International Trade
Total Investments in Japan 87,405,133 92,420,148 24.2
- ---------------------------------------------------------------------------------------------------------------------------------
Malaysia
Banking 583,333 Commerce Asset-Holding BHD 1,276,855 2,282,836 0.6
Construction & Housing 150,000 Ekran BHD 573,279 522,444 0.2
150,000 Ekran BHD (New) 'A' 0 484,287 0.1
------------ ------------ ------
573,279 1,006,731 0.3
</TABLE>
60
<PAGE>
<TABLE>
<S> <C> <S> <C> <C> <C>
Real Estate 100,000 Technology Resources Industries BHD 393,521 340,468 0.1
Telecommunications 400,000 Telekom Malaysia BHD 1,837,601 2,942,903 0.8
Utilities 200,000 Tenaga Nasional BHD 879,094 860,956 0.2
Total Investments in Malaysia 4,960,350 7,433,894 2.0
- ---------------------------------------------------------------------------------------------------------------------------------
New Zealand
Telecommunications 400,000 Telecom Corp. of New Zealand Ltd. (Class C) (ADR)* 1,278,315 1,354,752 0.4
Total Investments in New Zealand 1,278,315 1,354,752 0.4
- ---------------------------------------------------------------------------------------------------------------------------------
Singapore
Air Transport 100,000 Singapore Airlines, Ltd. 383,769 970,277 0.3
Banking 70,000 Overseas Chinese Banking Corp. 673,166 717,458 0.2
Multi-Industry 300,000 Amcol Holdings Ltd. 838,803 623,164 0.2
120,000 Keppel Corp. Ltd. 851,434 975,743 0.2
------------ ------------ ------
1,690,237 1,598,907 0.4
Shipping 400,000 Straits Steamship Land 962,487 1,333,789 0.3
Telecommunications 400,000 Singapore Telecommunications Ltd. 907,320 800,819 0.2
Total Investments in Singapore 4,616,979 5,421,250 1.4
- ---------------------------------------------------------------------------------------------------------------------------------
South Korea
Aerospace 2,983 Samsung Aerospace Industries (New) 77,985 101,748 0.0
Banking 91,875 Hanil Bank 1,273,823 1,529,207 0.4
Construction & Housing 26,265 Hyundai Engineering and Construction Co. 539,284 1,516,891 0.4
Machinery & Engineering 14,500 Samsung Heavy Industry 737,089 805,029 0.2
1,799 Samsung Heavy Industry (New Shares) 58,499 84,685 0.0
------------ ------------ ------
795,588 889,714 0.2
Utilities 40,000 Korea Electric Power Co. 1,097,115 1,623,965 0.5
Total Investments in South Korea 3,783,795 5,661,525 1.5
- ---------------------------------------------------------------------------------------------------------------------------------
Taiwan
Electrical Equipment US$1,000,000 Teco Electric & Machinery Co., 2.75% due 4/15/2004 1,000,000 947,500 0.3
Total Investments in Taiwan 1,000,000 947,500 0.3
- ---------------------------------------------------------------------------------------------------------------------------------
Thailand
Building Materials 48,500 ++++Jasmine International Ltd. 670,901 921,523 0.3
28,700 Siam Cement Group 848,980 1,695,514 0.4
------------ ------------ ------
1,519,881 2,617,037 0.7
Electrical Equipment 40,000 United Communication Industry 796,556 1,117,675 0.3
Telecommunications 60,000 Advanced Information Service 643,081 914,897 0.2
Total Investments in Thailand 2,959,518 4,649,609 1.2
- ---------------------------------------------------------------------------------------------------------------------------------
Total Investments in the Pacific Basin 129,470,120 142,562,026 37.5
- ---------------------------------------------------------------------------------------------------------------------------------
SOUTHEAST ASIA
- ---------------------------------------------------------------------------------------------------------------------------------
India
Electrical Equipment US$325,000 Sterlite Industry, 3.50% due 6/30/1999 325,000 300,625 0.1
Textiles 40,000 Indian Rayon & Industries (GDR) (b) 844,207 720,000 0.2
Total Investments in India 1,169,207 1,020,625 0.3
- ---------------------------------------------------------------------------------------------------------------------------------
Total Investments in Southeast Asia 1,169,207 1,020,625 0.3
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
61
<PAGE>
<TABLE><CAPTION>
SCHEDULE OF INVESTMENTS (continued)
Shares Held/ Value Percent of
Industries Face Amount Investments Cost (Note 1a) Net Assets
<S> <C> <C> <C> <C> <C>
WESTERN EUROPE
- ---------------------------------------------------------------------------------------------------------------------------------
Austria
Energy 11,000 OMV Aktiengesellschaft $ 997,161 $ 922,388 0.2%
Total Investments in Austria 997,161 922,388 0.2
- ---------------------------------------------------------------------------------------------------------------------------------
Belgium
Automobiles 2,500 D'ieteren N.V. 214,059 176,302 0.0
Broadcasting 1,900 Audiofina 1,045,105 960,012 0.3
& Publishing
Total Investments in Belgium 1,259,164 1,136,314 0.3
- ---------------------------------------------------------------------------------------------------------------------------------
Denmark
Telecommunications 15,000 Tele Danmark A/S 'B' 710,499 783,883 0.2
Total Investments in Denmark 710,499 783,883 0.2
- ---------------------------------------------------------------------------------------------------------------------------------
Finland
Forest Products 20,000 Kymmene OY Corp. 517,588 526,532 0.1
Telecommunications 2,360 Benefon OY 800,821 606,746 0.2
16,600 OY Nokia AB 1,564,267 2,270,465 0.6
------------ ------------ ------
2,365,088 2,877,211 0.8
Total Investments in Finland 2,882,676 3,403,743 0.9
- ---------------------------------------------------------------------------------------------------------------------------------
France
Appliances 25,000 Moulinex S.A. 536,491 517,389 0.1
Broadcasting 6,220 NRJ S.A. 737,863 658,654 0.2
& Publishing
Building Materials 5,000 Imetal Co. 502,687 477,447 0.1
Business & Public 17,140 Compagnie Generale des Eaux 1,574,432 1,639,871 0.4
Services
Construction & Housing 13,350 Bouygues S.A. 1,439,564 1,413,669 0.4
Energy 12,000 Societe Nationale Elf Aquitane 917,095 821,505 0.2
Financial Services 6,250 Credit Local de France 447,395 482,091 0.1
Industrial--Other 37,000 ++Michelin Tire Corp. 1,515,115 1,422,866 0.4
Total Investments in France 7,670,642 7,433,492 1.9
- ---------------------------------------------------------------------------------------------------------------------------------
Germany
Banking 2,000 Deutsche Bank AG 651,283 944,430 0.2
Building Materials 6,000 Friedrich Grohe (Preferred) 1,478,231 1,678,563 0.4
Chemicals 10,000 BASF AG (Ordinary) 2,051,098 1,938,567 0.5
Health & Personal Care 3,000 Wella AG (Preferred) 1,257,500 1,911,802 0.5
Machinery & Equipment 4,000 Jungheinrich AG (Preferred) 930,503 853,939 0.2
Multi-Industry 5,000 Vereinigte Elektrizitaets & Bergwerks AG (Veba) 1,678,120 1,640,963 0.5
Total Investments in Germany 8,046,735 8,968,264 2.3
- ---------------------------------------------------------------------------------------------------------------------------------
Italy
Broadcasting 50,000 Arnoldo Mondadori Editore 475,059 423,454 0.1
& Publishing
Merchandising 125,000 La Rinascente RISP 285,348 339,999 0.1
Telecommunications 300,000 Telecom Italia SPA (Ordinary) 280,800 777,054 0.2
500,000 Telecom Italia SPA (Savings) 978,610 1,035,452 0.3
------------ ------------ ------
1,259,410 1,812,506 0.5
Total Investments in Italy 2,019,817 2,575,959 0.7
- ---------------------------------------------------------------------------------------------------------------------------------
Netherlands
Beverages 20,000 Heineken N.V. 2,176,767 2,892,430 0.7
& Tobacco
Broadcasting 10,000 Ver Ner Uitgevers 1,075,021 983,495 0.2
& Publishing
</TABLE>
62
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Chemicals 11,600 ++European Vinyls Corp. International N.V. 512,097 507,046 0.1
Construction 90,000 IHC Caland N.V. 1,977,215 2,125,783 0.6
& Housing
Electronics 57,000 Philips Industries Inc. 1,790,368 1,725,896 0.5
Metal Fabricating 25,000 Koninklijke Nederlandsche Hoogovens
Staalfabrieken N.V. 1,136,219 1,038,702 0.3
Shipping 30,000 Koninklijke Van Ommeren NV 911,131 768,355 0.2
Wholesale & 28,500 Hagemeyer N.V. 2,298,541 2,246,585 0.6
International Trade
Total Investments in the Netherlands 11,877,359 12,288,292 3.2
- ---------------------------------------------------------------------------------------------------------------------------------
Norway
Broadcasting 41,400 Schibsted Gruppen A/S 455,529 442,813 0.1
& Publishing
Multi-Industry 100,000 Kverneland Gruppen A/S 1,315,522 1,260,074 0.3
40,000 Unitor Ships Service 796,035 630,036 0.2
------------ ------------ ------
2,111,557 1,890,110 0.5
Total Investments in Norway 2,567,086 2,332,923 0.6
- ---------------------------------------------------------------------------------------------------------------------------------
Portugal
Beverages 20,000 Sumolis Companhia Industrial de Frutas
& Tobacco e Bebidas S.A. 221,229 213,350 0.1
Total Investments in Portugal 221,229 213,350 0.1
- ---------------------------------------------------------------------------------------------------------------------------------
Spain
Banking 10,000 Banco Popular Espanol S.A. 1,289,096 1,257,251 0.3
Building Materials 19,000 Cristaleria Espanol S.A. 1,200,734 1,076,184 0.3
Energy 50,000 Repsol S.A. 1,662,606 1,438,932 0.4
Forest Products 56,500 Empresa Nacional de Celulosas S.A. 1,134,583 1,386,622 0.4
Telecommunications 100,000 Telefonica de Espana Co. 1,347,830 1,282,443 0.3
Utilities 43,060 Empresa Nacional de Electricidad S.A. 1,531,115 1,949,204 0.5
Total Investments in Spain 8,165,964 8,390,636 2.2
- ---------------------------------------------------------------------------------------------------------------------------------
Sweden
Automobiles 16,000 Autoliv AB 523,591 560,472 0.2
65,000 Catena AB 555,934 564,918 0.2
72,500 Volvo AB 'B' 1,448,465 1,394,878 0.4
------------ ------------ ------
2,527,990 2,520,268 0.8
Engineering 30,000 SKF AB 'B' Free 540,908 531,414 0.1
& Construction
Forest Products/ 28,000 Mo Och Domsjoe AB 'B' Free 1,278,795 1,315,199 0.3
Paper & Packaging 350,000 Rottneros Bruks AB Free 473,280 473,695 0.1
------------ ------------ ------
1,752,075 1,788,894 0.4
Health & Personal Care 113,400 Astra AB 'B' Fria 2,120,584 3,039,448 0.8
Metals 90,000 Trelleborg AB 'B' 1,330,902 1,313,607 0.3
Multi-Industry 54,000 ++Kinnevik AB 'B' Free 1,821,410 1,683,806 0.4
Shipping 37,000 ICB Shipping AB 'B' Free 350,695 289,657 0.1
Total Investments in Sweden 10,444,564 11,167,094 2.9
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
63
<PAGE>
<TABLE><CAPTION>
SCHEDULE OF INVESTMENTS (concluded)
Shares Held/ Value Percent of
Industries Face Amount Investments Cost (Note 1a) Net Assets
<S> <C> <S> <C> <C> <C>
WESTERN EUROPE (concluded)
- ---------------------------------------------------------------------------------------------------------------------------------
Switzerland
Building Materials 1,417 Holderbank Financiere Glaris Ltd. $ 1,036,354 $ 1,098,375 0.3%
Electrical Equipment 2,000 BBC Brown Boveri & Co. 1,542,228 1,676,836 0.4
Food & Household 1,100 Nestle AG 439,670 1,020,867 0.3
Products
Health & Personal Care 931 Roche Holding AG 4,493,036 4,095,699 1.1
Insurance 1,180 Zurich Insurance Co. 1,169,946 1,102,222 0.3
Shipping 4,000 Danzas Holding AG 954,580 789,453 0.2
Total Investments in Switzerland 9,635,814 9,783,452 2.6
- ---------------------------------------------------------------------------------------------------------------------------------
United Kingdom
Banking 300,000 Bank of Scotland 916,166 967,603 0.3
340,000 National Westminster Bank PLC 2,114,246 2,778,804 0.7
------------ ------------ ------
3,030,412 3,746,407 1.0
Building Materials & 500,000 Spring Ram Corp. PLC 1,450,088 340,540 0.1
Components
Business & 29,000 Bell Cablemedia PLC (ADR)* 493,000 652,500 0.2
Public Services 125,000 Carlton Communications PLC (Ordinary) 1,292,970 1,715,420 0.4
210,000 Chubb Security PLC 1,106,853 1,062,014 0.3
------------ ------------ ------
2,892,823 3,429,934 0.9
Electronics 800,000 Astec (BSR) 1,105,101 1,070,939 0.3
Energy 450,000 British Petroleum Co. PLC 2,236,817 2,994,402 0.8
Food & Household 200,000 Cadbury Schweppes PLC 1,741,253 1,346,502 0.4
Products
Health & 200,000 Goldsborough Healthcare PLC 506,362 447,790 0.1
Personal Care
Merchandising 570,000 House of Fraser PLC 1,851,700 1,673,341 0.4
350,000 Next PLC 1,098,607 1,391,908 0.4
------------ ------------ ------
2,950,307 3,065,249 0.8
Multi-Industry 350,000 BTR PLC 2,065,257 1,570,006 0.4
150,000 Siebe PLC 1,033,849 1,308,142 0.3
------------ ------------ ------
3,099,106 2,878,148 0.7
Total Investments in the United Kingdom 19,012,269 19,319,911 5.1
- ---------------------------------------------------------------------------------------------------------------------------------
Total Investments in Western Europe 85,510,979 88,719,701 23.2
- ---------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM Face
SECURITIES Amount
- ---------------------------------------------------------------------------------------------------------------------------------
United States
Commercial Paper*** US$17,917,000 Associates Corp. of North America, 5.70%
due 12/01/1994 17,917,000 17,917,000 4.7
US Government & 10,000,000 Federal Home Loan Mortgage Corp., 5.38%
Agency Obligations*** due 12/09/1994 9,988,044 9,988,044 2.6
Total Investments in Short-Term Securities 27,905,044 27,905,044 7.3
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
64
<PAGE>
<TABLE><CAPTION>
Par Premiums
OPTIONS Value Paid
<S> <C> <S> <C> <C> <C>
Currency Put Options Japanese Yen:
Purchased US$13,910,785 Expiring December 1994 at Y=107.83 625,985 1,391 0.0
13,602,975 Expiring January 1995 at Y=110.27 627,097 1,360 0.0
Total Options Purchased 1,253,082 2,751 0.0
- ---------------------------------------------------------------------------------------------------------------------------------
Total Investments $344,977,872 379,159,562 99.4
============
Other Assets Less Liabilities 2,386,880 0.6
------------ ------
Net Assets $381,546,442 100.0%
============ ======
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
[FN]
(a)The rights may be exercised until 9/29/95.
(b)Global Depositary Receipts (GDR).
*American Depositary Receipts (ADR).
**Global Depositary Shares (GDS).
***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 Company.
++Non-income producing security.
++++Restricted securities as to resale. The value of the Company's investment
was approximately $4,791,000, representing 1.3% of net assets.
- -------------------------------------------------------------------------------
Acquisition Value
Issue Date Cost (Note 1a)
- -------------------------------------------------------------------------------
Grupo Televisa, S.A. de
C.V. (ADR) 12/01/91 $ 953,349 $1,357,500
Jasmine International Ltd. 5/04/94 670,901 921,523
Telecom Argentina 3/23/92
Stet-France Telecom S.A. (ADR) 11/12/92 1,400,296 2,210,000
Venezolana de Prerreducidos
Caroni 'Venprecar' C.A. (GDS) 2/13/92 379,600 302,250
- -------------------------------------------------------------------------------
Total $3,404,146 $4,791,273
========== ==========
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
65
<PAGE>
<TABLE><CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
As of November 30, 1994
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets: Investments, at value (identified cost--$343,724,790) (Note 1a) $379,156,811
Put options purchased, at value (cost--$1,253,082) (Notes 1a & 1c) 2,751
Foreign cash 312,512
Receivables:
Securities sold $ 3,066,430
Capital shares sold 1,183,640
Dividends 695,288
Interest 34,420 4,979,778
------------
Prepaid registration fees and other assets (Note 1f) 15,826
------------
Total assets 384,467,678
------------
- ---------------------------------------------------------------------------------------------------------------------------------
Liabilities: Payables:
Capital shares redeemed 954,551
Investment adviser (Note 2) 321,718
Securities purchased 302,939
Distributor (Note 2) 43,596 1,622,804
------------
Accrued expenses and other liabilities 1,298,432
------------
Total liabilities 2,921,236
------------
- ---------------------------------------------------------------------------------------------------------------------------------
Net Assets: Net assets $381,546,442
============
- ---------------------------------------------------------------------------------------------------------------------------------
Net Assets Class A Common Stock, $0.10 par value, 100,000,000 shares authorized $ 2,574,934
Consist of: Class B Common Stock, $0.10 par value, 100,000,000 shares authorized 397,072
Class C Common Stock, $0.10 par value, 100,000,000 shares authorized 1,415
Class D Common Stock, $0.10 par value, 100,000,000 shares authorized 12,414
Paid-in capital in excess of par 330,479,269
Overdistributed investment income--net 530,009
Undistributed realized capital gains on investments and foreign currency transactions--net 13,372,324
Unrealized appreciation on investments and foreign currency transactions--net 34,179,005
------------
Net assets $381,546,442
============
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Class A Shares--Based on net assets of $330,132,381 and 25,749,344 shares outstanding $ 12.82
Value: ============
Class B Shares--Based on net assets of $49,646,500 and 3,970,722 shares outstanding $ 12.50
============
Class C Shares--Based on net assets of $176,892 and 14,145 shares outstanding $ 12.51
============
Class D Shares--Based on net assets of $1,590,669 and 124,135 shares outstanding $ 12.81
============
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
66
<PAGE>
<TABLE><CAPTION>
STATEMENT OF OPERATIONS
For the Year Ended November 30, 1994
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment Dividends (net of $385,983 foreign withholding tax) $ 4,425,362
Income Interest and discount earned 1,891,166
(Notes 1d & 1e): ------------
Total income 6,316,528
------------
- ---------------------------------------------------------------------------------------------------------------------------------
Expenses: Investment advisory fees (Note 2) 3,780,445
Transfer agent fees--Class A (Note 2) 534,710
Distribution fees--Class B (Note 2) 501,902
Custodian fees 331,723
Printing and shareholder reports 268,914
Accounting services 138,310
Registration fees (Note 1f) 128,814
Transfer agent fees--Class B (Note 2) 97,005
Professional fees 76,959
Organizational expenses 62,704
Directors' fees and expenses 34,955
Pricing fees 5,357
Transfer agent fees--Class D (Note 2) 260
Account maintenance fees--Class D (Note 2) 180
Distribution fees--Class C (Note 2) 159
Foreign tax expense 130
Transfer agent fees--Class C (Note 2) 62
Other 6,717
------------
Total expenses 5,969,306
------------
Investment income--net 347,222
------------
- ---------------------------------------------------------------------------------------------------------------------------------
Realized & Realized gain (loss) from:
Unrealized Gain Investments--net $ 15,363,004
(Loss) on Foreign currency transactions--net (94,755) 15,268,249
Investments & ------------
Foreign Currency Change in unrealized appreciation/depreciation on:
Transactions--Net Investments--net (5,895,990)
(Notes 1b, 1e & 3): Foreign currency transactions--net (1,235,033) (7,131,023)
------------ ------------
Net realized and unrealized gain on investments and foreign currency
transactions 8,137,226
------------
Net Increase in Net Assets Resulting from Operations $ 8,484,448
============
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
67
<PAGE>
<TABLE><CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
For the Year Ended November 30,
Increase (Decrease) in Net Assets: 1994 1993
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operations: Investment income--net $ 347,222 $ 475,574
Realized gain on investments and foreign currency transactions--net 15,268,249 19,105,708
Change in unrealized appreciation/depreciation on investments and foreign
currency transactions--net (7,131,023) 18,287,892
------------ ------------
Net increase in net assets resulting from operations 8,484,448 37,869,174
------------ ------------
- ---------------------------------------------------------------------------------------------------------------------------------
Dividends & Investment income--net:
Distributions to Class A (292,787) --
Shareholders Realized gain on investments--net:
(Note 1g): Class A (15,976,086) (11,512,553)
Class B (1,819,251) (1,598,607)
------------ ------------
Net decrease in net assets resulting from dividends and distributions
to shareholders (18,088,124) (13,111,160)
------------ ------------
- ---------------------------------------------------------------------------------------------------------------------------------
Capital Share Net increase in net assets derived from capital share transactions 100,706,623 75,813,575
Transactions ------------ ------------
(Note 4):
- ---------------------------------------------------------------------------------------------------------------------------------
Net Assets: Total increase in net assets 91,102,947 100,571,589
Beginning of year 290,443,495 189,871,906
------------ ------------
End of year* $381,546,442 $290,443,495
============ ============
- ---------------------------------------------------------------------------------------------------------------------------------
<FN>
*Undistributed investment income--net $ 530,009 $ 475,574
============ ============
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
<TABLE><CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- ---------------------------------------------------------------------------------------------------------------------------------
Class A
The following per share data and ratios For the For the
have been derived from information provided Seven-Month Year
in the financial statements. Period Ended Ended
For the Year Ended November 30, Nov. 30, April 30,
Increase (Decrease) in Net Asset Value: 1994++ 1993++ 1992++ 1991 1990 1990
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 13.07 $ 11.78 $ 10.95 $ 10.48 $ 10.91 $ 11.79
Operating -------- -------- -------- -------- -------- --------
Performance: Investment income--net .03 .04 .10 .16 .17 .20
Realized and unrealized gain (loss) on
investments and foreign currency
transactions--net .53 2.07 1.05 .53 (.30) .62
-------- -------- -------- -------- -------- --------
Total from investment operations .56 2.11 1.15 .69 (.13) .82
-------- -------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.01) -- (.10) (.21) (.13) (.21)
</TABLE>
68
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Realized gain on investments--net (.80) (.82) (.22) (.01) (.17) (1.49)
-------- -------- -------- -------- -------- --------
Total dividends and distributions (.81) (.82) (.32) (.22) (.30) (1.70)
-------- -------- -------- -------- -------- --------
Net asset value, end of period $ 12.82 $ 13.07 $ 11.78 $ 10.95 $ 10.48 $ 10.91
======== ======== ======== ======== ======== ========
- ---------------------------------------------------------------------------------------------------------------------------------
Total Investment Based on net asset value per share 4.39% 19.16% 10.67% 6.77% (1.45%)+++ 6.93%
Return:** ======== ======== ======== ======== ======== ========
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Expenses 1.44% 1.43% 1.49% 1.48% 1.59%* 1.49%
Net Assets: ======== ======== ======== ======== ======== ========
Investment income (loss)--net .23% .32% (.19%) 1.31% 2.63%* 1.65%
======== ======== ======== ======== ======== ========
- ---------------------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, end of period (in thousands) $330,132 $256,203 $166,947 $165,687 $176,898 $187,843
Data: ======== ======== ======== ======== ======== ========
Portfolio turnover 40.18% 56.98% 65.93% 63.94% 34.44% 84.21%
======== ======== ======== ======== ======== ========
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Class B
The following per share data and ratios For the For the
have been derived from information provided Seven-Month Year
in the financial statements. Period Ended Ended
For the Year Ended November 30, Nov. 30, April 30,
Increase (Decrease) in Net Asset Value: 1994++ 1993++ 1992++ 1991 1990 1990
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 12.74 $ 11.62 $ 10.82 $ 10.36 $ 10.82 $ 11.74
Operating -------- -------- -------- -------- -------- --------
Performance: Investment income (loss)--net (.10) (.08) (.03) .04 .10 .16
Realized and unrealized gain (loss) on
investments and foreign currency
transactions--net .52 2.02 1.05 .54 (.30) .55
-------- -------- -------- -------- -------- --------
Total from investment operations .42 1.94 1.02 .58 (.20) .71
-------- -------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net -- -- -- (.11) (.09) (.14)
Realized gain on investments--net (.66) (.82) (.22) (.01) (.17) (1.49)
-------- -------- -------- -------- -------- --------
Total dividends and distributions (.66) (.82) (.22) (.12) (.26) (1.63)
-------- -------- -------- -------- -------- --------
Net asset value, end of period $ 12.50 $ 12.74 $ 11.62 $ 10.82 $ 10.36 $ 10.82
======== ======== ======== ======== ======== ========
- ---------------------------------------------------------------------------------------------------------------------------------
Total Investment Based on net asset value per share 3.32% 17.87% 9.58% 5.67% (2.08%)+++ 5.91%
Return:** ======== ======== ======== ======== ======== ========
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Expenses, excluding account maintenance
Net Assets: and distribution fees 1.48% 1.46% 1.52% 1.51% 1.63%* 1.53%
======== ======== ======== ======== ======== ========
Expenses 2.48% 2.46% 2.52% 2.51% 2.63%* 2.53%
======== ======== ======== ======== ======== ========
Investment income (loss)--net (.80%) (.72%) (1.19%) .25% 1.54%* .65%
======== ======== ======== ======== ======== ========
- ---------------------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, end of period (in thousands) $ 49,647 $ 34,241 $ 2,925 $ 24,960 $ 22,623 $ 16,342
Data: ======== ======== ======== ======== ======== ========
Portfolio turnover 40.18% 56.98% 65.93% 63.94% 34.44% 84.21%
======== ======== ======== ======== ======== ========
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
[FN]
*Annualized.
**Total investment returns excludes the effects of sales loads.
++Based on average shares outstanding during the period.
+++Aggregate total investment return.
See Notes to Financial Statements.
69
<PAGE>
<TABLE><CAPTION>
FINANCIAL HIGHLIGHTS (concluded)
The following per share data and ratios have been derived
from information provided in the financial statements. For the Period October 21, 1994+
to November 30, 1994
Increase (Decrease) in Net Asset Value: Class C++ Class D++
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <S> <C> <C>
Per Share Net asset value, beginning of period $ 13.08 $ 13.39
Operating -------- --------
Performance: Investment loss--net (.02) (.01)
Realized and unrealized loss on investments and foreign currency transactions--net (.55) (.57)
-------- --------
Total from investment operations (.57) (.58)
-------- --------
Less dividends and distributions:
Investment income--net -- --
Realized gain on investments--net -- --
-------- --------
Total dividends and distributions -- --
-------- --------
Net asset value, end of period $ 12.51 $ 12.81
======== ========
- ---------------------------------------------------------------------------------------------------------------------------------
Total Investment Based on net asset value per share (4.36%)+++ (4.33%)+++
Return:** ======== ========
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Expenses, excluding account maintenance and distribution fees 2.00%* 1.98%*
Net Assets: ======== ========
Expenses 3.00%* 2.23%*
======== ========
Investment loss--net (1.31%)* (.67%)*
======== ========
- ---------------------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, end of period (in thousands) $ 177 $ 1,591
Data: ======== ========
Portfolio turnover 40.18% 40.18%
======== ========
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
[FN]
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Commencement of Operations.
++++Based on average shares outstanding during the period.
+++Aggregate total investment return.
See Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch Global Holdings (the "Company") is registered
under the Investment Company Act of 1940 as a diversified, open-end
management investment company. The Company 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 Company.
70
<PAGE>
(a) Valuation of securities--Portfolio securities which are
traded on stock exchanges are valued at the last sale price on the
exchange on which such securities are traded, as of the close of
business on the day the securities are being valued or, lacking
any sales, at the last available bid price. In cases where
securities are traded on more than one exchange, the securities
are valued on the exchange designated by or under the authority of
the Board of Directors as the primary market. Securities 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.
Options written by the Company are valued at the last asked price
in the case of exchange-traded options or, in the case of options
traded in the over-the-counter market, the average of the last
asked price as obtained from one or more dealers. Options purchased
by the Company are valued at the last sale price in the case of
exchange-traded options or, in the case of options traded in the
over-the-counter market, the average of the last bid price as
obtained from two or more dealers unless there is only one dealer,
in which case that dealer's price is used. Securities with sixty
days or less to maturity are valued at amortized cost, which
approximates market value. 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 Company.
(b) 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) such transactions expressed
in foreign currencies into US dollars. Realized and unrealized
gains or losses from investments include the effects of foreign
exchange rates on investments.
The Company is authorized to enter into forward foreign exchange
contracts as a hedge against either specific transactions or portfolio
positions. Such contracts are not entered on the Company's records.
However, the effect on operations is recorded from the date the
Company enters into such contracts. Premium or discount is amortized
over the life of the contracts.
The Company is authorized to purchase or sell listed or over-the-counter
foreign currency options, foreign currency futures and related options
on foreign currency futures as a short or long hedge against possible
variations in foreign exchange rates. Such transactions could be effected
with respect to hedges on non-US dollar denominated securities owned by the
Company, sold by the Company but not yet delivered, or committed or
anticipated to be purchased by the Company.
(c) Options--The Company is authorized to purchase and write call
and put options. When the Company writes an option, an amount
equal to the premium received by the Company is reflected as an
asset and an equivalent liability. The amount of the liability is
subsequently marked to market to reflect the current value of the
option written.
When a security is sold or bought through an exercise of an option,
the related premium received (or paid) is deducted from (or
added to) the basis of the security sold. When an option expires
(or the Company enters into a closing transaction), the Company
realizes a gain or loss on the option to the extent of the premiums
received or paid (or gain or loss to the extent the cost of
the closing transactions exceeds the premium paid or received).
Written and purchased options are non-income producing investments.
(d) Income taxes--It is the Company'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 Company is informed of the ex-dividend date.
Interest income is recognized on the accrual basis. Realized
gains and losses on security transactions are determined on the
identified cost basis.
(f) Prepaid registration fees--Prepaid registration fees are
charged to expense as the related shares are issued.
(g) Dividends and distributions--Dividends and distributions paid
by the Company are recorded on the ex-dividend dates.
2. Investment Advisory Agreement and Transactions
with Affiliates:
The Company has entered into an Investment Advisory Agreement with
Merrill Lynch Asset Management, L.P. ("MLAM"). Effective
January 1, 1994, the investment advisory business of MLAM was
reorganized from a corporation to a limited partnership. Both prior
to and after the reorganization, ultimate control of MLAM was
vested with Merrill Lynch & Co., Inc. ("ML & Co."). The general
partner of MLAM is Princeton Services, Inc. ("PSI"), an indirect
wholly-owned subsidiary of ML & Co., which is a limited
partner. The Company has also entered into a Distribution Agreement
and a Distribution Plan with Merrill Lynch Funds Distributor, Inc.
("MLFD" or "Distributor"), a wholly-owned subsidiary of MLIM.
71
<PAGE>
As compensation for its services to the Company, the Investment Adviser receives
monthly compensation at the annual rate of 1.0% of the average daily net assets
of the Company. MLAM entered into Investment Research Agreements with Lombard
Odier Global Portfolio Management Limited ("LOIPM") and Nomura Capital
Management, Inc. ("NCM") pursuant to which LOIPM and NCM furnished MLAM with
economic research, securities analysis and investment recommendations and
reviewed and rendered investment research with respect to the portfolio of the
Company. The Investment Research Agreements were terminated as of April 1, 1994.
Pursuant to their respective Investment Research Agreements, the Investment
Adviser paid LOIPM and NCM fees at the annual rates of 0.15% and 0.20%,
respectively, of the average daily net assets of the Company.
Certain states in which shares of the Company are qualified for sale impose
limitations on the expenses of the Company. The most restrictive annual
expense limitation requires that the Investment Adviser reimburse the Company
to the extent that expenses (excluding interest, taxes, distribution fees,
brokerage fees and commissions and extraordinary items) exceed 2.5% of the
Company's first $30 million of average daily net assets, 2.0% of the Company's
next $70 million of average daily net assets and 1.5% of the daily net assets
in excess thereof. In the event reimbursement is required pursuant to such
limitations, MLAM will be responsible for the amounts required to be
reimbursed, but the fees paid to LOIPM and NCM will be reduced pro rata.
No fee payment will be made to the Investment Adviser during any fiscal year
which will cause such expenses to exceed the most restrictive expense
limitation at the time of such payment. For the year ended November 30, 1994,
investment advisory fees were $3,780,445, of which $3,371,747 was paid to
MLAM, $175,156 was paid to LOPIM and $233,542 was paid to NCM under the terms
of their respective research agreements prior to termination.
Pursuant to the distribution plans ("the Distribution Plans") adopted by the
Company in accordance with Rule 12b-1 under the Investment Company Act of
1940, the Company 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 Distribution
Maintenance 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
Company. 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 November 30, 1994, MLFD earned underwriting
discounts and MLPF&S earned dealer concessions on sales of the
Company's Class A and Class D Shares as follows:
MLFD MLPF&S
Class A $8,688 $133,688
Class D $ 154 $ 2,570
MLPF&S received contingent deferred sales charges of $54,858
relating to transactions in Class B Shares, and $20,959 in
commissions on the execution of portfolio security transactions
for the Company for the year ended November 30, 1994.
Financial Data Services, Inc. ("FDS"), a wholly owned subsidiary
of ML & Co., acts as the Company's transfer agent.
Accounting services are provided to the Company by MLAM at cost.
Certain officers and/or directors of the Company are officers and/or
directors of MLAM, PSI, NCM, LOIPM (including their affiliated
companies), MLFP&S, FDS, MLFD and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the year ended November 30, 1994 were $207,990,432 and
$133,774,417, respectively.
Net realized and unrealized gains (losses) as of November 30, 1994
were as follows:
Realized Unrealized
Gains (Losses) Gains (Losses)
Long-term investments $ 15,363,522 $ 35,432,021
Short-term investments (518) --
Currency put options purchased -- (1,250,331)
Foreign currency transactions (94,755) (2,685)
------------ ------------
Total $ 15,268,249 $ 34,179,005
============ ============
72
<PAGE>
As of November 30, 1994, net unrealized appreciation/depreciation
for Federal income tax purposes aggregated $35,432,021, of which
$52,629,498 related to appreciated securities and $17,197,477
related to depreciated securities. The aggregate cost of investments
at November 30, 1994 for Federal income tax purposes was $343,724,790.
4. Capital Stock Transactions:
Net increase in net assets derived from capital share transactions
was $100,706,623 and $75,813,575 for the years ended November 30,
1994 and November 30, 1993, respectively.
Transactions in capital shares for each class were as follows:
Class A Shares for the Year Dollar
Ended November 30, 1994 Shares Amount
Shares sold 11,383,578 152,341,771
Shares issued to shareholders in
reinvestment of dividends and distributions 1,160,533 14,703,952
------------ ------------
Total issued 12,544,111 167,045,723
Shares redeemed (6,393,917) (84,948,853)
------------ ------------
Net increase 6,150,194 82,096,870
============ ============
Class A Shares for the Year Dollar
Ended November 30, 1993 Shares Amount
Shares sold 9,166,536 112,504,555
Shares issued to shareholders in
reinvestment of distributions 900,399 9,949,408
------------ ------------
Total issued 10,066,935 122,453,963
Shares redeemed (4,639,892) (55,755,689)
------------ ------------
Net increase 5,427,043 66,698,274
============ ============
Class B Shares for the Year Dollar
Ended November 30, 1994 Shares Amount
Shares sold 2,992,769 $ 39,141,551
Shares issued to shareholders in
reinvestment of distributions 131,099 1,636,117
------------ ------------
Total issued 3,123,868 40,777,668
Shares redeemed (1,737,178) (22,670,466)
------------ ------------
Conversion of shares (102,695) (1,309,366)
Net increase 1,283,995 $ 16,797,836
============ ============
Class B Shares for the Year Dollar
Ended November 30, 1993 Shares Amount
Shares sold 1,235,408 15,456,464
Shares issued to shareholders in
reinvestment of distributions 126,908 1,380,757
------------ ------------
Total issued 1,362,316 16,837,221
Shares redeemed (649,303) (7,721,920)
------------ ------------
Net increase 713,013 9,115,301
============ ============
Class C Shares for the Period
October 21, 1994++ to Dollar
November 30, 1994 Shares Amount
Shares sold 16,968 221,416
------------ ------------
Total issued 16,968 221,416
Shares redeemed (2,823) (36,788)
------------ ------------
Net increase 14,145 184,628
============ ============
[FN]
++Commencement of Operations.
Class D Shares for the Period
October 21, 1994++ to Dollar
November 30, 1994 Shares Amount
Shares sold 24,298 323,555
Conversion of shares 100,258 1,309,366
------------ ------------
Total issued 124,556 1,632,921
Shares redeemed (421) (5,632)
------------ ------------
Net increase 124,135 1,627,289
============ ============
[FN]
++Commencement of Operations.
5. Commitments:
On November 30, 1994, the Company had entered into forward
exchange contracts under which it had agreed to purchase and sell
various foreign currencies with an approximate value of $895,000
and $1,971,000, respectively.
6. Subsequent Event:
On December 14, 1994, the Board of Directors declared an ordinary
income dividend of $.006867 per Class A Share and $.002781 per
Class D Share and a capital gains distribution of $0.514407 per
Class A, Class B, Class C and Class D Share, payable on December 21,
1994 to shareholders of record as of December 13, 1994.
73
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74
<PAGE>
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75
<PAGE>
TABLE OF CONTENTS
MERRILL LYNCH
PAGE GLOBAL
---- HOLDINGS, INC.
Investment Objective and Policies..... 2
Hedging Techniques.................. 3
Investment Restrictions............. 7
Management of the Company............. 11
Directors and Officers.............. 11
Compensation of Directors........... 13
Advisory and Management
Arrangements.......................... 14 [INSERT ART HERE]
Purchase of Shares.................... 15
Redemption of Shares.................. 23
Portfolio Transactions and
Brokerage........................... 25
Determination of Net Asset Value...... 27
Shareholder Services.................. 28
Taxes................................. 46
Performance Data...................... 49
General Information................... 52
Description of Shares............... 52
Computation of Offering Price Per
Share............................... 53
Independent Auditors................ 53 ------------------------------
Custodian........................... 53
Transfer Agent...................... 54 Statement of
Legal Counsel....................... 54 Additional Information
Reports to Shareholders............. 54
Additional Information.............. 54
Independent Auditors' Report.......... 55
Financial Statements.................. 56
March 28, 1995
Distributor:
Merrill Lynch Funds
Code #10245-0395 Distributor, Inc.
<PAGE>
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements:
Contained in Part A:
Financial Highlights for the fiscal years ended November 30, 1994, 1993,
1992, and 1991, the seven month period ended November 30, 1990, and each of
the fiscal years in the five year period ended April 30, 1990.
Contained in Part B:
Schedule of Investments, as of November 30, 1994.
Statement of Assets and Liabilities, as of November 30, 1994.
Statement of Operations for the year ended November 30, 1994.
Statements of Changes in Net Assets for the years ended November 30, 1994
and 1993.
Financial Highlights for the fiscal years ended November 30, 1994, 1993,
1992 and 1991, the seven month period ended November 30, 1990, and the
fiscal year ended April 30, 1990.
(b) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
- -------------- -------------------------------------------------------------------------------
<S> <C>
1(a) --Articles of Incorporation of Registrant, as amended.(d)
(b) --Articles of Amendment to Articles of Incorporation of Registrant.(d)
(c) --Articles of Amendment to the Articles of Incorporation of the Registrant.
(d) --Articles Supplementary to the Articles of Incorporation of the Registrant.
2 --By-Laws of Registrant.(d)
3 --None.
4 --Copies of instruments defining the rights of shareholders, including the
relevant portions of the Articles of Incorporation, as amended, and By-Laws
of Registrant.(a)
5(a) --Investment Advisory Agreement between Registrant and Merrill Lynch Asset
Management, Inc.(d)
(b) --Supplement to Investment Advisory Agreement between Registrant and Merrill
Lynch Asset Management, L.P., dated January 3, 1994.(b)
6(a) --Class A Distribution Agreement between Registrant and Merrill Lynch Funds
Distributor, Inc.(d)
(b) --Class B Distribution Agreement between Registrant and Merrill Lynch Funds
Distributor, Inc.(d)
(c) --Letter Agreement between the Registrant and Merrill Lynch Funds Distributor,
Inc. with respect to the Merrill Lynch Mutual Fund Advisor Program.(b)
(d) --Class C Shares Distribution Agreement between Registrant and Merrill Lynch
Funds Distributor, Inc.(d)
(e) --Class D Shares Distribution Agreement between Registrant and Merrill Lynch
Funds Distributor, Inc.(d)
7 --None.
8 --Custody Agreement between Registrant and The Chase Manhattan Bank, N.A.(d)
9 --Transfer Agency, Dividend Disbursing Agency and Shareholder Servicing Agency
Agreement between Registrant and Merrill Lynch Financial Data Service, Inc.
(now known as Financial Data Services, Inc.)(d)
</TABLE>
C-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
- -------------- -------------------------------------------------------------------------------
<S> <C>
10 --Opinion of Brown & Wood, counsel for the Registrant.
11 --Consent of Deloitte & Touche LLP, independent auditors for the Registrant.
12 --None.
13 --Certificate of Merrill Lynch Asset Management, Inc.(d)
14 --None.
15(a) --Amended and Restated Class B Distribution Plan of the Registrant and
Distribution Plan Sub-Agreement.(b)
(b) --Class C Shares Distribution Plan and Class C Shares Distribution Plan Sub-
Agreement of the Registrant.(d)
(c) --Class D Shares Distribution Plan and Class D Shares Distribution Plan Sub-
Agreement of the Registrant.(d)
16(a) --Schedule for computation of each performance quotation for Class A shares
provided in the Registration Statement in response to Item 22.(d)
(b) --Schedule for computation of each performance quotation for Class B shares
provided in the Registration Statement in response to Item 22.(d)
(c) --Schedule for computation of each performance quotation for Class C shares
provided in the Registration Statement in response to Item 22.
(d) --Schedule for computation of each performance quotation for Class D shares
provided in the Registration Statement in response to Item 22.
17(a) --Financial Data Schedule for the Year Ended November 30, 1994, relating to
Class A Shares.
(b) --Financial Data Schedule for the Year Ended November 30, 1994, relating to
Class B Shares.
(c) --Financial Data Schedule for the Year Ended November 30, 1994, relating to
Class C Shares.
(d) --Financial Data Schedule for the Year Ended November 30, 1994, relating to
Class D Shares.
18 --Power of Attorney for Edward D. Zinbarg.
</TABLE>
- ------------
<TABLE>
<S> <C>
(a) Reference is made to Article III (Sections 3 and 4), Article VI (Sections 2, 3 and 5),
Article VII, Article VIII and Article X of the Registrant's Articles of Incorporation,
as amended, filed as Exhibit(1)(a) to the Registrant's Registration Statement; amended
and restated Article V contained in the Articles of Amendment filed as Exhibit (1)(b) to
the Registrant's Registration Statement; the Articles of Amendment filed as Exhibit 1(c)
to the Registration Statement; the Articles Supplementary filed as Exhibit 1(d) to the
Registration Statement; and Article II, Article III (Sections 1, 2, 3, 5, 6 and 17),
Article V (Section 7), Article VI, Article VII, Article XII, Article XIII, and Article
XIV of the Registrant's By-Laws previously filed as Exhibit (2) to the Registrant's
Registration Statement.
(b) Filed on March 30, 1994 as an Exhibit to Post-Effective Amendment No. 12 to Registrant's
Registration Statement under the Securities Act of 1933.
(c) Filed on October 17, 1994, as an Exhibit to Post-Effective Amendment No. 13 to
Registrant's Registration Statement under the Securities Act of 1933.
(d) Refiled pursuant to the Electronic Data Gathering, Analysis, and Retreival (EDGAR)
phase-in requirements.
</TABLE>
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
The Registrant is not controlled by or under common control with any other
person.
C-2
<PAGE>
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
<TABLE>
<CAPTION>
NUMBER OF RECORD
HOLDERS AT
TITLE OF CLASS FEBRUARY 28, 1995
- ------------------------------------------------------------------- -----------------
<S> <C>
Shares of Class A Common Stock, par value $0.10 per share.......... 1,537
Shares of Class B Common Stock, par value $0.10 per share.......... 118
Shares of Class C Common Stock, par value $0.10 per share.......... 2
Shares of Class D Common Stock, par value $0.10 per share.......... 10
</TABLE>
ITEM 27. INDEMNIFICATION.
Reference is made to Article VI of Registrant's Articles of Incorporation,
Article VI of Registrant's By-Laws, Section 2-418 of the Maryland General
Corporation Law and Section 9 of the Distribution Agreements.
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 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.
Each officer and director of the Registrant claiming indemnification within
the scope of Article VI of the By-Laws shall be entitled to advances from the
Registrant for payment of the reasonable expenses incurred by him in connection
with proceedings to which he is a party in the manner and to the full extent
permitted under the General Laws of the State of Maryland; provided, however,
that the person seeking indemnification shall provide to the Registrant a
written affirmation of his good faith belief that the standard of conduct
necessary for indemnification by the Registrant has been met and a written
undertaking to repay any such advance, if it should ultimately be determined
that the standard of conduct has not been met, and provided further that at
least one of the following additional conditions is met: (a) the person seeking
indemnification shall provide a security in form and amount acceptable to the
Registrant for his undertaking; (b) the Registrant is insured against losses
arising by reason of the advance; or (c) a majority of a quorum of non-party
independent directors, or independent legal counsel in a written opinion, shall
determine, based on a review of facts readily available to the Registrant at the
time the advance is proposed to be made, that there is reason to believe that
the person seeking indemnification will ultimately be found to be entitled to
indemnification.
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, make advances or purchase insurance to the
extent provided in Article VI of the By-Laws on behalf of an employee or agent
who is not an officer or director of the Registrant.
In Section 9 of the Distribution Agreements relating to the securities being
offered hereby, the Registrant agrees to indemnify the Distributor and each
person, if any, who controls the Distributor within the meaning of the
Securities Act of 1933, as amended (the "Act"), against certain types of civil
C-3
<PAGE>
liabilities arising in connection with the Registration Statement or Prospectus
and Statement of Additional Information.
Insofar as indemnification for liabilities arising under 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
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.
Merrill Lynch Asset Management, L.P., doing business as Merrill Lynch Asset
Management ("MLAM" or the "Investment Adviser"), acts as investment adviser for
the following registered investment companies: Convertible Holdings, Inc.,
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,
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 Utility Fund, Inc., Merrill Lynch Global SmallCap Fund, Inc., Merrill
Lynch Growth Fund for Investment and Retirement, Merrill Lynch Healthcare Fund,
Inc., Merrill Lynch High Income Municipal Bond 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 Senior
Floating Rate Fund, Inc., 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. Fund Asset Management, L.P.
("FAM"), an affiliate of the Investment Adviser, acts as the investment adviser
for the following registered investment companies: Apex Municipal Fund, Inc.,
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., Corporate High Yield Fund, Inc., Corporate High
Yield Fund II, Inc., Emerging Tigers Fund, Inc., Financial Institutions Series
Trust, Income Opportunities Fund 1999, Inc., Income Opportunities Fund 2000,
Inc., 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., MuniAssets Fund, Inc., MuniBond Income Fund, Inc., The
Municipal Fund Accumulation Program, Inc., MuniEnhanced Fund, Inc., MuniInsured
Fund, Inc., MuniVest Fund, Inc., MuniVest Fund II, Inc., MuniVest California
Insured Fund, Inc., MuniVest Florida Fund, MuniVest Michigan Insured Fund,
C-4
<PAGE>
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., 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
Fund, Inc. The address of each of these investment companies is 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
the Investment Adviser and FAM 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.
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 December 1, 1992 for his or its 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 substantially
all of the investment companies described in the preceding paragraph, and
Messrs. Durnin, Giordano, Harvey, Kirstein, Monagle and Ms. Griffin are
directors, trustees or officers of one or more of such companies.
<TABLE><CAPTION>
POSITION(S)
WITH THE OTHER SUBSTANTIAL BUSINESS,
NAME INVESTMENT ADVISER PROFESSION, VOCATION OR EMPLOYMENT
- ---------------------- ---------------------- --------------------------------------------
<S> <C> <C>
ML & Co............... Limited Partner Financial Services Holding Company
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 Executive Vice President of FAM; Executive
President Vice President and Director of Princeton
Services; President and Director of MLFD;
Director of Financial Data Services, Inc.
("FDS"); President of Princeton
Administrators, L.P.
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
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
</TABLE>
C-5
<PAGE>
<TABLE><CAPTION>
POSITION(S)
WITH THE OTHER SUBSTANTIAL BUSINESS,
NAME INVESTMENT ADVISER PROFESSION, VOCATION OR EMPLOYMENT
- ---------------------- ---------------------- --------------------------------------------
<S> <C> <C>
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 Senior Vice President and Controller of FAM;
and Controller 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,
Jr.................... Senior Vice President Senior Vice President of FAM; Senior Vice
President of Princeton Services
Gerald M. Richard..... Senior Vice President Senior Vice President and Treasurer of FAM;
and Treasurer 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 Princeton Services
</TABLE>
ITEM 29. PRINCIPAL UNDERWRITERS.
(a) MLFD acts as the principal underwriter for the Registrant and for each
of the investment companies referred to in the first paragraph of Item 28 except
Apex Municipal Fund, Inc., CBA Money Fund, CMA Government Securities Fund, CMA
Money Fund, CMA Multi-State Municipal Series Trust, CMA Tax-Exempt Fund, CMA
Treasury Fund, Convertible Holdings, Inc., The Corporate Fund Accumulation
Program, 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., The Municipal Fund Accumulation Program, Inc., MuniEnhanced Fund, Inc.,
MuniInsured Fund, Inc., MuniVest Fund, Inc., MuniVest Fund II, Inc., MuniVest
California Insured Fund, Inc., MuniVest Florida Fund, MuniVest Michigan Insured
Fund, Inc., MuniVest New Jersey Fund, Inc., MuniVest New York Insured Fund,
Inc., MuniVest Pennsylvania Fund, MuniYield Arizona Fund, MuniYield Arizona Fund
II, Inc., MuniYield California Fund, Inc., MuniYield California Insured Fund,
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., Senior High Income Portfolio, Inc., Senior High
Income Portfolio II, Inc., Strategic High Income Fund, Inc., Taurus
MuniCalifornia Holdings, Inc., Taurus MuniNew York Holdings, Inc. and Worldwide
DollarVest Fund, Inc.
C-6
<PAGE>
(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, Breen, Graczyk, Fatseas and Wasel is One Financial Center, Boston,
Massachusetts 02111-2646.
<TABLE><CAPTION>
(2) (3)
(1) POSITION(S) AND OFFICE(S) POSITION(S) AND OFFICE(S)
NAME WITH MLFD WITH REGISTRANT
- ----------------------------- ----------------------------- -----------------------------
<S> <C> <C>
Terry K. Glenn............... President and Director Executive Vice President
Arthur Zeikel................ Director President and Director
Philip L. Kirstein........... Director None
William E. Aldrich........... Senior Vice President None
Kevin P. Boman............... Vice President None
Robert W. Crook.............. Senior Vice President None
Michael J. Brady............. Vice President None
William M. Breen............. Vice President None
Sharon Creveling............. Vice President and Assistant None
Treasurer
Mark A. DeSario.............. Vice President None
James T. Fatseas............. Vice President None
Stanley Graczyk.............. Vice President None
Michelle T. Lau.............. Vice President None
Debra W. Landsman-Yaros...... Vice President None
Gerald M. Richard............ Vice President and Treasurer Treasurer
Salvatore Venezia............ Vice President None
William Wasel................ Vice President None
Robert Harris................ Secretary Secretary
</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 are maintained at the offices of the Registrant, 800 Scudders Mill
Road, Plainsboro, New Jersey 08536, and Financial Data Services, Inc., 4800 Deer
Lake Drive East, Jacksonville, Florida 32246-6484.
ITEM 31. MANAGEMENT SERVICES.
Other than as set forth under the caption "Management of the
Company--Advisory and Management Arrangements" in the Prospectus constituting
Part A of the Registration Statement and under "Management of the
Company--Advisory and Management Arrangements" in the Statement of Additional
Information constituting Part B of the Registration Statement, Registrant is not
a party to any management related service contract.
ITEM 32. UNDERTAKINGS.
(a) Not applicable.
(b) Not applicable.
(c) The Registrant undertakes to furnish to each person to whom a prospectus
is delivered a copy of the Registrant's latest annual report to shareholders,
upon request and without charge.
C-7
<PAGE>
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 its 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 27th day of March
1995.
MERRILL LYNCH GLOBAL HOLDINGS, INC.
(REGISTRANT)
By /s/ Arthur Zeikel
...................................
(Arthur Zeikel, President)
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to Registrant's Registration Statement has been signed
below by the following persons in the capacities and on the date(s) indicated.
<TABLE><CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------ ------------------------------------ ----------------
<S> <C> <C>
/s/ Arthur Zeikel
.................................... President and Director March 27, 1995
(Arthur Zeikel) (Principal Executive Officer)
/s/ Gerald M. Richard
.................................... Treasurer (Principal Financial March 27, 1995
(Gerald M. Richard) and Accounting Officer)
DONALD CECIL* Director March 27, 1995
....................................
(Donald Cecil)
EDWARD H. MEYER* Director March 27, 1995
....................................
(Edward H. Meyer)
CHARLES C. REILLY* Director March 27, 1995
....................................
(Charles C. Reilly)
RICHARD R. WEST* Director March 27, 1995
....................................
(Richard R. West)
EDWARD D. ZINBARG* Director March 27, 1995
....................................
(Edward D. Zinbarg)
</TABLE>
<TABLE>
<S> <C> <C>
*By /s/ Arthur Zeikel Director March 27, 1995
...............................
(Arthur Zeikel, Attorney-in-Fact)
</TABLE>
C-8
<PAGE>
EXHIBIT INDEX
<TABLE><CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
- ------ --------------------------------------------------------------------------- ------
<S> <C> <C>
1(a) --Articles of Incorporation of Registrant, as amended.(d)
(b) --Articles of Amendment to Articles of Incorporation of Registrant.(d)
(c) --Articles of Amendment to the Articles of Incorporation of the Registrant.
(d) --Articles Supplementary to the Articles of Incorporation of the
Registrant.
2 --By-Laws of Registrant.(d)
3 --None.
4 --Copies of instruments defining the rights of shareholders, including the
relevant portions of the Articles of Incorporation, as amended, and
By-Laws of Registrant.(a)
5(a) --Investment Advisory Agreement between Registrant and Merrill Lynch Asset
Management, Inc.(d)
(b) --Supplement to Investment Advisory Agreement between Registrant and
Merrill Lynch Asset Management, L.P., dated January 3, 1994.(b)
6(a) --Class A Distribution Agreement between Registrant and Merrill Lynch Funds
Distributor, Inc.(d)
(b) --Class B Distribution Agreement between Registrant and Merrill Lynch Funds
Distributor, Inc.(d)
(c) --Letter Agreement between the Registrant and Merrill Lynch Funds
Distributor, Inc. with respect to the Merrill Lynch Mutual Fund Advisor
Program.(b)
(d) --Class C Shares Distribution Agreement between Registrant and Merrill
Lynch Funds Distributor, Inc.(d)
(e) --Class D Shares Distribution Agreement between Registrant and Merrill
Lynch Funds Distributor, Inc.(d)
7 --None.
8 --Custody Agreement between Registrant and The Chase Manhattan Bank, N.A.(d)
9 --Transfer Agency, Dividend Disbursing Agency and Shareholder Servicing
Agency Agreement between Registrant and Merrill Lynch Financial Data
Service, Inc. (now known as Financial Data Services, Inc.)(d)
10 --Opinion of Brown & Wood, counsel for the Registrant.
11 --Consent of Deloitte & Touche ]LLP, independent auditors for the
Registrant.
12 --None.
13 --Certificate of Merrill Lynch Asset Management, Inc.(d)
14 --None.
15(a) --Amended and Restated Class B Distribution Plan of the Registrant and
Distribution Plan Sub-Agreement.(b)
(b) --Class C Shares Distribution Plan and Class C Shares Distribution Plan
Sub-Agreement of the Registrant.(d)
</TABLE>
<PAGE>
<TABLE><CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
- ------ --------------------------------------------------------------------------- ------
<S> <C> <C>
(c) --Class D Shares Distribution Plan and Class D Shares Distribution Plan
Sub-Agreement of the Registrant.(d)
16(a) --Schedule for computation of each performance quotation for Class A shares
provided in the Registration Statement in response to Item 22.(d)
(b) --Schedule for computation of each performance quotation for Class B shares
provided in the Registration Statement in response to Item 22.(d)
(c) --Schedule for computation of each performance quotation for Class C shares
provided in the Registration Statement in response to Item 22.
(d) --Schedule for computation of each performance quotation for Class D shares
provided in the Registration Statement in response to Item 22.
17(a) --Financial Data Schedule for the Year Ended November 30, 1994, relating to
Class A Shares.
(b) --Financial Data Schedule for the Year Ended November 30, 1994, relating to
Class B Shares.
(c) --Financial Data Schedule for the Year Ended November 30, 1994, relating to
Class C Shares.
(d) --Financial Data Schedule for the Year Ended November 30, 1994, relating to
Class D Shares.
</TABLE>
- ------------
<TABLE>
<S> <C>
(a) Reference is made to Article III (Sections 3 and 4), Article VI (Sections 2, 3 and 5),
Article VII, Article VIII and Article X of the Registrant's Articles of Incorporation,
as amended, filed as Exhibit(1)(a) to the Registrant's Registration Statement; amended
and restated Article V contained in the Articles of Amendment filed as Exhibit (1)(b) to
the Registrant's Registration Statement; the Articles of Amendment filed as Exhibit 1(c)
to the Registration Statement; the Articles Supplementary filed as Exhibit 1(d) to the
Registration Statement; and Article II, Article III (Sections 1, 2, 3, 5, 6 and 17),
Article V (Section 7), Article VI, Article VII, Article XII, Article XIII, and Article
XIV of the Registrant's By-Laws previously filed as Exhibit (2) to the Registrant's
Registration Statement.
(b) Filed on March 30, 1994 as an Exhibit to Post-Effective Amendment No. 12 to Registrant's
Registration Statement under the Securities Act of 1933.
(c) Filed on October 17, 1994, as an Exhibit to Post-Effective Amendment No. 13 to
Registrant's Registration Statement under the Securities Act of 1933.
(d) Refiled pursuant to the Electronic Data Gathering, Analysis, and Retreival (EDGAR)
phase-in requirements.
</TABLE>
<PAGE>
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
graphic paper and Merrill Lynch back cover of Statement of
logo including stylized market Additional Information
bull
[.EX99_16A]1
[.EX99_16B]1
[.EX99_15C]1-5
[.EX99_15B]1-5
[.EX99_6E]1-20
[.EX99_6E]1-23
[.EX99_6D]1-20
[.EX99_6A]1-23
[.EX99_8]1-12
[.EX99_9]1-6
[.EX99_13]1
[.EX99_5A]1-19
[.EX99_5B]1
[.EX99_1C]1-4
[.EX99_1D]1-3
[.EX99_1B]1-2
[.EX99_1A]1-41
[.EX99_2]1
Exhibit 99.16(a)
INTERNATIONAL HOLDINGS, INC.
TOTAL RETURN
Since
Inception Annual
1 Year 7/2/86 Return*
------ --------- ------
Initial Investment $1,000.00 $1,000.00 $1,000.00
Divided by
Maximum Offering Price 15.38 9.79
----- ----
Divided by Net Asset Value 14.38
-----
Equals Shares Purchased 65.020 102.145 69.541
Plus Shares Acquired Through
Dividend Reinvestment 7.902 56.713 8.447
----- ------ -----
Equals Shares Held
at 6/30/88 72.922 158.858 77.988
Multiplied by Net Asset
Value at 6/30/88 12.08 12.08 12.08
----- ----- -----
Equals Ending Redeemable
Value of a $1,000
Investment (ERV) $880.90 $1,919.01 $942.10
Divided by $1,000 (P) .8809 1.9190 .9421
Subtract 1 (.1191) .9190 .0579
Expressed as a percentage
equals the Aggregate Total
Return for the Period (T) (11.91%) 91.90%
-------- ------
Expressed as a percentage
equals the Annual
Total Return (5.79%)
-------
ERV divided by P .8809 1.9190
Raise to the Power of 1 1/3.997
Equals .8809 1.1771
Subtract 1 (.1191) .1771
-------- ------
Expressed As a percentage
equals the Average
Annualized Total Return (11.91%) 17.71%
-------- ------
*Does not include sales charge for the period
Exhibit 99.16(b)
INTERNATIONAL HOLDINGS
TOTAL RETURN
Since
Inception
1 Year 7/O2/84
------ ---------
Initial Investment (P) $1,000.00 $1,000.00
Divided by
Maximum offering Price 18.07 9.79
--------- ---------
Equals Shares Purchased 55.34 102.15
Plus Shares Acquired Through
Dividend Reinvestment 17.75 56.66
--------- ---------
Equals Shares Hold at 4/30/88 73.09 158.81
Multiplied by Net Asset
Value at 4/30/88 12.23 12.23
--------- ---------
Equals Ending Redeemable
Value of a $1,000
Investment (ERV) $893.60 $1,942.90
Divided by $1,000 .8936 1.9429
Subtract 1 (.1064) .9429
Expressed as a percentage equals
the aggregate total return for
the period (10.64%) 94.29%
-------- ------
ERV divided by P .8936 1.9429
Raise to the power of 1 1/3.3801
Equals .8936 1.1894
Subtract 1 (.1064) .1894
Expressed as a percentage equals
the average Annualized total
return (10.64%) 18.94%
-------- ------
Exhibit 99.15(c)
CLASS D DISTRIBUTION PLAN
OF
MERRILL LYNCH GLOBAL HOLDINGS, INC.
PURSUANT TO RULE 12b-1
DISTRIBUTION PLAN made as of the 21st day of October 1994,
by and between Merrill Lynch Global Holdings, 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 main-
tenance 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:
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
<PAGE>
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 securi-
ties 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 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.
7. The Plan may be terminated at any time by vote of a
majority of the Rule 12b-I 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 I hereof unless such
amendment is approved by at least a majority, as defined in the
2
<PAGE>
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 nomina-
tion 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 GLOBAL,.,HOLDINGS, INC.
By /s/ Terry K. Glenn
--------------------------------------
Title: President
MERRILL LYNCH FUNDS DISTRIBUTOR, INC.
By /s/ David Conine
--------------------------------------
Title: Vice President
3
<PAGE>
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 corpo-
ration ("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 Global Holdings, 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.
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
<PAGE>
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/ Terry K. Glenn
-----------------------
Title: President
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By /s/ David Conine
-----------------------
Title: Vice President
2
Exhibit 99.15(b)
CLASS C DISTRIBUTION PLAN
OF
MERRILL LYNCH GLOBAL HOLDINGS, INC.
PURSUANT TO RULE 12b-1
DISTRIBUTION PLAN made as of the 21st day of October 1994,
by and between Merrill Lynch Global Holdings, 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 Fundis 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:
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
<PAGE>
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 0.75% 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 require-
ments set forth in Paragraph 4 hereof.
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.
2
<PAGE>
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 securi-
ties 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 nomina-
tion 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
the Plan, or the agreements or such report, as the case may be,
the first two years in an easily accessible place.
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Distribution Plan as of the date first above written.
MERRILL LYNCH GLOBAL HOLDINGS, INC.
By /s/ Arthur Zeikel
-----------------------------------------
Title: President
MERRILL LYNCH FUNDS DISTRIBUTOR, INC.
By /s/ Terry K. Glenn
-----------------------------------------
Title: Vice President
4
<PAGE>
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 corpo-
ration ("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 Global Holdings, 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 0.75% 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.
<PAGE>
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
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/ Terry K. Glenn
-----------------------------------------
Title: President
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By /s/ David Conine
-----------------------------------------
Title: Vice President
2
Exhibit 99.6(b)
CLASS B SHARES
DISTRIBUTION AGREEMENT
AGREEMENT made as of the 3rd day of October, 1988, between
--- ------- -
MERRILL LYNCH INTERNATIONAL HOLDINGS, 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 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 direct-
ly 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 B shares of common stock of the Fund (the "Class B
Shares") in order to promote the growth of the Fund and
facilitate the distribution of its Class B shares.
NOW, THEREFORE, the parties agree as follows:
<PAGE>
Section 1. Appointment of the Distributor. The Fund
------------------------------
hereby appoints the Distributor as the principal underwriter and
distributor of the Fund to sell Class B shares to the public and
hereby agrees during the term of this Agreement to sell Class B
shares of the Fund to the Distributor upon the terms and condi-
tions 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 its Class B 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 B 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 rights granted to the Distributor to
purchase Class B 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
2.
<PAGE>
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.
(c) Such exclusive rights also shall not apply to Class B
shares issued by the Fund pursuant to reinvestment of dividends
or capital gains distributions.
(d) such exclusive rights also shall not apply to Class B
shares issued by the Fund pursuant to any reinstatement privilege
afforded redeeming shareholders.
Section 3. Purchase of Shares from the Fund.
--------------------------------
(a) The Fund will commence an offering of its class B
shares and thereafter the Distributor shall have the right to buy
from the Fund the Class B shares needed, but not more than the
Class B shares needed (except for clerical errors in
transmission) to fill unconditional orders for Class B shares of
the Fund placed with the Distributor by investors or securities
dealers. The price which the Distributor shall pay for the Class
B shares so purchased from the Fund shall be the net asset value,
determined as set forth in Section 3(c) hereof.
(b) The Class B 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>
(c) The net asset value of Class B 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 of the Fund and guidelines
established by the Board of Directors.
(d) The Fund shall have the right to suspend the sale of
its Class B 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 B
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 B 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 B 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 B-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 B shares pursuant to the instructions
of the Distributor. Payment shall be made to the Fund in New
4.
<PAGE>
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 Class B shares may be tendered
for redemption at any time, and the Fund agrees to repurchase or
redeem the Class B 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 B shares shall be equal to
the net asset value calculated in accordance with the provisions
of Section 3(c) hereof, less the redemption fee or other charge,
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 Class B 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
5.
<PAGE>
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 B shares or payment may be
suspended 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.
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 B 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.
6.
<PAGE>
(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 Class B shares and such steps as
may be necessary to register the same under the Securities Act of
1933, as amended (the "Securities Act"), to the end that there
will be available for sale such number of Class B 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
B 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 B shares of the Fund, but shall
not be obligated to sell any specific number of Class B shares.
The services of the Distributor to the Fund hereunder are not to
7 .
<PAGE>
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 B 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 representations,
other than those contained in the registration statement or
related prospectus and statement ot 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 neces-
sary to comply with the requirements of the National Association
of Securities Dealers, Inc. (the "NASD"), as such requirements
may from time to time exist.
8.
<PAGE>
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 B shares; provided,
that the Fund shall approve the forms of agreements with dealers.
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 initial form of agreement with selected
dealers to be used in the offering of the Class B shares is
attached hereto as Exhibit A.
(b) Within the United States, the Distributor shall offer
and sell Class B 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 audi-
tors, in connection with the preparation and filing of any re-
quired 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 mate-
rials to shareholders (including but not limited to the expense
of setting in type any such registration statements, prospec-
tuses, statements of additional information, annual or interim
reports or proxy materials).
9.
<PAGE>
(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 con-
sultants. 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 B
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 B 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 Distribution Plan pursuant
to Rule 12b-1 under the Investment Company Act remains in effect,
any 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 qualifi-
cation of the Class B 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
10.
<PAGE>
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 Distri-
butor 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 Class B 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 connec-
tion 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 per-
sons thereof against any liability to the Fund or its security
11.
<PAGE>
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 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
12.
<PAGE>
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 commence-
ment 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 B 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 regis-
tration statement or related prospectus and statement of addi-
tional 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
Distributor shall have the rights and duties given to the Fund,
13.
<PAGE>
and the Fund and each person so indemnified shall have the rights
and duties given to the Distributor by the provisions of sub-
section (a) of this Section 9.
Section 10. Duration and Termination of this Agreement.
------------------------------------------
This Agreement shall become effective as of the date first above
written and shall remain in force until 19 and
thereafter, but only 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 Class B 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 Class B 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.
14.
<PAGE>
Section 11. Amendments of this Agreement. This Agreement
----------------------------
may be amended by the parties only if such amendment is specifi-
cally approved by (i) the Directors, or by the vote of a majority
of outstanding Class B 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 12. Governing Law. The provisions of this Agree-
-------------
ment 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.
15.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
MERRILL LYNCH INTERNATIONAL HOLDINGS, INC.
By /s/ Arthur Zeikel
---------------------------------------
MERRILL LYNCH FUNDS DISTRIBUTOR, INC.
By /s/ Terry K. Glenn
---------------------------------------
16.
<PAGE>
EXHIBIT A
MERRILL LYNCH INTERNATIONAL HOLDINGS, INC.
CLASS B SHARES OF COMMON STOCK
SELECTED DEALER AGREEMENT
Gentlemen:
Merrill Lynch Funds Distributor, Inc. (the "Distributor")
has an agreement with Merrill Lynch International Holdings, Inc.,
a Maryland corporation (the "Fund"), pursuant to which it acts as
the distributor for the sale of Class B shares of common stock,
par value $0.10 per share, of the Fund (the "Class B Shares"),
and as such has the right to distribute Class B 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 B shares being offered to the public are registered
under the Securities Act of 1933, as amended. You have received
a copy of 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. As principal, we offer to
sell to you, as a member of the Selected Dealers Group, Class B
shares of the Fund upon the following terms and conditions:
1. In all sales of these Class B 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.
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 ini-
tial and subsequent purchase requirements are as set forth in the
current Prospectus and Statement of Additional Information of the
Fund.
<PAGE>
3. You shall not place orders for any of the Class B
shares unless you have already received purchase orders for such
Class B 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 B
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 B 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 B
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 B 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 B 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 B 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 B
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 are 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.
2.
<PAGE>
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 interim reports and proxy solicitation materials of the
Fund will be supplied to you in reasonable quantities upon re-
quest.
8. We reserve the right in our discretion, without notice,
to suspend sales or withdraw the offering of Class B shares
entirely. 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.
ii. Upon application to us, we will inform you as to the
states in which we believe the Class B 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 B
shares in any jurisdiction. We will file with the Department of
State in New York a Further State Notice with respect to the
Class B 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 tele-
graphed to you at the address specified by you below.
3.
<PAGE>
13. Your first order placed pursuant to this Agreement for
the purchase of Class B shares of the Fund will represent your
acceptance of this Agreement.
MERRILL LYNCH FUNDS DISTRIBUTOR, INC.
By
---------------------------------------
(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:
---------------------------------------
By:
-------------------------------------------------
Address:
--------------------------------------------
-----------------------------------------------------
Date:
-----------------------------------------------
4.
Exhibit 99.6(e)
CLASS D SHARES
DISTRIBUTION AGREEMENT
AGREEMENT made as of the 21st day of October 1994 between
Merrill Lynch Global Holdings, 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 distri-
butor 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
<PAGE>
sell 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 prin-
cipal underwriter and distributor, except that:
(a) The Fund may, upon written notice to the Distributor,
from time to time designate other principal underwriters and dis-
tributors 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 pur-
chase 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 sub-
stantially 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.
2
<PAGE>
(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
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 Sec-
tion 3(c) hereof, or to securities dealers having agreements
3
<PAGE>
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 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 deter-
mined 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>
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 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).
5
<PAGE>
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) 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 D shares purchased by or through the Distri-
butor 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 repur-
chase within seven business days after the date of the confirma-
tion 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
6
<PAGE>
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
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 Dis-
tributor may reasonably request for use in connection with the
distribution of Class D shares of the Fund, and this shall in-
clude, 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>
such number of copies of the prospectus and statement of addi-
tional 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 Securi-
ties 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 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
8
<PAGE>
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 in-
vestment 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 Distri-
butor 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 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
9
<PAGE>
("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 mem-
bers 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 regis-
tration 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).
10
<PAGE>
(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 con-
sultants. 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 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 qualifi-
cation of the Class D shares for sale pursuant to this Agreement
and, if necessary or advisable in connection therewith, of quali-
fying the Fund as a broker or dealer in such states of the United
States or other jurisdictions as shall be selected by the Fund
11
<PAGE>
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 Distri-
butor 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 com-
mon 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
12
<PAGE>
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 per-
formance 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
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
13
<PAGE>
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 reim-
burse the Distributor or such controlling person or persons, de-
fendant 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 shall have the rights and duties
given to the Fund, and the Fund and each person so indemnified
14
<PAGE>
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 Adviser 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 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 Dis-
tributor, on sixty days' written notice to the other party. This
15
<PAGE>
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 specifi-
cally 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.
16
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
MERRILL LYNCH GLOBAL HOLDINGS INC.
By /s/ Arthur Zeikel
-----------------------------------------
Title: President
MERRILL LYNCH FUNDS DISTRIBUTOR, INC.
By /s/ Terry K. Glenn
-----------------------------------------
Title: President
17
<PAGE>
EXHIBIT A
MERRILL LYNCH GLOBAL HOLDINGS, INC.
CLASS D SHARES OF COMMON STOCK
SELECTED DEALERS AGREEMENT
Gentlemen:
Merrill Lynch Funds Distributor, Inc. (the "Distributor")
has an agreement with Merrill Lynch Global Holdings, 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
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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 the public, computed as
percentages of the public offering price and the amount invested,
and the related discount to Selected Dealers are as follows:
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
------------------ -------------- -------------- -----------
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%
- -------------------------
* 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.
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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 to the
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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.
S. 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.
Any printed information which we furnish you other than the Fund's
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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 ofFair
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.
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.
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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
-----------------------------------------
(Authorized Signature)
Please return one signed copy
of this agreement to:
MERRILL LYNCH FUNDS DISTRIBUTOR, INC.
P.O. Box 9011
Princeton, New Jersey 08543-9011
Accepted
Firm Name: Merri11 Lynch, Pierce, Fenner & Smith Inc.
--------------------------------------------
By
--------------------------------------------------
Address: 800 Scudders Mill Road
--------------------------------------------
Plainsboro, New Jersey 08536
--------------------------------------------
Date: October 21, 1994
--------------------------------------------
6
Exhibit 99.6(d)
CLASS C SHARES
DISTRIBUTION AGREEMENT
AGREEMENT made as of the 21st day of October 1994, between
Merrill Lynch Global Holdings, 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 in-
terest 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 direct-
ly 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
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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 prin-
cipal 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 conso-
lidation 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.
2
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(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.
(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.
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(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 Dis-
tributor upon the terms and conditions set forth in Section 7
hereof.
(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 imprac-
ticable 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
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(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).
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.
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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.
(b) Redemption of Class C shares or payment may be sus-
pended 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 in-
clude, upon request by the Distributor, one certified copy of all
6
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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 addi-
tional 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 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.
7
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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 exclu-
sive and nothing herein contained shall prevent the Distributor
from entering into like arrangements with other investment com-
panies so long as the performance of its obligations hereunder is
not impaired thereby.
(b) In selling the Class C shares of the Fund, the Distri-
butor 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 se-
lected 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 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 neces-
sary to comply with the requirements of the National Association
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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, 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,
9
<PAGE>
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 con-
sultants. 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 Dis-
tributor 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 expenses incurred by the Distributor here-
under may be paid from amounts recovered by it from the Fund
under such Plan.
(c) The Fund shall bear the cost and expenses of qualifi-
cation of the Class C shares for sale pursuant to this Agreement
and, if necessary or advisable in connection therewith, of quali-
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fying 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 Distri-
butor 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 reliance upon, and in conformity with, in-
formation furnished to the Fund in connection therewith by or on
behalf of the Distributor; provided, however, that in no case (i)
<PAGE>
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
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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 commence-
ment 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 indem-
nity 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
13
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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 Distri-
butor, 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 Adviser 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 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
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<PAGE>
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
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 specifi-
cally 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 Agree-
-------------
ment 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
15
<PAGE>
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 GLOBAL HOLDINGS, INC.
By /s/ Arthur Zeikel
--------------------------------------
Title: President
MERRILL LYNCH FUNDS DISTRIBUTOR, INC.
By /s/ Terry K. Glenn
--------------------------------------
Title: President
16
<PAGE>
EXHIBIT A
MERRILL LYNCH GLOBAL HOLDINGS, INC.
CLASS C SHARES OF COMMON STOCK
SELECTED DEALER AGREEMENT
Gentlemen:
Merrill Lynch Funds Distributor, Inc. (the "Distributor")
has an agreement with Merrill Lynch Global Holdings, 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 "Prospec-
tus" 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 ini-
1
<PAGE>
tial 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 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 Addi-
tional 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 Addi-
tional 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 Sec-
tion 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 with-
holding: 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 Informa-
tion and supplemental information above mentioned. Any printed
information which we furnish you other than the Fund's Prospec-
tus, 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
2
<PAGE>
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 interim reports and proxy solicitation materials of the
Fund will be supplied to you in reasonable quantities upon re-
quest.
B. 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 tele-
graphed to you at the address specified by you below.
3
<PAGE>
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
------------------------------------------
(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:
--------------------------------------------------
Address: 800 Scudders Mill Road
---------------------------------------------
Plainsboro, New Jersey 08536
------------------------------------------------------
Date: October 21, 1994
------------------------------------------------
4
Exhibit 99.6(a)
CLASS A SHARES
DISTRIBUTION AGREEMENT
AGREEMENT made as of the 21st day of October 1994 between
MERRILL LYNCH GLOBAL HOLDINGS,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 Fund (sometimes herein referred to as "Class A shares") to
eligible investors (as defined below) and hereby agrees during
<PAGE>
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 prin-
cipal underwriter and distributor, except that:
(a) The Fund may, upon written notice to the Distributor,
from time to time designate other principal underwriters and dis-
tributors 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 pur-
chase 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 sub-
stantially all) the assets or the outstanding Class A shares of
any such company by the Fund.
(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.
2
<PAGE>
(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
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>
(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 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 A shares shall be deter-
mined 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.
4
<PAGE>
(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>
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 Distri-
butor 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 repur-
chase within seven business days after the date of the confirma-
tion 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>
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 Dis-
tributor may reasonably request for use in connection with the
distribution of Class A shares of the Fund, and this shall in-
clude, 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>
such number of copies of the prospectus and statement of addi-
tional 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 Securi-
ties 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>
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 in-
vestment 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 Distri-
butor 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>
("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 mem-
bers in good standing of the NASD.
Section S. 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 regis-
tration 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>
(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 con-
sultants. 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 qualifi-
cation of the Class A shares for sale pursuant to this Agreement
and, if necessary or advisable in connection therewith, of quali-
fying 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.
<PAGE>
Section 9. Indemnification.
---------------
(a) The Fund shall indemnify and hold harmless the Distri-
butor 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 com-
mon 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 per-
formance of their duties or by reason of the reckless disregard
12
<PAGE>
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
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 reim-
13
<PAGE>
burse the Distributor or such controlling person or persons, de-
fendant 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 Adviser Program. In
-----------------------------------------
connection with the Merrill Lynch Mutual Fund Adviser Program,
14
<PAGE>
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 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 Dis-
tributor, 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>
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 specifi-
cally 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>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
MERRILL LYNCH GLOBAL HOLDINGS, INC.
By /s/ Arthur Zeikel
------------------------------------------
Title: President
MERRILL LYNCH FUNDS DISTRIBUTOR, INC.
By /s/ Terry K. Glenn
------------------------------------------
Title: President
17
<PAGE>
EXHIBIT A
MERRILL LYNCH GLOBAL HOLDINGS, INC.
CLASS A SHARES OF COMMON STOCK
SELECTED DEALERS AGREEMENT
--------------------------
Gentlemen:
Merrill Lynch Funds Distributor, Inc. (the "Distributor")
has an agreement with Merrill Lynch Global Holdings, 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
Information of the Fund. The procedure relating to the handling
<PAGE>
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:
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
------------------ -------------- -------------- -----------
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%
* 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>
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
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 Investmen
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 pur-
chase 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 shall 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 to
the right of accumulation or a Letter of Intention is set forth in the
Prospectus and Statement of Additional Information.
3
<PAGE>
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 AdditionalInformation.
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. 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
4
<PAGE>
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 of
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.
ii. 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
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 constitutes 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,
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.
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.
5
<PAGE>
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/ Terry K. Glenn
------------------------------------------
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 21, 1994
------------------------------------------------
6
Exhibit 99.8
CUSTODY AGREEMENT
AGREEMENT dated April 30 1984, between THE CHASE MANHATTAN
BANK, N.A. ("Chase'), having its principal place of business at 1
Chase Manhattan Plaza, New York, New York, 10005, and MERRILL ,
LYNCH INTERNATIONAL HOLDINGS, INC. a Maryland Corporation having
its principal place of business at 633 Third Avenue, New York, New
York, 10017 (the 'Fund').
WHEREAS, the Fund, which is registered as an investment
company under the Investment Company Act of 1940 ("Act of 1940"),
wishes certain of its securities and monies to be held in places
outside of the United States for the convenience of purchasing and
selling such securities in foreign-securities markets;
WHEREAS, the Fund wishes to appoint Chase as custodian in
order to hold certain of the securities and monies of the Fund,
and Chase is willing to act as custodian;
WHEREAS, Chase has received an order ("Exemptive order") from
the Securities and Exchange Commission ("Commission') granting
Chase an exemption pursuant to Section 6(c) of the Act of 1940
exempting Chase and any subcustodian of Chase and any investment
company registered under the Act of 1940 from the provisions of
Section 17(f) of the Act of 1940 and Rule 17f-4 thereunder, so as
to permit Chase, as custodian of the securities and other assets
of such investment companies, as to which any other entity is
acting as custodian, and such other entity for which Chase so
acts, to deposit, or to cause or permit the deposit of, such
securities in certain Foreign Banks and Foreign Securities
Depositories in accordance with the arrangement prescribed in
Chase's application;
WHEREAS, the Fund wishes to enter into this Agreement with
Chase (i) to evidence the appointment of Chase as its custodian to
hold certain of the securities and other assets of the Fund, and
(ii) authorizing Chase to utilize Foreign Banks and Foreign
Securities Depositories as permitted under the Exemptive Order;
NOW, THEREFORE, the Fund and Chase, on behalf of themselves
and their respective successors and assigns, hereby agree as
follows:
1. Appointment as Custodian. Chase agrees to act as
------------------------
custodian for the Fund as provided herein, in connection with (a)
cash ("Cash') received from, or for the account of, the Fund for
credit to the Fund's deposit account or accounts administered by
Chase ("Deposit Account') and (b) all stocks, shares, bonds,
<PAGE>
debentures, notes, mortgages, or other obligations for the payment
of money 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
interests therein and other similar property ("Securities") from
time to time received by Chase for the account of the Fund
("Custody Account").
2. Authorization to Use Branch offices, Foreign Banks and
------------------------------------------------------
Foreign Securities Depositories. Chase is hereby authorized to
--------------------------------
appoint and utilize:
(a) Chase's foreign branch offices in Hong Kong,
Singapore, and Tokyo; (b) such other foreign branch
offices of Chase as to which Chase shall have given
prior notice to the Fund; and (c) such Foreign Banks and
Foreign Securities Depositories located in countries
approved by the Board of Directors of the Fund as to
which Chase shall determine and shall have given prior
notice to the Fund;
to hold Securities and Cash at any time owned by the Fund, it
being understood that no such appointment or utilization shall in
any way relieve Chase of its responsibilities as provided for in
this Agreement. Foreign branch offices of Chase appointed and
utilized by Chase are herein referred to as "Chase Branches."
Utilization by Chase of Chase Branches, Foreign Banks and Foreign
Securities Depositories shall be in accordance with provisions as
from time to time amended, of an operating agreement to be entered
into between Chase and the Fund ("Operating Agreement").
3. Definitions. As used in this Agreement the following
-----------
terms shall have the following meanings:
(a) Authorized Persons. Authorized Persons of the Fund
------------------
shall mean such officers or employees of such Fund or any other
person or persons as shall have been designated by a resolution of
the Board of Directors of the Fund, a certified copy of which has
been filed, with Chase, to act as Authorized Persons hereunder.
Such persons shall continue to be Authorized Persons of the Fund,
authorized to act either singly or together with one or more other
of such persons as provided in such resolution, until such time as
the Fund shall have filed with Chase a written notice of the Fund
supplementing, amending, or revoking the authority of such
persons;
(b) Foreign Bank. 'Foreign Bank shall mean any banking
------------
institution organized under the laws of a jurisdiction other than
the United States or of any state thereof;
2.
<PAGE>
(c) Foreign Securities Depository. A Foreign
-----------------------------
Securities Depository shall mean any system for the central
handling of securities abroad where all. securities of any
particular class or series of any issuer deposited within the
system are treated as fungible and may be transferred or pledged
by bookkeeping without physical delivery of the securities; and
(d) Written Instructions. Written Instructions of the
--------------------
Fund shall include instructions in writing signed by Authorized
Persons of the Fund giving such instructions, telex or tested
telex instructions of the Fund, and such other forms of
communications (including written or oral instructions) as from
time to time shall be agreed upon between the Fund and Chase.
4. Responsibility of Fund to Approve Countries in Which
----------------------------------------------------
Securities May be Held. Chase shall not cause Securities and Cash
----------------------
to be held in any particular country until the Fund has authorized
the holding of its assets in such country. Chase represents that
it has been advised by the Fund that in making such a
determination the Fund shall consider, among other factors the
following:
(a) comparative operational efficiencies of custody;
(b) clearance and settlement and the costs thereof;
(c) political and other risks, other than those risks
specifically assumed by Chase.
It is understood that Chase shall have no responsibility for this
determination.
5. Responsibility of Chase to Select Custodians in
-----------------------------------------------
Individual Foreign Countries. The responsibility of selecting the
----------------------------
Chase Branch, Foreign Bank or Foreign Securities Depository to
hold the Fund's Securities and Cash in individual countries
authorized by the Fund shall be that of Chase. Chase shall
utilize Chase Branches where available. In locations where there
are no Chase Branches providing custodial services, Chase shall
select as its agent a Foreign Bank, which may be an affiliate or
subsidiary of Chase. To facilitate the clearance and settlement
of securities transactions, Chase represents that it intends that
it may deposit Securities in a Foreign Securities Depository in a
country authorized by the Fund in which Chase is a participant.
In situations in which Chase is not a participant in a Foreign
Securities Depository, Chase may authorize a Foreign Bank acting
as its subcustodian to deposit the Securities in a Foreign
Securities Depository in which the Foreign Bank is a participant.
6. Conditions on Selection of Foreign Bank or Foreign
--------------------------------------------------
Securities Depository. Chase shall authorize the holding of
---------------------
3.
<PAGE>
Securities and Cash by a Foreign Bank or Foreign Securities
Depository only:
(i) to the extent that the Securities and Cash are not
subject to any right, charge, security interest, lien or
claim of any kind in favour of a foreign entity, except
for their safe custody or administration, and
(ii) to the extent that the beneficial ownership of
Securities is freely transferable without the payment of
money or value other than for safe custody or
administration; provided, however, that the foregoing
shall not apply to the extent that any of the above
mentioned rights, charges, etc. result from any
arrangements made by the Fund with any such Foreign Bank
or Foreign Securities Depository.
7. Foreign Banks Not Agents of Fund. Chase Branches,
---------------------------------
Foreign Banks and Foreign Securities Depositories selected by
Chase or a Foreign Bank (as authorized by Chase pursuant to
Section 5) shall be subject to the instructions of Chase including
Chase London or the Foreign Bank, and not to those of the Fund
except that the Fund is authorized to give instructions to Chase
London. Any Foreign Bank or Foreign Securities Depository shall
act solely as agent of Chase, or of such Foreign Bank.
8. Custody Account. Securities held in the Custody Account
---------------
shall be physically segregated at all times from those of any
other person or persons except that (a) with respect to Securities
held by Chase Branches, such Securities may be placed in an
omnibus account for the customers of Chase, which Chase shall
maintain separate book entry records for each such omnibus
account, and such Securities shall be deemed for the purpose of
this Agreement to be held by Chase in the Custody Account; (b)
with respect to Securities deposited by-Chase with a foreign Bank
or 'a Foreign Securities Depository, Chase shall identify on its
books as belonging to the Fund the Securities shown on Chase's
account on the books of the Foreign Bank or Foreign Securities
Depository and (c) with respect to Securities deposited by a
Foreign Bank with a Foreign Securities Depository, Chase shall
cause the Foreign Bank to identify on its books as belonging to
Chase, as agent, the Securities shown on the Foreign Bank's
account on the books of the Foreign Securities Depository. All
Securities of the Fund maintained by Chase pursuant to this
Agreement shall be subject only to the instructions of Chase,
Chase Branches or their agents. Securities deposited-by Chase in
accounts with a Foreign Bank shall be deposited in accounts which
include assets held by Chase for its customers.
4.
<PAGE>
9. Deposit Account. Subject to the provisions of this
---------------
Agreement, the Fund authorizes Chase to establish and maintain in
each country or other jurisdiction in which the principal trading
market for any Securities is located or in which any Securities
are to be presented for payment, an account or accounts, which may
include nostro accounts with Chase Branches and omnibus accounts
of Chase at Foreign Banks, for receipt of cash in the Deposit
Account, in such currencies as directed by Written Instructions of
the Fund or of such other person or persons as designated. For
purposes of this Agreement, cash so held in any such account shall
be evidenced by separate book entries maintained by Chase at its
office in London and shall be deemed to be Cash held by Chase in
the Deposit Account. Cash received or credited by Chase or any
other Chase Branch, Foreign Bank or Foreign Securities Depository
for the Deposit Account in a currency other than United States
dollars shall be maintained in such currency and shall not be
converted or remitted except in accordance with the written
instructions of the Fund or such other person or persons as
authorized by the Fund.
10. Settlement Procedures. Settlement procedures for
---------------------
transactions in Securities delivered to, held in, or to be
delivered from the Custody Account in Chase Branches, Foreign
Banks and Foreign Securities Depositories, including receipts and
payments of cash held in any nostro account or omnibus account for
the Deposit Account as described in Section 9 hereof, shall be
carried out in accordance with the provisions of the Operating
Agreement. It is understood that such settlement procedures may
vary, as provided in the Operating Agreement, from securities
market to securities market, to reflect particular settlement
practices in such markets.
Chase shall make or cause the appropriate Chase Branch or
Foreign Bank to make payments of Cash-held in the Deposit Account
only:
(a) in connection with the purchase of Securities for
the account of the Fund and against the delivery of such
Securities to Chase or to-another appropriate Chase Branch,
Foreign Banks or Foreign Securities Depository, or otherwise as
provided in the Operating Agreement, each such payment to be made
at prices confirmed by the written instructions of the Fund or
such other person or persons as authorized by the Fund, or
(b) as directed by the Fund by written or other
appropriate instructions.
Upon the receipt by Chase of Written Instructions of the Fund
or such other person or persons as designated in the Operating
Agreement, specifying the Securities to be so transferred or
5.
<PAGE>
delivered, which instructions shall name the person or persons to
whom transfers or deliveries of such Securities shall be made and
shall indicate the time(s) -for-such transfers or deliveries,
Securities held in the Custody Account shall be transferred,
exchanged, or delivered by Chase, any Chase Branch, Foreign Bank,
or Foreign Securities Depository, as the case may be, against
payment in Cash or Securities', or otherwise as provided in the
Operating Agreement, only:
(a) upon sale of such Securities for the account of the
Fund and receipt of such payment in the amount confirmed by the
Written Instructions of the Fund;
(b) in exchange for or upon conversion into other
Securities alone or other. Securities and Cash pursuant to any plan
of merger, consolidation, reorganization, recapitalization,
readjustment, or tender offer;
(c) upon exercise of subscription, purchase, or other
similar 'rights represented by such Securities; or
(d) otherwise as directed by the Fund by written
instructions which shall set forth the amount and purpose of such
transfer or delivery.
Subject to such rules and guidelines as may be communicated
in writing from time to time by the Fund to Chase, Chase is
authorized, pursuant to Written Instructions from the Fund to loan
any Securities at any time held by it to brokers or dealers and to
permit any such loaned Securities to be transferred into the name
of and voted by the borrower or others.
Until Chase receives Written Instructions of the Fund to the
contrary, Chase shall or shall cause Foreign Banks or Foreign
securities Depositories holding Securities or Cash to:
(a) present for payment all Securities in the Custody
Account which are called, redeemed, or retired or otherwise become
payable and all coupons and other income items which call for
payment upon presentation and to receive and credit to the Deposit
Account Cash so paid for the account of the Fund;
(b) present for exchange Securities converted pursuant
to their terms into other Securities';
(c) (in respect of Securities in the Custody Account),
execute in the name of the Fund such ownership and other
certificates as may be required to obtain payments in respect
thereto; provided that the Fund, shall have furnished to Chase any
information necessary in connection with such certificates; and
6.
<PAGE>
(d) exchange interim receipts or temporary Securities
in the Custody Account for definitive Securities.
11. Records. Chase hereby agrees that Chase and anv Chase
-------
Branch(es) hall create, maintian, and retain all records relating
to their activities and obligations under this Agreement in such
manner as will meet the obligations of the Fund under the Act of
1940, particularly Section 31 thereof and Rules 3la-1 and 3la-2
thereunder, and applicable Federal, state and foreign tax laws and
other legal or administrative rules or procedures, in each case as
currently in effect, which may be applicable Federal, state and
foreign tax laws and other law or administrative rules or
procedures, in each case as currently in effect, which may be
applicable to the Fund'. All records so maintained in connection
with the performance of its duties under this Agreement shall
remain the property of the Fund and, in the event of termination
of this Agreement, shall be delivered in accordance with the
provisions of Section 19.
Chase hereby agrees that the books and records of Chase,,.
and any Chase Branch pertaining to their actions under this
Agreement shall be open to the physical, on-premises inspection
and audit at reasonable times by officers of the independent
accountants ("Accountants") employed by, or other representatives
of the Fund. Chase hereby agrees that, subject to restrictions
under applicable laws, access shall be afforded to the Accountants
to. such of the books and records of any Foreign Bank or Foreign
Securities Depository with respect to Securities and Cash as shall
be required by the Accountants in connection with their
examination of the books and records pertaining to the affairs of
the Fund. Chase also agrees that as the Fund may reasonably
request from time to time, Chase shall furnish the Accountants
with reports of Chase's, and Chase Branches' systems of internal
accounting controls as they relate to the services provided under
this Agreement, and Chase shall use its best efforts to obtain and
furnish similar reports of each Foreign Bank and Foreign
Securities Depository holding Securities and Cash.
12. Reports. Chase shall supply periodically upon the
-------
reasonable request of the Fund such statements, reports, and
advices with respect to Cash in the Deposit Account and the
Securities in the Custody Account and transactions in Securities
from time to time received and/or delivered by Chase for or from
the Custody Account, as the case may be, as Chase, and the Fund
mutually shall agree. Such statements, reports, and advices shall
include an identification of the Foreign Banks and Foreign
Securities Depositories having custody of the Securities and Cash,
and descriptions thereof.
7.
<PAGE>
13. Registration of Securities. Securities in the Custody
--------------------------
Account which are held in registered form shall be registered in
the name of Chase, Chase Branches, authorized Foreign Banks and
Foreign Securities Depositories and their nominees.
14. Standard of Care. Chase, and each Chase Branch shall be
----------------
responsible for the performance of only such duties as are set
forth or contemplated herein or contained in instructions given to
it which are not contrary to the provisions of this Agreement.
Chase and any Chase Branch shall exercise, in the performance of
their obligations undertaken or reasonably assumed with respect to
this Agreement, including the selection of Foreign banks and
Foreign Securities Depositories, reasonable care, for which Chase
shall be responsible to the same extent as if it were performing
such duties directly and holding such securities and Cash in New
York, United States of America. Chase, and any such Chase Branch
shall be indemnified and held harmless by the Fund from and
against any loss or liability for any action taken or omitted to
be taken hereunder in good faith upon Written Instructions of the
Fund or any Authorized Person of the Fund and may rely on the
genuineness of all such Written Instructions and documents as it
in good faith believes to have been validly executed. Chase shall
be responsible for the Securities and Cash held by or deposited
with Chase or any other Chase Branch to the same extent as if such
Securities and Cash were directly held by or deposited with Chase.
Chase hereby agrees that it shall indemnify and hold the Fund
harmless from and against any loss which shall occur as a result
of the failure of a Foreign Bank or a Foreign Securities
Depository holding the Securities and Cash to exercise reasonable
care with respect to the safekeeping of such Securities and Cash
to the extent that Chase would be required to indemnify and hold
the Fund harmless if Chase were itself holding such Securities or
Cash in New York. It is also understood that Chase shall not have
liability for loss except by reason of Chase's, or Chase Branches'
negligence, fraud or willful misconduct, or by reason of
negligence, fraud or willful misconduct of the Foreign Bank or
Foreign Securities Depository holding such Securities or Cash.
Chase, and Chase Branches shall not be responsible for
any loss of the Fund, or to take any action with respect to any
attachment or lien on any omnibus account or nostro account, if
such loss, attachment or lien arisses by reason of any cause or
circumstances beyond the control of Chase, Chase Branches, or any
Foreign Bank acting on behalf of Chase, including acts of civil or
military authority, expropriation, national emergency, acts of
God, insurrection, war, riots, or failure of transportion,
communication or power supply, or the failure of any person, firm
or corporation (other than Chase, any Chase Branch and any Foreign
Bank acting on behalf of Chase) to perform any obligation if such
failure results in any such loss.
8.
<PAGE>
15. Insurance.
---------
a. Bankers' Blanket Bond. Chase represents and
---------------------
warrants that it presently maintains and shall maintain-for the
duration of this Agreement a bankers' blanket bond ('Bond') which
provides standard fidelity and non-negligent loss coverage with
respect to Securities and Cash which may be held by Chase, or
Chase Branches and Securities which may be held in the offices of
Foreign Banks and Foreign Securities Depositories which may be
utilized by Chase pursuant to this Agreement. Chase agrees that
if at any time Chase, or Chase Branches for any reason
discontinues such coverage, it shall immediately notify the fund
in writing. Chase represents that only the named insured on the
Bond, which includes Chase, and Chase Branches but not any of
Chase's customers, is directly protected against loss. Chase
represents that while it might resist a claim of one of its
customers to recover for a loss not covered by the Bond, as a
practical matter, where a claim is brought and a loss is possibly
covered by the Bond, Chase would give notice of the claim to its
insurer, and the insurer would normally determine whether to
defend the claim against Chase or to pay the claim on behalf of
Chase.
b. Expropriation Insurance. Chase represents that it
-----------------------
does not intend to obtain any insurance for the benefit of the
Fund which protects against the imposition of exchange control
restrictions on the transfer from any foreign jurisdiction of the
proceeds of sale of any Securities or against confiscation,
expropriation or nationalization of any securities or the assets'
of the issuer of such securities by a government of any foreign
country in which the issue of such securities is organized or in
which Securities are held for safekeeping either by Chase, Chase
Branches or any Foreign Bank or Foreign Securities Depository in
such country. Chase represents that Chase has discussed the
availability of expropriation insurance with the Fund. Chase also
represents that Chase has advised the Fund as to its understanding
of the position of the Staff of the Commission that any investment
company investing in securities of foreign issuers has the
responsibility for reviewing the possibility of the imposition of
exchange control restrictions which would affect the liquidity of
such investment company's assets and the possibility of exposure
to political risk, including the appropriateness of insuring
against such risk. Chase represents that the Fund has
acknowledged that it has the responsibility to review the
possibility of such. risks and what, if any, action should be
taken.
16. Proxy, Notice, Reports, Etc. If Chase or any Chase
---------------------------
Branches, Foreign Banks or Foreign Securities Depositories shall
receive any proxies, notices, reports, or other communications
9.
<PAGE>
relative to any of the Securities of the Fund in connection with
tender offers, reorganizations, mergers, consolidations, or
similar events which may have a material impact upon the issuer
thereof, Chase shall, on its behalf or on the behalf of a Chase
Branch, Foreign Bank or Foreign Securities Depository, promptly
transmit any such communication to the Fund.
As specifically requested by the Fund, Chase shall
execute or deliver or shall cause the nominee in whose name
Securities are registered to execute and deliver to the Fund
proxies relating to Securities in the Custody Account registered
in the name of Chase or such nominee, as the case may be, but
without indicating the manner in which such proxies are to be
voted. Chase shall take such reasonable steps to vote bearer
Securities in accordance with Written Instructions of the Fund
timely received by Chase, or such other person or persons as
designated in or pursuant to the Operating Agreement.
Chase, and any Chase. Branch shall have no liability for
any loss or liability occasioned by delay in the actual receipt by
them or any Foreign Bank or Foreign Securities Depository of
notice of any payment redemption, or other transaction regarding
Securities in the Custody Account in respect of which it has
agreed to take action as provided in Section 10 hereof, unless
such delay is a result of their own negligence, fraud, or willful
misconduct.
17. Compensation. The Fund agrees to pay to Chase from time
------------
to time such compensation for its services pursuant to this
Agreement as may be mutually agreed upon in writing from time to
time and Chase's out-of-pocket or incidental expenses, as from
time to time shall be mutually agreed upon by Chase and the Fund.
In the event of any advance of Cash for any purpose made by Chase
pursuant to any Written Instruction upon which Chase may rely
under this Agreement, or in the event that Chase or any nominee of
Chase shall incur or be assessed any taxes, charges, expenses
(including counsel fees), assessments, claims, or liabilities in
connection with the performance of this Agreement, the Fund shall
indemnify and reimburse Chase as the case may be, therefor, except
such assessment of taxes, charges, etc., as results from the
negligence, fraud, or willful misconduct of Chase, Chase London,
Chase Branches, Foreign Banks or Foreign Securities Depositories.
18. Agreement Subject to Approval of Fund. It is understood
-------------------------------------
that this Agreement and any amendments shall be subject to the
approval of the Fund.
19. Term. This Agreement shall remain in effect for a
----
period of one (1) year from the date of this Agreement and shall
thereafter remain in effect until terminated by either party, as
10.
<PAGE>
provided hereunder. This Agreement may be terminated by the Fund
or Chase by 60 days' written notice to the other, sent by
registered mail. Chase, upon the date this Agreement terminates
pursuant to notice which has been given in a timely fashion, shall
deliver the Securities in the Custody Account and shall pay the
Cash in the Deposit Account to the Fund unless Chase has received
from the Fund 60 days prior to the date on which this Agreement is
to be terminated written instructions of the Fund specifying the
name(s) of the person(s) to whom the Securities in the Custody
Account shall be delivered and to whom the Cash in the Deposit
Account shall be paid. Concurrently with the delivery of such
Securities, Chase shall deliver to the Fund, or such other person
as the Fund shall instruct, the records referred to in Section 11
hereof which are in the possession or control of Chase, Chase
Branches, Foreign 'Bank or Foreign Securities Depositories.
20. Authorization of Chase to Execute Necessary Documents.
-----------------------------------------------------
In connection with the pertormance of its duties hereunder, the
Fund hereby authorizes and directs Chase and each Chase Branch
acting on behalf of Chase, and Chase hereby agrees, to execute and
deliver in the name of the Fund, or cause such other Chase Branch
to execute and deliver in the name of the Fund, such certificates,
instruments, and other documents as shall be reasonably necessary
in connection with such performance, provided that the Fund, shall
have furnished to Chase any information-necessary in connection
therewith.
21. Notices. Any notice or other communication authorized
-------
or require by this Agreement to be given to the parties shall be
sufficiently given if addressed to such corporation and mailed
postage prepaid or delivered to it at its office at the address
set forth below:
To Chase: To the Fund
-----------
1211 Avenue of the Americas c/o Merrill Lynch Asset
New York, NY 10036 Management, Inc.
Att: David M. Mann 633 Third Avenue
New York, NY 10017
22. Non-Assignability of Agreement. The Agreement shall not
------------------------------
be assignable by either party hereto; provided, however, that any
corporation into which the Fund or Chase,as the case may be, may
be merged or converted or with which it may be consolidated, or
any corporation succeeding to all or substantially all of the
trust business of Chase, shall succeed to the respective rights
and shall-assume the respective duties of the Fund or of Chase, as
the case may be, hereunder.
11.
<PAGE>
23. Governing Law. This Agreement shall be governed by the
-------------
laws of the State of New York.
THE CHASE MANHATTAN BANK, N.A.
By:
----------------------------------
Vice President
MERRILL LYNCH INTERNATIONAL
HOLDINGS, INC.
By:
----------------------------------
Vice President
12.
Exhibit 99.9
TRANSFER AGENCY, DIVIDEND DISBURSING AGENCY
AND SHAREHOLDER SERVICING AGENCY AGREEMENT
THIS AGREEMENT made as of the lst day of August, 1987 by
and between Merrill Lynch International Holdings, 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 for the
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>
(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>
(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>
(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>
(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 MLFDS 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,
<PAGE>
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, it's 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
Servicing 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>
(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.
MERRILL LYNCH INTERNATIONAL HOLDINGS, INC.
By: /s/ Terry K. Glenn
-------------------------------
Title: Executive Vice President
-----------------------------
MERRILL LYNCH FINANCIAL DATA SERVICE, INC.
By:
-------------------------------------
Title:
----------------------------------
7
Exhibit 99.13
CERTIFICATE OF SOLE STOCKHOLDER
Merrill Lynch Asset Management, Inc., the holder of
10,929 shares of Common Stock, par value $0.10 per share,
of Merrill Lynch International Holdings, Inc., a Maryland
corporation (the "Company"), does hereby confirm to the
Company 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 Company's organizational
expenses, the proceeds thereof will be reduced by the pro-
portionate amount that the total unamortized balance bears
to the number of shares being redeemed.
MERRILL LYNCH ASSET MANAGEMENT, INC.
By /s/ Philip L. Kirstein
-------------------------------------
Dated: April 19, 1984
Exhibit 99.5(a)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 1st day of February, 1990, by and
--- --------
between MERRILL LYNCH INTERNATIONAL HOLDINGS, INC., a Maryland
corporation (hereinafter referred to as the "Company"), and
MERRILL LYNCH ASSET MANAGEMENT, INC., a Delaware corporation
(hereinafter referred to as "MIAMI').
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company is engaged in business as a diversi-
fied, open-end investment company registered under the Investment
Company Act of 1940, as amended (hereinafter referred to as the
"Investment Company Act"); and
WHEREAS, MLAM is engaged principally in rendering management
and investment advisory services and is registered as an
investment adviser under the Investment Advisers Act of 1940, as
amended; and
WHEREAS, the Company desires to retain MLAM to provide
management and investment advisory services to the Company in the
manner and on the terms hereinafter set forth; and
WHEREAS, MLAM is willing to provide management and invest-
ment advisory services to the Company on the terns and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the
covenants hereinafter contained, the company and MLAM hereby
agree as follows:
<PAGE>
ARTICLE I
---------
Duties of MLAM
--------------
The Company hereby employs MLAM to act as manager and
investment adviser of the Company and to furnish, or arrange for
affiliates to furnish, the management and investment advisory
services described below, subject to the policies of, review by
and overall control of the Board of Directors of the Company, for
the period and on the terms and conditions set forth in this
Agreement. MLAM 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. MLAM and its
affiliates shall for all purposes herein be deemed to be inde-
pendent contractors and shall, unless otherwise expressly pro-
vided or authorized, have no authority to act for or represent
the Company in any way or otherwise be deemed agents of the Com-
pany.
(a) Management Services. MLAM shall perform, or arrange
-------------------
for affiliates to perform, the management and administrative
services necessary for the operation of the Company including
administering shareholder accounts and handling shareholder
relations. MLAM shall provide the Company with office space,
facilities, equipment and necessary personnel and such other
services as MLAM, subject to review by the Directors, shall from
tine to time determine to be necessary or useful to perform its
2.
<PAGE>
obligations under this Agreement. MLAM shall also, on behalf of
the Company,conduct relations with custodians, depositories,
transfer agents, dividend disbursing agents, other shareholder
servicing 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. MLAM shall generally monitor the Company's com-
pliance with investment policies and restrictions as set forth in
the currently effective prospectus and statement of additional
information relating to the shares of the Company under the
Securities Act of 1933, as amended (the "Prospectus" and "State-
ment of Additional Information," respectively). MLAM shall make
reports to the Directors of its performance of obligations here-
under and furnish advice and recommendations with respect to such
other aspects of the business and affairs of the Company as it
shall determine to be desirable.
(b) Investment Advisory Services. MLAM shall provide the
----------------------------
Company with such investment research, advice and supervision as
the latter nay from time to time consider necessary for the
proper supervision of the assets of the Company, shall furnish
continuously an investment program for the Company and shall
determine from time to time which securities shall be purchased,
sold or exchanged and what portion of the assets of the Company
shall be held in the various securities in which the Company
invests or cash, subject always to the restrictions of the
3.
<PAGE>
Articles of Incorporation and By-Laws of the Company, as amended
from time to time, the provisions of the Investment Company Act
and the statements relating to the Company's investment objec-
tives, investment policies and investment restrictions as the
same are set forth in the Prospectus and Statement of Additional
Information. MLAM shall make decisions for the Company as to
foreign currency matters and make determinations as to foreign
exchange contracts. MLAM shall make decisions-for the Company as
to the manner in which voting rights, rights to consent to corpo-
rate action and any other rights pertaining to the Company's
portfolio securities shall be exercised. Should the Directors at
any time, however, make any definite determination as to invest-
ment policy and notify MLAM thereof in writing, MLAM 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. MLAM shall take, on behalf of the Company, all
actions which 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 Company's account with brokers or dealers selected by it, and
to that end, MLAM is authorized as the agent of the Company to
give instructions to the Custodian of the Company as to deli-
veries of securities and payments of cash for the account of the
Company. In connection with the selection of such brokers or
dealers and the placing of such orders with respect to assets of
4.
<PAGE>
the Company, MLAM is directed at all times to seek to obtain
execution and prices within the policy guidelines determined by
the Directors and set forth in the Prospectus and Statement of
Additional Information. 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,
MLAM may select brokers or dealers with which it or the Company
is affiliated. Subject to the policies of, review by and overall
control of the Board of Directors, MLAM is responsible for the
allocation of the Company's assets among the various securities
markets of the world.
ARTICLE II
----------
Allocation of Charges and Expenses
----------------------------------
(a) MLAM. MLAM assumes and shall pay for maintaining the
----
staff and personnel necessary to perform its obligations under
this Agreement, and shall at its own expense, provide the office
space, facilities, equipment and necessary personnel which it is
obligated to provide under Article I hereof, and shall pay all
compensation of officers of the Company and all Directors of the
Company who are affiliated persons of MLAM.
(b) The Company. The Company assumes and shall pay or
-----------
cause to be paid all other expenses of the Company (except for
the expenses paid by the Company's distributor (the "Distri-
butor")), including, without limitation: taxes, expenses for
legal and auditing services, costs of printing proxies, stock
5 .
<PAGE>
certificates, shareholder reports, Prospectuses and Statements of
Additional Information, charges of the custodian, any sub-custo-
dian and transfer agent, expenses of portfolio transactions, ex-
penses of redemption of shares, Securities and Exchange Commis-
sion fees,, expenses of registering the shares under Federal,
state and foreign laws, fees and actual out-of-pocket expenses of
Directors who are not affiliated persons of MLAM or any
investment research provider pursuant to Article IV hereof,
accounting and pricing costs (including the daily calculation of
the net asset value), insurance, interest, brokerage costs,
litigation and other extraordinary or nonrecurring expenses, and
other expenses properly payable by the Company. The Distributor
will pay certain of the expenses of the Company incurred in
connection with the continuous offering of shares of common stock
of the Company.
ARTICLE III
-----------
Compensation of MLAM
--------------------
(a) Management and Investment Advisory Fee. For the
--------------------------------------
services rendered, the facilities furnished and expenses assumed
by MLAM, the Company shall pay to MLAM at the end of each
calendar month a fee based on the average daily value of the net
assets of the Company, as determined and computed in accordance
with the description of the determination of net asset value
contained in the Prospectus and Statement of Additional Informa-
tion, at the annual rate of 1.0% of the average daily net assets
6.
<PAGE>
of the Company, commencing on the day following effectiveness
hereof. If this Agreement becomes effective subsequent to the
first day of a month or shall terminate before the last day of a
month, compensation for that part of the month this Agreement is
in effect shall be prorated in a manner consistent with the cal-
culation of the fee as set forth above. Subject to the pro-
visions of subsection (b) hereof, payment of MLAM's compensation
for the preceding month shall be made as promptly as possible
after completion of the computations contemplated by subsection
(b) hereof. During any period when the determination of net
asset value is suspended by the Directors, 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 deter-
mined.
(b) Expense Limitations. In the event the operating ex-
-------------------
penses of the Company, including amounts payable to MLAM 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 Company imposed by applicable state securities
laws or regulations thereunder, as such limitations may be raised
or lowered from time to time, MLAM shall reduce its management
fee by the extent of such excess and, if required pursuant to any
such laws or regulations, will reimburse the Company in the
amount of such excess; provided, however, to the extent permitted
7.
<PAGE>
by law, there shall be excluded from such expenses the amount of
any interest, taxes, brokerage fees and commissions, distribution
fees and extraordinary expenses (including but not limited to
legal claims and liabilities and litigation costs and any indem-
nification related thereto) paid or payable by the Company.
Whenever the expenses of the Company 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 MLAM.
Should two or more. such expense limitations be applicable as at
the end of the last business day of the 'month, that expense limi-
tation which results in the largest reduction in MLAM's fee shall
be applicable.
ARTICLE IV
----------
Investment Research Agreement
-----------------------------
MLAM may enter into separate investment research agreements
with Nomura Capital Management, Inc. ("NCM") and Lombard Odier
International Portfolio Management Limited ("LOIPM"), in the
forms attached hereto as Annex I and Annex II, in which MLAM may
contract for investment research services and pay NCM and LOIPM
compensation for their services out of the compensation received
hereunder pursuant to Article III. Such investment research
agreements will be coterminous with this Investment Advisory
Agreement.
<PAGE>
ARTICLE V
---------
Limitation of Liability of MLAM
-------------------------------
MLAM shall not be liable for any error of judgment or mis-
take of law or for any loss arising out of any investment or for
any act or omission in the management of the Company, except for
willful misfeasance, bad faith or gross negligence in the per-
formance of its duties, or by reason of reckless disregard of its
obligations and duties hereunder. As used in this Article V, the
term "Manager" shall include any affiliates of MLAM performing
services for the Company contemplated hereby and directors,
officers and employees of MLAM and such affiliates.
ARTICLE VI
----------
Activities of MLAM
------------------
The services of MLAM to the Company are not to be deemed to
be exclusive, MLAM and any person controlled by or under common
control with MLAM (for purposes of this Article VI referred to
as
"affiliates") being free to render services to others. It is
understood that Directors, officers, employees and shareholders
of the Company are or may become interested in MLAM and its
affiliates, as directors, officers, employees, partners, and
shareholders or otherwise and that directors, officers,
employees, partners, and shareholders of MLAM and its affiliates
are or may become similarly interested in the Company, and that
MLAM and directors, officers, employees, partners, and
9.
<PAGE>
shareholders of its affiliates may become interested in the
Company as shareholders or otherwise.
ARTICLE VII
-----------
Duration and Termination of this Agreement
------------------------------------------
This Agreement shall become effective as of the date first
above written and shall remain in force until January 31, 1992 and
thereafter, but only 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 Com-
pany, 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 Directors or by vote of a majority
of the outstanding voting securities of the Company, or by MI-km,
on sixty days' written notice to the other party. This Agreement
shall automatically terminate in the event of its assignment.
10.
<PAGE>
ARTICLE VIII
------------
Amendments of this Agreement
----------------------------
This Agreement may be amended by the parties only if such
amendment is specifically approved by (i) the vote of a majority
of outstanding voting securities of the Company, 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.
ARTICLE IX
----------
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-and the rules
and regulations thereunder, subject, however, to such exemptions
as may be granted by the Securities and Exchange Commission under
said Act.
ARTICLE X
---------
Governinq Law
-------------
This Agreement shall be construed in accordance with the
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,
11.
<PAGE>
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.
MERRIL LYNCH INTERNATIONAL HOLDINGS, INC.
By /s/ Terry K. Glenn
-------------------------------------
MERRILL LYNCH ASSET MANAGEMENT, INC.
By /s/ Arthur Zeikel
-------------------------------------
12.
<PAGE>
ANNEX I
INVESTMENT RESEARCH AGGREEMENT
AGREEMENT made this 1st day of February 1990, by and be-
--- --------
tween MERRILL LYNCH ASSET MANAGEMENT, INC., a Delaware corpo-
ration (hereinafter referred to as "MLAM") , and NOMURA CAPITAL
MANAGEMENT, INC., a New York corporation (hereinafter referred to
as "NCM").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Merrill Lynch International Holdings, Inc. (the
"Company") is engaged in business as a diversified, open-end
investment company registered under the Investment Company Act of
1940, as amended (the "Investment Company Act") ; and
WHEREAS, MLAM has entered into an investment advisory agree-
ment (the "Investment Advisory Agreement") with the Company pur-
suant to which it has undertaken to provide management and in-
vestment supervisory services to the Company; and
WHEREAS, NCM is registered as an investment adviser under
the Investment Advisers Act of 1940, as amended, and is willing
to provide investment research services to MLAM in connection
with the Company's operations on the terms and conditions set
forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements of the parties hereto as herein set forth, the parties
covenant and agree as follows:
<PAGE>
ARTICLE 1. Duties of NCM. Subject to the broad supervision
-------------
of the Company and MLAM, NCM shall provide MLAM with such eco-
nomic research and securities analyses as MLAM may from time to
time consider necessary for the proper supervision of the Com-
pany's assets invested in the Pacific Basin (i.e., Far Eastern
and Western Pacific countries). NCM shall continuously review
the Company's holdings of such assets and shall make recommenda-
tions as to which securities shall be purchased, sold or ex-
changed and what portion of the assets of the Company shall be
held in equity securities, fixed income securities, money market
securities or cash, and what portion in Pacific Basin, United
States or other securities, subject always to the restrictions of
the Articles of Incorporation and By-Laws of the Company, as
amended from time to time, the provisions of the Investment Com-
pany Act and the statements relating to the Company's investment
objectives, investment policies and investment restrictions as
the same are set forth in the currently effective prospectus and
statement of additional information of the Company under the
Securities Act of 1933, as amended. NCM also shall make recom-
mendations as to Pacific Basin-related foreign currency matters
and the advisability of entering into Pacific Basin-related
foreign exchange contracts. NCM also shall make recommendations
as to the manner in which voting rights, rights to consent to
corporate action and any other rights pertaining to the Company's
Pacific Basin portfolio securities shall be exercised. It is
2.
<PAGE>
understood that NCM may enter into a separate investment research
agreement with Nomura Investment Management Co., Ltd. ("NIMC0"),
in the form attached hereto as Exhibit A, pursuant to which NCM
may contract for investment research and pay NIMCO compensation
for its services out of the compensation received hereunder pur-
suant to Article 3.
ARTICLE 2. Allocation of Charges and Expenses. NCM shall
----------------------------------
furnish at its own expense all administrative services, office
space, equipment and facilities, investment advisory, statistical
and research services, and executive, supervisory and clerical
personnel necessary to carry out its obligations under this
Agreement and shall be obligated to pay the fees of all Directors
of the Company who are affiliated persons of NCM or its affili-
ates.
ARTICLE 3. Compensation of NCM.
-------------------
(a) Research Fee. For the services to be rendered as
------------
provided herein, MLAM shall pay to NCM a fee computed and paid at
the end of each month at the annual rate of 0.20 of one percent
(0.20%) of the value of the average daily net assets of the Com-
pany determined as of the close of business on each business day
throughout the month as provided in Article III of the Investment
Advisory Agreement. If NCM shall serve for less than the whole
of any period specified in this Article, the compensation to NCM
shall be prorated.
3.
<PAGE>
(b) Expense Limitations. Pursuant to Article III of the
-------------------
Investment Advisory Agreement, MLAM has agreed that if the
operating expenses of the Company payable by the Company (in-
cluding the investment advisory fee payable to MLAM by the Com-
pany pursuant to the Investment Advisory Agreement but excluding
interest, taxes, brokerage commissions, distribution fees and
extraordinary expenses) in any fiscal year exceed expense limita-
tions applicable to the Company imposed by state securities laws
or regulations thereunder, as such limitations may be raised or
lowered from time to time, MLAM shall reduce its investment ad-
visory fee by the extent of such excess and, if required pursuant
to any such laws or regulations, will reimburse the Company in
the amount of such excess. NCM hereby agrees that if the invest-
ment advisory fee is reduced pursuant to Article III of the In-
vestment Advisory Agreement, the research fee payable to NCM
hereunder shall be proportionately reduced and to the extent that
MLAM reimburses the Company as a result of such expense limita-
tions, NCM shall reimburse MLAM in an amount equal to the propor-
tion of such payment which the research fee bears to the invest-
ment advisory fee.
ARTICLE 4. Limitation of Liability of NCM. NCM 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 performance of its duties hereunder, except for willful mis-
feasance, bad faith or gross negligence in the performance of its
4.
<PAGE>
duties, or by reason of reckless disregard of its obligations and
duties hereunder. As used in this Article 4, the term "NCM"
shall include directors, officers and employees of NCM as well as
that corporation itself.
ARTICLE 5. Activities of NCM. The services of NCM here-
-----------------
under are not to be deemed to be exclusive, NCM being free to
render services to others. It is understood that directors,
officers, employees and shareholders of NCM or MLAM are or may
become interested in NCM as directors, officers, employees and
shareholders or otherwise and that directors, officers, employees
and shareholders of NCM are or may become similarly interested in
MLAM or the Company, and that NCM may become interested in MLAM
or the Company as shareholder or otherwise.
ARTICLE 6. 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 January 31 1992 and
------- -
thereafter, but only so long as such continuance is specifically
approved at least annually by (i) the Board of Directors of the
Company, or by the vote of a majority of the outstanding voting
securities of the Company, and (ii) a majority of those directors
of the Company who are not parties to this Agreement or in-
terested persons of any such party cast in person at a meeting
called for the purpose of voting on such approval.
5.
<PAGE>
This Agreement may be terminated at any time, without the
payment of any penalty, by MLAM or the Board of Directors of the
Company or by vote of a majority of the outstanding voting
securities of the Company, or by NCM, on sixty days' written
notice to the other party. This Agreement shall terminate auto-
matically in the event of its assignment.
ARTICLE 7. Amendments of this Agreement. This Agreement
----------------------------
may be amended by the parties only if such amendment is spe-
cifically approved by (i) the Board of Directors of the Company,
or by the vote of a majority of the outstanding voting securities
of the Company, and (ii) a majority of those directors of the
Company who are not parties to this Agreement or interested per-
sons of any such party cast in person at a meeting called for the
purpose of voting on such approval.
ARTICLE 8. Definitions of Certain Terms. The terms "vote
----------------------------
of a majority of the outstanding voting securities," "assign-
nent," "interested person" and "affiliated person," when used in
this Agreement, shall have the respective meanings specified in
the Investment Company Act.
ARTICLE 9. Governing Law. This Agreement shall be con-
-------------
strued in accordance with the laws of the State of New York and
the applicable provisions of the Investment Company Act. To the
extent 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.
6 .
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the date first above written.
MERRILL LYNCH ASSET MANAGEMENT,
INC.
By /s/ Arthur Zeikel
---------------------------------
NOMURA CAPITAL MANAGEMENT, INC.
By
---------------------------------
7.
Exhibit 99.5(b)
SUPPLEMENT TO INVESTMENT ADVISORY AGREEMENT
WITH
MERRILL LYNCH ASSET MANAGEMENT
As of January 1, 1994 Merrill Lynch Investment Management, Inc.
d/b/a Merrill Lynch Asset Management was reorganized as a limited
partnership, formally known as Merrill Lynch Asset Management,
L.P. and continuing to do business under the name Merrill Lynch
Asset Management ("MLAM"). The general partner of MLAM is
Princeton Services, Inc. and the limited partners are Merrill
Lynch Investment Management, Inc. and Merrill Lynch & Co., Inc.
Pursuant to Rule 202(a)(l)-l under the Investment Advisers Act of
1940 and Rule 2a-6 under the Investment Company Act of 1940 such
reorganization did not constitute an assignment of this
investment advisory agreement since it did not involve a change
of control or management of the investment adviser. Pursuant to
the requirements of Section 205 of the Investment Advisers Act of
1940, however, Merrill Lynch Asset Management hereby supplements
this investment advisory agreement by undertaking to advise you
of any change in the membership of the partnership within a
reasonable time after any such change occurs.
By /s/ Arthur Zeikel
-------------------------
Dated: January 3, 1994
Exhibit 99.1(c)
MERRILL LYNCH INTERNATIONAL HOLDINGS, INC.
ARTICLES OF AMENDMENT
TO THE ARTICLES OF INCORPORATION
MERRILL LYNCH INTERNATIONAL HOLDINGS, 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 of
Maryland that:
FIRST: The charter of the Corporation is hereby amended
by adding the following provision at the end of Article V:
(4) 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 holders 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 held 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
<PAGE>
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 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: The charter of the corporation is hereby amended by
deleting Article II thereof in its entirety and inserting the
following in lieu thereof:
"Article II
NAME
----
The name of the Corporation is MERRILL
LYNCH GLOBAL HOLDINGS, INC. (the
"Corporation")."
FOURTH: 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. The amendment is limited to a
change expressly permitted by Section 2-605(a)(4) of the Maryland
Corporations and Associations Code to be made without action by
the stockholders and was approved by a majority of the entire
Board of Directors of the corporation. The corporation is
registered as an open-end company under the Investment Company
Act of 1940, as amended.
2
<PAGE>
FIFTH: Except as amended hereby, the Corporation's charter
shall remain in full force and effect.
SIXTH: The authorized capital stock of the Corporation has
not been increased by these Articles of Amendment.
SEVENTH: 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.
3
<PAGE>
IN WITNESS WHEREOF, MERRILL LYNCH INTERNATIONAL HOLDINGS,
INC., has caused these Articles 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 17th day of October, 1994.
----
MERRILL LYNCH INTERNATIONAL HOLDINGS, INC.
/s/ Arthur Zeikel
------------------------------------------
Arthur Zeikel
President
ATTEST:
/s/ Robert Harris
-----------------------------
Robert Harris, Secretary
4
Exhibit 99.1(d)
MERRILL LYNCH GLOBAL HOLDINGS, 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 GLOBAL HOLDINGS, 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 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
($.lo) per share and an aggregate par value of TWENTY MILLION
Dollars ($20,000,000).
SECOND: The Board of Directors of the Corporation, acting
in accordance with Section 2-105(c) of the Maryland Corporations
and Associations Code, hereby increases the total number of
authorized shares of Class B Common Stock of the Corporation by
TWO HUNDRED MILLION (200,000,000) shares.
THIRD: After this increase in the number of authorized
shares of capital stock of the Corporation, the Corporation will
have authority to issue FOUR HUNDRED MILLION (400,000,000) shares
of capital stock and the capital stock will consist of ONE
HUNDRED MILLION (100,000,000) shares of Class A Common Stock and
THREE HUNDRED MILLION (300,000,000) shares of Class B Common
Stock.
FOURTH: After this increase in the number of authorized
shares of capital stock of the Corporation, all shares of all
classes and series of the Corporation's capital stock will have a
par value of Ten Cents ($.10) per share and an aggregate par
value of FORTY MILLION Dollars ($40,000,000).
FIFTH: Pursuant to authority expressly vested in the Board
of Directors of the Corporation by its charter, the Board of
Directors has reclassified ONE HUNDRED MILLION (100,000,000)
authorized and unissued shares of the Class B Common Stock of the
Corporation as Class C Common Stock of par value of Ten Cents
<PAGE>
($.10) per share and of the aggregate par value of TEN MILLION
Dollars ($10,000,000).
SIXTH: The preferences, designations, conversion or other
rights, voting powers, restrictions, limitations as to dividends,
qualifications or terms or conditions of redemption of Class C
Common Stock are as follows:
The Class C Common Stock of the Corporation shall represent
the same interest in the Corporation and have identical
preferences, designations, conversion or other rights, voting
powers, restrictions, limitations as to dividends,
qualifications, or terms or conditions of redemption as the Class
B Common Stock as of the date of these Articles Supplementary,
except as otherwise set forth in the Corporation's charter and
further except that:
(i) Expenses related to the distribution of the Class C
Common Stock shall be borne solely by such class and such class
shall have exclusive voting rights with respect to matters
relating to the expenses being borne solely by such class;
(ii) Such distribution expenses borne solely by Class C
Common Stock shall be appropriately reflected (in the manner
determined by the Board of Directors) in the net asset value,
dividends, distribution and liquidation rights of the shares of
such class; and
(iii) Class C Common Stock shall not be reclassified into
Class D shares.
SEVENTH: Pursuant to authority expressly vested in the
Board of Directors of the Corporation by its charter, the Board
of Directors has reclassified ONE HUNDRED MILLION (100,000,000)
authorized and unissued shares of the Class B Common Stock of the
Corporation as Class D Common Stock of par value of Tin Cents
($.10) per share and of the aggregate par value of TEN MILLION
Dollars ($10,000,000).
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,
2
<PAGE>
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.
3
<PAGE>
IN WITNESS WHEREOF, MERRILL LYNCH GLOBAL HOLDINGS, 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 17, 1994.
MERRILL LYNCH GLOBAL HOLDINGS, INC.
By /s/ Arthur Zeikel
-------------------------------------
Arthur Zeikel
President
Attest:
/s/ Robert Harris
----------------------------
Robert Harris, Secretary
THE UNDERSIGNED, President of MERRILL LYNCH GLOBAL HOLDINGS,
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 purjury
/s/ Arthur Zeikel
-----------------------
Arthur Zeikel
President
4
MERRILL LYNCH INTERNATIONAL HOLDINGS, INC.
Articles of Amendment
---------------------
MERRILL LYNCH INTERNATIONAL HOLDINGS, 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:
Capital Stock
-------------
1. The total number of shares of capital stock which
the Corporation shall have authority to issue is Two Hundred
Million (200,000,000) shares of the par value of Ten Cents
($0.10) per share and of the aggregate par value of Twenty
Million Dollars ($20,000,000). The capital stock initially
is classified into two classes, consisting of One Hundred
Million (100,000,000) shares of Class A Common Stock and one
Hundred Million (l00,000,000) 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 or 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
<PAGE>
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 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 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
2.
<PAGE>
for payment of the debts and other liabilities of the
Corporation, to share ratably in the remaining net assets of
the Corporation.
6. Any 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 and the
right to receive dividends.
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 3 , 1988 shall without further act be considered
Class A 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.
3.
<PAGE>
IN WITNESS WHEREOF, Merrill Lynch International Holdings,
Inc. has caused these Articles of Amendment to be signed in its
name and on its behalf by its President and attested by its
Secretary on October 3, 1988.
ATTEST: MERRILL LYNCH INTERNATIONAL
HOLDINGS, INC.
/s/ Rboert Harris By /s/ Arthur Zeikel
------------------------ ------------------------
Robert Harris, Secretary Arthur Zeikel, President
THE UNDERSIGNED, President of Merrill Lynch International
Holdings, 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/ Arthur Zeikel
------------------------
Arthur Zeikel, President
4.
Exhibit 99.1(b)
MERRILL LYNCH WORLD FUND, INC.
ARTICLES OF AMENDMENT
MERRILL LYNCH WORLD FUND, 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 striking out Article II of the Articles of Incorporation
and inserting in lieu thereof the following:
ARTICLE II
NAME
----
The name of the Corporation is
MERRILL LYNCH INTERNATIONAL HOLDINGS, INC.
SECOND. The.amendment to the charter of the Corporation
herein made was duly approved by unanimous written consent of
the board of directors on March 28, 1984; and that at the
time of the approval by the directors there were no shares
of stock of the Corporation entitled to vote on the matter
either outstanding or subscribed for.
<PAGE>
IN WITNESS WHEREOF, Merrill Lynch World Fund, Inc. has
caused these articles to be signed in its name and on its
behalf by its President and attested by its Secretary on
March 28, 1984.
MERRILL LYNCH WORLD FUND, INC.
By /s/ Arthur Zeikel
---------------------------
Arthur Zeikel, President
/s/ Phillip L. Kirstein, Secretary
-----------------------------------
THE UNDERSIGNED, President of MERRILL LYNCH WORLD FUND,
INC., who executed on behalf of said corporation the fore-
going 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/ Arthur Zeikel
---------------------------
Arthur Zeikel
-2-
Exhibit 99.1(a)
ARTICLES OF INCORPORATION
OF
MERRILL LYNCH WORLD FUND, INC.
* * * *
ARTICLE I
THE UNDERSIGNED, Philip L. Kirstein, whose post-office
address is 633 Third Avenue, New York, New York 10017, being
at least eighteen years of age, does hereby act as an in-
corporator, 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 WORLD-FUND, 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:
(*I) To conduct and carry on the business of an invest-
ment company of the management type.
<PAGE>
(2) To hold, invest and reinvest its assets in securi-
ties, 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 Mary-
land and by these Articles of Incorporation, as its Board of
Directors may determine; provided, however, that the value
of the consideration per share to be received by the Corpo-
ration upon the sale or other disposition of any shares of
its capital stock shall not be less than the net asset value
per share of such capital stock outstanding at the time of
such event.
(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 may
be necessary, incidental, relative, conducive, appropriate
or desirable for the accomplishment, carrying out or attain-
ment of all or any of the foregoing purposes or objects.
2.
<PAGE>
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 Cor-
poration Trust Incorporated, 32 South Street, Baltimore,
Maryland 21202. The name of the resident agent of the
Corporation in this State is The Corporation Trust In-
corporated, a corporation of this State, and the post-office
address of the resident agent is 32 South Street, Baltimore,
Maryland 21202.
ARTICLE V
CAPITAL STOCK
-------------
(1) The total number of shares of capital stock which
the Corporation shall have authority to issue is Two Hundred
Million (200,000,0001 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 Twenty Million Dollars ($20,000,000).
3.
<PAGE>
(2) Any fractional share 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 and
the right to receive dividends.
(3) All persons who shall acquire stock in the Cor-
poration 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 COR-
PORATION AND OF THE DIRECTORS AND
STOCKHOLDERS
--------------------------------
(1) -The number of directors of the Corporation shall
be three (3), which number may be increased pursuant 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:
Arthur Zeikel
Robert Harris
Philip L. Kirstein
(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
4.
<PAGE>
authorized, for such consideration as the Board of Directors
may deem advisble, 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.
(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 the requirements of 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.
5.
<PAGE>
ARTICLE VII
REDEMPTION
----------
Each holder of shares of capital stock of the Corpora-
tion shall be entitled to require the Corporation to redeem
all or any part of the shares of capital stock of the Cor-
poration 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
Directors of the Corporation to suspend the right of re-
demption 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.
6.
<PAGE>
ARTICLE VIII
DETERMINATION BINDING
---------------------
Any determination made in good faith, so far as ac-
counting matters are involved, in accordance with accepted
accounting practice by or pursuant to the direction of
the Board of Directors, as to the amount of assets, obli-
gations 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, altera-
tion 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 dis-
charged or shall be then or thereafter required to be 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 disposi-
tion of securities or shares of capital stock of the Cor-
poration, and any reasonable determination made in good
faith by the Board of Directors as to whether any trans-
action constitutes a purchase of securities on 'margin',
a sale of securities "short", or an underwriting of the
7.
<PAGE>
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 condi-
tion and understanding, evidenced by the purchase of shares
of capital stock or acceptance of share certificates, that
any and all such determinations shall be binding as afore-
said. No provision of these Articles of Incorporation shall
be effective to (a) require a waiver of compliance with any
provision of the Securities Act of 1933, as amended, or the
Investment Company Act of 1940, as amended, or of any valid
rule, regulation or order of the Securities and Exchange
Commission thereunder or (b) protect or purport to protect
any director or officer of the Corporation against any
liability' to the Corporation or its security holders to
which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless dis-
regard of the duties involved in the conduct of his office'.
ARTICLE IX
PERPETUAL EXISTENCE
-------------------
The duration of the Corporation shall be perpetual.
8.
<PAGE>
ARTICLE X
AMENDMENT
---------
The Corporation reserves the right from time to time
to make any amendment of its Charter, now or hereafter
authorized by law, including any amendment which alters the
contract rights, as expressly set forth in its Charter, of
any outstanding stock.
IN WITNESS WHEREOF, the undersigned incorporator of
MERRILL LYNCH WORLD FUND, INC. hereby executes the foregoing
Articles of Incorporation and acknowledges the same to be
his act and further acknowledges that, to the best of his
knowledge, the matters and facts set forth therein are true
in all material respects under the penalties of perjury.
Dated the 2nd day of March, 1984.
---------------------------
Philip L. Kirstein
9.
BY-LAWS
OF
MERRILL LYNCH INTERNATIONAL HOLDINGS, INC.
ARTICLE I
Offices
-------
Section 1. Principal Office. The principal office of the
----------------
Corporation shall be in the City of Baltimore, State of Maryland.
Section 2. Principal Executive Office. The principal
--------------------------
executive office of the Corporation shall be at 800 Scudders Mill
Road, Plainsboro, New Jersey 08536.
Section 3. Other Offices. The Corporation may have such
-------------
other offices in such places as the Board of Directors may from
time to time determine.
ARTICLE II
Meetings of Stockholders
------------------------
Section 1. Annual Meeting. The Corporation shall not be
--------------
required to hold an annual meeting of its stockholders in any
year in which none of the following is required to be acted on by
the holders of the capital stock under the Investment Company Act
of 1940, as amended: (a) election of directors, (b) approval of
the Corporation's investment advisory agreement; (c) ratification
of the selection of independent public accountants; and (d)
<PAGE>
approval of the Corporation's distribution agreement. In the
event that the Corporation shall be required to hold an annual
meeting of stockholders by the Investment Company Act of 1940, as
amended, such meeting shall be held: (a) at a date and time set
by the Board of Directors in accordance with the Investment
Company Act of 1940, as amended if the purpose of the meeting is
to elect directors or to approve an investment advisory agreement
or distribution agreement; and (b) on a date fixed by the board
of directors during the month of October (i) in the fiscal year
immediately following the fiscal year in which independent
accountants were appointed if the purpose of the meeting is to
ratify the selection of such independent accountants, or (ii) in
any fiscal year if an annual meeting is to be held for any reason
other than as specified in the foregoing. Any stockholders'
meeting held in accordance with the preceding sentence shall for
all purposes constitute the annual meeting of stockholders for
the fiscal year of the Corporation in which the meeting is held.
At any such meeting, the stockholders shall elect directors to
hold the offices of any directors who have held office for more
than one year or who have been elected by the board of directors
to fill vacancies which result from any cause.
Section 2. Special Meetings. Special meetings of the
----------------
stockholders, unless otherwise provided by law or by the Articles
of Incorporation, may be called for any purpose or purposes by a
majority of the Board of Directors, the President, or on the
-2-
<PAGE>
written request of the holders of the outstanding capital stock
of the Corporation entitled to vote at such meeting to the extent
permitted by Maryland law and the Investment Company Act of 1940,
as amended.
Section 3. Place of Meetings. Meetings of the stockholders
-----------------
shall be held at such place within the United States as the Board
of Directors may from time to time determine.
Section 4. Notice of Meetings; Waiver of Notice. Notice of
------------------------------------
the place, date and time of the holding of each stockholders'
meeting and, if the meeting is a special meeting, the purpose or
purposes of the special meeting, shall be given personally or by
mail, not less than ten nor more than ninety days before the date
of such meeting, to each stockholder entitled to vote at such
meeting and to each other stockholder entitled to notice of the
meeting. Notice by mail shall be deemed to be duly given when
deposited in the United States mail addressed to the stockholder
at his address as it appears on the records of the Corporation,
with postage thereon prepaid.
Notice of any meeting of stockholders shall be deemed waived
by any stockholder who shall attend such meeting in person or by
proxy, or who shall, either before or after the meeting, submit a
signed waiver of notice which is filed with the records of the
meeting. When a meeting is adjourned to another time and place,
unless the Board of Directors, after the adjournment, shall fix a
new record date for an adjourned meeting, or the adjournment is
-3-
<PAGE>
for more than one hundred and twenty days after the original
record date, notice of such adjourned meeting need not be given
if the time and place to which the meeting shall be adjourned
were announced at the meeting at which the adjournment is taken.
Section 5. Quorum. At all meetings of the stockholders,
------
the holders of a majority of the shares of stock of the Corpora-
tion entitled to vote at the meeting, present in person or by
proxy, shall constitute a quorum for the transaction of any
business, except as otherwise provided by statute or by the
Articles of Incorporation. In the absence of a quorum no busi-
ness may be transacted, except that the holders of a majority of
the shares of stock present in person or by proxy and entitled to
vote may adjourn the meeting from time to time, without notice
other than announcement thereat except as otherwise required by
these By-Laws, until the holders of the requisite amount
of shares of stock shall be so present. At any such adjourned
meeting at which a quorum may be present any business may be
transacted which might have been transacted at the meeting as
originally called. The absence from any meeting, in person or by
proxy, of holders of the number of shares of stock of the Corpo-
ration in excess of a majority thereof which may be required by
the laws of the State of Maryland, the Investment Company Act of
1940, as amended, or other applicable statute, the Articles of
Incorporation, or these By-Laws, for action upon any given matter
shall not prevent action at such meeting upon any other matter or
-4-
<PAGE>
matters which may properly come before the meeting, if there
shall be present thereat, in person or by proxy, holders of the
number of shares of stock of the Corporation required for action
in respect of such other matter or matters.
Section 6. Organization. At each meeting of the stock-
------------
holders, the Chairman of the Board (if one has been designated by
the Board), or in his absence or inability to act, the President,
or in the absence or inability to act of the Chairman of the
Board and the President, a Vice President, shall act as chairman
of the meeting. The Secretary, or in his absence or inability to
act, any person appointed by the chairman of the meeting, shall
act as secretary of the meeting and keep the minutes thereof.
Section 7. Order of Business. The order of business at all
-----------------
meetings of the stockholders shall be as determined by the chair-
man of the meeting.
Section 8. Voting. Except as otherwise provided by statute
------
or the Articles of Incorporation, each holder of record of shares
of stock of the Corporation having voting power shall be entitled
at each meeting of the stockholders to one vote for every share
of such stock standing in his name on the record of stockholders
of the Corporation as of the record date determined pursuant to
Section 9 of this Article or if such record date shall not have
been so fixed, then at the later of (i) the close of business on
the day on which notice of the meeting is mailed or (ii) the
thirtieth day before the meeting.
-5-
<PAGE>
Each stockholder entitled to vote at any meeting of stock-
holders may authorize another person or persons to act for him by
a proxy signed by such stockholder or his attorney-in-fact. No
proxy shall be valid after the expiration of eleven months from
the date thereof, unless otherwise provided in the proxy. Every
proxy shall be revocable at the pleasure of the stockholder
executing it, except in those cases where such proxy states that
it is irrevocable and where an irrevocable proxy is permitted by
law. Except as otherwise provided by statute, the Articles of
Incorporation or these By-Laws, any corporate action to be taken
by vote of the stockholders shall be authorized by a majority of
the total votes cast at a meeting of stockholders by the holders
of shares present in person or represented by proxy and entitled
to vote on such action.
If a vote shall be taken on any question other than the
election of directors, which shall be by written ballot, then
unless required by statute or these By-Laws, or determined by the
chairman of the meeting to be advisable, any such vote need not
be by ballot. on a vote by ballot, each ba1lot shall be signed
by the stockholder voting, or by his proxy, if there be such
proxy, and shall state the number of shares voted.
Section 9. Fixing of Record Date. The Board of Directors
---------------------
may set a record date for the purpose of determining stockholders
entitled to vote at any meeting of the stockholders. The record
date, which may not be prior to the close of business on the day
-6-
<PAGE>
the record date is fixed, shall be not more than ninety nor less
than ten days before the date of the meeting of the stockholders.
All persons who were holders of record of shares at such time,
and no others, shall be entitled to vote at such meeting and any
adjournment thereof.
Section 10. Inspectors. The Board may, in advance of any
----------
meeting of stockholders, appoint one or more inspectors to act at
such meeting or any adjournment thereof. If the inspectors shall
not be so appointed or if any of them shall fail to appear or
act, the chairman of the meeting may, and on the request of any
stockholder entitled to vote thereat shall, appoint inspectors.
Each inspector, before entering upon the discharge of his duties,
shall take and sign an oath to execute faithfully the duties of
inspector at such meeting with strict impartiality and according
to the best of his ability. The inspectors shall determine the
number of shares outstanding and the voting power of each, the
number of shares represented at the meeting, the existence of a
quorum, the validity and effect of proxies, and shall receive
votes, ballots or consents, hear and determine all challenges and
questions arising in connection with the right to vote, count and
tabulate all votes, ballots or consents, determine the result,
and do such acts as are proper to conduct the election or vote
with fairness to all stockholders. On request of the chairman of
the meeting or any stockholder entitled to vote thereat, the
inspectors shall make a report in writing of any challenge,
-7-
<PAGE>
request or matter determined by them and shall execute a certifi-
cate of any fact found by them. No director or candidate for the
office of director shall act as inspector of an election of
directors. Inspectors need not be stockholders.
Section 11. Consent of Stockholders in Lieu of Meeting.
------------------------------------------
Except as otherwise provided by statute or the Articles of Incor-
poration, any action required to be taken at any meeting of
stockholders, or any action which may be taken at any meeting of
such stockholders, may be taken without a meeting, without prior
notice and without a vote, if the following are filed with the
records of stockholders meetings: (i) a unanimous written
consent which sets forth the action and is signed by each
stockholder entitled to vote on the matter and (ii) a written
waiver of any right to dissent signed by each stockholder
entitled to notice of the meeting but not entitled to vote
thereat.
ARTICLE III
Board of Directors
------------------
Section 1. General Powers. Except as otherwise provided in
--------------
the Articles of Incorporation, the business and affairs of the
Corporation shall be managed under the direction of the Board of
Directors. All powers of the Corporation may be exercised by or
under authority of the Board of Directors except as conferred on
-8-
<PAGE>
or reserved to the stockholders by law or by the Articles of
Incorporation or these By-Laws.
Section 2. Number of Directors. The number of directors
-------------------
shall be fixed from time to time by resolution of the Board of
Directors adopted by a majority of the Directors then in office;
provided, however, that the number of directors shall in no event
be less than three nor more than fifteen except that the Corpora-
tion may have two directors if there is no stock outstanding, or
so long as there are less than three stockholders. Any vacancy
created by an increase in Directors may be filled in accordance
with Section 6 of this Article III. No reduction in the number
of directors shall have the effect of removing any director from
office prior to the expiration of his term unless such director
is specifically removed pursuant to Section 5 of this Article III
at the time of such decrease. Directors need not be stock-
holders.
Section 3. Election and Term of Directors. Directors shall
------------------------------
be elected annually, by written ballot at a meeting of
stockholders held for that purpose; provided, however, that if no
meeting of the stockholders of the Corporation is required to be
held in a particular year pursuant to Section 1 of Article II of
these By-Laws, Directors shall be elected at the next meeting
held. The term of office of each director shall be from the
time of his election and qualification until the election of
directors next succeeding his election and until his successor
-9-
<PAGE>
shall have been elected and shall have qualified, or until his
death, or until he shall have resigned, or have been removed as
hereinafter provided in these By-Laws, or as otherwise provided
by statute or the Articles of Incorporation.
Section 4. Resignation. A director of the Corporation may
-----------
resign at any time by giving written notice of his resignation to
the Board or the Chairman of the Board or the President or the
Secretary. Any such resignation shall take effect at the time
specified therein or, if the time when it shall become effective
shall not be specified therein, immediately upon its receipt;
and, unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
Section 5. Removal of Directors. Any director of the
--------------------
Corporation may be removed by the stockholders by a vote of a
majority of the votes entitled to be cast for the election of
directors.
Section 6. Vacancies. Any vacancies in the Board, whether
---------
arising from death, resignation, removal, an increase in the
number of directors or any other cause, shall be filled by a vote
of the majority of the Board of Directors then in office even
though such majority is less than a quorum, provided that no
vacancies shall be filled by action of the remaining directors,
if after the filling of said vacancy or vacancies, less than
two-thirds of the directors then holding office shall have been
elected by the stockholders of the Corporation. In the event
-10-
<PAGE>
that at any time there is a vacancy in any office of a director
which vacancy may not be filled by the remaining directors, a
special meeting of the stockholders shall be held as promptly as
possible and in any event within sixty days, for the purpose of
filling said vacancy or vacancies. Any directors elected or
appointed to fill a vacancy shall hold office only until the next
meeting of stockholders of the Corporation and until a successor
shall have been chosen and qualifies or until his earlier
resignation or removal.
Section 7. Place of Meetings. Meetings of the Board may be
-----------------
held at such place as the Board may from time to time determine
or as shall be specified in the notice of such meeting.
Section 8. Regular Meetings. Regular meetings of the Board
----------------
may be held without notice at such time and place as may be
determined by the Board of Directors.
Section 9. Special Meetings. Special meetings of the Board
----------------
may be called by two or more directors of the Corporation or by
the Chairman of the Board or the President.
Section 10. Telephone Meetings. Members of the Board of
------------------
Directors or of any committee thereof may participate in a
meeting by means of a conference telephone or similar
communications equipment if all persons participating in the
meeting can hear each other at the same time. Subject to the
provisions of the Investment Company Act of 1940, as amended,
-11-
<PAGE>
participation in a meeting by these means constitutes presence in
person at the meeting.
Section 11. Notice of Special Meetings. Notice of each
--------------------------
special meeting of the Board shall be given by-the Secretary as
hereinafter provided, in which notice shall be stated the time
and place of the 'meeting. Notice of each such meeting shall be
delivered to each director, either personally or by telephone or
any standard form of telecommunication, at least twenty-four
hours before the time at which such meeting is to be held, or by
first-class mail, postage prepaid, addressed to him at his resi-
dence or usual place of business, at least three days before the
day on which such meeting is to be held.
Section 12. Waiver of Notice of Meetings. Notice of any
----------------------------
special meeting need not be given to any director who shall,
either before or after the meeting, sign a written waiver of
notice which is filed with the records of the meeting or who
shall attend such meeting. Except as otherwise specifically
required by these By-Laws, a notice or waiver of notice of any
meeting need not state the purposes of such meeting.
section 13. Quorum and Voting. One-third, but not less
-----------------
than two, of the members of the entire Board shall be present in
person at any meeting of the Board in order to constitute a
quorum for the transaction of business at such meeting, and
except as otherwise expressly required by statute, the Articles
of Incorporation, these By-Laws, the Investment Company Act of
-12-
<PAGE>
1940, as amended, or other applicable statute, the act of a
majority of the directors present at any meeting at which a
quorum is present shall be the act of the Board. In the absence
of a quorum at any meeting of the Board, a majority of the
directors present thereat may adjourn such meeting to another
time and place until a quorum shall be present thereat. Notice
of the time and place of any such adjourned meeting shall be
given to the directors who were not present at the time of the
adjournment and, unless such time and place were announced at the
meeting at which the adjournment was taken, to the other
directors. At any adjourned meeting at which a quorum is
present, any business may be transacted which might have been
transacted at the meeting as originally called.
Section 14. Organization. The Board may, by resolution
------------
adopted by a majority of the entire Board, designate a Chairman
of the Board, who shall preside at each meeting of the Board. In
the absence or inability of the Chairman of the Board to preside
at a meeting, the President, or, in his absence or inability to
act, another director chosen by a majority of the directors
present, shall act as chairman of the meeting and preside
thereat. The Secretary (or, in his absence or inability to act,
any person appointed by the Chairman) shall act as secretary of
the meeting and keep the minutes thereof.
Section 15. Written Consent of Directors in Lieu of a
-----------------------------------------
Meeting. Subject to the provisions of the Investment Company Act
-------
-13-
<PAGE>
of 1940, as amended, any action required or permitted to be taken
at any meeting of the Board of Directors or of any committee
thereof may be taken without a meeting if all members of the
Board or committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes
of the proceedings of the Board or committee.
Section 16. Compensation. Directors may receive compensa-
------------
tion for services to the Corporation in their capacities as
directors or otherwise in such manner and in such amounts as may
be fixed from time to time by the Board.
Section 17. Investment Policies. It shall be the duty of
-------------------
the Board of Directors to ensure that the purchase, sale, reten-
tion and disposal of portfolio securities and the other invest-
ment practices of the Corporation are at all times consistent
with the investment policies and restrictions with respect to
securities investments and otherwise of the corporation, as
recited in the current Prospectus and Statement of Additional
Information of the Corporation included in the Registration
Statement of the Corporation, as filed from time to time with the
Securities and Exchange Commission and as required by the
Investment Company Act of 1940, as amended. The Board, however,
may delegate the duty of management of the assets and the
administration of its day to day operations to an individual or
corporate management company and/or investment adviser pursuant
to a written contract or contracts which have obtained the
-14-
<PAGE>
requisite approvals, including the requisite approvals of
renewals thereof, of the Board of Directors and/or the stock-
holders of the Corporation in accordance with the provisions of
the Investment Company Act of 1940, as amended.-
ARTICLE IV
Committees
----------
Section 1. Executive Committee. The Board may, by resolu-
-------------------
tion adopted by a majority of the entire board, designate an
Executive Committee consisting-of two or more of the directors of
the Corporation, which committee shall have and may exercise all
the powers and authority of the Board with respect to all matters
other than:
(a) the submission to stockholders of any action requiring
authorization of stockholders pursuant to statute or the Articles
of Incorporation;
(b) the filling of vacancies on the Board of Directors;
(c) the fixing of compensation of the directors for serving
on the Board or on any committee of the Board, including the
Executive Committee;
(d) the approval or termination of any contract with an
investment adviser manager or principal underwriter, as such
terms are defined in the Investment Company Act of 1940, as
amended, or the taking of any other action required to be taken
-15-
<PAGE>
by the Board of Directors by the Investment Company Act of 1940,
as amended;
(e) the amendment or repeal of these By-Laws or the adop-
tion of new By-Laws;
(f) the amendment or repeal of any resolution of the Board
which by its terms may be amended or repealed only by the Board;
(g) the declaration of dividends and the issuance of capi-
tal stock of the Corporation; and
(h) the approval of any merger or share exchange which does
not require stockholder approval.
The Executive Committee shall keep written minutes of its
proceedings and shall report such minutes to the Board. All such
proceedings shall be subject to revision or alteration by the
Board; provided, however, that third parties shall not be preju-
diced by such revision or alteration.
Section 2. Other Committees of the Board. The Board of
-----------------------------
Directors may from time to time, by resolution adopted by a
majority of the whole Board, designate one or more other commit-
tees of the Board, each such committee to consist of two or more
directors and to have such powers and duties as the Board of
Directors may, by resolution, prescribe.
Section 3. General. One-third, but not less than two, of
the members of any committee shall be present in person at any
meeting of such committee in order to constitute a quorum for the
transaction of business at such meeting, and the act of a major-
-16-
<PAGE>
ity present shall be the act of such committee. The Board may
designate a chairman of any committee and such chairman or any
two members of any committee may fix the time and place of its
meetings unless the Board shall otherwise provide. In the
absence or disqualification of any member of any committee, the
member or members thereof present at any meeting and not disqual-
ified from voting, whether or not he or they constitute a quorum,
may unanimously appoint another member of the Board of Directors
to act at the meeting in the place of any such absent or disqual-
ified member. The Board shall have the power at any time to
change the membership of any committee, to fill all vacancies, to
designate alternate members to replace any absent or disqualified
member, or to dissolve any such committee. Nothing herein shall
be deemed to prevent the Board from appointing one or more com-
mittees consisting in whole or in part of persons who are not
directors of the Corporation; provided, however, that no such
committee shall have or may exercise any authority or power of
the Board in the management of the business or affairs of the
Corporation.
ARTICLE V
Officers, Agents and Employees
------------------------------
Section 1. Number and Qualifications. The officers of the
-------------------------
Corporation shall be a President a Secretary and a Treasurer,
each of whom shall be elected by the Board of Directors. The
-17-
<PAGE>
Board of Directors may elect one or more Vice Presidents and may
also appoint such other officers, agents and employees as it may
deem necessary or proper. Any two or more offices may be held by
the same person, except the offices of President and Vice Presi-
dent, but no officer shall execute, acknowledge or verify any
instrument in more than one capacity. Such officers shall be
elected by the Board of Directors each year at a meeting of the
Board of Directors, each to hold office for the ensuing year and
until his successor shall have been duly elected and shall have
qualified, or until his death, or until he shall have resigned,
or have been removed, as hereinafter provided in these By-Laws.
The Board may from time to time elect, or delegate to the
President the power to appoint, such officers (including one or
more Assistant Vice Presidents, one or more Assistant Treasurers
and one or more Assistant Secretaries) and such agents, as may be
necessary or desirable for the business of the Corporation. Such
other officers and agents shall have such duties and shall hold
their offices for such terms as may be prescribed by the Board or
by the appointing authority.
Section 2. Resignations. Any officer of the Corporation
------------
may resign at any time by giving written notice of his resigna-
tion to the Board, the Chairman of the Board, the President or
the Secretary. Any such resignation shall take effect at the
time specified therein or, if the time when it shall become
effective shall not be specified therein, immediately upon its
-18-
<PAGE>
receipt; and, unless otherwise specified therein, the acceptance
of such resignation shall not be necessary to make it effective.
Section 3. Removal of Officer, Agent or Employee. Any
-------------------------------------
officer, agent or employee of the Corporation may be removed by
the Board of Directors with or without cause at any time, and the
Board may delegate such power of removal as to agents and
employees not elected or appointed by the Board of Directors.
Such removal shall be without prejudice to such person's contract
rights, if any, but the appointment of any person as an officer,
agent or employee of the Corporation shall not of itself create
contract rights.
Section 4. Vacancies. A vacancy in any office, whether
---------
arising from death, resignation, removal or any other cause, may
be filled for the unexpired portion of the term of the office
which shall be vacant, in the manner prescribed in these By-Laws
for the regular election or appointment to such office.
Section 5. Compensation. The compensation of the officers
------------
of the Corporation shall be fixed by the Board of Directors, but
this power may be delegated to any officer in respect of other
officers under his control.
Section 6. Bonds or Other Security. If required by the
-----------------------
Board, any officer, agent or employee of the Corporation shall
give a bond or other security for the faithful performance of his
duties, in such amount and with such surety or sureties as the
Board may require.
-19-
<PAGE>
Section 7. President. The President shall be the chief
---------
executive officer of the Corporation. In the absence of the
Chairman of the Board (or if there is none), the President shall
preside at meetings of the stockholders and the Board of Direc-
tors. The President shall have, subject to the control of the
Board of Directors, general charge of the business and affairs of
the Corporation. He may employ and discharge employees and
agents of the Corporation, except such as shall be appointed by
the Board, and he may delegate these powers.
Section S. Vice President. Each Vice President shall have
--------------
such powers and perform such duties as the Board of Directors or
the President may from time to time prescribe.
Section 9. Treasurer. The Treasurer shall
---------
(a) have charge and custody of, and be responsible for, all
the funds and securities of the Corporation, except those which
the Corporation has placed in the custody of a bank or trust
company or member of a national securities exchange (as that term
is defined in the Securities Exchange Act of 1934) pursuant to a
written agreement designating such bank or trust company or
member of a national securities exchange as custodian of the
property of the Corporation;
(b) keep full and accurate accounts of receipts and dis-
bursements in books belonging to the Corporation;
(c) cause all moneys and other valuable to be deposited to
the credit of the Corporation;
-20-
<PAGE>
(d) receive, and give receipts for, moneys due and payable
to the Corporation from any source whatsoever;
(e) disburse the funds of the Corporation and supervise the
investment of its funds as ordered or authorized by the Board,
taking proper vouchers therefor; and
(f) in general, perform all the duties incident to the
office of Treasurer and such other duties as from time to time
may be assigned to him by the Board or the President.
Section 10. Secretary. The Secretary shall
---------
(a) keep or cause to be kept in one or more books provided
for the purpose, the minutes of all meetings of the Board, the
committees of the Board and the stockholders;
(b) see that all notices are duly given in accordance with
the provisions of these By-Laws and as required by law;
(c) be custodian of the records and the seal of the Corpo-
ration and affix and attest the seal to all stock certificates of
the Corporation (unless the seal of the Corporation on such
certificates shall be a facsimile, as hereinafter provided) and
affix and attest the seal to all other documents to be executed
on behalf of the Corporation under its seal;
(d) see that the books, reports, statements, certificates
and other documents and records required by law to be kept and
filed are properly kept and filed; and
-21-
<PAGE>
(e) in general, perform all the duties incident to the
office of Secretary and such other duties as from time to tine
may be assigned to him by the Board or the President.
Section 11. Delegation of Duties. In case of the absence
--------------------
of any officer of the Corporation, or for any other reason that
the Board may deem sufficient, the Board may confer for the time
being the powers or duties, or any of them, of such officer upon
any other officer or upon any director.
ARTICLE VI
Indemnification
---------------
Each officer and director of the Corporation shall be indem-
nified by the Corporation 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
Corporation 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 negli-
gence or reckless disregard of the duties involved in the conduct
of his office, the decision by the Corporation to indemnify such
person must be based upon the reasonable determination of inde-
pendent counsel or non-party independent directors, after review
-22-
<PAGE>
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 Corporation 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 Corporation. The Corporation, however, may not purchase
insurance on behalf of any officer or director of the Corporation
that protects or purports to protect such person from liability
to the Corporation 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 Corporation may indemnify or purchase insurance to the
extent provided in this Article VI on behalf of an employee or
agent who is not an officer or director of the Corporation.
ARTICLE VII
Capital Stock
-------------
Section 1. Stock Certificates. Each holder of stock of the
------------------
Corporation shall be entitled upon request to have a certificate
or certificates, in such form as shall be approved by the Board,
representing the number of shares of stock of the Corporation
owned by him, provided, however, that certificates for fractional
-23-
<PAGE>
shares will not be delivered in any case. The certificates
representing shares of stock shall be signed by or in the name of
the Corporation by the President or a Vice President and by the
Secretary or an Assistant Secretary or the Treasurer or an Assis-
tant Treasurer and sealed with the seal of the Corporation. Any
or all of the signatures or the seal on the certificate may be a
facsimile. In case any officer, transfer agent or registrar who
has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent
or registrar before such certificate shall be issued, it may be
issued by the Corporation with the same effect as if such offi-
cer, transfer agent or registrar were still in office at the date
of issue.
Section 2. Books of Account and Record of Stockholders.
-------------------------------------------
There shall be kept at the principal executive office of the
Corporation correct and complete books and records of account of
all the business and transactions of the Corporation. There
shall be made available upon request of any stockholder, in
accordance with Maryland law, a record containing the number of
shares of stock issued during a specified period not to exceed
twelve months and the consideration received by the Corporation
for each such share.
Section 3. Transfers of Shares. Transfers of shares of
-------------------
stock of the Corporation shall be made on the stock records of
the Corporation only by the registered holder thereof, or by his
-24-
<PAGE>
attorney thereunto authorized by power of attorney duly executed
and filed with the Secretary or with a transfer agent or transfer
clerk, and on surrender of the certificate or certificates, if
issued, for such shares properly endorsed or accompanied by a
duly executed stock transfer power and the payment of all taxes
thereon. Except as otherwise provided by law, the Corporation
shall be entitled to recognize the exclusive right of a person in
whose name any share or shares stand on the record of stock-
holders as the owner of such share or shares for all purposes,
including, without limitation, the rights to receive dividends or
other distributions, and to vote as such owner, and the Corpora-
tion shall not be bound to recognize any equitable or legal claim
to or interest in any such share or shares on the part of any
other person.
Section 4. Regulations. The Board may make such additional
-----------
rules and regulations, not inconsistent with these By-Laws, as it
may deem expedient concerning the issue, transfer and registra-
tion of certificates for shares of stock of the Corporation. It
may appoint, or authorize any officer or officers to appoint, one
or more transfer agents or one or more transfer clerks and one or
more registrars and may require all certificates for shares of
stock to bear the signature or signatures of any of them.
Section 5. Lost, Destroyed or Mutilated Certificates. The
-----------------------------------------
holder of any certificates representing shares of stock of the
Corporation shall immediately notify the Corporation of any loss,
-25-
<PAGE>
destruction or mutilation of such certificate, and the Corpora-
tion may issue a new certificate of stock in the place of any
certificate theretofore issued by it which the owner thereof
shall allege to have been lost or destroyed or which shall have
been mutilated, and the Board may, in its discretion, require
such owner or his legal representatives to give to the Corpora-
tion a bond in such sum, limited or unlimited, and in such form
and with such surety or sureties, as the Board in its absolute
discretion shall determine, to indemnify the Corporation against
any claim that may be made against it on account of the alleged
loss or destruction of any such certificate, or issuance of a new
certificate. Anything herein to the contrary notwithstanding,
the Board, in its absolute discretion, may refuse to issue any
such new certificate, except pursuant to legal proceedings under
the laws of the State of Maryland.
Section 6. Fixing of a Record Date for Dividends and Dis-
---------------------------------------------
tributions. The Board may fix, in advance, a date not more than
----------
ninety days preceding the date fixed for the payment of any
dividend or the making of any distribution or the allotment of
rights to subscribe for securities of the Corporation, or for the
delivery of evidences of rights or evidences of interests arising
out of any change, conversion or exchange of common stock or
other securities, as the record date for the determination of the
stockholders entitled to receive any such dividend, distribution,
allotment, rights on interests, and in such case only the stock-
-26-
<PAGE>
holders of record at the time so fixed shall be entitled to
receive such dividend, distribution, allotment, rights or inter-
ests.
Section 7. Information to Stockholders and Others. Any
--------------------------------------
stockholder of the Corporation or his agent may inspect and copy
during usual business hours the Corporation's By-Laws, minutes of
the proceedings of its stockholders, annual statements of its
affairs, and voting trust agreements on file at its principal
office.
ARTICLE VIII
Seal
----
The seal of the Corporation shall be circular in form and
shall bear, in addition to any other emblem or device approved by
the Board of Directors, the name of the Corporation, the year of
its incorporation and the words "Corporate Seal" and "Maryland."
Said seal may be used by causing it or a facsimile thereof to be
impressed or affixed or in any other manner reproduced.
ARTICLE IX
Fiscal Year
-----------
Unless otherwise determined by the Board, the fiscal year of
the Corporation shall end on the 30th day of April.
-27-
<PAGE>
ARTICLE X
Depositories and Custodians
---------------------------
Section 1. Depositories. The funds of the Corporation
------------
shall be deposited with such banks or other depositories as the
Board of Directors of the Corporation may from time to time
determine.
Section 2. Custodians. All securities and other invest-
----------
ments shall be deposited in the safe keeping of such banks or
other companies as the Board of Directors of the Corporation may
from time to time determine. Every arrangement entered into with
any bank or other company for the safe keeping of the securities
and investments of the Corporation shall contain provisions
complying with the Investment Company Act of 1940, as amended,
and the general rules and regulations thereunder.
ARTICLE XI
Execution of Instruments
------------------------
Section 1. Checks, Notes, Drafts, etc. Checks, notes,
--------------------------
drafts, acceptances, bills of exchange and other orders obliga-
tions for the payment of money shall be signed by such officer or
officers or person or persons as the Board of Directors by reso-
lution shall from time to time designate.
Section 2. Sale or Transfer of Securities. Stock certifi-
------------------------------
cates, bonds or other securities at any time owned by the Corpo-
ration may be held on behalf of the Corporation or sold, trans-
-28-
<PAGE>
ferred or otherwise disposed of subject to any limits imposed by
these By-Laws and pursuant to authorization by the Board and,
when so authorized to be held on behalf of the Corporation or
sold, transferred or otherwise disposed of, may be transferred
from the name of the Corporation by the signature of the Presi-
dent or a Vice President or the Treasurer or pursuant to any
procedure approved by the Board of Directors, subject to applica-
ble law.
ARTICLE XII
Independent Public Accountants
------------------------------
The firm of independent public accountants which shall sign
or certify the financial statements of the Corporation which are
filed with the Securities and Exchange Commission shall be
selected annually by the Board of Directors and, if required by
the provisions of the Investment Company Act of 1940, as amended,
ratified by the stockholders.
ARTICLE XIII
Annual Statement
----------------
The books of account of the Corporation shall be examined by
an independent firm of public accountants at the close of each
annual period of the Corporation and at such other times as may
be directed by the Board. A report to the stockholders based
upon each such examination shall be mailed to each stockholder of
-29-
<PAGE>
the Corporation of record on such date with respect to each
report as may be determined by the Board, at his address as the
same appears on the books of the Corporation. Such annual state-
ment shall also be available at the annual meeting of stock-
holders, if any, and, within 20 days after the meeting (or, in the
absence of an annual meeting, within 20 days after the end of the
month of October following the end of the fiscal year), be placed
on file at the Corporation's principal office. Each such report
shall show the assets and liabilities of the Corporation as of
the close of the annual or quarterly period covered by the report
and the securities in which the funds of the Corporation were
then invested. Such report shall also show the Corporation's
income and expenses for the period from the end of the
Corporation's preceding fiscal year to the close of the annual or
quarterly period covered by the report and any other information
required by the Investment Company Act of 1940, as amended, and
shall set forth such other matters as the Board or such firm of
independent public accountants shall determine.
ARTICLE XIV
Amendments
----------
These By-Laws or any of them may be amended, altered or
repealed at any regular meeting of the stockholders or at any
special meeting of the stockholders at which a quorum is present
or represented, provided that notice of the proposed amendment,
-30-
<PAGE>
alteration or repeal be contained in the notice of such special
meeting. These By-Laws may also be amended, altered or repealed
by the affirmative vote of a majority of the Board of Directors
at any regular or special meeting of the Board of Directors,
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.
-31-
EXHIBIT 11
INDEPENDENT AUDITORS' CONSENT
MERRILL LYNCH GLOBAL HOLDINGS, INC.:
We consent to the use in Post-Effective Amendment No. 14 to Registration
Statement No. 2-89834 of our report dated January 12, 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
March 24, 1995
Exhibit 16(c)
EXHIBIT 16
Global Holdingss - Class C
10/21/94 - 11/30/94 Since Since
Inception Inception
Avg Annual Total
Return Return*
---------- ---------
Initial Investment $1,000.00 $1,000.00
Divided by Net Asset Value 13.08 13.08
---------- ---------
Equals Shares Purchased 76.453 76.453
Plus Shares Acquired through
Dividend Reinvestment 0.000 0.000
---------- ---------
Equals Shares Held at 11/30/94 76.453 76.453
Multiplied by Net Asset Value at 11/30/94 12.51 12.51
---------- ---------
Equals Ending Value before deducting for
contingent deferred sales charge 956.42 956.42
Less deferred sales charge (9.56) 0.00
---------- ---------
Equals Ending Redeemable Value at
$1000 Investment (ERV) at 11/30/94 .946.86 956.42
---------- ---------
Divided by $1,000 (P) 0.9469 0.9564
Subtract 1 -0.0531 -0.0436
Expressed as a percentage equals the
Aggregated Total Return for the Period (T) -5.31%
==========
Expressed as a percentage equals the
Aggregated Total Return for the Period -4.36%
==========
ERV divided by P 0.9469
Raise to the power of 9.1250
Equals 0.6076
Subtract 1 -0.3924
Expressed as a percentage equals the
Average Annualized Total Return -39.24%
==========
* Does not include sales charge for the period.
Exhibit 16(d)
EXHIBIT 16
Global Holdingss - Class D
10/21/94 - 11/30/94 Since Since
Inception Inception
Avg Annual Total
Return Return*
---------- ---------
Initial Investment $1,000.00 $1,000.00
Divided by Initial Maximum Offering Price 14.13
----------
Divided by Net Asset Value 13.39
---------
Equals Shares Purchased 70.762 74.683
Plus Shares Acquired through
Dividend Reinvestment 0.000 0.000
---------- ---------
Equals Shares Held at 11/30/94 70.762 74.683
Multiplied by Net Asset Value at 11/30/94 12.81 12.81
---------- ---------
Equals Ending Redeemable Value at
$1000 Investment (ERV) at 11/30/94 $906.46 $956.68
Divided by $1,000 (P) 0.9065 0.9567
Subtract 1 -0.0935 -0.0433
Expressed as a percentage equals the
Aggregated Total Return for the Period (T) -9.35%
==========
Expressed as a percentage equals the
Aggregated Total Return for the Period -4.33%
==========
ERV divided by P 0.9065
Raise to the power of 9.1250
Equals 0.4081
Subtract 1 -0.5919
Expressed as a percentage equals the
Average Annualized Total Return -59.19%
==========
* Does not include sales charge for the period.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000741886
<NAME> MERRILL LYNCH GLOBAL HOLDINGS, INC.
<SERIES>
<NUMBER> 1
<NAME> [SERIES FUND/MULTI-CLASS CO. NAME]
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1994
<PERIOD-START> DEC-01-1993
<PERIOD-END> NOV-30-1994
<INVESTMENTS-AT-COST> 344977872
<INVESTMENTS-AT-VALUE> 379159562
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Exhibit 99.10
BROWN & WOOD
ONE WORLD TRADE CENTER
NEW YORK, NEW YORK 10048-0557
TELEPHONE: 212-839-5300
FACSIMILE: 212-839-5599
March 28, 1995
Merrill Lynch Global Holdings, Inc.
Box 9011
Princeton, NJ 08543-9011
Dear Sirs:
This opinion is furnished in connection with the registration by Merrill
Lynch Global Holdings, Inc., a Maryland corporation (the "Company"), of
3,790,917 shares of common stock, par value $0.10 per share (the "Shares"),
under the Securities Act of 1933 pursuant to a registration statement on Form
N-1A (File No. 2-89834), as amended (the "Registration Statement").
As counsel for the Company, we are familiar with the proceedings taken by
it in connection with the authorization, issuance and sale of the Shares. In
addition, we have examined and are familiar with the Articles of
Incorporation of the Company, as amended, the By-Laws of the Company and such
other documents as we have deemed relevant to the matters referred to in this
opinion.
<PAGE>
Based upon the foregoing, we are of the opinion that the Shares, upon
issuance and sale in the manner referred to in the Registration Statement for
consideration not less than the par value thereof, will be legally issued,
fully paid and non-assessable shares of common stock of the Company.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name in the prospectus and
statement of additional information constituting parts thereof.
Very truly yours,
/s/ Brown & Wood
2
Exhibit 99.18
POWER OF ATTORNEY
I, Edward D. Zinbarg, hereby authorize Arthur Zeikel, Terry K. Glenn,
Gerald M. Richard, Mark B. Goldfus, Robert Harris or Michael J. Hennewinkel,
or any of them, as attorney-in-fact, to sign on my behalf any amendments to
the Registration Statement for each of the following registered investment
companies and to file the same, with all exhibits thereto, with the
Securities and Exchange Commission: Emerging Tigers Fund, Inc.; Merrill
Lynch Americas Income Fund, Inc.; Merrill Lynch Developing Capital Markets
Fund, Inc.; Merrill Lynch Dragon Fund, Inc.; Merrill Lynch EuroFund; Merrill
Lynch Global Allocation Fund, Inc.; Merrill Lynch Global Bond Fund for
Investment and Retirement; Merrill Lynch Global Holdings, Inc.; Merrill Lynch
Global SmallCap Fund, Inc.; Merrill Lynch Healthcare Fund, Inc.; Merrill
Lynch International Equity Fund; Merrill Lynch Latin America Fund, Inc.;
Merrill Lynch Middle East/Africa Fund, Inc.; Merrill Lynch Pacific Fund,
Inc.; Merrill Lynch Short-Term Global Income Fund, Inc.; Merrill Lynch
Technology Fund, Inc.; and Worldwide DollarVest Fund, Inc.
Dated: February 21, 1995 /s/ Edward D. Zinbarg
-------------------------------------
Edward D. Zinbarg
(Director of each above referenced
Maryland corporation and Trustee
of each above referenced
Massachusetts business trust)
