<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 11, 1994
SECURITIES ACT FILE NO. 2-97095
INVESTMENT COMPANY ACT FILE NO. 811-4282
- - - - - - --------------------------------------------------------------------------------
- - - - - - --------------------------------------------------------------------------------
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. 10 /x/
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /x/
AMENDMENT NO. 12 /x/
(CHECK APPROPRIATE BOX OR BOXES)
------------------------
MERRILL LYNCH GLOBAL RESOURCES TRUST
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
800 SCUDDERS MILL ROAD 08536
PLAINSBORO, NEW JERSEY (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (609) 282-2800
ARTHUR ZEIKEL
MERRILL LYNCH GLOBAL RESOURCES TRUST
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 TRUST: PHILIP L. KIRSTEIN, ESQ.
BROWN & WOOD MERRILL LYNCH ASSET MANAGEMENT
ONE WORLD TRADE CENTER P.O. BOX 9011
NEW YORK, NEW YORK 10048 PRINCETON, NEW JERSEY 08543-9011
ATTENTION: THOMAS R. SMITH, JR.
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE
(CHECK APPROPRIATE BOX)
/ / immediately upon filing pursuant to paragraph (b)
/x/ on October 21, 1994 pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(i)
/ / on (date) pursuant to paragraph (a)(i)
/ / 75 days after filing pursuant to paragraph (a)(ii)
/ / on (date) pursuant to paragraph (a)(ii) of Rule 485.
IF APPROPRIATE, CHECK THE FOLLOWING BOX:
/ / this post-effective amendment designates a new
effective date for a previously filed
post-effective amendment.
------------------------
THE REGISTRANT HAS REGISTERED AN INDEFINITE NUMBER OF SHARES OF BENEFICIAL
INTEREST 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 SEPTEMBER 20, 1994.
------------------------
CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
<TABLE>
<CAPTION>
PROPOSED PROPOSED
AMOUNT OF MAXIMUM MAXIMUM AMOUNT OF
TITLE OF SECURITIES SHARES BEING OFFERING PRICE AGGREGATE REGISTRATION
BEING REGISTERED REGISTERED PER UNIT OFFERING PRICE FEE
<S> <C> <C> <C> <C>
Shares of Beneficial
Interest (par
value $.10 per
share)............ 5,188,632 $16.79 $289,997 $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 5,171,360 shares.
(3) None of the shares described in (2) above have been used for reduction
pursuant to Rule 24e-2(a) or Rule 24f-2(c) under the Investment Company Act
of 1940 in previous filings during Registrant's current fiscal year.
(4) All of the shares redeemed during Registrant's previous fiscal year are
being used for the reduction of the registration fee in this amendment to
the Registration Statement.
- - - - - - --------------------------------------------------------------------------------
- - - - - - --------------------------------------------------------------------------------
<PAGE>
MERRILL LYNCH GLOBAL RESOURCES TRUST
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...................... Not Applicable
Item 3. Condensed Financial
Information................. Financial Highlights
Item 4. General Description of
Registrant.................. Investment Objectives and
Policies; Additional
Information
Item 5. Management of the Fund........ Fee Table; Management of the
Trust; Portfolio Transactions
and Brokerage; 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 Pricing(Service
Mark) System; Purchase of
Shares; Shareholder
Services; Additional
Information; Inside Back
Cover Page
Item 8. Redemption or Repurchase...... Fee Table; Merrill Lynch
Select Pricing(Service Mark)
System; 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..................... Not Applicable
Item 13. Investment Objectives and
Policies.................... Investment Objectives and
Policies
Item 14. Management of the Fund........ Management of the Trust
Item 15. Control Persons and Principal
Holders of Securities....... Management of the Trust
Item 16. Investment Advisory and Other
Services.................... Management of the Trust;
Purchase of Shares; General
Information
Item 17. Brokerage Allocation.......... Portfolio Transactions and
Brokerage
Item 18. Capital Stock and Other
Securities.................. General Information
Item 19. Determination of Net Asset
Value; Purchase, Redemption
and Pricing of Securities
Being Offered............... Purchase of Shares; Redemption
of Shares; Determination of
Net Asset Value; Shareholder
Services
Item 20. Tax Status.................... Dividends, Distributions and
Taxes
Item 21. Underwriters.................. Purchase of Shares
Item 22. Calculation of Performance
Data........................ Performance Data
Item 23. Financial Statements.......... Financial Statements
</TABLE>
PART C
Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Registration Statement.
<PAGE>
PROSPECTUS
October 21, 1994
MERRILL LYNCH GLOBAL RESOURCES TRUST
P.O. BOX 9011, PRINCETON, NEW JERSEY 08543-9011 - PHONE NO. (609) 282-2800
------------------------
The investment objectives of Merrill Lynch Global Resources Trust (the
'Trust') are to achieve long-term growth of capital and to protect the
purchasing power of shareholders' capital by investing in a portfolio of equity
securities of domestic and foreign companies with substantial natural resource
assets. The Trust may also invest in debt, preferred or convertible securities,
the value of which is related to the market value of some natural resource asset
('asset-based securities'). Management of the Trust will seek to identify
securities it believes are attractively priced relative to the intrinsic value
of related natural resource assets or are especially well positioned to benefit
during particular portions of inflationary cycles. The Trust's fully managed
investment approach enables it to switch its emphasis among various natural
resource industry groups depending upon management's outlook with respect to
prevailing trends and developments. It is expected that when management of the
Trust anticipates significant economic, political or financial instability, such
as high inflationary pressures or upheaval in the foreign currencies exchange
markets, the Trust may invest a majority of its assets in gold-related
securities. Current income from dividends and interest will not be a primary
consideration in selecting securities.
------------------------
Pursuant to the Merrill Lynch Select Pricing(Service Mark) System, the Trust
offers four classes of shares, each with a different combination of sales
charges, ongoing fees and other features. The Merrill Lynch Select
Pricing(Service Mark) System permits an investor to choose the method of
purchasing shares that the investor believes is most beneficial given the amount
of the purchase, the length of time the investor expects to hold the shares and
other relevant circumstances. See 'Merrill Lynch Select Pricing(Service Mark)
System' on page 3.
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
Trust'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 Trust that
is relevant to making an investment in the Trust. This Prospectus should be
retained for future reference. A statement containing additional information
about the Trust, dated October 21, 1994 (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 Trust 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 Trust follows:
<TABLE>
<CAPTION>
CLASS A(A) CLASS B(B) CLASS C(C) CLASS D(C)
---------- -------------------- -------------- ----------
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION
EXPENSES:
Maximum Sales Charge Imposed
on Purchases (as a
percentage of offering
price).................... 5.25%(d) None None 5.25%(d)
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(e) 4.0% during the 1.0% for one None(e)
first year, year
decreasing 1.0%
annually to 0.0%
after the fourth
year
Exchange Fee................ None None None None
ANNUAL TRUST OPERATING
EXPENSES (AS A PERCENTAGE OF
AVERAGE NET ASSETS)(F):
Investment Advisory
Fees(g)................... 0.60% 0.60% 0.60% 0.60%
12b-1 Fees(h):
Account Maintenance
Fees.................... None 0.25% 0.25% 0.25%
Distribution Fees......... None 0.75% 0.75% None
(Class B shares
convert to Class D
shares automatically
after approximately
eight years and
cease being subject
to distribution
fees)
Other Expenses
Custodial Fees............ 0.03% 0.03% 0.03% 0.03%
Shareholder Servicing
Costs(i)................ 0.14% 0.17% 0.17% 0.14%
Other..................... 0.15% 0.15% 0.15% 0.15%
---------- -------------------- -------------- ----------
Total Other Expenses.... 0.32% 0.35% 0.35% 0.32%
---------- -------------------- -------------- ----------
TOTAL TRUST OPERATING
EXPENSES...................... 0.92% 1.95% 1.95% 1.17%
---------- -------------------- -------------- ----------
---------- -------------------- -------------- ----------
</TABLE>
- - - - - - ------------------
(a) Class A shares are sold to a limited group of investors including existing
Class A shareholders, certain retirement plans and investment programs. See
'Purchase of Shares--Initial Sales Charge Alternatives--Class A and Class D
Shares'--page 18.
(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 20.
(c) Prior to the date of this Prospectus, the Trust has not offered its Class C
or Class D shares to the public.
(d) Reduced for purchases of $25,000 and over. Class A or Class D purchases of
$1,000,000 or more may not be subject to an initial sales charge. See
'Purchase of Shares--Initial Sales Charge Alternatives--Class A and Class D
Shares'--page 18.
(e) 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 may not
be subject to an initial sales charge will instead be subject to a CDSC of
1.0% of amounts redeemed within the first year after purchase.
(f) Information for Class A and Class B shares is stated for the fiscal year
ended July 31, 1994. Information under 'Other Expenses' for Class C and
Class D shares is estimated for the fiscal year ending July 31, 1995.
(g) See 'Management of the Trust--Management and Advisory Arrangements'--page
15.
(h) See 'Purchase of Shares--Distribution Plans'--page 23.
(i) See 'Management of the Trust--Transfer Agency Services'--page 16.
2
<PAGE>
EXAMPLE:
<TABLE>
<CAPTION>
CUMULATIVE EXPENSES PAID FOR THE
PERIOD OF:
----------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
An investor would pay the following
expenses on a $1,000 investment
including the maximum $52.50 initial
sales charge (Class A and Class D
shares only) and assuming (1) the
Total Trust 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............................ $ 61 $ 80 $ 101 $ 160
Class B............................ $ 60 $ 81 $ 105 $ 208*
Class C............................ $ 30 $ 61 $ 105 $ 227
Class D............................ $ 64 $ 88 $ 113 $ 187
An investor would pay the following
expenses on the same $1,000 investment
assuming no redemption at the end of
the period:
Class A............................ $ 61 $ 80 $ 101 $ 160
Class B............................ $ 20 $ 61 $ 105 $ 208*
Class C............................ $ 20 $ 61 $ 105 $ 227
Class D............................ $ 64 $ 88 $ 113 $ 187
</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 Trust will bear directly or
indirectly. The Example set forth above assumes reinvestment of all
dividends and distributions and utilizes a 5% annual fee rate of return as
mandated by Securities and Exchange Commission ('Commission') regulations. THE
EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR
ANNUAL RATE OF RETURN, AND ACTUAL EXPENSES OR ANNUAL RATE 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 Trust's transfer
agent are not subject to the processing fee. See 'Purchase of Shares' and
'Redemption of Shares'.
MERRILL LYNCH SELECT PRICING(SERVICE MARK) SYSTEM
The Trust offers four classes of shares under the Merrill Lynch Select
Pricing(Service Mark) System. The shares of each class may be purchased at a
price equal to the next determined net asset value per share subject to the
sales charges and ongoing fee arrangements described below. Shares of Class A
and Class D are sold to investors choosing the initial sales charge
alternatives, and shares of Class B and Class C are sold to investors choosing
the deferred sales charge alternatives. The Merrill Lynch Select Pricing System
is used by more than 50 mutual funds advised by Merrill Lynch Asset Management,
L.P. ('MLAM' or the 'Investment Adviser') or its affiliate, Fund Asset
Management, L.P. ('FAM' an affiliate of MLAM). Funds advised by MLAM or FAM are
referred to herein as 'MLAM-advised mutual funds'.
3
<PAGE>
Each Class A, Class B, Class C or Class D share of the Trust represents an
identical interest in the investment portfolio of the Trust and has the same
rights, except that Class B, Class C and Class D shares bear the expenses of the
ongoing account maintenance fees and Class B and Class C shares bear the
expenses of the ongoing distribution fees and the additional incremental
transfer agency costs resulting from the deferred sales charge arrangements. The
deferred sales charges and account maintenance fees that are imposed on Class B
and Class C shares, as well as the account maintenance fees that are imposed on
the Class D shares, will be imposed directly against those classes and not
against all assets of the Trust and, accordingly, such charges will not affect
the net asset value of any other class or have any impact on investors choosing
another sales charge option. Dividends paid by the Trust for each class of
shares will be calculated in the same manner at the same time and will differ
only to the extent that account maintenanance 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 Trust. The
distribution-related revenues paid with respect to a class will not be used to
finance the distribution expenditures of another class. Sales personnel may
receive different compensation for selling different classes of shares.
The following table sets forth a summary of the distribution arrangements
for each class of shares under the Merrill Lynch Select Pricing(Service Mark)
System, followed by a more detailed description of each class and a discussion
of the factors that investors should consider in determining the method of
purchasing shares under the Merrill Lynch Select Pricing System that the
investor believes is the most beneficial 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
<S> <C> <C> <C> <C>
A Maximum 5.25% No No No
initial sales
charge(2)(3)
B CDSC for a period 0.25% 0.75% B shares convert
to 4 years, at to D shares
a rate of 4.0% automatically
during the first after
year, decreasing approximately
1.0% annually to eight years(4)
0.0%
C 1.0% CDSC for one 0.25% 0.75% No
year
D Maximum 5.25% 0.25% No No
initial sales
charge(3)
</TABLE>
(Footnotes on following page)
4
<PAGE>
- - - - - - ------------------
(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, if the initial sales charge is waived, 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 Trust are exchanged for Class B
shares of another MLAM-advised mutual fund, the conversion period applicable
to the Class B shares acquired in the exchange will apply, and the holding
period for the shares exchanged will be tacked onto the holding period for
the shares acquired.
Class A: Class A shares incur an initial sales charge when they are purchased
and bear no ongoing distribution or account maintenance fees. Class A
shares are offered to a limited group of investors and also will be
issued upon reinvestment of dividends on outstanding Class A shares.
Investors that currently own Class A shares in a shareholder account
are entitled to purchase additional Class A shares 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 the
Investment Adviser, 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 CDSC of 1.0% 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'.
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 Trust'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 Trust, 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
Trust 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'.
5
<PAGE>
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 Trust'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 Trust's Board of
Trustees 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
Trust'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 purchases will be subject to a CDSC of 1.0% if the shares are
redeemed within one year after purchase. The schedule of initial sales
charges and reductions for Class D shares is the same as the schedule
for Class A shares. Class D shares also will be issued upon conversion
of Class B shares as described above under 'Class B'. See 'Purchase of
Shares--Initial Sales Charge Alternatives--Class A and Class D Shares'.
The following is a discussion of the factors that investors should consider
in determining the method of purchasing shares under the Merrill Lynch Select
Pricing(Service Mark) 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 of the account maintenance fee imposed
on Class D shares. Investors qualifying for significantly reduced initial sales
charges may find the initial sales charge alternative particularly attractive
because similar sales charge reductions are not available with respect to the
deferred sales charges imposed in connection with purchases of Class B or Class
C shares. Investors not qualifying for reduced initial sales charges who expect
to maintain their investment for an extended period of time also may elect to
purchase Class A or Class D shares, because over time the accumulated ongoing
account maintenance and distribution fees on Class B or Class C shares may
exceed the initial sales charge and, in the case of Class D shares, the account
maintenance fee. Although some investors that previously purchased Class A
shares may no longer be eligible to purchase Class A shares of other
MLAM-advised mutual funds, those previously purchased Class A shares, together
with Class B, Class C and Class D share holdings, will count toward a right of
accumulation which may qualify the investor for reduced initial sales charges on
new initial sales charge purchases. In addition, the ongoing Class B and Class C
account maintenance and distribution fees will cause Class B and Class C shares
to have higher expense ratios, pay lower dividends and have lower total returns
than the initial sales charge shares. The ongoing Class D account maintenance
fees will cause Class D shares to have a higher expense ratio, pay lower
dividends and have a lower total return than Class A shares.
Deferred Sales Charge Alternatives. Because no initial sales charges are
deducted at the time of purchase, Class B and Class C shares provide the benefit
of putting all of the investor's dollars to work from the time the investment is
made. The deferred sales charge alternatives may be particularly appealing to
investors who do not qualify for a reduction in initial sales charges. Both
Class B and Class C shares are subject to ongoing account
6
<PAGE>
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
Trust 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 forego 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 connection
with the annual audits of the financial statements of the Trust by Deloitte &
Touche LLP, independent auditors. Financial statements for the year ended July
31, 1994 and the independent auditors' report thereon are included in the
Statement of Additional Information. The following per share data and ratios
have been derived from information provided in the Trust's audited financial
statements. Financial information is not presented for Class A shares for the
period August 2, 1985 to October 23, 1988 since no shares of that class were
outstanding during that period, and financial information is not presented for
Class C or Class D shares, since no shares of those classes are publicly issued
as of the date of this Prospectus. Further information about the performance of
the Trust is contained in the Trust's most recent annual report to shareholders
which may be obtained, without charge, by calling or by writing the Trust at the
telephone number or address on the front cover of this Prospectus.
<TABLE>
<CAPTION>
CLASS A CLASS B
---------------------------------------------------------------- -------------------------------
FOR THE YEAR ENDED JULY 31, FOR THE YEAR ENDED JULY 31,
---------------------------------------------------------------- -------------------------------
1994 1993 1992 1991 1990 1989+ 1994 1993 1992
--------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <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.... $ 14.07 $ 14.33 $ 15.38 $ 15.93 $ 13.63 $ 12.50 $ 14.02 $ 14.26 $ 15.30
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Investment
income--net.......... .22 .24 .34 .37 .39 .29 .05 .09 .13
Realized and unrealized
gain (loss) on
investments and
foreign currency
transactions--net(1)... 1.69 (.26) (.13) (.47) 2.29 1.03 1.70 (.24) (.08)
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Total from investment
operations............. 1.91 (.02) .21 (.10) 2.68 1.32 1.75 (.15) .05
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Less dividends and
distributions:
Investment
income--net.......... (.14) (.24) (.47) (.41) (.38) (.14) (.05) (.09) (.30)
Realized gain on
investments--net..... -- -- (.79) (.04) -- (.05) -- -- (.79)
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Total dividends and
distributions.......... (.14) (.24) (1.26) (.45) (.38) (.19) (.05) (.09) (1.09)
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Net asset value, end of
period................. $ 15.84 $ 14.07 $ 14.33 $ 15.38 $ 15.93 $ 13.63 $ 15.72 $ 14.02 $ 14.26
--------- --------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- --------- ---------
TOTAL INVESTMENT
RETURN:**
Based on net asset
value per share........ 13.69% (0.05)% 1.66% (0.57)% 19.99% 10.77% 12.52% (1.02)% 0.53%
--------- --------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- --------- ---------
RATIOS TO AVERAGE NET
ASSETS:
Expenses, net of
reimbursement and
excluding
distribution fees.... .92% .95% .97% .95% .93% .86%* .95% .99% 1.00%
--------- --------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Expenses............... .92% .95% .97% .95% .93% .86%* 1.95% 1.99% 2.00%
--------- --------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Investment
income--net.......... 1.39% 1.62% 1.82% 2.89% 3.18% 2.66%* .35% .60% .94%
--------- --------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- --------- ---------
SUPPLEMENTAL DATA:
Net assets, end of
period (in
thousands)........... $20,054 $12,087 $11,265 $6,699 $5,440 $1,864 $236,581 $208,113 $254,866
--------- --------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Portfolio turnover..... 54.87% 66.78% 31.43% 71.42% 57.21% 58.60% 54.87% 66.78% 31.43%
--------- --------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- --------- ---------
<CAPTION>
CLASS B
----------------------------------------------------------------
FOR THE YEAR ENDED JULY 31,
----------------------------------------------------------------
1991 1990 1989 1988 1987 1986++
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in
Net Asset Value
PER SHARE OPERATING
PERFORMANCE:
Net asset value,
beginning of period.... $ 15.84 $ 13.55 $ 13.89 $ 19.86 $ 10.24 $ 10.00
--------- --------- --------- --------- --------- ---------
Investment
income--net.......... .31 .33 .27 .16 .11 .11
Realized and unrealized
gain (loss) on
investments and
foreign currency
transactions--net(1)... (.56) 2.19 (.06) (4.00) 9.86 .20
--------- --------- --------- --------- --------- ---------
Total from investment
operations............. (.25) 2.52 .21 (3.84) 9.97 .31
--------- --------- --------- --------- --------- ---------
Less dividends and
distributions:
Investment
income--net.......... (.25) (.23) (.21) (.15) (.07) (.07)
Realized gain on
investments--net..... (.04) -- (.34) (1.98) (.28) --
--------- --------- --------- --------- --------- ---------
Total dividends and
distributions.......... (.29) (.23) (.55) (2.13) (.35) (.07)
--------- --------- --------- --------- --------- ---------
Net asset value, end of
period................. $ 15.30 $ 15.84 $ 13.55 $ 13.89 $ 19.86 $ 10.24
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
TOTAL INVESTMENT
RETURN:**
Based on net asset
value per share........ (1.61)% 18.79% 1.94% (20.74)% 100.16% 3.12%
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
RATIOS TO AVERAGE NET
ASSETS:
Expenses, net of
reimbursement and
excluding
distribution fees.... .99% .96% .90% .82% .82% .96%*
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
Expenses............... 1.99% 1.96% 1.90% 1.82% 1.82% 1.96%*
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
Investment
income--net.......... 1.85% 1.96% 1.83% 1.04% 1.04% 1.12%*
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
SUPPLEMENTAL DATA:
Net assets, end of
period (in
thousands)........... $322,502 $420,951 $481,108 $741,984 $1,190,935 $183,541
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
Portfolio turnover..... 71.42% 57.21% 58.60% 68.69% 68.82% 49.35%
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
</TABLE>
- - - - - - ------------------------
* Annualized.
** Total investment returns exclude the effects of sales loads.
+ Class A shares commenced operations on October 24, 1988.
++ Class B shares commenced operations on August 2, 1985.
(1) Foreign currency transaction amounts have been reclassified to conform to
1994 presentation.
8
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
The Trust is a non-diversified, open-end management investment company. The
investment objectives of the Trust are to achieve long-term growth of capital
and to protect the purchasing power of shareholders' capital by investing in a
portfolio of equity securities (e.g., common stocks and securities convertible
into common stocks) of domestic and foreign companies with substantial natural
resource assets. The Trust also may invest in debt, preferred or convertible
securities, the value of which is related to the market value of some natural
resource asset ('asset-based securities'). See 'Asset-Based Securities' below.
Management of the Trust will seek to identify companies or asset-based
securities it believes are attractively priced relative to the intrinsic value
of the underlying natural resource assets or are especially well positioned to
benefit during particular portions of inflationary cycles. IT IS EXPECTED THAT
WHEN MANAGEMENT OF THE TRUST ANTICIPATES SIGNIFICANT ECONOMIC, POLITICAL OR
FINANCIAL INSTABILITY, SUCH AS HIGH INFLATIONARY PRESSURES OR UPHEAVAL IN
FOREIGN CURRENCY EXCHANGE MARKETS, THE TRUST, IN SEEKING TO PROTECT THE
PURCHASING POWER OF SHAREHOLDERS' CAPITAL, MAY INVEST A MAJORITY OF ITS ASSETS
IN COMPANIES THAT EXPLORE FOR, EXTRACT, PROCESS OR DEAL IN GOLD OR IN ASSET-
BASED SECURITIES INDEXED TO THE VALUE OF GOLD BULLION. Such a switch in
investment strategies could require the Trust to liquidate portfolio securities
and incur transaction costs. There can be no assurance that the objectives of
the Trust will be realized.
The Trust expects that, under normal circumstances, at least 65% of its
total assets will be invested in the securities of issuers from at least three
different countries (including the United States). For purpose of this policy,
an issuer ordinarily will be considered to be located in the country under the
laws of which it is organized or where the primary trading market of its
securities is located. The Trust, however, may consider a company to be located
in a country, without reference to its domicile or to the primary trading market
of its securities, when at least 50% of its non-current assets, capitalization,
gross revenues or profits in any one of the two most recent fiscal years
represents (directly or indirectly through subsidiaries) assets or activities
located in such country. The Trust also may consider closed-end investment
companies to be located in the country or countries in which they primarily make
their portfolio investments. For the risks attendant to investing in foreign
securities see "Special Considerations" below.
Management attempts to achieve the investment objectives of the Trust by
seeking to identify securities of companies which, in its opinion, are
undervalued relative to the value of natural resource holdings of such companies
in light of current and anticipated economic or financial conditions. Natural
resource assets are materials derived from natural sources which have economic
value. The Trust will consider a company to have substantial natural resource
assets when, in management's opinion, the company's holdings of the assets are
of such magnitude, when compared to the capitalization, revenues or operating
profits of the company, that changes in the economic value of the assets will
affect the market price of the equity securities of such company. Generally, a
company has substantial natural resource assets when at least 50% of the
non-current assets, capitalization, gross revenues or operating profits of the
company in the most recent or current fiscal year are involved in or result
from, directly or indirectly through subsidiaries, exploring, mining, refining,
processing, fabricating, dealing in or owning natural resource assets. Examples
of natural resource assets include precious metals (e.g., gold, silver and
platinum), ferrous and nonferrous metals (e.g., iron, aluminum and copper),
strategic metals (e.g., uranium and titanium), hydrocarbons (e.g., coal, oil and
natural gas), timber land, undeveloped real property and agricultural
commodities. The Trust presently does not intend to invest directly in natural
resource assets or contracts related thereto.
Management of the Trust believes that, based upon past performance, the
securities of specific companies that hold different types of substantial
natural resource assets may move relatively independently of one another
9
<PAGE>
during different stages of inflationary cycles due to different degrees of
demand for, or market values of, their respective natural resource holdings
during particular portions of such inflationary cycles. The Trust's
fully-managed investment approach enables it to switch its emphasis among
various industry groups depending upon management's outlook with respect to
prevailing trends and developments. The Trust may seek to hedge its portfolio
partially by writing covered call options or purchasing put options on its
portfolio holdings.
The Trust at all times, except during defensive periods, will maintain at
least 65% of its total assets invested in companies with substantial natural
resource assets or in asset-based securities. Current income from dividends and
interest will not be a primary consideration in selecting securities. The Trust
reserves the right as a temporary defensive measure to hold short-term U.S.
Government securities, money market securities, including repurchase agreements,
or cash, in such proportions as, in the opinion of management, prevailing market
or economic conditions warrant. The Trust reserves the right to hold short-term
U.S. Government securities, money market securities, including repurchase
agreements, or cash for redemptions. Except during extraordinary periods, the
Trust would not expect that such securities or cash held for redemptions would
exceed 20% of its total assets.
The Trust may purchase securities that are not registered ('restricted
securities') under the Securities Act of 1933 (the 'Securities Act'), but can be
offered and sold to 'qualified institutional buyers' under Rule 144A under the
Securities Act. However, the Trust will not invest more than 10% of its net
assets in illiquid investments, which includes securities for which there is no
readily available market, securities subject to contractual restrictions on
resale, certain investments in asset-backed and receivable-backed securities and
restricted securities, unless the Trust's Board of Trustees continuously
determines, based on the trading markets for the specific restricted security,
that it is liquid. The Board of Trustees may adopt guidelines and delegate to
the Investment Adviser the daily function of determining and monitoring
liquidity of restricted securities. The Board of Trustees, 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 Trustees will carefully monitor the Trust'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 Trust to the extent that qualified
institutional buyers become for a time uninterested in purchasing these
restricted securities.
The investment policies of the Trust described in the first and
fifth paragraphs of this section are fundamental policies of the Trust and may
not be changed without the approval of the holders of a majority of the Trust's
outstanding voting securities, as defined in the Investment Company Act.
SPECIAL CONSIDERATIONS
Because of its emphasis on securities of companies with substantial natural
resource assets, the Trust should be considered a vehicle for diversification
and not as a balanced investment program.
There are no prescribed geographic limits on companies in which the Trust
may invest. Under certain economic, financial and political conditions, the
Trust may be invested primarily in foreign securities. Investments in securities
of foreign entities and denominated in foreign currencies involve risks not
typically involved in domestic investment, including fluctuations in foreign
exchange rates, future political and economic development and the possible
imposition of exchange controls or other foreign or United States governmental
laws or restrictions applicable to such investments. Since the Trust may invest
in securities denominated or quoted in currencies other than the United States
dollar, changes in foreign currency exchange rates may affect
10
<PAGE>
the value of investments in the portfolio and the unrealized appreciation or
depreciation of investments insofar as United States investors are concerned.
Changes in foreign currency exchange rates relative to the U.S. dollar will
affect the U.S. dollar value of the Trust's assets denominated in that currency
and the Trust's yield on such assets. Foreign currency exchange rates are
determined by forces of supply and demand on the foreign exchange markets. These
forces are, in turn, affected by the international balance of payments and other
economic and financial conditions, government intervention, speculation, and
other factors. Moreover, individual foreign economies may differ favorably or
unfavorably from the United States economy in such respects as growth of gross
national product, rate of inflation, capital reinvestment, resources,
self-sufficiency and balance of payments position.
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 investment in those
countries. There may be less publicly available information about a foreign
financial instrument than about a United States instrument, and foreign
entities may not be subject to accounting, auditing and financial reporting
standards and requirements comparable to those of United States entities. In
addition, certain foreign investments may be subject to foreign withholding
taxes. Investors will be able to deduct such taxes in computing their taxable
income or to use such amounts as credits against their United States income
taxes if more than 50% of the Trust's total assets at the close of any taxable
year consist of stock or securities in foreign corporations. See 'Additional
Information--Taxes'. Foreign financial markets, while growing in volume, have,
for the most part, substantially less volume than United States 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 in settlement could result in temporary periods when
assets of the Trust are uninvested and no return is earned thereon. The
inability of the Trust to make intended security purchases due to settlement
problems could cause the Trust to miss attractive investment opportunities.
Inability to dispose of portfolio securities due to settlement problems could
result either in losses to the Trust due to subsequent declines in value of
the portfolio security or, if the Trust has entered into a contract to sell
the security, could result in possible liability to the purchaser. Costs
associated with transactions in foreign securities are generally higher than
with transactions in United States securities. There is generally less
government supervision and regulation of exchanges, financial institutions and
issuers in foreign countries than there is in the United States.
As indicated above, under certain circumstances, the Trust may invest a
majority of its assets in gold-related companies or securities. Based on
historic experience, during periods of economic or financial instability the
securities of such companies may be subject to extreme price fluctuations,
reflecting the high volatility of gold prices during such periods. In
addition, the instability of gold prices may result in volatile earnings of
gold-related companies which, in turn, may affect adversely the financial
condition of such companies. Gold mining companies also are subject to the
risks generally associated with mining operations.
The major producers of gold include the Republic of South Africa, the
Commonwealth of Independent States, Canada, the United States, Brazil and
Australia. Sales of gold by the Commonwealth of Independent States are largely
unpredictable and often relate to political and economic considerations rather
than to market forces. Economic, social and political developments within South
Africa may affect significantly South African gold production.
11
<PAGE>
ASSET-BASED SECURITIES
The Trust may invest in debt securities, preferred stocks or convertible
securities, the principal amount, redemption terms or conversion terms of which
are related to the market price of some natural resource asset such as gold
bullion. For the purposes of the Trust's investment policies, these securities
are referred to as 'asset-based securities'. The Trust will purchase only
asset-based securities which are rated, or are issued by issuers that have
outstanding debt obligations rated, investment grade (that is AAA, AA, A or BBB
by Standard & Poor's Corporation ('S&P') or Aaa, Aa, A or Baa by Moody's
Investors Service, Inc. ('Moody's') or commercial paper rated A-1 by S&P or
Prime-1 by Moody's) or of issuers that Merrill Lynch Asset Management (the
'Investment Adviser') has determined to be of similar creditworthiness.
Obligations ranked in the fourth highest rating category, while considered
'investment grade,' may have certain speculative characteristics and may be more
likely to be downgraded than securities rated in the three highest rating
categories. If the asset-based security is backed by a bank letter of credit or
other similar facility, the Investment Adviser may take such backing into
account in determining the creditworthiness of the issuer. While the market
prices for an asset-based security and the related natural resource asset
generally are expected to move in the same direction, there may not be perfect
correlation in the two price movements. Asset-based securities may not be
secured by a security interest in or claim on the underlying natural resource
asset. The asset-based securities in which the Trust may invest may bear
interest or pay preferred dividends at below market (or even relatively nominal)
rates. As an example, assume gold is selling at a market price of $300 per ounce
and an issuer sells a $1,000 face amount gold related note with a seven-year
maturity, payable at maturity at the greater of either $1,000 in cash or the
then market price of three ounces of gold. If at maturity, the market price of
gold is $400 per ounce, the amount payable on the note would be $1,200. Certain
asset-based securities may be payable at maturity in cash at the stated
principal amount or, at the option of the holder, directly in a stated amount of
the asset to which it is related. In such instance, because the Trust presently
does not intend to invest directly in natural resource assets, the Trust would
sell the asset-based security in the secondary market, to the extent one exists,
prior to maturity if the value of the stated amount of the asset exceeds the
stated principal amount and thereby realize the appreciation in the underlying
asset.
OTHER INVESTMENT POLICIES AND PRACTICES
Writing Covered Call Options. The Trust is authorized to write, i.e.,
sell, covered call options on the equity securities in which it may invest and
to enter into closing purchase transactions with respect to certain of such
options. A call option is an option where the Trust, in return for a premium,
gives another party a right to buy specified securities owned by the Trust at a
specified future date and price set at the time of the contract. A call option
is considered covered where the writer of the option owns the underlying
securities. By writing covered call options, the Trust 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 Trust's
ability to sell the underlying security will be limited while the option is in
effect unless the Trust effects a closing purchase transaction. A closing
purchase transaction cancels out the Trust'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. The Trust may not
write covered call options in underlying securities in an amount exceeding 15%
of the market value of its total assets.
Purchasing Put Options. The Trust may purchase put options to hedge
against a decline in the market value of its equity securities. By buying a put
option the Trust has a right to sell the underlying security at the exercise
price, thus limiting the Trust's risk of loss through a decline in the market
value of the security until the
12
<PAGE>
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 Trust'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 Trust will not purchase put options on
securities if, as a result of such purchase, the aggregate cost of all
outstanding options on securities held by the Trust would exceed 5% of the
market value of the Trust's total assets.
Portfolio Transactions. In executing portfolio transactions, the Trust
seeks to obtain the best net results, taking into account such factors as price
(including the applicable brokerage commission or dealer spread), size of order,
difficulty of execution, operational facilities of the firm involved and the
firm's risk in positioning a block of securities. While the Trust generally
seeks reasonably competitive commission rates, the Trust does not necessarily
pay the lowest commission or spread available. The Trust contemplates that,
consistent with its policy of obtaining the best net results, it will place
orders for transactions with a number of brokers and dealers, including Merrill
Lynch, an affiliate of the Investment Adviser. Subject to obtaining the best
price and execution, brokers who provide supplemental investment research to the
Trust may receive orders for transactions by the Trust. Information so received
will be in addition to, and not in lieu of, the services required to be
performed by the Investment Adviser and the expenses of the Investment Adviser
will not necessarily be reduced as a result of the receipt of such supplemental
information. See 'Management of the Trust--Management and Advisory
Arrangements'. In addition, consistent with the Rules of Fair Practice of the
National Association of Securities Dealers, Inc., management of the Trust may
consider sales of shares of the Trust as a factor in the selection of brokers or
dealers to execute portfolio transactions for the Trust. It is expected that the
majority of the shares of the Trust will be sold by Merrill Lynch.
The Trust 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 securities
exchanges are generally higher than in the United States, although the Trust
will endeavor to achieve the best net results in effecting such transactions.
Forward Foreign Exchange Transactions. The Trust is authorized 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 Trust'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 Trust accruing in connection with the purchase and sale of its portfolio
securities, the sale and redemption of shares of the Trust or the payment of
dividends and distributions by the Trust. Position hedging is the sale of
forward foreign currency with respect to portfolio security positions
denominated or quoted in such foreign currency. The Trust will not speculate in
forward foreign exchange. The Trust will not attempt to hedge all of its foreign
portfolio positions. The Trust may not commit more than 15% of its total assets
to position hedging contracts.
Repurchase Agreements. The Trust may invest in securities pursuant to
repurchase agreements of not more than seven days' duration. Repurchase
agreements may be entered into only with a member bank of the Federal Reserve
System or a primary dealer in U.S. Government securities or an affiliate
thereof. Under such agreements, the bank or primary dealer or an affiliate
thereof agrees, upon entering into the contract, to repurchase the
13
<PAGE>
security at a mutually agreed upon time and price, thereby determining the yield
during the term of the agreement. This results in a fixed rate of return
insulated from market fluctuations during such period. In all instances, the
Trust takes possession of the underlying securities when investing in repurchase
agreements.
Lending of Portfolio Securities. The Trust is authorized to lend
securities from its portfolio, with a value not exceeding 33 1/3% of its total
assets, to banks, brokers and other financial institutions if it receives
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 this loan,
the Trust receives income on both the loaned securities and the collateral and
may thereby increase its yield.
Investment Restrictions. The Trust 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 Trust's outstanding voting securities, as defined
in the Investment Company Act. Among the more significant restrictions (except
when management of the Trust anticipates significant economic, political or
financial instability, such as high inflationary pressures or upheaval in the
foreign currencies exchange markets, referred to below as 'Special Periods'),
the Trust may not:
o Invest in the securities of any one issuer if, immediately after
and as a result of such investment, the value of the holdings of
the Trust in the securities of such issuer exceed 5% of the Trust's
total assets, taken at market value, except that such restriction
shall not apply to securities issued or guaranteed by the U.S.
Government or any of its agencies or instrumentalities; or
o Invest in the securities of any single issuer if, immediately after
and as a result of such investment, the Trust owns more than 10% of
the outstanding voting securities of such issuer; or
o Invest more than 25% of its total assets, taken at market value at
the time of each investment, in the securities of issuers in any
particular industry.
During periods when management of the Trust anticipates significant
economic, political or financial instability ('Special Periods'), the Trust is
not required to comply with the foregoing diversification and concentration
restrictions in all respects. As indicated above, it is expected that during
Special Periods, the Trust will concentrate its investments (i.e., invest more
than 25% of its total assets) in gold-related companies. Normally, the Trust
will diversify its assets in accordance with the 5% and 10% requirements set
forth above. During Special Periods, the Trust will not be required to meet such
diversification requirements and, accordingly, it has registered as a
'non-diversified' investment company under the Investment Company Act. However,
during Special Periods, the Trust will be required to limit its investments to
the extent required by the diversification requirements of the Internal Revenue
Code. To qualify as a regulated investment company under the Internal Revenue
Code, the Trust, at the close of each of its fiscal quarters and with respect to
50% of its assets, (i) may not have more than 5% of its total assets invested in
the securities of any one issuer (except obligations of the U.S. Government, its
agencies or instrumentalities) and (ii) may not own more than 10% of the
outstanding voting securities of any one issuer. The Trust does not intend to
notify investors either as to the commencement or termination of any Special
Period, except in its regular reports to shareholders or as may be required in
regulatory filings. As of the date of this Prospectus, management of the Trust
had not determined that a Special Period existed.
In addition, nothing in the foregoing investment restrictions shall be
deemed to prohibit the Trust from purchasing the securities of any issuer
pursuant to the exercise of subscription rights distributed to the Trust by the
issuer, except that no such purchase may be made if as a result the Trust will
fail to meet the diversification requirements of the Internal Revenue Code.
14
<PAGE>
The Board of Trustees of the Trust, at a meeting held on August 4, 1994,
approved certain changes to the fundamental and non-fundamental investment
restrictions of the Trust. These changes were proposed in connection with the
creation of a set of standard fundamental and non-fundamental investment
restrictions that would be adopted, subject to shareholder approval, by all of
the non-money market mutual funds advised by MLAM or FAM. The proposed uniform
investment restrictions are designed to provide each of these funds, including
the Trust, with as much investment flexibility as possible under the Investment
Company Act and applicable state securities regulations, help promote
operational efficiencies and facilitate monitoring of compliance. The investment
objectives and policies of the Trust will be unaffected by the adoption of the
proposed investment restrictions.
The full text of the proposed investment restrictions is set forth under
'Investment Objectives and Policies--Proposed Uniform Investment Restrictions'
in the Statement of Additional Information. Shareholders of the Trust are
currently considering whether to approve the proposed revised investment
restrictions. If such shareholder approval is obtained, the Trust's current
investment restrictions will be replaced by the proposed restrictions, and the
Trust's Prospectus and Statement of Additional Information will be supplemented
to reflect such change.
MANAGEMENT OF THE TRUST
TRUSTEES
The Trustees of the Trust consist of six individuals, five of whom are not
'interested persons' of the Trust as defined in the Investment Company Act. The
Trustees of the Trust are responsible for the overall supervision of the
operations of the Trust and perform the various duties imposed on the directors
of investment companies by the Investment Company Act.
The Trustees of the Trust are:
ARTHUR ZEIKEL*--President and Chief Investment Officer of the Investment
Adviser and FAM; President and Director of Princeton Services, Inc., Executive
Vice President of Merrill Lynch & Co., Inc. ('ML&Co.') and Merrill Lynch;
Director of the Distributor.
DONALD CECIL--Special Limited Partner of Cumberland Partners (an investment
partnership).
M. COLYER CRUM--James R. Williston Professor of Investment Management,
Harvard Business School.
EDWARD H. MEYER--Chairman of the Board of Directors, President and Chief
Executive Officer of Grey Advertising Inc.
JACK B. SUNDERLAND--President and Director of American Independent Oil
Company, Inc. (an energy company).
J. THOMAS TOUCHTON--Managing Partner of The Witt-Touchton Company (a
private investment partnership).
MANAGEMENT AND ADVISORY ARRANGEMENTS
The Investment Adviser, which is owned and controlled by ML&Co., a
financial services holding company, acts as the investment adviser for the Trust
and provides the Trust with management and investment advisory services. The
Investment Adviser or its affiliate, FAM, acts as the investment adviser for
more than 100
- - - - - - ------------------
* Interested person, as defined in the Investment Company Act, of the Trust.
15
<PAGE>
registered investment companies. The Investment Adviser also provides investment
advisory services to individual and institutional accounts. As of August 31,
1994, the Investment Adviser and its affiliate had a total of $165.7 billion in
investment company and other portfolio assets under management, including
accounts of certain affiliates of the Investment Adviser.
The investment advisory agreement with the Investment Adviser (the
'Investment Advisory Agreement') provides that, subject to the direction of the
Trustees of the Trust, the Investment Adviser is responsible for the actual
management of the Trust'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 Trustees. The Investment Adviser provides the portfolio
manager for the Trust who considers analyses from various sources (including
brokerage firms with which the Trust does business), makes the necessary
investment decisions and places transactions accordingly. The Investment Adviser
also is obligated to perform certain administrative and management services for
the Trust and is obligated to provide all of the office space, facilities,
equipment and personnel necessary to perform its duties under the Investment
Advisory Agreement.
The Trust pays the Investment Adviser a monthly fee at the annual rate of
0.60% of the average daily net assets of the Trust. For the fiscal year ended
July 31, 1994, the Investment Adviser earned a fee of $1,351,581 (based on
average net assets of approximately $225.9 million).
The Investment Advisory Agreement obligates the Trust to pay certain
expenses incurred in its operations including, among other things, the
investment advisory fee, legal and audit fees, registration fees, unaffiliated
Trustees' fees and expenses, custodian and transfer agency fees, accounting
costs, the costs of issuing and redeeming shares and certain of the costs of
printing proxies, shareholder reports, prospectuses and statements of additional
information. Accounting services are provided for the Trust by the Investment
Adviser and the Trust reimburses the Investment Adviser for its costs in
connection with such services. For the fiscal year ended July 31, 1994, the
Trust paid the Investment Adviser $67,082 for such accounting services. For the
fiscal year ended July 31, 1994, the ratio of total expenses (excluding
distribution fees) to average net assets was 0.92% for Class A shares and 0.95%
for Class B shares; no Class C or Class D shares had been issued during that
year.
Peter A. Lehman is primarily responsible for the day-to-day management of
the Trust's portfolio. Mr. Lehman has been a Vice President of the Investment
Adviser since 1994 and an employee of the Investment Adviser since 1992.
TRANSFER AGENCY SERVICES
Financial Data Services, Inc. (the 'Transfer Agent'), which is a
wholly-owned subsidiary of ML&Co., acts as the Trust'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 Trust pays the Transfer
Agent a fee of $11.00 per Class A or Class D shareholder account and $14.00 per
Class B or Class C shareholder account and the Transfer Agent is entitled to
reimbursement for out-of-pocket expenses incurred by the Transfer Agent under
the Transfer Agency Agreement. For the fiscal year ended July 31, 1994, the
total fee paid by the Trust to the Transfer Agent pursuant to the Transfer
Agency Agreement was $381,487. At August 31, 1994, the Fund had 1,951 Class A
shareholder accounts, 32,339 Class B shareholder accounts, no Class C
shareholder accounts and no Class D shareholder accounts. At this level of
accounts, the annual fee payable to the Transfer Agent would aggregate
approximately $474,207 plus out-of-pocket expenses.
16
<PAGE>
PURCHASE OF SHARES
Merrill Lynch Funds Distributor, Inc. (the 'Distributor'), an affiliate
both of MLAM and Merrill Lynch, acts as the Distributor of the shares of the
Trust. Shares of the Trust are offered continuously for sale by the Distributor
and other eligible securities dealers (including Merrill Lynch). Shares of the
Trust 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 Trust is offering its shares in four classes at a public offering price
equal to the next determined net asset value per share plus sales charges
imposed either at the time of purchase or on a deferred basis depending upon the
class of shares selected by the investor under the Merrill Lynch Select Pricing
System, as described below. The applicable offering price for purchase orders is
based on the net asset value of the Trust next determined after receipt of the
purchase order by the Distributor. As to purchase orders received by securities
dealers prior to 4:15 P.M., New York time, which includes orders received after
the determination of net asset value on the previous day, the applicable
offering price will be based on the net asset value determined as of 4:15 P.M.,
New York time, on the day the orders are placed with the Distributor, provided
the orders are received by the Distributor prior to 4:30 P.M., New York time, on
that day. If the purchase orders are not received prior to 4:30 P.M., New York
time, such orders shall be deemed received on the next business day. The Trust
or the Distributor may suspend the continuous offering of the Trust'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 Trust. 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.
The Trust issues four classes of shares under the Merrill Lynch Select
Pricing(Service Mark) 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 Trust 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
Pricing System is set forth under 'Merrill Lynch Select Pricing(Service Mark)
System' on page 3.
Each Class A, Class B, Class C and Class D share of the Trust represents
identical interests in the investment portfolio of the Trust and has the same
rights, except that Class B, Class C and Class D shares bear the expenses of the
ongoing account maintenance fees, and Class B and Class C shares bear the
expenses of the ongoing distribution fees and the additional incremental
transfer agency costs resulting from the deferred sales charge arrangements. The
deferred sales charges and account maintenance fees that are imposed on Class B
and Class C shares, as well as the account maintenance fees that are imposed on
Class D shares, will be imposed directly against those classes and not against
all assets of the Trust and, accordingly, such charges will not affect the net
asset value of any other class or have any impact on investors choosing another
sales charge option.
17
<PAGE>
Dividends paid by the Trust for each class of shares will be calculated in the
same manner at the same time and will differ only to the extent that account
maintenance and distribution fees and any incremental transfer agency costs
relating to a particular class are borne exclusively by that class. Class B,
Class C and Class D shares each have exclusive voting rights with respect to the
Rule 12b-1 distribution plan adopted with respect to such class pursuant to
which account maintenance and/or distribution fees are paid. See 'Distribution
Plans' below. Each class has different exchange privileges. See 'Shareholder
Services--Exchange Privilege'.
Investors should understand that the purpose and function of the initial
sales charges with respect to Class A and Class D shares are the same as those
of the deferred sales charges with respect to Class B and Class C shares in that
the sales charges applicable to each class provide for the financing of the
distribution of the shares of the Trust. 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 arrrangements
for each class of shares under the Merrill Lynch Select Pricing(Service Mark)
System.
<TABLE>
<CAPTION>
ACCOUNT
MAINTENANCE DISTRIBUTION
CLASS SALES CHARGE(1) FEE FEE CONVERSION FEATURE
- - - - - - ----- ------------------------- ----------- ------------ -------------------
<S> <C> <C> <C> <C>
A Maximum 5.25% initial No No No
sales charge(2)(3)
B CDSC for a period of 0.25% 0.75% B shares convert to
4 years, at a rate D shares
of 4.0% during the first automatically
year, after
decreasing 1.0% annually approximately
to 0.0% eight years(4)
C 1.0% CDSC for one year 0.25% 0.75% No
D Maximum 5.25% initial 0.25% No No
sales charge(3)
</TABLE>
(1) Initial sales charges are imposed at the time of purchase as a percentage of
the offering price. CDSCs may be imposed if the redemption occurs within the
applicable CDSC time period. The charge will be assessed on an amount equal
to the lesser of the proceeds of redemption or the cost of the shares being
redeemed.
(2) Offered only to eligible investors. See 'Initial Sales Charge
Alternatives--Class A and Class D Shares--Eligible Class A Investors'.
(3) Reduced for purchases of $25,000 or more. Class A and Class D share
purchases of $1,000,000 or more may not be subject to an initial sales
charge but instead will be subject to a 1.0% CDSC for one year.
(4) The conversion period for 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 Trust 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.
18
<PAGE>
INITIAL SALES CHARGE ALTERNATIVES--CLASS A AND CLASS D SHARES
Investors choosing the initial sales charge alternatives who are eligible
to purchase Class A shares should purchase Class A rather than Class D shares
because there is an account maintenance fee imposed on Class D shares.
The public offering price of Class A and Class D shares for purchasers
choosing the initial sales charge alternatives is the next determined net asset
value plus varying sales charges (i.e., sales loads), as set forth below:
<TABLE>
<CAPTION>
SALES LOAD AS
PERCENTAGE* DISCOUNT TO
SALES LOAD AS OF THE NET SELECTED DEALERS
PERCENTAGE OF AMOUNT AS PERCENTAGE OF
AMOUNT OF PURCHASE OFFERING 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 401(k) 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 Trust 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 July 31, 1994, the Trust sold 1,169,348 Class A shares for
aggregate net proceeds of $17,964,584. The gross sales charges for the sale of
Class A shares of the Trust for that year were $177,162, of which $12,408 and
$164,754 were received by the Distributor and Merrill Lynch, respectively. For
the fiscal year ended July 31, 1994, 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.
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 in a
shareholder account, including participants in the Merrill Lynch
Blueprint(Service Mark) Program, are entitled to purchase additional Class A
shares 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 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
19
<PAGE>
eligible to purchase Class A shares at net asset value are participants in
certain investment programs including TMA(Service Mark) 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 Trustees of the Trust.
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 Trust also may purchase Class A shares of the
Trust if certain conditions set forth in the Statement of Additional Information
are met. For example, Class A shares of the Trust 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 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
Blueprint(Service Mark) Program.
Additional information concerning these reduced initial sales charges 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,
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 Trust 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
20
<PAGE>
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 Trust 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 Trust 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 Trust 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 Trust, 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
Trust 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 Trust
exercising the exchange privilege described under 'Shareholder
Services--Exchange Privilege' will continue to be subject to the Trust's CDSC
schedule if such schedule is higher than the CDSC schedule relating to the Class
B shares acquired as a result of the exchange.
Contingent Deferred Sales Charges--Class B Shares. Class B shares which
are redeemed within four years of purchase may be subject to a CDSC at the rates
set forth below charged as a percentage of the dollar amount subject thereto.
The charge will be assessed on an amount equal to the lesser of the proceeds of
redemption or the cost of the shares being redeemed. Accordingly, no CDSC will
be imposed on increases in net asset value above the initial purchase price. In
addition, no CDSC will be assessed on shares derived from reinvestment of
dividends or capital gains distributions.
21
<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 July 31, 1994, the Distributor received CDSCs of
$188,148 with respect to redemptions of Class B shares, all of which were paid
to Merrill Lynch.
In determining whether a CDSC is applicable to a redemption, the
calculation will be determined in the manner that results in the lowest possible
rate being charged. Therefore, it will be assumed that the redemption is first
of shares held for over four years or shares acquired pursuant to reinvestment
of dividends or distributions and then of shares held longest during the
four-year period. The charge will not be applied to dollar amounts representing
an increase in the net asset value since the time of purchase. A transfer 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 the 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).
The Class B CDSC is waived on redemptions of shares in connection with
certain post-retirement withdrawals from an Individual Retirement Account
('IRA') or other retirement plan or following the death or disability (as
defined in the Internal Revenue Code of 1986, as amended) of a shareholder. The
Class B CDSC also is waived on redemptions of shares by certain eligible 401(a)
and eligible 401(k) plans and in connection with certain group plans placing
orders through the Merrill Lynch Blueprint(Service Mark) Program. The CDSC also
is waived for any Class B shares which are purchased by eligible 401(k) or
eligible 401(a) plans which are rolled over into a Merrill Lynch or Merrill
Lynch Trust Company custodied IRA and held in such account at the time of
redemption. The Class B CDSC also is waived for any Class B shares which are
purchased by a Merrill Lynch rollover IRA that was funded by a rollover from a
terminated 401(k) plan managed by the MLAM Private Portfolio Group and held in
such account at the time of redemption. 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
22
<PAGE>
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 Trust. Class D shares are subject to an ongoing
account maintenance fee of 0.25 % of net assets but are not subject to the
distribution fee that is borne by Class B shares. Automatic conversion of Class
B shares into Class D shares will occur at least once each month (on the
'Conversion Date') on the basis of the relative net asset values of the shares
of the two classes on the Conversion Date, without the imposition of any sales
load, fee or other charge. Conversion of Class B shares to Class D shares will
not be deemed a purchase or sale of the shares for Federal income tax purposes.
In addition, shares purchased through reinvestment of dividends on Class B
shares also will convert automatically to Class D shares. The Conversion Date
for dividend reinvestment shares will be calculated taking into account the
length of time the shares underlying such dividend reinvestment shares were
outstanding. If at a Conversion Date the conversion of Class B shares to Class D
shares of the Fund in a single account will result in less than $50 worth of
Class B shares being left in the account, all of the Class B shares of the Fund
held in the account on the Conversion Date will be converted to Class D shares
of the Fund.
Share certificates for Class B shares of the Fund to be converted must be
delivered to the Transfer Agent at least one week prior to the Conversion Date
applicable to those shares. In the event such certificates are not received by
the Transfer Agent at least one week prior to the Conversion Date, the related
Class B shares will convert to Class D shares on the next scheduled Conversion
Date after such certificates are delivered.
In general, Class B shares of equity MLAM-advised mutual funds will convert
approximately eight years after initial purchase, and Class B shares of taxable
and tax-exempt fixed income MLAM-advised mutual funds will convert approximately
ten years after initial purchase. If, during the Conversion Period, a
shareholder exchanges Class B shares with an eight-year Conversion Period for
Class B shares with a ten-year Conversion Period, or vice versa, the Conversion
Period applicable to the Class B shares acquired in the exchange will apply, and
the holding period for the shares exchanged will be tacked onto the holding
period for the shares acquired.
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.
23
<PAGE>
DISTRIBUTION PLANS
The Trust 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 Trust 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 Trust 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 Trust 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
Trust 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 Trust 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 Trust,
including payments to financial consultants for selling Class B and Class C
shares of the Trust. 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 Trust in that the deferred sales charges provide for the financing
of the distribution of the Trust's Class B and Class C shares.
Prior to July 6, 1993, the Trust paid the Distributor an ongoing
distribution fee, accrued daily and paid monthly, at the annual rate of 1.0% of
average daily net assets of the Class B shares of the Trust under a distribution
plan previously adopted by the Trust (the 'Prior Plan') to compensate the
Distributor and Merrill Lynch for providing account maintenance and
distribution-related activities and services to Class B shareholders. The fee
rate payable and the services provided under the Prior Plan are identical to the
aggregate fee rate payable and the services provided under the Class B
Distribution Plan, the difference being that the account maintenance and
distribution services have been unbundled.
For the year ended July 31, 1994, the Trust paid the Distributor account
maintenance fees of $526,722 and distribution fees of $1,580,166 under the Class
B Distribution Plan. The Trust did not begin to offer shares of Class C or Class
D publicly until the date of this Prospectus. Accordingly, no payments have been
made pursuant to the Class C or Class D Distribution Plans prior to the date of
this Prospectus.
The payments under the Distribution Plans are based on 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 Board of Trustees each year 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, CDSCs and
certain other related revenues, and expenses consist
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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, 1993, the fully allocated accrual
expenses incurred by the Distributor and Merrill Lynch with respect to Class B
shares exceeded fully allocated accrual revenues for such period by
approximately $5,379,000 (2.66% of Class B net assets at that date). As of
December 31, 1993, direct cash revenues for the period since commencement of the
offering of Class B shares exceeded direct cash expenses by $33,707,266 (16.69%
of Class B net assets at that date). As of July 31, 1994, direct cash revenues
for the period since the commencement of operations exceeded direct cash
expenses by $34,547,921 (14.60% of Class B net assets at that date).
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 Trust, the maximum sales charge rule limits
the aggregate of distribution fee payments and CDSCs payable by the Trust 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 waiving the interest charges at any time.
To the extent payments would exceed the voluntary maximum, the Trust will not
make further payments of the distribution fee with respect to Class B shares,
and any CDSCs will be paid to the Trust rather than to the Distributor, however,
the Trust will continue to make payments of the account maintenance fee. In
certain circumstances the amount payable pursuant to the voluntary maximum may
exceed the amount payable under the NASD formula. In such circumstances, payment
in excess of the amount payable under the NASD formula will not be made.
------------------------------
The Trust has no obligation with respect to distribution and/or account
maintenance-related expenses incurred by the Distributor and Merrill Lynch in
connection with the Class B, Class C and Class D shares, and there is no
assurance that the Board of Trustees of the Trust 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 Trustees will be asked to take into consideration
expenses incurred in connection with the 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'.
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REDEMPTION OF SHARES
The Trust is required to redeem for cash all shares of the Trust 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 on redemption all dividends
reinvested through the date of redemption. The value of shares at the time of
redemption may be more or less than the shareholder's cost, depending on the
market value of the securities held by the Trust at such time.
REDEMPTION
A shareholder wishing to redeem shares may do so without charge 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' as
such is defined in Rule 17Ad-15 under the Securities Exchange Act of 1934, as
amended, the existence and validity of it 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 Trust may be requested to redeem shares for which it
has not yet received good payment. The Trust 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 United States bank) has been collected for the
purchase of such shares, which will not exceed 10 days.
REPURCHASE
The Trust will also repurchase shares through a shareholder's listed
securities dealer. The Trust 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 such request is received by the
Trust from such dealer not later than 4:30 P.M., New York time, on the same day.
Dealers have the responsibility of submitting such repurchase requests to the
Trust not later than 4:30 P.M., New York time, 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 Trust (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 shareholder for
transmitting the notice of repurchase to the Trust. 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 Trust reserves the right to reject any order
for repurchase, which right of rejection might
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affect adversely shareholders seeking redemption through the repurchase
procedure. A shareholder whose order for repurchase is rejected by the Trust,
however, 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 Trust 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 Trust offers a number of shareholder services and investment plans
designed to facilitate investment in shares of the Trust. 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 how
to change options with respect thereto, can be obtained from the Trust by
calling the telephone number on the cover page hereof or from the Distributor or
Merrill Lynch.
Investment Account. Each shareholder whose account is maintained at the
Transfer Agent has an Investment Account and will receive 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 also will show any other activity in the account since the preceding
statement. Shareholders will receive separate confirmations for each purchase or
sale transaction other than automatic investment purchases and the reinvestment
of ordinary income dividends and long-term capital gains distributions.
Shareholders may make additions to their Investment Account at any time by
mailing a check directly to the Transfer Agent. 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 may be opened at the Transfer Agent. Shareholders considering
transferring their Class A or Class D shares from Merrill Lynch to another
brokerage firm or financial institution should be aware that, if the firm to
which the Class A or Class D shares are to be transferred will not take delivery
of shares of the Trust, a shareholder either must redeem the Class A or Class D
shares (paying any applicable CDSC) so that the cash proceeds can be transferred
to the account at the new firm or such shareholder must continue to maintain an
Investment Account at the Transfer Agent for those Class A or Class D shares.
Shareholders interested in transferring their Class B or Class C shares from
Merrill Lynch and who do not wish to have an Investment Account maintained for
such shares at the Transfer Agent may request their new brokerage firm to
maintain such shares in an account registered in the name of the brokerage firm
for the benefit of the shareholder at the Transfer Agent. Shareholders
considering transferring a tax-deferred retirement account such as an IRA 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 Trust, a shareholder must either redeem the
shares (paying any applicable CDSC) so that the cash proceeds can be transferred
to the account at the new firm, or such shareholder must continue to maintain a
retirement account at Merrill Lynch for those shares.
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Exchange Privilege. Shareholders of each class of shares of the Trust 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 Pricing System, Class A shareholders may
exchange Class A shares of the Trust 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 will be exchangeable with shares of the
same class of other MLAM-advised mutual funds.
Shares of the Trust which are subject to a CDSC will be 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 Trust. 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 Trust 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 will be 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 Trust exercising the exchange privilege will
continue to be subject to the Trust'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 Trust acquired through use of the exchange privilege will be
subject to the Trust's CDSC schedule if such schedule is higher than the CDSC
schedule relating to the Class B shares of the MLAM-advised mutual fund from
which the exchange has been made.
Exercise of the exchange privilege is treated as a sale for Federal income
tax purposes. For further information, see 'Shareholder Services--Exchange
Privilege' in the Statement of Additional Information.
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The Trust'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 Trust 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 Trust being acquired in the
exchange under the MFA program.
Automatic Reinvestment of Dividends and Capital Gains Distributions. All
dividends and capital gains distributions are reinvested automatically in full
and fractional shares of the Trust, without sales charge, at the net asset value
per share next determined on the ex-dividend date of such dividend or
distribution. A shareholder may at any time, by written notification or by
telephone (1-800-MER-FUND) to the Transfer Agent, elect to have subsequent
dividends or both dividends and capital gains distributions paid in cash, rather
than reinvested, in which event payment will be mailed on or about the payment
date. Cash payments can also be directly deposited to the shareholder's bank
account. No CDSC will be imposed on redemption of shares issued as a result of
the automatic reinvestment of dividends or capital gains distributions.
Systematic Withdrawal Plans. A Class A or Class D shareholder may elect to
receive systematic withdrawal payments from 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(Registered), CBA(Registered) or Retirement
Account may elect to have shares redeemed on a monthly, bimonthly, quarterly,
semiannual or annual basis through the Systematic Redemption Program, subject to
certain conditions.
Automatic Investment Plans. Regular additions of Class A, Class B, Class C
or Class D shares may be made to an investor's Investment Account by prearranged
charges of $50 or more to his regular bank account. Investors who maintain
CMA(Registered) accounts may arrange to have periodic investments made in the
Trust in their CMA(Registered) accounts or in certain related accounts in
amounts of $100 or more ($1 for retirement plans) through the CMA(Registered)
Automated Investment Program.
PORTFOLIO TRANSACTIONS AND BROKERAGE
The Investment Adviser is responsible for making the Trust's portfolio
decisions, placing the Trust's brokerage business, evaluating the reasonableness
of brokerage commissions and negotiating the amount of any commissions paid,
subject to policies established by the Trust's Trustees and officers. The Trust
has no obligation to deal with any broker or group of brokers in the execution
of transactions in portfolio securities. Orders for transactions in portfolio
securities are placed for the Trust with a number of brokers and dealers,
including Merrill Lynch. In placing orders, it is the policy of the Trust to
obtain the most favorable net results, taking into account various factors,
including price, commissions, if any, size of the transaction and difficulty of
execution. Where practicable, the Investment Adviser surveys a number of brokers
and dealers in connection with proposed portfolio transactions and selects the
broker or dealer which offers the Trust best price and execution or other
services which are of benefit to the Trust. Securities firms also may receive
brokerage commissions on transactions including covered call options written by
the Trust and the sale of underlying securities upon the exercise of such
options.
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The Trust does not use any particular broker or dealer, and brokers who
provide supplemental investment research to the Investment Adviser may receive
orders for transactions by the Trust. Such supplemental research services
ordinarily consist of assessments and analyses of the business or prospects of a
company, industry or economics sector. 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. If in the judgment
of the Investment Adviser the Trust will be benefited by supplemental research
services, the Investment Adviser is authorized to pay brokerage commissions to a
broker furnishing such services which are in excess of commissions which another
broker may have charged for effecting the same transaction. The expenses of the
Investment Adviser will not necessarily be reduced as a result of the receipt of
such supplemental information, and the Investment Adviser may use such
information in servicing its other accounts.
PERFORMANCE DATA
From time to time the Trust 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 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 Trust 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, distribution charges and any incremental transfer agency costs relating to
each class of shares will be borne exclusively by that class. The Trust will
include performance data for all classes of shares of the Trust in any
advertisement or information including performance data of the Trust.
The Trust also may quote total return and aggregate total return
performance data for various specified time periods. Such data will be
calculated substantially as described above, except that (1) the rates of return
calculated will not be average annual rates, but rather, actual annual,
annualized or aggregate rates of return and (2) the maximum applicable sales
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 than average annual total
return data since the aggregate rates of return reflect compounding over a
longer period of time. In advertisements directed to investors whose purchases
are subject to waiver of the CDSC in the case of Class B and Class C shares
(such as investors in certain retirement plans) or reduced sales charges in the
case of Class A and Class D shares, performance data may take into account the
reduced, and not the maximum, sales charge or may not take into account the CDSC
and therefore may reflect greater total return since, due to the reduced sales
charges or waiver of the CDSC, a lower amount of expenses may be deducted. See
'Purchase of Shares'. The Trust's total return may be expressed either as a
percentage or
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as a dollar amount in order to illustrate the effect of such total return on a
hypothetical $1,000 investment in the Trust at the beginning of each specified
period.
Total return figures are based on the Trust's historical performance and
are not intended to indicate future performance. The Trust's total return will
vary depending on market conditions, the securities comprising the Trust's
portfolio, the Trust'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 Trust will fluctuate and an investor's shares, when redeemed,
may be worth more or less than their original cost.
On occasion, the Trust may compare its performance to that of the Standard
& Poor's 500 Composite Stock Price Index, the Dow Jones Industrial Average or
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 and Fortune Magazine. As with other
performance data, performance comparisons should not be considered
representative of the Trust's relative performance for any future period.
ADDITIONAL INFORMATION
DIVIDENDS AND DISTRIBUTIONS
It is the Trust's intention to distribute all its net investment income, if
any. Dividends from such net investment income are paid semi-annually. All net
realized long-or short-term capital gains, if any, are distributed to the
Trust's shareholders at least annually. Premiums from expired call options
written by the Trust and net gains from closing purchase transactions are
treated as short-term capital gains for Federal income tax purposes. The per
share dividends and distributions on each class of shares will be reduced as a
result of any account maintenance, distribution and transfer agency fees
applicable to that class. See 'Additional Information--Determination of Net
Asset Value'. Dividends and distributions may be reinvested automatically in
shares of the Trust at net asset value without 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 Trust or received in cash.
DETERMINATION OF NET ASSET VALUE
The net asset value of the shares of all classes of the Trust is determined
once daily as of 4:15 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 per share is computed by dividing
the sum of the market value of the securities held by the Trust 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, rounded to the nearest cent. Expenses, including the
investment advisory fees 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 generally will be higher
than the per share net asset value of shares of the other classes, reflecting
the daily expense accruals of the account maintenance, distribution and higher
transfer agency fees applicable with respect to Class B and Class C shares and
the daily expense accruals of the account maintenance fees applicable with
respect to Class D shares;
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moreover, the per share net asset value of Class D shares generally will be
higher than the per share net asset value of Class B and Class C shares,
reflecting the daily expense accruals of the distribution and higher transfer
agency fees applicable with respect to Class B and Class C shares. It is
expected, however, that the per share net asset value of the classes will tend
to converge immediately after the payment of dividends or distributions, which
will differ by approximately the amount of the expense accrual differentials
between the classes.
TAXES
The Trust 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 Trust (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
Trust intends to distribute substantially all of such income.
Dividends paid by the Trust from its ordinary income and distributions of
the Trust'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 Trust's net realized long-term
capital gains (including long-term gains from certain transactions in options)
('capital gain dividends') are taxable to shareholders as long-term capital
gains, regardless of the length of time the shareholder has owned Trust shares.
Distributions in excess of the Fund'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 Trust. Not later than 60 days after the close of its
taxable year, the Trust will provide its shareholders with a written notice
designating the amounts of any ordinary income or capital gain dividends. A
portion of the Trust'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 Trust 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 Trust and received by its shareholders on December
31 of the year in which such dividend was declared.
Ordinary income dividends paid by the Trust 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
United States withholding tax.
Dividends and interest received by the Trust may give rise to withholding
and other taxes imposed by foreign countries. Tax conventions between certain
countries and the United States may reduce or eliminate such taxes. Shareholders
may be able to claim United States 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 Trust. If more than 50% in value
of the Trust's total assets at the close of its taxable year consists of
securities of foreign corporations, the Trust will be eligible, and intends, to
file an election with the Internal Revenue Service pursuant to which
shareholders of the Trust will be required to include their proportionate
shares of such withholding taxes in their United States income tax
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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 United States
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 United
States withholding tax on the income resulting from the Trust's election
described in this paragraph but may not be able to claim a credit or deduction
against such United States tax for the foreign taxes treated as having been paid
by such shareholder. The Trust 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 Trust or who, to the Trust'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 Trust'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 Trust 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 Trust
shares and resulting in a capital gain for any shareholder who received a
distribution greater than the shareholder's tax basis in Trust 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 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 such 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 Trust on the exchanged shares reduces any sales charge the
shareholder would have owed upon the 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 Trust will be
disallowed if other Trust 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.
33
<PAGE>
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 United States Government obligations. State
law varies as to whether dividend income attributable to United States
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
Trust.
ORGANIZATION OF THE TRUST
The Trust was organized on April 12, 1985 under the laws of the
Commonwealth of Massachusetts and is a business entity commonly known as a
'Massachusetts business trust'. The Trust is authorized to issue an unlimited
number of shares of beneficial interest of $.10 par value of different classes.
At the date of this Prospectus, the shares of the Trust are divided into Class
A, Class B, Class C and Class D shares. Shares of beneficial interest of Class
A, Class B, Class C and Class D represent interests in the same assets of the
Trust and 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 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 Trust has received an order from the Commission
permitting the issuance and sale of multiple classes of shares. The Trustees of
the Trust may classify and reclassify the shares of the Trust into additional
classes of shares of beneficial interest at a future date. Shares issued are
fully paid, non-assessable and have no preemptive rights. Shares have the
conversion rights described in this Prospectus.
The Declaration does not require that the Trust hold an annual meeting of
shareholders. However, the Trust will be required to call special meetings of
shareholders in accordance with the requirements of the Investment Company Act
to seek approval of new management and advisory arrangements, of a material
increase in distribution fees or of a change in the fundamental policies,
objectives or restrictions of the Trust. The Trust also would be required to
hold a special shareholders' meeting to elect new Trustees at such time as less
than a majority of the Trustees holding office have been elected by
shareholders. The Declaration provides that a shareholders' meeting may be
called for any reason at the request of 10% of the outstanding shares of the
Trust or by a majority of the Trustees.
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
34
<PAGE>
The written notification should include the shareholder's name, address,
tax identification number and Merrill Lynch, Pierce, Fenner & Smith Incorporated
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 800-637-3863.
SHAREHOLDER INQUIRIES
Shareholder inquiries may be addressed to the Trust at the address or
telephone number set forth on the cover page of this Prospectus.
------------------------------------
The Declaration of Trust establishing the Trust, dated April 12, 1985, a
copy of which, together with all amendments thereto (the 'Declaration'), is on
file in the office of the Secretary of the Commonwealth of Massachusetts,
provides that the name 'Merrill Lynch Global Resources Trust' refers to the
trustees under the Declaration collectively as Trustees, but not as individuals
or personally; and no Trustee, shareholder, officer, employee or agent of the
Trust shall be held to any personal liability, nor shall resort be had to their
private property for the satisfaction of any obligation or claim of said Trust
but the 'Trust Property' only shall be liable.
35
<PAGE>
[This page intentionally left blank]
36
<PAGE>
MERRILL LYNCH GLOBAL RESOURCES TRUST--AUTHORIZATION FORM (PART 1)
- - - - - - --------------------------------------------------------------------------------
Note: This form may not be used for purchases through the Merrill Lynch
Blueprint(Service Mark) Program. You may request a Merrill Lynch
Blueprint(Service Mark) 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 Resources Trust 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.)
1.................................... 4.......................................
2.................................... 5.......................................
3.................................... 6.......................................
Name .........................................................................
First Name Initial Last Name
Name of Co-Owner (if any) ....................................................
First Name Initial Last Name
Address ...........................
....................................
(Zip Code)
Occupation.............. Name and Address of Employer ......................
...................................... .....................................
...................................... .....................................
Signature of Owner Signature of Co-Owner (if any)
(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
Ordinary Income Long-Term Capital Gains
Dividends
Select / / Reinvest Select / / Reinvest
One: / / Cash One: / / Cash
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 Resources Trust 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.
37
<PAGE>
- - - - - - --------------------------------------------------------------------------------
3. SOCIAL SECURITY NUMBER OR TAXPAYER INDENTIFICATION 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.
...................................... .....................................
Signature of Owner Signature of Co-Owner (if any)
- - - - - - --------------------------------------------------------------------------------
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 Resources Trust or any other investment company with an initial
sales charge or deferred sales charge for which Merrill Lynch Funds Distributor,
Inc. acts as distributor over the next 13 month period which will equal or
exceed:
/ / $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 Resources
Trust 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 Resources Trust held as security.
By ...................................... ....................................
Signature of Owner Signature of Co-Owner
(If registered in joint parties,
both must sign)
In making purchases under this letter, the following are the related accounts
on which reduced offering prices are to apply:
(1) Name................................ (2) Name..............................
Account Number.......................... Account Number........................
- - - - - - --------------------------------------------------------------------------------
5. FOR DEALER ONLY
Branch Office, Address, Stamp.
[INDICIA]
This form when completed should be mailed to:
Merrill Lynch Global Resources Trust
c/o Financial Data Services, Inc.
Transfer Agency Mutual Fund Operations
P.O. Box 45289
Jacksonville, Florida 32232-5289
We hereby authorize Merrill Lynch Funds Distributor, Inc. to act as our agent in
connection with transactions under this authorization form and agree to notify
the Distributor of any purchases made under a Letter of Intention or Systematic
Withdrawal Plan. We guarantee the shareholder's signature.
...............................................................................
Dealer Name and Address
By..............................................................................
Authorized Signature of Dealer
/ / / / / / / / / .....................
Branch-Code F/C No. F/C Last Name
/ / / / / / / / / /
Dealer's Customer Account No.
38
<PAGE>
- - - - - - --------------------------------------------------------------------------------
MERRILL LYNCH GLOBAL RESOURCES TRUST--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 No.
Name of Co-Owner (if any) ...................... or Taxpayer Identification No.
Address .............................................
............................. Account Number .................................
(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
Resources Trust at cost or current offering price. Withdrawals to be made either
(check one) / / Monthly on the 24th day of each month, or M 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 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 SHOULD ACCOMPANY THIS APPLICATION.
39
<PAGE>
- - - - - - --------------------------------------------------------------------------------
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 Resources Trust, 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 Resources Trust 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 as possible.
(month)
I agree that you are preparing these ACH debits voluntarily at my request and
that you shall not be liable for any loss arising from any delay in preparing or
failure to prepare any such debit. If I change banks or desire to terminate or
suspend this program, I agree to notify you promptly in writing. I hereby
authorize you to take any action to correct erroneous ACH debits of my bank
account or purchases of fund shares including liquidating shares of the Fund and
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
.................... ....................................
Bank Account Number Signature of Depositor
(If joint account, both must
sign)
NOTE: IF AUTOMATIC INVESTMENT PLAN IS ELECTED, YOUR BLANK, UNSIGNED CHECK MARKED
'VOID' SHOULD ACCOMPANY THIS APPLICATION.
40
<PAGE>
INVESTMENT ADVISER
Merrill Lynch Asset Management
Administrative Offices:
800 Scudders Mill Road
Plainsboro, New Jersey
Mailing Address:
P.O. Box 9011
Princeton, New Jersey 08543-9011
DISTRIBUTOR
Merrill Lynch Funds Distributor, Inc.
Administrative Offices:
800 Scudders Mill Road
Plainsboro, New Jersey
Mailing Address:
P.O. Box 9011
Princeton, New Jersey 08543-9011
CUSTODIAN
The Bank of New York
90 Washington Street, 12th Floor
New York, New York 10286
TRANSFER AGENT
Financial Data Services, Inc.
Administrative Offices:
Transfer Agency Mutual Fund Operations
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
Mailing Address:
P.O. Box 45289
Jacksonville, Florida 32232-5289
INDEPENDENT AUDITORS
Deloitte & Touche LLP
117 Campus Drive
Princeton, New Jersey 08540-6619
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 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 TRUST, THE INVESTMENT ADVISER, OR THE DISTRIBUTOR. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFERING IN ANY STATE IN WHICH SUCH OFFERING MAY NOT LAWFULLY
BE MADE.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Fee Table......................................... 2
Merrill Lynch Select Pricing(Service Mark)
System.......................................... 3
Financial Highlights.............................. 8
Investment Objectives and Policies................ 9
Special Considerations............................ 10
Asset-Based Securities.......................... 12
Other Investment Policies and Practices......... 12
Management of the Trust........................... 15
Trustees........................................ 15
Management and Advisory Arrangements............ 15
Transfer Agency Services........................ 16
Purchase of Shares................................ 17
Initial Sales Charge Alternatives--
Class A and Class D Shares.................... 18
Deferred Sales Charge Alternatives--
Class B and Class C Shares.................... 20
Distribution Plans.............................. 23
Limitations on the Payment of Deferred Sales
Charges....................................... 25
Redemption of Shares.............................. 25
Redemption...................................... 26
Repurchase...................................... 26
Reinstatement Privilege--Class A and Class D
Shares........................................ 26
Shareholder Services.............................. 27
Investment Account.............................. 27
Exchange Privilege.............................. 28
Automatic Reinvestment of Dividends and Capital
Gains Distributions........................... 29
Systematic Withdrawal Plans..................... 29
Automatic Investment Plans...................... 29
Portfolio Transactions and Brokerage.............. 29
Performance Data.................................. 30
Additional Information............................ 31
Dividends and Distributions..................... 31
Determination of Net Asset Value................ 31
Taxes........................................... 32
Organization of the Trust....................... 34
Shareholder Reports............................. 35
Shareholder Inquiries........................... 35
Authorization Form................................ 37
</TABLE>
Code # 10301-1094
[LOGO]
MERRILL LYNCH
GLOBAL RESOURCES
TRUST
[ART]
Prospectus
October 21, 1994
Distributor:
Merrill Lynch
Funds Distributor, Inc.
This prospectus should be
retained for future reference.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
MERRILL LYNCH GLOBAL RESOURCES TRUST
P.O. BOX 9011, PRINCETON, NEW JERSEY 08543-9011 - PHONE NO. (609) 282-2800
----------------------
The investment objectives of Merrill Lynch Global Resources Trust (the
'Trust') are to achieve long-term growth of capital and to protect the
purchasing power of shareholders' capital by investing in a portfolio of equity
securities of domestic and foreign companies with substantial natural resource
assets. The Trust also may invest in debt, preferred or convertible securities,
the value of which is related to the market value of some natural resource asset
('asset-based securities'). Management of the Trust will seek to identify
securities it believes are attractively priced relative to the intrinsic value
of related natural resource assets or are especially well positioned to benefit
during particular portions of inflationary cycles. The Trust's fully managed
investment approach enables it to switch its emphasis among various natural
resource industry groups depending upon management's outlook with respect to
prevailing trends and developments. It is expected that when management of the
Trust anticipates significant economic, political or financial instability, such
as high inflationary pressures or upheaval in the foreign currency exchange
markets, the Trust may invest a majority of its assets in gold-related
securities. Current income from dividends and interest will not be a primary
consideration in selecting securities.
----------------------
Pursuant to the Merrill Lynch Select Pricing(Service Mark) System, the
Trust offers four classes of shares each with a different combination of sales
charges, ongoing fees and other features. The Merrill Lynch Select
Pricing(Service Mark) 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 Trust is not a prospectus
and should be read in conjunction with the prospectus of the Trust, dated
October 21, 1994 (the 'Prospectus'), which has been filed with the Securities
and Exchange Commission and can be obtained, without charge, by calling or by
writing the Trust 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 October 21, 1994.
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
The investment objectives of the Trust are to achieve long-term growth of
capital and to preserve the purchasing power of shareholders' capital by
investing in a portfolio of equity securities of domestic and foreign companies
with substantial natural resource assets. The Trust may also invest in debt,
preferred or convertible securities, the value of which is related to the market
value of some natural resource asset ('asset-based securities'). See
'Asset-Based Securities' below. Reference is made to 'Investment Objectives and
Policies' in the Prospectus for a discussion of the investment objectives and
policies of the Trust.
While the Trust generally does not expect to engage in trading for
short-term gains, it will effect portfolio transactions without regard to
holding period if, in its management's 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 Trust's investment policies, under certain market conditions the
Trust's portfolio turnover may be higher than that of other investment
companies. Accordingly, while the Trust anticipates that its annual 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 Trust's annual sales or purchases of portfolio securities
(exclusive of purchases or sales of all securities with maturities at the time
of acquisition of one year or less) by the monthly average value of the
securities in the portfolio during the year. For the years ended July 31, 1993
and 1994, the Trust's rates of portfolio turnover were 66.78% and 54.87%,
respectively.
ASSET-BASED SECURITIES
The Trust may invest in debt securities, preferred stocks or convertible
securities, the principal amount, redemption terms or conversion terms of which
are related to the market price of some natural resource asset such as gold
bullion. For the purposes of the Trust's investment policies, these securities
are referred to as 'asset-based securities'. The Trust will only purchase
asset-based securities which are rated, or are issued by issuers that have
outstanding debt obligations rated, investment grade (that is, AAA, AA, A or BBB
by Standard & Poor's Corporation ('S&P') or Aaa, Aa, A or Baa by Moody's
Investors Service, Inc. ('Moody's') or commercial paper rated A-1 by S&P or
Prime-1 by Moody's) or of issuers that Merrill Lynch Investment Management,
Inc., doing business as Merrill Lynch Asset Management (the 'Investment
Adviser'), has determined to be of similar creditworthiness. Obligations ranked
in the fourth highest rating category, while considered 'investment grade', may
have certain speculative characteristics and may be more likely to be downgraded
than securities rated in the three highest rating categories. If the asset-based
security is backed by a bank letter of credit or other similar facility, the
Investment Adviser may take such backing into consideration in determining the
creditworthiness of the issuer. While the market prices for an asset-based
security and the related natural resource asset generally are expected to move
in the same direction, there may not be perfect correlation in the two price
movements. Asset-based securities may not be secured by a security interest in
or claim on the underlying natural resource assets.
The Trust will not acquire asset-based securities for which no established
secondary trading market exists if at the time of acquisition more than 5% of
its total assets are invested in securities which are not readily marketable.
The Trust may invest in asset-based securities without limit when it has the
option to put such securities to the issuer or a stand-by bank or broker and
receive the principal amount or redemption price thereof less transaction costs
on no more than seven days' notice or when the Trust has the right to convert
such
2
<PAGE>
securities into a readily marketable security in which it could otherwise invest
upon not less than seven days' notice.
The asset-based securities in which the Trust may invest may bear interest
or pay preferred dividends at below market (or even relatively nominal) rates.
The Trust's holdings of such securities therefore might not generate appreciable
current income, and the return from such securities primarily will be from any
profit on the sale, maturity or conversion thereof at a time when the price of
the related asset is higher than it was when the Trust purchased such
securities.
OTHER INVESTMENT POLICIES AND PRACTICES
Writing Covered Call Options. The Trust is authorized to write, i.e.,
sell, covered call options on the equity securities in which it may invest and
to enter into closing purchase transactions with respect to certain of such
options. A call option is an option where the Trust, in return for a premium,
gives another party a right to buy specified securities owned by the Trust at a
specified future date and price set at the time of the contract. A call option
is considered covered where the writer of the option owns the underlying
securities. The principal reason for writing call options is to attempt to
realize, through the receipt of premiums, a greater return than would be
realized on the securities alone. By writing covered call options, the Trust
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 Trust's ability to sell the underlying security will be limited
while the option is in effect unless the Trust effects a closing purchase
transaction. A closing purchase transaction cancels out the Trust'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. The Trust may not write covered call options in underlying securities
in an amount exceeding 15% of the market value of its total assets.
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.
All options referred to herein and in the Trust's Prospectus are options
issued by The Options Clearing Corporation (the 'Clearing Corporation') which
are currently traded on the Chicago Board Options Exchange, American Stock
Exchange, Philadelphia Stock Exchange, Pacific Stock Exchange or New York Stock
Exchange. An option position may be closed out only on an Exchange which
provides a secondary market for an option of the same series. If a secondary
market does not exist, it might not be possible to effect closing transactions
in particular options, with the result, in the case of a covered call option,
that the Trust will not be able to sell the underlying security until the option
expires or it delivers the underlying security upon exercise. Reasons for the
absence of a liquid secondary market on an Exchange include the following: (i)
there may be insufficient trading interest in certain options; (ii) restrictions
may be imposed by an Exchange on opening transactions or closing transactions or
both; (iii) trading halts, suspension or other restrictions may be imposed with
respect to particular classes or series of options or underlying securities;
(iv) unusual or unforeseen circumstances may interrupt normal operations on an
Exchange; (v) the facilities of an Exchange or the Clearing Corporation may not
at all times be adequate to handle current trading volume; or (vi) one or more
Exchanges could, for economic or other reasons, decide or be compelled at some
future date to discontinue the trading of options (or a particular class or
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series of options), in which event the secondary market on that exchange (or in
that class or series of options) would cease to exist, although outstanding
options on that Exchange that had been issued by the Clearing Corporation as a
result of trades on that Exchange would continue to be exercisable in accordance
with their terms.
Purchasing Put Options. The Trust may purchase put options to hedge
against a decline in the market value of its equity holdings. By buying a put
the Trust has a right to sell the underlying security at the exercise price,
thus limiting the Trust'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 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 Trust'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 Trust will purchase only put
options traded on an Exchange. The Trust will not purchase put options on
securities if, as a result of such purchase, the aggregate cost of all
outstanding options on securities held by the Trust would exceed 5% of the
market value of the Trust's total assets.
Forward Foreign Exchange Transactions. Generally, the foreign exchange
transactions of the Trust will be conducted on a spot, i.e., cash, basis at the
spot rate for purchasing or selling currency prevailing in the foreign exchange
market. This rate under normal market conditions differs from the prevailing
exchange rate in an amount generally less than 0.15 of one percent due to the
costs of converting from one currency to another. However, the Trust 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 and price set at the time of the contract.
The Trust'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 Trust accruing in connection with the
purchase and sale of its portfolio securities, the sale and redemption of shares
of the Trust or the payment of dividends and distributions by the Trust.
Position hedging is the sale of forward foreign currency with respect to
portfolio security positions denominated or quoted in such foreign currency. The
Trust will not speculate in forward foreign exchange. The Trust 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 Trust enters into a position hedging transaction, its
custodian bank will place cash or liquid equity or debt securities in a separate
account of the Trust in an amount equal to the value of the Trust'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 Trust's commitment with respect to such contracts. The
Trust will not attempt to hedge all of its foreign portfolio positions and will
enter into such transactions only to the extent, if any, deemed appropriate by
the management of the Trust. The Trust will not enter into a position hedging
commitment if, as a result thereof, the Trust would have more than 15% of the
value of its assets committed to such contracts. The Trust will not enter into a
forward contract with a term of more than one year.
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Hedging against a decline in the value of a currency does not eliminate
fluctuations in the prices 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 Trust to hedge against a devaluation that is so
generally anticipated that the Trust 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 Trust may have to limit its currency
transactions to qualify as a regulated investment company under the Internal
Revenue Code; in this regard, the Trust 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 Trust determines that income from the
transactions is not subject to this restriction. The cost to the Trust 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.
Repurchase Agreements. The Trust may invest in securities pursuant to
repurchase agreements. Repurchase agreements may be entered into only with a
member bank of the Federal Reserve System or a primary dealer in U.S. Government
securities or an affiliate thereof. Under such agreements, the bank or primary
dealer or an affiliate thereof agrees, upon entering into the contract, to
repurchase the security at a mutually agreed upon time and price, thereby
determining the yield during the term of the agreement. This results in a fixed
rate of return insulated from market fluctuations during such period. Repurchase
agreements usually cover short periods, such as under one week. Repurchase
agreements may be construed to be collateralized loans by the purchaser to the
seller secured by the securities transferred to the purchaser. The Trust will
require the seller to provide additional collateral if the market value of the
securities falls below the repurchase price at any time during the term of the
repurchase agreement. In the event of default by the seller under a repurchase
agreement construed to be a collateralized loan, the underlying securities are
not owned by the Trust but only constitute collateral for the seller's
obligation to pay the repurchase price. Therefore, the Trust may suffer time
delays and incur costs or possible losses in connection with the disposition of
the collateral. In the event of a default under such a repurchase agreement,
instead of the contractual fixed rate of return, the rate of return to the Trust
shall be dependent upon intervening fluctuations of the market value of such
security and the accrued interest on the security. In such event, the Trust
would have rights against the seller for breach of contract with respect to any
losses arising from market fluctuations following the failure of the seller to
perform.
Lending of Portfolio Securities. Subject to current investment restriction
(7) below, the Trust may lend securities from its portfolio to approved
borrowers and receive therefor collateral in cash or securities issued or
guaranteed by the United States Government which are maintained at all times in
an amount equal to at least 100% of the current market value of the loaned
securities. The purpose of such loans is to permit the borrower to use such
securities for delivery to purchasers when such borrower has sold short. If cash
collateral is received by the Trust, it is invested in short-term money market
securities, and a portion of the yield received in respect of such investment is
retained by the Trust. Alternatively, if securities are delivered to the Trust
as collateral, the Trust and the borrower negotiate a rate for the loan premium
to be received by the Trust for lending its portfolio securities. In either
event, the total yield on the Trust's portfolio is increased by loans of its
portfolio securities. The Trust will have the right to regain record ownership
of loaned securities to exercise beneficial rights such as voting rights,
subscription rights and rights to dividends, interest or other distributions.
Such loans are terminable at any time. The Trust may pay reasonable finder's,
administrative and custodial fees in connection with such loans.
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Current Investment Restrictions. In addition to the investment policies
and restrictions set forth in the Prospectus, the Trust has adopted the
following investment policies and restrictions. These may not be changed without
the approval of the holders of a majority of the Trust's outstanding voting
shares, which for this purpose means the lesser of (a) more than 50% of the
outstanding shares of the Trust or (b) 67% of the shares represented at a
meeting where more than 50% of the outstanding shares of the Trust are
represented. Unless otherwise provided, all references to the assets of the
Trust below are in terms of current market value. The Trust may not:
1. Make investments for the purpose of exercising control or
management.
2. Purchase securities of other investment companies, except in
connection with a merger, consolidation, acquisition or reorganization, or
by purchase in the open market of securities of closed-end investment
companies where no underwriter's or dealer's commission or profit, other
than customary broker's commission, is involved and only if immediately
thereafter not more than 10% of the Trust's total assets would be invested
in such securities.
3. Purchase or sell real estate, except that, to the extent permitted
by applicable law, the Trust may invest in securities secured by real
estate or interests therein or issued by companies, including real estate
investment trusts, which invest in real estate or interests therein.
4. Purchase any securities on margin, except that the Trust may obtain
such short-term credit as may be necessary for the clearance of purchases
and sales of portfolio securities. The payment by the Trust of initial or
variation margin in connection with futures or related options
transactions, if applicable, shall not be considered the purchase of a
security on margin.
5. Make short sales of securities or maintain a short position.
6. Make loans to other persons, except that the acquisition of bonds,
debentures or other corporate debt securities and investment in government
obligations, short-term commercial paper, certificates of deposit, bankers'
acceptances and repurchase agreements shall not be deemed to be the making
of a loan, and except further that the Trust may lend its portfolio
securities as set forth in restriction (7) below.
7. Lend its portfolio securities in excess of 33 1/3% of its total
assets, taken at market value; provided that such loans may only be made in
accordance with the guidelines set forth above.
8. Issue senior securities, borrow money or pledge its assets except
that the Trust may borrow from a bank as a temporary measure for
extraordinary or emergency purposes or to meet redemptions in amounts not
exceeding 10% (taken at the market value) of its total assets and pledge
its assets to secure such borrowings. (For the purpose of this restriction,
collateral arrangements with respect to the writing of options, and, if
applicable, interest rate futures contracts, options on interest rate
futures contracts, and collateral arrangements with respect to initial and
variation margin are not deemed to be a pledge of assets and neither such
arrangements nor the purchase or sale of futures or related options are
deemed to be the issuance of a senior security.) The Trust will not
purchase securities while borrowings exceed 5% (taken at market value) of
its total assets.
9. Invest in securities which cannot be readily resold because of
legal or contractual restrictions or which are not otherwise readily
marketable, if at the time of acquisition more than 5% of its net assets
would be invested in such securities. Asset-based securities which the
Trust has the option to put to the issuer or a stand-by bank or broker and
receive the principal amount of redemption price thereof less transaction
costs
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on no more than seven days' notice or when the Trust has the right to
convert such securities into a readily marketable security in which it
could otherwise invest upon not less than seven days' notice are not
subject to this restriction.
10. Underwrite securities of other issuers, except insofar as the
Trust technically may be deemed an underwriter under the Securities Act of
1933, as amended, in selling portfolio securities.
11. Purchase or sell interest in oil, gas or other mineral exploration
or development programs, except that the Trust may invest in securities
issued by companies that engage in oil, gas or other mineral exploration or
development activities.
Additional investment restrictions adopted by the Trust, which may be
changed by the Trustees, provide that the Trust may not:
1. Invest in warrants if at the time of acquisition more than 2% of
its total assets, taken at market value, would be invested in warrants. For
purposes of this restriction, warrants acquired by the Trust in units or
attached to securities may be deemed to be without value.
2. Purchase or sell commodities or commodity contracts, except that
the Trust may deal in forward foreign exchange between currencies of the
different countries in which it may invest.
3. Invest in securities of companies having a record, together with
predecessors, of less than three years of continuous operation, if more
than 5% of its total assets would be invested in such securities.
4. Write, purchase or sell puts, calls, straddles, spreads or
combinations thereof, except that the Trust may write covered call options
and purchase put options on the equity securities in which it may invest.
5. Purchase or retain the securities of any issuer, if those
individual Trustees, officers and directors of the Trust, the Investment
Adviser or any subsidiary thereof each owning beneficially more than 1/2 of
1% of the securities of such issuer own in the aggregate more than 5% of
the securities of such issuer.
6. Invest in real estate limited partnership interests or in oil, gas
or mineral leases.
In addition to restriction (5) above, the Trust also has a policy of not
purchasing securities of companies in which Trustees, directors or management
personnel of the Trust, the Investment Adviser or its affiliates have a
substantial beneficial interest. Portfolio securities of the Trust may not be
purchased from or sold or loaned to the Investment Adviser or its affiliates or
any of their directors, officers or employees, acting as principal.
Proposed Uniform Investment Restrictions. As discussed in the Prospectus
under 'Investment Objectives and Policies--Investment Restrictions', the
Trustees of the Trust have approved the replacement of the Trust's existing
investment restrictions with the fundamental and non-fundamental investment
restrictions set forth below. These uniform investment restrictions have been
proposed for adoption by all of the non-money market mutual funds advised by
Merrill Lynch Asset Management, L.P. ('MLAM' or the 'Investment Adviser') or its
affiliate, Fund Asset Management, L.P. ('FAM'). The investment objectives and
policies of the Trust will be unaffected by the adoption of the proposed
investment restrictions.
Shareholders of the Trust are currently considering whether to approve the
proposed revised investment restrictions. If such shareholder approval is
obtained, the Trust's current investment restrictions will be replaced by the
proposed restrictions, and the Trust's Prospectus and Statement of Additional
Information will be supplemented to reflect such change.
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Under the proposed fundamental investment restrictions, the Trust may not:
1. 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).
2. Make investments for the purpose of exercising control or
management.
3. Purchase or sell real estate, except that, to the extent permitted
by applicable law, the Trust 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.
4. 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 Trust may lend its portfolio securities, provided that the
lending of portfolio securities may be made only in accordance with
applicable law and the guidelines ser forth in the Trust's Prospectus and
Statement of Additional Information, as they may be amended from time to
time.
5. Issue senior securities to the extent such issuance would violate
applicable law.
6. Borrow money, except that (i) the Trust 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 Trust may borrow up
to an additional 5% of its total assets for temporary purposes, (iii) the
Trust may obtain such short-term credit as may be necessary for the
clearance of purchases and sales of portfolio securities and (iv) the Trust
may purchase securities on margin to the extent permitted by applicable
law. The Trust may not pledge its assets other than to secure such
borrowings or, to the extent permitted by the Trust'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.
7. Underwrite securities of other issuers except insofar as the Trust
technically may be deemed an underwriter under the Securities Act of 1933,
as amended (the 'Securities Act') in selling portfolio securities.
8. Purchase or sell commodities or contracts on commodities, except to
the extent that the Trust may do so in accordance with applicable law and
the Trust's Prospectus and Statement of Additional Information, as they may
be amended from time to time, and without registering as a commodity pool
operator under the Commodity Exchange Act.
Under the proposed non-fundamental investment restrictions, the Trust may
not:
a. Purchase securities of other investment companies, except to the
extent such purchases are permitted by applicable law.
b. Make short sales of securities or maintain a short position, except
to the extent permitted by applicable law. The Fund currently does not
intend to engage in short sales, except short sales 'against the box'.
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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 Trustees of the Trust have
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 Trust's shares are registered or qualified for sale
require a lower limitation, the Trust will observe such limitation. As of
the date hereof, therefore, the Trust 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 Trust's
Board of Trustees 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 5% of its total assets in securities of issuers
that are restricted as to disposition, including Rule 144A securities.
d. Invest in warrants if, at the time of acquisition, its investments
in warrants, valued at the lower of cost or market value, would exceed 5%
of the Trust's net assets; included within such limitation, but not to
exceed 2% of the Trust'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 Trust
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 Trust'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 Trustees of the Trust, the officers and general
partner of the Investment Adviser, the directors of such general partner or
the officers and directors of any subsidiary thereof each owning
beneficially more than one-half of one percent of the securities of such
issuer own in the aggregate more than 5% of the securities of such issuer.
g. Invest in real estate limited partnership interests or interests in
oil, gas or other mineral leases, or exploration or development programs,
except that the Trust 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 Trust's
Prospectus and Statement of Additional Information, as they may be amended
from time to time.
i. Notwithstanding fundamental investment restriction (6) above,
borrow money or pledge its assets except that the Trust may borrow from a
bank as a temporary measure for extraordinary or emergency purposes or to
meet redemptions in amounts not exceeding 10% (taken at the market value)
of its total assets and pledge its assets to secure such borrowings. (For
the purpose of this restriction, collateral arrangements with respect to
the writing of options, and, if applicable, interest rate futures
contracts, options on interest rate futures contracts, and collateral
arrangements with respect to initial and variation margin are not deemed
to be a pledge of assets and neither such arrangements nor the purchase or
sale of futures or related options are deemed to be the issuance of a
senior security.) The Trust will not purchase securities while borrowings
exceed 5% (taken at market value) of its total assets.
------------------
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Because of the affiliation of Merrill Lynch, Pierce, Fenner & Smith
Incorporated ('Merrill Lynch') with the Trust, the Trust 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 of 1940 (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
Merrill Lynch acts as principal and purchases of securities from underwriting
syndicates of which Merrill Lynch is a member.
MANAGEMENT OF THE TRUST
TRUSTEES AND OFFICERS
The Trustees and executive officers of the Trust and their principal
occupations for at least the last five years are set forth below. Unless
otherwise noted, the address of each Trustee and executive officer is P.O. Box
9011, Princeton, New Jersey 08543-9011.
ARTHUR ZEIKEL--President and Trustee (1)(2)--President of the Investment
Adviser (which term as used herein includes the Investment Adviser's corporate
predecessors) since 1977 and Chief Investment Officer of the Investment Adviser
since 1976; President and Chief Investment Officer of FAM (which term as used
herein includes FAM's corporate predecessors) since 1977; President and Director
of Princeton Services, Inc. ('Princeton Services') since 1993; Executive Vice
President of Merrill Lynch & Co., Inc. ('ML&Co.') since 1990; Executive Vice
President of Merrill Lynch since 1990 and a Senior Vice President thereof from
1985 to 1990; Director of Merrill Lynch Funds Distributor, Inc. (the
'Distributor').
DONALD CECIL--Trustee (2)--1114 Avenue of the Americas, New York, New York
10036. Special Limited Partner of Cumberland Partners (an investment
partnership) since 1982; General Partner of Cumberland Associates (an asset
management company) from 1970 to 1982; Member of Institute of Chartered
Financial Analysts; Member and Chairman of Westchester County (N.Y.) Board of
Transportation.
M. COLYER CRUM--Trustee (2)--Soldiers Field Road, Boston, Massachusetts
02163. James R. Williston Professor of Investment Management, Harvard Business
School, since 1971; Director of Cambridge Bancorp, Copley Properties, Inc. and
Sun Life Assurance Company of Canada.
EDWARD H. MEYER--Trustee (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., Harman International Industries,
Inc. and Ethan Allen Interiors, Inc.
JACK B. SUNDERLAND--Trustee (2)--P.O. Box 1177, Scarsdale, New York 10583.
President and Director of American Independent Oil Company, Inc. (an energy
company) since 1987; Chairman of Murexco Petroleum, Inc. (an energy company)
from 1981 to 1988; Member of Council on Foreign Relations since 1971; President,
Director and Chief Executive Officer of Coroil, Inc. (an energy company) from
1979 to 1985.
J. THOMAS TOUCHTON--Trustee (2)--Suite 3405, One Tampa City Center, Tampa,
Florida 33602. Managing Partner of The Witt-Touchton Company and its predecessor
The Witt Co. (a private investment partnership) since 1972; Trustee Emeritus of
Washington and Lee University; Director of TECO Energy, Inc. (an electric
utility holding company).
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TERRY K. GLENN--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 of the Distributor since
1986 and Director thereof since 1991; and President of Princeton Administrators
L.P. since 1988.
NORMAN R. HARVEY--Senior Vice President (1)(2)--Senior Vice President of
the Investment Adviser and FAM since 1982; Senior Vice President of Princeton
Services since 1993.
DONALD C. BURKE--Vice President (1)(2)--Vice President and Director of
Taxation of the Investment Adviser since 1990; Employee of Deloitte & Touche LLP
from 1981 to 1990.
EDWARD P. IX, JR.--Vice President (1)--Vice President of the Investment
Adviser since 1987 and employee of the Investment Adviser since 1985.
PETER A. LEHMAN--Vice President (1)--Vice President of the Investment
Adviser since 1994 and employee of the Investment Adviser since 1992.
GERALD M. RICHARD--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 of the Distributor since 1984.
MARK B. GOLDFUS--Secretary (1)(2)--Vice President of the Investment Adviser
and FAM since 1985.
- - - - - - ------------------
(1) Interested person, as defined in the Investment Company Act, of the Trust.
(2) Such Trustee or officer is a director or officer of certain other investment
companies for which the Investment Adviser or FAM acts as investment
adviser.
At September 30, 1994, the Trustees and officers of the Trust as a group
(13 persons) owned an aggregate of less than 1% of the outstanding shares of the
Trust. At that date, Mr. Zeikel, a Trustee and officer of the Trust, and the
other officers of the Trust owned less than 1% of the outstanding common stock
of ML&Co.
The Trust pays each Trustee not affiliated with the Investment Adviser a
fee of $3,500 per year plus $500 per meeting attended. The Trust also pays each
member of its Audit and Nominating Committee, which consists of all unaffiliated
Trustees, a fee of $2,500 per year and the chairman of the Committee an annual
fee of $1,000. The Trust reimburses each unaffiliated Trustee for his
out-of-pocket expenses relating to attendance at Board and Committee meetings.
For the fiscal year ended July 31, 1994, fees and out-of-pocket expenses paid to
the unaffiliated Trustees aggregated $41,519.
MANAGEMENT AND ADVISORY ARRANGEMENTS
Reference is made to 'Management of the Trust--Management and Advisory
Arrangements' in the Prospectus for certain information concerning the
management and advisory arrangements of the Trust.
The Investment Advisory Agreement provides that, subject to the direction
of the Board of Trustees of the Trust, the Investment Adviser is responsible for
the actual management of the Trust's portfolio and for the review of the Trust's
holdings in light of its own research analysis and analyses from other relevant
sources.
The responsibility for making decisions to buy, sell or hold a particular
security rests with the Investment Adviser, subject to review by the Trustees.
The Investment Adviser supplies the portfolio managers for the Trust
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<PAGE>
who consider analyses from various sources, make the necessary investment
decisions and place transactions accordingly. The Investment Adviser also is
obligated to perform certain administrative and management services for the
Trust and is required to provide all the office space, facilities, equipment and
personnel necessary to perform its duties under the Investment Advisory
Agreement.
Securities held by the Trust also may be held by or be appropriate
investments for other funds for which the Investment Adviser or FAM acts as an
adviser or by investment advisory clients of the Investment Adviser. Because of
different investment objectives or other factors, a particular security may be
bought for one or more clients when one or more clients are selling the same
security. If purchases or sales of securities for the Trust or other funds for
which the Investment Adviser or FAM acts as investment adviser or for their
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 FAM during the
same period may increase the demand for securities being purchased or the supply
of securities being sold there may be an adverse effect on price.
As compensation for its services to the Trust the Investment Adviser
receives from the Trust at the end of each month a fee based on the average
daily value of the Trust's net assets at the annual rates of 0.60% of the daily
net assets of the Trust. The State of California imposes limitations on the
expenses of the Trust. At the date of this Statement of Additional Information,
these annual expense limitations require the Investment Adviser to reimburse the
Trust in an amount necessary to prevent the ordinary operating expenses of the
Trust from exceeding 2.5% of the Trust'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 Trust is limited to the amount of the investment advisory fee. 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
applicable at the time of such payment. For the fiscal years ended July 31,
1992, 1993 and 1994, the total advisory fees paid by the Trust to the Investment
Adviser aggregated $1,686,530, $1,391,524 and $1,351,581, respectively. For such
periods, the Investment Adviser made no reimbursement of expenses to the Trust
in respect of the expense limitation provisions discussed above.
The Investment Adviser will provide the investment advisory services and
pay all compensation of and furnish office space for officers and employees of
the Trust connected with investment and economic research, trading and
investment management of the Trust, as well as the fees for Trustees of the
Trust who are affiliated persons of ML&Co. or any of its affiliates. The Trust
pays all other expenses incurred, except for some incurred by the Distributor,
in the operation of the Trust including, among others, taxes, expenses for legal
and auditing services, charges of the custodian and the transfer agent, expenses
of issuing and redeeming shares, brokerage costs, Securities and Exchange
Commission and other registration fees, all expenses of shareholders' and
Trustee's meetings, and certain of the expenses of printing prospectuses,
statements of additional information, proxies, reports to shareholders, and
share certificates. Accounting services are provided to the Trust by the
Investment Adviser, who is reimbursed by the Trust for the costs in connection
with such services. The Distributor will pay the promotional expenses incurred
in connection with the offering of shares of the Trust. See 'Purchase of
Shares--Distribution Plans'.
The Investment Adviser is a limited partnership, the partners of which are
ML&Co., Merrill Lynch Investment Management, Inc. and Princeton Services.
12
<PAGE>
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 Trustees or, if submitted to a meeting of
shareholders, by a majority of the voting securities and (b) by a majority of
Trustees who are neither parties to such contract nor interested persons, as
defined in the Investment Company Act, of any such party. Such contract is not
assignable and may be terminated without penalty upon 60 days' written notice at
the option of either party or by the vote of the shareholders of the Trust.
PURCHASE OF SHARES
Reference is made to 'Purchase of Shares' in the Prospectus for certain
information as to the purchase of Trust shares.
The Trust issues four classes of shares under the Merrill Lynch Select
Pricing System: Class A and Class D shares are sold to investors choosing the
initial sales charge alternatives, and Class B and Class C shares are sold to
investors choosing the deferred sales charge alternatives. Each Class A, Class
B, Class C and Class D share of the Trust represents identical interests in the
investment portfolio of the Trust, 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 C shares bear the expenses of the ongoing distribution fees
and the additional incremental transfer agency costs resulting from the deferred
sales charge arrangements. Class B, Class C and Class D shares each have
exclusive voting rights with respect to the Rule 12b-1 distribution plan adopted
with respect to such class pursuant to which the account maintenance and/or
distribution fees are paid. Each class has different exchange privileges. See
'Shareholder Services--Exchange Privilege'.
The Merrill Lynch Select Pricing System is used by more than 50 mutual
funds advised by the Investment Adviser or its affiliate. Funds advised by the
Investment Adviser or FAM are referred to herein as 'MLAM-advised mutual funds'.
The Trust has entered into separate distribution agreements with the
Distributor in connection with the continuous offering of each class of shares
of the Trust (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 Trust. 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 above.
INITIAL SALES CHARGE ALTERNATIVES--CLASS A AND CLASS D SHARES
The gross sales charges for the sale of Class A shares for the year ended
July 31, 1992 were $116,108, of which the Distributor received $9,075 and
Merrill Lynch received $107,033. The gross sales charges for the sale of Class A
shares for the year ended July 31, 1993 were $83,929, of which the Distributor
received $4,861 and Merrill Lynch received $79,068. The gross sales charges for
the sale of Class A shares for the year ended July 31, 1994 were approximately
$177,162, of which the Distributor received approximately $12,408 and Merrill
Lynch received approximately $164,754.
13
<PAGE>
The term 'purchase', as used in the Prospectus and this Statement of
Additional Information in connection with an investment in Class A and Class D
shares of the Trust, refers to a single purchase by an individual, or to
concurrent purchases, which in the aggregate are at least equal to the
prescribed amounts, by an individual, his spouse and their children under the
age of 21 years purchasing shares for his or their own account and to single
purchases by a trustee or other fiduciary purchasing shares for a single trust
estate or single fiduciary account although more than one beneficiary is
involved. The term 'purchase' also includes purchases by any 'company', as that
term is defined in the Investment Company Act, but does not include purchases by
any such company which has not been in existence for at least six months or
which has no purpose other than the purchase of shares of the Trust or shares of
other registered investment companies at a discount; provided, however, that it
shall not include purchases by any group of individuals whose sole
organizational nexus is that the participants therein are credit cardholders of
a company, policyholders of an insurance company, customers of either a bank or
broker-dealer or clients of an investment adviser.
REDUCED INITIAL SALES CHARGES
Right of Accumulation. Reduced sales charges are applicable through a
right of accumulation under which eligible investors are permitted to purchase
shares of the Trust 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 Trust and of other MLAM-advised mutual funds. For any such
right of accumulation to be made available, the Distributor must be provided at
the time of purchase, by the purchaser or the purchaser's securities dealer,
with sufficient information to permit confirmation of qualification. Acceptance
of the purchase order is subject to such confirmation. The right of accumulation
may be amended or terminated at any time. Shares held in the name of a nominee
or custodian under pension, profit-sharing, or other employee benefit plans may
not be combined with other shares to qualify for the right of accumulation.
Letter of Intention. Reduced sales charges are applicable to purchases
aggregating $25,000 or more of the Class A or Class D shares of the Trust 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 Trust'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 or Class
D shares of the Trust and of other MLAM-advised mutual funds presently held, at
cost or maximum offering price (whichever is higher), on the date of the first
purchase under the Letter of Intention, may be included as a credit toward the
completion of such Letter, but the reduced sales charge applicable to the amount
covered by such Letter will be applied only to new purchases. If the total
amount of shares does not equal the amount stated in the Letter of Intention
(minimum of $25,000), the investor will be notified and must pay, within 20 days
of the expiration of such Letter, the difference between the sales charge on the
Class A or Class D shares purchased at the reduced rate and the sales charge
applicable to the shares actually purchased through the Letter. Class A or Class
D shares equal to five percent of the intended amount will be held in escrow
during the 13 month period while remaining registered in the name of the
purchaser for this purpose. The first purchase under the Letter of Intention
must be at least five
14
<PAGE>
percent of the dollar amount of such Letter. If a purchase during the term of
such Letter would otherwise be subject to a further reduced sales charge based
on the right of accumulation, the purchaser will be entitled on that purchase
and subsequent purchases to that further reduced percentage sales charge, but
there will be no retroactive reduction of the sales charges on any previous
purchase. The value of any shares redeemed or otherwise disposed of by the
purchaser prior to termination or completion of the Letter of Intention will be
deducted from the total purchases made under such Letter. An exchange from a
MLAM-advised money market fund into the Trust that creates a sales charge will
count toward completing a new or existing Letter of Intention from the Trust.
Merrill Lynch Blueprint(Service Mark) Program. Class D shares of the Trust
are offered to participants in the Merrill Lynch Blueprint(Service Mark) Program
('Blueprint'). In addition, participants in Blueprint who own Class A shares of
the Trust may purchase additional Class A shares of the Trust through Blueprint.
The Blueprint program is directed to small investors, group IRA's and
participants in certain affinity groups such as credit unions and trade
associations. Investors placing orders to purchase Class A or Class D shares of
the Trust through Blueprint will acquire the Class A or Class D shares at net
asset value plus a sales charge calculated in accordance with the Blueprint
sales charge schedule (i.e., up to $300 at 4.25%, from $300.01 to $5,000 at
3.25% plus $3.00 and $5,000.01 or more at the standard sales charge rates
disclosed in the Prospectus). In addition, Class A and Class D shares of the
Trust are being offered at net asset value plus a sales charge of 1/2 of 1% for
corporate or group IRA programs placing orders to purchase their Class D shares
through Blueprint. Services, including the exchange privilege, available to
Class A and Class D investors through Blueprint, however, may differ from those
available to other investors in Class A or 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 has entered into a Merrill
Lynch Directed IRA Rollover Program Service Agreement.
Orders for purchases and redemptions of Class A or Class D shares of the
Trust 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 Blueprint(Service Mark)
Program, P.O. Box 30441, New Brunswick, New Jersey 08989-0441.
TMA(Service Mark) Managed Trusts. Class A shares are offered at net asset
value to TMA(Service Mark) Managed Trusts to which Merrill Lynch Trust Company
provides discretionary trustee services.
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 qualifed retirement plans within the meaning of Section
401(a) of the Internal Revenue Code of 1986 as amended (the 'Code'), deferred
compensation plans within the meaning of Section 403(b) and 457 of the Code,
other deferred compensation arrangements, Voluntary Employee Benefits
Association ('VEBA') plans, and non-qualified After Tax Savings and Investment
programs, maintained on the Merrill Lynch Group Employee Services system, herein
referred to as 'Employer Sponsored Retirement or Savings Plans', provided the
plan has accumulated $20 million or more
15
<PAGE>
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 invested in
MLAM-advised mutual funds. Assets of Employer Sponsored Retirement or Savings
Plans sponsored by the same sponsor or an affiliated sponsor may be aggregated.
Class A shares and Class D shares also are offered at net asset value to
Employer Sponsored Retirement or Savings Plans that have at least 1,000
employees eligible to participate in the plan (in the case of Class A shares) or
between 500 and 999 employees eligible to participate in the plan (in the case
of Class D shares). Employees eligible to participate in Employer Sponsored
Retirement or Savings Plans of the same sponsoring employer or its affiliates
may be aggregated. Tax qualified retirement plans within the meaning of Section
401(a) of the Code meeting any of the foregoing requirements and which are
provided specialized services (e.g., plans whose participants may direct on a
daily basis their plan allocations among a wide range of investments including
individual corporate equities and other securities in addition to mutual fund
shares) by 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 shares at net asset value has the option of
(i) purchasing Class A shares at the intial sales charge schedule and possible
CDSC schedule disclosed in the Prospectus if it is otherwise eligible to
purchase Class A shares, (ii) purchasing Class D shares at the initial sales
charge and possible CDSC schedule disclosed in the Prospectus, (iii) 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 if the
Employer Sponsored Retirement or Savings Plan does not qualify to purchase Class
B shares with a waiver of the CDSC upon redemption, purchasing Class C shares at
the CDSC schedule disclosed in the Prospectus. The minimum initial and
subsequent purchase requirements are waived in connection with all the above
referenced Employer Sponsored Retirement or Savings Plans.
Closed-End Fund Investment Option. Class A shares of the Trust and other
MLAM-advised mutual funds ('Eligible Class A shares') are offered at net asset
value to shareholders of certain closed-end funds advised by the Investment
Adviser or FAM who purchased such closed-end fund shares prior to October 21,
1994 and wish to reinvest the net proceeds from a sale of their closed-end fund
shares of common stock in Eligible Class A shares, if the conditions set forth
below are satisfied. Alternatively, closed-end fund shareholders who purchased
such shares on or after October 21, 1994 and wish to reinvest the net proceeds
from a sale of their closed-end fund shares are offered Class A shares (if
eligible to buy Class A shares) Class D shares of the Fund and other
MLAM-advised mutual funds ('Eligible Class D shares'), if the following
conditions are met. First, the sale of the closed-end fund shares must be made
through Merrill Lynch and the net proceeds therefrom must be immediately
reinvested in Eligible Class A or Class D Shares. Second, the closed-end fund
shares must either have been acquired in the initial public offering or be
shares representing dividends from shares of common stock acquired in such
offering. Third, the closed-end fund shares must have been continuously
maintained in a Merrill Lynch securities account. Fourth, there must be a
minimum purchase of $250 to be eligible for the investment option. Class A
shares of the Trust 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 Trust. In order to exercise this
investment option, Senior Floating Rate Fund shareholders must sell their Senior
Floating Rate 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 Trust. 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
16
<PAGE>
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 Trust at
such day.
Purchase Privilege of Certain Persons. Trustees of the Trust, 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 the Investment Adviser, 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 Trust at net asset value.
Class D shares of the Trust also 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 he
or she will purchase Class D shares of the Fund with proceeds from a redemption
of a mutual fund that was sponsored by the financial consultant's previous firm
and was subject to a sales charge either at the time of purchase or on a
deferred basis. Second, the investor also must establish that such redemption
had been made within 60 days prior to the investment in the Trust, and the
proceeds from the redemption had been maintained in the interim in cash or a
money market fund.
Class D shares of the Trust 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 Trust with
proceeds from a redemption of shares of such other mutual fund and such fund was
subject to a sales charge either at the time of purchase or on a deferred basis.
Second, such purchase of Class D shares must be made within 90 days after such
notice.
Class D shares of the Trust will be offered at net asset value, without
sales charge, to an investor who has a business relationship with a Merrill
Lynch financial consultant and who has invested in a mutual fund for which
Merrill Lynch has not served as a selected dealer if the following conditions
are satisfied. First, the investor must advise Merrill Lynch that it will
purchase Class D shares of the Fund with proceeds from the redemption of such
shares of other mutual funds and that 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 personal holding company or a public or private investment company. The value
of the assets or company acquired in a tax-free transaction may be adjusted in
appropriate cases to reduce possible adverse tax consequences to the Trust 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 Trust. 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 Trust; (ii) are acquired for
investment and not for resale (subject to the understanding that the disposition
of the Trust's portfolio securities shall at all times remain within its
control);
17
<PAGE>
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 Trust may acquire through such transactions restricted or
illiquid securities to the extent the Trust does not exceed the applicable
limits on acquisition of such securities set forth under 'Investment Objectives
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
1940 Act (each a 'Distribution Plan') with respect to the account maintenance
and/or distribution fees paid by the Trust to the Distributor with respect to
such classes.
Payments of the account maintenance fees and/or distribution fees are
subject to the provisions of Rule 12b-1 under the 1940 Act. Among other things,
each Distribution Plan provides that the Distributor shall provide and the
Trustees 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 Trustees must consider all factors
they deem relevant, including information as to the benefits of the Distribution
Plan to the Trust 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 Trustees who are not 'interested persons' of the
Trust, as defined in the 1940 Act (the 'Independent Trustees'), shall be
committed to the discretion of the Independent Trustees then in office. In
approving each Distribution Plan in accordance with Rule 12b-1, the Independent
Trustees concluded that there is reasonable likelihood that such Distribution
Plan will benefit the Trust 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 Trustees or by the vote of the holders of a
majority of the outstanding related class of voting securities of the Trust. A
Distribution Plan cannot be amended to increase materially the amount to be
spent by the Trust without the approval of the related class of shareholders,
and all material amendments are required to be approved by the vote of Trustees,
including a majority of the Independent Trustees who have no direct or indirect
financial interest in such Distribution Plan, cast in person at a meeting called
for that purpose. Rule 12b-1 further requires that the Trust 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
Trust, the maximum sales charge rule limits the aggregate of distribution fee
payments and CDSCs payable by the Trust 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
18
<PAGE>
gross sales. Consequently, the maximum amount payable to the Distributor
(referred to as the 'voluntary maximum') in connection with the Class B shares
is 6.75% of eligible gross sales. The Distributor retains the right to stop
waiving the interest charges at any time. To the extent payments would exceed
the voluntary maximum, the Trust will not make further payments of the
distribution fee with respect to Class B shares, and any CDSCs will be paid to
the Trust rather than to the Distributor; however, the Trust will continue to
make payments of the account maintenance fee. In certain circumstances the
amount payable pursuant to the voluntary maximum may exceed the amount payable
under the NASD formula. In such circumstances payment in excess of the amount
payable under the NASD formula will not be made.
The following table sets forth comparative information as of July 31, 1994
with respect to the Class B shares of the Trust indicating the maximum allowable
payments that can be made under the NASD maximum sales charge rule and the
Distributor's voluntary maximum for the period August 2, 1985 (commencement of
the public offering of Class B shares) to July 31, 1994. Since Class C shares of
the Trust had not been publicly issued prior to the date of this Statement of
Additional Information, information concerning Class C shares is not yet
provided below.
DATA CALCULATED AS OF JULY 31, 1994 (IN THOUSANDS)
<TABLE>
<CAPTION>
ALLOWABLE ALLOWABLE
ELIGIBLE AGGREGATE INTEREST ON
GROSS SALES UNPAID
SALES(1) CHARGES BALANCE(2)
-------------- ------------ -----------
<S> <C> <C> <C>
Under NASD Rule as
Adopted.............. $ 1,276,360 $ 79,772 $ 42,208
Under Distributor's
Voluntary Waiver..... $ 1,276,360 $ 79,772 $ 6,382
<CAPTION>
ANNUAL
DISTRIBUTION
AMOUNT FEES AT
MAXIMUM PREVIOUSLY AGGREGATE CURRENT
AMOUNT PAID TO UNPAID NET ASSET
PAYABLE DISTRIBUTOR(3) BALANCE LEVEL(4)
------------ -------------- ----------- ------------
<S> <C> <C> <C> <C>
Under NASD Rule as
Adopted.............. $ 121,980 $ 48,094 $ 73,886 $ 1,774
Under Distributor's
Voluntary Waiver..... $ 86,154 $ 48,094 $ 38,060 $ 1,774
</TABLE>
- - - - - - ------------------
(1) Purchase price of all eligible Class B shares sold since August 2, 1985
(commencement of the public issuance of Class B shares) other than shares
acquired through dividend reinvestment and the exchange privilege.
(2) Interest is computed on a monthly basis based upon the prime rate, as
reported in The Wall Street Journal, plus 1.0% as permitted under the NASD
Rule.
(3) Consists of CDSC payments, distribution fee payments and accruals. Of the
distribution fee payments made prior to July 6, 1993 under a prior plan at
the 1.0% rate, 0.75% of average daily net assets has been treated as a
distribution fee and 0.25% of average daily net assets has been deemed to
have been a service fee and not subject to the NASD maximum sales charge
rule. See 'Purchase of Shares-- Distribution Plans' in the Prospectus.
(4) Provided to illustrate the extent to which the current level of distribution
fee payments (not including any CDSC payments) is amortizing the unpaid
balance. No assurance can be given that payments of the distribution fee
will reach either the voluntary maximum or the NASD maximum.
REDEMPTION OF SHARES
Reference is made to 'Redemption of Shares' in the Prospectus for certain
information as to the redemption and repurchase of Trust 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
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
Commission, as a result of which disposal of portfolio securities or
determination of the net asset value of the Trust is not reasonably practicable,
and for such other periods as the Commission may by order permit for the
protection of shareholders of the Trust.
19
<PAGE>
DEFERRED SALES CHARGES--CLASS B 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 (i) on redemptions of Class B shares in connection with
certain post-retirement withdrawals from an Individual Retirement Account
('IRA') or other retirement plan or (ii) on redemptions of Class B shares
following the death or disability of a Class B shareholder. Redemptions for
which the waiver applies are: (a) any partial or complete redemption in
connection with a distribution following retirement under a tax-deferred
retirement plan 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 July 31, 1992, 1993 and 1994, the
Distributor received CDSCs of $279,413 $246,318 and $188,148, respectively, all
of which was paid to Merrill Lynch.
Merrill Lynch Blueprint(Service Mark) 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 Trust are offered through
Blueprint only to members of certain affinity groups. The CDSC is waived in
connection with purchase orders placed through Blueprint by members of such
affinity groups. Services, including the exchange privilege, available to Class
B investors through Blueprint, however, may differ from those available to other
Class B investors. Orders for purchases and redemptions of Class B shares of the
Trust will be grouped for execution purposes which, in some circumstances, may
involve the execution of such orders two business days following the day such
orders are placed. The minimum initial purchase price is $100, with a $50
minimum for subsequent purchases through Blueprint. There is no minimum initial
or subsequent purchase requirement for investors who are part of a 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 Blueprint(Service Mark)
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 such plan has the
same or an affiliated sponsoring employer as an Eligible 401(k) Plan purchasing
Class B shares of MLAM-advised mutual funds ('Eligible 401(a) Plan'). Other tax
qualified retirement plans within the meaning of Section 401(a) or 401(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 also is waived for
any Class B shares which are purchased by an Eligible 401(k) Plan or
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<PAGE>
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
The Investment Adviser is responsible for making the Trust's portfolio
decisions, placing the Trust's brokerage business, evaluating the reasonableness
of brokerage commissions and negotiating the amount of any commissions paid,
subject to policies established by the Trust's Trustees and officers. The Trust
has no obligation to deal with any broker or group of brokers in the execution
of transactions in portfolio securities. Orders for transactions in portfolio
securities are placed for the Trust with a number of brokers and dealers,
including Merrill Lynch. In placing orders, it is the policy of the Trust to
obtain the most favorable net results, taking into account various factors,
including price, commissions, if any, size of the transaction and difficulty of
execution. Where practicable, the Investment Adviser surveys a number of brokers
and dealers in connection with proposed portfolio transactions and selects the
broker or dealer which offers the Trust best price and execution or other
services which are of benefit to the Trust. Securities firms also may receive
brokerage commissions on transactions including covered call options written by
the Trust and the sale of underlying securities upon the exercise of such
options. In addition, consistent with the Rules of Fair Practice of the NASD and
policies established by the Trust's Trustees, the Investment Adviser may
consider sales of shares of the Trust as a factor in the selection of brokers or
dealers to execute portfolio transactions for the Trust.
For the fiscal year ended July 31, 1992, the Trust paid total brokerage
commissions of $234,638, of which $1,400 or 0.60% was paid to Merrill Lynch for
effecting 1.05% of the aggregate dollar amount of transactions in which the
Trust paid brokerage commissions. For the fiscal year ended July 31, 1993, the
Trust paid total brokerage commissions of $520,434, of which $31,459 or 6.04%
was paid to Merrill Lynch for effecting 6.49% of the aggregate dollar amount of
transactions in which the Trust paid brokerage commissions. For the fiscal year
ended July 31, 1994, the Trust paid total brokerage commissions of $632,276 of
which $4,800 or 0.76% was paid to Merrill Lynch for effecting 2.15% of the
aggregate dollar amount of transactions in which the Trust paid brokerage
commissions.
The Trust does not use any particular broker or dealer, and brokers who
provide supplemental investment research to the Investment Adviser may receive
orders for transactions by the Trust. Such supplemental research services
ordinarily consist of assessments and analyses of the business or prospects of a
company, industry or economic sector. 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. If in the judgment
of the Investment Adviser the Trust will be benefitted by supplemental research
services, the Investment Adviser is authorized to pay brokerage commissions to a
broker furnishing such services which are in excess of commissions which another
broker may have charged for effecting the same transaction. The expenses of the
Investment Adviser will not necessarily be reduced as a result of the receipt of
such supplemental information, and the Investment Adviser may use such
information in servicing its other accounts.
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<PAGE>
The Trust invests in securities traded in the over-the-counter market and,
where possible, deals directly with the dealers who make a market in the
securities involved, except in those circumstances in which better prices and
execution are available elsewhere. Under the 1940 Act, persons affiliated with
the Trust are prohibited from dealing with the Trust as principal in the
purchase and sale of securities. Since transactions in the over-the-counter
market usually involve transactions with dealers acting as principal for their
own accounts, affiliated persons of the Trust, including Merrill Lynch, will not
serve as the Trust's dealer in such transactions. However, affiliated persons of
the Trust may serve as its broker in over-the-counter transactions conducted on
an agency basis.
The Trust may invest in the securities of foreign issuers in the form of
American Depositary Receipts (ADR's), European Depositary Receipts (EDR's) 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. ADR's are receipts typically issued
by an American bank or trust company which evidence ownership of underlying
securities issued by a foreign corporation. EDR's are receipts issued in Europe
which evidence a similar ownership arrangement. Generally, ADR's, which are
issued in registered form, are designed for use in the United States securities
markets and EDR's, which are issued in bearer form, are designed for use in
European securities markets.
The Trustees of the Trust have considered the possibilities of recapturing
for the benefit of the Trust brokerage commissions, dealer spreads and other
expenses of possible portfolio transactions, such as underwriting commissions,
by conducting such portfolio transactions through affiliated entities, including
Merrill Lynch. For example, brokerage commissions received by Merrill Lynch
could be offset against the investment advisory fee paid by the Trust to the
Investment Adviser. After considering all factors deemed relevant, the Trustees
made a determination not to seek such recapture. The Trustees will reconsider
this matter from time to time. The Investment Adviser has arranged for the
Trust's custodian to receive any tender offer solicitation fees on behalf of the
Trust payable with respect to portfolio securities of the Trust.
Section 11(a) of the Securities Exchange Act of 1934 generally prohibits
members of the U.S. national securities exchanges from executing exchange
transactions for their affiliates and 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 setting forth the aggregate compensation received by the member in
effecting such transactions, and (iii) complies with any rules the 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
Trust 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 Trust, and annual statements as to aggregate compensation will be provided
to the Trust.
DETERMINATION OF NET ASSET VALUE
The net asset value of the shares of the Trust is determined once daily
Monday through Friday as of 4:15 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, President's 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 Trust also will determine its
net asset value on any day
22
<PAGE>
in which there is sufficient trading in its portfolio securities that the net
asset value might be affected materially, but only if on such day the Trust is
required to sell or redeem shares. Net asset value is determined by adding the
total market value of all securities held by the Trust plus cash or other assets
(including interest and dividends accrued but not yet received) less all
liabilities of the Trust (including accrued expenses). The amount remaining is
divided by the total number of shares outstanding and rounded to the nearest
cent to arrive at the net asset value of each share. Expenses, including
investment advisory fees and any account maintenance and/or distribution fees,
are accrued daily. The per share net asset value of the Class B, Class C and
Class D shares generally will be lower than the per share net asset value of the
Class A shares reflecting the daily expense accruals of the account maintenance,
distribution and higher transfer agency fees applicable with respect to the
Class B and Class C shares and the daily expense accruals of the account
maintenance fees applicable with respect to the Class D shares; moreover the per
share net asset value of Class B and Class C shares generally will be lesser
than the per share net asset value of 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 Fund. It is
expected, however, that the per share net asset value of the four classes will
tend to converge immediately after the payment of dividends or distributions,
which will differ by approximately the amount of the expense accrual
differential between the classes.
Securities in the Trust's portfolio are valued daily at the time of
closing of the New York Stock Exchange. Securities traded on a stock exchange
are vaued at the last sale price (regular way) at such time. If there are no
sales, then the price is the last available bid price. Securities traded on
more than one exchange are valued on the exchange determined to be their
primary market. Securities traded in the over-the-counter market will be
valued at the last quoted bid price. Securities traded on a stock exchange and
the over-the-counter market will be valued according to the broadest and most
representative market. Options which are traded on exchanges are valued at
their last sale price as of the close of such exchanges or, if there are no
sales, then the price is the last available bid price. Where there is no market
quotation on securities or options, fair market value will be determined in good
faith by or under the direction of the Trust's Trustees. Short-term securities
are valued at amortized cost, which approximates market. Such valuation
procedures will be reviewed periodically by the Trustees.
SHAREHOLDER SERVICES
The Trust offers a number of shareholder services summarized below which
are designed to facilitate investment in its shares. Full details as to each of
such services and copies of the various plans described below can be obtained
from the Trust, the Distributor or Merrill Lynch.
INVESTMENT ACCOUNT
Each shareholder whose account is maintained at the Transfer Agent has an
Investment Account and will receive statements, at least quarterly, from the
Transfer Agent showing any reinvestments of dividends and capital gains
distributions activity in the account since the previous statement. Shareholders
also will receive separate confirmations for each purchase or sale transaction
other than reinvestment of dividends and capital gains distributions. A
shareholder may make additions to his Investment Account at any time by mailing
a check directly to the Transfer Agent.
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<PAGE>
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.
AUTOMATIC INVESTMENT PLANS
A shareholder may make additions to an Investment Account at any time by
purchasing Class A shares (if he or she is an eligible Class A investor as
described in the Prospectus) or Class B, Class C or Class D shares at the
applicable public offering price either through the shareholder's securities
dealer, or by mail directly to the Transfer Agent, acting as agent for such
securities dealer. Voluntary accumulation also can be made through a service
known as the Automatic Investment Plan whereby the Trust 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. For
investors who buy shares of the Trust through Blueprint, no minimum charge to
the investor's bank account is required. Investors who maintain CMA(Registered)
accounts may arrange to have periodic investments made in the Trust in their
CMA(Registered) accounts or in certain related accounts in amounts of $100 or
more ($1 for retirement accounts) through the CMA(Registered) Automated
Investment Program.
AUTOMATIC REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
Unless specific instructions are given as to the method of payment of
dividends and capital gains distributions, dividends and distributions will be
reinvested automatically in additional shares of the Trust. Such reinvestment
will be at the net asset value of shares of the Trust 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 capital gains distributions reinvested in shares of the Trust 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 Trust having a value, based on cost or the
current offering price, of $5,000 or more, and monthly withdrawals are available
for shareholders with Class A or Class D shares with such a value of $10,000 or
more.
At the time of each withdrawal payment, sufficient Class A or Class D
shares are redeemed from those on deposit in the shareholder's account to
provide the withdrawal payment specified by the shareholder. The shareholder may
specify either a dollar amount or a percentage of the value of his Class A or
Class D shares. Redemptions will be made at net asset value as determined at the
close of business on the New York Stock Exchange (currently 4:00 P.M., New York
City time) on the 24th day of each month or the 24th day of the last month of
each quarter, whichever is applicable. If the New York Stock Exchange is not
open for business on such
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<PAGE>
date, the Class A or Class D shares will be redeemed at the close of business on
the following business day. The check for the withdrawal payment will be mailed,
or the direct deposit 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 reinvested automatically in Class A or Class D shares of
the Trust, respectively. A shareholder's Systematic Withdrawal Plan may be
terminated at any time, without charge or penalty, by the shareholder, the
Trust, the Trust's transfer agent or the Distributor. Withdrawal payments should
not be considered as dividends, yield or income. Each withdrawal is a taxable
event. If periodic withdrawals continuously exceed reinvested dividends, the
shareholder's original investment may be reduced correspondingly. Purchases of
additional Class A or Class D shares concurrent with withdrawals are ordinarily
disadvantageous to the shareholder because of sales charges and tax liabilities.
The Trust will not knowingly accept purchase orders for Class A or Class D
shares of the Trust 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.
A Class A or Class D shareholder whose shares are held within a
CMA(Registered), CBA(Registered) or Retirement Account may elect to have shares
redeemed on a monthly, bimonthly, quarterly, semiannual or annual basis through
the Systematic Redemption Program. The minimum fixed dollar amount redeemable is
$25. The proceeds of systematic redemptions will be posted to a 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 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
Systematic Redemption Program is not available if Trust shares are being
purchased within the account pursuant to the Automatic Investment Program. For
more information on the Systematic Redemption Program, eligible shareholders
should contact their Merrill Lynch financial consultant.
RETIREMENT PLANS
Self-directed individual retirement accounts and other retirement plans are
available from Merrill Lynch. Under these plans, investments may be made in the
Trust and in certain of the other mutual funds sponsored by Merrill Lynch as
well as in other securities. Merrill Lynch charges an initial establishment fee
and an annual custodial fee for such account. Information with respect to these
plans is available upon request from Merrill Lynch. The minimum initial purchase
to establish any such plan is $100 and the minimum subsequent purchase is $1.
Capital gains and income received in each of the plans referred to above
are exempt from Federal taxation until distributed from the plans. Investors
considering participation in any such plan should review specific tax laws
relating thereto and should consult their attorneys or tax advisers with respect
to the establishment and maintenance of any such plan.
EXCHANGE PRIVILEGE
Shareholders of each class of shares of the Trust have an exchange
privilege with certain other MLAM-advised mutual funds listed below. Under the
Merril Lynch Select Pricing(Service Mark) System, Class A shareholders may
exchange Class A shares of the Trust for Class A shares of a second MLAM-advised
mutual fund if the
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<PAGE>
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 will be
exchangeable with shares of the same class of other MLAM-advised mutual funds.
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 Trust is 'tacked' to the holding period of the newly acquired
shares of the other fund as more fully described below. Class A, Class B, Class
C and Class D shares also will be exchangeable for shares of certain
MLAM-advised money market funds specifically designated below as available for
exchange by holders of Class A, Class B, Class C or Class D shares. Shares with
a net asset value of at least $100 are required to qualify for the exchange
privilege, and any shares utilized in an exchange must have been held by the
shareholder for 15 days. It is contemplated that the exchange privilege may be
applicable to other new mutual funds whose shares may be distributed by the
Distributor.
Exchanges of Class A or Class D shares outstanding ('outstanding Class A or
Class D shares') for Class A 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 Trust generally 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, of another
MLAM-advised mutual fund ('new Class B or Class C shares') on the basis of
relative net asset value per Class B or Class C share, without the payment of
any CDSC that might otherwise be due on redemption of the outstanding shares.
Class B shareholders of the Trust exercising the exchange privilege will
continue to be subject to the Trust'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 Trust acquired
through use of the exchange privilege will be subject to the Trust'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
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<PAGE>
new Class B or Class C shares. For example, an investor may exchange Class B
shares of the Trust for those of Merrill Lynch Special Value Fund, Inc.
('Special Value Fund') after having held the Trust Class B shares for two and a
half years. The 2% sales charge that generally would apply to a redemption would
not apply to the exchange. Three years later the investor may decide to redeem
the Class B shares of Special Value Fund and receive cash. There will be no CDSC
due on this redemption, since by 'tacking' the two and a half year holding
period of Trust 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 Trust 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 Trust
may, in turn, be exchanged back into Class B or Class C shares, respectively, of
any fund offering such shares, in which event the holding period for Class B or
Class C shares of the fund will be aggregated with previous holding periods for
purposes of reducing the CDSC. Thus, for example, an investor may exchange Class
B shares of the Trust for shares of Merrill Lynch Institutional Fund
('Institutional Fund') after having held the Trust 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 Trust been redeemed for cash rather than
exchanged for shares of Institutional Fund will be payable. If, instead of such
redemption, the shareholder exchanged such shares for Class B shares of a fund
which the shareholder continued to hold for an additional two and a half years,
any subsequent redemption will not incur a CDSC.
Set forth below is a description of the investment objectives of the other
funds into which exchanges can be made:
<TABLE>
<CAPTION>
Funds Issuing Class A, Class B, Class C and Class D Shares:
<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 of fund
shares resulting from movements in
interest rates, through investment
primarily in a portfolio of adjustable
rate securities.
MERRILL LYNCH AMERICAS INCOME FUND,
INC. ............................ A high level of current income,
consistent with prudent investment risk,
by investing primarily in debt
securities denominated in a currency
of a country located in the Western
Hemisphere (i.e., North and South
America and the surrounding waters).
MERRILL LYNCH ARIZONA LIMITED
MATURITY MUNICIPAL BOND FUND..... A portfolio of Merrill Lynch Multi-State
Limited Maturity Municipal Series Trust,
a series fund, whose objective is to
provide as high a level of income
exempt from Federal and Arizona income
taxes as is consistent with prudent
investment
</TABLE>
27
<PAGE>
<TABLE>
<S> <C>
management through investment in a
portfolio primarily of intermediate-term
investment grade Arizona Municipal Bonds.
MERRILL LYNCH ARIZONA MUNICIPAL
BOND FUND........................ A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund,
whose objective is to provide as high
a level of income exempt from Federal
and Arizona income taxes as is
consistent with prudent investment
management.
MERRILL LYNCH ARKANSAS MUNICIPAL
BOND FUND........................ A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund,
whose objective is to provide as high
a level of income exempt from Federal
and Arkansas income taxes as is
consistent with prudent investment
management.
MERRILL LYNCH ASSET GROWTH FUND,
INC. ............................ High total investment return, consistent
with prudent risk, from investment in
United States and foreign equity, debt
and money market securities the
combination of which will be varied
both with respect to types of
securities and markets in response to
changing market and economic trends.
MERRILL LYNCH ASSET INCOME FUND,
INC. ............................ A high level of current income through
investment primarily in United States
fixed income securities.
MERRILL LYNCH BALANCED FUND FOR
INVESTMENT
AND RETIREMENT................... As high a level of total investment
return as is consistent with a
relatively low level of risk through
investment in common stock and other
types of securities, including fixed
income securities and convertible
securities.
MERRILL LYNCH BASIC VALUE FUND,
INC. ............................ Capital appreciation and, secondarily,
income 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 primarily of insured
California Municipal Bonds.
</TABLE>
28
<PAGE>
<TABLE>
<S> <C>
MERRILL LYNCH CALIFORNIA LIMITED
MATURITY MUNICIPAL BOND FUND..... A portfolio of Merrill Lynch Multi-State
Maturity Municipal Series Trust, a
series fund, whose objective is to
provide shareholders with as high a
level of income exempt from Federal
and California income taxes as is
consistent with prudent investment
management through investment in a
portfolio primarily of
intermediate-term investment grade
California Municipal Bonds.
MERRILL LYNCH CALIFORNIA MUNICIPAL
BOND FUND........................ A portfolio of Merrill Lynch California
Municipal Series Trust, a series fund,
whose objective is to provide as high
a level of income exempt from Federal
and California income taxes as is
consistent with prudent investment
management.
MERRILL LYNCH CAPITAL FUND,
INC. ............................ The highest total investment return
consistent with prudent risk through a
fully managed investment policy
utilizing equity, debt and convertible
securities.
MERRILL LYNCH COLORADO MUNICIPAL
BOND FUND........................ A portfolio of Merrill Lynch Multi-State
Municipal Series, 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 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.
</TABLE>
29
<PAGE>
<TABLE>
<S> <C>
MERRILL LYNCH EUROFUND............. Capital appreciation primarily through
investment in equity securities of
corporations domiciled in Europe.
MERRILL LYNCH FEDERAL SECURITIES
TRUST............................ High current return through investments
in U.S. Government and Government agency
securities, including GNMA
mortgage-backed certificates and other
mortgage-backed Government securities.
MERRILL LYNCH FLORIDA LIMITED
MATURITY MUNICIPAL BOND FUND..... A portfolio of Merrill Lynch Multi-State
Limited Maturity Municipal Series Trust,
a series fund, whose objective is to
provide as high a level of income ex-
empt 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.
MERRILL LYNCH GLOBAL ALLOCATION
FUND, INC. ...................... High total investment return, consistent
with prudent risk, through a fully
managed investment policy utilizing
United States and foreign equity, debt
and money market securities, the
combination of which will be varied
from time to time both with respect to
</TABLE>
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the types of securities and markets in
response to changing market and
economic trends.
MERRILL LYNCH GLOBAL BOND FUND FOR
INVESTMENT AND RETIREMENT........ High total investment return from
investment in government and corporate
bonds denominated in various
currencies and 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 HOLDINGS, INC.
(residents of Arizona must meet
investor
suitability standards)........... The highest total investment return
consistent with prudent risk through
worldwide investment in an
internationally diversified portfolio
of securities.
MERRILL LYNCH GLOBAL 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 primarily engaged in
the ownership or operation of
facilities used to generate, transmit
or distribute electricity, tele-
communications, 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.
</TABLE>
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MERRILL LYNCH INTERNATIONAL EQUITY
FUND............................. Capital appreciation and, secondarily,
income by investing in a diversified
portfolio of equity securities of
issuers located in countries other
than the United States.
MERRILL LYNCH LATIN AMERICA FUND,
INC. ............................ Capital appreciation by investing
primarily in Latin American equity and
debt securities.
MERRILL LYNCH MARYLAND MUNICIPAL
BOND FUND........................ A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund,
whose objective is to provide as high
a level of income exempt from Federal
and Maryland income taxes as is
consistent with prudent investment
management.
MERRILL LYNCH MASSACHUSETTS LIMITED
MATURITY MUNICIPAL BOND FUND..... A portfolio of Merrill Lynch Multi-State
Limited Maturity Municipal Series Trust,
a series fund, whose objective is to
provide as high a level of income ex-
empt 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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MERRILL LYNCH MINNESOTA MUNICIPAL
BOND FUND........................ A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund,
whose objective is to provide as high
a level of income exempt from Federal
and Minnesota personal income taxes as
is consistent with prudent investment
management.
MERRILL LYNCH MUNICIPAL BOND FUND,
INC. ............................ Tax-exempt income from three separate
diversified portfolios of municipal
bonds.
MERRILL LYNCH MUNICIPAL
INTERMEDIATE
TERM FUND........................ Currently the only portfolio of Merrill
Lynch Municipal Series Trust, a series
fund, whose objective is to provide as
high a level as possible of income
exempt from Federal income taxes by
investing in investment grade
obligations with a dollar weighted
average maturity of five to twelve
years.
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
investment in 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.
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
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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.
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 primarily of
intermediate-term investment grade
Pennsylvania Municipal Bonds.
</TABLE>
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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 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.
MERRILL LYNCH SPECIAL VALUE FUND,
INC. ............................ Long-term growth of capital from
investments in securities, primarily
common stock, 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.
</TABLE>
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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.
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 if the exchange
occurs within certain retirement
plans)........................... Currently the only portfolio of Merrill
Lynch Retirement Series Trust, a series
fund, whose objectives are to provide
current income, preservation of capi-
tal and liquidity available from in-
vesting 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.
<CAPTION>
Class B, Class C and Class D Share
Money Market Funds:
<S> <C>
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.
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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 Trust of the exchange.
Shareholders of the Trust, 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 Trust reserves
the right to require a properly completed Exchange Application. This exchange
privilege may be modified or terminated in accordance with the rules of the
Commission. The Trust 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.
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<PAGE>
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS
The Trust intends to distribute all its net investment income, if any.
Dividends from such net investment income will be paid semi-annually. All net
realized long-or short-term capital gains, if any, will be distributed to the
Trust's shareholders at least annually. See 'Shareholder Services--Automatic
Reinvestment of Dividends and Capital Gains Distributions' for information
concerning the manner in which dividends and distributions may be reinvested
automatically in shares of the Trust. 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 Trust or received in cash. The per share dividends
and distributions on Class B and Class C shares will be lower than the per share
dividends and distributions on Class A and Class D shares as a result of the
account maintenance, distribution and higher transfer agency fees applicable
with respect to the Class B and Class C shares; similarly, the per share
dividends and distributions on Class D shares will be lower than the per share
dividends and distributions on Class A shares as a result of the account
maintenance fees applicable with respect to the Class D shares. See
'Determination of Net Asset Value'.
TAXES
The Trust 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 Trust (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
Trust intends to distribute substantially all of such income.
Dividends paid by the Trust from its ordinary income and distributions of
the Trust'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 Trust's net realized long-term
capital gains (including long-term capital gains from certain transactions in
options) ('capital gain dividends') are taxable to shareholders as long-term
capital gains, regardless of the length of time the shareholder has owned Trust
shares. Any loss upon the sale or exchange of Trust shares held for six months
or less, however, 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 Trust'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 Trust. Not later than 60 days after the close of its
taxable year, the Trust will provide its shareholders with a written notice
designating the amounts of any ordinary income dividends or capital gain
dividends. A portion of the Trust'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 Trust 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 Commission 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 Fund
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
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purposes as being paid by the Trust and received by its shareholders on December
31 of the year in which such dividend was declared.
Ordinary income dividends paid by the Trust 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
United States withholding tax.
Dividends and interest received by the Trust may give rise to withholding
and other taxes imposed by foreign countries. Tax conventions between certain
countries and the United States may reduce or eliminate such taxes. Shareholders
may be able to claim United States 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 Trust. If more than 50% in value
of the Trust's total assets at the close of its taxable year consists of
securities of foreign corporations, the Trust will be eligible, and intends, to
file an election with the Internal Revenue Service pursuant to which
shareholders of the Trust will be required to include their proportionate shares
of such withholding taxes in their United States income tax returns as gross
income, treat such proportionate shares as taxes paid by them and deduct such
respective proportionate shares in computing their taxable incomes or,
alternatively, use them as foreign tax credits against their United States
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 United
States withholding tax on the income resulting from the Trust's election
described in this paragraph but may not be able to claim a credit or deduction
against such United States tax for the foreign taxes treated as having been paid
by such shareholder. The Trust will report annually to its shareholders the
amount per share of such withholding taxes. For this purpose, the Trust 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.
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 Trust or who, to the Trust'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.
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 the exchange privilege within 90 days of
acquiring the shares, then the loss the shareholder can recognize on the
exchange will be reduced (or the gain increased) to the extent the sales charge
paid to the Trust on the exchanged shares reduces any sales charge the
shareholder would have owed upon the 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.
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A loss realized on a sale or exchange of shares of the Trust will be
disallowed if other Trust 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 a 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 Trust 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 Trust's taxable
income and capital gains will be distributed to avoid entirely the imposition of
the tax. In such event, the Trust will be liable for the tax only on the amount
by which it does not meet the foregoing distribution requirements.
TAX TREATMENT OF OPTIONS AND FORWARD FOREIGN EXCHANGE TRANSACTIONS
The Trust may write, purchase or sell options or forward foreign exchange
contracts. Options and forward foreign exchange 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 option or forward foreign exchange
contract will be treated as sold for its fair market value on the last day of
the taxable year. Unless such contract is a non-equity option or a regulated
futures contract for a non-U.S. currency for which the Trust 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 Trust 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
Trust 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 Trust's transactions in options and forward foreign exchange
contracts. Under Section 1092, the Trust may be required to postpone recognition
for tax purposes of losses incurred in certain closing transactions in options
and forward foreign exchange contracts.
One of the requirements for qualification as a RIC is that less than 30% of
the Trust's gross income be derived from gains from the sale or other
disposition of securities held for less than three months. Accordingly, the
Trust may be restricted in effecting closing transactions within three months
after entering into an options contract.
SPECIAL RULES FOR CERTAIN FOREIGN CURRENCY TRANSACTIONS
In general, gains from 'foreign currencies' and from foreign currency
options and forward foreign exchange contracts relating to investments in stock,
securities or foreign currencies will be qualifying income for purposes of
determining whether the Trust qualifies as a RIC. It is currently unclear,
however, who will be treated as the issuer of a foreign currency instrument or
how foreign currency options and forward foreign exchange contracts will be
valued for purposes of the RIC diversification requirements applicable to the
Trust.
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Under Code Section 988, special rules are provided for certain transactions
in a foreign currency other than the taxpayer's functional currency (i.e.,
unless certain special rules apply, currencies other than the United States
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
Trust may elect capital gain or loss treatment for such transactions. In
general, however, Code Section 988 gains or losses will increase or decrease the
amount of the Trust'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 Trust 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 Trust shares and resulting in a
capital gain for any shareholder who received a distribution greater than such
shareholder's basis in Trust 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 Trust 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 are exempt from state income taxation dividends paid by RICs
which are derived from interest on United States Government obligations. State
law varies as to whether dividend income attributable to United States
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
Trust.
PERFORMANCE DATA
From time to time the Trust 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 Trust'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 Commission.
Average annual total return quotations for the specified periods are
computed by finding the average annual compounded rates of return (based on net
investment income and any realized and unrealized capital gains or losses on
portfolio investments over such periods) that would equate the initial amount
invested to the redeemable value of such investment at the end of each period.
Average annual total return is computed assuming all dividends and distributions
are reinvested and taking into account all applicable recurring and nonrecurring
expenses, including the 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 Trust 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
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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 a longer period of time.
Set forth below is total return information for the Class A and Class B
shares of the Trust for the periods indicated. Since Class C and Class D shares
have not been issued prior to the date of this Statement of Additional
Information, performance information concerning Class C and Class D shares is
not yet provided.
<TABLE>
<CAPTION>
CLASS A SHARES* CLASS B SHARES
--------------------------- ---------------------------
REDEEMABLE EXPRESSED AS REDEEMABLE
VALUE OF A A VALUE OF A
EXPRESSED AS HYPOTHETICAL PERCENTAGE HYPOTHETICAL
A PERCENTAGE $1,000 BASED $1,000
BASED ON A INVESTMENT ON A INVESTMENT
HYPOTHETICAL AT THE END HYPOTHETICAL AT THE END
$1,000 OF $1,000 OF THE
INVESTMENT THE PERIOD INVESTMENT PERIOD
------------ ------------ ------------ ------------
AVERAGE ANNUAL TOTAL RETURN
(INCLUDING MAXIMUM APPLICABLE SALES CHARGES)
<S> <C> <C> <C> <C>
One Year Ended July 31,
1994................. 7.73% $ 1,077.30 8.52% $ 1,085.20
Five Years Ended July
31, 1994............. 5.48% $ 1,305.90 5.53% $ 1,308.60
Inception (August 2,
1985) to July 31,
1994................. 9.06% $ 2,182.50
Inception (October 24,
1988) to July 31,
1994................. 6.61% $ 1,446.50
<CAPTION>
ANNUAL TOTAL RETURN
(EXCLUDING MAXIMUM APPLICABLE SALES CHARGES)
Year Ended July 31,
<S> <C> <C> <C> <C>
1994................... 13.69% $ 1,136.90 12.52% $ 1,125.20
1993................... (0.05)% $ 999.50 (1.02)% $ 989.80
1992................... 1.66% $ 1,016.60 .53% $ 1,005.30
1991................... (0.57)% $ 994.30 (1.61)% $ 983.90
1990................... 19.99% $ 1,199.90 18.79% $ 1,187.90
1989................... 1.94% $ 1,019.40
1988................... (20.74)% $ 792.60
1987................... 100.16% $ 2,001.60
Inception (August 2,
1985) to July 31,
1986................. 3.12% $ 1,031.20
Inception (October 21,
1988) to July 31,
1989................. 10.77% $ 1,107.70
</TABLE>
- - - - - - ------------------
* Information as to Class A shares is presented only for the period October 21,
1988 to July 31, 1994. Prior to October 21, 1988, no Class A shares were
publicly issued.
42
<PAGE>
<TABLE>
<CAPTION>
CLASS A SHARES* CLASS B SHARES
--------------------------- ---------------------------
REDEEMABLE EXPRESSED AS REDEEMABLE
VALUE OF A A VALUE OF A
EXPRESSED AS HYPOTHETICAL PERCENTAGE HYPOTHETICAL
A PERCENTAGE $1,000 BASED $1,000
BASED ON A INVESTMENT ON A INVESTMENT
HYPOTHETICAL AT THE END HYPOTHETICAL AT THE END
$1,000 OF $1,000 OF THE
INVESTMENT THE PERIOD INVESTMENT PERIOD
------------ ------------ ------------ ------------
AGGREGATE TOTAL RETURN
(INCLUDING MAXIMUM APPLICABLE SALES CHARGES)
<S> <C> <C> <C> <C>
Inception (August 2,
1985) to July 31,
1994................. 118.25 % $ 2,182.50
Inception (October 21,
1988) to July 31,
1994................. 44.65 % $ 1,446.50
</TABLE>
- - - - - - ------------------
* Information as to Class A shares is presented only for the period October 21,
1988 to July 31, 1994. Prior to October 24, 1988, no Class A shares were
publicly issued.
In order to reflect the reduced sales charges in the case of Class A and
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
Trust in advertisements directed to such investors 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 the waiver of sales charges, a lower amount of expenses may be
deducted.
GENERAL INFORMATION
DESCRIPTION OF SHARES
The Declaration of Trust of the Trust permits the Trustees to issue an
unlimited number of full and fractional shares of beneficial interest, par value
$0.10 per share, of different classes and to divide or combine the shares of
each class into a greater or lesser number of shares without thereby changing
the proportionate beneficial interest in the Trust. At the date of this
Statement of Additional Information, the shares of the Trust are divided into
Class A, Class B, Class C and Class D shares. Under the Declaration of Trust,
the Trustees have the authority to issue separate classes of shares which would
represent interests in the assets of the Trust and 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 and/or distribution of such shares and have exclusive voting
rights with respect to matters relating to such account maintenance and/or
distribution expenditures. The Trust has received an order from the Commission
permitting the issuance and sale of multiple classes of shares. The Board of
Trustees of the Trust may classify and reclassify the shares of the Trust into
additional shares of beneficial interest at a future date. Upon liquidation of
the Trust, shareholders of each class are entitled to share pro rata in the net
assets of the Trust available for distribution to shareholders, except for any
expenses which may be attributable only to one class. Shares have no preemptive
rights. The rights of redemption, conversion and exchange are described
elsewhere herein and in the Prospectus. Shares are fully paid and non-assessable
by the Trust.
Shareholders are entitled to one vote for each full share held and
fractional votes for fractional shares held in the election of Trustees (to the
extent hereafter provided) and on other matters submitted to vote of
shareholders,
43
<PAGE>
except that shareholders of the class bearing account maintenance and/or
distribution expenses as provided above shall have exclusive voting rights with
respect to matters relating to such account maintenance and/or distribution
expenditures. Voting rights are not cumulative, so that holders of more than 50%
of the shares voting in the election of Trustees can, if they choose to do so,
elect all the Trustees of the Trust, in which event the holders of the remaining
shares are unable to elect any person as a Trustee. No amendment may be made to
the Declaration of Trust without the affirmative vote of a majority of the
outstanding shares of the Trust.
The Trust is an entity of the type commonly known as a 'Massachusetts
business trust'. Under Massachusetts law, shareholders of such a trust may,
under certain circumstances, be held personally liable as partners for its
obligations. However, the Declaration of Trust establishing the Trust, dated
April 12, 1985, a copy of which together with all amendments thereto (the
'Declaration of Trust') is on file in the office of the Secretary of the
Commonwealth of Massachusetts, contains an express disclaimer of shareholder
liability for acts or obligations of the Trust and provides for indemnification
and reimbursement of expenses out of the Trust property for any shareholder held
personally liable for the obligations of the Trust. The Declaration of Trust
also provides that the Trust may maintain appropriate insurance (for example,
fidelity bonding and errors and omissions insurance) for the protection of the
Trust, its shareholders, Trustees, officers, employees and agents covering
possible tort and other liabilities. Thus, the risk of a shareholder incurring
financial loss on account of shareholder liability is limited to circumstances
in which both inadequate insurance existed and the Trust itself was unable to
meet its obligations.
The Declaration of Trust further provides that obligations of the Trust are
not binding upon the Trustees individually but only upon the property of the
Trust and that the Trustees will not be liable for any action or failure to act,
but nothing in the Declaration of Trust protects a Trustee against any liability
to which he 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 Investment Adviser provided the initial capital for the Trust by
purchasing 10,000 shares for $100,000. Such shares were acquired for investment
and can only be disposed of by redemption. The organizational expenses of the
Trust were paid by the Trust and are being amortized over a period not exceeding
five years. The proceeds realized by the Investment Adviser upon the redemption
of any of the shares initially purchased by it will be reduced by the
proportional amount of the unamortized organizational expenses which the number
of such initial shares being redeemed bears to the number of shares initially
purchased.
44
<PAGE>
COMPUTATION OF OFFERING PRICE PER SHARE
The offering price for Class A shares of the Trust, based on the current
offering period value of the Trust's net assets and number of shares outstanding
as of July 31, 1994, is calculated as set forth below. Information is not
provided for Class D shares since no Class D shares were publicly offered prior
to the date of this Statement of Additional Information. The offering price for
Class B and Class C shares of the Trust is the net asset value of Class B and
Class C shares, respectively.
<TABLE>
<CAPTION>
CLASS A
-----------
<S> <C>
Net Assets.............................. $20,054,142
-----------
-----------
Number of Shares Outstanding............ 1,266,118
-----------
-----------
Net Asset Value Per Share (net assets
divided by number of shares
outstanding).......................... $15.84
Sales Charge (5.25% of offering price
(5.54% of net amount invested))*...... .88
-----------
Offering Price.......................... $16.72
-----------
-----------
</TABLE>
- - - - - - ------------------
* Rounded to the nearest one-hundredth percent; assumes maximum sales charge is
applicable.
INDEPENDENT AUDITORS
Deloitte & Touche LLP, 117 Campus Drive, Princeton, New Jersey 08540-6619,
has been selected as the independent auditors of the Trust. The selection of
independent auditors is subject to ratification by the shareholders of the
Trust. The independent auditors are responsible for auditing the annual
financial statements of the Trust.
CUSTODIAN
The Bank of New York, 90 Washington Street, 12th Floor, New York, New York
10286, acts as custodian of the Trust's assets. The Custodian is responsible for
safeguarding and controlling the Trust's cash and securities, handling the
receipt and delivery of securities and collecting interest and dividends on the
Trust's investments.
TRANSFER AGENT
Financial Data Services, Inc., 4800 Deer Lake Drive East, Jacksonville,
Florida 32246-6484, acts as the Trust's transfer agent and is responsible for
the issuance, transfer and redemption of shares and the opening, maintenance and
servicing of shareholder accounts.
LEGAL COUNSEL
Brown & Wood, One World Trade Center, New York, New York 10048-0557, is
counsel for the Trust.
REPORTS TO SHAREHOLDERS
The fiscal year of the Trust ends July 31 of each year. The Trust sends to
its shareholders at least semi-annually reports showing the Trust'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,
45
<PAGE>
shareholders will receive Federal income tax information regarding dividends and
capital gains distributions and, if applicable, foreign withholding and other
taxes.
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 Trust has filed with the Securities and Exchange
Commission, Washington, D.C. under the Securities Act of 1933, as amended, and
the Investment Company Act, as amended, to which reference is hereby made.
To the knowledge of the Trust, no person or entity owned beneficially 5% or
more of the Trust's shares on September 30, 1994.
46
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders,
MERRILL LYNCH GLOBAL RESOURCES TRUST
(formerly MERRILL LYNCH NATURAL RESOURCES TRUST):
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of Merrill Lynch Global Resources Trust as of July
31, 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 each of the periods in the five-year period
then ended. These financial statements and the financial highlights are the
responsibility of the Trust'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 July 31,
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
Resources Trust as of July 31, 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
August 29, 1994
47
<PAGE>
Merrill Lynch Global Resources Trust July 31, 1994
SCHEDULE OF INVESTMENTS
<TABLE>
<CAPTION>
Shares Value Percent of
Industries Held Common Stocks Cost (Note 1a) Net Assets
<S> <C> <C> <C> <C> <C>
Chemical 150,000 Air Products and Chemicals, Inc. $ 6,531,950 $ 7,200,000 2.8%
640,000 Asahi Chemical Industry Co., Ltd. 4,707,315 4,988,010 1.9
42,000 du Pont (E.I.) de Nemours & Co. 2,292,524 2,493,750 1.0
157,500 Hanna (M.A.) Co. 3,130,050 4,173,750 1.6
------------ ------------ ------
16,661,839 18,855,510 7.3
Diversified 157,000 Coastal Corp. 4,019,253 4,925,875 1.9
Companies 345,000 Cyprus Amax Minerals Co. 9,974,501 10,781,250 4.2
110,000 Mitchell Energy & Development Corp. (Class A) 2,303,358 2,076,250 0.8
175,000 Mitchell Energy & Development Corp. (Class B) 3,666,183 3,237,500 1.3
500,000 Occidental Petroleum Corp. 9,585,073 9,937,500 3.9
------------ ------------ ------
29,548,368 30,958,375 12.1
Gold 828,100 Newcrest Mining Ltd. 3,817,001 3,774,808 1.5
101,622 Newmont Mining Corp. 4,349,170 4,014,069 1.6
190,000 Placer Dome Inc. 4,703,434 3,942,500 1.5
------------ ------------ ------
12,869,605 11,731,377 4.6
Integrated Oil 41,000 Amoco Corp. 2,293,335 2,454,875 1.0
Companies-- 200,000 Unocal Corp. 5,792,080 5,800,000 2.2
Domestic ------------ ------------ ------
8,085,415 8,254,875 3.2
Integrated Oil 1,230,000 British Petroleum Co. PLC 6,552,656 7,835,746 3.1
Companies-- 132,000 Societe Nationale Elf Aquitaine (ADR)* 4,687,579 5,049,000 2.0
International 42,000 Total S.A. (Class B) 2,380,137 2,417,277 0.9
192,000 YPF S.A. (ADR)* 4,770,800 4,872,000 1.9
------------ ------------ ------
18,391,172 20,174,023 7.9
Metals & Mining 300,000 CRA Ltd. 3,704,244 4,153,534 1.6
187,000 +Falconbridge Ltd. 2,533,703 2,520,352 0.9
380,000 Freeport-McMoRan Copper & Gold Inc. 8,134,201 8,787,500 3.4
2,023,000 M.I.M. Holdings Ltd. 4,404,825 4,483,777 1.8
250,000 Noranda Inc. 4,726,554 4,409,690 1.7
85,000 Phelps Dodge Corp. 3,997,431 5,248,750 2.1
375,000 The RTZ Corp. PLC (Rio Tinto Zinc) 4,822,842 4,989,024 1.9
------------ ------------ ------
32,323,800 34,592,627 13.4
Oil & Gas 957,000 Ampolex Ltd. 2,975,977 3,026,095 1.2
Producers 410,000 +Chauvco Resources Ltd. 4,750,813 4,969,607 1.9
730,000 Enterprise Oil PLC 4,693,559 4,825,017 1.9
39,000 The Louisiana Land and Exploration Co. 1,495,626 1,642,875 0.6
140,000 Oryx Energy Co. 2,332,787 2,152,500 0.8
12,500,000 Premier Consolidated Oilfields PLC 6,793,853 5,205,938 2.0
380,000 Ranger Oil, Ltd. 2,575,159 2,470,000 1.0
93,200 +Vastar Resources, Inc. 2,555,113 2,469,800 1.0
------------ ------------ ------
28,172,887 26,761,832 10.4
</TABLE>
48
<PAGE>
Merrill Lynch Global Resources Trust July 31, 1994
SCHEDULE OF INVESTMENTS (concluded)
<TABLE>
<CAPTION>
Shares Value Percent of
Industries Held Common Stocks Cost (Note 1a) Net Assets
<S> <C> <C> <C> <C> <C>
Oil Services 194,000 IHC Caland $ 4,286,119 $ 4,477,929 1.8%
80,000 Schlumberger Ltd. 4,642,939 4,720,000 1.8
------------ ------------ ------
8,929,058 9,197,929 3.6
Paper & Pulp 426,600 Aracruz Celulose S.A. (ADR)* 2,365,445 4,799,250 1.9
90,000 Georgia-Pacific Corp. 5,778,780 5,805,000 2.3
27,000 Metsa-Serla OY 1,182,695 1,164,373 0.4
58,000 Mo Och Domsjo AB Co. 2,330,990 2,537,851 1.0
150,000 Pope & Talbot, Inc. 3,477,225 2,775,000 1.1
600,000 Slocan Forest Products Ltd. 5,136,011 5,644,402 2.2
270,000 Weyerhaeuser Co. 10,496,289 11,340,000 4.4
80,000 Willamette Industries, Inc. 3,013,670 3,940,000 1.5
------------ ------------ ------
33,781,105 38,005,876 14.8
Petroleum 250,000 Total Petroleum (North America), Ltd. 3,028,198 2,781,250 1.1
Refining
Plantations 635,000 Kuala Lumpur Kepong BHD 1,274,116 1,555,052 0.6
Wood Products 310,000 Louisiana-Pacific Corp. 10,634,960 9,997,500 3.9
325,000 Pacific Forest Products Ltd. 3,496,173 3,233,772 1.3
146,100 Riverside Forest Products Ltd. 2,401,223 2,616,669 1.0
------------ ------------ ------
16,532,356 15,847,941 6.2
Total Common Stocks 209,597,919 218,716,667 85.2
<CAPTION>
Face
Amount Short-Term Securities
<S> <C> <C> <C> <C> <C>
Repurchase $11,131,000 UBS Finance, Inc., purchased on 7/29/1994
Agreements** to yield 4.22% to 8/01/1994 11,131,000 11,131,000 4.3
US Treasury Bills:
US Government 15,000,000 4.15% due 9/01/1994 14,941,208 14,944,467 5.8
Obligations*** 4,000,000 4.385% due 10/06/1994 3,966,382 3,967,723 1.6
6,000,000 4.41% due 10/20/1994 5,938,995 5,940,793 2.3
2,000,000 4.255% due 10/27/1994 1,978,725 1,978,250 0.8
Total Short-Term Securities 37,956,310 37,962,233 14.8
Total Investments $247,554,229 256,678,900 100.0
============
Liabilities in Excess of Other Assets (44,008) (0.0)
------------ ------
Net Assets $256,634,892 100.0%
============ ======
<FN>
+ Non-income producing security.
* American Depositary Receipts (ADR).
** Repurchase Agreements are fully collateralized by US Government & Agency
Obligations.
*** US Government Obligations are traded on a discount basis; the interest rates
shown are the discount rates paid at the time of purchase by the Trust.
</TABLE>
See Notes to Financial Statements.
49
<PAGE>
Merrill Lynch Global Resources Trust July 31, 1994
FINANCIAL INFORMATION
Statement of Assets and Liabilities as of July 31, 1994
<TABLE>
<S> <C> <C> <C>
Assets: Investments, at value (identified cost--$247,554,229) (Note 1a) $256,678,900
Cash 485
Foreign cash 43,647
Receivables:
Beneficial interest sold $ 2,351,616
Dividends 576,925 2,928,541
------------
Prepaid registration fees and other assets (Note 1f) 70,862
------------
Total assets 259,722,435
------------
Liabilities: Payables:
Securities purchased 2,299,969
Beneficial interest redeemed 323,895
Distributor (Note 2) 181,853
Investment adviser (Note 2) 118,194 2,923,911
------------
Accrued expenses and other liabilities 163,632
------------
Total liabilities 3,087,543
------------
Net Assets: Net assets $256,634,892
============
Net Assets Class A Shares of beneficial interest, $0.10 par value, unlimited number of
Consist of: shares authorized $ 126,612
Class B Shares of beneficial interest, $0.10 par value, unlimited number of
shares authorized 1,504,834
Paid-in capital in excess of par 271,817,014
Undistributed investment income--net 859,496
Accumulated realized capital losses and foreign currency
transactions--net (Note 5) (26,802,008)
Unrealized appreciation on investments and foreign currency
transactions--net 9,128,944
------------
Net assets $256,634,892
============
Net Asset Class A--Based on net assets of $20,054,142 and 1,266,118 shares of beneficial
Value: interest outstanding $ 15.84
============
Class B--Based on net assets of $236,580,750 and 15,048,339 shares of
beneficial interest outstanding $ 15.72
============
</TABLE>
See Notes to Financial Statements.
50
<PAGE>
Merrill Lynch Global Resources Trust July 31, 1994
FINANCIAL INFORMATION (continued)
Statement of Operations for the Year Ended July 31, 1994
<TABLE>
<S> <C> <C> <C>
Investment Dividends (net of $166,153 foreign withholding tax) $ 4,280,744
Income Interest and discount earned 905,265
(Notes 1d & ------------
1e): Total income 5,186,009
------------
Expenses: Distribution fees--Class B (Note 2) 2,106,888
Investment advisory fees (Note 2) 1,351,581
Transfer agent fees--Class B (Note 2) 360,957
Printing and shareholder reports 114,272
Accounting services (Note 2) 67,082
Custodian fees 65,960
Professional fees 56,507
Registration fees (Note 1f) 49,670
Trustees' fees and expenses 41,519
Transfer agent fees--Class A (Note 2) 20,530
Amortization of organization expenses (Note 1f) 5,285
Other 6,389
------------
Total expenses 4,246,640
------------
Investment income--net 939,369
------------
Realized & Realized gain (loss) from:
Unrealized Investments--net $ 1,840,778
Gain(Loss)on Foreign currency transactions--net (107,675) 1,733,103
Investments ------------ ------------
& Foreign Change in unrealized appreciation/depreciation on:
Currency Investments--net 22,556,309
Transactions- Foreign currency transactions--net 6,959 22,563,268
Net(Notes 1b, ------------ ------------
1d & 3): Net realized and unrealized gain on investments and
foreign currency transactions 24,296,371
------------
Net Increase in Net Assets Resulting from Operations $ 25,235,740
============
</TABLE>
See Notes to Financial Statements.
51
<PAGE>
Merrill Lynch Global Resources Trust July 31, 1994
FINANCIAL INFORMATION (continued)
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
For the Year Ended July 31,
1994 1993
Increase (Decrease) in Net Assets:
<S> <C> <C> <C>
Operations: Investment income--net $ 939,369 $ 1,612,413
Realized gain (loss) on investments and foreign currency transactions--net 1,733,103 (25,207,926)
Change in unrealized appreciation/depreciation on investments and foreign
currency transactions--net 22,563,268 18,886,523
------------ ------------
Net increase (decrease) in net assets resulting from operations 25,235,740 (4,708,990)
------------ ------------
Dividends to Investment income--net:
Shareholders Class A (114,152) (184,310)
(Note 1g): Class B (703,582) (1,546,283)
------------ ------------
Net decrease in net assets resulting from dividends to shareholders (817,734) (1,730,593)
------------ ------------
Beneficial Net increase (decrease) in net assets derived from beneficial interest
Interest transactions 12,016,848 (39,490,887)
Transactions ------------ ------------
(Note 4):
Net Assets: Net increase (decrease) in net assets 36,434,854 (45,930,470)
Beginning of year 220,200,038 266,130,508
------------ ------------
End of year* $256,634,892 $220,200,038
============ ============
<FN>
*Undistributed investment income--net $ 859,496 $ 737,861
============ ============
</TABLE>
See Notes to Financial Statements.
52
<PAGE>
Merrill Lynch Global Resources Trust July 31, 1994
FINANCIAL INFORMATION (continued)
Financial Highlights
<TABLE>
<CAPTION>
The following per share data and ratios have been derived
from information provided in the financial statements. Class A
For the Year Ended July 31,
Increase (Decrease) in Net Asset Value: 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year $ 14.07 $ 14.33 $ 15.38 $ 15.93 $ 13.63
Operating ------- ------- ------- ------- -------
Performance: Investment income--net .22 .24 .34 .37 .39
Realized and unrealized gain (loss) on
investments and foreign currency
transactions--net(1) 1.69 (.26) (.13) (.47) 2.29
------- ------- ------- ------- -------
Total from investment operations 1.91 (.02) .21 (.10) 2.68
------- ------- ------- ------- -------
Less dividends and distributions:
Investment income--net (.14) (.24) (.47) (.41) (.38)
Realized gain on investments--net -- -- (.79) (.04) --
------- ------- ------- ------- -------
Total dividends and distributions (.14) (.24) (1.26) (.45) (.38)
------- ------- ------- ------- -------
Net asset value, end of year $ 15.84 $ 14.07 $ 14.33 $ 15.38 $ 15.93
======= ======= ======= ======= =======
Total Investment Based on net asset value per share 13.69% (.05%) 1.66% (.57%) 19.99%
Return:* ======= ======= ======= ======= =======
Ratios to Average Expenses .92% .95% .97% .95% .93%
Net Assets: ======= ======= ======= ======= =======
Investment income--net 1.39% 1.62% 1.82% 2.89% 3.18%
======= ======= ======= ======= =======
Supplemental Net assets, end of year (in thousands) $20,054 $12,087 $11,265 $ 6,699 $ 5,440
Data: ======= ======= ======= ======= =======
Portfolio turnover 54.87% 66.78% 31.43% 71.42% 57.21%
======= ======= ======= ======= =======
<FN>
* Total investment returns exclude the effects of sales loads.
(1) Foreign currency transaction amounts have been reclassified to conform to
1994 presentation.
</TABLE>
See Notes to Financial Statements.
53
<PAGE>
Merrill Lynch Global Resources Trust July 31, 1994
FINANCIAL INFORMATION (concluded)
Financial Highlights (concluded)
<TABLE>
<CAPTION>
The following per share data and ratios have been derived
from information provided in the financial statements. Class B
For the Year Ended July 31,
Increase (Decrease) in Net Asset Value: 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year $ 14.02 $ 14.26 $ 15.30 $ 15.84 $ 13.55
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .05 .09 .13 .31 .33
Realized and unrealized gain (loss) on
investments and foreign currency
transactions--net(1) 1.70 (.24) (.08) (.56) 2.19
-------- -------- -------- -------- --------
Total from investment operations 1.75 (.15) .05 (.25) 2.52
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.05) (.09) (.30) (.25) (.23)
Realized gain on investments--net -- -- (.79) (.04) --
-------- -------- -------- -------- --------
Total dividends and distributions (.05) (.09) (1.09) (.29) (.23)
-------- -------- -------- -------- --------
Net asset value, end of year $ 15.72 $ 14.02 $ 14.26 $ 15.30 $ 15.84
======== ======== ======== ======== ========
Total Investment Based on net asset value per share 12.52% (1.02%) .53% (1.61%) 18.79%
Return:* ======== ======== ======== ======== ========
Ratios to Average Expenses, excluding distribution fees .95% .99% 1.00% .99% .96%
Net Assets: ======== ======== ======== ======== ========
Expenses 1.95% 1.99% 2.00% 1.99% 1.96%
======== ======== ======== ======== ========
Investment income--net .35% .60% .94% 1.85% 1.96%
======== ======== ======== ======== ========
Supplemental Net assets, end of year (in thousands) $236,581 $208,113 $254,866 $322,502 $420,951
Data: ======== ======== ======== ======== ========
Portfolio turnover 54.87% 66.78% 31.43% 71.42% 57.21%
======== ======== ======== ======== ========
<FN>
* Total investment returns exclude the effects of sales loads.
(1) Foreign currency transaction amounts have been reclassified to conform to
1994 presentation.
</TABLE>
See Notes to Financial Statements.
54
<PAGE>
Merrill Lynch Global Resources Trust July 31, 1994
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch Global Resources Trust (the "Trust")
(formerly Merrill Lynch Natural Resources Trust) is
registered under the Investment Company Act of 1940
as a non-diversified, open-end management investment
company. The Trust offers both Class A and Class B
Shares. Class A Shares are sold with a front-end sales
charge. Class B Shares may be subject to a contingent
deferred sales charge. Both classes of shares have
identical voting, dividend, liquidation and other rights
and the same terms and conditions, except that
Class B Shares bear certain expenses related to the
distribution of such shares and have exclusive voting
rights with respect to matters relating to such dis-
tribution expenditures. The following is a summary of
significant accounting policies followed by the Trust.
(a) Valuation of investments--Securities traded on a
stock exchange are valued at the last sale price as of
the close of business on the day the securities are being
valued or, lacking any sales, at the last available bid
price. Securities traded in the over-the-counter market
are valued at the last quoted bid price at the close of
trading on such day by dealers that make markets in
such securities. Securities which are traded both in
the over-the-counter market and on a stock exchange
are valued based upon the prices or quotes obtained
from the broadest and most representative market.
Short-term securities are valued at amortized cost,
which approximates market. Options which are traded
on exchanges are valued at the last sale price as of the
close of such exchanges or, lacking any sales, at the
last available bid price. Securities for which market
quotations are not readily available are valued at their
fair value as determined in good faith by or under the
direction of the Trustees of the Trust.
(b) Foreign currency transactions--Transactions denomi-
nated 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 valu-
ing (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 Trust 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 Trust's records. However, the effect on
net investment income is recorded from the date the
Trust enters into such contracts. Premium or discount
is amortized over the life of the contracts.
(c) Options--The Trust can write covered call options and
purchase put options. When the Trust writes an option,
an amount equal to the premium received by the Trust is
reflected as an asset and an equivalent liability. The
amount of the liability is subsequently marked to market
to reflect the current market value of the option written.
When a security is purchased or sold through an exercise
of an option, the related premium paid (or received)
is added to (or deducted from) the basis of the security
acquired or deducted from (or added to) the proceeds
of the security sold. When an option expires (or the
Trust enters into a closing transaction), the Trust
realizes a gain or loss on the option to the extent of the
premiums received or paid (or loss or gain to the extent
the cost of the closing transaction is less than or greater
than the premiums paid or received).
Written and purchased options are non-income pro-
ducing investments.
(d) Income taxes--It is the Trust'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 provi-
sion 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 dates except that
if the ex-dividend date has passed, certain dividends
from foreign securities are recorded as soon as the Trust
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) Deferred organization expenses and prepaid registra-
tion fees--Deferred organization expenses are charged to
expense on a straight-line basis over a five-year period.
Prepaid registration fees are charged to expense as the
related shares are issued.
55
<PAGE>
Merrill Lynch Global Resources Trust July 31, 1994
(g) Dividends and distributions--Dividends and
distributions paid by the Trust are recorded on the
ex-dividend dates.
2. Investment Advisory Agreement and Transaction
with Affiliates:
The Trust 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., an indirect wholly-owned subsidiary of ML & Co.
The limited partners are ML & Co. and Merrill Lynch
Investment Management, Inc. ("MLIM"), which is also
an indirect wholly-owned subsidiary of ML & Co. The
Fund 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.
MLAM is responsible for the management of the Trust's
portfolio and provides the necessary personnel, facili-
ties, equipment and certain other services necessary to
the operations of the Trust. For such services, the Trust
pays a monthly fee of 0.60% on an annual basis, of the
average daily value of the Trust's net assets. The Invest-
ment Advisory Agreement obligates MLAM to reimburse
the Trust to the extent the Trust's expenses (excluding
interest, taxes, distribution fees, brokerage fees and com-
missions, and extraordinary items) exceed 2.5% of the
Trust's first $30 million of average daily net assets, 2.0%
of the next $70 million of average daily net assets, and
1.5% of the average daily net assets in excess thereof.
No fee payment will be made to the Investment Adviser
during any fiscal year which will cause such expenses
to exceed the most restrictive expense limitation at the
time of such payment.
Pursuant to a distribution plan ("the Distribution Plan")
adopted by the Trust in accordance with Rule 12b-1
under the Investment Company Act of 1940, the Trust
pays the Distributor an ongoing account maintenance
fee and distribution fee, which are accrued daily and
paid monthly at the annual rates of 0.25% and 0.75%,
respectively, of the average daily net assets of the Class B
Shares of the Trust. Pursuant to a sub-agreement with the
Distributor, Merrill Lynch Pierce, Fenner & Smith,
Inc. (MLPF&S) also provides account maintenance and
distribution services to the Trust. The ongoing account
maintenance fee compensates the Distributor and MLPF&S for
providing account maintenance services to Class B shareholders.
The ongoing distribution fee compensates the Distributor
and MLPF&S for providing shareholder and distribution
services and bearing certain distribution-related expenses
of the Trust, including payments to financial consultants
for selling Class B Shares of the Trust. As authorized by the
Plan, MLFD has entered into an agreement with MLPF&S, which
provides for the compensation of MLPF&S for providing distribution-
related services to the Trust.
During the year ended July 31, 1994, MLFD earned
underwriting discounts of $12,408, and MLPF&S earned
dealer concessions of $164,754, on sales of the Trust's
Class A Shares.
MLPF&S received contingent deferred sales charges for
the sale of Class B Shares of $188,148 and $4,800
in commissions on the execution of portfolio security
transactions for the Trust during the year.
Financial Data Services, Inc. ("FDS"), a wholly-owned
subsidiary of ML & Co., is the Trust's transfer agent.
Accounting services are provided to the Trust by MLAM
at cost.
Certain officers and/or trustees of the Trust are officers
and/or directors of MLIM, MLPF&S, FDS, MLFD, and/or
ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-
term securities, for the year ended July 31, 1994 were
$108,922,248 and $123,958,324, respectively.
Net realized and unrealized gains (losses) as of
July 31, 1994 were as follows:
Realized Unrealized
Gains (Losses) Gains
Long-term investments $ 1,842,199 $ 9,118,748
Short-term investments (1,421) 5,923
Foreign currency
transactions (107,675) 4,273
----------- -----------
Total $ 1,733,103 $ 9,128,944
=========== ===========
As of July 31, 1994, net unrealized appreciation for
Federal income tax purposes aggregated $9,124,671, of
56
<PAGE>
Merrill Lynch Global Resources Trust July 31, 1994
NOTES TO FINANCIAL STATEMENTS (concluded)
which $15,075,411 related to appreciated securities
and $5,950,740 related to depreciated securities. The
aggregate cost of investments at July 31, 1994 for Federal
income tax purposes was $247,554,229.
4. Shares of Beneficial Interest:
Net increase (decrease) in net assets derived from
beneficial interest transactions was $12,016,848 and
($39,490,887) for the years ended July 31, 1994 and
July 31, 1993, respectively.
Transactions in shares of beneficial interest for Class A
and Class B Shares were as follows:
Class A Shares for the Year Dollar
Ended July 31, 1994 Shares Amount
Shares sold 1,169,348 $ 17,964,584
Shares issued to shareholders
in reinvestment of dividends 6,902 96,377
----------- ------------
Total issued 1,176,250 18,060,961
Shares redeemed (769,151) (11,522,490)
----------- ------------
Net increase 407,099 $ 6,538,471
=========== ============
Class A Shares for the Year Dollar
Ended July 31, 1993 Shares Amount
Shares sold 651,703 $ 9,124,901
Shares issued to shareholders
in reinvestment of dividends 11,188 149,234
----------- ------------
Total issued 662,891 9,274,135
Shares redeemed (590,161) (8,196,043)
----------- ------------
Net increase 72,730 $ 1,078,092
=========== ============
Class B Shares for the Year Dollar
Ended July 31, 1994 Shares Amount
Shares sold 4,569,263 $ 70,407,201
Shares issued to shareholders
in reinvestment of dividends 38,724 541,357
----------- ------------
Total issued 4,607,987 70,948,558
Shares redeemed (4,402,209) (65,470,181)
----------- ------------
Net increase 205,778 $ 5,478,377
=========== ============
Class B Shares for the Year Dollar
Ended July 31, 1993 Shares Amount
Shares sold 2,354,206 $ 32,785,764
Shares issued to shareholders
in reinvestment of dividends 88,895 1,184,467
----------- ------------
Total issued 2,443,101 33,970,231
Shares redeemed (5,467,068) (74,539,210)
----------- ------------
Net decrease (3,023,967) $(40,568,979)
=========== ============
5. Capital Loss Carryforward:
At July 31, 1994, the Trust has a net capital loss
carryforward of approximately $26,694,000 all of which
$2,786,000 expires in 2000, $1,863,000 expires in 2001
and $22,045,000 expires in 2002 and will be available to
offset a like amount of any future taxable gains.
6. Commitments:
At July 31, 1994, the Trust entered into forward exchange
contracts under which it had agreed to purchase various
foreign currencies with values of approximately $507,000.
57
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Investment Objectives and Policies................ 2
Asset-Based Securities.......................... 2
Other Investment Policies and Practices......... 3
Management of the Trust........................... 10
Trustees and Officers........................... 10
Management and Advisory
Arrangements................................. 11
Purchase of Shares................................ 13
Initial Sales Charge Alternatives--
Class A and Class D Shares................... 13
Reduced Initial Sales Charges................... 14
Distribution Plans.............................. 18
Limitations on the Payment of Deferred Sales
Charges...................................... 18
Redemption of Shares.............................. 19
Deferred Sales Charges--
Class B Shares............................... 20
Portfolio Transactions and Brokerage.............. 21
Determination of Net Asset Value.................. 22
Shareholder Services.............................. 23
Investment Account.............................. 24
Automatic Investment Plans...................... 24
Automatic Reinvestment of Dividends and Capital
Gains Distributions.......................... 24
Systematic Withdrawal Plans--
Class A and Class D Shares................... 24
Retirement Plans................................ 25
Exchange Privilege.............................. 26
Dividends, Distributions and Taxes................ 38
Dividends and Distributions..................... 38
Taxes........................................... 38
Tax Treatment of Options and Forward Foreign
Exchange Transactions........................ 40
Special Rules for Certain Foreign
Currency Transactions........................ 40
Performance Data.................................. 41
General Information............................... 43
Description of Shares........................... 43
Computation of Offering Price per Share......... 45
Independent Auditors............................ 45
Custodian....................................... 45
Transfer Agent.................................. 45
Legal Counsel................................... 45
Reports to Shareholders......................... 45
Additional Information.......................... 46
Independent Auditors' Report...................... 47
Financial Statements.............................. 48
</TABLE>
Code #10302-1094
[LOGO]
MERRILL LYNCH
GLOBAL RESOURCES
TRUST
[ART]
Statement of
Additional Information
October 21, 1994
Distributor:
Merrill Lynch
Funds Distributor, Inc.
<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
graph paper and Merrill Lynch back cover of Statement of
logo including stylized market Additional Information
bull
<PAGE>
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
(A) FINANCIAL STATEMENTS:
CONTAINED IN PART A:
Financial Highlights for each of the years in the eight-year period
ended July 31, 1994 and for the period August 2, 1985 (Commencement of
Operations) to July 31, 1986.
CONTAINED IN PART B:
Schedule of Investments, as of July 31, 1994.
Statement of Assets and Liabilities, as of July 31, 1994.
Statement of Operations for the year ended July 31, 1994.
Statements of Changes in Net Assets for the years ended July 31,
1994 and July 31, 1993.
Financial Highlights for each of the years in the five-year period
ended July 31, 1994.
(B) EXHIBITS:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- - - - - - ------- -------------------------------------------------------------------
<S> <C>
1(a) -- Declaration of Trust of the Registrant, dated April 12, 1985.(a)
(b) -- Amendment to Declaration of Trust of the Registrant, dated May 28,
1985.(a)
(c) -- Amendment to Declaration of Trust of the Registrant, dated October
3, 1988.(c)
(d) -- Instrument establishing Class A shares and Class B shares of the
Registrant.(c)
2 -- By-Laws of the Registrant.(a)
3 -- None.
4(a) -- Portions of the Declaration of Trust and By-Laws of Registrant
defining the rights of holders of shares of beneficial interest of
Registrant.(f)
(b) -- Specimen certificate for Class A shares of beneficial interest of
the Registrant.(c)
(c) -- Specimen certificate for Class B shares of beneficial interest of
the Registrant.(c)
5(a) -- Investment Advisory Agreement between the Registrant and Merrill
Lynch Asset Management, L.P.(d)
(b) -- Supplement to Investment Advisory Agreement between Registrant and
Merrill Lynch Asset Management, L.P.
6(a)(1) -- Class A Distribution Agreement between the Registrant and Merrill
Lynch Funds Distributor, Inc.(c)
(a)(2) -- Form of Class A Distribution Agreement between the Registrant and
Merrill Lynch Funds Distributor, Inc. (including Form of Selected
Dealers Agreement).
(b) -- Class B Distribution Agreement between the Registrant and Merrill
Lynch Funds Distributor, Inc.(d)
(c) -- Merrill Lynch Mutual Fund Adviser Agreement.(g)
(d) -- Form of Class C Distribution Agreement between Registrant and
Merrill Lynch Funds Distributor, Inc. (including Form of Selected
Dealers Agreement).
(e) -- Form of Class D Distribution Agreement between Registrant and
Merrill Lynch Funds Distributor, Inc. (including Form of Selected
Dealers Agreement).
7 -- None.
8 -- Custody Agreement between the Registrant and The Bank of New
York.(d)
9 -- Transfer Agency, Dividend Disbursing Agency and Shareholder
Servicing Agency Agreement between the Registrant and Merrill Lynch
Financial Data Service Inc. (now known as Financial Data Services,
Inc.).(e)
10 -- Opinion of Brown & Wood, counsel for the Registrant.
</TABLE>
C-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- - - - - - ------- -------------------------------------------------------------------
<S> <C>
11 -- Consent of Deloitte & Touche LLP, independent auditors for the
Registrant.
12 -- None.
13 -- None.
14 -- None.
15(a) -- Amended and Restated Class B Distribution Plan of the
Registrant.(g)
(b) -- Form of Class C Distribution Plan and Class C Distribution Plan
Sub-Agreement of Registrant.
(c) -- Form of Class D Distribution Plan and Class D Distribution Plan
Sub-Agreement of Registrant.
16(a) -- Schedule for computation of each performance quotation for Class A
shares provided in the Registration Statement in response to Item
22(f).(b)
(b) -- Schedule for computation of each performance quotation for Class B
shares provided in the Registration Statement in response to Item
22(j).(c)
17(a) -- Financial Data Schedule for Class A Shares.
(b) -- Financial Data Schedule for Class B Shares.
</TABLE>
- - - - - - ------------------
(a) Filed on May 29, 1985 as an Exhibit to Pre-Effective Amendment No. 1 to the
Registrant's Registration Statement under the Securities Act of 1933 (the
'Registration Statement').
(b) Filed on November 28, 1989 as an Exhibit to Post-Effective Amendment No. 5
to the Registration Statement.
(c) Filed on October 11, 1988 as an Exhibit to Post-Effective Amendment No. 4 to
the Registration Statement.
(d) Filed on June 18, 1985 as an Exhibit to Pre-Effective Amendment No. 2 to the
Registration Statement.
(e) Filed on November 27, 1987 as an Exhibit to Post-Effective Amendment No. 3
to the Registration Statement.
(f) Reference is made to Article III, Article V, Article VI (sections 2, 3, 4
and 5), Article VII, Article VIII, and Article X of the Registrant's
Declaration of Trust, previously filed as Exhibit (1), to the Registration
Statement; and to Article II, Article III (sections 1, 3, 5, 6 and 17),
Article VI, Article VII, Article XII, Article XIII, Article XIV and Article
XV of the Registrant's By-Laws previously filed as Exhibit (2) to the
Registration Statement.
(g) Filed on November 23, 1993 as an Exhibit to Post-Effective Amendment No. 9
to the Registration Statement.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
The Registrant is not controlled by or under common control with any
person.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
<TABLE>
<CAPTION>
NUMBER OF
RECORD HOLDERS AT
TITLE OF CLASS SEPTEMBER 30, 1994*
- - - - - - -------------------------------------------------- -------------------
<S> <C>
Class A shares of beneficial interest, par value
$0.10 per share................................. 47
Class B shares of beneficial interest, par value
$0.10 per share................................. 1,598
Class C shares of beneficial interest, par value
$0.10 per share................................. 0
Class D shares of beneficial interest, par value
$0.10 per share................................. 0
</TABLE>
ITEM 27. INDEMNIFICATION.
Section 5.3 of the Registrant's Declaration of Trust provides as follows:
'The Trust shall indemnify each of its Trustees, officers, employees, and
agents (including persons who serve at its request as directors, officers or
trustees of another organization in which it has any interest as a shareholder,
creditor or otherwise) against all liabilities and expenses (including amounts
paid in satisfaction of judgments, in compromise, as fines and penalties, and as
counsel fees) reasonably incurred by him in connection with the defense or
disposition of any action, suit or other proceeding, whether civil or criminal,
in which he may be involved or with which he may be threatened, while in office
or thereafter, by reason of his being or having
C-2
<PAGE>
been a trustee, officer, employee or agent, except with respect to any matter as
to which he shall have been adjudicated to have acted in bad faith, willful
misfeasance, gross negligence or reckless disregard of his duties; provided,
however, that as to any matter disposed of by a compromise payment by such
person, pursuant to a consent decree or otherwise, no indemnification either for
said payment or for any other expenses shall be provided unless the Trust shall
have received a written opinion from independent legal counsel approved by the
Trustees to the effect that if either the matter of willful misfeasance, gross
negligence or reckless disregard of duty, or the matter of good faith and
reasonable belief as to the best interests of the Trust, had been adjudicated,
it would have been adjudicated in favor of such person. The rights accruing to
any Person under these provisions shall not exclude any other right to which he
may be lawfully entitled; provided that no Person may satisfy any right of
indemnity or reimbursement granted herein or in Section 5.1 or to which he may
be otherwise entitled except out of the property of the Trust, and no
Shareholder shall be personally liable to any Person with respect to any claim
for indemnity or reimbursement or otherwise. The Trustees may make advance
payments in connection with indemnification under this Section 5.3, provided
that the indemnified person shall have given a written undertaking to reimburse
the Trust in the event it is subsequently determined that he is not entitled to
such indemnification.'
Insofar as the conditional advancing of indemnification moneys for actions
based upon the Investment Company Act may be concerned, such payments will be
made only on the following conditions: (i) the advances must be limited to
amounts used, or to be used, for the preparation or presentation of a defense to
the action, including costs connected with the preparation of a settlement; (ii)
advances may be made only upon receipt of a written promise by, or on behalf of,
the recipient to repay that amount of the advance which exceeds the amount which
it is ultimately determined that he is entitled to receive from the Registrant
by reason of indemnification; and (iii)(a) such promise must be secured by a
surety bond, other suitable insurance or an equivalent form of security which
assures that any repayments may be obtained by the Registrant without delay or
litigation, which bond, insurance or other form of security must be provided by
the recipient of the advance, or (b) a majority of a quorum of the Registrant's
disinterested, non-party Trustees, or an independent legal counsel in a written
opinion, shall determine, based upon a review of readily available facts, that
the recipient of the advance ultimately will be found entitled to
indemnification.
In Section 9 of the Class A, Class B, Class C and Class D 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, against certain
types of civil liabilities arising in connection with the Registration Statement
or Prospectus and Statement of Additional Information.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to Trustees, 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 Trustee, 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
Trustee, 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. (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 Income Fund, Inc.,
Merrill Lynch Asset Growth 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 Allocation Fund, Inc., Merrill Lynch
Global Bond Fund for Investment and Retirement, Merrill Lynch Global Convertible
Fund, Inc., Merrill Lynch Global Holdings, Inc., Merrill Lynch Global
C-3
<PAGE>
Resources Trust, Merrill Lynch Global SmallCap Fund, Inc., Merrill Lynch Global
Utility Fund, Inc., Merrill Lynch Growth Fund for Investment and Retirement,
Merrill Lynch Healthcare Fund, Inc., Merrill Lynch High Income Municipal Bond
Fund, Inc., Merrill Lynch Institutional Intermediate Fund, Merrill Lynch
International Equity Fund, Merrill Lynch Latin America Fund, Inc., Merrill Lynch
Municipal Series Trust, Merrill Lynch Pacific Fund, Inc., Merrill Lynch Ready
Assets Trust, 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, 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
MuniNewYork Holdings, Inc., and Worldwide DollarVest Fund, Inc.
The address of each of these investment companies is P.O. Box 9011,
Princeton, New Jersey 08543-9011, except that the address of Merrill Lynch
Institutional Intermediate Fund, and 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,
FAM, Princeton Services, Inc. ('Princeton Services'), Merrill Lynch Funds
Distributor, Inc. ('MLFD') and Princeton Administrators, L.P. is also P.O. Box
9011, Princeton, New Jersey 08543-9011. The address of Merrill Lynch, Pierce,
Fenner & Smith Incorporated ('Merrill Lynch') and Merrill Lynch & Co., Inc. ('ML
& Co.') is World Financial Center, North Tower, 250 Vesey Street, New York, New
York 10281. The address of Financial Data Services ('FDS') is 4800 Deer Lake
Drive East, Jacksonville, Florida 32246-6484.
Set forth below is a list of each executive officer and partner of the
Investment Adviser indicating each business, profession, vocation or employment
of a substantial nature in which each such person has been engaged since August
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 also hold the same
positions with all or substantially all of the investment companies described in
the preceeding paragraphs and Messrs. Durnin, Giordano, Harvey, Hewitt,
Kirstein, Monagle and Ms. Griffin are directors or officers of one or more of
such companies.
C-4
<PAGE>
<TABLE>
<CAPTION>
POSITIONS WITH
INVESTMENT OTHER SUBSTANTIAL BUSINESS,
NAME ADVISER PROFESSION, VOCATION OR EMPLOYMENT
- - - - - - ------------------------- --------------- -----------------------------------
<S> <C> <C>
ML & Co.................. Limited Partner Financial Services Holding Company
Merrill Lynch Investment Limited Partner Investment Advisory Services
Management, Inc........
Princeton Services....... General Partner General Partner of FAM
Arthur Zeikel............ President and President of FAM; President and
Director Director of Princeton Services;
Director of MLFD; Executive Vice
President of ML & Co.; Executive
Vice President of Merrill Lynch
Terry K. Glenn........... Executive Vice Executive Vice President of FAM;
President Executive Vice President and
Director of Princeton Services;
President of MLFD; Director of
FDS; President of Princeton
Administrators, L.P.
Bernard J. Durnin........ Senior Vice Senior Vice President of FAM;
President Senior Vice President of Princeton
Services
Vincent R. Giordano...... Senior Vice Senior Vice President of FAM;
President Senior Vice President of Princeton
Services
Elizabeth Griffin........ Senior Vice Senior Vice President of FAM
President
Norman R. Harvey......... Senior Vice Senior Vice President of FAM;
President Senior Vice President of Princeton
Services
N. John Hewitt........... Senior Vice Senior Vice President of FAM;
President Senior Vice President of Princeton
Services
Philip L. Kirstein....... Senior Vice Senior Vice President, General
President, Counsel and Secretary of FAM;
General Senior Vice President, General
Counsel and Counsel, Director and Secretary
Secretary of Princeton Services; Director
of MLFD
Ronald M. Kloss.......... Senior Vice Senior Vice President and
President and Controller of FAM; Senior Vice
Controller President and Controller of
Princeton Services
Stephen M. M. Miller..... Senior Vice Executive Vice President of
President Princeton Administrators, L.P.
Joseph T. Monagle, Jr.... Senior Vice Senior Vice President of FAM;
President Senior Vice President of Princeton
Services
Gerald M. Richard........ Senior Vice Senior Vice President and Treasurer
President and of FAM; Vice President and
Treasurer Treasurer of MLFD; Senior Vice
President and Treasurer of
Princeton Services
Richard L. Rufener....... Senior Vice Senior Vice President of FAM; Vice
President President of MLFD; Senior Vice
President of Princeton Services
Ronald L. Welburn........ Senior Vice Senior Vice President of FAM;
President Senior Vice President of Princeton
Services
Anthony Wiseman.......... Senior Vice Senior Vice President of FAM;
President Senior Vice President of Princeton
Services
</TABLE>
C-5
<PAGE>
ITEM 29. PRINCIPAL UNDERWRITERS.
(a) MLFD acts as the principal underwriter for the Registrant and for each
of the open-end investment companies referred to in the 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, Inc., 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., Senior Strategic
Income Fund, Inc., Taurus MuniCalifornia Holdings, Inc., Taurus MuniNew York
Holdings, Inc. and Worldwide DollarVest Fund, Inc.
(b) Set forth below is information concerning each director and officer of
MLFD. The principal business address of each such person is P.O. Box 9011,
Princeton, New Jersey 08543-9011, except that the address of Messrs. Aldrich,
Breen, Crook, Fatseas, Graczyk and Wasel is One Financial Center, 15th Floor,
Boston, Massachusetts 02111-2646.
<TABLE>
<CAPTION>
(2) (3)
(1) POSITION(S) AND OFFICES POSITIONS AND OFFICES
NAME WITH MLFD WITH REGISTRANT
- - - - - - -------------------------- ------------------------- -------------------------
<S> <C> <C>
Terry K. Glenn............ President and Director Executive Vice President
Arthur Zeikel............. Director President and Trustee
Philip L. Kirstein........ Director None
William E. Aldrich........ Senior Vice President None
Robert W. Crook........... Senior Vice President None
Kevin P. Boman............ Vice President None
Michael J. Brady.......... Vice President None
William M. Breen.......... Vice President None
Sharon Creveling.......... Vice President and None
Assistant 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
Richard L. Rufener........ Vice President None
Salvatore Venezia......... Vice President None
William Wasel............. Vice President None
Robert Harris............. Secretary None
</TABLE>
(c) Not applicable.
C-6
<PAGE>
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
All accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940, as amended, and the rules
thereunder will be maintained at the offices of the Registrant, 800 Scudders
Mill Road, Plainsboro, New Jersey 08536 and its transfer agent, 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
Trust--Management and Advisory Arrangements' in the Prospectus constituting Part
A of the Registration Statement and under 'Management of the Trust--Management
and Advisory 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) Registrant undertakes to furnish each person to whom a prospectus is
delivered with 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 REGISTRATION STATEMENT PURSUANT TO
RULE 485(B) UNDER THE SECURITIES ACT OF 1933 AND HAS DULY CAUSED THIS AMENDMENT
TO ITS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THEREUNTO DULY AUTHORIZED, IN THE TOWNSHIP OF PLAINSBORO, AND STATE OF NEW
JERSEY, ON THE 10th DAY OF OCTOBER 1994.
MERRILL LYNCH GLOBAL RESOURCES TRUST
(Registrant)
By /s/ ARTHUR ZEIKEL
---------------------------------
(ARTHUR ZEIKEL, PRESIDENT)
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- - - - - - ------------------------- ----------------------------------- ---------------
<S> <C> <C>
/s/ ARTHUR ZEIKEL President and Trustee (Principal October 10,
- - - - - - ------------------------- Executive Officer) 1994
(ARTHUR ZEIKEL)
/s/ GERALD M. RICHARD Treasurer (Principal Financial and October 10,
- - - - - - ------------------------- Accounting Officer) 1994
(GERALD M. RICHARD)
DONALD CECIL* Trustee
- - - - - - -------------------------
(DONALD CECIL)
M. COLYER CRUM* Trustee
- - - - - - -------------------------
(M. COLYER CRUM)
EDWARD H. MEYER* Trustee
- - - - - - -------------------------
(EDWARD H. MEYER)
JACK B. SUNDERLAND* Trustee
- - - - - - -------------------------
(JACK B. SUNDERLAND)
J. THOMAS TOUCHTON* Trustee
- - - - - - -------------------------
(J. THOMAS TOUCHTON)
*By /s/ ARTHUR ZEIKEL October 10,
---------------------- 1994
(ARTHUR ZEIKEL,
ATTORNEY-IN-FACT)
</TABLE>
C-8
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
- - - - - - ------- ------------------------------------------------------------ ------
<S> <C> <C>
5(b) -- Supplement to Investment Advisory Agreement between
Registrant and Merrill Lynch Asset Management, L.P.
6(a)(2) -- Form of Class A Distribution Agreement between Registrant
and Merrill Lynch Funds Distributor, Inc. (including Form
of Selected Dealers Agreement).
(c) -- Form of Class C Distribution Agreement between Registrant
and Merrill Lynch Funds Distributor, Inc. (including Form
of Selected Dealers Agreement)
(d) -- Form of Class D Distribution Agreement between Registrant
and Merrill Lynch Funds Distributor, Inc. (including Form
of Selected Dealers Agreement)
10 -- Opinion of Brown & Wood, counsel for the Registrant
11 -- Consent of Deloitte & Touche LLP, independent auditors
for Registrant
15(b) -- Form of Class C Distribution Plan and Class C
Distribution Plan Sub-Agreement
(c) -- Form of Class D Distribution Plan and Class D
Distribution Plan Sub-Agreement
17(a) -- Financial Data Schedule for Class A Shares
(b) -- Financial Data Schedule for Class B Shares
</TABLE>
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)(1)-1
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
CLASS A SHARES
DISTRIBUTION AGREEMENT
AGREEMENT made as of the ____ day of October 1994 between
MERRILL LYNCH GLOBAL RESOURCES TRUST, INC., a Massachusetts
business trust (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 beneficial interest 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 A shares of beneficial interest
in the Fund (sometimes herein referred to as "Class A shares") to
eligible investors (as defined below) and hereby agrees during
the term of this Agreement to sell Class A shares of the Fund to
the Distributor upon the terms and conditions herein set forth.
Section 2. Exclusive Nature of Duties. The Distributor
shall be the exclusive representative of the Fund to act as 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.
(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.
(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 Trustees,
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
Trustees.
(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).
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 VIII of its Declaration of
Trust, as amended from time to time, and in accordance with the
applicable provisions set forth in the prospectus and statement
of additional information. The price to be paid to redeem or
repurchase the Class A shares shall be equal to the net asset
value calculated in accordance with the provisions of Section
3(d) hereof, less any contingent deferred sales charge ("CDSC"),
redemption fee or other charge(s), if any, set forth in the
prospectus and statement of additional information of the Fund.
All payments by the Fund hereunder shall be made in the manner
set forth below. The redemption or repurchase by the Fund of any
of the Class A shares purchased by or through the Distributor
will not affect the sales charge secured by the Distributor or
any selected dealer in the course of the original sale, except
that if any Class A shares are tendered for redemption or 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
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
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
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
("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 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 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).
(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.
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
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-
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
Trustees 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 Trustees 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,
the Distributor and its affiliate, Merrill Lynch, Pierce, Fenner
& Smith Incorporated, are authorized to offer and sell shares of
the Fund, as agent for the Fund, to participants in such program.
The terms of this Agreement shall apply to such sales, including
terms as to the offering price of shares, the proceeds to be paid
to the Fund, the duties of the Distributor, the payment of
expenses and indemnification obligations of the Fund and the
Distributor.
Section 11. Duration and Termination of this Agreement.
This Agreement shall become effective as of the date first above
written and shall remain in force until October __, 1995 and
thereafter, but only for so long as such continuance is
specifically approved at least annually by (i) the Trustees 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 Trustees 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 Trustees 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
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 Trustees or by the vote of a majority
of outstanding voting securities of the Fund and (ii) by the vote
of a majority of those Trustees 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.
Section 15. Personal Liability. The Declaration of Trust
establishing the Fund, dated April 12, 1985, a copy of which,
together with all amendments thereto (the "Declaration"), is on
file in the office of the Secretary of the Commonwealth of
Massachusetts, provides that the name "Merrill Lynch Global
Resources Trust" refers to the Trustees under the Declaration
collectively as trustees, but not as individuals or personally;
and no Trustee, shareholder, officer, employee or agent of the
Fund shall be held to any personal liability, nor shall resort be
had to their private property for the satisfaction of any
obligation or claim or otherwise in connection with the affairs
of the Fund, but the "Trust Property" only shall be liable.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
MERRILL LYNCH GLOBAL RESOURCES TRUST
By _________________________________________
Title: Executive Vice President
MERRILL LYNCH FUNDS DISTRIBUTOR, INC.
By _________________________________________
Title: Vice President
EXHIBIT A
MERRILL LYNCH GLOBAL RESOURCES TRUST
CLASS A SHARES OF BENEFICIAL INTEREST
SELECTED DEALERS AGREEMENT
Gentlemen:
Merrill Lynch Funds Distributor, Inc. (the "Distributor")
has an agreement with Merrill Lynch Global Resources Trust, a
Massachusetts business trust (the "Fund"), pursuant to which it
acts as the distributor for the sale of Class A shares of
beneficial interest, 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
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 may 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.
The term "purchase" refers to a single purchase by an indi-
vidual, 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 pur-
chases by a trustee or other fiduciary purchasing Class A shares
for a single trust estate or single fiduciary account although
more than one beneficiary is involved. The term "purchase" also
includes purchases by any "company" as that term is defined in
the Investment Company Act of 1940, as amended, but does not
include purchases by any such company which has not been in
existence for at least six months or which has no purpose other
than the purchase of Class A shares of the Fund or Class A shares
of other registered investment companies at a discount; provided,
however, that it shall not include purchases by any group of
individuals whose sole organizational nexus is that the
participants therein are credit cardholders of a company,
policyholders of an insurance company, customers of either a bank
or broker-dealer or clients of an investment adviser.
The reduced sales charges are applicable through a right of
accumulation under which certain eligible investors are permitted
to purchase Class A shares of the Fund at the offering price
applicable to the total of (a) the public offering price of the
shares then being purchased plus (b) an amount equal to the then
current net asset value or cost, whichever is higher, of the
purchaser's combined holdings of Class A, Class B, Class C and
Class D shares of the Fund and of any other investment company
with an initial sales charge for which the Distributor acts as
the distributor. For any such right of accumulation to be made
available, the Distributor must be provided at the time of pur-
chase, by the purchaser or you, with sufficient information to
permit confirmation of qualification, and acceptance of the pur-
chase order is subject to such confirmation.
The reduced sales charges are applicable to purchases aggre-
gating $25,000 or more of Class A shares or of Class D shares of
any other investment company with an initial sales charge for
which the Distributor acts as the distributor made through you
within a thirteen-month period starting with the first purchase
pursuant to a Letter of Intention in the form provided in the
Prospectus. A purchase not originally made pursuant to a Letter
of Intention may be included under a subsequent letter executed
within 90 days of such purchase if the Distributor is informed in
writing of this intent within such 90-day period. If the
intended amount of shares is not purchased within the
thirteen-month period, an appropriate price adjustment will be
made pursuant to the terms of the Letter of Intention.
You agree to advise us promptly at our request as to amounts
of any sales made by you to eligible investors qualifying for
reduced sales charges. Further information as to the reduced
sales charges pursuant to the right of accumulation or a Letter
of Intention is set forth in the Prospectus and Statement of
Additional Information.
4. You shall not place orders for any of the Class A
shares unless you have already received purchase orders for such
Class A shares at the applicable public offering prices and
subject to the terms hereof and of the Distribution Agreement.
You agree that you will not offer or sell any of the Class A
shares except under circumstances that will result in compliance
with the applicable Federal and state securities laws and that in
connection with sales and offers to sell Class A shares you will
furnish to each person to whom any such sale or offer is made a
copy of the Prospectus and, if requested, the Statement of
Additional Information (as then amended or supplemented) and will
not furnish to any person any information relating to the Class A
shares of the Fund which is inconsistent in any respect with the
information contained in the Prospectus and Statement of
Additional Information (as then amended or supplemented) or
cause any advertisement to be published in any newspaper or
posted in any public place without our consent and the consent of
the Fund.
5. As a selected dealer, you are hereby authorized (i) to
place orders directly with the Fund for Class A shares of the
Fund to be resold by us to you subject to the applicable terms
and conditions governing the placement of orders by us set forth
in Section 3 of the Distribution Agreement and subject to the
compensation provisions of Section 3 hereof and (ii) to tender
Class A shares directly to the Fund or its agent for redemption
subject to the applicable terms and conditions set forth in
Section 4 of the Distribution Agreement.
6. You shall not withhold placing orders received from
your customers so as to profit yourself as a result of such with-
holding: 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 con-
cerning Class A shares of the Fund except those contained in the
current Prospectus and Statement of Additional Information of the
Fund and in such printed information subsequently issued by us or
the Fund as information supplemental to such Prospectus and
Statement of Additional Information. In purchasing Class A
shares through us you shall rely solely on the representations
contained in the Prospectus and Statement of Additional
Information and supplemental information above mentioned. Any
printed information which we furnish you other than the Fund's
Prospectus, Statement of Additional Information, periodic reports
and proxy solicitation material is our sole responsibility and
not the responsibility of the Fund, and you agree that the Fund
shall have no liability or responsibility to you in these
respects unless expressly assumed in connection therewith.
9. You agree to deliver to each of the purchasers making
purchases from you a copy of the then current Prospectus and, if
requested, the Statement of Additional Information at or prior to
the time of offering or sale and you agree thereafter to deliver
to such purchasers copies of the annual and interim reports and
proxy solicitation materials of the Fund. You further agree to
endeavor to obtain proxies from such purchasers. Additional
copies of the Prospectus and Statement of Additional Information,
annual or interim reports and proxy solicitation materials of the
Fund will be supplied to you in reasonable quantities upon
request.
10. We reserve the right in our discretion, without notice,
to suspend sales or withdraw the offering of Class A shares
entirely or to certain persons or entities in a class or classes
specified by us. Each party hereto has the right to cancel this
agreement upon notice to the other party.
11. We shall have full authority to take such action as we
may deem advisable in respect of all matters pertaining to the
continuous offering. We shall be under no liability to you
except for lack of good faith and for obligations expressly
assumed by us herein. Nothing contained in this paragraph is
intended to operate as, and the provisions of this paragraph
shall not in any way whatsoever constitute, a waiver by you of
compliance with any provision of the Securities Act of 1933, as
amended, or of the rules and regulations of the Securities and
Exchange Commission issued thereunder.
12. You represent that you are a member of the National
Association of Securities Dealers, Inc. and, with respect to any
sales in the United States, we both hereby agree to abide by the
Rules of Fair Practice of such Association.
13. Upon application to us, we will inform you as to the
states in which we believe the Class A shares have been qualified
for sale under, or are exempt from the requirements of, the
respective securities laws of such states, but we assume no
responsibility or obligation as to your right to sell Class A
shares in any jurisdiction. We will file with the Department of
State in New York a Further State Notice with respect to the
Class A shares, if necessary.
14. 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.
15. Your first order placed pursuant to this Agreement for
the purchase of Class A shares of the Fund will represent your
acceptance of this Agreement.
16. This Agreement supersedes any prior Selected Dealers
Agreement entered into by the parties hereto with respect to the
Class A shares of the Fund.
MERRILL LYNCH FUNDS DISTRIBUTOR, INC.
By _________________________________________
(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: ______________________________________________________
CLASS C SHARES
DISTRIBUTION AGREEMENT
AGREEMENT made as of the ____ day of October 1994, between
MERRILL LYNCH GLOBAL RESOURCES TRUST, a Massachusetts business
trust (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 beneficial
interest in the Fund (sometimes herein referred to as "Class C
shares") to the public and hereby agrees during the term of this
Agreement to sell shares of the Fund to the Distributor upon the
terms and conditions herein set forth.
Section 2. Exclusive Nature of Duties. The Distributor
shall be the exclusive representative of the Fund to act as 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.
(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.
(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
Trustees.
(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
(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 VIII of its Declaration of
Trust, as amended from time to time, and in accordance with the
applicable provisions set forth in the prospectus and statement
of additional information of the Fund. The price to be paid to
redeem or repurchase the Class C shares shall be equal to the net
asset value calculated in accordance with the provisions of
Section 3(c) hereof, less any contingent deferred sales charge
("CDSC"), redemption fee or other charge(s), if any, set forth in
the prospectus and statement of additional information of the
Fund. All payments by the Fund hereunder shall be made in the
manner set forth below.
The Fund shall pay the total amount of the redemption price
as defined in the above paragraph pursuant to the instructions of
the Distributor on or before the seventh business day subsequent
to its having received the notice of redemption in proper form.
The proceeds of any redemption of shares shall be paid by the
Fund as follows: (i) any applicable CDSC shall be paid to the
Distributor, and (ii) the balance shall be paid to or for the
account of the shareholder, in each case in accordance with the
applicable provisions of the prospectus and statement of
additional information.
(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
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.
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
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,
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-
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)
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
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 Trustees 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 Trustees 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
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 __, 1995
and thereafter, but only for so long as such continuance is
specifically approved at least annually by (i) the Trustees 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 Trustees 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 Trustees 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 Trustees or by the vote of a majority
of outstanding voting securities of the Fund and (ii) by the vote
of a majority of those Trustees 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
of the provisions herein, conflict with the applicable provisions
of the Investment Company Act, the latter shall control.
Section 14. Personal Liability. The Declaration of
Trust establishing the Fund, dated April 12, 1985, a copy of
which, together with all amendments thereto (the "Declaration"),
is on file in the office of the Secretary of the Commonwealth of
Massachusetts, provides that the name "Merrill Lynch Global
Resources Trust" refers to the Trustees under the Declaration
collectively as trustees, but not as individuals or personally;
and no Trustee, shareholder, officer, employee or agent of the
Fund shall be held to any personal liability, nor shall resort be
had to their private property for the satisfaction of any
obligation or claim or otherwise in connection with the affairs
of the Fund, but the "Trust Property" only shall be liable.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
MERRILL LYNCH GLOBAL RESOURCES TRUST
By __________________________________
Title: Executive Vice President
MERRILL LYNCH FUNDS DISTRIBUTOR, INC.
By __________________________________
Title: Vice President
EXHIBIT A
MERRILL LYNCH GLOBAL RESOURCES TRUST
CLASS C SHARES OF BENEFICIAL INTEREST
SELECTED DEALER AGREEMENT
Gentlemen:
Merrill Lynch Funds Distributor, Inc. (the "Distributor")
has an agreement with Merrill Lynch Global Resources Trust, a
Massachusetts business trust (the "Fund"), pursuant to which it
acts as the distributor for the sale of Class C shares of
beneficial interest, par value $0.10 per share (herein referred
to as the "Class C shares"), of the Fund and as such has the
right to distribute Class C shares of the Fund for resale. The
Fund is an open-end investment company registered under the
Investment Company Act of 1940, as amended, and its Class C
shares being offered to the public are registered under the
Securities Act of 1933, as amended. You have received a copy of
the Class C Shares Distribution Agreement (the "Distribution
Agreement") between ourself and the Fund and reference is made
herein to certain provisions of such Distribution Agreement. The
terms "Prospectus" and "Statement of Additional Information" as
used herein refer to the prospectus and statement of additional
information, respectively, on file with the Securities and
Exchange Commission which is part of the most recent effective
registration statement pursuant to the Securities Act of 1933, as
amended. We offer to sell to you, as a member of the Selected
Dealers Group, Class C shares of the Fund upon the following
terms and conditions:
1. In all sales of these Class C shares to the public, you shall
act as dealer for your own account and in no transaction shall
you have any authority to act as agent for the Fund, for us or
for any other member of the Selected Dealers Group, except in
connection with the Merrill Lynch Mutual Fund Adviser program and
such other special programs as we from time to time agree, in
which case you shall have authority to offer and sell shares, as
agent for the Fund, to participants in such program.
2. Orders received from you will be accepted through us
only at the public offering price applicable to each order, as
set forth in the current Prospectus and Statement of Additional
Information of the Fund. The procedure relating to the handling
of orders shall be subject to Section 4 hereof and instructions
which we or the Fund shall forward from time to time to you. All
orders are subject to acceptance or rejection by the Distributor
or the Fund in the sole discretion of either. The minimum ini-
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
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.
8. We reserve the right in our discretion, without notice,
to suspend sales or withdraw the offering of Class C shares
entirely or to certain persons or entities in a class or classes
specified by us. Each party hereto has the right to cancel this
Agreement upon notice to the other party.
9. We shall have full authority to take such action as we
may deem advisable in respect of all matters pertaining to the
continuous offering. We shall be under no liability to you
except for lack of good faith and for obligations expressly
assumed by us herein. Nothing contained in this paragraph is
intended to operate as, and the provisions of this paragraph
shall not in any way whatsoever constitute, a waiver by you of
compliance with any provision of the Securities Act of 1933, as
amended, or of the rules and regulations of the Securities and
Exchange Commission issued thereunder.
10. You represent that you are a member of the National
Association of Securities Dealers, Inc. and, with respect to any
sales in the United States, we both hereby agree to abide by the
Rules of Fair Practice of such Association.
11. Upon application to us, we will inform you as to the
states in which we believe the Class C shares have been qualified
for sale under, or are exempt from the requirements of, the
respective securities laws of such states, but we assume no
responsibility or obligation as to your right to sell Class C
shares in any jurisdiction. We will file with the Department of
State in New York a Further State Notice with respect to the
Class C shares, if necessary.
12. All communications to us should be sent to the address
below. Any notice to you shall be duly given if mailed or tele-
graphed to you at the address specified by you below.
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: _________________________________________________
By: ________________________________________________________
Address: ___________________________________________________
Date: ______________________________________________________
CLASS D SHARES
DISTRIBUTION AGREEMENT
AGREEMENT made as of the ____ day of October 1994 between
MERRILL LYNCH GLOBAL RESOURCES TRUST, a Massachusetts business
trust ("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 beneficial interest 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 beneficial interest
in the Fund (sometimes herein referred to as "Class D shares") to
the public and hereby agrees during the term of this Agreement to
sell 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.
(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
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 Trustees,
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
information of the Fund and guidelines established by the Trustees.
(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).
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 VIII of its Declaration of
Trust, 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 Distributor
will not affect the sales charge secured by the Distributor or
any selected dealer in the course of the original sale, except
that if any Class D shares are tendered for redemption or 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
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
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
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
("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).
(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
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
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
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
Trustees 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 Trustees 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
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 __, 1995 and
thereafter, but only for so long as such continuance is
specifically approved at least annually by (i) the Trustees 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 Trustees 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 Trustees 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
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 Trustees or by the vote of a majority
of outstanding voting securities of the Fund and (ii) by the vote
of a majority of those Trustees 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. Personal Liability. The Declaration of Trust
establishing the Fund, dated April 12, 1985, a copy of which,
together with all amendments thereto (the "Declaration"), is on
file in the office of the Secretary of the Commonwealth of
Massachusetts, provides that the name "Merrill Lynch Global
Resources Trust" refers to the Trustees under the Declaration
collectively as trustees, but not as individuals or personally;
and no Trustee, shareholder, officer, employee or agent of the
Fund shall be held to any personal liability, nor shall resort be
had to their private property for the satisfaction of any
obligation or claim or otherwise in connection with the affairs
of the Fund, but the "Trust Property" only shall be liable.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
MERRILL LYNCH GLOBAL RESOURCES TRUST
By ______________________________________
Title: Executive Vice President
MERRILL LYNCH FUNDS DISTRIBUTOR, INC.
By ______________________________________
Title: Vice President
EXHIBIT A
MERRILL LYNCH GLOBAL RESOURCES TRUST
CLASS D SHARES OF BENEFICIAL INTEREST
SELECTED DEALERS AGREEMENT
Gentlemen:
Merrill Lynch Funds Distributor, Inc. (the "Distributor")
has an agreement with Merrill Lynch Global Resources Trust, a
Massachusetts business trust (the "Fund"), pursuant to which it
acts as the distributor for the sale of Class D shares of
beneficial interest, par value $0.10 per share (herein referred
to as "Class D shares"), of the Fund and as such has the right to
distribute Class D shares of the Fund for resale. The Fund is an
open-end investment company registered under the Investment
Company Act of 1940, as amended, and its Class D shares being
offered to the public are registered under the Securities Act of
1933, as amended. You have received a copy of the Class D Shares
Distribution Agreement (the "Distribution Agreement") between
ourself and the Fund and reference is made herein to certain
provisions of such Distribution Agreement. The terms
"Prospectus" and "Statement of Additional Information" used
herein refer to the prospectus and statement of additional
information, respectively, on file with the Securities and
Exchange Commission which is part of the most recent effective
registration statement pursuant to the Securities Act of 1933, as
amended. We offer to sell to you, as a member of the Selected
Dealers Group, Class D shares of the Fund upon the following
terms and conditions:
1. In all sales of these Class D shares to the public, you
shall act as dealer for your own account and in no transaction
shall you have any authority to act as agent for the Fund, for us
or for any other member of the Selected Dealers Group, except in
connection with the Merrill Lynch Mutual Fund Adviser program and
such other special programs as we from time to time agree, in
which case you shall have authority to offer and sell shares, as
agent for the Fund, to participants in such program.
2. Orders received from you will be accepted through us
only at the public offering price applicable to each order, as
set forth in the current Prospectus and Statement of Additional
Information of the Fund. The procedure relating to the handling
of orders shall be subject to Section 5 hereof and instructions
which we or the Fund shall forward from time to time to you. All
orders 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.
The term "purchase" refers to a single purchase by an indi-
vidual, 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 pur-
chases 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 pur-
chase 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 aggre-
gating $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 right of accumulation or a Letter of
Intention is set forth in the Prospectus and Statement of Addi-
tional 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 with-
holding: e.g., by a change in the "net asset value" from that
used in determining the offering price to your customers.
7. If any Class D shares sold to you under the terms of
this Agreement are repurchased by the Fund or by us for the
account of the Fund or are tendered for redemption within seven
business days after the date of the confirmation of the original
purchase by you, it is agreed that you shall forfeit your right
to, and refund to us, any discount received by you on such Class
D shares.
8. No person is authorized to make any representations con-
cerning 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
Prospectus, Statement of Additional Information, periodic reports
and proxy solicitation material is our sole responsibility and
not the responsibility of the Fund, and you agree that the Fund
shall have no liability or responsibility to you in these
respects unless expressly assumed in connection therewith.
9. You agree to deliver to each of the purchasers making
purchases from you a copy of the then current Prospectus and, if
requested, the Statement of Additional Information at or prior to
the time of offering or sale and you agree thereafter to deliver
to such purchasers copies of the annual and interim reports and
proxy solicitation materials of the Fund. You further agree to
endeavor to obtain proxies from such purchasers. Additional
copies of the Prospectus and Statement of Additional Information,
annual or interim reports and proxy solicitation materials of the
Fund will be supplied to you in reasonable quantities upon
request.
10. We reserve the right in our discretion, without notice,
to suspend sales or withdraw the offering of Class D shares
entirely or to certain persons or entities in a class or classes
specified by us. Each party hereto has the right to cancel this
agreement upon notice to the other party.
11. We shall have full authority to take such action as we
may deem advisable in respect of all matters pertaining to the
continuous offering. We shall be under no liability to you
except for lack of good faith and for obligations expressly
assumed by us herein. Nothing contained in this paragraph is
intended to operate as, and the provisions of this paragraph
shall not in any way whatsoever constitute, a waiver by you of
compliance with any provision of the Securities Act of 1933, as
amended, or of the rules and regulations of the Securities and
Exchange Commission issued thereunder.
12. You represent that you are a member of the National
Association of Securities Dealers, Inc. and, with respect to any
sales in the United States, we both hereby agree to abide by the
Rules of Fair Practice of such Association.
13. Upon application to us, we will inform you as to the
states in which we believe the Class D shares have been qualified
for sale under, or are exempt from the requirements of, the
respective securities laws of such states, but we assume no
responsibility or obligation as to your right to sell Class D
shares in any jurisdiction. We will file with the Department of
State in New York a Further State Notice with respect to the
Class D shares, if necessary.
14. 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.
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.
Box 9011
Princeton, New Jersey 08543-9011
Accepted:
Firm Name: _________________________________________________
By: ________________________________________________________
Address: ___________________________________________________
____________________________________________________________
Date: ______________________________________________________
BROWN & WOOD
ONE WORLD TRADE CENTER
NEW YORK, NEW YORK 10048-0557
TELEPHONE: 212-839-5300
FACSIMILE: 212-839-5599
October 11, 1994
Merrill Lynch Global Resources Trust
P.O. Box 9011
Princeton, New Jersey 08543-9011
Dear Sirs:
This opinion is furnished in connection with the
registration by Merrill Lynch Global Resources Trust, a
Massachusetts business trust (the "Trust"), of 5,188,632 shares
of beneficial interest, 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. 2-97095), as amended (the
"Registration Statement").
As counsel for the Trust, 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 Declaration of Trust of the Trust, as
amended, the By-Laws of the Trust and such other documents as we
have deemed relevant to the matters referred to in this opinion.
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 beneficial interest of the Trust.
In rendering this opinion, we have relied as to matter of Massachusetts law
upon an opinion previously rendered to the Trust by Bingham, Dana & Gould.
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
EXHIBIT 11
INDEPENDENT AUDITORS' CONSENT
Merrill Lynch Global Resources Trust (formerly
Merrill Lynch Natural Resources Trust):
We consent to the use in Post-Effective Amendment No. 10 to Registration
Statement No. 2-97095 of our report dated August 29, 1994 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
October 10, 1994
CLASS C DISTRIBUTION PLAN
OF
MERRILL LYNCH GLOBAL RESOURCES TRUST
PURSUANT TO RULE 12b-1
DISTRIBUTION PLAN made as of the ____ day of October 1994,
by and between Merrill Lynch Global Resources Trust, a
Massachusetts business trust (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 beneficial interest, par
value $0.10 per share (the "Class C shares"), of the Fund to the
public; and
WHEREAS, the Fund desires to adopt this Class C Distribution
Plan (the "Plan") pursuant to Rule 12b-1 under the Investment
Company Act, pursuant to which the Fund will pay an account
maintenance fee and a distribution fee to MLFD with respect to
the Fund's Class C shares; and
WHEREAS, the Trustees 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
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
Trustees, and the Trustees shall review, at least quarterly, a
written report complying with the requirements of Rule 12b-1
regarding the disbursement of the account maintenance fee and the
distribution fee during such period.
5. This Plan shall not take effect until it has been
approved by a vote of at least a majority, as defined in the
Investment Company Act, of the outstanding Class C voting 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 Trustees of the Fund and (b) those
Trustees 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 Trustees"),
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 Trustees, 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 Trustees 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 Trustees who are not interested persons, as defined in
the Investment Company Act, of the Fund shall be committed to the
discretion of the Trustees 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.
12. The Declaration of Trust establishing the Fund, dated
April 12, 1985, a copy of which, together with all amendments
thereto (the "Declaration"), is on file in the office of the
Secretary of the Commonwealth of Massachusetts, provides that the
name "Merrill Lynch Global Resources Trust" refers to the
Trustees under the Declaration collectively as trustees, but not
as individuals or personally; and no Trustee, shareholder,
officer, employee or agent of the Fund shall be held to any
personal liability, nor shall resort be had to their private
property for the satisfaction of any obligation or claim or
otherwise in connection with the affairs of the Fund, but the
"Trust Property" only shall be liable.
IN WITNESS WHEREOF, the parties hereto have executed this
Distribution Plan as of the date first above written.
MERRILL LYNCH GLOBAL RESOURCES TRUST
By_____________________________________
Title: Executive Vice President
MERRILL LYNCH FUNDS DISTRIBUTOR, INC.
By_____________________________________
Title: Vice President
CLASS C SHARES DISTRIBUTION PLAN SUB-AGREEMENT
AGREEMENT made as of the ____ 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 Resources Trust, a Massachusetts business trust (the
"Fund"), pursuant to which it acts as the exclusive distributor
for the sale of Class C shares of beneficial interest, 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.
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 Trustees of the
Fund and (b) those Trustees 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 Trustees"), 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_____________________________________
Title: Vice President
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By_____________________________________
Title:
CLASS D DISTRIBUTION PLAN
OF
MERRILL LYNCH GLOBAL RESOURCES TRUST
PURSUANT TO RULE 12b-1
DISTRIBUTION PLAN made as of the ____ day of October 1994,
by and between Merrill Lynch Global Resources Trust, a
Massachusetts business trust (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 beneficial interest, 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 Trustees 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
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
Trustees, and the Trustees 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 Trustees of the Fund and (b) those
Trustees 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 Trustees"),
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-1 Trustees, or by vote of a majority of
the outstanding Class D voting securities of the Fund.
8. The Plan may not be amended to increase materially the
rate of payments provided for in Paragraph 1 hereof unless such
amendment is approved by at least a majority, as defined in the
Investment Company Act, of the outstanding Class D voting
securities of the Fund, and by the Trustees 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 Trustees who are not interested persons, as defined in
the Investment Company Act, of the Fund shall be committed to the
discretion of the Trustees 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.
11. The Declaration of Trust establishing the Fund, dated
April 12, 1985, a copy of which, together with all amendments
thereto (the "Declaration"), is on file in the office of the
Secretary of the Commonwealth of Massachusetts, provides that the
name "Merrill Lynch Global Resources Trust" refers to the
Trustees under the Declaration collectively as trustees, but not
as individuals or personally; and no Trustee, shareholder,
officer, employee or agent of the Fund shall be held to any
personal liability, nor shall resort be had to their private
property for the satisfaction of any obligation or claim or
otherwise in connection with the affairs of the Fund, but the
"Trust Property" only shall be liable.
IN WITNESS WHEREOF, the parties hereto have executed this
Distribution Plan as of the date first above written.
MERRILL LYNCH GLOBAL RESOURCES TRUST
By_____________________________________
Title: Executive Vice President
MERRILL LYNCH FUNDS DISTRIBUTOR, INC.
By_____________________________________
Title: Vice President
CLASS D SHARES DISTRIBUTION PLAN SUB-AGREEMENT
AGREEMENT made as of the ____ 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 Resources Trust, a Massachusetts business trust (the
"Fund"), pursuant to which it acts as the exclusive distributor
for the sale of Class D shares of beneficial interest, 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 Trustees of the
Fund and (b) those Trustees 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 Trustees"), 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_____________________________________
Title: Vice President
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By_____________________________________
Title:
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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