MERRILL LYNCH
GLOBAL
RESOURCES
TRUST
[GRAPHIC OMITTED]
STRATEGIC
Performance
Annual Report
July 31, 1998
<PAGE>
MERRILL LYNCH GLOBAL RESOURCES TRUST
DEAR SHAREHOLDER
Fiscal Year in Review
For the year ended July 31, 1998, Merrill Lynch Global Resources Trust's Class
A, Class B, Class C and Class D Shares had total returns of -27.00%, -27.76%,
- -27.78% and -27.15%. (Results shown do not reflect sales charges and would be
lower if sales charges were included. Complete performance information can be
found on pages 4-6 of this report to shareholders.) The environment for natural
resources investments was extraordinarily difficult for the year ended July 31,
1998, with virtually all commodities declining to reflect depressed demand
resulting from the onset of recessions in many Asian countries. While the Trust
delivered improved performance relative to its peer group of broad-based natural
resource funds since December 1997, it was not able to overcome steep declines
in its international investments because of the collapse of Asian economies
during the first half of its fiscal year. Moreover, the environment for natural
resources investments continued to erode during the first half of 1998. The
collapse of Asian currencies (particularly the Japanese yen) and economies has
been translated into near-universal commodity price declines.
As we discussed in our last two letters to shareholders, the impact of
stagnation in Asian economies was a major concern in the outlook for natural
resource investments. However, the actual results have been much worse than our
expectations, and downward momentum continues unabated. Economic contractions
are now occurring throughout Asian economies, and the economic drag has extended
to Europe and the United States. The continuing erosion of the Japanese yen
could lead to another round of currency depreciation and a possible devaluation
of the Chinese renminbi. In the absence of concrete fiscal reform by Japanese
authorities, these remain risks with highly negative consequences.
Portfolio Matters
We continued to migrate to holdings that we believed have less earnings risk
exposure, or that may be positioned to take advantage of declining prices in the
natural resource feedstock used in their operations. However, the investment
environment was unique during the quarter ended July 31, 1998, in that there
were no safe havens, with natural resource stocks suffering declines in
virtually all commodity segments. This was particularly true for energy-related
stocks. After rallying on preliminary production cuts by the Organization of
Petroleum Exporting Countries (OPEC) and non-OPEC producers, oil prices retraced
their gains and tested lows not seen in 12 years. A second round of cuts brought
prices back to the $14 per barrel range. This was far below the earlier
consensus expectations, and oil company shares have been battered by earnings
estimate cuts. We continue to expect the remainder of 1998 to be volatile, as
strict OPEC quota compliance will be necessary to work off inventories that were
as much as 160 million barrels above year-ago levels. Even if full production
cuts are taken, the decline in oil demand in Asian economies appears to be much
greater than initially forecast. This may necessitate an additional round of
production cuts by OPEC to return oil prices to a level above $15 per barrel.
The shares of oil service stocks were particularly hard-hit during the period,
as lower oil company revenues have resulted in curtailed drilling plans. The
Trust had benefited from reducing exposure to energy stocks early in the year to
less than 39% of total assets. However, we subsequently increased the Trust's
energy exposure to 46% of total assets at July 31, 1998, with emphasis on major
integrated oil stocks, natural gas-leveraged production companies and deep-water
drilling and construction stocks.
We believe that North American natural gas is close to full capacity utilization
as demand continues to increase and current production becomes more difficult to
replace from mature fields. Early summer prices had been strong at $2.40 per
thousand cubic feet; however, prices are experiencing seasonal erosion as
injections into natural gas storage have been
1
<PAGE>
Merrill Lynch Global Resources Trust July 31, 1998
stronger than expected. We believe that extensive fuel switching to residual oil
for electricity generation is a major factor accounting for this build. We
expect winter heating demand for natural gas to result in a rebound in prices
during the upcoming heating season, but the rebound may be muted if storage
continues to build at present rates. We increased the Trust's holdings in
Canadian gas producers, where realized prices are at steep discounts to US
prices as a result of pipeline constraints. As two new export pipeline projects
are completed this winter, we expect this differential to close.
New stocks purchased to capitalize on our positive natural gas outlook included
Alberta Energy Co., Ltd., Snyder Oil Corp., Vastar Resources, Inc. and Enron Oil
& Gas Company. We also took new positions in larger integrated oil companies
including Texaco Inc., Mobil Corp., Chevron Corp. and Unocal Corporation, all of
which traded at attractive valuation levels and hopefully will add defensive
characteristics to the Trust.
We continued to have substantial exposure to gold shares, despite the sale of
nearly one-quarter of the Trust's gold company stocks since December. Gold
mining stocks staged a rally early in the year on expectations that gold's role
as an asset backing the currency of the European Economic and Monetary Union
(EMU) would be above extremely bearish estimates that existed in late 1997.
However, weak Asian currencies and economies resulted in a sharp decline in
demand for jewelry fabrication and hoarding for investment purposes. In
addition, the announcement that gold would be 15% of EMU reserve assets
disappointed investors who had become overly optimistic prior to the European
Central Bank meeting in May.
The Trust's performance was particularly hurt by its exposure to Australian gold
mining stocks. While many of these companies sold gold forward and enjoyed
rising margins as costs of production declined in local currency terms, the
stock prices have been devastated by the declining Australian markets and
currency. The companies could be attractive acquisition candidates at current
levels, but we are worried that further demand shortfalls and currency
depreciation could drive these shares back to their 1997 lows. We remain
concerned that gold's failure to act as a safe haven in times of economic
turmoil marks a secular shift away from gold as an investment vehicle. Unless
gold shows better performance in the face of widespread currency declines, we
anticipate a further review of gold's investment role in the Trust.
We reduced the Trust's exposure to steel and metals stocks with sales across all
metals groups. We eliminated our position in Falconbridge Ltd. and we reduced
holdings of eight other companies for nearly a 10% reduction in the Trust's
weighting of metals, mining and steel stocks since January 31, 1998. We also
took partial profits in the shares of Alumax, Inc., which received a merger
offer from Aluminum Company of America, but maintained positions in Centaur
Mining & Exploration Ltd. and Resolute Ltd. for their exposures to laterite
nickel mines. These projects are in the start-up phase, and we believe they
offer significant upside potential should commissioning be successful.
Unfortunately, the stocks were tainted by the collapse of the Australian stock
market. While global inventories of most metals are at relatively low levels, we
doubt that there will be any near-term catalysts for base metals stocks until
resumption in Asian economic growth appears visible.
Paper and forest products stocks rallied significantly through May 1998, as
capacity utilization trends improved as a result of industry consolidation and
voluntary production curtailments. Unfortunately, the steep declines in Asian
demand and exports of some grades into European and American markets resulted in
the group surrendering all of its earlier share price gains. We sold shares in
Avenor Inc. after the company received a takeover bid from Abitibi Consolidated
Holdings, and also made partial sales in Slocan Forest Products Ltd.,
Weyerhaeuser Co. and Willamette Industries Inc. As the fiscal year came to a
close, we determined that declining share prices and deteriorating financial
strength of the companies might defer further consolidation. In addition,
low-cost imports from Asia and South America will likely result in a poor
pricing environment over the next several quarters. Therefore, we aggressively
reduced the Trust's holdings in the paper and forest products area.
Chemical stocks continued to register the best returns in the natural resource
sector, but showed signs of weakening as the first half of 1998 came to a
2
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Merrill Lynch Global Resources Trust July 31, 1998
close. Many chemical stocks have reported a series of positive earnings
surprises resulting from declining feedstock costs from low oil and natural gas
prices. However, capacity utilization is forecast to fall with new production
from newly completed chemical projects and plant expansions over the coming 18
months. Given our forecast for rising natural gas prices and a trough in oil
prices, we expect to maintain our underweighted position in the commodity
chemical area since we expect that declining feedstock trends should end. During
the period, we maintained a position in E.I. duPont de Nemours & Co. DuPont had
a strong first-half performance in response to the announcement of its upcoming
initial public offering of 20% of its interest in its Conoco energy subsidiary
and its eventual spin-off to shareholders. In addition, investors held out
expectations of a potential upward price/earnings ratio revision, as the
company's life sciences division becomes a larger component of its earnings.
Unfortunately, the company reported an earnings shortfall in the second quarter
as a result of low oil prices, the impact of the General Motors strike and lower
demand in its seed businesses. The stock subsequently gave back most of its
gains recorded this year.
We reduced the Trust's exposure to the gold and base metals groups, with the
proceeds used to increase the weighting of the energy group. In addition, we
increased the Trust's cash position from 2% of net assets to 6% as of July 31,
1998. We will strive to maintain higher cash balances in light of the weak
resource environment, as well as to exploit buying opportunities as they become
available.
Progress was made in restructuring the Trust. During the six months ended July
31, 1998, we reduced Trust holdings to 89 positions from 104 at January 31,
1998. Our goal continues to be the creation of a more focused portfolio. In
addition, new positions in the Trust were concentrated in companies that we
believe have solid ongoing operations, and away from companies that, in our
view, are highly dependent on exploration successes.
In Conclusion
The investment environment for natural resources has been extremely difficult
since the onset of the Asian financial crisis just over a year ago. While the
Trust's performance has improved relative to other natural resource funds, we
share our investors' frustration over the negative returns. However, we believe
that continued progress has been made in repositioning the Trust. Many of the
Trust's shortfalls had been in smaller-capitalization companies with an emphasis
on exploration. As we shift to more established companies supported by
underlying production and cash flow, the Trust should be better positioned to
avoid some of the problems that have hindered past performance.
The outlook for natural resource investments is expected to remain highly
volatile. While we believed that the effects of Asian financial distress were
being underestimated, the outcome has surpassed our expectations. Despite
remedial steps by governments to address the situation, it is difficult to see
that commodities have reached a trough in terms of demand and prices. We
continue to seek opportunities to invest in companies that can exploit declining
commodity prices, or companies whose share prices already discount the economic
turmoil. In addition, we believe that the energy sector has declined to levels
that discount the current weak pricing environment, particularly in natural gas
stocks. We hope to improve the Trust's performance relative to other natural
resource funds with continued restructuring of the Trust.
We appreciate your investment in Merrill Lynch Global Resources Trust, and we
look forward to sharing our investment outlook and strategies again with you in
our next report to shareholders.
Sincerely,
/s/ Arthur Zeikel
Arthur Zeikel
President
/s/ Robert M. Shearer
Robert M. Shearer
Senior Vice President and Portfolio Manager
September 2, 1998
3
<PAGE>
Merrill Lynch Global Resources Trust July 31, 1998
PERFORMANCE DATA
About Fund Performance
Investors are able to purchase shares of the Trust through the Merrill Lynch
Select Pricing(SM) System, which offers four pricing alternatives:
o Class A Shares incur a maximum initial sales charge (front-end load) of
5.25% and bear no ongoing distribution or account maintenance fees. Class
A Shares are available only to eligible investors.
o Class B Shares are subject to a maximum contingent deferred sales charge
of 4% if redeemed during the first year, decreasing 1% each year
thereafter to 0% after the fourth year. In addition, Class B Shares are
subject to a distribution fee of 0.75% and an account maintenance fee of
0.25%. These shares automatically convert to Class D Shares after
approximately 8 years. (There is no initial sales charge for automatic
share conversions.)
o Class C Shares are subject to a distribution fee of 0.75% and an account
maintenance fee of 0.25%. In addition, Class C Shares are subject to a 1%
contingent deferred sales charge if redeemed within one year of purchase.
o Class D Shares incur a maximum initial sales charge of 5.25% and an
account maintenance fee of 0.25% (but no distribution fee).
None of the past results shown should be considered a representation of future
performance. Figures shown in the "Recent Performance Results" and "Average
Annual Total Return" tables assume reinvestment of all dividends and capital
gains distributions at net asset value on the ex-dividend date. Investment
return and principal value of shares will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost. Dividends paid to
each class of shares will vary because of the different levels of account
maintenance, distribution and transfer agency fees applicable to each class,
which are deducted from the income available to be paid to shareholders.
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
================================================================================
Class A Shares*
================================================================================
Year Ended 6/30/98 -17.95% -22.26%
- --------------------------------------------------------------------------------
Five Years Ended 6/30/98 + 3.57 + 2.46
- --------------------------------------------------------------------------------
Inception (10/24/88)
through 6/30/98 + 4.97 + 4.38
- --------------------------------------------------------------------------------
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
================================================================================
Class B Shares*
================================================================================
Year Ended 6/30/98 -18.75% -21.57%
- --------------------------------------------------------------------------------
Five Years Ended 6/30/98 + 2.51 + 2.51
- --------------------------------------------------------------------------------
Ten Years Ended 6/30/98 + 3.10 + 3.10
- --------------------------------------------------------------------------------
* Maximum contingent deferred sales charge is 4% and is reduced to 0% after
4 years.
** Assuming payment of applicable contingent deferred sales charge.
================================================================================
% Return % Return
Without CDSC With CDSC**
================================================================================
Class C Shares*
================================================================================
Year Ended 6/30/98 -18.70% -19.41%
- --------------------------------------------------------------------------------
Inception (10/21/94)
through 6/30/98 - 0.28 - 0.28
- --------------------------------------------------------------------------------
* Maximum contingent deferred sales charge is 1% and is reduced to 0% after
1 year.
** Assuming payment of applicable contingent deferred sales charge.
================================================================================
% Return Without % Return With
Sales Charge Sales Charge**
================================================================================
Class D Shares*
================================================================================
Year Ended 6/30/98 -18.17% -22.47%
- --------------------------------------------------------------------------------
Inception (10/21/94)
through 6/30/98 + 0.52 - 0.94
- --------------------------------------------------------------------------------
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
4
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Merrill Lynch Global Resources Trust July 31, 1998
PERFORMANCE DATA (continued)
Total Return Based on a $10,000 Investment--Class A Shares
A line graph depicting the growth of an investment in the Fund's Class A Shares
compared to growth of an investment in the S&P 500 Index, Lipper Gold Funds
Group Average and Lipper Natural Resources Funds Group Average. Beginning and
ending values are:
10/24/88** 7/98
ML Global Resources Trust+--Class A Shares* $ 9,475 $13,912
S&P 500 Index++ $10,000 $52,071
Lipper Gold Funds Group Average+++ $10,000 $ 7,000
Lipper Natural Resources Funds Group Average++++ $10,000 $19,157
A line graph depicting the growth of an investment in the Fund's Class B Shares
compared to growth of an investment in the S&P 500 Index, Lipper Gold Funds
Group Average and Lipper Natural Resources Funds Group Average. Beginning and
ending values are:
7/88 7/98
ML Global Resources Trust+--Class B Shares* $10,000 $12,306
S&P 500 Index++ $10,000 $54,510
Lipper Gold Funds Group Average+++ $10,000 $ 6,495
Lipper Natural Resources Funds Group Average++++ $10,000 $18,562
Total Return Based on a $10,000 Investment--Class C Shares & Class D Shares
A line graph depicting the growth of an investment in the Fund's Class C and
Class D Shares compared to growth of an investment in the S&P 500 Index, Lipper
Gold Funds Group Average and Lipper Natural Resources Funds Group Average.
Beginning and ending values are:
10/21/94** 7/98
ML Global Resources Trust+--Class C Shares* $10,000 $ 9,073
ML Global Resources Trust+--Class D Shares* $ 9,475 $ 8,868
S&P 500 Index++ $10,000 $26,119
Lipper Gold Funds Group Average+++ $10,000 $ 5,065
Lipper Natural Resources Funds Group Average++++ $10,000 $11,869
* Assuming maximum sales charge, transaction costs and other operating
expenses, including advisory fees.
** Commencement of operations.
+ The Trust invests primarily in equity securities of domestic and
foreign companies with substantial natural resource assets.
++ This unmanaged broad-based Index is comprised of common stocks.
+++ The Lipper Gold Funds Group Average is an index of all US mutual
funds classified as gold-related funds. The starting date for the
Index in the Class A Shares graph is 10/31/88 and in the Class C and
Class D Shares graph is 10/31/94.
++++ The Lipper Natural Resources Funds Group Average is an index of all
US mutual funds classified as natural resource-related funds. The
starting date for the Index in the Class A Shares graph is 10/31/88
and in the Class C & Class D Shares graph is 10/31/94.
Past performance is not predictive of future performance.
5
<PAGE>
Merrill Lynch Global Resources Trust July 31, 1998
PERFORMANCE DATA (concluded)
Recent Performance Results*
<TABLE>
<CAPTION>
Ten Years/
12 Month 3 Month Since Inception
Total Return Total Return Total Return
=========================================================================================
<S> <C> <C> <C>
ML Global Resources Trust Class A Shares -27.00% -19.59% +46.83%
- -----------------------------------------------------------------------------------------
ML Global Resources Trust Class B Shares -27.76 -19.81 +23.06
- -----------------------------------------------------------------------------------------
ML Global Resources Trust Class C Shares -27.78 -19.81 - 9.27
- -----------------------------------------------------------------------------------------
ML Global Resources Trust Class D Shares -27.15 -19.59 - 6.41
=========================================================================================
</TABLE>
* Investment results shown do not reflect sales charges; results would be
lower if a sales charge was included. Total investment returns are based
on changes in net asset values for the periods shown, and assume
reinvestment of all dividends and capital gains distributions at net asset
value on the ex-dividend date. The Fund's ten-year/inception dates are:
Class A Shares, 10/24/88; Class B Shares, ten years ended 7/31/98; and
Class C and Class D Shares, 10/21/94.
6
<PAGE>
Merrill Lynch Global Resources Trust July 31, 1998
SCHEDULE OF INVESTMENTS
<TABLE>
<CAPTION>
Value Percent of
Industries Shares Held Common Stocks Cost (Note 1a) Net Assets
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
Aluminum 13,656 Alumax, Inc. $ 519,747 $ 656,342 0.7%
15,000 Aluminum Company of America 787,658 1,039,688 1.0
19,400 Pechiney, S.A. (A Shares) 782,024 812,698 0.8
------------ ------------ ------
2,089,429 2,508,728 2.5
====================================================================================================================================
Chemicals 28,000 Air Products and Chemicals, Inc. 630,826 980,000 1.0
26,400 BASF AG 633,146 1,213,495 1.2
8,000 Dow Chemical Co. 551,274 726,000 0.7
35,200 duPont (E.I.) de Nemours & Co. 1,209,065 2,182,400 2.2
------------ ------------ ------
3,024,311 5,101,895 5.1
====================================================================================================================================
Diversified Companies 102,000 Asahi Glass Co., Ltd. 1,223,974 533,126 0.5
27,000 Ashland Inc. 1,144,672 1,400,625 1.4
378,000 North Ltd. 1,419,525 816,828 0.8
------------ ------------ ------
3,788,171 2,750,579 2.7
====================================================================================================================================
Gold 797,100 Acacia Resources Ltd. 1,280,689 967,679 1.0
94,500 Ashanti Goldfields Co. Ltd. (GDR)** 2,346,106 715,838 0.7
122,500 Cambior Inc. 1,625,848 589,411 0.6
599,200 Delta Gold N.L. 1,054,663 697,968 0.7
92,000 +Getchell Gold Corp. 3,713,827 1,242,000 1.2
865,700 Great Central Mines N.L. 2,476,396 788,220 0.8
373,800 +Miramar Mining Corp. 1,900,432 310,094 0.3
74,222 Newmont Mining Corp. 2,736,348 1,400,940 1.4
920,000 Normandy Mining Ltd. 1,040,108 709,219 0.7
211,000 Placer Dome Inc. 4,483,800 2,189,125 2.2
131,500 Prime Resources Group, Inc. 1,286,428 964,345 1.0
1,097,000 Resolute Ltd. 2,284,526 898,937 0.9
122,000 +Sutton Resources Ltd. 1,097,904 546,522 0.5
------------ ------------ ------
27,327,075 12,020,298 12.0
====================================================================================================================================
Integrated Oil 23,700 Amerada Hess Corp. 1,319,197 1,201,294 1.2
Companies--Domestic 40,000 Amoco Corp. 1,118,700 1,670,000 1.7
17,900 Chevron Corp. 1,490,829 1,478,988 1.5
18,000 Mobil Corp. 1,420,830 1,255,500 1.2
27,300 Texaco Inc. 1,606,401 1,660,181 1.6
------------ ------------ ------
6,955,957 7,265,963 7.2
====================================================================================================================================
Integrated Oil 384,000 British Petroleum Co., PLC 1,554,500 5,107,461 5.1
Companies--International 42,700 Ente Nazionale Idrocarburi S.p.A. (ENI) (ADR)* 1,996,225 2,759,488 2.7
8,800 OMV AG 933,582 1,126,310 1.1
119,400 Petro-Canada 1,308,151 1,723,838 1.7
43,100 Societe Nationale Elf Aquitaine (ADR)* 1,586,637 2,796,113 2.8
31,200 Total, S.A. (Class B) 1,914,184 3,563,173 3.5
47,000 Yacimientos Petroliferos Fiscales S.A.
(YPF) (ADR)* 1,152,205 1,374,750 1.4
------------ ------------ ------
10,445,484 18,451,133 18.3
====================================================================================================================================
</TABLE>
7
<PAGE>
Merrill Lynch Global Resources Trust July 31, 1998
SCHEDULE OF INVESTMENTS (continued)
<TABLE>
<CAPTION>
Value Percent of
Industries Shares Held Common Stocks Cost (Note 1a) Net Assets
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
Metals & Mining 1,803,712 +Centaur Mining & Exploration Ltd. $ 2,469,435 $ 624,066 0.6%
172,200 Industrias Penoles, S.A. de C.V. 757,856 560,094 0.6
939,009 M.I.M. Holdings Ltd. 2,089,671 444,583 0.4
237,457 Minsur S.A. 597,621 437,271 0.4
196,000 Mitsubishi Materials Corp. 973,251 394,849 0.4
73,400 Noranda Inc. 1,355,782 1,132,566 1.1
79,300 Outokumpu OYJ 1,460,162 894,984 0.9
53,100 P.T. Tambag Timah (GDR)** (a) 661,263 354,443 0.4
14,300 Phelps Dodge Corp. 834,065 794,544 0.8
97,900 Rio Tinto PLC (The) 1,273,590 1,101,931 1.1
1,717,000 Savage Resources Ltd. 1,306,929 677,442 0.7
110,000 Sumitomo Metal Mining Co. Ltd. 917,508 447,006 0.4
62,000 Trelleborg `B' Fria 842,932 758,673 0.8
643,400 WMC Ltd. 3,807,237 1,929,286 1.9
------------ ------------ ------
19,347,302 10,551,738 10.5
====================================================================================================================================
Oil & Gas Producers 54,200 Alberta Energy Co., Ltd. 1,182,890 1,210,400 1.2
41,000 Apache Corp. 1,085,270 1,086,500 1.1
84,600 +Baytex Energy Ltd. (Class A) 1,110,828 353,716 0.3
21,197 Burlington Resources, Inc. 526,291 768,391 0.8
54,900 +Chieftain International Inc. 1,232,560 988,200 1.0
29,200 Devon Energy Corporation 992,794 941,700 0.9
141,600 +EEX Corporation 1,366,261 991,200 1.0
64,100 Enron Oil & Gas Company 1,415,062 1,017,588 1.0
45,100 Enterprise Oil PLC 301,994 368,918 0.4
180,900 Gulf Canada Resources Ltd. 1,424,588 667,069 0.7
78,000 +Northrock Resources Ltd. 639,975 711,773 0.7
86,400 +Oryx Energy Co. 1,496,324 1,593,000 1.6
77,100 +Renaissance Energy Ltd. 1,390,129 987,543 1.0
59,000 Snyder Oil Corp. 1,251,841 1,062,000 1.0
31,200 Unocal Corporation 1,102,006 1,021,800 1.0
40,800 Vastar Resources, Inc. 1,720,948 1,744,200 1.7
------------ ------------ ------
18,239,761 15,513,998 15.4
====================================================================================================================================
Oil Services 29,200 Coflexip Stena Offshore, Inc. (ADR)* 610,458 1,416,200 1.4
29,925 +EVI Weatherford, Inc. 1,364,807 770,569 0.8
51,800 McDermott International, Inc. 1,932,635 1,343,562 1.3
42,500 +Noble Drilling Corp. 1,347,119 802,187 0.8
10,900 Schlumberger Ltd. 312,031 660,131 0.7
44,600 +Stolt Comex Seaway, S.A. 1,101,028 646,700 0.6
22,300 +Stolt Comex Seaway, S.A. (ADR)* 273,434 298,262 0.3
70,300 +TransCoastal Marine Services, Inc. 1,289,935 443,769 0.4
32,200 Transocean Offshore Inc. 1,020,228 1,269,887 1.3
------------ ------------ ------
9,251,675 7,651,267 7.6
====================================================================================================================================
Paper & Pulp 45,666 Aracruz Celulose S.A. (ADR)* 365,755 448,098 0.4
23,900 Bowater Inc. 1,094,682 1,099,400 1.1
23,000 Champion International Corp. 1,196,585 976,062 1.0
53,400 Georgia-Pacific Corp. (Timber Group) 1,247,507 1,198,162 1.2
213,296 Slocan Forest Products Ltd. 1,926,964 990,889 1.0
63,500 +Stone Container Corp. 785,423 829,469 0.8
------------ ------------ ------
6,616,916 5,542,080 5.5
====================================================================================================================================
</TABLE>
8
<PAGE>
Merrill Lynch Global Resources Trust July 31, 1998
SCHEDULE OF INVESTMENTS (concluded)
<TABLE>
<CAPTION>
Value Percent of
Industries Shares Held Common Stocks Cost (Note 1a) Net Assets
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
Petroleum Refining 38,400 Sun Company, Inc. $ 1,067,529 $ 1,437,600 1.4%
29,300 Ultramar Diamond Shamrock Corp. 698,163 767,294 0.8
------------ ------------ ------
1,765,692 2,204,894 2.2
====================================================================================================================================
Plantations 717,000 Golden Hope Plantations BHD 1,325,785 593,139 0.6
578,000 Kuala Lumpur Kepong BHD 790,865 977,397 1.0
------------ ------------ ------
2,116,650 1,570,536 1.6
====================================================================================================================================
Steel 291,000 British Steel PLC 770,309 598,666 0.6
12,400 Koninklijke Nederlandsche Hoogovens en
Staalfabrienken N.V. 545,807 545,931 0.6
341,000 Nippon Steel Corp. 1,163,723 594,891 0.6
433,000 Sumitomo Metal Industries, Ltd. 1,341,418 644,479 0.6
------------ ------------ ------
3,821,257 2,383,967 2.4
====================================================================================================================================
Wood Products 146,100 Riverside Forest Products Ltd. 2,401,223 969,604 1.0
====================================================================================================================================
Total Common Stocks 117,190,903 94,486,680 94.0
====================================================================================================================================
<CAPTION>
Face
Amount Short-Term Securities
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
Repurchase $3,000,000 HSBC Holdings PLC, purchased on 7/31/1998 to
Agreements*** yield to 5.65% to 8/03/1998 3,000,000 3,000,000 3.0
2,512,000 Nikko Securities International, Inc., purchased
on 7/31/1998 to yield to 5.65% to 8/03/1998 2,512,000 2,512,000 2.5
====================================================================================================================================
Total Short-Term Securities 5,512,000 5,512,000 5.5
====================================================================================================================================
Total Investments $122,702,903 99,998,680 99.5
============
Other Assets Less Liabilities 558,002 0.5
------------ ------
Net Assets $100,556,682 100.0%
============ ======
====================================================================================================================================
</TABLE>
* American Depositary Receipts (ADR).
** Global Depositary Receipts (GDR).
*** Repurchase Agreements are fully collateralized by US Government &
Agency Obligations.
+ Non-income producing security.
(a) The security may be offered and sold to "qualified institutional
buyers" under Rule 144A of the Securities Act of 1933. See Notes to
Financial Statements.
9
<PAGE>
Merrill Lynch Global Resources Trust July 31, 1998
FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Statement of Assets and Liabilities as of July 31, 1998
==================================================================================================================================
<S> <C> <C> <C>
Assets: Investments, at value (identified cost--$122,702,903) (Note 1a) ............... $ 99,998,680
Cash .......................................................................... 493,460
Receivables:
Securities sold ........................................................... $ 1,406,119
Dividends ................................................................. 250,913
Beneficial interest sold .................................................. 49,117 1,706,149
-------------
Prepaid registration fees and other assets (Note 1g) .......................... 35,640
-------------
Total assets .................................................................. 102,233,929
-------------
==================================================================================================================================
Liabilities: Payables:
Beneficial interest redeemed .............................................. 489,107
Securities purchased ...................................................... 426,020
Investment adviser (Note 2) ............................................... 55,776
Distributor (Note 2) ...................................................... 42,964 1,013,867
-------------
Accrued expenses and other liabilities ........................................ 663,380
-------------
Total liabilities ............................................................. 1,677,247
-------------
==================================================================================================================================
Net Assets: Net assets .................................................................... $ 100,556,682
=============
==================================================================================================================================
Net Assets Class A Shares of beneficial interest, $0.10 par value, unlimited number
Consist of: of shares authorized .......................................................... $ 70,248
Class B Shares of beneficial interest, $0.10 par value, unlimited number
of shares authorized .......................................................... 232,937
Class C Shares of beneficial interest, $0.10 par value, unlimited number
of shares authorized .......................................................... 11,530
Class D Shares of beneficial interest, $0.10 par value, unlimited number
of shares authorized .......................................................... 467,298
Paid-in capital in excess of par .............................................. 128,650,292
Undistributed investment income--net .......................................... 361,954
Accumulated distributions in excess of realized capital gains on investments
and foreigncurrency transactions--net (Note 1h) ............................... (6,528,128)
Unrealized depreciation on investments and foreigncurrency
transactions--net ............................................................. (22,709,449)
-------------
Net assets .................................................................... $ 100,556,682
=============
==================================================================================================================================
Net Asset Value: Class A--Based on net assets of $9,081,814 and 702,475 shares
of beneficial interest outstanding ............................................ $ 12.93
=============
Class B--Based on net assets of $29,794,242 and 2,329,374 shares
of beneficial interest outstanding ............................................ $ 12.79
=============
Class C--Based on net assets of $1,461,207 and 115,302 shares
of beneficial interest outstanding ............................................ $ 12.67
=============
Class D--Based on net assets of $60,219,419 and 4,672,981 shares
of beneficial interest outstanding ............................................ $ 12.89
=============
==================================================================================================================================
</TABLE>
See Notes to Financial Statements
10
<PAGE>
Merrill Lynch Global Resources Trust July 31, 1998
FINANCIAL INFORMATION (continued)
<TABLE>
<CAPTION>
Statement of Operations for the Year Ended July 31, 1998
==================================================================================================================================
<S> <C> <C> <C>
Investment Dividends (net of $166,297 foreign withholding tax) ........................... $ 2,516,545
Income Interest and discount earned .................................................. 266,307
(Notes 1e & 1f): Other income .................................................................. 3,678
-------------
Total income .................................................................. 2,786,530
-------------
==================================================================================================================================
Expenses: Investment advisory fees (Note 2) ............................................. $ 903,333
Account maintenance & distribution fees--Class B (Note 2) ..................... 515,493
Account maintenance fees--Class D (Note 2) .................................... 209,031
Transfer agent fees--Class D (Note 2) ......................................... 159,772
Transfer agent fees--Class B (Note 2) ......................................... 120,781
Printing and shareholder reports .............................................. 89,550
Custodian fees ................................................................ 78,013
Professional fees ............................................................. 77,454
Accounting services (Note 2) .................................................. 59,039
Registration fees (Note 1g) ................................................... 53,366
Trustees' fees and expenses ................................................... 45,651
Transfer agent fees--Class A (Note 2) ......................................... 25,600
Account maintenance & distribution fees--Class C (Note 2) ..................... 20,118
Pricing fees .................................................................. 5,683
Transfer agent fees--Class C (Note 2) ......................................... 4,936
Other ......................................................................... 7,436
-------------
Total expenses ................................................................ 2,375,256
-------------
Investment income--net ........................................................ 411,274
-------------
==================================================================================================================================
Realized & Realized loss from:
Unrealized Gain Investments--net .......................................................... (2,808,058)
(Loss) on Foreign currency transactions--net ........................................ (39,983) (2,848,041)
Investments & Change in unrealized appreciation/depreciation on: ............................ -------------
Foreign Currency Investments--net .......................................................... (44,031,318)
Transactions--Net Foreign currency transactions--net ........................................ 2,289 (44,029,029)
(Notes 1c, 1d, ------------- -------------
1f & 3): Net realized and unrealized loss on investments and
foreign currency transactions ................................................. (46,877,070)
-------------
Net Decrease in Net Assets Resulting from Operations .......................... $ (46,465,796)
=============
==================================================================================================================================
</TABLE>
See Notes to Financial Statements
11
<PAGE>
Merrill Lynch Global Resources Trust July 31, 1998
FINANCIAL INFORMATION (continued)
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
==================================================================================================================================
For the Year Ended July 31,
----------------------------
Increase (Decrease) in Net Assets: 1998 1997
==================================================================================================================================
<S> <C> <C> <C>
Operations: Investment income--net ....................................................... $ 411,274 $ 465,718
Realized gain (loss) on investments and foreign currency
transactions--net ............................................................ (2,848,041) 21,291,983
Change in unrealized appreciation/depreciation on investments
and foreign currency transactions--net ....................................... (44,029,029) 13,758,830
------------- -------------
Net increase (decrease) in net assets resulting from operations .............. (46,465,796) 35,516,531
------------- -------------
==================================================================================================================================
Dividends & Investment income--net:
Distributions to Class A .................................................................. (89,265) (303,399)
Shareholders Class B .................................................................. -- (98,601)
(Note 1h): Class C .................................................................. -- (17,412)
Class D .................................................................. (239,469) (1,171,993)
Realized gain on investments--net:
Class A .................................................................. (1,233,600) (245,005)
Class B .................................................................. (5,053,865) (956,214)
Class C .................................................................. (178,070) (40,585)
Class D .................................................................. (7,236,347) (1,157,650)
In excess of realized gain on investments--net:
Class A .................................................................. (591,336) --
Class B .................................................................. (2,422,613) --
Class C .................................................................. (85,359) --
Class D .................................................................. (3,468,803) --
------------- -------------
Net decrease in net assets resulting from dividends and
distributions to shareholders ................................................ (20,598,727) (3,990,859)
------------- -------------
==================================================================================================================================
Beneficial Interest Net decrease in net assets derived from beneficial
Transactions interest transactions ........................................................ (38,351,521) (54,789,794)
(Note 4): ------------- -------------
==================================================================================================================================
Net Assets: Total decrease in net assets ................................................. (105,416,044) (23,264,122)
Beginning of year ............................................................ 205,972,726 229,236,848
------------- -------------
End of year* ................................................................. $ 100,556,682 $ 205,972,726
============= =============
==================================================================================================================================
*Undistributed investment income--net (Note 1i) ............................... $ 361,954 $ 319,397
============= =============
==================================================================================================================================
</TABLE>
See Notes to Financial Statements
12
<PAGE>
Merrill Lynch Global Resources Trust July 31, 1998
FINANCIAL INFORMATION (continued)
<TABLE>
<CAPTION>
Financial Highlights
===================================================================================================================
The following per share data and ratios have been derived Class A
from information provided in the financial statements. ---------------------------------------------------
For the Year Ended July 31,
---------------------------------------------------
Increase (Decrease) in Net Asset Value: 1998+ 1997+ 1996+ 1995 1994
===================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year ...... $ 19.90 $ 17.27 $ 16.70 $ 15.84 $ 14.07
Operating ------- ------- ------- ------- -------
Performance: Investment income--net .................. .13 .14 .22 .22 .22
Realized and unrealized gain (loss) on
investments and foreign currency
transactions--net ....................... (5.00) 2.91 .50 .88 1.69
------- ------- ------- ------- -------
Total from investment operations ........ (4.87) 3.05 .72 1.10 1.91
------- ------- ------- ------- -------
Less dividends and distributions:
Investment income--net .............. (.10) (.23) (.15) (.24) (.14)
Realized gain on investments--net ... (1.35) (.19) -- -- --
In excess of realized gain on
investments--net .................... (.65) -- -- -- --
------- ------- ------- ------- -------
Total dividends and distributions ....... (2.10) (.42) (.15) (.24) (.14)
------- ------- ------- ------- -------
Net asset value, end of year ............ $ 12.93 $ 19.90 $ 17.27 $ 16.70 $ 15.84
======= ======= ======= ======= =======
===================================================================================================================
Total Investment Based on net asset value per share ...... (27.00%) 17.95% 4.34% 7.05% 13.69%
Return:* ======= ======= ======= ======= =======
===================================================================================================================
Ratios to Average Expenses ................................ 1.07% 1.01% 1.03% 1.06% .92%
Net Assets: ======= ======= ======= ======= =======
Investment income--net .................. .79% .76% 1.26% 1.34% 1.39%
======= ======= ======= ======= =======
===================================================================================================================
Supplemental Net assets, end of year (in thousands) .. $ 9,082 $18,504 $22,726 $28,729 $20,054
Data: ======= ======= ======= ======= =======
Portfolio turnover ...................... 21.04% 24.23% 26.48% 31.64% 54.87%
======= ======= ======= ======= =======
===================================================================================================================
</TABLE>
* Total investment returns exclude the effects of sales loads.
+ Based on average shares outstanding.
See Notes to Financial Statements.
13
<PAGE>
Merrill Lynch Global Resources Trust July 31, 1998
FINANCIAL INFORMATION (continued)
<TABLE>
<CAPTION>
Financial Highlights (continued)
====================================================================================================================
The following per share data and ratios have been derived Class B
from information provided in the financial statements. -------------------------------------------------------
For the Year Ended July 31,
-------------------------------------------------------
Increase (Decrease) in Net Asset Value: 1998++ 1997++ 1996++ 1995 1994
====================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year ... $ 19.80 $ 17.16 $ 16.62 $ 15.72 $ 14.02
Operating -------- -------- -------- -------- --------
Performance: Investment income (loss)--net ........ (.05) (.05) .03 .10 .05
Realized and unrealized gain (loss) on
investments and foreign currency
transactions--net .................... (4.96) 2.90 .51 .84 1.70
-------- -------- -------- -------- --------
Total from investment operations ..... (5.01) 2.85 .54 .94 1.75
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net ........... -- (.02) --+ (.04) (.05)
Realized gain on investments--net (1.35) (.19) -- -- --
In excess of realized gain on
investments--net ................. (.65) -- -- -- --
-------- -------- -------- -------- --------
Total dividends and distributions .... (2.00) (.21) -- (.04) (.05)
-------- -------- -------- -------- --------
Net asset value, end of year ......... $ 12.79 $ 19.80 $ 17.16 $ 16.62 $ 15.72
======== ======== ======== ======== ========
====================================================================================================================
Total Investment Based on net asset value per share ... (27.76%) 16.72% 3.26% 5.95% 12.52%
Return:* ======== ======== ======== ======== ========
====================================================================================================================
Ratios to Average Expenses ............................. 2.11% 2.04% 2.07% 2.08% 1.95%
Net Assets: ======== ======== ======== ======== ========
Investment income (loss)--net ........ (.29%) (.29%) .20% .31% .35%
======== ======== ======== ======== ========
====================================================================================================================
Supplemental Net assets, end of year (in thousands) $ 29,794 $ 77,386 $ 94,199 $141,800 $236,581
Data: ======== ======== ======== ======== ========
Portfolio turnover ................... 21.04% 24.23% 26.48% 31.64% 54.87%
======== ======== ======== ======== ========
====================================================================================================================
</TABLE>
* Total investment returns exclude the effects of sales loads.
+ Amount is less than $.01 per share.
++ Based on average shares outstanding.
See Notes to Financial Statements.
14
<PAGE>
Merrill Lynch Global Resources Trust July 31, 1998
FINANCIAL INFORMATION (continued)
<TABLE>
<CAPTION>
Financial Highlights (continued)
=======================================================================================================================
Class C
---------------------------------------
For the
Period
The following per share data and ratios have been derived Oct. 21,
from information provided in the financial statements. For the Year Ended July 31, 1994+ to
----------------------------- July 31,
Increase (Decrease) in Net Asset Value: 1998++ 1997++ 1996++ 1995
=======================================================================================================================
<S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period ................. $ 19.64 $ 17.08 $ 16.55 $ 15.93
Operating ------- ------- ------- -------
Performance: Investment income(loss)--net ......................... (.04) (.06) .04 .05
Realized and unrealized gain (loss) on investments and
foreign currency transactions--net ................... (4.93) 2.90 .49 .62
------- ------- ------- -------
Total from investment operations ..................... (4.97) 2.84 .53 .67
------- ------- ------- -------
Less dividends and distributions:
Investment income--net ........................... -- (.09) -- (.05)
Realized gain on investments--net ................ (1.35) (.19) -- --
In excess of realized gain on
investments--net ................................. (.65) -- -- --
------- ------- ------- -------
Total dividends and distributions .................... (2.00) (.28) -- (.05)
------- ------- ------- -------
Net asset value, end of period ....................... $ 12.67 $ 19.64 $ 17.08 $ 16.55
======= ======= ======= =======
=======================================================================================================================
Total Investment Based on net asset value per share ................... (27.78%) 16.77% 3.20% 4.26%++
Return:** ======= ======= ======= =======
=======================================================================================================================
Ratios to Average Expenses ............................................. 2.12% 2.06% 2.07% 2.20%*
Net Assets: ======= ======= ======= =======
Investment income (loss)--net ........................ (.29%) (.33%) .27% .28%*
======= ======= ======= =======
=======================================================================================================================
Supplemental Net assets, end of period (in thousands) ............. $ 1,461 $ 2,680 $ 3,388 $ 2,800
Data: ======= ======= ======= =======
Portfolio turnover ................................... 21.04% 24.23% 26.48% 31.64%
======= ======= ======= =======
=======================================================================================================================
</TABLE>
* Annualized.
** Total investment returns exclude the effects of sales loads.
+ Commencement of operations.
++ Based on average shares outstanding.
++ Aggregate total investment return.
See Notes to Financial Statements.
15
<PAGE>
Merrill Lynch Global Resources Trust July 31, 1998
FINANCIAL INFORMATION (concluded)
<TABLE>
<CAPTION>
Financial Highlights (concluded)
===============================================================================================================================
Class D
-----------------------------------------------
For the
Period
The following per share data and ratios have been derived Oct. 21,
from information provided in the financial statements. For the Year Ended July 31, 1994+ to
-------------------------------- July 31,
Increase (Decrease) in Net Asset Value: 1998++ 1997++ 1996++ 1995
===============================================================================================================================
<S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period ......................... $ 19.83 $ 17.21 $ 16.67 $ 15.96
Operating -------- -------- -------- --------
Performance: Investment income--net ....................................... .09 .09 .17 .12
Realized and unrealized gain (loss) on investments and foreign
currency transactions--net ................................... (4.99) 2.91 .50 .66
-------- -------- -------- --------
Total from investment operations ............................. (4.90) 3.00 .67 .78
-------- -------- -------- --------
Less dividends and distributions:
Investment income--net ................................... (.04) (.19) (.13) (.07)
Realized gain on investments--net ........................ (1.35) (.19) -- --
In excess of realized gain on
investments--net ......................................... (.65) -- -- --
-------- -------- -------- --------
Total dividends and distributions ............................ (2.04) (.38) (.13) (.07)
-------- -------- -------- --------
Net asset value, end of period ............................... $ 12.89 $ 19.83 $ 17.21 $ 16.67
======== ======== ======== ========
===============================================================================================================================
Total Investment Based on net asset value per share ........................... (27.15%) 17.66% 4.06% 4.93%++
Return:** ======== ======== ======== ========
===============================================================================================================================
Ratios to Average Expenses ..................................................... 1.32% 1.26% 1.27% 1.39%*
Net Assets: ======== ======== ======== ========
Investment income--net ....................................... .55% .51% 1.00% 1.02%*
======== ======== ======== ========
===============================================================================================================================
Supplemental Net assets, end of period (in thousands) ..................... $ 60,220 $107,403 $108,924 $107,467
Data: ======== ======== ======== ========
Portfolio turnover ........................................... 21.04% 24.23% 26.48% 31.64%
======== ======== ======== ========
===============================================================================================================================
</TABLE>
* Annualized.
** Total investment returns exclude the effects of sales loads.
+ Commencement of operations.
++ Based on average shares outstanding.
++ Aggregate total investment return.
See Notes to Financial Statements.
16
<PAGE>
Merrill Lynch Global Resources Trust July 31, 1998
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch Global Resources Trust (the "Trust") is registered under the
Investment Company Act of 1940 as a non-diversified, open-end management
investment company. The Trust offers four classes of shares under the Merrill
Lynch Select PricingSM System. Shares of Class A and Class D are sold with a
front-end sales charge. Shares of Class B and Class C may be subject to a
contingent deferred sales charge. All classes of shares have identical voting,
dividend, liquidation and other rights and the same terms and conditions, except
that Class B, Class C and Class D Shares bear certain expenses related to the
account maintenance of such shares, and Class B and Class C Shares also bear
certain expenses related to the distribution of such shares. Each class has
exclusive voting rights with respect to matters relating to its account
maintenance and distribution expenditures. The following is a summary of
significant accounting policies followed by the Trust.
(a) Valuation of investments--Portfolio securities which are traded on stock
exchanges are valued at the last sale price on the exchange on which such
securities are traded, as of the close of business on the day the securities are
being valued or, lacking any sales, at the last available bid price. Securities
traded in the over-the-counter market are valued at the last available bid price
prior to the time of valuation. In cases where securities are traded on more
than one exchange, the securities are valued on the exchange designated by or
under the authority of the Trustees of the Trust as the primary market.
Securities which are traded both in the over-the-counter market and on a stock
exchange are valued according to the broadest and most representative market.
Options written are valued at the last sale price in the case of exchange-traded
options or, in the case of options traded in the over-the-counter market, the
last asked price. Options purchased are valued at the last sale price in the
case of exchange-traded options or, in the case of options traded in the
over-the-counter market, the last bid price. Short-term securities are valued at
amortized cost, which approximates market value. Other investments are stated at
market value. Securities and other assets for which market value quotations are
not available are valued at their fair value as determined in good faith by or
under the direction of the Trustees of the Trust.
(b) Repurchase agreements--The Trust invests in US Government securities
pursuant to repurchase agreements. Under such agreements, the counterparty
agrees to repurchase the security at a mutually agreed upon time and price. The
Trust takes possession of the underlying securities, marks to market such
securities and, if necessary, receives additional securities daily to ensure
that the contract is fully collateralized.
(c) Derivative financial instruments--The Trust may engage in various portfolio
strategies to seek to increase its return by hedging its portfolio against
adverse movements in the equity, debt and currency markets. Losses may arise due
to changes in the value of the contract or if the counterparty does not perform
under the contract.
o Forward foreign exchange contracts--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.
o 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 gain or loss 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 producing investments.
(d) Foreign currency transactions--Transactions denominated in foreign
currencies are recorded at the exchange rate prevailing when recognized. Assets
and liabilities denominated in foreign currencies are
17
<PAGE>
Merrill Lynch Global Resources Trust July 31, 1998
NOTES TO FINANCIAL STATEMENTS (continued)
valued at the exchange rate at the end of the period. Foreign currency
transactions are the result of settling (realized) or valuing (unrealized)
assets or liabilities expressed in foreign currencies into US dollars. Realized
and unrealized gains or losses from investments include the effects of foreign
exchange rates on investments.
(e) 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 provision is required. Under the applicable
foreign tax law, a withholding tax may be imposed on interest, dividends, and
capital gains at various rates.
(f) 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. Dividends from foreign
securities where the ex-dividend date may have passed are subsequently recorded
when the Trust has determined the ex-dividend dates. Interest income is
recognized on the accrual basis. Realized gains and losses on security
transactions are determined on the identified cost basis.
(g) Prepaid registration fees--Prepaid registration fees are charged to expense
as the related shares are issued.
(h) Dividends and distributions--Dividends and distributions paid by the Trust
are recorded on the ex-dividend dates. Distributions in excess of realized
capital gains are due primarily to differing tax treatments for post-October
losses.
(i) Reclassification--Generally accepted accounting principles require that
certain components of net assets be adjusted to reflect permanent differences
between financial and tax reporting. Accordingly, current year's permanent
book/tax differences of $39,983 have been reclassified between accumulated
distributions in excess of net realized capital gains and undistributed net
investment income. These reclassifications have no effect on net assets or net
asset values per share.
2. Investment Advisory Agreement and Transactions with Affiliates:
The Trust has entered into an Investment Advisory Agreement with Merrill Lynch
Asset Management, L.P. ("MLAM"). The general partner of MLAM is Princeton
Services, Inc. ("PSI"), an indirect wholly-owned subsidiary of Merrill Lynch &
Co., Inc. ("ML & Co."), which is the limited partner. The Trust has also entered
into a Distribution Agreement and Distribution Plans with Merrill Lynch Funds
Distributor ("MLFD" or "Distributor"), a division of Princeton Funds
Distributor, Inc. ("PFD"), which is a wholly-owned subsidiary of Merrill Lynch
Group, Inc.
MLAM is responsible for the management of the Trust's portfolio and provides the
necessary personnel, facilities, 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.
Pursuant to the Distribution Plans adopted by the Trust in accordance with Rule
12b-1 under the Investment Company Act of 1940, the Trust pays the Distributor
ongoing account maintenance and distribution fees. The fees are accrued daily
and paid monthly at annual rates based upon the average daily net assets of the
shares as follows:
- --------------------------------------------------------------------------------
Account Distribution
Maintenance Fee Fee
- --------------------------------------------------------------------------------
Class B .......................................... 0.25% 0.75%
Class C .......................................... 0.25% 0.75%
Class D .......................................... 0.25% --
- --------------------------------------------------------------------------------
Pursuant to a sub-agreement with the Distributor, Merrill Lynch, Pierce, Fenner
& Smith Inc. ("MLPF&S"), a subsidiary of ML & Co., also provides account
maintenance and distribution services to the Trust. The ongoing account
maintenance fee compensates the Distributor and MLPF&S for providing account
maintenance services to Class B, Class C and Class D shareholders. The ongoing
distribution fee compensates the Distributor and MLPF&S for providing
shareholder and distribution-related services to Class B and Class C
shareholders.
For the year ended July 31, 1998, MLFD earned underwriting discounts and MLPF&S
earned dealer concessions on sales of the Trust's Class A and Class D Shares as
follows:
- --------------------------------------------------------------------------------
MLFD MLPF&S
- --------------------------------------------------------------------------------
Class A .......................................... $ 93 $ 952
Class D .......................................... $1,081 $14,361
- --------------------------------------------------------------------------------
18
<PAGE>
Merrill Lynch Global Resources Trust July 31, 1998
For the year ended July 31, 1998, MLPF&S received contingent deferred sales
charges of $153,380 and $809 relating to transactions in Class B and Class C
Shares, respectively.
In addition, MLPF&S received $17,450 in commissions on the execution of
portfolio security transactions for the Trust for the year ended July 31, 1998.
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
MLAM, PSI, FDS, PFD, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the
year ended July 31, 1998 were $30,624,198 and $91,034,518, respectively.
Net realized losses for the year ended July 31, 1998 and net unrealized losses
as of July 31, 1998 were as follows:
- --------------------------------------------------------------------------------
Realized Unrealized
Losses Losses
- --------------------------------------------------------------------------------
Long-term investments ................... $(2,808,058) $(22,704,223)
Foreign currency transactions ........... (39,983) (5,226)
- --------------------------------------------------------------------------------
Total ................................... $(2,848,041) $(22,709,449)
=========== ============
- --------------------------------------------------------------------------------
As of July 31, 1998, net unrealized depreciation for Federal income tax purposes
aggregated $22,704,223, of which $14,078,348 related to appreciated securities
and $36,782,571 related to depreciated securities. At July 31, 1998, the
aggregate cost of investments for Federal income tax purposes was $122,702,903.
4. Beneficial Interest Transactions:
Net decrease in net assets derived from beneficial interest transactions was
$38,351,521 and $54,789,794, for the years ended July 31, 1998 and July 31,
1997, respectively.
Transactions in shares of beneficial interest for each class were as follows:
- --------------------------------------------------------------------------------
Class A Shares for the Year Dollar
Ended July 31, 1998 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ................................. 251,435 $ 3,890,541
Shares issued to shareholders
in reinvestment of dividends
and distributions ........................... 98,253 1,700,980
-------- -----------
Total issued ................................ 349,688 5,591,521
Shares redeemed ............................. (577,238) (9,070,150)
-------- -----------
Net decrease ................................ (227,550) $(3,478,629)
======== ===========
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class A Shares for the Year Dollar
Ended July 31, 1997 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ................................. 448,154 $ 8,330,555
Shares issued to shareholders
in reinvestment of dividends
and distributions ........................... 27,690 494,192
-------- -----------
Total issued ................................ 475,844 8,824,747
Shares redeemed ............................. (862,003) (15,971,403)
-------- -----------
Net decrease ................................ (386,159) $(7,146,656)
======== ===========
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class B Shares for the Year Dollar
Ended July 31, 1998 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ................................. 372,051 $ 6,141,470
Shares issued to shareholders
in reinvestment of distributions ............ 352,334 6,075,936
---------- ------------
Total issued ................................ 724,385 12,217,406
Automatic conversion
of shares ................................... (174,357) (2,685,847)
Shares redeemed ............................. (2,129,327) (33,391,721)
---------- ------------
Net decrease ................................ (1,579,299) $(23,860,162)
========== ============
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class B Shares for the Year Dollar
Ended July 31, 1997 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ................................. 950,849 $ 17,425,847
Shares issued to shareholders
in reinvestment of dividends
and distributions ........................... 48,665 875,929
---------- ------------
Total issued ................................ 999,514 18,301,776
Automatic conversion
of shares ................................... (207,430) (3,820,920)
Shares redeemed ............................. (2,374,035) (43,883,586)
---------- ------------
Net decrease ................................ (1,581,951) $(29,402,730)
========== ============
- --------------------------------------------------------------------------------
19
<PAGE>
Merrill Lynch Global Resources Trust July 31, 1998
NOTES TO FINANCIAL STATEMENTS (concluded)
- --------------------------------------------------------------------------------
Class C Shares for the Year Dollar
Ended July 31, 1998 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ................................. 292,397 $ 4,497,842
Shares issued to shareholders
in reinvestment of distributions ............ 13,740 233,761
-------- -----------
Total issued ................................ 306,137 4,731,603
Shares redeemed ............................. (327,342) (5,047,786)
-------- -----------
Net decrease ................................ (21,205) $ (316,183)
======== ===========
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class C Shares for the Year Dollar
Ended July 31, 1997 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ................................. 278,052 $ 5,116,267
Shares issued to shareholders
in reinvestment of dividends
and distributions ........................... 2,963 52,754
-------- -----------
Total issued ................................ 281,015 5,169,021
Shares redeemed ............................. (342,861) (6,275,052)
-------- -----------
Net decrease ................................ (61,846) $(1,106,031)
======== ===========
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class D Shares for the Year Dollar
Ended July 31, 1998 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ................................. 688,374 $ 12,306,366
Automatic conversion
of shares ................................... 173,783 2,685,847
Shares issued to shareholders
in reinvestment of dividends
and distributions ........................... 465,362 8,004,915
------------ ------------
Total issued ................................ 1,327,519 22,997,128
Shares redeemed ............................. (2,069,885) (33,693,675)
------------ ------------
Net decrease ................................ (742,366) $(10,696,547)
============ ============
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class D Shares for the Year Dollar
Ended July 31, 1997 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ................................. 515,787 $ 9,511,946
Automatic conversion
of shares ................................... 207,740 3,820,920
Shares issued to shareholders
in reinvestment of dividends
and distributions ........................... 95,865 1,709,679
---------- ------------
Total issued ................................ 819,392 15,042,545
Shares redeemed ............................. (1,731,884) (32,176,922)
---------- ------------
Net decrease ................................ (912,492) $(17,134,377)
========== ============
- --------------------------------------------------------------------------------
5. Commitments:
On July 31, 1998, the Trust had entered into foreign exchange contracts, under
which it had agreed to sell foreign currency with the approximate value of
$1,405,000.
6. Subsequent Event:
On September 3, 1998 the Board of Trustees declared dividends per share payable
on September 11, 1998 to shareholders of record on September 2, 1998 as follows:
- --------------------------------------------------------------------------------
Ordinary Long-Term
Income Capital Gains
- --------------------------------------------------------------------------------
Class A ..................................... $.144079 $ .076890
Class B ..................................... $ -- $ --
Class C ..................................... $ -- $ .039968
Class D ..................................... $.098001 $ .076890
- --------------------------------------------------------------------------------
20
<PAGE>
Merrill Lynch Global Resources Trust July 31, 1998
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders, Merrill Lynch Global 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, 1998, the related statements of operations for the year then ended and
changes in net assets for each of the years in the two-year period then ended,
and the financial highlights for each of the years in the five-year period then
ended. These financial statements and the financial highlights are the
responsibility of the 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,
1998 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, 1998, 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
September 11, 1998
IMPORTANT TAX INFORMATION (unaudited)
The following information summarizes all per share distributions paid by Merrill
Lynch Global Resources Trust during its taxable year ended July 31, 1998:
<TABLE>
<CAPTION>
============================================================================================================
Record Payable Qualifying Domestic Total Foreign Taxes Long-Term
Date Date Ordinary Income Ordinary Income Paid or Withheld Capital Gains*
============================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Class A 9/03/97 9/11/97 $ .096564 $ .096564 $ .042330 $1.623299
- ------------------------------------------------------------------------------------------------------------
Class B 9/03/97 9/11/97 $ -- $ -- $ -- $1.623299
- ------------------------------------------------------------------------------------------------------------
Class C 9/03/97 9/11/97 $ -- $ -- $ -- $1.623299
- ------------------------------------------------------------------------------------------------------------
Class D 9/03/97 9/11/97 $ .044832 $ .044832 $ .042330 $1.623299
============================================================================================================
</TABLE>
* Of this long-term capital gain distribution, 72.67% is subject to
the 28% tax rate and 27.33% is subject to the 20% tax rate.
The qualifying domestic ordinary income qualifies for the dividends received
deduction for corporations.
The foreign taxes paid or withheld represent taxes incurred by the Trust on
dividends received by the Trust from foreign sources. Foreign taxes paid or
withheld should be included as foreign source income with an offsetting
deduction from gross income or as a credit for taxes paid to foreign
governments. You should consult your tax adviser regarding the appropriate
treatment of foreign taxes paid.
Additionally, the Trust paid a long-term capital gain distribution of $.371708
per share to shareholders of record on December 10, 1997. Of this distribution,
4.44% is subject to the 28% tax rate and 95.56% is subject to the 20% tax rate.
Please retain this information for your records.
21
<PAGE>
Merrill Lynch Global Resources Trust July 31, 1998
PORTFOLIO INFORMATION (unaudited)
As of July 31, 1998
Percent of
Ten Largest Equity Holdings Net Assets
British Petroleum Co., PLC ................ 5.1%
Total, S.A. (Class B) ..................... 3.5
Societe Nationale Elf Aquitaine (ADR) ..... 2.8
Ente Nazionale Idrocarburi S.p.A.
(ENI) (ADR) ............................. 2.7
Placer Dome Inc. .......................... 2.2
duPont (E.I.) de Nemours & Co. ............ 2.2
WMC Ltd. .................................. 1.9
Vastar Resources, Inc. .................... 1.7
Petro-Canada .............................. 1.7
Amoco Corp. ............................... 1.7
Percent of
Geographic Allocation Net Assets
United States ............................. 45.8%
Canada .................................... 8.7
France .................................... 8.5
Australia ................................. 8.5
United Kingdom ............................ 7.1
Italy ..................................... 2.7
Japan ..................................... 2.6
Malaysia .................................. 1.6
Argentina ................................. 1.4
Germany ................................... 1.2
Austria ................................... 1.1
Finland ................................... 0.9
Sweden .................................... 0.8
South Africa .............................. 0.7
Mexico .................................... 0.6
Netherlands ............................... 0.5
Brazil .................................... 0.5
Peru ...................................... 0.4
Indonesia ................................. 0.4
Equity Portfolio Changes
For the Quarter Ended July 31, 1998
Additions
Bowater Inc.
Devon Energy Corporation
EVI Weatherford, Inc.
Enron Oil & Gas Company
Noble Drilling Corp.
Renaissance Energy Ltd.
Stolt Comex Seaway, S.A. (ADR)
Texaco Inc.
Unocal Corporation
Deletions
Coastal Corp.
Falconbridge Ltd.
Georgia-Pacific Corp.
International Paper Co.
Louisiana-Pacific Corp.
Metsa Serla OY `B'
Mo Och Domsjo AB Co.
Weatherford Enterra, Inc.
Weyerhaeuser Co.
Willamette Industries, Inc.
22
<PAGE>
Merrill Lynch Global Resources Trust July 31, 1998
OFFICERS AND TRUSTEES
Arthur Zeikel, President and Trustee
Donald Cecil, Trustee
M. Colyer Crum, Trustee
Edward H. Meyer, Trustee
Jack B. Sunderland, Trustee
J. Thomas Touchton, Trustee
Fred G. Weiss, Trustee
Terry K. Glenn, Executive Vice President
Norman R. Harvey, Senior Vice President
Robert M. Shearer, Senior Vice President and Portfolio Manager
Donald C. Burke, Vice President
Gerald M. Richard, Treasurer
Thomas D. Jones, III, Secretary
Custodian
The Bank of New York
90 Washington Street, 12th Floor
New York, NY 10286
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
23
<PAGE>
This report is not authorized for use as an offer of sale or a solicitation of
an offer to buy shares of the Trust unless accompanied or preceded by the
Trust's current prospectus. Past performance results shown in this report should
not be considered a representation of future performance. Investment return and
principal value of shares will fluctuate so that shares, when redeemed, may be
worth more or less than their original cost. Statements and other information
herein are as dated and are subject to change.
Merrill Lynch
Global Resources Trust
Box 9011
Princeton, NJ
08543-9011 #10303--7/98
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