MERRILL LYNCH
GLOBAL
RESOURCES
TRUST
[GRAPHIC OMITTED]
STRATEGIC
Performance
Annual Report
July 31, 1999
<PAGE>
MERRILL LYNCH GLOBAL RESOURCES TRUST
DEAR SHAREHOLDER
During the fiscal year ended July 31, 1999, the per formance of Merrill Lynch
Global Resources Trust dramatically improved. The Trust's Class A and Class B
Shares' total returns of +22.91% and +21.66% significantly exceeded the Lipper
Natural Resource Fund Average of +16.24%, and matched the +21.80% return of the
unmanaged Morgan Stanley Capital International (MSCI) Natural Resources Index.
Results in the fiscal fourth quarter were also good, with the Fund's total
returns of +3.26% and +2.98% for Class A and Class B Shares, outperforming the
+2.74% return of the Lipper peer group, and the +0.43% return of the MSCI
Natural Resource Index. (Fund results 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.)
While commodities have rebounded with the nascent recovery of the Asian
economies, we attribute the strong results of the Trust to changes we made in
our commodity selections, as well as to the operational and financial
characteristics of the companies in which we invest. This process led us to
overweight companies exposed to North American natural gas production, as well
as selected products within the paper and forest products industry. We believe
that energy sector trends appear positive going into the 1999-2000 winter
heating season, and we are optimistic that our increased weighting in energy
will deliver positive returns. While we expect the continued recovery in
resource stocks to be volatile, we still believe that the potential risk and
reward of owning resource stocks has shifted to a more positive outlook. We
believe that our emphasis on stocks exposed to commodities with positive
capacity utili zation trends should give the Trust's shareholders the potential
to receive both positive absolute, as well as favorable relative, total returns
during a one-year-two-year investment horizon.
Fiscal Year in Review
Merrill Lynch Global Resources Trust began the fiscal year in the midst of a
widespread commodity deflation, brought on by the financial crisis in global
emerging markets. Given that there were virtually no commodity sectors immune,
we moved aggressively to shift the Trust's investments into companies with
strong finances and raised our cash position significantly. In addition, we
invested in major international oil companies. This step proved to be favorable,
since the Trust benefited from major oil companies con solidat ing. Substantial
gains were realized in Amoco Corporation, and the resulting entity BP Amoco PLC
delivered a strong 45% return, excluding dividends after the merger. The Trust
also gained from our holding in Mobil Corporation after the company agreed to
merge with Exxon Corporation, and after YPF S.A. received a hostile takeover bid
from Repsol SA, a Spanish oil company.
Despite profit taking in the major oil companies, our weighting in the group
rose from 19.8% in January 1998 to a peak of 27% of total assets in March 1999.
We decreased our holdings in the large international oil companies since March,
as valuations became extended when consolidation activity increased in the
sector. Proceeds from these sales were directed into domestic integrated oil
companies because domestic oil stocks traded at more attractive valuations.
Since oil stocks generally have a greater exposure to oil production, they
benefit directly from rising oil prices resulting from Organization of Petroleum
Exporting Countries production cuts and recover ing demand in Asia. We increased
our position in Kerr-McGee Corporation at a price of $33 per share in April,
providing a solid return as the stock rose to $51 per share by July 31, 1999.
The Trust also benefited from substantial gains in our holdings of stocks
exposed to North American natural gas. After three consecutive
warmer-than-normal
1
<PAGE>
Merrill Lynch Global Resources Trust July 31, 1999
winters, the natural gas sector traded at the lowest valuations since gas prices
were decontrolled in 1986. Our forecast for increasing gas use in electrical
generation, combined with the lowest drilling activity in 54 years, sets the
stage for a favorable gas-pricing environment during the upcoming winter heating
season. We expect that the natural gas story may also become a secular
investment theme, as higher rates of depletion require higher prices, and
increased drilling to replace our relatively mature natural gas basins in North
America.
Stocks that were particularly strong gainers included Canadian Hunter
Exploration Ltd., which appre ciated 139% from our purchase price, and Barrett
Resources Corporation, which increased more than 151%. Other significant gainers
included Rio Alto Exploration Ltd. (+75.4%), Apache Corporation (+53%), Vastar
Resources, Inc. (+54.8%) and Union Pacific Resources Group Inc. (+58%). We
continue to find attractive new investments in the gas-leveraged independent
energy sector, and we are actively real locating assets to this area. We also
increased our oil service holdings, but we did not capture the strong gains this
sector realized. We were skeptical that a timely return of pricing power would
return to the group as consolidation in the sector could reduce overall
activity. Furthermore, we expected the higher debt on company balance sheets to
delay drilling plans. While these fac tors remain as a critical variable in oil
service investing, many investors were willing to overlook these negatives.
The Trust also made substantial gains in the paper and forest products
industries. These gains came from recoveries in the shares of some long-term
Trust holdings, as well as solid gains in containerboard producers. This sector
is also benefiting from positive changes in the outlook for supply and demand,
as well as rising capacity utilization. We added to our hold ing in
Smurfit-Stone Container Corporation, which recovered sharply after the merger
completion of its predecessor companies, and as the industry closed high-cost
capacity. This sector is also a beneficiary of recovering developing markets. We
also initiated new positions in two companies that are both exposed to
containerboard: Ireland-based Smurfit Jefferson Group PLC and St. Laurent
Paperboard Inc. of Canada. The housing boom in the United States led to a sharp
recovery in lumber prices, and Trust holdings in Canadian lumber producers
Riverside Forest Products Limited and Slocan Forest Products Ltd. made strong
recoveries with gains of 79% and 66%, respectively, during the fiscal year.
The Trust is also exposed to pulp manufacturing. Brazil-based Aracruz Celulose
SA has recovered from last year's financial turmoil in Latin America,
appreciating 87.3% during the past 12 months. Capitalizing on our expectations
for improved pulp prices, we initiated a position in Canadian pulp producer
Tembec Inc.
We dramatically reduced the weighting of gold stocks in the Trust during the
past 12 months, but especially early in 1999. While gold shares were
satisfactory relative performers in the second half of 1998, they started to
erode early in 1999. We reduced holdings from 11% of net assets in December to
7% by late April. However, we slashed remaining holdings to 2.3% after the
United Kingdom announced that it would auction away more than one-half of its
official reserves. While gold demand has rebounded and production growth has
recently started to fall despite years of declining prices, we are hesitant to
hold significant gold assets in the absence of clear signs of global inflation.
We believe that other commodities should provide more direct protection from the
threat of inflation, although we continue to monitor gold industry fundamentals
closely.
We reduced the weighting of steel and non-ferrous metals in the Trust and used
the proceeds to fund our increased energy and paper products holdings. However,
we maintained exposure to Alcoa Inc., whose shares appreciated more than 75%
during the fiscal year. We also added to our holding in Australian copper
producer M.I.M. Holdings Limited and reestablished a position in
Freeport-McMoRan Copper & Gold, Inc. We are content to maintain our weighting in
the metals sector at current levels. While there has been increased
consolidation activity in the sector, we are concerned that an increase in US
interest rates could stifle domestic demand. We also continued to avoid the
chemicals sector. New capacity is
2
<PAGE>
Merrill Lynch Global Resources Trust July 31, 1999
planned in some key commodity chemicals, and the industry is facing sharply
higher energy-derived feedstock costs. Since this does not fit our investment
strategy, we are avoiding chemical stocks despite the risk of missing some
merger activity in this industry.
In Conclusion
We continue to believe that our current holdings will capitalize on the positive
trends we see developing in the energy and paper industries. We believe the
valuations of resource industries remain reasonable compared to the overall
market, despite returns that have far surpassed the S&P 500 Index in 1999. We
expect consolidation among natural resource com panies to provide continued cost
savings efficiencies to industry participants.
We are optimistic that the changes we made in our investment strategy last year
will continue to deliver improved investment returns. We will continue to focus
on attractively valued, financially strong com panies exposed to commodities
that are subject to rising capacity utilization trends. We believe this approach
is likely to mitigate risk in economic contractions, while positioning the
portfolio for strong performance in times of economic expansions.
We appreciate your investment in Merrill Lynch Global Resources Trust, and we
look forward to sharing our investment outlook strategies with you in our next
quarterly report to shareholders.
Sincerely,
/s/ Terry K. Glenn
Terry K. Glenn
President and Trustee
/s/ Robert M. Shearer
Robert M. Shearer
Senior Vice President and Portfolio Manager
September 14, 1999
3
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Merrill Lynch Global Resources Trust July 31, 1999
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 distri bution 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 automati cally 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 distri butions 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 appli cable 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 6/30/99 +9.67% +3.91%
- --------------------------------------------------------------------------------
Five Years Ended 6/30/99 +3.62 +2.51
- --------------------------------------------------------------------------------
Ten Years Ended 6/30/99 +5.31 +4.75
- --------------------------------------------------------------------------------
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
================================================================================
Class B Shares*
================================================================================
Year Ended 6/30/99 +8.46% +4.46%
- --------------------------------------------------------------------------------
Five Years Ended 6/30/99 +2.54 +2.54
- --------------------------------------------------------------------------------
Ten Years Ended 6/30/99 +4.23 +4.23
- --------------------------------------------------------------------------------
* 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 6/30/99 +8.51% +7.51%
- --------------------------------------------------------------------------------
Inception (10/21/94)
through 6/30/99 +1.53 +1.53
- --------------------------------------------------------------------------------
* 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 6/30/99 +9.40% +3.66%
- --------------------------------------------------------------------------------
Inception (10/21/94)
through 6/30/99 +2.35 +1.18
- --------------------------------------------------------------------------------
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
4
<PAGE>
Merrill Lynch Global Resources Trust July 31, 1999
PERFORMANCE DATA (continued)
Total Return Based on a $10,000 Investment
ML Global Resources Trust's Class A and Class B Shares--Total Return Based on a
$10,000 Investment
A line graph depicting the growth of an investment in the Portfolio's Class A
Shares and Class B Shares compared to growth of an investment in the S&P 500
Index, Lipper Gold Funds Group Average and the Lipper Natural Resources Funds
Group Average. Beginning and ending values are:
7/89 7/99
ML Global Resources Trust+--
Class A Shares* $ 9,475 $15,436
ML Global Resources Trust+--
Class B Shares* $10,000 $14,686
S&P 500 Index++ $10,000 $49,663
Lipper Gold Funds
Group Average+++ $10,000 $ 6,504
Lipper Natural Resources
Funds Group Average++++ $10,000 $19,061
ML Global Resources Trust's Class C and Class D Shares--Total Return Based on a
$10,000 Investment
A line graph depicting the growth of an investment in the Portfolio'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 the Lipper Natural Resources Funds Group
Average. Beginning and ending values are:
10/21/94** 7/99
ML Global Resources Trust+--
Class C Shares* $10,000 $11,041
ML Global Resources Trust+--
Class D Shares* $ 9,475 $10,869
S&P 500 Index++ $10,000 $31,396
Lipper Gold Funds
Group Average+++ $10,000 $ 4,898
Lipper Natural Resources
Funds Group Average++++ $10,000 $14,126
* 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 C and Class D Shares' graph is from 10/31/94.
++++ The Lipper Natural Resources Funds Group Average is an index of all US
mutual funds classifieds as natural resource-related funds. The starting
date for the Index in the Class C & Class D Shares' graph is from
10/31/94.
Past performance is not predictive of future performance.
5
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Merrill Lynch Global Resources Trust July 31, 1999
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 +22.91% +3.26% +62.93%
- -------------------------------------------------------------------------------------------------------
ML Global Resources Trust Class B Shares +21.66 +2.98 +46.87
- -------------------------------------------------------------------------------------------------------
ML Global Resources Trust Class C Shares +21.68 +2.95 +10.41
- -------------------------------------------------------------------------------------------------------
ML Global Resources Trust Class D Shares +22.56 +3.19 +14.70
=======================================================================================================
</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/since inception dates
are for ten years for Class A & Class B Shares and from 10/21/94 for Class
C & Class D Shares.
6
<PAGE>
Merrill Lynch Global Resources Trust July 31, 1999
SCHEDULE OF INVESTMENTS
<TABLE>
<CAPTION>
Shares Value Percent of
Industries Held Common Stocks Cost (Note 1a) Net Assets
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Aluminum 16,450 Alcoa Inc. $ 448,811 $ 984,944 1.1%
- ------------------------------------------------------------------------------------------------------------------------------
Canadian 58,700 Alberta Energy Company Ltd. 1,276,545 1,810,158 2.0
Independents 172,350 + Canadian Hunter Exploration Ltd. 1,169,113 2,792,442 3.1
46,092 + Northrock Resources Ltd. 379,722 493,250 0.6
84,600 Paramount Resources Ltd. 1,156,037 1,198,660 1.3
63,100 + Rio Alto Exploration Ltd. 595,909 1,045,496 1.2
----------- ----------- -----
4,577,326 7,340,006 8.2
- ------------------------------------------------------------------------------------------------------------------------------
Chemicals 28,000 Air Products and Chemicals, Inc. 630,826 936,250 1.0
29,000 Imperial Chemical Industries PLC (ADR) (a) 1,418,032 1,337,625 1.5
----------- ----------- -----
2,048,858 2,273,875 2.5
- ------------------------------------------------------------------------------------------------------------------------------
Coal 46,300 + CONSOL Energy Inc. 678,522 515,087 0.6
- ------------------------------------------------------------------------------------------------------------------------------
Diversified 102,000 Asahi Glass Company, Limited 1,223,974 626,831 0.7
Companies 27,000 Ashland Inc. 1,144,672 1,026,000 1.1
34,000 + UCAR International Inc. 922,474 903,125 1.0
----------- ----------- -----
3,291,120 2,555,956 2.8
- ------------------------------------------------------------------------------------------------------------------------------
Gold 717,800 Acacia Resources Limited 1,106,014 852,423 0.9
94,500 Ashanti Goldfields Company Ltd. (GDR) (b) 2,346,106 590,625 0.7
300,000 Delta Gold NL 498,354 440,438 0.5
310,000 Normandy Mining Limited 352,610 224,525 0.2
----------- ----------- -----
4,303,084 2,108,011 2.3
- ------------------------------------------------------------------------------------------------------------------------------
Integrated Oil 18,200 Amerada Hess Corporation 993,871 1,077,212 1.2
Companies 37,000 BP Amoco PLC 149,783 723,476 0.8
1,520 BP Amoco PLC(ADR) (a) 64,250 176,130 0.2
28,200 Chevron Corporation 2,389,017 2,573,250 2.9
33,900 + Conoco Inc.(Class B) 890,539 889,875 1.0
34,000 ENI SpA (ADR) (a) 1,589,500 2,071,875 2.3
6,200 Elf Aquitaine SA (ADR) (a) 227,096 530,488 0.6
10,500 Exxon Corporation 749,268 833,437 0.9
39,722 Kerr-McGee Corporation 1,756,139 2,045,683 2.3
14,500 Mobil Corporation 1,143,282 1,482,625 1.7
28,300 Phillips Petroleum Company 1,271,149 1,452,144 1.6
15,700 Royal Dutch Petroleum Company
(NY Registered Shares) 870,117 957,700 1.1
26,700 Texaco Inc. 1,495,712 1,663,744 1.9
6,000 Total Fina SA `B' 366,642 764,266 0.8
46,900 USX-Marathon Group 1,395,976 1,424,588 1.6
----------- ----------- -----
15,352,341 18,666,493 20.9
- ------------------------------------------------------------------------------------------------------------------------------
Metals & Mining 1,803,712 + Centaur Mining and Exploration Limited 2,469,435 264,807 0.3
56,700 + Freeport-McMoRan Copper & Gold, Inc.
(Class B) 831,439 956,812 1.1
1,174,009 M.I.M. Holdings Limited 2,221,742 972,872 1.1
252,992 Minsur SA 597,621 526,782 0.6
82,000 Noranda, Inc. 1,052,756 1,082,544 1.2
79,300 Outokumpu OYJ 1,460,162 908,245 1.0
7,300 Phelps Dodge Corporation 425,781 432,981 0.5
49,950 + Stillwater Mining Company 1,299,101 1,130,119 1.3
240,000 WMC Limited 1,467,525 1,047,654 1.2
119,840 + Zimbabwe Platinum Mines Limited 66,324 34,797 0.0
----------- ----------- -----
11,891,886 7,357,613 8.3
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
Merrill Lynch Global Resources Trust July 31, 1999
SCHEDULE OF INVESTMENTS (continued)
<TABLE>
<CAPTION>
Shares Value Percent of
Industries Held Common Stocks Cost (Note 1a) Net Assets
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Oil & Gas Producers 31,500 Anadarko Petroleum Corporation $ 843,498 $ 1,202,906 1.3%
56,400 Apache Corporation 1,563,912 2,393,475 2.7
23,600 + Barrett Resources Corporation 378,289 948,425 1.1
31,797 Burlington Resources Inc. 937,202 1,405,030 1.6
80,300 Cabot Oil & Gas Corporation (Class A) 1,246,175 1,450,419 1.6
54,900 + Chieftain International, Inc. 1,232,560 1,015,650 1.1
55,900 Devon Energy Corporation 1,695,233 2,057,819 2.3
83,400 Enron Oil & Gas Company 1,712,551 1,782,675 2.0
61,000 + The Meridian Resource Corporation 370,508 240,188 0.3
10,100 + Stone Energy Corporation 441,875 456,394 0.5
88,800 Union Pacific Resources Group Inc. 997,114 1,581,750 1.8
42,700 Unocal Corporation 1,489,462 1,694,656 1.9
36,500 Vastar Resources, Inc. 1,540,628 2,386,188 2.7
----------- ----------- -----
14,449,007 18,615,575 20.9
- ------------------------------------------------------------------------------------------------------------------------------
Oil Services 31,600 + BJ Services Company 893,515 965,775 1.1
29,700 Baker Hughes Incorporated 880,143 1,033,931 1.2
25,400 Coflexip SA (ADR) (a) 528,758 1,120,775 1.3
25,900 + Cooper Cameron Corporation 939,638 938,875 1.1
36,200 Helmerich & Payne, Inc. 902,950 925,362 1.0
26,100 McDermott International, Inc. 912,733 735,694 0.8
31,900 + Noble Drilling Corporation 1,004,685 723,731 0.8
44,600 + Stolt Comex Seaway, SA 1,101,028 568,650 0.6
22,300 + Stolt Comex Seaway, SA (ADR) (a) 273,434 278,750 0.3
32,925 + Weatherford International, Inc. 1,421,475 1,290,248 1.4
----------- ----------- -----
8,858,359 8,581,791 9.6
- ------------------------------------------------------------------------------------------------------------------------------
Paper & Pulp 111,000 Abitibi-Consolidated Inc. 1,166,655 1,258,168 1.4
45,666 Aracruz Celulose SA (ADR) (a) 365,755 867,654 1.0
204,502 Nexfor Inc. 909,484 1,315,805 1.5
213,296 + Slocan Forest Products Ltd. 1,926,964 1,656,820 1.9
784,600 Smurfit Jefferson Group PLC 2,095,403 2,276,327 2.5
93,865 + Smurfit-Stone Container Corporation 1,180,672 2,094,363 2.3
160,200 + St. Laurent Paperboard Inc. 1,413,692 2,109,581 2.4
152,600 + Tembec Inc. `A' 1,021,177 1,368,496 1.5
29,900 Westvaco Corporation 823,332 880,181 1.0
----------- ----------- -----
10,903,134 13,827,395 15.5
- ------------------------------------------------------------------------------------------------------------------------------
Pipelines 21,900 Coastal Corporation 879,894 866,419 1.0
29,300 Equitable Resources, Inc. 888,376 1,085,931 1.2
----------- ----------- -----
1,768,270 1,952,350 2.2
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
Merrill Lynch Global Resources Trust July 31, 1999
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>
Plantations 717,000 Golden Hope Plantations Berhad++ $ 1,325,785 $ 564,166 0.6%
578,000 Kuala Lumpur Kepong Berhad++ 790,865 751,400 0.9
----------- ----------- -----
2,116,650 1,315,566 1.5
- ------------------------------------------------------------------------------------------------------------------------------
Refining 20,200 Sunoco, Inc. 563,499 616,100 0.7
- ------------------------------------------------------------------------------------------------------------------------------
Steel 140,700 The LTV Corporation 808,838 932,137 1.0
- ------------------------------------------------------------------------------------------------------------------------------
Total Common Stocks 82,059,705 87,642,899 98.1
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Face
Amount Short-Term Securities
- ------------------------------------------------------------------------------------------------------------------------------
Repurchase $ 3,689,000 Warburg Dillon Read LLC, purchased on
Agreements* 7/30/1999 to yield 5.05% to 8/02/1999 3,689,000 3,689,000 4.1
- ------------------------------------------------------------------------------------------------------------------------------
Total Short-Term Securities 3,689,000 3,689,000 4.1
- ------------------------------------------------------------------------------------------------------------------------------
Total Investments $85,748,705 91,331,899 102.2
===========
Liabilities in Excess of Other Assets (2,006,807) (2.2)
----------- -----
Net Assets $89,325,092 100.0%
=========== =====
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) American Depositary Receipts (ADR).
(b) Global Depositary Receipts (GDR).
* Repurchase Agreements are fully collateralized by US Government & Agency
Obligations.
+ Non-income producing security.
++ Effective February 16, 1999, the Trustees of the Trust adopted a change in
valuation for Malaysian securities. The Trust will utilize a Malaysian
exchange rate of 3.80 and record an estimated exit tax on the value of any
investments made before February 15, 1999, based upon its value as of
August 31, 1998 in the amount of 30% through March 31, 1999, 20% from
April 1, 1999 through May 31, 1999 and 10% from June 1, 1999 through
August 31, 1999. These changes are due to the capital controls implemented
by the Malaysian government, which froze the Malaysian ringgit at 3.80
until September 1, 1999 and initiated a tax at various rates, as described
above, on any funds repatriated from Malaysia.
See Notes to Financial Statements.
9
<PAGE>
Merrill Lynch Global Resources Trust July 31, 1999
FINANCIAL INFORMATION
Statement of Assets and Liabilities as of July 31, 1999
<TABLE>
<S> <C> <C> <C>
Assets: Investments, at value (identified cost--$85,748,705) (Note 1a)... $ 91,331,899
Cash............................................................. 590
Receivables:
Securities sold............................................... $ 1,002,204
Dividends..................................................... 95,277
Beneficial interest sold...................................... 8,218 1,105,699
------------
Prepaid registration fees and other assets (Note 1g)............. 32,658
------------
Total assets..................................................... 92,470,846
------------
- ----------------------------------------------------------------------------------------------------------------------------
Liabilities: Payables:
Securities purchased.......................................... 2,547,638
Beneficial interest redeemed.................................. 225,104
Investment adviser (Note 2)................................... 44,235
Distributor (Note 2).......................................... 31,198 2,848,175
------------
Accrued expenses and other liabilities........................... 297,579
------------
Total liabilities................................................ 3,145,754
------------
- ----------------------------------------------------------------------------------------------------------------------------
Net Assets: Net assets....................................................... $ 89,325,092
============
- ----------------------------------------------------------------------------------------------------------------------------
Net Assets Class A Shares of beneficial interest, $.10 par value,
Consist of: unlimited number of shares authorized............................ $ 58,890
Class B Shares of beneficial interest, $.10 par value,
unlimited number of shares authorized............................ 137,887
Class C Shares of beneficial interest, $.10 par value,
unlimited number of shares authorized............................ 13,274
Class D Shares of beneficial interest, $.10 par value,
unlimited number of shares authorized............................ 365,522
Paid-in capital in excess of par................................. 102,949,102
Undistributed investment income--net............................. 76,974
Accumulated realized capital losses on investments and
foreign currency transactions--net (Note 6)...................... (7,074,226)
Accumulated distributions in excess of realized capital
gains on investments and foreigncurrency transactions--
net (Note 1h).................................................... (12,680,790)
Unrealized appreciation on investments and foreign
currency transactions--net....................................... 5,478,459
------------
Net assets....................................................... $ 89,325,092
============
- ----------------------------------------------------------------------------------------------------------------------------
Net Asset Value: Class A--Based on net assets of $9,137,653 and 588,901
shares of beneficial interest outstanding............... $ 15.52
============
Class B--Based on net assets of $21,449,811 and 1,378,874
shares of beneficial interest outstanding............... $ 15.56
============
Class C--Based on net assets of $2,039,100 and 132,735
shares of beneficial interest outstanding............... $ 15.36
============
Class D--Based on net assets of $56,698,528 and 3,655,220
shares of beneficial interest outstanding............... $ 15.51
============
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
Merrill Lynch Global Resources Trust July 31, 1999
FINANCIAL INFORMATION (continued)
Statement of Operations for the Year Ended July 31, 1999
<TABLE>
<S> <C> <C> <C>
Investment Dividends (net of $109,390 foreign withholding tax).............. $ 1,496,953
Income Interest and discount earned..................................... 246,633
(Notes 1e & 1f): ------------
Total income..................................................... 1,743,586
------------
- ----------------------------------------------------------------------------------------------------------------------------
Expenses: Investment advisory fees (Note 2)................................ $ 511,418
Account maintenance & distribution fees--Class B (Note 2)........ 223,982
Transfer agent fees--Class D (Note 2)............................ 135,099
Account maintenance fees--Class D (Note 2)....................... 132,855
Professional fees................................................ 82,508
Transfer agent fees--Class B (Note 2)............................ 69,950
Accounting services (Note 2)..................................... 69,682
Printing and shareholder reports................................. 58,607
Registration fees (Note 1g)...................................... 58,536
Trustees' fees and expenses...................................... 49,242
Custodian fees................................................... 41,565
Transfer agent fees--Class A (Note 2)............................ 20,592
Account maintenance & distribution fees--Class C (Note 2)........ 15,783
Transfer agent fees--Class C (Note 2)............................ 4,839
Pricing fees..................................................... 3,200
Other............................................................ 5,355
Total expenses................................................... ------------ 1,483,213
------------
Investment income--net........................................... 260,373
------------
- ----------------------------------------------------------------------------------------------------------------------------
Realized & Realized loss from:
Unrealized Gain Investments--net.............................................. (12,652,232)
(Loss) on Foreign currency transactions--net............................ (28,558) (12,680,790)
Investments & ------------
Foreign Currency Change in unrealized appreciation/depreciation on:
Transactions--Net Investments--net.............................................. 28,287,417
(Notes 1c, 1d, Foreign currency transactions--net............................ (99,509) 28,187,908
1f & 3): ------------ ------------
Net realized and unrealized gain on investments and
foreign currency transactions.................................... 15,507,118
------------
Net Increase in Net Assets Resulting from Operations............. $ 15,767,491
============
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
11
<PAGE>
Merrill Lynch Global Resources Trust July 31, 1999
FINANCIAL INFORMATION (continued)
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
For the Year Ended July 31,
------------------------------
Increase (Decrease) in Net Assets: 1999 1998
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operations: Investment income--net........................................... $ 260,373 $ 411,274
Realized loss on investments and foreign currency
transactions--net....................................... (12,680,790) (2,848,041)
Change in unrealized appreciation/depreciation on investments
and foreign currency transactions--net........................... 28,187,908 (44,029,029)
------------ ------------
Net increase (decrease) in net assets resulting from operations.. 15,767,491 (46,465,796)
------------ ------------
- ----------------------------------------------------------------------------------------------------------------------------
Dividends & Investment income--net:
Distributions to Class A....................................................... (112,274) (89,265)
Shareholders Class D....................................................... (510,053) (239,469)
(Note 1h): In excess of investment income--net:
Class A....................................................... (11,492) --
Class D....................................................... (52,205) --
Realized gain on investments--net:
Class A....................................................... -- (1,233,600)
Class B....................................................... -- (5,053,865)
Class C....................................................... -- (178,070)
Class D....................................................... -- (7,236,347)
In excess of realized gain on investments--net:
Class A....................................................... (51,962) (591,336)
Class B....................................................... -- (2,422,613)
Class C....................................................... (4,683) (85,359)
Class D....................................................... (348,806) (3,468,803)
------------ ------------
Net decrease in net assets resulting from dividends and
distributions to shareholders.................................... (1,091,475) (20,598,727)
------------ ------------
- ----------------------------------------------------------------------------------------------------------------------------
Beneficial Interest Net decrease in net assets derived from beneficial
Transactions interest transactions............................................ (25,907,606) (38,351,521)
(Note 4): ------------ ------------
- ----------------------------------------------------------------------------------------------------------------------------
Net Assets: Total decrease in net assets..................................... (11,231,590) (105,416,044)
Beginning of year................................................ 100,556,682 205,972,726
------------ ------------
End of year*..................................................... $ 89,325,092 $100,556,682
============ ============
- ----------------------------------------------------------------------------------------------------------------------------
* Undistributed investment income--net (Note 1i).................... $ 76,974 $ 361,954
============ ============
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
12
<PAGE>
Merrill Lynch Global Resources Trust July 31, 1999
FINANCIAL INFORMATION (continued)
Financial Highlights
<TABLE>
<CAPTION>
Class A
The following per share data and ratios have been derived ---------------------------------------------------------
from information provided in the financial statements. For the Year Ended July 31,
---------------------------------------------------------
Increase (Decrease) in Net Asset Value: 1999+ 1998+ 1997+ 1996+ 1995
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year............. $ 12.93 $ 19.90 $ 17.27 $ 16.70 $ 15.84
Operating -------- -------- -------- -------- --------
Performance: Investment income--net......................... .10 .13 .14 .22 .22
Realized and unrealized gain (loss) on
investments and foreign currency
transactions--net.............................. 2.75 (5.00) 2.91 .50 .88
-------- -------- -------- -------- --------
Total from investment operations............... 2.85 (4.87) 3.05 .72 1.10
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net...................... (.17) (.10) (.23) (.15) (.24)
In excess of investment income--net......... (.01) -- -- -- --
Realized gain on investments--net........... -- (1.35) (.19) -- --
In excess of realized gain on
investments--net ........................... (.08) (.65) -- -- --
-------- -------- -------- -------- --------
Total dividends and distributions.............. (.26) (2.10) (.42) (.15) (.24)
-------- -------- -------- -------- --------
Net asset value, end of year................... $ 15.52 $ 12.93 $ 19.90 $ 17.27 $ 16.70
======== ======== ======== ======== ========
- ----------------------------------------------------------------------------------------------------------------------------------
Total Investment Based on net asset value per share............. 22.91% (27.00%) 17.95% 4.34% 7.05%
Return:* ======== ======== ======== ======== ========
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Expenses....................................... 1.28% 1.07% 1.01% 1.03% 1.06%
Net Assets: ======== ======== ======== ======== ========
Investment income--net......................... .75% .79% .76% 1.26% 1.34%
======== ======== ======== ======== ========
- ----------------------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, end of year (in thousands)......... $ 9,138 $ 9,082 $ 18,504 $ 22,726 $ 28,729
Data: ======== ======== ======== ======== ========
Portfolio turnover............................. 50.48% 21.04% 24.23% 26.48% 31.64%
======== ======== ======== ======== ========
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Total investment returns exclude the effects of sales
charges.
+ Based on average shares outstanding.
See Notes to Financial Statements.
13
<PAGE>
Merrill Lynch Global Resources Trust July 31, 1999
FINANCIAL INFORMATION (continued)
Financial Highlights (continued)
<TABLE>
<CAPTION>
Class B
The following per share data and ratios have been derived ---------------------------------------------------------
from information provided in the financial statements. For the Year Ended July 31,
---------------------------------------------------------
Increase (Decrease) in Net Asset Value: 1999++ 1998++ 1997++ 1996++ 1995
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year............. $ 12.79 $ 19.80 $ 17.16 $ 16.62 $ 15.72
Operating -------- -------- -------- -------- --------
Performance: Investment income (loss)--net.................. (.04) (.05) (.05) .03 .10
Realized and unrealized gain (loss) on
investments and foreign currency
transactions--net.............................. 2.81 (4.96) 2.90 .51 .84
-------- -------- -------- -------- --------
Total from investment operations............... 2.77 (5.01) 2.85 .54 .94
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net...................... -- -- (.02) --+ (.04)
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)
-------- -------- -------- -------- --------
Net asset value, end of year................... $ 15.56 $ 12.79 $ 19.80 $ 17.16 $ 16.62
======== ======== ======== ======== ========
- ----------------------------------------------------------------------------------------------------------------------------------
Total Investment Based on net asset value per share............. 21.66% (27.76%) 16.72% 3.26% 5.95%
Return:* ======== ======== ======== ======== ========
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Expenses....................................... 2.35% 2.11% 2.04% 2.07% 2.08%
Net Assets: ======== ======== ======== ======== ========
Investment income (loss)--net.................. (.28%) (.29%) (.29%) .20% .31%
======== ======== ======== ======== ========
- ----------------------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, end of year (in thousands)......... $ 21,450 $ 29,794 $ 77,386 $ 94,199 $141,800
Data: ======== ======== ======== ======== ========
Portfolio turnover............................. 50.48% 21.04% 24.23% 26.48% 31.64%
======== ======== ======== ======== ========
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Total investment returns exclude the effects of sales
charges.
+ 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, 1999
FINANCIAL INFORMATION (continued)
Financial Highlights (continued)
<TABLE>
<CAPTION>
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: 1999++ 1998++ 1997++ 1996++ 1995
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period........... $ 12.67 $ 19.64 $ 17.08 $ 16.55 $ 15.93
Operating -------- -------- -------- -------- --------
Performance: Investment income(loss)--net................... (.04) (.04) (.06) .04 .05
Realized and unrealized gain (loss) on
investments and foreign currency
transactions--net ............................. 2.77 (4.93) 2.90 .49 .62
-------- -------- -------- -------- --------
Total from investment operations............... 2.73 (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 ........................... (.04) (.65) -- -- --
-------- -------- -------- -------- --------
Total dividends and distributions.............. (.04) (2.00) (.28) -- (.05)
-------- -------- -------- -------- --------
Net asset value, end of period................. $ 15.36 $ 12.67 $ 19.64 $ 17.08 $ 16.55
======== ======== ======== ======== ========
- --------------------------------------------------------------------------------------------------------------------------------
Total Investment Based on net asset value per share............. 21.68% (27.78%) 16.77% 3.20% 4.26%+++
Return:** ======== ======== ======== ======== ========
- --------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Expenses....................................... 2.33% 2.12% 2.06% 2.07% 2.20%*
Net Assets: ======== ======== ======== ======== ========
Investment income (loss)--net.................. (.33%) (.29%) (.33%) .27% .28%*
======== ======== ======== ======== ========
- --------------------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, end of period (in thousands)....... $ 2,039 $ 1,461 $ 2,680 $ 3,388 $ 2,800
Data: ======== ======== ======== ======== ========
Portfolio turnover............................. 50.48% 21.04% 24.23% 26.48% 31.64%
======== ======== ======== ======== ========
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
** Total investment returns exclude the effects of sales
charges.
+ 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, 1999
FINANCIAL INFORMATION (concluded)
Financial Highlights (concluded)
<TABLE>
<CAPTION>
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: 1999++ 1998++ 1997++ 1996++ 1995
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period........... $ 12.89 $ 19.83 $ 17.21 $ 16.67 $ 15.96
Operating -------- -------- -------- -------- --------
Performance: Investment income--net......................... .06 .09 .09 .17 .12
Realized and unrealized gain (loss) on
investments and foreign currency
transactions--net ............................. 2.77 (4.99) 2.91 .50 .66
-------- -------- -------- -------- --------
Total from investment operations............... 2.83 (4.90) 3.00 .67 .78
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net...................... (.12) (.04) (.19) (.13) (.07)
In excess of investment income--net......... (.01) -- -- -- --
Realized gain on investments--net........... -- (1.35) (.19) -- --
In excess of realized gain on
investments--net ........................... (.08) (.65) -- -- --
-------- -------- -------- -------- --------
Total dividends and distributions.............. (.21) (2.04) (.38) (.13) (.07)
-------- -------- -------- -------- --------
Net asset value, end of period................. $ 15.51 $ 12.89 $ 19.83 $ 17.21 $ 16.67
======== ======== ======== ======== ========
- --------------------------------------------------------------------------------------------------------------------------------
Total Investment Based on net asset value per share............. 22.56% (27.15%) 17.66% 4.06% 4.93%+++
Return:** ======== ======== ======== ======== ========
- --------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Expenses....................................... 1.54% 1.32% 1.26% 1.27% 1.39%*
Net Assets: ======== ======== ======== ======== ========
Investment income--net......................... .50% .55% .51% 1.00% 1.02%*
======== ======== ======== ======== ========
- --------------------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, end of period (in thousands)....... $ 56,698 $ 60,220 $107,403 $108,924 $107,467
Data: ======== ======== ======== ======== ========
Portfolio turnover............................. 50.48% 21.04% 24.23% 26.48% 31.64%
======== ======== ======== ======== ========
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
** Total investment returns exclude the effects of sales
charges.
+ 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, 1999
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 Fund's financial statements are prepared in accordance
with generally accepted accounting principles, which may require the use of
management accruals and estimates. 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 that 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 that 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 or purchased are valued at the last sale price in the case of
exchange-traded options. In the case of options traded in the over-the-counter
market, valuation is the last asked price (options written) or the last bid
price (options purchased). 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.
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
17
<PAGE>
Merrill Lynch Global Resources Trust July 31, 1999
NOTES TO FINANCIAL STATEMENTS (continued)
the exchange rate prevailing when recognized. Assets and liabilities denominated
in foreign currencies are valued at the exchange rate at the end of the period.
Foreign currency transactions are the result of settling (realized) or valuing
(unrealized) assets or liabilities expressed in foreign currencies into US
dollars. Realized and unrealized gains or losses from investments include the
effects of foreign exchange rates on investments.
(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 net investment
income and realized capital gains are due primarily to deferring 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 have been reclassified as follows: $140,659 reclassified
between accumulated net realized capital losses and undistributed net investment
income; $12 reclassified between paid-in capital in excess of par and
accumulated net realized capital losses; and $12 reclassified between paid-in
capital in excess of par 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 the "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 .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 ............................... .25% .75%
Class C ............................... .25% .75%
Class D ............................... .25% --
- --------------------------------------------------------------------------------
Pursuant to a sub-agreement with the Distributor, Merrill Lynch, Pierce, Fenner
& Smith Incorporated ("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.
18
<PAGE>
Merrill Lynch Global Resources Trust July 31, 1999
For the year ended July 31, 1999, 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 .............................. $ 179 $2,062
Class D .............................. $ 189 $3,297
- --------------------------------------------------------------------------------
For the year ended July 31, 1999, MLPF&S received contingent deferred sales
charges of $48,853 and $733 relating to transactions in Class B and C Shares,
respectively.
In addition, MLPF&S received $22,994 in com missions on the execution of
portfolio security transactions for the Trust for the year ended July 31, 1999.
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, 1999 were $40,620,636 and $63,100,198, respectively.
Net realized losses for the year ended July 31, 1999 and net unrealized gains
(losses) as of July 31, 1999 were as follows:
- --------------------------------------------------------------------------------
Realized Unrealized
Losses Gains (Losses)
- --------------------------------------------------------------------------------
Long-term investments .................. $(12,651,636) $ 5,583,194
Short-term investments ................. (596) --
Foreign currency transactions .......... (28,558) (104,735)
------------ ------------
Total .................................. $(12,680,790) $ 5,478,459
============ ============
- --------------------------------------------------------------------------------
As of July 31, 1999, net unrealized appreciation for Federal income tax purposes
aggregated $5,560,623, of which $15,986,294 related to appreciated securities
and $10,425,671 related to depreciated securities. At July 31, 1999, the
aggregate cost of investments for Federal income tax purposes was $85,771,276.
4. Beneficial Interest Transactions:
Net decrease in net assets derived from beneficial interest transactions was
$25,907,606 and $38,351,521 for the years ended July 31, 1999 and July 31, 1998,
respectively.
Transactions in shares of beneficial interest for each class were as follows:
- --------------------------------------------------------------------------------
Class A Shares for the Year Dollar
Ended July 31, 1999 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ............................ 258,053 $ 3,353,195
Shares issued to shareholders
in reinvestment of dividends
and distributions ...................... 14,280 155,903
------------ ------------
Total issued ........................... 272,333 3,509,098
Shares redeemed ........................ (385,907) (4,907,125)
------------ ------------
Net decrease ........................... (113,574) $ (1,398,027)
============ ============
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 B Shares for the Year Dollar
Ended July 31, 1999 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ............................ 265,094 $ 3,508,586
Automatic conversion
of shares .............................. (160,271) (2,040,380)
Shares redeemed ........................ (1,055,323) (13,211,981)
------------ ------------
Net decrease ........................... (950,500) $(11,743,775)
============ ============
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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)
============ ============
- --------------------------------------------------------------------------------
19
<PAGE>
Merrill Lynch Global Resources Trust July 31, 1999
NOTES TO FINANCIAL STATEMENTS (concluded)
- --------------------------------------------------------------------------------
Class C Shares for the Year Dollar
Ended July 31, 1999 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ............................ 80,297 $ 1,032,928
Shares issued to shareholders in
reinvestment of distributions .......... 380 4,096
------------ ------------
Total issued ........................... 80,677 1,037,024
Shares redeemed ........................ (63,244) (830,479)
------------ ------------
Net increase ........................... 17,433 $ 206,545
============ ============
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 D Shares for the Year Dollar
Ended July 31, 1999 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ............................ 78,640 $ 1,010,759
Automatic conversion
of shares .............................. 160,807 2,040,380
Shares issued to shareholders
in reinvestment of dividends
and distributions ...................... 61,096 666,540
------------ ------------
Total issued ........................... 300,543 3,717,679
Shares redeemed ........................ (1,318,304) (16,690,028)
------------ ------------
Net decrease ........................... (1,017,761) $(12,972,349)
============ ============
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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)
============ ============
- --------------------------------------------------------------------------------
5. Commitments:
At July 31, 1999, the Fund had entered into foreign exchange contracts under
which it had agreed to purchase and sell various foreign currencies with
approximate values of $110,000 and $1,005,000, respectively.
6. Capital Loss Carryforward:
At July 31, 1999, the Trust had a net capital loss carryforward of approximately
$9,970,000, all of which expires in 2007. This amount will be available to
offset like amounts of any future taxable gains.
20
<PAGE>
Merrill Lynch Global Resources Trust July 31, 1999
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 invest ments, of Merrill Lynch Global Resources Trust as of July
31, 1999, 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 responsi
bility 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,
1999 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, 1999, 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 15, 1999
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, 1999:
<TABLE>
<CAPTION>
=================================================================================================================
Qualifying Non- Foreign
Domestic Qualifying Foreign Total Taxes
Record Payable Ordinary Ordinary Source Ordinary Paid or
Date Date Income Income Income Income Withheld
=================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Class A 9/02/98 9/11/98 $.186631 $.021923 $.012415 $.220969 $.031204
12/07/98 12/15/98 $.040407 $.000000 $.000000 $.040407 $.000000
- -----------------------------------------------------------------------------------------------------------------
Class B 9/02/98 9/11/98 $.000000 $.000000 $.000000 $.000000 $.000000
12/07/98 12/15/98 $.000000 $.000000 $.000000 $.000000 $.000000
- -----------------------------------------------------------------------------------------------------------------
Class C 9/02/98 9/11/98 $.033757 $.003965 $.002246 $.039968 $.031204
12/07/98 12/15/98 $.000000 $.000000 $.000000 $.000000 $.000000
- -----------------------------------------------------------------------------------------------------------------
Class D 9/02/98 9/11/98 $.147713 $.017352 $.009826 $.174891 $.031204
12/07/98 12/15/98 $.027228 $.000000 $.000000 $.027228 $.000000
=================================================================================================================
</TABLE>
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, there were no long-term capital gain distributions paid by the
Trust during the year.
Please retain this information for your records.
21
<PAGE>
Merrill Lynch Global Resources Trust July 31, 1999
PORTFOLIO INFORMATION (unaudited)
As of July 31, 1999
Percent of
Ten Largest Equity Holdings Net Assets
Canadian Hunter Exploration Ltd. .................................. 3.1%
Chevron Corporation ............................................... 2.9
Apache Corporation ................................................ 2.7
Vastar Resources, Inc. ............................................ 2.7
Smurfit Jefferson Group PLC ....................................... 2.5
St. Laurent Paperboard Inc. ....................................... 2.4
Smurfit-Stone Container Corporation ............................... 2.3
ENI SpA (ADR) ..................................................... 2.3
Devon Energy Corporation .......................................... 2.3
Kerr-McGee Corporation ............................................ 2.3
Percent of
Geographic Allocation Net Assets
United States ..................................................... 57.2%
Canada ............................................................ 19.2
Australia ......................................................... 4.2
France ............................................................ 2.7
Ireland ........................................................... 2.5
United Kingdom .................................................... 2.5
Italy ............................................................. 2.3
Malaysia .......................................................... 1.5
Netherlands ....................................................... 1.1
Finland ........................................................... 1.0
Brazil ............................................................ 1.0
Norway ............................................................ 0.9
Japan ............................................................. 0.7
Ghana ............................................................. 0.7
Peru .............................................................. 0.6
Equity Portfolio Changes
For the Quarter Ended July 31, 1999
Additions
BJ Services Company
Baker Hughes Incorporated
Coastal Corporation
Conoco Inc. (Class B)
Cooper Cameron Corporation
Equitable Resources, Inc.
Helmerich & Payne, Inc.
Paramount Resources Ltd.
Royal Dutch Petroleum Company (NY Registered Shares)
Stone Energy Corporation
UCAR International Inc.
Deletions
Bowater Incorporated
Cambior Inc.
Champion International Corporation
IMC Global Inc.
Industrias Penoles SA
Mitsubishi Materials Corporation
Newmont Mining Corporation
Petro-Canada
Placer Dome Inc.
Resolute Limited
Riverside Forest Products Limited
Sumitomo Metal Mining Co.
Transocean Offshore Inc.
Ultramar Diamond Shamrock Corporation
YPF Sociedad Anonima (ADR)
22
<PAGE>
Merrill Lynch Global Resources Trust July 31, 1999
OFFICERS AND TRUSTEES
Terry K. Glenn, 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
Arthur Zeikel, Trustee
Robert C. Doll, Senior Vice President
Robert M. Shearer, Senior Vice President and
Portfolio Manager
Donald C. Burke, Vice President and
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--7/99
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