MERRILL LYNCH
GLOBAL
RESOURCES
TRUST
[GRAPHIC]
STRATEGIC
Performance
Quarterly Report
October 31, 1999
<PAGE>
MERRILL LYNCH GLOBAL RESOURCES TRUST
DEAR SHAREHOLDER
Merrill Lynch Global Resources Trust's performance declined during the
three-month period ended October 31, 1999, as natural resource-related stocks
relinquished some of their strong gains from earlier in the year. During the
October quarter, the Trust's Class A, Class B, Class C and Class D Shares had
total returns of -4.90%, -5.14%, -5.14% and -4.96%, respectively, compared to a
- -4.40% total return for the Lipper Analytical Services Inc.'s Natural Resources
Fund average. (Fund results do not reflect sales charges, and would be lower if
sales charges were included. Complete performance information can be found on
pages 3 and 4 of this report to shareholders.) This narrowed the Trust's lead
over the Lipper Analytical Services Inc.'s Natural Resources Fund average to
just over 3% for the 12-month period ended October 31, 1999. The recent setback
in the Trust is largely the result of volatile energy stock movements as we
entered the seasonally weak demand months of September and October.
We believe that investors are worried about two key factors in the energy
sector, which led to profit taking in the stocks. First, there are concerns over
the cheating by various Organization of Petroleum Exporting Countries (OPEC),
historically a problem area in supporting oil prices, and the eventual timing at
which OPEC will raise production limits for its members. Currently, OPEC
compliance has been surprisingly strong. As a result, inventories dropped below
the average level of the last five years and nearly 150 million barrels below
year-ago levels. Oil prices have risen to as high as $27 per barrel on the
reduced supply and recovering demand in Asia. Inventory levels are sufficiently
low so that price shocks could occur should we have production disruptions or a
cold snap in Northern Hemisphere energy markets. Despite the strong oil price
rise, the share price of major integrated oil companies generally declined
during the October quarter. This is justified to the extent that rising oil
prices are squeezing margins in the chemical and refining operations of the
integrated oil companies. However, many companies weighted to upstream oil
production operations, as well as oil service stocks, also declined in price.
At current price levels, we believe that our major oil stocks represent
compelling valuations since their share prices discount a decline in oil prices
to the $20 per share level. A decline in oil prices would also improve results
in refining and petrochemicals as declines in their energy feedstock costs would
improve margins. Given strong global growth, we believe that the major energy
stocks will generate strong positive earnings comparisons in the coming year.
During the October quarter, the Trust was also hurt by declines in its holdings
of Canadian and US exploration and production companies leveraged to natural gas
production. We believe that the decline can be explained partly by
disappointment that natural gas storage again reached capacity by the start of
the winter heating season, leading to profit taking in the sector. A second
factor is concern that we could have a third consecutive warm winter. The
heating season is indeed off to a poor start, with temperatures over 25% above
normal since November 1, 1999. Given full storage levels and the lack of
seasonal demand, the cash market natural gas price has declined from over $3 per
thousand cubic feet (mcf) to near $2 per mcf on the cash market. As a result,
the stocks of natural gas producers have surrendered a significant portion of
their gains from the summer months.
We remain committed to the natural gas sector, since we believe that the
short-term focus on storage in the pre-winter months ignores the positive supply
and demand balance developing in the gas markets. While production of gas is
down in 1999 as a result of record low drilling and accelerating production
decline rates, we had expected gas storage to be filled this year because of
several factors. Canadian imports of gas were higher as a result of the
completion of several export pipelines. Gas demand in the fertilizer
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<PAGE>
Merrill Lynch Global Resources Trust October 31, 1999
industry was off significantly in response to low fertilizer prices and demand.
Finally, the country experienced relatively strong nuclear generation during the
summer, which displaces gas-fired electrical generation for air conditioning.
Despite these negatives, we were surprised that storage levels were not filled
sooner as we exited the 1998-1999 winter season with a surplus of over 300
billion cubic feet of storage.
Our supply and demand expectations for natural gas remain positive. Supply has
declined as production in the United States is projected to have fallen between
2%-4% as a result of low drilling activity in late 1998 and early 1999. In
addition, preliminary Department of Energy statistics suggest that reserves have
fallen, and exploration success has declined as well. We expect demand to be
higher in 2000 and beyond as a result of construction of gas-fired electrical
power plants. These factors, combined with higher decline rates from mature gas
basins, are likely to support gas prices significantly above $2 per mcf on a
sustained basis. While the lack of early winter weather has hurt the Trust, we
note that November represents only 15% of typical winter heating degree-days
demand. While we are disappointed in the recent decline in the Trust's returns,
we believe that our holdings can generate solid absolute and relative total
returns given the current valuation of our holdings.
Portfolio Matters
The decline in the oil service sector provided us with the opportunity to
increase the Trust's weighting in these stocks. The major oil companies have
announced that capital-spending budgets are expected to rise in excess of 10% in
2000, with most of the increased spending directed to oil and gas exploration
and production projects. In addition, high depletion rates for natural gas could
assure strong spending as gas-leveraged exploration and production stocks seek
to replace production. These factors could lead to a healthy recovery in oil
service revenue and earnings in 2000.
During the October quarter, we initiated new positions in Precision Drilling
Corporation and Ensign Resource Service Group, Inc. These Canadian drilling
companies are likely to have strong results as rig utilization is projected to
approach capacity limits this winter. In addition, we also increased our
weighting in our current oil service holdings. We concentrated our investments
in companies with exposure to natural gas exploration and production, as well as
deep-water exploration. We also purchased new positions in Canadian-based
exploration and production companies given their extremely attractive
valuations. Canadian Occidental Petroleum Ltd. and Talisman Energy Inc. both
have excellent exploration and production profiles, and trade at discounts to
many US-based peers. We also initiated positions in Paramount Resources Ltd. and
Anderson Exploration Ltd. to gain exposure to gas production in Canada. As we
have noted previously, increased export pipeline capacity has resulted in
sharply higher gas price realizations for Canadian-based gas producers.
We continued to maintain an overweighted exposure to the paper and forest
products sector, especially to the shares of containerboard and pulp producers.
Rising demand and reduced capacity from recent consolidation in the sector has
led to the announcement of several price increases in both pulp and linerboard.
We maintained our holdings in companies leveraged to this area. However, we sold
the shares of companies leveraged to lumber products. Lumber prices have soared
in response to strong housing demand in the United States and expectations of
recovery in Asia. However, we believe that there are low barriers to limit
sources of new supply to the market. Therefore, we sold our holdings in Slocan
Forest Products Ltd. and Nexfor Inc.
We kept our neutral weightings in the metals sector, although we did make
further sales of our gold shares during the October quarter. While the gold
price made a strong rally to the $300 per share level after a group of 15
European central banks announced limits on gold sales and lending, stock
performance of gold companies was mixed. Many stocks, including our holding in
Ashanti Goldfields Company Ltd., suffered losses as a result of the aggressive
use of derivatives in gold hedging activities. However, most of these losses
were offset by the gain experienced by Acacia Resources Limited, which received
a merger offer from Delta Gold NL, followed by a competitive bid from Anglogold
Resources. We are monitoring gold supply and demand fundamentals, but we believe
that we may gain better inflation protection through the ownership of stocks
exposed to other commodities.
2
<PAGE>
Merrill Lynch Global Resources Trust October 31, 1999
In Conclusion
We are disappointed that the short-term focus of the markets has resulted in
high volatility and a retreat of Merrill Lynch Global Resources Trust's net
asset valuations. However, we believe that long-term fundamentals, combined with
attractive current valuations, could result in positive returns to resource
investments over the cycle. While the returns in resource sector funds have
exceeded that of the Standard & Poor's 500 Index for the year-to-date ended
October 31, 1999, we note the allure that investments in new technologies offer
to investors. While we are not suggesting that the resource investments will
outperform these sectors, we do believe that investors should consider the role
that resources play in a diversified portfolio and as a hedge should
inflationary pressures return in an era of tight labor markets and growing
global economies.
We appreciate your investment in Merrill Lynch Global Resources Trust, and we
look forward to sharing our investment outlook and strategies with you in our
upcoming semi-annual 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
December 8, 1999
To reduce shareholders' expenses, Merrill Lynch Global Resources Trust will no
longer be printing and mailing quarterly reports to shareholders. We will
continue to provide you with reports on a semi-annual and annual basis.
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.
3
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Merrill Lynch Global Resources Trust October 31, 1999
PERFORMANCE DATA (concluded)
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
================================================================================
Class A Shares*
================================================================================
Year Ended 9/30/99 +26.42% +19.78%
- --------------------------------------------------------------------------------
Five Years Ended 9/30/99 + 2.69 + 1.59
- --------------------------------------------------------------------------------
Ten Years Ended 9/30/99 + 4.39 + 3.83
- --------------------------------------------------------------------------------
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
================================================================================
Class B Shares*
================================================================================
Year Ended 9/30/99 +25.14% +21.14%
- --------------------------------------------------------------------------------
Five Years Ended 9/30/99 + 1.63 + 1.63
- --------------------------------------------------------------------------------
Ten Years Ended 9/30/99 + 3.31 + 3.31
- --------------------------------------------------------------------------------
* 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 9/30/99 +24.71% +23.71%
- --------------------------------------------------------------------------------
Inception (10/21/94)
through 9/30/99 + 1.79 + 1.79
- --------------------------------------------------------------------------------
* 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 9/30/99 +26.09% +19.47%
- --------------------------------------------------------------------------------
Inception (10/21/94)
through 9/30/99 + 2.61 + 1.50
- --------------------------------------------------------------------------------
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
Recent Performance Results*
<TABLE>
<CAPTION>
Ten Years/
3 Month 12 Month Since Inception
As of October 31, 1999 Total Return Total Return Total Return
========================================================================================
<S> <C> <C> <C>
ML Global Resources Trust Class A Shares -4.90% +18.20% +53.50%
- ----------------------------------------------------------------------------------------
ML Global Resources Trust Class B Shares -5.14 +17.05 +38.39
- ----------------------------------------------------------------------------------------
ML Global Resources Trust Class C Shares -5.14 +16.56 + 4.73
- ----------------------------------------------------------------------------------------
ML Global Resources Trust Class D Shares -4.96 +17.91 + 9.01
========================================================================================
</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 periods
are ten years for Class A & Class B Shares and from 10/21/94 for Class C &
Class D Shares.
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<PAGE>
Merrill Lynch Global Resources Trust October 31, 1999
SCHEDULE OF INVESTMENTS
<TABLE>
<CAPTION>
Shares Percent of
Industries Held Common Stocks Value Net Assets
==========================================================================================================================
<S> <C> <C> <C> <C>
Aluminum 15,950 Alcoa Inc. $ 968,963 1.2%
==========================================================================================================================
Canadian 60,400 Alberta Energy Company Ltd. 1,867,999 2.3
Independents 161,850 Canadian Hunter Exploration Ltd. 2,640,294 3.2
34,700 Canadian Natural Resources Ltd. 764,192 0.9
65,900 Canadian Occidental Petroleum Ltd. 1,290,049 1.6
44,692 Northrock Resources Ltd. 328,082 0.4
83,000 Paramount Resources Ltd. 1,142,435 1.4
61,600 Rio Alto Exploration Ltd. 908,592 1.1
------------ -----
8,941,643 10.9
==========================================================================================================================
Chemicals 27,200 Air Products and Chemicals, Inc. 748,000 0.9
==========================================================================================================================
Coal 44,900 CONSOL Energy Inc. 521,963 0.6
==========================================================================================================================
Diversified Companies 26,200 Ashland Inc. 864,600 1.1
47,000 UCAR International Inc. 919,437 1.1
------------ -----
1,784,037 2.2
==========================================================================================================================
Gold 532,800 Acacia Resources Limited 943,218 1.1
==========================================================================================================================
Integrated Oil Companies 17,700 Amerada Hess Corporation 1,015,538 1.2
74,000 BP Amoco PLC 717,330 0.9
3,040 BP Amoco PLC (ADR) (a) 175,560 0.2
104,100 Baytex Energy Ltd. 654,517 0.8
31,200 Chevron Corporation 2,848,950 3.5
16,800 Conoco Inc. (Class A) 460,950 0.6
33,100 Conoco Inc. (Class B) 897,838 1.1
28,100 ENI SpA (ADR) (a) 1,650,875 2.0
10,200 Exxon Corporation 755,437 0.9
40,922 Kerr-McGee Corporation 2,199,557 2.7
14,100 Mobil Corporation 1,360,650 1.7
8,800 Phillips Petroleum Company 409,200 0.5
15,200 Royal Dutch Petroleum Company (NY Registered Shares) 911,050 1.1
23,650 Texaco Inc. 1,451,519 1.8
37,400 USX-Marathon Group 1,089,275 1.3
------------ -----
16,598,246 20.3
==========================================================================================================================
Metals & Mining 1,174,009 M.I.M. Holdings Limited 964,416 1.2
79,500 Noranda, Inc. 1,048,328 1.3
7,100 Phelps Dodge Corporation 400,262 0.5
84,950 Stillwater Mining Company 1,709,619 2.1
240,000 WMC Limited 1,028,559 1.2
119,840 Zimbabwe Platinum Mines Limited 49,604 0.1
------------ -----
5,200,788 6.4
==========================================================================================================================
</TABLE>
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<PAGE>
Merrill Lynch Global Resources Trust October 31, 1999
SCHEDULE OF INVESTMENTS (continued)
<TABLE>
<CAPTION>
Shares Percent of
Industries Held Common Stocks Value Net Assets
==========================================================================================================================
<S> <C> <C> <C> <C>
Oil & Gas Producers 31,900 Anadarko Petroleum Corporation $ 982,919 1.2%
97,000 Anderson Exploration Ltd. 1,249,422 1.5
54,700 Apache Corporation 2,133,300 2.6
22,900 Barrett Resources Corporation 768,581 0.9
36,697 Burlington Resources Inc. 1,279,808 1.6
51,000 Cabot Oil & Gas Corporation (Class A) 822,375 1.0
53,300 Chieftain International, Inc. 1,019,363 1.2
60,300 Devon Energy Corporation 2,344,163 2.9
91,900 EOG Resources, Inc. 1,912,669 2.3
59,100 The Meridian Resource Corporation 262,256 0.3
9,800 Stone Energy Corporation 476,525 0.6
44,200 Talisman Energy Inc. 1,167,190 1.4
86,100 Union Pacific Resources Group Inc. 1,248,450 1.5
42,000 Unocal Corporation 1,449,000 1.8
35,400 Vastar Resources, Inc. 2,090,812 2.6
------------ -----
19,206,833 23.4
==========================================================================================================================
Oil Services 39,700 BJ Services Company 1,362,206 1.7
28,800 Baker Hughes Incorporated 804,600 1.0
25,100 Coflexip SA (ADR) (a) 993,019 1.2
25,200 Cooper Cameron Corporation 974,925 1.2
33,200 Ensign Resource Service Group, Inc. 696,180 0.9
35,100 Helmerich & Payne, Inc. 835,819 1.0
25,300 McDermott International, Inc. 458,562 0.6
38,000 Noble Drilling Corporation 843,125 1.0
55,600 Precision Drilling Corporation 1,301,944 1.6
41,800 R&B Falcon Corporation 519,887 0.6
44,600 Stolt Comex Seaway, SA 473,875 0.6
20,300 Stolt Comex Seaway, SA (ADR) (a) 195,387 0.2
32,425 Weatherford International, Inc. 1,098,397 1.3
------------ -----
10,557,926 12.9
==========================================================================================================================
Paper & Pulp 107,700 Abitibi-Consolidated Inc. 1,310,379 1.6
49,866 Aracruz Celulose SA (ADR) (a) 1,022,253 1.2
103,800 Canfor Corporation 881,933 1.1
784,600 Jefferson Smurfit Group PLC 2,035,039 2.5
91,065 Smurfit-Stone Container Corporation 1,963,589 2.4
155,400 St. Laurent Paperboard Inc. 1,943,556 2.4
169,700 Tembec Inc. `A' 1,701,383 2.1
29,000 Westvaco Corporation 860,937 1.0
------------ -----
11,719,069 14.3
==========================================================================================================================
Pipelines 25,100 Coastal Corporation 1,057,338 1.3
28,400 Equitable Resources, Inc. 1,036,600 1.3
------------ -----
2,093,938 2.6
==========================================================================================================================
Refining 19,600 Sunoco, Inc. 472,850 0.6
==========================================================================================================================
Steel 136,500 The LTV Corporation 494,812 0.6
==========================================================================================================================
Total Common Stocks (Cost--$74,449,201) 80,252,286 98.0
==========================================================================================================================
</TABLE>
6
<PAGE>
Merrill Lynch Global Resources Trust October 31, 1999
SCHEDULE OF INVESTMENTS (concluded)
<TABLE>
<CAPTION>
Face Percent of
Amount Short-Term Securities Value Net Assets
==========================================================================================================================
<S> <C> <C> <C> <C>
Repurchase $ 927,000 Warburg Dillon Read LLC, purchased on 10/29/1999 to yield
Agreements* 5.21% to 11/01/1999 $ 927,000 1.1%
==========================================================================================================================
Total Short-Term Securities (Cost--$927,000) 927,000 1.1
==========================================================================================================================
Total Investments (Cost--$75,376,201) 81,179,286 99.1
Other Assets Less Liabilities 696,806 0.9
------------ -----
Net Assets $ 81,876,092 100.0%
============ =====
==========================================================================================================================
Net Asset Value: Class A--Based on net assets of $8,951,872 and 606,609 shares
of beneficial interest outstanding $ 14.76
============
Class B--Based on net assets of $19,852,065 and 1,345,290 shares
of beneficial interest outstanding $ 14.76
============
Class C--Based on net assets of $1,788,393 and 122,717 shares
of beneficial interest outstanding $ 14.57
============
Class D--Based on net assets of $51,283,762 and 3,478,222 shares
of beneficial interest outstanding $ 14.74
============
==========================================================================================================================
</TABLE>
(a) American Depositary Receipts (ADR).
* Repurchase Agreements are fully collateralized by US Government & Agency
Obligations.
PORTFOLIO INFORMATION
As of October 31, 1999
Percent of
Ten Largest Equity Holdings Net Assets
Chevron Corporation .................................................. 3.5%
Canadian Hunter Exploration Ltd. ..................................... 3.2
Devon Energy Corporation ............................................. 2.9
Kerr-McGee Corporation ............................................... 2.7
Apache Corporation ................................................... 2.6
Vastar Resources, Inc. ............................................... 2.6
Jefferson Smurfit Group PLC .......................................... 2.5
Smurfit-Stone Container Corporation .................................. 2.4
St. Laurent Paperboard Inc. .......................................... 2.4
EOG Resources, Inc. .................................................. 2.3
Percent of
Geographic Allocation Net Assets
United States ........................................................ 57.7%
Canada ............................................................... 26.8
Australia ............................................................ 3.6
Ireland .............................................................. 2.5
Italy ................................................................ 2.0
Brazil ............................................................... 1.2
France ............................................................... 1.2
Netherlands .......................................................... 1.1
United Kingdom ....................................................... 1.1
Norway ............................................................... 0.8
7
<PAGE>
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
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--10/99
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