<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 27, 1995
SECURITIES ACT FILE NO. 33-37537
INVESTMENT COMPANY ACT FILE NO. 811-6211
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM N-1A
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933 [X]
PRE-EFFECTIVE AMENDMENT NO. [_]
POST-EFFECTIVE AMENDMENT NO. 5 [X]
AND/OR
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 7 [X]
(CHECK APPROPRIATE BOX OR BOXES)
----------------
MERRILL LYNCH U.S. TREASURY MONEY FUND
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
800 SCUDDERS MILL ROAD 08536
PLAINSBORO, NEW JERSEY (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE
OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (609) 282-2800
ARTHUR ZEIKEL
MERRILL LYNCH U.S. TREASURY MONEY FUND
800 SCUDDERS MILL ROAD, PLAINSBORO, NEW JERSEY
MAILING ADDRESS: P.O. BOX 9011, PRINCETON, NEW JERSEY 08543-9011
(NAME AND ADDRESS OF AGENT FOR SERVICE)
----------------
COPIES TO:
COUNSEL FOR THE FUND: PHILIP L. KIRSTEIN, ESQ.
BROWN & WOOD MERRILL LYNCH ASSET MANAGEMENT
ONE WORLD TRADE CENTER,
NEW YORK, N.Y. 10048-0557 P.O. BOX 9011
PRINCETON, N.J. 08543-9011
ATTENTION: THOMAS R. SMITH, JR., ESQ.
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK APPROPRIATE BOX)
[X] immediately upon filing pursuant to paragraph (b), or
[_] on (date) pursuant to paragraph (b), or
[_] 60 days after filing pursuant to paragraph (a)(1)
[_] on (date) pursuant to paragraph (a)(1)
[_] 75 days after filing pursuant to paragraph (a)(2)
[_] on (date) pursuant to paragraph (a)(2) of Rule 485.
IF APPROPRIATE, CHECK THE FOLLOWING BOX:
[_] this post-effective amendment designates a new effective
date for a previously filed post-effective amendment.
----------------
THE REGISTRANT HAS REGISTERED AN INDEFINITE NUMBER OF ITS SHARES UNDER THE
SECURITIES ACT OF 1933 PURSUANT TO RULE 24F-2 UNDER THE INVESTMENT COMPANY ACT
OF 1940. THE NOTICE REQUIRED BY SUCH RULE FOR THE REGISTRANT'S MOST RECENT
FISCAL YEAR WAS FILED ON OR ABOUT JANUARY 24, 1995.
CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
-------------------------------------------------------------------------------
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<TABLE>
<CAPTION>
PROPOSED PROPOSED
AMOUNT OF MAXIMUM MAXIMUM AMOUNT OF
TITLE OF SECURITIES SHARES BEING OFFERING PRICE AGGREGATE REGISTRATION
BEING REGISTERED REGISTERED PER UNIT OFFERING PRICE FEE
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares of beneficial interest
(par value $.10 per share)...... 44,578,989 $1.00 $290,000* $100
---------------------------------------------------------------------------------------------
</TABLE>
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*(1)The calculation of the maximum aggregate offering price is made pursuant
to Rule 24e-2 under the Investment Company Act of 1940.
(2) The total amount of securities redeemed or repurchased during Registrant's
previous fiscal year was 204,278,073 shares of beneficial interest.
(3) 159,989,084 of the shares described in (2) above have been used for
reduction pursuant to Rule 24e-2(a) or Rule 24f-2(c) under the Investment
Company Act of 1940 in previous filings during Registrant's current fiscal
year.
(4) 44,288,989 of the shares redeemed during Registrant's previous fiscal year
are being used for the reduction of the registration fee in this amendment
to the Registration Statement.
-------------------------------------------------------------------------------
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<PAGE>
MERRILL LYNCH U.S. TREASURY MONEY FUND
REGISTRATION STATEMENT ON FORM N-1A
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
N-1A ITEM NO. LOCATION
------------- --------
<C> <S> <C>
Part A
Item 1. Cover Page..................... Cover Page
Item 2. Synopsis....................... Fee Table
Item 3. Condensed Financial
Information................... Financial Highlights; Yield
Information
Item 4. General Description of
Registrant.................... Investment Objectives and
Policies; Organization of the
Fund
Item 5. Management of the Fund......... Fee Table; Management of the
Fund; Portfolio Transactions;
Inside Back Cover Page
Item 5A. Management's Discussion of Fund
Performance................... Not Applicable
Item 6. Capital Stock and Other
Securities.................... Organization of the Fund
Item 7. Purchase of Securities Being
Offered....................... Cover Page; Fee Table; Purchase
of Shares; Redemption of
Shares; Inside Back Cover Page
Item 8. Redemption or Repurchase....... Purchase of Shares; Redemption
of Shares
Item 9. Pending Legal Proceedings...... Not Applicable
Part B
Item 10. Cover Page..................... Cover Page
Item 11. Table of Contents.............. Back Cover Page
Item 12. General Information and
History....................... Not Applicable
Item 13. Investment Objectives and
Policies...................... Investment Objectives and
Policies
Item 14. Management of the Fund......... Management of the Fund
Item 15. Control Persons and Principal
Holders of Securities......... Management of the Fund
Item 16. Investment Advisory and Other
Services...................... Management of the Fund;
Purchase of Shares; General
Information
Item 17. Brokerage Allocation........... Portfolio Transactions
Item 18. Capital Stock and Other
Securities.................... General Information--
Item 19. Purchase, Redemption and Description of Shares
Pricing of Securities Being
Offered....................... Purchase of Shares; Redemption
of Shares; Purchase and
Redemption of Shares through
Merrill Lynch Retirement
Plans; Determination of Net
Asset Value
Item 20. Tax Status..................... Taxes
Item 21. Underwriters................... Purchase of Shares
Item 22. Calculation of Performance
Data.......................... Not Applicable
Item 23. Financial Statements........... Financial Statements; Yield
Information
</TABLE>
Part C
Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Registration Statement.
<PAGE>
PROSPECTUS
MARCH 27, 1995
MERRILL LYNCH U.S. TREASURY MONEY FUND
PHONE NO. (609) 282-2800
P.O. BOX 9011, PRINCETON, NEW JERSEY 08543-9011
----------------
Merrill Lynch U.S. Treasury Money Fund (the "Fund") is a no-load,
diversified, open-end investment company seeking preservation of capital,
liquidity and current income through investment exclusively in a diversified
portfolio of short-term marketable securities which are direct obligations of
the U.S. Treasury. For purposes of its investment policies, the Fund defines
short-term marketable securities which are direct obligations of the U.S.
Treasury as any U.S. Treasury obligations having a maturity of no more than 762
days (25 months). There can be no assurance that the investment objectives of
the Fund will be realized.
The net income of the Fund is declared as dividends daily and reinvested at
net asset value in additional shares. The Fund seeks to maintain a constant
$1.00 net asset value per share, although this cannot be assured. In order to
maintain a constant net asset value of $1.00 per share, the Fund may reduce the
number of shares held by its shareholders. The shares of the Fund are neither
insured nor guaranteed by the U.S. Government.
Shares of the Fund may be purchased at their net asset value without any
sales charge. The minimum initial purchase is $5,000 and subsequent purchases
generally must be $1,000 or more. For accounts advised by banks and registered
investment advisers, the minimum initial purchase is $300 and the minimum
subsequent purchase is $100. The minimum initial purchase with respect to
pension, profit sharing, individual retirement and other retirement plans is
$100 and the minimum subsequent purchase with respect to these plans is $1. The
minimum initial purchase under the Merrill Lynch BlueprintSM Program is $500
(or $50 if the shareholder elects to participate in the automatic investment of
sale proceeds option on the Merrill Lynch BlueprintSM Program application form)
and the minimum subsequent purchase is $50. Shares may be redeemed at any time
at net asset value as described herein. The Fund has adopted a Shareholder
Servicing Plan and Agreement in compliance with Rule 12b-1 under the Investment
Company Act of 1940, as amended (the "Investment Company Act"). See "Purchase
of Shares" and "Redemption of Shares".
Shares may be purchased directly from Merrill Lynch Funds Distributor, Inc.
(the "Distributor"), P.O. Box 9011, Princeton, New Jersey 08543-9011, Tel. No.
(609) 282-2800, or from securities dealers which have entered into selected
dealer agreements with the Distributor, including Merrill Lynch, Pierce, Fenner
& Smith Incorporated ("Merrill Lynch"). See "Purchase of Shares".
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
----------------
This Prospectus is a concise statement of information about the Fund that is
relevant to making an investment in the Fund. This Prospectus should be
retained for future reference. A statement containing additional information
about the Fund, dated March 27, 1995 (the "Statement of Additional
Information"), has been filed with the Securities and Exchange Commission and
can be obtained without charge by calling or writing to the Fund at the above
telephone number or address. The Statement of Additional Information is hereby
incorporated by reference into this Prospectus.
----------------
MERRILL LYNCH ASSET MANAGEMENT--MANAGER
MERRILL LYNCH FUNDS DISTRIBUTOR, INC.--DISTRIBUTOR
<PAGE>
FEE TABLE
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS) FOR THE
FISCAL YEAR ENDED NOVEMBER 30, 1994:
<TABLE>
<S> <C>
Management Fees(a).................................................... 0.50 %
Rule 12b-1 Fees(b).................................................... 0.12 %
Other Expenses(c)..................................................... 0.44 %
----
Total Fund Operating Expenses, net of reimbursement(d)................ 1.06 %
====
</TABLE>
--------
(a) See "Management of the Fund--Management and Advisory Arrangements"--page 6.
(b) See "Purchase of Shares--Distribution Plan"--page 9.
(c) See "Management of the Fund--Transfer Agency Services"--page 7.
(d) The Manager voluntarily elected to waive $236,185 of its management fee for
the year ended November 30, 1994. The Total Fund Operating Expenses have
been restated to assume the absence of any such waiver or reimbursement
because the Manager may discontinue or reduce such waiver of fees at any
time without notice. The actual Total Fund Operating Expenses, net of the
waiver, for the fiscal year ended November 30, 1994 was 0.71%.
EXAMPLE:
<TABLE>
<CAPTION>
CUMULATIVE EXPENSES
PAID FOR THE PERIOD
OF:
----------------------
1 3 5 10
YEAR YEARS YEARS YEARS
---- ----- ----- -----
<S> <C> <C> <C> <C>
An investor would pay the following expenses on a $1,000
investment, assuming an operating expense ratio of
1.06% and a 5% annual return throughout the periods.... $11 $34 $58 $129
</TABLE>
The foregoing Fee Table is intended to assist investors in understanding the
costs and expenses that a shareholder in the Fund will bear directly or
indirectly. The example set forth above assumes reinvestment of all dividends
and distributions and utilizes a 5% annual rate of return as mandated by
Securities and Exchange Commission regulations. THE EXAMPLE SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR ANNUAL RATE OF RETURN
AND ACTUAL EXPENSES OR ANNUAL RATE OF RETURN MAY BE MORE OR LESS THAN THOSE
ASSUMED FOR PURPOSES OF THE EXAMPLE.
2
<PAGE>
FINANCIAL HIGHLIGHTS
The financial information in the table below has been audited in conjunction
with the annual audits of the financial statements of the Fund by Deloitte &
Touche LLP, independent auditors. Financial Statements for the year ended
November 30, 1994 and the independent auditors' report thereon are included in
the Statement of Additional Information. The following per share data and
ratios have been derived from information provided in the Fund's audited
financial statements. Further information about the performance of the Fund is
contained in the Fund's most recent annual report to shareholders which may be
obtained, without charge, by calling or writing the Fund at the telephone
number or address on the front cover of this Prospectus.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE PERIOD
----------------------------------------- APRIL 15, 1991+
NOV. 30, 1994 NOV. 30, 1993 NOV. 30, 1992 TO NOV. 30, 1991
------------- ------------- ------------- ----------------
<S> <C> <C> <C> <C>
Increase (Decrease) in
Net Asset Value:
PER SHARE OPERATING PER-
FORMANCE:
Net asset value, begin-
ning of period......... $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- -------
Investment income--net. .0317 .0262 .0312 .0328
Realized and unrealized
gain (loss) on invest-
ments--net............ (.0002) .0010 .0014 .0029
------- ------- ------- -------
Total from investment
operations............. .0315 .0272 .0326 .0357
------- ------- ------- -------
Less dividends and dis-
tributions:
Investment income--net. (.0317) (.0262) (.0312) (.0328)
Realized gain on in-
vestments--net........ (.0002) (.0004) (.0020) (.0029)++
------- ------- ------- -------
Total dividends and dis-
tributions............. (.0319) (.0266) (.0332) (.0357)
------- ------- ------- -------
Net asset value, end of
period................. $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= =======
TOTAL INVESTMENT RETURN. 3.22% 2.69% 3.37% 5.58%*
======= ======= ======= =======
RATIOS TO AVERAGE NET
ASSETS:
Expenses, net of reim-
bursement and excluding
distribution fees...... .59% .41% .53% .27%*
======= ======= ======= =======
Expenses, net of reim-
bursement.............. .71% .53% .65% .39%*
======= ======= ======= =======
Expenses................ 1.06% .96% 1.16% 1.55%*
======= ======= ======= =======
Investment income and
realized gain on in-
vestments--net......... 3.16% 2.66% 3.41% 5.45%*
======= ======= ======= =======
SUPPLEMENTAL DATA:
Net assets, end of pe-
riod (in thousands).... $57,184 $70,544 $80,978 $94,301
======= ======= ======= =======
</TABLE>
--------
* Annualized.
+ Commencement of Operations.
++ Includes unrealized gain (loss).
3
<PAGE>
YIELD INFORMATION
Set forth below is yield information for the indicated seven-day periods,
computed to include and exclude realized and unrealized gains and losses, and
information as to the compounded annualized yield, excluding gains and losses,
for the same periods.
<TABLE>
<CAPTION>
SEVEN-DAY PERIOD ENDED
-----------------------------------
FEBRUARY 28, 1995 NOVEMBER 30, 1994
----------------- -----------------
<S> <C> <C>
Annualized Yield:
Including gains and losses............ 4.85% 4.34%
Excluding gains and losses............ 4.85% 4.33%
Compounded Annualized Yield............. 4.97% 4.42%
Average maturity of portfolio at end of
period................................. 55 days 47 days
</TABLE>
The yield of the Fund refers to the income generated by an investment in the
Fund over a stated seven-day period. This income is then annualized; that is,
the amount of income generated by the investment during that period is assumed
to be generated each seven-day period over a 52-week period and is shown as a
percentage of the investment. The compounded annualized yield is calculated
similarly but, when annualized, the income earned by an investment in the Fund
is assumed to be reinvested. The compounded annualized yield will be somewhat
higher than the yield because of the effect of the assumed reinvestment.
The yield on Fund shares normally will fluctuate on a daily basis. Therefore,
the yield for any given past period is not an indication or representation by
the Fund of future yields or rates of return on its shares. The Fund's yield is
affected by changes in interest rates on Treasury securities, average portfolio
maturity, the types and quality of portfolio securities held and operating
expenses. Current yield information may not provide a basis for comparison with
bank deposits or other investments which pay a fixed yield over a stated period
of time.
On occasion, the Fund may compare its yield to (i) the Donoghue's Domestic
Prime Funds Average, an average compiled by Donoghue's Money Fund Report, a
widely recognized independent publication that monitors the performance of
money market mutual funds, (ii) the average yield reported by the Bank Rate
Monitor National Index (TM) for money market deposit accounts offered by the
100 leading banks and thrift institutions in the ten largest standard
metropolitan statistical areas, (iii) yield data reported by Lipper Analytical
Services, Inc., Morningstar Publications, Inc., Money Magazine, U.S. News &
World Report, Business Week, CDA Investment Technology, Inc., Forbes Magazine
and Fortune Magazine, or (iv) the yield on an investment in 91-day Treasury
bills on a rolling basis, assuming quarterly compounding. As with yield
quotations, yield comparisons should not be considered indicative of the Fund's
yield or relative performance for any future period.
INVESTMENT OBJECTIVES AND POLICIES
The investment objectives of the Fund are to seek preservation of capital,
liquidity and current income through investment exclusively in a diversified
portfolio of short-term marketable securities which are direct obligations of
the U.S. Treasury. The investment objectives are fundamental policies of the
Fund and may not be changed without a vote of the majority of the outstanding
shares of the Fund.
Preservation of capital is a prime investment objective of the Fund, and the
direct U.S. Treasury obligations in which it will invest are generally
considered to have the lowest principal risk among money
4
<PAGE>
market securities. Historically, direct U.S. Treasury obligations have
generally had lower rates of return than other money market securities with
less safety.
For purposes of its investment objectives, the Fund defines short-term
marketable securities which are direct obligations of the U.S. Treasury as any
U.S. Treasury obligations having maturities of no more than 762 days (25
months). The dollar weighted average maturity of the Fund's portfolio will not
exceed 90 days. During the fiscal year ended November 30, 1994, the average
maturity of its portfolio ranged from 23 days to 86 days.
Investment in Fund shares offers several benefits. The Fund seeks to provide
as high a yield potential, consistent with preservation of capital, as is
available through investment in short-term U.S. Treasury obligations, by
utilizing professional money market management and block purchases of
securities and yield improvement techniques. The Fund provides high liquidity
because of its redemption features and seeks reduced risk resulting from
diversification of assets. The shareholder is also relieved from administrative
burdens associated with direct investment in U.S. Treasury securities, such as
coordinating maturities and reinvestments, and making numerous buy-sell
decisions. There can be no assurance that the investment objectives of the Fund
will be realized. Certain expenses are borne by investors, including advisory
and management fees, administrative costs and operational costs.
In managing the Fund, Merrill Lynch Asset Management, L.P. ("MLAM" or the
"Manager") will employ a number of professional money management techniques,
including varying the composition of investments and the average maturity of
the portfolio based on its assessment of the relative values of the various
securities and future interest rate patterns. These assessments will respond to
changing economic and money market conditions and to shifts in fiscal and
monetary policy. The Manager also will seek to improve yield by taking
advantage of yield disparities that regularly occur between securities of a
similar kind. For example, market conditions frequently result in similar
securities trading at different prices. The Fund seeks to enhance yield by
purchasing and selling securities based on these yield disparities.
Forward Commitments. The Fund may purchase portfolio securities on a forward
commitment basis at fixed purchase terms. The purchase will be recorded on the
date the Fund enters into the commitment, and the value of the security will
thereafter be reflected in the calculation of the Fund's net asset value. The
value of the security on the delivery date may be more or less than its
purchase price. A separate account of the Fund will be established with its
custodian consisting of cash or Treasury securities having a market value at
all times at least equal to the amount of the forward commitment. Although the
Fund generally will enter into forward commitments with the intention of
acquiring securities for its portfolio, the Fund may dispose of a commitment
prior to settlement if the Manager deems it appropriate to do so.
When-Issued Securities and Delayed Delivery Transactions. The Fund also may
purchase portfolio securities on a when-issued basis, and it may purchase or
sell portfolio securities for delayed delivery. These transactions occur when
securities are purchased or sold by the Fund with payment and delivery taking
place in the future to secure what is considered an advantageous yield and
price to the Fund at the time of entering into the transaction. The Fund will
maintain a segregated account with its custodian of cash or Treasury securities
having a market value at all times at least equal to the amount of its
commitments in connection with such purchase transactions.
5
<PAGE>
Investment Restrictions. The Fund has adopted a number of restrictions and
policies relating to the investment of its assets and its activities, which are
fundamental policies and may not be changed without the approval of the holders
of a majority of the Fund's outstanding voting securities as defined in the
Investment Company Act. Among the more significant restrictions, the Fund may
not purchase any securities other than direct obligations of the U.S. Treasury
having maturities of 762 days (25 months) or less.
MANAGEMENT OF THE FUND
TRUSTEES
The Trustees of the Fund consist of six individuals, five of whom are not
"interested persons" of the Fund, as defined in the Investment Company Act. The
Trustees of the Fund are responsible for the overall supervision of the
operations of the Fund and perform the various duties imposed on the directors
of investment companies by the Investment Company Act.
The Trustees of the Fund are:
Arthur Zeikel*--President of MLAM and its affiliate, Fund Asset
Management, L.P. ("FAM"); President and Director of Princeton Services,
Inc.; Executive Vice President of Merrill Lynch & Co., Inc. ("ML&Co") and
of Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch");
Director of the Distributor.
Donald Cecil--Special Limited Partner of Cumberland Partners (an
investment partnership).
M. Colyer Crum--James R. Williston Professor of Investment Management,
Harvard Business School.
Edward H. Meyer--Chairman of the Board of Directors, President and Chief
Executive Officer of Grey Advertising Inc.
Jack B. Sunderland--President and Director of American Independent Oil
Company, Inc. (an energy company).
J. Thomas Touchton--Managing Partner of The Witt-Touchton Company (a
private investment partnership).
--------
*Interested person, as defined in the Investment Company Act, of the Fund.
MANAGEMENT AND ADVISORY ARRANGEMENTS
MLAM, which is owned and controlled by ML&Co., a financial services holding
company, acts as the Manager for the Fund and provides the Fund with management
services. The Manager or an affiliate of the Manager, FAM, acts as the
investment adviser for more than 130 registered investment companies and
provides investment advisory services to individual and institutional accounts.
As of February 28, 1995, the Manager and FAM had a total of approximately
$168.2 billion in investment company and other portfolio assets under
management, including accounts of certain affiliates of the Manager.
The investment advisory agreement with the Manager (the "Management
Agreement") provides that, subject to the direction of the Trustees, the
Manager is responsible for the actual management of the Fund's
6
<PAGE>
portfolio and constantly reviews the Fund's holdings in light of its own
research analysis and that from other relevant sources. The responsibility for
making decisions to buy, sell or hold a particular security rests with the
Manager subject to review by the Board of Trustees. The Manager performs
certain of the other administrative services and provides all the office space,
facilities, equipment and necessary personnel for portfolio management of the
Fund.
As compensation for its services under the Management Agreement, the Manager
receives a fee from the Fund at the end of each month at the annual rate of
0.50% of the Fund's average daily net assets. For the fiscal year ended
November 30, 1994, the total management fee payable by the Fund to the Manager
aggregated $337,407 (based on average net assets of approximately $67.5
million) of which the Manager waived $236,185. This voluntary waiver may be
withdrawn by the Manager at any time and without prior notice. At February 28,
1995, the net assets of the Fund aggregated approximately $63.2 million. At
this asset level, the annual management fee would aggregate approximately
$316,123.
The Management Agreement obligates the Fund to pay certain expenses incurred
in its operations, including, among other things, the management fee, legal and
audit fees, unaffiliated Trustees' fees and expenses, registration fees,
Custodian and Transfer Agent fees, accounting and pricing costs, and certain of
the costs of printing proxies, shareholder reports, prospectuses and statements
of additional information. Accounting services are provided to the Fund by the
Manager, and the Fund reimburses the Manager for its costs in connection with
such services. For the fiscal year ended November 30, 1994, the Fund paid
$36,025 to the Manager in connection with accounting services, and the ratio of
total expenses, net of reimbursement, to average net assets was 0.71%.
TRANSFER AGENCY SERVICES
The Fund has entered into a transfer agency, shareholder servicing agency and
proxy agency agreement (the "Transfer Agency Agreement") with Financial Data
Services, Inc. (the "Transfer Agent"), a subsidiary of ML&Co. Pursuant to the
Transfer Agency Agreement, the Transfer Agent is responsible for the issuance,
transfer and redemption of shares and the opening and maintenance of
shareholder accounts. Pursuant to the Transfer Agency Agreement, the Fund pays
the Transfer Agent an annual fee of $15.00 per shareholder account and the
Transfer Agent is entitled to reimbursement from the Fund for out-of-pocket
expenses incurred by the Transfer Agent under the Transfer Agency Agreement.
For the fiscal year ended November 30, 1994, the total fee paid by the Fund to
the Transfer Agent pursuant to the Transfer Agency Agreement was $25,206. At
February 28, 1995, the Fund had 1,895 shareholder accounts. At this level of
accounts, the annual fee payable to the Transfer Agent would aggregate
approximately $28,425, plus out-of-pocket expenses.
PURCHASE OF SHARES
The Fund is offering its shares without sales charge at a public offering
price equal to the net asset value (normally $1.00 per share) next determined
after a purchase order becomes effective. Share purchase orders are effective
on the date Federal funds become available to the Fund. If Federal funds are
available to the Fund prior to the determination of net asset value (generally
4:00 P.M., New York time) on any business day, the order will be effective on
that day. Shares purchased will begin accruing dividends on the day following
the date of purchase. Any order may be rejected by the Fund or the Distributor.
7
<PAGE>
The minimum initial purchase is $5,000 and the minimum subsequent purchase is
$1,000, except that lower minimums apply in the case of purchases made under
certain retirement plans. The Fund may, at its discretion, establish reduced
minimum initial and subsequent purchase requirements with respect to various
types of accounts. Participants in the self-directed retirement plans for which
Merrill Lynch acts as passive custodian may invest in shares of the Fund with a
minimum initial purchase of $100 and a minimum subsequent purchase of $1.
Information concerning investments in the Fund by participants in retirement
plans for which Merrill Lynch acts as passive custodian is set forth under
"Purchase and Redemption of Shares through Merrill Lynch Retirement Plans" in
the Statement of Additional Information. A variety of retirement plans are also
available from the Distributor. The minimum initial investment under these
plans is $100 and the minimum subsequent investment is $1. In addition, there
is no minimum investment under certain corporate pension and profit-sharing
plans which have established self-directed employee sub-accounts with Merrill
Lynch. The minimum initial purchase with respect to other retirement plans and
pension and profit-sharing plans is $100 and the minimum subsequent investment
is $1. For accounts advised by banks and registered investment advisers, the
minimum initial purchase is $300 and the minimum subsequent purchase is $100.
METHODS OF PAYMENT
Payment Through Securities Dealers. Investment in the Fund may be made
through securities dealers, including Merrill Lynch, who have entered into
selected dealer agreements with the Distributor. In such a case, the dealer
will transmit payment to the Fund on behalf of the investor and will supply the
Fund with the required account information. Generally, purchase orders placed
through Merrill Lynch will be made effective on the day following the day the
order is placed with Merrill Lynch, except that orders received through the
Merrill Lynch BlueprintSM Program ("Blueprint") in some circumstances may be
executed two business days following the day the order is placed with Merrill
Lynch. Investments in the Fund through Blueprint may be made only through
Merrill Lynch. Such orders should be sent to Merrill Lynch, Pierce, Fenner &
Smith Incorporated, Attention: The BlueprintSM Program, P.O. Box 30441, New
Brunswick, New Jersey 08989-0441. Blueprint maintains a toll-free telephone
number for inquiries: (800) 637-3766. Investors who are not placing orders
through Blueprint and who desire same day effectiveness should utilize the
Payment by Wire procedure described below. Merrill Lynch has an order procedure
pursuant to which investors can have the proceeds from the sale of listed
securities invested in shares of the Fund on the day investors receive such
proceeds in their Merrill Lynch securities accounts. Investors with free cash
credit balances (i.e., immediately available funds) in securities accounts of
Merrill Lynch will not have their funds invested in the Fund until the day
after the order is placed with Merrill Lynch and will not receive the daily
dividend which would have been received had their funds been invested in the
Fund on the day the order was placed with Merrill Lynch.
Payment by Wire. An expeditious method of investing in the Fund is available
through the transmittal of Federal funds by wire to the Transfer Agent. The
Fund will not be responsible for delays in the wiring system. To purchase
shares by wiring Federal funds, payment should be wired to First Union National
Bank of Florida. Shareholders should give their financial institutions the
following wiring instructions: ABA #063000021, DDA #21126000601186, Financial
Data Services, Inc. The wire should be identified as a payment to Merrill Lynch
U.S. Treasury Money Fund and should include the shareholder's name and account
number. Failure to submit the required information may delay investment.
Investors are urged to make payment by wire in Federal funds.
8
<PAGE>
Payment to the Transfer Agent. Purchase orders for which remittance is to be
made by check may be submitted directly by mail or otherwise to the Transfer
Agent. Purchase orders by mail should be sent to Financial Data Services, Inc.,
Transfer Agency Money Market Operations, P.O. Box 45290, Jacksonville, Florida
32232-5290. Purchase orders which are sent by hand should be delivered to
Financial Data Services, Inc., Transfer Agency Money Market Operations, 4800
Deer Lake Drive East, Jacksonville, Florida 32246-6484. Investors opening a new
account must enclose a completed Purchase Application. Existing shareholders
should enclose the detachable stub from a monthly account statement which they
have received. Checks should be made payable to Merrill Lynch Funds
Distributor, Inc. Certified checks are not necessary, but checks are accepted
subject to collection at full face value in United States funds and must be
drawn in United States dollars on a United States bank. Payments for the
accounts of corporations, foundations and other organizations may not be made
by third party checks.
DISTRIBUTION PLAN
The Fund has adopted a shareholder servicing plan and agreement (the "Plan")
in compliance with Rule 12b-1 under the Investment Company Act pursuant to
which the Fund is authorized to pay Merrill Lynch a fee at the annual rate of
0.125% of the average daily net asset value of Fund accounts maintained through
Merrill Lynch. The Plan reimburses Merrill Lynch only for actual expenses
incurred in the fiscal year in which the fee is paid. The fee is principally to
provide compensation to Merrill Lynch financial consultants and other Merrill
Lynch personnel for providing certain services to shareholders who maintain
their Fund accounts through Merrill Lynch. The fee is for direct personal
services to Fund shareholders. Under the Plan, Merrill Lynch, in its sole
discretion, may expend out of the fee an amount not exceeding 0.01% of such
average daily net asset value as reimbursement for expenditures incurred in
advertising activities promoting the sale, marketing and distribution of the
shares of the Fund. For the fiscal year ended November 30, 1994 $80,962 was
paid to Merrill Lynch pursuant to the Plan (based on average net assets subject
to the Plan of $67.5 million). At February 28, 1995, the net assets of the Fund
subject to the Plan aggregated approximately $63.2 million. At this asset
level, the annual fee payable to Merrill Lynch pursuant to the Plan would
aggregate approximately $79,031.
REDEMPTION OF SHARES
The Fund is required to redeem for cash all full and fractional shares of the
Fund. The redemption price is the net asset value per share next determined
after receipt by the Transfer Agent of proper notice of redemption as described
in accordance with one of the procedures set forth below. If such notice is
received by the Transfer Agent prior to the determination of net asset value
(generally 4:00 P.M., New York time), on any day during which the New York
Stock Exchange or New York banks are open for business, the redemption will be
effective on such day and payment will be made on the next business day. If the
notice is received after the determination of net asset value has been made,
the redemption will be effective on the next business day and payment will be
made on the second business day thereafter. If notice of a redemption of shares
held in connection with Blueprint is received by Merrill Lynch prior to the
Fund's determination of net asset value, it will be effective on the business
day following receipt of the redemption request. If the notice is received
after the determination of net asset value has been made, the redemption will
be effective on the second business day thereafter.
At various times, the Fund may be requested to redeem shares for which it has
not yet received good payment (e.g., cash, Federal funds or certified check
drawn on a United States bank). The Fund may delay
9
<PAGE>
or cause to be delayed the mailing of a redemption check until such time as
good payment has been collected for the purchase of such Fund shares, which
may take up to 10 days.
Information concerning redemptions by participants in the self-directed
retirement plans for which Merrill Lynch acts as passive custodian is set
forth in the Statement of Additional Information.
METHODS OF REDEMPTION
Set forth below is information as to the five methods pursuant to which
shareholders may redeem shares. In certain instances, the Transfer Agent may
require additional documents in connection with redemptions.
Redemption by Check. Shareholders may redeem shares by check in an amount
not less than $500. At the shareholder's request, the Transfer Agent will
provide the shareholder with checks drawn on the custody account of the Fund
with the Custodian. These checks can be made payable to the order of any
person in any amount not less than $500; however, these checks may not be used
to purchase securities in transactions with Merrill Lynch. The payee of the
check may cash or deposit it like any check drawn on a bank. When such a check
is presented to the Transfer Agent for payment, the Transfer Agent will
present the check to the Fund as authority to redeem a sufficient number of
full and fractional shares in the shareholder's account to cover the amount of
the check. This enables the shareholder to continue earning daily dividends
until the check is cleared. Cancelled checks will be returned to the
shareholder by the Transfer Agent.
Shareholders will be subject to the Transfer Agent's rules and regulations
governing such checking accounts, including the right of the Transfer Agent
not to honor checks in amounts exceeding the value of the shareholder's
account at the time the check is presented for payment. The Fund or the
Transfer Agent may modify or terminate the redemption by check privilege at
any time on 30 days' notice to participating shareholders. In order to be
eligible for the redemption by check privilege, purchasers should check the
box under the caption "Check Redemption Privilege" in the Purchase
Application. The Transfer Agent will then send checks to the shareholder.
Federal Funds Redemption. Shareholders also may arrange to have redemption
proceeds of $5,000 or more wired in Federal Funds to a pre-designated bank
account. In order to be eligible for Federal Funds redemption, the shareholder
must designate on his Purchase Application the domestic commercial bank and
account number to receive the proceeds of his redemption and must have his
signature on the Purchase Application guaranteed. The redemption request for
Federal Funds redemption may be made by telephone, wire or by letter to the
Transfer Agent and, if received before the determination of net asset value of
the Fund on any business day (generally 4:00 P.M., New York time), the
redemption proceeds will be wired to the investor's predesignated bank account
on the next business day. Shareholders may effect Federal Funds redemptions by
telephoning the Transfer Agent at (800) 221-7210 toll-free. The Fund will
employ reasonable procedures to confirm that instructions communicated by
telephone are genuine; if it does not, the Fund may be liable for any losses
due to fraudulent or unauthorized instructions. Among other things, redemption
proceeds may only be wired into the bank account designated on the Purchase
Application. The investor must independently verify this information at the
time the redemption request is made.
Repurchase Through Securities Dealers. The Fund will repurchase shares
through securities dealers. The Fund normally will accept orders to repurchase
shares by wire or telephone from dealers for customers at the net asset value
next computed after receipt of the order from the dealer, provided that such
request for
10
<PAGE>
repurchase is received from the dealer prior to the determination of net asset
value of the Fund (generally 4:00 P.M., New York time) on any business day.
The foregoing repurchase arrangements are for the convenience of shareholders
and do not involve a charge by the Fund; however, dealers may impose a charge
on the shareholder for transmitting the notice of repurchase to the Fund.
Redemption of Fund shares held in connection with Blueprint may be made only
through Merrill Lynch. Such a redemption may be made by submitting a written
notice by mail directly to Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Attention: The BlueprintSM Program, P.O. Box 30441, New Brunswick, New Jersey
08989-0441. Investors whose shares are held through Blueprint also may effect
notice of redemption by telephoning Merrill Lynch at (800) 637-3766 toll-free.
The Fund reserves the right to reject any order for repurchase through a
securities dealer, but it may not reject properly submitted requests for
redemption as described below. The Fund will promptly notify any shareholder of
any rejection of a repurchase with respect to his shares. For shareholders
repurchasing through their securities dealer, payment will be made by the
Transfer Agent to the dealer.
Regular Redemption. Shareholders may redeem shares by submitting a written
notice by mail directly to the Transfer Agent, Financial Data Services, Inc.,
Transfer Agency Money Market Operations, P.O. Box 45290, Jacksonville, Florida
32232-5290. Redemption requests which are sent by hand should be delivered to
Financial Data Services, Inc., Transfer Agency Money Market Operations, 4800
Deer Lake Drive East, Jacksonville, Florida 32246-6484. Redemption requests
should not be sent to the Fund. The notice requires the signatures of all
persons in whose names the shares are registered, signed exactly as their names
appear on the Transfer Agent's register. The signatures on the redemption
request must be guaranteed by an "eligible guarantor institution" as such is
defined in Rule 17Ad-15 under the Securities Exchange Act of 1934, the
existence and validity of which may be verified by the Transfer Agent through
the use of industry publications. Notarized signatures are not sufficient.
Automatic Redemption. Merrill Lynch has instituted an automatic redemption
procedure applicable to shareholders of the Fund who maintain securities
accounts with Merrill Lynch. Merrill Lynch may utilize this procedure, which is
not applicable to margin accounts, to satisfy amounts due it by the shareholder
as a result of account fees and expenses owed to Merrill Lynch or one of its
affiliates or as a result of purchases of securities or other transactions in
the shareholder's securities account. Under this procedure, unless the
shareholder notifies Merrill Lynch to the contrary, the shareholder's Merrill
Lynch securities account will be scanned each business day prior to the
determination of net asset value of the Fund (generally 4:00 P.M., New York
time); after application of any cash balances in the account, a sufficient
number of Fund shares will be redeemed at net asset value, as determined on
that day, to satisfy any amounts for which the shareholder is obligated to make
payment to Merrill Lynch or one of its affiliates. Redemptions will be effected
on the business day preceding the date the shareholder is obligated to make
such payment, and Merrill Lynch or its affiliate will receive the redemption
proceeds on the business day following the redemption date. Shareholders will
receive all dividends declared and reinvested through the date of redemption.
----------------
Due to the relatively high cost of maintaining accounts of less than $1,000,
the Fund reserves the right to redeem shares in any account (other than
accounts which have a minimum initial purchase of less than $1,000) for their
then current value (which will be promptly paid to the shareholder), if at any
time the total investment does not have a value of at least $1,000.
Shareholders will be notified that the value of their account is less than
$1,000 and allowed two months to make an additional investment before the
redemption is processed. In such event, the $1,000 minimum on subsequent
investment will not be applicable.
11
<PAGE>
SHAREHOLDER SERVICES
The Fund offers a number of shareholder services designed to facilitate
investment in its shares. Full details as to each of such services, copies of
the various plans described below and instructions as to how to participate in
the various services or plans, or to change options with respect thereto can be
obtained from the Fund, the Distributor or Merrill Lynch. Included in such
services are the following:
Investment Account. Each shareholder whose account is maintained at the
Transfer Agent has an Investment Account and will receive from the Transfer
Agent a monthly report showing the activity in his account for the month. A
shareholder may make additions to his Investment Account at any time by
purchasing shares at the public offering price either through his securities
dealer, by wire or by mail directly to the Transfer Agent, acting as agent for
his dealer. A shareholder may ascertain the number of shares in his Investment
Account by telephoning the Transfer Agent at (800) 221-7210 toll-free. The
Transfer Agent will furnish this information only after the shareholder has
specified the name, address, account number and social security number of the
registered owner or owners. Shareholders also may maintain their accounts
through Merrill Lynch. Upon the transfer of shares out of a Merrill Lynch
brokerage account, an Investment Account in the transferring shareholder's name
may be opened automatically, without charge, at the Transfer Agent.
Shareholders considering transferring a tax-deferred retirement account such as
an individual retirement account from Merrill Lynch to another brokerage firm
or financial institution should be aware that, if the firm to which the
retirement account is to be transferred will not take delivery of shares of the
Fund, a shareholder must either redeem the shares so that the cash proceeds can
be transferred to the account at the new firm, or such shareholder must
continue to maintain a retirement account at Merrill Lynch for those shares.
Exchange Privilege. Shareholders of the Fund have an exchange privilege with
Class D shares of certain other mutual funds advised by the Manager or FAM
("MLAM-advised mutual funds"). Alternatively, shareholders may exchange shares
of the Fund for Class A shares of one of the MLAM-advised mutual funds if the
shareholder holds any Class A shares of that fund in his account in which the
exchange is made at the time of the exchange or is otherwise an eligible Class
A investor. Shareholders of the Fund also may exchange shares of the Fund into
shares of certain MLAM-advised money market funds specifically designated as
available for exchange by holders of Fund shares. There is currently no
limitation on the number of times a shareholder may exercise the exchange
privilege. The exchange privilege may be modified or terminated at any time in
accordance with the rules of the Securities and Exchange Commission. Exercise
of the exchange privilege is treated as a sale for Federal income tax purposes.
For further information, see "Shareholder Services--Exchange Privilege" in the
Statement of Additional Information.
Accrued Monthly Payout Plan. Shareholders desiring their dividends in cash
may enroll in this plan and receive monthly cash payments resulting from the
redemption of the shares received on dividend reinvestments during the month.
Systematic Withdrawal Plan. A shareholder may elect to receive systematic
withdrawal checks from his Investment Account on either a monthly or quarterly
basis.
Automatic Investment Plan. Regular additions may be made to an investor's
Investment Account by prearranged charges to his regular bank account at a
minimum of $50 per month.
12
<PAGE>
PORTFOLIO TRANSACTIONS
The portfolio securities in which the Fund invests are traded in the over-
the-counter market. The Fund will deal directly with the dealers who make a
market in the securities involved, except in those circumstances where better
prices and execution are available elsewhere. Such dealers usually are acting
as principal for their own account. On occasion, securities may be purchased
directly from the U.S. Treasury. Portfolio securities generally are traded on a
net basis and normally do not involve either brokerage commissions or transfer
taxes. The cost of executing portfolio transactions primarily will consist of
dealer spreads. Under the Investment Company Act, persons affiliated with the
Fund are prohibited from dealing with the Fund as a principal in the purchase
and sale of securities unless an exemptive order allowing such transactions is
obtained from the Securities and Exchange Commission. An affiliated person of
the Fund may serve as its broker in over-the-counter transactions conducted on
an agency basis.
The Securities and Exchange Commission has issued an exemptive order
permitting the Fund to conduct certain principal transactions with Merrill
Lynch Government Securities Inc. or its subsidiary, Merrill Lynch Money
Markets, Inc., subject to certain terms and conditions. During the fiscal year
ended November 30, 1994, the Fund engaged in four transactions pursuant to such
order aggregating approximately $32.7 million.
ADDITIONAL INFORMATION
DIVIDENDS
All of the net income of the Fund is declared as dividends daily. The Fund's
net income for dividend purposes is determined by the Manager at the close of
business on the New York Stock Exchange (generally 4:00 P.M., New York time),
on each day the New York Stock Exchange is open for business, immediately prior
to the determination of the Fund's net asset value on that day. See
"Determination of Net Asset Value". Net income of the Fund (from the time of
the immediately preceding determination thereof) consists of (i) interest
accrued and/or discount earned (including both original issue and market
discount), (ii) less the estimated expenses of the Fund (including the fees
payable to the Manager) applicable to that dividend period and (iii) plus or
minus all realized gains and losses on the portfolio securities. Dividends are
declared and reinvested daily in the form of additional full and fractional
shares of the Fund at net asset value.
DETERMINATION OF NET ASSET VALUE
The net asset value of the Fund is determined by the Manager once daily,
immediately after the daily declaration of dividends, on each day during which
the New York Stock Exchange or New York banks are open for business. Such
determination is made as of the close of business on the New York Stock
Exchange (generally 4:00 P.M., New York time) or, on days when the New York
Stock Exchange is closed but New York banks are open, at 4:00 P.M., New York
time. The net asset value is computed pursuant to the "penny rounding" method
by dividing the fair value of all securities held by the Fund plus any cash or
other assets (including interest accrued but not yet received) minus all
liabilities by the total number of shares outstanding at such time. The result
of this computation will be rounded to the nearest whole cent. It is
anticipated that the net asset value will remain constant at $1.00 per share.
The securities of the Fund are valued at the most recent bid price or yield
equivalent as obtained from dealers that make markets in such securities.
Assets for which market quotations are not readily available
13
<PAGE>
are valued at fair value as determined in good faith by or under the direction
of the Trustees of the Fund. Securities with a remaining maturity of 60 days or
less are valued on an amortized cost basis i.e., by valuing an instrument at
its cost and thereafter assuming a constant amortization to maturity of any
discount or premium, regardless of the impact of fluctuating interest rates on
the market value of the instrument.
TAXES
The Fund intends to continue to qualify for the special tax treatment
afforded regulated investment companies ("RICs") under the Internal Revenue
Code of 1986, as amended (the "Code"). If it so qualifies, the Fund (but not
its shareholders) will not be subject to Federal income tax on the part of its
net ordinary income and net realized capital gains which it distributes to
shareholders. The Fund intends to distribute substantially all of such income.
Dividends paid by the Fund from its ordinary income and distributions of its
net realized short-term capital gains (together referred to hereafter as
"ordinary income dividends") are taxable to shareholders as ordinary income.
Distributions made from the Fund's net realized long-term capital gains
("capital gain dividends") are taxable to shareholders as long-term capital
gains, regardless of the length of time the shareholder has owned Fund shares.
Distributions in excess of the Fund's earnings and profits will first reduce
the adjusted tax basis of a holder's shares and, after such adjusted tax basis
is reduced to zero, will constitute capital gains to such holder (assuming the
shares are held as a capital asset).
Dividends are taxable to shareholders even though they are reinvested in
additional shares of the Fund. Not later than 60 days after the close of its
taxable year, the Fund will provide its shareholders with a written notice
designating the amounts of any ordinary income dividends or capital gain
dividends. Distributions by the Fund, whether from ordinary income or capital
gains, will not be eligible for the dividends received deduction allowed to
corporations under the Code. If the Fund pays a dividend in January which was
declared in the previous October, November or December to shareholders of
record on a specified date in one of such months, then such dividend will be
treated for tax purposes as being paid by the Fund and received by its
shareholders on December 31 of the year in which such dividend was declared.
Ordinary income dividends paid by the Fund to shareholders who are
nonresident aliens or foreign entities will be subject to a 30% United States
withholding tax under existing provisions of the Code applicable to foreign
individuals and entities unless a reduced rate of withholding or a withholding
exemption is provided under applicable treaty law. Nonresident shareholders are
urged to consult their own tax advisers concerning the applicability of the
United States withholding tax.
Under certain provisions of the Code, some taxpayers may be subject to a 31%
withholding tax on ordinary income dividends, capital gain dividends and
redemption payments ("backup withholding"). Generally, shareholders subject to
backup withholding will be those for whom no certified taxpayer identification
number is on file with the Fund or who, to the Fund's knowledge, have furnished
an incorrect number. When establishing an account, an investor must certify
under penalty of perjury that such number is correct and that such investor is
not otherwise subject to backup withholding.
If a shareholder exercises the exchange privilege within 90 days of acquiring
the shares, then the loss the shareholder can recognize on the exchange will be
reduced (or the gain increased) to the extent the sales
14
<PAGE>
charge paid to the Fund on the exchanged shares reduces any sales charge the
shareholder would have owed upon purchase of the new shares in the absence of
the exchange privilege. Instead, such sales charge will be treated as an amount
paid for the new shares.
A loss realized on a sale or exchange of shares of the Fund will be
disallowed if other Fund shares are acquired (whether through the automatic
reinvestment of dividends or otherwise) within a 61-day period beginning 30
days before and ending 30 days after the date that the shares are disposed of.
In such a case, the basis of the shares acquired will be adjusted to reflect
the disallowed loss.
The foregoing is a general and abbreviated summary of the applicable
provisions of the Code and Treasury regulations presently in effect. For the
complete provisions, reference should be made to the pertinent Code sections
and the Treasury regulations promulgated thereunder. The Code and the Treasury
regulations are subject to change by legislative or administrative action
either prospectively or retroactively.
Ordinary income and capital gain dividends may also be subject to state and
local taxes.
Certain states exempt from state income taxation dividends paid by RICs which
are derived from interest on U.S. Treasury obligations. State law varies as to
whether dividend income attributable to U.S. Treasury obligations is exempt
from state income tax.
Shareholders are urged to consult their tax advisers regarding specific
questions as to Federal, foreign, state or local taxes. Foreign investors
should consider applicable foreign taxes in their evaluation of an investment
in the Fund.
ORGANIZATION OF THE FUND
The Fund was organized on October 30, 1990 as a business trust under the laws
of the Commonwealth of Massachusetts.
The Fund is a no-load, diversified, open-end investment company. The
Declaration of Trust of the Fund permits the Trustees to issue an unlimited
number of full and fractional shares of a single class. Upon liquidation of the
Fund, shareholders of the Fund are entitled to share pro rata in the net assets
of the Fund available for distribution to shareholders. Shares are fully paid
and nonassessable by the Fund. Shareholders are entitled to one vote for each
full share held and fractional votes for fractional shares held and to vote in
the election of Trustees and on other matters submitted to the vote of
shareholders.
The Declaration of Trust of the Fund does not require that the Fund hold
annual meetings of shareholders. However, the Fund will be required to call
special meetings of shareholders in accordance with the requirements of the
Investment Company Act to seek approval of new management and advisory
arrangements, of a material increase in distribution fees or of a change in the
fundamental policies, objectives or restrictions of the Fund. The Fund also
would be required to hold a special shareholders' meeting to elect new Trustees
at such time as less than a majority of the Trustees holding office have been
elected by shareholders. The Fund's Declaration of Trust provides that a
shareholders' meeting may be called for any reason at the request of 10% of the
outstanding shares of the Fund or by a majority of the Trustees. Except as set
forth above, the Trustees shall continue to hold office and appoint successor
Trustees.
15
<PAGE>
SHAREHOLDER INQUIRIES
Shareholder inquiries may be addressed to the Fund at the address or
telephone number set forth on the cover page of this Prospectus.
SHAREHOLDER REPORTS
Only one copy of each shareholder report and certain shareholder
communications will be mailed to each identified shareholder regardless of the
number of accounts such shareholder has. If a shareholder wishes to receive
separate copies of each report and communication for all of the shareholder's
related accounts the shareholder should notify in writing:
Financial Data Services, Inc.
Attn: TAMMO
P.O. Box 45290
Jacksonville, FL 32232-5290
The notification should include the shareholder's name, address, tax
identification number and Merrill Lynch, Pierce, Fenner & Smith Incorporated
and/or mutual fund account numbers. If you have any questions regarding this
please call your Merrill Lynch financial consultant or Financial Data Services,
Inc. at 800-221-7210.
----------------
The Declaration of Trust establishing the Fund, a copy of which, together
with all amendments thereto (the "Declaration"), is on file in the office of
the Secretary of the Commonwealth of Massachusetts, provides that the name
"Merrill Lynch U.S. Treasury Money Fund" refers to the Trustees under the
Declaration collectively as Trustees, but not as individuals or personally; and
except for his own bad faith, willful misfeasance, gross negligence or reckless
disregard of his duties, no Trustee, shareholder, officer, employee or agent of
the Fund shall be held to any personal liability, nor shall resort be had to
their private property for the satisfaction of any obligation or claim or
otherwise in connection with the affairs of the Fund but the "Trust Property"
only shall be liable.
16
<PAGE>
MERRILL LYNCH U.S. TREASURY MONEY FUND PURCHASE APPLICATION
INSTRUCTIONS
SEND THIS COMPLETED FORM TO: FINANCIAL DATA SERVICES, INC.,
Transfer Agency Money Market Operations, P.O. Box 45290,
Jacksonville, Florida 32232-5290. NOTE: THIS FORM MAY NOT BE
USED FOR PURCHASES THROUGH THE MERRILL LYNCH BLUEPRINTSM
PROGRAM. YOU MAY REQUEST A MERRILL LYNCH BLUEPRINTSM PROGRAM
APPLICATION FORM BY CALLING TOLL FREE (800) 637-3766.
-------------------------------------------------------------------------------
1. TO REGISTER SHARES. The Account should be registered as follows:
(PLEASE PRINT EXCEPT FOR SIGNATURES)
[ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ]
PRINT APPLICANT'S NAME. FOR CLARITY, PLEASE SKIP A SPACE BETWEEN NAMES.
[ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ][ ]
PRINT JOINT REGISTRANT'S NAME, IF ANY. IN CASE OF JOINT REGISTRATION, A JOINT
TENANCY WITH RIGHT OF SURVIVORSHIP WILL BE PRESUMED, UNLESS OTHERWISE
INDICATED.
-------------------------------------------------- [ ][ ][ ][ ][ ][ ][ ][ ][ ]
STREET ADDRESS SOCIAL SECURITY NO. OR
TAX ID NO.
-------------------------------------------------------------------------------
CITY STATE ZIP CODE
----------------------------------- ----------------------------------
OCCUPATION NAME AND ADDRESS OF EMPLOYER
----------------------------------
----------------------------------
--------------------------------------
HOME PHONE NO. (INCLUDE AREA CODE)
PLEASE MAKE ANY CHECK PAYABLE
TO MERRILL LYNCH FUNDS -------------------
DISTRIBUTOR, INC. AMOUNT OF BUSINESS PHONE NO.
INVESTMENT $ __________________
-------------------------------------------------------------------------------
2. CHECK REDEMPTION PRIVILEGE (SEE TERMS AND CONDITIONS IN THE PROSPECTUS)
CHECK BOX (IF DESIRED) [_]
I HEREBY REQUEST AND AUTHORIZE FINANCIAL DATA SERVICES, INC. (THE
"TRANSFER AGENT") TO HONOR CHECKS OR AUTOMATIC CLEARING HOUSE ("ACH")
DEBITS DRAWN BY ME ON MY MERRILL LYNCH U.S. TREASURY MONEY FUND (THE
"FUND") ACCOUNT SUBJECT TO ACCEPTANCE BY THE FUND, WITH PAYMENT
THEREFOR TO BE MADE BY REDEEMING SUFFICIENT SHARES IN MY ACCOUNT
WITHOUT A SIGNATURE GUARANTEE. THE TRANSFER AGENT AND THE FUND DO
HEREBY RESERVE ALL THEIR LAWFUL RIGHTS FOR HONORING CHECKS OR ACH
DEBITS DRAWN BY ME AND FOR EFFECTING REDEMPTIONS PURSUANT TO THE CHECK
REDEMPTION PRIVILEGE. I UNDERSTAND THAT THIS ELECTION DOES NOT CREATE A
CHECKING OR OTHER BANK ACCOUNT RELATIONSHIP BETWEEN MYSELF AND THE
TRANSFER AGENT OR THE FUND AND THAT THE RELATIONSHIP BETWEEN MYSELF AND
THE TRANSFER AGENT IS THAT OF SHAREHOLDER-TRANSFER AGENT.
FOR JOINT ACCOUNT: CHECK HERE WHETHER EITHER OWNER [_] IS
AUTHORIZED, OR ALL OWNERS [_] ARE REQUIRED TO SIGN CHECKS.
17
<PAGE>
-------------------------------------------------------------------------------
3. FEDERAL FUNDS REDEMPTION (SEE TERMS AND CONDITIONS IN THE PROSPECTUS)
[_] CHECK BOX (IF DESIRED)
THE UNDERSIGNED HEREBY AUTHORIZES AND DIRECTS FINANCIAL DATA SERVICES,
INC. (THE "TRANSFER AGENT") TO ACT ON TELEPHONIC, TELEGRAPHIC OR OTHER
INSTRUCTIONS (WITHOUT SIGNATURE GUARANTEE) FROM ANY PERSON REPRESENTING
HIMSELF TO BE EITHER THE INVESTOR OR ANY AUTHORIZED REPRESENTATIVE OF
THE INVESTOR, DIRECTING REDEMPTION OF SHARES IN AN AMOUNT OF $5,000 OR
MORE OF MERRILL LYNCH U.S. TREASURY MONEY FUND (THE "FUND") HELD BY THE
TRANSFER AGENT ON BEHALF OF THE UNDERSIGNED, AND TO TRANSMIT THE
PROCEEDS BY WIRE ONLY TO THE BANK ACCOUNT DESIGNATED BELOW.
ANY CHANGE IN THE BANK ACCOUNT DESIGNATED TO RECEIVE REDEMPTION
PROCEEDS SHALL REQUIRE A SIGNATURE GUARANTEE. THE INVESTOR UNDERSTANDS
AND AGREES THAT THE FUND AND THE TRANSFER AGENT RESERVE THE RIGHT TO
REFUSE ANY INSTRUCTIONS.
THE TRANSFER AGENT REQUIRES ADDITIONAL DOCUMENTATION FROM CORPORATIONS,
PARTNERSHIPS, TRUSTEES AND SIMILAR INSTITUTIONAL INVESTORS IN ADDITION TO THIS
AUTHORIZATION (SEE NO. 9 BELOW).
ABSENT ITS OWN NEGLIGENCE, AND SO LONG AS REASONABLE PROCEDURES TO CONFIRM THE
VALIDITY OF TELEPHONED INSTRUCTIONS ARE EMPLOYED, NEITHER THE FUND NOR
FINANCIAL DATA SERVICES, INC. SHALL BE LIABLE FOR ANY REDEMPTION CAUSED BY
UNAUTHORIZED INSTRUCTIONS. INVESTORS MAY EFFECT NOTICE OF THIS TYPE OF
REDEMPTION BY TELEPHONING THE TRANSFER AGENT AT THE TOLL-FREE NUMBER (800)
221-7210. SHARES WHICH ARE BEING REPURCHASED THROUGH SECURITIES DEALERS WILL
NOT QUALIFY FOR FEDERAL FUNDS REDEMPTION.
FILL OUT THE REST OF THIS SPACE ONLY IF THE ABOVE BOX IS CHECKED. IN ADDITION,
YOUR SIGNATURE(S) MUST BE GUARANTEED. YOUR BANK MUST BE A MEMBER OF THE
FEDERAL RESERVE OR HAVE A CORRESPONDENT BANKING RELATIONSHIP WITH A BANK THAT
DOES BELONG TO THE FEDERAL RESERVE.
ENCLOSE A SPECIMEN COPY OF YOUR
PERSONAL CHECK (MARKED "VOID") FOR
THE BANK ACCOUNT LISTED BELOW. IF YOUR BANK IS NOT A MEMBER OF
THE FEDERAL RESERVE:
----------------------------------
IF YOUR BANK IS A MEMBER OF THE CORRESPONDENT BANK NAME ROUTING
FEDERAL RESERVE: CODE
----------------------------------- ----------------------------------
YOUR BANK NAME BANK ROUTING CODE YOUR BANK NAME BANK ROUTING CODE
----------------------------------- ----------------------------------
YOUR ACCOUNT NAME ACCOUNT NUMBER YOUR ACCOUNT NAME YOUR ACCOUNT
NUMBER
----------------------------------- ----------------------------------
ADDRESS OF BANK CITY STATE ZIP CODE YOUR BANK ADDRESS CITY STATE ZIP
CODE
-------------------------------------------------------------------------------
4. AUTOMATIC INVESTMENT PLAN PRIVILEGE (SEE TERMS AND CONDITIONS IN STATEMENT
OF ADDITIONAL INFORMATION)
[_] Check this box only if you wish to have an Authorization Form sent to you.
-------------------------------------------------------------------------------
5. SYSTEMATIC WITHDRAWAL PLAN (SEE TERMS AND CONDITIONS IN THE STATEMENT OF
ADDITIONAL INFORMATION)
MINIMUM REQUIREMENTS: $10,000 FOR MONTHLY DISBURSEMENT, $5,000 FOR QUARTERLY,
OF SHARES IN MERRILL LYNCH U.S. TREASURY MONEY FUND AT COST OR CURRENT
OFFERING PRICE. IN ADDITION, YOUR SIGNATURE(S) MUST BE GUARANTEED. THIS OPTION
IS AVAILABLE ONLY IF YOU DO NOT CHECK NO. 5.
THE UNDERSIGNED HEREBY AUTHORIZES AND DIRECTS FINANCIAL DATA SERVICES, INC. ON
(CHECK ONLY ONE)
PAYABLE TO THE ORDER OF (CHECK
[_] the 24th of each month ONLY ONE)
[_] the registered owner as
[_] March 24, June 24, September indicated in item 1 herein
24 and December 24 above.
[_] (other) __________________
[_] to redeem a sufficient
number of Shares in my SUCH CHECKS OR ACH DEBITS SHOULD
account to generate BE MAILED TO (CHECK ONLY ONE)
redemption proceeds of [_] the address indicated in
$ ; or item 1 herein above
[_] the following name and
address:
-------------------------------
[_] to redeem % of the
Shares in my account on such
date and pay the redemption
proceeds by check
-------------------------------------------------------------------------------
6. ACCRUED MONTHLY PAYOUT PLAN (SEE TERMS AND CONDITIONS IN STATEMENT OF
ADDITIONAL INFORMATION)
THE UNDERSIGNED HEREBY AUTHORIZES AND DIRECTS FINANCIAL DATA SERVICES, INC. TO
REDEEM ON THE LAST FRIDAY OF EACH MONTH ALL SHARES PURCHASED DURING SUCH MONTH
THROUGH REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS AND SEND THE PROCEEDS TO
ME.
[_] CHECK BOX (IF DESIRED)
18
<PAGE>
-------------------------------------------------------------------------------
7. OTHER INFORMATION
THIS APPLICATION ENABLES YOU TO TAKE ADVANTAGE OF ANY OR ALL OF THE OPTIONAL
SERVICES AVAILABLE TO MERRILL LYNCH U.S. TREASURY MONEY FUND SHAREHOLDERS AND
WILL UPDATE ANY OPTIONS IN EFFECT FOR YOUR ACCOUNT.
IF YOU SELECT THE CHECK REDEMPTION PRIVILEGE, A SUPPLY OF CHECKS IMPRINTED
WITH YOUR NAME AND SHAREHOLDER ACCOUNT NUMBER WILL BE SENT TO YOU IN
APPROXIMATELY 10 DAYS. YOU SHOULD BE CERTAIN THAT A SUFFICIENT NUMBER OF
SHARES ARE HELD BY THE TRANSFER AGENT FOR YOUR ACCOUNT TO COVER THE AMOUNT OF
ANY CHECK DRAWN BY YOU. IF INSUFFICIENT SHARES ARE IN THE ACCOUNT, THE CHECK
WILL BE RETURNED OR THE ACH DEBIT WILL BE DISHONORED MARKED INSUFFICIENT
FUNDS. SINCE THE DOLLAR VALUE OF YOUR ACCOUNT IS CONSTANTLY CHANGING, THE
TOTAL VALUE OF YOUR ACCOUNT CANNOT BE DETERMINED IN ADVANCE AND THE ACCOUNT
CANNOT BE ENTIRELY REDEEMED BY CHECK OR ACH DEBIT. IF THE CHECK REDEMPTION
PRIVILEGE IS BEING REQUESTED FOR AN ACCOUNT IN THE NAME OF A CORPORATION OR
OTHER INSTITUTION, THE FOLLOWING ADDITIONAL DOCUMENTS MUST BE SUBMITTED WITH
THIS AUTHORIZATION.
CORPORATIONS--"CERTIFICATION OF CORPORATE RESOLUTION," INDICATING THE NAMES
AND TITLES OF OFFICERS AUTHORIZED TO WRITE CHECKS OR TO DRAW ACH DEBITS, MUST
BE SIGNED BY AN OFFICER OTHER THAN ONE EMPOWERED TO EXECUTE TRANSACTIONS, WITH
HIS SIGNATURE GUARANTEED AND THE CORPORATE SEAL AFFIXED.
PARTNERSHIPS--"CERTIFICATION OF PARTNERSHIP," NAMING THE PARTNERS AND THE
REQUIRED NUMBER THAT MAY ACT IN ACCORDANCE WITH THE TERMS OF THE PARTNERSHIP
AGREEMENT, IS TO BE EXECUTED BY A GENERAL PARTNER WITH HIS SIGNATURE
GUARANTEED.
TRUSTS--"CERTIFICATION OF TRUSTEES," NAMING THE TRUSTEES AND THE REQUIRED
NUMBER THAT MAY ACT IN ACCORDANCE WITH THE TERMS OF THE TRUST AGREEMENT, MUST
BE EXECUTED BY A CERTIFYING TRUSTEE WITH HIS SIGNATURE GUARANTEED AND UNDER
THE CORPORATE SEAL.
IF YOU ARE ADDING OR REINSTATING THE FEDERAL FUNDS REDEMPTION OPTION, THE
SIGNATURE(S) MUST BE GUARANTEED IN THE SPACE PROVIDED BELOW. YOUR SIGNATURE(S)
MUST BE GUARANTEED BY A COMMERCIAL BANK (NOT A SAVINGS BANK) IN NEW YORK CITY
OR ONE HAVING A NEW YORK CITY CORRESPONDENT, OR BY A MEMBER FIRM OF ANY
NATIONAL SECURITIES EXCHANGE. (A NOTARY PUBLIC'S SEAL DOES NOT CONSTITUTE A
SIGNATURE GUARANTEE.)
-------------------------------------------------------------------------------
8. SIGNATURES
UNDER PENALTY OF PERJURY, I CERTIFY (1) THAT THE NUMBER SET FORTH ABOVE IS MY
CORRECT SOCIAL SECURITY NUMBER OR TAXPAYER IDENTIFICATION NUMBER AND (2) THAT
I AM NOT SUBJECT TO BACKUP WITHHOLDING (AS DISCUSSED UNDER "ADDITIONAL
INFORMATION--TAXES") EITHER BECAUSE I HAVE NOT BEEN NOTIFIED THAT I AM SUBJECT
THERETO AS A RESULT OF A FAILURE TO REPORT ALL INTERESTS AND DIVIDENDS, OR THE
INTERNAL REVENUE SERVICE ("IRS") HAS NOTIFIED ME THAT I AM NO LONGER SUBJECT
THERETO. INSTRUCTIONS: YOU MUST STRIKE OUT THE LANGUAGE IN (2) ABOVE IF YOU
HAVE BEEN NOTIFIED THAT YOU ARE SUBJECT TO BACKUP WITHHOLDING DUE TO
UNDERREPORTING AND YOU HAVE NOT RECEIVED A NOTICE FROM THE IRS THAT BACKUP
WITHHOLDING HAS BEEN TERMINATED. BY YOUR SIGNATURE BELOW, YOU AUTHORIZE THE
FURNISHING OF THIS CERTIFICATION TO OTHER MERRILL LYNCH-SPONSORED MUTUAL
FUNDS.
BY THE EXECUTION OF THIS PURCHASE APPLICATION, THE INVESTOR REPRESENTS AND
WARRANTS THAT THE INVESTOR HAS FULL RIGHT, POWER AND AUTHORITY TO MAKE THE
INVESTMENT APPLIED FOR PURSUANT TO THIS APPLICATION, AND THE PERSON OR PERSONS
SIGNING ON BEHALF OF THE INVESTOR REPRESENT AND WARRANT THAT THEY ARE DULY
AUTHORIZED TO SIGN THIS APPLICATION AND TO PURCHASE OR REDEEM SHARES OF THE
FUND ON BEHALF OF THE INVESTOR.
THE INVESTOR HEREBY AFFIRMS THAT HE HAS RECEIVED A CURRENT FUND PROSPECTUS
AND APPOINTS FINANCIAL DATA SERVICES, INC. AS HIS AGENT TO RECEIVE DIVIDENDS
AND DISTRIBUTIONS FOR THEIR AUTOMATIC REINVESTMENT IN ADDITIONAL FUND SHARES.
----------------------------------- ------- ---------------------------------
SIGNATURE OF INVESTOR DATE SIGNATURE OF JOINT REGISTRANT, IF
ANY
NOTE: THE GUARANTOR MUST BE EITHER
A U.S. COMMERCIAL BANK (NOT A
SAVINGS BANK) OR A TRUST COMPANY
IN NEW YORK CITY OR ONE THAT IS A
CORRESPONDENT OF A NEW YORK CITY
COMMERCIAL BANK OR TRUST COMPANY,
OR A MEMBER FIRM OF A NATIONAL
SECURITIES EXCHANGE. (A NOTARY
PUBLIC'S SEAL DOES NOT CONSTITUTE
A SIGNATURE GUARANTEE.)
SIGNATURE(S) GUARANTEED: (FOR
THOSE ELECTING NO. 4)
BY: ____________________________
(AUTHORIZED SIGNATORY)
-------------------------------------------------------------------------------
9. OTHER INFORMATION
THIS APPLICATION ENABLES YOU TO TAKE ADVANTAGE OF ANY OR ALL OF THE OPTIONAL
SERVICES AVAILABLE TO MERRILL LYNCH U.S. TREASURY MONEY FUND SHAREHOLDERS AND
WILL UPDATE ANY OPTIONS IN EFFECT FOR YOUR ACCOUNT.
IF YOU SELECT THE CHECK REDEMPTION PRIVILEGE, A SUPPLY OF CHECKS IMPRINTED
WITH YOUR NAME AND SHAREHOLDER ACCOUNT NUMBER WILL BE SENT TO YOU IN
APPROXIMATELY 10 DAYS. YOU SHOULD BE CERTAIN THAT A SUFFICIENT NUMBER OF
SHARES ARE HELD BY FINANCIAL DATA SERVICES, INC. FOR YOUR ACCOUNT TO COVER THE
AMOUNT OF ANY CHECK DRAWN BY YOU. IF INSUFFICIENT SHARES ARE IN THE ACCOUNT,
THE CHECK WILL BE RETURNED OR THE ACH DEBIT WILL BE DISHONORED MARKED
INSUFFICIENT FUNDS. SINCE THE DOLLAR VALUE OF YOUR ACCOUNT IS CONSTANTLY
CHANGING, THE TOTAL VALUE OF YOUR ACCOUNT CANNOT BE DETERMINED IN ADVANCE AND
THE ACCOUNT CANNOT BE ENTIRELY REDEEMED BY CHECK OR ACH DEBIT. IF THE CHECK
REDEMPTION PRIVILEGE IS BEING REQUESTED FOR AN ACCOUNT IN THE NAME OF A
CORPORATION OR OTHER INSTITUTION, THE FOLLOWING ADDITIONAL DOCUMENTS MUST BE
SUBMITTED WITH THIS AUTHORIZATION.
CORPORATIONS--"CERTIFICATION OF CORPORATE RESOLUTION," INDICATING THE NAMES
AND TITLES OF OFFICERS AUTHORIZED TO WRITE CHECKS OR TO DRAW ACH DEBITS, MUST
BE SIGNED BY AN OFFICER OTHER THAN ONE EMPOWERED TO EXECUTE TRANSACTIONS, WITH
HIS SIGNATURE GUARANTEED AND WITH THE CORPORATE SEAL AFFIXED.
PARTNERSHIPS--"CERTIFICATION OF PARTNERSHIP," NAMING THE PARTNERS AND THE
REQUIRED NUMBER THAT MAY ACT IN ACCORDANCE WITH THE TERMS OF THE PARTNERSHIP
AGREEMENT, IS TO BE EXECUTED BY A GENERAL PARTNER WITH HIS SIGNATURE
GUARANTEED.
TRUSTS--"CERTIFICATION OF TRUSTEES," NAMING THE TRUSTEES AND THE REQUIRED
NUMBER THAT MAY ACT IN ACCORDANCE WITH THE TERMS OF THE TRUST AGREEMENT, MUST
BE EXECUTED BY A CERTIFYING TRUSTEE WITH HIS SIGNATURE GUARANTEED AND UNDER
THE CORPORATE SEAL.
IF YOU ARE ADDING OR REINSTATING THE FEDERAL FUNDS REDEMPTION OPTION, THE
SIGNATURE MUST BE GUARANTEED IN THE SPACE PROVIDED ABOVE. YOUR SIGNATURE(S)
MUST BE GUARANTEED BY A COMMERCIAL BANK (NOT A SAVINGS BANK) IN NEW YORK CITY
OR ONE HAVING A NEW YORK CITY CORRESPONDENT, OR BY A MEMBER FIRM OF ANY
NATIONAL SECURITIES EXCHANGE. (A NOTARY PUBLIC'S SEAL DOES NOT CONSTITUTE A
SIGNATURE GUARANTEE.)
19
<PAGE>
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20
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
21
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
22
<PAGE>
MANAGER
Merrill Lynch Asset Management
Administrative Offices:
800 Scudders Mill Road
Plainsboro, New Jersey
Mailing Address:
P.O. Box 9011
Princeton, New Jersey 08543-9011
DISTRIBUTOR
Merrill Lynch Funds Distributor, Inc.
Administrative Offices:
800 Scudders Mill Road
Plainsboro, New Jersey
Mailing Address:
P.O. Box 9011
Princeton, New Jersey 08543-9011
CUSTODIAN
The Bank of New York
90 Washington Street
12th Floor
New York, New York 10286
TRANSFER AGENT
Financial Data Services, Inc.
Administrative Offices:
Transfer Agency Money Market Operations
4800 Deer Lake Drive East
Jacksonville, Florida 32246
Mailing Address:
P.O. Box 45290
Jacksonville, Florida 32232-5290
INDEPENDENT AUDITORS
Deloitte & Touche LLP
117 Campus Drive
Princeton, New Jersey 08540
COUNSEL
Brown & Wood
One World Trade Center
New York, New York 10048-0557
<PAGE>
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMA-
TION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PRO-
SPECTUS, IN CONNECTION WITH THE OFFERS CONTAINED THEREIN, AND, IF GIVEN OR
MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAV-
ING BEEN AUTHORIZED BY THE FUND, THE MANAGER, OR THE DISTRIBUTOR. THIS PROSPEC-
TUS DOES NOT CONSTITUTE AN OFFERING IN ANY STATE IN WHICH SUCH OFFERING MAY NOT
LAWFULLY BE MADE.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Fee Table.................................................................. 2
Financial Highlights....................................................... 3
Yield Information.......................................................... 4
Investment Objectives and Policies......................................... 4
Management of the Fund..................................................... 6
Trustees................................................................. 6
Management and Advisory Arrangements..................................... 6
Transfer Agency Services................................................. 7
Purchase of Shares......................................................... 7
Methods of Payment....................................................... 8
Distribution Plan........................................................ 9
Redemption of Shares....................................................... 9
Methods of Redemption.................................................... 10
Shareholder Services....................................................... 12
Portfolio Transactions..................................................... 13
Additional Information..................................................... 13
Dividends................................................................ 13
Determination of Net Asset Value......................................... 13
Taxes.................................................................... 14
Organization of the Fund................................................. 15
Shareholder Inquiries.................................................... 16
Shareholder Reports...................................................... 16
Purchase Application....................................................... 17
</TABLE>
Code #11624-0395
LOGO MERRILL LYNCH
Merrill Lynch
U.S. Treasury Money Fund
[ART]
Merrill Lynch U.S. Treasury
Money Fund is organized
as a Massachusetts business
trust. It is not a bank nor
does it offer fiduciary or
trust services. Shares of the
Fund are not equivalent to
a bank account. A share-
holder's investment in the
Fund is not insured by any
Government agency.
PROSPECTUS
March 27, 1995
Distributor:
Merrill Lynch
Funds Distributor, Inc.
This Prospectus should be retained for future reference.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
MERRILL LYNCH U.S. TREASURY MONEY FUND
P.O. BOX 9011, PRINCETON, NEW JERSEY 08543-9011 . PHONE NO. (609) 282-2800
----------------
Merrill Lynch U.S. Treasury Money Fund (the "Fund") is a no-load,
diversified, open-end investment company seeking preservation of capital,
liquidity and current income through investment exclusively in a diversified
portfolio of short-term marketable securities which are direct obligations of
the U.S. Treasury. For purposes of its investment policies, the Fund defines
short-term marketable securities which are direct obligations of the U.S.
Treasury as any U.S. Treasury obligations having a maturity of no more than 762
days (25 months). There can be no assurance that the investment objectives of
the Fund will be realized. The Fund pays Merrill Lynch, Pierce, Fenner & Smith
Incorporated a distribution fee for providing certain services in connection
with the distribution of Fund shares. See "Purchase of Shares".
----------------
This Statement of Additional Information of the Fund is not a prospectus and
should be read in conjunction with the prospectus of the Fund dated March 27,
1995 (the "Prospectus"), which has been filed with the Securities and Exchange
Commission and can be obtained without charge by calling or writing to the Fund
at the above telephone number or address. This Statement of Additional
Information has been incorporated by reference into the Prospectus. Capitalized
terms used but not defined herein have the same meanings as in the Prospectus.
----------------
MERRILL LYNCH ASSET MANAGEMENT--MANAGER
MERRILL LYNCH FUNDS DISTRIBUTOR, INC.--DISTRIBUTOR
----------------
The date of this Statement of Additional Information is March 27, 1995.
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
The Fund is a no-load money market fund. Reference is made to "Investment
Objectives and Policies" in the Prospectus of the Fund for a discussion of the
investment objectives and policies of the Fund.
The Fund has adopted the following restrictions and policies relating to the
investment of its assets and its activities, which are fundamental policies and
may not be changed without the approval of the holders of a majority of the
Fund's outstanding voting securities (which for this purpose means the lesser
of (i) 67% of the shares represented at a meeting at which more than 50% of the
outstanding shares are represented or (ii) more than 50% of the outstanding
shares). The Fund may not: (1) purchase any securities other than direct
obligations of the U.S. Treasury having maturities no more than 762 days (25
months); (2) act as an underwriter of securities issued by other persons; (3)
purchase any securities on margin, except for use of short-term credit
necessary for clearance of purchases and sales of portfolio securities; (4)
make short sales of securities or maintain a short position or write, purchase
or sell puts, calls, straddles, spreads or combinations thereof; (5) make loans
to other persons, provided that the Fund may purchase short-term marketable
securities which are direct obligations of the U.S. Treasury; (6) borrow
amounts in excess of 20% of its total assets, taken at market value (including
the amount borrowed), and then only from banks as a temporary measure for
extraordinary or emergency purposes [Usually only "leveraged" investment
companies may borrow in excess of 5% of their assets; however, the Fund will
not borrow to increase income but only to meet redemption requests which might
otherwise require untimely dispositions of portfolio securities. The Fund will
not purchase securities while borrowings are outstanding. Interest paid on such
borrowings will reduce net income.]; and (7) mortgage, pledge, hypothecate or
in any manner transfer as security for indebtedness any securities owned or
held by the Fund except as may be necessary in connection with borrowings
mentioned in (6) above, and then such mortgaging, pledging or hypothecating may
not exceed 10% of the Fund's net assets, taken at market value.
MANAGEMENT OF THE FUND
TRUSTEES AND OFFICERS
The Trustees and executive officers of the Fund, their ages and their
principal occupations for at least the last five years are set forth below.
Unless otherwise noted, the address of each Trustee and executive officer is
Merrill Lynch Asset Management, P.O. Box 9011, Princeton, New Jersey 08543-
9011.
Arthur Zeikel (62)--President and Trustee (1)(2)--President of Merrill Lynch
Asset Management, L.P. (the "Manager" or "MLAM", which term as used herein
includes its corporate predecessors) since 1977; President of Fund Asset
Management, L.P. ("FAM", which term as used herein includes its corporate
predecessors), since 1977; President and Director of Princeton Services, Inc.
("Princeton Services") since 1993; Executive Vice President of Merrill Lynch,
Pierce, Fenner & Smith Incorporated ("Merrill Lynch") since 1990 and a Senior
Vice President thereof from 1985 to 1990; Executive Vice President of Merrill
Lynch & Co., Inc. ("ML&Co.") since 1990; Director of Merrill Lynch Funds
Distributor, Inc. (the "Distributor").
Donald Cecil (68)--Trustee (2)--1114 Avenue of the Americas, New York, New
York 10036. Special Limited Partner of Cumberland Partners (an investment
partnership) since 1982; Member of Institute of Chartered Financial Analysts;
Member and Chairman of Westchester County (N.Y.) Board of Transportation.
2
<PAGE>
M. Colyer Crum (62)--Trustee (2)--Soldiers Field Road, Boston, Massachusetts
02163. James R. Williston Professor of Investment Management, Harvard Business
School, since 1971; Director of Cambridge Bancorp, Copley Properties, Inc. and
Sun Life Assurance Company of Canada.
Edward H. Meyer (68)--Trustee (2)--777 Third Avenue, New York, New York
10017. President of Grey Advertising, Inc. since 1968, Chief Executive Officer
since 1970 and Chairman of the Board of Directors since 1972; Director of The
May Department Stores Company, Bowne & Co. Inc. (financial printers), Ethan
Allen Interiors, Inc. and Harman International Industries, Inc.
Jack B. Sunderland (66)--Trustee (2)--P.O. Box 1177, Scarsdale, New York
10583. President and Director of American Independent Oil Company, Inc. (an
energy company) since 1987; Chairman of Murexco Petroleum, Inc. (an energy
company) from 1981 to 1988; President, Director and Chief Executive Officer of
Coroil, Inc. (an energy company) from 1979 to 1985; Member of Council on
Foreign Relations since 1971.
J. Thomas Touchton (56)--Trustee (2)--Suite 3405, One Tampa City Center,
Tampa, Florida 33602. Managing Partner of The Witt-Touchton Company and its
predecessor The Witt Co. (a private investment partnership) since 1972; Trustee
Emeritus of Washington and Lee University; Director of TECO Energy, Inc. (an
electric utility holding company).
Terry K. Glenn (54)--Executive Vice President (1)(2)--Executive Vice
President of the Manager and FAM since 1983; Executive Vice President and
Director of Princeton Services since 1993; President of the Distributor since
1986 and Director thereof since 1991; President of Princeton Administrators,
L.P. since 1988.
Joseph T. Monagle, Jr. (46)--Executive Vice President (1)(2)--Senior Vice
President of the Manager and FAM since 1990; Vice President of the Manager from
1978 to 1990; Senior Vice President of Princeton Services since 1993.
Linda B. Costanzo (44)--Vice President (1)(2)--Vice President of the Manager
since 1989; Assistant Vice President of the Manager from 1988 to 1989; employee
of the Manager from 1986 to 1988.
Alex V. Bouzakis (38)--Vice President (1)(2)--Vice President of the Manager
since 1985.
John Ng (41)--Vice President (1)(2)--Vice President of the Manager since
1985.
Donald C. Burke (34)--Vice President (1)(2)--Vice President and Director of
Taxation of the Manager since 1990; employee of Deloitte & Touche LLP from 1982
to 1990.
Gerald M. Richard (45)--Treasurer (1)(2)--Senior Vice President and Treasurer
of the Manager and FAM since 1984; Senior Vice President and Treasurer of
Princeton Services since 1993; Vice President of the Distributor since 1981 and
Treasurer since 1984.
Mark B. Goldfus (48)--Secretary (1)(2)--Vice President of the Manager and FAM
since 1985.
--------
(1) Interested person, as defined in the Investment Company Act of 1940, as
amended (the "Investment Company Act"), of the Fund.
(2) Such Trustee or officer is a director or officer of certain other
investment companies for which the Manager or FAM acts as investment
adviser.
At February 28, 1995 the Trustees and officers of the Fund as a group (14
persons) owned an aggregate of less than 1% of the outstanding shares of
beneficial interest of the Fund. At such date, Mr. Zeikel and the other
officers of the Fund owned an aggregate of less than 1% of the outstanding
common stock of ML&Co.
3
<PAGE>
COMPENSATION OF TRUSTEES
Pursuant to the terms of its management agreement (the "Management
Agreement") with the Fund, the Manager pays all compensation of officers and
employees of the Fund as well as the fees of all Trustees of the Fund who are
affiliated persons of ML&Co. or its subsidiaries. The Fund pays each
unaffiliated Trustee an annual fee of $4,000 plus a fee of $1,000 for each
meeting attended and pays all Trustees' actual out-of-pocket expenses relating
to attendance at meetings. Additionally, the Fund has established an Audit
Committee of the Board of Trustees of which all of the unaffiliated Trustees
are members. Each member of such committee receives an annual fee of $3,500 and
the chairman of such committee receives an annual fee of $1,500. The total
Trustees' fees and expenses aggregated $59,347 for the fiscal year ended
November 30, 1994.
The following table sets forth for the fiscal year ended November 30, 1994,
compensation paid by the Fund to the non-interested Trustees and for the
calendar year ended December 31, 1994, the aggregate compensation paid by all
investment companies advised by MLAM and its affiliate, FAM ("MLAM/FAM Advised
Funds"), to the non-interested Trustees.
<TABLE>
<CAPTION>
AGGREGATE PENSION OR RETIREMENT TOTAL COMPENSATION FROM
NAME OF COMPENSATION BENEFITS ACCRUED AS PART FUND AND MLAM/FAM
TRUSTEE FROM FUND OF FUND EXPENSES ADVISED FUNDS PAID TO TRUSTEES
-------- ------------ ------------------------ ------------------------------
<S> <C> <C> <C>
Donald Cecil(/1/)....... $13,000 None $276,350
M. Colyer Crum(/1/)..... $11,500 None $126,600
Edward H. Meyer(/1/).... $11,500 None $251,600
Jack B. Sunderland(/1/). $11,500 None $134,600
J. Thomas Touchton(/1/). $11,500 None $134,600
</TABLE>
--------
(1) The Trustees serve on the boards of other MLAM/FAM Advised Funds as
follows: Mr. Cecil (34 funds), Mr. Crum (17 funds), Mr. Meyer (34 funds),
Mr. Sunderland (18 funds) and Mr. Touchton (18 funds).
MANAGEMENT AND ADVISORY ARRANGEMENTS
Reference is made to "Management of the Fund--Management and Advisory
Arrangements" in the Prospectus of the Fund for certain information concerning
the management arrangements of the Fund.
Subject to the direction of the Board of Trustees, the Manager is responsible
for the actual management of the Fund's portfolio and constantly reviews the
Fund's holdings in light of its own research analysis and that from other
relevant sources. The responsibility for making decisions to buy, sell or hold
a particular security rests with the Manager. The Manager performs certain of
the other administrative services and provides all the office space,
facilities, equipment and necessary personnel for portfolio management of the
Fund.
The Manager has access to the expertise of its affiliate, Merrill Lynch
Government Securities, Inc. ("GSI"), which is a wholly-owned subsidiary of
ML&Co. In terms of dollar volume of trading, GSI is one of the largest dealers
in U.S. Government securities and Government agency securities, acting both as
a primary dealer and a secondary market trader. GSI is one of the reporting
dealers in U.S. Government securities who report their daily position and
activity to the Federal Reserve Bank of New York. In addition, the total
securities and economic research facilities of Merrill Lynch are available to
the Manager.
4
<PAGE>
Securities held by the Fund may also be held by, or be appropriate
investments for, other funds or clients (collectively referred to as "clients")
for which the Manager, or its affiliate, FAM, acts as an investment adviser.
Because of different investment objectives or other factors, a particular
security may be bought for one or more clients when one or more clients are
selling the security. If purchases or sales of securities for the Fund or other
clients arise for consideration at or about the same time, transactions in such
securities will be made, insofar as feasible, for the respective clients in a
manner deemed equitable to all by the Manager or FAM. To the extent that
transactions on behalf of more than one client of the Manager or FAM during the
same period may increase the demand for securities being purchased or the
supply of securities being sold, there may be an adverse effect on price.
As compensation for its services to the Fund, the Manager presently receives
a fee from the Fund at the end of each month at the annual rate of 0.50% of the
average daily net assets of the Fund. For the fiscal years ended November 30,
1992, 1993 and 1994, the total management fees payable by the Fund to the
Manager aggregated $363,986, $379,689 and $337,407, respectively. The Manager
voluntarily waived its entire fee for the year ended November 30, 1992, waived
$327,310 of its fee for the fiscal year ended November 30, 1993 and waived
$236,185 of its fee for the fiscal year ended November 30, 1994. This voluntary
waiver may be withdrawn by the Manager at any time and without prior notice.
The State of California imposes limitations on the expenses of the Fund. This
annual expense limitation applicable to the Fund requires that the Manager
reimburse the Fund in any amount necessary to prevent such operating expenses
(excluding interest, taxes, distribution fees, brokerage fees and commissions
and extraordinary charges such as litigation costs) of the Fund from exceeding
in any fiscal year 2.5% of the Fund's first $30 million of average net assets,
2.0% of the next $70 million of average net assets and 1.5% of the remaining
average net assets. No fee payment will be made to the Manager during any year
which will cause such expenses to exceed the pro rata expense limitation at the
time of such payment. At the date of this Statement of Additional Information,
the Manager has not been required to make any reimbursement to the Fund
pursuant to limitations on operating expenses.
The Management Agreement obligates the Manager to provide investment advisory
services, to furnish administrative services, office space and facilities for
management of the affairs of the Fund, to pay all compensation of and furnish
office space for officers and employees of the Fund, as well as the fees of all
Trustees of the Fund who are affiliated persons of ML&Co. or any of its
subsidiaries. Except for certain expenses incurred by the Distributor (see
"Purchase and Redemption of Shares"), the Fund pays all other expenses incurred
in its operations, including, among other things, taxes, expenses for legal and
auditing services, costs of printing proxies, reports, prospectuses and
statements of additional information sent to current shareholders, charges of
the Custodian and Transfer Agent, expenses of redemption of shares, Securities
and Exchange Commission fees, expenses of registering the shares under Federal
and state securities laws, fees and expenses of unaffiliated Trustees,
accounting and pricing costs (including the daily calculation of net asset
value), insurance, interest, brokerage costs, litigation and other
extraordinary or non-recurring expenses and other expenses properly payable by
the Fund. Accounting services are provided by the Manager and the Fund
reimburses the Manager for its costs in connection with such services provided
to the Fund. For the fiscal year ended November 30, 1994, the Fund paid $36,025
to the Manager in connection with accounting services.
For information as to the distribution fee to be paid by the Fund to Merrill
Lynch pursuant to the Distribution Agreement, see "Purchase and Redemption of
Shares".
5
<PAGE>
Duration and Termination. Unless earlier terminated as described below, the
Management Agreement will continue in effect from year to year if approved
annually (a) by the Trustees of the Fund or by a majority of the outstanding
voting shares of the Fund and (b) by a majority of the Trustees who are not
parties to such contract or interested persons (as defined in the Investment
Company Act) of any such party. Such contract is not assignable and may be
terminated without penalty on 60 days' written notice at the option of either
party thereto or by the vote of the shareholders of the Fund.
PURCHASE OF SHARES
Reference is made to "Purchase of Shares" in the Prospectus of the Fund for
certain information as to the purchase of Fund shares.
The Fund is offering its shares without sales charge at a public offering
price equal to the net asset value next determined after a purchase order
becomes effective. It is anticipated that the net asset value will remain
constant at $1.00 per share, although this cannot be assured.
The Distributor acts as the distributor in the continuous offering of the
Fund's shares. Shares may be purchased directly from the Distributor or from
other securities dealers, including Merrill Lynch, with whom the Distributor
has entered into a selected dealer agreement. Securities dealers may charge
investors a fee in connection with such transactions. Merrill Lynch has
informed the Fund that it does not charge such a fee.
The Fund's distribution agreement with the Distributor is renewable annually
and may be terminated on 60 days' written notice by either party. Under such
agreement, after the prospectuses, statements of additional information and
periodic reports have been prepared and set in type, the Distributor will pay
for the printing and distribution of copies thereof used in connection with the
offering to dealers and investors. The Distributor also will pay for other
supplementary sales literature.
It is the Fund's policy to be as fully invested as reasonably practicable at
all times to maximize the yield on the Fund's portfolio. The money markets in
which the Fund will purchase and sell portfolio securities normally require
immediate settlement of transactions in Federal funds. Federal funds are a
commercial bank's deposits in a Federal Reserve Bank and can be transferred
from one member bank's account to that of another member bank on the same day
and thus are considered to be immediately available funds. Orders for the
purchase of Fund shares shall become effective on the day Federal funds become
available to the Fund and the shares being purchased will be issued at the net
asset value per share next determined. If Federal funds are available to the
Fund prior to 4:00 P.M., New York time, on any business day, the order will be
effective on that day. Shares purchased will begin accruing dividends on the
day following the date of purchase.
DISTRIBUTION PLAN
The Fund has adopted a Shareholder Servicing Plan and Agreement (the "Plan")
in compliance with Rule 12b-1 under the Investment Company Act pursuant to
which the Fund is authorized to pay Merrill Lynch a fee at the end of each
month at the annual rate of 0.125% of average daily net assets of Fund accounts
maintained through Merrill Lynch. The Plan reimburses Merrill Lynch only for
actual expenses incurred in the fiscal year in which the fees are paid. The fee
is principally to provide compensation to Merrill Lynch financial consultants
and other Merrill Lynch personnel for providing direct personal services to
6
<PAGE>
shareholders of the Fund. The distribution fee is not compensation for the
administrative and operational services rendered to shareholders by Merrill
Lynch which are covered under the Management Agreement (see "Management of the
Fund--Management and Advisory Arrangements") between the Fund and the Manager.
The Trustees believe that the Fund's expenditures under the Plan benefit the
Fund and its shareholders by providing better shareholder services and by
facilitating the sale and distribution of Fund shares. Under the Plan, Merrill
Lynch, in its sole discretion, may expend out of the fee an amount not
exceeding 0.01% of such average daily net asset value as reimbursement for
expenditures incurred in advertising activities promoting the sale, marketing
and distribution of the shares of the Fund. For the fiscal year ended November
30, 1994, $80,962 was paid to Merrill Lynch pursuant to the Plan (based on
average net assets subject to the Plan of $67.5 million). At February 28, 1995,
the net assets of the Fund subject to the Plan aggregated approximately $63.2
million. At this asset level, the annual fee payable to Merrill Lynch pursuant
to the Plan would aggregate approximately $79,031. All of such amounts were
allocated to Merrill Lynch financial consultants, other Merrill Lynch personnel
and related administrative costs.
Among other things, the Plan provides that Merrill Lynch shall provide and
the Trustees of the Fund shall review quarterly reports of the distribution
expenditures made by Merrill Lynch pursuant to the Plan. In their consideration
of the Plan, the Trustees must consider all factors they deem relevant,
including information regarding the benefits of the Plan to the Fund and its
shareholders. The Plan further provides that, so long as the Plan remains in
effect, the selection and nomination of Trustees of the Fund who are not
"interested persons" of the Fund as defined in the Investment Company Act
("Independent Trustees") shall be committed to the discretion of the
Independent Trustees then in office. The Plan can be terminated at any time,
without penalty, by the vote of a majority of the Independent Trustees or by
the vote of the holders of a majority of the outstanding voting securities of
the Fund. Finally, the Plan cannot be amended to increase materially the amount
to be spent by the Fund thereunder without shareholder approval, and all
material amendments are required to be approved by vote of the Trustees of the
Fund, including a majority of the Independent Trustees, cast in person at a
meeting called for that purpose.
REDEMPTION OF SHARES
Reference is made to "Redemption of Shares" in the Prospectus for certain
information as to the repurchase and redemption of Fund shares.
The right to receive payment with respect to any redemption of Fund shares
may be suspended by the Fund for a period of up to seven days. Suspensions of
more than seven days may not be made except (1) for any period (a) during which
the New York Stock Exchange is closed other than customary weekend and holiday
closings or (b) during which trading on the New York Stock Exchange is
restricted; (2) for any period during which an emergency exists as a result of
which (a) disposal by the Fund of portfolio securities is not reasonably
practicable or (b) it is not reasonably practicable for the Fund fairly to
determine the value of its net assets; or (3) for such other periods as the
Securities and Exchange Commission may by order permit for the protection of
security holders of the Fund. The Commission shall by rules and regulations
determine the conditions under which (i) trading shall be deemed to be
restricted and (ii) an emergency shall be deemed to exist within the meaning of
clause (2) above.
The total value of the shareholder's investment in the Fund at the time of
redemption may be more or less than his cost, depending on the market value of
the securities held by the Fund at such time and income earned.
7
<PAGE>
PURCHASE AND REDEMPTION OF SHARES THROUGH MERRILL LYNCH RETIREMENT PLANS
Merrill Lynch offers four types of self-directed retirement plans for which
it acts as passive custodian (the "Retirement Plans"). These plans are an
individual retirement account ("IRA"), The Merrill Lynch Tax-Deferred BasicTM
Retirement Plan, designed for sole proprietors, partnerships and small
corporations (the "Basic Plan"), a simplified employee pension plan ("SEP") and
a special IRA available through payroll deductions to individuals through their
employers, labor unions and other employee associations that have chosen to
make such IRAs available on a voluntary basis through the Merrill Lynch
BlueprintSM Program. Information concerning the establishment and maintenance
of Retirement Plans and investments by Retirement Plan accounts is contained in
the Retirement Plan documents available from Merrill Lynch.
PURCHASE BY RETIREMENT PLANS
Special purchase procedures apply in the case of the Retirement Plans. The
minimum initial purchase for participants in Retirement Plans is $100, and the
minimum subsequent purchase is $1. In addition, participants in the Retirement
Plans may elect to have cash balances in their Retirement Plan account
automatically invested in the Fund.
Cash balances of participants who elect to have such funds automatically
invested in the Fund will be invested as follows. Cash balances arising from
the sale of securities held in the Retirement Plan account which do not settle
on the day of the transaction (such as most common and preferred stock
transactions) become available to the Fund and will be invested in shares of
the Fund on the business day following the day that proceeds with respect
thereto are received in the Retirement Plan account. Proceeds giving rise to
cash balances from the sale of securities held in the Retirement Plan account
settling on a same day basis and from principal repayments on debt securities
held in the account become available to the Fund and will be invested in shares
of the Fund on the next business day following receipt. Cash balances arising
from dividends or interest payments on securities held in the Retirement Plan
account or from a contribution to the Retirement Plan are invested in shares of
the Fund on the business day following the date the payment is received in the
Retirement Plan account. Cash balances of less than $1.00 will not be invested
and no return will be earned.
A participant in the IRA, Basic or SEP Retirement Plans who has not elected
to have cash balances automatically invested in shares of the Fund may enter a
purchase order through his Merrill Lynch financial consultant.
REDEMPTIONS BY RETIREMENT PLANS
Distributions from Retirement Plans to a participant prior to the time the
participant reaches age 59 1/2 may subject the participant to penalty taxes.
There are, however, no adverse tax consequences resulting from redemptions of
shares of the Fund where the redemption proceeds remain in the Retirement Plan
account or are otherwise invested therein.
The Fund has instituted an automatic redemption procedure for participants in
the Retirement Plans who have elected to have cash balances in their accounts
automatically invested in shares of the Fund. In the case of such participants,
unless directed otherwise, Merrill Lynch will redeem a sufficient number of
shares of the Fund to purchase other securities (such as common stocks) that
the participant has selected for investment in his Retirement Plan account.
8
<PAGE>
Any shareholder may redeem shares of the Fund by submitting a written notice
of redemption to Merrill Lynch. Participants in IRA, Basic and SEP Retirement
Plans should contact their Merrill Lynch financial consultant to effect such
redemptions. Participants in the IRA program through the Merrill Lynch
BlueprintSM Program should contact Merrill Lynch at the toll-free number
furnished to them to effect such redemptions. Redemption requests should not be
sent to the Fund. If inadvertently sent to the Fund, they will be forwarded to
Merrill Lynch. The notice must bear the signature of the person in whose name
the Retirement Plan is maintained, signed exactly as his name appears on his
Retirement Plan adoption agreement.
CONFIRMATIONS
All purchases and redemptions of Fund shares and dividend reinvestments will
be confirmed to participants in the IRA, Basic and SEP Retirement Plans
(rounded to the nearest share) in the statement which is sent quarterly to all
participants in IRA Retirement Plans and monthly to all participants in Basic
and SEP Retirement Plans.
Participants in the IRA program through the Merrill Lynch BlueprintSM Program
will receive quarterly statements reflecting all purchases, redemptions and
dividend reinvestments of Fund shares, and, at least monthly, will receive an
individual confirmation with respect to each redemption of Fund shares and each
purchase of such shares other than purchases which are made automatically
through payroll deductions.
PORTFOLIO TRANSACTIONS
The Fund has no obligation to deal with any dealer or group of dealers in the
execution of transactions in portfolio securities. Subject to policy
established by the Board of Trustees of the Fund, the Manager is primarily
responsible for the Fund's portfolio decisions and the placing of the Fund's
portfolio transactions. In placing orders, it is the policy of the Fund to
obtain the best net results taking into account such factors as price
(including the applicable dealer spread) of the securities offered, the size,
type and difficulty of transaction involved, the firm's general execution and
operational facilities and the firm's risk in positioning the securities
involved. While the Manager generally seeks reasonably competitive spreads or
commissions, the Fund will not necessarily be paying the lowest spread or
commission available. The Fund's policy of investing in securities with short
maturities will result in high portfolio turnover.
The securities in which the Fund invests are traded in the over-the-counter
market. Where possible, the Fund will deal directly with the dealers who make a
market in the securities involved except in those circumstances where better
prices and execution are available elsewhere. Such dealers usually are acting
as principal for their own accounts. On occasion, securities may be purchased
directly from the U.S. Treasury. The Treasury securities in which the Fund
invests are generally traded on a net basis and do not normally involve either
brokerage commissions or transfer taxes. The cost of executing portfolio
securities transactions of the Fund primarily will consist of dealer spreads.
Under the Investment Company Act, persons affiliated with the Fund are
prohibited from dealing with the Fund as a principal in the purchase and sale
of securities unless an exemptive order allowing such transactions is obtained
from the Securities and Exchange Commission. Since over-the-counter
transactions are usually principal transactions, affiliated persons of the
Fund, including Merrill Lynch Government Securities Inc. ("GSI") and Merrill
Lynch, may not serve as the
9
<PAGE>
Fund's dealer in connection with such transactions, except pursuant to the
exemptive order described below. However, an affiliated person of the Fund may
serve as its broker in over-the-counter transactions conducted on an agency
basis.
The Securities and Exchange Commission has issued an exemptive order
permitting the Fund to conduct principal transactions with GSI in United States
Government securities. This order contains a number of conditions, including
conditions designed to insure that the price to the Fund from GSI is equal to
or better than that available from other sources. GSI has informed the Fund
that it will in no way, at any time, attempt to influence or control the
activities of the Fund or the Manager in placing such principal transactions.
The exemptive order allows GSI or its subsidiary, Merrill Lynch Money Markets
Inc., to receive a dealer spread on any transaction with the Fund no greater
than its customary dealer spread from transactions of the type involved.
Generally such spreads do not exceed 0.25% of the principal amount of the
securities involved. During the fiscal year ended November 30, 1993, the Fund
engaged in 10 such transactions aggregating approximately $7.2 million. During
the fiscal year ended November 30, 1994 the Fund engaged in four such
transactions aggregating approximately $32.7 million.
The Trustees of the Fund have considered the possibilities of recapturing for
the benefit of the Fund expenses of possible portfolio transactions, such as
dealer spreads, by conducting such portfolio transactions through affiliated
entities, including GSI and Merrill Lynch. For example, dealer spreads received
by GSI or its subsidiary on transactions conducted pursuant to the permissive
order described above could be offset against the management fee payable by the
Fund to the Manager. After considering all factors deemed relevant, the
Trustees made a determination not to seek such recapture. The Trustees will
reconsider this matter from time to time. The Manager has arranged for the
Fund's custodian to receive any tender offer solicitation fees on behalf of the
Fund payable with respect to portfolio securities of the Fund.
The Fund does not expect to use one particular dealer, but, subject to
obtaining the best price and execution, dealers who provide supplemental
investment research (such as economic data and market forecasts) to the Manager
may receive orders for transactions by the Fund. Information so received will
be in addition to and not in lieu of the services required to be performed by
the Manager under the Management Agreement, and the expenses of the Manager
will not necessarily be reduced as a result of the receipt of such supplemental
information.
DETERMINATION OF NET ASSET VALUE
The net asset value of the Fund is determined by the Manager once daily,
immediately after the daily declaration of dividends, on each day during which
the New York Stock Exchange or New York banks are open for business. Such
determination is made as of the close of business on the New York Stock
Exchange (generally 4:00 P.M., New York time) or, on days when the New York
Stock Exchange is closed but New York banks are open, at 4:00 P.M., New York
time. As a result of this procedure, the net asset value is determined each day
except for days on which both the New York Stock Exchange and New York banks
are closed. Both the New York Stock Exchange and New York banks are closed for
New Year's Day, Presidents' Day, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. The net asset value per share is computed
under the "penny rounding" method by adding the value of all securities and
other assets in the portfolio, deducting the portfolio's liabilities, dividing
by the number of shares outstanding and rounding the result to the nearest
whole cent.
10
<PAGE>
The Fund values its portfolio securities with remaining maturities of 60 days
or less on an amortized cost basis and values its securities with remaining
maturities of greater than 60 days for which market quotations are readily
available at market value. Other securities held by the Fund are valued at
their fair value as determined in good faith by or under the direction of the
Board of Trustees.
In accordance with the Securities and Exchange Commission rule applicable to
the valuation of its portfolio securities, the Fund will maintain a dollar-
weighted average portfolio maturity of 90 days or less and will purchase
instruments having remaining maturities of not more than 397 days (13 months),
with the exception of U.S. Government and U.S. Government agency securities,
which may have remaining maturities of up to 762 days (25 months). The Fund
will invest only in securities determined by the Trustees to be of high quality
with minimal credit risks. In addition, the Trustees have established
procedures designed to stabilize, to the extent reasonably possible, the Fund's
price per share as computed for the purpose of sales and redemptions at $1.00.
Deviations of more than an insignificant amount between the net asset value
calculated using market quotations and that calculated on a "penny rounded"
basis will be reported to the Trustees by the Manager. In the event the
Trustees determine that a deviation exists which may result in material
dilution or other unfair results to investors or existing shareholders, the
Fund will take such corrective action as it regards as necessary and
appropriate, including the reduction of the number of outstanding shares of the
Fund by having each shareholder proportionately contribute shares to the Fund's
capital; the sale of portfolio instruments prior to maturity to realize capital
gains or losses or to shorten average portfolio maturity; withholding
dividends; or establishing a net asset value per share solely by using
available market quotations. If the number of outstanding shares is reduced in
order to maintain a constant penny-rounded net asset value of $1.00 per share,
the shareholders will contribute proportionately to the Fund's capital. Each
shareholder will be deemed to have agreed to such contribution by such
shareholder's investment in the Fund.
Since the net income of the Fund (including realized gains and losses on the
portfolio securities) is determined and declared as a dividend immediately
prior to each time the net asset value of the Fund is determined, the net asset
value per share of the Fund normally remains at $1.00 per share immediately
after each such dividend declaration. Any increase in the value of a
shareholder's investment in the Fund, representing the reinvestment of dividend
income, is reflected by an increase in the number of shares of the Fund in the
account and any decrease in the value of a shareholder's investment may be
reflected by a decrease in the number of shares in the account. See "Taxes".
YIELD INFORMATION
The Fund normally computes its annualized yield by determining the net income
for a seven-day base period for a hypothetical pre-existing account having a
balance of one share at the beginning of the base period, dividing the net
income by the net asset value of the account at the beginning of the base
period to obtain the base period return, multiplying the result by 365 and then
dividing by seven. Under this calculation, the yield on the Fund shares
reflects realized gains and losses on portfolio securities. In accordance with
regulations adopted by the Securities and Exchange Commission, the Fund is
required to disclose its annualized yield for certain seven-day periods in a
standardized manner which does not take into consideration any realized or
unrealized gains or losses on portfolio securities. The Securities and Exchange
Commission also permits the calculation of a standardized effective or
compounded yield. This is computed
11
<PAGE>
by compounding the unannualized base period return which is done by adding one
to the base period return, raising the sum to a power equal to 365 divided by
seven and subtracting one from the result. This compounded yield calculation
also reflects realized gains or losses on portfolio securities.
The yield on the Fund's shares normally will fluctuate on a daily basis.
Therefore, the yield for any given past period is not an indication or
representation by the Fund of future yields or rates of return on its shares.
The yield is affected by such factors as changes in interest rates on Treasury
securities, average portfolio maturity, the types of portfolio securities held
and operating expenses. The yield on Fund shares for various reasons may not be
comparable to the yield on shares of other money market funds or other
investments.
SHAREHOLDER SERVICES
The Fund offers a number of shareholder services described below designed to
facilitate investment in its shares. Full details as to each of such services
and copies of the various plans described below can be obtained from the Fund,
the Distributor or Merrill Lynch.
INVESTMENT ACCOUNT
Every shareholder whose account is maintained at the Transfer Agent has an
Investment Account and will receive from the Transfer Agent a monthly report
showing the activity in his account for the month. A shareholder may make
additions to his Investment Account at any time by purchasing shares at the
applicable public offering price either through his securities dealer, by wire
or by mail directly to the Transfer Agent, acting as agent for his dealer. A
shareholder may ascertain the number of shares in his Investment Account by
telephoning the Transfer Agent at (800) 221-7210 toll-free. The Transfer Agent
will furnish this information only after the shareholder has specified the
name, address, account number and social security number of the registered
owner or owners.
In the interest of economy and convenience and because of the operating
procedures of the Fund, certificates representing the Fund's shares will not be
issued physically. Shares are maintained by the Fund on its register maintained
by the Transfer Agent, and the holders thereof will have the same rights and
ownership with respect to such shares as if certificates had been issued.
AUTOMATIC INVESTMENT PLAN
The Fund offers an Automatic Investment Plan in connection with accounts
maintained at the Transfer Agent whereby the Transfer Agent is authorized
through preauthorized checks of $50 or more to charge the regular bank account
of the shareholder on a regular basis to provide systematic additions to the
Investment Account of such shareholder. See the Purchase Application in the
Prospectus. A shareholder's Automatic Investment Plan may be terminated at any
time without charge or penalty by the shareholder, the Fund, the Transfer Agent
or the Distributor.
ACCRUED MONTHLY PAYOUT PLAN
The dividends of the Fund are reinvested automatically in additional shares.
Shareholders with accounts maintained at the Transfer Agent desiring cash
payments may enroll in the Accrued Monthly Payout Plan,
12
<PAGE>
under which shares equal in number to shares credited through the automatic
reinvestment of dividends and distributions during each month are redeemed at
net asset value on the last Friday of such month in order to meet the monthly
distribution. Investors may open an Accrued Monthly Payout Plan by completing
the appropriate portion of the Purchase Application in the Prospectus. A
shareholder's Accrued Monthly Payout Plan may be terminated at any time without
charge or penalty by the shareholder, the Fund, the Transfer Agent or the
Distributor.
SYSTEMATIC WITHDRAWAL PLANS
A shareholder may elect to make systematic withdrawals from an Investment
Account on either a monthly or quarterly basis as provided below. Quarterly
withdrawals are available for shareholders who have acquired shares of the Fund
having a value, based on cost or the current offering price of $5,000 or more,
and monthly withdrawals for shareholders with shares with such a value of
$10,000 or more. The quarterly periods end on the 24th day of March, June,
September and December. See the Purchase Application in the Prospectus.
At the time of each withdrawal payment, sufficient shares are redeemed from
those on deposit in the shareholder's account to provide the withdrawal payment
specified by the shareholder. The shareholder may specify either a dollar
amount or a percentage of the value of his shares. Redemptions will be made at
net asset value as determined at the close of business on the New York Stock
Exchange on the 24th day of each month or the 24th day of the last month of
each quarter, whichever is applicable. A shareholder's Systematic Withdrawal
Plan may be terminated at any time, without charge or penalty, by the
shareholder, the Fund, the Transfer Agent or the Distributor. A shareholder may
not elect to make systematic withdrawals while he is enrolled in the Accrued
Monthly Payout Plan.
Withdrawal payments should not be considered as dividends, yield or income.
Withdrawals are sales of shares and may result in taxable gain or loss. If
periodic withdrawals continuously exceed reinvested dividends, the
shareholder's original investment will be reduced correspondingly. Shareholders
are cautioned not to designate withdrawal programs that result in an undue
reduction of principal. There are no minimums on amounts that may be
systematically withdrawn. Periodic investments may not be made into an
Investment Account in which the shareholder has elected to make systematic
withdrawals.
RETIREMENT PLANS
Self-directed individual retirement accounts and other retirement plans are
available from Merrill Lynch. Under these plans, investments may be made in the
Fund and certain of the other mutual funds sponsored by Merrill Lynch as well
as in other securities. Merrill Lynch charges an initial establishment fee and
an annual custodial fee for each account. Information with respect to these
plans is available upon request from Merrill Lynch. In addition, eligible
shareholders of the Fund may participate in a variety of qualified employee
benefit plans which are available from the Distributor. Participants in these
plans may invest in the Fund and in certain other mutual funds sponsored by
Merrill Lynch. Information with respect to these plans is available upon
request from the Distributor. See "Purchase of Shares" in the Prospectus and
"Purchase and Redemption of Shares through Merrill Lynch Retirement Plans"
herein.
Capital gains and income received in each of the plans referred to above are
exempt from Federal taxation until distributed from the plans. Investors
considering participation in any such plan should review specific tax laws
relating thereto and should consult their attorneys or tax advisers with
respect to the establishment and maintenance of any such plan.
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<PAGE>
EXCHANGE PRIVILEGE
Shareholders of the Fund who have held all or part of their shares for at
least 15 days may exchange their shares of the Fund for Class D shares of
mutual funds advised by the Manager or FAM described below (collectively
referred to as the "MLAM-advised mutual funds") on the basis described below.
Shares with a net asset value of at least $250 are required to qualify for the
exchange privilege. It is contemplated that the exchange privilege may be
applicable to other new mutual funds whose shares may be distributed by the
Distributor. The exchange privilege available to participants in the Merrill
Lynch Blueprint SM Program may be different from that available to other
investors.
Alternatively, shareholders may exchange shares of the Fund for Class A
shares of one of the MLAM-advised mutual funds if the shareholder holds any
Class A shares of that fund in his account in which the exchange is made at
the time of the exchange or is otherwise an eligible Class A investor. An
eligible Class A investor includes the following: certain employer sponsored
retirement or savings plans, including eligible 401(k) plans, provided such
plans meet the required minimum number of eligible employees or required
amount of assets advised by MLAM or any of its affiliates; corporate warranty
insurance reserve fund programs provided that the program has $3 million or
more initially invested in MLAM-advised mutual funds; participants in certain
investment programs including TMA SM Managed Trusts to which Merrill Lynch
Trust Company provides discretionary trustee services and certain purchases
made in connection with the Merrill Lynch Mutual Fund Adviser program; and
ML&Co. and its subsidiaries and their directors and employees and members of
the Boards of MLAM-advised investment companies, including the Fund.
Shareholders of the Fund also may exchange shares of the Fund into shares of
Class A Share Money Market Funds, as listed below.
Under the exchange privilege, each of the funds offers to exchange its
shares ("new shares") for shares ("outstanding shares") of any of the other
funds, on the basis of relative net asset value per share, plus an amount
equal to the difference, if any, between the sales charge previously paid on
the outstanding shares and the sales charge payable at the time of the
exchange on the new shares. At the present time, the shares of each of the
funds are sold with varying sales charges. With respect to outstanding shares
as to which previous exchanges have taken place, the "sales charge previously
paid" shall include the aggregate of the charges paid with respect to such
shares in the initial purchase and any subsequent exchange. Shares issued
pursuant to dividend reinvestment are sold on a no-load basis in each of the
funds. For purposes of the exchange privilege, dividend reinvestment shares
shall be deemed to have been sold with a sales charge equal to the sales
charge previously paid on the shares on which the dividend was paid. Based on
this formula, an exchange of shares of the Fund, which are sold on a no-load
basis, for shares of the other funds, which are sold with a sales charge,
generally will require the payment of a sales charge.
The investment objectives of the other funds into which exchanges can be
made are as follows:
Funds Issuing Class A, Class B, Class C and Class D Shares:
<TABLE>
<C> <S>
Merrill Lynch Adjustable Rate
Securities Fund, Inc....................... High current income, consistent with a
policy of limiting the degree of
fluctuation in net asset value by
investing primarily in a portfolio of
adjustable rate securities consisting
principally of mortgage-backed and
asset-backed securities.
</TABLE>
14
<PAGE>
<TABLE>
<C> <S>
Merrill Lynch Americas Income
Fund, Inc. ................................ A high level of current income,
consistent with prudent
investment risk, by investing
primarily in debt securities
denominated in a currency of a
country located in the Western
Hemisphere (i.e., North and
South America and the
surrounding waters).
Merrill Lynch Arizona Limited
Maturity Municipal Bond Fund............... A portfolio of Merrill Lynch
Multi-State Limited Maturity
Municipal Series Trust, a
series fund, whose objective is
to provide as high a level of
income exempt from Federal and
Arizona income taxes as is
consistent with prudent
investment management through
investment in a portfolio
primarily of intermediate-term
investment grade Arizona
Municipal Bonds.
Merrill Lynch Arizona Municipal Bond Fund...
A portfolio of Merrill Lynch
Multi-State Municipal Series
Trust, a series fund, whose
objective is to provide as high
a level of income exempt from
Federal and Arizona income
taxes as is consistent with
prudent investment management.
Merrill Lynch Arkansas Municipal Bond Fund..
A portfolio of Merrill Lynch
Multi-State Municipal Series
Trust, a series fund, whose
objective is to provide as high
a level of income exempt from
Federal and Arkansas income
taxes as is consistent with
prudent investment management.
Merrill Lynch Asset Growth Fund, Inc........ High total investment return,
consistent with prudent risk,
from investment in United
States and foreign equity, debt
and money market securities the
combination of which will be
varied both with respect to
types of securities and markets
in response to changing market
and economic trends.
Merrill Lynch Asset Income Fund, Inc........ A high level of current income
through investment primarily in
United States fixed income
securities.
</TABLE>
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Merrill Lynch Balanced Fund For Investment
and Retirement, Inc........................ As high a level of total
investment return as is
consistent with reasonable
risk by investing in common
stocks and other types of
securities, including fixed
income securities and
convertible securities.
Merrill Lynch Basic Value Fund, Inc......... Capital appreciation and,
secondarily, income through
investment in securities,
primarily equities, that are
undervalued and therefore
represent basic investment
value.
Merrill Lynch California Insured Municipal
Bond Fund.................................. A portfolio of Merrill Lynch
California Municipal Series
Trust, a series fund, whose
objective is to provide as
high a level of income exempt
from Federal and California
income taxes as is consistent
with prudent investment
management through investment
in a portfolio consisting
primarily of insured
California Municipal Bonds.
Merrill Lynch California Limited Maturity
Municipal Bond Fund........................ A portfolio of Merrill Lynch
Multi-State Limited Maturity
Municipal Series Trust, a
series fund, whose objective
is to provide as high a level
of income exempt from Federal
and California income taxes as
is consistent with prudent
investment management through
investment in a portfolio
primarily of intermediate-term
investment grade California
Municipal Bonds.
Merrill Lynch California Municipal
Bond Fund.................................. A portfolio of Merrill Lynch
California Municipal Series
Trust, a series fund, whose
objective is to provide as
high a level of income exempt
from Federal and California
income taxes as is consistent
with prudent investment
management.
Merrill Lynch Capital Fund, Inc............. The highest total investment
return consistent with prudent
risk through a fully managed
investment policy utilizing
equity, debt and convertible
securities.
</TABLE>
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Merrill Lynch Colorado Municipal Bond Fund..
A portfolio of Merrill Lynch
Multi-State Municipal Series
Trust, a series fund, whose
objective is to provide as high
a level of income exempt from
Federal and Colorado income
taxes as is consistent with
prudent investment management.
Merrill Lynch Connecticut Municipal Bond
Fund....................................... A portfolio of Merrill Lynch
Multi-State Municipal Series
Trust, a series fund, whose
objective is to provide as high
a level of income exempt from
Federal and Connecticut income
taxes as is consistent with
prudent investment management.
Merrill Lynch Corporate Bond
Fund, Inc.................................. Current income from three
separate diversified portfolios
of fixed income securities.
Merrill Lynch Developing
Capital Markets Fund, Inc.................. Long-term capital appreciation
through investment in
securities, principally
equities, of issuers in
countries having smaller
capital markets.
Merrill Lynch Dragon Fund, Inc.............. Capital appreciation primarily
through investment in equity
and debt securities of issuers
domiciled in developing
countries located in Asia and
the Pacific Basin.
Merrill Lynch Eurofund...................... Capital appreciation primarily
through investment in equity
securities of corporations
domiciled in Europe.
Merrill Lynch Federal Securities Trust...... High current return through
investments in U.S. Government
and Government agency
securities, including GNMA
mortgage-backed certificates
and other mortgage-backed
Government securities.
</TABLE>
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Merrill Lynch Florida Limited
Maturity Municipal Bond Fund............... A portfolio of Merrill Lynch
Multi-State Limited Maturity
Municipal Series Trust, a
series fund, whose objective
is to provide as high a level
of income exempt from Federal
income taxes as is consistent
with prudent investment
management while serving to
offer shareholders the
opportunity to own securities
exempt from Florida intangible
personal property taxes
through investment in a
portfolio primarily of
intermediate-term investment
grade Florida Municipal Bonds.
Merrill Lynch Florida Municipal Bond Fund...
A portfolio of Merrill Lynch
Multi-State Municipal Series
Trust, a series fund, whose
objective is to provide as
high a level of income exempt
from Federal income taxes as
is consistent with prudent in-
vestment management while
seeking to offer shareholders
the opportunity to own securi-
ties exempt from Florida in-
tangible personal property
taxes.
Merrill Lynch Fund for Tomorrow, Inc........ Long-term growth through
investment in a portfolio of
good quality securities,
primarily common stock,
potentially positioned to
benefit from demographic and
cultural changes as they
affect consumer markets.
Merrill Lynch Fundamental Growth
Fund, Inc.................................. Long-term growth through
investment in a diversified
portfolio of equity securities
placing particular emphasis on
companies that have exhibited
above-average growth rate in
earnings.
Merrill Lynch Fundamental Value
Portfolio.................................. A portfolio of Merrill Lynch
(Available only for exchanges by certain Retirement Asset Builder
individual retirement accounts for Program, Inc., a series fund,
which Merrill Lynch acts as custodian) whose objective is to provide
capital appreciation and
income by investing in
securities, with at least 65%
of the portfolio's assets
being invested in equities.
Merrill Lynch Global Allocation
Fund, Inc.................................. High total return, consistent
with prudent risk, through a
fully-managed investment
policy utilizing United States
and foreign equity, debt and
money market securities, the
combination of which will be
varied from time to time both
with respect to types of
securities and markets in
response to changing market
and economic trends.
</TABLE>
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Merrill Lynch Global Bond Fund For
Investment and Retirement.................. High total investment return
from investment in a global
portfolio of debt instruments
denominated in various
currencies and multinational
currency units.
Merrill Lynch Global Convertible
Fund, Inc.................................. High total return from
investment primarily in an
internationally diversified
portfolio of convertible debt
securities, convertible
preferred stock and "synthetic"
convertible securities
consisting of a combination of
debt securities or preferred
stock and warrants or options.
Merrill Lynch Global Holdings, Inc.......... The highest total investment
(Residents of Arizona must meet investor return consistent with prudent
suitability standards) risk through worldwide
investment in an
internationally diversified
portfolio of securities.
Merrill Lynch Global Opportunity Portfolio..
(Available only for exchanges by certain A portfolio of Merrill Lynch
individual retirement accounts for which Retirement Asset Builder
Merrill Lynch acts as custodian) Program, Inc., a series fund,
whose objective is to provide a
high total investment return
through an investment policy
utilizing United States and
foreign equity, debt and money
market securities, the
combination of which will vary
depending upon changing market
and economic trends.
Merrill Lynch Global Resources Trust........ Long-term growth and protection
of capital from investment in
securities of domestic and
foreign companies that possess
substantial natural resource
assets.
Merrill Lynch Global SmallCap
Fund, Inc.................................. Long-term growth of capital by
investing primarily in equity
securities of companies with
relatively small market
capitalizations located in
various foreign countries and
in the United States.
Merrill Lynch Global Utility Fund, Inc...... Capital appreciation and current
income through investment of at
least 65% of its total assets
in equity and debt securities
issued by domestic and foreign
companies which are primarily
engaged in the ownership or
operation of facilities used to
generate, transmit or
distribute electricity,
telecommunications, gas or
water.
</TABLE>
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Merrill Lynch Growth Fund for Investment and
Retirement................................. Growth of capital and, secondarily, income
from investment in a diversified portfolio
of equity securities placing principal
emphasis on those securities which
management of the fund believes to be
undervalued.
Merrill Lynch Healthcare
Fund, Inc.................................. Capital appreciation through worldwide
(Residents of Wisconsin must meet investor investment in equity securities of
suitability standards) companies that derive or are expected to
derive a substantial portion of their sales
from products and services in healthcare.
Merrill Lynch International
Equity Fund................................ Capital appreciation and, secondarily,
income by investing in a diversified
portfolio of equity securities of issuers
located in countries other than the United
States.
Merrill Lynch Latin America Fund, Inc. ..... Capital appreciation by investing primarily
in Latin American equity and debt
securities.
Merrill Lynch Maryland Municipal Bond Fund..
A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund,
whose objective is to provide as high a
level of income exempt from Federal and
Maryland income taxes as is consistent with
prudent investment management.
Merrill Lynch Massachusetts Limited Maturity
Municipal Bond Fund........................ A portfolio of Merrill Lynch Multi-State
Limited Maturity Municipal Series Trust, a
series fund, whose objective is to provide
as high a level of income exempt from
Federal and Massachusetts income taxes as
is consistent with prudent investment
management through investment in a
portfolio primarily of intermediate-term
investment grade Massachusetts Municipal
Bonds.
Merrill Lynch Massachusetts Municipal Bond
Fund....................................... A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund,
whose objective is to provide as high a
level of income exempt from Federal and
Massachusetts income taxes as is consistent
with prudent investment management.
</TABLE>
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Merrill Lynch Michigan Limited Maturity
Municipal Bond Fund........................ A portfolio of Merrill Lynch Multi-State
Limited Maturity Municipal Series Trust, a
series fund, whose objective is to provide
as high a level of income exempt from
Federal and Michigan income taxes as is
consistent with prudent investment
management through investment in a
portfolio primarily of intermediate-term
investment grade Michigan Municipal Bonds.
Merrill Lynch Michigan Municipal
Bond Fund.................................. A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund,
whose objective is to provide as high a
level of income exempt from Federal and
Michigan income taxes as is consistent with
prudent investment management.
Merrill Lynch Minnesota Municipal
Bond Fund.................................. A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund,
whose objective is to provide as high a
level of income exempt from Federal and
Minnesota income taxes as is consistent
with prudent investment management.
Merrill Lynch Municipal Bond
Fund, Inc.................................. Tax-exempt income from three separate
diversified portfolios of municipal bonds.
Merrill Lynch Municipal Intermediate Term
Fund....................................... Currently the only portfolio of Merrill
Lynch Municipal Series Trust, a series
fund, whose objective is to provide as high
a level as possible of income exempt from
Federal income taxes by investing
in investment grade obligations with a dol-
lar weighted average maturity of five to
twelve years.
Merrill Lynch New Jersey Limited Maturity
Municipal Bond Fund........................ A portfolio of Merrill Lynch Multi-State
Limited Maturity Municipal Series Trust, a
series fund, whose objective is to provide
as high a level of income exempt from
Federal and New Jersey income taxes as is
consistent with prudent investment
management through a portfolio primarily of
intermediate-term investment grade New
Jersey Municipal Bonds.
</TABLE>
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Merrill Lynch New Jersey Municipal
Bond Fund.................................. A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund,
whose objective is to provide as high a
level of income exempt from Federal and New
Jersey income taxes as is consistent with
prudent investment management.
Merrill Lynch New Mexico Municipal
Bond Fund.................................. A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund,
whose objective is to provide as high a
level of income exempt from Federal and New
Mexico income taxes as is consistent with
prudent investment management.
Merrill Lynch New York Limited Maturity
Municipal Bond Fund........................ A portfolio of Merrill Lynch Multi-State
Limited Maturity Municipal Series Trust, a
series fund, whose objective is to provide
as high a level of income exempt from
Federal, New York State and New York City
income taxes as is consistent with prudent
investment management through investment in
a portfolio primarily of intermediate-term
investment grade New York Municipal Bonds.
Merrill Lynch New York Municipal
Bond Fund.................................. A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund,
whose objective is to provide as high a
level of income exempt from Federal, New
York State and New York City income taxes
as is consistent with prudent investment
management.
Merrill Lynch North Carolina Municipal Bond
Fund....................................... A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund,
whose objective is to provide as high a
level of income exempt from Federal and
North Carolina income taxes as is
consistent with prudent investment
management.
Merrill Lynch Ohio Municipal
Bond Fund.................................. A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund,
whose objective is to provide as high a
level of income exempt from Federal and
Ohio income taxes as is consistent with
prudent investment management.
</TABLE>
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Merrill Lynch Oregon Municipal
Bond Fund.................................. A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund,
whose objective is to provide as high a
level of income exempt from Federal and
Oregon income tax as is consistent with
prudent investment management.
Merrill Lynch Pacific Fund, Inc............. Capital appreciation by investing in equity
securities of corporations domiciled in Far
Eastern and Western Pacific countries,
including Japan, Australia, Hong Kong, and
Singapore.
Merrill Lynch Pennsylvania Limited Maturity
Municipal Bond Fund........................ A portfolio of Merrill Lynch Multi-State
Limited Maturity Municipal Series Trust, a
series fund, whose objective is to provide
as high a level of income exempt from
Federal and Pennsylvania income taxes as is
consistent with prudent investment
management through investment in a
portfolio of intermediate-term investment
grade Pennsylvania Municipal Bonds.
Merrill Lynch Pennsylvania Municipal Bond
Fund....................................... A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund,
whose objective is to provide as high a
level of income exempt from Federal and
Pennsylvania income taxes as is consistent
with prudent investment management.
Merrill Lynch Phoenix Fund, Inc............. Long-term growth of capital by investing in
equity and fixed income securities,
including tax-exempt securities, of issuers
in weak financial condition or experiencing
poor operating results believed to be
undervalued relative to the current or
prospective conditions of such issuer.
Merrill Lynch Quality Bond
Portfolio.................................. A portfolio of Merrill Lynch Retirement As-
(Available only for exchanges by certain set Builder Program, Inc., a series fund,
individual retirement accounts for whose objective is to provide a high level
which Merrill Lynch acts as custodian) of current income through investment in a
diversified portfolio of debt obligations,
such as corporate bonds and notes, convert-
ible securities, preferred stocks and gov-
ernmental obligations.
</TABLE>
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Merrill Lynch Short-Term Global
Income Fund, Inc........................... As high a level of current income as is con-
sistent with prudent investment management
from a global portfolio of high quality
debt securities denominated in various cur-
rencies and multinational currency units
and having remaining maturities not exceed-
ing three years.
Merrill Lynch Special Value Fund, Inc....... Long-term growth of capital from investments
in securities, primarily common stocks, of
relatively small companies believed to have
special investment value and emerging
growth companies regardless of size.
Merrill Lynch Strategic Dividend Fund....... Long-term total return from investment in
dividend-paying common stocks which yield
more than Standard & Poor's 500 Composite
Stock Price Index.
Merrill Lynch Technology Fund, Inc.......... Capital appreciation through worldwide
investment in equity securities of
companies that derive or are expected to
derive a substantial portion of their sales
from products and services in technology.
Merrill Lynch Texas Municipal Bond
Fund....................................... A portfolio of Merrill Lynch Multi-State Mu-
nicipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from
Federal income taxes as is consistent with
prudent investment management by investing
primarily in a portfolio of long-term, in-
vestment grade obligations issued by the
State of Texas, its political subdivisions,
agencies and instrumentalities.
Merrill Lynch U.S. Government
Securities Portfolio....................... A portfolio of Merrill Lynch Retirement
(Available only for exchanges by certain Asset Builder Program, Inc., a series fund,
individual retirement accounts for whose objective is to provide a high
which Merrill Lynch acts as custodian) current return through investments in U.S.
Government and government agency
securities, including GNMA mortgage-backed
certificates and other mortgage-backed
government securities.
</TABLE>
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Merrill Lynch Utility Income Fund, Inc...... High current income through investment in
equity and debt securities issued by
companies which are primarily engaged in
the ownership or operation of facilities
used to generate, transmit or distribute
electricity, telecommunications, gas or
water.
Merrill Lynch World Income Fund, Inc........ High current income by investing in a global
portfolio of fixed income securities
denominated in various currencies,
including multinational currencies.
</TABLE>
Class A Share Money Market Funds:
<TABLE>
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Merrill Lynch Ready Assets Trust............ Preservation of capital, liquidity and the
highest possible current income consistent
with the foregoing objectives from the
short-term money market securities in which
the Trust invests.
Merrill Lynch Retirement Reserves
Money Fund................................. Currently the only portfolio of Merrill
(Available only if the exchange occurs Lynch Retirement Series Trust, a series
within certain retirement plans) fund, whose objectives are current income,
preservation of capital and liquidity
available from investing in a diversified
portfolio of short-term money market
securities.
Merrill Lynch U.S.A. Government Reserves....
Preservation of capital, current income and
liquidity available from investing in
direct obligations of the U.S. Government
and repurchase agreements relating to such
securities.
Class B, Class C and Class D Share Money Market Funds:
Merrill Lynch Government Fund............... A portfolio of Merrill Lynch Funds for
Institutions Series, a series fund, whose
objective is to provide current income
consistent with liquidity and security of
principal from investment in securities
issued or guaranteed by the U.S.
Government, its agencies and
instrumentalities and in repurchase
agreements secured by such obligations.
Merrill Lynch Institutional Fund............ A portfolio of Merrill Lynch Funds for
Institutions Series, a series fund, whose
objective is to provide maximum current
income consistent with liquidity and the
maintenance of a high quality portfolio of
money market securities.
</TABLE>
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Merrill Lynch Institutional
Tax-Exempt Fund............................ A portfolio of Merrill Lynch Funds for
Institutions Series, a series fund, whose
objective is to provide current income
exempt from Federal income taxes,
preservation of capital and liquidity
available from investing in a diversified
portfolio of short-term, high quality
municipal bonds.
Merrill Lynch Treasury Fund................. A portfolio of Merrill Lynch Funds for
Institutions Series, a series fund, whose
objective is to provide current income
consistent with liquidity and security of
principal from investment in direct
obligations of the U.S. Treasury and up to
10% of its total assets in repurchase
agreements secured by such obligations.
</TABLE>
Before effecting an exchange, shareholders of the Fund should obtain a
currently effective prospectus of the fund into which the exchange is to be
made. Exercise of the exchange privilege is treated as a sale for Federal
income tax purposes and depending on the circumstances, a short- or long-term
capital gain or loss may be realized. In addition, an exchanging shareholder of
any of the funds may be subject to backup withholding unless such shareholder
certifies under penalty of perjury that the taxpayer identification number on
file with any such fund is correct, and that he or she is not otherwise subject
to backup withholding. See "Taxes".
To exercise the exchange privilege, shareholders may either contact their
listed securities dealer, who will advise the Fund of the exchange, or write to
the Transfer Agent requesting that the exchange be effected. Such letter must
be signed by an "eligible guarantor institution" as such is defined in Rule
17Ad-15 under the Securities Exchange Act of 1934, as amended, the existence
and validity of which may be verified by the Transfer Agent through the use of
industry publications. Shareholders of the Fund, and shareholders of the other
funds described above with shares for which certificates have not been issued,
may exercise the exchange privilege by wire through their securities dealer.
The Fund reserves the right to require a properly completed Exchange
Application. This exchange privilege may be modified or terminated at any time
in accordance with the rules of the Securities and Exchange Commission. The
Fund reserves the right to limit the number of times an investor may exercise
the exchange privilege. Certain funds may suspend the continuous offering of
their shares at any time and may thereafter resume such offering from time to
time. The exchange privilege is available only to U.S. shareholders in states
where the exchange legally may be made.
TAXES
FEDERAL
The Fund intends to continue to qualify for the special tax treatment
afforded regulated investment companies ("RICs") under the Internal Revenue
Code of 1986, as amended (the "Code"). If it so qualifies, the Fund (but not
its shareholders) will not be subject to Federal income tax on the part of its
net ordinary income and net realized capital gains which it distributes to
shareholders. The Fund intends to distribute substantially all of such income.
26
<PAGE>
Dividends paid by the Fund from its ordinary income and distributions of the
Fund's net realized short-term capital gains (together referred to hereafter as
"ordinary income dividends") are taxable to shareholders as ordinary income.
Distributions made from the Fund's net realized long-term capital gains
("capital gain dividends") are taxable to shareholders as long-term capital
gains, regardless of the length of time the shareholder has owned the Fund
shares. Any loss upon the sale or exchange of Fund shares held for six months
or less, however, will be treated as long-term capital loss to the extent of
any capital gain dividends received by the shareholder. Distributions in excess
of the Fund's earnings and profits will first reduce the adjusted tax basis of
a holder's shares and, after such adjusted tax basis is reduced to zero, will
constitute capital gains to such holder (assuming the shares are held as a
capital asset).
Dividends are taxable to shareholders even though they are reinvested in
additional shares of the Fund. Not later than 60 days after the close of its
taxable year, the Fund will provide its shareholders with a written notice
designating the amounts of any ordinary income dividends or capital gain
dividends. Distributions by the Fund, whether from ordinary income or capital
gains, will not be eligible for the dividends received deduction allowed to
corporations under the Code. If the Fund pays a dividend in January which was
declared in the previous October, November or December to shareholders of
record on a specified date in one of such months, then such dividend will be
treated for tax purposes as being paid by the Fund and received by its
shareholders on December 31 of the year in which such dividend was declared.
If the value of assets held by the Fund declines, the Board of Directors may
authorize a reduction in the number of outstanding shares in shareholders'
accounts so as to preserve a net asset value of $1.00 per share. After such a
reduction, the basis of eliminated shares would be added to the basis of
shareholders' remaining Fund shares, and any shareholders disposing of shares
at that time may recognize a capital loss. Distributions, including
distributions reinvested in additional shares of the Fund, will nonetheless be
fully taxable, even if the number of shares in shareholders' accounts has been
reduced as described above.
Ordinary income dividends paid by the Fund to shareholders who are
nonresident aliens or foreign entities will be subject to a 30% United States
withholding tax under existing provisions of the Code applicable to foreign
individuals and entities unless a reduced rate of withholding or a withholding
exemption is provided under applicable treaty law. Nonresident shareholders are
urged to consult their own tax advisers concerning the applicability of the
United States withholding tax.
Under certain provisions of the Code, some shareholders may be subject to a
31% withholding tax on ordinary income dividends, capital gain dividends and
redemption payments ("backup withholding"). Generally, shareholders subject to
backup withholding will be those for whom no certified taxpayer identification
number is on file with the Fund or who, to the Fund's knowledge, have furnished
an incorrect number. When establishing an account, an investor must certify
under penalty of perjury that such number is correct and that such investor is
not otherwise subject to backup withholding.
If a shareholder exercises the exchange privilege within 90 days of acquiring
the shares, then the loss the shareholder can recognize on the exchange will be
reduced (or the gain increased) to the extent the sales charge paid to the Fund
on the exchanged shares reduces any sales charge the shareholder would have
owed upon purchase of the new shares in the absence of the exchange privilege.
Instead, such sales charge will be treated as an amount paid for the new
shares.
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A loss realized on a sale or exchange of shares of the Fund will be
disallowed if other Fund shares are acquired (whether through the automatic
reinvestment of dividends or otherwise) within a 61-day period beginning 30
days before and ending 30 days after the date that the shares are disposed of.
In such a case, the basis of the shares acquired will be adjusted to reflect
the disallowed loss.
The Code requires a RIC to pay a nondeductible 4% excise tax to the extent it
does not distribute, during each calendar year, 98% of its ordinary income,
determined on a calendar year basis, and 98% of its capital gains, determined,
in general, on an October 31 year end, plus certain undistributed amounts from
previous years. While the Fund intends to distribute its income and gains in
the manner necessary to avoid imposition of the excise tax, there can be no
assurance that sufficient amounts of the Fund's taxable ordinary income and
capital gains will be distributed to avoid entirely the imposition of the tax.
In such event, the Fund will be liable for the tax only on the amount by which
it does not meet the foregoing distribution requirements.
The foregoing is a general and abbreviated summary of the applicable
provisions of the Code and Treasury regulations presently in effect. For the
complete provisions, reference should be made to the pertinent Code sections
and the Treasury regulations promulgated thereunder. The Code and the Treasury
regulations are subject to change by legislative or administrative action
either prospectively or retroactively.
Ordinary income and capital gain dividends may also be subject to state and
local taxes.
Certain states exempt from state income taxation dividends paid by RICs which
are derived from interest on U.S. Treasury obligations. State law varies as to
whether dividend income attributable to U.S. Treasury obligations is exempt
from state income tax.
Shareholders are urged to consult their tax advisers regarding specific
questions as to Federal, foreign, state or local taxes. Foreign investors
should consider applicable foreign taxes in their evaluation of an investment
in the Fund.
GENERAL INFORMATION
DESCRIPTION OF SHARES
The Declaration of Trust of the Fund permits the Trustees to issue an
unlimited number of full and fractional shares of a single class and to divide
or combine the shares into a greater or lesser number of shares without thereby
changing the proportionate beneficial interest in the Fund. Each share
represents an equal proportionate interest in the Fund with each other share.
Upon liquidation of the Fund, shareholders are entitled to share pro rata in
the net assets of the Fund available for distribution to shareholders. Shares
have no preemptive or conversion rights. The rights of redemption and exchange
are described elsewhere herein and in the Prospectus of the Fund. Shares of the
Fund are fully paid and non-assessable by the Fund.
Shareholders are entitled to one vote for each full share held and fractional
votes for fractional shares held in the election of Trustees and on other
matters submitted to the vote of shareholders. Voting rights are not
cumulative, so that the holders of more than 50% of the shares voting in the
election of Trustees can, if they choose to do so, elect all the Trustees of
the Fund, in which event the holders of the remaining shares are unable to
elect any person as a Trustee. No amendment may be made to any Declaration of
Trust without the affirmative vote of a majority of the outstanding shares of
the Fund.
CUSTODIAN
The Bank of New York, 90 Washington Street, 12th Floor, New York, New York
10286, acts as custodian of the Fund's assets. The custodian is responsible for
safeguarding and controlling the Fund's cash and securities, handling the
receipt and delivery of securities and collecting interest on the Fund's
investments.
28
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TRANSFER AGENT
Financial Data Services, Inc., 4800 Deer Lake Drive East, Jacksonville,
Florida 32246-6484, a subsidiary of ML&Co., acts as the Fund's transfer agent.
The transfer agent is responsible for the issuance, transfer and redemption of
shares and the opening, maintenance and servicing of shareholder accounts.
INDEPENDENT AUDITORS
Deloitte & Touche LLP, 117 Campus Drive, Princeton, New Jersey 08540, has
been selected as the independent auditors of the Fund. The selection of
independent auditors is subject to ratification by the shareholders of the
Fund. The independent auditors are responsible for auditing the annual
financial statements of the Fund.
LEGAL COUNSEL
Brown & Wood, One World Trade Center, New York, New York 10048-0557, is
counsel for the Fund.
REPORTS TO SHAREHOLDERS
The fiscal year of the Fund ends on the last day of November of each year.
The Fund will send to its shareholders at least semi-annually reports showing
its portfolio and other information. An annual report containing financial
statements audited by independent auditors is sent to the shareholders each
year. After the end of each year shareholders will receive federal income tax
information regarding dividends and capital gains distributions.
ADDITIONAL INFORMATION
The Prospectus and Statement of Additional Information do not contain all the
information set forth in the Registration Statement and the exhibits relating
thereto, which the Fund has filed with the Securities and Exchange Commission,
Washington, D.C., under the Securities Act of 1933 and the Investment Company
Act, to which reference is hereby made.
To the knowledge of the Fund, no person or entity owned beneficially 5% or
more of the Fund's shares on November 30, 1994.
All time references are New York time.
---------------------
The Declaration of Trust establishing the Fund, a copy of which, together
with all amendments thereto (the "Declaration") is on file in the office of the
Secretary of the Commonwealth of Massachusetts, provides that the name "Merrill
Lynch U.S. Treasury Money Fund" refers to the Trustees under the Declaration
collectively as Trustees, but not as individuals or personally; and except for
his own bad faith, willful misfeasance, gross negligence or reckless disregard
of his duties, no Trustee, shareholder, officer, employee or agent of the Fund
shall be held to any personal liability, nor shall resort be had to their
private property for the satisfaction of any obligation or claim or otherwise
in connection with the affairs of the Fund but the "Trust Property" only shall
be liable.
29
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INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders,
Merrill Lynch U.S. Treasury Money Fund:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of Merrill Lynch U.S. Treasury Money Fund as of
November 30, 1994, the related statements of operations for the year then ended
and changes in net assets for each of the years in the two year period then
ended, and the financial highlights for each of the years in the three-year
period then ended and the period April 15, 1991 (commencement of operations) to
November 30, 1991. These financial statements and the financial highlights are
the responsibility of the Fund's management. Our responsibility is to express
an opinion on these financial statements and the financial highlights based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at
November 30, 1994 by correspondence with the custodian. 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 U.S.
Treasury Money Fund as of November 30, 1994, the results of its operations, the
changes in its net assets, and the financial highlights for the respective
stated periods in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Princeton, New Jersey
January 6, 1995
30
<PAGE>
SCHEDULE OF INVESTMENTS (in Thousands)
<TABLE>
<CAPTION>
Face Interest Maturity Value
Issue Amount Rate Date (Note 1a)
US Government Obligations--102.2%
<S> <C> <C> <C> <C>
US Treasury Bills* $ 4,276 4.56 % 12/15/94 $ 4,268
251 4.72 12/15/94 251
598 4.74 12/15/94 597
17 4.81 12/15/94 17
7,576 4.825 12/15/94 7,561
654 4.81 12/22/94 652
9,638 4.855 12/22/94 9,609
822 4.91 12/22/94 820
876 5.135 12/22/94 873
10,000 5.245 12/22/94 9,968
4,621 4.85 1/12/95 4,594
442 4.86 1/12/95 439
431 4.90 1/12/95 428
1,430 5.02 1/26/95 1,418
195 5.04 1/26/95 193
175 5.20 2/02/95 173
6,686 5.21 2/02/95 6,622
408 5.26 2/02/95 404
379 5.275 2/02/95 375
197 5.28 2/02/95 195
3,457 5.315 2/02/95 3,424
1,192 4.96 3/09/95 1,174
1,784 5.61 4/06/95 1,748
319 5.43 4/20/95 312
762 5.235 8/24/95 727
662 5.26 8/24/95 631
1,000 5.825 10/19/95 943
Total US Government Obligations (Cost--$58,439) 58,416
Total Investments (Cost--$58,439)--102.2% 58,416
Liabilities in Excess of Other Assets--(2.2%) (1,232)
-------
Net Assets--100.0% $57,184
=======
<FN>
*US Treasury Bills are traded on a discount basis; the interest
rates shown are the discount rates paid at the time of purchase by
the Fund.
See Notes to Financial Statements.
</TABLE>
31
<PAGE>
FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Statement of Assets and Liabilities as of November 30, 1994
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$58,438,917*)(Note 1a) $ 58,415,581
Cash 1,612
Beneficial interest sold 116,789
Deferred organization expenses (Note 1d) 15,384
Prepaid registration fees and other assets (Note 1d) 48,969
-------------
Total assets 58,598,335
-------------
Liabilities: Payables:
Beneficial interest redeemed $ 1,356,626
Distributor (Note 2) 12,663
Investment adviser (Note 2) 7,396 1,376,685
-------------
Accrued expenses and other liabilities 37,207
-------------
Total liabilities 1,413,892
-------------
Net Assets: Net assets $ 57,184,443
=============
Net Assets Shares of beneficial interest, $.10 par value, unlimited number of
Consist of: shares authorized $ 5,720,778
Paid-in capital in excess of par 51,487,001
Unrealized depreciation on investments--net (23,336)
-------------
Net assets--Equivalent to $1.00 per share based on 57,207,779 shares
of beneficial interest outstanding $ 57,184,443
=============
<FN>
*Cost for Federal income tax purposes. As of November 30, 1994, net unrealized
depreciation for Federal income tax purposes amounted to $23,336, of which $564
related to appreciated securities and $23,900 related to depreciated securities.
See Notes to Financial Statements.
</TABLE>
32
<PAGE>
FINANCIAL INFORMATION (continued)
<TABLE>
<CAPTION>
Statement of Operations
For the Year Ended
November 30, 1994
<S> <S> <C> <C>
Investment Interest and amortization of premium and discount earned $ 2,594,052
Income
(Note 1c):
Expenses: Investment advisory fees (Note 2) $ 337,407
Distribution fees (Note 2) 80,962
Professional fees 65,025
Trustees' fees and expenses 59,347
Registration fees (Note 1d) 53,789
Accounting services (Note 2) 36,025
Printing and shareholder reports 31,540
Transfer agent fees (Note 2) 25,206
Amortization of organization expenses (Note 1d) 11,208
Custodian fees 9,272
Other 3,930
-------------
Total expenses before reimbursement 713,711
Reimbursement of expenses (Note 2) (236,185)
-------------
Total expenses after reimbursement 477,526
-------------
Investment income--net 2,116,526
-------------
Realized & Realized gain on investments--net 13,396
Unrealized Change in unrealized appreciation/depreciation on
Gain (Loss) on investments--net (23,496)
Investments--Net -------------
(Note 1c): Net Increase in Net Assets Resulting from Operations $ 2,106,426
=============
See Notes to Financial Statements.
</TABLE>
33
<PAGE>
FINANCIAL INFORMATION (continued)
<TABLE>
<CAPTION>
Statements of Changes in Net Assets
For the Year Ended November 30,
Increase (Decrease) in Net Assets: 1994 1993
<S> <S> <C> <C>
Operations: Investment income--net $ 2,116,526 $ 1,988,296
Realized gain on investments--net 13,396 33,592
Change in unrealized appreciation/depreciation on investments--net (23,496) 41,965
------------- -------------
Net increase in net assets resulting from operations 2,106,426 2,063,853
------------- -------------
Dividends & Investment income--net (2,116,526) (1,988,296)
Distributions to Realized and unrealized gain on investments--net (13,396) (33,592)
Shareholders ------------- -------------
(Note 1e): Net decrease in net assets resulting from dividends and
distributions to shareholders (2,129,922) (2,021,888)
------------- -------------
Beneficial Net proceeds from sale of shares 188,819,746 169,140,970
Interest Net asset value of shares issued to shareholders in reinvestment
Transactions of dividends (Note 1e) 2,122,334 2,019,817
(Note 3): ------------- -------------
190,942,080 171,160,787
Cost of shares redeemed (204,278,073) (181,636,527)
------------- -------------
Net decrease in net assets derived from beneficial interest
transactions (13,335,993) (10,475,740)
------------- -------------
Net Assets: Total decrease in net assets (13,359,489) (10,433,775)
Beginning of year 70,543,932 80,977,707
------------- -------------
End of year $ 57,184,443 $ 70,543,932
============= =============
See Notes to Financial Statements.
</TABLE>
34
<PAGE>
FINANCIAL INFORMATION (concluded)
<TABLE>
<CAPTION>
Financial Highlights
For the
Period
The following per share data and ratios have been derived April 15,
from information provided in the financial statements. For the Year 1991++ to
Ended November 30, Nov. 30,
Increase (Decrease) in Net Asset Value: 1994 1993 1992 1991
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00
Operating -------- -------- -------- --------
Performance: Investment income--net .0317 .0262 .0312 .0328
Realized and unrealized gain (loss) on
investments--net (.0002) .0010 .0014 .0029
-------- -------- -------- --------
Total from investment operations .0315 .0272 .0326 .0357
-------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.0317) (.0262) (.0312) (.0328)
Realized gain on investments--net (.0002) (.0004) (.0020) (.0029)++++
-------- -------- -------- --------
Total dividends and distributions (.0319) (.0266) (.0332) (.0357)
-------- -------- -------- --------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ========
Total investment return 3.22% 2.69% 3.37% 5.58%*
======== ======== ======== ========
Ratios to Average Expenses, net of reimbursement and excluding
Net Assets: distribution fees .59% .41% .53% .27%*
======== ======== ======== ========
Expenses, net of reimbursement .71% .53% .65% .39%*
======== ======== ======== ========
Expenses 1.06% .96% 1.16% 1.55%*
======== ======== ======== ========
Investment income and realized gain on
investments--net 3.16% 2.66% 3.41% 5.45%*
======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $ 57,184 $ 70,544 $ 80,978 $ 94,301
Data: ======== ======== ======== ========
<FN>
*Annualized.
++Commencement of Operations.
++++Includes unrealized gain (loss).
See Notes to Financial Statements.
</TABLE>
35
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch U.S. Treasury Money Fund (the "Fund") is registered
under the Investment Company Act of 1940 as a diversified, open-end
management investment company. The following is a summary of
significant accounting policies followed by the Fund.
(a) Valuation of investments--The Treasury securities in which the
Fund invests are traded primarily in the over-the-counter markets.
Except as set forth below, these securities are valued at the most
recent bid price or yield equivalent as obtained from dealers that
make markets in Treasury securities. When securities are valued with
sixty days or less to maturity, the difference between the valuation
existing on the sixty-first day before maturity and maturity value
is amortized on a straight-line basis to maturity. Investments
maturing within sixty days from their date of acquisition are valued
at amortized cost, which approximates market value. Assets for which
market quotations are not readily available are valued at fair value
as determined in good faith by or under the direction of the
Trustees of the Fund.
(b) Income taxes--It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable income to
its shareholders. Therefore, no Federal income tax provision is
required.
(c) Security transactions and investment income--Security
transactions are recorded on the dates the transactions are entered
into (the trade dates). Interest income (including amortization of
premium and discount) is recognized on the accrual basis. Realized
gains and losses on security transactions are determined on the
identified cost basis.
(d) Deferred organization expenses and prepaid registration fees--
Deferred organization expenses are charged to expense on a straight-
line basis over a five-year period. Prepaid registration fees are
charged to expense as the related shares are issued.
(e) Dividends to shareholders--The Fund declares dividends daily and
reinvests daily such dividends in additional fund shares at net
asset value. Dividends are declared from the total of net investment
income and net realized gain or loss on investments.
2. Investment Advisory Agreement and
Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with
Merrill Lynch Asset Management, L.P. ("MLAM"). Effective January 1,
1994, the investment advisory business of MLAM was reorganized from
a corporation to a limited partnership. Both prior to and after the
reorganization, ultimate control of MLAM was vested with Merrill
Lynch & Co., Inc. ("ML & Co."). The general partner of MLAM is
Princeton Services, Inc. ("PSI"), an indirect wholly-owned
subsidiary of ML & Co. The limited partners are ML & Co. and Merrill
Lynch Investment Management, Inc. ("MLIM"), which is also an
indirect wholly-owned subsidiary of ML & Co. The Fund has entered
into a Distribution Agreement and a Distribution Plan with Merrill
Lynch Funds Distributor, Inc. ("MLFD" or "Distributor"), a wholly-
owned subsidiary of MLIM.
MLAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee at the annual rate of 0.50% of
the average daily net assets of the Fund. The Investment Advisory
Agreement obligates MLAM to reimburse the Fund to the extent the
Fund's expenses (excluding interest, taxes, distribution fees,
brokerage fees and commissions, and extraordinary charges such as
litigation costs) exceed 2.5% of the Fund's first $30 million of
average daily net assets, 2.0% of the next $70 million of average
daily net assets, and 1.5% of the remaining average daily net
assets.
No fee payment will be made to MLAM during the period which will
cause such expenses to exceed the pro rata expense limitation at the
time of such payment. For the year ended November 30, 1994, MLAM
earned fees of $337,407, of which $236,185 was voluntarily waived.
NOTES TO FINANCIAL STATEMENTS (concluded)
The Fund has adopted a Distribution Plan (the "Plan") in accordance
with Rule 12b-1 under the Investment Company Act of 1940 pursuant to
which MLFD receives a fee from the Fund at the end of each month at
the annual rate of 0.125% of the average daily net assets of the
Fund. This fee is to compensate
36
<PAGE>
MLFD for the services it provides and the expenses borne by MLFD under the
Distribution Agreement. As authorized by the Plan, MLFD has entered into an
agreement with Merrill Lynch, Pierce, Fenner & Smith Inc. ("MLPF&S"), which
provides for the compensation of MLPF&S for providing distribution-related
services to the Fund. Such services relate to the sale, promotion, and marketing
of the shares of the Fund. For the year ended November 30, 1994, MLFD earned
$80,962 under the Plan, all of which was paid to MLPF&S pursuant to the
agreement.
Financial Data Services, Inc. ("FDS"), a wholly-owned subsidiary of
ML & Co., is the Fund's transfer agent.
Accounting services are provided to the Fund by MLAM at cost.
Certain officers and/or trustees of the Fund are officers and/or
directors of MLIM, FDS, MLFD, PSI, MLPF&S, MLAM, and/or ML & Co.
3. Shares of Beneficial Interest:
The number of shares purchased and redeemed during the periods
corresponds to the amounts included in the Statements of Changes in
Net Assets for net proceeds from sale of shares and cost of shares
redeemed, respectively, since shares are recorded at $1.00 per
share.
37
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
38
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
39
<PAGE>
-------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Investment Objectives and Policies............................................. 2
Management of the Fund......................................................... 2
Trustees and Officers......................................................... 2
Compensation of Trustees...................................................... 4
Management and Advisory
Arrangements................................................................ 4
Purchase of Shares............................................................. 6
Distribution Plan............................................................. 6
Redemption of Shares........................................................... 7
Purchase and Redemption of Shares
through Merrill Lynch Retirement Plans....................................... 8
Purchase by Retirement Plans.................................................. 8
Redemptions by Retirement Plans............................................... 8
Confirmations................................................................. 9
Portfolio Transactions......................................................... 9
Determination of Net Asset Value............................................... 10
Yield Information.............................................................. 11
Shareholder Services........................................................... 12
Investment Account............................................................ 12
Automatic Investment Plan..................................................... 12
Accrued Monthly Payout Plan................................................... 12
Systematic Withdrawal Plans................................................... 13
Retirement Plans.............................................................. 13
Exchange Privilege............................................................ 14
Taxes.......................................................................... 26
Federal....................................................................... 26
General Information............................................................ 28
Description of Shares......................................................... 28
Custodian..................................................................... 28
Transfer Agent................................................................ 29
Independent Auditors.......................................................... 29
Legal Counsel................................................................. 29
Reports to Shareholders....................................................... 29
Additional Information........................................................ 29
Independent Auditors' Report................................................... 30
Financial Statements........................................................... 31
</TABLE>
Code #11625-0395
LOGO MERRILL LYNCH
Merrill Lynch
U.S. Treasury Money Fund
[ART]
Merrill Lynch U.S. Treasury
Money Fund is organized
as a Massachusetts business
trust. It is not a bank nor
does it offer fiduciary or
trust services. Shares of the
Fund are not equivalent to
a bank account. A share-
holder's investment in the
Fund is not insured by any
Government agency.
STATEMENT OF
ADDITIONAL
INFORMATION
March 27, 1995
Distributor:
Merrill Lynch
Funds Distributor, Inc.
<PAGE>
PART C: OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements
Contained in Part A:
Financial Highlights for the period April 15, 1991 (commencement of
operations) to November 30, 1991 and for the years ended November 30,
1992, 1993 and 1994
Contained in Part B:
Schedule of Investments as of November 30, 1994
Statement of Assets and Liabilities as of November 30, 1994
Statement of Operations for the year ended November 30, 1994
Statements of Changes in Net Assets for the years ended November 30,
1993 and 1994
Financial Highlights for the period April 15, 1991 (commencement of
operations) to November 30, 1991 and for the years ended November 30,
1992, 1993 and 1994
(b) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
1(a) --Declaration of Trust dated October 30, 1990.(a)
(b) --Amendment to the Declaration of Trust dated February 1, 1991.(a)
2 --By-Laws of Registrant.(a)
3 --None.
4 --Copies of instruments defining the rights of shareholders, including
the relevant portions of the Declaration of Trust, as amended, and
By-Laws of the Registrant.(b)
5(a) --Management Agreement between Registrant and Merrill Lynch Asset
Management.(a)
5(b) --Supplement to Management Agreement between Registrant and Merrill
Lynch Asset Management.
6(a) --Distribution Agreement between Registrant and Merrill Lynch Funds
Distributor, Inc.(a)
(b) --Selected Dealer Agreement.(a)
7 --None.
8 --Custody Agreement between Registrant and The Bank of New York.(a)
9 --Transfer Agency, Shareholder Servicing Agency and Proxy Agency
Agreement between Registrant and Financial Data Services, Inc.(a)
10 --Opinion of Brown & Wood, counsel for the Registrant.
11 --Consent of Deloitte & Touche LLP, independent auditors for
Registrant.
12 --None.
13 --Certificate of Merrill Lynch Asset Management.(a)
14(a) --IRA, SEP and Self-Directed Plans, as defined in Parts A and B of
this Registration Statement.(c)
(b) --Prototype Merrill Lynch Tax-Deferred Basic(TM) Retirement Plan
available from Merrill Lynch, Pierce, Fenner & Smith Incorporated.(c)
15 --Form of Shareholder Servicing Plan and Agreement of Registrant.(a)
16 --None.
17 --Financial Data Schedule for the fiscal year ended November 30, 1994.
</TABLE>
--------
(a) Refiled pursuant to the Electronic Data Gathering, Analysis, and Retrieval
(EDGAR) phase-in requirements.
(b) Reference is made to Article II, Section 2.3 and Articles V, VI, VIII, IX,
X and XI of the Registrant's Declaration of Trust, filed as Exhibit 1(a) to
the Registration Statement and to Articles I, V and VII of the Registrant's
By-Laws, filed as Exhibit 2 to the Registration Statement.
(c) Incorporated by reference to Exhibit 14 to Post-Effective Amendment No. 1
to the Registration Statement under the Securities Act of 1933 on Form N-1A
of Merrill Lynch Retirement Series Trust (File No. 2-74584).
C-1
<PAGE>
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
Registrant is not controlled by or under common control with any person.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
<TABLE>
<CAPTION>
NUMBER OF RECORD
HOLDERS AT
FEBRUARY 28,
TITLE OF CLASS 1995
-------------- ----------------
<S> <C>
Shares of beneficial interest, par value $0.10 per share....... 13
</TABLE>
ITEM 27. INDEMNIFICATION.
Section 5.3 of the Registrant's Declaration of Trust provides as follows:
"The Trust shall indemnify each of its Trustees, officers, employees, and
agents (including persons who serve at its request as directors, officers
or trustees of another organization in which it has any interest as a
shareholder, creditor or otherwise) against all liabilities and expenses
(including amounts paid in satisfaction of judgments, in compromise, as
fines and penalties, and as counsel fees) reasonably incurred by him in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, in which he may be involved or with
which he may be threatened, while in office or thereafter, by reason of his
being or having been such a trustee, officer, employee or agent, except
with respect to any matter as to which he shall have been adjudicated to
have acted in bad faith, willful misfeasance, gross negligence or reckless
disregard of his duties; provided, however, that as to any matter disposed
of by a compromise payment by such person, pursuant to a consent decree or
otherwise, no indemnification either for said payment or for any other
expenses shall be provided unless the Trust shall have received a written
opinion from independent legal counsel approved by the Trustees to the
effect that if either the matter of willful misfeasance, gross negligence
or reckless disregard of duty, or the matter of good faith and reasonable
belief as to the best interests of the Trust, had been adjudicated, it
would have been adjudicated in favor of such person. The rights accruing to
any Person under these provisions shall not exclude any other right to
which he may be lawfully entitled; provided that no Person may satisfy any
right of indemnity or reimbursement granted herein or in Section 5.1 or to
which he may be otherwise entitled except out of the property of the Trust,
and no Shareholder shall be personally liable to any Person with respect to
any claim for indemnity or reimbursement or otherwise. The Trustees may
make advance payments in connection with indemnification under this Section
5.3, provided that the indemnified person shall have given a written
undertaking to reimburse the Trust in the event it is subsequently
determined that he is not entitled to such indemnification."
The Registrant's by-laws provide that insofar as the conditional advancing of
indemnification moneys pursuant to Section 5.3 of the Declaration of Trust for
actions based upon the Investment Company Act may be concerned, such payments
will be made only on the following conditions: (i) the advances must be limited
to amounts used, or to be used, for the preparation or presentation of a
defense to the action, including costs connected with the preparation of a
settlement; (ii) advances may be made only upon receipt of a written promise
by, or on behalf of, the recipient to repay that amount of the advance which
exceeds the amount which it is ultimately determined that he is entitled to
receive from the Registrant by reason of indemnification; and (iii) (a) such
promise must be secured by a surety bond, other suitable insurance or an
equivalent form of security which assures that any repayments may be obtained
by the Registrant without delay or litigation, which bond, insurance or other
form of security must be provided by the recipient of the advance, or (b) a
majority of a quorum of the Registrant's disinterested, non-party Trustees, or
an independent legal counsel in a written opinion, shall determine, based upon
a review of readily available facts, that the recipient of the advance
ultimately will be found entitled to indemnification.
C-2
<PAGE>
In Section 9 of the Distribution Agreement relating to the securities being
offered hereby, the Registrant agrees to indemnify the Distributor and each
person, if any, who controls the Distributor within the meaning of the
Securities Act of 1933 (the "Act"), against certain types of civil liabilities
arising in connection with the Registration Statement or Prospectus.
Insofar as indemnification for liabilities arising under the Act may be
permitted to Trustees, officers and controlling persons of the Registrant and
the principal underwriter pursuant to the foregoing provisions or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a Trustee, officer, or controlling
person of the Registrant and principal underwriter in connection with the
successful defense of any action or proceeding) is asserted by such Trustee,
officer or controlling person or the principal underwriter in connection with
shares being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
Merrill Lynch Asset Management, L.P. ("MLAM" or the "Manager") acts as
investment adviser for the following investment companies: Convertible
Holdings, Inc., Merrill Lynch Adjustable Rate Securities Fund, Inc., Merrill
Lynch Americas Income Fund, Inc., Merrill Lynch Asset Growth Fund, Inc.,
Merrill Lynch Asset Income Fund, Inc., Merrill Lynch Balanced Fund for
Investment and Retirement, Inc., Merrill Lynch Capital Fund, Inc., Merrill
Lynch Developing Capital Markets Fund, Inc., Merrill Lynch Dragon Fund, Inc.,
Merrill Lynch EuroFund, Merrill Lynch Fundamental Growth Fund, Inc., Merrill
Lynch Fund For Tomorrow, Inc., Merrill Lynch Global Allocation Fund, Inc.,
Merrill Lynch Global Bond Fund for Investment and Retirement, Merrill Lynch
Global Convertible Fund, Inc., Merrill Lynch Global Holdings, Merrill Lynch
Global Resources Trust, Merrill Lynch Global SmallCap Fund, Inc., Merrill Lynch
Global Utility Fund, Inc., Merrill Lynch Growth Fund for Investment and
Retirement, Merrill Lynch Healthcare Fund, Inc., Merrill Lynch High Income
Municipal Bond Fund, Inc., Merrill Lynch Institutional Intermediate Fund,
Merrill Lynch International Equity Fund, Merrill Lynch Latin America Fund,
Inc., Merrill Lynch Middle East/Africa Fund, Inc., Merrill Lynch Municipal
Series Trust, Merrill Lynch Pacific Fund, Inc., Merrill Lynch Ready Assets
Trust, Merrill Lynch Retirement Asset Builder Program, Inc., Merrill Lynch
Retirement Series Trust, Merrill Lynch Senior Floating Rate Fund, Inc., Merrill
Lynch Series Fund, Inc., Merrill Lynch Short-Term Global Income Fund, Inc.,
Merrill Lynch Strategic Dividend Fund, Merrill Lynch Technology Fund, Inc.,
Merrill Lynch U.S.A. Government Reserves, Merrill Lynch Utility Income Fund,
Inc. and Merrill Lynch Variable Series Funds, Inc. Fund Asset Management, L.P.
("FAM"), an affiliate of MLAM, acts as the investment adviser for the following
investment companies: Apex Municipal Fund, Inc., CBA Money Fund, CMA Government
Securities Fund, CMA Money Fund, CMA Multi-State Municipal Series Trust, CMA
Tax-Exempt Fund, CMA Treasury Fund, The Corporate Fund Accumulation Program,
Inc., Corporate High Yield Fund, Inc., Corporate High Yield Fund II, Inc.,
Emerging Tigers Fund, Inc., Financial Institutions Series Trust, Income
Opportunities Fund 1999, Inc., Income Opportunities Fund 2000, Inc., Merrill
Lynch Basic Value Fund, Inc., Merrill Lynch California Municipal Series Trust,
Merrill Lynch Corporate Bond Fund, Inc., Merrill Lynch Federal Securities
Trust, Merrill Lynch Funds for Institutions Series, Merrill Lynch Multi-State
Limited Maturity Municipal Series Trust, Merrill Lynch Multi-State Municipal
Series Trust, Merrill Lynch Municipal Bond Fund, Inc., Merrill Lynch Phoenix
Fund, Inc., Merrill Lynch Special Value Fund, Inc., Merrill Lynch World Income
Fund, Inc., MuniAssets Fund, Inc., MuniBond Income Fund, Inc., The Municipal
Fund Accumulation Program, Inc., MuniEnhanced Fund, Inc., MuniInsured Fund,
Inc., MuniVest Fund, Inc., MuniVest Fund II, Inc., MuniVest California Insured
Fund, Inc., MuniVest Florida Fund, MuniVest Michigan Insured Fund, Inc.,
MuniVest New Jersey Fund, Inc., MuniVest New York Insured Fund, Inc., MuniVest
Pennsylvania Insured Fund, MuniYield Arizona Fund, Inc., MuniYield Arizona Fund
II, Inc., MuniYield California Fund, Inc., MuniYield California
C-3
<PAGE>
Insured Fund, Inc., MuniYield California Insured Fund II, Inc., MuniYield
Florida Fund, MuniYield Florida Insured Fund, MuniYield Fund, Inc., MuniYield
Insured Fund, Inc., MuniYield Insured Fund II, Inc., MuniYield Michigan Fund,
Inc., MuniYield Michigan Insured Fund, Inc., MuniYield New Jersey Fund, Inc.,
MuniYield New Jersey Insured Fund, Inc., MuniYield New York Insured Fund, Inc.,
MuniYield New York Insured Fund II, Inc., MuniYield New York Insured Fund III,
Inc., MuniYield Pennsylvania Fund, MuniYield Quality Fund, Inc., MuniYield
Quality Fund II, Inc., Senior High Income Portfolio, Inc., Senior High Income
Portfolio II, Inc., Senior Strategic Income Fund, Inc., Taurus MuniCalifornia
Holdings, Inc., Taurus MuniNew York Holdings, Inc. and Worldwide DollarVest
Fund, Inc. The address of each of these investment companies is P.O Box 9011,
Princeton, New Jersey 08543-9011. The address of Merrill Lynch Institutional
Intermediate Fund, and Merrill Lynch Funds for Institutions Series is One
Financial Center, 15th Floor, Boston, Massachusetts 02111-2646. The address of
the Manager, FAM, Princeton Services, Inc. ("Princeton Services"), Merrill
Lynch Funds Distributor, Inc. ("MLFD") and Princeton Administrators, L.P. is
also P.O. Box 9011, Princeton, New Jersey 08543-9011. The address of Merrill
Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch") and Merrill Lynch
& Co., Inc. ("ML&Co.") is World Financial Center, North Tower, 250 Vesey
Street, New York, New York 10281. The address of Financial Data Services, Inc.
("FDS") is 4800 Deer Lake Drive East, Jacksonville, Florida 32246-6484.
Set forth below is a list of each executive officer and partner of the
Manager indicating each business, profession, vocation or employment of a
substantial nature in which each such person or entity has been engaged since
December 1, 1992 for his or its own account or in the capacity of director,
officer, partner or trustee. In addition, Mr. Zeikel is President, Mr. Glenn is
Executive Vice President and Mr. Richard is Treasurer of all or substantially
all of the investment companies described in the preceding paragraph and
Messrs. Durnin, Giordano, Harvey, Hewitt, Kirstein, Monagle and Ms. Griffin are
officers or directors/trustees of one or more of such companies.
<TABLE>
<CAPTION>
OTHER SUBSTANTIAL BUSINESS,
POSITIONS WITH PROFESSION, VOCATION OR
NAME MANAGER EMPLOYMENT
---- -------------- ---------------------------
<S> <C> <C>
ML&Co. ................. Limited Partner Financial Services Holding
Company
Princeton Services...... General Partner General Partner of FAM
Arthur Zeikel........... President President of FAM; President
and Director of Princeton
Services; Director of MLFD;
Executive Vice President of
ML&Co.; Executive Vice
President of Merrill Lynch.
Terry K. Glenn.......... Executive Vice President Executive Vice President of
FAM; Executive Vice President
and Director of Princeton
Services; President and
Director of
MLFD; Director of FDS;
President of Princeton
Administrators, L.P.
Bernard J. Durnin....... Senior Vice President Senior Vice President of FAM;
Senior Vice President of
Princeton Services
Vincent R. Giordano..... Senior Vice President Senior Vice President of FAM;
Senior Vice President of
Princeton Services
Elizabeth Griffin....... Senior Vice President Senior Vice President of FAM
</TABLE>
C-4
<PAGE>
<TABLE>
<S> <C> <C>
Norman R. Harvey........ Senior Vice President Senior Vice President of FAM;
Senior Vice President of
Princeton Services
N. John Hewitt.......... Senior Vice President Senior Vice President of FAM;
Senior Vice President of
Princeton Services
Philip L. Kirstein...... Senior Vice President, Senior Vice President, General
General Counsel and Counsel and Secretary of FAM;
Secretary Senior Vice President,
General Counsel, Director and
Secretary of Princeton
Services; Director of MLFD
Ronald M. Kloss......... Senior Vice President and Senior Vice President and
Controller Controller of FAM; Senior
Vice President and Controller
of Princeton Services
Stephen M.M. Miller..... Senior Vice President Executive Vice President of
Princeton Administrators,
L.P.
Joseph T. Monagle, Jr. . Senior Vice President Senior Vice President of FAM;
Senior Vice President of
Princeton Services
Gerald M. Richard....... Senior Vice President Senior Vice President and
and Treasurer Treasurer of FAM; Senior Vice
President and Treasurer of
Princeton Services; Vice
President and Treasurer of
MLFD
Ronald L. Welburn....... Senior Vice President Senior Vice President of FAM;
Senior Vice President of
Princeton Services
Anthony Wiseman......... Senior Vice President Senior Vice President of FAM;
Senior Vice President of
Princeton Services
</TABLE>
ITEM 29. PRINCIPAL UNDERWRITERS.
(a) MLFD acts as the principal underwriter for the Registrant and for each of
the open-end investment companies referred to in the first paragraph of Item 28
except Apex Municipal Fund, Inc., CBA Money Fund, CMA Government Securities
Fund, CMA Money Fund, CMA Multi-State Municipal Series Trust, CMA Tax-Exempt
Fund, CMA Treasury Fund, Convertible Holdings, Inc., The Corporate Fund
Accumulation Program, Inc., Corporate High Yield Fund, Inc., Corporate High
Yield Fund II, Inc., Emerging Tigers Fund, Inc., Income Opportunities Fund
1999, Inc., Income Opportunities Fund 2000, Inc., MuniAssets Fund, Inc.,
MuniBond Income Fund, Inc., The Municipal Fund Accumulation Program, Inc.,
MuniEnhanced Fund, Inc., MuniInsured Fund, Inc., MuniVest Fund, Inc., MuniVest
Fund II, Inc., MuniVest California Insured
C-5
<PAGE>
Fund, Inc., MuniVest Florida Fund, MuniVest Michigan Insured Fund, Inc.,
MuniVest New Jersey Fund, Inc., MuniVest New York Insured Fund, Inc., MuniVest
Pennsylvania Fund, MuniYield Arizona Fund, MuniYield Arizona Fund II, Inc.,
MuniYield California Fund, Inc., MuniYield California Insured Fund, Inc.,
MuniYield Florida Fund, MuniYield Florida Insured Fund, MuniYield Fund, Inc.,
MuniYield Insured Fund, Inc., MuniYield Insured Fund II, Inc., MuniYield
Michigan Fund, Inc., MuniYield Michigan Insured Fund, Inc., MuniYield New
Jersey Fund, Inc., MuniYield New Jersey Insured Fund, Inc., MuniYield New York
Insured Fund, Inc., MuniYield New York Insured Fund II, Inc., MuniYield New
York Insured Fund III, Inc., MuniYield Pennsylvania Fund, MuniYield Quality
Fund, Inc., MuniYield Quality Fund II, Inc., Senior High Income Portfolio,
Inc., Senior High Income Portfolio II, Inc., Senior Strategic Income Fund,
Inc., Taurus MuniCalifornia Holdings, Inc., Taurus MuniNew York Holdings, Inc.
and Worldwide DollarVest Fund, Inc.
(b) Set forth below is information concerning each director and officer of
MLFD. The principal business address of each such person is P.O. Box 9011,
Princeton, New Jersey 08543-9011, except that the address of Messrs. Aldrich,
Crook, Brady, Breen, Graczyk, Fatseas and Wasel is One Financial Center,
Boston, Massachusetts 02111-2633.
<TABLE>
<CAPTION>
(2) (3)
(1) POSITION AND OFFICES POSITIONS AND OFFICES
NAME WITH MLFD WITH REGISTRANT
---- -------------------- ---------------------
<S> <C> <C>
Terry K. Glenn.............. President and Director Executive Vice President
Arthur Zeikel............... Director President and Trustee
Philip L. Kirstein.......... Director None
William E. Aldrich.......... Senior Vice President None
Robert W. Crook............. Senior Vice President None
Kevin P. Boman.............. Vice President None
Michael J. Brady............ Vice President None
William M. Breen............ Vice President None
Sharon Creveling............ Vice President and None
Assistant Treasurer
Mark A. DeSario............. Vice President None
James T. Fatseas............ Vice President None
Stanley Graczyk............. Vice President None
Michelle T. Lau............. Vice President None
Debra W. Landsman-Yaros..... Vice President None
Gerald M. Richard........... Vice President and Treasurer
Treasurer
Salvatore Venezia........... Vice President None
William Wasel............... Vice President None
Robert Harris .............. Secretary None
</TABLE>
(c) Not applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
All accounts, books and other documents required to be maintained by Section
31(a) of the Investment Company Act and the rules thereunder will be maintained
at the offices of the Registrant, 800 Scudders Mill Road, Plainsboro, New
Jersey 08536, and Financial Data Services, Inc., 4800 Deer Lake Drive East,
Jacksonville, Florida 32246-6484.
ITEM 31. MANAGEMENT SERVICES.
Other than as set forth under the caption "Management of the Fund--Management
and Advisory Arrangements" in the Prospectus constituting Part A of the
Registration Statement and under the caption
C-6
<PAGE>
"Management of the Fund--Management and Advisory Arrangements" in the Statement
of Additional Information constituting Part B of the Registration Statement,
Registrant is not a party to any management-related services contract.
ITEM 32. UNDERTAKINGS.
(a) Not applicable.
(b) Not applicable.
(c) Registrant undertakes to furnish each person to whom a prospectus is
delivered with a copy of the Registrant's latest annual report to shareholders
upon request and without charge.
C-7
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933 AND THE INVESTMENT
COMPANY ACT OF 1940, THE REGISTRANT CERTIFIES THAT IT MEETS ALL OF THE
REQUIREMENTS FOR EFFECTIVENESS OF THIS REGISTRATION STATEMENT PURSUANT TO RULE
485(B) OF THE SECURITIES ACT OF 1933 AND HAS DULY CAUSED THIS AMENDMENT TO ITS
REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO
DULY AUTHORIZED, IN THE TOWNSHIP OF PLAINSBORO, AND STATE OF NEW JERSEY, ON THE
24TH DAY OF MARCH, 1995.
Merrill Lynch U.S. Treasury Money
Fund (Registrant)
/s/ Arthur Zeikel
By:__________________________________
(ARTHUR ZEIKEL, PRESIDENT)
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT TO
THE REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN
THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
/s/ Arthur Zeikel President and
------------------------------------- Trustee (Principal March 24, 1995
(ARTHUR ZEIKEL) Executive Officer)
/s/ Gerald M. Richard Treasurer (Principal
------------------------------------- Financial and March 24, 1995
(GERALD M. RICHARD) Accounting Officer)
Donald Cecil*
------------------------------------- Trustee
(DONALD CECIL)
M. Colyer Crum* Trustee
-------------------------------------
(M. COLYER CRUM)
Edward H. Meyer*
------------------------------------- Trustee
(EDWARD H. MEYER)
Jack B. Sunderland* Trustee
-------------------------------------
(JACK B. SUNDERLAND)
J. Thomas Touchton* Trustee
-------------------------------------
(J. THOMAS TOUCHTON)
/s/ Arthur Zeikel
*By:_________________________________
(ARTHUR ZEIKEL, ATTORNEY-IN-FACT) March 24, 1995
C-8
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
1(a) --Declaration of Trust dated October 30, 1990(a)
(b) --Amendment to the Declaration of Trust dated February 1, 1991(a)
2 --Bylaws of Registrant(a)
5(a) --Management Agreement between Registrant and Merrill Lynch Asset
Management(a)
5(b) --Supplement to Management Agreement between Registrant and Merrill
Lynch Asset Management
--Distribution Agreement between Registrant and Merrill Lynch Funds
6(a) Distributor, Inc.(a)
(b) --Selected Dealer Agreement(a)
8 --Custody Agreement between Registrant and The Bank of New York(a)
9 --Transfer Agency, Shareholder Servicing Agency and Proxy Agency
Agreement between Registrant and Financial Data Services, Inc.(a)
10 --Opinion of Brown & Wood, counsel for the Registrant
11 --Consent of Deloitte & Touche LLP, independent auditors for the
Registrant
13 --Certificate of Merrill Lynch Asset Management(a)
15 --Form of Shareholder Servicing Plan and Agreement of Registrant(a)
--Financial Data Schedule for the fiscal year ended November 30,
17 1994
</TABLE>
--------
(a) Refiled pursuant to the Electronic Data Gathering, Analysis and Retrieval
(EDGAR) phase-in requirements.
<PAGE>
APPENDIX FOR GRAPHIC AND IMAGE MATERIAL
Pursuant to Rule 304 of Regulation S-T, the following table presents
fair and accurate narrative descriptions of graphic and image material omitted
from this EDGAR Submission file due to ASCII-incompatibility and cross-
references this material to the location of each occurrence in the text.
DESCRIPTION OF OMITTED LOCATION OF GRAPHIC
GRAPHIC OR IMAGE OR IMAGE IN TEXT
---------------------- -------------------
Compass plate, circular Back cover of Prospectus and
graph paper and Merrill Lynch back cover of Statement of
logo including stylized market Additional Information
bull
<PAGE>
EXHIBIT 99.1(a)
DECLARATION OF TRUST
OF
MERRILL LYNCH TREASURY ASSETS FUND
THE DECLARATION OF TRUST of Merrill Lynch Treasury Assets Fund
is made the 30th day of October, 1990 by the parties signatory
hereto, as trustees (such persons, so long as they shall continue
in office in accordance with the terms of this Declaration of
Trust, and all other persons who at the time in question have been
duly elected or appointed as trustees in accordance with the
provisions of this Declaration of Trust and are then in office,
being hereinafter called the "Trustees").
W I T N E S S E T H
WHEREAS, the Trustees desire to form a trust fund under the
laws of Massachusetts for the investment and reinvestment of funds
contributed thereto; and
WHEREAS, it is proposed that the beneficial interest in the
trust assets be divided into transferable shares of beneficial
interest as hereinafter provided;
NOW, THEREFORE, the Trustees hereby declare that they will
hold in trust, all money and property contributed to the trust fund
to manage and dispose of the same for the benefit of the holders
from time to time of the shares of beneficial interest issued
hereunder and subject to the provisions hereof, to wit:
<PAGE>
ARTICLE I
The Trust
1.1. Name. The name of the trust created hereby (the
"Trust") shall be "Merrill Lynch Treasury Assets Fund", and so far
as may be practicable the Trustees shall conduct the activities of
the Trust, execute all documents and sue or be sued under that
name, which name (and the word "Trust" wherever hereinafter used)
shall refer to the Trustees as Trustees, and not individually, and
shall not refer to the officers, agents, employees or Shareholders
of the Trust. However, should the Trustees determine that the use
of the name of the Trust is not advisable, they may select such
other name for the Trust as they deem proper and the Trust may
conduct its activities under such other name. Any name change
shall be effective upon the execution by a majority of the then
Trustees of an instrument setting forth the new name. Any such
instrument shall have the status of an amendment to this
Declaration.
1.2. Definitions. As used in this Declaration, the following
terms shall have the following meanings:
The terms "Affiliated Person", "Assignment", "Commission",
"Interested Person" , "Majority Shareholder Vote" (the 67% or more
than 50% requirement of the third sentence of Section 2(a)(42) of
the 1940 Act, whichever may be applicable) and "Principal
Underwriter" shall have the meanings given them in the 1940 Act.
"Declaration" shall mean this Declaration of Trust as amended
from time to time. References in this Declaration to
"Declaration",, "hereof", "herein" and "hereunder" shall be deemed
to refer to the Declaration rather than' the article or section in
which such words appear.
"Fundamental Policies" shall mean the investment restrictions
set forth in the Prospectus and designated as fundamental policies
therein.
"Person" shall mean and include individuals, corporations,
partnerships, trusts, associations, joint ventures and other
entities, whether or not legal entities, and governments and
agencies and political subdivisions thereof.
Prospectus shall mean the currently effective Prospectus of
the Trust under the Securities Act of 1933, as amended, including
the Statement of Additional Information incorporated by reference
therein.
2.
<PAGE>
"Shares" shall mean the equal proportionate transferable units
of interest into which the beneficial interest in the Trust shall
be divided from time to time and includes fractions of Shares as
well as whole Shares.
"Trustees" shall mean the signatories to this Declaration of
Trust, so long as they shall continue in office in accordance with
the terms hereof, and all other persons who at the time in question
have been duly elected or appointed and have qualified as trustees
in accordance with the provisions hereof and are then in office,
are herein referred to as the "Trustees", and reference in this
Declaration of Trust to a Trustee or Trustees shall refer to such
person or persons in their capacity as Trustees hereunder.
"Trust Property" shall mean as of any particular time any and
all property, real or personal, tangible or intangible, which at
such time is owned or held by or for the account of the Trust or
the Trustees.
The "1940 Act" refers to the Investment Company Act of 1940
and the regulations promulgated thereunder, as amended from time to
time.
3.
<PAGE>
ARTICLE II
Trustees
2.1. Number and Qualification. The number of Trustees shall
be fixed from time to time by written instrument signed by a
majority of the Trustees then in office, provided, however, that
the number of Trustees shall in no event be less than three or more
than fifteen (except prior to the first public offering of Shares).
Any vacancy created by an increase in Trustees may, to the extent
permitted by the 1940 Act, be filled by the appointment of an
individual having the qualifications described in this Article made
by a written instrument signed by a majority of the Trustees then
in office. Any such appointment shall not become effective,
however, until the individual named in the written instrument of
appointment shall have accepted in writing such appointment and
agreed in writing to be bound by the terms of this Declaration. No
reduction in the number of Trustees shall have the effect of
removing any Trustee from office prior to the expiration of his
term. Whenever a vacancy in the number of Trustees shall occur,
until such vacancy is filled as provided in Section 2.4 hereof, the
Trustees in office, regardless of their number, shall have all the
powers granted to the Trustees and shall discharge all the duties
imposed upon the Trustees by this Declaration. A Trustee shall be
an individual at least 21 years of age who is not under legal
disability. Trustees need not own Shares.
2.2. Term of Office. Each Trustee shall (except in the event
of resignations or removals or vacancies pursuant to Section 2.3 or
2.4 hereof) hold office until his successor has been elected and is
qualified to serve as Trustee.
2.3. Resignation and Removal. Any Trustee may resign his
trust (without need for prior or subsequent accounting) by an
instrument in writing signed by him and delivered or mailed to the
Chairman, if any, the President or the Secretary, and such
resignation shall be effective upon such delivery, or at a later
date according to the terms of the instrument. Any of the Trustees
may be removed (provided the aggregate number of Trustees after
such removal shall not be less than the number required by Section
2.1 hereof) with cause, by the action of two-thirds of the
remaining Trustees. Any Trustee may be removed at any special
meeting of the Shareholders by a vote of two-thirds of the
outstanding Shares. Upon the resignation or removal of a Trustee,
or his otherwise ceasing to be a Trustee, he shall execute and
deliver such documents as the remaining Trustees shall require for
the purpose of conveying to the successor Trustee or the remaining
Trustees any Trust Property held in the name of the resigning or
removed Trustee. Upon the incapacity or death of any Trustee, his
legal representative shall execute and deliver on his behalf such
4.
<PAGE>
documents as the remaining Trustees shall require as provided in
the preceding sentence.
2.4. Vacancies. The term of office of a Trustee shall
terminate and a vacancy shall occur in the event of the death,
resignation, bankruptcy, adjudicated incompetence or other
incapacity to perform the duties of the office, or removal, of a
Trustee. No such vacancy shall operate to annul this Declaration
or to revoke any existing agency created pursuant to the terms of
this Declaration. In the case of a vacancy, the Shareholders,
acting at any meeting of Shareholders held in accordance with
Section 10.2 hereof, or, to the extent permitted by the 1940 Act, a
majority of the Trustees continuing in office acting by written
instrument or instruments, may fill such vacancy, and any Trustee
so elected by the Trustees shall hold office as provided in this
Declaration.
2.5. Meetings. Meetings of the Trustees shall be held from
time to time upon the call of the Chairman, if any, the President,
the Secretary or any two Trustees. Regular meetings of the
Trustees may be held without call or notice at a time and place
fixed by the By-Laws or by resolution of the Trustees. Notice of
any other meeting shall be mailed or otherwise given not less than
48 hours before the meeting but may be waived in writing by any
Trustee either before or after such meeting. The attendance of a
Trustee at a meeting shall constitute a waiver of notice of such
meeting except where a Trustee attends a meeting for the express
purpose of objecting to the transaction of any business on the
ground that the meeting has not been lawfully called or convened.
The Trustees may act with or without a meeting. A quorum for all
meetings of the Trustees shall be a majority of the Trustees.
Unless provided otherwise in this Declaration of Trust, any action
of the Trustees may be taken at a meeting by vote of a majority of
the Trustees present (a quorum being present) or without a meeting
by written consents of a majority of the Trustees.
Any committee of the Trustees, including an executive
committee, if any, may act with or without a meeting. A quorum for
all meetings of any such committee shall be a majority of the
members thereof. Unless provided otherwise in this Declaration,
any action of any such committee may be taken at a meeting by vote
of a majority of the members present (a quorum being present) or
without a meeting by written consent of a majority of the members.
With respect to actions of the Trustees and any committee of
the Trustees, Trustees who are Interested Persons of the Trust
within the meaning of Section 1.2 hereof or otherwise interested in
any action to be taken may be counted for quorum purposes under
this Section and shall be entitled to vote to the extent permitted
by the 1940 Act.
5.
<PAGE>
To the extent permitted by the 1940 Act, all or any one or
more Trustees may participate in a meeting of the Trustees or any
committee thereof by means of a conference telephone or similar
communications equipment by means of which all persons
participating in the meeting can hear each other and participation
in a meeting pursuant to such communications systems shall
constitute presence in person at such meeting.
2.6. Officers. The Trustees shall annually elect a
President, a Secretary and a Treasurer and may elect a Chairman.
The Trustees may elect or appoint or authorize the Chairman, if
any, or President to appoint such other officers or agents with
such powers as the Trustees may deem to be advisable. The Chairman
and President shall be and the Secretary and Treasurer may, but
need not, be a Trustee.
2.7. By-Laws. The Trustees may adopt and from time to time
amend or repeal the By-Laws for the conduct of the business of the
Trust.
6.
<PAGE>
ARTICLE III
Powers of Trustees
3.1. General. The Trustees shall have exclusive and absolute
control over the Trust Property and over the business of the Trust
to the same extent as if the Trustees were the sole owners of the
Trust Property and business in their own right, but with such
powers of delegation as may be permitted by this Declaration. The
Trustees may perform such acts as in their sole discretion are
proper for conducting the business of the Trust. The enumeration
of any specific power herein shall not be construed as limiting the
aforesaid power. Such powers of the Trustees may be exercised
without order of or resort to any court.
3.2. Investments. The Trustees shall have power, subject to
the Fundamental Policies, to:
(a) conduct, operate and carry on the business of an
investment company;
(b) subscribe for, invest in, reinvest in, purchase or
otherwise acquire, hold, pledge, sell, assign, transfer,
exchange, distribute or otherwise deal in or dispose of
negotiable or non-negotiable instruments, obligations,
evidences of indebtedness, certificates of deposit or
indebtedness, commercial paper, repurchase agreements,
reverse repurchase agreements and other securities,
including, without limitation, those issued, guaranteed or
sponsored by any state, territory or possession of the United
States and the District of Columbia and their political sub-
divisions, agencies and instrumentalities, or by the United
States Government or its agencies or instrumentalities, or
international instrumentalities, or by any bank, savings
institution, corporation or other business entity organized
under the laws of the United States and, to the extent
provided in the Prospectus and not prohibited by the
Fundamental Policies, organized under foreign laws; and to
exercise any and all rights, powers and privileges of
ownership or interest in respect of any and all such
investments of every kind and description, including, without
limitation, the right to consent and otherwise act with
respect thereto, with power to designate one or more persons,
firms, associations or corporations to exercise any of said
rights, powers and privileges in respect of any of said
instruments; and the Trustees shall be deemed to have the
foregoing powers with respect to any additional securities in
which the Trust may invest should the investment policies set
forth in the Prospectus or the Fundamental Policies be
amended.
7.
<PAGE>
The Trustees shall not be limited to investing in obligations
maturing before the possible termination of the Trust, nor shall
the Trustees be limited by any law limiting the investments which
may be made by fiduciaries.
3.3. Legal Title. Legal title to all the Trust Property
shall be vested in the Trustees as joint tenants except that the
Trustees shall have power to cause legal title to any Trust
Property to be held by or in the name of one or more of the
Trustees, or in the name of the Trust, or in the name of any other
Person as nominee, on such terms as the Trustees may determine,
provided that the interest of the Trust therein is appropriately
protected.
The right, title and interest of the Trustees in the Trust
Property shall vest automatically in each person who may hereafter
become a Trustee upon his due election and qualification. Upon the
resignation, removal or death of a Trustee he shall automatically
cease to have any right, title or interest in any of the Trust
Property, and the right, title and interest of such Trustee in the
Trust Property shall vest automatically in the remaining Trustees.
Such vesting and cessation of title shall be effective whether or
not conveyancing documents have been executed and delivered.
3.4. Issuance and Repurchase of Securities. The Trustees
shall have the power to issue, sell, repurchase, redeem, retire,
cancel, acquire, hold, resell, reissue, dispose of, transfer, and
otherwise deal in, Shares, including shares in fractional
denominations, and, subject to the more detailed provisions set
forth in Articles VIII and IX, to apply to any such repurchase,
redemption, retirement, cancellation or acquisition of Shares any
funds or property of the Trust whether capital or surplus or
otherwise, to the full extent now or hereafter permitted by the
laws of the Commonwealth of Massachusetts governing business
corporations.
3.5. Borrow Money. Subject to the Fundamental Policies, the
Trustees shall have power to borrow money or otherwise obtain
credit and to secure the same by mortgaging, pledging or otherwise
subjecting as security the assets of the Trust, including the
lending of portfolio securities, and to endorse, guarantee, or
undertake the performance of any obligation, contract or engagement
of any other person, firm, association or corporation.
3.6. Delegation; Committees. The Trustees shall have power,
consistent with their continuing exclusive authority over the
management of the Trust and the Trust Property, to delegate from
time to time to such of their number or to officers, employees or
agents of the Trust the doing of such things and the execution of
such instruments either in the name of the Trust or the names of
the Trustees or otherwise as the Trustees may deem expedient, to
8.
<PAGE>
the same extent as such delegation is permitted to directors of a
Massachusetts business corporation and is permitted by the 1940
Act.
3.7. Collection and Payment. The Trustees shall have power
to collect all property due to the Trust; to pay all claims, in-
cluding taxes, against the Trust Property; to prosecute, defend,
compromise or abandon any claims relating to the Trust Property; to
foreclose any security interest securing any obligations, by virtue
of which any property is owed to the Trust; and to enter into
releases, agreements and other instruments.
3.8. Expenses. The Trustees shall have power to incur and
pay any expenses which in the opinion of the Trustees are necessary
or incidental to carry out any of the purposes of this Declaration
of Trust, and to pay reasonable compensation from the funds of the
Trust to themselves as Trustees. The Trustees shall fix the
compensation of all officers, employees and Trustees. The Trustees
may pay themselves such compensation for special services,
including legal, underwriting, syndicating and brokerage services,
as they in good faith may deem reasonable and reimbursement for
expenses reasonably incurred by themselves on behalf of the Trust.
3.9. Miscellaneous Powers. The Trustees shall have the power
to: (a) employ or contract with such Persons as the Trustees may
deem desirable for the transaction of the business of the Trust;
(b) enter into joint ventures, partnerships and any other
combinations or associations; (c) purchase, and pay for out of
Trust Property, insurance policies insuring the Shareholders,
Trustees, officers, employees, agents, investment advisors,
distributors, selected dealers or independent contractors of the
Trust against all claims arising by reason of holding any such
position or by reason of any action taken or omitted by any such
Person in such capacity, whether or not constituting negligence, or
whether or not the Trust would have the power to indemnify such
Person against such liability; (d) establish pension, profit-
sharing, share purchase, and other retirement, incentive and
benefit plans for any Trustees, officers, employees and agents of
the Trust; (e) make donations, irrespective of benefit to the
Trust, for charitable, religious, educational, scientific, civic or
similar purposes; (f) to the extent permitted by law, indemnify any
Person with whom the Trust has dealings, including any advisor,
administrator, manager, distributor and selected dealers, to such
extent as the Trustees shall determine; (g) guarantee indebtedness
or contractual obligations of others; (h) determine and change the
fiscal year of the Trust and the method in which its accounts shall
be kept; and (i) adopt a seal for the Trust but the absence of such
seal shall not impair the validity of any instrument executed on
behalf of the Trust.
9.
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3.10. Further Powers. The Trustees shall have power to
conduct the business of the Trust and carry on its operations in
any and all of its branches and maintain offices both within and
without the Commonwealth of Massachusetts, in any and all states of
the United States of America, in the District of Columbia, and in
any and all commonwealths, territories, dependencies, colonies,
possessions, agencies or instrumentalities of the United States of
America and of foreign governments, and to do all such other things
and execute all such instruments as they deem necessary, proper or
desirable in order to promote the interests of the Trust although
such things are not herein specifically mentioned. Any
determination as to what is in the interests of the Trust made by
the Trustees in good faith shall be conclusive. In construing the
provisions of this Declaration, the presumption shall be in favor
of a grant of power to the Trustees. The Trustees will not be
required to obtain any court order to deal with the Trust Property.
10.
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ARTICLE IV
Advisory, Management and Distribution Arrangements
4.1. Advisory and Management Arrangements. Subject to a
Majority Shareholder Vote, as required by the 1940 Act, the
Trustees may in their discretion from time to time enter into
advisory or management contracts whereby the other party to such
contract shall undertake to furnish the Trustees such advisory and
management services as the Trustees shall from time to time
consider desirable and all upon such terms and conditions as the
Trustees may in their discretion determine. Notwithstanding any
provisions of this Declaration of Trust, the Trustees may authorize
any adviser or manager (subject to such general or specific in-
structions as the Trustees may from time to time adopt) to effect
purchases, sales, loans or exchanges of portfolio securities of the
Trust on behalf of the Trustees or may authorize any officer,
employee or Trustee to effect such purchases, sales, loans or
exchanges pursuant to recommendations of any such advisor,
administrator or manager (and all without further action by the
Trustees). Any such purchases, sales, loans and exchanges shall be
deemed to have been authorized by all of the Trustees.
4.2. Distribution Arrangements. The Trustees may in their
discretion from time to time enter into a contract, providing for
the sale of the Shares of the Trust to net the Trust not less than
the par value per share, whereby the Trust may either agree to sell
the Shares to the other party to the contract or appoint such other
party its sales agent for such Shares. In either case, the
contract shall be on such terms and conditions as the Trustees may
in their discretion determine not inconsistent with the provisions
of this Article IV or the By-Laws; and such contract may also
provide for the repurchase or sale of Shares by such other party as
principal or as agent of the Trust and may provide that such other
party may enter into selected dealer agreements with registered
securities dealers to further the purpose of the distribution or
repurchase of the Shares.
4.3. Parties to Contract. Any contract of the character
described in Section 4.1 and 4.2 of this Article IV or in Article
VII hereof may be entered into with any corporation, firm, trust or
association, although one or more of the Trustees or officers of
the Trust may be an officer, director, Trustee, shareholder, or
member of such other party to the contract, and no such contract
shall be invalidated or rendered voidable by reason of the
existence of any such relationship, nor shall any person holding
such relationship be liable merely by reason of such relationship
for any loss or expense to the Trust under or by reason of said
contract or accountable for any profit realized directly or indi-
rectly therefrom, provided that the contract when entered into was
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reasonable and fair and not inconsistent with the provisions of
this Article IV or the By-Laws. The same person (including a firm,
corporation, trust, or association) may be the other party to
contracts entered into pursuant to Sections 4.1 and 4.2 above or
Article VII, and any individual may be financially interested-or
otherwise affiliated with persons who are parties to any or all of
the contracts mentioned in this Section 4.3.
4.4. Provisions and Amendments. Any contract entered into
pursuant to Section 4.1 and 4.2 of this Article IV shall be
consistent with and subject to the requirements of Section 15 of
the 1940 Act with respect to its continuance in effect, its
termination, and the method of authorization and approval of such
contract or renewal thereof, and no amendment to any contract
entered into pursuant to Section 4.1 shall be effective unless
assented to by a Majority Shareholder Vote.
12.
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ARTICLE V
Limitations of Liability of Shareholders,
Trustees and Others
5.1. No Personal Liability of Shareholders, Trustees, etc.
No Shareholder shall be subject to any personal liability
whatsoever to any Person in connection with Trust Property or the
acts, obligations or affairs of the Trust. No Trustee, officer,
employee or agent of the Trust shall be subject to any personal
liability whatsoever to any Person, other than the Trust or its
Shareholders, in connection with Trust Property or the affairs of
the Trust, save only that arising from his bad faith, willful
misfeasance, gross negligence or reckless disregard of his duty to
such Person; and all such Persons shall look solely to the Trust
Property for satisfaction of claims of any nature arising in
connection with the affairs of the Trust. If any Shareholder,
Trustee, officer, employee, or agent, as such, of the Trust, is
made a party to any suit or proceeding to enforce any such
liability, he shall not on account thereof, be held to any personal
liability. The Trust shall indemnify and hold each Shareholder
harmless from and against all claims and liabilities, to which such
Shareholder may become subject by reason of his being or having
been a Shareholder, and shall reimburse such Shareholder for all
legal and other expenses reasonably incurred by him in connection
with any such claim or liability. The rights accruing to a
Shareholder under this Section 5.1 shall not exclude any other
right to which such Shareholder may be lawfully entitled, nor shall
anything herein contained restrict the right of the Trust to
indemnify or reimburse a Shareholder in any appropriate situation
even though not specifically provided herein.
5.2. Non-Liability of Trustees, etc. No Trustee, officer,
employee or agent of the Trust shall be liable to the Trust, its
Shareholders, or to any Shareholder, Trustee, officer, employee, or
agent thereof for any action or failure to act (including without
limitation the failure to compel in any way any former or acting
Trustee to redress any breach of trust) except for his own bad
faith, willful misfeasance, gross negligence or reckless disregard
of his duties.
5.3. Mandatory Indemnification. The Trust shall indemnify
each of its Trustees, officers, employees, and agents (including
persons who serve at its request as directors, officers or trustees
of another organization in which it has any interest, as a
shareholder, creditor or otherwise) against all liabilities and
expenses (including amounts paid in satisfaction of judgments, in
compromise, as fines and penalties, and as counsel fees) reasonably
incurred by him in connection with the defense or disposition of
any action, suit or other proceeding, whether civil or criminal, in
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which he may be involved or with which he may be threatened, while
in office or thereafter, by reason of his being or having been such
a trustee, officer, employee or agent, except with respect to any
matter as to which he shall have been adjudicated to have acted in
bad faith, willful misfeasance, gross negligence or reckless
disregard of his duties; provided, however, that as to any matter
disposed of by a compromise payment by such person, pursuant to a
consent decree or otherwise, no indemnification either for said
payment or for any other expenses shall be provided unless the
Trust shall have received a written opinion from independent legal
counsel approved by the Trustees to the effect that if either the
matter of willful misfeasance, gross negligence or reckless
disregard of duty, or the matter of good faith and reasonable
belief as to the best interests of the Trust, had been adjudicated,
it would have been adjudicated in favor of such person. The rights
accruing to any Person under these provisions shall not exclude any
other right to which he may be lawfully entitled; provided that no
Person may satisfy any right of indemnity or reimbursement granted
herein or in section 5.1 or to which he may be otherwise entitled
except out of the property of the Trust, and no Shareholder shall
be personally liable to any Person with respect to any claim for
indemnity or reimbursement or otherwise. The Trustees may make
advance payments in connection with indemnification under this
Section 5.3, provided that the indemnified person shall have given
a written undertaking to reimburse the Trust in the event it is
subsequently determined that he is not entitled to such
indemnification.
5.4. No Bond Required of Trustees. No Trustee shall, as
such, be obligated to give any bond or security or other security
for the performance of any of his duties hereunder.
5.5. No Duty of Investigation; Notice in Trust Instruments,
etc. No purchaser, lender, transfer agent or other person dealing
with the Trustees or any officer, employee or agent of the Trust
shall be bound to make any inquiry concerning the validity of any
transaction purporting to be made by the Trustees or by said
officer, employee or agent or be liable for the application of
money or property paid, loaned, or delivered to or on the order of
the Trustees or of said officer, employee or agent. Every
obligation, contract, undertaking, instrument, certificate, Share,
other security of the Trust, and every other act or thing
whatsoever executed in connection with the Trust shall be
conclusively-taken to have been executed or done by the executors
thereof only in their capacity as Trustees under this Declaration
of Trust or in their capacity as officers, employees or agents of
the Trust. Every written obligation, contract, undertaking,
instrument, certificate, Share, other security of the Trust made or
issued by the Trustees or by any officers, employees or agents of
the Trust, in their capacity as such, shall contain an appropriate
recital to the effect that the Shareholders, Trustees, officers,
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employees and agents of the Trust shall not personally be bound by
or liable thereunder, nor shall resort be had to their private
property for the satisfaction of any obligation or claim
thereunder, and appropriate references shall be made therein to the
Declaration of Trust, and may contain any further recital which
they may deem appropriate, but the omission of such recital shall
not operate to impose personal liability on any of the Trustees,
Shareholders, officers, employees or agents of the Trust. The
Trustees may maintain insurance for the protection of the Trust
Property, its Shareholders, Trustees, officers, employees and
agents in such amount as the Trustees shall deem adequate to cover
possible tort liability, and such other insurance as the Trustees
in their sole judgment shall deem advisable.
5.6. Reliance on Experts, etc. Each Trustee and officer or
employee of the Trust shall, in the performance of his duties, be
fully and completely justified and protected with regard to any act
or any failure to act resulting from reliance in good faith upon
the books of account or other records of the Trust, upon an opinion
of counsel, or upon reports made to the Trust by any of its
officers or employees or by any investment adviser, administrator,
manager, distributor, selected dealer, accountant, appraiser or
other expert or consultant selected with reasonable care by the
Trustees, officers or employees of the Trust, regardless of whether
such counsel or expert may also be a Trustee.
15.
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ARTICLE VI
Shares of Beneficial Interest
6.1. Beneficial Interest. The interest of the beneficiaries
hereunder shall be divided into transferable shares of beneficial
interest, all of one class, with par value $0.10 per share. The
number of such shares of beneficial interest authorized hereunder
is unlimited. All Shares issued hereunder including, without limi-
tation, Shares issued in connection with a dividend in Shares or a
split of Shares, shall be fully paid and nonassessable.
6.2. Rights of Shareholders. The ownership of the Trust
Property of every description and the right to conduct any business
hereinbefore described are vested exclusively in the Trustees, and
the Shareholders shall have no interest therein other than the
beneficial interest conferred by their Shares, and they shall have
no right to call for any partition or division of any property,
profits, rights or interests of the Trust nor can they be called
upon to share or assume any losses of the Trust or suffer an
assessment of any kind by virtue of their ownership of Shares. The
Shares shall be personal property giving only the rights in this
Declaration specifically set forth. The Shares shall not entitle
the holder to preference, preemptive, appraisal, conversion or
exchange rights (except for rights of appraisal specified in
Section 11.4).
6.3. Trust Only. It is the intention of the Trustees to
create only the relationship of Trustee and beneficiary between the
Trustees and each Shareholder from time to time. It is not the
intention of the Trustees to create a general partnership, limited
partnership, joint stock association, corporation, bailment or any
form of legal relationship other than a trust. Nothing in this
Declaration of Trust shall be construed to make the Shareholders,
either by themselves or with the Trustees, partners or members of a
joint stock association.
6.4. Issuance of Shares. The Trustees, in their discretion,
may from time to time without vote of the Shareholders issue
Shares, in addition to the then issued and outstanding Shares and
Shares held in the treasury, to such party or parties and for such
amount not less than par value and type of consideration, including
cash or property, at such time or times (including, without
limitation, each business day in accordance with the maintenance of
a constant net asset value per share as set forth in Section 9.3
hereof), and on such terms as the Trustees may deem best, and may
in such manner acquire other assets (including the acquisition of
assets subject to, and in connection with the assumption of,
liabilities) and businesses. In connection with any issuance of
Shares, the Trustees may issue fractional Shares. The Trustees may
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from time to time divide or combine the Shares into a greater or
lesser number without thereby changing the proportionate beneficial
interests of the Trust. Reductions in the number of outstanding
Shares may be made pursuant to the constant net asset value per
share formula set forth in Section 9.3. Contributions to the Trust
may be accepted for, and Shares shall be redeemed as, whole Shares
and/or 1/1,000ths of a Share or multiples thereof.
6.5. Register of Shares. A register shall be kept at the
Trust or any transfer agent duly appointed by the Trustees under
the direction of the Trustees which shall contain the names and
addresses of the Shareholders and the number of Shares held by them
respectively and a record of all transfers thereof. Such register
shall be conclusive as to who are the holders of the Shares and who
shall be entitled to receive dividends or distributions or
otherwise to exercise or enjoy the rights of Shareholders. No
Shareholder shall be entitled to receive payment of any dividend or
distribution, nor to have notice given to him as herein provided,
until he has given his address to a transfer agent or such other
officer or agent of the Trustees as shall keep the register for
entry thereon. It is not contemplated that certificates will be
issued for the Shares; however, the Trustees, in their discretion,
may authorize the issuance of share certificates and promulgate
appropriate rules and regulations as to their use.
6.6. Transfer Agent and Registrar. The Trustee shall have
power to employ a transfer agent or transfer agents, and a
registrar or registrars, with respect to the Shares. The transfer
agent or transfer agents may keep the applicable register and
record therein the original issues and transfers, if any, of the
said Shares. Any such transfer agent and registrars shall perform
the duties usually performed by transfer agents and registrars of
certificates of stock in a corporation, except as modified by the
Trustees.
6.7. Transfer of Shares. Shares shall be transferable on the
records of the Trust only by the record holder thereof or by his
agent thereto duly authorized in writing, upon delivery to the
Trustees or a transfer agent of the Trust of a duly executed
instrument of transfer, together with such evidence of the
genuineness of each such execution and authorization and of other
matters as may reasonably be required. Upon such delivery the
transfer shall be recorded on the applicable register of the Trust.
Until such record is made, the Shareholder of record shall be
deemed to be the holder of such Shares for all purposes hereof and
neither the Trustees nor any transfer agent or registrar nor any
officer, employee or agent of the Trust shall be affected by any
notice of the proposed transfer.
Any person becoming entitled to any Shares in consequence of
the death, bankruptcy, or incompetence of any Shareholder, or
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otherwise by operation of law, shall be recorded on the register of
Shares as the holder of such Shares upon production of the proper
evidence thereof to the Trustees or a transfer agent of the Trust,
but until such record is made, the Shareholder of record shall be
deemed to be the holder of such Shares for all purposes hereof and
neither the Trustees nor any transfer agent or registrar nor any
officer or agent of the Trust shall be affected by any notice of
such death, bankruptcy or incompetence, or other operation of law.
6.8. Notices. Any and all notices to which any Shareholder
hereunder may be entitled and any and all communications shall be
deemed duly served or given if mailed, postage prepaid, addressed
to any Shareholder of record at his last known address as recorded
on the register of the Trust.
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ARTICLE VII
Custodian
7.1. Appointment and Duties. The Trustees shall at all times
employ a custodian or custodians, meeting the qualifications for
custodians for portfolio securities of investment companies
contained in the 1940 Act, as custodian with respect to the Trust.
Any custodian shall have authority as agent of the Trust, but
subject to such restrictions, limitations and other requirements,
if any, as may be contained in the By-Laws of the Trust and the
1940 Act:
(1) to hold the securities owned by the Trust and
deliver the same upon written order;
(2) to receive and receipt for any moneys due to the
Trust and deposit the same in its own banking department (if
a bank) or elsewhere as the Trustees may direct;
(3) to disburse such funds upon orders or vouchers;
(4) if authorized by the Trustees, to keep the books
and accounts of the Trust and furnish clerical and accounting
services; and
(5) if authorized to do so by the Trustees, to compute
the net income of the Trust;
all upon such basis of compensation as may be agreed upon between
the Trustees and the custodian. If so directed by a Majority
Shareholder Vote, the custodian shall deliver and pay over all
property of the Trust held by it as specified in such vote.
The Trustees may also authorize each custodian to employ one
or more sub-custodians from time to time to perform such of the
acts and services of the custodian and upon such terms and
conditions, as may be agreed upon between the custodian and such
sub-custodian and approved by the Trustees, provided that in every
case such sub-custodian shall meet the qualifications for
custodians contained in the 1940 Act.
7.2. Central Certificate System. Subject to such rules,
regulations and orders as the Commission may adopt, the Trustees
may direct the custodian to deposit all or any part of the
securities owned by the Trust in a system for the central handling
of securities established by a national securities exchange or a
national securities association registered with the Commission
under the Securities Exchange Act of 1934, or such other person as
may be permitted by the Commission, or otherwise in accordance with
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the 1940 Act, pursuant to which system all securities of any
particular class or series of any issuer deposited within the
system are treated as fungible and may be transferred or pledged by
bookkeeping entry without physical delivery of such securities,
provided that all such deposits shall be subject to withdrawal only
upon the order of the Trust.
20.
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ARTICLE VIII
Redemption
8.1. Redemptions. All outstanding Shares may be redeemed at
the option of the holders thereof, upon and subject to the terms
and conditions provided in this Article VIII. The Trust shall,
upon application of any Shareholder or pursuant to authorization
from any Shareholder, redeem or repurchase from such Shareholder
outstanding Shares for an amount per share determined by the
application of a formula adopted for such purpose by the Trustees
(which formula shall be consistent with the 1940 Act); provided
that (a) such amount per share shall not exceed the cash equivalent
of the proportionate interest of each share in the assets of the
Trust at the time of the purchase or redemption and (b) if so
authorized by the Trustees, the Trust may, at any time and from
time to time, charge fees for effecting such redemption, at such
rates as the Trustees may establish, as and to the extent permitted
under the 1940 Act, and may, at any time and from time to time,
pursuant to such Act, suspend such right of redemption. The
procedures for effecting redemption shall be as set forth in the
Prospectus with respect to the applicable Series from time to time.
8.2. Redemption of Shares; Disclosure of Holding. If the
Trustees shall, at any time and in good faith, be of the opinion
that direct or indirect ownership of Shares or other securities of
the Trust has or may become concentrated in any person to an extent
which would disqualify the Trust as a regulated investment company
under the Internal Revenue Code, then the Trustees shall have the
power by lot or other means deemed equitable by them (i) to call
for redemption a number, or principal amount, of Shares or other
securities of the Trust sufficient, in the opinion of the Trustees,
to maintain or bring the direct or indirect ownership of Shares or
other securities of the Trust into conformity with the requirements
for such qualification and (ii) to refuse to transfer or issue
Shares or other securities of the Trust to any Person whose
acquisition of the Shares or other securities of the Trust in
question would in the opinion of the Trustees result in such
disqualification. The redemption shall be effected at a redemption
price determined in accordance with Section 8.1.
The holders of Shares or other securities of the Trust shall
upon demand disclose to the Trustees in writing such information
with respect to direct and indirect ownership of Shares or other
securities of the Trust as the Trustees deem necessary to comply
with the provisions of the Internal Revenue Code, or to comply with
the requirements of any other taxing authority.
8.3. Redemptions of Accounts of Less than $1,000. Due to the
relatively high cost of maintaining investment accounts of less
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than $1,000, the Trustees shall have the power to redeem shares at
a redemption price determined in accordance with Section 8.1 if at
any time the total investment in such account does not have a value
of at least $1,000; provided, however, that the Trustees may not
exercise such power with respect to Shares if the Prospectus does
not describe such power. In the event the Trustees determine to
exercise their power to redeem Shares provided in this Section 8.3,
shareholders shall be notified that the value of their account is
less than $1,000 and allowed 60 days to make an additional
investment before redemption is processed.
8.4. Redemptions Pursuant to Constant Net Asset Value
Formula. The Trust may also reduce the number of outstanding
Shares pursuant to the provisions of Section 9.3.
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ARTICLE IX
Determination of Net Asset Value_,
Net Income and Distributions
9.1. Net Asset Value. The net asset value of each
outstanding Share of the Trust shall be determined at such time or
times on such days as the Trustees may determine, in accordance
with the 1940 Act. The method of determination of net asset value
shall be determined by the Trustees and shall be as set forth in
the Prospectus. The power and duty to make the daily calculations
may be delegated by the Trustees to the adviser, administrator,
manager, custodian, transfer agent or such other person as the
Trustees may determine. The Trustees may suspend the daily
determination of net asset value to the extent permitted by the
1940 Act.
9.2. Distributions to Shareholders. The Trustees shall from
time to time distribute ratably among the Shareholders such
proportion of the net profits, surplus (including paid-in surplus),
capital, or assets held by the Trustees as they may deem proper.
Such distribution may be made in cash or property (including
without limitation any type of obligations of the Trust or any
assets thereof), and the Trustees may distribute ratably among the
Shareholders additional shares in such manner, at such times, and
on such terms as the Trustees may deem proper. Such distributions
may be among the Shareholders of record at the time of declaring a
distribution or among the Shareholders of record at such later date
as the Trustees shall determine. The Trustees may always retain
from the net profits such amount as they may deem necessary to pay
the debts or expenses of the Trust or to meet obligations of the
Trust, or as they may deem desirable to use in the conduct of its
affairs or to retain for future requirements or extensions of the
business. The Trustees may adopt and offer to Shareholders such
dividend reinvestment plans, cash dividend payout plans or related
plans as the Trustees shall deem appropriate.
Inasmuch as the computation of net income and gains for
Federal income tax purposes may vary from the computation thereof
on the books, the above provisions shall be interpreted to give the
Trustees the power in their discretion to distribute for any fiscal
year as ordinary dividends and as capital gains distributions,
respectively, additional amounts sufficient to enable the Trust to
avoid or reduce liability for taxes.
9.3. Constant Net Asset Value; Reduction of outstanding
Shares. The Trustees shall have the power to determine the net
income of the Trust on each day the net asset value is determined
as provided in Section 9.1 and at each such determination declare
such net income as dividends with the result that the net asset
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value per share of the Trust shall remain at a constant dollar
value. The determination of net income and the resultant
declaration of dividends shall be as set forth in the Prospectus.
In such event fluctuations in value may be reflected in the number
of outstanding Shares in each Shareholder's account. It is
expected that the Trust will have a positive net income at the time
of each determination. If for any reason such net income is a
negative amount, the Trust may offset such amount against dividends
accrued in the account of the Shareholder. If and to the extent
such negative amount exceeds such accrued dividends, the Trust
shall have authority to reduce the number of the outstanding
Shares. Such reduction will be effected by having each Shareholder
proportionately contributing to capital the necessary Shares that
represent the amount of the excess upon such determination. Each
Shareholder will be deemed to have agreed to such contribution in
these circumstances by his investment in the Trust. This procedure
will permit the net asset value per share of the Trust to be
maintained at a constant dollar value per share.
The Trustees, by resolution, may discontinue or amend the
practice of maintaining the net asset value per share at a constant
dollar amount at any time and such modification shall be evidenced
by appropriate changes in the Prospectus.
9.4. Power to Modify Foregoing Procedures. Notwithstanding
any of the foregoing provisions of this Article IX, the Trustees
may prescribe, in their absolute discretion, such other bases and
times for determining the per share net asset value of the Trust's
Shares or net income, or the declaration and payment of dividends
and distributions as they may deem necessary or desirable to enable
the Trust to comply with any provision of the 1940 Act, or any se-
curities association registered under the Securities Exchange Act
of 1934, or any order of exemption issued by said Commission, all
as in effect now or hereafter amended or modified.
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ARTICLE X
Shareholders
10.1. Voting Powers. The Shareholders shall have power to
vote (i) for the removal of Trustees as provided in Section 2.3,
(ii) with respect to any advisory or management contract as
provided in section 4.1, (iii) with respect to the amendment of
this Declaration as provided in Section 11.3, (iv) with respect to
such additional matters relating to the Trust as may be required or
authorized by the 1940 Act, the laws of the Commonwealth of
Massachusetts or other applicable law or by this Declaration or by
the By-Laws of the Trust, and (v) with respect to such additional
matters relating to the Trust as may be properly submitted for
Shareholder approval.
10.2. Meetings of Shareholders. Special meetings of the
Shareholders may be called at any time by a majority of the
Trustees and shall be called by any Trustee upon written request of
Shareholders holding in the aggregate not less than 10% of the
outstanding Shares having voting rights, such request specifying
the purpose or purposes for which such meeting is to be called.
Any such meeting shall be held within or without the Commonwealth
of Massachusetts on such day and at such time as the Trustees shall
designate. The holders of a majority of outstanding Shares present
in person or by proxy shall constitute a quorum for the transaction
of any business, except as may otherwise be required by the 1940
Act, the laws of the Commonwealth of Massachusetts or other
applicable law or by this Declaration or the By-Laws of the Trust.
If a quorum is present at a meeting, the affirmative vote of a
majority of the Shares represented at the meeting constitutes the
action of the Shareholders, unless the 1940 Act, the laws of the
Commonwealth of Massachusetts or other applicable law, this
Declaration or the By-Laws of the Trust requires a greater number
of affirmative votes.
10.3. Notice of Meetings. Notice of all meetings of the
Shareholders, stating the time, place and purposes of the meeting,
shall be given by the Trustees by mail to each Shareholder at his
registered address, mailed at least 10 days and not more than 60
days before the meeting. Only the business stated in the notice of
the meeting shall be considered at such meeting. Any adjourned
meeting may be held as adjourned without further notice.
10.4. Record Date for Meetings. For the purpose of
determining the Shareholders who are entitled to notice of and to
vote at any meeting, or to participate in any distribution, or for
the purpose of any other action, the Trustees may from time to time
close the transfer books for such period, not exceeding 30 days, as
the Trustees may determine; or without closing the transfer books
the Trustees may fix a date not more than 60 days prior to the date
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of any meeting of Shareholders or daily dividends or other action
as a record date for the determination of the Persons to be treated
as Shareholders of record for such purposes, except for dividend
payments which shall be governed by Section 9.2 hereof.
10.5. Proxies, etc. At any meeting of Shareholders, any
holder of Shares entitled to vote thereat may vote by proxy,
provided that no proxy shall be voted at any meeting unless it
shall have been placed on file with the Secretary, or with such
other officer or agent of the Trust as the Secretary may direct,
for verification prior to the time at which such vote shall be
taken. Pursuant to a resolution of a majority of the Trustees,
proxies may be solicited in the name of one or more Trustees or one
or more of the officers of the Trust. Only Shareholders of record
shall be entitled to vote. Each full Share shall be entitled to
one vote and fractional Shares shall be entitled to a vote of such
fraction. When any Share is held jointly by several persons, any
one of them may vote at any meeting in person or by proxy in
respect of such Share, but if more than one of them shall be
present at such meeting in person or by proxy, and such joint
owners or their proxies so present disagree as to any vote to be
cast, such vote shall not be received in respect of such Share. A
proxy purporting to be executed by or on behalf of a Shareholder
shall be deemed valid unless challenged at or prior to its
exercise, and the burden of proving invalidity shall rest on the
challenger. If the holder of any such Share is a minor or a person
of unsound mind, and subject to guardianship or to the legal
control of any other person as regards the charge or management of
such Share, he may vote by his guardian or such other person
appointed or having such control, and such vote may be given in
person or by proxy.
10.6. Reports. The Trustees shall cause to be prepared at
least annually a report of operations containing a balance sheet
and statement of income and undistributed income of the Trust
prepared in conformity with generally accepted accounting
principles and an opinion of an independent public accountant on
such financial statements. Copies of such reports shall be mailed
to all Shareholders of record within the time required by the 1940
Act, and in any event within a reasonable period preceding any
meeting of Shareholders. The Trustees shall, in addition, furnish
to the Shareholders at least annually, interim reports containing
an unaudited balance sheet as of the end of such period and an
unaudited statement of income and surplus for the period from the
beginning of the current fiscal year to the end of such period.
10.7. Inspection of Records. The records of the Trust shall
be open to inspection by Shareholders to the same extent as is
permitted shareholders of a Massachusetts business corporation.
26.
<PAGE>
10.8. Shareholder Action by Written Consent. Any action
which may be taken by Shareholders may be taken without a meeting
if a majority of Shareholders entitled to vote on the matter (or
such larger proportion thereof as shall be required by any express
provision of this Declaration) consent to the action in writing and
the written consents are filed with the records of the meetings of
Shareholders. Such consent shall be treated for all purposes as a
vote taken at a meeting of Shareholders.
27.
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ARTICLE XI
Duration; Termination of Trust;
Amendment; Mergers, Etc.
11.1. Duration. Subject to possible termination in
accordance with the provisions of Section 11.2 hereof, the Trust
created hereby shall continue until the expiration of 20 years
after the death of the last survivor of the initial Trustees named
herein and the following named persons:
Name Address Date of Birth
Emily Sarah Abbott Beeson 33 Husted Lane May 5, 1987
Greenwich, CT 06830
Morgan Robert Franklin Beeson 33 Husted Lane May 25, 1990
Greenwich, CT 06830
Samuel Gray Drury Bieler 200 East 28th Street June 26, 1990
New York, NY 10016
Emily Elizabeth Bruno 44 Sturgis Road January 16, 1990
Bronxville, NY 10708
Michael Lawrence Kaplan 40 Revere Road
Port Washington, NY 11050 July 28, 1989
Daryl Lian Kleiman 300 Rector Place May 9, 1986
New York, NY 10280
11.2. Termination.
(a) The Trust may be terminated by the affirmative vote
of the holders of not less than two-thirds of the Shares at any
meeting of Shareholders or by an instrument in writing, without a
meeting, signed by a majority of the Trustees and consented to by
the holders of not less than two-thirds of such Shares. Upon the
termination of the Trust,
(i) The Trust shall carry on no business except for
the purpose of winding up its affairs.
(ii) The Trustees shall proceed to wind up the affairs
of the Trust and all of the powers of the Trustees under
this Declaration shall continue until the affairs of the
Trust shall have been wound up, including the power to
fulfill or discharge the contracts of the Trust, collect its
assets, sell, convey, assign, exchange, transfer or
28.
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otherwise dispose of all or any part of the remaining Trust
Property to one or more persons at public or private sale
for consideration which may consist in whole or in part of
cash, securities or other property of any kind, discharge or
pay its liabilities, and do all other acts appropriate to
liquidate its business; provided that any sale, conveyance,
assignment, exchange, transfer or other disposition of all
or substantially all the Trust Property shall require
approval of the principal terms of the transaction and the
nature and amount of the consideration by vote or consent of
the holders of a majority of the Shares entitled to vote.
(iii) After paying or adequately providing for the
payment of all liabilities, and upon receipt of such
releases, indemnities and refunding agreements, as they deem
necessary for their protection, the Trustees may distribute
the remaining Trust Property, in cash or in kind or partly
each, among the Shareholders according to their respective
rights.
(b) After termination of the Trust and distribution to
the Shareholders as herein provided, a majority of the Trustees
shall execute and lodge among the records of the Trust an
instrument in writing setting forth the fact of such termination.
Upon termination of the Trust, the Trustees shall thereupon be
discharged from all further liabilities and duties hereunder, and
the rights and interests of all Shareholders shall thereupon
cease.
11.3. Amendment Procedure.
(a) This Declaration may be amended by the affirmative
vote of the holders of not less than a majority of the Shares at
any meeting of Shareholders or by an instrument in writing,
without a meeting, signed by a majority of the Trustees and
consented to by the holders of not less than a majority of such
Shares. The Trustees may also amend this Declaration without the
vote or consent of Shareholders if they deem it necessary to
conform this Declaration to the requirements of applicable federal
laws or regulations or the requirements of the regulated
investment company provisions of the Internal Revenue Code, but
the Trustees shall not be liable for failing so to do. The
Trustees may also amend this Declaration without the vote or
consent of Shareholders if they deem it necessary or desirable to
change the name of the Trust or to make other changes to this
Declaration which do not materially adversely affect the rights of
Shareholders.
(b) No amendment may be made, under Section 11.3 (a)
above, which would change any rights with respect to any Shares of
the Trust by reducing the amount payable thereon upon liquidation
29.
<PAGE>
of the Trust or by diminishing or eliminating any voting rights
pertaining thereto, except with the vote or consent of the holders
of two-thirds of the Shares. Nothing contained in this
Declaration shall permit the amendment of this Declaration to
impair the exemption from personal liability of the Shareholders,
Trustees, officers, employees and agents of the Trust or to permit
assessments upon Shareholders.
(c) A certification in recordable form signed by a
majority of the Trustees setting forth an amendment and reciting
that it was duly adopted by the Shareholders or by the Trustees as
aforesaid or a copy of the Declaration, as amended, in recordable
form, and executed by a majority of the Trustees, shall be
conclusive evidence of such amendment when lodged among the
records of the Trust.
Notwithstanding any other provision hereof, until such time
as a Registration Statement under the Securities Act of 1933, as
amended, covering the first public offering of Shares of the Trust
shall have become effective, this Declaration of Trust may be
terminated or amended in any respect by the affirmative vote of a
majority of the Trustees or by an instrument signed by a majority
of the Trustees.
11.4. Merger, Consolidation and Sale of Assets. The Trust
may merge or consolidate with any other corporation, association,
trust or other organization or may sell, lease or exchange all or
substantially all of the Trust Property, including its good will,
upon such terms and conditions and for such consideration when and
as authorized at any meeting of Shareholders called for the pur-
pose by the affirmative vote of the holders of not less than two-
thirds of the Shares, or by an instrument or instruments in
writing without a meeting, consented to by the holders of not less
than two-thirds of such Shares, and any such merger,
consolidation, sale, lease or exchange shall be deemed for all
purposes to have been accomplished under and pursuant to the
statutes of the Commonwealth of Massachusetts. In respect of any
such merger, consolidation, sale or exchange of assets, any
Shareholder shall be entitled to rights of appraisal of his Shares
to the same extent as a shareholder of a Massachusetts business
corporation in respect of a merger, consolidation, sale or
exchange of assets of a Massachusetts business corporation, and
such rights shall be his exclusive remedy in respect of his
dissent from any such action.
11.5. Incorporation. With the approval of the holders of a
majority of the Shares, the Trustees may cause to be organized or
assist in organizing a corporation or corporations under the laws
of any jurisdiction or any other trust, partnership, association
or other organization to take over all of the Trust Property or to
carry on any business in which the Trust shall directly or
30.
<PAGE>
indirectly have any interest, and to sell, convey and transfer the
Trust Property to any such corporation, trust, association or
organization in exchange for the Shares or securities thereof or
otherwise, and to lend money to, subscribe for the Shares or
securities of, and enter into any contracts with any such
corporation, trust, partnership, association or organization, or
any corporation, partnership, trust, association or organization
in which the Trust holds or is about to acquire shares or any
other interest. The Trustees may also cause a merger or
consolidation between the Trust or any successor thereto and any
such corporation, trust, partnership, association or other
organization if and to the extent permitted by law, as provided
under the law then in effect. Nothing contained herein shall be
construed as requiring approval of Shareholders for the Trustees
to organize or assist in organizing one or more corporations,
trusts, partnerships, associations or other organizations and
selling, conveying or transferring a portion of the Trust Property
to such organizations or entities.
31.
<PAGE>
ARTICLE XII
Miscellaneous
12.1. Filing. This Declaration and any amendment hereto
shall be filed in the office of the Secretary of the Commonwealth
of Massachusetts and in such other places as may be required under
the laws of Massachusetts and may also be filed or recorded in
such other places as the Trustees deem appropriate. Each
amendment so filed shall be accompanied by a certificate signed
and acknowleged by a Trustee stating that such action was duly
taken in a manner provided herein, and unless such amendment or
such certificate sets forth some later time for the effectiveness
of such amendment, such amendment shall be effective upon its
filing. A restated Declaration, containing the original
Declaration and all amendments theretofore made, may be executed
from time to time by a majority of the Trustees and shall, upon
filing with the Secretary of the Commonwealth of Massachusetts, be
conclusive evidence of all amendments contained therein and may
thereafter be referred to in lieu of the original Declaration and
the various amendments thereto.
12.2. Principal Place of Business. The principal place of
business of the Trust is 800 Scudders Mill Road, Plainsboro, New
Jersey 08536.
12.3. Resident Agent. The Trust shall maintain a resident
agent in the Commonwealth of Massachusetts, which agent shall
initially be CT Corporation System, 10 Post Office Square, Boston,
Massachusetts 02109. The Trustees may designate a successor
resident agent, provided, however, that such appointment shall not
become effective until written notice thereof is delivered to the
office of the Secretary of the Commonwealth.
12.4. Governing Law. This Declaration is executed by the
Trustees and delivered in the Commonwealth of Massachusetts and
with reference to the laws thereof, and the rights of all parties
and the validity and construction of every provision hereof shall
be subject to and construed according to the laws of said State
and reference shall be specifically made to the business cor-
poration law of the Commonwealth of Massachusetts as to the
construction of matters not specifically covered herein or as to
which an ambiguity exists.
12.5. Counterparts. This Declaration may be simultaneously
executed in several counterparts, each of which shall be deemed to
be an original, and such counterparts, together, shall constitute
one and the same instrument, which shall be sufficiently evidenced
by any such original counterpart.
32.
<PAGE>
12.6. Reliance by Third Parties. Any certificate executed
by an individual who, according to the records of the Trust, or of
any recording office in which this Declaration may be recorded,
appears to be a Trustee hereunder, certifying to: (a) the number
or identity of Trustees or Shareholders, (b) the name of the Trust
(c) the due authorization of the execution of any instrument or
writing, (d) the form of any vote passed at a meeting of Trustees
or Shareholders, (e) the fact that the number of Trustees or
Shareholders present at any meeting or executing any written
instrument satisfies the requirements of this Declaration, (f) the
form of any By-Laws adopted by or the identity of any officers
elected by the Trustees, or (g) the existence of any fact or facts
which in any manner relate to the affairs of the Trust, shall be
conclusive evidence as to the matters so certified in favor of any
person dealing with the Trustees and their successors.
12.7. Provisions in Conflict With Law or Regulations.
(a) The provisions of this Declaration are severable,
and if the Trustees shall determine, with the advice of counsel,
that any of such provisions is in conflict with 1940 Act, the
regulated investment company provisions of the Internal Revenue
Code or with other applicable laws and regulations, the
conflicting provision shall be deemed never to have constituted a
part of this Declaration; provided, however, that such
determination shall not affect any of the remaining provisions of
this Declaration or render invalid or improper any action taken or
omitted prior to such determination.
(b) If any provision of this Declaration shall be held
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall attach only to such provision in such
jurisdiction and shall not in any manner affect such provision in
any other jurisdiction or any other provision of this Declaration
in any jurisdiction.
33.
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused these
presents to be executed as of the day and year first above
written.
/s/ Philip L. Kirstein
-------------------------------
Phillip L. Kirstein
79 West Shore Drive
Pennington, New Jersey 08534
/s/ Mark B. Goldfus
-------------------------------
Mark B. Goldfus
50 Bergen Street
Lawrenceville, New Jersey 08648
-------------------------------
Susan B. Baker
1015 Buckingham Way
Morrisville, Pennsylvania 19067
/s/ William E. Aldrich
-------------------------------
William E. Aldrich
11 Windsor Road
Needham, Massachusetts 02192
34.
<PAGE>
EXHIBIT 99.1(b)
MERRILL LYNCH TREASURY ASSETS FUND
The undersigned, Philip L. Kirstein, Mark B. Goldfus, Susan
B. Baker and William E. Aldrich, constituting all of the Trustees
of Merrill Lynch Treasury Assets Fund (the "Trust"), a
Massachusetts business trust having no shareholders of the date
hereof, hereby certify that the Trustees of the Trust have duly
adopted the following amendment to the Declaration of Trust dated
the 30th day of October, 1990.
VOTED: That the Declaration of Trust dated October 30, 1990 be
and it hereby is amended to change the name of the Trust
from "Merrill Lynch Treasury Assets Fund" to "Merrill
Lynch U.S. Treasury Money Fund" in the following manner:
1.1 Name. The name of the trust created hereby (the
"Trust") shall be Merrill Lynch U.S. Treasury Money
Fund, and so far as may be practicable the Trustees
shall conduct the activities of the Trust, execute all
documents and sue or be sued under that name, which name
(and the word "Trust" wherever hereinafter used) shall
refer to the Trustees as Trustees, and not individually,
and shall not refer to the officers, agents, employees
or Shareholders of the Trust. However, should the
Trustees determine that the use of the name of the Trust
is not advisable, they may select such other name for
the Trust as they deem proper and the Trust may conduct
its activities under such other name. Any name change
shall be effective upon the execution by a majority of
the then Trustees of an instrument setting forth the new
name. Any such instrument shall have the status of an
amendment to this Declaration.
<PAGE>
IN WITNESS WHEREOF, the undersigned have signed this
Certificate in duplicate original counterparts and have caused a
duplicate original to be lodged among the records of the Trust as
required by Article XI, Section 11.3(c) of the Declaration of
Trust, as of the 1st day of February, 1991.
/s/ Phillip L. Kirstein
-------------------------------
Phillip L. Kirstein
79 West Shore Drive
Pennington, New Jersey 08534
/s/ Mark B. Goldfus
-------------------------------
Mark B. Goldfus
509 Bergen Street
Lawrenceville, New Jersey 08648
/s/ Susan B. Baker
-------------------------------
Susan B. Baker
1015 Buckingham Way
Morrisville, Pennsylvania 19067
/s/ William E. Aldrich
-------------------------------
William E. Aldrich
11 Windsor Road
Needham, Massachusetts 02192
2
<PAGE>
MERRILL LYNCH TREASURY ASSETS FUND
BY-LAWS
These By-Laws are made and adopted pursuant to Section 2.7
of the Declaration of Trust establishing MERRILL LYNCH TREASURY
ASSETS FUND, dated October 30, 1990, as from time to time amended
(hereinafter called the "Declaration"). All words and terms
capitalized in these By-Laws shall have the meaning or meanings
set forth for such words or terms in the Declaration.
ARTICLE I
Shareholder Meetings
Section 1.1. Chairman. The Chairman, if any, shall act as
chairman at all meetings of the Shareholders; in his absence, the
President shall act as chairman; and in the absence of the
Chairman and President, the Trustee or Trustees present at each
meeting may elect a temporary chairman for the meeting, who may
be one of themselves.
Section 1.2. Proxies; Voting. Shareholders may vote either
in person or by duly executed proxy and each full share repre-
sented at the meeting shall have one vote, all as provided in
Article X of the Declaration. No proxy shall be valid after
eleven (11) months from the date of its execution, unless a
longer period is expressly stated in such proxy.
Section 1.3. Closing of Transfer Books and Fixing Record
Dates. For the purpose of determining the Shareholders who are
entitled to notice of or to vote or act at any meeting, including
any adjournment thereof, or who are entitled to participate in
<PAGE>
from time to time close the transfer books or fix a record date
in the manner provided in Section 10.4 of the Declaration. If
the Trustees do not prior to any meeting of Shareholders so fix a
record date or close the transfer books, then the date of mailing
notice of the meeting or the date upon which the dividend
resolution is adopted, as the case may be, shall be the record
date.
Section 1.4. Inspectors of Election. In advance of any
meeting of Shareholders, the Trustees may appoint Inspectors of
Election to act at the meeting or any adjournment thereof. If
Inspectors of Election are not so appointed, the Chairman, if
any, of any meeting of Shareholders may, and on the request of
any Shareholder or his proxy shall, appoint Inspectors of
Election of the meeting. The number of Inspectors shall be
either one or three. If appointed at the meeting on the request
of one or more Shareholders or proxies, a majority of Shares
present shall determine whether one or three Inspectors are to be
appointed, but failure to allow such determination by the
Shareholders shall not affect the validity of the appointment of
Inspectors of Election. In case any person appointed as
Inspector fails to appear or fails or refuses to act, the vacancy
may be filled by appointment made by the Trustees in advance of
the convening of the meeting or at the meeting by the person
acting as chairman. The Inspectors of Election shall determine
the number of Shares outstanding, the Shares represented at the
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meeting, the existence of a quorum, the authenticity, validity
and effect of proxies, shall receive votes, ballots or consents,
shall hear and determine all challenges and questions in any way
arising in connection with the right to vote, shall count and
tabulate all votes or consents, determine the results, and do
such other acts as may be proper to conduct the election or vote
with fairness to all Shareholders. If there are three Inspectors
of Election, the decision, act or certificate of a majority is
effective in all respects as the decision, act or certificate of
all. on request of the Chairman, if any, of the meeting, or of
any Shareholder or his proxy, the Inspectors of Election shall
make a report in writing of any challenge or question or matter
determined by them and shall execute a certificate of any facts
found by them.
Section 1.5. Records at Shareholder Meetings. At each
meeting of the Shareholders there shall be open for inspection
the minutes of the last previous Shareholder Meeting of the Trust
and a list of the Shareholders of the Trust, certified to be true
and correct by the Secretary or other proper agent of the Trust,
as of the record date of the meeting or the date of closing of
transfer books, as the case may be. Such list of Shareholders
shall contain the name of each Shareholder in alphabetical order
and the address of and number of Shares owned by such
Shareholder. Shareholders shall have such other rights and
procedures of inspection of the books and records of the Trust as
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<PAGE>
are granted to shareholders of a Massachusetts business
corporation.
ARTICLE II
Trustees
Section 2.1. Annual and Regular Meetings. The Trustees
shall hold an annual meeting for the election of officers and the
transaction of other business which may come before such meeting,
on such date as shall be fixed by the Trustees from time to time.
Regular meetings of the Trustees may be held without call or
notice at such place or places and times as the Trustees may by
resolution provide from time to time.
Section 2.2. Special Meetings. Special Meetings of the
Trustees shall be held upon the call of the Chairman, if any, the
President, the Secretary or any two Trustees, at such time, on
such day, and at such place, as shall be designated in the notice
of the meeting.
Section 2.3. Notice. Notice of a meeting shall be given by
mail or by telegram (which term shall include a cablegram) or
delivered personally. If notice is given by mail, it shall be
mailed not later than 48 hours preceding the meeting and if given
by telegram or personally, such telegram shall be sent or
delivery made not later than 48 hours preceding the meeting.
Notice by telephone shall constitute personal delivery for these
purposes. Notice of a meeting of Trustees may be waived before
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<PAGE>
or after any meeting by signed written waiver. Neither the
business to be transacted at, nor the purpose of, any meeting of
the Board of Trustees need be stated in the notice or waiver of
notice of such meeting, and no notice need be given of action
proposed to be taken by unanimous written consent. The
attendance of a Trustee at a meeting shall constitute a waiver of
notice of such meeting except where a Trustee attends a meeting
for the express purpose of objecting to the transaction of any
business on the ground that the meeting has not been lawfully
called or convened.
Section 2.4. Chairman; Records. The Chairman, if any,
shall act as chairman at all meetings of the Trustees; in his
absence, the President shall act as chairman; and, in the absence
of the Chairman and the President, the Trustees present shall
elect one of their number to act as temporary chairman. The
results of all actions taken at a meeting of the Trustees, or by
unanimous written consent of the Trustees, shall be recorded by
the Secretary.
ARTICLE III
Officers
Section 3.1. Officers of the Trust. The officers of the
Trust shall consist of a Chairman, if any, a President, a
Secretary, a Treasurer and such other officers or assistant
officers, including Vice Presidents, as may be elected by the
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<PAGE>
Trustees. Any two or more of the offices may be held by the same
person, except that the same person may not be both President and
Secretary. The Trustees may designate a Vice President as an
Executive Vice President and may designate the order in which the
other Vice Presidents may act. The Chairman and the President
shall be Trustees, but no other officer of the Trust need be a
Trustee.
Section 3.2. Election and Tenure. At the initial organ-
izational meeting and thereafter at each annual meeting of the
Trustees, the Trustees shall elect the Chairman, if any,
President, Secretary, Treasurer and such other officers as the
Trustees shall deem necessary or appropriate in order to carry
out the business of the Trust. Such officers shall hold office
until the next annual meeting of the Trustees and until their
successors have been duly elected and qualified. The Trustees
may fill any vacancy in office or add any additional officers at
any time.
Section 3.3. Removal of Officers. Any officer may be
removed at any time, with or without cause, by action of a
majority of the Trustees. This provision shall not prevent the
making of a contract of employment for a definite term with any
officer and shall have no effect upon any cause of action which
any officer may have as a result of removal in breach of a
contract of employment. Any officer may resign at any time by
notice in writing signed by such officer and delivered or mailed
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<PAGE>
to the Chairman, if any, President, or Secretary, and such
resignation shall take effect immediately upon receipt by the
Chairman, if any, President, or Secretary, or at a later date
according to the terms of such notice in writing.
Section 3.4. Bonds and Surety. Any officer may be required
by the Trustees to be bonded for the faithful performance of his
duties in such amount and with such sureties as the Trustees may
determine.
Section 3.5. Chairman, President, and Vice Presidents. The
Chairman, if any, shall, if present, preside at all meetings of
the Shareholders and of the Trustees and shall exercise and
perform such other powers and duties as may from time to time be
assigned to him by the Trustees. Subject to such supervisory
powers, if any, as may be given by the Trustees to the Chairman,
if any, the President shall be the chief executive officer of the
Trust and, subject to the control of the Trustees, shall have
general supervision, direction and control of the business of the
Trust and of its employees and shall exercise such general powers
of management as are usually vested in the office of President of
a corporation. In the absence of the Chairman, if any, the
President shall preside at all meetings of the Shareholders and
the Trustees. The President shall be, ex-officio, a member of
all standing committees,, except as otherwise provided in the
resolutions or instruments creating any such committees. Subject
to direction of the Trustees, the Chairman, if any, and the
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<PAGE>
President shall each have power in the name and on behalf of the
Trust to execute any and all loan documents, contracts,
agreements, deeds, mortgages, and other instruments in writing,
and to employ and discharge employees and agents of the Trust.
Unless otherwise directed by the Trustees, the Chairman, if any,
and the President shall each have full authority and power, on
behalf of all of the Trustees, to attend and to act and to vote,
on behalf of the Trust at any meetings of business organizations
in which the Trust holds an interest, or to confer such powers
upon any other persons, by executing any proxies duly authorizing
such persons. The Chairman, if any, and the President shall have
such further authorities and duties as the Trustees shall from
time to time determine. In the absence or disability of the
President," the Vice Presidents in order of their rank as fixed by
the Trustees or, if more than one and not ranked, the Vice
President designated by the Trustees, shall perform all of the
duties of the President, and when so acting shall have all the
powers of and be subject to all of the restrictions upon the
President. Subject to the direction of the Trustees, and of the
President, each Vice President shall have the power in the name
and on behalf of the Trust to execute any and all loan documents,
contracts, agreements, deeds, mortgages and other instruments in
writing, and, in addition, shall have such other duties and
powers as shall be designated from time to time by the Trustees
or by the President.
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<PAGE>
Section 3.6. Secretary. The Secretary shall keep the
minutes of all meetings of, and record all votes of,
Shareholders, Trustees and the Executive Committee, if any. He
shall be custodian of the seal of the Trust, if any, and he (and
any other person so authorized by the Trustees) shall affix the
seal or, if permitted, a facsimile thereof, to any instrument
executed by the Trust which would be sealed by a Massachusetts
corporation executing the same or a similar instrument and shall
attest the seal and the signature or signatures of the officer or
officers executing such instrument on behalf of the Trust. The
Secretary shall also perform any other duties commonly incident
to such office in a Massachusetts business corporation, and shall
have such other authorities and duties as the Trustees shall from
time to time determine.
Section 3.7. Treasurer. Except as otherwise directed by
the Trustees, the Treasurer shall have the general supervision of
the monies, funds, securities, notes receivable and other
valuable papers and documents of the Trust, and shall have and
exercise under the supervision of the Trustees and of the
President all powers and duties normally incident to his office.
He may endorse for deposit or collection all notes, checks and
other instruments payable to the Trust or to its order. He shall
deposit all funds of the Trust in such depositories as the
Trustees shall designate. He shall be responsible for such
disbursement of the funds of the Trust as may be ordered by the
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<PAGE>
Trustees or the President. He shall keep accurate account of the
books of the Trust's transactions which shall be the property of
the Trust, and which together with all other property of the
Trust in his possession, shall be subject at all times to the
inspection and control of the Trustees. Unless the Trustees
shall otherwise determine, the Treasurer shall be the principal
accounting officer of the Trust and shall also be the principal
financial officer of the Trust. He shall have such other duties
and authorities as the Trustees shall from time to time
determine. Notwithstanding anything to the contrary herein
contained, the Trustees may authorize any adviser, administrator,
manager or transfer agent to maintain bank accounts and deposit
and disburse funds of the Trust.
Section 3.8. Other Officers and Duties. The Trustees may
elect such other officers and assistant officers as they shall
from time to time determine to be necessary or desirable in order
to conduct the business of the Trust. Assistant officers shall
act generally in the absence of the officer whom they assist and
shall assist that officer in the duties of his office. Each
officer, employee and agent of the Trust shall have such other
duties and authority as may be conferred upon him by the Trustees
or delegated to him by the President.
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<PAGE>
ARTICLE IV
Miscellaneous
Section 4.1. Custodians. In accordance with Section 7.1 of
the Declaration, the funds of the Trust shall be deposited with
such custodian or custodians as the Trustees shall designate and
shall be drawn out on checks, drafts or other orders signed by
such officer, officers, agent or agents (including any adviser,
administrator or manager), as the Trustees may from time to time
authorize.
Section 4.2. Signatures. All contracts and other
instruments shall be executed on behalf of the Trust by such
officer, officers, agent or agents, as provided in these By-Laws
or as the Trustees may from time to time by resolution provide.
Section 4.3. Seal. The seal of the Trust, if any, may be
affixed to any document, and the seal and its attestation may be
lithographed, engraved or otherwise printed on any document with
the same force and effect as if it had been imprinted and
attested manually in the same manner and with the same effect as
if done by a Massachusetts business corporation.
ARTICLE V
Share Certificates and Share Transfers
Section 5.1. Share Certificates-. Certificates representing
Shares of the Trust shall not be issued.
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<PAGE>
Section 5.2. Transfer Agents, Registrars and the Like. As
provided in Section 6.6 of the Declaration, the Trustees shall
have authority to employ and compensate such transfer agents and
registrars with respect to the Shares of the Trust as the
Trustees shall deem necessary or desirable. In addition, the
Trustees shall have power to employ and compensate such dividend
disbursing agents, warrant agents and agents for the reinvestment
of dividends as they shall deem necessary or desirable. Any of
such agents shall have such power and authority as is delegated
to any of them by the Trustees.
Section 5.3. Transfer of Shares. The Shares of the Trust
shall be transferable on the books of the Trust only upon
delivery to the Trustees or a transfer agent of the Trust of
proper documentation as provided in Section 6.7 of the Declara-
tion, and on surrender of the certificate or certificates, if
issued, for such Shares properly endorsed or accompanied by a
duly executed stock transfer power and the payment of all taxes
thereon. The Trust, or its transfer agents, shall be authorized
to refuse any transfer unless and until presentation of such
evidence as may be reasonably required to show that the requested
transfer is proper.
Section 5.4. Registered Shareholders. The Trust may deem
and treat the holder of record of any Share as the absolute owner
thereof for all purposes and shall not be required to take any
notice of any right or claim of right of any other person.
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<PAGE>
Section 5.5. Regulations. The Trustees may make such
additional rules and regulations, not inconsistent with these
By-Laws, as it may deem expedient concerning the issue, transfer
and registration of Shares of the Trust.
ARTICLE VI
Advancement of Indemnification Moneys
Section 6.1 Insofar as the conditional advancing of
indemnification moneys to Trustees, officers, employees or agents
of the Trust pursuant to Section 5.3 of the Declaration for
actions based upon the Investment Company Act of 1940 may be
concerned, such payments will be made only on the following
conditions: (i) the advances must be limited to amounts used, or
to be used, for the preparation or presentation of a defense to
the action, including costs connected with the preparation of a
settlement; (ii) advances may be made only upon receipt of a
written promise by, or on behalf of, the recipient to repay that
amount of the advance which exceeds the amount to which it is
ultimately determined that he is entitled to receive from the
Trust by reason of indemnification; and (iii) (a) such promise
must be secured by a surety bond, other suitable insurance or an
equivalent form of security which assures that any repayments may
be obtained by the Trust without delay or litigation, which bond,
insurance or other form of security must be provided by the
recipient of the advance, or (b) a majority of a quorum of the
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<PAGE>
Trust's disinterested, non-party Trustees, or an independent
legal counsel in a written opinion, shall determine, based upon a
review of readily available facts, that the recipient of the
advance ultimately will be found entitled to indemnification.
ARTICLE VII
Amendment of By-Laws
Section 7.1. Amendment and Repeal of By-Laws. In accor-
dance with Section 2.7 of the Declaration, the Trustees shall
have the power to alter, amend or repeal the By-Laws or adopt new
By-Laws at any time. Action by the Trustees with respect to the
By-Laws shall be taken by an affirmative vote of a majority of
the Trustees. The Trustees shall in no event adopt By-Laws which
are in conflict with the Declaration, and any apparent incon-
sistency shall be construed in favor of the related provisions in
the Declaration.
The Declaration establishing Merrill Lynch Treasury Assets
Fund, a copy of which, together with all amendments thereto, is
on file in the office of the Secretary of the Commonwealth of
Massachusetts, provides that the name "Merrill Lynch Treasury
Assets Fund" refers to the Trustees under the Declaration
collectively as Trustees, but not as individuals or personally;
and no Trustee, shareholder, officer, employee or agent of
Merrill Lynch Treasury Assets Fund shall be held to any personal
liability, nor shall resort be had to their private property for
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<PAGE>
the satisfaction of any obligation or claim or otherwise in
connection with the affairs of said Merrill Lynch Treasury Assets
Fund but the "Trust Property" only shall be liable.
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<PAGE>
EXHIBIT 99.5(a)
MANAGEMENT AGREEMENT
AGREEMENT made this 5th day of February, 1991 by and
between MERRILL LYNCH U.S. TREASURY MONEY FUND, a Massachusetts
business trust (hereinafter referred to as the "Fund"), and
MERRILL LYNCH ASSET MANAGEMENT, INC., a Delaware corporation
(hereinafter referred to as the "Manager").
W I T N E S S E T H:
WHEREAS, the Fund is engaged in business as a diversified
open-end investment company registered under the Investment
Company Act of 1940, as amended (hereinafter referred to as the
"Investment Company Act"); and
WHEREAS, the Manager is willing to provide management and
investment advisory services to the Fund on the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the
covenants hereinafter contained, the Fund and the Manager agree
as follows:
ARTICLE I
DUTIES OF THE MANAGER
The Fund hereby employes the Manager to act as the manager
and investment adviser of the Fund and to furnish, or arrange for
affiliates to furnish, the management and investment advisory
services described below, subject to the supervision of the
Trustees of the Fund, for the period and on the terms and
conditions set forth in this Agreement. The Manager hereby
accepts such employment and agrees during such period, at its own
expense, to render, or arrange for the rendering of, such
services and to assume the obligations herein set forth for the
compensation provided for herein. The Manager and its affiliates
shall for all purposes herein be deemed to be an independent
contractor and shall, unless otherwise expressly provided or
authorized, have no authority to act for or represent the Fund in
any way or otherwise be deemed an agent of the Fund.
(a) Management Services. The Manager shall perform (or
arrange for the performance by affiliates of) the management and
administrative services necessary for the operation of the Fund
including processing shareholder orders, administering
shareholder accounts and handling shareholder relations. The
Manager shall provide the Fund with office space, equipment and
facilities and such other services as the Manager, subject to
review by the Trustees, shall from time to time determine to be
<PAGE>
necessary or useful to perform its obligations under this
Agreement. The Manager shall also, on behalf of the Fund,
conduct relations with custodians, depositories, transfer agents,
accountants, attorneys, underwriters, brokers and dealers,
corporate fiduciaries, insurers, banks and such other persons in
any such other capacity deemed to be necessary or desirable. The
Manager shall make reports to the Trustees of its performance of
obligations hereunder and furnish advice and recommendations with
respect to such other aspects of the business and affairs of the
Fund as it shall determine to be desirable.
(b) Investment Advisory Services. The Manager shall
provide the Fund with such investment research, advice and
supervision as the latter may from time to time consider
necessary for the proper supervision of the assets of the Fund,
shall furnish continuously an investment program for the Fund and
shall determine from time to time which securities shall be
purchased, sold or exchanged and what portion of the assets of
the Fund shall be held in the various securities in which the
Fund invests or cash, subject always to the restrictions of the
Declaration of Trust and By-Laws of the Fund, as amended from
time to time, the provisions of the Investment Company Act and
the statements relating to the Fund's investment objectives,
investment policies and investment-restrictions as the same are
set forth in the currently effective prospectus relating to the
shares of beneficial interest of the Fund under the Securities
Act of 1933, as amended (the "Prospectus"). The Manager shall
also make decisions for the Fund as to the manner in which voting
rights, rights to consent to corporate action and any other
rights pertaining to the Fund's portfolio securities shall be
exercised. Should the Trustees at any time, however, make any
definite determination as to investment policy and notify the
Manager thereof in writing, the Manager shall be bound by such
determination for the period, if any specified in such notice or
until similarly notified that such determination has been
revoked. The Manager shall take, on behalf of the Fund, all
actions which it deems necessary to implement the investment
policies determined as provided above, and in particular to place
all orders for the purchase or sale of portfolio securities for
the Fund's account with brokers or dealers selected by it, and to
that end, the Manager is authorized as the agent of the Fund to
give instructions to the Custodian of the Fund as to deliveries
of securities and payments of cash for the account of the Fund.
In connection with the selection of such brokers or dealers and
the placing of such orders with respect to assets for the Fund,
the Manager is directed at all times to seek to obtain execution
and price within the policy guidelines determined by the Trustees
of the Fund and set forth in the Prospectus. Subject to this
requirement and the provisions of the Investment Company Act, the
Securities Exchange Act of 1934, as amended, and other applicable
provisions of law, the Manager may select brokers or dealers with
which it or the Fund is affiliated.
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<PAGE>
ARTICLE II
ALLOCATION OF CHARGES AND EXPENSES
(a) The Manager. The Manager assumes and shall pay for
maintaining the staff and personnel necessary to perform its
obligations under this Agreement, and shall at its own expense,
provide the office space, equipment and facilities which it is
obligated to provide under Article I hereof, and shall pay all
compensation of officers of the Fund and all Trustees of the Fund
who are affiliated persons of the Manager.
(b) The Fund. The Fund assumes and shall pay or cause to
be paid all other expenses of the Fund (except for the expenses
incurred by the Distributor), including, without limitation,
redemption expenses, expenses of portfolio transactions, expenses
of registering shares under Federal and state securities laws,
pricing costs (including the daily calculation of net asset
value), expenses of printing shareholder reports and
prospectuses, Securities and Exchange Commission fees, interest,
taxes, fees and actual out-of-pocket expenses of Trustees who are
not affiliated persons of the Manager, fees for legal and
auditing services, litigation expenses, costs of printing proxies
and other expenses related to shareholders meetings, and other
expenses properly payable by the Fund. It is also understood
that the Fund will reimburse the Manager for its costs in
providing accounting services to the Fund. The Distributor will
pay certain of the expenses of the Fund incurred in connection
with the continuous offering of Fund shares.
ARTICLE III
COMPENSATION OF THE MANAGER
(a) Management Fee. For the services rendered, the
facilities furnished and the expenses assumed by the Manager, the
Fund shall pay to the Manager compensation at the annual rate of
___ of one percent (_%), calculated as hereinafter set forth,
commencing on the day following effectiveness hereof. Except as
hereinafter set forth, compensation under this Agreement shall be
calculated and accrued daily and paid monthly by applying the
annual rate to the average daily net assets of the Fund
determined as of each business day. If this Agreement becomes
effective subsequent to the first day of a month or shall
terminate before the last day of a month, compensation for that
part of the month that this Agreement is in effect shall be
prorated in a manner consistent with the calculation-of the fees
as set forth above. Subject to the provisions of subsection (b)
hereof, payment of the Manager's compensation for the preceding
month shall be made as promptly as possible after completion of
the computations contemplated by subsection (b) hereof.
-3-
<PAGE>
(b) Expense Limitations. In the event the operating
expenses of the Fund, including amounts payable to the Manager
pursuant to subsection (a) hereof, for any fiscal year ending on
a date which this Agreement is in effect exceed the expense
limitations applicable to the Fund imposed by applicable state
securities laws or regulations thereunder, as such limitations
may be raised or lowered from time to time, the Manager shall
reduce its management fee by the extent of such excess and, if
required pursuant to any such laws or regulations, will reimburse
the Fund in the amount of such excess, provided, however, to the
extent permitted by law, there shall be excluded from such
expenses the amount of any interest, taxes, distribution fees,
brokerage commissions and extraordinary expenses (including but
not limited to legal claims and liabilities and litigation costs
and any indemnification related thereto) paid or payable by the
Fund. Whenever the expenses of the Fund exceed a pro rata
portion of the applicable annual expense limitations, the
estimated amount of reimbursement under such limitations shall be
applicable as an offset against the monthly payment of the fee
due to the Manager. Should two or more such expense limitations
be applicable as at the end of the last business day of the
month, that expense limitation which results in the largest
reduction in the Manager's fee shall be applicable.
ARTICLE IV
LIMITATION OF LIABILITY OF THE MANAGER
The Manager shall not be liable for any error of judgment or
mistake of law or for any loss arising out of any investment or
for any act or omission in the management of the Fund, except for
willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of reckless disregard of
its obligations and duties hereunder. As used in this Article
IV, the term "Manager" shall include any affiliates of the
Manager performing services for the Fund contemplated hereby and
directors, officers and employees of the Manager and such
affiliates.
ARTICLE V
ACTIVITIES OF THE MANAGER
The services of the Manager to the Fund are not to be deemed
to be exclusive, the Manager being free to render services to
others. It is understood that Trustees, officers, employees and
shareholders of the Fund are or may become interested in the
Manager, as directors, officers, employees and shareholders or
otherwise and that directors, officers, employees and
shareholders of the Manger are or may become similarly interested
in the Fund, and that the Manager may become interested in the
Fund as shareholder or otherwise.
-4-
<PAGE>
ARTICLE VI
DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall become effective as of the date first
above written and shall remain in force until January 31, 1993
and thereafter, but only so long as such continuance is
specifically approved at least annually by (i) the Trustees of
the Fund, or by the vote of a majority of the outstanding voting
securities of the Fund, and (ii) a majority of those Trustees who
are not parties to this Agreement or interested persons of any
such party cast in person at a meeting called for the purpose of
voting on such approval.
This Agreement may be terminated at any time, without the
payment of any penalty, by the Trustees of the Fund or by vote of
a majority of the outstanding voting securities of the Fund, or
by the Manager, on sixty days' written notice to the other party.
This Agreement shall automatically terminate in the event of its
assignment.
ARTICLE VII
AMENDMENTS OF THIS AGREEMENT
This Agreement may be amended by the parties only if such
amendment is specifically approved by (i) the vote of a majority
of outstanding voting securities of the Fund, and (ii) a majority
of those Trustees who are not parties to this Agreement or
interested persons of any such party cast in person at a meeting
called for the purpose of voting on such approval.
ARTICLE VIII
DEFINITIONS OF CERTAIN TERMS
The terms "vote of a majority of the outstanding voting
securities", "assignment", "affiliated person" and "interested
person", when used in this Agreement, shall have the respective
meanings specified in the Investment Company Act.
ARTICLE IX
GOVERNING LAW
This Agreement shall be construed in accordance with laws of
the State of New York and the applicable provisions of the
Investment Company Act. To the extent that the applicable laws
of the State of New York, or any of the provisions herein,
conflict with the applicable provisions of the Investment Company
Act, the latter shall control.
-5-
<PAGE>
ARTICLE X
PERSONAL LIABILITY
The Declaration of Trust establishing Merrill Lynch Treasury
Assets Fund, dated October 30, 1990, a copy of which, together
with all amendments thereto (the "Declaration"), is on file in
the office of the Secretary of the Commonwealth of Massachusetts,
provides that the name "Merrill Lynch U.S. Treasury Money Fund"
refers to the Trustees under the declaration collectively as
Trustees, but not as individuals or personally; and no Trustee,
shareholder, officer, employee or agent of Merrill Lynch U.S.
Treasury Money Fund shall be held to any personal liability, nor
shall resort be had to their private property for the
satisfaction of any obligation or claim of said Merrill Lynch
U.S. Treasury Money Fund, but the "Trust Property" only shall be
liable.
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the date first above written.
MERRILL LYNCH U.S. TREASURY MONEY FUND
By: /s/ Joseph T. Monagle
---------------------
MERRILL LYNCH ASSET MANAGEMENT, INC.
By: /s/ Mark B. Goldfus
---------------------
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<PAGE>
EXHIBIT 99.6(a)
DISTRIBUTION AGREEMENT
AGREEMENT made this 5th day of February, 1991
between MERRILL LYNCH U.S. TREASURY MONEY FUND, a trust organized
under the laws of Massachusetts (the "Fund"), and MERRILL LYNCH
FUNDS DISTRIBUTOR, INC., a Delaware corporation (the
"Distributor");
W I T N E S S E T H:
WHEREAS, the Fund is registered under the Investment Company
Act of 1940, as amended (the "Investment Company Act"), as a
diversified open-end investment company and it is affirmatively in
the interest of the Fund to offer its shares for sale in a
continuous offering; and
WHEREAS, the Distributor is a securities firm engaged in the
business of selling shares of investment companies either directly
to investors or through other securities dealers; and
WHEREAS, the Fund and the Distributor wish to enter into an
agreement with each other with respect to the continuous offering
of the Fund's shares to commence after the effectiveness of its
initial registration statement filed pursuant to the Securities
Act of 1933, as amended (the "Securities Act").
NOW, THEREFORE, the parties agree as follows:
Section 1. Appointment of the Distributor. The Fund hereby
appoints the Distributor as the exclusive underwriter and
<PAGE>
distributor and representative of the Fund to sell shares of
beneficial interest, par value $.lo per share (the "shares") to
the public and the Distributor hereby accepts such appointment.
The Fund during the term of this Agreement shall sell its shares
to the Distributor upon the terms and conditions set forth below.
Section 2. Exclusive Nature of Duties. The Distributor
shall be the exclusive representative of the Fund to act as
principal underwriter and distributor, except that such exclusive
rights shall not apply to shares issued by the Fund pursuant to
reinvestments of dividends and,capital gains distributions.
Section 3. Purchase of Shares from the Fund. (a) The
Distributor shall have the right to buy from the Fund the shares
needed, but not more than the shares needed (except for clerical
errors in transmission) to fill unconditional orders for shares of
the Fund placed with the Distributor by investors or securities
dealers. The price which the Distributor shall pay for the shares
so purchased from the Fund shall be the net asset value,
determined as set forth in Section 3(c) hereof, used in
determining the public offering price described below on which
such orders were based.
(b) The shares are to be resold by the Distributor to
investors at the public offering price, as set forth in Section
3(c) hereof, or to securities dealers having agreements with the
Distributor upon the terms and conditions set forth in Section 7
hereof.
2.
<PAGE>
(c) The public offering price of the shares, i.e., the price
per share at which the Distributor may sell shares to the public,
shall be the public offering price as set forth in the currently
effective prospectus of the Fund under the Securities Act (the
"Prospectus") relating to such shares, which shall be the net
asset value thereof, as determined in accordance with the
description thereof contained in the Prospectus.
(d) The Fund, or any agent of the Fund designated in writing
by it, shall be promptly advised of all purchase orders for shares
received by the Distributor. Procedures may be established by the
Fund and the Distributor whereby purchase orders for shares are
presented directly to the Fund or an agent designated by the Fund
upon the condition that in such cases it shall be deemed that the
sale of the shares to be purchased is made pursuant to this
Section 3. Any order may be rejected by the Fund or the
Distributor, provided, however, that neither will arbitrarily or
without reasonable cause refuse to accept or confirm orders for
the purchase of shares. The Fund (or its agent) will confirm
orders upon their receipt, or in accordance with any exemptive
order of the Securities and Exchange Commission, and will make
appropriate book entries pursuant to the instructions of the
Distributor. Purchase orders are effective when Federal Funds
become available to the-Fund. The Distributor agrees to cause
such payment and such instructions to be delivered promptly to the
Fund (or its agent).
3.
<PAGE>
Section 4. Redemption or Repurchase of Shares by the Fund.
(a) Outstanding shares may be tendered for redemption or
repurchase in accordance with the Prospectus and the Fund shall
redeem or repurchase the shares so tendered in accordance with its
obligations and rights as set forth in its Declaration of Trust,
as amended from time to time, and in accordance with the
applicable provisions contained in the Prospectus. The Fund shall
pay the total amount of the redemption price as determined in
accordance with such procedures as are set forth in the
Declaration of Trust, as amended from time to time, and the
Prospectus.
(b) The Fund reserves the right to reject any order for
repurchase through a securities dealer, but the right to redeem
shares, or to receive payment with respect to any such redemption,
upon the presentation of properly submitted redemption requests in
accordance with the procedures set forth in the Prospectus may
only be suspended in accordance with the provisions of the
Investment Company Act.
Section 5. Duties of the Fund.
(a) The Fund shall furnish to the Distributor copies of all
information, financial statements and other documents which the
Distributor may reasonably request for use in connection with the
distribution of shares of the Fund, and this shall include one
certified copy, upon request by the Distributor, of all financial
4.
<PAGE>
statements of the Fund by independent public accountants. The
Fund shall make available to the Distributor such number of copies
of the Prospectus as the Distributor shall reasonably request.
(b) The Fund shall take, from time to time, all necessary
action to register shares under the Securities Act to the end that
there will be available for sale such number of shares as the
Distributor may reasonably be expected to sell.
(c) The Fund shall use its best efforts to qualify and
maintain the qualification of an appropriate number of shares for
sale under the securities laws of such states as the Distributor
and the Fund may approve. Any such qualification may be withheld,
terminated or withdrawn by the Fund at any time in its discretion.
As provided in Section B(c) hereof, the expense of qualification
and maintenance of qualification shall be borne by the Fund. The
Distributor shall furnish such information and other material
relating to its affairs and activities as may be required by the
Fund in connection with such qualifications.
(d) The Fund will furnish to the Distributor, in reasonable
quantities upon request by the Distributor, copies of annual and
interim reports.
Section 6. Duties of the Distributor.
(a) The Distributor shall devote reasonable time and effort
to effect sales of shares of the Fund, but shall not be obligated
to sell any specific number of shares. The services of the
Distributor hereunder are not to be deemed exclusive and nothing
5.
<PAGE>
herein contained shall prevent the Distributor from entering into
distribution arrangements with other investment companies so long
as the performance of its obligations hereunder is not impaired
thereby.
(b) In selling the shares of the Fund, the Distributor shall
use its best efforts in all respects duly to conform with the
requirements of all federal and state laws and regulations and the
regulations of the National Association of Securities Dealers,
Inc. (the "NASD") relating to the sale of such securities.
Neither the Distributor nor any other person is authorized by the
Fund to give any information or to make any representations, other
than those contained in the Prospectus or any sales literature
specifically approved by the Fund.
(c) The Distributor shall adopt and follow procedures, as
approved by the Fund, for the confirmation of sales to investors
and selected dealers, the collection of amounts payable by
investors on such sales, and the cancellation of unsettled
transactions, as may be necessary to comply with the requirements
of the NASD, as such requirements may from time to time exist.
Section 7. Selected Dealer Agreements.
(a) The Distributor shall have the right to enter into
selected dealer agreements with securities dealers of its choice
("selected dealers") for the sale-of shares; provided, however,
that the form of selected dealer agreement shall be approved by
the Fund. Shares sold to selected dealers shall be for resale by
6 .
<PAGE>
such dealers only in accordance with the provisions of the
Prospectus. The form of selected dealer agreement is appended
hereto as Exhibit A.
(b) Within the United States, the Distributor shall offer
and sell shares only to such selected dealers as are members in
good standing of the NASD.
Section 8. Payment of Expenses.
(a) The Fund shall bear all of its costs and expenses,
including fees and disbursements of its counsel and auditors, in
connection with the preparation and filing of any required
registration statements and prospectuses under the Investment
Company Act, the Securities Act, and all amendments and
supplements thereto, and the expense of preparing, printing,
mailing and otherwise distributing prospectuses, annual or
interim reports and proxy materials to its shareholders.
(b) After the prospectuses and annual and interim reports
have been prepared, set in type and mailed to shareholders, the
Distributor shall bear the costs and expenses of printing and
distributing any copies thereof which are used in connection with
the offering of the shares. The Distributor shall bear the costs
and expenses of preparing, printing and distributing any
supplementary sales literature used by the Distributor in
connection with the offering of the shares for sale. Any expenses
of advertising incurred in connection with such offering will also
be the obligation of the Distributor.
7.
<PAGE>
(c) The Fund shall bear the cost and expenses of
qualification of the shares for sale, and, if necessary or
advisable in connection therewith, of qualifying the Fund as a
broker or dealer, in such states of the United States or other
jurisdictions as shall be selected by the Fund and the
Distributor, and the cost and expenses payable to each such state
for continuing qualification therein until the Fund decides to
discontinue such qualification.
Section 9. Indemnification.
(a) The Fund shall indemnify and hold harmless the
Distributor and each person, if any, who controls the Distributor
against any loss, liability, claim, damage or expense (including
the reasonable cost of investigating or defending any alleged
loss, liability, claim, damage or expense and reasonable counsel
fees incurred in connection therewith), arising by reason of any
person acquiring any shares, which may be based upon the
Securities Act, or on any other statute or at common law, on the
ground that the registration statement or related Prospectus, as
from time to time amended and supplemented, or an annual or
interim report to shareholders of the Fund includes an untrue
statement of a material fact or omits to state a material fact
required to be stated therein or necessary in order to make the
statements therein not misleading, unless such statement or
omission was made in reliance upon, and in conformity with,
information furnished to the Fund in connection therewith by or on
8.
<PAGE>
behalf of the Distributor; provided, however, that in no case (i)
is the indemnity of the Fund in favor of the Distributor and any
such controlling persons to be deemed to protect such Distributor
or any such controlling persons thereof against any liability to
the Fund or its security holders to which the Distributor or any
such controlling persons would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the
performance of its duties or by reason of reckless disregard of
its obligations and duties under this Agreement, or (ii) is the
Fund to be liable under its indemnity agreement contained in this
paragraph with respect to any claim made against the Distributor
or any such controlling persons, unless the Distributor or such
controlling persons, as the case may be, shall have notified the
Fund in writing within a reasonable time after the summons or
other first legal process giving information of the nature of the
claim shall have been served upon the Distributor or such
controlling persons (or after the Distributor or such controlling
persons shall have received notice of such service on any
designated agent), but failure to notify the Fund of any such
claim shall not relieve it from any liability which it may have to
the person against whom such action is brought otherwise than on
account of its indemnity agreement contained in this paragraph.
The Fund will be entitled to participate at its own expense in the
defense, or, if it so elects, to assume the defense of any suit
brought to enforce any such liability, but if the Fund elects to
9.
<PAGE>
assume the defense, such defense shall be conducted by counsel
chosen by it and satisfactory to the Distributor or such
controlling person or persons, defendant or defendants in the
suit. In the event the Fund elects to assume the defense of any
such suit and retain such counsel, the Distributor or such
controlling person or persons, defendant or defendants in the
suit, shall bear the fees and expenses of any additional counsel
retained by them, but, in case the Fund does not elect to assume
the defense of any such suit, it will reimburse the Distributor or
such controlling person or persons, defendant or defendants in the
suit, for the reasonable fees and expenses of any counsel retained
by them. The Fund shall promptly notify the Distributor of the
commencement of any litigation or proceedings against it or any of
its officers or Trustees in connection with the issuance or sale
of any of the shares.
(b) The Distributor shall indemnify and hold harmless the
Fund and each of its Trustees and officers and each person, if
any, who controls the Fund against any loss, liability, claim,
damage, or expense described in the foregoing indemnity contained
in subsection (a) of this Section, but only with respect to
statements or omissions made in reliance upon, and in conformity
with, information furnished to the Fund in writing by or on behalf
of the Distributor for use in connection with-the registration
statement or related Prospectus, as from time to time amended, or
the annual or interim reports to shareholders of the Fund. In
10.
<PAGE>
case any action shall be brought against the Fund or any person so
indemnified, in respect of which indemnity may be sought against
the Distributor, the Distributor shall have the rights and duties
given to the Fund, and the Fund and each person so indemnified
shall have the rights and duties given to the Distributor by the
provisions of subsection (a) of this Section 9.
Section 10. Duration and Termination of this Agreement.
This Agreement shall become effective as of the date first above
written and shall remain in force until January 31, 1993 and
thereafter, but only so long as such continuance is specifically
approved at least annually by (i) the Trustees of the Fund, or by
the vote of a majority of the outstanding voting securities of the
Fund, and (ii) a majority of those Trustees who are not parties to
this Agreement or interested persons of any such party cast in
person at a meeting called for the purpose of voting on such
approval.
This Agreement may be terminated at any time, without the
payment of any penalty, by the Trustees of the Fund or by vote of
a majority of the outstanding voting securities of the Fund, or by
the Distributor, on sixty days' written notice to the other party.
This Agreement shall automatically terminate in the event of its
assignment.
Section 11. Amendments. This Agreement may be amended by
the parties hereto only if such amendment is specifically approved
(i) by the Trustees of the Fund, or by the vote of a majority of
11.
<PAGE>
outstanding voting securities of the Fund, and (ii) by a majority
of those Trustees who are not parties to this Agreement or
interested persons of any such party, which vote must be cast in
person at a meeting called for the purpose of voting on such
approval.
Section 12. Definitions of Certain Terms. The terms "vote
of a majority of the outstanding voting securities", "assignment",
"interested person" and "affiliated person", when used in this
Agreement, shall have the respective meanings specified in the
Investment Company Act.
Section 13. Governing Law. This Agreement shall be
construed in accordance with the laws of the State of New York and
the applicable provisions of the Investment Company Act. To the
extent the applicable law of the State of New York, or any of the
provisions herein, conflict with the applicable provisions of the
Investment Company Act, the latter shall control.
Section 14. Personal Liability. The Declaration of Trust
establishing Merrill Lynch U.S. Treasury Money Fund, dated October
30, 1990 a copy of which, together with all amendments thereto
(the "Declaration"), is on file in the office of the Secretary of
the Commonwealth of Massachusetts, provides that the name "Merrill
Lynch U.S. Treasury Money Fund" refers to the Trustees under the
Declaration collectively as Trustees, but not as individuals or
personally; and no Trustee, shareholder, officer, employee or
agent of Merrill Lynch U.S. Treasury Money Fund shall be held to
12.
<PAGE>
any personal liability, nor shall resort be had to their private
property for the satisfaction of any obligation or claim or
otherwise in connection with the affairs of said Merrill Lynch
U.S. Treasury Money Fund, but the "Trust Property" only shall be
liable.
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the day and year first above
written.
MERRILL LYNCH U.S. TREASURY MONEY FUND
/s/ Joseph T. Monagle
------------------------------------
MERRILL LYNCH FUNDS DISTRIBUTOR, INC.
By /s/ Mark A. DeSario
---------------------------------
13.
<PAGE>
EXHIBIT 99.6(b)
MERRILL LYNCH U.S. TREASURY MONEY FUND
SHARES OF BENEFICIAL INTEREST
SELECTED DEALER AGREEMENT
February 5, 1991
Gentlemen:
Merrill Lynch Funds Distributor, Inc. (the "Distributor") has
an agreement with Merrill Lynch U.S. Treasury Money Fund, a
Massachusetts business trust (the "Fund"), pursuant to which it
acts as the distributor for the sale of shares of beneficial
interest, par value $.10 per share (the "shares"), of the Fund,
and as such has the right to distribute shares for resale. The
Fund is a diversified open-end investment company registered under
the Investment Company Act of 1940, as amended, and the shares
being offered are registered under the Securities Act of 1933, as
amended. You have received a copy of the Distribution Agreement
between ourselves and the Fund and reference is made herein to
certain provisions of such Distribution Agreement. The term
"Prospectus" as used herein refers to the prospectus on file with
the Securities and Exchange Commission which is part of the most
recent effective registration statement relating to the shares
filed pursuant to the Securities Act of 1933, as amended. As
principal, we offer to sell to you, as a selected dealer, shares
of the Fund upon the following terms and conditions:
1. In all sales of these shares to the public you shall act
as dealer for your own account, and in no transaction shall you
have any authority to act as agent for the Fund or for us.
2. Shares may be offered by you only as described in the
Prospectus. Orders received from you will be accepted through us
only at the public offering price applicable to each order, as set
forth in the Prospectus. The procedure relating to the handling
of orders shall be subject to Section 4 hereof and instructions
which we or the Fund shall forward to you from time to time. All
orders are subject to acceptance or rejection by the Distributor
or the Fund in the sole discretion of either. The minimum initial
and subsequent purchase requirements are as set forth in the
Prospectus.
<PAGE>
3. You agree that you will not place orders for any shares
except in accordance with the procedures described in the
Prospectus. You agree that you will not offer or sell any of the
shares except under circumstances that will result in compliance
with the applicable Federal and state securities laws and that in
connection with sales and offers to sell shares you will furnish
to each person to whom any such sale or offer is made a copy of
the Prospectus (as then amended or supplemented) and will not
furnish to any person any information relating to the shares which
is inconsistent in any respect with the information contained in
the Prospectus (as then amended or supplemented) or cause any
advertisement to be published in any newspaper or posted in any
public place without our consent and the consent of the Fund.
4. As a selected dealer, you are hereby authorized (i) to
place orders directly with the Fund for shares to be sold by us to
you subject to the applicable terms and conditions governing the
placement of orders by us set forth in Section 3 of the
Distribution Agreement, and (ii) to tender shares directly to the
Fund or its agent for redemption subject to the applicable terms
and conditions set forth in Section 4 of the Distribution
Agreement and the Prospectus.
5. You shall not withhold placing orders received from your
customers so as to profit yourself as a result of such
withholding: e.g., by a change in the "net asset value" from that
used in determining the offering price to your customers.
6. No person is authorized to make any representations
concerning shares except those contained in the Prospectus and in
such printed information subsequently issued by us or the Fund as
information supplemental to such Prospectus. In purchasing shares
through us you shall rely solely on the representations contained
in the Prospectus and supplemental information above mentioned.
Any printed information which we furnish you other than the Fund's
Prospectus, periodic reports and proxy solicitation material are
our sole responsibility and not the responsibility of the Fund,
and you agree that the Fund shall have no liability or
responsibility to you in these respects unless expressly assumed
in connection therewith.
7. You agree to deliver to any purchasers whose shares you
are holding as record holder copies of the Prospectus, as amended
from time to time, and the annual and interim reports and proxy
solicitation materials relating to the Fund. You further agree-to
make reasonable efforts to endeavor to obtain proxies from such
purchasers whose shares you are holding as record holder.
Additional copies of the Prospectus, annual or interim reports and
proxy solicitation materials of the Fund will be supplied to you
in reasonable quantities upon request.
2.
<PAGE>
8. We reserve the right in our discretion, without notice,
to suspend sales or withdraw the offering of shares entirely.
Each party hereto has the right to cancel this agreement upon
notice to the other party.
9. We shall have full authority to take such action as we
may deem advisable in respect of all matters pertaining to the
continuous offering. We shall be under no liability to you except
for lack of good faith and for obligations expressly assumed by us
herein. Nothing contained in this paragraph is intended to
operate as, and the provisions of this paragraph shall not in any
way whatsoever constitute, a waiver by you of compliance with any
provisions of the Securities Act of 1933, as amended, or of the
rules and regulations of the Securities and Exchange Commission
issued thereunder.
10. You represent that you are a member of the National
Association of Securities Dealers, Inc. and, with respect to any
sales in the United States, we both hereby agree to abide by the
Rules of Fair Practice of such Association.
11. Upon application to us, we will inform you as to the
states or other jurisdictions in which we believe the shares have
been qualified for sale under, or are exempt from the requirements
of, the respective securities laws of such states, but we assume
no responsibility or obligation as to your right to sell shares in
any jurisdiction. We will file with the Department of State in
New York a Further State Notice with respect to the shares, if
necessary.
12. We shall have full authority to act upon your express
instructions to effect transactions in shares through us on behalf
of your customers under the terms and conditions provided in the
Prospectus. You agree to hold us free and harmless as a result of
action taken with respect to authorized repurchases or exchanges
upon your express instructions.
13. All communications to us should be sent to the address
below. Any notice to you shall be duly given if mailed or
telegraphed to you at the address specified by you below.
3.
<PAGE>
Please indicate your acceptance of this Agreement by signing
and returning one copy to us at our address specified above.
MERRILL LYNCH FUNDS DISTRIBUTOR, INC.
By /s/ Mark A. DeSario
----------------------------------
(Authorized Signature)
Please return one signed copy
of this agreement to:
MERRILL LYNCH FUNDS DISTRIBUTOR, INC.
Box 9011
Princeton, New Jersey 08543-9011
Accepted:
Firm Name: ___________________________________________
By:____________________________________________________
Address:_______________________________________________
_______________________________________________
Date:__________________________________________________
4.
<PAGE>
EXHIBIT 99.8
CUSTODY AGREEMENT
Agreement made as of this 15th day of April, 1991,
between MERRILL LYNCH U.S. TREASURY MONEY FUND, a
Massachusetts business trust organized and existing under the
laws of the Commonwealth of Massachusetts, having its
principal office and place of business at
(hereinafter called the "Fund"), and THE BANK OF NEW YORK, a
New York corporation authorized to do a banking business,
having its principal office and place of business at 48 Wall
Street, New York, New York 10015 (hereinafter called the
"Custodian").
W I T N E S S E T H :
that for and in consideration of the mutual promises
hereinafter set forth, the Fund and the Custodian agree as
follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and
phrases, unless the context otherwise requires, shall have the
following meanings:
1. "Authorized Person" shall be deemed to include any
person, whether or not such person is an Officer or employee
of the Fund, duly authorized by the Board of Trustees of the
Fund to give Oral Instructions and Written Instructions on
behalf of the Fund and listed in the Certificate annexed
hereto as Appendix A or such other Certificate as may be
received by the Custodian from time to time.
2. "Book-Entry System" shall mean the Federal
Reserve/Treasury book-entry system for United States and federal
agency securities, its successor or successors and its nominee or
nominees.
3. "Call Option" shall mean an exchange traded option
with respect to Securities other than Stock Index Options,
Futures Contracts, and Futures Contract Options entitling the
<PAGE>
holder, upon timely exercise and payment of the exercise
price, as specified therein, to purchase from the writer
thereof the specified underlying Securities.
4. "Certificate" shall mean any notice, instruction, or
other instrument in writing, authorized or required by this
Agreement to be given to the Custodian which is actually
received by the Custodian and signed on behalf of the Fund by
any two officers.
5. "Clearing Member" shall mean a registered
broker-dealer which is a clearing member under the rules of
O.C.C. and a member of a national securities exchange
qualified to act as a custodian for an investment company, or
any broker-dealer reasonably believed by the Custodian to be
such a clearing member.
6. "Collateral Account" shall mean a segregated account
so denominated which is specifically allocated to a Series and
pledged to the Custodian as security for, and in consideration
of, the Custodian's issuance of (a) any Put Option guarantee
letter or similar document described in paragraph 8 of Article
V herein, or (b) any receipt described in Article V or VIII
herein.
7. "Covered Call Option" shall mean an exchange traded
option entitling the holder, upon timely exercise and payment
of the exercise price, as specified therein, to purchase from
the writer thereof the specified underlying Securities
(excluding Futures Contracts) which are owned by the writer
thereof and subject to appropriate restrictions.
8. "Depository" shall mean The Depository Trust Company
("DTC"), a clearing agency registered with the Securities and
Exchange Commission, its successor or successors and its
nominee or nominees. The term "Depository" shall further mean
and include any other person authorized to act as a depository
under the Investment Company Act of 1940, its successor or
successors and its nominee or nominees, specifically
identified in a certified copy of a resolution of the Fund's
Board of Trustees specifically approving deposits therein by
the Custodian.
9. "Financial Futures Contract" shall mean the firm
commitment to buy or sell fixed income securities including,
without limitation I U.S. Treasury Bills, U.S. Treasury Notes,
U.S. Treasury Bonds, domestic bank certificates of deposit,
and Eurodollar certificates of deposit, during a specified
month at an agreed upon price.
10. "Futures Contract" shall mean a Financial Futures
Contract and/or Stock Index Futures Contracts.
11. "Futures Contract Option" shall mean an option with
respect to a Futures Contract.
- 2 -
<PAGE>
12. "Margin Account" shall mean a segregated account in
the name of a broker, dealer, futures commission merchant, or
a Clearing Member, or in the name of the Fund for the benefit
of a broker, dealer, futures commission merchant, or Clearing
Member, or otherwise, in accordance with an agreement between
the Fund, the Custodian and a broker, dealer, futures
commission merchant or a Clearing Member (a "Margin Account
Agreement"), separate and distinct from the custody account,
in which certain Securities and/or 'money of the Fund shall be
deposited and withdrawn from time to time in connection with
such transactions as the Fund may from time to time
determine. Securities held in the Book-Entry System or the
Depository shall be deemed to have been deposited in, or
withdrawn from, a Margin Account upon the Custodian's
effecting an appropriate entry in its books and records.
13. "Money Market Security" shall be deemed to include,
without limitation, certain Reverse Repurchase Agreements,
debt obligations issued or guaranteed as to interest and
principal by the government of the United States or agencies
or instrumentalities thereof, any tax, bond or revenue
anticipation note issued by any state or municipal government
or public authority, commercial paper, certificates of deposit
and bankers' acceptances, repurchase agreements with respect
to the same and bank time deposits, where the purchase. and
sale of such securities normally requires settlement in
federal funds on the same day as such purchase or sale.
14. "O.C.C." shall mean the Options clearing
Corporation, a clearing agency registered under Section 17A of
the Securities Exchange Act of 1934, its successor or
successors, and its nominee or nominees.
15. "Officers" shall be deemed to include the President,
any Vice President, the Secretary, the Clerk, the Treasurer,
the Controller, any Assistant Secretary, any Assistant Clerk,
any Assistant Treasurer, and any other person or persons,
whether or not any such other person is an officer of the
Fund, duly authorized by the Board of Trustees of the Fund to
execute any Certificate, instruction, notice or other
instrument on behalf of the Fund and listed in the Certificate
annexed hereto as Appendix B or such other Certificate as may
be received by the Custodian from time to time.
16. "Option" shall mean a Call Option, Covered Call
Option, Stock Index Option and/or a Put option.
17. "Oral Instructions" shall mean verbal instructions
actually received by the Custodian from an Authorized Person
or from a person reasonably believed by the Custodian to be an
Authorized Person.
18. "Put option" shall mean an exchange traded option
with respect to Securities other than Stock Index Options,
- 3 -
<PAGE>
Futures Contracts, and Futures Contract Options entitling the
holder, upon timely exercise and tender of the specified
underlying Securities, to sell such Securities to the writer
thereof for the exercise price.
19. "Reverse Repurchase Agreement" shall mean an agreement
pursuant to which the Fund sells Securities and agrees to
repurchase such Securities at a described or specified date and
price.
20. "Security" shall be deemed to include, without
limitation, Money Market Securities, Call Options, Put Options,
Stock Index Options, Stock Index Futures Contracts, Stock Index
Futures Contract Options, Financial Futures Contracts, Financial
Futures Contract options, Reverse Repurchase Agreements, common
stocks and other securities having characteristics similar to
common stocks, preferred stocks, debt obligations issued by state
or municipal governments and by public authorities, (including,
without limitation, general obligation bonds, revenue bonds,
industrial bonds and industrial development bonds), bonds,
debentures, notes, mortgages or other obligations, and any
certificates, receipts, warrants or other instruments representing
rights to receive, purchase, sell or subscribe for the same, or
evidencing or.,representing any other rights or interest therein,
or any property or assets.
21. "Senior Security Account" shall mean an account
maintained and specifically allocated to a Series under the terms
of this Agreement as a segregated account, by recordation or
otherwise, within the custody account in which certain Securities
and/or other assets of the Fund specifically allocated to such
Series shall be deposited and withdrawn from time to time in
accordance with Certificates received by the Custodian in
connection with such transactions as the Fund may from time to time
determine.
22. "Series" shall mean the various portfolios, if any, of
the Fund as described from time to time in the current and
effective prospectus for the Fund.
23. "Shares" shall mean the shares of beneficial interest of
the Fund, each of which is, in the case of a Fund having series,
allocated to a particular Series.
24. "Stock Index Futures Contract" shall mean a bilateral
agreement pursuant to which the parties agree to take or make
delivery of an amount of cash equal to a specified dollar amount
times the difference between the value of a particular stock index
at the close of the last business day of the contract and the price
at which the futures contract is originally struck.
25. "Stock Index Option" shall mean an exchange traded
option entitling the holder, upon timely exercise, to receive
- 4 -
<PAGE>
an amount of cash determined by reference to the difference
between the exercise price and the value of the index on the
date of exercise.
26. "Written Instructions" shall mean written
communications actually received by the Custodian from an
Authorized Person or from a person reasonably believed by the
Custodian to be an Authorized Person by telex or any other
such system whereby the receiver of such communications is
able to verify by codes or otherwise with a reasonable degree
of certainty the identity of the sender of such communication.
ARTICLE II
APPOINTMENT OF CUSTODIAN
1. The Fund hereby constitutes and appoints the
Custodian as custodian of the Securities and moneys at any
time owned by the Fund during the period of this Agreement.
2. The Custodian hereby accepts appointment as such
custodian and agrees to perform the duties thereof as
hereinafter set forth.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
1. Except as otherwise provided in paragraph 7 of this
Article and in Article VIII, the Fund will deliver or cause to
be delivered to the Custodian all Securities and all moneys
owned by it, at any time during the period of this Agreement,
and shall specify with respect to such Securities and money
the Series to which the same are specifically allocated. The
Custodian shall segregate, keep and maintain the assets of the
Series separate and apart. The Custodian will not be
responsible for any Securities and moneys not actually
received by it. The Custodian will be entitled to reverse any
credits made on the Fund's behalf where such credits have been
previously made and moneys are not finally collected. The
Fund shall deliver to the Custodian a certified resolution of
the Board of Trustees of the Fund, substantially in the form
of Exhibit A hereto, approving, authorizing and instructing
the Custodian on a continuous and on going basis to deposit in
the Book-Entry System all Securities eligible for deposit
therein, regardless of the Series to which the same are
specifically allocated and to utilize the Book-Entry System to
the extent possible in connection with its performance
hereunder, including, without limitation, in connection with
- 5 -
<PAGE>
settlements of purchases and sales of Securities, loans of
securities and deliveries and returns of Securities
collateral. Prior to a deposit of Securities specifically
allocated to a Series in the Depository, the Fund shall
deliver to the Custodian a certified resolution of the Board
of Trustees of the Fund, substantially in the form of Exhibit
B hereto, approving, authorizing and instructing the Custodian
on a continuous and ongoing basis until instructed to the
contrary by a Certificate actually received by the Custodian
to deposit in the Depository all Securities specifically
allocated to such Series eligible for deposit therein, and to
utilize the Depository to the extent possible with respect to
such securities in connection with its performance hereunder,
including, without limitation, in connection with settlements
of purchases and sales of Securities, loans of Securities, and
deliveries and, returns of Securities collateral. securities
and moneys deposited in either the Book-Entry System or the
Depository will be represented in accounts which include only
assets held by the Custodian for customers, including, but not
limited to, accounts in which the Custodian acts in a
fiduciary or representative capacity and will be specifically
allocated on the Custodian's books to the separate account for
the applicable Series. Prior to the Custodian's accepting,
utilizing and acting with respect to Clearing Member
confirmations for Options and transactions in Options 'for a
Series as provided in this Agreement, the Custodian shall have
received a certified resolution of the Fund's Board of
Trustees, substantially in the form of Exhibit C hereto,
approving, authorizing and instructing the Custodian on a
continuous and on going basis, until instructed to the
contrary by a Certificate actually received by the Custodian,
to accept, utilize and. act in accordance with such
confirmations as provided in this Agreement with respect to
such Series.
2. The Custodian shall establish and maintain separate
accounts, in the name of each Series, and shall credit to the
separate account for each Series all moneys received by it for
the account of the Fund with respect to such Series. Money
credited to a separate account for a Series shall be disbursed
by the Custodian only:
(a) As hereinafter provided;
(b) Pursuant to Certificates setting forth the name
and address of the person to whom the payment is to be made,
the Series account from which payment is to be made and the
purpose for which payment is to be made; or
(c) In payment of the fees and in reimbursement of
the expenses and liabilities of the Custodian attributable to
such Series.
3. Promptly after the close of business on each day,
the Custodian shall furnish the Fund with confirmations and a
- 6 -
<PAGE>
summary, on a per Series basis, of all transfers to or from
the account of the Fund for a Series, either hereunder or with
any co-custodian or sub-custodian appointed in accordance with
this Agreement during said day. Where Securities are
transferred to the account of the Fund for a Series, the
Custodian shall also by book-entry or otherwise identify as
belonging to such Series a quantity of Securities in a
fungible bulk of Securities registered in the name of the
Custodian (or its nominee) or shown on the Custodian's account
on the books of the Book-Entry System or the Depository. At
least monthly and from time to time, the Custodian shall
furnish the Fund with a detailed statement, on a per Series
basis, of the Securities and moneys held by the Custodian for
the Fund.
4. Except as otherwise provided in paragraph 7 of this
Article and in Article VIII, all Securities held by the
Custodian hereunder, which are issued or issuable only in
bearer form, except such Securities as are held in the
Book-Entry System, shall be held by the Custodian in that
form; all other Securities held hereunder may be registered in
the name of the Fund, in the name of any duly appointed
registered nominee of the Custodian as the Custodian may from
time to time determine, or in the name of the Book-Entry
System or the Depository or their successor or successors, or
their nominee or nominees. The Fund agrees to furnish to the
Custodian appropriate instruments to enable the Custodian to
hold or deliver in proper form for transfer, or to register in
the name of its registered nominee or in the name of the
Book-Entry System or the Depository any Securities which it
may hold hereunder and which may from time to time be
registered in the name of the Fund. The Custodian shall hold
all such Securities specifically allocated to a Series which
are not held in the Book-Entry System or in the Depository in
a separate account in the name of such Series physically
segregated at all times from those of any other person or
persons.
5. Except as otherwise provided in this Agreement and
unless otherwise instructed to the contrary by a Certificate,
the Custodian by itself, or through the use of the Book-Entry
System or the Depository with respect to Securities held
hereunder and therein deposited, shall with respect to all
Securities held for the Fund hereunder in accordance with
preceding paragraph 4:
(a) Collect all income due or payable;
(b) Present for payment and collect the amount
payable upon such securities which are called, but only if
either (i) the Custodian receives a written notice of such
call, or (ii) notice of such call appears in one or more of
the publications listed in Appendix C annexed hereto, which
may be amended at any time by the Custodian without the prior
notification or consent of the Fund;
- 7 -
<PAGE>
(c) Present for payment and collect the amount
payable upon all Securities which mature;
(d) Surrender Securities in temporary form for
definitive Securities;
(e) Execute, as custodian, any necessary
declarations or certificates of ownership under the Federal
Income Tax Laws or the laws or regulations of any other taxing
authority now or hereafter in effect; and
(f) Hold directly, or through the Book-Entry System
or the Depository with respect to Securities therein
deposited, for the account of a Series, all rights and similar
securities issued with respect to any Securities held by the
Custodian for such Series hereunder.
6. Upon receipt of a Certificate and not otherwise, the
Custodian, directly or through the use of the Book-Entry
System or the Depository, shall:
(a) Execute and deliver to such persons as may be
designated in such Certificate proxies, consents,
authorizations, and any other instruments whereby the
authority of the Fund as owner of any Securities held by the
Custodian hereunder for the Series specified in such
Certificate may be exercised;
(b) Deliver any Securities held by the Custodian
hereunder for the Series specified in such Certificate in
exchange for other securities or cash issued or paid in
connection with the liquidation, reorganization, refinancing,
merger, consolidation or recapitalization of any corporation,
or the exercise of any conversion privilege and receive and
hold hereunder specifically allocated to such Series any cash
or other Securities received in exchange;
(c) Deliver any Securities held by the Custodian
hereunder for the series specified in such Certificate to any
protective committee, reorganization committee or other person
in connection with the reorganization, refinancing, merger,,
consolidation, recapitalization or sale of assets of any
corporation, and receive and hold hereunder specifically
allocated to such Series such certificates of deposit, interim
receipts or other instruments or documents as may be issued to
it to evidence such delivery;
(d) Make such transfers or exchanges of the assets
of the Series specified in such Certificate, and take such
other steps as shall be stated in such Certificate to be for
the purpose of effectuating any duly authorized plan of
liquidation, reorganization, merger, consolidation or
recapitalization of the Fund; and
- 8 -
<PAGE>
(e) Present for payment and collect the amount
payable upon Securities not described in preceding paragraph
5(b) of this Article which may be called as specified in the
Certificate.
7. Notwithstanding any provision elsewhere contained
herein, the Custodian shall not be required to obtain
possession of any instrument or certificate representing any
Futures Contract, any option, or any Futures Contract Option
until after it shall have determined, or shall have received a
Certificate from the Fund stating, that any such instruments
or certificates are available. The Fund shall deliver to the
Custodian such a Certificate no later than the business day
preceding the availability of any such instrument or
certificate. Prior to such availability, the Custodian shall
comply with Section 17(f) of the Investment Company Act of
1940, as amended, in connection with the purchase, sale,
settlement, closing out or writing of Futures Contracts,
Options, or Futures Contract Options by making payments or
deliveries specified in Certificates received by the Custodian
in connection with any such purchase, sale, writing,
settlement or closing out upon its receipt from a broker
dealer, or futures 'commission merchant of a statement or
confirmation reasonably believed by the Custodian to be in the
form customarily used by brokers, dealers, or future
commission merchants with respect to such Futures Contracts,
Options, or Futures Contract Options, as the case may be,
confirming that such Security is held by such broker, dealer
or futures commission merchant, in book-entry form or
otherwise, in the name of the Custodian (or any nominee of the
Custodian) as custodian for the Fund, provided, however, that
notwithstanding the foregoing, payments to or deliveries from
the Margin Account and payments with respect to Securities to
which a Margin Account relates, shall be made in accordance
with the terms and conditions of the Margin Account
Agreement. Whenever any such instruments or certificates are
available, the Custodian shall, notwithstanding any provision
in this Agreement to the contrary, make payment for any
Futures Contract, Option, or Futures Contract option for which
such instruments or such certificates are available only
against the delivery to the Custodian of such instrument or
such certificate, and deliver any Futures Contract, Option or
Futures Contract Option for which such instruments or such
certificates are available only against receipt by the
Custodian of payment therefor.. Any such instrument or
certificate delivered to the Custodian shall be held by the
Custodian hereunder in accordance with, and subject to, the
provisions of this Agreement.
ARTICLE IV
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<PAGE>
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
OTHER THAN OPTIONS, FUTURES CONTRACTS AND
FUTURES CONTRACT OPTIONS
1. Promptly after each purchase of Securities by the
Fund, other than a purchase of an Option, a Futures Contract,
or a Futures Contract Option, the Fund shall deliver to the
Custodian (i) with respect to each purchase of Securities
which are not Money Market Securities, a Certificate, and (ii)
with respect to each purchase of Money Market Securities, a
Certificate, oral Instructions or Written Instructions,
specifying with respect to each such purchase: (a) the Series
to which such Securities are to be specifically allocated; (b)
the name of the issuer and the title of the Securities; (c)
the number of shares or the principal amount purchased and
accrued interest, if any; (d) the date of purchase and
settlement; (e) the purchase price per unit; (f) the total
amount payable upon such purchase; (g) the name of the person
from whom or the broker through whom the purchase was made,
and the name of the clearing broker, if any; and (h) the name
of the broker to whom payment is to be made. The Custodian
shall, upon receipt of Securities purchased by or for the
Fund, pay to the broker specified in the Certificate out of
the moneys hold for the account of such Series the total
amount payable upon such purchase, provided that the same
conforms to the total amount payable as set forth.in such
Certificate, Oral Instructions or Written Instructions.
2. Promptly after each sale of Securities by the Fund,
other than a sale of any Option, Futures Contract, Futures
Contract Option, or any Reverse Repurchase Agreement, the Fund
shall deliver to the Custodian (i) with respect to each sale
of Securities which are not Money Market Securities, a
Certificate, and (ii) with respect to each sale of Money
Market Securities, a Certificate, Oral Instructions or Written
Instructions, specifying with respect to each such sale: (a)
the series to which such Securities were specifically
allocated; (b) the name of the issuer and the title of the
Security; (c) the number of shares or principal amount sold,
and accrued interest, if any; (d) the date of sale; (e) the
sale price per unit; (f) the total amount payable to the Fund
upon such sale; (g) the name of the broker through whom or the
person to whom the sale was made, and the name of the clearing
broker, if any; and (h) the name of the broker to whom the
Securities are to be delivered. The Custodian shall deliver
the Securities specifically allocated to such Series to the
broker specified in the Certificate against payment upon
receipt of the total amount payable to the Fund upon such
sale, provided that the same conforms to the total amount
payable as set forth in such Certificate, Oral Instructions or
Written Instructions.
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<PAGE>
ARTICLE V
OPTIONS
Promptly after the purchase of any Option by the
Fund, the Fund shall deliver to the Custodian a Certificate
specifying with respect to each Option purchased: (a) the
Series to which such option is specifically allocated; (b) the
type of option (put or call); (c) the name of the issuer and
the title and number of shares subject to such option or, in
the case of a Stock Index Option, the stock index to which
such option relates and the number of Stock Index Options
purchased; (d) the expiration date; (e) the exercise price;
(f) the dates of purchase and settlement; (g) the total amount
payable by the Fund in connection with such purchase; (h) the
name of the Clearing Member through whom such Option was
purchased; and (i) the name of the broker to whom payment is
to be made. The Custodian shall pay, upon receipt of a
Clearing Member's statement confirming the purchase of such
option held by such Clearing Member for the account of the
Custodian (or any duly appointed and registered nominee of the
Custodian) as custodian for the Fund, out of moneys held for
the account of the Series to which such option is to be
specifically allocated, the total amount payable upon such
purchase to the Clearing Member through whom the purchase was
made, provided that the same conforms to the total amount
payable as set forth in such Certificate.
2. Promptly after the sale of any Option purchased by
the Fund pursuant to paragraph 1 hereof, the Fund shall
deliver to the Custodian a Certificate specifying with respect
to each such sale: (a) the Series to which such option was
specifically allocated; (b) the type of Option (put or call);
(c) the name of the issuer and the title and number of shares
subject to such Option or, in the case of a Stock Index
option, the stock index to which such Option relates and the
number of Stock Index options sold; (d) the date of sale; (e)
the sale price; (f) the date of settlement; (g) the total
amount payable to the Fund upon such sale; and (h) the name of
the Clearing Member through whom the sale was made. The
Custodian shall consent to the delivery of the Option sold by
the Clearing Member which previously supplied the confirmation
described in preceding paragraph I of this Article with
respect to such Option against payment to the Custodian of the
total amount payable to the Fund, provided that the same
conforms to the total amount payable as set forth in such
Certificate.
3. Promptly after the exercise by the Fund of any Call
Option purchased by the Fund pursuant to paragraph 1 hereof,
the Fund shall deliver to the Custodian a Certificate
specifying with respect to such Call Option: (a) the Series to
which such Call option was specifically allocated; (b) the
name of the issuer and the title and number of shares subject
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<PAGE>
to the Call Option; (c) the expiration date; (d) the date of
exercise and settlement; (e) the exercise price per share; (f)
the total amount to be paid by the Fund upon such exercise;
and (g) the name of the Clearing Member through whom such Call
option was exercised. The Custodian shall, upon receipt of
the Securities underlying the Call Option which was exercised,
pay out of the moneys held for the account of the Series to
which such Call option was specifically allocated the total
amount payable to the Clearing Member through whom the Call
option was exercised, provided that the same conforms to the
total amount payable as set forth in such Certificate.
4. Promptly after the exercise by the Fund of any Put
option purchased by the Fund pursuant to paragraph I hereof,
the Fund shall deliver to the Custodian a Certificate
specifying with respect to such Put Option: (a) the Series to
which such Put option was specifically allocated; (b) the name
of the issuer and the title and number of shares subject to
the Put Option; (c) the expiration date; (d) the date of
exercise and settlement; (e) the exercise price per share; (f)
the total amount to be paid to the Fund upon such exercise;
and (g) the name of the Clearing Member through whom such Put
option was exercised. The Custodian shall, upon receipt of the
amount payable upon the exercise of the Put Option, deliver or
direct the Depository to deliver the Securities specifically
allocated to such Series, provided the same conforms to the
amount payable to the Fund as set forth in such Certificate.
5. Promptly after the exercise by the Fund of any Stock
Index option purchased by the Fund pursuant to paragraph I
hereof, the Fund shall deliver to the Custodian a Certificate
specifying with respect to such Stock Index Option: (a) the
Series to which such Stock Index Option was specifically
allocated; (b) the type of Stock Index Option (put or call);
(c) the number of Options being exercised; (d) the stock index
to which such Option relates; (e) the expiration date; (f) the
exercise price; (g) the total amount to be received by the
Fund in connection with such exercise; and (h) the Clearing
Member from whom such payment is to be received.
6. Whenever the Fund writes a Covered Call Option, the
Fund shall promptly deliver to the Custodian a Certificate
specifying with respect to such Covered Call Option: (a) the
Series for which such Covered Call Option was written; (b) the
name of the issuer and the title. and number of shares for
which the Covered Call Option was written and which underlie
the same; (c) the expiration date; (d) the exercise price; (e)
the premium to be received by the Fund; (f) the date such
Covered Call Option was written; and (g) the name of the
clearing Member through whom the premium is to be received.
The Custodian shall deliver or cause to be delivered, in
exchange for receipt of the premium specified in the
Certificate with respect to such Covered Call option, such
receipts as are required in accordance with the customs
prevailing among Clearing Members dealing in Covered Call
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<PAGE>
and shall impose, or direct the Depository to impose, the
underlying Securities specified in the Certificate specifically
allocated to such Series such restrictions as may required by
such receipts. Notwithstanding the foregoing, custodian has the
right, upon prior written notification the Fund, at any time to
refuse to issue any receipts for Securities in the possession
of the Custodian and not deposited with the Depository
underlying a Covered Call Option.
7. Whenever a Covered Call Option written by the Fund
and described in the preceding paragraph of this Article is
excercised, the Fund shall promptly deliver to the Custodian a
certificate instructing the Custodian to deliver, or to direct
the Depository to deliver, the Securities subject to such
covered Call Option and specifying: (a) the Series for which
such Covered Call option was written; (b) the name of the
issuer and the title and number of shares subject to the
Covered Call Option; (c) the Clearing Member to whom the
underlying Securities are to be delivered; and (d) the total
amount payable to the Fund upon such delivery. Upon the
return and/or cancellation of any receipts delivered pursuant
to paragraph 6 of this Article, the Custodian shall deliver,
or direct the Depository to deliver, the underlying Securities
as specified in the Certificate against payment of the amount
to be received as set forth in such Certificate.
8. Whenever the Fund writes a Put Option, the Fund
shall promptly deliver to the Custodian a Certificate
specifying with respect to such Put Option:(a) the Series
for which such Put Option was written; (b) the name of the
issuer and the title and number of shares for which the Put
Option is written, and which underlie the same; (c) the
expiration date; (d) the exercise price; (e) the premium to be
received by the Fund; (f) the date such Put option is written;
(g) the name of the Clearing Member through whom the premium
is to be received and to whom a Put Option guarantee letter is
to be delivered; (h) the amount of cash, and/or the amount and
kind of Securities, if any, specifically allocated to such
Series to be deposited in the Senior Security Account for such
Series; and (i) the amount of cash and/or the amount and kind
of Securities specifically allocated to such Series to be
deposited into the Collateral Account for such Series. The
Custodian shall, after making the deposits into the Collateral
Account specified in the Certificate, issue a Put option
guarantee letter substantially in the form utilized by the
Custodian on the date hereof, ahd deliver the same to the
Clearing Member specified in the Certificate against receipt
of the premium specified in said Certificate. Notwithstanding
the foregoing, the Custodian shall be under no obligation to
issue any Put option guarantee letter or similar document if
it is unable to make any of the representations contained
therein.
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<PAGE>
9. Whenever a Put Option written by the Fund and
described in the preceding paragraph is exercised, the Fund
shall promptly deliver to the Custodian a Certificate
specifying: (a) the Series to which such Put Option was
written; (b) the name of the issuer and title and number of
shares subject to the Put Option; (c) the Clearing Member from
whom the underlying Securities are to be received; (d) the
total amount payable by the Fund upon such delivery; (e) the
amount of cash and/or the amount and kind of Securities
specifically allocated to such Series to be withdrawn from the
Collateral Account for such Series and (f) the amount of cash
and/or the amount and kind of Securities, specifically
allocated to such Series, if any, to be withdrawn from the
Senior Security Account. Upon the return and/or cancellation
of any Put Option guarantee letter or similar document issued
by the Custodian in connection with such Put Option, the
Custodian shall pay out of the moneys held for the account of
the Series to which such Put Option was specifically allocated
the total amount payable to the Clearing Member specified in
the Certificate as set forth in such Certificate against
delivery of such Securities, and shall make the withdrawals
specified in such Certificate.
10. Whenever the Fund writes a Stock Index Option, the
Fund shall promptly deliver to the custodian a Certificate
specifying with respect to such Stock Index option: (a) the
series for which such Stock Index option was written; (b)
whether such Stock Index option is a put or a call; (c) the
number of options written; (d) the stock index to which such
Option relates; (e) the expiration date; (f) the exercise
price; (g) the Clearing Member through whom such option was
written; (h) the premium to be received by the Fund; (i) the
amount of cash and/or the amount and kind of Securities, if
any, specifically allocated to such Series to be deposited in
the Senior Security Account for such Series; (j) the amount of
cash and/or the amount and kind of Securities, if any,
specifically allocated to such Series to be deposited in the
Collateral Account for such Series; and (k) the amount of cash
and/or the amount and kind of Securities, if any, specifically
allocated to such Series to be deposited in a Margin Account,
and the name in which such account is to be or has been
established. The Custodian shall, upon receipt of the premium
specified in the Certificate, make the deposits, if any, into
the Senior Security Account specified in the Certificate, and
either (1) deliver such receipts, if any, which the Custodian
has specifically agreed to issue, which are in accordance with
the customs prevailing among Clearing Members in Stock Index
Options and make the deposits into the Collateral Account
specified in the Certificate, or (2) make the deposits into
the Margin Account specified in the Certificate.
11. Whenever a Stock Index option written by the Fund
and described in the preceding paragraph of this Article is
exercised, the Fund shall promptly deliver to the Custodian a
Certificate specifying with respect to such Stock Index
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<PAGE>
Option: (a) the Series for which such Stock Index option was
written; (b) such information as may be necessary to identify
the Stock Index Option being exercised; (c) the Clearing
Member through whom such Stock Index Option is being
exercised; (d) the total amount payable upon such exercise,
and whether such amount is to be paid by or to the Fund; (e)
the amount of cash and/or amount and kind of Securities, if
any, to be withdrawn from the Margin Account; and (f) the
amount of cash and/or amount and kind of Securities, if any,
to be withdrawn from the senior Security Account for such
Series; and the amount of cash and/or the amount and kind of
securities, if any, to be withdrawn from the Collateral
Account for such Series. Upon the return and/or cancellation
of the receipt, if any, delivered pursuant to the preceding
paragraph of this Article, the Custodian shall pay out of the
moneys held for the account of the Series to which such Stock
Index Option was specifically allocated to the Clearing Member
specified in the Certificate the total amount payable, if any,
as specified therein.
12. Whenever the Fund purchases any option identical to
a previously written Option described in paragraphs, 6, 8 or
10 of this Article in a transaction expressly designated as a
"Closing Purchase Transaction" in order to liquidate its
position as a writer of an Option, the Fund shall promptly
deliver to the Custodian a Certificate specifying with respect
to the Option being purchased: (a) that the transaction is a
Closing Purchase Transaction; (b) the Series for which the
Option was written; (c) the name of the issuer and the title
and number of shares subject to the Option, or, in the case of
a Stock Index Option, the stock index to which such option
relates and the number of. options held; (d) the exercise
price; (e) the premium to be paid by the Fund; (f) the
expiration date; (g) the type of Option (put or call); (h) the
date of such purchase; (i) the name of the Clearing Member to
whom the premium is to be paid; and (j) the amount of cash
and/or the amount and kind of Securities, if any, to be
withdrawn from the Collateral Account, a specified Margin
Account, or the Senior Security Account for such Series. Upon
the Custodian's payment of the premium and the return and/or
cancellation of any receipt issued pursuant to paragraphs 6, 8
or 10 of this Article with respect to the Option being
liquidated through the Closing Purchase Transaction, the
Custodian shall remove, or direct the Depository to remove,
the previously imposed restrictions on the Securities
underlying the Call option.
13. Upon the expiration, exercise or consummation of a
Closing Purchase Transaction with respect to any option
purchased or written by the Fund and described in this
Article, the Custodian shall delete such Option from the
statements delivered to the Fund pursuant to paragraph 3
Article III herein, and upon the return and/or cancellation of
any receipts issued by the Custodian, shall make such
withdrawals from the Collateral Account, and the Margin
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<PAGE>
Account and/or the Senior Security Account as may be specified
in a certificate received in connection with such expiration,
exercise, or consummation.
ARTICLE VI
FUTURES CONTRACTS
1. Whenever the Fund shall enter into a Futures
Contract, the Fund shall deliver to the Custodian a
Certificate specifying with respect to such Futures Contract,
(or with respect to any number of identical Futures
Contract(s): (a) the Series for which the Futures Contract is
being entered; (b) the category of Futures Contract (the name
of the underlying stock index or financial instrument); (c)
the number of identical Futures Contracts entered into; (d)
the delivery or settlement date of the Futures Contract(s);
(e) the date the Futures Contract(s) was (were) entered into
and the maturity date; (f) whether the Fund is buying (going
long) or selling (going short) on such Futures Contract(s);
(g) the amount of cash and/or the amount and kind of
Securities, if any, to be deposited in the Senior Security
Account for such Series; (h) the name of the broker, dealer,
or futures commission merchant through whom the Futures
Contract was entered into; and (i) the amount of fee or
commission, if any, to be paid and the name of the broker,
dealer, or futures commission merchant to whom such amount is
to be paid. The Custodian shall make the deposits, if any, to
the Margin Account in accordance with the terms and conditions
of the Margin Account Agreement. The Custodian shall make
payment out of the moneys specifically allocated to such
Series of the fee or commission, if any, specified in the
Certificate and deposit in the Senior Security Account for
such Series the amount of cash and/or the amount and kind of
securities specified in said Certificate.
2. (a) Any variation margin payment or similar payment
required to be made by the Fund to a broker, dealer, or
futures commission merchant with respect to an outstanding
Futures Contract, shall be made by the Custodian in accordance
with the terms and conditions of the Margin Account
Agreement.
(b) Any variation margin payment or similar payment
from a broker, dealer, or futures commission merchant to the
Fund with respect to an outstanding Futures Contract, shall be
received and dealt with by the Custodian in accordance with
the terms and conditions of the Margin Account Agreement.
3. Whenever a Futures Contract held by the Custodian
hereunder is retained by the Fund until delivery or settlement
is made on such Futures Contract, the Fund shall deliver to
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<PAGE>
the Custodian a Certificate specifying: (a) the Futures
Contract and the Series to which the same relates; (b) with
respect to a Stock Index Futures Contract, the total cash
settlement amount to be paid or received, and with respect to
a Financial Futures Contract, the Securities and/or amount of
cash to be delivered or received; (c) the broker, dealer, or
futures commission merchant to or from whom payment or
delivery is to be 'made or received; and (d) the amount of cash
and/or Securities to be withdrawn from the Senior Security
Account for such Series. The Custodian shall make the payment
or delivery specified in the Certificate, and delete such
Futures Contract from the statements delivered to the Fund
pursuant to paragraph 3 of Article III herein.
4. Whenever the Fund shall enter into a Futures
Contract to offset a Futures Contract held by the Custodian
hereunder, the Fund shall deliver to the Custodian a
Certificate specifying: (a) the items of information required
in a Certificate described in paragraph I of this Article, and
(b) the Futures Contract being offset. The Custodian shall
make payment out of the money specifically allocated to such
Series of the fee or commission, if any, specified in the
Certificate and delete the Futures Contract being offset from
the statements delivered to the Fund pursuant to paragraph 3
of Article III herein, and make such withdrawals from the
Senior Security Account for such Series as may be specified in
such Certificate. The withdrawals, if any, to be made from
the Margin Account shall be made by the Custodian in
accordance with the terms and conditions of the Margin Account
Agreement.
ARTICLE VII
FUTURES CONTRACT OPTIONS
1. Promptly after the purchase of any Futures Contract
option by the Fund, the Fund shall promptly deliver to the
Custodian a Certificate specifying with respect to such
Futures Contract Option: (a) the Series to which such option
is specifically allocated; (b) the type of Futures Contract
option (put or call); (c) the type of Futures Contract and
such other information as may be necessary to identify the
Futures Contract underlying the Futures Contract option
purchased; (d) the expiration date; (e) the exercise price;
(f) the dates of purchase and settlement; (g) the amount of
premium to be paid by the Fund upon such purchase; (h) the
name of the broker or futures commission merchant through whom
such option was purchased; and (i) the name of the broker, or
futures commission merchant, to whom payment is to be made.
The Custodian shall pay out of the moneys specifically
allocated to such Series, the total amount to be paid upon
such purchase to the broker or futures commissions merchant
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<PAGE>
through whom the purchase was made, provided that the same
conforms to the amount set forth in such Certificate.
2. Promptly after the sale of any Futures Contract
option purchased by the Fund pursuant to paragraph 1 hereof,
the Fund shall promptly deliver to the Custodian a Certificate
specifying with respect to each such sale: (a) Series to which
such Futures Contract Option was specifically allocated; (b)
the type of Future Contract Option (put or call); (c) the type
of Futures Contract and such other information as may be
necessary to identify the Futures Contract underlying the
Futures Contract option; (d) the date of sale; (e) the sale
price; (f) the date of settlement; (g) the total amount
payable to the Fund upon such sale; and (h) the name of the
broker of futures commission merchant through whom the sale
was made. The Custodian shall consent to the cancellation of
the Futures Contract option being closed against payment to
the Custodian of the total amount payable to the Fund,
provided the same conforms to the total amount payable as set
forth in such Certificate.
3. Whenever a Futures Contract Option purchased by the
Fund pursuant to paragraph 1 is exercised by the Fund, the
Fund shall promptly deliver to the Custodian a Certificate
specifying: (a) the Series to which such Futures Contract
option was specifically allocated; (b) the particular Futures
Contract Option (put or call) being exercised; (c) the type of
Futures Contract underlying the Futures Contract Option; (d)
the date of exercise; (e) the name of the broker or futures
commission merchant through whom the Futures Contract option
is exercised; (f) the net total amount, if any, payable by the
Fund; (g) the amount, if any, to be received by the Fund; and
(h) the amount of cash and/or the amount and kind of
Securities to be deposited in the Senior Security Account for
such Series. The Custodian shall make, out of the moneys and
Securities specifically allocated to such Series, the
payments, if any, and the deposits, if any, into the senior
Security Account as specified in the Certificate. The
deposits, if any, to be made to the Margin Account shall be
made by the Custodian in accordance with the terms and
conditions of the Margin Account Agreement.
4. Whenever the Fund writes a Futures Contract Option,
the Fund shall promptly deliver to the Custodian a Certificate
specifying with respect to such Futures Contract Option: (a)
the Series for which such Futures Contract Option was written;
(b) the type of Futures Contract Option (put or call); (c) the
type of Futures Contract and such other information as may be
necessary to identify the Futures Contract underlying the
Futures Contract Option; (d) the expiration date; (e) the
exercise price; (f) the premium to be received by the Fund;
(g) the name of the broker or futures commission merchant
through whom the premium is to be received; and (h) the amount
of cash and/or the amount and kind of Securities, if any, to
be deposited in the Senior Security Account for such Series.
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<PAGE>
The Custodian shall, upon receipt of the premium specified in
the Certificate, make out of the moneys and Securities
specifically allocated to such Series the deposits into the
Senior Security Account, if any, as specified in the
Certificate. The deposits, if any, to be made to the Margin
Account shall be made by the Custodian in accordance with the
terms and conditions of the Margin Account Agreement.
5. Whenever a Futures Contract Option written by the
Fund which is a call is exercised, the Fund shall promptly
deliver to the Custodian a Certificate specifying: (a) the
Series to which such Futures Contract Option was specifically
allocated; (b) the particular Futures Contract option
exercised; (c) the type of Futures Contract underlying the
Futures Contract Option; (d) the name of the broker or futures
commission merchant through whom such Futures Contract Option
was exercised; (e) the net total amount, if any, payable to
the Fund upon such exercise; (f) the net total amount, if any,
payable by the Fund upon such exercise; and (g) the amount of
cash and/or the amount and kind of Securities to be deposited
in the Senior Security Account for such Series. The Custodian
shall, upon its receipt of the net total amount payable to the
Fund, if any, specified in such Certificate make the payments,
if any, and the deposits, if any, into the Senior Security
Account as specified in the Certificate. The deposits, if any,
to be made to the Margin Account shall be made by the
Custodian in accordance with the terms and conditions of the
Margin Account Agreement.
6. Whenever a Futures Contract Option which is written
by the Fund and which is a put is exercised, the Fund shall
promptly deliver to the Custodian a Certificate specifying:
(a) the Series to which such Option was specifically
allocated; (b) the particular Futures Contract Option
exercised; (c) the type of Futures Contract underlying such
Futures Contract Option; (d) the name of the broker or futures
commission merchant through whom such Futures Contract Option
is exercised; (e) the net total amount, if any, payable to the
Fund upon such exercise; (f) the net total amount, if any,
payable by the Fund upon such exercise; and (g) the amount and
kind of Securities and/or cash to be withdrawn from or
deposited in, the Senior Security Account for such Series, if
any. The Custodian shall, upon its receipt of the net total
amount payable to the Fund, if any, specified in the
Certificate, make out of the' moneys and securities
specifically allocated to such Series, the payments, if any,
and the deposits, if any, into the Senior Security Account as
specified in the Certificate. The deposits to and/or
withdrawals from the Margin Account, if any, shall be made by
the Custodian in accordance with the terms and conditions of
the Margin Account Agreement.
7. Whenever the Fund purchases any Futures Contract
option identical to a previously written Futures Contract
option described in this Article in order to liquidate its
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<PAGE>
position as a writer of such Futures Contract Option, the Fund
shall promptly deliver to the Custodian a Certificate
specifying with respect to the Futures Contract Option being
purchased: (a) the Series to which such Option is specifically
allocated; (b) that the transaction is a closing transaction;
(c) the type of Future Contract and such other information as
may be necessary to identify the Futures Contract underlying
the Futures Option Contract; (d) the exercise price; (e) the
premium to be paid by the Fund; (f) the expiration date; (g)
the name of the broker or futures commission 'merchant to whom
the premium is to be paid; and (h) the amount of cash and/or
the amount and kind of Securities, if any, to be withdrawn
from the Senior Security Account for such series. The
Custodian shall effect the withdrawals from the Senior
Security Account specified in the Certificate. The
withdrawals, if any, to be made from the Margin Account shall
be made by the Custodian in accordance with the terms and
conditions of the Margin Account Agreement.
8. Upon the expiration, exercise, or consummation of a
closing transaction with respect to, any Futures Contract
Option written or purchased by the Fund and described in this
Article, the Custodian shall (a) delete such Futures Contract
Option from the statements delivered to the Fund pursuant to
paragraph 3 of Article III herein and, (b) make such
withdrawals from and/or in the case of an exercise such
deposits into the Senior Security Account as may be specified
in a Certificate. The deposits to and/or withdrawals from the
Margin Account, if any, shall be made by the Custodian in
accordance with the terms and conditions of the Margin Account
Agreement.
9. Futures Contracts acquired by the Fund through the
exercise of a Futures Contract Option described in this
Article shall be subject to Article VI hereof.
ARTICLE VIII
SHORT SALES
1. Promptly after any short sales by any Series of the
Fund, the Fund shall promptly deliver to the Custodian a
Certificate specifying: (a) the Series for which such short
sale was made; (b) the name of the issuer and the title of the
Security; (c) the number of shares or principal amount sold,
and accrued interest or dividends, if any; (d) the dates of
the sale and settlement; (e) the sale price per unit; (f) the
total amount credited to the Fund upon such sale, if any, (g)
the amount of cash and/or the amount and kind of Securities,
if any, which are to be deposited in a Margin Account and the
name in which such Margin Account has been or is to be
established; (h) the amount of cash and/or the amount and kind
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<PAGE>
of securities, if any, to be deposited in a Senior Security
Account, and (i) the name of the broker through whom such
short sale was made. The Custodian shall on its receipt of
a statement from such broker confirming such sale and that the
total amount credited to the Fund upon such sale, if any, as
specified in the Certificate is held by such broker for the
account of the Custodian (or any nominee of the Custodian) as
custodian of the Fund, issue a receipt or make the deposits
into the Margin Account and the Senior Security Account
specified in the Certificate.
2. In connection with the closing out of any short
sale, the Fund shall promptly deliver to the Custodian a
Certificate specifying with respect to each such closing out:
(a) the Series for which such transaction is being made; (b)
the name of the issuer and the title of the Security; (c) the
number of shares or the principal amount, and accrued interest
or dividends, if any, required to effect such closing out to
be delivered to the broker; (d) the dates of closing out and
settlement; (e) the purchase price per unit; (f) the net total
amount payable to the Fund upon such closing out; (g) the net
total amount payable to the broker upon such closing out;. (h)
the amount of cash and the amount and kind of Securities to be
withdrawn, if any, from the Margin Account; (i) the amount of
cash and/or the amount and kind of Securities, if any, to be
withdrawn from the Senior Security Account; and (j) the name
of the broker through whom the Fund is effecting such
closing out. The Custodian shall, upon receipt of the net
total amount payable to the Fund upon such closing out, and
the return and/ or cancellation of the receipts, if any,
issued by the Custodian with respect to the short sale being
closed out, pay out of the moneys held for the account of the
Fund to the broker the net total amount payable to the broker,
and make the withdrawals from the Margin Account and the
Senior Security Account, as the same are specified in the
Certificate.
ARTICLE IX
REVERSE REPURCHASE AGREEMENTS
1. Promptly after the Fund enters a Reverse Repurchase
Agreement with respect to Securities and money held by the
Custodian hereunder, the Fund shall deliver to the Custodian a
Certificate, or in the event such Reverse Repurchase Agreement
is a Money Market Security, a Certificate, Oral Instructions,
or Written Instructions specifying: (a) the Series for which
the Reverse Repurchase Agreement is entered; (b) the total
amount payable to the Fund in connection with such Reverse
Repurchase Agreement and specifically allocated to such,
Series; (c) the broker or dealer through or with whom the
Reverse Repurchase Agreement is entered; (d) the amount and
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<PAGE>
kind of Securities to be delivered by the Fund to such broker
or dealer; (e) the date of such Reverse Repurchase Agreement;
and (f) the amount of cash and/or the amount and kind of
securities, if any, specifically allocated to such Series to
be deposited in a Senior Security Account for such Series in
connection with such Reverse Repurchase Agreement. The
Custodian shall, upon receipt of the total amount payable to
the Fund specified in the Certificate, Oral Instructions, or
Written Instructions make the delivery to the broker or
dealer, and the deposits, if any, to the Senior Security
Account, specified in such Certificate, Oral Instructions, or
Written Instructions.
2. Upon the termination of a Reverse Repurchase
Agreement described in preceding paragraph 1 of this Article,
the Fund shall promptly deliver a Certificate or, in the event
such Reverse Repurchase Agreement is a Money Market Security,
a Certificate, Oral Instructions, or Written Instructions to
the Custodian specifying: (a) the Reverse Repurchase Agreement
being terminated and the Series for which same was entered;
(b) the total amount payable by the Fund in connection with
such termination; (c) the amount and kind of Securities to be
received by the Fund and specifically allocated to such Series
in connection with such termination; (d) the date of
termination; (e) the name of the broker or dealer with or
through whom the Reverse Repurchase Agreement is to be
terminated; and (f) the amount of cash and/or the amount and
kind of Securities to be withdrawn from the Senior Securities
Account for such Series. The Custodian shall, upon receipt of
the amount and kind of Securities to be received by the Fund
specified in the Certificate, Oral Instructions, or Written
Instructions, make the payment to the broker or dealer, and
the withdrawals, if any, from the Senior Security Account,
specified in such Certificate, Oral Instructions, or Written
Instructions.
ARTICLE X
LOAN OF PORTFOLIO SECURITIES OF THE FUND
1. Promptly after each loan of portfolio Securities
specifically allocated to a Series held by the Custodian
hereunder, the Fund shall deliver or cause to be delivered to
the Custodian a Certificate specifying with respect to each
such loan: (a) the Series to which the loaned Securities are
specifically allocated; (b) the name of the issuer and the
title of the Securities, (c) the number of shares or the
principal amount loaned, (d) the date of loan and delivery,
(e) the total amount to be delivered to the Custodian against
the loan of the Securities, including the amount of cash
collateral and the premium, if any, separately identified, and
(f) the name of the broker, dealer, or financial institution
to which the loan was made. The Custodian shall deliver the
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<PAGE>
Securities thus designated to the broker, dealer or financial
institution to which the loan was made upon receipt of the
total amount designated as to be delivered against the loan of
securities. The Custodian may accept payment in connection
with a delivery otherwise than through the Book-Entry System
or Depository only in the form of a certified or bank
cashier's check payable to the order of the Fund or the
Custodian drawn on New York Clearing House funds and may
deliver Securities in accordance with the customs prevailing
among dealers in securities.
2. Promptly after each termination of the loan of
Securities by the Fund, the Fund shall deliver or cause to be
delivered to the Custodian a Certificate specifying with
respect to each such loan termination and return of
Securities: (a) the Series to which the loaned Securities are
specifically allocated; (b) the name of the issuer and the
title of the Securities to be returned, (c) the number of
shares or the principal amount to be returned, (d) the date of
termination, (e) the total amount to be delivered by the
Custodian (including the cash collateral for such Securities
minus any offsetting credits as described in said
Certificate), and (f) the name of the broker, dealer, or
financial institution from which the Securities will be
returned. The Custodian shall receive all Securities returned
from the broker, dealer, or financial institution to which
such Securities were loaned and upon receipt thereof shall
pay, out of the moneys held for the account of the Fund, the
total amount payable upon such return of Securities as set
forth in the Certificate.
ARTICLE XI
CONCERNING MARGIN ACCOUNTS, SENIOR SECURITY
ACCOUNTS, AND COLLATERAL ACCOUNTS
1. The Custodian shall, from time to time, make such
deposits to, or withdrawals from, a Senior Security Account as
specified in a Certificate received by the Custodian. Such
Certificate shall specify the Series for which such deposit or
withdrawal is to be made and the amount of cash and/or the
amount and kind of Securities specifically allocated to such
Series to be deposited in, or withdrawn from, such Senior
Security Account for such Series. In the event that the Fund
fails to specify in a Certificate the Series, the name of the
issuer, the title and the number of shares or the principal
amount of any particular Securities to be deposited by the
Custodian into, or withdrawn from, a Senior Securities
Account, the Custodian shall be under no obligation to make
any such deposit or withdrawal and shall so notify the Fund.
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<PAGE>
2. The Custodian shall make deliveries or payments from
a Margin Account to the broker, dealer, futures commission
merchant or Clearing Member in whose name, or for whose
benefit, the account was established as specified in the
Margin Account Agreement.
3. Amounts received by the Custodian as payments or
distributions with respect to Securities deposited in any
Margin Account shall be dealt with in accordance with the
terms and conditions of the Margin Account Agreement.
4. The Custodian shall have a continuing lien and
security interest in and to any property at any time held by
the Custodian in any Collateral Account described herein. In
accordance with applicable law the Custodian may enforce its
lien and realize on any such property whenever the Custodian
has made payment or delivery pursuant to any Put option
guarantee letter or similar document or any receipt issued
hereunder by the Custodian. In the event the Custodian should
realize on any such property net proceeds which are less than
the Custodiants obligations under any Put Option guarantee
letter or similar document or any receipt, such deficiency
shall be a debt owed the Custodian by the Fund within' the
scope of Article XIV herein.
5. on each business day the Custodian shall furnish the
Fund with a statement with respect to each Margin Account in
which money or Securities are held specifying as of the close
of business on the previous business day: (a) the name of the
Margin Account; (b) the amount and kind of Securities held
therein; and (c) the amount of money held therein. The
Custodian shall make available upon request to any broker,
dealer, or futures commission merchant specified in the name
of a Margin Account a copy of the statement furnished the Fund
with respect to such Margin Account.
6. Promptly after the close of business on each
business day in which cash and/or Securities are maintained in
a Collateral Account for any Series, the Custodian shall
furnish the Fund with a statement with respect to such
Collateral Account specifying the amount of cash and/or the
amount and kind of Securities held therein. No later than the
close of business next succeeding the delivery to the Fund of
such statement, the Fund shall furnish to the Custodian a
Certificate or Written Instructions specifying the then market
value of the Securities described in such statement. In the
event such then market value is indicated to be less than the
Custodian's obligation with respect to any outstanding Put
option guarantee letter or similar document, the Fund shall
promptly specify in a Certificate the additional cash and/or
Securities to be deposited in such Collateral Account to
eliminate such deficiency.
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<PAGE>
ARTICLE XII
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. The Fund shall furnish to the Custodian a copy of
the resolution of the Board of Trustees of the Fund, certified
by the Secretary, the Clerk, any Assistant Secretary or any
Assistant Clerk, either (i) setting forth with respect to the
Series specified therein the date of the declaration of a
dividend or distribution, the date of payment thereof, the
record date as of which shareholders entitled to payment shall
be determined, the amount payable per Share of such Series to
the shareholders of record as of that date and the total
amount payable to the Dividend Agent and any sub-dividend
agent or co-dividend agent of the Fund on the payment date, or
(ii) authorizing with respect to the Series specified therein
the declaration of dividends and distributions on a daily
basis and authorizing the Custodian to rely on oral
Instructions, Written Instructions or a Certificate setting
forth the date of the declaration of such dividend or
distribution, the date of payment thereof, the record date as
of which shareholders entitled to payment shall be determined,
the amount payable per Share of such Series to the
shareholders of record as of that date and the total amount
payable to the Dividend Agent on the payment date.
2. Upon the payment date specified in such resolution,
Oral Instructions, Written Instructions or Certificate, as the
case may be, the Custodian shall pay out of the moneys held
for the account of each Series the total amount payable to the
Dividend Agent and any sub-dividend agent or co-dividend agent
of the Fund with respect to such Series.
ARTICLE XIII
SALE AND REDEMPTION OF SHARES
1. Whenever the Fund shall sell any Shares, it shall
deliver to the Custodian a Certificate duly specifying:
(a) The Series, the number of Shares sold, trade
date, and price; and
(b) The amount of money to be received by the
Custodian for the sale of such Shares and specifically
allocated to the separate account in the name of such series.
2. Upon receipt of such money from the Transfer Agent,
the Custodian shall credit such money to the separate account
in the name of the Series for which such money was received.
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<PAGE>
3. Upon issuance of any Shares of any Series described
in the foregoing provisions of this Article, the Custodian
shall pay, out of the money held for the account of such
Series, all original issue or other taxes required to be paid
by the Fund in connection with such issuance upon the receipt
of a Certificate specifying the amount to be paid.
4. Except as provided hereinafter, whenever the Fund
desires the Custodian to make payment out of the money held by
the Custodian hereunder in connection with a redemption of any
Shares, it shall furnish to the Custodian a Certificate
specifying:
(a) The number and Series of Shares redeemed; and
(b) The amount to be paid for such Shares.
5. Upon receipt from the Transfer Agent of an advice
setting forth the Series and number of Shares received by the
Transfer Agent for redemption and that such Shares are in good
form for redemption, the Custodian shall make payment to the
Transfer Agent out of the moneys held in the separate account
in the name of the Series the total amount specified in the
Certificate issued pursuant to the foregoing paragraph 4 of
this Article.
6. Notwithstanding the above provisions regarding the
redemption of any Shares, whenever any Shares are redeemed
pursuant to any check redemption privilege which may from time
to time be offered by the Fund, the Custodian, unless
otherwise instructed by a Certificate, shall, upon receipt of
an advice from the Fund or its agent setting forth that the
redemption is in good form for redemption in accordance with
the check redemption procedure, honor the check presented as
part of such check redemption privilege out of the moneys held
in the separate account of the Series of the Shares being
redeemed.
ARTICLE XIV
OVERDRAFTS OR INDEBTEDNESS
1. if the Custodian, should in its sole discretion
advance funds on behalf of any Series which results in an
overdraft because the moneys held by the Custodian in the
separate account for such Series shall be insufficient to pay
the total amount payable upon a purchase of Securities
specifically allocated to such Series, as set forth in a
Certificate, Oral Instructions, or Written Instructions or
which results in an overdraft in the separate account of such
Series for some other reason, or if the Fund is for any other
reason indebted to the Custodian with respect to a Series,
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<PAGE>
including any indebtedness to The Bank of New York under the
Fund's Cash Management and Related Services Agreement, (except
a borrowing for investment or for temporary or emergency
purposes using Securities as collateral pursuant to a separate
agreement and subject to the provisions of paragraph 2 of this
Article), such overdraft or indebtedness shall be deemed to be
a loan made by the Custodian to the Fund for such Series
payable on demand and shall bear interest from the date
incurred at a rate per annum (based on a 360-day year for the
actual number of days involved) equal to 1/2% over Custodian's
prime commercial lending rate in effect from time to time,
such rate to be adjusted on the effective date of any change
in such prime commercial lending rate but in no event to be
less than 6% per annum. In addition, the Fund hereby agrees
that the Custodian shall have a continuing lien and security
interest in and to any property specifically allocated to such
series at any time held by it for the benefit of such Series
or in which the Fund may have an interest which is then in the
custodian's possession or control or in possession or control
of any third party acting in the Custodian's behalf. The Fund
authorizes the Custodian, in its sole discretion, at any time
to charge any such overdraft or indebtedness together with
interest due thereon against any balance of account standing
to such Series' credit an the Custodian's books. In addition,
the Fund hereby covenants that on each Business Day on which
either it intends to enter a Reverse Repurchase Agreement and/
or otherwise borrow from a third party, or which next succeeds
a Business Day on which at the close of business the Fund had
outstanding a Reverse Repurchase Agreement or such a
borrowing, it shall prior to 9 a.m., New York City time,
advise the Custodian, in writing, of each such borrowing,
shall specify the Series to which the same relates, and shall
not incur any indebtedness not so specified other than from
the Custodian.
2. The Fund will cause to be delivered to the Custodian
by any bank (including, if the borrowing is pursuant to a
separate agreement, the Custodian) from which it borrows money
for investment or for temporary or emergency purposes using
Securities held by the Custodian hereunder as collateral for
such borrowings, a notice or undertaking in the form currently
employed by any such bank setting forth the amount which such
bank will loan to the Fund against delivery of a stated amount
of collateral. The Fund shall promptly deliver to the
Custodian a Certificate specifying with respect to each such
borrowing: (a) the Series to which such borrowing relates; (b)
the name of the bank, (c) the amount and terms of the
borrowing, which may be set forth by incorporating by
reference an attached promissory note, duly endorsed by the
Fund, or other loan agreement, (d) the time and date, if
known, on which the loan is to be entered into, (e) the date
on which the loan becomes due and payable, (f) the total
amount payable to the Fund on the borrowing date, (g) the
market value of Securities to be delivered as collateral for
such loan, including the name of the issuer, the title and the
number of shares or the principal amount of any particular
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<PAGE>
Securities, and (h) a statement specifying whether such loan
is for investment purposes or for temporary or emergency
purposes and that such loan is in conformance with the
Investment Company Act of 1940 and the Fund's prospectus. The
Custodian shall deliver on the borrowing date specified in a
Certificate the specified collateral and the executed
promissory note, if any, against delivery by the lending bank
of the total amount of the loan payable, provided that the
same conforms to the total amount payable as set forth in the
Certificate. The Custodian may, at the option of the lending
bank, keep such collateral in its possession, but such
collateral shall be subject to all rights therein given the
lending bank by virtue of any promissory note or loan
agreement. The Custodian shall deliver such Securities as
additional collateral as may be specified in a Certificate to
collateralize further any transaction described in this
paragraph. The Fund shall cause all Securities released from
collateral status to be returned directly to the Custodian,
and the Custodian shall receive from time to time such return
of collateral as may be tendered to it. In the event that the
Fund fails to specify in a Certificate the Series, the name of
the issuer, the title and number of shares or the principal
amount of any particular Securities to be delivered as
collateral by the Custodian, the Custodian shall not be under
any obligation to deliver any Securities.
ARTICLE XV
CONCERNING THE CUSTODIAN
1. Except as hereinafter provided, neither the
Custodian nor its nominee shall be liable for any loss or
damage, including counsel fees, resulting from its action or
omission to act or otherwise, either hereunder or under any
Margin Account Agreement, except for any such loss or damage
arising out of its own negligence or willful misconduct. In
no event shall the Custodian be liable to the Fund or any
third party for special, indirect or consequential damages or
lost profits or loss of business, arising under or in
connection with this Agreement, even if previously informed of
the possibility of such damages and regardless of the form of
action. The Custodian may, with respect to questions of law
arising hereunder or under any Margin Account Agreement, apply
for and obtain the advice and opinion of counsel to the Fund
or of its own counsel, at the expense of the Fund, and shall
be fully protected with respect to anything done or omitted by
it in good faith in conformity with such advice or opinion.
The Custodian shall be liable to the Fund for any loss or
damage resulting from the use of the Book-Entry System or any
Depository arising by reason of any negligence or willful
misconduct on the part of the Custodian or any of its
employees or agents.
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<PAGE>
2. Without limiting the generality of the foregoing,
the Custodian shall be under no obligation to inquire into,
and shall not be liable for:
(a) The validity of the issue of any Securities
purchased, sold, or written by or for the Fund, the legality
of the purchase, sale or writing thereof, or the propriety of
the amount paid or received therefor;
(b) The legality of the sale or redemption of any
Shares, or the propriety of the amount to be received or paid
therefor;
(c) The legality of the declaration or payment of
any dividend by the Fund;
(d) The legality of any borrowing by the Fund using
Securities as collateral;
(e) The legality of any loan of portfolio
Securities, nor shall the Custodian be under any duty or
obligation to see to it that any cash collateral delivered to
it by a broker, dealer, or financial institution or held by it
at any time as a result of such loan of portfolio Securities
of the Fund is adequate collateral for the Fund against any
loss it might sustain as a result of such loan. The Custodian
specifically, but not by way of limitation, shall not be under
any duty or obligation periodically to check or notify the
Fund that the amount of such cash collateral held by it for
the Fund is sufficient collateral for the Fund, but such duty
or obligation shall be the sole responsibility of the Fund.
In addition, the Custodian shall be under no duty or
obligation to see that any broker, dealer or financial
institution to which portfolio Securities of the Fund are lent
pursuant to Article XIV of this Agreement makes payment to it
of any dividends or interest which are payable to or for the
account of the Fund during the period of such loan or at the
termination of such loan, provided, however, that the
Custodian shall promptly notify the Fund in the event that
such dividends or interest are not paid and received when due;
or
(f) The sufficiency or value of any amounts of
money and/or Securities held in any Margin Account, Senior
Security Account or Collateral Account in connection with
transactions by the Fund. In addition, the Custodian shall be
under no duty or obligation to see that any broker, dealer,
futures commission merchant or Clearing Member makes payment
to the Fund of any variation margin payment or similar payment
which the Fund may be entitled to receive from such broker,
dealer, futures commission merchant or Clearing Member, to see
that any payment received by the Custodian from any broker,
dealer, futures commission merchant or Clearing Member is the
amount the Fund is entitled to receive, or to notify the Fund
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<PAGE>
of the Custodian's receipt or non-receipt of any such
payment.
3. The Custodian shall not be liable for, or considered
to be the Custodian of, any money, whether or not represented
by any check, draft, or other instrument for the payment of
money, received by it on behalf of the Fund until the
Custodian actually receives and collects such money directly
or by the final crediting of the account representing the
Fund's interest at the Book-Entry System or the Depository.
4. The Custodian shall have no responsibility and shall
not be liable for ascertaining or acting upon any calls,
conversions, exchange offers, tenders, interest rate changes
or similar matters relating to Securities held in the
Depository, unless the Custodian shall have actually received
timely notice from the Depository. In no event shall the
Custodian have any responsibility or liability for the failure
of the Depository to collect, or for the late collection or
late crediting by the Depository of any amount payable upon
securities deposited in the Depository which may mature or be
redeemed, retired, called or otherwise become payable.
However, upon receipt of a Certificate from the Fund of an
overdue amount on Securities held in the Depository the
Custodian shall make a claim against the Depository on behalf
of the Fund, except that the Custodian shall not be under any
obligation to appear in, prosecute or defend any action suit
or proceeding in respect to any Securities held by the
Depository which in its opinion may involve it in expense or
liability, unless indemnity satisfactory to it against all
expense and liability be furnished as often as may be
required.
5. The Custodian shall not be under any duty or
obligation to take action to effect collection of any amount
due to the Fund from the Transfer Agent of the Fund nor to
take any action to effect payment or distribution by the
Transfer Agent of the Fund of any amount paid by the Custodian
to the Transfer Agent of the Fund in accordance with this
Agreement.
6. The Custodian shall not be under any duty or
obligation to take action to effect collection of any amount
if the Securities upon which such amount is payable are in
default, or if payment is refused after due demand or
presentation, unless and until (i) it shall be directed to
take such action by a Certificate and (ii) it shall be assured
to its satisfaction of reimbursement of its costs and expenses
in connection with any such action.
7. The Custodian may appoint one or more banking
institutions as Depository or Depositories, as Sub-Custodian
or Sub-Custodians, or as Co-Custodian or Co-Custodians
including, but not limited to, banking institutions located in
foreign countries, of Securities and moneys at any time owned
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<PAGE>
by the Fund, upon such terms and conditions as may be approved
in a certificate or contained in an agreement executed by the
Custodian, the Fund and the appointed institution.
8. The Custodian shall not be under any duty or
obligation (a) to ascertain whether any Securities at any time
delivered to, or held by it, for the account of the Fund and
specifically allocated to a Series are such as properly may be
held by the Fund or such Series under the provisions of its
then current prospectus, or (b) to ascertain whether any
transactions by the Fund, whether or not involving, the
Custodian, are such transactions as may properly be engaged in
by the Fund.
9. The Custodian shall be entitled to receive and the
Fund agrees to pay to the Custodian all out-of-pocket expenses
and such compensation as may be agreed upon from time to time
between the Custodian and the Fund. The Custodian may charge
such compensation and any expenses with respect to a Series
incurred by the Custodian in the performance of its duties
pursuant to such agreement against any money specifically
allocated to such Series. Unless and until the Fund instructs
the Custodian by a Certificate to apportion any loss, damage,
liability or expense among the Series in a specified manner,
the Custodian shall also be entitled to charge against any
money held by it for the account of a Series such Series' pro
rata share (based on such Series net asset value at the time
of the charge to the aggregate net asset value of all Series
at that time) of the amount of any loss, damage, liability or
expense, including counsel fees, for which it shall be
entitled to reimbursement under the provisions of this
Agreement. The expenses for which the Custodian shall be
entitled to reimbursement hereunder shall include, but are not
limited to, the expenses of sub-custodians and foreign
branches of the Custodian incurred in settling outside of New
York City transactions involving the purchase and sale of
Securities of the Fund.
10. The Custodian shall be entitled to rely upon any
Certificate, notice or other instrument in writing received by
the Custodian and reasonably believed by the Custodian to be a
Certificate. The Custodian shall be entitled to rely upon any
Oral Instructions and any Written Instructions actually
received by the Custodian hereinabove provided for. The Fund
agrees to forward to the Custodian a Certificate or facsimile
thereof confirming such Oral Instructions or Written
Instructions in such manner so that such Certificate or
facsimile thereof is received by the Custodian, whether by
hand delivery, telecopier or other similar device, or
otherwise, by the close of business of the same day that such
Oral Instructions or Written Instructions are given to the
Custodian. The Fund agrees that the fact that such confirming
instructions are not received by the Custodian shall in no way
affect the validity of the transactions or enforceability of
the transactions hereby authorized by the Fund. The Fund
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<PAGE>
agrees that the Custodian shall incur no liability to the Fund
in acting upon Oral Instructions or Written Instructions given
to the Custodian hereunder concerning such transactions
provided such instructions reasonably appear to have been
received from an Authorized Person.
11. The Custodian shall be entitled to rely upon any
instrument, instruction or notice received by the Custodian
and reasonably believed by the Custodian to be given in
accordance with the terms and conditions of any Margin Account
Agreement. Without limiting the generality of the foregoing,
the Custodian shall be under no duty to inquire into, and
shall not be liable for, the accuracy of any statements or
representations contained in any such instrument or other
notice including, without limitation, any specification of any
amount to be paid to a broker, dealer, futures commission
merchant or Clearing Member.
12. The books and records pertaining to the Fund which
are in the possession of the Custodian shall be the property
of the Fund. Such books and records shall be prepared and
maintained as required by the Investment Company Act of 1940,
as amended, and other applicable securities laws and rules and
regulations. The Fund, or the Fund's authorized
representatives, shall have access to such books and records
during the Custodian's normal business hours. Upon the
reasonable request of the Fund, copies of any such books and
records shall be provided by the Custodian to the Fund or the
Fund's authorized representative, and the Fund shall reimburse
the Custodian its expenses of providing such copies. Upon
reasonable request of the Fund, the Custodian shall provide in
hard copy or on micro-film, whichever the Custodian elects,
any records included in any such delivery which are maintained
by the Custodian on a computer disc, or are similarly
maintained, and the Fund shall reimburse the Custodian for its
expenses of providing such hard copy or micro-film.
13. The Custodian shall provide the Fund with any report
obtained by the Custodian on the system of internal accounting
control of the Book-Entry System, the Depository or O.C.C.,
and with such reports on its own systems of internal
accounting control as the Fund may reasonably request from
time to time.
14. The Fund agrees to indemnify the Custodian against
and save the Custodian harmless from all liability, claims,
losses and demands whatsoever, including attorney's fees,
howsoever arising or incurred because of or in connection with
this Agreement, including the Custodian's payment or
non-payment of checks pursuant to paragraph 6 of Article XIII
as part of any check redemption privilege program of the Fund,
except for any such liability, claim, loss and demand arising
out of the Custodian's own negligence or willful misconduct.
- 32 -
<PAGE>
15. Subject to the foregoing provisions of this
Agreement, the custodian may deliver and receive Securities,
and receipts with respect to such Securities, and arrange for
payments to be made and received by the Custodian in
accordance with the customs prevailing from time to time among
brokers or dealers in such Securities. When the Custodian is
instructed to deliver securities against payment, delivery of
such Securities and receipt of payment therefor may not be
completed simultaneously. The Fund assumes all responsibility
and liability for all credit risks involved in connection with
the Custodian's delivery of securities pursuant to
instructions of the Fund, which responsibility and liability
shall continue until final payment in full has been received
by the Custodian.
16. The Custodian shall have no duties or
responsibilities whatsoever except such duties and
responsibilities as are specifically set forth in this
Agreement, and no covenant or obligation shall be implied in
this Agreement against the Custodian.
ARTICLE XVI
TERMINATION
1. Either of the parties hereto may terminate this
Agreement by giving to the other party a notice in writing
specifying the date of such termination, which shall be not
less than ninety (90) days after the date of giving of such
notice. In the event such notice is given by the Fund, it
shall be accompanied by a copy of a resolution of the Board of
Trustees of the Fund, certified by the Secretary, the Clerk,
any Assistant Secretary or any Assistant Clerk, electing to
terminate this Agreement and designating a successor custodian
or custodians, each of which shall be a bank or trust company
having not less than $2,000,000 aggregate capital, surplus and
undivided profits. In the event such notice is given by the
Custodian, the Fund shall, on or before the termination date,
deliver to the Custodian a copy of a resolution of the Board
of Trustees of the Fund, certified by the Secretary, the
Clerk, any Assistant Secretary or any Assistant Clerk,
designating a successor custodian or custodians. In the
absence of such designation by the Fund, the Custodian may
designate a successor custodian which shall be a bank or trust
company having not less than $2,000,000 aggregate capital,
surplus and undivided profits. Upon the date set forth in
such notice this Agreement shall terminate, and the Custodian
shall upon receipt of a notice of acceptance by the successor
custodian on that date deliver directly to the successor
custodian all Securities and moneys then owned by the Fund and
held by it as Custodian, after deducting all fees, expenses
- 33 -
<PAGE>
and other amounts for the payment or reimbursement of which it
shall then be entitled.
2. If a successor custodian is not designated by the
Fund or the Custodian in accordance with the preceding
paragraph, the Fund shall upon the date specified in the
notice of termination of this Agreement and upon the delivery
by the Custodian of all Securities (other than Securities held
in the Book-Entry System which cannot be delivered to the
Fund) and moneys then owned by the Fund be deemed to be its
own custodian and the Custodian shall thereby be relieved of
all duties and responsibilities pursuant to this Agreement,
other than the duty with respect to Securities held in the
Book Entry System which cannot be delivered to the Fund to
hold such Securities hereunder in accordance with this
Agreement.
ARTICLE XVII
MISCELLANEOUS
1. Annexed hereto as Appendix A is a Certificate signed
by two of the present Officers of the Fund under its seal,
setting forth the names and the signatures of the present
Authorized Persons. The Fund agrees to furnish to the
Custodian a new Certificate in similar form in the event that
any such present Authorized Person ceases to be an Authorized
Person or in the event that other or additional Authorized
Persons are elected or appointed. Until such new Certificate
shall be received, the Custodian shall be fully protected in
acting under the provisions of this Agreement upon Oral
Instructions or signatures of the present Authorized Persons
as set forth in the last delivered Certificate.
2. Annexed hereto as Appendix B is a Certificate signed
by two of the present Officers of the Fund under its seal,
setting forth the names and the signatures of the present
officers of the Fund. The Fund agrees to furnish to the
Custodian a new Certificate in similar form in the event any
such present officer ceases to be an Officer of the Fund, or
in the event that other or additional Officers are elected or
appointed. Until such new Certificate shall be received, the
Custodian shall be fully protected in acting under the
provisions of this Agreement upon the signatures of the
officers as set forth in the last delivered Certificate.
3. Any notice or other instrument in writing,
authorized or required by this Agreement to be given to the
Custodian, shall be sufficiently given if addressed to the
Custodian and mailed or delivered to it at its offices at 90
Washington Street, New York, New York 10015, or at such other
- 34 -
<PAGE>
place as the Custodian may from time to time designate in
writing.
4. Any notice or other instrument in writing,
authorized or required by this Agreement to be given to the
Fund shall be sufficiently given if addressed to the Fund and
mailed or delivered to it at its office at the address for the
Fund first above written, or at such other place as the Fund
may from time to time designate in writing.
5. This Agreement may not be amended or modified in any
manner except by a written agreement executed by both parties
with the same formality as this Agreement and approved by a
resolution of the Board of Trustees of the Fund.
6. This Agreement shall extend to and shall be binding
upon the parties hereto, and their respective successors and
assigns; provided, however, that this Agreement shall not be
assignable by the Fund without the written consent of the
Custodian, or by the Custodian without the written consent of
the Fund, authorized or approved by a resolution of the Fund's
Board of Trustees.
7. This Agreement shall be construed in accordance with
the laws of the State of New York without giving effect to
conflict of laws principles thereof. Each party hereby
consents to the jurisdiction of a state or federal court
situated in New York City, New York in connection with any
dispute arising hereunder and hereby waives its right to trial
by jury.
8. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original,
but such counterparts shall, together, constitute only one
instrument.
9. A copy of the Declaration of Trust of the Fund is on
file with the Secretary of The Commonwealth of Massachusetts,
and notice is hereby given that this instrument is executed on
behalf of the Board of Trustees of the Fund as Trustees and
not individually and that the obligations of this instrument
are not binding upon any of the Trustees or shareholders
individually but are binding only upon the assets and property
of the Fund; provided, however, that the Declaration of Trust
of the Fund provides that the assets of a particular Series of
the Fund shall under no circumstances be charged with
liabilities attributable to any other Series of the Fund and
that all persons extending credit to, or contracting with or
having any claim against a particular Series of the Fund shall
look only to the assets of that particular Series for payment
of such credit, contract or claim.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective Officers,
- 35 -
<PAGE>
thereunto duly authorized and their respective seals to be
hereunto affixed, as of the day and year first above written.
MERRILL LYNCH U.S. TREASURY
MONEY FUND
BY: /s/ Gerald M. Richard
------------------------
(SEAL)
Attest:
/s/ Mark B. Goldfus
-----------------------
THE BANK OF NEW YORK
By: /s/ Jorge Ramos
--------------------------
(SEAL)
Attest:
/s/ Marjorie McLaughlin
-----------------------
- 36 -
<PAGE>
EXHIBIT 99.9
TRANSFER AGENCY, SHAREHOLDER SERVICING
AGENCY, AND PROXY AGENCY AGREEMENT
THIS AGREEMENT made as of the 5th day of February, 1991 by
and between Merrill Lynch U.S. Treasury Money Fund (the "Fund"),
a trust organized under the laws of the Commonwealth of
Massachusetts, and Financial Data Services, Inc., a corporation
organized and existing under the laws of New Jersey (the
"Transfer Agent").
W I T N E S S E T H:
WHEREAS, the Fund is engaged in business as a diversified,
open-end, management investment company and is registered as such
under the Investment Company Act of 1940, as amended; and
WHEREAS, the Transfer Agent is engaged principally in
rendering transfer agency, shareholder servicing agency and proxy
agency services; and
WHEREAS, the Fund wishes to appoint the Transfer Agent to be
the transfer agent, shareholder servicing agent and proxy agent
for the Fund upon, and subject to, the terms and provisions of
this Agreement, and the Transfer Agent is desirous of accepting
such appointment upon, and subject to, such terms and provisions;
<PAGE>
NOW THEREFORE, in consideration of the mutual covenants
contained in this Agreement, the Fund and the Transfer Agent
agree as follows:
1. Appointment as Transfer Agent, Shareholder Servicing
Agent and Proxy Agent for the Fund.
1.1. The Fund hereby appoints the Transfer Agent to
act as the transfer agent, shareholder servicing agent and proxy
agent for the Fund upon, and subject to, the terms and provisions
of this Agreement.
1.2. The Transfer Agent hereby accepts the appointment
as transfer agent, shareholder servicing agent, and proxy agent
for the Fund, and agrees to act as such upon, and subject to, the
terms and provisions of this Agreement. The Transfer Agent
hereby agrees to hire, purchase, develop and maintain such dedi-
cated personnel, facilities, equipment, software, resources and
capabilities as may be reasonably determined by the Fund to be
necessary for the satisfactory performance of the duties and
responsibilities of the Transfer Agent under this Agreement.
2. Definitions.
In this Agreement:
2.1. The term "Act" means the Investment Company Act
of 1940, as amended from time to time, and any applicable rule,
regulation or order thereunder.
2
<PAGE>
2.2. The term "Account" means the account of a Share-
holder maintained with the Transfer Agent reflecting the
Shareholder's interest in the Fund.
2.3. The term "Custodian" means the bank duly
appointed to act as Custodian for the assets of the Fund and the
term "Custodian Agreement" means any agreement in effect between
the Fund and the Custodian.
2.4. The term "Officer's Instruction" means an
instruction given in writing on behalf of the Fund to the
Transfer Agent by the President, any Vice President, the
Secretary, the Treasurer or the Controller of the Fund.
2.5. The term "Prospectus" means the prospectus of the
Fund from time to time in effect.
2.6. The term "Shares" means the shares of the Fund.
2.7. The term "Shareholder" means the holder of record
of Shares, irrespective of the category of Account maintained in
respect of such Shares.
2.8. The term "Statement of Additional Information"
means the statement of additional information of the Fund from
time to time in effect.
3
<PAGE>
3. Functions of Transfer Agent, Shareholder Servicing Agent
and Proxy Agent.
3.1. Subject to the succeeding provisions of this
Agreement, the Transfer Agent hereby agrees to perform the
following functions for the Funds on behalf of the Fund:
3.1.1. Issuing, transferring and redeeming Shares.
3.1.2. Opening, maintaining, servicing and closing
Accounts.
3.1.3. Acting as agent of the Fund and/or Shareholders
in connection with Accounts, upon the terms and subject to the
conditions contained in the Prospectus and the Statement of
Additional Information.
3.1.4. Causing the reinvestment in Accounts of
dividends declared upon Shares.
3.1.5. Processing liquidations.
3.1.6. Furnishing to Shareholders appropriate income
tax information and income tax forms duly completed.
3.1.7. Mailing to Shareholders annual, semi-annual,
and quarterly reports of the Fund prepared by or on behalf of the
Fund, and mailing new Prospectuses upon their issue to
Shareholders whose Shares are held in Accounts.
3.1.8. Furnishing to the Fund such periodic statements
of transactions effected by the Transfer Agent, reconciliations,
balances and summaries as set forth in Exhibit A.
4
<PAGE>
3.1.9. Maintaining such books and records relating to
transactions effected by the Transfer Agent as are required by
the Act or by any other applicable provisions of law to be main-
tained by the Fund or the Transfer Agent with respect to such
transactions, and preserving, or causing to be preserved, any
such books and records for such periods as may be required by any
law, rule or regulation.
3.2. The Transfer Agent agrees to act as proxy agent
in connection with the holding of meetings of Shareholders, such
services to include, but not be limited to, mailing to
Shareholders notices, proxies and proxy statements in connection
with the holding of such meetings, receiving and tabulating votes
cast by proxy, communicating to the Fund the results of such
tabulation accompanied by appropriate certificates, and preparing
and furnishing to the Fund certified lists of Shareholders, all
of the foregoing in such form and containing such information as
may be required by the Fund to comply with any provisions of law
applicable to such meetings.
3.3. The Transfer Agent agrees to deal with, and
answer, all correspondence from or on behalf of Shareholders
relating to the functions of the Transfer Agent under this
Agreement.
5
<PAGE>
3.4. The Transfer Agent agrees to furnish to the Fund
such information and at such intervals as is necessary for the
Fund to comply with the registration and/or the reporting
requirements of the Securities and Exchange Commission, state
securities authorities or other regulatory agencies.
3.5. The Transfer Agent agrees to provide to the Fund
upon request such information as may reasonably be required to
enable the Fund to reconcile the number of outstanding Shares
between the Transfer Agent's records and the account books of the
Fund.
3.6. The parties hereto agree that, without prejudice
to any other provisions of this section 3, the functions of the
Transfer Agent under this section 3 will be performed in accor-
dance with the Activities List set out in Exhibit A to this
Agreement.
3.7. Notwithstanding anything in the foregoing provi-
sions of this section 3, the Transfer Agent agrees to perform its
functions hereunder subject to such modification (whether in
respect of particular cases or in any particular class of cases)
as may from time to time be contained in an Officer's Instruc-
tion.
6
<PAGE>
4. Compensation of Transfer Agent.
The charges for services described in this Agreement,
including "out-of-pocket" expenses will be established by a Fee
Agreement between the Fund and the Transfer Agent under separate
cover.
5. Right to Inspect Records, etc., of Transfer Agent.
The Transfer Agent agrees that, upon request by any
officer of the Fund or by any officer of the Fund's accountant or
investment adviser, the Transfer Agent will make available to any
such officer any books and records (whether or not books and
records to be preserved as required by law) which relate to any
transaction or function to be performed by the Transfer Agent
under or pursuant to this Agreement and shall permit any such
officer to transcribe or to duplicate on equipment provided by
the Transfer Agent any such book or record, in whole or in part.
6. Confidential Relationships of the Transfer Agent, etc.
The Transfer Agent agrees, on behalf of itself and its
officers, employees, vendors and agents, that each of the forego-
ing shall treat the identity and all transactions of Share-
holders, and all other transactions contemplated by this Agree-
ment, and all information germane thereto, as confidential and
not to be disclosed to any person (other than the Shareholder
concerned, or the Fund, or as may be disclosed in the examination
of any books or records by any person lawfully entitled to
examine the same) except as may be authorized by an Officer's
7
<PAGE>
Instruction. The Transfer Agent agrees to adopt procedures for
and written instructions to its officers, employees, vendors and
agents reasonably designed to implement the agreement established
in this section 6.
7. Standard of Care; Loss Caused by Imposters.
The Transfer Agent shall use its best efforts to insure
the accuracy of all services performed under this Agreement, but
assumes no responsibility for, and shall not be liable for, any
loss or damage to any party unless the negligence, bad faith or
willful misconduct of the Transfer Agent is a proximate cause of
such loss or damage; provided, however, that losses due to the
failure of the Transfer Agent to detect payments made by it under
this Agreement to imposters shall be borne by the Transfer Agent.
8. Termination of Appointment.
The appointment of the Transfer Agent provided by this
Agreement shall be in effect for one year from the date hereof
and thereafter on a year-to-year basis, each such term to expire
on the anniversary of the date hereof. Any party may terminate
such appointment by delivering a written notice to that effect at
the principal place of business of the other party at least 60
days prior to the expiration of the then-current term of the
Agreement. In the event such appointment shall be terminated,
for whatever reason, the Transfer Agent will provide the Fund
without further charge with:
8
<PAGE>
8.1. A complete and current computer-reproducible
record, within 7 days of the date of termination, of that file
data which may reasonably be required to establish transfer
agency, shareholder servicing agency and proxy agency services
elsewhere.
8.2. All hard copy records in file containers or other
acceptable container for shipping to a new location.
8.3. A referral service, for a reasonable period of
time, indicating to Shareholders or potential Shareholders the
next appropriate address for inquiries or Shareholder informa-
tion.
8.4. Any other services, including correction of
errors or the costs of such correction, as may be normal and
necessary to effect the transfer of Shareholder information in an
orderly and timely manner, should the occasion arise.
Notwithstanding anything in the foregoing provisions of
this section 8, if it appears impracticable in the circumstances
to effect an orderly delivery of the necessary and appropriate
records of the Transfer Agent to a successor transfer agent,
shareholder servicing agent, and/or proxy agent for the Fund
within the time specified in the notice of termination as afore-
said, the Transfer Agent agrees that its appointment shall remain
in force and effect for such reasonable period as may be required
to complete necessary arrangements with a successor transfer
agent, shareholder servicing agent, and/or proxy agent.
9
<PAGE>
9. Amendment, etc. of Agreement.
Except to the extent that the performance by the Trans-
fer Agent of its functions under this Agreement may from time to
time be modified by an officer's Instruction, this Agreement may
be amended or modified only by a further written agreement
between the parties.
10. No Personal Liability of Trustees, etc.
The Transfer Agent acknowledges that the Declaration of
Trust establishing the Fund, a copy of which, together with all
amendments thereto (the "Declaration"), is on file in the office
of the Secretary of the Commonwealth of Massachusetts, provides
that the name of the Fund, "Merrill Lynch U.S. Treasury Money
Fund," refers to the trustees under the Declaration collectively
as trustees, but not as individuals or personally; and no
trustee, Shareholder, officer, employee or agent of the Fund
shall be held to any personal liability, nor shall resort be had
to their private property for the satisfaction of any obligation
or claim or otherwise in connection with the affairs of said Fund
but the "Trust Property" only shall be liable.
- 10
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first above written by
their respective officers hereunto duly authorized.
MERRILL LYNCH U.S. TREASURY MONEY FUND
By /s/
------------------------
ATTEST
/s/
----------------------
Secretary
FINACIAL DATA SERVICES, INC.
By /s/
------------------------
ATTEST:
----------------------
Secretary
11
<PAGE>
EXHIBIT 99.9A
Exhibit A
Activities List
I. Services Further Described.
A. Shareholder and Accounting Services.
1. General Scope.
The Transfer Agent will provide a comprehensive accounting
and shareholder service generally consistent with that pro-
vided to other investment companies. The Transfer Agent
acknowledges that the services necessitated for the Fund may
be significantly more demanding from a time and precision
viewpoint than other types of investment companies with
respect to such features as:
(a) Daily dividend accounting.
(b) Wire receipt and payout of Shareholders' funds.
(c) Immediate determination of Federal Funds availability on
subscriptions received.
(d) Rapid and efficient transfers of investment monies between the
Fund's various accounts (e.g., subscription/custody/redemption).
(e) Effective and controlled processing of redemptions.
2. Computer Accounting and Record Keeping.
(a) The Transfer Agent will perform daily maintenance and
routine file update prior to investment of the daily dividend or
establishing new Accounts.
A-1
<PAGE>
(b) The Transfer Agent will perform a dividend reinvestment run
daily in order to credit all existing Accounts with dividends
earned that day.
(c) The Transfer Agent will take reasonable precautions for
safeguarding all Accounts during computer runs.
(d) The Transfer Agent will provide continuous proof of the
outstanding Shares on a daily basis and on-line availability of
all file data.
3. Establishing and Servicing Accounts.
The Transfer Agent will accept instructions from the Fund opening
a new Account and will:
(a) Audit and verify payment items for proper registration and
other particulars as prescribed by the Prospectus or Statement of
Additional Information of the Fund.
(b) Verify that there is no other existing Account with the same
registration.
(c) Assign Account numbers.
(d) Produce microfilm record of all incoming checks and source
documentation of filmstrips so as to be retrievable and repro-
ducible on command.
(e) Process address changes and acknowledge such changes to
previous address of record.
(f) Answer inquiries from Shareholders.
(g) Process on a daily basis routine transactions such as:
i. Change of address.
A-2
<PAGE>
ii. Miscellaneous changes.
(h) Incorporate in the Shareholder accounting software and
procedures the necessary flags, audits and tests to assure that
the various provisions and requirements specified elsewhere in
this contract are satisfied.
B. Transfer Agent Services.
The Transfer Agent will perform all functions with respect to the
Fund normally required of a transfer agent for an investment
company. Such functions shall include but not necessarily be
limited to:
1. Keeping such records in the form and manner as it may deem
advisable consistent with the rules and regulations of appro-
priate governmental authorities.
2. Processing transfers as requested, including obtaining and
reviewing papers and all other documents necessary to satisfy
transfer requirements.
3. Processing initial and subsequent investments from Share-
holders.
4. Processing and recording liquidation of Account balances to
satisfy full or partial Account redemptions.
5. Accepting the daily dividend income calculated by the Fund
and reinvesting such income to the benefit of the Shareholders in
additional full and fractional non-certificated Shares. The
procedure used must prove that the amount reinvested daily
balances to the total net income accrued to this portfolio, and
A-3
<PAGE>
that each Account is credited daily with the corresponding Shares
reinvested. To ensure that these objectives are achieved,
appropriate reports and proofs are to be generated.
C. Dividend Disbursement and Redemption Agent Services.
1. Dividends.
(a) Determination of daily dividend amounts shall be as
generally described in Section I.B.5. and more specifically as
set forth in:
i. The Prospectus and Statement of Additional Information
of the Fund.
ii. The Transfer Agent's dividend accrual and update
routine.
(b) Dividends shall be reinvested daily in additional non-
certificated Shares of the Fund.
(c) Additional dividend information shall be provided to
Shareholders upon written request.
2. Redemption Processing.
The Transfer Agent will take all necessary steps to insure that
redemptions and repurchase requirements have been met, including
the receipt and examination of signature guarantees, and will
obtain any needed papers or documents.
(a) All redemption requests will be automatically reviewed:
i. To ensure there are sufficient Shares available in the
redeeming Shareholder's Account.
A-4
<PAGE>
ii. To ensure collection of the applicable subscription
check before using funds for redemption (other than
payment received by the Transfer Agent from Bank Wire
and Federal Reserve Drafts).
iii. To notify the Fund of all redemption requests in excess
Of $1,000,000.
(b) All redemption requests will be signed by an individual
other than the preparer of the checks, to ensure that the checks
issued in redemption correspond to the amounts requested to be
redeemed.
(c) The Transfer Agent will develop and employ a method for
validating receipt of good subscription funds to comply with
section I.D.2.a.ii.
(d) No signature guarantees shall be acceptable unless provided
by a domestic bank or by a brokerage firm which is a member of
the New York, American, Midwest, Pacific or Boston Stock
Exchange.
3. Redemption Account.
The Transfer Agent shall maintain a redemption account for the
Fund. This account shall be established and operated so as to
satisfy the following criteria:
(a) The account shall be established at the Custodian for the
benefit of the Fund.
A-5
<PAGE>
(b) All withdrawals from the redemption account shall be for the
exclusive purpose of making payments in accordance with the
Prospectus and Statement of Additional Information of the Fund.
Monies paid out will be paid out in accordance with the
description set forth therein and elsewhere in this contract.
(c) All deposits into this account shall be from the custody
account of the Fund. No deposits of subscription receipts shall
be made directly into the redemption account.
(d) The Transfer Agent will advise the Fund at various mutually
established times during each business day as to the total demand
for valid dividends and full or partial Account liquidations.
The notification of demand for payment shall only include valid
demands for payment which are actually in hand, such that the
Fund need not fund the redemption account with an amount in
excess of what is actually required to satisfy current demands
for payment. The specific objective of this procedure is
mutually recognized to be the maximum employment of each of the
Fund's assets through minimization of any float in the redemption
account. The Transfer Agent agrees to develop with the Fund
methods and procedures to accomplish this objective.
(e) Wire redemptions shall be made in Federal Funds.
(f) Federal Reserve Draft redemption payments shall only be made
upon specific request.
A-6
<PAGE>
(g) The Transfer Agent will adopt such reasonable safeguards as
may be prescribed by the Fund's auditors to safeguard redemption
assets.
(h) The Transfer Agent will employ all due diligence in
servicing redemption requests as rapidly as possible. Rapid
servicing of redemptions is specifically recognized as a key
feature of the Fund.
D. Proxy Agent Services.
The Transfer Agent agrees to act as proxy agent in connection
with the holding of meetings of Shareholders by mailing to
Shareholders notices, proxies and proxy statements in connection
with the holding of such meetings, receiving and tabulating votes
cast by proxy and communicating to the Fund the results of such
tabulations accompanied by appropriate certificates, and
preparing and furnishing to the Fund certified lists of
Shareholders as of such date and in such form and containing such
information as may be required by the Fund to comply with any
provisions of law applicable to such meetings.
II. Reports.
The Transfer Agent will establish, maintain and provide to the
Fund the following records with respect to the Fund:
A. Daily Journal of Subscription Receipts, Availability and Funds
Transfers to Custody.
B. Daily Journal of Redemption Payment Demand.
A-7
<PAGE>
C. Daily Sales and Transaction Journals containing the day's
detail of all transactions.
D. Daily Closed Account Journal.
E. Daily Dividend Proof (Daily & Monthly).
F. Daily Redemption Blotter.
G. Daily Shares Proof (Daily & Monthly).
H. Daily Master Control Proof.
I. Daily Prospectus Mailing Report.
J. Daily Blue Sky Report (frequency as agreed upon).
K. Daily Quality Control Reports.
L. Large Item Report.
M. Weekly Status Report.
N. Research and Correspondence Status Report.
0. Monthly Sales by State and Dividends Reinvested.
P. Monthly Shareholders Master File List.
Q. Monthly Record of Out-of-Pocket Costs Incurred.
III. Other Services.
The Transfer Agent will provide the following additional
services within the basic fee structure:
A. Referral of Inquiries.
Refer all Shareholder or governmental inquiries of a policy or
non-routine nature to the Fund.
A-8
<PAGE>
B. Account Officer at the Transfer Agent.
Assign an account officer who will serve as the primary point
of contact between the Fund, the Fund's manager, and the
Transfer Agent in its various capacities. The Transfer Agent
will exercise due care in assigning an individual to this
function who is both conversant with standard investment
company practice and of sufficient stature to deal quickly and
efficiently with problems peculiar to placing a new investment
company on line and which may be peculiar to the cash manage-
ment variety of investment company.
C. Security.
1. Provide reasonable security against possible theft and/or
use by others of the names, addresses and properties of the
Shareholders and the properties of the Fund.
2. Perform periodic duplication of all records
(computer/microfilm/hardcopy/copy) at a frequency and in
detail sufficient to assure full protection of Shareholder
record information in the event of a disaster to the Transfer
Agent's facilities.
D. Other Mailings.
Provide mailing services to all Accounts, including addres-
sing, enclosing and mailing quarterly reports, semi-annual
reports, annual reports, Prospectuses, Statements of
Additional Information, proxy cards, proxy statements, and
notices. Postage will be paid by the Fund.
A-9
<PAGE>
EXHIBIT 99.13
CERTIFICATE OF SOLE SHAREHOLDER
Merrill Lynch Asset Management, Inc. ("MLAM"), the holder of
10,000 shares of beneficial interest, par value $0.10 per share,
of Merrill Lynch U.S. Treasury Money Fund, a Massachusetts
business trust (the "Fund"), does hereby confirm to the Fund its
representation that it purchased such shares for investment
purposes, with no present intention of redeeming or reselling any
portion thereof, and does further agree that if it redeems any
portion of such shares prior to the amortization of the Fund's
organizational expenses, the proceeds thereof will be reduced by
the proportionate amount of the unamortized organizational
expenses which the number of shares being redeemed bears to the
number of shares initially purchased and outstanding at the time
of redemption. MLAM further agrees that in the event such shares
are sold or otherwise transferred to any other party, that prior
to such sale or transfer MLAM will obtain on behalf of the Fund
an agreement from such other party to comply with the foregoing
as to the reduction of redemption proceeds and to obtain a
similar agreement from any transferee of such party.
MERRILL LYNCH ASSET MANAGEMENT, INC.
By /s/ Arthur Zeikel
-------------------------
President
Dated: March 28, 1991
<PAGE>
EXHIBIT 99.15
MERRILL LYNCH SHAREHOLDER
SERVICING PLAN AND AGREEMENT
PLAN AND AGREEMENT made as of the 5th day of February, 1991
by and between Merrill Lynch U.S. Treasury Money Fund, a
Massachusetts business trust (the "Fund"), and Merrill Lynch,
Pierce, Fenner & Smith Incorporated, a Delaware corporation
("MLPF&S").
WHEREAS, the Fund is a no-load, diversified, open-end
investment company registered under the Investment Company Act of
1940, as amended (the "Investment Company Act"), which operates
as a money market fund;
WHEREAS, MLPF&S acts as a dealer selling shares of the Fund
to its customers and substantially all of the shareholders of the
Fund are MLPF&S customers who maintain their Fund accounts
through MLPF&S (such accounts being referred to herein as the
"MLPF&S Fund Accounts");
WHEREAS, MLPF&S provides a variety of administrative and
operational services to MLPF&S Fund Accounts including processing
shareholder orders and administering MLPF&S Fund Accounts (such
services being referred to as "MLPF&S Administrative Services")
which are being provided pursuant to the management arrangements
between the Fund and Merrill Lynch Asset Management, Inc.
WHEREAS, MLPF&S account executives and other personnel spend
substantial amounts of time providing shareholder services to
existing and prospective MLPF&S Fund Accounts, including
<PAGE>
furnishing information as to the status of such MLPF&S Fund
Accounts and handling purchase and redemption orders for Fund
shares, for which they receive no compensation (such services
being referred to herein as "MLPF&S Shareholder Services and
Activities");
WHEREAS, the Trustees of the Fund have determined that the
Fund should make direct payments to MLPF&S for distribution to
its account executives and other directly involved Merrill Lynch
personnel as compensation for the MLPF&S Shareholder Services and
Activities and that such payments should be in addition to the
management compensation being paid MLAM;
WHEREAS, the Trustees of The Fund have determined that in
addition to providing the services and activities provided in the
Plan, MLPF&S in their discretion may promote the sale, marketing
and distribution of the shares of the Fund by engaging in
advertising activities in newspapers, magazines, radio,
television and other media and through direct mail solicitations
and that a portion of the aforesaid direct payments made to
MLPF&S may be utilized to reimburse MLPF&S for the costs (or a
portion thereof) of preparing, running and otherwise engaging in
such advertising activities (the "Advertising Expenditures");
WHEREAS, the Fund desires to adopt this Merrill Lynch
Shareholder Servicing Plan and Agreement (the "Plan") in the
manner and on the terms and conditions hereinafter set forth,
which Plan must be adopted pursuant to Rule 12b-1 under the
-2-
<PAGE>
Investment Company Act because the services for which
compensation is to be provided under the Plan may include
services associated with the distribution of Fund shares;
WHEREAS, MLPF&S desires to enter into the Plan on said terms
and conditions; and
WHEREAS, the Trustees of the Fund have determined that there
is a reasonable likelihood that adoption of the Plan will benefit
the Fund and its shareholders:
NOW, THEREFORE, the Fund hereby adopts the Plan in
accordance with Rule 12b-1 under the Investment Company Act and
the parties hereto enter into this agreement on the following
terms and conditions:
1. The Fund is hereby authorized to utilize its assets to
make payments to MLPF&S pursuant to the Plan to (i) compensate
MLPF&S account executives and other directly involved MLPF&S
personnel for providing the MLPF&S Shareholder Services and
Activities with respect to MLPF&S Fund Accounts and (ii) subject
to the limitations specified in paragraph 2, to reimburse MLPF&S
for part or all of any Advertising Expenditures incurred by
MLPF&S with respect to shares of the Fund.
2. The Fund shall pay MLPF&S a fee at the end of each month
at the annual rate of 0.125% of average daily net asset value of
the MLPF&S Fund Accounts. Out of such fee, MLPF&S, in its sole
discretion, may expend an amount not exceeding 0.01% of the
average daily net asset value of the MLPF&S Fund Accounts as
reimbursement for Advertising Expenditures; MLPF&S is obligated
-3-
<PAGE>
to expend the remaining amount of the fee for compensation,
including incentives and bonuses, to MLPF&S account executives
and other directly involved MLPF&S personnel (such expenditures
of the fee, including Advertising Expenditures, being referred to
as the "Plan Expenditures"). The fee is for direct personal
services and is not to be considered compensation for the MLPF&S
Administrative Services.
3. MLPF&S shall provide the Fund for review by the
Trustees, and the Trustees shall review, at least quarterly, a
written report complying with the requirements of Rule 12b-1
regarding the disbursement of the fee for Plan Expenditures
during such period. The report shall include an itemization of
the Plan Expenditures made by MLPF&S, the purpose of such Plan
Expenditures and a description of the benefits derived by the
Fund therefrom.
4. In the event that the aggregate payments received by
MLPF&S under the Plan in any year shall exceed the Plan
Expenditures in such fiscal year, MLPF&S shall be required to
reimburse the Fund the amount of such excess.
5. MLPF&S will use its best efforts in rendering and
causing its employees to render services to the Fund, but in the
absence of willful misfeasance, bad faith, gross negligence or
reckless disregard of its obligations hereunder, MLPF&S shall not
be liable to the Fund or any of- its shareholders for any error of
judgment or mistake of law or for any act of omission or for any
losses sustained by the Fund or its shareholders.
-4-
<PAGE>
6. Nothing contained in the Plan shall prevent MLPF&S or
any affiliated person of MLPF&S from performing services similar
to those to be performed hereunder for any other person, firm or
corporation or for its or their own accounts or for the accounts
of others.
7. The Plan shall not take effect until it has been
approved by votes of a majority of both (a) the Trustees of the
Fund and (b) those Trustees of the Fund who are not "interested
persons" of the Fund, as defined in the Investment Company Act,
and have no direct or indirect financial interest in the
operation of this Plan or any agreements related to it (the "Rule
12b-1 Trustees"), cast in person at a meeting or meetings called
for the purpose of voting on the Plan.
8. The Plan shall not take effect until it has been
approved by a vote of at least a majority, as defined in the
Investment Company Act, of the outstanding voting securities of
the Fund.
9. The Plan shall continue in effect for so long as such
continuance is specifically approved at least annually in the
manner provided for approval of the Plan in Paragraph 7.
10. The Plan may be terminated at any time by vote of a
majority of the Rule 12b-1 Trustees, or by vote of a majority of
the outstanding voting securities of the Fund.
11. The Plan may not be amended to increase materially the
fee provided for in Paragraph 2 unless such amendment is approved
in the manner provided for initial approval in Paragraphs 7 and
-5-
<PAGE>
8, and no material amendment to the Plan shall be made unless
approved in the manner provided for approval and annual renewal
in Paragraph 7.
12. While the Plan is in effect, the selection and
nomination of the Trustees who are not interested persons, as
defined in the Investment Company Act, of the Fund shall be
committed to the discretion of the Trustees who are not
interested persons.
13. The Fund shall preserve copies of this Plan and any
related agreements and all reports made pursuant to Paragraph 2,
for a period of not less than six years from the date of the
Plan, or the agreements or such report, as the case may be, the
first two years in an easily accessible place.
14. The Declaration of Trust establishing Merrill Lynch
U.S. Treasury Money Fund, dated October 30, 1990, a copy of
which, together with all amendments thereto (the "Declaration"),
is on file in the office of the Secretary of the Commonwealth of
Massachusetts, provides that the name "Merrill Lynch U.S.
Treasury Money Fund" refers to the Trustees under the Declaration
collectively as Trustees, but not as individuals or personally;
and no Trustee, shareholder, officer, employee or agent of
Merrill Lynch U.S. Treasury Money Fund shall be held to any
personal liability, nor shall resort be had to their private
property for the satisfaction of any obligation or claim of said
Merrill Lynch U.S. Treasury Money Fund, but the "Trust Property"
only shall be liable.
-6-
<PAGE>
WHEREAS, the parties hereto have executed and delivered this
Shareholder Servicing Plan and Agreement as of the date first
above written.
MERRILL LYNCH U.S. TREASURY MONEY-FUND
By: /s/ Joseph T. Monagle
-----------------------------------
MERRILL LYNCH PIERCE, FENNER & SMITH
By: /s/ David Conine
___________________________________
-7-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1994
<PERIOD-START> DEC-01-1993
<PERIOD-END> NOV-30-1994
<INVESTMENTS-AT-COST> 58,438,917
<INVESTMENTS-AT-VALUE> 58,415,581
<RECEIVABLES> 116,789
<ASSETS-OTHER> 65,965
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 58,598,335
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,413,892
<TOTAL-LIABILITIES> 1,413,892
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 57,207,779
<SHARES-COMMON-STOCK> 57,207,779
<SHARES-COMMON-PRIOR> 70,543,772
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (23,336)
<NET-ASSETS> 57,184,443
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,594,052
<OTHER-INCOME> 0
<EXPENSES-NET> 477,526
<NET-INVESTMENT-INCOME> 2,116,526
<REALIZED-GAINS-CURRENT> 13,396
<APPREC-INCREASE-CURRENT> (23,496)
<NET-CHANGE-FROM-OPS> 2,106,426
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2,116,526
<DISTRIBUTIONS-OF-GAINS> 13,396
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 188,819,746
<NUMBER-OF-SHARES-REDEEMED> 204,278,073
<SHARES-REINVESTED> 2,122,334
<NET-CHANGE-IN-ASSETS> (13,359,489)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 337,407
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 713,711
<AVERAGE-NET-ASSETS> 67,481,454
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .03
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .03
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 1.06
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE>
SUPPLEMENT TO INVESTMENT ADVISORY AGREEMENT
WITH
FUND ASSET MANAGEMENT
As of January 1, 1994 Fund Asset Management was reorganized as a limited
partnership, formally known as Fund Asset Management, L.P. ("FAM"). The general
partner of FAM is Princeton Services, Inc. and the limited partners are Fund
Asset Management, Inc. and Merrill Lynch & Co. Inc. Pursuant to Rule
202(a)(1)-1 under the Investment Advisers Act of 1940 and Rule 2a-6 under the
Investment Company Act of 1940 such reorganization did not constitute an
assignment of this investment advisory agreement since it did not involve a
change of control or management of the investment adviser. Pursuant to the
requirements of Section 205 of the Investment Advisers Act of 1940, however,
Fund Asset Management hereby supplements this investment advisory agreement by
undertaking to advise you of any change in the membership of the partnership
within a reasonable time after any such change occurs.
By: /s/ Arthur Zeikel
-------------------
Dated: January 3, 1994
<PAGE>
EXHIBIT 10
BROWN & WOOD
ONE WORLD TRADE CENTER
NEW YORK, NEW YORK 10048-0557
TELEPHONE: (212) 839-5300
FACSIMILE: (212) 839-5599
March 27, 1995
Merrill Lynch U.S. Treasury Money Fund
800 Scudders Mill Road
Plainsboro, New Jersey 08536
Dear Sir or Madam:
This opinion is furnished in connection with the registration by Merrill
Lynch U.S. Treasury Money Fund, a Massachusetts business trust (the "Trust"), of
44,578,989 shares of beneficial interest, par value $0.10 per share (the
"Shares"), under the Securities Act of 1933, as amended, pursuant to a
registration statement on Form N-1A (File No. 33-37537) (the "Registration
Statement").
As counsel for the Trust, we are familiar with the proceedings taken by it
in connection with the authorization, issuance and sale of the Shares. In
addition, we have examined and are familiar with the Declaration of Trust of the
Trust, the By-Laws of the Trust and such other documents as we have deemed
relevant to the matters referred to in this opinion.
Based upon the foregoing, we are of the opinion that the Shares, upon
issuance and sale in the manner referred to in the Registration Statement for
consideration not less than the par value thereof, will be legally issued, fully
paid and non-assessable, except that shareholders of the Trust may under certain
circumstances be held personally liable for the Trust's obligations.
In rendering this opinion, we have relied as to matters of Massachusetts
law upon an opinion of Bingham, Dana & Gould, dated January 20, 1995, rendered
to the Fund.
<PAGE>
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name in the prospectus and
statement of additional information constituting parts thereof.
Very truly yours,
/s/ BROWN & WOOD
2
<PAGE>
EXHIBIT 11
INDEPENDENT AUDITORS' CONSENT
Merrill Lynch U.S. Treasury Money Fund:
We consent to the use in Post-Effective Amendment No. 5 to Registration
Statement No. 33-37537 of our report dated January 6, 1995 appearing in the
Statement of Additional Information, which is a part of such Registration
Statement, and to the reference to us under the caption "Financial Highlights"
appearing in the Prospectus, which also is a part of such Registration
Statement.
DELOITTE & TOUCHE LLP
Princeton, New Jersey
March 24, 1995
