As filed with the Securities and Exchange Commission on May 19, 2000
Securities Act File No. 333-95885
Investment Company Act File No. 811-6581
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-14
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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/ / Pre-Effective Amendment No. /X/ Post-Effective Amendment No. 2
(Check Appropriate Box or Boxes)
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MERRILL LYNCH DRAGON FUND, INC.
(Exact Name Of Registrant As Specified in Its Charter)
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(609) 282-2800
(Area Code and Telephone Number)
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800 Scudders Mill Road
Plainsboro, New Jersey 08536
(Address of Principal Executive Offices:
Number, Street, City, State, Zip Code)
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Terry K. Glenn
Merrill Lynch Dragon Fund, Inc.
800 Scudders Mill Road, Plainsboro, New Jersey 08536
Mailing Address: P.O. Box 9011, Princeton, New Jersey 08543-9011
(Name and Address of Agent for Service)
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Copies to:
Frank P. Bruno, Esq. Michael J. Hennewinkel, Esq.
BROWN & WOOD LLP MERRILL LYNCH ASSET MANAGEMENT
One World Trade Center 800 Scudders Mill Road
New York, NY 10048-0557 Plainsboro, NJ 08536
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Title Of Securities Being Registered. Common Stock, Par Value $.10 Per Share.
No filing fee is required because of reliance on Section 24(f) under the
Investment Company Act of 1940, as amended.
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<PAGE>
This Post-Effective Amendment consists of the following:
(1) Facing Sheet of the Registration Statement.
(2) Part C to the Registration Statement (including signature page).
Parts A and B are incorporated herein by reference from Pre-Effective
Amendment No. 1 to this Registration Statement on Form N-14 (File No.
333-95885) filed on March 22, 2000.
This Post-Effective Amendment is being filed solely to file as Exhibit
No. 12 to this Registration Statement on Form N-14 the Private Letter Ruling
from the Internal Revenue Service.
<PAGE>
PART C
OTHER INFORMATION
Item 15. Indemnification.
Reference is made to Article VI of the Registrant's Articles of
Incorporation, Article VI of the Registrant's By-Laws, Section 2-418 of the
Maryland General Corporation Law and Section 9 of the Class A, Class B, Class
C and Class D Distribution Agreements.
Insofar as the conditional advancing of indemnification moneys for
actions based on the Investment Company Act of 1940, as amended (the "1940
Act") may be concerned, Article VI of the Registrant's By-Laws provides that
such payments will be made only on the following conditions: (i) advances may
be made only on receipt of a written affirmation of such person's good faith
belief that the standard of conduct necessary for indemnification has been met
and a written undertaking to repay any such advance if it is ultimately
determined that the standard of conduct has not been met; and (ii) (a) such
promise must be secured by a security for the undertaking in form and amount
acceptable to the Registrant, (b) the Registrant is insured against losses
arising by receipt by the advance, or (c) a majority of a quorum of the
Registrant's disinterested non-party Directors, or an independent legal
counsel in a written opinion, shall determine, based upon a review of readily
available facts, that at the time the advance is proposed to be made, there is
reason to believe that the person seeking indemnification will ultimately be
found to be entitled to indemnification.
In Section 9 of the Class A, Class B, Class C and Class D Shares
Distribution Agreements relating to the securities being offered hereby, the
Registrant agrees to indemnify the Distributor and each person, if any, who
controls the Distributor within the meaning of the Securities Act of 1933, as
amended (the "1933 Act"), against certain types of civil liabilities arising
in connection with the Registration Statement or Prospectus and Statement of
Additional Information.
Insofar as indemnification for liabilities arising under the 1933 Act may
be permitted to Directors, 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 1933 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 Director,
officer, or controlling person of the Registrant and the principal underwriter
in connection with the successful defense of any action, suit or proceeding)
is asserted by such Director, officer or controlling person or the principal
underwriter in connection with the shares being registered, the Registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the 1933 Act and will be governed by the final adjudication of
such issue.
<PAGE>
Item 16. Exhibits.
(1)(a) -- Articles of Incorporation of the Registrant, dated
February 13, 1992.(a)
(1)(b) -- Articles of Amendment to the Articles of Incorporation of the
Registrant, dated October 17, 1994.(a)
(1)(c) -- Articles Supplementary to the Articles of Incorporation of
the Registrant, dated October 17, 1994.(a)
(1)(d) -- Articles Supplementary to the Articles of Incorporation of
the Registrant, dated September 1, 1995.(b)
(2) -- By-Laws of the Registrant.(b)
(3) -- Not applicable.
(4) -- Form of Agreement and Plan of Reorganization between the
Registrant and Merrill Lynch Emerging Tigers Fund, Inc.(c)
(5) -- Copies of instruments defining the rights of stockholders,
including the relevant portions of the Articles of
Incorporation of the Registrant, as amended and
supplemented, and the By-Laws of the Registrant.(d)
(6)(a) -- Form of Management Agreement between the Registrant and
Merrill Lynch Asset Management, L.P. ("MLAM").(b)
(6)(b) -- Supplement to Management Agreement between the Registrant
and MLAM, dated January 3, 1994(e)
(6)(c) -- Sub-Advisory Agreement between Merrill Lynch Asset
Management, L.P. and Merrill Lynch Asset Management U.K.
Limited.(f)
(7)(a) -- Form of Class A Shares Distribution Agreement between the
Registrant and Merrill Lynch Funds Distributor, Inc. (now
known as Princeton Funds Distributor, Inc.) (the
"Distributor")(a)
(7)(b) -- Form of Class B Shares Distribution Agreement between the
Registrant and the Distributor.(a)
(7)(c) -- Letter Agreement between the Registrant and the Distributor,
with respect to the Merrill Lynch Mutual Fund Adviser
Program.(e)
(7)(d) -- Form of Class C Shares Distribution Agreement between the
Registrant and the Distributor.(a)
(7)(e) -- Form of Class D Shares Distribution Agreement between the
Registrant and the Distributor.(a)
(8) -- None.
(9) -- Form of Custody Agreement between the Registrant and Brown
Brothers Harriman & Co.(a)
(10)(a) -- Form of Class B Shares Distribution Plan and Class B Shares
Distribution Plan Sub-Agreement of the Registrant.(a)
(10)(b) -- Form of Class C Shares Distribution Plan and Class C Shares
Distribution Plan Sub-Agreement of the Registrant.(a)
(10)(c) -- Form of Class D Shares Distribution Plan and Class D Shares
Distribution Plan Sub-Agreement of the Registrant.(a)
(10)(d) -- Merrill Lynch Select Pricing(SM) System Plan pursuant to
Rule l8f-3 under the Investment Company Act of 1940, as
amended.(g)
(11) -- Opinion and Consent of Brown & Wood LLP, counsel for the
Registrant.(h)
(12) -- Private Letter Ruling from the Internal Revenue Service.
(13) -- Not applicable.
(14)(a) -- Consent of Deloitte & Touche LLP, independent auditors for
the Registrant.(i)
(14)(b) -- Consent of Deloitte & Touche LLP, independent auditors for
Merrill Lynch Emerging Tigers Fund, Inc.(i)
(15) -- Not applicable.
(16) -- Power of Attorney.(j)
(17)(a) -- Prospectus, dated March 22, 2000, and Statement of
Additional Information, dated March 22, 2000, of the
Registrant.(i)
(17)(b) -- Annual Report to Shareholders of the Registrant, as of
December 31, 1999.(i)
(17)(c) -- Annual Report to Shareholders of Merrill Lynch Emerging
Tigers Fund, Inc., as of November 30, 1999.(i)
(17)(d) -- Form of Proxy Card.(k)
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(a) Filed on April 27, 1995, as an Exhibit to Post-Effective Amendment No.
5 to the Registrant's Registration Statement on Form N-1A (File No.
333-46216) under the Securities Act of 1933, as amended (the
"Registration Statement").
(b) Filed on April 26, 1996, as an Exhibit to Post-Effective Amendment No.
6 to the Registration Statement.
(c) Included as Exhibit I to the Proxy Statement and Prospectus contained
in the Registrant's Registration Statement on Form N-14 (File No.
333-95885) under the Securities Act of 1933, as amended (the "N-14
Registration Statement") filed on February 1, 2000.
(d) Reference is made to Article II (Sections 3, 4 and 5), Article IV
(Sections 1, 2, 3, 4, 5, 6, 7, 8, 9 and 10), Article V (Sections 2, 3,
4, 5 and 6), Article VI, Article VII and Article IX of the Registrant's
Articles of Incorporation filed as Exhibit (1)(a) to the Registration
Statement; the Articles of Amendment to the Articles of Incorporation
filed as Exhibit (1)(b) to the Registration Statement; the Articles
Supplementary to the Articles of Incorporation filed as Exhibits (1)(c)
and (1)(d) to the Registration Statement; and Article II (Sections 1,
2, 3, 4, 5, 6, 7, 8, 9, 10 and 11), Article III (Sections 1, 3, 5, 6
and 17), Article VI, Article VII (Sections 1, 2, 3, 4, 5, 6 and 7),
Article XII, Article XIII and Article XIV of the Registrant's By-Laws
filed as Exhibit (2) to the Registration Statement.
(e) Filed on April 28, 1994, as an Exhibit to Post-Effective Amendment No.
3 to the Registration Statement.
(f) Filed on April 28, 1997, as an Exhibit to Post-Effective Amendment No.
7 to the Registration Statement.
(g) Incorporated by reference to Exhibit 18 to Post-Effective Amendment No.
13 to the Registration Statement on Form N-1A under the Securities Act
of 1933, as amended, filed on January 25, 1996, relating to shares of
Merrill Lynch New York Municipal Bond Fund series of Merrill Lynch
Multi-State Municipal Series Trust (File No. 2-99473).
(h) Filed on March 23, 2000, as an Exhibit to Post-Effective Amendment No.
1 to the N-14 Registration Statement.
(i) Filed on March 22, 2000, as an Exhibit to Pre-Effective Amendment No.1
to the N-14 Registration Statement.
(j) Included on the signature page of the N-14 Registration Statement and
incorporated herein by reference.
(k) Filed on February 1, 2000, as an Exhibit to the N-14 Registration
Statement.
Item 17. Undertakings.
(1) The undersigned Registrant agrees that prior to any public reoffering
of the securities registered through use of a prospectus which is part of this
Registration Statement by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c) of the Securities Act of 1933,
as amended, the reoffering prospectus will contain information called for by
the applicable registration form for reofferings by persons who may be deemed
underwriters, in addition to the information called for by other items of the
applicable form.
(2) The undersigned Registrant agrees that every prospectus that is filed
under paragraph (1) above will be filed as part of an amendment to the
registration statement and will not be used until the amendment is effective,
and that, in determining any liability under the Securities Act of 1933, as
amended, each post-effective amendment shall be deemed to be a new
registration statement for the securities offered therein, and the offering of
securities at that time shall be deemed to be the initial bona fide offering
of them.
(3) The Registrant undertakes to file, by post-effective amendment,
either a copy of the Internal Revenue Service private letter ruling applied
for or an opinion of counsel as to certain tax matters, within a reasonable
time after receipt of such ruling or opinion.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933, this Registration Statement
has been signed on behalf of the Registrant, in the Township of Plainsboro and
State of New Jersey, on the 19th day of May, 2000.
MERRILL LYNCH DRAGON FUND, INC.
(Registrant)
By: /S/ DONALD C. BURKE
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(Donald C. Burke, Vice President and Treasurer)
As required by the Securities Act of 1933, this Registration Statement
has been signed by the following persons in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
Terry K. Glenn* Vice President and Director
- ------------------------------------- (Principal Executive Officer)
(Terry K. Glenn)
Donald C. Burke* Vice President and Treasurer
- ------------------------------------- (Principal Financial
(Donald C. Burke) and Accounting Officer)
Charles C. Reilly* Director
- -------------------------------------
(Charles C. Reilly)
Richard R. West* Director
- -------------------------------------
(Richard R. West)
Arthur Zeikel* Director
- -------------------------------------
(Arthur Zeikel)
Edward D. Zinbarg* Director
- -------------------------------------
(Edward D. Zinbarg)
* By: /S/ DONALD C. BURKE May 19, 2000
--------------------------------
(Donald C. Burke, Attorney-in-Fact)
</TABLE>
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
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12 -- Private Letter Ruling from the Internal Revenue Service.
<PAGE>
Exhibit 00.12
Internal Revenue Service Department of the Treasury
Index Number: 368:03-00; 368.13-00 Washington, DC 20224
Person to Contact:
Megan Fitzsimmons #50-12160
Telephone Number:
202-622-7790
Mr. Donald C. Burke Refer Reply to:
Vice President & Treasurer CC: DOM:CORP:3 - PLR-104086-00
Merrill Lynch Dragon Fund, Inc. Date:
800 Scudders Mill Road May 5, 2000
Plainsboro, NJ 08536
Acquiring = Merrill Lynch Dragon Fund, Inc.
a Maryland Corporation
EIN: 22-3166657
Target = Merrill Lynch Emerging Tigers Fund, Inc.
a Maryland Corporation
EIN: 22-3281060
State A = Maryland
Date X = December 31
Date Y = November 30
Dear Mr. Burke:
This letter responds to your representative's February 14, 2000
request for rulings on the federal income tax consequences of a proposed
transaction. The information submitted for consideration is summarized below.
Acquiring is organized under the laws of State A and operates as a
diversified open-end management company. Acquiring has elected to be taxed as
a regulated investment company ("RIC") under Sections 851-855. Acquiring's
investment objective is to seek long term capital appreciation by investing
primarily in equity and debt securities of issuers domiciled in developing
countries located in Asia and the Pacific Basin. Acquiring's investment
strategy is to search for stocks that have strong earnings growth and high
growth potential.
Target is organized under the laws of State A and operates as a
diversified open-end management company. Target has elected to be taxed as a
RIC under Sections 851-855. Target's investment objective is to seek long term
capital appreciation by investing primarily in equity securities of
corporations in designated emerging market countries located in Asia and the
Pacific Basin. Target's investment strategy is to search for stocks that are
worth more than the current trading price.
Acquiring and Target each file their income tax returns based on the
accrual method of accounting. Acquiring has a taxable year ending Date X, and
Target has a taxable year ending Date Y. Both Acquiring and Target offer four
classes of shares: Class A, Class B, Class C, and Class D, with the
corresponding classes of Acquiring and Target's shares having identical terms.
The directors of Acquiring and Target have approved a plan of
reorganization for what are represented to be valid business reasons. Pursuant
to the plan, the following transaction is proposed (the "Transaction"):
(1) Target will transfer all of its assets and liabilities to Acquiring in
exchange for newly issued Acquiring Class A, Class B, Class C, and Class
D stock (the "Transfer).
(2) Target will distribute to its shareholders all of the Acquiring stock
received in the exchange. Each Target shareholder will receive Acquiring
shares with the same class designation and the same distribution fees,
account maintenance fees and sales charges, if any, as the Target shares
held by such shareholder immediately prior to the Transfer.
(3) Target will dissolve in accordance with the laws of State A and will
terminate its registration under the Investment Company Act of 1940 (the
"1940 Act").
(4) Acquiring may sell up to 66 percent a of the assets received in the
Transaction to unrelated purchasers and will reinvest any proceeds
consistent with its investment objectives and policies.
The following representations have been made in connection with the
Transaction:
(a) The fair market value of the Acquiring stock received by each Target
shareholder will be approximately equal to the fair market value of the
Target stock surrendered in the exchange.
(b) Acquiring will acquire at least 90 percent of the fair market value of
the net assets and at least 70 percent of the fair market value of the
gross assets held by Target immediately prior to the Transaction. For
purposes of this representation amounts used by Target to pay its
reorganization expenses, amounts paid by Target to shareholders who
receive cash or other property, and all redemptions and distributions
(except for redemptions in the ordinary course of Target's business as an
open-end investment company as required by Section 22(e) of the 1940 Act
pursuant to a demand of a shareholder and regular, normal dividends) made
by Target immediately preceding the transfer will be included as assets
of Target held immediately prior to the Transaction. There will be no
payments to dissenters as shareholders may redeem their shares at any
time.
(c) After the Transaction, Acquiring will use the assets acquired from Target
in its business, except that a portion of these assets may be sold or
otherwise disposed of in the ordinary course of Acquiring's business. Any
proceeds will be invested in accordance with Acquiring's investment
objectives. Acquiring has no plan or intention to sell or dispose of any
of the assets of Target acquired in the Transaction, except for
dispositions made in the ordinary course of business.
(d) Target will distribute to its shareholders the stock of Acquiring it
receives pursuant to the plan of reorganization.
(e) The liabilities of Target assumed by Acquiring and any liabilities to
which the transferred assets of Target are subject were incurred by
Target in the ordinary course of its business.
(f) Following the Transaction, Acquiring will continue the historic business
of Target or use a significant portion of Target's historic business
assets in the continuing business.
(g) Acquiring, Target, and the shareholders of Target will pay their
respective expenses, if any, incurred in connection with the Transaction.
(h) There is no intercorporate indebtedness existing between Target and
Acquiring that was issued, acquired or will be settled at a discount.
(i) Acquiring and Target each meets the requirements of a regulated
investment company as defined in Section 368(a)(2)(F).
(j) Acquiring does not own, directly or indirectly, nor has it owned during
the past five years, directly or indirectly, any stock of Target.
(k) The fair market value of the assets of Target transferred to Acquiring
will equal or exceed the sum of the liabilities assumed by Acquiring,
plus the amount of liabilities, if any, to which the transferred assets
are subject.
(l) Target is not under the jurisdiction of a court in a Title 11 or similar
case within the meaning of Section 368(a)(3)(A).
(m) Target and Acquiring have elected to be taxed as RICs under Section 851
and, for all of their taxable periods (including Target's last short
taxable period ending on the date of the Transaction), have qualified for
the special tax treatment afforded R1Cs under the Internal Revenue Code.
After the Transaction, Acquiring intends to continue to so qualify.
(n) There is no plan or intention for Acquiring (the issuing corporation as
defined in Section 1.368-1(b)), or any person related (as defined in
Section 1.368-1(e)(3)) to Acquiring, to acquire, during the five year
period beginning on the date of the Transaction, with consideration other
than Acquiring stock, Acquiring stock furnished in exchange for a
proprietary interest in Target in the Transaction, either directly or
through any transaction, agreement, or arrangement with any other person,
except for redemptions in the ordinary course of Acquiring's business as
an open-end investment company as required by Section 22(e) of the 1940
Act.
(o) During the five year period ending on the date of the Transaction, (i)
neither Acquiring, nor any person related (as defined in Section
1.368-1(e)(3)) to Acquiring, will have acquired Target stock with
consideration other than Acquiring stock; (ii) neither Target, nor any
person related (as defined in Section 1.368-1(e)(3) without regard to
Section 1.368-1(e)(3)(i)(A)) to Target, will have acquired Target stock
with consideration other than Acquiring stock or Target stock except
redemptions in the ordinary course of Target's business as an open-end
investment company as required by Section 22(e) of the 1940 Act; and
(iii) no distributions will have been made with respect to Target
stock (other than ordinary, regular, normal dividend distributions made
pursuant to Target's historic dividend paying practice), either directly
or through any transaction, agreement, or arrangement with any other
person, except for (a) cash paid to dissenters and (b) distributions
described in Sections 852 and 4982, as required for Target's tax
treatment as a RIC.
(p) The aggregate value of the acquisitions, redemptions, and distributions
described in paragraphs (p) and (q) above will not exceed 50 percent of
the value (without giving effect to the acquisitions, redemptions, and
distributions) of the proprietary interest in Target on the effective
date of the Transaction.
Based solely on the information submitted and on the representations set
forth above, we hold as follows:
1. The acquisition by Acquiring of substantially all of the assets of Target
in exchange for voting stock of Acquiring and Acquiring's assumption of
Target's liabilities, followed by the distribution by Target to its
shareholders of Acquiring stock, in complete liquidation, will qualify as
a reorganization within the meaning of Section 368(a)(1)(C). For purposes
of this ruling, "substantially all" means at least 90 percent of the fair
market value of the net assets and at least 70 percent of the fair market
value of the gross assets of Target. Target and Acquiring will each be a
"party to a reorganization" within the meaning of Section 368(b).
2. Target will recognize no gain or loss upon the transfer of substantially
all of its assets to Acquiring in exchange for voting stock of Acquiring
and Acquiring's assumption of Target's liabilities. Sections 361(a) and
357(a).
3. Target will recognize no gain or loss on the distribution of Acquiring
stock to its shareholders in pursuance of the plan of reorganization.
Section 361(c)(1).
4. Acquiring will recognize no gain or loss on the receipt of the assets of
Target in exchange for voting stock of Acquiring. Section 1032(a).
5. The basis of Target's assets in the hands of Acquiring will be the same
as the basis of those assets in the hands of Target immediately prior to
the Transaction. Section 362(b).
6. Acquiring's holding period for the Target assets acquired will include
the period during which such assets were held by Target. Section 1223(2).
7. The Target shareholders will recognize no gain or loss on the receipt of
voting stock of Acquiring solely in exchange for their Target stock.
Section 354(a)(1).
8. The basis of the Acquiring stock received by the Target shareholders will
be the same in the aggregate as the basis of the Target stock surrendered
in exchange therefor. Section 358(a)(1).
9. The holding period of the Acquiring stock received by the Target
shareholders in exchange for their Target stock will include the period
that the shareholder held the Target stock exchanged therefor, provided
that the shareholder held such stock as a capital asset on the date of
the exchange. Section 1223(1).
10. Pursuant to Section 381(a) and Section 1.381(a)-1, Acquiring will succeed
to and take into account the items of Target described in Section 381(c),
subject to the provisions and limitations specified in Sections 381, 382,
383, and 384, and the regulations thereunder. Pursuant to Section
1.381(b)-1, the taxable year of Target will end on the close of the
effective date of the Transaction.
No opinion is expressed about the tax treatment of the Transaction under
other provisions of the Code and regulations or about the tax treatment of any
conditions existing at the time of, or effects resulting from, the
transactions that are not specifically covered by the above rulings.
Specifically, no opinion was requested, and none is expressed, about whether
Acquiring or Target qualify as a RIC that is taxable under subchapter M, Part
1 of the Code.
The rulings contained in this letter are based upon information and
representations submitted by the taxpayer and accompanied by a penalty of
perjury statement executed by an appropriate party. While this office has not
verified any of the material submitted in support of the request for rulings,
it is subject to verification on examination.
This ruling is directed only to the taxpayer(s) requesting it. Section
6110(k)(3) of the Code provides that it may not be used or cited as precedent.
In accordance with the Power of Attorney on file with this office, a copy
of this letter is being sent to your authorized representative.
A copy of this letter must be attached to any income tax return to which
it is relevant.
Sincerely yours,
Assistant Chief Counsel (Corporate)
By: /s/ Ken Cohen
-------------------------------------
Ken Cohen
Senior Technical Reviewer, Branch 3
