<R> As filed with the Securities and Exchange Commission on November 24, 2003 </R>

Securities Act File No. 33-14517 Investment Company Act File No. 811-5178

SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549

FORM N-1A

	REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933	| X |
	Pre-Effective Amendment No.	|     |
	<R> Post-Effective Amendment No. 21 </R>	| X |
	and/or
	REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940	| X |
	<R> AMENDMENT NO. 23 </R>	| X |
	(Check appropriate box or boxes)

<R> Merrill Lynch Equity Dividend Fund (Formerly known as Merrill Lynch Equity Income Fund) </R> (Exact Name of Registrant as Specified in Charter)

800 Scudders Mill Road, Plainsboro, New Jersey 08536 (Address of Principal Executive Offices) (609) 282-2800 Registrant’s Telephone Number, including Area Code

Terry K. Glenn <R> Merrill Lynch Equity Dividend Fund </R> 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: <R>Shearman & Sterling LLP </R> 599 Lexington Avenue New York, New York 10022-6069 Attention: Joel H. Goldberg, Esq.	and	<R> Andrew J. Donahue, Esq. </R> Merrill Lynch Investment Managers, L.P. P.O. Box 9011 Princeton, New Jersey 08543-9011

It is proposed that this filing will become effective (check appropriate box):

<R>	| X |	immediately upon filing pursuant to paragraph (b)
	|     |	on (date) pursuant to paragraph (b) </R>
	|     |	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.

Title of Securities Being Registered: Shares of beneficial interest, par value $.10 per share.

 

[LOGO]    Merrill Lynch   Investment Managers

www.mlim.ml.com

Prospectus

<R>November 24, 2003

Merrill Lynch Equity Dividend Fund </R>

This Prospectus contains information you should know before investing, including information about risks. Please read it before you invest and keep it for future reference.

The Securities and Exchange Commission has not approved or disapproved these securities or passed upon the adequacy of this Prospectus. Any representation to the contrary is a criminal offense.

Table of Contents

		PAGE
[ICON]	KEY FACTS
<R>	Merrill Lynch Equity Dividend Fund at a Glance	3
</R>	Risk/Return Bar Chart	5
	Fees and Expenses	7
[ICON]	DETAILS ABOUT THE FUND
	How the Fund Invests	9
	Investment Risks	10
[ICON]	YOUR ACCOUNT
	Merrill Lynch Select Pricing SM System	16
	How to Buy, Sell, Transfer and Exchange Shares	22
	Participation in Fee-Based Programs	26
[ICON]	MANAGEMENT OF THE FUND
	Merrill Lynch Investment Managers	29
	Financial Highlights	30
[ICON]	FOR MORE INFORMATION
	Shareholder Reports	Back Cover
	Statement of Additional Information	Back Cover

 

<R>MERRILL LYNCH EQUITY DIVIDEND FUND</R>

Key Facts     [ICON]

In an effort to help you better understand the many concepts involved in making an investment decision, we have defined the highlighted terms in this Prospectus in the sidebar.

<R> Equity Securities — common stock, preferred stock, securities convertible into common stock, or securities or other instruments whose price is linked to the value of common stock.

Convertible Security — a fixed income security, such as a bond or preferred stock, that is exchangeable for shares of common stock of the issuer or of another company. </R>

Preferred Stock — class of stock that often pays dividends at a specified rate and has preference over common stock in dividend payments and liquidation of assets.

<R>

MERRILL LYNCH EQUITY DIVIDEND FUND AT A GLANCE

</R>

What is the Fund’s investment objective?

The investment objective of the Fund is to seek long-term total return and current income.

What are the Fund’s main investment strategies?

The Fund seeks to achieve its objective by investing primarily in a portfolio of equity securities . It tries to choose investments that will increase in value over the long term as well as provide current income. The Fund’s investments emphasize long-term total return more than current income.

<R>Total return consists of increases in value from both capital appreciation and income. Under normal circumstances, the Fund will invest at least 80% of its assets in equity securities and at least 80% of its assets in dividend paying securities. The Fund will focus on issuers that have good prospects for capital appreciation. Fund management believes that stocks that have yields often provide more attractive long-term total return and greater price stability during periods of downward movements in market prices than stocks that do not pay dividends. In selecting portfolio securities, the Fund will generally employ a value-oriented analysis, but may purchase equity securities based on a growth-oriented analysis when such securities pay dividends or Fund management believes such securities have particularly good prospects for capital appreciation. The Fund emphasizes investments in large companies. The Fund’s portfolio, in the aggregate, will be structured in a manner designed to produce potential long-term capital appreciation as well as net portfolio yield in excess of the average yield of mutual funds invested primarily in U.S. equities. The Fund may also invest in convertible securities and non-convertible preferred stock . The Fund may invest up to 25% of its total assets in securities of foreign issuers.

What are the main risks of investing in the Fund?

The Fund cannot guarantee that it will achieve its objective.

As with any fund, the value of the Fund’s investments — and therefore the value of the Fund’s shares — may fluctuate. These changes may occur because a particular market is rising or falling. At other times, there are specific factors that may affect the value of a particular investment. Also, Fund management may select securities that underperform the markets, the relevant indices or other funds with similar investment objectives and investment strategies. If the value of the Fund’s investments goes down, you may lose money.</R>

 

<R>MERRILL LYNCH EQUITY DIVIDEND FUND</R>

3

[ICON]   Key Facts

<R>The Fund may invest in foreign securities. Because foreign markets may differ significantly from U.S. markets in terms of both economic conditions and government regulation, investments in foreign securities involve special risks. In addition, investments in securities denominated in foreign currencies involve the risk that these currencies may decline in value relative to the U.S. dollar, which decreases the value of the investments in U.S. dollar terms.</R>

Who should invest?

<R>Investors should consider their own investment goals, time horizon, and risk tolerance before investing in the Fund. An investment in the Fund may not be appropriate for all investors and is not intended to be a complete investment program. The Fund may be an appropriate investment for you if you:</R>

•

Are looking for capital appreciation for long-term goals, but also seek some current income

•

Want a professionally managed and diversified portfolio of equity securities as part of your total investment portfolio

•

Are willing to accept the risk that the value of your investment may decline in order to seek long-term total return and current income

 

4

<R>MERRILL LYNCH EQUITY DIVIDEND FUND</R>

RISK/RETURN BAR CHART

<R>The bar chart and the table shown below provide an indication of the risks of investing in the Fund. The bar chart shows changes in the Fund’s performance for Class B shares for each of the past ten calendar years. Sales charges are not reflected in the bar chart. If these amounts were reflected, the returns would be less than those shown. The table compares the average annual total returns for each class of the Fund’s shares for the periods shown with those of the Standard & Poor’s (S&P) 500 Index, a broad measure of market performance. How the Fund performed in the past (before and after taxes) is not necessarily an indication of how the Fund will perform in the future.</R>

<R>During the ten year period shown in the bar chart, the highest return for a quarter was 11.40% (quarter ended June 30, 1997) and the lowest return for a quarter was -15.29% (quarter ended September 30, 2002). The year-to-date return as of September 30, 2003 was 10.87%.</R>

 

<R>MERRILL LYNCH EQUITY DIVIDEND FUND</R>

5

[ICON]   Key Facts

<R>After-tax returns are shown only for Class B shares and will vary for other classes. The after-tax returns are calculated using the historical highest applicable marginal Federal individual income tax rates in effect during the periods measured and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor’s tax situation and may differ from those shown. The after-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts or through tax advantaged education savings accounts.

Average Annual Total Returns (for the periods ended December 31, 2002)#		One Year		Five Years		Ten Years/ Life of Fund
Merrill Lynch Equity Dividend Fund — Class A*
Return Before Taxes**		-16.15	%	0.99	%	9.27	%†
Merrill Lynch Equity Dividend Fund — Class B
Return Before Taxes**		-15.66	%	1.03	%	8.34	%
Return After Taxes on Distributions**		-15.82	%	-0.92	%	5.47	%
Return After Taxes on Distributions and
Sale of Fund Shares**		-9.62	%	0.64	%	5.97	%
Merrill Lynch Equity Dividend Fund — Class C
Return Before Taxes**		-13.08	%	1.29	%	9.12	%†
Merrill Lynch Equity Dividend Fund — Class I*
Return Before Taxes**		-15.93	%	1.24	%	8.88	%
S&P 500 Index***		-22.10	%	-0.59	%	9.34%/9.96	%††

#

Since the inception date for Class R shares was January 3, 2003, information for Class R shares is not included.

*

Prior to April 14, 2003, Class A shares of the Fund were designated Class D and Class I shares were designated Class A.

**

Includes all applicable fees and sales charges.

***

The S&P 500 Index is a widely recognized, unmanaged index of common stock prices. Performance of the index does not reflect the deduction of fees, expenses or taxes. Past performance is not predictive of future performance.

†

Class inception date is October 21, 1994.

† †

Ten years and since October 21, 1994. </R>

 

6

<R>MERRILL LYNCH EQUITY DIVIDEND FUND</R>

UNDERSTANDING EXPENSES

Fund investors pay various fees and expenses, either directly or indirectly. Listed below are some of the main types of expenses, that the Fund may charge:

Expenses paid directly by the shareholder:

Shareholder Fees — these include sales charges that you may pay when you buy or sell shares of the Fund.

Expenses paid indirectly by the shareholder:

Annual Fund Operating Expenses — expenses that cover the costs of operating the Fund.

Management Fee — a fee paid to the Manager for managing the Fund.

Distribution Fees — fees used to support the Fund’s marketing and distribution efforts, such as compensating financial advisers and other financial intermediaries, advertising and promotion.

Service (Account Maintenance) Fees — fees used to compensate securities dealers and other financial intermediaries for account maintenance activities.

FEES AND EXPENSES

<R>The Fund offers five different classes of shares. Although your money will be invested the same way no matter which class of shares you buy, there are differences among the fees and expenses associated with each class. Not everyone is eligible to buy every class. After determining which classes you are eligible to buy, decide which class best suits your needs. Your Merrill Lynch Financial Advisor can help you with this decision.</R>

This table shows the different fees and expenses that you may pay if you buy and hold the different classes of shares of the Fund. Future expenses may be greater or less than those indicated below.<R>

Shareholder Fees (fees paid directly from our investment)(a):	Class A*		Class B(b)		Class C		Class I*		Class R
Maximum Sales Charge (Load) imposed on   purchases (as a percentage of offering price)	5.25%	(c)	None		None		5.25%	(c)	None
Maximum Deferred Sales Charge (Load)   (as a percentage of original purchase price or   redemption proceeds, whichever is lower)	None	(d)	4.0%	(c)	1.0%	(c)	None	(d)	None
Maximum Sales Charge (Load) imposed on   Dividend Reinvestments	None		None		None		None		None
Redemption Fee	None		None		None		None		None
Exchange Fee	None		None		None		None		None
Annual Fund Operating Expenses  (expenses that are deducted from  Fund assets):
Management Fee	0.60%		0.60%		0.60%		0.60%		0.60%
Distribution and/or Service (12b-1) Fees (e)	0.25%		1.00%		1.00%		None		0.50%
Other Expenses (including transfer agency   fees)(f)	0.35%		0.38%		0.38%		0.35%		0.35%
Total Annual Fund Operating Expenses	1.20%		1.98%		1.98%		0.95%		1.45%

<R>

*

Prior to April 14, 2003, Class A shares were designated Class D and Class I shares were designated Class A. </R>

(a)

In addition, Merrill Lynch may charge clients a processing fee (currently $5.35) when a client buys or redeems shares. See “Your Account — How to Buy, Sell, Transfer and Exchange Shares.” <R>

(b)

Class B shares automatically convert to Class A shares approximately eight years after you buy them and will no longer be subject to distribution fees.</R>

(c)

Some investors may qualify for reductions in or waivers of the sales charge (load).

(d)

You may pay a deferred sales charge if you purchase $1 million or more and you redeem within one year. <R>

(e)

The Fund calls the “Service Fee” an “Account Maintenance Fee. “Account Maintenance Fee is the term used elsewhere in this Prospectus and in all other Fund materials. If you hold Class B, Class C or Class R shares over time, it may cost you more in distribution and account maintenance (12b-1) fees than the maximum sales charge that you would have paid if you had bought one of the other classes.</R>

(f)

Financial Data Services, Inc., an affiliate of the Manager, provides transfer agency services to the Fund. The Fund pays a fee for these services. The Manager or its affiliates also provide certain accounting services to the Fund and the Fund reimburses the Manager or its affiliates for these services.

 

<R>MERRILL LYNCH EQUITY DIVIDEND FUND</R>

7

[ICON]   Key Facts

Examples:

These examples are intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds.

<R>These examples assume that you invest $10,000 in the Fund for the time periods indicated, that your investment has a 5% return each year, that you pay the sales charges, if any, that apply to the particular class and that the Fund’s operating expenses remain the same. These assumptions are not meant to indicate you will receive a 5% annual rate of return. Your annual return may be more or less than the 5% used in this example. Although your actual costs may be higher or lower, based on these assumptions your costs would be:

EXPENSES IF YOU DID REDEEM YOUR SHARES:

	1 Year		3 Years		5 Years		10 Years
Class A*	$641		$886		$1,150		$1,903
Class B	$601		$921		$1,268		$2,105	**
Class C	$301		$621		$1,068		$2,306
Class I*	$617		$812		$1,023		$1,630
Class R	$148		$459		$   792		$1,735

EXPENSES IF YOU DID NOT REDEEM YOUR SHARES:

	1 Year		3 Years		5 Years		10 Years
Class A*	$641		$886		$1,150		$1,903
Class B	$201		$621		$1,068		$2,105	**
Class C	$201		$621		$1,068		$2,306
Class I*	$617		$812		$1,023		$1,630
Class R	$148		$459		$   792		$1,735

*

Prior to April 14, 2003, Class A shares were designated Class D and Class I shares were designated Class A.

**

Assumes conversion to Class A shares approximately eight years after purchase. See note (b) to the Fees and Expenses table above.</R>

 

8

<R>MERRILL LYNCH EQUITY DIVIDEND FUND</R>

Details About the Fund     [ICON]

ABOUT THE PORTFOLIO MANAGER

<R>Robert M. Shearer has been Vice President and the Portfolio Manager of the Fund since 2001. Mr. Shearer has been Managing Director of Merrill Lynch Investment Managers since 2000. Prior to that was First Vice President of Merrill Lynch Investment Managers from 1998 to 2000.</R>

ABOUT THE MANAGER

The Fund is managed by Merrill Lynch Investment Managers.

HOW THE FUND INVESTS

The investment objective of the Fund is to seek long-term total return and current income.

<R> Outlined below are the main strategies the Fund uses in seeking to achieve its investment objective.

The Fund seeks to achieve its objective by investing primarily in a diversified portfolio of equity securities.

Total return consists of increases in value from both capital appreciation and income. Under normal circumstances, the Fund will invest at least 80% of its assets in equity securities and at least 80% of its assets in dividend paying securities. This policy is a non-fundamental policy of the Fund and may not be changed without 60 days prior notice to shareholders. The Fund will focus on issuers that have good prospects for capital appreciation. Although the Fund invests primarily in dividend paying securities, portions of the distributions paid by the Fund may not be subject to the lower income tax rates applicable to dividends.</R>

Fund management believes that stocks that have yields often provide more attractive long-term total return and greater price stability during periods of downward movements in market prices than stocks that do not pay dividends. In certain market cycles, such as periods of high growth or high interest rates on bonds, dividend paying stocks could go out of favor. During such periods, the Fund may underperform other equity funds that do not emphasize investments in dividend paying stocks. The Fund emphasizes investments in large companies. The Fund’s portfolio, in the aggregate, will be structured in a manner designed to seek long-term capital appreciation as well as net portfolio yield in excess of the average yield of mutual funds invested primarily in U.S. equities.

<R>The Fund may also invest in securities convertible into common stock, non-convertible preferred stock and debt securities. The Fund invests mainly in U.S. companies, but may invest up to 25% of its total assets in securities of foreign issuers. The Fund may invest in securities from any country. The Fund may invest in securities denominated in currencies other than the U.S. dollar.</R>

The Fund has no stated minimum holding period for investments and will buy or sell securities whenever Fund management sees an appropriate opportunity. For example, the Fund may sell shares of a company when the company’s prospects for capital appreciation deteriorate or when its dividend rates become unattractive or when the Fund identifies another company with more attractive prospects.

 

<R>MERRILL LYNCH EQUITY DIVIDEND FUND</R>

9

[ICON]   Details About the Fund

<R> Investment Grade — securities rated in the four highest rating categories by recognized rating agencies, including Moody’s Investor Services, Inc., S&P’s and Fitch Ratings.

Other Strategies. In addition to the main strategies discussed above, the Fund may use certain other investment strategies: </R>

The Fund may use derivatives, such as futures, options and indexed securities. Derivatives are financial instruments whose value is derived from another security, a commodity (such as gold or oil) or an index such as the S&P 500 Index. The Fund may use derivatives for hedging purposes, including anticipatory hedges, and to seek increased return. The Fund may also invest in illiquid securities or enter into repurchase agreements.

<R>The Fund may invest in investment grade debt securities of any maturity.

The Fund will normally invest a portion of its assets in short term debt securities, money market securities, including repurchase agreements, or cash. The Fund invests in such securities or cash when Fund management is unable to find enough attractive long-term investments to reduce exposure to stocks when Fund management believes it is advisable to do so or to meet redemptions. Except during temporary defensive periods, such investments will not exceed 20% of the Fund’s assets. As a temporary measure for defensive purposes, the Fund may invest more heavily in these securities or cash, without limitation. During such periods, the Fund’s investments in dividend-paying common stocks will be limited and the Fund may, therefore, not be able to achieve its investment objective.

The Fund may also lend its portfolio securities and invest its uninvested cash balances in affiliated money market funds.</R>

INVESTMENT RISKS

<R>This section contains a summary discussion of the general risks of investing in the Fund. As with any fund, there can be no guarantee that the Fund will meet its objective or that the Fund’s performance will be positive over any period of time.

Set forth below are the main risks of investing in the Fund.

Market Risk and Selection Risk — Market risk is the risk that a market in which the Fund invests will go down in value, including the possibility that a market will go down sharply and unpredictably. Selection risk is the risk that the securities that Fund management selects will underperform the stock markets, the relevant indices or other funds with a similar investment objective and investment strategies.</R>

 

10

<R>MERRILL LYNCH EQUITY DIVIDEND FUND</R>

<R> Foreign Market Risk — Since the Fund may invest in foreign securities, it offers the potential for more diversification than a fund that invests only in the United States. This is because securities traded on foreign markets have often (though not always) performed differently from securities traded in the United States. However, such investments involve special risks not present in U.S. investments that can increase the chances that the Fund will lose money. In particular, the Fund is subject to the risk that because there are generally fewer investors on foreign exchanges and a smaller number of securities traded each day, it may make it difficult for the Fund to buy and sell securities on those exchanges. In addition, prices of foreign securities go up and down more than prices of securities traded in the United States.</R>

Foreign Economy Risk — The economies of certain foreign markets may not compare favorably with the economy of the United States with respect to such issues as growth of gross national product, reinvestment of capital, resources and balance of payments position. Certain such economies may rely heavily on particular industries or foreign capital and are more vulnerable to diplomatic developments, the imposition of economic sanctions against a particular country or countries, changes in international trading patterns, trade barriers and other protectionist or retaliatory measures.

Investments in foreign markets may be adversely affected by governmental actions such as the imposition of capital controls, nationalization of companies or industries, expropriation of assets or the imposition of punitive taxes. In addition, the governments of certain countries may prohibit or impose substantial restrictions on foreign investing in their capital markets or in certain industries. Any of these actions could severely affect security prices, impair the Fund’s ability to purchase or sell foreign securities or transfer the Fund’s assets or income back into the United States, or otherwise adversely affect the Fund’s operations.

Other foreign market risks include foreign exchange controls, difficulties in pricing securities, defaults on foreign government securities, difficulties in enforcing favorable legal judgments in foreign courts and political and social instability. Legal remedies available to investors in certain foreign countries may be less extensive than those available to investors in the United States or other foreign countries.

Currency Risk — Securities in which the Fund invests may be denominated or quoted in currencies other than the U.S. dollar. Changes in foreign currency exchange rates affect the value of the Fund’s portfolio. Generally, when the U.S. dollar rises in value against a foreign currency, a security

 

<R>MERRILL LYNCH EQUITY DIVIDEND FUND</R>

11

[ICON]   Details About the Fund

denominated in that currency loses value because the currency is worth fewer U.S. dollars. Conversely, when the U.S. dollar decreases in value against a foreign currency, a security denominated in that currency gains value because the currency is worth more U.S. dollars. This risk, generally known as “currency risk,” means that a strong U.S. dollar will reduce returns for U.S. investors while a weak U.S. dollar will increase those returns.

Governmental Supervision and Regulation/Accounting Standards — Many foreign governments supervise and regulate stock exchanges, brokers and the sale of securities less than the United States does. Some countries may not have laws to protect investors the way that the U.S. securities laws do. For example, some countries may have no laws or rules against insider trading. Insider trading occurs when a person buys or sells a company’s securities based on non-public information about that company. Accounting standards in other countries are not necessarily the same as in the United States. If the accounting standards in another country do not require as much detail as U.S. accounting standards, it may be harder for Fund management to completely and accurately determine a company’s financial condition. Also, brokerage commissions and other costs of buying or selling securities often are higher in foreign countries than they are in the United States. This reduces the amount the Fund can earn on its investments.

Certain Risks of Holding Fund Assets Outside the United States — The Fund generally holds its foreign securities and cash in foreign banks and securities depositories. Some foreign banks and securities depositories may be recently organized or new to the foreign custody business. In addition, there may be limited or no regulatory oversight over their operations. Also, the laws of certain countries may put limits on the Fund’s ability to recover its assets if a foreign bank, depository or issuer of a security or any of their agents goes bankrupt. In addition, it is often more expensive for the Fund to buy, sell and hold securities in certain foreign markets than in the United States. The increased expense of investing in foreign markets reduces the amount the Fund can earn on its investments and typically results in a higher operating expense ratio for the Fund than for investment companies invested only in the United States.

Settlement Risk — Settlement and clearance procedures in certain foreign markets differ significantly from those in the United States. Foreign settlement procedures and trade regulations also may involve certain risks (such as delays in payment for or delivery of securities) not typically generated by the settlement of U.S. investments. Communications between the United States and emerging market countries may be unreliable,

 

12

<R>MERRILL LYNCH EQUITY DIVIDEND FUND</R>

increasing the risk of delayed settlements or losses of security certificates. Settlements in certain foreign countries at times have not kept pace with the number of securities transactions; these problems may make it difficult for the Fund to carry out transactions. If the Fund cannot settle or is delayed in settling a purchase of securities, it may miss attractive investment opportunities and certain of its assets may be uninvested with no return earned thereon for some period. In addition, the Fund may lose money if the value of the security then declines or, if it has contracted to sell the security to another party, the Fund could be liable to that party for any losses incurred.

<R> The Fund may also be subject to certain other risks associated with its investments and investment strategies, including:

Borrowing and Leverage Risk — The Fund may borrow for temporary emergency purposes including to meet redemptions. Borrowing may exaggerate changes in the net asset value of Fund shares and in the return on the Fund’s portfolio. Borrowing will cost the Fund interest expense and other fees. The cost of borrowing may reduce the Fund’s return. Certain securities that the Fund buys may create leverage including, for example, futures, options and warrants. </R>

Securities Lending — The Fund may lend securities with a value up to 33 1 / 3 % of its total assets to financial institutions that provide cash or securities issued or guaranteed by the U.S. government as collateral. Securities lending involves the risk that the borrower may fail to return the securities in a timely manner or at all. As a result, the Fund may lose money and there may be a delay in recovering the loaned securities. The Fund could also lose money if it does not recover the securities and/or the value of the collateral falls, including the value of investments made with cash collateral. These events could trigger adverse tax consequences to the Fund.

<R> Derivatives — The Fund may use derivative instruments, including futures, options and indexed securities. Derivatives may allow the Fund to increase or decrease its risk exposure more quickly and efficiently than other types of instruments. </R>

Derivatives are volatile and involve significant risks, including:

Leverage risk — the risk associated with certain types of investments or trading strategies (such as borrowing money to increase the amount of investments) that relatively small market movements may result in large changes in the value of an investment. Certain investments or trading strategies that involve leverage can result in losses that greatly exceed the amount originally invested.

 

<R>MERRILL LYNCH EQUITY DIVIDEND FUND</R>

13

[ICON]   Details About the Fund

Credit risk — the risk that the counterparty (the party on the other side of the transaction) on a derivative transaction will be unable to honor its financial obligation to the Fund.

Currency risk — the risk that changes in the exchange rate between currencies will adversely affect the value (in U.S. dollar terms) of an investment.

Liquidity risk — the risk that certain securities may be difficult or impossible to sell at the time that the seller would like or at the price that the seller believes the security is currently worth.

<R>The Fund may use derivatives for hedging purposes, including anticipatory hedges, and to seek increased returns. Hedging is a strategy in which the Fund uses a derivative to offset the risks associated with other Fund holdings. While hedging can reduce losses, it can also reduce or eliminate gains or cause losses if the market moves in a different manner than anticipated by the Fund or if the cost of the derivative outweighs the benefit of the hedge. Hedging also involves the risk that changes in the value of the derivative will not match those of the holdings being hedged as expected by the Fund, in which case any losses on the holdings being hedged may not be reduced and may be increased. There can be no assurance that the Fund’s hedging strategy will reduce risk or that hedging transactions will be either available or cost effective. The Fund is not required to use hedging and may choose not to do so.

Debt Securities — Debt securities, such as bonds, involve credit risk. This is the risk that the borrower will not make timely payments of principal and interest. The degree of credit risk depends on the issuer’s financial condition and on the terms of the bonds. These securities are also subject to interest rate risk. This is the risk that the value of a security may fall when interest rates rise. In general, the market price of debt securities with longer maturities will go up or down more in response to changes in interest rates than the market price of shorter term securities.

Convertibles — Convertibles are generally debt securities or preferred stock that may be converted into common stock. Convertibles typically pay current income as either interest (debt security convertibles) or dividends (preferred stocks). A convertible’s value usually reflects both the stream of current income payments and the value of the underlying common stock. The market value of a convertible performs like that of a regular debt security; </R>

 

14

<R>MERRILL LYNCH EQUITY DIVIDEND FUND</R>

that is, if market interest rates rise, the value of a convertible security usually falls. Since it is convertible into common stock, the convertible also has the same types of market and issuer risk as the underlying common stock.

Illiquid Securities — The Fund may invest up to 15% of its net assets in illiquid securities that it cannot easily sell within seven days at current value or that have contractual or legal restrictions on resale. If the Fund buys illiquid securities, it may be unable to quickly sell them or may be able to sell them only at a price below current value.

Restricted Securities — Restricted securities have contractual or legal restrictions on their resale. They may include private placement securities that the Fund buys directly from the issuer. Private placement and other restricted securities may not be listed on an exchange and may have no active trading market.

Restricted securities may be illiquid. The Fund may be unable to sell them on short notice or may be able to sell them only at a price below current value. The Fund may get only limited information about the issuer, so it may be less able to predict a loss. In addition, if Fund management receives material adverse nonpublic information about the issuer, the Fund will not be able to sell the securities.

Rule 144A Securities — Rule 144A securities are restricted securities that can be resold to qualified institutional buyers but not to the general public. Rule 144A securities may have an active trading market, but carry the risk that the active trading market may not continue.

STATEMENT OF ADDITIONAL INFORMATION

If you would like further information about the Fund, including how it invests, please see the Statement of Additional Information.

 

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15

Your Account     [ICON]

MERRILL LYNCH SELECT PRICING SM SYSTEM

<R>The Fund offers five share classes, each with its own sales charge and expense structure, allowing you to invest in the way that best suits your needs. Each share class represents an ownership interest in the same investment portfolio. When you choose your class of shares you should consider the size of your investment and how long you plan to hold your shares. Your Merrill Lynch Financial Advisor can help you determine which share class is best suited to your personal financial goals.

For example, if you select Class A or Class I shares, you generally pay a sales charge at the time of purchase. If you buy Class A shares, you also pay an ongoing account maintenance fee of 0.25%. You may be eligible for a sales charge reduction or waiver.</R>

Certain financial intermediaries may charge additional fees in connection with transactions in Fund shares. The Manager, the Distributor or their affiliates may make payments out of their own resources to selected securities dealers and other financial intermediaries for providing services intended to result in the sale of Fund shares or for shareholder servicing activities.

<R>If you select Class B, Class C or Class R shares, you will invest the full amount of your purchase price. However, you will be subject to a distribution fee of 0.75% for Class B and Class C shares, and 0.25% for Class R shares, and an account maintenance fee of 0.25% for all three classes of shares. Because these fees are paid out of the Fund’s assets on an ongoing basis, over time these fees increase the cost of your investment and may cost you more than paying other types of sales charges. In addition, you may be subject to a deferred sales charge when you sell Class B or Class C shares.</R>

The Fund’s shares are distributed by FAM Distributors, Inc., an affiliate of Merrill Lynch.

 

16

<R>MERRILL LYNCH EQUITY DIVIDEND FUND</R>

 

The table below summarizes key features of the Merrill Lynch Select Pricing SM System<R>

		Class A		Class B		Class C		Class I		Class R
Availability		Generally available through Merrill Lynch. Limited availability through selected securities dealers and other financial intermediaries.		Generally available through Merrill Lynch. Limited availability through selected securities dealers and other financial intermediaries.		Generally available through Merrill Lynch. Limited availability through selected securities dealers and other financial intermediaries.		Limited to certain investors including:    • Current Class I       shareholders    • Certain Retirement       Plans    • Participants in       certain       Merrill Lynch-       sponsored       programs    • Certain affiliates       of Merrill       Lynch, selected       securities dealers       and other financial       intermediaries.		Available only to certain retirement plans.
Initial Sales Charge?		Yes. Payable at time of purchase. Lower sales charges available for larger investments.		No. Entire purchase price is invested in shares of the Fund.		No. Entire purchase price is invested in shares of the Fund.		Yes. Payable at time of purchase. Lower sales charges available for larger investments.		No. Entire purchase price is invested in shares of the Fund.
Deferred Sales Charge?		No. (May be charged for purchases over $1 million that are redeemed within one year.)		Yes. Payable if you redeem within six years of purchase.		Yes. Payable if you redeem within one year of purchase.		No. (May be charged for purchases over $1 million that are redeemed within one year.)		No.
Account Maintenance and Distribution Fees?		0.25% Account Maintenance Fee No Distribution Fee.		0.25% Account Maintenance Fee 0.75% Distribution Fee.		0.25% Account Maintenance Fee 0.75% Distribution Fee.		No.		0.25% Account Maintenance Fee 0.25%  Distribution Fee.
Conversion to Class A shares?		N/A		Yes, automatically after approximately eight years.		No.		No.		No.
</R>

 

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[ICON]   Your Account

<R> Right of Accumulation — permits you to pay the sales charge that would apply to the cost or value (whichever is higher) of all qualifying shares you own in the Merrill Lynch mutual funds that offer Select SM Pricing options.

Letter of Intent — permits you to pay the sales charge that would be applicable if you add up all qualifying shares of Merrill Lynch Select Pricing SM System funds that you agree to buy within a 13 month period. Certain restrictions apply.

Class A and Class I Shares — Initial Sales Charge Options

If you select Class A or Class I shares, you will pay a sales charge at the time of purchase, as shown in the following table.</R>

Your Investment	As a % of Offering Price	As a % of Your Investment*	Dealer Compensation as a % of Offering Price
Less than $25,000	5.25%	5.54%	5.00%
$25,000 but less
than $50,000	4.75%	4.99%	4.50%
$50,000 but less
than $100,000	4.00%	4.17%	3.75%
$100,000 but less
than $250,000	3.00%	3.09%	2.75%
$250,000 but less
than $1,000,000	2.00%	2.04%	1.80%
$1,000,000 and over**	0.00%	0.00%	0.00%

*

Rounded to the nearest one-hundredth percent. <R>

**

If you invest $1,000,000 or more in Class A or Class I shares, you may not pay an initial sales charge. In that case, the Manager compensates the selling dealer or other financial intermediary from its own funds. However, if you redeem your shares within one year after purchase, you may be charged a deferred sales charge. This charge is 1.00% of the lesser of the original cost of the shares being redeemed or your redemption proceeds. A sales charge of 0.75% will be charged on purchases of $1,000,000 or more of Class A or Class I shares by certain employer sponsored retirement or savings plans.

No initial sales charge applies to Class A or Class I shares that you buy through reinvestment of dividends.

A reduced or waived sales charge on a purchase of Class A or Class I shares may apply for:</R>

•

Purchases under a Right of Accumulation or Letter of Intent

•

TMA SM Managed Trusts<R>

•

Merrill Lynch Blueprint SM Program participants</R>

•

Certain Merrill Lynch investment or central asset accounts

•

Certain employer-sponsored retirement or savings plans

•

Purchases using proceeds from the sale of certain Merrill Lynch closed-end funds under certain circumstances

 

18

<R>MERRILL LYNCH EQUITY DIVIDEND FUND</R>

 

•

Certain investors, including directors or trustees of Merrill Lynch mutual funds and Merrill Lynch employees

•

Certain fee-based programs of Merrill Lynch and other financial intermediaries that have agreements with the Distributor or its affiliates

<R>Only certain investors are eligible to buy Class I shares. Your Merrill Lynch Financial Advisor can help you determine whether you are eligible to buy Class I shares or to participate in any of these programs.

If you decide to buy shares under the initial sales charge alternative and you are eligible to buy both Class A and Class I shares, you should buy Class I since Class A shares are subject to a 0.25% account maintenance fee, while Class I shares are not.

If you redeem Class A or Class I shares and within 30 days buy new shares of the same class, you will not pay a sales charge on the new purchase amount. The amount eligible for this “Reinstatement Privilege” may not exceed the amount of your redemption proceeds. To exercise the privilege, contact your Merrill Lynch Financial Advisor, selected securities dealer, other financial intermediary or the Fund’s Transfer Agent at 1-800-MER-FUND.</R>

Class B and Class C Shares — Deferred Sales Charge Options

If you select Class B or Class C shares, you do not pay an initial sales charge at the time of purchase. However, if you redeem your Class B shares within six years after purchase or your Class C shares within one year after purchase, you may be required to pay a deferred sales charge. You will also pay distribution fees of 0.75% and account maintenance fees of 0.25% each year under distribution plans that the Fund has adopted under Rule 12b-1. Because these fees are paid out of the Fund’s assets on an ongoing basis, over time these fees increase the cost of your investment and may cost you more than paying other types of sales charges. The Distributor uses the money that it receives from the deferred sales charges and the distribution fees to cover the costs of marketing, advertising and compensating the Merrill Lynch Financial Advisor, selected securities dealer or other financial intermediary who assists you in purchasing Fund shares.

 

<R>MERRILL LYNCH EQUITY DIVIDEND FUND</R>

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[ICON]   Your Account

Class B Shares

If you redeem Class B shares within six years after purchase, you may be charged a deferred sales charge. The amount of the charge gradually decreases as you hold your shares over time, according to the following schedule:

	Years Since Purchase	Sales Charge*
	0 – 1	4.00	%
	1 – 2	4.00	%
	2 – 3	3.00	%
	3 – 4	3.00	%
	4 – 5	2.00	%
	5 – 6	1.00	%
	6 and thereafter	0.00	%

*

The percentage charge will apply to the lesser of the original cost of the shares being redeemed or the proceeds of your redemption. Shares acquired through reinvestment of dividends are not subject to a deferred sales charge. For shares acquired before June 1, 2001, the four-year deferred sales charge schedule in effect at that time will apply. Not all Merrill Lynch funds have identical deferred sales charge schedules. If you exchange your shares for shares of another fund, the higher charge will apply.

The deferred sales charge relating to Class B shares may be reduced or waived in certain circumstances, such as:

•

Certain post-retirement withdrawals from an IRA or other retirement plan if you are over 59 1 / 2 years old<R>

•

Redemption by certain eligible 401(a) and 401(k) plans, certain related accounts, certain group plans participating in the Merrill Lynch Blueprint SM Program and certain retirement plan rollovers

•

Redemption in connection with participation in certain fee-based programs of Merrill Lynch or other financial intermediaries that have agreements with the Distributor or its affiliates or in connection with involuntary termination of an account in which Fund shares are held

•

Withdrawals resulting from shareholder death or disability as long as the waiver request is made within one year of death or disability or, if later, reasonably promptly following completion of probate

</R>

 

20

<R>MERRILL LYNCH EQUITY DIVIDEND FUND</R>

 

<R>

•

Withdrawal through the Merrill Lynch Systematic Withdrawal Plan of up to 10% per year of your Class B account value at the time the plan is established</R>

<R>Your Class B shares convert automatically into Class A shares approximately eight years after purchase. Any Class B shares received through reinvestment of dividends paid on converting shares will also convert at that time. Class A shares are subject to lower annual expenses than Class B shares. The conversion of Class B to Class A shares is not a taxable event for Federal income tax purposes.</R>

Different conversion schedules apply to Class B shares of different Merrill Lynch mutual funds. For example, Class B shares of a fixed income fund typically convert approximately ten years after purchase compared to approximately eight years for equity funds. If you acquire your Class B shares in an exchange from another fund with a shorter conversion schedule, the Fund’s eight year conversion schedule will apply. If you exchange your Class B shares in the Fund for Class B shares of a fund with a longer conversion schedule, the other fund’s conversion schedule will apply. The length of time that you hold both the original and exchanged Class B shares in both funds will count toward the conversion schedule. The conversion schedule may be modified in certain other cases as well.

Class C Shares

<R>If you redeem Class C shares within one year after purchase, you may be charged a deferred sales charge of 1.00%. The charge will apply to the lesser of the original cost of the shares being redeemed or the proceeds of your redemption. You will not be charged a deferred sales charge when you redeem shares that you acquire through reinvestment of Fund dividends. The deferred sales charge relative to Class C shares may be reduced or waived in connection with involuntary termination of an account in which Fund shares are held, withdrawals through the Merrill Lynch Systematic Withdrawal Plan and redemption of Class C shares by certain retirement plans.</R>

Class C shares do not offer a conversion privilege.

 

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[ICON]   Your Account

<R>Class R Shares

Class R shares are available only to certain retirement plans. If you purchase Class R shares, you will not pay either an initial sales charge or a contingent deferred sales charge. However, Class R shares are subject to a distribution fee of 0.25% and an account maintenance fee of 0.25%. Because these fees are paid out of the Fund’s assets on an ongoing basis, over time these fees increase the cost of your investment and may cost you more than paying other types of sales charges. Class R shares do not offer a conversion privilege.</R>

HOW TO BUY, SELL, TRANSFER AND EXCHANGE SHARES

<R>The chart on the following pages summarizes how to buy, sell, transfer and exchange shares through Merrill Lynch, a selected securities dealer, broker, investment adviser, service provider or other financial intermediary. You may also buy, sell, transfer and exchange shares through the Transfer Agent. To learn more about buying, selling, transferring or exchanging shares through the Transfer Agent, call 1-800-MER-FUND. Because the selection of a mutual fund involves many considerations, your Merrill Lynch Financial Advisor may help you with this decision.</R>

Because of the high costs of maintaining smaller shareholder accounts, the Fund may redeem the shares in your account (without charging any deferred sales charge) if the net asset value of your account falls below $500 due to redemptions you have made. You will be notified that the value of your account is less than $500 before the Fund makes an involuntary redemption. You will then have 60 days to make an additional investment to bring the value of your account to at least $500 before the Fund takes any action. This involuntary redemption does not apply to retirement plans or Uniform Gifts or Transfers to Minors Act accounts.

 

22

<R>MERRILL LYNCH EQUITY DIVIDEND FUND</R>

If You Want To		Your Choices		Information Important for You to Know
Buy Shares		First, select the share class appropriate for you		Refer to the Merrill Lynch Select Pricing table on page 17. Be sure to read this Prospectus carefully.
<R>		Next, determine the amount of your investment		The minimum initial investment for the Fund is $1,000 for all accounts except    •  $250 for certain Merrill Lynch fee-based programs    •  $100 for retirement plans    •  $100 for Merrill Lynch Blueprint SM Program (The minimums for initial investments may be waived under certain circumstances.)</R>
		Have your Merrill Lynch Financial Advisor, selected securities dealer or other financial intermediary submit your purchase order		The price of your shares is based on the next calculation of net asset value after your order is placed. Any purchase orders placed prior to the close of business on the New York Stock Exchange (generally 4:00 p.m. Eastern time) will be priced at the net asset value determined that day. Certain financial intermediaries, however, may require submission of orders prior to that time. Purchase orders placed after that time will be priced at the net asset value determined on the next business day. The Fund may reject any order to buy shares and may suspend the sale of shares at any time. Selected securities dealers or other financial intermediaries, including Merrill Lynch, may charge a processing fee to confirm a purchase. Merrill Lynch currently charges a fee of $5.35.
		Or contact the Transfer Agent		To purchase shares directly, call the Transfer Agent at 1-800-MER-FUND and request a purchase application. Mail the completed purchase application to the Transfer Agent at the address on the inside back cover of this Prospectus.
Add to Your Investment		Purchase additional shares		The minimum investment for additional purchases is generally $50 for all accounts except that retirement plans have a minimum additional purchase of $1 and certain programs, such as automatic investment plans, may have higher minimums. (The minimums for additional purchases may be waived under certain circumstances.)
		Acquire additional shares through the automatic dividend reinvestment plan		All dividends are automatically reinvested without a sales charge.
		Participate in the automatic investment plan		You may invest a specific amount on a periodic basis through certain Merrill Lynch investment or central asset accounts.
Transfer Shares to Another Securities Dealer or Other Financial Intermediary		Transfer to a participating securities dealer or other financial intermediary		You may transfer your Fund shares only to another securities dealer or other financial intermediary that has entered into an agreement with the Distributor. Certain shareholder services may not be available for the transferred shares. You may purchase additional shares only of funds previously owned before the transfer. All future trading of these assets must be coordinated by the receiving firm.

 

<R>MERRILL LYNCH EQUITY DIVIDEND FUND</R>

23

 

[ICON]   Your Account

If You Want To		Your Choices		Information Important for You to Know
Transfer Shares to Another Selected Securities Dealer or Other Financial Intermediary (continued)		Transfer to a non-participating securities dealer or other financial intermediary		You must either:    •  Transfer your shares to an account with the Transfer Agent; or    •  Sell your shares, paying any applicable deferred sales charges.
Sell Your Shares		Have your Merrill Lynch Financial Advisor, selected securities dealer or other financial intermediary submit your sales order		The price of your shares is based on the next calculation of net asset value after your order is placed. For your redemption request to be priced at the net asset value on the day of your request, you must submit your request to your dealer or other financial intermediary prior to that day’s close of business on the New York Stock Exchange (generally 4:00 p.m. Eastern time). Certain financial intermediaries, however, may require submission of orders prior to that time. Any redemption request placed after that time will be priced at the net asset value at the close of business on the next business day Securities dealers or other financial intermediaries, including Merrill Lynch, may charge a fee to process a redemption of shares. Merrill Lynch currently charges a fee of $5.35. No processing fee is charged if you redeem shares directly through the Transfer Agent. The Fund may reject an order to sell shares under certain circumstances.
		Sell through the Transfer Agent		You may sell shares held at the Transfer Agent by writing to the Transfer Agent at the address on the inside back cover of this Prospectus. All shareholders on the account must sign the letter. A signature guarantee will generally be required but may be waived in certain limited circumstances. You can obtain a signature guarantee from a bank, securities dealer, securities broker, credit union, savings and loan association, national securities exchange or registered securities association. A notary public seal will not be acceptable. If you hold stock certificates, return the certificates with the letter. The Transfer Agent will normally mail redemption proceeds within seven days following receipt of a properly completed request. If you make a redemption request before the Fund has collected payment for the purchase of shares, the Fund or the Transfer Agent may delay mailing your proceeds. This delay will usually not exceed ten days. You may also sell shares held at the Transfer Agent by telephone request if the amount being sold is less than $50,000 and if certain other conditions are met. Contact the Transfer Agent at 1-800-MER-FUND for details.

 

24

<R>MERRILL LYNCH EQUITY DIVIDEND FUND</R>

If You Want To		Your Choices		Information Important for You to Know
Sell Shares Systematically		Participate in the Fund’s Systematic Withdrawal Plan		You can choose to receive systematic payments from your Fund account either by check or through direct deposit to your bank account on a monthly or quarterly basis. If you hold your Fund shares in a Merrill Lynch CMA ® or Retirement Account you can arrange for systematic redemptions of a fixed dollar amount on a monthly, bi-monthly, quarterly, semi-annual or annual basis, subject to certain conditions. Under either method you must have dividends automatically reinvested. For Class B and Class C shares your total annual withdrawals cannot be more than 10% per year of the value of your shares at the time your plan is established. The deferred sales charge is waived for systematic redemptions. Ask your Merrill Lynch Financial Advisor or other financial intermediary for details.
Exchange Your Shares		Select the fund into which you want to exchange. Be sure to read that fund’s prospectus		<R>You can exchange your Class A, Class B, Class C and Class I shares of the Fund for shares of many other Merrill Lynch mutual funds. You must have held the shares used in the exchange for at least 15 calendar days before you can exchange to another fund Class A, Class B, Class C and Class I shares of the Fund are generally exchangeable for shares of the same class of another fund. If you own Class I shares and wish to exchange into a fund in which you have no Class I shares (and are not eligible to purchase Class I shares), you will exchange into Class A shares Some of the Merrill Lynch mutual funds impose a different initial or deferred sales charge schedule. If you exchange Class I or Class A shares for shares of a fund with a higher initial sales charge than you originally paid, you will be charged the difference at the time of exchange. If you exchange Class B shares for shares of a fund with a different deferred sales charge schedule, the higher schedule will apply. The time you hold Class B or Class C shares in both funds will count when determining your holding period for calculating a deferred sales charge at redemption. If you exchange Class I or Class A shares for money market fund shares, you will receive Class A shares of Summit Cash Reserves Fund. Class B or Class C shares of the Fund will be exchanged for Class B shares of Summit Cash Reserves Fund. </R> To exercise the exchange privilege, contact your Merrill Lynch Financial Advisor or other financial intermediary or call the Transfer Agent at 1-800-MER-FUND. Although there is currently no limit on the number of exchanges that you can make, the exchange privilege may be modified or terminated at any time in the future.

<R>The Fund reserves the right to reject any purchase order, including exchanges. Short-term or excessive trading into and out of the Fund, particularly in larger amounts, may harm performance by disrupting portfolio management strategies and by increasing expenses. Accordingly, the Fund may reject purchase orders, including exchanges, from market timers or investors that Fund management has determined are short-term or excessive or that will be disruptive to the Fund. For these purposes, Fund management may consider an investor’s trading history in the Fund or other Merrill Lynch funds, and accounts under common ownership or control.</R>

 

<R>MERRILL LYNCH EQUITY DIVIDEND FUND</R>

25

[ICON]   Your Account

Net Asset Value — the market value of the Fund’s total assets after deducting liabilities, divided by the number of shares outstanding.

HOW SHARES ARE PRICED

When you buy shares, you pay the net asset value , plus any applicable sales charge. This is the offering price. Shares are also redeemed at their net asset value, minus any applicable deferred sales charge. The Fund calculates its net asset value (generally by using market quotations) each day the New York Stock Exchange is open as of the close of business on the Exchange, based on prices at the time of closing. The Exchange generally closes at 4:00 p.m. Eastern time. If events that are expected to materially affect the value of securities traded in other markets occur between the close of those markets and the close of business on the New York Stock Exchange, those securities may be valued at their fair value. The net asset value used in determining your share price is the next one calculated after your purchase or redemption order is placed. Foreign securities owned by the Fund may trade on weekends or other days when the Fund does not price its shares. As a result, the Fund’s net asset value may change on days when you will not be able to purchase or redeem the Fund’s shares.

The Fund may accept orders from certain authorized financial intermediaries or their designees. The Fund will be deemed to receive an order when accepted by the intermediary or designee and the order will receive the net asset value next computed by the Fund after such acceptance. If the payment for a purchase order is not made by a designated later time, the order will be canceled and the financial intermediary could be held liable for any losses.

<R>Generally, Class I shares will have the highest net asset value because that class has the lowest expenses, and Class A shares will have a higher net asset value than Class B, Class C or Class R shares and Class R shares will have a higher net asset value than Class B or Class C shares. Also, dividends paid on Class A, Class I and Class R shares will generally be higher than dividends paid on Class B and Class C shares because Class A, Class I and Class R shares have lower expenses.</R>

PARTICIPATION IN FEE-BASED PROGRAMS

<R>If you participate in certain fee-based programs offered by Merrill Lynch or other financial intermediaries, you may be able to buy Class I shares at net asset value, including by exchanges from other share classes. Sales charges on the shares being exchanged may be reduced or waived under certain circumstances.</R>

 

26

<R>MERRILL LYNCH EQUITY DIVIDEND FUND</R>

Dividends — ordinary income and capital gains paid to shareholders. Dividends may be reinvested in additional Fund shares as they are paid.

You generally cannot transfer shares held through a fee-based program into another account. Instead, you will have to redeem your shares held through the program and purchase shares of another class, which may be subject to distribution and account maintenance fees. This may be a taxable event and you will pay any applicable sales charges.

<R>If you leave one of these programs, your shares may be redeemed or automatically exchanged into another class of Fund shares or into a money market fund. The class you receive may be the class you originally owned when you entered the program, or in certain cases, a different class. If the exchange is into Class B shares, the period before conversion to Class A shares may be modified. Any redemption or exchange will be at net asset value. However, if you participate in the program for less than a specified period, you may be charged a fee in accordance with the terms of the program.</R>

Details about these features and the relevant charges are included in the client agreement for each fee-based program and are available from your Merrill Lynch Financial Advisor, selected securities dealer or other financial intermediary.

DIVIDENDS AND TAXES

<R>The Fund will distribute net investment income quarterly and net realized capital gains, if any, at least annually. The Fund may also pay a special distribution at the end of the calendar year to comply with Federal tax requirements. If you would like to receive dividends in cash, contact your Merrill Lynch Financial Advisor, selected securities dealer, other financial intermediary or the Transfer Agent. Capital gains may be taxable to you at lower rates, depending on how long the Fund held the assets sold.

You will pay tax on dividends from the Fund whether you receive them in cash or additional shares. If you redeem Fund shares or exchange them for shares of another fund, you generally will be treated as having sold your shares and any gain on the transaction may be subject to tax. Recently enacted legislation reduces the tax rate on certain dividend income, including dividends received from some foreign corporations, and long-term capital<R>

 

<R>MERRILL LYNCH EQUITY DIVIDEND FUND</R>

27

[ICON]   Your Account

“BUYING A DIVIDEND”

Unless your investment is in a tax-deferred account, you may want to avoid buying shares shortly before the Fund pays a dividend. The reason? If you buy shares when a fund has realized but not yet distributed ordinary income or capital gains, you will pay the full price for the shares and then receive a portion of the price back in the form of a taxable dividend. Before investing you may want to consult your tax adviser

<R>gain. To the extent that the Fund’s distributions are derived from qualifying dividend income and long-term capital gain, such distributions will be eligible for taxation at a reduced rate.

If you are neither a lawful permanent resident nor a citizen of the United States or if you are a foreign entity, the Fund’s ordinary income dividends (which include distributions of the excess of net short term capital gains over net long term capital losses) will generally be subject to a 30% U.S. withholding tax, unless a lower treaty rate applies.</R>

By law your dividends and redemption proceeds will be subject to a withholding tax if you have not provided a taxpayer identification number or social security number or if the number you have provided is incorrect.

<R>This section summarizes some of the consequences under current Federal tax law of an investment in the Fund. It is not a substitute for personal tax advice. Consult your personal tax adviser about the potential tax consequences of an investment in the Fund under all applicable tax laws.</R>

ELECTRONIC DELIVERY

<R>The Fund is now offering electronic delivery of communications to its shareholders. In order to receive this service, you must register your account and provide us with e-mail information. To sign up for this service, simply access this website http://www.icsdelivery.com/live/ and follow the instructions. When you visit the site, you will obtain a personal identification number (PIN). You will need this PIN should you wish to update your e-mail address, choose to discontinue this service and/or make any other changes to the service. This service is not available for certain retirement accounts at this time.</R>

 

28

<R>MERRILL LYNCH EQUITY DIVIDEND FUND</R>

Management of the Fund     [ICON]

MERRILL LYNCH INVESTMENT MANAGERS

<R>Merrill Lynch Investment Managers, the Fund’s Manager, manages the Fund’s investments and its business operations under the overall supervision of the Fund’s Board of Trustees. The Manager has the responsibility for making all investment decisions for the Fund. The Manager has a sub-advisory agreement with Merrill Lynch Asset Management U.K. Limited, an affiliate, under which the Manager may pay a fee for services it receives. For the fiscal year ended July 31, 2003, the Manager received a fee at the annual rate of 0.60% of the Fund’s average daily net assets.

Merrill Lynch Investment Managers was organized as an investment adviser in 1976 and offers investment advisory services to more than 50 registered investment companies. Merrill Lynch Asset Management U.K. Limited was organized as an investment adviser in 1986 and acts as sub-adviser to more than 50 registered investment companies. Merrill Lynch Investment Managers and its affiliates had approximately $492 billion in investment company and other portfolio assets under management as of October 2003.</R>

 

<R>MERRILL LYNCH EQUITY DIVIDEND FUND</R>

29

[ICON]   Management of the Fund

FINANCIAL HIGHLIGHTS

The Financial Highlights table is intended to help you understand the Fund’s financial performance for the past five years. Certain information reflects the financial results for a single Fund share. The total returns in the table represent the rate an investor would have earned or lost on an investment in the Fund (assuming reinvestment of all dividends). The information has been audited by Deloitte & Touche LLP , whose report, along with the Fund’s financial statements, is included in the Fund’s Annual Report, which is available upon request.<R>

	Class A*										Class B
	For the Year Ended July 31,										For the Year Ended July 31,
Increase (Decrease) in   Net Asset Value:	2003		2002		2001		2000		1999		2003		2002		2001		2000		1999
Per Share Operating Performance:
Net asset value, beginning of year	$10.49		$12.29		$12.70		$14.27		$15.36		$10.53		$12.33		$12.73		$14.29		$15.38
Investment income — net†	.15		.14		.16		.28		.32		.07		.05		.07		.18		.21
Realized and unrealized gain   (loss) on investments
and foreign currency transactions — net	.44		(1.30	)	1.07		(.95	)	1.41		.43		(1.30	)	1.07		(.94	)	1.41
Total from investment operations	.59		(1.16	)	1.23		(.67	)	1.73		.50		(1.25	)	1.14		(.76	)	1.62
Less dividends and distributions:
Investment income — net	(.14	)	(.13	)	(.18	)	(.28	)	(.32	)	(.06	)	(.04	)	(.08	)	(.18)		(.21	)
Realized gain on investments — net	—		(.51	)	(1.46	)	(.62	)	(2.50	)	—		(.51	)	(1.46	)	(.62	)	(2.50	)
Total dividends and distributions	(.14	)	(.64	)	(1.64	)	(.90	)	(2.82	)	(.06	)	(.55	)	(1.54	)	(.80	)	(2.71	)
Net asset value, end of year	$10.94		$10.49		$12.29		$12.70		$14.27		$10.97		$10.53		$12.33		$12.73		$14.29
Total Investment Return:**
Based on net asset value per share	5.72	%	(9.77	%)	10.12	%	(4.68	%)	13.88	%	4.79	%	(10.45	%)	9.32	%	(5.39	%)	12.96	%
Ratios to Average Net Assets:
Expenses	1.20	%	1.20	%	1.33	%	1.20	%	1.12	%	1.98	%	1.98	%	2.11	%	1.97	%	1.89	%
Investment income — net	1.46	%	1.18	%	1.30	%	2.10	%	2.26	%	.69	%	.40	%	.52	%	1.35	%	1.48	%
Supplemental Data:
Net assets, end of year (in thousands)	$98,558		$82,956		$97,609		$97,517		$127,743		$53,429		$44,371		$49,383		$43,289		$75,330
Portfolio turnover	11.72	%	25.82	%	61.08	%	32.33	%	20.11	%	11.72	%	25.82	%	61.08	%	32.33	%	20.11	%

*

Prior to April 14, 2003, Class A shares of the Fund were designated Class D.

**

Total investment returns exclude the effects of sales charges. </R>

†

Based on average shares outstanding.

 

30

<R>MERRILL LYNCH EQUITY DIVIDEND FUND</R>

FINANCIAL HIGHLIGHTS (concluded)

<R>
	Class C										Class I*										Class R
	For the Year Ended July 31,										For the Year Ended July 31,										For the Period January 3, 2003‡  to July 31, 2003
Increase (Decrease) in   Net Asset Value:	2003		2002		2001		2000		1999		2003		2002		2001		2000		1999
Per Share Operating Performance:
Net asset value, beginning of     year/period	$10.35		$12.15		$12.58		$14.14		$15.25		$10.49		$12.30		$12.70		$14.27		$15.36		$10.38
Investment income — net†	.07		.04		.05		.17		.20		.18		.16		.18		.31		.35		.04
Realized and unrealized gain
(loss) on investments
and foreign currency transactions — net	.43		(1.27	)	1.14		(.93	)	1.40		.43		(1.30	)	1.09		(.94	)	1.42		.60
Total from investment operations	.50		(1.23	)	1.19		(.76	)	1.60		.61		(1.14	)	1.27		(.63	)	1.77		.64
Less dividends and distributions:
Investment income — net	(.06	)	(.06	)	(.16	)	(.18	)	(.21	)	(.16	)	(.16	)	(.21	)	(.32	)	(.36	)	—
Realized gain on investments — net	—		(.51	)	(1.46	)	(.62	)	(2.50	)	—		(.51	)	(1.46	)	(.62	)	(2.50	)	—
Total dividends and distributions	(.06	)	(.57	)	(1.62	)	(.80	)	(2.71	)	(.16	)	(.67	)	(1.67	)	(.94	)	(2.86	)	—
Net asset value, end of year/period	$10.79		$10.35		$12.15		$12.58		$14.14		$10.94		$10.49		$12.30		$12.70		$14.27		$11.02
Total Investment Return:**
Based on net asset value per share	4.89	%	(10.50	%)	9.31	%	(5.39	%)	12.96	%	5.98	%	(9.61	%)	10.48	%	(4.44	%)	14.15	%	7.01	%#
Ratios to Average Net Assets:
Expenses	1.98	%	1.97	%	2.12	%	1.98	%	1.90	%	0.95	%	.95	%	1.10	%	.95	%	.87	%	1.45	%##
Investment income — net	.69	%	.38	%	.44	%	1.33	%	1.45	%	1.72	%	1.42	%	1.47	%	2.35	%	2.50	%	1.10	%##
Supplemental Data:
Net assets, end of year/period
(in thousands)	$29,947		$24,748		$12,961		$4,294		$5,347		$102,651		$51,345		$45,085		$19,114		$25,477		$14
Portfolio turnover	11.72	%	25.82	%	61.08	%	32.33	%	20.11	%	11.72	%	25.82	%	61.08	%	32.33	%	20.11	%	11.72	%

*

Prior to April 14, 2003, Class I shares of the Fund were designated Class A.

**

Total investment returns exclude the effects of sales charges.

†

Based on average shares outstanding.

† †

Commencement of Operations.

#

Aggregate total investment return.

##

Annualized.</R>

 

<R>MERRILL LYNCH EQUITY DIVIDEND FUND</R>

31

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<R>MERRILL LYNCH EQUITY DIVIDEND FUND</R>

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<R>MERRILL LYNCH EQUITY DIVIDEND FUND</R>

[1]	POTENTIAL INVESTORS Open an account (two options).	[2]
MERRILL LYNCH FINANCIAL ADVISOR OR SECURITIES DEALER Advises shareholders on their Fund investments.		TRANSFER AGENT Financial Data Services, Inc. ADMINISTRATIVE OFFICES 4800 Deer Lake Drive East Jacksonville, Florida 32246-6484 MAILING ADDRESS P.O. Box 45289 Jacksonville, Florida 32232-5289 Performs recordkeeping and reporting services.
	DISTRIBUTOR FAM Distributors, Inc. P.O. Box 9081 Princeton, New Jersey 08543-9081 Arranges for the sale of Fund shares.
COUNSEL <R> Shearman & Sterling LLP 599 Lexington Avenue New York, New York 10022-6069</R> Provides legal advice to the Fund.	THE FUND The Board of Trustees oversees the Fund.	CUSTODIAN State Street Bank and Trust Company One Heritage Drive P2N North Quincy, MA 02171 Holds the Fund’s assets for safekeeping.
INDEPENDENT AUDITORS Deloitte & Touche LLP <R>750 College Road East Princeton, New Jersey 08540</R> Audits the financial statements of the Fund.	ACCOUNTING SERVICES PROVIDER State Street Bank and Trust Company 500 College Road East Princeton, New Jersey 08540 Provides certain accounting services to the Fund.	MANAGER Merrill Lynch Investment Manager, L.P. ADMINISTRATIVE OFFICES 800 Scudders Mill Road Plainsboro, New Jersey 08536 MAILING ADDRESS P.O. Box 9011 Princeton, New Jersey 08543-9011 TELEPHONE NUMBER 1-800-MER-FUND Manager of the Fund. Manages the Fund’s day-to-day activities. Merrill Lynch Asset Management U.K. Limited 33 King William Street London, EC4R 9AS England Sub-Adviser to the Fund.

 

<R>MERRILL LYNCH EQUITY DIVIDEND FUND</R>

[ICON] For More Information

Shareholder Reports

Additional information about the Fund’s investments is available in the Fund’s Annual and Semi-Annual Reports to shareholders. In the Fund’s Annual Report you will find a discussion of the market conditions and investment strategies that significantly affected the Fund’s performance during its last fiscal year. You may obtain these reports at no cost by calling 1-800-MER-FUND.

The Fund will send you one copy of each shareholder report and certain other mailings, regardless of the number of Fund accounts you have. To receive separate shareholder reports for each account, call your Merrill Lynch Financial Advisor or other financial intermediary or write to the Transfer Agent at its mailing address. Include your name, address, tax identification number and Merrill Lynch brokerage or mutual fund account number. If you have any questions, please call your Merrill Lynch Financial Advisor or other financial intermediary or call the Transfer Agent at 1-800-MER-FUND.

Statement of Additional Information

<R>The Statement of Additional Information contains further information about the Fund. The portions of the Statement of Additional Information relating to the Fund are incorporated by reference into (legally considered part of) this Prospectus. The portions of the Statement of Additional Information that do not relate to the Fund are not incorporated by reference, are not part of this Prospectus, and should not be relied on by investors in the Fund. You may request a free copy by writing the Fund at Financial Data Services, Inc., P.O. Box 45289, Jacksonville, Florida 32232-5289 or by calling 1-800-MER-FUND.

Information about the Fund (including the Statement of Additional Information) can be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-202-942-8090 for information on the operation of the public reference room. This information is also available on the SEC’s Internet site at http://www.sec.gov and copies may be obtained, upon payment of a duplicating fee, by electronic request at the following E-mail address: publicinfo@sec.gov, or by writing the Public Reference Section of the SEC, Washington, D.C. 20549-0102.</R>

You should rely only on the information contained in this Prospectus. No one is authorized to provide you with information that is different from the information contained in this Prospectus.

Investment Company Act file #811-5178 <R>Code #10559-11-03</R> ®Merrill Lynch Investment Managers, L.P.

[LOGO]     Merrill Lynch   Investment Managers

Prospectus

<R>November 24, 2003

Merrill Lynch Equity Dividend Fund </R>

This Prospectus contains information you should know before investing, including information about risks. Please read it before you invest and keep it for future reference.

The Securities and Exchange Commission has not approved or disapproved these securities or passed upon the adequacy of this Prospectus. Any representation to the contrary is a criminal offense.

www.mlim.ml.com

STATEMENT OF ADDITIONAL INFORMATION

M ERRILL L YNCH E QUITY D IVIDEND F UND

P.O. Box 9011, Princeton, New Jersey 08543-9011 • Phone No. (609) 282-2800

This Statement of Additional Information of the Merrill Lynch Equity Dividend Fund (the “Fund”) is not a prospectus and should be read in conjunction with the Prospectus of the Fund, dated November 24, 2003, which has been filed with the Securities and Exchange Commission (the “Commission”) and can be obtained, without charge, by calling 1-800-MER-FUND or by writing to the Fund at the above address. The Fund’s Prospectus is incorporated by reference into this Statement of Additional Information, and Part I of this Statement of Additional Information and the portions of Part II of this Statement of Additional Information that relate to the Fund have been incorporated by reference into the Fund’s Prospectus. The portions of Part II of this Statement of Additional Information that do not relate to the Fund do not form a part of the Fund’s Statement of Additional Information, have not been incorporated by reference into the Fund’s Prospectus and should not be relied upon by investors in the Fund. The Fund’s audited financial statements are incorporated by reference into this Statement of Additional Information by reference to the Fund’s 2003 Annual Report. You may request a copy of the Annual Report at no charge by calling 1-800-637-3863 between 8:30 a.m. and 5:30 p.m. Eastern time on any business day.

M ERRILL L YNCH I NVESTMENT M ANAGERS, L.P. – M ANAGER

FAM D ISTRIBUTORS , I NC . – D ISTRIBUTOR

The date of this Statement of Additional Information is November 24, 2003

Table Of Contents

Part I
Investment Objectives and Policies		I-1
Investment Restrictions		I-1
Information on Trustees and Officers		I-3
Management and Advisory Arrangements		I-6
Information on Sales Charges and Distribution Related Expenses		I-7
Computation of Offering Price		I-9
Portfolio Transactions and Brokerage		I-9
Fund Performance		I-9
Additional Information		I-10
Financial Statements		I-11
Part II
Investment Risks and Considerations		II-1
Management and other Service Arrangements		II-27
Purchase of Shares		II-30
Redemption of Shares		II-38
Shareholder Services		II-39
Pricing of Shares		II-44
Portfolio Transactions and Brokerage		II-45
Dividends and Taxes		II-48
Performance Data		II-51
Proxy Voting Policies and Procedures		II-53
General Information		II-56
Appendix A		A-1

PART I: SPECIAL INFORMATION ABOUT MERRILL LYNCH EQUITY DIVIDEND FUND, INC.

Part I of this Statement of Additional Information sets forth information about Merrill Lynch Equity Dividend Fund (the “Fund”). It includes information about the Fund’s Board of Trustees, the advisory services provided to and the management fees paid by the Fund, performance data for the Fund, and information about other fees paid by and services provided to the Fund. This Part I should be read in conjunction with the Fund’s Prospectus and those portions of Part II of this Statement of Additional Information that pertain to the Fund.

I. Investments Objectives and Policies

The investment objective of the Fund is to seek long-term total return and current income. The Fund seeks to achieve its objective by investing primarily in a diversified portfolio of equity securities. Total return consists of increases in value from both capital appreciation and income. The Fund’s investment objective is a fundamental policy of the Fund 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 of 1940, as amended (the “Investment Company Act”). Under normal circumstances, the Fund invests at least 80% of its net assets in equity securities and at least 80% of its net assets in dividend paying securities. For these purposes, net assets include any borrowings for investment purposes. The Fund is classified as a diversified fund under the Investment Company Act.

The Fund will focus on issuers that have good prospects for capital appreciation. Merrill Lynch Investment Managers, L.P. (“MLIM” or the “Manager”) believes that stocks that have yields often provide more attractive long-term total return and greater price stability during periods of downward movements in market prices than stocks that do not pay dividends. In selecting portfolio securities, the Fund will generally employ a value-oriented analysis, but may purchase equity securities based on a growth-oriented analysis when such securities pay dividends or Fund management believes such securities have particularly good prospects for capital appreciation. The Fund emphasizes investments in large companies. The Fund’s portfolio, in the aggregate, will be structured in a manner designed to produce potential long-term capital appreciation as well as a net portfolio yield in excess of the average of mutual funds invested primarily in U.S. equities. The Fund may engage in various portfolio strategies involving options and futures to seek to increase its return or to hedge its portfolio against movements in the equity markets, interest rates and exchange rates between currencies.

In addition to common stocks, the Fund may also invest in securities convertible into common stocks, non-convertible preferred stocks and debt securities and utilize the other investment practices described below. The Fund may invest in debt securities of any maturity that are rated in the four highest quality ratings as determined by either Moody’s Investor Service, Inc. (currently Aaa, Aa, A and Baa for bonds) or Standard & Poor’s (currently AAA, AA, A and BBB for bonds). The Fund reserves the right to hold, as a temporary defensive measure or as a reserve for redemptions, short-term U.S. Government securities, money market securities, including repurchase agreements, or cash in such proportions as, in the opinion of the Manager, prevailing market or economic conditions warrant. Except during temporary defensive periods, such securities or cash will not exceed 20% of its total assets.