AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 27, 1995
SECURITIES ACT FILE NO. 2-97095
INVESTMENT COMPANY ACT FILE NO. 811-4282
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
PRE-EFFECTIVE AMENDMENT NO. / /
POST-EFFECTIVE AMENDMENT NO. 11 /X/
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
AMENDMENT NO. 13 /X/
(CHECK APPROPRIATE BOX OR BOXES)
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MERRILL LYNCH GLOBAL RESOURCES TRUST
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
800 SCUDDERS MILL ROAD
PLAINSBORO, NEW JERSEY 08536
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
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REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (609) 282-2800
ARTHUR ZEIKEL
MERRILL LYNCH GLOBAL RESOURCES TRUST
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 TRUST:
BROWN & WOOD PHILIP L. KIRSTEIN, ESQ.
ONE WORLD TRADE CENTER MERRILL LYNCH ASSET MANAGEMENT
NEW YORK, NEW YORK 10048-0557 P.O. BOX 9011
ATTENTION: THOMAS R. SMITH, JR. PRINCETON, NEW JERSEY 08543-9011
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IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK APPROPRIATE BOX)
/X/ immediately upon filing pursuant to paragraph (b)
/ / on (date) pursuant to paragraph (b)
/ / 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:
THE REGISTRANT HAS REGISTERED AN INDEFINITE NUMBER OF SHARES OF BENEFICIAL INTEREST UNDER THE SECURITIES ACT OF 1933 PURSUANT TO RULE 24f-2 UNDER THE INVESTMENT COMPANY ACT OF 1940. THE NOTICE REQUIRED BY SUCH RULE FOR THE REGISTRANT'S MOST RECENT FISCAL YEAR WAS FILED ON SEPTEMBER 21, 1995.
CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
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AMOUNT OF PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SECURITIES SHARES BEING OFFERING PRICE AGGREGATE AMOUNT OF
BEING REGISTERED REGISTERED PER UNIT OFFERING PRICE REGISTRATION FEE
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Shares of Beneficial Interest (par
value $.10 per share)........... 9,314,329 $16.57 $289,992 $100
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*(1) The calculation of the maximum aggregate offering price is made pursuant to Rule 24e-2 under the Investment Company Act of 1940.
(2) The total amount of securities redeemed or repurchased during Registrant's previous fiscal year was 9,296,828 shares.
MERRILL LYNCH GLOBAL RESOURCES TRUST
REGISTRATION STATEMENT ON FORM N-1A
CROSS REFERENCE SHEET
N-1A ITEM NO. LOCATION
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PART A
Item 1. Cover Page............................... Cover Page
Item 2. Synopsis................................. Fee Table
Item 3. Condensed Financial Information.......... Financial Highlights
Item 4. General Description of Registrant........ Investment Objectives and Policies;
Additional Information
Item 5. Management of the Fund................... Fee Table; Management of the Trust;
Portfolio Transactions and Brokerage;
Inside Back Cover Page
Item 5A. Management's Discussion of Fund
Performance............................ Not Applicable
Item 6. Capital Stock and Other Securities....... Cover Page; Purchase of Shares;
Redemption of Shares; Shareholder
Services; Additional Information
Item 7. Purchase of Securities Being Offered..... Cover Page; Fee Table; Merrill Lynch
Select PricingSM System; Purchase of
Shares; Shareholder Services;
Additional Information; Inside Back
Cover Page
Item 8. Redemption or Repurchase................. Fee Table; Merrill Lynch Select
PricingSM; Purchase of Shares;
Redemption of Shares
Item 9. Pending Legal Proceedings................ Not Applicable
PART B
Item 10. Cover Page............................... Cover Page
Item 11. Table of Contents........................ Back Cover Page
Item 12. General Information and History.......... Not Applicable
Item 13. Investment Objectives and Policies....... Investment Objectives and Policies
Item 14. Management of the Fund................... Management of the Trust
Item 15. Control Persons and Principal Holders of
Securities............................. Management of the Trust; General
Information--Additional Information
Item 16. Investment Advisory and Other Services... Management of the Trust; Purchase of
Shares; General Information
Item 17. Brokerage Allocation..................... Portfolio Transactions and Brokerage
Item 18. Capital Stock and Other Securities....... General Information
Item 19. Determination of Net Asset Value;
Purchase, Redemption and Pricing of
Securities Being Offered............... Purchase of Shares; Redemption of
Shares; Determination of Net Asset
Value; Shareholder Services
Item 20. Tax Status............................... Dividends, Distributions and Taxes
Item 21. Underwriters............................. Purchase of Shares
Item 22. Calculation of Performance Data.......... Performance Data
Item 23. Financial Statements..................... Financial Statements
PART C
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Information required to be included in Part C is set forth under the appropriate Item, so numbered, in Part C to this Registration Statement.
PROSPECTUS
NOVEMBER 27, 1995
The investment objectives of Merrill Lynch Global Resources Trust (the "Trust") are to achieve long-term growth of capital and to protect the purchasing power of shareholders' capital by investing in a portfolio of equity securities of domestic and foreign companies with substantial natural resource assets. The Trust may also invest in debt, preferred or convertible securities, the value of which is related to the market value of some natural resource asset ("asset-based securities"). Management of the Trust will seek to identify securities it believes are attractively priced relative to the intrinsic value of related natural resource assets or are especially well-positioned to benefit during particular portions of inflationary cycles. The Trust's fully managed investment approach enables it to switch its emphasis among various natural resource industry groups depending upon management's outlook with respect to prevailing trends and developments. It is expected that when management of the Trust anticipates significant economic, political or financial instability, such as high inflationary pressures or upheaval in the foreign currencies exchange markets, the Trust may invest a majority of its assets in gold-related securities. Current income from dividends and interest will not be a primary consideration in selecting securities. There can be no assurance that the Trust's investment objective will be achieved. For more information on the Trust's investment objectives and policies, please see "Investment Objectives and Policies" on page 11.
Pursuant to the Merrill Lynch Select PricingSM System, the Trust offers four classes of shares, each with a different combination of sales charges, ongoing fees and other features. The Merrill Lynch Select PricingSM System permits an investor to choose the method of purchasing shares that the investor believes is most beneficial given the amount of the purchase, the length of time the investor expects to hold the shares and other relevant circumstances. See "Merrill Lynch Select PricingSM System" on page 3.
Shares may be purchased directly from Merrill Lynch Funds Distributor, Inc.
(the "Distributor"), P.O. Box 9081, Princeton, New Jersey 08543-9081 [(609)
282-2800], or from other securities dealers which have entered into dealer
agreements with the Distributor, including Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch"). The minimum initial purchase is $1,000 and the
minimum subsequent purchase is $50, except that for retirement plans the minimum
initial purchase is $100 and the minimum subsequent purchase is $1. Merrill
Lynch may charge its customers a processing fee (presently $4.85) for confirming
purchases and repurchases. Purchases and redemptions directly through the
Trust's transfer agent are not subject to the processing fee. See "Purchase of
Shares" and "Redemption of Shares".
This Prospectus is a concise statement of information about the Trust that is relevant to making an investment in the Trust. This Prospectus should be retained for future reference. A statement containing additional information about the Trust, dated November 27, 1995 (the "Statement of Additional Information"), has been filed with the Securities and Exchange Commission (the "Commission") and is available, without charge, by calling or by writing the Trust at the above telephone number or address. The Statement of Additional Information is hereby incorporated by reference into this Prospectus.
FEE TABLE
A general comparison of the sales arrangements and other nonrecurring and recurring expenses applicable to shares of the Trust follows:
CLASS A(a) CLASS B(b) CLASS C CLASS D
----------- ----------------------- ------------ --------
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Charge Imposed on Purchases (as a
percentage of offering price)................. 5.25%(c) None None 5.25%(c)
Sales Charge Imposed on Dividend
Reinvestments................................. None None None None
Deferred Sales Charge (as a percentage of
original purchase price or redemption
proceeds, whichever is lower)................. None(d) 4.0% during the first 1.0% for one None(d)
year, decreasing 1.0% year
annually to 0.0% after
the fourth year
Exchange Fee.................................... None None None None
ANNUAL TRUST OPERATING EXPENSES (AS A PERCENTAGE OF
AVERAGE NET ASSETS)(e):
Investment Advisory Fees(f)..................... 0.60% 0.60% 0.60% 0.60%
12b-1 Fees(g):
Account Maintenance Fees...................... None 0.25% 0.25% 0.25%
Distribution Fees............................. None 0.75% 0.75% None
(Class B shares
convert to Class D
shares automatically
after approximately
eight years and cease
being subject to
distribution fees)
Other Expenses
Custodial Fees.............................. 0.04% 0.04% 0.04% 0.04%
Shareholder Servicing Costs(h).............. 0.24% 0.26% 0.26% 0.24%
Other....................................... 0.18% 0.18% 0.18% 0.18%
-------- ----- ----- ------
Total Other Expenses.................... 0.46% 0.48% 0.48% 0.46%
-------- ----- ----- ------
TOTAL TRUST OPERATING EXPENSES.................. 1.06% 2.08% 2.08% 1.31%
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(a) Class A shares are sold to a limited group of investors including existing Class A shareholders, certain retirement plans and certain investment programs. See "Purchase of Shares--Initial Sales Charge Alternatives--Class A and Class D Shares"-- page 22.
(b) Class B shares convert to Class D shares automatically approximately eight years after initial purchase. See "Purchase of Shares--Deferred Sales Charge Alternatives--Class B and Class C Shares"--page 24.
(c) Reduced for purchases of $25,000 and over and waived for purchases of Class A shares by certain retirement plans in connection with certain investment programs. Class A or Class D purchases of $1,000,000 or more may not be subject to an initial sales charge. See "Purchase of Shares--Initial Sales Charge Alternatives--Class A and Class D Shares"--page 22.
(d) Class A and Class D shares are not subject to a contingent deferred sales charge (a "CDSC"), except that certain purchases of $1,000,000 or more which may not be subject to an initial sales charge will instead be subject to a CDSC of 1.0% of amounts redeemed within the first year after purchase.
(e) Information for Class A and Class B shares is stated for the fiscal year ended July 31, 1995. Information under "Other Expenses" for Class C and Class D shares is estimated for the fiscal year ending July 31, 1996.
(f) See "Management of the Trust--Management and Advisory Arrangements"--page 18.
(g) See "Purchase of Shares--Distribution Plans"--page 28.
(h) See "Management of the Trust--Transfer Agency Services"--page 20.
EXAMPLE:
CUMULATIVE EXPENSES PAID FOR THE PERIOD
OF:
----------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
An investor would pay the following expenses on a
$1,000 investment including the maximum $52.50
initial sales charge (Class A and Class D shares
only) and assuming (1) the Total Trust Operating
Expenses for each class set forth above, (2) a 5%
annual return throughout the periods and (3)
redemption at the end of the period:
Class A........................................... $ 63 $84 $ 108 $175
Class B........................................... $ 61 $85 $ 112 $222*
Class C........................................... $ 31 $65 $ 112 $241
Class D........................................... $ 65 $92 $ 121 $202
An investor would pay the following expenses on the
same $1,000 investment assuming no redemption at the
end of the period:
Class A........................................... $ 63 $84 $ 108 $175
Class B........................................... $ 21 $65 $ 112 $222*
Class C........................................... $ 21 $65 $ 112 $241
Class D........................................... $ 65 $92 $ 121 $202
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The foregoing Fee Table is intended to assist investors in understanding the costs and expenses that a shareholder in the Trust will bear directly or indirectly. The Example set forth above assumes reinvestment of all dividends and distributions and utilizes a 5% annual fee rate of return as mandated by Commission regulations. THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR ANNUAL RATE OF RETURN, AND ACTUAL EXPENSES OR ANNUAL RATE OF RETURN MAY BE MORE OR LESS THAN THOSE ASSUMED FOR PURPOSES OF THE EXAMPLE. Class B and Class C shareholders who hold their shares for an extended period of time may pay more in Rule 12b-1 distribution fees than the economic equivalent of the maximum front-end sales charges permitted under the Rules of Fair Practice of the National Association of Securities Dealers, Inc. (the "NASD"). Merrill Lynch may charge its customers a processing fee (presently $4.85) for confirming purchases and redemptions. Purchases and redemptions directly through the Trust's transfer agent are not subject to the processing fee. See "Purchase of Shares" and "Redemption of Shares".
MERRILL LYNCH SELECT PRICING(SM) SYSTEM
The Trust offers four classes of shares under the Merrill Lynch Select Pricing(SM) System. The shares of each class may be purchased at a price equal to the next determined net asset value per share subject to the sales charges and ongoing fee arrangements described below. Shares of Class A and Class D are sold to investors choosing the initial sales charge alternatives, and shares of Class B and Class C are sold to investors choosing the deferred sales charge alternatives. The Merrill Lynch Select Pricing(SM) System is used by more than 50 mutual funds advised by Merrill Lynch Asset Management, L.P. ("MLAM" or the "Investment Adviser") or Fund Asset Management, L.P. ("FAM") an affiliate of MLAM. Funds advised by MLAM or
FAM which use the Merrill Lynch Select PricingSM System are referred to herein as "MLAM-advised mutual funds".
Each Class A, Class B, Class C or Class D share of the Trust represents an identical interest in the investment portfolio of the Trust and has the same rights, except that Class B, Class C and Class D shares bear the expenses of the ongoing account maintenance fees and Class B and Class C shares bear the expenses of the ongoing distribution fees and the additional incremental transfer agency costs resulting from the deferred sales charge arrangements. The deferred sales charges and account maintenance fees that are imposed on Class B and Class C shares, as well as the account maintenance fees that are imposed on the Class D shares, are imposed directly against those classes and not against all assets of the Trust and, accordingly, such charges do not affect the net asset value of any other class or have any impact on investors choosing another sales charge option. Dividends paid by the Trust for each class of shares are calculated in the same manner at the same time and will differ only to the extent that account maintenance and distribution fees and any incremental transfer agency costs relating to a particular class are borne exclusively by that class. Each class has different exchange privileges. See "Shareholder Services--Exchange Privilege".
Investors should understand that the purpose and function of the initial sales charges with respect to the Class A and Class D shares are the same as those of the deferred sales charges with respect to the Class B and Class C shares in that the sales charges applicable to each class provide for the financing of the distribution of the shares of the Trust. The distribution-related revenues paid with respect to a class will not be used to finance the distribution expenditures of another class. Sales personnel may receive different compensation for selling different classes of shares.
The following table sets forth a summary of the distribution arrangements for each class of shares under the Merrill Lynch Select PricingSM System, followed by a more detailed description of each class and a discussion of the factors that investors should consider in determining the method of purchasing shares under the Merrill Lynch Select PricingSM System that the investor believes is the most beneficial under his or her particular circumstances. More detailed information as to each class of shares is set forth under "Purchase of Shares".
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ACCOUNT
MAINTENANCE DISTRIBUTION
CLASS SALES CHARGE(1) FEE FEE CONVERSION FEATURE
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A Maximum 5.25% initial sales
charge(2)(3) No No No
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B CDSC for a period of up to 4 years, B shares convert to
at a rate of 4.0% during the D shares
first year, decreasing 1.0% automatically after
annually to 0.0% 0.25% 0.75% eight years(4)
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C 1.0% CDSC for one year 0.25% 0.75% No
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D Maximum 5.25% initial sales charge(3) 0.25% No No
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(Footnotes on following page)
(Footnotes for preceding page)
(1) Initial sales charges are imposed at the time of purchase as a percentage of the offering price. CDSCs are imposed if the redemption occurs within the applicable CDSC time period. The charge will be assessed on an amount equal to the lesser of the proceeds of redemption or the cost of the shares being redeemed.
(2) Offered only to eligible investors. See "Purchase of Shares--Initial Sales Charge Alternatives--Class A and Class D Shares--Eligible Class A Investors".
(3) Reduced for purchases of $25,000 or more and waived for purchases of Class A shares by certain retirement plans in connection with certain investment programs. Class A and Class D share purchases of $1,000,000 or more may not be subject to an initial sales charge but, if the initial sales charge is waived, will be subject to a 1.0% CDSC for one year. See "Class A" and "Class D" below.
(4) The conversion period for dividend reinvestment shares and the conversion and holding periods for certain retirement plans are modified. Also, Class B shares of certain other MLAM-advised mutual funds into which exchanges may be made have a ten year conversion period. If Class B shares of the Trust are exchanged for Class B shares of another MLAM-advised mutual fund, the conversion period applicable to the Class B shares acquired in the exchange will apply, and the holding period for the shares exchanged will be tacked onto the holding period for the shares acquired.
Class A: Class A shares incur an initial sales charge when they are purchased and bear no ongoing distribution or account maintenance fees. Class A shares of the Trust are offered to a limited group of investors and also will be issued upon reinvestment of dividends on outstanding Class A shares of the Trust. Investors that currently own Class A shares of the Trust in a shareholder account are entitled to purchase additional Class A shares of the Trust in that account. Other eligible investors include certain retirement plans and participants in certain investment programs. In addition, Class A shares will be offered to Merrill Lynch & Co., Inc. ("ML & Co.") and its subsidiaries (the term "subsidiaries", when used herein with respect to ML & Co., includes the Investment Adviser, FAM and certain other entities directly or indirectly wholly-owned and controlled by ML & Co.) and their directors and officers, and to members of the Boards of MLAM-advised mutual funds. The maximum initial sales charge is 5.25%, which is reduced for purchases of $25,000 and over, and waived for purchases by certain retirement plans in connection with certain investment programs. Purchases of $1,000,000 or more may not be subject to an initial sales charge, but if the initial sales charge is waived such purchases will be subject to a 1.0% CDSC if the shares are redeemed within one year after purchase. Sales charges are also reduced under a right of accumulation which takes into account the investor's holdings of all classes of all MLAM-advised mutual funds. See "Purchase of Shares--Initial Sales Charge Alternatives--Class A and Class D Shares".
Class B: Class B shares do not incur a sales charge when they are purchased, but they are subject to an ongoing account maintenance fee of 0.25% and an ongoing distribution fee of 0.75%, of the Trust's average net assets attributable to the Class B shares, and a CDSC if they are redeemed within four years of purchase. Approximately eight years after issuance, Class B shares will convert automatically into Class D shares of the Trust, which are subject to an account maintenance fee but no distribution fee; Class B shares of certain other MLAM-advised mutual funds into which exchanges may be made convert into Class D shares automatically after approximately ten years. If Class B shares of the Trust are exchanged for Class B shares of another MLAM-advised mutual fund, the conversion period applicable to the Class B shares acquired in the exchange will apply, and the holding period for the shares exchanged will be tacked onto the holding period for the shares acquired. Automatic conversion of Class B shares into Class D shares will occur at least once a month on the basis of the relative net asset values of the shares of the two classes on the conversion date, without the imposition of any sales load, fee or other charge. Conversion of Class B shares to Class D shares will not be deemed a purchase or sale of the shares for Federal income tax purposes. Shares purchased through reinvestment of dividends on Class B shares also will convert automatically to Class D shares. The conversion period
for dividend reinvestment shares, and the conversion and holding periods for certain retirement plans are modified as described under "Purchase of Shares--Deferred Sales Charge Alternatives--Class B and Class C Shares--Conversion of Class B Shares to Class D Shares".
Class C: Class C shares do not incur a sales charge when they are purchased, but they are subject to an ongoing account maintenance fee of 0.25% and an ongoing distribution fee of 0.75% of the Trust's average net assets attributable to the Class C shares. Class C shares are also subject to a CDSC if they are redeemed within one year of purchase. Although Class C shares are subject to a 1.0% CDSC for only one year (as compared to four years for Class B), Class C shares have no conversion feature and, accordingly, an investor that purchases Class C shares will be subject to distribution fees that will be imposed on Class C shares for an indefinite period subject to annual approval by the Trust's Board of Trustees and regulatory limitations.
Class D: Class D shares incur an initial sales charge when they are purchased and are subject to an ongoing account maintenance fee of 0.25% of the Trust's average net assets attributable to Class D shares. Class D shares are not subject to an ongoing distribution fee or any CDSC when they are redeemed. Purchases of $1,000,000 or more may not be subject to an initial sales charge but if the initial sales charge is waived such purchases will be subject to a CDSC of 1.0% if the shares are redeemed within one year after purchase. The schedule of initial sales charges and reductions for Class D shares is the same as the schedule for Class A shares, except that there is no waiver for purchases by retirement plans in connection with certain retirement programs. Class D shares also will be issued upon conversion of Class B shares as described above under "Class B". See "Purchase of Shares--Initial Sales Charge Alternatives--Class A and Class D Shares".
The following is a discussion of the factors that investors should consider in determining the method of purchasing shares under the Merrill Lynch Select PricingSM System that the investor believes is most beneficial under his or her particular circumstances.
Initial Sales Charge Alternatives. Investors who prefer an initial sales charge alternative may elect to purchase Class D shares or, if an eligible investor, Class A shares. Investors choosing the initial sales charge alternative who are eligible to purchase Class A shares should purchase Class A shares rather than Class D shares because there is an account maintenance fee imposed on Class D shares. Investors qualifying for significantly reduced initial sales charges may find the initial sales charge alternative particularly attractive because similar sales charge reductions are not available with respect to the deferred sales charges imposed in connection with purchases of Class B or Class C shares. Investors not qualifying for reduced initial sales charges who expect to maintain their investment for an extended period of time also may elect to purchase Class A or Class D shares, because over time the accumulated ongoing account maintenance and distribution fees on Class B or Class C shares may exceed the initial sales charge and, in the case of Class D shares, the account maintenance fee. Although some investors that previously purchased Class A shares may no longer be eligible to purchase Class A shares of other MLAM-advised mutual funds, those previously purchased Class A shares, together with Class B, Class C and Class D share holdings, will count toward a right of accumulation which may qualify the investor for reduced initial sales charges on new initial sales charge purchases. In addition, the ongoing Class B and Class C account maintenance and distribution fees will cause Class B and Class C shares to have higher expense ratios, pay lower dividends and have lower total returns than the initial sales charge shares. The ongoing Class D account maintenance fees will cause Class D shares to have a higher expense ratio, pay lower dividends and have a lower total return than Class A shares.
Deferred Sales Charge Alternatives. Because no initial sales charges are deducted at the time of purchase, Class B and Class C shares provide the benefit of putting all of the investor's dollars to work from the time the investment is made. The deferred sales charge alternatives may be particularly appealing to investors who do not qualify for a reduction in initial sales charges. Both Class B and Class C shares are subject to ongoing account maintenance fees and distribution fees; however, the ongoing account maintenance and distribution fees potentially may be offset to the extent any return is realized on the additional funds initially invested in Class B or Class C shares. In addition, Class B shares will be converted into Class D shares of the Trust after a conversion period of approximately eight years, and thereafter investors will be subject to lower ongoing fees.
Certain investors may elect to purchase Class B shares if they determine it to be most advantageous to have all of their funds invested initially and intend to hold their shares for an extended period of time. Investors in Class B shares should take into account whether they intend to redeem their shares within the CDSC period and, if not, whether they intend to remain invested until the end of the conversion period and thereby take advantage of the reduction in ongoing fees resulting from the conversion into Class D shares. Other investors, however, may elect to purchase Class C shares if they determine that it is advantageous to have all of their assets invested initially and they are uncertain as to the length of time they intend to hold their assets in MLAM-advised mutual funds. Although Class C shareholders are subject to a shorter CDSC period at a lower rate, they forego the Class B conversion feature, making their investment subject to account maintenance and distribution fees for an indefinite period of time. In addition, while both Class B and Class C distribution fees are subject to the limitations on asset-based sales charges imposed by the NASD, the Class B distribution fees are further limited under a voluntary waiver of asset-based sales charges. See "Purchase of Shares--Limitations on the Payment of Deferred Sales Charges".
FINANCIAL HIGHLIGHTS
The financial information in the table below has been audited in connection with the annual audits of the financial statements of the Trust by Deloitte & Touche LLP, independent auditors. Financial statements for the year ended July 31, 1995 and the independent auditors' report thereon are included in the Statement of Additional Information. The following per share data and ratios have been derived from information provided in the Trust's audited financial statements. Financial information is not presented for Class A shares for the period August 2, 1985 to October 23, 1988 since no shares of that class were outstanding during that period, and financial information is presented for Class C and Class D shares only for the period October 21, 1994 (commencement of operations) to July 31, 1995. Further information about the performance of the Trust is contained in the Trust's most recent annual report to shareholders which may be obtained, without charge, by calling or by writing the Trust at the telephone number or address on the front cover of this Prospectus.
CLASS A
----------------------------------------------------------------------
FOR THE YEAR ENDED JULY 31,
----------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989+
------- ------- ------- ------- ------ ------ ------
Increase (Decrease) in Net Asset Value:
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.................... $ 15.84 $ 14.07 $ 14.33 $ 15.38 $15.93 $13.63 $12.50
------- ------- ------- ------ ------ ------ ------
Investment income--net.............................. .22 .22 .24 .34 .37 .39 .29
Realized and unrealized gain (loss) on investments
and foreign
currency transactions--net........................ .88 1.69 (.26) (.13) (.47) 2.29 1.03
------- ------- ------- ------ ------ ------ -------
Total from investment operations........................ 1.10 1.91 (.02) .21 (.10) 2.68 1.32
------- ------- ------- ------ ------ ------ -------
Less dividends and distributions:
Investment income--net.............................. (.24) (.14) (.24) (.47) (.41) (.38) (.14)
Realized gain on investments--net................... -- -- -- (.79) (.04) -- (.05)
------- ------- ------- ------ ------ ------ -------
Total dividends and distributions....................... (.24) (.14) (.24) (1.26) (.45) (.38) (.19)
------- ------- ------- ------ ------ ------ ------
Net asset value, end of period.......................... $ 16.70 $ 15.84 $ 14.07 $ 14.33 $15.38 $15.93 $13.63
======= ======= ======= ====== ====== ====== ======
TOTAL INVESTMENT RETURN:**
Based on net asset value per share.................. 7.05% 13.69% (0.05)% 1.66% (0.57)% 19.99% 10.77%
======= ======= ======= ====== ====== ====== ========
RATIOS TO AVERAGE NET ASSETS:
Expenses, excluding account maintenance and
distribution fees................................. 1.06% .92% .95% .97% .95% .93% .86%*
======= ======= ======= ====== ====== ====== ========
Expenses............................................ 1.06% .92% .95% .97% .95% .93% .86%*
======= ======= ======= ====== ====== ====== ========
Investment income--net.............................. 1.34% 1.39% 1.62% 1.82% 2.89% 3.18% 2.66%*
======= ======= ======= ====== ====== ====== ========
SUPPLEMENTAL DATA:
Net assets, end of period (in thousands)............ $28,729 $20,054 $12,087 $11,265 $6,699 $5,440 $1,864
======= ======= ======= ====== ====== ====== ========
Portfolio turnover.................................. 31.64% 54.87% 66.78% 31.43% 71.42% 57.21% 58.60%
======= ======= ======= ====== ====== ====== ========
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FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS B
-------------------------------------------------------
FOR THE YEAR ENDED JULY 31,
-------------------------------------------------------
1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
Increase (Decrease) in Net
Asset Value
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period......................... $ 15.72 $ 14.02 $ 14.26 $ 15.30 $ 15.84
-------- -------- -------- -------- --------
Investment income--net....... .10 .05 .09 .13 .31
Realized and unrealized gain
(loss) on investments and
foreign currency
transactions--net......... .84 1.70 (.24) (.08) (.56)
-------- -------- -------- -------- --------
Total from investment
operations..................... .94 1.75 (.15) .05 (.25)
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net...... (.04) (.05) (.09) (.30) (.25)
Realized gain on
investments--net.......... -- -- -- (.79) (.04)
-------- -------- -------- -------- --------
Total dividends and
distributions................. (.04) (.05) (.09) (1.09) (.29)
-------- -------- -------- -------- --------
Net asset value, end of period... $ 16.62 $ 15.72 $ 14.02 $ 14.26 $ 15.30
======== ======== ======== ======== ========
TOTAL INVESTMENT RETURN:**
Based on net asset value
per share.................. 5.95% 12.52% (1.02)% 0.53% (1.61)%
======== ======== ======== ======== ========
RATIOS TO AVERAGE NET ASSETS:
Expenses, excluding account
maintenance and
distribution fees......... 1.08% .95% .99% 1.00% .99%
======== ======== ======== ======== ========
Expenses.................... 2.08% 1.95% 1.99% 2.00% 1.99%
======== ======== ======== ======== ========
Investment income--net...... .31% .35% .60% .94% 1.85%
======== ======== ======== ======== ========
SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands)............. $141,800 $236,581 $208,113 $254,866 $322,502
======== ======== ======== ======== ========
Portfolio turnover.......... 31.64% 54.87% 66.78% 31.43% 71.42%
======== ======== ======== ======== ========
|
* Annualized.
** Total investment returns exclude the effects of sales loads.
+ Class B shares commenced operations on August 2, 1985.
CLASS B
-------------------------------------------------------
FOR THE YEAR ENDED JULY 31,
-------------------------------------------------------
1990 1989 1988 1987 1986+
-------- -------- -------- -------- --------
Increase (Decrease) in Net
Asset Value
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period........................ $ 13.55 $ 13.89 $ 19.86 $ 10.24 $ 10.00
-------- -------- -------- ---------- --------
Investment income--net...... .33 .27 .16 .11 .11
Realized and unrealized gain
(loss) on investments and
foreign currency
transactions--net......... 2.19 (.06) (4.00) 9.86 .20
-------- -------- -------- ---------- --------
Total from investment
operations.................... 2.52 .21 (3.84) 9.97 .31
-------- -------- -------- ---------- --------
Less dividends and distributions:
Investment income--net...... (.23) (.21) (.15) (.07) (.07)
Realized gain on
investments--net.......... -- (.34) (1.98) (.28) --
-------- -------- -------- ---------- --------
Total dividends and
distributions............... (.23) (.55) (2.13) (.35) (.07)
-------- -------- -------- ---------- --------
Net asset value, end of period.. $ 15.84 $ 13.55 $ 13.89 $ 19.86 $ 10.24
======== ======== ======== ========== ========
TOTAL INVESTMENT RETURN:**
Based on net asset value
per share................. 18.79% 1.94% (20.74)% 100.16% 3.12%
======== ======== ======== ========== ========
RATIOS TO AVERAGE NET ASSETS:
Expenses, exclusing account
maintenance and
distribution fees......... .96% .90% .82% .82% .96%*
======== ======== ======== ========== ========
Expenses.................... 1.96% 1.90% 1.82% 1.82% 1.96%*
======== ======== ======== ========== ========
Investment income--net...... 1.96% 1.83% 1.04% 1.04% 1.12%*
======== ======== ======== ========== ========
SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands)............. $420,951 $481,108 $741,984 $1,190,935 $183,541
======== ======== ======== ========== ========
Portfolio turnover........... 57.21% 58.60% 68.69% 68.82% 49.35%
======== ======== ======== ========== ========
|
* Annualized.
** Total investment returns exclude the effects of sales loads.
+ Class B shares commenced operations on August 2, 1985.
FINANCIAL HIGHLIGHTS (CONCLUDED)
CLASS C CLASS D
------------------ ------------------
FOR THE PERIOD FOR THE PERIOD
OCTOBER 21, 1994+ OCTOBER 21, 1994+
TO JULY 31, TO JULY 31,
------------------ ------------------
1995 1995
------------------ ------------------
Increase (Decrease) in Net Asset Value:
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.................................................. $15.93 $ 15.96
------ --------
Investment income--net............................................................ .05 .12
Realized and unrealized gain on investments and foreign currency
transactions--net................................................................ .62 .66
------ --------
Total from investment operations...................................................... .67 .78
------ --------
Less dividends from investment income -- net.......................................... (.05) (.07)
------ --------
Net asset value, end of period........................................................ $16.55 $ 16.67
====== ========
TOTAL INVESTMENT RETURN:**
Based on net asset value per share................................................ 4.26%# 4.93%#
====== ========
RATIOS TO AVERAGE NET ASSETS:
Expenses, excluding account maintenance and distribution fees..................... 1.20%* 1.14%*
====== ========
Expenses.......................................................................... 2.20%* 1.39%*
====== ========
Investment income--net............................................................ .28%* 1.02%*
====== ========
SUPPLEMENTAL DATA:
Net assets, end of period (in thousands).......................................... $2,800 $107,467
====== ========
Portfolio turnover................................................................ 31.64% 31.64%
====== ========
|
* Annualized.
** Total investment returns exclude the effects of sales loads.
+ Commencement of operations.
# Aggregate total investment return.
SPECIAL CONSIDERATIONS
Because of its emphasis on securities of companies with substantial natural resource assets, the Trust should be considered a vehicle for diversification and not as a balanced investment program.
There are no prescribed geographic limits on companies in which the Trust may invest. Under certain economic, financial and political conditions, the Trust may be invested primarily in foreign securities. Investments in securities of foreign entities and denominated in foreign currencies involve risks not typically involved in domestic investment, including fluctuations in foreign exchange rates, future political and economic development and the possible imposition of exchange controls or other foreign or United States governmental laws or restrictions applicable to such investments. Since the Trust may invest in securities denominated or quoted in currencies other than the U.S. dollar, changes in foreign currency exchange rates may affect the value of investments in the portfolio and the unrealized appreciation or depreciation of investments insofar as U.S. investors are concerned. Changes in foreign currency exchange rates relative to the U.S. dollar will affect the U.S. dollar value of the Trust's assets denominated in that currency and the Trust's yield on such assets. Foreign currency exchange rates are determined by forces of supply and demand on the foreign exchange markets. These forces are, in turn, affected by the international balance of payments and other economic and financial conditions, government intervention, speculation, and other factors. Moreover, individual foreign economies may differ favorably or unfavorably from the U.S. economy in such respects as growth of gross national product, rate of inflation, capital reinvestment, resources, self-sufficiency and balance of payments position.
With respect to certain foreign countries, there is the possibility of expropriation of assets, confiscatory taxation, political or social instability or diplomatic developments which could affect investment in those countries. There may be less publicly available information about a foreign financial instrument than about a U.S. instrument, and foreign entities may not be subject to accounting, auditing and financial reporting standards and requirements comparable to those of U.S. entities. In addition, certain foreign investments may be subject to foreign withholding taxes. Investors will be able to deduct such taxes in computing their taxable income or to use such amounts as credits against their U.S. income taxes if more than 50% of the Trust's total assets at the close of any taxable year consist of stock or securities in foreign corporations. See "Additional Information--Taxes". Foreign financial markets, while growing in volume, have, for the most part, substantially less volume than United States markets, and securities of many foreign companies are less liquid and their prices more volatile than securities of comparable domestic companies. The foreign markets also have different clearance and settlement procedures and in certain markets there have been times when settlements have been unable to keep pace with the volume of securities transactions making it difficult to conduct such transactions. Delays in settlement could result in temporary periods when assets of the Trust are uninvested and no return is earned thereon. The inability of the Trust to make intended security purchases due to settlement problems could cause the Trust to miss attractive investment opportunities. Inability to dispose of portfolio securities due to settlement problems could result either in losses to the Trust due to subsequent declines in value of the portfolio security or, if the Trust has entered into a contract to sell the security, could result in possible liability to the purchaser. Costs associated with transactions in foreign securities are generally higher than with transactions in U.S. securities. There is generally less government supervision and regulation of exchanges, financial institutions and issuers in foreign countries than there is in the United States.
As indicated above, under certain circumstances, the Trust may invest a majority of its assets in gold-related companies or securities. Based on historic experience, during periods of economic or financial instability the securities of such companies may be subject to extreme price fluctuations, reflecting the high
volatility of gold prices during such periods. In addition, the instability of gold prices may result in volatile earnings of gold-related companies which, in turn, may affect adversely the financial condition of such companies. Gold mining companies also are subject to the risks generally associated with mining operations.
The major producers of gold include the Republic of South Africa, the Commonwealth of Independent States, Canada, the United States, Brazil and Australia. Sales of gold by the Commonwealth of Independent States are largely unpredictable and often relate to political and economic considerations rather than to market forces. Economic, social and political developments within South Africa may affect significantly South African gold production.
INVESTMENT OBJECTIVES AND POLICIES
The Trust is a non-diversified, open-end management investment company. The investment objectives of the Trust are to achieve long-term growth of capital and to protect the purchasing power of shareholders' capital by investing in a portfolio of equity securities (e.g., common stocks and securities convertible into common stocks) of domestic and foreign companies with substantial natural resource assets. The Trust also may invest in debt, preferred or convertible securities, the value of which is related to the market value of some natural resource asset ("asset-based securities"). See "Asset-Based Securities" below. Management of the Trust will seek to identify securities it believes are attractively priced relative to the intrinsic value of the underlying natural resource assets or are especially well-positioned to benefit during particular portions of inflationary cycles. IT IS EXPECTED THAT WHEN MANAGEMENT OF THE TRUST ANTICIPATES SIGNIFICANT ECONOMIC, POLITICAL OR FINANCIAL INSTABILITY, SUCH AS HIGH INFLATIONARY PRESSURES OR UPHEAVAL IN FOREIGN CURRENCY EXCHANGE MARKETS, THE TRUST, IN SEEKING TO PROTECT THE PURCHASING POWER OF SHAREHOLDERS' CAPITAL, MAY INVEST A MAJORITY OF ITS ASSETS IN COMPANIES THAT EXPLORE FOR, EXTRACT, PROCESS OR DEAL IN GOLD OR IN ASSET-BASED SECURITIES INDEXED TO THE VALUE OF GOLD BULLION. Such a switch in investment strategies could require the Trust to liquidate portfolio securities and incur transaction costs. There can be no assurance that the objectives of the Trust will be realized.
The Trust expects that, under normal circumstances, at least 65% of its total assets will be invested in the securities of issuers from at least three different countries (including the United States). For purposes of this policy, an issuer ordinarily will be considered to be located in the country under the laws of which it is organized or where the primary trading market of its securities is located. The Trust, however, may consider a company to be located in a country, without reference to its domicile or to the primary trading market of its securities, when at least 50% of its non-current assets, capitalization, gross revenues or profits in any one of the two most recent fiscal years represents (directly or indirectly through subsidiaries) assets or activities located in such country. The Trust also may consider closed-end investment companies to be located in the country or countries in which they primarily make their portfolio investments. For the risks attendant to investing in foreign securities see "Special Considerations" below.
Management attempts to achieve the investment objectives of the Trust by seeking to identify securities of companies which, in its opinion, are undervalued relative to the value of natural resource holdings of such companies in light of current and anticipated economic or financial conditions. Natural resource assets are materials derived from natural sources which have economic value. The Trust will consider a company to have substantial natural resource assets when, in management's opinion, the company's holdings of the assets are of such magnitude, when compared to the capitalization, revenues or operating profits of the company, that changes in the economic value of the assets will affect the market price of the equity securities of such company. Generally, a company has substantial natural resource assets when at least 50% of the non-current assets, capitalization, gross revenues or operating profits of the company in the most recent or current fiscal year are involved in or result from, directly or indirectly through subsidiaries, exploring, mining, refining, processing, fabricating, dealing in or owning natural resource assets. Examples of natural resource assets include precious metals (e.g., gold, silver and platinum), ferrous and nonferrous metals (e.g., iron, aluminum and copper), strategic metals (e.g., uranium and titanium), hydrocarbons (e.g., coal, oil and natural gas), timber land, undeveloped real property and agricultural commodities. The Trust presently does not intend to invest directly in natural resource assets or contracts related thereto.
Management of the Trust believes that, based upon past performance, the securities of specific companies that hold different types of substantial natural resource assets may move relatively independently of one another during different stages of inflationary cycles due to different degrees of demand for, or market values of, their respective natural resource holdings during particular portions of such inflationary cycles. The Trust's fully-managed investment approach enables it to switch its emphasis among various industry groups depending upon management's outlook with respect to prevailing trends and developments. The Trust may seek to hedge its portfolio partially by writing covered call options or purchasing put options on its portfolio holdings.
The Trust at all times, except during defensive periods, will maintain at least 65% of its total assets invested in companies with substantial natural resource assets or in asset-based securities. Current income from dividends and interest will not be a primary consideration in selecting securities. The Trust reserves the right as a temporary defensive measure to hold short-term U.S. Government securities, money market securities, including repurchase agreements, or cash, in such proportions as, in the opinion of management, prevailing market or economic conditions warrant. The Trust reserves the right to hold short-term U.S. Government securities, money market securities, including repurchase agreements, or cash for redemptions. Except during extraordinary periods, the Trust would not expect that such securities or cash held for redemptions would exceed 20% of its total assets.
The Trust may purchase securities that are not registered ("restricted securities") under the Securities Act of 1933 (the "Securities Act"), but can be offered and sold to "qualified institutional buyers" under Rule 144A under the Securities Act. However, the Trust will not invest more than 15% of its net assets in illiquid investments, which includes securities for which there is no readily available market, securities subject to contractual restrictions on resale, certain investments in asset-backed and receivable-backed securities and restricted securities, unless the Trust's Board of Trustees continuously determines, based on the trading markets for the specific restricted security, that it is liquid. The Board of Trustees may adopt guidelines and delegate to the Investment Adviser the daily function of determining and monitoring liquidity of restricted securities. The Board of Trustees, however, will retain sufficient oversight and be ultimately responsible for the determinations.
The Board of Trustees carefully monitors the Trust's investments in these securities purchased pursuant to Rule 144A, focusing on such factors, among others, as valuation, liquidity and availability of information. These investments in securities purchased pursuant to Rule 144A could have the effect of increasing the level of illiquidity in the Trust to the extent that qualified institutional buyers become for a time uninterested in purchasing these restricted securities.
The investment policies of the Trust described in the first and fifth paragraphs of this section are fundamental policies of the Trust and may not be changed without the approval of the holders of a majority of the Trust's outstanding voting securities, as defined in the Investment Company Act of 1940, as amended (the "Investment Company Act").
ASSET-BASED SECURITIES
The Trust may invest in debt securities, preferred stocks or convertible securities, the principal amount, redemption terms or conversion terms of which are related to the market price of some natural resource asset such as gold bullion. For the purposes of the Trust's investment policies, these securities are referred to as "asset-based securities". The Trust will purchase only asset-based securities which are rated, or are issued by issuers that have outstanding debt obligations rated, investment grade (that is AAA, AA, A or BBB by Standard & Poor's Ratings Group ("S&P") or Aaa, Aa, A or Baa by Moody's Investors Service, Inc. ("Moody's") or commercial paper rated A-1 by S&P or Prime-1 by Moody's) or of issuers that the Investment Adviser has determined to be of similar creditworthiness. Obligations ranked in the fourth highest rating category, while considered "investment grade," may have certain speculative characteristics and may be more likely to be downgraded than securities rated in the three highest rating categories. If the asset-based security is backed by a bank letter of credit or other similar facility, the Investment Adviser may take such backing into account in determining the creditworthiness of the issuer. While the market prices for an asset-based security and the related natural resource asset generally are expected to move in the same direction, there may not be perfect correlation in the two price movements. Asset-based securities may not be secured by a security interest in or claim on the underlying natural resource asset. The asset-based securities in which the Trust may invest may bear interest or pay preferred dividends at below market (or even relatively nominal) rates. As an example, assume gold is selling at a market price of $300 per ounce and an issuer sells a $1,000 face amount gold-related note with a seven-year maturity, payable at maturity at the greater of either $1,000 in cash or the then market price of three ounces of gold. If at maturity, the market price of gold is $400 per ounce, the amount payable on the note would be $1,200. Certain asset-based securities may be payable at maturity in cash at the stated principal amount or, at the option of the holder, directly in a stated amount of the asset to which it is related. In such instance, because the Trust presently does not intend to invest directly in natural resource assets, the Trust would sell the asset-based security in the secondary market, to the extent one exists, prior to maturity if the value of the stated amount of the asset exceeds the stated principal amount and thereby realize the appreciation in the underlying asset.
OTHER INVESTMENT POLICIES AND PRACTICES
Writing Covered Call Options. The Trust is authorized to write, i.e., sell, covered call options on the equity securities in which it may invest and to enter into closing purchase transactions with respect to certain of such options. A call option is an option where the Trust, in return for a premium, gives another party a right to buy specified securities owned by the Trust at a specified future date and price set at the time of the contract. A call option is considered covered where the writer of the option owns the underlying securities. By writing covered call options, the Trust gives up the opportunity, while the option is in effect, to profit from any price increase in the underlying security above the option exercise price. In addition, the Trust's ability to sell the underlying security will be limited while the option is in effect unless the Trust effects a closing purchase transaction. A closing purchase transaction cancels out the Trust's position as the writer of an option by means of an offsetting purchase of an identical option prior to the expiration of the option it has written. Covered call options serve as a partial hedge against the price of the underlying security declining. The Trust may not write covered call options in underlying securities in an amount exceeding 15% of the market value of its total assets.
Purchasing Put Options. The Trust may purchase put options to hedge against a decline in the market value of its equity securities. By buying a put option the Trust has a right to sell the underlying security at the
exercise price, thus limiting the Trust's risk of loss through a decline in the market value of the security until the put option expires. The amount of any appreciation in the value of the underlying security will be partially offset by the amount of the premium paid for the put option and any related transaction costs. Prior to its expiration, a put option may be sold in a closing sale transaction and profit or loss from the sale will depend on whether the amount received is more or less than the premium paid for the put option plus the related transaction costs. A closing sale transaction cancels out the Trust's position as the purchaser of an option by means of an offsetting sale of an identical option prior to the expiration of the option it has purchased. The Trust will not purchase put options on securities if, as a result of such purchase, the aggregate cost of all outstanding options on securities held by the Trust would exceed 5% of the market value of the Trust's total assets.
Portfolio Transactions. In executing portfolio transactions, the Trust seeks to obtain the best net results, taking into account such factors as price (including the applicable brokerage commission or dealer spread), size of order, difficulty of execution, operational facilities of the firm involved and the firm's risk in positioning a block of securities. While the Trust generally seeks reasonably competitive commission rates, the Trust does not necessarily pay the lowest commission or spread available. The Trust contemplates that, consistent with its policy of obtaining the best net results, it will place orders for transactions with a number of brokers and dealers, including Merrill Lynch, an affiliate of the Investment Adviser. Subject to obtaining the best price and execution, brokers who provide supplemental investment research to the Trust may receive orders for transactions by the Trust. Information so received will be in addition to, and not in lieu of, the services required to be performed by the Investment Adviser and the expenses of the Investment Adviser will not necessarily be reduced as a result of the receipt of such supplemental information. See "Management of the Trust--Management and Advisory Arrangements". In addition, consistent with the Rules of Fair Practice of the NASD, management of the Trust may consider sales of shares of the Trust as a factor in the selection of brokers or dealers to execute portfolio transactions for the Trust. It is expected that the majority of the shares of the Trust will be sold by Merrill Lynch.
The Trust anticipates that its brokerage transactions involving securities of companies domiciled in countries other than the United States will be conducted primarily on the principal stock exchanges of such countries. Brokerage commissions and other transaction costs on foreign securities exchanges are generally higher than in the United States, although the Trust will endeavor to achieve the best net results in effecting such transactions.
Forward Foreign Exchange Transactions. The Trust is authorized to deal in forward foreign exchange between currencies of the different countries in which it will invest as a hedge against possible variations in the foreign exchange rate between these currencies. This is accomplished through contractual agreements to purchase or sell a specified currency at a specified future date (up to one year) and price set at the time of the contract. The Trust's dealings in forward foreign exchange will be limited to hedging involving either specific transactions or portfolio positions. Transaction hedging is the purchase or sale of forward foreign currency with respect to specific receivables or payables of the Trust accruing in connection with the purchase and sale of its portfolio securities, the sale and redemption of shares of the Trust or the payment of dividends and distributions by the Trust. Position hedging is the sale of forward foreign currency with respect to portfolio security positions denominated or quoted in such foreign currency. The Trust will not speculate in forward foreign exchange. The Trust will not attempt to hedge all of its foreign portfolio positions. The Trust may not commit more than 15% of its total assets to position hedging contracts.
Repurchase Agreements. The Trust may invest in securities pursuant to repurchase agreements of not more than seven days' duration. Repurchase agreements may be entered into only with a member bank of the Federal Reserve System or a primary dealer in U.S. Government securities or an affiliate thereof. Under such agreements, the bank or the primary dealer or an affiliate thereof agrees, upon entering into the contract, to repurchase the security at a mutually agreed upon time and price, thereby determining the yield during the term of the agreement. This results in a fixed rate of return insulated from market fluctuations during such period. In all instances, the Trust takes possession of the underlying securities when investing in repurchase agreements.
Lending of Portfolio Securities. The Trust is authorized to lend securities from its portfolio, with a value not exceeding 33 1/3% of its total assets, to banks, brokers and other financial institutions if it receives collateral in cash or securities issued or guaranteed by the U.S. Government which will be maintained at all times in an amount equal to at least 100% of the current market value of the loaned securities. During the period of this loan, the Trust receives income on both the loaned securities and the collateral and may thereby increase its yield.
INVESTMENT RESTRICTIONS
The Trust's investment activities are subject to further restrictions that are described in the Statement of Additional Information. Investment restrictions and policies which are fundamental policies may not be changed without the approval of the holders of a majority of the Trust's outstanding voting securities (which for this purpose and under the Investment Company Act means the lesser of (a) 67% of the shares represented at a meeting at which more than 50% of the outstanding shares are represented or (b) more than 50% of the outstanding shares). Among its fundamental policies, the Trust may not invest more than 25% of its total assets, taken at market value at the time of each investment, in the securities of issuers in any particular industry (excluding the U.S. Government and its agencies and instrumentalities). In addition, the Trust may not borrow money or pledge its assets, except that the Trust (a) may borrow from a bank as a temporary measure for extraordinary or emergency purposes or to meet redemptions in amounts not exceeding 33 1/3% (taken at market value) of its total assets and pledge its assets to secure such borrowings, (b) may obtain such short-term credit as may be necessary for the clearance of purchases and sales of portfolio securities and (c) may purchase securities on margin to the extent permitted by applicable law. (However, at the present time, applicable law prohibits the Trust from purchasing securities on margin.) (The deposit or payment by the Trust of initial or variation margin in connection with financial futures contracts or options transactions is not considered to be the purchase of a security on margin.) The purchase of securities while borrowings are outstanding will have the effect of leveraging the Trust. Such leveraging or borrowing increases the Trust's exposure to capital risk, and borrowed funds are subject to interest costs which will reduce net income.
Investment restrictions and policies that are non-fundamental policies may be changed by the Board of Trustees without shareholder approval. As a non-fundamental policy, the Trust will not invest in securities which cannot readily be resold because of legal or contractual restrictions or which are not otherwise readily marketable, including repurchase agreements and purchase and sale contracts maturing in more than seven days, if, regarding all such securities, more than 15% of its total assets (or 10% of its total assets as presently required by certain state law) taken at market value would be invested in such securities. Notwithstanding the foregoing, the Trust may purchase without regard to this limitation securities that are not registered under the
Securities Act, but that can be offered and sold to "qualified institutional buyers" under Rule 144A under the Securities Act, provided that the Trust's Board of Directors determines, based on the trading markets for the specific Rule 144A security, that it is liquid. The Board of Directors may adopt guidelines and delegate to the Investment Adviser the daily function of determining and monitoring liquidity of restricted securities. The Board has determined that securities which are freely tradeable in their primary market offshore should be deemed liquid. The Board, however, will retain sufficient oversight and be ultimately responsible for the determinations.
MANAGEMENT OF THE TRUST
TRUSTEES
The Trustees of the Trust consist of six individuals, five of whom are not "interested persons" of the Trust as defined in the Investment Company Act. The Trustees of the Trust are responsible for the overall supervision of the operations of the Trust and perform the various duties imposed on the directors of investment companies by the Investment Company Act.
The Trustees of the Trust are:
ARTHUR ZEIKEL*--President of the Investment Adviser and FAM; President and Director of Princeton Services, Inc. ("Princeton Services"); Executive Vice President of ML & Co. and Merrill Lynch; Director of the Distributor.
DONALD CECIL--Special Limited Partner of Cumberland Partners (an investment partnership).
M. COLYER CRUM--James R. Williston Professor of Investment Management, Harvard Business School.
EDWARD H. MEYER--Chairman of the Board of Directors, President and Chief Executive Officer of Grey Advertising Inc.
JACK B. SUNDERLAND--President and Director of American Independent Oil Company, Inc. (an energy company).
MANAGEMENT AND ADVISORY ARRANGEMENTS
The Investment Adviser, which is owned and controlled by ML & Co., a financial services holding company, acts as the investment adviser for the Trust and provides the Trust with management and investment advisory services. The Investment Adviser or its affiliate, FAM, acts as the investment adviser for more than 125 registered investment companies. The Investment Adviser also provides investment advisory services to individual and institutional accounts. As of October 31, 1995, the Investment Adviser and its
affiliate had a total of $190 billion in investment company and other portfolio assets under management, including accounts of certain affiliates of the Investment Adviser.
The investment advisory agreement with the Investment Adviser (the "Investment Advisory Agreement") provides that, subject to the direction of the Trustees of the Trust, the Investment Adviser is responsible for the actual management of the Trust's portfolio. The responsibility for making decisions to buy, sell or hold a particular security rests with the Investment Adviser, subject to review by the Trustees. The Investment Adviser provides the portfolio manager for the Trust who considers analyses from various sources (including brokerage firms with which the Trust does business), makes the necessary investment decisions and places transactions accordingly. The Investment Adviser also is obligated to perform certain administrative and management services for the Trust and is obligated to provide all of the office space, facilities, equipment and personnel necessary to perform its duties under the Investment Advisory Agreement.
The Trust pays the Investment Adviser a monthly fee at the annual rate of 0.60% of the average daily net assets of the Trust. For the fiscal year ended July 31, 1995, the Investment Adviser earned a fee of $1,832,048 (based on average net assets of approximately $320.3 million).
The Investment Advisory Agreement obligates the Trust to pay certain expenses incurred in its operations including, among other things, the investment advisory fee, legal and audit fees, registration fees, unaffiliated Trustees' fees and expenses, custodian and transfer agency fees, accounting costs, the costs of issuing and redeeming shares and certain of the costs of printing proxies, shareholder reports, prospectuses and statements of additional information. Accounting services are provided for the Trust by the Investment Adviser and the Trust reimburses the Investment Adviser for its costs in connection with such services. For the fiscal year ended July 31, 1995, the Trust paid the Investment Adviser $68,488 for accounting services. For the fiscal year ended July 31, 1995, the ratio of total expenses to average net assets was 1.06% for Class A shares and 2.08% for Class B shares. For the period October 21, 1994 (commencement of operations) to July 31, 1995 the annualized ratio of total expenses to average net assets was 2.20% for Class C shares and 1.39% for Class D shares.
Peter A. Lehman is primarily responsible for the day-to-day management of the Trust's portfolio. Mr. Lehman has been a Vice President of the Investment Adviser and Portfolio Manager of the Trust since 1994 and an employee of the Investment Adviser since 1992.
CODE OF ETHICS
The Board of Trustees of the Trust has adopted a Code of Ethics pursuant to Rule 17j-1 under the Investment Company Act which incorporates the Code of Ethics of the Investment Adviser (together, the "Codes"). The Codes significantly restrict the personal investing activities of all employees of the Investment Adviser and, as described below, impose additional, more onerous, restrictions on Trust investment personnel.
The Codes require that all employees of the Investment Adviser preclear any personal securities investment (with limited exceptions, such as government securities). The preclearance requirement and associated procedures are designed to identify any substantive prohibition or limitation applicable to the proposed investment. The substantive restrictions applicable to all employees of the Investment Adviser include a ban on acquiring any securities in a "hot" initial public offering and a prohibition from profiting on short-term trading in securities. In addition, no employee may purchase or sell any security which at the time is being purchased or sold (as the case may be), or to the knowledge of the employee is being considered for
purchase or sale, by any fund advised by the Investment Adviser. Furthermore, the Codes provide for trading "blackout periods" which prohibit trading by investment personnel of the Trust within periods of trading by the Trust in the same (or equivalent) security (15 or 30 days depending upon the transaction).
TRANSFER AGENCY SERVICES
Merrill Lynch Financial Data Services, Inc. (formerly called Financial Data Services, Inc.) (the "Transfer Agent"), which is a wholly-owned subsidiary of ML & Co., acts as the Trust's Transfer Agent pursuant to a transfer agency, dividend disbursing agency and shareholder servicing agency agreement (the "Transfer Agency Agreement"). Pursuant to the Transfer Agency Agreement, the Transfer Agent is responsible for the issuance, transfer and redemption of shares and the opening and maintenance of shareholder accounts. Pursuant to the Transfer Agency Agreement, the Trust pays the Transfer Agent a fee of $11.00 per Class A or Class D shareholder account and $14.00 per Class B or Class C shareholder account and the Transfer Agent is entitled to reimbursement for out-of-pocket expenses incurred by the Transfer Agent under the Transfer Agency Agreement. For the fiscal year ended July 31, 1995, the total fee paid by the Trust to the Transfer Agent pursuant to the Transfer Agency Agreement was $826,239. At October 31, 1995, the Fund had 2,917 Class A shareholder accounts, 15,529 Class B shareholder accounts, 488 Class C shareholder accounts and 17,024 Class D shareholder accounts. At this level of accounts, the annual fee payable to the Transfer Agent would aggregate approximately $443,589 plus out-of-pocket expenses.
PURCHASE OF SHARES
Merrill Lynch Funds Distributor, Inc. (the "Distributor"), an affiliate of the Investment Adviser, FAM and Merrill Lynch, acts as the Distributor of the shares of the Trust. Shares of the Trust are offered continuously for sale by the Distributor and other eligible securities dealers (including Merrill Lynch). Shares of the Trust may be purchased from securities dealers or by mailing a purchase order directly to the Transfer Agent. The minimum initial purchase is $1,000 and the minimum subsequent purchase is $50, except that for retirement plans the minimum initial purchase is $100 and the minimum subsequent purchase is $1.
The Trust offers its shares in four classes at a public offering price equal to the next determined net asset value per share plus sales charges imposed either at the time of purchase or on a deferred basis depending upon the class of shares selected by the investor under the Merrill Lynch Select Pricing(SM) System, as described below. The applicable offering price for purchase orders is based on the net asset value of the Trust next determined after receipt of the purchase order by the Distributor. As to purchase orders received by securities dealers prior to the close of business on the New York Stock Exchange (generally, 4:00 p.m., New York time), which includes orders received after the close of business on the previous day, the applicable offering price will be based on the net asset value determined as of 15 minutes after the close of business on the New York Stock Exchange on that day, provided the Distributor in turn receives the orders from the securities dealer prior to 30 minutes after the close of business on the New York Stock Exchange on that day. If the purchase orders are not received by the Distributor prior to 30 minutes after the close of business on the New York Stock Exchange, such orders shall be deemed received on the next business day. The Trust or the Distributor may suspend the continuous offering of the Trust's shares of any class at any time in response to conditions in the securities markets or otherwise and may thereafter resume such offering from time to time. Any order may be rejected by the Distributor or the Trust. Neither the Distributor nor the dealers are
permitted to withhold placing orders to benefit themselves by a price change. Merrill Lynch may charge its customers a processing fee (presently $4.85) to confirm a sale of shares to such customers. Purchases directly through the Transfer Agent are not subject to the processing fee.
The Trust issues four classes of shares under the Merrill Lynch Select PricingSM System, which permits each investor to choose the method of purchasing shares that the investor believes is most beneficial given the amount of the purchase, the length of time the investor expects to hold the shares and other relevant circumstances. Shares of Class A and Class D are sold to investors choosing the initial sales charge alternatives and shares of Class B and Class C are sold to investors choosing the deferred sales charge alternatives. Investors should determine whether under their particular circumstances it is more advantageous to incur an initial sales charge or to have the entire initial purchase price invested in the Trust with the investment thereafter being subject to a contingent deferred sales charge and ongoing distribution fees. A discussion of the factors that investors should consider in determining the method of purchasing shares under the Merrill Lynch Select PricingSM System is set forth under "Merrill Lynch Select Pricing(SM) System" on page 3.
Each Class A, Class B, Class C and Class D share of the Trust represents an identical interest in the investment portfolio of the Trust and has the same rights, except that Class B, Class C and Class D shares bear the expenses of the ongoing account maintenance fees, and Class B and Class C shares bear the expenses of the ongoing distribution fees and the additional incremental transfer agency costs resulting from the deferred sales charge arrangements. The deferred sales charges and account maintenance fees that are imposed on Class B and Class C shares, as well as the account maintenance fees that are imposed on Class D shares, are imposed directly against those classes and not against all assets of the Trust and, accordingly, such charges do not affect the net asset value of any other class or have any impact on investors choosing another sales charge option. Dividends paid by the Trust for each class of shares are calculated in the same manner at the same time and will differ only to the extent that account maintenance and distribution fees and any incremental transfer agency costs relating to a particular class are borne exclusively by that class. Class B, Class C and Class D shares each have exclusive voting rights with respect to the Rule 12b-1 distribution plan adopted with respect to such class pursuant to which account maintenance and/or distribution fees are paid. See "Distribution Plans" below. Each class has different exchange privileges. See "Shareholder Services--Exchange Privilege".
Investors should understand that the purpose and function of the initial sales charges with respect to Class A and Class D shares are the same as those of the deferred sales charges with respect to Class B and Class C shares in that the sales charges applicable to each class provide for the financing of the distribution of the shares of the Trust. The distribution-related revenues paid with respect to a class will not be used to finance the distribution expenditures of another class. Sales personnel may receive different compensation for selling different classes of shares. Investors are advised that only Class A and Class D shares may be available for purchase through securities dealers, other than Merrill Lynch, which are eligible to sell shares.
The following table sets forth a summary of the distribution arrangements for each class of shares under the Merrill Lynch Select Pricing(SM) System.
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ACCOUNT
MAINTENANCE DISTRIBUTION
CLAS SALES CHARGE(1) FEE FEE CONVERSION FEATURE
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A Maximum 5.25% initial sales No
charge(2)(3) No No
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B CDSC for a period of up to 4 years,
at a rate of 4.0% during the first B shares convert to D
year, decreasing 1.0% annually to shares
0.0% 0.25% 0.75% automatically after
approximately eight
years(4)
-----------------------------------------------------------------------------------------------
C 1.0% CDSC for one year 0.25% 0.75% No
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D Maximum 5.25% initial sales No
charge(3) 0.25% No
-----------------------------------------------------------------------------------------------
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(1) Initial sales charges are imposed at the time of purchase as a percentage of
the offering price. CDSCs may be imposed if the redemption occurs within the
applicable CDSC time period. The charge will be assessed on an amount equal
to the lesser of the proceeds of redemption or the cost of the shares being
redeemed.
(2) Offered only to eligible investors. See "Initial Sales Charge
Alternatives--Class A and Class D Shares--Eligible Class A Investors".
(3) Reduced for purchases of $25,000 or more and waived for purchasers of Class A shares by certain retirement plans in connection with certain investment programs. Class A and Class D share purchases of $1,000,000 or more may not be subject to an initial sales charge but, if the initial sales charge is waived, will be subject to a 1.0% CDSC for one year.
(4) The conversion period for dividend reinvestment shares and the conversion and holding periods for certain retirement plans are modified. Also, Class B shares of certain other MLAM-advised mutual funds into which exchanges may be made have a ten-year conversion period. If Class B shares of the Trust are exchanged for Class B shares of another MLAM-advised mutual fund, the conversion period applicable to the Class B shares acquired in the exchange will apply, and the holding period for the shares exchanged will be tacked onto the holding period for the shares acquired.
INITIAL SALES CHARGE ALTERNATIVES--CLASS A AND CLASS D SHARES
Investors choosing the initial sales charge alternatives who are eligible to purchase Class A shares should purchase Class A rather than Class D shares because there is an account maintenance fee imposed on Class D shares.
The public offering price of Class A and Class D shares for purchasers choosing the initial sales charge alternatives is the next determined net asset value plus varying sales charges (i.e., sales loads), as set forth below:
SALES LOAD AS SALES LOAD AS DISCOUNT TO
PERCENTAGE OF PERCENTAGE* OF SELECTED DEALERS
OFFERING THE NET AMOUNT AS PERCENTAGE OF
AMOUNT OF PURCHASE PRICE INVESTED THE 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
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** The initial sales charge may be waived on Class A and Class D share purchases of $1,000,000 or more made on or after October 21, 1994, and on Class A share purchases by certain retirement plan investors in connection with certain investment programs. If the sales charge is waived in connection with a purchase of $1,000,000 or more, such purchases will be subject to a CDSC of 1.0% if the shares are redeemed within one year after purchase. Class A share purchases made prior to October 21, 1994 may be subject to a CDSC if the shares are redeemed within one year of purchase at the following rates: 1.00% on purchases of $1,000,000 to $2,500,000; 0.60% on purchases of $2,500,001 to $3,500,000; 0.40% on purchases of $3,500,001 to $5,000,000; and 0.25% on purchases of more than $5,000,000, in lieu of paying an initial sales charge. The charge will be assessed on an amount equal to the lesser of the proceeds of redemption or the cost of the shares being redeemed. A sales charge of 0.75% will be charged on purchases of $1,000,000 or more of Class A or Class D shares by certain 401(k) plans.
The Distributor may reallow discounts to selected dealers and retain the balance over such discounts. At times the Distributor may reallow the entire sales charge to such dealers. Since securities dealers selling Class A and Class D shares of the Trust will receive a concession equal to most of the sales charge, they may be deemed to be underwriters under the Securities Act. During the fiscal year ended July 31, 1995, the Trust sold 2,372,442 Class A shares for aggregate net proceeds of $37,625,025. The gross sales charges for the sale of Class A shares of the Trust for that year were $104,144, of which $6,956 and $97,188 were received by the Distributor and Merrill Lynch, respectively. For the fiscal year ended July 31, 1995, the Distributor received no CDSCs with respect to redemption within one year after purchase of Class A shares purchased subject to front-end sales charge waivers. During the period October 21, 1994 (commencement of operations) to July 31, 1995, the Trust sold 325,837 Class D shares for an aggregate net proceeds of $5,011,879. The gross sales charges for the sale of Class D shares of the Trust for that period were $53,122 of which $3,459 and $49,663 were received by the Distributor and Merrill Lynch, respectively. For the period October 21, 1994 (commencement of operations) to July 31, 1995, the Distributor received no CDSCs with respect to redemption within one year after purchase of Class D shares purchased subject to front-end sales charge waivers.
Eligible Class A Investors. Class A shares are offered to a limited group of investors and also will be issued upon reinvestment of dividends on outstanding Class A shares. Investors that currently own Class A shares of the Trust in a shareholder account are entitled to purchase additional Class A shares of the Trust in that amount. Investors who currently own Class A shares of the Trust in a shareholder account, including participants in the Merrill Lynch BlueprintSM Program, are entitled to purchase additional Class A shares of the Trust in that account. Certain employer sponsored retirement or savings plans, including eligible
401(k) plans, may purchase Class A shares at net asset value provided such plans meet the required minimum number of eligible employees or required amount of assets advised by the Investment Adviser or any of its affiliates. Class A shares are available at net asset value to corporate warranty insurance reserve fund programs provided that the program has $3 million or more initially invested in MLAM-advised mutual funds. Also eligible to purchase Class A shares at net asset value are participants in certain investment programs including TMA(SM) Managed Trusts to which Merrill Lynch Trust Company provides discretionary trustee services and certain purchases made in connection with the Merrill Lynch Mutual Fund Adviser program. In addition, Class A shares will be offered at net asset value to ML & Co. and its subsidiaries and their directors and employees and to members of the Boards of MLAM-advised investment companies, including the Trustees of the Trust. Certain persons who acquired shares of certain MLAM-advised closed-end funds who wish to reinvest the net proceeds from a sale of their closed-end fund shares of common stock in shares of the Trust also may purchase Class A shares of the Trust if certain conditions set forth in the Statement of Additional Information are met (for closed-end funds that commenced operations prior to October 21, 1994). For example, Class A shares of the Trust and certain other MLAM-advised mutual funds are offered at net asset value to shareholders of Merrill Lynch Senior Floating Rate Fund, Inc. who wish to reinvest the net proceeds from a sale of certain of their shares of common stock of Merrill Lynch Senior Floating Rate Fund, Inc. in shares of such funds.
Reduced Initial Sales Charges. No initial sales charges are imposed upon Class A and Class D shares issued as a result of the automatic reinvestment of dividends or capital gains distributions. Class A and D sales charges also may be reduced under a Right of Accumulation and a Letter of Intention. Class A shares are offered at net asset value to certain eligible Class A investors as set forth above under "Eligible Class A Investors".
Class A and Class D shares are offered at net asset value to certain employer sponsored retirement or savings plans and to Employee Access AccountsSM available through employers which provide such plans.
Class D shares are offered at net asset value without sales charge to an investor who has a business relationship with a Merrill Lynch financial consultant, if certain conditions set forth in the Statement of Additional Information are met. Class D shares may be offered at net asset value in connection with the acquisition of assets of other investment companies.
Class D shares are offered with reduced sales charges and, in certain circumstances, at net asset value, to participants in the Merrill Lynch Blueprint(SM) Program.
Class D shares of the Trust are offered at net asset value to shareholders of Merrill Lynch Municipal Strategy Fund, Inc. who wish to reinvest the net proceeds from a sale of certain of their shares of common stock of Merrill Lynch Municipal Strategy Fund, Inc. in shares of the Trust.
Additional information concerning these reduced initial sales charges is set forth in the Statement of Additional Information.
DEFERRED SALES CHARGE ALTERNATIVES--CLASS B AND CLASS C SHARES
Investors choosing the deferred sales charge alternatives should consider Class B shares if they intend to hold their shares for an extended period of time and Class C shares if they are uncertain as to the length of time they intend to hold their assets in MLAM-advised mutual funds.
The public offering price of Class B and Class C shares for investors choosing the deferred sales charge alternatives is the next determined net asset value per share without the imposition of a sales charge at the time of purchase. As discussed below, Class B shares are subject to a four-year CDSC, while Class C shares are subject only to a one-year 1.0% CDSC. On the other hand, approximately eight years after Class B shares are issued, such Class B shares, together with shares issued upon dividend reinvestment with respect to those shares, are automatically converted into Class D shares of the Trust and thereafter will be subject to lower continuing fees. See "Conversion of Class B Shares to Class D Shares" below. Both Class B and Class C shares are subject to an account maintenance fee of 0.25% of net assets and a distribution fee of 0.75% of net assets as discussed below under "Distribution Plans". The proceeds from the account maintenance fees are used to compensate Merrill Lynch for providing continuing account maintenance activities.
Class B and Class C shares are sold without an initial sales charge so that the Trust will receive the full amount of the investor's purchase payment. Merrill Lynch compensates its financial consultants for selling Class B and Class C shares at the time of purchase from its own funds. See "Distribution Plans" below.
Proceeds from the CDSC and the distribution fee are paid to the Distributor and are used in whole or in part by the Distributor to defray the expenses of dealers (including Merrill Lynch) related to providing distribution-related services to the Trust in connection with the sale of the Class B and Class C shares, such as the payment of compensation to financial consultants for selling Class B and Class C shares from the dealer's own funds. The combination of the CDSC and the ongoing distribution fee facilitates the ability of the Trust to sell the Class B and Class C shares without a sales charge being deducted at the time of purchase. Approximately eight years after issuance, Class B shares will convert automatically into Class D shares of the Trust, which are subject to an account maintenance fee but no distribution fee; Class B shares of certain other MLAM-advised mutual funds into which exchanges may be made convert into Class D shares automatically after approximately ten years. If Class B shares of the Trust are exchanged for Class B shares of another MLAM-advised mutual fund, the conversion period applicable to the Class B shares acquired in the exchange will apply, and the holding period for the shares exchanged will be tacked onto the holding period for the shares acquired.
Imposition of the CDSC and the distribution fee on Class B and Class C shares is limited by the NASD asset-based sales charge rule. See "Limitations on the Payment of Deferred Sales Charges" below. The proceeds from the ongoing account maintenance fee are used to compensate Merrill Lynch for providing continuing account maintenance activities. Class B shareholders of the Trust exercising the exchange privilege described under "Shareholder Services--Exchange Privilege" will continue to be subject to the Trust's CDSC schedule if such schedule is higher than the CDSC schedule relating to the Class B shares acquired as a result of the exchange.
Contingent Deferred Sales Charges--Class B Shares. Class B shares which are redeemed within four years of purchase may be subject to a CDSC at the rates set forth below charged as a percentage of the dollar amount subject thereto. The charge will be assessed on an amount equal to the lesser of the proceeds of redemption or the cost of the shares being redeemed. Accordingly, no CDSC will be imposed on increases in net asset value above the initial purchase price. In addition, no CDSC will be assessed on shares derived from reinvestment of dividends or capital gains distributions.
The following table sets forth the rates of the Class B CDSC:
CLASS B CDSC
AS A PERCENTAGE
YEAR SINCE PURCHASE OF DOLLAR AMOUNT
PAYMENT MADE SUBJECT TO CHARGE
------------------- -----------------
0-1...................................................... 4.00%
1-2...................................................... 3.00
2-3...................................................... 2.00
3-4...................................................... 1.00
4 and thereafter......................................... 0.00
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During the fiscal year ended July 31, 1995 the Trust sold 6,694,914 Class B shares for aggregate net proceeds of $105,112,417. For the fiscal year ended July 31, 1995, the Distributor received CDSCs of $469,990 with respect to redemptions of Class B shares, all of which were paid to Merrill Lynch.
In determining whether a CDSC is applicable to a redemption, the calculation will be determined in the manner that results in the lowest possible rate being charged. Therefore, it will be assumed that the redemption is first of shares held for over four years or shares acquired pursuant to reinvestment of dividends or distributions and then of shares held longest during the four-year period. The charge will not be applied to dollar amounts representing an increase in the net asset value since the time of purchase. A transfer of shares from a shareholder's account to another account will be assumed to be made in the same order as a redemption.
To provide an example, assume an investor purchased 100 shares at $10 per share (at a cost of $1,000) and in the third year after purchase, the net asset value per share is $12 and, during such time, the investor has acquired 10 additional shares through dividend reinvestment. If at such time the investor makes his or her first redemption of 50 shares (proceeds of $600), 10 shares will not be subject to the CDSC because of dividend reinvestment. With respect to the remaining 40 shares, the CDSC is applied only to the original cost of $10 per share and not to the increase in net asset value of $2 per share. Therefore, $400 of the $600 redemption proceeds will be charged at a rate of 2.0% (the applicable rate in the third year after purchase for shares purchased on or after October 21, 1994).
In the event that Class B shares are exchanged by certain retirement plans for Class A shares in connection with a transfer to the Merrill Lynch Mutual Fund Adviser ("MFA") program, the time period that such Class A shares are held in the MFA program will be included in determining the holding period of Class B shares reacquired upon termination of participation in the MFA program (see "Shareholder Services--Exchange Privilege").
The Class B CDSC is waived on redemptions of shares in connection with certain post-retirement withdrawals from an Individual Retirement Account ("IRA") or other retirement plan or following the death or disability (as defined in the Internal Revenue Code of 1986, as amended) of a shareholder. The Class B CDSC also is waived on redemptions of shares by certain eligible 401(a) and eligible 401(k) plans and in connection with certain group plans placing orders through the Merrill Lynch Blueprint(SM) Program. The CDSC also is waived for any Class B shares which are purchased by eligible 401(k) or eligible 401(a) plans which are rolled over into a Merrill Lynch or Merrill Lynch Trust Company custodied IRA and held in such account at the time of redemption and for any Class B shares that were acquired and held at the time of the
redemption in the Employee Access Account(SM) available through employers providing eligible 401(k) plans. The Class B CDSC also is waived for any Class B shares which are purchased by a Merrill Lynch rollover IRA that was funded by a rollover from a terminated 401(k) plan managed by the MLAM Private Portfolio Group and held in such account at the time of redemption. Additional information concerning the waiver of the Class B CDSC is set forth in the Statement of Additional Information.
Contingent Deferred Sales Charges--Class C Shares. Class C shares which are redeemed within one year after purchase may be subject to a 1.0% CDSC charged as a percentage of the dollar amount subject thereto. The charge will be assessed on an amount equal to the lesser of the proceeds of redemption or the cost of the shares being redeemed. Accordingly, no Class C CDSC will be imposed on increases in net asset value above the initial purchase price. In addition, no Class C CDSC will be assessed on shares derived from reinvestment of dividends or capital gains distributions.
In determining whether a Class C CDSC is applicable to a redemption, the calculation will be determined in the manner that results in the lowest possible rate being charged. Therefore, it will be assumed that the redemption is first of shares held for over one year or shares acquired pursuant to reinvestment of dividends or distributions and then of shares held longest during the one-year period. The charge will not be applied to dollar amounts representing an increase in the net asset value since the time of purchase. A transfer of shares from a shareholder's account to another account will be assumed to be made in the same order as a redemption.
During the period October 21, 1994 (commencement of operations) to July 31, 1995, the Trust sold 406,317 Class C shares for aggregate net proceeds of $6,241,943. During that period, the Distributor received CDSCs of $1,502 with respect to redemptions of Class C shares, all of which were paid to Merrill Lynch.
Conversion of Class B Shares to Class D Shares. After approximately eight years (the "Conversion Period"), Class B Shares will be converted automatically into Class D shares of the Trust. Class D shares are subject to an ongoing account maintenance fee of 0.25 % of net assets but are not subject to the distribution fee that is borne by Class B shares. Automatic conversion of Class B shares into Class D shares will occur at least once each month (on the "Conversion Date") on the basis of the relative net asset values of the shares of the two classes on the Conversion Date, without the imposition of any sales load, fee or other charge. Conversion of Class B shares to Class D shares will not be deemed a purchase or sale of the shares for Federal income tax purposes.
In addition, shares purchased through reinvestment of dividends on Class B shares also will convert automatically to Class D shares. The Conversion Date for dividend reinvestment shares will be calculated taking into account the length of time the shares underlying such dividend reinvestment shares were outstanding. If at a Conversion Date the conversion of Class B shares to Class D shares of the Trust in a single account will result in less than $50 worth of Class B shares being left in the account, all of the Class B shares of the Trust held in the account on the Conversion Date will be converted to Class D shares of the Trust.
Share certificates for Class B shares of the Trust to be converted must be delivered to the Transfer Agent at least one week prior to the Conversion Date applicable to those shares. In the event such certificates are not received by the Transfer Agent at least one week prior to the Conversion Date, the related Class B shares will convert to Class D shares on the next scheduled Conversion Date after such certificates are delivered.
In general, Class B shares of equity MLAM-advised mutual funds will convert approximately eight years after initial purchase, and Class B shares of taxable and tax-exempt fixed income MLAM-advised mutual funds will convert approximately ten years after initial purchase. If, during the Conversion Period, a shareholder exchanges Class B shares with an eight-year Conversion Period for Class B shares with a ten-year Conversion Period, or vice versa, the Conversion Period applicable to the Class B shares acquired in the exchange will apply, and the holding period for the shares exchanged will be tacked onto the holding period for the shares acquired.
The Conversion Period is modified for shareholders who purchased Class B shares through certain retirement plans which qualified for a waiver of the CDSC normally imposed on purchases of Class B shares ("Class B Retirement Plans"). When the first share of any MLAM-advised mutual fund purchased by a Class B Retirement Plan has been held for ten years (i.e., ten years from the date the relationship between MLAM-advised mutual funds and the Class B Retirement Plan was established), all Class B shares of all MLAM-advised mutual funds held in that Class B Retirement Plan will be converted into Class D shares of the appropriate funds. Subsequent to such conversion, that Class B Retirement Plan will be sold Class D shares of the appropriate funds at net asset value per share.
The Conversion Period also is modified for retirement plan investors which participate in the MFA program. While participating in the MFA program, such investors will hold Class A shares. If these Class A shares were acquired through exchange of Class B shares (see "Shareholder Services--Exchange Privilege"), then the holding period for such Class A shares will be "tacked" to the holding period of the Class B shares originally held for purposes of calculating the Conversion Period on Class B shares acquired upon termination of participation in the MFA program.
DISTRIBUTION PLANS
The Trust has adopted separate distribution plans for Class B, Class C and Class D shares pursuant to Rule 12b-1 under the Investment Company Act (each a "Distribution Plan") with respect to the account maintenance and/or distribution fees paid by the Trust to the Distributor with respect to such classes. The Class B and Class C Distribution Plans provide for the payment of account maintenance fees and distribution fees, and the Class D Distribution Plan provides for the payment of account maintenance fees.
The Distribution Plans for Class B, Class C and Class D shares each provide that the Trust pays the Distributor an account maintenance fee relating to the shares of the relevant class, accrued daily and paid monthly, at the annual rate of 0.25% of the average daily net assets of the Trust attributable to shares of the relevant class in order to compensate the Distributor and Merrill Lynch (pursuant to a sub-agreement) in connection with account maintenance activities.
The Distribution Plans for Class B and Class C shares each provide that the Trust also pays the Distributor a distribution fee relating to the shares of the relevant class, accrued daily and paid monthly, at the annual rate of 0.75% of the average daily net assets of the Trust attributable to the shares of the relevant class in order to compensate the Distributor and Merrill Lynch (pursuant to a sub-agreement) for providing shareholder and distribution services, and bearing certain distribution-related expenses of the Trust, including payments to financial consultants for selling Class B and Class C shares of the Trust. The Distribution Plans relating to Class B and Class C shares are designed to permit an investor to purchase Class B and Class C shares through dealers without the assessment of an initial sales charge and at the same time permit the dealer
to compensate its financial consultants in connection with the sale of the Class B and Class C shares. In this regard, the purpose and function of the ongoing distribution fees and the CDSC are the same as those of the initial sales charge with respect to the Class A and Class D shares of the Trust in that the deferred sales charges provide for the financing of the distribution of the Trust's Class B and Class C shares.
Prior to July 6, 1993, the Trust paid the Distributor an ongoing distribution fee, accrued daily and paid monthly, at the annual rate of 1.0% of average daily net assets of the Class B shares of the Trust under a distribution plan previously adopted by the Trust (the "Prior Plan") to compensate the Distributor and Merrill Lynch for providing account maintenance and distribution-related activities and services to Class B shareholders. The fee rate payable and the services provided under the Prior Plan are identical to the aggregate fee rate payable and the services provided under the Class B Distribution Plan, the difference being that the account maintenance and distribution services have been unbundled.
For the fiscal year ended July 31, 1995, the Fund paid the Distributor $ 2,185,267 pursuant to the Class B Distribution Plan (based on average net assets subject to the Class B Distribution Plan of approximately $217.3 million), all of which was paid to Merrill Lynch for providing account maintenance and distribution-related activities and services in connection with Class B shares. For the period October 21, 1994 (commencement of operations) to July 31, 1995, the Fund paid the Distributor $25,551 pursuant to the Class C Distribution Plan (based on average net assets subject to the Class C Distribution Plan of approximately $3.3 million), all of which was paid to Merrill Lynch for providing account maintenance and distribution-related activities and services in connection with Class C shares. For the period October 21, 1994 (commencement of operations) to July 31, 1995, the Fund paid the Distributor $134,156 pursuant to the Class D Distribution Plan (based on average net assets subject to the Class D Distribution Plan of approximately $69.2 million), all of which was paid to Merrill Lynch for providing account maintenance services in connection with Class D shares.
The payments under the Distribution Plans are based on a percentage of average daily net assets attributable to the shares regardless of the amount of expenses incurred and, accordingly, distribution-related revenues from the Distribution Plans may be more or less than distribution-related expenses. Information with respect to the distribution-related revenues and expenses is presented to the Board of Trustees each year for their consideration in connection with their deliberations as to the continuance of the Class B and Class C Distribution Plans. This information is presented annually as of December 31 of each year on a "fully allocated accrual" basis and quarterly on a "direct expense and revenue/cash" basis. On the fully allocated accrual basis, revenues consist of the account maintenance fees, distribution fees, CDSCs and certain other related revenues, and expenses consist of financial consultant compensation, branch office and regional operation center selling and transaction processing expenses, advertising, sales promotion and marketing expenses, corporate overhead and interest expense. On the direct expense and revenue/cash basis, revenues consist of the account maintenance fees, distribution fees and CDSCs and the expenses consist of financial consultant compensation. At December 31, 1994, for Class B shares, the fully allocated accrual revenues earned by the Distributor and Merrill Lynch exceeded fully allocated accrual expenses for such period by approximately $5,280,000 (2.38% of Class B net assets at that date). As of July 31, 1995, direct cash revenues for the period since the commencement of operations exceeded direct cash expenses by $36,435,979 (25.70% of Class B net assets at that date). Similar fully allocated accrual data is not yet available with respect to Class C shares, which the Trust commenced offering to the public on October 21, 1994. As of July 31, 1995,
for Class C shares, direct cash revenues for the period since commencement of the offering of Class C shares exceeded direct cash revenues by $5,330 (0.19% of Class C net assets at that date).
LIMITATIONS ON THE PAYMENT OF DEFERRED SALES CHARGES
The maximum sales charge rule in the Rules of Fair Practice of the NASD imposes a limitation on certain asset-based sales charges such as the distribution fee and the CDSC borne by the Class B and Class C shares but not the account maintenance fee. The maximum sales charge rule is applied separately to each class. As applicable to the Trust, the maximum sales charge rule limits the aggregate of distribution fee payments and CDSCs payable by the Trust to (1) 6.25% of eligible gross sales of Class B shares and Class C shares, computed separately (defined to exclude shares issued pursuant to dividend reinvestments and exchanges) plus (2) interest on the unpaid balance for the respective class computed separately, at the prime rate plus 1% (the unpaid balance being the maximum amount payable minus amounts received from the payment of the distribution fee and the CDSC). In connection with the Class B shares, the Distributor has voluntarily agreed to waive interest charges on the unpaid balance in excess of 0.50% of eligible gross sales. Consequently, the maximum amount payable to the Distributor (referred to as the "voluntary maximum") in connection with the Class B shares is 6.75% of eligible gross sales. The Distributor retains the right to stop waiving the interest charges at any time. To the extent payments would exceed the voluntary maximum, the Trust will not make further payments of the distribution fee with respect to Class B shares, and any CDSCs will be paid to the Trust rather than to the Distributor, however, the Trust will continue to make payments of the account maintenance fee. In certain circumstances the amount payable pursuant to the voluntary maximum may exceed the amount payable under the NASD formula. In such circumstances, payment in excess of the amount payable under the NASD formula will not be made.
The Trust has no obligation with respect to distribution and/or account maintenance-related expenses incurred by the Distributor and Merrill Lynch in connection with the Class B, Class C and Class D shares, and there is no assurance that the Board of Trustees of the Trust will approve the continuance of the Distribution Plans from year to year. However, the Distributor intends to seek annual continuation of the Distribution Plans. In their review of the Distribution Plans, the Trustees will be asked to take into consideration expenses incurred in connection with the distribution of each class of shares separately. The initial sales charges, the account maintenance fee, the distribution fee and/or the CDSCs received with respect to one class will not be used to subsidize the sale of shares of another class. Payments of the distribution fee on Class B shares will terminate upon conversion of those Class B shares into Class D shares as set forth under "Deferred Sales Charge Alternatives--Class B and Class C Shares--Conversion of Class B Shares to Class D Shares".
REDEMPTION OF SHARES
The Trust is required to redeem for cash all shares of the Trust on receipt of a written request in proper form. The redemption price is the net asset value per share next determined after the initial receipt of proper notice of redemption. Except for any CDSC which may be applicable, there will be no charge for redemption if the redemption request is sent directly to the Transfer Agent. Shareholders liquidating their holdings will receive on redemption all dividends reinvested through the date of redemption. The value of shares at the time of redemption may be more or less than the shareholder's cost, depending on the market value of the securities held by the Trust at such time.
REDEMPTION
A shareholder wishing to redeem shares may do so without charge by tendering the shares directly to the Transfer Agent, Merrill Lynch Financial Data Services, Inc., P.O. Box 45289, Jacksonville, Florida 32232-5289. Redemption requests delivered other than by mail should be delivered to Merrill Lynch Financial Data Services, Inc., 4800 Deer Lake Drive East, Jacksonville, Florida 32246-6484. Proper notice of redemption in the case of shares deposited with the Transfer Agent may be accomplished by a written letter requesting redemption. Proper notice of redemption in the case of shares for which certificates have been issued may be accomplished by a written letter as noted above accompanied by certificates for the shares to be redeemed. The notice in either event requires the signatures of all persons in whose names the shares are registered, signed exactly as their names appear on the Transfer Agent's register or on the certificate, as the case may be. The signature(s) on the redemption request must be guaranteed by an "eligible guarantor institution" (including, for example, Merrill Lynch branch offices and certain other financial institutions) as such is defined in Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended, the existence and validity of it may be verified by the Transfer Agent through the use of industry publications. Notarized signatures are not sufficient. In certain instances, the Transfer Agent may require additional documents, such as, but not limited to, trust instruments, death certificates, appointments as executor or administrator, or certificates of corporate authority. For shareholders redeeming directly with the Transfer Agent, payment will be mailed within seven days of receipt of a proper notice of redemption.
At various times the Trust may be requested to redeem shares for which it has not yet received good payment. The Trust may delay or cause to be delayed the mailing of a redemption check until such time as good payment (e.g., cash or certified check drawn on a United States bank) has been collected for the purchase of such shares. Normally, this delay will not exceed 10 days.
REPURCHASE
The Trust will also repurchase shares through a shareholder's listed securities dealer. The Trust normally will accept orders to repurchase shares by wire or telephone from dealers for their customers at the net asset value next computed after receipt of the order by the dealer, provided that the request for repurchase is received by the dealer prior to the close of business on the New York Stock Exchange on the day received, and such request is received by the Trust from such dealer not later than 30 minutes after the close of business on the New York Stock Exchange (generally, 4:00 p.m. New York time) on the same day. Dealers have the responsibility to submit such repurchase requests to the Trust not later than 30 minutes after the close of business on the New York Stock Exchange in order to obtain that day's closing price.
The foregoing repurchase arrangements are for the convenience of shareholders and do not involve a charge by the Trust (other than any applicable CDSC). Securities firms which do not have selected dealer agreements with the Distributor, however, may impose a transaction charge on the shareholder for transmitting the notice of repurchase to the Trust. Merrill Lynch may charge its customers a processing fee (presently $4.85) to confirm a repurchase of shares to such customers. Redemptions directly through the Transfer Agent are not subject to the processing fee. The Trust reserves the right to reject any order for repurchase, which right of rejection might affect adversely shareholders seeking redemption through the repurchase procedure. A shareholder whose order for repurchase is rejected by the Trust, however, may redeem shares as set forth above.
REINSTATEMENT PRIVILEGE--CLASS A AND CLASS D SHARES
Shareholders who have redeemed their Class A or Class D shares have a one-time privilege to reinstate their accounts by purchasing Class A or Class D shares, as the case may be, of the Trust at net asset value without a sales charge up to the dollar amount redeemed. The reinstatement privilege may be exercised by sending a notice of exercise along with a check for the amount to be reinstated to the Transfer Agent within 30 days after the date the request for redemption was accepted by the Transfer Agent or the Distributor. The reinstatement will be made at the net asset value per share next determined after the notice of reinstatement is received and cannot exceed the amount of the redemption proceeds. The reinstatement privilege is a one-time privilege and may be exercised by the Class A or Class D shareholder only the first time such shareholder makes a redemption.
SHAREHOLDER SERVICES
The Trust offers a number of shareholder services and investment plans designed to facilitate investment in shares of the Trust. Full details as to each of such services, copies of the various plans described below and instructions as to how to participate in the various services or plans, or how to change options with respect thereto, can be obtained from the Trust by calling the telephone number on the cover page hereof or from the Distributor or Merrill Lynch. Certain of these services are only available to U.S. investors. Included in the Trust's shareholder services are the following:
Investment Account. Each shareholder whose account is maintained at the Transfer Agent has an Investment Account and will receive statements, at least quarterly, from the Transfer Agent. These statements will serve as transaction confirmations for automatic investment purchases and the reinvestment of ordinary income dividends and long-term capital gain distributions. The statements also will show any other activity in the account since the preceding statement. Shareholders will receive separate confirmations for each purchase or sale transaction other than automatic investment purchases and the reinvestment of ordinary income dividends and long-term capital gains distributions. Shareholders may make additions to their Investment Account at any time by mailing a check directly to the Transfer Agent. Shareholders also may maintain their accounts through Merrill Lynch. Upon the transfer of shares out of a Merrill Lynch brokerage account, an Investment Account in the transferring shareholder's name may be opened automatically, without charge, at the Transfer Agent. Shareholders considering transferring their Class A or Class D shares from Merrill Lynch to another brokerage firm or financial institution should be aware that, if the firm to which the Class A or Class D shares are to be transferred will not take delivery of shares of the Trust, a shareholder either must redeem the Class A or Class D shares (paying any applicable CDSC) so that the cash proceeds can be transferred to the account at the new firm or such shareholder must continue to maintain an Investment Account at the Transfer Agent for those Class A or Class D shares. Shareholders interested in transferring their Class B or Class C shares from Merrill Lynch and who do not wish to have an Investment Account maintained for such shares at the Transfer Agent may request their new brokerage firm to maintain such shares in an account registered in the name of the brokerage firm for the benefit of the shareholder at the Transfer Agent. If the new brokerage firm is willing to accommodate the shareholder in this manner, the shareholder must request that he or she be issued certificates for his/her shares and then must turn the certificates over to the new firm for re-registration as described in the preceding sentence. Shareholders considering transferring a tax-deferred retirement account such as an IRA from Merrill Lynch to another brokerage firm or financial institution should be aware that, if the firm to which the retirement account is to be
transferred will not take delivery of shares of the Trust, a shareholder must either redeem the shares (paying any applicable CDSC) so that the cash proceeds can be transferred to the account at the new firm, or such shareholder must continue to maintain a retirement account at Merrill Lynch for those shares.
EXCHANGE PRIVILEGE
Shareholders of each class of shares of the Trust have an exchange privilege with certain other MLAM-advised mutual funds. There is currently no limitation on the number of times a shareholder may exercise the exchange privilege. The exchange privilege may be modified or terminated in accordance with the rules of the Commission.
Under the Merrill Lynch Select Pricing(SM) System, Class A shareholders may exchange Class A shares of the Trust for Class A shares of a second MLAM-advised mutual fund if the shareholder holds any Class A shares of the second fund in his or her account in which the exchange is made at the time of the exchange or is otherwise eligible to purchase Class A shares of the second fund. If the Class A shareholder wants to exchange Class A shares for shares of a second MLAM-advised mutual fund, and the shareholder does not hold Class A shares of the second fund in his or her account at the time of the exchange and is not otherwise eligible to acquire Class A shares of the second fund, the shareholder will receive Class D shares of the second fund as a result of the exchange. Class D shares also may be exchanged for Class A shares of a second MLAM-advised mutual fund at any time as long as, at the time of the exchange, the shareholder holds Class A shares of the second fund in the account in which the exchange is made or is otherwise eligible to purchase Class A shares of the second fund.
Exchanges of Class A and Class D shares are made on the basis of the relative net asset values per Class A or Class D share, respectively, plus an amount equal to the difference, if any, between the sales charge previously paid on the Class A or Class D shares being exchanged and the sales charge payable at the time of the exchange on the shares being acquired.
Class B, Class C and Class D shares are exchangeable with shares of the same class of other MLAM-advised mutual funds.
Shares of the Trust which are subject to a CDSC are exchangeable on the basis of relative net asset value per share without the payment of any CDSC that might otherwise be due upon redemption of the shares of the Trust. For purposes of computing the CDSC that may be payable upon a disposition of the shares acquired in the exchange, the holding period for the previously owned shares of the Trust is "tacked" to the holding period of the newly acquired shares of the other fund.
Class A, Class B, Class C and Class D shares also are exchangeable for shares of certain MLAM-advised money market funds specifically designated as available for exchange by holders of Class A, Class B, Class C or Class D shares. The period of time that Class A, Class B, Class C or Class D shares are held in a money market fund, however, will not count toward satisfaction of the holding period requirement for reduction of any CDSC imposed on such shares, if any, and, with respect to Class B shares, toward satisfaction of the Conversion Period.
Class B shareholders of the Trust exercising the exchange privilege will continue to be subject to the Trust's CDSC schedule if such schedule is higher than the CDSC schedule relating to the new Class B shares. In addition, Class B shares of the Trust acquired through use of the exchange privilege will be subject to the
Trust's CDSC schedule if such schedule is higher than the CDSC schedule relating to the Class B shares of the MLAM-advised mutual fund from which the exchange has been made.
Exercise of the exchange privilege is treated as a sale of the exchanged shares and a purchase of the acquired shares for Federal income tax purposes. For further information, see "Shareholder Services --Exchange Privilege" in the Statement of Additional Information.
The exchange privilege is modified with respect to certain retirement plans which participate in the MFA program. Such retirement plans may exchange Class B, Class C or Class D shares that have been held for at least one year for Class A shares of the same fund on the basis of relative net asset values in connection with the commencement of participation in the MFA program, i.e., no CDSC will apply. The one-year holding period does not apply to shares reacquired through reinvestment of dividends. Upon termination of participation in the MFA program, Class A shares will be reexchanged for the class of shares originally held. For purposes of computing any CDSC that may be payable upon redemption of Class B or Class C shares so reacquired, or the Conversion Period for Class B shares so acquired, the holding period for the Class A shares will be "tacked" to the holding period for the Class B or Class C shares originally held. The Trust's exchange privilege is also modified with respect to purchases of Class A and Class D shares by non-retirement plan investors under the MFA program. First, the initial allocation of assets is made under the MFA program. Then, any subsequent exchange under the MFA program of Class A or Class D shares of a MLAM-advised mutual fund for Class A or Class D shares of the Trust will be made solely on the basis of the relative net asset values of the shares being exchanged. Therefore, there will not be a charge for any difference between the sales charge previously paid on the shares of the other MLAM-advised mutual fund and the sales charge payable on the shares of the Trust being acquired in the exchange under the MFA program.
AUTOMATIC REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
All dividends and capital gains distributions are reinvested automatically in full and fractional shares of the Trust, without sales charge, at the net asset value per share next determined on the ex-dividend date of such dividend or distribution. A shareholder may at any time, by written notification or by telephone (1-800-MER-FUND) to the Transfer Agent, if the shareholder's account is maintained at the Transfer Agent, elect to have subsequent dividends or both dividends and capital gains distributions paid in cash, rather than reinvested, in which event payment will be mailed on or about the payment date. Cash payments can also be directly deposited to the shareholder's bank account. No CDSC will be imposed on redemption of shares issued as a result of the automatic reinvestment of dividends or capital gains distributions.
SYSTEMATIC WITHDRAWAL PLANS
A Class A or Class D shareholder may elect to receive systematic withdrawal payments from his Investment Account in the form of payments by check or through automatic payment by direct deposit to his bank account on either a monthly or quarterly basis. A Class A or Class D shareholder whose shares are held within a CMA(R), CBA(R) or Retirement Account may elect to have shares redeemed on a monthly, bimonthly, quarterly, semiannual or annual basis through the CMA(R)/CBA(R) Systematic Redemption Program, subject to certain conditions.
AUTOMATIC INVESTMENT PLANS
Regular additions of Class A, Class B, Class C or Class D shares may be made to an investor's Investment Account by prearranged charges of $50 or more to his regular bank account. Investors who maintain CMA(R) or CBA(R) accounts may arrange to have periodic investments made in the Trust in their CMA(R) or CBA(R) accounts or in certain related accounts in amounts of $100 or more ($1 for retirement plans) through the CMA(R)/CBA(R) Automated Investment Program.
PORTFOLIO TRANSACTIONS AND BROKERAGE
The Investment Adviser is responsible for making the Trust's portfolio decisions, placing the Trust's brokerage business, evaluating the reasonableness of brokerage commissions and negotiating the amount of any commissions paid, subject to policies established by the Trust's Trustees and officers. The Trust has no obligation to deal with any broker or group of brokers in the execution of transactions in portfolio securities. Orders for transactions in portfolio securities are placed for the Trust with a number of brokers and dealers, including Merrill Lynch. In placing orders, it is the policy of the Trust to obtain the most favorable net results, taking into account various factors, including price, commissions, if any, size of the transaction and difficulty of execution. Where practicable, the Investment Adviser surveys a number of brokers and dealers in connection with proposed portfolio transactions and selects the broker or dealer which offers the Trust best price and execution or other services which are of benefit to the Trust. Securities firms also may receive brokerage commissions on transactions including covered call options written by the Trust and the sale of underlying securities upon the exercise of such options.
The Trust does not use any particular broker or dealer, and brokers who provide supplemental investment research to the Investment Adviser may receive orders for transactions by the Trust. Such supplemental research services ordinarily consist of assessments and analyses of the business or prospects of a company, industry or economics sector. Information so received will be in addition to and not in lieu of the services required to be performed by the Investment Adviser under the Investment Advisory Agreement. If in the judgment of the Investment Adviser the Trust will be benefited by supplemental research services, the Investment Adviser is authorized to pay brokerage commissions to a broker furnishing such services which are in excess of commissions which another broker may have charged for effecting the same transaction. The expenses of the Investment Adviser will not necessarily be reduced as a result of the receipt of such supplemental information, and the Investment Adviser may use such information in servicing its other accounts.
PERFORMANCE DATA
From time to time the Trust may include its average annual total return for various specified time periods in advertisements or information furnished to present or prospective shareholders. Average annual total return is computed separately for Class A, Class B, Class C and Class D shares in accordance with a formula specified by the Commission.
Average annual total return quotations for the specified periods will be computed by finding the average annual compounded rates of return (based on net investment income and any capital gains or losses on portfolio investments over such periods) that would equate the initial amount invested to the redeemable value
of such investment at the end of each period. Average annual total return will be computed assuming all dividends and distributions are reinvested and taking into account all applicable recurring and nonrecurring expenses, including any CDSC that would be applicable to a complete redemption of the investment at the end of the specified period such as in the case of Class B and Class C shares and the maximum sales charge in the case of Class A and Class D shares. Dividends paid by the Trust with respect to all shares, to the extent any dividends are paid, will be calculated in the same manner at the same time on the same day and will be in the same amount, except that account maintenance fees, distribution charges and any incremental transfer agency costs relating to each class of shares will be borne exclusively by that class. The Trust will include performance data for all classes of shares of the Trust in any advertisement or information including performance data of the Trust.
The Trust also may quote total return and aggregate total return performance data for various specified time periods. Such data will be calculated substantially as described above, except that (1) the rates of return calculated will not be average annual rates, but rather, actual annual, annualized or aggregate rates of return and (2) the maximum applicable sales charges will not be included with respect to annual or annualized rates of return calculations. Aside from the impact on the performance data calculations of including or excluding the maximum applicable sales charges, actual annual or annualized total return data generally will be lower than average annual total return data since the average annual rates of return reflect compounding; aggregate total return data generally will be higher than average annual total return data since the aggregate rates of return reflect compounding over a longer period of time. In advertisements directed to investors whose purchases are subject to waiver of the CDSC in the case of Class B and Class C shares (such as investors in certain retirement plans) or reduced sales charges in the case of Class A and Class D shares, performance data may take into account the reduced, and not the maximum, sales charge or may not take into account the CDSC and therefore may reflect greater total return since, due to the reduced sales charges or waiver of the CDSC, a lower amount of expenses may be deducted. See "Purchase of Shares". The Trust's total return may be expressed either as a percentage or as a dollar amount in order to illustrate the effect of such total return on a hypothetical $1,000 investment in the Trust at the beginning of each specified period.
Total return figures are based on the Trust's historical performance and are not intended to indicate future performance. The Trust's total return will vary depending on market conditions, the securities comprising the Trust's portfolio, the Trust's operating expenses and the amount of realized and unrealized net capital gains or losses during the period. The value of an investment in the Trust will fluctuate and an investor's shares, when redeemed, may be worth more or less than their original cost.
On occasion, the Trust may compare its performance to that of the Standard & Poor's 500 Composite Stock Price Index, the Dow Jones Industrial Average or performance data published by Lipper Analytical Services, Inc., Morningstar Publications, Inc., Money Magazine, U.S. News & World Report, Business Week, CDA Investment Technology, Inc., Forbes Magazine and Fortune Magazine or other industry publications. As with other performance data, performance comparisons should not be considered indicative of the Trust's relative performance for any future period.
ADDITIONAL INFORMATION
DIVIDENDS AND DISTRIBUTIONS
It is the Trust's intention to distribute all its net investment income, if any. Dividends from such net investment income are paid semi-annually. All net realized long- or short-term capital gains, if any, are distributed to the Trust's shareholders at least annually. Premiums from expired call options written by the Trust and net gains from closing purchase transactions are treated as short-term capital gains for Federal income tax purposes. The per share dividends and distributions on each class of shares will be reduced as a result of any account maintenance, distribution and transfer agency fees applicable to that class. See "Determination of Net Asset Value" below. Dividends and distributions may be reinvested automatically in shares of the Trust at net asset value without sales charge. Shareholders may elect in writing to receive any such dividends or distributions, or both, in cash. Dividends and distributions are taxable to shareholders as discussed below whether they are reinvested in shares of the Trust or received in cash. From time to time, the Trust may declare a special distribution at or about the end of the calendar year in order to comply with a Federal income tax requirement that certain percentages of its ordinary income and capital gains be distributed during the calendar year.
DETERMINATION OF NET ASSET VALUE
The net asset value of the shares of all classes of the Trust is determined once daily as of 15 minutes after the close of business on the New York Stock Exchange (generally, 4:00 p.m., New York time), on each day during which the New York Stock Exchange is open for trading. Any assets or liabilities initially expressed in terms of non-U.S. dollar currencies are translated into U.S. dollars at the prevailing market rates as quoted by one or more banks or dealers on the day of valuation. The net asset value per share is computed by dividing the sum of the market value of the securities held by the Trust plus any cash or other assets (including interest and dividends accrued but not yet received) minus all liabilities (including accrued expenses) by the total number of shares outstanding at such time, rounded to the nearest cent. Expenses, including the investment advisory fees payable to the Investment Adviser and any account maintenance and/or distribution fees payable to the Distributor, are accrued daily.
The per share net asset value of Class A shares generally will be higher than the per share net asset value of shares of the other classes, reflecting the daily expense accruals of the account maintenance, distribution and higher transfer agency fees applicable with respect to Class B and Class C shares and the daily expense accruals of the account maintenance fees applicable with respect to Class D shares; moreover, the per share net asset value of Class D shares generally will be higher than the per share net asset value of Class B and Class C shares, reflecting the daily expense accruals of the distribution and higher transfer agency fees applicable with respect to Class B and Class C shares. It is expected, however, that the per share net asset value of the classes will tend to converge (although not necessarily meet) immediately after the payment of dividends or distributions, which will differ by approximately the amount of the expense accrual differentials between the classes.
Portfolio securities which are traded on stock exchanges are valued at the last sale price (regular way) on the exchange on which such securities are traded, as of the close of business on the day the securities are being valued or, lacking any sales, at the last available bid price. In cases where securities are traded on more than one exchange, the securities are valued on the exchange designated by or under the authority of the Board of Trustees as the primary market. Securities traded in the over-the-counter market are valued at the last
available bid price in the over-the-counter market prior to the time of valuation. When the Trust writes a call option, the amount of the premium received is recorded on the books of the Trust as an asset and an equivalent liability. The amount of the liability is subsequently valued to reflect the current market value of the option written, based upon the last sale price in the case of exchange-traded options, or, in the case of options traded in the OTC market, the last asked price. Options purchased by the Trust are valued at their last sale price. Securities and assets for which market quotations are not readily available are valued at fair value as determined in good faith under the direction of the Board of Trustees of the Trust.
TAXES
The Trust intends to continue to qualify for the special tax treatment afforded regulated investment companies ("RICs") under the Internal Revenue Code of 1986, as amended (the "Code"). If it so qualifies, the Trust (but not its shareholders) will not be subject to Federal income tax on the part of its net ordinary income and net realized capital gains which it distributes to Class A, Class B, Class C and Class D shareholders (together, the "shareholders"). The Trust intends to distribute substantially all of such income.
Dividends paid by the Trust from its ordinary income or from an excess of net short-term capital gains over net long-term capital losses (together referred to hereafter as "ordinary income dividends") are taxable to shareholders as ordinary income. Distributions made from an excess of net long-term capital gains over net short-term capital losses (including gains or losses from certain transactions in futures and options) ("capital gain dividends") are taxable to shareholders as long-term capital gains, regardless of the length of time the shareholder has owned Trust shares. Any loss upon the sale or exchange of Trust shares held for six months or less, however, will be treated as long-term capital loss to the extent of any capital gain dividends received by the shareholder. Distributions in excess of the Trust's earnings and profits will first reduce the adjusted tax basis of a holder's shares and, after such adjusted tax basis is reduced to zero, will constitute capital gains to such holder (assuming the shares are held as a capital asset).
Dividends are taxable to shareholders even though they are reinvested in additional shares of the Trust. Not later than 60 days after the close of its taxable year, the Trust will provide its shareholders with a written notice designating the amounts of any ordinary income or capital gain dividends. A portion of the Trust's ordinary income dividends may be eligible for the dividends received deduction allowed to corporations under the Code, if certain requirements are met. If the Trust pays a dividend in January which was declared in the previous October, November or December to shareholders of record on a specified date in one of such months, then such dividend will be treated for tax purposes as being paid by the Trust and received by its shareholders on December 31 of the year in which such dividend was declared.
Ordinary income dividends paid to shareholders who are nonresident aliens or foreign entities will be subject to a 30% United States withholding tax under existing provisions of the Code applicable to foreign individuals and entities unless a reduced rate of withholding or a withholding exemption is provided under applicable treaty law. Nonresident shareholders are urged to consult their own tax advisers concerning the applicability of the United States withholding tax.
Dividends and interest received by the Trust may give rise to withholding and other taxes imposed by foreign countries. Tax conventions between certain countries and the United States may reduce or eliminate such taxes. Shareholders may be able to claim United States foreign tax credits with respect to such taxes, subject to certain conditions and limitations contained in the Code. For example, certain retirement accounts cannot claim foreign tax credits on investments in foreign securities held in the Trust. If more than 50% in
value of the Trust's total assets at the close of its taxable year consists of securities of foreign corporations, the Trust will be eligible, and intends, to file an election with the Internal Revenue Service pursuant to which shareholders of the Trust will be required to include their proportionate shares of such withholding taxes in their United States income tax returns as gross income, treat such proportionate shares as taxes paid by them, and deduct such proportionate shares in computing their taxable incomes or, alternatively, use them as foreign tax credits against their United States income taxes. No deductions for foreign taxes, however, may be claimed by noncorporate shareholders who do not itemize deductions. A shareholder that is a nonresident alien individual or a foreign corporation may be subject to United States withholding tax on the income resulting from the Trust's election described in this paragraph but may not be able to claim a credit or deduction against such United States tax for the foreign taxes treated as having been paid by such shareholder. The Trust will report annually to its shareholders the amount per share of such withholding taxes.
Under certain provisions of the Code, some shareholders may be subject to a 31% withholding tax on ordinary income dividends, capital gain dividends and redemption payments ("backup withholding"). Generally, shareholders subject to backup withholding will be those for whom no certified taxpayer identification number is on file with the Trust or who, to the Trust's knowledge, have furnished an incorrect number. When establishing an account, an investor must certify under penalty of perjury that such number is correct and that such investor is not otherwise subject to backup withholding.
Under Code Section 988, foreign currency gains or losses from certain debt instruments, from certain forward contracts, from futures contracts that are not "regulated futures contracts" and from unlisted options will generally be treated as ordinary income or loss. Such Code Section 988 gains or losses will generally increase or decrease the amount of the Trust's investment company taxable income available to be distributed to shareholders as ordinary income. Additionally, if Code Section 988 losses exceed other investment company taxable income during a taxable year, the Trust would not be able to make any ordinary income dividend distributions, and any distributions made before the losses were realized but in the same taxable year would be recharacterized as a return of capital to shareholders, thereby reducing the basis of each shareholder's Trust shares and resulting in a capital gain for any shareholder who received a distribution greater than the shareholder's tax basis in Trust shares (assuming the shares were held as a capital asset).
No gain or loss will be recognized by Class B shareholders on the conversion of their Class B shares into Class D shares. A shareholder's basis in the Class D shares acquired will be the same as such shareholder's basis in the Class B shares converted, and the holding period of the acquired Class D shares will include the holding period for the converted Class B shares.
If a shareholder exercises an exchange privilege within 90 days of acquiring the shares, then the loss the shareholder can recognize on the exchange will be reduced (or the gain increased) to the extent any sales charge paid to the Trust on the exchanged shares reduces any sales charge the shareholder would have owed upon the purchase of the new shares in the absence of the exchange privilege. Instead, such sales charge will be treated as an amount paid for the new shares.
A loss realized on a sale or exchange of shares of the Trust will be disallowed if other Trust shares are acquired (whether through the automatic reinvestment of dividends or otherwise) within a 61-day period beginning 30 days before and ending 30 days after the date that the shares are disposed of. In such a case, the basis of the shares acquired will be adjusted to reflect the disallowed loss.
The foregoing is a general and abbreviated summary of the applicable provisions of the Code and Treasury regulations presently in effect. For the complete provisions, reference should be made to the pertinent Code sections and the Treasury regulations promulgated thereunder. The Code and the Treasury regulations are subject to change by legislative, judicial or administrative action either prospectively or retroactively.
Ordinary income and capital gain dividends may also be subject to state and local taxes.
Certain states exempt from state income taxation dividends paid by RICs which are derived from interest on United States Government obligations. State law varies as to whether dividend income attributable to United States Government obligations is exempt from state income tax.
Shareholders are urged to consult their tax advisers regarding specific questions as to Federal, foreign, state or local taxes. Foreign investors should consider applicable foreign taxes in their evaluation of an investment in the Trust.
ORGANIZATION OF THE TRUST
The Trust was organized on April 12, 1985 under the laws of the Commonwealth of Massachusetts and is a business entity commonly known as a "Massachusetts business trust". The Trust is authorized to issue an unlimited number of shares of beneficial interest of $0.10 par value of different classes. At the date of this Prospectus, the shares of the Trust are divided into Class A, Class B, Class C and Class D shares. Shares of beneficial interest of Class A, Class B, Class C and Class D represent interests in the same assets of the Trust and have identical voting, dividend, liquidation and other rights and the same terms and conditions except that Class B, Class C and Class D shares bear certain expenses related to the account maintenance of such shares and Class B and Class C shares bear certain expenses related to the distribution of such shares. Each class has exclusive voting rights with respect to matters relating to account maintenance and distribution expenditures, as applicable. See "Purchase of Shares". The Trust has received an order from the Commission permitting the issuance and sale of multiple classes of shares. The Trustees of the Trust may classify and reclassify the shares of the Trust into additional classes of shares of beneficial interest at a future date. Shares issued are fully paid, non-assessable and have no preemptive rights. Shares have the conversion rights described in this Prospectus.
The Declaration does not require that the Trust hold an annual meeting of shareholders. However, the Trust will be required to call special meetings of shareholders in accordance with the requirements of the Investment Company Act to seek approval of new management and advisory arrangements, of a material increase in distribution fees or of a change in the fundamental policies, objectives or restrictions of the Trust. The Trust also would be required to hold a special shareholders' meeting to elect new Trustees at such time as less than a majority of the Trustees holding office have been elected by shareholders. The Declaration provides that a shareholders' meeting may be called for any reason at the request of 10% of the outstanding shares of the Trust or by a majority of the Trustees.
SHAREHOLDER REPORTS
Only one copy of each shareholder report and certain shareholder communications will be mailed to each identified shareholder regardless of the number of accounts such shareholder has. If a shareholder wishes to receive separate copies of each report and communication for each of the shareholder's related accounts the shareholder should notify in writing:
Merrill Lynch Financial Data Services, Inc.
P.O. Box 45289
Jacksonville, FL 32232-5289
The written notification should include the shareholder's name, address, tax identification number and Merrill Lynch, Pierce, Fenner & Smith Incorporated and/or mutual fund account numbers. If you have any questions regarding this please call your Merrill Lynch financial consultant or Merrill Lynch Financial Data Services, Inc. at 800-637-3863.
SHAREHOLDER INQUIRIES
The Declaration of Trust establishing the Trust, dated April 12, 1985, a copy of which, together with all amendments thereto (the "Declaration"), is on file in the office of the Secretary of the Commonwealth of Massachusetts, provides that the name "Merrill Lynch Global Resources Trust" refers to the trustees under the Declaration collectively as Trustees, but not as individuals or personally; and no Trustee, shareholder, officer, employee or agent of the Trust shall be held to any personal liability, nor shall resort be had to their private property for the satisfaction of any obligation or claim of said Trust, but the "Trust Property" (as defined in the Declaration) only shall be liable.
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MERRILL LYNCH GLOBAL RESOURCES TRUST--AUTHORIZATION FORM (PART 1)
NOTE: THIS FORM MAY NOT BE USED FOR PURCHASES THROUGH THE MERRILL LYNCH BLUEPRINT(SM) PROGRAM. YOU MAY REQUEST A MERRILL LYNCH BLUEPRINT(SM) PROGRAM APPLICATION BY CALLING TOLL FREE (800) 637-3766.
I, being of legal age, wish to purchase: (choose one) / / Class A shares / / Class B shares / / Class C shares / / Class D shares of Merrill Lynch Global Resources Trust and establish an Investment Account as described in the Prospectus. In the event that I am not eligible to purchase Class A shares, I understand that Class D shares will be purchased.
Basis for establishing an Investment Account:
A. I enclose a check for $.......... payable to Merrill Lynch Financial Data Services, Inc. as an initial investment (minimum $1,000). I understand that this purchase will be executed at the applicable offering price next to be determined after this Application is received by you.
B. I already own shares of the following Merrill Lynch mutual funds that would qualify for the right of accumulation as outlined in the Statement of Additional Information: (Please list all funds. Use a separate sheet of paper
if necessary.)
1. ............................... 4. ...............................
2. ............................... 5. ...............................
3. ............................... 6. ...............................
Name............................................................................
First Name Initial Last Name
Name of Co-Owner (if any).......................................................
First Name Initial Last Name
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Address........................
............................... Name and Address of Employer..................
(Zip Code)
Occupation .................... ..............................................
............................... ..............................................
Signature of Owner Signature of Co-Owner (if any)
If no election is made, dividends and capital gains will be automatically reinvested at net asset value without a sales charge.
IF CASH, SPECIFY HOW YOU WOULD LIKE YOUR DISTRIBUTIONS PAID TO YOU: / / Check
or / / Direct Deposit to bank account
IF DIRECT DEPOSIT TO BANK ACCOUNT IS SELECTED, PLEASE COMPLETE BELOW:
I hereby authorize payment of dividend and capital gain distributions by direct deposit to my bank account and, if necessary, debit entries and adjustments for any credit entries made to my account in accordance with the terms I have selected on the Merrill Lynch Global Resources Trust Authorization Form.
SPECIFY TYPE OF ACCOUNT (CHECK ONE) / / checking / / savings
Name on your account............................................................
Bank Name.......................................................................
Bank Number .............................. Account Number.......................
Bank Address....................................................................
I agree that this authorization will remain in effect until I provide written notification to Merrill Lynch Financial Data Services, Inc. amending or terminating this service.
Signature of Depositor..........................................................
Signature of Depositor............................ Date.........................
(if joint account, both must sign)
NOTE: IF DIRECT DEPOSIT TO BANK ACCOUNT IS SELECTED, YOUR BLANK, UNSIGNED CHECK MARKED "VOID" OR A DEPOSIT SLIP FROM YOUR SAVINGS ACCOUNT SHOULD ACCOMPANY THIS APPLICATION.
3. SOCIAL SECURITY NUMBER OR TAXPAYER IDENTIFICATION NUMBER
Social Security Number or Taxpayer Identification Number
Under penalty of perjury, I certify (1) that the number set forth above is my correct Social Security Number or Taxpayer Identification Number and (2) that I am not subject to backup withholding (as discussed in the Prospectus under "Additional Information--Taxes") either because I have not been notified that I am subject thereto as a result of a failure to report all interest or dividends, or the Internal Revenue Service ("IRS") has notified me that I am no longer subject thereto.
INSTRUCTION: YOU MUST STRIKE OUT THE LANGUAGE IN (2) ABOVE IF YOU HAVE BEEN NOTIFIED THAT YOU ARE SUBJECT TO BACKUP WITHHOLDING DUE TO UNDERREPORTING AND IF YOU HAVE NOT RECEIVED A NOTICE FROM THE IRS THAT BACKUP WITHHOLDING HAS BEEN TERMINATED. THE UNDERSIGNED AUTHORIZES THE FURNISHING OF THIS CERTIFICATION TO OTHER MERRILL LYNCH SPONSORED MUTUAL FUNDS.
............................................................. ............................................................
Signature of Owner Signature of Co-Owner (if any)
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4. LETTER OF INTENTION--CLASS A AND D SHARES ONLY (SEE TERMS AND CONDITIONS IN THE STATEMENT OF ADDITIONAL INFORMATION)
......................,
19 . . . .
Dear Sir/Madam: Date of initial purchase
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Although I am not obligated to do so, I intend to purchase shares of Merrill Lynch Global Resources Trust or any other investment company with an initial sales charge or deferred sales charge for which Merrill Lynch Funds Distributor, Inc. acts as distributor over the next 13-month period which will equal or exceed:
/ / $25,000 / / $50,000 / / $100,000 / /$250,000 / / $1,000,000
Each purchase will be made at the then reduced offering price applicable to the amount checked above, as described in the Merrill Lynch Global Resources Trust Prospectus.
I agree to the terms and conditions of this Letter of Intention. I hereby irrevocably constitute and appoint Merrill Lynch Funds Distributor, Inc., my attorney, with full power of substitution, to surrender for redemption any or all shares of Merrill Lynch Global Resources Trust held as security.
By............................................................... ...............................................................
Signature of Owner Signature of Co-Owner
(If registered in joint parties, both must sign)
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In making purchases under this letter, the following are the related accounts on which reduced offering prices are to apply:
(1) Name ................................................... (2) Name.................................................... Account Number ............................................ Account Number.............................................. |
5. FOR DEALER ONLY
Branch Office, Address, Stamp
This form when completed should be mailed to:
Merrill Lynch Global Resources Trust
c/o Merrill Lynch Financial Data Services, Inc.
P.O. Box 45289
Jacksonville, Florida 32232-5289
We hereby authorize Merrill Lynch Funds Distributor, Inc. to act as our agent in connection with transactions under this authorization form and agree to notify the Distributor of any purchases made under a Letter of Intention or Systematic Withdrawal Plan. We guarantee the Shareholder's signature.
...............................................................
Dealer Name and Address
By .............................................................................
Authorized Signature of Dealer
- --------- ------------
..............................
- --------- ------------
Branch-Code F/C No. F/C Last Name
- --------- ---------------
- --------- ---------------
Dealer's Customer Account No.
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NOTE: THIS FORM IS REQUIRED TO APPLY FOR THE SYSTEMATIC WITHDRAWAL PLAN OR THE AUTOMATIC INVESTMENT PLAN ONLY.
1. ACCOUNT REGISTRATION
------------------------------------
Name of Owner.......................................................................
------------------------------------
Social Security No.
or Taxpayer Identification No.
Name of Co-Owner (if any)...........................................................
Address.............................................................................
.................................................................................... Account Number...........................
(if existing account)
Name of Owner.......................................................................
Name of Co-Owner (if any)...........................................................
Address.............................................................................
....................................................................................
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MINIMUM REQUIREMENTS: $10,000 for monthly disbursements, $5,000 for quarterly, of / / Class A or / / Class D shares in Merrill Lynch Global Resources Trust at cost or current offering price. Withdrawals to be made either (check one) / / Monthly on the 24th day of each month, or / / Quarterly on the 24th day of March, June, September and December. If the 24th falls on a weekend or holiday, the next succeeding business day will be utilized. Begin systematic withdrawal on ................(month) or as soon as possible thereafter.
SPECIFY HOW YOU WOULD LIKE YOUR WITHDRAWAL PAID TO YOU (CHECK ONE): / / $...... or / / ......% of the current value of / / Class A or / / Class D shares in the account.
SPECIFY WITHDRAWAL METHOD: / / check or / / direct deposit to bank account (check one and complete part (a) or (b) below):
DRAW CHECKS PAYABLE (CHECK ONE)
(a) I hereby authorize payment by check / / as indicated in Item 1. / / to the order of..........................................................
Mail to (check one)
/ / the address indicated in Item 1.
/ / Name (please print)......................................................
Address.........................................................................
...........................................................................
Signature of Owner................................... Date......................
Signature of Co-Owner (if any)..................................................
(B) I HEREBY AUTHORIZE PAYMENT BY DIRECT DEPOSIT TO BANK ACCOUNT AND, IF NECESSARY, DEBIT ENTRIES AND ADJUSTMENTS FOR ANY CREDIT ENTRIES MADE TO MY ACCOUNT. I AGREE THAT THIS AUTHORIZATION WILL REMAIN IN EFFECT UNTIL I PROVIDE WRITTEN NOTIFICATION TO MERRILL LYNCH FINANCIAL DATA SERVICES, INC. AMENDING OR TERMINATING THIS SERVICE.
SPECIFY TYPE OF ACCOUNT (CHECK ONE): / / checking / / savings
Name on your account............................................................
Bank Name.......................................................................
Bank Number .................................. Account Number...................
Bank Address....................................................................
......................................................................
Signature of Depositor....................................... Date..............
Signature of Depositor..........................................................
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(If joint account, both must sign)
NOTE: IF DIRECT DEPOSIT IS ELECTED, YOUR BLANK, UNSIGNED CHECK MARKED "VOID" OR A DEPOSIT SLIP FROM YOUR SAVINGS ACCOUNT SHOULD ACCOMPANY THIS APPLICATION.
3. APPLICATION FOR AUTOMATIC INVESTMENT PLAN
I hereby request that Merrill Lynch Financial Data Services, Inc. draw an automated clearing house ("ACH") debit on my checking account as described below each month to purchase (choose one)
/ / Class A shares / / Class B shares / / Class C shares / / Class D shares
of Merrill Lynch Global Resources Trust, subject to the terms set forth below. In the event that I am not eligible to purchase Class A shares, I understand that Class D shares will be purchased.
MERRILL LYNCH FINANCIAL DATA SERVICES, INC.
You are hereby authorized to draw an ACH debit each month on my bank account for investment in Merrill Lynch Global Resources Trust as indicated below:
Amount of each check or ACH debit $..........................................
Account Number............................................................... Please date and invest ACH debits on the 20th of each month beginning
.................................. or as soon thereafter as possible.
(month)
I agree that you are preparing these ACH debits voluntarily at my request and that you shall not be liable for any loss arising from any delay in preparing or failure to prepare any such debit. If I change banks or desire to terminate or suspend this program, I agree to notify you promptly in writing. I hereby authorize you to take any action to correct erroneous ACH debits of my bank account or purchases of fund shares including liquidating shares of the Fund and credit my bank account. I further agree that if a debit is not honored upon presentation, Merrill Lynch Financial Data Services, Inc. is authorized to discontinue immediately the Automatic Investment Plan and to liquidate sufficient shares held in my account to offset the purchase made with the dishonored debit.
................. .......................................
Date Signature of Depositor
.......................................
Signature of Depositor
(If joint account, both must sign)
AUTHORIZATION TO HONOR ACH DEBITS DRAWN
BY MERRILL LYNCH FINANCIAL DATA SERVICES, INC.
To..........................................................................Bank
(Investor's Bank)
Bank Address....................................................................
City .................... State ........ Zip Code...............................
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As a convenience to me, I hereby request and authorize you to pay and charge to my account ACH debits drawn on my account by and payable to Merrill Lynch Financial Data Services, Inc., I agree that your rights in respect to each such debit shall be the same as if it were a check drawn on you and signed personally by me. This authority is to remain in effect until revoked by me in writing. Until you receive such notice, you shall be fully protected in honoring any such debit. I further agree that if any such debit be dishonored, whether with or without cause and whether intentionally or inadvertently, you shall be under no liability.
................. .......................................
Date Signature of Depositor
................. .......................................
Bank Account Signature of Depositor
Number (If joint account, both must sign)
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NOTE: IF AUTOMATIC INVESTMENT PLAN IS ELECTED, YOUR BLANK, UNSIGNED CHECK MARKED "VOID" SHOULD ACCOMPANY THIS APPLICATION.
INVESTMENT ADVISER
Merrill Lynch Asset Management
Administrative Offices:
800 Scudders Mill Road
Plainsboro, New Jersey
Mailing Address:
P.O. Box 9011
Princeton, New Jersey 08543-9011
DISTRIBUTOR
Merrill Lynch Funds Distributor, Inc.
Administrative Offices:
800 Scudders Mill Road
Plainsboro, New Jersey
Mailing Address:
P.O. Box 9081
Princeton, New Jersey 08543-9081
CUSTODIAN
The Bank of New York
90 Washington Street, 12th Floor
New York, New York 10286
TRANSFER AGENT
Merrill Lynch 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
INDEPENDENT AUDITORS
Deloitte & Touche LLP
117 Campus Drive
Princeton, New Jersey 08540-6400
COUNSEL
Brown & Wood
One World Trade Center
New York, New York 10048-0557
TABLE OF CONTENTS
PAGE
----
Fee Table....................................... 2
Merrill Lynch Select Pricing(SM) System......... 3
Financial Highlights............................ 8
Special Considerations.......................... 11
Investment Objectives and Policies.............. 13
Asset-Based Securities........................ 15
Other Investment Policies and Practices....... 15
Investment Restrictions....................... 17
Management of the Trust......................... 18
Trustees...................................... 18
Management and Advisory Arrangements.......... 18
Code of Ethics................................ 19
Transfer Agency Services...................... 20
Purchase of Shares.............................. 20
Initial Sales Charge Alternatives--
Class A and Class D Shares.................. 22
Deferred Sales Charge Alternatives--
Class B and Class C Shares.................. 24
Distribution Plans............................ 28
Limitations on the Payment of Deferred Sales
Charges..................................... 30
Redemption of Shares............................ 30
Redemption.................................... 31
Repurchase.................................... 31
Reinstatement Privilege--
Class A and Class D Shares.................. 32
Shareholder Services............................ 32
Exchange Privilege............................ 33
Automatic Reinvestment of Dividends and
Capital Gains Distributions................. 34
Systematic Withdrawal Plans................... 34
Automatic Investment Plans.................... 35
Portfolio Transactions and Brokerage............ 35
Performance Data................................ 35
Additional Information.......................... 37
Dividends and Distributions................... 37
Determination of Net Asset Value.............. 37
Taxes......................................... 38
Organization of the Trust..................... 40
Shareholder Reports........................... 41
Shareholder Inquiries......................... 41
Authorization Form.............................. 43
Code # 10301-1195
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(ART)
Merrill Lynch
Global Resources Trust
PROSPECTUS
November 27, 1995
Distributor:
Merrill Lynch
Funds Distributor, Inc.
This prospectus should be
retained for future reference.
STATEMENT OF ADDITIONAL INFORMATION
MERRILL LYNCH GLOBAL RESOURCES TRUST
P.O. BOX 9011, PRINCETON, NEW JERSEY 08543-9011 - PHONE NO. (609) 282-2800
The investment objectives of Merrill Lynch Global Resources Trust (the "Trust") are to achieve long-term growth of capital and to protect the purchasing power of shareholders' capital by investing in a portfolio of equity securities of domestic and foreign companies with substantial natural resource assets. The Trust also may invest in debt, preferred or convertible securities, the value of which is related to the market value of some natural resource asset ("asset-based securities"). Management of the Trust will seek to identify securities it believes are attractively priced relative to the intrinsic value of related natural resource assets or are especially well-positioned to benefit during particular portions of inflationary cycles. The Trust's fully managed investment approach enables it to switch its emphasis among various natural resource industry groups depending upon management's outlook with respect to prevailing trends and developments. It is expected that when management of the Trust anticipates significant economic, political or financial instability, such as high inflationary pressures or upheaval in the foreign currency exchange markets, the Trust may invest a majority of its assets in gold-related securities. Current income from dividends and interest will not be a primary consideration in selecting securities.
Pursuant to the Merrill Lynch Select Pricing(SM) System, the Trust offers four classes of shares each with a different combination of sales charges, ongoing fees and other features. The Merrill Lynch Select Pricing(SM) System permits an investor to choose the method of purchasing shares that the investor believes is most beneficial given the amount of the purchase, the length of time the investor expects to hold the shares and other relevant circumstances.
This Statement of Additional Information of the Trust is not a prospectus and should be read in conjunction with the prospectus of the Trust, dated November 22, 1995 (the "Prospectus"), which has been filed with the Securities and Exchange Commission (the "Commission") and can be obtained, without charge, by calling or by writing the Trust at the above telephone number or address. This Statement of Additional Information has been incorporated by reference into the Prospectus.
The date of this Statement of Additional Information is November 22, 1995.
INVESTMENT OBJECTIVES AND POLICIES
The investment objectives of the Trust are to achieve long-term growth of capital and to preserve the purchasing power of shareholders' capital by investing in a portfolio of equity securities of domestic and foreign companies with substantial natural resource assets. The Trust may also invest in debt, preferred or convertible securities, the value of which is related to the market value of some natural resource asset ("asset-based securities"). See "Asset-Based Securities" below. Reference is made to "Investment Objectives and Policies" in the Prospectus for a discussion of the investment objectives and policies of the Trust.
While the Trust generally does not expect to engage in trading for short-term gains, it will effect portfolio transactions without regard to holding period if, in its management's judgment, such transactions are advisable in light of a change in circumstances of a particular company or within a particular industry or in general market, economic or financial conditions. As a result of the Trust's investment policies, under certain market conditions the Trust's portfolio turnover may be higher than that of other investment companies. Accordingly, while the Trust anticipates that its annual turnover rate should not exceed 100% under normal conditions, it is impossible to predict portfolio turnover rates. The portfolio turnover rate is calculated by dividing the lesser of the Trust's annual sales or purchases of portfolio securities (exclusive of purchases or sales of all securities with maturities at the time of acquisition of one year or less) by the monthly average value of the securities in the portfolio during the year. For the years ended July 31, 1993, 1994 and 1995 the Trust's rates of portfolio turnover were 66.78%, 54.87% and 31.64%, respectively.
ASSET-BASED SECURITIES
The Trust may invest in debt securities, preferred stocks or convertible securities, the principal amount, redemption terms or conversion terms of which are related to the market price of some natural resource asset such as gold bullion. For the purposes of the Trust's investment policies, these securities are referred to as "asset-based securities". The Trust will only purchase asset-based securities which are rated, or are issued by issuers that have outstanding debt obligations rated, investment grade (that is, AAA, AA, A or BBB by Standard & Poor's Ratings Group ("S&P") or Aaa, Aa, A or Baa by Moody's Investors Service, Inc. ("Moody's") or commercial paper rated A-1 by S&P or Prime-1 by Moody's) or of issuers that Merrill Lynch Asset Management, L.P. (the "Investment Adviser") has determined to be of similar creditworthiness. Obligations ranked in the fourth highest rating category, while considered "investment grade", may have certain speculative characteristics and may be more likely to be downgraded than securities rated in the three highest rating categories. If the asset-based security is backed by a bank letter of credit or other similar facility, the Investment Adviser may take such backing into consideration in determining the creditworthiness of the issuer. While the market prices for an asset-based security and the related natural resource asset generally are expected to move in the same direction, there may not be perfect correlation in the two price movements. Asset-based securities may not be secured by a security interest in or claim on the underlying natural resource assets.
The Trust will not acquire asset-based securities for which no established secondary trading market exists if at the time of acquisition more than 15% of its total assets are invested in securities which are not readily marketable. The Trust may invest in asset-based securities without limit when it has the option to put such securities to the issuer or a stand-by bank or broker and receive the principal amount or redemption price thereof less transaction costs on no more than seven days' notice or when the Trust has the right to convert
such securities into a readily marketable security in which it could otherwise invest upon not less than seven days' notice.
The asset-based securities in which the Trust may invest may bear interest or pay preferred dividends at below market (or even relatively nominal) rates. The Trust's holdings of such securities therefore might not generate appreciable current income, and the return from such securities primarily will be from any profit on the sale, maturity or conversion thereof at a time when the price of the related asset is higher than it was when the Trust purchased such securities.
OTHER INVESTMENT POLICIES AND PRACTICES
Writing Covered Call Options. The Trust is authorized to write, i.e., sell, covered call options on the equity securities in which it may invest and to enter into closing purchase transactions with respect to certain of such options. A call option is an option where the Trust, in return for a premium, gives another party a right to buy specified securities owned by the Trust at a specified future date and price set at the time of the contract. A call option is considered covered where the writer of the option owns the underlying securities. The principal reason for writing call options is to attempt to realize, through the receipt of premiums, a greater return than would be realized on the securities alone. By writing covered call options, the Trust gives up the opportunity, while the option is in effect, to profit from any price increase in the underlying security above the option exercise price. In addition, the Trust's ability to sell the underlying security will be limited while the option is in effect unless the Trust effects a closing purchase transaction. A closing purchase transaction cancels out the Trust's position as the writer of an option by means of an offsetting purchase of an identical option prior to the expiration of the option it has written. Covered call options serve as a partial hedge against the price of the underlying security declining. The Trust may not write covered call options in underlying securities in an amount exceeding 15% of the market value of its total assets.
The writer of a covered call option has no control over when he may be required to sell his securities since he may be assigned an exercise notice at any time prior to the termination of his obligation as a writer. If an option expires unexercised, the writer realizes a gain in the amount of the premium. Such a gain, of course, may be offset by a decline in the market value of the underlying security during the option period. If a call option is exercised, the writer realizes a gain or loss from the sale of the underlying security.
All options referred to herein and in the Trust's Prospectus are options
issued by The Options Clearing Corporation (the "Clearing Corporation") which
are currently traded on the Chicago Board Options Exchange, American Stock
Exchange, Philadelphia Stock Exchange, Pacific Stock Exchange or New York Stock
Exchange. An option position may be closed out only on an Exchange which
provides a secondary market for an option of the same series. If a secondary
market does not exist, it might not be possible to effect closing transactions
in particular options, with the result, in the case of a covered call option,
that the Trust will not be able to sell the underlying security until the option
expires or it delivers the underlying security upon exercise. Reasons for the
absence of a liquid secondary market on an Exchange include the following: (i)
there may be insufficient trading interest in certain options; (ii) restrictions
may be imposed by an Exchange on opening transactions or closing transactions or
both; (iii) trading halts, suspension or other restrictions may be imposed with
respect to particular classes or series of options or underlying securities;
(iv) unusual or unforeseen circumstances may interrupt normal operations on an
Exchange; (v) the facilities of an Exchange or the Clearing Corporation may not
at all times be adequate to handle current trading volume; or (vi) one or more
Exchanges could, for economic or other reasons, decide or be compelled at some
future date to
discontinue the trading of options (or a particular class or series of options), in which event the secondary market on that exchange (or in that class or series of options) would cease to exist, although outstanding options on that Exchange that had been issued by the Clearing Corporation as a result of trades on that Exchange would continue to be exercisable in accordance with their terms.
Purchasing Put Options. The Trust may purchase put options to hedge against a decline in the market value of its equity holdings. By buying a put the Trust has a right to sell the underlying security at the exercise price, thus limiting the Trust's risk of loss through a decline in the market value of the security until the put option expires. The amount of any appreciation in the value of the underlying security will be offset partially by the amount of the premium paid for the put option and any related transaction costs. Prior to its expiration, a put option may be sold in a closing sale transaction and profit or loss from the sale will depend on whether the amount received is more or less than the premium paid for the put option plus the related transaction cost. A closing sale transaction cancels out the Trust's position as the purchaser of an option by means of an offsetting sale of an identical option prior to the expiration of the option it has purchased. The Trust will purchase only put options traded on an Exchange. The Trust will not purchase put options on securities if, as a result of such purchase, the aggregate cost of all outstanding options on securities held by the Trust would exceed 5% of the market value of the Trust's total assets.
Forward Foreign Exchange Transactions. Generally, the foreign exchange transactions of the Trust will be conducted on a spot, i.e., cash, basis at the spot rate for purchasing or selling currency prevailing in the foreign exchange market. This rate under normal market conditions differs from the prevailing exchange rate in an amount generally less than 0.15 of one percent due to the costs of converting from one currency to another. However, the Trust has authority to deal in forward foreign exchange between currencies of the different countries in which it will invest as a hedge against possible variations in the foreign exchange rate between these currencies. This is accomplished through contractual agreements to purchase or sell a specified currency at a specified future date and price set at the time of the contract. The Trust's dealings in forward foreign exchange will be limited to hedging involving either specific transactions or portfolio positions. Transaction hedging is the purchase or sale of forward foreign currency with respect to specific receivables or payables of the Trust accruing in connection with the purchase and sale of its portfolio securities, the sale and redemption of shares of the Trust or the payment of dividends and distributions by the Trust. Position hedging is the sale of forward foreign currency with respect to portfolio security positions denominated or quoted in such foreign currency. The Trust will not speculate in forward foreign exchange. The Trust may not position hedge with respect to the currency of a particular country to an extent greater than the aggregate market value (at the time of making such sale) of the securities held in its portfolio denominated or quoted in that particular foreign currency. If the Trust enters into a position hedging transaction, its custodian bank will place cash or liquid equity or debt securities in a separate account of the Trust in an amount equal to the value of the Trust's total assets committed to the consummation of such forward contract. If the value of the securities placed in the separate account declines, additional cash or securities will be placed in the account so that the value of the account will equal the amount of the Trust's commitment with respect to such contracts. The Trust will not attempt to hedge all of its foreign portfolio positions and will enter into such transactions only to the extent, if any, deemed appropriate by the management of the Trust. The Trust will not enter into a forward contract with a term of more than one year.
Hedging against a decline in the value of a currency does not eliminate fluctuations in the prices of portfolio securities or prevent losses if the prices of such securities decline. Such transactions also preclude the
opportunity for gain if the value of the hedged currency should rise. Moreover, it may not be possible for the Trust to hedge against a devaluation that is so generally anticipated that the Trust is not able to contract to sell the currency at a price above the devaluation level it anticipates. It is possible that, under certain circumstances, the Trust may have to limit its currency transactions to qualify as a regulated investment company under the Internal Revenue Code; in this regard, the Trust presently intends to limit its gross income from currency hedging transactions to less than 10% of its gross income in any taxable year until such time as the Trust determines that income from the transactions is not subject to this restriction. The cost to the Trust of engaging in foreign currency transactions varies with such factors as the currencies involved, the length of the contract period and the market conditions then prevailing. Since transactions in foreign currency exchange usually are conducted on a principal basis, no fees or commissions are involved.
Repurchase Agreements. The Trust may invest in securities pursuant to repurchase agreements. Repurchase agreements may be entered into only with a member bank of the Federal Reserve System or a primary dealer in U.S. Government securities or an affiliate thereof. Under such agreements, the bank or the primary dealer or an affiliate thereof agrees, upon entering into the contract, to repurchase the security at a mutually agreed upon time and price, thereby determining the yield during the term of the agreement. This results in a fixed rate of return insulated from market fluctuations during such period. Repurchase agreements usually cover short periods, such as under one week. Repurchase agreements may be construed to be collateralized loans by the purchaser to the seller secured by the securities transferred to the purchaser. The Trust will require the seller to provide additional collateral if the market value of the securities falls below the repurchase price at any time during the term of the repurchase agreement. In the event of default by the seller under a repurchase agreement construed to be a collateralized loan, the underlying securities are not owned by the Trust but only constitute collateral for the seller's obligation to pay the repurchase price. Therefore, the Trust may suffer time delays and incur costs or possible losses in connection with the disposition of the collateral. In the event of a default under such a repurchase agreement, instead of the contractual fixed rate of return, the rate of return to the Trust shall be dependent upon intervening fluctuations of the market value of such security and the accrued interest on the security. In such event, the Trust would have rights against the seller for breach of contract with respect to any losses arising from market fluctuations following the failure of the seller to perform.
Lending of Portfolio Securities. Subject to current investment restriction
(4) below, the Trust may lend securities from its portfolio to approved
borrowers and receive therefor collateral in cash or securities issued or
guaranteed by the United States Government which are maintained at all times in
an amount equal to at least 100% of the current market value of the loaned
securities. The purpose of such loans is to permit the borrower to use such
securities for delivery to purchasers when such borrower has sold short. If cash
collateral is received by the Trust, it is invested in short-term money market
securities, and a portion of the yield received in respect of such investment is
retained by the Trust. Alternatively, if securities are delivered to the Trust
as collateral, the Trust and the borrower negotiate a rate for the loan premium
to be received by the Trust for lending its portfolio securities. In either
event, the total yield on the Trust's portfolio is increased by loans of its
portfolio securities. The Trust will have the right to regain record ownership
of loaned securities to exercise beneficial rights such as voting rights,
subscription rights and rights to dividends, interest or other distributions.
Such loans are terminable at any time. The Trust may pay reasonable finder's,
administrative and custodial fees in connection with such loans.
INVESTMENT RESTRICTIONS
In addition to the investment policies and restrictions set forth in the Prospectus, the Trust has adopted a number of fundamental and non-fundamental investment policies and restrictions. The fundamental policies and restrictions set forth below may not be changed without the approval of the holders of a majority of the Trust's outstanding voting shares, which for this purpose means the lesser of (a) 67% of the shares represented at a meeting where more than 50% of the outstanding shares of the Trust are represented or (b) more than 50% of the outstanding shares of the Trust. Unless otherwise provided, all references to the assets of the Trust below are in terms of current market value. The Trust may not:
1. Invest more than 25% of its assets, taken at market value, in the securities of issuers in any particular industry (excluding the U.S. Government and its agencies and instrumentalities).
2. Make investments for the purpose of exercising control or management.
3. Purchase or sell real estate, except that, to the extent permitted by applicable law, the Trust may invest in securities directly or indirectly secured by real estate or interests therein or issued by companies which invest in real estate or interests therein.
4. Make loans to other persons, except that the acquisition of bonds, debentures or other corporate debt securities and investment in government obligations, commercial paper, pass-through instruments, certificates of deposit, bankers acceptances, repurchase agreements or any similar instruments shall not be deemed to be the making of a loan, and except further that the Trust may lend its portfolio securities, provided that the lending of portfolio securities may be made only in accordance with applicable law and the guidelines set forth in the Trust's Prospectus and Statement of Additional Information, as they may be amended from time to time.
5. Issue senior securities to the extent such issuance would violate applicable law.
6. Borrow money, except that (i) the Trust may borrow from banks (as defined in the Investment Company Act) in amounts up to 33 1/3% of its total assets (including the amount borrowed), (ii) the Trust may borrow up to an additional 5% of its total assets for temporary purposes, (iii) the Trust may obtain such short-term credit as may be necessary for the clearance of purchases and sales of portfolio securities and (iv) the Trust may purchase securities on margin to the extent permitted by applicable law. The Trust may not pledge its assets other than to secure such borrowings or, to the extent permitted by the Trust's investment policies as set forth in its Prospectus and Statement of Additional Information, as they may be amended from time to time, in connection with hedging transactions, short sales, when-issued and forward commitment transactions and similar investment strategies.
7. Underwrite securities of other issuers except insofar as the Trust technically may be deemed an underwriter under the Securities Act of 1933, as amended (the "Securities Act") in selling portfolio securities.
8. Purchase or sell commodities or contracts on commodities, except to the extent that the Trust may do so in accordance with applicable law and the Trust's Prospectus and Statement of Additional Information, as they may be amended from time to time, and without registering as a commodity pool operator under the Commodity Exchange Act.
Under the non-fundamental investment restrictions, the Trust may not:
a. Purchase securities of other investment companies, except to the extent such purchases are permitted by applicable law.
b. Make short sales of securities or maintain a short position, except to the extent permitted by applicable law. The Trust currently does not intend to engage in short sales, except short sales "against the box".
c. Invest in securities which cannot be readily resold because of
legal or contractual restrictions or which cannot otherwise be marketed,
redeemed or put to the issuer or a third party, if at the time of
acquisition more than 15% of its total assets would be invested in such
securities. This restriction shall not apply to securities which mature
within seven days or securities which the Trustees of the Trust have
otherwise determined to be liquid pursuant to applicable law.
Notwithstanding the 15% limitation herein, to the extent the laws of any
state in which the Trust's shares are registered or qualified for sale
require a lower limitation, the Trust will observe such limitation. As of
the date hereof, therefore, the Trust will not invest more than 10% of its
total assets in securities which are subject to this investment restriction
(c). Securities purchased in accordance with Rule 144A under the Securities
Act (each a "Rule 144A security") and determined to be liquid by the
Trust's Board of Trustees are not subject to the limitations set forth in
this investment restriction (c). Notwithstanding the fact that the Board
may determine that a Rule 144A security is liquid and not subject to
limitations set forth in this investment restriction (c), the State of Ohio
does not recognize Rule 144A securities as securities that are free of
restrictions as to resale. To the extent required by Ohio law, the Trust
will not invest more than 50% of its total assets in securities of issuers
that are restricted as to disposition, including Rule 144A securities, or
in securities of issuers described in (e) below.
d. Invest in warrants if, at the time of acquisition, its investments in warrants, valued at the lower of cost or market value, would exceed 5% of the Trust's net assets; included within such limitation, but not to exceed 2% of the Trust's net assets, are warrants which are not listed on the New York Stock Exchange or American Stock Exchange or a major foreign exchange. For purposes of this restriction, warrants acquired by the Trust in units or attached to securities may be deemed to be without value.
e. Invest in securities of companies having a record, together with predecessors, of less than three years of continuous operation, if more than 5% of the Trust's total assets would be invested in such securities. This restriction shall not apply to mortgage-backed securities, asset-backed securities or obligations issued or guaranteed by the U.S. Government, its agencies or instrumentalities.
f. Purchase or retain the securities of any issuer, if those individual officers and Trustees of the Trust, the officers and general partner of the Investment Adviser, the directors of such general partner or the officers and directors of any subsidiary thereof each owning beneficially more than one-half of one percent of the securities of such issuer own in the aggregate more than 5% of the securities of such issuer.
g. Invest in real estate limited partnership interests or interests in oil, gas or other mineral leases, or exploration or development programs, except that the Trust may invest in securities issued by companies that engage in oil, gas or other mineral exploration or development activities.
h. Write, purchase or sell puts, calls, straddles, spreads or combinations thereof, except to the extent permitted in the Trust's Prospectus and Statement of Additional Information, as they may be amended from time to time.
i. Notwithstanding fundamental investment restriction (6) above, borrow money or pledge its assets except that the Trust may borrow from a bank as a temporary measure for extraordinary or emergency purposes or to meet redemptions in amounts not exceeding 10% (taken at the market value) of its total assets and pledge its assets to secure such borrowings. (For the purpose of this restriction, collateral arrangements with respect to the writing of options, and, if applicable, interest rate futures contracts, options on interest rate futures contracts, and collateral arrangements with respect to initial and variation margin are not deemed to be a pledge of assets and neither such arrangements nor the purchase or sale of futures or related options are deemed to be the issuance of a senior security.) The Trust will not purchase securities while borrowings exceed 5% (taken at market value) of its total assets.
Because of the affiliation of Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch") with the Trust, the Trust is prohibited from engaging in certain transactions involving Merrill Lynch except pursuant to a permissive order or otherwise in compliance with the provisions of the Investment Company Act of 1940 (the "Investment Company Act") and the rules and regulations thereunder. Included among such restricted transactions are purchases from or sales to Merrill Lynch of securities in transactions in which Merrill Lynch acts as principal and purchases of securities from underwriting syndicates of which Merrill Lynch is a member.
MANAGEMENT OF THE TRUST
TRUSTEES AND OFFICERS
The Trustees and executive officers of the Trust, their ages and their principal occupations for at least the last five years are set forth below. Unless otherwise noted, the address of each Trustee and executive officer is P.O. Box 9011, Princeton, New Jersey 08543-9011.
ARTHUR ZEIKEL (63)--President and Trustee (1)(2)--President of the Investment Adviser (which term as used herein includes the Investment Adviser's corporate predecessors) since 1977; President of Fund Asset Management, L.P. ("FAM") (which term as used herein includes FAM's corporate predecessors) since 1977; President and Director of Princeton Services, Inc. ("Princeton Services") since 1993; Executive Vice President of Merrill Lynch & Co., Inc. ("ML & Co.") since 1990; Executive Vice President of Merrill Lynch since 1990 and a Senior Vice President thereof from 1985 to 1990; Director of Merrill Lynch Funds Distributor, Inc. (the "Distributor").
DONALD CECIL (68)--Trustee (2)--1114 Avenue of the Americas, New York, New York 10036. Special Limited Partner of Cumberland Partners (an investment partnership) since 1982; Member of Institute of Chartered Financial Analysts; Member and Chairman of Westchester County (N.Y.) Board of Transportation.
M. COLYER CRUM (62)--Trustee (2)--Soldiers Field Road, Boston, Massachusetts 02163. James R. Williston Professor of Investment Management, Harvard Business School, since 1971; Director of Cambridge Bancorp, Copley Properties, Inc. and Sun Life Assurance Company of Canada.
EDWARD H. MEYER (68)--Trustee (2)--777 Third Avenue, New York, New York 10017. President of Grey Advertising Inc. since 1968, Chief Executive Officer since 1970 and Chairman of the Board of Directors since 1972; Director of The May Department Stores Company, Bowne & Co., Inc. (financial printers), Harman International Industries, Inc. and Ethan Allen Interiors, Inc.
JACK B. SUNDERLAND (67)--Trustee (2)--P.O. Box 1177, Scarsdale, New York 10583. President and Director of American Independent Oil Company, Inc. (an energy company) since 1987; Chairman of Murexco Petroleum, Inc. (an energy company) from 1981 to 1988; Member of Council on Foreign Relations since 1971; President, Director and Chief Executive Officer of Coroil, Inc. (an energy company) from 1979 to 1985.
J. THOMAS TOUCHTON (56)--Trustee (2)--Suite 3405, One Tampa City Center, Tampa, Florida 33602. Managing Partner of The Witt-Touchton Company and its predecessor The Witt Co. (a private investment partnership) since 1972; Trustee Emeritus of Washington and Lee University; Director of TECO Energy, Inc. (an electric utility holding company).
TERRY K. GLENN (54)--Executive Vice President (1)(2)--Executive Vice President of the Investment Adviser and FAM since 1983; Executive Vice President and Director of Princeton Services since 1993; President of the Distributor since 1986 and Director thereof since 1991; President of Princeton Administrators L.P. since 1988.
NORMAN R. HARVEY (61)--Senior Vice President (1)(2)--Senior Vice President of the Investment Adviser and FAM since 1982; Senior Vice President of Princeton Services since 1993.
DONALD C. BURKE (35)--Vice President (1)(2)--Vice President and Director of Taxation of the Investment Adviser since 1990; Employee of Deloitte & Touche LLP from 1981 to 1990.
EDWARD P. IX, JR. (62)--Vice President (1)--Vice President of the Investment Adviser since 1987 and employee of the Investment Adviser since 1985.
PETER A. LEHMAN (37)--Vice President (1)--Vice President of the Investment Adviser since 1994 and employee of the Investment Adviser since 1992.
GERALD M. RICHARD (45)--Treasurer (1)(2)--Senior Vice President and Treasurer of the Investment Adviser and FAM since 1984; Senior Vice President and Treasurer of Princeton Services since 1993; Vice President of the Distributor since 1981 and Treasurer of the Distributor since 1984.
MARK B. GOLDFUS (48)--Secretary (1)(2)--Vice President of the Investment Adviser and FAM since 1985.
At October 31, 1995, the Trustees and officers of the Trust as a group (13 persons) owned an aggregate of less than 1% of the outstanding shares of the Trust. At that date, Mr. Zeikel, a Trustee and officer of the Trust, and the other officers of the Trust owned less than 1/4 of 1% of the outstanding common stock of ML & Co.
The Trust pays each Trustee not affiliated with the Investment Adviser a fee of $3,500 per year plus $500 per meeting attended. The Trust also pays each member of its Audit and Nominating Committee, which consists of all unaffiliated Trustees, a fee of $2,500 per year and the chairman of the Committee an additional annual fee of $1,000. The Trust reimburses each unaffiliated Trustee for his out-of-pocket expenses relating to attendance at Board and Committee meetings. For the fiscal year ended July 31, 1995, fees and out-of-pocket expenses paid to the unaffiliated Trustees aggregated $40,866.
COMPENSATION OF TRUSTEES
The following table sets forth, for the fiscal year ended July 31, 1995, compensation paid by the Trust to the non-interested Trustees and, for the calendar year ended December 31, 1994, the aggregate compensation paid by all investment companies advised by MLAM and its affiliate, FAM ("MLAM/FAM Advised Funds"), to the non-interested Trustees.
AGGREGATE COMPENSATION FROM
PENSION OR RETIREMENT FUND AND MLAM/FAM
COMPENSATION BENEFITS ACCRUED AS PART ADVISED FUNDS PAID TO
NAME OF DIRECTOR FROM THE TRUST OF FUND EXPENSES TRUSTEES(1)
- --------------------------------- -------------- ------------------------ --------------------------------
Donald Cecil..................... $9,000 None $276,350
M. Colyer Crum................... $8,000 None $126,600
Edward H. Meyer.................. $7,500 None $251,600
Jack B. Sunderland............... $8,000 None $134,600
J. Thomas Touchton............... $8,000 None $134,600
|
(1) In addition to the Trust, the Trustees serve on the boards of other MLAM/FAM Advised Funds as follows: Mr. Cecil (48 funds), Mr. Crum (17 funds), Mr. Meyer (34 funds), Mr. Sunderland (18 funds) and Mr. Touchton (18 funds).
MANAGEMENT AND ADVISORY ARRANGEMENTS
Reference is made to "Management of the Trust--Management and Advisory Arrangements" in the Prospectus for certain information concerning the management and advisory arrangements of the Trust.
The Investment Advisory Agreement provides that, subject to the direction of the Board of Trustees of the Trust, the Investment Adviser is responsible for the actual management of the Trust's portfolio and for the review of the Trust's holdings in light of its own research analysis and analyses from other relevant sources.
The responsibility for making decisions to buy, sell or hold a particular security rests with the Investment Adviser, subject to review by the Trustees. The Investment Adviser supplies the portfolio managers for the Trust who consider analyses from various sources, make the necessary investment decisions and place transactions accordingly. The Investment Adviser also is obligated to perform certain administrative and management services for the Trust and is required to provide all of the office space, facilities, equipment and personnel necessary to perform its duties under the Investment Advisory Agreement.
Securities held by the Trust also may be held by or be appropriate investments for other funds for which the Investment Adviser or FAM acts as an adviser or by investment advisory clients of the Investment Adviser. Because of different investment objectives or other factors, a particular security may be bought for
one or more clients when one or more clients are selling the same security. If purchases or sales of securities for the Trust or other funds for which the Investment Adviser or FAM acts as investment adviser or for their advisory clients arise for consideration at or about the same time, transactions in such securities will be made, insofar as feasible, for the respective funds and clients in a manner deemed equitable to all. To the extent that transactions on behalf of more than one client of the Investment Adviser or FAM during the same period may increase the demand for securities being purchased or the supply of securities being sold there may be an adverse effect on price.
As compensation for its services to the Trust the Investment Adviser receives from the Trust at the end of each month a fee based on the average daily value of the Trust's net assets at the annual rates of 0.60% of the daily net assets of the Trust. The State of California imposes limitations on the expenses of the Trust. At the date of this Statement of Additional Information, these annual expense limitations require the Investment Adviser to reimburse the Trust in an amount necessary to prevent the ordinary operating expenses of the Trust from exceeding 2.5% of the Trust's first $30 million of average daily net assets, 2.0% of the next $70 million of average daily net assets and 1.5% of the remaining average daily net assets. The Investment Adviser's obligation to reimburse the Trust is limited to the amount of the investment advisory fee. No fee payment will be made to the Investment Adviser during any fiscal year which will cause such expenses to exceed the most restrictive expense limitation applicable at the time of such payment. For the fiscal years ended July 31, 1993, 1994 and 1995, the total advisory fees paid by the Trust to the Investment Adviser aggregated $1,391,524, $1,351,581 and $1,832,048, respectively. For such periods, the Investment Adviser made no reimbursement of expenses to the Trust in respect of the expense limitation provisions discussed above.
The Investment Adviser provides the investment advisory services and pays all compensation of and furnishes office space for officers and employees of the Trust connected with investment and economic research, trading and investment management of the Trust, as well as the fees for Trustees of the Trust who are affiliated persons of ML & Co. or any of its affiliates. The Trust pays all other expenses incurred, except for some incurred by the Distributor, in the operation of the Trust including, among others, taxes, expenses for legal and auditing services, charges of the custodian and the transfer agent, expenses of issuing and redeeming shares, brokerage costs, Commission and other registration fees, all expenses of shareholders' and Trustee's meetings, and certain of the expenses of printing prospectuses, statements of additional information, proxies, reports to shareholders, and share certificates. Accounting services are provided to the Trust by the Investment Adviser, who is reimbursed by the Trust for the costs in connection with such services. The Distributor will pay the promotional expenses incurred in connection with the offering of shares of the Trust. See "Purchase of Shares--Distribution Plans".
The Investment Adviser is a limited partnership, the partners of which are ML & Co. and Princeton Services. ML & Co. and Princeton Services are "controlling persons" of the Investment Adviser (as defined under the Investment Company Act) because of their ownership of its voting securities or their power to exercise a controlling influence over its management or policies.
Duration and Termination. Unless earlier terminated as described herein, the Investment Advisory Agreement will remain in effect from year to year if approved annually (a) by the Trustees or, if submitted to a meeting of shareholders, by a majority of the voting securities and (b) by a majority of Trustees who are neither parties to such contract nor interested persons, as defined in the Investment Company Act, of any such party. Such contract is not assignable and may be terminated without penalty upon 60 days' written notice at the option of either party or by the vote of the shareholders of the Trust.
PURCHASE OF SHARES
Reference is made to "Purchase of Shares" in the Prospectus for certain information as to the purchase of Trust shares.
The Trust issues four classes of shares under the Merrill Lynch Select PricingSM System: Class A and Class D shares are sold to investors choosing the initial sales charge alternatives, and Class B and Class C shares are sold to investors choosing the deferred sales charge alternatives. Each Class A, Class B, Class C and Class D share of the Trust represents identical interests in the investment portfolio of the Trust, and has the same rights except that Class B, Class C and Class D shares bear the expenses of the ongoing account maintenance fees and Class B and C shares bear the expenses of the ongoing distribution fees and the additional incremental transfer agency costs resulting from the deferred sales charge arrangements. Class B, Class C and Class D shares each have exclusive voting rights with respect to the Rule 12b-1 distribution plan adopted with respect to such class pursuant to which the account maintenance and/or distribution fees are paid. Each class has different exchange privileges. See "Shareholder Services--Exchange Privilege".
The Merrill Lynch Select PricingSM System is used by more than 50 mutual funds advised by the Investment Adviser or its affiliate, FAM. Funds advised by the Investment Adviser or FAM which use the Merrill Lynch Select PricingSM System are referred to herein as "MLAM-advised mutual funds".
The Trust has entered into four separate distribution agreements with the Distributor in connection with the continuous offering of each class of shares of the Trust (the "Distribution Agreements"). The Distribution Agreements obligate the Distributor to pay certain expenses in connection with the offering of each class of shares of the Trust. After the prospectuses, statements of additional information and periodic reports have been prepared, set in type and mailed to shareholders, the Distributor pays for the printing and distribution of copies thereof used in connection with the offering to dealers and investors. The Distributor also pays for other supplementary sales literature and advertising costs. The Distribution Agreements are subject to the same renewal requirements and termination provisions as the Investment Advisory Agreement described above.
INITIAL SALES CHARGE ALTERNATIVES--CLASS A AND CLASS D SHARES
During the fiscal years ended July 31, 1993, 1994, and 1995, gross sales charges on the sale of Class A shares totaled $83,929, $177,162 and $104,144, respectively, of which approximately $4,861, $12,408 and $6,956, respectively, was received by the Distributor and approximately $79,068, $164,754 and $97,188, respectively, was paid to Merrill Lynch as a selected dealer. For the fiscal years referenced above, the Distributor received no contingent deferred sales charges ("CDSCs") with respect to redemptions within one year of purchase of Class A shares purchased subject to front-end sales charge waivers. The gross sales charges for the sale of the Trust's Class D shares for the period October 21, 1994 (commencement of operations) to July 31, 1995, totaled $53,122, of which the Distributor received $3,459 and Merrill Lynch received $49,663. During such period, the Distributor received no CDSCs with respect to redemptions within one year of purchase of Class D shares purchased subject to front-end sales charge waivers. For information as to brokerage commissions received by Merrill Lynch, see "Portfolio Transactions and Brokerage".
The term "purchase", as used in the Prospectus and this Statement of Additional Information in connection with an investment in Class A and Class D shares of the Trust, refers to a single purchase by an individual, or to concurrent purchases, which in the aggregate are at least equal to the prescribed amounts, by an individual, his spouse and their children under the age of 21 years purchasing shares for his or their own
account and to single purchases by a trustee or other fiduciary purchasing shares for a single trust estate or single fiduciary account although more than one beneficiary is involved. The term "purchase" also includes purchases by any "company", as that term is defined in the Investment Company Act, but does not include purchases by any such company which has not been in existence for at least six months or which has no purpose other than the purchase of shares of the Trust or shares of other registered investment companies at a discount; provided, however, that it shall not include purchases by any group of individuals whose sole organizational nexus is that the participants therein are credit cardholders of a company, policyholders of an insurance company, customers of either a bank or broker-dealer or clients of an investment adviser.
REDUCED INITIAL SALES CHARGES
Right of Accumulation. Reduced sales charges are applicable through a right of accumulation under which eligible investors are permitted to purchase shares of the Trust subject to an initial sales charge at the offering price applicable to the total of (a) the public offering price of the shares then being purchased plus (b) an amount equal to the then current net asset value or cost, whichever is higher, of the purchaser's combined holdings of all classes of shares of the Trust and of other MLAM-advised mutual funds. For any such right of accumulation to be made available, the Distributor must be provided at the time of purchase, by the purchaser or the purchaser's securities dealer, with sufficient information to permit confirmation of qualification. Acceptance of the purchase order is subject to such confirmation. The right of accumulation may be amended or terminated at any time. Shares held in the name of a nominee or custodian under pension, profit-sharing, or other employee benefit plans may not be combined with other shares to qualify for the right of accumulation.
Letter of Intention. Reduced sales charges are applicable to purchases aggregating $25,000 or more of the Class A or Class D shares of the Trust or any other MLAM-advised mutual funds made within a 13-month period starting with the first purchase pursuant to a Letter of Intention in the form provided in the Prospectus. The Letter of Intention is available only to investors whose accounts are maintained at the Trust's transfer agent. The Letter of Intention is not available to employee benefit plans for which Merrill Lynch provides plan-participant recordkeeping services. The Letter of Intention is not a binding obligation to purchase any amount of Class A or Class D shares; however, its execution will result in the purchaser paying a lower sales charge at the appropriate quantity purchase level. A purchase not originally made pursuant to a Letter of Intention may be included under a subsequent Letter of Intention executed within 90 days of such purchase if the Distributor is informed in writing of this intent within such 90-day period. The value of Class A or Class D shares of the Trust and of other MLAM-advised mutual funds presently held, at cost or maximum offering price (whichever is higher), on the date of the first purchase under the Letter of Intention, may be included as a credit toward the completion of such Letter, but the reduced sales charge applicable to the amount covered by such Letter will be applied only to new purchases. If the total amount of shares does not equal the amount stated in the Letter of Intention (minimum of $25,000), the investor will be notified and must pay, within 20 days of the expiration of such Letter, the difference between the sales charge on the Class A or Class D shares purchased at the reduced rate and the sales charge applicable to the shares actually purchased through the Letter. Class A or Class D shares equal to five percent of the intended amount will be held in escrow during the 13-month period while remaining registered in the name of the purchaser for this purpose. The first purchase under the Letter of Intention must be at least five percent of the dollar amount of such Letter. If a purchase during the term of such Letter would otherwise be subject to a further reduced sales charge based on the right of accumulation, the purchaser will be entitled on that purchase and subsequent
purchases to that further reduced percentage sales charge, but there will be no retroactive reduction of the sales charges on any previous purchase. The value of any shares redeemed or otherwise disposed of by the purchaser prior to termination or completion of the Letter of Intention will be deducted from the total purchases made under such Letter. An exchange from a MLAM-advised money market fund into the Trust that creates a sales charge will count toward completing a new or existing Letter of Intention from the Trust.
Merrill Lynch Blueprint(SM) Program. Class D shares of the Trust are offered to participants in the Merrill Lynch BlueprintSM Program ("Blueprint"). In addition, participants in Blueprint who own Class A shares of the Trust may purchase additional Class A shares of the Trust through Blueprint. The Blueprint program is directed to small investors, group IRAs and participants in certain affinity groups such as credit unions and trade associations. Investors placing orders to purchase Class A or Class D shares of the Trust through Blueprint will acquire the Class A or Class D shares at net asset value plus a sales charge calculated in accordance with the Blueprint sales charge schedule (i.e., up to $300 at 4.25%, from $300.01 to $5,000 at 3.25% plus $3.00 and $5,000.01 or more at the standard sales charge rates disclosed in the Prospectus). In addition, Class A and Class D shares of the Trust are being offered at net asset value plus a sales charge of 1/2 of 1% for corporate or group IRA programs placing orders to purchase their Class D shares through Blueprint. Services, including the exchange privilege, available to Class A and Class D investors through Blueprint, however, may differ from those available to other investors in Class A or Class D shares.
Class A and Class D shares are offered at net asset value to Blueprint participants through the Merrill Lynch Directed IRA Rollover Program (the "IRA Rollover Program") available from Merrill Lynch Business Financial Services, a business unit of Merrill Lynch. The IRA Rollover Program is available to custodian rollover assets from Employer Sponsored Retirement and Savings Plans (as defined below) whose Trustee and/or Plan Sponsor has entered into a Merrill Lynch Directed IRA Rollover Program Service Agreement.
Orders for purchases and redemptions of Class A or Class D shares of the Trust may be grouped for execution purposes which, in some circumstances, may involve the execution of such orders two business days following the day such orders are placed. The minimum initial purchase price is $100, with a $50 minimum for subsequent purchases through Blueprint. There are no minimum initial or subsequent purchase requirements for participants who are part of an automatic investment plan. Additional information concerning purchases through Blueprint, including any annual fees and transaction charges, is available from Merrill Lynch, Pierce, Fenner & Smith Incorporated, The BlueprintSM Program, P.O. Box 30441, New Brunswick, New Jersey 08989-0441.
TMA(SM) Managed Trusts. Class A shares are offered at net asset value to TMA(SM) Managed Trusts to which Merrill Lynch Trust Company provides discretionary trustee services.
Employer Sponsored Retirement and Savings Plans. Class A and Class D
shares are offered at net asset value to employer sponsored retirement or
savings plans, such as tax qualified retirement plans within the meaning of
Section 401(a) of the Internal Revenue Code of 1986 as amended (the "Code"),
deferred compensation plans within the meaning of Section 403(b) and 457 of the
Code, other deferred compensation arrangements, Voluntary Employee Benefits
Association ("VEBA") plans, and non-qualified After Tax Savings and Investment
programs, maintained on the Merrill Lynch Group Employee Services system, herein
referred to as "Employer Sponsored Retirement or Savings Plans", provided the
plan has accumulated $20 million or more in MLAM-advised mutual funds (in the
case of Class A shares) or $5 million or more in
MLAM-advised mutual funds (in the case of Class D shares). Class D shares may be offered at net asset value to new Employer Sponsored Retirement or Savings Plans, provided the plan has $3 million or more initially invested in MLAM-advised mutual funds. Assets of Employer Sponsored Retirement or Savings Plans sponsored by the same sponsor or an affiliated sponsor may be aggregated. Class A shares and Class D shares also are offered at net asset value to Employer Sponsored Retirement or Savings Plans that have at least 1,000 employees eligible to participate in the plan (in the case of Class A shares) or between 500 and 999 employees eligible to participate in the plan (in the case of Class D shares). Employees eligible to participate in Employer Sponsored Retirement or Savings Plans of the same sponsoring employer or its affiliates may be aggregated. Tax qualified retirement plans within the meaning of Section 401(a) of the Code meeting any of the foregoing requirements and which are provided specialized services (e.g., plans whose participants may direct on a daily basis their plan allocations among a wide range of investments including individual corporate equities and other securities in addition to mutual fund shares) by Blueprint, are offered Class A or Class D shares at a price equal to net asset value per share plus a reduced sales charge of 0.50%. Any Employer Sponsored Retirement or Savings Plan which does not meet the above described qualifications to purchase Class A or Class D shares at net asset value has the option of (i) purchasing Class A shares at the initial sales charge schedule and possible CDSC schedule disclosed in the Prospectus if it is otherwise eligible to purchase Class A shares, (ii) purchasing Class D shares at the initial sales charge and possible CDSC schedule disclosed in the Prospectus, (iii) if the Employer Sponsored Retirement or Savings Plan meets the specified requirements, purchasing Class B shares with a waiver of the CDSC upon redemption; or if the Employer Sponsored Retirement or Savings Plan does not qualify to purchase Class B shares with a waiver of the CDSC upon redemption, purchasing Class C shares at the CDSC schedule disclosed in the Prospectus. The minimum initial and subsequent purchase requirements are waived in connection with all the above referenced Employer Sponsored Retirement or Savings Plans.
Employee Access Accounts(SM). Class A or Class D shares are offered at net asset value to Employee Access Accounts available through employers that provide employer sponsored retirement or savings plans that are eligible to purchase such shares at net asset value. The initial minimum for such accounts is $500, except that the initial minimum for shares purchased for such accounts pursuant to the Automatic Investment Program is $50.
Closed-End Fund Investment Option. Class A shares of the Trust and other MLAM-advised mutual funds ("Eligible Class A shares") are offered at net asset value to shareholders of certain closed-end funds advised by the Investment Adviser or FAM who purchased such closed-end fund shares prior to October 21, 1994 (the date the Merrill Lynch Select PricingSM System commenced operations) and wish to reinvest the net proceeds from a sale of their closed-end fund shares of common stock in Eligible Class A shares, if the conditions set forth below are satisfied. Alternatively, closed-end fund shareholders who purchased such shares on or after October 21, 1994 and wish to reinvest the net proceeds from a sale of their closed-end fund shares are offered Class A shares (if eligible to buy Class A shares) Class D shares of the Fund and other MLAM- advised mutual funds ("Eligible Class D shares"), if the following conditions are met. First, the sale of the closed-end fund shares must be made through Merrill Lynch and the net proceeds therefrom must be immediately reinvested in Eligible Class A or Class D Shares. Second, the closed-end fund shares must either have been acquired in the initial public offering or be shares representing dividends from shares of common stock acquired in such offering. Third, the closed-end fund shares must have been continuously maintained in a Merrill Lynch securities account. Fourth, there must be a minimum purchase of $250 to be eligible for the investment option. Class A shares of the Trust are offered at net asset value to shareholders of Merrill Lynch
Senior Floating Rate Fund, Inc. ("Senior Floating Rate Fund") who wish to reinvest the net proceeds from a sale of certain of their shares of common stock of Senior Floating Rate Fund in shares of the Trust. In order to exercise this investment option, Senior Floating Rate Fund shareholders must sell their Senior Floating Rate shares to the Senior Floating Rate Fund in connection with a tender offer conducted by the Senior Floating Rate Fund and reinvest the proceeds immediately in the Trust. This investment option is available only with respect to the proceeds of Senior Floating Rate Fund shares as to which no Early Withdrawal Charge (as defined in the Senior Floating Rate Fund prospectus) is applicable. Purchase orders from Senior Floating Rate Fund shareholders wishing to exercise this investment option will be accepted only on the day that the related Senior Floating Rate Fund tender offer terminates and will be effected at the net asset value of the Trust at such day. Similarly, Class D shares of the Trust are offered at net asset value to shareholders of Merrill Lynch Municipal Strategy Fund, Inc. ("Municipal Strategy Fund") who wish to purchase shares of the Trust with the net proceeds from a sale of certain of their shares of common stock of Municipal Strategy Fund pursuant to a tender offer by Municipal Strategy Fund. This investment option is available only with respect to the proceeds of Municipal Strategy Fund shares as to which no CDSC (as defined in the Municipal Strategy Fund prospectus) is applicable.
Purchase Privilege of Certain Persons. Trustees of the Trust, members of the Boards of other MLAM-advised investment companies, directors and employees of ML & Co. and its subsidiaries (the term "subsidiaries", when used herein with respect to ML & Co., includes the Investment Adviser, FAM and certain other entities directly or indirectly wholly-owned and controlled by ML & Co.), and any trust, pension, profit-sharing or other benefit plan for such persons, may purchase Class A shares of the Trust at net asset value.
Class D shares of the Trust are offered at net asset value, without sales charge, to an investor who has a business relationship with a financial consultant who joined Merrill Lynch from another investment firm within six months prior to the date of purchase by such investor, if the following conditions are satisfied. First, the investor must advise Merrill Lynch that he or she will purchase Class D shares of the Fund with proceeds from a redemption of a mutual fund that was sponsored by the financial consultant's previous firm and was subject to a sales charge either at the time of purchase or on a deferred basis. Second, the investor also must establish that such redemption had been made within 60 days prior to the investment in the Trust, and the proceeds from the redemption had been maintained in the interim in cash or a money market fund.
Class D shares of the Trust are also offered at net asset value, without sales charge, to an investor who has a business relationship with a Merrill Lynch financial consultant and who has invested in a mutual fund sponsored by a non-Merrill Lynch company for which Merrill Lynch has served as a selected dealer and where Merrill Lynch has either received or given notice that such arrangement will be terminated ("notice"), if the following conditions are satisfied: first, the investor must purchase Class D shares of the Trust with proceeds from a redemption of shares of such other mutual fund and the shares of such other fund were subject to a sales charge either at the time of purchase or on a deferred basis; and second, such purchase of Class D shares must be made within 90 days after such notice.
Class D shares of the Trust will be offered at net asset value, without a sales charge, to an investor who has a business relationship with a Merrill Lynch financial consultant and who has invested in a mutual fund for which Merrill Lynch has not served as a selected dealer if the following conditions are satisfied: first, the investor must advise Merrill Lynch that it will purchase Class D shares of the Fund with proceeds from the redemption of such shares of other mutual funds and that such shares of other mutual funds have been
outstanding for a period of no less than six months; and second, such purchase of Class D shares must be made within 60 days after the redemption and the proceeds from the redemption must be maintained in the interim in cash or a money market fund.
Acquisition of Certain Investment Companies. The public offering price of Class D shares may be reduced to the net asset value per Class D share in connection with the acquisition of the assets of or merger or consolidation with a personal holding company or a public or private investment company. The value of the assets or company acquired in a tax-free transaction may be adjusted in appropriate cases to reduce possible adverse tax consequences to the Trust which might result from an acquisition of assets having net unrealized appreciation which is disproportionately higher at the time of acquisition than the realized or unrealized appreciation of the Trust. The issuance of Class D shares for consideration other than cash is limited to bona fide reorganizations, statutory mergers or other acquisitions of portfolio securities which (i) meet the investment objectives and policies of the Trust; (ii) are acquired for investment and not for resale (subject to the understanding that the disposition of the Trust's portfolio securities shall at all times remain within its control); and (iii) are liquid securities, the value of which is readily ascertainable, which are not restricted as to transfer either by law or liquidity of market (except that the Trust may acquire through such transactions restricted or illiquid securities to the extent the Trust does not exceed the applicable limits on acquisition of such securities set forth under "Investment Objectives and Policies" herein).
Reductions in or exemptions from the imposition of a sales load are due to the nature of the investors and/or the reduced sales efforts that will be needed in obtaining such investments.
DISTRIBUTION PLANS
Reference is made to "Purchase of Shares--Distribution Plans" in the Prospectus for certain information with respect to the separate distribution plans for Class B, Class C and Class D shares pursuant to Rule 12b-1 under the Investment Company Act (each a "Distribution Plan") with respect to the account maintenance and/or distribution fees paid by the Trust to the Distributor with respect to such classes.
Payments of the account maintenance fees and/or distribution fees are subject to the provisions of Rule 12b-1 under the Investment Company Act. Among other things, each Distribution Plan provides that the Distributor shall provide and the Trustees shall review quarterly reports of the disbursement of the account maintenance fees and/or distribution fees paid to the Distributor. In their consideration of each Distribution Plan, the Trustees must consider all factors they deem relevant, including information as to the benefits of the Distribution Plan to the Trust and its related class of shareholders. Each Distribution Plan further provides that, so long as the Distribution Plan remains in effect, the selection and nomination of Trustees who are not "interested persons" of the Trust, as defined in the Investment Company Act (the "Independent Trustees"), shall be committed to the discretion of the Independent Trustees then in office. In approving each Distribution Plan in accordance with Rule 12b-1, the Independent Trustees concluded that there is reasonable likelihood that such Distribution Plan will benefit the Trust and its related class of shareholders. Each Distribution Plan can be terminated at any time, without penalty, by the vote of a majority of the Independent Trustees or by the vote of the holders of a majority of the outstanding related class of voting securities of the Trust. A Distribution Plan cannot be amended to increase materially the amount to be spent by the Trust without the approval of the related class of shareholders, and all material amendments are required to be approved by the vote of Trustees, including a majority of the Independent Trustees who have no direct or indirect financial interest in such Distribution Plan, cast in person at a meeting called for that purpose. Rule 12b-1 further
requires that the Trust preserve copies of each Distribution Plan and any report made pursuant to such plan for a period of not less than six years from the date of such Distribution Plan or such report, the first two years in an easily accessible place.
LIMITATIONS ON THE PAYMENT OF DEFERRED SALES CHARGES
The maximum sales charge rule in the Rules of Fair Practice of the National Association of Securities Dealers, Inc. (the "NASD") imposes a limitation on certain asset-based sales charges such as the distribution fee and the CDSC borne by the Class B and Class C shares but not the account maintenance fee. The maximum sales charge rule is applied separately to each class. As applicable to the Trust, the maximum sales charge rule limits the aggregate of distribution fee payments and CDSCs payable by the Trust to (1) 6.25% of eligible gross sales of Class B shares and Class C shares, computed separately (defined to exclude shares issued pursuant to dividend reinvestments and exchanges), plus (2) interest on the unpaid balance for the respective class, computed separately, at the prime rate plus 1% (the unpaid balance being the maximum amount payable minus amounts received from the payment of the distribution fee and the CDSC). In connection with the Class B shares, the Distributor has voluntarily agreed to waive interest charges on the unpaid balance in excess of 0.50% of eligible gross sales. Consequently, the maximum amount payable to the Distributor (referred to as the "voluntary maximum") in connection with the Class B shares is 6.75% of eligible gross sales. The Distributor retains the right to stop waiving the interest charges at any time. To the extent payments would exceed the voluntary maximum, the Trust will not make further payments of the distribution fee with respect to Class B shares, and any CDSCs will be paid to the Trust rather than to the Distributor; however, the Trust will continue to make payments of the account maintenance fee. In certain circumstances the amount payable pursuant to the voluntary maximum may exceed the amount payable under the NASD formula. In such circumstances payment in excess of the amount payable under the NASD formula will not be made.
The following table sets forth comparative information as of July 31, 1995 with respect to the Class B and Class C shares of the Trust, indicating the maximum allowable payments that can be made under the NASD maximum sales charge rule and the Distributor's voluntary maximum for the period August 2, 1985 (commencement of operations) to July 31, 1995 with respect to Class B shares, and under the NASD maximum sales charge rule for the period October 21, 1994 (commencement of operations) to July 31, 1995, with respect to Class C shares.
DATA CALCULATED AS OF JULY 31, 1995 (IN THOUSANDS)
ANNUAL
ALLOWABLE ALLOWABLE AMOUNT DISTRIBUTION
ELIGIBLE AGGREGATE INTEREST MAXIMUM PREVIOUSLY AGGREGATE FEES AT CURRENT
GROSS SALES ON UNPAID AMOUNT PAID TO UNPAID NET ASSET
CLASS B SALES(1) CHARGES BALANCE(2) PAYABLE DISTRIBUTOR(3) BALANCE LEVEL(4)
- ------- ---------- --------- ---------- -------- -------------- --------- ---------------
Under NASD Rule as Adopted........... $1,318,955 $82,435 $ 49,423 $131,858 $ 50,203 $81,655 $ 1,064
Under Distributor's Voluntary
Waiver............................. $1,318,955 $82,435 $ 6,595 $89,030 $ 50,203 $38,827 $ 1,064
CLASS C
- ------
Under NASD Rule as Adopted........... $ 5,127 $ 320 $ 16 $ 336 $ 21 $ 315 $ 21
Under Distributor's Voluntary
Waiver............................. N/A N/A N/A N/A N/A N/A N/A
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(1) Purchase price of all eligible Class B or Class C shares sold during the period indicated other than shares acquired through dividend reinvestment and the exchange privilege.
(2) Interest is computed on a monthly basis based upon the prime rate, as reported in The Wall Street Journal, plus 1.0% as permitted under the NASD Rule.
(3) Consists of CDSC payments, distribution fee payments and accruals. Of the distribution fee payments made with respect to Class B shares prior to July 6, 1993 under the distribution plan in effect at that time, at the 1.0% rate, 0.75% of average daily net assets has been treated as a distribution fee and 0.25% of average daily net assets has been deemed to have been a service fee and not subject to the NASD maximum sales charge rule. See "Purchase of Shares--Distribution Plans" in the Prospectus.
(4) Provided to illustrate the extent to which the current level of distribution fee payments (not including any CDSC payments) is amortizing the unpaid balance. No assurance can be given that payments of the distribution fee will reach either the NASD maximum or, with respect to Class B shares, the voluntary maximum.
REDEMPTION OF SHARES
Reference is made to "Redemption of Shares" in the Prospectus for certain information as to the redemption and repurchase of Trust shares.
The right to redeem shares or to receive payment with respect to any such redemption may be suspended for more than seven days only for periods during which trading on the New York Stock Exchange is restricted as determined by the Commission or such Exchange is closed (other than customary weekend and holiday closings), for any period during which an emergency exists, as defined by the Commission, as a result of which disposal of portfolio securities or determination of the net asset value of the Trust is not reasonably practicable, and for such other periods as the Commission may by order permit for the protection of shareholders of the Trust.
DEFERRED SALES CHARGES--CLASS B AND CLASS C SHARES
As discussed in the Prospectus under "Purchase of Shares--Deferred Sales Charge Alternatives--Class B and Class C Shares", while Class B shares redeemed within four years of purchase are subject to a CDSC under most circumstances, the charge is waived (i) on redemptions of Class B shares in connection with certain post-retirement withdrawals from an Individual Retirement Account ("IRA") or other retirement plan or (ii) on redemptions of Class B shares following the death or disability of a Class B shareholder. Redemptions for which the waiver applies are: (a) any partial or complete redemption in connection with a tax-free distribution following retirement under a tax-deferred retirement plan or attaining age 59 1/2 in the case of an IRA or other retirement plan, or part of a series of equal periodic payments (not less frequently than annually) made for the life (or life expectancy) or any redemption resulting from the tax-free return of an excess contribution to an IRA; or (b) any partial or complete redemption following the death or disability (as defined in the Code) of a Class B shareholder (including one who owns the Class B shares as joint tenant with
his or her spouse), provided the redemption is requested within one year of the death or initial determination of disability. For the fiscal years ended July 31, 1993, 1994 and 1995, the Distributor received CDSCs of $246,318, $188,148 and $469,990, respectively, all of which were paid to Merrill Lynch. For the fiscal period October 21, 1994 (commencement of operations) to July 31, 1995, the Distributor received CDSCs of $1,502 with respect to redemptions of Class C shares, all of which were paid to Merrill Lynch.
Merrill Lynch BlueprintSM Program. Class B shares are offered to certain participants in Blueprint. Blueprint is directed to small investors, group IRAs and participants in certain affinity groups such as trade associations and credit unions. Class B shares of the Trust are offered through Blueprint only to members of certain affinity groups. The CDSC is waived in connection with purchase orders placed through Blueprint by members of such affinity groups. Services, including the exchange privilege, available to Class B investors through Blueprint, however, may differ from those available to other Class B investors. Orders for purchases and redemptions of Class B shares of the Trust will be grouped for execution purposes which, in some circumstances, may involve the execution of such orders two business days following the day such orders are placed. The minimum initial purchase price is $100, with a $50 minimum for subsequent purchases through Blueprint. There is no minimum initial or subsequent purchase requirement for investors who are part of a Blueprint automatic investment plan. Additional information concerning these Blueprint programs, including any annual fees or transaction charges, is available from Merrill Lynch, Pierce, Fenner & Smith Incorporated, The BlueprintSM Program, P.O. Box 30441, New Brunswick, New Jersey 08989-0441.
Retirement Plans. Any Retirement Plan which does not meet the
qualifications to purchase Class A or Class D shares at net asset value has the
option of purchasing Class A or Class D shares at the sales charge schedule
disclosed in the Prospectus, or if the Retirement Plan meets the following
requirements, then it may purchase Class B shares with a waiver of the CDSC upon
redemption. The CDSC is waived for any Eligible 401(k) Plan redeeming Class B
shares. "Eligible 401(k) Plan" is defined as a retirement plan qualified under
Section 401(k) of the Code with a salary reduction feature offering a menu of
investments to plan participants. The CDSC is also waived for redemptions from a
401(a) plan qualified under the Code, provided, however, that such plan has the
same or an affiliated sponsoring employer as an Eligible 401(k) Plan purchasing
Class B shares of MLAM-advised mutual funds ("Eligible 401(a) Plan"). Other tax
qualified retirement plans within the meaning of Section 401(a) or 401(b) of the
Code which are provided specialized services (e.g., plans whose participants may
direct on a daily basis their plan allocations among a menu of investments) by
independent administration firms contracted through Merrill Lynch also may
purchase Class B shares with a waiver of the CDSC. The CDSC also is waived for
any Class B shares which are purchased by an Eligible 401(k) Plan or Eligible
401(a) Plan and are rolled over into a Merrill Lynch or Merrill Lynch Trust
Company custodied IRA and held in such account at the time of redemption. The
Class B CDSC also is waived for any Class B shares which are purchased by a
Merrill Lynch rollover IRA that was funded by a rollover from a terminated
401(k) Plan managed by the MLAM Private Portfolio Group and held in such account
at the time of redemption. The minimum initial and subsequent purchase
requirements are waived in connection with all the above-referenced Retirement
Plans. The CDSC is also waived for any Class B shares that were acquired and
held at the time of redemption by Employee Access Accounts available through
employers that provide Eligible 401(k) Plans. The initial minimum for such
accounts is $500, except that the initial minimum for shares purchased for such
accounts pursuant to the Automatic Investment Program is $50.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Reference is made to "Portfolio Transactions and Brokerage in the Prospectus."
The Investment Adviser is responsible for making the Trust's portfolio decisions, placing the Trust's brokerage business, evaluating the reasonableness of brokerage commissions and negotiating the amount of any commissions paid, subject to policies established by the Trust's Trustees and officers. The Trust has no obligation to deal with any broker or group of brokers in the execution of transactions in portfolio securities. Orders for transactions in portfolio securities are placed for the Trust with a number of brokers and dealers, including Merrill Lynch. In placing orders, it is the policy of the Trust to obtain the most favorable net results, taking into account various factors, including price, commissions, if any, size of the transaction and difficulty of execution. Where practicable, the Investment Adviser surveys a number of brokers and dealers in connection with proposed portfolio transactions and selects the broker or dealer which offers the Trust best price and execution or other services which are of benefit to the Trust. Securities firms also may receive brokerage commissions on transactions including covered call options written by the Trust and the sale of underlying securities upon the exercise of such options. In addition, consistent with the Rules of Fair Practice of the NASD and policies established by the Trust's Trustees, the Investment Adviser may consider sales of shares of the Trust as a factor in the selection of brokers or dealers to execute portfolio transactions for the Trust.
For the fiscal year ended July 31, 1993, the Trust paid total brokerage commissions of $520,434, of which $31,459 or 6.04% was paid to Merrill Lynch for effecting 3.58% of the aggregate dollar amount of transactions in which the Trust paid brokerage commissions. For the fiscal year ended July 31, 1994, the Trust paid total brokerage commissions of $632,276, of which $4,800 or .76% was paid to Merrill Lynch for effecting 2.15% of the aggregate dollar amount of transactions in which the Trust paid brokerage commissions. For the fiscal year ended July 31, 1995, the Trust paid total brokerage commissions of $588,382 of which $20,069 or 3.41% was paid to Merrill Lynch for effecting 3.58% of the aggregate dollar amount of transactions in which the Trust paid brokerage commissions.
The Trust does not use any particular broker or dealer, and brokers who provide supplemental investment research to the Investment Adviser (including Merrill Lynch) may receive orders for transactions by the Trust. Such supplemental research services ordinarily consist of assessments and analyses of the business or prospects of a company, industry or economic sector. Information so received will be in addition to and not in lieu of the services required to be performed by the Investment Adviser under the Investment Advisory Agreement. If in the judgment of the Investment Adviser the Trust will be benefitted by supplemental research services, the Investment Adviser is authorized to pay brokerage commissions to a broker furnishing such services which are in excess of commissions which another broker may have charged for effecting the same transaction. The expenses of the Investment Adviser will not necessarily be reduced as a result of the receipt of such supplemental information, and the Investment Adviser may use such information in servicing its other accounts.
The Trust invests in securities traded in the over-the-counter market and, where possible, deals directly with the dealers who make a market in the securities involved, except in those circumstances in which better prices and execution are available elsewhere. Under the Investment Company Act, persons affiliated with the Trust are prohibited from dealing with the Trust as principal in the purchase and sale of securities. Since transactions in the over-the-counter market usually involve transactions with dealers acting as principal for
their own accounts, affiliated persons of the Trust, including Merrill Lynch, will not serve as the Trust's dealer in such transactions. However, affiliated persons of the Trust may serve as its broker in over-the-counter transactions conducted on an agency basis.
The Trust may invest in the securities of foreign issuers in the form of American Depositary Receipts (ADRs), European Depositary Receipts (EDRs) or other securities convertible into securities of foreign issuers. These securities may not necessarily be denominated in the same currency as the securities into which they may be converted. ADR's are receipts typically issued by an American bank or trust company which evidence ownership of underlying securities issued by a foreign corporation. EDRs are receipts issued in Europe which evidence a similar ownership arrangement. Generally, ADRs, which are issued in registered form, are designed for use in the United States securities markets and EDRs, which are issued in bearer form, are designed for use in European securities markets.
The Trustees of the Trust have considered the possibilities of recapturing for the benefit of the Trust brokerage commissions, dealer spreads and other expenses of possible portfolio transactions, such as underwriting commissions, by conducting such portfolio transactions through affiliated entities, including Merrill Lynch. For example, brokerage commissions received by Merrill Lynch could be offset against the investment advisory fee paid by the Trust to the Investment Adviser. After considering all factors deemed relevant, the Trustees made a determination not to seek such recapture. The Trustees will reconsider this matter from time to time. The Investment Adviser has arranged for the Trust's custodian to receive any tender offer solicitation fees on behalf of the Trust payable with respect to portfolio securities of the Trust.
Section 11(a) of the Securities Exchange Act of 1934 generally prohibits members of the U.S. national securities exchanges from executing exchange transactions for their affiliates and institutional accounts which they manage unless the member (i) has obtained prior express authorization from the account to effect such transactions, (ii) at least annually furnishes the account with a statement setting forth the aggregate compensation received by the member in effecting such transactions, and (iii) complies with any rules the Commission has prescribed with respect to the requirements of clauses (i) and (ii). To the extent Section 11(a) would apply to Merrill Lynch acting as a broker for the Trust in any of its portfolio transactions executed on any such securities exchange of which it is a member, appropriate consents have been obtained from the Trust, and annual statements as to aggregate compensation will be provided to the Trust.
DETERMINATION OF NET ASSET VALUE
The net asset value of the shares of all classes of the Trust is determined once daily Monday through Friday as of 15 minutes after the close of business on the New York Stock Exchange (generally, 4:00 P.M., New York time) on each day during which the New York Stock Exchange is open for trading. The New York Stock Exchange is not open on New Year's Day, President's Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. Any assets or liabilities initially expressed in terms of non-U.S. dollar currencies are translated into U.S. dollars at the prevailing market rates as quoted by one or more banks or dealers on the day of valuation. The Trust also will determine its net asset value on any day in which there is sufficient trading in its portfolio securities that the net asset value might be affected materially, but only if on such day the Trust is required to sell or redeem shares. Net asset value is determined by adding the total market value of all securities held by the Trust plus cash or other assets (including interest and dividends accrued but not yet received) less all liabilities of the Trust (including accrued expenses). The
amount remaining is divided by the total number of shares outstanding and rounded to the nearest cent to arrive at the net asset value of each share. Expenses, including investment advisory fees and any account maintenance and/or distribution fees, are accrued daily. The per share net asset value of the Class B, Class C and Class D shares generally will be lower than the per share net asset value of the Class A shares reflecting the daily expense accruals of the account maintenance, distribution and higher transfer agency fees applicable with respect to the Class B and Class C shares and the daily expense accruals of the account maintenance fees applicable with respect to the Class D shares; moreover the per share net asset value of Class B and Class C shares generally will be lesser than the per share net asset value of Class D shares reflecting the daily expense accruals of the distribution fees and higher transfer agency fees applicable with respect to Class B and Class C shares of the Trust. It is expected, however, that the per share net asset value of the four classes will tend to converge (although not necessarily meet) immediately after the payment of dividends or distributions, which will differ by approximately the amount of the expense accrual differential between the classes.
Portfolio securities which are traded on stock exchanges are valued at the last sale price (regular way) on the exchange on which such securities are traded, as of the close of business on the day the securities are being valued or, lacking any sales, at the last available bid price. In cases where securities are traded on more than one exchange, the securities are valued on the exchange designated by or under the authority of the Board of Trustees as the primary market. Securities traded in the over-the-counter market are valued at the last available bid price in the over-the-counter market prior to the time of valuation. When the Trust writes a call option, the amount of the premium received is recorded on the books of the Trust as an asset and an equivalent liability. The amount of the liability is subsequently valued to reflect the current market value of the option written, based upon the last sale price in the case of exchange-traded options, or, in the case of options traded in the OTC market, the last asked price. Options purchased by the Trust are valued at their last sale price. Securities and assets for which market quotations are not readily available are valued at fair value as determined in good faith under the direction of the Board of Trustees of the Trust.
SHAREHOLDER SERVICES
The Trust offers a number of shareholder services summarized below which are designed to facilitate investment in its shares. Full details as to each of such services and copies of the various plans described below can be obtained from the Trust, the Distributor or Merrill Lynch.
INVESTMENT ACCOUNT
Each shareholder whose account is maintained at Merrill Lynch Financial Data Services, Inc. (formerly called Financial Data Services, Inc.) (the "Transfer Agent") has an Investment Account and will receive statements, at least quarterly, from the Transfer Agent. The statements will serve as transaction confirmations for automatic investment purchases and the reinvestment of ordinary income dividends and capital gains distributions. The statements also will show any other activity in the account since the previous statement. Shareholders also will receive separate confirmations for each purchase or sale transaction other than automatic investment purchases and the reinvestment of ordinary income dividends and capital gains distributions. A shareholder may make additions to his or her Investment Account at any time by mailing a check directly to the Transfer Agent.
Share certificates are issued only for full shares and only upon the specific request of the shareholder. Issuance of certificates representing all or only part of the full shares in an Investment Account may be requested by a shareholder directly from the Transfer Agent.
Shareholders considering transferring their Class A or Class D shares from Merrill Lynch to another brokerage firm or financial institution should be aware that, if the firm to which the Class A or Class D shares are to be transferred will not take delivery of shares of the Trust, a shareholder either must redeem the Class A or Class D shares (paying any applicable CDSC) so that the cash proceeds can be transferred to the account at the new firm or such shareholder must continue to maintain an Investment Account at the transfer agent for those Class A or Class D shares. Shareholders interested in transferring their Class B or Class C shares from Merrill Lynch and who do not wish to have an Investment Account maintained for such shares at the transfer agent may request their new brokerage firm to maintain such shares in an account registered in the name of the brokerage firm for the benefit of the shareholder at the transfer agent. If the new brokerage firm is willing to accommodate the shareholder in this manner, the shareholder must request that he be issued certificates for his shares, and then must turn the certificates over to the new firm for re-registration as described in the preceding sentence. Shareholders considering transferring a tax-deferred retirement account such as an individual retirement account from Merrill Lynch to another brokerage firm or financial institution should be aware that, if the firm to which the retirement account is to be transferred will not take delivery of shares of the Trust, a shareholder must either redeem the shares (paying any applicable CDSC) so that the cash proceeds can be transferred to the account at the new firm, or such shareholder must continue to maintain a retirement account at Merrill Lynch for those shares.
AUTOMATIC INVESTMENT PLANS
A shareholder may make additions to an Investment Account at any time by purchasing Class A shares (if he or she is an eligible Class A investor as described in the Prospectus) or Class B, Class C or Class D shares at the applicable public offering price either through the shareholder's securities dealer, or by mail directly to the Transfer Agent, acting as agent for such securities dealer. Voluntary accumulation also can be made through a service known as the Automatic Investment Plan whereby the Trust is authorized through pre-authorized checks or automated clearing house debits of $50 or more to charge the regular bank account of the shareholder on a regular basis to provide systematic additions to the Investment Account of such shareholder. For investors who buy shares of the Trust through Blueprint, no minimum charge to the investor's bank account is required. Investors who maintain CMA(R) or CBA(R) accounts may arrange to have periodic investments made in the Trust in their CMA(R) or CBA(R) accounts or in certain related accounts in amounts of $100 or more ($1 for retirement accounts) through the CMA(R) or CBA(R) Automated Investment Program.
AUTOMATIC REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
Unless specific instructions are given as to the method of payment of dividends and capital gains distributions, dividends and distributions will be reinvested automatically in additional shares of the Trust. Such reinvestment will be at the net asset value of shares of the Trust as of the close of business on the ex-dividend date of the dividend or distribution. Shareholders may elect in writing to receive either their ordinary income dividends or capital gains distributions, or both, in cash, in which event payment will be mailed or direct deposited on or about the payment date.
Shareholders may, at any time, notify the Transfer Agent in writing or by telephone (1-800-MER-FUND) that they no longer wish to have their dividends and/or capital gains distributions reinvested in shares of the Trust or vice versa and, commencing ten days after receipt by the Transfer Agent of such notice, those instructions will be effected.
SYSTEMATIC WITHDRAWAL PLANS--CLASS A AND CLASS D SHARES
A Class A or Class D shareholder may elect to make systematic withdrawals from an Investment Account on either a monthly or quarterly basis as provided below. Quarterly withdrawals are available for shareholders who have acquired Class A or Class D shares of the Trust having a value, based on cost or the current offering price, of $5,000 or more, and monthly withdrawals are available for shareholders with Class A or Class D shares with such a value of $10,000 or more.
At the time of each withdrawal payment, sufficient Class A or Class D shares are redeemed from those on deposit in the shareholder's account to provide the withdrawal payment specified by the shareholder. The shareholder may specify either a dollar amount or a percentage of the value of his or her Class A or Class D shares. Redemptions will be made at net asset value as determined as of 15 minutes after the close of business on the New York Stock Exchange (generally 4:00 P.M., New York time) on the 24th day of each month or the 24th day of the last month of each quarter, whichever is applicable. If the New York Stock Exchange is not open for business on such date, the Class A or Class D shares will be redeemed at the close of business on the following business day. The check for the withdrawal payment will be mailed, or the direct deposit of the withdrawal payment will be made, on the next business day following redemption. When a shareholder is making systematic withdrawals, dividends and distributions on all Class A or Class D shares in the Investment Account are reinvested automatically in Class A or Class D shares of the Trust, respectively. A shareholder's Systematic Withdrawal Plan may be terminated at any time, without charge or penalty, by the shareholder, the Trust, the Trust's transfer agent or the Distributor. Withdrawal payments should not be considered as dividends, yield or income. Each withdrawal is a taxable event. If periodic withdrawals continuously exceed reinvested dividends, the shareholder's original investment may be reduced correspondingly. Purchases of additional Class A or Class D shares concurrent with withdrawals are ordinarily disadvantageous to the shareholder because of sales charges and tax liabilities. The Trust will not knowingly accept purchase orders for Class A or Class D shares of the Trust from investors who maintain a Systematic Withdrawal Plan unless such purchase is equal to at least one year's scheduled withdrawals or $1,200, whichever is greater. Periodic investments may not be made into an Investment Account in which the shareholder has elected to make systematic withdrawals.
Alternatively, a Class A or Class D shareholder whose shares are held within a CMA(R), CBA(R) or Retirement Account may elect to have shares redeemed on a monthly, bimonthly, quarterly, semiannual or annual basis through the CMA(R)/CBA(R) Systematic Redemption Program. The minimum fixed dollar amount redeemable is $25. The proceeds of systematic redemptions will be posted to a shareholder's account five business days after the date the shares are redeemed. Monthly systematic redemptions will be made at net asset value on the first Monday of each month, bimonthly systematic redemptions will be made at net asset value on the first Monday of every other month, and quarterly, semiannual or annual redemptions are made at net asset value on the first Monday of months selected at the shareholder's option. If the first Monday of the month is a holiday, the redemption will be processed at net asset value on the next business day. The CMA(R)/CBA(R) Systematic Redemption Program is not available if Trust shares are being purchased within
the account pursuant to the Automatic Investment Program. For more information on the CMA(R)/CBA(R) Systematic Redemption Program, eligible shareholders should contact their Merrill Lynch financial consultant.
RETIREMENT PLANS
Self-directed individual retirement accounts and other retirement plans are available from Merrill Lynch. Under these plans, investments may be made in the Trust and in certain of the other mutual funds sponsored by Merrill Lynch as well as in other securities. Merrill Lynch charges an initial establishment fee and an annual custodial fee for such account. Information with respect to these plans is available upon request from Merrill Lynch. The minimum initial purchase to establish any such plan is $100 and the minimum subsequent purchase is $1.
Capital gains and ordinary income received in each of the plans referred to above are exempt from Federal taxation until distributed from the plans. Investors considering participation in any such plan should review specific tax laws relating thereto and should consult their attorneys or tax advisers with respect to the establishment and maintenance of any such plan.
EXCHANGE PRIVILEGE
Shareholders of each class of shares of the Trust have an exchange privilege with certain other MLAM-advised mutual funds listed below. Under the Merrill Lynch Select Pricing(SM) System, Class A shareholders may exchange Class A shares of the Trust for Class A shares of a second MLAM-advised mutual fund if the shareholder holds any Class A shares of the second fund in his or her account in which the exchange is made at the time of the exchange or is otherwise eligible to purchase Class A shares of the second fund. If the Class A shareholder wants to exchange Class A shares for shares of a second MLAM-advised mutual fund, but does not hold Class A shares of the second fund in his account at the time of the exchange and is not otherwise eligible to acquire Class A shares of the second fund, the shareholder will receive Class D shares of the second fund as a result of the exchange. Class D shares also may be exchanged for Class A shares of a second MLAM-advised mutual fund at any time as long as, at the time of the exchange, the shareholder holds Class A shares of the second fund in the account in which the exchange is made or is otherwise eligible to purchase Class A shares of the second fund. Class B, Class C and Class D shares are exchangeable with shares of the same class of other MLAM-advised mutual funds. For purposes of computing the CDSC that may be payable upon a disposition of the shares acquired in the exchange, the holding period for the previously owned shares of the Trust is "tacked" to the holding period of the newly acquired shares of the other fund as more fully described below. Class A, Class B, Class C and Class D shares also are exchangeable for shares of certain MLAM-advised money market funds specifically designated below as available for exchange by holders of Class A, Class B, Class C or Class D shares. Shares with a net asset value of at least $100 are required to qualify for the exchange privilege, and any shares utilized in an exchange must have been held by the shareholder for at least 15 days. It is contemplated that the exchange privilege may be applicable to other new mutual funds whose shares may be distributed by the Distributor.
Exchanges of Class A or Class D shares outstanding ("outstanding Class A or Class D shares") for Class A or Class D shares of another MLAM-advised mutual fund ("new Class A or Class D shares") are transacted on the basis of relative net asset value per Class A or Class D share, respectively, plus an amount equal to the difference, if any, between the sales charge previously paid on the outstanding Class A or Class D
shares and the sales charge payable at the time of the exchange on the new Class A or Class D shares. With respect to outstanding Class A or Class D shares as to which previous exchanges have taken place, the "sales charge previously paid" shall include the aggregate of the sales charge paid with respect to such Class A or Class D shares in the initial purchase and any subsequent exchange. Class A or Class D shares issued pursuant to dividend reinvestment are sold on a no-load basis in each of the funds offering Class A or Class D shares. For purposes of the exchange privilege, Class A and Class D shares acquired through dividend reinvestment shall be deemed to have been sold with a sales charge equal to the sales charge previously paid on the Class A or Class D shares on which the dividend was paid. Based on this formula, Class A and Class D shares of the Trust generally may be exchanged into the Class A or Class D shares of the other funds or into shares of the Class A and Class D money market funds with a reduced or without a sales charge.
In addition, each of the funds with Class B and Class C shares outstanding ("outstanding Class B or Class C shares") offers to exchange its Class B or Class C shares for Class B or Class C shares, respectively, of another MLAM-advised mutual fund ("new Class B or Class C shares") on the basis of relative net asset value per Class B or Class C share, without the payment of any CDSC that might otherwise be due on redemption of the outstanding shares. Class B shareholders of the Trust exercising the exchange privilege will continue to be subject to the Trust's CDSC schedule if such schedule is higher than the CDSC schedule relating to the new Class B shares acquired through use of the exchange privilege. In addition, Class B shares of the Trust acquired through use of the exchange privilege will be subject to the Trust's CDSC schedule if such schedule is higher than the CDSC schedule relating to the Class B shares of the fund from which the exchange has been made. For purposes of computing the sales charge that may be payable on a disposition of the new Class B or Class C shares, the holding period for the outstanding Class B or Class C shares is "tacked" to the holding period of the new Class B or Class C shares. For example, an investor may exchange Class B shares of the Trust for those of Merrill Lynch Special Value Fund, Inc. ("Special Value Fund") after having held the Trust Class B shares for two and a half years. The 2% CDSC that generally would apply to a redemption would not apply to the exchange. Three years later the investor may decide to redeem the Class B shares of Special Value Fund and receive cash. There will be no CDSC due on this redemption, since by "tacking" the two and a half-year holding period of Trust Class B shares to the three-year holding period for the Special Value Fund Class B shares, the investor will be deemed to have held the new Class B shares for more than five years.
The exchange privilege is modified with respect to certain retirement plans which participate in the Merrill Lynch Mutual Fund Adviser ("MFA") program. Such retirement plans may exchange Class B, Class C or Class D shares that have been held for at least one year for Class A shares of the same fund on the basis of relative net asset values in connection with the commencement of participation in the MFA program, i.e., no CDSC will apply. The one-year holding period does not apply to shares acquired through reinvestment of dividends. Upon termination of participation in the MFA program, Class A shares will be re-exchanged for the class of shares originally held. For purposes of computing any CDSC that may be payable upon redemption of Class B or Class C shares so reacquired, the holding period for the Class A shares will be "tacked" to the holding period for the Class B or Class C shares originally held.
Shareholders also may exchange shares of the Trust into shares of a money market fund advised by the Investment Adviser or its affiliates, but the period of time that Class B or Class C shares are held in a money market fund will not count towards satisfaction of the holding period requirement for purposes of reducing the CDSC or, with respect to Class B shares, towards satisfaction of the conversion period. However, shares of a
money market fund which were acquired as a result of an exchange for Class B or Class C shares of the Trust may, in turn, be exchanged back into Class B or Class C shares, respectively, of any fund offering such shares, in which event the holding period for Class B or Class C shares of the fund will be aggregated with previous holding periods for purposes of reducing the CDSC. Thus, for example, an investor may exchange Class B shares of the Trust for shares of Merrill Lynch Institutional Fund ("Institutional Fund") after having held the Trust Class B shares for two and a half years and three years later decide to redeem the shares of Institutional Fund for cash. At the time of this redemption, the 2% CDSC that would have been due had the Class B shares of the Trust been redeemed for cash rather than exchanged for shares of Institutional Fund will be payable. If, instead of such redemption, the shareholder exchanged such shares for Class B shares of a fund which the shareholder continued to hold for an additional two and a half years, any subsequent redemption will not incur a CDSC.
Set forth below is a description of the investment objectives of the other funds into which exchanges can be made:
Funds Issuing Class A, Class B, Class C and Class D Shares:
MERRILL LYNCH ADJUSTABLE RATE
SECURITIES FUND, INC. ...... High current income consistent with a policy of
limiting the degree of fluctuation in net
asset value by investing primarily in a
portfolio of adjustable rate securities,
consisting principally of mortgage-backed and
asset-backed securities.
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MERRILL LYNCH AMERICAS INCOME
FUND, INC. ................. A high level of current income, consistent with
prudent investment risk, by investing
primarily in debt securities denominated in a
currency of a country located in the Western
Hemisphere (i.e., North and South America and
the surrounding waters).
MERRILL LYNCH ARIZONA LIMITED
MATURITY MUNICIPAL BOND
FUND ....................... A portfolio of Merrill Lynch Multi-State
Limited Maturity Municipal Series Trust, a
series fund, whose objective is to provide as
high a level of income exempt from Federal
and Arizona income taxes as is consistent
with prudent investment management through
investment in a portfolio primarily of
intermediate-term investment grade Arizona
Municipal Bonds.
MERRILL LYNCH ARIZONA
MUNICIPAL BOND FUND ........ A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal and Arizona income
taxes as is consistent with prudent
investment management.
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MERRILL LYNCH ARKANSAS
MUNICIPAL BOND FUND ........ A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal and Arkansas
income taxes as is consistent with prudent
investment management.
MERRILL LYNCH ASSET GROWTH
FUND, INC. ................. High total investment return, consistent with
prudent risk, from investment in United
States and foreign equity, debt and money
market securities the combination of which
will be varied both with respect to types of
securities and markets in response to
changing market and economic trends.
MERRILL LYNCH ASSET INCOME
FUND, INC. ................. A high level of current income through
investment primarily in United States fixed
income securities.
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MERRILL LYNCH BALANCED FUND
FOR INVESTMENT AND
RETIREMENT, INC. ........... As high a level of total investment return as
is consistent with reasonable risk by
investing in common stock and other types of
securities, including fixed income securities
and convertible securities.
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MERRILL LYNCH BASIC VALUE
FUND, INC. ................. Capital appreciation and, secondarily, income
through investment in securities, primarily
equities, that are undervalued and therefore
represent basic investment value.
MERRILL LYNCH CALIFORNIA
INSURED MUNICIPAL BOND
FUND ....................... A portfolio of Merrill Lynch California
Municipal Series Trust, a series fund, whose
objective is to provide shareholders with as
high a level of income exempt from Federal
and California income taxes as is consistent
with prudent investment management through
investment in a portfolio primarily of
insured California Municipal Bonds.
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MERRILL LYNCH CALIFORNIA
LIMITED MATURITY MUNICIPAL
BOND FUND .................. A portfolio of Merrill Lynch Multi-State
Maturity Municipal Series Trust, a series
fund, whose objective is to provide as high a
level of income exempt from Federal and
California income taxes as is consistent with
prudent investment management through
investment in a portfolio primarily of
intermediate-term investment grade California
Municipal Bonds.
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MERRILL LYNCH CALIFORNIA
MUNICIPAL BOND FUND ........ A portfolio of Merrill Lynch California
Municipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal and California
income taxes as is consistent with prudent
investment management.
MERRILL LYNCH CAPITAL
FUND, INC. ................. The highest total investment return consistent
with prudent risk through a fully managed
investment policy utilizing equity, debt and
convertible securities.
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MERRILL LYNCH COLORADO
MUNICIPAL BOND FUND ........ A portfolio of Merrill Lynch Multi-State
Municipal Series, a series fund, whose
objective is to provide as high a level of
income exempt from Federal and Colorado
income taxes as is consistent with prudent
investment management.
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MERRILL LYNCH CONNECTICUT
MUNICIPAL BOND FUND ........ A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal and Connecticut
income taxes as is consistent with prudent
investment management.
MERRILL LYNCH CORPORATE BOND
FUND, INC. ................. Current income from three separate diversified
portfolios of fixed income securities.
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MERRILL LYNCH DEVELOPING
CAPITAL MARKETS FUND,
INC. ....................... Long-term capital appreciation through
investment in securities, principally
equities, of issuers in countries having
smaller capital markets.
MERRILL LYNCH DRAGON
FUND, INC. ................. Capital appreciation primarily through
investment in equity and debt securities of
issuers domiciled in developing countries
located in Asia and the Pacific Basin.
MERRILL LYNCH EUROFUND ....... Capital appreciation primarily through
investment in equity securities of
corporations domiciled in Europe.
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MERRILL LYNCH FEDERAL
SECURITIES TRUST ........... High current return through investments in U.S.
Government and Government agency securities,
including GNMA mortgage-backed certificates
and other mortgage-backed Government
securities.
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MERRILL LYNCH FLORIDA LIMITED
MATURITY MUNICIPAL BOND
FUND ....................... A portfolio of Merrill Lynch Multi-State
Limited Maturity Municipal Series Trust, a
series fund, whose objective is to provide as
high a level of income exempt from Federal
income taxes as is consistent with prudent
investment management while serving to offer
shareholders the opportunity to own
securities exempt from Florida intangible
personal property taxes through investment in
a portfolio primarily of intermediate-term
investment grade Florida Municipal Bonds.
MERRILL LYNCH FLORIDA
MUNICIPAL BOND FUND ........ A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal income taxes as is
consistent with prudent investment management
while seeking to offer shareholders the
opportunity to own securities exempt from
Florida intangible personal property taxes.
MERRILL LYNCH FUND FOR
TOMORROW, INC. ............. Long-term growth through investment in a
portfolio of good quality securities,
primarily common stock, potentially
positioned to benefit from demographic and
cultural changes as they affect consumer
markets.
MERRILL LYNCH FUNDAMENTAL
GROWTH FUND, INC. .......... Long-term growth of capital through investment
in a diversified portfolio of equity
securities placing particular emphasis on
companies that have exhibited an
above-average growth rate in earnings.
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MERRILL LYNCH FUNDAMENTAL
VALUE PORTFOLIO
(available only for
exchanges by certain
individual retirement
accounts for which Merrill
Lynch acts as custodian) ... A portfolio of Merrill Lynch Asset Builder
Program, Inc., a series fund, whose objective
is to provide capital appreciation and income
by investing in securities, with at least 65%
of the portfolio's assets being invested in
equities.
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MERRILL LYNCH GLOBAL
ALLOCATION FUND, INC. ...... High total investment return, consistent with
prudent risk, through a fully managed
investment policy utilizing United States and
foreign equity, debt and money market
securities, the combination of which will be
varied from time to time both with respect to
the types of securities and markets in
response to changing market and economic
trends.
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MERRILL LYNCH GLOBAL BOND FUND
FOR INVESTMENT AND
RETIREMENT ................. High total investment return from investment in
a global portfolio of debt instruments
denominated in various currencies and
multinational currency units.
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MERRILL LYNCH GLOBAL
CONVERTIBLE FUND, INC. ..... High total return from investment primarily in
an internationally diversified portfolio of
convertible debt securities, convertible
preferred stock and "synthetic" convertible
securities consisting of a combination of
debt securities or preferred stock and
warrants or options.
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MERRILL LYNCH GLOBAL
HOLDINGS, INC.
(residents of Arizona must
meet investor suitability
standards) ................. The highest total investment return consistent
with prudent risk through worldwide
investment in an internationally diversified
portfolio of securities.
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MERRILL LYNCH GLOBAL
OPPORTUNITY PORTFOLIO
(available only for
exchanges by certain
individual retirement
accounts for which Merrill
Lynch acts as custodian) ... A portfolio of Merrill Lynch Asset Builder
Program, Inc., a series fund, whose objective
is to provide a high total investment return
through an investment policy utilizing United
States and foreign equity, debt and money
market securities, the combination of which
will vary depending upon changing market and
economic trends.
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MERRILL LYNCH GLOBAL SMALLCAP
FUND, INC. ................. Long-term growth of capital by investing
primarily in equity securities of companies
with relatively small market capitalizations
located in various foreign countries and in
the United States.
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MERRILL LYNCH GLOBAL UTILITY
FUND, INC. ................. Capital appreciation and current income through
investment of at least 65% of its total
assets in equity and debt securities issued
by domestic and foreign companies primarily
engaged in the ownership or operation of
facilities used to generate, transmit or
distribute electricity, telecommunications,
gas or water.
MERRILL LYNCH GROWTH FUND FOR
INVESTMENT AND
RETIREMENT ................. Growth of capital and, secondarily, income from
investment in a diversified portfolio of
equity securities placing principal emphasis
on those securities which management of the
fund believes to be undervalued.
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MERRILL LYNCH HEALTHCARE FUND,
INC.
(residents of Wisconsin must
meet investor suitability
standards) ................. Capital appreciation through worldwide
investment in equity securities of companies
that derive or are expected to derive a
substantial portion of their sales from
products and services in healthcare.
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MERRILL LYNCH INTERNATIONAL
EQUITY FUND ................ Capital appreciation and, secondarily, income
by investing in a diversified portfolio of
equity securities of issuers located in
countries other than the United States.
MERRILL LYNCH LATIN AMERICA
FUND, INC. ................. Capital appreciation by investing primarily in
Latin American equity and debt securities.
MERRILL LYNCH MARYLAND
MUNICIPAL BOND FUND ........ A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal and Maryland
income taxes as is consistent with prudent
investment management.
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MERRILL LYNCH MASSACHUSETTS
LIMITED MATURITY MUNICIPAL
BOND FUND .................. A portfolio of Merrill Lynch Multi-State
Limited Maturity Municipal Series Trust, a
series fund, whose objective is to provide as
high a level of income exempt from Federal
and Massachusetts income taxes as is
consistent with prudent investment management
through investment in a portfolio primarily
of intermediate-term investment grade
Massachusetts Municipal Bonds.
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MERRILL LYNCH MASSACHUSETTS
MUNICIPAL BOND FUND ........ A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal and Massachusetts
income taxes as is consistent with prudent
investment management.
MERRILL LYNCH MICHIGAN LIMITED
MATURITY MUNICIPAL BOND
FUND ....................... A portfolio of Merrill Lynch Multi-State
Limited Maturity Municipal Series Trust, a
series fund, whose objective is to provide as
high a level of income exempt from Federal
and Michigan income taxes as is consistent
with prudent investment management through
investment in a portfolio primarily of
intermediate-term investment grade Michigan
Municipal Bonds.
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MERRILL LYNCH MICHIGAN
MUNICIPAL BOND FUND ........ A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal and Michigan
income taxes as is consistent with prudent
investment management.
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MERRILL LYNCH MINNESOTA
MUNICIPAL BOND FUND ........ A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal and Minnesota
personal income taxes as is consistent with
prudent investment management.
MERRILL LYNCH MUNICIPAL BOND
FUND, INC. ................. Tax-exempt income from three separate
diversified portfolios of municipal bonds.
MERRILL LYNCH MUNICIPAL
INTERMEDIATE TERM FUND ..... Currently the only portfolio of Merrill Lynch
Municipal Series Trust, a series fund, whose
objective is to provide as high a level as
possible of income exempt from Federal income
taxes by investing in investment grade
obligations with a dollar weighted average
maturity of five to twelve years.
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MERRILL LYNCH MUNICIPAL
STRATEGY FUND, INC. ....... As high a level of current income exempt from
Federal income taxes as is consistent with
prudent investment management by investing
primarily in a portfolio of long-term,
investment grade municipal obligations the
interest on which, in the opinion of bond
counsel to the issuer, is exempt from Federal
income taxes.
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MERRILL LYNCH NEW JERSEY
LIMITED MATURITY MUNICIPAL
BOND FUND .................. A portfolio of Merrill Lynch Multi-State
Limited Maturity Municipal Series Trust, a
series fund, whose objective is to provide as
high a level of income exempt from Federal
and New Jersey income taxes as is consistent
with prudent investment management through
investment in a portfolio primarily of
intermediate-term investment grade New Jersey
Municipal Bonds.
MERRILL LYNCH NEW JERSEY
MUNICIPAL BOND FUND ........ A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal and New Jersey
income taxes as is consistent with prudent
investment management.
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MERRILL LYNCH NEW MEXICO
MUNICIPAL BOND FUND ........ A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal and New Mexico
income taxes as is consistent with prudent
investment management.
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MERRILL LYNCH NEW YORK LIMITED
MATURITY MUNICIPAL BOND
FUND ....................... A portfolio of Merrill Lynch Multi-State
Limited Maturity Municipal Series Trust, a
series fund, whose objective is to provide as
high a level of income exempt from Federal,
New York State and New York City income taxes
as is consistent with prudent investment
management through investment in a portfolio
primarily of intermediate-term investment
grade New York Municipal Bonds.
MERRILL LYNCH NEW YORK
MUNICIPAL BOND FUND ........ A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal, New York State
and New York City income taxes as is
consistent with prudent investment
management.
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MERRILL LYNCH NORTH CAROLINA
MUNICIPAL BOND FUND ........ A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal and North Carolina
income taxes as is consistent with prudent
investment management.
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MERRILL LYNCH OHIO MUNICIPAL
BOND FUND .................. A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal and Ohio income
taxes as is consistent with prudent
investment management.
MERRILL LYNCH OREGON MUNICIPAL
BOND FUND .................. A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal and Oregon income
taxes as is consistent with prudent
investment management.
MERRILL LYNCH PACIFIC
FUND, INC. ................. Capital appreciation by investing in equity
securities of corporations domiciled in Far
Eastern and Western Pacific countries,
including Japan, Australia, Hong Kong, and
Singapore.
MERRILL LYNCH PENNSYLVANIA
LIMITED MATURITY MUNICIPAL
BOND FUND .................. A portfolio of Merrill Lynch Multi-State
Limited Maturity Municipal Series Trust, a
series fund, whose objective is to provide as
high a level of income exempt from Federal
and Pennsylvania income taxes as is
consistent with prudent investment management
through investment in a portfolio primarily
of intermediate-term investment grade
Pennsylvania Municipal Bonds.
MERRILL LYNCH PENNSYLVANIA
MUNICIPAL BOND FUND ........ A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal and Pennsylvania
income taxes as is consistent with prudent
investment management.
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MERRILL LYNCH PHOENIX
FUND, INC. ................. Long-term growth of capital by investing in
equity and fixed income securities, including
tax-exempt securities, of issuers in weak
financial condition or experiencing poor
operating results believed to be undervalued
relative to the current or prospective
condition of such issuer.
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MERRILL LYNCH QUALITY BOND
PORTFOLIO (available only
for exchanges by certain
individual retirement
accounts for which Merrill
Lynch acts as custodian) ... A portfolio of Merrill Lynch Asset Builder
Program, Inc., a series fund, whose objective
is to provide a high level of current income
through investment in a diversified portfolio
of debt obligations, such as corporate bonds
and notes, convertible securities, preferred
stocks and governmental obligations.
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MERRILL LYNCH SHORT-TERM
GLOBAL INCOME FUND, INC. ... As high a level of current income as is
consistent with prudent investment management
from a global portfolio of high quality debt
securities denominated in various currencies
and multinational currency units and having
remaining maturities not exceeding three
years.
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MERRILL LYNCH SPECIAL VALUE
FUND, INC. ................. Long-term growth of capital from investments in
securities, primarily common stock, of
relatively small companies believed to have
special investment value and emerging growth
companies regardless of size.
MERRILL LYNCH STRATEGIC
DIVIDEND FUND .............. Long-term total return from investment in
dividend paying common stocks which yield
more than Standard & Poor's 500 Composite
Stock Price Index.
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MERRILL LYNCH TECHNOLOGY FUND,
INC. ....................... Capital appreciation through worldwide
investment in equity securities of companies
that derive or are expected to derive a
substantial portion of their sales from
products and services in technology.
MERRILL LYNCH TEXAS MUNICIPAL
BOND FUND .................. A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal income taxes as is
consistent with prudent investment management
by investing primarily in a portfolio of
long-term, investment grade obligations
issued by the State of Texas, its political
subdivisions, agencies and instrumentalities.
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MERRILL LYNCH U.S. GOVERNMENT
SECURITIES PORTFOLIO
(available only for
exchanges by certain
individual retirement
accounts for which Merrill
Lynch acts as custodian) ... A portfolio of Merrill Lynch Asset Builder
Program, Inc., a series fund, whose objective
is to provide a high current return through
investments in U.S. Government and government
agency securities, including GNMA
mortgage-backed certificates and other
mortgage-backed government securities.
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MERRILL LYNCH UTILITY INCOME
FUND, INC. ................. High current income through investment in
equity and debt securities issued by
companies which are primarily engaged in the
ownership or operation of facilities used to
generate, transmit or distribute electricity,
telecommunications, gas or water.
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MERRILL LYNCH WORLD INCOME
FUND, INC. ................. High current income by investing in a global
portfolio of fixed income securities
denominated in various currencies, including
multinational currencies.
Class A Share Money Market Funds:
MERRILL LYNCH READY ASSETS
TRUST ...................... Preservation of capital, liquidity and the
highest possible current income consistent
with the foregoing objectives from the short-
term money market securities in which the
Trust invests.
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MERRILL LYNCH RETIREMENT
RESERVES MONEY FUND
(available only if the
exchange occurs within
certain retirement
plans) ..................... Currently the only portfolio of Merrill Lynch
Retirement Series Trust, a series fund, whose
objectives are to provide current income,
preservation of capital and liquidity
available from investing in a diversified
portfolio of short-term money market
securities.
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MERRILL LYNCH U.S.A.
GOVERNMENT RESERVES ........ Preservation of capital, current income and
liquidity available from investing in direct
obligations of the U.S. Government and
repurchase agreements relating to such
securities.
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MERRILL LYNCH U.S. TREASURY
MONEY FUND ................. Preservation of capital, liquidity and current
income through investment exclusively in a
diversified portfolio of short-term
marketable securities which are direct
obligations of the U.S. Treasury.
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Class B, Class C and Class D Share Money Market Funds:
MERRILL LYNCH GOVERNMENT
FUND ....................... A portfolio of Merrill Lynch Funds for
Institutions Series, a series fund, whose
objective is to provide current income
consistent with liquidity and security of
principal from investment in securities
issued or guaranteed by the U.S. Government,
its agencies and instrumentalities and in
repurchase agreements secured by such
obligations.
MERRILL LYNCH INSTITUTIONAL
FUND ....................... A portfolio of Merrill Lynch Funds for
Institutions Series, a series fund, whose
objective is to provide maximum current
income consistent with liquidity and the
maintenance of a high quality portfolio of
money market securities.
MERRILL LYNCH INSTITUTIONAL
TAX-EXEMPT FUND ............ A portfolio of Merrill Lynch Funds for
Institutions Series, a series fund, whose
objective is to provide current income exempt
from Federal income taxes, preservation of
capital and liquidity available from
investing in a diversified portfolio of
short-term, high quality municipal bonds.
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MERRILL LYNCH TREASURY
FUND ......................... A portfolio of Merrill Lynch Funds for
Institutions Series, a series fund, whose
objective is to provide current income
consistent with liquidity and security of
principal from investment in direct
obligations of the U.S. Treasury and up to
10% of its total assets in repurchase
agreements secured by such obligations.
Before effecting an exchange, shareholders should obtain a currently
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effective prospectus of the fund into which the exchange is to be made.
To exercise the exchange privilege, shareholders should contact their Merrill Lynch financial consultant, who will advise the Trust of the exchange. Shareholders of the Trust, and shareholders of the other funds described above with shares for which certificates have not been issued, may exercise the exchange privilege by wire through their securities dealers. The Trust reserves the right to require a properly completed Exchange Application. This exchange privilege may be modified or terminated in accordance with the rules of the Commission. The Trust reserves the right to limit the number of times an investor may exercise the exchange privilege. Certain funds may suspend the continuous offering of their shares at any time and thereafter may
resume such offering from time to time. The exchange privilege is available only to U.S. shareholders in states where the exchange legally may be made.
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS
The Trust intends to distribute all of its net investment income, if any. Dividends from such net investment income will be paid semi-annually. All net realized long- or short-term capital gains, if any, will be distributed to the Trust's shareholders at least annually. See "Shareholder Services--Automatic Reinvestment of Dividends and Capital Gains Distributions" for information concerning the manner in which dividends and distributions may be reinvested automatically in shares of the Trust. Shareholders may elect in writing to receive any such dividends or distributions, or both, in cash. Dividends and distributions are taxable to shareholders, as discussed below, whether they are reinvested in shares of the Trust or received in cash. The per share dividends and distributions on Class B and Class C shares will be lower than the per share dividends and distributions on Class A and Class D shares as a result of the account maintenance, distribution and higher transfer agency fees applicable with respect to the Class B and Class C shares; similarly, the per share dividends and distributions on Class D shares will be lower than the per share dividends and distributions on Class A shares as a result of the account maintenance fees applicable with respect to the Class D shares. See "Determination of Net Asset Value".
TAXES
The Trust intends to continue to qualify for the special tax treatment afforded regulated investment companies ("RICs") under the Internal Revenue Code of 1986, as amended (the "Code"). If it so qualifies, the Trust (but not its shareholders) will not be subject to Federal income tax on the part of its net ordinary income and net realized capital gains which it distributes to Class A, Class B, Class C and Class D shareholders (together, the "shareholders"). The Trust intends to distribute substantially all of such income.
Dividends paid by the Trust from its ordinary income or from an excess of its net short-term capital gains over net long-term capital losses (together referred to hereafter as "ordinary income dividends") are taxable to shareholders as ordinary income. Distributions made from an excess of net long-term capital gains over net short-term capital losses (including gains or losses from certain transactions in futures and options) ("capital gain dividends") are taxable to shareholders as long-term capital gains, regardless of the length of time the shareholder has owned Trust shares. Any loss upon the sale or exchange of Trust shares held for six months or less, however, will be treated as long-term capital loss to the extent of any capital gain dividends received by the shareholder. Distributions in excess of the Trust's earnings and profits will first reduce the adjusted tax basis of a holder's shares and, after such adjusted tax basis is reduced to zero, will constitute capital gains to such holder (assuming the shares are held as a capital asset).
Dividends are taxable to shareholders even though they are reinvested in additional shares of the Trust. Not later than 60 days after the close of its taxable year, the Trust will provide its shareholders with a written notice designating the amounts of any ordinary income dividends or capital gain dividends. A portion of the Trust's ordinary income dividends may be eligible for the dividends received deduction allowed to corporations under the Code, if certain requirements are met. For this purpose, the Trust will allocate dividends eligible for
the dividends received deduction among the Class A, Class B, Class C and Class D shareholders according to a method (which it believes is consistent with the Commission exemptive order permitting the issuance and sale of multiple classes of stock) that is based on the gross income allocable to Class A, Class B, Class C and Class D shareholders during the taxable year, or such other method as the Internal Revenue Service may prescribe. If the Trust pays a dividend in January which was declared in the previous October, November or December to shareholders of record on a specified date in one of such months, then such dividend will be treated for tax purposes as being paid by the Trust and received by its shareholders on December 31 of the year in which such dividend was declared.
Ordinary income dividends paid by the Trust to shareholders who are nonresident aliens or foreign entities will be subject to a 30% United States withholding tax under existing provisions of the Code applicable to foreign individuals and entities unless a reduced rate of withholding or a withholding exemption is provided under applicable treaty law. Nonresident shareholders are urged to consult their own tax advisers concerning the applicability of the United States withholding tax.
Under certain provisions of the Code, some shareholders may be subject to a 31% withholding tax on ordinary income dividends, capital gain dividends and redemption payments ("backup withholding"). Generally, shareholders subject to backup withholding will be those for whom no certified taxpayer identification number is on file with the Trust or who, to the Trust's knowledge, have furnished an incorrect number. When establishing an account, an investor must certify under penalty of perjury that such number is correct and that such investor is not otherwise subject to backup withholding.
Dividends and interest received by the Trust may give rise to withholding and other taxes imposed by foreign countries. Tax conventions between certain countries and the United States may reduce or eliminate such taxes. Shareholders may be able to claim United States foreign tax credits with respect to such taxes, subject to certain conditions and limitations contained in the Code. For example, certain retirement accounts cannot claim foreign tax credits on investments in foreign securities held in the Trust. If more than 50% in value of the Trust's total assets at the close of its taxable year consists of securities of foreign corporations, the Trust will be eligible, and intends, to file an election with the Internal Revenue Service pursuant to which shareholders of the Trust will be required to include their proportionate shares of such withholding taxes in their United States income tax returns as gross income, treat such proportionate shares as taxes paid by them and deduct such proportionate shares in computing their taxable incomes or, alternatively, use them as foreign tax credits against their United States income taxes. No deductions for foreign taxes, however, may be claimed by noncorporate shareholders who do not itemize deductions. A shareholder that is a nonresident alien individual or a foreign corporation may be subject to United States withholding tax on the income resulting from the Trust's election described in this paragraph but may not be able to claim a credit or deduction against such United States tax for the foreign taxes treated as having been paid by such shareholder. The Trust will report annually to its shareholders the amount per share of such withholding taxes. For this purpose, the Trust will allocate foreign taxes and foreign source income among the Class A, Class B, Class C and Class D shareholders according to a method similar to that described above for the allocation of dividends eligible for the dividends received deduction.
No gain or loss will be recognized by Class B shareholders on the conversion of their Class B shares into Class D shares. A shareholder's basis in the Class D shares acquired will be the same as such shareholder's basis in the Class B shares converted, and the holding period of the acquired Class D shares will include the holding period for the converted Class B shares.
If a shareholder exercises an exchange privilege within 90 days of acquiring the shares, then the loss the shareholder can recognize on the exchange will be reduced (or the gain increased) to the extent any sales charge paid to the Trust on the exchanged shares reduces any sales charge the shareholder would have owed upon the purchase of the new shares in the absence of the exchange privilege. Instead, such sales charge will be treated as an amount paid for the new shares.
A loss realized on a sale or exchange of shares of the Trust will be disallowed if other Trust shares are acquired (whether through the automatic reinvestment of dividends or otherwise) within a 61-day period beginning 30 days before and ending 30 days after the date that the shares are disposed of. In such a case, the basis of the shares acquired will be adjusted to reflect the disallowed loss.
The Code requires a RIC to pay a nondeductible 4% excise tax to the extent the RIC does not distribute, during each calendar year, 98% of its ordinary income, determined on a calendar year basis, and 98% of its capital gains, determined, in general, on an October 31 year end, plus certain undistributed amounts from previous years. While the Trust intends to distribute its income and capital gains in the manner necessary to avoid imposition of the 4% excise tax, there can be no assurance that sufficient amounts of the Trust's taxable income and capital gains will be distributed to avoid entirely the imposition of the tax. In such event, the Trust will be liable for the tax only on the amount by which it does not meet the foregoing distribution requirements.
TAX TREATMENT OF OPTIONS AND FORWARD FOREIGN EXCHANGE TRANSACTIONS
The Trust may write, purchase or sell options, futures and forward foreign exchange contracts. Options and forward foreign exchange contracts that are "Section 1256 contracts" will be "marked to market" for Federal income tax purposes at the end of each taxable year, i.e., each such option or futures contract will be treated as sold for its fair market value on the last day of the taxable year. Unless such contract is a non-equity option or a regulated futures contract for a non-U.S. currency for which the Trust elects to have gain or loss treated as ordinary gain or loss under Code Section 988 (as described below), gain or loss from Section 1256 contracts will be 60% long-term and 40% short-term capital gain or loss. The mark-to-market rules outlined above, however, will not apply to certain transactions entered into by the Trust solely to reduce the risk of changes in price or interest or currency exchange rates with respect to its investments.
A forward foreign exchange contract that is a Section 1256 contract will be marked to market, as described above. However, the character of gain or loss from such a contract will generally be ordinary under Code Section 988. The Trust may, nonetheless, elect to treat the gain or loss from certain forward foreign exchange contracts as capital. In this case, gain or loss realized in connection with a forward foreign exchange contract that is a Section 1256 contract will be characterized as 60% long-term and 40% short-term capital gain or loss.
Code Section 1092, which applies to certain "straddles," may affect the taxation of the Trust's transactions in options and forward foreign exchange contracts. Under Section 1092, the Trust may be required to postpone recognition for tax purposes of losses incurred in certain closing transactions in options and forward foreign exchange contracts.
One of the requirements for qualification as a RIC is that less than 30% of the Trust's gross income be derived from gains from the sale or other disposition of securities held for less than three months. Accordingly, the Trust may be restricted in effecting closing transactions within three months after entering into an option or futures contract.
SPECIAL RULES FOR CERTAIN FOREIGN CURRENCY TRANSACTIONS
In general, gains from "foreign currencies" and from foreign currency options, foreign currency futures and forward foreign exchange contracts relating to investments in stock, securities or foreign currencies will be qualifying income for purposes of determining whether the Trust qualifies as a RIC. It is currently unclear, however, who will be treated as the issuer of a foreign currency instrument or how foreign currency options and forward foreign exchange contracts will be valued for purposes of the RIC diversification requirements applicable to the Trust.
Under Code Section 988, special rules are provided for certain transactions
in a currency other than the taxpayer's functional currency (i.e., unless
certain special rules apply, currencies other than the United States dollar). In
general, foreign currency gains or losses from certain debt instruments, from
certain forward contracts, from futures contracts that are not "regulated
futures contracts" and from unlisted options will be treated as ordinary income
or loss under Code Section 988. In certain circumstances, the Trust may elect
capital gain or loss treatment for such transactions. Regulated futures
contracts, as described above, will be taxed under Code Section 1256 unless
application of Section 988 is elected by the Trust. In general, however, Code
Section 988 gains or losses will increase or decrease the amount of the Trust's
investment company taxable income available to be distributed to shareholders as
ordinary income. Additionally, if Code Section 988 losses exceed other
investment company taxable income during a taxable year, the Trust would not be
able to make any ordinary income dividend distributions, and any distributions
made before the losses were realized but in the same taxable year would be
recharacterized as a return of capital to shareholders, thereby reducing the
basis of each shareholder's Trust shares, and resulting in a capital gain for
any shareholder who received a distribution greater than such shareholder's
basis in Trust shares (assuming the shares were held as a capital asset). These
rules and the mark-to-market rules described above, however, will not apply to
certain transactions entered into by the Trust solely to reduce the risk of
currency fluctuations with respect to its investments.
The foregoing is a general and abbreviated summary of the applicable provisions of the Code and Treasury regulations presently in effect. For the complete provisions, reference should be made to the pertinent Code sections and the Treasury regulations promulgated thereunder. The Code and the Treasury regulations are subject to change by legislative, judicial or administrative action either prospectively or retroactively.
Ordinary income and capital gain dividends may also be subject to state and local taxes.
Certain states exempt from state income taxation dividends paid by RICs which are derived from interest on United States Government obligations. State law varies as to whether dividend income attributable to United States Government obligations is exempt from state income tax.
Shareholders are urged to consult their own tax advisers regarding specific questions as to Federal, foreign, state or local taxes. Foreign investors should consider applicable foreign taxes in their evaluation of an investment in the Trust.
PERFORMANCE DATA
From time to time, the Trust may include its average annual total return and other total return data in advertisements or information furnished to present or prospective shareholders. Total return figures are based on the Trust's historical performance and are not intended to indicate future performance. Average annual total return is determined separately for Class A, Class B, Class C and Class D shares in accordance with a formula specified by the Commission.
Average annual total return quotations for the specified periods are computed by finding the average annual compounded rates of return (based on net investment income and any realized and unrealized capital gains or losses on portfolio investments over such periods) that would equate the initial amount invested to the redeemable value of such investment at the end of each period. Average annual total return is computed assuming all dividends and distributions are reinvested and taking into account all applicable recurring and nonrecurring expenses, including the maximum sales charge in the case of Class A and Class D shares and the CDSC that would be applicable to a complete redemption of the investment at the end of the specified period in the case of Class B and Class C shares.
The Trust also may quote annual, average annual and annualized total return
and aggregate total return performance data, both as a percentage and as a
dollar amount based on a hypothetical $1,000 investment, for various periods
other than those noted below. Such data will be computed as described above,
except that (1) as required by the periods of the quotations, actual annual,
annualized or aggregate data, rather than average annual data, may be quoted and
(2) the maximum applicable sales charges will not be included with respect to
annual or annualized rates of return calculations. Aside from the impact on the
performance data calculations of including or excluding the maximum applicable
sales charge, actual annual or annualized total return data generally will be
lower than average annual total return data since the average rates of return
reflect compounding of return; aggregate total return data generally will be
higher than average annual total return data since the aggregate rates of return
reflect compounding over a longer period of time.
Set forth below is total return information for the Class A, Class B, Class C and Class D shares of the Trust for the periods indicated.
CLASS A SHARES* CLASS B SHARES
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REDEEMABLE REDEEMABLE
VALUE OF A VALUE OF A
EXPRESSED AS A HYPOTHETICAL EXPRESSED AS A HYPOTHETICAL
PERCENTAGE BASED $1,000 INVESTMENT PERCENTAGE BASED $1,000 INVESTMENT
ON A HYPOTHETICAL AT THE END ON A HYPOTHETICAL AT THE END
PERIOD $1,000 INVESTMENT OF THE PERIOD $1,000 INVESTMENT OF THE PERIOD
- ---------------------------------- ------------------ ----------------- ------------------ -----------------
AVERAGE ANNUAL TOTAL RETURN
(including maximum applicable sales charges)
One Year Ended July 31, 1995...... 1.43 % $1,014.30 1.95 % $1,019.50
Five Years Ended July 31, 1995.... 3.10 % $1,165.00 3.14 % $1,167.20
Inception (August 2, 1985) to July
31, 1995........................ 8.74 % $2,312.50
Inception (October 24, 1988) to
July 31, 1995................... 6.67 % $1,548.50
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CLASS A SHARES* CLASS B SHARES
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REDEEMABLE REDEEMABLE
VALUE OF A VALUE OF A
EXPRESSED AS A HYPOTHETICAL EXPRESSED AS A HYPOTHETICAL
PERCENTAGE BASED $1,000 INVESTMENT PERCENTAGE BASED $1,000 INVESTMENT
ON A HYPOTHETICAL AT THE END ON A HYPOTHETICAL AT THE END
PERIOD $1,000 INVESTMENT OF THE PERIOD $1,000 INVESTMENT OF THE PERIOD
------ ------------------ ----------------- ------------------ -----------------
ANNUAL TOTAL RETURN
(excluding maximum applicable sales charges)
Year Ended July 31,
1995............................ 7.05 % $1,070.50 5.95 % $1,059.50
1994............................ 13.69 % $1,136.90 12.52 % $1,125.20
1993............................ (0.05)% $ 999.50 (1.02)% $ 989.80
1992............................ 1.66 % $1,016.60 .53 % $1,005.30
1991............................ (0.57)% $ 994.30 (1.61)% $ 983.90
1990............................ 19.99 % $1,199.90 18.79 % $1,187.90
1989............................ 1.94 % $1,019.40
1988............................ (20.74)% $ 792.60
1987............................ 100.16 % $2,001.60
Inception (August 2, 1985) to
July 31, 1986................... 3.12 % $1,031.20
Inception (October 24, 1988) to
July 31, 1989................... 10.77 % $1,107.70
AGGREGATE TOTAL RETURN
(including maximum applicable sales charges)
Inception (August 2, 1985) to July
31, 1995........................ 131.25 % $2,312.50
Inception (October 24, 1988) to
July 31, 1995................... 54.85 % $1,548.50
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* Information as to Class A shares is presented only for the period October 24, 1988 to July 31, 1995. Prior to October 21, 1988, no Class A shares were publicly issued.
In order to reflect the reduced sales charges in the case of Class A and Class D shares or the waiver of the CDSC in the case of Class B or Class C shares applicable to certain investors, as described under "Purchase of Shares" and "Redemption of Shares", respectively, the total return data quoted by the Trust in advertisements directed to such investors may take into account the reduced, and not the maximum, sales charge or may not take into account the CDSC and therefore may reflect greater total return since, due to the reduced sales charges or the waiver of sales charges, a lower amount of expenses may be deducted.
CLASS C SHARES* CLASS D SHARES*
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REDEEMABLE REDEEMABLE
VALUE OF A VALUE OF A
EXPRESSED AS A HYPOTHETICAL EXPRESSED AS A HYPOTHETICAL
PERCENTAGE BASED $1,000 INVESTMENT PERCENTAGE BASED $1,000 INVESTMENT
ON A HYPOTHETICAL AT THE END ON A HYPOTHETICAL AT THE END
PERIOD $1,000 INVESTMENT OF THE PERIOD $1,000 INVESTMENT OF THE PERIOD
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AVERAGE ANNUAL TOTAL RETURN
(including maximum applicable sales charges)
Inception (October 21, 1994) to
July 31, 1995................... 4.22% $1,032.60 (0.75)% $ 994.20
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CLASS C SHARES* CLASS D SHARES*
-------------------------------------- --------------------------------------
REDEEMABLE REDEEMABLE
VALUE OF A VALUE OF A
EXPRESSED AS A HYPOTHETICAL EXPRESSED AS A HYPOTHETICAL
PERCENTAGE BASED $1,000 INVESTMENT PERCENTAGE BASED $1,000 INVESTMENT
ON A HYPOTHETICAL AT THE END ON A HYPOTHETICAL AT THE END
PERIOD $1,000 INVESTMENT OF THE PERIOD $1,000 INVESTMENT OF THE PERIOD
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ANNUAL TOTAL RETURN
(excluding maximum applicable sales charges)
Inception (October 21, 1994) to
July 31, 1995................... 4.26% $1,042.60 4.93 % $1,049.30
AGGREGATE TOTAL RETURN
(including maximum applicable sales charges)
Inception (October 21, 1994) to
July 31, 1995................... 3.26% $1,032.60 (0.58)% $ 994.20
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* Information as to Class C and Class D shares is presented for the period October 21, 1994 to July 31, 1995. Prior to October 21, 1994, no Class C or Class D shares were publicly issued.
GENERAL INFORMATION
DESCRIPTION OF SHARES
The Declaration of Trust of the Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest, par value $0.10 per share, of different classes and to divide or combine the shares of each class into a greater or lesser number of shares without thereby changing the proportionate beneficial interest in the Trust. At the date of this Statement of Additional Information, the shares of the Trust are divided into Class A, Class B, Class C and Class D shares. Under the Declaration of Trust, the Trustees have the authority to issue separate classes of shares which would represent interests in the assets of the Trust and have identical voting, dividend, liquidation and other rights and the same terms and conditions except that Class B, Class C and Class D shares bear certain expenses related to the account maintenance and/or distribution of such shares and have exclusive voting rights with respect to matters relating to such account maintenance and/or distribution expenditures. The Trust has received an order from the Commission permitting the issuance and sale of multiple classes of shares. The Board of Trustees of the Trust may classify and reclassify the shares of the Trust into additional shares of beneficial interest at a future date. Upon liquidation of the Trust, shareholders of each class are entitled to share pro rata in the net assets of the Trust available for distribution to shareholders, except for any expenses which may be attributable only to one class. Shares have no preemptive rights. The rights of redemption, conversion and exchange are described elsewhere herein and in the Prospectus. Shares are fully paid and non-assessable by the Trust.
Shareholders are entitled to one vote for each full share held and fractional votes for fractional shares held in the election of Trustees (to the extent hereafter provided) and on other matters submitted to vote of shareholders, except that shareholders of the class bearing account maintenance and/or distribution expenses as provided above shall have exclusive voting rights with respect to matters relating to such account maintenance and/or distribution expenditures. Voting rights are not cumulative, so that holders of more than 50% of the shares voting in the election of Trustees can, if they choose to do so, elect all the Trustees of the Trust, in which event the holders of the remaining shares are unable to elect any person as a Trustee. No
amendment may be made to the Declaration of Trust without the affirmative vote of a majority of the outstanding shares of the Trust.
The Trust is an entity of the type commonly known as a "Massachusetts business trust". Under Massachusetts law, shareholders of such a trust may, under certain circumstances, be held personally liable as partners for its obligations. However, the Declaration of Trust establishing the Trust, dated April 12, 1985, a copy of which together with all amendments thereto (the "Declaration of Trust") is on file in the office of the Secretary of the Commonwealth of Massachusetts, contains an express disclaimer of shareholder liability for acts or obligations of the Trust and provides for indemnification and reimbursement of expenses out of the Trust property for any shareholder held personally liable for the obligations of the Trust. The Declaration of Trust also provides that the Trust may maintain appropriate insurance (for example, fidelity bonding and errors and omissions insurance) for the protection of the Trust, its shareholders, Trustees, officers, employees and agents covering possible tort and other liabilities. Thus, the risk of a shareholder incurring financial loss on account of shareholder liability is limited to circumstances in which both inadequate insurance existed and the Trust itself was unable to meet its obligations.
The Declaration of Trust further provides that obligations of the Trust are not binding upon the Trustees individually but only upon the property of the Trust and that the Trustees will not be liable for any action or failure to act, but nothing in the Declaration of Trust protects a Trustee against any liability to which he or she would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of his office.
The Investment Adviser provided the initial capital for the Trust by purchasing 10,000 shares for $100,000. Such shares were acquired for investment and can only be disposed of by redemption. The organizational expenses of the Trust were paid by the Trust and were amortized over a period not exceeding five years. The proceeds realized by the Investment Adviser upon the redemption of any of the shares initially purchased by it will be reduced by the proportional amount of the unamortized organizational expenses which the number of such initial shares being redeemed bears to the number of shares initially purchased.
COMPUTATION OF OFFERING PRICE PER SHARE
An illustration of the computation of the offering price for Class A, Class B, Class C and Class D shares of the Fund, based on the value of the Fund's net assets and number of shares outstanding as of July 31, 1995, is calculated as set forth below.
CLASS A CLASS B CLASS C CLASS D
----------- ------------ ---------- ------------
Net Assets............................... $28,728,903 $141,799,990 $2,800,094 $107,467,227
========== =========== ========= ===========
Number of Shares Outstanding............. 1,720,619 8,533,888 169,196 6,446,960
========== =========== ========= ===========
Net Asset Value Per Share (net assets
divided by number of shares
outstanding)........................... $16.70 $16.62 $16.55 $16.67
Sales Charge (for Class A and Class D
shares: 5.25% of offering price (5.54%
of net asset value per share))*........ .93 ** ** .92
----------- ------------ ---------- ------------
Offering Price........................... $17.63 $16.62 $16.55 $17.59
========== =========== ========= ===========
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(Footnotes on following page)
(Footnotes for preceding page)
* Rounded to the nearest one-hundredth percent; assumes maximum sales charge is applicable.
** Class B and Class C shares are not subject to an initial sales charge but may be subject to a CDSC on redemption of shares. See "Purchase of Shares--Deferred Sales Charge Alternatives--Class B and Class C Shares" in the Prospectus and "Redemption of Shares--Deferred Sales Charge--Class B Shares" herein.
INDEPENDENT AUDITORS
Deloitte & Touche LLP, 117 Campus Drive, Princeton, New Jersey 08540-6400, has been selected as the independent auditors of the Trust. The selection of independent auditors is subject to ratification by the shareholders of the Trust. The independent auditors are responsible for auditing the annual financial statements of the Trust.
CUSTODIAN
The Bank of New York, 90 Washington Street, 12th Floor, New York, New York 10286, acts as custodian of the Trust's assets. The Custodian is responsible for safeguarding and controlling the Trust's cash and securities, handling the receipt and delivery of securities and collecting interest and dividends on the Trust's investments.
TRANSFER AGENT
Merrill Lynch Financial Data Services, Inc., 4800 Deer Lake Drive East, Jacksonville, Florida 32246-6484 (the "Transfer Agent"), acts as the Trust's transfer agent. The Transfer Agent is responsible for the issuance, transfer and redemption of shares and the opening, maintenance and servicing of shareholder accounts.
LEGAL COUNSEL
Brown & Wood, One World Trade Center, New York, New York 10048-0557, is counsel for the Trust.
REPORTS TO SHAREHOLDERS
The fiscal year of the Trust ends July 31 of each year. The Trust sends to its shareholders at least semi-annually reports showing the Trust's portfolio and other information. An annual report, containing financial statements audited by independent auditors, is sent to shareholders each year. After the end of each year, shareholders will receive Federal income tax information regarding dividends and capital gains distributions and, if applicable, foreign withholding and other taxes.
ADDITIONAL INFORMATION
The Prospectus and this Statement of Additional Information do not contain all of the information set forth in the Registration Statement and the exhibits relating thereto which the Trust has filed with the Commission, Washington, D.C. under the Securities Act and the Investment Company Act, to which reference is hereby made.
To the knowledge of the Trust, no person or entity owned beneficially 5% or more of the Trust's shares on November 1, 1995.
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders,
MERRILL LYNCH GLOBAL RESOURCES TRUST:
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Merrill Lynch Global Resources Trust as of July 31, 1995, the related statements of operations for the year then ended and changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended. These financial statements and the financial highlights are the responsibility of the Trust's management. Our responsibility is to express an opinion on these financial statements and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and the financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned at July 31, 1995 by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present fairly, in all material respects, the financial position of Merrill Lynch Global Resources Trust as of July 31, 1995, the results of its operations, the changes in its net assets, and the financial highlights for the respective stated periods in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Princeton, New Jersey
August 31, 1995
SCHEDULE OF INVESTMENTS
Value Percent of
Industries Shares Held Common Stocks Cost (Note 1a) Net Assets
Aluminum 90,000 Alcan Aluminium Ltd. $ 2,356,436 $ 3,048,750 1.1%
424,000 Comalco Ltd. 1,557,844 2,068,018 0.7
------------ ------------ ------
3,914,280 5,116,768 1.8
Chemicals 78,000 Air Products and Chemicals, Inc. 3,451,070 4,368,000 1.5
640,000 Asahi Chemical Industry Co., Ltd. 4,707,315 4,572,467 1.6
37,000 Dow Chemical Co. 2,596,842 2,742,625 1.0
41,300 DuPont (E.I.) de Nemours & Co. 2,313,453 2,767,100 1.0
97,500 Hanna (M.A.) Co. 1,937,650 2,693,438 1.0
------------ ------------ ------
15,006,330 17,143,630 6.1
Diversified Companies 154,500 Canadian Pacific, Ltd. 2,417,458 2,761,688 1.0
90,000 Coastal Corp. 2,302,519 2,801,250 1.0
179,000 Cyprus Amax Minerals Co. 4,500,651 4,989,625 1.8
90,000 Norcen Energy Resources Ltd. 1,158,729 1,353,939 0.5
225,000 Occidental Petroleum Corp. 4,361,550 5,062,500 1.8
407,500 Renison Goldfields Consolidated Ltd. 1,613,171 1,541,850 0.5
------------ ------------ ------
16,354,078 18,510,852 6.6
Gold 1,387,000 ++Delta Gold N.L. 2,730,517 2,716,231 1.0
1,679,100 ++Newcrest Mining Ltd. 7,470,444 7,817,386 2.8
140,622 Newmont Mining Corp. 5,614,727 6,011,591 2.1
250,000 Placer Dome Inc. 5,677,853 6,281,250 2.2
260,000 Sante Fe Pacific Gold Corp. 3,770,398 3,250,000 1.2
------------ ------------ ------
25,263,939 26,076,458 9.3
Integrated Oil 41,000 Amoco Corp. 2,293,335 2,757,250 1.0
Companies-- 16,000 Mobil Corp. 1,557,790 1,564,000 0.6
Domestic 200,000 Unocal Corp. 5,792,080 5,625,000 2.0
------------ ------------ ------
9,643,205 9,946,250 3.6
Integrated Oil 890,000 British Petroleum Co. PLC 4,237,936 6,743,483 2.4
Companies-- 14,600 OMV AG 1,554,378 1,559,639 0.5
International 321,000 Petro-Canada 2,682,966 3,190,098 1.1
78,800 Repsol, S.A. 2,272,896 2,667,363 0.9
71,600 Societe Nationale Elf Aquitaine (ADR)* 2,544,624 2,801,350 1.0
101,600 Total S.A. (Class B) 6,049,223 6,170,213 2.2
122,000 Yacimientos Petroliferos Fiscales
S.A. (Sponsored) (ADR)* 2,997,273 2,119,750 0.7
------------ ------------ ------
22,339,296 25,251,896 8.8
Metals & Mining 67,000 ASARCO Inc. 1,927,403 2,127,250 0.8
162,200 CRA Ltd. 2,011,572 2,517,182 0.9
277,000 Falconbridge Ltd. 3,843,568 5,505,653 2.0
140,000 Freeport-McMoRan Copper & Gold, Inc. 3,000,786 3,727,500 1.3
2,470,000 M.I.M. Holdings Ltd. 5,396,407 3,541,140 1.3
77,500 Magma Copper Co. 1,332,076 1,433,750 0.5
245,000 Mitsubishi Materials Corp. 1,292,688 1,224,443 0.4
278,500 Noranda Inc. 5,240,418 5,865,563 2.1
77,000 Outokumpu OY 1,385,926 1,508,001 0.5
68,000 Phelps Dodge Corp. 3,672,444 4,369,000 1.6
430,000 (The) RTZ Corp. PLC 5,546,995 6,206,536 2.2
157,000 Sumitomo Metal Mining Co. 1,314,920 1,283,962 0.5
215,000 Trelleborg 'B' Fria 2,921,179 2,775,177 1.0
1,050,000 Western Mining Corp. Holdings Ltd. 6,137,031 6,812,841 2.4
------------ ------------ ------
45,023,413 48,897,998 17.5
|
SCHEDULE OF INVESTMENTS (continued)
Value Percent of
Industries Shares Held Common Stocks Cost (Note 1a) Net Assets
Oil & Gas Producers 470,000 ++Abacan Resource Corp. $ 1,763,996 $ 1,354,121 0.5%
1,099,500 Ampolex Ltd. 3,384,940 2,486,343 0.9
89,000 Anadarko Petroleum Corp. 4,350,002 3,782,500 1.3
115,000 Apache Corp. 3,073,528 3,148,125 1.1
99,000 Burlington Resources, Inc. 3,873,710 3,848,625 1.4
403,000 ++Chauvco Resources Ltd. 4,669,606 4,115,244 1.5
125,900 Enron Oil & Gas Co. 2,695,396 2,722,587 1.0
730,000 Enterprise Oil PLC 4,693,559 4,430,194 1.6
68,600 (The) Louisiana Land and Exploration Co. 2,718,183 2,726,850 1.0
85,600 Mitchell Energy & Development Corp.
(Class A) 1,765,094 1,455,200 0.5
175,000 Mitchell Energy & Development Corp.
(Class B) 3,666,183 2,975,000 1.1
140,000 ++Oryx Energy Co. 2,332,787 2,012,500 0.7
81,000 Parker & Parsley Petroleum Co. 1,593,235 1,569,375 0.6
7,500,000 ++Premier Oil Co. PLC 3,091,256 2,730,341 1.0
675,000 Ranger Oil Ltd. 4,526,339 3,796,875 1.3
103,000 Sonat, Inc. 3,276,567 3,090,000 1.1
44,100 Triton Energy Corp. 1,440,582 2,199,487 0.8
78,200 Vastar Resources, Inc. 2,135,113 2,199,375 0.8
------------ ------------ ------
55,050,076 50,642,742 18.2
Oil Services 130,000 Baker Hughes Inc. 2,501,121 2,876,250 1.0
57,800 Coflexip Stena Offshore, Inc. (ADR)* 1,242,700 1,416,100 0.5
141,000 IHC Caland N.V. 3,098,872 4,355,564 1.5
80,000 Schlumberger Ltd. 4,627,531 5,360,000 1.9
------------ ------------ ------
11,470,224 14,007,914 4.9
Paper & Pulp 242,133 Aracruz Celulose S.A. (ADR)* 970,032 2,966,129 1.1
172,700 Avenor Inc. 3,423,014 4,172,639 1.5
62,000 Georgia-Pacific Corp. 3,962,100 5,347,500 1.9
10,700 International Paper 772,379 904,150 0.3
91,000 Metsa-Serla OY 3,935,508 4,238,118 1.5
60,400 Mo Och Domsjo AB Co. 2,613,099 4,009,532 1.4
120,000 Pope & Talbot, Inc. 2,789,668 1,920,000 0.7
406,496 Slocan Forest Products Ltd. 3,555,171 3,595,014 1.3
117,000 Weyerhaeuser Co. 4,993,809 5,469,750 1.9
48,000 Willamette Industries, Inc. 1,806,620 2,928,000 1.0
------------ ------------ ------
28,821,400 35,550,832 12.6
Petroleum Refining 250,000 Total Petroleum (North America) Ltd. 3,028,198 2,906,250 1.0
Plantations 717,000 Golden Hope Plantations BHD 1,325,785 1,284,266 0.5
480,000 Kuala Lumpur Kepong BHD 983,702 1,563,200 0.6
------------ ------------ ------
2,309,487 2,847,466 1.1
Steel 71,000 Koninklijke Nederlandsche Hoogovens en
Staalfabrienken N.V. 3,078,006 3,262,311 1.2
1,397,000 ++Sumitomo Metal Industries, Ltd. 4,640,554 4,046,286 1.4
------------ ------------ ------
7,718,560 7,308,597 2.6
Wood Products 200,000 Louisiana-Pacific Corp. 6,751,778 4,925,000 1.7
325,000 Pacific Forest Products Ltd. 3,496,173 3,674,325 1.3
146,100 Riverside Forest Products Ltd. 2,401,223 1,678,392 0.6
------------ ------------ ------
12,649,174 10,277,717 3.6
Total Common Stocks 258,591,660 274,485,370 97.7
|
SCHEDULE OF INVESTMENTS (concluded)
Value Percent of
Face Amount Short-Term Securities Cost (Note 1a) Net Assets
Repurchase $ 5,570,000 PaineWebber Inc., purchased on
Agreement** 7/31/1995 to yield 5.78% to 8/01/1995 $ 5,570,000 $ 5,570,000 2.0%
Total Short-Term Securities 5,570,000 5,570,000 2.0
Total Investments $264,161,660 280,055,370 99.7
============
Other Assets Less Liabilities 740,844 0.3
------------ ------
Net Assets $280,796,214 100.0%
============ ======
|
*American Depositary Receipts (ADR).
**Repurchase Agreements are fully collateralized by US Government &
Agency Obligations.
++Non-income producing security.
See Notes to Financial Statements.
FINANCIAL INFORMATION
Statement of Assets and Liabilities as of July 31, 1995
Assets: Investments, at value (identified cost--$264,161,660) (Note 1a) $280,055,370
Cash 15,848
Receivables:
Securities sold $ 1,664,207
Dividends 433,598
Beneficial interest sold 311,085 2,408,890
------------
Prepaid registration fees and other assets (Note 1f) 39,040
------------
Total assets 282,519,148
------------
Liabilities: Payables:
Beneficial interest redeemed 701,553
Securities purchased 431,354
Distributor (Note 2) 160,488
Investment adviser (Note 2) 153,443 1,446,838
------------
Accrued expenses and other liabilities 276,096
------------
Total liabilities 1,722,934
------------
Net Assets: Net assets $280,796,214
============
Net Assets Class A Shares of beneficial interest, $0.10 par value, unlimited
Consist of: number of shares authorized $ 172,062
Class B Shares of beneficial interest, $0.10 par value, unlimited
number of shares authorized 853,389
Class C Shares of beneficial interest, $0.10 par value, unlimited
number of shares authorized 16,920
Class D Shares of beneficial interest, $0.10 par value, unlimited
number of shares authorized 644,696
Paid-in capital in excess of par 279,621,426
Undistributed investment income--net 1,099,608
Accumulated realized capital losses on investments and foreign
currency transactions--net (Note 5) (17,507,553)
Unrealized appreciation on investments and foreign
currency transactions--net 15,895,666
------------
Net assets $280,796,214
============
Net Asset Value: Class A--Based on net assets of $28,728,903 and 1,720,619 shares
of beneficial interest outstanding $ 16.70
============
Class B--Based on net assets of $141,799,990 and 8,533,888 shares
of beneficial interest outstanding $ 16.62
============
Class C--Based on net assets of $2,800,094 and 169,196 shares
of beneficial interest outstanding $ 16.55
============
Class D--Based on net assets of $107,467,227 and 6,446,960 shares
of beneficial interest outstanding $ 16.67
============
See Notes to Financial Statements.
|
FINANCIAL INFORMATION (continued)
Statement of Operations for the Year Ended July 31, 1995
Investment Dividends (net of $423,302 foreign withholding tax) $ 5,877,622
Income Interest and discount earned 1,437,806
(Notes 1d & 1e): ------------
Total income 7,315,428
------------
Expenses: Account maintenance and distribution fees--Class B (Note 2) $ 2,185,267
Investment advisory fees (Note 2) 1,832,048
Transfer agent fees--Class B (Note 2) 593,121
Printing and shareholder reports 168,074
Transfer agent fees--Class D (Note 2) 150,924
Custodian fees 143,110
Account maintenance fees--Class D (Note 2) 134,156
Registration fees (Note 1f) 133,389
Professional fees 91,587
Transfer agent fees--Class A (Note 2) 73,266
Accounting services (Note 2) 68,488
Trustees' fees and expenses 40,866
Account maintenance and distribution fees--Class C (Note 2) 25,551
Transfer agent fees--Class C (Note 2) 8,928
Pricing fees 5,465
Other 9,113
------------
Total expenses 5,663,353
------------
Investment income--net 1,652,075
------------
Realized & Realized gain (loss) from:
Unrealized Gain Investments--net 9,186,780
(Loss) on Foreign currency transactions--net (53,988) 9,132,792
Investments & ------------
Foreign Change in unrealized appreciation/depreciation on:
Currency Investments--net 6,769,039
Transactions--Net Foreign currency transactions--net (2,317) 6,766,722
(Notes 1b, 1c, ------------ ------------
1e & 3): Net realized and unrealized gain on investments and
foreign currency transactions 15,899,514
------------
Net Increase in Net Assets Resulting from Operations $ 17,551,589
============
See Notes to Financial Statements.
|
FINANCIAL INFORMATION (continued)
Statements of Changes in Net Assets
For the Year Ended July 31,
Increase (Decrease) in Net Assets: 1995 1994
Operations: Investment income--net $ 1,652,075 $ 939,369
Realized gain on investments and foreign currency
transactions--net 9,132,792 1,733,103
Change in unrealized appreciation/depreciation on
investments and foreign currency transactions--net 6,766,722 22,563,268
------------ ------------
Net increase in net assets resulting from operations 17,551,589 25,235,740
------------ ------------
Dividends to Investment income--net:
Shareholders Class A (426,768) (114,152)
(Note 1g): Class B (570,653) (703,582)
Class C (7,419) --
Class D (245,460) --
------------ ------------
Net decrease in net assets resulting from dividends
to shareholders (1,250,300) (817,734)
------------ ------------
Beneficial Net increase in net assets derived from beneficial
Interest interest transactions 7,860,033 12,016,848
Transactions ------------ ------------
(Note 4):
Net Assets: Total increase in net assets 24,161,322 36,434,854
Beginning of year 256,634,892 220,200,038
------------ ------------
End of year* $280,796,214 $256,634,892
============ ============
*Undistributed investment income--net (Note 1h) $ 1,099,608 $ 859,496
============ ============
See Notes to Financial Statements.
|
FINANCIAL INFORMATION (continued)
Financial Highlights
The following per share data and ratios have been derived
from information provided in the financial statements. Class A
For the Year Ended July 31,
Increase (Decrease) in Net Asset Value: 1995 1994 1993 1992 1991
Per Share Net asset value, beginning of year $ 15.84 $ 14.07 $ 14.33 $ 15.38 $ 15.93
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .22 .22 .24 .34 .37
Realized and unrealized gain (loss) on invest-
ments and foreign currency transactions--net .88 1.69 (.26) (.13) (.47)
-------- -------- -------- -------- --------
Total from investment operations 1.10 1.91 (.02) .21 (.10)
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.24) (.14) (.24) (.47) (.41)
Realized gain on investments--net -- -- -- (.79) (.04)
-------- -------- -------- -------- --------
Total dividends and distributions (.24) (.14) (.24) (1.26) (.45)
-------- -------- -------- -------- --------
Net asset value, end of year $ 16.70 $ 15.84 $ 14.07 $ 14.33 $ 15.38
======== ======== ======== ======== ========
Total Investment Based on net asset value per share 7.05% 13.69% (.05%) 1.66% (.57%)
Return:* ======== ======== ======== ======== ========
Ratios to Average Expenses 1.06% .92% .95% .97% .95%
Net Assets: ======== ======== ======== ======== ========
Investment income--net 1.34% 1.39% 1.62% 1.82% 2.89%
======== ======== ======== ======== ========
Supplemental Net assets, end of year (in thousands) $ 28,729 $ 20,054 $ 12,087 $ 11,265 $ 6,699
Data: ======== ======== ======== ======== ========
Portfolio turnover 31.64% 54.87% 66.78% 31.43% 71.42%
======== ======== ======== ======== ========
|
*Total investment returns exclude the effect of sales loads.
See Notes to Financial Statements.
FINANCIAL INFORMATION (continued)
Financial Highlights (continued)
The following per share data and ratios have been derived
from information provided in the financial statements. Class B
For the Year Ended July 31,
Increase (Decrease) in Net Asset Value: 1995 1994 1993 1992 1991
Per Share Net asset value, beginning of year $ 15.72 $ 14.02 $ 14.26 $ 15.30 $ 15.84
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .10 .05 .09 .13 .31
Realized and unrealized gain (loss) on invest-
ments and foreign currency transactions--net .84 1.70 (.24) (.08) (.56)
-------- -------- -------- -------- --------
Total from investment operations .94 1.75 (.15) .05 (.25)
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.04) (.05) (.09) (.30) (.25)
Realized gain on investments--net -- -- -- (.79) (.04)
-------- -------- -------- -------- --------
Total dividends and distributions (.04) (.05) (.09) (1.09) (.29)
-------- -------- -------- -------- --------
Net asset value, end of year $ 16.62 $ 15.72 $ 14.02 $ 14.26 $ 15.30
======== ======== ======== ======== ========
Total Investment Based on net asset value per share 5.95% 12.52% (1.02%) .53% (1.61%)
Return:* ======== ======== ======== ======== ========
Ratios to Average Expenses, excluding account maintenance
Net Assets: and distribution fees 1.08% .95% .99% 1.00% .99%
======== ======== ======== ======== ========
Expenses 2.08% 1.95% 1.99% 2.00% 1.99%
======== ======== ======== ======== ========
Investment income--net .31% .35% .60% .94% 1.85%
======== ======== ======== ======== ========
Supplemental Net assets, end of year (in thousands) $141,800 $236,581 $208,113 $254,866 $322,502
Data: ======== ======== ======== ======== ========
Portfolio turnover 31.64% 54.87% 66.78% 31.43% 71.42%
======== ======== ======== ======== ========
|
*Total investment returns exclude the effect of sales loads.
See Notes to Financial Statements.
FINANCIAL INFORMATION (concluded)
Financial Highlights (concluded)
The following per share data and ratios have been derived For the Period
from information provided in the financial statements. October 21, 1994++ to
July 31, 1995
Increase (Decrease) in Net Asset Value: Class C Class D
Per Share Net asset value, beginning of period $ 15.93 $ 15.96
Operating ------------ ------------
Performance: Investment income--net .05 .12
Realized and unrealized gain on investments and foreign
currency transactions--net .62 .66
------------ ------------
Total from investment operations .67 .78
------------ ------------
Less dividends from investment income--net (.05) (.07)
------------ ------------
Net asset value, end of period $ 16.55 $ 16.67
============ ============
Total Investment Based on net asset value per share 4.26%+++ 4.93%+++
Return:** ============ ============
Ratios to Expenses, excluding account maintenance and distribution fees 1.20%* 1.14%*
Average Net ============ ============
Assets: Expenses 2.20%* 1.39%*
============ ============
Investment income--net .28%* 1.02%*
============ ============
Supplemental Net assets, end of period (in thousands) $ 2,800 $ 107,467
Data: ============ ============
Portfolio turnover 31.64% 31.64%
============ ============
|
*Annualized.
**Total investment returns exclude the effect of sales loads.
++Commencement of Operations.
+++Aggregate total investment return.
See Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch Global Resources Trust ("the Trust") is registered
under the Investment Company Act of 1940 as a non-diversified,
open-end management investment company. The Trust offers four
classes of shares under the Merrill Lynch Select Pricing SM
System. Shares of Class A and Class D are sold with a front-end
sales charge. Shares of Class B and Class C may be subject to
a contingent deferred sales charge. All classes of shares have
identical voting, dividend, liquidation and other rights and the
same terms and conditions, except that Class B, Class C and Class D
Shares bear certain expenses related to the account maintenance of
such shares, and Class B and Class C Shares also bear certain
expenses related to the distribution of such shares. Each class has
exclusive voting rights with respect to matters relating to its
account maintenance and distribution expenditures. The following is
a summary of significant accounting policies followed by the Trust.
(a) Valuation of investments--Portfolio securities which are traded on stock exchanges are valued at the last sale price on the exchange on which such securities are traded, as of the close of business on the day the securities are being valued or, lacking any sales, at the last available bid price. Securities traded in the over-the- counter market are valued at the last available bid price prior to the time of valuation. In cases where securities are traded on more than one exchange, the securities are valued on the exchange designated by or under the authority of the Trustees of the Trust as the primary market. Securities which are traded both in the over-the- counter market and on a stock exchange are valued according to the broadest and most representative market. Options written are valued at the last sale price in the case of exchange-traded options or, in the case of options traded in the over-the-counter market, the last asked price. Options purchased are valued at the last sale price in the case of exchange-traded options or, in the case of options traded in the over-the-counter market, the last bid price. Short- term securities are valued at amortized cost, which approximates market value. Other investments are stated at market value. Securities and assets for which market value quotations are not available are valued at their fair value as determined in good faith by or under the direction of the Trustees of the Trust.
(b) Derivative financial instruments--The Trust may engage in various portfolio strategies to seek to increase its return by hedging its portfolio against adverse movements in the equity, debt and currency markets. Losses may arise due to changes in the value of the contract or if the counterparty does not perform under the contract.
* Forward foreign exchange contracts--The Trust is authorized to enter into forward foreign exchange contracts as a hedge against either specific transactions or portfolio positions. Such contracts are not entered on the Trust's records. However, the effect on net investment income is recorded from the date the Trust enters into such contracts. Premium or discount is amortized over the life of the contracts.
* Options--The Trust can write covered call options and purchase put options. When the Trust writes an option, an amount equal to the premium received by the Trust is reflected as an asset and an equivalent liability. The amount of the liability is subsequently marked to market to reflect the current market value of the option written. When a security is purchased or sold through an exercise of an option, the related premium paid (or received) is added to (or deducted from) the basis of the security acquired or deducted from (or added to) the proceeds of the security sold. When an option expires (or the Trust enters into a closing transaction), the Trust realizes a gain or loss on the option to the extent of the premiums received or paid (or gain or loss to the extent the cost of the closing transaction is less than or greater than the premiums paid or received).
Written and purchased options are non-income producing investments.
(c) Foreign currency transactions--Transactions denominated in foreign currencies are recorded at the exchange rate prevailing when recognized. Assets and liabilities denominated in foreign currencies are valued at the exchange rate at the end of the period. Foreign currency transactions are the result of settling (realized) or valuing (unrealized) assets or liabilities expressed in foreign currencies into US dollars. Realized and unrealized gains or losses from investments include the effects of foreign exchange rates on investments.
(d) Income taxes--It is the Trust's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable income to its shareholders. Therefore, no Federal income tax provision is required. Under the applicable foreign tax
law, a withholding tax may be imposed on interest, dividends, and capital gains at various rates.
(e) Security transactions and investment income--Security transactions are recorded on the dates the transactions are entered into (the trade dates). Dividend income is recorded on the ex- dividend date, except that if the ex-dividend date has passed, certain dividends from foreign securities are recorded as soon as the Trust is informed of the ex-dividend date. Interest income is recognized on the accrual basis. Realized gains and losses on security transactions are determined on the identified cost basis.
(f) Prepaid registration fees--Prepaid registration fees are charged to expense as the related shares are issued.
(g) Dividends and distributions--Dividends and distributions paid by the Trust are recorded on the ex-dividend dates.
(h) Reclassification--Generally accepted accounting principles require that certain differences between undistributed net investment income for financial reporting and tax purposes, if permanent, be reclassified to accumulated net realized capital losses. Accordingly, current year's permanent book/tax differences of $161,663 have been reclassified from undistributed net investment income to accumulated net realized capital losses. These reclassifications have no effect on net assets or net asset values per share.
2. Investment Advisory Agreement and
Transactions with Affiliates:
The Trust has entered into an Investment Advisory Agreement with
Merrill Lynch Asset Management, L.P. ("MLAM"). The general partner
of MLAM is Princeton Services, Inc. ("PSI"), an indirect wholly-
owned subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is
the limited partner. The Trust has also entered into a Distribution
Agreement and Distribution Plans with Merrill Lynch Funds
Distributor, Inc. ("MLFD" or "Distributor"), a wholly-owned
subsidiary of Merrill Lynch Group, Inc.
MLAM is responsible for the management of the Trust's portfolio and provides the necessary personnel, facilities, equipment and certain other services necessary to the operations of the Trust. For such services, the Trust pays a monthly fee of 0.60%, on an annual basis, of the average daily value of the Trust's net assets. The Investment Advisory Agreement obligates MLAM to reimburse the Trust to the extent the Trust's expenses (excluding interest, taxes, distribution fees, brokerage fees and commissions, and extraordinary items) exceed 2.5% of the Trust's first $30 million of average daily net assets, 2.0% of the next $70 million of average daily net assets, and 1.5% of the average daily net assets in excess thereof. No fee payment will be made to the Investment Adviser during any fiscal year which will cause such expenses to exceed the expense limitation at the time of such payment.
Pursuant to the distribution plans ("the Distribution Plans") adopted by the Trust in accordance with Rule 12b-1 under the Investment Company Act of 1940, the Trust pays the Distributor ongoing account maintenance and distribution fees. The fees are accrued daily and paid monthly at annual rates based upon the average daily net assets of the shares as follows:
Account Distribution
Maintenance Fee Fee
Class B 0.25% 0.75%
Class C 0.25% 0.75%
Class D 0.25% --
|
Pursuant to a sub-agreement with the Distributor, Merrill Lynch, Pierce, Fenner & Smith Inc. ("MLPF&S"), a subsidiary of ML & Co., also provides account maintenance and distribution services to the Trust. The ongoing account maintenance fee compensates the Distributor and MLPF&S for providing account maintenance services to Class B, Class C and Class D shareholders. The ongoing distribution fee compensates the Distributor and MLPF&S for providing shareholder and distribution-related services to Class B and Class C shareholders.
For the year ended July 31, 1995, MLFD earned underwriting discounts and MLPF&S earned dealer concessions on sales of the Trust's Class A and Class D Shares as follows:
MLFD MLPF&S
Class A $6,956 $97,188
Class D $3,459 $49,663
|
For the year ended July 31, 1995, MLPF&S received contingent deferred sales charges of $469,990 relating to transactions in Class B Shares of beneficial interest, $1,502 relating to transactions in Class C Shares of beneficial interest, and $20,069 in commissions on the execution of portfolio security transactions for the Trust for the year ended July 31, 1995.
Merrill Lynch Financial Data Services, Inc. ("MLFDS"), a wholly- owned subsidiary of ML & Co., is the Trust's transfer agent.
Accounting services are provided to the Trust by MLAM at cost.
Certain officers and/or trustees of the Trust are officers and/or directors of MLAM, PSI, MLPF&S, MLFDS, MLFD, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the year ended July 31, 1995 were $127,098,758 and $87,286,344,
respectively.
Net realized and unrealized gains (losses) as of July 31, 1995 were as follows:
Realized
Gains Unrealized
(Losses) Gains
Long-term investments $ 9,181,328 $ 15,893,710
Short-term investments 5,452 --
Foreign currency
transactions (53,988) 1,956
------------ ------------
Total $ 9,132,792 $ 15,895,666
============ ============
|
As of July 31, 1995, net unrealized appreciation for Federal income tax purposes aggregated $15,893,710, of which $29,297,603 related to appreciated securities and $13,403,893 related to depreciated securities. At July 31,1995, the aggregate cost of investments for Federal income tax purposes was $264,161,660.
4. Shares of Beneficial Interest:
Net increase in net assets derived from beneficial interest
transactions for the years ended July 31, 1995 and July 31, 1994
were $ 7,860,033 and $12,016,848, respectively.
Transactions in shares of beneficial interest for each class were as follows:
Class A Shares for the Year Dollar
Ended July 31, 1995 Shares Amount
Shares sold 2,372,442 $ 37,625,025
Shares issued to share-
holders in reinvestment of
dividends. 24,490 385,380
------------ -------------
Total issued 2,396,932 38,010,405
Shares redeemed (1,942,431) (31,015,092)
------------ -------------
Net increase 454,501 $ 6,995,313
============ =============
Class A Shares for the Year Dollar
Ended July 31, 1994 Shares Amount
Shares sold 1,169,348 $ 17,964,584
Shares issued to shareholders
in reinvestment of dividends 6,902 96,377
------------ -------------
Total issued 1,176,250 18,060,961
Shares redeemed (769,151) (11,522,490)
------------ -------------
Net increase 407,099 $ 6,538,471
============ =============
Class B Shares for the Year Dollar
Ended July 31, 1995 Shares Amount
Shares sold 6,694,914 $ 105,112,417
Shares issued to shareholders
in reinvestment of dividends. 28,028 454,893
------------ -------------
Total issued 6,722,942 105,567,310
Automatic conversion of
shares (6,950,286) (107,241,311)
Shares redeemed (6,287,107) (99,273,886)
------------ -------------
Net decrease (6,514,451) $(100,947,887)
============ =============
Class B Shares for the Year Dollar
Ended July 31, 1994 Shares Amount
Shares sold 4,569,263 $ 70,407,201
Shares issued to shareholders
in reinvestment of dividends 38,724 541,357
------------ -------------
Total issued 4,607,987 70,948,558
Shares redeemed (4,402,209) (65,470,181)
------------ -------------
Net increase 205,778 $ 5,478,377
============ =============
Class C Shares for the Period Dollar
Oct. 21, 1994++ to July 31, 1995 Shares Amount
Shares sold 406,317 $ 6,241,943
Shares issued to shareholders
in reinvestment of dividends. 456 6,782
------------ -------------
Total issued 406,773 6,248,725
Shares redeemed (237,577) (3,852,799)
------------ -------------
Net increase 169,196 $ 2,395,926
============ =============
++Commencement of Operations.
Class D Shares for the Period Dollar
Oct. 21, 1994++ to July 31, 1995 Shares Amount
Shares sold 325,837 $ 5,011,879
Automatic conversion of
shares 6,938,622 107,241,311
Shares issued to share-
holders in reinvestment of
dividends. 12,214 181,873
------------ -------------
Total issued 7,276,673 112,435,063
Shares redeemed (829,713) (13,018,382)
------------ -------------
Net increase 6,446,960 $ 99,416,681
============ =============
|
++Commencement of Operations.
5. Capital Loss Carryforward:
At July 31, 1995, the Trust had a net capital loss carryforward of
approximately $17,508,000, all of which expires in 2002. This amount
will be available to offset like amounts of any future taxable
gains.
6. Commitments:
At July 31, 1995, the Trust had entered into foreign exchange
contracts under which it had agreed to sell a foreign currency
with a value of approximately $1,671,000.
[This page intentionally left blank]
TABLE OF CONTENTS
PAGE
----
Investment Objectives and Policies...... 2
Asset-Based Securities................ 2
Other Investment Policies and
Practices........................... 3
Investment Restrictions............... 6
Management of the Trust................. 8
Trustees and Officers................. 8
Compensation of Trustees.............. 10
Management and Advisory
Arrangements........................ 10
Purchase of Shares...................... 12
Initial Sales Charge
Alternatives--Class A and Class D
Shares.............................. 12
Reduced Initial Sales Charges......... 13
Distribution Plans.................... 17
Limitations on the Payment of Deferred
Sales Charges....................... 18
Redemption of Shares.................... 19
Deferred Sales Charges--Class B and
Class C Shares...................... 19
Portfolio Transactions and Brokerage.... 21
Determination of Net Asset Value........ 22
Shareholder Services.................... 23
Investment Account.................... 23
Automatic Investment Plans............ 24
Automatic Reinvestment of Dividends
and Capital Gains Distributions..... 24
Systematic Withdrawal Plans--Class A
and Class D Shares.................. 25
Retirement Plans...................... 26
Exchange Privilege.................... 26
Dividends, Distributions and Taxes...... 40
Dividends and Distributions........... 40
Taxes................................. 40
Tax Treatment of Options and Forward
Foreign Exchange Transactions....... 42
Special Rules for Certain Foreign
Currency Transactions............... 43
Performance Data........................ 44
General Information..................... 46
Description of Shares................. 46
Computation of Offering Price per
Share............................... 47
Independent Auditors.................. 48
Custodian............................. 48
Transfer Agent........................ 48
Legal Counsel......................... 48
Reports to Shareholders............... 48
Additional Information................ 48
Independent Auditors' Report............ 49
Financial Statements.................... 50
Code #10302-1195
|
(Logo)
Merrill Lynch
Global Resources Trust
STATEMENT OF
ADDITIONAL
INFORMATION
November 27, 1995
Distributor:
Merrill Lynch
Funds Distributor, Inc.
APPENDIX FOR GRAPHIC AND IMAGE MATERIAL
Pursuant to Rule 304 of Regulation S-T, the following table presents fair and accurate narrative descriptions of graphic and image material omitted from this EDGAR Submission File due to ASCII-incompatibility and cross-references this material to the location of each occurrence in the text.
DESCRIPTION OF OMITTED LOCATION OF GRAPHIC GRAPHIC OR IMDATE OR IMAGE IN TEST - ---------------------- ------------------- Compass plate, circular Back cover of Prospectus and graph paper and Merrill Lynch back cover of Statement of logo including stylized market Additional Information bull. |
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS:
CONTAINED IN PART A:
Financial Highlights for each of the years in the ten-year period ended July 31, 1995 and for the period August 2, 1985 (commencement of operations) to July 31, 1986.
CONTAINED IN PART B:
Schedule of Investments, as of July 31, 1995.
Statement of Assets and Liabilities, as of July 31, 1995.
Statement of Operations for the year ended July 31, 1995.
Statements of Changes in Net Assets for the years ended July 31, 1995 and July 31, 1994.
Financial Highlights for each of the years in the five-year period ended July 31, 1995.
(b) EXHIBITS:
EXHIBIT
NUMBER DESCRIPTION
- ------ ----------------------------------------------------------------------------
1(a) -- Declaration of Trust of the Registrant, dated April 12, 1985.(a)
(b) -- Amendment to Declaration of Trust of the Registrant, dated May 28, 1985.(a)
(c) -- Amendment to Declaration of Trust of the Registrant, dated October 3,
1988.(a)
(d) -- Instrument establishing Class A shares and Class B shares of the
Registrant.(a)
(e) -- Amendment to Declaration of Trust of the Registrant, dated October 17, 1994,
including Instrument establishing Class C and Class D shares of beneficial
interest.
2 -- By-Laws of the Registrant.(a)
3 -- None.
4(a) -- Portions of the Declaration of Trust and By-Laws of Registrant defining the
rights of holders of shares of beneficial interest of Registrant.(b)
5(a) -- Investment Advisory Agreement between the Registrant and Merrill Lynch Asset
Management, L.P.(a)
(b) -- Supplement to Investment Advisory Agreement between Registrant and Merrill
Lynch Asset Management, L.P.(d)
6(a) -- Form of Class A Distribution Agreement between the Registrant and Merrill
Lynch Funds Distributor, Inc. (including Form of Selected Dealers
Agreement).(d)
(b) -- Class B Distribution Agreement between the Registrant and Merrill Lynch
Funds Distributor, Inc.(a)
(c) -- Letter Agreement between Registrant and Merrill Lynch Funds Distributor,
Inc., dated September 15, 1993, in connection with the Merrill Lynch Mutual
Fund Adviser Program.(c)
(d) -- Form of Class C Distribution Agreement between Registrant and Merrill Lynch
Funds Distributor, Inc. (including Form of Selected Dealers Agreement).(d)
(e) -- Form of Class D Distribution Agreement between Registrant and Merrill Lynch
Funds Distributor, Inc. (including Form of Selected Dealers Agreement).(d)
7 -- None.
8 -- Custody Agreement between the Registrant and The Bank of New York.(a)
9 -- Transfer Agency, Dividend Disbursing Agency and Shareholder Servicing Agency
Agreement between the Registrant and Financial Data Service Inc. (now known
as Merrill Lynch Financial Data Services, Inc.).(a)
10 -- Opinion of Brown & Wood, counsel for the Registrant.
11 -- Consent of Deloitte & Touche LLP, independent auditors for the Registrant.
12 -- None.
13 -- None.
14 -- None.
15(a) -- Amended and Restated Class B Distribution Plan of the Registrant.(c)
(b) -- Form of Class C Distribution Plan and Class C Distribution Plan
Sub-Agreement of Registrant.(d)
(c) -- Form of Class D Distribution Plan and Class D Distribution Plan
Sub-Agreement of Registrant.(d)
|
EXHIBIT
NUMBER DESCRIPTION
- ------ ----------------------------------------------------------------------------
16(a) -- Schedule for computation of each performance quotation for Class A shares
provided in the Registration Statement in response to Item 22(f).(a)
(b) -- Schedule for computation of each performance quotation for Class B shares
provided in the Registration Statement in response to Item 22(j).(a)
(c) -- Schedule for computation of each performance quotation for Class C shares
provided in the Registration Statement in response to Item 22(j).
(d) -- Schedule for computation of each performance quotation for Class D shares
provided in the Registration Statement in response to Item 22(j).
17(a) -- Financial Data Schedule for Class A Shares.
(b) -- Financial Data Schedule for Class B Shares.
(c) -- Financial Data Schedule for Class C Shares.
(d) -- Financial Data Schedule for Class D Shares.
|
(a) Refiled pursuant to the Electronic Data Gathering, Analysis and Retrieval (EDGAR) phase-in requirements.
(b) Reference is made to Article III, Article V, Article VI (sections 2, 3, 4 and 5), Article VII, Article VIII, and Article X of the Registrant's Declaration of Trust, filed as Exhibit (1) to Post-Effective Amendment No. 11 to Registrant's Registration Statement on Form N-1A under the Securities Act of 1933, as amended (the "Registration Statement"); and to Article II, Article III (sections 1, 3, 5, 6 and 17), Article VI, Article VII, Article XII, Article XIII, Article XIV and Article XV of the Registrant's By-Laws, filed as Exhibit (2) to Post-Effective Amendment No. 11 to the Registration Statement.
(c) Previously filed on November 23, 1993 as an Exhibit to Post-Effective Amendment No. 9 to the Registration Statement.
(d) Previously filed on October 11, 1994 as an Exhibit to Post-Effective Amendment No. 10 to the Registration Statement.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
The Registrant is not controlled by or under common control with any person.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
NUMBER OF
HOLDERS AT
OCTOBER 31,
TITLE OF CLASS 1995+
- ------------------------------------------------------------------------------ ----------------
Class A shares of beneficial interest, par value $0.10 per share.............. 2,917
Class B shares of beneficial interest, par value $0.10 per share.............. 15,529
Class C shares of beneficial interest, par value $0.10 per share.............. 488
Class D shares of beneficial interest, par value $0.10 per share.............. 17,024
|
+ The number of holders shown above includes holders of record plus beneficial owners whose shares are held of record by Merrill Lynch, Pierce, Fenner & Smith Incorporated.
ITEM 27. INDEMNIFICATION.
Section 5.3 of the Registrant's Declaration of Trust provides as follows:
"The Trust shall indemnify each of its Trustees, officers, employees, and agents (including persons who serve at its request as directors, officers or trustees of another organization in which it has any interest as a shareholder, creditor or otherwise) against all liabilities and expenses (including amounts paid in satisfaction of judgments, in compromise, as fines and penalties, and as counsel fees) reasonably incurred by him in connection with the defense or disposition of any action, suit or other proceeding, whether civil or criminal, in which he may be involved or with which he may be threatened, while in office or thereafter, by reason of his being or having been a trustee, officer, employee or agent, except with respect to any matter as to which he shall have been adjudicated to have acted in bad faith, willful misfeasance, gross negligence or reckless
disregard of his duties; provided, however, that as to any matter disposed of by
a compromise payment by such person, pursuant to a consent decree or otherwise,
no indemnification either for said payment or for any other expenses shall be
provided unless the Trust shall have received a written opinion from independent
legal counsel approved by the Trustees to the effect that if either the matter
of willful misfeasance, gross negligence or reckless disregard of duty, or the
matter of good faith and reasonable belief as to the best interests of the
Trust, had been adjudicated, it would have been adjudicated in favor of such
person. The rights accruing to any Person under these provisions shall not
exclude any other right to which he may be lawfully entitled; provided that no
Person may satisfy any right of indemnity or reimbursement granted herein or in
Section 5.1 or to which he may be otherwise entitled except out of the property
of the Trust, and no Shareholder shall be personally liable to any Person with
respect to any claim for indemnity or reimbursement or otherwise. The Trustees
may make advance payments in connection with indemnification under this Section
5.3, provided that the indemnified person shall have given a written undertaking
to reimburse the Trust in the event it is subsequently determined that he is not
entitled to such indemnification."
Insofar as the conditional advancing of indemnification moneys for actions
based upon the Investment Company Act of 1940, as amended (the "1940 Act") may
be concerned, such payments will be made only on the following conditions: (i)
the advances must be limited to amounts used, or to be used, for the preparation
or presentation of a defense to the action, including costs connected with the
preparation of a settlement; (ii) advances may be made only upon receipt of a
written promise by, or on behalf of, the recipient to repay that amount of the
advance which exceeds the amount which it is ultimately determined that he is
entitled to receive from the Registrant by reason of indemnification; and
(iii)(a) such promise must be secured by a surety bond, other suitable insurance
or an equivalent form of security which assures that any repayments may be
obtained by the Registrant without delay or litigation, which bond, insurance or
other form of security must be provided by the recipient of the advance, or (b)
a majority of a quorum of the Registrant's disinterested, non-party Trustees, or
an independent legal counsel in a written opinion, shall determine, based upon a
review of readily available facts, that the recipient of the advance ultimately
will be found entitled to indemnification.
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 (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 Trustees, officers and controlling persons of the Registrant and the principal underwriter pursuant to the foregoing provisions or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the 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 Trustee, 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 Trustee, 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.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
Merrill Lynch Asset Management L.P. ("MLAM" or the "Investment Adviser")
acts as investment adviser for the following open-end investment companies:
Merrill Lynch Adjustable Rate Securities Fund, Inc., Merrill Lynch Americas
Income Fund, Inc., Merrill Lynch Asset Builder Program, Inc., Merrill Lynch
Asset Growth Fund, Inc., Merrill Lynch Asset Income Fund, Inc., Merrill Lynch
Balanced Fund for Investment and Retirement, Inc., Merrill Lynch Capital Fund,
Inc., Merrill Lynch Developing Capital Markets Fund, Inc., Merrill Lynch Dragon
Fund, Inc., Merrill Lynch EuroFund, Merrill Lynch Fundamental Growth Fund, Inc.,
Merrill Lynch Fund for Tomorrow, Inc., Merrill Lynch Global Allocation Fund,
Inc.,
Merrill Lynch Global Bond Fund for Investment and Retirement, Merrill Lynch Global Convertible Fund, Inc., Merrill Lynch Global Holdings, Inc., Merrill Lynch Global Resources Trust, Merrill Lynch Global SmallCap Fund, Inc., Merrill Lynch Global Utility Fund, Inc., Merrill Lynch Growth Fund for Investment and Retirement, Merrill Lynch Healthcare Fund, Inc., Merrill Lynch Institutional Intermediate Fund, Merrill Lynch International Equity Fund, Merrill Lynch Latin America Fund, Inc., Merrill Lynch Middle East/ Africa Fund, Inc., Merrill Lynch Municipal Series Trust, Merrill Lynch Pacific Fund, Inc., Merrill Lynch Ready Assets Trust, Merrill Lynch Retirement Series Trust, Merrill Lynch Series Fund, Inc., Merrill Lynch Short-Term Global Income Fund, Inc., Merrill Lynch Strategic Dividend Fund, Merrill Lynch Technology Fund, Inc., Merrill Lynch U.S. Treasury Money Fund, Merrill Lynch U.S.A. Government Reserves, Merrill Lynch Utility Income Fund, Inc. and Merrill Lynch Variable Series Funds, Inc.; and for the following closed-end investment companies: Convertible Holdings, Inc., Merrill Lynch High Income Municipal Bond Fund, Inc. and Merrill Lynch Senior Floating Rate Fund, Inc.
Fund Asset Management, L.P. ("FAM"), an affiliate of the Investment Adviser, acts as the investment adviser for the following open-end investment companies: CBA Money Fund, CMA Government Securities Fund, CMA Money Fund, CMA Multi-State Municipal Series Trust, CMA Tax-Exempt Fund, CMA Treasury Fund, The Corporate Fund Accumulation Program, Inc., Financial Institutions Series Trust, Merrill Lynch Basic Value Fund, Inc., Merrill Lynch California Municipal Series Trust, Merrill Lynch Corporate Bond Fund, Inc., Merrill Lynch Federal Securities Trust, Merrill Lynch Funds for Institutions Series, Merrill Lynch Multi-State Municipal Series Trust, Merrill Lynch Multi-State Limited Maturity Municipal Series Trust, Merrill Lynch Municipal Bond Fund, Inc., Merrill Lynch Phoenix Fund, Inc., Merrill Lynch Special Value Fund, Inc., Merrill Lynch World Income Fund, Inc., and The Municipal Fund Accumulation Program, Inc.; and for the following closed-end investment companies: Apex Municipal Fund, Inc., Corporate High Yield Fund, Inc., Corporate High Yield Fund II, Inc., Emerging Tigers Fund, Inc., Income Opportunities Fund 1999, Inc., Income Opportunities Fund 2000, Inc., Merrill Lynch Municipal Strategy Fund, Inc., MuniAssets Fund, Inc., MuniEnhanced Fund, Inc., MuniInsured Fund, Inc., MuniVest Fund, Inc., MuniVest Fund II, Inc., MuniVest California Insured Fund, Inc., MuniVest Florida Fund, MuniVest Michigan Insured Fund, Inc., MuniVest New Jersey Fund, Inc., MuniVest New York Insured Fund, Inc., MuniVest Pennsylvania Insured Fund, MuniYield Arizona Fund, Inc., MuniYield California Fund, Inc., MuniYield California Insured Fund, Inc., MuniYield California Insured Fund II, Inc., MuniYield Florida Fund, MuniYield Florida Insured Fund, MuniYield Fund, Inc., MuniYield Insured Fund, Inc., MuniYield Insured Fund II, Inc., MuniYield Michigan Fund, Inc., MuniYield Michigan Insured Fund, Inc., MuniYield New Jersey Fund, Inc., MuniYield New Jersey Insured Fund, Inc., MuniYield New York Insured Fund, Inc., MuniYield New York Insured Fund II, Inc., MuniYield New York Insured Fund III, Inc., MuniYield Pennsylvania Fund, MuniYield Quality Fund, Inc., MuniYield Quality Fund II, Inc., Senior High Income Portfolio, Inc., Senior High Income Portfolio II, Inc., Senior Strategic Income Fund, Inc., Taurus MuniCalifornia Holdings, Inc., Taurus MuniNewYork Holdings, Inc., and Worldwide DollarVest Fund, Inc.
The address of each of these investment companies is P.O. Box 9011, Princeton, New Jersey 08543-9011, except that the address of Merrill Lynch Institutional Intermediate Fund, and Merrill Lynch Funds for Institutions Series and Merrill Lynch Institutional Intermediate Fund is One Financial Center, 15th Floor, Boston, Massachusetts 02111-2646. The address of the Investment Adviser, FAM, Princeton Services, Inc. ("Princeton Services") and Princeton Administrators, L.P. is also P.O. Box 9011, Princeton, New Jersey 08543-9011. The address of Merrill Lynch Funds Distributor, Inc. ("MLFD") is P.O. Box 9081, Princeton, New Jersey 08543-9081. The address of Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch") and Merrill Lynch & Co., Inc. ("ML & Co.") is World Financial Center, North Tower, 250 Vesey Street, New York, New York 10281. The address of the Fund's transfer agent, Merrill Lynch Financial Data Services ("MLFDS") is 4800 Deer Lake Drive East, Jacksonville, Florida 32246-6484.
Set forth below is a list of each executive officer and partner of the Investment Adviser indicating each business, profession, vocation or employment of a substantial nature in which each such person has been engaged since August 1, 1992 for his or its own account or in the capacity of director, officer, partner or trustee. In addition, Mr. Zeikel is President, Mr. Richard is Treasurer and Mr. Glenn is Executive Vice
President of substantially all of the investment companies described in the preceding paragraphs and also hold the same positions with all or substantially all of the investment companies described in the preceding paragraphs and Messrs. Giordano, Harvey, Hewitt, Kirstein, and Monagle are directors or officers of one or more of such companies.
POSITIONS WITH OTHER SUBSTANTIAL BUSINESS,
NAME INVESTMENT ADVISER PROFESSION, VOCATION OR EMPLOYMENT
- ---------------------------- ------------------------- ---------------------------------------
ML & Co..................... Limited Partner Financial Services Holding Company;
Limited Partner of MLAM
Merrill Lynch Investment
Management, Inc........... Limited Partner Investment Advisory Services
Princeton Services, Inc.
("Princeton Services").... General Partner General Partner of FAM
Arthur Zeikel............... President and Director President of MLAM; President and
Director of Princeton Services;
Director of MLFD; Executive Vice
President of ML & Co.; Executive Vice
President of Merrill Lynch
Terry K. Glenn.............. Executive Vice President Executive Vice President of FAM;
Executive Vice President and Director
of Princeton Services; President of
MLFD; Director of the Transfer Agent;
Director of MLFDS; President of
Princeton Administrators, L.P.
Vincent R. Giordano......... Senior Vice President Senior Vice President of FAM; Senior
Vice President of Princeton Services
Elizabeth Griffin........... Senior Vice President Senior Vice President of FAM
Norman R. Harvey............ Senior Vice President Senior Vice President of FAM; Senior
Vice President of Princeton Services
N. John Hewitt.............. Senior Vice President Senior Vice President of FAM; Senior
Vice President of Princeton Services
Philip L. Kirstein.......... Senior Vice President, Senior Vice President, General Counsel
General Counsel and and Secretary of FAM; Senior Vice
Secretary President, General Counsel, Director
and Secretary of Princeton Services;
Director of MLFD
Ronald M. Kloss............. Senior Vice President and Senior Vice President and Controller of
Controller FAM; Senior Vice President and
Controller of Princeton Services
Stephen M. M. Miller........ Senior Vice President Executive Vice President of Princeton
Administrators, L.P.
Joseph T. Monagle, Jr. ..... Senior Vice President Senior Vice President of FAM; Senior
Vice President of Princeton Services
Richard L. Reller........... Senior Vice President Senior Vice President of MLAM; Senior
Vice President of Princeton Services
Gerald M. Richard........... Senior Vice President and Senior Vice President and Treasurer of
Treasurer FAM; Vice President and Treasurer of
MLFD; Senior Vice President and
Treasurer of Princeton Services
Ronald L. Welburn........... Senior Vice President Senior Vice President of FAM; Senior
Vice President of Princeton Services
Anthony Wiseman............. Senior Vice President Senior Vice President of FAM; Senior
Vice President of Princeton Services
|
ITEM 29. PRINCIPAL UNDERWRITERS.
(a) MLFD acts as the principal underwriter for the Registrant; MLFD acts as the principal underwriter for each of the open-end investment companies referred to in the first two paragraphs of Item 28 except CBA Money Fund, CMA Government Securities Fund, CMA Money Fund, CMA Multi-State Municipal Series Trust, CMA Tax-Exempt Fund, CMA Treasury Fund, Convertible Holdings, Inc., The Corporate Fund Accumulation Program, Inc., MuniAssets Fund, Inc., and The Municipal Fund Accumulation Program, Inc.; and MLFD also acts as the principal underwiter for the following closed-end investment companies:
Merrill Lynch High Income Municipal Bond Fund, Inc., Merrill Lynch Municipal Strategy Fund, Inc. and Merrill Lynch Senior Floating Rate Fund, Inc.
(b) Set forth below is information concerning each director and officer of MLFD. The principal business address of each such person is P.O. Box 9011, Princeton, New Jersey 08543-9011, except that the address of Messrs. Aldrich, Brady, Breen, Crook, Fatseas, Graczyk and Wasel is One Financial Center, 15th Floor, Boston, Massachusetts 02111-2646.
(2) (3)
(1) POSITION(S) AND OFFICES POSITIONS AND OFFICES
NAME WITH MLFD WITH REGISTRANT
- ------------------------------ ------------------------------------- ------------------------
Terry K. Glenn................ President and Director Executive Vice President
Arthur Zeikel................. Director President and Trustee
Philip L. Kirstein............ Director None
William E. Aldrich............ Senior Vice President None
Robert W. Crook............... Senior Vice President None
Kevin P. Boman................ Vice President None
Michael J. Brady.............. Vice President None
William M. Breen.............. Vice President None
Vice President and Assistant
Sharon Creveling.............. Treasurer None
Mark A. DeSario............... Vice President None
James T. Fatseas.............. Vice President None
Stanley Graczyk............... Vice President None
Michelle T. Lau............... Vice President None
Debra W. Landsman-Yaros....... Vice President None
Gerald M. Richard............. Vice President and Treasurer Treasurer
Salvatore Venezia............. Vice President None
William Wasel................. Vice President None
Robert Harris................. Secretary None
|
(c) Not applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
All accounts, books and other documents required to be maintained by
Section 31(a) of the 1940 Act, and the rules thereunder will be maintained at
the offices of the Registrant, 800 Scudders Mill Road, Plainsboro, New Jersey
08536 and its transfer agent, Merrill Lynch Financial Data Services, Inc., 4800
Deer Lake Drive East, Jacksonville, Florida 32246-6484.
ITEM 31. MANAGEMENT SERVICES.
Other than as set forth under the caption "Management of the Trust--Management and Advisory Arrangements" in the Prospectus constituting Part A of the Registration Statement and under "Management of the Trust--Management and Advisory Arrangements" in the Statement of Additional Information constituting Part B of the Registration Statement, Registrant is not a party to any management related service contract.
ITEM 32. UNDERTAKINGS.
(a) Not applicable.
(b) Not applicable.
(c) Registrant undertakes to furnish to each person to whom a prospectus is delivered a copy of the Registrant's latest annual report to shareholders, upon request and without charge.
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933 AND THE INVESTMENT COMPANY ACT OF 1940, THE REGISTRANT CERTIFIES THAT IT MEETS ALL OF THE REQUIREMENTS FOR EFFECTIVENESS OF THIS REGISTRATION STATEMENT PURSUANT TO RULE 485(b) UNDER THE SECURITIES ACT OF 1933 AND HAS DULY CAUSED THIS POST-EFFECTIVE AMENDMENT TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE TOWNSHIP OF PLAINSBORO, AND STATE OF NEW JERSEY, ON THE 24TH DAY OF NOVEMBER, 1995.
MERRILL LYNCH GLOBAL RESOURCES TRUST
(Registrant)
By /s/ TERRY K. GLENN
---------------------------------
(Terry K. Glenn, Executive Vice
President)
|
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS POST-EFFECTIVE AMENDMENT TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
- --------------------------------------------- ------------------------ ------------------
ARTHUR ZEIKEL* President and Trustee
- --------------------------------------------- (Principal Executive
(Arthur Zeikel) Officer)
GERALD M. RICHARD* Treasurer (Principal
- --------------------------------------------- Financial and
(Gerald M. Richard) Accounting Officer)
DONALD CECIL* Trustee
- ---------------------------------------------
(Donald Cecil)
M. COLYER CRUM* Trustee
- ---------------------------------------------
(M. Colyer Crum)
EDWARD H. MEYER* Trustee
- ---------------------------------------------
(Edward H. Meyer
JACK B. SUNDERLAND* Trustee
- ---------------------------------------------
(Jack B. Sunderland)
J. THOMAS TOUCHTON* Trustee
- ---------------------------------------------
(J. Thomas Touchton)
*By /s/ TERRY K. GLENN November 24, 1995
- ---------------------------------------------
(Terry K. Glenn, Attorney-in-Fact)
|
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION PAGE NO.
------ ----------------------------------------------------------------- --------
1(a) -- Declaration of Trust of the Registrant, dated April 12, 1985.(a)
(b) -- Amendment to Declaration of Trust of the Registrant, dated May
28, 1985.(a)
(c) -- Amendment to Declaration of Trust of the Registrant, dated
October 3, 1988.(a)
(d) -- Instrument establishing Class A shares and Class B shares of the
Registrant.(a)
(e) -- Amendment to Declaration of Trust of the Registrant, dated
October 17, 1994, including Instrument establishing Class C and
Class D shares of beneficial interest.
2 -- By-Laws of the Registrant.(a)
5(a) -- Investment Advisory Agreement between the Registrant and Merrill
Lynch Asset Management, L.P.(a)
6 -- Class B Distribution Agreement between the Registrant and Merrill
Lynch Funds Distributor, Inc.(a)
8 -- Custody Agreement between the Registrant and The Bank of New
York.(a)
9 -- Transfer Agency, Dividend Disbursing Agency and Shareholder
Servicing Agency Agreement between the Registrant and Merrill
Lynch Financial Data Service Inc. (now known as Merrill Lynch
Financial Data Services, Inc.).(a)
10 -- Opinion of Brown & Wood, counsel for the Registrant.
11 -- Consent of Deloitte & Touche LLP, independent auditors for the
Registrant.
16(a) -- Schedule for computation of each performance quotation for Class
A shares provided in the Registration Statement in response to
Item 22(f).(a)
(b) -- Schedule for computation of each performance quotation for Class
B shares provided in the Registration Statement in response to
Item 22(j).(a)
(c) -- Schedule for computation of each performance quotation for Class
C shares provided in the Registration Statement in response to
Item 22(j).
(d) -- Schedule for computation of each performance quotation for Class
D shares provided in the Registration Statement in response to
Item 22(j).
17(a) -- Financial Data Schedule for Class A Shares.
(b) -- Financial Data Schedule for Class B Shares.
(c) -- Financial Data Schedule for Class C Shares.
(d) -- Financial Data Schedule for Class D Shares.
|
(a) Refiled pursuant to the Electronic Data Gathering, Analysis and Retrieval ("EDGAR") phase-in requirements.
DECLARATION OF TRUST Ex-99.1(a)
OF
MERRILL LYNCH RESOURCE VALUE TRUST
THE DECLARATION OF TRUST of Merrill Lynch Resource Value Trust is made the 12th day of April, 1985, by the parties signatory hereto, as trustees (such persons, so long as they shall continue in office in accordance with the terms of this Declaration of Trust, and all other persons who at the time in question have been duly elected or appointed as trustees in accordance with the provisions of this Declaration of Trust and are then in office, being hereinafter called the "Trustees").
WITNESSETH:
WHEREAS, the Trustees desire to form a trust fund under the law of Massachusetts for the investment and reinvestment of funds contributed thereto; and
WHEREAS, it is proposed that the beneficial interest in the trust assets be divided into transferable shares of beneficial interest as hereinafter provided;
NOW, THEREFORE, the Trustees hereby declare that they will hold in trust all money and property contributed to the trust fund to manage and dispose of the same for the benefit of the holders from time to time of the shares of beneficial interest issued hereunder and subject to the provisions hereof, to wit:
ARTICLE I
The Trust
1.1. Name. The name of the trust created hereby (the "Trust") shall be "Merrill Lynch Resource Value Trust", and so far as may be practicable the Trustees shall conduct the Trust's activities, execute all documents and sue or be sued under that name, which name (and the word "Trust" wherever hereinafter used) shall refer to the Trustees as Trustees, and not individually, and shall not refer to the officers, agents, employees or Shareholders of the Trust. However, should the Trustees determine that the use of such name is not advisable, they may select such other name for the Trust as they deem proper and the Trust may hold its property and conduct its activities under such other name. Any name change shall become effective upon the execution by a majority of the then Trustees of an instrument setting forth the new name. Any such instrument shall have the status of an amendment to this Declaration.
1.2. Definitions. As used in this Declaration, the following terms shall have the following meanings:
The terms "Affiliated Person", "Assignment","Commission", "Interested Person", "Majority Shareholder Vote' (the 67% or more than 50% requirement of the third sentence of Section 2(a)(42) of the 1940 Act, whichever may be applicable) and "Principal Underwriter" shall have the meanings given them in the 1940 Act, as amended from time to time.
"Declaration" shall mean this Declaration as amended from time to time. References in this Declaration to "Declaration", "hereof", "herein" and "hereunder" shall be deemed to refer to the Declaration rather than the article or section in which such words appear.
"Fundamental Policies" shall mean the investment restrictions set forth in the Prospectus and designated-as fundamental policies therein.
"Person" shall mean and include individuals, corporations, partnerships, trusts, associations, joint ventures and other entities, whether or not legal entities, and governments and agencies and political subdivisions thereof.
"Prospectus" shall mean the currently effective Prospectus of the Trust under the Securities Act of 1933, as amended, including
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the Statement of Additional Information incorporated by reference therein.
"Shareholders" shall mean as of any particular time all holders of record of outstanding Shares at such time.
"Shares" shall mean the equal proportionate transferable units of interest into which the beneficial interest in the Trust shall be divided from time to time and includes fractions of Shares as well as whole Shares.
"Trustees" shall mean the signatories to this Declaration, so long as they shall continue in office in accordance with the terms hereof, and all other persons who at the time in question have been duly elected or appointed and have qualified as trustees in accordance with the provisions hereof and are then in office, are herein referred to as the "Trustees", and reference in this Declaration to a Trustee or Trustees shall refer to such person or persons in their capacity as trustees hereunder.
"Trust Property" shall mean as of any particular time any and all property, real or personal, tangible or intangible, which at such time is owned or held by or for the account of the Trust or the Trustees.
The "1940 Act" refers to the Investment Company Act of 1940, as amended from time to time.
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ARTICLE II
Trustees
2.1. Number and Qualification. The number of Trustees shall
be fixed from time to time by written instrument signed by a
majority of the Trustees then in office, provided, however, that
the number of Trustees shall in no event be less than three or
more than fifteen (except prior to the first public offering of
Shares). Any vacancy created by an increase in Trustees may, to
the extent permitted by the 1940 Act, be filled by the appointment
of an individual having the qualifications described in this
Article made by a written instrument signed by a majority of the
Trustees then in office. Any such appointment shall not become
effective, however, until the individual named in the written
instrument of appointment shall have accepted in writing such
appointment and agreed in writing to be bound by the terms of this
Declaration. No reduction in the number of Trustees shall have
the effect of removing any Trustee from office prior to the
expiration of his term. Whenever a vacancy in the number of
Trustees shall occur, until such vacancy is filled as provided in
Section 2.4 hereof, the Trustees in office, regardless of their
number, shall have all the powers granted to the Trustees and
shall discharge all the duties imposed upon the Trustees by this
Declaration. A Trustee shall be an individual at least 21 years
of age who is not under legal disability. Trustees need not own
Shares.
2.2. Term of Office. Each Trustee shall (except in the event of resignations or removals or vacancies pursuant to Sections 2.3 or 2.4 hereof) hold office until his successor has been elected and is qualified to serve as Trustee.
2.3. Resignation and Removal. Any Trustee may resign his
trust (without need for prior or subsequent accounting) by an
instrument in writing signed by him and delivered or mailed to the
Chairman, if any, the President or the Secretary and such
resignation shall be effective upon such delivery, or at a later
date according to the terms of the instrument. Any of the
Trustees may be removed (provided the aggregate number of Trustees
after such removal shall not be less than the number required by
Section 2.1 hereof) with cause, by the action of two thirds of the
remaining Trustees. Any Trustee may be removed at any special
meeting of the Shareholders by a vote of two thirds of the
outstanding Shares. Upon the resignation or removal of a Trustee,
or his otherwise ceasing to be a Trustee, he shall execute and
deliver such documents as the remaining Trustees shall require for
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the purpose of conveying to the Trust or the remaining Trustees any Trust Property held in the name of the resigning or removed Trustee. Upon the incapacity or death of any Trustee, his legal representative shall execute and deliver on his behalf such documents as the remaining Trustees shall require as provided in the preceding sentence.
2.4. Vacancies. The term of office of a Trustee shall
terminate and a vacancy shall occur in the event of the death,
resignation, bankruptcy, adjudicated incompetence or other
incapacity to perform the duties of the office, or removal, of a
Trustee. No such vacancy shall operate to annul this Declaration
or to revoke any existing agency created pursuant to the terms of
this Declaration. In the case of a vacancy, the Shareholders,
acting at any meeting of Shareholders held in accordance with
Section 10.2 hereof, or, to the extent permitted by the 1940 Act,
a majority of the Trustees continuing in office acting by written
instrument or instruments, may fill such vacancy, and any Trustee
so elected by the Trustees shall hold office as provided in this
Declaration.
2.5. Meetings. Meetings of the Trustees shall be held from time to time upon the call of the Chairman, if any, the President, the Secretary or any two Trustees. Regular meetings of the Trustees may be held without call or notice at a time and place fixed by the By-Laws or by resolution of the Trustees. Notice of any other meeting shall be mailed or otherwise given not less than 48 hours before the meeting but may be waived in writing by any Trustee either before or after such meeting. The attendance of a Trustee at a meeting shall constitute a waiver of notice of such meeting except where a Trustee attends a meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting has not been lawfully called or convened. The Trustees may act with or without a meeting. A quorum for all meetings of the Trustees shall be a majority of the Trustees. Unless provided otherwise in this Declaration, any action of the Trustees may be taken at a meeting by vote of a majority of the Trustees present (a quorum being present) or without a meeting by written consents of a majority of the Trustees.
Any committee of the Trustees, including an executive committee, if any, may act with or without a meeting. A quorum for all meetings of any such committee shall be a majority of the members thereof. Unless provided otherwise in this Declaration, any action of any such committee may be taken at a meeting by vote of a majority of the members present (a quorum being present) or without a meeting by written consent of a majority of the members.
With respect to actions of the Trustees and any committee of the Trustees, Trustees who are Interested Persons of the Trust
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within the meaning of Section 1.2 hereof or otherwise interested in any action to be taken may be counted for quorum purposes under this Section and shall be entitled to vote to the extent permitted by the 1940 Act.
All or any one or more Trustees may participate in a meeting of the Trustees or any committee thereof by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other and participation in a meeting pursuant to such communications systems shall constitute presence in person at such meeting.
2.6. Officers. The Trustees shall annually elect a President, a Secretary and a Treasurer and may elect a Chairman. The Trustees may elect or appoint or authorize the Chairman, if any, or President to appoint such other officers or agents with such powers as the Trustees may deem to be advisable. The Chairman and President shall be and the Secretary and Treasurer may, but need not, be a Trustee.
2.7. By-Laws. The Trustees may adopt and from time to time amend or repeal the By-Laws for the conduct of the business of the Trust.
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ARTICLE III
Powers of Trustees
3.1. General. The Trustees shall have exclusive and absolute control over the Trust Property and over the business of the Trust to the same extent as if the Trustees were the sole owners of the Trust Property and business in their own right, but with such powers of delegation as may be permitted by this Declaration. The Trustees may perform such acts as in their sole discretion are proper for conducting the business of the Trust. The enumeration of any specific power herein shall not be construed as limiting the aforesaid power. Such powers of the Trustees may be exercised without order of or resort to any court.
3.2. Investments. The Trustees shall have power, subject to the Fundamental Policies, to:
(a) conduct, operate and carry on the business of an investment company;
(b) subscribe for, invest in, reinvest in, purchase or otherwise acquire, hold, pledge, sell, assign, transfer, ex- change, distribute or otherwise deal in or dispose of nego- tiable or non-negotiable instruments, obligations, evidences of indebtedness, certificates of deposit or indebtedness, commercial paper, repurchase agreements, reverse repurchase agreements, options, futures contracts, options on futures contracts and other investments, including, without limita- tion, those issued, guaranteed or sponsored by any state, territory or possession of the United States and the District of Columbia and their political subdivisions, agencies and instrumentalities, or by the United States Government or its agencies or instrumentalities, or international instrumental- ities, or by any bank, savings institution, corporation or other business entity organized under the laws of the United States and, to the extent provided in the Prospectus and not prohibited by the Fundamental Policies, organized under foreign laws; and to exercise any and all rights, powers and privileges of ownership or interest in respect of any and all such investments of every kind and description, including, without limitation, the right to consent and otherwise act with respect thereto, with power to designate one or more persons, firms, associations or corporations to exercise any of said rights, powers and privileges in respect of any of said instruments; and the Trustees shall be deemed to have the foregoing powers with respect to any additional securi- ties in which the Trust may invest should the investment
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policies set forth in the Prospectus or the Fundamental Policies be amended.
The Trustees shall not be limited to investing in obligations maturing before the possible termination of the Trust, nor shall the Trustees be limited by any law limiting the investments which may be made by fiduciaries.
3.3. Legal Title. Legal Title to all the Trust Property shall be vested in the Trustees as joint tenants except that the Trustees shall have power to cause legal title to any Trust Property to be held by or in the name of one or more of the Trustees, or in the name of the Trust, or in the name of any other Person as nominee, on such terms as the Trustees may determine, provided that the interest of the Trust therein is appropriately protected.
The right, title and interest of the Trustees in the Trust Property shall vest automatically in each person who may hereafter become a Trustee upon his due election and qualification. Upon the resignation, removal or death of a Trustee he shall automat- ically cease to have any right, title or interest in any of the Trust Property, and the right, title and interest of such Trustee in the Trust Property shall vest automatically in the remaining Trustees. Such vesting and cessation of title shall be effective whether or not conveyancing documents have been executed and delivered.
3.4. Issuance and Repurchase of Securities. The Trustees shall have the power to issue, sell, repurchase, redeem, retire, cancel, acquire, hold, resell, reissue, dispose of, transfer, and otherwise deal in, Shares, including shares in fractional denominations, and, subject to the more detailed provisions set forth in Articles VIII and IX, to apply to any such repurchase, redemption, retirement, cancellation or acquisition of Shares any funds or property of the Trust whether capital or surplus or otherwise, to the full extent now or hereafter permitted by the laws of the Commonwealth of Massachusetts governing business corporations.
3.5. Borrow Money. Subject to the Fundamental Policies, the Trustees shall have power to borrow money or otherwise obtain credit and to secure the same by mortgaging, pledging or otherwise subjecting as security the assets of the Trust, including the lending of portfolio securities, and to endorse, guarantee, or undertake the performance of any obligation, contract or engagement of any other person, firm, association or corporation.
3.6. Delegation; Committees. The Trustees shall have power, consistent with their continuing exclusive authority over the
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management of the Trust and the Trust Property, to delegate from time to time to such of their number or to officers, employees or agents of the Trust the doing of such things and the execution of such instruments either in the name of the Trust or the names of the Trustees or otherwise as the Trustees may deem expedient, to the same extent as such delegation is permitted to directors of a Massachusetts business corporation and is permitted by the 1940 Act.
3.7. Collection and Payment. The Trustees shall have power to collect all property due to the Trust; to pay all claims including taxes, against the Trust Property; to prosecute, defend, compromise or abandon any claim relating to the Trust Property; to foreclose any security interest securing any obligations, by virtue of which any property is owed to the Trust; and to enter into releases, agreements and other instruments.
3.8. Expenses. The Trustees shall have power to incur and pay any expenses which in the opinion of the Trustees are necessary or incidental to carry out any of the purposes of this Declaration, and to pay reasonable compensation from the funds of the Trust to themselves as Trustees. The Trustees shall fix the compensation of all officers, employees and Trustees. The Trustees may pay themselves such compensation for special services, including legal, underwriting, syndicating and brokerage services, as they in good faith may deem reasonable and reimbursement for expenses reasonably incurred by themselves on behalf of the Trust.
3.9. Miscellaneous Powers. The Trustees shall have the power to: (a) employ or contract with such Persons as the Trustees may deem desirable for the transaction of the business of the Trust; (b) enter into joint ventures, partnerships and any other combinations or associations; (c) purchase, and pay for out of Trust Property, insurance policies insuring the Shareholders, Trustees, officers, employees, agents, investment advisers, distributors, selected dealers or independent contractors of the Trust against all claims arising by reason of holding any such position or by reason of any action taken or omitted by any such Person in such capacity, whether or not constituting negligence, or whether or not the Trust would have the power to indemnify such Person against such liability; (d) establish pension, profit- sharing, share purchase, and other retirement, incentive and benefit plans for any Trustees, officers, employees and agents of the Trust; (e) make donations, irrespective of benefit to the Trust, for charitable, religious, educational, scientific, civic or similar purposes; (f) to the extent permitted by law, indemnify any Person with whom the Trust has dealings, including any advisor, administrator, manager, distributor and selected dealers, to such extent as the Trustees shall determine; (g) guarantee
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indebtedness or contractual obligations of others; (h) determine and change the fiscal year of the Trust and the method in which its accounts shall be kept; and (i) adopt a seal for the Trust, but the absence of such seal shall not impair the validity of any instrument executed on behalf of the Trust.
3.10. Further Powers. The Trustees shall have power to conduct the business of the Trust and carry on its operations in any and all of its branches and maintain offices both within and without the Commonwealth of Massachusetts, in any and all states of the United States of America, in the District of Columbia, and in any and all commonwealths, territories, dependencies, colonies, possessions, agencies or instrumentalities of the United States of America and of foreign governments, and to do all such other things and execute all such instruments as they deem necessary, proper or desirable in order to promote the interests of the Trust although such things are not herein specifically mentioned. Any determination as to what is in the interests of the Trust: made by the Trustees in good faith shall be conclusive. In construing the provisions of this Declaration, the presumption shall be in favor of a grant of power to the Trustees. The Trustees will not be required to obtain any court order to deal with the Trust Property.
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ARTICLE IV
Management and Distribution Arrangements
4.1. Management Arrangements. Subject to a Majority Shareholder Vote, as required by the 1940 Act, the Trustees may in their discretion from time to time enter into advisory or management contracts whereby the other party to such contract shall undertake to furnish the Trustees such advisory and management services as the Trustees shall from time to time consider desirable and all upon such terms and conditions as the Trustees may in their discretion determine. Notwithstanding any provisions of this Declaration, the Trustees may authorize any advisor or manager (subject to such general or specific instructions as the Trustees may from time to time adopt) to effect purchases, sales, loans or exchanges of portfolio securities of the Trust on behalf of the Trustees or may authorize any officer, employee or Trustee to effect such purchases, sales, loans or exchanges pursuant to recommendations of any such advisor or manager (and all without further action by the Trustees). Any such purchases, sales, loans and exchanges shall be deemed to have been authorized by all of the Trustees.
4.2. Distribution Arrangements. The Trustees may in their discretion from time to time enter into a contract, providing for the sale of the Shares of the Trust to net the Trust not less than the par value per share, whereby the Trust may either agree to sell the Shares to the other party to the contract or appoint such other party its sales agent for such Shares. In either case, the contract shall be on such terms and conditions as the Trustees may in their discretion determine not inconsistent with the provisions of this Article IV or the By-Laws; and such contract may also provide for the repurchase or sale of Shares by such other party as principal or as agent of the Trust and may provide that such other party may enter into selected dealer agreements with registered securities dealers to further the purpose of the distribution or repurchase of the Shares.
4.3. Parties to Contract. Any contract of the character described in Section 4.1 and 4.2 of this Article IV or in Article VII hereof may be entered into with any corporation, firm, trust or association, although one or more of the Trustees or officers of the Trust may be an officer, director, Trustee, shareholder, or member of such other party to the contract, and no such contract shall be invalidated or rendered voidable by reason of the existence of any such relationship, nor shall any person holding such relationship be liable merely by reason of such relationship for any loss or expense to the Trust under or by reason of said contract or accountable for any profit realized directly or
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indirectly therefrom, provided that the contract when entered into was reasonable and fair and not inconsistent with the provisions of this Article IV or the By-Laws. The same person (including a firm, corporation, trust, or association) may be the other party to contracts entered into pursuant to Sections 4.1 and 4.2 above or Article VII, and any individual may be financially interested or otherwise affiliated with persons who are parties to any or all of the contracts mentioned in this Section 4.3.
4.4. Provisions and Amendments. Any contract entered into pursuant to Section 4.1 and 4.2 of this Article IV shall be consistent with and subject to the requirements of Section 15 of the 1940 Act with respect to its continuance in effect, its termination, and the method of authorization and approval of such contract or renewal thereof, and no amendment to any contract, entered into pursuant to Section 4.1 shall be effective unless assented to by a Majority Shareholder Vote.
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ARTICLE V
Limitations of Liability of Shareholders,
Trustees and Others
5.1. No Personal Liability of Shareholders, Trustees, etc. No Shareholder shall be subject to any personal liability whatsoever to any Person in connection with Trust Property or the acts, obligations or affairs of the Trust. No Trustee, officer, employee or agent of the Trust shall be subject to any personal liability whatsoever to any Person, other than the Trust or its Shareholders, in connection with Trust Property or the affairs of the Trust, save only that arising from his bad faith, willful misfeasance, gross negligence or reckless disregard of his duty to such Person; and all such Persons shall look solely to the Trust Property for satisfaction of claims of any nature arising in connection with the affairs of the Trust. If any Shareholder, Trustee, officer, employee, or agent, as such, of the Trust, is made a party to any suit or proceeding to enforce any such liability, he shall not on account thereof, be held to any personal liability. The Trust shall indemnify and hold each Shareholder harmless from and against all claims and liabilities, to which such Shareholder may become subject by reason of his being or having been a Shareholder, and shall reimburse such Shareholder for all legal and other expenses reasonably incurred by him in connection with any such claim or liability. The rights accruing to a Shareholder under this Section 5.1 shall not exclude any other right to which such Shareholder may be lawfully entitled, nor shall anything herein contained restrict the right of the Trust to indemnify or reimburse a Shareholder in any appropriate situation even though not specifically provided herein.
5.2. Non-Liability of Trustees, etc. No Trustee, officer, employee or agent of the Trust shall be liable to the Trust, its Shareholders, or to any Shareholder, Trustee, officer, employee, or agent thereof for any action or failure to act (including without limitation the failure to compel in any way any former or acting Trustee to redress any breach of trust) except for his own bad faith, willful misfeasance, gross negligence or reckless disregard of his duties.
5.3. Mandatory Indemnification. The Trust shall indemnify each of its Trustees, officers, employees, and agents (including persons who serve at its request as directors, officers or trustees of another organization in which it has any interest, as a shareholder, creditor or otherwise) against all liabilities and expenses (including amounts paid in satisfaction of judgments, in compromise, as fines and penalties, and as counsel fees)
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reasonably incurred by him in connection with the defense or disposition of any action, suit or other proceeding, whether civil or criminal, in which he may be involved or with which he may be threatened, while in office or thereafter, by reason of his being or having been such a Trustee, officer, employee or agent, except with respect to any matter as to which he shall have been adjudicated to have acted in bad faith, willful misfeasance, gross negligence or reckless disregard of his duties; provided, however, that as to any matter disposed of by a compromise payment by such person, pursuant to a consent decree or otherwise, no indemnification either for said payment or for any other expenses shall be provided unless the Trust shall have received a written opinion from independent legal counsel approved by the Trustees to the effect that if either the matter of willful misfeasance, gross negligence or reckless disregard of duty, or the matter of good faith and reasonable belief as to the best interests of the Trust, had been adjudicated, it would have been adjudicated in favor of such person. The rights accruing to any Person under these provisions shall not exclude any other right to which he may be lawfully entitled; provided that no Person may satisfy any right of indemnity or reimbursement granted herein or in Section 5.1 or to which he may be otherwise entitled except out of the property of the Trust, and no Shareholder shall be personally liable to any Person with respect to any claim for indemnity or reimbursement or otherwise. The Trustees may make advance payments in connection with indemnification under this Section 5.3, provided that the indemnified person shall have given a written undertaking to reimburse the Trust in the event it is subsequently determined that he is not entitled to such indemnification.
5.4. No Bond Required of Trustees. No Trustee shall, as such, be obligated to give any bond or surety or other security for the performance of any of his duties hereunder.
5.5. No Duty of Investigation; Notice in Trust Instruments, etc. No purchaser, lender, transfer agent or other person dealing with the Trustees or any officer, employee or agent of the Trust shall be bound to make any inquiry concerning the validity of any transaction purporting to be made by the Trustees or by said officer, employee or agent or be liable for the application of money or property paid, loaned, or delivered to or on the order of the Trustees or of said officer, employee or agent. Every obligation, contract, instrument, certificate, Share, other security of the Trust or undertaking, and every other act or thing whatsoever executed in connection with the Trust shall be conclusively taken to have been executed or done by the executors thereof only in their capacity as Trustees under this Declaration or in their capacity as officers, employees or agents of the Trust. Every written obligation, contract, instrument, certificate, Share, other security of the Trust or undertaking
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made or issued by the Trustees or by any officers, employees or agents of the Trust, in their capacity as such, shall contain an appropriate recital to the effect that the Shareholders, Trustees, officers, employees and agents of the Trust shall not personally be bound by or liable thereunder, nor shall resort be had to their private property for the satisfaction of any obligation or claim thereunder, and appropriate references shall be made herein to the Declaration, and may contain any further recital which they may deem appropriate, but the omission of such recital shall not operate to impose personal liability on any of the Trustees, Shareholders, officers, employees or agents of the Trust. The Trustees may maintain insurance for the protection of the Trust Property, its Shareholders, Trustees, officers, employees and agents in such amount as the Trustees shall deem adequate to cover possible tort liability, and such other insurance as the Trustees in their sole judgment shall deem advisable.
5.6. Reliance on Experts, etc. Each Trustee and officer or employee of the Trust shall, in the performance of his duties, be fully and completely justified and protected with regard to any act or any failure to act resulting from reliance in good faith upon the books of account or other records of the Trust, upon an opinion of counsel, or upon reports made to the Trust by any of its officers or employees or by any investment adviser, distributor, selected dealers, accountants, appraisers or other experts or consultants elected with reasonable care by the Trustees, officers or employees of the Trust, regardless of whether such counsel or expert may also be a Trustee.
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ARTICLE VI
Shares of Beneficial Interest
6.1. Beneficial Interest. The interest of the beneficiaries hereunder shall be divided into transferable shares of beneficial interest, all of one class, with par value $0.10 per share. The number of such shares of beneficial interest authorized hereunder is unlimited. All Shares issued hereunder including, without limitation, Shares issued in connection with a dividend in Shares or a split of Shares, shall be fully paid and nonassessable.
6.2. Rights of Shareholders. The ownership of the Trust Property of every description and the right to conduct any business hereinbefore described are vested exclusively in the Trustees, and the Shareholders shall have no interest therein other than the beneficial interest conferred by their Shares, and they shall have no right to call for any partition or division of any property, profits, rights or interests of the Trust nor can they be called upon to share or assume any losses of the Trust or suffer an assessment of any kind by virtue of their ownership of Shares. The Shares shall be personal property giving only the rights in this Declaration specifically set forth. The Shares shall not entitle the holder to preference, preemptive, appraisal, conversion or exchange rights (except for rights of appraisal specified in Section 11.4).
6.3. Trust Only. It is the intention of the Trustees to create only the relationship of Trustee and beneficiary between the Trustees and each Shareholder from time to time. It is not the intention of the Trustees to create a general Partnership, limited partnership, joint stock association, corporation, bailment or any form of legal relationship other than a trust. Nothing in this Declaration shall be construed to make the Shareholders, either by themselves or with the Trustees, partners or members of a joint stock association.
6.4. Issuance of Shares. The Trustees, in their discretion, may from time to time without a vote of the Shareholders issue Shares, in addition to the then issued and outstanding Shares and Shares held in the treasury, to such party or parties and for such amount not less than par value and type of consideration, includ- ing cash or property, at such time or times, and on such terms as the Trustees may deem best, and may in such manner acquire other assets (including the acquisition of assets subject to, and in connection with the assumption of, liabilities) and businesses. In connection with any issuance of Shares, the Trustees may issue fractional Shares. The Trustees may from time to time divide or combine the Shares into a greater or lesser number without thereby
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changing the proportionate beneficial interests in the Trust. Contributions to the Trust may be accepted for, and Shares shall be redeemed as, whole Shares and/or 1/1,000ths of a Share or multiples thereof.
6.5. Register of Shares. A register shall be kept at the Trust or a transfer agent duly appointed by the Trustees under the direction of the Trustees which shall contain the names and addresses of the Shareholders and the number of Shares held by them respectively and a record of all transfers thereof. Such register shall be conclusive as to who are the holders of the Shares and who shall be entitled to receive dividends or distributions or otherwise to exercise or enjoy the rights of Shareholders. No Shareholder shall be entitled to receive payment of any dividend or distribution, nor to have notice given to him as herein provided, until he has given his address to a transfer agent or such other officer or agent of the Trustees as shall keep the said register for entry thereon. It is not contemplated that certificates will be issued for the Shares; however, the Trustees, in their discretion, may authorize the issuance of share certificates and promulgate appropriate rules and regulations as to their use.
6.6. Transfer Agent and Registrar. The Trustee shall have power to employ a transfer agent or transfer agents, and a registrar or registrars. The transfer agent or transfer agents may keep the said register and record therein the original issues and transfers, if any, of the said Shares. Any such transfer agent and registrars shall perform the duties usually performed by transfer agents and registrars of certificates of stock in a corporation, except as modified by the Trustees.
6.7. Transfer of Shares. Shares shall be transferable on the records of the Trust only by the record holder thereof or by his agent thereto duly authorized in writing, upon delivery to the Trustees or a transfer agent of the Trust of a duly executed instrument of transfer, together with such evidence of the genuineness of each such execution and authorization and of other matters as may reasonably be required. Upon such delivery the transfer shall be recorded on the register of the Trust. Until such record is made, the Shareholder of record shall be deemed to be the holder of such Shares for all purposes hereof and neither the Trustees nor any transfer agent or registrar nor any officer, employee or agent of the Trust shall be affected by any notice of the proposed transfer.
Any person becoming entitled to any Shares in consequence of the death, bankruptcy, or incompetence of any Shareholder, or otherwise by operation of law, shall be recorded on the register of Shares as the holder of such Shares upon production of the
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proper evidence thereof to the Trustees or a transfer agent of the Trust, but until such record is made, the Shareholder of record shall be deemed to be the holder of such Shares for all purposes hereof and neither the Trustees nor any transfer agent or registrar nor any officer or agent of the Trust shall be affected by any notice of such death, bankruptcy or incompetence, or other operation of law.
6.8. Notices. Any and all notices to which any Shareholder hereunder may be entitled and any and all communications shall be deemed duly served or given if mailed, postage prepaid, addressed to any Shareholder of record at his last known address as recorded on the register of the Trust.
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ARTICLE VII
Custodian
7.1. Appointment and Duties. The Trustees shall at all times employ one or more custodians, meeting the qualifications for custodians for portfolio securities of investment companies contained in the 1940 Act, as custodian with authority as its agent, but subject to such restrictions, limitations and other requirements, if any, as may be contained in the By-Laws of the Trust and the 1940 Act:
(1) to hold the securities owned by the Trust and deliver the same upon written order;
(2) to receive and receipt for any moneys due to the Trust and deposit the same in its own banking department or elsewhere as the Trustees may direct;
(3) to disburse such funds upon orders or vouchers;
(4) if authorized by the Trustees, to keep the books and accounts of the Trust and furnish clerical and accounting services; and
(5) if authorized to do so by the Trustees, to compute the net income of the Trust;
all upon such basis of compensation as may be agreed upon between the Trustees and the custodian. If so directed by a Majority Shareholder Vote, the custodian shall deliver and pay over all property of the Trust held by it as specified in such vote.
The Trustees may also authorize the custodian to employ one or more sub-custodians from time to time to perform such of the acts and services of the custodian and upon such terms and conditions, as may be agreed upon between the custodian and such sub-custodian and approved by the Trustees, provided that in every case such sub-custodian shall meet the qualifications for custodians contained in the 1940 Act.
7.2. Central Certificate System. Subject to such rules, regulations and orders as the Commission may adopt, the Trustees may direct the custodian to deposit all or any part of the securities owned by the Trust in a system for the central handling of securities established by a national securities exchange or a national securities association registered with the Commission under the Securities Exchange Act of 1934, or such other person as may be permitted by the Commission, or otherwise in accordance
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with the 1940 Act, pursuant to which system all securities of any particular class or series of any issuer deposited within the system are treated as fungible and may be transferred or pledged by bookkeeping entry without physical delivery of such securities, provided that all such deposits shall be subject to withdrawal only upon the order of the Trust.
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ARTICLE VIII
Redemption
8.1. Redemptions. All outstanding Shares may be redeemed at
the option of the holders thereof, upon and subject to the terms
and conditions provided in this Article VIII. The Trust shall,
upon application of any Shareholder or pursuant to authorization
from any Shareholder, redeem or repurchase from such Shareholder
outstanding Shares for an amount per share determined by the
application of a formula adopted for such purpose by resolution of
the Trustees (which formula shall be consistent with the 1940 Act,
and the rules and regulations promulgated thereunder); provided
that (a) such amount per share shall not exceed the cash
equivalent of the proportionate interest of each share in the
assets of the Trust at the time of the purchase or redemption and
(b) if so authorized by the Trustees, the Trust may, at any time
and from time to time, charge fees for effecting such redemption,
at such rates as the Trustees may establish, as and to the extent
permitted under the 1940 Act, and the rules and regulations
promulgated thereunder, and may, at any time and from time to
time, pursuant to such Act and such rules and regulations, suspend
such right of redemption. The procedures for effecting redemption
shall be as set forth in the Prospectus from time to time.
8.2. Redemption of Shares; Disclosure of Holding. If the Trustees shall, at any time and in good faith, be of the opinion that direct or indirect ownership of Shares or other securities of the Trust has or may become concentrated in any person to an extent which would disqualify the Trust as a regulated investment company under the Internal Revenue Code, then the Trustees shall have the power by lot or other means deemed equitable by them (i) to call for redemption a number, or principal amount, of Shares or other securities of the Trust sufficient, in the opinion of the Trustees, to maintain or bring the direct or indirect ownership of Shares or other securities of the Trust into conformity with the requirements for such qualification and (ii) to refuse to transfer or issue Shares or other securities of the Trust to any Person whose acquisition of the Shares or other securities of the Trust in question would in the opinion of the Trustees result in such disqualification. The redemption shall be effected at a redemption price determined in accordance with Section 8.1.
The holders of Shares or other securities of the Trust shall upon demand disclose to the Trustees in writing such information with respect to direct and indirect ownership of Shares or other securities of the Trust as the Trustees deem necessary to comply with the provisions of the Internal Revenue Code, or to comply with the requirements of any other taxing authority.
8.3. Redemptions of Accounts of Less than $1,000. Due to the relatively high cost of maintaining investment accounts of less than $1,000, the Trustees shall have the power to redeem shares at a redemption price determined in accordance with Section 8.1 if at any time the total investment in such account does not have a value of at least $1,000; provided, however, that the Trustees may not exercise such power if the Prospectus does not describe such power. In the event the Trustees determine to exercise their power to redeem Shares provided in this Section 8.3, Shareholders shall be notified that the value of their account is less than $1,000 and allowed 60 days to make an additional investment before redemption is processed.
22.
ARTICLE IX
Determination of Net Asset Value,
Net Income and Distributions
9.1. Net Asset Value. The net asset value of each outstanding Share of the Trust shall be determined at such time or times on such days as the Trustees may determine, in accordance with the 1940 Act. The method of determination of net asset value shall be determined by the Trustees and shall be as set forth in the Prospectus. The power and duty to make the daily calculations may be delegated by the Trustees to the adviser, administrator, manager, custodian, transfer agent or such other person as the Trustees may determine. The Trustees may suspend the daily determination of net asset value to the extent permitted by the 1940 Act.
9.2. Distributions to Shareholders. The Trustees shall from time to time distribute ratably among the Shareholders such proportion of the net profits, surplus (including paid-in surplus), capital, or assets held by the Trustees as they may deem proper. Such distribution way be made in cash or property (including without limitation any type of obligations of the Trust or any assets thereof), and the Trustees may distribute ratably among the Shareholders additional Shares issuable hereunder in such manner, at such times, and on such terms as the Trustees may deem proper. Such distributions may be among the Shareholders of record at the time of declaring a distribution or among the Shareholders of record at such later date as the Trustees shall determine. The Trustees may always retain from the net profits such amount as they may deem necessary to pay the debts or expenses of the Trust or to meet obligations of the Trust, or as they may deem desirable to use in the conduct of its affairs or to retain for future requirements or extensions of the business. The Trustees may adopt and offer to Shareholders such dividend reinvestment plans, cash dividend payout plans or related plans as the Trustees shall deem appropriate.
Inasmuch as the computation of net income and gains for Federal income tax purposes may vary from the computation thereof on the books, the above provisions shall be interpreted to give the Trustees the power in their discretion to distribute for any fiscal year as ordinary dividends and as capital gains distributions, respectively, additional amounts sufficient to enable the Trust to avoid or reduce liability for taxes.
9.3. Power to Modify Foregoing Procedures. Notwithstanding any of the foregoing provisions of this Article IX, the Trustees may prescribe, in their absolute discretion, such other bases and
23.
times for determining the per share net asset value of the Trust's Shares or net income, or the declaration and payment of dividends and distributions as they may deem necessary or desirable or to enable the Trust to comply with any provision of the 1940 Act, or any rule or regulation thereunder, including any rule or regulation adopted pursuant to Section 22 of the 1940 Act by the Commission or any securities association registered under the Securities Exchange Act of 1934, or any order of exemption issued by said Commission, all as in effect now or hereafter amended or modified.
24.
ARTICLE X
Shareholders
10.1. Voting Powers. The Shareholders shall have power to
vote (i) for the removal of Trustees as provided in Section 2.3,
(ii) with respect to any advisory or management contract as
provided in Section 4.1, (iii) with respect to the amendment of
this Declaration as provided in Section 11.3, (iv) with respect to
such additional matters relating to the Trust as may be required
or authorized by the 1940 Act, the laws of the Commonwealth of
Massachusetts or other applicable law or by this Declaration or
the By-Laws of the Trust, and (v) with respect to such additional
matters relating to the Trust as may be properly submitted for
Shareholder approval.
10.2. Meetings of Shareholders. Special meetings of the Shareholders may be called at any time by a majority of the Trustees and shall be called by any Trustee upon written request of Shareholders holding in the aggregate not less than 10% of the outstanding Shares having voting rights, such request specifying the purpose or purposes for which such meeting is to be called. Any such meeting shall be held within or without the Commonwealth of Massachusetts on such day and at such time as the Trustees shall designate. The holders of one-third of the outstanding Shares present in person or by proxy shall constitute a quorum for the transaction of any business, except as may otherwise be required by the 1940 Act, the laws of the Commonwealth of Massachusetts or other applicable law or by this Declaration or the By-Laws of the Trust. If a quorum is present at a meeting, the affirmative vote of a majority of the Shares represented at the meeting constitutes the action of the Shareholders, unless the 1940 Act, the laws of the Commonwealth of Massachusetts or other applicable law, the Declaration or the By-Laws of the Trust requires a greater number of affirmative votes.
10.3. Notice of Meetings. Notice of all meetings of the Shareholders, stating the time, place and purposes of the meeting, shall be given by the Trustees by mail to each Shareholder at his registered address, mailed at least 10 days and not more than 60 days before the meeting. Only the business stated in the notice of the meeting shall be considered at such meeting. Any adjourned meeting may be held as adjourned without further notice.
10.4. Record Date for Meetings. For the purpose of determining the Shareholders who are entitled to notice of and to vote at any meeting, or to participate in any distribution, or for the purposes of any other action, the Trustees may from time to time close the transfer books for such period, not exceeding 30
25.
days, as the Trustees may determine; or without closing the
transfer books the Trustees may fix a date not more than 60 days
prior to the date of any meeting of Shareholders or daily
dividends or other action as a record date for the determination
of the Persons to be treated as Shareholders of record for such
purposes, except for dividend payments which shall be governed by
Section 9.2 hereof.
10.5. Proxies, etc. At any meeting of Shareholders, any holder of Shares entitled to vote thereat may vote by proxy, provided that no proxy shall be voted at any meeting unless it shall have been placed on file with the Secretary, or with such other officer or agent of the Trust as the Secretary may direct, for verification prior to the time at which such vote shall be taken. Pursuant to a resoluton of a majority of the Trustees, proxies may be solicited in the name of one or more Trustees or one or more of the officers of the Trust. Only Shareholders of record shall be entitled to vote. Each full Share shall be entitled to one vote and fractional Shares shall be entitled to a vote of such fraction. When any Share is held jointly by several persons, any one of them may vote at any meeting in person or by proxy in respect of such Share, but if more than one of them shall be present at such meeting in person or by proxy, and such joint owners or their proxies so present disagree as to any vote to be cast, such vote shall not be received in respect of such Share. A proxy purporting to be executed by or on behalf of a Shareholder shall be deemed valid unless challenged at or prior to its exercise, and the burden of proving invalidity shall rest on the challenger. If the holder of any such Share is a minor or a person of unsound mind, and subject to guardianship or to the legal control of any other person as regards the charge or management of such Share, he may vote by his guardian or such other person appointed or having such control, and such vote may be given in person or by proxy.
10.6. Reports. The Trustees shall cause to be prepared at least annually a report of operations containing a balance sheet and statement of income and undistributed income of the Trust prepared in conformity with generally accepted accounting principles and an opinion of an independent public accountant on such financial statements. Copies of such reports shall be mailed to all Shareholders of record within the time required by the 1940 Act, and in any event within a reasonable period preceding the annual meeting of Shareholders. The Trustees shall, in addition, furnish to the Shareholders at least semi-annually interim reports containing an unaudited balance sheet of the Trust as of the end of such period and an unaudited statement of income and surplus for the period from the beginning of the current fiscal year to the end of such period.
26.
10.7. Inspection of Records. The records of the Trust shall be open to inspection by Shareholders to the same extent as is permitted shareholders of a Massachusetts business corporation.
10.8. Shareholder Action by Written Consent. Any action which may be taken by Shareholders may be taken without a meeting if a majority of Shareholders entitled to vote on the matter (or such larger proportion thereof as shall be required by any express provision of this Declaration) consent to the action in writing and the written consents are filed with the records of the meetings of Shareholders. Such consent shall be treated for all purposes as a vote taken at a meeting of Shareholders.
-27.
ARTICLE XI
Duration; Termination of Trust;
Amendment; Mergers, Etc.
11.1. Duration . Subject to possible termination in accordance with the provisions of Section 11.2 hereof, the Trust created hereby shall continue until the expiration of 20 years after the death of the last survivor of the initial Trustees named herein and the following named persons:
Name Address Date of Birth
Lindsay Rider MacKinnon Mountain Farm Road January 27, 1981
Tuxedo Park, N.Y. 10987
Eric Alfred Pietrzak 95 Corona Avenue January 29, 1961
Pelham, N.Y. 10803
Angus Washburn Smith 12 Masterton Road October 15, 1982
Bronxville, N.Y. 10708
Ashley Chapin Smith 12 Masterton Road May 20, 1972
Bronxville, N.Y. 10708
Elisabeth Lyon-Smith 12 Masterton Road October 15, 1982
Bronxville, N.Y. 10708
Thomas Ervin Smith 12 Masterton Road November 14, 1973
Bronxville, N.Y. 10708
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11.2. Termination of Trust.
(a) The Trust may be terminated by the affirmative vote of the holders of not less than two-thirds of the Shares at any meeting of Shareholders or by an instrument in writing, without a meeting, signed by a majority of the Trustees and consented to by the-holders of not less than two-thirds of such Shares. Upon the termination of the Trust,
(i) The Trust shall carry on no business except for the purpose of winding up its affairs.
(ii) The Trustees shall proceed to wind up the affairs of the Trust and all of the powers of the Trustees under this Declaration shall continue until the affairs of the Trust shall have been wound up, including the power to fulfill or
28.
discharge the contracts of the Trust, collect its assets, sell, convey, assign, exchange, transfer or otherwise dispose of all or any part of the remaining Trust Property to one or more persons at public or private sale for consideration which may consist in whole or in part of cash, securities or other property of any kind, discharge or pay its liabilities, and do all other acts appropriate to liquidate its business; provided that any sale, conveyance, assignment, exchange, transfer or other disposition of all or substantially all the Trust Property shall require approval of the principal terms of the transaction and the nature and amount of the consideration by vote or consent of the holders of a majority of the Shares entitled to vote.
(iii) After paying or adequately providing far the payment of all liabilities, and upon receipt of such releases, indemnities and refunding agreements, as they deem necessary for their protection, the Trustees may distribute the remaining Trust Property, in cash or in kind or partly each, among the Shareholders according to their respective rights.
(b) After termination of the Trust and distribution to the Shareholders as herein provided, a majority of the Trustees shall execute and lodge among the records of the Trust an instrument in writing setting forth the fact of such termination, and the Trustees shall thereupon be discharged from all further liabilities and-duties hereunder, and the rights and interests of all Shareholders shall thereupon cease.
11.3. Amendment Procedure.
(a) This Declaration may be amended by the affirmative vote of the holders of not less than a majority of the Shares at any meeting of Shareholders or by an instrument in writing, with- out a meeting, signed by a majority of the Trustees and consented to by the holders of not less than a majority of such Shares. The Trustees may also amend this Declaration without the vote or con- sent of Shareholders if they deem it necessary to conform this Declaration to the requirements of applicable federal laws or reg- ulations or the requirements of the regulated investment company provisions of the Internal Revenue Code, but the Trustees shall not be liable for failing so to do.
(b) No amendment may be made, under-Section 11.3 (a) above, which would change any rights with respect to any Shares of the Trust by reducing ,he amount payable thereon upon liquidation of the Trust or by diminishing or eliminating any voting rights pertaining thereto, except with the vote or consent of the holders of two-thirds of the Shares. Nothing contained in this
29.
Declaration shall permit the amendment of this Declaration to impair the exemption from personal liability of the Shareholders, Trustees, officers, employees and agents of the Trust or to permit assessments upon Shareholders.
(c) A certification in recordable form signed by a majority of the Trustees setting forth an amendment and reciting that it was duly adopted by the Shareholders or by the Trustees as aforesaid or a copy of the Declaration, as amended, in recordable form,.and executed by a majority of the Trustees, shall be conclusive evidence of such amendment when lodged among the records of the Trust.
Notwithstanding any other provision hereof, until such time as a Registration Statement under the Securities Act of 1933, as amended, covering the first public offering of Shares of the Trust shall have become effective, this Declaration may be terminated or amended in any respect by the affirmative vote of a majority of the Trustees or by an instrument signed by a majority of the Trustees.
11.4. Merger, Consolidation and Sale of Assets. The Trust may merge or consolidate with any other corporation, association, trust or other organization or may sell, lease or exchange all or substantially all of the Trust Property, including its good will, upon such terms and conditions and for such consideration when and as authorized at any meeting of Shareholders called for the pur- pose by the affirmative vote of the holders of not less than two- thirds of the Shares, or by an instrument or instruments in writ- ing without meeting, consented to by the holders of not less than two-thirds of such Shares, and any such merger, consolidation, sale, lease or exchange shall be deemed for all purposes to have been accomplished under and pursuant to the statutes of the Com- monwealth of Massachusetts. In respect of any such merger, con- solidation, sale or exchange of assets, any Shareholder shall be entitled to rights of appraisal of his Shares to the same extent as a shareholder of a Massachusetts business corporation in respect of a merger, consolidation, sale or exchange of assets of a Massachusetts business corporation, and such rights shall be his exclusive remedy in respect of his dissent from any such action.
11.5. Incorporation. With the approval of the holders of a majority of the Shares, the Trustees may cause to be organized or assist in organizing a corporation or corporations under the laws of any jurisdiction or any other trust, partnership, association or other organization to take over all of the Trust Property or to carry on any business in which the Trust shall directly or indi- rectly have any interest, and to sell, convey and transfer the Trust Property to any such corporation, trust, association or organization in exchange for the Shares or securities thereof or
30.
otherwise, and to lend money to, subscribe for the Shares or securities of, and enter into any contracts with any such corpo- ration, trust, partnership, association or organization, or any corporation, partnership, trust, association or organization in which the Trust holds or is about to acquire shares or any other interest. The Trustees may also cause merger or consolidation between the Trust or any successor thereto and any such corpora- tion, trust, partnership, association or other organization if and to the extent permitted by law, as provided under the law then in effect. Nothing contained herein shall be construed as requiring approval of Shareholders for the Trustees to organize or assist in organizing one or more corporations, trusts, partnerships, associ- ations or other organizations and selling, conveying or transfer- ring a portion of the Trust Property to such organizations or entities.
31.
ARTICLE XII
Miscellaneous
12.1. Filing. This Declaration and any amendment hereto shall be filed in the office of the Secretary of the Commonwealth of Massachusetts and in such other places as may be required under the-laws of Massachusetts and may also be filed or recorded in such other places as the Trustees deem appropriate. Each amend- ment so filed shall be accompanied by a certificate signed and acknowleged by a Trustee stating that such action was duly taken in a manner provided herein, and unless such amendment or such certificate sets forth some later time for the effectiveness of such amendment, such amendment shall be effective upon its filing. A restated Declaration, containing the original Declaration and all amendments theretofore made, may be executed from time to time by a majority of the Trustees and shall, upon filing with the Secretary of the Commonwealth of Massachusetts, be conclusive evidence of all amendments contained therein and may thereafter be referred to in lieu of the original Declaration and the various amendments thereto.
12.2. Resident Agent. The Trust shall maintain a resident agent in the Commonwealth of Massachusetts, which agent shall initially be CT Corporation System, 12 Oliver Street, Boston, Massachusetts 02109. The Trustees may designate a successor resident agent, provided, however, that such appointment shall not become effective until written notice thereof is delivered to the office of the Secretary of the Commonwealth.
12.3. Governing Law. This Declaration is executed by the Trustees and delivered in the Commonwealth of Massachusetts and with reference to the laws thereof, and the rights of all parties and the validity amd construction of every provision hereof shall be subject to and construed according to the laws of said State and reference shall be specifically made to the business corporation law of the Commonwealth of Massachusetts as to the construction of matters not specifically covered herein or as to which an ambiguity exists.
12.4. Counterparts. This Declaration may be simultaneously executed in several counterparts, each of which shall be deemed to be an original, and such counterparts, together, shall constitute one and the same instrument, which shall be sufficiently evidenced by any such original counterpart.
12.5. Reliance by Third Parties. Any certificate executed by an individual who, according to the records of the Trust, or of any recording office in which this Declaration may be recorded,
32.
appears to be a Trustee hereunder, certifying to: (a) the number or identity of Trustees or Shareholders, (b) the due authorization of the execution of any instrument or writing, (c) the form of any vote passed at a meeting of Trustees or Shareholders, (d) the fact that the number of Trustees or Shareholders present at any meeting or executing any written instrument satisfies the requirements of this Declaration, (e) the form of any By-Laws adopted by or the identity of any officers elected by the Trustees, or (f) the existence of any fact or facts which in any manner relate to the affairs of the Trust, shall be conclusive evidence as to the matters so certified in favor of any person dealing with the Trustees and their successors.
12.6. Provisions in Conflict With Law or Regulations.
(a) The provisions of this Declaration are severable, and if the Trustees shall determine, with the advice of counsel, that any of such provisions is in conflict with the 1940 Act, the regulated investment company provisions of the Internal Revenue Code, the laws of the Commonwealth of Massachusetts or with other applicable laws and regulations, the conflicting provision shall be deemed never to have constituted a part of this Declaration; provided, however, that such determination shall not affect any of the remaining provisions of this Declaration or Render invalid or improper any action taken or omitted prior to such determination.
(b) If any provision of this Declaration shall be held invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall attach only to such provision in such jurisdiction and shall not in any manner affect such provision in any other jurisdiction or any other provision of this Declaration in any jurisdiction.
33.
IN WITNESS WHEREOF, the undersigned, constituting all of the Trustees of the Trust, have caused these presents to be executed as of the day and year first above written.
/s/ Philip L. Kirstein 9 Liberty Street Ossining, New York 10562 /s/ Mark B. Goldfus 1101 Hillside Boulevard Carrcroft Wilmington, Delaware 19803 /s/ Michael J. Hennewinkel 828 Bloomfield Avenue Montclair, New Jersey 07042 /s/ Robert W. Crook 49 May Street Everett, Massachusetts 02149 |
Ex-99.1(b)
MERRILL LYNCH RESOURCE VALUE TRUST
The undersigned, Philip L. Kirstein, Mark B. Goldfus
and Michael J. Hennewinkel, constituting a majority of the
Trustees of Merrill Lynch Resource Value Trust (the "Trust"),
a Massachusetts business trust having no shareholders as of
the date hereof, hereby certify that the Trustees of the
Trust have duly adopted the following amendment to the
Declaration of Trust of the Trust dated the 12th day of
April, 1985.
VOTED: That the Declaration of Trust dated April 12,
1985 be and it hereby is amended to change the
name of the Trust from "Merrill Lynch Resource
Value Trust" to "Merrill Lynch Natural Resources
Trust" in the following manner:
1.1. Name. The name of the trust created
hereby (th "Trust") shall be "Merrill Lynch
Natural Resources Trust", and so far as may be
practicable the Trustees shall conduct the Trust's
activities, execute all documents and sue or be
sued under that name, which name (and the word
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"Trust" wherever hereinafter used) shall refer to the Trustees as Trustees, and not individually, and shall not refer to the officers, agents, employees or Shareholders of the Trust. However, should the Trustees determine that the use of such name is not advisable, they may select such other name for the Trust as they deem proper and the Trust may hold its property and conduct its activities under such other name. Any name change shall become effective upon the execution by a majority of the then Trustees of an instrument setting forth the new name. Any such instrument shall have the status of an amendment to this Declaration.
IN WITNESS WHEREOF, the said Philip L. Kirstein,
Mark B. Goldfus and Michael J. Hennewinkel have signed this
Certificate in duplicate original counterparts and have
caused a duplicate original to be lodged among the records
of the Trust as required by Article XI, Section 11.3(c) of
the Declaration of Trust, as of the 28th day of May, 1985.
/s/ Philip Kirstein 9 Liberty Street Ossining, New York, 10562 /s/ Mark B. Goldfus 509 Bergen Street Lawrenceville, New Jersey 08648 /s/ Michael Hennewinkel 828 Bloomfield Avenue Montclair, New Jersey 07042 |
Ex-99.1(c)
MERRILL LYNCH NATURAL RESOURCES TRUST
The undersigned, constituting a majority of the Trustees of
Merrill Lynch Natural Resources Trust (the "Trust"), a
Massachusetts business trust, hereby certify that the Trustees of
the Trust have duly adopted the following amendment, as approved
by a majority of the shareholders of the Trust, to the Declaration
of Trust of the Trust dated the 12th day of April 1985 (the
"Declaration of Trust").
VOTED: That Section 1.2 of Article I of the Declaration of
Trust be and it hereby is amended in its entirety to
read as follows:
1.2 Definitions. As used in this Declaration, the
following terms shall have the following meanings:
The terms "Affiliated Person", "Assignment",
"Commission", "Interested Person", "Majority Share-
-holder Vote" (the 67% or-more than 50% requirement of
the third sentence of Section 2(a)(42) of the 1940
Act, whichever may be applicable) and "Principal
Underwriter" shall have the meanings given them in
the 1940 Act.
"Declaration" shall mean this Declaration as
amended from time to time. References in this Decla-
ration to "Declaration ", "hereof", "herein" and
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"hereunder" shal be deeme to refer to the Declara- tion rather than the article or section in which such words appear.
"Fundamental Policies" shall mean the investment restrictions set forth in the Prospectus and designa- ted as fundamental policies therein.
"Person" shall mean and include individuals, corporations, partnerships, trusts, associations, joint ventures and other entities, whether or not legal entities, and governments and agencies and political subdivisions thereof.
"Prospectus" shall mean the currently effective Prospectus of the Trust under the Securities Act of 1933, as amended, including the Statement of Addi- tional Information incorporated by reference therein.
"Shareholders" shall mean as of any particular time all holders of.record of outstanding Shares at such time.
"Shares" shall mean the equal proportionate transferable units of interest into which the beneficial interest in the Trust shall be divided from time to time and includes fractions of Shares as well as whole Shares. As provided in Article VI hereof, the Trust may issue separate classes of Shares; all references to Shares shall be deemed to be Shares of a single class or all classes as the context may require.
"Trustees" shall mean the signatories to this Declaration, so long as they shall continue in office in accordance with the terms hereof, and all other persons who at the time in question have been duly elected or appointed and have qualified as trustees in accordance with the provisions hereof and are then in office, are herein referred to as the "Trustees", and reference in this Declaration to a Trustee or Trustees shall refer to such person or persons in their capacity as trustees hereunder.
"Trust Property" shall mean as of any particular time any and all property, real or personal, tangible or intangible, which at such time is owned or held by or for the account of the Trust or the Trustees.
The "1940 Act" refers to the Investment Company Act of 1940, as amended from time to time, and shall include the rules and regulations and any relevant order of exemption promulgated thereunder by the Commission.
VOTED: That Section 6.1 of Article VI of the Declaration of
Trust be and it hereby is amended in its entirety to
read as follows:
6.1. Beneficial Interest. The interest of the
beneficiaries hereunder shall be divided into trans-
ferable shares of beneficial interest, par value
$0.10 per share. The number of such shares of bene-
ficial interest authorized hereunder is unlimited.
The Trustees, in their discretion without a vote of
the Shareholders, may divide the shares of beneficial
interest into classes. In such event, each class
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2.
shall represent interests in the Trust property and
have identical voting, dividend, liquidation and
other rights and the same terms and conditions except
that expenses related directly or indirectly to the
distribution of the shares of a class may be borne
solely by such class (as shall be determined by the
Trustees) and, as provided in Section 10.1, a class
may have exclusive voting rights with respect to
matters relating to the expenses being borne solely
by such class. The bearing of such expenses solely
by a class of Shares shall be appropriately reflected
(in the manner determined by the Trustees) in the net
asset value, dividend and liquidation rights of the
Shares of such class. The division of the Shares
into classes and the terms and conditions pursuant to
which the Shares of the classes will be issued must
be made in compliance with the 1940 Act. No division
of Shares into classes shall result in the creation
of a class of Shares having a preference as to
dividends or distributions or a preference in the
event of any liquidation, termination or winding up
of the Trust. All Shares issued hereunder including,
without limitation, Shares issued in connection with
a dividend in Shares or a split of Shares, shall be
fully paid and nonassessable.
VOTED: That Section 8.1 of Article VIII of the Declaration of
Trust be and it hereby is amended in its entirety to
read as follows:
8.1. Redemptions. All outstanding Shares may be re-
deemed at the option of the holders hereof, upon and
subject to the terms and conditions provided in this
Article VIII. The Trust shall, upon application of
any Shareholder or pursuant to authorization from any
Shareholder, redeem or repurchase from such Share-
holder outstanding Shares for an amount per share
determined by the application of a formula adopted
for such purpose by resolution of the Trustees (which
formula shall be consistent with the 1940 Act);
provided that (a) such amount per share shall not
exceed the cash equivalent of the proportionate
interest of each share in the assets of the Trust at
the time of the purchase or redemption and (b) if so
authorized by the Trustees, the Trust may, at any
time and from time to time, charge fees for effecting
such redemption, at such rates as the Trustees may
establish, as and to the extent permitted under the
1940 Act, and may, at any time and from time to time,
pursuant to such Act, suspend such right of redemp-
tion. The procedures for effecting redemption shall
be as set forth in the Prospectus from time to time.
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3.
VOTED: That Sections 9.1, 9.2 and 9.3 of Article IX of the
Declaration of Trust be and they hereby are amended in
their entirety to read as follows:
9.1. Net Asset Value. The net asset value of each
outstanding Share of the Trust shall be determined at
such time or times on such days as the Trustees may
determine, in accordance with the 1940 Act. The
method of determination of net asset value of Shares
of each class shall be determined by the Trustees and
shall be as set forth in the Prospectus with any
expenses being borne solely by a class of Shares
being reflected in the net asset value of such
Shares. The power and duty to make the daily calcu-
lations may be delegated by the Trustees to the
adviser, administrator, manager, custodian, transfer
agent or such other person as the Trustees may deter-
mine. The Trustee may suspend the daily determina-
tion of net asset value to the extent permitted by
the 1940 Act.
9.2. Distributions to Shareholders. The Trust-
ees shall from time to time distribute ratably among
the Shareholders such proportion of the net profits,
surplus (including paid-in-surplus), capital, or
assets held by the Trustees as they deem proper with
any expenses being borne solely by a class of Shares
being reflected in the net profits or other assets
being distributed to such class. Such distribution
may be made in cash or property (including without
limitation any type of obligations of the Trust or
any assets thereof), and the Trustees may distribute
ratably among the Shareholders additional Shares
issuable hereunder in such manner, at such times, and
on such terms as the Trustees may deem proper. Such
distributions may be among the Shareholders of record
at the time of declaring a distribution or among the
Shareholders of record at such later date as the
Trustees shall determine. The Trustees may always
retain from the net profits such amount as they may
deem necessary to pay the debts or expenses of the
Trust or to meet obligations of the Trust, or as they
deem desirable to use in the conduct of its affairs
or to retain for future requirements or extensions of
the business. The Trustees may adopt and offer to
Shareholders such dividend reinvestment plans, cash
dividend payout plans or related plans as the Trust-
ees shall deem appropriate.
Inasmuch as the computation of net income and
gains for Federal income tax purposes may vary from
the computation thereof on the books, the above
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4.
provisions shall be interpreted to give the Trustees
the power in their discretion to distribute for any
fiscal year as ordinary dividends and as capital
gains distributions, respectively, additional amounts
sufficient to enable the Trust to avoid or reduce
liability for taxes.
9.3. Power to Modify Foregoing Procedures.
Notwithstanding any of the foregoing provisions of
this Article IX, the Trustees may prescribe, in their
absolute discretion, such other bases and times for
determining the per share net asset value of the
Trust's Shares or net income, or the declaration and
payment of dividends and distributions as they deem
necessary or desirable or to enable the Trust to
comply with any provision of the 1940 Act, including
any rule or regulation adopted pursuant to Section 22
of the 1940 Act by the Commission or any securities
association registered under the Securities Exchange
Act of 1934, all as in effect now or hereafter amend-
ed or modified.
VOTED: That Section 10.1 and 10.2 of Article X of the Declara-
tion of Trust be and they hereby are amended in their
entirety to read as follows:
10.1. Voting Powers. The Shareholders shall
have power to vote (i) for the removal of Trustees as
provided in Section 2.3, (ii) with respect to any
advisory or management contract as provided in Sec-
tion 4.1, (iii) with respect to the amendment of this
Declaration as may be provided in Section 11.3, (iv)
with respect to such additional matters relating to
the Trust as may be required or authorized by the
1940 Act, the laws of the Commonwealth of
Massachusetts or other applicable law or by this
Declaration or the By-Laws of the Trust, and (v) with
respect to such additional matters relating to the
Trust as may be properly submitted for Shareholder
approval. If the Shares shall be divided into
classes as provided in Article VI hereof, the Shares
of each class shall have identical voting rights
except that the Trustees, in their discretion, may
provide a class with exclusive voting rights with
respect to matters related to expenses being borne
solely by such class.
10.2. Meetings of Shareholders. Special meet-
ings of the Shareholders may be called at any time by
a majority of the Trustees and shall be called by any,
Trustee upon written request of Shareholders holding
in the aggregate not less than 10% of the outstanding
|
5.
Shares having voting rights, such request specifying
the purpose or purposes for which such meeting is to
be called. Any such meeting shall be held within or
without the Commonwealth of Massachusetts on such day
and at such time as the Trustees shall designate.
The holders of one-third of the outstanding Shares
present in person or by proxy shall constitute a
quorum for the transaction of any business, except as
may otherwise be required by the 1940 Act, the laws
of the Commonwealth of Massachusetts or other appli-
cable law or by this Declaration or the By-Laws of
the Trust. If a quorum is present at a meeting, the
affirmative vote of a majority of the Shares repre-
sented at the meeting constitutes the action of the
Shareholders, unless the 1940 Act, the laws of the
Commonwealth of Massachusetts or other applicable
law, the Declaration or by the By-Laws of the Trust
requires a greater number of affirmative votes. If
the Shares shall be divided into classes with a class
having exclusive voting rights with respect to cer-
tain matters, the aforesaid quorum and voting
requirements with respect to action to be taken by
the Shareholders of the class on such matters shall
be applicable only to the Shares of such class.
VOTED: That Section 11.2 of Article XI of the Declaration of
Trust be and it hereby is amended in its entirety to
read as follows:
11.2. Termination of Trust.
(a) The Trust may be terminated by the affirma-
tive vote of the holders of not less than two-thirds
of the Shares at any meeting of Shareholders or by an
instrument in writing, without a meeting, signed by a
majority of the Trustees and consented to by the
holders of not less than two-thirds of such Shares.
Upon the termination of the Trust,
(i) The Trust shall carry on no business
except for the purpose of winding up its affairs.
(ii) The Trustees shall proceed to wind up
the affairs of the Trust and all of the powers of the
Trustees under this Declaration shall continue until
the affairs of the Trust shall have been wound up,
including the power to fulfill or discharge the
contracts of the Trust, collect its assets, sell,
convey, assign, exchange, transfer or otherwise dis-
pose of all or any part of the remaining Trust Proper-
ty to one or more persons at public or private sale
for consideration which may consist in whole or in
|
6.
part of cash, securities or other property of any kind, discharge or pay its liabilities, and do all other acts appropriate to liquidate its business; provided that any sale, conveyance, assignment, ex- change, transfer or other disposition of all or sub- stantially all the Trust Property shall require appro- val of the principal terms of the transaction and the nature and amount of the consideration by vote or consent of the holders of a majority of the Shares entitled to vote.
(iii) After paying or adequately providing for the payment of all liabilities, and upon receipt of such releases, indemnities and refunding agree- ments, as they deem necessary for their protection, the Trustees may distribute the remaining Trust Pro- perty, in cash or in kind or partly each, among the Shareholders of each class, according to their respec- tive rights taking into account the proper allocation of expenses being borne solely by any class of Shares.
(b) After termination of the Trust and distribution to the Shareholders as herein provided, a majority of the Trustees shall execute and lodge among the records of the Trust an instrument in writing setting forth the fact of such termination, and the Trustees shall thereupon be discharged from all further liabilities and duties hereunder, and the rights and interest of all Shareholders shall thereupon cease.
7.
IN WITNESS WHEREOF, the undersigned, constituting a majority
of the Trustees, have signed this certificate in duplicate
original counterparts and have caused a duplicate original to be
lodged among the records of the Trust as required by Article XI,
Section 11.3 (c) of the Declaration of Trust as of the 3rd day of
October, 1988.
/s/ James I. Armstrong /s/ Robert F. Bryan
Box 528, R.D. 1 200 North Ocean Boulevard
South Berwick, Maine 03908 Delray Beach, Florida 33444
/s/ Donald Cecil /s/ M. Colyer Crum
3 Stratford Road 80 Ash Street
Harrison, New York 10528 Weston, Massachusetts 02193
/s/ George F. James /s/ Edward H. Meyer
Ocean Reef Club 580 Park Avenue
Key Largo, Florida 33037 New York, New York 10021
/s/ Jack B. Sunderland /s/ J. Thomas Touchton
16 Hadden Road 2801 Hawthrone Road
Scarsdaye, New York 10583 Tampa, Florida 33611
/s/ Arthur Zeikel
279 Watchung Fork
Westfield, New Jersey 07090
|
8 .
Ex-99.1(d)
MERRILL LYNCH NATURAL RESOURCES TRUST
Establishment and Designation
of
Class A Shares and Class B Shares of
Beneficial Interest of the Trust
The undersigned, being a majority of the Trustees of Merrill Lynch Natural Resources Trust, a Massachusetts business trust (the "Trust"), acting pursuant to Section 6.1 of the Declaration of Trust, as amended, dated April 12, 1985 (the "Declaration"), of the Trust, do hereby divide the shares of beneficial interest of the Trust, par value $0.10 per share ("Shares"), to create two classes of Shares, within the meaning of said Section 6.1, as follows:
1. The two classes of Shares are designated "Class A Shares" and "Class B Shares," respectively.
2. Class A Shares and Class B Shares shall be entitled to all of the rights and preferences accorded to Shares under the Declaration.
3. The purchase price of Class A Shares and Class B Shares, the method of determination of net asset value of Class A Shares and Class B Shares, the price, terms and manner of redemption of Class A Shares and Class B Shares, and the relative dividend rights of holders of Class A Shares and Class B Shares shall be established by the Trustees of the Trust in accordance with the provisions of the Declaration and shall be set forth in the currently effective prospectus and statement of additional information of the Trust, as amended from time to time, under the Securities Act of 1933, as amended.
4. All Shares issued prior to the filing of this instrument with the Commonwealth of Massachusetts shall be deemed Class B Shares.
IN WITNESS WHEREOF, the undersigned, have signed this instrument in duplicate original counterparts and have caused a duplicate original to be lodged among the records of the Trust this 3rd day of Octobe, 1988.
/s/ James I. Armstrong /s/ Robert F. Bryan Box 528, R.D. 1 200 North Ocean Boulevard South Berwick, Maine 03908 Delray Beach, Florida 33444 /s/Donald Cecil /s/ M. Colyer Crum 3 Stratford Road 80 Ash Street Harrison, New York 10528 Weston, Massachusetts 02193 /s/ George F. James /s/ Edward H. Meyer Ocean Reef Club 580 Park Avenue Key Largo, Florida 33037 New York, New York 10021 /s/ Jack B. Sunderland /s/ J. Thomas Touchton 16 Hadden Road 2801 Hawthorne Road Scarsdale, New York 10583 Tampa, Florida 33611 /s/ Arthur Zeikel 279 Watchung Fork Westfield, New Jersey 07090 |
The Declaration of Trust establishing Merrill Lynch Natural Resources Trust, dated April 12, 1985, a copy of which, together with all amendments thereto (the "Declaration"), is on file in the office of the Secretary of the Commonwealth of Massachusetts, provides that the name "Merrill Lynch Natural Resources Trust" refers to the Trustees under the Declaration collectively as Trustees, but not as individuals or personally; and no Trustee, shareholder, officer, employee or agent of Merrill Lynch Natural Resources Trust shall be held to any personal liability, nor shall resort be had to their private property for the satisfaction of any obligation or claim or otherwise in connection with the affairs of said Trust but the Trust Property only shall be liable.
2.
Ex-99.2
BY-LAWS
OF
MERRILL LYNCH NATURAL
RESOURCES TRUST
MERRILL LYNCH NATURAL RESOURCES TRUST
BY-LAWS
These By-Laws are made and adopted pursuant to Section 2.7 of the Declaration of Trust establishing MERRILL LYNCH NATURAL RESOURCES TRUST, dated April 12, 1985, as from time to time amended (hereinafter called the "Declaration"). All words and terms capitalized in these By-Laws shall have the meaning or meanings set forth for such words or terms in the Declaration.
ARTICLE I
Shareholder Meetings
Section 1.1. Chairman. The Chairman, if any, shall act as chairman at all meetings of the Shareholders; in his absence, the President shall act as chairman; and in the absence of the Chairman and President, the Trustee or Trustees present at each meeting may elect a temporary chairman for the meeting, who may be one of themselves.
Section 1.2. Proxies; Voting. Shareholders may vote either in person or by duly executed proxy and each full share repre- sented at the meeting shall have one vote, all as provided in Article X of the Declaration. No proxy shall be valid after eleven (11) months from the date of its execution, unless a longer period is expressly stated in such proxy.
Section 1.3. Closing of Transfer Books and Fixing Record Dates. For the purpose of determining the Shareholders who are entitled to notice of or to vote or act at any meeting, including any adjournment thereof, or who are entitled to participate in any dividends, or for any other proper purpose, the Trustees may from time to time close the transfer books or fix a record date in the manner provided in Section 10.4 of the Declaration. If the Trustees do not prior to any meeting of Shareholders so fix a record date or close the transfer books, then the date of mailing notice of the meeting or the date upon which the dividend resolution is adopted, as the case may be, shall be the record date.
Section 1.4. Inspectors of Election. In advance of any meeting of Shareholders, the Trustees may appoint Inspectors of Election to act at the meeting or any adjournment thereof. If Inspectors of Election are not so appointed, the Chairman, if any, of any meeting of Shareholders may, and on the request of any Shareholder or his proxy shall, appoint Inspectors of Election of the meeting. The number of Inspectors shall be either one or three. If appointed at the meeting on the request of one or more Shareholders or proxies, a majority of Shares present shall determine whether one or three Inspectors are to be appointed, but failure to allow such determination by the Shareholders shall not affect the validity of the appointment of Inspectors of Election. In case any person appointed as
2.
Inspector fails to appear or fails or refuses to act, the vacancy may be filled by appointment made by the Trustees in advance of the convening of the meeting or at the meeting by the person acting as chairman. The Inspectors of Election shall determine the number of Shares outstanding, the Shares represented at the meeting, the existence of a quorum, the authenticity, validity and effect of proxies, shall receive votes, ballots or consents, shall hear and determine all challenges and questions in any way arising in connection with the right to vote, shall count and tabulate all votes or consents, determine the results, and do such other acts as may be proper to conduct the election or vote with fairness to all Shareholders. If there are three Inspectors of Election, the decision, act or certificate of a majority is effective in all respects as the decision, act or certificate of all. On request of the Chairman, if any, of the meeting, or of any Shareholder or his proxy, the Inspectors of Election shall make a report in writing of any challenge or question or matter determined by them and shall execute a certificate of any facts found by them.
Section 1.5. Records at Shareholder Meetings. At each meeting of the Shareholders there shall be open for inspection the minutes of the last previous Shareholder Meeting of the Trust and a list of the Shareholders of the Trust, certified to be true and correct by the Secretary or other proper agent of the Trust, as of the record date of the meeting or the date of closing of
3.
transfer books, as the case may be. Such list of Shareholders shall contain the name of each Shareholder in alphabetical order and the address and number of Shares owned by such Shareholder. Shareholders shall have such other rights and procedures of inspection of the books and records of the Trust as are granted to shareholders of a Massachusetts business corporation.
ARTICLE II
Trustees
Section 2.1. Annual and Regular Meetings. The Trustees shall hold an annual meeting for the election of officers and the transaction of other business which may come before such meeting, on such date as shall be fixed by the Trustees from time to time. Regular meetings of the Trustees may be held without call or notice at such place or places and times as the Trustees may by resolution provide from time to time.
Section 2.2. Special Meetings. Special Meetings of the Trustees shall be held upon the call of the Chairman, if any, the President, the Secretary or any two Trustees, at such time, on such day, and at such place, as shall be designated in the notice of the meeting.
Section 2.3. Notice. Notice of a meeting shall be given by mail or by telegram (which term shall include a cablegram) or delivered personally. If notice is given by mail, it shall be mailed not later than 48 hours preceding the meeting and if given
4.
by telegram or personally, such telegram shall be sent or delivery made not later than 48 hours preceding the meeting. Notice by telephone shall constitute personal delivery for these purposes. Notice of a meeting of Trustees may be waived before or after any meeting by signed written waiver. Neither the business to be transacted at, nor the purpose of, any meeting of the Board of Trustees need be stated in the notice or waiver of notice of such meeting, and no notice need be given of action proposed to be taken by unanimous written consent. The attendance of a Trustee at a meeting shall constitute a waiver of notice of such meeting except where a Trustee attends a meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting has not been lawfully called or convened.
Section 2.4. Chairman; Records. The Chairman, if any, shall act as chairman at all meetings of the Trustees; in his absence the President shall act as chairman; and, in the absence of the Chairman and the President, the Trustees present shall elect one of their number to act as temporary chairman. The results of all actions taken at a meeting of the Trustees, or by unanimous written consent of the Trustees, shall be recorded by the Secretary.
5.
ARTICLE III
Officers
Section 3.1. officers of the Trust. The officers of the Trust shall consist of a Chairman, if any, a President, a Secretary, a Treasurer and such other officers or assistant officers, including Vice-Presidents, as may be elected by the Trustees. Any two or more of the offices may be held by the same person, except that the same person may not be both President and Secretary. The Trustees may designate a Vice-President as an Executive Vice-President and may designate the order in which the other Vice-Presidents may act. The Chairman and the President shall be Trustees, but no other officer of the Trust need be a Trustee.
Section 3.2. Election and Tenure. At the initial organ- ization meeting and thereafter at each annual meeting of the Trustees, the Trustees shall elect the Chairman, if any, President, Secretary, Treasurer and such other officers as the Trustees shall deem necessary or appropriate in order to carry out the business of the Trust. Such officers shall hold office until the next annual meeting of the Trustees and until their successors have been duly elected and qualified. The Trustees may fill any vacancy in office or add any additional officers at any time.
Section 3.3. Removal of Officers. Any officer may be removed at any time, with or without cause, by action of a
6.
majority of the Trustees. This provision shall not prevent the making of a contract of employment for a definite term with any officer and shall have no effect upon any cause of action which any officer may have as a result of removal in breach of a contract of employment. Any officer may resign at any time by notice in writing signed by such officer and delivered or mailed to the Chairman, if any, President, or Secretary, and such resignation shall take effect immediately upon receipt by the Chairman, if any, President, or Secretary, or at a later date according to the terms of such notice in writing.
Section 3.4. Bonds and Surety. Any officer may be required by the Trustees to be bonded for the faithful performance of his duties in such amount and with such sureties as the Trustees may determine.
Section 3.5. Chairman, President, and Vice-Presidents. The Chairman, if any, shall, if present, preside at all meetings of the Shareholders and of the Trustees and shall exercise and perform such other powers and duties as may be from time to time assigned to him by the Trustees. Subject to such supervisory powers, if any, as may be given by the Trustees to the Chairman, if any, the President shall be the chief executive officer of the Trust and, subject to the control of the Trustees, shall have general supervision, direction and control of the business of the Trust and of its employees and shall exercise such general powers of management as are usually vested in the office of President of
7.
a corporation. In the absence of the Chairman, if any, the President shall preside at all meetings of the Shareholders and of the Trustees. The President shall be, ex-officio, a member of all standing committees, except as otherwise provided in the resolutions or instruments creating any such committees. Subject to direction of the Trustees, the Chairman, if any, and the President shall each have power in the name and on behalf of the Trust to execute any and all loan documents, contracts, agreements, deeds, mortgages, and other instruments in writing, and to employ and discharge employees and agents of the Trust. Unless otherwise directed by the Trustees, the Chairman, if any, and the President shall each have full authority and power, on behalf of all of the Trustees, to attend and to act and to vote, on behalf of the Trust at any meetings of business organizations in which the Trust holds an interest, or to confer such powers upon any other persons, by executing any proxies duly authorizing such persons. The Chairman, if any, and the President shall have such further authorities and duties as the Trustees shall from time to time determine. In the absence or disability of the President, the Vice-Presidents in order of their rank as fixed by the Trustees or, if more than one and not ranked, the Vice- President designated by the Trustees, shall perform all of the duties of the President, and when so acting shall have all the powers of and be subject to all of the restrictions upon the President. Subject to the direction of the Trustees, and of the
8.
President, each Vice-President shall have the power in the name and on behalf of the Trust to execute any and all loan documents, contracts, agreements, deeds, mortgages and other instruments in writing, and, in addition, shall have such other duties and powers as shall be designated from time to time by the Trustees or by the President.
Section 3.6. Secretary. The Secretary shall keep the minutes of all meetings of, and record all votes of, Shareholders, Trustees and the Executive Committee, if any. He shall be custodian of the seal of the Trust, if any, and he (and any other person so authorized by the Trustees) shall affix the seal or, if permitted, a facsimile thereof, to any instrument executed by the Trust which would be sealed by a Massachusetts corporation executing the same or a similar instrument and shall attest the seal and the signature or signatures of the officer or officers executing such instrument on behalf of the Trust. The Secretary shall also perform any other duties commonly incident to such office in a Massachusetts business corporation, and shall have such other authorities and duties as the Trustees shall from time to time determine.
Section 3.7. Treasurer. Except as otherwise directed by the Trustees, the Treasurer shall have the general supervision of the monies, funds, securities, notes receivable and other valuable papers and documents of the Trust, and shall have and exercise under the supervision of the Trustees and of the
9.
President all powers and duties normally incident to his office. He may endorse for deposit or collection all notes, checks and other instruments payable to the Trust or to its order. He shall deposit all funds of the Trust in such depositories as the Trustees shall designate. He shall be responsible for such disbursement of the funds of the Trust as may be ordered by the Trustees or the President. He shall keep accurate account of the books of the Trust's transactions which shall be the property of the Trust, and which together with all other property of the Trust in his possession, shall be subject at all times to the inspection and control of the Trustees. Unless the Trustees shall otherwise determine, the Treasurer shall be the principal accounting officer of the Trust and shall also be the principal financial officer of the Trust. He shall have such other duties and authorities as the Trustees shall from time to time determine. Notwithstanding anything to the contrary herein contained, the Trustees may authorize any adviser, administrator, manager or transfer agent to maintain bank accounts and deposit and disburse funds of the Trust.
Section 3.8. Other Officers and Duties. The Trustees may elect such other officers and assistant officers as they shall from time to time determine to be necessary or desirable in order to conduct the business of the Trust. Assistant officers shall act generally in the absence of the officer whom they assist and shall assist that officer in the duties of his office. Each
10.
officer, employee and agent of the Trust shall have such other duties and authority as may be conferred upon him by the Trustees or delegated to him by the President.
ARTICLE IV
Miscellaneous
Section 4.1. Custodians. In accordance with Section 7.1 of the Declaration, the funds of the Trust shall be deposited with such custodian or custodians as the Trustees shall designate and shall be drawn out on checks, drafts or other orders signed by such officer, officers, agent or agents (including any adviser, administrator or manager), as the Trustees may from time to time authorize.
Section 4.2. Signatures. All contracts and other instruments shall be executed on behalf of the Trust by such officer, officers, agent or agents, as provided in these By-Laws or as the Trustees may from time to time by resolution provide.
Section 4.3. Seal. The seal of the Trust, if any, may be affixed to any document, and the seal and its attestation may be lithographed, engraved or otherwise printed on any document with the same force and effect as if it had been imprinted and attested manually in the same manner and with the same effect as if done by a Massachusetts business corporation.
11.
ARTICLE V
Share Certificates and Share Transfers
Section 5.1. Share Certificates. Each holder of Shares of the Trust shall be entitled upon request to have a certificate or certificates, in such form as shall be approved by the Trustees, representing the number of Shares owned by him, provided, however, that certificates for fractional Shares shall not be delivered in any case. The certificates representing Shares shall be signed by or in the name of the Trust by the President or a Vice-President and by the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer and sealed with the seal of the Trust. Any or all of the signatures or the seal on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate shall be issued, it may be issued by the Trust with the same effect as if such officer, transfer agent or registrar were still in office at the date of issue.
Section 5.2. Transfer Agents, Registrars and the Like. As provided in Section 6.6 of the Declaration, the Trustees shall have authority to employ and compensate such transfer agents and registrars with respect to the Shares of the Trust as the Trustees shall deem necessary or desirable and may require all certificates for Shares to bear the signature or signatures of
12.
any of them. In addition, the Trustees shall have power to employ and compensate such dividend disbursing agents, warrant agents and agents for the reinvestment of dividends as they shall deem necessary or desirable. Any of such agents shall have such power and authority as is delegated to any of them by the Trustees.
Section 5.3. Transfer of Shares. The Shares of the Trust shall be transferable on the books of the Trust only upon delivery to the Trustees or a transfer agent of the Trust of proper documentation as provided in Section 6.7 of the Declara- tion, and on surrender of the certificate or certificates, if issued, for such Shares properly endorsed or accompanied by a duly executed stock transfer power and the payment of all taxes thereon. The Trust, or its transfer agents, shall be authorized to refuse any transfer unless and until presentation of such evidence as may be reasonably required to show that the requested transfer is proper.
Section 5.4. Registered Shareholders. The Trust may deem and treat the holder of record of any Share as the absolute owner thereof for all purposes and shall not be required to take any notice of any right or claim of right of any other person.
Section 5.5. Regulations. The Trustees may make such additional rules and regulations, not inconsistent with these By-Laws, as it may deem expedient concerning the issue, transfer and registration of certificates for Shares of the Trust.
13.
Section 5.6. Lost, Destroyed or Mutilated Certificates. The holder of any certificate representing Shares of the Trust shall immediately notify the Trust of any loss, destruction or mutilation of such certificate, and the Trust may issue a new certificate in the place of any certificate theretofore issued by it which the owner thereof shall allege to have been lost or destroyed or which shall have been mutilated, and the Trustees may, in their discretion, require such owner or his legal representatives to give the Trust a bond in such sum, limited or unlimited, and in such form and with such surety or sureties, as the Trustees in their absolute discretion shall determine, to indemnify the Trust against any claim that may be made against it on account of the alleged loss or destruction of any such certificate, or issuance of a new certificate. Anything herein to the contrary notwithstanding, the Trustees in their absolute discretion, may refuse to issue any such new certificates, except pursuant to legal proceedings under the laws of the Commonwealth of Massachusetts.
ARTICLE VI
Amendment of By-Laws
Section 6.1. Amendment and Repeal of By-Laws. In accor- dance with Section 2.7 of the Declaration, the Trustees shall have the power to alter, amend or repeal the By-Laws or adopt new By-Laws at any time. Action by the Trustees with respect to the
14.
By-Laws shall be taken by an affirmative vote of a majority of the Trustees. The Trustees shall in no event adopt By-Laws which are in conflict with the Declaration, and any apparent incon- sistency shall be construed in favor of the related provisions in the Declaration.
The Declaration establishing Merrill Lynch Natural Resources Trust, a copy of which, together with all amendments thereto, is on file in the office of the Secretary of the Commonwealth of Massachusetts, provides that the name "Merrill Lynch Natural Resources Trust" refers to the Trustees under the Declaration collectively as Trustees, but not as individuals or personally; and no Trustee, shareholder, officer, employee or agent of Merrill Lynch Natural Resources Trust shall be held to any personal liability, nor shall resort be had to their private property for the satisfaction of any obligation or claim or otherwise in connection with the affairs of said Merrill Lynch Resource Value Trust but the Trust Property only shall be liable.
15.
EX-99. 5 (a)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 10th day of June, 1985, by and between
MERRILL LYNCH NATURAL RESOURCES TRUST, a Massachusetts business
trust (hereinafter referred to as the "Trust"), and MERRILL LYNCH
ASSET MANAGEMENT, INC., a Delaware corporation (hereinafter
referred to as the "Investment Adviser").
W I T N E S S E T H:
WHEREAS, the Trust is engaged in business as An open-end
investment company registered under the Investment Company Act of
1940, as amended (hereinafter referred to as the "Investment
Company Act"); and
WHEREAS, the Investment Adviser is engaged principally in
rendering investment advisory and management services and is
registered as an investment adviser under the Investment Advisers
Act of 1940; and
WHEREAS, the Trust desires to retain the Investment Adviser
to provide certain investment advisory and management services to
the Trust in the manner and on the terms hereinafter set forth;
and
WHEREAS, the Investment Adviser is willing to provide such
investment advisory and management services to the Trust on the
terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the covenants hereinafter contained, the Trust and the Investment Adviser hereby agree as follows:
ARTICLE I
Duties of the Investment Adviser
The Trust hereby employs the Investment Adviser to act as an investment adviser and manager of the Trust and to furnish, or arrange for affiliates to furnish, the management and investment advisory services described below, subject to the policies of, review by and overall control of the Board of Trustees of the Trust, for the period and on the terms and conditions set forth in this Agreement. The Investment Adviser hereby accepts such employment and agrees during such period, at its own expense, to render, or arrange for the rendering of, such services and to assume the obligations herein set forth for the compensation provided for herein. The Investment Adviser and its affiliates shall for all purposes herein be deemed to be an independent contractor and shall, unless otherwise expressly provided or authorized, have no authority to act for or represent the Trust in any way or otherwise be deemed an agent of the Trust.
(a) Management Services. The Investment Adviser shall perform (or arrange for the performance by affiliates of) the management and administrative services necessary for the operation
2.
of the Trust including administering shareholder accounts and handling shareholder relations. The Investment Adviser shall provide the Trust with office space, equipment and facilities and such other services as the Investment Adviser, subject to review by the Board of Trustees of the Trust, shall from time to time determine to be necessary or useful to perform its obligations under this Agreement. The Investment Adviser shall also, on behalf of the Trust, conduct relations with custodians, depositories, transfer agents, dividend disbursing agents, other shareholder servicing agents, accountants, attorneys, underwrit- ers, brokers and dealers, corporate fiduciaries, insurers, banks and such other persons in any such other capacity deemed to be necessary or desirable. The Investment Adviser shall generally monitor the Trust's compliance with investment policies and restrictions as set forth in the currently effective prospectus and statement of additional information relating to the shares of the Trust under the Securities Act of 1933, as amended (the "Prospectus" and "Statement of Additional Information", respectively). The Investment Adviser shall make reports to the Board of Trustees of the Trust of its performance of obligations hereunder and furnish advice and recommendations with respect to such other aspects of the business and affairs of the Trust as it shall determine to be desirable.
(b) Investment Advisory Services. The Investment Adviser shall provide the Trust with such investment research, advice and
3.
supervision as the latter may from time to time consider necessary for the proper supervision of the assets of the Trust, shall furnish continuously an investment program for the Trust and shall determine from time to time which securities shall be purchased, sold or exchanged and what portion of the assets of the Trust shall be held in the various securities in which the Trust invests or cash, and shall make decisions for the Trust as to the sale of options on the Trust's portfolio securities, subject always to the restrictions of the Declaration of Trust and By-Laws of the Trust, as amended from time to time, the provisions of the Investment Company Act and the statements relating to the Trust's investment objectives, investment policies and investment restrictions as the same are set forth in the Prospectus and Statement of Additional Information. The Investment Adviser shall make decisions for the Trust as to the manner in which voting rights, rights to consent to corporate action and any other rights pertaining to the Trust's portfolio securities shall be exercised. Should the Board of Trustees of the Trust at any time, however, make any definite determination as to investment policy and notify the Investment Adviser thereof in writing, the Investment Adviser shall be bound by such determination for the period, if any, specified in such notice or until similarly notified that such determination has been revoked. The Investment Adviser shall take, on behalf of the Trust, all actions which it deems necessary to implement the investment policies determined as provided above, and in
4.
particular to place all orders for the purchase or sale of portfolio securities for the Trust's account with brokers or dealers selected by it, and to that end, the Investment Adviser is authorized as the agent of the Trust to give instructions to the Custodian of the Trust as to deliveries of securities and payments of cash for the account of the Trust. In connection with the selection of such brokers or dealers and the placing of such orders, the Investment Adviser is directed at all times to seek to obtain execution and price within the policy guidelines determined by the Board of Trustees of the Trust as set forth in the Prospectus and Statement of Additional Information. Subject to this requirement and the provisions of the Investment Company Act, the Securities Exchange Act of 1934, as amended, and other applicable provisions of law, the Investment Adviser may select brokers or dealers with which it or the Trust is affiliated.
ARTICLE II
Allocation of Charges and Expenses
(a) The Investment Adviser. The Investment Adviser assumes and shall pay for maintaining the staff and personnel necessary to perform its obligations under this Agreement, and shall, at its own expense, provide the office space, equipment and facilities which it is obligated to provide under Article I hereof, and shall
5.
pay all compensation of officers of the Trust and all Trustees of the Trust who are affiliated persons of the Investment Adviser.
(b) The Trust. The Trust assumes and shall pay or cause to
be paid all other expenses of the Trust (except for the expenses
paid by the Trust's underwriters), including, without limitation:
taxes, expenses for legal and auditing services, costs of printing
proxies, share certificates (if any), shareholder reports,
prospectuses and statements of additional information, charges of
the Custodian, any Sub-Custodian and Transfer Agent, expenses of
redemption of shares, Securities and Exchange Commission fees,
expenses of registering the shares under Federal, state and
foreign laws, fees and actual out-of-pocket expenses of Trustees
who are not affiliated persons of the Investment Adviser,
accounting and pricing costs (including the daily calculation of
the net asset value), insurance, interest, brokerage costs,
litigation and other extraordinary or non-recurring expenses, and
other expenses properly payable by the Trust. It is also under-
stood that the Trust will reimburse the Investment Adviser for its
costs in providing accounting services to the Trust.
ARTICLE III
Compensation of the Investment Adviser
(a) Investment Advisory Fee. For the services rendered, the facilities furnished and expenses assumed by the Investment
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Adviser, the Trust shall pay to the Investment Adviser at the end of each calendar month a fee based upon the average daily value of the net assets of the Trust, as determined and computed in accordance with the description of the determination of net asset value contained in the Prospectus and Statement of Additional Information, at the annual rate of .60 of 1% (.60%) of the average daily net assets of the Trust, commencing on the day following effectiveness hereof. During any period when the determination of net asset value is suspended by the Board of Trustees of the Trust, the net asset value of a share as of the last business day prior to such suspension shall for this purpose be deemed to be the net asset value at the close of each succeeding business day until it is again determined.
(b) Expense Limitations. In the event the operating expenses of the Trust, including amounts payable to the Investment Adviser pursuant to subsection (a) hereof, for any fiscal year ending on a date on which this Agreement is in effect exceed the expense limitations applicable to the Trust imposed by applicable state securities laws or regulations thereunder, as such limitations may be raised or lowered from time to time, the Investment Adviser shall reduce its fee by the extent of such excess and, if required pursuant to any such laws or regulations, will reimburse the Trust in the amount of such excess; provided, however, to the extent permitted by law, there shall be excluded from such expenses the amount of any interest, taxes, brokerage
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commissions, distribution fees and extraordinary expenses (including but not limited to legal claims and liabilities and litigation costs and any indemnification related thereto) paid or payable by the Trust. Whenever the expenses of the Trust exceed a pro rata portion of the applicable annual expense limitations, the estimated amount of reimbursement under such limitations shall be applicable as an offset against the monthly payment of the fee due to the Investment Adviser. Should two or more such expense limitations be applicable as at the end of the last business day of the month, that expense limitation which results in the largest reduction in the Investment Adviser's fee shall be applicable.
ARTICLE IV
Limitation of Liability of the Investment Adviser
The Investment Adviser shall not be liable for any error of judgment or mistake of law or for any loss arising out of any investment or for any act or omission in the management of the Trust, except for willful misfeasance, bad faith or gross negligence in the performance of its duties, or by reason of reckless disregard of its obligations and duties hereunder. As used in this Article IV, the term "Investment Adviser" shall include any affiliates of the Investment Adviser performing services for the Trust contemplated hereby and directors, officers and employees of the Investment Adviser and such affiliates.
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ARTICLE V
Activities of the Investment Adviser
The services of the Investment Adviser to the Trust are not to be deemed to be exclusive, the Investment Adviser and any person controlled by or under common control with the Investment Adviser (for purposes of this Article V referred to as "affiliates") being free to render services to others. It is understood that directors, officers, employees and shareholders of the Trust are or may become interested in the Investment Adviser and its affiliates, as directors, officers, employees, partners, and shareholders or otherwise and that directors, officers, employees, partners, and shareholders of the Investment Adviser and its affiliates are or may become similarly interested in the Trust, and that the Investment Adviser and directors, officers, employees, partners, and shareholders of its affiliates may become interested in the Trust as shareholder or otherwise.
ARTICLE VI
Duration and Termination of This Agreement
This Agreement shall become effective as of the date first above written and shall remain in force until April 30, 1987 and thereafter, but only so long as such continuance is specifically approved at least annually by (i) the Board of Trustees of the
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Trust, or by the vote of a majority of the outstanding voting securities of the Trust, and (ii) a majority of those Trustees who are not parties to this Agreement or interested persons of any such party cast in person at a meeting called for the purpose of voting on such approval.
This Agreement may be terminated at any time, without the payment of any penalty, by the Board of Trustees of the Trust or by vote of a majority of the outstanding voting securities of the Trust, or by the Investment Adviser, on sixty days' written notice to the other party. This Agreement shall automatically terminate in the event of its assignment.
ARTICLE VII
Amendments of this Agreement
This Agreement may be amended by the parties only if such amendment is specifically approved by (i) the vote of a majority of outstanding voting securities of the Trust, and (ii) a majority of those Trustees who are not parties to this Agreement or interested persons of any such party cast in person at a meeting called for the purpose of voting on such approval.
ARTICLE VIII
Definitions of Certain Terms
The terms "vote of a majority of the outstanding voting securities", assignment, "affiliated person" and "interested person", when used in this Agreement, shall have the respective meanings specified in the Investment Company Act of 1940 and the Rules and Regulations thereunder, subject, however, to such exemptions as may be granted by the Securities and Exchange Commission under said Act.
ARTICLE IX
Governing Law
This Agreement shall be construed in accordance with laws of the State of New York and the applicable provisions of the Investment Company Act. To the extent that the applicable laws of the State of New York, or any of the provisions herein, conflict with the applicable provisions of the Investment Company Act, the latter shall control.
ARTICLE X
Personal Liability
The Declaration of Trust establishing Merrill Lynch Natural Resources Trust, dated April 12, 1985, a copy of which, together with all amendments thereto (the "Declaration"), is on file in the office of the Secretary of the Commonwealth of Massachusetts, provides that the name "Merrill Lynch Natural Resources Trust" refers to the trustees under the Declaration collectively as trustees, but not as individuals or personally; and no trustee, shareholder, officer, employee or agent of the Trust shall be held to any personal liability, nor shall resort be had to their private property for the satisfaction of any obligation or claim or otherwise in connection with the affairs of the Trust, but the "Trust Property" only shall be liable.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the date first above written.
MERRILL LYNCH NATURAL RESOURCES TRUST
By /s/ Terry K. Glenn
MERRILL LYNCH ASSET MANAGEMENT, INC.
By /s/ Arthur Zeikel
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|
Ex-99. 6 (b)
Merrill Lynch Natural Resources Trust
DISTRIBUTION AGREEMENT
AGREEMENT made as of the 10th day of June, 1985 between MERRILL LYNCH NATURAL RESOURCES TRUST, a Massachusetts business trust (the "Fund"), and MERRILL LYNCH FUNDS DISTRIBUTOR, INC., a Delaware corporation (the "Distributor").
W I T N E S S E T H
WHEREAS, the Fund is registered under the Investment Company Act of 1940, as amended to date (the "Investment Company Act"), as an open-end investment company and it is affirmatively in the interest of the Fund to offer its shares for sale continuously; and
WHEREAS, the Distributor is a securities firm engaged in the business of selling shares of investment companies either directly to purchasers or through other securities dealers; and
WHEREAS, the Fund and the Distributor wish to enter into an agreement with each other with respect to the continuous offering of the Fund's shares in order to promote the growth of the Fund and facilitate the distribution of its shares.
NOW, THEREFORE, the parties agree as follows:
Section 1. Appointment of the Distributor. The Fund hereby appoints the Distributor as the principal underwriter and distributor of the Fund to sell shares of beneficial interest of
the Fund (sometimes herein referred to as "shares") to the public and hereby agrees during the term of this Agreement to sell shares of the Fund to the Distributor upon the terms and conditions herein set forth.
Section 2. Exclusive Nature of Duties. The Distributor shall be the exclusive representative of the Fund to act as principal underwriter and distributor, except that:
(a) The Fund may, upon written notice to the Distributor, from time to time designate other principal underwriters and distributors of its shares with respect to areas other than the United States as to which the Distributor may have expressly waived in writing its right to act as such. If such designation is deemed exclusive, the right of the Distributor under this Agreement to sell shares in the areas so designated shall terminate, but this Agreement shall remain otherwise in full effect until terminated in accordance with the other provisions hereof.
(b) The exclusive rights granted to the Distributor to purchase shares from the Fund shall not apply to shares of the Fund issued in connection with the merger or consolidation of any other investment company or personal holding company with the Fund or the acquisition by purchase or otherwise of all (or substantially all) the assets or the outstanding shares of any such company by the Fund.
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(c) Such exclusive rights shall also not apply to shares issued by the Fund pursuant to reinvestment of dividends or capital gains distributions.
(d) Such exclusive rights shall also not apply to shares issued by the Fund pursuant to the reinstatement privilege afforded redeeming shareholders.
Section 3. Purchase of Shares from the Fund.
(a) Prior to the continuous offering of the shares, commencing on a date agreed upon by the Fund and the Distributor, it is contemplated that the Distributor will solicit subscriptions for shares during a subscription period which shall last for such period as may be agreed upon by the parties hereto. The subscriptions will be payable within six business days after the termination of the subscription period, at which time the Fund will commence operations.
(b) After the Fund commences operations, the Fund will commence an offering of its shares and thereafter the Distributor shall have the right to buy from the Fund the shares needed, but not more than the shares needed (except for clerical errors in transmission) to fill unconditional orders for shares of the Fund placed with the Distributor by investors or securities dealers. The price which the Distributor shall pay for the shares so purchased from the Fund shall be the net asset value, determined as set forth in Section 3(d) hereof.
3.
(c) The shares are to be resold by the Distributor to investors at net asset value, as set forth in Section 3(d) hereof, or to securities dealers having agreements with the Distributor upon the terms and conditions set forth in Section 7 hereof.
(d) The net asset value of shares of the Fund shall be determined by the Fund or any agent of the Fund in accordance with the method set forth in the prospectus and statement of additional information of the Fund and guidelines established by the Board of Trustees of the Fund.
(e) The Fund shall have the right to suspend the sale of its shares at times when redemption is suspended pursuant to the conditions set forth in Section 4(b) hereof. The Fund shall also have the right to suspend the sale of its shares if trading on the New York Stock Exchange shall have been suspended, if a banking moratorium shall have been declared by Federal or New York authorities, or if there shall have been some other event, which, in the judgment of the Fund, makes it impracticable or inadvisable to sell the shares.
(f) The Fund, or any agent of the Fund designated in writing by the Fund, shall be promptly advised of all purchase orders for shares received by the Distributor. Any order may be rejected by the Fund; provided, however, that the Fund will not arbitrarily or without reasonable cause refuse to accept or confirm orders for the purchase of shares. The Fund (or its
4.
agent) will confirm orders upon their receipt, will make appropriate book entries and upon receipt by the Fund (or its agent) of payment therefor, will deliver deposit receipts or certificates for such shares pursuant to the instructions of the Distributor. Payment shall be made to the Fund in New York Clearing House funds. The Distributor agrees to cause such payment and such instructions to be delivered promptly to the Fund (or its agent).
Section 4. Repurchase or Redemption of Shares by the Fund.
(a) Any of the outstanding shares may be tendered for redemption at any time, and the Fund agrees to repurchase or redeem the shares so tendered in accordance with its obligations as set forth in Article VIII of its Declaration of Trust, as amended from time to time, and in accordance with the applicable provisions set forth in the prospectus and statement of additional information of the Fund. The price to be paid to redeem or repurchase the shares shall be equal to the net asset value calculated in accordance with the provisions of Section 3(d) hereof, less the redemption fee or other charge, if any, set forth in the prospectus and statement of additional information of the Fund. All payments by the Fund hereunder shall be made in the manner set forth below.
The Fund shall pay the total amount of the redemption price as defined in the above paragraph pursuant to the instructions of
5.
the Distributor on or before the seventh business day subsequent to its having received the notice of redemption in proper form. The proceeds of any redemption of shares shall be paid by the Fund as follows: (i) any applicable contingent deferred sales charge shall be paid to the Distributor and (ii) the balance shall be paid to or for the account of the shareholder, in each case in accordance with the applicable provisions of the prospectus and statement of additional information.
(b) Redemption of shares or payment may be suspended at times when the New York Stock Exchange is closed, when trading on said Exchange is closed, when trading on said Exchange is restricted, when an emergency exists as a result of which disposal by the Fund of securities owned by it is not reasonably practicable or it is not reasonably practicable for the Fund fairly to determine the value of its net assets, or during any other period when the Securities and Exchange Commission, by order, so permits.
Section S. Duties of the Fund.
(a) The Fund shall furnish to the Distributor copies of all information, financial statements and other papers which the Distributor may reasonably request for use in connection with the distribution of shares of the Fund, and this shall include one certified copy, upon request by the Distributor, of all financial statements prepared for the Fund by independent public accountants. The Fund shall make available to the Distributor
6.
such number of copies of its prospectus and statement of additional information as the Distsributor shall reasonably request.
(b) The Fund shall take, from time to time, but subject to the necessary approval of the shareholders, all necessary action to fix the number of authorized shares and such steps as may be necessary to register the same under the Securities Act, to the end that there will be available for sale such number of shares as the Distributor reasonably may be expected to sell.
(c) The Fund shall use its best efforts to qualify and maintain the qualification of an appropriate number of its shares for sale under the securities laws of such states as the Distributor and the Fund may approve. Any such qualification may be withheld, terminated or withdrawn by the Fund at any time in its discretion. As provided in Section 8(c) hereof, the expense of qualification and maintenance of qualification shall be borne by the Fund. The Distributor shall furnish such information and other material relating to its affairs and activities as may be required by the Fund in connection with such qualification.
(d) The Fund will furnish, in reasonable quantities upon request by the Distributor, copies of annual and interim reports of the Fund.
Section 6. Duties of the Distributor.
(a) The Distributor shall devote reasonable time and effort to effect sales of shares of the Fund, but shall not be obligated
7.
to sell any specific number of shares. The services of the Distributor to the Fund hereunder are not to be deemed exclusive and nothing herein contained shall prevent the Distributor from entering into like arrangements with other investment companies so long as the performance of its obligations hereunder is not impaired thereby.
(b) In selling the shares of the Fund, the Distributor shall use its best efforts in all respects duly to conform with the requirements of all Federal and state laws relating to the sale of such securities. Neither the Distributor nor any selected dealer nor any other person is authorized by the Fund to give any information or to make any representations, other than those contained in the registration statement or related prospectus and statement of additional information and any sales literature specifically approved by the Fund.
(c) The Distributor shall adopt and follow procedures, as approved by the officers of the Fund, for the confirmation of sales to investors and selected dealers, the collection of amounts payable by investors and selected dealers on such sales, and the cancellation of unsettled transactions, as may be necessary to comply with the requirements of the National Association of Securities Dealers, Inc. (the "NASD"), as such requirements may from time to time exist.
8.
Section 7. Selected Dealers Agreements.
(a) The Distributor shall have the right to enter into selected dealers agreements with securities dealers of its choice ("selected dealers") for the sale of shares; provided that the Fund shall approve the forms of agreements with dealers. Shares sold to selected dealers shall be for resale by such dealers only at net asset value determined as set forth in Section 3(d) hereof. The form of agreement with selected dealers to be used during the subscription period described in Section 3(a) is attached hereto as Exhibit A and the initial form of agreement with selected dealers to be used in the continuous offering of the shares is attached hereto as Exhibit B.
(b) Within the United States, the Distributor shall offer and sell shares only to such selected dealers as are members in good standing of the NASD.
Section B. Payment of Expenses.
(a) The Fund shall bear all costs and expenses of the Fund, including fees and disbursements of its counsel and auditors, in connection with the preparation and filing of any required registration statements and/or prospectuses and statements of additional information under the Investment Company Act, the Securities Act, and all amendments and supplements thereto, and preparing and mailing annual and interim reports and proxy materials to shareholders (including but not limited to the expense of setting in type any such registration statements,
9.
prospectuses, statements of additional information, annual or interim reports or proxy materials).
(b) The Distributor shall be responsible for any payments made to selected dealers as reimbursement for their expenses associated with payments of sales commissions to account executives. In addition, after the prospectuses, statements of additional information and annual and interim reports have been prepared and set in type, the Distributor shall bear the costs and expenses of printing and distributing any copies thereof which are to be used in connection with the offering of shares to selected dealers or investors pursuant to this Agreement. The Distributor shall bear the costs and expenses of preparing, printing and distributing any other literature used by the Distributor or furnished by it for use by selected dealers in connection with the offering of the shares for sale to the public and any expenses of advertising incurred by the Distributor in connection with such offering. It is understood and agreed that, so long as the Fund's Distribution Plan pursuant to Rule 12b-1 under the Investment Company Act remains in effect, any expenses incurred by the Distributor hereunder may be paid from amounts recovered by it from the Fund under such Plan.
(c) The Fund shall bear the cost and expenses of qualification of the shares for sale pursuant to this Agreement, and, if necessary or advisable in connection therewith, of qualifying the Fund as a broker or dealer, in such states of the
10.
United States or other jurisdictions as shall be selected by the Fund and the Distributor pursuant to Section 5(c) hereof and the cost and expenses payable to each such state for continuing qualification therein until the Fund decides to discontinue such qualification pursuant to Section 5(c) hereof.
Section 9. Indemnification.
(a) The Fund shall indemnify and hold harmless the Distributor and each person, if any, who controls the Distributor against any loss, liability, claim, damage or expense (including the reasonable cost of investigating or defending any alleged loss, liability, claim, damage or expense and reasonable counsel fees incurred in connection therewith), arising by reason of any person acquiring any shares, which may be based upon the Securities Act, or on any other statute or at common law, on the ground that the registration statement or related prospectus and statement of additional information, as from time to time amended and supplemented, or an annual or interim report to shareholders of the Fund, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading, unless such statement or omission was made in reliance upon, and in conformity with, information furnished to the Fund in connection therewith by or on behalf of the Distributor; provided, however, that in no case (i) is the indemnity of the Fund in favor of the Distributor and any such controlling persons
11.
to be deemed to protect such Distributor or any such controlling persons thereof against any liability to the Fund or its security holders to which the Distributor or any such controlling persons would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence in the performance of their duties or by reason of the reckless disregard of their obligations and duties under this Agreement; or (ii) is the Fund to be liable under its indemnity agreement contained in this paragraph with respect to any claim made against the Distributor or any such controlling persons, unless the Distributor or such controlling persons, as the case may be, shall have notified the Fund in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim shall have been served upon the Distributor or such controlling persons (or after the Distributor or such controlling persons shall have received notice of such service on any designated agent), but failure to notify the Fund of any such claim shall not relieve it from any liability which it may have to the person against whom such action is brought otherwise than on account of its indemnity agreement contained in this paragraph. The Fund will be entitled to participate at its own expense in the defense, or, if it so elects, to assume the defense of any suit brought to enforce any such liability, but if the Fund elects to assume the defense, such defense shall be conducted by counsel chosen by it and satisfactory to the Distributor or such controlling person or
12.
persons, defendant or defendants in the suit. In the event the Fund elects to assume the defense of any such suit and retain such counsel, the Distributor or such controlling person or persons, defendant or defendants in the suit, shall bear the fees and expenses of any additional counsel retained by them, but, in case the Fund does not elect to assume the defense of any such suit, it will reimburse the Distributor or such controlling person or persons, defendant or defendants in the suit, for the reasonable fees and expenses of any counsel retained by them. The Fund shall promptly notify the Distributor of the commencement of any litigation or proceedings against it or any of its officers or trustees in connection with the issuance or sale of any of the shares.
(b) The Distributor shall indemnify and hold harmless the Fund and each of its trustees and officers and each person, if any, who controls the Fund against any loss, liability, claim, damage or expense described in the foregoing indemnity contained in subsection (a) of this Section, but only with respect to statements or omissions made in reliance upon, and in conformity with, information furnished to the Fund in writing by or on behalf of the Distributor for use in connection with the registration statement or related prospectus and statement of additional information, as from time to time amended, or the annual or interim reports to shareholders. In case any action shall be brought against the Fund or any person so indemnified,
13.
in respect of which indemnity may be sought against the Distributor, the Distributor shall have the rights and duties given to the Fund, and the Fund and each person so indemnified shall have the rights and duties given to the Distributor by the provisions of subsection (a) of this Section 9.
Section 10. Duration and Termination of this Agreement. This Agreement shall become effective as of the date first above written and shall remain in force until April 30, 1987 and thereafter, but only so long as such continuance is specifically approved at least annually by (i) the Board of Trustees of the Fund, or by the vote of a majority of the outstanding voting securities of the Fund, and (ii) by the vote of a majority of those trustees who are not parties to this Agreement or interested persons of any such party cast in person at a meeting called for the purpose of voting on such approval.
This Agreement may be terminated at any time, without the payment of any penalty, by the Board of Trustees of the Fund or by vote of a majority of the outstanding voting securities of the Fund, or by the Distributor, on sixty days written notice to the other party. This Agreement shall automatically terminate in the event of its assignment.
The terms "vote of a majority of the outstanding voting securities", "assignment", "affiliated person" and "interested person", when used in this Agreement, shall have the respective meanings specified in the Investment Company Act.
14.
Section 11. Amendments of this Agreement. This Agreement may be amened by the parties only if such amendment is specifically approved by (i) the Board of Trustees of the Fund, or by the vote of a majority of outstanding voting securities of the Fund, and (ii) by the vote of a majority of those trustees of the Fund who are not parties to this Agreement or interested persons of any such party cast in person at a meeting called for the purpose of voting on such approval.
Section 12. Governing Law. The provisions of this Agreement shall be construed and interpreted in accordance with the laws of the State of New York as at the time in effect and the applicable provisions of the Investment Company Act. To the extent that the applicable law of the State of New York, or any of the provisions herein, conflict with the applicable provisions of the Investment Company Act, the latter shall control.
Section 13. Personal Liability. The Declaration of Trust establishing Merrill Lynch Natural Resources Trust, dated April 12, 1985, a copy of which, together with all amendments thereto (the "Declaration"), is on file in the office of the Secretary of the Commonwealth of Massachusetts, provides that the name "Merrill Lynch Natural Resources Trust" refers to the trustees under the Declaration collectively as trustees, but not as individuals or personally; and no trustee, shareholder, officer, employee or agent of the Fund shall be held to any personal liability, nor shall resort be had to their private property for
15.
the satisfaction of any obligation or claim or otherwise in connection with the affairs of the Fund, but the "Trust Property" only shall be liable.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.
MERRILL LYNCH NATURAL RESOURCES TRUST
By /s/ Arthur Zeikel MERRILL LYNCH FUNDS DISTRIBUTOR, INC. By /S/ Terry K. Glenn |
16.
EXHIBIT A
MERRILL LYNCH NATURAL RESOURCES TRUST
SHARES OF BENEFICIAL INTEREST
SELECTED DEALERS AGREEMENT
FOR SUBSCRIPTION PERIOD
Gentlemen:
Merrill Lynch Funds Distributor, Inc. (the "Distributor") has an agreement with Merrill Lynch Natural Resources Trust, a Massachusetts business trust (the "Fund"), pursuant to which it acts as the distributor for the sale of shares of beneficial interest, par value $0.20 per share, of the Fund, and as such has the right to distribute shares of the Fund for resale. The Fund is an open-end investment company registered under the Investment Company Act of 1940, as amended, and its shares being offered to the public are registered under the Securities Act of 1933, as amended. Such shares and certain of the terms on which they are being offered are more fully described in the enclosed Prospectus and Statement of Additional Information. You have received a copy of the Distribution Agreement between ourself and the Fund and reference is made herein to certain provisions of such Distribution Agreement. This Agreement relates solely to the subscription period described in Section 3(a) of such Distribution Agreement. Subject to the foregoing, as principal, we offer to sell to you, as a member of the Selected Dealers Group, shares of the Fund upon the following terms and conditions:
1. The subscription period referred to in Section 3(a) of
the Distribution Agreement will continue through July _, 1985.
The subscription period may be extended upon agreement between
the Fund and the Distributor. Subject to the provisions of such
Section and the conditions contained herein, we will sell to you
on the fifth business day following the termination of the
subscription period, or such other date as we may advise (the
"Closing Date"), such number of shares as to which you have
placed orders with us not later than 5:00 P.M. on the second full
business day preceding the Closing Date.
2. In all sales of these shares to the public you shall act as dealer for your own account, and in no transaction shall you have any authority to act as agent for the Fund, for us or for any other member of the Selected Dealers Group.
3. You shall not place orders for any of the shares unless you have already received purchase orders for such shares at the
applicable public offering prices and subject to the terms hereof and of the Distribution Agreement. All orders are subject to acceptance by the Distributor or the Fund in the sole discretion of either. The minimum initial and subsequent purchase requirements are as set forth in the Prospectus, as amended from time to time. You agree that you will not offer or sell any of the shares except under circumstances that will result in compliance with the applicable Federal and state securities laws and that in connection with sales and offers to sell shares you will furnish to each person to whom any such sale or offer is made a copy of the Prospectus and, if requested, the Statement of Additional Information (as then amended or supplemented) and will not furnish to any person any information relating to the shares of the Fund which is inconsistent in any respect with the information contained in the Prospectus and Statement of Additional Information (as then amended or supplemented) or cause any advertisement to be published in any newspaper or posted in any public place without our consent and the consent of the Fund.
4. Payment for shares purchased by you is to be made by certified or official bank check at the office of Merrill Lynch Funds Distributor, Inc., 633 Third Avenue, New York, N.Y. 10017 on such date as we may advise, in New York Clearing House funds payable to the order of Merrill Lynch Funds Distributor, Inc. against delivery by us of non-negotiable share deposit receipts ("Receipts") issued by The Bank of New York, as shareholder servicing agent, acknowledging the deposit with it of the shares so purchased by you. You agree that as promptly as practicable after the delivery of such shares you will issue appropriate written transfer instructions to the Fund or to the shareholder servicing agent as to the purchasers to whom you sold the shares.
5. No person is authorized to make any representations concerning shares of the issuer except those contained in the current Prospectus and Statement of Additional Information of the Fund and in such printed information subsequently issued by us or the Fund as information supplemental to such Prospectus and Statement of Additional Information. In purchasing shares through us you shall rely solely on the representations contained in the Prospectus and Statement of Additional Information and supplemental information above mentioned. Any printed informa- tion which we furnish you other than the Fund's Prospectus and Statement of Additional Information, periodic reports and proxy solicitation material are our sole responsibility and not the responsibility of the Fund, and you agree that the Fund shall have no liability or responsibility to you in these respects unless expressly assumed in connection therewith.
6. You agree to deliver to each of the purchasers making purchases from you a copy of the then current Prospectus and, if
2.
requested, the Statement of Additional Information at or prior to the time of offering or sale and you agree thereafter to deliver to such purchasers copies of the annual and interim reports and proxy solicitation materials of the Fund. You further agree to endeavor to obtain Proxies from such purchasers. Additional copies of the Prospectus and Statement of Additional Information, annual or interim reports and proxy solicitation materials of the Fund will be supplied to you in reasonable quantities upon request.
7. We reserve the right in our discretion, without notice, to suspend sales or withdraw the offering of shares entirely. Each party hereto has the right to cancel this agreement upon notice to the other party.
8. We shall have full authority to take such action as we may deem advisable in respect of all matters pertaining to the continuous offering. We shall be under no liability to you except for lack of good faith and for obligations expressly assumed by us herein. Nothing contained in this paragraph is intended to operate as, and the provisions of this paragraph shall not in any way whatsoever constitute, a waiver by you of compliance with any provision of the Securities Act of 1933, as amended, or of the rules and regulations of the Securities and Exchange Commission issued thereunder.
9. You represent that you are a member of the National Association of Securities Dealers, Inc. and, with respect to any sales in the United States, we both hereby agree to abide by the Rules of Fair Practice of such Association.
10. Upon application to us, we will inform you as to the states in which we believe the shares have been qualified for sale under, or are exempt from the requirements of, the respective securities laws of such states, but we assume no responsibility or obligation as to your right to sell shares in any jurisdiction. We will file with the Department of State in New York a Further State Notice with respect to the shares, if necessary.
11. All communications to us should be sent to the address below. Any notice to you shall be duly given if mailed or telegraphed to you at the address specified by you below.
12. You agree that you will not sell any shares of the Fund to any account over which you exercise discretionary authority.
3.
13. This Agreement shall terminate at the close of business on the Closing Date, unless earlier terminated, provided, however, this Agreement shall continue after termination for the purpose of settlement of accounts hereunder.
MERRILL LYNCH FUNDS DISTRIBUTOR, INC.
By
(Authorized Signature)
Please return one signed copy
of this agreement to:
MERRILL LYNCH FUNDS DISTRIBUTOR, INC.
633 Third Avenue
New York, N. Y. 10017
Accepted:
Firm Name:
By:
Address:
Date:
4.
EXHIBIT B
MERRILL LYNCH NATURAL RESOURCES TRUST
SHARES OF BENEFICIAL INTEREST
SELECTED DEALERS AGREEMENT
Gentlemen:
Merrill Lynch Funds Distributor, Inc. (the "Distributor".) has an agreement with Merrill Lynch Natural Resources Trust, a Massachusetts business trust (the "Fund"), pursuant to which it acts as the distributor for the sale of shares of beneficial interest, par value $0.10 per share, of the Fund, and as such has the right to distribute shares of the Fund for resale. The Fund is an open-end investment company registered under the Investment Company Act of 1940, as amended, and its shares being offered to the public are registered under the Securities Act of 1933, as amended. You have received a copy of the Distribution Agreement between ourself and the Fund and reference is made herein to certain provisions of such Distribution Agreement. The terms "Prospectus" and "Statement of Additional Informationit as used herein refer to the prospectus and statement of additional information, respectively, on file with the Securities and Exchange Commission which is part of the most recent effective registration statement pursuant to the Securities Act of 1933, as amended. As principal, we offer to sell to you, as a member of the Selected Dealers Group, shares of the Fund upon the following terms and conditions:
1. In all sales of these shares to the public you shall act as dealer for your own account, and in no transaction shall you have any authority to act as agent for the Fund, for us or for any other member of the Selected Dealers Group.
2. Orders received from you will be accepted through us only at the public offering price applicable to each order, as set forth in the current Prospectus and Statement of Additional Information of the Fund. The procedure relating to the handling of orders shall be subject to Section 4 hereof and instructions which we or the Fund shall forward from time to time to you. All orders are subject to acceptance or rejection by the Distributor or the Fund in the sole discretion of either. The minimum initial and subsequent purchase requirements are as set forth in the current Prospectus and Statement of Additional Information of the Fund.
3. You shall not place orders for any of the shares unless you have already received purchase orders for such shares at the
applicable public offering prices and subject to the terms hereof and of the Distribution Agreement. You agree that you will not offer or sell any of the shares except under circumstances that will result in compliance with the applicable Federal and state securities laws and that in connection with sales and offers to sell shares you will furnish to each person to whom any such sale or offer is made a copy of the Prospectus and, if requested, the Statement of Additional Information (as then amended or supple- mented) and will not furnish to any person any information relating to the shares of the Fund, which is inconsistent in any respect with the information contained in the Prospectus and Statement of Additional Information (as then amended or supple- mented) or cause any advertisement to be published in any newspaper or posted in any public place without our consent and the consent of the Fund.
4. As a selected dealer, you are hereby authorized (i) to
place orders directly with the Fund for shares of the Fund to be
resold by us to you subject to the applicable terms and condi-
tions governing the placement of orders by us set forth in
Section 3 of the Distribution Agreement, and (ii) to tender
shares directly to the Fund or its agent for redemption subject
to the applicable terms and conditions set forth in Section 4 of
the Distribution Agreement.
5. You shall not withhold placing orders received from your customers so as to profit yourself as a result of such withholding: e.g., by a change in the "net asset value" from that used in determining the offering price to your customers.
6. No person is authorized to make any representations concerning shares of the Fund except those contained in the current Prospectus and Statement of Additional Information of the Fund and in such printed information subsequently issued by us or the Fund as information supplemental to such Prospectus and Statement of Additional Information. In purchasing shares through us you shall rely solely on the representations obtained in the Prospectus and Statement of Additional Information and supplemental information above mentioned. Any printed informa- tion which we furnish you other than the Fund's Prospectus, Statement of Additional Information, periodic reports and proxy solicitation material are our sole responsibility and not the responsibility of the Fund, and you agree that the Fund shall have no liability or responsibility to you in these respects unless expressly assumed in connection therewith.
7. You agree to deliver to each of the purchasers making purchases from you a copy of the then current Prospectus and, if requested, the Statement of Additional Information at or prior to the time of offering or salt and you agree thereafter to deliver
2.
to such purchasers copies of the annual and interim reports and proxy solicitation materials of the Fund. You further agree to endeavor to obtain proxies from such purchasers. Additional copies of the Prospectus and Statement of Additional Information, annual or interim reports and proxy solicitation materials of the Fund will be supplied to you in reasonable quantities upon request.
8. We reserve the right in our discretion, without notice, to suspend sales or withdraw the offering of shares entirely. Each party hereto has the right to cancel this agreement upon notice to the other party.
9. We shall have full authority to take such action as we may deem advisable in respect of all matters pertaining to the continuous offering. We shall be under no liability to you except for lack of good faith and for obligations expressly assumed by us herein. Nothing contained in this paragraph is intended to operate as, and the provisions of this paragraph shall not in any way whatsoever constitute, a waiver by you of compliance with any provision of the Securities Act of 1933, as amended, or of the rules and regulations of the Securities and Exchange Commission issued thereunder.
10. You represent that you are a member of the National Association of Securities Dealers, Inc. and, with respect to any sales in the United States, we both hereby agree to abide by the Rules of Fair Practice of such Association.
11. Upon application to us, we will inform you as to the states in which we believe the shares have been qualified for sale under, or are exempt from the requirements of, the respective securities laws of such states, but we assume no responsibility or obligation as to your right to sell shares in any jurisdiction. We will file with the Department of State in New York a Further State Notice with respect to the shares, if necessary.
12. All communications to us should be sent to the address below. Any notice to you shall be duly given if mailed or telegraphed to you at the address specified by you below.
3.
13. Your firstorder placed pursuant to this Agreement for the purchase of shares of the Fund will represent your acceptance of this Agreement.
MERRILL LYNCH FUNDS DISTRIBUTOR, INC.
By/s/
Please return one signed copy
of this agreement to:
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MERRILL LYNCH FUNDS DISTRIBUTOR, INC.
633 Third Avenue
New York, N. Y. 10017
Accepted:
Firm Name:
By:
Address:
Date:
4.
Ex-99.8
CUSTODY AGREEMENT
Agreement made as of this 10th day of June ,1985,
between Merrill Lynch Natural Resources Trust , a
Massachusetts business trust organized and existing under
the laws of the Commonwealth of Massachusetts, having its
principal office and place of business at
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(hereinafter called the 'Fund'), and THE BANK OF NEW YORK, a New York corporation authorized to do a banking business, having its principal office and place of business at 48 Wall Street, New York, New York 10015 (hereinafter called the "Custodian").
W I T N E S S E T H
that for and in consideration of the mutual promises herein- after set forth the Fund and the Custodian agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases, unless the context otherwise requires, shall have the following meanings:
1. "Authorized Person' shall be deemed to include any person, whether or not such person is an officer or employee of the Fund, duly authorized by the Board of Trustees of the Fund to give Oral Instructions and Written Instructions on behalf of the Fund and listed in the Certificate annexed hereto as Appendix A or such other Certificate as may be received by the Custodian from time to time.
2. "Book-Entry System" shall mean the Federal Reserve/Treasury book-entry system for United States and federal agency securities, its successor or successors and its nominee or nominees.
3 "Certificate" shall mean any notice, instruction, or other instrument in writing, authorized or required by this Agreement to be given to the Custodian which is actu- ally received by the Custodian and signed on behalf of the Fund by any two officers.
4. "Call option" shall mean an exchange traded option with respect to Securities other than Stock Index options, Futures Contracts, and Futures Contract Options entitling the holder, upon timely exercise and payment of the exercise price, as specified therein, to purchase from the writer thereof the specified underlying Securities.
5. "Covered Call Option" shall mean an exchange trade option entitling the holder, upon timely exercise and pay- ment of the exercise price, as specified therein, to pur- chase from the writer thereof the specified underlying Securities (excluding Futures Contracts) which are owned by the writer thereof and subject to appropriate restrictions.
6. "Clearing Member" shall mean a registered broker- dealer which is a clearing member under the rules of O.C.C. and a member of a national securities exchange qualified to act as a custodian for an investment company, or any broker- dealer reasonably believed by the Custodian to be such a clearing member.
7. "Collateral Account" shall mean a segregated account so denominated which is specifically allocated to a Series and pledged to the Custodian as security for, and in consideration of, the Custodian's issuance of (a) any Put Option guarantee letter or similar document described in paragraph 8 of Article V herein, or (b) any receipt des- cribed in Article V or VIII herein.
8. "Depository' shall mean The Depository Trust Com- pany ("DTC"), a clearing agency registered with the Securi- ties and Exchange Commission, its successor or successors and its nominee or nominees. The term "Depository" shall further mean and include any other person authorized to act as a depository under the Investment Company Act of 1940, its successor or successors and its nominee or nominees, specifically identified in a certified copy of a resolution of the Fund's Board of Trustees specifically approving deposits therein by the Custodian.
9. "Financial Futures Contract" shall mean the firm commitment to buy or sell fixed income securities including,
without limitation, U.S. Treasury Bills, U.S. Treasury Notes, U.S. Treasury Bonds, domestic bank certificates of deposit, and Eurodollar certificates of deposit, during a specified month at an agreed upon price.
10. "Futures Contract" shall mean a Financial Futures Contract and/or Stock Index Futures Contracts.
11. "Futures Contract Option" shall mean an option with respect to a Futures Contract.
12. "Margin Account" shall mean a segregated account in the name of a broker, dealer, futures commission mer- chant, or a Clearing Member, or in the name of the Fund for the benefit of a broker, dealer, futures commission mer- chant, or Clearing Member, as the case may be, separate and distinct from the custody account, in which certain Securi- ties and/or money of the Fund shall be deposited and with- drawn from time to time in connection with such transactions as the Fund may from time to time determine. Securities held in the Book-Entry System or the Depository shall be deemed to have been deposited in, or withdrawn from, a Margin Account upon the Custodian's effecting an appropriate entry in its books and records.
13. 'Money Market Security" shall be deemed to include, without limitation, certain Reverse Repurchase Agreements, debt obligations issued or guaranteed as to interest and principal by the government of the United States or agencies or instrumentalities thereof, any tax, bond or revenue anticipation note issued by any state or municipal government or public authority, commercial paper, certificates of deposit and bankers' acceptances, repurchase and reverse repurchase agreements with respect to the same and bank time deposits, where the purchase and sale of such securities normally requires settlement in federal funds on the same day as such purchase or sale.
14. "O.C.C." shall mean the Options Clearing Corpora- tion, a clearing agency registered under Section 17A of the Securities Exchange Act of 1934, its successor or succes- sors, and its nominee or nominees.
15. "Officers" shall be deemed to include the President, any vice President, the Secretary, the Clerk, the Treasurer, the Controller, any Assistant Secretary, any Assistant Clerk, any Assistant Treasurer, and any other per- son or persons, whether or not any such other person is an
officer of the Fund, duly authorized by the Board of Trus- tees of the Fund to execute any Certificate, instruction, notice or other instrument on behalf of the Fund and listed in the Certificate annexed hereto as Appendix B or such other Certificate as may be received by the Custodian from time to time.
16. "Option" shall mean a Call Option, Covered Call option, Stock Index Option and/or a Put option.
17. "Oral Instructions" shall mean verbal instruc- tions actually received by the Custodian from an Authorized Person or from a person reasonably believed by the Custodian to be an Authorized Person.
18. "Put option" shall mean an exchange traded option with respect to Securities other than Stock Index options, Futures Contracts, and Futures Contract options entitling the holder, upon timely exercise and tender of the specified underlying Securities, to sell such Securities to the writer thereof for the exercise price.
19. "Reverse Repurchase Agreement" shall mean an agreement pursuant to which the Fund sells Securities and agrees to repurchase such Securities at a described or specified date and price.
20. "Security" shall be deemed to include, without limitation, Money Market Securities, Call options, Put options, Stock Index Options, Stock Index Futures Contracts, Stock Index Futures Contract options, Financial Futures Con- tracts, Financial Futures Contract Options, Reverse Repur- chase Agreements, common stocks and other securities having characteristics similar to common stocks, preferred stocks, debt obligations issued by state or municipal governments and by public authorities, (including, without limitation, general obligation bonds, revenue bonds and industrial bonds and industrial development bonds), bonds, debentures, notes, mortgages or other obligations, and any certificates, receipts, warrants or other instruments representing rights to receive, purchase, sell or subscribe for the same, or evidencing or representing any other rights or interest therein, or any property or assets.
21. "Senior Security Account" shall mean an account maintained and specifically allocated to a Series under the terms of this Agreement as a segregated account, by recorda- tion or otherwise within the custody account in which cer- tain Securities and/or other assets of the Fund specifically allocated to such Series shall be deposited and withdrawn
from time to time in accordance with Certificates received by the Custodian in connection with such transactions as the Fund may from time to time determine.
22. "Series" shall mean the various portfolios, if any, of the Fund as described from time to time in the current and effective prospectus for the Fund.
23. "Stock Index Futures Contract" shall mean a bi- lateral agreement pursuant to which the parties agree to take or make delivery of an amount of cash equal to a speci- fied dollar amount times the difference between the value of a particular stock index at the close of the last business day of the contract and the price at which the futures con- tract is originally struck.
24. "Stock index option" shall mean an exchange traded option entitling the holder, upon timely exercise, to receive an amount of cash determined by reference to the difference between the exercise price and the value of the index on the date of exercise.
25. "Shares" shall mean the shares of beneficial interest of the Fund, each of which is in the case of a Fund having Series allocated to a particular Series.
26. "Written Instructions" shall mean written com- munications actually received by the Custodian from an Authorized Person or from a person reasonably believed by the Custodian to be an Authorized Person by telex or any other such system whereby the receiver of such communica- tions is able to verify by codes or otherwise with a reason- able degree of certainty the identity of the sender of such communication.
ARTICLE II
APPOINTMENT OF CUSTODIAN
The Fund hereby constitutes and appoints the Custodian as custodian of the Securities and moneys at any time owned by the Fund during the period of this Agreement.
2. The Custodian hereby accepts appointment as such custodian and agrees to perform the duties thereof as here- inafter set forth.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
1. Except as otherwise provided in paragraph 7 of this Article and in Article VIII, the Fund will deliver or cause to be delivered to the Custodian all Securities and all moneys owned by it, at any time during the period of this Agreement, and shall specify with respect to such Securities and money the Series to which the same are speci- fically allocated. The Custodian shall segregate, keep and maintain the assets. of the Series separate and apart. The Custodian will not be responsible for any Securities and moneys not actually received by it. The Custodian will be entitled to reverse any credits made on the Fund's behalf where such credits have been previously made and moneys are not finally collected. The Fund shall deliver to the Custo- dian a certified resolution of the Board of Trustees of the Fund, substantially in the form of Exhibit A hereto, approv- ing, authorizing and instructing the Custodian on a continu- ous and on-going basis to deposit in the Book-Entry System all Securities eligible for deposit therein, regardless of the Series to which the same are specifically allocated and to utilize the Book-Entry System to the extent possible in connection with its performance hereunder, including, with- out limitation, in connection with settlements of purchases and sales of Securities, loans of Securities, and deliveries and returns of Securities collateral. Prior to a deposit of Securities specifically allocated to a Series in the Deposi- tory, the Fund shall deliver to the Custodian a certified resolution of the Board of Trustees of the Fund, substan- tially in the form of Exhibit B hereto, approving, authoriz- ing and instructing the Custodian on a continuous and on- going basis until instructed to the contrary by a Certifi- cate actually received by the Custodian to deposit in the Depository all Securities specifically allocated to such Series eligible for deposit therein, and to utilize the Depository to the extent possible with respect to such Securities in connection with its performance hereunder, including, without limitation, in connection with settle- ments of purchases and sales of Securities, loans of Securi- ties, and deliveries and returns of Securities collateral. securities and moneys deposited in either the Book-Entry System or the Depository will be represented in accounts which include only assets held by the Custodian for custo- mers, including, but not limited to, accounts in which the Custodian acts in a fiduciary or representative capacity. prior to the Custodian's accepting, utilizing and acting with respect to Clearing Member confirmations for options and transactions in options for a Series as provided in this
Agreement, the Custodian shall have received a certified resolution of the Fund's Board of Trustees, substantially in the form of Exhibit C hereto, approving, authorizing and instructing the Custodian on a continuous and on-going basis, until instructed to the contrary by a Certificate actually received by the Custodian, to accept, utilize and act in accordance with such confirmations as provided in this Agreement with respect to such Series.
2. The Custodian shall establish and maintain separate accounts, in the name of each Series, and shall credit to the separate account for each Series all moneys received by it for the account of the Fund with respect to such Series. Money credited to a separate account for a Series shall be disbursed by the Custodian only:
(a) As hereinafter provided;
(b) Pursuant to Certificates setting forth the name and address of the person to whom the payment is to be made, the Series account from which payment is to be made, and the purpose for which payment is to be made; or
(c) In payment of the fees and in reimbursement of the expenses and liabilities of the Custodian attribu- table to such Series.
3. Promptly after the close of business on each day the Custodian shall furnish the Fund with confirmations and a summary, on a per Series basis, of all transfers to or from the account of the Fund for a Series, either hereunder or with any co-custodian or sub-custodian appointed in accordance with this Agreement during said day. Where Securities are transferred to the account of the Fund for a Series, the Custodian shall also by book-entry or otherwise identify as belonging to such Series a quantity of Securi- ties in a fungible bulk of Securities registered in the name of the Custodian (or its nominee) or shown on the Custo- dian's account on the books of the Book-Entry System or the Depository. At least monthly and from time to time, the Custodian shall furnish the Fund with a detailed statement, on a per Series basis, of the Securities and moneys held by the Custodian for the Fund.
4. Except as otherwise provided in paragraph 7 of this Article and in Article VIII, all Securities held by the Custodian hereunder, which are issued or issuable only in bearer form, except such Securities as are held in the Book-Entry System, shall be held by the Custodian in that form; all other Securities held hereunder may be registered in the name of the Fund, in the name of any duly appointed
registered nominee of the Custodian as the Custodian may from time to time determine, or in the name of the Book- Entry System or the Depository or their successor or succes- sors, or their nominee or nominees. The Fund agrees to furnish to the Custodian appropriate instruments to enable the Custodian to hold or deliver in proper form for trans- fer, or to register in the name of its registered nominee or in the name of the Book-Entry System or the Depository any Securities which it may hold hereunder and which may from time to time be registered in the name of the Fund. The Custodian shall hold all such Securities specifically allo- cated to a Series which are not held in the Book-Entry System or in the Depository in a separate account in the name of such Series physically segregated at all times from those of any other person or persons,
5. Except as otherwise provided in this Agreement and unless otherwise instructed to the contrary by a Certi- ficate, the Custodian by itself, or through the use of the Book-Entry System or the Depository with respect to Securi- ties held hereunder and therein. deposited, shall with respect to all Securities held for the Fund hereunder:
(a) Collect all income due or payable;
(b) Present for payment and collect the amount payable upon such Securities which may be called, but only if either (i) the Custodian receives a written notice of such call, or (ii) notice of such call appears in one or more of the publications listed in Appendix C annexed hereto, which may be amended at any time by the Custodian without the prior notification or consent of the Fund;
(c) Present for payment and collect the amount payable upon all Securities which may mature or be redeemed, or retired,, or otherwise become payable;
(d) Surrender Securities in temporary form for definitive Securities;
(e) Execute, as custodian, any necessary declara- tions or certificates of ownership under the Federal Income Tax Laws or the laws or regulations of any other taxing authority now or hereafter in effect; and
(f) Hold directly? or through the Book-Entry System or the Depository with respect to Securities therein deposited, for the account of a Series, all rights and simi- lar securities issued with respect to any Securities held by the Custodian for such Series hereunder.
6 Upon receipt of a Certificate and not otherwise, the Custodian, directly or through the use of the Book-Entry System or the Depository, shall:
(a) Execute and deliver to such persons as may be designated in such Certificate proxies, consents, authoriza- tions, and any other instruments whereby the authority of the Fund as owner of any Securities held by the Custodian hereunder for the Series specified in such Certificate may be exercised;
(b) Deliver any Securities held by the Custodian hereunder for the series specified in such Certificate in exchange for other Securities or cash issued or paid in con- nection with the liquidation, reorganization, refinancing, merger, consolidation or recapitalization of any corpora- tion, or the exercise of any conversion privilege and receive and hold hereunder specifically allocated to such Series any cash or other Securities received in exchange;
(c) Deliver any Securities held by the Custodian hereunder for the Series specified in such Certificate to any protective committee, reorganization committee or other person in connection with the reorganization, refinancing, merger, consolidation, recapitalization or sale of assets of any corporation, and receive and hold hereunder specifically allocated to such Series such certificates of deposit, interim receipts or other instruments or documents as may be issued to it to evidence such delivery;
(d) Make such transfers or exchanges of the assets of the Series specified in such Certificate, and take such other steps as shall be stated in such Certificate to be for the purpose of effectuating any duly authorized plan of liquidation, reorganization, merger, consolidation or recapitalization of the Fund; and
(e) Present for payment and collect the amount payable upon Securities not described in preceding paragraph 5(b) of this Article which may be called as specified in the Certificate.
7. Notwithstanding any provision elsewhere contained herein, the Custodian shall not be required to obtain pos- session of any instrument or certificate representing any Futures Contract, any Option, or any Futures Contract Option until after it shall have determined, or shall have received a Certificate from the Fund stating, that any such instru- ments or certificates are available. The Fund shall deliver to the Custodian such a Certificate no later than the busi- ness day preceding the availability of any such instrument or certificate. Prior to such availability the Custodian
shall comply with Section 17f of the investment Company Act of 1940, as amended, in connection with the purchase, sale, settlement, closing out or writing of Futures Contracts, options, or Futures Contract Options by making payments or deliveries specified in Certificates received by the Custo- dian in connection with any such purchase, sale, writing, settlement or closing out upon its receipt from a broker, dealer, or futures commission merchant of a statement or confirmation reasonably believed by the Custodian to be in the form customarily used by brokers, dealers, or future commission merchants with respect to such Futures Contractst Options, or Futures Contract Options, as the case may be, confirming that such Security is held by such broker, dealer or futures commission merchant in book-entry form or other- wise, in the name of the Custodian (or any nominee of the Custodian) as custodian for the Fund. Whenever any such instruments or certificates are available, the Custodian shall, notwithstanding any provision in this Agreement to the contrary, make payment for any Futures Contract, Option, or Futures Contract option for which such instruments or such certificates are available only against the delivery to the Custodian of such instrument or such certificate, and deliver any Future Contract, option or Futures Contract option for which such instruments or such instruments or such certificates are available only against receipt by the Custodian of payment therefor. Any such instrument or certificate delivered to the Custodian shall be held by the Custodian hereunder in accordance with, and subject to, the provisions of this Agreement,
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
OTHER THAN OPTIONS, FUTURES CONTRACTS AND
FUTURES CONTRACT OPTIONS
1. Promptly after each purchase of Securities by the
Fund, other than a purchase of an option, a Futures Con-
tract, or a Futures Contract option, the Fund shall deliver
to the Custodian (i) with respect to each purchase of
Securities which are not Money Market Securities, a Certifi-
cate, and (ii) with respect to each purchase of Money Market
Securities, a Certificate, Oral Instructions or Written
Instructions, specifying with respect to each such purchase:
(a) the Series to which such Securities are to be speci-
fically allocated; (b) the name of the issuer and the title
of the Securities; (c) the number of shares or the principal
amount purchased and accrued interest, if any; (d) the date
of purchase and settlement; (e) the purchase price per unit;
(f) the total amount payable upon such purchase; (g) the
name of the person from whom or the broker through whom the
purchase was made, and the name of the clearing broker, if any; and (h) the name of the broker to whom payment is to be made. The Custodian shall, upon receipt of Securities pur- chased by or for the Fund, pay to the broker specified in the Certificate out of the moneys held for the account of such Series the total amount payable upon such purchase, provided that the same conforms to the total amount payable as set forth in such Certificate, Oral instructions or Written Instructions.
2. Promptly after each sale of Securities by the Fund, other than a sale of any option, Futures Contract, Futures Contract Option, or any Reverse Repurchase Agree- ment, the Fund shall deliver to the Custodian (i) with respect to each sale of Securities which are not Money Market Securities, a Certificatep and (ii) with respect to each sale of Money Market Securities, a Certificate, Oral Instructions or Written Instructions, specifying with re- spect to each such sale: (a) the Series to which such Se- curities were specifically allocated; (b) the name of the issuer and the title of the Security; (c) the number of shares or principal amount sold, and accrued interest, if any; (d) the date of sale; (e) the sale price per unit; (f) the total amount payable to the Fund upon such sale; (g) the name of the broker through whom or the person to whom the sale was made, and the name of the clearing broker, if any; and (h) the name of the broker to whom the Securities are to be delivered. The Custodian shall deliver the Securities specifically allocated to such Series to the broker speci- fied in the Certificate upon the total amount payable to the Fund upon such sale, provided that the same conforms to the total amount payable as set forth in such Certificate, Oral instructions or Written Instructions.
ARTICLE V
OPTIONS
1. Promptly after the purchase of any option by the Fund, the Fund shall deliver to the Custodian a Certificate specifying with respect to each Option purchased: (a) the Series to which such option is specifically allocated; (b) the type of option (put or call); (c) the name of the issuer and the title and number of shares subject to such option orp in the case of a Stock Index option, the stock index to which such Option relates and the number of Stock index options purchased (d) the expiration date; (e) the exercise price; (f) the dates of purchase and settlement (g) the total amount payable by the Fund in connection with such purchase; (h) the name of the Clearing Member through whom such Option was purchased; and (i) the name of the broker to whom payment is to be made. The Custodian shall pay, upon
receipt of a Clearing Member's statement confirming the purchase of such option held by such Clearing Member for the account of the Custodian (or any duly appointed and regis- tered nominee of the Custodian) as custodian for the Fund,, out of moneys held for the account of the Series to which such Option is to be specifically allocated, the total amount payable upon such purchase to the Clearing Member through whom the purchase was made, provided that the same conforms to the total amount payable as set forth in such Certificate.
2. Promptly after the sale of any option purchased by the Fund pursuant to paragraph I hereof, the Fund shall deliver to the Custodian a Certificate specifying with respect to each such sale: (a) the Series to which such option was specifically allocated; (b) the type of option (put or call) ; (c) the name of the issuer and the title and number of shares subject to such option or, in the case of a Stock Index option, the stock index to which such option relates and the number of Stock Index options sold; (d) the date of sale; (e) the sale price; (f) the date of settle- ment; (g) the total amount payable to the Fund upon such sale; and (h) the name of the Clearing Member through whom the sale was made. The Custodian shall consent to the delivery of the option sold by the Clearing Member which previously supplied the confirmation described in preceding paragraph 1 of this Article with respect to such Option against payment to the Custodian of the total amount payable to the Fund, provided that the same conforms to the total amount payable as set forth in such Certificate.
3. Promptly after the exercise by the Fund of any
Call option purchased by the Fund pursuant to paragraph 1
hereof, the Fund shall deliver to the Custodian a Certi-
ficate specifying with respect to such Call option: (a) the
Series to which such Call Option was specifically allocated;
(b) the name of the issuer and the title and number of
shares subject to the Call Option; (c) the expiration date;
(d) the date of exercise and settlement; (e) the exercise
price per share; (f) the total amount to be paid by the
Fund upon such exercise; and (g) the name of the Clearing
Member through whom such Call option was exercised. The
Custodian shall, upon receipt of the Securities underlying
the Call option which was exercised pay out of the moneys
held for the account of the Series to which such Call option
was specifically allocated the total amount payable to the
Clearing Member through whom the Call option was exercised,
provided that the same conforms to the total amount payable
as set forth in such Certificate.
4. Promptly after the exercise by the Fund of any Put option purchased by the Fund pursuant to paragraph 1 hereof, the Fund shall deliver to the Custodian a Certificate specifying with respect to such Put option: (a) the Series to which such Put option was specifically allocated; (b) the name of the issuer and the title and number of shares subject to the Put option; (c) the expiration date; (d) the date of exercise and settlement; (e) the exercise price per share; (f) the total amount to be paid to the Fund upon such exercise; and (g) the name of the Clearing Member through whom such Put Option was exercised. The Custodian shall, upon receipt of the amount payable upon the exercise of the Put option, deliver or direct the Depository to deliver the Securties specifically allocated to such Series, provided the same conforms to the amount payable to the Fund as set forth in such Certificate.
5. Promptly after the exercise by the Fund of any
Stock Index option purchased by the Fund pursuant to para-
graph 1 hereof, the Fund shall deliver to the Custodian a
Certificate specifying with respect to such Stock Index
option: (a) the Series to which such Stock index option was
specifically allocated; (b) the type of Stock index option
(put or call); (c) the number of options being exercised;
(d) the stock index to which such option relates; (e) the
expiration date; (f) the exercise price; (g) the total
amount to be received by the Fund in connection with such
exercise; and (h) the Clearing Member from whom such payment
is to be received.
6. Whenever the Fund writes a Covered Call Option,
the Fund shall promptly deliver to the Custodian a Certi-
ficate specifying with respect to such Covered Call Option:
(a) the Series for which such Covered Call option was
written; (b) the name of the issuer and the title and number
of shares for which the Covered Call Option was written and
which underlie the same; (c) the expiration date; (d) the
exercise price; (e) the premium to be received by the
Fund; (f) the date such Covered Call Option was written; and
(g) the name of the Clearing Member through whom the premium
is to be received. The Custodian shall deliver or cause to
be delivered, in exchange for receipt of the premium speci-
fied in the Certificate with respect to such Covered Call
option, such receipts as are required in accordance with the
customs prevailing among Clearing Members dealing in Covered
Call options and shall impose, or direct the Depository to
impose,upon the underlying Securities specified in the Cer-
tificate specifically allocated to such Series such restric-
tions as may be required by such receipts. Notwithstanding
the foregoing the Custodian has the right, upon prior
written notification to the Fund, at any time to refuse to
issue any receipts for Securities in the possession of the Custodian and not deposited with the Depository underlying a Covered Call option.
7. Whenever a Covered Call option written by the Fund and described in the preceding paragraph of this Article is exercised, the Fund shall promptly deliver to the Custodian a Certificate instructing the Custodian to deliver, or to direct the Depository to deliver, the Securities subject to such Covered Call Option and specifying: (a) the Series for which such Covered Call option was written; (b) the name of the issuer and the title and number of shares subject to the Covered Call option; (c) the Clearing Member to whom the underlying Securities are to be delivered; and (d) the total amount payable to the Fund upon such delivery. Upon the return and/or cancellation of any receipts delivered pursu- ant to paragraph 6 of this Article,, the Custodian shall deliver, or direct the Depository to deliver, the underlying Securities as specified in the Certificate for the amount to be received as set forth in such Certificate.
8. Whenever the Fund writer; a Put option, the Fund shall promptly deliver to the Custodian a Certificate speci- fying with respect to such Put option: (a) the Series for which such Put option was written; (b) the name of the issuer and the title and number of shares for which the Put option is written and which underlie the same; (c) the expiration date; (d) the exercise price; (e) the premium to be received by the Fund; (f) the date such Put Option is written; (g) the name of the Clearing Member through whom the premium is to be received and to whom a Put Option guarantee letter is to be delivered; (h) the amount of cash, and/or the amount and kind of Securities, if any, speci- fically allocated to such Series to be deposited in the Senior Security Account for such Series; and (i) the amount of cash and/or the amount and kind of Securities specifically allocated to such Series to be deposited into the Collateral Account for such Series. The Custodian shall, after making the deposits into the Collateral Account specified in the Certificate, issue a Put option guarantee letter substantially in the form utilized by the Custodian on the date hereof, and deliver the same to the Clearing Member specified in the Certificate against receipt of the premium specified in said Certificate. Notwithstanding the foregoing the Custodian shall be under no obligation to issue any Put option guarantee letter or similar document if it is unable to make any of the representations contained therein.
9. Whenever a Put option written by the Fund and described in the preceding paragraph is exercised, the
Fund shall promptly deliver to the Custodian a Certificate specifying: (a) the Series to which such put Option was written; (b) the name of the issuer and title and number of shares subject to the Put Option; (c) the Clearing Member from whom the underlying Securities are to be received; (d) the total amount payable by the Fund upon such delivery; (e) the amount of cash and/or the amount and kind of Securities specifically allocated to such Series to be withdrawn from the Collateral Account for such Series and (f) the amount of cash and/or the amount and kind of Securities, specifically allocated to such Series, if any, to be withdrawn from the Senior Security Account. Upon the return and/or cancella- tion of any Put Option guarantee letter or similar document issued by the Custodian in connection with such Put Option, the Custodian shall pay out of the moneys held for the account of the Series to which such Put option was specific- ally allocated the total amount payable to the Clearing Member specified in the Certificate as set forth in such Certificate, and shall make the withdrawals specified in such Certificate.
10. Whenever the Fund writes a Stock index option, the Fund shall promptly deliver to the Custodian a Certificate specifying with respect to such Stock Index option: (a) the Series for which such Stock index option was written; (b) whether such Stock index option is a put or a call; (c) the number of options written; (d) the stock index to which such option relates; (e) the expiration date; (f) the exercise price; (g) the Clearing Member through whom such option was written; (h) the premium to be received by the Fund; (i) the amount of cash and/or the amount and kind of Securities, if any, specifically allocated to such Series to be deposited in the Senior Security Account for such Series; (j) the amount of cash and/or the amount and kind of Securities, if any, specifically allocated to such Series to be deposited in the Collateral Account for such Series; and (k) the amount of cash and/or the amount and kind of Securities, if any, specifically allocated to such Series to be deposited in a Margin Account, and the name in which such account is to be or has been established. The Custodian shall, upon receipt of the premium specified in the Certificate,make the deposits, if any, into the Senior Security Account specified in the Certificate, and either (1) deliver such receipts, if any, which the Custodian has specifically agreed to issue, which are in accordance with the customs prevailing among Clearing Members in Stock index options and make the deposits into the Collateral Account specified in the Certificate, or (2) make the deposits into the Margin Account specified in the Certificate.
11. Whenever a Stock index option written by the Fund and described in the preceding paragraph of this Article is exercised, the Fund shall promptly deliver to the Custodian a Certificate specifying with respect to such Stock Index option: (a) the Series for which such Stock Index option was written; (b) such information as may be necessary to identi- fy the Stock Index option being exercised; (c) the Clearing Member through whom such Stock Index option is being exer- cised; (d) the total amount payable upon such exercise, and whether such amount is to be paid by or to the Fund; (e) the amount of cash and/or amount and kind of Securites, if any, to be withdrawn from the margin Account; and (f) the amount of cash and/or amount and kind of Securities, if any, to be withdrawn from the Senior Security Account for such Series; and the amount of cash and/or the amount and kind of Securi- ties, if any, to be withdrawn from the Collateral Account for such Series. Upon the return and/or cancellation of the receipt, if any, delivered pursuant to the preceding para- graph of this Article, the Custodian shall pay out of the moneys held for the account of the Series to which such Stock Index option was specifically allocated to the Clear- ing Member specified in the Certificate the total amount payable, if any, as specified therein.
12. Whenever the Fund purchases any option identical
to a previously written option described in paragraphs, 6, 8
or 10 of this Article in a transaction expressly designated
as a "Closing Purchase Transaction" in order to liquidate
its position as a writer of an option, the Fund shall
promptly deliver to the Custodian a Certificate specifying
with respect to the option being purchased: (a) that the
transaction is a Closing Purchase Transaction; (b) the
Series for which the Option was written; (c) the name of the
issuer and the title and number of shares subject to the
option, or,in the case of a Stock Index Option, the stock
index to which such option relates and the number of options
held; (d) the exercise price; (e) the premium to be paid by
the Account; (f) the expiration date; (g) the type of option
(put or call) (h) the date of such purchase; (i) the name of
the Clearing Member to whom the premium is to be paid; and
(j) the amount of cash and/or the amount and kind of Securi-
ties, if any, to be withdrawn from the Collateral Account, a
specified Margin Account, or the Senior Security Account for
such Series. Upon the Custodian's payment of the premium
and the return and/or cancellation of any receipt issued
pursuant to paragraphs 6, 8 or 10 of this Article with
respect to the option being liquidated through the Closing
Purchase Transaction, the Custodian shall removal, or direct
the Depository to remove, the previously imposed restric-
tions on the Securities underlying the Call Option.
13. Upon the expiration of exercise, or consummation of a Closing Transaction with respect to, any Option pur- chased or written by the Fund and described in this Article, the Custodian shall delete such option from the statements delivered to the Fund pursuant to paragraph 3 Article III herein, and upon the return and/or cancellation of any receipts issued by the Custodian, shall make such withdrawals from the Collateral Account, and the Margin Account and/or the Senior Security Account as may be speci- fied in a Certificate received in connection with such expiration, exercise, or consummation.
ARTICLE VI
FUTURES CONTRACTS
1. Whenever the Fund shall enter into a Futures
Contract, the Fund shall deliver to the Custodian a Certifi-
cate specifying with respect to such Futures Contract, (or
with respect to any number of identical Futures Con-
tract(s)): (a) the Series for which the Futures Contract is
being entered; (b) the category of Futures Contract (the
name of the underlying stock index or financial instrument);
(c) the number of indentical Futures Contracts entered into;
(d) the delivery or settlement date of the Futures Con-
tract(s); (e) the date the Futures Contract(s) was (were)
entered into and the maturity date; (f) whether the Fund is
buying (going long) or selling (going short) on such Futures
Contract(s); (g) the amount of cash and/or the amount and
kind of Securities, if any, to be deposited by the Custodian
in a Margin Account with respect to such Futures Contract
and the name in which such Margin Account has been, or is to
be, established; (h) the amount of cash and/or the amount
and kind of Securities, if any, to be deposited in the
Senior Security Account for such Series; (i) the name of the
broker, dealer, or futures commission merchant through whom
the Futures Contract was entered into; and (j) the amount of
fee or commission, if any, to be paid and the name of the
broker, dealer, or futures commission merchant to whom such
amount is to be paid. The Custodian shall upon receipt of
such broker's, dealer's, or futures commission merchant's,
statement confirming the purchase (creation of a long posi-
tion) or sale (creation of a short position) of a Futures
Contract(s) which is (are) held by such broker, dealer, or
futures commission merchant in the name of the Custodian (or
of any duly appointed and registered nominee of the Custo-
dian) as custodian for the Fund, make payment out of the
moneys specifically allocated to such Series of the fee or
commission, if any, specified in the Certificate and deposit in such Margin Account and/or in the Senior Security Account for such Series the amount of cash and/or the amount and kind of Securities specified in said Certificate.
2. (a) Whenever the Fund shall be required to make any variation margin payment or similar payment to a broker, dealer, or futures commission merchant with respect to an outstanding Futures Contract, it shall deliver to the Custo- dian a Certificate specifying: (a) the Series for which such payment is to be made; (b) such information as may be neces- sary to identify the Futures Contract to which such payment relates; (c) the amount of cash and/or the amount and kind of Securities to be paid or delivered and the date on which such payment or delivery is to be made; and (d) the name of the broker, dealer, or futures commission merchant to whom such payment or delivery is to be made. The Custodian shall in accordance with the Certificate make the payments and deliveries out of the money and Securities specifically allocated to such Series.
(b) Whenever the Fund shall be entitled to receive a variation margin payment or similar payment from a broker, dealer, or futures commission merchant with respect to an outstanding Futures Contracts, the Fund shall deliver to the Custodian a Certificate specifying: (a) the Series for which such payment is to be received; (b) the amount of cash and/or the amount and kind of Securities to be paid, or delivered, to the Fund in the date of such payment or delivery; and (c) the name of the broker, dealer, or futures commission merchant who shall make such payment and or delivery. The Custodian shall accept the money and/or Securities delivered by such broker, dealer, or futures commission merchant and specifically allocate the same to the Series specified in the Certificate, provided that such payment or delivery conforms to such Certificate.
3. Whenever a Futures Contract held by the Custodian
hereunder is retained by the Fund until delivery or set-
tlement is made on such Futures Contracts, the Fund shall
deliver to the Custodian a Certificate specifying: (a) the
Futures Contract and the Series to which the same relates;
(b) with respect to a Stock Index Futures Contract, the
total cash settlement amount to be paid or received, and
with respect to a Financial Futures Contract, the Securities
and/or amount of cash to be delivered or received; (c) the
broker, dealer, or futures commission merchant to or from
whom payment or delivery is to be made or received; and (d)
the amount of cash and/or Securities to be withdrawn from
the related margin Account and/or the Senior Security
Account for such Series. Upon the receipt of a broker's,
dealer's, or futures commission merchants statement or con- firmation reasonably believed by the Custodian to be in the form customarily used by brokers, dealers and futures com- mission merchants confirming that the Futures Contract is being settled and that the Fund's position in such Futures Contract is thereby terminated, the Custodian shall make the payment or delivery specified in the Certificateg and delete such Futures Contract from the statements delivered to the Fund pursuant to paragraph 3 of Article III herein.
4. Whenever the Fund shall enter into a Futures Con-
tract to offset a Futures Contract held by the Custodian
hereunder the Fund shall deliver to the Custodian a Certi-
ficate specifying: (a) the items of information required in
a Certificate described in paragraph I of this Article and
(b) the Futures Contract being offset. The Custodian shall,
upon receipt of a broker's, dealer's, or futures commission
merchant's statement or confirmation reasonably believed by
the Custodian to be in the form customarily used by brokers,
dealers and futures commission merchants confirming the off-
setting transaction, make payment out of the money specific-
ally allocated to such Seris of the fee or commission if
any, specified in the Certificate and delete the Futures
Contract being offset from the statements delivered to the
Fund pursuant to paragraph 3 of Article III herein, and make
such withdrawals from the Senior Security Account for such
Series and/or the Margin Account as may be specified in such
Certificate.
ARTICLE VII
FUTURES CONTRACT OPTIONS
1. Promptly after the purchase of any Futures Contract Option by the Fund, the Fund shall promptly deliver to the Custodian a Certificate specifying with respect to such Futures Contract Option: (a) the Series to which such option is specifically allocated; (b) the type of Futures Contract option (put or call); (c) the type of Futures Contract and such other information as may be necessary to identify the Futures Contract underlying the Futures Contract option pur- chased; (d) the expiration date; (e) the exercise price; (f) the dates of purchase and settlement; (g) the amount of premium to be paid by the Fund upon such purchase; (h) the name of the broker or futures commission merchant through whom such option was purchased; and (i) the name of the broker, or futures commission merchant to whom payment is to be made. The Custodian shall pays, upon receipt of a
broker's or futures commission merchant's statement confirm- ing the purchase of such Futures Contract option which is held by such broker or futures commission merchant in the name of the Custodian (or any duly appointed and registered nominee of the Custodian) as custodian for the Fund, out of the moneys specifically allocated to such Series the total amount to be paid upon such purchase to the broker or futures commissions merchant through whom the purchase was made, provided that the same conforms to the amount set forth in such Certificate.
2. Promptly after the sale of any Futures Contract Option purchased by the Fund pursuant to paragraph 1 hereof, the Fund shall promptly deliver to the Custodian a Certifi- cate specifying with respect to each such sale: (a) Series to which such Futures Contract Option was specifically allocated; (b) the type of Future Contract Option (put or call); (c) the type of Futures Contract and such other information as may be necessary to identify the Futures Con- tract underlying the Futures Contract option; (d) the date of sale; (e) the sale price; (f) the date of settlement; (g) the total amount payable to the Fund upon such sale; and (h) the name of the broker of futures commission merchant through whom the sale was made. The Custodian shall consent to the cancellation of the Futures Contract Option being closed against payment to the Custodian of the total amount payable to the Fund, provided the same conforms to the total amount payable as set forth in such Certificate.
3. Whenever a Futures Contract option purchased by the Fund pursuant to paragraph 1 is exercised by the Fund, the Fund shall promptly deliver to the Custodian a Certificate specifying: (a) the Series to which such Futures Contract option was specifically allocated; (b) the particular Futures Contract option (put or call) being exercised; (c) the type of Futures Contract underlying the Futures Contract option; (d) the date of exercise; (e) the name of the broker or futures commission merchant through whom the Futures Contract Option is exercised; (f) the net total amount if any, payable by the Fund; (g) the amount, if any, to be received by the Fund; (h) the amount of cash and/or the amount and kind of Securities to be deposited in a Margin Account, and the name in which such Margin Account is to be or has been established; and (i) the amount of cash and/or the amount and kind of Securities to be deposited in the Senior Security Account for such Series. The Custodian shall, upon its receipt from such broker or futures commis- sion merchant of a statement confirming that the underlying Futures Contract is held by such broker or futures commis- sion merchant in the name of the Custodian (or any nominee of the Custodian) as custodian for the Fund and its receipt
of the net total amount payable to the Fund, if any, speci- fied in the Certificate, make out of the moneys and Securi- ties specifically allocated to such Series the payments, if any, and the deposits, if any, into the Margin Account and the Senior Security Account as specified in the Certifi- cate.
4. Whenever the Fund writes a Futures Contract option, the Fund shall promptly deliver to the Custodian a Certificate specifying with respect to such Futures Contract option: (a) the Series for which such Futures Contract Option was written; (b) the type of Futures Contract Option (put or call); (c) the type of Futures Contract and such other information as may be necessary to identify the Futures Contract underlying the Futures Contract option; (d) the expiration date; (e) the exercise price; (f) the premium to be received by the Fund; (g) the name of the broker or futures commission merchant through whom the premium is to be received; (h) if the Futures Contract Option is a put, the amount of cash and/or the amount and kind of Securities, if any, to be deposited by the Custodian in a Margin Account relating to such Futures Contract Option, and the name in which such Margin Account is to be, or has been established; and (i) the amount of cash and/or the amount and kind of Securities, if any, to be deposited in the Senior Security Account for such Series. The Custodian shall, upon receipt of the premium specified in the Certificate make out of the moneys and Securities specifically allocated to such Series the deposits into the Margin Account and/or into the Senior Security Account, as specified in the Certificate.
5. Whenever a Futures Contract Option written by the
Fund which is a call is exercised the Fund shall promptly
deliver to the Custodian a Certificate specifying: (a) the
Series to which such Futures Contract Option was specific-
ally allocated; (b) the particular Futures Contract Option
exercised; (c) the type of Futures Contract underlying the
Futures Contract option; (d) the name of the broker or
futures commission merchant through whom such Futures Con-
tract option was exercised; (e) the net total amount, if
any, payable to the Fund upon such exercise; (f) the net
total amount, if any, payable by the Fund upon such exer-
cise; (g) the amount of cash and/or amount and kind of
Securities to be deposited in a Margin Account, and the name
in which such account is to be or has been established; and
(h) the amount of cash and/or the amount and kind of
Securities to be deposited in the Senior Security Account
for such Series. The Custodian shall, upon its receipt of
the net total amount payable to the Fund, if any, specified
in such Certificate, and its receipt from such broker or
futures commission merchant of a statement confirming that
the underlying Futures Contract is held by such broker or futures commission merchant in the name of the Custodian (or any nominee of the Custodian) as custodian for the Fund, make the payments, if any, and the deposits, if any, into the Margin Account and/or the Senior Security Account as specified in the Certificate.
6. Whenever a Futures Contract Option which is written
by the Fund and which is a put is exercised, the Fund shall
promptly deliver to the Custodian a Certificate specifying:
(a) the Series to which such option was specifically allo-
cated; (b) the particular Futures Contract Option exercised;
(c) the type of Futures Contract underlying such Futures
Contract Option; (d) the name of the broker or futures com-
mission merchant through whom such Futures Contract Option
is exercised; (e) the net total amount, if any, payable to
the Fund upon such exercise; (f) the net total amount, if
any, payable by the Fund upon such exercise; and (g) the
amount and kind of Securities and/or cash to be withdrawn
from or deposited in, the Senior Security Account for such
Series, if any, and/or the related Margin Account, if any
The Custodian shall, upon its receipt of a broker's or
futures commission merchant's statement confirming that the
Futures Contract specified in the Certificate is held by
such broker or future commission merchant in the name of the
Custodian (or any nominee of the Custodian) as custodian for
the Fund, and upon its receipt of the net total amount pay-
able to the Fund, if any, specified in the Certificate, make
out of the moneys and Securities specifically allocated to
such Series, the payments, if any, and the deposits, if any,
into the margin Account and/or the Senior Security Account
as specified in the Certificate.
7. Whenever the Fund purchases any Futures Contract
option identical to a previously written Futures Contract
option described in this Article in order to liquidate its
position as a writer of such Futures Contract Option, the
Fund shall promptly deliver to the Custodian a Certificate
specifying with respect to the Futures Contract option being
purchased: (a) the Series to which such option is speci-
fically allocated; (b) that the transaction is a closing
transaction; (c) the type of Future Contract and such other
information as may be necessary to identify the Futures
Contract underlying the Futures option Contract; (d) the
exercise price; (e) the premium to be paid by the Fund; (f)
the expiration date; (g) the name of the broker or futures
commission merchant to whom the premium is to be paid; and
(h) the amount of cash and/or the amount and kind of Securi-
ties, if any, to be withdrawn from the related Margin
Account and/or the Senior Security Account for such Series.
The Custodian shall upon receipt of a brokerts or futures
commission merchant's statement confirming the liquidation of the Fund's position as the writer of such Futures Con- tract option, make the payments and effect the withdrawals from the related Margin Account and/or the Senior Security Account specified in the Certificate.
S. Upon the expiration, exercise, or consummation of a closing transaction with respect too, any Futures Contract Option written or purchased by the Fund and described in this Article, the Custodian shall (a) delete such Futures Contract Option from the statements delivered to the Fund pursuant to paragraph 3 of Article III herein and, (b) make such withdrawals from and/or in the case of an exercise such deposits into the Margin Account and/or the Senior Security Account as may be specified in a Certificate.
9. Futures Contracts acquired by the Fund through the exercise of a Futures Contract option described in this Article shall be subject to Article VI hereof.
ARTICLE VIII
SHORT SALES
1. Promptly after any short sales by any Series of the Fund, the Fund shall promptly deliver to the Custodian a Certificate specifying: (a) the Series for which such short sale was made; (b) the name of the issuer and the title of the Security; (c) the number of shares or principal amount sold, and accrued interest or dividends, if any; (d) the dates of the sale and settlement; (e) the sale price per unit; (f) the total amount credited to the Fund upon such sale, if any, (g) the amount of cash and/or the amount and kind of Securities, if any, which are to be deposited in a Margin Account and the name in which such margin Account has been or is to be established; (h) the amount of cash and/or the amount and kind of Securities, if any, to be deposited in a Senior Security Account, and (i) the name of the broker through whom such short sale was made. The Custodian shall upon its receipt of a statement from such broker confirming such sale and that the total amount credited to the Fund upon such sale, if any, as specified in the Certificate is held by such broker for the account of the Custodian (or any nominee of the Custodian) as custodian of the Fund, issue a receipt or make the deposits into the Margin Account and the Senior Security Account specified in the Certificate.
2. In connection with the closing-out of any short sale, the Fund shall promptly deliver to the Custodian a Certificate specifying with respect to each such closing- out: (a) the Series for which such transaction is being made; (b) the name of the issuer and the title of the Security; (c) the number of shares or the principal amount, and accrued interest or dividends, if any, required to effect such closing-out to be delivered to the broker; (d) the dates of closing-out and settlement; (e) the purchase price per unit; (f) the net total amount payable to the Fund upon such closing-out; (g) the net total amount payable to the broker upon such closing-out; (h) the amount of cash and the amount and kind of Securities to be withdrawn, if any, from the Margin Account; (i) the amount of cash and/or the amount and kind of Securities, if any, to be withdrawn from the Senior Security Account; and (j) the name of the broker through whom the Fund is effecting such closing-out. The Custodian shall, upon receipt of the net total amount pay- able to the Fund upon such closing-out, and the return and/ or cancellation of the receipts, if any, issued by the Custodian with respect to the short sale being closed-out, pay out of the moneys held for the account of the Fund to the broker the net total amount payable to the broker, and make the withdrawals from the Margin Account and the Senior Security Account, as the same are specified in the Certifi- cate.
ARTICLE IX
REVERSE REPURCHASE AGREEMENTS
1. Promptly after the Fund enters a Reverse Repur-
chase Agreement with respect to Securities and money held by
the Custodian hereunder, the Fund shall deliver to the
Custodian a Certificate or in the event such Reverse Repur-
chase Agreement is a Money Market Security, a Certificate,
oral Instructions or Written instructions specifying: (a)
the Series for which the Reverse Repurchase Agreement is
entered; (b) the total amount payable to the Fund in connec-
tion with such Reverse Repurchase Agreement and specifically
allocated to such Series; (c) the broker or dealer through
or with whom the Reverse Repurchase Agreement is entered;
(d) the amount and kind of Securities to be delivered by the
Fund to such broker or dealer; (e) the date of such Reverse
Repurchase Agreement; and (f) the amount of cash and/or the
amount and kind of Securities, if any, specifically allo-
cated to such Series to be deposited in a Senior Security
Account for such Series in connection with such Reverse
Repurchase Agreement. The Custodian shall, upon receipt of the total amount payable to the Fund specified in the Certi- ficate, Oral Instructions, or Written Instructions make the delivery to the broker or dealer, and the deposits, if any, to the Senior Security Accounts, specified in such Certifi- cate, Oral Instructions, or written Instructions.
2. Upon the termination of a Reverse Repurchase Agreement described in preceding paragraph 1 of this Arti- cle, the Fund shall promptly deliver a Certificate or, in the event such Reverse Repurchase Agreement is a Money Market Security, a Certificate, Oral Instructions or Written Instructions to the Custodian specifying: (a) the Reverse Repurchase Agreement being terminated and the Series for which same was entered; (b) the total amount payable by the Fund in connection with such termination; (c) the amount and kind of Securities to be received by the Fund and specifically allocated to such Series in connection with such termination; (d) the date of termination; (e) the name of the broker or dealer with or through whom the Reverse Repurchase Agreement is to be terminated; and (f) the amount of cash and/or the amount and kind of Securities to be with- drawn from the Senior Securities Account for such Series. The Custodian shall, upon receipt of the amount and kind of Securities to be received by the Fund specified in the Certificate, Oral Instructions, or Written Instructions, make the payment to the broker or dealer, and the with- drawals, if any, from the Senior Security Account, specified in such Certificate; Oral Instructions, or Written Instruc- tions.
ARTICLE X
LOAN OF PORTFOLIO SECURITIES OF THE FUND
1. Promptly after each loan of portfolio Securities specifically allocated to a Series held by the Custodian hereunder, the Fund shall deliver or cause to be delivered to the Custodian a Certificate specifying with respect to each such loan: (a) the Series to which the loaned Securi- ties are specifically allocated; (b) the name of the issuer and the title of the Securities, (c) the number of shares or the principal amount loaned, (d) the date of loan and delivery, (e) the total amount to be delivered to the Cus- todian against the loan of the Securities, including the amount of cash collateral and the premium, if any, separate- ly identified, and (f) the name of the broker, dealer, or financial institution to which the loan was, made. The Custodian shall deliver the Securities thus designated to the broker, dealer or financial institution to which the
loan was made upon receipt of the total amount designated as to be delivered against the loan of Securities. The Custodian may accept payment in connection with a delivery otherwise than through the Book-Entry System or Depository only in the form of a certified or bank cashier's check pay- able to the order of the Fund or the Custodian drawn on New York Clearing House funds and may deliver Securities in accordance with the customs prevailing among dealers in securities.
2. Promptly after each termination of the loan of Securities by the Fund,, the Fund shall deliver or cause to be delivered to the Custodian a Certificate specifying with respect to each such loan termination and return of Securi- ties: (a) the Series to which the loaned Securities are specifically allocated; (b) the name of the issuer and the title of the Securities to be returned, (c) the number of shares or the principal amount to be returned, (d) the date of termination, (e) the total amount to be delivered by the Custodian (including the cash collateral for such Securities minus any offsetting credits as described in said Certifi- cate), and (f) the name of the broker, dealer, or financial institution from which the Securities will be returned. The Custodian shall receive all Securities returned from the broker, dealer, or financial institution to which such Securities were loaned and upon receipt thereof shall pay, out of the moneys held for the account of the Fund, the total amount payable upon such return of Securities as set forth in the Certificate.
ARTICLE XI
CONCERNING MARGIN ACCOUNTS SENIOR SECURITY
ACCOUNTS, AND COLLATERAL ACCOUNTS
1. The Custodian shall from time to time, make such additional deposits to, or withdrawals from, a Senior Security Account as specified in a Certificate received by the Custodian. Such Certificate shall specify the Series for which such deposit or withdrawal is to be made, and the amount of cash and/or the amount and kind of Securities specifically allocated to such Series to be deposited in, or withdrawn from, such Senior Security Account for such Series, in the event that the Fund fails to specify in a Certificate the Series, the name of the issuer, the title and the number of shares or the principal amount of any par- ticular Securities to be deposited by the Custodian into, or withdrawn from, a Senior Securities Account, the Custodian shall be under no obligation to make any such deposit or withdrawal and shall so notify the Fund.
2. The Custodian shall make deliveries or payments from a Margin Account to the broker, dealer, futures commis- sion merchant or Clearing Member in whose name, or for whose benefit, the account was established only upon the receipt of a certification believed by the Custodian to be signed by an officer, director, or employee of such broker, dealers, futures commission merchant, or Clearing member stating that all conditions precedent to its right under its agreement with the Fund to direct disposition of the assets held therein have been satisfied and specifying the amount of money and/or the amount and kind of Securities to be paid or delivered to such broker, dealer, futures commission mer- chant, or Clearing Member and the date of such payment. After receipt of such a certification, the Custodian shall orally so advise an officer or Authorized Person of such receipt, and make the payments and/or deliveries to the broker, dealer, futures commission merchant, or Clearing Member therein specified, provided, however that payments and/or deliveries pursuant to such a certification may be delayed until the business day next succeeding the Custodian's receipt of such certification.
Except as otherwise expressly provided herein above, the Custodian shall be under no duty or obligation to act in accordance with or with respect to any Certificate, or with any other order, direction or request of the Fund, in what- ever form, with respect to any cash or Securities deposited in any Margin Accounts, including, without limitation, any Certificate, order, direction, or request to pay, deliver, transfer or withdraw any such cash or Securities unless such order, direction, or request is contained in a Certificate believed by the Custodian to bear the signed consent thereto of an officer, director or employee of the broker, dealer, futures commission merchant or Clearing Member in whose name, or for whose benefit, the Margin Account was estab- lished.
3. Unless otherwise instructed by a Certificate, amounts received by the Custodian as payments or distribu- tions with respect to Securities deposited in any Margin Account shall be held by the Custodian hereunder and neither credited tot nor deposited in, such Margin Account.
4. The Custodian shall have a continuing lien and security interest in and to any property at any time held by the Custodian in any Collateral Account described herein. In accordance with applicable law the Custodian may enforce its lien and realize on any such property whenever the Custodian has made payment or delivery pursuant to any Put option guarantee letter or similar document or any receipt
issued hereunder by the Custodian. In the event the Custo- dian should realize on any such property net proceeds which are less than the Custodian's obligations under any Put option guarantee letter or similar document or any receipt, such deficiency shall be a debt owed the Custodian by the Fund within the scope of Article XIV herein.
5. In the event the Fund furnishes the Custodian with an order of exemption under the Investment Company Act of 1940, as amended, permitting the Fund to establish with brokers and/or futures commission merchants accounts (here- inafter "Exempt Accounts") intended to replace any Margin Account, then, notwithstanding any other provisions con- tained herein, the Fund may substitute an instruction to deliver Securities and/or money to a broker or futures com- mission merchant for deposit into an Exempt Account for an instruction to deposit Securities and/or money into a Margin Account. The Custodian shall be under no duty or obligation with respect to any Securities and/or money so delivered for deposit into an Exempt Account, including any obligation to provide the Fund with any statements with respect to any Exempt Account, nor shall the Custodian have any duty or obligation with respect to the operation or terms of the Exempt Account, the timely return of any such Securities or money delivered for deposit therein, or the payment by such broker or futures commission merchant of amounts to be paid to the Fund with respect to such account. The Custodian shall accept from any such broker and/or futures commission merchant any Securities and/or moneys purportedly paid out of, or distributed with respect to, any Exempt Account, when so instructed in a Certificate specifying the Series to which the same is specifically allocated.
6. Promptly after the close of business on each busi- ness day the Custodian shall furnish the Fund with a state- ment with respect to each margin Account in which money or Securities are held specifying: (a) the name of the Margin Account; (b) the amount and kind of Securities held therein; and (c) the amount of money held therein. The Custodian shall make available upon request to any broker, dealer, or futures commission merchant specified in the name of a Margin Account a copy of the statement furnished the Fund with respect to such Margin Account.
7. Promptly after the close of business on each busi- ness day in which cash and/or Securities are maintained in a Collateral Account for any Series, the Custodian shall furnish the Fund with a Statement with respect to such Col- lateral Account specifying the amount of cash and/or the amount and kind of Securities held therein. No later than the close of business next succeeding the delivery to the
Fund of such statement, the Fund shall furnish to the Custodian a Certificate or Written instructions specifying the then market value of the Securities described in such statement. In the event such then market value is indicated to be less than the Custodian's obligation with respect to any outstanding Put Option guarantee letter or similar docu- ment, the Fund shall promptly specify in a Certificate the additional cash and/or Securities to be deposited in such Collateral Account to eliminate such deficiency.
ARTICLE XII
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. The Fund shall furnish to the Custodian a copy of the resolution of the Board of Trustees of the Fund, certi- fied by the Secretary, the Clerk, any Assistant Secretary or any Assistant Clerk, either (i) setting forth with respect to the Series specified therein the date of the declaration of a dividend or distribution, the date of payment thereof, the record date as of which shareholders entitled to payment shall be determined, the amount payable per Share of such Series to the shareholders of record as of that date and the total amount payable to the Dividend Agent and any sub- dividend agent or co-dividend agent of the Fund on the pay- ment date, or (ii) authorizing with respect to the Series specified therein the declaration of dividends and distribu- tions on a daily basis and authorizing the Custodian to rely on oral Instructions, Written Instructions or a Certificate setting forth the date of the declaration of such dividend or distribution, the date of payment thereof, the record date as of which shareholders entitled to payment shall be determined, the amount payable per Share of such Series to the shareholders of record as of that date and the total amount payable to the Dividend Agent on the payment date.
2. Upon the payment date specified in such resolu- tion, oral instructions, written instructions or Certifi- cate, as the case may be, the Custodian shall pay out of the moneys held for the account of each Series the total amount payable to the Dividend Agent, and any sub-dividend agent or co-dividend agent of the Fund with respect to such Series.
ARTICLE XIII
SALE AND REDEMPTION OF SHARES
1. Whenever the Fund shall sell any Shares, it shall deliver to the Custodian a Certificate duly specifying:
(a) The Series, the number of Shares sold, trade date, and price; and
(b) The amount of money to be received by the Custodian for the sale of such Shares and specifically allo- cated to the seperate account in the name of such Series.
2. Upon receipt of such money from the Transfer Agent, the Custodian shall credit such money to the separate account in the name of the Series for which such money was received.
3. upon issuance of any Shares of any Series des- cribed in the foregoing provisions of this Article, the Custodian shall pay, out of the money held for the account of such Series, all original issue or other taxes required to be paid by the Fund in connection with such issuance upon the receipt of a Certificate specifying the amount to be paid.
4. Except as provided hereinafter, whenever the Fund desires the Custodian to make payment out of the money held by the Custodian hereunder in connection with a redemption of any Shares, it shall furnish to the Custodian a Certificate specifying:
(a) The number and Series of Shares redeemed; and
(b) The amount to be paid for such Shares.
5. Upon receipt from the Transfer Agent of an advice setting forth the Series and number of Shares received by the Transfer Agent for redemption and that such Shares are in good form for redemption, the Custodian shall make pay- ment to the Transfer Agent out of the moneys held in the separate account in the name of the Series the total amount specified in the Certificate issued pursuant to the fore- going paragraph 4 of this Article.
6, Notwithstanding the above provisions regarding the redemption of any Shares, whenever any Shares are redeemed pursuant to any check redemption privilege which may from time to time be offered by the Funds, the Custodian, unless
otherwise instructed by a Certificates, shall, upon receipt of an advice from the Fund or its agent setting forth that the redemption is in good form for redemption in accordance with the check redemption procedure honor the check pre- sented as part of such check redemption privilege out of the moneys held in the separate account of the Series of the Shares being redeemed.
ARTICLE XIV
OVERDRAFTS OR INDEBTEDNESS
1. If the Custodian should in its sole discretion advance funds on behalf of any Series which results in an overdraft because the moneys held by the Custodian in the separate account for such Series shall be insufficient to pay the total amount payable upon a purchase of Securities specifically allocated to such Series, as set forth in a Certificate, oral instructions, or Written Instructions or which results in an overdraft in the separate account of such Series for some other reason, or if the Fund is for any other reason indebted to the Custodian with respect to a Series (except a borrowing for investment or for temporary or emergency purposes using Securities as collateral pursu- ant to a separate agreement and subject to the provisions of paragraph 2 of this Article) such overdraft or indebtedness shall be deemed to be a loan made by the Custodian to the Fund for such Series payable on demand and shall bear interest from the date incurred at a rate per annum (based on a 360-day year for the actual number of days involved) equal to 1/2% over Custodian's prime commercial lending rate in effect from time to times such rate to be adjusted on the effective date of any change in such prime commercial lending rate but in no event to be less than 6% per annum. In addition, the Fund hereby agrees that the Custodian shall have a continuing lien and security interest in and to any property specifically allocated to such Series at any time held by it for the benefit of such Series or in which the Fund may have an interest which is then in the Custodian's possession or control or in possession or control of any third party acting in the Custodian's behalf. The Fund authorizes the Custodian, in its sole discretion at any time to charge any such overdraft or indebtedness together with interest due thereon against any balance of account standing to such Series' credit on the Custodian's books.
2. The Fund will cause to be delivered to the Custodian by any bank (including, if the borrowing is pur-
suant to a separate agreement, the Custodian) from which it
borrows money for investment or for temporary or emergency
purposes using Securities held by the Custodian hereunder as
collateral for such borrowings, a notice or undertaking in
the form currently employed by any such bank setting forth
the amount which such bank will loan to the Fund against
delivery of a stated amount of collateral. The Fund shall
promptly deliver to the Custodian a Certificate specifying
with respect to each such borrowing: (a) the Series to which
such borrowing relates; (b) the name of the bank, (c) the
amount and terms of the borrowing, which may be set forth by
incorporating by reference an attached promissory note, duly
endorsed by the Fund, or other loan agreement, (d) the time
and date, if known, on which the loan is to be entered into,
(e) the date on which the loan becomes due and payable, (f)
the total amount payable to the Fund on the borrowing date,
(g) the market value of Securities to be delivered as col-
lateral for such loan, including the name of the issuer, the
title and the number of shares or the principal amount of
any particular Securities, and (h) a statement specifying
whether such loan is for investment purposes or for tempor-
ary or emergency purposes and that such loan is in confor-
mance with the investment Company Act of 1940 and the Fund's
prospectus. The Custodian shall deliver on the borrowing'
date specified in a Certificate the specified collateral and
the executed promissory note, if any, against delivery by
the lending bank of the total amount of the loan payable,
provided that the same conforms to the total amount payable
as set forth in the Certificate. The Custodian may, at the
option of the lending bank, keep such collateral in its pos-
session, but such collateral shall be subject to all rights
therein given the lending bank by virtue of any promissory
note or loan agreement. The Custodian shall deliver such
Securities as additional collateral as may be specified in a
Certificate to collateralize further any transaction des-
cribed in this paragraph. The Fund shall cause all Securi-
ties released from collateral status to be returned directly
to the Custodian, and the Custodian shall receive from time
to time such return of collateral as may be tendered to it.
In the event that the Fund fails to specify in a Certificate
the Series, the name of the issuer, the title and number of
shares or the principal amount of any particular Securities
to be delivered as collateral by the Custodian, the Custo-
dian shall not be under any obligation to deliver any
Securities.
ARTICLE XV
CONCERNING THE CUSTODIAN
1. Except as hereinafter provided, neither the Custo- dian nor its nominee shall be liable for any loss or damage, including counsel fees, resulting from its action or omis- sion to act or otherwise, except for any such loss or damage arising out of its own negligence or willful misconduct. The Custodian may, with respect to questions of law, apply for and obtain the advice and opinion of counsel to the Fund or of its own counsel, at the expense of the Fund, and shall be fully protected with respect to anything done or omitted by it in good faith in conformity with such advice or opinion. The Custodian shall be liable to the Fund for any loss or damage resulting from the use of the Book-Entry System or any Depository arising by reason of any negli- gence, misfeasance or willful misconduct on the part of the Custodian or any of its employees or agents.
2. Without limiting the generality of the foregoing, the Custodian shall be under no obligation to inquire into, and shall not be liable for:
(a) The validity of the issue of any Securities purchased, sold, or written by or for the Fund, the legality of the purchase, sale or writing thereof, or the propriety of the amount paid or received therefor;
(b) The legality of the sale or redemption of any Shares, or the propriety of the amount to be received or paid therefor;
(c) The legality of the declaration or payment of any dividend by the Fund;
(d) The legality of any borrowing by the Fund using Securities as collateral;
(e) The legality of any loan of portfolio Securi- ties, nor shall the Custodian be under any duty or obliga- tion to see to it that any cash collateral delivered to it by a broker, dealer, or financial institution or held by it at any time as a result of such loan of portfolio Securities of the Fund is adequate collateral for the Fund against any loss it might sustain as a result of such loan. The Custo- dian specifically, but not by way of limitation, shall not be under any duty or obligation periodically to check or notify the Fund that the amount of such cash collateral held by it for the Fund Is sufficient collateral for the Fund,
but such duty or obligation shall be the sole responsibility of the Fund. In addition, the Custodian shall be under no duty or obligation to see that any broker dealer or finan- cial institution to which portfolio Securities of the Fund are lent pursuant to Article XIV of this Agreement makes payment to it of any dividends or interest which are payable to or for the account of the Fund during the period of such loan or at the termination of such loan, provided, however, that the Custodian shall promptly notify the Fund in the event that such dividends or interest are not paid and received when due; or
(f) The sufficiency or value of any amounts of money and/or Securities held in any Margin Account, Senior Security Account, Exempt Account or Collateral Account in connection with transactions by the Fund. In addition, the Custodian shall be under no duty or obligation to see that any broker, dealer, futures commission merchant or Clearing Member makes payment to the Fund of any variation margin payment or similar payment which the Fund may be entitled to receive from such broker, dealer, futures commission merchant or Clearing Member, to see that any payment received by the Custodian from any broker,, dealer, futures commission merchant or Clearing Member is the amount the Fund is entitled to receive, or to notify the Fund of the Custodian's receipt or non-receipt of any such payment.
3. The Custodian shall not be liable for, or con- sidered to be the Custodian of, any money, whether or not represented by any check, draft, or other instrument for the payment of money, received by it on behalf of the Fund until the Custodian actually receives and collects such money directly or by the final crediting of the account representing the Fund's interest at the Book-Entry System or the Depository.
4. The Custodian shall not be under any duty or obli- gation to take action to effect collection of any amount due to the Fund from the Transfer Agent of the Fund nor to take any action to effect payment or distribution by the Transfer Agent of the Fund of any amount paid by the Custodian to the Transfer Agent of the Fund in accordance with this Agree- ment,
5. The Custodian shall not be under any duty or obli- gation to take action to effect collection of any amount, if the Securities upon which such amount is payable are in default, or if payment is refused after due demand or pre- sentation, unless and until (i) it shall be directed to take such action by a Certificate and (ii) it shall be assured to its satisfaction of reimbursement of its costs and expenses in connection with any such action.
6. The Custodian may appoint one or more banking institutions as Depository or Depositories, as Sub-Custodian or Sub-Custodians or as Co-Custodian or Co-Custodians including, but not limited to, banking institutions located in foreign countries, of Securities and moneys at any time owned by the Fund, upon such terms and conditions as may be approved in a Certificate or contained in an agreement exe- cuted by the Custodian, the Fund and the appointed institu- tion.
7. The Custodian shall not be under any duty or obli- gation (a) to ascertain whether any Securities at any time delivered to, or held by it, for the account of the Fund and specifically allocated to a Series are such as properly may be held by the Fund or such Series under the provisions of its then current prospectus, or (b) to ascertain whether any transactions by the Fund, whether or not involving the Custodian, are such transactions as may properly be engaged in by the Fund.
S. The Custodian shall be entitled to receive and the Fund agrees to pay to the Custodian all out-of-pocket expenses and such compensation as may be agreed upon from time to time between the Custodian and the Fund. The Custo- dian may charge such compensation and any expenses incurred by the Custodian in the performance of its duties pursuant to such agreement against any money specifically allocated to a Series. Unless and until the Fund instructs the Custo- dian by a Certificate to apportion any loss, damage, liabil- ity or expense among the Series in a specified manner, the Custodian shall also be entitled to charge against any money held by it for the account of a Series such Series' pro rata share (based on such Series net asset value at the time of the charge to the aggregate net asset value of all Series at that time) of the amount of any loss, damage, liability or expense, including counsel fees, for which it shall be entitled to reimbursement under the provisions of this Agreement. The expenses for which the Custodian shall be entitled to reimbursement hereunder shall include, but are not limited to, the expenses of sub-custodians and foreign branches of the Custodian incurred in settling outside of New York City transactions involving the purchase and sale of Securities of the Fund.
9. The Custodian shall be entitled to rely upon any Certificate, notice or other instrument in writing received by the Custodian and reasonably believed by the Custodian to be a Certificate. The Custodian shall be entitled to rely upon any Oral Instructions and any Written, Instructions actually received by the Custodian hereinabove provided
for. The Fund agrees to forward to the Custodian a Certifi- cate or facsimile thereof confirming such Oral Instructions or Written instructions in such manner so that such Certifi- cate or facsimile thereof is received by the Custodian,, whether by hand delivery telecopier or other similar device, or otherwise, by the close of business of the same day that such Oral Instructions or Written Instructions are given to the Custodian. The Fund agrees that the fact that such confirming instructions are not received by the Custo- dian shall in no way affect the validity of the transactions or enforceability of the transactions hereby authorized by the Fund. The Fund agrees that the Custodian shall incur no liability to the Fund in acting upon Oral instructions or Written Instructions given to the Custodian hereunder con- cerning such transactions provided such instructions reason- ably appear to have been received from an Authorized Person.
10. The Custodian shall be entitled to rely upon any instrument or notice in writing received by the Custodian and reasonably believed by the Custodian to be a certifica- tion described in paragraph 2 of Aticle XI herein. Without limiting the generality of the foregoing, the Custodian shall be under no duty to require into, and shall not be liable for, the accuracy of any statements or representa- tions contained in any such instrument or other notice including, without limitation, any specification of any amount to be paid to a broker, dealer, futures commission merchant or Clearing Member.
11. The books and records pertaining to the Fund which are in the possession of the Custodian shall be the property of the Fund. Such books and records shall be prepared and maintained as required by the Investment Company Act of 1940, as amended, and other applicable securities laws and rules and regulations. The Fund, or the Fund's authorized representatives, shall have access to such books and records during the Custodian's normal business hours. Upon the reasonable request of the Fund, copies of any such books and records shall be provided by the Custodian to the Fund or the Fund's authorized representative, and the Fund shall reimburse the Custodian its expenses of providing such copies.
12. The Custodian shall provide the Fund with any report obtained by the Custodian on the system of internal accounting control of the Book-Entry System, the Depository, or O.C.C., and with such reports on its own systems of internal accounting control as the Fund may reasonably request from time to time.
13. The Fund agrees to indemnify the Custodian against and save the Custodian harmless from all liability, claims, losses and demands whatsoever, including attorney's fees, howsoever arising or incurred because of or in connection with the Custodian's payment or non-payment of checks pursu- ant to paragraph 6 of Article XIII as part of any check redemption privilege program of the Fund, except for any such liability, claim, loss and demand arising out of the Custodian's own negligence or willful misconduct.
14. Subject to the foregoing provisions of this Agree- ment, the Custodian may deliver and receive Securities, and receipts with respect to such Securities, and arrange for payments to be made and received by the Custodian in accor- dance with the customs prevailing from time to time among brokers or dealers in such Securities.
15. The Custodian shall have no duties or responsibil- ities whatsoever except such duties and responsibilities as are specifically set forth in this Agreement, and no covenant or obligation shall be implied in this Agreement against the Custodian.
ARTICLE XVI
TERMINATION
1. Either of the parties hereto may terminate this Agreement by giving to the other party a notice in writing specifying the date of such termination, which shall be not less than ninety (90) days after the date of giving of such notice. In the event such notice is given by the Fund, it shall be accompanied by a copy of a resolution of the Board of Trustees of the Fund, certified by the Secretary, the Clerk, any Assistant Secretary or any Assistant Clerk, electing to terminate this Agreement and designating a suc- cessor custodian or custodians, each of which shall be a bank or trust company having not less than $2,OOO,OOO aggre- gate capital, surplus and undivided profits. In the event such notice is given by the Custodian, the Fund shall, on or before the termination date, deliver to the Custodian a copy of a resolution of the Board of Trustees of the Fund , cer- tified by the Secretary, the Clerk, any Assistant Secretary or any Assistant Clerk, designating a successor custodian or custodians. In the absence of such designation by the Fund, the Custodian may designate a successor custodian which shall be a bank or trust company having not less than $2,000,OOO aggregate capital, surplus and undivided pro- fits. Upon the date set forth in such notice this Agreement
ment shall terminate, and the Custodian shall upon receipt of a notice of acceptance by the successor custodian on that date deliver directly to the successor custodian all Securi- ties and moneys then owned by the Fund and held by it as Custodian, after deducting all fees, expenses and other amounts for the payment or reimbursement of which it shall then be entitled.
2. If a successor custodian is not designated by the Fund or the Custodian in accordance with the preceding para- graph, the Fund shall upon the date specified in the notice of termination of this Agreement and upon the delivery by the Custodian of all Securities (other than Securities held in the Book-Entry System which cannot be delivered to the Fund) and moneys then owned by the Fund be deemed to be its own custodian and the Custodian shall thereby be relieved of all duties and responsibilities pursuant to this Agreement, other than the duty with respect to Securities held in the Book Entry System which cannot be delivered to the Fund to hold such Securities hereunder in accordance with this Agreement.
ARTICLE XVII
MISCELLANEOUS
l. Annexed hereto as Appendix A is a Certificate signed by two of the present officers of the Fund under its seal, setting forth the names and the signatures of the present Authorized Persons. The Fund agrees to furnish to the Custodian a new Certificate in similar form in the event that any such present Authorized Person ceases to be an Authorized Person or in the event that other or additional Authorized Persons are elected or appointed. Until such new Certificate shall be received, the Custodian shall be fully protected in acting under the provisions of this Agreement upon Oral Instructions or signatures of the present Author- ized Persons as set forth in the last delivered Certificate.
2. Annexed hereto as Appendix B is a Certificate signed by two of the present officers of the Fund under its seal, setting forth the names and the signatures of the pre- sent officers of the Fund. The Fund agrees to furnish to the Custodian a new Certificate in similar form in the event any such present officer ceases to be an Officer of the Fund, or in the event that other or additional officers are
elected or appointed. Until such now Certificate shall be received the Custodian shall be fully protected in acting under the provisions of this Agreement upon the signatures of the officers as set forth in the last delivered Certifi- cate.
3. Any notice or other instrument in writing, author- ized or required by this Agreement to be given to the Custo- dian, shall be sufficiently given if addressed to the Custo- dian and mailed or delivered to it at its offices at 90 Washington Street, New York, New York 10015, or at such other place as the Custodian may from time to time designate in writing.
4. Any notice or other instrument in writing, author- ized or required by this Agreement to be given to the Fund shall be sufficiently given if addressed to the Fund and mailed or delivered to it at its office at the address for the Fund first above written, or at such other place as the Fund may from time to time designate in writing.
S. This Agreement may not be amended or modified in any manner except by a written agreement executed by both parties with the same formality as this Agreement and approved by a resolution of the Board of Trustees of the Fund.
6. This Agreement shall extend to and shall be bind- ing upon the parties hereto, and their respective successors and assigns; provided, however, that this Agreement shall not be assignable by the Fund without the written consent of the Custodian, or by the Custodian without the written con- sent of the Fund, authorized or approved by a resolution of the Fund's Board of Trustees.
7. This Agreement shall be construed in accordance with the laws of the State of New York.
8. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an origi- nal, but such counterparts shall, together constitute only one instrument.
9. A copy of the Declaration of Trust of the Fund is on file with the Secretary of The Commonwealth of Massa- chusetts, and notice is hereby given that this instrument is executed on behalf of the Board of Trustees of the Fund as Trustees and not individually and that the obligations of this instrument are not binding upon any of the Trustees or shareholders individually but are binding only upon the assets and property of the Fund.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers,
thereunto duly authorized and their respective seals to be
hereunto affixed, as of the day and year first above
written.
MERRILL LYNCH NATURAL RESOURCES TRUST
By: /S/ TERRY K. GLENN
Attest; /s/ Mark B. Goldfus
|
APPENDIX A
I, President and I,
of
a Massachusetts business trust (the "Fund"),
|
do hereby certify that:
The following individuals have been duly authorized by the Board of Trustees of the Fund in conformity with the Fund's Declaration of Trust and By-Laws to give oral Instructions and Written Instructions on behalf of the Fund, and the signatures set forth opposite their respective names are their true and correct signatures:
Name Signature
APPENDIX B
I, ,President and I, Of ,a Massachusetts business trust (the "Fund"), do hereby certify that:
The following individuals serve in the following posi- tions with the Fund and each has been duly elected or appointed by the Board of Trustees of the Fund to each such position and qualified therefor in conformity with the Fund's Declaration of Trust and BY-Laws, and the signatures set forth opposite their respective names are their true and correct signatures:
Name Position Signature
EXHIBIT A
CERTIFICATION
The undersigned, ,hereby
certifies that he or she is the duly elected and acting
of , a Massachusetts business
trust (the "Fund"), and further certifies that the following
resolution was adopted by the Board of Trustees of the Fund
at a meeting duly held on , 19 , at which a quorum
was at all times present and that such resolution has not
been modified or rescinded and is in full force and effect
as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian
pursuant to a Custody Agreement between The Bank of New
York and the Fund dated as of , 19 (the
"Custody Agreement') is authorized and instructed on a
continuous and ongoing basis to deposit in, the Book-
Entry System, as defined in the Custody Agreement, all
securities eligible for deposit therein, regardless of
the Series to which the same are specifically allo-
cated, and to utilize the Book-Entry System to the
extent possible in connection with its performance
thereunder, including, without limitation, in connec-
tion with settlements of purchases and sales of securi-
ties, loans of securities, and deliveries and returns
of securities collateral.
IN WITNESS WHEREOF, I have hereunto set my hand and the
seal of ,as of the day of ,
19 .
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EXHIBIT B
CERTIFICATION
The undersigned, ,hereby
certifies that he or she is the duly elected and acting
of , a Massachusetts business
Trust (the 'Fund'), and further certifies that the following
resolution was adopted by the Board of Trustees of the Fund
at a meeting duly held on , 19 , at which a quorum
was at all times present and that such resolution has not
been modified or rescinded and is in full force and effect
as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian
pursuant to a Custody Agreement between The Bank of New
York and the Fund dated as of , 19 ,
(the "Custody Agreement") is authorized and instructed
on a continuous and ongoing basis until such time as it
receives a Certificate, as defined in the Custody
Agreement, to the contrary to deposit in the Depos-
itory, as defined in the Custody Agreement, all secu-
rities eligible for deposit therein, regardless of the
Series to which the same are specifically allocated,
and to utilize the Depository to the extent possible in
connection with its performance thereunder, including,
without limitation, in connection with settlements of
purchases and sales of securities, loans of securities,
and deliveries and returns of securities collateral.
IN WITNESS WHEREOF, I have hereunto set my hand and the
seal of ,as of the day of ,
19
|
EXHIBIT C
CERTIFICATION
The undersigned, ,hereby certifies that he or she is the duly elected and acting of , a Massachusetts business trust (the 'Fund'), and further certifies that the following resolution was adopted by the Board of Trustees of the Fund at a meeting duly held on I , 19 , at which a quorum was at all times present and that such resolution has not been modified or rescinded and is in full force and effect as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian pursuant to a Custody Agreement between The Bank of New York and the Fund dated as of , 19 , (the "Custody Agreement") is authorized and instructed on a continuous and ongoing basis until such time as it receives a Certificate, as defined in the Custody Agreement, to the contrary, to accept, utilize and act with respect to Clearing Member confirmations for options and transaction in options, regardless of the Series to which the same are specifically allocated, as such terms are defined in the Custody Agreement, as provided in the Custody Agreement.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal of ,as of the day of ,
Ex-99.9
TRANSFER AGENCY, DIVIDEND DISBURSING AGENCY
AND SHAREHOLDER SERVICING AGENCY AGREEMENT
THIS AGREEMENT made as of the lst day of August, 1987 by and between Merrill Lynch Natural Resources Trust (the "Fund") and Merrill Lynch Financial Data Service, Inc. ("MLFDS"), a New Jersey corporation.
WITNESSETH:
WHEREAS, the Fund wishes to appoint MLFDS to be the Transfer Agent, Dividend Disbursing Agent and Shareholder Servicing Agent upon, and subject tot the terms and provisions of this Agreement, and MLFDS is desirous of accepting such appointment upon, and subject to, such terms and provisions:
NOW THEREFORE, in consideration of mutual covenants contained in this Agreement, the Fund and MLFDS agree as follows:
1. Appointment of MLFDS as Transfer Agent, Dividend Disbursing Agent and Shareholder Servicing Agent.
(a) The Fund hereby appoints MLFDS to act as Transfer Agent, Dividend Disbursing Agent and Shareholder Servicing Agent for the Fund upon, and subject to, the terms and provisions of this Agreement.
(b) MLFDS hereby accepts the appointment as Transfer Agent, Dividend Disbursing Agent and Shareholder Servicing Agent for the Fund, and agrees to act as such upon, and subject to, the terms and provisions of the Agreement.
2. Definitions.
(a) In this Agreement:
(I) The term "Act" means the Investment Company Act of 1940 as amended from time to time and any rule or regulation thereunder;
(II) The term "Account" means any account of a Shareholder, or, if the shares are held in an account in the name of MLPF&S for benefit of an identified customer, such account, including a Plan Account, any account under a plan (by whatever name referred to in the Prospectus) pursuant to the Self-Employed Individuals Retirement Act of 1962 ("Keogh-Act Plan")and any plan (by whatever name referred to in the Prospectus) in conjunction with Section 401 of the Internal Revenue Code ("Corporation master Plan");
(III) The term "application" means an application made by a Shareholder or prospective Shareholder respecting the opening of an Account;
(IV) The term "MLFD" means Merrill LYlnch Funds Distributor, Inc., a Delaware corporation;.
(V) The "term "MLPF&S" means Merrill Lynch, Pierce, Fenner & Smith Incorporated, a Delaware corporation;
(VI) The term "officer's Instruction" means an instruction in writing given on behalf of the Fund to MLFDS, and signed on behalf of the Fund by the President, any Vice President, the Secretary or the Treasurer of the Fund;
(VII) The term "Prospectus" means the Prospectus and the Statement of Additional Information of the Fund as from time to time in effect;
(VIII) The term "Shares" means shares of stock or beneficial interestr as the case may be, of the Fund, irrespective of class or series;
(IX) The term "Shareholder" means the holder of record of Shares;
(X) The term "Plan Account" means an account opened by a Shareholder or prospective Shareholder in respect to an open account, monthly payment or, withdrawal plan (in each case by whatever name referred to in the Prospectus), and may also include an account relating to any other Plan if and when provision is made for such plan in the Prospectus.
3. Duties of MLFDS as Transfer Agent, Dividend Disbursing Agnet and Shareholder Servicing Agent.
(a) Subject to the succeeding provisions of the Agreement, MLFDS hereby agrees to perform the following functions as Transfer Agent, Dividend Disbursing Agnet and Shareholder Servicing Agent for the Fund;
(I) Issuing Transerring and redeeming Shares;
(II) Opeing, maintaining , servicing and closing Accounts;
(III) Acting as agent for the Fund Shareholders and/or customers of MLPF&S in connection with Plan Accounts, upon the terms and subject to the conditions contained in the Prospectus and application relating to the specific Plan Account;
(IV) Acting as agent of the Fund and/or MLPF&S, maintaining such records as may permit the imposition of such contingent deferred sales charges as may be described in the Prospectus, including such reports as may be reasonably requested by the Fund with respect to such Shares as may be subject to a contingent deferred sales charge;
(V) Upon the redemption of Shares subject to such a contingent deferred sales charger calculating and deducting from the redemption proceeds thereof the amount of such charge in the manner set forth in the Prospectus. MLFDS shall pay, on behalf of MLFD, to MLPF&S such deducted contingent deferred sales charges imposed upon all Shares maintained in the name of MLPF&S, or maintained in the name of an account identified as a customer account of MLPF&S. Sales charges imposed upon any other Shares shall be paid by MLFDS to MLFD.
(VI) Exchanging the investment of an investor into, or from the shares of other open-end investment companies or other series portfolios of the Fund, if any, if and to the extent permitted by the Prospectus at the direction of such investor.
(VII) Processing redemptions;
(VIII) Examining and approving legal transfers;
(IX) Replacing lost, stolen or destroyed certificates representing Shares, in accordance with, and subject to, procedures and conditions adopted by the Fund;
(X) Furnishing such, confirmations of transactions relating to their Shares as required by applicable law;
(XI) Acting as agent for the Fund and/or MLPF&S, furnishing such appropriate periodic statements relating to Accounts, together, with additional enclosurses, including appropriate income tax information and income tax forms duly completed, as required by applicable law;
(XII) Acting as agent for the Fund and/or MLPF&S mailing annual, semi-annual, and quarterly reports prepared by or on behalf of the Fund, and mailing new Porspectuses upon their issuse to Shareholders as required by applicable law;
(XIII) Furnishing such periodic statements of transactions effected by MLFDS, reconciliations, balances and summaries as the Fund may reasonably request;
(XIV) Maintaining such books and records relating to transactions effected by MLFDS as are required by the Act, or by any other applicable provision of law, rule or regulation, to be maintained by the Fund or its transfer agent with respect to such transactions, and preserving, or causing to be preserved any such books and records for such periods as may be required by any such law, rule or regulation and as may be agreed upon from time to time between MLFDS and the Fund. In addition, MLFDS agrees to maintain and preserve master files and historical computer tapes on a daily basis in multiple separate locations a sufficient distance apart to insure preservation of at least one copy of such information;
(XV) Withholding taxes on non-resident alien Accounts,, preparing and filing U.S. Treasury Department Form 1099 and other appropriate forms as required by applicable law with respect to dividends and distributions; and
(XVI) Reinvesting dividends for full and fractional shares and disbursing cash dividends, as applicable.
(b) MLFDS agrees to act as proxy agent in connection with the holding of annual, if any, and special meetings of Shareholders, mailing such notices, proxies and proxy statements in connection with the holding of, such meetings as may. be required by applicable law, receiving and tabulating votes cast by proxy and communicating to the Fund the results of such tabulation accompanied by appropriate certifications, and preparing and furnishing to the Fund certified lists, of Shareholders as of such date, in such form and containing such information as may be required by the Fund.
(c) MLFDS agrees to deal with, and answer in timely manner, all correspondence and inquiries relating to the functions Of MLFDS under this Agreement with respect to Accounts.
(d) MLFDS agrees to furnish to the Fund such information and at such intervals as is necessary for the Fund to comply with the registration and/or, the reporting requirements (including applicable escheat laws) of the Securities and exchange Commission, Blue Sky authorities, or other governmental authorities.
(e) MLFDS agrees to provide to the Fund such information as many reasonably be required to enable the Fund to reconcile the number of outstanding Shares between MLFDS's records and the account books of the Fund.
(f) Notwithstanding anything in the foregoing provision of this paragraph, MLFDS agrees to perform its functions thereunder subject to such modification (whether in respect of particular cases or in any particular class of cases) as may from time to time be contained in an Officer's Instruction.
4. Compensation.
The charges for services described in this Agreement, including "out-of-pocket" expenses, will be set forth in the Schedule of Fees attachedhereto.
5. Right of Inspection.
MLFDS agrees that it will in a timely manner make available to, and permit, any officer, accountant, attorney or authorized agent of the Fund to examine and make transcripts and copies (including photocopies and computer or other electronical information storage Media and print-outs)of any and all of its books and records which relate to any transaction or function performed by MLFDS under or pursuant to this Agreement.
6. Confidential Relationship.
MLFDS agrees that it will, on behalf of itself and its officers and employees, treat all transactions contemplated by this Agreement, and all information germane thereto, as confidential and not to be disclosed to any person (other than the Shareholder concerned, or the Fund, or as may be disclosed in the examination of any books or records by any person lawfully entitled to examine the same) except as may be, authorized by the Fund by way of an officer's Instruction.
7. Indemnification.
The Fund shall indemnify and hold MLPDS harmless from any loss, costs, damage and reasonable expenses including reasonable attorney's fees(provided that such attorney is appointed with the Fund's consent, which consent shall not be unreasonably withheld), incurred by it resulting fromamy claim, demand, action, or suit in connection with the performance of its duties hereunder.
provided that this indemnification shall not apply to actions or omissions of MLFDS in cases of willful misconduct, failure to act in good faith or neglige by MLFDS, it's officers, employees or agents, and further provided, that prior to confessing any claim against it which may be subject to this indemnification MLFDS shall give the Fund reasonable opportunity to defend against said claim in its own name or in the name of MLFDS. An action taken by MLFDS upon any Officer's Instruction reasonably believed by it to have been properly executed shall not constitute willful misconduct, failure to act in good faith or negligence under this Agreement.
8. Regarding MLFDS.
(a) MLFDS hereby agrees to hire, purchase, develop and maintain such dedicated personnel,facilities, equipment, software resources and capabilities as may be reasonably determined by the Fund to be necessary for the satisfactory performance of the duties and responsibilities of MLFDS. MLFDS warrants and represents that its officers and supervisory personnel charged with carrying out its functions as Transfer Agent, Dividend Disbursing Agent and Shareholder Servicing Agent for the Fund possess the special skill and technical knowledge appropriate for that purpose. MLFDS shall at all times exercise due care and diligence in the performance of its functions as Transfer Agent, Dividend Disbursing Agent and Shareholder Servicing Agent for the Fund. MLFDS agrees that, in determining whether it has exercised due tare and diligence, its conduct shall be measured by the standard applicable to persons possessing such special skill and technical knowledge.
(b) MLFDS warrants and represents that is duly authorized and permitted to act as Transfer Agent, Dividend Disbursing Agent, and Shareholder Servicing Agent under all applicable laws and that, it will immediately notify the Fund of any revocation of such authority or permission or of the commencement of any proceeding or other action which may lead to such revocation.
9. Termination.
(a) This Agreement shall become effective as of the date first above written and shall thereafter continue from year to year. This agreement may be terminated by the Fund or MLFDS (without penalty to the Fund or MLFDS) provided that the terminating, party gives the toher party written notice or such termination at least sixty (60) days in advance, except that the Fund may terminate this Agreement immediately upon written notice to MLFDS if the authority or permission of MLFDS ot act as Transfer Agent, Dividend Disbursing Agent and Shareholder Servicing Agent has been revoked or if any proceeding or other revocations ahs been commenced.
(b) Upon termination of this Agreement, MLFDS shall deliver all unissued and canceled stock certificates representing Shares remaining in its possession, and all Shareholder records, books, stock ledgers, instruments and other documents (including computerized or other electronically stored information) made or accumulated in the performance of its duties as Transfer Agent, Disbursing Agent and Shareholder Servicing Agent for the Fund along with a certified locator document clearly indicating the complete contents therein, to such successor as may be specified in a notice of termination or Officer's Instruction; and the Fund assumes all responsibility for failure thereafter to produce any paper, record or documents so delivered and identified in the locator document, if and when required to be produced.
10. Amendment.
Except to the extent that the performance by MLFDS or its functions under this Agreement may from time to time be modified by an Officer's instruction, this Agreement may be amended or modified only by further written Agreement between the parties.
11. Governing Law.
This Agreement shall be governed by the laws of the State of New Jersey.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed by their respective duly authorized officers and their respective corporate seals hereunto duly affixed and attested as of the day and year above written.
MERRILL LYNCH NATURAL RESOURCES TRUST
By:
Title:
MERRILL LYNCH FINANCIAL DATA SERVICE, INC.
By:
Title:
Ex-99.15(a)
AMENDED AND RESTATED
CLASS B DISTRIBUTION PLAN
OF
MERRILL LYNCH NATURAL RESOURCES TRUST
PURSUANT TO RULE 12b-1
DISTRIBUTION PLAN made as of the 10th day of June, 1985 and amended and restated as of the 12th day of October, 1992, by and between Merrill Lynch Natural Resources Trust, a Massachusetts business trust (the "Trust"), and Merrill Lynch Funds Distributor, Inc., a Delaware corporation ("MLFD").
W I T N E S S E T H
WHEREAS, the Trust intends to engage in business as an open-end investment company registered under the Investment Company Act of 1940, as amended (the "Investment Company Act"); and
WHEREAS, MLFD is a securities firm engaged in the business of selling shares of investment companies either directly to purchasers or through other securities dealers; and
WHEREAS, the Trust proposes to enter into a Class B Shares Distribution Agreement with MLFD, pursuant to which MLFD will act as the exclusive distributor and representative of the Trust in the offer and sale of Class B shares of common stock, par value $0.10 per share (the "Class B shares"), of the Trust to the public; and
WHEREAS, the Trust has entered into a Class B Distribution Plan (the "Prior Plan") pursuant to Rule 12b-1 under the Investment Company Act; and
WHEREAS, the Trust desires to adopt this Amended and Restated Class B Shares Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Investment Company Act, pursuant to which the Trust will pay an account maintenance fee and a distribution fee to MLFD with respect to the Trust's Class B Shares; and
WHEREAS, the Trustees of the Trust have determined that there is a reasonable likelihood that adoption of this Class B Shares Distribution Plan will benefit the Trust and its share- holders.
NOW, THEREFORE, the Trust hereby adopts, and MLFD hereby agrees to the terms of, the Plan in accordance with Rule 12b-1 under the Investment Company Act on the following terms and conditions:
1. The Trust shall pay MLFD an account maintenance fee under the Plan at the end of each month at the annual rate of 0.25% of average daily net assets of the Trust relating to Class B shares to compensate MLFD and securities firms with which MLFD enters into related agreements ("Sub-Agreements") pursuant to Paragraph 3 hereof for account maintenance activities with respect to Class B shareholders of the Trust.
2. The Trust shall pay MLFD a distribution fee under the Plan at the end of each month at the-annual rate of 0.75% of average daily net assets of the Trust relating to Class B shares to compensate MLFD and securities firms with which MLFD enters into related agreements ("Sub-Agreements") pursuant to Paragraph 3 hereof for providing sales and promotional activities and services. Such activities and services will relate to the sale, promotion and marketing of the Class B shares of the Trust. Such expenditures may consist of sales commissions to financial consultants for selling Class B shares of the Trust, compensation, sales incentives and payments to sales and marketing personnel, and the payment of expenses incurred in its sales and promotional activities, including advertising expenditures related to the Trust and the costs of preparing and distributing promotional materials. The distribution fee may also be used to pay the financing costs of carrying the unreimbursed expenditures described in this Paragraph 2. Payment of the distribution fee described in this Paragraph 2 shall be subject to any limitation set forth in any applicable regulation of the National Association of Securities Dealers, Inc.
3. The Trust hereby authorizes MLFD to enter into Sub-Agreements with certain securities firms ("Securities Firms"), including Merrill Lynch, Pierce, Fenner & Smith Incorporated, to provide compensation to such Securities Firms for activities and services of the type referred to in Paragraphs 1 and 2 hereof. MLFD may reallocate all or a portion of its account maintenance fee or distribution fee to such Securities Firms as compensation for the above mentioned activities and services. Such Sub-Agreement shall provide that the Securities Firms shall provide MLFD with such information as is reasonable necessary to permit MLFD to comply with the reporting require- ments set forth in Paragraph 4 hereof.
4. MLFD shall provide the Trust for review by the Board of Trustees, and the Trustees shall review, at least quarterly, a written report complying with the requirements of Rule 12b-1 regarding the disbursement of the account maintenance fee and the distribution fee during such period.
5. The Prior Plan has been approved by a vote of at least a majority, as defined in the Investment Company Act, of the outstanding Class B voting securities of the Trust. The Plan has not been submitted to the Class B shareholders because the amendments do not materially increase the rate of payments by the Trust provided for in the Prior Plan.
6. The Plan shall not take effect until it has been approved, together with any related agreements, by votes of a majority of both (a) the Trustees of the Trust and (b) those Trustees of the Trust who are not "interested persons" of the Trust, as defined in the Investment Company Act, and have no direct or indirect financial interest in the operation of the Plan or any agreements related to it (the "Rule 12b-1 Trustees"), cast in person at a meeting or meetings called for the purpose of voting on the Plan and such related agreements.
7. The Plan shall continue in effect for so long as such continuance is specifically approved at least annually in the manner provided for approval of the Plan in Paragraph 6.
S. The Plan may be terminated at any time by vote of a majority of the Rule 12b-1 Trustees, or by vote of a majority of the outstanding Class B voting securities of the Trust.
9. The Plan may not be amended to increase materially the rate of payments provided for herein unless such amendment is approved by at least a majority, as defined in the Investment Company Act, of the outstanding Class B voting securities of the Trust, and by the Trustees of the Trust in the manner provided for in Paragraph 6 hereof, and no material amendment to the Plan shall be made unless approved in the manner provided for approval and annual renewal in Paragraph 6 hereof.
10. While the Plan is in effect, the selection and nomina- tion of Trustees who are not interested persons, as defined in the Investment Company Act, of the Trust shall be committed to the discretion of the Trustees who are not interested persons.
11. The Trust shall preserve copies of the Plan and any related agreements and all reports made pursuant to Paragraph 4 hereof, for a period of not less than six years from the date of ,the Plan, or the agreements or such report, as the case may be, the first two years in an easily accessible place.
IN WITNESS WHEREOF, the parties hereto have executed the Plan as of the date first above written.
MERRILL LYNCH NATURAL RESOURCES TRUST
By /s/ Gerald M. Richard MERRILL LYNCH FUNDS DISTRIBUTOR, INC. By /s/ Michelle Lau |
CLASS B SHARES DISTRIBUTION PLAN SUB-AGREEMENT
AGREEMENT made as of the 6th day of May, 1993 by and between Merrill Lynch Funds Distributor, Inc. ("MLFD"), and Merrill Lynch, Pierce, Fenner & Smith Incorporated, a Delaware corporation (the "Securities Firm").
W I T N E S S E T H
WHEREAS, MLFD has entered into an agreement with Merrill Lynch Natural Resources Trust, a Maryland corporation (the "Trust"), pursuant to which it acts as the exclusive distributor for the sale of Class B shares of common stock, par value $0.10 per share (the "Class B shares"), of the Trust;.and
WHEREAS, MLFD and Trust have entered into an Amended and Restated Class B Shares Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the "Act") pursuant to which MLFD receives an account maintenance fee from the Trust at the annual rate of 0.25% of average daily net assets of the Trust relating to Class B shares for account maintenance services related to the Class B shares of the Trust and a distribution fee from the Trust at the annual rate of 0.75% of average daily net assets of the Trust relating to Class B shares for providing sales and promotional activities and services related to the distribution of Class B shares; and
WHEREAS, MLFD desires the Securities Firm to perform certain account maintenance activities and sales and promotional activities and services for the Trust's Class B shareholders and the Securities Firm is willing to perform such services;
NOW, THEREFORE, in consideration of the mutual covenants contained herein, the parties hereby agree as follows:
1. The Securities Firm shall provide account maintenance activities with respect to the Class B shares of the Trust of the types-referred to in Paragraph 1 of the Plan.
2. The Securities Firm shall provide sales and promotional activities and services with respect to the sale of the Class B shares of the Trust, and incur distribution expenditures of the types referred to in paragraph 2 of the Plan.
3. As compensation for its activities and services performed under this Sub-Agreement, MLFD shall pay the Securities Firm an account maintenance fee and a distribution fee at the end of each calendar month in an amount agreed upon by the parties hereto.
4. The Securities Firm shall provide MLFD, at least quarterly, such information as reasonably requested by MLFD to enable MLFD to comply with the reporting requirements of Rule 12b-1 regarding the disbursement of the fee during such period referred to in Paragraph 4 of the Plan.
5. This Sub-Agreement shall not take effect until it has been approved by votes of a majority of both (a) the Trustees of the Trust and (b) those Trustees of the Trust who are not "in- terested persons" of the Trust, as defined in the Act, and have no direct or indirect financial interest in the operation of the Plan or any agreements related to the Plan or this Sub-Agreement (the "Rule 12b-1 Trustees"), cast in person at a meeting or meetings called for the purpose of voting on this Agreement.
6. This Sub-Agreement shall continue in effect for as long as such continuance is specifically approved at least annually in the manner provided for approval of the Plan in Paragraph 6.
7. This Sub-Agreement shall automatically terminate in the event of its assignment or in the event of the termination of the Plan or any amendment to the Plan that requires such termination.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the date first above written.
MERRILL LYNCH FUNDS DISTRIBUTOR, INC.
By: /s/ Michelle Lau |
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /s/ Arthur Zeikel |
Merrill Lynch Natural Resources Trust Class A
Total Return Exhibit 16(a)
Period from
10/24/88 Annual
(inception) Total
to 07/31/89 Return*
Initial Investment $1,000.00 $1,000.00
Divided by
Maximum Offering Price 13.37
Divided by Net Asset Value 12.50
Equals Shares Purchased 74.79 80.00
Plus Shares Acquired through
Dividend Reinvestment 13.06 13.95
Equals Shares Held
at 07/31/89 87.85 93.95
Multiplied by Net Asset
Value at 07/31/89 11.79 11.79
Equals Ending Redeemable
Value at $1,000
Investment (ERV) at 07/31/89 $1,035.70 $1,107.70
Divided by $1,000 (P) 1.0357 1.1077
Subtract 1 0.0357 0.1077
Expressed as a percentage
equals the Aggregate Total
Return for the Period (T) 3.57%
Expressed as a percentage
equals the Aggregate Total
Return for the Period 10.77%
ERV divided by P 1.0357
Raise to the power of 1 / .7671
Equals 1.0468
Subtract 1 0.0468
Expressed as a percentage
equals the Average
Annualized Total Return 4.68%
|
* Does not include sales charge for the period.
NATURAL RESOURCES Ex-99.16(b)
TOTAL RETURN
Since Total
Inception Annual
12-2-85) Return*
Initial Investment $1,000.00 $1,000.00 $1,000.00
Divided by
Not Asset Value 19.86 10.OQ 19.86
Equals Shares Purchased 50.352 100.000 50.352
Plus Shares Acquired Through
Dividend Reinvestment 6.711 17.783 6.711
Equals Shares Held
at 7/31/88 57.063 117.783 57.063
Multiplied by Net Asset
Value at 7/31/88 13.89 13.89 13.89
Equals Ending Value before
deduction for contingent
deferred sales charge 792.60 1,636.00 792.61
Deduction for deferred sales charge 27.30 20.00 -0-
Equals Ending Redemable
Value of a $1,000
Investment (ERV) 765.30 1,616.00 792.61
Divided by $1,000 (P) .7653 1.616 .7926
Subtract 1 (.2347) .616 (.2076)
Expressed as a percentage
equals the Aggregate Total
Return for the Period (T) (23.47%) 61.60%
Expressed as a percentage
equals the Annual
Total Rem= (2O.76%)
ERV divided by P .7653 1.616
Raise to the power of 1 1/2.997
equals .7653 1.1737
Subtract 1
.2347 .1737
Expressed as a percentage
equals the Average
Annualized Total Return (23.47%) 17,37%
|
*Does not include sales charge for the period.
EXHIBIT 1(e)
MERRILL LYNCH GLOBAL RESOURCES TRUST
Certification Of Amendment
To Declaration Of Trust
and
Establishment and Designation of Classes
The undersigned, constituting a majority of the Trustees of Merrill Lynch Global Resources Trust (the "Trust"), a Massachusetts business trust, hereby certify that the Trustees of the Trust have duly adopted the following amendments, as approved by a majority of the shareholders of the Trust, to the Trust's Declaration of Trust.
VOTED: That Sections 6.1 and 6.2 of Article VI of the Declaration of Trust be, and they hereby are, amended in their entirety to read as follows:
6.1 Beneficial Interest. The interest of the beneficiaries hereunder shall be divided into transferable shares of beneficial interest, par value $0.10 per share. The number of such shares of beneficial interest authorized hereunder is unlimited. The Trustees, in their discretion, without a vote of the Shareholders, may divide the shares of beneficial interest into classes. In such event, each class shall represent interests in the Trust property and have identical voting, dividend, liquidation and other rights and the same terms and conditions except that expenses related directly or indirectly to the distribution of the shares of a class may be borne solely by such class (as shall be determined by the Trustees) and, as provided in Section 10.1, a class may have exclusive voting rights with respect to matters relating to the expenses being borne solely by such class. The bearing of such expenses solely by a class of Shares shall be appropriately reflected (in the manner determined by the Trustees) in the net asset value, dividend and liquidation rights of the Shares of such class. The Trustees may provide that shares of a class will be exchanged for shares of another class without any act or deed on the part of the holder of shares of the class being exchanged, whether or not shares of such class are issued and outstanding, all on terms and conditions as the Trustees may specify. The Trustees may redesignate a class or series of shares of beneficial interest or a portion of a class or series of shares of beneficial interest whether or not shares of such class or series are issued and outstanding, provided that such redesignation does not substantially adversely affect the preference, conversion or
other rights, voting powers, restrictions, limitations as to dividends, qualifications or terms or conditions of redemption of such issued and outstanding shares of beneficial interest. The division of the Shares into classes and the terms and conditions pursuant to which the Shares of the classes will be issued must be made in compliance with the 1940 Act. All Shares issued hereunder including, without limitation, Shares issued in connection with a dividend in Shares or a split of Shares, shall be fully paid and nonassessable.
6.2. Rights of Shareholders. The ownership of the Trust Property of every description and the right to conduct any business hereinbefore described are vested exclusively in the Trustees, and the Shareholders shall have no interest therein other than the beneficial interest conferred by their Shares, and they shall have no right to call for any partition or division of any property, profits, rights or interests of the Trust nor can they be called upon to share or assume any losses of the Trust or suffer an assessment of any kind by virtue of their ownership of Shares. The Shares shall be personal property giving only the rights in this Declaration specifically set forth. The Shares shall not entitle the holder to preference, preemptive, appraisal, conversion or exchange rights (except for rights of appraisal specified in Section 11.4 and except as may be specified by the Trustees in connection with the division of shares into classes or the redesignation of classes or portions of classes in accordance with Section 6.1).
VOTED: That Section 10.1 of Article X of the Declaration of Trust be, and it
hereby is, amended in its entirety to read as follows:
10.1. Voting Powers. The Shareholders shall have power to vote (i)
|
for the removal of Trustees as provided in Section 2.3; (ii) with respect to any advisory or management contract as provided in Section 4.1; (iii) with respect to the amendment of this Declaration as provided in Section 11.3; (iv) with respect to such additional matters relating to the Trust as may be required or authorized by the 1940 Act, the laws of the Commonwealth of Massachusetts or other applicable law or by this Declaration or the By-Laws of the Trust; and (v) with respect to such additional matters relating to the Trust as may be properly submitted for Shareholder approval. If the Shares of a Series shall be divided into classes as provided in Article VI hereof, the Shares of each class shall have identical voting rights except that the Trustees, in their discretion, may provide a class with exclusive voting rights with respect to matters related to expenses being borne solely by such class whether or not shares of such class are issued and outstanding.
The undersigned, being a majority of the Trustees of the Trust, acting pursuant to Section 6.1 of the Declaration of Trust, do hereby divide the shares of beneficial interest of each series of the Trust to create four classes of shares, within the meaning of said Section 6.1, as follows:
1. The four classes of shares are designated "Class A Shares," "Class B Shares," "Class C Shares" and "Class D Shares".
2. Class A Shares, Class B Shares, Class C Shares and Class D Shares shall be entitled to all of the rights and preferences accorded to Shares under the Declaration of Trust.
3. The purchase price, the method of determination of net asset value, the price, terms and manner of redemption, and the relative dividend rights of holders of Class A Shares, Class B Shares, Class C Shares and Class D Shares shall be established by the Trustees of the Trust in accordance with the provisions of the Declaration of Trust and shall be set forth in the currently effective prospectus and statement of additional information of the Trust relating to each series of the Trust, as amended from time to time, contained in the Trust's registration statement under the Securities Act of 1933, as amended.
4. Class A Shares, Class B Shares, Class C Shares and Class D Shares shall vote together as a single class except that shares of a class may vote separately on matters affecting only that class and shares of a class not affected by a matter will not vote on that matter.
5. A class of shares of any series of the Trust may be terminated by the Trustees by written notice to the Shareholders of the class.
IN WITNESS WHEREOF, the undersigned, constituting a majority of the Trustees, have signed this certificate in duplicate original counterparts and have caused a duplicate original to be lodged among the records of the Trust as required by Article XI, Section 11.3(c) of the Declaration of Trust as of the 17th day of October, 1994.
/s/ Donald Cecil /s/ M. Colyer Crum - --------------------------- -------------------------- Donald Cecil M. Colyer Crum 3 Stratford Road 104 Westcliff Road Harrison, NY 10528 Weston, MA 02193 /s/ Edward H. Meyer /s/ Jack B. Sunderland - --------------------------- -------------------------- Edward H. Meyer Jack B. Sunderland 580 Park Avenue P.O. Box 1177 New York, NY 10021 Scarsdale, New York 10583 /s/ J. Thomas Touchton /s/ Arthur Zeikel - --------------------------- -------------------------- J. Thomas Touchton Arthur Zeikel 2801 Hawthorne Road 300 Woodland Avenue Tampa, FL 33611 Westfield, NJ 07090 |
The Declaration of Trust establishing Merrill Lynch Global Resources Trust, dated April 12, 1985, a copy of which, together with all amendments thereto (the "Declaration"), is on file in the office of the Secretary of the Commonwealth of Massachusetts, provides that the name of the Trust, "Merrill Lynch Global Resources Trust," refers to the Trustees under the Declaration collectively as Trustees, but not as individuals or personally; and no Trustee, shareholder, officer, employee or agent of Merrill Lynch Global Resources Trust shall be held to any personal liability, nor shall resort be had to their private property for the satisfaction of any obligation or claim or otherwise in connection with the affairs of said Trust but the "Trust Property" only
shall be liable.
EXHIBIT 10
BROWN & WOOD
ONE WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
TELEPHONE: (212) 839-5300
FACSIMILE: (212) 839-5599
November 27, 1995
Merrill Lynch Global Resources Trust
800 Scudders Mill Road
Plainsboro, New Jersey 08536
Ladies and Gentlemen:
This opinion is furnished in connection with the registration by
Merrill Lynch Global Resources Trust, a Massachusetts business trust (the
"Trust"), of 9,314,329 shares of beneficial interest, par value $0.10 per share
(the "Shares"), under the Securities Act of 1933 pursuant to a registration
statement on Form N-1A (File No. 2-97095), as amended (the "Registration
Statement").
As counsel for the Trust, we are familiar with the proceedings taken
by it in connection with the authorization, issuance and sale of the Shares.
In addition, we have examined and are familiar with the Declaration of Trust of
the Trust, as amended, the By-Laws of the Trust and such other documents as we
have deemed relevant to the matters referred to in this opinion.
Based upon the foregoing, we are of the opinion that the Shares, upon
issuance and sale in the manner referred to in the Registration Statement for
consideration not less than the par value thereof, will be legally issued,
fully paid and non-assessable shares of beneficial interest.
In rendering this opinion, we have relied as to matters of
Massachusetts law upon an opinion of Bingham, Dana & Gould rendered to the
Trust.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name in the Prospectus and
Statement of Additional Information constituting parts thereof.
Very truly yours,
/s/ BROWN & WOOD |
EXHIBIT 11
INDEPENDENT AUDITORS' CONSENT
Merrill Lynch Global Resources Trust:
We consent to the use in Post-Effective Amendment No. 11 to Registration Statement No. 2-97095 of our report dated August 31, 1995 appearing in the Statement of Additional Information, which is a part of such Registration Statement, and to the reference to us under the caption "Financial Highlights" appearing in the Prospectus, which also is a part of such Registration Statement.
DELOITTE & TOUCHE LLP
Princeton, New Jersey
November 27, 1995
EXHIBIT 16
GLOBAL RESOURCES TRUST -- CLASS C
10/31/94 -- 7/31/95
SINCE SINCE
INCEPTION INCEPTION
AVERAGE ANNUAL TOTAL
TOTAL RETURN RETURN*
------------- ---------
Initial Investment $1,000.00 $1,000.00
Divided by Net Asset Value 15.93 15.93
--------- ---------
Equals Shares Purchased 62.775 62.775
Plus Shares Acquired through
Dividend Reinvestment 0.220 0.220
--------- ---------
Equals Shares Held at 7/31/95 62.995 62.995
Multiplied by Net Asset Value at 7/31/95 16.55 16.55
--------- ---------
Equals Ending Value before deduction for
contingent deferred sales charge 1,042.57 1,042.57
Less deferred sales charge (10.00) 0.00
--------- ---------
Equals Ending Redeemable Value at
$1,000 Investment (ERV) at 7/31/95 1,032.57 1,042.57
--------- ---------
Divided by $1,000 (F) 1,032.26 1,042.26
Subtract 1 0.0326 0.0426
Expressed as a percentage equals the
Aggregate Total Return for the
Period (T) 3.26%
=========
Expressed as a percentage equals the
Aggregate Total Return for the Period 4.26%
=========
ERV divided by F 1.0326
Raise to the power of 1.2898
Equals 1.0422
Subtract 1 0.0422
Expressed as a percentage equals the
Average Annualized Total Return 4.22%
=========
|
* Does not include sales charge for the period.
EXHIBIT 16
GLOBAL RESOURCES TRUST -- CLASS D
10/31/94 -- 7/31/95
<Caption)
SINCE SINCE
INCEPTION INCEPTION
AVERAGE ANNUAL TOTAL
TOTAL RETURN RETURN*
-------------- ---------
Initial Investment $1,000.00 $1,000.00
Divided by Initial Maximum Offering Price 16.84
---------
Divided by Net Asset Value 15.96
---------
Equals Shares Purchased 54.367 62.657
Plus Shares Acquired through
Dividend Reinvestment 0.271 0.286
--------- ---------
Equals Shares Held at 7/31/95 59.638 62.943
Multiplied by Net Asset Value at 7/31/95 16.67 16.67
--------- ---------
Equals Ending Redeemable Value at
$1,000 Investment (ERV) at 7/31/95 994.17 1,049.25
Divided by $1,000 (F) 0.9942 1.0493
Subtract 1 0.0055 0.0493
Expressed as a percentage equals the
Aggregate Total Return for the period (T) -.58%
=========
Expressed as a percentage equals the
Aggregate Total Return for the period 4.93%
=========
ERV divided by F 0.9942
Raise to the power of 1.2898
Equals 0.9925
Subtract 1 -0.0075
Expressed as a percentage equals the
Aggregate Total Return -0.75%
=========
|
*Does not include sales charge for the period.
| ARTICLE 6 |
| CIK: 0000766555 |
| NAME: MERRILL LYNCH GLOBAL RESOURCES TRUST |
| SERIES: |
| NUMBER: 001 |
| NAME: CLASS A |
| PERIOD TYPE | 12 MOS |
| FISCAL YEAR END | JUL 31 1995 |
| PERIOD START | AUG 01 1994 |
| PERIOD END | JUL 31 1995 |
| INVESTMENTS AT COST | 264,161,660 |
| INVESTMENTS AT VALUE | 280,055,370 |
| RECEIVABLES | 2,408,890 |
| ASSETS OTHER | 54,888 |
| OTHER ITEMS ASSETS | 0 |
| TOTAL ASSETS | 282,519,148 |
| PAYABLE FOR SECURITIES | 431,354 |
| SENIOR LONG TERM DEBT | 0 |
| OTHER ITEMS LIABILITIES | 1,291,580 |
| TOTAL LIABILITIES | 1,722,934 |
| SENIOR EQUITY | 0 |
| PAID IN CAPITAL COMMON | 281,308,493 |
| SHARES COMMON STOCK | 1,720,619 |
| SHARES COMMON PRIOR | 1,266,118 |
| ACCUMULATED NII CURRENT | 1,099,608 |
| OVERDISTRIBUTION NII | 0 |
| ACCUMULATED NET GAINS | (17,507,553) |
| OVERDISTRIBUTION GAINS | 0 |
| ACCUM APPREC OR DEPREC | 15,895,666 |
| NET ASSETS | 28,728,903 |
| DIVIDEND INCOME | 5,877,622 |
| INTEREST INCOME | 1,437,806 |
| OTHER INCOME | 0 |
| EXPENSES NET | 5,663,353 |
| NET INVESTMENT INCOME | 1,652,075 |
| REALIZED GAINS CURRENT | 9,132,792 |
| APPREC INCREASE CURRENT | 6,766,722 |
| NET CHANGE FROM OPS | 17,551,589 |
| EQUALIZATION | 0 |
| DISTRIBUTIONS OF INCOME | 426,768 |
| DISTRIBUTIONS OF GAINS | 0 |
| DISTRIBUTIONS OTHER | 0 |
| NUMBER OF SHARES SOLD | 2,372,442 |
| NUMBER OF SHARES REDEEMED | 1,942,431 |
| SHARES REINVESTED | 24,490 |
| NET CHANGE IN ASSETS | 24,161,322 |
| ACCUMULATED NII PRIOR | 859,496 |
| ACCUMULATED GAINS PRIOR | (26,802,008) |
| OVERDISTRIB NII PRIOR | 0 |
| OVERDIST NET GAINS PRIOR | 0 |
| GROSS ADVISORY FEES | 1,832,048 |
| INTEREST EXPENSE | 0 |
| GROSS EXPENSE | 5,663,353 |
| AVERAGE NET ASSETS | 30,430,606 |
| PER SHARE NAV BEGIN | 15.84 |
| PER SHARE NII | .22 |
| PER SHARE GAIN APPREC | .88 |
| PER SHARE DIVIDEND | .24 |
| PER SHARE DISTRIBUTIONS | 0 |
| RETURNS OF CAPITAL | 0 |
| PER SHARE NAV END | 16.70 |
| EXPENSE RATIO | 1.06 |
| AVG DEBT OUTSTANDING | 0 |
| AVG DEBT PER SHARE | 0 |
| ARTICLE 6 |
| CIK: 0000766555 |
| NAME: MERRILL LYNCH GLOBAL RESOURCES TRUST |
| SERIES: |
| NUMBER: 002 |
| NAME: CLASS B |
| PERIOD TYPE | 12 MOS |
| FISCAL YEAR END | JUL 31 1995 |
| PERIOD START | AUG 01 1994 |
| PERIOD END | JUL 31 1995 |
| INVESTMENTS AT COST | 264,161,660 |
| INVESTMENTS AT VALUE | 280,055,370 |
| RECEIVABLES | 2,408,890 |
| ASSETS OTHER | 54,888 |
| OTHER ITEMS ASSETS | 0 |
| TOTAL ASSETS | 282,519,148 |
| PAYABLE FOR SECURITIES | 431,354 |
| SENIOR LONG TERM DEBT | 0 |
| OTHER ITEMS LIABILITIES | 1,291,580 |
| TOTAL LIABILITIES | 1,722,934 |
| SENIOR EQUITY | 0 |
| PAID IN CAPITAL COMMON | 281,308,493 |
| SHARES COMMON STOCK | 8,533,888 |
| SHARES COMMON PRIOR | 15,048,339 |
| ACCUMULATED NII CURRENT | 1,099,608 |
| OVERDISTRIBUTION NII | 0 |
| ACCUMULATED NET GAINS | (17,507,553) |
| OVERDISTRIBUTION GAINS | 0 |
| ACCUM APPREC OR DEPREC | 15,895,666 |
| NET ASSETS | 141,799,990 |
| DIVIDEND INCOME | 5,877,622 |
| INTEREST INCOME | 1,437,806 |
| OTHER INCOME | 0 |
| EXPENSES NET | 5,663,353 |
| NET INVESTMENT INCOME | 1,652,075 |
| REALIZED GAINS CURRENT | 9,132,792 |
| APPREC INCREASE CURRENT | 6,766,722 |
| NET CHANGE FROM OPS | 17,551,589 |
| EQUALIZATION | 0 |
| DISTRIBUTIONS OF INCOME | 570,653 |
| DISTRIBUTIONS OF GAINS | 0 |
| DISTRIBUTIONS OTHER | 0 |
| NUMBER OF SHARES SOLD | 6,694,914 |
| NUMBER OF SHARES REDEEMED | 13,237,393 |
| SHARES REINVESTED | 28,028 |
| NET CHANGE IN ASSETS | 24,161,322 |
| ACCUMULATED NII PRIOR | 859,496 |
| ACCUMULATED GAINS PRIOR | (26,802,008) |
| OVERDISTRIB NII PRIOR | 0 |
| OVERDIST NET GAINS PRIOR | 0 |
| GROSS ADVISORY FEES | 1,832,048 |
| INTEREST EXPENSE | 0 |
| GROSS EXPENSE | 0 |
| AVERAGE NET ASSETS | 217,335,792 |
| PER SHARE NAV BEGIN | 15.72 |
| PER SHARE NII | .10 |
| PER SHARE GAIN APPREC | .84 |
| PER SHARE DIVIDEND | .04 |
| PER SHARE DISTRIBUTIONS | 0 |
| RETURNS OF CAPITAL | 0 |
| PER SHARE NAV END | 16.62 |
| EXPENSE RATIO | 2.08 |
| AVG DEBT OUTSTANDING | 0 |
| AVG DEBT PER SHARE | 0 |
| ARTICLE 6 |
| CIK: 0000766555 |
| NAME: MERRILL LYNCH GLOBAL RESOURCES TRUST |
| SERIES: |
| NUMBER: 003 |
| NAME: CLASS C |
| PERIOD TYPE | OTHER |
| FISCAL YEAR END | JUL 31 1995 |
| PERIOD START | OCT 21 1994 |
| PERIOD END | JUL 31 1995 |
| INVESTMENTS AT COST | 264,161,660 |
| INVESTMENTS AT VALUE | 280,055,370 |
| RECEIVABLES | 2,408,890 |
| ASSETS OTHER | 54,888 |
| OTHER ITEMS ASSETS | 0 |
| TOTAL ASSETS | 282,519,148 |
| PAYABLE FOR SECURITIES | 431,354 |
| SENIOR LONG TERM DEBT | 0 |
| OTHER ITEMS LIABILITIES | 1,291,580 |
| TOTAL LIABILITIES | 1,722,934 |
| SENIOR EQUITY | 0 |
| PAID IN CAPITAL COMMON | 281,308,493 |
| SHARES COMMON STOCK | 169,196 |
| SHARES COMMON PRIOR | 0 |
| ACCUMULATED NII CURRENT | 1,099,608 |
| OVERDISTRIBUTION NII | 0 |
| ACCUMULATED NET GAINS | (17,507,553) |
| OVERDISTRIBUTION GAINS | 0 |
| ACCUM APPREC OR DEPREC | 15,895,666 |
| NET ASSETS | 2,800,094 |
| DIVIDEND INCOME | 5,877,622 |
| INTEREST INCOME | 1,437,806 |
| OTHER INCOME | 0 |
| EXPENSES NET | 5,663,353 |
| NET INVESTMENT INCOME | 1,652,075 |
| REALIZED GAINS CURRENT | 9,132,792 |
| APPREC INCREASE CURRENT | 6,766,722 |
| NET CHANGE FROM OPS | 17,551,589 |
| EQUALIZATION | 0 |
| DISTRIBUTIONS OF INCOME | 7,419 |
| DISTRIBUTIONS OF GAINS | 0 |
| DISTRIBUTIONS OTHER | 0 |
| NUMBER OF SHARES SOLD | 406,317 |
| NUMBER OF SHARES REDEEMED | 237,577 |
| SHARES REINVESTED | 456 |
| NET CHANGE IN ASSETS | 24,161,322 |
| ACCUMULATED NII PRIOR | 859,496 |
| ACCUMULATED GAINS PRIOR | (26,802,008) |
| OVERDISTRIB NII PRIOR | 0 |
| OVERDIST NET GAINS PRIOR | 0 |
| GROSS ADVISORY FEES | 1,832,048 |
| INTEREST EXPENSE | 0 |
| GROSS EXPENSE | 0 |
| AVERAGE NET ASSETS | 3,295,396 |
| PER SHARE NAV BEGIN | 15.93 |
| PER SHARE NII | .05 |
| PER SHARE GAIN APPREC | .62 |
| PER SHARE DIVIDEND | .05 |
| PER SHARE DISTRIBUTIONS | 0 |
| RETURNS OF CAPITAL | 0 |
| PER SHARE NAV END | 16.55 |
| EXPENSE RATIO | 2.20 |
| AVG DEBT OUTSTANDING | 0 |
| AVG DEBT PER SHARE | 0 |
| ARTICLE 6 |
| CIK: 0000766555 |
| NAME: MERRILL LYNCH GLOBAL RESOURCES TRUST |
| SERIES: |
| NUMBER: 004 |
| NAME: CLASS D |
| PERIOD TYPE | OTHER |
| FISCAL YEAR END | JUL 31 1995 |
| PERIOD START | OCT 21 1994 |
| PERIOD END | JUL 31 1995 |
| INVESTMENTS AT COST | 264,161,660 |
| INVESTMENTS AT VALUE | 280,055,370 |
| RECEIVABLES | 2,408,890 |
| ASSETS OTHER | 54,888 |
| OTHER ITEMS ASSETS | 0 |
| TOTAL ASSETS | 282,519,148 |
| PAYABLE FOR SECURITIES | 431,354 |
| SENIOR LONG TERM DEBT | 0 |
| OTHER ITEMS LIABILITIES | 1,291,580 |
| TOTAL LIABILITIES | 1,722,934 |
| SENIOR EQUITY | 0 |
| PAID IN CAPITAL COMMON | 281,308,493 |
| SHARES COMMON STOCK | 6,446,960 |
| SHARES COMMON PRIOR | 0 |
| ACCUMULATED NII CURRENT | 1,099,608 |
| OVERDISTRIBUTION NII | 0 |
| ACCUMULATED NET GAINS | (17,507,553) |
| OVERDISTRIBUTION GAINS | 0 |
| ACCUM APPREC OR DEPREC | 15,895,666 |
| NET ASSETS | 107,467,227 |
| DIVIDEND INCOME | 5,877,622 |
| INTEREST INCOME | 1,437,806 |
| OTHER INCOME | 0 |
| EXPENSES NET | 5,663,353 |
| NET INVESTMENT INCOME | 1,652,075 |
| REALIZED GAINS CURRENT | 9,132,792 |
| APPREC INCREASE CURRENT | 6,766,722 |
| NET CHANGE FROM OPS | 17,551,589 |
| EQUALIZATION | 0 |
| DISTRIBUTIONS OF INCOME | 245,460 |
| DISTRIBUTIONS OF GAINS | 0 |
| DISTRIBUTIONS OTHER | 0 |
| NUMBER OF SHARES SOLD | 7,264,459 |
| NUMBER OF SHARES REDEEMED | 829,713 |
| SHARES REINVESTED | 12,214 |
| NET CHANGE IN ASSETS | 24,161,322 |
| ACCUMULATED NII PRIOR | 859,496 |
| ACCUMULATED GAINS PRIOR | (26,802,008) |
| OVERDISTRIB NII PRIOR | 0 |
| OVERDIST NET GAINS PRIOR | 0 |
| GROSS ADVISORY FEES | 1,832,048 |
| INTEREST EXPENSE | 0 |
| GROSS EXPENSE | 0 |
| AVERAGE NET ASSETS | 69,211,006 |
| PER SHARE NAV BEGIN | 15.96 |
| PER SHARE NII | .12 |
| PER SHARE GAIN APPREC | .66 |
| PER SHARE DIVIDEND | .07 |
| PER SHARE DISTRIBUTIONS | 0 |
| RETURNS OF CAPITAL | 0 |
| PER SHARE NAV END | 16.67 |
| EXPENSE RATIO | 1.39 |
| AVG DEBT OUTSTANDING | 0 |
| AVG DEBT PER SHARE | 0 |