As filed with the Securities and Exchange Commission
                 on October 30, 2000 SCHEDULE 14A INFORMATION
               PROXY STATEMENT PURSUANT TO SECTION 14(a)14(A) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

(AMENDMENT NO.  )
        
Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ] 

Check the appropriate box:

[X]  Preliminary Proxy Statement 

[_]  Definitive Proxy Statement 

[_]  Definitive Additional Materials 

[_]  Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12

                                 MERRILL LYNCH
               ------------------------------------------------
               (Name of Registrant as Specified In Its Charter)

                        MERRILL LYNCH BALANCED FUND FOR
                           INVESTMENT AND RETIREMENT
Filed by the Registrants /X/ Check the appropriate box: Filed by a Party other than the Registrant /_/ /X/ Preliminary Proxy Statement /_/ Definitive Proxy Statement /_/ Definitive Additional Materials /_/ Soliciting Material Pursuant to Rule14a-11(c) or Rule 14a-12
MERRILL LYNCH CALIFORNIA MUNICIPAL SERIES TRUST (2 Series) MERRILL LYNCH GLOBAL CONVERTIBLE FUND, INC.Merrill Lynch California Insured Municipal Bond Fund Merrill Lynch California Municipal Bond Fund MERRILL LYNCH GROWTH FUND FOR INVESTMENT AND RETIREMENT MERRILL LYNCH MULTI-STATE LIMITED MATURITY MUNICIPAL SERIES TRUST (8(2 Series) Merrill Lynch California Limited Maturity Municipal Bond Fund Merrill Lynch Florida Limited Maturity Municipal Bond Fund MERRILL LYNCH MULTI-STATE MUNICIPAL SERIES TRUST (16(17 Series) Merrill Lynch Arizona Municipal Bond Fund Merrill Lynch Arkansas Municipal Bond Fund Merrill Lynch Colorado Municipal Bond Fund Merrill Lynch Connecticut Municipal Bond Fund Merrill Lynch Florida Municipal Bond Fund Merrill Lynch Maryland Municipal Bond Fund Merrill Lynch Massachusetts Municipal Bond Fund Merrill Lynch Michigan Municipal Bond Fund Merrill Lynch Minnesota Municipal Bond Fund Merrill Lynch New Jersey Municipal Bond Fund Merrill Lynch New Mexico Municipal Bond Fund Merrill Lynch New York Municipal Bond Fund Merrill Lynch North Carolina Municipal Bond Fund Merrill Lynch Ohio Municipal Bond Fund Merrill Lynch Oregon Municipal Bond Fund Merrill Lynch Pennsylvania Municipal Bond Fund Merrill Lynch Texas Municipal Bond Fund MERRILL LYNCH WORLD INCOME FUND, INC. P.O. Box 9011 Princeton, New Jersey 08543-9011 -------------------------------------------------------------------------------------------------------- (Name of Person(s)Registrants as Specified In Their Charters) SAME AS ABOVE -------------------------------------------------------- (Name of Persons) Filing Proxy Statement) Payment of Filing Feefiling fee (Check the appropriate box): [X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2). [_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-6(i)(3). [_]/X/ No fee required. /_/ Fee computed on table below per Exchange Act Rules 14a-6(i)(4)(1) and 0-11. (1) Title of each class of securities to which transaction applies: ------------------------------------------------------------------- (2) Aggregate number of securities to which transaction applies: ------------------------------------------------------------------- (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11:* (4) Proposed maximum aggregate value of transaction: - ---------- * Set1 (Set forth the amount on which the filing fee is calculated and state how it was determined. [_]) ------------------------------------------------------------------- (4) Proposed maximum aggregate value of transaction: /_/ Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Formform or Scheduleschedule and the date of its filing. (1) Amount Previously Paid: ------------------------------------------------------------------- (2) Form, Schedule or Registration Statement No.: ------------------------------------------------------------------- (3) Filing Party: ------------------------------------------------------------------- (4) Date Filed: Notes: [PRELIMINARY COPY] MERRILL LYNCH BALANCED FUND FOR INVESTMENT AND RETIREMENTPRELIMINARY COPY MERRILL LYNCH CALIFORNIA MUNICIPAL SERIES TRUST (2 SERIES) MERRILL LYNCH GLOBAL CONVERTIBLE FUND, INC.Series) Merrill Lynch California Insured Municipal Bond Fund Merrill Lynch California Municipal Bond Fund MERRILL LYNCH GROWTH FUND FOR INVESTMENT AND RETIREMENTMERRILLLYNCH MULTI-STATE LIMITED MATURITY MUNICIPAL SERIES TRUST (2 Series) Merrill Lynch California Limited Maturity Municipal Bond Fund Merrill Lynch Florida Limited Maturity Municipal Bond Fund MERRILL LYNCH MULTI-STATE MUNICIPAL SERIES TRUST (17 Series) Merrill Lynch Arizona Municipal Bond Fund Merrill Lynch Arkansas Municipal Bond Fund Merrill Lynch Colorado Municipal Bond Fund Merrill Lynch Connecticut Municipal Bond Fund Merrill Lynch Florida Municipal Bond Fund Merrill Lynch Maryland Municipal Bond Fund Merrill Lynch Massachusetts Municipal Bond Fund Merrill Lynch Michigan Municipal Bond Fund Merrill Lynch Minnesota Municipal Bond Fund Merrill Lynch New Jersey Municipal Bond Fund Merrill Lynch New Mexico Municipal Bond Fund Merrill Lynch New York Municipal Bond Fund Merrill Lynch North Carolina Municipal Bond Fund Merrill Lynch Ohio Municipal Bond Fund Merrill Lynch Oregon Municipal Bond Fund Merrill Lynch Pennsylvania Municipal Bond Fund Merrill Lynch Texas Municipal Bond Fund MERRILL LYNCH WORLD INCOME FUND, INC. P.O. Box 9011 Princeton, New Jersey 08543-9011 --------------------------- NOTICE OF 2000 MEETINGS OF SHAREHOLDERS --------------------------- TO BE HELD ON DECEMBER 21, 2000 To the Shareholders of: MERRILL LYNCH CALIFORNIA MUNICIPAL SERIES TRUST (2 Series) Merrill Lynch California Insured Municipal Bond Fund Merrill Lynch California Municipal Bond Fund MERRILL LYNCH GROWTH FUND MERRILL LYNCH MULTI-STATE LIMITED MATURITY MUNICIPAL SERIES TRUST (8 SERIES)(2 Series) Merrill Lynch California Limited Maturity Municipal Bond Fund Merrill Lynch Florida Limited Maturity Municipal Bond Fund MERRILL LYNCH MULTI-STATE MUNICIPAL SERIES TRUST (16 SERIES)(17 Series) Merrill Lynch Arizona Municipal Bond Fund Merrill Lynch Arkansas Municipal Bond Fund Merrill Lynch Colorado Municipal Bond Fund Merrill Lynch Connecticut Municipal Bond Fund Merrill Lynch Florida Municipal Bond Fund Merrill Lynch Maryland Municipal Bond Fund Merrill Lynch Massachusetts Municipal Bond Fund Merrill Lynch Michigan Municipal Bond Fund Merrill Lynch Minnesota Municipal Bond Fund Merrill Lynch New Jersey Municipal Bond Fund Merrill Lynch New Mexico Municipal Bond Fund Merrill Lynch New York Municipal Bond Fund Merrill Lynch North Carolina Municipal Bond Fund Merrill Lynch Ohio Municipal Bond Fund Merrill Lynch Oregon Municipal Bond Fund Merrill Lynch Pennsylvania Municipal Bond Fund Merrill Lynch Texas Municipal Bond Fund MERRILL LYNCH WORLD INCOME FUND, INC. P.O. BOX 9011 PRINCETON, NEW JERSEY 08543-9011 Dear Shareholder: The enclosed proxy statement requestsNOTICE IS HEREBY GlVEN that you considera Meeting of Shareholders (each, a "Meeting" and approve (i)collectively, the election"Meetings") of the Board of Directors or Trustees, (ii) the selection of the independent auditors, (iii) certain changes to the fundamental investment restrictions for each of the above-referenced mutual fundsabove-listed investment companies (each, a "Fund","Fund," which term includes the individual seriesSeries of the above-listed series trusts) of which you own shares;Series Trusts, and (iv) an amendment tocollectively, the Fund's Articles of Incorporation or Declaration of Trust in connection with the implementation by the Funds of the Merrill Lynch Select Pricing SM System (the "Select Pricing System"). As you are aware, many of the mutual funds advised by Merrill Lynch Asset Management, L.P. ("MLAM") or its affiliate, Fund Asset Management, L.P. ("FAM"), and distributed by Merrill Lynch Funds Distributor, Inc. ("MLFD"), offer two classes of shares which may be purchased at a price equal to the next determined net asset value per share plus a sales charge which, at the election of the purchaser, may be imposed (i) at the time of purchase (the "Class A shares") or (ii) on a deferred basis (the "Class B shares") (the "Dual Distribution System"). In order to provide additional distribution alternatives tailored more specifically to an investor's needs, the Funds, as well as all of the other mutual funds advised by MLAM or FAM that are currently operating under the Dual Distribution System, intend to implement the Select Pricing System, a new distribution system under which each Fund will offer four classes of shares, each with a different combination of sales charges, ongoing fees and other features. The implementation of the Select Pricing System will not adversely affect the net asset value of a current shareholder's investment in the Fund nor will the two new classes of shares have an adverse effect on the shares that are issued and outstanding. An amendment to the Articles of Incorporation or Declaration of Trust of each of the Funds is being proposed in connection with the implementation of the Select Pricing System. This amendment, as well as the election of the Boards of Directors and Trustees, the selection of independent auditors and the proposed investment restriction changes require the separate approval of the outstanding shareholders of each of the Funds. In addition, in the case of a series trust, the charter amendment and the investment restriction changes require the separate approval of each series. When we have solicited proxies in the past, you have received a proxy statement directed solely to shareholders of your Fund. Because all of the mutual funds currently operating under the Dual Distribution System intend to begin operating under the Select Pricing System, and since much of the information required to be included in the proxy materials for each Fund is substantially identical, we believe it is more efficient to prepare a single "omnibus" proxy statement for use by the shareholders of all Funds having a common Board of Directors or Trustees. Specific information pertaining to your Fund or Funds is attached hereto as Exhibits A and C. If you own more than one Fund, the term "Fund" refers to each Fund in which you own shares. Each Fund is organized either as a Maryland corporation or a Massachusetts business trust. In each jurisdiction, nomenclature varies. For ease and clarity of presentation, throughout the proxy statement we will refer to you as a "shareholder", to your Fund shares of common stock or beneficial interest as "shares", to your Board of Directors or Trustees as the "Board", to your directors or trustees as "Board members", to the investment adviser of your Fund as the "Investment Adviser" or "MLAM" and to your Fund's Articles of Incorporation or Declaration of Trust as its "charter". Unless otherwise indicated, MLAM and FAM are together referred to as "MLAM". EACH SHAREHOLDER WILL VOTE ONLY ON PROPOSALS THAT APPLY TO THAT SHAREHOLDER'S FUND. SHARES OF AN INDIVIDUAL SERIES OF A SERIES TRUST WILL BE DEEMED TO BE SHARES OF A SEPARATE FUND FOR VOTING PURPOSES IN THE CASE OF PROPOSALS 3 AND 4. THE ENCLOSED PROXY CARD(S) SOLICITS YOUR VOTE ON EACH PROPOSAL AS A SHAREHOLDER OF EACH OF THE FUNDS THAT YOU OWN. YOU WILL BE SENT A SEPARATE PROXY STATEMENT AND PROXY CARD FOR EACH ACCOUNT IN WHICH YOU HOLD SHARES OF THE FUNDS COVERED BY THIS PROXY STATEMENT; IN ADDITION, 2 IF YOU OWN SHARES OF OTHER MLAM-ADVISED FUNDS, YOU WILL BE SENT FOR EACH ACCOUNT AN ADDITIONAL COMBINED PROXY STATEMENT AND PROXY CARD FOR EACH GROUP OF FUNDS WITH A COMMON BOARD. EACH VOTE IS IMPORTANT; PLEASE REVIEW EACH PROXY STATEMENT CAREFULLY AND CAST YOUR VOTE ON EACH PROXY CARD YOU RECEIVE. MANAGEMENT AND THE BOARD RECOMMEND THAT YOU VOTE "FOR" EACH PROPOSAL. If you have any questions, please call . Sincerely, Arthur Zeikel President 3 [PRELIMINARY COPY] MERRILL LYNCH BALANCED FUND FOR INVESTMENT AND RETIREMENT MERRILL LYNCH CALIFORNIA MUNICIPAL SERIES TRUST (2 SERIES) MERRILL LYNCH GLOBAL CONVERTIBLE FUND, INC. MERRILL LYNCH GROWTH FUND FOR INVESTMENT AND RETIREMENT MERRILL LYNCH MULTI-STATE LIMITED MATURITY MUNICIPAL SERIES TRUST (8 SERIES) MERRILL LYNCH MULTI-STATE MUNICIPAL SERIES TRUST (16 SERIES) MERRILL LYNCH WORLD INCOME FUND, INC. P.O. BOX 9011 PRINCETON, NEW JERSEY 08543-9011 ------------------------ NOTICE OF MEETINGS OF SHAREHOLDERS SEPTEMBER 20, 1994 ------------------------ To The Shareholders: Notice is hereby given that Meetings of Shareholders (the "Meetings") of the above-listed mutual funds (each a "Fund", which term includes the individual series of the above-listed series trusts) advised by Merrill Lynch Asset Management, L.P. ("MLAM") and Fund Asset Management, L.P. ("FAM""Funds") will be held at the offices of MLAM,Merrill Lynch Investment Managers, L.P., 800 Scudders Mill Road, Plainsboro, New Jersey, on September 20, 1994Thursday, December 21, 2000, at the timetimes specified in Exhibit A hereto. The Meetings will be heldto this Combined Proxy Statement for the following purposes: (1) To elect membersthe Board Members (which term as used herein refers to both Directors and Trustees, as applicable) of the Boards of Directors or Trustees to serve for an indefinite termeach Fund until their successors arehave been duly elected and qualified;qualified or until their earlier resignation or removal; (2) To consider and act upon a proposal to ratify the selection of the independent auditors of each Fund for its current fiscal year; (3) To consider and act upon a proposal to amend each Fund's charter to permit the fundamental investment restrictionsBoard of each Fund; (4) To consider and act upon a proposalTrustees (which term as used herein refers to amendboth the ArticlesBoard of IncorporationTrustees or Declarationthe Board of Trust of each Fund in connection with the implementationDirectors, as applicable) of the Merrill Lynch Select Pricing SM System (the "Select Pricing System"), a multiclass distribution system in connection with the offer and sale of shares ofapplicable Fund to reorganize the Fund (this proposal must be approved by the shareholders of both classes of the Fund voting asinto a single classmaster/feeder structure; and also by the Class B shareholders of the Fund voting as a separate class); and (5)(4) To transact such other business as may properly come before theany Meeting or any adjournment thereof. The Board of Trustees of each Fund has fixed the close of business on August 5, 1994October 30, 2000 as the record date for the determination of shareholders entitled to notice of and to vote at the Meetingsapplicable Meeting or any adjournment thereof. A complete list of the shareholders of each Fund entitled to vote at eachthe applicable Meeting will be available and open to the examination of any shareholder of that Fund for any purpose germane to the Fund'sthat Meeting during ordinary business hours from and after September 6, 1994December 7, 2000, at the office of theeach Fund, 800 Scudders Mill Road, Plainsboro, New Jersey 08536.Jersey. You are cordially invited to attend your Fund's Meeting.any Meeting at which you may vote shares. Shareholders who do not expect to attend theany such Meeting in person are requested to complete, date and sign the enclosed form of proxy as well as any other proxies you may receive from the Funds in connection with these Meetings, and return them promptly.it promptly in the envelope provided for this purpose. If you own shareshave been provided with the opportunity on your proxy card or voting instruction form to provide voting instructions via telephone or the Internet, please take advantage of a series trust, you will vote the shares of each series as a separate Fund. Eachthese prompt and efficient voting options. The enclosed proxy you receive from the Funds in connection with these meetings is being solicited on behalf of the Board.Board of Trustees of each Fund. If you have any questions regarding the enclosed proxy material or need assistance in voting your shares, please contact our proxy solicitor, Shareholder Communications Corporation, at (800) ___-____. By Order of the BoardBoards of Trustees Alice A. Pellegrino Secretary of Merrill Lynch California Municipal Series Trust, Merrill Lynch Multi-State Limited Maturity Municipal Series Trust and Merrill Lynch Multi-State Municipal Series Trust Robert Harris Secretary of Merrill Lynch World Income Fund, Inc. Lori A. Martin Secretary of Merrill Lynch Growth Fund Plainsboro, New Jersey Dated: August 10, 1994 2November __, 2000 [PRELIMINARY COPY]PRELIMINARY COPY COMBINED PROXY STATEMENT ------------------------ MERRILL LYNCH BALANCED FUND FOR INVESTMENT AND RETIREMENT--------- MERRILL LYNCH CALIFORNIA MUNICIPAL SERIES TRUST (2 SERIES) MERRILL LYNCH GLOBAL CONVERTIBLE FUND, INC.Series) Merrill Lynch California Insured Municipal Bond Fund Merrill Lynch California Municipal Bond Fund MERRILL LYNCH GROWTH FUND FOR INVESTMENT AND RETIREMENT MERRILL LYNCH MULTI-STATE LIMITED MATURITY MUNICIPAL SERIES TRUST (8 SERIES)(2 Series) Merrill Lynch California Limited Maturity Municipal Bond Fund Merrill Lynch Florida Limited Maturity Municipal Bond Fund MERRILL LYNCH MULTI-STATE MUNICIPAL SERIES TRUST (16 SERIES)(17 Series) Merrill Lynch Arizona Municipal Bond Fund Merrill Lynch Arkansas Municipal Bond Fund Merrill Lynch Colorado Municipal Bond Fund Merrill Lynch Connecticut Municipal Bond Fund Merrill Lynch Florida Municipal Bond Fund Merrill Lynch Maryland Municipal Bond Fund Merrill Lynch Massachusetts Municipal Bond Fund Merrill Lynch Michigan Municipal Bond Fund Merrill Lynch Minnesota Municipal Bond Fund Merrill Lynch New Jersey Municipal Bond Fund Merrill Lynch New Mexico Municipal Bond Fund Merrill Lynch New York Municipal Bond Fund Merrill Lynch North Carolina Municipal Bond Fund Merrill Lynch Ohio Municipal Bond Fund Merrill Lynch Oregon Municipal Bond Fund Merrill Lynch Pennsylvania Municipal Bond Fund Merrill Lynch Texas Municipal Bond Fund MERRILL LYNCH WORLD INCOME FUND, INC. P.O. BOXBox 9011 PRINCETON, NEW JERSEYPrinceton, New Jersey 08543-9011 --------------------------------- 2000 MEETINGS OF SHAREHOLDERS SEPTEMBER 20, 1994--------- December 21, 2000 TABLE OF CONTENTS Page ---- INTRODUCTION................................................................3 ITEM 1: ELECTION OF BOARD MEMBERS..........................................4 ITEM 2: SELECTION OF INDEPENDENT AUDITORS..................................6 ITEM 3: APPROVAL OR DISAPPROVAL OF CHARTER AMENDMENT TO PERMIT REORGANIZATION OF A FUND INTO A MASTER/FEEDER STRUCTURE............7 ADDITIONAL INFORMATION: Exhibit A-Information About the Funds................................. A-1 Exhibit B-Proposed Charter Amendments................................. B-1 INTRODUCTION This Combined Proxy Statement is furnished in connection with the solicitation of proxies on behalf of the Boards (which term as used herein refers to the Board of Trustees or the Board of Directors, as applicable) of the above-listed funds (each, a "Fund","Fund," which term includes the individual seriesSeries of the above-listed series trusts,Series Trusts, and collectively, the "Funds"), to be voted at the 2000 Meeting of Shareholders of each Fund (the(each, a "Meeting" and collectively, the "Meetings"), to be held at the offices of Merrill Lynch Asset Management,Investment Managers, L.P. ("MLAM"MLIM"), 800 Scudders Mill Road, Plainsboro, New Jersey, on September 20, 1994Thursday, December 21, 2000 at the timetimes specified in Exhibit A hereto. The approximate mailing date of this Combined Proxy Statement is August 16, 1994.November __, 2000. Each Fund is organized either as a Maryland corporation or as a Massachusetts business trust. In each jurisdiction, nomenclature varies. For ease and clarity of presentation, throughout the proxy statement shares of common stock orof a Fund and shares of beneficial interest of a Fund are referred to herein as "shares", or "Common Stock," holders of shares or Common Stock are referred to as "shareholders","shareholders," the Board of Directorstrustees or Trusteesdirectors of each of the Funds isFund are referred to as "Board members",Members," the investment adviser or manager of each Fund is referred to as the "Investment Adviser" or "MLAM"Adviser," and each Fund's Articles of Incorporation or Declaration of Trust is referred to as its "charter". Unless otherwise indicated, MLAM and Fund Asset Management, L.P. ("FAM") are together referred"charter." Please see Exhibit A to as "MLAM" and Merrill Lynch Funds Distributor, Inc., is referredthis Combined Proxy Statement for certain information relating to as "MLFD".each Fund. All properly executed proxies received prior to thea Fund's Meeting will be voted at thethat Meeting in accordance with the instructions marked thereon or otherwise as provided therein. Unless instructions to the contrary are marked, proxies will be votedvoted: 1) "FOR" the election of the Board Member nominees of each Fund; 2) "FOR" the ratification of the selection of Deloitte & Touche LLP ("D&T"), as independent auditors to serve for the Fund's current fiscal year,auditors; and 3) "FOR" the proposal to amend the fundamental investment restrictionsapproval of the Fund and "FOR" thea charter amendment in connection withpermitting each Board to reorganize the implementation of the Merrill Lynch Select Pricing SM System (the "Select Pricing System").applicable Fund into a master/feeder structure. Any proxy may be revoked at any time prior to the exercise thereof by giving written notice to the Secretary of the Fund.applicable Fund at that Fund's address indicated above or by voting in person at the applicable Meeting. The Board of each Fund has fixed the close of business on August 5, 1994October 30, 2000 as the record date (the "Record Date") for the determination of shareholders entitled to notice of and to vote at the Meetings and at any adjournment thereof. Shareholders on the Record Date will be entitled to one vote for each share held, and fractional votes for fractional shares held, with no shares having cumulative voting rights. Shareholders of each Fund will vote as a single class, and will vote separately on each proposal on which shareholders of that Fund are entitled to vote. As noted, with respect to Proposal 4, Class B shareholders of each Fund voting together as a separate class also will be required to approve the charter amendment. With respect to proposals 3 and 4, if you own shares of a series trust, you will vote the shares of each series as a separate Fund. As of the Record Date, youreach Fund had outstanding the number of shares of Common Stock as indicated in Exhibit A. ToA hereto. Except as set forth in Exhibit A to this Combined Proxy Statement, to the knowledge of each Fund, as of the Fund,Record Date, no person owned beneficiallyis the beneficial owner of more than five percent of the Fund's outstanding Common Stock or more than five percent of the outstanding sharesCommon Stock of the Fund at such date except as set forth on Exhibit A.any Series. The Board knowsMembers of each Fund know of no business other than that mentioned in ProposalsItems 1, through 42 and 3 of the Notice of Meeting whichthat will be presented for consideration at the applicable Meeting. If any other matter is properly presented at a Meeting or any adjournment thereof, it is the intention of the persons named inon the enclosed proxy as well as any other proxy sent by the Funds in connection with the Meetings,card to vote in accordance with their best judgment. 2 Proposal 1ITEM 1: ELECTION OF BOARD MEMBERS At the Meeting,Meetings, the Board Members of each Board memberFund will be elected to serve for an indefinite term until his successor istheir successors are elected and qualified until his death, until he resigns or is otherwise removed under the charter or until December 31their earlier resignation or removal. It is intended that all properly executed proxies will be voted (unless such authority has been withheld in the proxy or revoked as described herein) "FOR" the Board Member nominees listed below. Certain biographical and other information relating to the Board Member nominees is set forth below. Additional information relating to the Board Member nominees is set forth in Exhibit A to this Combined Proxy Statement.
Principal Occupation During Past Name and Address of Nominees Age Five Years and Public Directorships (1) - ---------------------------- --- --------------------------------------- Terry K. Glenn(1)*......................... 60 Executive Vice President of Fund Asset Management, P.O. Box 9011 L.P. ("FAM") and MLIM (the terms FAM and MLIM, as Princeton, New Jersey used herein, include their corporate predecessors) 08543-9011 since 1983; Executive Vice President and Director of Princeton Services, Inc. ("Princeton Services") since 1993; President of FAM Distributors, Inc. ("FAMD") since 1986 and Director thereof since 1991; President of Princeton Administrators, L.P. since 1988. James H. Bodurtha(1)(2) ................... 56 Director and Executive Vice President, The China 36 Popponesset Road Business Group, Inc. since 1966; Chairman and Chief Cotuit, Massachusetts 02635 Executive Officer, China Enterprise Management Corporation from 1993 to 1996; Chairman, Berkshire Corporation since 1980; Partner, Squire, Sanders & Dempsey from 1980 to 1993. Herbert I. London(1)(2) ................... 61 John M. Olin Professor of Humanities, New York 2 Washington Square Village University since 1993 and Professor thereof since New York, New York 10012 1980; President, Hudson Institute since 1997 and Trustee thereof since 1980; Dean, Gallatin Division of New York University from 1976 to 1993; Distinguished Fellow, Herman Kahn Chair, Hudson Institute from 1984 to 1985; Director, Damon Corp. from 1991 to 1995; Overseer, Center for Naval Analyses from 1983 to 1993; Limited Partner, Hypertech LP from 1996 to 1997. Joseph L. May(1)(2) ....................... 71 Attorney in private practice since 1984; President, 424 Church Street May and Athens Hosiery Mills Division, Wayne-Gossard Suite 2000 Corporation from 1954 to 1983; Chairman, The May Nashville, Tennessee 37219 Corporation (personal holding company) from 1972 to 1983; Director, Signal Apparel Co. from 1972 to 1989. Andre F. Perold (1)(2)..................... 48 Sylvan C. Coleman Professor of Financial Management, Morgan Hall Harvard Business School since 1993, Professor from Soldiers Field 1989 to 1993, and Associate Professor from 1983 to Boston, Massachusetts 02163 1989; Trustee, The Common Fund since 1989; Director, Quantec Limited 1991 to 1999; Director, TIBCO from 1994 to 1996; Director, Genbel Securities Limited and Gensec Bank since 1999; Director, Gensec Asset Management since 2000; Director, Bulldogresearch.com since 2000; Director, Stockback.com since 2000. Roberta Cooper Ramo(1)(2).................. 58 Shareholder, Modrall, Sperling, Roehl, Harris & Sisk, P.O. Box 2168 P.A. since 1993; President, American Bar Association 500 Fourth Street, N.W. from 1995 to 1996 and Member of the Board of Albuquerque, New Mexico 87103 Governors thereof from 1994 to 1997; Partner, Poole, Kelly & Ramo, Attorneys at Law, P.C. from 1977 to 1993; Director, Coopers, Inc. since 1999; Director, United New Mexico Bank (now Wells Fargo) from 1983 to 1988; Director, First National Bank of New Mexico (now First Security) from 1975 to 1976. Arthur Zeikel(1)* ......................... 68 Chairman of FAM and MLIM from 1997 to 1999; President 300 Woodland Avenue of FAM and MLIM from 1977 to 1997; Chairman of Westfield, New Jersey 07090 Princeton Services from 1997 to 1999, Director thereof from 1993 to 1999 and President from 1993 to 1997; Executive Vice President of Merrill Lynch & Co., Inc. ("ML & Co.") from 1990 to 1999.
- -------------- (1) Each of the year inBoard Member nominees is a director, trustee or member of an advisory board of certain other investment companies for which FAM or MLIM acts as investment adviser. See "Compensation of Board Members" and Exhibit A to this Combined Proxy Statement. (2) Member of the Audit and Nominating Committee of each fund on which he reaches age 72. It is the intentionor she currently serves as a Board Member and will be a member of the persons namedAudit and Nominating Committee of each fund to which he or she is elected as a Board Member. See Exhibit A to this Combined Proxy Statement. * Interested person, as defined in the enclosed proxy to nominate and vote in favorInvestment Company Act of the election1940, as amended, of the persons listed below.each Fund. The Board of each Fund knows of no reason why any of thesethe Board Member nominees listed above will be unable to serve, but in the event of any such unavailability, the proxies received will be voted for such substitute nominee or nominees as the Board may recommend. Certain information concerning the nominees is set forth below. Additional information concerning the nominees and other information relevant to the election of Board members is set forth in Exhibit A.
PRINCIPAL OCCUPATIONS DURING PAST FIVE YEARS AND PUBLIC NAME AND ADDRESS OF NOMINEE AGE DIRECTORSHIPS(1) --------------------------- --- ---------------------------- Kenneth S. 72 Executive Vice President and Axelson(1)(2)......... Director, J.C. Penney Company, 75 Jameson Point Road Inc., until 1982; Director, UNUM Rockland, Maine 04841 Corporation, Protection Mutual Insurance Company, and, until 1994, Grumman Corporation and Zurn Industries, Inc., and, until 1992, Central Maine Power Company and Key Trust Company of Maine; Trustee, The Chicago Dock and Canal Trust. Herbert I. London(1)(2). 55 Dean, Gallatin Division of New 113-115 University York University from 1978 to Place 1993 and Director from 1975 to New York, New York 1976; Professor, New York 10003 University since 1973; John M. Olin Professor of Humanities, New York University since 1993; Distinguished Fellow, Herman Kahn Chair, Hudson Institute from 1984 to 1985; Trustee, Hudson Naval Institute since 1980; Overseer, Center for Naval Analyses from 1983 to 1993; Director, Damon Corp. since 1991.
3
PRINCIPAL OCCUPATIONS DURING PAST FIVE YEARS AND PUBLIC NAME AND ADDRESS OF NOMINEE AGE DIRECTORSHIPS(1) --------------------------- --- ---------------------------- Robert R. Martin(1)(2).. 67 Chairman and Chief Executive 513 Grand Hill Officer, Kinnard Investments, St. Paul, Minnesota Inc. from 1990 to 1993; 55102 Executive Vice President, Dain Bosworth from 1974 to 1989; Director, Carnegie Capital Management from 1977 to 1985 and Chairman thereof in 1979; Director, Securities Industry Association from 1981 to 1982 and Public Securities Association from 1979 to 1980; Chairman of the Board, WTC Industries, Inc. since 1994; Trustee, Northland College since 1992. Joseph L. May(1)(2)..... 65 Attorney in private practice since 424 Church Street 1984; President, May and Athens Suite 2000 Hosiery Mills Division, Wayne- Nashville, Tennessee Gossard Corporation from 1954 to 37219 1983; Vice President, Wayne- Gossard Corporation from 1972 to 1983; Chairman, The May Corporation (personal holding company) from 1972 to 1983; Director, Signal Apparel Co. from 1972 to 1989. Andre F. Perold(1)(2)... 42 Professor, Harvard Business School Morgan Hall since 1989 and Associate Soldiers Field Professor from 1983 to 1989; Boston, Massachusetts Trustee, The Common Fund, since 02163 1989; Director, Quantel Investment Technology (a private United Kingdom company). Arthur Zeikel(1)(3)..... 62 President of MLAM and its P.O. Box 9011 predecessor since 1977 and Chief Princeton, New Jersey Investment Officer since 1976; 08543-9011 President and Chief Investment Officer of FAM and its predecessor 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; Senior Vice President of Merrill Lynch from 1985 to 1990; Director of MLFD.
4 - ------------ (1) Each of the nominees is a director, trustee or member of an advisory board of certain other investment companies for which FAM or MLAM acts as investment adviser. See "Merrill Lynch Investment Company Directorships" below. (2) Member of the Audit and Nominating Committee of the Board. (3) Interested person, as defined in the Investment Company Act of 1940, as amended (the "Investment Company Act"), of the Funds. Committees and Board Meetings. The Board of each Fund has a standing Audit and Nominating Committee (the "Committee"), which consists of the Board membersMembers who are not "interested persons" of the Fund within the meaning of the Investment Company Act.Act of 1940, as amended (the "Investment Company Act"). The principal purpose of the Committee is to review the scope of the annual audit conducted by the Fund's independent auditors and the evaluation by such auditors of the accounting procedures followed by the Fund. The Committee will also selectreviews and nominate thenominates candidates to serve as non-interested Board members who are not "interested persons" of the Fund within the meaning of the Investment Company Act.Members. The Committee generally will not consider nominees recommended by shareholders of thea Fund. The non-interested Board membersMembers have retained independent legal counsel to assist them in connection with these duties. During theeach Fund's lastmost recently completed fiscal year, each of the Board membersMembers then in office attended at least 75% of the aggregate of (i) the total number of meetings of the Board of that Fund held during the fiscal year and, (ii) if a member, of the total number of meetings of the Committee held during the fiscal year.period for which he or she served. For more information about Committee and Board meetings, see Exhibit A to this Combined Proxy Statement. Interested Persons. Each Fund considers Mr. Glenn and Mr. Zeikel to be "interested persons" of the Fund within the meaning of Section 2(a)(19) of the Investment Company Act because of the positions each holds or has held with the Investment Adviser and its affiliates. Mr. Glenn is the President of each Fund. Compensation of Board Members. The Investment Adviser pays all compensation ofto all officers of theeach Fund and all Board membersMembers of each Fund who are affiliated with ML & Co. or its subsidiaries. TheEach Fund pays fees to each Board memberMember who is not affiliated with the Investment Adviser (each, a "non-affiliated Board Member") for service to the Fund. Each non-affiliated Board Member receives an aggregate annual fee plusretainer of $100,000 for his or her services to multiple investment companies advised by the Investment Adviser ("MLIM/FAM-advised funds"). The portion of the annual retainer allocated to each MLIM/FAM-advised fund is determined quarterly based on the relative net assets of each such fund. In addition, each non-affiliated Board Member receives a fee for eachper in-person Board meeting attended and theper in-person Committee meeting attended. The annual per meeting fees paid to each non-affiliated Board Member aggregate $60,000 for all MLIM/FAM-advised funds for which that Board Member serves and are allocated equally among those funds. Each Fund also pays each member of its Committee an annual fee plus a feereimburses the non-affiliated Board Members for each meeting attended, together with such Board member'sactual out-of-pocket expenses relating to attendance at such meetings. Information with respectrelating to the aggregate fees and expenses paid by each Fund to theits non-affiliated Board members forMembers during each Fund's most recently completed fiscal year is set forth in Exhibit A. Merrill Lynch Investment Company Board Memberships. MLAM and FAM act as the investment adviser for more than 90 registered investment companies. Mr. Zeikel is a trustee or director of each of these companies except for Merrill Lynch Series Fund, Inc., Merrill Lynch Institutional Intermediate Fund and Merrill Lynch Funds for Institutions 5 Series. Messrs. Axelson, London, Martin, May and Perold are trustees or directors of Convertible Holdings, Inc., Merrill Lynch Balanced Fund for Investment and Retirement, Merrill Lynch California Municipal Series Trust, Merrill Lynch Consults International Portfolio, Merrill Lynch Multi-State Municipal Series Trust, Merrill Lynch Growth Fund for Investment and Retirement, Merrill Lynch Multi-State Limited Maturity Municipal Series Trust, Merrill Lynch World Income Fund, Inc., Merrill Lynch Global Convertible Fund, Inc., MuniEnhanced Fund, Inc., MuniYield Fund, Inc., MuniYield Arizona Fund, Inc., MuniYield Arizona Fund II, Inc., MuniYield California Fund, Inc., MuniYield California Insured Fund, Inc., MuniYield California Insured Fund II, Inc., MuniYield Florida Fund, MuniYield Michigan Fund, Inc., MuniYield New Jersey Fund, Inc., MuniYield New York Insured Fund, Inc., MuniYield New York Insured Fund II, Inc., MuniYield Quality Fund, Inc., MuniYield Quality Fund II, Inc. and MuniVest Pennsylvania Insured Fund.A to this Combined Proxy Statement. Officers of the Fund.Funds. Information regardingrelating to the officers of theeach Fund is set forth in Exhibit A. Stock Ownership. As of July 29, 1994, the nominees held sharesA to this Combined Proxy Statement. Officers of the Funds as follows:
NO. OF NOMINEE FUND AND CLASS SHARES HELD - ------- -------------- ----------- Mr. Axelson.......................................... Mr. London........................................... Mr. Martin........................................... Mr. May.............................................. Mr. Perold........................................... Mr. Zeikel...........................................
Atare elected and appointed by the Board and hold office until they resign, are removed or are otherwise disqualified to serve. Stock Ownership. Information relating to the number of shares of each Fund owned by the Board Member nominees is set forth in Exhibit A to this Combined Proxy Statement. As of the Record Date, the Board membersMembers and officers of theeach Fund as a group owned an aggregate of less than 1% of the sharesCommon Stock of theeach Fund outstanding at such date. At such date, Mr. Zeikel, an officerGlenn, President and a Board Member of theeach Fund, and Mr. Zeikel, a memberBoard Member of the Board,each Fund, and the other officers of theeach Fund owned an aggregate of less than 1% of the outstanding shares of common stock of ML & Co. Proposal 2Each Board recommends that its respective shareholders vote FOR the election of the Board Member nominees. ITEM 2: SELECTION OF INDEPENDENT AUDITORS The Board of each Fund, including a majority of the Board membersMembers who are not interested persons of the Fund within the meaning of the Investment Company Act, has selected D&T as the Fund's independent auditors to examine the financial statements of the Fund for the Fund's current fiscal year. The Fundyear as set forth in the following chart. None of the Funds knows of noany direct or indirect financial interest of such auditors 6 in theany Fund. Such appointment is subject to ratification or rejection by the shareholders of theeach respective Fund. Unless a contrary specification is made, the accompanying proxy will be voted in favor of ratifying the selection of such Fund's auditors. Deloitte & Touche ("D&T") acts as independent auditors for all of the Funds.
Fund Fiscal Year Ending - ---- ------------------ Merrill Lynch California Municipal Series Trust August 31, 2001 Merrill Lynch Growth Fund October 31, 2001 Merrill Lynch Multi-State Limited Maturity Municipal Series Trust July 31, 2001 Merrill Lynch Multi-State Municipal Series Trust(1) July 31, 2001 Merrill Lynch Multi-State Municipal Series Trust (2) September 30, 2001 Merrill Lynch World Income Fund, Inc. December 31, 2001 - ----------------------------------------------------------------------------------- (1) All Series of Merrill Lynch Multi-State Municipal Series Trust except Merrill Lynch New York Municipal Bond Fund. (2) Merrill Lynch New York Municipal Bond Fund only.
D&T also acts as independent auditors for ML & Co. and allmost of its subsidiaries, including the Investment Adviser, and for most other investment companies for which MLAM orMLIM and FAM actsact as investment adviser. The fees received by D&T from these other entities are substantially greater, in the aggregate, than the total fees received by itthem from theeach applicable Fund. The Board of each Fund considered the fact that D&T has been retained as the independent auditors for ML & Co. and the other entities described above in its evaluation of the independence of D&T with respect to each applicable Fund. Representatives of the Fund's independent auditorsD&T are expected to be present at the MeetingMeetings and will have the opportunity to make a statement if they so desire and to respond to questions from shareholders. Proposal 3 PROPOSAL TO AMEND THE FUNDAMENTALINVESTMENT RESTRICTIONS OF THE FUND Each Fund advised by MLAM or FAM (collectively,Board recommends that its respective shareholders vote FOR the "MLAM Funds") has adopted investment restrictions that govern generally the operationsratification of the selection of D&T as independent auditors for that Fund. Investment restrictions ITEM 3: APPROVAL OR DISAPPROVAL OF CHARTER AMENDMENT TO PERMIT REORGANIZATION OF A FUND INTO A MASTER/FEEDER STRUCTURE The Board of each Fund proposes to amend the charter of the applicable Fund to add a provision that are deemed fundamental may not be changed without awould give the Board the express power to transfer in the ordinary course of business and upon the affirmative vote of the outstanding sharesmajority of the entire Board, all or substantially all of the assets of a Fund while non-fundamentalto another entity known in the investment restrictions may be changed bycompany industry as a master fund in a "master/feeder" structure. By voting in favor of this provision, shareholders of a Fund are authorizing the Fund'sapplicable Board to reorganize a Fund into a master/feeder structure if it deems itthe Board believes the structure is in the best interestinterests of the Fund and its shareholders to do so. In addition to investment restrictions, eachshareholders. Copies of the forms of charter amendment for the Funds operate pursuantare attached to investment objectives and policies, described in the Fund's Prospectus andthis Combined Proxy Statement of Additional Information, that govern the investment activities of theas Exhibit B. Merrill Lynch World Income Fund, and further limit their ability to invest in certain types of securities or engage in certain types of transactions. These investment objectives and policies will be unaffected by the adoption of the proposed investment restrictions.Inc. ("World Income Fund") is organized as a Maryland corporation. Generally, the investment objectivetransfer of a Fund is a fundamental policy of the Fund that may be changed only by shareholder vote. The investment policies of a Fund are non- fundamental and may not be changed unless and until (i) the Board of the Fund explicitly authorizes, by resolution, a change in the investment policy and (ii) the Prospectus of the Fund is amended to reflect the change in policy and, if appropriate, to include additional disclosure. Investment restrictions may differ among Funds depending on prevailing regulations and the nature of the securities markets at the time 7 the particular Fund commenced operations. As a result, similar Funds in the MLAM complex have different investment restrictions, which may disadvantage one Fund over another in the current marketplace and make administration and compliance monitoring unnecessarily difficult. To address this problem, MLAM has analyzed the various fundamental and non- fundamental investment restrictions of the Funds covered by this proxy statement, as well as the investment restrictions ofall or substantially all of the other MLAM- advised non-money market mutual funds, in lightassets of each Fund's investment objectives and policies, and has created a set of standard fundamental and non- fundamental investment restrictions. The proposed uniform restrictions are designedMaryland corporation to provide each Fund with as much investment flexibility as possible underanother entity requires the Investment Company Act and applicable state securities regulations ("state blue sky regulations"), help promote operational efficiencies and facilitate monitoring of compliance. Several recently created Funds in the MLAM complex operate under investment restrictions substantially similar to the proposed restrictions. The proposed changes to the investment restrictions are not expected to affect materially the operations of the Funds. Although adoption of new or revised investment restrictions is not likely to have any effect on the current investment techniques employed by a Fund, it will contribute to the overall goal of uniformity and standardization. In this regard, the Boards propose that each Fund adopt, as described below, the uniform, updated investment restrictions. The proposed restrictions restate, without material change, many of the fundamental and non-fundamental restrictions currently in effect for each Fund. In some instances, certain fundamental or non-fundamental restrictions have been modified or eliminated in accordance with developments in Federal or state blue sky regulations or in the securities markets since the inception of the Fund. In other instances, certain restrictions previously deemed fundamental have been redesignated non-fundamental. Fundamental investment restrictions may not be changed without a voteapproval of the shareholders of that Maryland corporation. Maryland law permits the Fund, and the coststransfer of shareholder meetings for these purposes generally are borne by the Fund and its shareholders. By making certain restrictions non-fundamental, the Board may amend a restriction as it deems appropriate and in the best interestall or substantially all of the Fund and its shareholders,assets of a Maryland corporation to a wholly owned subsidiary without incurring the costs of seeking a shareholder vote. Each Fund's current investment restrictions are set forth in Exhibit C. Set forth below is each proposed restriction, followed by a commentary describing the proposed restriction and detailing the significance, if any,approval of the proposed changescorporation's shareholders. In certain circumstances, however, the Investment Adviser may propose a master/feeder structure for the MLAM Funds. 8 Proposed Fundamental Investment Restrictions. Under the proposed fundamental investment restrictions, a Fund may not: 1. MAKE ANY INVESTMENT INCONSISTENT WITH THE FUND'S CLASSIFICATION AS A DIVERSIFIED COMPANY UNDER THE INVESTMENT COMPANY ACT./1/ Commentary: Current applicable law regarding diversificationorganized as a Maryland corporation where the master fund would not be a wholly owned subsidiary of such Fund immediately after the transfer of the Fund's assets to the master fund. Therefore, World Income Fund is seeking shareholder approval of a charter amendment that would permit such a transfer of assets requiresto a master fund in exchange for shares or other beneficial interests in that with respect to 75%master fund without shareholder approval (even if such master fund is not a wholly owned subsidiary of its total assets, aWorld Income Fund). The charter amendment for World Income Fund may not invest more than 5% of its total assets (taken at market value atwould also clarify the time of each investment)manner in the securities of any one issuer or acquire more than 10% of the voting securities of any one issuer. The U.S. Government, its agencies and instrumentalities are not included within the definition of "issuer" for purposes of these limitations. Certain MLAM Funds apply this diversification restriction to 100% of total assets. At one time, state blue sky regulations applied the diversification restriction to 100% of a mutual fund's assets, thereby prohibiting an investment company from investing more than 5% of total assetswhich World Income Fund will operate in a single issuer or from holding more than 10% of the voting securities of a single issuer. These state blue sky limitations, however, have been eliminated. If the uniform restrictions are approved, each Fund currently classified as "diversified" would be subject, as a matter of investment policy, to the diversification restriction described above only with respect to 75% of its total assets. As to the remaining 25% of total assets, there would be no fundamental investment limitation on the amount of (i) total assets the Fund could invest in a single issuer or (ii) voting securities of a single issuer that could be held by the Fund. A Fund could, for example, invest up to 25% of its assets in a single issuer without limitation as to the percentage ownership of that issuer's outstanding securities. The primary purpose of the proposal is to give the Funds that presently have a diversification restriction with respect to 100% of their assets the same investment flexibility as MLAM Funds that have a diversification restriction with respect to 75% of their assets, as well as to enable the Funds to comply with any future changes in applicable law regarding diversification requirements without incurring the costs of soliciting a shareholder vote. - ------------ /1/Not applicable to either series ofmaster/feeder structure. Merrill Lynch California Municipal Series Trust, all series of Merrill Lynch Multi-State Limited Maturity Municipal Series Trust, all series of Merrill Lynch Multi-State Municipal Series Trust (except(each, a "Series Trust" and collectively, the Arizona"Series Trusts") and New York series) or Merrill Lynch World IncomeGrowth Fund Inc., which("Growth Fund" and, collectively with the Series Trusts, the "Trusts") are non-diversified Funds. 9 2. 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/ Commentary:each organized as a Massachusetts business trust. The proposed restriction, which addresses concentration incharters governing each Trust generally require shareholder approval before a particular industry, is in substance identical to the applicable restriction in effect for each Fund. Certain MLAM Funds currently do not exclude explicitly the U.S. Government, its agencies and instrumentalities from the definition of "industry". However, such entities have not been considered to constitute "industries" for purposes of concentration, and therefore explicit reference to such entities in the proposed restriction does not change a Fund's concentration policy. In addition, for purposes of this restriction, states, municipalities and their political subdivisions are not considered to be part of any industry. 3. MAKE INVESTMENTS FOR THE PURPOSE OF EXERCISING CONTROL OR MANAGEMENT. Commentary: The proposed restriction is in substance identical to the applicable restriction in effect for each Fund. Certain MLAM Funds currently include the restriction in their non-fundamental, rather than their fundamental, investment restrictions. 4. PURCHASE OR SELL REAL ESTATE, EXCEPT THAT A FUND 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. Commentary: The proposed restriction is substantially similar to the applicable restriction in effect for each Fund, except that certain MLAM Funds also prohibit investment in real estate limited partnerships in the fundamental restriction. Prohibition on investments in real estate limited partnerships is required under current applicable law, however such law does not require this restriction to be fundamental. Accordingly, under the proposed uniform restrictions, investment in real estate limited partnerships is prohibited in non-fundamental investment restriction (g) to provide the flexibility to the - ------------ /2/A MLAM Fund that concentrates in a particular industry (i.e., more than 25%) will continue to use its present concentration restriction. A typical restriction in this regard reads as follows: The Fund will not invest more than 25% ofTrust transfers its assets taken at market value,to a master fund in the securities of issuers in any particular industry (excluding the U.S. Government, its agencies and instrumentalities), except that, under normal circumstances, the Fund will invest more than 25% of its total assets in the securities of issuers in the [name of industry]. None of the Funds covered by this proxy statement concentrate inorder to reorganize into a particular industry. 10 Board to modify the restriction in response to future changes in applicable law without incurring the expensemaster/feeder structure. Accordingly, each Trust is seeking shareholder approval of a shareholder vote. In addition, the applicable restrictions currently in effect for certain MLAM Funds do not contain any exception to the general prohibition on investments in real estate. The proposed restriction clarifiescharter amendment that these Funds have the flexibility, consistent with other MLAM Funds to invest in securities secured by real estate or issued by companies investing in real estate,would permit such as real estate investment trusts. 5. MAKE LOANS TO OTHER PERSONS, EXCEPT THAT THE ACQUISITION OF BONDS, DEBENTURES OR OTHER CORPORATE DEBT SECURITIES AND INVESTMENT IN GOVERNMENT OBLIGATIONS, SHORT-TERM COMMERCIAL PAPER, CERTIFICATES OF DEPOSIT, BANKERS ACCEPTANCES AND REPURCHASE AGREEMENTS SHALL NOT BE DEEMED TO BE THE MAKING OF A LOAN, AND EXCEPT FURTHER THAT THE FUND 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 FUND'S PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION, AS THEY MAY BE AMENDED FROM TIME TO TIME. Commentary: The proposed restriction, with respect to the making of loans, is in substance similar to the applicable restrictions in effect for each Fund. Certain MLAM Funds address loans to other persons and securities lending in two separate restrictions. A Fund may, as an investment policy, restrict investment in the instruments specifically permitted in the exception beyond the limitations set forth in the proposed restriction. Each Fund is permitted to engage in securities lending but the MLAM Funds have a variety of different investment restrictions in this regard. For example, certain MLAM Funds have a fundamental investment restriction limiting securities lending to less than 20% of total assets. In addition to investment restrictions, certain MLAM Funds have imposed limitations on securities lending as an investment policy. Applicable law generally permits the lending of a Fund's portfolio securities in an amount up to 33 1/3% of the Fund's total assets, provided that such loans are made in accordance with prescribed guidelines which typically are set forth in the Statement of Additional Information of the Fund. Each Fund will continue to be subject to the lending limitations set forth as an investment policy in its Prospectus and Statement of Additional Information following approval of the proposed uniform investment restrictions, unless and until the Board determines that an amendment to such investment policy is in the best interest of the Fund and its shareholders and the Prospectus of the Fund is amended. 11 6. ISSUE SENIOR SECURITIES TO THE EXTENT SUCH ISSUANCE WOULD VIOLATE APPLICABLE LAW. Commentary: Certain MLAM Funds currently limit the extent to which the Fund may issue senior securities, while other MLAM Funds have no restriction on the issuance of senior securities. The proposed restriction substitutes instead a limitation on the issuance of senior securities based upon applicable law. Applicable law currently prohibits the issuance of senior securities, defined as any bond, debenture, note or similar obligation or instrument evidencing indebtedness, and any stock of any class having priority as to any other class as to distribution of assets or payment of dividends, but not including (i) bank borrowings provided that immediately thereafter the Fund has 300% asset coverage for all borrowings, or (ii) any note or other evidence of indebtedness representing a loan made to the Fund for temporary purposes (i.e., to be repaid in 60 days without extension or renewal) in an amount not exceeding 5% of the Fund's total assets when the loan is made. Certain of a Fund's other investment techniques, which involve leverage or establish a prior claim to the Fund's assets, may be considered senior securities, absent appropriate segregation of assets or exemptive relief. These techniques include standby commitment agreements, contracts for the purchase of securities on a delayed delivery basis (i.e., firm commitment agreements), reverse repurchase agreements, engaging in financial futures and options thereon, forward foreign currency contracts, put and call options, the purchase of securities on a when-issued basis and short sales. The manner and extent to which a Fund can issue senior securities is governed by applicable law, must be set forth in the Fund's Prospectus and Statement of Additional Information and may be changed only upon resolution of the Board. Investments in interest rate swaps, to the extent permitted, are not treated as senior securities. 7. BORROW MONEY, EXCEPT THAT (I) THE FUND 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 FUND MAY BORROW UP TO AN ADDITIONAL 5% OF ITS TOTAL ASSETS FOR TEMPORARY PURPOSES, (III) THE FUND MAY OBTAIN SUCH SHORT-TERM CREDIT AS MAY BE NECESSARY FOR THE CLEARANCE OF PURCHASES AND SALES OF PORTFOLIO SECURITIES AND (IV) THE FUND MAY PURCHASE SECURITIES ON MARGIN TO THE EXTENT PERMITTED BY APPLICABLE LAW. THE FUND MAY NOT PLEDGE ITS ASSETS OTHER THAN TO SECURE SUCH BORROWINGS OR, TO THE EXTENT PERMITTED BY THE FUND'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 12 TRANSACTIONS, SHORT SALES, WHEN-ISSUED AND FORWARD COMMITMENT TRANSACTIONS AND SIMILAR INVESTMENT STRATEGIES. Commentary: Each Fund has an express limitation on borrowings, a number of which are more restrictive than the limitations set forth in the proposed restriction. For example, a number of MLAM Funds limit borrowings to 5% of total assets. To the extent the Fund's investment policies, as stated in the Fund's Prospectus and Statement of Additional Information, include a limitation on borrowing, or on the pledgingtransfer of assets to secure borrowings,a master fund in exchange for shares or other beneficial interests in that is more restrictive than the restrictions in proposed restriction (7), the Fund will continue to be limited by such investment policy on a non-fundamental basis. Moreover, if a Fund intends to borrow from a bank or to offer debt securities privately as part of its investment policies, it will so state in its Prospectus. If the Fund limits borrowing to 5% of total assets, a statement to that effect in the Prospectus will suffice. On the other hand, if the Fund intends as an investment policy to engage in a higher level of borrowing for investment purposes, additional disclosure with respect to the purposes of such borrowing and the consequences of leverage will be included in the Fund's Prospectus and Statement of Additional Information. With regard to purchases on margin, under current applicable law, a Fund may not establish or use a margin account with a brokermaster fund without shareholder approval. The charter amendments for the purpose of effecting securities transactions on margin, except that a Fund may obtain such short term credit as necessary for the clearance of transactions. However, a Fund may pay initial or variation margin in connection with futures and related options transactions, as set forth in investment restriction (9) below, without regard to this prohibition. 8. UNDERWRITE SECURITIES OF OTHER ISSUERS EXCEPT INSOFAR AS THE FUND TECHNICALLY MAY BE DEEMED AN UNDERWRITER UNDER THE SECURITIES ACT OF 1933 IN SELLING PORTFOLIO SECURITIES. Commentary: The proposed restriction is in substance identical to the applicable restriction in effect for each Fund. 9. PURCHASE OR SELL COMMODITIES OR CONTRACTS ON COMMODITIES, EXCEPT TO THE EXTENT THE FUND MAY DO SO IN ACCORDANCE WITH APPLICABLE LAW AND THE FUND'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. Commentary: Certain MLAM Funds prohibit investment in commodities; others have no restriction on investment in commodities. Under the Investment Company Act, a Fund must state its policy relating to the purchase and sale of commodities. In general, the Funds currently do not anticipate investment directly in tangible commodities andTrusts would be greatly restricted from making such direct investments 13 by the provisions of the Federal tax laws; however, the Funds may invest in financial instruments linked to commodities as described below. Adoption of the proposed uniform restrictions will enable a Fund to invest in commodities only in accordance with applicable law and with the Fund's investment policies as stated in the Fund's Prospectus and Statement of Additional Information. The MLAM Funds have obtained an exemptive order from the Securities and Exchange Commission (the "SEC") which, among other things, permits investment in the commodities markets to the extent such investment is limited to financial futures and options thereon for hedging purposes only. The terms of the exemptive order are slightly more restrictive than currently applicable law. Regulations of the Commodity Futures Trading Commission applicable to the Funds provide that futures trading activities, as described in a Fund's Prospectus and Statement of Additional Information, will not result in the Fund being deemed a "commodity pool operator" as defined under such regulations if the Fund adheres to certain restrictions. In particular, a MLAM Fund that may, as a matter of investment policy, purchase and sell futures contracts and options thereon may do so (i) for bona fide hedging purposes and (ii) for non-hedging purposes, if the aggregate initial margin and premiums required to establish positions in such contracts and options do not exceed 5% of the liquidation value of such Fund's portfolio, after taking into account unrealized profits and unrealized losses on any such contracts and options. In addition, certain of the MLAM Funds may invest in securities whose potential investment returns are based on the change in value of specific commodities. If approved by the shareholders, the above-listed restrictions will replace the fundamental investment restrictions for each Fund and, accordingly, will become the only fundamental investment restrictions under which each Fund will operate. If approved, the above restrictions may not be changed without the approval of the holders of a majority of the Fund's outstanding shares (which for this purpose and under the Investment Company Act means the lesser of (i) 67% of the shares represented at a meeting at which more than 50% of the outstanding shares are represented or (ii) more than 50% of the outstanding shares). Proposed Non-Fundamental Investment Restrictions. The Boards have adopted the following non-fundamental investment restrictions, subject to approval of the fundamental investment restrictions described above. Certain of the proposed non-fundamental restrictions are in substance similar or identical to current fundamental investment restrictions. Redesignating a restriction as non-fundamental allows the 14 Board the flexibility to modify the restriction in response to changes in the securities markets or applicable law if the Board deems it in the best interest of the Fund and its shareholders to do so. Although future modification of a non-fundamental investment restriction would not require a shareholder vote, modification of these restrictions would require both (i) authorization by resolution by the Board and (ii) amendment of the Fund's Prospectus. Under the proposed non-fundamental investment restrictions, each Fund may not: A. PURCHASE SECURITIES OF OTHER INVESTMENT COMPANIES, EXCEPT TO THE EXTENT SUCH PURCHASES ARE PERMITTED BY APPLICABLE LAW. Commentary: A number of MLAM Funds currently state this restriction as a fundamental, rather than a non-fundamental, restriction. In addition, a number of the restrictions currently in effect set forth specifically the applicable law. Applicable law currently allows a Fund to purchase the securities of other investment companies if immediately thereafter not more than (i) 3% of the total outstanding voting stock of such company is owned by the Fund, (ii) 5% of the Fund's total assets, taken at market value, would be invested in any one such company, (iii) 10% of the Fund's total assets, taken at market value, would be invested in such securities, and (iv) the Fund, together with other investment companies having the same investment adviser and companies controlled by such companies, owns not more than 10% of the total outstanding stock of any one closed-end investment company. Certain state blue sky regulations have excepted from the prohibition on purchases of securities of other investment companies purchases made in connection with a plan of merger, consolidation, reorganization, or acquisition, or purchases made in the open market of securities of closed-end investment companies where no underwriter or dealer's commission or profit, other than the customary broker's commission, is involved. This restriction is no longer required and has therefore been deleted from the proposed restriction. B. MAKE SHORT SALES OF SECURITIES OR MAINTAIN A SHORT POSITION EXCEPT TO THE EXTENT PERMITTED BY APPLICABLE LAW. Commentary: In a short sale, an investor sells a borrowed security and has a corresponding obligation to "cover" by delivering at a later date the identical security. In a short sale "against the box", an investor sells the securities short while either owning the same securities in the same amount or having the right to obtain securities to cover through, for example, the investor's ownership of warrants, options, or convertible 15 securities. Certain MLAM Funds currently prohibit short sales under any circumstances; others are specifically authorized to engage in short sales "against the box". Under current applicable law, short sales are considered to involve the creation of senior securities. A Fund that includes short sales in its investment policies must secure its obligation to replace the borrowed security by depositing collateral in a segregated account in compliance with SEC guidelines which are described in the Fund's Prospectus. In addition, under the current blue sky laws of a certain state, Funds that sell short are limited so that the dollar amount of short sales at any one time may not exceed 25% of the net equity of the Fund and the value of securities of any one issuer in which the Fund is short may not exceed the lesser of 2.0% of the value of the Fund's net assets or 2.0% of the securities of any class of any issuer. Short sales "against the box" are not considered speculative sales and do not create senior securities. Funds that are not specifically authorized to engage in short sales "against the box" have not considered short sales "against the box" to be short sales for purposes of their investment restrictions. The majority of the MLAM Funds, as a matter of investment policy, do not enter into short sales of any kind. If the proposed investment restrictions are adopted, the MLAM Funds that currently are authorized to make short sales will continue to have that ability within the confines of applicable law; the MLAM Funds that are not currently authorized to make short sales will not make short sales unless and until such policy is amended by resolution of the Board and the Fund's Prospectus is amended. 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 BOARD OF [DIRECTORS OR TRUSTEES] OF THE FUND HAS OTHERWISE DETERMINED TO BE LIQUID PURSUANT TO APPLICABLE LAW. Commentary: Certain MLAM Funds limit investment in restricted and illiquid securities to 5% or 10% of Fund assets. Under the Investment Company Act, open-end investment companies are required to determine net asset value and offer redemption on a daily basis with payment to follow within seven days. In order to ensure that adequate cash is available at all times to cover redemptions, a Fund is required to limit its investments in securities deemed illiquid to 15% of the Fund's net assets. 16 Under current applicable law, an illiquid asset is any asset which may not be sold or disposed of in the ordinary course of business within seven days at approximately the value at which a Fund has valued the investment. The types of securities that will be considered illiquid will vary over time based on changing market conditions and regulatory interpretations. In accordance with the most restrictive state blue sky regulations currently in effect, a Fund whose shares are registered or qualified for sale in such state, may invest no more than 10% of its total assets in illiquid securities. It is possible that such state interpretation will be relaxed in the future to enable a Fund to invest up to 15% of its total assets in illiquid securities. In addition, certain states consider investment of more than 5% of a Fund's total assets in illiquid securities to be speculative and require special disclosure in a Fund's Prospectus with respect thereto. Under current SEC interpretations, a Fund may purchase, without regard to the foregoing 10% (or 15%) limitation, securities which are not registered under the Securities Act of 1933, as amended (the "Securities Act"), provided that they are determined to be liquid pursuant to guidelines and procedures established by the Board. Included among such securities are foreign securities traded in a foreign securities market and securities which can be offered and sold to "qualified institutional buyers," as defined in Rule 144A under the Securities Act ("Rule 144A Securities"). Certain MLAM Funds do not permit the Board discretion with respect to Rule 144A Securities. The proposed investment restriction would increase the Funds' flexibility with respect to the amount of securities deemed illiquid in which the Fund may invest up to the current SEC limit, assuming that the Fund is not otherwise limited with respect to investment in illiquid securities. A Fund, in its Prospectus and Statement of Additional Information, may limit investment in illiquid securities to a percentage of less than 15%, pursuant to state blue sky regulations or for other reasons. Current applicable law does not require a Fund to state its limitation on investment in illiquid securities as a fundamental policy; however, a number of MLAM Funds currently state their limitations on illiquid securities as a fundamental, rather than a non-fundamental, restriction. 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 FUND'S TOTAL ASSETS; INCLUDED WITHIN SUCH LIMITATION, BUT NOT TO EXCEED 2% OF THE FUND'S TOTAL ASSETS, ARE WARRANTS WHICH ARE NOT LISTED ON THE NEW 17 YORK STOCK EXCHANGE OR AMERICAN STOCK EXCHANGE OR A MAJOR FOREIGN EXCHANGE. FOR PURPOSES OF THIS RESTRICTION, WARRANTS ACQUIRED BY THE FUND IN UNITS OR ATTACHED TO SECURITIES MAY BE DEEMED TO BE WITHOUT VALUE. Commentary: Certain MLAM Funds currently prohibit investment in warrants; others impose limitations that are as restrictive or more restrictive than the proposed restriction. If a Fund is otherwise authorized to invest in warrants as a matter of investment policy, such Fund will now be subject to the limitation set forth in proposed non-fundamental investment restriction (d). A Fund that is currently prohibited from investing in warrants as a matter of investment policy will not invest in warrants unless and until such policy is amended by resolution of the Board and the Fund's Prospectus is amended. 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 FUND'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. Commentary: The proposed restriction, which addresses investment by a Fund in "unseasoned issuers", is in substance identical to the applicable restriction in effect for each Fund; however, a number of MLAM Funds state this restriction as a fundamental, rather than a non-fundamental, restriction. Restrictions on unseasoned issuers are determined primarily by state blue sky regulations. While several states have more lenient restrictions concerning investment in the securities of unseasoned issuers (i.e., up to 15%), the most restrictive state limitation is currently 5%. Applicable state blue sky regulations do not require that entities with less than three years of continuous operation that issue mortgage-backed securities, asset-backed securities or obligations supported by the U.S. Government, its agencies or instrumentalities be included in the definition of "unseasoned issuers". There is no federal limitation concerning investment in unseasoned issuers. F. PURCHASE OR RETAIN THE SECURITIES OF ANY ISSUER, IF THOSE INDIVIDUAL OFFICERS AND DIRECTORS OF THE FUND, THE INVESTMENT ADVISER OR ANY SUBSIDIARY THEREOF EACH OWNING 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. Commentary: The proposed restriction, which addresses investment by a Fund in securities of an issuer in which management of the Fund owns shares, is in substance similar to the applicable restriction in effect 18 for each Fund; however, a number of MLAM Funds currently state this restriction as a fundamental, rather than a non-fundamental, restriction. Restrictions on these types of investments are determined primarily by state blue sky regulations. Certain MLAM Funds' current investment restrictions apply to the Investment Adviser or any "affiliate" thereof, which would make the restriction applicable to ML & Co. and any entity controlled by ML & Co. The proposed restriction reflects currently applicable law and applies only to MLAM and its subsidiaries. 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 FUND MAY INVEST IN SECURITIES ISSUED BY COMPANIES THAT ENGAGE IN OIL, GAS OR OTHER MINERAL EXPLORATION OR DEVELOPMENT ACTIVITIES. Commentary: Restrictions with respect to these types of investments are determined primarily by state blue sky regulations. The proposed restriction is in substance similar to the applicable restriction in effect for each Fund; however, a number of MLAM Funds state this restriction, in whole or in part, as a fundamental, rather than a non- fundamental, restriction. H. WRITE, PURCHASE OR SELL PUTS, CALLS, STRADDLES, SPREADS OR COMBINATIONS THEREOF, EXCEPT TO THE EXTENT PERMITTED IN THE FUND'S PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION, AS THEY MAY BE AMENDED FROM TIME TO TIME. Commentary: The proposed restriction is in substance similar to the applicable restriction in effect for each MLAM Fund authorized to engage in these types of transactions, except that certain MLAM Funds impose specific percentage limitations in the investment restriction on the investments. A number of MLAM Funds state this restriction as a fundamental, rather than a non-fundamental, restriction. If the proposed restrictions are approved, MLAM Funds that currently are authorized to engage in puts, calls, straddles, spreads and combinations thereof will be subject to the proposed restriction. MLAM Funds that are not currently authorized to engage in these types of transactions would not be permitted to engage in such transactions unless and until the Board determines to establish an investment policy in this regard. Elimination of Investment Restrictions on Eligible Securities for Municipal Bond Funds. Each of the Funds covered by this Proxy Statement which invest primarily in municipal bonds currently is subject to a fundamental investment restriction that such Fund may not purchase any securities other than securities referred to in the investment objective 19 and policies section of the Prospectus of the Fund. Under the proposed uniform investment restrictions, this restriction is eliminated. The elimination of this restriction is not considered to be significant because the Prospectuses of the Funds generally contain broad definitions of eligible tax-exempt securities. The investment objective of each of the Funds will continue to be a fundamental policy changeable only by shareholder vote. Generally the investment objective of each such Fund specifies that the Fund will seek to provide shareholders with income exempt from Federal income taxes and, in the case of state-specific funds, income exempt from income tax of the relevant state. Such investment objective mandates significant investment in tax-exempt securities. Interpretations by the staff of the SEC require that under normal market conditions tax-exempt funds be at least 80% invested in tax-exempt securities and, if state specific, at least 65% invested in the tax-exempt securities of the relevant state. Accordingly, any change in the fundamental investment objective of such Funds will require shareholder approval. Elimination of Restrictions Applicable to Foreign Securities. Investment restrictions relating to investment in foreign securities have been eliminated in the proposed uniform restrictions. Certain funds that commenced operations more than 10 years ago were required by state blue sky regulations then in effect to include an investment restriction limiting or prohibiting investment in foreign securities. More recently, Funds are no longer required to state this policy as an investment restriction but instead include investment policies with respect to foreign securities in their Prospectuses and Statements of Additional Information. Proposal 4 APPROVAL OR DISAPPROVAL OF A CHARTER AMENDMENT IN CONNECTION WITH THE IMPLEMENTATION OF THE MERRILL LYNCH SELECT PRICINGSM SYSTEM DESCRIPTION OF THE SELECT PRICING SYSTEM General. In 1988, MLAM developed a two-class distribution system pursuant to which investors may choose to purchase Class A shares of a Fund with a front- end sales charge or Class B shares with a contingent deferred sales charge ("CDSC") and ongoing distribution fees (the "Dual Distribution System"). The Dual Distribution System was among the first in the mutual fund industry to offer investors alternative sales charge arrangements within the same Fund. On April 12, 1994, the SEC issued an exemptive order permitting certain MLAM- advised mutual funds to issue multiple classes of shares (the "Order"). The Order permits each Fund to create an unlimited number of classes of shares to expand the types of sales charge 20 arrangements available to Fund investors without otherwise affecting investment in the Fund. In this regard, the Funds intend to implement the Select Pricing System, under which eligible investors may choose from different sales charge alternatives in four classes of shares. At its meeting held August , 1994, the Board approvedalso clarify the manner in which the Trusts will operate in a master/feeder structure. In a master/feeder structure, a fund (the "Feeder Fund") sells its shares of each class will be offered and soldto public investors under the Select Pricing System, as described in detail below. The specific amounts of the sales charges, and account maintenance and distribution fees for each Fund are set forth in Exhibit A. Although the Funds currently intend to implement the Select Pricing System as described herein, changes may be made to the distribution arrangements of any class at any time; however, changes will not be made to the terms of its prospectus. Instead of investing the Select Pricing Systemmoney it obtains from such sales directly in securities and other investments, however, the Feeder Fund invests all of those assets in another fund (the "Master Fund") in return for shares or beneficial interests in that Master Fund. The Master Fund will have substantially the same investment objective and policies as it applies to anythe Feeder Fund. The Master Fund unlessthen invests the assets received from the Feeder Fund in a portfolio of securities and until (i)other investments. Because the Boardshareholders of the Feeder Fund explicitly authorizes, by resolution, any changeown an indirect interest in the termsMaster Fund, their investment has the same performance as the Master Fund's portfolio. Since any number of Feeder Funds can invest their assets in a single Master Fund, a master/feeder structure permits greater pooling of assets than does a stand alone fund. This ability to pool assets may, in turn, allow the Master Fund to achieve increased economies of scale and efficiencies in portfolio management. The master/feeder structure may also permit greater investor access to a single Master Fund portfolio, since any number of separate Feeder Funds with separate identities, management, fee structures and/or distribution channels can all invest in the same Master Fund. An existing fund could convert to a Feeder Fund by (i) selling all of its investments and then purchasing shares of a Master Fund, an approach that involves brokerage and other transaction costs and the realization of taxable gain or loss, or (ii) the Prospectus of the Fund is amended to reflect the change. Changesby contributing its assets to the Select Pricing System ordinarily would not require a voteMaster Fund in return for shares or beneficial interests in such Master Fund and avoiding transaction costs and, if proper procedures are followed, avoiding the realization of taxable gain or loss. Approval of this Item 3 by the shareholders of a Fund exceptwould permit the applicable Board to convert the Fund to a Feeder Fund by using either alternative discussed in certain circumstances necessitatingthe preceding sentence. It is expected that each Fund that converts to a charter amendmentFeeder Fund will do so by transferring its assets to the applicable Master Fund in exchange for shares or beneficial interests in which fees paid by existing shareholders pursuantsuch Master Fund. The Investment Adviser believes that, generally, the larger the pool of assets, the more efficiently and cost-effectively it can be managed. Because a Master Fund may pool the assets of multiple Feeder Funds, the master/feeder structure provides an effective means of creating larger asset pools. Whether the Board of a particular Fund exercises its discretionary authority to Rule 12b-1 underreorganize the Investment Company Act ("Rule 12b-1")Fund into a master/feeder structure would depend upon the existence of appropriate opportunities to pool the Fund's assets with those of other Feeder Funds. There are increased. The following table sets forthno current plans to effect such a summaryconversion for any of the Funds. As discussed above, the primary purpose of reorganizing into a master/feeder structure would be to seek to achieve possible economies of scale and efficiencies in portfolio management, while preserving separate identities, management and distribution arrangements for each class of shares underchannels at the Select Pricing System, followed by a more detailed description of each class.
ACCOUNT SALES MAINTENANCE DISTRIBUTION CONVERSION CLASS CHARGE FEE FEE FEATURE - ------------------------------------------------------------------------------------ A* Maximum 5.25% No No No front-end sales charge** - ------------------------------------------------------------------------------------ B CDSC for Maximum Maximum B shares periods of up 0.25% 0.75%Feeder Fund level. The Board's decision to convert to D to 4 years, shares at a maximum automatically rate of 4.0% after during the Conversion first year, Period decreasing 1.0% annually to 0.0% - ------------------------------------------------------------------------------------ C 1.0% CDSC for Maximum Maximum No one year 0.25% 0.75% - ------------------------------------------------------------------------------------ D Maximum 5.25% Maximum No No front-end 0.25% sales charge**
21 - ------------ * Offered only to eligible investors. See "Class A" below. ** Certain Class A and Class D purchases will be subject to a maximum 1.0% CDSC for one year. See "Class A" and "Class D" below. Class A: Class A shares will be sold subject to a front-end sales charge and will bear no ongoing distribution or account maintenance fees. For most Funds, the front-end sales charge on purchases of Class A shares under the Select Pricing System will be lower than the front-end sales charge currently imposed on Class A shares. Class A shares will be offered to a limited group of investors. Investors that currently own Class A shares of a Fund into a Feeder Fund would be based upon the Board's determination that it would be in an account will be entitled to purchase additional Class A sharesthe best interests of thatboth the Fund in that account. Class A shares also will be offered to certain retirement plans. In addition, Class A shares will be offered to directors of ML & Co. and employees of ML & Co. and its subsidiaries, Board members and members of the Boards of other MLAM-advised mutual funds and participants in certainshareholders. Because investment programs. Class A shares also will be issued on reinvestment of dividends paid on Class A shares. Exchange Privilege. THE EXCHANGE PRIVILEGE FOR CLASS A SHAREHOLDERS WILL BE MODIFIED UNDER THE SELECT PRICING SYSTEM MAKING IT MORE RESTRICTIVE THAN PRESENTLY EXISTS. Under the Select Pricing System, Class A shareholders may exchange Class A shares of one Fund 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 account in which the exchange is madeadvisory services are provided at the time of the exchange. If the Class A shareholder wants to exchange his Class A shares for shares ofMaster Fund level, a second Fund and the shareholder does not hold Class A shares of the second Fund in his account at the time of the exchange, the shareholder will receive Class D shares of the second Fund as a result of the exchange. Class A or Class D shares may be exchanged for Class A shares of a second 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. For example, a shareholder owns 50 Class A shares of Merrill Lynch Basic Value Fund, Inc. ("Basic Value") and 50 Class A shares of Merrill Lynch World Income Fund, Inc. ("World Income") in his personal account and 50 Class A shares of Merrill Lynch Pacific Fund, Inc. ("Pacific") in his individual retirement account ("IRA"). In his personal account, the shareholder eliminates his position in Basic Value by exchanging 25 shares of Basic Value for shares of equivalent value of World Income and 25 shares of Basic Value for shares of equivalent 22 value of Pacific. The shareholder will receive Class A shares of World Income, because he holds World Income Class A shares in his personal account at the time of the exchange, and he will receive Class D shares of Pacific, because although he owns Pacific Class A shares, he does not hold them in his personal account. Similarly, if the shareholder decides to exchange back into Basic Value, he will receive Class D shares, because he no longer holds Class A shares of Basic Value in his personal account. In his IRA, if the investor decides to exchange 25 Class A shares of Pacific for shares of equivalent value of Merrill Lynch Fund for Tomorrow, Inc. ("Fund for Tomorrow"), he will receive Class D shares of Fund for Tomorrow, because he holds no Class A shares of Fund for Tomorrow in his IRA. If he decides, however, to exchange back into Pacific, he can receive Class A shares of Pacific as long as he still holds any Class A shares of Pacific in his IRA at the time of the exchange. Class A shareholders also may exchange Class A shares for shares of certain MLAM-advised money market funds. For further information regarding the Select Pricing System exchange privilege, see "Exchange Privilege" below. Reduced initial sales charges. Class A investors may qualify for reduced initial sales charges through a right of accumulation taking into account an investor's holdings in both Class A and Class D shares of any MLAM-advised Fund. Under the Select Pricing System, Class B shares will no longer be counted towardhave an investment adviser if it converts to a Feeder Fund. Each Master Fund will pay its investment adviser an investment advisory fee based upon the rightnet assets of accumulation. See "Right of Accumulation" below. Underthat Master Fund. A Feeder Fund may have its own administrator in a right of accumulation, certain Class A shareholders who purchase or accumulate at least $1 million in Class A and/or Class D shares of any MLAM-advised Fund also qualify to add to their investment in Class A shares ofmaster/feeder structure. If a Fund without the imposition of a front-end sales charge. Although these investors will not be subjectconverts to a front-end sales charge, theymaster/feeder fund structure, whenever the Master Fund holds a vote of its Feeder Funds, the Fund will be subjecteither pass the vote through to a CDSC of 1.0% if the shares are redeemed within one year after purchase. Redesignation of Class A Shares. Class A shares outstanding on the date of the implementation of the Select Pricing System (the "Implementation Date") that are subject to ongoing account maintenance fees automatically will be redesignated Class D shares. None of the Funds covered by this Proxy Statement 23 currently have Class A shares that will be redesignated as Class D shares on the Implementation Date. The redesignation of the Class A shares to Class D shares will not be deemed a purchaseits own shareholders or sale of the shares for Federal income tax purposes. See "Redesignation of Shares of Certain MLAM-Advised Funds" below. Class B: Class B shares will be sold on a deferred sales charge basis. Class B shares do not incur a front-end sales charge, but they are subject to a maximum ongoing 0.25% account maintenance fee, an ongoing distribution fee and a CDSC for periods of up to four years. Conversion of Class B Shares to Class D Shares. After a set time period (the "Conversion Period"), Class B shares will be converted automatically into Class D shares of the Fund. Class D shares are subject to an ongoing account maintenance fee but no distribution fee. Automatic conversion of Class B shares into Class D shares will occur at least once a month (on the "Conversion Date") on the basis of the relative net asset values ofvote the shares of the two classes onMaster Fund held by it in the Conversion Date, withoutsame proportion as the impositionvotes of any sales load, fee orall other charge. Conversion of Class B shares to Class D shares will not be deemed a purchase or saleFeeder Funds. If some 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 accountFeeder Funds are larger than the length of timeFund, these other Feeder Funds would have more voting power than the shares underlying such dividend reinvestment shares were outstanding. In general, Class B shares of equity Funds will convert approximately eight years after initial purchase, and Class B shares of taxable and tax-exempt fixed income Funds will convert approximately ten years after initial purchase. Specific Conversion Periods for each Fund are set forth in Exhibit A. If duringover the Conversion Period a shareholder exchanges Class B shares with a ten- year Conversion Period for Class B shares with an eight-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 for certain retirement plans will be modified as described under "Class B Retirement Plans" below. 24 The Class B distribution fee is subject to the limitations on asset- based sales charges imposed by the National Association of Securities Dealers, Inc. (the "NASD"), as voluntarily modified by MLFD. See "Limitations on Asset-Based Sales Charges" below. Exchange Privilege. Class B shareholders may exchange Class B sharesoperations of the Fund for Class B shares of any MLAM-advised mutual fund as well as shares of certain MLAM-advised money market funds. See "Exchange Privilege" below. Redesignation of Class B Shares. Class B shares of Merrill Lynch Fundamental Growth Fund, Inc., outstanding on the Implementation Date automatically will be redesignated Class C shares. This redesignation of Class B shares to Class C shares will not be deemed a purchase or saleMaster Fund. Shareholders of the shares for Federal income tax purposes. See "Redesignation of Shares of Certain MLAM-Advised Funds" below. Class C: Class C shares will not incur a front-end sales charge when purchased, but Class C shares are subject to a maximum ongoing 0.25% account maintenance fee and an ongoing distribution fee. In the case of fixed income Funds the Class C distribution fees will be different from the Class B distribution fees of a particular Fund. In the case of equity Funds, Class C distribution fees will equal Class B distribution fees. Class C shares are sold subject to a CDSC of 1.0% for one year. The Class C distribution fee will be charged indefinitely subject to approval of the continuance of the Fund's Class C Distribution Plan pursuant to Rule 12b-1 and the limitations on asset-based sales charges imposed by the NASD. See "Limitations on Asset-Based Sales Charges" below. Exchange Privilege. Class C shareholders may exchange Class C shares of the Fund for Class C shares of any MLAM-advised mutual fund as well as shares of certain MLAM-advised money market funds. See "Exchange Privilege" below. Class D: Class D shares will be sold subject to a front-end sales charge which will be identical to the front-end sales charge imposed on Class A shares under the Select Pricing System. Class D shares are charged a maximum ongoing 0.25% account maintenance fee but are not subjectentitled to an ongoing distribution fee. Reduced Initial Sales Charges. Class D investors may qualify for reduced initial sales charges through a right of accumulation taking into account each investor's holdings in both Class A and Class D shares of any MLAM-advised Fund. See "Right of Accumulation" below. Under a right of accumulation, certain 25 investors who purchase or accumulate at least $1 million in Class A and/or Class D shares of any MLAM-advised Fund will not be subject to a front-end sales charge upon the purchase of Class D shares; however, they will be subject to a CDSC of 1.0% if the shares are redeemed within one year after purchase. Exchange Privilege. Class D shareholders may exchange Class D shares of one Fund for Class D shares of any MLAM-advised mutual fund. If the shareholder holds any Class A shares of the second Fund in his account at the time of the exchange, he may exchange Class D shares for Class A shares of the second Fund. Class D shareholders also may exchange Class D shares of the Fund for shares of certain MLAM- advised money market funds. See "Exchange Privilege" below. Class D shares also will be issued upon conversion of Class B shares after the Class B Conversion Period, as more fully described below. MLAM developed the Dual Distribution System to provide investors with the alternatives within the same Fund of purchasing shares pursuant to either the front-end sales charge method or the deferred sales charge method. The Select Pricing System was developed to expand the alternatives availableappraisal rights under the Dual Distribution System by providing investors with additional distribution alternatives. These alternative sales arrangements permit the investor to choose the method of purchasing shares that is most beneficial given the amount of the investor's purchase, the length of time the investor expects to hold the shares and other relevant circumstances. Front-End Sales Charge Alternatives. Investors who prefer a front-end sales charge alternative may elect to purchase Class D shares or, if an eligible investor, Class A shares. Investors choosing the front-end sales charge alternative who are eligible to purchase Class A shares should purchase Class A shares rather than Class D shares because of the account maintenance fee imposed on Class D shares. Investors qualifying for significantly reduced front-end sales charges may find the front-end 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 front-end sales charge and, in the case of 26 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 Funds, those previously purchased Class A shares, as well as any new Class D shares acquired, will count toward a right of accumulation which may qualify the investor for reduced initial sales charges on new front- end 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 a higher expense ratio, pay lower dividends and have a lower total return than the front-end 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. The benefit of an initial sales charge waiver for investors who purchase at least $1 million in Class A or Class D shares of any MLAM-advised Fund may be offset to the extent the shareholder must pay a CDSC on shares redeemed in less than one year. Deferred Sales Charge Alternatives. Investors that do not qualify for a reduction of front-end sales charges may prefer the deferred sales charge alternatives, because while Class A and Class D 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. Both Class B and Class C shares are subject to ongoing account maintenance fees and distribution fees; however, the ongoing account maintenance and distribution charges 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 Fund after the Conversion Period and thereafter will be subject to significantly lower ongoing fees. Certain investors may elect to purchase Class B shares if they determine it to be most advantageous to have all their funds invested initially and intend to hold their shares for an extended period of time. In making this decision, Class B purchasers will 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. Other investors, however, may elect to purchase Class C shares if they determine that it is advantageous to have all their funds invested initially and they are uncertain as to the amount of time they intend to hold the shares. Although Class C shareholders are subject to a shorter CDSC period at a lower rate, they forgo the Class B conversion feature, making their investment subject to account maintenance and distribution fees for an 27 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, Class B shares are further limited under a MLFD voluntary waiver of asset-based sales charges. See "Limitations on Asset-Based Sales Charges" below. ------------------------ Each Class A, B, C and D share of a Fund will represent identical interests in the investment portfolio of the Fund and have the same rights, except that Classes B, C and D bear the expenses of the ongoing account maintenance fee and Classes B and C also bear the expenses of the ongoing distribution fee and the additional incremental transfer agency costs resulting from the deferred sales charge arrangement. Classes B, C and D have exclusive voting rights with respect to the distribution plan adopted pursuant to Rule 12b-1 under the Investment Company Act applicable to each respective class. Each class also has different exchange privileges. The deferred sales charges that are imposed on Class B and Class C shares will be imposed directly and respectively against those classes and not against all assets of the Fund and, accordingly, such charges will not affect the net asset value of any other class or have any impact on investors choosing another sales charge option. The implementation of the Select Pricing System will not adversely affect the net asset value of a current shareholder's investment in the Fund. Outstanding shares will not be subject to any charge as a result of the reclassification. Two new and separate classes will be added, having no adverse effect on the shares that are issued and outstanding; however, the creation of Class D will provide a significant benefit to Class B shareholders as described herein. Exchange Privilege. As previously stated, investors who hold Class A shares of a Fund in an account will be entitled, subsequent to the Implementation Date, to purchase additional Class A shares of that Fund in that account only. Current Class A shareholders that do not qualify to purchase Class A shares under the Select Pricing System and wish to exchange their Class A shares for shares of a second Fund will receive Class A shares of that Fund only if such shareholder owned Class A shares of the second Fund on the date of the exchange. Otherwise, shareholders that do not qualify to purchase Class A shares under the Select Pricing System will receive Class D shares in exchange for Class A shares after the Implementation Date. Investors will have an unlimited right to exchange Class D shares for Class A shares of any Fund held in the account, provided that Class A shares of the Fund acquired in the exchange are held in the account at the time of the exchange. 28 Class A and Class D shares also will be exchangeable for shares of certain money market funds specifically designated as available for exchange by holders of Class A and Class D shares. The period of time that Class A 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 in connection with a reduced initial sales charge purchase. Class B and Class C shares will be exchangeable only with shares of the same class of other mutual funds advised by MLAM as well as certain money market funds specifically designated as available for exchange by holders of Class B and Class C shares. The period of time that Class B or Class C shares are held in a money market fund, however, will not count toward satisfaction of the holding period requirement for reduction of the CDSC for Class B and Class C shares or the Conversion Period for Class B shares. Right of Accumulation. Under the Select Pricing System, reduced sales charges will be applicable through a right of accumulation under which eligible investors are permitted to purchase Class A or Class D shares of a Fund at the offering price applicable to the total of (a) the dollar amount then being purchased plus (b) an amount equal to the then net asset value or cost, whichever is higher, of the purchaser's combined holdings of Class A and Class D shares of the Fund and of any other Fund with an initial sales charge for which MLFD is the distributor. Class B and Class C shares owned will not count toward this right of accumulation. Redesignation of Shares of Certain MLAM-Advised Funds. The following eight Funds currently offer Class A shares subject to an account maintenance fee: Merrill Lynch Americas Income Fund, Inc., Merrill Lynch Adjustable Rate Securities Fund, Inc., Merrill Lynch Dragon Fund, Inc., Merrill Lynch Federal Securities Trust, Merrill Lynch Fundamental Growth Fund, Inc., Merrill Lynch International Equity Fund, Merrill Lynch Latin America Fund, Inc. and Merrill Lynch Short-Term Global Income Fund, Inc. In order to continue the same sales charge and account maintenance fee arrangements on these Class A shares, on the Implementation Date, Class A shares of those Funds will be automatically redesignated Class D shares. Subsequent to the Implementation Date, reinvestment of dividends paid on these redesignated Class A shares will be in Class D shares. Outstanding Class B shares of Merrill Lynch Fundamental Growth Fund, Inc. ("Fundamental Growth"), which currently are subject to the same CDSC, account maintenance fee and distribution fee as Class C shares will be under the Select Pricing System, will be automatically 29 redesignated Class C shares on the Implementation Date. Subsequent to the Implementation Date, reinvestment of dividends paid on these redesignated Class B shares of Fundamental Growth will be in Class C shares. Redesignation of shares of any Fundstate law in connection with the implementation of the Select Pricing System will not be deemed a purchase or sale of the shares for Federal income tax purposes. Limitations on Asset-Based Sales Charges. Class B and Class C distribution fees are subject to the limitations on asset-based sales charges imposed by the NASD. As applicable to the Funds, the NASD rule limits the aggregate of distribution fee payments and CDSCs payable by a Fund to (1) 6.25% of eligible gross sales of Class B or Class C shares (defined to exclude shares issued pursuant to dividend reinvestments and exchanges) plus (2) interest on the unpaid balance 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). The maximum allowable payments under the NASD rule is referred to as the "NASD maximum". Aggregate distribution fee payments on Class C shares will be limited in accordance with the NASD maximum. With respect to Class B shares, MLFD has agreed voluntarily to waive interest charges on the unpaid balance in excess of 0.50% of eligible gross sales. Consequently, the maximum amount payable to MLFD (referred to as the "Class B voluntary maximum") is 6.75% of eligible gross sales. MLFD retains the right to stop waiving the interest charges at any time. To the extent payments would exceed the Class B voluntary maximum, in the case of Class B shares, or the NASD maximum, in the case of Class C shares, the Fund will not make further payments of the distribution fee and any CDSCs will be paid to the Fund rather than to MLFD; however, the Fund will continue to make payments of the account maintenance fee. In certain circumstances the amount payable pursuant to the Class B voluntary maximum may exceed the amount payable under the NASD formula. In such circumstances payments in excess of the amount payable under the NASD maximum will not be made. PROPOSED CHARTER AMENDMENT On August , 1994, the Board approved the Select Pricing System and a related amendment to the Fund's charter. The proposed amendment to themaster/feeder charter among other things, will enable each Fund to institute the Class B to Class D automatic conversion feature which is integral to the implementation of the Select Pricing System. In addition, while the Fund's charter permits the Board to reclassify unissued shares into additional 30 classes, the proposed amendment to the Fund's charter also will permit the Board to institute automatic conversion features with respect to all classes by reclassifying issued shares of the Fund into additional classes at a future date. Class B Retirement Plans. Certain shareholders of the Fund purchased Class B shares through retirement plans. These purchases qualified for a waiver of the CDSC normally imposed on purchases of Class B shares under exemptive orders and a no-action letter granted by the SEC. Retirement plans holding Class B shares purchased without a CDSC are herein referred to as "Class B Retirement Plans." Since these Class B shares were sold without a CDSC, there was heretofore no reason to track the length of time that such shares were held, and therefore Class B Retirement Plan shares cannot be converted to Class D shares in the same manner as other Class B shares. To ensure that both the Class B Retirement Plan shareholders and the other Class B shareholders are treated fairly under the Select Pricing System, the proposed charter amendment provides that rather than imposing the usual Class B Conversion Periods which apply to the shares, a ten-year Conversion Period will be applied to each Class B Retirement Plan. After the Implementation Date, the Class B Retirement Plans will continue to purchase Class B shares without a CDSC. When the first share purchased by a Class B Retirement Plan has been held for ten years (i.e., ten years from the date the relationship between the Funds and the plan was established), all Class B shares of all Funds held in that Class B Retirement Plan will be converted into Class D shares of the appropriate Funds. Subsequent to such conversion, that retirement plan will be sold Class D shares of the appropriate Funds. Text of Proposed Charter Amendment. Each Fund's state of organization is set forth in Exhibit A. With respect to the Funds that are Maryland corporations, the charter will be amended to add the following provision: The Board of Directors may classify and reclassify any issued shares of capital stock into one or more additional or other classes or series as may be established from time to time by setting or changing in any one or more respects the designations, preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications or terms or conditions of redemption of such shares of stock and pursuant to such classification or reclassification to increase or decrease the number of authorized shares of any existing class or series; provided, however, that any such classification or reclassification shall not substantially adversely affect the rights of 31 holders of such issued shares. The Board's authority pursuant to this paragraph shall include, but not be limited to, the power to vary among all the holders of a particular class or series (a) the length of time shares must be held prior to reclassification to shares of another class or series (the "Holding Period(s)"), (b) the manner in which the time for such Holding Period(s) is determined and (c) the class or series into which the particular class or series is being reclassified; provided, however, that, subject to the first sentence of this section, with respect to holders of the Corporation's shares issued on or after the date of the Corporation's first effective prospectus which sets forth Holding Period(s) (the "First Holding Period Prospectus"), the Holding Period(s), the manner in which the time for such Holding Period(s) is determined and the class or series into which the particular class or series is being reclassified shall be disclosed in the Corporation's prospectus or statement of additional information in effect at the time such shares, which are the subject of the reclassification, were issued; and provided, further, that, subject to the first sentence of this section, with respect to holders of the Corporation's Class B shares issued prior to the date of the Corporation's First Holding Period Prospectus, the Holding Period shall be ten (10) years for retirement plan (as recognized by the Internal Revenue Code of 1986, as amended from time to time) holders of issued Class B shares and shall be the Holding Period set forth in the Corporation's First Holding Period Prospectus, for all other holders of issued Class B shares; Class B shares held by a retirement plan shall be reclassified to Class D shares in the month following the month in which the first Class B share of any mutual fund advised by Merrill Lynch Asset Management, L.P., Fund Asset Management, L.P., or their affiliates, held by such retirement plan has been held for the ten (10) year Holding Period established by the Corporation's Board of Directors for such retirement plan Class B shareholder; and the Class B shares of every other shareholder shall be reclassified to Class D shares in the month following the month in which such shares have been held for the Holding Period established by the Corporation's Board of Directors for non- retirement plan shareholders in the Corporation's First Holding Period Prospectus. With respect to the Funds that are Massachusetts business trusts, Sections 6.1, 6.2 and 10.1 of the charters generally will be amended as follows (changes are underlined): 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 32 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 materially adversely affect the preference, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications or terms or conditions of redemption of such 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 33 connection with the division of shares into classes or the redesignation of classes or portions of classes in accordance with Section 6.1). 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. Implementation of the Select Pricing System is conditioned upon approval of the charter amendment by all shareholders of the Fund, voting as a single class, as well as by existing Class B shareholders, voting as a separate class. On August , 1994, the Board approved the proposed charter amendment.amendments. The Board recommends that the respective shareholders of each Fund vote FOR the proposal to approve the charter amendment. * * * OTHER PERTINENT INFORMATION REGARDING THE FUND INFORMATION CONCERNING MLAM AND FAM Effective January 1, 1994, MLAM and FAM were reorganized as Delaware limited partnerships. Both MLAM and FAM are owned and controlled by ML & Co., and the general partner of both MLAM and FAM is Princeton Services, a wholly-owned subsidiary of ML & Co. The reorganization did not result in a change of management of either MLAM or FAM, in any of its personnel, or in an adverse change in its financial condition. Prioramendment to permit the reorganization MLAM (which was known as Merrill Lynch Investment Management, Inc. and which did business as Merrill Lynch Asset Management) and FAM (which was known as Fund Asset Management, Inc.) were Delaware corporations. MLAM was a wholly-owned subsidiary of ML & Co. and FAM was a wholly-owned subsidiary of MLAM. MLFD, an affiliate of MLAM and FAM, acts as distributor of the Fund's shares. MLAM, FAM, Princeton Services and MLFD are located 34 at 800 Scudders Mill Road, Plainsboro, New Jersey 08536. ML & Co. is located at 250 Vesey Street, New York, New York 10281. MLAM or FAM acts as the investment adviser to more than 90 registered investment companies. In addition, MLAM offers portfolio management and portfolio analysis services to individuals and institutions. The audited balance sheet of each of MLAM and FAM for the fiscal year ended December 31, 1993 is set forth in Exhibit B. Securities held by thesuch Fund also may be held by or be appropriate investments for other funds or clients (collectively referred to as "clients") for which MLAM or FAM acts as an adviser. Because of different investment objectives or other factors,into a particular security may be bought for one or more clients when one or more clients are selling the security. If purchases or sales of securities for the Fund or other clients arise for consideration at or about the same time, transactions in such securities will be made, insofar as feasible, for the respective clients in a manner deemed equitable to all by MLAM or FAM. To the extent that transactions on behalf of more than one client of MLAM 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. The following table sets forth the name, title and principal occupation of the principal executive officer of MLAM and FAM and the directors of Princeton Services, the general partner of both MLAM and FAM.
NAME* TITLE PRINCIPAL OCCUPATION ----- ----- -------------------- Arthur Zeikel...... President and Chief President and Chief Investment Officer Investment Officer of MLAM and FAM and of MLAM and FAM; Director of Executive Vice Princeton Services President of ML & Co.; President of Princeton Services Terry K. Glenn..... Executive Vice Executive Vice President of MLAM President of MLAM and FAM and and FAM; Executive Director of Vice President of Princeton Services Princeton Services Philip L. Kirstein. Senior Vice Senior Vice President and President and General Counsel of General Counsel of MLAM and FAM and MLAM and FAM; Director of Senior Vice Princeton Services President of Princeton Services
35master/feeder structure. - ------------ * Mr. Zeikel is presently a Board member of the Fund. The address of Messrs. Zeikel, Glenn and Kirstein is P.O. Box 9011, Princeton, New Jersey 08543- 9011, which is also the address of MLAM and FAM. TERMS OF INVESTMENT ADVISORY AGREEMENT The Investment Advisory Agreement provides that, subject to the direction of the Board, the Investment Adviser is responsible for the actual management of the Fund's portfolio and for the review of the Fund'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 Board. The Investment Adviser provides the portfolio managers for the Fund who consider analyses from various sources (including brokerage firms with which the Fund does business), make the necessary investment decisions and place transactions accordingly. The Investment Adviser is also obligated to perform certain administrative and management services for the Fund and is obligated to provide all the office space, facilities, equipment and personnel necessary to perform its duties under the Investment Advisory Agreement. Investment Advisory Fee. The Investment Advisory Agreement provides that as compensation for its services to the Fund, the Investment Adviser receives from the Fund at the end of each month a fee calculated as an annual percentage of the Fund's average daily net assets (i.e., the average daily value of the total assets of the Fund minus the sum of accrued liabilities of the Fund). Information pertaining to the Fund's investment advisory fee is set forth in Exhibit A. Payment of Expenses. The Investment Advisory Agreement obligates the Investment Adviser to provide investment advisory services and to pay all compensation of and furnish office space for officers and employees of the Fund connected with the investment and economic research, trading and investment management of the Fund, as well as the fees of all Board members of the Fund who are affiliated persons of the Investment Adviser or any of its affiliates. The Fund pays all other expenses incurred in its operation, including, among other things, expenses for legal and auditing services, taxes, costs of printing proxies, stock certificates and shareholder reports, charges of the custodian and transfer agent, dividend disbursing agent and registrar fees and expenses with respect to the issuance of preferred stock, SEC fees, fees and expenses of unaffiliated Board members, accounting and pricing costs, insurance, interest, brokerage costs, litigation and other extraordinary or non-recurring expenses, mailing and other expenses properly payable by the Fund. 36 Accounting services are provided to the Fund by the Investment Adviser, and the Fund reimburses the Investment Adviser for its costs in connection with such services. Information with respect to such reimbursement is set forth in Exhibit A. California imposes limitations on the expenses of those Funds whose shares are registered or qualified for sale in California. At the date of this proxy statement, these annual expense limitations require that the Investment Adviser reimburse the Fund in an amount necessary to prevent the aggregate ordinary operating expenses (excluding taxes, brokerage fees and commissions, distribution fees and extraordinary charges such as litigation costs) from exceeding in any fiscal year 2.5% of the Fund's first $30 million of average net assets, 2.0% of the next $70 million and 1.5% of the remaining average net assets. The Investment Adviser's obligation to reimburse the Fund is limited to the amount of the investment advisory fee. No payment will be made to the Investment Adviser during any fiscal year which will cause expenses to exceed the most restrictive expense limitation at the time of such payment. Additional information with respect to the Fund's reimbursement pursuant to such expense limitations, if any, is set forth in Exhibit A. Duration and Termination. The Investment Advisory Agreement will continue in effect from year to year if approved annually (a) by the Board or by a majority of the outstanding shares of the Fund and (b) by a majority of the Board members who are not parties to such agreement or interested persons (as defined in the Investment Company Act) of any such party. Such agreement is not assignable and may be terminated without penalty on 60 days' written notice at the option of either party thereto or by the vote of the shareholders of the Fund. PORTFOLIO TRANSACTIONS AND BROKERAGE Subject to policies established by the Board, the Investment Adviser is primarily responsible for the execution of each Fund's portfolio transactions and the allocation of brokerage. In executing such transactions, the Investment Adviser seeks to obtain the best results for the Fund, taking into account such factors as price (including the applicable brokerage commission or dealer spread), size of order, difficulty of execution and operational facilities of the firm involved and the firm's risk in positioning a block of securities. While the Investment Adviser generally seeks reasonably competitive commission rates, the Fund does not necessarily pay the lowest commission or spread available. The Fund has no obligation to deal with any broker or group of brokers in the execution of transactions in portfolio securities. Subject to obtaining the best price and execution, brokers or dealers who provided 37 supplemental investment research (such as information concerning money market securities, economic data and market forecasts) to the Investment Adviser, including Merrill Lynch, may receive orders for transactions by the Fund. Information so received will be in addition to and not in lieu of the services required to be performed by the Investment Adviser under the Investment Advisory Agreement, and the expenses of the Investment Adviser will not necessarily be reduced as a result of the receipt of such supplemental information. Each Fund invests in securities traded in the over-the-counter markets, and where possible, deals directly with dealers who make markets in the securities involved, except in those circumstances where better prices and execution are available elsewhere. Under the Investment Company Act, except as permitted by exemptive order, persons affiliated with a Fund are prohibited from dealing with the Fund 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 account, a Fund will not deal with affiliated persons, including Merrill Lynch and its affiliates, in connection with such transactions except that pursuant to an exemptive order, obtained by the Investment Adviser, certain Funds may engage in principal transactions with Merrill Lynch in high-quality short-term, tax-exempt securities. For information about transactions with and brokerage commissions paid to Merrill Lynch see Exhibit A. The Board has considered the possibility of recapturing for the benefit of the Fund brokerage commissions, dealer spreads and other expenses of possible portfolio transactions, such as underwriting commissions, by conducting 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 Fund to the Investment Adviser. After considering all factors deemed relevant, the Board members made a determination not to seek such recapture. The Board members will reconsider this matter from time to time. ADDITIONAL INFORMATION The expenses of preparation, printing and mailing by the Fund of the enclosed forms of proxy materials in connection with the matters to be considered at the meetingand accompanying Notice and Combined Proxy Statement will be borne by the Fund.Funds in proportion to their relative net assets. The FundFunds will reimburse banks, brokers and others for their reasonable expenses in forwarding proxy solicitation materialmaterials to the beneficial owners of the shares of the Fund. The Fund also may hire proxy solicitors at the expense of the Fund. The proposal to elect the Fund's Board (Proposal 1) and the proposal to ratify the selection of the Fund's independent auditors (Proposal 2) may 38 be approved by a majority of the Fund's shareholders, voting in person or by proxy, at a meeting at which a quorum is duly constituted. The proposal to amend the fundamental investment restrictions of the Fund (Proposal 3) requires the affirmative vote of the lesser of (i) 67% of the shares represented at the Meeting at which more than 50% of the outstanding shares are represented or (ii) more than 50% of the outstanding shares. The proposal to amend the Fund's charter (Proposal 4) must be approved by the affirmative vote of (i) at least 66 2/3% of the outstanding shares of the Fund for Merrill Lynch Global Convertible Fund, Inc. and Merrill LynchFunds. For World Income Fund, Inc., or (ii) a majority of the outstanding shares of the Fund for Merrill Lynch Balanced Fund for Investment and Retirement, Merrill Lynch California Municipal Series Trust, Merrill Lynch Growth Fund for Investment and Retirement, Merrill Lynch Multi-State Limited Maturity Municipal Series Trust and Merrill Lynch Multi-State Municipal Series Trust. The charter amendment also must be approved separately by the affirmative vote of the outstanding Class B shares of the Fund in the same percentages as set forth in (i) and (ii) immediately above. In order to obtain the necessary quorum at the Meeting, supplementary solicitation may be made by mail, telephone, telegraph or personal interview by officers of the Fund. It is anticipated that the cost of such supplementary solicitation, if any, will be nominal. For Merrill Lynch Balanced Fund for Investment and Retirement, Merrill Lynch Global Convertible Fund, Inc. and Merrill Lynch World Income Fund, Inc., a quorum consists of a majority of the shares entitled to vote at the Meeting for World Income Fund, present in person or by proxy; for Merrill Lynch California Municipal Series Trust, Merrill Lynchproxy. For Growth Fund, a quorum consists of one-third of the outstanding shares, present in person or by proxy, at the Meeting for Investment and Retirement, Merrill Lynch Multi-State Limited Maturity Municipal Series Trust and Merrill Lynch Multi-State MunicipalGrowth Fund. For each Series Trust, a quorum consists of 33 1/3%one-third of the outstanding shares of each Series, present in person or by proxy, at the applicable Meeting. Assuming a quorum is present, approval of Items 1, 2 and 3 will require the affirmative vote of shareholders holding at least the percentage of shares indicated in the chart below.
- ------------------------------------------------------------------------------------------------------------------------- Item 1. Item 2. Item 3. - ------------------------------------------------------------------------------------------------------------------------- Approval of a Charter Amendment to Permit the Ratification of Reorganization of Selection of the Fund Into a Election of Independent Master/Feeder Fund Board Members Auditors Structure - ------------------------------------------------------------------------------------------------------------------------- Merrill Lynch California Municipal Affirmative vote of a Affirmative vote of a Affirmative vote of Series Trust majority of the shares majority of the shares of two-thirds of the of each Series each Series represented at outstanding shares of represented at the the Meeting each Series Meeting - ------------------------------------------------------------------------------------------------------------------------- Merrill Lynch Growth Fund Affirmative vote of a Affirmative vote of a Affirmative vote of majority of the shares majority of the shares two-thirds of the represented at the represented at the Meeting outstanding shares Meeting - ------------------------------------------------------------------------------------------------------------------------- Merrill Lynch Multi-State Limited Affirmative vote of a Affirmative vote of a Affirmative vote of a Maturity Municipal Series Trust majority of the shares majority of the shares of majority of the of each Series each Series represented at outstanding shares of represented at the the Meeting each Series Meeting - ------------------------------------------------------------------------------------------------------------------------- Merrill Lynch Multi-State Municipal Affirmative vote of a Affirmative vote of a Affirmative vote of Series Trust majority of the shares majority of the shares of two-thirds of the of each Series each Series represented at outstanding shares of represented at the the Meeting each Series Meeting - ------------------------------------------------------------------------------------------------------------------------- Merrill Lynch World Income Fund, Inc. Affirmative vote of a Affirmative vote of a Affirmative vote of a majority of votes cast majority of votes cast majority of the outstanding shares - -------------------------------------------------------------------------------------------------------------------------
If, by the time scheduled for a Meeting, a quorum of the shareholders is not present or if a quorum is present but sufficient votes to take action with respect to the proposals are not received from the shareholders, the persons named as proxies may propose one or more adjournments of the Meetings to permit further solicitation of proxies from shareholders. Any such adjournment will require the affirmative vote of a majority of the shares of the Fund present in person or by proxy and entitled to vote at the session of the Meeting presentto be adjourned. The persons named as proxies will vote in person or by proxy. Class B quorum requirements forfavor of any such adjournment if they determine that adjournment and additional solicitation are reasonable and in the separate Class B vote on Proposal 4 will be identical tobest interests of the overall quorum requirements for each Fund.Fund's shareholders. All shares represented by properly executed proxies, unless such proxies have previously been revoked, will be voted at the MeetingMeetings or any adjournment thereof in accordance with the directions on the proxies; if no direction is indicated, the shares will be votedvoted: 1) "FOR" the election of the Fund's Board member nominees,Member nominees; 2) "FOR" the ratification of the selection of Deloitte & Touche LLP as independent auditors,auditors; and 3) "FOR" the amendmentsapproval of a charter amendment permitting the Board to reorganize the fundamental investment restrictionsFund into a master/feeder structure. In order to obtain the necessary quorum at the Meetings, supplementary solicitations may be made by mail, telephone, telegraph or personal interview by officers of the Fund and "FOR" the charter amendment. With respectFunds. The Funds have retained Shareholder Communications Corporation to each Fund whose fiscal year ended subsequent to May 31, 1994, the Board represents that there has been no material adverse 39 changeaid in the financial operationssolicitation of proxies, at an aggregate cost to be allocated among the Fund since the dateFunds of the unaudited financial statements contained in the Fund's most recent semi-annual report. Also, with respect to each Fund whose fiscal year ended subsequent to May 31, 1994, shares will not be voted for Proposal (1) unless the Fund has received a certificate from its President, dated the Meeting Date, that, to his knowledge, there has been no material adverse change in the Fund's financial operations since the date of the unaudited financial statements included in the Fund's most recent semi-annual report, unless such material adverse change has been disclosed to shareholders in additional proxy material. If you wish to receive a copy of the Fund's most recent annual report and any semi-annual, without charge, report, please call 1-800- and one will be sent to you.approximately $__________, plus out-of-pocket expenses. Broker-dealer firms, including Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S"), holding shares of each Fund shares in "street name" for the benefit of their customers and clients, will request the instructions of such customers and clients on how to vote their shares on each ProposalItem before the Meeting. The Fund understandsFunds understand that, under the rules of the New York Stock Exchange, such broker-dealer firms may, without instructions from their customers and clients, grant authority to the proxies designated to vote on the election of Board members (ProposalMembers (Item 1), the ratification of the selection of independent auditors (Proposal(Item 2) and the proposed charter amendment (Proposal 4)(Item 3), if no instructions have been received prior to the date specified in the broker-dealer firm's request for voting instructions. Broker- dealer firms, including Merrill Lynch, will not be permitted to grant voting authority without instructions with respect to the amendments to the fundamental investment restrictions (Proposal 3). The Fund will include shares held of record by broker-dealers as to which such authority has been granted in its tabulation of the total number of votesshares present for purposes of determining whether the necessary quorum of shareholders exists. Proxies whichthat are returned but whichthat are marked "abstain" or on which a broker-dealer has declined to vote on any proposal ("broker non-votes") will be counted as present for the purposes of a quorum. Merrill LynchMLPF&S has advised theeach Fund that it intends to exercise discretion overvote shares held in its name for which no instructions have been received except as limited by voting such sharesagreement or applicable law, on ProposalsItem 1, Item 2 and 4Item 3 in the same proportion as it has votedthe votes received from beneficial owners of those shares for which it hasinstructions have been received, instructions. However, abstentionswhether or not held in nominee name. Abstentions and broker non-votes will not be counted as votes cast. AbstentionsTherefore, abstentions and broker non-votes will not have an effect on the vote on ProposalsItem 1 and Item 2 (in the case of Maryland corporations) or on Proposal 1 only (in the case of Massachusetts business trusts); however, abstentionsfor World Income Fund. Abstentions and broker non-votes will have the same effect as a vote against ProposalsItem 3 for World Income Fund and 4 (inItems 1, 2 and 3 for each Trust. Address of Investment Adviser The principal office of the caseInvestment Adviser is located at 800 Scudders Mill Road, Plainsboro, New Jersey 08536. Annual Report Delivery Each Fund will furnish, without charge, a copy of Maryland corporations) or Proposals 2, 3its annual report for the Fund's last fiscal year and 4 (ina copy of its most recent semi-annual report to any shareholder upon request. Such requests should be directed to the caseattention of Massachusetts business trusts). 40 With respect to Funds organized in Massachusetts: The charter, which is on file with the Secretary of Statethe applicable Fund, P.O. Box 9011, Princeton, New Jersey 08543-9011, or to 1-800-456-4587 ext. 123. Shareholders' Meetings The charters of the Commonwealth of Massachusetts, provides that the name of the Fund refers to the Board under the charter collectively as Board members, but not as individuals or personally; and no Board member, shareholder, officer, employee or agent of the Fund shall be held to any personal liability, nor shall resort be had to their private property for the satisfaction of any obligation or claim of the Fund but the Fund Estate only shall be liable. MEETINGS OF SHAREHOLDERS The Fund's charter doesFunds do not require that the FundFunds hold an annual meetingmeetings of shareholders. TheEach Fund will be required, however, 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 or of a change in the fundamental policies, objectives or restrictions of the Fund. TheEach Fund also would be required to hold a special shareholders' meeting to elect new Board membersMembers at such time as less than a majority of the Board membersMembers holding office have been elected by shareholders. The charter or by-laws of eachWorld Income Fund provide that a shareholders' meeting may be called at any time by a majority of the Board Members, the President, or on the written request of the holders of at least 25% of the outstanding shares of World Income Fund entitled to vote at such meeting. The charter of Growth Fund provides that a shareholders' meeting may be called at any time by a majority of the Board Members and shall be called by any Board Member upon written request of (i)shareholders holding in the aggregate not less than 10% of the outstanding shares of such Fund having voting rights. The charter of each Series Trust provides that a shareholders' meeting may be called at any time by a majority of the Board Members and shall be called by any Board Member upon written request of shareholders of any Series holding in the aggregate not less than 10% of the outstanding shares of such Series having voting rights. Shareholder Proposals A shareholder proposal intended to be presented at any subsequent meeting of the shareholders of a Fund must be received by that Fund in a reasonable time before the applicable Board's solicitation relating to such meeting is to be made in order to be considered in that Fund's proxy statement and form of proxy relating to such meeting. By Order of the Boards of Trustees Alice A. Pellegrino Secretary of Merrill Lynch California Municipal Series Trust, Merrill Lynch Growth Fund for Investment and Retirement, Merrill Lynch Multi- StateMulti-State Limited Maturity Municipal Series Trust and Merrill Lynch Multi-State Municipal Series Trust (ii) 25% of the outstanding shares of Merrill Lynch Balanced Fund for Investment and Retirement, (iii) a majority of the outstanding sharesRobert Harris Secretary of Merrill Lynch World Income Fund, Inc. or (iv) by the written requestLori A. Martin Secretary of the holders of shares, entitled to vote at such meeting, or by a majority of the Board members. By Order of the BoardMerrill Lynch Growth Fund Dated: August , 1994 41November __, 2000 EXHIBIT A INFORMATION PERTAINING TO EACH FUND . GENERAL INFORMATION PERTAINING TO THE FUNDSGeneral Information Pertaining to the Funds
DEFINED TERM STATE OF FUND USED IN EXHIBITDefined Term Fiscal Sometimes Used in Year State of Meeting Fund this Exhibit A FISCAL YEAR END ORGANIZATION MEETING TIMEEnd Organization Time - ----------------------------------------------------------------------------------------------------------------------------------- ----------------- ------ ------------ ------- Merrill Lynch Balanced Fund for Investment and Retirement* Balanced Fund 9/30 MD 11:00 a.m. - ---------------------------------------------------------------------------------- Merrill Lynch California Municipal Series Trust** CA Trust....................................... ML California 8/31 MA 2:30 p.m. - ---------------------------------------------------------------------------------- Merrill Lynch Global Convertible Fund, Inc. Global Convertible 10/31 MD 3:30 p.m. - ----------------------------------------------------------------------------------9:00 a.m. Merrill Lynch Growth Fund for Investment and Re- tirementFund......................... ML Growth Fund 10/31 MA 4:00 p.m. - ----------------------------------------------------------------------------------9:30 a.m. Merrill Lynch Multi-State Limited Maturity Munic- ipalMunicipal Series Trust*** Ltd ML Limited Maturity Trust 7/31 MA 2:10:00 p.m. - ----------------------------------------------------------------------------------a.m. Merrill Lynch Multi-State Municipal Series Trust+ Municipal Series TrustTrust***..................................... ML Multi-State 7/31++ MA 11:10:30 a.m. - ---------------------------------------------------------------------------------- Merrill Lynch World Income Fund, Inc.Inc.............. ML World Income 12/31 MD 3:11:00 p.m.a.m.
- --------- * Merrill Lynch Retirement Benefit Investment Program, Inc. does business under the name Merrill Lynch Balanced Fund for Investment and Retirement. ** Consists of two series: Merrill Lynch California Municipal Bond Fund ("CA Muni Bond") and Merrill Lynch California Insured Municipal Bond Fund ("CA Ins Muni Bond"). *** Consists of eighttwo series: Merrill Lynch Arizona Limited Maturity Municipal Bond Fund ("AZ Ltd Maturity"); Merrill Lynch California Limited Maturity Municipal Bond Fund ("CA Ltd Maturity"); and Merrill Lynch Florida Limited Maturity Municipal Bond Fund ("FL Ltd Maturity"); Merrill Lynch Massachusetts Limited Maturity Municipal Bond Fund ("MA Ltd Maturity"); Merrill Lynch Michigan Limited Maturity Municipal Bond Fund ("MI Ltd Maturity"); Merrill Lynch New Jersey Limited Maturity Municipal Bond Fund ("NJ Ltd Maturity"); Merrill Lynch New York Limited Maturity Municipal Bond Fund ("NY Ltd Maturity"); and Merrill Lynch Pennsylvania Limited Maturity Municipal Bond Fund ("PA Ltd Maturity"). + Currently consists*** Consists of 1617 series: Merrill Lynch Arizona Municipal Bond Fund ("AZ Muni Bond"); Merrill Lynch Arkansas Municipal Bond Fund ("AK Muni Bond"); Merrill Lynch Colorado Municipal Bond Fund ("CO Muni Bond"); Merrill Lynch Connecticut Municipal Bond Fund ("CT Muni Bond"); Merrill Lynch Florida Municipal Bond Fund ("FL Muni Bond"); Merrill Lynch Maryland Municipal Bond Fund ("MD Muni Bond"); Merrill Lynch Massachusetts Municipal Bond Fund ("MA Muni Bond"); Merrill Lynch Michigan Municipal Bond Fund ("MI Muni Bond"); Merrill Lynch Minnesota Municipal Bond Fund ("MN Muni Bond"); Merrill Lynch New Jersey Municipal Bond Fund ("NJ Muni Bond"); Merrill Lynch New Mexico Municipal Bond Fund ("NM Muni Bond"); Merrill Lynch New York Municipal Bond Fund ("NY Muni Bond"); Merrill Lynch North Carolina Municipal Bond Fund ("NC Muni Bond"); Merrill Lynch Ohio Municipal Bond Fund ("OH Muni Bond"); Merrill Lynch Oregon Municipal Bond Fund ("OR Muni Bond"); Merrill Lynch Pennsylvania Municipal Bond Fund ("PA Muni Bond"); and Merrill Lynch Texas Municipal Bond Fund ("TX Muni Bond"). Merrill Lynch Arkansas Municipal Bond Fund, a new series+ For all Series of Municipal Series Trust, has not commenced operations and has no public shareholders at the date of this Proxy Statement. ++ ExceptML Multi-State except for NY Muni Bond, which has a fiscal year end of 9/30. A-1 Shares of Common Stock Outstanding as of the Record Fund Date - ---- ----------------- Merrill Lynch California Municipal Series Trust CA Ins Muni Bond................................................... CA Muni Bond....................................................... Merrill Lynch Growth Fund............................................... Merrill Lynch Multi-State Limited Maturity Municipal Series Trust CA Ltd Maturity FL Ltd Maturity Merrill Lynch Multi-State Municipal Series Trust AZ Muni Bond....................................................... AK Muni Bond....................................................... CO Muni Bond....................................................... CT Muni Bond....................................................... FL Muni Bond....................................................... MD Muni Bond....................................................... MA Muni Bond....................................................... MI Muni Bond....................................................... MN Muni Bond....................................................... NJ Muni Bond....................................................... NM Muni Bond....................................................... NY Muni Bond....................................................... NC Muni Bond....................................................... OH Muni Bond....................................................... OR Muni Bond....................................................... PA Muni Bond....................................................... TX Muni Bond....................................................... Merrill Lynch World Income Fund, Inc.................................... Except as set forth below, as of the Record Date, no person is a beneficial owner of more than five percent of the shares of any Fund or any Series, as applicable.
FUND SHARES OUTSTANDING AS OF THE RECORD DATE ----------------------------------------------------- CLASS A CLASS BShares of Common Stock Beneficially Owned as of the Record Date Name and Address of --------------------------------- Name of Fund/Series Beneficial Owner Number Percent of Total - ------------------------------------------------------------------------------------------------ ------------------- ------ ---------------- Balanced Fund - ----------------------------------------------------------------------------- CA Trust --------------------------------------------------------------------- CA Muni Bond - ----------------------------------------------------------------------------- CA Ins Muni Bond - ----------------------------------------------------------------------------- Global Convertible - ----------------------------------------------------------------------------- Growth Fund - ----------------------------------------------------------------------------- Ltd Maturity Trust --------------------------------------------------------------------- AZ Ltd Maturity - ----------------------------------------------------------------------------- CA Ltd Maturity - ----------------------------------------------------------------------------- FL Ltd Maturity - ----------------------------------------------------------------------------- MA Ltd Maturity - ----------------------------------------------------------------------------- MI Ltd Maturity - ----------------------------------------------------------------------------- NJ Ltd Maturity - ----------------------------------------------------------------------------- NY Ltd Maturity - ----------------------------------------------------------------------------- PA Ltd Maturity - ----------------------------------------------------------------------------- Municipal Series Trust --------------------------------------------------------------------- AZ Muni Bond
A-2 Information Pertaining to Board Member Nominees As of the Record Date, none of the Board Member nominees held shares of the Funds except as set forth in the table below: Nominee Fund/Series and Class No. of Shares Held - ----------------- --------------------- ------------------ Set forth below is information about the year in which each nominee became a Board Member for the Funds on whose Board he or she serves.
FUND SHARES OUTSTANDING AS OF THE RECORD DATE -------------------------------------------- CLASS A CLASS BFund Bodurtha Glenn London May Perold Ramo* Zeikel - -------------------------------------------------------------------- CO Muni Bond - -------------------------------------------------------------------- CT Muni Bond - -------------------------------------------------------------------- FL Muni Bond - -------------------------------------------------------------------- MD Muni Bond - -------------------------------------------------------------------- MA Muni Bond - -------------------------------------------------------------------- MI Muni Bond - -------------------------------------------------------------------- MN Muni Bond - -------------------------------------------------------------------- NJ Muni Bond - -------------------------------------------------------------------- NM Muni Bond - -------------------------------------------------------------------- NY Muni Bond - -------------------------------------------------------------------- NC Muni Bond - -------------------------------------------------------------------- OH Muni Bond - -------------------------------------------------------------------- OR Muni Bond - -------------------------------------------------------------------- PA Muni Bond - -------------------------------------------------------------------- TX Muni Bond - -------------------------------------------------------------------- World Income
. INFORMATION ABOUT HOLDERS OF 5% OR MORE OF A FUND'S OUTSTANDING SHARES. A-3 . INFORMATION PERTAINING TO OFFICERS AND BOARD MEMBERS
YEAR IN WHICH EACH NOMINEE BECAME A MEMBER OF THE BOARD --------------------------------------------------------------- FUND AXELSON LONDON MARTIN MAY PEROLD ZEIKEL - --------------------------------------------------------------------------------- -------- ----- ------ --- ------ ----- ------ Balanced Fund 1985ML California............. 1995 1999 1987 1993 1987 1985 N/A 1985 - ----------------------------------------------------------------------------- CA Trust 1985ML Growth................. 1995 1999 1987 1987 1987 N/A 1987 ML Limited Maturity 1995 1999 1993 1993 1993 N/A 1993 ML Multi-State............ 1995 1999 1987 1987 1985 N/A 1985 - ----------------------------------------------------------------------------- Global Convertible 1988 1988 1993ML World Income........... 1995 1999 1988 1988 1988 N/A 1988 - ----------------------------------------------------------------------------- Growth Fund 1987 1987 1993 1987 1987 1987 - ----------------------------------------------------------------------------- Ltd Maturity Trust 1993 1993 1993 1993 1993 1993 - ----------------------------------------------------------------------------- Municipal Series Trust 1985 1987 1993 1987 1985 1985 - ----------------------------------------------------------------------------- World Income 1988 1988 1993 1988 1988 1988--------- * Ms. Ramo is not currently a Board Member of any of the Funds.
A-4 Set forth in the table below is information regarding boardBoard and committee meetings held, and independent director compensationthe aggregate fees and expenses paid by each Fund to non-affiliated Board Members during each Fund's most recently completed fiscal year.
FUND BOARD AUDIT COMMITTEEBoard ---------------------------------------- Number of Per Number of Per Aggregate Meetings Annual Meeting Meetings Meeting Fees and Fund Held* Fee** Fee*** Held* Fee*** Expenses - -------------------------------------------------------------------------------- --------------------------------- # MEETINGS ANNUAL FEE PER MEETING FEE # MEETINGS ANNUAL FEE PER MEETING FEE AGGREGATE FEES AND HELD ($) ($) HELD ($) ($) EXPENSES ($) - -------------------------------------------------------------------------------------- ----- ----- ------ ----- ------ -------- Balanced FundML California............ 5 $ 7,927 $ 698 4 5,000 500$ $45,683 ML Growth................ 5 $18,400 $ 340 4 1,000 250 36,447$ $45,626 ML Limited Maturity 4 $ $ 4 $ $30,283 ML Multi-State........... 4 $16,332 $ 5,930 4 $ $96,870 ML World Income.......... 5 $ 6,000 $ 750 4 $ $45,568 - ---------------------------------------------------------------------------------- CA Trust 4 5,000 500 4 1,000 250 36,657 - ---------------------------------------------------------------------------------- Global Convertible 4 5,000 500 4 1,000 250 36,395 - ---------------------------------------------------------------------------------- Growth Fund 4 5,000 500 4 1,000 250 36,828 - ---------------------------------------------------------------------------------- Ltd Maturity Trust* 5 5,000 500 5 1,000 250 11,816 - ---------------------------------------------------------------------------------- Municipal Series Trust*--------- * 5 10,000 1,000 6 2,000 500 71,934 - ---------------------------------------------------------------------------------- World Income 4 5,000 500 4 1,000 250 40,553
*Represents the total amount of fees and expenses for each Series for the six month period ended January 31, 1994. **Represents the total amount of fees and expenses for each Series most recent fiscal year end. A-5 Set forth in the table below are the officers of all of the Funds; specific officers of each Fund are indicated according to the year in which he became an officer. OFFICER INFORMATION - ----------------------------------------------------------------------------------------------------
OFFICER SINCE ---------------------------------------------- NAME AND BALANCED GLOBAL GROWTH LTD MATURITY MUNICIPAL WORLD BIOGRAPHY AGE OFFICE FUND CA TRUST CONVERTIBLE FUND TRUST SERIES TRUST INCOME - ---------------------------------------------------------------------------------- Arthur Zeikel.......... 62 President 1986 1985 1988 1987 1993 1985 1988 PresidentIncludes meetings held via teleconferencing equipment. ** Each non-affiliated Board Member receives an aggregate annual retainer of MLAM since 1977 and Chief Investment Officer since 1976; President and Chief Investment Officer of FAM since 1977; President and Director of Princeton Services since 1993; Executive Vice President of ML & Co. since 1990; Executive Vice President of Merrill Lynch since 1990 and Senior Vice President from 1985$100,000 for his or her services to 1990; Director of MLFD. - ---------------------------------------------------------------------------------- Terry K. Glenn......... 53 Executive Vice 1986 1985 1988 1987 1993 1985 1988 Executive Vice President President of MLAM and FAM since 1983; Executive Vice President and Director of Princeton Services since 1993; President of MLFD since 1986 and Director since 1991; President of Princeton Administrators, L.P. since 1988.
A-6 OFFICER INFORMATION - ------------------------------------------------------------------------------------------------------
OFFICER SINCE ----------------------------------------------- NAME AND BALANCED GLOBAL GROWTH LTD MATURITY MUNICIPAL WORLD BIOGRAPHY AGE OFFICE FUND CA TRUST CONVERTIBLE FUND TRUST SERIES TRUST INCOME - ------------------------------------------------------------------------------------- Gerald M. Richard...... 45 Treasurer 1985 1985 1988 1987 1993 1985 1988 Senior Vice President and Treasurer of MLAM and FAM since 1984; Senior Vice President and Treasurer of Princeton Services since 1993; Treasurer of MLFD since 1984 and Vice President since 1981. - ------------------------------------------------------------------------------------- Bernard J. Durnin...... 51 Senior Vice 1985 -- -- -- -- -- -- Senior Vice President of President MLAM and FAM since 1981 and Vice President from 1977 to 1981. - ------------------------------------------------------------------------------------- Vincent R. Giordano.... 49 Senior Vice -- 1985 -- -- 1993 1985 -- Senior Vice President of President FAM and MLAM since 1984 and Portfolio Manager of FAM and MLAM since 1977; Vice President of MLAM from 1980 to 1984; Senior Vice President of Princeton Services since 1993. - ------------------------------------------------------------------------------------- Norman R. Harvey....... 61 Senior Vice -- -- -- 1987 -- -- -- Senior Vice President of President MLAM and FAM since 1982; Senior Vice President of Princeton Services since 1993.
A-7 OFFICER INFORMATION - ------------------------------------------------------------------------------------------------------
OFFICER SINCE ----------------------------------------------- NAME AND BALANCED GLOBAL GROWTH LTD MATURITY MUNICIPAL WORLD BIOGRAPHY AGE OFFICE FUND CA TRUST CONVERTIBLE FUND TRUST SERIES TRUST INCOME - ------------------------------------------------------------------------------------- N. John Hewitt......... 59 Senior Vice -- -- 1988 -- -- -- 1988 Senior Vice President of President MLAM and FAM since 1976; Managercertain MLIM/FAM-advised funds. The portion of the Fixed Income Mutual Fundannual retainer allocated to each MLIM/FAM-advised fund is determined quarterly based on the relative net assets of each such fund. *** The fee is payable for each meeting attended in person. No fee is paid for telephonic meetings. The annual per meeting fees paid to each non-affiliated Board Member aggregate $60,000 for all MLIM/FAM-advised funds for which that Board Member serves and Insurance Portfolio Groups of MLAM since 1980; Senior Vice President of Princeton Services since 1993. - ------------------------------------------------------------------------------------- Donald C. Burke........ 34 Vice President 1993 1993 1993 1993 1993 1993 1993 Vice President and Director of Taxation of MLAM since 1990; Employee of Deloitte & Touche from 1982 to 1990. - ------------------------------------------------------------------------------------- Denis B. Cummings...... 51 Vice President 1991 -- -- -- -- -- -- Vice President of MLAM since 1978. - ------------------------------------------------------------------------------------- Harry E. Dewdney....... 65 Vice President -- -- 1988 -- -- -- -- Vice President and Portfolio Manager of MLAM since 1986; Senior Vice President of the International Trading and Foreign Exchange Department of Prescott, Ball and Turben from 1978 to 1986. - ------------------------------------------------------------------------------------- Peter J. Hayes......... 35 Vice President -- -- -- -- 1993 -- -- Vice President of MLAM since 1989 and Assistant Vice President of MLAM from 1987 to 1989; Assistant Vice President of Shawmut Bank, N.A. from 1985 to 1987.are allocated equally among those funds.
A-8 OFFICER INFORMATION - ------------------------------------------------------------------------------------------------------
OFFICER SINCE ----------------------------------------------- NAME AND BALANCED GLOBAL GROWTH LTD MATURITY MUNICIPAL WORLD BIOGRAPHY AGE OFFICE FUND CA TRUST CONVERTIBLE FUND TRUST SERIES TRUST INCOME - ------------------------------------------------------------------------------------- Kenneth A. Jacob....... 43 Vice President -- 1986 -- -- 1993 1986 -- Vice President of FAM and MLAM since 1984. - ------------------------------------------------------------------------------------- Stephen C. Johnes...... 58 Vice President -- -- -- 1987 -- -- -- Vice President of MLAM since 1987; Managing Director of the Trust Company of the West from 1983 to 1986 and Senior Vice President from 1980 to 1982. - ------------------------------------------------------------------------------------- Vincent T. Lathbury, 53 Vice President -- -- -- -- -- -- 1988 III.................... President and Portfolio Manager of FAM and MLAM since 1982; Vice President and Manager of Bond Department of INA Capital Management, Inc. from 1979 to 1982. - ------------------------------------------------------------------------------------- Robert Parish.......... 42 Vice President -- -- -- -- -- -- 1992 Portfolio Manager of FAM since 1991; Portfolio Manager of Templeton International from 1986 to 1991 and Vice President from 1989. - ------------------------------------------------------------------------------------- Mark B. Goldfus........ 47 Secretary -- -- 1987 -- -- -- 1988 Vice President of MLAM and FAM since 1985.
A-9 OFFICER INFORMATION - ------------------------------------------------------------------------------------------------------
OFFICER SINCE ----------------------------------------------- NAME AND BALANCED GLOBAL GROWTH LTD MATURITY MUNICIPAL WORLD BIOGRAPHY AGE OFFICE FUND CA TRUST CONVERTIBLE FUND TRUST SERIES TRUST INCOME - ------------------------------------------------------------------------------------- Robert Harris.......... 42 Secretary -- -- -- -- 1993 -- -- Vice President of MLAM since 1984; Secretary of MLFD since 1982. - ------------------------------------------------------------------------------------- Jerry Weiss............ 36 Secretary 1990 1990 -- 1990 -- 1990 -- Vice President of MLAM since 1990; Attorney in private practice from 1982 to 1990.
A-10 . INFORMATION PERTAINING TO THE SELECT PRICING SYSTEM SALES CHARGES For Balanced Fund and Growth Fund:
DUAL DISTRIBUTION SELECT PRICING - ----------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------- CLASS A CLASS B CLASS A CLASS B CLASS C CLASS D - ----------------------------------------------------------------------------------------------------------------------------- Maximum 4.0% CDSC during the Maximum 5.25%** 4.0% CDSC during the 1.0% CDSC during the Maximum 5.25%** 6.5%* first year, decreasing first year, decreasing first year, decreasing 1.0% annually to 0.00% 1.0% annually to 0.00% to 0.00% after the after the fourth year after the fourth year first year - -----------------------------------------------------------------------------------------------------------------------------
* 6.5% for purchases less than $10,000; 6.0% for purchases between $10,000 and $25,000; 5.0% for purchases between $25,000 and $50,000; 4.0% for purchases between $50,000 and $100,000; 3.0% for purchases between $100,000 and $250,000; 2.0% for purchases between $250,000 and $1,000,000; .75% for purchases of $1,000,000 and greater. ** 4.75% for purchases between $25,000 and $50,000; 4.00% for purchases between $50,000 and $100,000; 3.00% for purchases between $100,000 and $250,000; 2.00% for purchases between $250,000 and $1,000,000; and 0% for purchases of $1,000,000 and greater. For all series of CA Trust, all series of Municipal Series Trust and World Income:
DUAL DISTRIBUTION SELECT PRICING - ----------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------- CLASS A CLASS B CLASS A CLASS B CLASS C CLASS D - ----------------------------------------------------------------------------------------------------------------------------- Maximum 4.0% CDSC during the Maximum 4.0%** 4.0% CDSC during the 1.0% CDSC during the Maximum 4.0%** 4.0%* first year, decreasing first year, decreasing first year, decreasing 1.0% annually to 0.00% 1.0% annually to 0.00% to 0.00% after the after the fourth year after the fourth year first year - -----------------------------------------------------------------------------------------------------------------------------
* 4.0% for purchases less than $25,000; 3.75% for purchases between $25,000 and $50,000; 3.25% for purchases between $50,000 and $100,000; 2.5% for purchases between $100,000 and $250,000; 1.5% for purchases between $250,000 and $1,000,000; .50% for purchases of $1,000,000 and greater. ** 3.75% for purchases between $25,000 and $50,000; 3.25% for purchases between $50,000 and $100,000; 2.5% for purchases between $100,000 and $250,000; 1.5% for purchases between $250,000 and $1,000,000; 0% for purchases of $1,000,000 and greater. A-11 For all series of Ltd Maturity Trust:
DUAL DISTRIBUTION SELECT PRICING - ---------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------- CLASS A CLASS B CLASS A CLASS B CLASS C CLASS D - ---------------------------------------------------------------------------------- Maximum 1.0% CDSC during the Maximum 1.0% CDSC during the 1.0% CDSC during Maximum 1.0%* first year, 1.0%** first the 1.0%** decreasing to year, decreasing to first year, 0.00% after the first 0.00% decreasing to year after the first year 0.00% after the first year
* .75% for purchases between $100,000 and $250,000; .50% for purchases between $250,000 and $500,000; .30% for purchases of $500,000 and greater. ** .75% for purchases between $100,000 and $250,000; .50% for purchases between $250,000 and $500,000; .30% for purchases between $500,000 and $1,000,000; 0% for purchases of $1,000,000 and greater. For Global Convertible:
DUAL DISTRIBUTION SELECT PRICING - ---------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------- CLASS A CLASS B CLASS A CLASS B CLASS C CLASS D - ---------------------------------------------------------------------------------- Maximum 4.0% CDSC during the Maximum 4.0% CDSC during the 1.0% CDSC during 5.25%** 4.0%* first 5.25%** first the year, decreasing 1.0% year, decreasing 1.0% first year, annually annually decreasing to to 0.00% after the to 0.00% after the 0.00% after the fourth year fourth year first year
* 4.0% for purchases less than $25,000; 3.75% for purchases between $25,000 and $50,000; 3.25% for purchases between $50,000 and $100,000; 2.5% for purchases between $100,000 and $250,000; 1.5% for purchases between $250,000 and $1,000,000; .50% for purchases of $1,000,000 and greater. ** 4.75% for purchases between $25,000 and $50,000; 4.0% for purchases between $50,000 and $100,000; 3.0% for purchases between $100,000 and $250,000; 2.0% for purchases between $250,000 and $1,000,000; 0% for purchases of $1,000,000 and greater. A-12 DISTRIBUTION AND ACCOUNT MAINTENANCE FEES (AS A PERCENTAGE OF AVERAGE NET ASSETS) For Balanced Fund, Global Convertible and Growth Fund:
DUAL DISTRIBUTION SELECT PRICING - ---------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------- CLASS A CLASS B CLASS A CLASS B CLASS C CLASS D - ---------------------------------------------------------------------------------------- ACCOUNT ACCOUNT ACCOUNT ACCOUNT DISTRIBUTION MAINTENANCE DISTRIBUTION MAINTENANCE DISTRIBUTION MAINTENANCE DISTRIBUTION MAINTENANCE FEE FEE FEE FEE FEE FEE FEE FEE - ---------------------------------------------------------------------------------------- None 0.75% 0.25% None 0.75% 0.25% 0.75% 0.25% None 0.25%
For all series of CA Trust, all series of Municipal Series Trust and World Income:
DUAL DISTRIBUTION SELECT PRICING - ---------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------- CLASS A CLASS B CLASS A CLASS B CLASS C CLASS D - ---------------------------------------------------------------------------------------- ACCOUNT ACCOUNT ACCOUNT ACCOUNT DISTRIBUTION MAINTENANCE DISTRIBUTION MAINTENANCE DISTRIBUTION MAINTENANCE DISTRIBUTION MAINTENANCE FEE FEE FEE FEE FEE FEE FEE FEE - ---------------------------------------------------------------------------------------- None 0.50% 0.25% None 0.50% 0.25% 0.55% 0.25% None 0.25%
For all series of Ltd Maturity Trust:
DUAL DISTRIBUTION SELECT PRICING - ---------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------- CLASS A CLASS B CLASS A CLASS B CLASS C CLASS D - ---------------------------------------------------------------------------------------- ACCOUNT ACCOUNT ACCOUNT ACCOUNT DISTRIBUTION MAINTENANCE DISTRIBUTION MAINTENANCE DISTRIBUTION MAINTENANCE DISTRIBUTION MAINTENANCE FEE FEE FEE FEE FEE FEE FEE FEE - ---------------------------------------------------------------------------------------- None 0.20% 0.15% None 0.20% 0.15% 0.20% 0.15% None 0.10%
A-13 CLASS B CONVERSION PERIODS Balanced Fund 8 years - -------------------------------------------------------- CA Trust 10 years - -------------------------------------------------------- Global Convertible 8 years - -------------------------------------------------------- Growth Fund 8 years - -------------------------------------------------------- Ltd Maturity Trust 10 years - -------------------------------------------------------- Municipal Series Trust 10 years - -------------------------------------------------------- World Income 10 years
A-14 . INFORMATION PERTAINING TO THE FUNDS' INVESTMENT ADVISORY ARRANGEMENTS
--------------------------------------- INVESTMENT ADVISORY AGREEMENT ----------------------------------------------------------------------- MOST RECENT MOST RECENT INVESTMENT DATE ANNUAL DIRECTOR SHAREHOLDER FUND ADVISER EXECUTED FEE RATE APPROVAL APPROVAL - -------------------------------------------------------------------------------------- Balanced Fund MLAM 3/20/87 0.65% 3/31/94 9/30/88 - -------------------------------------------------------------------------------------- FEE INFORMATION --------------------------------------- INVESTMENT ADVISORY FEE ADVISORY FEE PAYABLE PAID FOR FUND'S MOST BASED ON NET ASSETS REIMBURSEMENTS DURING RECENT FISCAL YEAR AT RECORD DATE FISCAL YEAR ----------------------------------------------------------------------- PURSUANT TO FEE BASED ON AVERAGE FEE BASED ON NET FOR CALIFORNIA AMOUNT NET ASSETS OF AMOUNT ASSETS OF ACCOUNTING EXPENSE FUND ($) APPROX. ($) APPROX. SERVICES($) LIMITATIONS - -------------------------------------------------------------------------------------- Balanced Fund 5,620,993 902,217,114 143,231 0 - -------------------------------------------------------------------------------------- CA Trust - -------------------------------------------------------------------------------------- CA Muni Bond FAM 8/5/85 0.55% 12/15/93 9/30/88 - -------------------------------------------------------------------------------------- CA Ins Muni Bond FAM 12/18/92 0.55% 12/15/93 -- - -------------------------------------------------------------------------------------- Global Con- vertible MLAM 1/18/88 0.65% 10/1/93 12/13/89 - -------------------------------------------------------------------------------------- Growth Fund MLAM 2/4/87 0.65% 10/1/93. 10/31/88 - -------------------------------------------------------------------------------------- CA Trust - -------------------------------------------------------------------------------------- CA Muni Bond 4,391,540 812,674,334 81,306 0 - -------------------------------------------------------------------------------------- CA Ins Muni Bond 213,036 75,603,552 24,230 0 - -------------------------------------------------------------------------------------- Global Con- vertible 139,948 21,589,532 49,224 0 - -------------------------------------------------------------------------------------- Growth Fund 6,922,555 1,049,650,500 77,561 0 - -------------------------------------------------------------------------------------- Ltd Maturity Trust - -------------------------------------------------------------------------------------- AZ Ltd Matu- rity FAM 10/1/93 0.35% 10/1/93 -- - -------------------------------------------------------------------------------------- CA Ltd Maturity FAM 10/1/93 0.35% 10/1/93 -- - -------------------------------------------------------------------------------------- FL Ltd Matu- rity FAM 10/1/93 0.35% 10/1/93 -- - -------------------------------------------------------------------------------------- MA Ltd Maturity FAM 10/1/93 0.35% 10/1/93 -- - -------------------------------------------------------------------------------------- MI Ltd Matu- rity FAM 10/1/93 0.35% 10/1/93 -- - -------------------------------------------------------------------------------------- NJ Ltd Matu- rity FAM 10/1/93 0.35% 10/1/93 -- - -------------------------------------------------------------------------------------- NY Ltd Maturity FAM 10/1/93 0.35% 10/1/93 -- - -------------------------------------------------------------------------------------- PA Ltd Matu- rity FAM 10/1/93 0.35% 10/1/93 -- Ltd Maturity Trust - -------------------------------------------------------------------------------------- AZ Ltd Matu- rity 3,679 5,726,154 5,701 0 - -------------------------------------------------------------------------------------- CA Ltd Maturity 8,704 13,547,381 6,491 0 - -------------------------------------------------------------------------------------- FL Ltd Matu- rity 21,994 34,233,784 5,490 0 - -------------------------------------------------------------------------------------- MA Ltd Maturity 7,154 11,135,523 5,702 0 - -------------------------------------------------------------------------------------- MI Ltd Matu- rity 3,202 4,983,575 6,232 0 - -------------------------------------------------------------------------------------- NJ Ltd Matu- rity 6,477 10,081,015 4,379 0 - -------------------------------------------------------------------------------------- NY Ltd Maturity 7,684 11,960,486 6,526 0 - -------------------------------------------------------------------------------------- PA Ltd Matu- rity 6,477 10,082,117 5,832 0
*For the six months ended January 31, 1994 A-15
----------------------------------------- INVESTMENT ADVISORY AGREEMENT ------------------------------------------------------------------------ MOST RECENT MOST RECENT INVESTMENT DATE ANNUAL DIRECTOR SHAREHOLDER FUND ADVISER EXECUTED FEE RATE APPROVAL APPROVAL - -------------------------------------------------------------------------------------- FEE INFORMATION ----------------------------------------- INVESTMENT ADVISORY FEE ADVISORY FEE PAYABLE PAID FOR FUND'S MOST BASED ON NET ASSETS REIMBURSEMENTS DURING RECENT FISCAL YEAR AT RECORD DATE FISCAL YEAR ------------------------------------------------------------------------ PURSUANT TO BASED ON AVERAGE BASED ON NET FOR CALIFORNIA FEE NET ASSETS OF FEE ASSETS OF ACCOUNTING EXPENSE FUND AMOUNT($) APPROX. AMOUNT($) APPROX. SERVICES($) LIMITATIONS - -------------------------------------------------------------------------------------- Municipal Series Trust - -------------------------------------------------------------------------------------- AZ Muni Bond FAM 7/12/91 0.55% 12/15/93 -- - -------------------------------------------------------------------------------------- CO Muni Bond* FAM 8/16/93 0.55% 12/15/93 -- - -------------------------------------------------------------------------------------- CT Muni Bond+ FAM 3/31/94 0.55% 3/31/94 -- - -------------------------------------------------------------------------------------- FL Muni Bond FAM 4/26/91 0.55% 12/15/93 7/24/92 - -------------------------------------------------------------------------------------- MD Muni Bond* FAM 8/16/93 0.55% 12/15/93 -- - -------------------------------------------------------------------------------------- MA Muni Bond FAM 12/12/91 0.55% 12/15/93 -- - -------------------------------------------------------------------------------------- MI Muni Bond FAM 12/18/92 0.55% 12/15/93 -- - -------------------------------------------------------------------------------------- MN Muni Bond FAM 12/12/91 0.55% 12/15/93 -- - -------------------------------------------------------------------------------------- NJ Muni Bond FAM 7/31/90 0.55% 12/15/93 11/1/91 - -------------------------------------------------------------------------------------- NM Muni Bond+ FAM 3/31/94 0.55% 3/31/94 -- - -------------------------------------------------------------------------------------- NY Muni Bond FAM 9/20/85 0.55% 12/15/93 - -------------------------------------------------------------------------------------- NC Muni Bond FAM 8/21/92 0.55% 12/15/93 9/30/88 - -------------------------------------------------------------------------------------- OH Muni Bond FAM 12/12/91 0.55% 12/15/93 -- - -------------------------------------------------------------------------------------- OR Muni Bond* FAM 6/18/93 0.55% 12/15/93 -- - -------------------------------------------------------------------------------------- PA Muni Bond FAM 7/31/90 0.55% 12/15/93 11/1/91 - -------------------------------------------------------------------------------------- TX Muni Bond FAM 6/14/91 0.55% 12/15/93 11/13/92 - -------------------------------------------------------------------------------------- World Income FAM 9/7/88 0.60% 12/15/93 12/13/91 Municipal Series Trust - -------------------------------------------------------------------------------------- AZ Muni Bond 471,916 86,038,511 26,175 0 - -------------------------------------------------------------------------------------- CO Muni Bond* 14,499 14,361,468 5,638 0 - -------------------------------------------------------------------------------------- CT Muni Bond+ -- -- -- -- -- -- - -------------------------------------------------------------------------------------- FL Muni Bond 1,317,023 240,116,482 48,945 0 - -------------------------------------------------------------------------------------- MD Muni Bond* 15,637 10,923,493 8,528 0 - -------------------------------------------------------------------------------------- MA Muni Bond 330,194 60,200,285 48,195 0 - -------------------------------------------------------------------------------------- MI Muni Bond 127,701 45,809,330 16,916 0 - -------------------------------------------------------------------------------------- MN Muni Bond 301,137 54,902,574 29,700 0 - -------------------------------------------------------------------------------------- NJ Muni Bond 1,015,508 185,145,083 38,618 0 - -------------------------------------------------------------------------------------- NM Muni Bond+ -- -- -- -- -- -- - -------------------------------------------------------------------------------------- NY Muni Bond 3,744,878 689,500,586 65,976 0 - -------------------------------------------------------------------------------------- NC Muni Bond 150,982 32,217,628 32,660 0 - -------------------------------------------------------------------------------------- OH Muni Bond 238,477 43,478,396 46,839 0 - -------------------------------------------------------------------------------------- OR Muni Bond* 57,376 24,099,244 17,240 0 - -------------------------------------------------------------------------------------- PA Muni Bond 591,807 107,896,850 48,205 0 - -------------------------------------------------------------------------------------- TX Muni Bond 401,457 73,192,727 51,189 0 - -------------------------------------------------------------------------------------- World Income 13,902,958 2,323,498,076 169,845 0
*For the six months ended January 31,1994 +CT Muni Bonds and NM Muni Bond Fund commenced oprrations on May 4, 1994 and April 13, 1994, respectively. A-16 Set forth in the table below is information regarding portfolio transactions and brokerage commissions forcompensation paid by each Fund to the non-affiliated Board Members during each Fund's most recentmost-recently completed fiscal year:year.
BROKERAGE COMMISSIONS ------------------------------------------------------------------ FUND DOLLAR AMOUNT DOLLAR AMOUNT PAID TO % PAID TO % OF AGGREGATE DOLLAR AMOUNT MERRILL LYNCH MERRILL LYNCH OF TRANSACTIONS IN WHICH BROKERAGE COMMISSIONS PAID EFFECTED THROUGH MERRILL LYNCH ----------------------------------------------------------------------------------Compensation Paid by Each Fund* -------------------------------------------------------- Fund Bodurtha Glenn London May Perold Ramo** Zeikel - ---- -------- ----- ------ --- ------ ------ ------ Balanced Fund 1,375,992 80,436 5.85% 1.65% ---------------------------------------------------------------------------------- CA ML California........ $10,072 $0 $10,072 $10,072 $10,072 $0 $0 ML Growth............ $20,190 $0 $20,190 $20,190 $20,190 $0 $0 ML Limited Maturity $ $0 $ $ $ $0 $0 ML Multi-State....... $29,693 $0 $29,693 $29,693 $29,693 $0 $0 ML World Income...... $ 9,000 $0 $ 9,000 $ 9,000 $ 9,000 $0 $0
- --------- * No pension or retirement benefits are accrued as part of Fund expenses. ** Ms. Ramo is not currently a Board Member of any of the Funds. Set forth in the table below is information regarding the aggregate compensation paid by all MLIM/FAM-advised funds to the non-affiliated Board Members for the year ended December 31, 1999. Aggregate Compensation Paid to Board Members by Name of Non-Affiliated Board Member MLIM/FAM Advised Funds (1) - ----------------------------------- -------------------------- James H. Bodurtha............................... $133,500 Herbert I. London............................... $133,500 Joseph L. May................................... $133,500 Andre F. Perold................................. $133,250 Roberta Cooper Ramo............................. None(2) - -------------- (1) The non-affiliated Board Members serve on the boards of MLIM/FAM-advised funds as follows: Mr. Bodurtha (32 registered investment companies consisting of 44 portfolios); Mr. London (32 registered investment companies consisting of 44 portfolios); Mr. May (32 registered investment companies consisting of 44 portfolios); Mr. Perold (32 registered investment companies consisting of 44 portfolios); and Ms. Ramo (26 registered investment companies consisting of 20 portfolios). (2) Ms. Ramo was appointed a Board Member of certain MLIM/FAM-advised funds on December 15, 1999. She received no compensation from MLIM/FAM-advised funds for the year ended December 31, 1999. Information Pertaining to Officers Name Age Principal Occupation During Past Five Years - ---- --- ------------------------------------------- Terry K. Glenn............. 60 Executive Vice President of MLIM and FAM since 1983; Executive Vice President and Director of Princeton Services since 1993; President of FAMD since 1986 and Director thereof since 1991; President of Princeton Administrators, L.P. since 1988. Robert C. Doll, Jr......... 45 Senior Vice President of MLIM and FAM since 1999, Senior Vice President of Princeton Services since 1999; Chief Investment Officer of Oppenheimer Funds, Inc. in 1999 and Executive Vice President thereof from 1991 to 1999. Donald C. Burke........... 40 First Vice President of Treasury since 2000; Senior Vice President and Treasurer of MLIM and FAM from 1999 to 2000; Senior Vice President and Treasurer of Princeton Services since 1999; Vice President of FAMD since 1999; First Vice President of MLIM from 1997 to 1999; Vice President of MLIM from 1990 to 1997; Director of Taxation of MLIM since 1990. Vincent R. Giordano........ 54 Senior Vice President of FAM and MLIM since 1984; Portfolio Manager of FAM and MLIM since 1977; Senior Vice President of Princeton Services since 1993. Joseph T. Monagle, Jr...... 51 Senior Vice President of MLIM and FAM since 1990; Department Head of the Global Fixed Income Division of MLIM and FAM since 1997; Senior Vice President of Princeton Services since 1993. Steven I. Silverman........ 50 First Vice President of MLIM since 1997; Senior Portfolio Manager at MLIM since 1983; Vice President of MLIM from 1983 to 1997. Robert Harris............. 47 First Vice President of MLIM since 1997; Vice President of MLIM from 1984 to 1997; attorney associated with MLIM since 1980; Secretary of FAM since 1982. Kenneth A. Jacob 48 First Vice President of MLIM since 1997; Vice President of MLIM from 1984 to 1997; Vice President of FAM since 1984. Vincent T. Lathbury, III 59 First Vive President of MLIM since 1997; Vice President of MLIM from 1982 to 1997; Portfolio Manager of MLIM since 1982. Edward Andrews 40 Vice President of MLIM since 1991; investment officer in the Private Banking Division of Citibank, N.A. from 1982 to 1991. William R. Bock............ 63 Vice President of MLIM since 1989. Robert A. DiMella, CFA..... 32 Vice President of MLIM since 1997; Assistant Vice President of MLIM from 1995 to 1997; Assistant Portfolio Manager of MLIM from 1993 to 1995. Michael Kalinoski.......... 29 Vice President and Portfolio Manager of MLIM since 1999; head Municipal Bond Trader with Strong Funds from 1996 to 1999 and a member of the municipal bond investment team of Strong Funds from 1993 to 1996. Lori A. Martin............. 38 Vice President of MLIM since 1998; Attorney in private practice from 1989 to 1998. Alice A. Pellegrino........ 40 Vice President of MLIM since 1999; Attorney associated with MLIM since 1997; Associate with Kirkpatrick & Lockhart LLP from 1992 to 1997. Roberto W. Roffo........... 33 Vice President of MLIM since 1996; Portfolio Manager with MLIM since 1992. Fred K. Steube............. 48 Vice President of MLIM since 1989. Robert D. Sneeden.......... 46 Assistant Vice President and Portfolio Manager of MLIM since 1994; Vice President of Lehman Brothers from 1990 to 1994. Theodore R. Jaeckel, Jr.... 38 Director (Municipal Tax-Exempt Fund Management) of MLIM since 1997; Vice President of MLIM since 1991. Walter O'Connor............ 37 Director (Municipal Tax-Exempt) of MLIM since 1997; Vice President of MLIM from 1993 to 1997. Set forth in the table below are the names of the officers of each Fund, and the years in which they were first elected to their respective offices.
Merrill Lynch Merrill Lynch California Multi-State Limited Merrill Lynch Municipal Series Merrill Lynch Maturity Municipal Multi-State Municipal Name Office Trust ---------------------------------------------------------------------------------- CA Muni Bond 0 0 0 0 ---------------------------------------------------------------------------------- CA Ins Muni Bond 0 0 0 0 ---------------------------------------------------------------------------------- Global Convertible 32,896 0 0 0 ---------------------------------------------------------------------------------- Growth Fund 1,399,875 27,990 2.00% 2.36 ---------------------------------------------------------------------------------- Ltd Maturity Trust* -- -- -- --
*Portfolio transactions and brokerage commissions are reported on an annual basis. Ltd Maturity Trust's most recent fiscal year is July 31, 1994, and numbers are not available at this time. A-17
BROKERAGE COMMISSIONS ----------------------------------------------------------------------------- FUND DOLLAR AMOUNT DOLLAR AMOUNT PAID TO % PAID TO % OF AGGREGATE DOLLAR AMOUNT MERRILL LYNCH MERRILL LYNCH OF TRANSACTIONS IN WHICH BROKERAGE COMMISSIONS PAID EFFECTED THROUGH MERRILL LYNCHSeries Trust Series Trust - ------------------------------------------------------------------------------------------------------------ ------ ----- ----------- ------------ ------------ Municipal Series Trust - -------------------------------------------------------------------------------------------------------- AZ Muni Bond 0 0 0 0 - -------------------------------------------------------------------------------------------------------- CO Muni BondTerry K. Glenn President 1985* 1987* 1993*** 1985**** Robert C. Doll Senior Vice President -- 1999 -- Vincent R. Giordano Senior Vice President 1985 1993 1985 Donald C. Burke Vice President 1993 1994 1993 1993 Treasurer 1999 1999 1999 1999 Vincent T. Lathbury, III Senior Vice President -- -- -- -- - -------------------------------------------------------------------------------------------------------- CT Muni BondJoseph T. Monagle Senior Vice President -- -- -- -- - -------------------------------------------------------------------------------------------------------- FL Muni Bond 5,655 0 0 0 - -------------------------------------------------------------------------------------------------------- MD Muni BondSteven I. Silverman Senior Vice President -- 1999 -- -- Kenneth A. Jacob Vice President 1986 1993 1986 Edward J. Andrews Vice President -- -- [1995] -- Walter O'Connor Vice President -- -- -- 1998 William R. Bock Vice President -- -- -- 1997 Robert A. DiMella, CFA Vice President -- -- -- 1998 Michael Kalinoski Vice President -- -- -- 1999 Roberto W. Roffo Vice President -- -- -- 1998 Robert D. Sneeden Vice President -- -- -- 1997 Theodore R. Jaeckel, Jr. Vice President -- -- -- 1997 Robert C. Harris Secretary -- -- -- -- - -------------------------------------------------------------------------------------------------------- MA Muni Bond 0 0 0 0 - -------------------------------------------------------------------------------------------------------- MI Muni Bond 0 0 0 0 - -------------------------------------------------------------------------------------------------------- MN Muni Bond 0 0 0 0 - -------------------------------------------------------------------------------------------------------- NJ Muni Bond 0 0 0 0 - -------------------------------------------------------------------------------------------------------- NM Muni BondLori A. Martin Secretary -- 1999 -- -- Alice A. Pellegrino Secretary 1999 -- -- - -------------------------------------------------------------------------------------------------------- NY Muni Bond 0 0 0 0 - -------------------------------------------------------------------------------------------------------- NC Muni Bond 0 0 0 0 - -------------------------------------------------------------------------------------------------------- OH Muni Bond 0 0 0 0 - -------------------------------------------------------------------------------------------------------- OR Muni Bond -- -- -- -- - -------------------------------------------------------------------------------------------------------- PA Muni Bond 0 0 0 0 - -------------------------------------------------------------------------------------------------------- TX Muni Bond 0 0 0 0 - --------------------------------------------------------------------------------------------------------1999 1999 (table continued) Merrill Lynch World Income 86,336 65,410 67.9% 67.1%Name Office Fund, Inc. - ---- ------ ---------- Terry K. Glenn President 1988***** Robert C. Doll Senior Vice President 2000 Vincent R. Giordano Senior Vice President -- Donald C. Burke Vice President 1993 Treasurer 1999 Vincent T. Lathbury, III Senior Vice President 1998 Joseph T. Monagle Senior Vice President 1997 Steven I. Silverman Senior Vice President -- Kenneth A. Jacob Vice President -- Edward J. Andrews Vice President -- Walter O'Connor Vice President -- William R. Bock Vice President -- Robert A. DiMella, CFA Vice President -- Michael Kalinoski Vice President -- Roberto W. Roffo Vice President Robert D. Sneeden Vice President -- Theodore R. Jaeckel, Jr. Vice President -- Robert C. Harris Secretary 1999 Lori A. Martin Secretary -- Alice A. Pellegrino Secretary --
A-18- --------- * Mr. Glenn was elected President of ML California in 1999. From 1985 to 1999, he served as Executive Vice President of ML California. ** Mr. Glenn was elected President of ML Growth in 1999. From 1987 to 1999, he served as Executive Vice President of ML Growth. *** Mr. Glenn was elected President of ML Limited Maturity in 1999. From 1993 to 1999, he served as Executive Vice President of ML Limited Maturity. **** Mr. Glenn was elected President of ML Multi-State in 1999. From 1985 to 1999, he served as Executive Vice President of ML Multi-State. ***** Mr. Glenn was elected President of ML World Income in 1999. From 1988 to 1999, he served as Executive Vice President of ML World Income. EXHIBIT B MERRILL LYNCH INVESTMENT MANAGEMENT,WORLD INCOME FUND, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET ASFORM OF DECEMBER 31, 1993 AND INDEPENDENT AUDITORS' REPORT B-1 INDEPENDENT AUDITORS' REPORT Merrill Lynch Investment Management, Inc.: We have auditedARTICLES OF AMENDMENT TO THE ARTICLES OF INCORPORATION MERRILL LYNCH WORLD INCOME FUND, INC., a Maryland corporation (the "Corporation"), does hereby certify to the accompanying consolidated balance sheetState Department of Merrill Lynch Investment Management, Inc.Assessments and its subsidiaries (the "Company") asTaxation of December 31, 1993. This consolidated balance sheet is the responsibilityMaryland that: FIRST: The charter of the Company's management. Our responsibilityCorporation is hereby amended by deleting Article III, Section (2) in its entirety and inserting the following in lieu thereof: "(2) To hold, invest and reinvest its assets in securities, and in connection therewith, without limiting the foregoing, to express an opinion on the consolidated balance sheet based on our audit. We conducted our audithold part or all of its assets (a) in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the balance sheet is freecash and/or (b) in shares of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosuresor beneficial interests in another corporation known in the balance sheet. An audit also includes assessing the accounting principles used and significant estimates made by management,investment company industry as well as evaluating the overall balance sheet presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, such consolidated balance sheet presents fairly, in all material respects, the financial position of the Company at December 31, 1993 in conformity with generally accepted accounting principles. DELOITTE & TOUCHE February 28, 1994 B-2 MERRILL LYNCH INVESTMENT MANAGEMENT, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1993 ------------ ASSETS Cash and cash equivalents......................................... $ 1,664,075 Receivable from affiliated companies: Lease transactions.............................................. 708,616,571 Sale of leased investment....................................... 48,312,532 Investments in affiliated limited partnership..................... 62,218,528 Investments in leases: Leveraged leases................................................ 57,431,668 Sales-type leases............................................... 3,362,521 Investments in affiliated investment companies--(market: $26,066,372).................................................... 24,610,184 Fund management and administrative fees receivable................ 49,098,914 Fixed assets (net of $11,457,912 accumulated depreciation)........ 10,406,280 Prepaid expenses and other assets................................. 15,376,412 ------------ TOTAL ASSETS...................................................... $981,097,685 ============ LIABILITIES AND STOCKHOLDER'S EQUITY Liabilities: Payable to affiliates............................................. $759,321,639 Accrued liabilities and other payables............................ 8,432,888 Deferred income--unearned fees.................................... 7,007,406 Deferred income taxes: Arising from leveraged leases................................... 52,938,886 Arising from sales-type leases.................................. 1,351,622 Other........................................................... 43,685,367 ------------ Total liabilities................................................. 872,737,808 ------------ Stockholder's Equity: Common stock, par value $1.00 per share--authorized 25,000 shares; outstanding 10,000 shares....................................... 10,000 Additional paid-in capital........................................ 23,266,792 Accumulated translation adjustment................................ 642,388 Retained earnings................................................. 84,440,697 ------------ Total stockholder's equity........................................ 108,359,877 ------------ TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY........................ $981,097,685 ============
See notes to consolidated balance sheet. B-3 MERRILL LYNCH INVESTMENT MANAGEMENT, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED BALANCE SHEET DECEMBER 31, 1993 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION Merrill Lynch Investment Management, Inc. and its subsidiaries (the "Company"), serve as investment adviser to certain registered investment companies, and provide investment advisory services for individuals and institutions. Merrill Lynch Investment Management, Inc., a wholly-owned subsidiary of Merrill Lynch Group, Inc., is an indirect wholly-owned subsidiary of Merrill Lynch & Co., Inc. ("ML&Co."). The Company's consolidated balance sheet reflects its 100 percent ownership of Merrill Lynch Funds Distributor, Inc., a distributor of shares of various affiliated managed registered investment companies, Fund Asset Management, Inc., an investment adviser to various registered investment companies and a lessor participant in leveraged lease agreements, Merrill Lynch International Asset Management, Ltd., a Channel Islands based investment adviser and Princeton Administrators, Inc., an administrator to certain non-affiliated investment companies, and its 60% ownership of Merrill Lynch International Capital Management Co., a Japan based investment advisor. CASH AND CASH EQUIVALENTS For purposes of the consolidated balance sheet, cash and cash equivalents include marketable securities with initial maturity dates of less than three months. The carrying amount approximates fair value because of the short maturity of those instruments. FIXED ASSETS Fixed assets recorded at cost and consist principally of furniture and equipment. Depreciation is calculated using the straight-line method over a period ranging from 3 to 10 years. DEFERRED INCOME--UNEARNED FEES Investment advisory services are billed at the beginning of the period for which services are to be rendered. The fee is deferred and credited to income on a pro rata basis over the period of the contract, which normally does not exceed one year. B-4 MERRILL LYNCH INVESTMENT MANAGEMENT, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED BALANCE SHEET--(CONTINUED) INCOME TAXES The results of operations of the Company are included in the consolidated Federal and combined state and local income tax returns filed by ML&Co. It is the policy of ML&Co. to allocate the tax associated with such operating results to each respective subsidiarymaster fund in a mannermaster/feeder structure, which approximates the separate company method. In 1992, ML&Co. adopted Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS 109") which requires an asset and liability method in recording income taxes on all transactions that have been recognized in the financial statements. SFAS 109 provides that deferred taxes be adjusted to reflect tax rates at which future tax liabilities or assets are expected to be settled or realized. The Company serves as an independent adviser for certain investment companies. In addition, the Company, through its 100% owned subsidiary, Princeton Administrators, Inc., serves as an administrator for certain non- affiliated investment companies. Management fees earned as adviser and administrator are based on a percentage of the net assets of each investment company. Such fees are recognized in the period earned. The Company maintains investments in certain of these investment companies. Such investments are carried at the lower of cost or market value. Market value is determined based upon quoted market prices. The Company has an arrangement with Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S"), an affiliate which provides that the Company, which receives revenue as investment adviser to certain investment companies (the "Funds"), reimburse MLPF&S for certain costs incurred in processing transactions involving shares of the Funds. In connection with the formation of certain affiliated investment companies (the "Investment Companies"), the Company has reimbursed MLPF&S for subscription expenses incurred in offering the Investment Companies' shares for sale. The unamortized balance included in prepaid expensescorporation holds securities and other assets totalled $5,276,842 as of December 31, 1993.for investment purposes (the "Master Fund")." SECOND: The Company has unsecured note agreements with ML&Co. for $700,000,000. These amounts bear interest at a floating rate approximating ML&Co's. average borrowing rate, of which $650,000,000 is payable on demand and $50,000,000 is due August 26, 1994. In addition, the Company has certain other amounts payable to affiliates. B-5 MERRILL LYNCH INVESTMENT MANAGEMENT, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED BALANCE SHEET--(CONTINUED) During 1992, the Company's investments in Merrill Lynch Interfunding, Inc. and Merlease Leasing Corp. were sold to an affiliate at book value. Receivable from affiliated companies-lease transactions represents the proceeds from this transaction. The Company has a 98 percent limited partnership interest in ML Plainsboro Limited Partnership ("MLP"), whose general partner is an affiliate. Profits and losses are allocated to the Company based on its percentage interest. The "Receivable from affiliated companies" arising from lease transactions is summarized as follows: Monies advanced to fund lease transactions................... $(103,476,954) Tax benefits allocated to the Company by ML&Co............... 88,699,254 Proceeds from sale of subsidiaries........................... 684,115,048 Other........................................................ 39,279,223 ------------- Total...................................................... $ 708,616,571 =============
ML&Co. is the holdercharter of the Company's excess cash, whichCorporation is available on demand to meet current liabilities. ML&Co. credits the Company for interest at a floating rate approximating ML&Co.'s average borrowing rate based on the Company's average daily balance due to/from ML&Co. INVESTMENTS IN LEASES The Company is a lessor participant in leveraged lease agreements. Pertinent information relating to the Company's investments in leveraged leases is summarized as follows:
ESTIMATED LENGTH OF RESIDUAL VALUE LEASE EQUITY OF LEASED TYPE OF PROPERTY (YEARS) INVESTMENT PROPERTY ---------------- --------- ---------- -------------- Generating plant......................... 24-25 34.06% 15.0%
Financing beyond the Company's equity interest in the purchase price of the properties was furnishedhereby further amended by outside parties in the form of long-term debt that provides for no recourse against the Company and is B-6 MERRILL LYNCH INVESTMENT MANAGEMENT, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED BALANCE SHEET--(CONTINUED) collateralized by a first lien on the properties and related rentals. At the end of the respective lease terms, ownership of the properties remains with the Company. The Company's net investment in leveraged leases is summarized as follows: Rentals receivable (net of principal and interest on nonre- course debt)............................................... $ 66,075,030 Estimated residual values of leased assets................... 18,964,143 Less: Unearned and deferred income............................... (26,617,505) Allowance for uncollectibles............................... (990,000) ------------ Investment in leveraged leases............................... 57,431,668 Less deferred taxes arising from leveraged leases............ (52,938,886) ------------ Net investment in leveraged leases........................... $ 4,492,782 ============
In 1993, one of the Company's subsidiaries sold its equity interest in a chemical tanker previously accounted for as a leverage lease. The sale resulted in an after-tax gain of $112,000. The Company's investment in the sales-type lease consisted ofadding the following elements at December 31, 1993: Minimum lease payments receivable................................ $3,672,000 Less: Unearned income................................................ (59,479) Allowance for uncollectibles................................... (250,000) ---------- Investment in sales-type financing leases........................ $3,362,521 ==========
At December 31, 1993, minimum lease payments receivable are $3,672,000 for 1994. For Federal income tax purposes,provision as Article III, Section (5), and renumbering Article III, Section (5) thereof as Article III, Section (6): "(5) To transfer all or substantially all the Company receives the investment tax credit and has the benefit of tax deductions for (i) depreciation on the entire amount of leased assets and (ii) interest on the outstanding long-term debt. For state and local tax purposes, the Company also receives the benefits of tax deductions from (i) and (ii) above. Since, during the early years of the leases, those deductions exceed the Company's B-7 MERRILL LYNCH INVESTMENT MANAGEMENT, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED BALANCE SHEET--(CONTINUED) lease rental income, substantial excess deductions are available to be applied against the Company's other income and the consolidated income of ML&Co. In the later years of these leases, rental income will exceed the related deductions and taxes will be payable (to the extent that net deductions arising from additional leveraged lease transactions do not offset such lease income). Deferred taxes have been provided to reflect these temporary differences. INCOME TAXES As part of the consolidated group, the Company transfers its current Federal and state tax liabilities to the Parent. At December 31, 1993, the Company had a current Federal tax receivable of $1,015,000 and current state tax payable of $2,900,000 to the Parent. PENSION PLAN The Company participates in the ML&Co. Comprehensive Retirement Program (the "Program"), consisting of the Retirement Accumulation Plan ("RAP") and the Employee Stock Ownership Plan (the "ESOP"). Both plans become effective January 1, 1989. Under the Program, cash contributions made by the Company and the ML&Co. stock held by the ESOP are allocated quarterly to participant's accounts. Allocations are based on years of service, age and eligible compensation. Actuarial data regarding the Company's Plan participants is not separately available. NAME CHANGE Effective December 28, 1991, the Company, through an amendment of its certificate of incorporation, changed its name to Merrill Lynch Investment Management, Inc., ("MLIM"). MLIM does business under the name "Merrill Lynch Asset Management". LITIGATION The Company is a party to certain lawsuits arising from the normal conduct of its business. While the ultimate result of the lawsuits against the Company cannot be predicted with certainty, management does not expect that these matters will have a material adverse effect on the Company's financial position or the results of its operations. B-8 MERRILL LYNCH INVESTMENT MANAGEMENT, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED BALANCE SHEET--(CONCLUDED) SUBSEQUENT EVENT Effective January 1, 1994, the Company contributed certain net investment advisory assets to Merrill Lynch Asset Management, L.P., a newly formed Delaware limited partnership, in exchange for a 99% limited partnership interest. The general partner, Princeton Services, Inc. (a wholly-owned subsidiary of Merrill Lynch & Co., Inc.) contributed 1% of the value of the net investment advisory assets in exchange for its 1% general partnership interest. The partnership's profits and losses are to be allocated in proportion to the capital contributions of the partners. B-9 EXHIBIT A FUND ASSET MANAGEMENT, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 1993 AND INDEPENDENT AUDITORS' REPORT B-10 INDEPENDENT AUDITORS' REPORT Fund Asset Management, Inc.: We have audited the accompanying consolidated balance sheet of Fund Asset Management, Inc. and subsidiary (the "Company") as of December 31, 1993. This balance sheet is the responsibility of the Company's management. Our responsibility is to express an opinion on the balance sheet based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the balance sheet is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the balance sheet. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall balance sheet presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, such consolidated balance sheet presents fairly, in all material respects, the financial position of the Company at December 31, 1993 in conformity with generally accepted accounting principles. Deloitte & Touche Parsippany, New Jersey February 28, 1994 B-11 FUND ASSET MANAGEMENT, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1993 ------------- ASSETS Cash............................................................. $ 996,680 Receivable from affiliated companies: Lease transactions............................................. 24,501,523 Sale of leased investment...................................... 48,312,532 Fund management fees receivable.................................. 28,927,938 Investments in leases: Leveraged leases............................................... 57,431,668 Sales-type lease............................................... 3,362,521 Investments in affiliated investment companies--(market: $19,731,088)................................................... 18,181,262 Investment in affiliated limited partnership..................... 31,109,264 ------------- TOTAL ASSETS..................................................... $212,823,388 ============= LIABILITIES AND STOCKHOLDER'S EQUITY LIABILITIES: Payable to Merrill Lynch & Co., Inc. and affiliates.............. $ 21,554,955 Deferred income taxes: Arising from leveraged leases.................................. 52,938,886 Arising from sales-type lease.................................. 1,351,622 Other.......................................................... 15,838,124 Other............................................................ 8,501 ------------- Total liabilities................................................ 91,692,088 ------------- STOCKHOLDERS EQUITY: Common stock, par value $1.00 per share--authorized 25,000 shares; outstanding 1,000 shares............................... 1,000 Additional paid-in capital....................................... 686,215,876 Retained earnings................................................ 119,029,472 Proceeds receivable from Merrill Lynch & Co., Inc. from sale of subsidiary..................................................... (684,115,048) ------------- Total stockholder's equity....................................... 121,131,300 ------------- TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY....................... $212,823,388 =============
See notes to consolidated balance sheet. B-12 FUND ASSET MANAGEMENT, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED BALANCE SHEET DECEMBER 31, 1993 ORGANIZATION Fund Asset Management, Inc. and subsidiary (the "Company"), a wholly-owned subsidiary of Merrill Lynch Investment Management, Inc. (the "Parent"), or "MLIM" which is an indirect wholly-owned subsidiary of Merrill Lynch & Co., Inc. ("ML&Co."), serves as an investment adviser to various registered open-end investment companies. The Company is also a lessor participant in certain leveraged and sales-type lease agreements. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Income Taxes--The results of the operations of the Company are included in the consolidated Federal and combined state and local income tax returns filed by ML&Co. It is the policy of ML&Co. to allocate the tax associated with such operating results to each respective subsidiary in a manner which approximates the separate company method. In 1992, ML&Co. adopted Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS 109") which requires an asset and liability method in recording income taxes on all transactions that have been recognized in the financial statements. SFAS 109 provides that deferred taxes be adjusted to reflect tax rates at which future tax liabilities or assets are expected to be settled or realized. TRANSACTIONS WITH AFFILIATES The Company serves as an investment adviser for certain affiliated investment companies. The Company maintains investments in certain of these investment companies. Such investments are carried at the lower of cost or market value. Market value is determined based upon quoted market prices. The Company has an arrangement with Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S") an affiliate which provides that the Company, which receives revenue as investment adviser to certain investment companies (the "Funds"), reimburse MLPF&S for certain costs incurred in processing transactions involving shares of the Funds. ML&Co. is the holder of the Company's excess cash, which is available on demand to meet current liabilities. ML&Co. credits the Company for interest, at a floating rate approximating ML&Co.'s average borrowing rate, based on the Company's average daily balances due to/from ML&Co. B-13 FUND ASSET MANAGEMENT, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED BALANCE SHEET--(CONTINUED) The "Receivable from affiliated companies" arising from lease transactions is summarized as follows: Monies advanced to fund lease transactions................... $(103,476,954) Tax benefits allocated to the Company by ML&Co............... 88,699,254 Other........................................................ 39,279,223 ------------- Total...................................................... $ 24,501,523 =============
The Company has a 49 percent limited partnership interest in ML Plainsboro Limited Partnership ("MLP") whose general partner is an affiliate. Profits and losses are allocated to the Company based on its percentage interest. During 1992, the Company sold its investment in Merrill Lynch Interfunding, Inc. and Merlease Leasing Corp. to an affiliate at book value, resulting in a receivable from ML&Co. This receivable is reflected as a reduction to stockholder's equity. INVESTMENTS IN LEASES The Company is a lessor participant in leveraged leases. Pertinent information relating to the Company's investments in leveraged leases is summarized as follows:
ESTIMATED LENGTH OF RESIDUAL VALUE LEASE EQUITY OF LEASED TYPE OF PROPERTY (YEARS) INVESTMENT PROPERTY ---------------- --------- ---------- -------------- Generating plant......................... 24-25 34.06% 15.0%
Financing beyond the Company's equity interest in the purchase price of the properties was furnished by outside parties in the form of long-term debt that provides for no recourse against the Company and is secured by a first lien on the properties and related rentals. At the end of the respective lease terms, ownership of the properties remains with the Company. B-14 FUND ASSET MANAGEMENT, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED BALANCE SHEET--(CONTINUED) The Company's net investment in leveraged leases is summarized as follows: Rentals receivable (net of principal and interest on nonre- course debt)................................................ $66,075,030 Estimated residual values of leased assets.................... 18,964,143 Less: Unearned and deferred income................................ (26,617,505) Allowance for uncollectibles................................ (990,000) ----------- Investment in leveraged leases................................ 57,431,668 Less deferred taxes arising from leveraged leases............. (52,938,886) ----------- Net investment in leveraged leases............................ $ 4,492,782 ===========
During 1993, the Company sold its equity interest in the chemical tanker previously accounted for as a leveraged lease. The sale resulted in an after- tax gain of $112,000. The Company's investment in the sales-type leases consisted of the following elements at December 31, 1993: Minimum lease payments receivable................................ $3,672,000 Less: Unearned income................................................ (59,479) Allowance for uncollectibles................................... (250,000) ---------- Investment in sales type financing leases........................ $3,362,521 ==========
At December 31, 1993 minimum lease payments receivable are $3,672,000 for 1994. For Federal income tax purposes, the Company receives the investment tax credit and has the benefit of tax deductions for (i) depreciation on the entire amount of leased assets and (ii) interest on the outstanding long-term debt. For state and local tax purposes, the Company also receives the benefits of tax deductions from (i) and (ii) above. Since, during the early years of the leases, those deductions exceed the Company's lease rental income, substantial excess deductions are available to be applied against the Company's other income and the consolidated income of ML&Co. In the later years of these leases, rental income will exceed the related deductions and taxes will be payable (to the extent that net B-15 FUND ASSET MANAGEMENT, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED BALANCE SHEET--(CONCLUDED) deductions arising from additional leveraged lease transactions do not offset such net lease income). Deferred taxes have been provided to reflect these temporary differences. INCOME TAXES As part of the consolidated group, the Company transfers its current Federal and state tax liabilities to MLIM. No such amounts were due to MLIM at December 31, 1993. PENSION PLAN The Company participates in the ML&Co. Comprehensive Retirement Program (the "Program") consisting of the Retirement Accumulation Plan ("RAP") and the Employee Stock Ownership Plan (the "ESOP"). Under the Program, cash contributions made by the Company and the ML&Co. stock held by the ESOP will be allocated quarterly to participants' accounts. Allocations will be based on years of service, age and eligible compensation. Actuarial data regarding the Company's Plan participants is not separately available. NAME CHANGE Effective December 28, 1991, the Company's Parent, through an amendment of its certificate of incorporation, changed its name to Merrill Lynch Investment Management, Inc. ("MLIM"). MLIM does business under the name "Merrill Lynch Asset Management". SUBSEQUENT EVENT Effective January 1, 1994, Fund Asset Management, Inc. contributed certain net investment advisory assets to Fund Asset Management, L.P., a newly formed Delaware limited partnership, in exchange for a 99% limited partnership interest. The general partner, Princeton Services, Inc. (a wholly-owned subsidiary of Merrill Lynch & Co., Inc.) contributed 1% of the value of the net investment advisory assets in exchange for its 1% general partnership interest. The partnership's profits and losses are to be allocated in proportion to the capital contributions of the partners. B-16 EXHIBIT C INVESTMENT RESTRICTIONS RELATING TO EACH FUND MERRILL LYNCH BALANCED FUND FOR INVESTMENT AND RETIREMENT ("BALANCED FUND") Fundamental Investment Restrictions The Balanced Fund may not: 1. Invest more than 5% of the total assets of any portfolio in the securities of any one issuer (except for government securities); or purchase more than 10% of the outstanding voting securities of any one company. 2. Pledge any of its assets, except that each portfolio may pledge securities having a market value of not more than 10% of its total assets in order to secure permitted borrowings from banks. Such borrowings may not exceed 10% of any such portfolio's assets. No such portfolio may make additional investments while outstanding borrowings are in excess of 5% of its assets. 3. Purchase a restricted security or a security for which there is no readily available market if as a result of such purchase more than 5% of the total assets of the portfolio making the purchase would be invested in such securities. 4. Invest more than 25% of the value of the total assets of any portfolio in the securities of issuers in any single industry. 5. Invest in companies for the purpose of exercising control of management. 6. Purchase or sell real estate. 7. Purchase or sell commodities or commodity contracts. 8. Purchase any securities on margin, except that any portfolio may obtain such short-term credit as may be necessary for the clearance of purchases and sales of portfolio securities. 9. Make short sales of securities or maintain a short position in any security. C-1 10. Lend money to other persons, except through the purchase of debt obligations and repurchase agreements consistent with the investment policies of the portfolio taking such action. 11. Lend securities of any portfolio in an amount exceeding 33 1/3% of the value of total assets of such portfolio, both taken at market value at the time any such loan is made. 12. Enter into a repurchase agreement maturing in more than seven days if, as a result, such repurchase agreement, together with restricted securities and securities for which there are no readily available markets, would constitute more than 10% of the value of the total assets of the portfolio entering into such agreement. 13. Underwrite securities of other issuers except insofar as the Balanced Fund or any portfolio thereof may technically be deemed an underwriter under the Securities Act of 1933, as amended, in selling portfolio securities. 14. Purchase securities of other open-end investment companies, except in connection with a merger, consolidation, reorganization or acquisition of assets. 15. Issue senior securities as defined in the Act, except that this restriction shall not be deemed to prohibit any portfolio from making permitted borrowings, lending its portfolio securities or entering into repurchase agreements. Non-Fundamental Investment Restrictions The Balanced Fund may not: a. Invest more than 5% ofCorporation (or the assets of any portfolio, taken at market value atseries thereof) to the timeMaster Fund, in exchange for shares of or beneficial interests in the Master Fund or for such other consideration as permitted by the General Laws of the investment, in companies having a record, together with predecessors,State of less than three years of continuous operation. b. Purchase or sell interests in oil, gas or other mineral exploration or development programs, except that any portfolio may invest in the securities of companies which invest in such interests or sponsor such programs. c. Invest in warrants if at the time of acquisition more than 2% of the value of the total assets of the portfolio making such acquisition, taken at market value, would be invested in warrants. (For purposes of this restriction, warrants acquired by a portfolio in units or attached to securities are deemed to have no value.) C-2 d. Invest in the securities of any issuer if, to the knowledge of the Balanced Fund, any officer or director of the Fund or its investment adviser owns more than 1/2 of 1% of the outstanding securities of such issuerMaryland and such officers and directors who own more than 1/2 of 1% own in the aggregate more than 5% of the outstanding securities of such issuer. e. Borrow money, except for temporary or emergency purposes, and in any case the Balanced Fund may not make borrowings in an aggregate amount in excess of 33 1/3% of its net assets. MERRILL LYNCH CALIFORNIA MUNICIPAL SERIES TRUST ("CALIFORNIA TRUST") Fundamental Investment Restrictions The following fundamental restrictions (the "California Trust Investment Restrictions") apply to the both series funds (each, the "Fund") of the Merrill Lynch California Trust, except as indicated below. Each Fund may not: 1. Purchase any securities other than securities referred to under "Investment Objective and Policies" in the Prospectus and the Statement of Additional Information and under "Description of Municipal Bonds and Temporary Investments" therein. 2. Invest more than 25% of its total assets (taken at market value at the time of each investment) in securities of issuers in any single industry provided that, for purposes of this restriction, the U.S. Government, U.S. Government Agencies, states, municipalities and their political subdivisions are not considered to be part of any industry. 3. Invest more than 10% of its total assets (taken at market value at the time of each investment) in industrial revenue bonds where the entity supplying the revenues from which the issue is to be paid, and the guarantor of the obligation, including predecessors, each have a record of less than three years of continuous business operation. 4. Make investments for the purpose of exercising control or management. 5. Purchase securities of other investment companies, except in connection with a merger, consolidation, acquisition or reorganization and provided further that the Fund may purchase securities of closed-end investment companies if immediately thereafter not more than (i) 3% of the total outstanding voting stock of such company is owned by the Fund, (ii) 5% of the Fund's total assets, taken at market value, would be invested in any one such company, or (iii) 10% of the Fund's total assets, taken at market value, would be invested in such securities. C-3 6. Purchase or sell real estate or real estate limited partnership interests (provided that such restriction shall not apply to securities secured by real estate or interests therein or issued by companies, other than such partnerships, which invest in real estate or interests therein), commodities or commodity contracts (except that the Fund may purchase and sell financial futures contracts), interests in oil, gas or other mineral leases or exploration or development programs. 7. Purchase any securities on margin, except for use of short-term credit necessary for clearance of purchases and sales of portfolio securities (the deposit or payment by the Fund of initial or variation margin in connection with financial futures contracts is not considered the purchase of a security on margin). 8. Make short sales of securities or maintain a short position or invest in put, call, straddle or spread options (this restriction does not apply to options on financial futures contracts). 9. Make loans to other persons, provided that the Fund may purchase a portion of an issue of tax-exempt securities (the acquisition of a portion of any issue of tax-exempt securities or bonds, debentures or other debt securities which are not publicly distributed is considered to be the making of a loan under the Investment Company Act of 1940, as amended)amended (all without the vote or consent of the stockholders of the Corporation), and all such actions, regardless of the frequency with which they are pursued, shall be deemed in furtherance of the ordinary, usual and customary business of the Corporation." THIRD: The charter of the Corporation is hereby further amended by deleting Article V, Section (4) in its entirety and inserting the following in lieu thereof: "(4) Unless otherwise expressly provided furtherin the charter of the Corporation, including those matters set forth in Article III, Sections (2), (4) and (5) hereof and including any Articles Supplementary creating any class or series of capital stock, on each matter submitted to a vote of stockholders, each holder of a share of capital stock of the Corporation shall be entitled to one vote for each share standing in such holder's name on the books of the Corporation, irrespective of the class or series thereof, and all shares of all classes and series shall vote together as a single class; provided, however, that investments(a) as to any matter with respect to which a separate vote of any class or series is required by the Investment Company Act of 1940, as amended, and in repurchase agreementseffect from time to time, or any rules, regulations or orders issued thereunder, or by the Maryland General Corporation Law, such requirement as to a separate vote by that class or series shall apply in lieu of a general vote of all classes and purchaseseries as described above, (b) in the event that the separate vote requirements referred to in (a) above apply with respect to one or more classes or series, then, subject to paragraph (c) below, the shares of all other classes and sale contractsseries not entitled to a separate class vote shall vote as a single class, (c) as to any matter which does not affect the interest of a particular class or series, such class or series shall not be entitled to any vote and only the holders of shares of the affected classes and series, if any, shall be entitled to vote and (d) the shares of capital stock of the Corporation shall have no voting rights in connection with the transfer of all or substantially all the assets of the Corporation (or the assets of any series thereof) to the Master Fund in exchange for shares of or beneficial interests in such Master Fund or for such other consideration as permitted by Maryland General Corporation Law and the Investment Company Act of 1940, as amended." FOURTH: The charter of the Corporation is hereby further amended by adding the following provision as Article VI, Section (7): "(7) Notwithstanding any other provision of these Articles of Incorporation or the By-Laws of the Corporation, or the General Laws of the State of Maryland, the transfer of all or substantially all of the assets of the Corporation (or the assets of any series thereof) to the Master Fund shall be deemed to be in the makingordinary course of a loan. 10. Borrow amountsbusiness of the Corporation, and the Board of Directors of the Corporation is vested with the sole power, to the exclusion of the stockholders, upon the affirmative vote of the majority of the entire Board of Directors, to transfer all or substantially all the assets of the Corporation (or the assets of any series thereof) to the Master Fund in excessexchange for shares of 20% of its total assets, taken at market value (including the amount borrowed), and then only from banksor beneficial interests in such Master Fund or for such other consideration as a temporary measure for extraordinary or emergency purposes. [Usually only "leveraged" investment companies may borrow in excess of 5% of their assets; however, the Fund will not borrow to increase income but only to meet redemption requests which might otherwise require untimely disposition of portfolio securities. The Fund will not purchase securities while borrowings are outstanding. Interest paid on such borrowings will reduce net income.] 11. Mortgage, pledge, hypothecate or in any manner transfer as security for indebtedness any securities owned or heldpermitted by the General Laws of the State of Maryland and the Investment Company Act of 1940, as amended." FIFTH: These Articles of Amendment have been advised by a majority of the entire Board of Directors of the Corporation and approved by a majority of the votes entitled to be cast by holders of the capital stock of the Corporation. SIXTH: The authorized capital stock of the Corporation has not been increased by these Articles of Amendment. SEVENTH: Except as amended hereby, the Corporation's charter shall remain in full force and effect. IN WITNESS WHEREOF, MERRILL LYNCH WORLD INCOME FUND, INC. has caused these Articles of Amendment to be signed in its name and on its behalf by its Vice President and attested by its Secretary on the day of , 200__. Merrill Lynch World Income Fund, exceptInc. By:______________________________________ Vice President Attest: - ------------------------- Secretary THE UNDERSIGNED, Vice President of Merrill Lynch World Income Fund, Inc., who executed on behalf of said Corporation the foregoing Articles of Amendment, of which this certificate is made a part, hereby acknowledges, in the name and on behalf of said Corporation, the foregoing Articles of Amendment to be the corporate act of said Corporation and further certifies that, to the best of his knowledge, information and belief, the matters and facts set forth therein with respect to the authorization and approval thereof are true in all material respects, and that this statement is made under the penalties for perjury. -------------------------------------- Vice President OPEN-END FUNDS MASSACHUSETTS BUSINESS TRUSTS [Name of Fund] CERTIFICATION OF AMENDMENT TO DECLARATION OF TRUST The undersigned, constituting at least a majority of the Trustees of [Name of Fund] (the "Trust"), a business trust organized under the laws of Massachusetts, pursuant to the Declaration of Trust of the Trust dated the day of , , as mayamended (the "Declaration"), do hereby certify that the Trustees of the Trust have duly adopted the following amendment, as approved by the holders of at least [two-thirds] [a majority] of the outstanding shares of the Trust, to the Declaration: VOTED: That Section 3.2 of Article III of the Declaration be, necessaryand it hereby is amended so that, as amended, it shall read as follows: 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, connection with borrowings mentionedreinvest in, (10) above, and then such mortgaging, pledgingpurchase or hypothecating may not exceed 10%otherwise acquire, hold, pledge, sell, assign, transfer, exchange, distribute or otherwise deal in or dispose of its total assets, taken at market value,negotiable or except as may be necessary in connection with transactions in financial futures contracts. 12. Invest in securities which cannot be readily resold becausenonnegotiable instruments, obligations, evidences of legalindebtedness, certificates of deposit or contractual restrictions or which are not readily marketable, or in individually negotiated loans that constitute illiquid investments and C-4 illiquid lease obligations, or inindebtedness, commercial paper, repurchase agreements, reverse repurchase agreements, options, futures contracts, options on futures contracts and other investments, including, without limitation, those issued, guaranteed or purchasesponsored by any state, territory or possession of the United States and sale contracts maturing in more than seven days, if, regarding all such securities, more than 15%the District of its net assets (taken at market value), would be invested in such securities. 13. Act as an underwriter of securities, except to the extent that the Fund may technically be deemed an underwriter when engaged in the activities described in (12) aboveColumbia and their political subdivisions, agencies and instrumentalities, or insofar as the Fund may be deemed an underwriter under the Securities Act of 1933, as amended, in selling portfolio securities. MERRILL LYNCH CALIFORNIA MUNICIPAL BOND FUND ("CALIFORNIA FUND") The above California Trust Investment Restrictions apply to the California Fund except for restrictions (2), (3) and (5). For the California Fund, investment restrictions (2), (3) and (5) are as follows: 2. Invest more than 5% of its total assets (taken at market value at the time of each investment) in the securities of any one issuer, except that such restriction shall not apply to securities backed by the United States Government or its agencies or instrumentalities. [For purposes of this restriction,instrumentalities, or international instrumentalities, or by any bank, savings institution, corporation or other business entity organized under the California Trust will regard each state and each political subdivision, agency or instrumentality of such state and each multi-state agency of which such state is a member and each public authority which issues securities on behalf of a private entity as a separate issuer, except that if the security is backed only by the assets and revenues of a non-government entity, then the entity with the ultimate responsibility for the payment of interest and principal may be regarded as the sole issuer.] 3. Invest more than 5% of its total assets (taken at market value at the time of each investment) in industrial revenue bonds where the entity supplying the revenues from which the issue is to be paid, and the guarantor of the obligation, including predecessors, each have a record of less than three years of continuous business operation. 5. Purchase securities of other investment companies, except in connection with a merger, consolidation, acquisition or reorganization. MERRILL LYNCH GLOBAL CONVERTIBLE FUND, INC. ("GLOBAL CONVERTIBLE FUND") Fundamental Investment Restrictions The Global Convertible Fund may not: 1. (a) Invest in the securities of any one issuer if, immediately after and as a result of such investment, the value of the holdings of the Global C-5 Convertible Fund in the securities of such issuer exceeds 5% of the Global Convertible Fund's total assets, taken at market value, except that such restriction shall not apply to securities issued or guaranteed by the Governmentlaws 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 its agencies or instrumentalities or, withsaid rights, powers and privileges in respect to 25% of the Global Convertible Fund's total assets, to securities issued or guaranteed by the government of any country which is a member of said instruments; and the Organization for Economic Cooperation and Development or any such countries' agencies or instrumentalities or supranational institutions or organizations. (b) Invest in the securities of any single issuer if, immediately after and as a result of such investment, the Global Convertible Fund owns more than 10% of the outstanding voting securities of such issuer. Nothing in the foregoing investment restrictionsTrustees shall be deemed to prohibithave the Global Convertible Fund from purchasing theforegoing powers with respect to any additional securities of any issuer pursuant to the exercise of subscription rights distributed to the Global Convertible Fund by the issuer, except that no such purchase may be made if as a result the Fund will no longer be a diversified investment company as defined in the Investment Company Act of 1940, as amended, or fail to meet the diversification requirementswhich [the Trust] [any Series of the Internal Revenue Code of 1986, as amended. 2. 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. 3. Make investments for the purpose of exercising control or management. 4. Purchase securities of other investment companies, except in connection with a merger, consolidation, acquisition or reorganization, or by purchase in the open market of securities of closed-end investment companies where no underwriter or dealer's commission or profit, other than customary broker's commission, is involved and only if immediately thereafter not more than (i) 3% of the total outstanding voting stock of such company is owned by the Global Convertible Fund, (ii) 5% of the Global Convertible Fund's total assets, taken at market value, would be invested in any one such company, or (iii) 10% of the Global Convertible Fund's total assets, taken at market value, would be invested in such securities. 5. Purchase or sell real estate; provided that the Global Convertible FundTrust] may invest in securities secured by real estate or interests therein or issued by companies which invest in real estate or interests therein. C-6 6. Purchase any securities on margin, except thatshould the Global Convertible Fund may obtain such short-term credit as may be necessary for the clearance of purchases and sales of portfolio securities. (The deposit or payment by the Global Convertible Fund of initial or variation margin in connection with futures or related options transactions is not considered the purchase of a security on margin.) 7. Make short sales of securities or maintain a short position. 8. Make loans to other persons (except as provided in (9) below); provided, that for purposes of this restriction an investment in repurchase agreements and purchase and sale contracts shall not be deemed to be the making of a loan. 9. Lend its portfolio securities in excess of 33 1/3% of its total assets, taken at market value; provided that such loan shall be made in accordance with the guidelinespolicies set forth in the Prospectus or the Fundamental Policies be amended. (c) 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. (d) Notwithstanding any other provision of this Declaration to the contrary, the Trustees shall have the power in their discretion without any requirement of approval by Shareholders to either invest all or a portion of the Trust Property in, sell all or a portion of the Trust Property and invest the Statementproceeds of Additional Information. 10. Issue senior securities, borrow moneysuch sales in, or pledge its assets in excesstransfer all or a portion of 20% of its total assets taken at market value (including the amount borrowed) and then only from a bank as a temporary measure for extraordinaryTrust Property to one or emergency purposes including to meet redemptions or to settle securities transactions. Usually only "leveraged"more investment companies may borrow in excess of 5% of their assets; however,to the Global Convertible Fund willextent not borrow to increase income but only to meet redemption requests or to settle securities transactions which may otherwise require untimely dispositions of Fund securities. The Global Convertible Fund will not purchase securities while borrowings are outstanding except (a) to honor prior commitments or (b) to exercise subscription rights where outstanding borrowings have been obtained exclusively for settlements of other securities transactions. The purchase of securities while borrowings are outstanding will have the effect of leveraging the Global Convertible Fund. Such leveraging increases the Global Convertible Fund's exposure to capital risk and borrowed funds are subject to interest costs which will reduce net income. (See restriction (11) below regarding the exclusion from this restriction of arrangements with respect to options, futures contracts and options on futures contracts). 11. Mortgage, pledge, hypothecate or in any manner transfer for indebtedness any securities owned by or heldprohibited by the Global Convertible Fund except1940 Act and any exemptive orders granted under the 1940 Act. INWITNESS WHEREOF, the undersigned have executed this Amendment this day of , 2000. - -------------------------- --------------------------- [Name] [Name] - -------------------------- --------------------------- [Name] [Name] - -------------------------- --------------------------- [Name] [Name] - -------------------------- --------------------------- [Name] [Name] The Declaration, a copy of which is on file in the office of the Secretary of the Commonwealth of Massachusetts, provides that the name "[Name of Fund]" refers to the Trustees under the Declaration collectively as maytrustees, but not as individuals or personally; and no Trustee, shareholder, officer, employee or agent of the Trust shall be necessaryheld 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 borrowings mentioned in (10) above, and then such mortgaging, pledging or hypothecating may not exceed 10% of its total assets, taken at market value. (For the purpose of this restriction and restriction (10) above, collateral arrangements with C-7 respect to the writing of options, futures contracts, options on 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 and sale of options, futures or related options are deemed to be the issuance of a senior security). 12. Invest in securities which cannot be readily 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 10% of its net assets, taken at market value, would be invested in such securities. 13. Act as an underwriter of securities, except to the extent that the Global Convertible Fund may technically be deemed an underwriter when investing in repurchase agreements and purchase and sale contracts or insofar as the Global Convertible Fund may be deemed an underwriter under the Securities Act of 1933, as amended, in selling portfolio securities. 14. Purchase or sell interests in oil, gas or other mineral exploration or development programs except that the Global Convertible Fund may invest in securities issued by companies that engage in oil, gas or other mineral exploration or development activities. Non-Fundamental Investment Restrictions The Global Convertible Fund may not: a. Invest in warrants except for the purpose of creating a synthetic convertible security if at the time of acquisition its investments in warrants, excluding those purchased for the purpose of creating a synthetic convertible security, valued at the lower of cost or market value, would exceed 5%affairs of the Global Convertible Fund's net assets; included within such limitation,Trust but not to exceed 2% of the Global Convertible Fund's net assets, are warrants which are not listed on the New York or American Stock Exchange. For purposes of this restriction, warrants acquired by the Global Convertible Fund in units or attached to securities mayTrust Property only shall be deemed to be without value. b. Purchase or sell commodities or commodity contracts, except that the Global Convertible Fund may deal in forward foreign exchange between currencies of the different countries in which it may invest and purchase and sell currency options, stock index futures, financial futures and currency futures contracts and related options on such futures. c. Invest in securities of companies having a record, together with predecessors, of less than three years of continuous operations, if more than 5% of its total assets would be invested in such securities. C-8 d. Write, purchase or sell puts, calls, straddles, spreads or combinations thereof, except to the extent described in the Global Convertible Fund's Prospectus and in the Statement of Additional Information, as amended from time to time. e. Purchase or retain the securities of any issuer, if those individual Directors, officers and directors of the Global Convertible Fund, the Manager or any subsidiary thereof each owning beneficially more than 1/2 of 1% of the securities of such issuer owns in the aggregate more than 5% of the securities of such issuer. f. Purchase or sell OTC options and the securities underlying such options if, as a result of such transactions, such options, together with all other illiquid securities or securities which are not readily marketable, exceed 10% of the net assets of the Global Convertible Fund, taken at market value, except that with respect to OTC options sold by the Global Convertible Fund to primary U.S. Government securities dealers who agree that the Global Convertible Fund may repurchase such options at a predetermined price (which may be based upon a formula), the Global Convertible Fund will treat as illiquid an amount equal to the repurchase price less the amount by which the option is in-the-money. The Global Convertible Fund will not change or modify the policy described in clause (f) above prior to the change or modification by the Commission staff of its position regarding OTC options. In addition, the Global Convertible Fund has undertaken with a State Securities Commission that it will not invest in real estate limited partnerships or in oil, gas or other mineral leases. Portfolio securities of the Global Convertible Fund generally may not be purchased from, sold or loaned to the Manager or its affiliates or any of their directors, officers or employees, acting as principal. With respect to investment restriction (12) above, while the Global Convertible Fund will not purchase illiquid securities in an amount exceeding 10% of its net assets, the Global Convertible Fund may purchase, without regard to that limitation, securities that are not registered under the Securities Act of 1933, as amended, but that can be offered and sold to "qualified institutional buyers" under Rule 144A under the Securities Act of 1933, as amended, provided that the Global Convertible Fund's Board of Directors continuously determines, based on the trading markets for the specific Rule 144A security, that it is liquid. The Board of Directors may adopt guidelines regarding such securities which may be held by the Global Convertible Fund and delegate to the Manager the daily function of determining and monitoring liquidity of such securities. The Board of Directors, however, will retain oversight and is ultimately responsible for the determinations. C-9liable. MERRILL LYNCH GROWTH FUND FOR INVESTMENT AND RETIREMENT ("GROWTH FUND") Fundamental Investment Restrictions The Growth Fund may not: 1. Invest more than 5% of its total assets (takenMANAGERS Sign, Date, and Return the Proxy Card 4800 DEER LAKE DRIVE EAST Promptly Using the Enclosed Envelope JACKSONVILLE, FLORIDA 32246-6484 To vote by Telephone 1) Read the Proxy Statement and have the proxy card below at market value athand. 2) Call 1-800-___-____. 3) Enter the time of each investment) in the securities of any one issuer, except that such restriction shall not apply to securities backed by the United States Government or its agencies or instrumentalities. 2. Invest in the securities of any single issuer if, immediately after and as a result of such investment, the Growth Fund owns more than 10% of the outstanding voting securities of such issuer. 3. 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. 4. Make investments for the purpose of exercising12-digit control or management. 5. Purchase securities of other investment companies, except in connection with a merger, consolidation, acquisition or reorganization, or by purchase in the open market of securities of closed-end investment companies where no underwriter or dealer's commission or profit, other than customary broker's commission, is involved and only if immediately thereafter not more than 10% of the Growth Fund's total assets, taken at market value, would be invested in such securities. 6. Purchase or sell real estate (including real estate limited partnerships); provided that the Growth Fund may invest in securities secured by real estate or interests therein or issued by companies which invest in real estate or interests therein. 7. Purchase any securities on margin, except that the Growth Fund may obtain such short-term credit as may be necessary for the clearance of purchases and sales of portfolio securities. (The deposit or payment by the Growth Fund of initial or variation margin in connection with futures or related options transactions, if applicable, is not considered the purchase of a security on margin.) 8. Make short sales of securities or maintain a short position. 9. Make loans to other persons (except as provided in (10) below); provided that for purposes of this restriction an investment in repurchase agreements shall not be deemed to be the making of a loan. C-10 10. Lend its portfolio securities in excess of 33 1/3% of its total assets, taken at market value; provided that such loans shall be made in accordance with the guidelinesnumber set forth in the Prospectus. 11. Issue senior securities, borrow money or pledge its assets in excess of 20% of its total assets taken at value (including the amount borrowed) and then only from a bank as a temporary measure for extraordinary or emergency purposes. Usually only "leveraged" investment companies may borrow in excess of 5% of their assets; however, the Growth Fund will not borrow to increase income but only to meet redemption requests which may otherwise require untimely dispositions of fund securities. The Growth Fund will not purchase securities while borrowings are outstanding except to honor prior commitments and to exercise subscription rights. Interest paid on such borrowings will reduce net income. (See restriction (12) below regarding the exclusion from this restriction of arrangements with respect to options, futures contracts and options on futures contracts.) 12. Mortgage, pledge, hypothecate or in any manner transfer as security for indebtedness any securities owned or held by the Growth Fund except as may be necessary in connection with borrowings mentioned in (11) above, and then such mortgaging, pledging or hypothecating may not exceed 10% of its total assets, taken at market value. (For the purpose of this restriction and restriction (11) above, collateral arrangements with respect to the writing of options, futures contracts, options on 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 and sale of options, futures or related options are deemed to be the issuance of a senior security.) 13. Invest in securities which cannot be readily resold because of legal or contractual restrictions or which are not otherwise readily marketable, including repurchase agreements maturing in more than seven days, if, regarding all such securities, more than 10% of its total assets, taken at market value, would be invested in such securities. 14. Act as an underwriter of securities, except to the extent that the Growth Fund may technically be deemed an underwriter when investing in repurchase agreements or insofar as the Growth Fund may be deemed an underwriter under the Securities Act of 1933, as amended, in selling portfolio securities. 15. Purchase or sell interests in oil, gas or other mineral exploration or development programs except that the Growth Fund may invest in securities issued by companies that engage in oil, gas or other mineral exploration development activities. C-11 With respect to investment restriction (f) above, while the Growth Fund will not purchase illiquid securities in an amount exceeding 10% of its net assets, the Growth Fund may purchase, without regard to that limitation, and to the extent permitted by applicable state law, securities that are not registered under the Securities Act of 1933, as amended, but that can be offered and sold to "qualified institutional buyers" under Rule 144A under the Securities Act of 1933, as amended, provided that the Growth Fund's Board of Trustees continuously determines, based on the trading markets forproxy card and follow the specific Rule 144A security, that it is liquid. The Board of Trustees may adopt guidelines regarding such securities which may be heldsimple instructions. To vote by Internet 1) Read the Growth FundProxy Statement and delegatehave the proxy card below at hand. 2) Go to Website www.proxyvote.com. 3) Enter the Manager12-digit control number set forth on the daily function of determiningproxy card and monitoring liquidity of such securities. The Board of Trustees, however, will retain oversight and is ultimately responsible forfollow the determinations. Non-Fundamental Investment Restrictions The Growth Fund may not: a. Invest in warrants if at the time of acquisition more than 2% of its total assets, taken at market value, would be invested in warrants. For purposes of this restriction, warrants acquired by the Growth Fund in units or attached to securities may be deemed to be without value. b. Purchase or sell commodities or commodity contracts, except that the Growth Fund may deal in forward foreign exchange between currencies of the different countries in which it may invest and purchase and sell stock index and currency options, stock index futures, financial futures and currency futures contracts and related options on such futures. c. Invest in securities or companies having a record, together with predecessors, of less than three years of continuous operation, if more than 5% of its total assets would be invested in such securities. d. Write, purchase, or sell puts, calls, straddles, spreads or combinations thereof, to the extent described in the Growth Fund's Prospectus and Statement of Additional Information, as amended from time to time. e. Purchase or retain the securities of any issuer, if those individual Trustees, officers and directors of the Growth Fund, the Manager or any subsidiary thereof each owning beneficially more than 1/2 of 1% of the securities of such issuer own in the aggregate more than 5% of the securities of such issuer. f. Purchase or sell OTC options and securities underlying such options if, as a result of such a transaction, such options, together with all other illiquid securities or securities which are not readily marketable, exceed 10% of the net assets of the Growth Fund, taken at market value. C-12simple instructions. The Growth Fund will not change or modify the policy described in clause (f) above prior to the change or modification by the Securities and Exchange Commission staff of its position regarding OTC options. MERRILL LYNCH MULTI-STATE LIMITED MATURITY MUNICIPAL SERIES TRUST ("LIMITED MATURITY TRUST") Fundamental Investment Restrictions The following fundamental restrictions apply to each series fund (each, the "Fund") of the Limited Maturity Trust. Each Fund may not: 1. Purchase any securities other than securities referred to under "Investment Objective and Policies" in the Prospectus and the Statement of Additional Information. 2. 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 (other than U.S. Government securities or Government agency securities, Municipal Bonds and Non-Municipal Tax-exempt Securities). 3. Invest more than 10% of its total assets (taken at market value at the time of each investment) in revenue bonds where the entity supplying the revenues from which the issue is to be paid, and the guarantor of the obligation, including predecessors, each have a record of less than three years of continuous business operation. 4. Make investments for the purpose of exercising control or management. 5. Purchase securities of other investment companies, except in connection with a merger, consolidation, acquisition or reorganization. 6. Purchase or sell real estate (including limited partnership interests, but provided that such restriction shall not apply to readily marketable securities secured by real estate or interests therein or issued by companies which invest in real estate or interest therein), commodities or commodity contracts (except that each Fund may purchase and sell financial futures contracts), interests in oil, gas or other mineral exploration or development programs or leases. 7. Purchase any securities on margin, except for use of short-term credit necessary for clearance of purchases and sales of portfolio securities (the deposit or payment by the Fund of initial or variation margin in connection with financial futures contracts is not considered the purchase of a security on margin). C-13 8. Make short sales of securities or maintain a short position or invest in put, call, straddle or spread options (this restriction does not apply to options on financial futures contracts). 9. Make loans to other persons, provided that each Fund may purchase a portion of an issue of tax-exempt securities (the acquisition of a portion of an issue of tax-exempt securities or bonds, debentures or other debt securities which are not publicly distributed is considered to be the making of a loan under the Investment Company Act of 1940, as amended), and provided further that investments in repurchase agreements and purchase and sale contracts shall not be deemed to be the making of a loan. 10. Borrow amounts in excess of 20% of its total assets, taken at market value (including the amount borrowed), and then only from banks as a temporary measure for extraordinary or emergency purposes. [Usually only "leveraged" investment companies may borrow in excess of 5% of their assets; however, each Fund will not borrow to increase income but only to meet redemption requests which might otherwise require untimely disposition of portfolio securities. Each Fund will not purchase securities while borrowings are outstanding. Interest paid on such borrowings will reduce net income]. 11. Mortgage, pledge, hypothecate or in any manner transfer as security for indebtedness any securities owned or held by the Fund except as may be necessary in connection with borrowings mentioned in (10) above, and then such mortgaging, pledging or hypothecating may not exceed 10% of its total assets, taken at market value, or except as may be necessary in connection with transactions in financial futures contracts. 12. Invest in securities which cannot be readily resold because of legal or contractual restrictions or which are not readily marketable, including individually negotiated loans that constitute illiquid investments and illiquid lease obligations, or in repurchase agreements or purchase and sale contracts maturing in more than seven days, if regarding all such securities, more than 15% of its net assets (taken at market value), would be invested in such securities. 13. Act as an underwriter of securities, except to the extent that such Fund may technically be deemed an underwriter when engaged in the activities described in (12) above or insofar as such Fund may be deemed an underwriter under the Securities Act of 1933, as amended, in selling portfolio securities. C-14 MERRILL LYNCH MULTI-STATE MUNICIPAL SERIES TRUST ("MUNICIPAL SERIES TRUST") Fundamental Investment Restrictions The following fundamental restrictions (the "Municipal Series Trust Investment Restrictions") apply to each series fund (each, the "Fund") of the Municipal Series Trust, except as indicated below. Each Fund may not: 1. Purchase any securities other than securities referred to under "Investment Objective and Policies" in the Prospectus and the Statement of Additional Information. 2. 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 (other than U.S. Government securities or Government agency securities, Municipal Bonds and Non-Municipal Tax-exempt Securities). 3. Invest more than 10% of its total assets (taken at market value at the time of each investment) in industrial revenue bonds where the entity supplying the revenues from which the issue is to be paid, and the guarantor of the obligation, including predecessors, each have a record of less than three years of continuous business operation. 4. Make investments for the purpose of exercising control or management. 5. Purchase securities of other investment companies, except in connection with a merger, consolidation, acquisition or reorganization, and provided further that each Fund may purchase securities of closed-end investment companies if immediately thereafter not more than (i) 3% of the total outstanding voting stock of such company is owned by such Fund, (ii) 5% of such Fund's total assets, taken at market value, would be invested in any one such company, or (iii) 10% of such Fund's total assets, taken at market value, would be invested in such securities. 6. Purchase or sell real estate (including limited partnership interests, but provided that such restriction shall not apply to readily marketable securities secured by real estate or interests therein or issued by companies which invest in real estate or interest therein), commodities or commodity contracts (except that each Fund may purchase and sell financial futures contracts), interests in oil, gas or other mineral exploration or development programs or leases. 7. Purchase any securities on margin, except for use of short-term credit necessary for clearance of purchases and sales of portfolio securities (the deposit or payment by each Fund of initial or variation margin in connection with financial futures contracts is not considered the purchase of a security on margin). C-15 8. Make short sales of securities or maintain a short position or invest in put, call, straddle or spread options (this restriction does not apply to options on financial futures contracts). 9. Make loans to other persons, provided that each Fund may purchase a portion of an issue of tax-exempt securities (the acquisition of a portion of an issue of tax-exempt securities or bonds, debentures or other debt securities which are not publicly distributed is considered to be the making of a loan under the Investment Company Act of 1940, as amended), and provided further that investments in repurchase agreements and purchase and sale contracts shall not be deemed to be the making of a loan. 10. Borrow amounts in excess of 20% of its total assets, taken at market value (including the amount borrowed), and then only from banks as a temporary measure for extraordinary or emergency purposes. [Usually only "leveraged" investment companies may borrow in excess of 5% of their assets; however, each Fund will not borrow to increase income but only to meet redemption requests which might otherwise require untimely disposition of portfolio securities. Each Fund will not purchase securities while borrowings are outstanding. Interest paid on such borrowings will reduce net income]. 11. Mortgage, pledge, hypothecate or in any manner transfer as security for indebtedness any securities owned or held by each Fund except as may be necessary in connection with borrowings mentioned in (10) above, and then such mortgaging, pledging or hypothecating may not exceed 10% of its total assets, taken at market value, or except as may be necessary in connection with transactions in financial futures contracts. 12. Invest in securities which cannot be readily resold because of legal or contractual restrictions or which are not readily marketable, including individually negotiated loans that constitute illiquid investments and illiquid lease obligations, or in repurchase agreements or purchase and sale contracts maturing in more than seven days, if regarding all such securities, more than 15% of its net assets (taken at market value), would be invested in such securities. 13. Act as an underwriter of securities, except to the extent that such Fund may technically be deemed an underwriter when engaged in the activities described in (12) above or insofar as such Fund may be deemed an underwriter under the Securities Act of 1933, as amended, in selling portfolio securities. C-16 MERRILL LYNCH ARIZONA MUNICIPAL BOND FUND ("ARIZONA FUND") The Municipal Series Trust Investment Restrictions apply to the Arizona Fund except for restrictions (2), (3), (6) and (12). For the Arizona Fund, investment restrictions (2), (3), (6) and (12) are as follows: 2. 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 (other than U.S. Government securities or Government agency securities or Municipal Bonds). 3. Invest more than 5% of its total assets (taken at market value at the time of each investment) in industrial revenue bonds where the entity supplying the revenues from which the issue is to be paid, including predecessors, each have a record of less than three years of continuous business operation. 6. Purchase or sell real estate (provided that such restriction shall not apply to securities secured by real estate or interests therein or issued by companies which invest in real estate or interest therein), commodities or commodity contracts (except that the Arizona Fund may purchase and sell financial futures contracts), or interests or leases in oil, gas or other mineral exploration or development programs. 12. Invest in securities with legal or contractual restrictions on resale or for which no readily available market exists, including repurchase agreements and purchase and sale contracts maturing in more than seven days, if regarding all such securities, more than 10% of its net assets (taken at market value), would be invested in such securities. In addition, the Arizona Fund may not, with respect to 75% of its total assets, invest in the securities of any one issuer if, immediately after and as a result of such investment, the value of the holdings of the Arizona Fund in the securities of such issuer exceeds 5% of the Arizona Fund's total assets, taken at market value, except that such restriction shall not apply to securities issued or guaranteed by the U.S. Government or any of its agencies or instrumentalities. [For purposes of this restriction, the Arizona Fund will regard each state and each political subdivision, agency or instrumentality of such state and each multi-state agency of which such state is a member and each public authority which issues securities on behalf of a private entity as a separate issuer, except that if the security is backed only by the assets and revenues of a non-government entity, then the entity with the ultimate responsibility for the payment of interest and principal may be regarded as the sole issuer.] C-17 MERRILL LYNCH FLORIDA MUNICIPAL BOND FUND ("FLORIDA FUND") The Municipal Series Trust Investment Restrictions apply to the Florida Fund except for restrictions (2), (3) and (12). For the Florida Fund, investment restrictions (2), (3) and (12) are as follows: 2. 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 (other than U.S. Government securities or Government agency securities or Municipal Bonds). 3. Invest more than 5% of its total assets (taken at market value at the time of each investment) in industrial revenue bonds where the entity supplying the revenues from which the issue is to be paid, and the guarantor of the obligation, including predecessors, each have a record of less than three years of continuous business operation. 12. Invest in securities which cannot be readily resold because of legal or contractual restrictions or which are not readily marketable, including individually negotiated loans that constitute illiquid investments and illiquid lease obligations, or in repurchase agreements or purchase and sale contracts maturing in more than seven days, if, regarding all such securities, more than 10% of its net assets (taken at market value), would be invested in such securities. MERRILL LYNCH MASSACHUSETTS MUNICIPAL BOND FUND ("MASSACHUSETTS FUND") The Municipal Series Trust Investment Restrictions apply to the Massachusetts Fund except for restriction (12). For the Massachusetts Fund, investment restriction (12) is as follows: 12. Invest in securities which cannot be readily resold because of legal or contractual restrictions or which are not readily marketable, including individually negotiated loans that constitute illiquid investments and illiquid lease obligations, or in repurchase agreements or purchase and sale contracts maturing in more than seven days, if regarding all such securities, more than 10% of its net assets (taken at market value), would be invested in such securities. MERRILL LYNCH MICHIGAN MUNICIPAL BOND FUND ("MICHIGAN FUND") MERRILL LYNCH OREGON MUNICIPAL BOND FUND ("OREGON FUND") The Municipal Series Trust Investment Restrictions apply to each of the Michigan Fund and the Oregon Fund except for restriction (6). For each of the Michigan Fund and the Oregon Fund, investment restriction (6) is as follows: C-18 6. Purchase or sell real estate (provided that such restriction shall not apply to securities secured by real estate or interests therein or issued by companies which invest in real estate or interests therein), commodities or commodity contracts (except that each of the Michigan Fund and the Oregon Fund may purchase and sell financial futures contracts), interests in oil, gas or other mineral exploration or development programs. MERRILL LYNCH MINNESOTA MUNICIPAL BOND FUND ("MINNESOTA FUND") The Municipal Series Trust Investment Restrictions apply to the Minnesota Fund except for restrictions (3) and (12). For the Minnesota Fund, investment restrictions (3) and (12) are as follows: 3. Invest more than 5% of its total assets (taken at market value at the time of each investment) in industrial revenue bonds where the entity supplying the revenues from which the issue is to be paid, including predecessors, each have a record of less than three years of continuous business operation. 12. Invest in securities which cannot be readily resold because of legal or contractual restrictions or which are not readily marketable, including individually negotiated loans that constitute illiquid investments and illiquid lease obligations, or in repurchase agreements or purchase and sale contracts maturing in more than seven days, if regarding all such securities, more than 10% of its net assets (taken at market value), would be invested in such securities. MERRILL LYNCH NEW JERSEY MUNICIPAL BOND FUND ("NEW JERSEY FUND") The Municipal Series Trust Investment Restrictions apply to the New Jersey Fund except for restrictions (2), (3), (6) and (12). For the New Jersey Fund, investment restrictions (2), (3), (6) and (12) are as follows: 2. 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 (other than U.S. Government securities or Government agency securities, Municipal Bonds or New Jersey Municipal Obligations). 3. Invest more than 5% of its total assets (taken at market value at the time of each investment) in industrial revenue bonds where the entity supplying the revenues from which the issue is to be paid, including predecessors, each have a record of less than three years of continuous business operation. 6. Purchase or sell real estate (provided that such restriction shall not apply to securities secured by real estate or interests therein or issued by companies which invest in real estate or interests therein), commodities or commodity contracts (except that the New Jersey Fund may purchase and sell financial futures contracts), or interests or leases in oil, gas or other mineral exploration or development programs. C-19 12. Invest in securities which cannot be readily resold because of legal or contractual restrictions or which are not readily marketable, including individually negotiated loans that constitute illiquid investments and illiquid lease obligations, or in repurchase agreements or purchase and sale contracts maturing in more than seven days, if regarding all such securities, more than 10% of its net assets (taken at market value), would be invested in such securities. MERRILL LYNCH NEW YORK MUNICIPAL BOND FUND ("NEW YORK FUND") The Municipal Series Trust Investment Restrictions apply to the New York Fund except for restrictions (1), (2), (3), (6) and (12). For the New York Fund, investment restrictions (1), (2), (3), (6) and (12) are as follows: 1. Purchase any securities other than securities referred to under "Investment Objective and Policies" in the Prospectus and the Statement of Additional Information and under "Description of Municipal Bonds and Temporary Investments" in the Statement of Additional Information. 2. Invest more than 5% of its total assets (taken at market value at the time of each investment) in the securities of any one issuer, except that such restriction shall not apply to securities backed by the United States Government or its agencies or instrumentalities. [For purposes of this restriction, the Municipal Series Trust will regard each state and each political subdivision, agency or instrumentality of such state and each multi- state agency of which such state is a member and each public authority which issues securities on behalf of a private entity as a separate issuer, except that if the security is backed only by the assets and revenues of a non- government entity, then the entity with the ultimate responsibility for the payment of interest and principal may be regarded as the sole issuer.] 3. Invest more than 5% of its total assets (taken at market value at the time of each investment) in industrial revenue bonds where the entity supplying the revenues from which the issue is to be paid, including predecessors, each have a record of less than three years of continuous business operation. 6. Purchase or sell real estate (provided that such restriction shall not apply to securities secured by real estate or interests therein or issued by companies which invest in real estate or interests therein), commodities or commodity contracts (except that the New York Fund may purchase and sell financial futures contracts), interests in oil, gas or other mineral exploration or development programs. C-20 12. Invest in securities with legal or contractual restrictions on resale or for which no readily available market exists, including repurchase agreements and purchase and sale contracts maturing in more than seven days, if regarding all such securities, more than 10% of its net assets (taken at market value), would be invested in such securities. MERRILL LYNCH NORTH CAROLINA MUNICIPAL BOND FUND ("NORTH CAROLINA FUND") The Municipal Series Trust Investment Restrictions apply to the North Carolina Fund except for restrictions (3) and (6). For the North Carolina Fund, investment restrictions (3) and (6) are as follows: 3. Invest more than 5% of its total assets (taken at market value at the time of each investment) in industrial revenue bonds where the entity supplying the revenues from which the issue is to be paid, and the guarantor of the obligation, including predecessors, each have a record of less than three years of continuous business operation. 6. Purchase or sell real estate (provided that such restriction shall not apply to securities secured by real estate or interests therein or issued by companies which invest in real estate or interests therein), commodities or commodity contracts (except that the North Carolina Fund may purchase and sell financial futures contracts), interests in oil, gas or other mineral exploration or development programs. MERRILL LYNCH OHIO MUNICIPAL BOND FUND ("OHIO FUND") The Municipal Series Trust Investment Restrictions apply to the Ohio Fund except for restrictions (3), (6) and (12). For the Ohio Fund, investment restrictions (3), (6) and (12) are as follows: 3. Invest more than 5% of its total assets (taken at market value at the time of each investment) in industrial revenue bonds where the entity supplying the revenues from which the issue is to be paid, and the guarantor of the obligation, including predecessors, each have a record of less than three years of continuous business operation. 6. Purchase or sell real estate (provided that such restriction shall not apply to securities secured by real estate or interests therein or issued by companies which invest in real estate or interests therein), commodities or commodity contracts (except that the Ohio Fund may purchase and sell financial futures contracts), interests in oil, gas or other mineral exploration or development programs. C-21 12. Invest in securities with legal or contractual restrictions on resale or for which no readily available market exists, or in individually negotiated loans that constitute illiquid investments and illiquid lease obligations, or in repurchase agreements or purchase and sale contracts maturing in more than seven days, if, regarding all such securities, more than 10% of its net assets (taken at market value), would be invested in such securities. MERRILL LYNCH PENNSYLVANIA MUNICIPAL BOND FUND ("PENNSYLVANIA FUND") The Municipal Series Trust Investment Restrictions apply to the Pennsylvania Fund except for restrictions (2), (3), (6) and (12). For the Pennsylvania Fund, investment restrictions (2), (3), (6) and (12) are as follows: 2. 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 (other than U.S. Government securities or Government agency securities or Municipal Bonds). 3. Invest more than 5% of its total assets (taken at market value at the time of each investment) in industrial revenue bonds where the entity supplying the revenues from which the issue is to be paid, including predecessors, has a record of less than three years of continuous business operation. 6. Purchase or sell real estate (provided that such restriction shall not apply to securities secured by real estate or interests therein or issued by companies which invest in real estate or interests therein), commodities or commodity contracts (except that the Pennsylvania Fund may purchase and sell financial futures contracts), or interests or leases in oil, gas or other mineral exploration or development programs. 12. Invest in securities which cannot be readily resold because of legal or contractual restrictions or which are not readily marketable, including individually negotiated loans that constitute illiquid investments and illiquid lease obligations, or in repurchase agreements or purchase and sale contracts maturing in more than seven days, if, regarding all such securities, more than 10% of its net assets (taken at market value), would be invested in such securities. Under prior Pennsylvania law, in order for the Pennsylvania Fund to qualify to pass through to investors income exempt from Pennsylvania personal income tax, the Pennsylvania Fund was required to adhere to C-22 certain investment restrictions. In order to comply with this and other Pennsylvania law requirements previously in effect, the Pennsylvania Fund adopted, as a fundamental policy, a requirement that it invest in securities for income earnings rather than trading for profit and that, in accordance with such policy, it not vary its portfolio investments except to: (i) eliminate unsafe investments or investments not consistent with the preservation of the capital of the tax status of the investments of the Fund; (ii) honor redemption orders, meet anticipated redemption requirements, and negate gains from discount purchases; (iii) reinvest the earnings from securities in like securities; or (iv) defray normal administrative expenses. Pennsylvania has recently enacted legislation which eliminated the necessity for the foregoing investment policies. Since such policies are fundamental policies of the Pennsylvania Fund, which can only be changed by the affirmative vote of a majority (as defined under the Investment Company Act of 1940, as amended) of the outstanding shares, the Pennsylvania Fund continues to be governed by such investment policies. MERRILL LYNCH TEXAS MUNICIPAL BOND FUND ("TEXAS FUND") The Municipal Series Trust Investment Restrictions apply to the Texas Fund except for restrictions (2), (3), (6) and (12). For the Texas Fund, investment restrictions (2), (3), (6) and (12) are as follows: 2. 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 (other than U.S. Government securities or Government agency securities or Municipal Bonds). 3. Invest more than 5% of its total assets (taken at market value at the time of each investment) in industrial revenue bonds where the entity supplying the revenues from which the issue is to be paid, including predecessors, each have a record of less than three years of continuous business operation. 6. Purchase or sell real estate (provided that such restriction shall not apply to securities secured by real estate or interests therein or issued by companies which invest in real estate or interests therein), commodities or commodity contracts (except that the Texas Fund may purchase and sell financial futures contracts), or interests or leases in oil, gas or other mineral exploration or development programs. 12. Invest in securities which cannot be readily resold because of legal or contractual restrictions or which are not readily marketable, including individually negotiated loans that constitute illiquid investments C-23 and illiquid lease obligations, or in repurchase agreements or purchase and sale contracts maturing in more than seven days, if regarding all such securities, more than 10% of its net assets (taken at market value), would be invested in such securities.[Proxy Card Front] COMMON STOCK MERRILL LYNCH WORLD INCOME FUND, INC. ("WORLD INCOME FUND") Fundamental Investment RestrictionsP.O. BOX 9011 PRINCETON, NEW JERSEY 08543-9011 PROXY This proxy is solicited on behalf of the Board of Directors The undersigned hereby appoints __________, __________ and __________ as proxies, each with the power to appoint his or her substitute, as applicable, and hereby authorizes each of them to represent and to vote, as designated on the reverse hereof, all of the shares of Common Stock of Merrill Lynch World Income Fund, may not: 1. Invest more than 25%Inc. (the "Fund") held of its total assets, taken at market valuerecord by the undersigned on October 30, 2000 at the timeMeeting of each investment,Stockholders of the Fund to be held on December 21, 2000, or any adjournment thereof. This proxy, when properly executed, will be voted in the securities of issuers in any particular industry (including securities issued or guaranteedmanner herein directed by the governmentundersigned stockholder. If no direction is made, this proxy will be voted "for" items 1, 2 and 3. By signing and dating the reverse side of this card, you authorize the proxies to vote each proposal as marked, or if not marked, to vote "FOR" each proposal, and to use their discretion to vote for any one foreign country, but excludingother matter as may properly come before the U.S. Government, its agenciesmeeting or any adjournment thereof. If you do not intend to personally attend the meeting, please complete and instrumentalities). 2. Make investments forreturn the purpose of exercising control or management. 3. Purchase securities of other investment companies, except in connection with a merger, consolidation, acquisition or reorganization, or by purchasecard at once in the open marketenclosed envelope. (Continued and to be signed on the reverse side) [Proxy Card Reverse] Please mark boxes /X/ or [X] in blue or black ink. 1. ELECTION OF DIRECTORS /_/ FOR all nominees listed /_/ WITHHOLD AUTHORITY to vote below (except as marked to for all nominees listed below the contrary below) (INSTRUCTION: To withhold authority to vote for any individual nominee, strike a line through the nominee's name in the list below.) James H. Bodurtha, Terry K. Glenn, Herbert I. London, Joseph L. May, Andre F. Perold, Roberta Cooper Ramo, and Arthur Zeikel. 2. To consider and act upon a proposal to ratify the selection of securities of closed-end investment companies where no underwriter or dealers' commission or profit, other than customary broker's commission, is involved and only if immediately thereafter not more than (i) 3%Deloitte & Touche LLP to serve as independent auditors of the total outstanding voting stockFund for its current fiscal year. FOR /_/ AGAINST /_/ ABSTAIN /_/ 3. To consider and act upon a proposal to amend the Fund's charter to permit the Board of Directors to reorganize the Fund into a master/feeder structure. FOR /_/ AGAINST /_/ ABSTAIN /_/ 4. In the discretion of such company is owned byproxies, upon such other business as properly may come before the World Income Fund, (ii) 5% of the World Income Fund's total assets, taken at market value, would be invested inmeeting or any one such company, or (iii) 10% of the World Income Fund's total assets, taken at market value, would be invested in all such securities. 4. Purchase or sell real estate; provided that the World Income Fund may invest in securities secured by real estate or interests therein or issued by companies which invest in real estate or interests therein. 5. Make loans to other persons (exceptadjournment thereof. Please sign exactly as provided in (6) below); provided that for purposes of this restriction the acquisition of a portion of bonds, debentures, or other corporate debt securities and investment in governmental and supranational obligations, short-term commercial paper, certificates of deposit, bankers' acceptances and repurchase agreements shall not be deemed to be the making of a loan. 6. Lend its portfolio securities in excess of 33 1/3% of its total assets, taken at market value; provided that such loans shall be made in accordance with the guidelines set forth in the Statement of Additional Information. C-24 7. Issue senior securities, borrow money or pledge its assets in excess of 33 1/3 of its total assets taken at market value (including the amount borrowed) and then only from banks for the purpose of meeting redemption requests or settlement of investment transactions, or for temporary or emergency purposes. [Usually only "leveraged" investment companies may borrow in excess of 5% of their assets; however, the World Income Fund will not borrow to increase income but intends only to meet redemption requests or to settle investment transactions or for temporary or emergency purposes which may otherwise require untimely dispositions of portfolio securities. Interest paid on such borrowings will reduce net income.] (See restriction (8) below regarding the exclusion from this restriction of arrangements with respect to options, futures contracts and options on futures contracts.) The World Income Fund will not purchase additional portfolio securities while outstanding borrowings exceed 5% of the World Income Fund's total assets. 8. Mortgage, pledge, hypothecate or in any manner transfer, as security for indebtedness, any securities owned orname appears hereon. When shares are held by the World Income Fund exceptjoint tenants, both should sign. When signing as may be necessary in connection with borrowings mentioned in (7) aboveattorney or except as may be necessary in connection with transactions in financial futures contracts and options thereon. 9. Underwrite securities of other issuers except insofar as the World Income Fund may be deemed an underwriter under the Securities Act of 1933, as amended, in selling portfolio securities. Non-Fundamental Investment Restrictions The World Income Fund may not: a. Purchase any securities on margin, except that the World Income Fund may obtain such short-term credit as may be necessary for the clearance of purchases and sales of portfolio securities. (The depositexecutor, administrator, trustee or payment by the World Income Fund of initial or variation margin in connection with futures contracts or options transactions is not considered the purchase of a security on margin.) b. Purchase or sell commodities or commodity contracts, except that the World Income Fund may deal in forward foreign exchange between currencies of the different countries in which its portfolio securities are denominated or anticipated to be denominated, and the World Income Fund may purchase and sell financial and currency options, futures contracts and related options. C-25 c. Write, purchase or sell puts, calls, straddles, spreads or combinations thereof, except to the extent described in the Prospectus and Statement of Additional Information. d. Invest in securities which cannot be readily resold because of legal or contractual restrictions, or which are not otherwise readily marketable, if, regarding all such securities, more than 10% of the World Income Fund's net assets, taken at market value, would be invested in such securities. e. Invest in real estate limited partnerships or oil, gas or other mineral exploration or development programs or leases. f. Invest in securities of unseasoned issuers, including their predecessors, which have been in operation for less than three years and equity securities of issuers which are not readily marketable if by reason thereof the value of the World Income Fund's aggregate investment in such classes of securities will exceed 5% of its total assets. g. Make short sales of securities or maintain a short position; provided, however, that the World Income Fund may sell short convertible securities "against the box". Selling "against the box" involves owning the convertible security and selling short the underlying common stock into which it is convertible. C-26
[PRELIMINARY COPY] PROXY Meeting of Shareholders of Please mark your choices below in blue or black ink. Merrill Lynch Balanced Fund for Investment and Retirement This Proxy has been personalized to reflect those Merrill Lynch California Municipal Series Trust (2 Series) shares of the indicated Funds that are held within a Merrill Lynch Global Convertible Fund, Inc. single account. If a shareholder holds shares in Merrill Lynch Growth Fund for Investment and Retirement multiple accounts, it will be necessary to execute a Merrill Lynch Multi-State Limited Maturity Municipal Series Trust proxy for each such account. With respect to (8 Series) proposal 4, separate vote is required for Class A Merrill Lynch Multi-State Municipal Series Trust (16 Series) and Class B shares owned. Merrill Lynch World Income Fund, Inc. P.O. Box 9011, Princton, NJ 08543-9011 This Proxy is solicited on behalf of the Directors/Trustees The undersigned hereby appoints as proxies, each with the power to appoint his substitute, and hereby authorizes them to represent and to vote, as designated below, all shares in one or more of the above-mentioned Funds held of record by the undersigned on August , 1994, at the Meeting of Shareholders of such Fund to be held on September , 1994, or any adjournments thereof. Such proxies are also authorized to vote on such other matters as may properly come before such meeting or any adjournment thereof. This Proxy when properly executed will be voted in the manner directed herein by the undersigned shareholder. If no direction is made for any specific item, this Proxy will be voted FOR all nominees for Director/Trustee and for each of the proposals related to each Fund. - ------------------------------------------------------------------------------------------------------------------------------------ Shares Held in Account 1. Election of Directors/Trustees. Nominees: Kenneth S. Axelson, Herbert I. London, Robert R. Martin, Joseph L. May, Andre F. Perold and Arthur Zeikel Class A Class B FOR WITHHOLD FOR ALL ALL ALL EXCEPT* 000000000 000000000 Balanced Fund for Investment and Retirement [_] [_] [_] 000000000 000000000 California Municipal Series Trust [_] [_] [_] 000000000 000000000 Global Convertible Fund, Inc. [_] [_] [_] 000000000 000000000 Growth Fund for Investment and Retirement [_] [_] [_] 000000000 000000000 Multi-State Limited Maturity Municipal Series Trust [_] [_] [_] 000000000 000000000 Multi-State Municipal Series Trust [_] [_] [_] 000000000 000000000 World Income Fund, Inc. [_] [_] [_] *To withhold authority for a Nominee for a particular Fund, check the "FOR ALL EXCEPT" box and print name of Nominee on the appropriate line below. --------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- 2. Ratify the 3. Amend the 4. Amend the charter of the Fund selection of fundamental in connection with the independent investment implementation of auditors. restrictions. Merrill Lynch Select Pricing(tm). --Class A Shares-- --Class B Shares-- FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN Balanced Fund for Investment and Retirement [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] California Municipal Series Trust [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] Global Convertible Fund, Inc. [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] Growth Fund for Investment and Retirement [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] Multi-State Limited Maturity Municipal Series Trust [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] Multi-State Municipal Series Trust [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] World Income Fund, Inc. [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] - ----------------------------------------------------------------------------------------------------------------------------------- Please mark, sign, date, and mail your Proxy in the enclosed potage-paid envelope. Signature _____________________________________________________________________ Date _________________________ If joint owner, each should sign. When signing as executor, trustee, etc.,guardian, please give full title as such.
If a corporation, please sign in full corporate name by president or other authorized officer. If a partnership, please sign in partnership name by authorized person. Dated:__________________________ X_______________________________ Signature X_______________________________ Signature, if held jointly Sign, Date, and Return the Proxy Card Promptly Using the Enclosed Envelope. [Proxy Card Front] SHARES OF BENEFICIAL INTEREST [NAME OF MASSACHUSETTS BUSINESS TRUST] P.O. BOX 9011 PRINCETON, NEW JERSEY 08543-9011 PROXY This proxy is solicited on behalf of the Board of Directors The undersigned hereby appoints __________, __________ and __________ as proxies, each with the power to appoint his or her substitute, as applicable, and hereby authorizes each of them to represent and to vote, as designated on the reverse hereof, all of the shares of beneficial interest of [NAME OF MASSACHUSETTS BUSINESS TRUST] (the "Fund") held of record by the undersigned on October 30, 2000 at the Meeting of Shareholders of the Fund to be held on December 21, 2000, or any adjournment thereof. This proxy, when properly executed, will be voted in the manner herein directed by the undersigned stockholder. If no direction is made, this proxy will be voted "for" items 1, 2 and 3. By signing and dating the reverse side of this card, you authorize the proxies to vote each proposal as marked, or if not marked, to vote "FOR" each proposal, and to use their discretion to vote for any other matter as may properly come before the meeting or any adjournment thereof. If you do not intend to personally attend the meeting, please complete and return the card at once in the enclosed envelope. (Continued and to be signed on the reverse side) [Proxy Card Reverse] Please mark boxes /X/ or [X] in blue or black ink. 1. ELECTION OF TRUSTEES /_/ FOR all nominees listed /_/ WITHHOLD AUTHORITY to vote for below (except as marked to all nominees listed below the contrary below) (INSTRUCTION: To withhold authority to vote for any individual nominee, strike a line through the nominee's name in the list below.) James H. Bodurtha, Terry K. Glenn, Herbert I. London, Joseph L. May, Andre F. Perold, Roberta Cooper Ramo, and Arthur Zeikel. 2. To consider and act upon a proposal to ratify the selection of Deloitte & Touche LLP to serve as independent auditors of the Fund for its current fiscal year. FOR /_/ AGAINST /_/ ABSTAIN /_/ 3. To consider and act upon a proposal to amend the Fund's charter to permit the Board of Trustees to reorganize the Fund into a master/feeder structure. FOR /_/ AGAINST /_/ ABSTAIN /_/ 4. In the discretion of such proxies, upon such other business as properly may come before the meeting or any adjournment thereof. Please sign exactly as name appears hereon. When shares are held by joint tenants, both should sign. When signing as attorney or as executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by president or other authorized officer. If a partnership, please sign in partnership name by authorized person. Dated:__________________________ X_______________________________ Signature X_______________________________ Signature, if held jointly Sign, Date, and Return the Proxy Card Promptly Using the Enclosed Envelope.