-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, P9UY1zhkPuoVYFJvCE6MctCvoAMqRGWB4ACZPrI7m+bzl30ZZKcFrrDJQt/xWWfL OwfXT+/p3jlRaahfGIF8vg== 0000905148-03-002618.txt : 20030717 0000905148-03-002618.hdr.sgml : 20030717 20030717160118 ACCESSION NUMBER: 0000905148-03-002618 CONFORMED SUBMISSION TYPE: POS EX PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20030717 EFFECTIVENESS DATE: 20030717 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MERRILL LYNCH INVESTMENT MANAGERS FUNDS INC CENTRAL INDEX KEY: 0001119261 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: POS EX SEC ACT: 1933 Act SEC FILE NUMBER: 333-102447 FILM NUMBER: 03791351 BUSINESS ADDRESS: STREET 1: 800 SCUDDERS ROAD STREET 2: SUITE 4000 CITY: PLAINSBORO STATE: NJ ZIP: 08536 BUSINESS PHONE: 6092820785 MAIL ADDRESS: STREET 1: 800 SCUDDERS ROAD STREET 2: SUITE 4000 CITY: PLAINSBORO STATE: NJ ZIP: 08536 POS EX 1 efc3-1046_5398808posex.txt As filed with the Securities and Exchange Commission on July 17, 2003 Securities Act File No. 333-102447 Investment Company Act File No. 811-10053 ============================================================================== SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 ------------------ FORM N-14 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------ Pre-Effective Amendment No. [ ] Post-Effective Amendment No. 1 [ X ] (Check appropriate box or boxes) ------------------ Merrill Lynch Investment Managers Funds, Inc. (Exact Name of Registrant as Specified in its Charter) ------------------ (609) 282-2800 (Area Code and Telephone Number) ------------------ 800 Scudders Mill Road Plainsboro, New Jersey 08536 (Address of Principal Executive Offices: Number, Street, City, State, Zip Code) ------------------ Terry K. Glenn Merrill Lynch Investment Managers Funds, Inc. 800 Scudders Mill Road, Plainsboro, New Jersey 08536 Mailing Address: P.O. Box 9011, Princeton, New Jersey 08543-9011 (Name and Address of Agent for Service) ------------------ Copies to: Frank P. Bruno, Esq. Andrew J. Donohue, Esq. SIDLEY AUSTIN BROWN & WOOD LLP FUND ASSET MANAGEMENT, L.P. 787 Seventh Avenue P.O. Box 9011 New York, New York 10019-6018 Princeton, New Jersey 08543-9011 ------------------ Title of Securities Being Registered: Common Stock, Par Value $.10 per share. No filing fee is required because of reliance on Section 24(f) under the Investment Company Act of 1940. This Post-Effective Amendment No. 1 to the Registrant's Registration Statement on Form N-14 (File No. 333-102447) (the "N-14 Registration Statement") consists of the following: (1) Facing Sheet of this Registration Statement. (2) Part C of this Registration Statement (including signature page). Parts A and B to the N-14 Registration Statement are unchanged from the Proxy Statement and Prospectus filed on February 14, 2003 under Rule 497 under the Securities Act of 1933, as amended. This Post-Effective Amendment No. 1 to the N-14 Registration Statement is being filed to file (i) an Amendment to the Transfer Agency, Dividend Disbursing Agency and Shareholder Servicing Agency Agreement between the Registrant and Financial Data Services, Inc. and (ii) a tax opinion of Sidley Austin Brown & Wood LLP, counsel for Merrill Lynch Low Duration Fund ("ML Low Duration"), a series of the Registrant, and Mercury Low Duration Fund ("Mercury Low Duration"), a series of Mercury Funds II ("Mercury Funds II"), as Exhibits 8(a) and 13, respectively, to the N-14 Registration Statement. The tax opinion relates to the reorganization of Mercury Low Duration into ML Low Duration. PART C OTHER INFORMATION Item 15. Indemnification. Reference is made to Article V of the Registrant's Articles of Incorporation, Article VI of the Registrant's By-Laws and Section 2-418 of the Maryland General Corporation Law. Insofar as the conditional advancing of indemnification moneys for actions based on the Investment Company Act of 1940, as amended (the "Investment Company Act"), may be concerned, Article VI of the Registrant's By-Laws provides that such payments will be made only on the following conditions: (i) advances may be made only on receipt of a written affirmation of such person's good faith belief that the standard of conduct necessary for indemnification has been met and a written undertaking to repay any such advance if it is ultimately determined that the standard of conduct has not been met; and (ii) (a) such promise must be secured by a security for the undertaking in form and amount acceptable to the Registrant, (b) the Registrant is insured against losses arising by receipt of the advance, or (c) a majority of a quorum of the Registrant's disinterested non-party Directors, or an independent legal counsel in a written opinion, shall determine, based upon a review of readily available facts, that at the time the advance is proposed to be made, there is reason to believe that the person seeking indemnification will ultimately be found to be entitled to indemnification. Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended (the "Securities Act") may be permitted to Directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a Director, officer, or controlling person of the Registrant in connection with the successful defense of any action, suit or proceeding) is asserted by such Director, officer or controlling person in connection with the shares being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. Item 16. Exhibits (1) (a) -- Articles of Incorporation of the Registrant.(1) (b) -- Certificate of Correction.(1) (c) -- Articles Supplementary (6) (2) -- By-Laws of the Registrant.(1) (3) -- Portions of Articles of Incorporation and By-Laws of the Registrant defining the rights of holders of shares of common stock of the Registrant.(1) (4) -- None. (5) (a) -- Form of Distribution Agreement between the Registrant and FAM Distributors, Inc. (including form of Selected Dealer Agreement).(1) (b) -- Form of Class B Shares Distribution Plan of the Registrant.(1) (c) -- Form of Class C Shares Distribution Plan of the Registrant.(1) (d) -- Form of Class D Shares Distribution Plan of the Registrant.(1) (6) -- None. (7) -- None. (8) (a) -- Amended Transfer Agency, Dividend Disbursing Agency and Shareholder Servicing Agency Agreement between the Registrant and Financial Data Services, Inc. (b) -- Agreement relating to use of name between the Registrant and Merrill Lynch & Co., Inc.(1) (c) -- Expense Cap Agreement.(2) (d) -- Amended and Restated Expense Cap Agreement.(5) (e) -- Administration Agreement for Merrill Lynch Low Duration Fund.(5) (f) -- Administration Agreement for Merrill Lynch Total Return Bond Fund.(5) (g) -- Credit Agreement.(3) (h) -- Administrative Services Agreement with State Street Bank and Trust Company.(4) (i) -- Certificate of Fund Asset Management, L.P.(2) (9) -- None. (10) -- Merrill Lynch Select Pricing System Plan pursuant to Rule 18f-3.(1) (11) -- Opinion of Sidley Austin Brown & Wood LLP, special counsel for ML Low Duration Fund.(8) (12) -- None. (13) -- Tax Opinion of Sidley Austin Brown & Wood LLP, special counsel for ML Low Duration Fund. (14) (a) -- Consent of Ernst & Young LLP, independent auditors for ML Low Duration Fund.(8) (b) -- Consent of Ernst & Young LLP, independent auditors for Mercury Low Duration Fund.(8) (15) -- Power of Attorney.(7) (16) -- Code of Ethics.(1) 17 (a) -- Prospectus, dated October 25, 2002, as supplemented, and Statement of Additional Information dated October 25, 2002, as supplemented, of the Registrant.(8) (b) -- Prospectus, dated October 25, 2002, and Statement of Additional Information dated October 25, 2002, of Mercury Low Duration Fund.(8) 2 (c) -- Annual Report to Stockholders of the Registrant for the fiscal year ended June 30, 2002.(8) (d) -- Annual Report to Shareholders of Mercury Low Duration Fund for the fiscal year ended June 30, 2002.(8) (e) -- Form of Proxy Card.(8) - ------------------ (1) Incorporated by reference and previously filed as an exhibit to the Registration Statement on Form N-1A filed on August 11, 2000 (File No. 333-43552). (2) Incorporated by reference and previously filed as an Exhibit to Pre-Effective Amendment No. 1 to the Registration Statement on Form N-1A filed on October 6, 2000 (File No. 333-43552). (3) Incorporated by reference to Exhibit (b) to the Issuer Tender Offer Statement on Schedule TO of Merrill Lynch Senior Floating Rate Fund, Inc. (File No. 333-15973) filed on December 14, 2000. (4) Incorporated by reference and previously filed as an Exhibit to Post-Effective Amendment No. 3 to the Registration Statement on Form N-1A of Mercury HW Variable Trust filed on February 28, 2001 (File No. 333-24349). (5) Incorporated by reference and previously filed as an Exhibit to Post-Effective Amendment No. 1 to the Registration Statement on Form N-1A filed on October 25, 2001 (File No. 333-43552). (6) Incorporated by reference and previously filed as an Exhibit to Post-Effective Amendment No. 3 to the Registration Statement on Form N-1A filed on December 20, 2002 (File No. 333-43552). (7) Included on the signature page of the N-14 Registration Statement filed on January 10, 2003. (8) Filed on January 10, 2003 as an Exhibit to the N-14 Registration Statement. Item 17. Undertakings. (1) The undersigned Registrant agrees that prior to any public reoffering of the securities registered through use of a prospectus which is part of this Registration Statement by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c) of the Securities Act of 1933, as amended, the reoffering prospectus will contain information called for by the applicable registration form for reofferings by persons who may be deemed underwriters, in addition to the information called for by other items of the applicable form. (2) The undersigned Registrant agrees that every prospectus that is filed under paragraph (1) above will be filed as part of an amendment to the registration statement and will not be used until the amendment is effective, and that, in determining any liability under the Securities Act of 1933, as amended, each post-effective amendment shall be deemed to be a new registration statement for the securities offered therein, and the offering of securities at that time shall be deemed to be the initial bona fide offering of them. (3) The Registrant undertakes to file, by post-effective amendment, a copy of an opinion of counsel as to certain tax matters within a reasonable time after receipt of such opinion. 3 SIGNATURES As required by the Securities Act of 1933, this Registration Statement has been signed on behalf of the Registrant, in the Township of Plainsboro and State of New Jersey, on the 17th day of July, 2003. MERRILL LYNCH INVESTMENT MANAGERS FUNDS, INC. (Registrant) BY: /s/ Donald C. Burke ------------------------------------- (Donald C. Burke, Vice President) As required by the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
Signatures Title Date ---------- ----- ---- TERRY K. GLENN* President (Principal Executive - -------------------------- Officer) and Trustee (Terry K. Glenn) DONALD C. BURKE* Vice President and Treasurer - -------------------------- (Principal Financial and (Donald C. Burke) Accounting Officer) JAMES H. BODURTHA* - -------------------------- (James H. Bodurtha) Director JOE GRILLS* - -------------------------- (Joe Grills) Director HERBERT I. LONDON* - -------------------------- (Herbert I. London) Director ANDRE F. PEROLD* - -------------------------- (Andre F. Perold) Director ROBERTA COOPER RAMO* - -------------------------- (Roberta Cooper Ramo) Director ROBERT S. SALOMON, JR.* - -------------------------- (Robert S. Salomon, Jr.) Director STEPHEN B. SWENSRUD* - -------------------------- (Stephen B. Swensrud) Director *By: /s/ Donald C. Burke ----------------------------------- (Donald C. Burke, Attorney-in-Fact) July 17, 2003
4 SIGNATURES Fund Asset Management Master Trust has duly caused this Registration Statement of Merrill Lynch Investment Managers Funds, Inc. to be signed on its behalf by the undersigned, thereunto duly authorized, in the Township of Plainsboro, and State of New Jersey, on the 17th day of July, 2003. FUND ASSET MANAGEMENT MASTER TRUST BY: /s/ Donald C. Burke ----------------------------------- (Donald C. Burke, Vice President) As required by the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
Signatures Title Date ---------- ----- ---- TERRY K. GLENN* President (Principal Executive - -------------------------- Officer) and Director (Terry K. Glenn) DONALD C. BURKE* Vice President and Treasurer - -------------------------- (Principal Financial and (Donald C. Burke) Accounting Officer) JAMES H. BODURTHA* - -------------------------- (James H. Bodurtha) Trustee JOE GRILLS* - -------------------------- (Joe Grills) Trustee HERBERT I. LONDON* - -------------------------- (Herbert I. London) Trustee ANDRE F. PEROLD* - -------------------------- (Andre F. Perold) Trustee ROBERTA COOPER RAMO* - -------------------------- (Roberta Cooper Ramo) Trustee ROBERT S. SALOMON, JR.* - -------------------------- (Robert S. Salomon, Jr.) Trustee STEPHEN B. SWENSRUD* - -------------------------- (Stephen B. Swensrud) Trustee *By: /s/ Donald C. Burke ----------------------------------- (Donald C. Burke, Attorney-in-Fact) July 17, 2003
5 EXHIBIT INDEX Exhibit Number Description ------ ----------- 8(a) -- Amended Transfer Agency, Dividend Disbursing Agency and Shareholder Servicing Agency Agreement between the Registrant and Financial Data Services, Inc. 13 -- Tax Opinion of Sidley Austin Brown & Wood LLP, special counsel for Merrill Lynch Low Duration Fund and Mercury Low Duration Fund, as to the reorganization of Mercury Low Duration Fund into Merrill Lynch Low Duration Fund. 6 EX-8.A 3 efc3-1046_ex8a.txt Exhibit 8(a) AMENDMENT TO THE TRANSFER AGENCY, DIVIDEND DISBURSING AGENCY AND SHAREHOLDER SERVICING AGENCY AGREEMENT WHEREAS, Financial Data Services, Inc. ("FDS") and Merrill Lynch Low Duration Fund, Inc. (the "Fund"), on behalf of itself and certain of its series, entered into a Transfer Agency, Dividend Disbursing Agency and Shareholder Servicing Agency Agreement, as amended (the "Agreement"); WHEREAS, the parties hereto desire to amend the Agreement to reflect the Fund's issuance of Class R shares; and WHEREAS, the parties hereto desire to amend the Agreement to reflect services FDS may provide to the Fund in connection with the Fund's money laundering prevention programs and compensation to FDS for such services. NOW, THEREFORE, FDS and the Fund hereby amend the Agreement as follows: 1. The parties agree that, in order to more accurately reflect the conduct of their business relationship, Paragraph 3(t) of the Agreement shall be re-designated Paragraph 3(g) and a new Paragraph 3(t) added to read in its entirety: "FDS agrees to perform such anti-money laundering ("AML") functions with respect to the Fund's shares as the Fund or its agent may delegate to FDS from time to time or as IDS is otherwise obligated to perform. In accordance with mutually-agreed procedures, FDS shall use its best efforts in carrying out such functions under the Fund's AML program. Fund shareholders (which for this purpose shall mean only shareholders of record) are customers of the Fund and not customers of IDS and the Fund retains legal responsibility under the USA PATRIOT Act for AML compliance with respect to transactions in Fund shares." FDS agrees to cooperate with any request from examiners of US Government agencies having jurisdiction over the Fund for information and records relating to the Fund's AML program and E consents to inspection by such examiners for this purpose. 2. The parties agree that the compensation payable in connection with certain accounts will be modified. Pursuant to Section 4 of the Agreement, the compensation payable to FDS on services for such accounts is set forth in the Amended and Restated Schedule of Fees attached to this Amendment, which shall become a part of the Agreement and shall be effective as of January 1, 2003. IN WITNESS HEREOF, the parties hereto have executed this Amendment as of this 1st day of January, 2003. MERRILL. LYNCH LO DURATION FUND, INC. By: /s/ Donald C. Burke ----------------------------------- Donald C. Burke Treasurer FINANCIAL DATA SERVICES, INC. By: /s/ Sharon L. Hockersmith ----------------------------------- Sharon L. Hockersmith Vice President AMENDED AND RESTATED SCHEDULE OF FEES MERRILL LYNCH MUTUAL FUNDS Transfer Agency and Record-keeping Fees: - ---------------------------------------- The Fund shall pay monthly the following transfer agency and record-keeping fees to FDS, unless otherwise noted: - ------------------------------------------------------------------------------ Annual Account Fee(6) Distribution Channel Class A, D, I & R Class B and C - ------------------------------------------------------------------------------ Proprietary Retail(1) $16 $19 - ------------------------------------------------------------------------------ Third Party(2) $16 $19 - ------------------------------------------------------------------------------ Direct Account $20 $23 - ------------------------------------------------------------------------------ MFA ERISA(3) 0.10% 0.10% - ------------------------------------------------------------------------------ RG Recordkept Plans(4) $16 $19 - ------------------------------------------------------------------------------ ML Connect Network Plans(5) $16 $19 - ------------------------------------------------------------------------------ NOTES: - ------ (1) Shares are sold through Merrill Lynch, Pierce, Fenner & Smith incorporated ("MLPF&S"), excluding MFA ERISA accounts. Certain MLPF&S fee-based program accounts are subject to separately negotiated transfer agency and record- keeping fees. (2) Shares are sold through broker-dealers other than MLPF&S. (3) Shares are held through the MLPF&S MFA (Mutual Fund Advisor) program, or any other fee-based program, in accounts requiring equalization under ERISA. Fees are calculated based on average daily net assets. (4) Shares are sold to participants of a defined benefit or defined contribution plan (a "Plan") that is recordkept by Merrill Lynch. (5) Shares are sold to participants of a Plan for which a third-party administrator (currently BISYS, Paychex, Inc., Invesco Retirement, Inc., MFS and Oppenheimer Funds) is the record-keeper pursuant to certain agreements with Merrill Lynch. (6) Fees apply to accounts that are active for any portion of a month. 2 Out-of-Pocket Expenses: - ----------------------- The Fund shall pay the following out-of-pocket costs incurred by FDS: o AML compliance costs, including, but not limited to, legal fees, reporting agency fees, and incremental personnel expenses, but only insofar as any of the foregoing fees and expenses relate to "direct" individual accounts. The Fund shall not pay for any costs related to the underlying beneficial owners of any omnibus or other similar type of accounts. o Postage o Special Mail processing expenses, including, but not limited to, postal presort, householding, exception extract, and duplicate elimination) o Envelopes/stationery o Record storage and retrieval o Telephone (local and long distance) o Pre-authorized checks o Returned check fees/charges and other similar fees/charges o Handling costs or similar supplemental charges imposed by ADP or other vendor delivering goods and services related to the Agreement o Fed wire charges, excluding wires to/from Fund custody accounts o Forms o Any other costs as mutually agreed by the parties Estimated miscellaneous out-of-pocket expenses are paid monthly based on an annualized rate of $0.04 per account. This estimated expense rate may be increased or decreased periodically, as necessary, to more accurately reflect anticipated actual expenses. On a semi-annual basis, the actual miscellaneous out-of-pocket expenses incurred will be compared to the estimated out-of-pocket expense paid. The appropriate adjustment will be made by FDS Finance or MLIM Accounts Payable at that time. Extraordinary Expenses: - ----------------------- The fees and expense reimbursements described above do not cover extraordinary services, including, but not limited to, administration of a reorganization or liquidation of the Fund, remedial actions necessitated by errors or omissions of the Fund or any of its agents, or conversion of the Fund to another transfer agent. Fees and expense reimbursements, in connection with extraordinary services, will be mutually agreed by the parties prior to the performance of such services. 3 EX-13 4 efc3-1046_5387394ex13.txt Exhibit 13 SIDLEY AUSTIN BROWN & WOOD LLP CHICAGO 787 SEVENTH AVE. BEIJING ---- NEW YORK, NEW YORK 10019 ---- DALLAS TELEPHONE 212 839 5300 GENEVA ---- FACSIMILE 212 839 5599 ---- LOS ANGELES www.sidley.com HONG KONG ---- ---- SAN FRANCISCO FOUNDED 1866 LONDON ---- ---- WASHINGTON, D.C. SHANGHAI ---- SINGAPORE ---- TOKYO June 16, 2003 Merrill Lynch Investment Managers Funds, Inc., on behalf of Merrill Lynch Low Duration Fund 800 Scudders Mill Road Plainsboro, New Jersey 08536 Mercury Funds II, on behalf of Mercury Low Duration Fund 800 Scudders Mill Road Plainsboro, New Jersey 08536 Re: Reorganization of Merrill Lynch Low Duration Fund and Mercury Low Duration Fund Ladies and Gentlemen: You have requested our opinion as to certain Federal income tax consequences of the acquisition by Merrill Lynch Low Duration Fund ("Acquiror"), a series of Merrill Lynch Investment Managers Funds, Inc. ("Acquiror Series"), of substantially all of the assets of Mercury Low Duration Fund ("Target"), a series of Mercury Funds II ("Target Series"), and the assumption by Acquiror of substantially all of the liabilities of Target and the simultaneous distribution of newly-issued shares of Acquiror common stock to Target stockholders (the "Reorganization"). After the Reorganization, Target will cease operations, will have no assets remaining and will have final Federal and state (if any) tax returns filed on its behalf. Target Series Funds will terminate Target as a series of Target Series Funds under the laws of the Commonwealth of Massachusetts and Target Series will be dissolved under Massachusetts law. This opinion letter is furnished pursuant to (i) the section entitled "The Reorganization--Terms of the Agreement and Plan--Amendments and Conditions" in the Proxy Statement and Prospectus, dated February 10, 2003, contained in the Registration Statement on Form N-14 SIDLEY AUSTIN BROWN & WOOD LLP NEW YORK Merrill Lynch Investment Managers Funds, Inc., on behalf of Merrill Lynch Low Duration Fund Mercury Funds II, on behalf of Mercury Low Duration Fund June 16, 2003 Page 2 (File No. 333-102447) of Acquiror Series, as amended and supplemented to date (the "N-14 Registration Statement"), and (ii) Sections 8(e) and 9(e) of the Agreement and Plan of Reorganization dated February 7, 2003, by and among Acquiror Series, on behalf of Acquiror, Target Series, on behalf of Target, and FAM Trust, on behalf of the Low Duration Portfolio, (the "Plan") as a condition of closing. All terms used herein, unless otherwise defined, are used as defined in the Plan. In rendering our opinion, we have reviewed and relied upon (a) the Plan, (b) the N-14 Registration Statement and (c) certain representations concerning the Reorganization made by (i) Acquiror in a letter dated June 16, 2003 and (ii) Target in a letter dated June 16, 2003 (together, the "Representations"). Based upon current law, including cases and administrative interpretations thereof, and on the reviewed materials listed above, it is our opinion that: 1. The acquisition by Acquiror of substantially all of the assets of Target (consisting primarily of all of Target's beneficial interests in the Low Duration Portfolio of FAM Trust), as described in the Plan, will constitute a reorganization within the meaning of Section 368(a)(1)(C) of the Internal Revenue Code of 1986, as amended (the "Code"), and Acquiror and Target each will be a "party" to a reorganization within the meaning of Section 368(b) of the Code. 2. In accordance with Section 361(a) of the Code, Target will not recognize any gain or loss either on the transfer of substantially all of its assets to Acquiror in exchange solely for voting shares of Acquiror common stock or on the distribution of shares of Acquiror common stock to its stockholders. 3. Under Section 1032 of the Code, Acquiror will recognize no gain or loss as a result of the Reorganization. 4. In accordance with Section 354(a)(1) of the Code, stockholders of Target will not recognize any gain or loss on the exchange of their shares for shares of Acquiror common stock. 5. The basis of the assets of Target received by Acquiror will be the same as the basis of such assets to Target immediately before the Reorganization under Section 362(b) of the Code. 6. Under Section 358 of the Code, immediately after the Reorganization, the basis of shares of Acquiror common stock received by Target stockholders (including fractional shares to which they may be entitled) will be the same as the basis of their Target shares exchanged pursuant to the Reorganization. SIDLEY AUSTIN BROWN & WOOD LLP NEW YORK Merrill Lynch Investment Managers Funds, Inc., on behalf of Merrill Lynch Low Duration Fund Mercury Funds II, on behalf of Mercury Low Duration Fund June 16, 2003 Page 3 7. Under Section 1223 of the Code, the holding period of shares of Acquiror common stock received by Target stockholders in the Reorganization (including fractional shares to which they may be entitled) will include the holding period of the Target shares exchanged pursuant to the Reorganization, provided that such shares were held as a capital asset on the date of the Reorganization. 8. The holding period of the assets acquired by Acquiror from Target will include the period during which such assets were held by Target under Section 1223 of the Code. 9. Pursuant to Section 381(a) of the Code and Section 1.381(a)-1 of the Income Tax Regulations, Acquiror will succeed to and take into account the items of Target described in Section 381(c) of the Code, subject to the provisions and limitations specified in Sections 381, 382, 383 and 384 of the Code and the regulations thereunder. Under Section 381(b), the tax year of Target will end on the date of the Reorganization. Our opinion represents our best legal judgment as to the proper Federal income tax treatment of the Reorganization, based on the facts contained in the Plan, the N-14 Registration Statement and the Representations. Our opinion assumes the accuracy of the facts as described in the Plan, the N-14 Registration Statement and the Representations and could be affected if any of the facts as so described are inaccurate. We are furnishing this opinion letter to the addressees hereof, solely for the benefit of such addressees in connection with the Reorganization. This opinion letter is not to be used, circulated, quoted or otherwise referred to for any other purpose. Very truly yours, /s/ Sidley Austin Brown & Wood LLP -----END PRIVACY-ENHANCED MESSAGE-----