Merrill Lynch Settles Suit With Mutual Fund Shareholders

NEW YORK (Dow Jones)--Merrill Lynch & Co. (MER) agreed to settle a class-action lawsuit involving shareholders of two funds managed by Merrill Lynch Asset Management, the Short-Term Global Income Fund and the Short-Term World Income Portfolio. In a press release Wednesday, the company said it will pay $50 million in cash and $40 million in coupons that can be used in place of sales charges for purchases of Merrill Lynch Asset Management mutual funds. The payments will be made to World Income Portfolio investors who experienced a loss on a total return basis as of June 8, 1993, and to those Global Income Fund investors who experienced a loss on a total return basis as of Sept. 15, 1993. A Merrill Lynch spokesman said those eligible for payments must have bought into the funds before Oct. 31, 1992. According to the spokesman, the lawsuit alleged that Merrill Lynch did not adequately disclose all aspects of the funds' investment strategy. The company disputes that allegation, and did not admit any wrongdoing in the settlement. Merrill Lynch said the two funds were affected in 1992 by unprecedented volatility in some currencies within the European Monetary System.