Exhibit 17.(c)
[LOGO] Merrill Lynch Investment Managers www.mlim.ml.com
Prospectus
April 19, 2002
Merrill Lynch Global Bond Fund
for Investment and Retirement
This Prospectus contains information you should know before investing, including
information about risks. Please read it before you invest and keep it for future
reference.
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this Prospectus. Any representation to
the contrary is a criminal offense.
Table of Contents
PAGE
[ICON]KEY FACTS
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Merrill Lynch Global Bond Fund at a Glance 3
Risk/Return Bar Chart 5
Fees and Expenses 7
[ICON]DETAILS ABOUT THE FUND
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How the Fund Invests 9
Investment Risks 10
[ICON]YOUR ACCOUNT
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Merrill Lynch Select Pricing(SM) System 17
How to Buy, Sell, Transfer and Exchange Shares 23
Participation in Fee-Based Programs 27
[ICON]MANAGEMENT OF THE FUND
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Merrill Lynch Investment Managers 30
Financial Highlights 31
[ICON]FOR MORE INFORMATION
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Shareholder Reports Back Cover
Statement of Additional Information Back Cover
MERRILL LYNCH GLOBAL BOND FUND FOR INVESTMENT AND RETIREMENT
Key Facts
[ICON]
In an effort to help you better understand the many concepts involved in making
an investment decision, we have defined highlighted terms in this prospectus in
the sidebar.
Total Investment Return -- the combination of capital appreciation and
investment income.
Investment Grade Securities -- fixed income securities rated in one of the four
highest categories by the major rating agencies, including Moody's Investors
Service, Inc., Standard & Poor's and Fitch Ratings.
MERRILL LYNCH GLOBAL BOND FUND AT A GLANCE
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What is the Fund's investment objective?
The Fund's investment objective is to seek a high total investment return by
investing in a global portfolio of debt instruments denominated in various
currencies and multinational currency units.
What are the Fund's main investment strategies?
The Fund invests in a global portfolio of investment grade debt instruments.
Under normal market conditions, the Fund expects to invest at least 80% of its
net assets in debt securities denominated in the currencies of at least three
different countries or in multinational currency units. The Fund expects to
invest mainly in obligations denominated in the currencies of the U.S., Japan,
Canada, Western European nations (including the euro), New Zealand and
Australia. When selecting investments, Fund management will consider the current
yield of a security, the likelihood that the currency in which the security is
denominated will appreciate or depreciate compared to the U.S. dollar, and the
likelihood that interest rates in that currency will change.
The Fund may buy securities of all maturities issued by governments,
corporations and certain international organizations. However, the Fund does
not expect the average maturity of its portfolio to be more then ten years.
The Fund may invest in certain types of "derivative" securities. The Fund
cannot guarantee that it will achieve its objective.
What are the main risks of investing in the Fund?
As with any fund, the value of the Fund's investments -- and therefore the
value of the Fund's shares -- may fluctuate. These changes may occur because
particular bond markets in which the Fund invests are rising or falling, or in
response to interest rate changes, currency movements or credit risk.
Generally, when interest rates go up, the value of debt securities goes down
and when a currency appreciates (or depreciates) versus the U.S. dollar, fixed
income securities denominated in that currency appreciates (or depreciates) in
U.S. dollar terms. Also, Fund management may select securities that
underperform the bond markets, the relevant indices or other funds with
similar investment objectives and investment strategies. If the value of the
Fund's investments goes down, you may lose money.
Derivatives may be volatile and subject to liquidity, leverage and credit risk.
MERRILL LYNCH GLOBAL BOND FUND FOR INVESTMENT AND RETIREMENT 3
[ICON] Key Facts
The Fund invests a large part of its assets in foreign securities. Foreign
investing involves special risks -- including foreign currency risk and the
possibility of substantial volatility due to adverse political, economic or
other developments. Foreign securities may be less liquid and harder to value
than U.S. securities.
The Fund is a non-diversified fund, which means that it may invest more of its
assets in securities of a single issuer than if it were a diversified fund. If
the Fund invests in a smaller number of issuers, the Fund's risk is increased
because developments affecting an individual issuer have a greater impact on the
Fund's performance.
Who should invest?
The Fund may be an appropriate investment for you if you:
o Are investing for long term goals, such as retirement or funding a
child's education
o Want a professionally managed portfolio
o Are looking for exposure to a variety of fixed income markets around
the world
o Are willing to receive taxable distributions of income and capital
gains
o Are willing to accept the risks of foreign investing in order to seek a
high total investment return
4 MERRILL LYNCH GLOBAL BOND FUND FOR INVESTMENT AND RETIREMENT
RISK/RETURN BAR CHART
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The bar chart and table shown below provide an indication of the risks of
investing in the Fund. The bar chart shows changes in the Fund's performance for
Class B shares for each of the past ten calendar years. Sales charges are not
reflected in the bar chart. If these amounts were reflected, returns would be
less than those shown. The table compares the Fund's average annual total
returns (before and after taxes) with those of the broad measure of market
performance. How the Fund performed in the past (before and after taxes) is not
necessarily an indication of how the Fund will perform in the future.
[CHART OMITTED]
During the ten year period shown in the bar chart, the highest return for a
quarter was 6.45% (quarter ended September 30, 2001) and the lowest return for a
quarter was -4.82% (quarter ended March 31, 1997). The Fund's year-to-date
return as of March 31, 2002 was -2.29%
MERRILL LYNCH GLOBAL BOND FUND FOR INVESTMENT AND RETIREMENT 5
[ICON] Key Facts
The table below compares the average annual total returns of the Fund's shares
with those of the JP Morgan Global Government Bond Index, for the periods
indicated. After-tax returns are shown only for Class B shares and will vary for
other classes. The after-tax returns are calculated using the historical highest
marginal Federal individual income tax rates in effect during the periods
measured and do not reflect the impact of state and local taxes. Actual
after-tax returns depend on an investor's tax situation and may differ from
those shown. The after-tax returns shown are not relevant to investors who hold
their Fund shares through tax-deferred arrangements, such as 401(k) plans or
individual retirement accounts or through tax advantaged education savings
accounts.
Average Annual Total Returns (for the Ten Years or
periods ended December 31, 2001) One Year Five Years Life of Class
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Merrill Lynch Global Bond Fund -- Class A
Return Before Taxes* -7.63% -0.63% 3.06%
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Merrill Lynch Global Bond Fund -- Class B
Return Before Taxes* -8.28% -0.59% 2.68%
Return After Taxes on Distributions* -9.01% -1.47% 1.01%
Return After Taxes on Distributions and
Sale of Fund Shares* -5.03% -0.88% 1.37%
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Merrill Lynch Global Bond Fund -- Class C
Return Before Taxes* -5.52% -0.65% 1.69%+
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Merrill Lynch Global Bond Fund -- Class D
Return Before Taxes* -7.86% -0.86% 1.72%+
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JP Morgan Global Government Bond Index**
(reflects no deduction for fees, expenses or taxes):
Return for Past One, Five and Ten Years -0.80 2.42 5.25%
Return Since October 31, 1994 -- -- 4.69%
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*Includes all applicable fees and sales charges.
**This unmanaged broad-based index is comprised of government bonds in the
13 largest bond markets, including the United States. Past performance is
not predictive of future performance.
+ Class inception date is October 21, 1994.
6 MERRILL LYNCH GLOBAL BOND FUND FOR INVESTMENT AND RETIREMENT
UNDERSTANDING EXPENSES
Fund investors pay various fees and expenses, either directly or indirectly.
Listed below are some of the main types of expenses that the Fund may
charge:
Expenses paid directly by the shareholder:
Shareholder Fees -- these include sales charges that you may pay when you buy or
sell shares of the Fund.
Expenses paid indirectly by the shareholder:
Annual Fund Operating Expenses -- expenses that cover the costs of operating the
Fund. Management Fee -- a fee paid to the Investment Adviser for managing the
Fund.
Management Fee -- a fee paid to the Investment Adviser for managing the Fund.
Distribution Fees -- fees used to support the Fund's marketing and distribution
efforts, such as compensating Financial Advisors and other financial
intermediaries, advertising and promotion.
Service (Account Maintenance) Fees -- fees used to compensate securities dealers
and other financial intermediaries for account maintenance activities.
FEES AND EXPENSES
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The Fund offers four different classes of shares. Although your money will be
invested the same way no matter which class of shares you buy, there are
differences among the fees and expenses associated with each class. Not everyone
is eligible to buy every class. After determining which classes you are eligible
to buy, decide which class best suits your needs. Your Merrill Lynch Financial
Advisor can help you with this decision.
This table shows the different fees and expenses that you may pay if you buy and
hold the different classes of shares of the Fund. Future expenses may be greater
or less than those indicated below.
Shareholder Fees (fees paid directly from your
investment) (a): Class A Class B(b) Class C Class D
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Maximum Sales Charge (Load) imposed on
purchases (as a percentage of offering price) 4.00%(c) None None 4.00%(c)
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Maximum Deferred Sales Charge (Load) (as a
percentage of original purchase price or
redemption proceeds, whichever is lower) None(d) 4.00%(c) 1.00%(c) None(d)
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Maximum Sales Charge (Load) imposed on
Dividend Reinvestments None None None None
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Redemption Fee None None None None
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Exchange Fee None None None None
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Annual Fund Operating Expenses (expenses that are deducted
from fund assets):
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Management Fee 0.60% 0.60% 0.60% 0.60%
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Distribution and/or Service (12b-1) Fees (e) None 0.75% 0.80% 0.25%
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Other Expenses (including transfer
agency fees)(f) 0.80% 0.83% 0.86% 0.80%
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Total Annual Fund Operating Expenses 1.40% 2.18% 2.26% 1.65%
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(a) In addition, Merrill Lynch may charge clients a processing fee (currently
$5.35) when a client buys or sells shares. See "Your Account -- How to Buy,
Sell, Transfer and Exchange Shares."
(b) Class B shares automatically convert to Class D shares approximately ten
years after you buy them and will no longer be subject to distribution fees.
(c) Some investors may qualify for reductions in the sales charge (load).
(d) You may pay a deferred sales charge if you purchase $1 million or more and
you redeem within one year.
(e) The Fund calls the "Service Fee" an "Account Maintenance Fee." Account
Maintenance Fee is the term used elsewhere in this Prospectus and in all
other Fund materials. If you hold Class B or Class C shares over time, it
may cost you more in distribution (12b-1) fees than the maximum sales charge
that you would have paid if you had bought one of the other classes.
(f) Financial Data Services, Inc., an affiliate of the Investment Adviser,
provides transfer agency services to the Fund. The Fund pays a fee for these
services. The Investment Adviser or its affiliates also provide certain
accounting services to the Fund and the Fund reimburses the Investment
Adviser or it affiliates for such services.
MERRILL LYNCH GLOBAL BOND FUND FOR INVESTMENT AND RETIREMENT 7
[ICON]Key Facts
Examples:
These examples are intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds.
These examples assume that you invest $10,000 in the Fund for the time periods
indicated, that your investment has a 5% return each year, that you pay the
sales charges, if any, that apply to the particular class and that the Fund's
operating expenses remain the same. This assumption is not meant to indicate you
will receive a 5% annual rate of return. Your annual return may be more or less
than the 5% used in this example. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
EXPENSES IF YOU DID REDEEM YOUR SHARES:
---
1 Year 3 Years 5 Years 10 Years
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Class A $ 537 $ 825 $1,135 $2,013
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Class B $ 621 $ 882 $1,169 $2,513
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Class C $ 329 $ 706 $1,210 $2,595
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Class D $ 561 $ 900 $1,261 $2,276
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EXPENSES IF YOU DID NOT REDEEM YOUR SHARES:
-------
1 Year 3 Years 5 Years 10 Years
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Class A $ 537 $ 825 $1,135 $2,013
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Class B $ 221 $ 682 $1,169 $2,513
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Class C $ 229 $ 706 $1,210 $2,595
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Class D $ 561 $ 900 $1,261 $2,276
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8 MERRILL LYNCH GLOBAL BOND FUND FOR INVESTMENT AND RETIREMENT
[ICON]
Details About the Fund
ABOUT THE
PORTFOLIO MANAGER
Gareth Fielding has been Portfolio Manager of the Fund since 2001. Mr. Fielding
has been associated with Merrill Lynch Investment Managers since 1998. Mr.
Fielding was a Senior Portfolio Manager with J.P. Morgan from 1991 to 1998.
ABOUT THE
INVESTMENT ADVISER
The Fund is managed by Merrill Lynch Investment Managers.
HOW THE FUND INVESTS
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The Fund's main objective is to provide a high total investment return.
The Fund will invest in U.S. and foreign fixed-income securities that have a
long-term credit rating of A or better by Standard & Poor's or by Moody's
Investors Service, Inc., a short-term credit rating in the highest category of
either Standard & Poor's or Moody's or are unrated obligations that the Fund's
Investment Adviser believes are of same credit quality. Fixed-income securities
include:
o short-, intermediate- and long-term U.S. and foreign government debt
securities
o short-, intermediate- and long-term corporate debt securities issued by
U.S. companies and foreign companies
o term preferred stock (that is, preferred stock which returns principal at
a set time) issued by U.S. and foreign companies
o corporate debt securities convertible into common stock
o money market securities
Under normal circumstances, the Fund will invest at least 90% of its assets in
such securities.
The Fund may invest in fixed-income securities denominated in any currency or
multi-national currency unit. The Fund's management currently anticipates that
substantially all of the Fund's assets will be denominated in the currencies of
the United States, Canada, Western European nations, Australia, New Zealand,
Japan and other developed countries. Under normal circumstances, the Fund's
investments will be denominated in at least three currencies or multi-national
currency units.
The Fund may invest in securities of any maturity. Under normal circumstances,
however, the Fund will maintain a dollar-weighted average maturity of no greater
than ten years.
Fund management will seek investments for the Fund with the potential for
high total return. When selecting investments, Fund management will consider the
current yield of a security, the likelihood that the currency in which the
security is denominated will appreciate or depreciate versus the U.S. dollar,
and the likelihood that interest rates in that currency will change. The Fund
may invest in securities with relatively high current yields but little
potential for capital appreciation and also may invest in securities with
MERRILL LYNCH GLOBAL BOND FUND FOR INVESTMENT AND RETIREMENT 9
[ICON] Details About the Fund
relatively low current yields but higher potential for capital appreciation as a
result of interest or currency movements. The Fund may also invest in a security
with a relatively high current yield but the potential for loss of capital
through currency depreciation if, in the opinion of Fund management, the
security offers high potential total return.
Under certain adverse conditions and for temporary defensive purposes, the Fund
may limit the financial markets or currencies in which it will invest. This may
limit the potential for the Fund's shares to increase in value or for the Fund
to achieve its investment objective. In addition, the Fund will normally invest
a portion of the portfolio in U.S. dollars or short term interest bearing
securities denominated in U.S. dollars to provide for possible redemptions.
Investments in short term debt securities can be sold easily and have limited
risk of loss but earn only limited returns and may limit the Fund's ability to
meet its investment objective.
The Fund may use derivatives to hedge its portfolio against interest rate
risk and currency risk or to seek to increase its return. Derivatives are
financial instruments whose value is derived from another security, a commodity
(such as oil or gold), a currency or an index, such as the Standard and Poor's
500 Index. The derivatives that the Fund may use include options on portfolio
positions or currencies, financial and currency futures and options on these
futures, forward foreign currency transactions, indexed securities and swaps.
Derivatives allow the Fund to increase or decrease its risk exposure more
quickly and efficiently than other types of instruments.
The Fund may also lend its portfolio securities.
INVESTMENT RISKS
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This section contains a summary discussion of the general risks of investing in
the Fund. As with any mutual fund, there can be no guarantee that the Fund will
meet its goals or that the Fund's performance will be positive for any period of
time.
Market and Selection Risk -- Market risk is the risk that a bond market in one
or more countries in which the Fund invests will go down in value, including the
possibility that a market will go down sharply and unpredictably. Selection risk
is the risk that the securities that Fund
10 MERRILL LYNCH GLOBAL BOND FUND FOR INVESTMENT AND RETIREMENT
management selects will underperform the bond markets, the relevant indices
or other funds with similar investment objectives and investment strategies. As
with all debt securities, changes in market yields will affect the value of the
Fund's shares.
Currency Risk -- Securities in which the Fund invests are usually denominated or
quoted in currencies other than the U.S. dollar. Changes in foreign currency
exchange rates affect the value of the Fund's portfolio. Generally, when the
U.S. dollar rises in value against a foreign currency, a security denominated in
that currency loses value because the currency is worth fewer U.S. dollars.
Conversely, when the U.S. dollar decreases in value against a foreign currency,
a security denominated in that currency gains value because the currency is
worth more U.S. dollars. This risk, generally known as "currency risk," means
that a strong U.S. dollar will reduce returns for U.S. investors while a weak
U.S. dollar will increase those returns.
Credit Risk -- Credit risk is the risk that the issuer will be unable to pay the
interest or principal when due. The degree of credit risk depends on both the
financial condition of the issuer and the terms of the obligation.
Interest Rate Risk -- Interest rate risk is the risk that prices of bonds
generally increase when interest rates decline and decrease when interest rates
increase. Prices of longer term securities generally change more in response to
interest rate changes than prices of shorter term securities. Because the Fund
may invest a large part of its assets in fixed income securities with long
maturities, rising interest rates may cause the value of the Fund's investments
to decline significantly.
Foreign Market Risk -- Since the Fund invests in foreign securities, it offers
the potential for more diversification than an investment only in the United
States. This is because securities traded on foreign markets have often (though
not always) performed differently than securities traded in the United States.
However, such investments involve special risks not present in U.S. investments
that can increase the chances that the Fund will lose money. In particular, the
Fund is subject to the risk that because there are generally fewer investors in
certain foreign markets and a smaller number of securities traded each day, it
may make it difficult for the Fund to buy and sell securities in those markets.
In addition, prices of foreign securities may go up and down more than prices of
securities traded in the United States.
Foreign Economy Risk -- The economies of certain foreign markets often do not
compare favorably with the economy of the United States with respect to such
issues as growth of gross national product, reinvestment of
MERRILL LYNCH GLOBAL BOND FUND FOR INVESTMENT AND RETIREMENT 11
[ICON]Details About the Fund
capital, resources and balance of payments position. Certain such economies may
rely heavily on particular industries or foreign capital and are more vulnerable
to diplomatic developments, the imposition of economic sanctions against a
particular country or countries, changes in international trading patterns,
trade barriers and other protectionist or retaliatory measures.
Investments in foreign markets may also be adversely affected by governmental
actions such as the imposition of capital controls, nationalization of companies
or industries, expropriation of assets or the imposition of punitive taxes. In
addition, the governments of certain countries may prohibit or impose
substantial restrictions on foreign investing in their capital markets or in
certain industries. Any of these actions could severely affect security prices,
impair the Fund's ability to purchase or sell foreign securities or transfer the
Fund's assets or income back into the United States, or otherwise adversely
affect the Fund's operations.
Other foreign market risks include foreign exchange controls, difficulties in
pricing securities, defaults on foreign government securities, difficulties in
enforcing favorable legal judgments in foreign courts and political and social
instability. Legal remedies available to investors in certain foreign countries
may be less extensive than those available to investors in the United States or
other foreign countries.
Governmental Supervision and Regulation/Accounting Standards -- Many foreign
governments supervise and regulate stock exchanges, brokers and the sale of
securities less than the United States does. Some countries may not have laws to
protect investors the way that the U.S. securities laws do. For example, some
foreign countries may have no laws or rules against insider trading. Insider
trading occurs when a person buys or sells a company's securities based on
non-public information about that company. Accounting standards in other
countries are not necessarily the same as in the United States. If the
accounting standards in another country do not require as much detail as U.S.
accounting standards, it may be harder for Fund management to completely and
accurately determine a company's financial condition. Also, brokerage
commissions and other costs of buying or selling securities often are higher in
foreign countries than they are in the United States. This reduces the amount
the Fund can earn on its investments.
Certain Risks of Holding Fund Assets Outside the United States -- The Fund
generally holds its foreign securities and cash in foreign banks and securities
depositories. Some foreign banks and securities depositories may be recently
organized or new to the foreign custody
12 MERRILL LYNCH GLOBAL BOND FUND FOR INVESTMENT AND RETIREMENT
business. In addition, there may be limited or no regulatory oversight over
their operations. Also, the laws of certain countries may put limits on the
Fund's ability to recover its assets if a foreign bank, depository or issuer of
a security, or any of their agents, goes bankrupt. In addition, it is often more
expensive for the Fund to buy, sell and hold securities in certain foreign
markets than in the United States. The increased expense of investing in foreign
markets reduces the amount the Fund can earn on its investments and typically
results in a higher operating expense ratio for the Fund than for investment
companies invested only in the United States.
Settlement Risk -- Settlement and clearance procedures in certain foreign
markets differ significantly from those in the United States. Foreign settlement
procedures and trade regulations also may involve certain risks (such as delays
in payment for or delivery of securities) not typically generated by the
settlement of U.S. investments. Communications between the United States and
emerging market countries may be unreliable, increasing the risk of delayed
settlements or losses of security certificates. Settlements in certain foreign
countries at times have not kept pace with the number of securities
transactions; these problems may make it difficult for the Fund to carry out
transactions. If the Fund cannot settle or is delayed in settling a purchase of
securities, it may miss attractive investment opportunities and certain of its
assets may be uninvested with no return earned thereon for some period. If the
Fund cannot settle or is delayed in settling a sale of securities, it may lose
money if the value of the security then declines or, if it has contracted to
sell the security to another party, the Fund could be liable to that party for
any losses incurred.
Non-Diversification Risk -- The Fund is a non-diversified fund. If the Fund
invests in securities of a smaller number of issuers, the Fund's risk is
increased because developments affecting an individual issuer have a greater
impact on the Fund's performance.
Securities Lending -- The Fund may lend securities with a value not exceeding
33 1/3% of its assets to financial institutions that provide cash or securities
issued or guaranteed by the U.S. Government as collateral. Securities lending
involves the risk that the borrower may fail to return the securities in a
timely manner or at all. As a result, the Fund may lose money and there may be a
delay in recovering the loaned securities. The Fund could also lose money if it
does not recover the securities and/or the value of the collateral falls,
including the value of investments made with cash collateral. These events could
trigger adverse tax consequences to the Fund.
MERRILL LYNCH GLOBAL BOND FUND FOR INVESTMENT AND RETIREMENT 13
[ICON]Details About the Fund
Risks associated with certain types of securities in which the Fund may invest
include:
Sovereign Debt -- The Fund may invest in sovereign debt securities. These
securities are issued or guaranteed by foreign government entities. Investments
in sovereign debt are subject to the risk that a government entity may delay or
refuse to pay interest or repay principal on its sovereign debt. Some of the
reasons may include cash flow problems, insufficient foreign currency reserves,
political considerations, the relative size of the government entity's debt
position to the economy or the failure to put in place economic reforms required
by the International Monetary Fund or other multilateral agencies. If a
government entity defaults, it may ask for more time in which to pay or for
further loans. There is no legal process for collecting sovereign debts that a
government does not pay nor bankruptcy proceeding by which all or part of a
sovereign debt that a government entity has not repaid may be collected.
Derivatives -- The Fund may use derivative instruments including options on
portfolio positions or currencies, financial and currency futures options on
these futures, forward foreign currency transactions, indexed securities and
swaps. Derivatives allow the Fund to increase or decrease its risk exposure more
quickly and efficiently than other types of instruments. Derivatives are
volatile and involve significant risks, including:
Credit Risk -- the risk that the counterparty (the party on the other side
of the transaction) on a derivative transaction will be unable to honor its
financial obligation to the Fund.
Currency Risk -- the risk that changes in the exchange rate between
currencies will adversely affect the value (in U.S. dollar terms) of an
investment.
Leverage Risk -- the risk associated with certain types of investments or
trading strategies (such as borrowing money to increase the amount of
investments) that relatively small market movements may result in large
changes in the value of an investment. Certain investments or trading
strategies that involve leverage can result in losses that greatly exceed
the amount originally invested.
14 MERRILL LYNCH GLOBAL BOND FUND FOR INVESTMENT AND RETIREMENT
Liquidity Risk -- the risk that certain securities may be difficult or
impossible to sell at the time that the seller would like or at the price
that the seller believes the security is currently worth.
The Fund may use derivatives for hedging purposes, including anticipatory
hedges, or to seek to increase its return. Hedging is a strategy in which the
Fund uses a derivative to offset the risks associated with other Fund holdings.
While hedging can reduce losses, it can also reduce or eliminate gains or cause
losses if the market moves in a different manner than anticipated by the Fund or
if the cost of the derivative outweighs the benefit of the hedge. Hedging also
involves the risk that changes in the value of the derivative will not match
those of the holdings being hedged as expected by the Fund, in which case any
losses on the holdings being hedged may not be reduced. There can be no
assurance that the Fund's hedging strategy will reduce risk or that hedging
transactions will be either available or cost effective. The Fund is not
required to use hedging and may choose not to do so.
Swap Agreements -- Swap agreements involve the risk that the party with whom the
Fund has entered into the swap will default on its obligation to pay the Fund
and the risk that the Fund will not be able to meet its obligations to pay the
other party to the agreement
When Issued Securities, Delayed Delivery Securities and Forward Commitments --
When issued and delayed delivery securities and forward commitments involve the
risk that the security the Fund buys will lose value prior to its delivery to
the Fund. There also is the risk that the security will not be issued or that
the other party will not meet its obligation, in which case the Fund loses both
the investment opportunity for the assets it has set aside to pay for the
security and any gain in the security's price.
Repurchase Agreements; Purchase and Sale Contracts -- The Fund may enter into
certain types of repurchase agreements or purchase and sale contracts. Under a
repurchase agreement, the seller agrees to repurchase a security (typically a
security issued or guaranteed by the U.S. Government) at a mutually agreed upon
time and price. This insulates the Fund from changes in the market value of the
security during the period, except for currency fluctuations. A purchase and
sale contract is similar to a repurchase agreement, but purchase and sale
contracts provide that the purchaser receives any interest on the security paid
during the period. If the seller fails to repurchase the security in either
situation and the market value declines, the Fund may lose money.
MERRILL LYNCH GLOBAL BOND FUND FOR INVESTMENT AND RETIREMENT 15
[ICON]Details About the Fund
Illiquid Securities -- The Fund may invest up to 15% of its net assets in
illiquid securities that it cannot easily sell within seven days at current
value or that have contractual or legal restrictions on resale. If the Fund buys
illiquid securities it may be unable to quickly sell them or may be able to sell
them only at a price below current value.
Restricted Securities -- Restricted securities have contractual or legal
restrictions on their resale. They include private placement securities that the
Fund buys directly from the issuer. Private placement and other restricted
securities may not be listed on an exchange and may have no active trading
market.
Restricted securities may be illiquid. The Fund may be unable to sell them on
short notice or may be able to sell them only at a price below current value.
The Fund may get only limited information about the issuer, so it may be less
able to predict a loss. In addition, if Fund management receives material
adverse nonpublic information about the issuer, the Fund will not be able to
sell the securities.
Rule 144A Securities -- Rule 144A securities are restricted securities that can
be resold to qualified institutional buyers but not to the general public. Rule
144A securities may have an active trading market, but carry the risk that the
active trading market may not continue.
STATEMENT OF ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
If you would like further information about the Fund, including how it invests,
please see the Statement of Additional Information.
16 MERRILL LYNCH GLOBAL BOND FUND FOR INVESTMENT AND RETIREMENT
[ICON]
Your Account
MERRILL LYNCH SELECT PRICING(SM)SYSTEM
- --------------------------------------------------------------------------------
The Fund offers four share classes, each with its own sales charge and
expense structure, allowing you to invest in the way that best suits your needs.
Each share class represents an ownership interest in the same investment
portfolio. When you choose your class of shares you should consider the size of
your investment and how long you plan to hold your shares. Your Merrill Lynch
Financial Advisor can help you determine which share class is best suited to
your personal financial goals.
For example, if you select Class A or Class D shares, you generally pay a sales
charge at the time of purchase. If you buy Class D shares, you also pay an
ongoing account maintenance fee of 0.25%. You may be eligible for a sales charge
reduction or waiver.
Certain financial intermediaries may charge additional fees in connection with
transactions in Fund shares. The Investment Adviser, the Distributor or their
affiliates may make payments out of their own resources to selected securities
dealers and other financial intermediaries for providing services intended to
result in the sale of Fund shares or for shareholder servicing activities.
If you select Class B or Class C shares, you will invest the full amount of your
purchase price, but you will be subject to a distribution fee of 0.50% for Class
B shares and 0.55% for Class C shares and an account maintenance fee of 0.25% on
both classes. Because these fees are paid out of the Fund's assets on an ongoing
basis, over time these fees increase the cost of your investment and may cost
you more than paying other types of sales charges. In addition, you may be
subject to a deferred sales charge when you sell Class B or Class C shares.
The Fund's shares are distributed by FAM Distributors, Inc., an affiliate of
Merrill Lynch.
MERRILL LYNCH GLOBAL BOND FUND FOR INVESTMENT AND RETIREMENT 17
[ICON]Your Account
The table below summarizes key features of the Merrill Lynch Select Pricing(SM)
System.
Class A Class B Class C Class D
- ------------------------------------------------------------------------------------------------------------------------------------
Availability Limited to certain investors Generally available through Generally available through Generally available through
including: Merrill Lynch. Limited Merrill Lynch. Limited Merrill Lynch. Limited
o Current Class A availability through availability through availability through
shareholders selected securities dealers selected securities dealers selected securities dealers
o Certain Retirement and other financial and other financial and other financial
Plans intermediaries. intermediaries. intermediaries.
o Participants in certain
Merrill Lynch
sponsored programs
o Certain affiliates of
Merrill Lynch,
selected securities
dealers and other
financial
intermediaries.
- ------------------------------------------------------------------------------------------------------------------------------------
Initial Sales Yes. Payable at time of No. Entire purchase price No. Entire purchase price Yes. Payable at time of
Charge? purchase. Lower sales charges is invested in shares of is invested in shares of purchase. Lower sales
available for larger the Fund. the Fund. charges available for larger
investments. investments.
- ------------------------------------------------------------------------------------------------------------------------------------
Deferred Sales No. (May be charged for Yes. Payable if you redeem Yes. Payable if you redeem No. (May be charged for
Charge? purchases over $1 million within four years of within one year of purchases over $1 million
that are redeemed within one purchase. purchase. that are redeemed within one
year.) year.)
- ------------------------------------------------------------------------------------------------------------------------------------
Account No. 0.25% Account Maintenance 0.25% Account Maintenance 0.25% Account Maintenance
Maintenance and Fee. 0.50% Distribution Fee. 0.55% Distribution Fee. No Distribution Fee.
Distribution Fees? Fee. Fee.
- ------------------------------------------------------------------------------------------------------------------------------------
Conversion to No. Yes, automatically after No. N/A
Class D shares? approximately ten years.
- ------------------------------------------------------------------------------------------------------------------------------------
18 MERRILL LYNCH GLOBAL BOND FUND FOR INVESTMENT AND RETIREMENT
Right of Accumulation -- permits you to pay the sales charge that would apply to
the cost or value (whichever is higher) of all shares you own in the Merrill
Lynch mutual funds that offer Select Pricing SM System options.
Letter of Intent -- permits you to pay the sales charge that would be applicable
if you add up all shares of Merrill Lynch Select Pricing(SM) System funds that
you agree to buy within a 13-month period. Certain restrictions apply.
Class A and Class D Shares -- Initial Sales Charge Options
If you select Class A or Class D shares, you will pay a sales charge at the
time of purchase as shown in the following table.
Dealer
Compensation
As a % of As a % of as a % of
Your Investment Offering Price Your Investment* Offering Price
- --------------------------------------------------------------------
Less than $25,000 4.00% 4.17% 3.75%
- --------------------------------------------------------------------
$25,000 but less
than $50,000 3.75% 3.90% 3.50%
- --------------------------------------------------------------------
$50,000 but less
than $100,000 3.25% 3.36% 3.00%
- --------------------------------------------------------------------
$100,000 but less
than $250,000 2.50% 2.56% 2.25%
- --------------------------------------------------------------------
$250,000 but less
than $1,000,000 1.50% 1.52% 1.25%
- --------------------------------------------------------------------
$1,000,000 and over** 0.00% 0.00% 0.00%
- --------------------------------------------------------------------
* Rounded to the nearest one-hundredth percent.
** If you invest $1,000,000 or more in Class A or Class D shares, you may not
pay an initial sales charge. In that case, the Investment Adviser
compensates the selling dealer or other financial intermediary from its own
funds. However, if you redeem your shares within one year after purchase,
you may be charged a deferred sales charge. This charge is 1.00% of the
lesser of the original cost of the shares being redeemed or your redemption
proceeds. A sales charge of 0.75% will be charged on purchases of
$1,000,000 or more of Class A or Class D shares by certain employer
sponsored retirement or savings plans.
No initial sales charge applies to Class A or Class D shares that you buy
through reinvestment of dividends.
A reduced or waived sales charge on a purchase of Class A or Class D shares may
apply for:
o Purchases under a Right of Accumulation or Letter of Intent
o Merrill Lynch Blueprint(SM) Program participants
o TMA(SM) Managed Trusts
o Certain Merrill Lynch investment or central asset accounts
o Certain employer-sponsored retirement or savings plans
o Purchases using proceeds from the sale of certain Merrill Lynch closed-end
funds under certain circumstances
MERRILL LYNCH GLOBAL BOND FUND FOR INVESTMENT AND RETIREMENT 19
[ICON]Your Account
o Certain investors, including directors or trustees of Merrill Lynch mutual
funds and Merrill Lynch employees
o Certain fee-based programs of Merrill Lynch and other financial
intermediaries that have agreements with the Distributor or its affiliates
Only certain investors are eligible to buy Class A shares. Your Merrill Lynch
Financial Advisor can help you determine whether you are eligible to buy Class A
shares or to participate in any of these programs.
If you decide to buy shares under the initial sales charge alternative and you
are eligible to buy both Class A and Class D shares, you should buy Class A
since Class D shares are subject to a 0.25% account maintenance fee, while Class
A shares are not.
If you redeem Class A or Class D shares and within 30 days buy new shares of
the same class, you will not pay a sales charge on the new purchase amount. The
amount eligible for this "Reinstatement Privilege" may not exceed the amount of
your redemption proceeds. To exercise the privilege, contact your Merrill Lynch
Financial Advisor, selected securities dealer, or other financial intermediary
or contact the Fund's Transfer Agent at 1-800-MER-FUND.
Class B and Class C Shares -- Deferred Sales Charge Options
If you select Class B or Class C shares, you do not pay an initial sales
charge at the time of purchase. However, if you redeem your Class B shares
within four years after purchase, or your Class C shares within one year after
purchase, you may be required to pay a deferred sales charge. You will also pay
distribution fees of 0.50% for Class B shares and 0.55% for Class C shares and
account maintenance fees of 0.25% for Class B and Class C shares each year under
distribution plans that the Fund has adopted under Rule 12b-1. Because these
fees are paid out of the Fund's assets on an ongoing basis, over time these fees
increase the cost of your investment and may cost you more than paying other
types of sales charges. The Distributor uses the money that it receives from the
deferred sales charges and the distribution fees to cover the costs of
marketing, advertising and compensating the Merrill Lynch Financial Advisor,
selected securities dealer or other financial intermediary who assists you in
purchasing Fund shares.
20 MERRILL LYNCH GLOBAL BOND FUND FOR INVESTMENT AND RETIREMENT
Class B Shares
If you redeem Class B shares within four years after purchase, you may be
charged a deferred sales charge. The amount of the charge gradually decreases as
you hold your shares over time, according to the following schedule:
Years Since Purchase Sales Charge*
---------------------------------------
0 - 1 4.00%
---------------------------------------
1 - 2 3.00%
---------------------------------------
2 - 3 2.00%
---------------------------------------
3 - 4 1.00%
---------------------------------------
4 and thereafter 0.00%
---------------------------------------
* The percentage charge will apply to the lesser of the original cost of the
shares being redeemed or the proceeds of your redemption. Shares acquired
through reinvestment of dividends are not subject to a deferred sales charge.
Not all Merrill Lynch funds have identical deferred sales charge schedules.
If you exchange your shares for shares of another fund, the higher charge
will apply.
The deferred sales charge relating to Class B shares may be reduced or waived in
certain circumstances, such as:
o Certain post-retirement withdrawals from an IRA or other retirement plan
if you are over 59 1/2 years old
o Redemption by certain eligible 401(a) and 401(k) plans, certain related
accounts, group plans participating in the Merrill Lynch Blueprint(SM)
Program and certain retirement plan rollovers
o Redemption in connection with participation in certain fee-based programs
of Merrill Lynch or other financial intermediaries that have agreements
with the Distributor or its affiliates, or in connection with involuntary
termination of an account in which Fund shares are held
o Withdrawals resulting from shareholder death or disability as long as the
waiver request is made within one year of death or disability or, if
later, reasonably promptly following completion of probate
o Withdrawal through the Merrill Lynch Systematic Withdrawal Plan of up to
10% per year of your Class B account value at the time the plan is
established
MERRILL LYNCH GLOBAL BOND FUND FOR INVESTMENT AND RETIREMENT 21
[ICON]Your Account
Your Class B shares convert automatically into Class D shares approximately ten
years after purchase. Any Class B shares received through reinvestment of
dividends paid on converting shares will also convert at that time. Class D
shares are subject to lower annual expenses than Class B shares. The conversion
of Class B to Class D shares is not a taxable event for Federal income tax
purposes.
Different conversion schedules apply to Class B shares of different Merrill
Lynch mutual funds. For example, Class B shares of a fixed-income fund typically
convert approximately ten years after purchase compared to approximately eight
years for equity funds. If you acquire your Class B shares in an exchange from
another fund with a shorter conversion schedule, the Fund's ten year conversion
schedule will apply. If you exchange your Class B shares in the Fund for Class B
shares of a fund with a longer conversion schedule, the other fund's conversion
schedule will apply. The length of time that you hold both the original and
exchanged Class B shares in both funds will count toward the conversion
schedule. The conversion schedule may be modified in certain other cases as
well.
Class C Shares
If you redeem Class C shares within one year after purchase, you may be charged
a deferred sales charge of 1.00%. The charge will apply to the lesser of the
original cost of the shares being redeemed or the proceeds of your redemption.
You will not be charged a deferred sales charge when you redeem shares that you
acquire through reinvestment of Fund dividends. The deferred sales charge
relating to Class C shares may be reduced or waived in connection with
involuntary termination of an account in which Fund shares are held and
withdrawals through the Merrill Lynch Systematic Withdrawal Plan.
Class C shares do not offer a conversion privilege.
22 MERRILL LYNCH GLOBAL BOND FUND FOR INVESTMENT AND RETIREMENT
HOW TO BUY, SELL, TRANSFER AND EXCHANGE SHARES
- --------------------------------------------------------------------------------
The chart on the following pages summarizes how to buy, sell, transfer and
exchange shares through Merrill Lynch, a selected securities dealer, broker,
investment adviser, service provider or other financial intermediary. You may
also buy shares through the Transfer Agent. To learn more about buying, selling,
transferring or exchanging shares through the Transfer Agent, call
1-800-MER-FUND. Because the selection of a mutual fund involves many
considerations, your Merrill Lynch Financial Advisor may help you with this
decision.
Because of the high costs of maintaining smaller shareholder accounts, the Fund
may redeem the shares in your account (without charging any deferred sales
charge) if the net asset value of your account falls below $500 due to
redemptions you have made. You will be notified that the value of your account
is less than $500 before the Fund makes an involuntary redemption. You will then
have 60 days to make an additional investment to bring the value of your account
to at least $500 before the Fund takes any action. This involuntary redemption
does not apply to retirement plans or Uniform Gifts or Transfers to Minors Act
accounts.
MERRILL LYNCH GLOBAL BOND FUND FOR INVESTMENT AND RETIREMENT 23
[ICON]Your Account
If You Want to Your Choices Information Important for You to Know
- ------------------------------------------------------------------------------------------------------------------------------------
Buy Shares First, select the share class appropriate for you Refer to the Merrill Lynch Select Pricing(SM)
table on page 18. Be sure to read this Prospectus
carefully.
---------------------------------------------------------------------------------------------------------------------
Next, determine the amount of your investment The minimum initial investment for the Fund is $1,000 for
all accounts except:
o $250 for certain Merrill Lynch fee-based
programs
o $100 for retirement plans
(The minimums for initial investments may be waived under
certain circumstances.)
---------------------------------------------------------------------------------------------------------------------
Have your Merrill Lynch Financial Advisor, selected The price of your shares is based on the next calculation
securities dealer or other financial intermediary submit of net asset value after your order is placed. Any
your purchase order purchase orders placed prior to the close of business on
the New York Stock Exchange (generally 4:00 p.m. Eastern
time) will be priced at the net asset value determined
that day. Certain financial intermediaries, however, may
require submission of orders prior to that time. Purchase
orders placed after that time will be priced at the net
asset value determined on the next business day. The Fund
may reject any order to buy shares and may suspend the
sale of shares at any time. Selected securities dealers
or other financial intermediaries, including Merrill
Lynch, may charge a processing fee to confirm a purchase.
Merrill Lynch currently charges a fee of $5.35.
---------------------------------------------------------------------------------------------------------------------
Or contact the Transfer Agent To purchase shares directly, call the Transfer Agent at
1-800-MER-FUND and request a purchase application. Mail
the completed purchase application to the Transfer Agent
at address on the inside back cover of this Prospectus.
- ------------------------------------------------------------------------------------------------------------------------------------
Add to Your Purchase additional shares The minimum investment for additional purchases is
Investment generally $50 except that retirement plans have a minimum
additional purchase of $1 and certain programs, such as
automatic investment programs, may have higher minimums.
(The minimums for additional purchases may be waived under
certain circumstances.)
---------------------------------------------------------------------------------------------------------------------
Acquire additional shares through the automatic All dividends are automatically reinvested without a sales
dividend reinvestment plan charge.
---------------------------------------------------------------------------------------------------------------------
Participate in the automatic investment plan You may invest a specific amount on a periodic basis
through certain Merrill Lynch investment or central asset
accounts.
- ------------------------------------------------------------------------------------------------------------------------------------
24 MERRILL LYNCH GLOBAL BOND FUND FOR INVESTMENT AND RETIREMENT
If You Want to Your Choices Information Important for You to Know
- ------------------------------------------------------------------------------------------------------------------------------------
Transfer Shares Transfer to a participating securities dealer or other You may transfer your Fund shares only to another
to Another financial intermediary securities dealer that has entered into an agreement with
Securities the Distributor. Certain shareholder services may not be
Dealer or Other available for the transferred shares. You may only
Financial purchase additional shares of funds previously owned
Intermediary before the transfer. All future trading of these assets
must be coordinated by the receiving firm.
------------------------------------------------------------------------------------------------------------------
Transfer to a non-participating securities dealer or You must either:
other financial intermediary o Transfer your shares to an account with the
Transfer Agent; or
o Sell your shares, paying any applicable deferred
sales charge.
- ------------------------------------------------------------------------------------------------------------------------------------
Sell Your Shares Have your Merrill Lynch Financial Advisor, selected The price of your shares is based on the next calculation
securities dealer or other financial intermediary of net asset value after your order is placed. For your
submit your sales order redemption request to be priced at the net asset value on
the day of your request, you must submit your request to
your dealer or other financial intermediary prior to that
day's close of business on the New York Stock Exchange
(generally 4:00 p.m. Eastern time). Certain financial
intermediaries, however, may require submission of orders
prior to that time. Any redemption request placed after
that time will be priced at the net asset value at the
close of business on the next business day.
Securities dealers or other financial intermediaries,
including Merrill Lynch, may charge a fee to process a
redemption of shares. Merrill Lynch currently charges a
fee of $5.35. No processing fee is charged if you redeem
shares directly through the Transfer Agent.
The Fund may reject an order to sell shares under certain
circumstances.
------------------------------------------------------------------------------------------------------------------
Sell through the Transfer Agent You may sell shares held at the Transfer Agent by writing
to the Transfer Agent at the address on the inside back
cover of this prospectus. All shareholders on the account
must sign the letter. A signature guarantee will
generally be required but may be waived in certain
limited circumstances. You can obtain a signature
guarantee from a bank, securities dealer, securities
broker, credit union, savings association, national
securities exchange or registered securities association.
A notary public seal will not be acceptable. If you hold
stock certificates, return the certificates with the
letter. The Transfer Agent will normally mail redemption
proceeds within seven days following receipt of a
properly completed request. If you make a redemption
request before the Fund has collected payment for the
purchase of shares, the Fund or the Transfer Agent may
delay mailing your proceeds. This delay will usually not
exceed ten days.
You may also sell shares held at the Transfer Agent by
telephone request if the amount being sold is less than
$50,000 and if certain other conditions are met. Contact
the Transfer Agent at 1-800-MER-FUND for details.
- ------------------------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH GLOBAL BOND FUND FOR INVESTMENT AND RETIREMENT 25
[ICON]Your Account
If You Want to Your Choices Information Important for You to Know
- ------------------------------------------------------------------------------------------------------------------------------------
Sell Shares Participate in the Fund's Systematic Withdrawal Plan You can choose to receive systematic payments from your
Systematically Fund account either by check or through direct deposit to
your bank account on a monthly or quarterly basis. If you
hold your Fund shares in a Merrill Lynch CMA(R), CBA(R)
or Retirement Account you can arrange for systematic
redemptions of a fixed dollar amount on a monthly,
bi-monthly, quarterly, semi-annual or annual basis, subject
to certain conditions. Under either method you must have
dividends automatically reinvested. For Class B and Class C
shares your total annual withdrawals cannot be more than
10% per year of the value of your shares at the time your
plan is established. The deferred sales charge is waived
for systematic redemptions. Ask your Merrill Lynch
Financial Advisor or other financial intermediary for
details.
- ------------------------------------------------------------------------------------------------------------------------------------
Exchange Your Select the fund into which you want to exchange. You can exchange your shares of the Fund for shares of many
Shares Be sure to read that fund's prospectus other Merrill Lynch mutual funds. You must have held the
shares used in the exchange for at least 15 calendar days
before you can exchange to another fund.
Each class of Fund shares is generally exchangeable for
shares of the same class of another fund. If you own Class
A shares and wish to exchange into a fund in which you have
no Class A shares (and are not eligible to purchase Class A
shares), you will exchange into Class D shares.
Some of the Merrill Lynch mutual funds impose a
different initial or deferred sales charge schedule. If you
exchange Class A or Class D shares for shares of a fund
with a higher initial sales charge than you originally
paid, you will be charged the difference at the time of
exchange. If you exchange Class B shares for shares of a
fund with a different deferred sales charge schedule, the
higher schedule will generally apply. The time you hold
Class B or Class C shares in both funds will count when
determining your holding period for calculating a deferred
sales charge at redemption. If you exchange Class A or
Class D shares for money market fund shares, you will
receive Class A shares of Summit Cash Reserves Fund. Class
B or Class C shares of the Fund will be exchanged for Class
B shares of Summit.
To exercise the exchange privilege contact your Merrill
Lynch Financial Advisor or other financial intermediary or
call the Transfer Agent at 1-800-MER-FUND.
Although there is currently no limit on the number of
exchanges that you can make, the exchange privilege may be
modified or terminated at any time in the future.
- ------------------------------------------------------------------------------------------------------------------------------------
Short term or excessive trading into and out of the Fund may harm performance by
disrupting portfolio management strategies and by increasing expenses.
Accordingly, the Fund may reject any purchase orders, including exchanges,
particularly from market timers or investors who, in Fund management's opinion,
have a pattern of short term or excessive trading or whose trading has been or
may be disruptive to the Fund. For these purposes, Fund management may consider
an investor's trading history in the Fund or other Merrill Lynch funds, and
accounts under common ownership or control.
26 MERRILL LYNCH GLOBAL BOND FUND FOR INVESTMENT AND RETIREMENT
Net Asset Value -- the market value of the Fund's total assets after deducting
liabilities, divided by the number of shares outstanding.
HOW SHARES ARE PRICED
- --------------------------------------------------------------------------------
When you buy shares, you pay the net asset value, plus any applicable sales
charge. This is the offering price. Shares are also redeemed at their net asset
value, minus any applicable deferred sales charge. The Fund calculates its net
asset value (generally by using market quotations) each day the New York Stock
Exchange is open as of the close of business on the Exchange, based on prices at
the time of closing. The Exchange generally closes at 4:00 p.m. Eastern time. If
events that are expected to materially affect the value of securities traded in
other markets occur between the close of those markets and the close of business
on the New York Stock Exchange, those securities may be valued at their fair
value. The net asset value used in determining your share price is the next one
calculated after your purchase or redemption order is placed. Foreign securities
owned by the Fund may trade on weekends or other days when the Fund does not
price its shares. As a result, the Fund's net asset value may change on days
when you will not be able to purchase or redeem the Fund's shares.
The Fund may accept orders from certain authorized financial intermediaries or
their designees. The Fund will be deemed to receive an order when accepted by
the intermediary or designee and the order will receive the net asset value next
computed by the Fund after such acceptance. If the payment for a purchase order
is not made by a designated later time, the order will be canceled and the
financial intermediary could be held liable for any losses.
Generally, Class A shares will have the highest net asset value because that
class has the lowest expenses, and Class D shares will have a higher net asset
value than Class B or Class C shares. Class B shares will have a higher net
asset value than Class C shares because Class B shares have lower distribution
expenses than Class C shares. Also dividends paid on Class A and Class D shares
will generally be higher than dividends paid on Class B and Class C shares
because Class A and Class D shares have lower expenses.
PARTICIPATION IN FEE-BASED PROGRAMS
- --------------------------------------------------------------------------------
If you participate in certain fee-based programs offered by Merrill Lynch or
other financial intermediaries, you may be able to buy Class A shares at net
asset value, including by exchanges from other share classes. Sales charges on
the shares being exchanged may be reduced or waived under certain circumstances.
MERRILL LYNCH GLOBAL BOND FUND FOR INVESTMENT AND RETIREMENT 27
[ICON]Your Account
Dividends -- ordinary income and capital gains paid to shareholders. Dividends
may be reinvested in additional Fund shares as they are paid.
You generally cannot transfer shares held through a fee-based program into
another account. Instead, you will have to redeem your shares held through the
program and purchase shares of another class, which may be subject to
distribution and account maintenance fees. This may be a taxable event and you
will pay any applicable sales charges.
If you leave one of these programs, your shares may be redeemed or automatically
exchanged into another class of Fund shares or into a money market fund. The
class you receive may be the class you originally owned when you entered the
program, or in certain cases, a different class. If the exchange is into Class B
shares, the period before conversion to Class D shares may be modified. Any
redemption or exchange will be at net asset value.
However, if you participate in the program for less than a specified period, you
may be charged a fee in accordance with the terms of the program.
Details about these features and the relevant charges are included in the
client agreement for each fee-based program and are available from your Merrill
Lynch Financial Advisor, selected securities dealer or other financial
intermediary.
DIVIDENDS AND TAXES
- --------------------------------------------------------------------------------
The Fund will distribute any net investment income monthly and any net realized
capital gains at least annually. The Fund may also pay a special distribution at
the end of the calendar year to comply with Federal tax requirements. If you
would like to receive dividends in cash, contact your Merrill Lynch Financial
Advisor, selected securities dealer, other financial intermediary or the
Transfer Agent. The Fund intends to make distributions that will either be taxed
as ordinary income or capital gains. Capital gains may be taxable to you at
different rates, depending, in part, on how long the Fund held the assets sold.
You will pay tax on dividends from the Fund whether you receive them in cash or
additional shares. If you redeem Fund shares or exchange them for shares of
another fund, you generally will be treated as having sold your shares and any
gain on the transaction may be subject to tax. Capital gain dividends are
generally taxed at different rates than ordinary income dividends.
28 MERRILL LYNCH GLOBAL BOND FUND FOR INVESTMENT AND RETIREMENT
"BUYING A DIVIDEND"
Unless your investment is in a tax deferred account, you may want to avoid
buying shares shortly before the Fund pays a dividend. The reason? If you buy
shares when a fund has realized but not yet distributed ordinary income or
capital gains, you will pay the full price for the shares and then receive a
portion of the price back in the form of a taxable dividend. Before investing
you may want to consult your tax adviser.
If you are neither a lawful permanent resident nor a citizen of the United
States or if you are a foreign entity, the Fund's ordinary income dividends
(which include distributions from an excess of net short term capital gains over
net long term capital losses) will generally be subject to a 30% U.S.
withholding tax, unless a lower treaty rate applies.
Dividends and interest received by the Fund may give rise to withholding and
other taxes imposed by foreign countries. Tax conventions between certain
countries and the United States may reduce or eliminate such taxes. You may be
able to claim a credit or take a deduction for foreign taxes paid by the Fund if
certain requirements are met.
By law, your dividends and redemption proceeds will be subject to a
withholding tax if you have not provided a taxpayer identification number or
social security number or if the number you have provided is incorrect.
This section summarizes some of the consequences under current Federal tax law
of an investment in the Fund. It is not a substitute for personal tax advice.
Consult your personal tax adviser about the potential tax consequences of an
investment in the Fund under all applicable tax laws.
MERRILL LYNCH GLOBAL BOND FUND FOR INVESTMENT AND RETIREMENT 29
[ICON]Management of the Fund
MERRILL LYNCH INVESTMENT MANAGERS
- --------------------------------------------------------------------------------
Merrill Lynch Investment Managers, the Fund's Investment Adviser, manages the
Fund's investments and its business operations under the overall supervision of
the Fund's Board of Trustees. The Investment Adviser has the responsibility for
making all investment decisions for the Fund. The Investment Adviser has a
sub-advisory agreement with Merrill Lynch Asset Management U.K. Limited, an
affiliate, under which the Investment Adviser may pay a fee for services it
receives. The Fund pays the Investment Adviser a fee at the annual rate of 0.60%
of the average daily net assets of the Fund.
Merrill Lynch Investment Managers was organized as an investment adviser in
1976 and offers investment advisory services to more than 50 registered
investment companies. Merrill Lynch Asset Management U.K. Limited was organized
as an investment adviser in 1986 and acts as sub-adviser to more than 50
registered investment companies. Merrill Lynch Investment Managers and its
affiliates had approximately $515 billion in investment company and other
portfolio assets under management as of February 2002.
30 MERRILL LYNCH GLOBAL BOND FUND FOR INVESTMENT AND RETIREMENT
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The Financial Highlights table is intended to help you understand the Fund's
financial performance for the past five years. Certain information reflects the
financial results for a single Fund share. The total returns in the table
represent the rate an investor would have earned or lost on an investment in the
Fund (assuming reinvestment of all dividends). The information has been audited
by Deloitte & Touche LLP, whose report, along with the Fund's financial
statements, is included in the Fund's Annual Report, which is available upon
request.
Class A Class B
---------------------------------------- ---------------------------------------------
For the Year Ended December 31, For the Year Ended December 31,
---------------------------------------- ---------------------------------------------
Increase (Decrease) in
Net Asset Value: 2001 2000 1999 1998 1997 2001 2000 1999 1998 1997
- ------------------------------------------------------------------------------------------------------------------
Per Share Operating
Performance:
- ------------------------------------------------------------------------------------------------------------------
Net asset value,
beginning of
year $8.13 $8.46 $9.66 $9.12 $9.56 $8.13 $8.47 $9.66 $9.12 $9.56
- ------------------------------------------------------------------------------------------------------------------
Investment income
-- net .22 .36 .45 .52 .54 .15 .29 .38 .45 .47
- ------------------------------------------------------------------------------------------------------------------
Realized and unrealized
gain (loss) on
investments and
foreign currency
transactions -- net (.52) (.33) (1.20) .54 (.44) (.52) (.34) (1.19) .54 (.44)
- ------------------------------------------------------------------------------------------------------------------
Total from investment
operations (.30) .03 (.75) 1.06 .10 (.37) (.05) (.81) .99 .03
- ------------------------------------------------------------------------------------------------------------------
Less dividends:
Investment income -- net -- -- (.34) (.52) (.14) -- -- (.28) (.45) (.13)
Return of capital -- net (.22) (.36) (.11) -- (.40) (.15) (.29) (.10) -- (.34)
- ------------------------------------------------------------------------------------------------------------------
Total dividends (.22) (.36) (.45) (.52) (.54) (.15) (.29) (.38) (.45) (.47)
- ------------------------------------------------------------------------------------------------------------------
Net asset value, end
of year $7.61 $8.13 $8.46 $9.66 $9.12 $7.61 $8.13 $8.47 $9.66 $9.12
- ------------------------------------------------------------------------------------------------------------------
Total Investment Return:*
- ------------------------------------------------------------------------------------------------------------------
Based on net asset value
per share (3.78)% .52% (7.92)% 11.99% 1.19% (4.53)% (.38)% (8.53)% 11.13% .41%
- ------------------------------------------------------------------------------------------------------------------
Ratios to Average
Net Assets:
- ------------------------------------------------------------------------------------------------------------------
Expenses 1.40% 1.07% 1.06% .92% .96% 2.18% 1.86% 1.84% 1.71% 1.73%
- ------------------------------------------------------------------------------------------------------------------
Investment income -- net 2.79% 4.50% 5.02% 5.57% 5.83% 2.02% 3.71% 4.24% 4.80% 5.07%
- ------------------------------------------------------------------------------------------------------------------
Supplemental Data:
- ------------------------------------------------------------------------------------------------------------------
Net assets, end of year
(in thousands) $8,815 $11,517 $16,776 $26,289 $27,522 $24,148 $38,426 $62,822 $110,620 $160,571
- ------------------------------------------------------------------------------------------------------------------
Portfolio turnover 124.66% 221.49% 138.81% 129.20% 699.63% 124.66% 221.49% 138.81% 129.20% 699.63%
- ------------------------------------------------------------------------------------------------------------------
* Total investment returns exclude the effects of sales charges.
MERRILL LYNCH GLOBAL BOND FUND FOR INVESTMENT AND RETIREMENT 31
[ICON]Management of the Fund
FINANCIAL HIGHLIGHTS (concluded)
- --------------------------------
Class C Class D
------------------------------------- ------------------------------------------
For the Year Ended December 31, For the Year Ended December 31,
------------------------------------- ------------------------------------------
Increase (Decrease) in
Net Asset Value: 2001 2000 1999 1998 1997 2001 2000 1999 1998 1997
- -----------------------------------------------------------------------------------------------------------
Per Share Operating
Performance:
- -----------------------------------------------------------------------------------------------------------
Net asset value,
beginning of
year $8.13 $8.46 $9.66 $9.12 $9.56 $8.13 $8.46 $9.66 $9.11 $9.55
- -----------------------------------------------------------------------------------------------------------
Investment income
-- net .15 .29 .37 .45 .46 .20 .32 .43 .50 .51
- -----------------------------------------------------------------------------------------------------------
Realized and unrealized
gain (loss) on
investments and
foreign currency
transactions -- net (.52) (.33) (1.20) .54 (.44) (.52) (.33) (1.20) .55 (.44)
- -----------------------------------------------------------------------------------------------------------
Total from investment
operations (.37) (.04) (.83) .99 .02 (.32) (.01) (.77) 1.05 .07
- -----------------------------------------------------------------------------------------------------------
Less dividends:
Investment income -- net -- -- (.28) (.45) (.12) -- -- (.32) (.50) (.13)
Return of capital -- net (.15) (.29) (.09) -- (.34) (.20) (.32) (.11) -- (.38)
- -----------------------------------------------------------------------------------------------------------
Total dividends (.15) (.29) (.37) (.45) (.46) (.20) (.32) (.43) (.50) (.51)
- -----------------------------------------------------------------------------------------------------------
Net asset value, end
of year $7.61 $8.13 $8.46 $9.66 $9.12 $7.61 $8.13 $8.46 $9.66 $9.11
- -----------------------------------------------------------------------------------------------------------
Total Investment Return:*
- -----------------------------------------------------------------------------------------------------------
Based on net asset value
per share (4.59)% (.32)% (8.69)% 11.07% .33% (4.02)% .27% (8.15)% 11.84% .94%
- -----------------------------------------------------------------------------------------------------------
Ratios to Average
Net Assets:
- -----------------------------------------------------------------------------------------------------------
Expenses 2.26% 1.91% 1.89% 1.75% 1.82% 1.65% 1.32% 1.31% 1.17% 1.19%
- -----------------------------------------------------------------------------------------------------------
Investment income
-- net 1.89% 3.65% 4.19% 4.74% 4.94% 2.52% 4.25% 4.77% 5.32% 5.66
- -----------------------------------------------------------------------------------------------------------
Supplemental Data:
- -----------------------------------------------------------------------------------------------------------
Net assets, end of year
(in thousands) $565 $407 $785 $1,848 $2,284 $25,504 $28,181 $34,894 $48,724 $49,813
- -----------------------------------------------------------------------------------------------------------
Portfolio turnover 124.66% 221.49% 138.81% 129.20%699.63% 124.66% 221.49% 138.81% 129.20% 699.63%
- -----------------------------------------------------------------------------------------------------------
* Total investment returns exclude the effects of sales charges.
32 MERRILL LYNCH GLOBAL BOND FUND FOR INVESTMENT AND RETIREMENT
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MERRILL LYNCH GLOBAL BOND FUND FOR INVESTMENT AND RETIREMENT
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MERRILL LYNCH GLOBAL BOND FUND FOR INVESTMENT AND RETIREMENT
[ICON]For More Information
Shareholder Reports
Additional information about the Fund's investments is available in the Fund's
annual and semi-annual reports to shareholders. In the Fund's annual report
you will find a discussion of the market conditions and investment strategies
that significantly affected the Fund's performance during its last fiscal
year. You may obtain these reports at no cost by calling 1-800-MER-FUND.
The Fund will send you one copy of each shareholder report and certain other
mailings regardless of the number of Fund accounts you have. To receive separate
shareholder reports for each account, call your Merrill Lynch Financial Advisor
or other financial intermediary or write to the Transfer Agent at its mailing
address. Include your name, address, tax identification number and Merrill Lynch
brokerage or mutual fund account number. If you have any questions, please call
your Merrill Lynch Financial Advisor or other financial intermediary or call the
Transfer Agent at 1-800-MER-FUND.
Statement of Additional Information
The Fund's Statement of Additional Information contains further information
about the Fund and is incorporated by reference (legally considered to be part
of this Prospectus). You may request a free copy by writing the Fund at
Financial Data Services, Inc., P.O. Box 45289, Jacksonville, Florida 32232-5289
or by calling 1-800-MER-FUND.
Contact your Merrill Lynch Financial Advisor or other financial intermediary
or contact the Fund at the telephone number or address indicated above if you
have any questions.
Information about the Fund (including the Statement of Additional Information)
can be reviewed and copied at the SEC's Public Reference Room in Washington,
D.C. Call 1-202-942-8090 for information on the operation of the public
reference room. This information is also available on the SEC's Internet site at
http://www.sec.gov and copies may be obtained upon payment of a duplicating fee,
by electronic request at the following e-mail address: publicinfo@sec.gov, or by
writing the Public Reference Section of the SEC, Washington, D.C. 20549-0102.
You should rely only on the information contained in this Prospectus. No one is
authorized to provide you with information that is different from information
contained in this Prospectus.
Investment Company Act File #811-4684
Code #10417-04-02
(c) Merrill Lynch Investment Managers, L.P.
[LOGO]Merrill Lynch Investment Managers
Prospectus
April 19, 2002
Merrill Lynch Global Bond Fund
for Investment and Retirement
This Prospectus contains information you should know before investing,
including information about risks. Please read it before you invest and keep it
for future reference.
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this Prospectus. Any representation to
the contrary is a criminal offense.
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