Exhibit 17(i)
(BULL LOGO)Merrill Lynch
Investment Managers
Semi-Annual Report
June 30, 2002
(BULL LOGO)Merrill Lynch
Investment Managers
- ---------------------------------------
[GRAPHIC OMITTED]
Merrill Lynch
This report is not authorized for use as Global Bond Fund
an offer of sale or a solicitation of an For Investment and
offer to buy shares of the Fund unless Retirement
accompanied or preceded by the Fund's
current prospectus. Past performance
results shown in this report should not
be considered a representation of future
performance. Investment return and
principal value of shares will fluctuate
so that shares, when redeemed, may be
worth more or less than their original
cost. Statements and other information
herein are as dated and are subject to
change.
Merrill Lynch Global Bond Fund
For Investment and Retirement
Box 9011
Princeton, NJ
08543-9011
_______________________________________
Printed on post-consumer recycled paper www.mlim.ml.com
Merrill Lynch Global Bond Fund for Investment and Retirement
PORTFOLIO INFORMATION
Type of Issues*
As of June 30, 2002
Percent of
Description Net Assets
U.S. Government & Agency Obligations 31.5%
Banks 11.5
Supranational 11.6
Sovereign Government Obligations 32.4
Geographical Diversification*
As of June 30, 2002
Percent of
Country Net Assets
Denmark 10.4%
Germany 6.0
Austria 4.0
Japan 5.9
United States 31.5
Spain 6.1
Sweden 8.1
Canada 2.7
Italy 12.3
Maturity of Investments*
As of June 30, 2002
Percent of
Description Net Assets
0 yr - 1 yr 14.0%
1 yr - 5 yrs 49.1
5 yrs - 10 yrs 21.9
10 yrs+ 15.0
*Percent of net assets may not equal 100%.
1
Merrill Lynch Global Bond Fund for Investment and Retirement June 30, 2002
DEAR SHAREHOLDER
Portfolio Matters
For the six months ended June 30, 2002, the Fund's Class A, Class B, Class C and
Class D Shares had total returns of +8.03%, +7.75%, +7.59% and +7.90%,
respectively, compared with a total return of +9.65% for the unmanaged J.P.
Morgan Global Government Bond Index. (Fund results shown do not reflect sales
charges and would be lower if sales charges were included. Complete performance
information can be found on pages 4 and 5 of this report to shareholders.)
The Fund remained neutral or slightly underweighted in dollar bloc bonds
throughout the six-month period because of continuing market volatility and
improving data. However, during the period yields fell as investors were wary
about leaving the safety of bonds. We maintained an overweighted position in
Europe during the first quarter of 2002 and then we established a modest
underweighted position in the second quarter. Both positions detracted from
performance. In the first quarter, inflationary concerns and the subsequent
threat of increased interest rates hit bond markets. As these concerns abated in
the second quarter, the bond markets reacted positively. The underweight
duration position in the United Kingdom was increased to one-third year in
February and then held for the rest of the period. However, UK yields fell
across the curve with the exception of the short end, which detracted very
slightly from performance. A one-third year underweight position in Japanese
government bonds (JGBs) was maintained throughout the period because of
continuing concerns over the fragile state of the Japanese economy. This was
also a negative contributor, as JGBs performed moderately well. On the positive
side, our overweighted position in the euro versus the U.S. dollar contributed
to the overall performance of the Fund, as the dollar embarked on a slide during
the second quarter.
Market Review
In the United States, the Treasury curve steepened, with the biggest fall in
yields of 32 basis points (0.32%) seen on the two-year note, as the long-end
barely moved. The Federal Reserve Board kept interest rates at their 40-year low
of 1.75% throughout the six-month period, and most of the movement at the short
end of the curve came from investors repricing interest rate expectations from
the very aggressive increase expectations in the first quarter. Confidence in
the strength of the recovery was undermined by some bad data releases, but
perhaps more importantly by rising oil prices and falling equity markets. Later
in the period there was a flight-to-quality effect because of concerns over
further possible terrorist attacks and a continuation of tensions in the Middle
East. Toward the end of the period bond markets were driven mainly by equity
returns, which were volatile and suffered from 100+ point swings. This turbulent
equity performance combined with some bad company results and accounting
problems supported bond markets.
The European yield curve flattened during the period, underperforming at
the short-end of the curve, which rose in places by nearly 40 basis points.
The European Central Bank (ECB) held interest rates at 3.25%, although
rhetoric became progressively more hawkish throughout the period. Toward the
end of the period, the ECB's worries over inflation began to abate somewhat as
encouraging inflation numbers were published in some of the member states and
May's estimated Eurozone consumer price index figures pointed to the lowest
expected inflation in five months, at 2.0%. There remain some potential
threats to inflation in the Eurozone including rising oil prices and the
threat of conflict in the Middle East and India/Pakistan.
Gilts performed well across all but the very shortest-dated maturities. Interest
rates remained at the 4% 40-year low despite house prices continuing to rise at
spectacular rates (19% year on year in May and 20% in June). Housing prices now
seem to be increasingly disconnected from retail prices and sales, posing
something of a dilemma to the Monetary Policy Committee. Rises in gilt yields
toward the end of the period were capped by a huge increase in retail sales and
higher-than-expected inflation. The concern for bond holders is that these
factors will combine to mean that interest rates may rise sooner and faster than
would otherwise have been the case.
JGBs performed moderately well across most of the curve, and outperformed more
particularly at the long end. Yields on the 30-year JGB fell by 30 basis
points--almost unheard of in recent times. The market experienced something of a
sell-off in February after Moody's Investors Service, the credit rating agency,
put Japanese sovereign debt on negative creditwatch. The troubled Japanese
banking sector was then struck yet another blow in March, when Moody's warned
that it would downgrade all of Japan's leading banks' financial
2
Merrill Lynch Global Bond Fund for Investment and Retirement June 30, 2002
strength and junior securities ratings. The logic behind this move was the
predicted increase in bad loans for this financial year, which would outweigh
any optimism seen in the stock markets. In May, Moody's downgraded Japanese
sovereign debt by two notches to A2, mainly because of concerns over the
country's perceived inability to pay back its debt. The downgrade did little to
move the markets, which had been pricing in this downgrade for some time. JGBs
continue to be supported by domestic investors who make up 95% of the market and
continue to look at debt as a safer alternative to banks or equities.
Credit markets had a volatile period, as the saga of Enron Corporation were
swiftly backed-up by the problems at Tyco International Ltd. and WorldCom, Inc.
Then the foreign exchange trading problems at Allied Irish Bank Group made
investors distinctly nervous. Nerves turned to fear when the U.S. Justice
Department charged Arthur Andersen LLP with obstruction of justice for allegedly
destroying documents relating to Enron Corporation and the U.S. Securities and
Exchange Commission commenced its investigation into WorldCom. These fears were
realized in April when WorldCom and Tyco securities bottomed out. WorldCom bonds
fell by 40% during April. The company announced a drop in profits in the first
quarter and was downgraded by both Standard & Poor's and Moody's Investors
Service. The problems carried on into June, when Tyco's chairman was indicted,
causing the company's stock to plummet by 25%. The end of June brought
allegations of fraudulent practices at the telecommunications giant WorldCom.
The announcement caused an immediate reaction as already low investor confidence
fell further and a flight to quality ensued. WorldCom bonds fell by 60% in one
day, and a default on payments is widely expected before the next coupon date.
Credit markets were adversely affected, with spreads widening across the board
but especially on lower credit qualities. Predictably, telecommunications
companies were the most severely affected by the troubles at WorldCom and
telecommunications spreads widened to record lev els.
Currencies
Dollar weakness was the main trend of the currency markets during the six-month
period ended June 30, 2002, especially in the second quarter. The euro
appreciated by 11.5% during the period, and the yen by 9.3%. In June, the euro
hit its highest level since February 2000, rising to 0.999 against the U.S.
dollar at the end of the month before falling off. Hitting parity against the
U.S. dollar is currently looking more likely. The Bank of Japan intervened twice
in the currency markets in a halfhearted attempt to halt the strengthening trend
of the yen, before enlisting the help of the Federal Reserve Board and the
European Central Bank on the last day of June. All three banks sold yen in a
massive attempt to weaken the currency. There was an immediate reaction as the
currency fell back to just below 120 to the U.S. dollar. How long this effect
will last remains to be seen. This is unlikely to be the last intervention by
the Bank of Japan, as a strong yen will be dangerous for the fragile state of
the Japanese economy. Should the yen fall below 115 to the U.S. dollar, exports
will be hit hard and the already dubious economic recovery in Japan will be
placed under severe pressure.
In Conclusion
We thank your for your investment in Merrill Lynch Global Bond Fund for
Investment and Retirement, and we look forward to serving your investment needs
in the months and years ahead.
Sincerely,
(Terry K. Glenn)
Terry K. Glenn
President and Trustee
(Gareth Fielding)
Gareth Fielding
Senior Vice President and
Portfolio Manager
August 7, 2002
3
Merrill Lynch Global Bond Fund for Investment and Retirement June 30, 2002
PERFORMANCE DATA
About Fund Performance
Investors are able to purchase shares of the Fund through the Merrill Lynch
Select Pricing (SM) System, which offers four pricing alternatives:
o Class A Shares incur a maximum initial sales charge (front-end load) of 4%
and bear no ongoing distribution or account maintenance fees. Class A Shares
are available only to eligible investors.
o Class B Shares are subject to a maximum contingent deferred sales charge of
4% if redeemed during the first year, decreasing 1% each year thereafter to
0% after the fourth year. In addition, Class B Shares are subject to a
distribution fee of 0.50% and an account maintenance fee of 0.25%. These
shares automatically convert to Class D Shares after approximately ten years.
(There is no initial sales charge for automatic share conversions.)
o Class C Shares are subject to a distribution fee of 0.55% and an account
maintenance fee of 0.25%. In addition, Class C Shares are subject to a 1%
contingent deferred sales charge if redeemed within one year of purchase.
o Class D Shares incur a maximum initial sales charge of 4% and an account
maintenance fee of 0.25% (but no distribution fee).
None of the past results shown should be considered a representation of
future performance. Performance results do not reflect the deduction of taxes
that a shareholder would pay on fund distributions or the redemption of fund
shares. Figures shown in the "Recent Performance Results" and "Average Annual
Total Return" tables assume reinvestment of all dividends and capital gains
distributions at net asset value on the payable date. Investment return and
principal value of shares will fluctuate so that shares, when redeemed, may
be worth more or less than their original cost. Dividends paid to each class
of shares will vary because of the different levels of account maintenance,
distribution and transfer agency fees applicable to each class, which are
deducted from the income available to be paid to shareholders.
Recent Performance Results*
Ten-Year/
6-Month 12-Month Since Inception Standardized
As of June 30, 2002 Total Return Total Return Total Return 30-Day Yield
- ---------------------------------------------------------------------------------------------------
ML Global Bond Fund Class A Shares +8.03% +10.39% +45.22% 1.91%
- ---------------------------------------------------------------------------------------------------
ML Global Bond Fund Class B Shares +7.75 + 9.66 +34.54 1.22
- ---------------------------------------------------------------------------------------------------
ML Global Bond Fund Class C Shares +7.59 + 9.47 +21.39 1.20
- ---------------------------------------------------------------------------------------------------
ML Global Bond Fund Class D Shares +7.90 +10.11 +27.05 1.68
- ---------------------------------------------------------------------------------------------------
* Investment results shown do not reflect sales charges; results shown would be
lower if a sales charge were included. Total investment returns are based on
changes in net asset values for the periods shown, and assume reinvestment of
all dividends and capital gains distributions at net asset value on the
payable date. The Fund's ten-year/since inception periods are ten years for
Class A & Class B Shares and from 10/21/94 for Class C & Class D Shares.
4
Merrill Lynch Global Bond Fund for Investment and Retirement June 30, 2002
PERFORMANCE DATA (concluded)
Average Annual Total Return
- --------------------------------------------------------------------
% Return Without % Return With
Sales Charge Sales Charge**
- --------------------------------------------------------------------
Class A Shares*
- --------------------------------------------------------------------
One Year Ended 6/30/02 +10.39% +5.97%
- --------------------------------------------------------------------
Five Years Ended 6/30/02 +2.36 +1.52
- --------------------------------------------------------------------
Ten Years Ended 6/30/02 +3.80 +3.38
- --------------------------------------------------------------------
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
- --------------------------------------------------------------------
Class B Shares*
- --------------------------------------------------------------------
One Year Ended 6/30/02 +9.66% +5.66%
- --------------------------------------------------------------------
Five Years Ended 6/30/02 +1.56 +1.56
- --------------------------------------------------------------------
Ten Years Ended 6/30/02 +3.01 +3.01
- --------------------------------------------------------------------
*Maximum contingent deferred sales charge is 4% and is reduced to 0% after 4
years.
**Assuming payment of applicable contingent deferred sales charge.
- --------------------------------------------------------------------
% Return % Return
Without CDSC With CDSC**
- --------------------------------------------------------------------
Class C Shares*
- --------------------------------------------------------------------
One Year Ended 6/30/02 +9.47% +8.47%
- --------------------------------------------------------------------
Five Years Ended 6/30/02 +1.51 +1.51
- --------------------------------------------------------------------
Inception (10/21/94) through 6/30/02 +2.55 +2.55
- --------------------------------------------------------------------
*Maximum contingent deferred sales charge is 1% and is reduced to 0% after 1
year.
**Assuming payment of applicable contingent deferred sales charge.
- --------------------------------------------------------------------
% Return Without % Return With
Sales Charge Sales Charge**
- --------------------------------------------------------------------
Class D Shares*
- --------------------------------------------------------------------
One Year Ended 6/30/02 +10.11% +5.71%
- --------------------------------------------------------------------
Five Years Ended 6/30/02 +2.10 +1.27
- --------------------------------------------------------------------
Inception (10/21/94) through 6/30/02 +3.16 +2.62
- --------------------------------------------------------------------
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
5
Merrill Lynch Global Bond Fund for Investment and Retirement June 30, 2002
SCHEDULE OF INVESTMENTS
- ---------------------------------------------------------------------------------------------------------------------------
Face Interest Maturity Percent of
Amount Long-Term Obligations Rate Date Value Net Assets
- ---------------------------------------------------------------------------------------------------------------------------
Austria
Banks YEN 260,000,000 Oesterreich Kontrollbank 1.80 % 3/22/2010 $ 2,332,651 4.0%
- ---------------------------------------------------------------------------------------------------------------------------
Total Investments in Austria (Cost--$2,299,205) 2,332,651 4.0
- ---------------------------------------------------------------------------------------------------------------------------
Canada
Supranational C$ 2,275,000 Inter-American Development Bank 7.25 11/03/2003 1,560,495 2.7
- ---------------------------------------------------------------------------------------------------------------------------
Total Investments in Canada (Cost--$1,513,318) 1,560,495 2.7
- ---------------------------------------------------------------------------------------------------------------------------
Denmark
Banks YEN 330,000,000 Deutsche Ausgleichsbank 1.85 9/20/2010 2,967,274 5.1
Supranational DKK 24,300,000 Realkredit Denmark 4.00 1/01/2007 3,090,683 5.3
- ---------------------------------------------------------------------------------------------------------------------------
Total Investments in Denmark (Cost--$5,640,725) 6,057,957 10.4
- ---------------------------------------------------------------------------------------------------------------------------
Germany
Banks EURO 1,400,000 Depfa Pfandbriefbank 5.00 2/03/2005 1,405,979 2.4
Sovereign 1,010,000 Bundesrepublik Deutschland 4.75 7/04/2028 917,552 1.6
Government 1,130,000 Bundesrepublik Deutschland 5.50 1/04/2031 1,152,481 2.0
Obligations
- ---------------------------------------------------------------------------------------------------------------------------
Total Investments in Germany (Cost--$3,246,364) 3,476,012 6.0
- ---------------------------------------------------------------------------------------------------------------------------
Italy
Sovereign 1,945,000 Buoni Poliennali del Tesoro 4.50 3/01/2007 1,913,775 3.3
Government YEN 310,000,000 Republic of Italy 3.75 6/08/2005 2,859,899 5.0
Obligations 261,000,000 Republic of Italy 1.80 2/23/2010 2,333,413 4.0
- ---------------------------------------------------------------------------------------------------------------------------
Total Investments in Italy (Cost--$6,733,536) 7,107,087 12.3
- ---------------------------------------------------------------------------------------------------------------------------
Japan
Sovereign 140,000,000 Kingdom of Spain 4.75 3/14/2005 1,311,296 2.3
Government
Obligations
Supranational 230,000,000 Asian Development Bank 3.125 6/29/2005 2,086,436 3.6
- ---------------------------------------------------------------------------------------------------------------------------
Total Investments in Japan (Cost--$3,631,816) 3,397,732 5.9
- ---------------------------------------------------------------------------------------------------------------------------
Spain
Sovereign EURO 1,890,000 Spanish Government Bonds 4.80 10/31/2006 1,887,281 3.2
Government 1,660,000 Spanish Government Bonds 5.50 7/30/2017 1,668,762 2.9
Obligations
- ---------------------------------------------------------------------------------------------------------------------------
Total Investments in Spain (Cost--$3,121,841) 3,556,043 6.1
- ---------------------------------------------------------------------------------------------------------------------------
6
Merrill Lynch Global Bond Fund for Investment and Retirement June 30, 2002
SCHEDULE OF INVESTMENTS (concluded)
- ---------------------------------------------------------------------------------------------------------------------------
Face Interest Maturity Percent of
Amount Long-Term Obligations Rate Date Value Net Assets
- ---------------------------------------------------------------------------------------------------------------------------
Sweden
Sovereign SEK 28,750,000 Swedish Government Bond 3.50 % 4/20/2006 $ 2,958,449 5.1%
Government 14,400,000 Swedish Government Bond 8.00 8/15/2007 1,760,805 3.0
Obligations
Total Investments in Sweden (Cost--$4,156,634) 4,719,254 8.1
- ---------------------------------------------------------------------------------------------------------------------------
United States
U.S. Govern- US$ 1,859,000 U.S. Treasury Bonds 8.00 11/15/2021 2,377,776 4.1
ment & Agency 2,310,000 U.S. Treasury Bonds 6.25 5/15/2030 2,502,289 4.3
Obligations 3,693,000 U.S. Treasury Notes 3.00 2/29/2004 3,714,493 6.4
3,868,000 U.S. Treasury Notes 3.625 3/31/2004 3,927,799 6.8
1,490,000 U.S. Treasury Notes 3.50 11/15/2006 1,463,460 2.5
3,071,000 U.S. Treasury Notes 5.00 2/15/2011 3,122,980 5.4
- ---------------------------------------------------------------------------------------------------------------------------
Total Investments in the United States (Cost--$16,940,237) 17,108,797 29.5
- ---------------------------------------------------------------------------------------------------------------------------
Total Investments in Long-Term Obligations (Cost--$47,283,676) 49,316,028 85.0
- ---------------------------------------------------------------------------------------------------------------------------
Short-Term Obligations
- ---------------------------------------------------------------------------------------------------------------------------
United States
U.S. Govern- US$ 1,200,000 U.S. Treasury Bills 1.685 9/12/2002 1,195,961 2.0
ment & Agency
Obligations*
- ---------------------------------------------------------------------------------------------------------------------------
Total Investments in Short-Term Obligations (Cost--$1,195,900) 1,195,961 2.0
- ---------------------------------------------------------------------------------------------------------------------------
Total Investments (Cost--$48,479,576) 50,511,989 87.0
Unrealized Appreciation on Forward Foreign Exchange Contracts--Net** 216,373 0.4
Other Assets Less Liabilities 7,298,832 12.6
------------ ------
Net Assets $ 58,027,194 100.0%
============ ======
- ---------------------------------------------------------------------------------------------------------------------------
*U.S. Government & Agency Obligations are traded on **Forward foreign exchange contracts as of June 30, 2002
a discount basis; the interest rate shown reflects were as follows:
the discount rate paid at the time of purchase by
the Fund. Foreign Expiration Unrealized
Currency Sold Date Depreciation
SEK 49,821,000 July 2002 $ (219,284)
YEN 3,638,800 July 2002 (958)
-------------
Total (US$ Commitment--$5,219,998) $ (220,242)
=============
Foreign Expiration Unrealized
Currency Purchased Date Appreciation
C$ 210,000 July 2002 $ 2,101
DKK 6,000,000 July 2002 32,746
EURO 6,997,000 July 2002 247,221
POUND 2,100,000 July 2002 87,665
YEN 215,600,000 July 2002 66,882
-------------
Total (US$ Commitment--$12,396,534) $ 436,615
-------------
Total Unrealized Appreciation on Forward
See Notes to Financial Statements. Foreign Exchange Contracts--Net $ 216,373
=============
7
Merrill Lynch Global Bond Fund for Investment and Retirement June 30, 2002
FINANCIAL INFORMATION
Statement of Assets and Liabilities as of June 30, 2002
- ---------------------------------------------------------------------------------------------------------------------------
Assets: Investments, at value (identified cost--$48,479,576) $ 50,511,989
Unrealized appreciation on forward foreign exchange contracts 216,373
Cash 2,838,889
Foreign cash (cost--$1,626,406) 1,624,558
Receivables:
Securities sold $ 2,333,071
Interest 783,391
Beneficial interest sold 13,421 3,129,883
--------------
Prepaid registration fees 80,527
--------------
Total assets 58,402,219
--------------
- ---------------------------------------------------------------------------------------------------------------------------
Liabilities: Payables:
Beneficial interest redeemed 153,613
Forward foreign exchange contracts 29,446
Investment adviser 26,094
Dividends to shareholders 23,665
Distributor 17,208 250,026
--------------
Accrued expenses 124,999
--------------
Total liabilities 375,025
--------------
- ---------------------------------------------------------------------------------------------------------------------------
Net Assets: Net assets $ 58,027,194
==============
- ---------------------------------------------------------------------------------------------------------------------------
Net Assets Class A Shares of beneficial interest, $.10 par value, unlimited
Consist of: number of shares authorized $ 111,505
Class B Shares of beneficial interest, $.10 par value, unlimited
number of shares authorized 244,023
Class C Shares of beneficial interest, $.10 par value, unlimited
number of shares authorized 14,963
Class D Shares of beneficial interest, $.10 par value, unlimited
number of shares authorized 342,091
Paid-in capital in excess of par 96,019,047
Accumulated investment loss--net $ (309,631)
Accumulated realized capital losses on investments and foreign
currency transactions--net (40,685,840)
Unrealized appreciation on investments and foreign currency
transactions--net 2,291,036
--------------
Total accumulated losses--net (38,704,435)
--------------
Net assets $ 58,027,194
==============
- ---------------------------------------------------------------------------------------------------------------------------
Net Asset Class A--Based on net assets of $9,080,244 and 1,115,045 shares
Value: of beneficial interest outstanding $ 8.14
==============
Class B--Based on net assets of $19,876,969 and 2,440,231 shares
of beneficial interest outstanding $ 8.15
==============
Class C--Based on net assets of $1,217,952 and 149,627 shares
of beneficial interest outstanding $ 8.14
==============
Class D--Based on net assets of $27,852,029 and 3,420,908 shares
of beneficial interest outstanding $ 8.14
==============
- ---------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
8
Merrill Lynch Global Bond Fund for Investment and Retirement June 30, 2002
FINANCIAL INFORMATION (continued)
Statement of Operations for the Six Months Ended June 30, 2002
Investment Interest $ 977,649
Income:
- ---------------------------------------------------------------------------------------------------------------------------
Expenses: Investment advisory fees $ 166,309
Account maintenance and distribution fees--Class B 77,283
Professional fees 48,397
Accounting services 42,212
Transfer agent fees--Class D 33,391
Account maintenance fees--Class D 32,110
Transfer agent fees--Class B 31,474
Printing and shareholder reports 26,719
Registration fees 25,146
Transfer agent fees--Class A 11,039
Trustees' fees and expenses 10,314
Custodian fees 6,481
Account maintenance and distribution fees--Class C 2,633
Pricing services 1,622
Transfer agent fees--Class C 955
Other 7,817
--------------
Total expenses 523,902
--------------
Investment income--net 453,747
--------------
- ---------------------------------------------------------------------------------------------------------------------------
Realized & Realized gain (loss) on:
Unrealized Investments--net (33,105)
Gain (Loss) on Foreign currency transactions--net 20,367 (12,738)
Investments & --------------
Foreign Change in unrealized appreciation/depreciation on:
Currency Investments--net 3,479,302
Transactions-- Foreign currency transactions--net 319,928 3,799,230
Net: -------------- --------------
Total realized and unrealized gain on investments and foreign
currency transactions--net 3,786,492
--------------
Net Increase in Net Assets Resulting from Operations $ 4,240,239
==============
- ---------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
9
Merrill Lynch Global Bond Fund for Investment and Retirement June 30, 2002
FINANCIAL INFORMATION (continued)
Statements of Changes in Net Assets
For the Six For the
Months Ended Year Ended
June 30, December 31,
Increase (Decrease) in Net Assets: 2002 2001
- ---------------------------------------------------------------------------------------------------------------------------
Operations: Investment income--net $ 453,747 $ 1,592,758
Realized loss on investments and foreign currency transactions--net (12,738) (5,652,478)
Change in unrealized appreciation/depreciation on investments and
foreign currency transactions--net 3,799,230 1,049,851
-------------- --------------
Net increase (decrease) in net assets resulting from operations 4,240,239 (3,009,869)
-------------- --------------
- ---------------------------------------------------------------------------------------------------------------------------
Dividends to Investment income--net:
Shareholders: Class A (86,242) --
Class B (128,448) --
Class C (3,876) --
Class D (228,506) --
Return of capital--net:
Class A -- (283,999)
Class B -- (611,668)
Class C -- (9,896)
Class D -- (675,162)
-------------- --------------
Net decrease in net assets resulting from dividends to shareholders (447,072) (1,580,725)
-------------- --------------
- ---------------------------------------------------------------------------------------------------------------------------
Beneficial Net decrease in net assets derived from beneficial interest
Interest transactions (4,797,884) (14,908,274)
Transactions: -------------- --------------
- ---------------------------------------------------------------------------------------------------------------------------
Net Assets: Total decrease in net assets (1,004,717) (19,498,868)
Beginning of period 59,031,911 78,530,779
-------------- --------------
End of period* $ 58,027,194 $ 59,031,911
============== ==============
- ---------------------------------------------------------------------------------------------------------------------------
*Accumulated investment loss--net $ (309,631) $ (316,306)
============== ==============
- ---------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
10
Merrill Lynch Global Bond Fund for Investment and Retirement June 30, 2002
FINANCIAL INFORMATION (continued)
- ---------------------------------------------------------------------------------------------------------------------------
Financial Highlights
Class A
--------------------------------------------------------------
The following per share data and ratios For the
have been derived from information Six Months
provided in the financial statements. Ended For the Year Ended December 31,
June 30, -------------------------------------------------
Increase (Decrease) in Net Asset Value: 2002 2001 2000 1999 1998
- ---------------------------------------------------------------------------------------------------------------------------
Per Share Net asset value, beginning of period $ 7.61 $ 8.13 $ 8.46 $ 9.66 $ 9.12
Operating ---------- ---------- ---------- ---------- ----------
Performance: Investment income--net .08++ .22 .36 .45 .52
Realized and unrealized gain (loss)
on investments and foreign currency
transactions--net .53 (.52) (.33) (1.20) .54
---------- ---------- ---------- ---------- ----------
Total from investment operations .61 (.30) .03 (.75) 1.06
---------- ---------- ---------- ---------- ----------
Less dividends:
Investment income--net (.08) -- -- (.34) (.52)
Return of capital--net -- (.22) (.36) (.11) --
---------- ---------- ---------- ---------- ----------
Total dividends (.08) (.22) (.36) (.45) (.52)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 8.14 $ 7.61 $ 8.13 $ 8.46 $ 9.66
========== ========== ========== ========== ==========
- ---------------------------------------------------------------------------------------------------------------------------
Total Based on net asset value per share 8.03%++++ (3.78%) .52% (7.92%) 11.99%
Investment ========== ========== ========== ========== ==========
Return:**
- ---------------------------------------------------------------------------------------------------------------------------
Ratios to Expenses 1.47%* 1.40% 1.07% 1.06% .92%
Average ========== ========== ========== ========== ==========
Net Assets: Investment income--net 2.03%* 2.79% 4.50% 5.02% 5.57%
========== ========== ========== ========== ==========
- ---------------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, end of period (in thousands) $ 9,080 $ 8,815 $ 11,517 $ 16,776 $ 26,289
Data: ========== ========== ========== ========== ==========
Portfolio turnover 113.08% 124.66% 221.49% 138.81% 129.20%
========== ========== ========== ========== ==========
- ---------------------------------------------------------------------------------------------------------------------------
*Annualized.
**Total investment returns exclude the effects of sales charges.
++Based on average shares outstanding.
++++Aggregate total investment return.
See Notes to Financial Statements.
11
Merrill Lynch Global Bond Fund for Investment and Retirement June 30, 2002
FINANCIAL INFORMATION (continued)
Financial Highlights (continued)
Class B
--------------------------------------------------------------
The following per share data and ratios For the
have been derived from information Six Months
provided in the financial statements. Ended For the Year Ended December 31,
June 30, -------------------------------------------------
Increase (Decrease) in Net Asset Value: 2002 2001 2000 1999 1998
- ---------------------------------------------------------------------------------------------------------------------------
Per Share Net asset value, beginning of period $ 7.61 $ 8.13 $ 8.47 $ 9.66 $ 9.12
Operating ---------- ---------- ---------- ---------- ----------
Performance: Investment income--net .05++ .15 .29 .38 .45
Realized and unrealized gain (loss)
on investments and foreign currency
transactions--net .54 (.52) (.34) (1.19) .54
---------- ---------- ---------- ---------- ----------
Total from investment operations .59 (.37) (.05) (.81) .99
---------- ---------- ---------- ---------- ----------
Less dividends:
Investment income--net (.05) -- -- (.28) (.45)
Return of capital--net -- (.15) (.29) (.10) --
---------- ---------- ---------- ---------- ----------
Total dividends (.05) (.15) (.29) (.38) (.45)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 8.15 $ 7.61 $ 8.13 $ 8.47 $ 9.66
========== ========== ========== ========== ==========
- ---------------------------------------------------------------------------------------------------------------------------
Total Based on net asset value per share 7.75%++++ (4.53%) (.38%) (8.53%) 11.13%
Investment ========== ========== ========== ========== ==========
Return:**
- ---------------------------------------------------------------------------------------------------------------------------
Ratios to Expenses 2.27%* 2.18% 1.86% 1.84% 1.71%
Average ========== ========== ========== ========== ==========
Net Assets: Investment income--net 1.27%* 2.02% 3.71% 4.24% 4.80%
========== ========== ========== ========== ==========
- ---------------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, end of period (in thousands) $ 19,877 $ 24,148 $ 38,426 $ 62,822 $ 110,620
Data: ========== ========== ========== ========== ==========
Portfolio turnover 113.08% 124.66% 221.49% 138.81% 129.20%
========== ========== ========== ========== ==========
- ---------------------------------------------------------------------------------------------------------------------------
*Annualized.
**Total investment returns exclude the effects of sales charges.
++Based on average shares outstanding.
++++Aggregate total investment return.
See Notes to Financial Statements.
Merrill Lynch Global Bond Fund for Investment and Retirement June 30, 2002
FINANCIAL INFORMATION (continued)
Financial Highlights (continued)
Class C
--------------------------------------------------------------
The following per share data and ratios For the
have been derived from information Six Months
provided in the financial statements. Ended For the Year Ended December 31,
June 30, -------------------------------------------------
Increase (Decrease) in Net Asset Value: 2002 2001 2000 1999 1998
- ---------------------------------------------------------------------------------------------------------------------------
Per Share Net asset value, beginning of period $ 7.61 $ 8.13 $ 8.46 $ 9.66 $ 9.12
Operating ---------- ---------- ---------- ---------- ----------
Performance: Investment income--net .05++ .15 .29 .37 .45
Realized and unrealized gain (loss)
on investments and foreign currency
transactions--net .52 (.52) (.33) (1.20) .54
---------- ---------- ---------- ---------- ----------
Total from investment operations .57 (.37) (.04) (.83) .99
---------- ---------- ---------- ---------- ----------
Less dividends:
Investment income--net (.04) -- -- (.28) (.45)
Return of capital--net -- (.15) (.29) (.09) --
---------- ---------- ---------- ---------- ----------
Total dividends (.04) (.15) (.29) (.37) (.45)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 8.14 $ 7.61 $ 8.13 $ 8.46 $ 9.66
========== ========== ========== ========== ==========
- ---------------------------------------------------------------------------------------------------------------------------
Total Based on net asset value per share 7.59%++++ (4.59%) (.32%) (8.69%) 11.07%
Investment ========== ========== ========== ========== ==========
Return:**
- ---------------------------------------------------------------------------------------------------------------------------
Ratios to Expenses 2.29%* 2.26% 1.91% 1.89% 1.75%
Average ========== ========== ========== ========== ==========
Net Assets: Investment income--net 1.20%* 1.89% 3.65% 4.19% 4.74%
========== ========== ========== ========== ==========
- ---------------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, end of period (in thousands) $ 1,218 $ 565 $ 407 $ 785 $ 1,848
Data: ========== ========== ========== ========== ==========
Portfolio turnover 113.08% 124.66% 221.49% 138.81% 129.20%
========== ========== ========== ========== ==========
- ---------------------------------------------------------------------------------------------------------------------------
*Annualized.
**Total investment returns exclude the effects of sales charges.
++Based on average shares outstanding.
++++Aggregate total investment return.
See Notes to Financial Statements.
Merrill Lynch Global Bond Fund for Investment and Retirement June 30, 2002
FINANCIAL INFORMATION (concluded)
Financial Highlights (concluded)
Class D
--------------------------------------------------------------
The following per share data and ratios For the
have been derived from information Six Months
provided in the financial statements. Ended For the Year Ended December 31,
June 30, -------------------------------------------------
Increase (Decrease) in Net Asset Value: 2002 2001 2000 1999 1998
- ---------------------------------------------------------------------------------------------------------------------------
Per Share Net asset value, beginning of period $ 7.61 $ 8.13 $ 8.46 $ 9.66 $ 9.11
Operating ---------- ---------- ---------- ---------- ----------
Performance: Investment income--net .07++ .20 .32 .43 .50
Realized and unrealized gain (loss)
on investments and foreign currency
transactions--net .53 (.52) (.33) (1.20) .55
---------- ---------- ---------- ---------- ----------
Total from investment operations .60 (.32) (.01) (.77) 1.05
---------- ---------- ---------- ---------- ----------
Less dividends:
Investment income--net (.07) -- -- (.32) (.50)
Return of capital--net -- (.20) (.32) (.11) --
---------- ---------- ---------- ---------- ----------
Total dividends (.07) (.20) (.32) (.43) (.50)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 8.14 $ 7.61 $ 8.13 $ 8.46 $ 9.66
========== ========== ========== ========== ==========
- ---------------------------------------------------------------------------------------------------------------------------
Total Based on net asset value per share 7.90%++++ (4.02%) .27% (8.15%) 11.84%
Investment ========== ========== ========== ========== ==========
Return:**
- ---------------------------------------------------------------------------------------------------------------------------
Ratios to Expenses 1.72%* 1.65% 1.32% 1.31% 1.17%
Average ========== ========== ========== ========== ==========
Net Assets: Investment income--net 1.80%* 2.52% 4.25% 4.77% 5.32%
========== ========== ========== ========== ==========
- ---------------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, end of period (in thousands) $ 27,852 $ 25,504 $ 28,181 $ 34,894 $ 48,724
Data: ========== ========== ========== ========== ==========
Portfolio turnover 113.08% 124.66% 221.49% 138.81% 129.20%
========== ========== ========== ========== ==========
- ---------------------------------------------------------------------------------------------------------------------------
*Annualized.
**Total investment returns exclude the effects of sales charges.
++Based on average shares outstanding.
++++Aggregate total investment return.
See Notes to Financial Statements.
12
Merrill Lynch Global Bond Fund for Investment and Retirement June 30, 2002
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies: Merrill Lynch Global Bond Fund for
Investment and Retirement (the "Fund") is registered under the Investment
Company Act of 1940 as a non-diversified, open-end management investment
company. The Fund's financial statements are prepared in conformity with
accounting principles generally accepted in the United States of America, which
may require the use of management accruals and estimates. These unaudited
financial statements reflect all adjustments, which are, in the opinion of
management, necessary to a fair statement of the results for the interim period
presented. All such adjustments are of a normal, recurring nature. The Fund
offers four classes of shares under the Merrill Lynch Select Pricing (SM)System.
Shares of Class A and Class D are sold with a front-end sales charge. Shares of
Class B and Class C may be subject to a contingent deferred sales charge. All
classes of shares have identical voting, dividend, liquidation and other rights
and the same terms and conditions, except that Class B, Class C and Class D
Shares bear certain expenses related to the account maintenance of such shares,
and Class B and Class C Shares also bear certain expenses related to the
distribution of such shares. Each class has exclusive voting rights with respect
to matters relating to its account maintenance and distribution expenditures.
Income, expenses (other than expenses attributable to a specific class) and
realized and unrealized gains and losses on investments and foreign currency
transactions are allocated daily to each class based on its relative net assets.
The following is a summary of significant accounting policies followed by the
Fund.
(a) Valuation of securities--Securities traded in the over-the-counter market
are valued at the last available bid price prior to the time of valuation.
Portfolio securities that are traded on stock exchanges are valued at the last
sale price on the exchange on which such securities are traded, as of the close
of business on the day the securities are being valued or, lacking any sales, at
the last available bid price. In cases where securities are traded on more than
one exchange, the securities are valued on the exchange designated by or under
the authority of the Board of Trustees of the primary market. Options written or
purchased are valued at the last sale price in the case of exchange-traded
options. In the case of options traded in the over-the-counter market, valuation
is the last asked price (options written) or the last bid price (options
purchased). Options purchased are valued at the last sale price in the case of
exchange-traded options or, in the case of options traded in the
over-the-counter market, the last bid price. Other investments, including
futures contracts and related options, are stated at market value or otherwise
at the fair value at which it is expected they may be resold, as determined in
good faith by or under the direction of the Board of Trustees. Securities and
assets for which market quotations are not readily available are valued at fair
value as determined in good faith by or under the direction of the Fund's Board
of Trustees.
(b) Derivative financial instruments--The Fund may engage in various portfolio
investment strategies to increase or decrease the level of risk to which the
Fund is exposed more quickly and efficiently than transactions in other types of
instruments. Losses may arise due to changes in the value of the contract or if
the counterparty does not perform under the contract.
o Forward foreign exchange contracts--The Fund is authorized to enter into
forward foreign exchange contracts as a hedge against either specific
transactions or portfolio positions. The contract is marked-to-market daily and
the change in market value is recorded by the Fund as an unrealized gain or
loss. When the contract is closed, the Fund records a realized gain or loss
equal to the difference between the value at the time it was opened and the
value at the time it was closed.
o Foreign currency options and futures--The Fund may also purchase or sell
listed or over-the-counter foreign currency options, foreign currency futures
and related options on foreign currency futures as a short or long hedge against
possible variations in foreign exchange rates. Such transactions may be effected
with respect to hedges on non-U.S. dollar denominated securities owned by the
Fund, sold by the Fund but not yet delivered, or committed or anticipated to be
purchased by the Fund.
* Financial futures contracts--The Fund may purchase or sell financial futures
contracts and options on such futures contracts as a hedge against adverse
changes in interest rates. A futures contract
13
Merrill Lynch Global Bond Fund for Investment and Retirement June 30, 2002
NOTES TO FINANCIAL STATEMENTS (continued)
is an agreement between two parties to buy and sell a security, respectively,
for a set price on a future date. Upon entering into a contract, the Fund
deposits and maintains as collateral such initial margin as required by the
exchange on which the transaction is effected. Pursuant to the contract, the
Fund agrees to receive from or pay to the broker an amount of cash equal to the
daily fluctuation in value of the contract. Such receipts or payments are known
as variation margin and are recorded by the Fund as unrealized gains or losses.
When the contract is closed, the Fund records a realized gain or loss equal to
the difference between the value of the contract at the time it was opened and
the value at the time it was closed.
o Options--The Fund is authorized to write and purchase call and put options.
When the Fund writes an option, an amount equal to the premium received by the
Fund is reflected as an asset and an equivalent liability. The amount of the
liability is subsequently marked to market to reflect the current market value
of the option written.
When a security is purchased or sold through an exercise of an option, the
related premium paid (or received) is added to (or deducted from) the basis of
the security acquired or deducted from (or added to) the proceeds of the
security sold. When an option expires (or the Fund enters into a closing
transaction), the Fund realizes a gain or loss on the option to the extent of
the premiums received or paid (or gain or loss to the extent the cost of the
closing transaction exceeds the premium paid or received).
Written and purchased options are non-income producing investments.
(c) Foreign currency transactions--Transactions denominated in foreign
currencies are recorded at the exchange rate prevailing when recognized. Assets
and liabilities denominated in foreign currencies are valued at the exchange
rate at the end of the period. Foreign currency transactions are the result of
settling (realized) or valuing (unrealized) assets or liabilities expressed in
foreign currencies into U.S. dollars. Realized and unrealized gains or losses
from investments include the effects of foreign exchange rates on investments.
(d) Income taxes--It is the Fund's policy to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income to its shareholders. Therefore, no Federal
income tax provision is required. Under the applicable foreign tax law, a
withholding tax may be imposed on interest, dividends and capital gains at
various rates.
(e) Security transactions and investment income--Security transactions are
recorded on the dates the transactions are entered into (the trade dates).
Realized gains and losses on security transactions are determined on the
identified cost basis. Interest income is recognized on the accrual basis.
(f) Prepaid registration fees--Prepaid registration fees are charged to expense
as the related shares are issued.
(g) Dividends and distributions--Dividends from net investment income are
declared daily and paid monthly. Distributions of capital gains are recorded on
the ex-dividend dates.
2. Investment Advisory Agreement and Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Merrill Lynch
Investment Managers, L.P. ("MLIM"). The general partner of MLIM is Princeton
Services, Inc. ("PSI"), an indirect, wholly-owned subsidiary of Merrill Lynch &
Co., Inc. ("ML & Co."), which is the limited partner. The Fund has also entered
into a Distribution Agreement and Distribution Plans with FAM Distributors, Inc.
("FAMD" or the "Distributor"), which is a wholly-owned subsidiary of Merrill
Lynch Group, Inc.
MLIM is responsible for the management of the Fund's portfolio and provides the
necessary personnel, facilities, equipment and certain other services necessary
to the operations of the Fund. For such services, the Fund pays a monthly fee of
..60%, on an annual basis, of the average daily value of the Fund's net assets.
Pursuant to the Distribution Plans adopted by the Fund in accordance with Rule
12b-1 under the Investment Company Act of 1940, the Fund pays the Distributor
ongoing account maintenance and distribution fees. The fees are accrued daily
and
14
Merrill Lynch Global Bond Fund for Investment and Retirement June 30, 2002
paid monthly at annual rates based upon the average daily net assets of the
shares as follows:
- --------------------------------------------------------
Account
Maintenance Distribution
Fee Fee
- --------------------------------------------------------
Class B .25% .50%
Class C .25% .55%
Class D .25% --
- --------------------------------------------------------
Pursuant to a sub-agreement with the Distributor, Merrill Lynch, Pierce, Fenner
& Smith Incorporated ("MLPF&S"), a subsidiary of ML & Co., also provides account
maintenance and distribution services to the Fund. The ongoing account
maintenance fee compensates the Distributor and MLPF&S for providing account
maintenance services to Class B, Class C and Class D shareholders. The ongoing
distribution fee compensates the Distributor and MLPF&S for providing
shareholder and distribution-related services to Class B and Class C
shareholders.
For the six months ended June 30, 2002, FAMD earned underwriting discounts and
MLPF&S earned dealer concessions on sales of the Fund's Class D Shares as
follows:
- --------------------------------------------------------
FAMD MLPF&S
- --------------------------------------------------------
Class D $198 $2,648
- --------------------------------------------------------
For the six months ended June 30, 2002, MLPF&S received contingent deferred
sales charges of $3,334 and $98 relating to transactions in Class B and Class C
Shares, respectively.
For the six months ended June 30, 2002, Merrill Lynch Security Pricing Service,
an affiliate of MLPF&S, earned $242 for providing security price quotations to
complete the Fund's net asset value.
Financial Data Services, Inc. ("FDS"), a wholly-owned subsidiary of ML & Co.,
is the Fund's transfer agent.
For the six months ended June 30, 2002, the Fund reimbursed MLIM $3,949 for
certain accounting services.
Certain officers and/or trustees of the Fund are officers and/or directors of
MLIM, PSI, FAMD, FDS, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the six
months ended June 30, 2002 were $57,508,076 and $69,651,608, respectively.
Net realized gains (losses) for the six months ended June 30, 2002 and net
unrealized gains as of June 30, 2002 were as follows:
- -------------------------------------------------------------------
Realized
Gains Unrealized
(Losses) Gains
- -------------------------------------------------------------------
Investments:
Long-term $ (33,123) $ 2,032,352
Short-term 18 61
------------- -------------
Total investments (33,105) 2,032,413
------------- -------------
Currency transactions:
Foreign currency
transactions (240,491) 42,250
Forward foreign exchange
contracts 260,858 216,373
------------- -------------
Total currency transactions 20,367 258,623
------------- -------------
Total $ (12,738) $ 2,291,036
============= =============
- -------------------------------------------------------------------
As of June 30, 2002, net unrealized appreciation for Federal income tax purposes
aggregated $1,966,191, of which $2,253,554 related to appreciated securities and
$287,363 related to depreciated securities. The aggregate cost of investments at
June 30, 2002 for Federal income tax purposes was $48,545,798.
4. Beneficial Interest Transactions:
Net decrease in net assets derived from beneficial interest transactions was
$4,797,884 and $14,908,274 for the six months ended June 30, 2002 and for the
year ended December 31, 2001, respectively.
Transactions in shares of capital for each class were as follows:
- --------------------------------------------------------------------
Class A Shares for the Six Months Dollar
Ended June 30, 2002 Shares Amount
- --------------------------------------------------------------------
Shares sold 159,213 $ 1,222,336
Shares issued to shareholders
in reinvestment of dividends 4,217 32,143
------------- -------------
Total issued 163,430 1,254,479
Shares redeemed (207,117) (1,576,516)
------------- -------------
Net decrease (43,687) $ (322,037)
============= =============
- --------------------------------------------------------------------
15
Merrill Lynch Global Bond Fund for Investment and Retirement June 30, 2002
NOTES TO FINANCIAL STATEMENTS (concluded)
- --------------------------------------------------------------------
Class A Shares for the Year Dollar
Ended December 31, 2001 Shares Amount
- --------------------------------------------------------------------
Shares sold 338,085 $ 2,682,717
Shares issued to shareholders
in reinvestment of dividends 15,382 120,121
------------- -------------
Total issued 353,467 2,802,838
Shares redeemed (611,782) (4,807,425)
------------- -------------
Net decrease (258,315) $ (2,004,587)
============= =============
- --------------------------------------------------------------------
- --------------------------------------------------------------------
Class B Shares for the Six Months Dollar
Ended June 30, 2002 Shares Amount
- --------------------------------------------------------------------
Shares sold 38,855 $ 299,410
Shares issued to shareholders
in reinvestment of dividends 8,722 66,463
------------- -------------
Total issued 47,577 365,873
Automatic conversion of shares (417,585) (3,186,586)
Shares redeemed (363,265) (2,769,179)
------------- -------------
Net decrease (733,273) $ (5,589,892)
============= =============
- --------------------------------------------------------------------
- --------------------------------------------------------------------
Class B Shares for the Year Dollar
Ended December 31, 2001 Shares Amount
- --------------------------------------------------------------------
Shares sold 83,072 $ 656,472
Shares issued to shareholders
in reinvestment of dividends 40,013 313,370
------------- -------------
Total issued 123,085 969,842
Automatic conversion of shares (639,208) (5,048,243)
Shares redeemed (1,037,154) (8,152,105)
------------- -------------
Net decrease (1,553,277) $(12,230,506)
============= =============
- --------------------------------------------------------------------
- --------------------------------------------------------------------
Class C Shares for the Six Months Dollar
Ended June 30, 2002 Shares Amount
- --------------------------------------------------------------------
Shares sold 82,438 $ 643,675
Shares issued to shareholders
in reinvestment of dividends 356 2,719
------------- -------------
Total issued 82,794 646,394
Shares redeemed (7,486) (56,969)
------------- -------------
Net increase 75,308 $ 589,425
============= =============
- --------------------------------------------------------------------
- --------------------------------------------------------------------
Class C Shares for the Year Dollar
Ended December 31, 2001 Shares Amount
- --------------------------------------------------------------------
Shares sold 43,912 $ 345,003
Shares issued to shareholders
in reinvestment of dividends 957 7,485
------------- -------------
Total issued 44,869 352,488
Shares redeemed (20,684) (161,855)
------------- -------------
Net increase 24,185 $ 190,633
============= =============
- --------------------------------------------------------------------
- --------------------------------------------------------------------
Class D Shares for the Six Months Dollar
Ended June 30, 2002 Shares Amount
- --------------------------------------------------------------------
Shares sold 82,851 $ 638,666
Automatic conversion of shares 417,705 3,186,586
Shares issued to shareholders
in reinvestment of dividends 18,331 139,742
------------- -------------
Total issued 518,887 3,964,994
Shares redeemed (451,252) (3,440,374)
------------- -------------
Net increase 67,635 $ 524,620
============= =============
- --------------------------------------------------------------------
- --------------------------------------------------------------------
Class D Shares for the Year Dollar
Ended December 31, 2001 Shares Amount
- --------------------------------------------------------------------
Shares sold 36,281 $ 282,741
Automatic conversion of shares 639,577 5,048,243
Shares issued to shareholders
in reinvestment of dividends 55,944 437,560
------------- -------------
Total issued 731,802 5,768,544
Shares redeemed (846,529) (6,632,358)
------------- -------------
Net decrease (114,727) $ (863,814)
============= =============
- --------------------------------------------------------------------
5. Short-Term Borrowings:
The Fund, along with certain other funds managed by MLIM and its affiliates, is
a party to a $1,000,000,000 credit agreement with Bank One, N.A. and certain
other lenders. The Fund may borrow under the credit agreement to fund
shareholder redemptions and for other lawful purposes other than for leverage.
The Fund may borrow up to the maximum amount allowable under the Fund's current
prospectus and statement of additional information, subject to various other
legal, regulatory or contractual limits. The Fund pays a commitment fee of .09%
per annum based on the Fund's pro rata share of the unused portion of the credit
agreement. Amounts borrowed under the credit agreement bear interest at a rate
equal to, at each fund's election, the Federal Funds rate plus .50% or a base
rate as determined by Bank One, N.A. On November 30, 2001, the credit agreement
was renewed for one year under the same terms. The Fund did not borrow under the
credit agreement during the six months ended June 30, 2002.
6. Capital Loss Carryforward:
On December 31, 2001, the Fund had a net capital loss carryforward of
approximately $40,672,248, of which $23,790,675 expires in 2002, $10,514,501
expires in 2005, $3,475,027 expires in 2007, $2,499,201 expires in 2008 and
$392,844 expires 2009. This amount will be available to offset like amounts of
any future taxable gains.
16
Merrill Lynch Global Bond Fund for Investment and Retirement June 30, 2002
OFFICERS AND TRUSTEES
Terry K. Glenn, President and Trustee
Ronald W. Forbes, Trustee
Cynthia A. Montgomery, Trustee
Charles C. Reilly, Trustee
Kevin A. Ryan, Trustee
Roscoe S. Suddarth, Trustee
Richard R. West, Trustee
Edward D. Zinbarg, Trustee
Gareth Fielding, Senior Vice President
Donald C. Burke, Vice President and Treasurer
David Clayton, Secretary
Custodian
State Street Bank and Trust Company
P.O. Box 351
225 Franklin Street
Boston, MA 02101
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
19