MERRILL LYNCH
GLOBAL BOND
FUND
For Investment and
Retirement
FUND LOGO
Annual Report
December 31, 1994
This report is not authorized for use as an offer of sale or a solicitation
of an offer to buy shares of the Fund unless 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.
Merrill Lynch
Global Bond Fund
For Investment
And Retirement
Box 9011
Princeton, NJ
08543-9011
<PAGE>
Merrill Lynch Global Bond Fund for Investment and Retirement
PORTFOLIO INFORMATION
Type of Issues*
As of December 31, 1994
A bar chart illustrating the following percentages:
Financial Services 11.30%
US Government & Agency Obligations 20.74%
Sovereign/Regional Government Agency Obligations 5.36%
Sovereign Government Obligations 61.45%
Geographical Diversification*
As of December 31, 1994
A pie chart illustrating the following percentages:
Netherlands 5.72%
Belgium 1.67%
Spain 6.98%
Canada 1.00%
Denmark 6.71%
United Kingdom 8.53%
United States 22.65%
Italy 4.72%
Ireland 2.54%
Germany 10.62%
France 5.18%
Australia 6.28%
Maturity of Investments*
As of December 31, 1994
A bar chart depicting the following percentages:
0-6 months 16%
6 months-5 yrs 46%
5 yrs-10 yrs 34%
10 yrs+ 4%
[FN]
*Percent of net assets may not equal 100%.
<PAGE>
DEAR SHAREHOLDER
1994 was one of the most difficult years in history for global fixed-income
markets. The tumultuous combination of unexpected synchronized global growth,
heightened inflationary fears, successive interest rate hikes by the US
Federal Reserve Board, and massive selling by hedge funds caused global bond
prices to plummet.
While 1993 was marked by chronic global deflationary conditions, events during
1994 confirmed the realization that global growth had finally returned.
Initially, global growth was seen only among the English speaking countries,
such as the United States, Canada, Australia, New Zealand, and the United
Kingdom, followed by a resurgence of growth in continental Europe and the
beginnings of a recovery in Japan. In 1994, the Uruguay round of the General
Agreement on Tariffs and Trade was finally concluded, which created the
foundations to further enhance global growth prospects.
Global conditions during the year also challenged the value of the US dollar.
Early in 1994, we believed the relative shift in monetary policy between the
US and Germany would support the US currency as the Federal Reserve Board
raised US interest rates because of an accelerating economy while the
Bundesbank lowered interest rates to boost growth. However, negative market
sentiment regarding the pace of interest rate hikes severely depressed the US
dollar. In addition, the threat of a trade war with Japan conveyed the picture
of a government willing to use a weak currency to open up the Japanese
markets. Overall, this resulted in a 12% drop in the US dollar versus the
Deutschemark and the yen. Not until the Federal Reserve Board's 75 basis
point (0.75%) hike in November 1994 was US monetary policy credibility
reestablished, thereby allowing the US dollar to rebound late in the fourth
quarter. With nominal short-term interest rates continuing to favor the US
dollar versus the Deutschemark and the yen, we believe that over the near
term the US dollar will maintain its recent strength.
In the United States, six interest rate hikes during 1994 by the Federal
Reserve Board resulted in an increase in the Federal Funds rate from 3% to
5.5%, which completely reversed realized bond market gains over the past
four years. The Federal Reserve Board remains biased to further raise
short-term interest rates to contain building inflationary pressures,
especially as growth momentum has yet to show signs of slowing and the
new Republican Congress may shift fiscal policy to a slightly stimulative
stance.
During 1994, European gross domestic product (GDP) growth registered a 2.6%
pace compared to expectations of below 1% a year ago. Industrial production
surged, led by a boom in exports to rapidly growing economies in Asia and
Latin America at a time when inventory levels were extraordinarily low
following the recession of the prior few years. In Germany, monetary policy
continued to ease as the key 14-day repurchase agreement rate dropped from 6%
to 4.85% during the first seven months of 1994. However, following signs that
GDP was not about to slow, the Bundesbank shifted to a neutral stance in July.
Currently, both European bond and foreign exchange investors appear concerned
about an imminent hike in German interest rates. Further moderation in
inflation and money supply growth, continuation of lackluster consumer trends,
Deutschemark strength within Europe, and a very restrictive fiscal stance,
argue for a steady policy from the Bundesbank through the first half of 1995.
<PAGE>
The Japanese bond market performed poorly, although underperforming only the
United States, Germany and Belgium markets, despite a delay in the economy's
recovery and continued low inflation. As corporate balance sheets are expected
to remain under repair over the intermediate term, deflationary pressures will
remain strong, while recovery in consumer spending is expected to be sluggish.
Since fiscal policy will be pulling back from a stimulative stance, monetary
policy will bear the burden of supporting both the financial system and
Japan's budding recovery. While this policy mix is not generally supportive of
the currency, Japan's continued massive current account surplus will offer a
counterbalancing effect.
Fiscal Year in Review
Merrill Lynch Global Bond Fund registered its first negative total return for
a fiscal year since its inception in August 1986 as the US bond market
suffered its worst year on record. In fact, all of the Fund's primary bond
markets recorded negative rates of return.
As we entered 1994, we foresaw a moderation in the US economy from its rapid
pace in the second half of 1993, Europe and Japan remaining in recession until
late 1994, and inflationary pressures remaining subdued. However, US inflation
pressures built rapidly, although they have not shown up in consumer price
inflation, and European growth exploded in the second quarter. Merrill Lynch
Global Bond Fund entered the year with an average maturity of roughly 9.5
years, and an overweighted position in European bonds. Performance suffered as
our high average maturity in a rising interest rate environment, plus our
overweight holdings in Canada and Australia, dramatically underperformed the
US market. During the first half of 1994, we substantially reduced the average
maturity as the sell-off in bonds showed no signs of abating. The average
maturity of the Fund finished 1994 at 5.1 years. Although the US dollar
declined 12% versus the Deutschemark and yen, we did not take full advantage
of the decline given our view the US dollar would be supported by its monetary
policy stance relative to Germany and Japan.
In 1995, the industrialized economies appear likely to maintain 1994's 3% GDP
growth rate through the first half of the year, while inflation should show a
mild pickup with the greatest risk existing in the United States and high
deficit countries in Europe. The keys for the global bond markets in 1995 will
primarily be the extent of an expected slowing in the second half of the year,
mainly in the United States, and the magnitude of the upswing in global
inflation. The US dollar should remain supported over the next six months by
the relatively firm monetary policy stance in the United States, but may come
under pressure later as the recovery matures and the Bundesbank moves closer
to raising interest rates.
In Conclusion
We thank you for your continued investment in Merrill Lynch Global Bond Fund
for Investment and Retirement, and we look forward to reviewing our outlook
and strategy with you again in our next report to shareholders.
<PAGE>
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Robert J. Parish)
Robert J. Parish
Vice President and Portfolio Manager
February 3, 1995
OFFICERS AND TRUSTEES
Arthur Zeikel, President and Trustee
Donald Cecil, Trustee
Edward H. Meyer, Trustee
Charles C. Reilly, Trustee
Richard R. West, Trustee
Edward D. Zinbarg, Trustee
Terry K. Glenn, Executive Vice President
N. John Hewitt, Senior Vice President
Donald C. Burke, Vice President
Robert J. Parish, Vice President
Gerald M. Richard, Treasurer
Mark B. Goldfus, Secretary
Custodian
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
PERFORMANCE DATA
About Fund Performance
Since October 21, 1994, investors have been able to purchase shares of the
Fund through the Merrill Lynch Select Pricing SM System, which
offers four pricing alternatives:
<PAGE>
* 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.
* 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 10 years.
* 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.
* Class D Shares incur a maximum initial sales charge of 4% and an account
maintenance fee of 0.25% (but no distribution fee).
Performance data for the Fund's Class A and Class B Shares are presented in
the "Total Return Based on a $10,000 Investment" and "Average Annual Total
Return" tables on page 5. "Aggregate Total Return" tables for Class C and
Class D Shares are also presented on page 5. Data for all of the Fund's
shares, including Class C and Class D Shares, are presented in the "Recent
Performance Results" table.
The "Recent Performance Results" table below shows investment results before
the deduction of any sales charges for Class A and Class B Shares for the
12-month and 3-month periods ended December 31, 1994 and for Class C and
Class D Shares for the period since inception through December 31, 1994. All
data in this table assume imposition of the actual total expenses incurred
by each class of shares during the relevant period.
None of the past results shown should 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. 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.
<TABLE>
Recent Performance Results*
<CAPTION>
12 Month 3 Month
12/31/94 9/30/94++ 12/31/93 % Change % Change++
<S> <C> <C> <C> <C> <C>
Class A Shares $8.96 $9.12 $10.03 -10.67% -1.75%
Class B Shares 8.96 9.12 10.03 -10.67 -1.75
Class C Shares 8.96 9.21 -- -- -2.71
Class D Shares 8.96 9.21 -- -- -2.71
Class A Shares--Total Return -5.29(1) -0.31(2)
Class B Shares--Total Return -6.01(3) -0.42(4)
Class C Shares--Total Return -- -1.73(5)
Class D Shares--Total Return -- -1.62(6)
Class A Shares--Standardized 30-day Yield 6.65%
Class B Shares--Standardized 30-day Yield 6.11%
Class C Shares--Standardized 30-day Yield 6.10%
Class D Shares--Standardized 30-day Yield 6.44%
<PAGE>
<FN>
*Investment results shown do not reflect sales charges;
results shown would be lower if a sales charge was included.
] ++Investment results shown for Class C and Class D Shares are since inception (10/21/94).
(1)Percent change includes reinvestment of $0.546 per share ordinary income dividends.
(2)Percent change includes reinvestment of $0.152 per share ordinary income dividends.
(3)Percent change includes reinvestment of $0.475 per share ordinary income dividends.
(4)Percent change includes reinvestment of $0.133 per share ordinary income dividends.
(5)Percent change includes reinvestment of $0.091 per share ordinary income dividends.
(6)Percent change includes reinvestment of $0.101 per share ordinary income dividends.
</TABLE>
PERFORMANCE DATA (concluded)
Total Return Based on a $10,000 Investment
A line graph depicting the growth of an investment in the Fund's
Class A Shares compared to growth of an investment in the JP
Morgan Global Government Bond Index. Beginning and ending values
are:
10/25/88** 12/31/94
ML Global Bond Fund++--
Class A Shares* $9,600 $16,397
JP Morgan Global Government
Bond Index++++ $10,000 $16,426
A line graph depicting the growth of an investment in the Fund's
Class B Shares compared to grwoth of an investment in the JP
Morgan Global Government Bond Index. Beginning and ending values
are:
8/29/86** 12/31/94
ML Global Bond Fund++--
Class B Shares* $10,000 $21,059
JP Morgan Global
Government Bond Index++++ $10,000 $18,747
[FN]
*Assuming maximum sales charge, transaction costs and other
operating expenses, including advisory fees.
**Commencement of Operations.
++ML Global Bond Fund invests in a global portfolio of debt
instruments denominated in various currencies and
multinational currency units.
++++This unmanaged Index is comprised of government bonds in the
13 largest bond markets, including the United States.
Past performance is not indicative of future performance.
<PAGE>
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 12/31/94 -5.29% -9.07%
Five Years Ended 12/31/94 +9.18 +8.29
Inception (10/25/88) through 12/31/94 +9.04 +8.32
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 12/31/94 -6.01% -9.57%
Five Years Ended 12/31/94 +8.35 +8.35
Inception (8/29/86) through 12/31/94 +9.33 +9.33
[FN]
*Maximum contingent deferred sales charge is 4%
and is reduced to 0% after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
Aggregate Total Return
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Inception (10/21/94) through 12/31/94 -1.73% -2.70%
[FN]
*Maximum contingent deferred sales charge is 1%
and is reduced to 0% after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Sales Charge Sales Charge**
<PAGE>
Class D Shares*
Inception (10/21/94) through 12/31/94 -1.62% -5.55%
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
<TABLE>
SCHEDULE OF INVESTMENTS
<CAPTION>
Face Interest Maturity Value Percent of
Amount Issue Rate Date (Note 1a) Net Assets
<S> <C> <S> <C> <C> <C> <C>
Australia
Long-Term A$ 9,000,000 Australian Government Bond (2) 12.50% 9/15/1997 $ 7,362,338 0.92%
Obligations 54,000,000 Queensland Treasury Corp., Domestic (3) 8.00 7/14/1999 38,498,122 4.83
6,300,000 Queensland Treasury Corp., Global Notes (3) 8.00 5/14/2003 4,258,932 0.53
Total Investments in Australia
(Cost--$50,624,780) 50,119,392 6.28
Belgium
Long-Term Bf 430,000,000 Belgium Government Bond (2) 7.75 12/22/2000 13,320,667 1.67
Obligations
Total Investments in Belgium
(Cost--$13,137,039) 13,320,667 1.67
Canada
Long-Term C$ 6,000,000 Canadian Government Bond (2) 7.75 9/01/1999 4,078,854 0.51
Obligations 5,500,000 Canadian Government Bond (2) 9.00 12/01/2004 3,893,448 0.49
Total Investments in Canada (Cost--$8,152,868) 7,972,302 1.00
Denmark
Long-Term Dkr364,000,000 Denmark Government Bond (2) 6.00 12/10/1999 53,480,092 6.71
Obligations
Total Investments in Denmark (Cost--$53,130,101) 53,480,092 6.71
<PAGE>
France
Long-Term ECU 16,500,000 French Government "B-TAN" (2) 5.00 3/16/1999 17,865,444 2.24
Obligations Frf130,500,000 French Government "B-TAN" (2) 7.00 11/12/1999 23,437,134 2.94
Total Investments in France (Cost--$42,646,389) 41,302,578 5.18
Germany
Long-Term DM 34,000,000 Deutschland Republic (2) 8.00 7/22/2002 22,337,209 2.80
Obligations 20,000,000 Deutschland Republic (2) 6.25 1/04/2024 10,432,817 1.31
63,000,000 Treuhandanstalt (2) 5.75 4/29/1999 38,381,977 4.82
21,000,000 Treuhandanstalt (2) 7.50 9/09/2004 13,447,868 1.69
Total Investments in Germany
(Cost--$84,827,802) 84,599,871 10.62
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Face Interest Maturity Value Percent of
Amount Issue Rate Date (Note 1a) Net Assets
<S> <C> <S> <C> <C> <C> <C>
Ireland
Long-Term Iep 14,500,000 Irish Gilts (2) 6.25% 4/01/1999 $20,261,140 2.54%
Obligations
Total Investments in Ireland (Cost--$20,437,693) 20,261,140 2.54
Italy
Long-Term Lit 26,000,000,000 Buoni Poliennali del Tesoro
Obligations (Italian Government Bonds) (2) 12.00 9/18/1998 16,075,527 2.02
32,500,000,000 Buoni Poliennali del Tesoro
(Italian Government Bonds) (2) 8.50 4/01/1999 17,794,181 2.23
6,000,000,000 Buoni Poliennali del Tesoro
(Italian Government Bonds) (2) 12.50 3/01/2001 3,776,379 0.47
Total Investments in Italy (Cost--$41,290,628) 37,646,087 4.72
<PAGE>
Netherlands
Long-Term NLG 79,000,000 Netherlands Government Bond (2) 7.50 6/15/1999 45,635,126 5.72
Obligations
Total Investments in the Netherlands
(Cost--$45,443,525) 45,635,126 5.72
Spain
Long-Term Pta 7,595,000,000 Bonos del Estado (Spanish Government
Obligations Bonds) (2) 8.30 12/15/1998 51,816,895 6.50
500,000,000 Bonos del Estado (Spanish Government
Bonds) (2) 12.25 3/25/2000 3,852,147 0.48
Total Investments in Spain (Cost--$58,820,921) 55,669,042 6.98
United Kingdom
Long-Term Pound 15,900,000 United Kingdom Gilt (2) 6.00 8/10/1999 22,370,555 2.81
Obligations Sterling 9,600,000 United Kingdom Gilt (2) 9.00 3/03/2000 15,226,218 1.91
ECU 20,000,000 United Kingdom Gilt (2) 9.12 2/21/2001 25,118,720 3.15
Pound 3,500,000 United Kingdom Treasury Notes (2) 8.00 6/10/2003 5,225,794 0.66
Sterling
Total Investments in the United Kingdom
(Cost--$68,859,017) 67,941,287 8.53
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Face Interest Maturity Value Percent of
Amount Issue Rate Date (Note 1a) Net Assets
<S> <C> <S> <C> <C> <C> <C>
United States
Long-Term US$ 7,000,000 Federal National Mortgage Association (4) 8.625% 11/10/2004 $ 7,028,560 0.88%
Obligations 7,500,000 Federal National Mortgage Association (4) 8.55 12/10/2004 7,430,625 0.93
4,000,000 Federal National Mortgage Association,
Floating Rate Notes (Indexed to Lit/Sfr)
(a) (4) 12.28++ 2/18/1999 2,830,000 0.36
4,000,000 Federal National Mortgage Association,
Floating Rate Notes (Indexed to Pta/Sfr)
(a) (4) 11.18++ 3/24/1999 2,810,000 0.35
37,000,000 Republic of Finland (2) 6.75 11/24/1997 35,705,000 4.48
11,000,000 Republic of Italy (2) 6.62 6/09/2003 9,658,000 1.21
11,000,000 Republic of Italy (2) 6.00 9/27/2003 9,286,200 1.17
10,000,000 United States Treasury Notes (4) 7.25 11/30/1996 9,922,300 1.25
10,000,000 United States Treasury Notes (4) 7.75 11/30/1999 9,958,800 1.25
8,000,000 United States Treasury Notes (4) 5.87 2/15/2004 6,980,000 0.88
67,000,000 United States Treasury Notes (4) 7.25 5/15/2004 64,372,327 8.08
15,000,000 United States Treasury STRIPS** (4) 7.25 8/15/2004 14,407,035 1.81
<PAGE>
Total Investments in Long-Term Obligations
(Cost--$185,494,037) 180,388,847 22.65
Short-Term US$ 40,000,000 CS First Boston, Commercial Paper* (1) 6.00 1/24/1995 39,860,000 5.00
Obligations 40,000,000 Federal Farm Credit Banks, Commercial
Paper* (1) 5.56 1/09/1995 39,962,933 5.01
39,000,000 Federal National Mortgage Association (4) 5.88 1/13/1995 38,936,300 4.88
10,286,000 General Electric Capital Corp., Commercial
Paper* (1) 5.80 1/03/1995 10,286,000 1.29
500,000 United States Treasury Bills (4) 4.85 1/05/1995 499,865 0.06
100,000 United States Treasury Bills (4) 5.31 2/02/1995 99,558 0.01
Total Investments in Short-Term Obligations
(Cost--$129,644,656) 129,644,656 16.25
Total Investments in the United States
(Cost--$315,138,693) 310,033,503 38.90
Par Strike Expiration Premiums
Value Price Date Paid
Currency Put Options Purchased
A$ 7,625,000 Australian Dollar $ .762 1/30/1995 18,300 .00
DM 36,558,462 German Mark 1.586 1/30/1995 106,019 .01
48,582,996 German Mark 1.605 1/30/1995 58,300 .01
Pound Sterling 15,500,000 Great Britain Pound 1.545 1/31/1995 82,150 .01
Lit 19,500,000 Italian Lira 1,690.000 1/31/1995 27,300 .01
Nlg 22,500,000 Netherlands Guilder 1.770 1/31/1995 85,500 .01
Pta 28,000,000 Spanish Peseta 135.500 1/31/1995 106,400 .01
Total Currency Put Options Purchased
(Cost--$907,846) 483,969 .06
Total Options Purchased (Cost--$907,846) 483,969 .06
Total Investments (Cost--$803,417,302) 788,465,056 98.91
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded)
<CAPTION>
Par Strike Expiration Premiums Percent of
Value Issue Price Date Paid Net Assets
<S> <C> <S> <C> <C> <C> <C>
Currency Call Options Written
A$ 7,850,000 Australian Dollar $ .785 1/30/1995 $ (28,260) (.01)%
DM 50,897,227 German Mark 1.532 1/30/1995 (341,011) (.04)
37,846,656 German Mark 1.532 1/30/1995 (253,573) (.03)
Pound Sterling 15,500,000 Great Britain Pound 1.582 1/31/1995 (69,750) (.01)
Lit 19,500,000 Italian Lira 1,590.000 1/31/1995 (48,750) (.01)
Nlg 22,500,000 Netherland Guilder 1.735 1/31/1995 (247,500) (.03)
Pta 28,000,000 Spanish Peseta 129.500 1/31/1995 (70,000) (.01)
Total Currency Call Options Written
(Premiums Received--$697,119) (1,058,844) (.14)
Total Options Written
(Premiums Received--$697,119) (1,058,844) (.14)
Total Investments, Net of Options Written (Cost--$802,720,183) 787,406,212 98.77
Unrealized Depreciation on Forward Foreign Exchange Contracts++++ (5,385,318) (.67)
Variation Margin on Future Contracts++++++ 16,250 .00
Other Assets Less Liabilities 15,150,276 1.90
------------ -------
Net Assets $797,187,420 100.00%
============ =======
<FN>
Corresponding industry groups for foreign securities (percent
of net assets):
(1)Financial Services--11.30%
(2)Sovereign Government Obligations--61.45%
(3)Sovereign/Regional Government Agency Obligations--5.36%
(4)US Government & Agency Obligations--20.74%
*Commercial Paper is traded on a discount basis; the interest rate shown
is the discount rate paid at the time of purchase by the Fund.
**STRIPS--Separate Trading of Registered Interest and Principal of Securities.
(a)Indexed instrument for which the principal amount due at maturity is affected
by the relative value of the foreign currencies indicated.
++Interest rates on Floating Rate Notes are adjusted periodically based on
appropriate indexes. The interest rates shown are the rates in effect at
December 31, 1994.
<PAGE>
++++Forward foreign exchange contracts as of December 31, 1994 were as follows:
<CAPTION>
Unrealized
Expiration Appreciation
Foreign Currency Purchased Date (Depreciation)
<S> <C> <S> <C>
C$ 42,400,000 January 1995 $ (358,678)
DM 6,226,352 January 1995 68,348
YEN 6,470,580,800 January 1995 335,817
Total (US$ Commitment--$99,352,208) $ 45,487
-----------
Foreign Currency Sold
A$ 32,000,000 January 1995 $ (203,611)
DM 325,531,524 January 1995 (3,790,667)
DM 61,191,780 February 1995 (556,379)
Dkr 181,740,278 January 1995 (425,357)
Pta 551,654,466 February 1995 (20,852)
Pound
Sterling 4,588,531 January 1995 (22,498)
Lit 49,181,350,000 January 1995 (411,441)
Total (US$ Commitment--$340,924,866) $(5,430,805)
-----------
Total Unrealized Depreciation on Forward
Foreign Exchange Contracts--Net $(5,385,318)
===========
++++++Financial futures contracts sold as of December 31, 1994 were as follows:
Number of Expiration Value
Contracts Issue Date (Note 1a)
52 US Treasury Bonds March 1995 $(5,156,125)
(Total Contract Price--$5,148,906) $(5,156,125)
===========
See Notes to Financial Statements.
</TABLE>
<PAGE>
FINANCIAL INFORMATION
<TABLE>
Statement of Assets and Liabilities as of December 31, 1994
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$802,509,456) (Note 1a) $787,981,087
Put options purchased, at value (cost--$907,846) (Notes 1a & 1b) 483,969
Foreign cash 45,458
Receivables:
Securities sold $103,196,563
Interest 14,426,015
Beneficial interest sold 932,751
Variation margin (Note 1b) 16,250 118,571,579
------------
Prepaid registration fees and other assets (Note 1f) 42,903
------------
Total assets 907,124,996
------------
Liabilities: Unrealized depreciation on forward foreign exchange contracts (Note 1b) 5,385,318
Call options written, at value (premiums received--$697,119) (Note 1b) 1,058,844
Payables:
Securities purchased 95,989,999
Beneficial interest redeemed 3,978,746
Dividends to shareholders (Note 1g) 2,034,910
Distributor (Note 2) 486,114
Investment adviser (Note 2) 439,155 102,928,924
------------
Accrued expenses and other liabilities 564,490
------------
Total liabilities 109,937,576
------------
Net Assets: Net assets $797,187,420
============
Net Assets Class A Shares of beneficial interest, $0.10 par value, unlimited number
Consist of: of shares authorized $ 1,013,850
Class B Shares of beneficial interest, $0.10 par value, unlimited number
of shares authorized 7,823,324
Class C Shares of beneficial interest, $0.10 par value, unlimited number
of shares authorized 40,341
Class D Shares of beneficial interest, $0.10 par value, unlimited number
of shares authorized 19,587
Paid-in capital in excess of par 879,637,694
Accumulated realized capital losses on investments and foreign
currency transactions--net (70,658,935)
Unrealized depreciation on investments and foreign currency
transactions--net (20,688,441)
------------
Net assets $797,187,420
<PAGE> ============
Net Asset Class A--Based on net assets of $90,823,366 and 10,138,497 shares of
Value: beneficial interest outstanding $ 8.96
============
Class B--Based on net assets of $700,994,799 and 78,233,237 shares of
beneficial interest outstanding $ 8.96
============
Class C--Based on net assets of $3,614,209 and 403,414 shares of
beneficial interest outstanding $ 8.96
============
Class D--Based on net assets of $1,755,046 and 195,870 shares of
beneficial interest outstanding $ 8.96
============
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations for the Year Ended December 31, 1994
<S> <S> <C> <C>
Investment Income Interest and discount earned (net of $667,795 foreign withholding tax) $ 60,466,023
(Notes 1d & 1e): ------------
Expenses: Distribution fees--Class B (Note 2) $ 6,022,167
Investment advisory fees (Note 2) 5,439,841
Transfer agent fees--Class B (Note 2) 976,185
Custodian fees 506,746
Accounting services (Note 2) 236,141
Printing and shareholder reports 235,243
Registration fees (Note 1f) 115,151
Transfer agent fees--Class A (Note 2) 108,165
Professional fees 93,011
Trustees' fees and expenses 35,940
Distribution fees--Class C (Note 2) 2,694
Account maintenance fees--Class D (Note 2) 400
Other 15,118
------------
Total expenses 13,786,802
------------
Investment income--net 46,679,221
------------
<PAGE>
Realized & Realized loss from:
Unrealized Investments--net (66,141,438)
Loss on Foreign currency transactions--net (22,093,225) (88,234,663)
Investments & ------------
Foreign Currency Change in unrealized depreciation on:
Transactions--Net Investments--net (10,441,284)
(Notes 1c, 1e & 3): Foreign currency transactions--net (6,192,227) (16,633,511)
------------ ------------
Net realized and unrealized loss on investments and foreign
currency transactions (104,868,174)
------------
Net Decrease in Net Assets Resulting from Operations $(58,188,953)
============
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Year Ended December 31,
Increase (Decrease) in Net Assets: 1994 1993
<S> <S> <C> <C>
Operations: Investment income--net $ 46,679,221 $ 49,349,216
Realized gain (loss) on investments and foreign currency
transactions--net (88,234,663) 29,307,307
Change in unrealized appreciation/depreciation on investments and
foreign currency transactions--net (16,633,511) 16,672,043
-------------- --------------
Net increase (decrease) in net assets resulting from operations (58,188,953) 95,328,566
-------------- --------------
Dividends & Investment income--net:
Distributions to Class A (2,646,477) (5,330,230)
Shareholders Class B (17,852,973) (44,016,259)
(Note 1g): Class C (7,735) --
Class D (4,807) --
Realized gain on investments--net:
Class A -- (3,116,015)
Class B -- (26,191,292)
Return of capital--net:
Class A (3,059,329) --
Class B (20,638,053) --
Class C (8,942) --
Class D (4,725) --
In excess of realized gain on investments--net:
Class A (317,003) (462,706)
Class B (2,138,481) (3,889,220)
Class C (926) --
Class D (490) --
-------------- --------------
Net decrease in net assets resulting from dividends and distributions
to shareholders (46,679,221) (83,005,722)
-------------- --------------
<PAGE>
Beneficial Interest Net increase in net assets derived from beneficial interest transactions (103,334,766) 294,102,091
Transactions -------------- --------------
(Note 4):
Net Assets: Total increase (decrease) in net assets (208,202,940) 306,424,935
Beginning of year 1,005,390,360 698,965,425
-------------- --------------
End of year $ 797,187,420 $1,005,390,360
============== ==============
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Financial Highlights
<CAPTION>
The following per share data and ratios have been derived
from information provided in the financial statements. Class A
For the Year Ended December 31,
Increase (Decrease) in Net Asset Value: 1994 1993 1992 1991 1990
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year $ 10.03 $ 9.79 $ 10.38 $ 9.93 $ 9.77
Operating --------- --------- --------- --------- ---------
Performance: Investment income--net .55 .70 .77 .95 1.01
Realized and unrealized gain (loss) on invest-
ments and foreign currency transactions--net (1.07) .56 .01 .55 .42
--------- --------- --------- --------- ---------
Total from investment operations (.52) 1.26 .78 1.50 1.43
--------- --------- --------- --------- ---------
Less dividends and distributions:
Investment income--net (.24) (.67) (1.14) (1.05) (1.27)
Realized gain on investments--net -- (.30) (.23) -- --
Return of capital--net (.28) -- -- -- --
In excess of realized gain on investments--net (.03) (.05) -- -- --
--------- --------- --------- --------- ---------
Total dividends and distributions (.55) (1.02) (1.37) (1.05) (1.27)
--------- --------- --------- --------- ---------
Net asset value, end of period $ 8.96 $ 10.03 $ 9.79 $ 10.38 $ 9.93
========= ========= ========= ========= =========
Total Investment Based on net asset value per share (5.29%) 13.21% 7.83% 16.00% 15.64%
Return:* ========= ========= ========= ========= =========
Ratios to Expenses .84% .82% .84% .99% 1.06%
Average ========= ========= ========= ========= =========
Net Assets: Investment income--net 5.84% 6.44% 12.24% 8.02% 12.71%
========= ========= ========= ========= =========
Supplemental Net assets, end of year (in thousands) $ 90,823 $ 108,241 $ 61,131 $ 21,211 $ 10,601
Data: ========= ========= ========= ========= =========
Portfolio turnover 405.00% 419.99% 235.11% 67.76% 159.79%
========= ========= ========= ========= =========
<FN>
*Total investment returns exclude the effects of sales loads.
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights (concluded)
<CAPTION>
The following per share data and ratios have been derived
from information provided in the financial statements. Class B
For the Year Ended December 31,
Increase (Decrease) in Net Asset Value: 1994 1993 1992 1991 1990
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year $ 10.03 $ 9.79 $ 10.39 $ 9.93 $ 9.77
Operating --------- --------- --------- --------- ---------
Performance: Investment income--net .47 .60 .70 .85 .93
Realized and unrealized gain (loss) on invest-
ments and foreign currency transactions--net (1.07) .58 (.01) .58 .42
--------- --------- --------- --------- ---------
Total from investment operations (.60) 1.18 .69 1.43 1.35
--------- --------- --------- --------- ---------
Less dividends and distributions:
Investment income--net (.20) (.59) (1.06) (.97) (1.19)
Realized gain on investments--net -- (.30) (.23) -- --
Return of capital--net (.24) -- -- -- --
In excess of realized gain on investments--net (.03) (.05) -- -- --
--------- --------- --------- --------- ---------
Total dividends and distributions (.47) (.94) (1.29) (.97) (1.19)
--------- --------- --------- --------- ---------
Net asset value, end of year $ 8.96 $ 10.03 $ 9.79 $ 10.39 $ 9.93
========= ========= ========= ========= =========
Total Investment Based on net asset value per share (6.01%) 12.36% 6.91% 15.23% 14.76%
Return:* ========= ========= ========= ========= =========
Ratios to Average Expenses, excluding distribution fees .86% .83% .86% 1.02% 1.09%
Net Assets: ========= ========= ========= ========= =========
Expenses 1.61% 1.58% 1.61% 1.77% 1.84%
========= ========= ========= ========= =========
Investment income--net 5.06% 5.72% 11.67% 7.76% 11.97%
========= ========= ========= ========= =========
Supplemental Net assets, end of period (in thousands) $ 700,995 $ 897,150 $ 637,834 $ 380,749 $ 274,124
Data: ========= ========= ========= ========= =========
Portfolio turnover 405.00% 419.99% 235.11% 67.76% 159.79%
========= ========= ========= ========= =========
<CAPTION>
The following per share data and ratios have been derived
from information provided in the financial statements. For the Period Oct. 21, 1994++
to Dec. 31, 1994
Increase (Decrease) in Net Asset Value: Class C Class D
<S> <S> <C> <C>
Per Share Net asset value, beginning of period $ 9.21 $ 9.21
Operating -------- --------
Performance: Investment income--net .09 .10
Realized and unrealized loss on investments and foreign currency
transactions--net (.25) (.25)
-------- --------
Total from investment operations (.16) (.15)
-------- --------
Less dividends:
Investment income--net (.03) (.04)
Return of capital--net (.05) (.05)
In excess of realized gain on investments--net (.01) (.01)
-------- --------
Total dividends and distributions (.09) (.10)
-------- --------
Net asset value, end of period $ 8.96 $ 8.96
======== ========
Total Investment Based on net asset value per share (1.73%)+++ (1.62%)+++
Return:* ======== ========
Ratios to Average Expenses, excluding distribution fees .89%** .87%**
Net Assets: ======== ========
Expenses 1.69%** 1.12%**
======== ========
Investment income--net 5.20%** 5.81%**
======== ========
Supplemental Net assets, end of period (in thousands) $ 3,614 $ 1,755
Data: ======== ========
Portfolio turnover 405.00% 405.00%
======== ========
<PAGE>
<FN>
*Total investment returns exclude the effects of sales loads.
**Annualized.
+++Aggregate total investment return.
++Commencement of Operations.
See Notes to Financial Statements.
</TABLE>
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 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. 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 or yield equivalents
obtained from one or more dealers in the over-the-counter market prior to the
time of valuation. Portfolio securities which are traded on stock exchanges
are valued at the last sale price on the principal market 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.
Options written are valued based upon 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 asked price. Options purchased by the Fund
are valued at their 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 of the Fund. Any assets or liabilities initially expressed
in the terms of non-US dollar currencies are translated into US dollars at the
prevailing market rates as quoted by one or more banks or dealers on the day
of valuation.
<PAGE>
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 Board of Trustees of the Fund.
(b) Derivative financial instruments--The Fund may engage in various
portfolio strategies to seek to increase its return by hedging its portfolio
against adverse movements in the equity, debt and currency markets. Losses may
arise due to changes in the value of the contract or if the counterpart does
not perform under the contract.
* 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. Such contracts are not entered on the
Fund's records. However, the effect on operations is recorded from the date
the Fund enters into such contracts. Premium or discount is amortized over the
life of the contracts.
* 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-US 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 is an agreement between
two parties to buy or sell a security 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.
NOTES TO FINANCIAL STATEMENTS (continued)
* 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 that the premium received or paid (or gain or
loss to the extent the cost of the closing transaction is less than or exceeds
the premiums paid or received).
<PAGE>
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 US 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).
Interest income (including amortization of discount) is recognized on the
accrual basis. Realized gains and losses on security transactions are
determined on the identified cost 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.
(h) Reclassifications--Generally accepted accounting principles require that
certain differences between accumulated net realized capital losses for
financial reporting and tax purposes, if permanent, be reclassified to
accumulated net investment losses. Accordingly, current year's permanent
book/tax differences of $23,711,049 have been reclassified from accumulated
net realized losses to accumulated net investment losses. These
reclassifications have no effect on net assets or net asset values per share.
2. Investment Advisory Agreement and Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Merrill Lynch
Asset Management, L.P. ("MLAM"). The general partner of MLAM is Princeton
Services, Inc. ("PSI"), an indirect wholly-owned subsidiary of Merrill Lynch
& Co. ("ML & Co."), which is also the limited partner. The Fund has also
entered into a Distribution Agreement and Distribution Plans with Merrill
Lynch Funds Distributor, Inc. ("MLFD" or "Distributor"), a wholly-owned
subsidiary of Merrill Lynch Group, Inc.
<PAGE>
MLAM is responsible for the management of the Fund's portfolio and provides
the necessary personnel, facilities, equipment and certain other services
necessary to the operation of the Fund. For such services, the Fund pays a
monthly fee of 0.60%, on an annual basis, of the average daily value of the
Fund's net assets. The most restrictive annual expense limitation requires
that the Investment Adviser reimburse the Fund to the extent the Fund's
expenses (excluding interest rates, distribution fees, brokerage fees and
commissions, and extraordinary items) exceed 2.5% of the Fund's first $30
million of average daily net assets, 2.0% of the Fund's next $70 million of
average daily net assets, and 1.5% of the average daily net assets in excess
thereof. The Adviser's obligation to reimburse the Fund is limited to the
amount of the investment advisory fee. No fee payment will be made to the
Investment Adviser during any fiscal year which will cause such expenses to
exceed the most restrictive expense limitation at the time of such payment.
Pursuant to the distribution plans ("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 paid monthly at annual rates based upon
the average daily net assets of the shares as follows:
Account Distribution
Maintenance Fee Fee
Class B 0.25% 0.50%
Class C 0.25% 0.55%
Class D 0.25% --
Pursuant to a sub-agreement with the Distributor, Merrill Lynch, Pierce,
Fenner & Smith Inc. ("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 year ended December 31, 1994, MLFD earned underwriting discounts and
MLPF&S earned dealer concessions on sales of the Fund's Class A and Class D
shares as follows:
MLFD MLPF&S
Class A $181,126 $159,090
Class D $ 601 $ 5,478
MLPF&S received contingent deferred sales charges of $2,016,979 relating to
transactions in Class B Shares of beneficial interest and $217 relating to
transactions in Class C Shares of beneficial interest for the Fund the year
ended December 31, 1994.
<PAGE>
Financial Data Services, Inc. ("FDS"), a wholly-owned subsidiary of ML &
Co., is the Fund's transfer agent.
Accounting services are provided to the Fund by MLAM at cost.
Certain officers and/or trustees of the Fund are officers and/or directors of
MLPF&S, MLFD, MLAM, PSI, FDS, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the
year ended December 31, 1994 were $3,093,282,684 and $3,271,292,982,
respectively.
Net realized and unrealized gains (losses) as of December 31, 1994 were as
follows:
Realized Unrealized
Gains (Losses) Gains (Losses)
Investments:
Long-term $(66,054,394) $(14,528,369)
Short-term (267) --
Financial futures 270,402 (7,219)
Options purchased (531,812) --
Options written 174,633 --
------------ ------------
Total investments (66,141,438) (14,535,588)
------------ ------------
Currency transactions:
Options purchased (1,201,548) (423,877)
Options written (1,340,009) (361,725)
Foreign currency
transactions (4,514,737) 18,067
Forward foreign
exchange contracts (15,036,931) (5,385,318)
------------ ------------
Total currency
transactions (22,093,225) (6,152,853)
------------ ------------
Total $(88,234,663) $(20,688,441)
============ ============
Transactions in call options written for the year ended
December 31, 1994 were as follows:
Number of
Contracts Premiums
Call Options Written Written Received
<PAGE>
Outstanding call options
written, beginning
of year 1 $ 78,692
Options written 27 3,491,635
Options expired (8) (878,108)
Options exercised (13) (1,995,100)
---------- ----------
Outstanding call options
written at end of year 7 $ 697,119
========== ===========
Transactions in put options written for the year ended
December 31, 1994 were as follows:
Number of
Contracts Premiums
Put Options Written Written Received
Outstanding put options
written, beginning
of year 1 $ 677,586
Options written 19 2,139,811
Options expired (5) (934,814)
Options exercised (15) (1,882,583)
---------- ----------
Outstanding put options
written at end of year -- $ --
========== ===========
NOTES TO FINANCIAL STATEMENTS (concluded)
As of December 31, 1994, net unrealized depreciation for Federal income tax
purposes aggregated $17,542,267, of which $859,371 related to appreciated
securities and $18,401,638 related to depreciated securities. The aggregate
cost of investments, plus premiums paid for options purchased, less premiums
received for options written, at December 31, 1994 for Federal income tax
purposes was $805,523,354.
4. Beneficial Interest Transactions:
Net increase (decrease) in net assets derived from beneficial interest
transactions was $(103,334,766) and $294,102,091 for the years ended December
31, 1994 and December 31, 1993, respectively.
Transactions in shares of capital for each class were as follows:
Class A Shares for the Year Ended Dollar
December 31, 1994 Shares Amount
<PAGE>
Shares sold 4,384,679 $ 40,711,428
Shares issued to share-
holders in reinvestment of
dividends 396,034 4,528,178
---------- ------------
Total issued 4,780,713 45,239,606
Shares redeemed (5,434,215) (50,793,461)
---------- ------------
Net decrease (653,502) $ (5,553,855)
========== ============
Class A Shares for the Year Ended Dollar
December 31, 1993 Shares Amount
Shares sold 7,296,287 $ 74,556,820
Shares issued to share-
holders in reinvestment of
dividends & distributions 552,772 5,589,768
---------- ------------
Total issued 7,849,059 80,146,588
Shares redeemed (3,300,362) (33,764,584)
---------- ------------
Net increase 4,548,697 $ 46,382,004
========== ============
Class B Shares for the Year Ended Dollar
December 31, 1994 Shares Amount
Shares sold 17,716,789 $ 166,930,180
Shares issued to share-
holders in reinvestment of
dividends 2,712,869 25,310,189
----------- -------------
Total issued 20,429,658 192,240,369
Shares redeemed (31,626,761) (295,457,890)
----------- -------------
Net decrease (11,197,103) $(103,217,521)
=========== =============
Class B Shares for the Year Ended Dollar
December 31, 1993 Shares Amount
Shares sold 32,678,494 $333,514,433
Shares issued to share-
holders in reinvestment of
dividends & distributions 4,530,502 45,791,118
----------- ------------
Total issued 37,208,996 379,305,551
Shares redeemed (12,907,839) (131,585,464)
----------- ------------
Net increase 24,301,157 $247,720,087
----------- ------------
<PAGE>
Class C Shares for the Period
October 21, 1994++ to Dollar
December 31, 1994 Shares Amount
Shares sold 417,769 $ 3,791,175
Shares issued to share-
holders in reinvestment of
dividends 1,634 14,657
---------- ------------
Total issued 419,403 3,805,832
Shares redeemed (15,989) (145,912)
---------- ------------
Net increase 403,414 $ 3,659,920
========== ============
[FN]
++Commencement of Operations.
Class D Shares for the Period
October 21, 1994+ to Dollar
December 31, 1994 Shares Amount
Shares sold 200,576 $ 1,819,651
Shares issued to share-
holders in reinvestment of
dividends 699 6,275
---------- ------------
Total issued 201,275 1,825,926
Shares redeemed (5,405) (49,236)
---------- ------------
Net increase 195,870 $ 1,776,690
========== ============
[FN]
++Commencement of Operations.
5. Commitments:
At December 31, 1994, the Fund entered into foreign exchange contracts under
which it had agreed to buy and sell various foreign currencies with values of
approximately $18,161 and $1,157, respectively.
6. Capital Loss Carryforward:
At December 31, 1994, the Fund had a net capital loss carryforward of
approximately $56,717,000, all of which expires in 2002. This amount will be
available to offset like amounts of any future taxable gains.
<AUDIT-REPORT>
INDEPENDENT AUDITORS' REPORT
<PAGE>
The Board of Trustees and Shareholders,
Merrill Lynch Global Bond Fund for Investment
and Retirement:
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of Merrill Lynch Global Bond Fund for
Investment and Retirement as of December 31, 1994, the related statements of
operations for the year then ended and changes in net assets for each of the
years in the two-year period then ended, and the financial highlights for each
of the years in the five-year period then ended. These financial statements
and the financial highlights are the responsibility of the Fund's management.
Our responsibility is to express an opinion on these financial statements and
the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and the
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned at December 31, 1994 by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Merrill Lynch
Global Bond Fund for Investment and Retirement as of December 31, 1994, the
results of its operations, the changes in its net assets, and the financial
highlights for the respective stated periods in conformity with generally
accepted accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
February 3, 1995
</AUDIT-REPORT>
IMPORTANT TAX INFORMATION (unaudited)
Of the monthly cash distributions paid by Merrill Lynch Global Bond Fund for
Investment and Retirement during its taxable year ended December 31, 1994,
61.07% of the January distribution and 32.75% of the distributions paid from
February through December, represent income from foreign sources.
Additionally, the Fund incurred foreign taxes which it has elected to pass
through to its shareholders. Your share of the Fund's total foreign taxes paid
or withheld is 0.6369% multiplied by the January cash distribution and 1.5575%
multiplied by cash distributions paid from February through December.
<PAGE>
Foreign taxes paid or withheld should be included as foreign source taxable
income with an offsetting deduction from gross income or as a credit for taxes
paid to foreign governments.
Listed at right are the percentages of total assets of the Fund invested in
Federal obligations as of the end of each quarter of the fiscal year:
For the Percentage of
Quarter Ended Federal Obligations
March 31, 1994 10.00%
June 30, 1994 9.96%
September 30, 1994 11.79%
December 31, 1994 11.50%
Of the monthly cash distributions paid by the Fund during its taxable year
ended December 31, 1994, 13.37% of the January distribution and 6.45% of the
distributions paid from February through December were attributable to Federal
obligations. In calculating the foregoing percentages, Fund expenses have been
allocated on a pro rata basis.
Finally, the Fund distributed long-term capital gains of $0.027598 to
shareholders of record on December 21, 1994. The foreign source income
percentages, foreign withholding tax percentages and federal obligation
percentages should not be applied to this distribution.
Please retain this information for your records.
