MERRILL LYNCH
GLOBAL BOND
FUND
For Investment and
Retirement
FUND LOGO
Quarterly Report
March 31, 1996
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.
Statements and other information herein are as dated and are subject
to change.
<PAGE>
Merrill Lynch
Global Bond Fund
For Investment
And Retirement
Box 9011
Princeton, NJ
08543-9011
Merrill Lynch Global Bond Fund for Investment and Retirement
PORTFOLIO INFORMATION
Type of Issues*
As of March 31, 1996
A bar chart illustrating the following percentages:
US Government & Agency Obligations 1.59%
Financial Services 17.49%
Foreign Government Obligations 3.77%
Beverages 0.83%
Sovereign Government Obligations 73.51%
Geographical Diversification*
As of March 31, 1996
A pie chart illustrating the following percentages:
Spain 11.01%
Australia 9.88%
Denmark 3.63%
United States 10.65%
United Kingdom 5.05%
Sweden 7.87%
Italy 5.36%
Ireland 3.92%
France 3.36%
Germany 10.57%
Canada 7.25%
Japan 4.99%
New Zealand 13.65%
<PAGE>
Maturity of Investments*
As of March 31, 1996
A bar chart depicting the following percentages:
5 yrs--10yrs 39%
10 years++ 17%
1 yr 2%
1 yr--5 yrs 42%
[FN]
*Percent of net assets may not equal 100%.
DEAR SHAREHOLDER
It appears that a decoupling is beginning to emerge in the world's
major economies. During the first quarter of 1996, both Japan and
the United States showed potential signs of an economic upturn.
Until recently, a sense of continued slowing in world growth rates
was reinforced month after month. While that theme is still
overwhelmingly true throughout Europe, the US and Japanese economies
must be questioned. Just how strong that potential is will not be
answered until later in the second quarter. The difficulty lies in
establishing what the economic numbers actually reflect.
In the United States, the quarter ended March 31, 1996 was marred by
three significant events, which cast a very cloudy image of economic
growth. The budget wrangling in Washington, the nationwide General
Motors Corp. strike, and the overwhelming impact of the intense
winter weather all combined to produce a clear state of unease on
where the US economy is headed. In Japan, the prolonged recession
has reflected false indications of renewed growth in the past. The
bigger question is does the potential expansion have room to gather
strength or is this just a spurt in an otherwise stable environment
similar to the one experienced in July 1995?
As mentioned above, Europe continues to be the region where both
positive fixed-income fundamentals and still-improving inflation
expectations exist. Therefore, we have focused our investment
strategy for Merrill Lynch Global Bond Fund for Investment and
Retirement in this area since the third quarter of 1995. Within
Europe, the high-yielding markets of Sweden, Italy and Spain were
emphasized in the Fund's portfolio. However, we did not view the
core markets of Germany, France and the Netherlands as unattractive.
These core market fundamentals are what we believe will drive the
performance of the high-yielding economies. We maintain that the
interest rate difference between core Europe and the high-yielding
markets will continue to converge for the foreseeable future. This
implies a strong performance for the Swedish, Italian and Spanish
markets.
<PAGE>
The 5% year-over-year rise of consumer prices in February within
Italy showed that inflation pressures are abating, providing scope
for moderate monetary policy easing, a development that is further
supported by evidence of cooling economic growth and the improvement
of the lira since last summer. Fundamentals in Spain also continue
to improve (and are reflected in the positive bond market), but the
near term is clouded by political concerns. As the political picture
clears--and we are confident it will be positive for the market--the
spread between Spanish and German bonds will continue to narrow.
Just since the start of the year, Spain has lowered its repurchase
agreement rate by over 150 basis points. Scope still exists for
additional significant interest rate cuts. A similar situation in
Sweden has focused our emphasis into that bond market as well.
The Bundesbank showed a willingness to be more pro-active in
lowering short-term interest rates. German domestic fundamentals
point to another discount rate cut in the upcoming months. First-
quarter unemployment rose to a post-war record, while the gross
domestic product rate appears likely to decline again, after a
fourth quarter drop of 0.4%. Thus, economic growth in 1996 will
probably not surpass 1% while inflation could slip to close to 1%
later in the year, despite prospects for a further modest decline of
the Deutschemark. We expect more interest rate reductions unless
leading indicators unexpectedly show a substantial improvement in
upcoming months, or the Deutschemark weakens more sharply than
anticipated. The drop in short-term interest rates and the slowdown
of inflation over the past year--coupled with the continued
correction of the overvalued Deutschemark and the potential pickup
in US economic momentum--favor expectations of a return to trend
economic growth in Germany by early 1997. Thus far, however, little
evidence exists of a quick improvement in German economic activity.
Investment Outlook & Portfolio Strategy
We continue to remain comfortable with the Fund's exposure to the
European markets. As key inflation figures continue to fall and new
fiscal restraints are actually put into place in Italy, Spain and
Sweden, we will remain invested in those markets. The higher rates
paid by these bond markets along with the potential for capital
appreciation represents a favorable risk/reward in the current
investment environment.
Within the dollar-bloc markets, we will continue to favor the
Canadian, Australian and New Zealand markets over the US market. Our
concern is that job growth in the United States could eventually
trigger inflationary pressures, most likely from the wage
standpoint. Our outlook for the US dollar has changed slightly in
that we have put off, until late 1996, the expected rise of the
dollar.
<PAGE>
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.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Sean J. Casey)
Sean J. Casey
Vice President and Co-Portfolio Manager
(Robert J. Parish)
Robert J. Parish
Co-Portfolio Manager
April 29, 1996
We are pleased to announce that Sean J. Casey is responsible for the
day-to-day co-management of Merrill Lynch Global Bond Fund for
Investment and Retirement. Mr. Casey has been a Vice President and
Senior Portfolio Manager of the Investment Adviser since 1995. Prior
thereto, he was employed by Chase Manhattan Asset Management
(Western Hemisphere) Inc. as Chief Investment Officer and Portfolio
Manager from 1986 to 1995.
<PAGE>
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:
* 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).
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.
<PAGE>
<TABLE>
Recent Performance Results
<CAPTION>
12 Month 3 Month
3/31/96 12/31/95 3/31/95 % Change % Change
<S> <C> <C> <C> <C> <C>
Class A Shares* $9.24 $9.54 $9.27 -0.32% -3.14%
Class B Shares* 9.24 9.54 9.27 -0.32 -3.14
Class C Shares* 9.24 9.54 9.27 -0.32 -3.14
Class D Shares* 9.24 9.54 9.27 -0.32 -3.14
Class A Shares--Total Return* +5.99(1) -1.67(2)
Class B Shares--Total Return* +5.18(3) -1.94(4)
Class C Shares--Total Return* +5.10(5) -1.96(6)
Class D Shares--Total Return* +5.73(7) -1.72(8)
Class A Shares--Standardized 30-day Yield 5.85%
Class B Shares--Standardized 30-day Yield 5.32%
Class C Shares--Standardized 30-day Yield 5.23%
Class D Shares--Standardized 30-day Yield 5.61%
<FN>
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included.
(1)Percent change includes reinvestment of $0.576 per share ordinary
income dividends.
(2)Percent change includes reinvestment of $0.123 per share ordinary
income dividends.
(3)Percent change includes reinvestment of $0.504 per share ordinary
income dividends.
(4)Percent change includes reinvestment of $0.107 per share ordinary
income dividends.
(5)Percent change includes reinvestment of $0.496 per share ordinary
income dividends.
(6)Percent change includes reinvestment of $0.105 per share ordinary
income dividends.
(7)Percent change includes reinvestment of $0.553 per share ordinary
income dividends.
(8)Percent change includes reinvestment of $0.117 per share ordinary
income dividends.
</TABLE>
PERFORMANCE DATA (continued)
<PAGE>
<TABLE>
Performance Summary--Class A Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
10/25/88--12/31/88 $10.22 $10.24 -- $0.251 + 2.66%
1989 10.24 9.77 -- 1.131 + 7.27
1990 9.77 9.93 -- 1.266 +15.64
1991 9.93 10.38 -- 1.045 +16.00
1992 10.38 9.79 $0.096 1.276 + 7.83
1993 9.79 10.03 0.020 0.998 +13.21
1994 10.03 8.96 -- 0.546 - 5.29
1995 8.96 9.54 -- 0.585 +13.39
1/1/96--3/31/96 9.54 9.24 -- 0.123 - 1.67
------ ------
Total $0.116 Total $7.221
Cumulative total return as of 3/31/96: +90.44%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the payable date, and do not
include sales charge; results would be lower if sales charge was
included.
</TABLE>
<TABLE>
Performance Summary--Class B Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
8/29/86--12/31/86 $10.00 $10.16 -- $0.194 + 3.93%
1987 10.16 10.68 $0.382 1.303 +22.82
1988 10.68 10.24 -- 0.817 + 3.82
1989 10.24 9.77 -- 1.057 + 6.45
1990 9.77 9.93 -- 1.191 +14.76
1991 9.93 10.39 -- 0.969 +15.23
1992 10.39 9.79 0.096 1.197 + 6.91
1993 9.79 10.03 0.020 0.921 +12.36
1994 10.03 8.96 -- 0.475 - 6.01
1995 8.96 9.54 -- 0.514 +12.52
1/1/96--3/31/96 9.54 9.24 -- 0.107 - 1.94
------ ------
Total $0.498 Total $8.745
Cumulative total return as of 3/31/96: +132.37%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the payable date, and do not
reflect deduction of any sales charge; results would be lower if
sales charge was deducted.
</TABLE>
<PAGE>
PERFORMANCE DATA (concluded)
<TABLE>
Performance Summary--Class C Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
10/21/94--12/31/94 $9.21 $8.96 -- $0.091 - 1.73%
1995 8.96 9.54 -- 0.507 +12.44
1/1/96--3/31/96 9.54 9.24 -- 0.105 - 1.96
------
Total $0.703
Cumulative total return as of 3/31/96: +8.33%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the payable date, and do not
reflect deduction of any sales charge; results would be lower if
sales charge was deducted.
</TABLE>
<TABLE>
Performance Summary--Class D Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
10/21/94--12/31/94 $9.21 $8.96 -- $0.101 - 1.62%
1995 8.96 9.54 -- 0.562 +13.11
1/1/96--3/31/96 9.54 9.24 -- 0.117 - 1.72
------
Total $0.780
Cumulative total return as of 3/31/96: +9.36%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the payable date, and do not
include sales charge; results would be lower if sales charge was
included.
</TABLE>
<PAGE>
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 3/31/96 +5.99% +1.75%
Five Years Ended 3/31/96 +8.48 +7.60
Inception (10/25/88)
through 3/31/96 +9.05 +8.45
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 3/31/96 +5.18% +1.19%
Five Years Ended 3/31/96 +7.66 +7.66
Inception (8/29/86)
through 3/31/96 +9.19 +9.19
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Year Ended 3/31/96 +5.10% +4.10%
Inception (10/21/94)
through 3/31/96 +5.70 +5.70
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced
to 0% after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
<PAGE>
% Return Without % Return With
Sales Charge Sales Charge**
Class D Shares*
Year Ended 3/31/96 +5.73% +1.50%
Inception (10/21/94)
through 3/31/96 +6.39 +3.43
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
<TABLE>
SCHEDULE OF INVESTMENTS
<CAPTION>
Face Interest Maturity Percent of
Amount Long-Term Obligations Rate Date Value Net Assets
<S> <S> <C> <S> <C> <C> <C> <C>
Australia
Sovereign A$ 15,250,000 Australian Government Bond 7.50 % 7/15/2005 $ 10,920,692 1.84%
Government 28,000,000 Queensland Treasury Corp.
Obligations Global Notes 8.00 7/14/1999 21,535,684 3.62
40,000,000 Queensland Treasury Corp.
Global Notes 6.50 6/14/2005 26,249,947 4.42
Total Investments in Australia (Cost--$58,473,229) 58,706,323 9.88
Canada
Sovereign C$ 34,800,000 Canadian Government Bond 7.50 3/01/2001 26,029,123 4.38
Government 6,250,000 Canadian Government Bond 8.75 12/01/2005 4,931,193 0.83
Obligations 18,500,000 Province of Ontario 7.50 2/07/2024 12,145,505 2.04
Total Investments in Canada (Cost--$43,978,639) 43,105,821 7.25
Denmark
Sovereign Dkr 119,000,000 Denmark Government Bond 8.00 3/15/2006 21,566,465 3.63
Government
Obligations
<PAGE>
Total Investments in Denmark (Cost--$21,660,852) 21,566,465 3.63
France
Financial Frf 50,000,000 Credit Local de France 5.75 8/27/1998 10,076,847 1.69
Services
Sovereign 50,000,000 Denmark Government Bond 5.50 10/26/1999 9,911,522 1.67
Government
Obligations
Total Investments in France (Cost--$20,173,669) 19,988,369 3.36
Germany
Financial DM 8,000,000 Deutsche Pfandbriefe Bank (DEPFA) 5.625 2/07/2003 5,263,557 0.89
Services 25,500,000 Global Bond International
Bank Reconciliation &
Development 7.125 4/12/2005 17,959,938 3.02
25,000,000 Interamerican Development
Bank (IADB) 7.00 6/08/2005 17,359,680 2.92
8,000,000 KFW International Finance Inc. 6.75 6/20/2005 5,468,004 0.92
Sovereign 6,400,000 Land--Baden Wuerttemberg 6.00 1/25/2006 4,143,601 0.70
Government 17,900,000 Landesbank Rheinland 7.25 4/20/2005 12,625,373 2.12
Obligations
Total Investments in Germany (Cost--$65,835,895) 62,820,153 10.57
Ireland
Sovereign Iep 14,400,000 Irish Government Bond 8.00 10/18/2000 23,286,933 3.92
Government
Obligations
Total Investments in Ireland (Cost--$23,433,967) 23,286,933 3.92
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Face Interest Maturity Percent of
Amount Long-Term Obligations Rate Date Value Net Assets
<S> <S> <C> <S> <C> <C> <C> <C>
Italy
Financial Lit 8,000,000,000 Interamerican Development
Services Bank (IADB) 7.70 % 2/03/2004 $ 4,405,871 0.74%
Sovereign 34,800,000,000 Buoni Poliennali Del Tesoro
Government (Italian Government Bonds) 10.50 7/15/1998 22,399,030 3.77
Obligations 8,000,000,000 Buoni Poliennali Del Tesoro
(Italian Government Bonds) 10.50 4/01/2005 5,084,875 0.85
Total Investments in Italy (Cost--$31,959,464) 31,889,776 5.36
Japan
Financial YEN 1,160,000,000 World Bank 4.50 3/20/2003 11,993,331 2.02
Services
Sovereign 811,000,000 Kingdom of Spain 5.75 3/23/2002 8,868,888 1.49
Government 800,000,000 Societe Nationale des Chemins
Obligations de Fer Francais 6.75 3/01/2000 8,804,796 1.48
Total Investments in Japan (Cost--$33,005,615) 29,667,015 4.99
New Zealand
Sovereign NZ$ 76,000,000 New Zealand Government Bond 10.00 7/15/1997 52,648,722 8.86
Government 27,500,000 New Zealand Government Bond 6.50 2/15/2000 17,600,215 2.96
Obligations 16,000,000 New Zealand Government Bond 8.00 11/15/2006 10,897,674 1.83
Total Investments in New Zealand (Cost--$81,910,949) 81,146,611 13.65
Spain
Sovereign Pta 5,050,000,000 Government of Spain 12.25 3/25/2000 44,816,511 7.54
Government 2,400,000,000 Government of Spain 10.90 8/30/2003 20,619,800 3.47
Obligations
Total Investments in Spain (Cost--$65,007,602) 65,436,311 11.01
<PAGE>
Sweden
Sovereign Skr 370,500,000 Government of Sweden 6.00 2/09/2005 46,782,094 7.87
Government
Obligations
Total Investments in Sweden (Cost--$44,557,652) 46,782,094 7.87
United Kingdom
Beverages Pound 3,250,000 Cadbury Schweppes PLC 8.00 12/29/2000 4,934,184 0.83
Sterling
Sovereign 9,000,000 United Kingdom Gilt 7.00 11/06/2001 13,218,826 2.22
Government 8,100,000 United Kingdom Gilt 8.00 12/07/2015 11,903,249 2.00
Obligations
Total Investments in the United Kingdom (Cost--$31,374,190) 30,056,259 5.05
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded)
<CAPTION>
Face Interest Maturity Percent of
Amount Long-Term Obligations Rate Date Value Net Assets
United States
<S> <S> <C> <S> <C> <C> <C> <C>
Financial US$ 3,000,000 Bank of America Corp. 6.20 % 2/15/2006 $ 2,831,880 0.48%
Services 13,500,000 Credit National 7.00 11/14/2005 13,007,250 2.19
17,000,000 Santander Finance Issuances 6.375 2/15/2011 15,594,270 2.62
Foreign 24,000,000 Republic of Finland 5.875 2/27/2006 22,416,000 3.77
Government
Obligations
US Government 600,000 United States Treasury Notes 5.25 1/31/2001 579,372 0.10
Obligations
Total Investments in the United States (Cost--$57,748,698) 54,428,772 9.16
<PAGE>
Total Investments in
Long-Term Obligations (Cost--$579,120,421) 568,880,902 95.70
Short-Term Obligations
US US$ 7,645,000 Federal Home Loan Bank 5.15 4/01/1996 7,645,000 1.29
Government 250,000 United States Treasury Bills (a) 4.755 6/27/1996 246,926 0.04
& Agency 960,000 United States Treasury Bills (a) 5.075 6/27/1996 948,196 0.16
Obligations*
Total Investments in Short-Term Obligations (Cost--$8,840,713) 8,840,122 1.49
Total Investments (Cost--$587,961,134) 577,721,024 97.19
Unrealized Depreciation on Forward Foreign Exchange Contracts** (481,663) (0.08)
Variation Margin on Financial Future Contracts++ (43,750) (0.01)
Other Assets Less Liabilities 17,212,150 2.90
------------ -------
Net Assets $594,407,761 100.00%
============ =======
Net Asset Value: Class A--Based on net assets of $84,388,418 and
9,132,824 shares outstanding $ 9.24
============
Class B--Based on net assets of $493,235,930 and
53,367,517 shares outstanding $ 9.24
============
Class C--Based on net assets of $9,860,321 and
1,067,086 shares outstanding $ 9.24
============
Class D--Based on net assets of $6,923,092 and
749,055 shares outstanding $ 9.24
============
<FN>
*Certain US Government & Agency Obligations are traded on a
discount basis; the interest rates shown are the discount rates paid
at the time of purchase by the Fund.
**Forward foreign exchange contracts as of March 31, 1996 were as
follows:
<PAGE>
Expiration Unrealized
Foreign Currency Sold Date (Depreciation)
A$ 20,000,000 April 1996 $(182,940)
DM 40,000,000 April 1996 (59,104)
Frf 96,000,000 April 1996 (136,059)
NZ$ 60,000,000 April 1996 (103,560)
Total Unrealized Depreciation on
Forward Foreign Exchange Contracts
(US$ Commitment--$102,211,629) $(481,663)
=========
++Financial futures contracts sold as of March 31, 1996 were as
follows:
Number of Expiration
Contracts Issue Date Value
200 US Treasury Bonds June 1996 $22,293,750
(Total Contract Price--$22,250,000) $22,293,750
===========
(a)Security held as collateral in connection with open
financial futures contracts.
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
Sean J. Casey, Vice President
Gerald M. Richard, Treasurer
Mark B. Goldfus, Secretary
<PAGE>
Custodian
State Street Bank and Trust Company
P.O. Box 351
225 Franklin Street
Boston, Massachusetts 02101
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
</TABLE>
