MERRILL LYNCH
GLOBAL BOND
FUND
For Investment and
Retirement
FUND LOGO
Semi-Annual Report
June 30, 2000
Officers and Trustees
Terry K. Glenn, President and Trustee
Charles C. Reilly, Trustee
Richard R. West, Trustee
Arthur Zeikel, Trustee
Edward D. Zinbarg, Trustee
Joseph T. Monagle Jr., Senior Vice President
Harry J. Escobar, Vice President
Donald C. Burke, Vice President and
Treasurer
Ira P. Shapiro, 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
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.
Merrill Lynch
Global Bond Fund
For Investment
And Retirement
Box 9011
Princeton, NJ
08543-9011
Printed on post-consumer recycled paper
Merrill Lynch Global Bond Fund for Investment and Retirement
PORTFOLIO INFORMATION
A chart depicting Type of Issues* As of June 30, 2000
Sovereign Government Obligations 57.3%
US Government & Agency Obligations 12.9%
Industrials 3.5%
Telecommunications 3.2%
Supranational 10.9%
Foreign Government Obligations 3.5%
Commercial Paper 2.8%
Computers & Technology 1.4%
A chart depicting Geographical Diversification* As
of June 30, 2000
Luxembourg 1.2%
Australia 2.5%
Spain 3.9%
Norway 5.0%
Canada 5.8%
Germany 8.7%
United States 20.6%
Japan 23.3%
United Kingdom 8.5%
Italy 5.2%
Finland 3.6%
Netherlands 3.5%
France 3.2%
Austria 0.5%
A chart depicting Maturity of Investments* As of
June 30, 2000
5 yrs-10 yrs 25.20%
10 yrs+ 20.53%
0-1 yr 12.24%
1 yr-5 yrs 42.02%
*Percent of net assets may not equal 100%.
Merrill Lynch Global Bond Fund for Investment and Retirement
June 30, 2000
DEAR SHAREHOLDER
During the six months ended June 30, 2000, global fixed-income
markets were shaped by the concerns about the effects of the Year
2000 (Y2K) date change, the continued economic robustness throughout
the world (excluding Japan), and the fear of higher interest rates
needed to quell the rate of economic growth and inflationary
pressures.
In the last two weeks of December 1999, global fixed-income markets
were virtually at a standstill as investors waited for the end of
the year to bring some market disruption. Although trading was
limited, by the first trading day of the new year it was evident
that Y2K problems were overblown. There were few disruptions in the
markets and investors returned to worrying about higher interest
rates very quickly. Although there were several economies that were
experiencing growth without inflation, the United States was by far
the most conspicuous. After a series of interest rate increases in
1999 totaling 75 basis points (0.75%), the US economy was still
moving along at 7.3% for the fourth quarter. There was very little
inflation, although the prices of oil and housing were still
climbing. There was a temporary rise in the consumer price index
(CPI) in April. The headline CPI was 0.7%, which was higher than the
expected 0.5%. However, the real surprise was the core CPI
(excluding food and energy) of 0.4%, compared to the previous
months' increases of only 0.1%--0.2%. As a result, investors were
concerned that the US Federal Reserve Board would have to raise
interest rates much further. By late May this view had almost turned
180 degrees, when a few economic statistics pointed to potential
slowdown.
Growth without inflation was also continuing in Canada, Australia,
the United Kingdom and Germany. However, the central banks were
concerned that the continued growth in their economies would
eventually spur inflation in the labor markets. The vigilance and
persistence of these central banks caused interest rates in the back
end of the yield curve to descend by the latter part of January.
This topping of interest rates was further exacerbated in the United
States by the paydown in long-dated securities. The United States
was using its budgetary surplus to pay down as much as $30 billion
in Government securities. The announcement of this paydown resulted
in an inversion of the yield curve from ten-year to 30-year
securities. These developments helped global sovereign yield curves
to flatten and, in some cases, to invert.
Dollar Bloc Markets
Although the US Federal Reserve Board paused in December from
raising interest rates, it continued on this path in early February.
The Federal Funds rate went up 25 basis points in February and March
to 6.00%. The US Federal Reserve Board continued its gradualist
approach of raising interest rates in 25 basis point increments in
an attempt to guide the economy into a soft landing. However, in
late April investors began to perceive that the US Federal Reserve
Board would need to be more aggressive, given that the first quarter
gross domestic product (GDP) was reported at 5.4%, which was not
indicative of a slowdown. On May 16, 2000, the US Federal Reserve
Board changed from a gradualist to an aggressive approach of raising
interest rates, increasing interest rates by 50 basis points to
6.50%. By the end of May, the first signs of a slowdown appeared in
durable goods, which was down 6.4%, and leading indicators, which
were down 0.1%. The unemployment numbers that were reported in early
June were most telling, with an increase in the unemployment rate
from 3.9% to 4.1%, and the non-farm payroll statistic, excluding
census workers, down 116,000. On June 28, the US Federal Reserve
Board paused in its interest rate increases to assess whether the US
economy was truly slowing as some economic statistics were
indicating. Although this seemed like a quick downturn, investors
were still cautious, waiting for more data to confirm an economic
slowdown. Investor expectation was that the US Federal Reserve Board
would wait until its August meeting to decide the future course of
interest rates. In cash securities, interest rates declined 41 basis
points in ten-year Government securities. The rise in interest rates
had been more dramatic from January 1 (6.44%) to January 20 (6.79%),
but with the shift in investor sentiment and the paydown announced
in January, the long end of the yield curve began to drop. The ten-
year Treasury note ended the period at 6.03%.
Meanwhile, Canada continued to experience a high level of economic
growth similar to the United States. Canada maintained its robust
economy from internal and external demand. Real GDP increased 0.6%
in November, registering the sixteenth consecutive rise, the longest
streak since 1961. Consumer prices, as reported by the CPI
statistic, were 2.3% year over year, slightly above the midpoint of
the acceptable inflation range of 1%--3% established by the Bank of
Canada (BoC). This rise in inflation, along with a tight labor
market, can portend higher inflation in the near future. As a
result, the BoC raised interest rates 25 basis points on February 3
and March 22. The BoC moved again on May 17 by 50 basis points,
again matching the increases seen in the United States.
Merrill Lynch Global Bond Fund for Investment and Retirement
June 30, 2000
During the period, we went from a short duration position to a long
duration position for both the United States and Canada relative to
our benchmark, the JP Morgan Global Government Bond Index. Within
this long position, we overweighted the long end and underweighted
the short end to take advantage of the flattening and inversion of
both yield curves. In addition, the central banks' increase of short-
term interest rates has aided our underweighted position because
these increases only affect the short end of curves, mostly
securities with maturities of less than five years. By June 30,
2000, we went to a neutral duration, looking for opportunities to
add duration.
Europe
The euro's weakness was the most dominant factor in the global
markets. At the beginning of the six-month period ended June 30,
2000, the euro stood at 1.0062 relative to the US dollar. It broke
through parity on January 27, and settled the day at 0.9882. It
temporarily traded above parity on February 22, hit the low of
0.8946 on May 18, and traded up to 0.9525 by the end of June.
Overall, the euro declined 5.34% for the six-month period. The main
cause of this decline was the disinvestment from the euro into the
stronger currencies in Japanese and US equity markets. In addition,
the reluctance by the European Central Bank (ECB) to aggressively
raise interest rates put added pressure on the euro. The ECB
appeared to us as indecisive and non-credible in its statements
about an appropriate level for the euro. Contradictory statements
from several members of the ECB put the euro in a precarious
position. Oil prices also created problems for Europeans in terms of
a drag on the economy and an inflationary stimulant. Crude oil
prices rose 50.7% during the period.
The economy of Euroland continued to expand during the six-month
period. Fourth quarter 1999 GDP rose 0.9% quarter over quarter and
3.0% year over year. Given the acceleration in industrial production
and the increase in business confidence, as reported in the Reuters
Purchasing Managers' Index, the economy is expected to continue its
expansion at a 3.5% pace for 2000. On the inflation front,
February's consumer prices came to 2% year over year. For most of
this period, the increase in oil prices did not seriously affect the
underlying inflation rate because of its volatility. In February the
price of oil rose to more than $34 per barrel, but by the end of May
it had traded down to $29.01. However, by the end of June the price
rose to a high of $32.50. During the period, the ECB raised interest
rates by 25 basis points on February 3 and on April 27. The ECB
paused during May, but surprised investors on June 8 with an
aggressive rise of 50 basis points, thereby giving a lift to the
euro. In cash securities, the ten-year Bund fell 14 basis points for
the period, but it fluctuated widely as investors' perception of
inflation increased or decreased. The 30-year Bund was the best-
performing security on the yield curve as it declined in yield by 53
basis points. In this environment, we continued to underweight the
front end of the yield curve and overweight the long end.
A development that influenced the global bond market during this
period was the Universal Mobile Telecommunications Systems (UMTS)
auctions. These UMTS auctions are the selling of third-generation
mobile phone licenses by the respective government to local
businesses. The United Kingdom raised Pound Sterling 23 billion at
its April auction. This was extraordinary since the government estimated
raising only 3 billion--4 billion Pound Sterling. In addition, the
auction caught the attention of bond market investors because these
proceeds could be utilized to pay down the government's debt. As a
result,Germany is expected to hold a similar auction this summer
that is expected to generate more than 50 billion Euro. With this
success, several other countries are contemplating utilizing the UMTS
auctions. If this trend continues, it may mean lower interest rates
in the long end of the respective yield curves. In this environment,
we moved from a short duration to a slightly long duration relative
to our benchmark. We concentrated on buying the 30-year sectors in
order to add duration and take advantage of the potential results of
these auctions.
Merrill Lynch Global Bond Fund for Investment and Retirement
June 30, 2000
In non-EMU countries, the central banks were also raising interest
rates. The Bank of England raised interest rates by 25 basis points
on January 13 and February 10. Denmark raised interest rates 30
basis points on February 3, 25 basis points on April 27 and 50 basis
points on June 8 to 4.25%. Sweden raised interest rates 50 basis
points on February 4 and June 14. The only exception to this trend
was in Greece, where the central bank reduced interest rates by 225
basis points. On January 26, the central bank lowered interest rates
by 75 basis points and then followed with 50 basis points on March 8
and April 19. In addition, it cut interest rates by 50 basis points
on June 28. In cash securities, the ten-year Gilt in the United
Kingdom declined by 24 basis points, while Denmark's ten-year sector
rose 4 basis points. Sweden's ten-year sovereign fell 44 basis
points, and Greece's ten-year sovereign fell 40 basis points. As the
ten-year sovereign's yield was approximately the yield of Norway's
ten-year sovereign, we traded out of Greece into Norway, believing
that the Norwegian krona would outperform the Greek drachma over the
near future. During this period, we remained long duration versus
our benchmark.
Japan
Unlike most of the other global economies, Japan had no growth and
inflation. It has stumbled along, occasionally rising above
recessionary levels. The latest two GDP reports have indicated that
Japan was back in a recession. The third and fourth quarter reports
for 1999 were both negative, -0.9% and -1.4%, respectively. The main
drag in the fourth quarter report continued to be personal
consumption, which fell 1.6% quarter over quarter. While consumption
remained somewhat of a concern, business activity was increasing,
which should help consumption going forward.
Japan's March Tankan report showed some positive signs. In this
report, Japanese companies assessed business conditions as
improving. The index for large enterprises rose from -17 to -9.
Another piece of potentially positive news for the economy was that
the new Prime Minister, Yoshiro Mori, is committed to following the
economic policies of Keizo Obuchi. He said that fiscal consolidation
is necessary, but must be delayed until the economy has recovered.
Mori said he does not have any plans for a new fiscal package, but
investors perceive that a package may be necessary later in the year
in order to help support growth. In addition, the June Tankan report
is expected to be -3 compared to the -9 of the March report, thereby
prompting a possible end to the "zero interest rate policy" in
either July or September. During this period, the ten-year Japanese
government bond rose by 4 basis points, and the US dollar relative
to the yen appreciated 3.5%. In this environment, we held a short
duration relative to our benchmark and were long in US dollars
relative to the yen.
In Conclusion
We thank you for your investment in Merrill Lynch Global Bond Fund
for Investment and Retirement, and we look forward to sharing our
investment outlook and strategies with you in our next report to
shareholders.
Sincerely,
(Terry K. Glenn)
Terry K. Glenn
President and Trustee
(Harry Escobar)
Harry Escobar
Senior Vice President and Portfolio Manager
August 8, 2000
Merrill Lynch Global Bond Fund for Investment and Retirement
June 30, 2000
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 approximately 10 years. (There is no initial
sales charge for automatic share conversions.)
* 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. 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.
<TABLE>
Recent Performance Results*
<CAPTION>
Ten Years/
6 Month 12 Month Since Inception Standardized
As of June 30, 2000 Total Return Total Return Total Return 30-Day Yield
<S> <C> <C> <C> <C>
ML Global Bond Fund Class A Shares -0.87% -1.80% +85.83% 3.01%
ML Global Bond Fund Class B Shares -1.38 -2.68 +72.03 2.35
ML Global Bond Fund Class C Shares -1.29 -2.62 +17.10 2.30
ML Global Bond Fund Class D Shares -1.00 -2.04 +21.12 2.77
<FN>
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was 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.
</TABLE>
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 6/30/00 -1.80% -5.73%
Five Years Ended 6/30/00 +2.83 +2.00
Ten Years Ended 6/30/00 +6.39 +5.96
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 6/30/00 -2.68% -6.41%
Five Years Ended 6/30/00 +2.05 +2.05
Ten Years Ended 6/30/00 +5.58 +5.58
*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 6/30/00 -2.62% -3.56%
Five Years Ended 6/30/00 +1.99 +1.99
Inception (10/21/94)
through 6/30/00 +2.81 +2.81
*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*
Year Ended 6/30/00 -2.04% -5.96%
Five Years Ended 6/30/00 +2.58 +1.74
Inception (10/21/94)
through 6/30/00 +3.42 +2.68
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
Merrill Lynch Global Bond Fund for Investment and Retirement
June 30, 2000
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
Face Interest Maturity Percent of
Amount Long-Term Obligations Rate Date Value Net Assets
<S> <C> <C> <S> <C> <C> <C> <C>
Australia
Sovereign A$ 1,325,000 Australian Government Bond 5.75% 6/15/2011 $ 767,683 0.8%
Government
Obligations
Total Investments in Australia (Cost--$780,343) 767,683 0.8
Austria
Sovereign YEN 43,000,000 Republic of Austria 4.75 12/20/2004 473,177 0.5
Government
Obligations
Total Investments in Austria (Cost--$474,586) 473,177 0.5
Canada
Supra- C$ 5,470,000 Inter-American Development Bank 7.25 11/03/2003 3,790,004 4.0
national
Total Investments in Canada (Cost--$3,860,262) 3,790,004 4.0
Finland
Sovereign Euro 3,195,570 Finnish Government Bond 7.25 4/18/2006 3,348,109 3.6
Government
Obligations
Total Investments in Finland (Cost--$3,960,538) 3,348,109 3.6
France
Telecom- Euro 3,170,939 France Telecom 5.75 4/25/2007 2,998,356 3.2
munications
Total Investments in France (Cost--$3,718,545) 2,998,356 3.2
Germany
Sovereign Euro 2,160,000 Bundesobligation-116 5.75 8/22/2000 2,073,630 2.2
Government 1,310,000 Bundesrepublic Deutschland 4.75 7/04/2028 1,119,929 1.2
Obligations 4,715,000 Bundesrepublic Deutschland 6.25 1/04/2030 5,034,609 5.3
Total Investments in Germany (Cost--$7,959,753) 8,228,168 8.7
Italy
Sovereign Euro 4,530,640 Buoni Poliennali Del Tesoro 10.00 8/01/2003 4,917,382 5.2
Government
Obligations
Total Investments in Italy (Cost--$6,070,277) 4,917,382 5.2
</TABLE>
Merrill Lynch Global Bond Fund for Investment and Retirement
June 30, 2000
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Face Interest Maturity Percent of
Amount Long-Term Obligations Rate Date Value Net Assets
Japan
<S> <C> <C> <S> <C> <C> <C> <C>
Sovereign YEN 790,000,000 Japan Government Bond #151 5.00 % 9/20/2002 $ 8,198,872 8.7%
Government 773,000,000 Japan Government Bonds #174 4.60 9/20/2004 8,397,065 8.9
Obligations
Supra- 230,000,000 Asian Development Bank 3.125 6/29/2005 2,379,031 2.6
national 282,000,000 World Bank 5.25 3/20/2002 2,892,362 3.1
Total Investments in Japan (Cost--$21,517,085) 21,867,330 23.3
Luxembourg
Supra- YEN 120,000,000 European Investment Bank 0.875 11/08/2004 1,130,406 1.2
national
Total Investments in Luxembourg (Cost--$1,139,629) 1,130,406 1.2
Netherlands
Sovereign Euro 3,295,000 Netherlands Government Bond 6.50 4/15/2003 3,268,010 3.5
Government
Obligations
Total Investments in the Netherlands (Cost--$3,488,588) 3,268,010 3.5
Norway
Sovereign Nok 42,000,000 Norwegian Government 5.50 5/15/2009 4,686,604 5.0
Government
Obligations
Total Investments in Norway (Cost--$4,764,268) 4,686,604 5.0
Spain
Sovereign Euro 2,400,000 Bonos y Obligation Del Estado 5.25 1/31/2003 2,304,383 2.4
Government 1,500,000 Spanish Government Bond 5.15 7/30/2009 1,401,026 1.5
Obligations
Total Investments in Spain (Cost--$4,442,760) 3,705,409 3.9
United Kingdom
Sovereign Pound 4,760,000 United Kingdom Gilt 7.50 12/07/2006 7,945,682 8.5
Government Sterling
Obligations
Total Investments in the United Kingdom
(Cost--$8,525,251) 7,945,682 8.5
United States
Computers & YEN 141,200,000 IBM Corporation 0.90 4/14/2003 1,333,863 1.4
Technology
Industrials DM 7,100,000 Ford Motor Credit Co. 5.25 6/16/2008 3,301,068 3.5
US Govern- US$ 5,660,000 US Treasury Bonds 5.25 11/15/2028 5,011,760 5.4
ment & Agency 7,010,000 US Treasury Bonds 6.125 8/15/2029 7,080,100 7.5
Obligations
Total Investments in the United States
(Cost--$16,929,475) 16,726,791 17.8
Total Investments in Long-Term Obligations
(Cost--$87,631,360) 83,853,111 89.2
</TABLE>
Merrill Lynch Global Bond Fund for Investment and Retirement
June 30, 2000
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
Face Interest Maturity Percent of
Amount Long-Term Obligations Rate Date Value Net Assets
Australia
<S> <C> <C> <S> <C> <C> <C> <C>
Foreign A$ 2,740,000 Australian Treasury Bill 5.75 % 8/03/2000 $ 1,637,772 1.7%
Government
Obligations*
Canada
Foreign C$ 2,440,000 Ontario Treasury Bill 5.9373 7/06/2000 1,645,226 1.8
Government
Obligations*
United States
Commercial US$ 2,669,000 General Motors Acceptance Corp. 7.13 7/03/2000 2,669,000 2.8
Paper*
Total Investments in Short-Term
Obligations (Cost--$5,939,530) 5,951,998 6.3
Nominal Value
Covered by Options Issue
Options Purchased
Currency Put 3,000,000 Japanese Yen, expiring July 2000 at YEN 108 7,500 0.0
Options
Purchased
Total Currency Options Purchased (Cost--$8,400) 7,500 0.0
Total Investments (Cost--$93,579,290) 89,812,609 95.5
Unrealized Depreciation on Forward Foreign Exchange Contracts** (19,647) 0.0
Other Assets Less Liabilities 4,254,740 4.5
------------ ------
Net Assets $ 94,047,702 100.0%
============ ======
*Commercial Paper, certain Foreign Government Obligations are traded
on a discount basis; the interest rates shown reflect the discount
rates paid at the time of purchase by the Fund.
**Forward foreign exchange contracts as of June 30, 2000 were as
follows:
Unrealized
Expiration Appreciation
Foreign Currency Sold Date (Depreciation)
A$ 2,691,639 July 2000 $ (36,122)
Euro 5,904,267 July 2000 (99,594)
Pound 253,332 July 2000 (958)
Sterling
YEN 1,100,482,064 July 2000 67,057
-----------
Total (US$ Commitment--$18,002,285) $ (69,617)
-----------
Foreign Currency Purchased
Euro 6,392,005 July 2000 $ 103,108
YEN 587,190,487 July 2000 (53,138)
-----------
Total (US$ Commitment--$11,644,363) $ 49,970
-----------
Total Unrealized Depreciation on Forward
Foreign Exchange Contracts--Net $ (19,647)
===========
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Global Bond Fund for Investment and Retirement
June 30, 2000
FINANCIAL INFORMATION
<TABLE>
Statement of Assets and Liabilities as of June 30, 2000
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$93,570,890) $ 89,805,109
Options purchased, at value (cost--$8,400) 7,500
Cash 515
Foreign cash 2,500,652
Receivables:
Securities sold $ 2,249,451
Interest 1,458,155
Beneficial interest sold 19,789
Forward foreign exchange contracts 1,562 3,728,957
-------------
Prepaid registration fees and other assets 66,448
-------------
Total assets 96,109,181
-------------
Liabilities: Unrealized depreciation on forward foreign exchange contracts 19,647
Payables:
Securities purchased 1,336,594
Beneficial interest redeemed 267,710
Dividends to shareholders 96,425
Investment adviser 43,657
Distributor 39,384
Forward foreign exchange contracts 777 1,784,547
-------------
Accrued expenses and other liabilities 257,285
-------------
Total liabilities 2,061,479
-------------
Net Assets: Net assets $ 94,047,702
=============
Net Assets Class A Shares of beneficial interest, $.10 par value, unlimited number
Consist of: of shares authorized $ 180,372
Class B Shares of beneficial interest, $.10 par value, unlimited number
of shares authorized 590,251
Class C Shares of beneficial interest, $.10 par value, unlimited number
of shares authorized 7,374
Class D Shares of beneficial interest, $.10 par value, unlimited number
of shares authorized 368,612
Paid-in capital in excess of par 142,590,730
Accumulated realized capital losses on investments and foreign
currency transactions--net (45,935,063)
Unrealized depreciation on investments and foreign currency
transactions--net (3,754,574)
-------------
Net assets $ 94,047,702
=============
Net Asset Value: Class A--Based on net assets of $14,792,776 and 1,803,718 shares
of beneficial interest outstanding $ 8.20
=============
Class B--Based on net assets of $48,422,989 and 5,902,515 shares
of beneficial interest outstanding $ 8.20
=============
Class C--Based on net assets of $604,704 and 73,735 shares
of beneficial interest outstanding $ 8.20
=============
Class D--Based on net assets of $30,227,233 and 3,686,121 shares
of beneficial interest outstanding $ 8.20
=============
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Global Bond Fund for Investment and Retirement
June 30, 2000
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations for the Six Months Ended June 30, 2000
<S> <S> <C> <C>
Investment Income: Interest and discount earned (net of $11,168 foreign
withholding tax) $ 2,877,692
Expenses: Investment advisory fees $ 305,960
Account maintenance and distribution fees--Class B 203,957
Transfer agent fees--Class B 57,415
Professional fees 40,842
Account maintenance fees--Class D 39,505
Accounting services 35,272
Custodian fees 34,854
Registration fees 29,093
Printing and shareholder reports 28,403
Transfer agent fees--Class D 28,208
Transfer agent fees--Class A 13,713
Trustees' fees and expenses 10,942
Account maintenance and distribution fees--Class C 2,550
Transfer agent fees--Class C 701
Pricing services 62
Other 3,186
-------------
Total expenses 834,663
-------------
Investment income--net 2,043,029
-------------
Realized & Realized loss from:
Unrealized Gain Investments--net (1,448,447)
(Loss) on Foreign currency transactions--net (4,809,062) (6,257,509)
Investments & -------------
Foreign Currency Change in unrealized appreciation/depreciation on:
Transactions--Net: Investments--net 2,097,652
Foreign currency transactions--net 621,074 2,718,726
------------- -------------
Net Decrease in Net Assets Resulting from Operations $ (1,495,754)
=============
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Global Bond Fund for Investment and Retirement
June 30, 2000
FINANCIAL INFORMATION (continued)
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Six For the
Months Ended Year Ended
June 30, December 31,
Increase (Decrease) in Net Assets: 2000 1999
<S> <S> <C> <C>
Operations: Investment income--net $ 2,043,029 $ 6,633,138
Realized loss on investments and foreign currency
transactions--net (6,257,509) (5,178,260)
Change in unrealized appreciation/depreciation on investments
and foreign currency transactions--net 2,718,726 (14,950,384)
------------- -------------
Net decrease in net assets resulting from operations (1,495,754) (13,495,506)
------------- -------------
Dividends to Investment income--net:
Shareholders: Class A (345,970) (812,197)
Class B (1,012,967) (2,645,207)
Class C (11,655) (38,789)
Class D (672,437) (1,459,445)
Return of capital--net:
Class A -- (274,931)
Class B -- (895,412)
Class C -- (13,130)
Class D -- (494,027)
------------- -------------
Net decrease in net assets resulting from dividends to
shareholders (2,043,029) (6,633,138)
------------- -------------
Beneficial Net decrease in net assets derived from beneficial
Interest interest transactions (17,690,838) (52,074,917)
Transactions: ------------- -------------
Net Assets: Total decrease in net assets (21,229,621) (72,203,561)
Beginning of period 115,277,323 187,480,884
------------- -------------
End of period $ 94,047,702 $ 115,277,323
============= =============
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Global Bond Fund for Investment and Retirement
June 30, 2000
FINANCIAL INFORMATION (continued)
<TABLE>
Financial Highlights
<CAPTION>
Class A
For the Six
The following per share data and ratios have been derived Months Ended
from information provided in the financial statements. June 30, For the Year Ended December 31,
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997 1996
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 8.46 $ 9.66 $ 9.12 $ 9.56 $ 9.54
Operating --------- --------- --------- --------- ---------
Performance: Investment income--net .18 .45 .52 .54 .56
Realized and unrealized gain (loss) on
investments and foreign currency
transactions--net (.26) (1.20) .54 (.44) .02
--------- --------- --------- --------- ---------
Total from investment operations (.08) (.75) 1.06 .10 .58
--------- --------- --------- --------- ---------
Less dividends and distributions:
Investment income--net (.18) (.34) (.52) (.14) (.56)
Return of capital--net -- (.11) -- (.40) --
--------- --------- --------- --------- ---------
Total dividends and distributions (.18) (.45) (.52) (.54) (.56)
--------- --------- --------- --------- ---------
Net asset value, end of period $ 8.20 $ 8.46 $ 9.66 $ 9.12 $ 9.56
========= ========= ========= ========= =========
Total Investment Based on net asset value per share (.87%)++ (7.92%) 11.99% 1.19% 6.42%
Return:** ========= ========= ========= ========= =========
Ratios to Average Expenses 1.13%* 1.06% .92% .96% .87%
Net Assets: ========= ========= ========= ========= =========
Investment income--net 4.49%* 5.02% 5.57% 5.83% 6.02%
========= ========= ========= ========= =========
Supplemental Net assets, end of period (in thousands) $ 14,793 $ 16,776 $ 26,289 $ 27,522 $ 72,876
Data: ========= ========= ========= ========= =========
Portfolio turnover 119.71% 138.81% 129.20% 699.63% 1234.05%
========= ========= ========= ========= =========
*Annualized.
**Total investment returns exclude the effects of sales charges.
++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Global Bond Fund for Investment and Retirement
June 30, 2000
FINANCIAL INFORMATION (continued)
<TABLE>
Financial Highlights (continued)
<CAPTION>
Class B
For the Six
The following per share data and ratios have been derived Months Ended
from information provided in the financial statements. June 30, For the Year Ended December 31,
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997 1996
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 8.47 $ 9.66 $ 9.12 $ 9.56 $ 9.54
Operating --------- --------- --------- --------- ---------
Performance: Investment income--net .15 .38 .45 .47 .49
Realized and unrealized gain (loss) on
investments and foreign currency
transactions--net (.27) (1.19) .54 (.44) .02
--------- --------- --------- --------- ---------
Total from investment operations (.12) (.81) .99 .03 .51
--------- --------- --------- --------- ---------
Less dividends and distributions:
Investment income--net (.15) (.28) (.45) (.13) (.49)
Return of capital--net -- (.10) -- (.34) --
--------- --------- --------- --------- ---------
Total dividends and distributions (.15) (.38) (.45) (.47) (.49)
--------- --------- --------- --------- ---------
Net asset value, end of period $ 8.20 $ 8.47 $ 9.66 $ 9.12 $ 9.56
========= ========= ========= ========= =========
Total Investment Based on net asset value per share (1.38%)++ (8.53%) 11.13% .41% 5.60%
Return:** ========= ========= ========= ========= =========
Ratios to Average Expenses 1.91%* 1.84% 1.71% 1.73% 1.65%
Net Assets: ========= ========= ========= ========= =========
Investment income--net 3.71%* 4.24% 4.80% 5.07% 5.25%
========= ========= ========= ========= =========
Supplemental Net assets, end of period (in thousands) $ 48,423 $ 62,822 $ 110,620 $ 160,571 $ 347,529
Data: ========= ========= ========= ========= =========
Portfolio turnover 119.71% 138.81% 129.20% 699.63% 1234.05%
========= ========= ========= ========= =========
*Annualized.
**Total investment returns exclude the effects of sales charges.
++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Global Bond Fund for Investment and Retirement
June 30, 2000
FINANCIAL INFORMATION (continued)
<TABLE>
Financial Highlights (continued)
<CAPTION>
Class C
For the Six
The following per share data and ratios have been derived Months Ended
from information provided in the financial statements. June 30, For the Year Ended December 31,
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997 1996
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 8.46 $ 9.66 $ 9.12 $ 9.56 $ 9.54
Operating --------- --------- --------- --------- ---------
Performance: Investment income--net .15 .37 .45 .46 .48
Realized and unrealized gain (loss) on
investments and foreign currency
transactions--net (.26) (1.20) .54 (.44) .02
--------- --------- --------- --------- ---------
Total from investment operations (.11) (.83) .99 .02 .50
--------- --------- --------- --------- ---------
Less dividends and distributions:
Investment income--net (.15) (.28) (.45) (.12) (.48)
Return of capital--net -- (.09) -- (.34) --
--------- --------- --------- --------- ---------
Total dividends and distributions (.15) (.37) (.45) (.46) (.48)
--------- --------- --------- --------- ---------
Net asset value, end of period $ 8.20 $ 8.46 $ 9.66 $ 9.12 $ 9.56
========= ========= ========= ========= =========
Total Investment Based on net asset value per share (1.29%)++ (8.69%) 11.07% .33% 5.51%
Return:** ========= ========= ========= ========= =========
Ratios to Average Expenses 1.97%* 1.89% 1.75% 1.82% 1.73%
Net Assets: ========= ========= ========= ========= =========
Investment income--net 3.65%* 4.19% 4.74% 4.94% 5.16%
========= ========= ========= ========= =========
Supplemental Net assets, end of period (in thousands) $ 605 $ 785 $ 1,848 $ 2,284 $ 9,351
Data: ========= ========= ========= ========= =========
Portfolio turnover 119.71% 138.81% 129.20% 699.63% 1234.05%
========= ========= ========= ========= =========
*Annualized.
**Total investment returns exclude the effects of sales charges.
++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Global Bond Fund for Investment and Retirement
June 30, 2000
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights (concluded)
<CAPTION>
Class D
For the Six
The following per share data and ratios have been derived Months Ended
from information provided in the financial statements. June 30, For the Year Ended December 31,
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997 1996
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 8.46 $ 9.66 $ 9.11 $ 9.55 $ 9.54
Operating --------- --------- --------- --------- ---------
Performance: Investment income--net .17 .43 .50 .51 .54
Realized and unrealized gain (loss) on
investments and foreign currency
transactions--net (.26) (1.20) .55 (.44) .01
--------- --------- --------- --------- ---------
Total from investment operations (.09) (.77) 1.05 .07 .55
--------- --------- --------- --------- ---------
Less dividends and distributions:
Investment income--net (.17) (.32) (.50) (.13) (.54)
Return of capital--net -- (.11) -- (.38) --
--------- --------- --------- --------- ---------
Total dividends and distributions (.17) (.43) (.50) (.51) (.54)
--------- --------- --------- --------- ---------
Net asset value, end of period $ 8.20 $ 8.46 $ 9.66 $ 9.11 $ 9.55
========= ========= ========= ========= =========
Total Investment Based on net asset value per share (1.00%)++ (8.15%) 11.84% .94% 6.05%
Return:** ========= ========= ========= ========= =========
Ratios to Average Expenses 1.38%* 1.31% 1.17% 1.19% 1.08%
Net Assets: ========= ========= ========= ========= =========
Investment income--net 4.24%* 4.77% 5.32% 5.66% 5.74%
========= ========= ========= ========= =========
Supplemental Net assets, end of period (in thousands) $ 30,227 $ 34,894 $ 48,724 $ 49,813 $ 45,685
Data: ========= ========= ========= ========= =========
Portfolio turnover 119.71% 138.81% 129.20% 669.63% 1234.05%
========= ========= ========= ========= =========
*Annualized.
**Total investment returns exclude the effects of sales charges.
++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Global Bond Fund for Investment and Retirement
June 30, 2000
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 accordance 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. 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.
* 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.
* 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 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.
Merrill Lynch Global Bond Fund for Investment and Retirement
June 30, 2000
* 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 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. A portion of the net
investment income dividends, paid by the Fund during the year ended
December 31, 1999, is characterized as a return of capital.
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 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% --
Merrill Lynch Global Bond Fund for Investment and Retirement
June 30, 2000
NOTES TO FINANCIAL STATEMENTS (concluded)
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, 2000, FAMD earned underwriting
discounts and MLPF&S earned dealer concessions on sales of the
Fund's Class A and Class D Shares as follows:
FAMD MLPF&S
Class A $ 4 $ 54
Class D $23 $882
For the six months ended June 30, 2000, MLPF&S received contingent
deferred sales charges of $19,482 and $141 relating to
transactions in Class B and Class C Shares, respectively.
For the six months ended June 30, 2000, Merrill Lynch Security
Pricing Source, an affiliate of MLPF&S, earned $139 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.
Accounting services are provided to the Fund by MLIM at cost.
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, 2000 were $109,450,145 and
$125,454,912, respectively.
Net realized gains (losses) for the six months ended June 30, 2000
and net unrealized gains (losses) as of June 30, 2000 were as
follows:
Realized Unrealized
Gains (Losses) Gains (Losses)
Investments:
Long-term $ (1,448,250) $ (3,765,781)
Short-term (197) --
------------- ------------
Total investments (1,448,447) (3,765,781)
------------- ------------
Currency transactions:
Options written 7,575 --
Options purchased (209,607) (900)
Foreign currency
transactions (4,553,006) 31,754
Forward foreign exchange
contracts (54,024) (19,647)
------------- ------------
Total currency transactions (4,809,062) 11,207
Total $ (6,257,509) $ (3,754,574)
============= ============
As of June 30, 2000, net unrealized depreciation for Federal income
tax purposes aggregated $3,765,781, of which $1,333,168 related to
appreciated securities and $5,098,949 related to depreciated
securities. The aggregate cost of investments at June 30, 2000 for
Federal income tax purposes was $93,570,890.
Transactions in options written for the six months ended June 30,
2000, were as follows:
Nominal Value
Covered by Premiums
Written Options Received
Outstanding call options
written, beginning of period -- --
Options written 2,367,260 $ 7,575
Options expired (2,367,260) (7,575)
------------- ------------
Outstanding call options
written, end of period -- $ --
============= ============
4. Beneficial Interest Transactions:
Net decrease in net assets derived from beneficial interest
transactions was $17,690,838 and $52,074,917 for the six months
ended June 30, 2000 and for the year ended December 31, 1999,
respectively.
Transactions in shares of capital for each class were as follows:
Class A Shares for the Six Months Dollar
Ended June 30, 2000 Shares Amount
Shares sold 133,173 $ 1,092,651
Shares issued to shareholders
in reinvestment of dividends 18,934 154,955
------------- ------------
Total issued 152,107 1,247,606
Shares redeemed (330,547) (2,715,733)
------------- ------------
Net decrease (178,440) $ (1,468,127)
============= ============
Merrill Lynch Global Bond Fund for Investment and Retirement
June 30, 2000
Class A Shares for the Year Dollar
Ended December 31, 1999 Shares Amount
Shares sold 342,620 $ 3,103,935
Shares issued to shareholders
in reinvestment of dividends 60,335 541,594
------------- ------------
Total issued 402,955 3,645,529
Shares redeemed (1,142,477) (10,228,013)
------------- ------------
Net decrease (739,522) $ (6,582,484)
============= ============
Class B Shares for the Six Months Dollar
Ended June 30, 2000 Shares Amount
Shares sold 101,319 $ 832,337
Shares issued to shareholders
in reinvestment of dividends 64,278 526,573
------------- ------------
Total issued 165,597 1,358,910
Automatic conversion of
shares (192,462) (1,573,020)
Shares redeemed (1,490,940) (12,245,914)
------------- ------------
Net decrease (1,517,805) $(12,460,024)
============= ============
Class B Shares for the Year Dollar
Ended December 31, 1999 Shares Amount
Shares sold 222,665 $ 2,037,879
Shares issued to shareholders
in reinvestment of dividends 226,620 2,037,643
------------- ------------
Total issued 449,285 4,075,522
Automatic conversion of
shares (301,066) (2,690,620)
Shares redeemed (4,176,877) (37,697,677)
------------- ------------
Net decrease (4,028,658) $(36,312,775)
============= ============
Class C Shares for the Six Months Dollar
Ended June 30, 2000 Shares Amount
Shares sold 14,677 $ 119,490
Shares issued to shareholders
in reinvestment of dividends 1,122 9,186
------------- ------------
Total issued 15,799 128,676
Shares redeemed (34,882) (287,656)
------------- ------------
Net decrease (19,083) $ (158,980)
============= ============
Class C Shares for the Year Dollar
Ended December 31, 1999 Shares Amount
Shares sold 10,394 $ 93,209
Shares issued to shareholders
in reinvestment of dividends 4,789 43,148
------------- ------------
Total issued 15,183 136,357
Shares redeemed (113,668) (1,023,182)
------------- ------------
Net decrease (98,485) $ (886,825)
============= ============
Class D Shares for the Six Months Dollar
Ended June 30, 2000 Shares Amount
Shares sold 13,930 $ 115,333
Automatic conversion of
shares 192,534 1,573,020
Shares issued to shareholders
in reinvestment of dividends 50,542 413,692
------------- ------------
Total issued 257,006 2,102,045
Shares redeemed (694,171) (5,705,752)
------------- ------------
Net decrease (437,165) $ (3,603,707)
============= ============
Class D Shares for the Year Dollar
Ended December 31, 1999 Shares Amount
Shares sold 39,011 $ 352,215
Automatic conversion of
shares 301,217 2,690,620
Shares issued to shareholders
in reinvestment of dividends 143,701 1,287,452
------------- ------------
Total issued 483,929 4,330,287
Shares redeemed (1,405,704) (12,623,120)
------------- ------------
Net decrease (921,775) $ (8,292,833)
============= ============
5. Short-Term Borrowings:
On December 3, 1999, the Fund, along with certain other funds
managed by MLIM, entered into a one-year, unsecured $1,000,000,000
credit agreement with The Bank of New York and certain other
institutions party thereto. The funds may borrow money for temporary
or emergency purposes to fund shareholder redemptions. The agreement
bears interest at the Federal Funds rate plus .50%. The Fund did not
borrow from the facility during the six months ended June 30, 2000.
6. Commitments:
At June 30, 2000, the Fund had entered into foreign exchange
contracts, under which it had agreed to sell foreign currency with
an approximate value of $556,000.
7. Capital Loss Carryforward:
At December 31, 1999, the Fund had a net capital loss carryforward
of approximately $37,780,000, of which $23,791,000 expires in 2002,
$10,514,000 expires in 2005 and $3,475,000 expires in 2007. This
amount will be available to offset like amounts of any future
taxable gains.
