MERRILL LYNCH
INTERMEDIATE
GOVERNMENT
BOND FUND
[FUND LOGO]
STRATEGIC
Performance
Semi-Annual Report
April 30, 1997
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
Intermediate Government
Bond Fund
Box 9011
Princeton, NJ
08543-9011 #IGB01 -- 4/97
Merrill Lynch Intermediate Government Bond Fund
DEAR SHAREHOLDER
Interest rates crept upward in late 1996, as the economy picked up
significant strength during a particularly strong Christmas selling
season. Gross domestic product (GDP) increased 3.8% in the fourth
quarter of 1996, up from a more modest 2.1% gain in the third quarter.
Real final sales showed a stronger acceleration in consumption than
indicated by the GDP report. While inflationary measures stayed low,
investors viewed the gain in the economy as too strong, which would be
threatened by a monetary policy tightening by the Federal Reserve Board
(FRB). The central bank followed through and tightened monetary policy
on March 25, 1997. Between early December 1996 (when FRB Chairman Alan
Greenspan first indicated that monetary policy tightening would be
likely) and the actual tightening, the yield on the Government's five-
year note rose from about 6.00% to about 6.80%.
Merrill Lynch Intermediate Government Bond Fund's short duration served
it well during the November 1996 to January 1997 period as interest
rates crept higher. After a brief and minor rally in early February,
interest rates hit a trough just as the Fund's new investment objective
was approved. We lengthened the Fund's average duration from 2.1 years
(average maturity of 2.6 years) at the end of January to 4.5 years
(average maturity of 6.7 years) by the end of February, which is
consistent with our new investment objective. (Under the new objective,
the Fund will continue to invest in US Government and agency
obligations, but up to a final maturity of 15 years. Under normal
circumstances, the Fund will have a weighted average maturity of between
six and eight years.)
As it became more evident that the FRB would tighten monetary policy, we
shortened the duration further, closing April at 4.1 years for an
average maturity of 5.7 years. In addition, we placed emphasis on
Government agency debt to take advantage of the extra yield spread. US
Government agency debt accounted for 40% of the portfolio at April 30,
1997, and callable agency securities made up about 12% of the
portfolio's net assets. There were no mortgage holdings. Cash, at just
over 5% of net assets, was held to minimal levels as the short-term end
of the yield curve (one-year -- two-year maturities) looked attractive,
even after assuming the possibility of further monetary policy
tightening.
We will continue to conservatively manage the Fund, with the average
maturity not falling far from the proposed six-year -- eight-year range.
We will also continue to emphasize agency debt in an effort to enhance
yield.
In Conclusion
We thank you for your continued investment in Merrill Lynch Intermediate
Government Bond Fund, and we look forward to discussing our outlook and
strategy in our upcoming quarterly report to shareholders.
Sincerely,
/S/ROBERT W. CROOK
Robert W. Crook
President and Trustee
/S/JAY C. HARBECK
Jay C. Harbeck
Vice President and Portfolio Manager
/S/RALPH A. DECESARE
Ralph A. DeCesare
Portfolio Manager
June 9, 1997
We are pleased to announce that effective February 18, 1997 Ralph A.
DeCesare became responsible for the day-to-day management of the Fund.
Mr. DeCesare has been Vice President of Merrill Lynch Asset Management,
L.P. ("MLAM") since January 1993, and was Assistant Vice president since
October 1991. Prior thereto, he was a credit analyst in MLAM since March
1990.
PERFORMANCE DATA
About Fund Performance
Investors are able to purchase shares of the Fund through the Merrill Lynch
Select PricingSM System, which offers four pricing alternatives:
[bullet] Class A Shares incur a maximum initial sales charge (front-
end load) of 1% and bear no ongoing distribution or account maintenance
fees. Class A Shares are available only to eligible investors.
[bullet] Class B Shares are subject to a maximum contingent deferred
sales charge of 1% if redeemed during the first year, decreasing to 0%
after the first year. In addition, Class B Shares are subject to a
distribution fee of 0.25% 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.)
[bullet] Class C Shares are subject to a distribution fee of 0.25%
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.
[bullet] Class D Shares incur a maximum initial sales charge of
1% and an account maintenance fee of 0.10% (but no distribution fee).
The Fund's shareholders as of February 18, 1997 became holders of
Class D Shares.
None of the past results shown should be considered a representation
of future performance. Figures shown in the "Aggregate Total Return"
and "Average Annual Total Return" tables as well as the total return
and cumulative total return in the "Performance Summary" table 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>
<CAPTION>
Performance Summary -- Class D Shares
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <C> <C> <C> <C> <C>
11/6/86 -- 12/31/86 $10.00 $9.98 -- $0.116 + 0.96%
1987 9.98 9.56 -- 0.757 + 3.57
1988 9.56 9.27 -- 0.809 + 5.58
1989 9.27 9.39 -- 0.827 +10.64
1990 9.39 9.45 -- 0.761 + 9.19
1991 9.45 10.00 -- 0.709 +13.91
1992 10.00 10.03 -- 0.602 + 6.54
1993 10.03 10.21 -- 0.535 + 7.23
1994 10.21 9.47 -- 0.566 - 1.71
1995 9.47 9.90 -- 0.615 +11.33
1996 9.90 9.64 -- 0.596 + 3.54
1/1/97 -- 4/30/97 9.64 9.45 -- 0.150 - 0.23
Total $7.043
Cumulative total return as of 4/30/97: +96.20%**
* Figures may include short-term capital gains distributions.
** Figures do not include sales charge; results would be lower if sales charge was included.
</TABLE>
<TABLE>
<CAPTION>
Recent Performance Results*
12 Month 3 Month Standardized
4/30/97 1/31/97+ 4/30/96 % Change % Change+ 30-Day Yield
<S> <C> <C> <C> <C> <C> <C>
Class A Shares $9.45 $9.66 -- -- -2.17% 5.07%
Class B Shares 9.45 9.66 -- -- -2.17 4.86
Class C Shares 9.45 9.66 -- -- -2.17 4.48
Class D Shares 9.45 9.63 $9.65 -2.07% -1.87 4.97
Class A Shares -- Total Return -- -1.17(1)
Class B Shares -- Total Return -- -1.23(2)
Class C Shares -- Total Return -- -1.30(3)
Class D Shares -- Total Return -3.86(4) -0.63(5)
* Investment results shown do not reflect sales charges; results shown would be lower if a sales charge
was included.
+ Investment results and net asset values for Class A, Class B and Class C Shares are since inception
on 2/18/97.
(1) Percent change includes reinvestment of $0.079 per share ordinary income dividends.
(2) Percent change includes reinvestment of $0.074 per share ordinary income dividends.
(3) Percent change includes reinvestment of $0.068 per share ordinary income dividends.
(4) Percent change includes reinvestment of $0.548 per share ordinary income dividends.
(5) Percent change includes reinvestment of $0.101 per share ordinary income dividends.
</TABLE>
Aggregate Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Inception (2/18/97)
through 3/31/97 -2.43% -3.41%
* Maximum sales charge is 1%.
** Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Inception (2/18/97)
through 3/31/97 -2.36% -3.33%
* Maximum contingent deferred sales charge is 1% and is reduced
to 0% after 1 year.
** Assuming payment of applicable contingent deferred sales charge.
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Inception (2/18/97)
through 3/31/97 -2.51% -3.48%
* Maximum contingent deferred sales charge is 1% and is
reduced to 0% after 1 year.
** Assuming payment of applicable contingent deferred sales
charge.
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class D Shares*
Year Ended 3/31/97 +2.32% +1.30%
Five Years Ended 3/31/97 +5.31 +5.10
Ten Years Ended 3/31/97 +6.64 +6.54
* Maximum sales charge is 1%.
** Assuming maximum sales charge.
<TABLE>
<CAPTION>
Merrill Lynch Intermediate Government Bond Fund April 30, 1997
SCHEDULE OF INVESTMENTS
Face Interest Maturity Value
Issue Amount Rate Date (Note 1a)
<S> <C> <C> <C> <C>
US Government & Agency Obligations -- 94.9%
US Treasury Notes $4,000,000 8.875% 2/15/99 $4,176,240
3,000,000 6.375 3/31/01 2,984,070
4,000,000 7.50 11/15/01 4,144,360
2,000,000 6.25 2/15/03 1,965,620
3,000,000 7.25 5/15/04 3,097,020
5,000,000 7.00 7/15/06 5,084,350
Federal Home Loan Banks 2,000,000 6.67 5/10/01 1,998,440
2,000,000 6.789 2/05/07 1,976,240
Federal National Mortgage Association 2,000,000 6.55 9/12/05 1,950,320
2,000,000 6.95 11/13/06 1,958,120
3,000,000 7.55 3/27/07 2,996,730
Student Loan Marketing Association 5,000,000 7.50 3/08/00 5,115,600
Total US Government & Agency Obligations
(Cost -- $37,646,531) 37,447,110
<CAPTION>
Face Amount Short-Term Securities
US Government Agency Obligations* -- 4.6%
<S> <C> <C>
$1,804,000 Federal Home Loan Mortgage Corp., 5.40% due 5/01/1997 1,804,000
Total Short-Term Securities (Cost -- $1,804,000) 1,804,000
Total Investments (Cost -- $39,450,531) -- 99.5% 39,251,110
Other Assets Less Liabilities -- 0.5% 210,659
-----------
Net Assets -- 100.0% $39,461,769
===========
* Certain US Government Agency Obligations are traded on a discount basis; the interest rate
shown is the discount rate paid at the time of purchase by the Fund.
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL INFORMATION
Statement of Assets and Liabilities as of April 30, 1997
<S> <C> <C> <C>
Assets: Investments, at value (identified cost -- $39,450,531) (Notes 1a & 1b) $39,251,110
Cash 664
Receivables:
Interest $714,123
Beneficial interest sold 2,201 716,324
------------
Prepaid registration fees and other assets (Note 1e) 87,053
------------
Total assets 40,055,151
------------
Liabilities: Payables:
Beneficial interest redeemed 395,389
Dividends to shareholders (Note 1f) 73,794
Investment adviser (Note 2) 13,109
Distributor (Note 2) 3,269 485,561
------------
Accrued expenses and other liabilities 107,821
------------
Total liabilities 593,382
------------
Net Assets: Net assets $39,461,769
============
Net Assets Class A Shares of beneficial interest, $0.10 par value, unlimited
Consist of: number of shares authorized $4,219
Class B Shares of beneficial interest, $0.10 par value, unlimited
number of shares authorized 3,007
Class C Shares of beneficial interest, $0.10 par value, unlimited
number of shares authorized 11
Class D Shares of beneficial interest, $0.10 par value, unlimited
number of shares authorized 410,414
Paid-in capital in excess of par 56,954,851
Accumulated realized capital losses on investments -- net (Note 5) (17,711,312)
Unrealized depreciation on investments -- net (199,421)
------------
Net assets $39,461,769
============
Net Asset Value: Class A -- Based on net assets of $398,550 and 42,187 shares outstanding $9.45
============
Class B -- Based on net assets of $284,220 and 30,075 shares outstanding $9.45
============
Class C -- Based on net assets of $1,049 and 111 shares outstanding $9.45
============
Class D -- Based on net assets of $38,777,950 and 4,104,135 shares
outstanding $9.45
============
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations for the Six Months Ended April 30, 1997
<S> <C> <C> <C>
Investment Income Interest and amortization of premium and discount earned $1,510,645
(Notes 1d):
Expenses: Investment advisory fees (Note 2) $87,526
Professional fees 71,680
Registration fees (Note 1e) 36,449
Printing and shareholder reports 31,825
Account maintenance fees -- Class D (Note 2) 28,732
Trustees' fees and expenses 12,268
Transfer agent fees -- Class D (Note 2) 10,626
Custodian fees 4,322
Accounting services (Note 2) 3,757
Pricing fees 223
Account maintenance and distribution fees -- Class B (Note 2) 55
Transfer agent fees -- Class A (Note 2) 26
Transfer agent fees -- Class B (Note 2) 21
Transfer agent fees -- Class C (Note 2) 1
Account maintenance and distribution fees -- Class C (Note 2) 1
Other 1,059
------------
Total expenses 288,571
------------
Investment income -- net 1,222,074
------------
Realized & Realized loss from investments -- net (1,042,277)
Unrealized Change in unrealized depreciation on investments -- net (6,383)
Loss on ------------
Investments -- Net Net Increase in Net Assets Resulting from Operations $173,414
(Notes 1d & 3): ============
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
For the Six For the
Months Ended Year Ended
April 30, 1997 Oct. 31, 1996
<S> <C> <C> <C>
Increase (Decrease) in Net Assets:
Operations: Investment income -- net $1,222,074 $3,591,278
Realized loss on investments -- net (1,042,277) (976,648)
Change in unrealized depreciation on investments -- net (6,383) (2,927)
------------- -------------
Net increase in net assets resulting from operations 173,414 2,611,703
------------- -------------
Dividends to Investment income -- net:
Shareholders Class A (1,661) (3,591,278)
(Note 1f): Class B (1,099) --
Class C (9) --
Class D (1,219,305) --
------------- -------------
Net decrease in net assets resulting from dividends to shareholders (1,222,074) (3,591,278)
------------- -------------
Beneficial Interest Net decrease in net assets derived from beneficial interest
Transactions transactions (6,770,791) (16,877,924)
(Note 4): ------------- -------------
Net Assets: Total decrease in net assets (7,819,451) (17,857,499)
Beginning of period 47,281,220 65,138,719
------------- -------------
End of period $39,461,769 $47,281,220
============= =============
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights
The following per share data and ratios have been derived
from information provided in the financial statements For the Period
Feb. 18, 1997+ to April 30, 1997
Class A Class B Class C
Increase (Decrease) in Net Asset Value:
<S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $9.66 $9.66 $9.66
Operating ------- ------- -------
Performance: Investment income -- net .10 .09 .08
Realized and unrealized loss on investment -- net (.21) (.21) (.21)
------- ------- -------
Total from investment operations (.11) (.12) (.13)
------- ------- -------
Less dividends from investment income -- net (.10) (.09) (.08)
------- ------- -------
Net asset value, end of period $9.45 $9.45 $9.45
======= ======= =======
Total Investment Based on net asset value per share (1.17%)++++ (1.23%)++++ (1.30%)++++
Return:** ======= ======= =======
Ratios to Average Expenses 1.74%* 2.02%* 2.48%*
Net Assets: ======= ======= =======
Investment income -- net 5.31%* 5.03%* 4.55%*
======= ======= =======
Supplemental Net assets, end of period (in thousands) $399 $284 $1
Data: ======= ======= =======
Portfolio turnover 139.03% 139.03% 139.03%
======= ======= =======
* Annualized.
** Total investment returns exclude the effects of sales loads.
+ Commencement of Operations.
++++ Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Class D
For the Six
The following per share data and ratios have been derived Months
from information provided in the financial statements. Ended
April 30, For the Year Ended October 31,
1997 1996 1995 1994 1993
Increase (Decrease) in Net Asset Value:
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $9.68 $9.82 $9.60 $10.31 $10.06
Operating ------- ------- ------- ------- --------
Performance: Investment income -- net .26 .61 .62 .55 .54
Realized and unrealized gain (loss) on
investments and foreign currency
transactions -- net (.23) (.14) .22 (.71) .25
------- ------- ------- ------- --------
Total from investment operations .03 47 .84 (.16) .79
------- ------- ------- ------- --------
Less dividends from investment income -- net (.26) (.61) (.62) (.55) (.54)
------- ------- ------- ------- --------
Net asset value, end of period $9.45 $9.68 $9.82 $9.60 $10.31
======= ======= ======= ======= ========
Total Investment Based on net asset value per share .35%++++ 4.87% 9.00% (1.54%) 8.07%
Return:** ======= ======= ======= ======= ========
Ratios to Average Expenses 1.32%* .97% .96% .83% .80%
Net Assets: ======= ======= ======= ======= ========
Investment income -- net 5.59%* 6.19% 6.38% 5.55% 5.34%
======= ======= ======= ======= ========
Supplemental Net assets, end of period (in thousands) $38,778 $47,281 $65,139 $81,407 $122,283
Data: ======= ======= ======= ======= ========
Portfolio turnover 139.03% 51.44% 47.90% 172.51% 204.80%
======= ======= ======= ======= ========
* Annualized.
** Total investment returns exclude the effects of sales loads.
++++ Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch Intermediate Government Bond Fund (the "Fund") is
registered under the Investment Company Act of 1940 as a diversified,
open-end management investment company. 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
PricingSM 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 investments -- Portfolio securities traded in the over-
the-counter markets are valued at the last available bid price or yield
equivalent as obtained from dealers who make a market in the securities.
US Government securities and securities issued by Federal agencies are
traded in the over-the-counter market. Securities with remaining
maturities of sixty days or less are valued at amortized cost, which
approximates market value.
(b) Repurchase agreements -- The Fund invests in US Government
securities pursuant to repurchase agreements with a member bank of the
Federal Reserve System or a primary dealer in US Government securities.
Under such agreements, the bank or primary dealer agrees to repurchase
the security at a mutually agreed upon time and price. The Fund takes
possession of the underlying securities, marks to market such securities
and, if necessary, receives additions to such securities daily to ensure
that the contract is fully collateralized.
(c) 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 substantially all of its taxable
income to its shareholders. Therefore, no Federal income tax provision
is required.
(d) 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 and premium)
is recognized on the accrual basis. Realized gains and losses on
security transactions are determined on the identified cost basis.
e) Prepaid registration fees -- Prepaid registration fees are charged to
expense as the related shares are issued.
(f) Dividends and distributions -- Dividends from net investment income
are declared daily and paid monthly. Distributions of capital gains are
recorded on the ex-dividend dates.
2. Investment Advisory Agreement and Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Merrill
Lynch Asset Management, L.P. ("MLAM"). The general partner of MLAM 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 Plan with Merrill Lynch Funds Distributor, Inc. ("MLFD" or
"Distributor"), a wholly-owned subsidiary of Merrill Lynch Group, Inc.
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 operations of the Fund. For such
services, the Fund pays a monthly fee at the annual rate of 0.40% of the
average daily net assets of the Fund.
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% 0.25%
Class C 0.25% 0.25%
Class D 0.10% --
This fee is to compensate MLFD for the services it provides and the
expenses borne by MLFD under the Distribution Agreement. As authorized
by the Plan, MLFD has entered into an agreement with Merrill Lynch,
Pierce, Fenner & Smith Inc. ("MLPF&S"), which provides for the
compensation of MLPF&S for providing distribution-related services to
the Fund. Such services relate to the sale, promotion, and marketing of
the shares of the Fund.
For the six months ended April 30, 1997, MLFD earned underwriting
discounts and direct commissions and MLPF&S earned dealer concessions on
sales of the Fund's Class D Shares as follows:
MLFD MLPF&S
Class D $2 $91
For the six months ended April 30, 1997, the Fund paid Merrill Lynch
Security Pricing Service, an affiliate of MLPF&S, $327 for security
price quotations to compute the net asset value of the Fund.
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 MLAM, PSI, MLFD, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for
the six months ended April 30, 1997 were $57,530,773 and $63,653,045,
respectively.
Net realized and unrealized losses as of April 30, 1997 were as follows:
Realized Unrealized
Losses Losses
Long-term investments $(1,042,277) $(199,421)
------------ -----------
Total $(1,042,277) $(199,421)
============ ===========
As of April 30, 1997, net unrealized depreciation for Federal income tax
purposes aggregated $199,421, of which $99,517 related to appreciated
securities and $298,938 related to depreciated securities. The aggregate
cost of investments at April 30, 1997 for Federal income tax purposes
was $39,450,531.
4. Transactions in Shares of Beneficial Interest:
Net decrease in net assets derived from beneficial interest transactions
was $6,770,791 and $16,877,924 for the six months ended April 30, 1997
and for the year ended October 31, 1996, respectively.
Transactions in shares of beneficial interest were as follows:
Class A Shares for the Period
Feb. 18, 1997+ to April 30, 1997 Shares Amount
Shares sold 42,175 $395,308
Shares issued to shareholders
in reinvestment of dividends 12 115
----------- -----------
Net increase 42,187 $395,423
=========== ===========
+Commencement of Operations.
Class B Shares for the Period Dollar
Feb. 18, 1997+ to April 30, 1997 Shares Amount
Shares sold 33,453 $314,894
Shares issued to shareholders
in reinvestment of dividends 71 673
----------- -----------
Total issued 33,524 315,567
Shares redeemed (3,449) (32,355)
----------- -----------
Net increase 30,075 $283,212
=========== ===========
+Commencement of Operations.
Class C Shares for the Period Dollar
Feb. 18, 1997+ to April 30, 1997 Shares Amount
Shares sold 110 $1,063
Shares issued to shareholders
in reinvestment of dividends 1 7
----------- -----------
Net increase 111 $1,070
=========== ===========
+Commencement of Operations.
Class D Shares for the Six Months Dollar
Ended April 30, 1997 Shares Amount
Shares sold 480,666 $4,643,810
Shares issued to shareholders
in reinvestment of dividends 117,277 1,126,700
----------- -----------
Total issued 597,943 5,770,510
Shares redeemed (1,377,232) (13,221,006)
----------- -----------
Net decrease (779,289) $(7,450,496)
=========== ===========
Class D Shares for the Year Dollar
Ended October 31, 1996 Shares Amount
Shares sold 3,906,826 $37,917,545
Shares issued to shareholders
in reinvestment of dividends 310,652 3,023,342
----------- -----------
Total issued 4,217,478 40,940,887
Shares redeemed (5,964,956) (57,818,811)
----------- -----------
Net decrease (1,747,478) $(16,877,924)
=========== ===========
5. Capital Loss Carryforward:
At October 31, 1996, the Fund had a net capital loss carryforward of
approximately $16,669,000, of which $5,830,000 expires in 1997,
$4,643,000 expires in 1998, $3,224,000 expires in 2002, $1,995,000
expires in 2003, and $977,000 expires in 2004. This amount will be
available to offset like amounts of any future taxable gains. Expired
capital loss carryforward in the amount of $8,336,446 has been
reclassified to paid-in capital in excess of par.
OFFICERS AND TRUSTEES
Robert W. Crook, President and Trustee
A. Bruce Brackenridge, Trustee
Charles C. Cabot Jr., Trustee
James T. Flynn, Trustee
Terry K. Glenn, Trustee
George W. Holbrook Jr., Trustee
W. Carl Kester, Trustee
William E. Aldrich, Executive Vice President
Michael J. Brady, Senior Vice President
William M. Breen, Senior Vice President
James J. Fatseas, Senior Vice President
Joseph T. Monagle Jr., Senior Vice President
William Wasel, Senior Vice President
Donald C. Burke., Vice President
Ann Catlin, Vice President
Charles O. Daly, Vice President
Diana Frankland, Vice President
Jay C. Harbeck, Vice President
Mark E. Maguire, Vice President
Dianne F. McDonough, Vice President
Patricia A. Schena, Vice President
Barry F. X. Smith, Vice President
Karen D. Young, Vice President
Gerald M. Richard, Treasurer
Custodian
State Street Bank and Trust Company
P.O. Box 351
Boston, MA 02101
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
