Release Date 03-0-2003 Page of 5 Overall Rating Morningstar Category Net Assets Merrill Lynch Short Term U.S. Govt B Investment Approach 22 Short Government Funds Equity Style Fixed-Income Style (2-3-2002) Composition Regional Exposure Value Blend Growth Short Int Long as of 2-3-02 % of assets as of 2-3-02 Equity Portfolio Statistics P/E Ratio P/C Ratio P/B Ratio 3 Yr Earnings Gr% Mdn Mkt Cap($mil) Large Medium Small Portfolio Average Fixed-Income Portfolio Statistics as of 2-3-2002 Avg Eff Mat/Duration AvgWeighted Coupon Avg Weighted Price Avg Credit Quality Holding Statistics Turnover Ratio % Assets in Top 0 Holdings % Total Holdings Trailing-Period Performance Total Return % as of 02-28-2003 +/- LB Aggregate +/- LB -5 YR GOVT / 5.33 05.0 84% 27.26 26 Relative Index High Medium Relative Category Cash U.S. Stocks Non-U.S. Stocks Bonds Other Credit Analysis.4 0.0 0.0 86.8.8 US Goverment AAA AA A BBB BB B Below B Not Rated/Not Available Americas Greater Europe Greater Asia % of Bonds Short Government $02.0 mil Risk and Return Profile (as of 02-28-2003) Morningstar Rating Risk Return 3Yr 22 funds Below Avg MPT Statistics/Other Measurements R-squared Beta Alpha Sharpe Ratio Std Deviation Mean 2-Month Yield 30-day SEC Yield Potential Cap Gains Exp LB Agg 64 0.38-0.59 5Yr 4 funds 0Yr 52 funds Below Avg Best Fit Lehman Brothers Intermediate Treasury 73 0.44-0.54 3 Yr 5 Yr 0 Yr.9.62 5.53 0.49.34 4.82 3.88% 0.4.29 4.68-0% of assets YTD Mo 3 Mo 2 Mo 3 Yr 5 Yr 0 Yr 5 Yr Standardized Return% Annlzd Annlzd Annlzd Annlzd as of 2-3-02 0.39 0.49.32 4.84 5.53 4.82 4.68 -.08-0.89-2.25-5.09-4.79-2.78-2.60-0.24-0.23-0.67-2.50-2.98-2.05 -.59 % Rank within Morningstar Category: 74(38) 95(22) 92(4) 96(52) -Best 00-Worst(number of funds) Growth of $0,000 from 0-0-993 to 02-28-2003 Merrill Lynch Short Term U.S. Govt B $5,853 Category Average: Short Government $7,407 00,000 80,000 60,000 40,000 20,000 2 Mo 5 Yr 0 Yr Inception 2.32 4.89 4.68 4.56 Index: Lehman Brothers Aggregate Bond $20,939 $0,000 5,000 Calendar-Year Performance 993 994 995 996 997 998 999 2000 200 2002 02-03 Total Return % +/- LB Aggregate +/- LB -5 YR GOVT 2.83-0.5 8.3 6.6 5.53 3.76 4. 5.02 6.25 5.32 0.39-6.92 2.77-0.34 2.55-4.5-4.9 4.94-6.6-2.7-4.95 -.08-4.05 0.62-4.53.56 -.58-3.89 2.5-4.07-2.39-2.38-0.24 Operations Family: Inception: Manager: Tenure: Telephone: Objective: Merrill Lynch Investment Managers 08-99 Gregory M. Maunz Years 800-995-6526 Govt Bond--Treasury Ticker: Minimum Initial Purchase: Minimum IRA Purchase: Minimum Auto Investment Plan: Purchase Constraints: MBAJX $,000 $00 $,000 Front-End Fees: Deferred Load: 2b- Fee: Expense Ratio: Assets: NAV: 0.00% 4.00% 0.75%.05% $02.0 mil 9.67
Mutual Fund Detail Report Disclosure Statement Page 2 of 5 The Mutual Fund Detail Report must be preceded or accompanied by the fund's current prospectus as well as this disclosure statement. The prospectus has more complete information on risks, charges, and expenses. Please read the prospectus carefully before investing or sending money. Not all funds or classes of shares may be available to every investor for purchase through Merrill Lynch. Certain limitations may apply and, therefore, you may not be eligible to purchase some funds or classes of shares identified herein. Furthermore, those classes of shares that you are eligible to purchase through Merrill Lynch may be subject to ongoing account maintenance and/or other fees, which will affect the performance. Performance The performance data given represents past performance and should not be considered indicative of future results. Principal value and investment return will fluctuate, so that an investor s shares when redeemed may be worth more or less than the original investment. Fund portfolio statistics change over time. The fund is not FDIC-insured, may lose value and is not guaranteed by a bank or other financial institution. Total return reflects performance without adjusting for sales charges or the effects of taxation, but is adjusted to reflect all actual ongoing fund expenses and assumes reinvestment of dividends and capital gains. If adjusted, sales charges would reduce the performance quoted. Standardized total return is total return adjusted for sales charges. The sales charge adjusted for may not necessarily be consistent with the prospectus. For certain funds, the returns reflect subsidies and waivers, without which their results would have been lower than noted. These subsidies and waivers may not continue in effect. Please consult the prospectus of the fund for more information. Sales Charge may not reflect the applicable sales charge. Sales charges are for charges do not reflect any special purchase privileges that may be available to certain investors, such as waivers and rights of accumulation. Consult the prospectus for more information. Sales charge also does not include information about Merrill Lynch Unlimited Advantage and other Merrill Lynch programs in which certain classes of participating funds are sold at NAV. These programs charge an on-going fee for assets held in the program. Growth of $0,000 The graph compares the growth of $0,000 in a fund with that of an index and with that of the average for all funds in its Morningstar category. The total returns are not adjusted to reflect sales charges or the effects of taxation, but are adjusted to reflect actual ongoing fund expenses, and assumes reinvestment of dividends and capital gains. If adjusted, sales charges would reduce the performance quoted. The index is an unmanaged portfolio of specified securities and the index and the category average do not reflect any initial or ongoing expenses. A funds portfolio may differ significantly from the securities in the index. The index is chosen by Morningstar. Risk and Return For each fund with at least a three-year history, Morningstar calculates a Morningstar Rating based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a fund's monthly performance (including the effects of sales charges, loads, and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 0% of funds in each category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars and the bottom 0% receive star. (Each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight variations in the distribution percentages.) The Overall Morningstar Rating for a fund is derived from a weighted average of the performance figures associated with its three-, fiveand ten-year (if applicable) Morningstar Rating metrics. Morningstar Return rates a fund's performance relative to other funds in its Morningstar Category. It is an assessment of a fund's excess return over a riskfree rate (the return of the 90-day Treasury bill), after adjusting for all applicable loads and sales charges, in comparison to the funds in its Morningstar Category. Morningstar Return is measured for up to three time periods (three-, five-, and 0-years). These separate measures are then weighted and averaged to produce an overall measure for the fund. Funds with less than three years of performance history are not rated. Morningstar Risk evaluates a fund's downside volatility relative to that of other funds in its Morningstar Category. It is an assessment of the variations in a fund's monthly returns, with an emphasis on downside variations, in comparison to the funds in its Morningstar Category. Morningstar Risk is measured for up to three time periods (three-, five-, and 0-years). These separate measures are then weighted and averaged to produce an overall measure for the fund. Funds with less than three years of performance history are not rated. Risk Measures R-squared reflects the percentage of a fund s movements that are explained by movements in its benchmark index, showing the degree of correlation between the fund and the benchmark. Beta is a measure of a fund s sensitivity to market movements. A portfolio with a beta greater than is more volatile than the market and a portfolio with a beta less than is less volatile than the market. Alpha measures the difference between a fund s actual returns and its expected performance, given its level of risk (as measured by beta). The Sharpe ratio uses standard deviation and excess return to determine reward per unit of risk. Standard deviation is a statistical measure of the volatility of the fund s returns. Mean represents the annualized three-year geometric return. Investment Style Box
Page 3 of 5 The style box reveals a fund s investment strategy. For equity funds the vertical axis shows the market capitalization of the stocks owned and the horizontal axis shows investment style (value, blend or growth). For fixed-income funds the vertical axis shows the average credit quality of the bonds owned, and the horizontal axis shows interest rate sensitivity as measured by a bond s duration (short, intermediate or long). Investment Risk The following describes general risks associated with investing. Please see fund prospectuses for the applicable risks associated with the subject funds. International Funds/Emerging Market Funds: The investor should note that funds that invest in international securities involve special additional risks. These risks include, but are not limited to, currency risk, political risk, and risk associated with varying accounting standards. Investing in emerging markets may accentuate these risks. Sector Funds: The investor should not that funds that invest exclusively in one sector or industry involve additional risks. The lack of industry diversification subjects the investor to increased industry-specific risks. Maximum Sales Charges: Standardized average annual returns for Merrill Lynch Funds Class A and Class D shares reflect the deduction of a current maximum sales charge of 5.25% for all equity funds (except Merrill Lynch Utililtes and Telecommunications Fund for which the current maximum initial sales charges is 4%); % for all limited maturity municipal bond funds, Merrill Lynch Municipal Intermediate Term Fund, Merrill Lynch Bond Fund-Intermediate Term Portfolio, and Merrill Lynch Intermediate Government Bond Fund; and 4% for all other fixed income funds. Class A shares are only offered to a limited group of investors. Class B average annual total returns with sales charge reflect the deduction of the maximum contingent deferred sales charge (CDSC). This charge is % for all limited maturity municipal bond funds and is reduced to 0% after one year. The maximum CDSC for all other fixed-income funds and all equity funds is 4% and is reduced to 0% after four years. For equity funds, the maximum CDSC is 4% and is reduced to 0% after six years. Standardized average annual returns for Mercury Funds shares reflect deduction of the current maximum sales charge of 5.25% for Class I and Class A shares and payment of the applicable contingent deferred sales charge (CDSC) for Class B and Class C shares. The maximum CDSC for Class B shares is 4%, which is reduced to 0% after six years. The maximum CDSC for Class C shares is %, which is reduced to 0% after on year. Class I shares are only offered to a limited group of investors. Non-Diversified Funds: The investor should note that funds that invest more of their assets in a single issuer involve additional risks, including share price fluctuation, because of the increased concentration of investments. Small-Cap Funds: The investor should note that funds that invest in stocks of small companies involve additional risks. Smaller companies typically have a higher risk of failure, and are not as well established as larger bluechip companies. Historically, smaller-company stocks have experienced a greater degree of market volatility than the overall market average. Mid-Cap Funds: The investor should note that funds that invest in companies with market capitalization below $0 billion involve additional risks. The securities of these companies may be more volatile and less liquid than the securities of larger companies. High-Yield Bond Funds: The investor should note that funds that invest in lower-rated debt securities (commonly referred to as junk bonds) involve additional risks because of the lower credit quality of the securities in the portfolio. The investor should be aware of the possible higher level of volatility, and increased risk of default. Tax-Free Municipal Bond Funds: The investor should note that the income from tax-free municipal bond funds may be subject to state and local taxation and the Alternative Minimum Tax. Operations Investors should consult each fund s prospectus for a more complete description of the funds investment objectives, risks, fees and expenses. Minimum investments and other terms of the Automated Investment Plan and IRA accounts available through Merrill Lynch may differ. Purchase Constraint Codes: A = Qualified Access, T = Institutional, C = Closed to New Investments, L = Closed to All Investments. Index Definitions Indices are unmanaged and do not carry fees and expenses associated with mutual fund investments. 6-Month CD: As tracked by the Wall Street Journal, this benchmark measures the yields of bank-sponsored certificates of deposit. CSFB Convertible Bond: A market-value weighted index which includes convertible-, preferred, and euro-convertible-bonds with B- or better S&P ratings and a minimum size of $50 million. CSFB Global High Yield: The index includes issues rated BB and below by S&P or Moody s with par amounts greater than $75 million. Dow Jones Utility: Consists of 5 geographically representative gas and electric utility companies. The index is price weighted, and dividends are reinvested. JPM Emerging Markets Bond +: A capitalization-weighted index of debt instruments from 3 emerging markets: Argentina, Brazil, Chile, Bulgaria, Ecuador, Morocco, Nigeria, Panama, Peru, the Philippines, Poland, Russia and Venezuela. JMP Global Government: Index of traded international debt issues from 9 countries. JSE Gold: Johannesburg Stock Exchange Gold index tracks the performance of gold-related companies on the Johannesburg stock exchange. LB -3 Yr Government: Comprised of both the Treasury Bond index and the Agency Bond Index. These bonds must have maturities of one to three years. LB Aggregate: Composed of the Lehman Brothers Govt/Credit Index, the Mortgage-Backed Securities Index, and the Asset-Backed Securities Index.
Lehman Brothers Corporate: This index tracks the returns of all publicly issued, fixed-rate, nonconvertible, dollar-denominated, SEC-registered, investment-grade corporate debt. LB Government: This index tracks the returns of U.S. Treasuries, agency bonds, and one- to three-year U.S. government obligations. LB Intermediate-Term Government/Corporate: Includes both corporate and government ndexes, including bonds with maturities up to ten years. Lehman Brothers Intermediate Treasury: This index includes treasury bonds with maturates of at least one year and up to 0 years with an outstanding par value of at least 00 million. LB Long-Term Government: Includes those indexes found in the LB Government index which have a maturity of 0 years or more. LB Long-Term Government/Corporate: Includes the LB Government and LB Corporate Bond indices that have maturities of 0 years or longer. LB Long-Term Treasury: Includes all public obligations of the U.S. Treasury, excluding flower bonds and foreign-targeted issues with maturities of 0 years or longer. Lehman Brothers Mortgage-Backed Securities: Includes 5- and 30-year fixedrate securities backed by mortgage pools of the Government National Mortgage Association (GNMA). LB Muni: This index serves as a benchmark for long-term, investment-grade, taxexempt municipal bonds. MSCI Europe ND: This index measures the performance of stock markets in Austria, Belgium, Denmark, Finland, France, Germany, Italy, the Netherlands, Norway, Spain, Sweden, Switzerland, Ireland, Portugal, and the United Kingdom. MSCI Japan ND: This index measures the performance of the Japanese stock market, listed in U.S. dollars, with net dividends reinvested. MSCI Pacific ND: This index measures the performance of stock markets in Australia, Hong Kong, Japan, New Zealand, and Singapore, and Malaysia. MSCI Pacific ex Japan ND: This index measures the performance of stock markets in Australia, Hong Kong, New Zealand, and Singapore, and Malaysia. MSCI World ND: Includes all 23 MSCI developed market countries. MSCI World ex U.S. ND: This index measures the performance of the stock market in Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Italy, Japan, Malaysia, Netherlands, New Zealand, Norway, Singapore, Spain, Sweden, Switzerland and the United Kingdom. PSE Tech 00: The Pacific Stock Exchange is a price-weighted index of 00 exchange-listed and over the counter technology stocks. Page 4 of 5 Russell 2000: Consists of the smallest 2000 companies in the Russell 3000 Index. Russell 2000 Growth: This index tracks the companies within the Russell 2000 Index that have higher price-to-book ratios and higher forecasted growth values. Russell 2000 Value: This index tracks the companies within the Russell 2000 Index that have lower price-to-book ratios and lower forecasted growth values. LB Muni CA: Serves as a benchmark for all eligible California issued bonds. LB Muni NY: Serves as a benchmark for New York-issued bonds. MSCI AC Far East ex-japan ID: A capitalization-weighted index of stocks from China, Hong Kong, Indonesia, Korea, Malaysia, the Philippines, Singapore, Taiwan and Thailand. MSCI AC World ID: A capitalization-weighted index of stocks from Argentina, Australia, Austria, Belgium, Brazil, Canada, Chile, Columbia, Denmark, Finland, France, Germany, Greece, Hong Kong, India, Indonesia, Ireland, Israel, Italy, Japan, Jordan, Korea, Luxembourg, Malaysia, Mexico, Netherlands, New Zealand, Norway, Pakistan, Peru, Philippines, Poland, Portugal, Singapore, South Africa, Spain, Sri Lanka, Sweden, Switzerland, Taiwan, Thailand, Turkey, United Kingdom, USA, and Venezuela. Russell Midcap: The Russell Midcap Index includes firms 20 through 000, based on market capitalization, from the Russell 3000 Index. Russell Midcap Growth: This index tracks the companies within the Russell Midcap Index having higher price-to-book ratios and higher forecasted growth values. Russell Midcap Value: This index tracks the companies within the Russell Midcap Index having lower price-to-book ratios and lower forecasted growth values. Russell Top 200 Index: This index includes the 200 firms from the Russell 3000 Index with the largest market capitalizations. Russell Top 200 Growth: This index tracks the companies within the Russell Top 200 Index having higher price-to-book ratios and higher forecasted growth values. MSCI EAFE ND: This Europe, Australasia, and Far East index is a marketcapitalization-weighted index of 2 on-u.s., industrialized country indexes. MSCI EASEA ND: The EASEA is a 20-country index of developed nations. It resembles the MSCI EAFE in all regards except that Japan is excluded. MSCI Emerging Markets ID: This index includes emerging-market companies, with an average size of (U.S.) $400 million. MSCI EM Latin ID: This index measures the performance of the stock market in Argentina, Brazil, Chile, Colombia, Mexico, Peru and Venezuela.. Russell Top 200 Value: This index tracks the companies within the Russell Top 200 Index having lower price-to-book ratios and lower forecasted growth values. Russell 3000: The Russell 3000 Index represents 98% of the of the investable US equity market. S&P Mid 400: This index is comprised of stocks in the middle-capitalization range, and includes approximately 0% of the capitalization of U.S. equity securities. Salomon Brothers Non-U.S.-$ World: This index covers thirteen government-bond markets. For inclusion in this index, a market must total at least (U.S.) $20 billion
Page 5 of 5 for three consecutive months. Wilshire 4500: This index measures the performance of all U.S. common equity securities excluding the stocks in the S&P 500. Wilshire 5000: This index tracks all U.S. common equity securities, and therefore serves as an index of all stock trades in the United States. Wilshire Large Cap 750: This index represents the largest 750 domestic stocks within the Wilshire 5000 universe. Wilshire REIT: The index is market-capitalization weighted of publicly traded real estate securities, such as Real Estate Investment Trusts (REITs), Real Estate Operating Companies (REOCs), and partnerships. June 200