MERRILL LYNCH
LARGE CAP
VALUE FUND
Merrill Lynch
Large Cap Series Funds, Inc.
[GRAPHIC OMITTED]
STRATEGIC
Performance
Semi-Annual Report
April 30, 2000
<PAGE>
MERRILL LYNCH LARGE CAP VALUE FUND
Officers and Directors
Terry K. Glenn, President and Director
James H. Bodurtha, Director
Herbert I. London, Director
Joseph L. May, Director
Andre F. Perold, Director
Roberta C. Ramo, Director
Arthur Zeikel, Director
Robert C. Doll, Jr., Senior Vice President and
Portfolio Manager
Linda J. Gardner, Vice President
Donald C. Burke, Vice President and Treasurer
Alice A. Pellegrino, Secretary
Custodian
Brown Brothers Harriman & Co.
40 Water Street
Boston, MA 02109
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
<PAGE>
Merrill Lynch Large Cap Value Fund, April 30, 2000
DEAR SHAREHOLDERS
We are pleased to provide you with this first semi-annual report for Merrill
Lynch Large Cap Value Fund. In this and future shareholder reports, we will
highlight the Fund's performance and describe recent investment activities. The
Fund's investment objective is long-term capital growth. The Fund will seek to
achieve its investment objective by investing primarily in a diversified
portfolio of equity securities of large cap companies located in the United
States that we believe are undervalued.
Investment Environment
Since the beginning of the year, market volatility has increased dramatically
and has become an additional cost in achieving investment returns. During
volatile periods, investors can easily lose sight of basic trends. Opinions
quickly shift from too much optimism to too much bearishness. A whipsaw effect
develops that tends to leave most investors taking too many losses over too
short a period of time. Based on the conditions that have caused this increase
in volatility, we believe the likelihood of it continuing through the year is
quite high. The gross overvaluation in about one-third of the market, coupled
with undervaluation in broad sectors of the market, is contributing to this
manic-depressive type of trading frenzy. However, even while the volatility
causes considerable noise, basic market trends appear to be mixed, despite
positive cash flow going into the market during the first four months of the
year. This is not a particularly welcome investment sign.
Our economy continues to be strong. Retail sales are robust and income growth is
healthy. More importantly, production schedules are in line with retail
expansion so that inventory/ sales ratios are still well maintained. Market
trends appear to have had little or no impact on consumption. Historically,
stock market declines have not had great impact on consumption until the decline
is significant and prolonged and followed by a recessionary environment.
Inflation in the first quarter ran excessively high relative to past trends;
when food and energy are included, the rate is alarming. The core rate of
inflation ran at a little over 3%. The ripple effect from rising energy costs is
being felt, and energy prices are holding up stubbornly. A robust economy may
support this trend further and inflation will continue to expand. Many
manufacturers have hedged commodity price increases this year; however, if there
is no relief in commodity price trends next year, manufacturers could be forced
to raise prices by 3%-5%. The Federal Reserve Board is obviously aware of this
and recognizes that the best way to get commodity price and inflation
expectations down is to slow the economy by continuing to raise interest rates.
Unfortunately, it may require much higher interest rates than foreseen.
Undoubtedly, investors believe that the Federal Reserve Board intends to slow
the economy and stop the inflationary pressures that are building, and that
interest rates will continue to rise until that slowdown is apparent. Rising
interest rates have historically been a negative to very high price/earnings
issues. The economy remains strong and the cash flows generated help offset the
negativism created by a tightening monetary policy. Clearly, the risks remain
the same. Interest rates will continue to rise until an economic slowdown is
clearly visible. Most importantly, we have to remember that the seasonal flows
of funds going into the market are now receding and interest rate increases lie
ahead. Basic trends are down and are likely to continue that way for a while.
Portfolio Matters
The Fund invests in a portfolio designed to outperform other large cap value
portfolios using securities found in the unmanaged Russell 1000 Value Index. Our
investment process attempts to add value through both security selection and
portfolio construction. Security selection involves the use of quantitative
selection criteria including earnings momentum, earnings surprise and valuation.
These criteria are input into a proprietary quantitative model and are subject
to selective fundamental overrides. Portfolio construction consists of an
optimization process with risk management controlling style, capitalization,
sectors and individual security selection.
Since inception (December 22, 1999) through April 30, 2000, the Fund's Class A,
Class B, Class C and Class D Shares had total returns of +8.50%, +8.20%, +8.20%
and +8.40%, respectively. (Fund results shown do not reflect sales charges, and
would be lower if sales charges were included. Complete performance information
can be found on pages 3 and 4 of this report to shareholders.) This compares
favorably to the +1.42% total return of the benchmark Russell 1000 Value Index.
Our investment outperformance was largely attributable to superior stock
selection and an overweighted position in technology, as well as security
selection in capital goods, particularly Vishay Intertechnology, Inc. Specific
securities contributing positively to performance included Advanced
MicroDevices, Inc. and Vishay Intertechnology, Inc.
At this time, we are positioned for the continuation of a strong economy and
rising short-term interest rates. Accordingly, we are overweighted in technology
and energy stocks and underweighted in financials and consumer staples. (See
page 19 for listings of the Fund's ten largest holdings and ten largest
industries.) We currently maintain a lower-weighted median market capitalization
than our benchmark and peer group and are extra sensitive to valuation levels of
individual securities in the current environment.
In Conclusion
We thank you for your investment in Merrill Lynch Large Cap Value Fund, and we
look forward to reviewing our outlook and strategy with you in our annual report
to shareholders.
Sincerely,
/s/ Terry K. Glenn
Terry K. Glenn
President and Director
/s/ Robert C. Doll, Jr.
Robert C. Doll, Jr.
Senior Vice President and
Portfolio Manager
May 23, 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:
o Class A Shares incur a maximum initial sales charge (front-end load) of
5.25% and bear no ongoing distribution or account maintenance fees. Class
A Shares are available only to eligible investors.
o 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 0.75% and an account maintenance fee of
0.25%. These shares automatically convert to Class D Shares after
approximately 8 years. (There is no initial sales charge for automatic
share conversions.)
o Class C Shares are subject to a distribution fee of 0.75% 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.
o Class D Shares incur a maximum initial sales charge of 5.25% 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
"Aggregate Total Return" tables assume reinvestment of all dividends and
capital gains distributions at net asset value on the ex-dividend 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. The Fund's Investment Adviser voluntarily waived
a portion of its management fee. Without such waiver, the Fund's
performance would have been lower.
2 & 3
<PAGE>
Merrill Lynch Large Cap Value Fund, April 30, 2000
PERFORMANCE DATA (concluded)
Recent Performance Results*
Since Inception
As of April 30, 2000 Total Return
================================================================================
ML Large Cap Value Fund Class A Shares +8.50%
--------------------------------------------------------------------------------
ML Large Cap Value Fund Class B Shares +8.20
--------------------------------------------------------------------------------
ML Large Cap Value Fund Class C Shares +8.20
--------------------------------------------------------------------------------
ML Large Cap Value Fund Class D Shares +8.40
================================================================================
* 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 ex-dividend date. The Fund's inception date is 12/22/99.
Aggregate Total Return
% Return Without % Return With
Sales Charge Sales Charge**
================================================================================
Class A Shares*
================================================================================
Inception (12/22/99)
through 3/31/00 +8.30% +2.61%
--------------------------------------------------------------------------------
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
================================================================================
Class B Shares*
================================================================================
Inception (12/22/99)
through 3/31/00 +8.00% +4.00%
--------------------------------------------------------------------------------
* 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*
================================================================================
Inception (12/22/99)
through 3/31/00 +8.00% +7.00%
--------------------------------------------------------------------------------
* 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*
================================================================================
Inception (12/22/99)
through 3/31/00 +8.30% +2.61%
--------------------------------------------------------------------------------
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
MERRILL LYNCH
LARGE CAP
VALUE FUND As of April 30, 2000
====================================================================================================================================
<S> <C> <C> <C>
Assets: Investment in Master Large Cap Value Portfolio, at value (identified cost--$2,811,821) $ 3,001,689
Prepaid registration fees and other assets ........................................... 42,167
-----------
Total assets ......................................................................... 3,043,856
-----------
====================================================================================================================================
Liabilities: Payables:
Investment adviser ................................................................ $ 4,854
Distributor ....................................................................... 362 5,216
-----------
Accrued expenses and other liabilities ............................................... 42,167
-----------
Total liabilities .................................................................... 47,383
-----------
====================================================================================================================================
Net Assets: Net assets ........................................................................... $ 2,996,473
===========
====================================================================================================================================
Net Assets Class A Shares of Common Stock, $.10 par value, 100,000,000 shares authorized ........ $ 20,982
Consist of: Class B Shares of Common Stock, $.10 par value, 200,000,000 shares authorized ........ 3,367
Class C Shares of Common Stock, $.10 par value, 100,000,000 shares authorized ........ 1,659
Class D Shares of Common Stock, $.10 par value, 100,000,000 shares authorized ........ 1,625
Paid-in capital in excess of par ..................................................... 2,797,699
Accumulated investment loss--net ..................................................... (2,864)
Accumulated realized capital losses on investments from the Portfolio--net ........... (15,863)
Unrealized appreciation on investments from the Portfolio--net ....................... 189,868
-----------
Net assets ........................................................................... $ 2,996,473
===========
====================================================================================================================================
Net Asset Class A--Based on net assets of $2,276,636 and 209,821 shares outstanding ............ $ 10.85
Value: ===========
Class B--Based on net assets of $364,142 and 33,670 shares outstanding ............... $ 10.82
===========
Class C--Based on net assets of $179,448 and 16,592 shares outstanding ............... $ 10.82
===========
Class D--Based on net assets of $176,247 and 16,253 shares outstanding ............... $ 10.84
===========
====================================================================================================================================
</TABLE>
See Notes to Financial Statements
4 & 5
<PAGE>
Merrill Lynch Large Cap Value Fund, April 30, 2000
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
MERRILL LYNCH
LARGE CAP
VALUE FUND For the Period December 22, 1999+ to April 30, 2000
===========================================================================================================
<S> <C> <C> <C>
Investment Investment income allocated from the Portfolio ............... $ 11,289
Income (Loss): Expenses allocated from the Portfolio ........................ (12,727)
---------
Net investment loss from the Portfolio ....................... (1,438)
---------
===========================================================================================================
Expenses: Registration fees ............................................ $ 39,319
Offering costs ............................................... 17,485
Printing and shareholder reports ............................. 3,904
Professional fees ............................................ 3,904
Accounting services .......................................... 1,034
Transfer agent fees--Class A ................................. 679
Account maintenance and distribution fees--Class B ........... 666
Account maintenance and distribution fees--Class C ........... 468
Account maintenance fees--Class D ............................ 116
Transfer agent fees--Class B ................................. 78
Transfer agent fees--Class C ................................. 57
Transfer agent fees--Class D ................................. 53
Other ........................................................ 1,384
---------
Total expenses before reimbursement .......................... 69,147
Reimbursement of expenses .................................... (67,721)
---------
Total expenses after reimbursement ........................... 1,426
---------
Investment loss--net ......................................... (2,864)
---------
===========================================================================================================
Realized & Realized loss on investments from the Portfolio--net ......... (15,863)
Unrealized Gain Unrealized appreciation on investments from the Portfolio--net 189,868
(Loss) from the ---------
Portfolio--Net: Net Increase in Net Assets Resulting from Operations ......... $ 171,141
=========
===========================================================================================================
</TABLE>
+ Commencement of operations.
See Notes to Financial Statements.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
MERRILL LYNCH For the Period
LARGE CAP Dec. 22, 1999+ to
VALUE FUND Increase (Decrease) in Net Assets: April 30, 2000
==================================================================================================
<S> <C> <C>
Operations: Investment loss--net ............................................. $ (2,864)
Realized loss on investments from the Portfolio--net ............. (15,863)
Unrealized appreciation on investments from the Portfolio--net ... 189,868
-----------
Net increase in net assets resulting from operations ............. 171,141
-----------
==================================================================================================
Capital Share Net increase in net assets derived from capital share transactions 2,325,332
Transactions: -----------
==================================================================================================
Net Assets: Total increase in net assets ..................................... 2,496,473
Beginning of period .............................................. 500,000
-----------
End of period .................................................... $ 2,996,473
===========
==================================================================================================
</TABLE>
+ Commencement of operations.
See Notes to Financial Statements.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
MERRILL LYNCH The following per share data and ratios
LARGE CAP have been derived from information
VALUE FUND provided in the financial statements. For the Period Dec. 22, 1999+ to April 30, 2000
---------------------------------------------------------
Increase (Decrease) in Net Asset Value: Class A Class B Class C Class D
========================================================================================================================
<S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period ... $ 10.00 $ 10.00 $ 10.00 $ 10.00
Operating --------- --------- --------- ---------
Performance: Investment loss--net ................... (.01) (.02) (.03) (.01)
Realized and unrealized gain on
investments from the Portfolio--net .... .86 .84 .85 .85
--------- --------- --------- ---------
Total from investment operations ....... .85 .82 .82 .84
--------- --------- --------- ---------
Net asset value, end of period ......... $ 10.85 $ 10.82 $ 10.82 $ 10.84
========= ========= ========= =========
========================================================================================================================
Total Investment Based on net asset value per share ..... 8.50%+++ 8.20%+++ 8.20%+++ 8.40%+++
Return:** ========= ========= ========= =========
========================================================================================================================
Ratios to Average Expenses, net of reimbursement++ ....... 1.49%* 2.52%* 2.54%* 1.78%*
Net Assets: ========= ========= ========= =========
Expenses++ ............................. 10.42%* 12.31%* 12.89%* 12.14%*
========= ========= ========= =========
Investment loss--net ................... (.19%)* (1.19%)* (1.16%)* (.40%)*
========= ========= ========= =========
========================================================================================================================
Supplemental Net assets, end of period (in thousands) $ 2,277 $ 364 $ 179 $ 176
Data: ========= ========= ========= =========
========================================================================================================================
</TABLE>
* Annualized.
** Total investment returns exclude the effects of sales charges.
+ Commencement of operations.
++ Includes the Fund's share of the Portfolio's allocated
expenses.
+++ Aggregate total investment return.
See Notes to Financial Statements.
6 & 7
<PAGE>
Merrill Lynch Large Cap Value Fund, April 30, 2000
NOTES TO FINANCIAL STATEMENTS
MERRILL LYNCH LARGE CAP VALUE FUND
1. Significant Accounting Policies:
Merrill Lynch Large Cap Value Fund of Merrill Lynch Large Cap Series Funds, Inc.
(the "Fund") is registered under the Investment Company Act of 1940 as a
non-diversified mutual fund. The Fund seeks to achieve its investment objective
by investing all of its assets in the Master Large Cap Value Portfolio (the
"Portfolio"), which is a portfolio of Master Large Cap Series Trust that has the
same investment objective as the Fund. The value of the Fund's investment in the
Portfolio reflects the Fund's proportionate interest in the net assets of the
Portfolio. The performance of the Fund is directly affected by the performance
of the Portfolio. The financial statements of the Portfolio, including the
Schedule of Investments, are included elsewhere in this report and should be
read in conjunction with the Fund's financial statements. 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. Prior to commencement of operations on
December 22, 1999, the Fund had no operations other than those relating to
organizational matters and the issuance of 50,000 capital shares of the Fund on
October 20, 1999 to Fund Asset Management, L.P. ("FAM") for $500,000. 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 investments--Valuation of securities is discussed in Note 1a of
the Portfolio's Notes to Financial Statements, which are included elsewhere in
this report.
(b) Income--The Fund's net investment income consists of the Fund's pro rata
share of the net investment income of the Portfolio, less all actual and accrued
expenses of the Fund determined in accordance with accounting principles
generally accepted in the United States of America.
(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 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.
(d) Prepaid registration fees--Prepaid registration fees are charged to expense
as the related shares are issued.
(e) Dividends and distributions--Dividends and distributions paid by the Fund
are recorded on the ex-dividend dates.
(f) Investment transactions--Investment transactions are accounted for on a
trade date basis.
2. Transactions with Affiliates:
The Fund has entered into a Distribution Agreement and Distribution Plans with
Merrill Lynch Funds Distributor ("MLFD" or the "Distributor"), a division of
Princeton Funds Distributor, Inc. ("PFD"), which is a wholly-owned subsidiary of
Merrill Lynch Group, Inc. 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 Distribution
Maintenance Fee Fee
--------------------------------------------------------------------------------
Class B ............................................ .25% .75%
Class C ............................................ .25% .75%
Class D ............................................ .25% --
--------------------------------------------------------------------------------
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 period December 22, 1999 to April 30, 2000, FAM reimbursed the Fund for
expenses of $67,721.
For the period December 22, 1999 to April 30, 2000, MLFD earned underwriting
discounts and MLPF&S earned dealer concessions on sales of the Fund's Class D
Shares as follows:
--------------------------------------------------------------------------------
MLFD MLPF&S
--------------------------------------------------------------------------------
Class D ............................................... $12 $250
--------------------------------------------------------------------------------
Financial Data Services, Inc. ("FDS"), an indirect wholly-owned subsidiary of ML
& Co., is the Fund's transfer agent.
Accounting services are provided to the Fund by FAM at cost.
Certain officers and/or directors of the Fund are officers and/or directors of
FAM, PSI, PFD, FDS, and/or ML & Co.
3. Investments:
Increases and decreases in the Fund's investment in the Portfolio for the period
December 22, 1999 to April 30, 2000 were $3,017,682 and $188,703, respectively.
4. Capital Share Transactions:
Net increase in net assets derived from capital share transactions was
$2,325,332 for the period December 22, 1999 to April 30, 2000.
Transactions in capital shares for each class were as follows:
--------------------------------------------------------------------------------
Class A Shares for the Period Dollar
December 22, 1999+ to April 30, 2000 Shares Amount
--------------------------------------------------------------------------------
Shares sold ......................................... 197,326 $2,021,798
Shares redeemed ..................................... (5) (50)
------- ----------
Net increase ........................................ 197,321 $2,021,748
======= ==========
--------------------------------------------------------------------------------
+ Prior to December 22, 1999 (commencement of operations), the Fund issued
12,500 shares to FAM for $125,000.
--------------------------------------------------------------------------------
Class B Shares for the Period Dollar
December 22, 1999+ to April 30, 2000 Shares Amount
--------------------------------------------------------------------------------
Shares sold ......................................... 22,066 $230,250
Shares redeemed ..................................... (896) (8,659)
------ --------
Net increase ........................................ 21,170 $221,591
====== ========
--------------------------------------------------------------------------------
+ Prior to December 22, 1999 (commencement of operations), the Fund issued
12,500 shares to FAM for $125,000.
--------------------------------------------------------------------------------
Class C Shares for the Period Dollar
December 22, 1999+ to April 30, 2000 Shares Amount
--------------------------------------------------------------------------------
Shares sold ......................................... 4,105 $42,704
Shares redeemed ..................................... (13) (143)
----- -------
Net increase ........................................ 4,092 $42,561
===== =======
--------------------------------------------------------------------------------
+ Prior to December 22, 1999 (commencement of operations), the Fund issued
12,500 shares to FAM for $125,000.
--------------------------------------------------------------------------------
Class D Shares for the Period Dollar
December 22, 1999+ to April 30, 2000 Shares Amount
--------------------------------------------------------------------------------
Shares sold ......................................... 5,005 $52,240
Shares redeemed ..................................... (1,252) (12,808)
----- -------
Net increase ........................................ 3,753 $39,432
===== =======
--------------------------------------------------------------------------------
+ Prior to December 22, 1999 (commencement of operations), the Fund issued
12,500 shares to FAM for $125,000.
8 & 9
<PAGE>
Merrill Lynch Large Cap Value Fund, April 30, 2000
SCHEDULE OF INVESTMENTS (in US dollars)
<TABLE>
<CAPTION>
Master Large Cap Value Portfolio
-----------------------------------------------------------------------------------------------------
Shares Percent of
Industry Held Common Stocks Value Net Assets
=====================================================================================================
<S> <C> <C> <C> <C>
Aluminum 500 Alcoa Inc. $ 32,437 0.9%
-----------------------------------------------------------------------------------------------------
Auto--Related 1,200 +AutoZone, Inc. 27,525 0.8
-----------------------------------------------------------------------------------------------------
Automobile Rental 900 The Hertz Corporation (Class A) 28,069 0.8
& Leasing
-----------------------------------------------------------------------------------------------------
Banking 500 Bank of America Corporation 24,500 0.7
1,000 The Chase Manhattan Corporation 72,063 2.0
1,500 +Golden State Bancorp Inc. 23,062 0.7
400 J.P. Morgan & Co., Incorporated 51,350 1.4
---------- -----
170,975 4.8
-----------------------------------------------------------------------------------------------------
Capital Equipment 900 Cummins Engine Company, Inc. 32,006 0.9
-----------------------------------------------------------------------------------------------------
Chemicals 600 +FMC Corporation 34,912 1.0
900 Millennium Chemicals Inc. 17,944 0.5
---------- -----
52,856 1.5
-----------------------------------------------------------------------------------------------------
Communications 400 SBC Communications Inc. 17,525 0.5
400 Scientific-Atlanta, Inc. 26,025 0.7
---------- -----
43,550 1.2
-----------------------------------------------------------------------------------------------------
Computer 600 Computer Associates International, Inc. 33,488 0.9
Services/Software 400 +Computer Sciences Corporation 32,625 0.9
500 +DST Systems, Inc. 37,094 1.1
200 International Business Machines Corporation 22,325 0.6
900 +Tech Data Corporation 37,744 1.1
---------- -----
163,276 4.6
-----------------------------------------------------------------------------------------------------
Computers & Peripherals 800 +Adaptec, Inc. 21,600 0.6
400 +Apple Computer, Inc. 49,625 1.4
1,400 Compaq Computer Corporation 40,950 1.2
---------- -----
112,175 3.2
-----------------------------------------------------------------------------------------------------
Consumer--Durables 600 Whirlpool Corporation 39,075 1.1
-----------------------------------------------------------------------------------------------------
Consumer--Goods 700 Circuit City Stores--Circuit City Group 41,169 1.2
-----------------------------------------------------------------------------------------------------
Consumer--Products 2,600 +Cendant Corporation 40,138 1.1
& Services
-----------------------------------------------------------------------------------------------------
Electrical Equipment 400 AVX Corporation 38,975 1.1
-----------------------------------------------------------------------------------------------------
Electronic Components 500 Avnet, Inc. 39,312 1.1
700 +LSI Logic Corporation 43,750 1.3
200 +SDL Inc. 39,000 1.1
---------- -----
122,062 3.5
-----------------------------------------------------------------------------------------------------
Electronics 900 +Arrow Electronics, Inc. 39,431 1.1
800 +SCI Systems, Inc. 42,600 1.2
500 +Vishay Intertechnology, Inc. 41,938 1.2
---------- -----
123,969 3.5
-----------------------------------------------------------------------------------------------------
Financial Services 1,000 A.G. Edwards, Inc. 37,625 1.1
800 The Bear Stearns Companies Inc. 34,300 1.0
1,200 Citigroup Inc. 71,325 2.0
600 Donaldson, Lufkin & Jenrette, Inc. 25,013 0.7
1,600 FleetBoston Financial Corporation 56,700 1.6
500 Lehman Brothers Holdings, Inc. 41,031 1.1
1,200 Morgan Stanley Dean Witter & Co. 92,100 2.6
---------- -----
358,094 10.1
-----------------------------------------------------------------------------------------------------
Food Distribution 1,600 SUPERVALU INC. 33,100 0.9
1,000 SYSCO Corporation 37,625 1.1
---------- -----
70,725 2.0
-----------------------------------------------------------------------------------------------------
Foods 1,700 ConAgra, Inc. 32,088 0.9
-----------------------------------------------------------------------------------------------------
HMO 500 +Wellpoint Health Networks Inc. 36,875 1.0
-----------------------------------------------------------------------------------------------------
Healthcare-- 1,600 Columbia/HCA Healthcare Corporation 45,500 1.3
Products & Services
-----------------------------------------------------------------------------------------------------
Hotels & Casinos 1,200 MGM Grand, Inc. 35,400 1.0
-----------------------------------------------------------------------------------------------------
Information Processing 900 First Data Corporation 43,819 1.2
-----------------------------------------------------------------------------------------------------
Insurance 1,200 AXA Financial, Inc. 39,150 1.1
200 American International Group, Inc. 21,937 0.6
500 CIGNA Corporation 39,875 1.1
700 The PMI Group, Inc. 33,906 1.0
---------- -----
134,868 3.8
-----------------------------------------------------------------------------------------------------
Leisure 1,400 Brunswick Corporation 26,863 0.8
-----------------------------------------------------------------------------------------------------
Medical 800 +Lincare Holdings Inc. 24,400 0.7
700 Mallinckrodt Inc. 18,812 0.5
700 +PacifiCare Health Systems, Inc. 36,006 1.0
---------- -----
79,218 2.2
-----------------------------------------------------------------------------------------------------
Natural Gas--Pipelines 1,200 Kinder Morgan, Inc. 36,375 1.0
-----------------------------------------------------------------------------------------------------
</TABLE>
10 & 11
<PAGE>
Merrill Lynch Large Cap Value Fund, April 30, 2000
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<TABLE>
<CAPTION>
Master Large Cap Value Portfolio (concluded)
-----------------------------------------------------------------------------------------------------
Shares Percent of
Industry Held Common Stocks Value Net Assets
=====================================================================================================
<S> <C> <C> <C> <C>
Office--Related 200 Avery Dennison Corporation $ 13,125 0.4%
900 Pitney Bowes Inc. 36,788 1.0
---------- -----
49,913 1.4
-----------------------------------------------------------------------------------------------------
Oil & Gas Producers 2,800 +Ocean Energy Inc. 36,225 1.0
1,200 Tosco Corporation 38,475 1.1
---------- -----
74,700 2.1
-----------------------------------------------------------------------------------------------------
Oil--Integrated 600 Amerada Hess Corporation 38,175 1.1
900 Phillips Petroleum Company 42,694 1.2
1,100 Texaco Inc. 54,450 1.5
---------- -----
135,319 3.8
-----------------------------------------------------------------------------------------------------
Oil--International 1,500 Exxon Mobil Corporation 116,531 3.3
-----------------------------------------------------------------------------------------------------
Oil Services 600 Kerr-McGee Corporation 31,050 0.9
1,400 USX-Marathon Group 32,638 0.9
---------- -----
63,688 1.8
-----------------------------------------------------------------------------------------------------
Paper & Forest Products 1,000 Boise Cascade Corporation 32,563 0.9
1,200 International Paper Company 44,100 1.3
1,000 Westvaco Corporation 30,875 0.9
---------- -----
107,538 3.1
-----------------------------------------------------------------------------------------------------
Petroleum 1,900 Occidental Petroleum Corporation 40,731 1.1
1,400 Ultramar Diamond Shamrock Corporation 34,650 1.0
---------- -----
75,381 2.1
-----------------------------------------------------------------------------------------------------
Pharmaceuticals 1,100 +IVAX Corporation 30,112 0.8
600 Merck & Co., Inc. 41,700 1.2
---------- -----
71,812 2.0
-----------------------------------------------------------------------------------------------------
Publishing 200 Gannett Co., Inc. 12,775 0.4
700 McClatchy Newspapers (Class A) 22,181 0.6
---------- -----
34,956 1.0
-----------------------------------------------------------------------------------------------------
Restaurants 1,200 +Brinker International, Inc. 38,250 1.1
1,800 Darden Restaurants, Inc. 33,188 0.9
---------- -----
71,438 2.0
-----------------------------------------------------------------------------------------------------
Retail 1,000 +Barnes & Noble, Inc. 18,500 0.5
700 +Federated Department Stores, Inc. 23,800 0.7
4,300 +Kmart Corporation 34,937 1.0
700 Liz Claiborne, Inc. 32,419 0.9
1,300 +The Neiman Marcus Group, Inc. (Class A) 33,475 1.0
200 +Payless ShoeSource, Inc. 11,025 0.3
900 Ross Stores, Inc. 18,675 0.5
1,200 Sears, Roebuck & Co. 43,950 1.3
300 Target Corporation 19,969 0.6
800 +Zale Corporation 33,000 0.9
---------- -----
269,750 7.7
-----------------------------------------------------------------------------------------------------
Semiconductor 600 +KLA-Tencor Corporation 44,925 1.3
Production Equipment 300 +Teradyne, Inc. 33,000 0.9
---------- -----
77,925 2.2
-----------------------------------------------------------------------------------------------------
Semiconductors 600 Motorola, Inc. 71,437 2.0
500 +National Semiconductor Corporation 30,375 0.9
---------- -----
101,812 2.9
-----------------------------------------------------------------------------------------------------
Software 600 +Advanced Micro Devices, Inc. 52,650 1.5
300 +Atmel Corporation 14,681 0.4
---------- -----
67,331 1.9
-----------------------------------------------------------------------------------------------------
Technology 500 +Novellus Systems, Inc. 33,344 1.0
-----------------------------------------------------------------------------------------------------
Tobacco 1,500 UST Inc. 22,500 0.6
-----------------------------------------------------------------------------------------------------
Utilities--
Communication 800 AT&T Corp. 37,350 1.1
1,800 BellSouth Corporation 87,637 2.5
---------- -----
124,987 3.6
-----------------------------------------------------------------------------------------------------
Utilities--Electric 1,400 FirstEnergy Corp. 35,612 1.0
=====================================================================================================
Total Common Stocks (Cost--$3,266,818) 3,502,619 99.0
=====================================================================================================
Total Investments (Cost--$3,266,818) 3,502,619 99.0
Other Assets Less Liabilities 34,678 1.0
---------- -----
Net Assets $3,537,297 100.0%
========== =====
=====================================================================================================
</TABLE>
+ Non-income producing security.
See Notes to Financial Statements.
12 & 13
<PAGE>
Merrill Lynch Large Cap Value Fund, April 30, 2000
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
MASTER LARGE CAP
VALUE PORTFOLIO As of April 30, 2000
==================================================================================================
<S> <C> <C> <C>
Assets: Investments, at value (identified cost--$3,266,818) $3,502,619
Cash ................................................ 27,089
Receivables:
Securities sold ................................... $ 67,801
Contributions ..................................... 32,524
Investment adviser ................................ 11,697
Dividends ......................................... 2,408 114,430
----------
Prepaid expenses and other assets ................... 1,111
----------
Total assets ........................................ 3,645,249
----------
==================================================================================================
Liabilities: Payables:
Securities purchased .............................. 89,079
Withdrawals ....................................... 51 89,130
----------
Accrued expenses and other liabilities .............. 18,822
----------
Total liabilities ................................... 107,952
----------
==================================================================================================
Net Assets: Net assets .......................................... $3,537,297
==========
==================================================================================================
Net Assets Partners' capital ................................... $3,301,496
Consist of: Unrealized appreciation on investments--net ......... 235,801
----------
Net assets .......................................... $3,537,297
==========
==================================================================================================
</TABLE>
See Notes to Financial Statements.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
MASTER LARGE CAP
VALUE PORTFOLIO For the Period December 22, 1999+ to April 30, 2000
=======================================================================================================
<S> <C> <C> <C>
Investment Dividends .......................................... $ 13,036
Income: Interest and discount earned ....................... 666
---------
Total income ....................................... 13,702
---------
=======================================================================================================
Expenses: Investment advisory fees ........................... $ 7,753
Trustees' fees and expenses ........................ 7,270
Accounting services ................................ 4,038
Professional fees .................................. 3,129
Custodian fees ..................................... 2,223
Offering costs ..................................... 2,173
Pricing fees ....................................... 1,174
Other .............................................. 1,369
---------
Total expenses before reimbursement ................ 29,129
Reimbursement of expenses .......................... (13,623)
---------
Total expenses after reimbursement ................. 15,506
---------
Investment loss--net ............................... (1,804)
---------
=======================================================================================================
Realized & Realized loss on investments--net .................. (19,535)
Unrealized Gain (Loss) Unrealized appreciation on investments--net ........ 235,801
On Investments--Net: ---------
Net Increase in Net Assets Resulting from Operations $ 214,462
=========
=======================================================================================================
</TABLE>
+ Commencement of operations.
See Notes to Financial Statements.
14 & 15
<PAGE>
Merrill Lynch Large Cap Value Fund, April 30, 2000
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the Period
MASTER LARGE CAP Dec. 22, 1999+ to
VALUE PORTFOLIO Increase (Decrease) in Net Assets: April 30, 2000
===============================================================================================
<S> <C> <C>
Operations: Investment loss--net ........................................ $ (1,804)
Realized loss on investments--net ........................... (19,535)
Unrealized appreciation on investments--net ................. 235,801
-----------
Net increase in net assets resulting from operations ........ 214,462
-----------
===============================================================================================
Net Capital Increase in net assets derived from net capital contributions 2,322,835
Contributions: -----------
===============================================================================================
Net Assets: Total increase in net assets ................................ 2,537,297
Beginning of period ......................................... 1,000,000
-----------
End of period ............................................... $ 3,537,297
===========
===============================================================================================
</TABLE>
+ Commencement of operations.
See Notes to Financial Statements.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
For the Period
MASTER LARGE CAP The following ratios have been derived from Dec. 22, 1999+ to
VALUE PORTFOLIO information provided in the financial statements. April 30, 2000
============================================================================================
<S> <C> <C>
Ratios to Average Expenses, net of reimbursement ........................... 1.50%*
Net Assets: =========
Expenses ................................................. 2.81%*
=========
Investment loss--net ..................................... (.17%)*
=========
============================================================================================
Supplemental Net assets, end of period (in thousands) ................. $ 3,537
Data: =========
Portfolio turnover ....................................... 77.26%
=========
============================================================================================
</TABLE>
* Annualized.
+ Commencement of operations.
See Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS
MASTER LARGE CAP VALUE FUND
1. Significant Accounting Policies:
Master Large Cap Value Portfolio (the "Portfolio") is part of Master Large Cap
Series Trust (the "Trust"). The Trust is registered under the Investment Company
Act of 1940 and is organized as a Delaware business trust. The Portfolio'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 following is a summary of significant
accounting policies followed by the Portfolio.
(a) Valuation of investments--Portfolio securities that are traded on stock
exchanges are valued at the last sale price as of the close of business on the
day the securities are being valued or, lacking any sales, at the closing bid
price. Securities traded in the over-the-counter market are valued at the last
available bid price to the time of valuation. Portfolio securities that are
traded both in the over-the-counter market and on a stock exchange are valued
according to the broadest and most representative 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). Short-term securities are valued at amortized cost, which
approximates market value. Other investments, including futures contracts and
related options, are stated at market value. Securities and assets for which
market quotations are not readily available are valued at fair market value, as
determined in good faith by or under the direction of the Trust's Board of
Trustees.
(b) Derivative financial instruments--The Portfolio may engage in various
portfolio investment techniques to increase or decrease the level of risk to
which the Portfolio is exposed more quickly and efficiently than transactions in
other types of investments. Losses may arise due to changes in the value of the
contract or if the counterparty does not perform under the contract.
o Financial futures contracts--The Portfolio may purchase or sell financial
futures contracts and options on such futures contracts for the purpose of
hedging the market risk on existing securities or the intended purchase of
securities. Upon entering into a contract, the Portfolio deposits and maintains
as collateral such initial margin as required by the exchange on which the
transaction is effected. Pursuant to the contract, the Portfolio 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 Portfolio as unrealized gains or
losses. When the contract is closed, the Portfolio
16 & 17
<PAGE>
Merrill Lynch Large Cap Value Fund, April 30, 2000
NOTES TO FINANCIAL STATEMENTS (concluded)
MASTER LARGE CAP VALUE 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.
o Options--The Portfolio is authorized to purchase and write call and put
options. When the Portfolio writes an option, an amount equal to the premium
received by the Portfolio 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
Portfolio enters into a closing transaction), the Portfolio realizes a gain or
loss on the option to the extent of the premiums received or paid (or a gain or
loss to the extent that the cost of the closing transaction exceeds the premium
paid or received).
Written and purchased options are non-income producing investments.
o Forward foreign exchange contracts--The Portfolio 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
Portfolio's records. However, the effect on operations is recorded from the date
the Portfolio enters into such contracts.
o Foreign currency options and futures--The Portfolio 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
Portfolio, sold by the Portfolio but not yet delivered, or committed or
anticipated to be purchased by the Portfolio.
(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--The Portfolio is classified as a partnership for Federal
income tax purposes. As a partnership for Federal income tax purposes, the
Portfolio will not incur Federal income tax liability. Items of partnership
income, gain, loss and deduction will pass through to investors as partners in
the Portfolio. Therefore, no Federal income tax provision is required. Under the
applicable foreign tax law, withholding taxes may be imposed on interest,
dividends and capital gains at various rates.
(e) Security transactions and investment income--Security transactions are
accounted for on the date the securities are purchased or sold (the trade
dates). Dividend income is recorded on the ex-dividend dates. Dividends from
foreign securities where the ex-dividend date may have passed are subsequently
recorded when the Portfolio has determined the ex-dividend date. 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.
2. Investment Advisory Agreement and Transactions with Affiliates:
The Trust has entered into an Investment Advisory Agreement with Fund Asset
Management, L.P. ("FAM"). The general partner of FAM is Princeton Services, Inc.
("PSI"), an indirect wholly-owned subsidiary of Merrill Lynch & Co., Inc. ("ML &
Co."), which is the limited partner.
FAM is responsible for the management of the Portfolio's investments and
provides the necessary personnel, facilities, equipment and certain other
services necessary to the operations of the Portfolio. For such services, the
Portfolio pays a monthly fee at an annual rate of .75% of the average daily
value of the Portfolio's net assets. For the period December 22, 1999 to April
30, 2000, FAM earned fees of $7,753, all of which was voluntarily waived. In
addition, FAM also reimbursed the Portfolio $5,870 in additional expenses.
Accounting services are provided to the Portfolio by FAM at cost.
Certain officers and/or trustees of the Trust are officers and/or directors of
FAM, PSI, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the
period December 22, 1999 to April 30, 2000 were $5,428,399 and $2,142,046,
respectively.
Net realized losses for the period December 22, 1999 to April 30, 2000 and net
unrealized gains as of April 30, 2000 were as follows:
--------------------------------------------------------------------------------
Realized Unrealized
Losses Gains
--------------------------------------------------------------------------------
Long-term investments ............................. $ (19,535) $ 235,801
---------- ----------
Total ............................................. $ (19,535) $ 235,801
========== ==========
--------------------------------------------------------------------------------
As of April 30, 2000, net unrealized appreciation for Federal income tax
purposes aggregated $235,801, of which $413,762 related to appreciated
securities and $177,961 related to depreciated securities. At April 30, 2000,
the aggregate cost of investments for Federal income tax purposes was
$3,266,818.
PORTFOLIO INFORMATION
As of April 30, 2000
================================================================================
Percent of
Ten Largest Holdings Net Assets
Exxon Mobil Corporation ............................................ 3.3%
Morgan Stanley Dean Witter & Co. ................................... 2.6
BellSouth Corporation .............................................. 2.5
The Chase Manhattan Corporation .................................... 2.0
Motorola, Inc. ..................................................... 2.0
Citigroup Inc. ..................................................... 2.0
FleetBoston Financial Corporation .................................. 1.6
Texaco Inc. ........................................................ 1.5
Advanced Micro Devices, Inc. ....................................... 1.5
J.P. Morgan & Co., Incorporated .................................... 1.4
Percent of
Ten Largest Industries Net Assets
Financial Services ................................................. 10.1%
Retail ............................................................. 7.7
Banking ............................................................ 4.8
Computer Services/Software ......................................... 4.6
Oil--Integrated .................................................... 3.8
Insurance .......................................................... 3.8
Utilities--Communication ........................................... 3.6
Electronics ........................................................ 3.5
Electronic Components .............................................. 3.5
Oil--International ................................................. 3.3
18 & 19
<PAGE>
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
Large Cap Series Funds, Inc.
Box 9011
Princeton, NJ
08543-9011 CAPVAL--4/00
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