MERRILL LYNCH
BASIC VALUE
FUND, INC.
FUND LOGO
Quarterly Report
September 30, 1995
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.
Merrill Lynch
Basic Value Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
MERRILL LYNCH BASIC VALUE FUND, INC.
TO OUR SHAREHOLDERS
After losing momentum through the second calendar quarter, it now
appears that the US economy has resumed a moderate growth trend.
Gross domestic product growth for the three months ended June 30 was
revised to show that the economy expanded at a 1.1% pace, rather
than the 0.5% rate that was originally reported. The employment
report for August exceeded consensus expectations, although most of
the new jobs created were in the service sector, reflecting the
ongoing sluggishness in manufacturing. However, durable goods orders
rebounded somewhat in August, supported by stronger automobile
sales. Reflecting the trend of renewed economic growth--and
continued containment of inflationary pressures--the Federal Reserve
Board signaled no shift in monetary policy following its September
meeting.
One of the major developments during the September quarter was the
strengthening of the US dollar relative to the yen and the
Deutschemark. Improving interest rate differentials favoring the US
currency, combined with coordinated central bank intervention and
more positive investor sentiment, have helped to bolster the dollar
in foreign exchange markets. Other factors that appear to be
improving the US dollar's outlook in the near term are a pick-up in
capital flows to the United States and the prospect of increased
capital outflows from Japan. However, it remains to be seen if the
US dollar's strengthening trend can continue without significant
improvements in the US budget and trade deficits.
In the weeks ahead, investor interest will continue to focus on US
economic activity. Clear signs of a moderate, noninflationary
expansion could further benefit the US stock and bond markets. In
addition, should the current Federal budget deficit reduction
efforts now underway in Washington prove successful, the
implications would likely be positive for the US financial markets.
Portfolio Matters
Security purchases in the quarter ended September 30, 1995 amounted
to $287 million, while equity sales totaled $68 million. New assets
invested in the Fund during the quarter were $160 million, with net
assets now exceeding $6 billion. The Fund's cash position at
September quarter-end was 15.2%, down from 17.3% at the close of the
June quarter.
The large disparity between equity purchases and sales during the
September quarter ($219 million) does not reflect any change in our
frequently espoused, and admittedly premature, caution relative to
stock market prospects. Indeed, over half of our purchases during
the September quarter were in areas we regard as defensive in
nature. Our energy holdings, primarily international oils, have
generally underperformed the market since May of 1995. We took
advantage of this by dedicating 30% of our purchases to increasing
positions in Exxon Corp., Mobil Corp., Texaco Inc., Chevron Corp.
and Royal Dutch Petroleum Co. We also added to Atlantic Richfield
Co. and Occidental Petroleum Corp.
In a stock market that has largely been dominated by growth stocks
in general, and technology issues in particular, defensive-type
issues such as oils have lagged, despite worthwhile earnings
progress and dividend yields that are high relative to the market.
Energy holdings constitute our largest industry position at 14% of
the portfolio.
Over 15% of September quarter purchases were utilities, primarily
electrics. In an economic environment that is somewhat uncertain, we
think utilities have investment appeal. Also, the decline in
interest rates renders their high yields even more attractive. As a
result of recent purchases, electric and telephone utilities now
account for over 10% of portfolio assets.
Overall, in the September quarter we added to 31 of our 74 equity
positions, but did not add any new names to the portfolio. We added
to eight of the top ten holdings, with the largest additions in
Deere & Co., Mobil Corp. and International Business Machines Corp.
(See page 10 of this report to shareholders for a listing of the
Fund's ten largest stock holdings.)
For a considerable period of time, Sears, Roebuck & Co. was the
Fund's largest position, but with the final stage of its
restructuring complete--the spin-off of insurance subsidiary
Allstate--Sears dropped out of the top ten holdings as the price of
the stock went from about $62 a share to about $32 per share. We are
optimistic about long-term prospects for Sears as a freestanding
merchandiser, and added to the position immediately following the
divestiture of Allstate. We also are positive about Allstate's
prospects, and the increased position makes this a major holding,
nearly a 2% position.
On the sell side in the September quarter, we were reasonably
inactive, with cumulative sales of only $68 million. The largest
sale was the elimination of National Semiconductor Corp. at a profit
in excess of 80%. The stock met, indeed exceeded, our price
expectations.
In Conclusion
Stock prices exhibited more volatility in the third quarter of 1995
than was evident in the first half of the year. Our financial
stocks, principally banks and insurance, were well above-average
market performers in the September quarter, while the Fund's oil and
technology-related issues lagged.
There are some indications that technology stocks, which have been
in the forefront of the 1995 market advance, are beginning a
corrective phase. If market leadership shifts away from technology,
the Fund could benefit as investors seek alternative investments.
As always, the Fund's investments are reasonably priced relative to
the market. Our cash position not only provides a cushion in the
event of a market decline, but also the wherewithal to take
advantage of any price weakness a stock market decline would
provide.
Thank you for your investment in Merrill Lynch Basic Value Fund,
Inc., and we look forward to reviewing our outlook and strategy
again in our upcoming semi-annual report to shareholders.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Paul M. Hoffmann)
Paul M. Hoffmann
Vice President and Portfolio Manager
October 9, 1995
PERFORMANCE DATA
About Fund Performance
Since October 21, 1994, investors have been able to purchase shares
of the Fund through the Merrill Lynch Select Pricing SM System,
which offers four pricing alternatives:
* Class A Shares incur a maximum initial sales charge (front-end
load) of 5.25% and bear no ongoing distribution or account
maintenance fees. Class A Shares are available only to eligible
investors.
* Class B Shares are subject to a maximum contingent deferred sales
charge of 4% if redeemed during the first year, decreasing 1% each
year thereafter to 0% after the fourth year. In addition, Class B
Shares are subject to a distribution fee of 0.75% and an account
maintenance fee of 0.25%. These shares automatically convert to
Class D Shares after 8 years.
* 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.
* Class D Shares incur a maximum initial sales charge of 5.25% and
an account maintenance fee of 0.25% (but no distribution fee).
Performance data for the Fund's Class A and Class B Shares are
presented in the "Average Annual Total Return" and "Performance
Summary" tables on pages 4 and 5. The "Results of a $1,000
Investment Since Inception--Class A Shares" chart on page 4
illustrates the performance of a $1,000 investment in Class A Shares
made at the Fund's inception (assuming the maximum initial sales
charge of 5.25%) through September 30, 1995. "Aggregate Total
Return" tables for Class C and Class D Shares are also presented on
page 4. Data for all of the Fund's shares are presented in the
"Recent Performance Results" table on page 6.
The "Recent Performance Results" table shows investment results
before the deduction of any sales charges for Class A and Class B
Shares for the 12-month and 3-month periods ended September 30, 1995
and for Class C and Class D Shares for the since inception and 3-
month periods ended September 30, 1995. All data in this table
assume imposition of the actual total expenses incurred by each
class of shares during the relevant period.
None of the past results shown should be considered a representation
of future performance. Investment return and principal value of
shares will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost. Dividends paid to each class
of shares will vary because of the different levels of account
maintenance, distribution and transfer agency fees applicable to
each class, which are deducted from the income available to be paid
to shareholders.
PERFORMANCE DATA (continued)
Results of a $1,000 Investment Since Inception--Class A Shares
(5.25% current sales charge--$947.50 net amount invested; assuming
reinvestment of all dividends and capital gains distributions)
A mountain chart depicting the growth of an investment in the Fund's
Class A Shares from $947.50 on July 1, 1977 to $13,547.47 on
September 30, 1995.
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 9/30/95 +24.71% +18.16%
Five Years Ended 9/30/95 +18.12 +16.85
Ten Years Ended 9/30/95 +14.63 +14.02
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 9/30/95 +23.45% +19.45%
Five Years Ended 9/30/95 +16.93 +16.93
Inception (10/21/88) through 9/30/95 +11.12 +11.12
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced
to 0% after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
Aggregate Total Return
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Inception (10/21/94)
through 9/30/95 +22.72% +21.72%
[FN]
*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 (10/21/94)
through 9/30/95 +23.64% +17.15%
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
PERFORMANCE DATA (continued)
<TABLE>
Performance Summary--Class A Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
7/1/77-12/31/77 $ 9.60 $ 9.91 -- -- + 3.23%
1978 9.91 9.61 $0.270 $0.490 + 4.65
1979 9.61 11.46 0.460 0.550 +31.24
1980 11.46 12.46 0.940 0.600 +23.92
1981 12.46 10.62 1.370 0.690 + 1.12
1982 10.62 12.28 0.310 0.680 +28.25
1983 12.28 14.31 0.920 0.610 +30.52
1984 14.31 13.38 1.130 0.680 + 7.08
1985 13.38 15.79 1.020 0.640 +32.17
1986 15.79 17.06 0.860 0.580 +17.86
1987 17.06 15.75 1.338 0.973 + 4.36
1988 15.75 17.90 0.655 0.749 +22.73
1989 17.90 19.94 0.226 0.872 +17.54
1990 19.94 16.09 0.303 0.969 -13.07
1991 16.09 19.36 0.272 0.772 +27.23
1992 19.36 20.34 0.325 0.680 +10.36
1993 20.34 23.37 0.726 0.702 +22.16
1994 23.37 22.35 0.784 0.692 + 1.97
1/1/95-9/30/95 22.35 27.54 0.213 0.370 +25.93
------- -------
Total $12.122 Total $12.299
Cumulative total return as of 9/30/95: +1,329.81%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the ex-dividend date, and do not
include sales charge; results would be lower if sales charge was
included.
</TABLE>
<TABLE>
Performance Summary--Class B Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
10/21/88-12/31/88 $18.78 $17.89 $0.352 $0.361 - 0.91%
1989 17.89 19.83 0.226 0.756 +16.33
1990 19.83 16.01 0.303 0.781 -13.92
1991 16.01 19.25 0.272 0.583 +25.91
1992 19.25 20.21 0.325 0.481 + 9.24
1993 20.21 23.19 0.726 0.484 +20.93
1994 23.19 22.15 0.784 0.464 + 0.88
1/1/95-9/30/95 22.15 27.20 0.213 0.257 +25.00
------ ------
Total $3.201 Total $4.167
Cumulative total return as of 9/30/95: +108.11%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the ex-dividend date, and do not
reflect deduction of any sales charge; results would be lower if
sales charge was deducted.
</TABLE>
PERFORMANCE DATA (concluded)
<TABLE>
Recent Performance Results
<CAPTION>
12 Month 3 Month
9/30/95 6/30/95 9/30/94++ % Change++ % Change
<S> <C> <C> <C> <C> <C>
ML Basic Value Fund Class A Shares* $27.54 $26.44 $23.04 +21.03%(1) +5.00%(2)
ML Basic Value Fund Class B Shares* 27.20 26.08 22.78 +20.92(1) +5.14(2)
ML Basic Value Fund Class C Shares* 27.04 25.98 22.92 +19.48(1) +4.93(2)
ML Basic Value Fund Class D Shares* 27.51 26.41 23.19 +20.12(1) +5.00(2)
Dow Jones Industrial Average** 4,789.08 4,556.10 3,843.19 +24.61 +5.11
Standard & Poor's 500 Index** 584.41 544.75 462.69 +26.31 +7.28
ML Basic Value Fund Class A Shares--Total Return* +24.71(3) +6.45(4)
ML Basic Value Fund Class B Shares--Total Return* +23.45(5) +6.16(6)
ML Basic Value Fund Class C Shares--Total Return* +22.72(7) +6.17(8)
ML Basic Value Fund Class D Shares--Total Return* +23.64(9) +6.38(10)
Dow Jones Industrial Average--Total Return** +27.98 +5.76
Standard & Poor's 500 Index--Total Return** +29.74 +7.96
<FN>
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included.
**An unmanaged broad-based index comprised of common stocks. Total
investment returns for unmanaged indexes are based on estimates.
++Investment results shown for Class C and Class D Shares are since
inception (10/21/94).
(1)Percent change includes reinvestment of $0.312 per share capital
gains distributions.
(2)Percent change includes reinvestment of $0.213 per share capital
gains distributions.
(3)Percent change includes reinvestment of $0.729 per share ordinary
income dividends and $0.312 per share capital gains distributions.
(4)Percent change includes reinvestment of $0.370 per share ordinary
income dividends and $0.213 per share capital gains distributions.
(5)Percent change includes reinvestment of $0.499 per share ordinary
income dividends and $0.312 per share capital gains distributions.
(6)Percent change includes reinvestment of $0.257 per share ordinary
income dividends and $0.213 per share capital gains distributions.
(7)Percent change includes reinvestment of $0.639 per share ordinary
income dividends and $0.312 per share capital gains distributions.
(8)Percent change includes reinvestment of $0.310 per share ordinary
income dividends and $0.213 per share capital gains distributions.
(9)Percent change includes reinvestment of $0.703 per share ordinary
income dividends and $0.312 per share capital gains distributions.
(10)Percent change includes reinvestment of $0.351 per share
ordinary income dividends and $0.213 per share capital gains
distributions.
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS
<CAPTION>
Shares Percent of
Industry Held Stocks Cost Value Net Assets
Discount from Book Value
<S> <C> <S> <C> <C> <C>
Metals/Non-Ferrous 1,600,000 ASARCO Inc. $ 40,877,630 $ 50,400,000 0.8%
Insurance 260,000 American National Insurance Co. 9,749,442 15,145,000 0.2
Utilities--Electric 2,000,000 Entergy Corp. 43,098,274 52,250,000 0.9
Telecommunications 1,400,000 Telefonica de Espana, S.A. (ADR)* 42,507,830 57,925,000 1.0
-------------- -------------- ------
136,233,176 175,720,000 2.9
Below-Average Price/Earnings Ratio
Savings & Loans 1,600,000 Ahmanson (H.F.) & Co. 28,283,055 40,600,000 0.7
Insurance 3,300,000 The Allstate Corp. 70,840,037 116,737,500 1.9
Insurance 2,300,000 American General Corp. 46,035,409 85,962,500 1.4
Steel 3,000,000 Bethlehem Steel Corp. 44,627,455 42,375,000 0.7
Banking 900,000 The Chase Manhattan Corp. 20,213,162 55,012,500 0.9
Banking 2,750,000 Citicorp 78,236,838 194,562,500 3.2
Financial Services 700,000 Dean Witter, Discover & Co. 18,012,707 39,375,000 0.6
Farm & Construction
Equipment 2,000,000 Deere & Co. 121,623,599 162,750,000 2.7
Information Processing 2,800,000 Digital Equipment Corp. 103,946,385 127,750,000 2.1
Capital Goods 1,150,000 Eaton Corp. 58,596,613 60,950,000 1.0
Retail 1,700,000 Federated Department Stores, Inc. 36,274,216 48,237,500 0.8
Banking 1,250,000 First Interstate Bancorp 61,123,093 125,937,500 2.1
Automotive 3,600,000 Ford Motor Co. 84,921,542 112,050,000 1.8
Automotive 2,750,000 General Motors Corp. 119,654,913 128,906,250 2.1
Conglomerates 1,000,000 ITT Corp. 46,914,030 124,000,000 2.0
Machinery 1,250,000 Ingersoll-Rand Co. 35,182,889 46,875,000 0.8
Information Processing 1,750,000 International Business Machines
Corp. 120,945,642 165,156,250 2.7
Paper & Forest Products 3,300,000 International Paper Co. 104,968,257 138,600,000 2.3
Retail Apparel 3,400,000 The Limited, Inc. 63,342,482 64,600,000 1.1
Banking 1,600,000 NationsBank Corp. 66,516,217 107,600,000 1.8
Banking 2,350,000 Norwest Corp. 34,446,022 76,962,500 1.3
Insurance 1,400,000 PartnerRe Holdings Ltd. 29,498,937 34,650,000 0.6
Electrical Equipment 2,400,000 Philips Electronics N.V. 42,421,261 117,000,000 1.9
Retail 3,350,000 Sears, Roebuck & Co. 65,320,219 123,531,250 2.0
Financial Services 800,000 Student Loan Marketing Association 29,398,674 43,200,000 0.7
Information Processing 2,800,000 Tandem Computers Inc. 35,850,031 34,300,000 0.6
Insurance 1,700,000 Travelers Inc. 65,450,616 90,312,500 1.5
Steel 2,000,000 USX--US Steel Group 61,011,276 62,000,000 1.0
Chemicals 1,700,000 Union Carbide Corp. 34,816,186 67,575,000 1.1
Information Processing 5,300,000 Unisys Corp. 58,650,167 41,737,500 0.7
Savings & Loans 1,400,000 Washington Mutual Savings Bank 23,454,491 37,100,000 0.6
-------------- -------------- ------
1,810,576,421 2,716,406,250 44.7
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Shares Percent of
Industry Held Stocks Cost Value Net Assets
Above-Average Yield
<S> <C> <S> <C> <C> <C>
Insurance 800,000 Aetna Life & Casualty Co. $ 35,195,218 $ 58,700,000 1.0%
Oil--Domestic 650,000 Atlantic Richfield Co. 65,762,101 69,793,750 1.1
Real Estate Investment
Trust 700,000 Avalon Properties, Inc. 14,548,710 14,262,500 0.2
Telecommunications 1,250,000 Bell Atlantic Corp. 57,059,580 76,718,750 1.3
Pharmaceutical 1,150,000 Bristol-Myers Squibb Co. 65,372,906 83,806,250 1.4
Oil--International 1,800,000 Chevron Corp. 61,655,694 87,525,000 1.4
Utilities--Electric 1,000,000 CINergy Corp. 24,141,035 27,875,000 0.5
Banking 207,776 Citicorp (Pfd. P) 3,064,696 4,207,464 0.1
Utilities--Electric 1,550,000 Consolidated Edison Co. of
New York, Inc. 37,135,210 47,081,250 0.8
Utilities--Electric 637,500 DPL Inc. 6,204,369 14,742,188 0.2
Oil--International 1,500,000 Exxon Corp. 84,896,705 108,375,000 1.8
Telecommunications 2,900,000 GTE Corp. 90,725,125 113,825,000 1.9
Chemicals 400,000 Imperial Chemical Industries PLC
(ADR)* 25,771,805 20,300,000 0.3
Real Estate Investment
Trust 440,000 Irvine Apartment Communities, Inc. 7,758,147 7,755,000 0.1
Real Estate Investment
Trust 820,000 Liberty Property Trust 16,510,230 17,425,000 0.3
Real Estate Investment
Trust 500,000 The Mills Corp. 11,734,125 9,062,500 0.2
Oil--International 1,650,000 Mobil Corp. 93,197,552 164,381,250 2.7
Utilities--Electric 1,100,000 NIPSCO Industries, Inc. 23,590,152 38,362,500 0.6
Oil--Domestic 2,800,000 Occidental Petroleum Corp. 58,898,789 61,600,000 1.0
Utilities--Electric 1,600,000 PECO Energy Co. 39,696,837 45,800,000 0.8
Tobacco 1,620,000 Philip Morris Cos. Inc. 89,036,004 135,270,000 2.2
Utilities--Electric 1,500,000 Public Service Enterprise Group
Inc. 40,249,885 44,625,000 0.7
Oil--International 1,280,000 Royal Dutch Petroleum Co. (ADR)* 86,396,073 157,120,000 2.6
Real Estate Investment
Trust 1,550,000 Simon Property Group, Inc. 34,819,560 39,331,250 0.6
Real Estate Investment
Trust 500,000 Summit Properties Inc. 9,602,500 9,437,500 0.2
Oil--International 1,450,000 Texaco Inc. 83,193,281 93,706,250 1.5
Utilities--Electric 1,300,000 Texas Utilities Co. 43,713,315 45,337,500 0.7
Telecommunications 1,500,000 U.S. West Inc. 50,251,138 70,687,500 1.2
-------------- -------------- ------
1,260,180,742 1,667,113,402 27.4
Special Situations
Oil--International 727,686 The British Petroleum Co. PLC
(ADR)* 35,138,051 65,400,779 1.1
Information Processing 1,000,000 Ceridian Corp. 16,072,735 44,375,000 0.7
Restaurants 2,000,000 Darden Restaurants, Inc. 20,441,741 23,000,000 0.4
Information Processing 1,570,000 Data General Corp. 21,268,247 16,288,750 0.3
Oil Services & Equipment 2,500,000 Dresser Industries, Inc. 50,259,610 59,687,500 1.0
Foods/Food Processing 1,350,000 General Mills, Inc. 62,379,617 75,262,500 1.2
Chemicals 1,500,000 Hercules Inc. 19,235,727 87,000,000 1.4
Retail 1,980,500 Kmart Corp. 38,751,187 28,717,250 0.5
Pharmaceutical 2,000,000 Merck & Co., Inc. 63,465,897 112,000,000 1.8
Aerospace & Defense 450,000 United Technologies Corp. 22,695,049 39,768,750 0.7
Pharmaceuticals 440,000 Zeneca Group PLC (ADR)* 12,980,000 23,980,000 0.4
-------------- -------------- ------
362,687,861 575,480,529 9.5
Total Stocks 3,569,678,200 5,134,720,181 84.5
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded)
<CAPTION>
Face Percent of
Amount Issue Cost Value Net Assets
Short-Term Securities
<S> <C> <S> <C> <C> <C>
Commercial Paper** ANZ (Delaware), Inc.:
$40,000,000 5.73% due 10/12/1995 $ 39,917,233 $ 39,917,233 0.7%
50,000,000 5.72% due 10/13/1995 49,888,778 49,888,778 0.8
50,000,000 5.70% due 10/16/1995 49,865,417 49,865,417 0.8
Ciesco L.P.:
25,812,000 5.70% due 10/20/1995 25,726,175 25,726,175 0.5
50,000,000 5.66% due 11/03/1995 49,724,861 49,724,861 0.8
37,104,000 General Electric Capital Corp.,
6.45% due 10/02/1995 37,084,056 37,084,056 0.6
50,000,000 IBM Credit Corp., 5.72% due
10/13/1995 49,888,778 49,888,778 0.8
70,013,000 Matterhorn Capital Corp., 5.71% due
10/23/1995 69,746,484 69,746,484 1.2
50,000,000 National Australia Funding
(Delaware) Inc., 5.72% due
10/13/1995 49,888,778 49,888,778 0.8
National Fleet Funding Corp.:
50,000,000 5.75% due 10/18/1995 49,848,264 49,848,264 0.8
50,000,000 5.71% due 11/09/1995 49,674,847 49,674,847 0.8
55,000,000 Penney (J.C.) Funding Corp., 5.70%
due 10/06/1995 54,939,042 54,939,042 0.9
Preferred Receivable Funding Corp.:
50,000,000 5.75% due 10/03/1995 49,968,055 49,968,055 0.9
50,000,000 5.73% due 10/11/1995 49,904,500 49,904,500 0.8
50,000,000 5.74% due 10/23/1995 49,808,667 49,808,667 0.8
50,000,000 Wal-Mart Stores, Inc., 5.70% due
10/23/1995 49,810,000 49,810,000 0.8
-------------- -------------- ------
775,683,935 775,683,935 12.8
US Government & Agency 50,000,000 Federal Home Loan Banks, 5.60%
Obligations** due 10/19/1995 49,844,445 49,844,445 0.8
20,000,000 Federal Home Loan Mortgage
Corporation, 5.62% due 10/06/1995 19,978,144 19,978,144 0.4
Federal National Mortgage
Association:
50,000,000 5.64% due 10/13/1995 49,890,333 49,890,333 0.8
25,000,000 5.65% due 10/17/1995 24,929,375 24,929,375 0.4
-------------- -------------- ------
144,642,297 144,642,297 2.4
Total Short-Term Securities 920,326,232 920,326,232 15.2
Total Investments $4,490,004,432 6,055,046,413 99.7
==============
Other Assets Less Liabilities 19,183,162 0.3
-------------- ------
Net Assets $6,074,229,575 100.0%
============== ======
Net Asset Value: Class A--Based on net assets of $3,026,407,212
and 109,897,605 shares outstanding $ 27.54
==============
Class B--Based on net assets of $2,675,816,716
and 98,373,620 shares outstanding $ 27.20
==============
Class C--Based on net assets of $102,453,134
and 3,788,738 shares outstanding $ 27.04
==============
Class D--Based on net assets of $269,552,513
and 9,799,925 shares outstanding $ 27.51
==============
<FN>
*American Depositary Receipts (ADR).
**Commercial Paper and certain US Government & Agency Obligations
are traded on a discount basis; the interest rates shown are the
discount rates paid at the time of purchase by the Fund.
</TABLE>
PORTFOLIO INFORMATION
Percent of
Ten Largest Stock Holdings Net Assets
Citicorp 3.2%
International Business Machines Corp. 2.7
Mobil Corp. 2.7
Deere & Co. 2.7
Royal Dutch Petroleum Co. (ADR) 2.6
International Paper Co. 2.3
Philip Morris Cos. Inc. 2.2
General Motors Corp. 2.1
Digital Equipment Corp. 2.1
First Interstate Bancorp 2.1
Portfolio Change for the Quarter Ended
September 30, 1995
Deletion
National Semiconductor Corp.
OFFICERS AND DIRECTORS
Arthur Zeikel, President and Director
Donald Cecil, Director
M. Colyer Crum, Director
Edward H. Meyer, Director
Jack B. Sunderland, Director
J. Thomas Touchton, Director
Terry K. Glenn, Executive Vice President
Norman R. Harvey, Senior Vice President
Donald C. Burke, Vice President
Paul M. Hoffmann, Vice President and
Portfolio Manager
Gerald M. Richard, Treasurer
Mark B. Goldfus, Secretary
Custodian
The Bank of New York
90 Washington Street
New York, New York 10286
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
