MERRILL LYNCH
BASIC VALUE
FUND, INC.
FUND LOGO
Annual Report
June 30, 1995
<PAGE>
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, NY 10286
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
This report is not authorized for use as an offer of sale or a
solicitation of an offer to buy shares of the Fund unless
accompanied or preceded by the Fund's current prospectus. Past
performance results shown in this report should not be considered a
representation of future performance. Investment return and
principal value of shares will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
Merrill Lynch
Basic Value Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
<PAGE>
MERRILL LYNCH BASIC VALUE FUND, INC.
TO OUR SHAREHOLDERS
In the June quarter economic data showed evidence of slowing
activity. Gross domestic product growth for the first three months
of 1995 was reported at 2.7%, the weakest showing in the past 18
months. Other signs of a sluggish economy included slowing growth in
the manufacturing sector in May and June as well as three
consecutive months of declines in the Index of Leading Economic
Indicators, an occurrence which has often (but not always) forecast
recessions. As a result, by the end of the June quarter concerns had
arisen that the economic "soft landing" could turn into an actual
recession. However, at the same time there were also expectations
that a few months of very slow or zero growth would be followed by a
pickup in economic activity later in the year. This view was
supported by the stronger-than-expected employment data for June and
an upward revision in May's employment figures.
Thus far in 1995, economic developments have been very positive for
the US stock and bond markets, and most US stock market averages
recently have attained record levels. In contrast, the US dollar has
been persistently weak, especially relative to the yen. Following
the Federal Reserve Board's cut in short-term interest rates in
early July, continued signs of a moderating expansion and well-
contained inflationary pressures could provide further assurance
that the peak in US interest rates is behind us, creating a stronger
foundation for higher stock and bond prices. On the other hand,
indications of reaccelerating growth and increasing inflationary
pressures would likely suggest that higher interest rates are on the
horizon, a negative development for the US financial markets.
Portfolio Matters
For the fiscal year ended June 30, 1995, Merrill Lynch Basic Value
Fund, Inc.'s Class A and Class B Shares provided total returns of
+21.67% and +20.45%, respectively, compared with a total return of
+25.95% for the unmanaged Standard & Poor's 500 Index (S&P 500). The
Fund's Class C and Class D Shares provided total returns of +15.59%
and +16.23%, respectively, since inception (October 21, 1994)
through June 30, 1995.
The following table details quarterly performance for the Fund's
Class A and Class B Shares relative to the S&P 500.
<PAGE>
% Total Return
Class A Class B
Quarter Ended Shares Shares S&P 500
September 1994 + 3.85% + 3.58% + 4.92%
December 1994 - 0.97 - 1.24 - 0.02
March 1995 + 8.59 + 8.35 + 9.73
June 1995 + 8.94 + 8.67 + 9.44
Fiscal Year +21.67 +20.45 +25.95
(Investment results shown do not include sales charges, and would be
lower if sales charges were deducted. Complete performance
information can be found on pages 3 through 6 of this report to
shareholders.)
For the full fiscal year, security purchases exceeded $979 million
while security sales amounted to approximately $409 million. The
following table outlines the quarterly activity in millions.
Quarter Ended Purchases Sales
September 1994 $131,344 $ 98,925
December 1994 238,635 70,614
March 1995 367,081 140,891
June 1995 242,306 98,857
-------- --------
Total $979,366 $409,287
======== ========
Trading activity was heavily biased toward purchases in each quarter
of the fiscal year and exceeded security sales by about $570 million
for the 12 months ended June 30, 1995. Despite this better than two-
to-one ratio of purchases to sales, our cash position for the full
fiscal year was little changed. On June 30, 1994, cash was 19.9% of
net assets and on June 30, 1995 it was 17.3%. This was the result of
a strong net inflow of new money from shareholders, particularly in
the most recent six months. For the full fiscal year, net
subscriptions into the Fund amounted to over $673 million, with over
$537 million being added in the most recent six months. Overall,
Fund assets increased 38.8% during the fiscal year to over $5.5
billion from $4.0 billion a year earlier.
<PAGE>
Over 90% of our June quarter purchases were dedicated to increases
in previously established positions with an emphasis on groups that
have been generally out-of-favor and, we felt, needlessly overlooked
during the strong recent gain in stock prices. Almost 25% of our
June quarter purchases were in autos (General Motors Corp. and Ford
Motor Co.) and steels (USX-US Steel Group and Bethlehem Steel
Corp.), two cyclical areas that have lagged the market. We also
continued to increase positions in Digital Equipment Corp.,
International Paper Co. and Tandem Computers. Also, we added to the
International Business Machines Corp. holding, which is now our
fourth-largest position. (See page 9 of this report to shareholders
for a listing of the Fund's ten largest stock holdings.)
Security sales were rather small during the June quarter with the
largest sales being in National Semiconductor Corp. and Deere & Co.,
although Deere remains our third-largest commitment. Also, we
eliminated Tenet Healthcare Corp. at a substantial profit.
Fiscal Year in Review
The Fund provided shareholders with a very favorable and competitive
total return for the 1995 fiscal year, but we did underperform
relative to the S&P 500.
On average, our ten largest holdings outperformed the market, up
31%, while the entire Fund showed 62 advances, only 12 declines and
one unchanged issue. Citicorp, our second-largest commitment,
performed well, up 45%, but other bank holdings lagged as did energy
stocks, our largest industry position. Also, the high cash position
maintained throughout the year was an impediment. It may be recalled
that both banks and energy outperformed in the 1994 fiscal year. We
believe both groups offer favorable value characteristics.
In Conclusion
The first half of 1995 has been characterized by a remarkable gain
in equity prices that has far surpassed most beginning-of-the-year
projections. A long-standing policy of Merrill Lynch Basic Value
Fund, Inc. has been not to attempt to "time" the market but to seek
out undervalued areas and to generally "sell strength and buy
weakness." Fortunately, we have thus far this year, as a result of
the strong cash inflow, limited the "sell strength" portion of the
philosophy that has generally held us in good stead for the history
of the Fund, and we have been more aggressive on "buying weakness"
in those few areas that have underperformed.
It seems highly unlikely that the second half of 1995 will be as
ebullient as the first half. Accordingly, we anticipate more
volatility the rest of the year, and we will attempt to be alert to
selling opportunities as well as favorable buying prospects.
<PAGE>
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 quarterly report to shareholders.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Paul M. Hoffmann)
Paul M. Hoffmann
Vice President and Portfolio Manager
July 10, 1995
PROXY RESULTS
During the year ended June 30, 1995, Merrill Lynch Basic Value Fund,
Inc. shareholders voted on the following proposals. Proposals 1, 2
and 4 were approved at a special shareholders' meeting on September
26, 1994. Proposal 3 was passed at a special shareholders' meeting
on January 31, 1995. The description of each proposal and number of
shares voted are as follows:
<TABLE>
<CAPTION>
Shares Voted Shares Voted
For Without Authority
<S> <S> <C> <C>
1. To elect the Fund's Board of Directors: Donald Cecil 166,180,203 3,025,744
M. Colyer Crum 166,188,483 3,017,464
Edward H. Meyer 166,170,332 3,035,615
Jack B. Sunderland 166,225,740 2,980,207
J. Thomas Touchton 166,183,154 3,022,793
Arthur Zeikel 166,127,850 3,078,097
<PAGE>
<CAPTION>
Shares Voted Shares Voted Shares Voted
For Against Abstain
<S> <C> <C> <C>
2. To select Deloitte & Touche LLP as the Fund's independent auditors. 163,921,928 1,265,083 4,018,936
3. To approve certain changes to the Fund's fundamental investment
restrictions. 89,297,698 3,562,624 4,676,207
4. To amend the Fund's articles of incorporation to implement the
Merrill Lynch Select Pricing SM System. 150,462,512 8,538,045 10,205,390
</TABLE>
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).
<PAGE>
Performance data for the Fund's Class A and Class B Shares are
presented in the "Total Return Based on a $10,000 Investment"
graphs, "Average Annual Total Return" and "Performance Summary"
tables on pages 4 and 6. The "Results of a $1,000 Investment Since
Inception--Class A Shares" chart on page 5 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 June 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 5.
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 June 30, 1995 and
for Class C and Class D Shares for the since inception and 3-month
periods ended June 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)
<PAGE>
Total Return Based on a $10,000 Investment
A line graph depicting the growth of an investment in the Fund's
Class A Shares compared to growth of an investment in the S&P 500
Index. Beginning and ending values are:
6/85 6/95
ML Basic Value Fund, Inc.++--
Class A Shares* $ 9,475 $33,375
S&P 500 Index++++ $10,000 $39,401
A line graph depicting the growth of an investment in the Fund's
Class B Shares compared to growth of an investment in the S&P 500
Index. Beginning and ending values are:
10/21/88** 6/95
ML Basic Value Fund, Inc.++--
Class B Shares* $10,000 $19,592
S&P 500 Index++++ $10,000 $23,628
[FN]
*Assuming maximum sales charge, transaction costs and other
operating expenses, including advisory fees.
**Commencement of Operations.
++ML Basic Value Fund, Inc. invests in securities, primarily
equities, that management of the Fund believes are
undervalued and therefore represent basic investment value.
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 6/30/95 +21.67% +15.28%
Five Years Ended 6/30/95 +13.17 +11.96
Ten Years Ended 6/30/95 +13.42 +12.81
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
<PAGE>
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 6/30/95 +20.45% +16.45%
Five Years Ended 6/30/95 +12.02 +12.02
Inception (10/21/88) through 6/30/95 +10.57 +10.57
[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 6/30/95 +15.59% +14.59%
[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 6/30/95 +16.23% +10.13%
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
<PAGE>
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 $12,726.63
on June 30, 1995.
<TABLE>
Recent Performance Results
<CAPTION>
12 Month 3 Month
6/30/95 3/31/95 6/30/94++ % Change++ % Change
<S> <C> <C> <C> <C> <C>
ML Basic Value Fund Class A Shares* $26.44 $24.27 $23.17 +18.05%(1) + 8.94%
ML Basic Value Fund Class B Shares* 26.08 24.00 22.87 +18.01(1) + 8.67
ML Basic Value Fund Class C Shares* 25.98 23.91 22.92 +13.87(2) + 8.66
ML Basic Value Fund Class D Shares* 26.41 24.26 23.19 +14.40(2) + 8.86
Dow Jones Industrial Average** 4,556.10 4,157.69 3,624.96 +25.69 + 9.58
Standard & Poor's 500 Index** 544.75 500.71 444.27 +22.62 + 8.80
ML Basic Value Fund Class A Shares--Total Return* +21.67(3) + 8.94
ML Basic Value Fund Class B Shares--Total Return* +20.45(4) + 8.67
ML Basic Value Fund Class C Shares--Total Return* +15.59(5) + 8.66
ML Basic Value Fund Class D Shares--Total Return* +16.23(6) + 8.86
Dow Jones Industrial Average--Total Return** +29.21 +10.28
Standard & Poor's 500 Index--Total Return** +25.95 + 9.44
<PAGE>
<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 $0.784 per share capital
gains distributions.
(2)Percent change includes reinvestment of $0.099 per share capital
gains distributions.
(3)Percent change includes reinvestment of $0.692 per share ordinary
income dividends and $0.784 per share capital gains distributions.
(4)Percent change includes reinvestment of $0.464 per share ordinary
income dividends and $0.784 per share capital gains distributions.
(5)Percent change includes reinvestment of $0.329 per share ordinary
income dividends and $0.099 per share capital gains distributions.
(6)Percent change includes reinvestment of $0.353 per share ordinary
income dividends and $0.099 per share capital gains distributions.
</TABLE>
PERFORMANCE DATA (concluded)
<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--6/30/95 22.35 26.44 -- -- +18.30
------- -------
Total $11.909 Total $11.929
Cumulative total return as of 6/30/95: +1,243.18%**
<PAGE>
<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 $18.79 $17.89 $0.352 $0.361 - 0.96%
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--6/30/95 22.15 26.08 -- -- +17.74
------ ------
Total $2.988 Total $3.910
Cumulative total return as of 6/30/95: +95.92%**
<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>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS
<CAPTION>
Shares Value Percent of
Industry Held Stocks Cost (Note 1a) Net Assets
<S> <C> <S> <C> <C> <C>
Discount from Book Value
Metals/Non-Ferrous 1,600,000 ASARCO Inc. $ 40,877,630 $ 48,800,000 0.9%
Insurance 260,000 American National Insurance Co. 9,749,442 15,665,000 0.3
Utilities--Electric 1,800,000 Entergy Corp. 38,211,274 43,425,000 0.8
Telecommunications 1,400,000 Telefonica de Espana, S.A. (ADR)* 42,507,830 54,250,000 0.9
-------------- -------------- ------
131,346,176 162,140,000 2.9
Below-Average Price/Earnings Ratio
Savings & Loans 1,850,000 Ahmanson (H.F.) & Co. 32,200,305 40,700,000 0.7
Insurance 600,000 The Allstate Corp. 16,316,532 17,775,000 0.3
Insurance 2,000,000 American General Corp. 35,557,769 67,500,000 1.2
Steel 2,600,000 ++Bethlehem Steel Corp. 38,429,300 42,250,000 0.8
Oil--International 721,886 The British Petroleum Co. PLC (ADR)* 34,636,351 61,811,488 1.1
Banking 900,000 The Chase Manhattan Corp. 20,213,162 42,300,000 0.8
Banking 2,820,272 Citicorp 77,865,009 163,223,242 2.9
Restaurants 1,800,000 Darden Restaurants, Inc. (a) 18,379,741 19,575,000 0.4
Financial Services 700,000 Dean Witter, Discover & Co. 18,012,707 32,900,000 0.6
Farm & Construction
Equipment 1,800,000 Deere & Co. 104,592,849 154,125,000 2.8
Information Processing 2,500,000 ++Digital Equipment Corp. 92,004,575 101,875,000 1.8
Capital Goods 935,000 Eaton Corp. 47,051,835 54,346,875 1.0
Retail 2,200,000 ++Federated Department Stores, Inc. 40,739,118 56,650,000 1.0
Banking 1,150,000 First Interstate Bancorp 53,035,168 92,287,500 1.7
Automotive 3,400,000 Ford Motor Co. 78,787,662 101,150,000 1.8
Automotive 2,665,000 General Motors Corp. 115,740,442 124,921,875 2.2
Conglomerates 1,000,000 ITT Corp. 46,914,030 117,500,000 2.1
Machinery 850,000 Ingersoll-Rand Co. 19,212,954 32,512,500 0.6
Information Processing 1,600,000 International Business Machines Corp. 106,346,141 153,600,000 2.8
Paper & Forest Products 1,550,000 International Paper Co. 96,729,382 132,912,500 2.4
Semiconductors 1,000,000 ++National Semiconductor Corp. 15,890,266 27,750,000 0.5
Banking 1,600,000 NationsBank Corp. 66,516,217 85,800,000 1.5
Banking 2,350,000 Norwest Corp. 34,446,022 67,562,500 1.2
Insurance 1,400,000 PartnerRe Holdings Ltd. 29,498,937 36,400,000 0.7
Electrical Equipment 2,400,000 Philips Electronics N.V. 42,421,261 102,600,000 1.8
Retail 3,100,000 Sears, Roebuck & Co. 114,099,842 185,612,500 3.3
Financial Services 800,000 Student Loan Marketing
Association 29,398,674 37,500,000 0.7
Information Processing 2,800,000 Tandem Computers 35,850,031 45,150,000 0.8
Insurance 1,700,000 Travelers Inc. 65,450,616 74,375,000 1.3
Steel 1,700,000 USX--US Steel Group 50,833,396 58,437,500 1.0
Chemicals 1,700,000 Union Carbide Corp. 34,816,186 56,737,500 1.0
Information Processing 4,800,000 ++Unisys Corp. 54,275,118 52,200,000 0.9
Aerospace & Defense 450,000 United Technologies Corp. 22,695,049 35,156,250 0.6
Savings & Loans 1,400,000 Washington Mutual Savings Bank 23,454,491 32,725,000 0.6
-------------- -------------- ------
1,712,411,138 2,507,922,230 44.9
<PAGE>
Above-Average Yield
Insurance 800,000 Aetna Life & Casualty Co. 35,195,218 50,300,000 0.9
Oil--Domestic 550,000 Atlantic Richfield Co. 54,813,351 60,362,500 1.1
Real Estate Investment
Trust 700,000 Avalon Properties, Inc. 14,548,710 13,912,500 0.2
Telecommunications 1,250,000 Bell Atlantic Corp. 57,059,580 70,000,000 1.3
Pharmaceutical 1,150,000 Bristol-Myers Squibb Co. 65,372,906 78,343,750 1.4
Oil--International 1,500,000 Chevron Corp. 47,205,854 69,937,500 1.2
Utilities--Electric 1,000,000 CINergy Corp. 24,141,035 26,250,000 0.5
Banking 425,708 Citicorp (Pfd. P) 6,279,193 8,620,587 0.1
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Shares Value Percent of
Industry Held Stocks Cost (Note 1a) Net Assets
<S> <C> <S> <C> <C> <C>
Above-Average Yield (concluded)
Utilities--Electric 1,250,000 Consolidated Edison Co. of
New York, Inc. $ 28,416,439 $ 36,875,000 0.7%
Utilities--Electric 637,500 DPL Inc. 6,204,369 14,104,687 0.2
Oil--International 1,250,000 Exxon Corp. 66,924,505 88,281,250 1.6
Telecommunications 2,900,000 GTE Corp. 90,725,125 98,962,500 1.8
Foods/Food Processing 1,200,000 General Mills, Inc. 54,577,127 61,650,000 1.1
Chemicals 400,000 Imperial Chemical Industries
PLC (ADR)* 25,771,805 19,500,000 0.3
Real Estate Investment
Trust 440,000 Irvine Apartment Communities, Inc. 7,758,147 7,590,000 0.1
Real Estate Investment
Trust 820,000 Liberty Property Trust 16,510,230 16,092,500 0.3
Real Estate Investment
Trust 500,000 The Mills Corp. 11,734,125 9,937,500 0.2
Oil--International 1,500,000 Mobil Corp. 78,457,147 144,000,000 2.6
Utilities--Electric 1,100,000 NIPSCO Industries, Inc. 23,590,152 37,400,000 0.7
Oil--Domestic 2,500,000 Occidental Petroleum Corp. 52,012,324 57,187,500 1.0
Utilities--Electric 1,200,000 PECO Energy Co. 28,784,191 33,150,000 0.6
Tobacco 1,620,000 Philip Morris Cos. Inc. 89,036,004 120,487,500 2.2
Utilities--Electric 1,200,000 Public Service Enterprise Group
Inc. 31,930,695 33,300,000 0.6
Oil--International 1,200,000 Royal Dutch Petroleum Co. (ADR)* 76,689,823 146,250,000 2.6
Real Estate Investment
Trust 1,550,000 Simon Property Group, Inc. 34,819,560 38,943,750 0.7
Real Estate Investment
Trust 500,000 Summit Properties Inc. 9,602,500 8,625,000 0.2
Oil--International 1,250,000 Texaco Inc. 70,092,871 82,031,250 1.5
Utilities--Electric 1,100,000 Texas Utilities Co. 36,860,685 37,812,500 0.7
Telecommunications 1,350,000 U.S. West, Inc. 43,842,140 56,193,750 1.0
Pharmaceuticals 440,000 Zeneca Group PLC (ADR)* 12,980,000 22,550,000 0.4
-------------- -------------- ------
1,201,935,811 1,548,651,524 27.8
<PAGE>
Special Situations
Information Processing 1,000,000 ++Ceridian Corp. 16,072,735 36,875,000 0.7
Information Processing 1,570,000 Data General Corp. 21,268,247 15,111,250 0.3
Oil Services & Equipment 2,500,000 Dresser Industries, Inc. 50,259,610 55,625,000 1.0
Chemicals 1,500,000 Hercules Inc. 19,235,727 73,125,000 1.3
Retail 1,980,500 Kmart Corp. 38,751,187 28,964,812 0.5
Retail Apparel 3,225,000 The Limited, Inc. 59,866,357 70,950,000 1.3
Pharmaceutical 2,000,000 Merck & Co., Inc. 63,465,897 98,000,000 1.7
-------------- -------------- ------
268,919,760 378,651,062 6.8
Total Stocks 3,314,612,885 4,597,364,816 82.4
Face
Amount Issue
Short-Term Securities
Commercial Paper** $50,000,000 ABN AMRO North America Finance,
Inc., 5.90% due 7/06/1995 49,950,833 49,950,833 0.9
50,000,000 ANZ (Delaware), Inc., 5.92%
due 7/20/1995 49,835,556 49,835,556 0.9
Ciesco L.P.:
50,000,000 5.90% due 7/07/1995 49,942,639 49,942,639 0.9
50,000,000 5.85% due 7/14/1995 49,886,250 49,886,250 0.9
50,000,000 5.94% due 7/27/1995 49,777,250 49,777,250 0.9
50,000,000 Daimler-Benz AG, 5.92% due
7/18/1995 49,852,000 49,852,000 0.9
du Pont (E.I.) de Nemours & Co.:
50,000,000 5.90% due 7/10/1995 49,918,056 49,918,056 0.9
50,000,000 5.88% due 8/08/1995 49,681,500 49,681,500 0.9
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded)
<CAPTION>
Face Value Percent of
Amount Issue Cost (Note 1a) Net Assets
<S> <C> <S> <C> <C> <C>
Short-Term Securities (concluded)
Commercial Paper** $86,520,000 General Electric Capital Corp.,
(concluded) 6.20% due 7/03/1995 $ 86,475,298 $ 86,475,298 1.5%
50,000,000 IBM Credit Corp., 5.90% due
7/12/1995 49,901,667 49,901,667 0.9
Matterhorn Capital Corp.:
49,988,000 5.92% due 7/11/1995 49,897,577 49,897,577 0.9
50,000,000 5.93% due 7/12/1995 49,901,167 49,901,167 0.9
50,000,000 National Australia Funding
(Delaware), Inc., 5.91% due
7/17/1995 49,860,458 49,860,458 0.9
Siemens Corporation AG:
30,000,000 5.93% due 7/24/1995 29,881,400 29,881,400 0.5
50,000,000 5.89% due 8/07/1995 49,689,139 49,689,139 0.9
-------------- -------------- ------
764,450,790 764,450,790 13.7
US Government & Agency 50,000,000 Federal Farm Credit Bank, 5.81%
Obligations** due 8/01/1995 49,741,778 49,741,778 0.9
Federal Home Loan Mortgage
Corporation:
50,000,000 5.80% due 8/02/1995 49,734,167 49,734,167 0.9
50,000,000 5.82% due 8/04/1995 49,717,083 49,717,083 0.9
50,000,000 Federal National Mortgage
Association, 5.84% due
8/16/1995 49,618,778 49,618,778 0.9
-------------- -------------- ------
198,811,806 198,811,806 3.6
Total Short-Term Securities 963,262,596 963,262,596 17.3
Total Investments $4,277,875,481 5,560,627,412 99.7
==============
Other Assets Less Liabilities 15,639,687 0.3
-------------- ------
Net Assets $5,576,267,099 100.0%
============== ======
<FN>
*American Depositary Receipt (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.
(a)Received as a spin-off from General Mills, Inc.
++Non-income producing security.
See Notes to Financial Statements.
</TABLE>
<PAGE>
PORTFOLIO INFORMATION
Percent of
Ten Largest Stock Holdings Net Assets
Sears, Roebuck & Co. 3.3%
Citicorp 2.9
Deere & Co. 2.8
International Business Machines Corp. 2.8
Royal Dutch Petroleum Co. (ADR) 2.6
Mobil Corp. 2.6
International Paper Co. 2.4
General Motors Corp. 2.2
Philip Morris Cos. Inc. 2.2
ITT Corp. 2.1
Portfolio Changes for the Quarter Ended
June 30, 1995
Additions
Darden Restaurants, Inc.
*PMI Group Inc.
Deletions
The Continental Corp.
*PMI Group Inc.
Tenet Healthcare Corp.
[FN]
*Added and deleted in the same quarter.
FINANCIAL INFORMATION
<PAGE>
<TABLE>
Statement of Assets and Liabilities as of June 30, 1995
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$4,277,875,481)
(Note 1a) $5,560,627,412
Cash 6,397,771
Receivables:
Capital shares sold $ 19,239,361
Dividends 8,285,070
Securities sold 2,681,411 30,205,842
--------------
Prepaid registration fees and other assets (Note 1d) 147,939
--------------
Total assets 5,597,378,964
--------------
Liabilities: Payables:
Capital shares redeemed 8,932,304
Securities purchased 7,164,999
Distributor (Note 2) 2,097,255
Investment adviser (Note 2) 1,835,128 20,029,686
--------------
Accrued expenses and other liabilities 1,082,179
--------------
Total liabilities 21,111,865
--------------
Net Assets: Net assets $5,576,267,099
==============
Net Assets Class A Shares of Common Stock, $0.10 par value, 300,000,000
Consist of: shares authorized $ 10,719,790
Class B Shares of Common Stock, $0.10 par value, 300,000,000
shares authorized 9,448,253
Class C Shares of Common Stock, $0.10 par value, 200,000,000
shares authorized 286,077
Class D Shares of Common Stock, $0.10 par value, 200,000,000
shares authorized 768,783
Paid-in capital in excess of par 4,160,099,946
Undistributed investment income--net 63,306,430
Undistributed realized capital gains on investments--net 48,885,889
Unrealized appreciation on investments--net 1,282,751,931
--------------
Net assets $5,576,267,099
==============
<PAGE>
Net Asset Value: Class A--Based on net assets of $2,834,652,321 and 107,197,900
shares outstanding $ 26.44
==============
Class B--Based on net assets of $2,464,247,794 and 94,482,533
shares outstanding $ 26.08
==============
Class C--Based on net assets of $74,333,991 and 2,860,765
shares outstanding $ 25.98
==============
Class D--Based on net assets of $203,032,993 and 7,687,830
shares outstanding $ 26.41
==============
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations for the Year Ended June 30, 1995
<S> <S> <C> <C>
Investment Dividends (net of $1,750,213 foreign withholding tax) $ 126,654,908
Income Interest and discount earned 44,476,505
(Notes 1b & 1c): --------------
Total income 171,131,413
--------------
Expenses: Account maintenance and distribution fees--Class B (Note 2) $ 19,879,726
Investment advisory fees (Note 2) 18,443,250
Transfer agent fees--Class A (Note 2) 3,613,058
Transfer agent fees--Class B (Note 2) 3,444,155
Printing and shareholder reports 503,104
Registration fees (Note 1d) 390,649
Accounting services (Note 2) 259,783
Account maintenance and distribution fees--Class C (Note 2) 211,321
Account maintenance fees--Class D (Note 2) 186,902
Custodian fees 164,456
Transfer agent fees--Class D (Note 2) 130,968
Professional fees 116,136
Transfer agent fees--Class C (Note 2) 44,071
Directors' fees and expenses 40,855
Pricing fees 309
Other 66,224
--------------
Total expenses 47,494,967
--------------
Investment income--net 123,636,446
--------------
<PAGE>
Realized & Realized gain on investments--net 66,820,215
Unrealized Gain on Change in unrealized appreciation on investments--net 718,977,808
Investments--Net --------------
(Notes 1c & 3): Net Increase in Net Assets Resulting from Operations $ 909,434,469
==============
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Year Ended June 30,
Increase (Decrease) in Net Assets: 1995 1994
<S> <S> <C> <C>
Operations: Investment income--net $ 123,636,446 $ 88,423,093
Realized gain on investments and foreign currency
transactions--net 66,820,215 163,320,957
Change in unrealized appreciation on investments and foreign
currency transactions--net 718,977,808 (76,944,519)
-------------- --------------
Net increase in net assets resulting from operations 909,434,469 174,799,531
-------------- --------------
Dividends & Investment income--net:
Distributions to Class A (68,596,425) (62,663,619)
Shareholders Class B (36,272,122) (30,680,760)
(Note 1g): Class C (125,803) --
Class D (1,039,403) --
Realized gain on investments--net:
Class A (77,560,878) (64,558,638)
Class B (61,276,834) (45,745,511)
Class C (37,759) --
Class D (291,335) --
-------------- --------------
Net decrease in net assets resulting from dividends and
distributions to shareholders (245,200,559) (203,648,528)
-------------- --------------
<PAGE>
Capital Share Net increase in net assets derived from capital share
Transactions transactions 894,346,339 639,523,156
(Note 4): -------------- --------------
Net Assets: Total increase in net assets 1,558,580,249 610,674,159
Beginning of year 4,017,686,850 3,407,012,691
-------------- --------------
End of year* $5,576,267,099 $4,017,686,850
============== ==============
<FN>
*Undistributed investment income--net $ 63,306,430 $ 45,703,737
============== ==============
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Financial Highlights
<CAPTION>
The following per share data and ratios have been derived
from information provided in the financial statements. Class A
For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: 1995 1994 1993 1992 1991
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year $ 23.17 $ 23.31 $ 20.57 $ 18.90 $ 19.32
Operating ---------- ---------- ---------- ---------- ----------
Performance: Investment income--net .74 .62 .71 .70 .87
Realized and unrealized gain (loss)
on investments and foreign currency
transactions--net 4.01 .67 3.03 2.02 (.02)
---------- ---------- ---------- ---------- ----------
Total from investment operations 4.75 1.29 3.74 2.72 .85
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.69) (.70) (.64) (.76) (.97)
Realized gain on investments--net (.79) (.73) (.36) (.29) (.30)
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (1.48) (1.43) (1.00) (1.05) (1.27)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 26.44 $ 23.17 $ 23.31 $ 20.57 $ 18.90
========== ========== ========== ========== ==========
<PAGE>
Total Investment Based on net asset value per
Return:* share 21.67% 5.68% 19.03% 15.08% 5.39%
========== ========== ========== ========== ==========
Ratios to Average Expenses .59% .53% .54% .58% .59%
Net Assets: ========== ========== ========== ========== ==========
Investment income--net 3.19% 2.76% 3.48% 3.52% 4.76%
========== ========== ========== ========== ==========
Supplemental Net assets, end of year (in
Data: thousands) $2,834,652 $2,272,983 $2,023,078 $1,670,430 $1,490,657
========== ========== ========== ========== ==========
Portfolio turnover 11.69% 21.79% 20.85% 21.24% 20.11%
========== ========== ========== ========== ==========
<FN>
*Total investment returns exclude the effects of sales loads.
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<PAGE>
<TABLE>
Financial Highlights (continued)
<CAPTION>
The following per share data and ratios have been derived
from information provided in the financial statements. Class B
For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: 1995 1994 1993 1992 1991
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year $ 22.87 $ 23.04 $ 20.35 $ 18.71 $ 19.12
Operating ---------- ---------- ---------- ---------- ----------
Performance: Investment income--net .53 .42 .53 .50 .66
Realized and unrealized gain on
investments and foreign currency
transactions--net 3.93 .62 2.96 2.00 .01
---------- ---------- ---------- ---------- ----------
Total from investment operations 4.46 1.04 3.49 2.50 .67
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.46) (.48) (.44) (.57) (.78)
Realized gain on investments--net (.79) (.73) (.36) (.29) (.30)
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (1.25) (1.21) (.80) (.86) (1.08)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 26.08 $ 22.87 $ 23.04 $ 20.35 $ 18.71
========== ========== ========== ========== ==========
Total Investment Based on net asset value per share 20.45% 4.61% 17.81% 13.90% 4.33%
Return:* ========== ========== ========== ========== ==========
Ratios to Average Expenses, excluding account
Net Assets: maintenance and distribution fees .61% .55% .56% .60% .61%
========== ========== ========== ========== ==========
Expenses 1.61% 1.55% 1.56% 1.60% 1.61%
========== ========== ========== ========== ==========
Investment income--net 2.16% 1.75% 2.47% 2.50% 3.73%
========== ========== ========== ========== ==========
Supplemental Net assets, end of year (in
Data: thousands) $2,464,248 $1,744,704 $1,383,935 $1,064,354 $ 874,318
========== ========== ========== ========== ==========
Portfolio turnover 11.69% 21.79% 20.85% 21.24% 20.11%
========== ========== ========== ========== ==========
<FN>
*Total investment returns exclude the effects of sales loads.
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (concluded)
<PAGE>
<TABLE>
Financial Highlights (concluded)
<CAPTION>
The following per share data and ratios have been derived
from information provided in the financial statements. For the Period Oct. 21, 1994++
to June 30, 1995
Increase (Decrease) in Net Asset Value: Class C Class D
<S> <S> <C> <C>
Per Share Net asset value, beginning of period $ 22.92 $ 23.19
Operating -------------- --------------
Performance: Investment income--net .44 .50
Realized and unrealized gain on investments--net 3.05 3.17
-------------- --------------
Total from investment operations 3.49 3.67
-------------- --------------
Less dividends and distributions:
Investment income--net (.33) (.35)
Realized gain on investments--net (.10) (.10)
-------------- --------------
Total dividends and distributions (.43) (.45)
-------------- --------------
Net asset value, end of period $ 25.98 $ 26.41
============== ==============
Total Investment Based on net asset value per share 15.59%+++ 16.23%+++
Return:** ============== ==============
Ratios to Average Expenses, excluding account maintenance and distribution fees .66%* .62%*
Net Assets: ============== ==============
Expenses 1.66%* .87%*
============== ==============
Investment income--net 2.09%* 2.88%*
============== ==============
Supplemental Net assets, end of period (in thousands) $ 74,334 $ 203,033
Data: ============== ==============
Portfolio turnover 11.69% 11.69%
============== ==============
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Commencement of Operations.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch Basic Value Fund, Inc. (the "Fund") is registered
under the Investment Company Act of 1940 as a diversified, open-end
management investment company. 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--Portfolio securities which are traded
on stock exchanges are valued at the last sale price on the exchange
on which such securities are traded, as of the close of business on
the day the securities are being valued or, lacking any sales, at
the last available bid price. Securities traded in the over-the-
counter market are valued at the last available bid price prior to
the time of valuation. Securities traded in the NASDAQ National
Market System are valued at the last sale price on the day the
securities are being valued, or lacking any sales, at the closing
bid price. In cases where securities are traded on more than one
exchange, the securities are valued on the exchange designated by or
under the Board of Directors as the primary market. Securities which
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 are valued at the last sale
price in the case of exchange-traded options or, in the case of
options traded in the over-the-counter market, the last bid price.
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 value quotations are not
available are valued at their fair value as determined in good faith
by or under the direction of the Fund's Board of Directors.
(b) Income taxes--It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its
taxable income to its shareholders. Therefore, no Federal income tax
provision is required. Under the applicable foreign tax law, a
withholding tax may be withheld on interest, dividends, and capital
gains at various rates.
<PAGE>
(c) Security transactions and investment income--Security
transactions are recorded on the dates the transactions are entered
into (the trade dates). Dividend income is recorded on the ex-
dividend date, except that if the ex-dividend date has passed,
certain dividends from foreign securities are recorded as soon as
the Fund is informed of 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.
(d) Prepaid registration fees--Prepaid registration fees are charged
to expense as the related shares are issued.
(e) Derivative financial instruments--The Fund may engage in various
portfolio strategies to seek to increase its return by hedging its
portfolio against adverse movements in the equity markets. Losses
may arise due to changes in the value of the contract or if the
counterparty does not perform under the contract.
* Options--The Fund is authorized to write covered call options. When
the Fund writes an option, an amount equal to the premium received
by the Fund is reflected as an asset and an equivalent liability.
The amount of the liability is subsequently marked to market to
reflect the current market value of the option written.
Written options are non-income producing investments
(f) 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.
(g) Dividends and distributions--Dividends and distributions paid by
the Fund are recorded on the ex-dividend dates.
2. Investment Advisory Agreement and
Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with 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. The Fund has also entered into a Distribution
Agreement and Distribution Plans with Merrill Lynch Funds
Distributor, Inc. ("MLFD" or "Distributor"), a wholly-owned
subsidiary of Merrill Lynch Group, Inc.
<PAGE>
FAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee based upon the average daily
value of the Fund's daily net assets at the following annual rates:
0.60% of the Fund's average daily net assets not exceeding $100
million; 0.50% of the Fund's average daily net assets in excess $100
million but not exceeding $200 million; and 0.40% of average daily
net assets in excess of $200 million. The Investment Advisory
Agreement obligates FAM to reimburse the Fund to the extent the
Fund's expenses (excluding interest, taxes, distribution fees,
brokerage fees and commissions, and extraordinary items) exceed 2.5%
of the Fund's first $30 million of average daily net assets, 2.0% of
the Fund's next $70 million of average daily net assets, and 1.5% of
the average daily net assets in excess thereof. No fee payment will
be made to the Investment Adviser during any fiscal year which will
cause such expenses to exceed the pro rata expense limitation at the
time of such payment.
Pursuant to the distribution plans ("the Distribution Plans")
adopted by the Fund in accordance with Rule 12b-1 under the
Investment Company Act of 1940, the Fund pays the Distributor
ongoing account maintenance and distribution fees, which are accrued
daily and paid monthly at annual rates based upon the average daily
net assets of the shares as follows:
Account Distribution
Maintenance Fee Fee
Class B 0.25% 0.75%
Class C 0.25% 0.75%
Class D 0.25% --
Pursuant to a sub-agreement with the Distributor, Merrill Lynch,
Pierce, Fenner & Smith Inc. ("MLPF&S"), a subsidiary of ML & Co.,
also provides account maintenance and distribution services to the
Fund. The ongoing account main-tenance 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 year ended June 30, 1995, MLFD earned underwriting discounts
and MLPF&S earned dealer concessions on sales of the Fund's Class A
and Class D Shares as follows:
<PAGE>
MLFD MLPF&S
Class A $88,037 $1,499,145
Class D $73,718 $1,165,652
For the year ended June 30, 1995, MLPF&S received contingent
deferred sales charges of $1,951,585 and $13,126 relating to
transactions in Class B and Class C Shares, respectively.
In addition, MLPF&S received $81,150 in commissions on the execution
of portfolio security transactions for the Fund for the year ended
June 30, 1995.
Merrill Lynch Financial Data Services, Inc. ("MLFDS"), a 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, MLPF&S, MLFDS, MLFD and/or ML & Co.
NOTES TO FINANCIAL STATEMENTS (concluded)
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the year ended June 30, 1995 were $1,009,368,845 and
$437,599,359, respectively.
Net realized and unrealized gains as of June 30, 1995 were as
follows:
Realized Unrealized
Gains Gains
Long-term investments $66,820,215 $1,282,751,931
----------- --------------
Total $66,820,215 $1,282,751,931
=========== ==============
As of June 30, 1995, net unrealized appreciation for Federal income
tax purposes aggregated $1,279,455,098, of which $1,308,447,655
related to appreciated securities and $28,992,557 related to
depreciated securities. At June 30, 1995, the aggregate cost of
investments for Federal income tax purposes was $4,281,172,314.
<PAGE>
4. Capital Share Transactions:
Net increase in net assets derived from capital share transactions
was $894,346,339 and $639,523,156 for the years ended June 30, 1995
and June 30, 1994, respectively.
Transactions in capital shares for each class were as follows:
Class A Shares for the Year Dollar
Ended June 30, 1995 Shares Amount
Shares sold 19,425,436 $466,205,455
Shares issued to shareholders
in reinvestment of dividends
and distributions 5,782,037 130,723,601
----------- ------------
Total issued 25,207,473 596,929,056
Shares redeemed (16,105,392) (384,011,079)
----------- ------------
Net increase 9,102,081 $212,917,977
=========== ============
Class A Shares for the Year Dollar
Ended June 30, 1994 Shares Amount
Shares sold 22,051,928 $518,481,972
Shares issued to shareholders
in reinvestment of dividends
and distributions 4,979,090 114,208,364
----------- ------------
Total issued 27,031,018 632,690,336
Shares redeemed (15,739,255) (370,180,112)
----------- ------------
Net increase 11,291,763 $262,510,224
=========== ============
<PAGE>
Class B Shares for the Year Dollar
Ended June 30, 1995 Shares Amount
Shares sold 34,461,582 $815,962,756
Shares issued to shareholders
in reinvestment of dividends
and distributions 3,848,516 86,346,162
----------- ------------
Total issued 38,310,098 902,308,918
Automatic conversion of
shares (4,721,916) (109,837,782)
Shares redeemed (15,381,764) (361,976,739)
----------- ------------
Net increase 18,206,418 $430,494,397
=========== ============
Class B Shares for the Year Dollar
Ended June 30, 1994 Shares Amount
Shares sold 25,498,592 $594,651,037
Shares issued to shareholders
in reinvestment of dividends
and distributions 2,969,021 67,552,341
----------- ------------
Total issued 28,467,613 662,203,378
Shares redeemed (12,261,811) (285,190,446)
----------- ------------
Net increase 16,205,802 $377,012,932
=========== ============
Class C Shares for the Period
October 21, 1994++ to Dollar
June 30, 1995 Shares Amount
Shares sold 3,236,903 $ 77,339,209
Shares issued to shareholders
in reinvestment of dividends
and distributions 6,576 142,631
----------- ------------
Total issued 3,243,479 77,481,840
Shares redeemed (382,714) (9,161,923)
----------- ------------
Net increase 2,860,765 $ 68,319,917
=========== ============
[FN]
++Commencement of Operations.
<PAGE>
Class D Shares for the Period
October 21, 1994++ to Dollar
June 30, 1995 Shares Amount
Shares sold 3,673,107 $ 88,800,325
Automatic conversion of
shares 4,666,859 109,837,782
Shares issued to shareholders
in reinvestment of dividends
and distributions 55,369 1,215,335
----------- ------------
Total issued 8,395,335 199,853,442
Shares redeemed (707,505) (17,239,394)
----------- ------------
Net increase 7,687,830 $182,614,048
=========== ============
[FN]
++Commencement of Operations.
<AUDIT-REPORT>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders,
Merrill Lynch Basic Value Fund, Inc.:
We have audited the accompanying statement of assets and
liabilities, including the schedule of investments, of Merrill Lynch
Basic Value Fund, Inc. as of June 30, 1995, the related statements
of operations for the year then ended and changes in net assets for
each of the years in the two-year period then ended, and the
financial highlights for each of the years in the five-year period
then ended. These financial statements and the financial highlights
are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and the
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements and the financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.
Our procedures included confirmation of securities owned at June 30,
1995 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of
Merrill Lynch Basic Value Fund, Inc. as of June 30, 1995, the
results of its operations, the changes in its net assets, and the
financial highlights for the respective stated periods in conformity
with generally accepted accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
July 31, 1995
</AUDIT-REPORT>
<PAGE>
IMPORTANT TAX INFORMATION
The following information summarizes all per share distributions
paid by Merrill Lynch Basic Value Fund, Inc. during the taxable year
ended June 30, 1995:
<TABLE>
<CAPTION>
Qualifying Non-Qualifying Total Long-Term
Record Payable Ordinary Ordinary Ordinary Capital
Date Date Income Income Income Gains
<S> <C> <C> <C> <C> <C> <C>
Class A Shares: 08/08/94 08/16/94 $.322307 $.010242 $.332549 $.685419
12/12/94 12/20/94 $.326859 $.032397 $.359256 $.098821
Class B Shares: 08/08/94 08/16/94 $.214755 $.006825 $.221580 $.685419
12/12/94 12/20/94 $.220138 $.021819 $.241957 $.098821
Class C Shares: 12/12/94 12/20/94 $.299554 $.029690 $.329244 $.098821
Class D Shares: 12/12/94 12/20/94 $.320773 $.031793 $.352566 $.098821
</TABLE>
The domestic qualifying ordinary income qualifies for the dividends-
received deduction for corporations.
Please retain this information for your records.
