MERRILL LYNCH
BASIC VALUE
FUND, INC.
FUND LOGO
Quarterly Report
March 31, 1996
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.
<PAGE>
Merrill Lynch
Basic Value Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
MERRILL LYNCH BASIC VALUE FUND, INC.
TO OUR SHAREHOLDERS
As 1995 ended and into the first two months of 1996, it appeared
that the US economy was losing momentum. Lackluster retail sales,
increases in initial unemployment claims (along with weak job and
income growth), and evidence of slowing in the manufacturing sector
all suggested that the rate of economic growth was slowing, with
some forecasters even suggesting the possibility of an imminent
recession. With inflationary pressures well subdued, these signs of
economic weakness led the Federal Reserve Board to lower short-term
interest rates at its January Federal Open Market Committee meeting.
However, investor perceptions regarding the rate of future economic
growth changed dramatically with the report of stronger-than-
expected employment data for February and March. As a result, the
consensus outlook regarding the direction of business activity
shifted from expectations of weakness to anticipation of a revival
in growth of the economy. Long-term interest rates rose, and the
Federal Reserve Board left monetary policy on hold.
Investors are likely to continue to focus on the probable direction
of economic activity and Federal Reserve Board monetary policy in
the weeks ahead. At this time, inflationary pressures do not seem to
be building and the manufacturing sector is still relatively weak,
which suggest that the economy is not on the verge of overheating.
Nevertheless, it is likely that any further indication of stronger
economic activity in the weeks ahead may add to investor concerns
that accelerating economic activity could lead to higher interest
rates.
<PAGE>
Portfolio Matters
Security purchases during the first quarter of 1996 amounted to $414
million, while equity sales totaled $189 million, a difference of
$225 million. New assets invested in the Fund during the quarter
ended March 31, 1996, approximated $290 million. Accordingly,
our cash position remained at 17.6% of net assets, unchanged from
year-end 1995.
Total Fund assets increased 11% during the March quarter to about
$7.3 billion from almost $6.6 billion, and are up over 50% from the
year-ago level of $4.8 billion. During the three months ended March
31, 1996, we added to 24 existing holdings and established three new
positions: Texas Instruments Inc., Hanson PLC, and The Seagram
Company Ltd.
Texas Instruments is one of the highest quality semiconductor
companies whose stock price has been decimated. From a high in the
low $80s in September 1995, the stock price fell to the mid $40s in
January 1996. In conjunction with technology stocks in general, and
semiconductor issues in particular, investor concerns developed
regarding future growth rates and product pricing flexibility.
Semiconductor industry growth has slowed, and pricing is always
competitive. Texas Instruments' earnings will be lower this year
reflecting industry conditions and a drop in royalty income.
However, at our entry price the stock was available at ten times to
eleven times expected earnings per share, and we believed risks were
minimal and long-term recovery possibilities favorable.
Hanson is one of the last of the major conglomerates whose stock has
been overlooked for years. This large producer of chemical, energy,
consumer and building products decided to "demerge," and we think
that the individual pieces of the company may prove to be worth more
than the whole.
Seagram is in the process of a significant change from a liquor and
beverage company with extensive security holdings to an
entertainment complex, while maintaining the spirits and beverages
business. Seagram sold its major position in du Pont (E.I.) de
Nemours & Co. stock back to the company and utilized the proceeds to
buy MCA, an underachieving entertainment firm. In addition, Seagram
is changing its fiscal year reporting period and in many cases
analyst coverage is shifting. We believe this transition period
offered a worthwhile buying opportunity.
On the sell side, we reduced positions in ten holdings and
eliminated the final portion of The Chase Manhattan Corp. commitment
prior to its merger with Chemical Banking Corp. The stock was an
outstanding performer in recent years, and we thought profit-taking
was in order. Bank stocks remain a substantial portfolio commitment,
accounting for 7.7% of net assets.
<PAGE>
In Conclusion
Despite a generally upward bias for stock prices during the quarter
ended March 31, 1996, there was enough volatility and group rotation
for us to exercise our basic contrary opinion, out-of-favor style of
investing. For example, Digital Equipment Corp.--one of our ten
largest holdings--was a very strong performer early in the March
quarter, and we modestly reduced our position on strength.
Subsequently, the company announced disappointing quarterly results
and the stock experienced considerable price weakness. We thought
the weakness created a buying opportunity and increased our
position. We expect continued volatility and group rotation, and we
will attempt to take advantage of these trends.
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 annual report to shareholders.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Paul M. Hoffmann)
Paul M. Hoffmann
Vice President and Portfolio Manager
April 24, 1996
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:
<PAGE>
* 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 approximately 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).
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.
<TABLE>
Recent Performance Results
<CAPTION>
12 Month 3 Month
3/31/96 12/31/95 3/31/95 % Change % Change
<S> <C> <C> <C> <C> <C>
ML Basic Value Fund Class A Shares* $30.13 $28.31 $24.27 +26.47%(1) +6.43%
ML Basic Value Fund Class B Shares* 29.74 28.02 24.00 +26.26(1) +6.14
ML Basic Value Fund Class C Shares* 29.55 27.84 23.91 +25.94(1) +6.14
ML Basic Value Fund Class D Shares* 30.09 28.29 24.26 +26.36(1) +6.36
Dow Jones Industrial Average** 5,587.14 5,117.12 4,157.69 +34.38 +9.19
Standard & Poor's 500 Index** 645.50 615.93 500.71 +28.92 +4.80
ML Basic Value Fund Class A Shares--Total Return* +30.25(2) +6.43
ML Basic Value Fund Class B Shares--Total Return* +28.91(3) +6.14
ML Basic Value Fund Class C Shares--Total Return* +28.92(4) +6.14
ML Basic Value Fund Class D Shares--Total Return* +29.90(5) +6.36
Dow Jones Industrial Average--Total Return** +37.68 +9.79
Standard & Poor's 500 Index--Total Return** +32.09 +5.38
<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.
(1)Percent change includes reinvestment of $0.511 per share capital
gains distributions.
(2)Percent change includes reinvestment of $0.820 per share ordinary
income dividends and $0.511 per share capital gains distributions.
(3)Percent change includes reinvestment of $0.571 per share ordinary
income dividends and $0.511 per share capital gains distributions.
(4)Percent change includes reinvestment of $0.639 per share ordinary
income dividends and $0.511 per share capital gains distributions.
(5)Percent change includes reinvestment of $0.770 per share ordinary
income dividends and $0.511 per share capital gains distributions.
</TABLE>
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 $15,216.09 on March
31, 1996.
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 3/31/96 +30.25% +23.41%
Five Years Ended 3/31/96 +16.32 +15.07
Ten Years Ended 3/31/96 +12.77 +12.16
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
<PAGE>
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 3/31/96 +28.91% +24.91%
Five Years Ended 3/31/96 +15.13 +15.13
Inception (10/21/88) through 3/31/96 +12.00 +12.00
[FN]
*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*
Year Ended 3/31/96 +28.92% +27.92%
Inception (10/21/94)
through 3/31/96 +24.46 +24.46
[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*
Year Ended 3/31/96 +29.90% +23.08%
Inception (10/21/94)
through 3/31/96 +25.43 +20.83
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
<PAGE>
PERFORMANCE DATA (continued)
<TABLE>
Performance Summary--Class A Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <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
1995 22.35 28.31 0.511 0.820 +32.90
1/1/96--3/31/96 28.31 30.13 -- -- + 6.43
------- -------
Total $12.420 Total $12.749
Cumulative total return as of 3/31/96: +1,505.92%**
<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
include sales charge; results would be lower if sales charge was
included.
</TABLE>
<PAGE>
<TABLE>
Performance Summary--Class B Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <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
1995 22.15 28.02 0.511 0.571 +31.60
1/1/96--3/31/96 28.02 29.74 -- -- + 6.14
------ ------
Total $3.499 Total $4.481
Cumulative total return as of 3/31/96: +132.54%**
<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>
Performance Summary--Class C Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <C> <C> <C> <C> <C>
10/21/94--12/31/94 $22.92 $22.07 $0.099 $0.329 - 1.81%
1995 22.07 27.84 0.511 0.639 +31.59
1/1/96--3/31/96 27.84 29.55 -- -- + 6.14
------ ------
Total $0.610 Total $0.968
Cumulative total return as of 3/31/96: +37.15%**
<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>
Performance Summary--Class D Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <C> <C> <C> <C> <C>
10/21/94--12/31/94 $23.19 $22.35 $0.099 $0.353 - 1.64%
1995 22.35 28.29 0.511 0.770 +32.57
1/1/96--3/31/96 28.29 30.09 -- -- + 6.36
------ ------
Total $0.610 Total $1.123
Cumulative total return as of 3/31/96: +38.69%**
<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>
PORTFOLIO INFORMATION
Percent of
Ten Largest Stock Holdings Net Assets
Deere & Co. 2.9%
International Business Machines Corp. 2.8
Mobil Corp. 2.8
Citicorp 2.7
Royal Dutch Petroleum Co. (ADR) 2.2
Digital Equipment Corp. 2.1
Sears, Roebuck & Co. 2.1
General Motors Corp. 2.0
Exxon Corp. 1.9
Ford Motor Co. 1.9
Portfolio Changes for the Quarter Ended
March 31, 1996
<PAGE>
Additions
Hanson PLC (Sponsored) (ADR)
The Seagram Company Ltd.
Texas Instruments Inc.
Deletion
The Chase Manhattan Corp.
<TABLE>
SCHEDULE OF INVESTMENTS
<CAPTION>
Shares Percent of
Industry Held Stocks Cost Value Net Assets
<S> <C> <S> <C> <C> <C>
Discount from Book Value
Metals/Non-Ferrous 1,600,000 ASARCO Inc. $ 40,877,630 $ 55,999,999 0.8%
Insurance 260,000 American National Insurance Co. 9,749,442 17,549,999 0.2
Utilities--Electric 2,138,000 Entergy Corp. 46,832,554 59,863,999 0.8
Information Processing 3,600,000 Tandem Computers Inc. 44,473,814 31,950,000 0.4
-------------- -------------- ------
141,933,440 165,363,997 2.2
Below-Average Price/Earnings Ratio
Savings & Loans 2,000,000 Ahmanson (H.F.) & Co. 37,440,059 48,500,000 0.7
Insurance 3,100,000 The Allstate Corp. 67,424,755 130,587,500 1.8
Insurance 2,600,000 American General Corp. 56,042,709 89,700,000 1.2
Oil--International 877,213 The British Petroleum Co. PLC (ADR)* 49,101,366 93,203,881 1.3
Banking 2,500,000 Citicorp 73,009,932 200,000,000 2.7
Financial Services 700,000 Dean Witter, Discover & Co. 18,012,707 40,075,000 0.6
Farm & Construction
Equipment 5,000,000 Deere & Co. 104,072,898 208,750,000 2.9
Capital Goods 1,300,000 Eaton Corp. 66,591,554 78,325,000 1.1
Banking 700,000 First Interstate Bancorp 29,058,115 121,450,000 1.7
Automotive 4,000,000 Ford Motor Co. 96,915,202 137,500,000 1.9
Automotive 2,750,000 General Motors Corp. 119,654,913 146,437,500 2.0
Insurance 1,250,000 ITT Hartford Group Inc.*** 31,155,644 61,250,000 0.8
Machinery 1,250,000 ITT Industries Inc.*** 14,483,831 31,875,000 0.4
Machinery 1,600,000 Ingersoll-Rand Co. 49,039,024 65,200,000 0.9
Information Processing 1,850,000 International Business Machines Corp. 130,970,966 205,581,250 2.8
Paper & Forest Products 2,900,000 International Paper Co. 93,252,865 114,187,500 1.6
<PAGE>
Banking 1,600,000 NationsBank Corp. 66,516,217 128,200,000 1.8
Banking 2,500,000 Norwest Corp. 39,665,962 91,875,000 1.3
Insurance 1,400,000 PartnerRe Holdings Ltd. 29,498,937 41,475,000 0.5
Electrical Equipment 3,200,000 Philips Electronics N.V. 73,970,386 116,400,000 1.6
Financial Services 650,000 Student Loan Marketing Association 23,901,759 49,725,000 0.7
Telecommunications 1,400,000 Telefonica de Espana S.A. (ADR)* 42,507,830 66,500,000 0.9
Semiconductors 1,600,000 Texas Instruments Inc. 81,112,780 81,400,000 1.1
Insurance 1,700,000 Travelers Inc. 65,201,903 112,200,000 1.5
Steel 2,400,000 USX--US Steel Group 73,819,785 83,100,000 1.1
Chemicals 2,200,000 Union Carbide Corp. 53,793,906 109,175,000 1.5
Savings & Loans 1,400,000 Washington Mutual Savings Bank 23,454,491 41,650,000 0.6
-------------- -------------- ------
1,609,670,496 2,694,322,631 37.0
Above-Average Yield
Insurance 300,000 Aetna Life & Casualty Co. 13,569,933 22,650,000 0.3
Oil--Domestic 859,000 Atlantic Richfield Co. 88,316,091 102,221,000 1.4
Real Estate Investment Trust 700,000 Avalon Properties, Inc. 14,548,710 15,050,000 0.2
Telecommunications 1,400,000 Bell Atlantic Corp. 66,463,875 86,450,000 1.2
Pharmaceuticals 1,150,000 Bristol-Myers Squibb Co. 65,372,906 98,468,750 1.4
Utilities--Electric 1,000,000 CINergy Corp. 24,141,035 30,000,000 0.4
Oil--International 1,900,000 Chevron Corp. 67,152,594 106,637,500 1.5
Utilities--Electric 1,550,000 Consolidated Edison Co. of
New York, Inc. 37,135,209 49,406,250 0.7
Utilities--Electric 637,500 DPL Inc. 6,204,369 15,220,312 0.2
Oil--International 1,700,000 Exxon Corp. 100,843,515 138,762,500 1.9
Telecommunications 3,000,000 GTE Corp. 95,027,435 131,625,000 1.8
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Shares Percent of
Industry Held Stocks Cost Value Net Assets
<S> <C> <S> <C> <C> <C>
Above-Average Yield (concluded)
Conglomerates 3,500,000 Hanson PLC (Sponsored) (ADR)* $ 51,530,968 $ 52,500,000 0.7%
Chemicals 400,000 Imperial Chemical Industries
PLC (ADR)* 25,771,805 22,800,000 0.3
Real Estate Investment Trust 440,000 Irvine Apartment Communities, Inc. 7,758,147 8,415,000 0.1
Real Estate Investment Trust 820,000 Liberty Property Trust 16,510,230 16,912,500 0.2
Real Estate Investment Trust 500,000 The Mills Corp. 11,119,875 8,812,500 0.1
Utilities--Electric 1,100,000 NIPSCO Industries, Inc. 23,590,152 40,975,000 0.6
Oil--Domestic 3,400,000 Occidental Petroleum Corp. 72,508,904 90,950,000 1.3
Utilities--Electric 1,800,000 PECO Energy Co. 45,082,585 47,925,000 0.7
Tobacco 1,400,000 Philip Morris Cos. Inc. 77,947,435 122,850,000 1.7
<PAGE>
Utilities--Electric 1,700,000 Public Service Enterprise Group Inc. 45,761,886 46,750,000 0.6
Oil--International 1,150,000 Royal Dutch Petroleum Co. (ADR)* 82,945,123 162,437,500 2.2
Real Estate Investment Trust 1,600,000 Simon Property Group, Inc. 35,914,635 36,800,000 0.5
Real Estate Investment Trust 500,000 Summit Properties Inc. 9,602,500 10,000,000 0.1
Oil--International 1,450,000 Texaco Inc. 87,060,641 124,700,000 1.7
Utilities--Electric 1,300,000 Texas Utilities Co. 43,713,315 53,787,500 0.7
Telecommunications 2,600,000 U.S. West Communications Group**** 64,638,416 84,175,000 1.2
-------------- -------------- ------
1,280,232,289 1,727,281,312 23.7
Special Situations
Steel 4,000,000 Bethlehem Steel Corp. 58,791,345 52,500,000 0.7
Information Processing 800,000 Ceridian Corp. 12,036,569 34,400,000 0.5
Restaurants 2,000,000 Darden Restaurants, Inc. 20,441,741 27,000,000 0.4
Information Processing 1,570,000 Data General Corp. 21,268,247 22,961,250 0.3
Information Processing 2,800,000 Digital Equipment Corp. 110,168,537 154,350,000 2.1
Oil Services & Equipment 2,500,000 Dresser Industries, Inc. 50,259,610 76,250,000 1.0
Retail 1,800,000 Federated Department Stores, Inc. 44,021,515 58,050,000 0.8
Foods/Food Processing 1,350,000 General Mills, Inc. 62,379,617 78,806,250 1.1
Chemicals 1,500,000 Hercules Inc. 19,235,727 93,000,000 1.3
Entertainment 1,250,000 ITT Corp.*** 31,402,179 75,000,000 1.0
Retail Apparel 1,000,000 The Limited, Inc. 19,770,052 19,000,000 0.3
Pharmaceuticals 2,000,000 Merck & Co., Inc. 63,465,897 124,500,000 1.7
Oil--International 1,750,000 Mobil Corp. 104,088,282 202,781,250 2.8
Beverages 1,500,000 The Seagram Company Ltd. 49,928,316 48,562,500 0.7
Retail 3,100,000 Sears, Roebuck & Co. 61,630,328 151,125,000 2.1
Telecommunications 1,700,000 U.S. West Media Group**** 24,221,802 35,062,500 0.5
Information Processing 5,300,000 Unisys Corp. 58,650,167 31,800,000 0.4
Aerospace & Defense 400,000 United Technologies Corp. 20,081,749 44,900,000 0.6
Retail 4,250,000 Woolworth Corp. 59,770,846 66,406,250 0.9
Pharmaceuticals 440,000 Zeneca Group PLC (ADR)* 12,980,000 28,050,000 0.4
-------------- -------------- ------
904,592,526 1,424,505,000 19.6
Total Stocks 3,936,428,751 6,011,472,940 82.5
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Face Percent of
Amount Issue Cost Value Net Assets
<S> <C> <S> <C> <C> <C>
Short-Term Securities
<PAGE>
Commercial Paper** $35,000,000 ANZ (Delaware) Inc., 5.10% due
4/22/1996 $ 34,881,000 $ 34,881,000 0.5%
AT&T Capital Corp.:
30,000,000 5.15% due 4/03/1996 29,978,542 29,978,542 0.4
45,000,000 5.29% due 4/23/1996 44,834,688 44,834,688 0.6
40,000,000 BellSouth Telecommunications
Inc., 5.24% due 5/03/1996 39,796,222 39,796,222 0.6
50,000,000 CIT Group Holdings, Inc., 5.22%
due 5/10/1996 49,695,500 49,695,500 0.7
Ciesco, L.P.:
25,000,000 5.15% due 4/04/1996 24,978,542 24,978,542 0.4
30,000,000 5.20% due 5/01/1996 29,857,000 29,857,000 0.4
50,000,000 Dean Witter, Discover & Co., 5.35%
due 5/03/1996 49,739,931 49,739,931 0.7
du Pont (E.I.) de Nemours & Co:
30,000,000 5.11% due 4/02/1996 29,982,967 29,982,967 0.4
40,000,000 5.13% due 4/19/1996 39,880,300 39,880,300 0.6
50,000,000 5.15% due 4/19/1996 49,849,792 49,849,792 0.7
61,443,000 General Electric Capital Corp.,
5.50% due 4/01/1996 61,414,839 61,414,839 0.8
Goldman Sachs Group, L.P.:
30,000,000 5.17% due 4/02/1996 29,982,767 29,982,767 0.4
40,000,000 5.30% due 4/16/1996 39,894,000 39,894,000 0.5
70,000,000 Matterhorn Capital Corp., 5.18%
due 4/04/1996 69,939,567 69,939,567 1.0
25,000,000 Morgan (J.P.) & Company, Inc.,
5.20% due 4/08/1996 24,963,889 24,963,889 0.3
50,000,000 Morgan Stanley Group Inc., 5.20%
due 4/04/1996 49,956,667 49,956,667 0.7
30,000,000 Motorola Inc., 5.15% due 4/01/1996 29,987,125 29,987,125 0.4
National Australia Funding
(Delaware), Inc.:
50,000,000 5.22% due 4/10/1996 49,913,000 49,913,000 0.7
50,000,000 5.22% due 4/11/1996 49,905,750 49,905,750 0.7
PHH Corp.:
25,000,000 5.21% due 4/02/1996 24,985,528 24,985,528 0.3
25,000,000 5.10% due 4/09/1996 24,961,042 24,961,042 0.3
45,000,000 5.33% due 5/10/1996 44,720,175 44,720,175 0.6
30,000,000 Pitney Bowes Credit Corp., 5.25%
due 5/07/1996 29,829,375 29,829,375 0.4
30,000,000 Preferred Receivables Funding Corp.,
5.35% due 4/16/1996 29,919,750 29,919,750 0.4
50,000,000 Sheffield Receivables Corp., 5.32%
due 4/15/1996 49,874,389 49,874,389 0.7
50,000,000 Shell Oil Co., 5.32% due 4/26/1996 49,793,111 49,793,111 0.7
50,000,000 UBS Finance Delaware Inc., 5.28%
due 4/18/1996 49,853,333 49,853,333 0.7
40,000,000 Xerox Corp., 5.13% due 4/09/1996 39,937,300 39,937,300 0.5
-------------- -------------- ------
1,173,306,091 1,173,306,091 16.1
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded)
<CAPTION>
Face Percent of
Amount Issue Cost Value Net Assets
<S> <C> <S> <C> <C> <C>
Short-Term Securities (concluded)
US Government & Agency $20,000,000 Federal Home Loan Bank, 5.12%
Obligations** due 4/01/1996 $ 19,991,467 $ 19,991,467 0.3%
Federal National Mortgage
Association:
35,000,000 5.07% due 4/04/1996 34,970,425 34,970,425 0.5
50,000,000 5.16% due 4/10/1996 49,914,000 49,914,000 0.7
-------------- -------------- ------
104,875,892 104,875,892 1.5
Total Short-Term Securities 1,278,181,983 1,278,181,983 17.6
Total Investments $5,214,610,734 7,289,654,923 100.1
==============
Liabilities in Excess of Other Assets (6,848,590) (0.1)
-------------- ------
Net Assets $7,282,806,333 100.0%
============== ======
Net Asset Value: Class A--Based on net assets of $3,533,740,550
and 117,284,795 shares outstanding $ 30.13
==============
Class B--Based on net assets of $3,184,348,828
and 107,058,012 shares outstanding $ 29.74
==============
Class C--Based on net assets of $179,817,084
and 6,085,945 shares outstanding $ 29.55
==============
Class D--Based on net assets of $384,899,871
and 12,791,941 shares outstanding $ 30.09
==============
<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.
***On December 20, 1995, ITT Corp. split into three separate
entities: ITT Corp., ITT Industries, Inc., and ITT Hartford Group,
Inc.
****On November 1, 1995, U.S. West Inc. spun off U.S. West Media
Group, and changed its name to U.S. West Communications Group.
</TABLE>
<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, New York 10286
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
