MERRILL LYNCH
BASIC VALUE
FUND, INC.
FUND LOGO
Quarterly Report
September 30, 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
Printed on post-consumer recycled paper
MERRILL LYNCH BASIC VALUE FUND, INC.
TO OUR SHAREHOLDERS
Although the US stock and bond markets rallied as the September
quarter drew to a close, much of the period was marked by volatility
in the capital markets. The US economy demonstrated surprising
resilience during the first half of the year. As a result, when
economic data releases appeared to indicate that the US economy was
expanding at a stronger-than-expected (and potentially inflationary)
rate, investors focused on the increasing possibility of monetary
policy tightening by the Federal Reserve Board. During these
periods, stock prices declined and long-term interest rates moved
higher. However, with inflationary pressures still under control,
the US central bank did not tighten monetary policy at its September
24 meeting. This development, coupled with several economic data
releases that showed growth was at or below expectations, helped to
assuage investors' concerns about an overheating economy. Stock and
bond prices improved, with stock market averages reaching historic
high levels.
The shifts in perceptions were exemplified by investors' reactions
to the release of recent employment reports. Inflationary concerns
were heightened in early July with the release of a stronger-than-
expected employment report for June. However, more subdued job
growth and decelerating hourly wage gains were subsequently reported
for the month of July. Although the employment report for August
showed that unemployment had dropped to its lowest level since 1989,
these results were generally in line with expectations, and were
received favorably by investors. The greatest boost in investor
confidence occurred in early October with the release of September's
employment report, which showed a slight increase in unemployment.
<PAGE>
Investors will continue to monitor economic data releases to
determine the probable direction of the US economy. The outcome of
the upcoming November election will also increasingly influence
investor psychology in the weeks ahead.
Portfolio Matters
Security purchases in the quarter ended September 30, 1996 amounted
to $523 million, while equity sales totaled $149 million. New assets
invested by shareholders in the Fund during the quarter were $331
million, with net assets exceeding $7.9 billion by September 30,
1996. The Fund's cash position at September 30, 1996 was 16.8% of
net assets, down from 18.7% at the close of the June quarter.
The large disparity between equity purchases and sales ($374
million) during the September quarter was a result of the weakness
in stock prices that developed in July. The decline in equity values
created some attractive buying opportunities, and we took advantage
of the downturn to add to 35 existing positions and establish one
major new commitment, du Pont (E.I.) de Nemours & Co.
Du Pont, the largest chemical manufacturer in the United States,
came under pressure in July and we initiated a position at an entry
price that provided us with an above-average 3% yield and a well
below-average price/earnings ratio of about 12 times estimated 1996
earnings per share and under 11 times projected 1997 profits. In
addition to their broad-based worldwide manufacturing operations, du
Pont owns Conoco, a large, integrated oil company which may
eventually be sold or spun-out to shareholders.
Our largest industry purchases during the quarter were again in the
energy area, with major increases in Exxon Corp., Royal Dutch
Petroleum Co. and Mobil Corp. Energy additions accounted for 17% of
our third-quarter purchases as we added to eight existing positions.
Energy holdings now account for 16% of Merrill Lynch Basic Value
Fund Inc.'s net assets. We continue to believe that oil issues offer
attractive value characteristics in an overall stock market that is
selling at historically high valuations.
Twelve percent of our third-quarter purchases were utilized for
enhancing positions in the automotive area, with increases in both
General Motors Corp. and Ford Motor Co. These issues have
underperformed the US stock market all year, despite what we regard
as reasonable fundamentals and generally favorable outlooks. In our
opinion, the stocks were overlooked because of investors' prevailing
obsession with "growth" stocks. We believe this will change, as all
market obsessions eventually do, and "value" issues such as autos
could benefit. In the meantime, both Ford Motor Co. and General
Motors Corp. provide above-average yields which cushion the wait.
<PAGE>
Other significant increases that were initiated on price weakness
during the quarter included Philip Morris Cos., Inc., Sears, Roebuck
& Co., ITT Industries Inc., and Digital Equipment Corp. Overall,
during the September quarter we added to 11 of our 15 largest
positions.
On the sell side, we eliminated the final portion of Ceridian Corp.
at a substantial profit as the stock's valuations appeared
excessive. Major partial sales included reductions in NationsBank
Corp. and Wells Fargo & Company. We remain enthusiastic about bank
holdings, which remain at 6.5% of the portfolio's holding, but
concluded that some profit-taking was prudent.
In Conclusion
The market volatility that we experienced in the third quarter is
likely to continue. Volatility in stock prices creates opportunities,
and we will attempt to capitalize on this anticipated unsettling
market environment. As always, your Fund remains undervalued
relative to the stock market.
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
<PAGE>
October 8, 1996
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
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:
* 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.
<PAGE>
* Class B Shares are subject to a maximum contingent deferred sales
charge of 4% if redeemed during the first year, decreasing 1% each
year thereafter to 0% after the fourth year. In addition, Class B
Shares are subject to a distribution fee of 0.75% and an account
maintenance fee of 0.25%. These shares automatically convert to
Class D Shares after approximately 8 years. (There is no initial
sales charge for automatic share conversions.)
* 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>
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--9/30/96 28.31 29.52 0.983 0.390 + 9.28
------- -------
Total $13.403 Total $13.139
<PAGE>
Cumulative total return as of 9/30/96: +1,548.90%**
<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>
PERFORMANCE DATA (continued)
<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--9/30/96 28.02 29.12 0.983 0.247 + 8.45
------ ------
Total $4.482 Total $4.728
Cumulative total return as of 9/30/96: +137.61%**
<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 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--9/30/96 27.84 28.89 0.983 0.270 + 8.41
------ ------
Total $1.593 Total $1.238
Cumulative total return as of 9/30/96: +40.08%**
<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>
<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--9/30/96 28.29 29.48 0.983 0.357 + 9.10
------ ------
Total $1.593 Total $1.480
Cumulative total return as of 9/30/96: +42.25%**
<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>
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)
<PAGE>
A mountain chart depicting the growth of an investment in the Fund's Class A
Shares from $947.50 on July 1, 1977 to $15,623.33 on September 30, 1996.
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 9/30/96 +15.32% + 9.27%
Five Years Ended 9/30/96 +15.53 +14.29
Ten Years Ended 9/30/96 +13.20 +12.59
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 9/30/96 +14.17% +10.17%
Five Years Ended 9/30/96 +14.36 +14.36
Inception (10/21/88) through 9/30/96 +11.51 +11.51
[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 9/30/96 +14.15% +13.15%
Inception (10/21/94)
through 9/30/96 +18.92 +18.92
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
<PAGE>
% Return Without % Return With
Sales Charge Sales Charge**
Class D Shares*
Year Ended 9/30/96 +15.05% + 9.01%
Inception (10/21/94)
through 9/30/96 +19.86 +16.59
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
PERFORMANCE DATA (concluded)
<TABLE>
Recent Performance Results
<CAPTION>
12 Month 3 Month
9/30/96 6/30/96 9/30/95 % Change % Change
<S> <C> <C> <C> <C> <C>
ML Basic Value Fund Class A Shares* $29.52 $30.22 $27.54 +12.05%(1) +1.04%(2)
ML Basic Value Fund Class B Shares* 29.12 29.76 27.20 +11.97(1) +1.25(2)
ML Basic Value Fund Class C Shares* 28.89 29.56 27.04 +11.78(1) +1.16(2)
ML Basic Value Fund Class D Shares* 29.48 30.16 27.51 +12.02(1) +1.11(2)
Dow Jones Industrial Average** 5,882.17 5,654.63 4,789.08 +22.82 +4.02
Standard & Poor's 500 Index** 687.31 670.63 584.41 +17.61 +2.49
ML Basic Value Fund Class A Shares--Total Return* +15.32(3) +2.37(4)
ML Basic Value Fund Class B Shares--Total Return* +14.17(5) +2.11(6)
ML Basic Value Fund Class C Shares--Total Return* +14.15(7) +2.10(8)
ML Basic Value Fund Class D Shares--Total Return* +15.05(9) +2.33(10)
Dow Jones Industrial Average--Total Return** +25.68 +4.62
Standard & Poor's 500 Index--Total Return** +20.31 +3.08
<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 $1.281 per share capital
gains distributions.
(2)Percent change includes reinvestment of $0.983 per share capital
gains distributions.
(3)Percent change includes reinvestment of $0.840 per share ordinary
income dividends and $1.281 per share capital gains distributions.
(4)Percent change includes reinvestment of $0.390 per share ordinary
income dividends and $0.983 per share capital gains distributions.
(5)Percent change includes reinvestment of $0.560 per share ordinary
income dividends and $1.281 per share capital gains distributions.
(6)Percent change includes reinvestment of $0.247 per share ordinary
income dividends and $0.983 per share capital gains distributions.
(7)Percent change includes reinvestment of $0.599 per share ordinary
income dividends and $1.281 per share capital gains distributions.
(8)Percent change includes reinvestment of $0.270 per share ordinary
income dividends and $0.983 per share capital gains distributions.
(9)Percent change includes reinvestment of $0.776 per share ordinary
income dividends and $1.281 per share capital gains distributions.
(10)Percent change includes reinvestment of $0.357 per share
ordinary income dividends and $0.983 per share capital gains
distributions.
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS
<CAPTION>
Shares Percent of
Industry Held Stocks Cost Value Net Assets
Low Price to Book Value
<S> <C> <S> <C> <C> <C>
Metals/Non-Ferrous 1,600,000 ASARCO Inc. $ 40,877,630 $ 42,600,000 0.5%
Savings & Loans 1,900,000 Ahmanson (H.F.) & Co. 35,849,422 53,200,000 0.7
Insurance 3,100,000 The Allstate Corp. 67,424,755 152,675,000 1.9
Insurance 2,600,000 American General Corp. 56,042,709 98,150,000 1.2
Insurance 260,000 American National Insurance Co. 9,749,442 17,680,000 0.2
Steel 4,000,000 Bethlehem Steel Corp. 58,791,345 40,000,000 0.5
Restaurants 2,900,000 Darden Restaurants, Inc. 27,882,673 25,012,500 0.3
Information Processing 1,570,000 Data General Corp. 21,268,247 21,980,000 0.3
Information Processing 3,400,000 Digital Equipment Corp. 134,953,667 121,550,000 1.5
Utilities--Electric 2,500,000 Entergy Corp. 56,597,248 67,500,000 0.9
Retail 2,700,000 Federated Deptartment Stores, Inc. 73,880,779 90,450,000 1.1
Conglomerates 4,800,000 Hanson PLC (ADR)* 69,841,760 59,400,000 0.7
Entertainment 1,700,000 ITT Corp. 51,222,199 74,162,500 0.9
Insurance 1,250,000 ITT Hartford Group Inc. 31,155,644 73,750,000 0.9
Chemicals 400,000 Imperial Chemical Industries PLC (ADR)* 25,771,805 21,100,000 0.3
Paper & Forest Products 3,000,000 International Paper Co. 97,036,675 127,500,000 1.6
Insurance 1,400,000 PartnerRe Holdings Ltd. 29,498,937 39,725,000 0.5
Trucking 1,000,000 Scania AB (Class A) (ADR)* 28,093,817 27,000,000 0.3
Trucking 500,000 Scania AB (Class B) (ADR)* 13,565,869 13,500,000 0.2
Information Processing 3,400,000 Tandem Computers Inc. 42,086,495 36,550,000 0.5
Electronics 1,500,000 Tektronix, Inc. 58,632,719 61,312,500 0.8
Insurance 2,550,000 Travelers Inc. 65,201,903 125,268,750 1.6
Telecommunications 1,700,000 US West Media Group 24,221,802 28,687,500 0.4
Steel 2,800,000 USX--US Steel Group 84,637,669 79,800,000 1.0
Savings & Loans 900,000 Washington Mutual Savings Bank 17,964,266 33,525,000 0.4
-------------- -------------- ------
1,222,249,477 1,532,078,750 19.2
<PAGE>
Below-Average Price/Earnings Ratio
Banking 2,500,000 Citicorp 73,009,932 226,562,500 2.8
Financial Services 400,000 Dean Witter, Discover & Co. 10,659,960 22,000,000 0.3
Farm & Construction
Equipment 4,800,000 Deere & Co. 100,712,804 201,600,000 2.5
Chemicals 1,275,000 du Pont (E.I.) de Nemours & Co. 96,720,608 112,518,750 1.4
Capital Goods 1,400,000 Eaton Corp. 72,067,416 84,525,000 1.1
Automotive 4,700,000 Ford Motor Co. 124,207,785 146,875,000 1.8
Automotive 3,300,000 General Motors Corp. 149,055,283 158,400,000 2.0
Machinery 2,650,000 ITT Industries Inc. 47,867,657 63,931,250 0.8
Information Processing 1,950,000 International Business Machines Corp. 143,281,294 242,775,000 3.1
Banking 1,200,000 NationsBank Corp. 46,863,800 104,250,000 1.3
Banking 3,100,000 Norwest Corp. 60,238,432 126,712,500 1.6
Tobacco 1,550,000 Philip Morris Cos. Inc. 99,467,815 139,112,500 1.8
Electrical Equipment 3,500,000 Philips Electronics N.V. (ADR)* 84,649,762 125,562,500 1.6
Retail 3,600,000 Sears, Roebuck & Co. 84,221,405 161,100,000 2.0
Financial Services 360,000 Student Loan Marketing Association 13,274,390 26,865,000 0.3
Telecommunications 1,250,000 Telefonica de Espana S.A. (ADR)* 38,741,080 69,531,250 0.9
Chemicals 2,600,000 Union Carbide Corp. 78,119,781 118,625,000 1.5
Information Processing 5,600,000 Unisys Corp. 60,913,547 34,300,000 0.4
Retail Apparel 4,250,000 Woolworth Corp. 59,770,846 87,656,250 1.1
-------------- -------------- ------
1,443,843,597 2,252,902,500 28.3
</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>
Oil--Domestic 930,000 Atlantic Richfield Co. $ 96,691,447 $ 118,575,000 1.5%
Real Estate Investment
Trust 700,000 Avalon Properties, Inc. 14,323,870 16,275,000 0.2
Telecommunications 1,500,000 Bell Atlantic Corp. 72,369,965 89,812,500 1.1
Pharmaceuticals 1,150,000 Bristol-Myers Squibb Co. 65,372,906 110,831,250 1.4
Oil--International 892,804 The British Petroleum Co. PLC (ADR)* 50,689,573 111,600,500 1.4
Utilities--Electric 1,400,000 CINergy Corp. 36,103,137 43,225,000 0.5
Oil--International 2,200,000 Chevron Corp. 84,879,829 137,775,000 1.7
Utilities--Electric 1,650,000 Consolidated Edison Co. of New York, Inc. 39,941,210 45,787,500 0.6
Utilities--Electric 637,500 DPL Inc. 6,204,369 14,901,562 0.2
Oil--International 2,100,000 Exxon Corp. 134,198,915 174,825,000 2.2
Telecommunications 3,300,000 GTE Corp. 107,131,875 127,050,000 1.6
Foods/Food Processing 1,450,000 General Mills, Inc. 67,972,787 87,543,750 1.1
Real Estate Investment
Trust 440,000 Irvine Apartment Communities, Inc. 7,299,447 9,735,000 0.1
Real Estate Investment
Trust 820,000 Liberty Property Trust 16,038,839 17,835,000 0.2
Real Estate Investment
Trust 500,000 The Mills Corp. 11,119,875 9,875,000 0.1
Oil--International 1,900,000 Mobil Corp. 120,904,758 219,925,000 2.8
Utilities--Electric 1,200,000 NIPSCO Industries, Inc. 27,387,777 42,900,000 0.5
Oil--Domestic 3,900,000 Occidental Petroleum Corp. 84,236,665 91,162,500 1.1
Utilities--Electric 1,900,000 PECO Energy Co. 47,700,965 45,125,000 0.6
Utilities--Electric 1,800,000 Public Service Enterprise Group Inc. 48,476,636 48,150,000 0.6
Oil--International 1,275,000 Royal Dutch Petroleum Co. (ADR)* 102,034,053 199,059,375 2.5
Real Estate Investment
Trust 1,600,000 Simon DeBartolo Group, Inc. (a) 35,365,609 40,800,000 0.5
Real Estate Investment
Trust 500,000 Summit Properties Inc. 9,407,600 9,875,000 0.1
Oil--International 1,600,000 Texaco Inc. 101,797,471 147,200,000 1.9
Utilities--Electric 1,500,000 Texas Utilities Co. 51,841,315 59,437,500 0.8
Telecommunications 2,850,000 US West Communications Group 72,098,667 84,787,500 1.1
-------------- -------------- ------
1,511,589,560 2,104,068,937 26.4
<PAGE>
Special Situations
Oil Services & Equipment 2,450,000 Dresser Industries, Inc. 50,686,268 72,887,500 0.9
Chemicals 1,500,000 Hercules Inc. 19,235,727 82,125,000 1.0
Machinery 2,100,000 Ingersoll-Rand Co. 69,523,571 99,750,000 1.3
Pharmaceuticals 1,800,000 Merck & Co., Inc. 57,303,897 126,675,000 1.6
Semiconductors 2,400,000 Micron Technology, Inc. 73,566,240 73,200,000 0.9
Beverages 2,200,000 The Seagram Company Ltd. 73,951,621 82,225,000 1.1
Semiconductors 2,000,000 Texas Instruments, Inc. 99,840,834 110,250,000 1.4
Banking 220,000 Wells Fargo & Company 18,952,111 57,200,000 0.7
Pharmaceuticals 440,000 Zeneca Group PLC (ADR)* 12,980,000 32,670,000 0.4
-------------- -------------- ------
476,040,269 736,982,500 9.3
Total Stocks 4,653,722,903 6,626,032,687 83.2
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Face Percent of
Amount Issue Cost Value Net Assets
<PAGE>
Short-Term Securities
<S> <C> <S> <C> <C> <C>
Commercial Paper** $ 25,000,000 Banc One Corporation, 5.39% due
11/08/1996 $ 24,854,021 $ 24,854,021 0.3%
CIT Group Holdings, Inc. (The):
50,000,000 5.27% due 10/07/1996 49,948,764 49,948,764 0.6
50,000,000 5.38% due 11/05/1996 49,731,000 49,731,000 0.6
25,000,000 5.34% due 11/15/1996 24,829,417 24,829,417 0.3
50,000,000 5.30% due 11/22/1996 49,609,861 49,609,861 0.6
CSW Credit, Inc.:
22,800,000 5.31% due 10/02/1996 22,793,274 22,793,274 0.3
20,000,000 5.37% due 10/28/1996 19,916,467 19,916,467 0.3
37,700,000 5.33% due 11/14/1996 37,448,824 37,448,824 0.5
20,000,000 Deer Park Refining L.P., 5.37% due
10/15/1996 19,955,250 19,955,250 0.3
150,000,000 Delaware Funding Corp., 5.35% due
10/15/1996 149,665,625 149,665,625 1.9
du Pont (E.I.) de Nemours & Co.:
50,000,000 5.27% due 10/04/1996 49,970,722 49,970,722 0.6
50,000,000 5.28% due 10/24/1996 49,824,000 49,824,000 0.6
50,000,000 5.38% due 11/04/1996 49,738,472 49,738,472 0.6
100,000,000 5.38% due 11/05/1996 99,462,000 99,462,000 1.3
125,000 Falcon Asset Securization Corp., 5.34%
due 10/10/1996 124,815 124,815 0.0
38,450,000 General Electric Capital Corp., 5.80%
due 10/01/1996 38,443,805 38,443,805 0.5
Goldman Sachs Group, L.P.:
50,000,000 5.30% due 10/29/1996 49,786,528 49,786,528 0.6
50,000,000 5.40% due 11/04/1996 49,737,500 49,737,500 0.6
50,000,000 Hewlett-Packard Company, 5.35% due
10/30/1996 49,777,083 49,777,083 0.6
5,000,000 IBM Credit Corp., 5.34% due 11/15/1996 4,965,883 4,965,883 0.1
International Securitization Corp.:
50,000,000 5.42% due 10/21/1996 49,841,917 49,841,917 0.6
50,000,000 5.50% due 10/22/1996 49,831,944 49,831,944 0.6
20,736,000 Monsanto Company, 5.30% due 10/08/1996 20,711,578 20,711,578 0.3
50,000,000 Morgan (J.P.) & Company, Inc., 5.39% due
11/08/1996 49,708,042 49,708,042 0.6
National Fleet Funding Corp.:
30,000,000 5.30% due 10/15/1996 29,933,750 29,933,750 0.4
20,000,000 5.36% due 11/13/1996 19,868,978 19,868,978 0.3
30,847,000 Norfolk Southern Corporation, 5.40% due
11/04/1996 30,685,053 30,685,053 0.4
50,000,000 Procter & Gamble Company (The), 5.38%
due 11/01/1996 49,760,889 49,760,889 0.6
35,000,000 USAA Capital Corp., 5.37% due 11/05/1996 34,812,050 34,812,050 0.4
50,000,000 Xerox Corporation, 5.28% due 10/08/1996 49,941,333 49,941,333 0.6
-------------- -------------- ------
1,275,678,845 1,275,678,845 16.0
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded)
<CAPTION>
Face Percent of
Amount Issue Cost Value Net Assets
Short-Term Securities (concluded)
<S> <C> <S> <C> <C> <C>
US Government & $ 12,450,000 Federal Home Loan Mortgage Corp.,
Agency Obligations** 5.20% ue 10/07/1996 $ 12,437,412 $ 12,437,412 0.2%
50,000,000 Federal National Mortgage Association,
5.32% due 10/01/1996 49,992,611 49,992,611 0.6
-------------- -------------- ------
62,430,023 62,430,023 0.8
Total Short-Term Securities 1,338,108,868 1,338,108,868 16.8
Total Investments $5,991,831,771 7,964,141,555 100.0
==============
Liabilities in Excess of Other Assets (1,166,345) 0.0
-------------- ------
Net Assets $7,962,975,210 100.0%
============== ======
Net Asset Value: Class A--Based on net assets of $3,865,472,535 and
30,930,371 shares outstanding $ 29.52
==============
Class B--Based on net assets of $3,391,625,919 and
6,477,654 shares outstanding $ 29.12
==============
Class C--Based on net assets of $239,338,313 and
8,284,446 shares outstanding $ 28.89
==============
Class D--Based on net assets of $466,538,443 and
5,827,457 shares outstanding $ 29.48
==============
<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.
(a)On August 12, 1996, Simon Property Group, Inc. merged with
DeBartolo Realty Corp.
</TABLE>
PORTFOLIO INFORMATION
<PAGE>
Percent of
Ten Largest Stock Holdings Net Assets
International Business Machines Corp. 3.1%
Citicorp 2.8
Mobil Corp. 2.8
Deere & Co. 2.5
Royal Dutch Petroleum Co. (ADR) 2.5
Exxon Corp. 2.2
Sears, Roebuck & Co. 2.0
General Motors Corp. 2.0
The Allstate Corp. 1.9
Texaco Inc. 1.9
Portfolio Changes for the Quarter Ended
September 30, 1996
Addition
du Pont (E.I.) de Nemours & Co.
Deletion
Ceridian Corp.
