MERRILL LYNCH
BASIC VALUE
FUND, INC.
FUND LOGO
Semi-Annual Report
December 31, 1995
This report is not authorized for use as an offer of sale or a
solicitation of an offer to buy shares of the Fund unless
accompanied or preceded by the Fund's current prospectus. Past
performance results shown in this report should not be considered a
representation of future performance. Investment return and
principal value of shares will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
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 drew to a close, the pace of US economic activity apparently
slowed. There was strong evidence of a slowing economy by mid-year,
a trend that was quickly reversed as gross domestic product growth
rebounded to a 4.2% pace during the third calendar quarter of 1995.
However, recent economic releases suggest that this rate of
expansion has not been sustained.
A number of key measures of economic growth indicate evidence of
slowing momentum. Retail sales for November were soft, a trend that
continued throughout the all-important holiday season, reflecting
ongoing caution on the part of debt-burdened consumers. At the same
time, there has been an increase in initial unemployment claims,
along with weak job and income growth. As labor costs continue to
decelerate and commodity price pressures remain subdued,
inflationary pressures continue to be well under control.
These developments led the Federal Reserve Board to ease its
monetary policy slightly at the December 19, 1995 Federal Open
Market Committee meeting. However, the Clinton Administration and
Congress have yet to reach an agreement in their current Federal
budget deliberations. While the probable direction of economic
activity will continue to be the primary focus of investors in the
weeks ahead, a credible plan for reducing the Federal budget deficit
will also be an important factor in the investment outlook.
Portfolio Matters
Security purchases during the final quarter of 1995 amounted to $218
million, while equity sales totaled $243 million. This was the first
time in a number of years that quarterly sales exceeded purchases.
This was a result of a major reduction in First Interstate Bancorp,
our tenth-largest holding at the end of the September quarter. The
company received an unsolicited take-over bid from Wells Fargo and
instantly advanced in price by about 40%. We felt that prudence
mandated the sale of nearly half of our position. This transaction
accounted for 30% of our security sales in the December quarter.
<PAGE>
Other important sales during the December quarter included partial
reductions in two more of our ten largest holdings, Deere & Co. and
Citicorp. Both stocks continue to be top ten commitments that were
purchased when they were out of favor. Now that both are popular,
and in favor, we concluded some partial profit-taking was called
for. Overall, we reduced positions in 13 holdings, with the
aforementioned three being the largest reductions. A major
elimination in the fourth quarter was Kmart Corp., a troubled
retailer that we sold in October at a substantial loss as we became
concerned about the company's prospects.
On the buy side in the fourth quarter, we added to 16 established
positions, accounting for 80% of our purchases, with an industry
emphasis on energy, chemicals, telephones, and steel. We added one
significant new position late in the final quarter of 1995,
Woolworth Corp. The relatively new management from outside the
company is almost totally revamping decades-old systems and
policies. The stock price has been more than cut in half during the
past few years in a period of generally higher equity prices. There
are some early signs that the new management will be successful, and
we think the risk/reward relationship is favorable.
One might question why sell one troubled retailer (Kmart Corp.) and
buy another (Woolworth Corp.). Other than both operating in a
currently difficult environment, we feel the similarities are
minimal, and that Woolworth's long-term profit potential is
superior.
Our cash position increased in the fourth quarter to 17.6% of net
assets from 15.2% at the end of September, reflecting the excess of
security sales over purchases and the net inflow of $180 million of
new money into the Fund. For the full year 1995, security purchases
exceeded $1.1 billion, with security sales amounting to $551
million. Net new assets invested in the Fund amounted to $878
million, and Fund assets increased by over 50% from $4.2 billion at
the end of 1994 to over $6.5 billion at year-end 1995.
In Conclusion
Stock market returns in 1995 were among the highest in decades, and
exceeded even the most optimistic projections. We have expressed
caution for a considerable period, and have been quite premature.
Despite this caution, and the Fund's high cash position, our returns
have been competitive. We expect more market volatility in 1996 than
was evident in 1995, and we will attempt to capitalize on both
buying opportunities and periods of strength to secure profits.
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.
<PAGE>
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Paul M. Hoffmann)
Paul M. Hoffmann
Vice President and Portfolio Manager
January 15, 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:
* 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.
<PAGE>
* 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
12/31/95 9/30/95 12/31/94 % Change % Change
<S> <C> <C> <C> <C> <C>
ML Basic Value Fund Class A Shares* $28.31 $27.54 $22.35 +29.04%(1) +3.89%(2)
ML Basic Value Fund Class B Shares* 28.02 27.20 22.15 +28.89(1) +4.12(2)
ML Basic Value Fund Class C Shares* 27.84 27.04 22.07 +28.55(1) +4.07(2)
ML Basic Value Fund Class D Shares* 28.29 27.51 22.35 +28.95(1) +3.93(2)
Dow Jones Industrial Average** 5,117.12 4,789.08 3,834.44 +33.45 +6.85
Standard & Poor's 500 Index** 615.93 584.41 459.27 +34.11 +5.39
ML Basic Value Fund Class A Shares--Total Return* +32.90(3) +5.53(4)
ML Basic Value Fund Class B Shares--Total Return* +31.60(5) +5.28(6)
ML Basic Value Fund Class C Shares--Total Return* +31.59(7) +5.29(8)
ML Basic Value Fund Class D Shares--Total Return* +32.57(9) +5.46(10)
Dow Jones Industrial Average--Total Return** +36.92 +7.49
Standard & Poor's 500 Index--Total Return** +37.54 +6.01
<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 $0.298 per share capital
gains distributions.
(3)Percent change includes reinvestment of $0.820 per share ordinary
income dividends and $0.511 per share capital gains distributions.
(4)Percent change includes reinvestment of $0.450 per share ordinary
income dividends and $0.298 per share capital gains distributions.
<PAGE>
(5)Percent change includes reinvestment of $0.571 per share ordinary
income dividends and $0.511 per share capital gains distributions.
(6)Percent change includes reinvestment of $0.313 per share ordinary
income dividends and $0.298 per share capital gains distributions.
(7)Percent change includes reinvestment of $0.639 per share ordinary
income dividends and $0.511 per share capital gains distributions.
(8)Percent change includes reinvestment of $0.329 per share ordinary
income dividends and $0.298 per share capital gains distributions.
(9)Percent change includes reinvestment of $0.770 per share ordinary
income dividends and $0.511 per share capital gains distributions.
(10)Percent change includes reinvestment of $0.419 per share
ordinary income dividends and $0.298 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 $14,296.92 on December
31, 1995.
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 12/31/95 +32.90% +25.92%
Five Years Ended 12/31/95 +18.37 +17.10
Ten Years Ended 12/31/95 +13.62 +13.01
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
<PAGE>
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 12/31/95 +31.60% +27.60%
Five Years Ended 12/31/95 +17.17 +17.17
Inception (10/21/88) through 12/31/95 +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 12/31/95 +31.59% +30.59%
Inception (10/21/94)
through 12/31/95 +23.93 +23.93
[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 12/31/95 +32.57% +25.61%
Inception (10/21/94)
through 12/31/95 +24.88 +19.37
[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**
<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
1995 22.35 28.31 0.511 0.820 +32.90
------- -------
Total $12.420 Total $12.749
Cumulative total return as of 12/31/95: +1,408.91%**
<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**
<C> <C> <C> <C> <C> <C>
10/21/88-12/31/88 $18.78 $17.89 $0.352 $0.361 - 0.91%
1989 17.89 19.83 0.226 0.756 +16.33
1990 19.83 16.01 0.303 0.781 -13.92
1991 16.01 19.25 0.272 0.583 +25.91
1992 19.25 20.21 0.325 0.481 + 9.24
1993 20.21 23.19 0.726 0.484 +20.93
1994 23.19 22.15 0.784 0.464 + 0.88
1995 22.15 28.02 0.511 0.571 +31.60
------ ------
Total $3.499 Total $4.481
Cumulative total return as of 12/31/95: +119.10%**
<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**
<C> <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
------ ------
Total $0.610 Total $0.968
Cumulative total return as of 12/31/95: +29.21%**
<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**
<C> <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
------ ------
Total $0.610 Total $1.123
Cumulative total return as of 12/31/95: +30.40%**
<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
Mobil Corp. 2.8%
Royal Dutch Petroleum Co. (ADR) 2.8
Deere & Co. 2.7
Citicorp 2.6
International Business Machines Corp. 2.5
Digital Equipment Corp. 2.4
Philip Morris Cos. Inc. 2.2
General Motors Corp. 2.2
Merck & Co., Inc. 2.0
Sears, Roebuck & Co. 2.0
Portfolio Changes for the Quarter Ended
December 31, 1995
Additions
*Canadian National Railway Co.
**Transport Holdings Inc. (Class A)
Woolworth Corp.
<PAGE>
Deletions
*Canadian National Railway Co.
Kmart Corp.
**Transport Holdings Inc. (Class A)
[FN]
*Added and deleted in the same quarter.
**A spin-off from Travelers, Inc.; received one share of Transport
for every 200 shares of Travelers, Inc. held.
<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/NonFerrous 1,600,000 ASARCO Inc. $ 40,877,630 $ 51,200,000 0.8%
Insurance 260,000 American National Insurance Co. 9,749,442 17,160,000 0.2
Utilities--Electric 2,000,000 Entergy Corp. 43,098,274 58,500,000 0.9
Insurance 1,400,000 PartnerRe Holdings Ltd. 29,498,937 37,975,000 0.6
Information Processing 3,000,000 ++Tandem Computers Inc. 38,348,072 31,875,000 0.5
Telecommunications 1,400,000 Telefonica de Espana, S.A. (ADR)* 42,507,830 58,625,000 0.9
-------------- -------------- ------
204,080,185 255,335,000 3.9
Below-Average Price/Earnings Ratio
Savings & Loans 1,500,000 Ahmanson (H.F.) & Co. 25,962,249 39,750,000 0.6
Insurance 3,100,000 The Allstate Corp. 67,424,755 127,487,500 1.9
Insurance 2,600,000 American General Corp. 56,042,709 90,675,000 1.4
Steel 3,500,000 ++Bethlehem Steel Corp. 51,720,690 49,000,000 0.7
Banking 700,000 The Chase Manhattan Corp. 13,475,662 42,437,500 0.7
Banking 2,500,000 Citicorp 73,009,932 168,125,000 2.6
Financial Services 700,000 Dean Witter, Discover & Co. 18,012,707 32,900,000 0.5
Farm & Construction
Equipment 5,100,000 Deere & Co. 105,666,960 179,775,000 2.7
Capital Goods 1,150,000 Eaton Corp. 58,596,613 61,668,750 0.9
Retail 1,400,000 ++Federated Department Stores, Inc. 30,852,433 38,500,000 0.6
Banking 700,000 First Interstate Bancorp 29,058,115 95,550,000 1.5
Automotive 3,800,000 Ford Motor Co. 90,908,542 110,200,000 1.7
Automotive 2,750,000 General Motors Corp. 119,654,913 145,406,250 2.2
Insurance 1,250,000 ++ITT Hartford Group Inc.*** 31,155,644 60,468,750 0.9
<PAGE>
Manufacturing 1,250,000 ITT Industries Inc.*** 14,483,831 30,000,000 0.5
Machinery 1,450,000 Ingersoll-Rand Co. 42,692,719 50,931,250 0.8
Information Processing 1,800,000 International Business Machines Corp. 125,454,892 165,150,000 2.5
Paper & Forest Products 2,900,000 International Paper Co. 93,252,865 109,837,500 1.7
Banking 1,600,000 NationsBank Corp. 66,516,218 111,400,000 1.7
Banking 2,350,000 Norwest Corp. 34,446,022 77,550,000 1.2
Electrical Equipment 2,800,000 Philips Electronics N.V. 58,713,866 100,450,000 1.5
Retail 3,350,000 Sears, Roebuck & Co. 65,320,219 130,650,000 2.0
Financial Services 800,000 Student Loan Marketing Association 29,398,674 52,700,000 0.8
Insurance 1,700,000 Travelers Inc. 65,201,903 106,887,500 1.6
Steel 2,400,000 USX--US Steel Group 73,819,785 73,800,000 1.1
Chemicals 2,200,000 Union Carbide Corp. 53,793,906 82,500,000 1.3
Information Processing 5,300,000 ++Unisys Corp. 58,650,167 29,812,500 0.4
Savings & Loans 1,400,000 Washington Mutual Savings Bank 23,454,491 40,075,000 0.6
-------------- -------------- ------
1,576,741,482 2,403,687,500 36.6
Above-Average Yield
Insurance 600,000 Aetna Life & Casualty Co. 25,751,832 41,550,000 0.6
Oil--Domestic 750,000 Atlantic Richfield Co. 76,325,626 83,062,500 1.3
Real Estate Investment
Trust 700,000 Avalon Properties, Inc. 14,548,710 15,050,000 0.2
Telecommunications 1,250,000 Bell Atlantic Corp. 57,059,580 83,593,750 1.3
</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)
Pharmaceutical 1,150,000 Bristol-Myers Squibb Co. $ 65,372,906 $ 98,756,250 1.5%
Oil--International 1,800,000 Chevron Corp. 61,655,694 94,500,000 1.4
Utilities--Electric 1,000,000 CINergy Corp. 24,141,035 30,625,000 0.5
Utilities--Electric 1,550,000 Consolidated Edison Co. of New York,
Inc. 37,135,210 49,600,000 0.8
Utilities--Electric 637,500 DPL Inc. 6,204,369 15,778,125 0.2
Oil--International 1,500,000 Exxon Corp. 84,896,705 120,187,500 1.8
Telecommunications 2,900,000 GTE Corp. 90,725,125 127,600,000 2.0
Chemicals 400,000 Imperial Chemical Industries PLC (ADR)* 25,771,805 18,700,000 0.3
Real Estate Investment
Trust 440,000 Irvine Apartment Communities, Inc. 7,758,147 8,470,000 0.1
Real Estate Investment
Trust 820,000 Liberty Property Trust 16,510,230 17,015,000 0.3
<PAGE>
Real Estate Investment
Trust 500,000 The Mills Corp. 11,734,125 8,500,000 0.1
Utilities--Electric 1,100,000 NIPSCO Industries, Inc. 23,590,152 42,075,000 0.6
Oil--Domestic 3,200,000 Occidental Petroleum Corp. 67,896,904 68,400,000 1.0
Utilities--Electric 1,600,000 PECO Energy Co. 39,696,837 48,200,000 0.7
Tobacco 1,620,000 Philip Morris Cos. Inc. 89,036,004 146,610,000 2.2
Utilities--Electric 1,500,000 Public Service Enterprise Group Inc. 40,249,885 45,937,500 0.7
Oil--International 1,280,000 Royal Dutch Petroleum Co. (ADR)* 86,396,073 180,640,000 2.8
Real Estate Investment
Trust 1,550,000 Simon Property Group, Inc. 34,819,560 37,781,250 0.6
Real Estate Investment
Trust 500,000 Summit Properties Inc. 9,602,500 9,937,500 0.2
Oil--International 1,450,000 Texaco Inc. 87,060,641 113,825,000 1.7
Utilities--Electric 1,300,000 Texas Utilities Co. 43,713,315 53,462,500 0.8
Telecommunications 2,000,000 U.S. West Communications Group**** 44,296,726 71,500,000 1.1
-------------- -------------- ------
1,171,949,696 1,631,356,875 24.8
Special Situations
Oil--International 870,428 The British Petroleum Co. PLC (ADR)* 48,486,476 88,892,460 1.4
Information Processing 800,000 ++Ceridian Corp. 12,036,569 33,000,000 0.5
Restaurants 2,000,000 Darden Restaurants, Inc. 20,441,741 23,750,000 0.4
Information Processing 1,570,000 ++Data General Corp. 21,268,247 21,587,500 0.3
Information Processing 2,500,000 ++Digital Equipment Corp. 88,632,744 160,312,500 2.4
Oil Services & Equipment 2,500,000 Dresser Industries, Inc. 50,259,610 60,937,500 0.9
Foods/Food Processing 1,350,000 General Mills, Inc. 62,379,617 77,962,500 1.2
Chemicals 1,500,000 Hercules Inc. 19,235,727 84,562,500 1.3
Entertainment 1,250,000 ITT Corp.*** 31,402,179 66,250,000 1.0
Retail Apparel 2,700,000 The Limited, Inc. 50,681,022 46,912,500 0.7
Pharmaceutical 2,000,000 Merck & Co., Inc. 63,465,898 131,500,000 2.0
Oil--International 1,650,000 Mobil Corp. 93,197,552 184,800,000 2.8
Telecommunications 1,700,000 U.S. West Media Group**** 24,221,802 32,300,000 0.5
Aerospace & Defense 450,000 United Technologies Corp. 22,695,049 42,693,750 0.6
Retail 3,000,000 Woolworth Corp. 44,713,564 39,000,000 0.6
Pharmaceuticals 440,000 Zeneca Group PLC (ADR)* 12,980,000 25,685,000 0.4
-------------- -------------- ------
666,097,797 1,120,146,210 17.0
Total Stocks 3,618,869,160 5,410,525,585 82.3
</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
Commercial Paper** $40,000,000 ABN AMRO North America Finance Inc.,
5.54% due 1/26/1996 $ 39,827,644 $ 39,827,644 0.6%
50,000,000 ANZ (Delaware) Inc., 5.49% due
2/15/1996 49,634,000 49,634,000 0.7
Ciesco, L.P.:
50,000,000 5.75% due 1/05/1996 49,944,097 49,944,097 0.8
25,000,000 5.70% due 1/16/1996 24,928,750 24,928,750 0.4
50,000,000 5.68% due 1/30/1996 49,747,556 49,747,556 0.7
50,000,000 Daimler-Benz AG, 5.72% due 1/29/1996 49,753,722 49,753,722 0.7
50,000,000 du Pont (E.I.) de Nemours & Co.,
5.66% due 1/08/1996 49,921,389 49,921,389 0.8
50,000,000 Emerson Electric Co., 5.50% due
2/06/1996 49,702,083 49,702,083 0.7
70,380,000 General Electric Capital Corp., 5.90%
due 1/02/1996 70,333,862 70,333,862 1.1
Goldman Sachs Group L.P.:
27,000,000 5.75% due 1/03/1996 26,978,438 26,978,438 0.4
50,000,000 5.75% due 1/04/1996 49,952,083 49,952,083 0.8
40,000,000 5.75% due 1/12/1996 39,910,556 39,910,556 0.6
30,000,000 IBM Credit Corp., 5.69% due 1/26/1996 29,867,233 29,867,233 0.4
70,174,000 Matterhorn Capital Corp., 5.74% due
1/24/1996 69,883,090 69,883,090 1.1
National Australia Funding
(Delaware), Inc.:
50,000,000 5.70% due 1/02/1996 49,968,333 49,968,333 0.8
50,000,000 5.73% due 1/12/1996 49,888,583 49,888,583 0.8
National Fleet Funding Corp.:
45,000,000 5.77% due 1/18/1996 44,855,750 44,855,750 0.7
50,000,000 5.75% due 2/01/1996 49,728,472 49,728,472 0.7
50,000,000 5.74% due 2/09/1996 49,665,167 49,665,167 0.7
30,000,000 PHH Corp., 5.76% due 1/09/1996 29,947,200 29,947,200 0.4
Preferred Receivables Funding Corp.:
32,475,000 5.78% due 1/02/1996 32,454,144 32,454,144 0.5
50,000,000 5.78% due 1/17/1996 49,847,472 49,847,472 0.8
Siemens Corporation AG:
19,650,000 5.70% due 1/19/1996 19,584,664 19,584,664 0.3
20,500,000 5.70% due 1/22/1996 20,422,100 20,422,100 0.3
31,380,000 USAA Capital Corp., 5.69% due 1/19/1996 31,275,845 31,275,845 0.5
30,000,000 Xerox Corp., 5.69% due 1/18/1996 29,905,167 29,905,167 0.5
-------------- -------------- ------
1,107,927,400 1,107,927,400 16.8
<PAGE>
US Government & Agency 50,000,000 Federal Home Loan Bank, 5.65% due
Obligations** 1/19/1996 49,835,208 49,835,208 0.8
Total Short-Term Securities 1,157,762,608 1,157,762,608 17.6
Total Investments $4,776,631,768 6,568,288,193 99.9
==============
Other Assets Less Liabilities 8,744,947 0.1
-------------- ------
Net Assets $6,577,033,140 100.0%
============== ======
<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.
++Non-income producing security.
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION
<TABLE>
Statement of Assets and Liabilities as of December 31, 1995
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$4,776,631,768) (Note 1a) $6,568,288,193
Cash 789,161
Receivables:
Capital shares sold $ 20,945,540
Dividends 8,418,527
Securities sold 4,769,330 34,133,397
--------------
Prepaid registration fees and other assets (Note 1d) 147,939
--------------
Total assets 6,603,358,690
--------------
<PAGE>
Liabilities: Payables:
Capital shares redeemed 13,705,708
Securities purchased 7,118,715
Distributor (Note 2) 2,431,292
Investment adviser (Note 2) 2,085,486 25,341,201
--------------
Accrued expenses and other liabilities 984,349
--------------
Total liabilities 26,325,550
--------------
Net Assets: Net assets $6,577,033,140
==============
Net Assets Class A Shares of Common Stock, $0.10 par value, 300,000,000
Consist of: shares authorized $ 11,408,857
Class B Shares of Common Stock, $0.10 par value, 300,000,000
shares authorized 10,329,267
Class C Shares of Common Stock, $0.10 par value, 200,000,000
shares authorized 475,984
Class D Shares of Common Stock, $0.10 par value, 200,000,000
shares authorized 1,129,627
Paid-in capital in excess of par 4,735,989,602
Accumulated investment losses--net (3,587,250)
Undistributed realized capital gains on investments--net 29,630,628
Unrealized appreciation on investments--net 1,791,656,425
--------------
Net assets $6,577,033,140
==============
Net Asset Value: Class A--Based on net assets of $3,230,336,685 and 114,088,572
shares outstanding $ 28.31
==============
Class B--Based on net assets of $2,894,577,957 and 103,292,666
shares outstanding $ 28.02
==============
Class C--Based on net assets of $132,511,011 and 4,759,838
shares outstanding $ 27.84
==============
Class D--Based on net assets of $319,607,487 and 11,296,270
shares outstanding $ 28.29
==============
See Notes to Financial Statements.
</TABLE>
<PAGE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations for the Six Months Ended December 31, 1995
<S> <S> <C> <C>
Investment Dividends (net of $780,511 foreign withholding tax) $ 76,936,861
Income Interest and discount earned 29,861,614
(Notes 1b & 1c): --------------
Total income 106,798,475
--------------
Expenses: Account maintenance and distribution fees--Class B (Note 2) $ 13,329,753
Investment advisory fees (Note 2) 12,237,078
Transfer agent fees--Class B (Note 2) 1,924,145
Transfer agent fees--Class A (Note 2) 1,824,419
Account maintenance and distribution fees--Class C (Note 2) 518,811
Account maintenance fees--Class D (Note 2) 332,794
Accounting services (Note 2) 215,839
Printing and shareholder reports 192,792
Transfer agent fees--Class D (Note 2) 161,638
Registration fees (Note 1d) 140,051
Custodian fees 104,152
Transfer agent fees--Class C (Note 2) 80,501
Professional fees 43,434
Directors' fees and expenses 19,058
Other 50,525
--------------
Total expenses 31,174,990
--------------
Investment income--net 75,623,485
--------------
Realized & Realized gain on investments--net 108,965,126
Unrealized Gain Change in unrealized appreciation on investments--net 508,904,494
on Investments --------------
- --Net (Notes 1c, Net Increase in Net Assets Resulting from Operations $ 693,493,105
1e & 3): ==============
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<PAGE>
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Six For the
Months Ended Year Ended
December 31, June 30,
Increase (Decrease) in Net Assets: 1995 1995
<S> <S> <C> <C>
Operations: Investment income--net $ 75,623,485 $ 123,636,446
Realized gain on investments--net 108,965,126 66,820,215
Change in unrealized appreciation on investments--net 508,904,494 718,977,808
-------------- --------------
Net increase in net assets resulting from operations 693,493,105 909,434,469
-------------- --------------
Dividends & Investment income--net:
Distributions to Class A (83,171,240) (68,596,425)
Shareholders Class B (50,150,559) (36,272,122)
(Note 1g): Class C (2,265,975) (125,803)
Class D (6,929,391) (1,039,403)
Realized gain on investments--net:
Class A (63,214,864) (77,560,878)
Class B (56,947,014) (61,276,834)
Class C (2,332,735) (37,759)
Class D (5,725,774) (291,335)
-------------- --------------
Net decrease in net assets resulting from dividends and
distributions to shareholders (270,737,552) (245,200,559)
-------------- --------------
Capital Share Net increase in net assets derived from capital
Transactions share transactions 578,010,488 894,346,339
(Note 4): -------------- --------------
Net Assets: Total increase in net assets 1,000,766,041 1,558,580,249
Beginning of period 5,576,267,099 4,017,686,850
-------------- --------------
End of period* $6,577,033,140 $5,576,267,099
============== ==============
<FN>
*Undistributed (accumulated) investment income (loss)--net $ (3,587,250) $ 63,306,430
============== ==============
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<PAGE>
<TABLE>
Financial Highlights
<CAPTION>
Class A
For the
The following per share data and ratios have been derived Six Months
from information provided in the financial statements. Ended
Dec. 31, For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: 1995 1995 1994 1993 1992
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 26.44 $ 23.17 $ 23.31 $ 20.57 $ 18.90
Operating ---------- ---------- ---------- ---------- ----------
Performance: Investment income--net .40 .74 .62 .71 .70
Realized and unrealized gain on
investments and foreign currency
transactions--net 2.80 4.01 .67 3.03 2.02
---------- ---------- ---------- ---------- ----------
Total from investment operations 3.20 4.75 1.29 3.74 2.72
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.76) (.69) (.70) (.64) (.76)
Realized gain on investments--net (.57) (.79) (.73) (.36) (.29)
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (1.33) (1.48) (1.43) (1.00) (1.05)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 28.31 $ 26.44 $ 23.17 $ 23.31 $ 20.57
========== ========== ========== ========== ==========
Total Based on net asset value per share 12.34%+++ 21.67% 5.68% 19.03% 15.08%
Investment ========== ========== ========== ========== ==========
Return:**
Ratios to Expenses .55%* .59% .53% .54% .58%
Average ========== ========== ========== ========== ==========
Net Assets: Investment income--net 2.98%* 3.19% 2.76% 3.48% 3.52%
========== ========== ========== ========== ==========
Supplemental Net assets, end of period
Data: (in thousands) $3,230,337 $2,834,652 $2,272,983 $2,023,078 $1,670,430
========== ========== ========== ========== ==========
Portfolio turnover 6.25% 11.69% 21.79% 20.85% 21.24%
========== ========== ========== ========== ==========
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
<PAGE>
FINANCIAL INFORMATION (continued)
<TABLE>
Financial Highlights (continued)
<CAPTION>
Class B
For the
The following per share data and ratios have been derived Six Months
from information provided in the financial statements. Ended
Dec. 31, For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: 1995 1995 1994 1993 1992
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 26.08 $ 22.87 $ 23.04 $ 20.35 $ 18.71
Operating ---------- ---------- ---------- ---------- ----------
Performance: Investment income--net .26 .53 .42 .53 .50
Realized and unrealized gain on
investments and foreign currency
transactions--net 2.76 3.93 .62 2.96 2.00
---------- ---------- ---------- ---------- ----------
Total from investment operations 3.02 4.46 1.04 3.49 2.50
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.51) (.46) (.48) (.44) (.57)
Realized gain on investments--net (.57) (.79) (.73) (.36) (.29)
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (1.08) (1.25) (1.21) (.80) (.86)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 28.02 $ 26.08 $ 22.87 $ 23.04 $ 20.35
========== ========== ========== ========== ==========
Total Investment Based on net asset value per share 11.77%+++ 20.45% 4.61% 17.81% 13.90%
Return:** ========== ========== ========== ========== ==========
Ratios to Average Expenses, excluding account
Net Assets: maintenance and distribution fees .57%* .61% .55% .56% .60%
========== ========== ========== ========== ==========
Expenses 1.57%* 1.61% 1.55% 1.56% 1.60%
========== ========== ========== ========== ==========
Investment income--net 1.95%* 2.16% 1.75% 2.47% 2.50%
========== ========== ========== ========== ==========
Supplemental Net assets, end of period
Data: (in thousands) $2,894,578 $2,464,248 $1,744,704 $1,383,935 $1,064,354
========== ========== ========== ========== ==========
Portfolio turnover 6.25% 11.69% 21.79% 20.85% 21.24%
========== ========== ========== ========== ==========
<PAGE>
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights (concluded)
<CAPTION>
Class C Class D
For the For the
For the Period For the Period
The following per share data and ratios have been derived Six Months Oct. 21 Six Months Oct. 21
from information provided in the financial statements. Ended 1994++ to Ended 1994++ to
Dec. 31, June 30, Dec. 31, June 30,
Increase (Decrease) in Net Asset Value: 1995 1995 1995 1995
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 25.98 $ 22.92 $ 26.41 $ 23.19
Operating ---------- ---------- ---------- ----------
Performance: Investment income--net .27 .44 .37 .50
Realized and unrealized gain on
investments and foreign currency
transactions--net 2.74 3.05 2.79 3.17
---------- ---------- ---------- ----------
Total from investment operations 3.01 3.49 3.16 3.67
---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.58) (.33) (.71) (.35)
Realized gain on investments
--net (.57) (.10) (.57) (.10)
---------- ---------- ---------- ----------
Total dividends and distributions (1.15) (.43) (1.28) (.45)
---------- ---------- ---------- ----------
Net asset value, end of period $ 27.84 $ 25.98 $ 28.29 $ 26.41
========== ========== ========== ==========
Total Investment Based on net asset value per
Return:** share 11.79%+++ 15.59%+++ 12.19%+++ 16.23%+++
========== ========== ========== ==========
<PAGE>
Ratios to Average Expenses, excluding account
Net Assets: maintenance and distribution fees . .58%* .66%* .55%* .62%*
========== ========== ========== ==========
Expenses 1.58%* 1.66%* .80%* .87%*
========== ========== ========== ==========
Investment income--net 1.93%* 2.09%* 2.71%* 2.88%*
========== ========== ========== ==========
Supplemental Net assets, end of period (in
Data: thousands) $ 132,511 $ 74,334 $ 319,607 $ 203,033
========== ========== ========== ==========
Portfolio turnover 6.25% 11.69% 6.25% 11.69%
========== ========== ========== ==========
<FN>
++Commencement of Operations.
*Annualized.
**Total investment returns exclude the effects of sales loads.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
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. These unaudited financial statements
reflect all adjustments which are, in the opinion of management,
necessary to a fair statement of the results for the interim period
presented. All such adjustments are of a normal recurring nature.
The 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.
<PAGE>
(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. In cases where securities are traded on more
than one exchange, the securities are valued on the exchange
designated by 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 asked
price. Short-term securities are valued at amortized cost, which
approximates market value. Other investments 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.
(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.
<PAGE>
* 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.
When a security is purchased or sold through an exercise of an
option, the related premium paid (or received) is added to (or
deducted from) the basis of the security acquired or deducted from
(or added to) the proceeds of the security sold. When an option
expires (or the Fund enters into a closing transaction), the Fund
realizes a gain or loss on the option to the extent of the premiums
received or paid (or gain or loss to the extent the cost of the
closing transaction exceeds the premium paid or received).
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.
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 of
$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 FAM during any fiscal year which will cause such expenses
to exceed the pro rata expense limitation at the time of such
payment.
<PAGE>
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 maintenance fee compensates the
Distributor and MLPF&S for providing account maintenance services to
Class B, Class C and Class D shareholders. The ongoing distribution
fee compensates the Distributor and MLPF&S for providing shareholder
and distribution-related services to Class B and Class C
shareholders.
For the six months ended December 31, 1995, MLFD earned underwriting
discounts and direct commissions and MLPF&S earned dealer
concessions on sales of the Fund's Class A and Class D Shares as
follows:
MLFD MLPF&S
Class A $35,271 $ 411,566
Class D $70,281 $1,011,045
For the six months ended December 31, 1995, MLPF&S received
contingent deferred sales charges of $1,318,828 and $33,889 relating
to transactions in Class B and Class C Shares, respectively.
In addition, MLPF&S received $61,000 in commissions on the execution
of portfolio security transactions for the Fund for the six months
ended December 31, 1995.
Merrill Lynch Financial Data Services, Inc. ("MLFDS"), a wholly-
owned subsidiary of ML & Co., is the Fund's transfer agent.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (concluded)
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.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended December 31, 1995 were $509,766,428 and
$314,475,151, respectively.
Net realized and unrealized gains as of December 31, 1995 were as
follows:
Realized Unrealized
Gains Gains
Long-term investments $108,965,126 $1,791,656,425
------------ --------------
Total $108,965,126 $1,791,656,425
============ ==============
As of December 31, 1995, net unrealized appreciation for Federal
income tax purposes aggregated $1,791,656,425, of which
$1,849,495,654 related to appreciated securities and $57,839,229
related to depreciated securities. At December 31, 1995, the
aggregate cost of investments for Federal income tax purposes was
$4,776,631,768.
4. Capital Share Transactions:
Net increase in net assets derived from capital share transactions
was $578,010,488 and $894,346,339 for the six months ended December
31, 1995 and the year ended June 30, 1995, respectively.
Transactions in capital shares for each class were as follows:
Class A Shares for the Six Months Dollar
Ended December 31, 1995 Shares Amount
Shares sold 9,898,416 $272,083,004
Shares issued to shareholders
in reinvestment of dividends
and distributions 4,785,871 131,186,394
----------- ------------
Total issued 14,684,287 403,269,398
Shares redeemed (7,793,615) (213,672,990)
----------- ------------
Net increase 6,890,672 $189,596,408
=========== ============
<PAGE>
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 B Shares for the Six Months Dollar
Ended December 31, 1995 Shares Amount
Shares sold 16,605,102 $449,074,039
Shares issued to shareholders
in reinvestment of dividends
and distributions 3,511,955 95,303,902
----------- ------------
Total issued 20,117,057 544,377,941
Shares redeemed (10,448,115) (282,586,867)
Automatic conversion of
shares (858,809) (23,092,918)
----------- ------------
Net increase 8,810,133 $238,698,156
=========== ============
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
=========== ============
<PAGE>
Class C Shares for the
Six Months Ended Dollar
December 31, 1995 Shares Amount
Shares sold 2,704,642 $ 72,814,300
Shares issued to shareholders
in reinvestment of dividends
and distributions 153,246 4,142,044
----------- ------------
Total issued 2,857,888 76,956,344
Shares redeemed (958,815) (25,830,219)
----------- ------------
Net increase 1,899,073 $ 51,126,125
=========== ============
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.
Class D Shares for the Six Months Dollar
Ended December 31, 1995 Shares Amount
Shares sold 3,565,610 $ 97,851,089
Automatic conversion of
shares 848,946 23,092,918
Shares issued to shareholders
in reinvestment of dividends
and distributions 412,739 11,332,508
----------- ------------
Total issued 4,827,295 132,276,515
Shares redeemed (1,218,855) (33,686,716)
----------- ------------
Net increase 3,608,440 $ 98,589,799
=========== ============
<PAGE>
Class D Shares for the Period Dollar
October 21 1994++ to 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.
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
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Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
