MERRILL LYNCH
BASIC VALUE
FUND, INC.
FUND LOGO
Quarterly Report
September 30, 1998
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.
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
Concerns over the prospects for the worldwide economy spilled over
into the US stock market during the quarter ended September 30,
1998. The increased volatility in US share prices reflected the
deteriorating outlook for corporate profits amid signs of a
weakening US economy. The uncertain economic picture and the
resulting flight to quality by investors pushed the 30-year US
Treasury bond to record low yields. In contrast, corporate bonds,
mortgage-backed securities and emerging markets debt underperformed
Treasury securities by a wide margin. The leverage/derivatives-
related problems of a major hedge fund and possible impeachment of
President Clinton further heightened investor uncertainties, as did
Russia's devaluation and effective repudiation of its debt in
August. A one-quarter point cut in the Federal Funds rate in late
September did not restore investor confidence, since a more
significant easing of monetary policy was expected. However, the
central bank unexpectedly cut the Federal Funds rate another quarter
point in October, which investors viewed positively.
As long as worldwide economic prospects appear fragile, it is likely
that stock and bond market volatility will continue. For the overall
global economy, the deepening recession in Japan is of great concern
as well as the difficulties in emerging economies such as Russia and
Brazil. Investors are awaiting decisive programs in Japan designed
to stabilize the financial system and stimulate the economy.
Positive developments in Japan, combined with continued monetary
easing on the part of the Federal Reserve Board, would likely
provide an important element of stability to the volatile investment
environment.
Portfolio Matters
Stock prices experienced their largest declines in eight years in
the third quarter of 1998. Merrill Lynch Basic Value Fund, Inc. was
not immune to these equity losses, but the Fund's diversity and high
cash position helped cushion the drop. As a result, the Fund's
decline was substantially less than the 15.02% decline for the
average equity mutual fund, according to Lipper Analytical Services,
Inc. For the quarter ended September 30, 1998, Merrill Lynch Basic
Value Fund, Inc.'s total returns for Class A, Class B, Class C and
Class D Shares were -11.33%, -11.54%, -11.57% and -11.37%,
respectively.
Security purchases in the third quarter of 1998 amounted to $663
million, while equity sales totaled $353 million. On the buy side,
there were two new additions to the portfolio, and we added to 25
existing positions. On the sell side, we eliminated one position and
reduced 14 holdings.
The two new positions were depressed, high-quality technology
companies: Applied Materials, Inc. and Hewlett-Packard Company.
Applied Materials, Inc. is the premier semiconductor equipment
producer in the world. The company is extremely well managed, with a
strong financial position and conservative accounting practices.
Current business conditions are not good in the semiconductor
industry, and Applied Materials' sales, incoming orders and earnings
are depressed. However, at our entry price, we believe most
adversities are discounted and the risk/reward potential is in our
favor.
Hewlett-Packard Company stock is also quite depressed. The world-
renowned manufacturer of computer products is experiencing weakness
in some product areas in conjunction with an overall slowdown in
economic activity. The company is responding to problem areas
quickly, and we anticipate that earnings, which will be modestly
lower in fiscal 1998, will show recovery in the October 1999 fiscal
year. This company's shares were available at a below-average
price/earnings ratio, which is unusual for an issue of this quality.
We regard long-term recovery and growth prospects as excellent.
Merrill Lynch Basic Value Fund, Inc.
September 30, 1998
Our largest addition to established positions was the continuing
purchase of Union Pacific Corporation, which was introduced to the
portfolio in the June quarter. We also added to recent new purchases
of Caterpillar, Inc. and National City Corp. Finally, it may be
recalled that in April of this year, we reduced positions in
Citicorp and Travelers Group, Inc. when the stocks reacted very
favorably to their merger announcement. In the September quarter,
both stocks dropped sharply (about 37%), but we prematurely added
back to the Citicorp position.
On the sell side, we eliminated COMPAQ Computer Corporation (the
survivor in the Digital Equipment Corporation merger) early in the
quarter as we were concerned about the stock's valuation. Our
largest partial sales during the September quarter were in Merck &
Co., Inc., International Paper Company, Eastman Kodak Company and
Ford Motor Company.
Our cash position, which has ranged from a low of 11.7% of net
assets to a high of 18.7% over the past two years, ended September
at 13.2%, down modestly from the 14.9% at the end of the June
quarter. As we are contrarians and out-of-favor investors, we might
have been expected to be more aggressive on the buy side during a
declining stock market. Purchases did exceed sales by almost two to
one, but in an uncertain investing environment, we preferred a slow
and cautious approach.
In Conclusion
Thank you for your investment in Merrill Lynch Basic Value Fund,
Inc. We look forward to reviewing our outlook and strategy in our
upcoming semi-annual report to shareholders.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Paul M. Hoffmann)
Paul M. Hoffmann
Senior Vice President and Portfolio Manager
October 30, 1998
Merrill Lynch Basic Value Fund, Inc.
September 30, 1998
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. (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. Figures shown in the "Recent Performance
Results" and "Average Annual Total Return" tables assume
reinvestment of all dividends and capital gains distributions at net
asset value on the ex-dividend date. 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.
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 9/30/98 + 0.45% - 4.83%
Five Years Ended 9/30/98 +15.72 +14.48
Ten Years Ended 9/30/98 +13.93 +13.32
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 9/30/98 - 0.55% - 4.15%
Five Years Ended 9/30/98 +14.55 +14.55
Inception (10/21/88) through 9/30/98 +12.51 +12.51
[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 9/30/98 - 0.58% - 1.48%
Inception (10/21/94)
through 9/30/98 +17.73 +17.73
[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 9/30/98 + 0.21% - 5.05%
Inception (10/21/94)
through 9/30/98 +18.66 +17.05
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
Merrill Lynch Basic Value Fund, Inc.
September 30, 1998
PERFORMANCE DATA (concluded)
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 dfrom $947.50 on July 1, 1977 to
$21,670.79 on September 30, 1998.
<TABLE>
Recent Performance Results
<CAPTION>
Ten Years/
12 Month 3 Month Since Inception
Total Return Total Return Total Return
<S> <C> <C> <C>
ML Basic Value Fund Class A Shares* +0.45% -11.33% +268.49%
ML Basic Value Fund Class B Shares* -0.55 -11.54 +222.94
ML Basic Value Fund Class C Shares* -0.58 -11.57 + 90.32
ML Basic Value Fund Class D Shares* +0.21 -11.37 + 96.30
Dow Jones Industrial Average** +0.41 -12.01 +394.85/+385.10/+120.11
Standard & Poor's 500 Index** +9.05 - 9.95 +392.61/+371.71/+137.75
<FN>
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included. Total
investment returns are based on changes in net asset values for the
periods shown, and assume reinvestment of all dividends and capital
gains distributions at net asset value on the ex-dividend date. The
Fund's ten-year/inception periods are: Class A Shares, for the ten
years ended 9/30/98; Class B Shares, from 10/21/88 to 9/30/98; and
Class C & Class D Shares, from 10/21/94 to 9/30/98.
**An unmanaged broad-based index comprised of common stocks. Ten
years/since inception total returns are: for the ten years ended
9/30/98; from 10/21/88 to 9/30/98; and from 10/21/94 to 9/30/98,
respectively.
</TABLE>
Merrill Lynch Basic Value Fund, Inc.
September 30, 1998
<TABLE>
SCHEDULE OF INVESTMENTS
<CAPTION>
Shares Percent of
Industry Held Stocks Cost Value Net Assets
<S> <C> <S> <C> <C> <C>
Low Price to Book Value
Metals/Non-Ferrous 1,400,000 ASARCO Inc. $ 36,667,971 $ 26,775,000 0.2%
Insurance 2,500,000 American General Corporation 54,530,936 159,687,500 1.4
Insurance 260,000 American National Insurance Co. 9,749,442 21,482,500 0.2
Steel 4,500,000 Bethlehem Steel Corporation 56,745,956 37,125,000 0.3
Restaurants 3,900,000 Darden Restaurants, Inc. 36,505,673 62,400,000 0.5
Information Processing 1,700,000 Data General Corporation 23,665,586 18,487,500 0.2
Utilities--Electric 3,000,000 Entergy Corporation 69,641,133 92,250,000 0.8
Retail 2,850,000 Federated Department Stores, Inc. 87,341,209 103,668,750 0.9
Capital Goods 2,500,000 Fluor Corporation 134,723,501 102,656,250 0.9
Automotive 4,800,000 Ford Motor Company 94,785,702 225,300,000 2.0
Insurance 2,500,000 Hartford Financial Services
Group Inc. (The) 31,155,644 118,593,750 1.0
Chemicals 1,200,000 Imperial Chemical Industries
PLC (ADR)* 66,336,803 38,100,000 0.3
Paper & Forest Products 2,200,000 International Paper Company 83,127,628 102,575,000 0.9
Retail 5,500,000 Kmart Corporation 65,809,409 65,656,250 0.6
Insurance 1,400,000 PartnerRe Ltd. 29,498,937 56,087,500 0.5
Beverages 2,600,000 Seagram Company Ltd. (The) 87,765,911 74,587,500 0.7
Steel 3,000,000 USX-US Steel Group, Inc. 90,807,536 71,625,000 0.6
Railroads 3,925,000 Union Pacific Corporation 176,463,110 167,303,125 1.5
Banking 400,000 Wells Fargo & Company 84,382,629 142,000,000 1.2
-------------- --------------- ------
1,319,704,716 1,686,360,625 14.7
Below-Average Price/Earnings Ratio
Telecommunications 2,800,000 AT&T Corp. 100,871,726 163,625,000 1.4
Savings & Loan 1,500,000 Ahmanson (H.F.) & Company 35,180,899 83,250,000 0.7
Insurance 5,000,000 Allstate Corporation (The) 58,084,911 208,437,500 1.8
Savings & Loan 1,800,000 Associates First Capital
Corporation 78,572,204 117,450,000 1.0
Farm &Construction
Equipment 3,400,000 Caterpillar, Inc. 188,485,090 151,512,500 1.3
Banking 2,550,000 Citicorp 182,774,620 236,990,625 2.1
Farm & Construction
Equipment 4,800,000 Deere & Company 121,028,151 145,200,000 1.3
Oil & Gas Producers 3,550,000 Diamond Offshore Drilling, Inc. 159,309,911 92,300,000 0.8
Photography 1,650,000 Eastman Kodak Company 95,813,937 127,565,625 1.1
Capital Goods 1,900,000 Eaton Corporation 112,837,489 119,106,250 1.0
Automotive 2,700,000 General Motors Corporation 118,385,267 147,656,250 1.3
Chemicals 2,600,000 Hercules Inc. 69,675,936 78,162,500 0.7
Information Processing 2,600,000 Hewlett-Packard Company 152,248,322 137,637,500 1.2
Machinery 4,400,000 ITT Industries Inc. 97,507,038 149,050,000 1.3
Machinery 3,600,000 Ingersoll-Rand Company 83,867,995 136,575,000 1.2
Banking 2,800,000 NationsBank Corporation 85,514,320 149,800,000 1.3
Banking 6,000,000 Norwest Corporation 78,802,630 214,875,000 1.9
Tobacco 3,800,000 Philip Morris Companies, Inc. 124,865,720 175,037,500 1.5
Electrical Equipment 3,400,000 Philips Electronics N.V.
(NY Registered Shares) 101,833,013 181,475,000 1.6
Fertilizers 1,600,000 Potash Corp. of Saskatchewan Inc. 125,426,223 84,200,000 0.7
Retail 3,750,000 Sears, Roebuck & Co. 112,511,986 165,703,125 1.5
Real Estate Investment 2,800,000 Starwood Hotels & Resorts
Trust Worldwide, Inc. 145,755,812 85,400,000 0.8
Electronics 2,400,000 Tektronix, Inc. 62,202,224 37,200,000 0.3
Electrical Equipment 1,800,000 Thomas & Betts Corporation 85,700,198 68,512,500 0.6
Insurance 3,200,000 Travelers Group, Inc. 35,097,922 120,000,000 1.1
Chemicals 2,600,000 Union Carbide Corporation 84,717,281 112,125,000 1.0
Retail 4,000,000 Venator Group, Inc. 55,901,671 34,750,000 0.3
-------------- --------------- ------
2,752,972,496 3,523,596,875 30.8
</TABLE>
Merrill Lynch Basic Value Fund, Inc.
September 30, 1998
<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
Telecommunications 3,800,000 Ameritech Corporation $ 118,458,152 $ 180,025,000 1.6%
Oil--Domestic 2,150,000 Atlantic Richfield Company 120,368,120 152,515,625 1.3
Telecommunications 2,900,000 Bell Atlantic Corporation 78,567,640 140,468,750 1.2
Oil--International 1,999,166 British Petroleum Company PLC 69,466,516 174,427,233 1.5
(The)(ADR)*
Utilities--Electric 2,000,000 CINergy Corp. 56,772,786 76,500,000 0.7
Oil--International 2,700,000 Chevron Corporation 129,731,902 226,968,750 2.0
Utilities--Electric 1,650,000 Consolidated Edison Co. of
New York, Inc. 39,941,210 86,006,250 0.7
Utilities--Electric 956,250 DPL Inc. 6,204,369 18,766,406 0.2
Chemicals 3,900,000 duPont (E.I.) de Nemours & Co. 175,448,036 218,887,500 1.9
Telecommunications 3,300,000 GTE Corp. 109,572,500 181,500,000 1.6
Foods/Food Processing 1,900,000 General Mills, Inc. 97,543,255 133,000,000 1.2
Oil Services & Equipment 3,600,000 Halliburton Co. 86,001,494 102,825,000 0.9
Real Estate Investment Trust 440,000 Irvine Apartment Communities, Inc. 7,126,791 11,825,000 0.1
Real Estate Investment Trust 900,000 Liberty Property Trust 17,263,193 21,431,250 0.2
Real Estate Investment Trust 500,000 Mills Corporation (The) 10,080,375 11,625,000 0.1
Oil--International 3,600,000 Mobil Corporation 125,469,668 273,375,000 2.4
Utilities--Electric 2,400,000 NIPSCO Industries, Inc. 27,387,777 78,900,000 0.7
Banking 1,800,000 National City Corp. 119,363,090 118,687,500 1.0
Oil--Domestic 4,000,000 Occidental Petroleum Corporation 89,410,660 86,000,000 0.8
Utilities--Electric 2,600,000 PECO Energy Company 62,537,242 95,062,500 0.8
Utilities--Electric 1,800,000 Public Service Enterprise
Group, Inc. 48,476,635 70,762,500 0.6
Oil--International 5,600,000 Royal Dutch Petroleum Company
(NY Registered Shares) 155,787,913 266,700,000 2.3
Real Estate Investment Trust 1,600,000 Simon Property Group, Inc. 32,239,889 47,600,000 0.4
Real Estate Investment Trust 500,000 Summit Properties Inc. 9,048,400 9,500,000 0.1
Oil--International 3,500,000 Texaco Inc. 133,671,295 219,406,250 1.9
Utilities--Electric 2,900,000 Texas Utilities Company 103,140,138 135,031,250 1.2
Telecommunications 3,000,000 U S West Communications
Group, Inc. 77,072,442 157,312,500 1.4
-------------- --------------- ------
2,106,151,488 3,295,109,264 28.8
Special Situations
Semiconductors &
Equipment 4,200,000 Applied Materials, Inc. 143,226,405 106,050,000 0.9
Pharmaceuticals 1,200,000 Bristol-Myers Squibb Co. 34,026,064 124,650,000 1.1
Oil--International 4,700,000 Exxon Corporation 172,039,165 329,881,250 2.9
Information Processing 3,000,000 International Business Machines
Corporation 122,185,764 384,000,000 3.3
Pharmaceuticals 500,000 Merck & Co., Inc. 18,028,062 64,781,250 0.6
Telecommunications 1,600,000 Telefonica de Espana S.A. (ADR)* 63,336,735 172,700,000 1.5
Semiconductors 1,650,000 Texas Instruments Inc. 73,947,507 87,037,500 0.8
Information Processing 5,300,000 Unisys Corporation 57,328,047 120,575,000 1.0
Pharmaceuticals 1,320,000 Zeneca Group PLC (ADR)* 12,980,000 46,200,000 0.4
-------------- --------------- ------
697,097,749 1,435,875,000 12.5
Total Stocks 6,875,926,449 9,940,941,764 86.8
</TABLE>
Merrill Lynch Basic Value Fund, Inc.
September 30, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Face Percent of
Amount Issue Cost Value Net Assets
<S> <C> <S> <C> <C> <C>
Short-Term Securities
Commercial Paper** Apreco, Inc.:
$30,000,000 5.54% due 10/02/1998 $ 29,990,767 $ 29,990,767 0.3%
20,000,000 5.55% due 10/15/1998 19,953,750 19,953,750 0.2
25,000,000 5.53% due 10/23/1998 24,911,674 24,911,674 0.2
26,600,000 CSW Credit, Inc., 5.53%
due 10/15/1998 26,538,709 26,538,709 0.2
30,000,000 CXC Inc., 5.52% due 10/14/1998 29,935,600 29,935,600 0.3
Concord Minutemen Capital
Co. LLC:
29,001,000 5.54% due 10/02/1998 28,992,074 28,992,074 0.3
107,916,000 5.55% due 10/09/1998 107,766,267 107,766,267 0.9
Corporate Asset Funding
Co., Inc.:
48,249,000 5.53% due 10/01/1998 48,241,588 48,241,588 0.4
75,000,000 5.52% due 10/05/1998 74,942,500 74,942,500 0.6
Countrywide Home Loans, Inc.:
45,299,000 5.53% due 10/08/1998 45,243,333 45,243,333 0.4
25,000,000 5.53% due 10/15/1998 24,942,396 24,942,396 0.2
Edison Asset Securitization LLC:
35,000,000 5.54% due 10/07/1998 34,962,297 34,962,297 0.3
29,777,000 5.54% due 10/08/1998 29,740,341 29,740,341 0.3
40,000,000 5.52% due 10/09/1998 39,944,800 39,944,800 0.4
50,000,000 Eureka Securitization Inc.,
5.50% due 11/09/1998 49,694,444 49,694,444 0.4
26,670,000 Falcon Asset Securitization Corp.,
5.55% due 10/16/1998 26,604,214 26,604,214 0.2
63,732,000 General Motors Acceptance Corp.,
5.88% due 10/01/1998 63,721,590 63,721,590 0.6
30,000,000 International Securitization Corp.,
5.55% due 10/14/1998 29,935,250 29,935,250 0.3
Knight-Ridder, Inc.:
35,000,000 5.62% due 10/06/1998 34,967,217 34,967,217 0.3
40,000,000 5.57% due 10/19/1998 39,882,411 39,882,411 0.3
Lexington Parker, Inc.:
40,000,000 5.54% due 10/06/1998 39,963,067 39,963,067 0.4
35,000,000 5.53% due 10/07/1998 34,962,365 34,962,365 0.3
38,978,000 5.56% due 10/16/1998 38,881,681 38,881,681 0.3
Monte Rosa Capital Corp.:
47,300,000 5.53% due 10/13/1998 47,205,545 47,205,545 0.4
19,975,000 5.52% due 10/27/1998 19,892,303 19,892,303 0.2
24,766,000 5.50% due 11/06/1998 24,626,003 24,626,003 0.2
Park Avenue Receivables Corp.:
3,631,000 5.55% due 10/14/1998 3,623,163 3,623,163 0.0
47,000,000 5.55% due 10/15/1998 46,891,312 46,891,312 0.4
35,000,000 5.58% due 10/27/1998 34,853,525 34,853,525 0.3
35,000,000 Repeat Offering Securitization
Entity (ROSE) Inc., 5.60%
due 10/07/1998 34,961,889 34,961,889 0.3
Republic Industries, Inc.:
17,788,000 5.54% due 10/14/1998 17,749,677 17,749,677 0.2
43,721,000 5.53% due 10/27/1998 43,539,667 43,539,667 0.4
36,854,000 Thames Asset Global Securitization
Inc., 5.47% due 11/10/1998 36,624,410 36,624,410 0.3
</TABLE>
Merrill Lynch Basic Value Fund, Inc.
September 30, 1998
<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)
Commercial Paper Three Rivers Funding Corp.:
(concluded) $10,000,000 5.52% due 10/05/1998 $ 9,992,333 $ 9,992,333 0.1%
38,566,000 5.57% due 10/19/1998 38,452,627 38,452,627 0.3
Variable Funding Capital Corp.:
40,000,000 5.54% due 10/02/1998 39,987,689 39,987,689 0.4
21,920,000 5.53% due 10/16/1998 21,866,126 21,866,126 0.2
35,000,000 5.54% due 10/22/1998 34,881,506 34,881,506 0.3
-------------- --------------- ------
1,379,866,110 1,379,866,110 12.1
US Government Agency 38,900,000 Federal Home Loan Bank,
Obligations** 5.22% due 10/21/1998 38,781,549 38,781,549 0.3
50,000,000 Federal Home Loan Mortgage
Corporation, 5.42% due
10/08/1998 49,939,778 49,939,778 0.4
30,000,000 Federal National Mortgage
Association, 5.44% due
10/01/1998 29,995,467 29,995,467 0.3
-------------- --------------- ------
118,716,794 118,716,794 1.0
Total Short-Term Securities 1,498,582,904 1,498,582,904 13.1
Total Investments $8,374,509,353 11,439,524,668 99.9
==============
Other Assets Less Liabilities 13,074,845 0.1
--------------- ------
Net Assets $11,452,599,513 100.0%
=============== ======
Net Asset Value: Class A--Based on net assets of $5,059,844,010 and
146,655,824 shares outstanding $ 34.50
===============
Class B--Based on net assets of $4,333,225,425 and
127,758,165 shares outstanding $ 33.92
===============
Class C--Based on net assets of $475,841,933 and
14,181,472 shares outstanding $ 33.55
===============
Class D--Based on net assets of $1,583,688,145 and
46,023,673 shares outstanding $ 34.41
===============
<FN>
*American Depositary Receipts (ADR).
**Commercial Paper and certain US Government Agency Obligations are
traded on a discount basis. The interest rates shown reflect the
discount rates paid at the time of purchase by the Fund.
</TABLE>
Merrill Lynch Basic Value Fund, Inc.
September 30, 1998
PORTFOLIO INFORMATION
As of September 30, 1998
Percent of
Ten Largest Stock Holdings Net Assets
International Business Machines
Corporation 3.3%
Exxon Corporation 2.9
Mobil Corporation 2.4
Royal Dutch Petroleum Company
(NY Registered Shares) 2.3
Citicorp 2.1
Chevron Corporation 2.0
Ford Motor Company 2.0
Texaco Inc. 1.9
duPont (E.I.) de Nemours & Co. 1.9
Norwest Corporation 1.9
Portfolio Changes for the Quarter Ended
September 30, 1998
Additions
Applied Materials, Inc.
Hewlett-Packard Company
Deletions
COMPAQ Computer Corporation
Merrill Lynch Basic Value Fund, Inc.
September 30, 1998
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
Fred G. Weiss, Director
Terry K. Glenn, Executive Vice President
Norman R. Harvey, Senior Vice President
Paul M. Hoffmann, Senior Vice President
and Portfolio Manager
Donald C. Burke, Vice President
Gerald M. Richard, Treasurer
Thomas D. Jones, III, Secretary
Custodian
The Bank of New York
90 Washington Street, 12th Floor
New York, NY 10286
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
