MERRILL LYNCH
BASIC VALUE
FUND, INC.
FUND LOGO
Semi-Annual Report
December 31, 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
During 1998, stock and bond market volatility reflected shifting
investor perceptions regarding global economic prospects. Investor
optimism early in the year gave way to expectations of deteriorating
corporate profits and signs of a weakening economy by late summer.
Further concerns arose from the precarious state of the Russian and
other emerging market economies. As a result, world stock markets
declined in the July--September period. At the same time, the
uncertain economic picture and the resulting flight to quality by
investors pushed the 30-year US Treasury bond to record low yields.
Yields also declined in sovereign bond markets of other major
industrialized countries. In contrast, corporate bonds, mortgage-
backed securities and emerging markets debt underperformed US
Treasury securities by a wide margin.
The US Federal Reserve Board and other central banks responded to
the uncertain economic outlook through a series of monetary policy
easings that served to restore investor confidence as 1998 drew
toward a close. Stock markets around the world rallied, with the
unmanaged Standard & Poor's 500 Index rising 21.3% and the unmanaged
Morgan Stanley Capital International World Index (Ex-US) increasing
20.5% during the fourth quarter of 1998. However, as 1999 began,
uncertainty regarding global economic prospects again began to cloud
the investment outlook. At the same time, with stronger-than-
expected economic results, prospects dimmed for further Federal
Reserve Board monetary policy easings in the near future. The
notable exception to the more subdued investment outlook in the
United States was the unprecedented popularity of Internet-related
stocks.
The weakening of the US dollar relative to the Japanese yen was one
of the year's more surprising developments. Since a stronger yen
would have a negative impact on the important export sector of
Japan's fragile economy, the Japanese central bank intervened in the
currency markets in January. For the overall global economy, the
deepening recession in Japan is of great concern. At the same time,
the difficulties in emerging economies such as Russia and Brazil
remain. Further progress in easing strains within the global
financial system would likely provide an important element of
stability to the volatile investment environment.
Portfolio Matters
Security purchases during the final quarter of 1998 amounted to $328
million, while security sales were $361 million. On the buy side, we
initiated one new position and added to 17 existing positions. On
the sell side, we eliminated one holding and reduced positions in 19
commitments.
A new addition to the portfolio was The Boeing Co., the world's
largest commercial aircraft manufacturer and a major military
supplier. Early in December of 1998, the company warned, for the
second time in less than five months, that sales and earnings
forecasts were overly optimistic. This second disappointment in just
a few months led to massive liquidation of the stock and a
precipitous price decline. Also, there were at least six downgrades
of the stock by brokerage house analysts. We viewed all these
negatives as a buying opportunity.
The Boeing Co. has clearly been hurt by the economic turmoil in
Asia, and the company's current guidance is for a prolonged period
of reduced commercial aircraft deliveries. We think that there is a
possibility current projections are overly pessimistic. Also, the
company has strong cash flow and is continuing a stock buy-back
program. At our entry price, additional risks seemed minimal, and
long-term recovery prospects seemed favorable.
Merrill Lynch Basic Value Fund, Inc.
December 31, 1998
The major additions to established positions were Caterpillar Inc.,
Hewlett-Packard Company, Union Pacific Corporation and Diamond
Offshore Drilling, Inc. Each was a new addition earlier in 1998, and
we took advantage of price weakness and market volatility to build
these holdings.
On the sell side, we eliminated Starwood Hotels & Resorts Worldwide,
Inc., the company that acquired ITT Corp., a long-time holding in
the portfolio. Partial sales included reductions in International
Business Machines Corporation and Citigroup Inc., which remain our
two largest holdings. We secured some profits in energy stocks with
sales of Exxon Corporation and Mobil Corporation on the announcement
of their pending merger. Also, we cut back on Chevron Corporation
and Royal Dutch Petroleum Company.
For the full year, security purchases amounted to $1.9 billion while
security sales totaled $1.5 billion. The sales generated cumulative
profits of 76%, equal to $671 million. At December 31, 1998, our
cash position stood at 10.0% of net assets, the lowest of the year,
down from 13.2% at the end of the September quarter.
In Conclusion
Relative to the Standard & Poor's 500 Index, 1998 was not a good
year for Merrill Lynch Basic Value Fund, Inc. A handful of very high-
valuation growth stocks contributed the bulk of the S&P 500's gain
although, in fact, more stocks declined in price for the year than
advanced, by a margin of about four to three on the New York Stock
Exchange and five to three on NASDAQ.
A hallmark of Merrill Lynch Basic Value Fund, Inc. during its more
than 20-year history has been its strict adherence to the "value"
philosophy. The temptation to make some adjustments in 1998 was
evident, but was easily resisted. The valuation disparities between
"growth" and "value" have seldom, if ever, been greater, but we
expect the gap will begin to narrow in 1999.
Thank you for your investment in Merrill Lynch Basic Value Fund,
Inc. We look forward to reviewing our outlook and strategy in our
upcoming quarterly report to shareholders.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Paul M. Hoffmann)
Paul M. Hoffmann
Senior Vice President and Portfolio Manager
February 8, 1999
Merrill Lynch Basic Value Fund, Inc.
December 31, 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 12/31/98 +11.66% + 5.80%
Five Years Ended 12/31/98 +18.21 +16.94
Ten Years Ended 12/31/98 +15.00 +14.38
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 12/31/98 +10.51% + 6.51%
Five Years Ended 12/31/98 +17.00 +17.00
Ten Years Ended 12/31/98 +13.83 +13.83
[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 12/31/98 +10.48% + 9.48%
Inception (10/21/94)
through 12/31/98 +19.79 +19.79
[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 12/31/98 +11.34% + 5.49%
Inception (10/21/94)
through 12/31/98 +20.73 +19.19
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
Merrill Lynch Basic Value Fund, Inc.
December 31, 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 from $947.50 on July 1, 1977 to $24,353.31 on
December 31, 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* +11.66% +12.38% +304.52%
ML Basic Value Fund Class B Shares* +10.51 +12.06 +265.21
ML Basic Value Fund Class C Shares* +10.48 +12.07 +113.29
ML Basic Value Fund Class D Shares* +11.34 +12.27 +120.40
Dow Jones Industrial Average** +18.12 +17.59 +461.64/+158.83
Standard & Poor's 500 Index** +28.58 +21.30 +479.62/+188.38
<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/since inception periods are Class A & Class B Shares,
for the ten years ended 12/31/98 and Class C & Class D Shares, from
10/21/94 to 12/31/98.
**An unmanaged broad-based index comprised of common stocks. Ten
years/since inception total returns are for the ten years ended
12/31/98 and from 10/21/94 to 12/31/98, respectively.
</TABLE>
Merrill Lynch Basic Value Fund, Inc.
December 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS
<CAPTION>
Shares Value Percent of
Industry Held Stocks Cost (Note 1a) Net Assets
Low Price to Book Value
<S> <C> <S> <C> <C> <C>
Metals/Non-Ferrous 1,400,000 ASARCO Incorporated $ 36,667,971 $ 21,087,500 0.2%
Insurance 2,500,000 American General Corporation 54,530,936 195,000,000 1.6
Insurance 260,000 American National Insurance Company 9,749,442 21,450,000 0.2
Steel 4,500,000 ++Bethlehem Steel Corporation 56,745,956 37,687,500 0.3
Aerospace 3,800,000 The Boeing Co. 127,722,727 123,975,000 1.0
Restaurants 3,900,000 Darden Restaurants, Inc. 36,505,673 70,200,000 0.6
Information Processing 1,700,000 ++Data General Corporation 23,665,586 27,943,750 0.2
Retail 3,200,000 ++Federated Department Stores, Inc. 101,593,301 139,400,000 1.1
Capital Goods 2,500,000 Fluor Corporation 134,723,501 106,406,250 0.8
Automotive 4,600,000 Ford Motor Company 91,435,351 269,962,500 2.2
Automotive 2,600,000 General Motors Corporation 114,646,840 186,062,500 1.5
Insurance 2,500,000 The Hartford Financial Services Group, Inc. 31,155,644 137,187,500 1.1
Chemicals 1,200,000 Imperial Chemical Industries PLC (ADR)* 66,336,804 41,925,000 0.3
Paper & Forest Products 2,200,000 International Paper Company 83,127,628 98,587,500 0.8
Retail 6,000,000 ++Kmart Corporation 72,061,012 91,875,000 0.7
Insurance 1,400,000 PartnerRe Ltd. 29,498,937 64,050,000 0.5
Beverages 2,000,000 The Seagram Company Ltd. 67,693,445 76,000,000 0.6
Steel 3,000,000 USX-U.S. Steel Group 90,807,536 69,000,000 0.5
Chemicals 2,600,000 Union Carbide Corporation 84,717,281 110,500,000 0.9
Railroads 4,400,000 Union Pacific Corporation 197,975,344 198,275,000 1.6
Retail 4,000,000 Venator Group, Inc. 55,901,671 25,750,000 0.2
Banking 9,600,000 Wells Fargo Company 152,700,107 383,400,000 3.1
-------------- --------------- ------
1,719,962,693 2,495,725,000 20.0
Below-Average Price/Earnings Ratio
Telecommunications 2,800,000 AT&T Corp. 100,871,726 210,700,000 1.7
Insurance 5,000,000 The Allstate Corporation 58,084,911 193,125,000 1.5
Banking 2,600,000 BankAmerica Corporation 73,705,440 156,325,000 1.3
Farm & Construction
Equipment 4,000,000 Caterpillar Inc. 216,034,335 184,000,000 1.5
Banking 8,200,000 Citigroup Inc. 186,320,196 405,900,000 3.3
Farm & Construction
Equipment 5,000,000 Deere & Company 127,302,509 165,625,000 1.3
Oil Services & Equipment 4,300,000 Diamond Offshore Drilling, Inc. 179,184,079 101,856,250 0.8
Photography 1,650,000 Eastman Kodak Company 95,813,937 118,800,000 0.9
Capital Goods 1,900,000 Eaton Corporation 112,837,489 134,306,250 1.1
Oil Services & Equipment 3,700,000 Halliburton Company 89,026,834 109,612,500 0.9
Chemicals 2,600,000 Hercules Incorporated 69,675,936 71,175,000 0.6
Information Processing 3,000,000 Hewlett-Packard Company 176,124,934 204,937,500 1.6
Machinery 4,400,000 ITT Industries, Inc. 97,507,038 174,900,000 1.4
Machinery 3,600,000 Ingersoll-Rand Company 83,867,995 168,975,000 1.4
Electrical Equipment 3,400,000 Koninklijke (Royal) Philips Electronics
N.V. (NY Registered Shares) 102,305,643 230,137,500 1.8
Tobacco 3,600,000 Philip Morris Companies Inc. 121,046,095 192,600,000 1.5
Fertilizers 1,600,000 Potash Corporation of Saskatchewan Inc. 125,426,223 102,200,000 0.8
Retail 4,000,000 Sears, Roebuck and Co. 123,523,136 170,000,000 1.4
Electronics 2,400,000 Tektronix, Inc. (a) 62,202,224 72,150,000 0.6
Electrical Equipment 2,000,000 Thomas & Betts Corporation 94,512,198 86,625,000 0.7
Savings & Loans 2,520,000 Washington Mutual, Inc. 35,180,899 96,232,500 0.8
-------------- --------------- ------
2,330,553,777 3,350,182,500 26.9
</TABLE>
Merrill Lynch Basic Value Fund, Inc.
December 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Shares Value Percent of
Industry Held Stocks Cost (Note 1a) Net Assets
Above-Average Yield
<S> <C> <S> <C> <C> <C>
Oil--Domestic 2,300,000 Atlantic Richfield Company $ 130,818,339 $ 150,075,000 1.2%
Telecommunications 2,900,000 Bell Atlantic Corporation 78,567,640 153,700,000 1.2
Oil--International 2,016,672 British Petroleum Company PLC (ADR)* 70,853,905 191,583,840 1.5
Utilities--Electric 2,000,000 CINergy Corp. 56,772,786 68,750,000 0.5
Oil--International 2,550,000 Chevron Corporation 119,882,204 211,490,625 1.7
Utilities--Electric 1,550,000 Consolidated Edison, Inc. 36,876,249 81,956,250 0.7
Utilities--Electric 956,250 DPL, Inc. 6,204,369 20,678,906 0.2
Chemicals 4,000,000 du Pont (E.I.) de Nemours and Company 181,450,756 212,250,000 1.7
Utilities--Electric 3,000,000 Entergy Corporation 69,641,133 93,375,000 0.7
Telecommunications 3,300,000 GTE Corporation 109,572,500 214,500,000 1.7
Foods 1,900,000 General Mills, Inc. 97,543,255 147,725,000 1.2
Real Estate Investment 440,000 Irvine Apartment Communities, Inc. 7,126,791 14,025,000 0.1
Trust
Real Estate Investment 900,000 Liberty Property Trust 17,263,193 22,162,500 0.2
Trust
Real Estate Investment 500,000 The Mills Corporation 10,080,375 9,937,500 0.1
Trust
Oil--International 3,400,000 Mobil Corporation 118,294,543 296,225,000 2.4
Utilities--Electric 2,400,000 NIPSCO Industries, Inc. 27,387,777 73,050,000 0.6
Banking 1,800,000 National City Corporation 119,363,090 130,500,000 1.0
Oil--Domestic 4,200,000 Occidental Petroleum Corporation 92,844,446 70,875,000 0.6
Utilities--Electric 2,400,000 PECO Energy Company 56,812,882 99,900,000 0.8
Utilities--Electric 1,800,000 Public Service Enterprise Group
Incorporated 48,476,636 72,000,000 0.6
Oil--International 5,300,000 Royal Dutch Petroleum Company
(NY Registered Shares) 150,095,978 253,737,500 2.0
Real Estate Investment 1,600,000 Simon Property Group Inc. 32,239,889 45,600,000 0.4
Trust
Real Estate Investment Trust 500,000 Summit Properties Inc. 9,048,400 8,625,000 0.1
Oil--International 3,500,000 Texaco Inc. 133,671,295 185,062,500 1.5
Utilities--Electric 2,900,000 Texas Utilities Company 103,140,138 135,393,750 1.1
Telecommunications 3,000,000 U S West, Inc. 77,072,442 193,875,000 1.6
-------------- --------------- ------
1,961,101,011 3,157,053,371 25.4
Special Solutions
Telecommunications 4,000,000 Ameritech Corporation 129,713,471 253,500,000 2.0
Semiconductors 4,400,000 Applied Materials, Inc. 148,012,345 187,825,000 1.5
Savings & Loans 3,400,000 Associates First Capital Corporation
(Class A) 76,156,826 144,075,000 1.1
Pharmaceuticals 1,200,000 Bristol-Myers Squibb Company 34,026,064 160,575,000 1.3
Oil--International 4,500,000 Exxon Corporation 167,157,353 329,062,500 2.6
Information Processing 2,800,000 International Business Machines
Corporation 110,578,394 517,300,000 4.2
Pharmaceuticals 400,000 Merck & Co., Inc. 15,081,688 59,075,000 0.5
Telecommunications 1,632,000 Telefonica S.A. (ADR)* 63,336,735 220,932,000 1.8
Semiconductors 1,650,000 Texas Instruments Incorporated 74,986,144 141,178,125 1.1
Information Processing 5,000,000 ++Unisys Corporation 53,702,547 172,187,500 1.4
Pharmaceuticals 1,320,000 Zeneca Group PLC (ADR)* 12,980,000 59,235,000 0.5
-------------- --------------- ------
885,731,567 2,244,945,125 18.0
Total Stocks 6,897,349,048 11,247,905,996 90.3
</TABLE>
Merrill Lynch Basic Value Fund, Inc.
December 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Face Value Percent of
Amount Issue Cost (Note 1a) Net Assets
Short-Term Securities
<S> <C> <S> <C> <C> <C>
Commercial Paper** $65,000,000 Amsterdam Funding Corp., 5.40% due
1/12/1999 $ 64,883,000 $ 64,883,000 0.5%
16,041,000 Block Financial Corp., 5.28% due 1/11/1999 16,015,121 16,015,121 0.1
10,000,000 CSW Credit Inc., 5.21% due 1/26/1999 9,962,372 9,962,372 0.1
50,000,000 CXC Incorporated, 5.30% due 1/13/1999 49,904,306 49,904,306 0.4
43,762,000 Clipper Receivables Corp., 5.45% due
1/07/1999 43,715,624 43,715,624 0.4
Concord Minutemen Capital Co. LLC:
25,000,000 5.45% due 1/11/1999 24,958,368 24,958,368 0.2
15,300,000 5.40% due 1/13/1999 15,270,165 15,270,165 0.1
60,540,000 5.58% due 1/13/1999 60,418,012 60,418,012 0.5
24,000,000 5.45% due 1/15/1999 23,945,500 23,945,500 0.2
14,000,000 Corporate Asset Funding Co., Inc., 5.32%
due 1/29/1999 13,940,002 13,940,002 0.1
30,272,000 Delaware Funding Corp., 5.60% due
1/05/1999 30,248,455 30,248,455 0.3
50,000,000 Edison Asset Securitization LLC, 5.55% due
1/04/1999 49,969,167 49,969,167 0.4
Eureka Securitization Inc.:
35,000,000 5.48% due 1/06/1999 34,968,033 34,968,033 0.3
50,000,000 5.48% due 1/08/1999 49,939,111 49,939,111 0.4
31,080,000 Falcon Asset Securitization Corp., 5.53%
due 1/11/1999 31,027,483 31,027,483 0.3
24,857,000 General Motors Acceptance Corp., 5.13%
due 1/04/1999 24,842,831 24,842,831 0.2
50,000,000 Greyhawk Capital Corp., 5.40% due
1/12/1999 49,910,000 49,910,000 0.4
70,000,000 International Securitization Corp., 5.63%
due 1/14/1999 69,846,739 69,846,739 0.6
Lexington Parker Capital Company, LLC:
40,000,000 5.45% due 1/04/1999 39,975,778 39,975,778 0.3
50,000,000 5.45% due 1/05/1999 49,962,153 49,962,153 0.4
30,000,000 5.58% due 1/15/1999 29,930,250 29,930,250 0.2
25,712,000 Metropolitan Life Insurance Company,
5.30% due 1/06/1999 25,689,288 25,689,288 0.2
Preferred Receivables Funding Corp.:
13,300,000 5.60% due 1/05/1999 13,289,656 13,289,656 0.1
50,000,000 5.52% due 1/22/1999 49,831,333 49,831,333 0.4
50,000,000 Riverwoods Funding Corp., 5.44% due
1/11/1999 49,916,889 49,916,889 0.4
27,000,000 Three Rivers Funding Corp., 5.60% due
1/15/1999 26,937,000 26,937,000 0.2
Variable Funding Capital Corp.:
11,915,000 5.65% due 1/04/1999 11,907,520 11,907,520 0.1
50,000,000 5.50% due 1/06/1999 49,954,167 49,954,167 0.4
50,000,000 5.54% due 1/08/1999 49,938,444 49,938,444 0.4
30,000,000 5.38% due 1/14/1999 29,937,233 29,937,233 0.2
25,000,000 Vermont American Corp., 5.50% due
1/21/1999 24,919,792 24,919,792 0.2
50,000,000 WCP Funding Inc., 5.48% due 1/07/1999 49,946,722 49,946,722 0.4
-------------- --------------- ------
1,165,900,514 1,165,900,514 9.4
</TABLE>
Merrill Lynch Basic Value Fund, Inc.
December 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (concluded)
<CAPTION>
Face Value Percent of
Amount Issue Cost (Note 1a) Net Assets
Short-Term Securities (concluded)
<S> <C> <S> <C> <C> <C>
US Government Agency Federal Home Loan Mortgage Corporation:
Obligations** $24,771,000 5.09% due 1/08/1999 $ 24,742,981 $ 24,742,981 0.2%
47,606,000 5.10% due 1/08/1999 47,552,047 47,552,047 0.4
72,295,028 72,295,028 0.6
Total Short-Term Securities 1,238,195,542 1,238,195,542 10.0
Total Investments $8,135,544,590 12,486,101,538 100.3
==============
Liabilities in Excess of Other Assets (34,652,736) (0.3)
--------------- ------
Net Assets $12,451,448,802 100.0%
=============== ======
<FN>
++Non-income producing security.
*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.
(a)Investments in companies 5% or more of whose outstanding
securities are held by the Fund (such companies are defined as
"Affiliated Companies" in section 2 (a)(3) of the Investment Company
Act of 1940) are as follows:
Net Share Net Dividend
Industry Affiliate Activity Cost Income
Electronics Tektronix, Inc. 150,000 $3,569,505 $ 558,000
See Notes to Financial Statements.
</TABLE>
PORTFOLIO INFORMATION
As of December 31, 1998
Percent of
Ten Largest Stock Holdings Net Assets
International Business Machines
Corporation 4.2%
Citigroup Inc. 3.3
Wells Fargo Company 3.1
Exxon Corporation 2.6
Mobil Corporation 2.4
Ford Motor Company 2.2
Royal Dutch Petroleum Company
(NY Registered Shares) 2.0
Ameritech Corporation 2.0
Koninklijke (Royal) Philips Electronics
N.V. (NY Registered Shares) 1.8
Telefonica S.A. (ADR) 1.8
Portfolio Changes for the Quarter
Ended December 31, 1998
Additions
The Boeing Co.
Deletions
Starwood Hotels & Resorts Worldwide, Inc.
Merrill Lynch Basic Value Fund, Inc.
December 31, 1998
FINANCIAL INFORMATION
<TABLE>
Statement of Assets and Liabilities as of December 31, 1998
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$8,135,544,590) (Note 1a) $12,486,101,538
Cash 326
Receivables:
Dividends $ 17,202,451
Capital shares sold 15,621,568 32,824,019
---------------
Prepaid registration fees and other assets (Note 1d) 206,428
---------------
Total assets 12,519,132,311
---------------
Liabilities: Payables:
Capital shares redeemed 38,116,259
Securities purchased 17,098,596
Distributor (Note 2) 4,789,021
Investment adviser (Note 2) 4,253,335 64,257,211
---------------
Accrued expenses and other liabilities 3,426,298
---------------
Total liabilities 67,683,509
---------------
Net Assets: Net assets $12,451,448,802
===============
Net Assets Class A Shares of Common Stock, $0.10 par value, 400,000,000
Consist of: shares authorized $ 14,273,595
Class B Shares of Common Stock, $0.10 par value, 400,000,000
shares authorized 12,614,873
Class C Shares of Common Stock, $0.10 par value, 200,000,000
shares authorized 1,390,673
Class D Shares of Common Stock, $0.10 par value, 200,000,000
shares authorized 4,707,132
Paid-in capital in excess of par 7,982,685,179
Undistributed investment income--net 1,627,598
Undistributed realized capital gains on investments--net 83,592,804
Unrealized appreciation on investments--net 4,350,556,948
---------------
Net assets $12,451,448,802
===============
Net Asset Value: Class A--Based on net assets of $5,426,113,030 and 142,735,950
shares outstanding $ 38.02
===============
Class B--Based on net assets of $4,724,527,504 and 126,148,728
shares outstanding $ 37.45
===============
Class C--Based on net assets of $515,166,598 and 13,906,729
shares outstanding $ 37.04
===============
Class D--Based on net assets of $1,785,641,670 and 47,071,319
shares outstanding $ 37.93
===============
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Basic Value Fund, Inc.
December 31, 1998
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations for the Six Months Ended December 31, 1998
<S> <S> <C> <C>
Investment Dividends (net of $907,815 foreign withholding tax) $ 120,095,718
Income Interest and discount earned 45,250,960
(Notes 1b & 1c): Other 186,905
---------------
Total income 165,533,583
---------------
Expenses: Investment advisory fees (Note 2) $ 24,761,001
Account maintenance and distribution fees--Class B (Note 2) 23,243,563
Transfer agent fees--Class A (Note 2) 3,492,174
Transfer agent fees--Class B (Note 2) 3,370,034
Account maintenance and distribution fees--Class C (Note 2) 2,538,039
Account maintenance fees--Class D (Note 2) 2,123,568
Transfer agent fees--Class D (Note 2) 1,090,309
Transfer agent fees--Class C (Note 2) 395,430
Accounting services (Note 2) 356,595
Printing and shareholder reports 226,542
Custodian fees 207,594
Registration fees (Note 1d) 204,180
Professional fees 45,932
Directors' fees and expenses 21,740
Pricing fees 3,409
Other 90,090
---------------
Total expenses 62,170,200
---------------
Investment income--net 103,363,383
---------------
Realized & Realized gain (loss) from:
Unrealized Gain Investments--net 200,767,004
(Loss) on Foreign currency transactions--net (3,687) 200,763,317
Investments--Net ---------------
(Notes 1c, 1e, Change in unrealized appreciation on investments--net (425,199,905)
1f & 3): ---------------
Net Decrease in Net Assets Resulting from Operations $ (121,073,205)
===============
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Basic Value Fund, Inc.
December 31, 1998
FINANCIAL INFORMATION (continued)
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Six For the
Months Ended Year Ended
Increase (Decrease) in Net Assets: Dec. 31, 1998 June 30, 1998
<S> <S> <C> <C>
Operations: Investment income--net $ 103,363,383 $ 196,693,190
Realized gain on investments and foreign currency
transactions--net 200,763,317 950,656,787
Change in unrealized appreciation on investments--net (425,199,905) 1,196,444,669
--------------- ---------------
Net increase (decrease) in net assets resulting from
operations (121,073,205) 2,343,794,646
--------------- ---------------
Dividends & Investment income--net:
Distributions to Class A (115,384,648) (104,991,974)
Shareholders Class B (52,615,334) (48,188,281)
(Note 1g): Class C (5,952,343) (4,614,624)
Class D (31,919,616) (20,742,423)
Realized gain on investments--net:
Class A (342,278,197) (298,730,147)
Class B (297,574,541) (254,752,228)
Class C (32,811,336) (22,962,880)
Class D (104,731,010) (64,611,806)
--------------- ---------------
Net decrease in net assets resulting from dividends and
distributions to shareholders (983,267,025) (819,594,363)
--------------- ---------------
Capital Share Net increase in net assets derived from capital share
Transactions transactions 418,125,923 1,378,654,564
(Note 4): --------------- ---------------
Net Assets: Total increase (decrease) in net assets (686,214,307) 2,902,854,847
Beginning of period 13,137,663,109 10,234,808,262
--------------- ---------------
End of period* $12,451,448,802 $13,137,663,109
=============== ===============
<FN>
*Undistributed investment income--net $ 1,627,598 $ 104,136,156
=============== ===============
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Basic Value Fund, Inc.
December 31, 1998
FINANCIAL INFORMATION (continued)
<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: 1998++ 1998++ 1997++ 1996 1995
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 41.55 $ 36.50 $ 30.22 $ 26.44 $ 23.17
Operating ---------- ---------- ---------- ---------- ----------
Performance: Investment income--net .40 .83 .81 .80 .74
Realized and unrealized gain (loss)
on investments and foreign currency
transactions--net (.71) 7.23 7.66 4.31 4.01
---------- ---------- ---------- ---------- ----------
Total from investment operations (.31) 8.06 8.47 5.11 4.75
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.81) (.78) (.80) (.76) (.69)
Realized gain on investments--net (2.41) (2.23) (1.39) (.57) (.79)
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (3.22) (3.01) (2.19) (1.33) (1.48)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 38.02 $ 41.55 $ 36.50 $ 30.22 $ 26.44
========== ========== ========== ========== ==========
Total Investment Based on net asset value per share (0.35%)+++ 23.23% 29.95% 19.92% 21.67%
Return:** ========== ========== ========== ========== ==========
Ratios to Average Expenses .55%* .54% .55% .56% .59%
Net Assets: ========== ========== ========== ========== ==========
Investment income--net 2.14%* 2.14% 2.54% 2.88% 3.19%
========== ========== ========== ========== ==========
Supplemental Net assets, end of period
Data: (in thousands) $5,426,113 $5,888,853 $4,921,834 $3,587,558 $2,834,652
========== ========== ========== ========== ==========
Portfolio turnover 6.75% 17.79% 13.00% 13.94% 11.69%
========== ========== ========== ========== ==========
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Based on average shares outstanding.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Basic Value Fund, Inc.
December 31, 1998
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: 1998++ 1998++ 1997++ 1996 1995
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 40.78 $ 35.89 $ 29.76 $ 26.08 $ 22.87
Operating ---------- ---------- ---------- ---------- ----------
Performance: Investment income--net .21 .43 .48 .53 .53
Realized and unrealized gain (loss)
on investments and foreign currency
transactions--net (.71) 7.11 7.55 4.23 3.93
---------- ---------- ---------- ---------- ----------
Total from investment operations (.50) 7.54 8.03 4.76 4.46
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.42) (.42) (.51) (.51) (.46)
Realized gain on investments--net (2.41) (2.23) (1.39) (.57) (.79)
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (2.83) (2.65) (1.90) (1.08) (1.25)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 37.45 $ 40.78 $ 35.89 $ 29.76 $ 26.08
========== ========== ========== ========== ==========
Total Investment Based on net asset value per share (0.87%)+++ 21.97% 28.61% 18.71% 20.45%
Return:** ========== ========== ========== ========== ==========
Ratios to Average Expenses 1.57%* 1.56% 1.57% 1.58% 1.61%
Net Assets: ========== ========== ========== ========== ==========
Investment income--net 1.12%* 1.13% 1.53% 1.86% 2.16%
========== ========== ========== ========== ==========
Supplemental Net assets, end of period (in
Data: thousands) $4,724,527 $4,976,004 $4,088,755 $3,288,963 $2,464,248
========== ========== ========== ========== ==========
Portfolio turnover 6.75% 17.79% 13.00% 13.94% 11.69%
========== ========== ========== ========== ==========
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Based on average shares outstanding.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Basic Value Fund, Inc.
December 31, 1998
FINANCIAL INFORMATION (continued)
<TABLE>
Financial Highlights (continued)
<CAPTION>
Class C
For the For the
The following per share data and ratios have been derived Six Months Period
from information provided in the financial statements. Ended Oct. 21, 1994++++
Dec. 31, For the Year Ended June 30, to June 30,
Increase (Decrease) in Net Asset Value: 1998++ 1998++ 1997++ 1996 1995
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 40.39 $ 35.59 $ 29.56 $ 25.98 $ 22.92
Operating ---------- ---------- ---------- ---------- ----------
Performance: Investment income--net .20 .43 .47 .55 .44
Realized and unrealized gain (loss) on
investments and foreign currency
transactions--net (.70) 7.04 7.49 4.18 3.05
---------- ---------- ---------- ---------- ----------
Total from investment operations (.50) 7.47 7.96 4.73 3.49
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.44) (.44) (.54) (.58) (.33)
Realized gain on investments--net (2.41) (2.23) (1.39) (.57) (.10)
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (2.85) (2.67) (1.93) (1.15) (.43)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 37.04 $ 40.39 $ 35.59 $ 29.56 $ 25.98
========== ========== ========== ========== ==========
Total Investment Based on net asset value per share (0.90%)+++ 21.98% 28.60% 18.69% 15.59%+++
Return:** ========== ========== ========== ========== ==========
Ratios to Average Expenses 1.58%* 1.57% 1.58% 1.59% 1.66%*
Net Assets: ========== ========== ========== ========== ==========
Investment income--net 1.12%* 1.12% 1.51% 1.83% 2.09%*
========== ========== ========== ========== ==========
Supplemental Net assets, end of period (in
Data: thousands) $ 515,167 $ 538,104 $ 337,828 $ 211,787 $ 74,334
========== ========== ========== ========== ==========
Portfolio turnover 6.75% 17.79% 13.00% 13.94% 11.69%
========== ========== ========== ========== ==========
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Based on average shares outstanding.
++++Commencement of operations.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Basic Value Fund, Inc.
December 31, 1998
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights (concluded)
<CAPTION>
Class D
For the For the
The following per share data and ratios have been derived Six Months Period
from information provided in the financial statements. Ended Oct. 21, 1994++++
Dec. 31, For the Year Ended June 30, to June 30,
Increase (Decrease) in Net Asset Value: 1998++ 1998++ 1997++ 1996 1995
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 41.42 $ 36.42 $ 30.16 $ 26.41 $ 23.19
Operating ---------- ---------- ---------- ---------- ----------
Performance: Investment income--net .35 .74 .73 .76 .50
Realized and unrealized gain (loss)
on investments and foreign currency
transactions--net (.71) 7.19 7.66 4.27 3.17
---------- ---------- ---------- ---------- ----------
Total from investment operations (.36) 7.93 8.39 5.03 3.67
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.72) (.70) (.74) (.71) (.35)
Realized gain on investments--net (2.41) (2.23) (1.39) (.57) (.10)
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (3.13) (2.93) (2.13) (1.28) (.45)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 37.93 $ 41.42 $ 36.42 $ 30.16 $ 26.41
========== ========== ========== ========== ==========
Total Investment Based on net asset value per share (0.49%)+++ 22.89% 29.65% 19.61% 16.23%+++
Return:** ========== ========== ========== ========== ==========
Ratios to Average Expenses .80%* .79% .80% .81% .87%*
Net Assets: ========== ========== ========== ========== ==========
Investment income--net 1.89%* 1.89% 2.28% 2.61% 2.88%*
========== ========== ========== ========== ==========
Supplemental Net assets, end of period (in
Data: thousands) $1,785,642 $1,734,702 $ 886,391 $ 434,396 $ 203,033
========== ========== ========== ========== ==========
Portfolio turnover 6.75% 17.79% 13.00% 13.94% 11.69%
========== ========== ========== ========== ==========
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Based on average shares outstanding.
++++Commencement of operations.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Basic Value Fund, Inc.
December 31, 1998
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch Basic Value Fund, Inc. (the "Fund") is registered
under the Investment Company Act of 1940 as a diversified, open-end
management investment company. The Fund's financial statements are
prepared in accordance with generally accepted accounting principles
which may require the use of management accruals and estimates.
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 PricingSM System. Shares of
Class A and Class D are sold with a front-end sales charge. Shares
of Class B and Class C may be subject to a contingent deferred sales
charge. All classes of shares have identical voting, dividend,
liquidation and other rights and the same terms and conditions,
except that Class B, Class C and Class D Shares bear certain
expenses related to the account maintenance of such shares, and
Class B and Class C Shares also bear certain expenses related to the
distribution of such shares. Each class has exclusive voting rights
with respect to matters relating to its account maintenance and
distribution expenditures. The following is a summary of significant
accounting policies followed by the Fund.
(a) Valuation of investments--Portfolio securities which are traded
on stock exchanges are valued at the last sale price on the exchange
on which such securities are traded, as of the close of business on
the day the securities are being valued or, lacking any sales, at
the last available bid price. Securities traded in the over-the-
counter market are valued at the last available bid price prior to
the time of valuation. In cases where securities are traded on more
than one exchange, the securities are valued on the exchange
designated by or under the authority of 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. In
the case of options traded in the over-the-counter market, valuation
is 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 dates. Interest income (including amortization of discount)
is recognized on the accrual basis. Realized gains and losses on
security transactions are determined on the identified cost basis.
(d) Prepaid registration fees--Prepaid registration fees are charged
to expense as the related shares are issued.
(e) Derivative financial instruments--The Fund may engage in various
portfolio strategies to seek to increase its return by hedging its
portfolio against adverse movements in the equity markets. Losses
may arise due to changes in the value of the contract or if the
counterparty does not perform under the contract.
* Options--The Fund is authorized to write covered call options. When
the Fund writes an option, an amount equal to the premium received
by the Fund is reflected as an asset and an equivalent liability.
The amount of the liability is subsequently marked to market to
reflect the current market value of the option written. 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).
Merrill Lynch Basic Value Fund
December 31, 1998
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 ("MLFD" or "Distributor"), a division of Princeton Funds
Distributor, Inc. ("PFD"), which is 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 $100
million but not exceeding $200 million; and 0.40% of average daily
net assets in excess of $200 million.
Pursuant to 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
Maintenance Distribution
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 Incorporated ("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, 1998, 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 $13,717 $186,759
Class D $38,560 $551,864
For the six months ended December 31, 1998, MLPF&S received
contingent deferred sales charges of $2,635,045 and $99,696 relating
to transactions in Class B and Class C Shares, respectively.
Furthermore, MLPF&S received contingent deferred sales charges of
$4,174 relating to transactions subject to front-end sales charge
waivers in Class A Shares.
In addition, MLPF&S received $79,500 in commissions on the execution
of portfolio security transactions for the Fund for the six months
ended December 31, 1998.
Financial Data Services, Inc. ("FDS"), a wholly-owned subsidiary of
ML & Co., is the Fund's transfer agent.
Accounting services are provided to the Fund by FAM at cost.
Certain officers and/or directors of the Fund are officers and/or
directors of FAM, PSI, FDS, PFD, and/or ML & Co.
Merrill Lynch Basic Value Fund, Inc.
December 31, 1998
NOTES TO FINANCIAL STATEMENTS (concluded)
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended December 31, 1998 were $994,398,767 and
$714,567,370, respectively.
Net realized gains (losses) for the six months ended December 31,
1998 and net unrealized gains as of December 31, 1998 were as
follows:
Realized Unrealized
Gains (Losses) Gains
Long-term investments $200,757,249 $4,350,556,948
Short-term investments 9,755 --
Foreign currency
transaction (3,687) --
------------ --------------
Total $200,763,317 $4,350,556,948
============ ==============
As of December 31, 1998, net unrealized appreciation for Federal
income tax purposes aggregated $4,350,556,948, of which
$4,656,643,168 related to appreciated securities and $306,086,220
related to depreciated securities. At December 31, 1998, the
aggregate cost of investments for Federal income tax purposes was
$8,135,544,590.
4. Capital Share Transactions:
Net increase in net assets derived from capital share transactions
was $418,125,923 and $1,378,654,564 for the six months ended
December 31, 1998 and for the year ended June 30, 1998,
respectively.
Transactions in capital shares for each class were as follows:
Class A Shares for the Six Dollar
Months Ended Dec. 31, 1998 Shares Amount
Shares sold 10,453,667 $ 390,204,358
Shares issued to shareholders
in reinvestment of dividends
and distributions 11,153,781 409,873,748
----------- --------------
Total issued 21,607,448 800,078,106
Shares redeemed (20,604,624) (758,397,013)
----------- --------------
Net increase 1,002,824 $ 41,681,093
=========== ==============
Class A Shares for the Year Dollar
Ended June 30, 1998 Shares Amount
Shares sold 25,708,451 $1,003,040,580
Shares issued to shareholders
in reinvestment of dividends
and distributions 9,831,759 365,328,091
----------- --------------
Total issued 35,540,210 1,368,368,671
Shares redeemed (28,641,119) (1,113,034,866)
----------- --------------
Net increase 6,899,091 $ 255,333,805
=========== ==============
Class B Shares for the Six Dollar
Months Ended Dec. 31, 1998 Shares Amount
Shares sold 14,873,923 $ 544,983,555
Shares issued to shareholders
in reinvestment of dividends
and distributions 8,668,007 313,408,370
----------- --------------
Total issued 23,541,930 858,391,925
Automatic conversion of
shares (3,032,460) (109,920,230)
Shares redeemed (16,374,452) (589,167,828)
----------- --------------
Net increase 4,135,018 $ 159,303,867
=========== ==============
Class B Shares for the Year Dollar
Ended June 30, 1998 Shares Amount
Shares sold 33,888,364 $1,301,745,206
Shares issued to shareholders
in reinvestment of dividends
and distributions 7,366,044 269,955,814
----------- --------------
Total issued 41,254,408 1,571,701,020
Automatic conversion of
shares (12,361,173) (468,787,712)
Shares redeemed (20,794,428) (797,426,917)
----------- --------------
Net increase 8,098,807 $ 305,486,391
=========== ==============
Class C Shares for the Six Dollar
Months Ended Dec. 31, 1998 Shares Amount
Shares sold 1,825,935 $ 66,613,355
Shares issued to shareholders
in reinvestment of dividends
and distributions 968,946 34,651,917
----------- --------------
Total issued 2,794,881 101,265,272
Shares redeemed (2,212,132) (78,551,674)
----------- --------------
Net increase 582,749 $ 22,713,598
=========== ==============
Merrill Lynch Basic Value Fund, Inc.
December 31, 1998
Class C Shares for the Year Dollar
Ended June 30, 1998 Shares Amount
Shares sold 5,944,133 $ 226,061,127
Shares issued to shareholders
in reinvestment of dividends
and distributions 685,367 24,889,642
----------- --------------
Total issued 6,629,500 250,950,769
Shares redeemed (2,796,591) (106,127,637)
----------- --------------
Net increase 3,832,909 $ 144,823,132
=========== ==============
Class D Shares for the Six Dollar
Months Ended Dec. 31, 1998 Shares Amount
Shares sold 4,899,575 $ 183,402,557
Automatic conversion of
shares 2,989,612 109,920,230
Shares issued to shareholders
in reinvestment of dividends
and distributions 3,334,999 122,301,439
----------- --------------
Total issued 11,224,186 415,624,226
Shares redeemed (6,029,963) (221,196,861)
----------- --------------
Net increase 5,194,223 $ 194,427,365
=========== ==============
Class D Shares for the Year Dollar
Ended June 30, 1998 Shares Amount
Shares sold 10,001,666 $ 390,347,881
Automatic conversion of
shares 12,192,461 468,787,712
Shares issued to shareholders
in reinvestment of dividends
and distributions 2,069,455 76,804,608
----------- --------------
Total issued 24,263,582 935,940,201
Shares redeemed (6,725,865) (262,928,965)
----------- --------------
Net increase 17,537,717 $ 673,011,236
=========== ==============
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
