<PAGE> PAGE 1
000 B000000 11/30/96
000 C000000 0000701804
000 D000000 N
000 E000000 NF
000 F000000 Y
000 G000000 N
000 H000000 N
000 I000000 3.0
000 J000000 A
001 A000000 THE MERGER FUND
001 B000000 811-3445
001 C000000 4142873315
002 A000000 615 E. MICHIGAN ST.
002 B000000 MILWAUKEE
002 C000000 WI
002 D010000 53202
003 000000 N
004 000000 N
005 000000 N
006 000000 N
007 A000000 N
007 B000000 0
007 C010100 1
007 C010200 2
007 C010300 3
007 C010400 4
007 C010500 5
007 C010600 6
007 C010700 7
007 C010800 8
007 C010900 9
007 C011000 10
008 A000001 WESTCHESTER CAPITAL MANAGEMENT, INC.
008 B000001 A
008 C000001 801-15556
008 D010001 VALHALLA
008 D020001 NY
008 D030001 10595
010 A000001 FIRSTAR TRUST COMPANY
010 B000001 85-00410
010 C010001 MILWAUKEE
010 C020001 WI
010 C030001 53202
011 A000001 MERCER ALLIED COMPANY, LP
011 B000001 8-20745
011 C010001 ALBANY
011 C020001 NY
011 C030001 12205
012 A000001 FIRSTAR TRUST COMPANY
012 B000001 85-00410
012 C010001 MILWAUKEE
<PAGE> PAGE 2
012 C020001 WI
012 C030001 53202
013 A000001 PRICE WATERHOUSE LLP
013 B010001 MILWAUKEE
013 B020001 WI
013 B030001 53202
015 A000001 FIRSTAR TRUST COMPANY
015 B000001 C
015 C010001 MILWAUKEE
015 C020001 WI
015 C030001 53202
015 E010001 X
018 000000 Y
019 A000000 N
019 B000000 0
020 A000001 JEFFERIES & COMPANY
020 B000001 95-2622906
020 C000001 590
020 A000002 BEAR STEARNS & CO.
020 B000002 13-4946705
020 C000002 243
020 A000003 INTERSTATE/JOHNSON LANE CORP
020 C000003 221
020 A000004 INSTINET
020 C000004 185
020 A000005 JONES & ASSOCIATES
020 C000005 86
020 A000006 CATHAY FINANCIAL CORP
020 C000006 86
020 A000007 WEISS PECK & GREER
020 C000007 79
020 A000008 OPPENHEIMER & CO.
020 C000008 79
020 A000009 BYRNE J. & CO., INC.
020 C000009 64
020 A000010 CANTOR, FITZGERALD COMPANY
020 B000010 95-1786286
020 C000010 59
021 000000 2467
022 A000001 FIRSTAR
022 C000001 2767397
022 D000001 412390
022 A000002 JEFFERIES & COMPANY
022 B000002 95-2622906
022 C000002 116146
022 D000002 33624
022 A000003 FIRST ALBANY CORPORATION
022 C000003 75349
022 D000003 5093
022 A000004 BEAR STEARNS & CO.
022 B000004 13-4946705
<PAGE> PAGE 3
022 C000004 43207
022 D000004 33720
022 A000005 JONES & ASSOCIATES
022 C000005 32498
022 D000005 4080
022 A000006 CANTOR, FITZGERALD COMPANY
022 B000006 95-1786286
022 C000006 23590
022 D000006 6465
022 A000007 FIRST BOSTON
022 C000007 12209
022 D000007 5681
022 A000008 HERZOG HEINE GOULD, INC.
022 C000008 14394
022 D000008 2822
022 A000009 MERRILL LYNCH
022 C000009 10982
022 D000009 5157
022 A000010 CHICAGO CORPORATION
022 C000010 8963
022 D000010 2555
023 C000000 3209479
023 D000000 547691
024 000000 N
025 D000001 0
025 D000002 0
025 D000003 0
025 D000004 0
025 D000005 0
025 D000006 0
025 D000007 0
025 D000008 0
026 A000000 N
026 B000000 Y
026 C000000 N
026 D000000 Y
026 E000000 N
026 F000000 N
026 G010000 N
026 G020000 N
026 H000000 Y
027 000000 Y
028 A010000 43710
028 A020000 0
028 A030000 0
028 A040000 13480
028 B010000 51514
028 B020000 0
028 B030000 0
028 B040000 42932
028 C010000 15837
<PAGE> PAGE 4
028 C020000 0
028 C030000 0
028 C040000 13248
028 D010000 23231
028 D020000 0
028 D030000 0
028 D040000 11807
028 E010000 12280
028 E020000 0
028 E030000 0
028 E040000 30880
028 F010000 9910
028 F020000 0
028 F030000 0
028 F040000 20953
028 G010000 156482
028 G020000 0
028 G030000 0
028 G040000 133300
028 H000000 0
029 000000 N
030 A000000 0
030 B000000 0.00
030 C000000 0.00
031 A000000 0
031 B000000 0
032 000000 0
033 000000 0
034 000000 N
035 000000 0
036 B000000 0
037 000000 N
038 000000 0
039 000000 N
040 000000 Y
041 000000 Y
042 A000000 0
042 B000000 3
042 C000000 10
042 D000000 85
042 E000000 0
042 F000000 0
042 G000000 0
042 H000000 2
043 000000 582
044 000000 0
045 000000 Y
046 000000 N
047 000000 Y
048 000000 1.000
048 A010000 0
<PAGE> PAGE 5
048 A020000 0.000
048 B010000 0
048 B020000 0.000
048 C010000 0
048 C020000 0.000
048 D010000 0
048 D020000 0.000
048 E010000 0
048 E020000 0.000
048 F010000 0
048 F020000 0.000
048 G010000 0
048 G020000 0.000
048 H010000 0
048 H020000 0.000
048 I010000 0
048 I020000 0.000
048 J010000 0
048 J020000 0.000
048 K010000 0
048 K020000 0.000
049 000000 N
050 000000 N
051 000000 N
052 000000 N
053 A000000 N
054 A000000 Y
054 B000000 Y
054 C000000 N
054 D000000 N
054 E000000 N
054 F000000 N
054 G000000 Y
054 H000000 Y
054 I000000 N
054 J000000 Y
054 K000000 N
054 L000000 N
054 M000000 Y
054 N000000 N
054 O000000 Y
055 A000000 Y
055 B000000 Y
056 000000 Y
057 000000 N
058 A000000 N
059 000000 Y
060 A000000 N
060 B000000 N
061 000000 2000
062 A000000 N
<PAGE> PAGE 6
062 B000000 0.0
062 C000000 0.0
062 D000000 0.0
062 E000000 0.0
062 F000000 0.0
062 G000000 0.0
062 H000000 0.0
062 I000000 0.0
062 J000000 0.0
062 K000000 0.0
062 L000000 0.0
062 M000000 0.0
062 N000000 0.0
062 O000000 0.0
062 P000000 0.0
062 Q000000 0.0
062 R000000 0.0
063 A000000 0
063 B000000 0.0
066 A000000 Y
066 B000000 N
066 C000000 N
066 D000000 Y
066 E000000 N
066 F000000 N
066 G000000 N
067 000000 N
068 A000000 N
068 B000000 N
069 000000 N
070 A010000 Y
070 A020000 Y
070 B010000 Y
070 B020000 Y
070 C010000 Y
070 C020000 N
070 D010000 Y
070 D020000 Y
070 E010000 Y
070 E020000 N
070 F010000 Y
070 F020000 N
070 G010000 Y
070 G020000 N
070 H010000 Y
070 H020000 N
070 I010000 N
070 I020000 N
070 J010000 Y
070 J020000 Y
070 K010000 Y
<PAGE> PAGE 7
070 K020000 N
070 L010000 Y
070 L020000 Y
070 M010000 Y
070 M020000 N
070 N010000 Y
070 N020000 Y
070 O010000 Y
070 O020000 Y
070 P010000 Y
070 P020000 N
070 Q010000 N
070 Q020000 N
070 R010000 Y
070 R020000 Y
071 A000000 1628005
071 B000000 1410662
071 C000000 347459
071 D000000 406
072 A000000 12
072 B000000 12864
072 C000000 2234
072 D000000 0
072 E000000 0
072 F000000 4114
072 G000000 169
072 H000000 0
072 I000000 127
072 J000000 141
072 K000000 0
072 L000000 82
072 M000000 29
072 N000000 127
072 O000000 0
072 P000000 2505
072 Q000000 65
072 R000000 28
072 S000000 109
072 T000000 581
072 U000000 0
072 V000000 0
072 W000000 1438
072 X000000 9515
072 Y000000 0
072 Z000000 5583
072AA000000 39120
072BB000000 0
072CC010000 0
072CC020000 7332
072DD010000 1258
072DD020000 0
<PAGE> PAGE 8
072EE000000 13482
073 A010000 0.0800
073 A020000 0.0000
073 B000000 0.8200
073 C000000 0.0000
074 A000000 359
074 B000000 0
074 C000000 90843
074 D000000 85857
074 E000000 1219
074 F000000 434063
074 G000000 680
074 H000000 0
074 I000000 2529
074 J000000 8225
074 K000000 0
074 L000000 170764
074 M000000 102066
074 N000000 896605
074 O000000 17761
074 P000000 420
074 Q000000 197250
074 R010000 0
074 R020000 186645
074 R030000 4304
074 R040000 1141
074 S000000 0
074 T000000 489084
074 U010000 31742
074 U020000 0
074 V010000 15.41
074 V020000 0.00
074 W000000 0.0000
074 X000000 5303
074 Y000000 0
075 A000000 0
075 B000000 407836
076 000000 0.00
077 A000000 Y
077 B000000 Y
077 C000000 N
077 D000000 N
077 E000000 N
077 F000000 N
077 G000000 N
077 H000000 N
077 I000000 N
077 J000000 N
077 K000000 N
077 L000000 N
077 M000000 N
<PAGE> PAGE 9
077 N000000 N
077 O000000 N
077 P000000 N
077 Q010000 Y
077 Q020000 N
077 Q030000 N
078 000000 N
080 A000000 NATIONAL UNION FIRE INS. CO.
080 C000000 900
081 A000000 N
081 B000000 0
082 A000000 N
082 B000000 0
083 A000000 N
083 B000000 0
084 A000000 N
084 B000000 0
085 A000000 Y
085 B000000 N
086 A010000 0
086 A020000 0
086 B010000 0
086 B020000 0
086 C010000 0
086 C020000 0
086 D010000 0
086 D020000 0
086 E010000 0
086 E020000 0
086 F010000 0
086 F020000 0
SIGNATURE FREDERICK GREEN
TITLE PRESIDENT
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000701804
<NAME> THE MERGER FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-START> DEC-01-1995
<PERIOD-END> NOV-30-1996
<INVESTMENTS-AT-COST> 601,367
<INVESTMENTS-AT-VALUE> 615,191
<RECEIVABLES> 178,988
<ASSETS-OTHER> 102,426
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 896,605
<PAYABLE-FOR-SECURITIES> 17,761
<SENIOR-LONG-TERM-DEBT> 197,250
<OTHER-ITEMS-LIABILITIES> 192,510
<TOTAL-LIABILITIES> 407,521
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 442,675
<SHARES-COMMON-STOCK> 31,742
<SHARES-COMMON-PRIOR> 16,349
<ACCUMULATED-NII-CURRENT> 5,323
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 38,018
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,068
<NET-ASSETS> 489,084
<DIVIDEND-INCOME> 2,234
<INTEREST-INCOME> 12,864
<OTHER-INCOME> 0
<EXPENSES-NET> 9,515
<NET-INVESTMENT-INCOME> 5,583
<REALIZED-GAINS-CURRENT> 39,120
<APPREC-INCREASE-CURRENT> (7,332)
<NET-CHANGE-FROM-OPS> 37,371
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,258
<DISTRIBUTIONS-OF-GAINS> 13,482
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 28,042
<NUMBER-OF-SHARES-REDEEMED> 13,551
<SHARES-REINVESTED> 902
<NET-CHANGE-IN-ASSETS> 246,002
<ACCUMULATED-NII-PRIOR> 1,032
<ACCUMULATED-GAINS-PRIOR> 12,375
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4,114
<INTEREST-EXPENSE> 2,505
<GROSS-EXPENSE> 9,515
<AVERAGE-NET-ASSETS> 411,065
<PER-SHARE-NAV-BEGIN> 14.87
<PER-SHARE-NII> 0.20
<PER-SHARE-GAIN-APPREC> 1.24
<PER-SHARE-DIVIDEND> 0.08
<PER-SHARE-DISTRIBUTIONS> 0.82
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 15.41
<EXPENSE-RATIO> 1.36
<AVG-DEBT-OUTSTANDING> 36,983
<AVG-DEBT-PER-SHARE> 1.35
</TABLE>
To the Board of Trustees of The Merger Fund
In planning and performing our audit of the financial statements of The Merger
Fund (the "Fund") for the year ended November 30, 1996, we considered its
internal control structure, including procedures for safeguarding securities, in
order to determine our auditing procedures for the purposes of expressing our
opinion on the financial statements and to comply with the requirements of Form
N-SAR, and not to provide assurance on the internal control structure.
The management of the Fund is responsible for establishing and maintaining an
internal control structure. In fulfilling this responsibility, estimates and
judgments by management are required to assess the expected benefits and
related costs of internal control structure policies and procedures. Two of
the objectives of an internal control structure are to provide management with
reasonable, but not absolute, assurance that assets are appropriately
safeguarded against loss from unauthorized use or disposition and that
transactions are executed in accordance with management's authorization and
recorded properly to permit preparation of financial statements in conformity
with generally accepted accounting principles.
Because of inherent limitations in any internal control structure, errors or
irregularities may occur and may not be detected. Also, projection of any
evaluation of the structure to future periods is subject to the risk that it
may become inadequate because of changes in conditions or that the
effectiveness of the design and operations may deteriorate.
Our consideration of the internal control structure would not necessarily
disclose all matters in the internal control structure that might be material
weaknesses under standards established by the American Institute of Certified
Public Accountants. A material weakness is a condition in which the design or
operation of the specific internal control structure elements does not reduce
to a relatively low level the risk that errors or irregularities in amounts
that would be material in relation to the financial statements being audited
may occur and not be detected within a timely period by employees in the
normal course of performing their assigned functions. However, we noted
no matters involving the internal control structure, including procedures for
safeguarding securities, that we consider to be material weaknesses as defined
above as of November 30, 1996.
This report is intended solely for the information and use of management and the
Securities and Exchange Commission.
/s/ Price Waterhouse LLP
January 7, 1996