<PAGE> PAGE 1
000 B000000 09/30/97
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 4142873651
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 473
020 A000002 BEAR STEARNS & CO.
020 B000002 13-4946705
020 C000002 235
020 A000003 INTERSTATE/JOHNSON LANE CORP
020 C000003 214
020 A000004 CATHAY FINANCIAL CORP
020 C000004 118
020 A000005 CANTOR, FITZGERALD COMPANY
020 B000005 95-1786286
020 C000005 107
020 A000006 OPPENHEIMER & COMPANY
020 C000006 91
020 A000007 MILLER TABEK
020 C000007 90
020 A000008 LEHMAN BROTHERS, INC.
020 C000008 74
020 A000009 BUNTING WARBURG, INC.
020 C000009 71
020 A000010 INSTINET
020 C000010 67
021 000000 2299
022 A000001 FIRSTAR BANK MONEY CENTER
022 C000001 581893
022 D000001 116692
022 A000002 JEFFERIES & COMPANY
022 C000002 134813
022 D000002 30450
022 A000003 FIRST ALBANY CORPORATION
022 C000003 8828
022 D000003 57395
022 A000004 BEAR STEARNS & COMPANY
022 C000004 43991
022 D000004 13879
<PAGE> PAGE 3
022 A000005 JONES & ASSOCIATES
022 C000005 43427
022 D000005 12121
022 A000006 J.P. MORGAN & COMPANY
022 C000006 17889
022 D000006 27191
022 A000007 CANTOR, FITZGERALD COMPANY
022 C000007 28235
022 D000007 5224
022 A000008 MERRILL LYNCH
022 C000008 25824
022 D000008 3046
022 A000009 OPPENHEIMER & COMPANY
022 C000009 24849
022 D000009 782
022 A000010 GOLDMAN SACHS
022 C000010 14147
022 D000010 10560
023 C000000 1023763
023 D000000 340477
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 7779
028 A020000 0
028 A030000 0
028 A040000 30114
028 B010000 5331
028 B020000 0
028 B030000 0
028 B040000 16575
028 C010000 4677
028 C020000 0
028 C030000 0
028 C040000 16544
<PAGE> PAGE 4
028 D010000 17266
028 D020000 0
028 D030000 0
028 D040000 26756
028 E010000 6216
028 E020000 0
028 E030000 0
028 E040000 10590
028 F010000 7664
028 F020000 0
028 F030000 0
028 F040000 11798
028 G010000 48933
028 G020000 0
028 G030000 0
028 G040000 112377
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 1
042 C000000 0
042 D000000 99
042 E000000 0
042 F000000 0
042 G000000 0
042 H000000 0
043 000000 583
044 000000 0
045 000000 Y
046 000000 N
047 000000 Y
048 000000 1.000
048 A010000 0
048 A020000 0.000
048 B010000 0
048 B020000 0.000
<PAGE> PAGE 5
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 N
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
062 B000000 0.0
062 C000000 0.0
062 D000000 0.0
<PAGE> PAGE 6
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 N
070 K010000 Y
070 K020000 N
070 L010000 Y
070 L020000 Y
<PAGE> PAGE 7
070 M010000 Y
070 M020000 Y
070 N010000 Y
070 N020000 N
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 1356674
071 B000000 1446540
071 C000000 500178
071 D000000 271
072 A000000 10
072 B000000 11369
072 C000000 5117
072 D000000 0
072 E000000 611
072 F000000 3865
072 G000000 168
072 H000000 0
072 I000000 108
072 J000000 121
072 K000000 0
072 L000000 117
072 M000000 25
072 N000000 39
072 O000000 0
072 P000000 5614
072 Q000000 55
072 R000000 37
072 S000000 60
072 T000000 618
072 U000000 0
072 V000000 0
072 W000000 5762
072 X000000 16589
072 Y000000 0
072 Z000000 508
072AA000000 95291
072BB000000 54272
072CC010000 667
072CC020000 0
072DD010000 5757
072DD020000 0
072EE000000 38090
073 A010000 0.1900
073 A020000 0.0000
<PAGE> PAGE 8
073 B000000 1.2400
073 C000000 0.0000
074 A000000 0
074 B000000 0
074 C000000 0
074 D000000 4958
074 E000000 1684
074 F000000 436996
074 G000000 237
074 H000000 0
074 I000000 0
074 J000000 12824
074 K000000 0
074 L000000 188895
074 M000000 43673
074 N000000 689267
074 O000000 25910
074 P000000 379
074 Q000000 4000
074 R010000 0
074 R020000 209458
074 R030000 1971
074 R040000 1562
074 S000000 0
074 T000000 445987
074 U010000 29046
074 U020000 0
074 V010000 15.35
074 V020000 0.00
074 W000000 0.0000
074 X000000 4377
074 Y000000 205092
075 A000000 0
075 B000000 460230
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
077 N000000 N
077 O000000 N
077 P000000 N
<PAGE> PAGE 9
077 Q010000 Y
077 Q020000 N
077 Q030000 N
078 000000 N
080 A000000 NATIONAL UNION FIRE INSURANCE COMPANY
080 C000000 1250
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 KERRY QUIGLEY
TITLE FUND ADMINISTRATION
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000701804
<NAME> THE MERGER FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 10-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> DEC-01-1996
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 428,010
<INVESTMENTS-AT-VALUE> 443,875
<RECEIVABLES> 201,719
<ASSETS-OTHER> 43,673
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 689,267
<PAYABLE-FOR-SECURITIES> 25,910
<SENIOR-LONG-TERM-DEBT> 4,000
<OTHER-ITEMS-LIABILITIES> 213,370
<TOTAL-LIABILITIES> 243,280
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 401,231
<SHARES-COMMON-STOCK> 29,046
<SHARES-COMMON-PRIOR> 31,742
<ACCUMULATED-NII-CURRENT> 590
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 40,431
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,735
<NET-ASSETS> 445,987
<DIVIDEND-INCOME> 5,117
<INTEREST-INCOME> 11,369
<OTHER-INCOME> 611
<EXPENSES-NET> 16,589
<NET-INVESTMENT-INCOME> 508
<REALIZED-GAINS-CURRENT> 41,019
<APPREC-INCREASE-CURRENT> 667
<NET-CHANGE-FROM-OPS> 42,194
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 5,757
<DISTRIBUTIONS-OF-GAINS> 38,090
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 8,130
<NUMBER-OF-SHARES-REDEEMED> 13,653
<SHARES-REINVESTED> 2,827
<NET-CHANGE-IN-ASSETS> (43,097)
<ACCUMULATED-NII-PRIOR> 5,323
<ACCUMULATED-GAINS-PRIOR> 38,018
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,865
<INTEREST-EXPENSE> 5,614
<GROSS-EXPENSE> 16,589
<AVERAGE-NET-ASSETS> 463,982
<PER-SHARE-NAV-BEGIN> 15.41
<PER-SHARE-NII> 0.02
<PER-SHARE-GAIN-APPREC> 1.35
<PER-SHARE-DIVIDEND> 0.19
<PER-SHARE-DISTRIBUTIONS> 1.24
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 15.35
<EXPENSE-RATIO> 1.36
<AVG-DEBT-OUTSTANDING> 100,221
<AVG-DEBT-PER-SHARE> 3.16
</TABLE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors
of The Leuthold Funds, Inc.:
In planning and performing our audit of the
financial statements of The Leuthold Funds, Inc.
(the "Fund"), (a Maryland corporation which includes
the Leuthold Asset Allocation Fund), for the year
ended September 30, 1997, we considered its internal
control, including control activities for
safeguarding securities, in order to determine our
auditing procedures for the purpose 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 internal control. In
fulfilling this responsibility, estimates and
judgments by management are required to assess the
expected benefits and related costs of control
activities. Generally, control activities that are
relevant to an audit pertain to the entity's
objective of preparing financial statements for
external purposes that are fairly presented in
conformity with generally accepted accounting
principles. Those control activities include the
safeguarding of assets against unauthorized
acquisition, use or disposition.
Because of inherent limitations in internal control,
errors or irregularities may occur and not be
detected. Also, projection of any evaluation of
internal control 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 operation may deteriorate.
Our consideration of the internal control structure
would not necessarily disclose all matters in
internal control 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 any specific internal control
components 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 control
activities for safeguarding securities, that we
consider to be material weaknesses as defined above
as of September 30, 1997.
This report is intended solely for the information
and use of management and the Securities and
Exchange Commission.
ARTHUR ANDERSEN
LLP
Milwaukee, Wisconsin,
October 24, 1997.
