MERRILL LYNCH
GROWTH FUND
For Investment and
Retirement
FUND LOGO
Quarterly Report
July 31, 1995
Officers and Trustees
Arthur Zeikel, President and Trustee
Herbert I. London, Trustee
Robert R. Martin, Trustee
Joseph L. May, Trustee
Andre F. Perold, Trustee
Terry K. Glenn, Executive Vice President
Norman R. Harvey, Senior Vice President
Donald C. Burke, Vice President
Stephen C. Johnes, Vice President and
Portfolio Manager
Gerald M. Richard, Treasurer
Jerry Weiss, Secretary
<PAGE>
Custodian
State Street Bank and Trust Company
One Heritage Drive, P2N
North Quincy, MA 02171
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
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.
Merrill Lynch
Growth Fund
For Investment
And Retirement
Box 9011
Princeton, NJ
08543-9011
<PAGE>
Merrill Lynch Growth Fund for Investment and Retirement
DEAR SHAREHOLDER
In the July quarter, economic data generally showed evidence of
slowing activity. Gross domestic product growth for the first three
months of 1995 was reported at 2.7%, the weakest showing in the past
18 months. Other signs of a sluggish economy included lackluster
durable goods orders, slowing growth in the manufacturing sector,
and three consecutive months of declines in the Index of Leading
Economic Indicators, an occurrence which has often (but not always)
forecast recessions. As a result, concerns arose that the economic
"soft landing" could turn into an actual recession. However, at the
same time there were also expectations that a few months of very
slow or zero growth would be followed by a pickup in economic
activity later in the year. This view was supported by the stronger-
than-expected employment data for June and an upward revision in
May's employment figures, as well as improving housing activity
measures and consumer confidence surveys.
Thus far in 1995, economic developments have been very positive for
the US stock and bond markets, and most US stock market averages
recently have attained record levels. In contrast, the US dollar has
been persistently weak, especially relative to the yen. Following
the Federal Reserve Board's cut in short-term interest rates in
early July, continued signs of a moderating expansion and well-
contained inflationary pressures could provide further assurance
that the peak in US interest rates is behind us, creating a stronger
foundation for higher stock and bond prices. On the other hand,
indications of reaccelerating growth and increasing inflationary
pressures would likely suggest that higher interest rates are on the
horizon, a negative development for the US financial markets. The
outcome of the current deliberations on reducing the Federal budget
deficit will also play a role in the investment outlook for the US
capital markets.
Portfolio Matters
Merrill Lynch Growth Fund's Class A, Class B, Class C and Class D
Shares had total returns of +14.35%, +14.14%, +14.08%, and +14.33%,
respectively, for the three-month period ended July 31, 1995. (Fund
results do not include sales charges, and would be lower if sales
charges were deducted. Complete performance information, including
average annual total returns, can be found on pages 3--5 of this
report to shareholders.)
The Fund's strong performance during the July quarter was largely
fueled by the significant outperformance of its technology holdings.
A vibrant personal computer market and strong technology-related
capital spending created a robust business environment for many of
the Fund's holdings and for technology shares in general.
<PAGE>
Within the strong market for technology stocks during the July
quarter, semiconductor-related companies proved to be the standout
performers. During the quarter alone, the Philadelphia Stock
Exchange Semiconductor Index advanced by 43%, climbing over 100% on
a year-to-date basis. While business prospects for semiconductor
manufacturers are currently strong, this business historically has
proven to be very cyclical. We believe that it is appropriate to
become more selective with respect to Fund holdings in this area as
equity market valuations for the more capital-intensive, and
inherently more cyclical, semiconductor suppliers appear fully
valued. With this in mind, the Fund reduced its semiconductor
exposure by eliminating its long-term holdings in Applied Materials,
Inc. and Cypress Semiconductor Corp.
Also within the technology sector, during the July quarter the Fund
closed out positions in Sequent Computer Systems, Inc. and Wang
Laboratories, Inc. and added two new holdings to the portfolio,
Platinum Technology, Inc. and Trinzic Corp., a company to be merged
into Platinum. These investment activities resulted in a 26%
technology exposure by July quarter-end, versus 30% at the end of
the April quarter. While historically low for our Fund, this remains
an above-market portfolio weighting relative to the Standard &
Poor's 500 Index, which currently has an approximate 17% technology
component.
Platinum Technology is a leading supplier of performance enhancement
and data recovery software for IBM and compatible mainframe
computers. Platinum has recently embarked on an aggressive
acquisition strategy with the goal of assembling a portfolio of
client/server system and database management products, similar to
those that it currently supplies to the mainframe marketplace. The
pending merger with Trinzic represents one of these acquisitions.
Unlike the mainframe market for systems and data management software
which is dominated by two companies, Platinum being one, the market
for comparable products in the client/server area is highly
fragmented with many different companies offering only pieces of a
complete solution. Consequently, Platinum's strategy is to be one of
the first with an integrated solution for the client/server market.
If successful, Platinum will be positioned to significantly augment
its core mainframe-related revenue and earnings growth rates, as the
market for client/server products is expanding rapidly.
Energy continues to be the Fund's other major sector commitment, and
our exposure rose slightly during the quarter from approximately 28%
of net assets to 30%. While energy pricing so far in 1995 has been
disappointing, largely because of the inventory overhang created by
the relatively mild winter of 1994/1995, overall energy consumption
has been relatively strong, driven by the general strength of the
world economy. We believe these consumption trends are likely to
continue, and remain constructive for the long-term prospects of our
energy holdings. During the quarter, we added three new domestic
exploration and production companies to the portfolio: Newfield
Exploration Co., Vastar Resources, Inc. and Apache Corp. As with
many of the Fund's holdings both in and out of the energy sector,
these companies have entrepreneurial managements, low cost
structures, and are positioned to exhibit strong unit volume growth.
In a stable pricing environment, we believe that the unit growth and
rising cashflow characteristics of these companies make them
legitimate growth stocks.
<PAGE>
During the July quarter, we established the Fund's first position in
the biotechnology industry with the purchase of CytoTherapeutics,
Inc. shares. This company is developing a proprietary cell-based
biotherapeutic drug delivery technology applicable for diseases
of the central nervous system. One of the initial applications
for this technology targets the delivery of site-specific bio-
therapeutic drugs to alleviate the chronic pain associated with
late-stage cancer. CytoTherapeutics has received funding from
industry partners that develop biotherapeutic drugs. These partners
view the company's product as an enabling technology that will
improve the efficacy and facilitate the market acceptance of their
own products.
We continue to research other potential biotechnology investments.
As with any emerging technology, the risks associated with bringing
a biotechnology-related product to market are relatively high.
Therefore, we expect to diversify the Fund's exposure to these risks
by establishing positions in several biotechnology companies that we
believe offer the potential for significant long-term capital
appreciation.
During the July quarter, the restructuring of Freeport-McMoRan
Copper & Gold, Inc. and its parent company, Freeport-McMoRan, Inc.,
was completed. As a result, the Fund now has direct exposure to the
copper business through ownership of Freeport-McMoRan Copper & Gold,
A and B shares. With its investment in Freeport-McMoRan, the Fund
has a participation in the fertilizer business through that
company's majority ownership stake in Freeport-McMoRan Resource
Partners, LP.
In Conclusion
Driven largely by the reduction in the Fund's technology exposure
mentioned above, the Fund's cash reserves increased from 17.2% of
net assets at the beginning of the quarter to 23.9% by quarter's
end. Given the Fund's investment discipline and three-to-five year
time horizon for prospective investments, shareholders should expect
us to be deliberate in committing new cash to equities. While our
Fund's transaction activity is always likely to be low when compared
to mutual fund industry norms, our activity so far suggests that
1995 will be an above-average year for us: it now appears that in
December we will have a significant capital gains distribution.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
<PAGE>
(Stephen C. Johnes)
Stephen C. Johnes
Vice President and Portfolio Manager
August 21, 1995
PERFORMANCE DATA
About Fund Performance
Since October 21, 1994, investors have been 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 8 years.
* Class C Shares are subject to a distribution fee of 0.75% and an
account maintenance fee of 0.25%. In addition, Class C Shares are
subject to a 1% contingent deferred sales charge if redeemed within
one year of purchase.
* Class D Shares incur a maximum initial sales charge of 5.25% and
an account maintenance fee of 0.25% (but no distribution fee).
Performance data for the Fund's Class A and Class B Shares are
presented in the "Average Annual Total Return," "Performance
Summary" and "Recent Performance Results" tables below and on pages
4 and 5. Data for Class C and Class D Shares are also presented in
the "Aggregate Total Return" and "Recent Performance Results" tables
below and on page 5.
<PAGE>
The "Recent Performance Results" table shows investment results
before the deduction of any sales charges for Class A and Class B
Shares for the 12-month and 3-month periods ended July 31, 1995 and
for Class C and Class D Shares for the since inception and 3-month
periods ended July 31, 1995. All data in this table assume
imposition of the actual total expenses incurred by each class of
shares during the relevant period.
None of the past results shown should be considered a representation
of future performance. Investment return and principal value of
shares will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost. Dividends paid to each class
of shares will vary because of the different levels of account
maintenance, distribution and transfer agency fees applicable to
each class, which are deducted from the income available to be paid
to shareholders.
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 6/30/95 +23.88% +17.37%
Five Years Ended 6/30/95 +15.76 +14.52
Inception (11/28/88)
through 6/30/95 +18.78 +17.81
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 6/30/95 +22.70% +18.70%
Five Years Ended 6/30/95 +14.57 +14.57
Inception (3/27/87)
through 6/30/95 +13.70 +13.70
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
<PAGE>
Aggregate Total Return
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Inception (10/21/94)
through 6/30/95 +18.27% +17.27%
[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*
Inception (10/21/94)
through 6/30/95 +18.90% +12.65%
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
<PAGE>
PERFORMANCE DATA (continued)
<TABLE>
Performance Summary--Class A Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
11/28/88--12/31/88 $ 9.61 $ 9.44 $0.257 $0.090 + 1.88%
1989 9.44 12.33 -- 0.211 +32.96
1990 12.33 12.20 0.130 -- + 0.03
1991 12.20 13.95 1.182 0.012 +25.20
1992 13.95 14.88 0.449 -- + 9.97
1993 14.88 17.48 2.122 -- +32.37
1994 17.48 17.49 0.295 -- + 1.77
1/1/95--7/31/95 17.49 23.11 -- -- +32.13
------ ------
Total $4.435 Total $0.313
Cumulative total return as of 7/31/95: +232.05%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the ex-dividend date, and do not
include sales charge; results would be lower if sales charge was
included.
</TABLE>
<TABLE>
Performance Summary--Class B Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
3/27/87--12/31/87 $10.00 $ 8.49 $0.060 $0.187 -12.72%
1988 8.49 9.45 0.257 0.140 +16.04
1989 9.45 12.35 -- 0.084 +31.62
1990 12.35 12.09 0.130 -- - 1.02
1991 12.09 13.65 1.182 0.012 +23.85
1992 13.65 14.39 0.449 -- + 8.79
1993 14.39 16.65 2.122 -- +31.11
1994 16.65 16.47 0.295 -- + 0.72
1/1/95--7/31/95 16.47 21.64 -- -- +31.39
------ ------
Total $4.495 Total $0.423
Cumulative total return as of 7/31/95: +208.49%**
<PAGE>
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the ex-dividend date, and do not
reflect deduction of any sales charge; results would be lower if
sales charge was deducted.
</TABLE>
PERFORMANCE DATA (concluded)
<TABLE>
Recent Performance Results
<CAPTION>
12 Month 3 Month
7/31/95 4/30/95 7/31/94++ % Change++ % Change
<S> <C> <C> <C> <C> <C>
ML Growth Fund Class A Shares* $23.11 $20.21 $17.78 +32.20%(1) +14.35%
ML Growth Fund Class B Shares* 21.64 18.96 16.83 +30.92(1) +14.14
ML Growth Fund Class C Shares* 21.63 18.96 17.45 +26.21(1) +14.08
ML Growth Fund Class D Shares* 23.06 20.17 18.47 +26.99(1) +14.33
Standard & Poor's 500 Index** 562.06 514.71 458.26 +22.65 + 9.20
ML Growth Fund Class A Shares--Total Return* +32.20(1) +14.35
ML Growth Fund Class B Shares--Total Return* +30.92(1) +14.14
ML Growth Fund Class C Shares--Total Return* +26.21(1) +14.08
ML Growth Fund Class D Shares--Total Return* +26.99(1) +14.33
Standard & Poor's 500 Index--Total Return** +26.06 + 9.94
<FN>
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included.
**An unmanaged broad-based index comprised of common stocks. Total
investment returns for unmanaged indexes are based on estimates.
++Investment results shown for Class C and Class D Shares are since
inception (10/21/94).
(1)Percent change includes reinvestment of $0.295 per share capital
gains distributions.
</TABLE>
<PAGE>
PORTFOLIO INFORMATION
For the Quarter Ended July 31, 1995
Percent of
Ten Largest Equity Holdings Net Assets
Cirrus Logic, Inc. 9.1%
Freeport-McMoRan Copper & Gold, Inc.* 5.4
Dell Computer Corp. 4.3
Anadarko Petroleum Corp. 4.2
U.S. HealthCare, Inc. 4.2
Autodesk, Inc. 3.8
Apache Corp. 3.6
Ensco International 3.1
Global Marine, Inc. 3.1
Valero Energy Corp. 3.1
[FN]
*Includes Class A and B shares.
Additions
Apache Corp.
CytoTherapeutics, Inc.
CytoTherapeutics, Inc. (Warrants)
Freeport-McMoRan Copper & Gold, Inc. (Class B)
Newfield Exploration Co.
Platinum Technology, Inc.
Trinzic Corp.
Vastar Resources, Inc.
Deletions
Applied Materials, Inc.
Cypress Semiconductor Corp.
Sequent Computer Systems, Inc.
Wang Laboratories, Inc.
Weyerhaeuser Co.
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS
<CAPTION>
Shares Percent of
Industries Held Stocks Cost Value Net Assets
<S> <C> <S> <C> <C> <C>
Banking & 350,000 Morgan Stanley Group, Inc. $ 19,683,340 $ 29,268,750 1.0%
Financial Services 1,000,000 Republic New York Corp. 44,267,281 56,000,000 1.8
1,000,000 Safra Republic Holdings S.A. 69,529,500 85,250,000 2.8
-------------- -------------- ------
133,480,121 170,518,750 5.6
Biotechnology 1,738,000 CytoTherapeutics, Inc. 9,776,250 14,121,250 0.4
434,500 CytoTherapeutics, Inc. (Warrants)(a) 651,750 1,432,112 0.1
-------------- -------------- ------
10,428,000 15,553,362 0.5
Commercial 2,011,047 Dell Computer Corp.++ 45,634,091 130,466,675 4.3
Workstations &
Network Servers
Computer Software 2,500,000 Autodesk, Inc. 50,626,050 113,125,000 3.8
1,600,000 Landmark Graphics Corp. 27,012,866 43,200,000 1.4
4,652,000 Mentor Graphics, Inc. 62,023,772 85,480,500 2.8
2,500,000 Platinum Technology, Inc. 45,561,988 61,250,000 2.0
641,900 Trinzic Corp. 4,035,929 4,974,725 0.2
-------------- -------------- ------
189,260,605 308,030,225 10.2
Diversified 1,168,750 Freeport-McMoRan Copper & Gold,
Resource Inc. (Class A) 28,313,051 31,117,968 1.0
Companies 4,912,138 Freeport-McMoRan Copper & Gold,
Inc. (Class B) 105,805,263 132,627,726 4.4
12,000,000 Freeport-McMoRan, Inc. 56,017,272 60,000,000 2.0
-------------- -------------- ------
190,135,586 223,745,694 7.4
Electronic 6,000,000 Cirrus Logic, Inc. 64,109,325 275,250,000 9.1
Components 905,000 Komag, Inc. 27,189,773 61,879,375 2.1
-------------- -------------- ------
91,299,098 337,129,375 11.2
<PAGE>
Healthcare Services 4,000,000 U.S. HealthCare, Inc. 101,351,070 126,500,000 4.2
International 3,500,000 Yacimientos Petroliferos Fiscales
Integrated Oils S.A.--Sponsored (ADR)* 83,800,841 60,812,500 2.0
Natural Gas 2,343,750 Panhandle Eastern Corp. 24,371,330 57,128,906 1.9
Gathering & 2,500,000 Western Gas Resources, Inc. 57,319,428 40,000,000 1.3
Transmission -------------- -------------- ------
81,690,758 97,128,906 3.2
Oil & Gas 3,000,000 Anadarko Petroleum Corp. 106,785,844 127,500,000 4.2
Exploration & 4,000,000 Apache Corp. 116,972,951 109,500,000 3.6
Production 2,200,000 Devon Energy Corp. 34,401,130 43,175,000 1.5
300,000 McMoRan Oil & Gas Co. 1,691,662 937,500 0.0
1,008,300 Newfield Exploration Co. 27,601,187 25,837,687 0.9
9,000,000 Santa Fe Energy Resources, Inc. 83,865,388 84,375,000 2.8
1,000,000 United Meridian Corp. 12,390,789 17,750,000 0.6
1,516,000 Vastar Resources, Inc. 44,499,463 42,637,500 1.4
-------------- -------------- ------
428,208,414 451,712,687 15.0
Oil Refining 4,000,000 Valero Energy Corp. 86,245,282 93,000,000 3.1
Oilfield Services 6,000,000 Ensco International (b) 66,189,856 95,250,000 3.1
16,300,000 Global Marine, Inc. 59,126,323 93,725,000 3.1
1,335,000 Pool Energy Services Co. 14,336,959 11,347,500 0.4
-------------- -------------- ------
139,653,138 200,322,500 6.6
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded)
<CAPTION>
Shares Percent of
Industries Held Stocks Cost Value Net Assets
<S> <C> <S> <C> <C> <C>
Pollution Control 3,800,000 Safety-Kleen Corp. $ 67,292,620 $ 59,375,000 2.0%
Scientific & Technical 2,500,000 Convex Computer Corp. 29,264,447 12,812,500 0.4
Computing Systems
<PAGE>
Steel 948,500 Nucor Corp. 22,124,065 50,981,875 1.7
Total Stocks 1,699,868,136 2,338,090,049 77.4
Face
Amount Short-Term Securities
Commercial $40,000,000 AIG Funding Inc., 5.72% due
Paper** 8/14/1995 39,917,378 39,917,378 1.3
ANZ (Delaware), Inc.:
40,000,000 5.72% due 8/14/1995 39,917,378 39,917,378 1.3
40,000,000 5.73% due 8/18/1995 39,891,767 39,891,767 1.3
50,000,000 Ford Motor Credit Co., 5.72% due
8/24/1995 49,817,278 49,817,278 1.7
96,465,000 General Electric Capital Corp.,
5.80% due 8/01/1995 96,465,000 96,465,000 3.2
Goldman Sachs Group L.P.:
60,000,000 5.90% due 8/04/1995 59,970,500 59,970,500 2.0
40,000,000 5.72% due 8/18/1995 39,891,955 39,891,955 1.3
16,669,000 IBM Credit Corp., 5.70% due
8/11/1995 16,642,607 16,642,607 0.6
30,000,000 Penney (J.C.) Funding Corp.,
5.71% due 8/31/1995 29,857,250 29,857,250 1.0
30,000,000 Preferred Receivable Funding Corp.,
5.73% due 8/21/1995 29,904,500 29,904,500 1.0
UBS Finance (Delaware), Inc.:
58,855,000 5.72% due 8/14/1995 58,733,432 58,733,432 2.0
75,000,000 5.72% due 8/15/1995 74,833,167 74,833,167 2.5
US Government 25,000,000 Federal Farm Credit Bank, 5.60%
& Agency due 8/11/1995 24,961,111 24,961,111 0.8
Obligations** 50,000,000 Federal Home Loan Bank, 5.64% due
8/25/1995 49,812,000 49,812,000 1.6
Federal National Mortgage
Association:
10,500,000 5.60% due 8/10/1995 10,485,300 10,485,300 0.3
60,000,000 5.65% due 8/14/1995 59,877,583 59,877,583 2.0
Total Short-Term Securities 720,978,206 720,978,206 23.9
Total Investments $2,420,846,342 3,059,068,255 101.3
==============
Liabilities in Excess of Other Assets (38,297,445) (1.3)
-------------- ------
Net Assets $3,020,770,810 100.0%
============== ======
<PAGE>
Net Asset Value: Class A--Based on net assets of $643,771,943 and
27,851,190 shares of beneficial interest
outstanding $ 23.11
==============
Class B--Based on net assets of $1,782,787,488 and
82,401,741 shares of beneficial interest
outstanding $ 21.64
==============
Class C--Based on net assets of $56,945,297 and
2,632,097 shares of beneficial interest
outstanding $ 21.63
==============
Class D--Based on net assets of $537,266,082 and
23,298,081 shares of beneficial interest
outstanding $ 23.06
==============
<FN>
(a)Warrants entitle the Fund to purchase a predetermined number of
shares of common stock. The purchase price and number of shares are
subject to adjustment under certain conditions until the expiration
date.
(b)Formerly Energy Service Co.
++Reflects the conversion of Dell Computer Corp., Series A,
Convertible Preferred Stock.
*American Depositary Receipts (ADR).
**Commercial Paper and certain US Government & Agency Obligations
are traded on a discount basis; the interest rates shownare the
discount rates paid at the time of purchase by the Fund.
</TABLE>
