MERRILL LYNCH
GROWTH FUND
For Investment and
Retirement
FUND LOGO
Semi-Annual Report
April 30, 1996
Officers and Trustees
Arthur Zeikel, President and Trustee
James H. Bodurtha, 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.
Statements and other information herein are as dated and are
subject to change.
<PAGE>
Merrill Lynch
Growth Fund
For Investment
And Retirement
Box 9011
Princeton, NJ
08543-9011
Merrill Lynch Growth Fund for Investment and Retirement
DEAR SHAREHOLDER
Investor perceptions regarding the US economy changed over the
course of the April quarter. In February, it appeared that the US
economy was losing momentum. Lackluster retail sales, increases in
initial unemployment claims (along with weak job and income growth),
and evidence of slowing in the manufacturing sector all suggested
that the rate of economic growth was decelerating, with some
forecasters suggesting the possibility of recession.
However, the consensus outlook for the rate of future economic
growth changed dramatically with the report of stronger-than-
expected employment data for February and March. As a result,
investors began to anticipate renewed economic growth. Long-term
interest rates rose, and the Federal Reserve Board left monetary
policy on hold. Adding to investor concerns was the report that the
Knight Ridder-Commodity Research Bureau Index was near an eight-year
high, largely because of an increase in agricultural prices and an
upward spike in the price of crude oil.
Investors are likely to continue to focus on the probable direction
of economic activity and Federal Reserve Board monetary policy in
the weeks ahead. At this time, inflationary pressures do not seem to
be building and the capital spending, housing and consumption
sectors are still relatively weak, which suggests that the economy
is not on the verge of overheating. Nevertheless, it is likely that
further indications of stronger economic activity in the weeks ahead
may add to investor concerns that accelerating economic activity
could lead to higher inflation and interest rates.
<PAGE>
Portfolio Matters
Merrill Lynch Growth Fund outperformed the broad stock market
indexes for the quarter ended April 30, 1996. During this period,
the unmanaged Dow Jones Industrial Average and Standard & Poor's 500
Index had total returns of +3.78% and +3.39%, respectively, compared
to total returns of +14.54%, +14.26%, +14.28% and +14.48% for the
Fund's Class A, Class B, Class C and Class D Shares, respectively.
(Fund results do not reflect sales charges, and would be lower if
sales charges were included. Complete performance information,
including average annual total returns, can be found on pages 3--5
of this report to shareholders.)
The Fund's positive relative performance was driven primarily by its
energy investments and, to a lesser extent, a recovery in technology
share prices. As of April quarter-end, the Fund had a 48.7% exposure
to the energy sector and a 19.0% exposure to technology. The Fund's
performance was also enhanced by sharp rebounds in share prices for
its largest holdings. For example, shares of Dell Computer Corp.--
which, after our additional purchases earlier this year, is now the
Fund's largest holding--rose nearly 70% during the quarter. Share
prices of certain other large holdings, notably the offshore
drilling companies Ensco International, Inc. and Global Marine,
Inc., were also up sharply.
As long-term investors will recall, the Fund has maintained an
overweighted position in the energy sector, with particular emphasis
on equity securities that would benefit from a revival in the North
American natural gas market. More recently, the Fund has increased
its exposure to the oilfield services sector. Since these
investments represent a significant percentage of the Fund's net
assets, it is noteworthy to review the long-term investment premise
that underlies our position.
Our interest in natural gas derives from our belief that long-term
demand growth will be driven by increasing energy consumption and by
market share gains for gas at the expense of alternative fuels. We
have maintained that, over time, gas consumption will rise in the US
energy mix as natural gas is an environmentally superior,
economically efficient and domestically secure fuel source. With
this in mind, the Fund has purchased a number of gas-related
equities that meet our overall investment criteria. We have sought
to purchase these shares opportunistically, at attractive valuations
during periods of generally weak commodity prices.
More recently, the Fund increased its exposure to the oilfield
services sector as we believe that the period of chronic industry
overcapacity that followed the oil boom of the early 1980s is
nearing an end. Over the past 18 months, we have seen increasing
evidence of tightening markets for various types of oilfield
equipment. For example, rates earned for offshore drilling rigs have
escalated sharply over this period, with capacity utilization for
certain types of equipment rapidly approaching 100%. As equipment
supply tightens, we believe that to grow deliverability of oil and
gas, the oilfield service industry will have to invest significant
new capital dollars in the years ahead. In this environment,
industry participants should enjoy a period of rising earnings and
cashflow required to fund this investment.
<PAGE>
Against the backdrop of a tightening oilfield service market,
current North American natural gas fundamentals also appear
positive. After a disappointing 1994/1995 heating season, the return
of normal seasonal temperatures this past winter has left natural
gas inventories at record lows. We believe that storage refill
requirements this summer are likely to provide positive support to
gas prices, potentially negating normal seasonal price declines, as
the industry strains to prepare for the 1996/1997 heating season.
Evidence of this trend is already apparent as gas prices are
currently significantly higher than at this time in previous years.
With positive industry fundamentals in place, we remain constructive
on the outlook for the Fund's energy holdings. If our investment
premise proves correct, we believe that share prices for the Fund's
energy holdings will continue to benefit as further evidence of the
industry's improving secular dynamics becomes manifest.
During the April quarter, we eliminated two long-standing holdings
at significant profits: U.S. Healthcare, Inc. and Nucor Corp. Long-
term investors may recall that U.S. Healthcare was one of the Fund's
earliest and most successful large investments. We chose to sell our
position following the company's announced merger with Aetna Life &
Casualty Co.
Our purchases during the quarter focused on adding to existing
holdings. We established a small position in TransMontaigne Oil Co.,
a company founded by the management of Associated Natural Gas Corp.,
which merged last year into Panhandle Eastern Corp., renamed
PanEnergy Corp.
The Fund also made a new investment during the period in the shares
of IMC Global, Inc. Through its phosphate fertilizer joint venture
with Freeport-McMoRan Resources Partners (known as IMC-Agrico), IMC
Global is North America's largest and lowest-cost producer of
phosphate fertilizer. IMC Global is also a leading producer of
potash, another necessary crop nutrient. Recent weather patterns in
the North American farm belt have delayed the seasonal application
of fertilizer, leading to a significant year-over-year increase in
fertilizer inventories, which has depressed prices for fertilizer
products and, in turn, the share price of IMC Global. Although these
short-term industry fundamentals have led to lower prices for IMC
Global's products, we believe that long-term industry supply/demand
dynamics represent a significant opportunity for this world-scale
producer of fertilizer products. With worldwide grain inventories at
their lowest levels in almost 20 years, industry experts believe
that even with an ample harvest it will take at least two years to
restore grain inventories to normal levels. The tightness in the
grain markets should support fertilizer demand, since application
rates are directly related to improved crop yields. Therefore, when
IMC Global's shares came under pressure, we initiated the Fund's
investment.
<PAGE>
In Conclusion
As of April quarter-end, cash reserves accounted for 17.5% of the
Fund's net assets, virtually unchanged from the end of the prior
quarter. These cash reserves resulted in large part from the
substantial profit-taking in technology holdings last year. We have
not reduced the Fund's cash position, primarily because it has been
difficult to find attractively priced investments. Furthermore, it
appears that we may be somewhat closer to the latter stages of the
current bull market, a time when above-average cash reserves would
be warranted.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Stephen C. Johnes)
Stephen C. Johnes
Vice President and Portfolio Manager
May 31, 1996
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.
<PAGE>
* 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).
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 3/31/96 +27.50% +20.80%
Five Years Ended 3/31/96 +14.74 +13.51
Inception (11/28/88)
through 3/31/96 +18.88 +18.01
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 3/31/96 +26.18% +22.18%
Five Years Ended 3/31/96 +13.57 +13.57
Inception (3/27/87) through 3/31/96 +14.13 +14.13
<PAGE>
[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 3/31/96 +26.19% +25.19%
Inception (10/21/94)
through 3/31/96 +22.76 +22.76
[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 3/31/96 +27.17% +20.49%
Inception (10/21/94)
through 3/31/96 +23.69 +19.16
[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*
<S> <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
1995 17.49 21.80 1.723 0.359 +36.82
1/1/96--4/30/96 21.80 24.50 -- -- +12.39
------ ------
Total $6.158 Total $0.672
Cumulative total return as of 4/30/96: +286.40%*
</TABLE>
<TABLE>
Performance Summary--Class B Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid++ % Change*
<S> <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
1995 16.47 20.40 1.723 0.143 +35.45
1/1/96--4/30/96 20.40 22.84 -- -- +11.96
------ ------
Total $6.218 Total $0.566
Cumulative total return as of 4/30/96: +256.06%**
</TABLE>
<PAGE>
<TABLE>
Performance Summary--Class C Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid++ % Change*
<S> <C> <C> <C> <C> <C>
10/21/94--12/31/94 $17.45 $16.47 $0.295 -- - 3.90%
1995 16.47 20.30 1.723 $0.239 +35.44
1/1/96--4/30/96 20.30 22.73 -- -- +11.97
------ ------
Total $2.018 Total $0.239
Cumulative total return as of 4/30/96: +45.73%**
</TABLE>
<TABLE>
Performance Summary--Class D Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid++ % Change*
<S> <C> <C> <C> <C> <C>
10/21/94--12/31/94 $18.47 $17.47 $0.295 -- - 3.79%
1995 17.47 21.76 1.723 $0.321 +36.52
1/1/96--4/30/96 21.76 24.43 -- -- +12.27
------ ------
Total $2.018 Total $0.321
Cumulative total return as of 4/30/96: +47.46%*
<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.
**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)
<PAGE>
<TABLE>
Recent Performance Results
<CAPTION>
12 Month 3 Month
4/30/96 1/31/96 4/30/95 % Change % Change
<S> <C> <C> <C> <C> <C>
ML Growth Fund Class A Shares* $24.50 $21.39 $20.21 +31.03%(1) +14.54%
ML Growth Fund Class B Shares* 22.84 19.99 18.96 +30.87(1) +14.26
ML Growth Fund Class C Shares* 22.73 19.89 18.96 +30.29(1) +14.28
ML Growth Fund Class D Shares* 24.43 21.34 20.17 +30.93(1) +14.48
Standard & Poor's 500 Index** 654.17 636.02 514.71 +27.09 + 2.85
ML Growth Fund Class A Shares--Total Return* +33.07(2) +14.54
ML Growth Fund Class B Shares--Total Return* +31.73(3) +14.26
ML Growth Fund Class C Shares--Total Return* +31.73(4) +14.28
ML Growth Fund Class D Shares--Total Return* +32.76(5) +14.48
Standard & Poor's 500 Index--Total Return** +30.16 + 3.39
<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.
(1)Percent change includes reinvestment of $1.723 per share capital
gains distributions.
(2)Percent change includes reinvestment of $0.359 per share ordinary
income dividends and $1.723 per share capital gains distributions.
(3)Percent change includes reinvestment of $0.143 per share ordinary
income dividends and $1.723 per share capital gains distributions.
(4)Percent change includes reinvestment of $0.239 per share ordinary
income dividends and $1.723 per share capital gains distributions.
(5)Percent change includes reinvestment of $0.321 per share ordinary
income dividends and $1.723 per share capital gains distributions.
</TABLE>
PORTFOLIO INFORMATION
For the Quarter Ended April 30, 1996
Percent of
Ten Largest Equity Holdings Net Assets
Dell Computer Corp. 6.0%
Freeport-McMoRan Copper & Gold, Inc.* 5.0
Apache Corp. 4.8
Anadarko Petroleum Corp. 4.6
Global Marine, Inc. 4.4
Ensco International, Inc. 4.3
Western Atlas, Inc. 3.3
Freeport-McMoRan, Inc. 3.3
Cirrus Logic, Inc. 3.1
Norcen Energy Resources Ltd. 3.1
[FN]
*Includes Class A and Class B Shares.
Additions
IMC Global, Inc.
TransMontaigne Oil Co.
<PAGE>
Deletions
Nucor Corp.
U.S. Healthcare, Inc.
<TABLE>
SCHEDULE OF INVESTMENTS
<CAPTION>
Shares Value Percent of
Industries Held Stocks Cost (Note 1a) Net Assets
<S> <C> <S> <C> <C> <C>
Banking & Financial 1,000,000 Republic New York Corp. $ 44,267,282 $ 59,375,000 1.4%
Services 1,000,000 Safra Republic Holdings S.A. (ADR)* 69,529,500 118,000,000 2.8
-------------- -------------- ------
113,796,782 177,375,000 4.2
Biotechnology 2,296,000 ++CytoTherapeutics, Inc. (b) 15,914,783 33,866,000 0.8
434,500 ++CytoTherapeutics, Inc. (Warrants) (a) 651,750 3,558,120 0.1
-------------- -------------- ------
16,566,533 37,424,120 0.9
Computer Software 2,500,000 Autodesk, Inc. (b) 55,028,020 101,875,000 2.4
1,600,000 ++Landmark Graphics Corp. (b) 27,012,866 30,800,000 0.7
5,139,000 ++Mentor Graphics, Inc. (b) 68,498,166 81,581,625 2.0
3,500,000 ++Platinum Technology, Inc. (b) 60,820,012 51,187,500 1.2
-------------- -------------- ------
211,359,064 265,444,125 6.3
Diversified 1,500,000 Freeport-McMoRan Copper & Gold,
Resource Inc. (Class A) 36,449,552 47,437,500 1.1
Companies 5,000,000 Freeport-McMoRan Copper & Gold,
Inc. (Class B) 107,984,584 164,375,000 3.9
3,750,000 Freeport-McMoRan, Inc. (b) 114,789,644 136,875,000 3.3
1,050,000 IMC Global, Inc. 37,222,925 38,718,750 0.9
-------------- -------------- ------
296,446,705 387,406,250 9.2
Domestic 3,300,000 Anadarko Petroleum Corp. (b) 119,856,330 192,225,000 4.6
Exploration & 300,000 ++McMoRan Oil & Gas Co. 1,691,662 900,000 0.0
Production 9,000,000 ++Santa Fe Energy Resources, Inc. (b) 83,865,388 108,000,000 2.6
3,450,000 ++Seagull Energy Corporation (b) 72,331,809 84,093,750 2.0
1,000,000 ++United Meridian Corp. 12,390,790 31,000,000 0.7
3,000,000 Vastar Resources, Inc. 89,836,252 109,125,000 2.6
-------------- -------------- ------
379,972,231 525,343,750 12.5
<PAGE>
Electronic 6,255,000 ++Cirrus Logic, Inc. (b) 69,372,447 130,573,125 3.1
Components 1,000,000 Intel Corporation 51,487,500 67,750,000 1.6
2,500,000 ++Komag, Inc. 51,714,403 83,750,000 2.0
-------------- -------------- ------
172,574,350 282,073,125 6.7
Energy Acquisition & 7,000,000 Apache Corp. (b) 202,769,992 203,000,000 4.8
Exploration 2,200,000 Devon Energy Corp. (b) 34,401,130 56,100,000 1.4
2,000,000 ++Newfield Exploration Co. (b) 56,598,373 68,500,000 1.6
-------------- -------------- ------
293,769,495 327,600,000 7.8
International Explora- 8,000,000 Norcen Energy Resources Ltd. (b) 120,353,892 129,620,105 3.1
tion & Production
International 3,500,000 Yacimientos Petroliferos Fiscales S.A.
Integrated Oils (Sponsored) (ADR)* 83,800,840 76,562,500 1.8
Natural Gas 2,343,750 Panhandle Eastern Corp. 24,371,330 76,464,844 1.8
Gathering & 3,117,000 TransMontaigne Oil Co. 17,143,500 17,143,500 0.4
Transmission 2,500,000 Western Gas Resources, Inc. (b) 57,319,428 36,875,000 0.9
-------------- -------------- ------
98,834,258 130,483,344 3.1
Offshore Drilling 6,000,000 ++Ensco International, Inc. (b) 66,189,856 180,000,000 4.3
Companies 16,300,000 ++Global Marine, Inc. (b) 59,126,323 185,412,500 4.4
-------------- -------------- ------
125,316,179 365,412,500 8.7
Oil Refining 4,000,000 Valero Energy Corp. (b) 86,245,282 115,500,000 2.7
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded)
<CAPTION>
Shares Value Percent of
Industries Held Stocks Cost (Note 1a) Net Assets
<S> <C> <S> <C> <C> <C>
Oilfield Services 4,000,000 ++Nabors Industries, Inc. $ 41,952,180 $ 61,500,000 1.5%
1,335,000 ++Pool Energy Services Co. (b) 14,336,959 16,854,375 0.4
1,000,000 Schlumberger Ltd., Inc. 67,216,872 88,250,000 2.1
2,000,000 ++Weatherford Enterra Inc. 57,620,147 70,500,000 1.7
2,346,300 ++Western Atlas, Inc. 131,993,371 140,778,000 3.3
-------------- -------------- ------
313,119,529 377,882,375 9.0
Personal 5,500,000 ++Dell Computer Corp. (b) 97,809,600 252,312,500 6.0
Computers
Total Stocks 2,409,964,740 3,450,439,694 82.0
Face Amount Short-Term Securities
Commercial AT&T Lucent Technologies:
Paper** $20,000,000 5.35% due 5/09/1996 19,976,222 19,976,222 0.5
40,000,000 5.35% due 5/10/1996 39,946,500 39,946,500 0.9
Corporate Asset Funding Co., Inc.:
50,000,000 5.27% due 5/02/1996 49,992,681 49,992,681 1.2
40,000,000 5.28% due 5/21/1996 39,882,667 39,882,667 0.9
50,000,000 Corporate Receivables Corp., 5.30%
due 5/21/1996 49,852,778 49,852,778 1.2
40,000,000 Falcon Asset Securitization Corp.,
5.30% due 5/20/1996 39,888,111 39,888,111 0.9
43,837,000 General Electric Capital Corp.,
5.35% due 5/01/1996 43,837,000 43,837,000 1.0
Goldman Sachs Group L.P.:
50,000,000 5.28% due 5/31/1996 49,780,000 49,780,000 1.2
50,000,000 5.32% due 6/07/1996 49,726,611 49,726,611 1.2
40,000,000 H.J. Heinz Company, 5.31% due
5/01/1996 40,000,000 40,000,000 1.0
54,000,000 International Securitization Corp.,
5.32% due 6/28/1996 53,537,160 53,537,160 1.3
25,000,000 Lilly (Eli) and Company, Inc.,
5.30% due 5/13/1996 24,955,833 24,955,833 0.6
21,000,000 National Fleet Funding Corp., 5.31%
due 5/28/1996 20,916,367 20,916,367 0.5
44,000,000 PHH Corp., 5.33% due 5/20/1996 43,876,225 43,876,225 1.0
Xerox Credit Corp.:
60,000,000 5.30% due 5/07/1996 59,947,000 59,947,000 1.4
40,000,000 5.30% due 5/08/1996 39,958,778 39,958,778 1.0
-------------- -------------- ------
666,073,933 666,073,933 15.8
<PAGE>
US Government & 40,000,000 Federal Home Loan Bank, 5.30% due
Agency Obligations** 5/01/1996 40,000,000 40,000,000 1.0
31,545,000 Federal National Mortgage Association,
5.29% due 5/10/1996 31,503,282 31,503,282 0.7
-------------- -------------- ------
71,503,282 71,503,282 1.7
Total Short-Term Securities 737,577,215 737,577,215 17.5
Total Investments $3,147,541,955 4,188,016,909 99.5
==============
Other Assets Less Liabilities 21,243,544 0.5
-------------- ------
Net Assets $4,209,260,453 100.0%
============== ======
<FN>
*American Depositary Receipts (ADR).
**Commercial Paper and certain US Government & Agency Obligations
are traded on a discount basis; the interest rates shown are the
discount rates paid at the time of purchase by the Fund.
(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)Investment in an affiliated company (Note 5).
++Non-income producing security.
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION
<TABLE>
Statement of Assets and Liabilities as of April 30, 1996
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$3,147,541,955) (Note 1a) $4,188,016,909
Cash 348,362
Receivables:
Securities sold $ 28,767,804
Beneficial interest sold 13,205,284
Dividends 1,627,500 43,600,588
--------------
Prepaid registration fees and other assets (Note 1f) 84,045
--------------
Total assets 4,232,049,904
--------------
<PAGE>
Liabilities: Payables:
Securities purchased 11,498,794
Beneficial interest redeemed 5,816,767
Distributor (Note 2) 2,296,553
Investment adviser (Note 2) 2,159,198 21,771,312
--------------
Accrued expenses and other liabilities 1,018,139
--------------
Total liabilities 22,789,451
--------------
Net Assets: Net assets $4,209,260,453
==============
Net Assets Class A Shares of beneficial interest, $0.10 par value,
Consist of: unlimited number of shares authorized $ 3,508,506
Class B Shares of beneficial interest, $0.10 par value,
unlimited number of shares authorized 10,590,412
Class C Shares of beneficial interest, $0.10 par value,
unlimited number of shares authorized 599,747
Class D Shares of beneficial interest, $0.10 par value,
unlimited number of shares authorized 3,252,963
Paid-in capital in excess of par 3,007,858,177
Undistributed investment income--net 4,042,816
Undistributed realized capital gains on investments and foreign
currency transactions--net 138,932,878
Unrealized appreciation on investments--net 1,040,474,954
--------------
Net assets $4,209,260,453
==============
Net Asset Value: Class A--Based on net assets of $859,469,778 and
35,085,064 shares of beneficial interest
outstanding $ 24.50
==============
Class B--Based on net assets of $2,418,799,799 and
105,904,122 shares of beneficial interest
outstanding $ 22.84
==============
Class C--Based on net assets of $136,310,005 and
5,997,465 shares of beneficial interest
outstanding $ 22.73
==============
Class D--Based on net assets of $794,680,871 and
32,529,630 shares of beneficial interest
outstanding $ 24.43
==============
<PAGE>
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations for the Year Ended April 30, 1996
<S> <S> <C> <C>
Investment Interest and discount earned $ 20,182,973
Income Dividends (net of $248,749 foreign withholding tax) 14,296,265
(Notes 1d & 1e): --------------
Total income 34,479,238
--------------
Expenses: Investment advisory fees (Note 2) $ 11,626,532
Account maintenance and distribution fees--Class B (Note 2) 10,361,719
Transfer agent fees--Class B (Note 2) 1,551,194
Account maintenance fees--Class D (Note 2) 841,011
Account maintenance and distribution fees--Class C (Note 2) 527,156
Transfer agent fees--Class A (Note 2) 460,444
Transfer agent fees--Class D (Note 2) 426,216
Registration fees (Note 1f) 192,371
Printing and shareholder reports 144,514
Accounting services (Note 2) 93,628
Transfer agent fees--Class C (Note 2) 86,675
Custodian fees 77,657
Professional fees 43,206
Trustees' fees and expenses 19,950
Pricing fees 409
Other 24,866
--------------
Total expenses before reimbursement 26,477,548
Reimbursement of expenses (Note 2) (583,556)
--------------
Total expenses after reimbursement 25,893,992
--------------
Investment income--net 8,585,246
--------------
<PAGE>
Realized & Realized gain (loss) from:
Unrealized Gain Investments--net 138,944,020
(Loss) on Foreign currency transactions--net (10,888) 138,933,132
Investments & --------------
Foreign Currency Change in unrealized appreciation on investments--net 414,466,099
Transactions-- --------------
Net (Notes 1b, Net realized and unrealized gain on investments and
1c, 1e & 3): foreign currency transactions 553,399,231
--------------
Net Increase in Net Assets Resulting from Operations $ 561,984,477
==============
See Notes to Financial Statements.
</TABLE>
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: April 30, 1996 Oct. 31, 1995
<S> <S> <C> <C>
Operations: Investment income--net $ 8,585,246 $ 9,409,014
Realized gain on investments and foreign currency
transactions--net 138,933,132 282,849,493
Change in unrealized appreciation on investments--net 414,466,099 212,145,489
-------------- --------------
Net increase in net assets resulting from operations 561,984,477 504,403,996
-------------- --------------
Dividends & Investment income--net:
Distributions to Class A (6,818,094) --
Shareholders Class B (1,339,631) --
(Note 1g): Class C (474,185) --
Class D (5,319,534) --
Realized gain on investments--net:
Class A (54,826,992) (6,083,187)
Class B (168,933,574) (23,093,382)
Class C (7,976,874) (87,568)
Class D (51,112,182) (872,515)
-------------- --------------
Net decrease in net assets resulting from dividends
and distributions to shareholders (296,801,066) (30,136,652)
-------------- --------------
<PAGE>
Beneficial Net increase in net assets derived from beneficial
Interest interest transactions 653,618,984 998,495,743
Transactions -------------- --------------
(Note 4):
Net Assets: Total increase in net assets 918,802,395 1,472,763,087
Beginning of period 3,290,458,058 1,817,694,971
-------------- --------------
End of period* $4,209,260,453 $3,290,458,058
============== ==============
<FN>
*Undistributed investment income--net $ 4,042,816 $ 9,409,014
============== ==============
See Notes to Financial Statements.
</TABLE>
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
April 30, For the Year Ended October 31,
Increase (Decrease) in Net Asset Value: 1996++ 1995++ 1994++ 1993 1992
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 23.13 $ 19.19 $ 19.22 $ 14.79 $ 15.31
Operating ---------- ---------- ---------- ---------- ----------
Performance: Investment income--net .13 .23 .08 .02 .02
Realized and unrealized gain on
investments and foreign currency
transactions--net 3.32 4.01 2.01 4.86 0.65
---------- ---------- ---------- ---------- ----------
Total from investment operations 3.45 4.24 2.09 4.88 0.67
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.23) -- -- -- --
Realized gain on investments--net (1.85) (.30) (2.12) (.45) (1.19)
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (2.08) (.30) (2.12) (.45) (1.19)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 24.50 $ 23.13 $ 19.19 $ 19.22 $ 14.79
========== ========== ========== ========== ==========
<PAGE>
Total Investment Based on net asset value per share 16.27%+++ 22.60% 12.50% 33.97% 5.77%
Return:** ========== ========== ========== ========== ==========
Ratios to Expenses, net of reimbursement .78%* .82% .82% .81% .84%
Average ========== ========== ========== ========== ==========
Net Assets: Expenses .81%* .84% .82% .81% .84%
========== ========== ========== ========== ==========
Investment income--net 1.15%* 1.10% .44% .29% .28%
========== ========== ========== ========== ==========
Supplemental Net assets, end of period
Data: (in thousands) $ 859,469 $ 670,164 $ 382,077 $ 229,709 $ 138,456
========== ========== ========== ========== ==========
Portfolio turnover 9.05% 37.42% 4.22% 33.21% 21.20%
========== ========== ========== ========== ==========
Average commission rate paid+++++ $ .0554 -- -- -- --
========== ========== ========== ========== ==========
<FN>
*Annualized.
**Total investment returns exclude the effect of sales loads.
++Based on average number of shares outstanding during the period.
+++Aggregate total investment return.
+++++For fiscal years beginning on or after September 1, 1995, the
Fund is required to disclose its average commission rate per share
for purchases and sales of equity securities.
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<PAGE>
<TABLE>
Financial Highlights (continued)
Class B
For the
The following per share data and ratios have been derived Six Months
from information provided in the financial statements. Ended
April 30, For the Year Ended October 31,
Increase (Decrease) in Net Asset Value: 1996++ 1995++ 1994++ 1993 1992
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 21.60 $ 18.12 $ 18.43 $ 14.35 $ 15.03
Operating ---------- ---------- ---------- ---------- ----------
Performance: Investment income (loss)--net .01 .01 (.10) (.11) (.10)
Realized and unrealized gain on
investments and foreign currency
transactions--net 3.09 3.77 1.91 4.64 .61
---------- ---------- ---------- ---------- ----------
Total from investment operations 3.10 3.78 1.81 4.53 .51
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income-- net (.01) -- -- -- --
Realized gain on investments--net (1.85) (.30) (2.12) (.45) (1.19)
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (1.86) (.30) (2.12) (.45) (1.19)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 22.84 $ 21.60 $ 18.12 $ 18.43 $ 14.35
========== ========== ========== ========== ==========
Total Investment Based on net asset value per share 15.63%+++ 21.37% 11.41% 32.54% 4.74%
Return:** ========== ========== ========== ========== ==========
Ratios to Expenses, net of reimbursement 1.80%* 1.84% 1.84% 1.83% 1.87%
Average ========== ========== ========== ========== ==========
Net Assets: Expenses 1.83%* 1.87% 1.84% 1.83% 1.87%
========== ========== ========== ========== ==========
Investment income (loss)--net .13%* .04% (.58%) (.78%) (.76%)
========== ========== ========== ========== ==========
Supplemental Net assets, end of period (in
Data: thousands) $2,418,800 $1,920,451 $1,433,051 $1,049,190 $ 758,061
========== ========== ========== ========== ==========
Portfolio turnover 9.05% 37.42% 4.22% 33.21% 21.20%
========== ========== ========== ========== ==========
Average commission rate paid+++++ $ .0554 -- -- -- --
========== ========== ========== ========== ==========
<FN>
*Annualized.
**Total investment returns exclude the effect of sales loads.
++Based on average number of shares outstanding during the period.
+++Aggregate total investment return.
+++++For fiscal years beginning on or after September 1, 1995, the
Fund is required to disclose its average commission rate per share
for purchases and sales of equity securities.
See Notes to Financial Statements.
</TABLE>
<PAGE>
FINANCIAL INFORMATION (continued)
<TABLE>
Financial Highlights (continued)
<CAPTION>
Class C
For the For the
Six For the Period
The following per share data and ratios have been derived Months Year Oct. 21,
from information provided in the financial statements. Ended Ended 1994++ to
April 30, Oct. 31, Oct. 31,
Increase (Decrease) in Net Asset Value: 1996++++ 1995++++ 1994++++
<S> <S> <C> <C> <C>
Per Share Net asset value, beginning of period $ 21.59 $ 18.12 $ 17.45
Operating ---------- ---------- ----------
Performance: Investment income--net .01 .03 --
Realized and unrealized gain on investments and
foreign currency transactions--net 3.09 3.74 .67
---------- ---------- ----------
Total from investment operations 3.10 3.77 .67
---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.11) -- --
Realized gain on investments--net (1.85) (.30) --
---------- ---------- ----------
Total dividends and distributions (1.96) (.30) --
---------- ---------- ----------
Net asset value, end of period $ 22.73 $ 21.59 $ 18.12
========== ========== ==========
Total Investment Based on net asset value per share 15.69%+++ 21.32% 3.84%+++
Return:** ========== ========== ==========
Ratios to Expenses, net of reimbursement 1.81%* 1.86% 1.52%*
Average ========== ========== ==========
Net Assets: Expenses 1.84%* 1.89% 2.52%*
========== ========== ==========
Investment income (loss)--net .09%* .14% (1.17%)*
========== ========== ==========
<PAGE>
Supplemental Net assets, end of period (in thousands) $ 136,310 $ 85,486 $ 1,381
Data: ========== ========== ==========
Portfolio turnover 9.05% 37.42% 4.22%
========== ========== ==========
Average commission rate paid+++++ $ .0554 -- --
========== ========== ==========
<FN>
*Annualized.
**Total investment returns exclude the effect of sales loads.
++Commencement of Operations.
++++Based on average number of shares outstanding during the period.
+++Aggregate total investment return.
+++++For fiscal years beginning on or after September 1, 1995, the
Fund is required to disclose its average commission rate per share
for purchases and sales of equity securities.
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights (concluded)
<CAPTION>
Class D
For the For the
Six For the Period
The following per share data and ratios have been derived Months Year Oct. 21,
from information provided in the financial statements. Ended Ended 1994++ to
April 30, Oct. 31, Oct. 31,
Increase (Decrease) in Net Asset Value: 1996++++ 1995++++ 1994++++
<S> <S> <C> <C> <C>
Per Share Net asset value, beginning of period $ 23.06 $ 19.18 $ 18.47
Operating ---------- ---------- ----------
Performance: Investment income--net .10 .22 --
Realized and unrealized gain on investments and foreign
currency transactions--net 3.31 3.96 .71
---------- ---------- ----------
Total from investment operations 3.41 4.18 .71
---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.19) -- --
Realized gain on investments--net (1.85) (.30) --
---------- ---------- ----------
Total dividends and distributions (2.04) (.30) --
---------- ---------- ----------
Net asset value, end of period $ 24.43 $ 23.06 $ 19.18
========== ========== ==========
<PAGE>
Total Investment Based on net asset value per share 16.12%+++ 22.29% 3.84%+++
Return:** ========== ========== ==========
Ratios to Expenses, net of reimbursement 1.02%* 1.08% 1.77%*
Average ========== ========== ==========
Net Assets: Expenses 1.06%* 1.10% 1.77%*
========== ========== ==========
Investment income (loss)--net .90%* 1.00% (.54%)*
========== ========== ==========
Supplemental Net assets, end of period (in thousands) $ 794,681 $ 614,357 $ 1,186
Data: ========== ========== ==========
Portfolio turnover 9.05% 37.42% 4.22%
========== ========== ==========
Average commission rate paid+++++ $ .0554 -- --
========== ========== ==========
<FN>
*Annualized.
**Total investment returns exclude the effect of sales loads.
++Commencement of Operations.
++++Based on average number of shares outstanding during the period.
+++Aggregate total investment return.
+++++For fiscal years beginning on or after September 1, 1995, the
Fund is required to disclose its average commission rate per share
for purchases and sales of equity securities.
See Notes to Financial Statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch Growth Fund for Investment and Retirement (the "Fund")
is registered under the Investment Company Act of 1940 as a non-
diversified, open-end management investment company. 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 Pricing SM 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 Trustees 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 or, in
the case of options traded in the over-the-counter market, the last
asked price. Options purchased are valued at the last sale price in
the case of exchange-traded options or, in the case of options
traded in the over-the-counter market, the last bid price. Short-
term securities are valued at amortized cost, which approximates
market value. Other investments, including futures contracts and
related options, 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 Trustees.
(b) 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.
<PAGE>
(c) 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 and currency
markets. Losses may arise due to changes in the value of the
contract or if the counterparty does not perform under the contract.
* Forward foreign exchange contracts--The Fund is authorized to
enter into forward foreign exchange contracts as a hedge against
either specific transactions or portfolio positions. Such contracts
are not entered on the Fund's records. However, the effect on net
operations is recorded from the date the Fund enters into such
contracts. Premium or discount is amortized over the life of the
contracts.
* Foreign currency options and futures--The Fund may also purchase
or sell listed or over-the-counter foreign currency options, foreign
currency futures and related options on foreign currency futures as
a short or long hedge against possible variations in foreign
exchange rates. Such transactions may be effected with respect to
hedges on non-US dollar denominated securities owned by the Fund,
sold by the Fund but not yet delivered, or committed or anticipated
to be purchased by the Fund.
* Options--The Fund is authorized to purchase and write covered call
and put 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 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
paid or received (or loss or gain to the extent the cost of the
closing transaction is less than or greater than the premium paid or
received).
NOTES TO FINANCIAL STATEMENTS (continued)
Written and purchased options are non-income producing investments.
* Financial futures contracts--The Fund may purchase or sell interest
rate futures contracts. Upon entering into a contract, the Fund
deposits and maintains as collateral such initial margin as required
by the exchange on which the transaction is effected. Pursuant to
the contract, the Fund agrees to receive from or pay to the broker
an amount of cash equal to the daily fluctuation in value of the
contract. Such receipts or payments are known as variation margin
and are recorded by the Fund as unrealized gains or losses. When the
contract is closed, the Fund records a realized gain or loss equal
to the difference between the value of the contract at the time it
was opened and the value at the time it was closed.
<PAGE>
(d) 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 imposed on interest, dividends and capital
gains at various rates.
(e) 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 date, except if the ex-dividend date has passed, certain
dividends from foreign securities are recorded as soon as the Fund
is informed of the ex-dividend date. Interest income is recognized
on the accrual basis. Realized gains and losses on security
transactions are determined on the identified cost basis.
(f) Prepaid registration fees--Prepaid registration fees are charged
to expense as the related shares are issued.
(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
Merrill Lynch Asset Management, L.P. ("MLAM"). The general partner
of MLAM 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, Inc. ("MLFD" or "Distributor"), a wholly-owned
subsidiary of Merrill Lynch Group, Inc.
MLAM 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 is required to pay a monthly fee based upon the
average daily value of the Fund's net assets at an annual rate of
0.65%. As a result of a voluntary waiver of expenses beginning on
December 16, 1994, the Fund will pay a monthly fee based upon the
average daily value of the Fund's net assets at the following annual
rates: 0.65% of the average daily net assets on the first $1
billion; 0.625% on the next $500 million; and 0.60% of the average
net assets over $1.5 billion. The Investment Advisory Agreement
obligates MLAM to reimburse the Fund to the extent the Fund's
expenses (excluding interest, taxes, distribution fees, brokerage
fees and commissions, and extraordinary items) exceed 2.5% of the
Fund's first $30 million of average daily net assets, 2.0% of the
Fund's next $70 million of average daily net assets, and 1.5% of the
average daily net assets in excess thereof. No fee payment will be
made to MLAM during any fiscal year which will cause expenses to
exceed the most restrictive expense limitation at the time of such
payment. For the six months ended April 30, 1996, MLAM earned fees
of $11,626,532, of which $583,556 was voluntarily waived.
<PAGE>
Pursuant to the distribution plans (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. The fees are
accrued daily and paid monthly at annual rates based upon the
average daily net assets of the shares as follows:
Account Distribution
Maintenance 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 Inc. ("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 April 30, 1996, 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 $ 7,919 $109,405
Class D $51,705 $752,750
For the six months ended April 30, 1996, MLPF&S received contingent
deferred sales charges of $951,597 and $42,835 relating to
transactions in Class B and Class C Shares, respectively.
<PAGE>
Merrill Lynch Financial Data Services, Inc. ("MLFDS"), a wholly-
owned subsidiary of ML & Co., is the Fund's transfer agent.
Accounting services are provided to the Fund by MLAM at cost.
Certain officers and/or trustees of the Fund are officers and/or
directors of MLAM, PSI, MLPF&S, MLFDS, MLFD, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended April 30, 1996 were $624,487,339 and
$264,719,029, respectively.
Net realized and unrealized gains (losses) as of April 30, 1996 were
as follows:
Realized Unrealized
Gains (Losses) Gains
Long-term investments $138,942,829 $1,040,474,954
Short-term investments 1,191 --
Foreign currency
transactions (10,888) --
------------ --------------
Total $138,933,132 $1,040,474,954
============ ==============
As of April 30, 1996, net unrealized appreciation for Federal income
tax purposes aggregated $1,040,474,954, of which $1,078,581,897
related to appreciated securities and $38,106,943 related to
depreciated securities. At April 30, 1996, the aggregate cost of
investments for Federal income tax purposes was $3,147,541,955.
4. Shares of Beneficial Interest:
Net increase in net assets derived from capital share transactions
was $653,618,984 and $998,495,743 for the six months ended April 30,
1996 and for the year ended October 31, 1995, respectively.
NOTES TO FINANCIAL STATEMENTS (concluded)
Transactions in shares of beneficial interest for each class were as
follows:
Class A Shares for the Six Dollar
Months Ended April 30, 1996 Shares Amount
Shares sold 7,474,109 $167,321,653
Shares issued to share-
holders in reinvestment of
dividends and distributions 2,662,311 56,760,458
------------ ------------
Total issued 10,136,420 224,082,111
Shares redeemed (4,022,765) (89,735,382)
------------ ------------
Net increase 6,113,655 $134,346,729
============ ============
<PAGE>
Class A Shares for the Year Dollar
Ended October 31, 1995 Shares Amount
Shares sold 14,567,526 $296,704,905
Shares issued to share-
holders in reinvestment of
distributions 317,795 5,475,610
------------ ------------
Total issued 14,885,321 302,180,515
Shares redeemed (5,824,423) (121,604,069)
------------ ------------
Net increase 9,060,898 $180,576,446
============ ============
Class B Shares for the Six Dollar
Months Ended April 30, 1996 Shares Amount
Shares sold 20,381,563 $426,546,274
Shares issued to shareholders
in reinvestment of dividends
and distributions 7,787,248 155,355,599
------------ ------------
Total issued 28,168,811 581,901,873
Automatic conversion of
shares (1,493,843) (31,637,433)
Shares redeemed (9,698,335) (202,528,190)
------------ ------------
Net increase 16,976,633 $347,736,250
============ ============
<PAGE>
Class B Shares for the Year Dollar
Ended October 31, 1995 Shares Amount
Shares sold 45,433,946 $887,607,425
Shares issued to shareholders
in reinvestment of
distributions 1,276,055 20,710,369
------------ ------------
Total issued 46,710,001 908,317,794
Automatic conversion of
shares (22,364,293) (422,714,534)
Shares redeemed (14,507,467) (282,014,523)
------------ ------------
Net increase 9,838,241 $203,588,737
============ ============
Class C Shares for the
Six Months Ended Dollar
April 30, 1996 Shares Amount
Shares sold 2,439,562 $ 50,700,338
Shares issued to shareholders
in reinvestment of dividends
and distributions 389,184 7,725,289
------------ ------------
Total issued 2,828,746 58,425,627
Shares redeemed (789,980) (16,442,543)
------------ ------------
Net increase 2,038,766 $ 41,983,084
============ ============
Class C Shares for the Year Dollar
Ended October 31, 1995 Shares Amount
Shares sold 4,263,467 $ 85,246,441
Shares issued to shareholders
in reinvestment of
distributions 4,740 76,935
------------ ------------
Total issued 4,268,207 85,323,376
Shares redeemed (385,718) (7,910,688)
------------ ------------
Net increase 3,882,489 $ 77,412,688
============ ============
<PAGE>
Class D Shares for the
Six Months Ended Dollar
April 30, 1996 Shares Amount
Shares sold 4,521,652 $101,343,223
Shares issued to shareholders
in reinvestment of dividends
and distributions 2,335,696 49,703,616
Automatic conversion of
shares 1,398,219 31,637,433
------------ ------------
Total issued 8,255,567 182,684,272
Shares redeemed (2,364,053) (53,131,351)
------------ ------------
Net increase 5,891,514 $129,552,921
============ ============
Class D Shares for the Year Dollar
Ended October 31, 1995 Shares Amount
Shares sold 7,989,658 $166,752,965
Shares issued to shareholders
in reinvestment of
distributions 46,313 797,042
Automatic conversion of
shares 21,033,581 422,714,534
------------ ------------
Total issued 29,069,552 590,264,541
Shares redeemed (2,493,288) (53,346,669)
------------ ------------
Net increase 26,576,264 $536,917,872
============ ============
5. Transactions with Affiliated Companies:
Investment 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:
<PAGE>
<TABLE>
<CAPTION>
Increase (Decrease) Increase (Decrease) Dividend
Industry Affiliate in Shares--Net in Cost--Net Income
<S> <S> <C> <C> <C>
Domestic Exploration & Production Anadarko Petroleum Corp. -- -- $ 495,000
Energy Acquisition & Exploration Apache Corp. 2,000,000 $58,438,870 700,000
Computer Software Autodesk, Inc. 500,000 17,881,171 300,000
Electronic Components Cirrus Logic, Inc. 255,000 5,263,123 ++
Biotechnology CytoTherapeutics, Inc. 213,000 2,904,158 ++
Personal Computers Dell Computer Corp. 1,877,906 56,678,261 ++
Energy Acquisition & Exploration Devon Energy Corp. -- -- 132,000
Offshore Drilling Companies Ensco International, Inc. -- -- ++
Diversified Resource Companies Freeport-McMoRan, Inc. -- -- 675,000
Offshore Drilling Companies Global Marine, Inc. -- -- ++
Computer Software Landmark Graphics Corp. -- -- ++
Computer Software Mentor Graphics, Inc. 487,000 6,474,394 ++
Energy Acquisition & Exploration Newfield Exploration Co. 349,500 10,270,295 ++
International Exploration & Production Norcen Energy Resources Ltd. 1,025,000 14,483,787 1,408,740
Computer Software Platinum Technology, Inc. 786,248 11,222,095 ++
Oilfield Services Pool Energy Services Co. -- -- ++
Domestic Exploration & Production Santa Fe Energy Resources, Inc. -- -- ++
Domestic Exploration & Production Seagull Energy Corporation 450,000 8,428,812 ++
Oil Refining Valero Energy Corp. -- -- 1,040,000
Natural Gas Gathering & Transmission Western Gas Resources, Inc. -- -- 250,000
<FN>
++Non-income producing security.
</TABLE>
