MERRILL LYNCH
GROWTH FUND
For Investment and
Retirement
FUND LOGO
Quarterly Report
January 31, 1996
<PAGE>
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
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
Although the partial shutdown of the US Government curtailed the
release of most economic data for the January quarter, it was
nonetheless apparent that gross domestic product (GDP) growth
continued to be lackluster. Consumer spending is barely growing, the
industrial sector is at a virtual standstill and, despite lower
mortgage rates, there is little or no pick-up in housing activity.
With inflationary pressures subdued, the Federal Reserve Board
responded to the slowing economy by modestly lowering short-term
interest rates in both December and January. Historically, it has
taken some time for shifts in monetary policy to have an impact on
economic growth. Therefore, the Federal Reserve Board's gradual
shift to lowering interest rates, which began early last year, may
not be reflected in a pick-up in real economic growth until later
this year.
The impasse between the Clinton Administration and Congress over the
Federal budget continues. However, both sides have made concessions
since the debate began. It appears that investors are currently
focusing on the progress that has been made rather than on the
differences that remain. Initially, President Clinton proposed
deficits of about $190 billion annually through fiscal year 2002,
but now proposes balanced budgets, as do the Republicans. Current
indications are that a piecemeal budget accord is the most likely
outcome. Even without the proposed policy changes, it appears that
the US Federal budget deficit would remain stable at about 2% of GDP
for the rest of the decade. This would be far better than is the
case for most Group of Seven industrial nations, and for the United
States would represent a great improvement over the last 15 years.
Although this may fall short of investors' best expectations, it
appears that the Federal budget debate over the past year has
resulted in a trend toward a more conservative fiscal policy.
<PAGE>
Portfolio Matters
By posting only a nominal gain for the January quarter, Merrill
Lynch Growth Fund failed to keep pace with the advance of the
broader stock market largely as a result of the underperformance of
the Fund's technology holdings. Although we had significantly
reduced the Fund's technology exposure by the end of October, sharp
declines in some of our major remaining technology holdings
negatively impacted performance during the January quarter. In some
cases, the price declines were so severe that they created what we
viewed as buying opportunities, resulting in selective additions to
our holdings.
During the January quarter, we made more meaningful additions to our
energy holdings. Long-term shareholders will recall that the Fund
has had a significant exposure to the energy sector, with a specific
focus on domestic natural gas. Throughout 1995 we increased this
exposure, and continued to do so in the January quarter. We continue
to believe that equity valuations do not reflect the improving
fundamentals for energy in general, and the domestic natural gas
market in particular. As of January quarter-end, the Fund had an
approximately 44% exposure to the energy sector, which represents
investments in several energy-related industries. The fundamentals
for the domestic natural gas market continue to improve. Normal
winter temperatures, together with low natural gas inventories, have
set the stage for strengthening natural gas prices in 1996, which
would positively impact many of the Fund's holdings.
Consistent with our positive view of energy market fundamentals,
during the January quarter the Fund selectively increased its
exposure to the oilfield service sector. This industry endured a
protracted period of overcapacity and underinvestment as it worked
off the excess capacity put in place during the oil boom in the
early 1980s. Since that time, energy prices have declined markedly
in real terms while improved technology has allowed oil and gas
producers to find and develop new reserves more efficiently. These
mutually reinforcing factors led to consolidations among oil service
companies.
<PAGE>
Given the improving fundamentals in the US natural gas market and
the apparent tightening in markets for certain oil field equipment
(such as offshore drilling rigs), we believe that the long secular
decline in the oil service industry is nearing a bottom.
Specifically, we believe that to increase deliverability of oil and
natural gas to meet ever-growing consumption, energy companies will
have to make significant new capital expenditures in the years
ahead. Given stable to rising prices for oil and natural gas, we
would expect that well-positioned oil service companies could begin
to have steadily improving earnings and cashflows. With this in
mind, we increased our exposure to a select few energy service
companies that we believe will be beneficiaries of these trends, and
added the following new positions: Nabors Industries, Inc., Western
Atlas, Inc., Weatherford Enterra Inc., and Schlumberger Ltd., Inc.
As a result of these investment activities, the oil service sector
represented approximately 14% of the Fund's net assets at the end of
the January quarter.
In Conclusion
We thank you for your investment in Merrill Lynch Growth Fund for
Investment and Retirement, and we look forward to reviewing our
outlook and strategy with you again in our next report to
shareholders.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Stephen C. Johnes)
Stephen C. Johnes
Vice President and Portfolio Manager
February 26, 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:
<PAGE>
* 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% contin-gent 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.
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--1/31/96 21.80 21.39 -- -- - 1.88
------ ------
Total $6.158 Total $0.672
<PAGE>
Cumulative total return as of 1/31/96: +237.35%*
</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--1/31/96 20.40 19.99 -- -- - 2.01
------ ------
Total $6.218 Total $0.566
Cumulative total return as of 1/31/96: +211.63%**
</TABLE>
<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--1/31/96 20.30 19.89 -- -- - 2.02
------ ------
Total $2.018 Total $0.239
Cumulative total return as of 1/31/96: +27.53%**
</TABLE>
<PAGE>
<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--1/31/96 21.76 21.34 -- -- - 1.93
------ ------
Total $2.018 Total $0.321
Cumulative total return as of 1/31/96: +28.81%*
<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)
<TABLE>
Recent Performance Results
<CAPTION>
12 Month 3 Month
1/31/96 10/31/95 1/31/95 % Change % Change
<S> <C> <C> <C> <C> <C>
ML Growth Fund Class A Shares* $21.39 $23.13 $17.33 +33.40%(1) - 0.05%(1)
ML Growth Fund Class B Shares* 19.99 21.60 16.30 +33.23(1) + 0.54(1)
ML Growth Fund Class C Shares* 19.89 21.59 16.30 +32.62(1) + 0.12(1)
ML Growth Fund Class D Shares* 21.34 23.06 17.31 +33.26(1) + 0.03(1)
Standard & Poor's 500 Index** 636.02 581.50 470.42 +35.20 + 9.38
ML Growth Fund Class A Shares--Total Return* +35.48(2) + 1.51(2)
ML Growth Fund Class B Shares--Total Return* +34.11(3) + 1.20(3)
ML Growth Fund Class C Shares--Total Return* +34.09(4) + 1.23(4)
ML Growth Fund Class D Shares--Total Return* +35.13(5) + 1.43(5)
Standard & Poor's 500 Index--Total Return** +38.63 +10.01
<PAGE>
<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>
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 12/31/95 +36.82% +29.63%
Five Years Ended 12/31/95 +20.47 +19.18
Inception (11/28/88)
through 12/31/95 +19.02 +18.12
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 12/31/95 +35.45% +31.45%
Five Years Ended 12/31/95 +19.24 +19.24
Inception (3/27/87)through 12/31/95 +14.10 +14.10
[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>
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Year Ended 12/31/95 +35.44% +34.44%
Inception (10/21/94)
through 12/31/95 +24.69 +24.69
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Sales Charge Sales Charge**
Class D Shares*
Year Ended 12/31/95 +36.52% +31.06%
Inception (10/21/94)
through 12/31/95 +25.64 +21.42
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
<TABLE>
SCHEDULE OF INVESTMENTS
<CAPTION>
Shares Percent of
Industries Held Stocks Cost Value Net Assets
<S> <C> <S> <C> <C> <C>
Banking & 1,000,000 Republic New York Corp. $ 44,267,282 $ 58,250,000 1.7%
Financial Services 1,000,000 Safra Republic Holdings S.A. (ADR)* 69,529,500 100,000,000 2.9
-------------- -------------- ------
113,796,782 158,250,000 4.6
Biotechnology 2,083,000 CytoTherapeutics, Inc. 13,010,625 34,890,250 1.0
434,500 CytoTherapeutics, Inc. (Warrants)(a) 651,750 4,551,822 0.1
-------------- -------------- ------
13,662,375 39,442,072 1.1
<PAGE>
Computer Software 2,500,000 Autodesk, Inc. 55,028,020 74,687,500 2.1
1,600,000 Landmark Graphics Corp. 27,012,866 33,200,000 1.0
5,139,000 Mentor Graphics, Inc. 68,498,166 72,588,375 2.1
2,713,752 Platinum Technology, Inc. 49,597,917 36,296,433 1.0
-------------- -------------- ------
200,136,969 216,772,308 6.2
Diversified Resource 1,500,000 Freeport-McMoRan Copper & Gold, Inc.
Companies (Class A) 36,449,552 43,500,000 1.2
5,000,000 Freeport-McMoRan Copper & Gold, Inc.
(Class B) 107,984,584 148,125,000 4.2
3,750,000 Freeport-McMoRan, Inc. 114,789,644 141,562,500 4.0
-------------- -------------- ------
259,223,780 333,187,500 9.4
Domestic 3,300,000 Anadarko Petroleum Corp. 119,856,330 166,650,000 4.8
Exploration & 300,000 McMoRan Oil & Gas Co. 1,691,662 937,500 0.0
Production 9,000,000 Santa Fe Energy Resources, Inc. 83,865,388 86,625,000 2.5
3,450,000 Seagull Energy Corporation 72,331,809 63,393,750 1.8
1,000,000 United Meridian Corp. 12,390,790 16,875,000 0.5
3,000,000 Vastar Resources, Inc. 89,836,252 84,750,000 2.4
-------------- -------------- ------
379,972,231 419,231,250 12.0
Electronic 6,255,000 Cirrus Logic, Inc. 69,372,447 132,136,875 3.8
Components 1,000,000 Intel Corporation 51,487,500 55,125,000 1.6
1,600,000 Komag, Inc. 23,908,523 46,600,000 1.3
-------------- -------------- ------
144,768,470 233,861,875 6.7
Energy Acquisition 5,000,000 Apache Corp. 144,331,122 134,375,000 3.8
& Exploration 2,200,000 Devon Energy Corp. 34,401,130 54,175,000 1.6
2,000,000 Newfield Exploration Co. 56,598,373 53,500,000 1.5
-------------- -------------- ------
235,330,625 242,050,000 6.9
Healthcare Services 4,000,000 U.S. HealthCare, Inc. 101,351,070 193,500,000 5.5
International 8,000,000 Norcen Energy Resources, Ltd. 120,353,892 117,022,823 3.3
Exploration &
Production
<PAGE>
International 3,500,000 Yacimientos Petroliferos Fiscales S.A.--
Integrated Oils Sponsored (ADR)* 83,800,840 79,187,500 2.3
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Shares Percent of
Industries Held Stocks Cost Value Net Assets
<S> <C> <S> <C> <C> <C>
Natural Gas 2,343,750 Panhandle Eastern Corp. $ 24,371,330 $ 67,675,781 1.9%
Gathering & 2,500,000 Western Gas Resources, Inc. 57,319,428 33,750,000 1.0
Transmission -------------- -------------- ------
81,690,758 101,425,781 2.9
Offshore Drilling 6,000,000 Ensco International, Inc. 66,189,856 143,250,000 4.1
Companies 16,300,000 Global Marine, Inc. 59,126,323 140,587,500 4.0
-------------- -------------- ------
125,316,179 283,837,500 8.1
Oil Refining 4,000,000 Valero Energy Corp. 86,245,282 99,000,000 2.8
Oilfield Services 4,000,000 Nabors Industries, Inc. 41,952,180 48,500,000 1.4
1,335,000 Pool Energy Services Co. 14,336,959 12,015,000 0.4
1,000,000 Schlumberger Ltd., Inc. 67,216,872 70,125,000 2.0
2,000,000 Weatherford Enterra Inc. 57,620,147 59,500,000 1.7
459,200 Western Atlas, Inc. 23,847,430 24,567,200 0.7
-------------- -------------- ------
204,973,588 214,707,200 6.2
Personal 5,500,000 Dell Computer Corp. 97,809,600 149,187,500 4.2
Computers
Steel 500,000 Nucor Corp. 19,718,967 29,062,500 0.8
Total Stocks 2,268,151,408 2,909,725,809 83.0
Face
Amount Short-Term Securities
<PAGE>
Commercial Ciesco L.P.:
Paper** $30,000,000 5.35% due 3/12/1996 29,821,667 29,821,667 0.8
50,000,000 5.40% due 3/14/1996 49,685,000 49,685,000 1.4
50,000,000 Deutsche Bank Financial, Inc., 5.45%
due 2/13/1996 49,909,167 49,909,167 1.4
Goldman Sachs Group L.P.:
50,000,000 5.50% due 2/07/1996 49,954,167 49,954,167 1.4
40,000,000 5.50% due 2/08/1996 39,957,222 39,957,222 1.1
15,000,000 Motorola, Inc., 5.40% due 2/28/1996 14,939,250 14,939,250 0.4
Preferred Receivable Funding Corp.:
25,000,000 5.48% due 2/15/1996 24,946,722 24,946,722 0.7
15,000,000 5.42% due 3/01/1996 14,934,509 14,934,509 0.4
30,000,000 Siemens Corp., 5.40% due 3/04/1996 29,856,000 29,856,000 0.9
Transamerica Finance Corp.:
30,000,000 5.51% due 2/05/1996 29,981,633 29,981,633 0.9
25,000,000 5.51% due 2/16/1996 24,942,604 24,942,604 0.7
20,000,000 USAA Capital Corp., 5.45% due 2/20/1996 19,942,472 19,942,472 0.6
20,000,000 Wal-Mart Stores, Inc., 5.40% due
3/08/1996 19,892,000 19,892,000 0.6
50,000,000 Xerox Credit Corp., 5.44% due 2/22/1996 49,841,333 49,841,333 1.4
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded)
<CAPTION>
Face Percent of
Amount Short-Term Securities Cost Value Net Assets
<S> <C> <S> <C> <C> <C>
US Government & Federal Home Loan Bank:
Agency $ 5,345,000 5.54% due 2/01/1996 $ 5,345,000 $ 5,345,000 0.2%
Obligations** 60,000,000 5.29% due 3/15/1996 59,620,883 59,620,883 1.7
Federal National Mortgage Association:
7,400,000 5.42% due 2/09/1996 7,391,087 7,391,087 0.2
25,000,000 5.56% due 2/09/1996 24,969,111 24,969,111 0.7
30,000,000 5.42% due 2/13/1996 29,945,800 29,945,800 0.9
50,000,000 5.38% due 2/21/1996 49,850,556 49,850,556 1.4
Total Short-Term Securities 625,726,183 625,726,183 17.8
Total Investments $2,893,877,591 3,535,451,992 100.8
==============
Liabilities in Excess of Other Assets (26,770,789) (0.8)
-------------- ------
Net Assets $3,508,681,203 100.0%
============== ======
<PAGE>
Net Asset Class A--Based on net assets of $704,266,716 and
Value: 32,929,718 shares of beneficial interest
outstanding $ 21.39
==============
Class B--Based on net assets of $2,037,248,065 and
101,912,265 shares of beneficial interest
outstanding $ 19.99
==============
Class C--Based on net assets of $103,645,502 and
5,210,085 shares of beneficial interest
outstanding $ 19.89
==============
Class D--Based on net assets of $663,520,920 and
31,090,984 shares of beneficial interest
outstanding $ 21.34
==============
<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.
</TABLE>
PORTFOLIO INFORMATION
For the Quarter Ended January 31, 1996
Percent of
Ten Largest Equity Holdings Net Assets
U.S. HealthCare, Inc. 5.5%
Freeport-McMoRan Copper & Gold, Inc.* 5.4
Anadarko Petroleum Corp. 4.8
Dell Computer Corp. 4.2
Ensco International, Inc. 4.1
Freeport-McMoRan, Inc. 4.0
Global Marine, Inc. 4.0
Apache Corp. 3.8
Cirrus Logic, Inc. 3.8
Norcen Energy Resources, Ltd. 3.3
[FN]
*Includes Class A and Class B Shares.
<PAGE>
Additions
Intel Corporation
Nabors Industries, Inc.
Schlumberger Ltd., Inc.
Weatherford Enterra Inc.
Western Atlas, Inc.
