MERRILL LYNCH
GROWTH FUND
FUND LOGO
Quarterly Report
January 31, 1997
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
Box 9011
Princeton, NJ
08543-9011
Printed on post-consumer recycled paper
MERRILL LYNCH GROWTH FUND
DEAR SHAREHOLDER
The relatively benign economic environment that prevailed throughout
1996 continued into the new year. Highlighting year-end economic
results were stronger industrial production and greater-than-
expected gross domestic product growth for the final quarter of the
year. Underscoring the moderating growth trend were some signs of
softening in the labor market, and initial indications suggested a
respectable but unremarkable holiday selling season.
On balance, US economic fundamentals appear to be the most positive
they have been for many years. However, as 1997 begins, the dilemma
facing investors is how long the economic expansion can continue at
a steady, noninflationary pace. At this late stage of the current
economic recovery, investor expectations can quickly change from
positive to negative with the release of surprising economic
results. Therefore, continued reassurance of steady, noninflationary
economic growth would be a very positive development for the stock
and bond markets in the new year.
<PAGE>
On the international front, the US dollar continued its strong
advance relative to the yen and the Deutschemark, raising concerns
about the outlook for US trade. In early February, the leading
industrialized nations expressed apparent agreement that it was time
to seek a lower dollar and less volatility in the foreign exchange
markets. It remains to be seen whether these stated intentions will
be acted upon, or if the US dollar continues to rise relative to
other major currencies.
Portfolio Matters
During the quarter ended January 31, 1997, Merrill Lynch Growth
Fund's Class A, Class B, Class C and Class D Shares had total
returns of +10.09%, +9.79%, +9.83% and +10.03%, respectively,
underperforming the unmanaged Standard & Poor's 500 Composite Index,
which had a total return of +12.03% for the period. (Fund results
shown 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.)
By way of review for our new investors, the Fund seeks to deliver
superior long-term returns by maintaining a focused, bottom-up
investment style. Prospective investments are considered within the
context of total return potential over a three year--five year
holding period. Over time, this has resulted in a relatively
concentrated list of portfolio holdings and low portfolio turnover.
With this in mind, this shareholder report will review the Fund's
very significant exposure to the energy sector, which represented
43.6% of net assets at the end of the January quarter.
The Fund began investing in various energy-related investments
several years ago based on the premise that domestic natural gas
stocks was undervalued relative to crude oil. Over a period of
years, we established positions in a number of natural gas-related
equities that, in addition to providing natural gas commodity
exposure, possessed real unit growth potential. As time passed, our
energy research expanded to include an increasing emphasis on the
oilfield service industry. With oilfield service, we saw the
potential for significant earnings and cashflow growth as the
industry consolidated the overcapacity of the 1980s.
Over the past 24 months, oilfield service capacity utilization has
risen dramatically. The attrition of oilfield equipment and skilled
personnel during the long industry depression of the late 1980s was
nevertheless coincident with consistent growth in demand for oil and
natural gas. With rising demand and shrinking supply, various
segments of the oilfield service industry began to tighten. This has
fueled earnings and cashflow growth for the Fund's oilfield service
companies.
<PAGE>
Increasing evidence of supply constraints within the oilfield
service sector combined with lean commodity inventories has
coincided in an upward bias to oil and gas prices for the past 12
months--18 months. We believe these events suggest it is becoming
more difficult to grow the deliverability of oil and gas at the same
rate as demand growth. Unlike past cycles, where rising energy
prices stimulated an acceleration in the growth rate of oil and gas
supplies, in the current environment, supply growth may be limited
by the constraints facing the oilfield service industry.
Against the backdrop of improving industry fundamentals, we expect
periods of oil and gas price volatility to impact share prices of
the Fund's energy investments. For example, unforeseen political
events or periods of unseasonably warm winter weather may introduce
volatility to oil and gas prices that depresses short-term
performance of energy-related equities.
While we monitor such events closely, and continually assess the
potential impact on our investment premise, we believe that until
there is a significant investment cycle in the oilfield service
sector, long-term fundamentals for the Fund's energy investments
remain positive. For this to happen, oilfield service companies will
need to earn reasonable returns on new investment. Despite the
recent improvement in business conditions, we believe that earnings
and cash flows are still too low to stimulate the level of capital
investment in the oilfield service sector needed to materially
expand oil and natural gas supplies.
At the end of the January quarter, the Fund's cash position
represented 26.4% of net assets. As we have stated in previous
shareholder letters, our relatively high cash position is a
byproduct of the Fund's disciplined bottom-up investment process.
Given the stock market's relatively high valuation, we have been
deliberate in deploying the Fund's cash, adhering to our investment
principles while we look for suitable long-term investment
opportunities.
In Conclusion
We thank you for your continued investment in Merrill Lynch Growth
Fund, and we look forward to reviewing our outlook and strategy with
you again in our next report to shareholders.
Sincerely,
<PAGE>
(Arthur Zeikel)
Arthur Zeikel
President
(Stephen C. Johnes)
Stephen C. Johnes
Vice President and Portfolio Manager
March 3, 1997
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.
* 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. (There is no initial sales charge for
automatic share conversions.)
* 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.
<PAGE>
* 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 12/31/96 +29.72% +22.91%
Five Years Ended 12/31/96 +21.33 +20.03
Inception (11/28/88)
through 12/31/96 +20.30 +19.50
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 12/31/96 +28.38% +24.38%
Five Years Ended 12/31/96 +20.09 +20.09
Inception (3/27/87) through 12/31/96 +15.50 +15.50
[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**
<PAGE>
Class C Shares*
Year Ended 12/31/96 +28.34% +27.34%
Inception (10/21/94)
through 12/31/96 +26.34 +26.34
[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 12/31/96 +29.39% +22.60%
Inception (10/21/94)
through 12/31/96 +27.34 +24.25
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
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
1996 21.80 26.13 1.394 0.708 +29.72
1/1/97--1/31/97 26.13 27.47 -- -- + 5.13
------ ------
Total $7.552 Total $1.380
Cumulative total return as of 1/31/97: +368.86%*
<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
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*
<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
1996 20.40 24.28 1.394 0.485 +28.38
1/1/97--1/31/97 24.28 25.50 -- -- + 5.02
------ ------
Total $7.612 Total $1.051
Cumulative total return as of 1/31/97: +328.78%*
<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>
<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
1996 20.30 24.13 1.394 0.498 +28.34
1/1/97--1/31/97 24.13 25.35 -- -- + 5.06
------ ------
Total $3.412 Total $0.737
<PAGE>
Cumulative total return as of 1/31/97: +75.49%*
<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>
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
1996 21.76 26.07 1.394 0.650 +29.39
1/1/97--1/31/97 26.07 27.40 -- -- + 5.10
------ ------
Total $3.412 Total $0.971
Cumulative total return as of 1/31/97: +78.62%*
<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>
Recent Performance Results
<CAPTION>
12 Month 3 Month
1/31/97 10/31/96 1/31/96 % Change % Change
<S> <C> <C> <C> <C> <C>
ML Growth Fund Class A Shares* $27.47 $26.87 $21.39 +35.38%(1) + 7.77%(1)
ML Growth Fund Class B Shares* 25.50 25.03 19.99 +35.00(1) + 7.81(1)
ML Growth Fund Class C Shares* 25.35 24.89 19.89 +34.92(1) + 7.82(1)
ML Growth Fund Class D Shares* 27.40 26.79 21.34 +35.37(1) + 7.83(1)
Standard & Poor's 500 Index** 786.16 705.27 636.02 +23.61 +11.47
ML Growth Fund Class A Shares--Total Return* +38.98(2) +10.09(3)
ML Growth Fund Class B Shares--Total Return* +37.60(4) + 9.79(5)
ML Growth Fund Class C Shares--Total Return* +37.61(6) + 9.83(7)
ML Growth Fund Class D Shares--Total Return* +38.67(8) +10.03(9)
Standard & Poor's 500 Index--Total Return** +26.35 +12.03
<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 $1.394 per share capital
gains distributions.
(2)Percent change includes reinvestment of $0.708 per share ordinary
income dividends and $1.394 per share capital gains distributions.
(3)Percent change includes reinvestment of $0.584 per share ordinary
income dividends and $1.394 per share capital gains distributions.
(4)Percent change includes reinvestment of $0.485 per share ordinary
income dividends and $1.394 per share capital gains distributions.
(5)Percent change includes reinvestment of $0.464 per share ordinary
income dividends and $1.394 per share capital gains distributions.
(6)Percent change includes reinvestment of $0.498 per share ordinary
income dividends and $1.394 per share capital gains distributions.
(7)Percent change includes reinvestment of $0.468 per share ordinary
income dividends and $1.394 per share capital gains distributions.
(8)Percent change includes reinvestment of $0.650 per share ordinary
income dividends and $1.394 per share capital gains distributions.
(9)Percent change includes reinvestment of $0.553 per share ordinary
income dividends and $1.394 per share capital gains distributions.
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS
<CAPTION>
Shares Held/ Percent of
Industries Face Amount Stocks & Bonds Cost Value Net Assets
<S> <C> <S> <C> <C> <C>
Banking & Financial 1,000,000 Republic New York Corp. $ 44,267,281 $ 88,625,000 1.5%
Services 1,000,000 Safra Republic Holdings S.A. (ADR)* 69,529,500 180,000,000 3.0
-------------- -------------- ------
113,796,781 268,625,000 4.5
Diversified Resource 2,109,000 Arcadian Corp. 47,969,951 55,888,500 0.9
Companies 1,500,000 Freeport-McMoRan Copper & Gold,
Inc. (Class A) 36,449,551 41,062,500 0.7
5,000,000 Freeport-McMoRan Copper & Gold,
Inc. (Class B) 107,984,584 143,750,000 2.4
3,750,000 Freeport-McMoRan, Inc. 114,789,644 108,281,250 1.8
1,050,000 IMC Global, Inc. 37,222,925 40,031,250 0.7
-------------- -------------- ------
344,416,655 389,013,500 6.5
<PAGE>
Domestic 1,554,300 Anadarko Petroleum Corp. 65,367,451 100,640,925 1.7
Exploration & 9,000,000 Santa Fe Energy Resources, Inc. 83,865,388 133,875,000 2.2
Production 3,000,000 Seagull Energy Corp. 63,430,800 64,125,000 1.1
3,000,000 Vastar Resources, Inc. 89,836,252 108,375,000 1.8
-------------- -------------- ------
302,499,891 407,015,925 6.8
Electronic 6,255,000 Cirrus Logic, Inc. 69,372,447 96,952,500 1.6
Components $ 1,000,000 Cirrus Logic, Inc. (Convertible
Bond), 6% due 12/15/2003 100,000,000 90,250,000 1.5
300,000 Intel Corp. 15,446,250 48,637,500 0.8
3,500,000 Komag, Inc. 72,539,664 102,812,500 1.7
-------------- -------------- ------
257,358,361 338,652,500 5.6
Energy Acquisition 8,000,000 Apache Corp. 232,123,043 307,000,000 5.1
& Exploitation 2,200,000 Devon Energy Corp. 34,401,130 77,825,000 1.3
$ 1,000,000 Devon Financing Trust (Convertible
Preferred), 6.50% due 6/15/2026 50,000,000 66,875,000 1.1
4,000,000 Newfield Exploration Co. 56,598,373 106,000,000 1.8
-------------- -------------- ------
373,122,546 557,700,000 9.3
International 8,000,000 Norcen Energy Resources, Ltd. 120,353,892 196,317,196 3.3
Exploration &
Production
Miscellaneous 1,000,000 Affymetrix, Inc. 16,662,627 29,000,000 0.5
2,000,000 Avalon Properties, Inc. 52,951,219 55,250,000 0.9
2,000,000 Beacon Properties Corp. 65,329,505 71,500,000 1.2
1,125,000 Crescent Real Estate Equities Inc. 54,520,638 60,328,125 1.0
2,464,260 CytoTherapeutics, Inc. 17,442,583 24,334,568 0.4
434,500 CytoTherapeutics, Inc. (Warrants)(a) 651,750 1,367,371 0.0
3,179,600 Equity Residential Properties Trust 133,219,589 136,722,800 2.3
3,000,000 Federal Realty Investment Trust 84,000,000 84,750,000 1.4
1,000,000 RAO Gazprom (ADR)* 17,865,451 20,250,000 0.3
4,000,000 Simon DeBartolo Group, Inc. 119,612,092 117,000,000 1.9
932,700 Starwood Lodging Trust 32,026,572 38,124,113 0.6
-------------- -------------- ------
594,282,026 638,626,977 10.5
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Shares Percent of
Industries Held Stocks & Bonds Cost Value Net Assets
<S> <C> <S> <C> <C> <C>
Natural Gas 3,117,000 TransMontaigne Oil Co. $ 17,143,500 $ 44,417,250 0.7%
Gathering & 3,500,000 Western Gas Resources, Inc. 74,549,278 68,687,500 1.1
Transmission -------------- -------------- ------
91,692,778 113,104,750 1.8
Offshore Drilling 7,300,000 Ensco International, Inc. 105,639,352 402,412,500 6.7
Companies 16,300,000 Global Marine, Inc. 59,126,323 364,712,500 6.0
-------------- -------------- ------
164,765,675 767,125,000 12.7
Oil Refining 2,000,000 Valero Energy Corp. 42,758,899 67,500,000 1.1
Oilfield Services 5,000,000 Nabors Industries, Inc. 55,701,065 92,500,000 1.5
1,100,000 Schlumberger Ltd., Inc. 75,504,657 122,237,500 2.0
3,000,000 Weatherford Enterra, Inc. 86,669,086 109,125,000 1.8
2,955,500 Western Atlas, Inc. 171,544,718 200,604,562 3.3
-------------- -------------- ------
389,419,526 524,467,062 8.6
Personal 3,000,000 Dell Computer Corp. 22,207,010 198,375,000 3.3
Computers
Total Stocks & Bonds 2,816,674,040 4,466,522,910 74.0
<CAPTION>
Face
Amount Short-Term Securities
Commercial $20,166,000 Allomon Funding Corp., 5.34% due
Paper** 2/21/1997 20,106,174 20,106,174 0.3
Atlantic Asset Securitization Corp.:
35,429,000 5.365% due 2/18/1997 35,339,242 35,339,242 0.6
14,000,000 5.34% due 2/19/1997 13,962,620 13,962,620 0.2
25,000,000 Bellsouth Capital Funding Corp.,
5.32% due 3/14/1997 24,848,528 24,848,528 0.4
CSW Credit, Inc.:
10,000,000 5.30% due 2/24/1997 9,966,139 9,966,139 0.2
11,000,000 5.35% due 3/04/1997 10,949,324 10,949,324 0.2
6,800,000 5.32% due 3/13/1997 6,759,804 6,759,804 0.1
75,000,000 Carnival Corp., 5.35% due 2/05/1997 74,955,417 74,955,417 1.2
44,700,000 Caterpillar Inc., 5.30% due 2/10/1997 44,640,772 44,640,772 0.7
50,000,000 Ciesco, L.P., 5.32% due 3/14/1997 49,697,056 49,697,056 0.8
12,518,000 Clipper Receivables Corp., 5.37%
due 2/07/1997 12,506,796 12,506,796 0.2
45,000,000 Corporate Receivables Corp., 5.35%
due 3/07/1997 44,772,625 44,772,625 0.7
Countrywide Home Loans:
10,000,000 5.31% due 3/04/1997 9,954,275 9,954,275 0.2
21,000,000 5.37% due 3/17/1997 20,862,170 20,862,170 0.3
46,003,000 Dean Witter, Discover Card & Co.,
5.30% due 3/20/1997 45,684,685 45,684,685 0.8
Eureka Securitization Inc.:
40,000,000 5.37% due 2/20/1997 39,886,633 39,886,633 0.7
30,000,000 5.32% due 2/27/1997 29,884,733 29,884,733 0.5
25,000,000 5.37% due 4/01/1997 24,779,979 24,779,979 0.4
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Face Percent of
Amount Short-Term Securities Cost Value Net Assets
<S> <C> <S> <C> <C> <C>
Commercial Finova Capital Corp.:
Paper** $ 15,000,000 5.35% due 3/10/1997 $ 14,917,521 $ 14,917,521 0.3%
(concluded) 11,909,000 5.35% due 3/18/1997 11,829,359 11,829,359 0.2
84,215,000 Ford Motor Credit Co., 5.31% due
2/10/1997 84,103,205 84,103,205 1.4
GTE Corp.:
3,100,000 5.33% due 2/19/1997 3,091,739 3,091,739 0.1
71,000,000 5.33% due 2/26/1997 70,737,201 70,737,201 1.2
General Motors Acceptance Corp.:
56,295,000 5.62% due 2/03/1997 56,277,423 56,277,423 0.9
50,000,000 5.32% due 3/24/1997 49,623,167 49,623,167 0.8
50,000,000 5.35% due 4/01/1997 49,561,597 49,561,597 0.8
Goldman Sachs Group, L.P.:
30,000,000 5.375% due 3/03/1997 29,865,625 29,865,625 0.5
50,000,000 5.31% due 3/07/1997 49,749,250 49,749,250 0.8
30,000,000 Hertz Funding Corp., 5.30% due
3/10/1997 29,836,583 29,836,583 0.5
International Securitization Corp.:
41,743,000 5.33% due 2/10/1997 41,687,377 41,687,377 0.7
25,000,000 5.35% due 2/18/1997 24,936,840 24,936,840 0.4
50,000,000 J.P. Morgan & Company, Inc., 5.31%
due 3/10/1997 49,727,125 49,727,125 0.8
50,000,000 Lehman Brothers Holdings Inc.,
5.42% due 2/04/1997 49,977,417 49,977,417 0.8
Morgan Stanley Group, Inc.:
50,000,000 5.30% due 2/21/1997 49,852,778 49,852,778 0.8
50,000,000 5.30% due 2/27/1997 49,808,611 49,808,611 0.8
NYNEX Corp.:
25,000,000 5.38% due 2/06/1997 24,981,319 24,981,319 0.4
40,000,000 5.32% due 2/11/1997 39,940,889 39,940,889 0.7
50,000,000 5.38% due 2/11/1997 49,925,278 49,925,278 0.8
National Fleet Funding Corp.:
19,000,000 5.36% due 2/27/1997 18,926,449 18,926,449 0.3
21,500,000 5.35% due 2/28/1997 21,413,731 21,413,731 0.4
9,000,000 5.34% due 3/14/1997 8,945,265 8,945,265 0.1
9,858,000 Preferred Receivables Funding Corp.,
5.35% due 2/04/1997 9,853,605 9,853,605 0.2
27,788,000 Sherwood Medical Co., 5.37%
due 2/26/1997 27,684,374 27,684,374 0.5
11,000,000 Student Loan Corp., 5.35% due
2/10/1997 10,985,288 10,985,288 0.2
17,679,000 Three Rivers Funding, 5.34% due
2/06/1997 17,665,888 17,665,888 0.3
WCP Funding, Inc.:
40,000,000 5.35% due 2/14/1997 39,922,722 39,922,722 0.7
50,000,000 5.35% due 3/04/1997 49,769,653 49,769,653 0.8
-------------- -------------- ------
1,555,154,251 1,555,154,251 25.7
</TABLE>
<PAGE>
<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 & $40,000,000 Federal Home Loan Mortgage Corp., $ 39,899,889 $ 39,899,889 0.7%
Agency 5.30% due 2/18/1997
Obligations**
Total Short-Term Securities 1,595,054,140 1,595,054,140 26.4
Total Investments $4,411,728,180 6,061,577,050 100.4
==============
Liabilities in Excess of Other Assets (26,509,323) (0.4)
-------------- ------
Net Assets $6,035,067,727 100.0%
============== ======
Net Asset Class A--Based on net assets of $1,249,989,154
Value: and 45,499,589shares of beneficial
interest outstanding $ 27.47
==============
Class B--Based on net assets of $3,423,769,236
and 134,251,609shares of beneficial
interest outstanding $ 25.50
==============
Class C--Based on net assets of $242,742,448
and 9,575,547shares of beneficial
interest outstanding $ 25.35
==============
Class D--Based on net assets of $1,118,566,889
and 40,821,035 shares of beneficial
interest outstanding $ 27.40
==============
<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
<PAGE>
For the Quarter Ended January 31, 1997
Percent of
Ten Largest Equity Holdings Net Assets
Ensco International, Inc. 6.7%
Global Marine, Inc. 6.0
Apache Corp. 5.1
Western Atlas, Inc. 3.3
Dell Computer Corp. 3.3
Norcen Energy Resources, Ltd. 3.3
Freeport-McMoRan Copper & Gold, Inc.* 3.1
Safra Republic Holdings S.A. (ADR) 3.0
Equity Residential Properties Trust 2.3
Santa Fe Energy Resources, Inc. 2.2
[FN]
*Includes Class A and Class B Shares.
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, Massachusetts 02171
<PAGE>
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
