MERRILL LYNCH
GROWTH FUND
FUND LOGO
Quarterly Report
January 31, 1998
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.
Merrill Lynch
Growth Fund
Box 9011
Princeton, NJ
08543-9011
<PAGE>
Printed on post-consumer recycled paper
MERRILL LYNCH GROWTH FUND
DEAR SHAREHOLDER
Our longer-term shareholders will recall that over the past several
years Merrill Lynch Growth Fund has maintained an overweighted
position in the energy sector. At the end of the January quarter,
the energy sector, broadly defined, represented 42% of net assets.
From the October highs, prices for crude oil and domestic natural
gas have retreated on worries of weakening demand growth because of
the Asian crisis and a warmer-than-normal North American winter, as
well as uncertainty created by an increase in quotas by the
Organization of Petroleum Exporting Countries (OPEC).
Against the backdrop of declining oil and natural gas prices, the
Fund's energy-related investments encountered significant selling
pressure, giving back part of the Fund's price appreciation during
the fiscal year ended October 31, 1997. Consequently, the Fund's
fiscal first quarter performance was negatively impacted. During the
January quarter, the Fund's Class A, Class B, Class C and Class D
Shares declined 12.60%, 12.79%, 12.79% and 12.63%, respectively, in
total return terms, trailing the unmanaged Standard & Poor's 500
Composite Index total return of +7.62% for the same three-month
period. (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 4--6 of this report to shareholders.)
While disappointed with the Fund's first fiscal quarter performance,
we have never made investment decisions in an attempt to influence
quarterly results. In fact, since the Fund's inception over ten
years ago, it has been managed with a three-year--five-year
investment time horizon for prospective investments and with a
concentrated focus on a relatively short list of portfolio
companies. This approach has enabled the Fund to deliver superior
long-term performance, but occasionally introduces company- or
sector-specific volatility that makes our short-term return
performance diverge from that of the broader equity market. Our
fiscal first quarter was one of these periods. With that in mind,
our conviction in the investment premise that has driven the Fund's
overweighted position in the energy sector remains in place. In this
report to shareholders, we will outline our reasons for optimism for
this, the Fund's most important sector weighting.
<PAGE>
The investment rationale for overweighting the energy sector is
driven by our belief that various energy-related businesses are in
the early stages of a secular revival following a 15+ year period of
industry overcapacity, downsizing and restructuring. The chart
entitled "Energy Demand/Prices & Capital Expenditures" on page 3
summarizes many of the industry trends that have influenced our
opinion.
During the late 1970s and early 1980s, oil and gas producers pursued
very aggressive capital expenditure programs in an effort to grow
the available supply of hydrocarbons. At the time, industry
expectations were for high and rising oil prices. In fact, as the
chart on page 3 suggests, in the early 1980s oil prices exceeded $40
a barrel when measured in 1996 dollars. This aggressive spending
brought on significant new oil and natural gas productive capacity
just as demand growth for hydrocarbons stalled because of a
worldwide recession. Oil prices eventually collapsed and excess
capacity for delivering oil and natural gas, combined with surplus
oilfield service infrastructure, plagued the industry for the
following 15+ year period. Through this period of consolidation and
restructuring, oil and natural gas prices remained little changed,
and energy-related businesses delivered substandard returns to
investors. With poor returns on new investment, industry capital
spending suffered, as excess capacity would have to be absorbed by
the world economy.
The second chart on page 3 entitled "Worldwide Excess Oil Production
Capacity" characterizes the magnitude of excess capacity created for
crude oil by this aggressive industry spending. At its peak, over
37% of the world's crude oil supply was "shut-in." In other words,
oil demand would have to have been approximately 37% higher to
absorb the excess capacity created by the overzealous drilling of
the early 1980s.
Merrill Lynch Growth Fund
January 31, 1998
As the two graphs suggest, following this period of overcapacity,
consistent moderate demand growth for hydrocarbons has largely
absorbed the overhang of excess supply. Even considering the impact
of the Asian crisis on oil demand growth in 1998, worldwide oil
consumption is still projected to grow in excess of 2% from 1997
levels. So despite the negative short-term impact that the Asian
crisis and an increase in OPEC quotas have had on oil prices, supply
and demand within the energy sector are more tightly balanced than
at any time over the past 15 years--20 years, in our view. In the
absence of shut-in oil and gas productive capacity, oil and gas
producers must invest at an increasing rate in order to grow oil and
gas supplies to meet modest worldwide demand growth.
<PAGE>
With this in mind, over the past several years the Fund has been
positioned for a revival in capital investment in the energy sector.
One area of focus has been the oilfield service sector as this
industry group has been starved for capital as the energy sector
consolidated. In fact, over the past 18 months--24 months, there
has been increasing evidence of shortages of essential oilfield
service personnel and infrastructure. Coincident with tightening
market conditions, industry pricing and operating utilization has
risen markedly, driving the earnings and cash flows of many Fund
holdings dramatically higher. Despite the lower oil and gas prices
of the past three months, the business fundamentals for the Fund's
investments in this sector remain strong and the long-term need for
growing the stock of available oilfield service infrastructure has
not changed.
The Fund also has a significant presence in several independent oil
and gas exploration and production companies (E&Ps). The investment
rationale for the Fund's E&P investments is predicated on our belief
that in the tightening energy market, oil and gas producers with
critical mass and well-positioned assets will be able to grow their
businesses by taking share from weaker competitors. Throughout 1997,
several prominent mergers between independent producers pointed to
this trend. For instance, in our portfolio, Burlington Resources,
Inc. acquired Louisiana Land and Exploration. More recently Union
Pacific Corporation acquired Norcen Energy Resources, Ltd., a Fund
holding. Furthermore, despite the relatively warm North American
winter we are experiencing, the fundamentals for the domestic
natural gas market appear strong, potentially driving the operating
results of well-positioned E&Ps later in 1998.
In Conclusion
In summary, we have confidence that the long-term industry
fundamentals that have influenced our overweighted position in the
energy sector remain in place. With that said, should oil and gas
prices remain depressed for an extended period of time (a
possibility we view as unlikely), growth in energy-related capital
spending could slow, lengthening the recovery period that we
envision, but not undermining it. The markets for oil and natural
gas and for oilfield services are too tight to remain depressed for
very long, in our opinion. Growing oil and natural gas demand has
absorbed the excess capacity that plagued the industry through the
1980s and has set the stage for a revival in industry capital
spending. As the demand uncertainty created by the Asian crisis and
the warm North American winter pass, we believe that the positive
long-term fundamentals for the energy sector will become
increasingly obvious as industry struggles to grow oil and gas
supplies to meet demand growth. As this occurs, the Fund's energy-
related investments are positioned to deliver long-term earnings and
cash flow growth, which should result in superior absolute and
relative share price performance.
<PAGE>
We thank you for your 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,
(Arthur Zeikel)
Arthur Zeikel
President
(Stephen C. Johnes)
Stephen C. Johnes
Senior Vice President and Portfolio Manager
March 3, 1998
Merrill Lynch Growth Fund
January 31, 1998
ENERGY DEMAND/PRICES & CAPITAL EXPENDITURES*
A bar graph depicting capital expenditures and line graphs depicting
oil prices and worldwide oil and natural gas demand. Beginning and
ending values are shown below:
1975 1998
Capital Expenditures
(in billions)/Crude Oil
Prices per Barrel $60.9 $93.7
1975 1997
Oil Prices $17.0 $18.2
1975 1998 2005 (projected)
Worldwide Oil & Natural
Gas Demand 64 92 110
<PAGE>
[FN]
*Capital expenditures and crude oil prices (left-hand scale) stated
in constant 1996 dollars. Crude oil prices are stated in terms of
refiners' average cost. Oil & natural gas demand (right-hand scale)
stated in million barrel oil equivalents/day. From 1998-2005, oil &
natural gas demand reflects a projected 2.5% annual rate of growth.
Sources: Baker Hughes Inc., Chase Manhattan Bank, Energy Information
Agency Administration and Salomon Smith Barney.
WORLDWIDE EXCESS OIL PRODUCTION CAPACITY
A line graph depicting the magnitude of excess capacity as a percent
of total production. Beginning and ending values are shown below:
1983 1998
Percent of Total Production 37% 2%
Sources: Petroleum Intelligence Weekly, Oil Market Intelligence, and
Energy Information Agency Administration. Excludes natural gas
liquids and condensates; includes Iraqi production of 1.62 million
barrels/day (October 1997).
Merrill Lynch Growth Fund
January 31, 1998
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 approximately 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.
* 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. Figures shown in the "Average Annual Total
Return" tables as well as the total returns and cumulative total
returns in the "Performance Summary" tables assume reinvestment of
all dividends and capital gains distributions at net asset value on
the ex-dividend date. 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 12/31/97 +18.69% +12.46%
Five Years Ended 12/31/97 +23.19 +21.87
Inception (11/28/88)
through 12/31/97 +20.12 +19.41
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
<PAGE>
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 12/31/97 +17.44% +13.44%
Five Years Ended 12/31/97 +21.95 +21.95
Ten Years Ended 12/31/97 +18.57 +18.57
[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 12/31/97 +17.45% +16.45%
Inception (10/21/94)
through 12/31/97 +23.49 +23.49
[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 12/31/97 +18.35% +12.14%
Inception (10/21/94)
through 12/31/97 +24.45 +22.37
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
Merrill Lynch Growth Fund
January 31, 1998
<PAGE>
PERFORMANCE DATA (continued)
<TABLE>
Performance Summary--Class A Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid++ % Change*
<C> <C> <C> <C> <C> <C>
11/28/88--12/31/88 $ 9.61 $ 9.44 $0.257 $0.090 + 1.88%
1989 9.44 12.33 -- 0.211 +32.96
1990 12.33 12.20 0.130 -- + 0.03
1991 12.20 13.95 1.182 0.012 +25.20
1992 13.95 14.88 0.449 -- + 9.97
1993 14.88 17.48 2.122 -- +32.37
1994 17.48 17.49 0.295 -- + 1.77
1995 17.49 21.80 1.723 0.359 +36.82
1996 21.80 26.13 1.394 0.708 +29.72
1997 26.13 28.65 1.765 0.692 +18.69
1/1/98--1/31/98 28.65 27.00 -- -- - 5.76
------ ------
Total $9.317 Total $2.072
Cumulative total return as of 1/31/98: +398.87%*
<FN>
++Figures may include short-term capital gains distributions.
*Figures do not include sales charge; results would be lower if
sales charge was included.
</TABLE>
<TABLE>
Performance Summary--Class B Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid++ % Change*
<C> <C> <C> <C> <C> <C>
3/27/87--12/31/87 $10.00 $ 8.49 $0.060 $0.187 -12.72%
1988 8.49 9.45 0.257 0.140 +16.04
1989 9.45 12.35 -- 0.084 +31.62
1990 12.35 12.09 0.130 -- - 1.02
1991 12.09 13.65 1.182 0.012 +23.85
1992 13.65 14.39 0.449 -- + 8.79
1993 14.39 16.65 2.122 -- +31.11
1994 16.65 16.47 0.295 -- + 0.72
1995 16.47 20.40 1.723 0.143 +35.45
1996 20.40 24.28 1.394 0.485 +28.38
1997 24.28 26.42 1.765 0.424 +17.44
1/1/98--1/31/98 26.42 24.89 -- -- - 5.79
------ ------
Total $9.377 Total $1.475
Cumulative total return as of 1/31/98: +351.70%*
<PAGE>
<FN>
++Figures may include short-term capital gains distributions.
*Figures do not reflect deduction of any sales charge; results would
be lower if sales charge was deducted.
</TABLE>
Merrill Lynch Growth Fund
January 31, 1998
PERFORMANCE DATA (concluded)
<TABLE>
Performance Summary--Class C Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid++ % Change*
<C> <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
1997 24.13 26.23 1.765 0.441 +17.45
1/1/98--1/31/98 26.23 24.71 -- -- - 5.79
------ ------
Total $5.177 Total $1.178
Cumulative total return as of 1/31/98: +84.83%*
<FN>
++Figures may include short-term capital gains distributions.
*Figures do not reflect deduction of any sales charge; results would
be lower if sales charge was deducted.
</TABLE>
<TABLE>
Performance Summary--Class D Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid++ % Change*
<C> <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
1997 26.07 28.56 1.765 0.623 +18.35
1/1/98--1/31/98 28.56 26.92 -- -- - 5.74
------ ------
Total $5.177 Total $1.594
Cumulative total return as of 1/31/98: +89.59%*
<PAGE>
<FN>
++Figures may include short-term capital gains distributions.
*Figures do not include sales charge; results would be lower if
sales charge was included.
</TABLE>
<TABLE>
Recent Performance Results
<CAPTION>
12 Month 3 Month
1/31/98 10/31/97 1/31/97 % Change % Change
<S> <C> <C> <C> <C> <C>
ML Growth Fund Class A Shares* $27.00 $33.13 $27.47 + 4.04%(1) -13.73%(1)
ML Growth Fund Class B Shares* 24.89 30.63 25.50 + 3.80(1) -13.59(1)
ML Growth Fund Class C Shares* 24.71 30.43 25.35 + 3.70(1) -13.61(1)
ML Growth Fund Class D Shares* 26.92 33.01 27.40 + 4.01(1) -13.66(1)
Standard & Poor's 500 Index** 980.28 914.62 786.16 +24.69 + 7.18
ML Growth Fund Class A Shares--Total Return* + 6.40(2) -12.60(3)
ML Growth Fund Class B Shares--Total Return* + 5.35(4) -12.79(5)
ML Growth Fund Class C Shares--Total Return* + 5.32(6) -12.79(7)
ML Growth Fund Class D Shares--Total Return* + 6.14(8) -12.63(9)
Standard & Poor's 500 Index--Total Return** +26.89 + 7.62
<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 $1.765 per share capital
gains distributions.
(2)Percent change includes reinvestment of $0.692 per share ordinary
income dividends and $1.765 per share capital gains distributions.
(3)Percent change includes reinvestment of $0.419 per share ordinary
income dividends and $1.765 per share capital gains distributions.
(4)Percent change includes reinvestment of $0.424 per share ordinary
income dividends and $1.765 per share capital gains distributions.
(5)Percent change includes reinvestment of $0.272 per share ordinary
income dividends and $1.765 per share capital gains distributions.
(6)Percent change includes reinvestment of $0.441 per share ordinary
income dividends and $1.765 per share capital gains distributions.
(7)Percent change includes reinvestment of $0.279 per share ordinary
income dividends and $1.765 per share capital gains distributions.
(8)Percent change includes reinvestment of $0.623 per share ordinary
income dividends and $1.765 per share capital gains distributions.
(9)Percent change includes reinvestment of $0.381 per share ordinary
income dividends and $1.765 per share capital gains distributions.
</TABLE>
Merrill Lynch Growth Fund
January 31, 1998
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS
<CAPTION>
Shares Held/ Percent of
Industries Face Amount Long-Term Investments Cost Value Net Assets
<S> <C> <S> <C> <C> <C>
Banking & Financial 1,000,000 Republic New York Corp. $ 44,267,281 $ 108,875,000 1.4%
Services 2,000,000 Safra Republic Holdings S.A. (ADR)* 69,529,500 242,000,000 3.1
-------------- -------------- ------
113,796,781 350,875,000 4.5
Canadian Exploration 4,000,000 Norcen Energy Resources, Ltd. 28,465,836 53,517,657 0.7
& Production
Diversified Resource 6,000,000 Freeport-McMoRan Copper & Gold, Inc.
Companies (Class A) 156,119,558 88,500,000 1.1
5,000,000 Freeport-McMoRan Copper & Gold, Inc.
(Class B) 107,984,584 73,437,500 0.9
12,375,000 IMC Global, Inc. 410,919,818 399,093,750 5.2
1,249,988 IMC Global, Inc. (Warrants)(a) 4,374,956 4,453,081 0.1
-------------- -------------- ------
679,398,916 565,484,331 7.3
Domestic Exploration 7,000,000 Burlington Resources, Inc. 336,647,444 299,250,000 3.9
& Production 3,500,000 Vastar Resources, Inc. 106,578,685 116,156,250 1.5
-------------- -------------- ------
443,226,129 415,406,250 5.4
Electronic $115,500,000 Cirrus Logic, Inc. (Convertible Bond),
Components 6% due 12/15/2003 105,411,250 87,202,500 1.1
3,500,000 Komag, Inc. 72,539,664 46,375,000 0.6
-------------- -------------- ------
177,950,914 133,577,500 1.7
Energy 8,500,000 Apache Corp. 249,527,672 281,562,500 3.6
Acquisition & 2,200,000 Devon Energy Corp. 34,401,130 76,725,000 1.0
Exploitation 1,000,000 Devon Financing Trust
(Convertible Preferred) 50,000,000 68,000,000 0.9
4,000,000 Newfield Exploration Co. 56,598,373 90,000,000 1.2
-------------- -------------- ------
390,527,175 516,287,500 6.7
Miscellaneous 1,000,000 Affymetrix, Inc. 16,662,627 27,750,000 0.4
2,763,558 CytoTherapeutics, Inc. 18,945,059 7,772,507 0.1
434,500 CytoTherapeutics, Inc. (Warrants)(a) 651,750 0 0.0
1,665,000 Genset (ADR)* 32,285,401 35,173,125 0.4
669,400 Panamerican Beverages, Inc. (Class A) 19,737,922 21,755,500 0.3
870,000 Pharmacopeia, Inc. 16,253,780 14,463,750 0.2
1,000,000 RAO Gazprom (ADR)* 17,865,451 18,800,000 0.3
5,333,400 Unova, Inc. 76,982,591 86,667,750 1.1
-------------- -------------- ------
199,384,581 212,382,632 2.8
<PAGE>
Natural Gas 3,855,434 TransMontaigne Oil Co. 27,060,669 52,048,359 0.7
Gathering & 3,500,000 Western Gas Resources, Inc. 74,549,278 71,093,750 0.9
Transmission -------------- -------------- ------
101,609,947 123,142,109 1.6
Offshore Drilling 18,400,000 Ensco International, Inc. 194,651,449 499,100,000 6.5
Companies 16,300,000 Global Marine, Inc. 59,126,323 373,881,250 4.8
3,000,000 Santa Fe International Corp. 118,225,728 109,687,500 1.4
-------------- -------------- ------
372,003,500 982,668,750 12.7
</TABLE>
Merrill Lynch Growth Fund
January 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Shares Percent of
Industries Held Long-Term Investments Cost Value Net Assets
<S> <C> <S> <C> <C> <C>
Oilfield Services 7,000,000 Nabors Industries, Inc. $ 90,192,970 $ 167,562,500 2.2%
5,000,000 Schlumberger Ltd., Inc. 223,527,267 368,437,500 4.7
5,000,000 Tidewater, Inc. 206,165,358 204,375,000 2.6
4,600,000 Weatherford Enterra, Inc. 135,307,975 161,000,000 2.1
3,985,400 Western Atlas, Inc. 192,559,931 248,340,238 3.2
-------------- -------------- ------
847,753,501 1,149,715,238 14.8
Personal Computers 500,000 Dell Computer Corp. 3,107,425 49,718,750 0.6
Real Estate 2,000,000 AMB Property Corp. 44,944,802 49,000,000 0.6
Investment Trusts--
Industrial
Real Estate 4,920,000 Crescent Real Estate Equities, Inc. 124,669,501 172,815,000 2.2
Investment Trusts-- 11,999,772 Equity Office Properties Trust 305,213,325 363,743,089 4.7
Office -------------- -------------- ------
429,882,826 536,558,089 6.9
Real Estate 2,000,000 Avalon Properties, Inc. 52,951,219 58,875,000 0.7
Investment Trusts-- 5,500,000 Equity Residential Properties Trust 241,098,763 281,187,500 3.6
Residential -------------- -------------- ------
294,049,982 340,062,500 4.3
<PAGE>
Real Estate 3,742,000 Federal Realty Investment Trust 102,967,307 92,614,500 1.2
Investment Trusts-- 1,689,200 New Plan Realty Trust 40,992,020 42,652,300 0.6
Retail 7,456,600 Simon DeBartolo Group, Inc. 224,164,808 247,465,912 3.2
1,842,900 Weingarten Realty Investors 76,563,944 81,087,600 1.0
-------------- -------------- ------
444,688,079 463,820,312 6.0
Total Long-Term Investments 4,570,790,394 5,942,216,618 76.6
Face
Amount Short-Term Investments
Commercial $50,000,000 Aesop Funding Corp., 5.46%
Paper** due 3/04/1998 49,757,333 49,757,333 0.6
Allomon Funding Corp.:
10,036,000 5.48% due 2/06/1998 10,026,834 10,026,834 0.1
14,349,000 5.50% due 2/10/1998 14,327,078 14,327,078 0.2
10,051,000 5.48% due 2/18/1998 10,023,460 10,023,460 0.1
Apreco, Inc.:
25,000,000 5.50% due 2/20/1998 24,923,611 24,923,611 0.3
50,000,000 5.53% due 2/25/1998 49,807,986 49,807,986 0.6
Atlantic Asset Securitization Corp.:
31,639,000 5.49% due 2/11/1998 31,585,926 31,585,926 0.4
15,070,000 5.48% due 2/12/1998 15,042,472 15,042,472 0.2
Bell Atlantic Financial Services, Inc.:
21,500,000 5.48% due 3/04/1998 21,395,271 21,395,271 0.3
50,000,000 5.50% due 3/05/1998 49,747,917 49,747,917 0.6
Block Financial Corp.:
20,000,000 5.48% due 2/02/1998 19,993,911 19,993,911 0.3
36,837,000 5.50% due 2/27/1998 36,685,047 36,685,047 0.5
Clipper Receivables Corp.:
42,576,000 5.50% due 2/24/1998 42,419,887 42,419,887 0.5
28,545,000 5.50% due 3/06/1998 28,396,725 28,396,725 0.4
</TABLE>
Merrill Lynch Growth Fund
January 31, 1998
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Face Percent of
Amount Short-Term Investments Cost Value Net Assets
<S> <C> <S> <C> <C> <C>
Commercial $50,000,000 Corporate Asset Funding Co., Inc.,
Paper** 5.45% due 3/18/1998 $ 49,651,806 $ 49,651,806 0.6%
(concluded) 20,000,000 Countrywide Home Loans, Inc.,
5.58% due 2/09/1998 19,972,100 19,972,100 0.3
Delaware Funding Corp.:
50,000,000 5.48% due 2/17/1998 49,870,611 49,870,611 0.6
24,939,000 5.48% due 3/30/1998 24,718,816 24,718,816 0.3
46,445,000 du Pont (E.I.) de Nemours & Co., 5.50%
due 2/23/1998 46,281,798 46,281,798 0.6
Eureka Securitization Inc.:
34,300,000 5.52% due 2/09/1998 34,252,666 34,252,666 0.4
50,000,000 5.57% due 2/12/1998 49,907,167 49,907,167 0.7
36,000,000 FCTR, Inc., 5.49% due 3/13/1998 35,774,910 35,774,910 0.5
Finova Capital Corp.:
15,000,000 5.80% due 2/09/1998 14,978,250 14,978,250 0.2
36,400,000 5.49% due 2/20/1998 36,288,980 36,288,980 0.5
25,000,000 5.48% due 3/20/1998 24,817,333 24,817,333 0.3
Fleet Funding Corp.:
50,000,000 5.50% due 3/03/1998 49,763,194 49,763,194 0.6
50,000,000 5.47% due 3/06/1998 49,741,695 49,741,695 0.6
40,000,000 General Electric Company PLC, 5.44%
due 2/11/1998 39,933,511 39,933,511 0.5
50,447,000 General Motors Acceptance Corp., 5.63%
due 2/02/1998 50,431,221 50,431,221 0.7
50,000,000 Lehman Brothers Holdings, Inc., 5.58%
due 2/11/1998 49,914,750 49,914,750 0.7
50,000,000 Lexington Parker Capital Corp., 5.62%
due 2/05/1998 49,960,972 49,960,972 0.7
Morgan (J.P.) & Co., Inc.:
50,000,000 5.46% due 2/17/1998 49,871,083 49,871,083 0.6
50,000,000 5.50% due 3/02/1998 49,770,833 49,770,833 0.6
50,000,000 Morgan Stanley Group, Inc., 5.77%
due 2/10/1998 49,919,861 49,919,861 0.7
45,000,000 Newell Company, 5.48% due 2/20/1998 44,863,000 44,863,000 0.6
44,440,000 Park Ave Receivables Corp., 5.52%
due 3/05/1998 44,215,134 44,215,134 0.6
45,000,000 Rank Xerox Capital PLC (Europe), 5.52%
due 2/04/1998 44,972,400 44,972,400 0.6
50,000,000 Republic Industries, Inc., 5.47% due
2/26/1998 49,802,472 49,802,472 0.6
35,000,000 Riverwoods Funding Corp., 5.48% due
2/12/1998 34,936,067 34,936,067 0.5
25,000,000 Scripps E.W. Company (The), 5.75% due
2/06/1998 24,976,042 24,976,042 0.3
Transamerica Finance Corp.:
49,315,000 5.46% due 2/19/1998 49,172,891 49,172,891 0.6
60,000,000 5.46% due 2/23/1998 59,790,700 59,790,700 0.8
25,000,000 WCP Funding Inc., 5.45% due 3/06/1998 24,871,320 24,871,320 0.3
-------------- -------------- ------
1,607,555,041 1,607,555,041 20.7
</TABLE>
<PAGE>
Merrill Lynch Growth Fund
January 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (concluded)
<CAPTION>
Face Percent of
Amount Short-Term Investments Cost Value Net Assets
<S> <C> <S> <C> <C> <C>
US Government $50,000,000 Federal Home Loan Bank, 5.65% due
Agency 2/18/1998 $ 49,858,750 $ 49,858,750 0.6%
Obligations** Federal Home Loan Mortgage Corp.:
45,000,000 5.36% due 2/05/1998 44,966,500 44,966,500 0.6
66,055,000 5.38% due 2/13/1998 65,926,670 65,926,670 0.9
30,000,000 5.65% due 2/13/1998 29,938,791 29,938,791 0.4
15,557,000 Federal National Mortgage
Association, 5.38% due 2/09/1998 15,536,076 15,536,076 0.2
-------------- -------------- ------
206,226,787 206,226,787 2.7
Total Short-Term Investments 1,813,781,828 1,813,781,828 23.4
Total Investments $6,384,572,222 7,755,998,446 100.0
==============
Liabilities in Excess of Other Assets (3,305,327) (0.0)
-------------- ------
Net Assets $7,752,693,119 100.0%
============== ======
Net Asset Class A--Based on net assets of $1,613,844,914 and 59,765,391
Value: shares of beneficial interest outstanding $ 27.00
==============
Class B--Based on net assets of $4,194,663,839 and 168,540,801
shares of beneficial interest outstanding $ 24.89
==============
Class C--Based on net assets of $408,427,371 and 16,529,427
shares of beneficial interest outstanding $ 24.71
==============
Class D--Based on net assets of $1,535,756,995 and 57,047,723
shares of beneficial interest outstanding $ 26.92
==============
<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>
<PAGE>
Merrill Lynch Growth Fund
January 31, 1998
PORTFOLIO INFORMATION
For the Quarter Ended January 31, 1998
Percent of
Ten Largest Equity Holdings Net Assets
Ensco International, Inc. 6.5%
IMC Global, Inc. 5.2
Global Marine, Inc. 4.8
Schlumberger Ltd., Inc. 4.7
Equity Office Properties Trust 4.7
Burlington Resources, Inc. 3.9
Apache Corp. 3.6
Equity Residential Properties Trust 3.6
Western Atlas, Inc. 3.2
Simon DeBartolo Group, Inc. 3.2
Additions
AMB Property Corp.
*Freeport-McMoRan Sulphur Inc.
**IMC Global, Inc. (Warrants)
Panamerican Beverages, Inc. (Class A)
Deletions
***Beacon Properties Corp.
**Freeport-McMoRan, Inc.
*Freeport-McMoRan Sulphur Inc.
[FN]
*Added and deleted in the same quarter.
**A merger between IMC Global, Inc. (IGL) and Freeport-McMoRan, Inc.
(FTX), in which IGL was the surviving company, established the
Fund's positions in Freeport-McMoRan Sulphur Inc. and IGL Global
Warrants, increased the number of shares of IGL held by the Fund,
and eliminated the Fund's position in FTX.
***A merger between Equity Office Properties Trust (EOP) and Beacon
Properties Trust (BCN), in which EOP was the surviving company,
increased the number of shares of EOP held by the Fund and
eliminated the Fund's position in BCN.
<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
Stephen C. Johnes, Senior Vice President and
Portfolio Manager
Donald C. Burke, Vice President
Arthur Moretti, Vice President
Gerald M. Richard, Treasurer
Ira P. Shapiro, 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
