MERRILL LYNCH
GROWTH FUND
FUND LOGO
Semi-Annual Report
April 30, 2000
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
Printed on post-consumer recycled paper
MERRILL LYNCH GROWTH FUND
DEAR SHAREHOLDER
Merrill Lynch Growth Fund outperformed the unmanaged Standard &
Poor's (S&P) Barra Growth Index during the six-month period ended
April 30, 2000. The Fund's Class A Shares rose +20.88%, compared to
an Index return of +10.84%. However, underperformance largely
occurred during the three months ended April 30, 2000 when the
Fund's Class A Shares returned +1.63% compared to an Index return of
+6.02%. In effect, during this period the Fund gave back some of its
strong outperformance in the month of January. As a result, for the
first four months of 2000, the Fund's Class A Shares returned +2.19%
compared to the S&P Barra Growth Index return of -1.05%.
Short-term performance disparities are to be expected in an actively
managed Fund such as ours, since our investments are appreciably
different from the component stocks of the S&P Barra Growth Index.
Looking out over an intermediate-term period, our relative
performance continues to be strong relative to the S&P Barra Growth
Index. For the 12 months ended April 30, 2000, the Fund had
extraordinarily good performance. During this period, the Fund's
Class A Shares were up +44.21%, compared to an Index return of
+19.00%. Although we are pleased the Fund experiences strong
performance relative to the S&P Barra Growth Index, as it has over
the past 12 months, we cannot expect to outperform this benchmark
index by such a wide margin on a long-term basis.
During the 12-month period, the unmanaged S&P 500 Index rose only
+10.13%; therefore, in general, growth stocks again outperformed
relative to the overall Index. Growth stocks significantly
outperformed value stocks, a continuation of the trend that has
prevailed over the past few years. (Fund results do not reflect
sales charges and would be lower if sales charges were included.
Complete performance information can be found on pages 3 and 4 of
this report to shareholders.)
Assessing Relative Value & Potential for
Appreciation
As we have noted in previous reports to shareholders, Merrill Lynch
Growth Fund invests in companies that are growing at rates that are
appreciably faster than the average company. We choose to invest in
those growth companies that we believe will provide attractive
investment returns. If a company in our portfolio is no longer a
growth company and its share price falls, we choose to sell our
investment unless we believe that the lapse in growth is only
temporary. Therefore, we do not hold onto stocks even if they might
provide attractive returns if we believe they no longer qualify as
growth stocks.
On the other hand, there are a number of companies that are growing
rapidly with above-average valuations. Valuations for these
companies are sufficiently high to imply that their rates of growth
must be sustained at higher levels for longer periods of time than
is usually considered achievable. However, this does not mean that
companies absolutely cannot grow fast enough and long enough to
justify these high valuations.
For example, Microsoft Corporation had been judged too expensive to
valuation-oriented analysts throughout most of its history. However,
the growth that occurred in the company's business quarter after
quarter and year after year was sufficiently high that it more than
justified Microsoft's share price. If the valuation-oriented
analysts had known what the ensuing earnings growth would be, they
would certainly have invested in the stock.
How do we evaluate whether we should own Cisco Systems, Inc., Oracle
Corporation, Sun Microsystems, Inc. and Nortel Neworks Corporation -
not to mention JDS Uniphase Corporation, Broadcom Corporation,
Juniper Networks, Inc. and Sycamore Networks, Inc.? The first group
consists of companies that have very large market capitalizations,
are leaders in large businesses, have very high profit margins, and
have large, fast-growing sales and earnings. Moreover, they are
regarded as large, profitable, fast-growing companies with strong,
capable management teams and are positioned to accrue a
disproportionate share of the benefits of the new Internet economy.
Other large premier companies--such as General Electric Company,
Microsoft Corporation, International Business Machines Corporation
and Lucent Technologies Inc.--are generally not viewed as
enthusiastically by the institutional and individual investors
because they are not deemed to be at the epicenter of the
Internet/bandwidth revolution.
Merrill Lynch Growth Fund
April 30, 2000
In contrast, Cisco, Oracle, Sun Microsystems and Nortel are regarded
as right at the heart of the future growth potential of the Internet
economy. However, they are trading at valuations that in general
might suggest their subsequent underperformance. This
underperformance would not necessarily result from any problems at
these companies; rather, it would be a reflection of the "law of
large numbers." When a company has a large market capitalization, a
high level of revenues and net income and a very high stock market
valuation, the law of large numbers suggests that it is unlikely
that the company will successfully deliver enough growth fast enough
in the ensuing years to justify its valuation.
Numerous commentators have pointed out that a company like Cisco,
with a market capitalization of $500 billion, has already grown so
large that it is 'unimaginable' that it could deliver shareholders
with 15% annual returns for the next 20 years. If a company grows
15% a year for 20 years, it grows to 16 times its current size. In
Cisco's case, this would bring its market capitalization to $8
trillion, or slightly more than the current US gross domestic
product. This same argument applies to other companies whose shares
have exceptionally high valuations.
Of course, this does not mean that Cisco has no appreciation
potential. If Cisco provides investors with stock price appreciation
of 25% for three years (thereby almost doubling its market
capitalization) and afterward provided a moderate annual growth rate
of 6% per year for the next 17 years, it would be an attractive
investment. Therefore, even if we agree that it is virtually certain
that Cisco cannot grow at 15% a year for 20 years, we could still
own it, and, in fact, we do own Cisco.
Our strategy in investing in growth companies is to try and forecast
the future size of the market opportunity the company addresses and
then to look to competitors (both current and potential) to assess
the percentage of the potential opportunity that the company might
attain. Finally, we try to apply some measure of how profitable this
business might be. If the business opportunity is large enough, if
the company is growing fast enough, if the current and potential
competitors appear weak enough, and if the company can charge prices
that make its business very profitable, very high valuations can be
justified, in our view.
Why do we own shares of Cisco and not Oracle or Sun Microsystems?
Simply because we believe that the business opportunity for Cisco is
large and its competition less intense than is the case for Oracle
and Sun Microsystems. So far, owning Cisco has been a very good
idea, but avoiding Oracle and Sun Microsystems have been very poor
ideas.
The newer companies, such as JDS Uniphase, Broadcom, Juniper and
Sycamore, are even more difficult to assess. In some cases, these
companies have large market capitalizations of $15 billion--$100
billion, yet have revenues ranging from $100 million to $1 billion.
Of course, these companies are growing very rapidly. However, their
price/sales multiples are much higher than the price/earnings
multiples one might traditionally associate with good growth stocks.
To emphasize this point, it bears repeating. Many of these companies
sell for a higher multiple of their sales than many established
growth companies sell for as a multiple of their earnings. Potential
profit margins are much more difficult to determine for these newer
companies; nevertheless, we analyze them in the same way as their
larger counterparts. Our success with these relatively smaller and
newer growth companies has been limited, at best, and we continue to
assess our analysis to refine and improve our ability to measure the
investment potential of these companies.
Few Changes in Investments
The only significant change that we made to the portfolio over the
past six months was to aggressively trim our exposure to
biotechnology. Our exposure in this sector exceeded 14% during mid-
February, which we cut back to 2.6% by April period-end as stock
prices first appreciated sharply and then retracted their
appreciation.
Merrill Lynch Growth Fund
April 30, 2000
The only significant new portfolio addition is Corning Incorporated.
This company's three main businesses are the production of optical
fiber, the manufacture of photonic components and the manufacture of
flat-panel displays. All of these businesses are experiencing strong
growth and Corning is supplying the products to meet the booming
demand.
In Conclusion
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 upcoming annual report to shareholders.
Sincerely,
(Terry K. Glenn)
Terry K. Glenn
President and Trustee
(Stephen I. Silverman)
Stephen I. Silverman
Senior Vice President and Portfolio Manager
June 12, 2000
Merrill Lynch Growth Fund
April 30, 2000
PERFORMANCE DATA
About Fund Performance
Investors are able to purchase shares of the Fund through the
Merrill Lynch Select Pricingsm 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 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 "Recent Performance
Results" and "Average Annual Total Return" 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. The Fund's Investment Adviser voluntarily waived a
portion of its management fee. Without such a waiver, the Fund's
performance would have been lower.
Merrill Lynch Growth Fund
April 30, 2000
PERFORMANCE DATA (concluded)
<TABLE>
Recent Performance Results
<CAPTION>
6 Month 12 Month Ten Years/Since
As of April 30, 2000 Total Return Total Return InceptionTotal Return
<S> <C> <C> <C>
ML Growth Fund Class A Shares* +20.88% +44.21% +298.21%
ML Growth Fund Class B Shares* +20.23 +42.70 +259.37
ML Growth Fund Class C Shares* +20.24 +42.67 + 90.84
ML Growth Fund Class D Shares* +20.72 +43.78 + 99.33
Standard & Poor's 500 Index** + 7.19 +10.13 +458.94/+246.32
<FN>
*Investment results shown do not reflect sales charges; results
would be lower if a sales charge was included. Total investment
returns are based on changes in net asset values for the periods
shown, and assume reinvestment of all dividends and capital gains
distributions at net asset value on the ex-dividend date. The Fund's
ten-year/inception periods are ten years for Class A & Class B
Shares and from 10/21/94 for Class C & Class D Shares.
**An unmanaged broad-based index comprised of common stocks. Ten
years/since inception total returns are for ten years and from
10/21/94, respectively.
</TABLE>
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 3/31/00 +49.35% +41.51%
Five Years Ended 3/31/00 +15.05 +13.81
Ten Years Ended 3/31/00 +15.21 +14.59
*Maximum sales charge is 5.25%. (Prior to October 21, 1994, Class A
Shares were offered at a higher sales charge. Thus, actual returns
would have been lower than shown for the ten-year period.)
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 3/31/00 +47.88% +43.88%
Five Years Ended 3/31/00 +13.88 +13.88
Ten Years Ended 3/31/00 +14.04 +14.04
*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 3/31/00 +47.84% +46.84%
Five Years Ended 3/31/00 +13.86 +13.86
Inception (10/21/94)
through 3/31/00 +13.98 +13.98
*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 3/31/00 +49.02% +41.02%
Five Years Ended 3/31/00 +14.76 +13.53
Inception (10/21/94)
through 3/31/00 +14.88 +13.75
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
Merrill Lynch Growth Fund
April 30, 2000
<TABLE>
SCHEDULE OF INVESTMENTS
<CAPTION>
Shares Percent of
Industries Held Long-Term Investments Value Net Assets
<S> <C> <S> <C> <C>
Banking & Financial 930,000 Federal Home Loan Mortgage Association $ 42,721,875 1.4%
Services 3,407,670 Lloyds TSB Group PLC 33,486,982 1.1
-------------- ------
76,208,857 2.5
Beverages 1,218,000 The Coca-Cola Company 57,322,125 1.9
Broadcasting & 700,000 ++Clear Channel Communications, Inc. 50,400,000 1.7
Publishing
Capital Goods-- 950,000 ++Maxim Integrated Products, Inc. 61,512,499 2.0
Technology
Communications 2,600 ++Avanex Corporation 314,925 0.0
Equipment 1,915,308 ++Cisco Systems, Inc. 132,874,493 4.4
1,380,400 Lucent Technologies Inc. 85,843,625 2.9
1,693,168 Nokia Oyj 97,362,290 3.2
-------------- ------
316,395,333 10.5
Computer Services 200,000 ++Amazon.com, Inc. 11,037,499 0.4
950,000 ++America Online, Inc. 56,821,875 1.9
333,000 ++eBay Inc. 52,988,625 1.8
1,000,000 ++go.com 13,500,000 0.4
114,800 ++lastminute.com PLC 386,224 0.0
-------------- ------
134,734,223 4.5
Computer Software 590,000 ++Intuit Inc. 21,203,125 0.7
1,480,000 ++Microsoft Corporation 103,230,000 3.4
58,500 ++Nuance Communications Inc. 1,758,656 0.1
450,000 ++Quest Software, Inc. 16,875,000 0.5
18,400 ++Riverdeep Group PLC (ADR)(c) 423,200 0.0
-------------- ------
143,489,981 4.7
Computers 648,200 ++Comverse Technology, Inc. 57,811,338 1.9
1,436,878 ++Dell Computer Corporation 71,933,705 2.4
565,400 ++EMC Corporation 78,555,263 2.6
487,200 International Business Machines Corporation 54,383,700 1.8
-------------- ------
262,684,006 8.7
Diversified 614,150 Corning Incorporated 121,294,625 4.0
Manufacturing 996,700 General Electric Company 156,731,075 5.2
-------------- ------
278,025,700 9.2
Electronics 574,000 ++Bookham Technology PLC (ADR)(c) 29,812,125 1.0
12,800 ++Infineon Technologies AG (ADR)(c) 868,800 0.0
519,000 ++Xilinx, Inc. 38,016,750 1.3
-------------- ------
68,697,675 2.3
Gas Pipeline & 3,848,434 ++TransMontaigne Inc. (b) 30,065,891 1.0
Transmission
</TABLE>
Merrill Lynch Growth Fund
April 30, 2000
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Shares Percent of
Industries Held Long-Term Investments Value Net Assets
<S> <C> <S> <C> <C>
Insurance 462,000 American International Group, Inc. $ 50,675,625 1.7%
151,112 Axa 22,460,234 0.7
-------------- ------
73,135,859 2.4
Internetworking 125,000 ++Internet Capital Group, Inc. 5,265,625 0.2
Life Sciences 257,000 ++Affymetrix, Inc. 34,695,000 1.1
460,000 ++Amgen Inc. 25,760,000 0.9
434,500 CytoTherapeutics, Inc. (Warrants)(a) 4 0.0
248,000 ++Millennium Pharmaceuticals, Inc. 19,654,000 0.6
-------------- ------
80,109,004 2.6
Medical Technology 956,500 ++Guidant Corporation 54,879,188 1.8
1,375,000 Medtronic, Inc. 71,414,063 2.4
-------------- ------
126,293,251 4.2
Natural Gas 1,293,000 Enron Corp. 90,105,938 3.0
Pharmaceuticals 700,000 Bristol-Myers Squibb Company 36,706,250 1.2
330,800 Johnson & Johnson 27,291,000 0.9
719,000 Merck & Co., Inc. 49,970,499 1.7
1,724,600 Pfizer Inc. 72,648,775 2.4
2,380,682 SmithKline Beecham PLC 32,726,683 1.1
532,200 Warner-Lambert Company 60,571,013 2.0
-------------- ------
279,914,220 9.3
Retail 1,161,500 Lowe's Companies, Inc. 57,494,250 1.9
2,035,400 Wal-Mart Stores, Inc. 112,710,275 3.7
-------------- ------
170,204,525 5.6
Semiconductors 981,030 Intel Corporation 124,406,867 4.1
225,500 Motorola, Inc. 26,848,594 0.9
540,000 Texas Instruments Incorporated 87,952,499 2.9
-------------- ------
239,207,960 7.9
Telecommunications 29,700 ++FLAG Telecom Holdings Limited 575,438 0.0
870,000 ++Level 3 Communications, Inc. 77,321,250 2.6
1,562,872 SBC Communications Inc. 68,473,330 2.3
1,070,000 Sonera Oyj 58,993,006 1.9
2,569,840 ++Telefonica SA 57,329,594 1.9
12,056,786 Vodafone AirTouch PLC 55,561,721 1.8
-------------- ------
318,254,339 10.5
</TABLE>
Merrill Lynch Growth Fund
April 30, 2000
<TABLE>
SCHEDULE OF INVESTMENTS (concluded)
<CAPTION>
Shares Percent of
Industries Held Long-Term Investments Value Net Assets
<S> <C> <S> <C> <C>
Wireless 65,000 ++Aether Systems, Inc. $ 10,818,438 0.4%
Communication 535,000 ++Metawave Communications Corporation 7,021,875 0.2
800,000 ++Netro Corporation 34,900,000 1.2
260,000 ++VoiceStream Wireless Corporation 25,723,750 0.8
-------------- ------
78,464,063 2.6
Wireline 4,276,000 The Furukawa Electric Co., Ltd. 59,308,110 2.0
Communication
Total Long-Term Investments (Cost--$2,396,280,699) 2,999,799,184 99.3
Face
Amount Short-Term Investments
Commercial Paper* $28,294,000 General Motors Acceptance Corp., 6.06% due 5/01/2000 28,284,474 0.9
Total Short-Term Investments (Cost--$28,284,474) 28,284,474 0.9
Total Investments (Cost--$2,424,565,173) 3,028,083,658 100.2
Liabilities in Excess of Other Assets (6,552,114) (0.2)
-------------- ------
Net Assets $3,021,531,544 100.0%
============== ======
*Commercial paper is traded on a discount basis; the interest rate
shown reflects the discount rate paid at the time of purchase by the
Fund.
++Non-income producing security.
(a)Warrants entitle the Fund to purchase a predetermined number of
shares of common stock and are non-income producing. 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).
(c)American Depositary Receipts (ADR).
See Notes to Financial Statements.
</TABLE>
PORTFOLIO INFORMATION
As of April 30, 2000
Percent of
Ten Largest Equity Holdings Net Assets
General Electric Company 5.2%
Cisco Systems, Inc. 4.4
Intel Corporation 4.1
Corning Incorporated 4.0
Wal-Mart Stores, Inc. 3.7
Microsoft Corporation 3.4
Nokia Oyj 3.2
Enron Corp. 3.0
Texas Instruments Incorporated 2.9
Lucent Technologies Inc. 2.9
Percent of
Geographic Allocation Net Assets
United States 84.6%
Finland 5.1
United Kingdom 5.0
Japan 2.0
Spain 1.9
France 0.7
Merrill Lynch Growth Fund
April 30, 2000
FINANCIAL INFORMATION
<TABLE>
Statement of Assets and Liabilities as of April 30, 2000
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$2,424,565,173) $3,028,083,658
Foreign cash 150,874
Receivables:
Securities sold $ 20,850,065
Beneficial interest sold 7,467,297
Dividends 1,962,531 30,279,893
--------------
Prepaid registration fees and other assets 114,885
--------------
Total assets 3,058,629,310
--------------
Liabilities: Payables:
Custodian bank 13,431,349
Beneficial interest redeemed 13,414,257
Securities purchased 5,070,000
Investment adviser 1,437,648
Distributor 1,225,329 34,578,583
--------------
Accrued expenses and other liabilities 2,519,183
--------------
Total liabilities 37,097,766
--------------
Net Assets: Net assets $3,021,531,544
==============
Net Assets Class A Shares of beneficial interest, $.10 par value,
Consist of: unlimited number of shares authorized $ 2,885,767
Class B Shares of beneficial interest, $.10 par value,
unlimited number of shares authorized 4,958,797
Class C Shares of beneficial interest, $.10 par value,
unlimited number of shares authorized 432,326
Class D Shares of beneficial interest, $.10 par value,
unlimited number of shares authorized 3,013,234
Paid-in capital in excess of par 2,199,265,917
Accumulated investment loss--net (14,393,262)
Undistributed realized capital gains on investments and
foreign currency transactions--net 221,900,824
Unrealized appreciation on investments and foreign currency
transactions--net 603,467,941
--------------
Net assets $3,021,531,544
==============
Net Asset Value: Class A--Based on net assets of $808,454,397 and 28,857,666
shares of beneficial interest outstanding $ 28.02
==============
Class B--Based on net assets of $1,264,436,655 and 49,587,973
shares of beneficial interest outstanding $ 25.50
==============
Class C--Based on net assets of $109,433,889 and 4,323,258
shares of beneficial interest outstanding $ 25.31
==============
Class D--Based on net assets of $839,206,603 and 30,132,336
shares of beneficial interest outstanding $ 27.85
==============
See Notes to Financial Statements.
Merrill Lynch Growth Fund
April 30, 2000
FINANCIAL INFORMATION (continued)
</TABLE>
<TABLE>
Statement of Operations for the Six Months Ended April 30, 2000
<S> <S> <C> <C>
Investment Dividends (net of $216,574 foreign withholding tax) $ 6,044,168
Income: Interest and discount earned 2,593,481
--------------
Total income 8,637,649
--------------
Expenses: Investment advisory fees $ 10,223,923
Account maintenance and distribution fees--Class B 6,706,100
Transfer agent fees--Class B 1,975,562
Transfer agent fees--Class A 1,157,031
Transfer agent fees--Class D 1,133,994
Account maintenance fees--Class D 1,046,000
Account maintenance and distribution fees--Class C 573,659
Transfer agent fees--Class C 180,599
Printing and shareholder reports 164,653
Custodian fees 111,996
Accounting services 69,357
Registration fees 50,124
Professional fees 46,248
Trustees' fees and expenses 23,401
Pricing fees 8,551
Other 35,377
--------------
Total expenses before reimbursement 23,506,575
Reimbursement of expenses (475,664)
--------------
Total expenses after reimbursement 23,030,911
--------------
Investment loss--net (14,393,262)
--------------
Realized & Realized gain (loss) from:
Unrealized Gain Investments--net 510,434,971
(Loss) on Foreign currency transactions--net (1,166,340) 509,268,631
Investments & --------------
Foreign Currency Change in unrealized appreciation/depreciation on:
Transactions--Net: Investments--net 85,421,040
Foreign currency transactions--net (50,464) 85,370,576
-------------- --------------
Net Increase in Net Assets Resulting from Operations $ 580,245,945
==============
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Growth Fund
April 30, 2000
FINANCIAL INFORMATION (continued)
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Six For the
Months Ended Year Ended
April 30, October 31,
Increase (Decrease) in Net Assets: 2000 1999
<S> <S> <C> <C>
Operations: Investment loss--net $ (14,393,262) $ (19,595,562)
Realized gain (loss) on investments and foreign currency
transactions--net 509,268,631 (223,616,559)
Change in unrealized appreciation/depreciation on investments
and foreign currency transactions--net 85,370,576 139,816,935
-------------- --------------
Net increase (decrease) in net assets resulting from operations 580,245,945 (103,395,186)
-------------- --------------
Dividends to In excess of investment income--net:
Shareholders: Class A -- (9,908,351)
Class B -- (10,381,062)
Class C -- (879,414)
Class D -- (8,144,104)
-------------- --------------
Net decrease in net assets resulting from dividends to
shareholders -- (29,312,931)
-------------- --------------
Beneficial Net decrease in net assets derived from beneficial interest
Interest transactions (431,496,213) (1,972,727,295)
Transactions: -------------- --------------
Net Assets: Total increase (decrease) in net assets 148,749,732 (2,105,435,412)
Beginning of period 2,872,781,812 4,978,217,224
-------------- --------------
End of period $3,021,531,544 $2,872,781,812
============== ==============
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Growth Fund
April 30, 2000
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: 2000 1999 1998 1997 1996
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 23.18 $ 22.71 $ 33.13 $ 26.87 $ 23.13
Operating ---------- ---------- ---------- ---------- ----------
Performance: Investment income (loss)--net (.05) (.01) .46 .53 .31
Realized and unrealized gain (loss) on
investments and foreign currency
transactions--net 4.89 .69 (8.47) 7.98 5.63
---------- ---------- ---------- ---------- ----------
Total from investment operations 4.84 .68 (8.01) 8.51 5.94
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net -- -- (.48) (.44) (.35)
In excess of investment income--net -- (.21) -- -- --
Realized gain on investments--net -- -- (1.70) (1.81) (1.85)
In excess of realized gain on
investments--net -- -- (.23) -- --
---------- ---------- ---------- ---------- ----------
Total dividends and distributions -- (.21) (2.41) (2.25) (2.20)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 28.02 $ 23.18 $ 22.71 $ 33.13 $ 26.87
========== ========== ========== ========== ==========
Total Investment Based on net asset value per share 20.88%+++ 3.09% (25.83%) 34.03% 28.15%
Return:** ========== ========== ========== ========== ==========
Ratios to Expenses, net of reimbursement .92%* .96% .81% .77% .80%
Average ========== ========== ========== ========== ==========
Net Assets: Expenses .95%* .99% .85% .81% .84%
========== ========== ========== ========== ==========
Investment income (loss)--net (.37%)* (.03%) 1.72% 1.84% 1.28%
========== ========== ========== ========== ==========
Supplemental Net assets, end of period (in
Data: thousands) $ 808,454 $ 774,287 $1,111,166 $1,769,296 $1,056,870
========== ========== ========== ========== ==========
Portfolio turnover 40.59% 101.71% 24.41% 24.75% 30.01%
========== ========== ========== ========== ==========
*Annualized.
**Total investment returns exclude the effects of sales charges.
++Based on average shares outstanding.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Growth Fund
April 30, 2000
FINANCIAL INFORMATION (continued)
<TABLE>
Financial Highlights (continued)
<CAPTION>
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: 2000 1999 1998 1997 1996
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 21.21 $ 20.88 $ 30.63 $ 25.03 $ 21.60
Operating ---------- ---------- ---------- ---------- ----------
Performance: Investment income (loss)--net (.17) (.19) .17 .22 .06
Realized and unrealized gain (loss)
on investments and foreign currency
transactions--net 4.46 .61 (7.80) 7.39 5.26
---------- ---------- ---------- ---------- ----------
Total from investment operations 4.29 .42 (7.63) 7.61 5.32
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net -- -- (.19) (.20) (.04)
In excess of investment income--net -- (.09) -- -- --
Realized gain on investments--net -- -- (1.70) (1.81) (1.85)
In excess of realized gain on
investments--net -- -- (.23) -- --
---------- ---------- ---------- ---------- ----------
Total dividends and distributions -- (.09) (2.12) (2.01) (1.89)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 25.50 $ 21.21 $ 20.88 $ 30.63 $ 25.03
========== ========== ========== ========== ==========
Total Investment Based on net asset value per share 20.23%+++ 2.06% (26.57%) 32.62% 26.84%
Return:** ========== ========== ========== ========== ==========
Ratios to Expenses, net of reimbursement 1.94%* 1.99% 1.83% 1.79% 1.82%
Average ========== ========== ========== ========== ==========
Net Assets: Expenses 1.97%* 2.02% 1.87% 1.83% 1.85%
========== ========== ========== ========== ==========
Investment income (loss)--net (1.39%)* (.98%) .70% .82% .26%
========== ========== ========== ========== ==========
Supplemental Net assets, end of period (in
Data: thousands) $1,264,437 $1,247,547 $2,544,979 $4,687,523 $2,916,507
========== ========== ========== ========== ==========
Portfolio turnover 40.59% 101.71% 24.41% 24.75% 30.01%
========== ========== ========== ========== ==========
*Annualized.
**Total investment returns exclude the effects of sales charges.
++Based on average shares outstanding.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Growth Fund
April 30, 2000
FINANCIAL INFORMATION (continued)
<TABLE>
Financial Highlights (continued)
<CAPTION>
Class C++
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: 2000 1999 1998 1997 1996
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 21.05 $ 20.72 $ 30.43 $ 24.89 $ 21.59
Operating ---------- ---------- ---------- ---------- ----------
Performance: Investment income(loss)--net (.17) (.18) .17 .22 .06
Realized and unrealized gain (loss)
on investments and foreign currency
transactions--net 4.43 .59 (7.75) 7.34 5.23
---------- ---------- ---------- ---------- ----------
Total from investment operations 4.26 .41 (7.58) 7.56 5.29
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net -- -- (.20) (.21) (.14)
In excess of investment income--net -- (.08) -- -- --
Realized gain on investments--net -- -- (1.70) (1.81) (1.85)
In excess of realized gain on
investments--net -- -- (.23) -- --
---------- ---------- ---------- ---------- ----------
Total dividends and distributions -- (.08) (2.13) (2.02) (1.99)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 25.31 $ 21.05 $ 20.72 $ 30.43 $ 24.89
========== ========== ========== ========== ==========
Total Investment Based on net asset value per share 20.24%+++ 2.04% (26.60%) 32.63% 26.84%
Return:** ========== ========== ========== ========== ==========
Ratios to Average Expenses, net of reimbursement 1.96%* 2.02% 1.84% 1.80% 1.84%
Net Assets: ========== ========== ========== ========== ==========
Expenses 1.99%* 2.05% 1.88% 1.84% 1.87%
========== ========== ========== ========== ==========
Investment income (loss)--net (1.41%)* (.96%) .68% .81% .25%
========== ========== ========== ========== ==========
Supplemental Net assets, end of period (in
Data: thousands) $ 109,434 $ 106,797 $ 239,445 $ 427,377 $ 187,221
========== ========== ========== ========== ==========
Portfolio turnover 40.59% 101.71% 24.41% 24.75% 30.01%
========== ========== ========== ========== ==========
*Annualized.
**Total investment returns exclude the effects of sales charges.
++Based on average shares outstanding.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Growth Fund
April 30, 2000
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights (concluded)
<CAPTION>
Class D++
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: 2000 1999 1998 1997 1996
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 23.07 $ 22.63 $ 33.01 $ 26.79 $ 23.06
Operating ---------- ---------- ---------- ---------- ----------
Performance: Investment income(loss)--net (.08) (.06) .39 .46 .24
Realized and unrealized gain (loss) on
investments and foreign currency
transactions--net 4.86 .68 (8.43) 7.95 5.63
---------- ---------- ---------- ---------- ----------
Total from investment operations 4.78 .62 (8.04) 8.41 5.87
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net -- -- (.41) (.38) (.29)
In excess of investment income--net -- (.18) -- -- --
Realized gain on investments--net -- -- (1.70) (1.81) (1.85)
In excess of realized gain on
investments--net -- -- (.23) -- --
---------- ---------- ---------- ---------- ----------
Total dividends and distributions -- (.18) (2.34) (2.19) (2.14)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 27.85 $ 23.07 $ 22.63 $ 33.01 $ 26.79
========== ========== ========== ========== ==========
Total Investment Based on net asset value per share 20.72%+++ 2.82% (26.00%) 33.67% 27.83%
Return:** ========== ========== ========== ========== ==========
Ratios to Average Expenses, net of reimbursement 1.17%* 1.21% 1.06% 1.02% 1.05%
Net Assets: ========== ========== ========== ========== ==========
Expenses 1.20%* 1.24% 1.10% 1.06% 1.08%
========== ========== ========== ========== ==========
Investment income (loss)--net (.62%)* (.26%) 1.47% 1.59% 1.03%
========== ========== ========== ========== ==========
Supplemental Net assets, end of period (in
Data: thousands) $ 839,207 $ 744,151 $1,082,627 $1,642,665 $ 932,811
========== ========== ========== ========== ==========
Portfolio turnover 40.59% 101.71% 24.41% 24.75% 30.01%
========== ========== ========== ========== ==========
*Annualized.
**Total investment returns exclude the effects of sales charges.
++Based on average shares outstanding.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Growth Fund
April 30, 2000
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch Growth Fund (the "Fund") is registered under the
Investment Company Act of 1940 as a non-diversified, open-end
management investment company. The Fund's financial statements are
prepared in accordance with accounting principles generally accepted
in the United States of America, which may require the use of
management accruals and estimates. 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 that 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 that 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 or
purchased are valued at the last sale price in the case of exchange-
traded options. In the case of options traded in the over-the-
counter market, valuation is the last asked price (options written)
or the last bid price (options purchased). 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.
(c) Derivative financial instruments--The Fund may engage in various
portfolio investment strategies to increase or decrease the level of
risk to which the Fund is exposed more quickly and efficiently than
transactions in other types of instruments. 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.
* 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.
Merrill Lynch Growth Fund
April 30, 2000
NOTES TO FINANCIAL STATEMENTS (continued)
* Options--The Fund is authorized to purchase and write covered call
options 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).
Written and purchased options are non-income producing investments.
* Financial futures contracts--The Fund may purchase or sell
financial futures contracts and options on such futures contracts
for the purpose of hedging the market risk of existing securities or
the intended purchase of securities. Futures contracts are contracts
for delayed delivery of securities at a specific future date and at
a specific price or yield. 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.
(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 dates. Dividends from foreign securities where the ex-
dividend date may have passed are subsequently recorded when the
Fund has determined 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. Distributions in
excess of investment income-net are due primarily to differing tax
treatments for post-October losses.
(h) Custodian bank--The Fund recorded an amount payable to the
Custodian Bank resulting from a timing difference of security
transaction settlements.
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 ("MLFD" or the "Distributor"), a division of Princeton
Funds Distributor, Inc. ("PFD") which is 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
.65%. As a result of a voluntary waiver of expenses, the Fund will
pay a monthly fee based upon the average daily value of the Fund's
net assets at the following annual rates: .65% of the average daily
net assets on the first $1 billion; .625% of the average net assets
on the next $500 million; and .60% of the average net assets over
$1.5 billion but not exceeding $10 billion and .575% of average net
assets in excess of $10 billion. For the six months ended April 30,
2000, MLAM earned fees of $10,223,923, of which $475,664 was
voluntarily waived.
Merrill Lynch Growth Fund
April 30, 2000
Pursuant to 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 .25% .75%
Class C .25% .75%
Class D .25% --
Pursuant to a sub-agreement with the Distributor, Merrill Lynch,
Pierce, Fenner & Smith Incorporated ("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, 2000, 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 $ 419 $ 5,705
Class D $5,505 $62,990
For the six months ended April 30, 2000, MLPF&S received contingent
deferred sales charges of $1,066,668 and $13,728 relating to
transactions in Class B and Class C Shares, respectively.
Furthermore, MLPF&S received contingent deferred sales charges of
$90 and $1,001 relating to transactions subject to front-end sales
charge waivers in Class A and Class D Shares, respectively.
In addition, MLPF&S received $89,620 in commissions on the execution
of portfolio security transactions for the Fund for the six months
ended April 30, 2000.
Financial Data Services, Inc. ("FDS"), 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, FDS, PFD, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for six months ended April 30, 2000 were $1,236,503,819 and
$1,568,024,426, respectively.
Net realized gains (losses) for the six months ended April 30, 2000
and net unrealized gains (losses) as of April 30, 2000 were as
follows:
Realized Unrealized
Gains Gains
(Losses) (Losses)
Long-term investments $ 508,422,850 $ 603,518,485
Options written 2,012,120 --
Foreign currency
transactions (1,166,339) (50,544)
------------- -------------
Total $ 509,268,631 $ 603,467,941
============= =============
Transactions in options written for the six months ended April 30,
2000, were as follows:
Nominal Value
Covered by Premiums
Call Options Written Written Options Received
Outstanding call options
written, beginning of
period 1,181,350 $ 3,471,380
Options exercised (300,000) (1,459,260)
Options expired (881,350) (2,012,120)
------------ -------------
Outstanding call options
written, end of period -- --
============ =============
As of April 30, 2000, net unrealized appreciation for Federal income
tax purposes aggregated $603,518,485, of which $747,360,030 related
to appreciated securities and $143,841,545 related to depreciated
securities. At April 30, 2000, the aggregate cost of investments for
Federal income tax purposes was $2,424,565,173.
4. Shares of Beneficial Interest:
Net decrease in net assets derived from beneficial interest
transactions was $431,496,213 and $1,972,727,295 for the six months
ended April 30, 2000 and for the year ended October 31, 1999,
respectively.
Merrill Lynch Growth Fund
April 30, 2000
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, 2000 Shares Amount
Shares sold 4,871,149 $ 136,530,607
Shares redeemed (9,414,768) (263,478,714)
------------- ---------------
Net decrease (4,543,619) $ (126,948,107)
============= ===============
Class A Shares for the Year Dollar
Ended October 31, 1999 Shares Amount
Shares sold 11,565,531 $ 240,814,815
Shares issued to share-
holders in reinvestment of
dividends 459,562 9,577,280
------------- ---------------
Total issued 12,025,093 250,392,095
Shares redeemed (27,558,400) (572,349,890)
------------- ---------------
Net decrease (15,533,307) $ (321,957,795)
============= ===============
Class B Shares for the Six Dollar
Months Ended April 30, 2000 Shares Amount
Shares sold 4,713,198 $ 118,633,549
Automatic conversion of
shares (2,201,822) (55,439,331)
Shares redeemed (11,750,927) (292,677,721)
------------- ---------------
Net decrease (9,239,551) $ (229,483,503)
============= ===============
Class B Shares for the Year Dollar
Ended October 31, 1999 Shares Amount
Shares sold 15,919,015 $ 305,351,815
Shares issued to share-
holders in reinvestment of
dividends 480,513 9,245,064
------------- ---------------
Total issued 16,399,528 314,596,879
Automatic conversion of
shares (6,389,720) (122,861,457)
Shares redeemed (73,087,724) (1,396,489,700)
------------- ---------------
Net decrease (63,077,916) $(1,204,754,278)
============= ===============
Class C Shares for the Six Dollar
Months Ended April 30, 2000 Shares Amount
Shares sold 215,292 $ 5,328,749
Shares redeemed (964,484) (23,793,887)
------------- ---------------
Net decrease (749,192) $ (18,465,138)
============= ===============
Class C Shares for the Year Dollar
Ended October 31, 1999 Shares Amount
Shares sold 844,502 $ 16,133,830
Shares issued to shareholders
in reinvestment of dividends 39,676 757,812
------------- ---------------
Total issued 884,178 16,891,642
Shares redeemed (7,365,382) (139,843,279)
------------- ---------------
Net decrease (6,481,204) $ (122,951,637)
============= ===============
Class D Shares for the Six Dollar
Months Ended April 30, 2000 Shares Amount
Shares sold 2,352,074 $ 65,100,005
Automatic conversion of
shares 2,019,241 55,439,331
------------- ---------------
Total issued 4,371,315 120,539,336
Shares redeemed (6,489,685) (177,138,801)
------------- ---------------
Net decrease (2,118,370) $ (56,599,465)
============= ===============
Class D Shares for the Year Dollar
Ended October 31, 1999 Shares Amount
Shares sold 5,370,336 $ 111,940,566
Shares issued to shareholders
in reinvestment of dividends 348,930 7,254,254
Automatic conversion of
shares 5,892,240 122,861,457
------------- ---------------
Total issued 11,611,506 242,056,277
Shares redeemed (27,209,168) (565,119,862)
------------- ---------------
Net decrease (15,597,662) $ (323,063,585)
============= ===============
Merrill Lynch Growth Fund
April 30, 2000
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:
<TABLE>
Increase (Decrease) Increase (Decrease) Dividend
Industry Affiliate in Shares--Net in Cost--Net Income
<S> <S> <C> <C> <C>
Gas Pipeline & Transmission TransMontaigne Inc. -- -- ++
++Non-income producing security.
</TABLE>
6. Capital Loss Carryforward:
At October 31, 1999, the Fund had a net capital loss carryforward of
approximately $286,994,000, of which $63,610,000 expires in 2006 and
$223,384,000 expires in 2007. This amount will be available to
offset like amounts of any future taxable gains.
OFFICERS AND TRUSTEES
Terry K. Glenn, President and Trustee
James H. Bodurtha, Trustee
Herbert I. London, Trustee
Joseph L. May, Trustee
Andre F. Perold, Trustee
Arthur Zeikel, Trustee
Robert C. Doll, Jr., Senior Vice President
Stephen I. Silverman, Senior Vice President and
Portfolio Manager
Donald C. Burke, Vice President and Treasurer
Lori A. Martin, Secretary
Custodian
State Street Bank and Trust Company
One Heritage Drive, P2N
North Quincy, MA 02171
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
Robert R. Martin, Trustee of Merrill Lynch Growth Fund has recently
retired. The Fund's Board of Trustees wishes Mr. Martin well in his
retirement.
