MERRILL LYNCH
STRATEGIC
DIVIDEND FUND
[GRAPHIC OMITTED]
STRATEGIC
Performance
Quarterly Report
April 30, 1998
<PAGE>
MERRILL LYNCH STRATEGIC DIVIDEND FUND
Security
Representation as a
Percentage of
Equities as of
April 30, 1998
[The following information was represented by a pie chart in the printed
materials.]
Utilities -- 28.5%
Capital Goods -- 13.0%
Energy -- 11.3%
Financial Services -- 20.5%
Basic Industries -- 9.7%
Consumer -- 17.0%
US Common Stock
Investments as of
April 30, 1998
S&P
Fund 500*
-----------------------------------------------------------------------------
Average Capitalization (in billions) $28.6 $64.9
-----------------------------------------------------------------------------
Price/Book Value 2.8 4.2
-----------------------------------------------------------------------------
Price/Earnings Ratio** 18.1 24.7
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Yield Based on Current Dividend 2.9% 1.4%
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*An unmanaged broad-based index comprised of common stocks.
**Based on trailing 12-month earnings.
<PAGE>
Merrill Lynch Strategic Dividend Fund, April 30, 1998
DEAR SHAREHOLDER
The quarter ended April 30, 1998 was positive for most capital markets
worldwide, despite periods of volatility. In the United States, sentiment
fluctuated between a variety of outlooks. At times, US stock and bond prices
reflected expectations that the slowdown in Asian economic growth would lead to
a sharp decline in US business activity and, ultimately, a deflationary
environment. The deterioration of economic conditions in Japan was of particular
concern. During other periods, US investors appeared to expect that the positive
trends of a moderately expanding economy, declining unemployment, enhanced
productivity and corporate profits growth would continue, unimpeded by the
developments in Asia. To date, there have been only a few signs that Asia's
troubles are influencing US economic activity. In Europe, the major event was
greater progress toward achieving European Monetary Union, although concerns
have arisen that interest rates will have to be increased to curtail
inflationary pressures.
As 1998 progresses, it is likely that investor focus will remain on developments
in Asia. For those economies that continue to expand, investors will watch for
signs that inflation is still not a threat. Evidence of ongoing, noninflationary
gross domestic product growth should continue to exert a positive influence on
capital markets worldwide.
Portfolio Matters
For the three months ended April 30, 1998, Merrill Lynch Strategic Dividend
Fund's Class A, Class B, Class C and Class D Shares had total returns of
+10.85%, +10.65%, +10.61% and +10.86%, respectively. (Results shown do not
reflect sales charges; results would be lower if sales charges were included.
For complete performance information, including average annual total returns,
see pages 4 and 5 of this report to shareholders.) The Fund outperformed the
+9.92% total return of the 200 highest-yielding stocks in the unmanaged Standard
& Poor's 500 Index (S&P 500), its primary investment focus, for the same
three-month period. The Fund also modestly outperformed the +10.36% return of
the Lipper Equity Income Funds Average for the April quarter; however, the Fund
lagged the +13.84% total return of the S&P 500.
The Fund's investment objective is to seek to provide long-term total returns by
investing primarily in a diversified portfolio of dividend paying common stocks
that yield more than the S&P 500. At April quarter-end, the gross dividend yield
on the Fund's stock holdings was 2.88%, compared to 1.44% for the S&P 500. At
the close of the April quarter, more than 95% of the Fund's 78 equity holdings
had dividend yields above the yield of the S&P 500.
Investment activities during the April quarter focused on realizing capital
gains in several of our lower-yielding investments that had appreciated
significantly. We eliminated the stocks of four companies that we believed
offered limited upside potential and reduced our investments in ten others. At
the same time, we initiated new positions in the shares of seven higher-yielding
companies within the utility and financial sectors. We believe these stocks
offer attractive total return opportunities at the share price levels at which
we purchased them. Among our new investments was Philadelphia Suburban
Corporation, the third-largest water utility in the country, supplying water to
nearly one million customers in the Delaware Valley. Through an aggressive asset
acquisition program, the company has increased its penetration of customers in
the suburban Philadelphia markets of southeastern Pennsylvania, New Jersey and
Delaware.
We added two additional natural gas companies, Enron Corp. and The Williams
Companies, Inc., to our holdings. Both companies own and operate large domestic
natural gas pipeline systems, as well as engage in oil and gas exploration and
production. More specifically, Enron is the largest US wholesale marketer of
natural gas and nonregulated electricity. Internationally, the company is a
major developer and operator of natural gas and power projects. Williams owns
natural gas and petroleum product pipelines and processing facilities, and
through its communications group is a nationwide provider of telecommunications
and network services. We believe both companies are well positioned to benefit
from the favorable growth prospects for natural gas domestically and to reap the
benefits from their individual niche businesses. In our view, the stocks are
selling at attractive price-to-cash flow multiples and offer above market
dividend yields.
With the addition of the shares of three real estate investment trusts (REITs),
our weighting in this group increased to approximately 5% of net assets. We
believe this group offers attractively valued investments with high current
dividend yields. Developers Diversified Realty Corp. is a large retail REIT that
acquires, develops, owns, leases and manages primarily community shopping
centers in 28 states, mainly in the East and Midwest. The company's portfolio
consists of 85 shopping centers, which are usually anchored by a national or
regional retailer such as Wal-Mart Stores, and seven business centers. Duke
Realty Investments, Inc. is a large commercial real estate operator of
industrial, office and retail properties in five states in the Midwest. The
company also provides leasing, management, construction, development and other
tenant-related services for properties owned by others. Colonial Properties
Trust is one of the largest owners, developers and operators of multi-family
apartments, office and retail properties in the Southeast. The company's
diversified portfolio includes 93 properties in eight states.
The addition of Barclays PLC, the second-largest bank in terms of assets in the
United Kingdom and a major financial services company, offers an opportunity to
participate in the evolving restructuring and consolidation of the financial
services business in Europe. These potential developments aside, we believe
Barclays' shares offer attractive total return opportunities.
In Conclusion
We thank you for your investment in Merrill Lynch Strategic Dividend Fund, and
we look forward to reviewing our outlook and strategy with you in our upcoming
annual report to shareholders.
Sincerely,
/s/ Arthur Zeikel
Arthur Zeikel
President
/s/ Walter D. Rogers
Walter D. Rogers
Senior Vice President and
Portfolio Manager
June 1, 1998
2 & 3
<PAGE>
Merrill Lynch Strategic Dividend Fund, April 30, 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:
o 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.
o 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.)
o 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.
o 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 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.
Recent
Performance
Results
<TABLE>
<CAPTION>
Ten Years/
12 Month 3 Month Since Inception
Total Return Total Return Total Return
=================================================================================================================================
<S> <C> <C> <C>
ML Strategic Dividend Fund Class A Shares* +34.65% +10.85% +261.97%
---------------------------------------------------------------------------------------------------------------------------------
ML Strategic Dividend Fund Class B Shares* +33.34 +10.65 +250.07
---------------------------------------------------------------------------------------------------------------------------------
ML Strategic Dividend Fund Class C Shares* +33.34 +10.61 +111.24
---------------------------------------------------------------------------------------------------------------------------------
ML Strategic Dividend Fund Class D Shares* +34.34 +10.86 +117.28
---------------------------------------------------------------------------------------------------------------------------------
Standard & Poor's 500 Index** +41.07 +13.84 +432.75/+466.16/+157.86
=================================================================================================================================
</TABLE>
*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 dates are: Class A Shares,
11/29/88; Class BShares, ten years ended 4/30/98; and Class C and Class D
Shares, 10/21/94.
**An unmanaged broad-based index comprised of common stocks. Ten years/since
inception total returns are: from 11/29/88 to 4/30/98; for the ten years
ended 4/30/98; and from 10/21/94 to 4/30/98, respectively.
Average Annual
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
=============================================================================
Class A Shares*
Year Ended 3/31/98 +39.26% +31.95%
=============================================================================
Five Years Ended 3/31/98 +18.02 +16.75
-----------------------------------------------------------------------------
Inception (11/29/88) through 3/31/98 +14.82 +14.16
-----------------------------------------------------------------------------
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
=============================================================================
Class B Shares*
=============================================================================
Year Ended 3/31/98 +37.73% +33.73%
-----------------------------------------------------------------------------
Five Years Ended 3/31/98 +16.79 +16.79
-----------------------------------------------------------------------------
Ten Years Ended 3/31/98 +13.45 +13.45
-----------------------------------------------------------------------------
*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 3/31/98 +37.81% +36.81%
-----------------------------------------------------------------------------
Inception (10/21/94) through 3/31/98 +24.41 +24.41
-----------------------------------------------------------------------------
*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 3/31/98 +38.76% +31.47%
-----------------------------------------------------------------------------
Inception (10/21/94) through 3/31/98 +25.39 +23.44
-----------------------------------------------------------------------------
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
4 & 5
<PAGE>
Merrill Lynch Strategic Dividend Fund, April 30, 1998
SCHEDULE OF INVESTMENTS (in US dollars)
<TABLE>
<CAPTION>
Shares Percent of
EUROPE Industries Held Common Stocks Cost Value Net Assets
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Netherlands Oil--International 50,000 Royal Dutch Petroleum PLC (NY Registered Shares) $ 747,328 $ 2,828,125 1.3%
--------------------------------------------------------------------------------------------------------------------
Total Investments in the Netherlands 747,328 2,828,125 1.3
====================================================================================================================================
United Kingdom Banking 70,000 Barclays PLC 2,097,292 2,017,491 1.0
--------------------------------------------------------------------------------------------------------------------
Oil--International 30,000 British Petroleum Co. PLC (ADR)* 1,328,520 2,835,000 1.3
--------------------------------------------------------------------------------------------------------------------
Total Investments in the United Kingdom 3,425,812 4,852,491 2.3
====================================================================================================================================
Total Investments in Europe 4,173,140 7,680,616 3.6
====================================================================================================================================
NORTH AMERICA
====================================================================================================================================
United States Aerospace & Defense 20,000 Rockwell International Corp. 975,228 1,118,750 0.5
60,000 TRW Inc. 1,663,738 3,168,750 1.5
----------- ----------- ----
2,638,966 4,287,500 2.0
--------------------------------------------------------------------------------------------------------------------
Automobiles 70,000 Ford Motor Company 1,318,007 3,206,875 1.5
50,000 General Motors Corp. 2,290,947 3,368,750 1.6
----------- ----------- ----
3,608,954 6,575,625 3.1
--------------------------------------------------------------------------------------------------------------------
Automotive Equipment 72,000 Arvin Industries, Inc. 1,656,934 2,947,500 1.4
& Tires 50,000 Cooper Tire and Rubber Company 1,202,300 1,193,750 0.6
60,000 Dana Corp. 1,649,850 3,547,500 1.7
----------- ----------- ----
4,509,084 7,688,750 3.7
--------------------------------------------------------------------------------------------------------------------
Banks 39,000 Bank of New York Company, Inc. (The) 1,989,838 2,303,438 1.1
10,000 Bankers Trust New York Corp. 709,031 1,291,250 0.6
38,000 Crestar Financial Corporation 1,964,030 2,272,875 1.1
10,000 J.P. Morgan & Co., Inc. 897,556 1,312,500 0.6
46,000 Mellon Bank Corp. 990,205 3,312,000 1.5
34,500 Mercantile Bancorp. 1,002,055 1,910,438 0.9
30,000 National City Corporation 2,011,800 2,077,500 1.0
32,000 State Street Corporation 1,952,758 2,288,000 1.1
----------- ----------- ----
11,517,273 16,768,001 7.9
--------------------------------------------------------------------------------------------------------------------
Business Services 52,000 Dun & Bradstreet Corp. 1,505,435 1,846,000 0.9
--------------------------------------------------------------------------------------------------------------------
Capital Goods 38,000 Cooper Industries, Inc. 2,036,029 2,541,250 1.2
30,000 General Electric Co. 724,669 2,553,750 1.2
50,000 Harris Corporation 2,167,485 2,418,750 1.1
35,000 Manitowoc Company, Inc. (The) 430,656 1,631,875 0.8
28,000 Minnesota Mining & Manufacturing Co. 1,608,098 2,642,500 1.2
68,000 Ogden Corporation 1,531,759 2,091,000 1.0
----------- ----------- ----
8,498,696 13,879,125 6.5
--------------------------------------------------------------------------------------------------------------------
Chemicals 23,000 Dow Chemical Co. (The) 1,369,880 2,223,813 1.0
40,000 E.I. du Pont de Nemours & Co. 1,329,525 2,912,500 1.4
----------- ----------- ----
2,699,405 5,136,313 2.4
--------------------------------------------------------------------------------------------------------------------
Drugs 50,000 American Home Products Corp. 3,031,175 4,656,250 2.2
40,000 Bristol-Myers Squibb Co. 913,275 4,235,000 2.0
----------- ----------- ----
3,944,450 8,891,250 4.2
--------------------------------------------------------------------------------------------------------------------
Engineering & 37,000 Foster Wheeler Corp. 1,380,470 1,024,438 0.5
Construction
--------------------------------------------------------------------------------------------------------------------
Foods 40,000 General Mills, Inc. 2,938,894 2,702,500 1.3
55,000 Quaker Oats Company 2,983,189 2,860,000 1.3
----------- ----------- ----
5,922,083 5,562,500 2.6
--------------------------------------------------------------------------------------------------------------------
Household Products 24,000 Clorox Company 728,490 2,013,000 0.9
--------------------------------------------------------------------------------------------------------------------
Insurance 65,000 American General Corp. 1,346,718 4,330,625 2.0
30,000 Lincoln National Corp. 1,275,150 2,664,375 1.3
85,000 Ohio Casualty Corp. 2,708,281 4,111,875 1.9
----------- ----------- ----
5,330,149 11,106,875 5.2
--------------------------------------------------------------------------------------------------------------------
Merchandising 50,000 J.C. Penney Company, Inc. 2,315,950 3,553,125 1.7
29,000 May Department Stores Co. 1,140,994 1,788,937 0.8
----------- ----------- ----
3,456,944 5,342,062 2.5
--------------------------------------------------------------------------------------------------------------------
Oil--Domestic 28,000 Atlantic Richfield Co. 1,584,596 2,184,000 1.0
90,000 Occidental Petroleum Corp. 2,323,525 2,649,375 1.2
50,000 Phillips Petroleum Co. 1,731,105 2,478,125 1.2
----------- ----------- ----
5,639,226 7,311,500 3.4
--------------------------------------------------------------------------------------------------------------------
Oil--International 40,000 Exxon Corp. 1,189,846 2,917,500 1.4
40,000 Mobil Corp. 915,150 3,160,000 1.5
50,000 Texaco Inc. 1,177,506 3,075,000 1.4
----------- ----------- ----
3,282,502 9,152,500 4.3
--------------------------------------------------------------------------------------------------------------------
Paper & Forest 66,000 Union Camp Corp. 3,963,011 3,984,750 1.9
Products 60,000 Weyerhaeuser Co. 2,666,100 3,457,500 1.6
----------- ----------- ----
6,629,111 7,442,250 3.5
--------------------------------------------------------------------------------------------------------------------
Photography 20,000 Eastman Kodak Co. 812,344 1,443,750 0.7
--------------------------------------------------------------------------------------------------------------------
Real Estate 38,000 Apartment Investment & Management Co. (Class A) 1,201,028 1,420,250 0.7
Investment Trusts 25,000 Avalon Properties, Inc. 514,336 703,125 0.3
40,000 Colonial Properties Trust 1,256,788 1,187,500 0.6
40,000 Crescent Real Estate Equities Company 1,261,325 1,365,000 0.6
32,000 Developers Diversified Realty Corp. 1,296,294 1,270,000 0.6
52,000 Duke Realty Investments, Inc. 1,267,708 1,238,250 0.6
35,000 Essex Property Trust, Inc. 854,486 1,155,000 0.5
30,000 Mack-Cali Realty Corporation 1,126,800 1,126,875 0.5
30,000 Patriot American Hospitality, Inc. 394,148 757,500 0.4
----------- ----------- ----
9,172,913 10,223,500 4.8
--------------------------------------------------------------------------------------------------------------------
Steel 55,000 Carpenter Technology Corp. 1,747,599 3,193,437 1.5
--------------------------------------------------------------------------------------------------------------------
</TABLE>
6 & 7
<PAGE>
Merrill Lynch Strategic Dividend Fund, April 30, 1998
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<TABLE>
<CAPTION>
NORTH AMERICA Shares Percent of
(concluded) Industries Held Common Stocks Cost Value Net Assets
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
====================================================================================================================================
United States Utilities--Electric 85,000 American Electric Power Co., Inc. $ 2,682,600 $ 4,058,750 1.9%
(concluded) 106,000 Boston Edison Company 2,656,360 4,319,500 2.0
60,000 Central and South West Corporation 1,598,600 1,563,750 0.7
63,000 Consolidated Edison Co. of New York, Inc. 1,779,750 2,850,750 1.4
105,000 Edison International, Inc. 1,759,425 3,130,312 1.5
60,000 Entergy Corporation 1,689,850 1,492,500 0.7
50,000 Long Island Lighting Co. 1,120,500 1,496,875 0.7
66,000 New Century Energies, Inc. 2,137,905 3,135,000 1.5
60,000 Northern States Power Co. 2,613,600 3,382,500 1.6
200,000 PECO Energy Company 3,948,520 4,762,500 2.2
------------ ------------ -----
21,987,110 30,192,437 14.2
--------------------------------------------------------------------------------------------------------------------
Utilities--Natural 40,000 Consolidated Natural Gas Co. 1,805,775 2,300,000 1.1
Gas 44,000 Enron Corp. 2,026,319 2,164,250 1.0
50,000 Sonat, Inc. 882,073 2,218,750 1.0
65,000 Williams Companies, Inc. (The) 2,185,643 2,055,625 1.0
------------ ------------ -----
6,899,810 8,738,625 4.1
--------------------------------------------------------------------------------------------------------------------
Utilities-- 78,000 Ameritech Corporation 3,008,167 3,319,875 1.5
Telecommunications 46,080 Bell Atlantic Corp. 2,299,200 4,311,360 2.0
120,000 Frontier Corporation 3,101,508 3,592,500 1.7
40,000 GTE Corp. 1,429,930 2,337,500 1.1
55,000 U S West Communications Group, Inc. 1,852,675 2,901,250 1.4
------------ ------------ -----
11,691,480 16,462,485 7.7
--------------------------------------------------------------------------------------------------------------------
Utilities--Water 76,000 American Water Works Co., Inc. 1,429,750 2,275,250 1.1
55,500 Philadelphia Suburban Corporation 1,203,656 1,172,437 0.5
------------ ------------ -----
2,633,406 3,447,687 1.6
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investments in North America 126,235,900 187,729,610 88.2
====================================================================================================================================
Total Common Stocks 130,409,040 195,410,226 91.8
====================================================================================================================================
<CAPTION>
Face
Amount Short-Term Securities
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
Repurchase Agreements** $8,241,000 J.P. Morgan & Co., Inc., purchased on
4/30/1998 to yield 5.52% to 5/01/1998 8,241,000 8,241,000 3.9
--------------------------------------------------------------------------------------------------------------------
US Government Agency 5,000,000 Federal Home Loan Mortgage Corp.,
Obligations*** 5.40% due 5/04/1998 4,997,000 4,997,000 2.3
4,000,000 Federal National Mortgage Association,
5.43% due 5/05/1998 3,996,983 3,996,983 1.9
------------ ------------ -----
8,993,983 8,993,983 4.2
====================================================================================================================================
Total Short-Term Securities 17,234,983 17,234,983 8.1
====================================================================================================================================
Total Investments $147,644,023 212,645,209 99.9
============
Other Assets Less Liabilities 110,825 0.1
------------ -----
Net Assets $212,756,034 100.0%
============ =====
<CAPTION>
====================================================================================================================================
<S> <C>
Class A--Based on net assets of $25,569,516 and 1,585,817 shares of beneficial
interest outstanding $ 16.12
============
Class B--Based on net assets of $78,619,861 and 4,871,868 shares of beneficial
interest outstanding $ 16.14
============
Class C--Based on net assets of $4,679,688 and 292,362 shares of beneficial
interest outstanding $ 16.01
============
Class D--Based on net assets of $103,886,969 and 6,445,495 shares of beneficial
interest outstanding $ 16.12
============
====================================================================================================================================
</TABLE>
*American Depositary Receipts (ADR).
**Repurchase Agreements are fully collateralized by US
Government & Agency Obligations.
***US Government Agency Obligations are traded on a
discount basis; the interest rate shown is the
discount rate paid at the time of purchase by the
Fund.
8 & 9
<PAGE>
Merrill Lynch Strategic Dividend Fund, April 30, 1998
PORTFOLIO CHANGES
<TABLE>
<CAPTION>
For the Quarter Ended April 30, 1998
===============================================================================================================
<S> <C> <C> <C>
Additions Barclays PLC Developers Diversified Realty Corp. Philadelphia Suburban Corporation
Colonial Properties Trust Duke Realty Investments, Inc. Williams Companies, Inc. (The)
Enron Corp.
===============================================================================================================
Deletions Beneficial Corp. KN Energy, Inc. Southern New England
Telecommunications Corp.
</TABLE>
PORTFOLIO INFORMATION
As of April 30, 1998
Percent of
Ten Largest Common Stock Holdings Net Assets
PECO Energy Company.............................. 2.2%
American Home Products Corp...................... 2.2
American General Corp............................ 2.0
Boston Edison Company............................ 2.0
Bell Atlantic Corp............................... 2.0
Bristol-Myers Squibb Co.......................... 2.0
Ohio Casualty Corp............................... 1.9
American Electric Power Co., Inc................. 1.9
Union Camp Corp.................................. 1.9
Frontier Corporation............................. 1.7
OFFICERS AND TRUSTEES
Arthur Zeikel, President and Trustee
Ronald W. Forbes, Trustee
Cynthia A. Montgomery, Trustee
Charles C. Reilly, Trustee
Kevin A. Ryan, Trustee
Richard R. West, Trustee
Terry K. Glenn, Executive Vice President
Norman R. Harvey, Senior Vice President
Walter D. Rogers, Senior Vice President and
Portfolio Manager
Donald C. Burke, Vice President
Gerald M. Richard, Treasurer
Thomas D. Jones, III, 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
10 & 11
<PAGE>
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
Strategic Dividend Fund
Box 9011
Princeton, NJ
08543-9011 #10561--4/98
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