UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-07177
Name of Fund: Merrill Lynch Mid Cap Value Opportunities Fund of
The Asset Program, Inc.
Fund Address: P.O. Box 9011
Princeton, NJ 08543-9011
Name and address of agent for service: Robert C. Doll, Jr., Chief Executive
Officer, Merrill Lynch Mid Cap Value Opportunities Fund of The Asset
Program, Inc., 800 Scudders Mill Road, Plainsboro, NJ, 08536. Mailing
address: P.O. Box 9011, Princeton, NJ, 08543-9011
Registrant's telephone number, including area code: (609) 282-2800
Date of fiscal year end: 01/31/06
Date of reporting period: 02/01/05 - 07/31/05
Item 1 - Report to Stockholders
Merrill Lynch
Mid Cap Value
Opportunities Fund
Of The Asset Program, Inc.
Semi-Annual Report
July 31, 2005
(BULL LOGO) Merrill Lynch Investment Managers
www.mlim.ml.com
Mercury Advisors
A Division of Merrill Lynch Investment Managers
www.mercury.ml.com
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.
A description of the policies and procedures that the Fund uses to determine
how to vote proxies relating to portfolio securities is available (1) without
charge, upon request, by calling toll-free 1-800-MER-FUND (1-800-637-3863);
(2) at www.mutualfunds.ml.com; and (3) on the Securities and Exchange
Commission's Web site at http://www.sec.gov. Information about how the
Fund voted proxies relating to securities held in the Fund's portfolio
during the most recent 12-month period ended June 30 is available (1) at
www.mutualfunds.ml.com; and (2) on the Securities and Exchange Commission's
Web site at http://www.sec.gov.
Merrill Lynch Mid Cap Value Opportunities Fund of
The Asset Program, Inc.
Box 9011
Princeton, NJ
08543-9011
(GO PAPERLESS LOGO)
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Merrill Lynch Mid Cap Value Opportunities Fund
Officers and Directors
Robert C. Doll, Jr., President and Director
James H. Bodurtha, Director
Kenneth A. Froot, Director
Joe Grills, Director
Herbert I. London, Director
Roberta Cooper Ramo, Director
Robert S. Salomon, Jr., Director
Stephen B. Swensrud, Director
Donald C. Burke, Vice President and Treasurer
R. Elise Baum, Vice President and Portfolio Manager
Jeffrey Hiller, Chief Compliance Officer
Alice A. Pellegrino, Secretary
Custodian
The Bank of New York
100 Church Street
New York, NY 10286
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
800-637-3863
Availability of Quarterly Schedule of Investments
The Fund files its complete schedule of portfolio holdings with the Securities
and Exchange Commission ("SEC") for the first and third quarters of each fiscal
year on Form N-Q. The Fund's Forms N-Q are available on the SEC's Web site at
http://www.sec.gov. The Fund's Forms N-Q may also be reviewed and copied at the
SEC's Public Reference Room in Washington, DC. Information on the operation of
the Public Reference Room may be obtained by calling 1-800-SEC-0330.
Electronic Delivery
The Fund offers electronic delivery of communications to its shareholders. In
order to receive this service, you must register your account and provide us
with e-mail information. To sign up for this service, simply access this Web
site at http://www.icsdelivery.com/live and follow the instructions. When you
visit this site, you will obtain a personal identification number (PIN). You
will need this PIN should you wish to update your e-mail address, choose to
discontinue this service and/or make any other changes to the service. This
service is not available for certain retirement accounts at this time.
MERRILL LYNCH MID CAP VALUE OPPORTUNITIES FUND JULY 31, 2005
A Letter From the President
Dear Shareholder
We have been referring to 2005 as a "muddle through" year for the financial
markets, characterized by positive and negative crosscurrents that have
conspired to create a fairly complicated investing environment. Amid these
conditions, the major market benchmarks managed to post positive results for
the current reporting period, as follows:
Total Returns as of July 31, 2005 6-month 12-month
U.S. equities (Standard & Poor's 500 Index) +5.45% +14.05%
Small-cap U.S. equities (Russell 2000 Index) +9.58% +24.78%
International equities (MSCI Europe Australasia Far East Index) +3.76% +21.06%
Fixed income (Lehman Brothers Aggregate Bond Index) +0.95% + 4.79%
Tax-exempt fixed income (Lehman Brothers Municipal Bond Index) +1.48% + 6.35%
High yield bonds (Credit Suisse First Boston High Yield Index) +2.16% +10.19%
On August 9, the Federal Reserve Board (the Fed) increased the federal funds
rate for the tenth consecutive time since June 2004, bringing the target short-
term interest rate to 3.5%. Just months ago, some observers felt that slowing
global economic growth and subdued inflation might cause the Fed to end its
monetary tightening campaign. Most recently, however, positive economic news
(including a favorable employment report for July and resilient consumer
spending) has prompted new concerns that the Fed may increase interest rates
more than is necessary to moderate economic growth and keep inflation in
check.
After ending 2004 in a strong rally, equity markets fell slightly into
negative territory in the first half of 2005. July, however, brought the
strongest monthly gain of the calendar year and helped to boost equity market
returns for the current reporting period. Working in favor of equities have
been surprisingly strong corporate earnings reports and low long-term bond
yields. Conversely, continued high oil prices and Fed interest rate hikes have
exerted downward pressure on stocks.
In the fixed income markets, the yield curve flattened considerably as short-
term rates rose in concert with the Fed rate hikes and long-term bond yields
fell. Over the past 12 months, the two-year Treasury yield rose 134 basis
points (1.34%) to 4.02% while the 10-year Treasury yield declined 22 basis
points to 4.28% - making the spread between the two just 26 basis points. At
period-end, the 10-year Treasury yield finally appeared to be on a slow upward
trend after falling below 4% in June.
Financial markets are likely to face continued crosscurrents for the remainder
of 2005. Nevertheless, opportunities do exist and we encourage you to work
with your financial advisor to diversify your portfolio among a variety of
asset types. This can help to diffuse risk while also tapping into the
potential benefits of a broader range of investment alternatives. As always,
we thank you for trusting Merrill Lynch Investment Managers with your
investment assets, and we look forward to serving you in the months and years
ahead.
Sincerely,
(Robert C. Doll, Jr.)
Robert C. Doll, Jr.
President and Director
MERRILL LYNCH MID CAP VALUE OPPORTUNITIES FUND JULY 31, 2005
A Discussion With Your Fund's Portfolio Manager
We maintained a relatively conservative market position throughout the period
and continue to find new opportunities in the $2 billion to $5 billion market-
capitalization range.
How did the Fund perform during the period in light of the existing market
conditions?
For the six-month period ended July 31, 2005, Merrill Lynch Mid Cap Value
Opportunities Fund's Class A, Class B, Class C, Class I and Class R Shares had
total returns of +10.06%, +9.55%, +9.50%, +10.04% and +9.79%, respectively.
(Fund results shown do not reflect sales charges and would be lower if sales
charges were included. Complete performance information can be found on pages
6 - 7 of this report to shareholders.) For the same period, the benchmark
Standard & Poor's (S&P) MidCap 400 Index returned +12.17% and the Lipper Mid
Cap Value Funds category had an average return of +10.14%. (Funds in this
Lipper category invest primarily in stocks of mid-capitalization companies
that are considered to be undervalued relative to a major unmanaged stock
index.)
After rising sharply in the fourth quarter of 2004, the major equity indexes
struggled to find their footing in the early months of 2005. Investor concerns
centered on heightened inflation expectations, a weak U.S. dollar, continuing
interest rate hikes by the Federal Reserve Board and fears that economic and
corporate earnings growth had peaked. Oil prices fluctuated and achieved
record highs during the six-month period. Gradually, in June and July,
sentiment began to change. Corporate earnings were stronger than expected,
first quarter gross domestic product was revised upward, and consumer
confidence rose to a three-year high.
For the six-month period ended July 31, 2005, investors favored a more cautious
approach, which allowed the S&P MidCap 400 Index (+12.17%) to outperform
the smaller cap and more speculative Russell 2000 Index (+9.58%). This
outperformance was attributable to the favorable earnings growth prospects
for mid cap stocks, and was further supported by lower valuations in the mid
cap segment of the market. We also saw value stocks outperform their growth
counterparts as represented by the +13.18% return of the Russell Midcap
Value Index versus the +10.60% return of the Russell Midcap Growth Index.
The Fund's underperformance relative to the benchmark was in part attributed
to our lower average market capitalization during a period when smaller stocks
underperformed. Apart from the lower capitalization bias, we maintained a
conservative market position in what was largely a period of investor caution.
What factors most influenced Fund performance?
Another factor hindering performance relative to our benchmark was stock
selection in the consumer discretionary and consumer staples sectors. Among
the Fund's bottom three performers were ConAgra Foods, Inc. in consumer
staples and TJX Cos., Inc. in consumer discretionary, which together cost the
Fund about 90 basis points (.90%) in relative performance. ConAgra, a leading
producer of packaged and frozen foods, declined due to weaker operating
results, while retailer TJX suffered from disappointing same-store sales
comparisons. Rounding out the bottom three was Tech Data Corp., a technology
distributor that declined on concerns about profit margins in Europe.
Stock selection in the information technology, industrials and health care
sectors benefited performance relative to the S&P MidCap 400 Index. The
portfolio's top-performing stock, and our largest investment, was WebMD Corp.,
a provider of healthcare connectivity solutions. The stock appreciated sharply
on the announcement of an initial public offering for part of the company's
Internet portal business. Also among the Fund's top three performers was
SunGard Data Systems, Inc., a provider of investment support systems, and
freight carrier USF Corp., which falls into the industrials sector. Both were
the subject of corporate acquisitions during the period.
In absolute terms, energy was the Fund's best-performing sector over the
six-month period. An overweight position and favorable stock selection in
this strong-performing sector benefited results. Higher oil prices improved
the fortunes of all stocks in the energy sector and caused an increase in
merger-and-acquisition activity.
MERRILL LYNCH MID CAP VALUE OPPORTUNITIES FUND JULY 31, 2005
What changes were made to the portfolio during the period?
Based on sharp stock appreciation and record-high energy prices, we took some
profits in energy stocks, while maintaining a favorable sector view. We also
made a number of changes within the industrials sector, adding companies
focused on engineering and construction and energy services. Recent additions
in this area included Maverick Tube Corp., a leading producer of steel tube
used in oil and gas drilling, and Chicago Bridge & Iron Co., an engineering
and construction firm.
We reduced the Portfolio's technology exposure, taking profits in selected
software and Internet issues. Proceeds from our technology sales were
primarily invested in the financial services sector. The Fund has been
underweighted in regional banks over the past few years. However, financial
services stocks declined to more attractive levels earlier this year on
interest rate fears and concerns about a flattening yield curve. We believe
that the flatter yield curve is a temporary phenomenon and that financial
services firms can continue to prosper despite higher short-term interest
rates.
We have been active buyers in the health care sector, particularly of specialty
pharmaceutical stocks. We believe that valuations are compelling by historical
standards given concerns about generic competition. Some concerns are justified
but, in certain instances, we believe investors are underestimating the ability
of pharmaceutical companies to respond with licensing agreements and further
market consolidation.
Sales during the period were primarily motivated as individual stocks
appreciated and reached our internal price targets. Notable, however, was an
increase in merger-and-acquisition activity, particularly among small and mid
cap issues. Several Fund holdings were involved in corporate acquisitions
during the past six months. In one of the biggest buyouts of the year, private
investment firm Silver Lake Partners announced plans to acquire SunGard Data
Systems, one of the Fund's top-performing holdings during the period. Another
top performer, USF Corp., was acquired by Yellow Roadway Corp., while
transportation company CNF Inc., one of the portfolio's ten largest holdings
earlier in the year, sold its forwarding business to United Parcel Service,
Inc. In technology, software provider Ascential Software Corp. was acquired by
International Business Machines Corp.
How would you characterize the Fund's position at the close of the period?
Relative to the S&P MidCap 400 Index, the Fund ended the period most
overweight in the financials and industrials sectors and most underweight in
consumer discretionary and utilities. In absolute terms, the Fund's leading
exposure was in financials, followed by information technology and
industrials.
We are concerned that further meaningful outperformance of very small
companies is unsustainable, and believe that mid cap companies will continue
to outperform in the second half of 2005. Further merger-and-acquisition
activity could prolong the favorable investment performance of mid cap stocks.
We are focusing new purchases on companies in the $2 billion to $5 billion
market cap range, where we believe investment opportunities are most
plentiful.
R. Elise Baum, CFA
Vice President and Portfolio Manager
August 10, 2005
MERRILL LYNCH MID CAP VALUE OPPORTUNITIES FUND JULY 31, 2005
Performance Data
About Fund Performance
Investors are able to purchase shares of the Fund through multiple pricing
alternatives:
* Class A Shares incur a maximum initial sales charge (front-end load) of 5.25%
and an account maintenance fee of 0.25% per year (but no distribution fee).
* Class B Shares are subject to a maximum contingent deferred sales charge of
4% declining to 0% after 6 years. In addition, Class B Shares are subject to a
distribution fee of 0.75% per year and an account maintenance fee of 0.25% per
year. These shares automatically convert to Class A Shares after approximately
eight years. (There is no initial sales charge for automatic share
conversions.) All returns for periods greater than eight years reflect this
conversion.
* Class C Shares are subject to a distribution fee of 0.75% per year and an
account maintenance fee of 0.25% per year. In addition, Class C Shares are
subject to a 1% contingent deferred sales charge if redeemed within one year
of purchase.
* Class I Shares incur a maximum initial sales charge (front-end load) of
5.25% and bear no ongoing distribution or account maintenance fees. Class I
Shares are available only to eligible investors.
* Class R Shares do not incur a maximum sales charge (front-end load) or
deferred sales charge. These shares are subject to a distribution fee of 0.25%
per year and an account maintenance fee of 0.25% per year. Class R Shares are
available only to certain retirement plans. Prior to inception, Class R Share
performance results are those of Class I Shares (which have no distribution or
account maintenance fees) restated for Class R Share fees.
None of the past results shown should be considered a representation of future
performance. Current performance may be lower or higher than the performance
data quoted. Refer to www.mlim.ml.com to obtain performance data current to
the most recent month-end. Performance results do not include the deduction of
taxes that a shareholder would pay on fund distributions or the redemption of
fund shares. Figures shown in each of the following tables assume reinvestment
of all dividends and capital gain distributions, if any, 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
6-Month 12-Month 10-Year
As of July 31, 2005 Total Return Total Return Total Return
ML Mid Cap Value Opportunities Fund--Class A Shares* +10.06% +21.62% +212.20%
ML Mid Cap Value Opportunities Fund--Class B Shares* + 9.55 +20.59 +191.81
ML Mid Cap Value Opportunities Fund--Class C Shares* + 9.50 +20.56 +186.58
ML Mid Cap Value Opportunities Fund--Class I Shares* +10.04 +21.78 +219.42
ML Mid Cap Value Opportunities Fund--Class R Shares* + 9.79 +21.25 +205.35
S&P MidCap 400 Index** +12.17 +25.89 +292.97
* Investment results shown do not reflect sales charges; results shown would be lower if a sales charge
was included. Cumulative 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.
** This unmanaged Index is a market value-weighted index that consists of 400 domestic stocks and measures
the performance of the mid-size company segment of the U.S. market.
MERRILL LYNCH MID CAP VALUE OPPORTUNITIES FUND JULY 31, 2005
Performance Data (concluded)
Average Annual Total Return
Return Without Return With
Sales Charge Sales Charge**
Class A Shares*
One Year Ended 7/31/05 +21.62% +15.24%
Five Years Ended 7/31/05 +12.49 +11.28
Ten Years Ended 7/31/05 +12.06 +11.46
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
Return Return
Without CDSC With CDSC**
Class B Shares*
One Year Ended 7/31/05 +20.59% +16.59%
Five Years Ended 7/31/05 +11.58 +11.32
Ten Years Ended 7/31/05 +11.30 +11.30
* Maximum contingent deferred sales charge is 4% and is reduced
to 0% after six years.
** Assuming payment of applicable contingent deferred sales
charge.
Return Return
Without CDSC With CDSC**
Class C Shares*
One Year Ended 7/31/05 +20.56% +19.56%
Five Years Ended 7/31/05 +11.54 +11.54
Ten Years Ended 7/31/05 +11.10 +11.10
* Maximum contingent deferred sales charge is 1% and is reduced
to 0% after one year.
** Assuming payment of applicable contingent deferred sales
charge.
Return Without Return With
Sales Charge Sales Charge**
Class I Shares*
One Year Ended 7/31/05 +21.78% +15.38%
Five Years Ended 7/31/05 +12.75 +11.54
Ten Years Ended 7/31/05 +12.31 +11.71
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
Class R Shares Return
One Year Ended 7/31/05 +21.25%
Five Years Ended 7/31/05 +12.30
Ten Years Ended 7/31/05 +11.81
MERRILL LYNCH MID CAP VALUE OPPORTUNITIES FUND JULY 31, 2005
Disclosure of Expenses
Shareholders of this Fund may incur the following charges: (a) expenses
related to transactions, including sales charges, redemption fees and exchange
fees; and (b) operating expenses including advisory fees, distribution fees
including 12(b)-1 fees, and other Fund expenses. The following example (which
is based on a hypothetical investment of $1,000 invested on February 1, 2005
and held through July 31, 2005) is intended to assist shareholders both in
calculating expenses based on an investment in the Fund and in comparing these
expenses with similar costs of investing in other mutual funds.
The first table below provides information about actual account values and
actual expenses. In order to estimate the expenses a shareholder paid during
the period covered by this report, shareholders can divide their account value
by $1,000 and then multiply the result by the number in the first line under
the heading entitled "Expenses Paid During the Period."
The second table below provides information about hypothetical account values
and hypothetical expenses based on the Fund's actual expense ratio and an
assumed rate of return of 5% per year before expenses. In order to assist
shareholders in comparing the ongoing expenses of investing in this Fund and
other funds, compare the 5% hypothetical example with the 5% hypothetical
examples that appear in other funds' shareholder reports.
The expenses shown in the table are intended to highlight shareholders ongoing
costs only and do not reflect any transactional expenses, such as sales
charges, redemption fees or exchange fees. Therefore, the second table is
useful in comparing ongoing expenses only, and will not help shareholders
determine the relative total expenses of owning different funds. If these
transactional expenses were included, shareholder expenses would have been
higher.
Expenses Paid
Beginning Ending During the Period*
Account Value Account Value February 1, 2005
February 1, July 31, to July 31,
2005 2005 2005
Actual
Class A $1,000 $1,100.60 $ 6.44
Class B $1,000 $1,095.50 $10.43
Class C $1,000 $1,095.00 $10.48
Class I $1,000 $1,100.40 $ 5.15
Class R $1,000 $1,097.90 $ 7.72
Hypothetical (5% annual return before expenses)**
Class A $1,000 $1,018.37 $ 6.19
Class B $1,000 $1,014.54 $10.03
Class C $1,000 $1,014.50 $10.08
Class I $1,000 $1,019.60 $ 4.95
Class R $1,000 $1,017.14 $ 7.42
* For each class of the Fund, expenses are equal to the annualized expense ratio for the class
(1.25% for Class A, 2.03% for Class B, 2.04% for Class C, 1.00% for Class I and 1.50% for Class R),
multiplied by the average account value over the period, multiplied by 179/365 (to reflect the
one-half year period shown).
** Hypothetical 5% annual return before expenses is calculated by pro-rating the number of days in the
most recent fiscal half-year divided by 365.
MERRILL LYNCH MID CAP VALUE OPPORTUNITIES FUND JULY 31, 2005
Portfolio Information
As of July 31, 2005
Percent of
Ten Largest Equity Holdings Net Assets
WebMD Corp. 3.4%
Convergys Corp. 2.8
Cinergy Corp. 2.4
Noble Energy, Inc. 2.3
Sovereign Bancorp, Inc. 2.1
Tech Data Corp. 2.1
Medicis Pharmaceutical Corp. Class A 2.1
King Pharmaceuticals, Inc. 2.1
E*Trade Financial Corp. 2.0
Conseco, Inc. 2.0
Percent of
Five Largest Industries* Net Assets
Specialty Retail 7.0%
Commercial Banks 6.0
Electronic Equipment & Instruments 5.0
Thrifts & Mortgage Finance 4.8
IT Services 4.3
Percent of
Total
Sector* Representation Investments
Financials 19.8%
Information Technology 15.3
Industrials 12.7
Consumer Discretionary 11.5
Energy 11.0
Health Care 10.4
Materials 4.0
Utilities 3.7
Consumer Staples 2.7
Telecommunications Services 1.3
Other** 7.6
* For Fund compliance purposes, "Industries" and "Sector" mean
any one or more of the industry and sector sub-classifications
used by one or more widely recognized market indexes or ratings
group indexes, and/or as defined by Fund management. This
definition may not apply for purposes of this report, which
may combine such industry and sector sub-classifications for
reporting ease.
** Includes portfolio holdings in short-term investments and
certain exchange-traded funds.
MERRILL LYNCH MID CAP VALUE OPPORTUNITIES FUND JULY 31, 2005
Schedule of Investments (in U.S. dollars)
Shares
Industry* Common Stocks Held Value
North America
Canada--1.9%
Diversified Telecommunication
Services--1.3%
BCE, Inc. 254,600 $ 6,151,136
Semiconductors & Semiconductor
Equipment--0.6%
ATI Technologies, Inc. (b) 224,493 2,826,367
Total Common Stocks in Canada 8,977,503
United States--86.7%
Aerospace & Defense--1.4%
Raytheon Co. 161,100 6,336,063
Air Freight & Logistics--0.3%
Ryder System, Inc. 41,100 1,602,489
Auto Components--0.5%
Lear Corp. 51,300 2,194,101
Biotechnology--2.4%
Cephalon, Inc. (b)(e) 87,500 3,666,250
Human Genome Sciences, Inc. (b) 129,000 1,889,850
Medimmune, Inc. (b) 162,600 4,619,466
Millennium Pharmaceuticals, Inc. (b) 79,700 823,301
-------------
10,998,867
Capital Markets--3.0%
E*Trade Financial Corp. (b) 603,700 9,363,387
Janus Capital Group, Inc. 317,500 4,768,850
-------------
14,132,237
Commercial Banks--6.0%
The Colonial BancGroup, Inc. 348,100 8,100,287
Compass Bancshares, Inc. 112,700 5,433,267
First Midwest Bancorp, Inc. 174,075 6,496,479
TD Banknorth, Inc. 252,828 7,529,218
-------------
27,559,251
Commercial Services
& Supplies--4.1%
Avery Dennison Corp. (e) 88,900 5,037,963
Cendant Corp. 301,600 6,442,176
Corrections Corp. of America (b) 58,800 2,210,292
Manpower, Inc. 107,100 5,119,380
-------------
18,809,811
Communications
Equipment--1.6%
Tellabs, Inc. (b) 762,400 7,410,528
Construction &
Engineering--1.6%
Fluor Corp. 114,700 7,317,860
Construction Materials--1.3%
Martin Marietta Materials, Inc. 80,300 5,837,007
Diversified Financial
Services--0.9%
Citigroup, Inc. 99,500 4,328,250
Shares
Industry* Common Stocks Held Value
North America (continued)
United States (continued)
Electric Utilities--2.4%
Cinergy Corp. 250,800 $ 11,072,820
Electronic Equipment
& Instruments--5.0%
Anixter International, Inc. (b)(e) 210,700 8,756,692
Ingram Micro, Inc. Class A (b) 249,900 4,658,136
Tech Data Corp. (b) 251,100 9,737,658
-------------
23,152,486
Energy Equipment
& Services--4.2%
BJ Services Co. 107,400 6,550,326
Diamond Offshore Drilling 32,200 1,837,332
Maverick Tube Corp. (b) 180,800 5,997,136
Rowan Cos., Inc. (b)(e) 152,700 5,216,232
-------------
19,601,026
Food Products--2.7%
ConAgra Foods, Inc. 231,400 5,255,094
Del Monte Foods Co. (b) 288,100 3,238,244
Smithfield Foods, Inc. (b) 161,300 4,213,156
-------------
12,706,494
Health Care Providers
& Services--3.4%
WebMD Corp. (b) 1,497,600 15,889,536
Household Durables--0.2%
Newell Rubbermaid, Inc. 34,600 860,502
IT Services--4.3%
Computer Sciences Corp. (b) 77,200 3,534,216
Convergys Corp. (b) 879,100 12,790,905
Sabre Holdings Corp. Class A 187,900 3,607,680
-------------
19,932,801
Industrial Conglomerates--1.3%
Teleflex, Inc. 92,700 6,148,791
Insurance--3.8%
Conseco, Inc. (b) 424,600 9,260,526
Protective Life Corp. 189,100 8,237,196
-------------
17,497,722
Internet Software
& Services--1.1%
Vignette Corp. (b) 321,244 5,066,018
Leisure Equipment
& Products--1.3%
Mattel, Inc. 313,900 5,854,235
Machinery--2.2%
Eaton Corp. 53,500 3,495,690
ITT Industries, Inc. 62,300 6,628,720
-------------
10,124,410
Media--1.8%
Knight-Ridder, Inc. 77,300 4,835,888
Liberty Global, Inc. (b) 72,600 3,444,144
-------------
8,280,032
MERRILL LYNCH MID CAP VALUE OPPORTUNITIES FUND JULY 31, 2005
Schedule of Investments (continued) (in U.S. dollars)
Shares
Industry* Common Stocks Held Value
North America (concluded)
United States (concluded)
Metals & Mining--1.5%
Reliance Steel & Aluminum Co. 121,200 $ 5,662,464
Wheeling-Pittsburgh Corp. (b) 62,200 1,181,178
-------------
6,843,642
Multiline Retail--1.2%
Dollar Tree Stores, Inc. (b) 126,700 3,166,233
Saks, Inc. (b) 101,600 2,155,952
-------------
5,322,185
Oil, Gas & Consumable Fuels--3.8%
Murphy Oil Corp. 85,200 4,519,008
Noble Energy, Inc. 130,100 10,734,551
Sunoco, Inc. 19,200 2,414,016
-------------
17,667,575
Paper & Forest Products--1.3%
Georgia-Pacific Corp. 178,000 6,078,700
Pharmaceuticals--4.2%
King Pharmaceuticals, Inc. (b) 853,800 9,519,870
Medicis Pharmaceutical Corp.
Class A 286,600 9,721,472
-------------
19,241,342
Real Estate--1.2%
Equity Office Properties Trust 161,400 5,721,630
Road & Rail--1.2%
JB Hunt Transport Services, Inc. 278,600 5,468,918
Semiconductors & Semiconductor
Equipment--0.3%
Micron Technology, Inc. (b) 101,900 1,210,572
Software--2.8%
Novell, Inc. (b) 1,202,700 7,312,416
TIBCO Software, Inc. (b) 719,000 5,529,110
-------------
12,841,526
Specialty Retail--7.0%
Foot Locker, Inc. 234,100 5,852,500
The Gap, Inc. 229,500 4,844,745
Linens `N Things, Inc. (b) 272,100 7,142,625
RadioShack Corp. 231,400 5,430,958
TJX Cos., Inc. 383,800 9,023,138
-------------
32,293,966
Thrifts & Mortgage
Finance--4.8%
New York Community Bancorp, Inc. 310,700 5,704,452
Sovereign Bancorp, Inc. 413,300 9,915,067
Webster Financial Corp. 138,700 6,685,340
-------------
22,304,859
Trading Companies
& Distributors--0.6%
WW Grainger, Inc. 44,800 2,791,936
Total Common Stocks in the United States 400,500,188
Total Common Stocks in North America--88.6% 409,477,691
Shares
Industry* Common Stocks Held Value
Western Europe
Netherlands--0.3%
Construction &
Engineering--0.3%
Chicago Bridge & Iron Co. NV 54,700 $ 1,528,865
Total Common Stocks in the Netherlands 1,528,865
Switzerland--0.8%
Biotechnology--0.8%
Serono SA (a) 199,900 3,370,314
Total Common Stocks in Switzerland 3,370,314
Total Common Stocks in
Western Europe--1.1% 4,899,179
Total Common Stocks
(Cost--$352,416,572)--89.7% 414,376,870
Exchange-Traded
Funds
iShares Russell 2000 Index Fund (e) 68,900 4,669,353
iShares S&P SmallCap 600 Index Fund (e) 96,100 5,600,708
Midcap SPDR Trust Series 1 35,300 4,643,009
SPDR Trust Series 1 18,500 2,289,375
-------------
17,202,445
Electric Utilities--1.4%
iShares Dow Jones US
Utilities Sector Index Fund 82,600 6,522,922
Oil, Gas & Consumable
Fuels--3.2%
Energy Select Sector SPDR Fund 74,800 3,560,480
iShares Goldman Sachs Natural
Resources Index Fund 60,200 4,866,568
Oil Service HOLDRs Trust 55,600 6,288,916
-------------
14,715,964
Real Estate--0.5%
iShares Dow Jones US
Real Estate Index Fund 34,400 2,332,320
Total Exchange-Traded Funds
(Cost--$37,413,740)--8.8% 40,773,651
Short-Term Beneficial
Securities Interest
Merrill Lynch Liquidity Series, LLC
Cash Sweep Series I (c) $ 2,954,408 2,954,408
Merrill Lynch Liquidity Series, LLC
Money Market Series (c)(d) 15,766,950 15,766,950
Total Short-Term Securities
(Cost--$18,721,358)--4.1% 18,721,358
Total Investments (Cost--$408,551,670**)--102.6% 473,871,879
Liabilities in Excess of Other Assets--(2.6%) (11,953,386)
-------------
Net Assets--100.0% $ 461,918,493
=============
MERRILL LYNCH MID CAP VALUE OPPORTUNITIES FUND JULY 31, 2005
Schedule of Investments (concluded) (in U.S. dollars)
* For Fund compliance purposes, "Industry" means any one or more of the
industry sub-classifications used by one or more widely recognized market
indexes or ratings group indexes, and/or as defined by Fund management.
This definition may not apply for purposes of this report, which may
combine such industry sub-classifications for reporting ease.
** The cost and unrealized appreciation (depreciation) of investments as
of July 31, 2005, as computed for federal income tax purposes, were as
follows:
Aggregate cost $ 411,395,669
===============
Gross unrealized appreciation $ 70,680,516
Gross unrealized depreciation (8,204,306)
---------------
Net unrealized appreciation $ 62,476,210
===============
(a) Depositary Receipts.
(b) Non-income producing security.
(c) Investments in companies considered to be an affiliate of the Fund,
for purposes of Section 2(a)(3) of the Investment Company Act of 1940,
were as follows:
Net Interest
Affiliate Activity Income
Merrill Lynch Liquidity Series, LLC
Cash Sweep Series I $ (7,860,065) $102,427
Merrill Lynch Liquidity Series, LLC
Money Market Series (32,198,000) $ 12,497
(d) Security was purchased with the cash proceeds from securities loans.
(e) Security, or a portion of security, is on loan.
See Notes to Financial Statements.
MERRILL LYNCH MID CAP VALUE OPPORTUNITIES FUND JULY 31, 2005
Statement of Assets and Liabilities
As of July 31, 2005
Assets
Investments in unaffiliated securities, at value (including securities
loaned of $15,258,046) (identified cost--$389,830,312) $ 455,150,521
Investments in affiliated securities, at value (identified cost--$18,721,358) 18,721,358
Cash 24,028
Receivables:
Securities sold $ 9,432,180
Dividends 471,350
Capital shares sold 367,427
Interest from affiliates 20,288
Securities lending 1,760 10,293,005
---------------
Prepaid expenses and other assets 385,327
---------------
Total assets 484,574,239
---------------
Liabilities
Collateral on securities loaned, at value 15,766,950
Payables:
Securities purchased 5,403,330
Capital shares redeemed 855,580
Investment adviser 226,374
Distributor 188,089
Other affiliates 182,277 6,855,650
---------------
Accrued expenses 33,146
---------------
Total liabilities 22,655,746
---------------
Net Assets
Net assets $ 461,918,493
===============
Net Assets Consist of
Class A Shares of Capital Stock, $.10 par value, 40,000,000 shares authorized $ 463,875
Class B Shares of Capital Stock, $.10 par value, 40,000,000 shares authorized 600,396
Class C Shares of Capital Stock, $.10 par value, 40,000,000 shares authorized 473,851
Class I Shares of Capital Stock, $.10 par value, 20,000,000 shares authorized 685,988
Class R Shares of Capital Stock, $.10 par value, 40,000,000 shares authorized 57,727
Paid-in capital in excess of par 352,661,698
Accumulated investment loss--net $ (693,777)
Undistributed realized capital gains--net 42,348,526
Unrealized appreciation--net 65,320,209
---------------
Total accumulated earnings--net 106,974,958
---------------
Net Assets $ 461,918,493
===============
Net Asset Value
Class A--Based on net assets of $95,679,517 and 4,638,750 shares outstanding $ 20.63
===============
Class B--Based on net assets of $118,506,649 and 6,003,958 shares outstanding $ 19.74
===============
Class C--Based on net assets of $93,126,662 and 4,738,514 shares outstanding $ 19.65
===============
Class I--Based on net assets of $143,124,230 and 6,859,884 shares outstanding $ 20.86
===============
Class R--Based on net assets of $11,481,435 and 577,274 shares outstanding $ 19.89
===============
See Notes to Financial Statements.
MERRILL LYNCH MID CAP VALUE OPPORTUNITIES FUND JULY 31, 2005
Statement of Operations
For the Six Months Ended July 31, 2005
Investment Income
Dividends (net of $12,608 foreign withholding tax) $ 2,525,800
Interest from affiliates 102,427
Securities lending--net 12,497
---------------
Total income 2,640,724
---------------
Expenses
Investment advisory fees $ 1,398,094
Account maintenance and distribution fees--Class B 582,243
Account maintenance and distribution fees--Class C 436,824
Transfer agent fees--Class B 155,709
Transfer agent fees--Class I 150,279
Transfer agent fees--Class C 120,103
Account maintenance fees--Class A 109,079
Transfer agent fees--Class A 101,106
Accounting services 88,225
Custodian fees 36,543
Registration fees 36,427
Professional fees 30,004
Printing and shareholder reports 29,175
Account maintenance and distribution fees--Class R 23,437
Directors' fees and expenses 10,967
Transfer agent fees--Class R 10,885
Pricing fees 469
Other 14,932
---------------
Total expenses 3,334,501
---------------
Investment loss--net (693,777)
---------------
Realized & Unrealized Gain (Loss)--Net
Realized gain on investments--net 45,192,549
Change in unrealized appreciation on investments--net (3,005,711)
---------------
Total realized and unrealized gain--net 42,186,838
---------------
Net Increase in Net Assets Resulting from Operations $ 41,493,061
===============
See Notes to Financial Statements.
MERRILL LYNCH MID CAP VALUE OPPORTUNITIES FUND JULY 31, 2005
Statements of Changes in Net Assets
For the Six For the
Months Ended Year Ended
July 31, January 31,
Increase (Decrease) in Net Assets: 2005 2005
Operations
Investment loss--net $ (693,777) $ (2,316,973)
Realized gain--net 45,192,549 37,752,452
Change in unrealized appreciation--net (3,005,711) 8,837,274
--------------- ---------------
Net increase in net assets resulting from operations 41,493,061 44,272,753
--------------- ---------------
Distributions to Shareholders
Realized gain--net:
Class A (2,894,248) (566,533)
Class B (2,621,633) (916,167)
Class C (2,245,737) (639,671)
Class I (4,583,681) (811,437)
Class R (357,637) (41,754)
--------------- ---------------
Net decrease in net assets resulting from distributions to shareholders (12,702,936) (2,975,562)
--------------- ---------------
Capital Share Transactions
Net increase (decrease) in net assets derived from capital share transactions (978,151) 14,070,858
--------------- ---------------
Net Assets
Total increase in net assets 27,811,974 55,368,049
Beginning of period 434,106,519 378,738,470
--------------- ---------------
End of period* $ 461,918,493 $ 434,106,519
=============== ===============
* Accumulated investment loss--net $ (693,777) --
=============== ===============
See Notes to Financial Statements.
MERRILL LYNCH MID CAP VALUE OPPORTUNITIES FUND JULY 31, 2005
Financial Highlights
Class A
For the Six
Months Ended
The following per share data and ratios have been derived July 31, For the Year Ended January 31,
from information provided in the financial statements. 2005 2005 2004 2003 2002
Per Share Operating Performance
Net asset value, beginning of period $ 19.33 $ 17.39 $ 12.29 $ 17.04 $ 16.14
---------- ---------- ---------- ---------- ----------
Investment income (loss)--net*** --++ (.04) (.05) (.04) --++
Realized and unrealized gain (loss)--net 1.94 2.11 5.15 (4.40) 1.60
---------- ---------- ---------- ---------- ----------
Total from investment operations 1.94 2.07 5.10 (4.44) 1.60
---------- ---------- ---------- ---------- ----------
Less distributions from realized gain--net (.64) (.13) -- (.31) (.70)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 20.63 $ 19.33 $ 17.39 $ 12.29 $ 17.04
========== ========== ========== ========== ==========
Total Investment Return**
Based on net asset value per share 10.06%++++ 11.90% 41.50% (26.12%) 10.31%
========== ========== ========== ========== ==========
Ratios to Average Net Assets
Expenses 1.25%* 1.26% 1.34% 1.37% 1.36%
========== ========== ========== ========== ==========
Investment loss--net (.02%)* (.20%) (.34%) (.26%) (.02%)
========== ========== ========== ========== ==========
Supplemental Data
Net assets, end of period (in thousands) $ 95,680 $ 85,184 $ 62,061 $ 31,504 $ 36,225
========== ========== ========== ========== ==========
Portfolio turnover 60.13% 82.43% 86.16% 73.90% 98.94%
========== ========== ========== ========== ==========
* Annualized.
** Total investment returns exclude the effects of sales charges.
*** Based on average shares outstanding.
++ Amount is less than $(.01) per share.
++++ Aggregate total investment return.
See Notes to Financial Statements.
MERRILL LYNCH MID CAP VALUE OPPORTUNITIES FUND JULY 31, 2005
Financial Highlights (continued)
Class B
For the Six
Months Ended
The following per share data and ratios have been derived July 31, For the Year Ended January 31,
from information provided in the financial statements. 2005 2005 2004 2003 2002
Per Share Operating Performance
Net asset value, beginning of period $ 18.43 $ 16.72 $ 11.90 $ 16.64 $ 15.86
---------- ---------- ---------- ---------- ----------
Investment loss--net*** (.07) (.17) (.16) (.15) (.12)
Realized and unrealized gain (loss)--net 1.82 2.01 4.98 (4.29) 1.56
---------- ---------- ---------- ---------- ----------
Total from investment operations 1.75 1.84 4.82 (4.44) 1.44
---------- ---------- ---------- ---------- ----------
Less distributions from realized gain--net (.44) (.13) -- (.30) (.66)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 19.74 $ 18.43 $ 16.72 $ 11.90 $ 16.64
========== ========== ========== ========== ==========
Total Investment Return**
Based on net asset value per share 9.55%++ 11.00% 40.50% (26.75%) 9.45%
========== ========== ========== ========== ==========
Ratios to Average Net Assets
Expenses 2.03%* 2.05% 2.15% 2.17% 2.17%
========== ========== ========== ========== ==========
Investment loss--net (.81%)* (.99%) (1.14%) (1.05%) (.78%)
========== ========== ========== ========== ==========
Supplemental Data
Net assets, end of period (in thousands) $ 118,507 $ 125,145 $ 139,610 $ 115,748 $ 162,316
========== ========== ========== ========== ==========
Portfolio turnover 60.13% 82.43% 86.16% 73.90% 98.94%
========== ========== ========== ========== ==========
* Annualized.
** Total investment returns exclude the effects of sales charges.
*** Based on average shares outstanding.
++ Aggregate total investment return.
See Notes to Financial Statements.
MERRILL LYNCH MID CAP VALUE OPPORTUNITIES FUND JULY 31, 2005
Financial Highlights (continued)
Class C
For the Six
Months Ended
The following per share data and ratios have been derived July 31, For the Year Ended January 31,
from information provided in the financial statements. 2005 2005 2004 2003 2002
Per Share Operating Performance
Net asset value, beginning of period $ 18.39 $ 16.68 $ 11.88 $ 16.61 $ 15.84
---------- ---------- ---------- ---------- ----------
Investment loss--net*** (.07) (.18) (.16) (.15) (.12)
Realized and unrealized gain (loss)--net 1.81 2.02 4.96 (4.27) 1.55
---------- ---------- ---------- ---------- ----------
Total from investment operations 1.74 1.84 4.80 (4.42) 1.43
---------- ---------- ---------- ---------- ----------
Less distributions from realized gain--net (.48) (.13) -- (.31) (.66)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 19.65 $ 18.39 $ 16.68 $ 11.88 $ 16.61
========== ========== ========== ========== ==========
Total Investment Return**
Based on net asset value per share 9.50%++ 11.03% 40.40% (26.73%) 9.38%
========== ========== ========== ========== ==========
Ratios to Average Net Assets
Expenses 2.04%* 2.06% 2.16% 2.19% 2.19%
========== ========== ========== ========== ==========
Investment loss--net (.81%)* (1.00%) (1.15%) (1.07%) (.79%)
========== ========== ========== ========== ==========
Supplemental Data
Net assets, end of period (in thousands) $ 93,127 $ 89,771 $ 84,755 $ 67,233 $ 80,227
========== ========== ========== ========== ==========
Portfolio turnover 60.13% 82.43% 86.16% 73.90% 98.94%
========== ========== ========== ========== ==========
* Annualized.
** Total investment returns exclude the effects of sales charges.
*** Based on average shares outstanding.
++ Aggregate total investment return.
See Notes to Financial Statements.
MERRILL LYNCH MID CAP VALUE OPPORTUNITIES FUND JULY 31, 2005
Financial Highlights (continued)
Class I
For the Six
Months Ended
The following per share data and ratios have been derived July 31, For the Year Ended January 31,
from information provided in the financial statements. 2005 2005 2004 2003 2002
Per Share Operating Performance
Net asset value, beginning of period $ 19.58 $ 17.56 $ 12.38 $ 17.12 $ 16.20
---------- ---------- ---------- ---------- ----------
Investment income (loss)--net*** .02 .01 (.01) --++ .03
Realized and unrealized gain (loss)--net 1.94 2.14 5.19 (4.42) 1.62
---------- ---------- ---------- ---------- ----------
Total from investment operations 1.96 2.15 5.18 (4.42) 1.65
---------- ---------- ---------- ---------- ----------
Less distributions from realized gain--net (.68) (.13) -- (.32) (.73)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 20.86 $ 19.58 $ 17.56 $ 12.38 $ 17.12
========== ========== ========== ========== ==========
Total Investment Return**
Based on net asset value per share 10.04%++++ 12.24% 41.84% (25.92%) 10.56%
========== ========== ========== ========== ==========
Ratios to Average Net Assets
Expenses 1.00%* 1.01% 1.09% 1.12% 1.10%
========== ========== ========== ========== ==========
Investment income (loss)--net .23%* .04% (.09%) (.01%) .19%
========== ========== ========== ========== ==========
Supplemental Data
Net assets, end of period (in thousands) $ 143,124 $ 126,651 $ 91,845 $ 59,125 $ 72,570
========== ========== ========== ========== ==========
Portfolio turnover 60.13% 82.43% 86.16% 73.90% 98.94%
========== ========== ========== ========== ==========
* Annualized.
** Total investment returns exclude the effects of sales charges.
*** Based on average shares outstanding.
++ Amount is less than $(.01) per share.
++++ Aggregate total investment return.
See Notes to Financial Statements.
MERRILL LYNCH MID CAP VALUE OPPORTUNITIES FUND JULY 31, 2005
Financial Highlights (concluded)
Class R
For the Six For the For the Period
Months Ended Year Ended February 4, 2003++
The following per share data and ratios have been derived July 31, January 31, to January 31,
from information provided in the financial statements. 2005 2005 2004
Per Share Operating Performance
Net asset value, beginning of period $ 18.71 $ 16.87 $ 11.81
------------ ------------ ------------
Investment loss--net*** (.02) (.08) (.09)
Realized and unrealized gain--net 1.84 2.05 5.15
------------ ------------ ------------
Total from investment operations 1.82 1.97 5.06
------------ ------------ ------------
Less distributions from realized gain--net (.64) (.13) --
------------ ------------ ------------
Net asset value, end of period $ 19.89 $ 18.71 $ 16.87
============ ============ ============
Total Investment Return**
Based on net asset value per share 9.79%++++ 11.68% 42.85%+++
============ ============ ============
Ratios to Average Net Assets
Expenses 1.50%* 1.51% 1.53%*
============ ============ ============
Investment loss--net (.26%)* (.45%) (.58%)*
============ ============ ============
Supplemental Data
Net assets, end of period (in thousands) $ 11,481 $ 7,356 $ 467
============ ============ ============
Portfolio turnover 60.13% 82.43% 86.16%
============ ============ ============
* Annualized.
** Total investment returns exclude the effects of sales charges.
*** Based on average shares outstanding.
++ Commencement of operations.
++++ Aggregate total investment return.
See Notes to Financial Statements.
MERRILL LYNCH MID CAP VALUE OPPORTUNITIES FUND JULY 31, 2005
Notes to Financial Statements
1. Significant Accounting Policies:
Merrill Lynch Mid Cap Value Opportunities Fund, (the "Fund") is a series of
The Asset Program, Inc. (the "Program"), which is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The Fund's financial statements are prepared in
conformity with U.S. generally accepted accounting principles, which may
require the use of management accruals and estimates. Actual results may
differ from these estimates. These unaudited financial statements reflect all
adjustments, which are, in the opinion of management, necessary to present a
fair statement of the results for the interim period. All such adjustments are
of a normal, recurring nature. The Fund offers multiple classes of shares.
Shares of Class A and Class I are sold with a front-end sales charge. Shares
of Class B and Class C may be subject to a contingent deferred sales charge.
Class R Shares are sold only to certain retirement plans. All classes of
shares have identical voting, dividend, liquidation and other rights and the
same terms and conditions, except that Class A, Class B, Class C and Class R
Shares bear certain expenses related to the account maintenance of such
shares, and Class B, Class C and Class R 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 (except that Class B shareholders may vote on
certain changes to the Class A distribution plan). Income, expenses (other
than expenses attributable to a specific class) and realized and unrealized
gains and losses are allocated daily to each class based on its relative net
assets. The following is a summary of significant accounting policies followed
by the Fund.
(a) Valuation of investments--Equity securities that are held by the Fund that
are traded on stock exchanges or the Nasdaq National Market are valued at the
last sale price or official close price on the exchange, as of the close of
business on the day the securities are being valued or, lacking any sales, at
the last available bid price for long positions, and at the last available
asked price for short positions. In cases where equity securities are traded
on more than one exchange, the securities are valued on the exchange
designated as the primary market by or under the authority of the Board of
Directors of the Fund. Long positions traded in the over-the-counter ("OTC")
market, Nasdaq Small Cap or Bulletin Board are valued at the last available
bid price or yield equivalent obtained from one or more dealers or pricing
services approved by the Board of Directors of the Fund. Short positions
traded in the OTC market are valued at the last available asked price.
Portfolio securities that are traded both in the OTC market and on a stock
exchange are valued according to the broadest and most representative market.
Options written are valued at the last sale price in the case of exchange-
traded options or, in the case of options traded in the OTC market, the last
asked price. Options purchased are valued at their last sale price in the case
of exchange-traded options or, in the case of options traded in the OTC
market, the last bid price. Swap agreements are valued by quoted fair
valuations received daily by the Fund from a pricing service or counterparty.
Financial futures contracts and options thereon, which are traded on
exchanges, are valued at their last sale price as of the close of such
exchanges. Obligations with remaining maturities of 60 days or less are valued
at amortized cost unless the Investment Adviser believes that this method no
longer produces fair valuations.
Repurchase agreements are valued at cost plus accrued interest. The Fund
employs pricing services to provide certain securities prices for the Fund.
Securities and assets for which market quotations are not readily available
are valued at fair value as determined in good faith by or under the direction
of the Board of Directors of the Fund, including valuations furnished by the
pricing services retained by the Fund, which may use a matrix system for
valuations. The procedures of a pricing service and its valuations are
reviewed by the officers of the Fund under the general supervision of the
Fund's Board of Directors. Such valuations and procedures will be reviewed
periodically by the Board of Directors of the Fund.
Generally, trading in foreign securities, as well as U.S. government
securities and money market instruments, is substantially completed each day
at various times prior to the close of business on the New York Stock Exchange
("NYSE"). The values of such securities used in computing the net asset value
of the Fund's shares are determined as of such times. Foreign currency
exchange rates also are generally determined prior to the close of business on
the NYSE. Occasionally, events affecting the values of such securities and
such exchange rates may occur between the times at which they are determined
and the close of business on the NYSE that may not be reflected in the
computation of the Fund's net asset value. If events (for example, a company
announcement, market volatility or a natural disaster) occur during such
periods that are expected to materially affect the value of such securities,
those securities may be valued at their fair value as determined in good faith
by the Fund's Board of Directors or by the Investment Adviser using a pricing
service and/or procedures approved by the Fund's Board of Directors.
MERRILL LYNCH MID CAP VALUE OPPORTUNITIES FUND JULY 31, 2005
Notes to Financial Statements (continued)
(b) Derivative financial instruments--The Fund may engage in various portfolio
strategies both to increase the return of the Fund and to hedge, or protect,
its exposure to interest rate movements and movements in the securities
markets. Losses may arise due to changes in the value of the contract or if
the counterparty does not perform under the contract.
* Financial futures contracts--The Fund may purchase or sell financial futures
contracts and options on such futures contracts. 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.
* Options--The Fund may write and purchase call 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 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 basis of the security acquired or deducted from (or added to) 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 received or paid (or gain or loss to the extent the
cost of the closing transaction exceeds the premium paid or received).
Written and purchased options are non-income producing investments.
* 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-U.S. 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.
* Forward foreign exchange contracts--The Fund may enter into forward foreign
exchange contracts as a hedge against either specific transactions or
portfolio positions. The contract is marked-to-market daily and the change in
market value is recorded by the Fund as an unrealized gain or loss. When the
contract is closed, the Fund records a realized gain or loss equal to the
difference between the value at the time it was opened and the value at the
time it was closed.
(c) 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 U.S. dollars. Realized and unrealized
gains or losses from investments include the effects of foreign exchange rates
on investments.
(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).
Realized gains and losses on security transactions are determined on the
identified cost basis. 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.
(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.
(h) Securities lending--The Fund may lend securities to financial institutions
that provide cash or securities issued or guaranteed by the U.S. government as
collateral, which will be maintained at all times in an amount equal to at
least 100% of the current market value of the loaned securities. The market
value of the loaned securities is determined at the close of business of the
Fund and any additional required collateral is delivered to the Fund on the
next business day. Where the Fund receives securities as collateral for the
loaned securities, it collects a fee from the borrower. The Fund typically
receives the income on the loaned securities but does not receive the income
on the collateral. Where the Fund receives cash collateral, it may invest such
collateral and retain the amount earned on such investment, net of any amount
rebated to the borrower. Loans of securities are terminable at any time and
the borrower, after notice, is required to return borrowed securities within
five business days. The Fund may pay reasonable finder's, lending agent,
administrative and custodial fees in connection with its loans. In the event
that the borrower defaults on its obligation to return borrowed securities
because of insolvency or for any other reason, the Fund could experience
delays and costs in gaining access to the collateral. The Fund also could
suffer a loss where the value of the collateral falls below the market value
of the borrowed securities, in the event of borrower default or in the event
of losses on investments made with cash collateral.
2. Investment Advisory Agreement and Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Merrill Lynch
Investment Managers, L.P. ("MLIM"). The general partner of MLIM is Princeton
Services, Inc. ("PSI"), an indirect, wholly-owned subsidiary of Merrill Lynch
& Co., Inc. ("ML & Co."), which is the limited partner of MLIM. The Program
has also entered into a Distribution Agreement and Distribution Plans with FAM
Distributors, Inc. ("FAMD" or the "Distributor"), which is a wholly-owned
subsidiary of Merrill Lynch Group, Inc.
MLIM 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 pays a
monthly fee at the annual rate of .65% of the average net assets of the Fund.
MLIM has entered into a Sub-Advisory Agreement with Merrill Lynch Asset
Management U.K. Limited ("MLAM U.K."), an affiliate of MLIM, pursuant to which
MLAM U.K. provides investment advisory services to MLIM with respect to the
Fund. There is no increase in the aggregate fees paid by the Fund for these
services.
Pursuant to the Distribution Plans adopted by the Program 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
Maintenance Distribution
Fee Fee
Class A .25% --
Class B .25% .75%
Class C .25% .75%
Class R .25% .25%
Pursuant to a sub-agreement with the Distributor, Merrill Lynch, Pierce,
Fenner & Smith Incorporated ("MLPF&S"), an affiliate of MLIM, 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 A, Class B, Class C and Class R shareholders.
The ongoing distribution fee compensates the Distributor and MLPF&S for
providing shareholder and distribution-related services to Class B, Class C
and Class R shareholders.
For the six months ended July 31, 2005, FAMD earned underwriting discounts and
MLPF&S earned dealer concessions on sales of the Fund's Class A and Class I
Shares as follows:
FAMD MLPF&S
Class A $ 1,308 $ 17,814
Class I -- $ 3
MERRILL LYNCH MID CAP VALUE OPPORTUNITIES FUND JULY 31, 2005
Notes to Financial Statements (continued)
For the six months ended July 31, 2005, MLPF&S received contingent deferred
sales charges of $81,686 and $2,035 relating to transactions in Class B and
Class C Shares, respectively.
The Fund has received an exemptive order from the Securities and Exchange
Commission permitting it to lend portfolio securities to MLPF&S or its
affiliates. Pursuant to that order, the Fund also has retained Merrill Lynch
Investment Managers, LLC ("MLIM, LLC"), an affiliate of MLIM, as the
securities lending agent for a fee based on a share of the returns on
investment of cash collateral. MLIM, LLC may, on behalf of the Fund, invest
cash collateral received by the Fund for such loans, among other things, in a
private investment company managed by MLIM, LLC or in registered money market
funds advised by MLIM or its affiliates. For the six months ended July 31,
2005, MLIM, LLC received $5,282 in securities lending agent fees.
In addition, MLPF&S received $65,663 in commissions on the execution of
portfolio security transactions for the Fund for the six months ended July 31,
2005.
Financial Data Services, Inc. ("FDS"), a wholly-owned subsidiary of ML & Co.,
is the Program's transfer agent.
For the six months ended July 31, 2005, the Fund reimbursed MLIM $5,494 for
certain accounting services.
Certain officers and/or directors of the Program are officers and/or directors
of MLIM, FDS, PSI, FAMD, ML & Co., and/or MLIM, LLC.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the
six months ended July 31, 2005 were $259,281,672 and $272,564,002,
respectively.
4. Capital Share Transactions:
Net increase (decrease) in net assets derived from capital share transactions
were $(978,151) and $14,070,858 for the six months ended July 31, 2005 and the
year ended January 31, 2005, respectively.
Transactions in capital shares for each class were as follows:
Class A Shares for the
Six Months Ended Dollar
July 31, 2005 Shares Amount
Shares sold 520,991 $ 10,302,497
Automatic conversion of shares 309,079 6,150,564
Shares issued to shareholders in
reinvestment of distributions 133,905 2,790,585
-------------- ---------------
Total issued 963,975 19,243,646
Shares redeemed (731,001) (14,474,053)
-------------- ---------------
Net increase 232,974 $ 4,769,593
============== ===============
Class A Shares for the Year Dollar
Ended January 31, 2005 Shares Amount
Shares sold 1,298,739 $ 23,735,475
Automatic conversion of shares 617,029 11,257,665
Shares issued to shareholders in
reinvestment of distributions 27,545 538,231
-------------- ---------------
Total issued 1,943,313 35,531,371
Shares redeemed (1,105,597) (20,336,916)
-------------- ---------------
Net increase 837,716 $ 15,194,455
============== ===============
Class B Shares for the
Six Months Ended Dollar
July 31, 2005 Shares Amount
Shares sold 354,119 $ 6,650,036
Shares issued to shareholders in
reinvestment of distributions 118,920 2,323,689
-------------- ---------------
Total issued 473,039 8,973,725
-------------- ---------------
Shares redeemed (934,101) (17,491,947)
Automatic conversion of shares (324,838) (6,150,564)
-------------- ---------------
Total redeemed (1,258,939) (23,642,511)
-------------- ---------------
Net decrease (785,900) $ (14,668,786)
============== ===============
Class B Shares for the Year Dollar
Ended January 31, 2005 Shares Amount
Shares sold 870,574 $ 15,160,268
Shares issued to shareholders in
reinvestment of distributions 43,801 828,706
-------------- ---------------
Total issued 914,375 15,988,974
-------------- ---------------
Shares redeemed (1,831,783) (31,967,958)
Automatic conversion of shares (644,409) (11,257,665)
-------------- ---------------
Total redeemed (2,476,192) (43,225,623)
-------------- ---------------
Net decrease (1,561,817) $ (27,236,649)
============== ===============
MERRILL LYNCH MID CAP VALUE OPPORTUNITIES FUND JULY 31, 2005
Notes to Financial Statements (concluded)
Class C Shares for the
Six Months Ended Dollar
July 31, 2005 Shares Amount
Shares sold 359,700 $ 6,747,163
Shares issued to shareholders in
reinvestment of distributions 102,693 1,998,414
-------------- ---------------
Total issued 462,393 8,745,577
Shares redeemed (605,619) (11,332,782)
-------------- ---------------
Net decrease (143,226) $ (2,587,205)
============== ===============
Class C Shares for the Year Dollar
Ended January 31, 2005 Shares Amount
Shares sold 872,632 $ 15,251,535
Shares issued to shareholders in
reinvestment of distributions 30,489 567,095
-------------- ---------------
Total issued 903,121 15,818,630
Shares redeemed (1,102,141) (19,169,507)
-------------- ---------------
Net decrease (199,020) $ (3,350,877)
============== ===============
Class I Shares for the
Six Months Ended Dollar
July 31, 2005 Shares Amount
Shares sold 997,836 $ 20,026,155
Shares issued to shareholders in
reinvestment of distributions 140,405 2,899,359
-------------- ---------------
Total issued 1,138,241 22,925,514
Shares redeemed (748,219) (14,952,845)
-------------- ---------------
Net increase 390,022 $ 7,972,669
============== ===============
Class I Shares for the Year Dollar
Ended January 31, 2005 Shares Amount
Shares sold 2,510,494 $ 46,408,243
Shares issued to shareholders in
reinvestment of distributions 30,307 599,474
-------------- ---------------
Total issued 2,540,801 47,007,717
Shares redeemed (1,299,827) (24,035,713)
-------------- ---------------
Net increase 1,240,974 $ 22,972,004
============== ===============
Class R Shares for the
Six Months Ended Dollar
July 31, 2005 Shares Amount
Shares sold 266,586 $ 5,110,192
Shares issued to shareholders in
reinvestment of distributions 18,397 362,226
-------------- ---------------
Total issued 284,983 5,472,418
Shares redeemed (100,945) (1,936,840)
-------------- ---------------
Net increase 184,038 $ 3,535,578
============== ===============
Class R Shares for the Year Dollar
Ended January 31, 2005 Shares Amount
Shares sold 467,520 $ 8,314,504
Shares issued to shareholders in
reinvestment of distributions 2,208 41,754
-------------- ---------------
Total issued 469,728 8,356,258
Shares redeemed (104,176) (1,864,333)
-------------- ---------------
Net increase 365,552 $ 6,491,925
============== ===============
5. Short-Term Borrowings:
The Fund, along with certain other funds managed by MLIM and its affiliates,
is a party to a $500,000,000 credit agreement with a group of lenders, which
expires in November 2005. The Fund may borrow under the credit agreement to
fund shareholder redemptions and for other lawful purposes other than for
leverage. The Fund may borrow up to the maximum amount allowable under the
Fund's current prospectus and statement of additional information, subject to
various other legal, regulatory or contractual limits. The Fund pays a
commitment fee of .07% per annum based on the Fund's pro rata share of the
unused portion of the credit agreement. Amounts borrowed under the credit
agreement bear interest at a rate equal to, at each Fund's election, the
federal funds rate plus .50% or a base rate as defined in the credit
agreement. The Fund did not borrow under the credit agreement during the six
months ended July 31, 2005.
MERRILL LYNCH MID CAP VALUE OPPORTUNITIES FUND JULY 31, 2005
Disclosure of Investment Advisory Agreement
Activities of and Composition of the Board of Directors
All but one member of the Board of Directors is an independent director whose
only affiliation with Merrill Lynch Investment Managers, L.P. (the "Investment
Adviser") or other Merrill Lynch affiliates is as a director of the Fund and
certain other funds advised by the Investment Adviser or its affiliates. The
Co-chairmen of the Board are also independent directors. New director nominees
are chosen as nominees by a Nominating Committee comprised of independent
directors. All independent directors also are members of the Board's Audit
Committee and the independent directors meet in executive session at each in-
person Board meeting. The Board and the Audit Committee meet in person for at
least two days each quarter and conduct other in-person and telephone meetings
throughout the year, some of which are formal board meetings, and some of
which are informational meetings. The independent counsel to the independent
directors attends all in-person Board and Audit Committee meetings and other
meetings at the independent directors' request.
Investment Advisory Agreement--Matters Considered by the Board
Every year, the Board considers approval of the Fund's investment advisory
agreement (the "Investment Advisory Agreement"). The Board also annually
reviews and considers approval of the sub-advisory agreement on behalf of the
Fund between the Investment Adviser and an affiliate. The Board assesses the
nature, scope and quality of the services provided to the Fund by the
personnel of the Investment Adviser, the sub-adviser and their affiliates,
including administrative services, shareholder services, oversight of fund
accounting, marketing services and assistance in meeting legal and regulatory
requirements. The Board also receives and assesses information regarding the
services provided to the Fund by certain unaffiliated service providers.
At various times throughout the year, the Board also considers a range of
information in connection with its oversight of the services provided by the
Investment Adviser and its affiliates, including the sub-adviser. Among the
matters considered are: (a) fees (in addition to management fees) paid to the
Investment Adviser and its affiliates by the Fund, such as transfer agency
fees and fees for marketing and distribution; (b) Fund operating expenses paid
to third parties; (c) the resources devoted to and compliance reports relating
to the Fund's investment objective, policies and restrictions, and its
compliance with its Code of Ethics and the Investment Adviser's compliance
policies and procedures; and (d) the nature, cost and character of non-
investment management services provided by the Investment Adviser and its
affiliates.
The Board believes that the Investment Adviser is one of the most experienced
global asset management firms and considers the overall services provided by
the Investment Adviser to be generally of high quality. The Board also
believes that the Investment Adviser is financially sound and well managed and
notes that the Investment Adviser is affiliated with one of America's largest
financial firms. The Board works closely with the Investment Adviser in
overseeing the Investment Adviser's efforts to achieve good performance. As
part of this effort, the Board discusses portfolio manager effectiveness and,
when performance is not satisfactory, discusses with the Investment Adviser
taking steps such as changing investment personnel.
Annual Consideration of Approval by the Board of Directors
In the period prior to the Board meeting to consider renewal of the Investment
Advisory Agreement and the sub-advisory agreement, the Board requests and
receives materials specifically relating to the Fund's Investment Advisory
Agreement and/or the sub-advisory agreement. These materials include (a)
information compiled by Lipper Inc. ("Lipper") on the fees and expenses and
the investment performance of the Fund as compared to a comparable group of
funds as classified by Lipper; (b) sales and redemption data for the Fund; (c)
a discussion by the Fund's portfolio management team of investment strategies
used by the Fund during its most recent fiscal year; (d) information on the
profitability to the Investment Adviser and its affiliates of the Investment
Advisory Agreement, the sub-advisory agreement and other relationships with
the Fund; and (e) information provided by the Investment Adviser concerning
investment advisory fees charged to other clients, such as offshore and
institutional funds under similar investment mandates and generally to
institutional clients. The Board also considers other matters it deems
important to the approval process such as payments made to the Investment
Adviser or its affiliates relating to the distribution of Fund shares,
services related to the valuation and pricing of Fund portfolio holdings,
allocation of Fund brokerage fees (including the related benefits to the
Investment Adviser of "soft dollars"), the Fund's portfolio turnover
statistics, and direct and indirect benefits to the Investment Adviser and the
sub-adviser and their affiliates from their relationship with the Fund.
MERRILL LYNCH MID CAP VALUE OPPORTUNITIES FUND JULY 31, 2005
Certain Specific Renewal Data
In connection with the most recent renewal of the Fund's Investment Advisory
Agreement and the sub-advisory agreement in June 2005, the independent
directors' and Board's review included the following:
Services Provided by the Investment Adviser--The Board reviewed the nature,
extent and quality of services provided by the Investment Adviser, including
the investment advisory services and the resulting performance of the Fund,
and the sub-adviser. The Board focused primarily on the Investment Adviser's
investment advisory services and the Fund's investment performance, having
concluded that the other services provided to the Fund by the Investment
Adviser were satisfactory. The Board compared Fund performance - both
including and excluding the effects of the Fund's fees and expenses - to the
performance of a comparable group of mutual funds, and the performance of a
relevant index or combination of indexes. While the Board reviews performance
data at least quarterly, consistent with the Investment Adviser's investment
goals, the Board attaches more importance to performance over relatively long
periods of time, typically three to five years. The Fund's performance after
fees and expenses ranked in the fourth quartile for the one- and three-year
periods, and in the third quartile for the five-year period, ended March 31,
2005. The Board discussed the level of performance with the Investment Adviser
and steps being taken by the Investment Adviser in an effort to improve
performance. Considering these factors, the Board concluded that the services
provided by the Investment Adviser supported the continuation of the
Investment Advisory Agreement.
The Investment Adviser's Personnel and Investment Process--The Board reviewed
the Fund's investment objectives and strategies. The Board discussed with
senior management of the Investment Adviser responsible for investment
operations and the senior management of the Investment Adviser's equity
investing group the strategies being used to achieve the stated objectives.
Among other things, the Board considered the size, education and experience of
the Investment Adviser's investment staff, its use of technology, and the
Investment Adviser's approach to training and retaining portfolio managers and
other research, advisory and management personnel. The Board also reviewed the
Investment Adviser's compensation policies and practices with respect to the
Fund's portfolio manager. The Board considered the investment process review
by the senior management of the Investment Adviser and the changes made in the
investment team supporting Ms. Baum, the Fund's portfolio manager. The Board
also considered the experience of the Fund's portfolio manager and noted that
Ms. Baum has more than thirteen years experience in portfolio management;
moreover, the Investment Adviser and its investment staff have extensive
experience in analyzing and managing the types of investments used by the
Fund. The Board concluded that the Fund benefits from that expertise.
Management Fees and Other Expenses--The Board reviewed the Fund's contractual
management fee rate and actual management fee rate as a percentage of total
assets at common asset levels - the actual rate includes advisory and
administrative service fees and the effects of any fee waivers - compared to
the other funds in its Lipper category. It also compared the Fund's total
expenses to those of other comparable funds. The Board considered the services
provided to and the fees charged by the Investment Adviser to other types of
clients such as offshore and institutional funds with similar investment
mandates and noted that the fees charged by the Investment Adviser to the
offshore fund was less than the fee being charged to the Fund but exceeded
that being charged to the institutional clients. The Board also noted that, as
a general matter, fees charged to institutional clients were lower than the
fees charged to the Fund, but believed that less extensive services were being
provided to such clients. The Board considered that the Fund's contractual and
actual management fee rates were lower than the median management fee rates
charged by comparable funds. The Board has concluded that the Fund's
contractual and actual management fee rates and its total expense ratio are
reasonable compared to those of other comparable funds.
Profitability--The Board considered the cost of the services provided to the
Fund by the Investment Adviser, and the Investment Adviser's and its
affiliates' profits in relation to the management and distribution of the Fund
and the MLIM/FAM-advised funds. As part of its analysis, the Board reviewed
the Investment Adviser's methodology in allocating its costs to the management
of the Fund and concluded that there was a reasonable basis for the
allocation. The Board concluded the Investment Adviser's profits are
reasonable in relation to the nature and quality of services provided.
Economies of Scale--The Board considered the extent to which economies of
scale might be realized as the assets of the Fund increase and whether there
should be changes in the management fee rate or structure in order to enable
the Fund to participate in these economies of scale. While the Board concluded
that it did not believe that the Fund's assets have reached a level where such
economies are effectively available, the Board will continue to seek
information relating to economies of scale.
Conclusion
After the independent directors deliberated in executive session, the entire
Board, including all of the independent directors, approved the renewal of the
existing Investment Advisory Agreement and sub-advisory agreement, concluding
that the advisory fee was reasonable in relation to the services provided and
that a contract renewal was in the best interests of the shareholders.
MERRILL LYNCH MID CAP VALUE OPPORTUNITIES FUND JULY 31, 2005
Item 2 - Code of Ethics - Not Applicable to this semi-annual report
Item 3 - Audit Committee Financial Expert - Not Applicable to this semi-
annual report
Item 4 - Principal Accountant Fees and Services - Not Applicable to this
semi-annual report
Item 5 - Audit Committee of Listed Registrants - Not Applicable
Item 6 - Schedule of Investments - Not Applicable
Item 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies - Not Applicable
Item 8 - Portfolio Managers of Closed-End Management Investment Companies -
Not Applicable
Item 9 - Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers - Not Applicable
Item 10 - Submission of Matters to a Vote of Security Holders - Not Applicable
Item 11 - Controls and Procedures
11(a) - The registrant's certifying officers have reasonably designed such
disclosure controls and procedures to ensure material information
relating to the registrant is made known to us by others
particularly during the period in which this report is being
prepared. The registrant's certifying officers have determined that
the registrant's disclosure controls and procedures are effective
based on our evaluation of these controls and procedures as of a
date within 90 days prior to the filing date of this report.
11(b) - There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the Act
(17 CFR 270.30a-3(d)) that occurred during the last fiscal half-year
of the period covered by this report that has materially affected,
or is reasonably likely to materially affect, the registrant's
internal control over financial reporting.
Item 12 - Exhibits attached hereto
12(a)(1) - Code of Ethics - Not Applicable to this semi-annual report
12(a)(2) - Certifications - Attached hereto
12(a)(3) - Not Applicable
12(b) - Certifications - Attached hereto
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
Merrill Lynch Mid Cap Value Opportunities Fund of The Asset Program, Inc.
By: /s/ Robert C. Doll, Jr.
-------------------------------
Robert C. Doll, Jr.,
Chief Executive Officer of
Merrill Lynch Mid Cap Value Opportunities Fund of
The Asset Program, Inc.
Date: September 23, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Robert C. Doll, Jr.
-------------------------------
Robert C. Doll, Jr.,
Chief Executive Officer of
Merrill Lynch Mid Cap Value Opportunities Fund of
The Asset Program, Inc.
Date: September 23, 2005
By: /s/ Donald C. Burke
-------------------------------
Donald C. Burke,
Chief Financial Officer of
Merrill Lynch Mid Cap Value Opportunities Fund of
The Asset Program, Inc.
Date: September 23, 2005