UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-9637
Name of Fund: Merrill Lynch Large Cap Value Fund
Master Large Cap Value Portfolio
Fund Address: P.O. Box 9011
Princeton, NJ 08543-9011
Name and address of agent for service: Terry K. Glenn, President, Merrill Lynch
Large Cap Value Fund, 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: 04/30/03
Date of reporting period: 11/01/02 - 04/30/03
Item 1 - Attach shareholder report
[LOGO] Merrill Lynch Investment Managers
Semi-Annual Report
April 30, 2003
Merrill Lynch
Large Cap
Value Fund
Of Merrill Lynch Large Cap Series Funds, Inc.
www.mlim.ml.com
MERRILL LYNCH LARGE CAP VALUE FUND
Portfolio Information
As of April 30, 2003
Percent of
Ten Largest Equity Holdings Net Assets
- --------------------------------------------------------------------------------
Exxon Mobil Corporation ............................................. 3.9%
Bank of America Corporation ......................................... 3.7
J.P. Morgan Chase & Co. ............................................. 2.4
Merck & Co., Inc. ................................................... 2.4
Wachovia Corporation ................................................ 2.3
Washington Mutual, Inc. ............................................. 2.1
Citigroup Inc. ...................................................... 2.0
U.S. Bancorp ........................................................ 2.0
Ford Motor Company .................................................. 1.4
National City Corporation ........................................... 1.4
- --------------------------------------------------------------------------------
Percent of
Five Largest Industries* Net Assets
- --------------------------------------------------------------------------------
Commercial Banks .................................................... 22.3%
Oil & Gas ........................................................... 10.5
Diversified Financial Services ...................................... 6.7
Household Durables .................................................. 4.9
Pharmaceuticals ..................................................... 4.6
- --------------------------------------------------------------------------------
* For Portfolio 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 Portfolio
management. This definition may not apply for purposes of this report,
which may combine such industry sub-classifications for reporting ease.
Merrill Lynch Large Cap Value Fund, April 30, 2003
DEAR SHAREHOLDER
Effective April 14, 2003, the share class names for the Merrill Lynch family of
mutual funds were changed to be consistent with the standard share classes of
most other mutual fund families. As of that date, all Class A Shares were
redesignated Class I Shares. At the same time, Class D Shares were redesignated
Class A Shares. There are no changes to the Class B or Class C share class
labels. Trading symbols have not changed nor have current eligibility rules or
pricing structures. This redesignation of share classes does not impact your
investment in any way.
Merrill Lynch Large Cap Value Fund invests primarily in a diversified portfolio
of equity securities of large cap companies that Fund management selects from
among the securities found in the Russell 1000 Value Index. Our investment
process attempts to add value through both security selection and portfolio
construction. Security selection involves the use of quantitative selection
criteria including earnings momentum, earnings surprise and valuation. These
criteria are input into a proprietary quantitative model and are subject to
selective fundamental overrides. Portfolio construction consists of an
optimization process with risk management controlling style, capitalization,
sector and individual security selection.
Fund Performance
For the six months ended April 30, 2003, the Fund's Class A, Class B, Class C
and Class I Shares had total returns of +1.38%, +1.01%, +1.01% and + 1.47%,
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 4 and 5 of this report to shareholders.) The Fund's results were
below the +5.25% total return of the benchmark, the unmanaged Russell 1000 Value
Index for the same six-month period.
The past six months have been challenging. While we generated positive absolute
performance, our relative performance trailed the benchmark. Overall, most of
the underperformance was attributable to stock selection, particularly in
information technology and consumer discretionary. In addition, the Portfolio's
underweight in energy had a negative impact on performance. On the positive
side, the Portfolio benefited from its underweight in telecommunication
services. At the individual stock level, the largest positive contributors to
performance were The Ryland Group, Inc., CheckFree Corp., Countrywide Credit
Industries, Inc., AutoNation, Inc. and Aetna Inc. We also benefited from our
underweights in SBC Communications Inc. and Altria Group Inc. (formerly Philip
Morris Companies Inc.). The largest detractors to performance included
Hewlett-Packard Company, Adolph Coors Company and Sprint Corporation. Our
largest purchases included J.P. Morgan Chase & Co., Merck & Co., Inc., Sprint
and Hewlett-Packard, while our largest sales included Gannett Co., Inc.,
National City Corporation and The Procter & Gamble Company.
During the course of the period, we increased our positions relative to the
benchmark in technology, health care and energy, and reduced our holdings in
consumer staples, industrials and consumer discretionary. Our largest
overweights were in information technology and health care, while our largest
underweights were in industrials, materials, and utilities. We are positioned
for an improvement in economic activity, continued positive earnings
comparisons, and an eventual uptick in interest rates. As always, we seek to own
companies that we believe have improving earnings momentum, a high probability
of positive earnings surprises, and reasonable valuations.
Economic Environment
To provide a larger context in which to view the portfolio, it is important to
understand that the economy has suffered a sharp loss of confidence this year.
The Conference Board survey showed that employment conditions are at risk of
deteriorating. Although new unemployment claims have not surged, jobs are still
seen as hard to come by, indicating that new job creation is still weak. The
risk is that a new round of layoffs and investment cutbacks will occur if the
business sector sees final demand slipping. Consumption has slowed in the past
two months, partly owing to bad weather, but also because confidence was hit by
the deterioration in the geopolitical backdrop and energy price crunch. While
there has been a modest drop in oil and natural gas prices recently, the relief
is not sufficient to offset renewed concerns about employment.
Treasury securities remain overvalued, but are likely to remain so until
economic expectations stabilize and deflation fears ease. The Federal Reserve
Board is going to continue to focus on trying to boost the economy and will not
contemplate shifting from this stance until well after the economy has
strengthened. In our opinion, longer-term investors should stay underweight in
bonds (slightly below-average duration), and within bond portfolios maintain an
overweight stance on corporates. Corporate bonds have weathered a difficult
economic patch in recent months, underscoring the power of good value and
improving corporate balance sheets.
The Standard & Poor's 500 Index is roughly in the middle of its trading range
(800-950), and we remain hopeful that a test of the upper end will develop. A
break to the upside would likely occur if the economy and corporate earnings
improve in a sustainable fashion. While profits have managed to do a bit better
than expected, some of this has been driven by cutbacks in investment and labor,
which have been economically bearish. Continued strong productivity growth
helped to contain unit labor costs, while pricing power improved a bit. Profits
likely suffered a setback in the first quarter given the spike in energy costs
and softness in overall demand. The budding stability in pricing power will be
in jeopardy unless demand growth re-accelerates. The profit environment will
remain tough, but the corporate sector is still focused on boosting the bottom
line, raising the hope that better times loom once the drag from the war lifts
and oil prices correct further. Investors need to believe that corporate profits
will rise in a self-reinforcing fashion before they will shift funds into
equities, particularly given the lack of great value in the market. It could be
a few months before the economic data clarifies whether the economy is still on
a recovery track or has been delayed or derailed. Until then, equities are
likely to remain trendless. While other investments are not offering much
competition to stocks, investors also have lost considerable capital in the
equity market since March 2000, and will remain leery, absent clear evidence
that the world economy is healing.
The bottom line is that the economy has taken a hard blow this year, but it is
not yet down for the count. If the economy does not revive soon, then hopes for
another equity upleg are likely to be dashed. Worse, equities could break below
their October 2002 low if the economy falters. Investors are already deeply
pessimistic and monetary policy will stay highly reflationary, but these
conditions are not sufficient to spur a bull market in the absence of stronger
earnings. Importantly, investors and the business sector need greater confidence
and rising hopes for a more profitable future in order to take risks. The energy
market and geopolitical backdrop have punished risk-taking and only these
factors can help restore some vitality.
In Conclusion
We appreciate your investment in Merrill Lynch Large Cap Value Fund, and we look
forward to serving your financial needs in the months and years ahead.
Sincerely,
/s/ Terry K. Glenn
Terry K. Glenn
President and Director/Trustee
/s/ Robert C. Doll, Jr.
Robert C. Doll, Jr.
Senior Vice President and
Portfolio Manager
May 27, 2003
2 & 3
Merrill Lynch Large Cap Value Fund, April 30, 2003
PERFORMANCE DATA
About Fund
Performance
Effective April 14, 2003, Class A Shares were redesignated Class I Shares and
Class D Shares were redesignated Class A Shares. Investors are able to purchase
shares of the Fund through multiple pricing alternatives:
o Class A Shares incur a maximum initial sales charge of 5.25% and an
account maintenance fee of 0.25% (but no distribution fee).
o Effective June 1, 2001, Class B Shares are subject to a maximum contingent
deferred sales charge of 4% declining to 0% after six years. All Class B
Shares purchased prior to June 1, 2001 will maintain the four-year
schedule. 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 A Shares after approximately eight 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 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.
o 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% and an account maintenance fee of 0.25%. Class R Shares are
available only to certain retirement plans.
None of the past results shown should be considered a representation of future
performance. Performance results do not reflect 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 gains distributions at net asset value on the ex-dividend
date. Investment return and principal value of shares will fluctuate so that
shares, when redeemed, may be worth more or less than their original cost.
Dividends paid to each class of shares will vary because of the different levels
of account maintenance, distribution and transfer agency fees applicable to each
class, which are deducted from the income available to be paid to shareholders.
The Fund's Administrator voluntarily waived a portion of its administration fee.
Without such waiver, and reimbursement of expenses, the Fund's performance would
have been lower.
Recent
Performance
Results
6-Month 12-Month Since Inception
As of April 30, 2003 Total Return Total Return Total Return
================================================================================================
ML Large Cap Value Fund Class A Shares* +1.38% -15.94% +2.90%
- ------------------------------------------------------------------------------------------------
ML Large Cap Value Fund Class B Shares* +1.01 -16.63 +0.31
- ------------------------------------------------------------------------------------------------
ML Large Cap Value Fund Class C Shares* +1.01 -16.63 +0.31
- ------------------------------------------------------------------------------------------------
ML Large Cap Value Fund Class I Shares* +1.47 -15.84 +3.74
- ------------------------------------------------------------------------------------------------
ML Large Cap Value Fund Class R Shares* -- -- -0.40
- ------------------------------------------------------------------------------------------------
Russell 1000 Value Index** +5.25 -13.01 -9.77/+0.40
================================================================================================
* Investment results shown do not reflect sales charges; results shown 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. Performance results are for a limited asset
pool. The Fund's since inception periods are from 12/22/99 for Class A,
Class B, Class C & Class I Shares and from 1/03/03 for Class R Shares.
** This unmanaged broad-based Index is a subset of the Russell 1000 Index
consisting of those Russell 1000 securities with lower price/book ratios
and lower forecasted growth values. The since inception total returns are
from 12/22/99 and 1/03/03, respectively.
Average Annual
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
================================================================================
Class A Shares*
================================================================================
One Year Ended 4/30/03 -15.94% -20.36%
- --------------------------------------------------------------------------------
Inception (12/22/99) through 4/30/03 + 0.86 - 0.75
- --------------------------------------------------------------------------------
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
================================================================================
Class B Shares*
================================================================================
One Year Ended 4/30/03 -16.63% -19.96%
- --------------------------------------------------------------------------------
Inception (12/22/99) through 4/30/03 + 0.09 - 0.81
- --------------------------------------------------------------------------------
* 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 4/30/03 -16.63% -17.46%
- --------------------------------------------------------------------------------
Inception (12/22/99) through 4/30/03 + 0.09 + 0.09
- --------------------------------------------------------------------------------
* 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 4/30/03 -15.84% -20.26%
- --------------------------------------------------------------------------------
Inception (12/22/99) through 4/30/03 + 1.10 - 0.51
- --------------------------------------------------------------------------------
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
Aggregate
Total Return
% Return Without
Sales Charge
================================================================================
Class R Shares
================================================================================
Inception (1/03/03)
through 4/30/03 -0.40%
- --------------------------------------------------------------------------------
4 & 5
Merrill Lynch Large Cap Value Fund, April 30, 2003
STATEMENT OF ASSETS AND LIABILITIES
MERRILL LYNCH
LARGE CAP
VALUE FUND As of April 30, 2003
=================================================================================================================================
Assets: Investment in Master Large Cap Value Portfolio, at value (identified
cost--$386,597,576) ............................................................. $408,266,824
Prepaid expenses and registration fees .......................................... 51,049
------------
Total assets .................................................................... 408,317,873
------------
=================================================================================================================================
Liabilities: Payables:
Distributor ................................................................... $ 228,246
Administrator ................................................................. 89,456
Other affiliates .............................................................. 67,450 385,152
------------
Accrued expenses and other liabilities .......................................... 51,663
------------
Total liabilities ............................................................... 436,815
------------
=================================================================================================================================
Net Assets: Net assets ...................................................................... $407,881,058
============
=================================================================================================================================
Net Assets Class A Shares of Common Stock, $.10 par value, 100,000,000 shares authorized ... $ 626,018
Consist of: Class B Shares of Common Stock, $.10 par value, 200,000,000 shares authorized ... 1,680,583
Class C Shares of Common Stock, $.10 par value, 100,000,000 shares authorized ... 1,016,357
Class I Shares of Common Stock, $.10 par value, 100,000,000 shares authorized ... 704,848
Class R Shares of Common Stock, $.10 par value, 200,000,000 shares authorized ... 1
Paid-in capital in excess of par ................................................ 452,764,260
Accumulated investment loss--net ................................................ $ (328,005)
Accumulated realized capital losses on investments from the Portfolio--net ...... (70,252,252)
Unrealized appreciation on investments from the Portfolio--net .................. 21,669,248
------------
Total accumulated losses--net ................................................... (48,911,009)
------------
Net assets ...................................................................... $407,881,058
============
=================================================================================================================================
Net Asset Class A--Based on net assets of $64,346,390 and 6,260,176 shares outstanding .... $ 10.28
Value: ============
Class B--Based on net assets of $168,566,282 and 16,805,831 shares outstanding .. $ 10.03
============
Class C--Based on net assets of $101,921,398 and 10,163,572 shares outstanding .. $ 10.03
============
Class I--Based on net assets of $73,046,888 and 7,048,484 shares outstanding .... $ 10.36
============
Class R--Based on net assets of $99.56 and 9.881 shares outstanding ............. $ 10.08
============
=================================================================================================================================
See Notes to Financial Statements.
STATEMENT OF OPERATIONS
MERRILL LYNCH
LARGE CAP
VALUE FUND For the Six Months Ended April 30, 2003
=================================================================================================================================
Investment Net investment income allocated from the Portfolio:
Income from the Dividends (net of $3,475 foreign withholding tax) ............................. $ 3,116,792
Portfolio--Net: Securities lending--net ....................................................... 29,606
Interest ...................................................................... 2,005
Expenses ...................................................................... (1,137,662)
------------
Net investment income from the Portfolio ........................................ 2,010,741
------------
=================================================================================================================================
Expenses: Account maintenance and distribution fees--Class B .............................. $ 849,144
Account maintenance and distribution fees--Class C .............................. 487,032
Administration fees ............................................................. 485,077
Transfer agent fees--Class B .................................................... 151,399
Transfer agent fees--Class C .................................................... 88,490
Account maintenance fees--Class A ............................................... 65,301
Transfer agent fees--Class I .................................................... 52,431
Registration fees ............................................................... 43,333
Printing and shareholder reports ................................................ 42,117
Transfer agent fees--Class A .................................................... 40,050
Professional fees ............................................................... 18,190
Other ........................................................................... 16,182
------------
Total expenses .................................................................. 2,338,746
------------
Investment loss--net ............................................................ (328,005)
------------
=================================================================================================================================
Realized & Realized loss on investments from the Portfolio--net ............................ (23,056,488)
Unrealized Gain Change in unrealized appreciation/depreciation on investments from the
(Loss) from the Portfolio--net .................................................................. 27,802,157
Portfolio--Net: ------------
Total realized and unrealized gain from the Portfolio--net ...................... 4,745,669
------------
Net Increase in Net Assets Resulting from Operations ............................ $ 4,417,664
============
=================================================================================================================================
See Notes to Financial Statements.
6 & 7
Merrill Lynch Large Cap Value Fund, April 30, 2003
STATEMENTS OF CHANGES IN NET ASSETS
For the Six For the
MERRILL LYNCH Months Ended Year Ended
LARGE CAP April 30, October 31,
VALUE FUND Increase (Decrease) in Net Assets: 2003 2002
=================================================================================================================================
Operations: Investment loss--net ......................................................... $ (328,005) $ (118,909)
Realized loss on investments from the Portfolio--net ......................... (23,056,488) (26,456,386)
Change in unrealized appreciation/depreciation on investments from the
Portfolio--net ............................................................... 27,802,157 (4,904,801)
------------ ------------
Net increase (decrease) in net assets resulting from operations .............. 4,417,664 (31,480,096)
------------ ------------
=================================================================================================================================
Capital Share Net increase in net assets derived from capital share transactions ........... 20,171,182 89,427,595
Transactions: ------------ ------------
=================================================================================================================================
Net Assets: Total increase in net assets ................................................. 24,588,846 57,947,499
Beginning of period .......................................................... 383,292,212 325,344,713
------------ ------------
End of period* ............................................................... $407,881,058 $383,292,212
============ ============
=================================================================================================================================
*Accumulated investment loss--net ............................................. $ (328,005) --
============ ============
=================================================================================================================================
See Notes to Financial Statements.
FINANCIAL HIGHLIGHTS
Class A@
-------------------------------------------------
For the
For the Period
The following per share data and ratios have been derived Six Months For the Year Ended Dec. 22,
MERRILL LYNCH from information provided in the financial statements. Ended October 31, 1999+ to
LARGE CAP April 30, ---------------------- Oct. 31,
VALUE FUND Increase (Decrease) in Net Asset Value: 2003 2002 2001 2000
================================================================================================================================
Per Share Net asset value, beginning of period ..................... $ 10.14 $ 10.62 $ 11.61 $ 10.00
Operating -------- -------- -------- --------
Performance: Investment income (loss)--net ............................ .01++ .04++ .04++ --@@
Realized and unrealized gain (loss) on investments from
the Portfolio--net ....................................... .13 (.52) (1.02) 1.61
-------- -------- -------- --------
Total from investment operations ......................... .14 (.48) (.98) 1.61
-------- -------- -------- --------
Less dividends from return of capital--net ............... -- -- (.01) --
-------- -------- -------- --------
Net asset value, end of period ........................... $ 10.28 $ 10.14 $ 10.62 $ 11.61
======== ======== ======== ========
================================================================================================================================
Total Investment Based on net asset value per share ....................... 1.38%@@@ (4.52%) (8.43%) 16.10%@@@
Return:** ======== ======== ======== ========
================================================================================================================================
Ratios to Average Expenses, net of reimbursement+++ ........................ 1.30%* 1.28% 1.29% 1.74%*
Net Assets: ======== ======== ======== ========
Expenses+++ .............................................. 1.30%* 1.28% 1.29% 3.78%*
======== ======== ======== ========
Investment income (loss)--net ............................ .28%* .49% .32% (.25%)*
======== ======== ======== ========
================================================================================================================================
Supplemental Net assets, end of period (in thousands) ................. $ 64,346 $ 46,020 $ 37,190 $ 8,377
Data: ======== ======== ======== ========
Portfolio turnover ....................................... 79.64% 136.92% 168.54% 81.99%
======== ======== ======== ========
================================================================================================================================
Class B
-------------------------------------------------
For the
For the Period
The following per share data and ratios have been derived Six Months For the Year Ended Dec. 22,
from information provided in the financial statements. Ended October 31, 1999+ to
April 30, ---------------------- Oct. 31,
Increase (Decrease) in Net Asset Value: 2003 2002 2001 2000
================================================================================================================================
Per Share Net asset value, beginning of period ..................... $ 9.93 $ 10.48 $ 11.54 $ 10.00
Operating -------- -------- -------- --------
Performance: Investment loss--net ..................................... (.02)++ (.03)++ (.04)++ (.01)
Realized and unrealized gain (loss) on investments from
the Portfolio--net ....................................... .12 (.52) (1.02) 1.55
-------- -------- -------- --------
Total from investment operations ......................... .10 (.55) (1.06) 1.54
-------- -------- -------- --------
Less dividends from return of capital--net ............... -- -- --@@ --
-------- -------- -------- --------
Net asset value, end of period ........................... $ 10.03 $ 9.93 $ 10.48 $ 11.54
======== ======== ======== ========
================================================================================================================================
Total Investment Based on net asset value per share ....................... 1.01%@@@ (5.25%) (9.18%) 15.40%@@@
Return:** ======== ======== ======== ========
================================================================================================================================
Ratios to Average Expenses, net of reimbursement+++ ........................ 2.08%* 2.05% 2.07% 2.55%*
Net Assets: ======== ======== ======== ========
Expenses+++ .............................................. 2.08%* 2.05% 2.07% 3.91%*
======== ======== ======== ========
Investment loss--net ..................................... (.44%)* (.28%) (.44%) (1.05%)*
======== ======== ======== ========
================================================================================================================================
Supplemental Net assets, end of period (in thousands) ................. $168,566 $174,623 $167,613 $ 36,037
Data: ======== ======== ======== ========
Portfolio turnover ....................................... 79.64% 136.92% 168.54% 81.99%
======== ======== ======== ========
================================================================================================================================
* Annualized.
** Total investment returns exclude the effects of sales charges.
+ Commencement of operations.
++ Based on average shares outstanding.
+++ Includes the Fund's share of the Portfolio's allocated expenses.
@ Effective April 14, 2003, Class D Shares were redesignated Class A Shares.
@@ Amount is less than $(.01) per share.
@@@ Aggregate total investment return.
See Notes to Financial Statements.
8 & 9
Merrill Lynch Large Cap Value Fund, April 30, 2003
FINANCIAL HIGHLIGHTS (concluded)
Class C
-------------------------------------------------
For the
For the Period
The following per share data and ratios have been derived Six Months For the Year Ended Dec. 22,
MERRILL LYNCH from information provided in the financial statements. Ended October 31, 1999+ to
LARGE CAP April 30, ---------------------- Oct. 31,
VALUE FUND Increase (Decrease) in Net Asset Value: 2003 2002 2001 2000
================================================================================================================================
Per Share Net asset value, beginning of period ..................... $ 9.93 $ 10.48 $ 11.54 $ 10.00
Operating -------- -------- -------- --------
Performance: Investment loss--net ..................................... (.02)++ (.03)++ (.04)++ (.01)
Realized and unrealized gain (loss) on investments from
the Portfolio--net ....................................... .12 (.52) (1.02) 1.55
-------- -------- -------- --------
Total from investment operations ......................... .10 (.55) (1.06) 1.54
-------- -------- -------- --------
Less dividends from return of capital--net ............... -- -- --@@ --
-------- -------- -------- --------
Net asset value, end of period ........................... $ 10.03 $ 9.93 $ 10.48 $ 11.54
======== ======== ======== ========
================================================================================================================================
Total Investment Based on net asset value per share ....................... 1.01%@@@ (5.25%) (9.18%) 15.40%@@@
Return:** ======== ======== ======== ========
================================================================================================================================
Ratios to Average Expenses, net of reimbursement+++ ........................ 2.08%* 2.05% 2.07% 2.54%*
Net Assets: ======== ======== ======== ========
Expenses+++ .............................................. 2.08%* 2.05% 2.07% 4.05%*
======== ======== ======== ========
Investment loss--net ..................................... (.46%)* (.28%) (.45%) (1.04%)*
======== ======== ======== ========
================================================================================================================================
Supplemental Net assets, end of period (in thousands) ................. $101,922 $ 95,895 $ 77,901 $ 15,885
Data: ======== ======== ======== ========
Portfolio turnover ....................................... 79.64% 136.92% 168.54% 81.99%
======== ======== ======== ========
================================================================================================================================
Class I@
-------------------------------------------------
For the
For the Period
The following per share data and ratios have been derived Six Months For the Year Ended Dec. 22,
from information provided in the financial statements. Ended October 31, 1999+ to
April 30, ---------------------- Oct. 31,
Increase (Decrease) in Net Asset Value: 2003 2002 2001 2000
================================================================================================================================
Per Share Net asset value, beginning of period ..................... $ 10.21 $ 10.67 $ 11.64 $ 10.00
Operating -------- -------- -------- --------
Performance: Investment income (loss)--net ............................ .03++ .05++ .07++ --@@
Realized and unrealized gain (loss) on investments from
the Portfolio--net ....................................... .12 (.51) (1.03) 1.64
-------- -------- -------- --------
Total from investment operations ......................... .15 (.46) (.96) 1.64
-------- -------- -------- --------
Less dividends from return of capital--net ............... -- -- (.01) --
-------- -------- -------- --------
Net asset value, end of period ........................... $ 10.36 $ 10.21 $ 10.67 $ 11.64
======== ======== ======== ========
================================================================================================================================
Total Investment Based on net asset value per share ....................... 1.47%@@@ (4.31%) (8.21%) 16.40%@@@
Return:** ======== ======== ======== ========
================================================================================================================================
Ratios to Average Expenses, net of reimbursement+++ ........................ 1.05%* 1.03% 1.04% 1.32%*
Net Assets: ======== ======== ======== ========
Expenses+++ .............................................. 1.05%* 1.03% 1.04% 5.32%*
======== ======== ======== ========
Investment income (loss)--net ............................ .57%* .76% .60% (.07%)*
======== ======== ======== ========
================================================================================================================================
Supplemental Net assets, end of period (in thousands) ................. $ 73,047 $ 66,754 $ 42,641 $ 16,211
Data: ======== ======== ======== ========
Portfolio turnover ....................................... 79.64% 136.92% 168.54% 81.99%
======== ======== ======== ========
================================================================================================================================
Class R
----------
For the
Period
The following per share data and ratios have been derived January 3,
from information provided in the financial statements. 2003+ to
April 30,
Increase (Decrease) in Net Asset Value: 2003
===============================================================================================================================
Per Share Net asset value, beginning of period ............................................................ $ 10.12
Operating ----------
Performance: Investment income--net++ ........................................................................ --@@
Realized and unrealized loss on investments from the Portfolio--net ............................. (.04)
----------
Total from investment operations ................................................................ (.04)
----------
Net asset value, end of period .................................................................. $ 10.08
----------
===============================================================================================================================
Total Investment Based on net asset value per share .............................................................. (0.40%)@@@
Return:** ==========
===============================================================================================================================
Ratios to Average Expenses, net of reimbursement+++ ............................................................... 1.55%*
Net Assets: ==========
Expenses+++ ..................................................................................... 1.55%*
==========
Investment income--net .......................................................................... (.04%)*
==========
===============================================================================================================================
Supplemental Net assets, end of period (in thousands) ........................................................ $ --@@@@
Data: ==========
Portfolio turnover .............................................................................. 79.64%
==========
===============================================================================================================================
* Annualized.
** Total investment returns exclude the effects of sales charges.
+ Commencement of operations.
++ Based on average shares outstanding.
+++ Includes the Fund's share of the Portfolio's allocated expenses.
@ Effective April 14, 2003, Class A Shares were redesignated Class I Shares.
@@ Amount is less than $(.01) per share.
@@@ Aggregate total investment return.
@@@@ Amount is less than $1,000.
See Notes to Financial Statements.
10 & 11
Merrill Lynch Large Cap Value Fund, April 30, 2003
NOTES TO FINANCIAL STATEMENTS
MERRILL LYNCH
LARGE CAP
VALUE FUND
1. Significant Accounting Policies:
Merrill Lynch Large Cap Value Fund of Merrill Lynch Large Cap Series Funds, Inc.
(the "Fund") is registered under the Investment Company Act of 1940 as a
diversified mutual fund. The Fund seeks to achieve its investment objective by
investing all of its assets in the Master Large Cap Value Portfolio (the
"Portfolio"), which is a portfolio of Master Large Cap Series Trust that has the
same investment objective as the Fund. The value of the Fund's investment in the
Portfolio reflects the Fund's proportionate interest in the net assets of the
Portfolio. The performance of the Fund is directly affected by the performance
of the Portfolio. The financial statements of the Portfolio, including the
Schedule of Investments, are included elsewhere in this report and should be
read in conjunction with the Fund's financial statements. The Fund's financial
statements are prepared in conformity with accounting principles generally
accepted in the United States of America, which may require the use of
management accruals and estimates. These unaudited financial statements reflect
all adjustments, which are, in the opinion of management, necessary to a fair
statement of the results for the interim period presented. All such adjustments
are of a normal, recurring nature. The percentage of the Portfolio owned by the
Fund at April 30, 2003 was 100%. The Fund offers multiple classes of shares.
Effective April 14, 2003, Class A Shares were redesignated Class I Shares and
Class D Shares were redesignated Class A Shares. The Fund's financial statements
and financial highlights, contained within this report, reflect the new share
class redesignation. Shares of Class I and Class A 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. Income, expenses (other than expenses attributable to
a specific class) and realized and unrealized gains and losses on investments
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 -- The Fund records its investment in the Portfolio
at fair value. Valuation of securities held by the Portfolio is discussed in
Note 1a of the Portfolio's Notes to Financial Statements, which are included
elsewhere in this report.
(b) Investment income and expenses -- The Fund records daily its proportionate
share of the Portfolio's income, expenses and realized and unrealized gains and
losses. In addition, the Fund accrues its own expenses.
(c) 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 shareholders. Therefore,
no Federal income tax provision is required. Under the applicable foreign tax
law, withholding taxes may be imposed on interest, dividends and capital gains
at various rates.
(d) Prepaid registration fees -- Prepaid registration fees are charged to
expense as the related shares are issued.
(e) Dividends and distributions -- Dividends and distributions paid by the Fund
are recorded on the ex-dividend dates.
(f) Investment transactions -- Investment transactions in the Portfolio are
accounted for on a trade date basis.
2. Transactions with Affiliates:
The Fund has entered into an Administration Agreement with Fund Asset
Management, L.P. ("FAM"). The general partner of FAM is Princeton Services, Inc.
("PSI"), a wholly-owned subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."),
which is the limited partner. The Fund pays a monthly fee at an annual rate of
..25% of the Fund's average daily net assets for the performance of
administrative services (other than investment advice and related portfolio
activities) necessary for the operation of the Fund.
The Fund 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.
Pursuant to the Distribution Plans adopted by the Fund in accordance with Rule
12b-1 under the Investment Company Act of 1940, the Fund pays the Distributor
ongoing account maintenance and distribution fees. The fees are accrued daily
and paid monthly at annual rates based upon the average daily net assets of the
shares as follows:
- --------------------------------------------------------------------------------
Account Distribution
Maintenance Fee Fee
- --------------------------------------------------------------------------------
Class 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"), a subsidiary of ML & Co., also provides account
maintenance and distribution services to the Fund. The ongoing account
maintenance fee compensates the Distributor and MLPF&S for providing account
maintenance services to Class A, Class B and Class C shareholders. The ongoing
distribution fee compensates the Distributor and MLPF&S for providing
shareholder and distribution-related services to Class B and Class C
shareholders.
For the six months ended April 30, 2003, 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 .......................................... $4,458 $68,844
Class I .......................................... $ 37 $ 520
- --------------------------------------------------------------------------------
For the six months ended April 30, 2003, MLPF&S received contingent deferred
sales charges of $211,370 and $10,696 relating to transactions in Class B and
Class C Shares, respectively.
Financial Data Services, Inc. ("FDS"), an indirect, wholly-owned subsidiary of
ML & Co., is the Fund's transfer agent.
Certain officers and/or directors of the Fund are officers and/or directors of
FAM, FAMD, FDS, and/or ML & Co.
3. Capital Share Transactions:
Net increase in net assets derived from capital share transactions was
$20,171,182 and $89,427,595 for the six months ended April 30, 2003 and for the
year ended October 31, 2002, respectively.
Transactions in capital shares for each class were as follows:
- -------------------------------------------------------------------------------
Class A Shares for the Six Months Dollar
Ended April 30, 2003+ Shares Amount
- -------------------------------------------------------------------------------
Shares sold ..................................... 1,319,279 $ 13,184,759
Shares issued resulting from
reorganization .................................. 20,860 209,524
Automatic conversion of shares .................. 982,855 9,198,222
------------ ------------
Total issued .................................... 2,322,994 22,592,505
Shares redeemed ................................. (603,119) (5,927,137)
------------ ------------
Net increase .................................... 1,719,875 $ 16,665,368
============ ============
- -------------------------------------------------------------------------------
+ Effective April 14, 2003, Class D Shares were redesignated Class A Shares.
- -------------------------------------------------------------------------------
Class A Shares for the Year Dollar
Ended October 31, 2002+ Shares Amount
- -------------------------------------------------------------------------------
Shares sold ..................................... 2,738,977 $ 31,744,144
Shares redeemed ................................. (1,701,757) (17,914,966)
------------ ------------
Net increase .................................... 1,037,220 $ 13,829,178
============ ============
- -------------------------------------------------------------------------------
+ Effective April 14, 2003, Class D Shares were redesignated Class A Shares.
- -------------------------------------------------------------------------------
Class B Shares for the Six Months Dollar
Ended April 30, 2003 Shares Amount
- -------------------------------------------------------------------------------
Shares sold ..................................... 2,343,558 $ 22,962,604
Shares issued resulting from
reorganization .................................. 236,587 2,319,101
------------ ------------
Total issued .................................... 2,580,145 25,281,705
Automatic conversion of shares .................. (1,006,654) (9,198,222)
Shares redeemed ................................. (2,354,016) (22,876,466)
------------ ------------
Net decrease .................................... (780,525) $ (6,792,983)
============ ============
- -------------------------------------------------------------------------------
12 & 13
Merrill Lynch Large Cap Value Fund, April 30, 2003
NOTES TO FINANCIAL STATEMENTS (concluded)
MERRILL LYNCH
LARGE CAP
VALUE FUND
- -------------------------------------------------------------------------------
Class B Shares for the Year Dollar
Ended October 31, 2002 Shares Amount
- -------------------------------------------------------------------------------
Shares sold ..................................... 6,025,209 $ 68,249,425
Shares redeemed ................................. (4,430,899) (48,486,592)
------------ ------------
Net increase .................................... 1,594,310 $ 19,762,833
============ ============
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Class C Shares for the Six Months Dollar
Ended April 30, 2003 Shares Amount
- -------------------------------------------------------------------------------
Shares sold ..................................... 1,891,587 $ 18,593,805
Shares issued resulting from
reorganization .................................. 16,579 162,483
------------ ------------
Total issued .................................... 1,908,166 18,756,288
Shares redeemed ................................. (1,403,794) (13,624,430)
------------ ------------
Net increase .................................... 504,372 $ 5,131,858
============ ============
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Class C Shares for the Year Dollar
Ended October 31, 2002 Shares Amount
- -------------------------------------------------------------------------------
Shares sold ..................................... 4,379,496 $ 48,906,399
Shares redeemed ................................. (2,153,830) (23,471,469)
------------ ------------
Net increase .................................... 2,225,666 $ 25,434,930
============ ============
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Class I Shares for the Six Months Dollar
Ended April 30, 2003+ Shares Amount
- -------------------------------------------------------------------------------
Shares sold ..................................... 1,696,175 $ 17,094,373
Shares redeemed ................................. (1,187,396) (11,927,534)
------------ ------------
Net increase .................................... 508,779 $ 5,166,839
============ ============
- -------------------------------------------------------------------------------
+ Effective April 14, 2003, Class A Shares were redesignated Class I Shares.
- -------------------------------------------------------------------------------
Class I Shares for the Year Dollar
Ended October 31, 2002+ Shares Amount
- -------------------------------------------------------------------------------
Shares sold ..................................... 4,259,603 $ 49,669,655
Shares redeemed ................................. (1,717,895) (19,269,001)
------------ ------------
Net increase .................................... 2,541,708 $ 30,400,654
============ ============
- -------------------------------------------------------------------------------
+ Effective April 14, 2003, Class A Shares were redesignated Class I Shares.
- -------------------------------------------------------------------------------
Class R Shares for the Period Dollar
January 3, 2003+ to April 30, 2003 Shares Amount
- -------------------------------------------------------------------------------
Shares sold .................................. 9.881 $ 100
------------ ------------
Net increase ................................. 9.881 $ 100
============ ============
- -------------------------------------------------------------------------------
+ Commencement of operations.
4. Capital Loss Carryforward:
On October 31, 2002, the Fund had a net capital loss carryforward of
$41,574,810, of which $119,492 expires in 2008, $17,784,252 expires in 2009 and
$23,671,066 expires in 2010. This amount will be available to offset like
amounts of any future taxable gains.
5. Acquisition of Mercury Large Cap Value Fund:
On April 28, 2003, the Fund acquired all of the net assets of Mercury Large Cap
Value Fund pursuant to a plan of reorganization. The acquisition was
accomplished by a tax-free exchange of 278,298 shares of Common Stock of Mercury
Large Cap Value Fund for 274,022 shares of Common Stock of the Fund. Mercury
Large Cap Value Fund's net assets on that date of $2,691,108, including $107,885
of net unrealized appreciation and $540,973 of accumulated net realized capital
losses, were combined with those of the Fund. The aggregate net assets
immediately after the acquisition amounted to $398,579,182.
OFFICERS & DIRECTORS/TRUSTEES
Terry K. Glenn, President and Director/Trustee
James H. Bodurtha, Director/Trustee
Joe Grills, Director/Trustee
Herbert I. London, Director/Trustee
Andre F. Perold, Director/Trustee
Roberta Cooper Ramo, Director/Trustee
Robert S. Salomon, Jr., Director/Trustee
Stephen B. Swensrud, Director/Trustee
Robert C. Doll, Jr., Senior Vice President and
Portfolio Manager
Donald C. Burke, Vice President and Treasurer
Phillip S. Gillespie, Acting Secretary
Custodian
Brown Brothers Harriman & Co.
40 Water Street
Boston, MA 02109-3661
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
800-637-3863
- --------------------------------------------------------------------------------
Melvin R. Seiden, Director/Trustee of Merrill Lynch Large Cap Value Fund, has
recently retired. The Fund's Board of Directors/Trustees wishes Mr. Seiden well
in his retirement.
- --------------------------------------------------------------------------------
14 & 15
Merrill Lynch Large Cap Value Fund, April 30, 2003
SCHEDULE OF INVESTMENTS (in U.S. dollars)
Master Large Cap Value Portfolio
----------------------------------------------------------------------------------------------------------------
Percent
Shares of Net
SECTOR Industry* Held Common Stocks Value Assets
====================================================================================================================================
Consumer Hotels, Restaurants & 125,000 +GTECH Holdings Corporation $ 4,208,750 1.0%
Discretionary Leisure 153,000 +Mandalay Resort Group 4,042,260 1.0
----------------------------------------------------------------------------------------------------------------
Household Durables 177,000 +American Greetings Corporation (Class A) 2,577,120 0.6
69,000 Centex Corporation 4,555,380 1.1
88,000 Fortune Brands, Inc. 4,259,200 1.0
76,000 Pulte Corporation 4,407,240 1.1
82,000 The Ryland Group, Inc. 4,446,860 1.1
----------------------------------------------------------------------------------------------------------------
Leisure Equipment & 155,000 Eastman Kodak Company 4,636,050 1.1
Products 267,000 Hasbro, Inc. 4,272,000 1.1
194,000 Mattel, Inc. 4,217,560 1.0
----------------------------------------------------------------------------------------------------------------
Multiline Retail 232,000 J.C. Penney Company, Inc. 3,957,920 1.0
----------------------------------------------------------------------------------------------------------------
Specialty Retail 314,000 +AutoNation, Inc. 4,348,900 1.1
128,000 Blockbuster Inc. (Class A) 2,288,640 0.6
----------------------------------------------------------------------------------------------------------------
Textiles, Apparel & Luxury 138,000 Liz Claiborne, Inc. 4,489,140 1.1
Goods 134,000 +Reebok International Ltd. 4,162,040 1.0
----------------------------------------------------------------------------------------------------------------
Total Consumer Discretionary
(Cost--$55,886,885) 60,869,060 14.9
====================================================================================================================================
Consumer Staples Beverages 198,000 Coca-Cola Enterprises Inc. 3,859,020 0.9
161,000 +Constellation Brands, Inc. (Class A) 4,316,410 1.1
----------------------------------------------------------------------------------------------------------------
Food Products 104,000 +Dean Foods Company 4,527,120 1.1
95,000 General Mills, Inc. 4,285,450 1.1
----------------------------------------------------------------------------------------------------------------
Total Consumer Staples (Cost--$16,298,731) 16,988,000 4.2
====================================================================================================================================
Energy Oil & Gas 81,000 Apache Corporation 4,637,250 1.1
96,000 Burlington Resources Inc. 4,445,760 1.1
57,000 ConocoPhillips 2,867,100 0.7
451,000 Exxon Mobil Corporation 15,875,200 3.9
210,000 Marathon Oil Corporation 4,781,700 1.2
109,000 Pogo Producing Company 4,316,400 1.1
38,000 Sunoco, Inc. 1,413,980 0.3
122,000 Valero Energy Corporation 4,483,500 1.1
----------------------------------------------------------------------------------------------------------------
Multi-Utilities & 893,000 Dynegy Inc. (Class A) 3,929,200 1.0
Unregulated Power
----------------------------------------------------------------------------------------------------------------
Total Energy (Cost--$49,823,258) 46,750,090 11.5
====================================================================================================================================
Financials Commercial Banks 212,000 Bank of America Corporation 15,698,600 3.7
112,000 Banknorth Group, Inc. 2,674,560 0.7
71,000 Capitol Federal Financial 2,211,650 0.5
83,000 Commerce Bancorp, Inc. 3,375,610 0.8
63,000 Golden West Financial Corporation 4,751,460 1.2
94,000 GreenPoint Financial Corp. 4,489,440 1.1
39,000 Hibernia Corporation (Class A) 706,680 0.2
88,000 Hudson United Bancorp 2,933,920 0.7
148,000 Independence Community Bank Corp. 3,870,200 1.0
195,000 National City Corporation 5,842,200 1.4
126,000 New York Community Bancorp, Inc. 4,374,720 1.1
125,000 Popular, Inc. 4,567,500 1.1
62,000 Roslyn Bancorp, Inc. 1,182,960 0.3
175,000 SouthTrust Corporation 4,700,675 1.2
367,000 U.S. Bancorp 8,129,050 2.0
244,000 Wachovia Corporation 9,323,240 2.3
131,000 Washington Federal, Inc. 2,855,800 0.7
213,000 Washington Mutual, Inc. 8,413,500 2.1
24,000 Webster Financial Corporation 900,960 0.2
----------------------------------------------------------------------------------------------------------------
Diversified Financial 67,000 The Bear Stearns Companies Inc. 4,478,280 1.1
Services 211,000 Citigroup Inc. 8,281,750 2.0
74,000 Countrywide Credit Industries, Inc. 5,002,400 1.2
334,000 J.P. Morgan Chase & Co. 9,802,900 2.4
----------------------------------------------------------------------------------------------------------------
Insurance 120,000 The Allstate Corporation 4,534,800 1.1
65,000 American Financial Group, Inc. 1,441,700 0.4
73,000 Berkley (W.R.) Corporation 3,390,120 0.8
169,000 MetLife, Inc. 4,855,370 1.2
----------------------------------------------------------------------------------------------------------------
Total Financials (Cost--$120,242,629) 132,790,045 32.5
====================================================================================================================================
Health Care Biotechnology 139,000 +Invitrogen Corporation 4,545,300 1.1
----------------------------------------------------------------------------------------------------------------
Health Care Equipment & 118,000 Bausch & Lomb Incorporated 4,148,880 1.0
Supplies 71,000 C.R. Bard, Inc. 4,499,980 1.1
184,000 +STERIS Corporation 4,176,800 1.0
----------------------------------------------------------------------------------------------------------------
Health Care Providers & 93,000 Aetna Inc. (New Shares) 4,631,400 1.1
Services 151,000 +DaVita, Inc. 3,113,620 0.8
255,000 +Humana Inc. 2,817,750 0.7
145,000 Omnicare, Inc. 3,845,400 0.9
44,000 +WellPoint Health Networks Inc. 3,341,360 0.8
----------------------------------------------------------------------------------------------------------------
Pharmaceuticals 77,000 +Medicis Pharmaceutical (Class A) 4,438,280 1.1
167,000 Merck & Co., Inc. 9,716,060 2.4
148,000 +Watson Pharmaceuticals, Inc. 4,302,360 1.1
----------------------------------------------------------------------------------------------------------------
Total Health Care (Cost--$48,696,236) 53,577,190 13.1
====================================================================================================================================
16 & 17
Merrill Lynch Large Cap Value Fund, April 30, 2003
SCHEDULE OF INVESTMENTS (concluded) (in U.S. dollars)
Master Large Cap Value Portfolio (concluded)
----------------------------------------------------------------------------------------------------------------
Shares
Held/ Percent
Beneficial of Net
SECTOR Industry* Interest Common Stocks Value Assets
====================================================================================================================================
Industrials Air Freight & Logistics 170,000 Ryder System, Inc. 4,222,800 1.0%
----------------------------------------------------------------------------------------------------------------
Auto Components 51,000 Autoliv, Inc. 1,239,300 0.3
----------------------------------------------------------------------------------------------------------------
Automobiles 572,000 Ford Motor Company 5,891,600 1.4
----------------------------------------------------------------------------------------------------------------
Commercial Services & 156,000 +CheckFree Corp. 4,300,920 1.1
Supplies 79,000 H & R Block, Inc. 3,050,980 0.7
----------------------------------------------------------------------------------------------------------------
Road & Rail 236,000 Norfolk Southern Corporation 5,005,560 1.3
----------------------------------------------------------------------------------------------------------------
Total Industrials (Cost--$21,115,773) 23,711,160 5.8
====================================================================================================================================
Information Communications Equipment 230,000 +3Com Corporation 1,196,000 0.3
Technology 284,000 +Advanced Fibre Communications, Inc. 4,345,200 1.1
213,000 +Emulex Corporation 4,364,370 1.1
----------------------------------------------------------------------------------------------------------------
Computers & Peripherals 523,000 Hewlett-Packard Company 8,524,900 2.1
186,000 +Storage Technology Corporation 4,597,920 1.1
----------------------------------------------------------------------------------------------------------------
Electronic Equipment & 116,000 +Arrow Electronics, Inc. 1,958,080 0.5
Instruments 142,000 +Avnet, Inc. 1,810,500 0.4
56,000 PerkinElmer, Inc. 555,520 0.1
223,000 +Thermo Electron Corporation 4,051,910 1.0
----------------------------------------------------------------------------------------------------------------
IT Services 446,000 +Unisys Corporation 4,638,400 1.1
----------------------------------------------------------------------------------------------------------------
Office Electronics 522,000 +Xerox Corporation 5,146,920 1.3
----------------------------------------------------------------------------------------------------------------
Software 274,000 +BMC Software, Inc. 4,088,080 1.0
332,000 +Macromedia, Inc. 4,186,520 1.0
----------------------------------------------------------------------------------------------------------------
Total Information Technology
(Cost--$50,650,445) 49,464,320 12.1
====================================================================================================================================
Materials Containers & Packaging 73,000 Ball Corporation 4,099,680 1.0
196,000 +Pactiv Corporation 4,021,920 1.0
----------------------------------------------------------------------------------------------------------------
Total Materials (Cost--$7,557,477) 8,121,600 2.0
====================================================================================================================================
Telecommunications Diversified 447,000 Sprint Corporation 5,144,970 1.3
Services Telecommunication Services 43,000 Verizon Communications 1,607,340 0.3
----------------------------------------------------------------------------------------------------------------
Wireless Telecommunication 747,000 +AT&T Wireless Services Inc. 4,825,620 1.2
Services
----------------------------------------------------------------------------------------------------------------
Total Telecommunications Services
(Cost--$12,129,510) 11,577,930 2.8
====================================================================================================================================
Utilities Electric Utilities 50,000 Entergy Corporation 2,330,500 0.6
----------------------------------------------------------------------------------------------------------------
Gas Utilities 81,000 Sempra Energy 2,174,040 0.5
----------------------------------------------------------------------------------------------------------------
Total Utilities (Cost--$4,283,743) 4,504,540 1.1
====================================================================================================================================
Total Common Stocks (Cost--$386,684,687) 408,353,935 100.0
====================================================================================================================================
Short-Term Securities
====================================================================================================================================
$ 202,254 Merrill Lynch Liquidity Series, LLC Cash
Sweep Series I (a) 202,254 0.1
$40,536,991 Merrill Lynch Liquidity Series, LLC Money
Market Series (a)(b) 40,536,991 9.9
27,024,659 Merrill Lynch Premier Institutional Fund
(a)(b) 27,024,659 6.6
----------------------------------------------------------------------------------------------------------------
Total Short-Term Securities
(Cost--$67,763,904) 67,763,904 16.6
====================================================================================================================================
Total Investments
(Cost--$454,448,591) 476,117,839 116.6
Liabilities in Excess
of Other Assets (67,851,015) (16.6)
------------ -----
Net Assets $408,266,824 100.0%
============ =====
====================================================================================================================================
* For Portfolio 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 Portfolio
management. This definition may not apply for purposes of this report,
which may combine such industry sub-classifications for reporting ease.
+ Non-income producing security.
(a) Investments in companies considered to be an affiliate of the Portfolio
(such companies are defined as "Affiliated Companies" in Section 2 (a)(3)
of the Investment Company Act of 1940) are as follows:
- --------------------------------------------------------------------------------
Dividend/
Net Interest
Affiliate Activity Income
- --------------------------------------------------------------------------------
Merrill Lynch Liquidity Series, LLC
Cash Sweep Series I $ 202,254 $ 1,019
Merrill Lynch Liquidity Series, LLC
Money Market Series $40,536,991 15,932
Merrill Lynch Premier Institutional Fund 27,024,659 13,883
- --------------------------------------------------------------------------------
(b) Security was purchased with the cash proceeds from securities loans.
See Notes to Financial Statements.
18 & 19
Merrill Lynch Large Cap Value Fund, April 30, 2003
STATEMENT OF ASSETS AND LIABILITIES
MASTER LARGE CAP
VALUE PORTFOLIO As of April 30, 2003
=================================================================================================================================
Assets: Investments, at value (including securities loaned of $59,431,922) (identified
cost--$454,448,591) ............................................................ $476,117,839
Receivables:
Securities sold .............................................................. $ 23,134,795
Contributions ................................................................ 479,794
Dividends .................................................................... 337,676
Securities lending--net ...................................................... 2,026
Interest ..................................................................... 11 23,954,302
------------
Prepaid expenses and other assets .............................................. 51,786
------------
Total assets ................................................................... 500,123,927
------------
=================================================================================================================================
Liabilities: Collateral on securities loaned, at value ...................................... 67,561,650
Payables:
Securities purchased ......................................................... 23,399,897
Withdrawals .................................................................. 587,959
Investment adviser ........................................................... 179,129
Custodian bank ............................................................... 90,439
Other affiliates ............................................................. 2,989 24,260,413
------------
Accrued expenses ............................................................... 35,040
------------
Total liabilities .............................................................. 91,857,103
------------
=================================================================================================================================
Net Assets: Net assets ..................................................................... $408,266,824
============
=================================================================================================================================
Net Assets Investors' capital ............................................................. $386,597,576
Consist of: Unrealized appreciation on investments--net .................................... 21,669,248
------------
Net assets ..................................................................... $408,266,824
============
=================================================================================================================================
See Notes to Financial Statements.
STATEMENT OF OPERATIONS
MASTER LARGE CAP
VALUE PORTFOLIO For the Six Months Ended April 30, 2003
=================================================================================================================================
Investment Dividends (net of $3,500 foreign withholding tax) .............................. $ 3,138,939
Income: Securities lending--net ........................................................ 29,815
Interest ....................................................................... 2,021
------------
Total income ................................................................... 3,170,775
------------
=================================================================================================================================
Expenses: Investment advisory fees ....................................................... $ 977,824
Accounting services ............................................................ 104,481
Custodian fees ................................................................. 21,967
Professional fees .............................................................. 21,119
Trustees' fees and expenses .................................................... 12,855
Printing and shareholder reports ............................................... 1,306
Pricing fees ................................................................... 637
Other .......................................................................... 5,774
------------
Total expenses ................................................................. 1,145,963
------------
Investment income--net ......................................................... 2,024,812
------------
=================================================================================================================================
Realized & Realized loss on investments--net .............................................. (23,254,572)
Unrealized Gain Change in unrealized depreciation on investments--net .......................... 27,964,675
(Loss) On ------------
Investments--Net Total realized and unrealized gain on investments--net ......................... 4,710,103
------------
Net Increase in Net Assets Resulting from Operations ........................... $ 6,734,915
============
=================================================================================================================================
See Notes to Financial Statements.
20 & 21
Merrill Lynch Large Cap Value Fund, April 30, 2003
STATEMENTS OF CHANGES IN NET ASSETS
For the Six For the
Months Ended Year Ended
MASTER LARGE CAP April 30, October 31,
VALUE PORTFOLIO Increase (Decrease) in Net Assets: 2003 2002
=================================================================================================================================
Operations: Investment income--net ......................................................... $ 2,024,812 $ 4,687,895
Realized loss on investments--net .............................................. (23,254,572) (26,670,388)
Change in unrealized appreciation/depreciation on investments--net ............. 27,964,675 (4,948,662)
------------ ------------
Net increase (decrease) in net assets resulting from operations ................ 6,734,915 (26,931,155)
------------ ------------
=================================================================================================================================
Net Capital Proceeds from contributions .................................................... 81,127,738 201,089,005
Transactions: Fair value of withdrawals ...................................................... (66,513,662) (115,459,189)
------------ ------------
Net increase in net assets derived from capital transactions ................... 14,614,076 85,629,816
------------ ------------
=================================================================================================================================
Net Assets: Total increase in net assets ................................................... 21,348,991 58,698,661
Beginning of period ............................................................ 386,917,833 328,219,172
------------ ------------
End of period .................................................................. $408,266,824 $386,917,833
============ ============
=================================================================================================================================
See Notes to Financial Statements.
FINANCIAL HIGHLIGHTS
For the
For the Period
The following ratios have been derived from Six Months For the Year Ended Dec. 22,
information provided in the financial statements. Ended October 31, 1999+ to
MASTER LARGE CAP April 30, ---------------------- Oct. 31,
VALUE PORTFOLIO Increase (Decrease) in Net Asset Value: 2003 2002 2001 2000
=================================================================================================================================
Total Investment 1.96% (3.40%) -- --
Return:** ======== ======== ======== ========
=================================================================================================================================
Ratios to Average Expenses, net of reimbursement ............................ .59%* .60% .67% 1.24%*
Net Assets: ======== ======== ======== ========
Expenses .................................................. .59%* .60% .67% 1.63%*
======== ======== ======== ========
Investment income--net .................................... 1.04%* 1.17% .96% .17%*
======== ======== ======== ========
=================================================================================================================================
Supplemental Net assets, end of period (in thousands) .................. $408,267 $386,918 $328,219 $ 77,138
Data: ======== ======== ======== ========
Portfolio turnover ........................................ 79.64% 136.92% 168.54% 81.99%
======== ======== ======== ========
=================================================================================================================================
* Annualized.
** Total return is required to be disclosed for fiscal years beginning after
December 15, 2000.
+ Commencement of operations.
See Notes to Financial Statements.
22 & 23
Merrill Lynch Large Cap Value Fund, April 30, 2003
NOTES TO FINANCIAL STATEMENTS
MASTER LARGE CAP
VALUE PORTFOLIO
1. Significant Accounting Policies:
Master Large Cap Value Portfolio (the "Portfolio") is part of Master Large Cap
Series Trust (the "Trust"). The Trust is registered under the Investment Company
Act of 1940 and is organized as a Delaware statutory trust. The Declaration of
Trust permits the Trustees to issue nontransferable interests in the Portfolio,
subject to certain limitations. The Portfolio's financial statements are
prepared in conformity with accounting principles generally accepted in the
United States of America, which may require the use of management accruals and
estimates. These unaudited financial statements reflect all adjustments, which
are, in the opinion of management, necessary to a fair statement of the results
for the interim period presented. All such adjustments are of a normal,
recurring nature. The following is a summary of significant accounting policies
followed by the Portfolio.
(a) Valuation of investments -- Portfolio securities that are traded on stock
exchanges or Nasdaq National are valued at the last sale price or official
closing price on the exchange on which such securities are traded as of the
close of business on the day the securities are being valued or, lacking any
sales, at the last available bid price for long positions, and at the last
available ask price for short positions. Securities traded in the
over-the-counter market are valued at the last available bid price to the time
of valuation. Portfolio securities that are traded both in the over-the-counter
market and on a stock exchange are valued according to the broadest and most
representative market. Options written or purchased are valued at the last sale
price in the case of exchange-traded options. In the case of options traded in
the over-the-counter market, valuation is the last asked price (options written)
or the last bid price (options purchased). Short-term securities are valued at
amortized cost, which approximates market value. Other investments, including
futures contracts and related options, are stated at market value. Securities
and assets for which market quotations are not readily available are valued at
fair market value, as determined in good faith by or under the direction of the
Trust's Board of Trustees. Occasionally, events affecting the values of
securities and other assets may occur between the times at which valuations of
such securities are determined (that is, close of the market on which such
securities trade) and the close of business on the NYSE. If events (for example,
company announcement, natural disasters, market volatility) occur during such
periods that are expected to materially affect the value for such securities,
those securities may be valued at their fair market value as determined in good
faith by the Trust's Board of Trustees or by the investment adviser using a
pricing service and/or procedures approved by the Board of Trustees of the
Trust.
(b) Derivative financial instruments -- The Portfolio may engage in various
portfolio investment strategies both to increase the return of the Portfolio and
to hedge, or protect, its exposure to interest rate movement 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.
o Financial futures contracts -- The Portfolio may purchase or sell financial
futures contracts and options on such futures contracts. Upon entering into a
contract, the Portfolio deposits and maintains as collateral such initial margin
as required by the exchange on which the transaction is effected. Pursuant to
the contract, the Portfolio 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
Portfolio as unrealized gains or losses. When the contract is closed, the
Portfolio 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.
o Options -- The Portfolio is authorized to purchase and write call and put
options. When the Portfolio writes an option, an amount equal to the premium
received by the Portfolio is reflected as an asset and an equivalent liability.
The amount of the liability is subsequently marked to market to reflect the
current market value of the option written. When a security is purchased or sold
through an exercise of an option, the related premium paid (or received) is
added to (or deducted from) the basis of the security acquired or deducted from
(or added to) the proceeds of the security sold. When an option expires (or the
Portfolio enters into a closing transaction), the Portfolio realizes a gain or
loss on the option to the extent of the premiums received or paid (or a gain or
loss to the extent that the cost of the closing transaction exceeds the premium
paid or received).
Written and purchased options are non-income producing investments.
o Forward foreign exchange contracts -- The Portfolio is authorized to 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 Portfolio as an unrealized gain or
loss. When the contract is closed, the Portfolio 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.
o Foreign currency options and futures -- The Portfolio 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 Portfolio, sold by the Portfolio but not yet delivered, or committed or
anticipated to be purchased by the Portfolio.
(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 -- The Portfolio is considered as a "pass through" entity for
Federal income tax purposes. As such, each investor in the Portfolio is treated
as owner of its proportionate share of the net assets, income, expenses and
realized and unrealized gains and losses of the Portfolio. Therefore, no Federal
income tax provision is required. It is intended that the Portfolio's assets
will be managed so an investor in the Portfolio can satisfy the requirements of
subchapter M of the Internal Revenue Code.
(e) Security transactions and investment income -- Security transactions are
accounted for on the date the securities are purchased or sold (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 Portfolio has determined the ex-dividend date.
Interest income is recognized on the accrual basis.
(f) Securities lending -- The Portfolio 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 Portfolio and any additional required collateral is delivered to the
Portfolio on the next business day. Where the Portfolio receives securities as
collateral for the loaned securities, the Portfolio typically receives the
income on both the loaned securities and the collateral and, as a result, the
Portfolio's yield may increase. Where the Portfolio receives cash collateral, it
may invest such collateral and retain the amount earned on such investment, net
of any amount rebated to the borrower. The Portfolio may receive a flat fee for
its loans. Loans of securities are terminable at any time and the borrower,
after notice, is required to return borrowed securities within five business
days. The Portfolio may pay reasonable finder's, lending
24 & 25
Merrill Lynch Large Cap Value Fund, April 30, 2003
NOTES TO FINANCIAL STATEMENTS (concluded)
MASTER LARGE CAP
VALUE PORTFOLIO
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 Portfolio could experience
delays and costs in gaining access to the collateral. The Portfolio 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.
(g) Custodian bank -- The Fund recorded an amount payable to the custodian bank
reflecting an overnight overdraft, which resulted from management estimates of
available cash.
2. Investment Advisory Agreement and Transactions with Affiliates:
The Trust has entered into an Investment Advisory Agreement with Fund Asset
Management, L.P. ("FAM"). The general partner of FAM is Princeton Services, Inc.
("PSI"), an indirect, wholly-owned subsidiary of Merrill Lynch & Co., Inc. ("ML
& Co."), which is the limited partner.
FAM is responsible for the management of the Portfolio's investments and
provides the necessary personnel, facilities, equipment and certain other
services necessary to the operations of the Portfolio. For such services, the
Portfolio pays a monthly fee at an annual rate of .75% of the average daily
value of the Portfolio's net assets. Effective January 17, 2001, the annual rate
was changed to .50%. FAM has entered into a Sub-Advisory Agreement with Merrill
Lynch Asset Management U.K. Limited ("MLAM U.K."), an affiliate of FAM, pursuant
to which MLAM U.K. provides investment advisory services to FAM with respect to
the Fund. There is no increase in the aggregate fees paid by the Fund for these
services.
In addition, Merrill Lynch, Pierce, Fenner & Smith ("MLPF&S") received $60 in
commissions on the execution of portfolio security transactions for the Fund for
the six months ended April 30, 2003.
For the six months ended April 30, 2003, the Fund reimbursed FAM $4,440 for
certain accounting services.
The Portfolio has received an exemptive order from the Securities and Exchange
Commission permitting it to lend portfolio securities to MLPF&S Incorporated or
its affiliates. As of April 30, 2003, the Portfolio lent securities with a value
of $7,746,344 to MLPF&S or its affiliates. Pursuant to that order, the Portfolio
also has retained Merrill Lynch Investment Managers, LLC ("MLIM LLC"), an
affiliate of FAM, 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
Portfolio, invest cash collateral received by the Portfolio for such loans,
among other things, in a private investment company managed by MLIM, LLC or in
registered money market funds advised by FAM or its affiliates. For the six
months ended April 30, 2003, MLIM, LLC received $13,038 in securities lending
agent fees.
Certain officers and/or trustees of the Trust are officers and/or directors of
FAM, PSI, MLAM U.K., and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the six
months ended April 30, 2003 were $328,840,263 and $311,752,378, respectively.
Net realized losses for the six months ended April 30, 2003 and net unrealized
gains as of April 30, 2003 were as follows:
- -------------------------------------------------------------------------------
Realized Unrealized
Losses Gains
- -------------------------------------------------------------------------------
Long-term investments ........................... $(23,254,572) $ 21,669,248
------------ ------------
Total ........................................... $(23,254,572) $ 21,669,248
============ ============
- -------------------------------------------------------------------------------
As of April 30, 2003, net unrealized appreciation for Federal income tax
purposes aggregated $16,551,553, of which $31,739,578 related to appreciated
securities and $15,188,025 related to depreciated securities. At April 30, 2003,
the aggregate cost of investments for Federal income tax purposes was
$459,566,286.
4. Short-Term Borrowings:
The Fund, along with certain other funds managed by FAM and its affiliates, is a
party to a $500,000,000 credit agreement with Bank One, N.A. and certain other
lenders. 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 .09% 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 determined by Bank One, N.A. On November 29, 2002, the credit agreement
was renewed for one year under the same terms, except that the commitment was
reduced from $1,000,000,000 to $500,000,000. The Fund did not borrow under the
credit agreement during the six months ended April 30, 2003.
26 & 27
[LOGO] Merrill Lynch Investment Managers
[GRAPHICS OMITTED]
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 Large Cap Value Fund of
Merrill Lynch Large Cap Series Funds, Inc.
Box 9011
Princeton, NJ
08543-9011
[RECYCLED LOGO] Printed on post-consumer recycled paper #CAPVAL--4/03
Item 2 - Did registrant adopt a code of ethics, as of the end of the period
covered by this report, that applies to the registrant's principal
executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions,
regardless of whether these individuals are employed by the registrant
or a third party? If not, why not? Briefly describe any amendments or
waivers that occurred during the period. State here if code of
ethics/amendments/waivers are on website and give website address-.
State here if fund will send code of ethics to shareholders without
charge upon request-- N/A (not answered until July 15, 2003 and only
annually for funds)
Item 3 - Did the registrant's board of directors determine that the registrant
either: (i) has at least one audit committee financial expert serving
on its audit committee; or (ii) does not have an audit committee
financial expert serving on its audit committee? If yes, disclose name
of financial expert and whether he/she is "independent," (fund may, but
is not required, to disclose name/independence of more than one
financial expert) If no, explain why not. -N/A (not answered until July
15, 2003 and only annually for funds)
Item 4 - Disclose annually only (not answered until December 15, 2003)
(a) Audit Fees - Disclose aggregate fees billed for each of the last
two fiscal years for professional services rendered by
the principal accountant for the audit of the
registrant's annual financial statements or services
that are normally provided by the accountant in
connection with statutory and regulatory filings or
engagements for those fiscal years. N/A.
(b) Audit-Related Fees - Disclose aggregate fees billed in each of the
last two fiscal years for assurance and
related services by the principal accountant
that are reasonably related to the performance
of the audit of the registrant's financial
statements and are not reported under
paragraph (a) of this Item. Registrants shall
describe the nature of the services comprising
the fees disclosed under this category. N/A.
(c) Tax Fees - Disclose aggregate fees billed in each of the last two
fiscal years for professional services rendered by the
principal accountant for tax compliance, tax advice, and
tax planning. Registrants shall describe the nature of
the services comprising the fees disclosed under this
category. N/A.
(d) All Other Fees - Disclose aggregate fees billed in each of the last
two fiscal years for products and services
provided by the principal accountant, other than
the services reported in paragraphs (a) through
(c) of this Item. Registrants shall describe the
nature of the services comprising the fees
disclosed under this category. N/A.
(e)(1) Disclose the audit committee's pre-approval policies and
procedures described in paragraph (c)(7) of Rule 2-01 of
Regulation S-X. N/A.
(e)(2) Disclose the percentage of services described in each of
paragraphs (b) through (d) of this Item that were approved by
the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule
2-01 of Regulation S-X. N/A.
(f) If greater than 50%, disclose the percentage of hours expended on
the principal accountant's engagement to audit the registrant's
financial statements for the most recent fiscal year that were
attributed to work performed by persons other than the principal
accountant's full-time, permanent employees. N/A.
(g) Disclose the aggregate non-audit fees billed by the registrant's
accountant for services rendered to the registrant, and rendered to
the registrant's investment adviser (not including any sub-adviser
whose role is primarily portfolio management and is subcontracted
with or overseen by another investment adviser), and any entity
controlling, controlled by, or under common control with the
adviser that provides ongoing services to the registrant for each
of the last two fiscal years of the registrant. N/A.
(h) Disclose whether the registrant's audit committee has considered
whether the provision of non-audit services that were rendered to
the registrant's investment adviser (not including any subadviser
whose role is primarily portfolio management and is subcontracted
with or overseen by another investment adviser), and any entity
controlling, controlled by, or under common control with the
investment adviser that provides ongoing services to the registrant
that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X is compatible with maintaining the principal
accountant's independence. N/A.
Item 5 - If the registrant is a listed issuer as defined in Rule 10A-3 under the
Exchange Act, state whether or not the registrant has a
separately-designated standing audit committee established in
accordance with Section 3(a)(58)(A) of the Exchange Act. If the
registrant has such a committee, however designated, identify each
committee member. If the entire board of directors is acting as the
registrant's audit committee in Section 3(a)(58)(B) of the Exchange
Act, so state.
If applicable, provide the disclosure required by Rule 10A-3(d) under
the Exchange Act regarding an exemption from the listing standards for
audit committees.
(Listed issuers must be in compliance with the new listing rules by the
earlier of their first annual shareholders meeting after January 2004,
or October 31, 2004 (annual requirement))
Item 6 - Reserved
Item 7 - For closed-end funds that contain voting securities in their portfolio,
describe the policies and procedures that it uses to determine how to
vote proxies relating to those portfolio securities. N/A (not answered
until July 1, 2003)
Item 8 -- Reserved
Item 9(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.
Item 9(b) -- There were no significant changes in the registrant's internal
controls or in other factors that could significantly affect these
controls subsequent to the date of their evaluation, including any
corrective actions with regard to significant deficiencies and
material weaknesses.
Item 10 - Exhibits
10(a) - Attach code of ethics or amendments/waivers, unless code of ethics or
amendments/waivers is on website or offered to shareholders upon request
without charge. N/A.
10(b) - Attach certifications pursuant to Section 302 of the Sarbanes-Oxley Act.
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 Large Cap Value Fund
By: /s/ Terry K. Glenn
------------------------------
Terry K. Glenn,
President of
Merrill Lynch Large Cap Value Fund
Date: June 23, 2003
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/ Terry K. Glenn
------------------------------
Terry K. Glenn,
President of
Merrill Lynch Large Cap Value Fund
Date: June 23, 2003
By: /s/ Donald C. Burke
------------------------------
Donald C. Burke,
Chief Financial Officer of
Merrill Lynch Large Cap Value Fund
Date: June 23, 2003
Attached hereto as an exhibit are the certifications pursuant to
Section 906 of the Sarbanes-Oxley Act.