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 811-09637
811-09739
Name of Fund: Merrill Lynch Large Cap Series Funds, Inc.
Master Large Cap Series Trust
Fund Address: P.O. Box 9011
Princeton, NJ 08543-9011
Name and address of agent for service: Robert C. Doll, Jr., Chief Executive
Officer, Merrill Lynch Large Cap Series Funds, Inc. and Master Large Cap
Series Trust, 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: 10/31/05
Date of reporting period: 11/01/04 - 10/31/05
Item 1 - Report to Stockholders
Merrill Lynch
Large Cap Series Funds, Inc.
Annual Reports
October 31, 2005
A Letter From the President
[PHOTO OMITTED]
Dear Shareholder
As the financial markets continued to muddle their way through 2005, the Federal
Reserve Board (the Fed) advanced its monetary tightening campaign full steam
ahead. The 12th consecutive interest rate hike since June 2004 came on November
1, bringing the target federal funds rate to 4%. The central bank is clearly
more focused on inflationary figures than on economic growth, which has shown
some signs of moderating. Despite rising short-term interest rates and
record-high energy prices, the major market indexes managed to post positive
results for the current reporting period:
Total Returns as of October 31, 2005 6-month 12-month
=====================================================================================
U.S. equities (Standard & Poor's 500 Index) + 5.27% + 8.72%
- -------------------------------------------------------------------------------------
Small-cap U.S. equities (Russell 2000 Index) +12.25 +12.08
- -------------------------------------------------------------------------------------
International equities (MSCI Europe Australasia Far East Index) + 8.63 +18.09
- -------------------------------------------------------------------------------------
Fixed income (Lehman Brothers Aggregate Bond Index) + 0.15 + 1.13
- -------------------------------------------------------------------------------------
Tax-exempt fixed income (Lehman Brothers Municipal Bond Index) + 0.59 + 2.54
- -------------------------------------------------------------------------------------
High yield bonds (Credit Suisse First Boston High Yield Index) + 2.87 + 3.54
- -------------------------------------------------------------------------------------
The headlines in recent months focused on Hurricanes Katrina and Rita and, more
recently, the nomination of Ben Bernanke to succeed Alan Greenspan as Chairman
of the Fed. While the hurricanes prompted a spike in energy prices and
short-term disruptions to production and spending, the longer-term economic
impact is likely to be tempered. In fact, the fiscal stimulus associated with
reconstruction efforts in the Gulf Coast region could add to gross domestic
product growth in 2006. Notably, the uncontroversial nomination of Dr. Bernanke
was well received by the markets.
The U.S. equity markets remained largely range bound in 2005. Up to this point,
strong corporate earnings reports and relatively low long-term bond yields have
worked in favor of equities. Looking ahead, high energy prices, continued
interest rate hikes, a potential consumer slowdown and/or disappointing earnings
pose the greatest risks to U.S. stocks. Internationally, many markets have
benefited from strong economic statistics, trade surpluses and solid finances.
The bond market continued to be characterized by a flattening yield curve,
although long-term yields finally began to inch higher toward period end. The
10-year Treasury yield hit 4.57% on October 31, 2005, its highest level in more
than six months. Still, the difference between the two-year and 10-year Treasury
yield was just 17 basis points (.17%) at period end, compared to 149 basis
points a year earlier.
Financial markets are likely to face continued crosscurrents in the months
ahead. Nevertheless, opportunities do exist and we encourage you to work with
your financial advisor to diversify your portfolio among a variety of asset
types. This can help to diffuse risk while also tapping into the potential
benefits of a broader range of investment alternatives. As always, we thank you
for trusting Merrill Lynch Investment Managers with your investment assets.
Sincerely,
/s/ Robert C. Doll, Jr.
Robert C. Doll, Jr.
President and Director/Trustee
2 MERRILL LYNCH LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2005
We are pleased to present to you the management team of
Merrill Lynch Large Cap Series Funds, Inc.
[PHOTO OMITTED]
[PHOTO OMITTED]
Robert C. Doll, Jr.
Senior Portfolio Manager
Senior Portfolio Manager Bob Doll, President and Chief Investment Officer of
Merrill Lynch Investment Managers, joined Merrill Lynch Investment Managers in
1999. He is the head of Merrill Lynch Large Cap Series Funds, Inc. Mr. Doll
received bachelor's degrees from Lehigh University and an MBA from The Wharton
School of the University of Pennsylvania. He is a CFA(R) charterholder and a
Certified Public Accountant. Mr. Doll's investment team includes Senior
Quantitative Analyst Tasos Bouloutas, Director of Equity Operations Brenda Sklar
and Fundamental Analyst Dan Hanson. Mr. Bouloutas earned a master's degree and a
Ph.D. from Columbia University. Ms. Sklar earned a bachelor's degree from the
University of Delaware. She is a Certified Public Accountant. Mr. Hanson
received a bachelor's degree from Middlebury College and an MBA from the
University of Chicago. He is a CFA charterholder and member of the CFA
Institute.
================================================================================
Table of Contents Page
- --------------------------------------------------------------------------------
A Letter From the President ............................................ 2
A Discussion With Your Funds' Portfolio Manager ........................ 4
Performance Data ....................................................... 6
Disclosure of Expenses ................................................. 11
Fund Financial Statements .............................................. 13
Fund Financial Highlights .............................................. 18
Fund Notes to Financial Statements ..................................... 28
Portfolio Information .................................................. 34
Master Schedules of Investments ........................................ 36
Master Financial Statements ............................................ 43
Master Financial Highlights ............................................ 48
Master Notes to Financial Statements ................................... 50
Reports of Independent Registered Public Accounting Firm ............... 33, 53
Important Tax Information .............................................. 56
Officers and Directors/Trustees ........................................ 57
CFA(R) and Chartered Financial Analyst(R) are trademarks owned by the CFA
Institute.
MERRILL LYNCH LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2005 3
A Discussion With Your Funds' Portfolio Manager
The Funds significantly outperformed their respective benchmarks for the
period, largely due to successful stock selection across various sectors and
good sector allocation decisions.
How did the Merrill Lynch Large Cap Series Funds perform during the fiscal year
in light of the existing market conditions?
For the 12-month period ended October 31, 2005, Merrill Lynch Large Cap Core
Fund's Class A, Class B, Class C, Class I and Class R Shares had total returns
of +17.61%, +16.69%, +16.80%, +17.94% and 17.39%, respectively, well ahead of
the +10.47% return of the benchmark Russell 1000 Index and the +10.50% average
return of its comparable Lipper category of Multi-Cap Core Funds*. Merrill Lynch
Large Cap Growth Fund's Class A, Class B, Class C, Class I and Class R Shares
had 12-month total returns of +11.62%, +10.80%, +10.82%, +11.96% and +11.39%,
respectively, exceeding the +8.81% return of the benchmark Russell 1000 Growth
Index. For the same period the Lipper Multi-Cap Growth Funds category had an
average return of +12.95%*. Merrill Lynch Large Cap Value Fund's Class A, Class
B, Class C, Class I and Class R Shares had total returns of +21.20%, +20.29%,
+20.31%, +21.49% and +20.93%, respectively, also surpassing the +11.86% return
of its benchmark, the Russell 1000 Value Index, and the +11.02% average return
of the Lipper Multi-Cap Value Funds category for the 12-month period*. (Fund
results shown do not reflect sales charges and would be lower if sales charges
were included. Complete performance information for each Fund can be found on
pages 6 - 10 of this report to shareholders.)
Because the Funds invest in large-capitalization stocks that represent a
significant part of the U.S. stock market, their portfolios were influenced by
the same economic and market events that affected the broader stock market
during the past 12 months. Impressive gains in the fourth quarter of 2004 were
given back in the early months of 2005 as major equity indexes struggled to find
their footing. The rally that followed the conclusion of the presidential
election in November 2004 was hampered by concerns over inflation, a weak U.S.
dollar and continuing interest rate hikes by the Federal Reserve Board (the
Fed). As of November 1, 2005, the Fed had increased the federal funds rate 12
consecutive times since June 2004, bringing the short-term interest rate target
to 4%. Oil prices continued to fluctuate and achieved record highs on more than
one occasion during the reporting period, leading to inflationary concerns, but
also contributing to strong performance from the energy sector.
January, March and April were particularly weak months for the market. May
through July brought a stock market upturn, as a significant number of
acquisition announcements, along with a resilient economy, solid consumer
spending, a robust housing sector, and solid growth in corporate profits, served
to boost equities. The summer rally was short-lived, however, as the markets
reacted to the uncertainty created in the aftermath of Hurricanes Katrina and
Rita. Specifically, equities stalled in response to spiking energy prices, still
rising interest rates, waning consumer confidence, the potential for slowing
corporate profit growth and impending new leadership at the Fed as Chairman Alan
Greenspan approaches the end of his 18-year tenure. Notably, the October 24
nomination of Dr. Ben Bernanke as Greenspan's replacement was well received by
the markets. Still, October ended as one of the weaker months of the fiscal
year.
What factors most influenced the Funds' performance during the fiscal year?
In the case of all three Funds, stock selection contributed positively to
returns in most sectors, including health care (particularly health care
providers and services) and financials (particularly insurance). In the energy
sector, the combination of a sector overweight and effective stock selection
enhanced returns, particularly in oil, gas and consumable fuels. Although stock
selection in the technology sector added to returns for Merrill Lynch Large Cap
Growth Fund, the combination of a sector overweight and stock selection
detracted from the relative performance of Merrill Lynch Large Cap Value Fund
and Merrill Lynch Large Cap Core Fund. Our positions in the consumer staples
sector detracted from relative performance in all three portfolios; however,
this was more than offset by the strong positive returns from other sectors.
* Lipper Multi-Cap funds invest in a variety of market capitalization ranges
without concentrating 75% of their equity assets in any one market
capitalization range over an extended period of time. Multi-Cap Core funds
typically have an average price-to-earnings ratio, price-to-book ratio and
three-year sales-per-share growth value compared to the S&P SuperComposite
1500 Index. Multi-Cap Growth funds typically have an above-average
price-to-earnings ratio, price-to-book ratio and three-year
sales-per-growth value compared to the S&P SuperComposite 1500 Index.
Multi-Cap Value funds typically have a below-average price-to-earnings
ratio, price-to-book ratio and three-year sales-per-growth value compared
to the S&P SuperComposite 1500 Index.
4 MERRILL LYNCH LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2005
At the individual stock level (based on the combined effect of stock returns and
relative weightings in each Portfolio), the largest positive contributors to
Merrill Lynch Large Cap Core Fund's relative performance during the 12-month
period were Valero Energy Corp., Humana, Inc., PacifiCare Health Systems,
Sunoco, Inc., Express Scripts, Inc., Cigna Corp. and Autodesk, Inc. The largest
performance detractors included Altria Group, Inc., TIBCO Software, Inc.,
Symantec Corporation, Dell, Inc. and QLogic Corp. In the Merrill Lynch Large Cap
Growth Fund portfolio, the largest positive contributors to relative performance
were PacifiCare Health Systems, Aetna, Inc., Express Scripts, AutoDesk and
Burlington Resources, Inc. Stocks that detracted most from that Fund's relative
performance included Dell, Pfizer, Inc., Amgen, Inc., Advanced Micro Devices,
Inc. and Cree, Inc. In terms of Merrill Lynch Large Cap Value Fund, the largest
positive contributors to relative performance were Valero Energy, Humana,
PacifiCare Health Systems, Sunoco and Pfizer. The largest detractors included
Altria Group, Claire's Stores, Inc., Exxon Mobil Corp., QLogic and Energizer
Holdings, Inc. Our underweight position in Fannie Mae also had a positive impact
on the performance of all three Funds, as this was a negative contributor in all
three benchmarks.
What changes were made to the Portfolios during the fiscal period?
Overall, we continued to identify companies with favorable growth
characteristics and earnings developments, selling at attractive relative
valuations. As a result of our bottom-up stock-selection process, we increased
the Portfolios' positions in technology and energy while reducing exposure to
the consumer discretionary, materials and consumer staples sectors.
In Master Large Cap Core Portfolio, the largest purchases during the period
included Intel Corp., Dell, Exxon Mobil, Hewlett-Packard Co. and Texas
Instruments, Inc. The largest sales included Johnson & Johnson, Apple Computer,
Inc., Chevron Corp., PacifiCare Health Systems and Monsanto Co. In Master Large
Cap Growth Portfolio, the largest purchases included Intel Corp., Dell, Amgen,
General Electric Co. and Best Buy Co., Inc. The largest sales included Johnson &
Johnson, Pfizer, Microchip Technology, The Home Depot, Inc. and PacifiCare
Health Systems. In Master Large Cap Value Portfolio, the largest purchases
included Intel, Exxon Mobil, Goldman Sachs Group, Inc., Hewlett-Packard, The St.
Paul Travelers Companies, Inc. and MeadWestvaco Corp. The largest sales included
Chevron Texaco, The Bear Stearns Cos., Inc., PacifiCare Health Systems, Monsanto
and Chubb Corp.
These transactions reflect our ongoing refinement of the portfolios, as we
continue to look for stocks that best meet our investment criteria while pruning
those that have deteriorated versus our original assessment.
How would you characterize the Portfolios' positioning at the close of the
period?
The Portfolios' largest overweights as of October 31, 2005, were in the
technology and energy sectors. The largest underweights were in financials,
which tend to underperform in periods of rising interest rates, consumer
staples, utilities, industrials and telecommunications services.
Our view is that a somewhat conservative investment position makes sense, at
least until there is more evidence that the Fed is prepared to cease increasing
short-term interest rates. Recently reported third quarter gross domestic
product (GDP) data showed that, contrary to investors' concerns, core inflation
(which excludes food and energy prices) actually declined from the second
quarter. By early 2006, we believe it will become more evident that consumers
are retrenching, and that real GDP has decelerated to a more non-inflationary
pace, specifically 3% or less. Having said that, we continue to believe that a
highly diversified portfolio and a focus on individual security selection
(rather than a more macro approach) is appropriate and should be rewarded on a
relative basis.
Robert C. Doll, Jr.
President, Director/Trustee and Senior Portfolio Manager
November 4, 2005
MERRILL LYNCH LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2005 5
Performance Data
About Fund Performance
Investors are able to purchase shares of the Funds through multiple pricing
alternatives:
o Class A Shares incur a maximum initial sales charge (front-end load) of
5.25% and an account maintenance fee of 0.25% per year (but no
distribution fee).
o Class B Shares are subject to a maximum contingent deferred sales charge
of 4% declining to 0% after six years. In addition, Class B Shares are
subject to a distribution fee of 0.75% per year and an account maintenance
fee of 0.25% per year. These shares automatically convert to Class A
Shares after approximately eight years. (There is no initial sales charge
for automatic share conversions.) All returns for periods greater than
eight years reflect this conversion.
o Class C Shares are subject to a distribution fee of 0.75% per year and an
account maintenance fee of 0.25% per year. In addition, Class C Shares are
subject to a 1% contingent deferred sales charge if redeemed within one
year of purchase.
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% per year and an account maintenance fee of 0.25% per year. Class R
Shares are available only to certain retirement plans. Prior to inception,
Class R Share performance results are those of Class I Shares (which have
no distribution or account maintenance fees) restated for Class R Share
fees.
None of the past results shown should be considered a representation of future
performance. Current performance may be lower or higher than the performance
data quoted. Refer to www.mlim.ml.com to obtain performance data current to the
most recent month-end. Performance results do not 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 gain distributions, if any, at net asset value on the
ex-dividend date. Investment return and principal value of shares will fluctuate
so that shares, when redeemed, may be worth more or less than their original
cost. Dividends paid to each class of shares will vary because of the different
levels of account maintenance, distribution and transfer agency fees applicable
to each class, which are deducted from the income available to be paid to
shareholders.
6 MERRILL LYNCH LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2005
Performance Data (continued)
Recent Performance Results
6-Month 12-Month Since Inception
As of October 31, 2005 Total Return Total Return Total Return
========================================================================================================
ML Large Cap Core Fund Class A Shares* +10.44% +17.61% +31.18%
- --------------------------------------------------------------------------------------------------------
ML Large Cap Core Fund Class B Shares* +10.00 +16.69 +25.34
- --------------------------------------------------------------------------------------------------------
ML Large Cap Core Fund Class C Shares* +10.00 +16.80 +25.34
- --------------------------------------------------------------------------------------------------------
ML Large Cap Core Fund Class I Shares* +10.55 +17.94 +33.10
- --------------------------------------------------------------------------------------------------------
ML Large Cap Core Fund Class R Shares* +10.26 +17.39 +29.84
- --------------------------------------------------------------------------------------------------------
ML Large Cap Growth Fund Class A Shares* + 9.37 +11.62 - 7.76
- --------------------------------------------------------------------------------------------------------
ML Large Cap Growth Fund Class B Shares* + 9.02 +10.80 -11.79
- --------------------------------------------------------------------------------------------------------
ML Large Cap Growth Fund Class C Shares* + 8.90 +10.82 -11.88
- --------------------------------------------------------------------------------------------------------
ML Large Cap Growth Fund Class I Shares* + 9.47 +11.96 - 6.35
- --------------------------------------------------------------------------------------------------------
ML Large Cap Growth Fund Class R Shares* + 9.22 +11.39 - 8.58
- --------------------------------------------------------------------------------------------------------
ML Large Cap Value Fund Class A Shares* +12.18 +21.20 +76.28
- --------------------------------------------------------------------------------------------------------
ML Large Cap Value Fund Class B Shares* +11.79 +20.29 +68.66
- --------------------------------------------------------------------------------------------------------
ML Large Cap Value Fund Class C Shares* +11.72 +20.31 +68.56
- --------------------------------------------------------------------------------------------------------
ML Large Cap Value Fund Class I Shares* +12.34 +21.49 +78.95
- --------------------------------------------------------------------------------------------------------
ML Large Cap Value Fund Class R Shares* +12.05 +20.93 +74.76
- --------------------------------------------------------------------------------------------------------
Russell 1000(R) Index** + 6.18 +10.47 - 4.36
- --------------------------------------------------------------------------------------------------------
Russell 1000(R) Growth Index*** + 7.59 + 8.81 -36.43
- --------------------------------------------------------------------------------------------------------
Russell 1000(R) Value Index**** + 4.82 +11.86 +36.04
- --------------------------------------------------------------------------------------------------------
* Investment results shown do not reflect sales charges; results shown would
be lower if a sales charge was included. Cumulative total investment
returns are based on changes in net asset values for the periods shown,
and assume reinvestment of all dividends and capital gains distributions
at net asset value on the ex-dividend date. Since inception total return
is from 12/22/99.
** This unmanaged broad-based Index measures the performance of the 1,000
largest companies in the Russell 3000(R) Index, which represents
approximately 92% of the total market capitalization of the Russell 3000
Index. Since inception total return is from 12/22/99.
*** This unmanaged broad-based Index is a subset of the Russell 1000 Index
consisting of those Russell 1000 securities with a greater-than-average
growth orientation. Since inception total return is from 12/22/99.
**** 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. Since inception total return is from
12/22/99.
Russell 1000 is a registered trademark of the Frank Russell Company.
MERRILL LYNCH LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2005 7
Performance Data (continued) Merrill Lynch Large Cap Core Fund
Total Return Based on a $10,000 Investment
A line graph depicting the growth of an investment in the Fund's Class A, Class
B, Class C, Class I and Class R Shares compared to growth of an investment in
the Russell 1000 Index. Values are from December 22, 1999 to October 2005:
ML Large Cap ML Large Cap ML Large Cap ML Large Cap ML Large Cap Russell
Core Fund+-- Core Fund+-- Core Fund+-- Core Fund+-- Core Fund+-- 1000
Class A Shares* Class B Shares* Class C Shares* Class I Shares* Class R Shares* Index++
12/22/99** $ 9,475 $10,000 $10,000 $ 9,475 $10,000 $10,000
10/00 $11,124 $11,670 $11,670 $11,152 $11,720 $10,250
10/01 $ 8,587 $ 8,931 $ 8,931 $ 8,626 $ 9,020 $ 7,581
10/02 $ 7,819 $ 8,071 $ 8,071 $ 7,877 $ 8,195 $ 6,474
10/03 $ 9,696 $ 9,931 $ 9,931 $ 9,792 $10,177 $ 7,919
10/04 $10,568 $10,741 $10,731 $10,693 $11,061 $ 8,658
10/05 $12,429 $12,434 $12,534 $12,611 $12,984 $ 9,564
* Assuming maximum sales charge, transaction costs and other operating
expenses, including administration fees.
** Commencement of operations.
+ ML Large Cap Core Fund invests all of its assets in Master Large Cap Core
Portfolio of Master Large Cap Series Trust. The Portfolio invests
primarily in a diversified portfolio of equity securities of large cap
companies located in the United States that the Investment Adviser
believes blends growth and value.
++ This unmanaged broad-based Index measures the performance of the 1,000
largest companies in the Russell 3000(R) Index, which represents
approximately 92% of the total market capitalization of the Russell 3000
Index.
Past performance is not predictive of future results.
Average Annual Total Return
Return Without Return With
Sales Charge Sales Charge**
================================================================================
Class A Shares*
================================================================================
One Year Ended 10/31/05 +17.61% +11.44%
- --------------------------------------------------------------------------------
Five Years Ended 10/31/05 + 2.24 + 1.15
- --------------------------------------------------------------------------------
Inception (12/22/99)
through 10/31/05 + 4.74 + 3.78
- --------------------------------------------------------------------------------
Return Return
Without CDSC With CDSC+++
================================================================================
Class B Shares++
================================================================================
One Year Ended 10/31/05 +16.69% +12.69%
- --------------------------------------------------------------------------------
Five Years Ended 10/31/05 + 1.44 + 1.06
- --------------------------------------------------------------------------------
Inception (12/22/99)
through 10/31/05 + 3.93 + 3.79
- --------------------------------------------------------------------------------
Return Return
Without CDSC With CDSC+++
================================================================================
Class C Shares+
================================================================================
One Year Ended 10/31/05 +16.80% +15.80%
- --------------------------------------------------------------------------------
Five Years Ended 10/31/05 + 1.44 + 1.44
- --------------------------------------------------------------------------------
Inception (12/22/99)
through 10/31/05 + 3.93 + 3.93
- --------------------------------------------------------------------------------
Return Without Return With
Sales Charge Sales Charge**
================================================================================
Class I Shares*
================================================================================
One Year Ended 10/31/05 +17.94% +11.75%
- --------------------------------------------------------------------------------
Five Years Ended 10/31/05 + 2.49 + 1.39
- --------------------------------------------------------------------------------
Inception (12/22/99)
through 10/31/05 + 5.00 + 4.04
- --------------------------------------------------------------------------------
Class R Shares Return
================================================================================
One Year Ended 10/31/05 +17.39%
- --------------------------------------------------------------------------------
Five Years Ended 10/31/05 + 2.07
- --------------------------------------------------------------------------------
Inception (12/22/99) through 10/31/05 + 4.56
- --------------------------------------------------------------------------------
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
+ Maximum contingent deferred sales charge is 1% and is reduced to 0% after
one year.
++ Maximum contingent deferred sales charge is 4% and is reduced to 0% after
six years.
+++ Assuming payment of applicable contingent deferred sales charge.
8 MERRILL LYNCH LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2005
Performance Data (continued) Merrill Lynch Large Cap Growth Fund
Total Return Based on a $10,000 Investment
A line graph depicting the growth of an investment in the Fund's Class A, Class
B, Class C, Class I and Class R Shares compared to growth of an investment in
the Russell 1000 Growth Index. Values are from December 22, 1999 to October
2005:
ML Large Cap ML Large Cap ML Large Cap ML Large Cap ML Large Cap Russell
Growth Fund+-- Growth Fund+-- Growth Fund+-- Growth Fund+-- Growth Fund+-- 1000
Class A Shares* Class B Shares* Class C Shares* Class I Shares* Class R Shares* Growth Index++
12/22/99** $ 9,475 $10,000 $10,000 $ 9,475 $10,000 $10,000
10/00 $10,726 $11,260 $11,250 $10,754 $11,302 $ 9,610
10/01 $ 7,081 $ 7,371 $ 7,362 $ 7,110 $ 7,434 $ 5,771
10/02 $ 6,057 $ 6,251 $ 6,252 $ 6,105 $ 6,351 $ 4,639
10/03 $ 7,479 $ 7,661 $ 7,652 $ 7,556 $ 7,862 $ 5,651
10/04 $ 7,830 $ 7,961 $ 7,952 $ 7,925 $ 8,207 $ 5,842
10/05 $ 8,740 $ 8,733 $ 8,812 $ 8,873 $ 9,142 $ 6,357
* Assuming maximum sales charge, transaction costs and other operating
expenses, including administration fees.
** Commencement of operations.
+ ML Large Cap Growth Fund invests all of its assets in Master Large Cap
Growth Portfolio of Master Large Cap Series Trust. The Portfolio invests
primarily in a diversified portfolio of equity securities of large cap
companies located in the United States that the Investment Adviser
believes have good prospects for earnings growth.
++ This unmanaged broad-based Index is a subset of the Russell 1000 Index
consisting of those Russell 1000 securities with a greater-than-average
growth orientation.
Past performance is not predictive of future results.
Average Annual Total Return
Return Without Return With
Sales Charge Sales Charge**
================================================================================
Class A Shares*
================================================================================
One Year Ended 10/31/05 +11.62% + 5.76%
- --------------------------------------------------------------------------------
Five Years Ended 10/31/05 - 4.01 - 5.04
- --------------------------------------------------------------------------------
Inception (12/22/99)
through 10/31/05 - 1.37 - 2.27
- --------------------------------------------------------------------------------
Return Return
Without CDSC With CDSC+++
================================================================================
Class B Shares++
================================================================================
One Year Ended 10/31/05 +10.80% + 6.80%
- --------------------------------------------------------------------------------
Five Years Ended 10/31/05 - 4.76 - 5.15
- --------------------------------------------------------------------------------
Inception (12/22/99)
through 10/31/05 - 2.12 - 2.28
- --------------------------------------------------------------------------------
Return Return
Without CDSC With CDSC+++
================================================================================
Class C Shares+
================================================================================
One Year Ended 10/31/05 +10.82% + 9.82%
- --------------------------------------------------------------------------------
Five Years Ended 10/31/05 - 4.77 - 4.77
- --------------------------------------------------------------------------------
Inception (12/22/99)
through 10/31/05 - 2.13 - 2.13
- --------------------------------------------------------------------------------
Return Without Return With
Sales Charge Sales Charge**
================================================================================
Class I Shares*
================================================================================
One Year Ended 10/31/05 +11.96% + 6.08%
- --------------------------------------------------------------------------------
Five Years Ended 10/31/05 - 3.77 - 4.80
- --------------------------------------------------------------------------------
Inception (12/22/99)
through 10/31/05 - 1.11 - 2.02
- --------------------------------------------------------------------------------
Class R Shares Return
================================================================================
One Year Ended 10/31/05 +11.39%
- --------------------------------------------------------------------------------
Five Years Ended 10/31/05 - 4.15
- --------------------------------------------------------------------------------
Inception (12/22/99) through 10/31/05 - 1.52
- --------------------------------------------------------------------------------
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
+ Maximum contingent deferred sales charge is 1% and is reduced to 0% after
one year.
++ Maximum contingent deferred sales charge is 4% and is reduced to 0% after
six years.
+++ Assuming payment of applicable contingent deferred sales charge.
MERRILL LYNCH LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2005 9
Performance Data (concluded) Merrill Lynch Large Cap Value Fund
Total Return Based on a $10,000 Investment
A line graph depicting the growth of an investment in the Fund's Class A, Class
B, Class C, Class I and Class R Shares compared to growth of an investment in
the Russell 1000 Value Index. Values are from December 22, 1999 to October 2005:
ML Large Cap ML Large Cap ML Large Cap ML Large Cap ML Large Cap Russell
Value Fund+-- Value Fund+-- Value Fund+-- Value Fund+-- Value Fund+-- 1000
Class A Shares* Class B Shares* Class C Shares* Class I Shares* Class R Shares* Value Index++
12/22/99** $ 9,475 $10,000 $10,000 $ 9,475 $10,000 $10,000
10/00 $11,000 $11,540 $11,540 $11,029 $11,590 $10,809
10/01 $10,073 $10,481 $10,481 $10,123 $10,586 $ 9,527
10/02 $ 9,617 $ 9,931 $ 9,931 $ 9,687 $10,079 $ 8,573
10/03 $12,112 $12,411 $12,411 $12,230 $12,735 $10,533
10/04 $13,781 $14,021 $14,011 $13,956 $14,451 $12,161
10/05 $16,702 $16,766 $16,856 $16,956 $17,476 $13,604
* Assuming maximum sales charge, transaction costs and other operating
expenses, including administration fees.
** Commencement of operations.
+ ML Large Cap Value Fund invests all of its assets in Master Large Cap
Value Portfolio of the Master Large Cap Series Trust. The Portfolio
invests primarily in a diversified portfolio of equity securities of large
cap companies located in the United States that the Investment Adviser
believes are undervalued.
++ 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.
Past performance is not predictive of future results.
Average Annual Total Return
Return Without Return With
Sales Charge Sales Charge**
================================================================================
Class A Shares*
================================================================================
One Year Ended 10/31/05 +21.20% +14.83%
- --------------------------------------------------------------------------------
Five Years Ended 10/31/05 + 8.71 + 7.54
- --------------------------------------------------------------------------------
Inception (12/22/99)
through 10/31/05 +10.16 + 9.15
- --------------------------------------------------------------------------------
Return Return
Without CDSC With CDSC+++
================================================================================
Class B Shares++
================================================================================
One Year Ended 10/31/05 +20.29% +16.29%
- --------------------------------------------------------------------------------
Five Years Ended 10/31/05 + 7.89 + 7.59
- --------------------------------------------------------------------------------
Inception (12/22/99)
through 10/31/05 + 9.33 + 9.22
- --------------------------------------------------------------------------------
Return Return
Without CDSC With CDSC+++
================================================================================
Class C Shares+
================================================================================
One Year Ended 10/31/05 +20.31% +19.31%
- --------------------------------------------------------------------------------
Five Years Ended 10/31/05 + 7.87 + 7.87
- --------------------------------------------------------------------------------
Inception (12/22/99)
through 10/31/05 + 9.32 + 9.32
- --------------------------------------------------------------------------------
Return Without Return With
Sales Charge Sales Charge**
================================================================================
Class I Shares*
================================================================================
One Year Ended 10/31/05 +21.49% +15.11%
- --------------------------------------------------------------------------------
Five Years Ended 10/31/05 + 8.98 + 7.81
- --------------------------------------------------------------------------------
Inception (12/22/99)
through 10/31/05 +10.44 + 9.43
- --------------------------------------------------------------------------------
Class R Shares Return
================================================================================
One Year Ended 10/31/05 +20.93%
- --------------------------------------------------------------------------------
Five Years Ended 10/31/05 + 8.56
- --------------------------------------------------------------------------------
Inception (12/22/99) through 10/31/05 + 9.99
- --------------------------------------------------------------------------------
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
+ Maximum contingent deferred sales charge is 1% and is reduced to 0% after
one year.
++ Maximum contingent deferred sales charge is 4% and is reduced to 0% after
six years.
+++ Assuming payment of applicable contingent deferred sales charge.
10 MERRILL LYNCH LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2005
Disclosure of Expenses
Shareholders of these Funds may incur the following charges: (a) expenses
related to transactions, including sales charges, redemption fees and exchange
fees; and (b) operating expenses including advisory fees, distribution fees
including 12(b)-1 fees, and other Fund expenses. The following example (which is
based on a hypothetical investment of $1,000 invested on May 1, 2005 and held
through October 31, 2005) is intended to assist shareholders both in calculating
expenses based on an investment in each Fund and in comparing these expenses
with similar costs of investing in other mutual funds.
The first table below provides information about actual account values and
actual expenses. In order to estimate the expenses a shareholder paid during the
period covered by this report, shareholders can divide their account value by
$1,000 and then multiply the result by the number in the first line under the
heading entitled "Expenses Paid During the Period."
The second table below provides information about hypothetical account values
and hypothetical expenses based on each Fund's actual expense ratio and an
assumed rate of return of 5% per year before expenses. In order to assist
shareholders in comparing the ongoing expenses of investing in these Funds and
other funds, compare the 5% hypothetical example with the 5% hypothetical
examples that appear in other funds' shareholder reports.
The expenses shown in the table are intended to highlight shareholders ongoing
costs only and do not reflect any transactional expenses, such as sales charges,
redemption fees or exchange fees. Therefore, the second table is useful in
comparing ongoing expenses only, and will not help shareholders determine the
relative total expenses of owning different funds. If these transactional
expenses were included, shareholder expenses would have been higher.
Expenses Paid
Beginning Ending During the Period*
Account Value Account Value May 1, 2005 to
Merrill Lynch Large Cap Core Fund May 1, 2005 October 31, 2005 October 31, 2005
============================================================================================================
Actual
============================================================================================================
Class A $1,000 $1,104.40 $ 6.24
- ------------------------------------------------------------------------------------------------------------
Class B $1,000 $1,100.00 $10.38
- ------------------------------------------------------------------------------------------------------------
Class C $1,000 $1,100.00 $10.38
- ------------------------------------------------------------------------------------------------------------
Class I $1,000 $1,105.50 $ 4.91
- ------------------------------------------------------------------------------------------------------------
Class R $1,000 $1,102.60 $ 7.62
============================================================================================================
Hypothetical (5% annual return before expenses)**
============================================================================================================
Class A $1,000 $1,019.41 $ 5.99
- ------------------------------------------------------------------------------------------------------------
Class B $1,000 $1,015.46 $ 9.96
- ------------------------------------------------------------------------------------------------------------
Class C $1,000 $1,015.46 $ 9.96
- ------------------------------------------------------------------------------------------------------------
Class I $1,000 $1,020.68 $ 4.71
- ------------------------------------------------------------------------------------------------------------
Class R $1,000 $1,018.09 $ 7.31
- ------------------------------------------------------------------------------------------------------------
* For each class of the Fund, expenses are equal to the annualized expense
ratio for the class (1.17% for Class A, 1.95% for Class B, 1.95% for Class
C, .92% for Class I and 1.43% for Class R), multiplied by the average
account value over the period, multiplied by 185/365 (to reflect the
one-half year period shown). Because the Fund is a feeder fund, the
expense table example reflects the expenses of both the feeder fund and
the master portfolio in which it invests.
** Hypothetical 5% annual return before expenses is calculated by pro-rating
the number of days in the most recent fiscal half-year divided by 365.
MERRILL LYNCH LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2005 11
Disclosure of Expenses (concluded)
Expenses Paid
Beginning Ending During the Period*
Account Value Account Value May 1, 2005 to
Merrill Lynch Large Cap Growth Fund May 1, 2005 October 31, 2005 October 31, 2005
============================================================================================================
Actual
============================================================================================================
Class A $1,000 $1,093.70 $ 7.06
- ------------------------------------------------------------------------------------------------------------
Class B $1,000 $1,090.20 $11.18
- ------------------------------------------------------------------------------------------------------------
Class C $1,000 $1,089.00 $11.17
- ------------------------------------------------------------------------------------------------------------
Class I $1,000 $1,094.70 $ 5.73
- ------------------------------------------------------------------------------------------------------------
Class R $1,000 $1,092.20 $ 8.38
============================================================================================================
Hypothetical (5% annual return before expenses)**
============================================================================================================
Class A $1,000 $1,018.60 $ 6.80
- ------------------------------------------------------------------------------------------------------------
Class B $1,000 $1,014.65 $10.77
- ------------------------------------------------------------------------------------------------------------
Class C $1,000 $1,014.65 $10.77
- ------------------------------------------------------------------------------------------------------------
Class I $1,000 $1,019.87 $ 5.53
- ------------------------------------------------------------------------------------------------------------
Class R $1,000 $1,017.33 $ 8.08
- ------------------------------------------------------------------------------------------------------------
* For each class of the Fund, expenses are equal to the annualized expense
ratio for the class (1.33% for Class A, 2.11% for Class B, 2.11% for Class
C, 1.08% for Class I and 1.58% for Class R), multiplied by the average
account value over the period, multiplied by 185/365 (to reflect the
one-half year period shown). Because the Fund is a feeder fund, the
expense table example reflects the expenses of both the feeder fund and
the master portfolio in which it invests.
** Hypothetical 5% annual return before expenses is calculated by pro-rating
the number of days in the most recent fiscal half-year divided by 365.
Expenses Paid
Beginning Ending During the Period*
Account Value Account Value May 1, 2005 to
Merrill Lynch Large Cap Value Fund May 1, 2005 October 31, 2005 October 31, 2005
============================================================================================================
Actual
============================================================================================================
Class A $1,000 $1,121.80 $ 6.67
- ------------------------------------------------------------------------------------------------------------
Class B $1,000 $1,117.90 $10.73
- ------------------------------------------------------------------------------------------------------------
Class C $1,000 $1,117.20 $10.73
- ------------------------------------------------------------------------------------------------------------
Class I $1,000 $1,123.40 $ 5.33
- ------------------------------------------------------------------------------------------------------------
Class R $1,000 $1,120.50 $ 8.01
============================================================================================================
Hypothetical (5% annual return before expenses)**
============================================================================================================
Class A $1,000 $1,019.06 $ 6.34
- ------------------------------------------------------------------------------------------------------------
Class B $1,000 $1,015.21 $10.21
- ------------------------------------------------------------------------------------------------------------
Class C $1,000 $1,015.21 $10.21
- ------------------------------------------------------------------------------------------------------------
Class I $1,000 $1,020.32 $ 5.07
- ------------------------------------------------------------------------------------------------------------
Class R $1,000 $1,017.79 $ 7.62
- ------------------------------------------------------------------------------------------------------------
* For each class of the Fund, expenses are equal to the annualized expense
ratio for the class (1.24% for Class A, 2.00% for Class B, 2.00% for Class
C, .99% for Class I and 1.49% for Class R), multiplied by the average
account value over the period, multiplied by 185/365 (to reflect the
one-half year period shown). Because the Fund is a feeder fund, the
expense table example reflects the expenses of both the feeder fund and
the master portfolio in which it invests.
** Hypothetical 5% annual return before expenses is calculated by pro-rating
the number of days in the most recent fiscal half-year divided by 365.
12 MERRILL LYNCH LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2005
Statements of Assets and Liabilities Merrill Lynch Large Cap Series Funds, Inc.
Merrill Lynch Merrill Lynch Merrill Lynch
Large Large Large
Cap Core Cap Growth Cap Value
As of October 31, 2005 Fund Fund Fund
===================================================================================================================================
Assets
- -----------------------------------------------------------------------------------------------------------------------------------
Investment in Master Large Cap Core Portfolio, Master
Large Cap Growth Portfolio and Master Large Cap Value
Portfolio, respectively (the"Portfolios")* ............. $2,463,214,494 $ 489,398,122 $1,535,988,062
Prepaid expenses ........................................ 70,077 59,501 120,343
---------------------------------------------------
Total assets ............................................ 2,463,284,571 489,457,623 1,536,108,405
---------------------------------------------------
===================================================================================================================================
Liabilities
- -----------------------------------------------------------------------------------------------------------------------------------
Payables:
Distributor .......................................... 1,133,067 219,238 657,504
Other affiliates ..................................... 807,040 252,889 473,143
Administrator ........................................ 511,011 101,696 322,605
Accrued expenses and other liabilities .................. 88,991 20,407 90,471
---------------------------------------------------
Total liabilities ....................................... 2,540,109 594,230 1,543,723
---------------------------------------------------
===================================================================================================================================
Net Assets
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets .............................................. $2,460,744,462 $ 488,863,393 $1,534,564,682
===================================================
===================================================================================================================================
Net Assets Consist of
- -----------------------------------------------------------------------------------------------------------------------------------
Undistributed (accumulated) realized capital gains
(losses) allocated from the Portfolios--net ............ $ 64,565,590 $ (58,161,863) $ 69,881,864
Unrealized appreciation allocated from the
Portfolios--net ........................................ 332,200,332 47,127,989 204,111,128
---------------------------------------------------
Total accumulated earnings (losses)--net ................ 396,765,922 (11,033,874) 273,992,992
Class A Shares of Common Stock, $.10 par value,
100,000,000 shares authorized .......................... 4,838,218 1,224,394 2,201,242
Class B Shares of Common Stock, $.10 par value,
200,000,000 shares authorized .......................... 3,588,997 1,084,321 1,621,698
Class C Shares of Common Stock, $.10 par value,
100,000,000 shares authorized .......................... 5,928,877 1,420,981 2,544,487
Class I Shares of Common Stock, $.10 par value,
100,000,000 shares authorized .......................... 4,554,523 1,374,606 2,606,262
Class R Shares of Common Stock, $.10 par value,
200,000,000 shares authorized .......................... 365,648 295,093 278,883
Paid-in capital in excess of par ........................ 2,044,702,277 494,497,872 1,251,319,118
---------------------------------------------------
Net Assets .............................................. $2,460,744,462 $ 488,863,393 $1,534,564,682
===================================================
MERRILL LYNCH LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2005 13
Statements of Assets and Liabilities (concluded)
Merrill Lynch Large Cap Series Funds, Inc.
Merrill Lynch Merrill Lynch Merrill Lynch
Large Large Large
Cap Core Cap Growth Cap Value
As of October 31, 2005 Fund Fund Fund
===================================================================================================================================
Net Asset Value
- -----------------------------------------------------------------------------------------------------------------------------------
Class A:
Net assets ........................................... $ 629,682,419 $ 112,886,500 $ 371,216,409
===================================================
Shares outstanding ................................... 48,382,179 12,243,944 22,012,424
===================================================
Net asset value ...................................... $ 13.01 $ 9.22 $ 16.86
===================================================
Class B:
Net assets ........................................... $ 446,242,276 $ 95,593,206 $ 261,344,935
===================================================
Shares outstanding ................................... 35,889,965 10,843,205 16,216,977
===================================================
Net asset value ...................................... $ 12.43 $ 8.82 $ 16.12
===================================================
Class C:
Net assets ........................................... $ 737,062,637 $ 125,150,254 $ 409,937,149
===================================================
Shares outstanding ................................... 59,288,768 14,209,813 25,444,869
===================================================
Net asset value ...................................... $ 12.43 $ 8.81 $ 16.11
===================================================
Class I:
Net assets ........................................... $ 601,378,310 $ 128,667,124 $ 446,172,027
===================================================
Shares outstanding ................................... 45,545,231 13,746,055 26,062,618
===================================================
Net asset value ...................................... $ 13.20 $ 9.36 $ 17.12
===================================================
Class R
Net assets ........................................... $ 46,378,820 $ 26,566,309 $ 45,894,162
===================================================
Shares outstanding ................................... 3,656,479 2,950,926 2,788,826
===================================================
Net asset value ...................................... $ 12.68 $ 9.00 $ 16.46
===================================================
* Identified cost ...................................... $2,131,014,162 $ 442,270,133 $1,331,876,934
===================================================
See Notes to Financial Statements.
14 MERRILL LYNCH LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2005
Statements of Operations Merrill Lynch Large Cap Series Funds, Inc.
Merrill Lynch Merrill Lynch Merrill Lynch
Large Large Large
Cap Core Cap Growth Cap Value
For the Year Ended October 31, 2005 Fund Fund Fund
===================================================================================================================================
Investment Income
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income allocated from the Portfolios:
Dividends ............................................ $ 25,958,189 $ 3,809,535 $ 15,255,855
Securities lending--net .............................. 161,565 35,059 43,166
Interest from affiliates ............................. 114,544 34,055 156,787
Expenses ............................................. (10,848,593) (2,458,800) (6,252,664)
---------------------------------------------------
Total income ............................................ 15,385,705 1,419,849 9,203,144
---------------------------------------------------
===================================================================================================================================
Expenses
- -----------------------------------------------------------------------------------------------------------------------------------
Account maintenance and distribution fees--Class C ...... 6,021,329 1,140,087 3,155,485
Administration fees ..................................... 5,352,637 1,076,760 2,863,939
Account maintenance and distribution fees--Class B ...... 4,443,683 967,638 2,479,882
Account maintenance fees--Class A ....................... 1,315,292 233,130 696,464
Transfer agent fees--Class C ............................ 966,537 272,485 548,802
Transfer agent fees--Class I ............................ 733,049 229,433 430,008
Transfer agent fees--Class A ............................ 718,974 198,463 435,334
Transfer agent fees--Class B ............................ 703,181 234,837 430,014
Registration fees ....................................... 223,583 90,172 173,615
Account maintenance and distribution fees--Class R ...... 153,849 94,427 143,842
Printing and shareholder reports ........................ 137,825 74,373 110,771
Professional fees ....................................... 43,182 17,846 29,270
Transfer agent fees--Class R ............................ 42,561 40,224 45,015
Other ................................................... 18,212 16,001 15,488
---------------------------------------------------
Total expenses .......................................... 20,873,894 4,685,876 11,557,929
---------------------------------------------------
Investment loss--net .................................... (5,488,189) (3,266,027) (2,354,785)
---------------------------------------------------
===================================================================================================================================
Realized & Unrealized Gain Allocated from the Portfolios--Net
- -----------------------------------------------------------------------------------------------------------------------------------
Realized gain on investments--net ....................... 169,480,673 27,951,501 77,262,988
Change in unrealized appreciation on investments--net ... 148,113,813 17,275,515 112,124,763
---------------------------------------------------
Total realized and unrealized gain--net ................. 317,594,486 45,227,016 189,387,751
---------------------------------------------------
Net Increase in Net Assets Resulting from Operations .... $ 312,106,297 $ 41,960,989 $ 187,032,966
===================================================
See Notes to Financial Statements.
MERRILL LYNCH LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2005 15
Statements of Changes in Net Assets Merrill Lynch Large Cap Core Fund
For the Year Ended
October 31,
-----------------------------------
Increase (Decrease) in Net Assets: 2005 2004
=================================================================================================================================
Operations
- ---------------------------------------------------------------------------------------------------------------------------------
Investment loss--net .................................................. $ (5,488,189) $ (5,975,718)
Realized gain--net .................................................... 169,480,673 176,458,090
Change in unrealized appreciation--net ................................ 148,113,813 (54,503,940)
-----------------------------------
Net increase in net assets resulting from operations .................. 312,106,297 115,978,432
-----------------------------------
=================================================================================================================================
Distributions to Shareholders
- ---------------------------------------------------------------------------------------------------------------------------------
Realized gain--net:
Class A ............................................................ (3,420,110) --
Class B ............................................................ (3,547,724) --
Class C ............................................................ (3,932,578) --
Class I ............................................................ (3,522,593) --
Class R ............................................................ (154,059) --
-----------------------------------
Net decrease in net assets resulting from distributions to shareholders (14,577,064) --
-----------------------------------
=================================================================================================================================
Capital Share Transactions
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets derived from capital share transactions .... 496,660,002 309,948,089
-----------------------------------
=================================================================================================================================
Net Assets
- ---------------------------------------------------------------------------------------------------------------------------------
Total increase in net assets .......................................... 794,189,235 425,926,521
Beginning of year ..................................................... 1,666,555,227 1,240,628,706
-----------------------------------
End of year ........................................................... $ 2,460,744,462 $ 1,666,555,227
===================================
See Notes to Financial Statements.
Statements of Changes In Net Assets Merrill Lynch Large Cap Growth Fund
For the Year Ended
October 31,
-----------------------------------
Increase (Decrease) in Net Assets: 2005 2004
=================================================================================================================================
Operations
- ---------------------------------------------------------------------------------------------------------------------------------
Investment loss--net .................................................. $ (3,266,027) $ (3,345,613)
Realized gain--net .................................................... 27,951,501 24,609,663
Change in unrealized appreciation/depreciation--net ................... 17,275,515 (10,279,020)
-----------------------------------
Net increase in net assets resulting from operations .................. 41,960,989 10,985,030
-----------------------------------
=================================================================================================================================
Capital Share Transactions
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets derived from capital share transactions .... 102,839,683 83,194,823
-----------------------------------
=================================================================================================================================
Net Assets
- ---------------------------------------------------------------------------------------------------------------------------------
Total increase in net assets .......................................... 144,800,672 94,179,853
Beginning of year ..................................................... 344,062,721 249,882,868
-----------------------------------
End of year ........................................................... $ 488,863,393 $ 344,062,721
===================================
See Notes to Financial Statements.
16 MERRILL LYNCH LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2005
Statements of Changes in Net Assets Merrill Lynch Large Cap Value Fund
For the Year Ended
October 31,
-----------------------------------
Increase (Decrease) in Net Assets: 2005 2004
=================================================================================================================================
Operations
- ---------------------------------------------------------------------------------------------------------------------------------
Investment loss--net .................................................. $ (2,354,785) $ (1,096,859)
Realized gain--net .................................................... 77,262,988 78,138,759
Change in unrealized appreciation--net ................................ 112,124,763 (2,549,598)
-----------------------------------
Net increase in net assets resulting from operations .................. 187,032,966 74,492,302
-----------------------------------
=================================================================================================================================
Distributions to Shareholders
- ---------------------------------------------------------------------------------------------------------------------------------
Realized gain--net:
Class A ............................................................ (8,283,910) --
Class B ............................................................ (10,290,416) --
Class C ............................................................ (10,721,593) --
Class I ............................................................ (8,685,584) --
Class R ............................................................ (707,934) --
-----------------------------------
Net decrease in net assets resulting from distributions to shareholders (38,689,437) --
-----------------------------------
=================================================================================================================================
Capital Share Transactions
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets derived from capital share transactions .... 576,505,050 220,472,373
-----------------------------------
=================================================================================================================================
Net Assets
- ---------------------------------------------------------------------------------------------------------------------------------
Total increase in net assets .......................................... 724,848,579 294,964,675
Beginning of year ..................................................... 809,716,103 514,751,428
-----------------------------------
End of year ........................................................... $ 1,534,564,682 $ 809,716,103
===================================
See Notes to Financial Statements.
MERRILL LYNCH LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2005 17
Financial Highlights Class A
Merrill Lynch Large Cap Core Fund
-----------------------------------------------------------------
For the Year Ended October 31,
The following per share data and ratios have been derived -----------------------------------------------------------------
from information provided in the financial statements. 2005 2004 2003 2002 2001
==================================================================================================================================
Per Share Operating Performance
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year ........... $ 11.15 $ 10.23 $ 8.25 $ 9.06 $ 11.74
-----------------------------------------------------------------
Investment income (loss)--net* ............... .01 (.01) (.02) .01 --@
Realized and unrealized gain (loss)--net ..... 1.94 .93 2.00 (.82) (2.68)
-----------------------------------------------------------------
Total from investment operations ............. 1.95 .92 1.98 (.81) (2.68)
-----------------------------------------------------------------
Less distributions:
Realized gain--net ........................ (.09) -- -- -- --
In excess of realized gain--net ........... -- -- -- -- --@
Return of capital ......................... -- -- -- -- --
-----------------------------------------------------------------
Total distributions .......................... (.09) -- -- -- --@
-----------------------------------------------------------------
Net asset value, end of year ................. $ 13.01 $ 11.15 $ 10.23 $ 8.25 $ 9.06
=================================================================
==================================================================================================================================
Total Investment Return+
- ----------------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share ........... 17.61% 8.99% 24.00% (8.94%) (22.80%)
=================================================================
==================================================================================================================================
Ratios to Average Net Assets
- ----------------------------------------------------------------------------------------------------------------------------------
Expenses, net of reimbursement** ............. 1.16% 1.18% 1.23% 1.28% 1.32%
=================================================================
Expenses** ................................... 1.16% 1.18% 1.23% 1.28% 1.32%
=================================================================
Investment income (loss)--net ................ .05% (.09%) (.21%) .10% (.05%)
=================================================================
==================================================================================================================================
Supplemental Data
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (in thousands) ....... $ 629,682 $ 392,896 $ 293,144 $ 136,552 $ 84,891
=================================================================
Portfolio turnover of the Portfolios ......... 93.95% 135.48% 138.73% 150.18% 162.28%
=================================================================
* Based on average shares outstanding.
** Includes the Fund's share of the Portfolio's allocated expenses.
+ Total investment returns exclude the effects of sales charges.
@ Amount is less than $(.01) per share.
See Notes to Financial Statements.
18 MERRILL LYNCH LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2005
Merrill Lynch Large Cap Growth Fund Merrill Lynch Large Cap Value Fund
- --------------------------------------------------------------- ---------------------------------------------------------------
For the Year Ended October 31, For the Year Ended October 31,
- --------------------------------------------------------------- ---------------------------------------------------------------
2005 2004 2003 2002 2001 2005 2004 2003 2002 2001
==================================================================================================================================
- ----------------------------------------------------------------------------------------------------------------------------------
$ 8.26 $ 7.89 $ 6.39 $ 7.47 $ 11.32 $ 14.53 $ 12.77 $ 10.14 $ 10.62 $ 11.61
- ----------------------------------------------------------------------------------------------------------------------------------
(.04) (.06) (.05) (.06) (.07) .02 .03 .03 .04 .04
1.00 .43 1.55 (1.02) (3.78) 2.97 1.73 2.60 (.52) (1.02)
- ----------------------------------------------------------------------------------------------------------------------------------
.96 .37 1.50 (1.08) (3.85) 2.99 1.76 2.63 (.48) (.98)
- ----------------------------------------------------------------------------------------------------------------------------------
-- -- -- -- -- (.66) -- -- -- --
-- -- -- -- --@ -- -- -- -- --
-- -- -- -- -- -- -- -- -- (.01)
- ----------------------------------------------------------------------------------------------------------------------------------
-- -- -- -- --@ (.66) -- -- -- (.01)
- ----------------------------------------------------------------------------------------------------------------------------------
$ 9.22 $ 8.26 $ 7.89 $ 6.39 $ 7.47 $ 16.86 $ 14.53 $ 12.77 $ 10.14 $ 10.62
==================================================================================================================================
==================================================================================================================================
- ----------------------------------------------------------------------------------------------------------------------------------
11.62% 4.69% 23.47% (14.46%) (33.98%) 21.20% 13.78% 25.94% (4.52%) (8.43%)
==================================================================================================================================
==================================================================================================================================
- ----------------------------------------------------------------------------------------------------------------------------------
1.33% 1.38% 1.46% 1.54% 1.38% 1.23% 1.26% 1.28% 1.28% 1.29%
==================================================================================================================================
1.33% 1.38% 1.46% 1.56% 1.38% 1.23% 1.26% 1.28% 1.28% 1.29%
==================================================================================================================================
(.46%) (.69%) (.81%) (.88%) (.90%) .10% .21% .24% .49% .32%
==================================================================================================================================
==================================================================================================================================
- ----------------------------------------------------------------------------------------------------------------------------------
$ 112,887 $ 64,539 $ 27,410 $ 15,874 $ 15,032 $ 371,216 $ 161,867 $ 90,358 $ 46,020 $ 37,190
==================================================================================================================================
131.79% 164.94% 178.11% 177.46% 230.34% 94.95% 127.59% 157.04% 136.92% 168.54%
==================================================================================================================================
MERRILL LYNCH LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2005 19
Financial Highlights (continued) Class B
Merrill Lynch Large Cap Core Fund
-----------------------------------------------------------------
For the Year Ended October 31,
The following per share data and ratios have been derived -----------------------------------------------------------------
from information provided in the financial statements. 2005 2004 2003 2002 2001
==================================================================================================================================
Per Share Operating Performance
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year ........... $ 10.74 $ 9.93 $ 8.07 $ 8.93 $ 11.67
-----------------------------------------------------------------
Investment loss--net** ....................... (.08) (.09) (.08) (.06) (.08)
Realized and unrealized gain (loss)--net ..... 1.86 .90 1.94 (.80) (2.66)
-----------------------------------------------------------------
Total from investment operations ............. 1.78 .81 1.86 (.86) (2.74)
-----------------------------------------------------------------
Less distributions:
Realized gain--net ........................ (.09) -- -- -- --
In excess of realized gain--net ........... -- -- -- -- --+
Return of capital--net .................... -- -- -- -- --
-----------------------------------------------------------------
Total distributions .......................... (.09) -- -- -- --+
-----------------------------------------------------------------
Net asset value, end of year ................. $ 12.43 $ 10.74 $ 9.93 $ 8.07 $ 8.93
=================================================================
==================================================================================================================================
Total Investment Return*
- ----------------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share ........... 16.69% 8.16% 23.05% (9.63%) (23.47%)
=================================================================
==================================================================================================================================
Ratios to Average Net Assets
- ----------------------------------------------------------------------------------------------------------------------------------
Expenses, net of reimbursement*** ............ 1.93% 1.95% 2.00% 2.07% 2.06%
=================================================================
Expenses*** .................................. 1.93% 1.95% 2.00% 2.07% 2.06%
=================================================================
Investment loss--net ......................... (.66%) (.86%) (.96%) (.64%) (.80%)
=================================================================
==================================================================================================================================
Supplemental Data
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (in thousands) ....... $ 446,242 $ 412,162 $ 389,598 $ 329,121 $ 159,287
=================================================================
Portfolio turnover of the Portfolios ......... 93.95% 135.48% 138.73% 150.18% 162.28%
=================================================================
* Total investment returns exclude the effects of sales charges.
** Based on average shares outstanding.
*** Includes the Fund's share of the Portfolio's allocated expenses.
+ Amount is less than ($.01) per share.
See Notes to Financial Statements.
20 MERRILL LYNCH LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2005
Merrill Lynch Large Cap Growth Fund Merrill Lynch Large Cap Value Fund
- --------------------------------------------------------------- ---------------------------------------------------------------
For the Year Ended October 31, For the Year Ended October 31,
- --------------------------------------------------------------- ---------------------------------------------------------------
2005 2004 2003 2002 2001 2005 2004 2003 2002 2001
==================================================================================================================================
- ----------------------------------------------------------------------------------------------------------------------------------
$ 7.96 $ 7.66 $ 6.25 $ 7.37 $ 11.26 $ 14.02 $ 12.41 $ 9.93 $ 10.48 $ 11.54
- ----------------------------------------------------------------------------------------------------------------------------------
(.10) (.12) (.10) (.12) (.14) (.09) (.07) (.05) (.03) (.04)
.96 .42 1.51 (1.00) (3.75) 2.85 1.68 2.53 (.52) (1.02)
- ----------------------------------------------------------------------------------------------------------------------------------
.86 .30 1.41 (1.12) (3.89) 2.76 1.61 2.48 (.55) (1.06)
- ----------------------------------------------------------------------------------------------------------------------------------
-- -- -- -- -- (.66) -- -- -- --
-- -- -- -- --+ -- -- -- -- --
-- -- -- -- -- -- -- -- -- --+
- ----------------------------------------------------------------------------------------------------------------------------------
-- -- -- -- --+ (.66) -- -- -- --+
- ----------------------------------------------------------------------------------------------------------------------------------
$ 8.82 $ 7.96 $ 7.66 $ 6.25 $ 7.37 $ 16.12 $ 14.02 $ 12.41 $ 9.93 $ 10.48
==================================================================================================================================
==================================================================================================================================
- ----------------------------------------------------------------------------------------------------------------------------------
10.80% 3.92% 22.56% (15.20%) (34.54%) 20.29% 12.97% 24.97% (5.25%) (9.18%)
==================================================================================================================================
==================================================================================================================================
- ----------------------------------------------------------------------------------------------------------------------------------
2.11% 2.16% 2.27% 2.32% 2.17% 2.00% 2.02% 2.05% 2.05% 2.07%
==================================================================================================================================
2.11% 2.16% 2.27% 2.34% 2.17% 2.00% 2.02% 2.05% 2.05% 2.07%
==================================================================================================================================
(1.15%) (1.48%) (1.61%) (1.66%) (1.67%) (.60%) (.53%) (.50%) (.28%) (.44%)
==================================================================================================================================
==================================================================================================================================
- ----------------------------------------------------------------------------------------------------------------------------------
$ 95,593 $ 93,382 $ 100,683 $ 83,726 $ 70,428 $ 261,345 $ 222,055 $ 202,190 $ 174,623 $ 167,613
==================================================================================================================================
131.79% 164.94% 178.11% 177.46% 230.34% 94.95% 127.59% 157.04% 136.92% 168.54%
==================================================================================================================================
MERRILL LYNCH LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2005 21
Financial Highlights (continued) Class C
Merrill Lynch Large Cap Core Fund
-----------------------------------------------------------------
For the Year Ended October 31,
The following per share data and ratios have been derived -----------------------------------------------------------------
from information provided in the financial statements. 2005 2004 2003 2002 2001
==================================================================================================================================
Per Share Operating Performance
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year ........... $ 10.73 $ 9.93 $ 8.07 $ 8.93 $ 11.67
-----------------------------------------------------------------
Investment loss--net* ........................ (.09) (.09) (.08) (.06) (.08)
Realized and unrealized gain (loss)--net ..... 1.88 .89 1.94 (.80) (2.66)
-----------------------------------------------------------------
Total from investment operations ............. 1.79 .80 1.86 (.86) (2.74)
-----------------------------------------------------------------
Less distributions:
Realized gain--net ........................ (.09) -- -- -- --
In excess of realized gain--net ........... -- -- -- -- --+
Return of capital--net .................... -- -- -- -- --
-----------------------------------------------------------------
Total distributions .......................... (.09) -- -- -- --+
-----------------------------------------------------------------
Net asset value, end of year ................. $ 12.43 $ 10.73 $ 9.93 $ 8.07 $ 8.93
=================================================================
==================================================================================================================================
Total Investment Return**
- ----------------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share ........... 16.80% 8.06% 23.05% (9.63%) (23.47%)
=================================================================
==================================================================================================================================
Ratios to Average Net Assets
- ----------------------------------------------------------------------------------------------------------------------------------
Expenses, net of reimbursement*** ............ 1.94% 1.96% 2.01% 2.07% 2.07%
=================================================================
Expenses*** .................................. 1.94% 1.96% 2.01% 2.07% 2.07%
=================================================================
Investment loss--net ......................... (.73%) (.86%) (.97%) (.66%) (.81%)
=================================================================
==================================================================================================================================
Supplemental Data
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (in thousands) ....... $ 737,063 $ 430,689 $ 250,491 $ 178,459 $ 86,694
=================================================================
Portfolio turnover of the Portfolios ......... 93.95% 135.48% 138.73% 150.18% 162.28%
=================================================================
* Based on average shares outstanding.
** Total investment returns exclude the effects of sales charges.
*** Includes the Fund's share of the Portfolio's allocated expenses.
+ Amount is less than $(.01) per share.
See Notes to Financial Statements.
22 MERRILL LYNCH LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2005
Merrill Lynch Large Cap Growth Fund Merrill Lynch Large Cap Value Fund
- --------------------------------------------------------------- ---------------------------------------------------------------
For the Year Ended October 31, For the Year Ended October 31,
- --------------------------------------------------------------- ---------------------------------------------------------------
2005 2004 2003 2002 2001 2005 2004 2003 2002 2001
==================================================================================================================================
- ----------------------------------------------------------------------------------------------------------------------------------
$ 7.95 $ 7.65 $ 6.25 $ 7.36 $ 11.25 $ 14.01 $ 12.41 $ 9.93 $ 10.48 $ 11.54
- ----------------------------------------------------------------------------------------------------------------------------------
(.10) (.12) (.10) (.12) (.14) (.10) (.07) (.05) (.03) (.04)
.96 .42 1.50 (.99) (3.75) 2.86 1.67 2.53 (.52) (1.02)
- ----------------------------------------------------------------------------------------------------------------------------------
.86 .30 1.40 (1.11) (3.89) 2.76 1.60 2.48 (.55) (1.06)
- ----------------------------------------------------------------------------------------------------------------------------------
-- -- -- -- -- (.66) -- -- -- --
-- -- -- -- --+ -- -- -- -- --
-- -- -- -- -- -- -- -- -- --+
- ----------------------------------------------------------------------------------------------------------------------------------
-- -- -- -- --+ (.66) -- -- -- --+
- ----------------------------------------------------------------------------------------------------------------------------------
$ 8.81 $ 7.95 $ 7.65 $ 6.25 $ 7.36 $ 16.11 $ 14.01 $ 12.41 $ 9.93 $ 10.48
==================================================================================================================================
==================================================================================================================================
- ----------------------------------------------------------------------------------------------------------------------------------
10.82% 3.92% 22.40% (15.08%) (34.56%) 20.31% 12.89% 24.97% (5.25%) (9.18%)
==================================================================================================================================
==================================================================================================================================
- ----------------------------------------------------------------------------------------------------------------------------------
2.11% 2.16% 2.27% 2.33% 2.17% 2.00% 2.03% 2.06% 2.05% 2.07%
==================================================================================================================================
2.11% 2.16% 2.27% 2.35% 2.17% 2.00% 2.03% 2.06% 2.05% 2.07%
==================================================================================================================================
(1.19%) (1.48%) (1.62%) (1.67%) (1.68%) (.65%) (.54%) (.51%) (.28%) (.45%)
==================================================================================================================================
==================================================================================================================================
- ----------------------------------------------------------------------------------------------------------------------------------
$ 125,150 $ 94,969 $ 68,337 $ 52,872 $ 39,167 $ 409,937 $ 219,806 $ 129,456 $ 95,895 $ 77,901
==================================================================================================================================
131.79% 164.94% 178.11% 177.46% 230.34% 94.95% 127.59% 157.04% 136.92% 168.54%
==================================================================================================================================
MERRILL LYNCH LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2005 23
Financial Highlights (continued) Class I
Merrill Lynch Large Cap Core Fund
-----------------------------------------------------------------
For the Year Ended October 31,
The following per share data and ratios have been derived -----------------------------------------------------------------
from information provided in the financial statements. 2005 2004 2003 2002 2001
==================================================================================================================================
Per Share Operating Performance
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year ........... $ 11.28 $ 10.33 $ 8.31 $ 9.10 $ 11.77
-----------------------------------------------------------------
Investment income (loss)--net* ............... .04 .02 .01 .03 .02
Realized and unrealized gain (loss)--net ..... 1.97 .93 2.01 (.82) (2.69)
-----------------------------------------------------------------
Total from investment operations ............. 2.01 .95 2.02 (.79) (2.67)
-----------------------------------------------------------------
Less distributions:
Realized gain--net ........................ (.09) -- -- -- --
In excess of realized gain--net ........... -- -- -- -- --+
Return of capital--net .................... -- -- -- -- --
-----------------------------------------------------------------
Total dividends and distributions ............ (.09) -- -- -- --+
-----------------------------------------------------------------
Net asset value, end of year ................. $ 13.20 $ 11.28 $ 10.33 $ 8.31 $ 9.10
=================================================================
==================================================================================================================================
Total Investment Return**
- ----------------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share ........... 17.94% 9.20% 24.31% (8.68%) (22.65%)
=================================================================
==================================================================================================================================
Ratios to Average Net Assets
- ----------------------------------------------------------------------------------------------------------------------------------
Expenses, net of reimbursement*** ............ .91% .93% .98% 1.04% 1.05%
=================================================================
Expenses*** .................................. .91% .93% .98% 1.04% 1.05%
=================================================================
Investment income (loss)--net ................ .31% .17% .06% .33% .21%
=================================================================
==================================================================================================================================
Supplemental Data
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (in thousands) ....... $ 601,378 $ 415,647 $ 307,277 $ 214,953 76,674
=================================================================
Portfolio turnover of the Portfolios ......... 93.95% 135.48% 138.73% 150.18% 162.28%
=================================================================
* Based on average shares outstanding.
** Total investment returns exclude the effects of sales charges.
*** Includes the Fund's share of the Portfolio's allocated expenses.
+ Amount is less than $(.01) per share.
See Notes to Financial Statements.
24 MERRILL LYNCH LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2005
Merrill Lynch Large Cap Growth Fund Merrill Lynch Large Cap Value Fund
- --------------------------------------------------------------- ---------------------------------------------------------------
For the Year Ended October 31, For the Year Ended October 31,
- --------------------------------------------------------------- ---------------------------------------------------------------
2005 2004 2003 2002 2001 2005 2004 2003 2002 2001
==================================================================================================================================
- ----------------------------------------------------------------------------------------------------------------------------------
$ 8.36 $ 7.97 $ 6.44 $ 7.50 $ 11.35 $ 14.71 $ 12.89 $ 10.21 $ 10.67 $ 11.64
- ----------------------------------------------------------------------------------------------------------------------------------
(.02) (.04) (.04) (.05) (.06) .06 .07 .06 .05 .07
1.02 .43 1.57 (1.01) (3.78) 3.01 1.75 2.62 (.51) (1.03)
- ----------------------------------------------------------------------------------------------------------------------------------
1.00 .39 1.53 (1.06) (3.84) 3.07 1.82 2.68 (.46) (.96)
- ----------------------------------------------------------------------------------------------------------------------------------
-- -- -- -- -- (.66) -- -- -- --
-- -- -- -- (.01) -- -- -- -- --
-- -- -- -- -- -- -- -- -- (.01)
- ----------------------------------------------------------------------------------------------------------------------------------
-- -- -- -- (.01) (.66) -- -- -- (.01)
- ----------------------------------------------------------------------------------------------------------------------------------
$ 9.36 $ 8.36 $ 7.97 $ 6.44 $ 7.50 $ 17.12 $ 14.71 $ 12.89 $ 10.21 $ 10.67
==================================================================================================================================
==================================================================================================================================
- ----------------------------------------------------------------------------------------------------------------------------------
11.96% 4.89% 23.76% (14.13%) (33.89%) 21.49% 14.12% 26.25% (4.31%) (8.21%)
==================================================================================================================================
==================================================================================================================================
- ----------------------------------------------------------------------------------------------------------------------------------
1.08% 1.13% 1.22% 1.29% 1.14% .98% 1.01% 1.03% 1.03% 1.04%
==================================================================================================================================
1.08% 1.13% 1.22% 1.31% 1.14% .98% 1.01% 1.03% 1.03% 1.04%
==================================================================================================================================
(.20%) (.45%) (.57%) (.63%) (.65%) .35% .49% .51% .76% .60%
==================================================================================================================================
==================================================================================================================================
- ----------------------------------------------------------------------------------------------------------------------------------
$ 128,667 $ 79,869 $ 53,163 $ 31,989 $ 23,112 $ 446,172 $ 194,625 $ 92,736 $ 66,754 $ 42,641
==================================================================================================================================
131.79% 164.94% 178.11% 177.46% 230.34% 94.95% 127.59% 157.04% 136.92% 168.54%
==================================================================================================================================
MERRILL LYNCH LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2005 25
Financial Highlights (concluded) Class R
Merrill Lynch Large Cap Core Fund
---------------------------------------------------
For the Period
For the Year Ended January 3,
October 31, 2003+ to
The following per share data and ratios have been derived -------------------------------- October 31,
from information provided in the financial statements. 2005 2004 2003
==================================================================================================================
Per Share Operating Performance
- ------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ..... $ 10.89 $ 10.02 $ 8.12
---------------------------------------------------
Investment income (loss)--net*** ......... (.03) (.03) (.05)
Realized and unrealized gain--net ........ 1.91 .90 1.95
---------------------------------------------------
Total from investment operations ......... 1.88 .87 1.90
---------------------------------------------------
Less distributions from realized gain--net (.09) -- --
---------------------------------------------------
Net asset value, end of period ........... $ 12.68 $ 10.89 $ 10.02
==================================================================================================================
Total Investment Return**
- ------------------------------------------------------------------------------------------------------------------
Based on net asset value per share ....... 17.39% 8.68% 23.40%@
===================================================
==================================================================================================================
Ratios to Average Net Assets
- ------------------------------------------------------------------------------------------------------------------
Expenses, net of reimbursement++ ......... 1.42% 1.43% 1.48%*
===================================================
Expenses++ ............................... 1.42% 1.43% 1.48%*
===================================================
Investment income (loss)--net ............ (.28%) (.32%) (.44%)*
===================================================
==================================================================================================================
Supplemental Data
- ------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) . $ 46,379 $ 15,160 $ 119
===================================================
Portfolio turnover of the Portfolios ..... 93.95% 135.48% 138.73%
===================================================
* Annualized.
** Total investment returns exclude the effects of sales charges.
*** Based on average shares outstanding.
+ Commencement of operations.
++ Includes the Fund's share of the Portfolio's allocated expenses.
@ Aggregate total investment return.
@@ Amount is less than ($.01) per share.
See Notes to Financial Statements.
26 MERRILL LYNCH LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2005
Merrill Lynch Large Cap Growth Fund Merrill Lynch Large Cap Value Fund
- ------------------------------------------------- -------------------------------------------------
For the Period For the Period
For the Year Ended January 3, For the Year Ended January 3,
October 31, 2003+ to October 31, 2003+ to
- ------------------------------- October 31, ------------------------------- October 31,
2005 2004 2003 2005 2004 2003
=====================================================================================================
$ 8.08 $ 7.74 $ 6.16 $ 14.23 $ 12.54 $ 10.12
- -----------------------------------------------------------------------------------------------------
(.07) (.06) (.05) (.03) --@@ .01
.99 .40 1.63 2.92 1.69 2.41
- -----------------------------------------------------------------------------------------------------
.92 .34 1.58 2.89 1.69 2.42
- -----------------------------------------------------------------------------------------------------
-- -- -- (.66) -- --
- -----------------------------------------------------------------------------------------------------
$ 9.00 $ 8.08 $ 7.74 $ 16.46 $ 14.23 $ 12.54
=====================================================================================================
=====================================================================================================
- -----------------------------------------------------------------------------------------------------
11.39% 4.39% 25.65%@ 20.93% 13.48% 23.91%@
=====================================================================================================
=====================================================================================================
- -----------------------------------------------------------------------------------------------------
1.58% 1.61% 1.72%* 1.48% 1.53% 1.53%*
=====================================================================================================
1.58% 1.61% 1.72%* 1.48% 1.53% 1.53%*
=====================================================================================================
(.75%) (.95%) (.94%)* (.19%) (.03%) .01%*
=====================================================================================================
=====================================================================================================
- -----------------------------------------------------------------------------------------------------
$ 26,566 $ 11,304 $ 290 $ 45,894 $ 11,362 $ 12
=====================================================================================================
131.79% 164.94% 178.11% 94.95% 127.59% 157.04%
=====================================================================================================
MERRILL LYNCH LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2005 27
Notes to Financial Statements Merrill Lynch Large Cap Series Funds, Inc.
1. Significant Accounting Policies:
Merrill Lynch Large Cap Core Fund, Merrill Lynch Large Cap Growth Fund and
Merrill Lynch Large Cap Value Fund constituting Merrill Lynch Large Cap Series
Funds, Inc. (the "Funds" or individually as the "Fund") are registered under the
Investment Company Act of 1940, as amended, as diversified, open-end investment
companies. The Funds seek to achieve their investment objective by investing all
of their assets in the Master Large Cap Core Portfolio, Master Large Cap Growth
Portfolio and Master Large Cap Value Portfolio (the "Portfolios" or individually
as the "Portfolio"), respectively, constituting Master Large Cap Series Trust,
which have the same investment objective and strategies as the corresponding
Funds. The value of the Funds' investment in the Portfolios reflect the Funds'
proportionate interest in the net assets of the Portfolios. The performance of
the Funds is directly affected by the performance of the Portfolios. The
financial statements of the Portfolios, including the Schedules of Investments,
are included elsewhere in this report and should be read in conjunction with the
Funds' financial statements. The Funds' financial statements are prepared in
conformity with U.S. generally accepted accounting principles, which may require
the use of management accruals and estimates. Actual results may differ from
these estimates. On October 31, 2005, the percentage of Master Large Cap Core
Portfolio owned by Merrill Lynch Large Cap Core Fund was 92.4%, and the
percentage of Master Large Cap Growth Portfolio and Master Large Cap Value
Portfolio owned by Merrill Lynch Large Cap Growth Fund and Merrill Lynch Large
Cap Value Fund, respectively, was 100%. The Funds offer multiple classes of
shares. Shares of Class A and Class I are sold with a front-end sales charge.
Shares of Class B and Class C may be subject to a contingent deferred sales
charge. Class R Shares are sold only to certain retirement plans. All classes of
shares have identical voting, dividend, liquidation and other rights and the
same terms and conditions, except that Class A, Class B, Class C and Class R
Shares bear certain expenses related to the account maintenance of such shares,
and Class B, Class C and Class R Shares also bear certain expenses related to
the distribution of such shares. Each class has exclusive voting rights with
respect to matters relating to its account maintenance and distribution
expenditures (except that Class B shareholders may vote on certain changes to
Class A distribution plan). Income, expenses (other than expenses attributable
to a specific class) and realized and unrealized gains and losses are allocated
daily to each class based on its relative net assets. The following is a summary
of significant accounting policies followed by the Funds.
(a) Valuation of investments -- Each Fund records its investment in the
Portfolio at fair value. Valuation of securities held by the Portfolio is
discussed in Note 1(a) of the Portfolios' Notes to Financial Statements, which
are included elsewhere in this report.
(b) Investment income and expenses -- Each Fund records daily its proportionate
share of the Portfolio's income, expenses and realized and unrealized gains and
losses. In addition, each Fund accrues its own expenses.
(c) Income taxes -- It is each 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 each Fund
are recorded on the ex-dividend dates.
(f) Investment transactions -- Investment transactions in each Portfolio are
accounted for on a trade date basis.
(g) Reclassifications --
Merrill Lynch Large Cap Core Fund
U.S. generally accepted accounting principles require that certain components of
net assets be adjusted to reflect permanent differences between financial and
tax reporting. Accordingly, during the current year, $5,488,189 has been
reclassified between undistributed net realized capital gains and accumulated
net investment loss, and $492,254 has been reclassified between paid-in capital
in excess of par and undistributed net realized capital gains as a result of
permanent differences attributable to net operating losses and other permanent
differences. These reclassifications have no effect on net assets or net asset
values per share.
Merrill Lynch Large Cap Growth Fund
U.S. generally accepted accounting principles require that certain components of
net assets be adjusted to reflect permanent differences between financial and
tax reporting. Accordingly, during the current year, $3,266,027 has been
reclassified between paid-in capital in excess of par and accumulated net
investment loss as a result of a permanent difference attributable to net
operating losses. This reclassification has no effect on net assets or net asset
values per share.
28 MERRILL LYNCH LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2005
Notes to Financial Statements (continued)
Merrill Lynch Large Cap Series Funds, Inc.
Merrill Lynch Large Cap Value Fund
U.S. generally accepted accounting principles require that certain components of
net assets be adjusted to reflect permanent differences between financial and
tax reporting. Accordingly, during the current year, $2,354,785 has been
reclassified between undistributed net realized capital gains and accumulated
net investment loss as a result of a permanent difference attributable to net
operating loss. This reclassification has no effect on net assets or net asset
values per share.
2. Transactions with Affiliates:
Each Fund has entered into an Administration 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. Each 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.
Each 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 Funds 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"), an affiliate of FAM, also provides account
maintenance and distribution services to the Funds. The ongoing account
maintenance fee compensates the Distributor and MLPF&S for providing account
maintenance services to Class A, Class B, Class C and Class R shareholders. The
ongoing distribution fee compensates the Distributor and MLPF&S for providing
shareholder and distribution-related services to Class B, Class C and Class R
shareholders.
For the year ended October 31, 2005, FAMD earned underwriting discounts and
MLPF&S earned dealer concessions on sales of the Funds' Class A and Class I
Shares as follows:
- --------------------------------------------------------------------------------
FAMD MLPF&S
- --------------------------------------------------------------------------------
Merrill Lynch Large Cap Core Fund
Class A .................................... $ 97,733 $1,243,371
Class I .................................... $ 2,392 $ 41,878
- --------------------------------------------------------------------------------
Merrill Lynch Large Cap Growth Fund
Class A .................................... $ 7,233 $ 99,665
Class I .................................... $ 5,310 $ 2,545
- --------------------------------------------------------------------------------
Merrill Lynch Large Cap Value Fund
Class A .................................... $ 32,572 $ 423,030
Class I .................................... $ 5,388 $ 4,463
- --------------------------------------------------------------------------------
For the year ended October 31, 2005, MLPF&S received contingent deferred sales
charges relating to transactions in Class B and Class C Shares as follows:
- --------------------------------------------------------------------------------
Class B Class C
- --------------------------------------------------------------------------------
Merrill Lynch Large Cap Core Fund .............. $356,271 $ 98,243
Merrill Lynch Large Cap Growth Fund ............ $ 83,289 $ 14,384
Merrill Lynch Large Cap Value Fund ............. $195,016 $ 32,683
- --------------------------------------------------------------------------------
Furthermore, MLPF&S received contingent deferred sales charges relating to
transactions subject to front-end sales charge waivers as follows:
- --------------------------------------------------------------------------------
Class A Class I
- --------------------------------------------------------------------------------
Merrill Lynch Large Cap Core Fund ................ $ 1,362 --
Merrill Lynch Large Cap Growth Fund .............. $ 2,075 $ 937
Merrill Lynch Large Cap Value Fund ............... $ 2,075 $ 200
- --------------------------------------------------------------------------------
Financial Data Services, Inc. ("FDS"), an indirect, wholly-owned subsidiary of
ML & Co., is the Funds' transfer agent.
Certain officers and/or directors of the Funds are officers and/or directors of
FAM, FAMD, PSI, FDS, and/or ML & Co.
3. Capital Share Transactions:
Merrill Lynch Large Cap Core Fund
Net increase in net assets derived from capital share transactions was
$496,660,002 and $309,948,089 for the years ended October 31, 2005 and October
31, 2004, respectively.
MERRILL LYNCH LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2005 29
Notes to Financial Statements (continued)
Merrill Lynch Large Cap Series Funds, Inc.
Transactions in capital shares for each class were as follows:
- --------------------------------------------------------------------------------
Merrill Lynch Large Cap Core Fund
- --------------------------------------------------------------------------------
Class A Shares for the Year Dollar
Ended October 31, 2005 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ............................ 21,630,751 $ 269,694,087
Automatic conversion of shares ......... 1,329,966 16,528,220
Shares issued resulting from
reinvestment of distributions ....... 276,770 3,252,048
---------------------------------
Total issued ........................... 23,237,487 289,474,355
Shares redeemed ........................ (10,104,529) (126,772,449)
---------------------------------
Net increase ........................... 13,132,958 $ 162,701,906
=================================
- --------------------------------------------------------------------------------
Merrill Lynch Large Cap Core Fund
- --------------------------------------------------------------------------------
Class A Shares for the Year Dollar
Ended October 31, 2004 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ............................ 12,310,095 $ 132,734,982
Automatic conversion of shares ......... 699,006 7,570,079
---------------------------------
Total issued ........................... 13,009,101 140,305,061
Shares redeemed ........................ (6,415,802) (69,616,834)
---------------------------------
Net increase ........................... 6,593,299 $ 70,688,227
=================================
- --------------------------------------------------------------------------------
Merrill Lynch Large Cap Core Fund
- --------------------------------------------------------------------------------
Class B Shares for the Year Dollar
Ended October 31, 2005 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ............................ 7,261,231 $ 86,386,499
Shares issued resulting from
reinvestment of distributions ....... 272,886 3,083,617
---------------------------------
Total issued ........................... 7,534,117 89,470,116
---------------------------------
Automatic conversion of shares ......... (1,386,617) (16,528,220)
Shares redeemed ........................ (8,651,655) (102,765,876)
---------------------------------
Total redeemed ......................... (10,038,272) (119,294,096)
---------------------------------
Net decrease ........................... (2,504,155) $ (29,823,980)
=================================
- --------------------------------------------------------------------------------
Merrill Lynch Large Cap Core Fund
- --------------------------------------------------------------------------------
Class B Shares for the Year Dollar
Ended October 31, 2004 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ............................ 7,493,427 $ 78,234,793
---------------------------------
Automatic conversion of shares ......... (723,121) (7,570,079)
Shares redeemed ........................ (7,616,831) (79,533,441)
---------------------------------
Total redeemed ......................... (8,339,952) (87,103,520)
---------------------------------
Net decrease ........................... (846,525) $ (8,868,727)
=================================
- --------------------------------------------------------------------------------
Merrill Lynch Large Cap Core Fund
- --------------------------------------------------------------------------------
Class C Shares for the Year Dollar
Ended October 31, 2005 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ............................ 26,855,950 $ 320,056,553
Shares issued resulting from
reinvestment of distributions ....... 316,872 3,580,652
---------------------------------
Total issued ........................... 27,172,822 323,637,205
Shares redeemed ........................ (8,010,043) (95,860,544)
---------------------------------
Net increase ........................... 19,162,779 $ 227,776,661
=================================
- --------------------------------------------------------------------------------
Merrill Lynch Large Cap Core Fund
- --------------------------------------------------------------------------------
Class C Shares for the Year Dollar
Ended October 31, 2004 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ............................ 20,161,028 $ 210,375,936
Shares redeemed ........................ (5,267,640) (54,888,794)
---------------------------------
Net increase ........................... 14,893,388 $ 155,487,142
=================================
- --------------------------------------------------------------------------------
Merrill Lynch Large Cap Core Fund
- --------------------------------------------------------------------------------
Class I Shares for the Year Dollar
Ended October 31, 2005 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ............................ 16,652,465 $ 209,256,024
Shares issued resulting from
reinvestment of distributions ....... 241,544 2,871,965
---------------------------------
Total issued ........................... 16,894,009 212,127,989
Shares redeemed ........................ (8,200,059) (103,663,058)
---------------------------------
Net increase ........................... 8,693,950 $ 108,464,931
=================================
- --------------------------------------------------------------------------------
Merrill Lynch Large Cap Core Fund
- --------------------------------------------------------------------------------
Class I Shares for the Year Dollar
Ended October 31, 2004 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ............................ 13,601,810 $ 149,026,978
Shares redeemed ........................ (6,508,083) (70,950,427)
---------------------------------
Net increase ........................... 7,093,727 $ 78,076,551
=================================
- --------------------------------------------------------------------------------
Merrill Lynch Large Cap Core Fund
- --------------------------------------------------------------------------------
Class R Shares for the Year Dollar
Ended October 31, 2005 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ............................ 3,599,772 $ 43,887,267
Shares issued resulting from
reinvestment of distributions ....... 13,432 154,059
---------------------------------
Total issued ........................... 3,613,204 44,041,326
Shares redeemed ........................ (1,348,354) (16,500,842)
---------------------------------
Net increase ........................... 2,264,850 $ 27,540,484
=================================
- --------------------------------------------------------------------------------
Merrill Lynch Large Cap Core Fund
- --------------------------------------------------------------------------------
Class R Shares for the Year Dollar
Ended October 31, 2004 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ............................ 1,940,287 $ 20,567,859
Shares redeemed ........................ (560,490) (6,002,963)
---------------------------------
Net increase ........................... 1,379,797 $ 14,564,896
=================================
Merrill Lynch Large Cap Growth Fund
Net increase in net assets derived from capital share transactions was
$102,839,683 and $83,194,823 for the years ended October 31, 2005 and October
31, 2004, respectively.
30 MERRILL LYNCH LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2005
Notes to Financial Statements (continued)
Merrill Lynch Large Cap Series Funds, Inc.
Transactions in capital shares for each class were as follows:
- --------------------------------------------------------------------------------
Merrill Lynch Large Cap Growth Fund
- --------------------------------------------------------------------------------
Class A Shares for the Year Dollar
Ended October 31, 2005 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ............................ 6,552,650 $ 58,552,118
Automatic conversion of shares ......... 479,396 4,340,086
---------------------------------
Total issued ........................... 7,032,046 62,892,204
Shares redeemed ........................ (2,602,492) (23,247,423)
---------------------------------
Net increase ........................... 4,429,554 $ 39,644,781
=================================
- --------------------------------------------------------------------------------
Merrill Lynch Large Cap Growth Fund
- --------------------------------------------------------------------------------
Class A Shares for the Year Dollar
Ended October 31, 2004 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ............................ 5,354,688 $ 43,501,833
Automatic conversion of shares ......... 707,045 5,697,532
---------------------------------
Total issued ........................... 6,061,733 49,199,365
Shares redeemed ........................ (1,722,354) (13,822,082)
---------------------------------
Net increase ........................... 4,339,379 $ 35,377,283
=================================
- --------------------------------------------------------------------------------
Merrill Lynch Large Cap Growth Fund
- --------------------------------------------------------------------------------
Class B Shares for the Year Dollar
Ended October 31, 2005 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ............................ 3,379,386 $ 29,012,975
---------------------------------
Automatic conversion of shares ......... (499,699) (4,340,086)
Shares redeemed ........................ (3,768,945) (32,206,346)
---------------------------------
Total redeemed ......................... (4,268,644) (36,546,432)
---------------------------------
Net decrease ........................... (889,258) $ (7,533,457)
=================================
- --------------------------------------------------------------------------------
Merrill Lynch Large Cap Growth Fund
- --------------------------------------------------------------------------------
Class B Shares for the Year Dollar
Ended October 31, 2004 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ............................ 2,656,595 $ 20,970,689
---------------------------------
Automatic conversion of shares ......... (733,375) (5,697,532)
Shares redeemed ........................ (3,330,795) (26,194,971)
---------------------------------
Total redeemed ......................... (4,064,170) (31,892,503)
---------------------------------
Net decrease ........................... (1,407,575) $ (10,921,814)
=================================
- --------------------------------------------------------------------------------
Merrill Lynch Large Cap Growth Fund
- --------------------------------------------------------------------------------
Class C Shares for the Year Dollar
Ended October 31, 2005 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ............................ 5,368,655 $ 45,981,773
Shares redeemed ........................ (3,102,840) (26,622,404)
---------------------------------
Net increase ........................... 2,265,815 $ 19,359,369
=================================
- --------------------------------------------------------------------------------
Merrill Lynch Large Cap Growth Fund
- --------------------------------------------------------------------------------
Class C Shares for the Year Dollar
Ended October 31, 2004 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ............................ 5,420,898 $ 42,638,163
Shares redeemed ........................ (2,404,956) (18,800,286)
---------------------------------
Net increase ........................... 3,015,942 $ 23,837,877
=================================
- --------------------------------------------------------------------------------
Merrill Lynch Large Cap Growth Fund
- --------------------------------------------------------------------------------
Class I Shares for the Year Dollar
Ended October 31, 2005 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ............................ 7,718,763 $ 69,629,558
Shares redeemed ........................ (3,522,654) (31,902,918)
---------------------------------
Net increase ........................... 4,196,109 $ 37,726,640
=================================
- --------------------------------------------------------------------------------
Merrill Lynch Large Cap Growth Fund
- --------------------------------------------------------------------------------
Class I Shares for the Year Dollar
Ended October 31, 2004 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ............................ 5,628,370 $ 46,581,467
Shares redeemed ........................ (2,749,862) (22,603,407)
---------------------------------
Net increase ........................... 2,878,508 $ 23,978,060
=================================
- --------------------------------------------------------------------------------
Merrill Lynch Large Cap Growth Fund
- --------------------------------------------------------------------------------
Class R Shares for the Year Dollar
Ended October 31, 2005 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ............................ 2,649,241 $ 23,240,567
Shares redeemed ........................ (1,096,413) (9,598,217)
---------------------------------
Net increase ........................... 1,552,828 $ 13,642,350
=================================
- --------------------------------------------------------------------------------
Merrill Lynch Large Cap Growth Fund
- --------------------------------------------------------------------------------
Class R Shares for the Year Dollar
Ended October 31, 2004 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ............................ 1,768,404 $ 14,093,471
Shares redeemed ........................ (407,775) (3,170,054)
---------------------------------
Net increase ........................... 1,360,629 $ 10,923,417
=================================
Merrill Lynch Large Cap Value
Net increase in net assets derived from capital share transactions was
$576,505,050 and $220,472,373 for the years ended October 31, 2005 and October
31, 2004, respectively.
Transactions in capital shares for each class were as follows:
- --------------------------------------------------------------------------------
Merrill Lynch Large Cap Value Fund
- --------------------------------------------------------------------------------
Class A Shares for the Year Dollar
Ended October 31, 2005 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ............................ 14,908,526 $ 240,034,025
Automatic conversion of shares ......... 939,374 14,950,013
Shares issued resulting from
reinvestment of distributions ....... 493,981 7,315,852
---------------------------------
Total issued ........................... 16,341,881 262,299,890
Shares redeemed ........................ (5,469,730) (88,547,806)
---------------------------------
Net increase ........................... 10,872,151 $ 173,752,084
=================================
- --------------------------------------------------------------------------------
Merrill Lynch Large Cap Value Fund
- --------------------------------------------------------------------------------
Class A Shares for the Year Dollar
Ended October 31, 2004 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ............................ 6,851,969 $ 96,047,859
Automatic conversion of shares ......... 617,127 8,580,936
---------------------------------
Total issued ........................... 7,469,096 104,628,795
Shares redeemed ........................ (3,406,539) (46,365,233)
---------------------------------
Net increase ........................... 4,062,557 $ 58,263,562
=================================
MERRILL LYNCH LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2005 31
Notes to Financial Statements (continued)
Merrill Lynch Large Cap Series Funds, Inc.
- --------------------------------------------------------------------------------
Merrill Lynch Large Cap Value Fund
- --------------------------------------------------------------------------------
Class B Shares for the Year Dollar
Ended October 31, 2005 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ............................ 4,746,786 $ 72,547,018
Shares issued resulting from
reinvestment of distributions ....... 645,906 9,204,154
---------------------------------
Total issued ........................... 5,392,692 81,751,172
---------------------------------
Automatic conversion of shares ......... (978,449) (14,950,013)
Shares redeemed ........................ (4,040,521) (61,542,283)
---------------------------------
Total redeemed ......................... (5,018,970) (76,492,296)
---------------------------------
Net increase ........................... 373,722 $ 5,258,876
=================================
- --------------------------------------------------------------------------------
Merrill Lynch Large Cap Value Fund
- --------------------------------------------------------------------------------
Class B Shares for the Year Dollar
Ended October 31, 2004 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ............................ 3,414,404 $ 46,104,000
---------------------------------
Automatic conversion of shares ......... (637,251) (8,580,936)
Shares redeemed ........................ (3,226,808) (43,435,015)
---------------------------------
Total redeemed ......................... (3,864,059) (52,015,951)
---------------------------------
Net decrease ........................... (449,655) $ (5,911,951)
=================================
- --------------------------------------------------------------------------------
Merrill Lynch Large Cap Value Fund
- --------------------------------------------------------------------------------
Class C Shares for the Year Dollar
Ended October 31, 2005 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ............................ 12,540,291 $ 192,758,758
Shares issued resulting from
reinvestment of distributions ....... 699,915 9,966,785
---------------------------------
Total issued ........................... 13,240,206 202,725,543
Shares redeemed ........................ (3,482,254) (53,395,043)
---------------------------------
Net increase ........................... 9,757,952 $ 149,330,500
=================================
- --------------------------------------------------------------------------------
Merrill Lynch Large Cap Value Fund
- --------------------------------------------------------------------------------
Class C Shares for the Year Dollar
Ended October 31, 2004 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ............................ 7,243,397 $ 98,014,167
Shares redeemed ........................ (1,990,871) (26,850,346)
---------------------------------
Net increase ........................... 5,252,526 $ 71,163,821
=================================
- --------------------------------------------------------------------------------
Merrill Lynch Large Cap Value Fund
- --------------------------------------------------------------------------------
Class I Shares for the Year Dollar
Ended October 31, 2005 Shares Amount
- --------------------------------------------------------------------------------
Total sold ............................. 17,058,691 $ 286,306,800
Shares issued resulting from
reinvestment of distributions ....... 549,731 8,245,964
---------------------------------
Total issued ........................... 17,608,422 294,552,764
Shares redeemed ........................ (4,781,111) (77,304,760)
---------------------------------
Net increase ........................... 12,827,311 $ 217,248,004
=================================
- --------------------------------------------------------------------------------
Merrill Lynch Large Cap Value Fund
- --------------------------------------------------------------------------------
Class I Shares for the Year Dollar
Ended October 31, 2004 Shares Amount
- --------------------------------------------------------------------------------
Total sold ............................. 8,635,426 $ 122,477,143
Shares redeemed ........................ (2,595,641) (36,662,508)
---------------------------------
Net increase ........................... 6,039,785 $ 85,814,635
=================================
- --------------------------------------------------------------------------------
Merrill Lynch Large Cap Value Fund
- --------------------------------------------------------------------------------
Class R Shares for the Year Dollar
Ended October 31, 2005 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ............................ 2,583,162 $ 40,275,219
Shares issued resulting from
reinvestment of distributions ....... 48,890 707,934
---------------------------------
Total issued ........................... 2,632,052 40,983,153
Shares redeemed ........................ (641,770) (10,067,567)
---------------------------------
Net increase ........................... 1,990,282 $ 30,915,586
=================================
- --------------------------------------------------------------------------------
Merrill Lynch Large Cap Value Fund
- --------------------------------------------------------------------------------
Class R Shares for the Year Dollar
Ended October 31, 2004 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ............................ 949,150 $ 13,228,217
Shares redeemed ........................ (151,527) (2,085,911)
---------------------------------
Net increase ........................... 797,623 $ 11,142,306
=================================
4. Distributions to Shareholders:
Merrill Lynch Large Cap Core Fund
The tax character of distributions paid during the fiscal years ended October
31, 2005 and October 31, 2004 was as follows:
- --------------------------------------------------------------------------------
10/31/2005 10/31/2004
- --------------------------------------------------------------------------------
Distributions paid from:
Net long-term capital gains ................. $14,577,064 --
-----------------------
Total taxable distributions ................... $14,577,064 --
=======================
As of October 31, 2005, the components of accumulated earnings on a tax basis
were as follows:
- -----------------------------------------------------------------------------
Undistributed ordinary income -- net ................... $ 31,667,861
Undistributed long-term capital gains -- net ........... 114,529,208
-------------
Total undistributed earnings -- net .................... 146,197,069
Capital loss carryforward .............................. (68,267,289)*
Unrealized gains -- net ................................ 318,836,142**
-------------
Total accumulated earnings -- net ...................... $ 396,765,922
=============
* On October 31, 2005, the Fund had a net capital loss carryforward of
$68,267,289, of which $43,009,464 expires in 2008, $14,159,796 expires in
2009 and $11,098,029 expires in 2010. This amount will be available to
offset like amounts of any future taxable gains.
** The difference between book-basis and tax-basis net unrealized gains is
attributable primarily to the tax deferral of losses on wash sales and a
limitation on the utilization of capital loss carryforwards for tax
purposes.
32 MERRILL LYNCH LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2005
Notes to Financial Statements (concluded)
Merrill Lynch Large Cap Series Funds, Inc.
Merrill Lynch Large Cap Growth Fund
As of October 31, 2005, the components of accumulated losses on a tax basis were
as follows:
- -----------------------------------------------------------------------------
Undistributed ordinary income--net ...................... $ --
Undistributed long-term capital gains--net .............. --
------------
Total undistributed earnings--net ....................... --
Capital loss carryforward ............................... (55,312,594)*
Unrealized gains--net ................................... 44,278,720**
------------
Total accumulated losses--net ........................... $(11,033,874)
============
* On October 31, 2005, the Fund had a net capital loss carryforward of
$55,312,594, of which $5,224,996 expires in 2007, $2,705,691 expires in
2008, $6,931,833 expires in 2009 and $40,450,074 expires in 2010. This
amount will be available to offset like amounts of any future taxable
gains.
** The difference between book-basis and tax-basis net unrealized gains is
attributable primarily to the tax deferral of losses on wash sales.
Merrill Lynch Large Cap Value Fund
The tax character of distributions paid during the fiscal years ended October
31, 2005 and October 31, 2004 was as follows:
- --------------------------------------------------------------------------------
10/31/2005 10/31/2004
- --------------------------------------------------------------------------------
Distributions paid from:
Net long-term capital gains ............. $38,689,437 $ --
-----------------------------
Total taxable distributions ............... $38,689,437 $ --
=============================
As of October 31, 2005, the components of accumulated earnings on a tax basis
were as follows:
- -----------------------------------------------------------------------------
Undistributed ordinary income--net ..................... $ 26,422,162
Undistributed long-term capital gains--net ............. 48,314,141
-------------
Total undistributed earnings--net ...................... 74,736,303
Capital loss carryforward .............................. (191,235)*
Unrealized gains--net .................................. 199,447,924**
-------------
Total accumulated earnings--net ........................ $ 273,992,992
=============
* On October 31, 2005, the Fund had a net capital loss carryforward of
$191,235, all of which expires in 2010. This amount, subject to
limitation, will be available to offset like amounts of any future taxable
gains.
** The difference between book-basis and tax-basis net unrealized gains is
attributable primarily to the tax deferral of losses on wash sales and a
limitation on the utilization of capital loss carryforwards for tax
purposes.
Report of Independent Registered Public Accounting Firm
Merrill Lynch Large Cap Series Funds, Inc.
To the Shareholders and Board of Directors of
Merrill Lynch Large Cap Series Funds, Inc.:
We have audited the accompanying statements of assets and liabilities of Merrill
Lynch Large Cap Series Funds, Inc. (the "Fund"), comprising Merrill Lynch Large
Cap Core Fund, Merrill Lynch Large Cap Growth Fund and Merrill Lynch Large Cap
Value Fund, as of October 31, 2005, and the related statements of operations for
the year then ended, the statements of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of the
five years in the period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. The Fund
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Fund's internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the funds constituting Merrill Lynch Large Cap Series Funds, Inc. as of
October 31, 2005, the results of their operations for the year then ended, the
changes in their net assets for each of the two years in the period then ended,
and their financial highlights for each of the five years in the period then
ended, in conformity with U.S. generally accepted accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
December 19, 2005
MERRILL LYNCH LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2005 33
Portfolio Information as of October 31, 2005 Master Large Cap Series Trust
Sector Representation
Percent of
Master Large Cap Core Portfolio Total Investments
- --------------------------------------------------------------------------------
Information Technology ......................................... 24.2%
Energy ......................................................... 18.2
Health Care .................................................... 17.8
Financials ..................................................... 10.8
Consumer Discretionary ......................................... 10.6
Industrials .................................................... 5.7
Materials ...................................................... 2.9
Consumer Staples ............................................... 2.8
Utilities ...................................................... 2.0
Other* ......................................................... 5.0
- --------------------------------------------------------------------------------
Percent of
Master Large Cap Growth Portfolio Total Investments
- --------------------------------------------------------------------------------
Information Technology ......................................... 33.8%
Health Care .................................................... 20.7
Consumer Discretionary ......................................... 14.8
Industrials .................................................... 9.2
Energy ......................................................... 4.8
Financials ..................................................... 3.8
Consumer Staples ............................................... 3.6
Materials ...................................................... 2.5
Other* ......................................................... 6.8
- --------------------------------------------------------------------------------
Percent of
Master Large Cap Value Portfolio Total Investments
- --------------------------------------------------------------------------------
Financials ..................................................... 25.0%
Energy ......................................................... 23.0
Information Technology ......................................... 13.8
Consumer Discretionary ......................................... 10.2
Health Care .................................................... 10.0
Industrials .................................................... 3.5
Materials ...................................................... 3.2
Consumer Staples ............................................... 2.7
Utilities ...................................................... 2.6
Other* ......................................................... 6.0
- --------------------------------------------------------------------------------
Five Largest Industries
Percent of
Master Large Cap Core Portfolio Net Assets
- --------------------------------------------------------------------------------
Oil, Gas & Consumable Fuels .................................... 18.6%
Health Care Providers & Services ............................... 10.9
Software ....................................................... 9.0
Insurance ...................................................... 8.4
Semiconductors & Semiconductor Equipment ....................... 6.4
- --------------------------------------------------------------------------------
Percent of
Master Large Cap Growth Portfolio Net Assets
- --------------------------------------------------------------------------------
Software ....................................................... 12.8%
Health Care Providers & Services ............................... 11.5
Semiconductors & Semiconductor Equipment ....................... 10.4
Specialty Retail ............................................... 6.8
Computers & Peripherals ........................................ 5.9
- --------------------------------------------------------------------------------
Percent of
Master Large Cap Value Portfolio Net Assets
- --------------------------------------------------------------------------------
Oil, Gas & Consumable Fuels .................................... 24.4%
Insurance ...................................................... 15.1
Health Care Providers & Services ............................... 7.2
Software ....................................................... 6.1
Computers & Peripherals ........................................ 4.0
- --------------------------------------------------------------------------------
* Includes portfolio holdings in short-term investments.
For Portfolio compliance purposes, sector and industries classifications
refer to any one or more of the sector and 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 sector and
industry sub-classifications for reporting ease.
34 MERRILL LYNCH LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2005
Ten Largest Equity Holdings
Percent of
Master Large Cap Core Portfolio Net Assets
- --------------------------------------------------------------------------------
Exxon Mobil Corp. .............................................. 3.8%
General Electric Co. ........................................... 2.0
ConocoPhillips ................................................. 1.8
Hewlett-Packard Co. ............................................ 1.7
Pfizer, Inc. ................................................... 1.7
UnitedHealth Group, Inc. ....................................... 1.6
Intel Corp. .................................................... 1.6
Motorola, Inc. ................................................. 1.4
Texas Instruments, Inc. ........................................ 1.4
Dell, Inc. ..................................................... 1.3
- --------------------------------------------------------------------------------
Percent of
Master Large Cap Growth Portfolio Net Assets
- --------------------------------------------------------------------------------
Intel Corp. .................................................... 3.3%
Amgen, Inc. .................................................... 2.5
General Electric Co. ........................................... 2.5
UnitedHealth Group, Inc. ....................................... 2.2
Dell, Inc. ..................................................... 2.2
Microsoft Corp. ................................................ 1.9
Motorola, Inc. ................................................. 1.8
Texas Instruments, Inc. ........................................ 1.8
Apple Computer, Inc. ........................................... 1.8
Aetna, Inc. New Shares ......................................... 1.4
- --------------------------------------------------------------------------------
Percent of
Master Large Cap Value Portfolio Net Assets
- --------------------------------------------------------------------------------
Exxon Mobil Corp. .............................................. 6.8%
ConocoPhillips ................................................. 2.6
Hewlett-Packard Co. ............................................ 2.4
Citigroup, Inc. ................................................ 2.0
Goldman Sachs Group, Inc. ...................................... 1.8
Lehman Brothers Holdings, Inc. ................................. 1.6
Occidental Petroleum Corp. ..................................... 1.6
Valero Energy Corp. ............................................ 1.6
Prudential Financial, Inc. ..................................... 1.6
The St. Paul Travelers Cos., Inc. .............................. 1.6
- --------------------------------------------------------------------------------
MERRILL LYNCH LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2005 35
Schedule of Investments Master Large Cap Core Portfolio
Shares
Sector Industry Common Stocks Held Value
===================================================================================
Consumer Discretionary--11.2%
Auto Components--1.0%
The Goodyear Tire & Rubber Co. (c)(d) 1,610,000 $ 25,180,400
-----------------------------------------------------------------------
Hotels, Restaurants &
Leisure--1.1%
Darden Restaurants, Inc. 880,000 28,529,600
-----------------------------------------------------------------------
Household Durables--1.7%
NVR, Inc. (c) 30,000 20,565,000
Ryland Group, Inc. 380,000 25,574,000
--------------
46,139,000
-----------------------------------------------------------------------
Multiline Retail--2.2%
JC Penney Co., Inc. 580,000 29,696,000
Nordstrom, Inc. 870,000 30,145,500
--------------
59,841,500
-----------------------------------------------------------------------
Specialty Retail--5.2%
Advance Auto Parts (c) 450,000 16,875,000
American Eagle Outfitters 1,090,000 25,669,500
AutoNation, Inc. (c) 420,000 8,349,600
Best Buy Co., Inc. 370,000 16,376,200
Circuit City Stores, Inc. 1,230,000 21,881,700
Office Depot, Inc. (c) 780,000 21,473,400
Staples, Inc. 1,190,000 27,048,700
--------------
137,674,100
-----------------------------------------------------------------------
Total Consumer Discretionary 297,364,600
===================================================================================
Consumer Staples--2.9%
Food & Staples Retailing--1.0%
The Kroger Co. (c) 1,380,000 27,462,000
-----------------------------------------------------------------------
Food Products--0.8%
Archer-Daniels-Midland Co. 690,000 16,815,300
Pilgrim's Pride Corp. 190,000 5,981,200
--------------
22,796,500
-----------------------------------------------------------------------
Household Products--0.8%
Energizer Holdings, Inc. (c) 90,000 4,544,100
Procter & Gamble Co. 280,000 15,677,200
--------------
20,221,300
-----------------------------------------------------------------------
Tobacco--0.3%
Altria Group, Inc. 100,000 7,505,000
-----------------------------------------------------------------------
Total Consumer Staples 77,984,800
===================================================================================
Energy--19.1%
Energy Equipment &
Services--0.5%
Cooper Cameron Corp. (c) 180,000 13,271,400
-----------------------------------------------------------------------
Oil, Gas & Consumable
Fuels--18.6%
Amerada Hess Corp. (d) 220,000 27,522,000
Anadarko Petroleum Corp. 350,000 31,748,500
Apache Corp. 260,000 16,595,800
Burlington Resources, Inc. 480,000 34,665,600
Chevron Corp. 80,000 4,565,600
ConocoPhillips 740,000 48,381,200
Devon Energy Corp. 550,000 33,209,000
Exxon Mobil Corp. 1,820,000 102,174,800
Forest Oil Corp. (c) 540,000 23,587,200
Kerr-McGee Corp. 340,000 28,913,600
Marathon Oil Corp. 530,000 31,884,800
Newfield Exploration Co. (c) 100,000 4,533,000
Occidental Petroleum Corp. (d) 450,000 35,496,000
Sunoco, Inc. 400,000 29,800,000
Tesoro Corp. 150,000 9,172,500
Valero Energy Corp. 320,000 33,676,800
--------------
495,926,400
-----------------------------------------------------------------------
Total Energy 509,197,800
===================================================================================
Financials--11.3%
Capital Markets--1.5%
Goldman Sachs Group, Inc. 50,000 6,318,500
Lehman Brothers Holdings, Inc. 280,000 33,507,600
--------------
39,826,100
-----------------------------------------------------------------------
Commercial Banks--0.4%
Bank of America Corp. 270,000 11,809,800
-----------------------------------------------------------------------
Diversified Financial
Services--1.0%
Citigroup, Inc. 560,000 25,636,800
-----------------------------------------------------------------------
Insurance--8.4%
AON Corp. 760,000 25,726,000
The Allstate Corp. 490,000 25,867,100
American International Group, Inc. 90,000 5,832,000
Metlife, Inc. 650,000 32,116,500
The Progressive Corp. (d) 90,000 10,422,900
Prudential Financial, Inc. 470,000 34,211,300
Safeco Corp. 410,000 22,837,000
The St. Paul Travelers Cos., Inc. (d) 740,000 33,322,200
UnumProvident Corp. 1,240,000 25,159,600
W.R. Berkley Corp. 225,000 9,832,500
--------------
225,327,100
-----------------------------------------------------------------------
Total Financials 302,599,800
===================================================================================
Health Care--18.7%
Biotechnology--2.2%
Amgen, Inc. (c) 330,000 25,000,800
Invitrogen Corp. (c) 310,000 19,712,900
Techne Corp. (c) 260,000 14,097,200
--------------
58,810,900
-----------------------------------------------------------------------
Health Care Equipment &
Supplies--0.8%
Becton Dickinson & Co. 430,000 21,822,500
-----------------------------------------------------------------------
Health Care Providers &
Services--10.9%
Aetna, Inc. New Shares 380,000 33,652,800
AmerisourceBergen Corp. 390,000 29,745,300
Caremark Rx, Inc. (c) 650,000 34,060,000
Cigna Corp. 260,000 30,126,200
Express Scripts, Inc. (c)(d) 380,000 28,655,800
HCA, Inc. 600,000 28,914,000
Humana, Inc. (c) 600,000 26,634,000
McKesson Corp. 660,000 29,983,800
Quest Diagnostics, Inc. 150,000 7,006,500
UnitedHealth Group, Inc. 750,000 43,417,500
--------------
292,195,900
-----------------------------------------------------------------------
Pharmaceuticals--4.8%
Allergan, Inc. (d) 330,000 29,469,000
Barr Pharmaceuticals, Inc. (c) 470,000 27,001,500
Johnson & Johnson 240,000 15,028,800
36 MERRILL LYNCH LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2005
Schedule of Investments (continued) Master Large Cap Core Portfolio
Shares
Sector Industry Common Stocks Held Value
===================================================================================
Health Care (concluded)
Pharmaceuticals (concluded)
King Pharmaceuticals, Inc. (c) 740,000 $ 11,418,200
Pfizer, Inc. 2,030,000 44,132,200
--------------
127,049,700
-----------------------------------------------------------------------
Total Health Care 499,879,000
===================================================================================
Industrials--6.0%
Aerospace & Defense--0.7%
Precision Castparts Corp. 90,000 4,262,400
Raytheon Co. 390,000 14,410,500
--------------
18,672,900
-----------------------------------------------------------------------
Airlines--0.2%
AMR Corp. (c)(d) 430,000 5,809,300
-----------------------------------------------------------------------
Commercial Services &
Supplies--0.2%
Corporate Executive Board Co. 70,000 5,784,800
-----------------------------------------------------------------------
Electrical Equipment--0.8%
Rockwell Automation, Inc. 410,000 21,791,500
-----------------------------------------------------------------------
Industrial Conglomerates--2.0%
General Electric Co. 1,530,000 51,882,300
-----------------------------------------------------------------------
Machinery--1.0%
Cummins, Inc. 210,000 17,927,700
Joy Global, Inc. 180,000 8,256,600
--------------
26,184,300
-----------------------------------------------------------------------
Road & Rail--1.1%
CSX Corp. 640,000 29,318,400
-----------------------------------------------------------------------
Total Industrials 159,443,500
===================================================================================
Information Technology--25.5%
Communications
Equipment--1.4%
Motorola, Inc. 1,730,000 38,336,800
-----------------------------------------------------------------------
Computers & Peripherals--5.7%
Dell, Inc. (c) 1,150,000 36,662,000
Hewlett-Packard Co. 1,590,000 44,583,600
International Business Machines Corp. 40,000 3,275,200
NCR Corp. (c) 650,000 19,643,000
QLogic Corp. (c) 680,000 20,508,800
Western Digital Corp. (c)(d) 2,190,000 26,499,000
--------------
151,171,600
-----------------------------------------------------------------------
Electronic Equipment &
Instruments--0.5%
Jabil Circuit, Inc. (c)(d) 430,000 12,835,500
-----------------------------------------------------------------------
IT Services--2.5%
CheckFree Corp. (c) 530,000 22,525,000
Computer Sciences Corp. (c) 140,000 7,175,000
Fiserv, Inc. (c)(d) 590,000 25,771,200
Sabre Holdings Corp. Class A 640,000 12,499,200
--------------
67,970,400
-----------------------------------------------------------------------
Semiconductors & Semiconductor
Equipment--6.4%
Broadcom Corp. Class A (c) 260,000 11,039,600
Intel Corp. 1,840,000 43,240,000
LSI Logic Corp. (c)(d) 3,100,000 25,141,000
Lam Research Corp. (c) 780,000 26,317,200
Nvidia Corp. (c) 810,000 27,175,500
Texas Instruments, Inc. 1,300,000 37,115,000
--------------
170,028,300
-----------------------------------------------------------------------
Software--9.0%
Autodesk, Inc. (c) 620,000 27,980,600
BEA Systems, Inc. (c) 2,960,000 26,107,200
BMC Software, Inc. (c) 1,100,000 21,549,000
Citrix Systems, Inc. (c) 1,010,000 27,845,700
Compuware Corp. (c) 1,110,000 8,979,900
Intuit, Inc. (c) 590,000 27,098,700
McAfee, Inc. (c) 910,000 27,327,300
Mercury Interactive Corp. (c) 650,000 22,613,500
Microsoft Corp. 1,010,000 25,957,000
Red Hat, Inc. (c) 1,060,000 24,613,200
--------------
240,072,100
-----------------------------------------------------------------------
Total Information Technology 680,414,700
===================================================================================
Materials--3.1%
Chemicals--0.6%
Eastman Chemical Co. (d) 270,000 14,245,200
-----------------------------------------------------------------------
Containers & Packaging--0.6%
Crown Holdings, Inc. (c) 930,000 15,084,600
-----------------------------------------------------------------------
Metals & Mining--1.5%
Freeport-McMoRan Copper & Gold,
Inc. Class B (d) 240,000 11,860,800
Nucor Corp. (d) 480,000 28,728,000
--------------
40,588,800
-----------------------------------------------------------------------
Paper & Forest Products--0.4%
MeadWestvaco Corp. 440,000 11,536,800
-----------------------------------------------------------------------
Total Materials 81,455,400
===================================================================================
Utilities--2.1%
Electric Utilities--1.4%
American Electric Power Co., Inc. 110,000 4,175,600
Edison International 630,000 27,568,800
Northeast Utilities 360,000 6,548,400
--------------
38,292,800
-----------------------------------------------------------------------
Multi-Utilities--0.7%
CMS Energy Corp. (c)(d) 1,190,000 17,742,900
-----------------------------------------------------------------------
Total Utilities 56,035,700
-----------------------------------------------------------------------
Total Common Stocks
(Cost--$2,304,822,230)--99.9% 2,664,375,300
===================================================================================
Short-Term Beneficial
Securities Interest
===================================================================================
Merrill Lynch Liquidity Series, LLC
Cash Sweep Series I (a) $ 4,121,341 4,121,341
Merrill Lynch Liquidity Series, LLC
Money Market Series (a)(b) 136,792,200 136,792,200
-----------------------------------------------------------------------
Total Short-Term Securities
(Cost--$140,913,541)--5.3% 140,913,541
===================================================================================
Total Investments
(Cost--$2,445,735,771*)--105.2% 2,805,288,841
Liabilities in Excess of Other Assets--(5.2%) (138,590,095)
--------------
Net Assets--100.0% $2,666,698,746
==============
MERRILL LYNCH LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2005 37
Schedule of Investments (concluded) Master Large Cap Core Portfolio
For Portfolio compliance purposes, the Portfolio's sector and industry
classifications refer to any one or more of the sector and 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
sector and industry sub-classifications for reporting ease. Sectors and
industries are shown as a percent of net assets. These sector and industry
classifications are unaudited.
* The cost and unrealized appreciation (depreciation) of investments as of
October 31, 2005, as computed for federal income tax purposes, were as
follows:
Aggregate cost ......................................... $2,459,099,961
==============
Gross unrealized appreciation .......................... $ 440,422,571
Gross unrealized depreciation .......................... (94,233,691)
--------------
Net unrealized appreciation ............................ $ 346,188,880
==============
(a) Investments in companies considered to be an affiliate of the Portfolio,
for purposes of Section 2(a)(3) of the Investment Company Act of 1940)
were as follows:
--------------------------------------------------------------------------
Net Interest
Affiliate Activity Income
--------------------------------------------------------------------------
Merrill Lynch Liquidity Series, LLC
Cash Sweep Series I $1,766,173 $125,703
Merrill Lynch Liquidity Series, LLC
Money Market Series $1,214,900 $176,578
--------------------------------------------------------------------------
(b) Security was purchased with the cash proceeds from securities loans.
(c) Non-income producing security.
(d) Security, or a portion of security, is on loan.
See Notes to Financial Statements.
38 MERRILL LYNCH LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2005
Schedule of Investments Master Large Cap Growth Portfolio
Shares
Sector Industry Common Stocks Held Value
===================================================================================
Consumer Discretionary--15.9%
Auto Components--1.0%
The Goodyear Tire & Rubber Co. (a) 321,000 $ 5,020,440
-----------------------------------------------------------------------
Diversified Consumer
Services--1.0%
Apollo Group, Inc. Class A (a) 20,000 1,260,400
Weight Watchers International, Inc. (a) 70,000 3,679,900
--------------
4,940,300
-----------------------------------------------------------------------
Hotels, Restaurants &
Leisure--1.2%
Darden Restaurants, Inc. 175,000 5,673,500
-----------------------------------------------------------------------
Household Durables--0.9%
NVR, Inc. (a) 6,000 4,113,000
-----------------------------------------------------------------------
Media--1.1%
Viacom, Inc. Class B 174,000 5,388,780
-----------------------------------------------------------------------
Multiline Retail--2.3%
JC Penney Co., Inc. 108,000 5,529,600
Nordstrom, Inc. 168,000 5,821,200
--------------
11,350,800
-----------------------------------------------------------------------
Specialty Retail--6.8%
Advance Auto Parts (a) 118,500 4,443,750
American Eagle Outfitters 215,000 5,063,250
Best Buy Co., Inc. 139,000 6,152,140
Chico's FAS, Inc. (a) 135,000 5,337,900
Circuit City Stores, Inc. 264,000 4,696,560
Staples, Inc. (b) 268,000 6,091,640
Tiffany & Co. 41,000 1,615,400
--------------
33,400,640
-----------------------------------------------------------------------
Textiles, Apparel & Luxury
Goods--1.6%
Polo Ralph Lauren Corp. 88,000 4,329,600
Timberland Co. Class A (a) 128,000 3,603,200
--------------
7,932,800
-----------------------------------------------------------------------
Total Consumer Discretionary 77,820,260
===================================================================================
Consumer Staples--3.8%
Beverages--0.6%
Pepsi Bottling Group, Inc. 114,000 3,241,020
-----------------------------------------------------------------------
Food & Staples Retailing--1.2%
Whole Foods Market, Inc. (b) 40,000 5,765,200
-----------------------------------------------------------------------
Household Products--2.0%
Energizer Holdings, Inc. (a) 90,000 4,544,100
Procter & Gamble Co. 93,000 5,207,070
--------------
9,751,170
-----------------------------------------------------------------------
Total Consumer Staples 18,757,390
===================================================================================
Energy--5.2%
Energy Equipment &
Services--1.1%
Cooper Cameron Corp. (a) 76,000 5,603,480
-----------------------------------------------------------------------
Oil, Gas & Consumable
Fuels--4.1%
Anadarko Petroleum Corp. 47,000 4,263,370
Burlington Resources, Inc. 62,000 4,477,640
Newfield Exploration Co. (a) 114,000 5,167,620
Sunoco, Inc. 79,000 5,885,500
--------------
19,794,130
-----------------------------------------------------------------------
Total Energy 25,397,610
===================================================================================
Financials--4.1%
Capital Markets--1.2%
Goldman Sachs Group, Inc. 46,000 5,813,020
-----------------------------------------------------------------------
Insurance--2.9%
Allmerica Financial Corp. 90,000 3,429,000
Prudential Financial, Inc. (b) 71,000 5,168,090
W.R. Berkley Corp. 124,000 5,418,800
--------------
14,015,890
-----------------------------------------------------------------------
Total Financials 19,828,910
===================================================================================
Health Care--22.2%
Biotechnology--5.6%
Amgen, Inc. (a) 162,000 12,273,120
Gilead Sciences, Inc. (a) 135,000 6,378,750
Invitrogen Corp. (a) 61,000 3,878,990
Techne Corp. (a) 92,000 4,988,240
--------------
27,519,100
-----------------------------------------------------------------------
Health Care Equipment &
Supplies--1.0%
Becton Dickinson & Co. 98,000 4,973,500
-----------------------------------------------------------------------
Health Care Providers &
Services--11.5%
Aetna, Inc. New Shares 77,000 6,819,120
AmerisourceBergen Corp. 64,000 4,881,280
Caremark Rx, Inc. (a) 125,000 6,550,000
Community Health Systems, Inc. (a) 127,000 4,712,970
Express Scripts, Inc. (a) 75,000 5,655,750
HCA, Inc. (b) 131,000 6,312,890
Humana, Inc. (a) 113,000 5,016,070
McKesson Corp. 119,000 5,406,170
UnitedHealth Group, Inc. (b) 188,000 10,883,320
--------------
56,237,570
-----------------------------------------------------------------------
Pharmaceuticals--4.1%
Allergan, Inc. 66,000 5,893,800
Barr Pharmaceuticals, Inc. (a) 91,000 5,227,950
Johnson & Johnson 85,000 5,322,700
Pfizer, Inc. 156,000 3,391,440
--------------
19,835,890
-----------------------------------------------------------------------
Total Health Care 108,566,060
===================================================================================
Industrials--9.9%
Aerospace & Defense--2.0%
Boeing Co. 75,000 4,848,000
Precision Castparts Corp. 100,000 4,736,000
--------------
9,584,000
-----------------------------------------------------------------------
Airlines--1.1%
AMR Corp. (a)(b) 386,000 5,214,860
-----------------------------------------------------------------------
Commercial Services &
Supplies--1.2%
Corporate Executive Board Co. 63,000 5,206,320
HNI Corp. 13,000 635,700
--------------
5,842,020
-----------------------------------------------------------------------
Electrical Equipment--1.1%
Rockwell Automation, Inc. 103,000 5,474,450
-----------------------------------------------------------------------
Industrial Conglomerates--2.4%
General Electric Co. 354,000 12,004,140
-----------------------------------------------------------------------
MERRILL LYNCH LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2005 39
Schedule of Investments (concluded) Master Large Cap Growth Portfolio
Shares
Sector Industry Common Stocks Held Value
===================================================================================
Industrials (concluded)
Machinery--2.1%
Cummins, Inc. 60,000 $ 5,122,200
Joy Global, Inc. 117,000 5,366,790
--------------
10,488,990
-----------------------------------------------------------------------
Total Industrials 48,608,460
===================================================================================
Information Technology--36.3%
Communications
Equipment--2.3%
Cisco Systems, Inc. (a) 88,000 1,535,600
Motorola, Inc. 391,000 8,664,560
Scientific-Atlanta, Inc. 23,000 815,120
--------------
11,015,280
-----------------------------------------------------------------------
Computers & Peripherals--5.9%
Apple Computer, Inc. (a) 150,000 8,638,500
Dell, Inc. (a) 336,000 10,711,680
NCR Corp. (a) 140,000 4,230,800
Western Digital Corp. (a) 437,000 5,287,700
--------------
28,868,680
-----------------------------------------------------------------------
Electronic Equipment &
Instruments--1.8%
Agilent Technologies, Inc. (a) 116,000 3,713,160
Jabil Circuit, Inc. (a) 166,000 4,955,100
--------------
8,668,260
-----------------------------------------------------------------------
IT Services--3.1%
Ceridian Corp. (a) 219,000 4,798,290
CheckFree Corp. (a) 118,000 5,015,000
Fiserv, Inc. (a) 126,000 5,503,680
--------------
15,316,970
-----------------------------------------------------------------------
Semiconductors & Semiconductor
Equipment--10.4%
Broadcom Corp. Class A (a) 125,000 5,307,500
Intel Corp. 691,000 16,238,500
Intersil Corp. Class A 200,000 4,552,000
LSI Logic Corp. (a) 626,000 5,076,860
Lam Research Corp. (a)(b) 163,000 5,499,620
Nvidia Corp. (a) 163,000 5,468,650
Texas Instruments, Inc. (b) 303,000 8,650,650
--------------
50,793,780
-----------------------------------------------------------------------
Software--12.8%
Autodesk, Inc. (a) 129,000 5,821,770
BEA Systems, Inc. (a) 577,000 5,089,140
BMC Software, Inc. (a) 259,000 5,073,810
Cadence Design Systems, Inc. (a) 318,000 5,081,640
Citrix Systems, Inc. (a) 28,000 771,960
Compuware Corp. (a) 645,000 5,218,050
Fair Isaac Corp. (b) 120,000 5,011,200
Intuit, Inc. (a) 113,000 5,190,090
McAfee, Inc. (a) 173,000 5,195,190
Mercury Interactive Corp. (a) 160,000 5,566,400
Microsoft Corp. 365,000 9,380,500
Red Hat, Inc. (a)(b) 231,000 5,363,820
--------------
62,763,570
-----------------------------------------------------------------------
Total Information Technology 177,426,540
===================================================================================
Materials--2.7%
Containers & Packaging--1.0%
Crown Holdings, Inc. (a) 308,000 4,995,760
-----------------------------------------------------------------------
Metals & Mining--1.7%
Freeport-McMoRan Copper & Gold, Inc.
Class B 65,000 3,212,300
Nucor Corp. 82,000 4,907,700
--------------
8,120,000
-----------------------------------------------------------------------
Total Materials 13,115,760
-----------------------------------------------------------------------
Total Common Stocks
(Cost--$442,393,001)--100.1% 489,520,990
===================================================================================
Short-Term Beneficial
Securities Interest
===================================================================================
Merrill Lynch Liquidity Series, LLC
Cash Sweep Series I (c) $ 184,446 184,446
Merrill Lynch Liquidity Series, LLC
Money Market Series (c)(d) 35,699,400 35,699,400
-----------------------------------------------------------------------
Total Short-Term Securities
(Cost--$35,883,846)--7.3% 35,883,846
===================================================================================
Total Investments (Cost--$478,276,847*)--107.4% 525,404,836
Liabilities in Excess of Other Assets--(7.4%) (36,006,714)
--------------
Net Assets--100.0% $ 489,398,122
==============
For Portfolio compliance purposes, the Portfolio's sector and industry
classifications refer to any one or more of the sector and 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
sector and industry sub-classifications for reporting ease. Sectors and
industries are shown as a percent of net assets. These sector and industry
classifications are unaudited.
* The cost and unrealized appreciation (depreciation) of investments as of
October 31, 2005, as computed for federal income tax purposes, were as
follows:
Aggregate cost ............................................ $481,126,764
============
Unrealized appreciation ................................... $ 58,089,507
Unrealized depreciation ................................... (13,811,435)
------------
Net unrealized appreciation ............................... $ 44,278,072
============
(a) Non-income producing security.
(b) Security, or a portion of security, is on loan.
(c) Investments in companies considered to be an affiliate of the Portfolio
for purposes of Section 2(a)(3) of the Investment Company Act of 1940,
were as follows:
--------------------------------------------------------------------------
Net Interest
Affiliate Activity Income
--------------------------------------------------------------------------
Merrill Lynch Liquidity Series, LLC
Cash Sweep Series I $ 167,724 $34,055
Merrill Lynch Liquidity Series, LLC
Money Market Series $12,849,500 $35,059
--------------------------------------------------------------------------
(d) Security was purchased with the cash proceeds from securities loans.
See Notes to Financial Statements.
40 MERRILL LYNCH LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2005
Schedule of Investments Master Large Cap Value Portfolio
Shares
Sector Industry Common Stocks Held Value
===================================================================================
Consumer Discretionary--10.8%
Auto Components--1.0%
The Goodyear Tire & Rubber Co. (c)(d) 1,010,000 $ 15,796,400
-----------------------------------------------------------------------
Hotels, Restaurants &
Leisure--0.8%
Darden Restaurants, Inc. 380,000 12,319,600
-----------------------------------------------------------------------
Household Durables--0.3%
Ryland Group, Inc. 60,000 4,038,000
-----------------------------------------------------------------------
Leisure Equipment &
Products--1.0%
Hasbro, Inc. 830,000 15,637,200
-----------------------------------------------------------------------
Media--1.1%
Viacom, Inc. Class B 550,000 17,033,500
-----------------------------------------------------------------------
Multiline Retail--2.0%
JC Penney Co., Inc. 360,000 18,432,000
Nordstrom, Inc. 340,000 11,781,000
--------------
30,213,000
-----------------------------------------------------------------------
Specialty Retail--3.6%
American Eagle Outfitters 390,000 9,184,500
AutoNation, Inc. (c)(d) 860,000 17,096,800
Circuit City Stores, Inc. 480,000 8,539,200
Office Depot, Inc. (c) 670,000 18,445,100
Tiffany & Co. 50,000 1,970,000
--------------
55,235,600
-----------------------------------------------------------------------
Textiles, Apparel & Luxury
Goods--1.0%
Polo Ralph Lauren Corp. 320,000 15,744,000
-----------------------------------------------------------------------
Total Consumer Discretionary 166,017,300
===================================================================================
Consumer Staples--2.9%
Beverages--0.9%
Pepsi Bottling Group, Inc. 470,000 13,362,100
-----------------------------------------------------------------------
Food & Staples Retailing--0.2%
The Kroger Co. (c) 130,000 2,587,000
-----------------------------------------------------------------------
Food Products--0.9%
Pilgrim's Pride Corp. 430,000 13,536,400
-----------------------------------------------------------------------
Household Products--0.9%
Energizer Holdings, Inc. (c) 290,000 14,642,100
-----------------------------------------------------------------------
Total Consumer Staples 44,127,600
===================================================================================
Energy--24.4%
Oil, Gas & Consumable
Fuels--24.4%
Amerada Hess Corp. 116,000 14,511,600
Anadarko Petroleum Corp. 230,000 20,863,300
Apache Corp. 150,000 9,574,500
Burlington Resources, Inc. 330,000 23,832,600
Chevron Corp. 90,000 5,136,300
ConocoPhillips 610,000 39,881,800
Devon Energy Corp. 380,000 22,944,400
Exxon Mobil Corp. 1,870,000 104,981,800
Forest Oil Corp. (c) 380,000 16,598,400
Kerr-McGee Corp. 210,000 17,858,400
Marathon Oil Corp. 360,000 21,657,600
Occidental Petroleum Corp. 310,000 24,452,800
Sunoco, Inc. 220,000 16,390,000
Valero Energy Corp. 230,000 24,205,200
Williams Cos., Inc. 520,000 11,596,000
-----------------------------------------------------------------------
Total Energy 374,484,700
===================================================================================
Financials--26.5%
Capital Markets--3.4%
Goldman Sachs Group, Inc. 220,000 27,801,400
Lehman Brothers Holdings, Inc. 210,000 25,130,700
--------------
52,932,100
-----------------------------------------------------------------------
Commercial Banks--0.9%
Bank of America Corp. 330,000 14,434,200
-----------------------------------------------------------------------
Diversified Financial
Services--3.4%
Citigroup, Inc. 670,000 30,672,600
JPMorgan Chase & Co. 60,000 2,197,200
Principal Financial Group, Inc. 390,000 19,355,700
--------------
52,225,500
-----------------------------------------------------------------------
Insurance--15.0%
AON Corp. 570,000 19,294,500
Allmerica Financial Corp. 340,000 12,954,000
The Allstate Corp. 430,000 22,699,700
American Financial Group, Inc. 270,000 9,228,600
Cincinnati Financial Corp. 140,000 5,957,000
Hartford Financial Services Group, Inc. 60,000 4,785,000
Lincoln National Corp. 360,000 18,219,600
Metlife, Inc. 430,000 21,246,300
Nationwide Financial Services, Inc.
Class A 170,000 6,866,300
The Progressive Corp. (d) 140,000 16,213,400
Prudential Financial, Inc. 330,000 24,020,700
Safeco Corp. 210,000 11,697,000
The St. Paul Travelers Cos., Inc. 530,000 23,865,900
UnumProvident Corp. 780,000 15,826,200
W.R. Berkley Corp. 390,000 17,043,000
--------------
229,917,200
-----------------------------------------------------------------------
Thrifts & Mortgage
Finance--3.8%
Astoria Financial Corp. 160,000 4,472,000
Countrywide Financial Corp. 260,000 8,260,200
Downey Financial Corp. 190,000 11,580,500
MGIC Investment Corp. (d) 290,000 17,179,600
The PMI Group, Inc. 420,000 16,749,600
--------------
58,241,900
-----------------------------------------------------------------------
Total Financials 407,750,900
===================================================================================
Health Care--10.6%
Biotechnology--1.4%
Applera Corp.--Applied
Biosystems Group 480,000 11,649,600
Invitrogen Corp. (c) 160,000 10,174,400
--------------
21,824,000
-----------------------------------------------------------------------
Health Care Providers &
Services--7.2%
Aetna, Inc. New Shares 200,000 17,712,000
AmerisourceBergen Corp. 230,000 17,542,100
Caremark Rx, Inc. (c)(d) 310,000 16,244,000
Cigna Corp. 130,000 15,063,100
HCA, Inc. 210,000 10,119,900
Humana, Inc. (c) 340,000 15,092,600
McKesson Corp. 400,000 18,172,000
--------------
109,945,700
-----------------------------------------------------------------------
MERRILL LYNCH LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2005 41
Schedule of Investments (concluded) Master Large Cap Value Portfolio
Shares
Sector Industry Common Stocks Held Value
===================================================================================
Health Care (concluded)
Pharmaceuticals--2.0%
King Pharmaceuticals, Inc. (c) 1,100,000 $ 16,973,000
Pfizer, Inc. 660,000 14,348,400
--------------
31,321,400
-----------------------------------------------------------------------
Total Healthcare 163,091,100
===================================================================================
Industrials--3.7%
Aerospace & Defense--1.9%
Precision Castparts Corp. 320,000 15,155,200
Raytheon Co. 370,000 13,671,500
--------------
28,826,700
-----------------------------------------------------------------------
Electrical Equipment--0.6%
Rockwell Automation, Inc. 190,000 10,098,500
-----------------------------------------------------------------------
Road & Rail--1.2%
CSX Corp. 400,000 18,324,000
-----------------------------------------------------------------------
Total Industrials 57,249,200
===================================================================================
Information Technology--14.6%
Communications
Equipment--1.1%
Motorola, Inc. 750,000 16,620,000
-----------------------------------------------------------------------
Computers & Peripherals--4.0%
Hewlett-Packard Co. 1,310,000 36,732,400
NCR Corp. (c) 290,000 8,763,800
QLogic Corp. (c) 180,000 5,428,800
Western Digital Corp. (c)(d) 930,000 11,253,000
--------------
62,178,000
-----------------------------------------------------------------------
Electronic Equipment &
Instruments--1.1%
Arrow Electronics, Inc. (c) 510,000 15,050,100
Avnet, Inc. (c) 70,000 1,613,500
--------------
16,663,600
-----------------------------------------------------------------------
IT Services--1.1%
CheckFree Corp. (c) 180,000 7,650,000
Sabre Holdings Corp. Class A 490,000 9,569,700
--------------
17,219,700
-----------------------------------------------------------------------
Semiconductors & Semiconductor
Equipment--1.1%
LSI Logic Corp. (c) 2,030,000 16,463,300
-----------------------------------------------------------------------
Software--6.2%
Autodesk, Inc. 245,000 11,056,850
BEA Systems, Inc. (c)(d) 1,100,000 9,702,000
BMC Software, Inc. (c) 830,000 16,259,700
Cadence Design Systems, Inc. (c) 890,000 14,222,200
Compuware Corp. (c) 1,980,000 16,018,200
Fair Isaac Corp. 40,000 1,670,400
McAfee, Inc. (c)(d) 410,000 12,312,300
Sybase, Inc. (c) 640,000 14,240,000
--------------
95,481,650
-----------------------------------------------------------------------
Total Information Technology 224,626,250
===================================================================================
Materials--3.4%
Chemicals--1.4%
Eastman Chemical Co. 120,000 6,331,200
FMC Corp. (c) 270,000 14,698,800
--------------
21,030,000
-----------------------------------------------------------------------
Metals & Mining--0.9%
Nucor Corp. 240,000 14,364,000
-----------------------------------------------------------------------
Paper & Forest Products--1.1%
MeadWestvaco Corp. 630,000 16,518,600
-----------------------------------------------------------------------
Total Materials 51,912,600
===================================================================================
Utilities--2.8%
Electric Utilities--1.7%
American Electric Power Co., Inc. 210,000 7,971,600
Edison International 308,000 13,478,080
Northeast Utilities 250,000 4,547,500
--------------
25,997,180
-----------------------------------------------------------------------
Multi-Utilities--1.1%
CMS Energy Corp. (c)(d) 1,120,000 16,699,200
-----------------------------------------------------------------------
Total Utilities 42,696,380
-----------------------------------------------------------------------
Total Common Stocks
(Cost--$1,327,844,902)--99.7% 1,531,956,030
===================================================================================
Short-Term Beneficial
Securities Interest
===================================================================================
Merrill Lynch Liquidity Series, LLC
Cash Sweep Series I (a) $ 8,523,929 8,523,929
Merrill Lynch Liquidity Series, LLC
Money Market Series (a)(b) 88,287,000 88,287,000
-----------------------------------------------------------------------
Total Short-Term Securities
(Cost--$96,810,929)--6.3% 96,810,929
===================================================================================
Total Investments
(Cost--$1,424,655,831*)--106.0% 1,628,766,959
Liabilities in Excess of Other Assets--(6.0%) (92,778,897)
--------------
Net Assets--100.0% $1,535,988,062
==============
For Portfolio compliance purposes, the Portfolio's sector and industry
classifications refer to any one or more of the sector or 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
sector and industry sub-classifications for reporting ease. Sectors and
industries are shown as a percent of net assets. These sector and industry
classifications are unaudited.
* The cost and unrealized appreciation (depreciation) of investments as of
October 31, 2005, as computed for federal income tax purposes, were as
follows:
Aggregate cost .......................................... $1,429,319,035
==============
Gross unrealized appreciation ........................... $ 234,612,696
Gross unrealized depreciation ........................... (35,164,772)
--------------
Net unrealized appreciation ............................. $ 199,447,924
==============
(a) Investments in companies considered to be an affiliate of the Portfolio,
for purposes of Section 2(a)(3) of the Investment Company Act of 1940,
were as follows:
--------------------------------------------------------------------------
Net Interest
Affiliate Activity Income
--------------------------------------------------------------------------
Merrill Lynch Liquidity Series, LLC
Cash Sweep Series I $ 7,320,828 $156,787
Merrill Lynch Liquidity Series, LLC
Money Market Series $53,063,800 $ 43,166
--------------------------------------------------------------------------
(b) Security was purchased with the cash proceeds from securities loans.
(c) Non-income producing security.
(d) Security, or a portion of security, is on loan.
See Notes to Financial Statements.
42 MERRILL LYNCH LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2005
Statements of Assets and Liabilities Master Large Cap Series Trust
Master Large Master Large Master Large
As of October 31, 2005 Cap Core Cap Growth Cap Value
===================================================================================================================================
Assets
- -----------------------------------------------------------------------------------------------------------------------------------
Investments in unaffiliated securities, at value*+ ...... $2,664,375,300 $ 489,520,990 $1,531,956,030
Investments in affiliated securities, at value** ........ 140,913,541 35,883,846 96,810,929
Cash .................................................... -- 4,414 --
Receivables:
Securities sold ...................................... 40,078,661 14,751,864 46,036,925
Contributions ........................................ 7,000,055 708,181 7,717,641
Dividends ............................................ 1,092,450 149,170 822,450
Securities lending ................................... 36,194 4,912 7,734
Prepaid expenses ........................................ 42,281 8,841 22,579
---------------------------------------------------
Total assets ............................................ 2,853,538,482 541,032,218 1,683,374,288
---------------------------------------------------
===================================================================================================================================
Liabilities
- -----------------------------------------------------------------------------------------------------------------------------------
Collateral on securities loaned, at value ............... 136,792,200 35,699,400 88,287,000
Payables:
Securities purchased ................................. 41,896,996 14,668,749 22,593,297
Withdrawals .......................................... 3,536,420 996,361 2,656,539
Custodian bank ....................................... 3,401,802 -- 33,099,435
Investment adviser ................................... 1,040,392 203,546 645,607
Other affiliates ..................................... 30,062 5,510 15,282
Accrued expenses ........................................ 141,864 60,530 89,066
---------------------------------------------------
Total liabilities ....................................... 186,839,736 51,634,096 147,386,226
---------------------------------------------------
===================================================================================================================================
Net Assets
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets .............................................. $2,666,698,746 $ 489,398,122 $1,535,988,062
===================================================
===================================================================================================================================
Net Assets Consist of
- -----------------------------------------------------------------------------------------------------------------------------------
Investors' capital ...................................... $2,307,145,676 $ 442,270,133 $1,331,876,934
Unrealized appreciation--net ............................ 359,553,070 47,127,989 204,111,128
---------------------------------------------------
Net Assets .............................................. $2,666,698,746 $ 489,398,122 $1,535,988,062
===================================================
* Identified cost for unaffiliated securities .......... $2,304,822,230 $ 442,393,001 $1,327,844,902
===================================================
** Identified cost for affiliated securities ........... $ 140,913,541 $ 35,883,846 $ 96,810,929
===================================================
+ Securities loaned for unaffiliated securities ........ $ 133,121,337 $ 35,545,473 $ 86,496,299
===================================================
See Notes to Financial Statements.
MERRILL LYNCH LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2005 43
Statements of Operations Master Large Cap Series Trust
Master Large Master Large Master Large
For the Year Ended October 31, 2005 Cap Core Cap Growth Cap Value
===================================================================================================================================
Investment Income
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends ............................................... $ 28,489,172 $ 3,809,535 $ 15,255,855
Securities lending--net ................................. 176,578 35,059 43,166
Interest from affiliates ................................ 125,703 34,055 156,787
---------------------------------------------------
Total income ............................................ 28,791,453 3,878,649 15,455,808
---------------------------------------------------
===================================================================================================================================
Expenses
- -----------------------------------------------------------------------------------------------------------------------------------
Investment advisory fees ................................ 11,047,046 2,154,995 5,732,081
Accounting services ..................................... 501,657 181,359 333,894
Custodian fees .......................................... 128,210 44,021 69,158
Professional fees ....................................... 68,428 42,134 51,429
Trustees' fees and expenses ............................. 65,144 22,106 37,850
Printing and shareholder reports ........................ 6,773 1,227 2,349
Pricing fees ............................................ 1,193 1,164 1,181
Other ................................................... 46,948 11,794 24,722
---------------------------------------------------
Total expenses .......................................... 11,865,399 2,458,800 6,252,664
---------------------------------------------------
Investment income--net .................................. 16,926,054 1,419,849 9,203,144
---------------------------------------------------
===================================================================================================================================
Realized & Unrealized Gain--Net
- -----------------------------------------------------------------------------------------------------------------------------------
Realized gain on investments--net ....................... 185,237,400 27,951,501 77,262,988
Change in unrealized appreciation on investments--net ... 159,284,150 17,275,515 112,124,763
---------------------------------------------------
Total realized and unrealized gain--net ................. 344,521,550 45,227,016 189,387,751
---------------------------------------------------
Net Increase in Net Assets Resulting from Operations .... $ 361,447,604 $ 46,646,865 $ 198,590,895
===================================================
See Notes to Financial Statements.
44 MERRILL LYNCH LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2005
Statements of Changes in Net Assets Master Large Cap Series Trust
Master Large Cap Core
-----------------------------------
For the Year Ended
October 31,
-----------------------------------
Increase (Decrease) in Net Assets: 2005 2004
=================================================================================================================================
Operations
- ---------------------------------------------------------------------------------------------------------------------------------
Investment income--net ............................................ $ 16,926,054 $ 9,256,200
Realized gain--net ................................................ 185,237,400 199,493,500
Change in unrealized appreciation--net ............................ 159,284,150 (68,627,985)
-----------------------------------
Net increase in net assets resulting from operations .............. 361,447,604 140,121,715
-----------------------------------
=================================================================================================================================
Capital Transactions
- ---------------------------------------------------------------------------------------------------------------------------------
Proceeds from contributions ....................................... 1,040,896,976 751,429,058
Fair value of withdrawals ......................................... (566,946,131) (514,359,352)
-----------------------------------
Net increase in net assets derived from capital transactions ...... 473,950,845 237,069,706
-----------------------------------
=================================================================================================================================
Net Assets
- ---------------------------------------------------------------------------------------------------------------------------------
Total increase in net assets ...................................... 835,398,449 377,191,421
Beginning of year ................................................. 1,831,300,297 1,454,108,876
-----------------------------------
End of year ....................................................... $ 2,666,698,746 $ 1,831,300,297
===================================
See Notes to Financial Statements.
MERRILL LYNCH LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2005 45
Statements of Changes in Net Assets Master Large Cap Series Trust
Master Large Cap Growth
-----------------------------------
For the Year Ended
October 31,
-----------------------------------
Increase (Decrease) in Net Assets: 2005 2004
=================================================================================================================================
Operations
- ---------------------------------------------------------------------------------------------------------------------------------
Investment income--net ................................................ $ 1,419,849 $ 281,254
Realized gain--net .................................................... 27,951,501 24,609,718
Change in unrealized appreciation/depreciation--net ................... 17,275,515 (10,279,183)
-----------------------------------
Net increase in net assets resulting from operations .................. 46.646,865 14,611,789
-----------------------------------
=================================================================================================================================
Capital Transactions
- ---------------------------------------------------------------------------------------------------------------------------------
Proceeds from contributions ........................................... 226,416,991 167,785,623
Fair value of withdrawals ............................................. (128,065,615) (88,163,265)
-----------------------------------
Net increase in net assets derived from capital transactions .......... 98,351,376 79,622,358
-----------------------------------
=================================================================================================================================
Net Assets
- ---------------------------------------------------------------------------------------------------------------------------------
Total increase in net assets .......................................... 144,998,241 94,234,147
Beginning of year ..................................................... 344,399,881 250,165,734
-----------------------------------
End of year ........................................................... $ 489,398,122 $ 344,399,881
===================================
See Notes to Financial Statements.
46 MERRILL LYNCH LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2005
Statements of Changes in Net Assets Master Large Cap Series Trust
Master Large Cap Value
-----------------------------------
For the Year Ended
October 31,
-----------------------------------
Increase (Decrease) in Net Assets: 2005 2004
=================================================================================================================================
Operations
- ---------------------------------------------------------------------------------------------------------------------------------
Investment income--net ................................................ $ 9,203,144 $ 6,104,616
Realized gain--net .................................................... 77,262,988 78,138,823
Change in unrealized appreciation--net ................................ 112,124,763 (2,549,830)
-----------------------------------
Net increase in net assets resulting from operations .................. 198,590,895 81,693,609
-----------------------------------
=================================================================================================================================
Capital Transactions
- ---------------------------------------------------------------------------------------------------------------------------------
Proceeds from contributions ........................................... 831,921,820 375,871,386
Fair value of withdrawals ............................................. (305,014,008) (162,332,461)
-----------------------------------
Net increase in net assets derived from capital transactions .......... 526,907,812 213,538,925
-----------------------------------
=================================================================================================================================
Net Assets
- ---------------------------------------------------------------------------------------------------------------------------------
Total increase in net assets .......................................... 725,498,707 295,232,534
Beginning of year ..................................................... 810,489,355 515,256,821
-----------------------------------
End of year ........................................................... $ 1,535,988,062 $ 810,489,355
===================================
See Notes to Financial Statements.
MERRILL LYNCH LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2005 47
Financial Highlights Master Large Cap Series Trust
Master Large Cap Core Portfolio
-----------------------------------------------------------------
For the Year Ended October 31,
The following ratios have been derived from information -----------------------------------------------------------------
provided in the financial statements. 2005 2004 2003 2002 2001
==================================================================================================================================
Total Investment Return*
- ----------------------------------------------------------------------------------------------------------------------------------
Total investment return ...................... 18.35% 9.61% 25.11% (8.13%) --
=================================================================
==================================================================================================================================
Ratios to Average Net Assets
- ----------------------------------------------------------------------------------------------------------------------------------
Expenses ..................................... .51% .52% .54% .57% .67%
=================================================================
Investment income--net ....................... .72% .57% .48% .83% .59%
=================================================================
==================================================================================================================================
Supplemental Data
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (in thousands) ....... $2,666,699 $1,831,300 $1,454,109 $ 873,704 $ 412,836
=================================================================
Portfolio turnover ........................... 93.95% 135.48% 138.73% 150.18% 162.28%
=================================================================
* Total investment return is required to be disclosed for fiscal years
beginning after December 15, 2000.
See Notes to Financial Statements.
48 MERRILL LYNCH LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2005
Master Large Cap Growth Portfolio Master Large Cap Value Portfolio
- --------------------------------------------------------------- ---------------------------------------------------------------
For the Year Ended October 31, For the Year Ended October 31,
- --------------------------------------------------------------- ---------------------------------------------------------------
2005 2004 2003 2002 2001 2005 2004 2003 2002 2001
==================================================================================================================================
- ----------------------------------------------------------------------------------------------------------------------------------
12.47% 5.42% 25.01% (13.56%) -- 21.93% 14.57% 27.05% (3.40%) --
==================================================================================================================================
==================================================================================================================================
- ----------------------------------------------------------------------------------------------------------------------------------
.57% .59% .61% .67% .73% .55% .56% .57% .60% .67%
==================================================================================================================================
.33% .09% .04% (.01%) (.24%) .80% .93% .97% 1.17% .96%
==================================================================================================================================
==================================================================================================================================
- ----------------------------------------------------------------------------------------------------------------------------------
$ 489,398 $ 344,400 $ 250,166 $ 185,676 $ 148,652 $1,535,988 $ 810,489 $ 515,257 $ 386,918 $ 328,219
==================================================================================================================================
131.79% 164.94% 178.11% 177.46% 230.34% 94.95% 127.59% 157.04% 136.92% 168.54%
==================================================================================================================================
MERRILL LYNCH LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2005 49
Notes to Financial Statements Master Large Cap Series Trust
1. Significant Accounting Policies:
Master Large Cap Core Portfolio, Master Large Cap Growth Portfolio and Master
Large Cap Value Portfolio (the "Portfolios" or individually as the "Portfolio")
constitute the Master Large Cap Series Trust (the "Trust"). The Trust is
registered under the Investment Company Act of 1940, as amended, 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 Portfolios' financial statements are prepared in conformity
with U.S. generally accepted accounting principles, which may require the use of
management accruals and estimates. Actual results may differ from these
estimates. The following is a summary of significant accounting policies
followed by the Portfolio.
(a) Valuation of investments -- Equity securities that are held by each
Portfolio that are traded on stock exchanges or the Nasdaq National Market are
valued at the last sale price or official close price on the exchange, as of the
close of business on the day the securities are being valued or, lacking any
sales, at the last available bid price for long positions, and at the last
available asked price for short positions. In cases where equity securities are
traded on more than one exchange, the securities are valued on the exchange
designated as the primary market by or under the authority of the Board of
Trustees of the Trust. Long positions traded in the over-the-counter ("OTC")
market, Nasdaq Small Cap or Bulletin Board are valued at the last available bid
price or yield equivalent obtained from one or more dealers or pricing services
approved by the Board of Trustees of the Trust. Short positions traded in the
OTC market are valued at the last available asked price. Portfolio securities
that are traded both in the OTC market and on a stock exchange are valued
according to the broadest and most representative market.
Options written are valued at the last sale price in the case of exchange-traded
options or, in the case of options traded in the OTC market, the last ask price.
Options purchased are valued at their last sale price in the case of
exchange-traded options or, in the case of options traded in the OTC market, the
last bid price. Swap agreements are valued based upon quoted fair valuations
received daily by the Portfolios from a pricing service or counterparty.
Financial futures contracts and options thereon, which are traded on exchanges,
are valued at their last sale price as of the close of such exchanges.
Obligations with remaining maturities of 60 days or less are valued at amortized
cost unless the Investment Adviser believes that this method no longer produces
fair valuations.
Repurchase agreements are valued at cost plus accrued interest. Each Portfolio
employs pricing services to provide certain securities prices for the Portfolio.
Securities and assets for which market quotations are not readily available are
valued at fair value as determined in good faith by or under the direction of
the Board of Trustees of the Trust, including valuations furnished by the
pricing services retained by each Portfolio, which may use a matrix system for
valuations. The procedures of a pricing service and its valuations are reviewed
by the officers of the Trust under the general supervision of the Trust's Board
of Trustees. Such valuations and procedures will be reviewed periodically by the
Board of Trustees of the Trust.
Generally, trading in foreign securities, as well as U.S. government securities,
money market instruments, and certain fixed income securities, is substantially
completed each day at various times prior to the close of business on the New
York Stock Exchange ("NYSE"). The values of such securities used in computing
the net assets of each Portfolio are determined as of such times. Foreign
currency exchange rates also are generally determined prior to the close of
business on the NYSE. Occasionally, events affecting the values of such
securities and such exchange rates may occur between the times at which they are
determined and the close of business on the NYSE that may not be reflected in
the computation of each Portfolio's net assets. If events (for example, a
company announcement, market volatility or a natural disaster) occur during such
periods that are expected to materially affect the value of such securities,
those securities may be valued at their fair value as determined in good faith
by the Trust's Board of Trustees or by the Investment Adviser using a pricing
service and/or procedures approved by the Trust's Board of Trustees.
(b) Derivative financial instruments -- Each 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 movements and movements in
the securities markets. Losses may arise due to changes in the value of the
contract or if the counterparty does not perform under the contract.
o Financial futures contracts -- Each Portfolio may purchase or sell
financial futures contracts and options on such futures contracts. Futures
contracts are contracts for delayed delivery of securities at a specific
date and at a specific price or yield. 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
50 MERRILL LYNCH LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2005
Notes to Financial Statements (continued) Master Large Cap Series Trust
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 -- Each Portfolio may 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.
(c) Income taxes -- Each 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.
(d) 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.
(e) Securities lending -- Each 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, it receives a fee from the borrower. The
Portfolio typically receives the income on the loaned securities, but does not
receive the income on the collateral. 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. 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
finders, lending agent, administrative and custodial fees in connection with its
loans. In the event that the borrower defaults on its obligation to return
borrowed securities because of insolvency or for any other reason, the 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.
(f) Custodian bank --
Master Large Cap Core Portfolio
The Portfolio recorded an amount payable to the custodian bank reflecting an
overnight overdraft, which resulted from a failed trade that settled the next
day.
Master Large Cap Value Portfolio
The Portfolio recorded an amount payable to the custodian bank resulting from a
timing difference of security transaction settlements.
2. Investment Advisory Agreement and Transactions with Affiliates:
The 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 each 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
Master Large Cap Core Portfolio pays a monthly fee at an annual rate of .50% of
the average daily value of the Portfolio's net assets not
MERRILL LYNCH LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2005 51
Notes to Financial Statements (concluded) Master Large Cap Series Trust
exceeding $1 billion and .45% of average daily net assets in excess of $1
billion. Master Large Cap Growth Portfolio and Master Large Cap Value Portfolio
each pay a monthly fee at an annual rate of .50% of the average daily value of
the Portfolio's net assets. 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 Portfolio. There is no increase in the aggregate fees paid by the
Portfolio for these services.
Each Portfolio has received an exemptive order from the Securities and Exchange
Commission permitting it to lend portfolio securities to Merrill Lynch, Pierce,
Fenner & Smith Incorporated ("MLPF&S"), an affiliate of FAM, or its affiliates.
As of October 31, 2005, the Master Large Cap Core Portfolio, Master Large Cap
Growth Portfolio and Master Large Cap Value Portfolio lent securities with
values of $11,244,452, $5,680,227 and $11,554,200, respectively, to MLPF&S or
its affiliates. Pursuant to that order, the Portfolios also have 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 Portfolios,
invest cash collateral received by the Portfolios for such loans, among other
things, in a private investment company managed by MLIM, LLC or in registered
money market Portfolios advised by FAM or its affiliates. For the year ended
October 31, 2005, MLIM, LLC received $77,387, $15,406 and $18,950 in securities
lending agent fees for Master Large Cap Core Portfolio, Master Large Cap Growth
Portfolio and Master Large Cap Value Portfolio, respectively.
For the year ended October 31, 2005, the Portfolios reimbursed FAM for certain
accounting services as follows:
- --------------------------------------------------------------------------------
Reimbursement
- --------------------------------------------------------------------------------
Master Large Cap Core Portfolio ................................ $53,670
Master Large Cap Growth Portfolio .............................. $10,598
Master Large Cap Value Portfolio ............................... $27,301
- --------------------------------------------------------------------------------
Certain officers and/or trustees of the Trust are officers and/or directors of
FAM, PSI, MLAM U.K., ML & Co., and/or MLIM, LLC.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the
year ended October 31, 2005 were as follows:
- --------------------------------------------------------------------------------
Total Purchases Total Sales
- --------------------------------------------------------------------------------
Master Large Cap
Core Portfolio ...................... $2,674,748,983 $2,184,746,762
Master Large Cap
Growth Portfolio .................... $ 664,219,773 $ 562,936,365
Master Large Cap
Value Portfolio ..................... $1,616,512,846 $1,082,971,746
- --------------------------------------------------------------------------------
4. Short-Term Borrowings:
Each Portfolio, along with certain other funds managed by FAM and its
affiliates, is party to a $500,000,000 credit agreement with a group of lenders,
which expires November 2005 and was subsequently renewed for one year under
substantially the same terms. The Portfolio may borrow under the credit
agreement to fund shareholder redemptions and for other lawful purposes other
than for leverage. The Portfolio may borrow up to the maximum amount allowable
under the Portfolio's current prospectus and statement of additional
information, subject to various other legal, regulatory or contractual limits.
The Portfolio pays a commitment fee of .07% per annum based on the Portfolio'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 Portfolio's
election, the federal funds rate plus .50% or a base rate as defined in the
credit agreement. None of the Portfolios borrowed under the credit agreement
during the year ended October 31, 2005.
52 MERRILL LYNCH LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2005
Report of Independent Registered Public Accounting Firm
Master Large Cap Series Trust
To the Investors and Board of Trustees of
Master Large Cap Series Trust:
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments of Master Large Cap Series Trust (the "Trust"),
comprising Master Large Cap Core Portfolio, Master Large Cap Growth Portfolio
and Master Large Cap Value Portfolio, as of October 31, 2005, the related
statements of operations for the year then ended, the statements of changes in
net assets for each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended. These financial
statements and financial highlights are the responsibility of the Trust's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. The Trust
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Trust's internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of October 31, 2005, by correspondence with the custodian
and brokers; where replies were not received from brokers, we performed other
auditing procedures. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the portfolios constituting Master Large Cap Series Trust, as of October 31,
2005, the results of their operations for the year then ended, the changes in
their net assets for each of the two years in the period then ended, and their
financial highlights for each of the five years in the period then ended, in
conformity with U.S. generally accepted accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
December 19, 2005
MERRILL LYNCH LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2005 53
Disclosure of Investment Advisory Agreement
Activities of and Composition of the Board of Directors.
All but one member of each Fund's Board of Directors is an independent director
whose only association with the Investment Adviser or other Merrill Lynch
affiliates is as a director of the Funds and certain other funds advised by the
Investment Adviser or its affiliates. The Co-chairmen of the Board are also
independent directors. New director nominees are chosen as nominees by a
Nominating Committee comprised of independent directors. All independent
directors also are members of each Board's Audit Committee and the independent
directors meet in executive session at each regular Board meeting. Each Board
and the Audit Committee meet in person for at least two days each quarter and
conduct other in-person and telephone meetings throughout the year, some of
which are formal board meetings and some of which are informational meetings.
The independent counsel to the independent directors attends all in-person Board
and Audit Committee meetings and other meetings at the independent directors'
request.
Investment Advisory Agreements -- Matters Considered by the Board
Every year, the Board considers approval of the Investment Advisory Agreements
with respect to each Fund and throughout each year, reviews and evaluates the
performance of and services provided by the Investment Adviser. Each Board
assesses the nature, scope and quality of the services provided to the Trust
and/or the Fund by the personnel of the Investment Adviser, and its affiliates,
including administrative services, shareholder services, oversight of fund
accounting, marketing services and assistance in meeting legal and regulatory
requirements. Each Board also receives and assesses information regarding the
services provided to the Trust and the Fund by certain unaffiliated service
providers.
At various times throughout the year, each Board also considers a range of
information in connection with its oversight of the services provided by the
Investment Adviser and its affiliates. Among the matters considered with respect
to each Fund are: (a) fees (in addition to management fees) paid to the
Investment Adviser and its affiliates by the Trust and/or the Fund, such as
transfer agency fees and fees for marketing and distribution; (b) Trust or Fund
operating expenses paid to third parties; (c) the resources devoted to and
compliance reports relating to the Trust's and the Fund's investment objective,
policies and restrictions, and its compliance with its Code of Ethics and the
Investment Adviser's compliance policies and procedures; and (d) the nature,
cost and character of non-investment management services provided by the
Investment Adviser and its affiliates.
Each Board believes that the Investment Adviser is one of the most experienced
global asset management firms and considers the overall quality of services
provided by the Investment Adviser to be generally of high quality. Each Board
also believes that the Investment Adviser is financially sound and well managed
and notes that the Investment Adviser is affiliated with one of America's
largest financial firms. Each Board works closely with the Investment Adviser in
overseeing the Investment Adviser's efforts to achieve good performance. As part
of this effort, each Board discusses portfolio manager effectiveness and, when
performance is not satisfactory, discusses with the Investment Adviser taking
steps such as changing investment personnel.
Annual Consideration of Approval by the Board of Directors.
In the period prior to the Board meeting to consider renewal of the Investment
Advisory Agreements, each Board requests and receives materials specifically
relating to the Investment Advisory Agreements. These materials are prepared
separately with respect to each Fund, and include (a) information compiled by
Lipper Inc. ("Lipper") on the fees and expenses and the investment performance
of the Fund as compared to a comparable group of funds as classified by Lipper;
(b) sales and redemption data for the Fund; (c) a discussion by the
Trust's/Fund's portfolio management team regarding investment strategies used by
the Trust/Fund during its most recent fiscal year; (d) information on the
profitability to the Investment Adviser and its affiliates of the Investment
Advisory Agreements and other relationships with the Trust/Fund; and (e)
information provided by the Investment Adviser concerning investment advisory
fees charged to other clients, such as other mutual funds and offshore funds
under similar investment mandates and generally to institutional clients. The
Board also considers other matters it deems important to the approval process
such as payments made to the Investment Adviser or its affiliates relating to
the distribution of Fund shares, services related to the valuation and pricing
of Trust/Fund portfolio holdings, allocation of Trust/Fund brokerage fees, the
Trust's/Fund's portfolio turnover statistics, and direct and indirect benefits
to the Investment Adviser and its affiliates from their relationship with the
Trust/Fund.
Certain Specific Renewal Data
In connection with the most recent renewal of the Trust's Investment Advisory
Agreements, which occurred in May
54 MERRILL LYNCH LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2005
2005, the independent Directors' and Board's review included the following:
The Investment Adviser's Services and Fund Performance -- Each Board reviewed
the nature, extent and quality of services provided by the Investment Adviser,
including the investment advisory services and the resulting performance of the
Fund. Each Board focused primarily on the Investment Adviser's investment
advisory services and the Fund's investment performance. Each Board compared the
Fund's performance -- both including and excluding the effects of the
Trust's/Fund's fees and expenses -- to the performance of a comparable group of
mutual funds, and the performance of a relevant index or combination of indexes.
While each Board reviews performance data at least quarterly, consistent with
the Investment Adviser's investment goals, the Board attaches more importance to
performance over relatively long periods of time, typically three to five years.
The Board noted that the Large Cap Growth Fund's performance within the group
compared for each of the one, three, and five year periods ended March 31, 2005
was in the second quartile. The Board noted that the Large Cap Core Fund's
performance within the group compared for each of the one and three year periods
ended March 31, 2005 was in the first quartile and in the second quartile for
the five year period ended March 31, 2005. The Board noted that the Large Cap
Value Fund's performance within the group compared for each of the one-, three-
and five-year periods ended March 31, 2005 was in the first quartile.
Considering these factors, each Board concluded that the nature and quality of
the services provided supported continuation of the Investment Advisory
Agreements.
The Investment Adviser's Personnel and Investment Process -- Each Board reviewed
the investment objectives and strategies of the Trust and the Fund. Each Board
discussed with senior management of the Investment Adviser responsible for
investment operations and the senior management of the Investment Adviser's
equity investing group the strategies being used to achieve the stated
objectives. Among other things, each Board considered the size, education and
experience of the Investment Adviser's investment staff, its use of technology,
and the Investment Adviser's approach to training and retaining portfolio
managers and other research, advisory and management personnel. Each Board also
reviewed the Investment Adviser's compensation policies and practices with
respect to the Trust's/Fund's portfolio manager. Each Board considered the
experience of the Trust's/Fund's portfolio manager and noted that Mr. Doll has
over twenty years experience in portfolio management. The Board concluded that
the Investment Adviser and its investment staff and the Trust's/Fund's portfolio
managers have extensive experience in analyzing and managing the types of
investments used by the Trust and the Fund and that the Trust and the Fund
benefit from that expertise.
Management Fees and Other Expenses -- Each Board reviewed the Trust's/Fund's
contractual management fee rate and actual management fee rate as a percentage
of total assets at common asset levels -- the actual rate includes advisory and
administrative service fees and the effects of any fee waivers -- compared to
the other funds in its Lipper category. It also compared the Trust's/Fund's
total expenses to those of other comparable funds. Each Board considered the
services provided to and the fees charged by the Investment Adviser to other
types of clients such as other mutual funds and off-shore funds, with similar
investment mandates and noted that the fees charged by the Investment Adviser in
those cases typically exceeded those being charged to the Trust/Fund. Each Board
also noted that, as a general matter, fees charged to institutional clients were
lower than the fees charged to the Trust/Fund, but determined that the
Investment Adviser provided less extensive services to such clients. The Board
noted that the Large Cap Growth Fund's contractual management fee rates for the
Fund was equal to the median fee rate charged by its peer group, as determined
by Lipper, while the Fund's actual management fee rate and total expenses were
below the median fees and expenses charged by its peers. The Board noted that
the Large Cap Core Fund's contractual and actual management fee rates for the
Fund, as well as its total expenses, were above the median fee rates charged by
its peer group as determined by Lipper. The Board noted that the Large Cap Value
Fund's contractual and actual management fee rates for the Fund, as well as its
total expenses, were below the median fee rates charged by its peer group as
determined by Lipper. Each Board has concluded that each Fund's management fee
and fee rate and overall expense ratio are reasonable compared to those of other
comparable funds.
Profitability -- The Boards considered the cost of the services provided to the
Trust and/or the Fund by the Investment Adviser and the Investment Adviser's and
its affiliates' profits relating to the management and distribution of the Fund
and the MLIM/FAM-advised funds. As part of its analysis, the Boards reviewed the
Investment Adviser's methodology in allocating its costs to the management of
the Trust and the Fund and concluded that there was a reasonable basis for the
allocation. The Boards also considered federal court decisions discussing an
investment adviser's profitability and
MERRILL LYNCH LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2005 55
Disclosure of Investment Advisory Agreement (concluded)
profitability levels considered to be reasonable in those decisions. The Boards
believe the Investment Adviser's profits are reasonable in relation to the
nature and quality of the services provided.
Economies of Scale -- The Boards considered the extent to which economies of
scale might be realized as the assets of the Trust and Fund increase and whether
there should be changes in the management fee rate or structure in order to
enable the Trust and the Funds to participate in these economies of scale. The
Boards determined that the current management fee structure was reasonable and
that no changes were currently necessary.
Conclusion
After the independent Directors deliberated in executive session, each entire
Board including all of the independent Directors, approved the renewal of the
existing Investment Advisory Agreements, concluding that the advisory fee was
reasonable in relation to the services provided and that a contract renewal was
in the best interests of the shareholders.
Important Tax Information
Merrill Lynch Large Cap Core Fund of Merrill Lynch Large Cap Series Funds, Inc.
distributed long-term capital gains of $0.093584 per share to shareholders of
record on December 6, 2004.
Merrill Lynch Large Cap Value Fund of Merrill Lynch Large Cap Series Funds, Inc.
distributed long-term capital gains of $0.0658491 per share to shareholders of
record on December 6, 2004.
56 MERRILL LYNCH LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2005
Officers and Directors/Trustees
Number of
Portfolios in Other Public
Fund Complex Directorships
Position(s) Length of Overseen by Held by
Held with Time Director/ Director/
Name Address & Age Funds/Trust Served Principal Occupation(s) During Past 5 Years Trustee Trustee
====================================================================================================================================
Interested Director or Trustee
- ------------------------------------------------------------------------------------------------------------------------------------
Robert C. P.O. Box 9011 President 2005 to President of the MLIM/FAM-advised funds since 2005; 131 Funds None
Doll, Jr.* Princeton, NJ and Director present President of MLIM and FAM since 2001; Co-Head 177 Portfolios
08543-9011 or Trustee (Americas Region) thereof from 2000 to 2001 and
Age: 51 Senior Vice President from 1999 to 2001; President
and Director of Princeton Services, Inc. ("Princeton
Services") since 2001; President of Princeton
Administrators, L.P. ("Princeton Administrators")
since 2001; Chief Investment Officer of Oppenheimer
Funds, Inc. in 1999 and Executive Vice President
thereof from 1991 to 1999.
------------------------------------------------------------------------------------------------------------------------
* Mr. Doll is a director, trustee or member of an advisory board of certain other investment companies for which MLIM
or FAM acts as investment adviser. Mr. Doll is an "interested person," as described in the Investment Company Act, of
the Fund based on his current positions with MLIM, FAM, Princeton Services and Princeton Administrators.
Directors/Trustees serve until their resignation, removal or death, or until December 31 of the year in which they
turn 72. As Fund President, Mr. Doll serves at the pleasure of the Board of Directors/Trustees.
====================================================================================================================================
Independent Directors/Trustees*
- ------------------------------------------------------------------------------------------------------------------------------------
James H. P.O. Box 9095 Director/ 1999 to Director, The China Business Group, Inc. since 39 Funds None
Bodurtha** Princeton, NJ Trustee present 1996 and Executive Vice President thereof from 59 Portfolios
08543-9095 1996 to 2003; Chairman of the Board, Berkshire
Age: 61 Holding Corporation since 1980; Partner, Squire,
Sanders & Dempsey from 1980 to 1993.
- ------------------------------------------------------------------------------------------------------------------------------------
Kenneth A. P.O. Box 9095 Director/ 2005 to Professor, Harvard University since 1992; Professor, 39 Funds None
Froot Princeton, NJ Trustee present Massachusetts Institute of Technology from 59 Portfolios
08543-9095 1986 to 1992.
Age: 48
- ------------------------------------------------------------------------------------------------------------------------------------
Joe P.O. Box 9095 Director/ 2002 to Member of the Committee of Investment of 39 Funds Kimco
Grills** Princeton, NJ Trustee present Employee Benefit Assets of the Association of 59 Portfolios Realty
08543-9095 Financial Professionals ("CIEBA") since 1986; Corporation
Age: 70 Member of CIEBA's Executive Committee since
1988 and its Chairman from 1991 to 1992;
Assistant Treasurer of International Business
Machines Corporation ("IBM") and Chief
Investment Officer of IBM Retirement Funds
from 1986 to 1993; Member of the Investment
Advisory Committee of the State of New York
Common Retirement Fund since 1989; Member
of the Investment Advisory Committee of the
Howard Hughes Medical Institute from 1997 to
2000; Director, Duke University Management
Company from 1992 to 2004, Vice Chairman
thereof from 1998 to 2004, and Director Emeritus
thereof since 2004; Director, LaSalle Street Fund
from 1995 to 2001; Director, Kimco Realty
Corporation since 1997; Member of the
Investment Advisory Committee of the Virginia
Retirement System since 1998, Vice Chairman
thereof from 2002 to 2005, and Chairman thereof
since 2005; Director, Montpelier Foundation since
1998 and its Vice Chairman since 2000; Member
of the Investment Committee of the Woodberry School
since 2000; Member of the Investment Committee of
the National Trust for Historic Preservation since
2000.
MERRILL LYNCH LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2005 57
Officers and Directors/Trustees (continued)
Number of
Portfolios in Other Public
Fund Complex Directorships
Position(s) Length of Overseen by Held by
Held with Time Director/ Director/
Name Address & Age Funds/Trust Served Principal Occupation(s) During Past 5 Years Trustee Trustee
====================================================================================================================================
Independent Directors/Trustees* (concluded)
- ------------------------------------------------------------------------------------------------------------------------------------
Herbert I. P.O. Box 9095 Director/ 1999 to John M. Olin Professor of Humanities, New York 39 Funds None
London Princeton, NJ Trustee present University since 1993 and Professor thereof since 59 Portfolios
08543-9095 1980; President, Hudson Institute since 1997
Age: 66 and Trustee thereof since 1980; Dean, Gallatin
Division of New York University from 1976 to
1993; Distinguished Fellow, Herman Kahn Chair,
Hudson Institute from 1984 to 1985; Director,
Damon Corp. from 1991 to 1995; Overseer,
Center for Naval Analyses from 1983 to 1993.
- ------------------------------------------------------------------------------------------------------------------------------------
Roberta P.O. Box 9095 Director/ 1999 to Shareholder, Modrall, Sperling, Roehl, Harris & 39 Funds None
Cooper Princeton, NJ Trustee present Sisk, P.A. since 1993; President, American Bar 59 Portfolios
Ramo 08543-9095 Association from 1995 to 1996 and Member of
Age: 63 the Board of Governors thereof from 1994 to
1997; Shareholder, Poole, Kelly & Ramo, Attorneys
at Law, P.C. from 1977 to 1993; Director of ECMC
Group (service provider to students, schools and
lenders) since 2001; Director, United New Mexico
Bank (now Wells Fargo) from 1983 to 1988;
Director, First National Bank of New Mexico
(now Wells Fargo) from 1975 to 1976; Vice
President, American Law Institute since 2004.
- ------------------------------------------------------------------------------------------------------------------------------------
Robert S. P.O. Box 9095 Director/ 2002 to Principal of STI Management (investment adviser) 39 Funds None
Salomon, Princeton, NJ Trustee present since 1994; Chairman and CEO of Salomon 59 Portfolios
Jr. 08543-9095 Brothers Asset Management Inc. from 1992 to
Age: 68 1995; Chairman of Salomon Brothers Equity
Mutual Funds from 1992 to 1995; regular
columnist with Forbes Magazine from 1992 to
2002; Director of Stock Research and U.S. Equity
Strategist at Salomon Brothers Inc. from 1975 to
1991; Trustee, Commonfund from 1980 to 2001.
- ------------------------------------------------------------------------------------------------------------------------------------
Stephen B. P.O. Box 9095 Director/ 2002 to Chairman of Fernwood Advisors, Inc. (investment 40 Funds None
Swensrud Princeton, NJ Trustee present adviser) since 1996; Principal, Fernwood 60 Portfolios
08543-9095 Associates (financial consultants) since 1975;
Age: 72 Chairman of R.P.P. Corporation (manufacturing
company) since 1978; Director of International
Mobile Communications, Inc. (telecommunications)
since 1998.
------------------------------------------------------------------------------------------------------------------------
* Directors/Trustees serve until their resignation, removal or death, or until December 31 of the year in which they
turn 72.
** Co-Chairman of the Board and the Audit Committee.
58 MERRILL LYNCH LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2005
Officers and Directors/Trustees (concluded)
Position(s) Length of
Held with Time
Name Address & Age Funds/Trust Served Principal Occupation(s) During Past 5 Years
====================================================================================================================================
Fund/Trust Officers*
- ------------------------------------------------------------------------------------------------------------------------------------
Donald C. P.O. Box 9011 Vice 1999 to First Vice President of MLIM and FAM since 1997 and Treasurer thereof since 1999;
Burke Princeton, NJ President present Senior Vice President and Treasurer of Princeton Services since 1999 and Director
08543-9011 and since 2004; Vice President of FAM Distributors, Inc. ("FAMD") since 1999; Vice
Age: 45 Treasurer President of MLIM and FAM from 1990 to 1997; Director of Taxation of MLIM from 1990
to 2001; Vice President, Treasurer and Secretary of the IQ Funds since 2004.
- ------------------------------------------------------------------------------------------------------------------------------------
Jeffrey P.O. Box 9011 Chief 2004 to Chief Compliance Officer of the MLIM/FAM-advised funds and First Vice President and
Hiller Princeton, NJ Compliance present Chief Compliance Officer of MLIM (Americas Region) since 2004; Chief Compliance
08543-9011 Officer Officer of the IQ Funds since 2004; Global Director of Compliance at Morgan Stanley
Age: 54 Investment Management from 2002 to 2004; Managing Director and Global Director of
Compliance at Citigroup Asset Management from 2000 to 2002; Chief Compliance
Officer at Soros Fund Management in 2000; Chief Compliance Officer at Prudential
Financial from 1995 to 2000; Senior Counsel in the Commission's Division of
Enforcement in Washington, D.C. from 1990 to 1995.
- ------------------------------------------------------------------------------------------------------------------------------------
Alice A. P.O. Box 9011 Secretary 2004 to Director (Legal Advisory) of MLIM since 2002; Vice President of MLIM from 1999 to
Pellegrino Princeton, NJ present 2002; Attorney associated with MLIM since 1997; Secretary of MLIM, FAM, FAMD and
08543-9011 Princeton Services since 2004.
Age: 45
------------------------------------------------------------------------------------------------------------------------
* Officers of the Funds/Trust serve at the pleasure of the Board of Directors/Trustees.
- ------------------------------------------------------------------------------------------------------------------------------------
Further information about the Funds' Officers and Directors/Trustees is available in the Fund's Statement of Additional
Information, which can be obtained without charge by calling 1-800-MER-FUND.
- ------------------------------------------------------------------------------------------------------------------------------------
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
Availability of Quarterly Schedule of Investments
The Funds file their complete schedule of portfolio holdings with the Securities
and Exchange Commission ("SEC") for the first and third quarters of each fiscal
year on Form N-Q. The Funds' Forms N-Q are available on the SEC's Web site at
http://www.sec.gov. The Funds' Forms N-Q may also be reviewed and copied at the
SEC's Public Reference Room in Washington, DC. Information on the operation of
the Public Reference Room may be obtained by calling 1-800-SEC-0330.
Electronic Delivery
The Fund offers electronic delivery of communications to its shareholders. In
order to receive this service, you must register your account and provide us
with e-mail information. To sign up for this service, simply access this Web
site at http://www.icsdelivery.com/live and follow the instructions. When you
visit this site, you will obtain a personal identification number (PIN). You
will need this PIN should you wish to update your e-mail address, choose to
discontinue this service and/or make any other changes to the service. This
service is not available for certain retirement accounts at this time.
MERRILL LYNCH LARGE CAP SERIES FUNDS, INC. OCTOBER 31, 2005 59
[LOGO] Merrill Lynch Investment Managers
www.mlim.ml.com
- --------------------------------------------------------------------------------
Mercury Advisors
A Division of Merrill Lynch Investment Managers
www.mercury.ml.com
This report is not authorized for use as an offer of sale or a solicitation of
an offer to buy shares of the Funds unless accompanied or preceded by the Funds'
current prospectus. Past performance results shown in this report should not be
considered a representation of future performance. Investment return and
principal value of shares will fluctuate so that shares, when redeemed, may be
worth more or less than their original cost. Statements and other information
herein are as dated and are subject to change.
A description of the policies and procedures that the Funds use to determine how
to vote proxies relating to portfolio securities is available (1) without
charge, upon request, by calling toll-free 1-800-MER-FUND (1-800-637-3863); (2)
at www.mutualfunds.ml.com; and (3) on the Securities and Exchange Commission's
Web site at http://www.sec.gov. Information about how each Fund voted proxies
relating to securities held in the Funds' portfolios during the most recent
12-month period ended June 30 is available (1) at www.mutualfunds.ml.com and (2)
on the Securities and Exchange Commission's Web site at http://www.sec.gov.
Merrill Lynch Large Cap Series Funds, Inc.
Box 9011
Princeton, NJ
08543-9011
#CAPSERIES -- 10/05
Item 2 - Code of Ethics - The registrant has adopted 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
and principal accounting officer, or persons performing similar
functions. A copy of the code of ethics is available without charge
upon request by calling toll-free 1-800-MER-FUND (1-800-637-3863).
Item 3 - Audit Committee Financial Expert - The registrant's board of directors
has determined that (i) the registrant has the following audit
committee financial experts serving on its audit committee and (ii)
each audit committee financial expert is independent: (1) Joe Grills,
(2) Robert S. Salomon, Jr., and (3) Stephen B. Swensrud.
Item 4 - Principal Accountant Fees and Services
Master Large Cap Series Trust
(a) Audit Fees - Fiscal Year Ending October 31, 2005 - $100,000
Fiscal Year Ending October 31, 2004 - $94,000
(b) Audit-Related Fees - Fiscal Year Ending October 31, 2005 - $0
Fiscal Year Ending October 31, 2004 - $0
(c) Tax Fees - Fiscal Year Ending October 31, 2005 - $8,700
Fiscal Year Ending October 31, 2004 - $20,000
The nature of the services include tax compliance, tax advice and tax
planning.
(d) All Other Fees - Fiscal Year Ending October 31, 2005 - $0
Fiscal Year Ending October 31, 2004 - $0
Merrill Lynch Large Cap Series Funds, Inc.
(a) Audit Fees - Fiscal Year Ending October 31, 2005 - $19,500
Fiscal Year Ending October 31, 2004 - $18,600
(b) Audit-Related Fees - Fiscal Year Ending October 31, 2005 - $0
Fiscal Year Ending October 31, 2004 - $0
(c) Tax Fees - Fiscal Year Ending October 31, 2005 - $17,100
Fiscal Year Ending October 31, 2004 - $17,400
The nature of the services include tax compliance, tax advice and tax
planning.
(d) All Other Fees - Fiscal Year Ending October 31, 2005 - $0
Fiscal Year Ending October 31, 2004 - $0
(e)(1) The registrant's audit committee (the "Committee") has adopted
policies and procedures with regard to the pre-approval of services.
Audit, audit-related and tax compliance services provided to the
registrant on an annual basis require specific pre-approval by the
Committee. The Committee also must approve other non-audit services
provided to the registrant and those non-audit services provided to the
registrant's affiliated service providers that relate directly to the
operations and the financial reporting of the registrant. Certain of
these non-audit services that the Committee believes are a) consistent
with the SEC's auditor independence rules and b) routine and recurring
services that will not impair the independence of the independent
accountants may be approved by the Committee without consideration on a
specific case-by-case basis ("general pre-approval"). However, such
services will only be deemed pre-approved provided that any individual
project does not exceed $5,000 attributable to the registrant or
$50,000 for all of the registrants the Committee oversees. Any proposed
services exceeding the pre-approved cost levels will require specific
pre-approval by the Committee, as will any other services not subject
to general pre-approval (e.g., unanticipated but permissible services).
The Committee is informed of each service approved subject to general
pre-approval at the next regularly scheduled in-person board meeting.
(e)(2) 0%
(f) Not Applicable
(g) Fiscal Year Ending October 31, 2005 - $6,277,749
Fiscal Year Ending October 31, 2004 - $13,270,096
(h) The registrant's audit committee has considered and determined that
the provision of non-audit services that were rendered to the
registrant's 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.
Regulation S-X Rule 2-01(c)(7)(ii) - $1,227,000, 0%
Item 5 - Audit Committee of Listed Registrants - Not Applicable
Item 6 - Schedule of Investments - Not Applicable
Item 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies - Not Applicable
Item 8 - Portfolio Managers of Closed-End Management Investment Companies -
Not Applicable
Item 9 - Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers - Not Applicable
Item 10 - Submission of Matters to a Vote of Security Holders - Not Applicable
Item 11 - Controls and Procedures
11(a) - The registrant's certifying officers have reasonably designed such
disclosure controls and procedures to ensure material information
relating to the registrant is made known to us by others particularly
during the period in which this report is being prepared. The
registrant's certifying officers have determined that the registrant's
disclosure controls and procedures are effective based on our evaluation
of these controls and procedures as of a date within 90 days prior to
the filing date of this report.
11(b) - There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the Act (17 CFR
270.30a-3(d)) that occurred during the second fiscal half-year of the
period covered by this report that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting.
Item 12 - Exhibits attached hereto
12(a)(1) - Code of Ethics - See Item 2
12(a)(2) - Certifications - Attached hereto
12(a)(3) - Not Applicable
12(b) - Certifications - Attached hereto
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Merrill Lynch Large Cap Series Funds, Inc. and Master Large Cap Series Trust
By: /s/ Robert C. Doll, Jr.
---------------------------
Robert C. Doll, Jr.,
Chief Executive Officer of
Merrill Lynch Large Cap Series Funds, Inc. and Master Large Cap Series Trust
Date: December 16, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Robert C. Doll, Jr.
---------------------------
Robert C. Doll, Jr.,
Chief Executive Officer of
Merrill Lynch Large Cap Series Funds, Inc. and Master Large Cap Series Trust
Date: December 16, 2005
By: /s/ Donald C. Burke
---------------------------
Donald C. Burke,
Chief Financial Officer of
Merrill Lynch Large Cap Series Funds, Inc. and Master Large Cap Series Trust
Date: December 16, 2005