The
Corporate
Fund
Accumulation
Program,
Inc.
Semi-Annual Report
June 30, 1995
This report is not authorized for use as an offer of sale or a
solicitation of an offer to buy shares of the Program unless
accompanied or preceded by the Program's current prospectus. Past
performance results shown in this report should not be considered a
representation of future performance. Investment return and
principal value of shares will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
<PAGE>
The Corporate Fund
Accumulation Program, Inc.
Box 9011
Princeton, NJ 08543-9011
To Our Shareholders:
For the six-month period ended June 30, 1995, The Corporate Fund
Accumulation Program, Inc. provided a total investment return of
+12.18%, based on a change in per share net asset value from $19.14
to $20.85, and assuming reinvestment of $0.589 per share income
dividends.
The Environment
During the first six months of 1995, economic data finally showed
evidence of slowing activity. Gross domestic product growth for the
first three months of 1995 was reported at 2.7%, the weakest showing
in the past 18 months. Other signs of a sluggish economy included
slowing growth in the manufacturing sector in May and June as well
as three consecutive months of declines in the Index of Leading
Economic Indicators, an occurrence which has often (but not always)
forecast recessions. As a result, by the end of June concerns had
arisen that the economic "soft landing" could turn into an actual
recession. However, at the same time there were also expectations
that a few months of very slow or zero growth could be followed by a
pickup in economic activity later in the year. This view was
supported by the stronger-than-expected employment data for June and
an upward revision in May's employment figures.
Thus far in 1995, economic developments have been very positive for
the US stock and bond markets, and most US stock market averages
recently have attained record levels. In contrast, the US dollar has
been persistently weak, especially relative to the yen. Following
the Federal Reserve Board's cut in short-term interest rates in
early July, continued signs of a moderating expansion and well-
contained inflationary pressures would provide further assurance
that the peak in US interest rates is behind us, creating a stronger
foundation for higher stock and bond prices. On the other hand,
indications of reaccelerating growth and increasing inflationary
pressures would likely suggest that higher interest rates are on the
horizon, a negative development for the US financial markets.
<PAGE>
Portfolio Matters
The bond market rallied with unexpected vigor during the six-month
period ended June 30, 1995 in response to significant deceleration
in economic growth. The domestic economy expanded at a 2.8% annual
rate for the first three months of 1995, the slowest rate of growth
since the summer of 1993. This was an abrupt change from the pace of
fourth quarter 1994, which recorded a 5.1% growth rate. The slowdown
offered further evidence that the economy, after a four-year
expansion, is braking at a steady rate in a much-desired soft
landing. At the same time, economic signs indicated that inflation
remains under control.
During the six-month period ended June 30, 1995, the yield on the
long-term Treasury bond dropped 126 basis points (1.26%) from 7.88%
to 6.62%. Since prices move inversely to yields, this resulted in a
strong rally in bond values, particularly in the longer maturities.
We continued to increase the average duration of the portfolio in
order to take advantage of the rally by extending the Program from
4.7 years in January to 5.7 years at June 30, 1995. This was
accomplished by investing in bonds with longer maturities. We also
reduced the Program's cash position from 12% of net assets to 4%.
In Conclusion
We appreciate your ongoing interest in The Corporate Fund
Accumulation Program, Inc., and we look forward to sharing our
investment strategy with you in our upcoming annual report to
shareholders.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Jay C. Harbeck)
Jay C. Harbeck
Vice President and Portfolio Manager
July 25, 1995
<PAGE>
<TABLE>
The Corporate Fund Accumulation Program, Inc.
Schedule of Investments June 30, 1995
<CAPTION>
S&P Moody's Face Value
Industry Rating Rating Amount Issue Cost (Note 1a)
US Government Obligations
<S> <S> <S> <C> <S> <C> <C>
US Government US Treasury Bonds:
Obligations-- AAA Aaa $3,000,000 8.875% due 8/15/2017 $ 3,423,965 $ 3,735,000
10.1% AAA Aaa 500,000 7.50% due 11/15/2024 563,187 553,205
US Treasury Notes:
AAA Aaa 2,000,000 5.875% due 6/30/2000 2,007,720 1,991,240
AAA Aaa 1,000,000 7.875% due 8/15/2001 1,101,585 1,091,720
AAA Aaa 1,000,000 7.25% due 5/15/2004 1,039,166 1,067,660
------------ ------------
8,135,623 8,438,825
Total US Government Obligations--10.1% 8,135,623 8,438,825
Corporate Bonds & Notes
Banks & A A2 2,000,000 BankAmerica Corp., 7.125% due 5/12/2005 1,971,365 2,018,200
Thrifts--10.2% A A2 1,000,000 Citicorp., 8.80% due 2/01/2000 1,000,000 1,084,740
AA Aa3 500,000 Morgan (J.P.) & Co. Incorporated, 7.625% due
9/15/2004 482,863 526,745
A A2 1,000,000 NationsBank Corporation, 7.50% due 2/15/1997 999,287 1,018,510
A+ A1 2,000,000 Norwest Corp., 6.625% due 3/15/2003 2,011,577 1,978,420
AA+ Aa2 1,000,000 Wachovia Bank, 6.55% due 6/09/1997 999,524 1,009,210
------------ ------------
7,464,616 7,635,825
Financial Chrysler Finance Corporation:
Services-- A- A3 1,000,000 7.13% due 9/30/1996 989,728 1,010,410
Captive--2.5% A- A3 1,000,000 10.95% due 8/01/2017 1,100,566 1,119,990
------------ ------------
2,090,294 2,130,400
Financial A+ A1 1,000,000 American General Finance Corp., 7.70% due
Services-- 11/15/1997 991,029 1,029,170
Consumer-- AA- Aa3 1,000,000 Associates Corp. of North America, 8.80% due
8.5% 8/01/1998 1,088,537 1,064,210
A A2 2,000,000 Beneficial Corp., 5.73% due 10/14/1997 2,000,000 1,988,076
A+ Aa3 2,000,000 CIT Group Holdings, Inc., 6.162% due 2/28/1997 1,999,164 1,999,940
A+ A2 1,000,000 Transamerica Finance Corp., 6.80% due 3/15/1999 999,798 1,009,860
------------ ------------
7,078,528 7,091,256
<PAGE>
Financial A A2 500,000 Bear Stearns Companies, Inc., 6.70% due
Services-- 8/01/2003 453,697 484,705
Other--7.1% A A2 1,000,000 Dean Witter, Discover & Co., 6.50% due
11/01/2005 989,803 959,500
AAA Aaa 1,000,000 General Electric Capital Corp., 14% due
7/01/1996 1,071,047 1,078,250
A+ A1 1,500,000 Morgan Stanley Group, Incorporated, 7% due
10/01/2013 1,296,839 1,375,320
BBB+ A3 1,000,000 PaineWebber Group Inc., 8.875% due 3/15/2005 996,049 1,081,600
A+ A2 1,000,000 Travelers Corp. (The), 7.875% due 5/15/2025 999,422 1,015,400
------------ ------------
5,806,857 5,994,775
</TABLE>
<TABLE>
The Corporate Fund Accumulation Program, Inc.
Schedule of Investments (continued) June 30, 1995
<CAPTION>
S&P Moody's Face Value
Industry Rating Rating Amount Issue Cost (Note 1a)
Corporate Bonds & Notes (continued)
<S> <S> <S> <C> <S> <C> <C>
Foreign*--11.7% A+ Aa2 $1,000,000 ABN AMRO Bank, N.V., 7.25% due 5/31/2005 (b) $ 999,157 $ 1,027,050
AA- A1 2,000,000 Aegon N.V., 8% due 8/15/2006 (b) 2,009,149 2,154,100
A+ A2 1,500,000 CRA Finance Ltd., 6.50% due 12/01/2003 (c) 1,345,200 1,461,405
A A2 2,000,000 Kingdom of Thailand, 8.25% due 3/15/2002 (a) 1,974,075 2,144,720
A+ A2 1,000,000 Pohang Iron & Steel Industries, 7.375% due
5/15/2005 (d) 1,018,060 1,020,580
A+ A2 2,500,000 Province of Quebec, 7.125% due 2/09/2024 (a) 2,061,914 2,324,150
AA A1 1,000,000 Republic of Italy, 6.875% due 9/27/2023 (a) 973,398 887,640
------------ ------------
10,380,953 11,019,645
Industrial A- A2 1,500,000 American Home Products Corporation, 7.90%
Consumer due 2/15/2005 1,497,182 1,612,080
Goods--14.9% A+ A1 2,000,000 Bass America, Inc., 6.625% due 3/01/2003 1,902,316 1,972,980
A+ A2 1,000,000 Grand Metropolitan Investment Corp., 8.625%
due 8/15/2001 1,021,774 1,093,510
AAA Aaa 2,000,000 Johnson & Johnson Co., 8.72% due 11/01/2024 2,019,063 2,262,820
A A2 1,125,000 May Department Stores Company (The),
10.625% due 11/01/2010 1,355,705 1,457,843
Philip Morris Companies, Inc.:
A A2 1,000,000 9% due 1/01/2001 1,019,305 1,098,360
A A2 2,000,000 7.25% due 1/15/2003 1,876,094 2,022,500
A A2 1,000,000 Weyerhaeuser Co., 7.95% due 3/15/2025 989,146 1,069,540
------------ ------------
11,680,585 12,589,633
<PAGE>
Industrial-- AA- A1 1,000,000 BP America Inc., 8.50% due 4/15/2001 1,042,113 1,093,800
Energy--2.8% A- A3 1,000,000 Burlington Resources, Inc., 9.875% due 6/15/2010 1,266,426 1,239,750
------------ ------------
2,308,539 2,333,550
Industrial-- AA- Aa2 1,000,000 Archer-Daniels-Midland Co., 8.875% due
Other--6.6% 4/15/2011 1,073,721 1,166,800
AA- Aa3 1,000,000 Capital Cities/ABC, Inc., 8.75% due 8/15/2021 1,174,005 1,159,010
Ford Capital B.V.:
A+ A1 1,000,000 7.75% due 3/15/2005 999,113 1,051,030
A+ A1 1,000,000 9.50% due 6/01/2010 1,105,954 1,189,040
BBB+ A3 1,000,000 Phillips Electronics N.V., 7.75% due 5/15/2025 996,624 1,028,730
------------ ------------
5,349,417 5,594,610
Supranational-- AAA Aaa 2,000,000 International Bank for Reconstruction &
3.2% Development, 12.375% due 10/15/2002 2,016,320 2,662,820
</TABLE>
<TABLE>
The Corporate Fund Accumulation Program, Inc.
Schedule of Investments (concluded) June 30, 1995
<CAPTION>
S&P Moody's Face Value
Industry Rating Rating Amount Issue Cost (Note 1a)
Corporate Bonds & Notes (concluded)
<S> <S> <S> <C> <S> <C> <C>
Transportation-- Southwest Airlines Co.:
3.3% A- Baa1 $1,500,000 9.40% due 7/01/2001 $ 1,749,984 $ 1,683,585
A- Baa1 1,000,000 7.875% due 9/01/2007 993,985 1,063,440
------------ ------------
2,743,969 2,747,025
Utilities-- AA Aa3 1,000,000 AT&T Corp., 8.35% due 1/15/2025 982,534 1,058,160
Communica- BBB+ Baa1 500,000 GTE Corporation, 9.10% due 6/01/2003 558,040 565,920
tions--5.5% AAA Aaa 1,000,000 Southern Bell Telephone, 8.625% due 9/01/2026 971,626 1,041,330
A+ A1 2,000,000 Southwestern Bell Telecommunications, Inc.,
6.125% due 3/01/2000 2,007,123 1,974,060
------------ ------------
4,519,323 4,639,470
Utilities-- A A2 3,000,000 Georgia Power Co., 6.125% due 9/01/1999 2,975,878 2,962,110
Electric--4.8% A A2 1,000,000 Virginia Electric & Power Co., 8.625% due
10/01/2024 981,167 1,096,430
------------ ------------
3,957,045 4,058,540
<PAGE>
Utilities-- AA- A1 2,000,000 Consolidated Natural Gas Co., 8.75% due
Gas--2.6% 6/01/1999 2,101,956 2,157,360
Total Corporate Bonds & Notes--83.7% 67,498,402 70,654,909
Short-Term Securities
Repurchase 3,883,000 Morgan Stanley & Co., Inc., purchased on
Agreement**--4.6% 6/30/1995 to yield 6% to 7/03/1995 3,883,000 3,883,000
Total Short-Term Securities--4.6% 3,883,000 3,883,000
Total Investments--98.4% $ 79,517,025 82,976,734
============
Other Assets Less Liabilities--1.6% 1,329,650
------------
Net Assets--100.0% $ 84,306,384
============
<FN>
*Corresponding industry groups for foreign bonds which are
denominated in US dollars:
(a)Government entity.
(b)Financial institution.
(c)Industrial, mining.
(d)Industrial, steel.
**Repurchase Agreements are fully collateralized by US Government
Obligations.
See Notes to Financial Statements.
</TABLE>
<TABLE>
The Corporate Fund Accumulation Program, Inc.
Statement of Assets and Liabilities as of June 30, 1995
<S> <C> <C>
Assets:
Investments, at value (identified cost--$79,517,025) (Note 1a) $ 82,976,734
Cash 206
Interest receivable 1,566,846
Prepaid registration fees and other assets (Note 1e) 18,913
------------
Total assets 84,562,699
------------
<PAGE>
Liabilities:
Payables:
Capital shares redeemed $ 86,495
Investment adviser (Note 2) 34,700 121,195
------------
Accrued expenses and other liabilities 135,120
------------
Total liabilities 256,315
------------
Net Assets $ 84,306,384
============
Net Assets Consist of:
Common Stock, $.01 par value, 50,000,000 shares authorized $ 40,437
Paid-in capital in excess of par 84,443,152
Undistributed investment income--net 213,929
Accumulated realized capital losses on investments--net (Note 5) (3,850,843)
Unrealized appreciation on investments--net 3,459,709
------------
Net Assets--Equivalent to $20.85 per share based on 4,043,659 shares outstanding $ 84,306,384
============
</TABLE>
<TABLE>
The Corporate Fund Accumulation Program, Inc.
Statement of Operations for the Six Months Ended June 30, 1995
<S> <C> <C>
Investment Income (Note 1c):
Interest and premium and discount earned $ 3,099,746
Expenses:
Investment advisory fees (Note 2) $ 207,608
Transfer agent fees 121,549
Printing and shareholder reports 40,549
Registration fees (Note 1d) 22,964
Professional fees 18,708
Accounting services (Note 2) 9,407
Custodian fees 9,117
Directors' fees and expenses 8,492
Pricing fees 1,394
Other 4,172
------------
Total expenses 443,960
------------
Investment income--net 2,655,786
------------
Realized & Unrealized Gain on Investments--Net (Notes 1c & 3):
Realized gain on investments--net 368,659
Change in unrealized appreciation/depreciation on investments--net 6,543,199
------------
Net Increase in Net Assets Resulting from Operations $ 9,567,644
============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
The Corporate Fund Accumulation Program, Inc.
Statements of Changes in Net Assets
<CAPTION>
For the Six For the
Months Ended Year Ended
Increase (Decrease) in Net Assets: June 30, 1995 Dec. 31, 1994
<S> <C> <C>
Operations:
Investment income--net $ 2,655,786 $ 5,510,067
Realized gain (loss) on investments--net 368,659 (4,218,614)
Change in unrealized appreciation/depreciation on investments--net 6,543,199 (7,424,128)
------------ ------------
Net increase (decrease) in net assets resulting from operations 9,567,644 (6,132,675)
------------ ------------
Dividends to Shareholders (Note 1e):
Investment income--net (2,441,857) (5,527,763)
------------ ------------
Net decrease in net assets resulting from dividends to shareholders (2,441,857) (5,527,763)
------------ ------------
Capital Share Transactions (Note 4):
Net decrease in net assets derived from capital share transactions (5,706,676) (20,819,404)
------------ ------------
Net Assets:
Total increase (decrease) in net assets 1,419,111 (32,479,842)
Beginning of period 82,887,273 115,367,115
------------ ------------
End of period* $ 84,306,384 $ 82,887,273
============ ============
<FN>
*Undistributed investment income--net $ 213,929 $ --
============ ============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
The Corporate Fund Accumulation Program, Inc.
Financial Highlights
<CAPTION>
The following per share data and ratios have been derived
from information provided in the financial statements. For the Six
Months Ended For the Year Ended December 31,
Increase (Decrease) in Net Asset Value: June 30, 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period $ 19.14 $ 21.55 $ 21.22 $ 21.76 $ 20.24
-------- -------- -------- -------- --------
Investment income--net .64 1.18 1.31 1.46 1.52
Realized and unrealized gain (loss) on investments--net 1.66 (2.41) 1.24 (.03) 1.51
-------- -------- -------- -------- --------
Total from investment operations 2.30 (1.23) 2.55 1.43 3.03
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.59) (1.18) (1.29) (1.47) (1.51)
Realized gain on investments--net -- -- (.93) (.50) --
-------- -------- -------- -------- --------
Total dividends and distributions (.59) (1.18) (2.22) (1.97) (1.51)
-------- -------- -------- -------- --------
Net asset value, end of period $ 20.85 $ 19.14 $ 21.55 $ 21.22 $ 21.76
======== ======== ======== ======== ========
Total Investment Return:
Based on net asset value per share 12.18%+++ (5.78%) 12.20% 6.88% 15.60%
======== ======== ======== ======== ========
Ratios to Average Net Assets:
Expenses 1.07%* 1.10% 1.08% 1.12% 1.16%
======== ======== ======== ======== ========
Investment income--net 6.40%* 5.80% 5.74% 6.72% 7.25%
======== ======== ======== ======== ========
Supplemental Data:
Net assets, end of period (in thousands) $ 84,306 $ 82,887 $115,367 $ 90,892 $ 82,663
======== ======== ======== ======== ========
Portfolio turnover 77% 122% 132% 65% 87%
======== ======== ======== ======== ========
<FN>
*Annualized.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
<PAGE>
The Corporate Fund Accumulation Program, Inc.
Notes to Financial Statements
1. Significant Accounting Policies:
The Corporate Fund Accumulation Program, Inc. (the "Program") is
registered under the Investment Company Act of 1940 as a
diversified, open-end investment management company. These unaudited
financial statements reflect all adjustments which are, in the
opinion of management, necessary to a fair statement of the results
for the interim period presented. All such adjustments are of a
normal recurring nature. The following is a summary of significant
accounting policies followed by the Program.
(a) Valuation of securities--Portfolio securities are valued on the
basis of prices furnished by one or more pricing services which
determine prices for normal, institutional-size trading units.
Obligations with remaining maturities of sixty days or less are
valued at amortized cost, which approximates market value, unless
this method no longer produces fair valuations. Securities for which
there exists no price quotations or valuations and all other assets
are valued at fair value as determined in good faith by the Board of
Directors of the Program.
(b) Income taxes--It is the Program's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its
taxable income to its shareholders. Therefore, no Federal income tax
provision is required.
(c) Security transactions and investment income--Security
transactions are recorded on the dates the transactions are entered
into (the trade dates). Interest income (including amortization of
premium and discount) is recognized on the accrual basis. Realized
gains and losses on security transactions are determined on the
identified cost basis.
(d) Prepaid registration fees--Prepaid registration fees are charged
to expense as the related shares are issued.
(e) Dividends to shareholders--Dividends from net investment income
are declared and paid monthly. Distributions of capital gains are
recorded on the ex-dividend dates.
<PAGE>
2. Investment Advisory Agreement and
Transactions with Affiliates:
The Program has entered into an Investment Advisory Agreement with
Fund Asset Management, L.P. ("FAM"). The general partner of FAM is
Princeton Services, Inc. ("PSI"), an indirect wholly-owned
subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is the
limited partner.
FAM is responsible for the management of the Program's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Program. For such
services, the Program pays a monthly fee of 0.50%, on an annual
basis, of the value of the Program's average daily net assets. The
Investment Advisory Agreement obligates FAM to reimburse the Program
to the extent the Program's expenses (excluding interest, taxes,
brokerage fees and extraordinary items) exceed 2.5% of the Program's
first $30 million of average daily net assets, 2.0% in excess of $30
million but not exceeding $100 million of average daily net assets,
and 1.5% of the average daily net assets in excess of $100 million.
No fee payment will be made to the Adviser during any fiscal year
which would cause such expenses to exceed the foregoing expense
limitations applicable at the time of such payment.
FAM has entered into an Administrative Agreement with Merrill Lynch,
Pierce, Fenner & Smith Inc. ("MLPF&S"), Prudential Securities, Inc.,
Dean Witter Reynolds Inc., and Shearson Lehman Brothers Inc. (the
"Administrators"), whereby the Administrators perform certain
administrative duties on behalf of FAM.
The Corporate Fund Accumulation Program, Inc.
Notes to Financial Statements (concluded)
The Administrators receive a monthly fee from FAM equal to 0.20%, on
an annual basis, of the Program's average daily net assets and have
agreed to reimburse FAM for a portion of the reimbursement of
expenses to the Program as described above, required to be made by
FAM.
During the six months ended June 30, 1995, the Program paid Merrill
Lynch Security Pricing Service, an affiliate of MLPF&S, $602 for
security price quotations to compute the net assets value of the
Program.
Accounting services are provided to the Program by FAM at cost.
Certain officers and/or directors of the Program are officers and/or
directors of FAM, PSI, MLPF&S, and/or ML & Co.
<PAGE>
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended June 30, 1995 were $60,920,189 and
$65,706,620, respectively.
Net realized and unrealized gains as of June 30, 1995 were as
follows:
Realized Unrealized
Gains Gains
Long-term investments $ 368,659 $ 3,459,709
---------- -------------
Total $ 368,659 $ 3,459,709
========== =============
As of June 30, 1995, net unrealized appreciation for Federal income
tax purposes aggregated $3,459,709, of which $3,836,405 related to
appreciated securities and $376,696 related to depreciated
securities. The aggregate cost of investments at June 30, 1995 for
Federal income tax purposes was $79,517,025.
4. Capital Share Transactions:
Transactions in capital shares were as follows:
For the Six Months Ended Dollar
June 30, 1995 Shares Amount
Shares sold 299,096 $ 6,004,931
Shares issued to
shareholders in
reinvestment of dividends 116,225 2,323,489
---------- ------------
Total issued 415,321 8,328,420
Shares redeemed (702,515) (14,035,096)
---------- ------------
Net decrease (287,194) $ (5,706,676)
========== ============
<PAGE>
For the Year Ended Dollar
December 31, 1994 Shares Amount
Shares sold 941,678 $ 19,087,306
Shares issued to
shareholders in
reinvestment of dividends 276,909 5,541,513
---------- ------------
Total issued 1,218,587 24,628,819
Shares redeemed (2,240,697) (45,448,223)
---------- ------------
Net decrease (1,022,110) $(20,819,404)
========== ============
5. Capital Loss Carryforward:
At December 31, 1994, the Program had a net capital loss
carryforward of approximately $3,363,000, all of which expires in
2002. This amount will be available to offset like amounts of any
future taxable gains.
The Corporate Fund Accumulation Program, Inc.
Officers and Directors
Arthur Zeikel--President and Director
Ronald W. Forbes--Director
Cynthia A. Montgomery--Director
Charles C. Reilly--Director
Kevin A. Ryan--Director
Richard R. West--Director
Terry K. Glenn--Executive Vice President
N. John Hewitt--Senior Vice President
Donald C. Burke--Vice President
Jay C. Harbeck--Vice President
Gerald M. Richard--Treasurer
Susan B. Baker--Secretary
Custodian and Transfer Agent
The Bank of New York
110 Washington Street
New York, New York 10286
