The
Corporate
Fund
Accumulation
Program,
Inc.
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.
Statements and other information herein are as dated and are subject
to change.
The Corporate Fund
Accumulation Program, Inc.
Box 9011
Princeton, NJ 08543-9011
To Our Shareholders:
For the year ended December 31, 1996, The Corporate Fund
Accumulation Program, Inc. provided a total investment return of
+1.69%, based on a change in per share net asset value from $21.59
to $20.69, and assuming reinvestment of $1.228 per share income
dividends.
For the six-month period ended December 31, 1996, The Corporate Fund
Accumulation Program, Inc. provided a total investment return of
+4.59%, based on a change in per share net asset value from $20.42
to $20.69, and assuming reinvestment of $0.654 per share income
dividends.
<PAGE>
The Environment
Bond prices fluctuated during the summer months in a swirl of
speculation about the course of inflation. This volatility was
caused by the release of economic data which seemed inconclusive
with regard to future growth prospects. Then the Federal Reserve
Board's decision in late September not to raise short-term interest
rates was interpreted by investors as a sign that the economy was
slowing down enough on its own so that inflation would not be a
problem. Bond prices began to rise as third quarter data was
released. However, Federal Reserve Board Chairman Alan Greenspan
raised concerns on December 5, 1996 when he suggested that there was
an "irrational exuberance" in US financial markets, implying that
the levels of both stock and bond prices were not consistent with
economic data. Within two weeks after his remarks, the stock market
dropped more than 200 points and there was a corresponding increase
of 20 basis points (0.20%) in the bellwether long-term US Treasury
bond.
However, a review of the underlying economic and political
conditions that normally influence the behavior of stock and bond
prices seems to justify the investor optimism that prevailed in the
fall. For example, the Federal Reserve Board's monetary policy
remained unchanged during the six-month period ended December 31,
1996, contrary to widespread expectations during the summer that
there would be a monetary tightening. The tightening did not occur
because it became apparent that the economy was slowing on its own
from the rapid pace of the second quarter, when gross domestic
product (GDP) jumped to 4.7% from the 2.0% pace of the first
quarter. Third quarter GDP dropped back to 2.1%. Meanwhile,
inflation remained subdued. In addition, the US dollar gained in
value, implying less inflation and continued foreign investment in
US securities. Stock and bond prices improved by year-end, but
without the enthusiasm that had been characterized throughout the
fall.
Fiscal Year in Review
The acceleration of job creation which became evident in February
1996 adversely impacted interest rates throughout the first half of
the fiscal year ended December 31, 1996. The bond rally of 1995 came
to a halt with the February job growth figure, as measured by the
bellwether 30-year Treasury yield, jumping from below 6.0% to over
6.6% in the first quarter of 1996. We shortened the average
portfolio maturity of the Program from 10.8 years to 8.8 years
during this period as a defensive move. The Program had a total
return of -2.8% in the first quarter, compared with the unmanaged
Merrill Lynch Corporate Master Index's return of -4.4%. As interest
rates continued to climb above 7.0% by the beginning of the summer,
we brought the average portfolio maturity of the Program to 8.2
years. We accomplished this by raising cash reserves and trading
into Treasury securities. As bond prices fluctuated over the summer
months, we moved to a market neutral position by extending the
Program's average maturity and reducing its cash position. We also
remained underweighted in the utility sector and overweighted in
industrial and Yankee issues. The total return on the Program
improved to +1.3% by October 31, 1996, compared to +1.2% for the
Merrill Lynch Corporate Master Index. For the 12-month period ended
December 31, 1996 the Program's total return was +1.7%, compared
with +2.3% for the Merrill Lynch Corporate Master Index.
<PAGE>
Looking ahead, we believe that markets have a way of self-
correcting. Although inflation remains at a low level, we believe
that the current level of bond prices fully reflects the positive
factors which characterized the economy in the December quarter.
Without significant additional good news, we believe that the market
is in a trading range which justifies a conservative strategy.
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 semi-annual report to
shareholders.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Jay C. Harbeck)
Jay C. Harbeck
Vice President and Portfolio Manager
January 31, 1997
<PAGE>
As of December 31, 1996, N. John Hewitt retired as Senior Vice
President of the Program. His colleagues at Merrill Lynch Asset
Management, L.P. join the Program's Board of Directors in wishing
Mr. Hewitt well in his retirement.
The Corporate Fund Accumulation Program, Inc.
Total Return Based on a $10,000 Investment
A line graph depicting the growth of an investment in the The
Corporate Fund Accumulation Program, Inc. compared to growth of an
investment in the ML COAO Corporate Master Bond Index. Beginning and
ending values are:
12/86 12/96
The Corporate Fund Accumulation
Program, Inc.*++ $10,000 $20,905
ML COAO Corporate Master Bond
Index++++ $10,000 $24,133
[FN]
*Assuming transaction costs and other operating expenses, including
advisory fees.
++The Corporate Fund Accumulation Program, Inc. invests in long- and
intermediate-term fixed-interest bearing debt obligations issued
primarily by corporations.
++++This unmanaged Index is comprised of all industrial bonds rated
BBB3 or higher, of all maturities.
Past performance is not predictive of future performance.
<TABLE>
The Corporate Fund Accumulation Program, Inc.
Schedule of Investments December 31, 1996
<CAPTION>
S&P Moody's Face Value
Industry Rating Rating Amount Issue Cost (Note 1a)
<S> <S> <S> <C> <S> <C> <C>
US Government Obligations
US Government US Treasury Notes:
Obligations-- AAA Aaa $2,000,000 6.25% due 8/31/2000 $ 2,013,626 $ 2,007,500
3.9% AAA Aaa 1,000,000 7.875% due 8/15/2001 1,079,910 1,065,940
Total US Government Obligations--3.9% 3,093,536 3,073,440
Corporate Bonds & Notes
<PAGE>
Banks & A+ A1 2,000,000 BankAmerica Corp., 7.125% due 5/12/2005 1,975,735 2,015,080
Thrifts--18.1% A- A2 1,500,000 Chase Manhattan Bank Corp., 8.65% due
2/13/1999 1,558,680 1,570,035
A+ A1 1,000,000 Citicorp., 8.80% due 2/01/2000 1,000,000 1,001,950
BBB+ A3 2,000,000 First Interstate Bancorp, 9.90% due
11/15/2001 2,261,189 2,263,940
BBB+ A1 1,250,000 First Union Capital, 7.85% due 1/01/2027+++ 1,247,825 1,247,825
AA- Aa2 1,000,000 JPM Capital Trust, 7.54% due 1/15/2027 1,000,000 977,290
A A2 1,000,000 NationsBank Corp., 7.50% due 2/15/1997 999,945 1,001,870
Norwest Corp.:
AA- Aa3 1,000,000 6.25% due 4/15/1999 997,476 1,000,800
A+ A1 2,000,000 6.625% due 3/15/2003 2,009,741 1,965,300
AA+ Aa2 1,000,000 Wachovia Bank, 6.55% due 6/09/1997 999,893 1,004,260
----------- -----------
14,050,484 14,048,350
Financial A+ A1 1,000,000 Ford Motor Credit Co., 7.75% due 3/15/2005 999,251 1,041,450
Services-- General Motors Acceptance Corp.:
Captive--3.3% A- A3 1,000,000 6.625% due 10/01/2002 998,519 993,550
A- A3 500,000 7.40% due 9/01/2025 496,146 494,470
----------- -----------
2,493,916 2,529,470
Financial A+ A1 1,000,000 American General Finance Corp., 7.70% due
Services-- 11/15/1997 996,707 1,013,400
Consumer-- AA- Aa3 1,000,000 Associates Corp. of North America, 5.25%
9.6% due 9/01/1998 983,553 985,390
A+ Aa3 2,000,000 CIT Group Holdings, Inc., 5.764% due
2/28/1997++ 1,999,919 2,000,100
A A2 1,000,000 Commercial Credit Corp., 6% due 4/15/2000 980,005 984,580
Equitable Life Assurance Society of the US+++:
A A2 500,000 6.95% due 12/01/2005 473,549 490,490
A A2 1,000,000 7.70% due 12/01/2015 993,233 999,580
A+ A2 1,000,000 Transamerica Finance Corp., 6.80% due
3/15/1999 999,880 1,010,520
----------- -----------
7,426,846 7,484,060
Financial Bear Stearns Companies, Inc.:
Services-- A A2 1,000,000 6.75% due 5/01/2001 997,270 1,002,370
Other--9.8% A A2 500,000 6.70% due 8/01/2003 462,318 491,995
Dean Witter, Discover & Co.:
A A2 2,000,000 6.75% due 8/15/2000 1,994,537 2,014,500
A A2 1,000,000 6.30% due 1/15/2006 996,022 944,672
BBB+ Baa1 1,000,000 PaineWebber Group Inc., 8.875% due 3/15/2005 996,662 1,084,620
A+ A1 2,000,000 Travelers Corp. (The), 7.875% due 5/15/2025 2,027,424 2,088,980
----------- -----------
7,474,233 7,627,137
</TABLE>
<PAGE>
<TABLE>
The Corporate Fund Accumulation Program, Inc.
Schedule of Investments (continued) December 31, 1996
<CAPTION>
S&P Moody's Face Value
Industry Rating Rating Amount Issue Cost (Note 1a)
<S> <S> <S> <C> <S> <C> <C>
Corporate Bonds & Notes (continued)
Industrial-- A+ A1 $2,000,000 Bass America, Inc., 6.625% due 3/01/2003 $ 1,921,497 $ 1,970,460
Consumer A A2 500,000 Disney Enterprises Inc.***, 6.85% due
Goods--9.3% 1/10/2007+++ 499,666 499,645
AAA Aaa 2,000,000 Johnson & Johnson Co., 8.72% due 11/01/2024 2,018,823 2,225,360
A A2 1,125,000 May Department Stores Company (The), 10.625%
due 11/01/2010 1,343,562 1,455,975
A A2 1,000,000 Philip Morris Companies, Inc., 9% due
1/01/2001 1,014,891 1,075,870
----------- -----------
6,798,439 7,227,310
Industrial-- A- A1 500,000 Dresser Industries, Inc., 7.60% due 8/15/2096 498,551 510,465
Energy--0.7%
Industrial-- Lockheed Martin Corp.:
Other--2.6% BBB+ A3 1,000,000 6.625% due 6/15/1998 999,905 1,007,710
BBB+ A3 1,000,000 6.55% due 5/15/1999 999,620 1,004,670
----------- -----------
1,999,525 2,012,380
Industrial-- A- A2 1,000,000 Columbia/HCA Healthcare Corp., 7.75% due
Services--1.3% 7/15/2036 992,373 1,019,500
Transportation-- Southwest Airlines Co.:
3.4% A- A3 1,500,000 9.40% due 7/01/2001 1,695,629 1,630,500
A- A3 1,000,000 7.875% due 9/01/2007 994,729 1,032,790
----------- -----------
2,690,358 2,663,290
Utilities-- GTE Corporation:
Communica- BBB+ A3 500,000 9.10% due 6/01/2003 549,358 557,745
tions--5.3% BBB+ A3 1,000,000 10.30% due 11/15/2017 1,077,727 1,082,450
AAA Aaa 500,000 Indiana Bell Telephone Co., Inc., 7.30%
due 8/15/2026 499,156 507,420
AA Aa3 2,000,000 Southwestern Bell Telecommunications, Inc.,
6.125% due 3/01/2000 2,005,040 1,987,160
----------- -----------
4,131,281 4,134,775
<PAGE>
Utilities-- A+ A1 3,000,000 Georgia Power Co., 6.125% due 9/01/1999 2,984,583 2,983,140
Electric--6.5% AA- A1 1,000,000 Northern States Power Co., 7.125% due
7/01/2025 1,060,533 980,060
A A2 1,000,000 Virginia Electric & Power Co., 8.625% due
10/01/2024 982,136 1,081,898
----------- -----------
5,027,252 5,045,098
Utilities-- AA- A1 2,000,000 Consolidated Natural Gas Co., 8.75% due
Gas--2.7% 6/01/1999 2,066,183 2,103,400
Yankee BBB+ A3 1,000,000 Bangkok Bank Public Company Ltd., 7.25% due
Corporates*-- 9/15/2005 (b)+++ 992,080 977,740
14.4% AA- Aa3 1,500,000 CRA Finance Ltd., 6.50% due 12/01/2003 (c) 1,372,879 1,461,585
A A3 1,000,000 China Light & Power Company, Ltd., 7.50%
due 4/15/2006 (b) 994,061 1,008,320
A+ A2 1,000,000 Grand Metropolitan Investment Corp., 8.625%
due 8/15/2001 (b) 1,017,379 1,079,190
A+ A1 1,000,000 Ford Capital B.V., 9.50% due 6/01/2010 (e) 1,100,107 1,187,660
</TABLE>
<TABLE>
The Corporate Fund Accumulation Program, Inc.
Schedule of Investments (concluded) December 31, 1996
<CAPTION>
S&P Moody's Face Value
Industry Rating Rating Amount Issue Cost (Note 1a)
<S> <S> <S> <C> <S> <C> <C>
Corporate Bonds & Notes (concluded)
Yankee BBB+ A3 $1,000,000 HSBC Americas Inc., 7% due 11/01/2006 (b) $ 991,731 $ 987,200
Corporates* A+ A1 1,000,000 Petroliam Nasional Berhad, 6.875%
(concluded) due 7/01/2003+++ 990,862 1,001,430
Pohang Iron & Steel Industries (d):
A+ A2 1,000,000 7.375% due 5/15/2005 1,016,050 1,013,710
A+ A2 1,000,000 7.125% due 11/01/2006 998,889 997,270
A A2 1,500,000 Western Mining, 7.25% due 11/15/2013 (c) 1,518,938 1,486,425
----------- -----------
10,992,976 11,200,530
<PAGE>
Yankee BBB A3 1,000,000 People's Republic of China, 6.625% due
Sovereign*-- 1/15/2003 (a) 995,250 980,830
4.6% Province of Quebec (a):
A+ A2 2,000,000 7.50% due 7/15/2002 2,035,231 2,060,800
A+ A2 500,000 8.80% due 4/15/2003 557,013 550,305
----------- -----------
3,587,494 3,591,935
Total Corporate Bonds & Notes--91.6% 70,229,911 71,197,700
Short-Term Securities
Repurchase 1,286,000 UBS Securities Funding, Inc., purchased on
Agreements** 12/31/1996 to yield 6.75% to 1/02/1997 1,286,000 1,286,000
- --1.7%
Total Short-Term Securities--1.7% 1,286,000 1,286,000
Total Investments--97.2% $74,609,447 75,557,140
===========
Other Assets Less Liabilities--2.8% 2,191,281
-----------
Net Assets--100.0% $77,748,421
===========
<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.
(e)Industrial; other.
**Repurchase Agreements are fully collateralized by US Government &
Agency Obligations.
***Formerly The Walt Disney Company.
++Floating Rate Note.
+++Restricted security as to resale. The value of the Program's
investment in restricted securities was approximately $5,217,000,
representing 6.7% of net assets.
<CAPTION>
Acquisition Value
Issue Date Cost (Note 1a)
<S> <S> <C> <C>
Bangkok Bank Public Company Ltd., 7.25% due 9/15/2005 9/22/1995 $ 992,080 $ 977,740
Disney Enterprises Inc., 6.85% due 1/10/2007 12/18/1996 499,666 499,645
Equitable Life Assurance Society of the US:
6.95% due 12/01/2005 10/17/1996 473,549 490,490
7.70% due 12/01/2015 6/11/1996 993,233 999,580
First Union Capital, 7.85% due 1/01/2027 1/27/1996 1,247,825 1,247,825
Petroliam Nasional Berhad, 6.875% due 7/01/2003 7/25/1995 990,862 1,001,430
Total $5,197,215 $5,216,710
========== ==========
<PAGE>
Ratings of issues shown have not been audited by Deloitte & Touche LLP.
See Notes to Financial Statements.
</TABLE>
<TABLE>
The Corporate Fund Accumulation Program, Inc.
Statement of Assets and Liabilities as of December 31, 1996
<S> <C> <C>
Assets:
Investments, at value (identified cost--$74,609,447) (Note 1a) $ 75,557,140
Receivables:
Securities sold $ 2,295,713
Interest 1,327,512
Capital shares sold 13,496 3,636,721
------------
Prepaid registration fees and other assets (Note 1d) 138,626
------------
Total assets 79,332,487
------------
Liabilities:
Payables:
Securities purchased 1,249,188
Capital shares redeemed 58,672
Investment adviser (Note 2) 34,134 1,341,994
------------
Accrued expenses and other liabilities 242,072
------------
Total liabilities 1,584,066
------------
Net Assets $ 77,748,421
============
Net Assets Consist of:
Common Stock, $.01 par value, 50,000,000 shares authorized $ 37,576
Paid-in capital in excess of par 78,529,617
Accumulated realized capital losses on investments--net (Note 5) (1,766,465)
Unrealized appreciation on investments--net 947,693
------------
Net Assets--Equivalent to $20.69 per share based on 3,757,574 shares outstanding $ 77,748,421
============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
The Corporate Fund Accumulation Program, Inc.
Statement of Operations for the Year Ended December 31, 1996
<S> <C> <C>
Investment Income (Note 1c):
Interest and premium and discount earned $ 5,655,919
Expenses:
Investment advisory fees (Note 2) $ 405,367
Transfer agent fees 253,609
Printing and shareholder reports 70,744
Registration fees (Note 1d) 50,992
Professional fees 44,942
Accounting services (Note 2) 35,910
Custodian fees 22,720
Directors' fees and expenses 15,936
Pricing fees 4,591
Other 4,388
------------
Total expenses 909,199
------------
Investment income--net 4,746,720
------------
Realized & Unrealized Gain (Loss) on Investments--Net (Notes 1c & 3):
Realized gain on investments--net 1,212,168
Change in unrealized appreciation on investments--net (4,788,096)
------------
Net Increase in Net Assets Resulting from Operations $ 1,170,792
============
See Notes to Financial Statements.
</TABLE>
<TABLE>
The Corporate Fund Accumulation Program, Inc.
Statements of Changes in Net Assets
<CAPTION>
For the Year Ended Dec. 31,
Increase (Decrease) in Net Assets: 1996 1995
<S> <C> <C>
Operations:
Investment income--net $ 4,746,720 $ 5,184,782
Realized gain on investments--net 1,212,168 1,240,812
Change in unrealized appreciation/depreciation on investments--net (4,788,096) 8,819,279
------------ ------------
Net increase in net assets resulting from operations 1,170,792 15,244,873
------------ ------------
Dividends to Shareholders (Note 1e):
Investment income--net (4,746,847) (5,184,682)
------------ ------------
Net decrease in net assets resulting from dividends to shareholders (4,746,847) (5,184,682)
------------ ------------
Capital Share Transactions (Note 4):
Net decrease in net assets resulting from capital share transactions (4,077,674) (7,545,314)
------------ ------------
Net Assets:
Total increase (decrease) in net assets (7,653,729) 2,514,877
Beginning of year 85,402,150 82,887,273
------------ ------------
End of year* $ 77,748,421 $ 85,402,150
============ ============
<FN>
*Undistributed investment income--net $ -- $ 100
============ ============
<PAGE>
See Notes to Financial Statements.
</TABLE>
<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 Year Ended December 31,
Increase (Decrease) in Net Asset Value: 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of year $ 21.59 $ 19.14 $ 21.55 $ 21.22 $ 21.76
-------- -------- -------- -------- --------
Investment income--net 1.23 1.28 1.18 1.31 1.46
Realized and unrealized gain (loss) on investments--net (.90) 2.45 (2.41) 1.24 (.03)
-------- -------- -------- -------- --------
Total from investment operations .33 3.73 (1.23) 2.55 1.43
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net (1.23) (1.28) (1.18) (1.29) (1.47)
Realized gain on investments--net -- -- -- (.93) (.50)
-------- -------- -------- -------- --------
Total dividends and distributions (1.23) (1.28) (1.18) (2.22) (1.97)
-------- -------- -------- -------- --------
Net asset value, end of year $ 20.69 $ 21.59 $ 19.14 $ 21.55 $ 21.22
======== ======== ======== ======== ========
Total Investment Return:
Based on net asset value per share 1.69% 20.05% (5.78%) 12.20% 6.86%
======== ======== ======== ======== ========
Ratios to Average Net Assets:
Expenses 1.12% 1.01% 1.10% 1.08% 1.12%
======== ======== ======== ======== ========
Investment income--net 5.84% 6.23% 5.80% 5.74% 6.72%
======== ======== ======== ======== ========
Supplemental Data:
Net assets, end of year (in thousands) $ 77,748 $ 85,402 $ 82,887 $115,367 $ 90,892
======== ======== ======== ======== ========
Portfolio turnover 77% 104% 122% 132% 65%
======== ======== ======== ======== ========
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 management investment company. 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. In
certain circumstances, portfolio securities are valued at the last
sale price on the exchange that is the primary market for such
securities, or the last quoted bid price for those securities for
which the over-the-counter market is the primary market or for
listed securities in which there were no sales during the day.
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 or on behalf
of 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.
FAM has entered into an Administrative Agreement with Merrill Lynch,
Pierce, Fenner & Smith Inc. ("MLPF&S"), Prudential Securities, Inc.,
Dean Witter Reynolds Inc., and Smith Barney, Inc. (the "Administrators"),
whereby the Administrators perform certain administrative duties on
behalf of FAM. The Administrators receive a monthly fee from FAM
equal to 0.20%, on an annual basis, of the Program's average daily
net assets.
The Corporate Fund Accumulation Program, Inc.
Notes to Financial Statements (concluded)
During the year ended December 31, 1996, the Program paid Merrill
Lynch Security Pricing Service, an affiliate of MLPF&S, $3,118 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.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the year ended December 31, 1996 were $59,233,081 and
$62,940,819, respectively.
<PAGE>
Net realized and unrealized gains as of December 31, 1996 were as
follows:
Realized Unrealized
Gains Gains
Long-term investments $1,212,168 $ 947,693
---------- ----------
Total $1,212,168 $ 947,693
========== ==========
As of December 31, 1996, net unrealized appreciation for Federal
income tax purposes aggregated $947,693 of which $1,334,352 related
to appreciated securities and $386,659 related to depreciated
securities. The aggregate cost of investments at December 31, 1996
for Federal income tax purposes was $74,609,447.
4. Capital Share Transactions:
Transactions in capital shares were as follows:
For the Year Ended Dollar
December 31, 1996 Shares Amount
Shares sold 943,053 $ 19,538,783
Shares issued to
shareholders in
reinvestment of
dividends 221,170 4,567,096
------------ ------------
Total issued 1,164,223 24,105,879
Shares redeemed (1,362,008) (28,183,553)
------------ ------------
Net decrease (197,785) $ (4,077,674)
============ ============
For the Year Ended Dollar
December 31, 1995 Shares Amount
Shares sold 691,078 $ 14,241,386
Shares issued to
shareholders in
reinvestment of
dividends 236,055 4,837,718
------------ ------------
Total issued 927,133 19,079,104
Shares redeemed (1,302,627) (26,624,418)
------------ ------------
Net decrease (375,494) $ (7,545,314)
============ ============
<PAGE>
5. Capital Loss Carryforward:
At December 31, 1996, the Program had a net capital loss
carryforward of approximately $1,766,000, all of which expires in
2002. This amount will be available to offset like amounts of any
future taxable gains.
<AUDIT-REPORT>
The Corporate Fund Accumulation Program, Inc.
Independent Auditors' Report
The Board of Directors and Shareholders,
The Corporate Fund Accumulation
Program, Inc.:
We have audited the accompanying statement of assets and
liabilities, including the schedule of investments, of The Corporate
Fund Accumulation Program, Inc. as of December 31, 1996, the related
statements of operations for the year then ended, and changes in net
assets for each of the years in the two-year period then ended, and
financial highlights for each of the years in the five-year period
then ended. These financial statements and the financial highlights
are the responsibility of the Program's management. Our
responsibility is to express an opinion on these financial
statements and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements and the financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.
Our procedures included confirmation of securities owned at December
31, 1996 by correspondence with the custodian and brokers. An audit
also includes 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, such financial statements and financial highlights
present fairly, in all material respects, the financial position of
The Corporate Fund Accumulation Program, Inc. as of December 31,
1996, the results of its operations, and the changes in its net
assets, and the financial highlights for the respective stated
periods in conformity with generally accepted accounting principles.
<PAGE>
Deloitte & Touche LLP
Princeton, New Jersey
February 3, 1997
</AUDIT-REPORT>
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
90 Washington Street
New York, New York 10286
