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<PAGE> PAGE 2
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<PAGE> PAGE 3
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<PAGE> PAGE 4
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<PAGE> PAGE 5
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<PAGE> PAGE 6
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<PAGE> PAGE 7
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<PAGE> PAGE 8
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<PAGE> PAGE 9
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<PAGE> PAGE 11
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SIGNATURE RICHARD W. INGRAM
TITLE TREASURER
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial data extracted from the annual report
dated June 30, 1998 for The Diversified Portfolio and is qualified in its
entirety by reference to such annual report.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> JUN-30-1998
<INVESTMENTS-AT-COST> 463586
<INVESTMENTS-AT-VALUE> 550355
<RECEIVABLES> 18356
<ASSETS-OTHER> 3875
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 572586
<PAYABLE-FOR-SECURITIES> 12868
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 652
<TOTAL-LIABILITIES> 13520
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 559065
<DIVIDEND-INCOME> 4256
<INTEREST-INCOME> 11947
<OTHER-INCOME> 0
<EXPENSES-NET> 2789
<NET-INVESTMENT-INCOME> 13414
<REALIZED-GAINS-CURRENT> 22975
<APPREC-INCREASE-CURRENT> 38418
<NET-CHANGE-FROM-OPS> 74807
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 251427
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2360
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3037
<AVERAGE-NET-ASSETS> 429086
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> .65
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
TRANSACTIONS SUBJECT TO RULE 10f-3 PROCEDURES
Portfolio: The Diversified Portfolio - Fixed Income Security Description: Notes
Issuer: U S West Capital Funding 6.25% 7/15/05 Offering Type: U S Registered
(US Registered, Eligible Muni, Eligible Foreign, Eligible 144A)
<TABLE>
<CAPTION>
- ---- ------------------------------------------ ---------------- -------------------------------------- -----------------
<S> <C> <C> <C> <C>
In Compliance
REQUIRED INFORMATION ANSWER APPLICABLE RESTRICTION (Yes/No)
- ---- ------------------------------------------ ---------------- -------------------------------------- -----------------
- ---- ------------------------------------------ ---------------- --------------------------------------
1. Offering Date June 24, 1998 None N/A
------------- ---
2. Trade Date June 24, 1998 Must be the same as #1 Yes
------------- ---
3. Unit Price of Offering 99.743% None N/A
------- ---
4. Price Paid per Unit 99.743% Must not exceed #3 Yes
------- ---
5. Years of Issuer's Operations 12 Must be at least three years * Yes
-- ---
Underwriting Type Firm Must be firm Yes
6.
Underwriting Spread .625% Investment Adviser determination to Yes
----- ---
7. be made
Total Price paid by Portfolio $1,296,659 None N/A
---------- ---
8.
Total Size of Offering $500,000,000 None N/A
------------ ---
9.
Total Price Paid by Portfolio plus Total #10 divided by #9 must not exceed
10. Price Paid for same securities purchased 25% ** Yes
---
by the same investment adviser for other $11,295,895
investment companies
Underwriter(s) from whom the Portfolio
11. purchased (attach a prospectus or Merrill Lynch Must not include Investment Adviser
-------------
offering circular for a list of all affiliates *** Yes
---
syndicate members)
Yes
12. If the affiliate was lead or co-lead
manager, was the instruction listed Must be "Yes" or "N/A" Yes
below given to the broker(s) named in
#11? ****
- ---- ------------------------------------------ ---------------- -------------------------------------- -----------------
</TABLE>
The Investment Adviser has no reasonable cause to believe that the underwriting
commission, spread or profit is NOT reasonable and fair compared to
underwritings of similar securities during a comparable period of time. In
determining which securities are comparable, the Investment Adviser has
considered the factors set forth in the Portfolio's 10f-3 procedures.
* Not applicable to munis. In the case of munis, (i) the issue must have
one investment grade rating or (ii) if the issuer or the revenue source
has been in operation for less than three years, the issue must have
one of the three highest ratings. Circle (i) or (ii), whichever is met.
** If an eligible Rule 144A offering, must not exceed 25% of the total
amount of same class sold to QIBs in the Rule 144A offering PLUS the
amount of the offering of the same class in any concurrent public
offering
*** For munis purchased from syndicate manager, check box to confirm that the
purchase was not designated as a group sale. [ ]
**** No credit for the purchase made for the Portfolio can be credited to
the Investment Adviser's affiliate.
