MERRILL LYNCH
ASSET BUILDER
PROGRAM, INC.
FUND LOGO
Semi-Annual Report
July 31, 1996
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.
<PAGE>
Merrill Lynch
Asset Builder Program, Inc.
Box 9011
Princeton, NJ
08543-9011
Merrill Lynch Asset Builder Program, Inc.
Officers and
Directors
Arthur Zeikel, President and Director
Joe Grills, Director
Walter Mintz, Director
Robert S. Salomon Jr., Director
Melvin R. Seiden, Director
Stephen B. Swensrud, Director
Terry K. Glenn, Executive Vice President
Norman R. Harvey, Senior Vice President
N. John Hewitt, Senior Vice President
Donald C. Burke, Vice President
Jay C. Harbeck, Vice President
Lawrence R. Fuller, Vice President
Gregory Mark Maunz, Vice President
Kevin M. Rendino, Vice President
Thomas R. Robinson, Vice President
Gerald M. Richard, Treasurer
Mark B. Goldfus, Secretary
Custodian
The Bank of New York
90 Washington Street, 12th Floor
New York, New York 10286
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jackonsville, Florida 32246-6484
(800) 637-3863
<PAGE>
DEAR SHAREHOLDER
We are pleased to provide you with this semi-annual report for
Merrill Lynch Asset Builder Program, Inc. The Program consists of
five separate diversified portfolios, each with its own investment
objectives. Complete performance information, including aggregate
and average annual total returns, for all five portfolios can be
found on pages 6--9 of this report to shareholders.
Merrill Lynch Fundamental Value
Portfolio
A stronger-than-expected employment report, coupled with rising
labor costs, sent the US equity market into a tailspin in early
July. Concerns arose that the Federal Reserve Board would be forced
to raise interest rates at the next Federal Open Market Committee
meeting in an effort to contain inflationary pressures.
Later in July, signs of moderating economic growth led to a renewed
interest in equities, particularly defensive issues. The Standard &
Poor's 500 Index (S&P 500) declined in July by 4.6%, the largest
monthly correction in some time. At one point during July, the S&P
500 had corrected 10% from its prior peak, and the NASDAQ
Industrials had corrected 20% in less than two months.
Portfolio activity was concentrated on the buy side since we
traditionally buy on weakness and sell on strength. Our new
investments were largely focused on economically sensitive issues,
since they sold off sharply in view of the uncertain economic
outlook. We believe much of the underperformance in some of these
sectors discounted extreme economic circumstances and drove
valuations down to levels not seen in years. Therefore, we added to
the Portfolio's investments in steel, copper, paper, auto, and
retail issues.
For the three-month period ended July 31, 1996, we invested $10.6
million by adding to 33 of our existing positions and initiating
seven new investments: Advanced Micro Devices Inc., Hechinger Co.,
Hibernia Corp., Louisiana-Pacific Corp., Phelps Dodge Corp., Scitex
Corp. Ltd., and U S West Media Group. The stock of Phelps Dodge, the
leading copper producer in the world, came under severe pressure
following the announcement that Sumitomo Corp. of Japan had incurred
a $2 billion loss trading copper futures. Worries of oversupply of
copper inventories and concerns that Sumitomo would flood the market
with copper pushed the price of copper from $1.50 a pound to $0.85
in just two months. At our initial entry price, Phelps Dodge was
trading at 1.5 times book value, a 3.3% yield and 7.5 times 1996
expected earnings. Although the copper market may continue to
experience turmoil for some time, we believe the shares
appropriately discount the uncertainty.
<PAGE>
We completed seven sales during the July quarter: Eaton Corp.,
FelCor Suite Hotels, Inc., Lone Star Technologies, Inc., Olin Corp.,
SyQuest Technology, Inc., TIG Holdings, Ltd., and Western Digital
Corp. All of these stocks had reached our price targets and the
sales netted substantial gains.
At July 31, 1996, our biggest group weighting was in technology. We
continued to invest in many companies in this out-of-favor sector.
We believe the worst of the inventory correction in the personal
computer and semiconductor industries is over and we look for
improvement in this sector once Microsoft Corporation announces its
latest version of the NT server. During the July quarter, we
continued to add to our investments in Apple Computer, Inc.,
Computervision Corp., Exabyte Corp., Micron Technology, Inc.,
National Semiconductor Corp., Storage Technology Corp., and Tandem
Computers, Inc. The Portfolio remained attractively valued relative
to the stock market, with the Portfolio's price/earnings ratio at
two-thirds of the market's multiple, and the price/book ratio at one-
half that of the market.
Merrill Lynch Global Opportunity
Portfolio
As of July 31, 1996, the asset allocation for Merrill Lynch Global
Opportunity Portfolio was: foreign stocks, 44%; US stocks, 35%;
foreign bonds, 15%; and cash reserves, 6%. During the three months
ended July 31, 1996, we eliminated the remaining high-yield US bond
positions. We regarded appreciation potential as being limited,
given evidence of a stronger US economy which could result in an
increase of short-term interest rates by the Federal Reserve Board.
While increasing the foreign bond sector, we maintained a
representation in the German market as well as the higher-yielding
bonds of Italy, Spain and Sweden. We continue to believe that the
return on Italian, Swedish and Spanish bonds will be enhanced by the
convergence of yields in these markets with those in Germany because
of a lackluster German economy, an accommodative monetary policy by
the Bundesbank, and relatively stringent fiscal policies. These
policies should allow for further short-term interest rate cuts by
the central banks of Italy, Spain and Sweden, while enabling their
currencies to strengthen versus the Deutschemark.
While expanding the Portfolio's foreign equity representation, we
continued to add to the European weighting. New positions were
spread across several markets, including the United Kingdom through
investments in British Steel PLC, Glaxo Wellcome PLC and Grand
Metropolitan PLC. Other investments included Bure Investment AB and
Sparbanken Sverige AB in Sweden; UPM-Kymmene Corp. in Finland; and
Henkel KGaA in Germany. Uncertain prospects led us to eliminate
Philips Electronics N.V. in the Netherlands from the Portfolio. We
also enlarged the Port-folio's commitment to Latin America by
purchasing shares of Companhia Cervejaria Brahma S.A. PN in Brazil.
<PAGE>
We continued to reduce the Portfolio's investment in Japanese
equities. During the quarter ended July 31, 1996, we sold our
holdings in Kamigumi Co., Ltd., Dai Nippon Printing Co., Ltd.,
Sumitomo Corp., and Sanwa Bank, Ltd. Expectations that the strength
in the US dollar versus the yen could be nearing an end led us to
eliminate the currency hedge of the Japanese equity holdings back
into US dollars. Overall, our expectations of a relatively
synchronized global economic recovery led us to allocate the largest
proportion of foreign equity assets to the capital equipment sector,
including electronics and electrical equipment, with an increasing
commitment of assets to depressed basic industry situations. The
Portfolio's most significant underweighting is in the finance
sector, including banking, insurance, and real estate, because we
believe the economic environment will not be conducive to
substantial declines in interest rates worldwide.
During the three months ended July 31, 1996, we modestly reduced the
Portfolio's commitment to US equities. We believe that value-based
stock selection in the United States is more likely to yield
positive results in coming months than will an industry focus. We
continued to allocate significant assets to focused and restructured
companies which enjoy dominant franchises within their respective
industries. The Coca-Cola Co. and PPG Industries, Inc. are examples
of new investments which fulfill these criteria. Other new
investments which appeared reasonably valued in relationship to
their asset values or earnings growth included Baxter International,
Inc. and Unocal Corp. We continued to enlarge the representation in
quality technology companies where new positions included Sun
Microsystems, Inc. and COMPAQ Computer Corp.
Merrill Lynch Growth Opportunity
Portfolio
Merrill Lynch Growth Opportunity Portfolio provided a relatively
favorable investment performance for the quarter ended July 31,
1996. The Portfolio's investments are primarily in large-
capitalization, high-quality growth companies. The stocks of these
companies began to provide better investment returns during the July
quarter as negative surprises in the earnings reports of more
cyclical companies began to challenge the conventional forecasts of
a sustainable and robust rebound in general business activity. The
Portfolio's primary focus is on companies in the non-cyclical
sectors of consumer and commercial markets which we believe will
produce consistent, above-average growth in earnings and rates of
return on investment.
<PAGE>
The most recent measures of business activity appear to reflect a
near-term slowdown of economic activity, which reduced concerns
somewhat of an imminent rise in interest rates and a monetary policy
tightening by the Federal Reserve Board. We continue to believe the
average rate of real growth for the US economy in 1996 will be in
the 2%--2.5% range with a moderate rate of overall price inflation.
The recent evidence of an economic slowdown and lower profits for
some cyclical companies is consistent with our business and economic
outlook at the start of the July quarter.
Since we focus our investments on companies which we expect to
provide consistent and above-average growth in earnings regardless
of the overall level of general business activity, we made few
changes in the Portfolio during the quarter ended July 31, 1996. The
ten largest industry sectors in the Portfolio at July quarter-end
were pharmaceuticals, computer software, financial services,
household products, beverages, information processing, food, banking
and financial, insurance and medical technology. These ten industry
sectors represented 60.9% of net assets at the end of the July
quarter. The top ten company stock holdings equaled 31.4% of net
assets. We added one company, ConAgra Inc., to the Portfolio during
the quarter bringing the total number of companies represented to
52. We invested in ConAgra because of the potential investment
returns from a recently announced global restructuring program by
the current management. The company is one of the leading packaged
food companies with an excellent record of corporate investment
returns and above-average growth in earnings.
We slightly reduced the Portfolio's cash reserve position in the
July quarter. Given the recent evidence of slower real economic
growth and declining long-term interest rates, we plan to
significantly reduce cash reserves during the October quarter.
Merrill Lynch Quality
Bond Portfolio
The acceleration of job creation in the United States, which jolted
the bond market in February 1996, continued to impact interest rates
through the first half of the year. Job growth averaged 233,000 jobs
per month during the first six months of 1996, compared with an
average monthly gain of only 144,000 for the same period in 1995.
Combined with a surprising strength in the wage and salary index,
this data caused concern that the period of favorable inflation
developments might be drawing to a close. Economic activity heated
up in the second quarter at a rate of 4.2%. In June and July, there
was speculation that the Federal Reserve Board would tighten
interest rates some time during the summer. Trading activity pushed
the long-term Treasury rate over 7% and almost up to 7.25% before
recovering to 6.97% at July 31, 1996.
<PAGE>
We maintained a defensive investment strategy throughout the three
months ended July 31, 1996. We shortened the duration of the Fund
from 5.08 years at the beginning of February to 4.27 years at the
beginning of May, and then up to 4.44 years at the end of July. We
thought this was an appropriate position, given the environment of
rising interest rates that prevailed for most of the July quarter.
Investor sentiment was extraordinarily volatile thus far this year,
shifting frequently and rapidly with the release of each new
economic report. We expect that a pattern of price volatility will
continue as long as the economic reports are inconclusive. Interest
rates should trend irregularly lower for the next quarter, but we
are cautious that the current sense of optimism needs the support of
more data than are currently available.
Merrill Lynch US Government
Securities Portfolio
Although yields on US Government securities increased moderately
during the quarter ended July 31, 1996, there were numerous dramatic
changes in interest rates. For example, the 30-year Treasury bond
closed at 6.97%, up from 6.90% at the beginning of the quarter.
However, ten trading sessions had price changes of one point or more
as the Treasury bond traded within a 40 basis point (0.40%) band.
The main cause for the volatile financial markets was a lack of
consensus among investors regarding the level of US economic
activity. As mentioned in our April report, increases in non-farm
payrolls raised concerns that an expanding economy may lead to
negative news on inflation. This continues to be the case as
payrolls are still growing at a strong pace. Gross domestic product
for second quarter 1996 expanded at 4.2%, the fastest growth in two
years. This level exceeds the pace deemed by the Federal Reserve
Board as non-inflationary. In addition, the measurement of Leading
Economic Indicators has expanded five consecutive months and
therefore could lead investors to conclude that a slowdown in the
economy is not imminent.
The evidence of healthy economic activ-ity combined with buoyant
consumer confidence is typical in periods in which interest rates
move in one direction--up. However, that was not the case during the
July quarter. It appears that when bond prices approached cyclical
lows, the market attracted significant buyers and prices would rally
two points--three points in a short period of time. This action is
the result of consistent low inflation. The Index of Producer Prices
reveals no increase of pricing pressures over 1995 and as long as
this trend continues, we believe there is most likely a limit on how
high interest rates will rise.
<PAGE>
The fixed-income markets will probably remain in a trading range
until a clearer signal on the depth of strength of the economy
emerges. We expect volatility within this range to remain high as
investors and economists alike attempt to predict the timing of the
Federal Reserve Board's next move. It appeared that many investors
altered their view on this matter frequently as they anticipated a
tightening of credit for months and seem bewildered that one has not
materialized.
We believe that whether or not the Federal Reserve Board tightens
monetary policy is less critical than what we anticipate for the
level of economic activity ahead. While the economy is going through
a cycle of reasonable expansion, it is not likely that a sustainable
pace exceeding 3% for more than one or two quarters will occur. This
in turn may result in an increase in some inflationary pressures,
but not nearly enough to make inflation a long-term spiraling
threat. Accordingly, we would anticipate a decline in interest rates
as more investors attain comfort with the stability of inflation.
During the quarter ended July 31, 1996, the Portfolio continued to
increase its allocation to the mortgage backed security (MBS)
sector. MBS provide a yield advantage over Treasury securities,
which they maintain easily in a trading-range environment. For
example, Government National Mortgage Association 7.5% MBS and
Federal Home Loan Mortgage Corporation (FHLMC) 7.5% MBS, which each
account for 18% of the Portfolio's investments, returned +1.50% and
+1.67%, respectively, for the July quarter. This contrasts favorably
with the +0.92% returned by the five-year Treasury note. MBS
currently comprises 89% of the Portfolio. We added to the 15-year
FHLMC 6.5% MBS position during the July quarter. In addition to
providing the yield advantage mentioned earlier the three-point
discount allows these securities to appreciate to a greater degree
if interest rates decline.
Finally, we reduced the Portfolio's cash position from 5% of net
assets at the beginning of the July quarter to 3%. This extends the
average life of the Portfolio, thereby increasing the Portfolio's
appreciation potential in a bond market rally.
In Conclusion
We thank you for your investment in Merrill Lynch Asset Builder
Program, Inc., and we look forward to reviewing our outlook and
strategy with you again in our upcoming quarterly report to
shareholders.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
<PAGE>
(Kevin M. Rendino)
Kevin M. Rendino
Vice President and Portfolio Manager
Merrill Lynch Fundamental Value
Portfolio
(Thomas R. Robinson)
Thomas R. Robinson
Vice President and Portfolio Manager
Merrill Lynch Global Opportunity
Portfolio
(Lawrence R. Fuller)
Lawrence R. Fuller
Vice President and Portfolio Manager
Merrill Lynch Growth Opportunity
Portfolio
(Jay C. Harbeck)
Jay C. Harbeck
Vice President and Portfolio Manager
Merrill Lynch Quality Bond Portfolio
(Gregory Mark Maunz)
Gregory Mark Maunz
Vice President and Portfolio Manager
Merrill Lynch US Government
Securities Portfolio
September 12, 1996
<PAGE>
PERFORMANCE DATA
About Fund
Performance
Investors are able to purchase shares of the Program through the
Merrill Lynch Select Pricing SM System, which offers four pricing
alternatives:
* Class A Shares incur a maximum initial sales charge (front-end
load) of 5.25% and bear no ongoing distribution or account
maintenance fees for Fundamental Value, Global Opportunity and
Growth Opportunity Portfolios. Quality Bond and US Government
Securities Portfolios incur a maximum initial sales charge (front-
end load) of 4% and bear no ongoing distribution or account
maintenance fees. Class A Shares are available only to eligible
investors.
* Class B Shares are subject to a maximum contingent deferred sales
charge of 4% if redeemed during the first year, decreasing 1% each
year thereafter to 0% after the fourth year for Fundamental Value,
Global Opportunity, Growth Opportunity, Quality Bond and US
Government Securities Portfolios. In addition, Quality Bond and US
Government Securities Portfolios are subject to a distribution fee
of 0.50% and an account maintenance fee of 0.25%. Fundamental Value,
Global Opportunity and Growth Opportunity Portfolios are subject to
a 0.75% distribution fee and a 0.25% account maintenance fee.
Fundamental Value, Global Opportunity and Growth Opportunity
Portfolios automatically convert to Class D Shares after
approximately 8 years. Quality Bond and US Government Securities
Portfolios automatically convert to Class D Shares after
approximately 10 years. (There is no initial sales charge for
automatic share conversions.)
* Class C Shares are subject to a distribution fee of 0.55% and an
account maintenance fee of 0.25% for Quality Bond and US Government
Securities Portfolios. Fundamental Value, Global Opportunity and
Growth Opportunity Portfolios are subject to a distribution fee of
0.75% and an account maintenance fee of 0.25%. In addition, Class C
Shares are subject to a 1% contingent deferred sales charge if
redeemed within one year of purchase.
* Class D Shares incur a maximum initial sales charge of 5.25% and
an account maintenance fee of 0.25% (but no distribution fee) for
Fundamental Value, Global Opportunity and Growth Opportunity
Portfolios. Quality Bond and US Government Securities Portfolios
incur a maximum initial sales charge of 4% and an account
maintenance fee of 0.25% (but no distribution fee).
<PAGE>
None of the past results shown should 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. 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.
<TABLE>
Recent
Performance
Results*
<CAPTION> Standardized
12 Month 3 Month 30-day Yield
7/31/96 4/30/96 7/31/95 % Change % Change As of 7/31/96
<S> <C> <C> <C> <C> <C> <C>
Fundamental Value Portfolio Class A Shares $12.17 $12.91 $11.61 +4.82% -5.73% --
Fundamental Value Portfolio Class B Shares 11.98 12.75 11.55 +3.72 -6.04 --
Fundamental Value Portfolio Class C Shares 11.98 12.75 11.55 +3.72 -6.04 --
Fundamental Value Portfolio Class D Shares 12.14 12.89 11.59 +4.75 -5.82 --
Global Opportunity Portfolio Class A Shares 10.66 10.97 10.82 -1.48 -2.83 --
Global Opportunity Portfolio Class B Shares 10.55 10.90 10.76 -1.95 -3.21 --
Global Opportunity Portfolio Class C Shares 10.55 10.89 10.76 -1.95 -3.12 --
Global Opportunity Portfolio Class D Shares 10.64 10.96 10.81 -1.57 -2.92 --
Growth Opportunity Portfolio Class A Shares 9.99 9.98 10.00++ -0.10++ +0.10 --
Growth Opportunity Portfolio Class B Shares 9.95 9.96 10.00++ -0.50++ -0.10 --
Growth Opportunity Portfolio Class C Shares 9.95 9.96 10.00++ -0.50++ -0.10 --
Growth Opportunity Portfolio Class D Shares 10.00 9.98 10.00++ 0.00++ +0.20 --
Quality Bond Portfolio Class A Shares 9.71 9.76 9.86 -1.52 -0.51 6.67%
Quality Bond Portfolio Class B Shares 9.71 9.76 9.86 -1.52 -0.51 6.20
Quality Bond Portfolio Class C Shares 9.71 9.75 9.86 -1.52 -0.41 6.09
Quality Bond Portfolio Class D Shares 9.71 9.76 9.86 -1.52 -0.51 6.51
US Government Securities Portfolio Class A Shares 10.11 10.15 10.47 -3.62 -0.39 7.06
US Government Securities Portfolio Class B Shares 10.11 10.15 10.47 -3.62 -0.39 6.60
US Government Securities Portfolio Class C Shares 10.11 10.15 10.46 -3.53 -0.39 6.55
US Government Securities Portfolio Class D Shares 10.12 10.16 10.47 -3.53 -0.39 6.82
Fundamental Value Portfolio Class A Shares--Total Return +7.88(1) -5.73
Fundamental Value Portfolio Class B Shares--Total Return +6.77(1) -6.04
Fundamental Value Portfolio Class C Shares--Total Return +6.77(1) -6.04
Fundamental Value Portfolio Class D Shares--Total Return +7.80(1) -5.82
Global Opportunity Portfolio Class A Shares--Total Return +1.20(2) -2.83
Global Opportunity Portfolio Class B Shares--Total Return +0.13(3) -3.21
Global Opportunity Portfolio Class C Shares--Total Return +0.15(4) -3.12
Global Opportunity Portfolio Class D Shares--Total Return +0.98(5) -2.92
Growth Opportunity Portfolio Class A Shares--Total Return -0.10++ +0.10
<PAGE>
Growth Opportunity Portfolio Class B Shares--Total Return -0.50++ -0.10
Growth Opportunity Portfolio Class C Shares--Total Return -0.50++ -0.10
Growth Opportunity Portfolio Class D Shares--Total Return 0.00++ +0.20
Quality Bond Portfolio Class A Shares--Total Return +5.23(6) +1.22(7)
Quality Bond Portfolio Class B Shares--Total Return +4.31(8) +1.00(9)
Quality Bond Portfolio Class C Shares--Total Return +4.23(10) +1.09(11)
Quality Bond Portfolio Class D Shares--Total Return +4.97(12) +1.16(13)
US Government Securities Portfolio Class A Shares--Total Return +6.01(14) +1.29(15)
US Government Securities Portfolio Class B Shares--Total Return +5.11(16) +1.08(17)
US Government Securities Portfolio Class C Shares--Total Return +5.15(18) +1.06(19)
US Government Securities Portfolio Class D Shares--Total Return +5.84(20) +1.23(21)
<FN>
++The Growth Opportunity Portfolio commenced operations on 2/02/96.
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included.
(1)Percent change includes reinvestment of
$0.337 per share ordinary income dividends.
(2)Percent change includes reinvestment of
$0.288 per share ordinary income dividends.
(3)Percent change includes reinvestment of
$0.224 per share ordinary income dividends.
(4)Percent change includes reinvestment of
$0.226 per share ordinary income dividends.
(5)Percent change includes reinvestment of
$0.274 per share ordinary income dividends.
(6)Percent change includes reinvestment of
$0.658 per share ordinary income dividends.
(7)Percent change includes reinvestment of
$0.165 per share ordinary income dividends.
(8)Percent change includes reinvestment of
$0.572 per share ordinary income dividends.
(9)Percent change includes reinvestment of
$0.144 per share ordinary income dividends.
(10)Percent change includes reinvestment of
$0.565 per share ordinary income dividends.
(11)Percent change includes reinvestment of
$0.143 per share ordinary income dividends.
(12)Percent change includes reinvestment of
$0.633 per share ordinary income dividends.
(13)Percent change includes reinvestment of
$0.159 per share ordinary income dividends.
(14)Percent change includes reinvestment of
$0.970 per share ordinary income dividends.
(15)Percent change includes reinvestment of
$0.168 per share ordinary income dividends.
(16)Percent change includes reinvestment of
$0.884 per share ordinary income dividends.
(17)Percent change includes reinvestment of
$0.147 per share ordinary income dividends.
<PAGE>
(18)Percent change includes reinvestment of
$0.878 per share ordinary income dividends.
(19)Percent change includes reinvestment of
$0.146 per share ordinary income dividends.
(20)Percent change includes reinvestment of
$0.944 per share ordinary income dividends.
(21)Percent change includes reinvestment of
$0.162 per share ordinary income dividends.
</TABLE>
PERFORMANCE DATA (concluded)
Aggregate
Total Returns--
Growth
Opportunity
Portfolio
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Inception (2/02/96) to 6/30/96 +3.70% -1.74%
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Inception (2/02/96) to 6/30/96 +3.30% -0.70%
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
<PAGE>
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Inception (2/02/96) to 6/30/96 +3.30% +2.30%
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Sales Charge Sales Charge**
Class D Shares*
Inception (2/02/96) to 6/30/96 +3.70% -1.74%
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
Average Annual
Total Returns--
Fundamental
Value Portfolio
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 6/30/96 +17.16% +11.01%
Inception (2/01/95) to 6/30/96 +21.82 +17.24
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 6/30/96 +15.97% +11.97%
Inception (2/01/95) to 6/30/96 +20.56 +18.57
<PAGE>
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Year Ended 6/30/96 +15.97% +14.97%
Inception (2/01/95) to 6/30/96 +20.56 +20.56
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Sales Charge Sales Charge**
Class D Shares*
Year Ended 6/30/96 +17.00% +10.86%
Inception (2/01/95) to 6/30/96 +21.55 +16.98
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
Average Annual
Total Returns--
Global
Opportunity
Portfolio
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 6/30/96 +8.32% +2.63%
Inception (2/01/95) to 6/30/96 +9.34 +5.24
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
<PAGE>
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 6/30/96 +7.22% +3.22%
Inception (2/01/95) to 6/30/96 +8.19 +6.12
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Year Ended 6/30/96 +7.15% +6.15%
Inception (2/01/95) to 6/30/96 +8.14 +8.14
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Sales Charge Sales Charge**
Class D Shares*
Year Ended 6/30/96 +8.19% +2.51%
Inception (2/01/95) to 6/30/96 +9.11 +5.01
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
Average Annual
Total Returns--
Quality Bond
Portfolio
<PAGE>
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 6/30/96 +4.29% +0.12%
Inception (2/01/95) to 6/30/96 +4.67 +1.68
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 6/30/96 +3.38% -0.52%
Inception (2/01/95) to 6/30/96 +3.71 +1.66
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Year Ended 6/30/96 +3.30% +2.33%
Inception (2/01/95) to 6/30/96 +3.64 +3.64
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Sales Charge Sales Charge**
Class D Shares*
Year Ended 6/30/96 +3.93% -0.23%
Inception (2/01/95) to 6/30/96 +4.33 +1.35
<PAGE>
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
Average Annual
Total Returns--
US Government
Securities
Portfolio
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 6/30/96 + 5.79% +1.55%
Inception (2/01/95) to 6/30/96 +10.27 +7.11
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 6/30/96 +4.89% +1.04%
Inception (2/01/95) to 6/30/96 +9.36 +7.30
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Year Ended 6/30/96 +4.83% +3.87%
Inception (2/01/95) to 6/30/96 +9.30 +9.30
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
<PAGE>
% Return Without % Return With
Sales Charge Sales Charge**
Class D Shares*
Year Ended 6/30/96 + 5.61% +1.39%
Inception (2/01/95) to 6/30/96 +10.03 +6.89
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
Fundamental Value Portfolio
LATIN Shares Value Percent of
AMERICA Industries Held Investments Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
Argentina Oil--International 42,500 Yacimientos Petroliferos Fiscales
S.A.(Sponsored)(ADR)* $ 803,225 $ 892,500 2.2%
Total Investments in Latin America 803,225 892,500 2.2
MIDDLE
EAST
Israel Computer Services 30,000 Scitex Corp. Ltd. 547,891 453,750 1.1
Total Investments in the Middle East 547,891 453,750 1.1
NORTH
AMERICA
United Athletic Footwear 22,500 Reebok International Ltd. 640,048 787,500 1.9
States
Auto--Related 55,000 ++National Auto Credit, Inc. 558,579 591,250 1.4
Automotive 22,500 Ford Motor Co. 666,506 731,250 1.8
20,000 General Motors Corp. 939,670 975,000 2.3
----------- ----------- ------
1,606,176 1,706,250 4.1
<PAGE>
Banking 15,000 Bankers Trust New York Corp. 955,408 1,078,125 2.6
55,000 Hibernia Corp. (Class A) 628,783 591,250 1.4
----------- ----------- ------
1,584,191 1,669,375 4.0
Beverage & 15,000 Seagram Company Ltd. (The) 509,814 498,750 1.2
Entertainment
Cable 60,000 ++Century Communications Corp. 502,500 412,500 1.0
Conglomerates 40,000 ++ADT Ltd. 477,625 755,000 1.8
Environmental 100,000 ++Allwaste Inc. 550,879 437,500 1.0
Services
Farm & Construction 10,000 Deere & Co. 288,150 357,500 0.9
Equipment 50,500 Giddings & Lewis, Inc. 783,703 580,750 1.4
----------- ----------- ------
1,071,853 938,250 2.3
Financial Services 13,000 Student Loan Marketing Association 666,905 949,000 2.3
Home Builders 30,000 ++Beazer Homes USA, Inc. 489,300 476,250 1.1
Hotels 45,000 ++John Q. Hammons Hotels, Inc. 548,518 455,625 1.1
Information 35,000 Apple Computer, Inc. 812,900 765,625 1.8
Processing 10,000 International Business Machines Corp. 934,148 1,078,750 2.6
75,000 Tandem Computers, Inc. 817,315 787,500 1.9
----------- ----------- ------
2,564,363 2,631,875 6.3
Medical Services 83,500 ++Applied Bioscience International Inc. 451,659 782,813 1.9
Metals--Non-Ferrous 37,500 ASARCO Inc. 1,018,794 900,000 2.2
13,500 Phelps Dodge Corp. 802,607 793,125 1.9
----------- ----------- ------
1,821,401 1,693,125 4.1
Oil Refiners 65,000 Total Petroleum (North America) Ltd. 737,523 666,250 1.6
Oil--Domestic 45,000 ++American Exploration Co. 486,675 540,000 1.3
45,000 Occidental Petroleum Corp. 1,006,450 1,006,875 2.4
----------- ----------- ------
1,493,125 1,546,875 3.7
Oil--Related 35,000 ++TETRA Technologies, Inc. 451,387 651,875 1.6
<PAGE>
Paper & Forest 22,000 International Paper Co. 840,728 833,250 2.0
Products 30,000 Louisiana-Pacific Corp. 790,607 611,250 1.5
----------- ----------- ------
1,631,335 1,444,500 3.5
Pharmaceuticals 8,000 Bristol-Myers Squibb Co. 575,570 693,000 1.7
Photography 8,000 Eastman Kodak Co. 555,080 597,000 1.4
Real Estate 20,000 Camden Property Trust 450,613 485,000 1.1
Investment Trusts 30,000 Evans Withycombe Residential, Inc. 609,085 611,250 1.5
----------- ----------- ------
1,059,698 1,096,250 2.6
Retail 150,000 Charming Shoppes, Inc. 609,871 946,875 2.3
30,000 Dillard Department Stores Inc. 893,797 941,250 2.3
80,000 Hechinger Co. (Class A) 357,757 270,000 0.7
55,000 ++Woolworth Corp. 703,986 1,058,750 2.6
----------- ----------- ------
2,565,411 3,216,875 7.9
Retail/Catalog 35,000 Fingerhut Companies, Inc. 461,991 494,375 1.2
Savings & Loans 80,000 ++Greater New York Savings Bank 794,627 850,000 2.0
40,000 Klamath First Bancorp, Inc. 519,485 535,000 1.3
50,000 ++PFF Bancorp Inc. 568,750 543,750 1.3
19,100 Washington Mutual Savings Bank 399,252 692,375 1.7
----------- ----------- ------
2,282,114 2,621,125 6.3
Semiconductors 56,600 Advanced Micro Devices Inc. 886,672 686,275 1.7
25,000 Micron Technology, Inc. 727,687 468,750 1.1
40,000 ++National Semiconductor Corp. 748,917 565,000 1.4
13,500 Texas Instruments, Inc. 673,951 583,875 1.4
----------- ----------- ------
3,037,227 2,303,900 5.6
Steel 35,000 USX-US Steel Group, Inc. 1,031,507 888,125 2.1
79,700 ++WHX Corp. 828,480 767,113 1.8
----------- ----------- ------
1,859,987 1,655,238 3.9
Technology 80,000 ++Computervision Corp. 804,158 590,000 1.4
51,300 ++Exabyte Corp. 698,164 609,188 1.5
116,500 ++Micronics Computers, Inc. 490,756 276,687 0.7
30,900 ++Storage Technology Corp. 785,945 1,046,737 2.5
----------- ----------- ------
2,779,023 2,522,612 6.1
Telecommunications 45,000 ++U S West Media Group 791,295 776,250 1.9
Textiles 50,000 ++Burlington Industries, Inc. 584,361 675,000 1.6
Total Investments in North America 34,908,938 35,746,188 86.1
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
Fundamental Value Portfolio (concluded)
WESTERN Shares Value Percent of
EUROPE Industries Held Investments Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
United Conglomerates 60,000 Hanson PLC (Sponsored)(ADR)* $ 881,675 $ 765,000 1.8%
Kingdom
Total Investments in Western Europe 881,675 765,000 1.8
SHORT-TERM Face
SECURITIES Amount Issue
Commercial Paper** US$ 342,000 Ford Motor Credit Co., 5.72%
due 8/01/1996 342,000 342,000 0.8
800,000 Goldman Sachs Group L.P., 5.40%
due 9/09/1996 795,320 795,320 1.9
600,000 National Fleet Funding Corp., 5.39%
due 8/09/1996 599,281 599,281 1.5
----------- ----------- ------
1,736,601 1,736,601 4.2
US Government 1,500,000 Federal National Mortgage Association,
& Agency 5.32% due 8/13/1996 1,497,340 1,497,340 3.6
Obligations**
Total Investments in Short-Term
Securities 3,233,941 3,233,941 7.8
Total Investments $40,375,670 41,091,379 99.0
===========
Other Assets Less Liabilities 416,133 1.0
----------- ------
Net Assets $41,507,512 100.0%
=========== ======
<FN>
*American Depositary Receipts (ADR).
**Commercial Paper and certain US Government & Agency
Obligations are traded on a discount basis; the interest rates shown
are the discount rates paid at the time of purchase by the Portfolio.
++Non-income producing security.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
Global Opportunity Portfolio
Face Value Percent of
COUNTRY Amount* Foreign Government Obligations Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
Germany DM 1,700,000 Bundes Obligation, 5.875%
due 5/15/2000 $ 1,145,459 $ 1,188,383 3.6%
800,000 Bundes Republik Deutschland,
7.125% due 12/20/2002 555,585 578,043 1.8
----------- ----------- ------
1,701,044 1,766,426 5.4
Italy Buoni Poliennali del Tesoro
(Italian Government Bonds):
Lit 350,000,000 9.50% due 2/01/1999 223,829 235,384 0.7
1,090,000,000 9.50% due 2/01/2001 716,649 735,917 2.3
----------- ----------- ------
940,478 971,301 3.0
Spain Government of Spain:
Pta 35,000,000 7.40% due 7/30/1999 271,080 275,866 0.8
35,000,000 8.40% due 4/30/2001 272,681 281,165 0.9
----------- ----------- ------
543,761 557,031 1.7
Sweden Government of Sweden:
Skr 7,600,000 11% due 1/21/1999 1,256,878 1,259,306 3.8
1,600,000 10.25% due 5/05/2000 261,718 265,674 0.8
----------- ----------- ------
1,518,596 1,524,980 4.6
Total Investments in Foreign
Government Obligations 4,703,879 4,819,738 14.7
Shares
Industries Held US Stocks
<PAGE>
United Aerospace & Defense 3,100 The Boeing Company 252,616 274,350 0.8
States 3,700 Northrop Grumman Corp. 242,040 254,375 0.8
2,500 United Technologies Corporation 174,848 281,563 0.9
----------- ----------- ------
669,504 810,288 2.5
Air Transport 4,125 Delta Air Lines, Inc. 330,874 288,234 0.9
Auto--Related 5,000 ++AutoZone, Inc. 175,000 144,375 0.4
Automobile Parts 7,000 ++Lear Corporation 234,500 238,000 0.7
Automobiles 3,100 General Motors Corp. 174,761 151,125 0.5
Banking 6,000 The Bank of New York Company, Inc. 301,406 309,000 0.9
3,500 Citicorp 278,022 286,563 0.9
----------- ----------- ------
579,428 595,563 1.8
Beverages 2,600 The Coca-Cola Co. 121,257 121,875 0.4
Chemicals 4,800 PPG Industries, Inc. 238,285 236,400 0.7
Computer Sales 1,700 International Business Machines Corp. 186,823 183,388 0.6
Computer Services 3,800 cisco Systems, Inc. 169,246 196,650 0.6
3,950 Electronic Data Systems Corp. 215,034 208,856 0.6
----------- ----------- ------
384,280 405,506 1.2
Computer Software 900 ++Microsoft Corp. 100,855 105,975 0.3
5,775 Oracle Corp. (a) 187,683 225,225 0.7
----------- ----------- ------
288,538 331,200 1.0
Computers 2,000 ++COMPAQ Computer Corp. 84,891 109,500 0.3
Diversified 7,500 Corning Inc. 228,519 276,563 0.8
Electrical Equipment 3,500 General Electric Company PLC 275,501 288,313 0.9
Electronics 4,200 INTEL Corporation 269,457 315,000 1.0
2,800 ++Lexmark International
Group, Inc. (Class A) 59,033 44,450 0.1
----------- ----------- ------
328,490 359,450 1.1
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Global Opportunity Portfolio (continued)
Shares Value Percent of
COUNTRY Industries Held US Stocks Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
United Engineering & 7,000 Foster Wheeler Corporation $ 305,063 $ 301,875 0.9%
States Construction
(concluded)
Farm Equipment 8,100 Deere & Company 338,890 289,575 0.9
Financial Services 6,550 American Express Company 304,845 286,563 0.9
300 Associates First Capital Corp. 8,700 11,513 0.0
3,900 First Data Corp. 276,600 302,737 0.9
----------- ----------- ------
590,145 600,813 1.8
Foods 600 H.J. Heinz Company 19,767 19,875 0.1
Hardware Products 400 The Stanley Works 7,664 11,400 0.0
Health Care--HMOs 7,400 ++Humana Inc. 149,218 123,950 0.4
Hospital Supplies 6,700 Abbott Laboratories 263,633 294,800 0.9
5,300 Baxter International, Inc. 248,564 220,612 0.7
----------- ----------- ------
512,197 515,412 1.6
Household Products 2,000 The Procter & Gamble Company 168,471 178,750 0.5
Insurance 3,650 Aetna Inc. (c) 275,913 212,156 0.6
5,600 Allstate Corp. 238,553 250,600 0.8
----------- ----------- ------
514,466 462,756 1.4
Leisure & Tourism 6,000 Carnival Corporation 169,534 161,250 0.5
2,421 Viacom, Inc. (Class B) 90,615 84,735 0.3
----------- ----------- ------
260,149 245,985 0.8
Machinery 4,000 ++American Standard Companies, Inc. 130,473 128,500 0.4
Machinery & Machine 5,100 Cincinnati Milacron, Inc. 128,780 100,725 0.3
Tools
Manufacturing 6,000 Fisher Scientific International Inc. 188,659 233,250 0.7
Natural Gas 7,300 Enron Corp. 278,011 287,437 0.9
<PAGE>
Oil Service 8,500 Dresser Industries, Inc. 178,222 229,500 0.7
2,100 Schlumberger Ltd. 132,364 168,000 0.5
----------- ----------- ------
310,586 397,500 1.2
Paper 3,200 Kimberly-Clark Corp. 246,051 243,200 0.7
Petroleum 5,600 Pennzoil Company 224,031 275,100 0.8
7,100 Unocal Corp. 238,728 231,637 0.7
----------- ----------- ------
462,759 506,737 1.5
Pharmaceuticals 4,500 Merck & Co., Inc. 257,848 289,125 0.9
Photography 2,300 Eastman Kodak Company 126,086 171,637 0.5
Pollution Control 8,600 Wheelabrator Technologies Inc. 134,127 119,325 0.4
Railroads 1,700 Conrail, Inc. 119,198 111,350 0.3
Real Estate 10,000 Spieker Properties, Inc. 263,505 285,000 0.9
Retail Apparel 8,200 The Limited, Inc. 182,835 157,850 0.5
Retail Trade 4,400 Sears, Roebuck & Co. 191,869 180,400 0.6
Steel 5,600 AK Steel Holding Corp. 230,865 205,100 0.6
Technology 1,500 Sun Microsystems, Inc. 94,575 81,750 0.3
Telecommunications 3,700 AT&T Corp. 191,509 192,862 0.6
3,600 Bell Atlantic Corporation 205,486 212,850 0.6
1,700 Lucent Technologies, Inc. 45,900 63,112 0.2
1,255 TCI Pacific Communications
(Convertible Preferred) 118,879 109,185 0.3
----------- ----------- ------
561,774 578,009 1.7
Tobacco 2,700 Philip Morris Companies, Inc. 262,364 282,487 0.9
Total Investments in US Stocks 11,337,046 11,649,553 35.5
Foreign Stocks
Argentina Banking 14,880 Banco de Galicia y Buenos Aires
S.A. (ADR)** 298,216 319,920 1.0
12,250 Banco Frances del Rio de la Plata
S.A. (ADR)** 266,333 292,469 0.9
----------- ----------- ------
564,549 612,389 1.9
<PAGE>
Petroleum 15,200 Yacimientos Petroliferos Fiscales
S.A.(Sponsored) (ADR)** 315,268 319,200 1.0
Total Stocks in Argentina 879,817 931,589 2.9
Brazil Beverages 500,000 Companhia Cervejaria Brahma S.A.
PN (Preferred) 273,436 306,345 0.9
Telecommunications 4,600 Telecomunicacoes Brasileiras
S.A.--Telebras PN (ADR)** 243,225 333,500 1.0
Total Stocks in Brazil 516,661 639,845 1.9
Canada Automotive Parts 6,300 Magna International, Inc. 286,282 280,350 0.9
Conglomerates 15,800 Canadian Pacific, Ltd. 267,558 343,650 1.0
Fertilizers 5,300 Potash Corp. of Saskatchewan, Inc. 358,645 358,412 1.1
Telecommunications 10,000 Northern Telecom Ltd. 456,173 470,000 1.4
Equipment
Total Stocks in Canada 1,368,658 1,452,412 4.4
Finland Paper & Forest 13,000 ++UPM-Kymmene Corp. (b) 268,348 285,361 0.9
Products
Telecommunications & 8,300 Nokia Corp. AB (ADR)** 304,351 292,575 0.9
Equipment
Transportation 9,000 Finnlines OY 167,834 179,507 0.5
Total Stocks in Finland 740,533 757,443 2.3
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Global Opportunity Portfolio (continued)
Shares Value Percent of
COUNTRY Industries Held Foreign Stocks Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
France Semi-Conductor 2,000 ++SGS-Thompson Microelectronics
Capital Equipment N.V. (NY Registered Shares) (ADR)** $ 69,055 $ 69,000 0.2%
<PAGE>
Steel 18,600 Usinor-Sacilor S.A. 298,997 259,600 0.8
Tires 5,500 Compagnie Generale des Establissements
Michelin S.A. (Class B) 246,934 249,605 0.8
Total Stocks in France 614,986 578,205 1.8
Germany Chemicals 600 ++Henkel KGaA 26,670 24,986 0.1
5,400 Henkel KGaA (Preferred) 229,478 217,541 0.7
----------- ----------- ------
256,148 242,527 0.8
Electronics 4,950 Siemens AG 250,080 261,287 0.8
Machinery & Equipment 750 Mannesmann AG 234,578 269,276 0.8
Total Stocks in Germany 740,806 773,090 2.4
Hong Kong Banking 20,000 HSBC Holdings PLC 312,430 319,419 1.0
Telecommunications 19,000 Hong Kong Telecommunications Ltd.
(ADR)** 352,215 313,500 0.9
Total Stocks in Hong Kong 664,645 632,919 1.9
Indonesia Telecommunications 11,000 P.T. Indonesian Satellite Corp.
(ADR)** 367,699 335,500 1.0
Total Stocks in Indonesia 367,699 335,500 1.0
Italy Machinery 71,000 Danieli & Co. 266,366 228,510 0.7
Telecommunications 88,600 Societa Finanziara Telefonica
S.p.A. (STET) 253,451 268,860 0.8
Total Stocks in Italy 519,817 497,370 1.5
Japan Building & 34,000 Maeda Corp. 357,334 321,385 1.0
Construction 40,000 Okumura Corp. 367,731 317,080 1.0
----------- ----------- ------
725,065 638,465 2.0
Capital Goods 33,000 Mitsubishi Heavy Industries, Ltd. 248,739 279,504 0.8
<PAGE>
Consumer--Electronics 5,000 Rohm Company Ltd. 270,107 299,485 0.9
Electrical Equipment 46,000 Mitsubishi Electric Corp. 335,869 301,357 0.9
Electronics 15,000 Canon Inc. 265,695 283,575 0.9
18,000 Matsushita Electric Industrial Co., Ltd. 285,871 313,336 1.0
----------- ----------- ------
551,566 596,911 1.9
Financial Services 16,000 Nomura Securities Co., Ltd. 322,526 280,019 0.9
Insurance 19,000 Tokio Marine & Fire Insurance Co., Ltd. 219,890 236,500 0.7
Pharmaceuticals 16,000 Eisai Co., Ltd. 299,025 294,993 0.9
Textiles 37,000 Toray Industries Inc. 242,411 251,399 0.8
Warehouse & Storage 36,000 Mitsui-Soko Co., Ltd. 307,384 303,229 0.9
Total Stocks In Japan 3,522,582 3,481,862 10.7
Mexico Beverages 7,300 Panamerican Beverages Inc. (Class A) 295,877 314,812 1.0
Conglomerates 12,800 Grupo Carso, S.A. de C.V. (ADR)** 203,727 99,200 0.3
Multi-Industry 12,800 ++Invercorporacion S.A. (ADR)** 1,792 1,664 0.0
Paper & Forest 15,300 Kimberly-Clark de Mexico, S.A. de C.V. 272,751 257,863 0.8
Producers
Telecommunications 12,800 ++Global Telecommunications
Solutions, Inc. (ADR)** 60,800 72,000 0.2
Total Stocks in Mexico 834,947 745,539 2.3
Netherlands Petroleum 2,125 Royal Dutch Petroleum N.V. (ADR)** 283,345 320,609 1.0
Total Stocks in the Netherlands 283,345 320,609 1.0
Philippines Beverages 82,000 San Miguel Corp. (Class B) 272,811 231,869 0.7
Total Stocks in the Philippines 272,811 231,869 0.7
South Korea Engineering & 4,900 ++Hyundai Engineering & Construction Co.,
Construction Ltd. (GDR)***(d) 63,847 60,025 0.2
Total Stocks in South Korea 63,847 60,025 0.2
<PAGE>
Spain Petroleum 9,400 Repsol S.A. (ADR)** 308,300 313,725 0.9
Total Stocks in Spain 308,300 313,725 0.9
Sweden Banking 22,500 Sparbanken Sverige AB (Class A) 286,305 270,703 0.8
Investment Management 18,300 Bure Investment AB 159,341 159,244 0.5
Total Stocks in Sweden 445,646 429,947 1.3
Switzerland Electrical Equipment 250 BBC Brown Boveri & Cie (Bearer) 260,449 296,009 0.9
Pharmaceuticals 6,000 Sandoz AG (ADR)** 285,354 336,000 1.0
Total Stocks in Switzerland 545,803 632,009 1.9
United Beverages 41,600 Grand Metropolitan PLC 287,494 284,572 0.9
Kingdom
Chemicals 7,500 Imperial Chemical Industries PLC (ADR)** 389,042 349,687 1.0
Electrical Equipment 50,500 General Electric Co. PLC (Ordinary) 265,728 297,562 0.9
Pharmaceuticals 21,000 Glaxo Wellcome PLC 285,670 292,043 0.9
Steel 109,000 British Steel PLC 289,013 300,796 0.9
Total Stocks in the United Kingdom 1,516,947 1,524,660 4.6
Total Investments in Foreign Stocks 14,207,850 14,338,618 43.7
Total Investments in US & Foreign
Stocks 25,544,896 25,988,171 79.2
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
Global Opportunity Portfolio (concluded)
<PAGE>
SHORT-TERM Face Value Percent of
SECURITIES Amount Short-Term Securities Cost (Note 1a) Net Assets
<S> <C> <S> <C> <C> <C>
US Government & US$1,595,000 Federal Home Loan Bank, 5.62%
Agency due 8/01/1996 $ 1,595,000 $ 1,595,000 4.9%
Obligations****
Total Investments in Short-Term
Securities 1,595,000 1,595,000 4.9
Total Investments $31,843,775 32,402,909 98.8
===========
Other Assets Less Liabilities 399,485 1.2
----------- ------
Net Assets $32,802,394 100.0%
=========== ======
<FN>
*Denominated in US dollars unless otherwise indicated.
**American Depositary Receipts (ADR).
***Global Depositary Receipts (GDR).
****Certain US Government & Agency Obligations are traded on a
discount basis; the interest rate shown is the discount rate paid at
the time of purchase by the Portfolio.
++Non-income producing security.
(a)Name changed from Oracle Systems Corp.
(b)Name changed as a result of the merger of Kymmene Corporation and
Repola Ltd.
(c)Name changed from Aetna Life & Casualty Co.
(d)Restricted securities as to resale. The value of the Portfolio's
investment in restricted securities was approximately $60,000,
representing 0.2% of net assets.
Acquisition Value
Issue Date Cost (Note 1a)
Hyundai Engineering &
Construction Co., Ltd. (GDR) 3/19/1996 $63,847 $60,025
Total $63,847 $60,025
======= =======
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
Growth Opportunity Portfolio
Shares Value Percent of
Industries Held Common Stocks Cost (Note 1a) Net Assets
<S> <C> <S> <C> <C> <C>
Advertising 3,400 Interpublic Group of Companies, Inc. $ 153,631 $ 150,025 1.8%
Banking & Financial 3,000 State Street Boston Corp. 149,607 150,750 1.9
800 Wells Fargo & Co. 197,899 186,300 2.3
----------- ----------- ------
347,506 337,050 4.2
Beverages 5,000 The Coca-Cola Company 206,258 234,375 2.9
7,400 PepsiCo, Inc. 231,650 234,025 2.9
----------- ----------- ------
437,908 468,400 5.8
Chemical Producers 300 Duracell International, Inc. 14,984 13,538 0.2
Computer Software 3,300 ++Compuserve Corporation 101,087 39,600 0.5
4,875 Computer Associates International, Inc. 236,451 248,016 3.1
1,000 ++Microsoft Corp. 96,625 117,750 1.4
6,500 ++Oracle Corp. (a) 214,710 253,500 3.1
----------- ----------- ------
648,873 658,866 8.1
Computers 1,575 ++COMPAQ Computer Corp. 80,784 86,231 1.1
Cosmetics 3,800 Gillette Company (The) 204,903 241,775 3.0
100 International Flavors & Fragrances Inc. 4,970 4,275 0.0
----------- ----------- ------
209,873 246,050 3.0
Electrical Equipment 100 Emerson Electric Company 8,482 8,438 0.1
3,000 General Electric Co. 236,522 247,125 3.0
----------- ----------- ------
245,004 255,563 3.1
Electronics 500 Intel Corp. 30,227 37,500 0.5
Energy 3,000 Enron Corp. 109,969 118,125 1.5
Entertainment 3,400 ++Viacom, Inc. (Class A) 136,388 116,450 1.4
2,400 Walt Disney Co. 150,131 133,500 1.7
----------- ----------- ------
286,519 249,950 3.1
Financial Services 7,800 Federal National Mortgage Association 247,502 247,650 3.1
6,000 The Travelers Group, Inc. 257,873 253,500 3.1
----------- ----------- ------
505,375 501,150 6.2
<PAGE>
Food 3,500 ConAgra, Inc. 153,460 148,750 1.8
6,500 Sara Lee Corp. 212,915 208,000 2.6
100 Wrigley (Wm.) Jr. Co. 5,919 5,163 0.1
----------- ----------- ------
372,294 361,913 4.5
Food Merchandising 1,000 Albertson's, Inc. 35,697 41,000 0.5
Hotels 1,000 Marriott International, Inc. 46,921 51,375 0.6
Household Durables 3,000 Rubbermaid, Inc. 88,197 86,250 1.1
Household Products 500 Colgate-Palmolive Co. 37,260 39,250 0.5
2,500 Kimberly-Clark Corp. 191,350 190,000 2.4
2,850 The Procter & Gamble Company 241,104 254,719 3.1
----------- ----------- ------
469,714 483,969 6.0
Information Processing 2,200 Electronic Data Systems Corp. (b) 120,013 116,325 1.4
3,200 First Data Corp. 227,013 248,400 3.1
----------- ----------- ------
347,026 364,725 4.5
Insurance 1,500 Aetna Inc. (c) 106,677 87,188 1.1
1,000 American International Group, Inc. 93,909 94,125 1.1
4,500 Travelers/Aetna Property
Casualty Corp. 114,570 120,937 1.5
----------- ----------- ------
315,156 302,250 3.7
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
Growth Opportunity Portfolio
Shares Value Percent of
Industries Held Common Stocks Cost (Note 1a) Net Assets
<S> <C> <S> <C> <C> <C>
Leisure 3,500 Polygram N.V. (NY Registered
Shares) $ 205,850 $ 196,437 2.4%
Medical Technology 5,600 Johnson & Johnson 263,307 267,400 3.3
Oil & Services 1,000 Schlumberger, Ltd. 83,041 80,000 1.0
Pharmaceuticals 4,000 ++Amgen, Inc. 238,125 218,500 2.7
4,000 Merck & Co., Inc. 260,258 257,000 3.2
3,500 Pfizer, Inc. 240,962 244,562 3.0
1,000 Pharmacia & Upjohn, Inc. 39,060 41,250 0.5
2,800 Schering-Plough Corp. 156,870 154,350 1.9
5,000 SmithKline Beecham PLC (ADR)* 267,521 268,750 3.3
----------- ----------- ------
1,202,796 1,184,412 14.6
<PAGE>
Photography 1,200 Eastman Kodak Co. 89,634 89,550 1.1
Pollution Control 500 WMX Technologies, Inc. 14,160 14,812 0.2
Restaurants 350 McDonald's Corp. 18,356 16,231 0.2
Retail--Specialty 750 ++Staples, Inc. 13,000 12,375 0.1
Retail Stores 1,450 Wal-Mart Stores, Inc. 32,286 34,800 0.4
Telecommunications 3,500 MCI Communications Corp. 87,675 85,750 1.1
Toys 4,350 Hasbro, Inc. 163,402 156,056 1.9
Travel & Lodging 1,000 Carnival Corporation (Class A) 26,786 26,875 0.3
Total Investments in Common Stocks 6,945,951 6,978,628 86.1
Face
Amount Short-Term Securities
US Government & $1,245,000 Federal Home Loan Bank, 5.62%
Agency Obligations** due 8/01/1996 1,245,000 1,245,000 15.4
Total Investments in Short-Term
Securities 1,245,000 1,245,000 15.4
Total Investments $ 8,190,951 8,223,628 101.5
===========
Liabilities in Excess of Other Assets (119,881) (1.5)
----------- ------
Net Assets $ 8,103,747 100.0%
=========== ======
<FN>
*American Depositary Receipts (ADR).
**Certain US Government & Agency Obligations are traded on a
discount basis; the interest rate shown is the discount rate paid at
the time of purchase by the Fund.
(a)Name changed from Oracle Systems Corp.
(b)Name changed from General Motors Corp. (Class E).
(c)Name changed from Aetna Life & Casualty Co.
++Non-income producing security.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
Quality Bond Portfolio
S&P Moody's Face Value
INDUSTRIES Ratings Ratings Amount Bonds & Notes Cost (Note 1a)
<S> <S> <S> <C> <S> <C> <C>
Asset-Backed AAA Aaa $150,000 Banc One Credit Card Master Trust,
Securities--1.9% Series B, 7.55% due 12/15/1999 $ 152,748 $ 152,297
Banking--21.8% AA- Aa3 150,000 Banc One Milwaukee, 6.625% due 4/15/2003 156,155 144,834
BBB+ A3 115,000 ++Bangkok Metropolitan Bank Public
Co. Ltd., 7.25% due 9/15/2005 113,956 110,264
A- A2 250,000 Bank of New York Company Inc. (The), 7.875%
due 11/15/2002 276,675 257,955
A+ A1 250,000 BankAmerica Corp., 6.65% due 5/01/2001 249,863 247,009
A- A3 150,000 First Bank System, Inc., 6.875% due 9/15/2007 148,611 142,455
A A2 253,000 First Chicago Corp., 9% due 6/15/1999 268,428 265,721
A A2 150,000 Mellon Bank Corporation, 7% due 3/15/2006 150,539 145,008
A A2 200,000 NationsBank Corp., 7% due 5/15/2003 199,200 197,876
AA- Aa3 250,000 Norwest Corporation, 6.75% due 5/12/2000 249,627 249,193
---------- ----------
1,813,054 1,760,315
Financial A A2 200,000 Bear Stearns Co., 6.75% due 8/15/2000 198,730 198,492
Services--5.9% A A2 150,000 Dean Witter, Discover & Co., 6.30%
due 1/15/2006 149,340 137,906
A- A3 150,000 Smith Barney Holdings, Inc., 6.875%
due 6/15/2005 148,485 143,868
---------- ----------
496,555 480,266
Financial A+ A1 200,000 Ford Motor Credit Co., 6.25% due 11/08/2000 199,154 194,576
Services-- A- A3 200,000 General Motors Acceptance Corp., 6.70%
Captive--4.9% due 4/18/1997 203,006 200,714
---------- ----------
402,160 395,290
Financial A+ A1 200,000 American General Finance Corp.,
Services-- 7.70% due 11/15/1997 203,396 202,874
Consumer--5.9% AA- Aa3 200,000 Associates Corp. of North America, 5.25%
due 9/01/1998 193,918 194,870
A+ Aa3 75,000 CIT Group Holdings, Inc., 7% due 9/30/1997 75,608 75,590
---------- ----------
472,922 473,334
<PAGE>
Industrial-- AA- A1 100,000 Anheuser-Busch Co., Inc., 8.75% due 12/01/1999 107,905 105,735
Consumer Goods-- A+ A1 100,000 Bass America, Inc., 8.125% due 3/31/2002 105,928 104,872
6.5% A- A2 100,000 Sears, Roebuck & Co., 9.25% due 4/15/1998 106,444 104,309
AA A2 200,000 Wal-Mart Stores, Inc., 8.50% due 9/15/2024 207,350 209,434
---------- ----------
527,627 524,350
Industrial-- AA- Aa3 175,000 BP America Inc., 9.375% due 11/01/2000 200,263 190,600
Energy--4.8% A+ A1 175,000 Texaco Capital Inc., 8.625% due 11/15/2031 205,665 194,948
---------- ----------
405,928 385,548
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
Quality Bond Portfolio
S&P Moody's Face Value
INDUSTRIES Ratings Ratings Amount Bonds & Notes Cost (Note 1a)
<S> <S> <S> <C> <S> <C> <C>
Industrial-- AA- Aa2 $100,000 Archer-Daniels-Midland Co., 8.125%
Other--8.4% due 6/01/2012 $ 111,874 $ 105,675
A A3 150,000 Carnival Cruise Lines, Inc., 7.70%
due 7/15/2004 156,745 149,987
BBB+ A3 100,000 Harris Corp., 7% due 1/15/2026 99,503 89,629
A- A3 90,000 IBP, Inc., 6.125% due 2/01/2006 82,690 82,464
BBB+ A3 250,000 Lockheed Martin Corp., 6.55% due 5/15/1999 249,880 248,843
---------- ----------
700,692 676,598
Supranational-- AAA Aaa 200,000 Asian Development Bank, 6.125% due 3/09/2004 198,300 190,746
5.0% AAA Aaa 166,000 International Bank for Reconstruction &
Development, 12.375% due 10/15/2002 222,483 210,616
---------- ----------
420,783 401,362
US Government US Treasury Notes:
Obligations--8.5% AAA Aaa 150,000 7.125% due 10/15/1998 158,086 152,671
AAA Aaa 200,000 6.375% due 5/15/1999 199,781 200,000
AAA Aaa 200,000 6.25% due 2/15/2003 198,625 195,624
AAA Aaa 150,000 6.25% due 8/15/2023 137,859 135,117
---------- ----------
694,351 683,412
<PAGE>
Utilities-- A A2 200,000 Central Power & Light Co., 6% due 10/01/1997 200,622 199,252
Electric--9.6% AA- A1 250,000 Northern States Power Company, 7.125%
due 7/01/2025 254,800 236,938
A- A3 180,000 Public Service Electric & Gas Co., 7.125%
due 11/01/1997 181,514 181,044
A A2 150,000 Virginia Electric & Power Co., 8.625%
due 10/01/2024 166,200 158,133
---------- ----------
803,136 775,367
Yankees-- A A3 250,000 Mass Transit Railway Corp., 7.25% due 10/01/2005 260,325 240,605
Corporate--4.2% A+ A2 100,000 Pohang Iron & Steel Company, Ltd., 7.375%
due 5/15/2005 101,816 97,748
---------- ----------
362,141 338,353
Yankees-- A+ A2 150,000 Province of Quebec, 7.125% due 2/09/2024 150,195 136,671
Sovereign--1.7%
Total Investments in Bonds & Notes--89.1% 7,402,292 7,183,163
SHORT-TERM
SECURITIES Issue
US Government & 595,000 Federal Home Loan Bank, 5.62% due 8/01/1996 595,000 595,000
Agency
Obligations*--7.4%
Total Investments in Short-Term Securities--7.4% 595,000 595,000
Total Investments--96.5% $7,997,292 7,778,163
==========
Other Assets Less Liabilities--3.5% 278,804
----------
Net Assets--100.0% $8,056,967
==========
<FN>
*Certain US Government & Agency Obligations are traded on a discount
basis; the interest rates shown are the discount rates paid at the
time of purchase by the Portfolio.
++Restricted securities as to resale. The value of the Fund's
investment in restricted securities was approximately $110,000,
representing 1.4% of net assets.
<PAGE>
Acquisition Value
Issue Date Cost (Note 1a)
Bangkok Metropolitan Bank Public
Co. Ltd., 7.25% due 9/15/2005 9/22/1995 $113,956 $110,264
Total $113,956 $110,264
======== ========
See Notes to Financial Statements.
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
US Government Securities Portfolio
Face Interest Maturity Value
Issue Amount Rate Date(s) (Note 1a)
<S> <S> <C> <C> <C> <C>
US Government & Federal Home Loan Mortgage Corporation $1,653,434 11.50 % 6/01/2019 $ 1,860,559
Agency Federal Home Loan Mortgage Corporation 1,912,301 7.50 8/01/2025-10/01/2025 1,883,004
Mortgage-Backed Federal Home Loan Mortgage Corporation 1,002,874 7.00 9/01/2025-5/01/2026 963,070
Obligations*-- Federal Home Loan Mortgage Corporation 2,890,320 6.50 2/01/2011-1/01/2020 2,786,815
89.1% Government National Mortgage Association 1,860,431 7.50 12/15/2022-10/01/2025 1,828,225
Total US Government & Agency Mortgage-Backed Obligations (Cost--$9,442,420) 9,321,673
US Government & US Treasury STRIPS*** 1,000,000 5.476++ 8/15/2000 770,990
Agency
Obligations--7.4%
Total US Government & Agency Obligations (Cost--$795,174) 770,990
Face Amount Issue
Repurchase $1,240,000 Nikko Securities Company, purchased on7/31/1996 to yield 5.65% to 8/01/1996 1,240,000
Agreements**--
11.8%
Total Repurchase Agreements (Cost--$1,240,000) 1,240,000
Total Investments (Cost--$11,477,594)--108.3% 11,332,663
Liabilities in Excess of Other Assets--(8.3%) (864,043)
-----------
Net Assets--100.0% $10,468,620
<PAGE> ===========
<FN>
++Represents the yield-to-maturity on this zero coupon issue.
*Mortgage-Backed Obligations are subject to principal paydowns as a
result of prepayments or refinancing of the underlying mortgage
instruments. As a result, the average life may be substantially less
than the original maturity.
**Repurchase Agreements are fully collateralized by US Government &
Agency Obligations.
***STRIPS--Separate Trading of Registered Interest and Principal of
Securities.
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENTS OF ASSETS AND LIABILITIES
<CAPTION>
US
Fundamental Global Growth Quality Government
Value Opportunity Opportunity Bond Securities
As of July 31, 1996 Portfolio Portfolio Portfolio Portfolio Portfolio
<S> <S> <C> <C> <C> <C> <C>
Assets: Investments, at value*
(Note 1a) $41,091,379 $32,402,909 $ 8,223,628 $ 7,778,163 $11,332,663
Foreign cash (Note 1c) -- 54,721 -- -- --
Cash 887 969 3,720 3,564 --
Receivables:
Securities sold 368,807 164,340 -- -- --
Capital shares sold 156,213 121,248 100,672 38,720 13,577
Interest -- 161,372 -- 138,606 74,326
Investment adviser
(Note 2) -- -- -- 56,331 61,150
Dividends 26,013 105,295 10,015 -- --
Principal paydowns -- -- -- -- 25,417
Forward foreign
exchange contracts
(Note 1b) -- 21,180 -- -- --
Deferred organization
expenses (Note 1f) 29,653 69,189 23,240 16,995 37,149
Prepaid registration
fees and other assets
(Note 1f) 112,774 251,547 96,900 92,236 164,801
----------- ----------- ----------- ----------- -----------
Total assets 41,785,726 33,352,770 8,458,175 8,124,615 11,709,083
----------- ----------- ----------- ----------- -----------
<PAGE>
Liabilities: Payables:
Securities purchased 80,011 301,184 196,096 -- 965,184
Capital shares
redeemed. 34,306 38,504 1,617 3,800 101,910
Distributor (Note 2) 35,309 28,134 6,655 3,613 3,465
Dividends to shareholders
(Note 1g) -- -- -- 18,129 23,381
Investment adviser
(Note 2) 24,499 10,074 680 -- --
Accrued expenses and
other liabilities 104,089 172,480 149,380 42,106 146,523
----------- ----------- ----------- ----------- -----------
Total liabilities 278,214 550,376 354,428 67,648 1,240,463
----------- ----------- ----------- ----------- -----------
Net Assets: Net assets $41,507,512 $32,802,394 $ 8,103,747 $ 8,056,967 $10,468,620
=========== =========== =========== =========== ===========
Net Assets Class A Common Stock,
Consist of: $0.10 par value++ $ 1,273 $ 905 $ 355 $ 22,115 $ 47,949
Class B Common Stock,
$0.10 par value++++ 224,571 218,191 51,784 40,347 38,383
Class C Common Stock,
$0.10 par value++++++ 93,079 73,222 24,590 17,087 14,494
Class D Common Stock,
$0.10 par value++++++++ 27,069 18,370 4,660 3,447 2,688
Paid-in capital in
excess of par. 38,098,683 31,761,063 8,014,383 8,188,456 10,437,270
Undistributed (accumulated)
investment income (loss)
--net (167,979) 21,197 (29,976) -- --
Undistributed realized
capital gains on
investments and foreign
currency transactions
--net 2,515,107 147,561 5,274 4,644 72,767
Unrealized appreciation
(depreciation) on
investments and foreign
currency transactions
--net 715,709 561,885 32,677 (219,129) (144,931)
----------- ----------- ----------- ----------- -----------
Net assets $41,507,512 $32,802,394 $ 8,103,747 $ 8,056,967 $10,468,620
=========== =========== =========== =========== ===========
Net Asset Value: Class A: Net assets $ 154,980 $ 96,432 $ 35,447 $ 2,147,684 $ 4,849,471
=========== =========== =========== =========== ===========
Shares outstanding 12,731 9,048 3,547 221,149 479,489
=========== =========== =========== =========== ===========
Net asset value
and redemption
price per share $ 12.17 $ 10.66 $ 9.99 $ 9.71 $ 10.11
=========== =========== =========== =========== ===========
Class B: Net assets $26,914,733 $23,028,962 $ 5,154,914 $ 3,916,325 $ 3,881,746
=========== =========== =========== =========== ===========
<PAGE> Shares outstanding 2,245,707 2,181,912 517,835 403,473 383,833
=========== =========== =========== =========== ===========
Net asset value
and redemption
price per share $ 11.98 $ 10.55 $ 9.95 $ 9.71 $ 10.11
=========== =========== =========== =========== ===========
Class C: Net assets $11,152,010 $ 7,722,401 $ 2,447,461 $ 1,658,404 $ 1,465,404
=========== =========== =========== =========== ===========
Shares outstanding 930,787 732,220 245,901 170,867 144,935
=========== =========== =========== =========== ===========
Net asset value
and redemption
price per share $ 11.98 $ 10.55 $ 9.95 $ 9.71 $ 10.11
=========== =========== =========== =========== ===========
Class D: Net assets $ 3,285,789 $ 1,954,599 $ 465,925 $ 334,554 $ 271,999
=========== =========== =========== =========== ===========
Shares outstanding 270,685 183,702 46,598 34,467 26,884
=========== =========== =========== =========== ===========
Net asset value
and redemption
price per share $ 12.14 $ 10.64 $ 10.00 $ 9.71 $ 10.12
=========== =========== =========== =========== ===========
*Identified cost $40,375,670 $31,843,775 $ 8,190,951 $ 7,997,292 $11,477,594
=========== =========== =========== =========== ===========
++Authorized shares--
Class A 6,250,000 6,250,000 6,250,000 6,250,000 6,250,000
=========== =========== =========== =========== ===========
++++Authorized shares--
Class B 6,250,000 6,250,000 6,250,000 6,250,000 6,250,000
=========== =========== =========== =========== ===========
++++++Authorized shares--
Class C 6,250,000 6,250,000 6,250,000 6,250,000 6,250,000
=========== =========== =========== =========== ===========
++++++++Authorized shares--
Class D 6,250,000 6,250,000 6,250,000 6,250,000 6,250,000
=========== =========== =========== =========== ===========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENTS OF OPERATIONS
<CAPTION>
Fundamental Global Growth Quality US Government
For the Six Months Value Opportunity Opportunity Bond Securities
Ended July 31, 1996 Portfolio Portfolio Portfolio++ Portfolio Portfolio
<S> <S> <C> <C> <C> <C> <C>
Investment Income Interest and discount
(Notes 1d & 1e): earned* $ 117,536 $ 366,335 $ 33,559 $ 240,630 $ 337,930
Dividends** 282,822 273,667 37,798 -- --
----------- ----------- ----------- ----------- -----------
Total income 400,358 640,002 71,357 240,630 337,930
----------- ----------- ----------- ----------- -----------
Expenses: Registration fees
(Note 1f) 37,414 110,582 27,065 55,532 81,443
Investment advisory
fees (Note 2) 125,949 110,641 20,286 18,011 25,331
Account maintenance and
distribution fees--Class B
(Note 2) 127,101 102,571 15,721 12,837 13,161
Transfer agent fees--Class B
(Note 2) 67,153 57,488 10,938 7,845 5,359
Account maintenance and
distribution fees--Class C
(Note 2) 50,594 32,817 7,185 5,515 5,072
Printing and shareholder
reports 41,714 35,201 4,872 8,814 7,051
Accounting services (Note 2) 37,539 28,414 7,658 5,750 2,456
Transfer agent fees--Class C
(Note 2) 28,061 19,535 5,316 3,290 2,024
Professional fees 20,590 17,276 1,191 7,172 7,421
Custodian fees. 9,384 15,291 6,459 5,796 6,508
Amortization of organization
expenses (Note 1f) 3,274 7,801 1,990 2,129 4,714
Transfer agent fees--Class A
(Note 2) 309 1,538 4,396 3,612 5,908
Transfer agent fees--Class D
(Note 2) 6,712 4,172 946 472 255
Directors' fees and expenses 4,743 3,877 397 1,131 1,636
Account maintenance fees--
Class D (Note 2) 3,841 2,258 404 348 281
Pricing fees (Note 2) 85 2,381 51 1,232 734
Other 3,874 2,834 416 3,037 2,326
----------- ----------- ----------- ----------- -----------
Total expenses before
reimbursement 568,337 554,677 115,291 142,523 171,680
Reimbursement of expenses
(Note 2) -- (48,228) (13,958) (123,823) (153,166)
----------- ----------- ----------- ----------- -----------
Total expenses after
reimbursement 568,337 506,449 101,333 18,700 18,514
----------- ----------- ----------- ----------- -----------
Investment income (loss)
--net (167,979) 133,553 (29,976) 221,930 319,416
----------- ----------- ----------- ----------- -----------
<PAGE>
Realized & Realized gain (loss)
Unrealized from: Investments--net 2,780,906 413,606 5,274 (26,863) 688
Gain (Loss) on Foreign currency
Investments & transactions--net -- (62,011) -- -- --
Foreign Currency Change in unrealized
Transactions--Net appreciation (depreciation)
(Notes 1b, 1c, on:
1e & 3): Investments--net (1,652,221) (1,128,601) 32,677 (355,878) (350,770)
Foreign currency
transactions--net -- (15,795) -- -- --
----------- ----------- ----------- ----------- -----------
Net realized and
unrealized gain (loss) on
investments and foreign
currency transactions 1,128,685 (792,801) 37,951 (382,741) (350,082)
----------- ----------- ----------- ----------- -----------
Net Increase (Decrease)
in Net Assets Resulting
from Operations $ 960,706 $ (659,248) $ 7,975 $ (160,811) $ (30,666)
=========== =========== =========== =========== ===========
*Net of foreign
withholding tax on
interest $ 6,000 $ 2,623 $ -- $ -- $ --
=========== =========== =========== =========== ===========
**Net of foreign
withholding tax on
dividends $ -- $ 17,997 $ 527 $ -- $ --
=========== =========== =========== =========== ===========
<FN>
++Commenced Operations on February 2, 1996.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
Fundamental Global Opportunity
Value Portfolio Portfolio
For the Six For the For the Six For the
Months Ended Year Ended Months Ended Year Ended
Increase (Decrease) in Net Assets: July 31, 1996 Jan. 31, 1996++ July 31, 1996 Jan. 31, 1996++
<S> <S> <C> <C> <C> <C>
Operations: Investment income (loss)--net $ (167,979) $ (81,282) $ 133,553 $ 363,179
Realized gain (loss) on investments and
foreign currency transactions--net 2,780,906 563,770 351,595 (132,463)
Change in unrealized appreciation
(depreciation) on investments and foreign
currency transactions--net (1,652,221) 2,367,930 (1,144,396) 1,706,281
----------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations 960,706 2,850,418 (659,248) 1,936,997
----------- ----------- ----------- -----------
Dividends & Investment income--net:
Distributions to Class A -- -- -- (90,788)
Shareholders Class B -- -- -- (193,635)
(Note 1g): Class C -- -- -- (56,404)
Class D -- -- -- (22,352)
In excess of investment income--net:
Class A -- -- -- (28,087)
Class B -- -- -- (59,905)
Class C -- -- -- (17,449)
Class D -- -- -- (6,915)
Realized gain on investments--net:
Class A -- (1,832) -- --
Class B -- (326,209) -- --
Class C -- (125,467) -- --
Class D -- (38,990) -- --
In excess of realized gain on investments--net:
Class A -- (978) -- (14,537)
Class B -- (174,333) -- (41,351)
Class C -- (67,053) -- (11,895)
Class D -- (20,837) -- (3,787)
Return of capital--net:
Class A -- (265) -- --
Class B -- (47,208) -- --
Class C -- (18,157) -- --
Class D -- (5,642) -- --
----------- ----------- ----------- -----------
Net decrease in net assets resulting from
dividends and distributions to shareholders -- (826,971) -- (547,105)
----------- ----------- ----------- -----------
<PAGE>
Capital Share Net increase in net assets derived from
Transactions capital share transactions 8,976,043 29,522,316 8,036,969 24,009,781
(Note 4): ----------- ----------- ----------- -----------
Net Assets: Total increase in net assets 9,936,749 31,545,763 7,377,721 25,399,673
Beginning of period 31,570,763 25,000 25,424,673 25,000
----------- ----------- ----------- -----------
End of period* $41,507,512 $31,570,763 $32,802,394 $25,424,673
=========== =========== =========== ===========
*Undistributed (accumulated) net
investment income (loss)--net $ (167,979) -- $ 21,197 $ (112,356)
=========== =========== =========== ===========
<FN>
++The Program commenced operations on February 1, 1995.
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS (concluded)
<CAPTION>
Growth
Opportunity Quality Bond US Government
Portfolio Portfolio Securities Portfolio
For the Period For the For the
Feb. 2, Six Months For the Six Months For the
Increase (Decrease) in 1996++++ to Ended Year Ended Ended Year Ended
Net Assets: July 31, 1996 July 31, 1996 Jan. 31, 1996++ July 31, 1996 Jan. 31, 1996++
<S> <S> <C> <C> <C> <C> <C>
Operations: Investment income--net $ (29,976) $ 221,930 $ 270,217 $ 319,416 $ 531,974
Realized gain (loss) on
investments and foreign
currency transactions
--net 5,274 (26,863) 31,507 688 297,048
Change in unrealized
appreciation (depreciation)
on investments and foreign
currency transactions--net 32,677 (355,878) 136,749 (350,770) 205,839
----------- ----------- ----------- ----------- -----------
Net increase (decrease)
in net assets resulting
from operations 7,975 (160,811) 438,473 (30,666) 1,034,861
----------- ----------- ----------- ----------- -----------
<PAGE>
Dividends & Investment income--net:
Distributions to Class A -- (71,678) (128,948) (172,052) (393,269)
Shareholders Class B -- (100,956) (101,375) (103,217) (98,505)
(Note 1g): Class C -- (40,229) (31,396) (36,902) (33,445)
Class D -- (9,067) (8,498) (7,245) (6,755)
Realized gain on
investments--net:
Class A -- -- -- -- (133,258)
Class B -- -- -- -- (64,660)
Class C -- -- -- -- (23,204)
Class D -- -- -- -- (3,847)
----------- ----------- ----------- ----------- -----------
Net decrease in net
assets resulting from
dividends and distributions
to shareholders -- (221,930) (270,217) (319,416) (756,943)
----------- ----------- ----------- ----------- -----------
Capital Share Net increase in net
Transactions assets derived from
(Note 4): capital share transactions 8,091,772 1,851,135 6,395,317 1,041,344 9,474,440
----------- ----------- ----------- ----------- -----------
Net Assets: Total increase in net
assets 8,099,747 1,468,394 6,563,573 691,262 9,752,358
Beginning of period 4,000 6,588,573 25,000 9,777,358 25,000
----------- ----------- ----------- ----------- -----------
End of period $ 8,103,747 $ 8,056,967 $ 6,588,573 $10,468,620 $ 9,777,358
=========== =========== =========== =========== ===========
<FN>
++The Program commenced operations on February 1, 1995.
++++Commencement of Operations.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
Fundamental Value Portfolio++++
Class A Class B
For the For the
The following per share data and ratios have Six For the Six For the
been derived from information provided in the Months Year Months Year
financial statements. Ended Ended Ended Ended
July 31, Jan. 31, July 31, Jan. 31,
Increase (Decrease) in Net Asset Value: 1996 1996++ 1996 1996++
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 11.67 $ 10.00 $ 11.55 $ 10.00
Operating ------- ------- ------- -------
Performance: Investment income (loss)--net .01 .25 (.06) (.07)
Realized and unrealized gain on investments--net .49 1.76 .49 1.96
------- ------- ------- -------
Total from investment operations .50 2.01 .43 1.89
------- ------- ------- -------
Less distributions:
Realized gain on investments--net -- (.20) -- (.20)
In excess of realized gain on investments--net -- (.11) -- (.11)
Return of capital--net -- (.03) -- (.03)
------- ------- ------- -------
Total distributions -- (.34) -- (.34)
------- ------- ------- -------
Net asset value, end of period $ 12.17 $ 11.67 $ 11.98 $ 11.55
======= ======= ======= =======
Total Investment Based on net asset value per share 4.28%+++ 20.10% 3.72%+++ 18.89%
Return:** ======= ======= ======= =======
Ratio to Expenses, net of reimbursement 1.90%* 1.54% 2.99%* 3.29%
Average Net ======= ======= ======= =======
Assets: Expenses 1.90%* 2.00% 2.99%* 3.39%
======= ======= ======= =======
Investment income (loss)--net .15%* 1.99% (.93%)* (.61%)
======= ======= ======= =======
Supplemental Net assets, end of period (in thousands) $ 155 $ 121 $26,915 $20,989
Data: ======= ======= ======= =======
Portfolio turnover 33.82% 51.37% 33.82% 51.37%
======= ======= ======= =======
Average commission rate paid+++++ $ .0541 -- $ .0541 --
======= ======= ======= =======
<PAGE>
<CAPTION>
Fundamental Value Portfolio++++
Class C Class D
For the For the
The following per share data and ratios have Six For the Six For the
been derived from information provided in the Months Year Months Year
financial statements. Ended Ended Ended Ended
July 31, Jan. 31, July 31, Jan. 31,
Increase (Decrease) in Net Asset Value: 1996 1996++ 1996 1996++
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 11.55 $ 10.00 $ 11.65 $ 10.00
Operating ------- ------- ------- -------
Performance: Investment income (loss)--net (.06) (.09) (.01) .03
Realized and unrealized gain on investments--net .49 1.98 .50 1.96
------- ------- ------- -------
Total from investment operations .43 1.89 .49 1.99
------- ------- ------- -------
Less distributions:
Realized gain on investments--net -- (.20) -- (.20)
In excess of realized gain on investments--net -- (.11) -- (.11)
Return of capital--net -- (.03) -- (.03)
------- ------- ------- -------
Total distributions -- (.34) -- (.34)
------- ------- ------- -------
Net asset value, end of period $ 11.98 $ 11.55 $ 12.14 $ 11.65
======= ======= ======= =======
Total Investment Based on net asset value per share 3.72%+++ 18.89% 4.21%+++ 19.90%
Return:** ======= ======= ======= =======
Ratio to Expenses, net of reimbursement 3.02%* 3.38% 2.15%* 2.45%
Average Net ======= ======= ======= =======
Assets: Expenses 3.02%* 3.46% 2.15%* 2.56%
======= ======= ======= =======
Investment income (loss)--net (.96%)* (.75%) (.09%)* .24%
======= ======= ======= =======
Supplemental Net assets, end of period (in thousands) $11,152 $ 7,990 $ 3,286 $ 2,471
Data: ======= ======= ======= =======
Portfolio turnover 33.82% 51.37% 33.82% 51.37%
======= ======= ======= =======
Average commission rate paid+++++ $ .0541 -- $ .0541 --
======= ======= ======= =======
<FN>
*Annualized.
**Total investment returns exclude the effect of sales loads.
++The Program commenced operations on February 1, 1995.
++++Based on average shares outstanding during the period.
+++Aggregate total return.
+++++For fiscal years beginning on or after September 1, 1995, the
Portfolio is required to disclose its average commission rate per
share for purchases and sales of equity securities.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS (continued)
<CAPTION>
Global Opportunity Portfolio++++
Class A Class B
For the For the
The following per share data and ratios have Six For the Six For the
been derived from information provided in the Months Year Months Year
financial statements. Ended Ended Ended Ended
July 31, Jan. 31, July 31, Jan. 31,
Increase (Decrease) in Net Asset Value: 1996 1996++++++ 1996 1996++++++
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 10.82 $ 10.00 $ 10.76 $ 10.00
Operating ------- ------- ------- -------
Performance: Investment income--net .09 .34 .05 .13
Realized and unrealized gain (loss) on
investments--net (.25) .77 (.26) .85
------- ------- ------- -------
Total from investment operations (.16) 1.11 (.21) .98
------- ------- ------- -------
Less dividends and distributions:
Investment income--net -- (.20) -- (.15)
In excess of investment income on investments--net -- (.06) -- (.04)
In excess of realized gain on investments--net -- (.03) -- (.03)
------- ------- ------- -------
Total dividends and distributions -- (.29) -- (.22)
------- ------- ------- -------
Net asset value, end of period $ 10.66 $ 10.82 $ 10.55 $ 10.76
======= ======= ======= =======
Total Investment Based on net asset value per share (1.48%)+++ 11.15% (1.95%)+++ 9.89%
Return:** ======= ======= ======= =======
Ratio to Expenses, net of reimbursement 2.40%* 2.01% 3.49%* 3.50%
Average Net ======= ======= ======= =======
Assets: Expenses 2.87%* 2.32% 3.81%* 3.61%
======= ======= ======= =======
Investment income--net 2.26%* 2.92% .83%* 1.20%
======= ======= ======= =======
Supplemental Net assets, end of period (in thousands) $ 96 $ 3,025 $23,029 $16,117
Data: ======= ======= ======= =======
Portfolio turnover 57.52% 83.14% 57.52% 83.14%
======= ======= ======= =======
Average commission rate paid+++++ $ .0322 -- $ .0322 --
======= ======= ======= =======
<PAGE>
<CAPTION>
Global Opportunity Portfolio++++
Class C Class D
For the For the
The following per share data and ratios have Six For the Six For the
been derived from information provided in the Months Year Months Year
financial statements. Ended Ended Ended Ended
July 31, Jan. 31, July 31, Jan. 31,
Increase (Decrease) in Net Asset Value: 1996 1996++++++ 1996 1996++++++
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 10.75 $ 10.00 $ 10.80 $ 10.00
Operating ------- ------- ------- -------
Performance: Investment income--net .04 .12 .09 .22
Realized and unrealized gain (loss) on
investments--net (.24) .85 (.25) .85
------- ------- ------- -------
Total from investment operations (.20) .97 (.16) 1.07
------- ------- ------- -------
Less dividends and distributions:
Investment income--net -- (.15) -- (.18)
In excess of investment income on investments--net -- (.04) -- (.06)
In excess of realized gain on investments--net -- (.03) -- (.03)
------- ------- ------- -------
Total dividends and distributions -- (.22) -- (.27)
------- ------- ------- -------
Net asset value, end of period $ 10.55 $ 10.75 $ 10.64 $ 10.80
======= ======= ======= =======
Total Investment Based on net asset value per share (1.86%)+++ 9.81% (1.48%)+++ 10.80%
Return:** ======= ======= ======= =======
Ratio to Expenses, net of reimbursement 3.53%* 3.58% 2.64%* 2.67%
Average Net ======= ======= ======= =======
Assets: Expenses 3.85%* 3.65% 2.97%* 2.77%
======= ======= ======= =======
Investment income--net .79%* 1.07% 1.68%* 2.00%
======= ======= ======= =======
Supplemental Net assets, end of period (in thousands) $ 7,722 $ 4,770 $ 1,955 $ 1,513
Data: ======= ======= ======= =======
Portfolio turnover 57.52% 83.14% 57.52% 83.14%
======= ======= ======= =======
Average commission rate paid+++++ $ .0322 -- $ .0322 --
======= ======= ======= =======
<PAGE>
<CAPTION>
The following per share data and ratios have
been derived from information provided in
the financial statements. Growth Opportunity Portfolio++++
For the Period February 2, 1996++ to July 31, 1996
Increase (Decrease) in Net Assets: Class A Class B Class C Class D
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 10.00 $ 10.00 $ 10.00 $ 10.00
Operating ----------- ----------- ----------- -----------
Performance: Investment income (loss)--net .02 (.07) (.07) (.02)
Realized and unrealized gain (loss) on
investments--net (.03) .02 .02 .02
----------- ----------- ----------- -----------
Total from investment operations (.01) (.05) (.05) --
----------- ----------- ----------- -----------
Net asset value, end of period $ 9.99 $ 9.95 $ 9.95 $ 10.00
=========== =========== =========== ===========
Total Investment Based on net asset value per share (.10%)+++ (.50%)+++ (.50%)+++ .00%+++
Return:** =========== =========== =========== ===========
Ratios to Average Expenses, net of reimbursement 2.43%* 3.50%* 3.55%* 2.63%*
Net Assets: =========== =========== =========== ===========
Expenses 3.09%* 3.89%* 3.93%* 3.07%*
=========== =========== =========== ===========
Investment income (loss)--net .27%* (1.34%)* (1.38%)* (.44%)*
=========== =========== =========== ===========
Supplemental Net assets, end of period (in thousands) $ 35 $ 5,155 $ 2,447 $ 467
Data: =========== =========== =========== ===========
Portfolio turnover 15.83% 15.83% 15.83% 15.83%
=========== =========== =========== ===========
Average commission rate paid+++++ $ .0635 $ .0635 $ .0635 $ .0635
=========== =========== =========== ===========
<PAGE>
<CAPTION>
Quality Bond Portfolio
Class A Class B
For the For the
The following per share data and ratios have Six For the Six For the
been derived from information provided in the Months Year Months Year
financial statements. Ended Ended Ended Ended
July 31, Jan. 31, July 31, Jan. 31,
Increase (Decrease) in Net Asset Value: 1996 1996++++++ 1996 1996++++++
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 10.27 $ 10.00 $ 10.27 $ 10.00
Operating ------- ------- ------- -------
Performance: Investment income--net .33 .62 .29 .54
Realized and unrealized gain (loss) on
investments--net (.56) .27 (.56) .27
------- ------- ------- -------
Total from investment operations (.23) .89 (.27) .81
------- ------- ------- -------
Less dividends from investment income--net (.33) (.62) (.29) (.54)
------- ------- ------- -------
Net asset value, end of period $ 9.71 $ 10.27 $ 9.71 $ 10.27
======= ======= ======= =======
Total Investment Based on net asset value per share (2.22%)+++ 9.26% (2.64%)+++ 8.35%
Return:** ======= ======= ======= =======
Ratios to Average Expenses, net of reimbursement .00%* .00% .78%* .79%
Net Assets: ======= ======= ======= =======
Expenses 3.35%* 2.60% 4.21%* 3.31%
======= ======= ======= =======
Investment income--net 6.73%* 6.22% 5.88%* 5.52%
======= ======= ======= =======
Supplemental Net assets, end of period (in thousands) $ 2,148 $ 2,196 $ 3,916 $ 3,049
Data: ======= ======= ======= =======
Portfolio turnover 37.64% 86.68% 37.64% 86.68%
======= ======= ======= =======
<PAGE>
<CAPTION>
Quality Bond Portfolio
Class C Class D
For the For the
The following per share data and ratios have Six For the Six For the
been derived from information provided in the Months Year Months Year
financial statements. Ended Ended Ended Ended
July 31, Jan. 31, July 31, Jan. 31,
Increase (Decrease) in Net Asset Value: 1996 1996++++++ 1996 1996++++++
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 10.27 $ 10.00 $ 10.27 $ 10.00
Operating ------- ------- ------- -------
Performance: Investment income--net .28 .53 .32 .60
Realized and unrealized gain (loss) on
investments--net (.56) .27 (.56) .27
------- ------- ------- -------
Total from investment operations (.28) .80 (.24) .87
------- ------- ------- -------
Less dividends from investment income--net (.28) (.53) (.32) (.60)
------- ------- ------- -------
Net asset value, end of period $ 9.71 $ 10.27 $ 9.71 $ 10.27
======= ======= ======= =======
Total Investment Based on net asset value per share (2.68%)+++ 8.27% (2.34%)+++ 8.99%
Return:** ======= ======= ======= =======
Ratios to Average Expenses, net of reimbursement .85%* .87% .17%* .19%
Net Assets: ======= ======= ======= =======
Expenses 4.28%* 3.44% 3.59%* 2.70%
======= ======= ======= =======
Investment income--net 5.82%* 5.46% 6.50%* 6.11%
======= ======= ======= =======
Supplemental Net assets, end of period (in thousands) $ 1,658 $ 1,123 $ 335 $ 221
Data: ======= ======= ======= =======
Portfolio turnover 37.64% 86.68% 37.64% 86.68%
======= ======= ======= =======
<FN>
*Annualized.
**Total investment returns exclude the effect of sales loads.
++Commencement of Operations.
++++Based on average shares outstanding during the period.
++++++The Program commenced operations on February 1, 1995.
+++Aggregate total investment return.
+++++For fiscal years beginning on or after September 1, 1995, the
Portfolio is required to disclose its average commission rate per
share for purchases and sales of equity securities.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS (concluded)
<CAPTION>
US Government Securities Portfolio
Class A Class B
For the For the
The following per share data and ratios have Six For the Six For the
been derived from information provided in the Months Year Months Year
financial statements. Ended Ended Ended Ended
July 31, Jan. 31, July 31, Jan. 31,
Increase (Decrease) in Net Asset Value: 1996 1996++ 1996 1996++
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 10.48 $ 10.00 $ 10.48 $ 10.00
Operating ------- ------- ------- -------
Performance: Investment income--net .34 .76 .30 .68
Realized and unrealized gain (loss) on
investments--net (.37) .74 (.37) .74
------- ------- ------- -------
Total from investment operations (.03) 1.50 (.07) 1.42
------- ------- ------- -------
Less dividends and distributions:
Investment income--net (.34) (.76) (.30) (.68)
Realized gain on investments--net -- (.26) -- (.26)
------- ------- ------- -------
Total dividends and distributions (.34) (1.02) (.30) (.94)
------- ------- ------- -------
Net asset value, end of period $ 10.11 $ 10.48 $ 10.11 $ 10.48
======= ======= ======= =======
Total Investment Based on net asset value per share (.26%)+++ 15.47% (.67%)+++ 14.53%
Return:** ======= ======= ======= =======
Ratios to Average Expenses, net of reimbursement .00* .00% .79%* .81%
Net Assets: ======= ======= ======= =======
Expenses 2.99%* 2.54% 3.79%* 3.35%
======= ======= ======= =======
Investment income--net 6.69%* 7.30% 5.87%* 6.28%
======= ======= ======= =======
Supplemental Net assets, end of period (in thousands) $ 4,850 $ 5,463 $ 3,882 $ 3,043
Data: ======= ======= ======= =======
Portfolio turnover 12.40% 113.05% 12.40% 113.05%
======= ======= ======= =======
<PAGE>
<CAPTION>
US Government Securities Portfolio
Class C Class D
For the For the
The following per share data and ratios have Six For the Six For the
been derived from information provided in the Months Year Months Year
financial statements. Ended Ended Ended Ended
July 31, Jan. 31, July 31, Jan. 31,
Increase (Decrease) in Net Asset Value: 1996 1996++ 1996 1996++
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 10.47 $ 10.00 $ 10.48 $ 10.00
Operating ------- ------- ------- -------
Performance: Investment income--net .29 .67 .33 .74
Realized and unrealized gain (loss) on
investments--net (.36) .73 (.36) .74
------- ------- ------- -------
Total from investment operations (.07) 1.40 (.03) 1.48
------- ------- ------- -------
Less dividends and distributions:
Investment income--net (.29) (.67) (.33) (.74)
Realized gain on investments--net -- (.26) -- (.26)
------- ------- ------- -------
Total dividends and distributions (.29) (.93) (.33) (1.00)
------- ------- ------- -------
Net asset value, end of period $ 10.11 $ 10.47 $ 10.12 $ 10.48
======= ======= ======= =======
Total Investment Based on net asset value per share. (.60%)+++ 14.36% (.29%)+++ 15.13%
Return:** ======= ======= ======= =======
Ratios to Average Expenses, net of reimbursement .85%* .86% .21%* .22%
Net Assets: ======= ======= ======= =======
Expenses 3.85%* 3.41% 3.21%* 2.77%
======= ======= ======= =======
Investment income--net 5.80%* 6.21% 6.44%* 6.90%
======= ======= ======= =======
Supplemental Net assets, end of period (in thousands) $ 1,465 $ 1,089 $ 272 $ 182
Data: ======= ======= ======= =======
Portfolio turnover 12.40% 113.05% 12.40% 113.05%
======= ======= ======= =======
<FN>
*Annualized.
**Total investment returns exclude the effect of sales loads.
++The Program commenced operations on February 1, 1995.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch Asset Builder Program, Inc. (the "Program") is
registered under the Investment Company Act of 1940 as a
diversified, open-end management investment company consisting of
five separate portfolios: Fundamental Value Portfolio, Global
Opportunity Portfolio, Growth Opportunity Portfolio, Quality Bond
Portfolio and US Government Securities Portfolio (the "Portfolios"),
except for Growth Opportunity Portfolio which is classified as a non-
diversified portfolio. These unaudited financial statements reflect
all adjustments which are, in the opinion of management, necessary
to a fair statement of results for the interim period presented. All
such adjustments are of a normal recurring nature. The Program's
Portfolios offer four classes of shares under the Merrill Lynch
Select Pricing SM System. Shares of Class A and Class D are sold with
a front-end sales charge. Shares of Class B and Class C may be
subject to a contingent deferred sales charge. All classes of shares
have identical voting, dividend, liquidation and other rights and
the same terms and conditions, except that Class B, Class C and
Class D Shares bear certain expenses related to the account
maintenance of such shares, and Class B and Class C 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. The
following is a summary of significant accounting policies followed
by the Program.
(a) Valuation of investments--Portfolio securities which are traded
on stock exchanges are valued at the last sale price on the exchange
on which such securities are traded, as of the close of business on
the day the securities are being valued or, lacking any sales, at
the last available bid price. Securities traded in the over-the-
counter market are valued at the last available bid price in the
over-the-counter market prior to the time of valuation. In cases
where securities are traded on more than one exchange, the
securities are valued on the exchange designated by or under the
authority of the Board of Directors as the primary market.
Securities which are traded both in the over-the-counter market and
on a stock exchange are valued according to the broadest and most
representative market. Options written are valued at the last sale
price in the case of exchange-traded options or, in the case of
options traded in the over-the-counter market, the last asked 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
over-the-counter market, the last bid price. Short-term securities
are valued at amortized cost, which approximates market value. Other
investments, including futures contracts and related options, are
stated at market value. Securities and assets for which market
quotations are not readily available are valued at fair market value
as determined in good faith by or under the direction of the Board
of Directors of the Program.
<PAGE>
(b) Derivative financial instruments--Each Portfolio may engage in
various portfolio strategies to seek to increase its return by
hedging its portfolio against adverse movements in the equity, debt
or currency markets. Losses may arise due to changes in the value of
the contract or if the counterparty does not perform under the
contract.
* Financial futures contracts--The Portfolios may purchase or sell
futures contracts and options on such futures contracts for the
purpose of hedging the market risk on existing securities or the
intended purchase of securities. Futures contracts are contracts for
delayed delivery of securities at a specific future date and at a
specific price or yield. Upon entering into a contract, the
Portfolios deposit and maintain as collateral such initial margin as
required by the exchange on which the transaction is effected.
Pursuant to the contract, the Portfolios agree 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 Portfolios as unrealized
gains or losses. When the contract is closed, the Portfolios record
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.
* Options--The Portfolios are authorized to purchase and write call
and put options. When the Portfolios write an option, an amount
equal to the premium received by the Portfolios 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 Portfolios enter into a closing transac-
tion), the Portfolios realize a gain or loss on the option to the
extent of the premiums received or paid (or gain or loss to the
extent the cost of the closing transaction exceeds the premium paid
or received).
Written and purchased options are non-income producing investments.
Forward foreign exchange contracts--Fundamental Value, Global
Opportunity and Growth Opportunity Portfolios are authorized to
enter into forward foreign exchange contracts as a hedge against
either specific transactions or portfolio positions. Such contracts
are not entered on the Portfolios' records. However, the effect on
operations is recorded from the date the Portfolios enter into such
contracts. Premium or discount is amortized over the life of the
contracts.
<PAGE>
* Foreign currency options and futures--Fundamental Value, Global
Opportunity and Growth Opportunity Portfolios may also purchase or
sell listed or over-the-counter foreign currency options, foreign
currency futures and related options on foreign currency futures as
a short or long hedge against possible variations in foreign
exchange rates. Such transactions may be effected with respect to
hedges on non-US dollar denominated securities owned by the
Portfolios, sold by the Portfolios but not yet delivered, or
committed or anticipated to be purchased by the Portfolios.
(c) Foreign currency transactions--Transactions denominated in
foreign currencies are recorded at the exchange rate prevailing when
recognized. Assets and liabilities denominated in foreign currencies
are valued at the exchange rate at the end of the period. Foreign
currency transactions are the result of settling (realized) or
valuing (unrealized) assets or liabilities expressed in foreign
currencies into US dollars. Realized and unrealized gains or losses
from investments include the effects of foreign exchange rates on
investments.
(d) Income taxes--It is each Portfolio'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. Under the applicable foreign tax law, a
witholding tax may be imposed on interest, dividends and capital
gains at various rates.
(e) Security transactions and investment income--Security
transactions are recorded on the dates the transactions are entered
into (the trade dates). Dividend income is recorded on the ex-
dividend dates except that if the ex-dividend date has passed,
certain dividends from foreign securities are recorded as soon as
the Portfolios are informed of the ex-dividend date. Interest income
(including amortization of discount) is recognized on the accrual
basis. Realized gains and losses on security transactions are
determined on the identified cost basis.
(f) Deferred organization expenses and prepaid registration fees--
Deferred organization expenses are charged to expense on a straight-
line basis over a five-year period. Prepaid registration fees are
charged to expense as the related shares are issued.
(g) Dividends and distributions--Dividends from net investment
income of Quality Bond and US Government Securities Portfolios are
declared daily and paid monthly. Dividends from net investment
income of Fundamental Value, Global Opportunity and Growth
Opportunity Portfolios are recorded on the ex-dividend dates.
Distributions of capital gains for all Portfolios are recorded on
the ex-dividend dates. Distributions in excess of investment income
and realized gains are due primarily to differing tax treatments for
futures transactions and post-October losses.
<PAGE>
2. Investment Advisory Agreement and Transactions
with Affiliates:
The Program has entered into an Investment Advisory Agreement with
Merrill Lynch Asset Management, L.P. ("MLAM"). The general partner
of MLAM is Princeton Services, Inc. ("PSI"), an indirect wholly-
owned subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is
the limited partner. The Program has also entered into a
Distribution Agreement and Distribution Plans with Merrill Lynch
Funds Distributor, Inc. ("MLFD" or "Distributor"), a wholly-owned
subsidiary of Merrill Lynch Group, Inc.
MLAM is responsible for the management of the Program's portfolios
and provides the necessary personnel, facilities, equipment and
certain other services necessary to the operations of the Program.
For such services, each Portfolio pays a monthly fee based on the
average daily value of that Portfolio's net assets at the following
annual rates; 0.65% for Fundamental Value and Growth Opportunity
Portfolios, 0.50% for Quality Bond and US Government Securities
Portfolios, and 0.75% for Global Opportunity Portfolio.
The Investment Advisory Agreement obligates MLAM to reimburse the
Program to the extent the Program's expenses (excluding interest,
taxes, distribution fees, brokerage fees and commissions, and
extraordinary items) exceed 2.5% of the Program's first $30 million
of average daily net assets, 2.0% of the Program's next $70 million
of average daily net assets, and 1.5% of the average daily net
assets in excess thereof. No fee payment will be made to MLAM during
any fiscal year which will cause such expenses to exceed the pro
rata expense limitation at the time of such payment.
For the six months ended July 31, 1996, MLAM had voluntarily waived
management fees and reimbursed each Portfolio for additional
expenses as follows:
Management Additional
Fee Expenses
Fundamental Value Portfolio -- --
Global Opportunity Portfolio $ 48,228 --
Growth Opportunity Portfolio $ 13,958 --
Quality Bond Portfolio $ 18,011 $105,812
US Government Securities Portfolio $ 25,331 $127,835
Pursuant to the distribution plans (the "Distribution Plans")
adopted by the Program in accordance with Rule 12b-1 under the
Investment Company Act of 1940, each Portfolio 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:
<PAGE>
Account Maintenance Fees
Class B Class C Class D
Fundamental Value Portfolio 0.25% 0.25% 0.25%
Global Opportunity Portfolio 0.25% 0.25% 0.25%
Growth Opportunity Portfolio 0.25% 0.25% 0.25%
Quality Bond Portfolio 0.25% 0.25% 0.25%
US Government Securities Portfolio 0.25% 0.25% 0.25%
Distribution Fees
Class B Class C
Fundamental Value Portfolio 0.75% 0.75%
Global Opportunity Portfolio 0.75% 0.75%
Growth Opportunity Portfolio 0.75% 0.75%
Quality Bond Portfolio 0.50% 0.55%
US Government Securities Portfolio 0.50% 0.55%
Pursuant to a sub-agreement with the Distributor, Merrill Lynch,
Pierce, Fenner & Smith Inc. ("MLPF&S"), a subsidiary of ML & Co.,
also provides account maintenance and distribution services to the
Program. The ongoing account maintenance fee compensates the
Distributor and MLPF&S for providing account maintenance services to
Class B, Class C and Class D shareholders. The ongoing distribution
fee compensates the Distributor and MLPF&S for providing shareholder
and distribution-related services to Class B and Class C
shareholders.
For the six months ended July 31, 1996, MLFD earned underwriting
discounts and MLPF&S earned dealer concessions on sales of each
Portfolio's Class A and Class D Shares as follows:
MLFD MLPF&S
Class A Class D Class A Class D
Fundamental Value Portfolio $2 $1,032 $46 $20,423
Global Opportunity Portfolio $3 $ 958 $40 $18,524
Growth Opportunity Portfolio++ -- $ 608 -- $11,850
Quality Bond Portfolio -- $ 242 -- $ 3,469
US Government Securities
Portfolio -- $ 85 -- $ 1,157
<PAGE>
[FN]
++Commenced operations February 2, 1996.
For the six months ended July 31, 1996, MLPF&S received contingent
deferred sales charges relating to transactions in Class B and Class
C Shares as follows:
Class B Shares Class C Shares
Fundamental Value Portfolio $25,212 $2,828
Global Opportunity Portfolio $20,407 $1,946
Growth Opportunity Portfolio++ $ 2,021 $ 344
Quality Bond Portfolio $ 3,320 $ 443
US Government Securities Portfolio $ 2,508 $ 143
[FN]
++Commenced operations February 2, 1996.
In addition, MLPF&S received $825, $1,227, and $830 in commissions
on the execution of portfolio security transactions for the
Fundamental Value, Global Opportunity, and Growth Opportunity
Portfolios, respectively, for the six months ended July 31, 1996.
NOTES TO FINANCIAL STATEMENTS (continued)
Merrill Lynch Financial Data Services, Inc. ("MLFDS"), a wholly-
owned subsidiary of ML & Co., is the Program's transfer agent.
During the six months ended July 31, 1996, Global Opportunity,
Quality Bond and US Government Securities Portfolios paid Merrill
Lynch Security Pricing Service, an affiliate of MLPF&S, $1,014, $766
and $225 for security price quotations to compute the net asset
value of the Portfolio.
Accounting services are provided to each Portfolio by MLAM at cost.
Certain officers and/or directors of the Program are officers and/or
directors of MLAM, PSI, MLPF&S, MLFD, MLFDS and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended July 31, 1996 were as follows:
<PAGE>
Purchases Sales
Fundamental Value Portfolio $19,573,809 $11,569,474
Global Opportunity Portfolio $29,352,562 $13,592,657
Growth Opportunity Portfolio++ $ 7,703,308 $ 762,631
Quality Bond Portfolio $ 4,509,093 $ 2,312,707
US Government Securities Portfolio $ 2,268,522 $ 1,138,913
[FN]
++Commenced operations February 2, 1996.
Net realized and unrealized gains (losses) as of July 31, 1996 were
as follows:
Realized Unrealized
Fundamental Value Portfolio Gains Gains
Long-term investments $2,780,899 $ 715,709
Short-term investments 7 --
---------- ----------
Total $2,780,906 $ 715,709
========== ==========
Realized
Gains Unrealized
Global Opportunity Portfolio (Losses) Gains
Long-term investments $ 413,610 $ 559,134
Short-term investments (4) --
Foreign currency transactions (55,751) 2,751
Forward foreign exchange contracts (6,260) --
---------- ----------
Total $ 351,595 $ 561,885
========== ==========
Realized Unrealized
Growth Opportunity Portfolio++ Gains Gains
Long-term investments $ 5,274 $ 32,677
---------- ----------
Total $ 5,274 $ 32,677
========== ==========
<PAGE>
[FN]
++Commenced operations February 2, 1996.
Realized Unrealized
Quality Bond Portfolio Losses Losses
Long-term investments $ (26,863) $ (219,129)
---------- ----------
Total $ (26,863) $ (219,129)
========== ==========
Realized Unrealized
US Government Securities Portfolio Gains Losses
Long-term investments $ 688 $ (144,931)
---------- ----------
Total $ 688 $ (144,931)
========== ==========
As of July 31, 1996, net unrealized appreciation (depreciation) for
Federal income tax purposes was as follows:
Net
Gross Gross Unrealized
Unrealized Unrealized Appreciation
Appreciation Depreciation (Depreciation)
Fundamental Value
Portfolio $3,533,952 $(2,818,243) $ 715,709
Global Opportunity
Portfolio $1,605,273 $(1,046,139) $ 559,134
Growth Opportunity
Portfolio++ $ 239,314 $ (206,637) $ 32,677
Quality Bond Portfolio $ 3,255 $ (222,384) $(219,129)
US Government Securities
Portfolio $ 80,054 $ (224,985) $(144,931)
[FN]
++Commenced operations February 2, 1996.
The aggregate cost of investments at July 31, 1996 for Federal
income tax purposes was $40,375,670 for the Fundamental Value
Portfolio, $31,843,775 for the Global Opportunity Portfolio,
$8,190,951 for the Growth Opportunity Portfolio, $7,997,292 for the
Quality Bond Portfolio, and $11,477,594 for the US Government
Securities Portfolio.
<PAGE>
4. Capital Share Transactions:
Net increase in net assets derived from capital share transactions
for the six months ended July 31, 1996 and the period February 1,
1995 to January 31, 1996, respectively, were as follows:
For the Six For the Period
Months Ended Feb. 1, 1995 to
July 31, 1996 Jan. 31, 1996
Fundamental Value Portfolio $8,976,043 $29,522,316
Global Opportunity Portfolio $8,036,969 $24,009,781
Growth Opportunity Portfolio++ $8,091,772 --
Quality Bond Portfolio $1,851,135 $ 6,395,317
US Government Securities Portfolio $1,041,344 $ 9,474,440
[FN]
++Commenced operations February 2, 1996.
Transactions in capital shares for each class were as follows:
Fundamental Value Portfolio
Class A Shares for the Six Months Dollar
Ended July 31, 1996 Shares Amount
Shares sold 3,694 $ 45,914
Shares redeemed (1,304) (16,115)
----------- -----------
Net increase 2,390 $ 29,799
=========== ===========
Fundamental Value Portfolio
Class A Shares for the Period Dollar
February 1, 1995++ to January 31, 1996 Shares Amount
Shares sold 211,092 $ 2,121,694
Shares issued to shareholders in
reinvestment of distributions 226 2,614
----------- -----------
Total issued 211,318 2,124,308
Shares redeemed (201,602) (2,349,514)
----------- -----------
Net increase (decrease) 9,716 $ (225,206)
=========== ===========
<PAGE>
[FN]
++Prior to February 1, 1995 (commencement of operations), the
Portfolio issued 625 shares to MLAM for $6,250.
Fundamental Value Portfolio
Class B Shares for the Six Months Dollar
Ended July 31, 1996 Shares Amount
Shares sold 585,190 $ 7,191,448
Shares redeemed (135,853) (1,663,543)
Automatic conversion of shares (20,774) (256,857)
----------- -----------
Net increase 428,563 $ 5,271,048
=========== ===========
Fundamental Value Portfolio
Class B Shares for the Period Dollar
February 1, 1995++ to January 31, 1996 Shares Amount
Shares sold 1,898,235 $20,687,636
Shares issued to shareholders in
reinvestment of distributions 46,363 530,851
----------- -----------
Total issued 1,944,598 21,218,487
Shares redeemed (128,079) (1,426,547)
----------- -----------
Net increase 1,816,519 $19,791,940
=========== ===========
[FN]
++Prior to February 1, 1995 (commencement of operations), the
Portfolio issued 625 shares to MLAM for $6,250.
Fundamental Value Portfolio
Class C Shares for the Six Months Dollar
Ended July 31, 1996 Shares Amount
Shares sold 322,753 $ 3,976,586
Shares redeemed (83,818) (1,032,125)
----------- -----------
Net increase 238,935 $ 2,944,461
=========== ===========
<PAGE>
Fundamental Value Portfolio
Class C Shares for the Period Dollar
February 1, 1995++ to January 31, 1996 Shares Amount
Shares sold 722,871 $ 7,998,489
Shares issued to shareholders in
reinvestment of distributions 17,800 203,810
----------- -----------
Total issued 740,671 8,202,299
Shares redeemed (49,444) (560,243)
----------- -----------
Net increase 691,227 $ 7,642,056
=========== ===========
[FN]
++Prior to February 1, 1995 (commencement of operations), the
Portfolio issued 625 shares to MLAM for $6,250.
Fundamental Value Portfolio
Class D Shares for the Six Months Dollar
Ended July 31, 1996 Shares Amount
Shares sold 61,488 $ 761,368
Automatic conversion of shares 20,555 256,857
----------- -----------
Total issued 82,043 1,018,225
Shares redeemed (23,453) (287,490)
----------- -----------
Net increase 58,590 $ 730,735
=========== ===========
NOTES TO FINANCIAL STATEMENTS (continued)
Fundamental Value Portfolio
Class D Shares for the Period Dollar
February 1, 1995++ to July 31, 1995 Shares Amount
Shares sold 217,786 $ 2,387,449
Shares issued to shareholders in
reinvestment of distributions 5,449 62,881
----------- -----------
Total issued 223,235 2,450,330
Shares redeemed (11,765) (136,804)
----------- -----------
Net increase 211,470 $ 2,313,526
=========== ===========
<PAGE>
[FN]
++Prior to February 1, 1995 (commencement of operations), the
Portfolio issued 625 shares to MLAM for $6,250.
Global Opportunity Portfolio
Class A Shares for the Six Months Dollar
Ended July 31, 1996 Shares Amount
Shares sold 2,767 $ 29,967
Shares redeemed (273,366) (2,963,779)
----------- -----------
Net decrease (270,599) $(2,933,812)
=========== ===========
Global Opportunity Portfolio
Class A Shares for the Period Dollar
February 1, 1995++ to January 31, 1996 Shares Amount
Shares sold 835,209 $ 8,372,011
Shares issued to shareholders in
reinvestment of dividends and
distributions 12,609 133,409
----------- -----------
Total issued 847,818 8,505,420
Shares redeemed (568,796) (6,107,760)
----------- -----------
Net increase 279,022 $ 2,397,660
=========== ===========
[FN]
++Prior to February 1, 1995 (commencement of operations), the
Portfolio issued 625 shares to MLAM for $6,250.
Global Opportunity Portfolio
Class B Shares for the Six Months Dollar
Ended July 31, 1996 Shares Amount
Shares sold 833,884 $ 8,999,934
Shares redeemed (146,925) (1,585,743)
Automatic conversion of shares (2,811) (30,129)
----------- -----------
Net increase 684,148 $ 7,384,062
=========== ===========
<PAGE>
Global Opportunity Portfolio
Class B Shares for the Period Dollar
February 1, 1995++ to January 31, 1996 Shares Amount
Shares sold 1,579,063 $16,389,513
Shares issued to shareholders in
reinvestment of dividends and
distributions 27,153 286,188
----------- -----------
Total issued 1,606,216 16,675,701
Automatic conversion of shares (12,547) (136,198)
Shares redeemed (96,530) (1,007,511)
----------- -----------
Net increase 1,497,139 $15,531,992
=========== ===========
[FN]
++Prior to February 1, 1995 (commencement of operations), the
Portfolio issued 625 shares to MLAM for $6,250.
Global Opportunity Portfolio
Class C Shares for the Six Months Dollar
Ended July 31, 1996 Shares Amount
Shares sold 344,461 $ 3,715,743
Shares redeemed (55,801) (603,920)
----------- -----------
Net increase 288,660 $ 3,111,823
=========== ===========
Global Opportunity Portfolio
Class C Shares for the Period Dollar
February 1, 1995++ to January 31, 1996 Shares Amount
Shares sold 460,425 $ 4,809,137
Shares issued to shareholders in
reinvestment of dividends and
distributions 7,790 82,108
----------- -----------
Total issued 468,215 4,891,245
Shares redeemed (25,280) (268,389)
----------- -----------
Net increase 442,935 $ 4,622,856
=========== ===========
<PAGE>
[FN]
++Prior to February 1, 1995 (commencement of operations), the
Portfolio issued 625 shares to MLAM for $6,250.
Global Opportunity Portfolio
Class D Shares for the Six Months Dollar
Ended July 31, 1996 Shares Amount
Shares sold 52,555 $ 571,381
Automatic conversion of shares 2,795 30,129
----------- -----------
Total issued 55,350 601,510
Shares redeemed (11,709) (126,614)
----------- -----------
Net increase 43,641 $ 474,896
=========== ===========
Global Opportunity Portfolio
Class D Shares for the Period Dollar
February 1, 1995++ to January 31, 1996 Shares Amount
Shares sold 129,359 $ 1,346,418
Automatic conversion of shares 12,498 136,198
Shares issued to shareholders in
reinvestment of dividends and
distributions. 3,015 31,872
----------- -----------
Total issued 144,872 1,514,488
Shares redeemed (5,436) (57,215)
----------- -----------
Net increase 139,436 $ 1,457,273
=========== ===========
[FN]
++Prior to February 1, 1995 (commencement of operations), the
Portfolio issued 625 shares to MLAM for $6,250.
<PAGE>
Growth Opportunity Portfolio
Class A Shares for the Period Dollar
February 2, 1996++ to July 31, 1996 Shares Amount
Shares sold 203,719 $ 2,037,022
Shares redeemed (200,272) (2,035,722)
----------- -----------
Net increase 3,447 $ 1,300
=========== ===========
[FN]
++Prior to February 2, 1996 (commencement of operations), the
Portfolio issued 100 shares to MLAM for $1,000.
Growth Opportunity Portfolio
Class B Shares for the Period Dollar
February 2, 1996++ to July 31, 1996 Shares Amount
Shares sold 532,720 $ 5,321,119
Shares redeemed (14,501) (146,331)
Automatic conversion of shares (484) (4,930)
----------- -----------
Net increase 517,735 $ 5,169,858
=========== ===========
[FN]
++Prior to February 2, 1996 (commencement of operations), the
Portfolio issued 100 shares to MLAM for $1,000.
Growth Opportunity Portfolio
Class C Shares for the Period Dollar
February 2, 1996++ to July 31, 1996 Shares Amount
Shares sold 259,769 $ 2,593,742
Shares redeemed (13,968) (139,553)
----------- -----------
Net increase 245,801 $ 2,454,189
=========== ===========
[FN]
++Prior to February 2, 1996 (commencement of operations), the
Portfolio issued 100 shares to MLAM for $1,000.
<PAGE>
Growth Opportunity Portfolio
Class D Shares for the Period Dollar
February 2, 1996++ to July 31, 1996 Shares Amount
Shares sold 51,622 $ 518,316
Automatic conversion of shares 483 4,930
----------- -----------
Total issued 52,105 523,246
Shares redeemed (5,607) (56,821)
----------- -----------
Net increase 46,498 $ 466,425
=========== ===========
[FN]
++Prior to February 2, 1996 (commencement of operations), the
Portfolio issued 100 shares to MLAM for $1,000.
Quality Bond Portfolio
Class A Shares for the Six Months Dollar
Ended July 31, 1996 Shares Amount
Shares sold 266 $ 2,619
Shares issued to shareholders in
reinvestment of dividends 7,254 71,327
----------- -----------
Total issued 7,520 73,946
Shares redeemed. (69) (690)
----------- -----------
Net increase 7,451 $ 73,256
=========== ===========
Quality Bond Portfolio
Class A Shares for the Period Dollar
February 1, 1995++ to January 31, 1996 Shares Amount
Shares sold 200,766 $ 2,007,639
Shares issued to shareholders in
reinvestment of dividends 12,321 123,667
----------- -----------
Total issued 213,087 2,131,306
Shares redeemed. (14) (145)
----------- -----------
Net increase 213,073 $ 2,131,161
=========== ===========
[FN]
++Prior to February 1, 1995 (commencement of operations), the
Portfolio issued 625 shares to MLAM for $6,250.
<PAGE>
Quality Bond Portfolio
Class B Shares for the Six Months Dollar
Ended July 31, 1996 Shares Amount
Shares sold 129,971 $ 1,279,942
Shares issued to shareholders in
reinvestment of dividends 9,075 89,069
----------- -----------
Total issued. 139,046 1,369,011
Shares redeemed (32,513) (322,973)
----------- -----------
Net increase 106,533 $ 1,046,038
=========== ===========
NOTES TO FINANCIAL STATEMENTS (concluded)
Quality Bond Portfolio
Class B Shares for the Period Dollar
February 1, 1995++ to January 31, 1996 Shares Amount
Shares sold 310,972 $ 3,112,230
Shares issued to shareholders in
reinvestment of dividends 8,720 87,735
----------- -----------
Total issued. 319,692 3,199,965
Shares redeemed (23,377) (234,918)
----------- -----------
Net increase 296,315 $ 2,965,047
=========== ===========
[FN]
++Prior to February 1, 1995 (commencement of operations), the
Portfolio issued 625 shares to MLAM for $6,250.
<PAGE>
Quality Bond Portfolio
Class C Shares for the Six Months Dollar
Ended July 31, 1996 Shares Amount
Shares sold 78,475 $ 770,753
Shares issued to shareholders in
reinvestment of dividends 3,752 36,801
----------- -----------
Total issued 82,227 807,554
Shares redeemed (20,772) (203,740)
----------- -----------
Net increase 61,455 $ 603,814
=========== ===========
Quality Bond Portfolio
Class C Shares for the Period Dollar
February 1, 1995++ to January 31, 1996 Shares Amount
Shares sold 119,801 $ 1,200,962
Shares issued to shareholders in
reinvestment of dividends 2,715 27,344
----------- -----------
Total issued 122,516 1,228,306
Shares redeemed (13,729) (138,226)
----------- -----------
Net increase 108,787 $ 1,090,080
=========== ===========
[FN]
++Prior to February 1, 1995 (commencement of operations), the
Portfolio issued 625 shares to MLAM for $6,250.
Quality Bond Portfolio
Class D Shares for the Six Months Dollar
Ended July 31, 1996 Shares Amount
Shares sold. 14,579 $ 143,976
Shares issued to shareholders in
reinvestment of dividends 807 7,917
----------- -----------
Total issued 15,386 151,893
Shares redeemed (2,424) (23,866)
----------- -----------
Net increase 12,962 $ 128,027
=========== ===========
Quality Bond Portfolio
Class D Shares for the Period Dollar
February 1, 1995++ to January 31, 1996 Shares Amount
<PAGE>
Shares sold. 22,296 $ 223,184
Shares issued to shareholders in
reinvestment of dividends 764 7,677
----------- -----------
Total issued 23,060 230,861
Shares redeemed (2,180) (21,832)
----------- -----------
Net increase 20,880 $ 209,029
=========== ===========
[FN]
++Prior to February 1, 1995 (commencement of operations), the
Portfolio issued 625 shares to MLAM for $6,250.
US Government Securities Portfolio
Class A Shares for the Six Months Dollar
Ended July 31, 1996 Shares Amount
Shares sold 3,467 $ 35,548
Shares issued to shareholders in
reinvestment of dividends 13,600 138,511
----------- -----------
Total issued 17,067 174,059
Shares redeemed (59,067) (600,482)
----------- -----------
Net decrease (42,000) $ (426,423)
=========== ===========
US Government Securities Portfolio
Class A Shares for the Period Dollar
February 1, 1995++ to January 31, 1996 Shares Amount
Shares sold 512,777 $ 5,133,291
Shares issued to shareholders in
reinvestment of dividends and
distributions 46,368 481,964
----------- -----------
Total issued 559,145 5,615,255
Shares redeemed (38,281) (400,291)
----------- -----------
Net increase 520,864 $ 5,214,964
=========== ===========
[FN]
++Prior to February 1, 1995 (commencement of operations), the
Portfolio issued 625 shares to MLAM for $6,250.
<PAGE>
US Government Securities Portfolio
Class B Shares for the Six Months Dollar
Ended July 31, 1996 Shares Amount
Shares sold 106,948 $ 1,088,574
Shares issued to shareholders in
reinvestment of dividends 7,665 78,035
----------- -----------
Total issued 114,613 1,166,609
Shares redeemed (21,265) (216,645)
----------- -----------
Net increase 93,348 $ 949,964
=========== ===========
US Government Securities Portfolio
Class B Shares for the Period Dollar
February 1, 1995++ to January 31, 1996 Shares Amount
Shares sold 316,580 $ 3,300,722
Shares issued to shareholders in
reinvestment of dividends and
distributions 8,754 79,114
----------- -----------
Total issued 325,334 3,379,836
Shares redeemed (35,474) (369,739)
----------- -----------
Net increase 289,860 $ 3,010,097
=========== ===========
[FN]
++Prior to February 1, 1995 (commencement of operations), the
Portfolio issued 625 shares to MLAM for $6,250.
US Government Securities Portfolio
Class C Shares for the Six Months Dollar
Ended July 31, 1996 Shares Amount
Shares sold 48,248 $ 495,363
Shares issued to shareholders in
reinvestment of dividends 3,314 33,730
----------- -----------
Total issued 51,562 529,093
Shares redeemed (10,654) (108,601)
----------- -----------
Net increase 40,908 $ 420,492
=========== ===========
<PAGE>
US Government Securities Portfolio
Class C Shares for the Period Dollar
February 1, 1995++ to January 31, 1996 Shares Amount
Shares sold 106,091 $ 1,106,574
Shares issued to shareholders in
reinvestment of dividends and
distributions 2,930 26,407
----------- -----------
Total issued 109,021 1,132,981
Shares redeemed (5,619) (57,961)
----------- -----------
Net increase 103,402 $ 1,075,020
=========== ===========
[FN]
++Prior to February 1, 1995 (commencement of operations), the
Portfolio issued 625 shares to MLAM for $6,250.
US Government Securities Portfolio
Class D Shares for the Six Months Dollar
Ended July 31, 1996 Shares Amount
Shares sold. 12,499 $ 127,641
Shares issued to shareholders in
reinvestment of dividends 511 5,202
----------- -----------
Total issued. 13,010 132,843
Shares redeemed (3,485) (35,532)
----------- -----------
Net increase 9,525 $ 97,311
=========== ===========
US Government Securities Portfolio
Class D Shares for the Period Dollar
February 1, 1995++ to January 31, 1996 Shares Amount
<PAGE>
Shares sold. 23,396 $ 243,530
Shares issued to shareholders in
reinvestmentof dividends and
distributions 517 4,969
----------- -----------
Total issued. 23,913 248,499
Shares redeemed (7,179) (74,140)
----------- -----------
Net increase 16,734 $ 174,359
=========== ===========
[FN]
++Prior to February 1, 1995 (commencement of operations), the
Portfolio issued 625 shares to MLAM for $6,250.
EQUITY PORTFOLIO CHANGES
FUNDAMENTAL
VALUE PORTFOLIO
For the Quarter Ended July 31, 1996
Additions
Advanced Micro Devices Inc.
*Associates First Capital Corp.
Hechinger Co. (Class A)
Hibernia Corp. (Class A)
Louisiana-Pacific Corp.
Phelps Dodge Corp.
Scitex Corp. Ltd.
U S West Media Group
Deletions
*Associates First Capital Corp.
Eaton Corp.
FelCor Suite Hotels, Inc.
Lone Star Technologies, Inc.
Olin Corp.
SyQuest Technology, Inc.
TIG Holdings, Ltd.
Western Digital Corp.
GLOBAL
OPPORTUNITY PORTFOLIO
<PAGE>
For the Quarter Ended July 31, 1996
Additions
AK Steel Holding Corp.
American Standard Companies, Inc.
Associates First Capital Corp.
AutoZone, Inc.
Baxter International, Inc.
British Steel PLC
Bure Investment AB
Canadian Pacific Ltd.
Cincinnati Milacron, Inc.
The Coca-Cola Co.
Companhia Cervejaria Brahma S.A. PN (Preferred)
COMPAQ Computer Corp.
Danieli & Co.
Electronic Data Systems Corp.
Glaxo Wellcome PLC
Global Telecommunications
Solutions, Inc. (ADR)
Grand Metropolitan PLC
H.J. Heinz Company
Henkel KGaA
Henkel KGaA (Preferred)
Kimberly-Clark Corp.
Lear Corporation
The Limited, Inc.
SGS-Thompson Microelectronics N.V. (NY Registered Shares) (ADR)
Sparbanken Sverige AB (Class A)
Sun Microsystems, Inc.
TCI Pacific Communications (Convertible Preferred)
Unocal Corp.
UPM-Kymmene Corp.
Viacom, Inc. (Class B)
Deletions
Applied Materials, Inc.
Canadian Pacific Limited (ADR)
Dai Nippon Printing Co., Ltd.
Dell Computer Corp.
Ford Motor Co.
Kamigumi Co., Ltd.
National Re Corp.
Philippine Long Distance Telephone Co. (ADR)
Philips Electronics N.V.
Preussag AG
Sanwa Bank, Ltd.
Singer Co. N.V.
Sumitomo Corp.
Texas Instruments Inc.
Whirlpool Corporation
<PAGE>
GROWTH
OPPORTUNITY
PORTFOLIO
For the Quarter Ended July 31, 1996
Addition
ConAgra, Inc.
[FN]
*Added and deleted in the same quarter.
