MERRILL LYNCH
ASSET BUILDER
PROGRAM, INC.
STRATEGIC
Performance
Quarterly Report
October 31, 1997
<PAGE>
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
Joseph T. Monagle Jr., Senior Vice President
Donald C. Burke, Vice President
Lawrence R. Fuller, Vice President
Geraldine C. Gunn, Vice President
Jay C. Harbeck, Vice President
Gregory Mark Maunz, Vice President
Thomas R. Robinson, Vice President
Gerald M. Richard, Treasurer
Barbara G. Fraser, Secretary
Custodian
The Bank of New York
90 Washington Street, 12th Floor
New York, NY 10286
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
<PAGE>
Merrill Lynch Asset Builder Program, Inc., October 31, 1997
DEAR SHAREHOLDER
We are pleased to provide you with this quarterly 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 average annual total returns, for
all five portfolios can be found on pages 7-11 of this report to shareholders.
Fundamental Value Portfolio
The quarter ended October 31, 1997 was a tumultuous one, with share prices
buffeted by developments occurring both in the United States and abroad.
Following a fairly consistent uptrend beginning in April, the market encountered
significant resistance in mid-August amid a number of high-profile corporate
earnings shortfalls, concerns over lofty valuations and fears of a Federal
Reserve Board tightening. The market experienced a resurgence in September as
concerns momentarily dissipated with generally better-than-expected earnings
reports and comforting readings on the inflation outlook. Late in the October
quarter, the market declined again, this time in reaction to the upheaval in the
Asian markets.
Despite the market's volatility, the quarter ended October 31, 1997 was a
favorable one for Fundamental Value Portfolio, with a resurgence in issues
selling at lower price/earnings ratios and smaller-capitalization stocks
benefiting the Portfolio's performance. The shift in market leadership
experienced during the October quarter was triggered by a number of key
large-capitalization corporate earnings shortfalls as well as concerns over
growth stock valuations in general. Because the Portfolio was positioned in low
price/earnings sectors and had very limited growth stock exposure, relative
performance benefited. Sectors that favorably impacted the Portfolio's
performance in the three-month period included financials, technology and
energy. The Portfolio's top-performing issues included WHX Corp., which
rebounded on a strike settlement; AT&T Corp., which named a new chief executive
officer; and Digital Equipment Corp., which reached a favorable resolution of a
legal dispute with Intel Corp.
During the October quarter, we initiated six positions and eliminated two. Cash
levels decreased to 8.4% of net assets from 15.5% at July 31, 1997. Following
the downdraft induced by the Asian markets, we selectively added to Portfolio
positions we deemed were unfairly tarnished in the correction. Included here
were holdings in such industries as healthcare, leisure, beverage and retail. We
believed these sectors would suffer little adverse impact from the Asian turmoil
and accordingly, viewed the weaknesses as providing buying opportunities.
New positions initiated in the period included out-of-favor issues in the
health-care services, packaging, leisure and fertilizer industries. We purchased
shares of Aetna Inc., the nation's largest managed care company, on weakness
related to a disappointing earnings report. The shortfall stemmed from
integration problems associated with Aetna's 1996 merger with U.S. Healthcare,
which resulted in higher-than-expected medical costs and lower-than-expected
enrollment growth. Aetna has taken steps to resolve these issues and, therefore,
we believed the company was poised for improved results in 1998. With the shares
trading 36% below their 1997 high and at a 25% discount to the market multiple,
we judged they represented basic investment value. Bolstering the case for the
stock was the company's significant share buyback program and the potential to
monetize non-core assets.
Crown Cork & Seal Company, Inc., the world's largest packaging company, had been
a disappointing investment for some time, with results continually falling short
of investor expectations. The litany of problems had included adverse currency
effects, weakness in the US plastic container business, sluggish European food
can results and the delayed realization of acquisition synergies. We believed we
might be nearing an inflection point in the outlook for the company. In our
view, the company's results for 1998 were likely to be enhanced by restructuring
initiatives, acquisition synergies and a less-adverse foreign exchange
environment. With the shares trading at a 25% discount to the market multiple,
we judged they offered favorable risk/reward appeal.
Circus Circus Enterprises, Inc., a large casino operator, has been a stock
market laggard since peaking in mid-1996. The underperformance reflects
disappointing results stemming from an intensely competitive Las Vegas gaming
environment as well as construction disruptions at Circus Circus's properties.
We believed the shares represented an attractive investment based on their
moderate valuation, an expected improvement in operating results and the
favorable long-term potential for several of the company's projects under
development.
IMC Global, Inc., one of the world's largest fertilizer companies, has been a
lackluster stock market performer for some time, with the shares trading at the
same level as in late 1995. This performance primarily reflects the company's
limited earnings progress over the last several years but also the dilutive
effects of a recent acquisition. We viewed the weakness in the share price as
providing a buying opportunity, with the shares available at a modest 12.5 times
1998 estimated earnings per share. We believe that the company's 1998 outlook is
likely to be enhanced by improved fundamentals including higher product prices,
lower raw material costs, acquisition synergies, and a sizable share buyback
program.
Completed sales in the period included two issues that were the subjects of
takeovers: American Exploration Co., bought by Louis Dreyfus Natural Gas Corp.,
and Tandem Computers, Inc., purchased by COMPAQ Computer Corp.
Periods of market instability such as we are currently experiencing frequently
provide attractive buying opportunities. We will continue to search for such
opportunities in the weeks and months ahead.
Global Opportunity Portfolio
As of October 31, 1997, the asset allocation of Global Opportunity Portfolio
was: foreign stocks, 41% of net assets; US stocks, 22%; foreign bonds, 15%; US
bonds, 12%; and cash reserves, 10%.
Following the strong performance of many equity markets during the past few
months, we gradually shifted assets out of foreign and US stocks during the
three months ended October 31, 1997. We reduced foreign equity representation
from 52% of net assets on July 31, 1997 to 41% as of October 31, 1997. In
addition, we cut back our commitment to US equities from 26% of net assets to
22% during the three months ended October 31, 1997.
Among our foreign equity holdings, we reduced several individual positions. In
addition, we lowered our commitment to Canada through the sale of Canadian
Pacific, Ltd. and Potash Corp. of Saskatchewan, Inc. We established a new
position in Gulf Canada Resources Ltd. In Japan, we accepted profits in Canon
Inc. We further reduced the already limited commitment to Asian markets, other
than Japan, through the sale of HSBC Holdings PLC. We also accepted profits in
Vodafone Group PLC and Usinor-Sacilor S.A.
As was the case with foreign equities, we reduced our position in US equities
through the reduction of individual commitments and the outright sale of others.
These sales included Aetna Inc., AirTouch Communications, Inc., Banc One Corp.,
Horizon/CMS Healthcare Corp., Kimberly-Clark Corporation, Pennzoil Company and
Philip Morris Companies, Inc. We retained the largest concentration of Portfolio
assets in the financial services category, which we expect to be a beneficiary
of declining US interest rates. A significant commitment was retained in
technology, where new positions included National Semiconductor Corporation and
Danka Business Systems PLC. Other significant sector concentrations included
energy and consumer cyclicals.
In addition to increasing cash reserves from 2% of net assets to 10% during the
three months ended October 31, 1997, we expanded our commitment to foreign bonds
from 10% of net assets to 15%, and enlarged US bond holdings from 10% of net
assets to 12% during the same period. In expanding foreign bond holdings, we
established a position in French obligations. Commitments to German, Italian and
Swedish bonds were also increased. During October, we became less confident that
US dollar strength would continue. Given this changed assessment, we reduced the
size of the hedges to the equivalent of one-half of the commitments in European
stocks and bonds and Japanese stocks.
For our US bond holdings, the average duration was at the 5.5-year level as of
October 31, 1997. Our optimistic stance toward US bonds reflected indications
that inflationary pressures in the US economy were exceptionally subdued, as
well as expectations that a slowdown in the rate of economic growth would become
evident in the months ahead. At the same time, we expect that the rapid
shrinkage of the Federal budget deficit to continue to reduce the supply of
newly issued US Government securities relative to demand.
As described above, more than 50% of the Portfolio is invested in foreign bond
and equity securities. These investments involve risks not typically involved in
US investments including currency exchange rate fluctuations, foreign, political
and economic developments, expropriation, reduced publicly available information
about the issuers and decreased market liquidity.
Growth Opportunity Portfolio
During the quarter ended October 31, 1997, total returns of Growth Opportunity
Portfolio modestly outperformed that of the unmanaged Standard & Poor's 500
Index (S&P 500). The Portfolio's comparative outperformance relative to the S&P
500 during the October quarter was a result of the positive investment returns
on five of the Portfolio's top ten holdings. These included COMPAQ Computer
Corp., Schlumberger, Ltd., Federal National Mortgage Association, Diamond
Offshore Drilling, Inc. and SAP AG (Systeme, Anwendungen, Produkte in der
Datenverarbeitung). On a year-to-date basis, Growth Opportunity Portfolio
outperformed both the total returns for the Lipper Growth Funds Average Index
and the unmanaged S&P 500 Index. (See pages 7-11 for complete performance
information for Growth Opportunity Portfolio.)
2 & 3
<PAGE>
Merrill Lynch Asset Builder Program, Inc., October 31, 1997
Investment activities during the October quarter focused on increasing the
equity weightings in the financial services, computer software, retailing and
oil services industries. Very early in the quarter, we took capital gains and
reduced investment weightings in several of the largest holdings where we
considered the price/earnings valuation ratios to be relatively high. These
companies included Cisco Systems, Inc., The Coca-Cola Company, The Gillette
Company, Lucent Technologies, Inc. and Microsoft Corp. Hasbro, Inc. was
eliminated from the Portfolio with a capital gain for valuation reasons.
Two companies added to the Portfolio were Mattel, Inc. and Mellon Bank
Corporation. We expected the management of Mattel, Inc. to continue to produce
above-average gains in earnings and improvements in rates of return from a
combination of new product introductions, geographic expansion and productivity
improvement from the restructuring of manufacturing and distribution operations.
Also, we expected Mattel, Inc. to benefit significantly from lower manufacturing
costs as a result of the depreciation of the currencies of major Asian
countries. Mellon Bank Corporation could produce a superior rate of growth in
earnings and improving returns on capital from recent financial service company
acquisitions and the continued restructuring of operations.
At the end of the October quarter, the ten largest industry sectors in Growth
Opportunity Portfolio were: banking and financial, communications equipment, oil
services, computer software, financial services, pharmaceuticals, retail stores,
computers, electrical equipment and specialty retailing. The top ten industries
represented almost two-thirds of the net assets of the Portfolio.
We continue to have a positive outlook for US stock market investment returns
over the next 12 months and maintain a relatively fully invested Portfolio,
although we raised our cash and cash equivalent position slightly at the end of
the October quarter to 8.9% of net assets compared to 6.5% at July quarter-end.
Quality Bond Portfolio
During the month of July it seemed that nothing could go wrong with the bond
market. Industrial prices had turned modestly lower, oil prices had plunged and
there was significant weakness in agricultural commodity prices. The concerns of
late spring that the Federal Reserve Board would tighten monetary policy
disappeared with the release of continued benign inflation data. While the
employment report was strong, productivity levels were up. In the calm market
environment of July, bond yields fell to the lowest level in five months. At the
end of July, the yield on the long-term bond dropped through the 6.30% level for
a brief period of time. Nevertheless, inflationary concerns resurfaced at the
beginning of August as a result of employment and purchasing manager reports.
These figures suggested substantially stronger consumer spending for the third
quarter. Bond market investor sentiment shifted sharply to become much more
pessimistic. In August, the yield on the long-term bond rose from 6.30% to
6.70%. The unmanaged Merrill Lynch Corporate Bond Master Index reflected a
negative monthly return for the first time in six months.
In September, the producer price index report for August showed an increase of
only 0.1%, excluding food and energy. These figures reinforced analysts'
expectations that inflation remains under control. As a result, the bond market
experienced another rally, which carried the long-term Treasury bond yield down
to 6.23% at the beginning of October. With low inflation, bond investors
believed that there was still no need for the Federal Reserve Board to tighten
monetary policy.
October was a difficult month for the market in terms of negative surprises. On
October 8, Federal Reserve Board Chairman Alan Greenspan expressed concern
before the House Budget Committee that the demand for labor was outpacing the
supply with the resulting pressure likely to push up wages and prices. He
suggested that the Federal Reserve Board would tighten before it allowed this to
happen. Bond prices slumped, and the yield on the long-term Treasury bond jumped
from 6.23% to 6.43% in three days. Then, on October 23, the Thai baht collapsed
and the Asian currency markets went into a free fall. The Dow Jones Industrial
Average fell 554 points on record volume of 1.2 billion shares. A worldwide
flight to quality caused both foreign and domestic investors to seek shelter in
the US Treasury market, and the yield on the long-term bond fell from 6.43% to
6.15%. As the month ended, third quarter gross domestic product (GDP) figures
were released showing a slightly larger-than-expected increase of 3.5% as
compared to 3.3% in the second quarter. On the other hand, the GDP price
deflator rose only 1.4% for the third quarter against a 1.8% increase for the
second quarter. This was the lowest quarterly increase since the second quarter
of 1964. The long-term bond finished the month at 6.16%.
During the October quarter, we maintained a duration-neutral position for the
Fund relative to the unmanaged Lehman Aggregate Bond Index. Accordingly, at the
beginning of July, we set a bracket of 4.5 years-4.6 years for the range of the
Portfolio's duration, which was neutral to the Index. As the market rallied, we
extended the upper limit to 4.7 years, and extended the maturity of our
investments accordingly. During August and September, when the bond market
experienced the alternate extremes of both negative and positive psychology, we
retreated to the 4.5 years-4.6 years bracket, which represents duration
neutrality. We maintained this course through the upheavals of October, and
finished the October quarter with a duration of 4.54 years.
The average quality of the Fund's holdings was AA-, which was slightly better
than the Lehman Aggregate Bond Index average of A+. We were underweighted in
Canadian and Yankee issues since we believed that their yields were not high
enough to compensate for the higher level of risk. We are also underweighted in
the electric utility sector because of our continued concerns that this sector
will be exposed to event risk as mergers and acquisitions occur that may affect
the collateral of bond issues.
The Federal Reserve Board elected not to tighten interest rates at the meeting
of November 12. This decision was probably more influenced by the turmoil in the
world currency markets than by domestic considerations. While a further move to
tighten interest rates might anticipate some of the problems that could result
from wage and price pressures, the side effects such a tightening move would
have on the international exchanges would be most unwelcome at this time.
Accordingly, we expect the Federal Reserve Board to stay on hold at least
through the end of the year to allow some relief to the international markets.
However, this may prove to be only a temporary respite until the Federal Reserve
Board becomes more comfortable with the outlook for US labor costs.
We expect to keep the duration of the portfolio close to the Index benchmark,
with a modest bias toward extending the outside bracket. With spreads as tight
as they are, we do not anticipate any significant changes in the asset
allocation mix during the January quarter.
US Government Securities Portfolio
The financial data released during the October quarter revealed an economy that
is still expanding but not producing the inflation that would normally accompany
this pace of growth. The US economy accelerated in the third quarter led by
stronger consumer spending and the largest gain in business investment in more
than a decade. Gross domestic product (GDP), a measure of the nation's output of
goods and services, grew at a faster-than-expected 3.5% annual rate in the third
quarter after expanding at a 3.3% pace in the second quarter. Meanwhile, the GDP
chain-weighted index, one of the broadest measures of domestic pricing behavior
and therefore inflation, increased at a 1.4% rate during the October quarter.
This was the slowest rate in over 30 years.
Further proving the strength of the US economy was October's report on US
employment which showed the economy added far more jobs than expected. The
unemployment rate fell to 4.7% from 4.9% in September and is at a 24-year low.
The Federal Reserve Board already had been anxious about this report as it has
been concerned that the tightness in the labor markets would ultimately lead to
wage inflation. In fact, October did also bring a new peak in the year-over-year
growth in hourly earnings. This, coupled with the continued strength of the
economy, might have been enough evidence to warrant a tightening of monetary
policy before 1997 year-end because of the Federal Reserve Board's preemptive
stance against inflation. However, we believe the turmoil in the Asian markets
and the fear that it could spill over into the US economy will keep the Federal
Reserve Board from changing monetary policy in the near term.
The US Treasury market had been on somewhat of a roller coaster ride during the
October quarter with big price swings as yields went up then dropped back down
many times. The turmoil in the Asian financial markets late in the October
quarter benefited the US Treasury market as capital seeks a haven in US dollar
assets during times of financial stress. Two-year and ten-year Treasury note
yields ended the October quarter at 5.61% and 5.84%, respectively, further
flattening an already flat Treasury yield curve. The ten-year Treasury note
yield, a benchmark for mortgage backed securities (MBS), fluctuated during the
October quarter, ending the three-month period 21 basis points lower than it
started the quarter.
As typically happens in months where long-term interest-rates drop
significantly, yield spreads of MBS widened relative to their Treasury
counterparts. As interest rates decrease, refinancing opportunities increase and
prices of MBS tend to compress as prepayment fears get priced into their yields.
The ten-year Treasury note yield has settled in a new range below 6%, increasing
the refinanceable universe. However, we continue to avoid MBS that are the most
susceptible to prepaying. We hold a 71% MBS allocation with 60% in MBS which
have little or no refinancing opportunities and 11% in super-premium MBS whose
homeowners have already gone through many refinancing opportunities.
Many of our MBS holdings participated in the dollar roll program (which involves
the current month sale and concurrent purchase of like securities in a forward
month at a lower price) during the
4 & 5
<PAGE>
Merrill Lynch Asset Builder Program, Inc., October 31, 1997
October quarter, enhancing the Portfolio's performance. Additionally, during the
October quarter we extended the duration of the US Treasury allocation of the
Portfolio through the use of US Treasury zero coupon securities. This benefited
the Portfolio as yields came down and the Treasury curve continued to flatten
with longer-term securities having the strongest performance for the quarter. We
continue to focus our investments on high-quality MBS as they offer a very
attractive yield advantage to comparable US Treasury securities, in our opinion.
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 annual report to shareholders.
Sincerely,
/s/ Arthur Zeikel
Arthur Zeikel
President
/s/ Geraldine C. Gunn
Geraldine C. Gunn
Vice President and Portfolio Manager
Fundamental Value Portfolio
/s/ Thomas R. Robinson
Thomas R. Robinson
Vice President and Portfolio Manager
Global Opportunity Portfolio
/s/ Lawrence R. Fuller
Lawrence R. Fuller
Vice President and Portfolio Manager
Growth Opportunity Portfolio
/s/ Jay C. Harbeck
Jay C. Harbeck
Vice President and Portfolio Manager
Quality Bond Portfolio
/s/ Gregory Mark Maunz
Gregory Mark Maunz
Vice President and Portfolio Manager
US Government Securities Portfolio
December 8, 1997
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:
o 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.
o 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.)
o 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.
o 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).
None of the past results shown should be considered a representation of future
performance. Figures shown in the "Average Annual Total Return" tables assume
reinvestment of all dividends and capital gains distributions at net asset value
on the ex-dividend or payable date. Investment return and principal value of
shares will fluctuate so that shares, when redeemed, may be worth more or less
than their original cost. Dividends paid to each class of shares will vary
because of the different levels of account maintenance, distribution and
transfer agency fees applicable to each class, which are deducted from the
income available to be paid to shareholders.
6 & 7
<PAGE>
Merrill Lynch Asset Builder Program, Inc., October 31, 1997
PERFORMANCE DATA (continued)
Fundamental
Value Portfolio
Average Annual
Total Returns
% Return Without % Return With
Sales Charge Sales Charge**
================================================================================
Class A Shares*
================================================================================
Year Ended 9/30/97 +33.19% +26.20%
- --------------------------------------------------------------------------------
Inception (2/01/95) to 9/30/97 +24.33 +21.83
- --------------------------------------------------------------------------------
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
================================================================================
Class B Shares*
================================================================================
Year Ended 9/30/97 +31.75% +27.75%
- --------------------------------------------------------------------------------
Inception (2/01/95) to 9/30/97 +23.00 +22.47
- --------------------------------------------------------------------------------
* 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 9/30/97 +31.78% +30.78%
- --------------------------------------------------------------------------------
Inception (2/01/95) to 9/30/97 +23.01 +23.01
- --------------------------------------------------------------------------------
* 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 9/30/97 +32.97% +25.99%
- --------------------------------------------------------------------------------
Inception (2/01/95) to 9/30/97 +24.07 +21.58
- --------------------------------------------------------------------------------
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
Global
Opportunity
Portfolio
Average Annual
Total Returns
% Return Without % Return With
Sales Charge Sales Charge**
================================================================================
Class A Shares*
================================================================================
Year Ended 9/30/97 +23.12% +16.66%
- --------------------------------------------------------------------------------
Inception (2/01/95) to 9/30/97 +14.29 +12.00
- --------------------------------------------------------------------------------
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
================================================================================
Class B Shares*
================================================================================
Year Ended 9/30/97 +21.85% +17.85%
- --------------------------------------------------------------------------------
Inception (2/01/95) to 9/30/97 +13.10 +12.48
- --------------------------------------------------------------------------------
* 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 9/30/97 +21.81% +20.81%
- --------------------------------------------------------------------------------
Inception (2/01/95) to 9/30/97 +13.06 +13.06
- --------------------------------------------------------------------------------
* 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 9/30/97 +22.82% +16.37%
- --------------------------------------------------------------------------------
Inception (2/01/95) to 9/30/97 +14.05 +11.76
- --------------------------------------------------------------------------------
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
Growth
Opportunity
Portfolio
Average Annual
Total Returns
% Return Without % Return With
Sales Charge Sales Charge**
================================================================================
Class A Shares*
================================================================================
Year Ended 9/30/97 +35.53% +28.41%
- --------------------------------------------------------------------------------
Inception (2/02/96) to 9/30/97 +25.65 +21.64
- --------------------------------------------------------------------------------
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
================================================================================
Class B Shares*
================================================================================
Year Ended 9/30/97 +34.05% +30.05%
- --------------------------------------------------------------------------------
Inception (2/02/96) to 9/30/97 +24.40 +22.83
- --------------------------------------------------------------------------------
* 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 9/30/97 +33.96% +32.96%
- --------------------------------------------------------------------------------
Inception (2/02/96) to 9/30/97 +24.35 +24.35
- --------------------------------------------------------------------------------
* 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 9/30/97 +35.25% +28.15%
- --------------------------------------------------------------------------------
Inception (2/02/96) to 9/30/97 +25.50 +21.49
- --------------------------------------------------------------------------------
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
Quality Bond
Portfolio
Average Annual
Total Returns
% Return Without % Return With
Sales Charge Sales Charge**
================================================================================
Class A Shares*
================================================================================
Year Ended 9/30/97 + 9.73% + 5.34%
- --------------------------------------------------------------------------------
Inception (2/01/95) to 9/30/97 + 6.74 + 5.12
- --------------------------------------------------------------------------------
* Maximum sales charge is 4%.
** Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
================================================================================
Class B Shares*
================================================================================
Year Ended 9/30/97 + 8.68% + 4.68%
- --------------------------------------------------------------------------------
Inception (2/01/95) to 9/30/97 + 5.80 + 5.11
- --------------------------------------------------------------------------------
* 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 9/30/97 + 8.59% + 7.59%
- --------------------------------------------------------------------------------
Inception (2/01/95) to 9/30/97 + 5.72 + 5.72
- --------------------------------------------------------------------------------
* 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 9/30/97 + 9.35% + 4.97%
- --------------------------------------------------------------------------------
Inception (2/01/95) to 9/30/97 + 6.44 + 4.82
- --------------------------------------------------------------------------------
* Maximum sales charge is 4%.
** Assuming maximum sales charge.
US Government
Securities
Portfolio
Average Annual
Total Returns
% Return Without % Return With
Sales Charge Sales Charge**
================================================================================
Class A Shares*
================================================================================
Year Ended 9/30/97 +10.02% + 5.62%
- --------------------------------------------------------------------------------
Inception (2/01/95) to 9/30/97 + 9.89 + 8.21
- --------------------------------------------------------------------------------
* Maximum sales charge is 4%.
** Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
================================================================================
Class B Shares*
================================================================================
Year Ended 9/30/97 + 9.01% + 5.01%
- --------------------------------------------------------------------------------
Inception (2/01/95) to 9/30/97 + 8.95 + 8.29
- --------------------------------------------------------------------------------
* 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 9/30/97 + 8.93% + 7.93%
- --------------------------------------------------------------------------------
Inception (2/01/95) to 9/30/97 + 8.88 + 8.88
- --------------------------------------------------------------------------------
* 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 9/30/97 + 9.64% + 5.25%
- --------------------------------------------------------------------------------
Inception (2/01/95) to 9/30/97 + 9.59 + 7.92
- --------------------------------------------------------------------------------
* Maximum sales charge is 4%.
** Assuming maximum sales charge.
8 & 9
<PAGE>
Merrill Lynch Asset Builder Program, Inc., October 31, 1997
PERFORMANCE DATA (concluded)
Recent
Performance
Results*
<TABLE>
<CAPTION>
Standardized
12 Month 3 Month 30-day Yield
10/31/97 7/31/97 10/31/96 % Change % Change As of 10/31/97
=================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Fundamental Value Portfolio Class A Shares $15.75 $15.51 $12.93 +24.09%(1) +1.55% --
- ---------------------------------------------------------------------------------------------------------------------------------
Fundamental Value Portfolio Class B Shares 15.41 15.22 12.70 +23.64(1) +1.25 --
- ---------------------------------------------------------------------------------------------------------------------------------
Fundamental Value Portfolio Class C Shares 15.41 15.22 12.70 +23.64(1) +1.25 --
- ---------------------------------------------------------------------------------------------------------------------------------
Fundamental Value Portfolio Class D Shares 15.68 15.45 12.89 +23.93(1) +1.49 --
- ---------------------------------------------------------------------------------------------------------------------------------
Global Opportunity Portfolio Class A Shares 12.80 13.92 11.42 +13.28(2) -8.05 --
- ---------------------------------------------------------------------------------------------------------------------------------
Global Opportunity Portfolio Class B Shares 12.61 13.75 11.27 +13.09(2) -8.29 --
- ---------------------------------------------------------------------------------------------------------------------------------
Global Opportunity Portfolio Class C Shares 12.59 13.74 11.27 +12.92(2) -8.37 --
- ---------------------------------------------------------------------------------------------------------------------------------
Global Opportunity Portfolio Class D Shares 12.76 13.89 11.39 +13.23(2) -8.14 --
- ---------------------------------------------------------------------------------------------------------------------------------
Growth Opportunity Portfolio Class A Shares 14.19 14.68 10.98 +29.23 -3.34 --
- ---------------------------------------------------------------------------------------------------------------------------------
Growth Opportunity Portfolio Class B Shares 13.93 14.46 10.91 +27.68 -3.67 --
- ---------------------------------------------------------------------------------------------------------------------------------
Growth Opportunity Portfolio Class C Shares 13.92 14.45 10.90 +27.71 -3.67 --
- ---------------------------------------------------------------------------------------------------------------------------------
Growth Opportunity Portfolio Class D Shares 14.15 14.65 10.98 +28.87 -3.41 --
- ---------------------------------------------------------------------------------------------------------------------------------
Quality Bond Portfolio Class A Shares 10.01 10.00 9.91 + 1.01 +0.10 6.20%
- ---------------------------------------------------------------------------------------------------------------------------------
Quality Bond Portfolio Class B Shares 10.00 9.99 9.90 + 1.01 +0.10 5.73
- ---------------------------------------------------------------------------------------------------------------------------------
Quality Bond Portfolio Class C Shares 10.00 9.99 9.90 + 1.01 +0.10 5.62
- ---------------------------------------------------------------------------------------------------------------------------------
Quality Bond Portfolio Class D Shares 10.00 9.99 9.90 + 1.01 +0.10 6.06
- ---------------------------------------------------------------------------------------------------------------------------------
US Government Securities Portfolio Class A Shares 10.44 10.38 10.29 + 1.51(3) +0.58 6.49
- ---------------------------------------------------------------------------------------------------------------------------------
US Government Securities Portfolio Class B Shares 10.44 10.38 10.29 + 1.51(3) +0.58 6.03
- ---------------------------------------------------------------------------------------------------------------------------------
US Government Securities Portfolio Class C Shares 10.44 10.38 10.29 + 1.51(3) +0.58 5.91
- ---------------------------------------------------------------------------------------------------------------------------------
US Government Securities Portfolio Class D Shares 10.44 10.38 10.29 + 1.51(3) +0.58 6.31
- ---------------------------------------------------------------------------------------------------------------------------------
Fundamental Value Portfolio Class A Shares--Total Return +28.96(4) +1.55
- ---------------------------------------------------------------------------------------------------------------------------------
Fundamental Value Portfolio Class B Shares--Total Return +27.48(5) +1.25
- ---------------------------------------------------------------------------------------------------------------------------------
Fundamental Value Portfolio Class C Shares--Total Return +27.50(6) +1.25
- ---------------------------------------------------------------------------------------------------------------------------------
Fundamental Value Portfolio Class D Shares--Total Return +28.55(7) +1.49
- ---------------------------------------------------------------------------------------------------------------------------------
Global Opportunity Portfolio Class A Shares--Total Return +14.54(8) -8.05
- ---------------------------------------------------------------------------------------------------------------------------------
Global Opportunity Portfolio Class B Shares--Total Return +13.36(9) -8.29
- ---------------------------------------------------------------------------------------------------------------------------------
Global Opportunity Portfolio Class C Shares--Total Return +13.21(10) -8.37
- ---------------------------------------------------------------------------------------------------------------------------------
Global Opportunity Portfolio Class D Shares--Total Return +14.25(11) -8.14
- ---------------------------------------------------------------------------------------------------------------------------------
Growth Opportunity Portfolio Class A Shares--Total Return +29.23 -3.34
- ---------------------------------------------------------------------------------------------------------------------------------
Growth Opportunity Portfolio Class B Shares--Total Return +27.68 -3.67
- ---------------------------------------------------------------------------------------------------------------------------------
Growth Opportunity Portfolio Class C Shares--Total Return +27.71 -3.67
- ---------------------------------------------------------------------------------------------------------------------------------
Growth Opportunity Portfolio Class D Shares--Total Return +28.87 -3.41
- ---------------------------------------------------------------------------------------------------------------------------------
Quality Bond Portfolio Class A Shares--Total Return + 8.77(12) +1.91(13)
- ---------------------------------------------------------------------------------------------------------------------------------
Quality Bond Portfolio Class B Shares--Total Return + 7.83(14) +1.68(15)
- ---------------------------------------------------------------------------------------------------------------------------------
Quality Bond Portfolio Class C Shares--Total Return + 7.74(16) +1.66(17)
- ---------------------------------------------------------------------------------------------------------------------------------
Quality Bond Portfolio Class D Shares--Total Return + 8.50(18) +1.85(19)
- ---------------------------------------------------------------------------------------------------------------------------------
US Government Securities Portfolio Class A Shares--Total Return + 9.32(20) +2.33(21)
- ---------------------------------------------------------------------------------------------------------------------------------
US Government Securities Portfolio Class B Shares--Total Return + 8.42(22) +2.12(23)
- ---------------------------------------------------------------------------------------------------------------------------------
US Government Securities Portfolio Class C Shares--Total Return + 8.35(24) +2.10(25)
- ---------------------------------------------------------------------------------------------------------------------------------
US Government Securities Portfolio Class D Shares--Total Return + 9.05(26) +2.27(27)
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* 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 $0.248 per share capital gains
distributions.
(2) Percent change includes reinvestment of $0.122 per share capital gains
distributions.
(3) Percent change includes reinvestment of $0.005 per share capital gains
distributions.
(4) Percent change includes reinvestment of $0.530 per share ordinary income
dividends and $0.248 per share capital gains distributions.
(5) Percent change includes reinvestment of $0.415 per share ordinary income
dividends and $0.248 per share capital gains distributions.
(6) Percent change includes reinvestment of $0.417 per share ordinary income
dividends and $0.248 per share capital gains distributions.
(7) Percent change includes reinvestment of $0.503 per share ordinary income
dividends and $0.248 per share capital gains distributions.
(8) Percent change includes reinvestment of $0.128 per share ordinary income
dividends and $0.122 per share capital gains distributions.
(9) Percent change includes reinvestment of $0.027 per share ordinary income
dividends and $0.122 per share capital gains distributions.
(10) Percent change includes reinvestment of $0.030 per share ordinary income
dividends and $0.122 per share capital gains distributions.
(11) Percent change includes reinvestment of $0.105 per share ordinary income
dividends and $0.122 per share capital gains distributions.
(12) Percent change includes reinvestment of $0.736 per share ordinary income
dividends.
(13) Percent change includes reinvestment of $0.185 per share ordinary income
dividends.
(14) Percent change includes reinvestment of $0.650 per share ordinary income
dividends.
(15) Percent change includes reinvestment of $0.162 per share ordinary income
dividends.
(16) Percent change includes reinvestment of $0.641 per share ordinary income
dividends.
(17) Percent change includes reinvestment of $0.160 per share ordinary income
dividends.
(18) Percent change includes reinvestment of $0.711 per share ordinary income
dividends.
(19) Percent change includes reinvestment of $0.178 per share ordinary income
dividends.
(20) Percent change includes reinvestment of $0.769 per share ordinary income
dividends and $0.005 per share capital gains distributions.
(21) Percent change includes reinvestment of $0.186 per share ordinary income
dividends.
(22) Percent change includes reinvestment of $0.683 per share ordinary income
dividends and $0.005 per share capital gains distributions.
(23) Percent change includes reinvestment of $0.163 per share ordinary income
dividends.
(24) Percent change includes reinvestment of $0.675 per share ordinary income
dividends and $0.005 per share capital gains distributions.
(25) Percent change includes reinvestment of $0.161 per share ordinary income
dividends.
(26) Percent change includes reinvestment of $0.743 per share ordinary income
dividends and $0.005 per share capital gains distributions.
(27) Percent change includes reinvestment of $0.179 per share ordinary income
dividends.
10 & 11
<PAGE>
Merrill Lynch Asset Builder Program, Inc., October 31, 1997
SCHEDULE OF INVESTMENTS (in US dollars)
<TABLE>
<CAPTION>
Fundamental Value Portfolio
---------------------------------------------------------------------------------------------------------------------
LATIN Shares Percent of
AMERICA Industries Held Investments Cost Value Net Assets
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Argentina Oil--International 35,000 Yacimientos Petroliferos Fiscales
S.A. (YPF) (ADR)* $ 682,846 $ 1,120,000 1.5%
---------------------------------------------------------------------------------------------------------------------
Total Investments in Latin America 682,846 1,120,000 1.5
====================================================================================================================================
MIDDLE
EAST
====================================================================================================================================
Israel Computer Services 125,000 Scitex Corp. Ltd. 1,244,861 1,500,000 2.1
---------------------------------------------------------------------------------------------------------------------
Total Investments in the Middle East 1,244,861 1,500,000 2.1
====================================================================================================================================
NORTH
AMERICA
====================================================================================================================================
United States Airlines 90,000 Mesa Air Group, Inc. 753,168 483,750 0.7
---------------------------------------------------------------------------------------------------------------------
Automotive 25,000 Ford Motor Co. 810,389 1,092,188 1.5
25,000 General Motors Corp. 1,359,960 1,604,688 2.3
----------- ---------- -----
2,170,349 2,696,876 3.8
---------------------------------------------------------------------------------------------------------------------
Banking 10,000 Bankers Trust New York Corp. 637,295 1,180,000 1.6
80,000 Hibernia Corp. (Class A) 948,558 1,425,000 2.0
5,000 Wells Fargo & Company 1,274,628 1,456,875 2.0
----------- ---------- -----
2,860,481 4,061,875 5.6
---------------------------------------------------------------------------------------------------------------------
Beverage & Entertainment 50,000 The Seagram Company Ltd. 1,792,586 1,684,375 2.3
---------------------------------------------------------------------------------------------------------------------
Chemicals 20,000 Eastman Chemical Co. 1,124,950 1,192,500 1.7
30,000 Great Lakes Chemical Corp. 1,289,188 1,410,000 2.0
40,000 Millennium Chemicals Inc. 740,341 940,000 1.3
----------- ---------- -----
3,154,479 3,542,500 5.0
---------------------------------------------------------------------------------------------------------------------
Computer Services 55,000 CompuServe Corporation 575,800 687,500 1.0
---------------------------------------------------------------------------------------------------------------------
Computer Software 100,000 Mentor Graphics Corporation 983,068 1,081,250 1.5
125,000 Novell, Inc. 982,244 1,046,875 1.5
----------- ---------- -----
1,965,312 2,128,125 3.0
---------------------------------------------------------------------------------------------------------------------
Conglomerates 35,000 Tenneco, Inc. 1,564,600 1,572,813 2.2
---------------------------------------------------------------------------------------------------------------------
Electrical Equipment 30,000 General Signal Corporation 1,229,451 1,203,750 1.7
---------------------------------------------------------------------------------------------------------------------
Fertilizer 37,500 IMC Global, Inc. 1,331,072 1,263,281 1.7
---------------------------------------------------------------------------------------------------------------------
Gaming 40,000 Circus Circus Enterprises, Inc. 963,565 890,000 1.2
40,000 Harrah's Entertainment, Inc. 765,713 787,500 1.1
----------- ---------- -----
1,729,278 1,677,500 2.3
---------------------------------------------------------------------------------------------------------------------
Health Care Services 17,500 Aetna Inc. 1,315,639 1,243,594 1.7
60,000 Humana, Inc. 1,171,635 1,260,000 1.8
----------- ---------- -----
2,487,274 2,503,594 3.5
---------------------------------------------------------------------------------------------------------------------
Household Products 35,000 Black & Decker Corp. 1,167,470 1,332,187 1.9
20,000 Whirlpool Corporation 1,085,682 1,212,500 1.7
----------- ---------- -----
2,253,152 2,544,687 3.6
---------------------------------------------------------------------------------------------------------------------
Information Processing 45,000 Digital Equipment Corp. 1,504,041 2,252,812 3.1
22,000 International Business Machines Corp. 1,309,275 2,157,375 3.0
----------- ---------- -----
2,813,316 4,410,187 6.1
---------------------------------------------------------------------------------------------------------------------
Insurance 50,000 TIG Holdings, Inc. 1,474,737 1,693,750 2.4
---------------------------------------------------------------------------------------------------------------------
Machinery 50,000 ITT Industries Inc. 1,177,983 1,578,125 2.2
---------------------------------------------------------------------------------------------------------------------
Medical Services 50,000 Pharmaceutical Product Development, Inc. 858,032 881,250 1.2
---------------------------------------------------------------------------------------------------------------------
Metals--Non-Ferrous 45,000 ASARCO Inc. 1,240,590 1,231,875 1.7
---------------------------------------------------------------------------------------------------------------------
Oil--Domestic 70,000 Occidental Petroleum Corp. 1,612,950 1,951,250 2.7
42,000 Sun Company, Inc. 1,307,258 1,682,625 2.4
----------- ---------- -----
2,920,208 3,633,875 5.1
---------------------------------------------------------------------------------------------------------------------
Oil Service 30,000 Dresser Industries, Inc. 927,909 1,263,750 1.8
---------------------------------------------------------------------------------------------------------------------
Packaging 30,000 Crown Cork & Seal Company, Inc. 1,423,092 1,351,875 1.9
---------------------------------------------------------------------------------------------------------------------
Paper & Forest Products 22,500 International Paper Co. 881,980 1,012,500 1.4
60,000 Louisiana-Pacific Corp. 1,351,137 1,260,000 1.8
----------- ---------- -----
2,233,117 2,272,500 3.2
---------------------------------------------------------------------------------------------------------------------
Pharmaceuticals 11,000 Bristol-Myers Squibb Co. 421,102 965,250 1.3
40,000 Pharmacia & Upjohn, Inc. 1,326,355 1,270,000 1.8
----------- ---------- -----
1,747,457 2,235,250 3.1
---------------------------------------------------------------------------------------------------------------------
Photography 25,000 Eastman Kodak Co. 1,765,546 1,496,875 2.1
---------------------------------------------------------------------------------------------------------------------
Publishing/Newspapers 27,500 Dow Jones & Company, Inc. 1,021,761 1,278,750 1.8
---------------------------------------------------------------------------------------------------------------------
Retail 40,000 Dillards Inc. (Class A) 1,260,809 1,535,000 2.2
125,000 Kmart Corporation 1,373,286 1,648,437 2.3
42,000 Toys `R' Us, Inc. 1,172,815 1,430,625 2.0
35,000 Woolworth Corp. 423,323 665,000 0.9
----------- ---------- -----
4,230,233 5,279,062 7.4
---------------------------------------------------------------------------------------------------------------------
Steel 40,000 USX-US Steel Group, Inc. 1,147,077 1,360,000 1.9
100,000 WHX Corp. 902,908 1,331,250 1.9
----------- ---------- -----
2,049,985 2,691,250 3.8
---------------------------------------------------------------------------------------------------------------------
Technology 80,000 Exabyte Corp. 1,024,595 840,000 1.2
---------------------------------------------------------------------------------------------------------------------
Telecommunications 40,000 AT&T Corp. 1,436,737 1,957,500 2.7
35,000 GTE Corp. 1,555,539 1,485,312 2.1
50,000 U S West Media Group 869,720 1,262,500 1.8
----------- ---------- -----
3,861,996 4,705,312 6.6
---------------------------------------------------------------------------------------------------------------------
Total Investments in North America 54,637,559 62,894,312 88.0
====================================================================================================================================
</TABLE>
12 & 13
<PAGE>
Merrill Lynch Asset Builder Program, Inc., October 31, 1997
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<TABLE>
<CAPTION>
Fundamental Value Portfolio (concluded)
---------------------------------------------------------------------------------------------------------------------
SHORT-TERM Face Percent of
SECURITIES Amount Issue Cost Value Net Assets
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
Commercial Paper** $1,013,000 General Electric Capital Corp., 5.79%
due 11/03/1997 $ 1,012,674 $ 1,012,674 1.4%
---------------------------------------------------------------------------------------------------------------------
US Government Agency 5,000,000 Federal Home Loan Mortgage Corp., 5.47%
Obligations** due 11/04/1997 4,997,721 4,997,721 7.0
---------------------------------------------------------------------------------------------------------------------
Total Investments in Short-Term
Securities 6,010,395 6,010,395 8.4
====================================================================================================================================
Total Investments $62,575,661 71,524,707 100.0
===========
Liabilities in Excess of Other Assets (32,964) (0.0)
----------- -----
Net Assets $71,491,743 100.0%
=========== =====
====================================================================================================================================
Net Asset Value: Class A--Based on net assets of $290,359 and 18,436 shares outstanding $ 15.75
==========
Class B--Based on net assets of $45,194,154 and 2,932,710 shares outstanding $ 15.41
==========
Class C--Based on net assets of $20,977,893 and 1,361,363 shares outstanding $ 15.41
==========
Class D--Based on net assets of $5,029,337 and 320,675 shares outstanding $ 15.68
==========
====================================================================================================================================
</TABLE>
* American Depositary Receipts (ADR).
** Commercial Paper and certain US Government Agency Obligations are traded
on a discount basis; the interest rates shown are the rates paid at the
time of purchase by the Portfolio.
SCHEDULE OF INVESTMENTS (in US dollars)
<TABLE>
<CAPTION>
Global Opportunity Portfolio
--------------------------------------------------------------------------------------------------------------------
Face Percent of
COUNTRY Amount Foreign Government Obligations Cost Value Net Assets
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Canada C$ 575,000 Canadian Government Bonds, 7% due 12/01/2006 $ 436,840 $ 452,955 0.8%
====================================================================================================================================
Denmark Dkr 5,100,000 Danish Government Bonds, 7% due 11/15/2007 814,777 827,587 1.4
====================================================================================================================================
France Frf 4,500,000 French Government OATS, 5.50% due 10/25/2007 740,926 775,499 1.3
====================================================================================================================================
Germany Bundesrepublik Deutschland:
DM 850,000 6.50% due 10/14/2005 547,951 524,993 0.9
1,150,000 6% due 7/04/2007 672,594 689,358 1.2
850,000 6% due 6/20/2016 472,899 493,861 0.8
800,000 Treuhandanstalt, 6.875% due 6/11/2003 532,016 503,087 0.9
----------- ---------- -----
2,225,460 2,211,299 3.8
====================================================================================================================================
Italy Lit 2,250,000,000 Buoni Poliennali del Tesoro (Italian Government
Bonds), 8.50% due 8/01/2004 1,464,424 1,504,616 2.6
====================================================================================================================================
Spain Pta 80,000,000 Bonos del Estado (Spanish Government Bonds), 7.90%
due 2/28/2002 648,305 602,933 1.0
====================================================================================================================================
Sweden Skr 5,800,000 Government of Sweden, 8% due 8/15/2007 879,521 865,701 1.5
====================================================================================================================================
United Kingdom (pound) 750,000 UK Treasury Gilt, 7.25% due 12/07/2007 1,241,406 1,323,469 2.3
====================================================================================================================================
Total Investments in Foreign Government Obligations 8,451,659 8,564,059 14.7
====================================================================================================================================
US Government Obligations
====================================================================================================================================
United States US Treasury Notes and Bonds:
US$ 500,000 5% due 1/31/1998 495,586 499,295 0.9
2,150,000 6% due 8/15/1999 2,153,820 2,162,427 3.7
800,000 6.50% due 5/31/2002 805,375 822,872 1.4
425,000 6.25% due 2/15/2007 428,387 435,493 0.7
635,000 6.625% due 5/15/2007 642,934 668,636 1.1
2,125,000 6.625% due 2/15/2027 2,073,855 2,253,159 3.9
====================================================================================================================================
Total Investments in US Government Obligations 6,599,957 6,841,882 11.7
====================================================================================================================================
Total Investments in Foreign & US Government
Obligations 15,051,616 15,405,941 26.4
====================================================================================================================================
Shares
Industries Held US Stocks
====================================================================================================================================
United States Aerospace & Defense 4,200 AlliedSignal, Inc. 157,785 151,200 0.3
5,000 GenCorp, Inc. 145,845 122,187 0.2
2,700 United Technologies Corporation 117,081 189,000 0.3
----------- ---------- -----
420,711 462,387 0.8
--------------------------------------------------------------------------------------------------------------------
Airlines 6,000 US Airways Group Inc. 220,454 281,250 0.5
--------------------------------------------------------------------------------------------------------------------
Appliances 5,800 Sunbeam Corp. 229,475 262,813 0.5
--------------------------------------------------------------------------------------------------------------------
Auto-Related 4,600 Hertz Corporation (Class A) 141,401 158,988 0.3
--------------------------------------------------------------------------------------------------------------------
Automobile Parts 4,300 Federal-Mogul Corporation 157,301 181,944 0.3
--------------------------------------------------------------------------------------------------------------------
Automotive & 7,000 Avis Rent A Car, Inc. 152,340 192,063 0.3
Equipment
--------------------------------------------------------------------------------------------------------------------
Banking 5,800 The Bank of New York Company, Inc. 157,950 272,963 0.5
4,700 BankAmerica Corp. 251,855 336,050 0.6
----------- ---------- -----
409,805 609,013 1.1
--------------------------------------------------------------------------------------------------------------------
Banking & Financial 6,000 First Union Corporation 295,244 294,375 0.5
--------------------------------------------------------------------------------------------------------------------
Broadcasting/Cable 14,225 Tele-Communications, Inc. (Class A) 240,093 325,399 0.6
4,875 Tele-Communications TCI Ventures Group (Class A) 77,795 112,427 0.2
----------- ---------- -----
317,888 437,826 0.8
--------------------------------------------------------------------------------------------------------------------
Chemicals 4,000 du Pont (E.I.) de Nemours & Company 221,876 227,500 0.4
--------------------------------------------------------------------------------------------------------------------
Communication 8,500 WorldCom, Inc. 219,474 285,281 0.5
Equipment
--------------------------------------------------------------------------------------------------------------------
Computer Sales 1,100 International Business Machines Corp. 64,579 107,869 0.2
--------------------------------------------------------------------------------------------------------------------
Computer Software 4,650 BMC Software, Inc. 196,192 279,581 0.5
</TABLE>
14 & 15
<PAGE>
Merrill Lynch Asset Builder Program, Inc., October 31, 1997
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<TABLE>
<CAPTION>
Global Opportunity Portfolio (continued)
--------------------------------------------------------------------------------------------------------------------
Shares Percent of
COUNTRY Industries Held US Stocks Cost Value Net Assets
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
United States Computer Software 1,050 Microsoft Corporation $ 123,832 $ 136,369 0.2%
(concluded) (concluded) 5,512 Oracle Corp. 126,046 197,054 0.3
----------- ---------- -----
446,070 613,004 1.0
--------------------------------------------------------------------------------------------------------------------
Computers 3,925 COMPAQ Computer Corp. 116,885 250,219 0.4
5,400 Quantum Corporation 153,565 170,438 0.3
----------- ---------- -----
270,450 420,657 0.7
--------------------------------------------------------------------------------------------------------------------
Containers 9,200 Owens-Illinois, Inc. 273,289 317,400 0.5
--------------------------------------------------------------------------------------------------------------------
Cosmetics 3,400 Avon Products, Inc. 236,983 222,700 0.4
--------------------------------------------------------------------------------------------------------------------
Electronics 1,850 Intel Corporation 127,865 142,450 0.2
--------------------------------------------------------------------------------------------------------------------
Energy 10,200 Edison International, Inc. 206,677 261,375 0.4
--------------------------------------------------------------------------------------------------------------------
Entertainment 1,800 Royal Caribbean Cruises Ltd. 73,480 83,588 0.1
--------------------------------------------------------------------------------------------------------------------
Financial Services 1,950 American Express Company 107,458 152,100 0.3
4,900 MGIC Investment Corporation 196,512 295,531 0.5
----------- ---------- -----
303,970 447,631 0.8
--------------------------------------------------------------------------------------------------------------------
Hardware Products 4,500 Black & Decker Corp. 154,250 171,281 0.3
--------------------------------------------------------------------------------------------------------------------
Health Care 11,789 HEALTHSOUTH Corporation 319,668 301,356 0.5
--------------------------------------------------------------------------------------------------------------------
Health Care Cost 4,000 Oxford Health Plans, Inc. 258,533 103,250 0.2
Containment
--------------------------------------------------------------------------------------------------------------------
Information 4,400 Computer Associates International, Inc. 189,764 328,075 0.6
Processing
--------------------------------------------------------------------------------------------------------------------
Insurance 2,025 Hartford Life, Inc. (Class A) 67,002 74,798 0.1
9,400 Provident Companies, Inc. 310,564 313,725 0.5
3,925 Travelers Group Inc. 208,764 274,750 0.5
2,200 Travelers Property Casualty Corp. (Class A) 88,807 79,475 0.1
4,700 UNUM Corporation 161,377 229,125 0.4
----------- ---------- -----
836,514 971,873 1.6
--------------------------------------------------------------------------------------------------------------------
Leisure & Tourism 7,700 Brunswick Corporation 193,245 259,875 0.4
7,100 Carnival Corporation (Class A) 205,985 344,350 0.6
----------- ---------- -----
399,230 604,225 1.0
--------------------------------------------------------------------------------------------------------------------
Machinery 5,100 American Standard Companies, Inc. 185,809 182,325 0.3
6,700 Ingersoll-Rand Company 211,138 260,881 0.5
----------- ---------- -----
396,947 443,206 0.8
--------------------------------------------------------------------------------------------------------------------
Machinery & Machine Tools 3,600 Harnischfeger Industries, Inc. 156,087 141,750 0.3
2,800 SPX Corporation 159,285 182,700 0.3
----------- ---------- -----
315,372 324,450 0.6
--------------------------------------------------------------------------------------------------------------------
Medical Supplies 5,600 DENTSPLY International Inc. 141,544 158,900 0.3
--------------------------------------------------------------------------------------------------------------------
Natural Gas 5,100 El Paso Natural Gas Co. 260,662 305,681 0.5
2,900 Enron Corp. 111,582 110,200 0.2
----------- ---------- -----
372,244 415,881 0.7
--------------------------------------------------------------------------------------------------------------------
Office Equipment 3,200 Danka Business Systems PLC (ADR)*+ 157,610 118,000 0.2
--------------------------------------------------------------------------------------------------------------------
Oil & Gas Producers 4,200 Smith International, Inc. 202,498 320,250 0.5
--------------------------------------------------------------------------------------------------------------------
Oil Service 6,100 Dresser Industries, Inc. 146,429 256,962 0.4
2,000 Schlumberger Ltd. 73,712 175,000 0.3
----------- ---------- -----
220,141 431,962 0.7
--------------------------------------------------------------------------------------------------------------------
Petroleum 4,900 Unocal Corp. 166,650 202,125 0.3
--------------------------------------------------------------------------------------------------------------------
Pharmaceuticals 3,200 American Home Products Corporation 197,463 237,200 0.4
1,300 Merck & Co., Inc. 79,216 116,025 0.2
----------- ---------- -----
276,679 353,225 0.6
--------------------------------------------------------------------------------------------------------------------
Railroads 2,700 Burlington Northern Santa Fe Corp. 231,374 256,500 0.4
--------------------------------------------------------------------------------------------------------------------
Real Estate 7,000 Glenborough Realty Trust, Inc. 175,000 179,375 0.3
Investment Trusts 5,500 Prentiss Properties Trust 114,074 156,406 0.3
4,600 Starwood Lodging Trust 205,717 275,137 0.5
----------- ---------- -----
494,791 610,918 1.1
--------------------------------------------------------------------------------------------------------------------
Retail 2,900 Safeway, Inc. 160,566 168,562 0.3
--------------------------------------------------------------------------------------------------------------------
Retail--Drug Stores 5,055 Rite Aid Corporation 185,578 300,141 0.5
--------------------------------------------------------------------------------------------------------------------
Retail Trade 3,900 Sears, Roebuck & Co. 182,902 163,312 0.3
--------------------------------------------------------------------------------------------------------------------
Semiconductors 5,700 National Semiconductor Corporation 232,238 205,200 0.4
--------------------------------------------------------------------------------------------------------------------
Transport Services 6,000 OMI Corp. 77,694 71,625 0.1
--------------------------------------------------------------------------------------------------------------------
Total Investments in US Stocks 10,762,119 13,034,431 22.3
====================================================================================================================================
Foreign Stocks
====================================================================================================================================
Argentina Petroleum 14,600 Yacimientos Petroliferos Fiscales S.A. (ADR)* 326,343 467,200 0.8
--------------------------------------------------------------------------------------------------------------------
Total Stocks in Argentina 326,343 467,200 0.8
====================================================================================================================================
Australia Diversified 50,200 Broken Hill Proprietary Co., Ltd. 660,237 499,084 0.8
Resources Company
--------------------------------------------------------------------------------------------------------------------
Total Stocks in Australia 660,237 499,084 0.8
====================================================================================================================================
Brazil Banking 8,100 Uniao de Bancos Brasileiros S.A. (Unibanco) (GDR)** 273,418 220,725 0.4
--------------------------------------------------------------------------------------------------------------------
Beverages 93,000 Companhia Cervejaria Brahma S.A. PN (Preferred) 533,409 558,935 0.9
--------------------------------------------------------------------------------------------------------------------
Telecommunications 5,300 Telecomunicacoes Brasileiras S.A.-Telebras PN (ADR)* 347,246 537,950 0.9
--------------------------------------------------------------------------------------------------------------------
Total Stocks in Brazil 1,154,073 1,317,610 2.2
====================================================================================================================================
Canada Automotive Parts 7,000 Magna International, Inc. (Class A) 342,201 461,125 0.8
--------------------------------------------------------------------------------------------------------------------
Entertainment 13,200 Imax Corp. 210,684 333,300 0.6
--------------------------------------------------------------------------------------------------------------------
Oil Services 30,000 Gulf Canada Resources Ltd. 278,574 251,250 0.4
--------------------------------------------------------------------------------------------------------------------
Total Stocks in Canada 831,459 1,045,675 1.8
====================================================================================================================================
</TABLE>
16 & 17
<PAGE>
Merrill Lynch Asset Builder Program, Inc., October 31, 1997
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<TABLE>
<CAPTION>
Global Opportunity Portfolio (continued)
--------------------------------------------------------------------------------------------------------------------
Shares Percent of
COUNTRY Industries Held Foreign Stocks Cost Value Net Assets
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Finland Holding Company 17,000 Amer Group Ltd. $ 306,406 $ 355,470 0.6%
--------------------------------------------------------------------------------------------------------------------
Paper & Forest 24,000 UPM-Kymmene Corp. 500,294 530,649 0.9
Products
--------------------------------------------------------------------------------------------------------------------
Pharmaceuticals 9,800 Orion-yhtyma OY (Class B) 372,233 362,401 0.6
--------------------------------------------------------------------------------------------------------------------
Transportation 10,800 Finnlines OY 211,570 396,244 0.7
--------------------------------------------------------------------------------------------------------------------
Total Stocks in Finland 1,390,503 1,644,764 2.8
====================================================================================================================================
France Insurance 14,300 Scor S.A. 559,756 664,522 1.1
--------------------------------------------------------------------------------------------------------------------
Semiconductor 3,800 SGS-Thomson Microelectronics N.V. (NY Registered) 143,296 270,750 0.5
Capital Equipment
--------------------------------------------------------------------------------------------------------------------
Total Stocks in France 703,052 935,272 1.6
====================================================================================================================================
Germany Banking 4,500 Bayerische Vereinsbank AG 271,327 261,613 0.4
--------------------------------------------------------------------------------------------------------------------
Chemicals 600 Henkel KGaA 26,670 29,301 0.0
5,400 Henkel KGaA (Preferred) 229,478 280,972 0.5
----------- ---------- -----
256,148 310,273 0.5
--------------------------------------------------------------------------------------------------------------------
Electronics 9,950 Siemens AG 504,790 613,740 1.1
--------------------------------------------------------------------------------------------------------------------
Machinery & 1,350 Mannesmann AG 467,510 571,362 1.0
Equipment
--------------------------------------------------------------------------------------------------------------------
Total Stocks in Germany 1,499,775 1,756,988 3.0
====================================================================================================================================
Indonesia Telecommunications 24,400 P.T. Indonesian Satellite Corp. (ADR)* 743,076 577,975 1.0
--------------------------------------------------------------------------------------------------------------------
Total Stocks in Indonesia 743,076 577,975 1.0
====================================================================================================================================
Italy Apparel 9,500 Gucci Group N.V. (NY Registered) 678,646 345,563 0.6
--------------------------------------------------------------------------------------------------------------------
Machinery 71,000 Danieli & Co. 266,366 277,521 0.5
--------------------------------------------------------------------------------------------------------------------
Publishing 57,000 Mondadori (Arnoldo) Editore S.p.A. 431,458 457,066 0.8
--------------------------------------------------------------------------------------------------------------------
Total Stocks in Italy 1,376,470 1,080,150 1.9
====================================================================================================================================
Japan Building & 68,000 Maeda Corp. 498,360 284,535 0.5
Construction 56,000 Okumura Corp. 454,377 265,535 0.5
----------- ---------- -----
952,737 550,070 1.0
--------------------------------------------------------------------------------------------------------------------
Building Products 25,000 Matsushita Electric Works, Ltd. 284,565 226,687 0.4
--------------------------------------------------------------------------------------------------------------------
Capital Goods 89,000 Mitsubishi Heavy Industries, Ltd. 651,454 437,559 0.7
--------------------------------------------------------------------------------------------------------------------
Consumer--Electronics 4,000 Rohm Company Ltd. 262,940 395,974 0.7
--------------------------------------------------------------------------------------------------------------------
Consumer--Miscellaneous 12,000 Amway Japan Ltd. 422,805 315,448 0.5
--------------------------------------------------------------------------------------------------------------------
Electrical Equipment 138,000 Mitsubishi Electric Corp. 824,890 460,344 0.8
6,000 Sony Corporation 439,896 498,627 0.9
----------- ---------- -----
1,264,786 958,971 1.7
--------------------------------------------------------------------------------------------------------------------
Electronics 15,000 Matsushita Electric Industrial Co., Ltd. 247,149 252,059 0.4
--------------------------------------------------------------------------------------------------------------------
Insurance 50,000 Tokio Marine & Fire Insurance Co., Ltd. 537,609 499,127 0.9
--------------------------------------------------------------------------------------------------------------------
Retail 5,000 Autobacs Seven Co., Ltd. 328,783 260,794 0.4
--------------------------------------------------------------------------------------------------------------------
Textiles 102,000 Toray Industries Inc. 624,943 568,505 1.0
--------------------------------------------------------------------------------------------------------------------
Tires & Rubber 20,000 Bridgestone Corp. 359,548 432,576 0.7
--------------------------------------------------------------------------------------------------------------------
Warehouse & Storage 55,000 Mitsui-Soko Co., Ltd. 396,640 222,361 0.4
--------------------------------------------------------------------------------------------------------------------
Total Stocks in Japan 6,333,959 5,120,131 8.8
====================================================================================================================================
Mexico Beverages 12,300 Panamerican Beverages, Inc. (Class A) 294,698 381,300 0.7
--------------------------------------------------------------------------------------------------------------------
Conglomerates 42,800 Grupo Carso, S.A. de C.V. (ADR)* 555,727 535,000 0.9
--------------------------------------------------------------------------------------------------------------------
Financial Services 22,000 Grupo Financiero Bancomer, S.A. de C.V. (ADR)* 316,997 203,500 0.3
--------------------------------------------------------------------------------------------------------------------
Utilities-- 6,200 Telefonos de Mexico, S.A. de C.V. (Telmex)
Communications (ADR)* 245,966 268,150 0.5
--------------------------------------------------------------------------------------------------------------------
Total Stocks in Mexico 1,413,388 1,387,950 2.4
====================================================================================================================================
Netherlands Banking 31,600 ABN AMRO Holding N.V. 466,422 636,821 1.1
--------------------------------------------------------------------------------------------------------------------
Total Stocks in the Netherlands 466,422 636,821 1.1
====================================================================================================================================
Norway Transportation 57,089 Color Line ASA 230,614 248,496 0.4
Services
--------------------------------------------------------------------------------------------------------------------
Total Stocks in Norway 230,614 248,496 0.4
====================================================================================================================================
Philippines Beverages 343,700 San Miguel Corp. (Class B) 835,127 386,785 0.7
--------------------------------------------------------------------------------------------------------------------
Total Stocks in the Philippines 835,127 386,785 0.7
====================================================================================================================================
South Africa Diversified 43,000 Sasol Limited 505,901 518,503 0.9
--------------------------------------------------------------------------------------------------------------------
Insurance 19,400 De Beers Consolidated Mines Ltd. (ADR)* 664,431 463,175 0.8
--------------------------------------------------------------------------------------------------------------------
Total Stocks in South Africa 1,170,332 981,678 1.7
====================================================================================================================================
South Korea Engineering & 4,200 Hyundai Engineering & Construction Co., Ltd.
(GDR)** 53,912 9,198 0.0
Construction 74 Hyundai Engineering & Construction Co., Ltd.
(New) (GDR)** 950 162 0.0
--------------------------------------------------------------------------------------------------------------------
Total Stocks in South Korea 54,862 9,360 0.0
====================================================================================================================================
Spain Petroleum 13,500 Repsol S.A. (ADR)* 484,459 573,750 1.0
--------------------------------------------------------------------------------------------------------------------
Total Stocks in Spain 484,459 573,750 1.0
====================================================================================================================================
Sweden Banking 16,200 Sparbanken Sverige AB (Class A) 207,538 368,098 0.7
--------------------------------------------------------------------------------------------------------------------
Chemicals 17,000 Perstorp AB (Class B) 318,484 299,932 0.5
--------------------------------------------------------------------------------------------------------------------
Electronics 9,000 Spectra-Physics AB (Class A) 274,607 244,196 0.4
--------------------------------------------------------------------------------------------------------------------
Investment 20,300 Bure Investment AB 192,973 248,266 0.4
Management
--------------------------------------------------------------------------------------------------------------------
Real Estate 12,200 Castellum AB 81,843 114,145 0.2
--------------------------------------------------------------------------------------------------------------------
Total Stocks in Sweden 1,075,445 1,274,637 2.2
====================================================================================================================================
</TABLE>
18 & 19
<PAGE>
Merrill Lynch Asset Builder Program, Inc., October 31, 1997
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<TABLE>
<CAPTION>
Global Opportunity Portfolio (continued)
--------------------------------------------------------------------------------------------------------------------
Shares Percent of
COUNTRY Industries Held Foreign Stocks Cost Value Net Assets
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Switzerland Electrical Equipment 435 ABB AG $ 466,462 $ 568,882 .0%
--------------------------------------------------------------------------------------------------------------------
Pharmaceuticals 5,800 Novartis AG (ADR)* 311,537 452,400 0.8
60 Roche Holding AG 502,766 529,058 0.9
----------- ---------- -----
814,303 981,458 1.7
--------------------------------------------------------------------------------------------------------------------
Total Stocks in Switzerland 1,280,765 1,550,340 2.7
====================================================================================================================================
United Kingdom Automobile Parts 193,300 LucasVarity PLC 640,803 663,153 1.1
--------------------------------------------------------------------------------------------------------------------
Beverages 61,300 Grand Metropolitan PLC 442,059 553,262 0.9
--------------------------------------------------------------------------------------------------------------------
Chemicals 12,600 Imperial Chemical Industries PLC 154,919 186,012 0.3
7,500 Imperial Chemical Industries PLC (ADR)* 389,042 449,062 0.8
----------- ---------- -----
543,961 635,074 1.1
--------------------------------------------------------------------------------------------------------------------
Metals & Mining 39,000 Rio Tinto PLC 593,026 502,475 0.9
--------------------------------------------------------------------------------------------------------------------
Retail Trade 30,000 Dixons Group PLC 315,904 350,786 0.6
--------------------------------------------------------------------------------------------------------------------
Total Stocks in the United Kingdom 2,535,753 2,704,750 4.6
====================================================================================================================================
Total Investments in Foreign Stocks 24,566,114 24,199,416 41.5
====================================================================================================================================
Total Investments in US & Foreign Stocks 35,328,233 37,233,847 63.8
====================================================================================================================================
Face
Amount Issue
====================================================================================================================================
SHORT-TERM Commercial Paper*** US$1,844,000 General Motors Acceptance Corp., 5.75% due
SECURITIES 11/03/1997 1,843,411 1,843,411 3.1
--------------------------------------------------------------------------------------------------------------------
US Government Agency 5,000,000 Federal Home Loan Mortgage Corp., 5.52%
Obligations*** due 11/07/1997 4,995,400 4,995,400 8.6
--------------------------------------------------------------------------------------------------------------------
Total Investments in Short-Term Securities 6,838,811 6,838,811 11.7
====================================================================================================================================
Total Investments $57,218,660 59,478,599 101.9
===========
Unrealized Depreciation on Forward Foreign Exchange Contracts++ (167,432) (0.3)
Liabilities in Excess of Other Assets (949,559) (1.6)
----------- -----
Net Assets $58,361,608 100.0%
=========== =====
====================================================================================================================================
Net Asset Value: Class A--Based on net assets of $166,851 and 13,039 shares outstanding $ 12.80
===========
Class B--Based on net assets of $39,819,057 and 3,158,296 shares outstanding $ 12.61
===========
Class C--Based on net assets of $15,334,437 and 1,218,020 shares outstanding $ 12.59
===========
Class D--Based on net assets of $3,041,263 and 238,337 shares outstanding $ 12.76
===========
====================================================================================================================================
</TABLE>
* American Depositary Receipts (ADR).
** Global Depositary Receipts (GDR).
*** 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.
+ Consistent with the general policy of the Securities and Exchange
Commission, the nationality or domicile of an issuer for determination of
foreign issuer status may be (i) the country under whose laws the issuer
is organized, (ii) the country in which the issuer's securities are
principally traded, or (iii) the country in which the issuer derives a
significant proportion (at least 50%) of its revenue or profits from goods
produced and sold, investments made, or services performed in the country,
or in which at least 50% of the assets of the issuer are situated.
++ Forward foreign exchange contracts sold as of October 31, 1997 were as
follows:
- ---------------------------------------------------------
Unrealized
Foreign Expiration Appreciation
Currency Sold Date (Depreciation)
- ---------------------------------------------------------
A$ 800,000 November 1997 $ 27,746
Chf 1,050,000 November 1997 (35,187)
Dkr 2,440,000 December 1997 (3,439)
DM 3,624,000 November 1997 (40,782)
Fmk 4,320,000 November 1997 (12,778)
Frf 4,700,000 November 1997 (27,571)
(pound) 1,320,000 January 1998 (75,237)
Lit 2,200,000,000 December 1997 (1,809)
Pta 78,300,000 November 1997 (9,176)
Skr 6,555,000 December 1997 (3,694)
Y 275,000,000 November 1997 14,495
- ---------------------------------------------------------
Total Unrealized Depreciation on Forward
Foreign Exchange Contracts Sold--Net
(US$ Commitment--$12,500,431) $(167,432)
=========
- ---------------------------------------------------------
SCHEDULE OF INVESTMENTS (in US dollars)
<TABLE>
<CAPTION>
Growth Opportunity Portfolio
- ----------------------------------------------------------------------------------------------------------------------------------
Shares Percent of
Industries Held Common Stocks Cost Value Net Assets
==================================================================================================================================
<S> <C> <C> <C> <C> <C>
Advertising 5,100 Interpublic Group of Companies, Inc. $ 153,631 $ 242,250 0.7%
- ----------------------------------------------------------------------------------------------------------------------------------
Banking & Financial 8,000 Banc One Corp. 372,883 417,000 1.3
11,800 BankAmerica Corp. 854,924 843,700 2.6
7,000 Citicorp 918,245 875,438 2.7
12,000 Mellon Bank Corporation 650,688 618,750 1.9
9,000 State Street Corp. 425,664 501,750 1.5
----------- ----------- ------
3,222,404 3,256,638 10.0
- ----------------------------------------------------------------------------------------------------------------------------------
Beverages 4,000 The Coca-Cola Company 242,115 226,000 0.7
- ----------------------------------------------------------------------------------------------------------------------------------
Communication Equipment 3,700 Cisco Systems, Inc. 246,996 303,400 0.9
27,200 FORE Systems, Inc. 615,177 440,300 1.4
5,200 Lucent Technologies, Inc. 348,467 428,675 1.3
14,500 Newbridge Networks Corp. 614,672 768,500 2.4
8,500 Northern Telecom Limited 671,434 762,344 2.3
12,500 Telefonaktiebolaget LM Ericsson (ADR)* 507,741 553,125 1.7
----------- ----------- ------
3,004,487 3,256,344 10.0
- ----------------------------------------------------------------------------------------------------------------------------------
Computers 19,250 COMPAQ Computer Corp. 727,664 1,227,188 3.8
3,000 Hewlett-Packard Co. 153,435 185,063 0.6
----------- ----------- ------
881,099 1,412,251 4.4
- ----------------------------------------------------------------------------------------------------------------------------------
Cosmetics 3,000 Gillette Company (The) 235,700 267,188 0.8
1,500 International Flavors & Fragrances Inc. 66,304 72,563 0.2
----------- ----------- ------
302,004 339,751 1.0
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
20 & 21
<PAGE>
Merrill Lynch Asset Builder Program, Inc., October 31, 1997
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<TABLE>
<CAPTION>
Growth Opportunity Portfolio (concluded)
- ----------------------------------------------------------------------------------------------------------------------------------
Shares Percent of
Industries Held Common Stocks Cost Value Net Assets
==================================================================================================================================
<S> <C> <C> <C> <C> <C>
Electrical Equipment 2,000 Emerson Electric Company $ 108,040 $ 104,875 0.3%
15,500 General Electric Co. 784,195 1,000,719 3.1
3,000 Honeywell, Inc. 219,293 204,188 0.6
----------- ----------- ------
1,111,528 1,309,782 4.0
- ----------------------------------------------------------------------------------------------------------------------------------
Electronics 13,000 Intel Corp. 931,828 1,001,000 3.1
- ----------------------------------------------------------------------------------------------------------------------------------
Energy 9,800 El Paso Natural Gas Co. 487,253 587,388 1.8
11,000 Enron Corp. 464,926 418,000 1.3
----------- ----------- ------
952,179 1,005,388 3.1
- ----------------------------------------------------------------------------------------------------------------------------------
Entertainment 7,000 Viacom, Inc. (Class A) 260,392 209,125 0.6
5,500 Walt Disney Co. 410,785 452,375 1.4
----------- ----------- ------
671,177 661,500 2.0
- ----------------------------------------------------------------------------------------------------------------------------------
Financial Services 7,800 American Express Company 622,579 608,400 1.9
20,000 Federal National Mortgage Association 871,908 968,750 3.0
14,000 The Travelers Group, Inc. 796,489 980,000 3.0
----------- ----------- ------
2,290,976 2,557,150 7.9
- ----------------------------------------------------------------------------------------------------------------------------------
Food 3,000 ConAgra, Inc. 70,590 90,375 0.3
2,000 Wrigley (Wm.) Jr. Co. 128,603 144,750 0.4
----------- ----------- ------
199,193 235,125 0.7
- ----------------------------------------------------------------------------------------------------------------------------------
Food Merchandising 8,000 Albertsons, Inc. 301,780 295,000 0.9
11,000 Meyer (Fred), Inc. 242,328 314,187 1.0
----------- ----------- ------
544,108 609,187 1.9
- ----------------------------------------------------------------------------------------------------------------------------------
Hotels 1,000 Marriott International, Inc. 46,921 69,750 0.2
- ----------------------------------------------------------------------------------------------------------------------------------
Household Products 8,000 Colgate-Palmolive Co. 526,400 518,000 1.6
1,500 Kimberly-Clark Corp. 56,995 77,906 0.2
8,000 Procter & Gamble Company 460,197 544,000 1.7
----------- ----------- ------
1,043,592 1,139,906 3.5
- ----------------------------------------------------------------------------------------------------------------------------------
Information Processing 18,000 First Data Corp. 647,332 523,125 1.6
- ----------------------------------------------------------------------------------------------------------------------------------
Insurance 1,000 Aetna Inc. 82,249 71,062 0.2
2,250 American International Group, Inc. 160,349 229,641 0.7
----------- ----------- ------
242,598 300,703 0.9
- ----------------------------------------------------------------------------------------------------------------------------------
Leisure 8,500 Polygram N.V. (NY Registered Shares) 446,700 474,406 1.5
- ----------------------------------------------------------------------------------------------------------------------------------
Medical Technology 8,300 Boston Scientific Corp. 470,698 377,650 1.2
5,000 Johnson & Johnson 275,816 286,875 0.9
----------- ----------- ------
746,514 664,525 2.1
- ----------------------------------------------------------------------------------------------------------------------------------
Oil & Services 14,000 Baker Hughes, Inc. 540,228 643,125 2.0
16,800 Diamond Offshore Drilling, Inc. 716,933 1,045,800 3.2
12,000 Schlumberger, Ltd. 651,710 1,050,000 3.2
----------- ----------- ------
1,908,871 2,738,925 8.4
- ----------------------------------------------------------------------------------------------------------------------------------
Pharmaceuticals 11,000 Amgen, Inc. 669,875 541,062 1.7
3,500 Bristol-Myers Squibb Co. 261,552 307,125 0.9
4,000 Merck & Co., Inc. 316,381 357,000 1.1
5,500 Pfizer, Inc. 260,241 389,125 1.2
----------- ----------- ------
1,508,049 1,594,312 4.9
- ----------------------------------------------------------------------------------------------------------------------------------
Photography 2,000 Eastman Kodak Co. 141,535 119,750 0.4
- ----------------------------------------------------------------------------------------------------------------------------------
Pollution Control 500 Waste Management, Inc. 14,160 11,687 0.0
- ----------------------------------------------------------------------------------------------------------------------------------
Restaurants 3,000 McDonald's Corp. 142,703 134,437 0.4
- ----------------------------------------------------------------------------------------------------------------------------------
Retail--Specialty 17,500 Staples, Inc. 451,082 457,187 1.4
- ----------------------------------------------------------------------------------------------------------------------------------
Retail Stores 11,500 CVS Corporation 642,991 705,094 2.2
24,500 Wal-Mart Stores, Inc. 829,302 860,562 2.6
23,000 Walgreen Co. 570,194 646,875 2.0
----------- ----------- ------
2,042,487 2,212,531 6.8
- ----------------------------------------------------------------------------------------------------------------------------------
Software--Computer 11,500 Baan Company, N.V. (ADR)* 652,000 806,437 2.5
2,000 Microsoft Corp. 208,687 259,750 0.8
18,000 Oracle Corp. 590,516 643,500 2.0
9,000 SAP AG (Systeme, Anwendungen, Produkte in
der Datenverarbeitung) (ADR)* 534,375 882,000 2.7
----------- ----------- ------
1,985,578 2,591,687 8.0
- ----------------------------------------------------------------------------------------------------------------------------------
Toys 8,000 Mattel, Inc. 290,588 311,000 1.0
- ----------------------------------------------------------------------------------------------------------------------------------
Travel & Lodging 3,500 Carnival Corporation (Class A) 143,764 169,750 0.5
- ----------------------------------------------------------------------------------------------------------------------------------
Total Investments in Common Stocks 26,309,203 29,626,047 91.1
==================================================================================================================================
Face
Amount Short-Term Securities
==================================================================================================================================
US Government Agency $2,778,000 Federal Home Loan Mortgage Corp., 5.65%
Obligations** due 11/03/1997 2,777,128 2,777,128 8.5
- ----------------------------------------------------------------------------------------------------------------------------------
Total Investments in Short-Term Securities 2,777,128 2,777,128 8.5
==================================================================================================================================
Total Investments $29,086,331 32,403,175 99.6
===========
Other Assets Less Liabilities 117,478 0.4
----------- ------
Net Assets $32,520,653 100.0%
=========== ======
==================================================================================================================================
Net Asset Value:Class A--Based on net assets of $149,622 and 10,547 shares outstanding $ 14.19
===========
Class B--Based on net assets of $20,946,622 and 1,503,227 shares outstanding $ 13.93
===========
Class C--Based on net assets of $10,031,190 and 720,421 shares outstanding $ 13.92
===========
Class D--Based on net assets of $1,393,219 and 98,465 shares outstanding $ 14.15
===========
==================================================================================================================================
</TABLE>
* 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 Portfolio.
22 & 23
<PAGE>
Merrill Lynch Asset Builder Program, Inc., October 31, 1997
SCHEDULE OF INVESTMENTS (in US dollars)
<TABLE>
<CAPTION>
Quality Bond Portfolio
--------------------------------------------------------------------------------------------------------------
S&P Moody's Face
INDUSTRIES Ratings Ratings Amount Bonds & Notes Cost Value
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Asset-Backed AAA Aaa $ 150,000 Arcadia Automobile Receivables Trust, 6.10% due 6/15/2000 (a) $ 149,971 $ 150,329
Securities--1.5%
====================================================================================================================================
Banking--12.5% A A2 250,000 Bank of New York Company Inc. (The), 7.875% due 11/15/2002 276,675 267,103
A+ Aa3 250,000 BankAmerica Corp., 6.65% due 5/01/2001 249,863 253,100
A A2 253,000 First Chicago Corp., 9% due 6/15/1999 268,428 264,598
AA- Aa3 250,000 Norwest Corporation, 6.75% due 5/12/2000 249,627 254,553
A- A2 200,000 Wells Fargo & Company, 8.375% due 5/15/2002 213,120 215,680
---------- ---------
1,257,713 1,255,034
====================================================================================================================================
Financial Services-- A A2 200,000 Bear Stearns Co., 6.75% due 8/15/2000 198,730 202,434
14.9% A A2 250,000 Beneficial Corporation, 6.80% due 9/16/2003 250,000 255,066
A- Baa1 38,000 Donaldson, Lufkin & Jenrette Inc., 6.875% due 11/01/2005 37,694 38,789
AA Aa2 200,000 MBIA, Inc., 7.15% due 7/15/2027 199,510 209,112
A+ A1 300,000 Morgan Stanley Group, Inc., 6.875% due 3/01/2007 298,923 304,572
A A2 150,000 Smith Barney Holdings, Inc., 7.375% due 5/15/2007 149,866 156,900
A+ Aa3 100,000 Travelers Capital II, 7.75% due 12/01/2036 100,170 101,235
AA- Aa3 200,000 The Travelers Group, Inc., 7.875% due 5/15/2025 205,616 222,154
---------- ---------
1,440,509 1,490,262
====================================================================================================================================
Financial Services-- A+ A2 200,000 American General Finance Corp., 7.70% due 11/15/1997 203,396 200,024
Consumer--5.5% AA- Aa3 200,000 Associates Corp. of North America, 5.25% due 9/01/1998 193,918 199,068
A NR* 150,000 CIT Capital Trust I, 7.70% due 2/15/2027 149,316 150,147
---------- ---------
546,630 549,239
====================================================================================================================================
Industrial--Consumer A+ A1 100,000 Anheuser-Busch Co., Inc., 8.75% due 12/01/1999 107,905 105,366
Goods--5.4% A+ A1 100,000 Bass America, Inc., 8.125% due 3/31/2002 105,928 107,158
A- A2 100,000 Sears, Roebuck & Co., 9.25% due 4/15/1998 106,444 101,525
AA Aa2 200,000 Wal-Mart Stores, Inc., 8.50% due 9/15/2024 207,350 222,318
---------- ---------
527,627 536,367
====================================================================================================================================
Industrial-- AA Aa2 175,000 BP America Inc., 9.375% due 11/01/2000 200,263 190,367
Energy--1.9%
====================================================================================================================================
Industrial-- A A2 150,000 Carnival Cruise Lines, Inc., 7.70% due 7/15/2004 156,745 160,525
Other--10.2% A A1 200,000 Ford Motor Credit Company, 7% due 9/25/2001 199,204 204,566
A- A3 100,000 General Motors Acceptance Corp., 8.50% due 1/01/2003 108,510 108,966
BBB+ A3 250,000 Lockheed Martin Corp., 6.55% due 5/15/1999 249,880 252,152
A A1 90,000 PPG Industries, Inc., 6.50% due 11/01/2007 89,725 89,725
BBB Baa3 200,000 Seagate Technology, 7.125% due 3/01/2004 199,650 202,716
---------- ---------
1,003,714 1,018,650
====================================================================================================================================
Industrial-- A A2 240,631 Disney Enterprises Inc., 6.85% due 1/10/2007 (a) 240,468 246,045
Services--3.6% BBB- Baa3 100,000 Time Warner Entertainment, 8.375% due 3/15/2023 107,029 109,626
---------- ---------
347,497 355,671
====================================================================================================================================
Manufacturing--2.0% BBB+ A3 200,000 Applied Materials, Inc., 6.75% due 10/15/2007 199,870 203,886
====================================================================================================================================
Supranational-- AAA Aaa 200,000 Asian Development Bank, 6.125% due 3/09/2004 198,300 200,658
2.0%
====================================================================================================================================
US Government US Treasury Notes:
Obligations--12.4% AAA Aaa 150,000 7.125% due 10/15/1998 158,086 152,155
AAA Aaa 200,000 6.375% due 5/15/1999 200,469 202,156
AAA Aaa 200,000 7.50% due 11/15/2001 210,406 212,312
AAA Aaa 150,000 6.25% due 2/15/2003 149,695 153,117
AAA Aaa 200,000 5.875% due 2/15/2004 194,031 200,750
AAA Aaa 300,000 7.25% due 8/15/2004 321,937 323,298
---------- ---------
1,234,624 1,243,788
====================================================================================================================================
Utilities-- A+ A2 300,000 Alltel Corp., 6.75% due 9/15/2005 295,380 304,521
Communications--
3.0%
====================================================================================================================================
Utilities-- A+ Aa3 200,000 Duke Power Co., 8% due 11/01/1999 208,016 207,360
Electric--8.2% AA- Aa3 250,000 Northern States Power Company, 7.125% due 7/01/2025 254,800 263,767
A- A3 180,000 Public Service Electric & Gas Co., 7.125% due 11/01/1997 181,514 179,831
A A2 150,000 Virginia Electric & Power Co., 8.625% due 10/01/2024 166,200 169,270
---------- ---------
810,530 820,228
====================================================================================================================================
Yankees BBB+ Baa3 200,000 Fairfax Financial Holdings, Ltd., 7.75% due 7/15/2037 199,002 204,620
Corporate--4.7% A+ A3 250,000 Mass Transit Railway Corp., 7.25% due 10/01/2005 260,325 261,002
---------- ---------
459,327 465,622
====================================================================================================================================
Yankees A+ A2 150,000 Province of Quebec, 7.125% due 2/09/2024 150,195 149,820
Sovereign--1.5%
====================================================================================================================================
Total Investments in Bonds & Notes--89.3% 8,822,150 8,934,442
====================================================================================================================================
SHORT-TERM
SECURITIES Issue
====================================================================================================================================
US Government 810,000 Federal Home Loan Mortgage Corp., 5.65% due 11/03/1997 810,000 810,000
Agency
Obligations**--8.1%
====================================================================================================================================
Total Investments in Short-Term Securities--8.1% 810,000 810,000
====================================================================================================================================
Total Investments--97.4% $9,632,150 9,744,442
==========
Other Assets Less Liabilities--2.6% 255,308
----------
Net Assets--100.0% $9,999,750
==========
====================================================================================================================================
Net Asset Value: Class A--Based on net assets of $1,480,518 and 147,919 shares outstanding $ 10.01
==========
Class B--Based on net assets of $5,490,540 and 548,871 shares outstanding $ 10.00
==========
Class C--Based on net assets of $2,482,507 and 248,188 shares outstanding $ 10.00
==========
Class D--Based on net assets of $546,185 and 54,602 shares outstanding $ 10.00
==========
====================================================================================================================================
</TABLE>
(a) Subject to principal paydowns.
* Not Rated.
** 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.
24 & 25
<PAGE>
Merrill Lynch Asset Builder Program, Inc., October 31, 1997
SCHEDULE OF INVESTMENTS (in US dollars)
<TABLE>
<CAPTION>
US Government Securities Portfolio
--------------------------------------------------------------------------------------------------------------
Face Interest Maturity
Issue Amount Rate Date(s) Value
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
US Government Agency Federal Home Loan Mortgage Corporation $1,106,854 11.50 % 6/01/2019 $ 1,253,102
Mortgage-Backed Federal Home Loan Mortgage Corporation--Gold Program 700,000 6.00(1) 7-Year TBA(2) 692,776
Obligations*--72.1% Federal Home Loan Mortgage Corporation--Gold Program 2,697,751 6.50 3/01/2012-10/01/2012 2,696,887
Government National Mortgage Association 500,000 6.50 1/01/2027 494,530
Government National Mortgage Association 1,000,000 7.00 1/01/2027 1,005,620
Government National Mortgage Association 1,862,264 7.50 10/01/2025-12/15/2026 1,905,516
====================================================================================================================================
Total US Government Agency Mortgage-Backed Obligations (Cost--$7,920,073) 8,048,431
====================================================================================================================================
US Government US Treasury Notes 1,900,000 5.875 11/15/2005 1,897,321
Obligations--24.1% US Treasury STRIPS*** 300,000 6.345+ 8/15/2001 241,965
US Treasury STRIPS*** 850,000 6.065+ 5/15/2005 546,525
====================================================================================================================================
Total US Government Obligations (Cost--$2,622,963) 2,685,811
====================================================================================================================================
SHORT-TERM Face
SECURITIES Amount Issue
====================================================================================================================================
Repurchase $2,462,000 Nikko Securities Company, purchased on 10/31/1997
Agreements**-- to yield 5.68% to 11/03/1997 2,462,000
22.0%
====================================================================================================================================
Total Investments in Short-Term Securities (Cost--$2,462,000) 2,462,000
====================================================================================================================================
Total Investments (Cost--$13,005,036)--118.2% 13,196,242
Liabilities in Excess of Other Assets--(18.2%) (2,029,143)
-----------
Net Assets--100.0% $11,167,099
===========
====================================================================================================================================
Net Asset Value: Class A--Based on net assets of $3,580,641 and 343,026 shares outstanding $ 10.44
===========
Class B--Based on net assets of $5,293,522 and 507,141 shares outstanding $ 10.44
===========
Class C--Based on net assets of $1,987,577 and 190,459 shares outstanding $ 10.44
===========
Class D--Based on net assets of $305,359 and 29,241 shares outstanding $ 10.44
===========
====================================================================================================================================
</TABLE>
* 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.
+ Represents the yield-to-maturity on this zero coupon issue at the time of
purchase by the Portfolio.
(1) Represents balloon mortgages that amortize on a 30-year schedule and have
7-year maturities.
(2) Represents a "to-be-announced" (TBA) transaction. The Portfolio has
committed to purchasing securities for which all specific information is
not available at this time.
EQUITY PORTFOLIO CHANGES
<TABLE>
<CAPTION>
For the Quarter Ended October 31, 1997
====================================================================================================================================
<S> <C> <C> <C>
FUNDAMENTAL
VALUE PORTFOLIO
====================================================================================================================================
Additions Aetna Inc. Crown Cork & Seal Company, Inc. IMC Global, Inc.
Circus Circus Enterprises, Inc. General Signal Corporation Whirlpool Corporation
====================================================================================================================================
Deletions American Exploration Co. Tandem Computers, Inc.
====================================================================================================================================
GLOBAL
OPPORTUNITY
PORTFOLIO
====================================================================================================================================
Additions Avis Rent A Car, Inc. Glenborough Realty Trust, Inc. Provident Companies, Inc.
Avon Products, Inc. Grupo Financiero Bancomer, S.A. de C.V. (ADR) Royal Caribbean Cruises Ltd.
Bayerische Vereinsbank AG Gulf Canada Resources Ltd. SPX Corporation
Danka Business Systems PLC (ADR) * Gulf Indonesia Resources Ltd. Spectra-Physics AB (Class A)
Dixons Group PLC Harnischfeger Industries, Inc. Tele-Communications TCI Ventures
Federal-Mogul Corporation National Semiconductor Corporation Group (Class A)
First Union Corporation OMI Corp.
====================================================================================================================================
Deletions Aetna Inc. First Data Corp. Philip Morris Companies, Inc.
AirTouch Communications, Inc. * Gulf Indonesia Resources Ltd. Potash Corp. of Saskatchewan, Inc.
Allstate Corp. HSBC Holdings PLC TCI Pacific Communications
Banc One Corp. Horizon/CMS Healthcare Corporation (Convertible Preferred)
Boots Company PLC Kimberly-Clark Corporation Tenet Healthcare Corp.
Canadian Pacific, Ltd. Nationwide Financial Services, Inc. (Class A) Usinor-Sacilor S.A.
Canon Inc. Pennzoil Company Vodafone Group PLC
====================================================================================================================================
GROWTH
OPPORTUNITY
PORTFOLIO
====================================================================================================================================
Additions Mattel, Inc. Mellon Bank Corporation
====================================================================================================================================
Deletions Hasbro, Inc.
====================================================================================================================================
</TABLE>
* Added and deleted in the same quarter.
26 & 27
<PAGE>
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.
Merrill Lynch
Asset Builder Program, Inc.
Box 9011
Princeton, NJ
08543-9011 #18473--10/97
[LOGO] Printed on post-consumer recycled paper
