MERRILL LYNCH
ASSET BUILDER
PROGRAM, INC.
[GRAPHIC OMITTED]
STRATEGIC
Performance
Annual Report
January 31, 1998
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Merrill Lynch Asset Builder Program, Inc.
Important Tax Information
Fundamental Value Portfolio
Of the ordinary income distributions paid by Fundamental Value Portfolio to
shareholders of record on December 16, 1997, 17.31% qualifies for the dividends
received deduction for corporations. Additionally, the Portfolio paid long-term
capital gain distributions of $.798602 per share to shareholders of record on
December 16, 1997. Of this long-term capital gain distribution, 65.03% is
subject to the 28% tax rate and 34.97% is subject to the 20% tax rate.
Global Opportunity Portfolio
Of the ordinary income distributions paid by Global Opportunity Portfolio to
shareholders of record on December 16, 1997, 11.77% qualifies for the dividends
received deduction for corporations and 8.38% represents income from foreign
sources. Additionally, the Portfolio paid foreign withholding taxes of $.007560
per share and long-term capital gain distributions of $.700142 per share to
shareholders of record on December 16, 1997. Of the long-term capital gain
distribution, 60.53% is subject to the 28% tax rate and 39.47% is subject to the
20% tax rate.
Growth Opportunity Portfolio
Of the ordinary income distributions paid by Growth Opportunity Portfolio to
shareholders of record on December 16, 1997, 21.49% qualifies for the dividends
received deduction for corporations. Additionally, the Portfolio paid a
long-term capital gain distribution of $.443539 per share to shareholders of
record on December 16, 1997. Of this long-term capital gain distribution, 25.38%
is subject to the 28% tax rate and 74.62% is subject to the 20% tax rate.
Quality Bond Portfolio
Of the ordinary income distributions paid monthly by Quality Bond Portfolio
during the fiscal year ended January 31, 1998, 14.72% is attributable to income
from Federal obligations. None of the monthly distributions qualify for the
dividends received deduction for corporations. Additionally, there were no
long-term capital gain distributions paid by the Portfolio during the year.
US Government Securities Portfolio
Of the ordinary income distributions paid monthly by US Government Securities
Portfolio during the fiscal year ended January 31, 1998, 14.43% is attributable
to income from Federal obligations. None of the monthly distributions qualify
for the dividends received deduction for corporations. The Portfolio paid
short-term capital gain distributions of $.071710 per share to shareholders of
record on December 22, 1997. Additionally, there were no long-term capital gain
distributions paid by the Portfolio during the year.
Please retain this information for your records.
<PAGE>
Merrill Lynch Asset Builder Program, Inc., January 31, 1998
DEAR SHAREHOLDER
We are pleased to provide you with this annual report for Merrill Lynch Asset
Builder Program, Inc. The Program consists of five separate diversified
portfolios, each with its own investment objectives.
Complete performance information, including average annual total returns, for
all five portfolios can be found on pages 8-15 of this report to shareholders.
Fundamental Value Portfolio
Fiscal Year in Review
The fiscal year ended January 31, 1998 proved to be a volatile yet rewarding
period for US equity investors, with the unmanaged Standard & Poor's 500 Index
(S&P 500) registering a +26.89% total return. In the early part of the year, the
stock market was fueled by continued signs of modest noninflationary economic
growth and by the solid outlook for corporate profits. Performance early in the
fiscal year was led by large-capitalization growth stocks reflecting, in part,
the continued influence of the indexing phenomenon which tends to favor larger
growth companies. Since the Portfolio had limited exposure to high-multiple
growth stocks, performance suffered during this period as compared to the S&P
500. By August, the equity market shifted in the Portfolio's favor as many
high-profile growth stocks came under selling pressure as a result of earnings
shortfalls and concerns over lofty valuations. Investors directed their
attention at that time to the many attractive opportunities available in basic
value and small-capitalization issues. Unfortunately, this period of value and
small-capitalization outperformance was short-circuited by the Asian financial
crisis, which led to a resurgence of safe-haven large-capitalization growth
issues and a renewed aversion to cyclically sensitive or Asian-affected
companies. For the fiscal year ended January 31, 1998, the Portfolio's Class A,
Class B, Class C and Class D Shares had total returns of +17.12%, +15.91%,
+15.93% and +16.89%, respectively, lagging the total return of the S&P 500.
Favorably impacting the Portfolio's performance during the year was the solid
showing of the following issues: U S West Media Group, AT&T Corp., Ford Motor
Co., Bristol-Myers Squibb Co., WHX Corp., Hibernia Corp. and Black & Decker
Corp., all of which appreciated by more than 40%. These companies all reported
substantial improvements in fundamentals during the year. The Portfolio also
benefited significantly from the takeover of six holdings: American Exploration
Co., CompuServe Corp., Digital Equipment Corp., ITT Corp., Tandem Computers,
Inc. and Transitional Hospitals Corp.
Examining the Portfolio's performance by sector reveals the adverse influence of
our overweighted positions in the capital goods--technology and basic industries
sectors, as these areas lagged the solid gains of the S&P 500 during the fiscal
year. Mitigating the adverse influence somewhat were the significant gains
realized during the period in selected holdings in these areas. For example, we
realized sizable profits in eight technology and basic industry positions during
the year. Going forward, we believe a continued overweighting in the
aforementioned sectors is warranted based on attractive valuations and the
envisioned improvement in long-term fundamentals emanating from the "Asian
contagion." We believe the Asian crisis will lead to a curtailment in capital
spending plans by many financially constrained Asian paper and semiconductor
producers, which ultimately could lead to an improved supply/demand balance for
the affected commodities/products. This expected improvement in long-term
fundamentals, combined with modest share price valuations, was the rationale
behind our increased commitments to International Paper Co., Tenneco, Inc. and
Louisiana-Pacific Corp., and our initiation of a position in Texas Instruments,
Inc.
Looking at the Portfolio's other sector exposures, we remain underweighted in
consumer staples and financials, a strategy that hindered our 1997 performance.
We believe continued modest exposure is warranted based on the limited
out-of-favor opportunities available in these areas. We remained underweighted
in the energy sector for the bulk of the year, a posture that served us well. We
made some changes within our energy holdings late in the year, reflecting
relative valuation opportunities. We eliminated our position in YPF S.A. because
it reached our price target, and we initiated positions in two underperforming
and undervalued issues, Enron Corp. and Exxon Corporation.
In the wake of the Asian crisis, we expanded our exposure to the domestically
oriented retail sector, which served to further augment our already above-market
exposure to the consumer cyclical group. We judged this area would suffer few
ill effects from the problems occurring in the Pacific Rim. We added to our core
holdings of Kmart Corporation and Woolworth Corp., initiated a position in
Sears, Roebuck & Co., and reestablished a position in Toys 'R' Us, Inc. Sears
and Toys 'R' Us have encountered fundamental problems recently, the former in
its credit division and the latter in its remodeling efforts. Both are taking
steps to rectify their respective problems and thus, we viewed the share price
weakness and modest valuations as providing buying opportunities.
Although 1997 proved a challenging year for Fundamental Value Portfolio, we
believe the Portfolio is favorably positioned for 1998. We have exposure to many
attractively valued equities that offer favorable turnaround potentials and
bright appreciation prospects. The Portfolio's potential is further enhanced by
the modest valuation of its holdings. On average, the Portfolio's investments
have a price/earnings ratio of 14.5 times 1998 estimated earnings per share and
a price/book value per share ratio of 1.9 times, representing sizable discounts
relative to the valuations of the stocks in the S&P 500 Index.
Global Opportunity Portfolio
Fiscal Year in Review
As of January 31, 1998, the Portfolio's asset allocation was: foreign stocks,
28% of net assets; US stocks, 28%; foreign bonds, 14%; US bonds, 15%; and cash
and cash equivalents, 15%.
During the fiscal year ended January 31, 1998, the overall returns of the
Portfolio were held down by the laggard performance of foreign equities and
bonds relative to the performance of their US counterparts. The negative impact
of foreign equities was limited by the reduction of that sector during the
second half of 1997. The decision to limit representation in Asian markets and
to remain underweighted in Japanese equities further reduced the negative impact
of foreign equities. As for foreign bonds, the maintenance of currency hedges
against the European fixed-income positions during much of the year improved the
Portfolio's returns by limiting the negative impact of a strong US dollar
relative to European currencies. US equities continued to be a positive net
contributor to overall portfolio returns during 1997. The strong overall
performance in the financial services sector, which was the largest single group
represented among US equities, offset less-favorable performance among
technology, healthcare and economically sensitive equities.
Portfolio Matters
During the three months ended January 31, 1998, we continued to become more
cautious toward foreign stocks. Our concerns over the widening economic problems
in Asia, particularly South Korea, Japan and Southeast Asia, led us to reduce
our allocation to foreign equities from 41% of net assets as of October 31, 1997
to 28% as of January 31, 1998. In decreasing our foreign equity weighting, we
eliminated representation in Brazil. We regarded the Brazilian market as being
the most vulnerable to a deterioration of the situation in Asia, particularly if
the Hong Kong currency peg to the US dollar were to come under pressure. We also
reduced Asian representation through the sale of HSBC Holdings PLC.
In November 1997, we further reduced Japan's relative position from an already
underweighted exposure. In addition to reducing individual commitments, we
liquidated positions in Autobacs Seven Co., Ltd., Mitsubishi Heavy Industries,
Ltd., Mitsubishi Electric Corp., Mitsui-Soko Co., Ltd. and Toray Industries,
Inc. We were concerned that the uncertainties surrounding the Japanese financial
structure and economy would limit the recovery potential in the Japanese stock
market over the coming months. However, by January 1998 the government had
proposed measures which could stabilize the financial structure and the economy.
Since we believed that these measures limited downside risk in the Japanese
equity market, we began the process of rebuilding our weighting in Japan through
the establishment of positions in Bank of Tokyo--Mitsubishi, Ltd., Ito-Yokado
Co., Ltd. and Makino Milling Machine Co., Ltd.
Our reduction of the European equity representation was more limited in scope,
given a relatively favorable economic background for European economies. While
we liquidated
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Merrill Lynch Asset Builder Program, Inc., January 31, 1998
positions in Siemens AG, ABB AG and ABN Amro Holding N.V., we also established
positions in Nordbanken Holding AB, Thomson-CSF S.A., Devro PLC and Sun
International Hotels Ltd.
The assets resulting from the sale of foreign equities were directed to US
equities. Consistent with our expectation of further US interest rate declines,
financial services equities continued to account for the largest concentration
of assets in the US stock portion of the Portfolio. Significant representation
is also maintained in healthcare, where new positions included Bristol-Myers
Squibb Co., Pfizer, Incorporated and Warner-Lambert Company, as well as in
technology and energy. Overall, we are increasing emphasis on the shares of
companies which we believe have a limited potential for earnings disappointments
resulting from the problems afflicting the Asian economies.
The bulk of our foreign bond weighting remained concentrated in Europe,
including Denmark, France, Germany, Italy, Sweden, Spain and the United Kingdom.
During January 1998, we became more optimistic in our outlook for the US dollar.
Consequently, we increased the size of the hedges to include the equivalent of a
full weighting in European stocks and bonds and Japanese equities. In the US
bond sector, we extended the Portfolio's average duration to 6.1 years as of
January 31, 1998. Our optimistic stance toward US bonds reflected indications
that inflationary pressures in the US economy were exceptionally subdued. The
problems in Asian economies and a resultant slowdown in the US economy seemed
likely to accentuate the trend toward lower inflation. At the same time, the
rapid shrinkage, if not outright elimination, of the US Federal budget deficit
was expected to continue to reduce the supply of newly issued US Government
securities relative to demand.
Growth Opportunity Portfolio
Fiscal Year in Review
For the fiscal year ended January 31, 1998, Growth Opportunity Portfolio's Class
A, Class B, Class C and Class D Shares had total returns of +23.52%, +22.16%,
+22.17% and +23.30%, respectively. The Portfolio outperformed the Lipper
Analytical Services Growth Funds Average total return of +19.66%, but
underperformed the unmanaged Standard & Poor's 500 (S&P 500) Index total return
of +26.89% for the same 12-month period. The primary reason for the Portfolio's
underperformance relative to the S&P 500 Index was the decline in the stock
prices of holdings in the computer, computer software, communications equipment
and oil services industries during the fourth fiscal quarter. These declines
appear to be related to investor concerns about the potential impact of
recessions in Asian countries on the profits of individual companies in these
industries. Fourth quarter 1997 earnings results reported during January 1998
suggest that the financial crisis and business declines in Asia have had a
relatively minimal effect thus far on the profits of most US-based global
companies. The stock prices of many of the Portfolio's investments started to
recover during January as reported earnings showed the modest effect of declines
in sales in Asia on their corporate results.
During the year ended January 31, 1998, we followed a fairly consistent
portfolio strategy which we implemented early in the fiscal year. At the start
of the fiscal year, we modestly changed the industry structure of the Portfolio
in order to focus on companies in several cyclical growth industries which
appeared to have excellent growth prospects for 1997. Several surveys of
investment plans by corporations had indicated increased spending plans for 1997
on new networked computer systems, advanced digital wireless and wireline
communication infrastructure and energy exploration activities. Consequently, we
added a number of companies to the Portfolio in these industries. For example,
we added Baan Company, N.V. and SAP AG (Systeme, Anwendungen, Produkte in der
Datenverarbeitung), two of the global leaders in client server-based business
application software, to the Portfolio. These two organizations are among the
leaders in facilitating the change, by both major and small corporations, to
totally networked operational systems with anticipated improvements in
productivity.
In the networking area, we added Cisco Systems, Inc., the global leader in
network equipment and software for the internet and private corporate intranets
of computer systems. We added Hewlett-Packard Co. because of the reasonable
valuation and the company's high profile in the corporate market for networked
server computers and workstations. In the communications equipment sector, we
added Lucent Technologies, Inc., Telefonaktiebolaget LM Ericsson, Newbridge
Networks Corp., Northern Telecom Limited and FORE Systems, Inc. These companies
have been leaders in receiving new contract awards by long distance and local
exchange telephone companies and unregulated commercial communication companies
for the latest in digital communication infrastructure switches and related
software, which can efficiently carry not only voice and data but also video
communications. These investments are necessary to compete for the
communications service business of the many corporations which are investing in
expanded networks of desktop computers, in our view. In the energy exploration
sector, we added Diamond Offshore Drilling, Inc., a leader in equipment and
systems for deepwater offshore exploration services. In addition, we added Baker
Hughes, Inc., which is a leader in high technology equipment and services for
energy exploration.
The companies which contributed the most to Portfolio returns during the fiscal
year ended January 31, 1998 were COMPAQ Computer Corp., Lucent Technologies,
Inc., SAP AG (Systeme, Anwendungen, Produkte in der Datenverarbeitung),
Microsoft Corporation, Cisco Systems, Inc. and Northern Telecom Limited. Other
significant contributors to the Portfolio's positive investment returns were The
Gillette Co., The Coca-Cola Company and Pfizer, Incorporated.
As stated earlier, the primary reason for the Portfolio's underperformance
relative to the S&P 500 Index during the quarter ended January 31, 1998 was the
decline in the stock prices of Portfolio holdings in the cyclical growth
sectors. However, the comparative stock price performance started to improve
during January 1998 as the reporting of operational results for a majority of
our investment holdings showed that the negative business conditions resulting
from the recessions and financial crisis in Asia were having a limited impact on
overall business profits. We continued to pursue the investment strategy we put
in place a year ago. The most recent reports from corporate management and
industry surveys show a continuation of positive capital investment trends in
networked computer systems and software, in digital infrastructure for both
wireless and wireline communication systems and in energy exploration
activities, particularly in offshore deepwater locations.
We changed our strategy modestly by increasing the Portfolio's weighting in the
banking and financial sector. The economic recessions in the developing Asian
countries are likely to slow the rate of real economic growth on a worldwide
basis and keep consumer price inflation at a relatively modest pace. Banking and
financial companies which have a modest exposure to credit risk in the Asian
markets may experience further appreciation in stock price valuation ratios in
this environment. At fiscal year-end, the Portfolio had 11.4% of net assets in
the banking and financial sector, the Portfolio's largest industry weighting.
The next largest sectors were communications equipment, 9.3% of net assets;
financial services, 7.2%; pharmaceuticals, 7%; and software--computers, 6.8%. We
had 10.2% of net assets in cash and cash equivalents at the end of the fiscal
year. Looking ahead, we have a positive outlook for investment returns from the
US stock market in 1998.
Quality Bond Portfolio
Fiscal Year in Review
During the first quarter of the fiscal year, fixed-income markets fell on
concern of growing inflationary pressures. We shortened the duration of the
Portfolio to 4.4 years by increasing the Portfolio's cash reserves to 7.9% of
net assets. At the end of March, the Federal Reserve Board launched a preemptive
strike against inflationary pressures by raising the Federal Funds rate by 25
basis points (0.25%). Interest rates peaked in mid-April, then dropped through
the second quarter. This rally was fueled by a significant change in
expectations regarding the economy and by a more optimistic outlook for
inflation. At this time, we decided to maintain a duration-neutral strategy for
the Portfolio, based on the volatility that characterized the market.
Accordingly, we set a range of 4.5 years-4.6 years for the Portfolio's duration.
The
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Merrill Lynch Asset Builder Program, Inc., January 31, 1998
Portfolio's performance was hurt by the relatively high percentage (8%) of the
Portfolio's net assets in cash reserves in response to our concerns regarding
volatility.
The market continued to rally until the middle of the summer. We extended the
upper limit of our duration range to 4.7 years and lengthened the positions
accordingly. The market fell sharply in August as a result of
stronger-than-expected employment and purchasing manager reports. These figures
suggested substantially stronger consumer spending in the third quarter. The
market rallied again in September on the belief that the Federal Reserve Board
would not move to tighten interest rates again in 1997. Prices then began to
fall in early October in response to concerns about employment and wage
pressures, but reversed direction and rose sharply in the middle of the month
because of concerns about the Asian currency crisis.
The US Treasury market has been viewed as a safe haven for investors. By the end
of December, bond yields were at their lowest levels of the year. We then
extended the Portfolio's duration to 5.9 years in order to participate in this
rally. This strategy enhanced the Portfolio's performance so that the total
returns on the Portfolio's Class A, Class B, Class C and Class D Shares were
+10.59%, +9.55%, +9.46% and +10.21%, respectively, for the year ended January
31, 1998.
US Government Securities Portfolio
During the three-month period ended January 31, 1998, the US economy continued
to show growth that was strong, inflation that was low and employment that was
high. The US economy in real terms expanded at a 4.3% annual rate in the fourth
quarter and at a 3.8% pace for all of 1997. This is up from a 2.8% pace the
prior year, and was the strongest annual growth rate in nine years. Meanwhile,
price inflation remained extremely mild for this pace of growth. For all of
1997, the Consumer Price Index rose only 1.7%, the smallest increase in more
than a decade. In addition, the Producer Price Index posted its first annual
decline since 1991. However, the Federal Reserve Board continues to be concerned
with wage inflation.
For all of 1997, employment costs rose 3.3%, up from the 2.9% increase the prior
year. Employment costs account for two-thirds of consumer prices. Although
employment costs are a concern for the Federal Reserve Board, this concern was
dampened by mild price inflation and increased productivity. The January 1998
unemployment rate held steady at 4.7%, just above a 24-year low. The
unemployment rate has been below 6% since January 1994 and below 5.5% since
January 1996.
The turmoil in the Asian financial markets could have a major impact on the US
economy, which may be evidenced in the upcoming economic data releases. It is
expected that growth will slow in response to declining demand for exports. It
is also expected that price inflation will remain low, aided by falling import
prices. Additionally, both slowing economic growth and falling imports prices
will most likely reduce corporate profits, which may marginally increase the
unemployment rate. It would appear that the turmoil in the Asian financial
markets kept the Federal Reserve Board from tightening monetary policy at their
most recent Federal Open Market Committee meetings. Until the events abroad
subside, the Federal Reserve Board's policy will probably remain on hold. If
the turmoil in the Asian markets stabilizes without a slowing effect on economic
growth, the Federal Reserve Board will probably tighten monetary policy as a
preemptive strike against inflation, given the low unemployment rate, in our
opinion. On the other hand, if the Asian turmoil sharply slows US economic
growth, the Federal Reserve Board may be inclined to ease monetary policy. The
fixed-income markets will probably experience some volatility in the likelihood
of either event.
Safe haven buying by both domestic and foreign investors in the US Treasury
market resulting from the turmoil abroad drove the 30-year bond yield to a
four-year low during the quarter ended January 31, 1998. The three-year,
five-year, ten-year and 30-year Treasury yields ended the period in excess of 30
basis points (0.30%) lower at 5.32%, 5.38%, 5.51% and 5.81%, respectively.
Although the yield spread flattened during the January quarter, the two year-ten
year yield curve ended the period where it started at 20 basis points.
Fiscal Year in Review
For the first three quarters of the fiscal year ended January 31, 1998, we
remained very heavily weighted in mortgage-backed securities (MBS) as a low
volatility environment kept MBS yield spreads in a narrow trading range. Early
in the fiscal year we sold slightly seasoned MBS (those that are
one-year--three-years old), swapping them for MBS with maturities that are to be
announced at very attractive premiums. As interest rates moved lower, we moved
down in coupon into less refinancable securities and into Government National
Mortgage Association securities whose prepayments tend to be slower than
conventional MBS. Additionally, many of these MBS participated in the dollar
roll program, further enhancing Portfolio performance.
The continued drop in long-term interest rates during the fourth fiscal quarter
put pressure on mortgage-backed securities. The MBA refinancing index--a measure
of mortgage refinance applications--hit an all-time high during the January
quarter, nearly doubling its previous 1993 record. We have been vigilant about
avoiding those MBS securities that would be hurt the most by refinancing. Of the
Portfolio's 67% of net assets allocated to MBS, 58% is invested in those MBS
which have little or no incentive to refinance. Additionally, there is a 10%
allocation in super premium MBS, which have already gone through several
refinancing opportunities. This strategy of avoiding prepayment-sensitive MBS
benefited the Portfolio's total return during the fiscal year ended January 31,
1998.
As interest rates came down, so did the durations of MBS. We managed the
shortening of the durations of the MBS allocation through the purchase of US
Treasury securities. The Portfolio has a 32% US Treasury allocation. The use of
US Treasury securities, along with our strategy of avoiding prepayment-sensitive
MBS, should allow the Portfolio to participate in a rally if interest rates
continue coming down without giving up the attractive yields provided by MBS.
Going forward, MBS are likely to continue to be attractive supported by demand
for yield and strong dollar roll markets created by collateralized mortgage
obligation issuance.
In Conclusion
We thank you for your investment in Merrill Lynch Asset Builder Program, Inc.,
and we look forward to reviewing our outlook and strategy with you again in our
upcoming quarterly report to shareholders.
Sincerely,
/s/ Arthur Zeikel
Arthur Zeikel
President
/s/ Geraldine C. Gunn
Geraldine C. Gunn
Senior Vice President and
Portfolio Manager
Fundamental Value Portfolio
/s/ Thomas R. Robinson
Thomas R. Robinson
Senior 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
Senior Vice President and
Portfolio Manager
Quality Bond Portfolio
/s/ Gregory Mark Maunz
Gregory Mark Maunz
Senior Vice President and
Portfolio Manager
US Government Securities Portfolio
March 16, 1998
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Merrill Lynch Asset Builder Program, Inc., January 31, 1998
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.
<TABLE>
<CAPTION>
Recent Performance Results*
Standardized
12 Month 3 Month 30-day Yield
1/31/98 10/31/97 1/31/97 % Change % Change As of 1/31/98
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Fundamental Value Portfolio Class A Shares $13.98 $15.75 $13.58 + 8.94%(1) -6.07%(1) --
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Fundamental Value Portfolio Class B Shares 13.75 15.41 13.39 + 8.76(1) -5.49(1) --
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Fundamental Value Portfolio Class C Shares 13.75 15.41 13.39 + 8.76(1) -5.49(1) --
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Fundamental Value Portfolio Class D Shares 13.94 15.68 13.54 + 8.96(1) -5.91(1) --
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Global Opportunity Portfolio Class A Shares 11.40 12.80 11.93 + 1.51(2) -5.39(2) --
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Global Opportunity Portfolio Class B Shares 11.30 12.61 11.86 + 1.26(2) -4.77(2) --
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Global Opportunity Portfolio Class C Shares 11.28 12.59 11.84 + 1.26(2) -4.77(2) --
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Global Opportunity Portfolio Class D Shares 11.39 12.76 11.92 + 1.51(2) -5.17(2) --
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Growth Opportunity Portfolio Class A Shares 13.42 14.19 11.79 +17.63(3) -2.26(3) --
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Growth Opportunity Portfolio Class B Shares 13.27 13.93 11.68 +17.45(3) -1.52(3) --
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Growth Opportunity Portfolio Class C Shares 13.26 13.92 11.67 +17.47(3) -1.52(3) --
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Growth Opportunity Portfolio Class D Shares 13.42 14.15 11.78 +17.73(3) -1.99(3) --
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Quality Bond Portfolio Class A Shares 10.10 10.01 9.79 + 3.17 +0.90 6.02%
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Quality Bond Portfolio Class B Shares 10.09 10.00 9.79 + 3.06 +0.90 5.52
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Quality Bond Portfolio Class C Shares 10.09 10.00 9.79 + 3.06 +0.90 5.45
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Quality Bond Portfolio Class D Shares 10.09 10.00 9.79 + 3.06 +0.90 5.83
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US Government Securities Portfolio Class A Shares 10.48 10.44 10.20 + 2.75 +0.38 6.31
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US Government Securities Portfolio Class B Shares 10.48 10.44 10.20 + 2.75 +0.38 5.80
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US Government Securities Portfolio Class C Shares 10.48 10.44 10.19 + 2.85 +0.38 5.75
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US Government Securities Portfolio Class D Shares 10.48 10.44 10.20 + 2.75 +0.38 6.09
- -----------------------------------------------------------------------------------------------------------------------------------
Fundamental Value Portfolio Class A Shares--Total Return +17.12(4) +0.98(4)
- -----------------------------------------------------------------------------------------------------------------------------------
Fundamental Value Portfolio Class B Shares--Total Return +15.91(5) +0.72(5)
- -----------------------------------------------------------------------------------------------------------------------------------
Fundamental Value Portfolio Class C Shares--Total Return +15.93(6) +0.73(6)
- -----------------------------------------------------------------------------------------------------------------------------------
Fundamental Value Portfolio Class D Shares--Total Return +16.89(7) +0.94(7)
- -----------------------------------------------------------------------------------------------------------------------------------
Global Opportunity Portfolio Class A Shares--Total Return + 7.27(8) -0.02(8)
- -----------------------------------------------------------------------------------------------------------------------------------
Global Opportunity Portfolio Class B Shares--Total Return + 5.97(9) -0.33(9)
- -----------------------------------------------------------------------------------------------------------------------------------
Global Opportunity Portfolio Class C Shares--Total Return + 5.99(10) -0.32(10)
- -----------------------------------------------------------------------------------------------------------------------------------
Global Opportunity Portfolio Class D Shares--Total Return + 7.02(11) -0.03(11)
- -----------------------------------------------------------------------------------------------------------------------------------
Growth Opportunity Portfolio Class A Shares--Total Return +23.52(12) +2.63(12)
- -----------------------------------------------------------------------------------------------------------------------------------
Growth Opportunity Portfolio Class B Shares--Total Return +22.16(13) +2.42(13)
- -----------------------------------------------------------------------------------------------------------------------------------
Growth Opportunity Portfolio Class C Shares--Total Return +22.17(13) +2.43(13)
- -----------------------------------------------------------------------------------------------------------------------------------
Growth Opportunity Portfolio Class D Shares--Total Return +23.30(14) +2.65(14)
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
8 & 9
<PAGE>
Merrill Lynch Asset Builder Program, Inc., January 31, 1998
PERFORMANCE DATA (continued)
<TABLE>
<CAPTION>
Recent Performance Results* (concluded)
12 Month 3 Month
% Change % Change
===================================================================================================
<S> <C> <C>
Quality Bond Portfolio Class A Shares--Total Return +10.59(15) +2.65(16)
- ---------------------------------------------------------------------------------------------------
Quality Bond Portfolio Class B Shares--Total Return + 9.55(17) +2.43(18)
- ---------------------------------------------------------------------------------------------------
Quality Bond Portfolio Class C Shares--Total Return + 9.46(19) +2.41(20)
- ---------------------------------------------------------------------------------------------------
Quality Bond Portfolio Class D Shares--Total Return +10.21(21) +2.58(22)
- ---------------------------------------------------------------------------------------------------
US Government Securities Portfolio Class A Shares--Total Return +10.66(23) +2.74(24)
- ---------------------------------------------------------------------------------------------------
US Government Securities Portfolio Class B Shares--Total Return + 9.76(25) +2.54(26)
- ---------------------------------------------------------------------------------------------------
US Government Securities Portfolio Class C Shares--Total Return + 9.79(27) +2.52(28)
- ---------------------------------------------------------------------------------------------------
US Government Securities Portfolio Class D Shares--Total Return +10.38(29) +2.68(30)
- ---------------------------------------------------------------------------------------------------
</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 $0.799 per share capital gains
distributions.
(2) Percent change includes reinvestment of $0.700 per share capital gains
distributions.
(3) Percent change includes reinvestment of $0.444 per share capital gains
distributions.
(4) Percent change includes reinvestment of $1.089 per share ordinary income
dividends and $0.799 capital gains distributions.
(5) Percent change includes reinvestment of $0.940 per share ordinary income
dividends and $0.799 capital gains distributions.
(6) Percent change includes reinvestment of $0.942 per share ordinary income
dividends and $0.799 capital gains distributions.
(7) Percent change includes reinvestment of $1.053 per share ordinary income
dividends and $0.799 capital gains distributions.
(8) Percent change includes reinvestment of $0.677 per share ordinary income
dividends and $0.700 capital gains distributions.
(9) Percent change includes reinvestment of $0.552 per share ordinary income
dividends and $0.700 capital gains distributions.
(10) Percent change includes reinvestment of $0.553 per share ordinary income
dividends and $0.700 capital gains distributions.
(11) Percent change includes reinvestment of $0.647 per share ordinary income
dividends and $0.700 capital gains distributions.
(12) Percent change includes reinvestment of $0.686 per share ordinary income
dividends and $0.444 capital gains distributions.
(13) Percent change includes reinvestment of $0.544 per share ordinary income
dividends and $0.444 capital gains distributions.
(14) Percent change includes reinvestment of $0.648 per share ordinary income
dividends and $0.444 capital gains distributions.
(15) Percent change includes reinvestment of $0.689 per share ordinary income
dividends.
(16) Percent change includes reinvestment of $0.174 per share ordinary income
dividends.
(17) Percent change includes reinvestment of $0.604 per share ordinary income
dividends.
(18) Percent change includes reinvestment of $0.153 per share ordinary income
dividends.
(19) Percent change includes reinvestment of $0.596 per share ordinary income
dividends.
(20) Percent change includes reinvestment of $0.151 per share ordinary income
dividends.
(21) Percent change includes reinvestment of $0.664 per share ordinary income
dividends.
(22) Percent change includes reinvestment of $0.168 per share ordinary income
dividends.
(23) Percent change includes reinvestment of $0.768 per share ordinary income
dividends.
(24) Percent change includes reinvestment of $0.244 per share ordinary income
dividends.
(25) Percent change includes reinvestment of $0.683 per share ordinary income
dividends.
(26) Percent change includes reinvestment of $0.223 per share ordinary income
dividends.
(27) Percent change includes reinvestment of $0.675 per share ordinary income
dividends.
(28) Percent change includes reinvestment of $0.221 per share ordinary income
dividends.
(29) Percent change includes reinvestment of $0.742 per share ordinary income
dividends.
(30) Percent change includes reinvestment of $0.237 per share ordinary income
dividends.
Fundamental Value Portfolio
Total Return Based on a $10,000 Investment
A line graph depicting the growth of an investment in the Portfolio's Class A
Shares and Class B Shares compared to growth of an investment in the Lipper
Growth and Income Fund Index and the S&P 500 Index. Beginning and ending values
are:
2/01/95** 1/98
Fundamental Value Portfolio+ --
Class A Shares* $9,475 $16,420
Fundamental Value Portfolio+ --
Class B Shares* $10,000 $16,585
Lipper Growth and Income Fund Index++ $10,000 $19,821
S&P 500 Index+++ $10,000 $22,224
A line graph depicting the growth of an investment in the Portfolio's Class C
Shares and Class D Shares compared to growth of an investment in the Lipper
Growth and Income Fund Index and the S&P 500 Index. Beginning and ending values
are:
2/01/95** 1/98
Fundamental Value Portfolio+ --
Class C Shares* $10,000 $16,791
Fundamental Value Portfolio+ --
Class D Shares* $9,475 $16,310
Lipper Growth and Income Fund Index++ $10,000 $19,821
S&P 500 Index+++ $10,000 $22,224
* Assuming maximum sales charge, transaction costs and other operating
expenses, including advisory fees.
** Commencement of operations.
+ Fundamental Value Portfolio invests in equities, primarily common stocks
and, to a lesser extent, securities convertible into common stock, as well
as preferred stocks and non-convertible debt securities.
++ Lipper Growth and Income Fund Index is an equally weighted Index of the
largest growth and income mutual funds. During the year ended January 31,
1998, we changed the Portfolio's primary performance benchmark from the
unmanaged S&P 500 Index to the unmanaged Lipper Growth and Income Fund Index
because it is more consistent with the Portfolio's investment objective.
Performance data is as of January 31, 1995.
+++ This unmanaged broad-based Index is comprised of common stocks. Past
performance is not predictive of future performance.
Fundamental Value Portfolio
Average Annual Total Returns
% Return Without % Return With
Sales Charge Sales Charge**
================================================================================
Class A Shares*
================================================================================
Year Ended 12/31/97 +19.83% +13.54%
- --------------------------------------------------------------------------------
Inception (2/01/95) to 12/31/97 +20.36 +18.15
- --------------------------------------------------------------------------------
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
================================================================================
Class B Shares*
================================================================================
Year Ended 12/31/97 +18.53% +14.53%
- --------------------------------------------------------------------------------
Inception (2/01/95) to 12/31/97 +19.10 +18.61
- --------------------------------------------------------------------------------
* 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 12/31/97 +18.46% +17.46%
- --------------------------------------------------------------------------------
Inception (2/01/95) to 12/31/97 +19.09 +19.09
- --------------------------------------------------------------------------------
* 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 12/31/97 +19.51% +13.23%
- --------------------------------------------------------------------------------
Inception (2/01/95) to 12/31/97 +20.11 +17.91
- --------------------------------------------------------------------------------
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
10 & 11
<PAGE>
Merrill Lynch Asset Builder Program, Inc., January 31, 1998
PERFORMANCE DATA (continued)
Global Opportunity Portfolio
Total Return Based on a $10,000 Investment
A line graph depicting the growth of an investment in the Portfolio's Class A
Shares and Class B Shares compared to growth of an investment in the Morgan
Stanley Capital International World Index and the Salomon Brothers World
Government Bond Index. Beginning and ending values are:
2/01/95** 1/98
Global Opportunity Portfolio+ --
Class A Shares* $ 9,475 $12,730
Global Opportunity Portfolio+ --
Class B Shares* $10,000 $12,803
Morgan Stanley Capital International
World Index++ $10,000 $16,550
Salomon Brothers World Government
Bond Index+++ $10,000 $12,227
A line graph depicting the growth of an investment in the Portfolio's Class C
Shares and Class D Shares compared to growth of an investment in the Morgan
Stanley Capital International World Index and the Salomon Brothers World
Government Bond Index. Beginning and ending values are:
2/01/95** 1/98
Global Opportunity Portfolio+ --
Class C Shares* $10,000 $12,990
Global Opportunity Portfolio+ --
Class D Shares* $ 9,475 $12,646
Morgan Stanley Capital International
World Index++ $10,000 $16,550
Salomon Brothers World Government
Bond Index+++ $10,000 $12,227
* Assuming maximum sales charge, transaction costs and other operating
expenses, including advisory fees.
** Commencement of operations.
+ Global Opportunity Portfolio invests in a portfolio of US and foreign
equity, debt and money market securities.
++ This unmanaged market capitalization-weighted Index is comprised of a
respresentative sampling of stocks of large-, medium-, and
small-capitalization companies in 22 countries, including the United States.
+++ This unmanaged market capitalization-weighted Index tracks the performance
of the government bond markets of Australia, Austria, Belgium, Canada,
Denmark, France, Germany, Italy, Japan, the Netherlands, Spain, Sweden, the
United Kingdom and the United States. Past performance is not predictive of
future performance.
Global Opportunity Portfolio
Average Annual Total Returns
% Return Without % Return With
Sales Charge Sales Charge**
================================================================================
Class A Shares*
================================================================================
Year Ended 12/31/97 + 9.26% +3.53%
- --------------------------------------------------------------------------------
Inception (2/01/95) to 12/31/97 +10.43 +8.41
- --------------------------------------------------------------------------------
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
================================================================================
Class B Shares*
================================================================================
Year Ended 12/31/97 + 8.14% +4.25%
- --------------------------------------------------------------------------------
Inception (2/01/95) to 12/31/97 + 9.27 +8.69
- --------------------------------------------------------------------------------
* 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 12/31/97 + 8.08% +7.10%
- --------------------------------------------------------------------------------
Inception (2/01/95) to 12/31/97 + 9.23 +9.23
- --------------------------------------------------------------------------------
* 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 12/31/97 + 9.01% +3.29%
- --------------------------------------------------------------------------------
Inception (2/01/95) to 12/31/97 +10.19 +8.17
- --------------------------------------------------------------------------------
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
Growth Opportunity Portfolio
Total Return Based on a $10,000 Investment
A line graph depicting the growth of an investment in the Portfolio's Class A
Shares and Class B Shares compared to growth of an investment in the Lipper
Growth Fund Index. Beginning and ending values are:
2/02/96** 1/98
Growth Opportunity Portfolio+ --
Class A Shares* $ 9,475 $13,798
Growth Opportunity Portfolio+ --
Class B Shares* $10,000 $13,968
Lipper Growth Fund Index++ $10,000 $14,724
A line graph depicting the growth of an investment in the Portfolio's Class C
Shares and Class D Shares compared to growth of an investment in the Lipper
Growth Fund Index. Beginning and ending values are:
2/02/96** 1/98
Growth Opportunity Portfolio+ --
Class C Shares* $10,000 $14,258
Growth Opportunity Portfolio+ --
Class D Shares* $ 9,475 $13,762
Lipper Growth Fund Index++ $10,000 $14,724
* Assuming maximum sales charge, transaction costs and other operating
expenses, including advisory fees.
** Commencement of operations.
+ Growth Opportunity Portfolio invests in a portfolio of equity securities,
placing particular emphasis on large-capitalization companies that are
anticipated to exhibit above-average growth rates in earnings.
++ Lipper Growth Fund Index is an equally weighted Index of the largest mutual
funds which normally invest in companies whose long-term earnings are
expected to grow significantly faster than the earnings of the stocks
represented in the major unmanaged stock indexes. The index is adjusted for
reinvestment of capital gains distributions and income dividends. Past
performance is not predictive of future performance.
Growth Opportunity Portfolio
Average Annual Total Returns
% Return Without % Return With
Sales Charge Sales Charge**
================================================================================
Class A Shares*
================================================================================
Year Ended 12/31/97 +28.70% +21.94%
- --------------------------------------------------------------------------------
Inception (2/02/96) to 12/31/97 +21.29 +17.92
- --------------------------------------------------------------------------------
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
================================================================================
Class B Shares*
================================================================================
Year Ended 12/31/97 +27.19% +23.19%
- --------------------------------------------------------------------------------
Inception (2/02/96) to 12/31/97 +20.04 +18.71
- --------------------------------------------------------------------------------
* 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 12/31/97 +27.21% +26.21%
- --------------------------------------------------------------------------------
Inception (2/02/96) to 12/31/97 +20.00 +20.00
- --------------------------------------------------------------------------------
* 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 12/31/97 +28.35% +21.62%
- --------------------------------------------------------------------------------
Inception (2/02/96) to 12/31/97 +21.13 +17.76
- --------------------------------------------------------------------------------
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
12 & 13
<PAGE>
Merrill Lynch Asset Builder Program, Inc., January 31, 1998
PERFORMANCE DATA (concluded)
Quality Bond Portfolio
Total Return Based on a $10,000 Investment
A line graph depicting the growth of an investment in the Portfolio's Class A
Shares and Class B Shares compared to growth of an investment in the ML C0A0
Corporate Master Bond Index. Beginning and ending values are:
2/01/95** 1/98
Quality Bond Portfolio+ --
Class A Shares* $ 9,600 $11,891
Quality Bond Portfolio+ --
Class B Shares* $10,000 $11,862
ML C0A0 Corporate Master
Bond Index++ $10,000 $13,823
A line graph depicting the growth of an investment in the Portfolio's Class C
Shares and Class D Shares compared to growth of an investment in the ML C0A0
Corporate Master Bond Index. Beginning and ending values are:
2/01/95** 1/98
Quality Bond Portfolio+ --
Class C Shares* $10,000 $12,035
Quality Bond Portfolio+ --
Class D Shares* $ 9,600 $11,791
ML C0A0 Corporate Master Bond Index++ $10,000 $13,823
* Assuming maximum sales charge, transaction costs and other operating
expenses, including advisory fees.
** Commencement of operations.
+ Quality Bond Portfolio invests in a diversified portfolio of debt
obligations, including corporate bonds and notes, convertible securities,
preferred stocks and government obligations. The Portfolio will invest
primarily in securities rated in the top three rating categories (A or
better) of a nationally recognized rating agency or in securities with
similar credit characteristics.
++ This unmanaged Index is comprised of all investment-grade corporate bonds
rated BB3 or higher, of all maturities. Past performance is not predictive
of future performance.
Quality Bond Portfolio
Average Annual Total Returns
% Return Without % Return With
Sales Charge Sales Charge**
================================================================================
Class A Shares*
================================================================================
Year Ended 12/31/97 +9.33% +4.96%
- --------------------------------------------------------------------------------
Inception (2/01/95) to 12/31/97 +7.13 +5.63
- --------------------------------------------------------------------------------
* Maximum sales charge is 4%.
** Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
================================================================================
Class B Shares*
================================================================================
Year Ended 12/31/97 +8.39% +4.39%
- --------------------------------------------------------------------------------
Inception (2/01/95) to 12/31/97 +6.22 +5.60
- --------------------------------------------------------------------------------
* 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 12/31/97 +8.30% +7.30%
- --------------------------------------------------------------------------------
Inception (2/01/95) to 12/31/97 +6.14 +6.14
- --------------------------------------------------------------------------------
* 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 12/31/97 +9.06% +4.70%
- --------------------------------------------------------------------------------
Inception (2/01/95) to 12/31/97 +6.86 +5.37
- --------------------------------------------------------------------------------
* Maximum sales charge is 4%.
** Assuming maximum sales charge.
================================================================================
US Government Securities Portfolio
Total Return Based on a $10,000 Investment
A line graph depicting the growth of an investment in the Portfolio's Class A
Shares and Class B Shares compared to growth of an investment in the Salomon
Brothers Mortgage Index. Beginning and ending values are:
2/01/95** 1/98
US Government Securities Portfolio+ --
Class A Shares* $ 9,600 $12,851
US Government Securities Portfolio+ --
Class B Shares* $10,000 $12,861
Salomon Brothers Mortgage Index++ $10,000 $13,272
A line graph depicting the growth of an investment in the Portfolio's Class C
Shares and Class D Shares compared to growth of an investment in the Salomon
Brothers Mortgage Index. Beginning and ending values are:
2/01/95** 1/98
US Government Securities Portfolio+ --
Class C Shares* $10,000 $13,036
US Government Securities Portfolio+ --
Class D Shares* $ 9,600 $12,747
Salomon Brothers Mortgage Index++ $10,000 $13,272
* Assuming maximum sales charge, transaction costs and other operating
expenses, including advisory fees.
** Commencement of operations.
+ US Government Securities Portfolio invests in marketable securities issued
or guaranteed by the US Government, by various agencies of the US Government
and by various instrumentalities which have been established or sponsored by
the US Government.
++ This unmanaged Index reflects the performance of a capital market weighting
of the outstanding agency-issued mortgage-backed securities. Past
performance is not predictive of future performance.
US Government Securities Portfolio
Average Annual Total Returns
% Return Without % Return With
Sales Charge Sales Charge**
================================================================================
Class A Shares*
================================================================================
Year Ended 12/31/97 + 9.85% +5.45%
- --------------------------------------------------------------------------------
Inception (2/01/95) to 12/31/97 +10.00 +8.47
- --------------------------------------------------------------------------------
* Maximum sales charge is 4%.
** Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
================================================================================
Class B Shares*
================================================================================
Year Ended 12/31/97 +8.95% +4.95%
- --------------------------------------------------------------------------------
Inception (2/01/95) to 12/31/97 +9.10 +8.52
- --------------------------------------------------------------------------------
* 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 12/31/97 + 8.87% +7.87%
- --------------------------------------------------------------------------------
Inception (2/01/95) to 12/31/97 + 8.99 +9.00
- --------------------------------------------------------------------------------
* 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 12/31/97 +9.57% +5.19%
- --------------------------------------------------------------------------------
Inception (2/01/95) to 12/31/97 +9.71 +8.18
- --------------------------------------------------------------------------------
* Maximum sales charge is 4%.
** Assuming maximum sales charge.
14 & 15
<PAGE>
Merrill Lynch Asset Builder Program, Inc., January 31, 1998
SCHEDULE OF INVESTMENTS (in US dollars)
<TABLE>
<CAPTION>
Fundamental Value Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
MIDDLE Shares Value Percent of
EAST Industries Held Investments Cost (Note 1a) Net Assets
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Israel Computer Services 125,000 +Scitex Corp. Ltd. $ 1,244,861 $ 1,226,562 1.6%
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investments in the Middle East 1,244,861 1,226,562 1.6
====================================================================================================================================
NORTH
AMERICA
====================================================================================================================================
United States Automotive 25,000 Ford Motor Co. 810,389 1,275,000 1.7
25,000 General Motors Corp. 1,286,517 1,448,438 1.9
----------- ----------- -----
2,096,906 2,723,438 3.6
------------------------------------------------------------------------------------------------------------------
Banking 15,000 Bankers Trust New York Corp. 1,157,132 1,564,688 2.0
80,000 Hibernia Corp. (Class A) 948,558 1,525,000 2.0
5,000 Wells Fargo & Company 1,274,628 1,545,000 2.0
----------- ----------- -----
3,380,318 4,634,688 6.0
------------------------------------------------------------------------------------------------------------------
Beverage & Entertainment 50,000 The Seagram Company Ltd. 1,792,586 1,706,250 2.2
------------------------------------------------------------------------------------------------------------------
Chemicals 25,000 duPont (E.I.) de Nemours & Co. 1,401,750 1,415,625 1.9
30,000 Great Lakes Chemical Corp. 1,289,188 1,310,625 1.7
----------- ----------- -----
2,690,938 2,726,250 3.6
------------------------------------------------------------------------------------------------------------------
Computer Software 100,000 +Mentor Graphics Corporation 983,068 912,500 1.2
160,000 +Novell, Inc. 1,245,994 1,130,000 1.5
----------- ----------- -----
2,229,062 2,042,500 2.7
------------------------------------------------------------------------------------------------------------------
Conglomerates 47,000 Tenneco, Inc. 2,030,095 1,906,437 2.5
------------------------------------------------------------------------------------------------------------------
Electrical Equipment 30,000 General Signal Corporation 1,229,451 1,170,000 1.5
------------------------------------------------------------------------------------------------------------------
Electronics 20,000 Texas Instruments, Inc. 877,717 1,092,500 1.4
------------------------------------------------------------------------------------------------------------------
Fertilizer 40,000 IMC Global, Inc. 1,408,459 1,290,000 1.7
------------------------------------------------------------------------------------------------------------------
Gaming 40,000 +Circus Circus Enterprises, Inc. 963,565 920,000 1.2
40,000 +Harrah's Entertainment, Inc. 765,713 880,000 1.1
----------- ----------- -----
1,729,278 1,800,000 2.3
------------------------------------------------------------------------------------------------------------------
Health Care Services 17,500 Aetna Inc. 1,315,639 1,286,250 1.7
60,000 +Humana, Inc. 1,171,635 1,203,750 1.6
----------- ----------- -----
2,487,274 2,490,000 3.3
------------------------------------------------------------------------------------------------------------------
Household Products 30,000 Black & Decker Corp. 1,004,612 1,445,625 1.9
20,000 Whirlpool Corporation 1,085,682 1,156,250 1.5
----------- ----------- -----
2,090,294 2,601,875 3.4
------------------------------------------------------------------------------------------------------------------
Information Processing 45,000 +Digital Equipment Corporation 1,504,041 2,545,313 3.3
22,000 International Business Machines Corp. 1,309,275 2,171,125 2.9
----------- ----------- -----
2,813,316 4,716,438 6.2
------------------------------------------------------------------------------------------------------------------
Insurance 50,000 TIG Holdings, Inc. 1,474,737 1,340,625 1.8
------------------------------------------------------------------------------------------------------------------
Machinery 50,000 ITT Industries Inc. 1,177,983 1,550,000 2.0
------------------------------------------------------------------------------------------------------------------
Medical Services 85,000 +Pharmaceutical Product Development, Inc. 1,388,032 1,423,750 1.9
------------------------------------------------------------------------------------------------------------------
Metals--Non-Ferrous 45,000 ASARCO Inc. 1,240,590 1,001,250 1.3
------------------------------------------------------------------------------------------------------------------
Oil & Gas Producers 30,000 Enron Corp. 1,134,746 1,243,125 1.6
------------------------------------------------------------------------------------------------------------------
Oil--Domestic 25,000 Exxon Corporation 1,524,560 1,482,813 2.0
70,000 Occidental Petroleum Corp. 1,612,950 1,785,000 2.3
20,000 Sun Company, Inc. 623,938 775,000 1.0
----------- ----------- -----
3,761,448 4,042,813 5.3
------------------------------------------------------------------------------------------------------------------
Oil Service 30,000 Dresser Industries, Inc. 927,909 1,072,500 1.4
------------------------------------------------------------------------------------------------------------------
Packaging 30,000 Crown Cork & Seal Company, Inc. 1,423,092 1,485,000 1.9
------------------------------------------------------------------------------------------------------------------
Paper & Forest Products 25,000 International Paper Co. 989,942 1,142,187 1.5
70,000 Louisiana-Pacific Corp. 1,551,112 1,404,375 1.8
----------- ----------- -----
2,541,054 2,546,562 3.3
------------------------------------------------------------------------------------------------------------------
Pharmaceuticals 11,000 Bristol-Myers Squibb Co. 421,102 1,096,562 1.4
40,000 Pharmacia & Upjohn, Inc. 1,326,355 1,537,500 2.0
----------- ----------- -----
1,747,457 2,634,062 3.4
------------------------------------------------------------------------------------------------------------------
Photography 25,000 Eastman Kodak Co. 1,765,546 1,631,250 2.1
------------------------------------------------------------------------------------------------------------------
Publishing/Newspapers 27,500 Dow Jones & Company, Inc. 1,021,761 1,381,875 1.8
------------------------------------------------------------------------------------------------------------------
Real Estate 12,100 Pennsylvania Real Estate Investment Trust 271,253 296,450 0.4
------------------------------------------------------------------------------------------------------------------
Retail 20,000 Dillards Inc. (Class A) 638,700 702,500 0.9
140,000 +Kmart Corporation 1,539,761 1,540,000 2.0
25,000 Sears, Roebuck & Co. 1,121,527 1,151,563 1.5
30,000 +Toys 'R' Us, Inc. 759,300 804,375 1.1
45,000 +Woolworth Corp. 628,513 978,750 1.3
----------- ----------- -----
4,687,801 5,177,188 6.8
------------------------------------------------------------------------------------------------------------------
Steel 40,000 USX-US Steel Group, Inc. 1,147,077 1,335,000 1.7
100,000 +WHX Corp. 902,908 1,218,750 1.6
----------- ----------- -----
2,049,985 2,553,750 3.3
------------------------------------------------------------------------------------------------------------------
Technology 70,000 +Exabyte Corp. 889,435 494,375 0.6
------------------------------------------------------------------------------------------------------------------
Telecommunications 30,000 AT&T Corp. 1,067,987 1,878,750 2.5
35,000 GTE Corp. 1,555,539 1,909,687 2.5
50,000 +U S West Media Group 869,720 1,484,375 1.9
----------- ----------- -----
3,493,246 5,272,812 6.9
------------------------------------------------------------------------------------------------------------------
Total Investments in North America 57,851,769 66,047,763 86.2
====================================================================================================================================
</TABLE>
16 & 17
<PAGE>
Merrill Lynch Asset Builder Program, Inc., January 31, 1998
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<TABLE>
<CAPTION>
Fundamental Value Portfolio (concluded)
- ------------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM Face Value Percent of
SECURITIES Amount Issue Cost (Note 1a) Net Assets
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
Commercial Paper* $2,500,000 Atlantic Asset Securitization
Corp., 5.51% due 2/11/1998 $ 2,495,791 $ 2,495,791 3.2%
2,000,000 Countrywide Home Loans, Inc.,
5.48% due 2/06/1998 1,998,173 1,998,173 2.6
3,209,000 General Electric Capital Corp.,
5.64% due 2/02/1998 3,207,995 3,207,995 4.2
----------- ----------- -----
7,701,959 7,701,959 10.0
------------------------------------------------------------------------------------------------------------------
US Government Agency 2,500,000 Federal Home Loan Mortgage Corp.,
Obligations* 5.49% due 2/12/1998 2,495,425 2,495,425 3.3
====================================================================================================================================
Total Investments in Short-Term
Securities 10,197,384 10,197,384 13.3
====================================================================================================================================
Total Investments $69,294,014 77,471,709 101.1
===========
Liabilities in Excess of Other Assets (871,875) (1.1)
----------- -----
Net Assets $76,599,834 100.0%
=========== =====
====================================================================================================================================
</TABLE>
* Commercial paper and certain US Government Agency Obligations are traded on a
discount basis; the interest rates shown are the rates paid at the time of
purchase by the Portfolio.
+ Non-income producing security.
See Notes to Financial Statements.
SCHEDULE OF INVESTMENTS (in US dollars)
<TABLE>
<CAPTION>
Global Opportunity Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Face Value Percent of
COUNTRY Amount Foreign Government Obligations Cost (Note 1a) Net Assets
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Canada C$ 575,000 Canadian Government Bonds,
7% due 12/01/2006 $ 436,840 $ 437,468 0.7%
====================================================================================================================================
Denmark Dkr 5,100,000 Danish Government Bonds,
7% due 11/15/2007 814,777 817,088 1.4
====================================================================================================================================
France Frf 4,500,000 French Government OATS,
5.50% due 10/25/2007 740,926 757,238 1.3
====================================================================================================================================
Bundesrepublik Deutschland:
Germany DM 850,000 6.50% due 10/14/2005 547,951 510,046 0.9
1,150,000 6% due 7/04/2007 672,594 671,902 1.1
850,000 6% due 6/20/2016 472,899 495,648 0.8
800,000 Treuhandanstalt, 6.875% due 6/11/2003 532,016 482,973 0.8
----------- ----------- -----
2,225,460 2,160,569 3.6
====================================================================================================================================
Italy Lit 2,250,000,000 Buoni Poliennali del Tesoro (Italian
Government Bonds), 8.50% due 8/01/2004 1,464,424 1,461,403 2.4
====================================================================================================================================
Spain Pta 80,000,000 Bonos del Estado (Spanish Government
Bonds), 7.90% due 2/28/2002 648,305 576,436 1.0
====================================================================================================================================
Sweden Skr 5,800,000 Government of Sweden, 8% due 8/15/2007 879,521 839,078 1.4
====================================================================================================================================
United Kingdom (pound) 750,000 UK Treasury Gilt, 7.25% due 12/07/2007 1,241,406 1,334,809 2.2
====================================================================================================================================
Total Investments in Foreign Government
Obligations 8,451,659 8,384,089 14.0
====================================================================================================================================
US Government Obligations
====================================================================================================================================
US Treasury Notes and Bonds:
United States US$ 2,150,000 6% due 8/15/1999 2,153,820 2,169,823 3.6
800,000 6.50% due 5/31/2002 805,375 832,872 1.4
425,000 6.25% due 2/15/2007 428,387 445,587 0.8
635,000 6.625% due 5/15/2007 642,934 683,120 1.1
4,020,000 6.625% due 2/15/2027 4,097,073 4,440,854 7.4
====================================================================================================================================
Total Investments in US Government
Obligations 8,127,589 8,572,256 14.3
====================================================================================================================================
Total Investments in Foreign & US
Government Obligations 16,579,248 16,956,345 28.3
====================================================================================================================================
<CAPTION>
Shares
Industries Held US Stocks
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
United States Aerospace & Defense 8,300 AlliedSignal, Inc. 315,291 323,181 0.5
6,000 GenCorp, Inc. 169,941 148,500 0.2
1,600 Lockheed Martin Corporation 166,215 166,500 0.3
1,700 +Orbital Sciences Corporation 43,804 56,525 0.1
----------- ----------- -----
695,251 694,706 1.1
------------------------------------------------------------------------------------------------------------------
Airlines 6,120 +US Airways Group Inc. 258,620 372,938 0.6
------------------------------------------------------------------------------------------------------------------
Auto--Related 8,100 Hertz Corporation (Class A) 280,385 324,000 0.5
------------------------------------------------------------------------------------------------------------------
Automobile Parts 6,900 Federal-Mogul Corporation 267,730 310,500 0.5
------------------------------------------------------------------------------------------------------------------
Automotive & Equipment 8,400 +Avis Rent A Car, Inc. 199,607 300,825 0.5
------------------------------------------------------------------------------------------------------------------
Banking 7,000 The Bank of New York Company, Inc. 225,778 379,312 0.6
3,540 BankAmerica Corp. 220,662 251,561 0.4
----------- ----------- -----
446,440 630,873 1.0
------------------------------------------------------------------------------------------------------------------
Banking & Financial 7,200 First Union Corporation 355,784 346,050 0.6
------------------------------------------------------------------------------------------------------------------
Broadcasting/Cable 12,400 +Tele-Communications, Inc. (Class A) 249,819 347,200 0.6
8,775 +Tele-Communications TCI Ventures
Group (Class A) 180,083 258,863 0.4
----------- ----------- -----
429,902 606,063 1.0
------------------------------------------------------------------------------------------------------------------
Broadcasting/Radio 6,800 +Chancellor Media Corp. (Class A) 215,650 233,750 0.4
------------------------------------------------------------------------------------------------------------------
Commercial Services 7,350 +Gartner Group, Inc. (Class A) 250,937 274,247 0.5
------------------------------------------------------------------------------------------------------------------
Communication Equipment 10,500 +Worldcom, Inc. 286,974 376,031 0.6
------------------------------------------------------------------------------------------------------------------
Computer Products 2,700 +Cisco Systems, Inc. 154,707 170,269 0.3
------------------------------------------------------------------------------------------------------------------
Computer Sales 1,400 International Business Machines Corp. 97,710 138,163 0.2
------------------------------------------------------------------------------------------------------------------
Computer Software 4,000 +BMC Software, Inc. 199,315 271,000 0.5
1,400 +Microsoft Corporation 171,870 208,863 0.4
----------- ----------- -----
371,185 479,868 0.9
------------------------------------------------------------------------------------------------------------------
</TABLE>
18 & 19
<PAGE>
Merrill Lynch Asset Builder Program, Inc., January 31, 1998
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<TABLE>
<CAPTION>
Global Opportunity Portfolio (continued)
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Value Percent of
COUNTRY Industries Held US Stocks Cost (Note 1a) Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
United States Computers 3,000 COMPAQ Computer Corp. $ 57,665 $ 90,188 0.2%
(concluded)
------------------------------------------------------------------------------------------------------------------
Conglomerates 12,000 Dial Corporation, (The) 232,662 251,250 0.4
------------------------------------------------------------------------------------------------------------------
Containers 11,000 +Owens-Illinois, Inc. 337,376 400,125 0.7
------------------------------------------------------------------------------------------------------------------
Electrical Equipment 4,200 General Electric Company 298,134 325,500 0.5
5,600 Illinova Corporation 167,594 163,450 0.3
5,200 Public Service Enterprise Group, Inc. 163,369 161,200 0.3
----------- ----------- -----
629,097 650,150 1.1
------------------------------------------------------------------------------------------------------------------
Energy 12,200 Edison International, Inc. 262,110 327,875 0.5
------------------------------------------------------------------------------------------------------------------
Entertainment 3,400 Royal Caribbean Cruises Ltd. 150,604 178,075 0.3
------------------------------------------------------------------------------------------------------------------
Financial Services 2,750 American Express Company 178,627 230,141 0.4
6,400 MGIC Investment Corporation 293,821 432,800 0.7
----------- ----------- -----
472,448 662,941 1.1
------------------------------------------------------------------------------------------------------------------
Foods 1,400 +Keebler Foods Company 33,600 38,500 0.1
------------------------------------------------------------------------------------------------------------------
Hardware Products 5,400 Black & Decker Corp. 189,784 260,213 0.4
------------------------------------------------------------------------------------------------------------------
Health Care 14,001 +HEALTHSOUTH Corporation 379,636 314,147 0.5
------------------------------------------------------------------------------------------------------------------
Information Processing 4,250 Computer Associates International, Inc. 154,881 226,047 0.4
------------------------------------------------------------------------------------------------------------------
Insurance 2,500 Hartford Life, Inc. (Class A) 86,627 107,031 0.2
4,687 Travelers Group Inc. 191,790 232,007 0.4
2,700 Travelers Property Casualty Corp. (Class A) 109,150 112,725 0.2
4,700 UNUM Corporation 161,377 228,538 0.4
----------- ----------- -----
548,944 680,301 1.2
------------------------------------------------------------------------------------------------------------------
Leisure & Tourism 9,200 Brunswick Corporation 239,225 277,150 0.5
8,500 Carnival Corporation (Class A) 280,357 474,406 0.8
----------- ----------- -----
519,582 751,556 1.3
------------------------------------------------------------------------------------------------------------------
Machinery 8,000 Ingersoll-Rand Company 265,166 318,000 0.5
------------------------------------------------------------------------------------------------------------------
Machinery & Machine Tools 4,300 Harnischfeger Industries, Inc. 182,202 150,500 0.3
2,800 SPX Corporation 159,285 204,400 0.3
----------- ----------- -----
341,487 354,900 0.6
------------------------------------------------------------------------------------------------------------------
Medical Specialties 2,200 Warner-Lambert Company 303,132 331,100 0.6
------------------------------------------------------------------------------------------------------------------
Medical Supplies 3,100 DENTSPLY International Inc. 79,185 92,225 0.2
------------------------------------------------------------------------------------------------------------------
Natural Gas 6,100 El Paso Natural Gas Co. 320,972 390,019 0.7
3,500 Enron Corp. 135,477 145,031 0.2
----------- ----------- -----
456,449 535,050 0.9
------------------------------------------------------------------------------------------------------------------
Office Equipment 3,200 Danka Business Systems PLC (ADR)*++ 157,610 63,200 0.1
------------------------------------------------------------------------------------------------------------------
Oil & Gas Producers 2,500 +Smith International, Inc. 148,741 124,063 0.2
------------------------------------------------------------------------------------------------------------------
Oil Service 2,500 Schlumberger Ltd. 116,992 184,219 0.3
------------------------------------------------------------------------------------------------------------------
Petroleum 7,500 Unocal Corp. 270,534 257,813 0.4
------------------------------------------------------------------------------------------------------------------
Pharmaceutical--Diversified 3,250 Bristol-Myers Squibb Co. 309,159 323,984 0.5
------------------------------------------------------------------------------------------------------------------
Pharmaceutical--Prescription 4,200 Pfizer, Incorporated 309,362 344,138 0.6
------------------------------------------------------------------------------------------------------------------
Pharmaceuticals 4,700 Lilly (Eli) and Company 297,500 317,250 0.5
------------------------------------------------------------------------------------------------------------------
Railroads 3,250 Burlington Northern Santa Fe Corp. 282,557 281,938 0.5
------------------------------------------------------------------------------------------------------------------
Real Estate 7,000 Glenborough Realty Trust, Inc. 175,000 222,250 0.4
Investment Trusts 5,100 Prentiss Properties Trust 105,187 138,975 0.2
3,500 Starwood Lodging Trust 161,591 190,312 0.3
----------- ----------- -----
441,778 551,537 0.9
------------------------------------------------------------------------------------------------------------------
Retail 3,500 +Safeway, Inc. 197,029 232,531 0.4
------------------------------------------------------------------------------------------------------------------
Retail--Drug Stores 6,555 Rite Aid Corporation 277,637 409,278 0.7
------------------------------------------------------------------------------------------------------------------
Retail Stores 7,200 Wal-Mart Stores, Inc. 295,383 287,100 0.5
------------------------------------------------------------------------------------------------------------------
Retail Trade 5,600 Sears, Roebuck & Co. 260,791 257,950 0.4
------------------------------------------------------------------------------------------------------------------
Savings Bank 11,200 Provident Companies, Inc. 374,924 407,400 0.7
------------------------------------------------------------------------------------------------------------------
Semiconductors 7,000 +National Semiconductor Corporation 269,447 196,875 0.3
------------------------------------------------------------------------------------------------------------------
Telecommunications 800 +Globalstar Telecommunications Ltd. 44,503 45,500 0.1
3,000 +Smartalk Teleservices, Inc. 83,742 87,000 0.1
----------- ----------- -----
128,245 132,500 0.2
------------------------------------------------------------------------------------------------------------------
Tobacco 4,900 Philip Morris Companies, Inc. 222,217 203,350 0.3
------------------------------------------------------------------------------------------------------------------
Transport Services 7,500 +OMI Corp. 93,253 63,750 0.1
------------------------------------------------------------------------------------------------------------------
Utilities--Communications 1,300 AT&T Corp. 84,009 81,412 0.1
------------------------------------------------------------------------------------------------------------------
Utilities--Electric & Gas 6,000 Texas Utilities Company 239,898 246,750 0.4
------------------------------------------------------------------------------------------------------------------
Total Investments in US Stocks 14,501,756 16,687,959 27.8
====================================================================================================================================
<CAPTION>
Foreign Stocks
====================================================================================================================================
Argentina Petroleum 7,300 Yacimientos Petroliferos
Fiscales S.A. (ADR)* 182,580 222,194 0.4
------------------------------------------------------------------------------------------------------------------
Total Stocks in Argentina 182,580 222,194 0.4
====================================================================================================================================
Australia Diversified 50,200 Broken Hill Proprietary Co., Ltd. 660,237 497,394 0.8
Resources Company
------------------------------------------------------------------------------------------------------------------
Total Stocks in Australia 660,237 497,394 0.8
====================================================================================================================================
Bahamas Hotels & Casinos 4,500 +Sun International Hotels Ltd. 172,131 172,125 0.3
------------------------------------------------------------------------------------------------------------------
Total Stocks in the Bahamas 172,131 172,125 0.3
====================================================================================================================================
Canada Automotive Parts 7,000 Magna International, Inc. (Class A) 342,201 409,937 0.7
------------------------------------------------------------------------------------------------------------------
Entertainment 13,200 +Imax Corp. 210,684 320,100 0.5
------------------------------------------------------------------------------------------------------------------
Total Stocks in Canada 552,885 730,037 1.2
====================================================================================================================================
</TABLE>
20 & 21
<PAGE>
Merrill Lynch Asset Builder Program, Inc., January 31, 1998
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<TABLE>
Global Opportunity Portfolio (continued)
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Value Percent of
COUNTRY Industries Held Foreign Stocks Cost (Note 1a) Net Assets
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Finland Holding Company 17,000 +Amer Group Ltd. $ 306,406 $ 311,468 0.5%
------------------------------------------------------------------------------------------------------------------
Paper & Forest Products 24,000 UPM-Kymmene Corp. 500,294 528,529 0.9
------------------------------------------------------------------------------------------------------------------
Pharmaceuticals 13,720 Orion-yhtyma OY (Class B) 372,233 413,093 0.7
------------------------------------------------------------------------------------------------------------------
Transportation 10,800 Finnlines OY 211,570 448,578 0.7
------------------------------------------------------------------------------------------------------------------
Total Stocks in Finland 1,390,503 1,701,668 2.8
====================================================================================================================================
France Electronics 5,500 Thomson-CSF S.A. 172,844 188,295 0.3
------------------------------------------------------------------------------------------------------------------
Insurance 10,300 Scor S.A. 404,903 525,411 0.9
------------------------------------------------------------------------------------------------------------------
Semiconductor 3,800 +SGS-Thomson Microelectronics N.V.
Capital Equipment (NY Registered) 143,296 258,162 0.4
------------------------------------------------------------------------------------------------------------------
Total Stocks in France 721,043 971,868 1.6
====================================================================================================================================
Germany Banking 4,500 Bayerische Vereinsbank AG 271,327 290,164 0.5
------------------------------------------------------------------------------------------------------------------
Chemicals 600 Henkel KGaA 26,670 31,148 0.1
5,400 Henkel KGaA (Preferred) 229,478 321,639 0.5
----------- ----------- -----
256,148 352,787 0.6
------------------------------------------------------------------------------------------------------------------
Machinery & Equipment 1,050 Mannesmann AG 385,889 597,295 1.0
------------------------------------------------------------------------------------------------------------------
Total Stocks in Germany 913,364 1,240,246 2.1
====================================================================================================================================
Indonesia Telecommunications 16,300 P.T. Indonesian Satellite Corp. (ADR)* 471,675 283,212 0.5
------------------------------------------------------------------------------------------------------------------
Total Stocks in Indonesia 471,675 283,212 0.5
====================================================================================================================================
Italy Apparel 9,500 Gucci Group N.V. (NY Registered) 678,646 378,219 0.6
------------------------------------------------------------------------------------------------------------------
Machinery 71,000 Danieli & Co. 266,366 273,546 0.5
------------------------------------------------------------------------------------------------------------------
Publishing 57,000 Mondadori (Arnoldo) Editore S.p.A. 431,458 563,622 0.9
------------------------------------------------------------------------------------------------------------------
Total Stocks in Italy 1,376,470 1,215,387 2.0
====================================================================================================================================
Japan Banking & Financial 10,000 Bank of Tokyo--Mitsubishi, Ltd. 152,902 145,122 0.2
------------------------------------------------------------------------------------------------------------------
Building & Construction 68,000 Maeda Corp. 498,360 225,791 0.4
56,000 Okumura Corp. 454,377 215,537 0.3
----------- ----------- -----
952,737 441,328 0.7
------------------------------------------------------------------------------------------------------------------
Building Products 25,000 Matsushita Electric Works, Ltd. 284,565 250,414 0.4
------------------------------------------------------------------------------------------------------------------
Consumer--Electronics 4,000 Rohm Company Ltd. 262,940 438,520 0.7
------------------------------------------------------------------------------------------------------------------
Consumer--Miscellaneous 12,000 Amway Japan Ltd. 422,805 241,344 0.4
------------------------------------------------------------------------------------------------------------------
Electrical Equipment 5,000 Sony Corporation 367,054 461,393 0.8
------------------------------------------------------------------------------------------------------------------
Electronics 15,000 Matsushita Electric Industrial Co., Ltd. 247,149 225,964 0.4
------------------------------------------------------------------------------------------------------------------
Insurance 34,000 Tokio Marine & Fire Insurance Co., Ltd. 349,361 378,106 0.6
------------------------------------------------------------------------------------------------------------------
Machinery 23,000 Makino Milling Machine Co., Ltd. 167,043 159,634 0.3
------------------------------------------------------------------------------------------------------------------
Retail Stores 3,000 Ito-Yokado Co., Ltd. 162,537 157,583 0.3
------------------------------------------------------------------------------------------------------------------
Tires & Rubber 19,000 Bridgestone Corp. 342,306 457,055 0.8
------------------------------------------------------------------------------------------------------------------
Total Stocks in Japan 3,711,399 3,356,463 5.6
====================================================================================================================================
Mexico Beverages 6,150 Panamerican Beverages, Inc. (Class A) 167,179 199,875 0.3
------------------------------------------------------------------------------------------------------------------
Conglomerates 21,400 Grupo Carso, S.A. de C.V. (ADR)* 252,025 235,400 0.4
------------------------------------------------------------------------------------------------------------------
Financial Services 11,000 +Grupo Financiero Bancomer, S.A.
de C.V. (ADR)* 157,005 110,275 0.2
------------------------------------------------------------------------------------------------------------------
Utilities--Communications 3,100 Telefonos de Mexico, S.A. de C.V.
(Telmex)(ADR)* 127,068 152,675 0.3
------------------------------------------------------------------------------------------------------------------
Total Stocks in Mexico 703,277 698,225 1.2
====================================================================================================================================
Netherlands Oil--International 4,700 Royal Dutch Petroleum Co.
(NY Registered) 256,717 240,875 0.4
------------------------------------------------------------------------------------------------------------------
Total Stocks in the Netherlands 256,717 240,875 0.4
====================================================================================================================================
Norway Transportation Services 57,089 Color Line ASA 230,614 210,847 0.3
------------------------------------------------------------------------------------------------------------------
Total Stocks in Norway 230,614 210,847 0.3
====================================================================================================================================
Philippines Beverages 97,700 San Miguel Corp. (Class B) 166,819 119,258 0.2
------------------------------------------------------------------------------------------------------------------
Total Stocks in the Philippines 166,819 119,258 0.2
====================================================================================================================================
South Africa Diversified 39,700 Sasol Limited 467,498 361,969 0.6
------------------------------------------------------------------------------------------------------------------
Total Stocks in South Africa 467,498 361,969 0.6
====================================================================================================================================
South Korea Engineering & Construction 3,800 +Hyundai Engineering & Construction Co.,
Ltd. (GDR)**+++ 48,777 3,325 0.0
74 +Hyundai Engineering & Construction Co.,
Ltd. (New)(GDR)**+++ 950 65 0.0
------------------------------------------------------------------------------------------------------------------
Total Stocks in South Korea 49,727 3,390 0.0
====================================================================================================================================
Spain Petroleum 10,600 Repsol S.A. (ADR)* 401,272 452,487 0.8
------------------------------------------------------------------------------------------------------------------
Total Stocks in Spain 401,272 452,487 0.8
====================================================================================================================================
Sweden Banking 35,700 +Nordbanken Holding AB 193,428 199,444 0.3
16,200 Sparbanken Sverige AB (Class A) 207,538 380,596 0.7
----------- ----------- -----
400,966 580,040 1.0
------------------------------------------------------------------------------------------------------------------
Chemicals 17,000 Perstorp AB (Class B) 318,484 318,674 0.5
------------------------------------------------------------------------------------------------------------------
Electronics 9,000 Spectra-Physics AB (Class A) 274,607 173,704 0.3
------------------------------------------------------------------------------------------------------------------
Investment Management 20,300 Bure Investment AB 192,973 282,897 0.5
------------------------------------------------------------------------------------------------------------------
Real Estate 12,200 +Castellum AB 81,843 127,889 0.2
------------------------------------------------------------------------------------------------------------------
Total Stocks in Sweden 1,268,873 1,483,204 2.5
====================================================================================================================================
Switzerland Pharmaceuticals 5,800 Novartis AG (ADR)* 311,537 495,175 0.8
52 Roche Holding AG 435,564 539,629 0.9
------------------------------------------------------------------------------------------------------------------
Total Stocks in Switzerland 747,101 1,034,804 1.7
====================================================================================================================================
</TABLE>
22 & 23
<PAGE>
Merrill Lynch Asset Builder Program, Inc., January 31, 1998
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<TABLE>
Global Opportunity Portfolio (concluded)
------------------------------------------------------------------------------------------------------------------
Shares Value Percent of
COUNTRY Industries Held Foreign Stocks Cost (Note 1a) Net Assets
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
United Kingdom Automobile Parts 128,400 LucasVarity PLC $ 417,250 $ 434,351 0.7%
------------------------------------------------------------------------------------------------------------------
Beverages 48,500 Diageo PLC 354,594 435,130 0.7
------------------------------------------------------------------------------------------------------------------
Chemicals 1,700 Imperial Chemical Industries PLC 19,556 26,073 0.0
7,500 Imperial Chemical Industries PLC (ADR)* 389,042 456,562 0.8
----------- ----------- -------
408,598 482,635 0.8
------------------------------------------------------------------------------------------------------------------
Foods 8,100 Devro PLC 52,893 52,551 0.1
------------------------------------------------------------------------------------------------------------------
Metals & Mining 39,000 Rio Tinto PLC 593,026 498,398 0.9
------------------------------------------------------------------------------------------------------------------
Retail Trade 30,000 Dixons Group PLC 315,904 240,963 0.4
------------------------------------------------------------------------------------------------------------------
Total Stocks in the United Kingdom 2,142,265 2,144,028 3.6
====================================================================================================================================
Total Investments in Foreign Stocks 16,586,450 17,139,681 28.6
====================================================================================================================================
Total Investments in US & Foreign Stocks 31,088,206 33,827,640 56.4
====================================================================================================================================
<CAPTION>
SHORT-TERM Face
SECURITIES Amount Issue
====================================================================================================================================
Commercial Paper*** US$ 533,000 General Motors Acceptance Corp., 5.63%
due 2/02/1998 532,833 532,833 0.9
====================================================================================================================================
US Government Agency 6,000,000 Federal Home Loan Mortgage Corp., 5.40%
Obligations*** due 2/02/1998 5,998,200 5,998,200 10.0
====================================================================================================================================
Total Investments in Short-Term
Securities 6,531,033 6,531,033 10.9
====================================================================================================================================
Total Investments $54,198,487 57,315,018 95.6
===========
Unrealized Depreciation on Forward Foreign Exchange Contracts++++ (16,522) (0.0)
Other Assets Less Liabilities 2,655,109 4.4
----------- -----
Net Assets $59,953,605 100.0%
=========== =====
====================================================================================================================================
</TABLE>
* American Depositary Receipts (ADR).
** Global Depositary Receipts (GDR).
*** Commercial Paper and certain US Government Agency Obligations are traded on
a discount basis. The interest rates shown are the discount rates paid at
the time of purchase by the Portfolio.
+ Non-income producing security.
++ Consistent with the general policy of the Securities and Exchange
Commission, the nationality or domicile of an issuer for determination of
foreign issuer status may be (i) the country under whose laws the issuer is
organized, (ii) the country in which the issuer's securities are
principally traded, or (iii) the country in which the issuer derives a
significant proportion (at least 50%) of its revenue or profits from goods
produced and sold, investments made, or services performed in the country,
or in which at least 50% of the assets of the issuer are situated.
+++ The security may be offered and sold to "qualified institutional buyers"
under Rule 144A of the Securities Act of 1933.
++++ Forward foreign exchange contracts sold as of January 31, 1998 were as
follows:
----------------------------------------------------------------
Unrealized
Appreciation
Foreign Expiration (Depreciation)
Currency Sold Date (Note 1b)
----------------------------------------------------------------
A$ 700,000 February 1998 $(13,912)
C$ 1,700,000 March 1998 33,417
Chf 1,500,000 April 1998 (4,148)
Dkr 5,800,000 April 1998 1,550
DM 6,700,000 April 1998 6,383
Fmk 9,000,000 April 1998 700
Frf 10,000,000 April 1998 2,956
(pound) 2,090,000 February 1998 5,474
Lit 4,740,000,000 February 1998 7,016
Pta 169,000,000 February 1998 1,691
Skr 19,200,000 April 1998 20,818
(Y) 320,000,000 April 1998 (78,467)
----------------------------------------------------------------
Total Unrealized Depreciation on Forward
Foreign Exchange Contracts Sold--Net
(US$ Commitment--$22,482,513) $(16,522)
========
----------------------------------------------------------------
See Notes to Financial Statements.
SCHEDULE OF INVESTMENTS (in US dollars)
<TABLE>
<CAPTION>
Growth Opportunity Portfolio
------------------------------------------------------------------------------------------------------------------
Shares Value Percent of
Industries Held Common Stocks Cost (Note 1a) Net Assets
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Advertising 5,100 Interpublic Group of Companies, Inc. $ 153,631 $ 250,219 0.6%
------------------------------------------------------------------------------------------------------------------
Apparel 1,300 Gap Inc. 49,621 50,781 0.1
------------------------------------------------------------------------------------------------------------------
Banking & Financial 18,000 Banc One Corp. 921,491 1,005,750 2.5
14,000 BankAmerica Corp. 1,000,785 994,875 2.4
9,000 Citicorp 1,170,947 1,071,000 2.6
15,000 Mellon Bank Corporation 833,523 905,625 2.2
12,000 State Street Corp. 594,654 672,000 1.7
----------- ----------- -----
4,521,400 4,649,250 11.4
------------------------------------------------------------------------------------------------------------------
Beverages 4,000 The Coca-Cola Company 242,115 259,000 0.6
------------------------------------------------------------------------------------------------------------------
Communication Equipment 13,000 +Cisco Systems, Inc. 702,377 819,813 2.0
27,200 +FORE Systems, Inc. 615,177 401,200 1.0
5,200 Lucent Technologies, Inc. 348,467 460,200 1.1
14,500 +Newbridge Networks Corp. 614,672 377,000 0.9
17,000 Northern Telecom Limited 671,434 767,125 1.9
25,000 Telefonaktiebolaget LM Ericsson (ADR)* 1,017,518 964,063 2.4
----------- ----------- -----
3,969,645 3,789,401 9.3
------------------------------------------------------------------------------------------------------------------
Communications 10,000 Sprint Corporation 605,678 593,750 1.5
------------------------------------------------------------------------------------------------------------------
Computers 46,000 COMPAQ Computer Corp. 953,583 1,382,875 3.4
1,500 Hewlett-Packard Co. 74,340 90,000 0.2
----------- ----------- -------
1,027,923 1,472,875 3.6
------------------------------------------------------------------------------------------------------------------
Cosmetics 7,000 Gillette Company (The) 601,649 691,250 1.7
1,500 International Flavors & Fragrances, Inc. 66,304 63,188 0.2
----------- ----------- -----
667,953 754,438 1.9
------------------------------------------------------------------------------------------------------------------
Electrical Equipment 2,000 Emerson Electric Company 108,040 121,000 0.3
15,500 General Electric Co. 784,195 1,201,250 3.0
3,000 Honeywell, Inc. 219,293 210,188 0.5
----------- ----------- -----
1,111,528 1,532,438 3.8
------------------------------------------------------------------------------------------------------------------
</TABLE>
24 & 25
<PAGE>
Merrill Lynch Asset Builder Program, Inc., January 31, 1998
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<TABLE>
<CAPTION>
Growth Opportunity Portfolio (concluded)
------------------------------------------------------------------------------------------------------------------
Shares Value Percent of
Industries Held Common Stocks Cost (Note 1a) Net Assets
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Electronics 17,000 Intel Corp. $ 1,250,328 $ 1,377,000 3.4%
2,000 +SGS-Thomson Microelectronics N.V.
(NY Registered Shares) 139,478 135,875 0.3
----------- ----------- -----
1,389,806 1,512,875 3.7
------------------------------------------------------------------------------------------------------------------
Energy 9,800 El Paso Natural Gas Co. 487,253 626,588 1.6
11,000 Enron Corp. 464,926 455,813 1.1
----------- ----------- -----
952,179 1,082,401 2.7
------------------------------------------------------------------------------------------------------------------
Entertainment 7,000 +Viacom, Inc. (Class A) 260,392 288,750 0.7
8,000 Walt Disney Co. 657,185 852,500 2.1
----------- ----------- -----
917,577 1,141,250 2.8
------------------------------------------------------------------------------------------------------------------
Financial Services 11,000 American Express Company 906,331 920,563 2.3
5,000 Federal National Mortgage Association 279,616 308,750 0.7
7,000 Morgan Stanley, Dean Witter, Discover
and Co. 415,067 408,625 1.0
26,000 The Travelers Group, Inc. 1,062,756 1,287,000 3.2
----------- ----------- -----
2,663,770 2,924,938 7.2
------------------------------------------------------------------------------------------------------------------
Food 2,000 ConAgra, Inc. 47,060 63,250 0.1
2,000 Wrigley (Wm.) Jr. Co. 128,603 147,875 0.4
----------- ----------- -----
175,663 211,125 0.5
------------------------------------------------------------------------------------------------------------------
Food Merchandising 8,000 Albertsons, Inc. 301,780 381,500 0.9
11,000 +Meyer (Fred), Inc. 242,328 405,625 1.0
----------- ----------- -----
544,108 787,125 1.9
------------------------------------------------------------------------------------------------------------------
Home Furnishings 4,500 Ethan Allen Interiors, Inc. 209,765 215,438 0.5
------------------------------------------------------------------------------------------------------------------
Hotels 1,000 Marriott International, Inc. 46,921 69,125 0.2
------------------------------------------------------------------------------------------------------------------
Household Products 4,000 Colgate-Palmolive Co. 280,280 293,000 0.7
1,500 Kimberly-Clark Corp. 56,995 78,281 0.2
8,000 Procter & Gamble Company 460,197 627,000 1.5
4,000 Unilever N.V. (NY Registered Shares) 233,771 228,250 0.6
----------- ----------- -----
1,031,243 1,226,531 3.0
------------------------------------------------------------------------------------------------------------------
Information Processing 18,000 First Data Corp. 647,332 551,250 1.4
------------------------------------------------------------------------------------------------------------------
Insurance 1,000 Aetna Inc. 82,249 73,500 0.2
7,000 American International Group, Inc. 659,045 772,187 1.9
----------- ----------- -----
741,294 845,687 2.1
------------------------------------------------------------------------------------------------------------------
Leisure 8,500 Polygram N.V. (NY Registered Shares) 446,700 376,656 0.9
------------------------------------------------------------------------------------------------------------------
Medical Technology 8,300 +Boston Scientific Corp. 470,698 421,225 1.0
6,000 Guidant Corporation 389,037 385,500 0.9
1,000 Johnson & Johnson 66,560 66,937 0.2
----------- ----------- -----
926,295 873,662 2.1
------------------------------------------------------------------------------------------------------------------
Oil & Services 20,000 Baker Hughes, Inc. 770,148 771,250 1.9
19,000 Diamond Offshore Drilling, Inc. 816,340 849,062 2.1
12,000 Schlumberger, Ltd. 651,710 884,250 2.2
----------- ----------- -----
2,238,198 2,504,562 6.2
------------------------------------------------------------------------------------------------------------------
Pharmaceuticals 3,000 Amgen, Inc. 189,750 149,812 0.4
8,000 Bristol-Myers Squibb Co. 684,867 797,500 2.0
11,000 Merck & Co., Inc. 1,098,217 1,289,750 3.2
7,000 Pfizer, Incorporated 368,519 573,562 1.4
----------- ----------- -----
2,341,353 2,810,624 7.0
------------------------------------------------------------------------------------------------------------------
Photography 2,000 Eastman Kodak Co. 141,535 130,500 0.3
------------------------------------------------------------------------------------------------------------------
Pollution Control 500 Waste Management, Inc. 14,160 11,750 0.0
------------------------------------------------------------------------------------------------------------------
Restaurants 3,000 McDonald's Corp. 142,703 141,375 0.3
------------------------------------------------------------------------------------------------------------------
Retail--Specialty 5,000 CVS Corporation 291,078 327,812 0.8
17,500 +Staples, Inc. 451,082 476,875 1.2
10,000 Walgreen Co. 278,070 331,250 0.8
----------- ----------- -----
1,020,230 1,135,937 2.8
------------------------------------------------------------------------------------------------------------------
Retail Stores 24,500 Wal-Mart Stores, Inc. 829,302 976,937 2.4
------------------------------------------------------------------------------------------------------------------
Software--Computer 30,000 +Baan Company, N.V. 902,700 1,100,625 2.7
2,000 +Microsoft Corporation 208,687 298,375 0.8
11,000 SAP AG (Systeme, Anwendungen, Produkte
in der Datenverarbeitung)(ADR)* 783,324 1,347,500 3.3
----------- ----------- -----
1,894,711 2,746,500 6.8
------------------------------------------------------------------------------------------------------------------
Toys 13,000 Mattel, Inc. 487,161 526,500 1.3
------------------------------------------------------------------------------------------------------------------
Travel & Lodging 3,500 Carnival Corporation (Class A) 143,764 195,344 0.5
------------------------------------------------------------------------------------------------------------------
Total Investments in Common Stocks 32,295,264 36,350,244 89.4
====================================================================================================================================
<CAPTION>
Face
Amount Short-Term Securities
====================================================================================================================================
Commercial Paper** $1,658,000 General Motors Acceptance Corp.,
5.63% due 2/02/1998 1,657,481 1,657,481 4.1
------------------------------------------------------------------------------------------------------------------
US Government 2,500,000 Federal Farm Credit Bank, 5.34% due
Agency Obligations** 2/02/1998 2,499,258 2,499,258 6.2
2,500,000 Federal Home Loan Mortgage Corp., 5.38%
due 2/09/1998 2,496,638 2,496,638 6.1
----------- ----------- -----
4,995,896 4,995,896 12.3
====================================================================================================================================
Total Investments in Short-Term Securities 6,653,377 6,653,377 16.4
====================================================================================================================================
Total Investments $38,948,641 43,003,621 105.8
===========
Liabilities in Excess of Other Assets (2,373,904) (5.8)
----------- -----
Net Assets $40,629,717 100.0%
=========== =====
====================================================================================================================================
</TABLE>
+ Non-income producing security.
* American Depositary Receipts (ADR).
** Commercial Paper and certain US Government Agency
Obligations are traded on a discount basis; the interest
rates shown are the discount rates paid at the time of
purchase by the Portfolio.
See Notes to Financial Statements.
26 & 27
<PAGE>
Merrill Lynch Asset Builder Program, Inc., January 31, 1998
SCHEDULE OF INVESTMENTS (in US dollars)
<TABLE>
<CAPTION>
Quality Bond Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
S&P Moody's Face Value
INDUSTRIES Ratings Ratings Amount Bonds & Notes Cost (Note 1a)
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Asset-Backed AAA Aaa $132,647 Arcadia Automobile Receivables Trust, 6.10%
Securities -- 1.2% due 6/15/2000 (a) $ 132,622 $ 132,901
====================================================================================================================================
Banking -- 12.1% A A2 250,000 Bank of New York Company, Inc. (The), 7.875%
due 11/15/2002 276,675 270,228
A+ Aa3 250,000 BankAmerica Corp., 6.65% due 5/01/2001 249,863 255,060
A A2 300,000 NationsBank Corp., 6.50% due 8/15/2003 308,325 306,654
AA- Aa3 250,000 Norwest Corporation, 6.75% due 5/12/2000 249,628 254,965
A- A2 200,000 Wells Fargo & Company, 8.375% due 5/15/2002 213,120 217,156
--------- ---------
1,297,611 1,304,063
====================================================================================================================================
Financial A A2 200,000 Bear Stearns Co., 6.75% due 8/15/2000 198,730 203,722
Services -- 16.4% A A2 250,000 Beneficial Corporation, 6.80% due 9/16/2003 250,000 256,787
A+ A1 250,000 Commercial Credit, 6.25% due 1/01/2008 249,262 250,405
A- A3 38,000 Donaldson, Lufkin & Jenrette Inc., 6.875%
due 11/01/2005 37,694 39,028
AA Aa2 200,000 MBIA, Inc., 7.15% due 7/15/2027 199,510 210,092
A+ A1 300,000 Morgan Stanley Group, Inc., 6.875% due 3/01/2007 298,923 309,219
A A2 150,000 Salomon Smith Barney Holdings, Inc., 7.375%
due 5/15/2007 149,866 158,762
A+ Aa3 100,000 Travelers Capital II, 7.75% due 12/01/2036 100,170 103,064
AA- Aa3 200,000 The Travelers Group, Inc., 7.875% due 5/15/2025 205,616 224,970
--------- ---------
1,689,771 1,756,049
====================================================================================================================================
Financial Services -- A NR* 150,000 CIT Capital Trust I, 7.70% due 2/15/2027 149,316 154,425
Consumer -- 1.4%
====================================================================================================================================
Industrial -- A+ A1 100,000 Anheuser-Busch Co., Inc., 8.75% due 12/01/1999 107,905 105,019
Consumer Goods -- AA- Aa3 250,000 Archer Daniels Midland Co., 8.375% due 4/15/2017 303,007 300,070
12.7% A+ A1 100,000 Bass America, Inc., 8.125% due 3/31/2002 105,928 108,114
AA Aa2 250,000 McDonald's Corporation, 5.95% due 1/15/2008 249,810 249,208
Pepsico Inc.:
A A1 80,000 5.75% due 1/02/2003 79,595 79,896
A A1 200,000 5.75% due 1/15/2008 196,150 194,590
A- A2 100,000 Sears, Roebuck & Co., 9.25% due 4/15/1998 106,444 100,610
AA Aa2 200,000 Wal-Mart Stores, Inc., 8.50% due 9/15/2024 207,350 225,336
--------- ---------
1,356,189 1,362,843
====================================================================================================================================
Industrial -- AA Aa2 175,000 BP America Inc., 9.375% due 11/01/2000 200,263 190,799
Energy -- 4.6% AA- A1 300,000 Consolidated Natural Gas Company, 6.80% due 12/15/2027 297,570 302,979
--------- ---------
497,833 493,778
====================================================================================================================================
Industrial -- A A2 200,000 Allied Signal Inc., 6.20% due 2/01/2008 199,732 199,732
Other -- 12.2% A A2 150,000 Carnival Cruise Lines, Inc., 7.70% due 7/15/2004 156,745 161,829
AA- Aa3 200,000 duPont (E.I.) de Nemours & Co., 6.75% due 9/01/2007 207,154 209,578
A A1 200,000 Ford Motor Credit Company, 7% due 9/25/2001 199,204 206,436
General Motors Acceptance Corp.:
A A3 100,000 8.50% due 1/01/2003 108,510 110,152
A A3 200,000 8.75% due 7/15/2005 226,232 228,762
AA Aa2 100,000 Kimberly Clark Corp., 6.375% due 1/01/2028 99,078 98,077
A A1 90,000 PPG Industries, Inc., 6.50% due 11/01/2007 89,725 92,326
--------- ---------
1,286,380 1,306,892
====================================================================================================================================
Industrial -- A A2 231,986 +Disney Enterprises, Inc., 6.85% due 1/10/2007 (a) 231,828 237,980
Services -- 5.2% A A2 200,000 First Data Corp., 6.375% due 12/15/2007 199,486 200,752
BBB- Baa3 100,000 Time Warner Entertainment Co., 8.375% due 3/15/2023 107,029 114,592
--------- ---------
538,343 553,324
====================================================================================================================================
Manufacturing -- 1.9% BBB+ A3 200,000 Applied Materials, Inc., 6.75% due 10/15/2007 199,870 203,214
====================================================================================================================================
US Government AAA Aaa 200,000 US Treasury Bond, 6.375% due 8/15/2027 216,254 214,688
Obligations -- 12.4% US Treasury Notes:
AAA Aaa 200,000 6.25% due 1/31/2002 205,937 205,874
AAA Aaa 25,000 6.25% due 2/15/2003 24,949 25,887
AAA Aaa 400,000 5.875% due 2/15/2004 398,469 409,564
AAA Aaa 200,000 7.50% due 2/15/2005 219,891 222,874
AAA Aaa 190,000 6.50% due 5/15/2005 196,769 201,073
AAA Aaa 50,000 6.125% due 8/15/2007 52,836 52,211
--------- ---------
1,315,105 1,332,171
====================================================================================================================================
Utilities -- A+ A2 300,000 ALLTEL Corporation, 6.75% due 9/15/2005 295,380 309,174
Communications -- AAA Aaa 125,000 Indiana Bell Telephone Co., Inc., 7.30% due 8/15/2026 133,639 137,816
5.4% AA Aa3 125,000 Southwestern Bell Capital Corp., 6.50% due 3/12/2003 126,222 128,872
--------- ---------
555,241 575,862
====================================================================================================================================
Utilities -- A+ A1 100,000 Consolidated Edison Inc., 6.25% due 2/01/2008 100,000 100,000
Electric -- 5.0% AA Aa3 250,000 Northern States Power Company, 7.125% due 7/01/2025 254,800 266,350
A A2 150,000 Virginia Electric & Power Co., 8.625% due 10/01/2024 166,200 170,173
--------- ---------
521,000 536,523
====================================================================================================================================
Total Investments in Bonds & Notes--90.5% 9,539,281 9,712,045
====================================================================================================================================
<CAPTION>
SHORT-TERM
SECURITIES Issue
====================================================================================================================================
US Government 747,000 Federal Home Loan Mortgage Corp., 5.57% due 2/02/1998 747,000 747,000
Agency
Obligations** -- 7.0%
====================================================================================================================================
Total Investments in Short-Term Securities--7.0% 747,000 747,000
====================================================================================================================================
Total Investments--97.5% $10,286,281 10,459,045
===========
Other Assets Less Liabilities--2.5% 273,162
-----------
Net Assets--100.0% $10,732,207
===========
====================================================================================================================================
</TABLE>
* 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.
+ The security may be offered and sold to "qualified
institutional buyers" under Rule 144A of the Securities
Act of 1933.
(a) Subject to principal paydowns.
Ratings of issues shown have not been audited by
Deloitte & Touche LLP.
See Notes to Financial Statements.
28 & 29
<PAGE>
Merrill Lynch Asset Builder Program, Inc., January 31, 1998
SCHEDULE OF INVESTMENTS (in US dollars)
<TABLE>
<CAPTION>
US Government Securities Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Face Interest Maturity Value
Issue Amount Rate Date(s) (Note 1a)
=================================================================================================================================
<S> <C> <C> <C> <C> <C>
US Government Federal Home Loan Mortgage Corporation $1,040,679 11.50% 6/01/2019 $ 1,182,326
Agency Mortgage- Federal Home Loan Mortgage Corporation--
Backed Obligations -- Gold Program 698,482 6.00(1) 4/01/2004-12/01/2004 698,258
66.6% Federal Home Loan Mortgage Corporation--
Gold Program 2,671,575 6.50 1/01/2013 2,691,612
Government National Mortgage Association 497,500 6.50 1/15/2028 495,475
Government National Mortgage Association 993,262 7.00 11/15/2027 1,008,479
Government National Mortgage Association 2,016,560 7.50 10/15/2025-12/15/2027 2,076,447
====================================================================================================================================
Total US Government Agency Mortgage-Backed Obligations (Cost--$7,995,409) 8,152,597
====================================================================================================================================
US Government US Treasury Notes 1,000,000 5.75 11/15/2000 1,010,470
Obligations -- 31.5% US Treasury Notes 1,900,000 5.875 11/15/2005 1,939,786
US Treasury STRIPS** 300,000 6.345+ 8/15/2001 248,364
US Treasury STRIPS** 850,000 6.065+ 5/15/2005 569,338
US Treasury STRIPS** 300,000 6.09+ 8/15/2019 83,724
====================================================================================================================================
Total US Government Obligations (Cost--$3,728,294) 3,851,682
====================================================================================================================================
Total Investments (Cost--$11,723,703 )--98.1% 12,004,279
Other Assets Less Liabilities--1.9% 227,500
-----------
Net Assets--100.0% $12,231,779
===========
====================================================================================================================================
</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.
** 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.
See Notes to Financial Statements.
EQUITY PORTFOLIO CHANGES
For the Quarter Ended January 31, 1998
================================================================================
FUNDAMENTAL
VALUE PORTFOLIO
================================================================================
Additions duPont (E.I.) de Nemours & Co.
Enron Corp.
Exxon Corporation
Pennsylvania Real Estate Investment Trust
* Raytheon Company (Class A)
Sears, Roebuck & Co.
Texas Instruments, Inc.
================================================================================
Deletions CompuServe Corporation
Eastman Chemical Co.
Mesa Air Group, Inc.
Millennium Chemicals Inc.
* Raytheon Company (Class A)
Yacimientos Petroliferos Fiscales
S.A. (YPF)(ADR)
================================================================================
GLOBAL
OPPORTUNITY
PORTFOLIO
================================================================================
Additions AT&T Corp.
Bank of Tokyo-Mitsubishi, Ltd.
Bristol-Myers Squibb Co.
Chancellor Media Corp. (Class A)
Cisco Systems, Inc.
Devro PLC
Diageo PLC
Dial Corporation (The)
Gartner Group, Inc. (Class A)
General Electric Company
Globalstar Telecommunications Ltd.
Illinova Corporation
Ito-Yokado Co., Ltd.
Keebler Foods Company
Lilly (Eli) and Company
Lockheed Martin Corporation
Makino Milling Machine Co., Ltd.
Nordbanken Holding AB
Orbital Sciences Corporation
Pfizer, Incorporated
Philip Morris Companies, Inc.
Provident Companies, Inc.
Public Service Enterprise Group, Inc.
Royal Dutch Petroleum Co.
(NY Registered)
Smartalk Teleservices, Inc.
Sun International Hotels Ltd.
Texas Utilities Company
Thomson-CSF S.A.
*Tricon Global Restaurants, Inc.
Wal-Mart Stores, Inc.
Warner-Lambert Company
================================================================================
Deletions ABB AG
ABN AMRO Holding N.V.
American Home Products Corporation
American Standard Companies, Inc.
Autobacs Seven Co., Ltd.
Avon Products, Inc.
Companhia Cervejaria Brahma S.A.
PN (Preferred)
De Beers Consolidated Mines Ltd. (ADR)
Dresser Industries, Inc.
duPont (E.I.) de Nemours & Co.
Grand Metropolitan PLC
Gulf Canada Resources Ltd.
Intel Corporation
Merck & Co., Inc.
Mitsubishi Electric Corp.
Mitsubishi Heavy Industries, Inc.
Mitsui-Soko Co., Ltd.
Oracle Corp.
Oxford Health Plans, Inc.
Provident Companies, Inc.
Quantum Corporation
Siemens AG
Sunbeam Corp.
Telecomunicacoes Brasileiras S.A.--
Telebras PN (ADR)
Toray Industries, Inc.
*Tricon Global Restaurants, Inc.
Uniao de Bancos Brasileiros S.A.
(Unibanco) (GDR)
United Technologies Corporation
================================================================================
GROWTH OPPORTUNITY PORTFOLIO
================================================================================
Additions Ethan Allen Interiors, Inc.
Gap Inc.
Guidant Corporation
Morgan Stanley, Dean Witter, Discover and Co.
SGS-Thomson Microelectronics N.V.
(NY Registered Shares)
Sprint Corporation
Unilever N.V. (NY Registered Shares)
================================================================================
Deletions Oracle Corp.
================================================================================
* Added and deleted in the same quarter.
30 & 31
<PAGE>
Merrill Lynch Asset Builder Program, Inc., January 31, 1998
STATEMENTS OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
Fundamental Global Growth Quality US Government
Value Opportunity Opportunity Bond Securities
As of January 31, 1998 Portfolio Portfolio Portfolio Portfolio Portfolio
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
Assets:
Investments, at value* (Note 1a) ................... $ 77,471,709 $ 57,315,018 $ 43,003,621 $ 10,459,045 $ 12,004,279
Foreign cash (Note 1c) ............................. -- 71,374 -- -- --
Cash ............................................... 290 14,807 157 -- 74,620
Receivables:
Securities sold .................................. 180,913 2,574,040 31,640 320,807 --
Capital shares sold .............................. 322,019 203,696 450,206 42,150 15,829
Interest ......................................... -- 455,210 -- 168,522 97,740
Dividends ........................................ 76,190 36,588 26,186 -- --
Investment adviser (Note 2) ...................... -- -- -- 60,597 43,756
Principal paydowns ............................... -- -- -- -- 8,119
Forward foreign exchange contracts (Note 1b) ..... -- 2,074 -- -- --
Loaned securities (Note 6) ....................... -- -- -- -- 330
Deferred organization expenses (Note 1f) ........... 14,827 34,594 48,382 8,486 18,549
Prepaid registration fees and other assets (Note 1f) 59,799 32,686 9,477 35,284 35,235
------------ ------------ ------------ ------------ ------------
Total assets ....................................... 78,125,747 60,740,087 43,569,669 11,094,891 12,298,457
------------ ------------ ------------ ------------ ------------
====================================================================================================================================
Liabilities:
Unrealized depreciation on forward foreign exchange
contracts (Note 1b) ................................ -- 16,522 -- -- --
Payables:
Securities purchased ............................. 1,136,408 369,759 2,746,120 299,732 --
Capital shares redeemed .......................... 103,788 140,751 33,952 3,808 6,964
Distributor (Note 2) ............................. 57,408 46,545 30,041 5,802 5,492
Investment adviser (Note 2) ...................... 39,554 36,437 20,241 -- --
Dividends to shareholders (Note 1g) .............. -- -- -- 17,206 18,258
Accrued expenses and other liabilities ............. 188,755 176,468 109,598 36,136 35,964
------------ ------------ ------------ ------------ ------------
Total liabilities .................................. 1,525,913 786,482 2,939,952 362,684 66,678
------------ ------------ ------------ ------------ ------------
====================================================================================================================================
Net Assets:
Net assets ......................................... $ 76,599,834 $ 59,953,605 $ 40,629,717 $ 10,732,207 $ 12,231,779
============ ============ ============ ============ ============
====================================================================================================================================
Net Assets Consist of:
Class A Common Stock, $0.10 par value+ ............. $ 2,266 $ 1,469 $ 1,540 $ 12,019 $ 30,852
Class B Common Stock, $0.10 par value++ ............ 349,574 359,918 194,023 60,399 63,248
Class C Common Stock, $0.10 par value+++ ........... 166,538 141,361 98,477 27,892 19,631
Class D Common Stock, $0.10 par value++++ .......... 38,108 27,658 12,015 6,040 3,008
Paid-in capital in excess of par ................... 66,408,833 57,507,375 36,136,012 10,473,503 11,808,202
Accumulated distributions in excess of investment
income--net (Note 1g) .............................. -- (87,348) -- -- --
Undistributed (accumulated) realized capital gains
(losses) on investments and foreign currency
transactions--net .................................. 1,456,820 -- 132,670 (19,779) 26,262
Accumulated distributions in excess of realized
capital gains on investments--net (Note 1g) ........ -- (1,087,401) -- (631) --
Unrealized appreciation on investments and foreign
currency transactions--net ......................... 8,177,695 3,090,573 4,054,980 172,764 280,576
------------ ------------ ------------ ------------ ------------
Net assets ......................................... $ 76,599,834 $ 59,953,605 $ 40,629,717 $ 10,732,207 $ 12,231,779
============ ============ ============ ============ ============
====================================================================================================================================
Net Asset Value:
Class A:
Net assets ....................................... $ 316,898 $ 167,377 $ 206,778 $ 1,213,548 $ 3,232,899
============ ============ ============ ============ ============
Shares outstanding ............................... 22,663 14,684 15,403 120,193 308,521
============ ============ ============ ============ ============
Net asset value and redemption price per share ... $ 13.98 $ 11.40 $ 13.42 $ 10.10 $ 10.48
============ ============ ============ ============ ============
Class B:
Net assets ....................................... $ 48,073,360 $ 40,686,401 $ 25,751,922 $ 6,094,815 $ 6,627,031
============ ============ ============ ============ ============
Shares outstanding ............................... 3,495,740 3,599,183 1,940,232 603,984 632,482
============ ============ ============ ============ ============
Net asset value and redemption price per share ... $ 13.75 $ 11.30 $ 13.27 $ 10.09 $ 10.48
============ ============ ============ ============ ============
Class C:
Net assets ....................................... $ 22,896,001 $ 15,950,676 $ 13,058,951 $ 2,814,366 $ 2,056,503
============ ============ ============ ============ ============
Shares outstanding ............................... 1,665,382 1,413,607 984,769 278,916 196,310
============ ============ ============ ============ ============
Net asset value and redemption price per share ... $ 13.75 $ 11.28 $ 13.26 $ 10.09 $ 10.48
============ ============ ============ ============ ============
Class D:
Net assets ....................................... $ 5,313,575 $ 3,149,151 $ 1,612,066 $ 609,478 $ 315,346
============ ============ ============ ============ ============
Shares outstanding ............................... 381,074 276,584 120,146 60,398 30,082
============ ============ ============ ============ ============
Net asset value and redemption price per share ... $ 13.94 $ 11.39 $ 13.42 $ 10.09 $ 10.48
============ ============ ============ ============ ============
====================================================================================================================================
*Identified cost .................................. $ 69,294,014 $ 54,198,487 $ 38,948,641 $ 10,286,281 $ 11,723,703
============ ============ ============ ============ ============
+Authorized shares--Class A ....................... 6,250,000 6,250,000 6,250,000 6,250,000 26,250,000
============ ============ ============ ============ ============
++Authorized shares--Class B ....................... 10,000,000 10,000,000 6,250,000 6,250,000 26,250,000
============ ============ ============ ============ ============
+++Authorized shares--Class C ....................... 6,250,000 6,250,000 6,250,000 6,250,000 6,250,000
============ ============ ============ ============ ============
++++Authorized shares--Class D ....................... 6,250,000 6,250,000 6,250,000 6,250,000 6,250,000
============ ============ ============ ============ ============
====================================================================================================================================
</TABLE>
See Notes to Financial Statements.
32 & 33
<PAGE>
Merrill Lynch Asset Builder Program, Inc., January 31, 1998
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Fundamental Global Growth Quality US Government
Value Opportunity Opportunity Bond Securities
For the Year Ended January 31, 1998 Portfolio Portfolio Portfolio Portfolio Portfolio
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
Investment Income (Notes 1d & 1e):
Interest and discount earned* .................... $ 513,314 $ 1,016,127 $ 159,735 $ 670,566 $ 745,446
Dividends** ...................................... 885,940 704,891 227,289 -- --
Loaned securities ................................ -- -- -- 543 330
------------ ------------ ------------ ------------ ------------
Total income ..................................... 1,399,254 1,721,018 387,024 671,109 745,776
------------ ------------ ------------ ------------ ------------
====================================================================================================================================
Expenses:
Investment advisory fees (Note 2) ................ 428,666 411,965 176,230 48,576 55,861
Account maintenance & distribution fees--Class B
(Note 2) ......................................... 418,499 376,364 173,921 38,753 37,168
Transfer agent fees--Class B (Note 2) ............ 213,483 211,869 120,719 30,554 15,935
Account maintenance and distribution fees--Class C
(Note 2) ......................................... 191,071 141,790 83,838 18,138 15,066
Registration fees (Note 1f) ...................... 98,422 68,356 60,337 91,379 61,210
Transfer agent fees--Class C (Note 2) ............ 103,084 85,565 62,028 14,134 6,607
Accounting services (Note 2) ..................... 84,704 86,374 50,019 18,186 16,831
Printing and shareholder reports ................. 88,408 61,400 31,170 14,976 14,331
Professional fees ................................ 52,990 43,529 21,447 12,617 13,423
Custodian fees ................................... 20,593 52,558 16,079 11,392 16,578
Amortization of organization expenses (Note 1f) .. 7,413 17,297 16,128 4,249 9,300
Transfer agent fees--Class D (Note 2) ............ 20,096 13,930 7,029 2,466 782
Directors' fees and expenses ..................... 10,117 8,267 3,199 1,778 2,045
Account maintenance fees--Class D (Note 2) ....... 11,827 7,402 3,025 1,299 792
Transfer agent fees--Class A (Note 2) ............ 1,105 717 738 8,265 9,717
Pricing fees (Note 2) ............................ 1,071 6,090 175 3,910 1,350
Other ............................................ 6,253 9,970 4,063 3,720 3,176
------------ ------------ ------------ ------------ ------------
Total expenses before reimbursement .............. 1,757,802 1,603,443 830,145 324,392 280,172
Reimbursement of expenses (Note 2) ............... -- -- -- (266,202) (227,146)
------------ ------------ ------------ ------------ ------------
Total expenses after reimbursement ............... 1,757,802 1,603,443 830,145 58,190 53,026
------------ ------------ ------------ ------------ ------------
Investment income (loss)--net .................... (358,548) 117,575 (443,121) 612,919 692,750
------------ ------------ ------------ ------------ ------------
====================================================================================================================================
Realized and Unrealized Gain (Loss) on Investments & Foreign Currency Transactions -- Net (Notes 1b, 1c, 1e & 3):
Realized gain from:
Investments--net ............................... 7,145,873 3,811,956 2,875,420 34,086 100,678
Foreign currency transactions--net ............. -- 374,612 -- -- --
Change in unrealized appreciation/depreciation on:
Investments--net ............................... 2,970,461 (855,192) 2,511,620 267,178 269,148
Foreign currency transactions--net ............. -- (671,211) -- -- --
------------ ------------ ------------ ------------ ------------
Net realized and unrealized gain on investments
and foreign currency transactions ................ 10,116,334 2,660,165 5,387,040 301,264 369,826
------------ ------------ ------------ ------------ ------------
Net Increase in Net Assets Resulting from
Operations ..................................... $ 9,757,786 $ 2,777,740 $ 4,943,919 $ 914,183 $ 1,062,576
============ ============ ============ ============ ============
====================================================================================================================================
*Net of foreign withholding tax on interest ....... -- $ 212 -- -- --
============ ============ ============ ============ ============
**Net of foreign withholding tax on dividends ...... $ 6,963 $ 64,442 $ 1,595 -- --
============ ============ ============ ============ ============
====================================================================================================================================
</TABLE>
See Notes to Financial Statements
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Fundamental Global Opportunity
Value Portfolio Portfolio
---------------------------- -----------------------------
For the Year Ended For the Year Ended
January 31, January 31,
---------------------------- -----------------------------
Increase (Decrease) in Net Assets: 1998 1997 1998 1997
====================================================================================================================================
Operations:
<S> <C> <C> <C> <C>
Investment income (loss)--net ...................................... $ (358,548) $ (478,635) $ 117,575 $ (112,394)
Realized gain on investments and foreign currency transactions--net 7,145,873 6,235,956 4,186,568 1,453,296
Change in unrealized appreciation/depreciation on investments and
foreign currency transactions--net ................................. 2,970,461 2,839,304 (1,526,403) 2,910,695
------------ ------------ ------------ ------------
Net increase in net assets resulting from operations ............... 9,757,786 8,596,625 2,777,740 4,251,597
------------ ------------ ------------ ------------
====================================================================================================================================
Dividends & Distributions to Shareholders (Note 1g):
Investment income--net:
Class A .......................................................... -- -- (611) --
Class B .......................................................... -- -- (76,651) --
Class C .......................................................... -- -- (30,314) --
Class D .......................................................... -- -- (9,999) --
In excess of investment income--net:
Class A .......................................................... -- -- (2,673) (1,274)
Class B .......................................................... -- -- (335,476) (65,176)
Class C .......................................................... -- -- (132,675) (25,328)
Class D .......................................................... -- -- (43,763) (21,506)
Realized gain on investments--net:
Class A .......................................................... (35,250) (11,190) (12,818) (1,213)
Class B .......................................................... (5,200,268) (1,597,213) (3,181,736) (298,844)
Class C .......................................................... (2,463,175) (693,946) (1,245,621) (104,853)
Class D .......................................................... (604,991) (215,995) (238,373) (25,165)
In excess of realized gain on investments--net:
Class A .......................................................... -- -- (1,779) --
Class B .......................................................... -- -- (441,592) --
Class C .......................................................... -- -- (172,879) --
Class D .......................................................... -- -- (33,084) --
------------ ------------ ------------ ------------
Net decrease in net assets resulting from dividends and
distributions to shareholders ...................................... (8,303,684) (2,518,344) (5,960,044) (543,359)
------------ ------------ ------------ ------------
====================================================================================================================================
Capital Share Transactions (Note 4):
Net increase in net assets derived from capital share transactions . 20,907,035 16,589,653 19,283,250 14,719,748
------------ ------------ ------------ ------------
====================================================================================================================================
Net assets:
Total increase in net assets ....................................... 22,361,137 22,667,934 16,100,946 18,427,986
Beginning of year .................................................. 54,238,697 31,570,763 43,852,659 25,424,673
------------ ------------ ------------ ------------
End of year ........................................................ $ 76,599,834 $ 54,238,697 $ 59,953,605 $ 43,852,659
============ ============ ============ ============
====================================================================================================================================
</TABLE>
See Notes to Financial Statements.
34 & 35
<PAGE>
Merrill Lynch Asset Builder Program, Inc., January 31, 1998
STATEMENTS OF CHANGES IN NET ASSETS (concluded)
<TABLE>
<CAPTION>
Growth Opportunity Portfolio
-----------------------------------
For the
For the Period Feb. 2,
Year Ended 1996+ to
Increase (Decrease) in Net Assets: Jan. 31, 1998 Jan. 31, 1997
====================================================================================================================================
<S> <C> <C>
Operations:
Investment loss--net ................................................................... $ (443,121) $ (154,034)
Realized gain on investments--net ...................................................... 2,875,420 378,775
Change in unrealized appreciation on investments--net .................................. 2,511,620 1,543,360
------------ ------------
Net increase in net assets resulting from operations ................................... 4,943,919 1,768,101
------------ ------------
====================================================================================================================================
Distributions to Shareholders (Note 1g):
Realized gain on investments--net:
Class A .............................................................................. (13,310) --
Class B .............................................................................. (1,603,433) --
Class C .............................................................................. (796,299) --
Class D .............................................................................. (111,328) --
------------ ------------
Net decrease in net assets resulting from distributions to shareholders ................ (2,524,370) --
------------ ------------
====================================================================================================================================
Capital Share Transactions (Note 4):
Net increase in net assets derived from capital share transactions ..................... 22,868,370 13,569,697
------------ ------------
====================================================================================================================================
Net Assets:
Total increase in net assets ........................................................... 25,287,919 15,337,798
Beginning of period .................................................................... 15,341,798 4,000
------------ ------------
End of period .......................................................................... $ 40,629,717 $ 15,341,798
============ ============
====================================================================================================================================
<CAPTION>
Quality Bond US Government Securities
Portfolio Portfolio
---------------------------- -----------------------------
For the Year For the Year
Ended January 31, Ended January 31,
---------------------------- -----------------------------
Increase (Decrease) in Net Assets: 1998 1997 1998 1997
====================================================================================================================================
<S> <C> <C> <C> <C>
Operations:
Investment income--net ............................................. $ 612,919 $ 506,519 $ 692,750 $ 661,707
Realized gain (loss) on investments--net ........................... 34,086 (51,285) 100,678 243
Change in unrealized appreciation/depreciation on investments--net . 267,178 (231,164) 269,148 (194,411)
------------ ------------ ------------ ------------
Net increase in net assets resulting from operations ............... 914,183 224,070 1,062,576 467,539
------------ ------------ ------------ ------------
====================================================================================================================================
Dividends & Distributions to Shareholders (Note 1g):
Investment income--net:
Class A .......................................................... (123,527) (150,009) (266,916) (329,353)
Class B .......................................................... (317,057) (238,507) (294,485) (222,614)
Class C .......................................................... (137,274) (96,264) (110,661) (85,215)
Class D .......................................................... (35,061) (21,739) (20,688) (16,900)
Realized gain on investments--net:
Class A .......................................................... -- -- (23,691) (32,773)
Class B .......................................................... -- -- (37,250) (29,573)
Class C .......................................................... -- -- (13,982) (12,740)
Class D .......................................................... -- -- (2,134) (2,220)
In excess of realized gain on investments--net:
Class A .......................................................... -- (8,426) -- --
Class B .......................................................... -- (17,644) -- --
Class C .......................................................... -- (7,230) -- --
Class D .......................................................... -- (1,417) -- --
------------ ------------ ------------ ------------
Net decrease in net assets resulting from dividends and
distributions to shareholders ...................................... (612,919) (541,236) (769,807) (731,388)
------------ ------------ ------------ ------------
====================================================================================================================================
Capital Share Transactions (Note 4):
Net increase in net assets derived from capital share transactions . 1,015,801 3,143,735 868,656 1,556,845
------------ ------------ ------------ ------------
====================================================================================================================================
Net Assets:
Total increase in net assets ....................................... 1,317,065 2,826,569 1,161,425 1,292,996
Beginning of year .................................................. 9,415,142 6,588,573 11,070,354 9,777,358
------------ ------------ ------------ ------------
End of year ........................................................ $ 10,732,207 $ 9,415,142 $ 12,231,779 $ 11,070,354
============ ============ ============ ============
====================================================================================================================================
</TABLE>
+ Commencement of operations.
See Notes to Financial Statements.
36 & 37
<PAGE>
Merrill Lynch Asset Builder Program, Inc., January 31, 1998
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Fundamental Value Portfolio++
-------------------------------------------------------------
Class A Class B
------------------------------ -----------------------------
The following per share data and ratios have been For the Year Ended For the Year Ended
derived from information provided in the financial January 31, January 31,
statements. ------------------------------ -----------------------------
Increase (Decrease) in Net Asset Value: 1998 1997 1996+ 1998 1997 1996+
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year ............. $ 13.58 $ 11.67 $10.00 $ 13.39 $ 11.55 $ 10.00
Operating ------- ------- ------ ------- ------- -------
Performance: Investment income (loss)--net .................. .07 (.01) .25 (.09) (.15) (.07)
Realized and unrealized gain on investments--net 2.22 2.70 1.76 2.19 2.65 1.96
------- ------- ------ ------- ------- -------
Total from investment operations ............... 2.29 2.69 2.01 2.10 2.50 1.89
------- ------- ------ ------- ------- -------
Less distributions:
Realized gain on investments--net ............ (1.89) (.78) (.20) (1.74) (.66) (.20)
In excess of realized gain on investments--net -- -- (.11) -- -- (.11)
Return of capital--net ....................... -- -- (.03) -- -- (.03)
------- ------- ------ ------- ------- -------
Total distributions ............................ (1.89) (.78) (.34) (1.74) (.66) (.34)
Net asset value, end of year ................... $ 13.98 $ 13.58 $11.67 $ 13.75 $ 13.39 $ 11.55
======= ======= ====== ======= ======= =======
- ----------------------------------------------------------------------------------------------------------------------------------
Total Investment Based on net asset value per share ............. 17.12% 23.20% 20.10%*+ 15.91% 21.79% 18.89%*+
Return:* ======= ======= ====== ======= ======= =======
- ----------------------------------------------------------------------------------------------------------------------------------
Ratio to Expenses, net of reimbursement ................. 1.63% 2.03% 1.54% 2.72% 3.11% 3.29%
Average Net ======= ======= ====== ======= ======= =======
Assets: Expenses ....................................... 1.63% 2.03% 2.00% 2.72% 3.11% 3.39%
======= ======= ====== ======= ======= =======
Investment income (loss)--net .................. .48% (.07%) 1.99% (.60%) (1.15%) (.61%)
======= ======= ====== ======= ======= =======
- ----------------------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, end of year (in thousands) ......... $ 317 $ 209 $ 121 $48,073 $34,828 $20,989
Data: ======= ======= ====== ======= ======= =======
Portfolio turnover ............................. 68.75% 80.60% 51.37% 68.75% 80.60% 51.37%
======= ======= ====== ======= ======= =======
Average commission rate paid++++ ............... $ .0572 $ .0539 -- $ .0572 $ .0539 --
======= ======= ====== ======= ======= =======
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Fundamental Value Portfolio++
-------------------------------------------------------------
Class C Class D
------------------------------ -----------------------------
The following per share data and ratios have been For the Year Ended For the Year Ended
derived from information provided in the financial January 31, January 31,
statements. ------------------------------ -----------------------------
Increase (Decrease) in Net Asset Value: 1998 1997 1996+ 1998 1997 1996+
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year ............. $ 13.39 $ 11.55 $10.00 $ 13.54 $ 11.65 $ 10.00
Operating ------- ------- ------ ------- ------- -------
Performance: Investment income (loss)--net .................. (.09) (.15) (.09) .03 (.04) .03
Realized and unrealized gain on investments--net 2.19 2.66 1.98 2.22 2.68 1.96
------- ------- ------ ------- ------- -------
Total from investment operations ............... 2.10 2.51 1.89 2.25 2.64 1.99
------- ------- ------ ------- ------- -------
Less distributions:
Realized gain on investments--net ............ (1.74) (.67) (.20) (1.85) (.75) (.20)
In excess of realized gain on investments--net -- -- (.11) -- -- (.11)
Return of capital--net ....................... -- -- (.03) -- -- (.03)
------- ------- ------ ------- ------- -------
Total distributions ............................ (1.74) (.67) (.34) (1.85) (.75) (.34)
------- ------- ------ ------- ------- -------
Net asset value, end of year ................... $ 13.75 $ 13.39 $11.55 $ 13.94 $ 13.54 $ 11.65
======= ======= ====== ======= ======= =======
- ----------------------------------------------------------------------------------------------------------------------------------
Total Investment Based on net asset value per share ............. 15.93% 21.82% 18.89%*+ 16.89% 22.82% 19.90%*+
Return:* ======= ======= ====== ======= ======= =======
- ----------------------------------------------------------------------------------------------------------------------------------
Ratio to Expenses, net of reimbursement ................. 2.75% 3.15% 3.38% 1.89% 2.27% 2.45%
Average Net ======= ======= ====== ======= ======= =======
Assets: Expenses ....................................... 2.75% 3.15% 3.46% 1.89% 2.27% 2.56%
======= ======= ====== ======= ======= =======
Investment income (loss)--net .................. (.63%) (1.19%) (.75%) .23% (.31%) .24%
======= ======= ====== ======= ======= =======
- ----------------------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, end of year (in thousands) ......... $22,896 $15,022 $7,990 $ 5,314 $ 4,180 $ 2,471
Data: ======= ======= ====== ======= ======= =======
Portfolio turnover ............................. 68.75% 80.60% 51.37% 68.75% 80.60% 51.37%
======= ======= ====== ======= ======= =======
Average commission rate paid++++ ............... $ .0572 $ .0539 -- $ .0572 $ .0539 --
======= ======= ====== ======= ======= =======
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Total investment returns exclude the effects of sales loads.
+ The Program commenced operations on February 1, 1995.
++ Based on average shares outstanding.
*+ Aggregate total investment return.
++++ For fiscal years beginning on or after September 1, 1995, the
Fund is required to disclose its average commission rate per
share for purchases and sales of equity securities. The
"Average Commission Rate Paid" includes commissions paid in
foreign currencies, which have been converted into US dollars
using the prevailing exchange rate on the date of the
transaction. Such conversions may significantly affect the
rate shown.
See Notes to Financial Statements.
38 & 39
<PAGE>
Merrill Lynch Asset Builder Program, Inc., January 31, 1998
FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
Global Opportunity Portfolio++
------------------------------------------------------
Class A Class B
-------------------------- --------------------------
For the Year Ended For the Year Ended
The following per share data and ratios have been derived January 31, January 31,
from information provided in the financial statements. -------------------------- --------------------------
Increase (Decrease) in Net Asset Value: 1998 1997 1996+ 1998 1997 1996+
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year .................... $ 11.93 $ 10.82 $10.00 $ 11.86 $ 10.76 $ 10.00
Operating ------- ------- ------ ------- ------- -------
Performance: Investment income (loss)--net ......................... .16 .15 .34 .02 (.04) .13
Realized and unrealized gain on investments and foreign
currency transactions--net ............................ .69 1.21 .77 .68 1.29 .85
------- ------- ------ ------- ------- -------
Total from investment operations ...................... .85 1.36 1.11 .70 1.25 .98
------- ------- ------ ------- ------- -------
Less dividends and distributions:
Investment income--net .............................. (.05) -- (.20) (.02) -- (.15)
In excess of investment income on investments--net .. (.20) (.13) (.06) (.11) (.03) (.04)
Realized gain on investments--net ................... (.99) (.12) -- (.99) (.12) --
In excess of realized gain on investments--net ...... (.14) -- (.03) (.14) -- (.03)
------- ------- ------ ------- ------- -------
Total dividends and distributions ..................... (1.38) (.25) (.29) (1.26) (.15) (.22)
------- ------- ------ ------- ------- -------
Net asset value, end of year .......................... $ 11.40 $ 11.93 $10.82 $ 11.30 $ 11.86 $ 10.76
======= ======= ====== ======= ======= =======
- ----------------------------------------------------------------------------------------------------------------------------------
Total Investment Based on net asset value per share .................... 7.27% 12.68% 11.15%*+ 5.97% 11.67% 9.89%*+
Return:* ======= ======= ====== ======= ======= =======
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios to Expenses, net of reimbursement ........................ 1.87% 2.47% 2.01% 2.96% 3.76% 3.50%
Average Net ======= ======= ====== ======= ======= =======
Assets: Expenses .............................................. 1.87% 2.90% 2.32% 2.96% 4.01% 3.61%
======= ======= ====== ======= ======= =======
Investment income (loss)--net ......................... 1.28% 1.83% 2.92% .18% (.39%) 1.20%
======= ======= ====== ======= ======= =======
- ----------------------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, end of year (in thousands) ................ $ 167 $ 129 $3,025 $40,687 $30,469 $16,117
Data: ======= ======= ====== ======= ======= =======
Portfolio turnover .................................... 99.11% 125.68% 83.14% 99.11% 125.68% 83.14%
======= ======= ====== ======= ======= =======
Average commission rate paid++++ ...................... $ .0178 $ .0170 -- $ .0178 $ .0170 --
======= ======= ====== ======= ======= =======
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Global Opportunity Portfolio++
------------------------------------------------------
Class C Class D
-------------------------- --------------------------
For the Year Ended For the Year Ended
The following per share data and ratios have been derived January 31, January 31,
from information provided in the financial statements. -------------------------- --------------------------
Increase (Decrease) in Net Asset Value: 1998 1997 1996+ 1998 1997 1996+
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year .................... $ 11.84 $ 10.75 $10.00 $11.92 $ 10.80 $10.00
Operating ------- ------- ------ ------ ------- ------
Performance: Investment income (loss)--net ......................... .02 (.05) .12 .13 .05 .22
Realized and unrealized gain on investments and foreign
currency transactions--net ............................ .68 1.29 .85 .70 1.29 .85
------- ------- ------ ------ ------- ------
Total from investment operations ...................... .70 1.24 .97 .83 1.34 1.07
------- ------- ------ ------ ------- ------
Less dividends and distributions:
Investment income--net .............................. (.02) -- (.15) (.04) -- (.18)
In excess of investment income on investments--net .. (.11) (.03) (.04) (.19) (.10) (.06)
Realized gain on investments--net ................... (.99) (.12) -- (.99) (.12) --
In excess of realized gain on investments--net ...... (.14) -- (.03) (.14) -- (.03)
------- ------- ------ ------ ------- ------
Total dividends and distributions ..................... (1.26) (.15) (.22) (1.36) (.22) (.27)
------- ------- ------ ------ ------- ------
Net asset value, end of year .......................... $ 11.28 $ 11.84 $10.75 $11.39 $ 11.92 $10.80
======= ======= ====== ====== ======= ======
- ----------------------------------------------------------------------------------------------------------------------------------
Total Investment Based on net asset value per share .................... 5.99% 11.61% 9.81%*+ 7.02% 12.56% 10.80%*+
Return:* ======= ======= ====== ====== ======= ======
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios to Expenses, net of reimbursement ........................ 3.00% 3.81% 3.58% 2.12% 2.91% 2.67%
Average Net ======= ======= ====== ====== ======= ======
Assets: Expenses .............................................. 3.00% 4.06% 3.65% 2.12% 3.17% 2.77%
======= ======= ====== ====== ======= ======
Investment income (loss)--net ......................... .13% (.46%) 1.07% 1.03% .48% 2.00%
======= ======= ====== ====== ======= ======
- ----------------------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, end of year (in thousands) ................ $15,951 $10,659 $4,770 $3,149 $ 2,596 $1,513
Data: ======= ======= ====== ====== ======= ======
Portfolio turnover .................................... 99.11% 125.68% 83.14% 99.11% 125.68% 83.14%
======= ======= ====== ====== ======= ======
Average commission rate paid++++ ...................... $ .0178 $ .0170 -- $.0178 $ .0170 --
======= ======= ====== ====== ======= ======
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Total investment returns exclude the effects of sales loads.
+ The Program commenced operations on February 1, 1995.
++ Based on average shares outstanding.
*+ Aggregate total investment return.
++++ For fiscal years beginning on or after September 1, 1995, the
Fund is required to disclose its average commission rate per
share for purchases and sales of equity securities. The
"Average Commission Rate Paid" includes commissions paid in
foreign currencies, which have been converted into US dollars
using the prevailing exchange rate on the date of the
transaction. Such conversions may significantly affect the
rate shown.
See Notes to Financial Statements.
40 & 41
<PAGE>
Merrill Lynch Asset Builder Program, Inc., January 31, 1998
FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
Growth Opportunity Portfolio++
-------------------------------------------
Class A Class B
-------------------- --------------------
For the For the
For the Period For the Period
Year Feb. 2, Year Feb. 2,
The following per share data and ratios have been derived Ended 1996+++ to Ended 1996+++ to
from information provided in the financial statements. Jan. 31, Jan. 31, Jan. 31, Jan. 31,
Increase (Decrease) in Net Asset Value: 1998 1997 1998 1997
=======================================================================================================================
<S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period .................... $ 11.79 $ 10.00 $ 11.68 $ 10.00
Operating ------- ------- ------- -------
Performance: Investment income (loss)--net ........................... (.07) .03 (.22) (.21)
Realized and unrealized gain on investments--net ........ 2.83 1.76 2.80 1.89
------- ------- ------- -------
Total from investment operations ........................ 2.76 1.79 2.58 1.68
------- ------- ------- -------
Less distributions from realized gain on investments--net (1.13) -- (.99) --
------- ------- ------- -------
Net asset value, end of period .......................... $ 13.42 $ 11.79 $ 13.27 $ 11.68
======= ======= ======= =======
=======================================================================================================================
Total Investment Based on net asset value per share ...................... 23.52% 17.90%*+ 22.16% 16.80%*+
Return:** ======= ======= ======= =======
=======================================================================================================================
Ratios to Average Expenses, net of reimbursement .......................... 1.98% 2.44%* 3.09% 3.84%*
Net Assets: ======= ======= ======= =======
Expenses ................................................ 1.98% 3.08%* 3.09% 4.00%*
======= ======= ======= =======
Investment income (loss)--net ........................... (55%) .23%* (1.66%) (1.93%)*
======= ======= ======= =======
=======================================================================================================================
Supplemental Net assets, end of period (in thousands) ................ $ 207 $ 58 $25,752 $ 9,816
Data: ======= ======= ======= =======
Portfolio turnover ...................................... 60.24% 51.63% 60.24% 51.63%
======= ======= ======= =======
Average commission rate paid++++ ........................ $ .0631 $ .0626 $ .0631 $ .0626
======= ======= ======= =======
=======================================================================================================================
<CAPTION>
Growth Opportunity Portfolio++
-------------------------------------------
Class C Class D
-------------------- --------------------
For the For the
For the Period For the Period
Year Feb. 2, Year Feb. 2,
The following per share data and ratios have been derived Ended 1996+++ to Ended 1996+++ to
from information provided in the financial statements. Jan. 31, Jan. 31, Jan. 31, Jan. 31,
Increase (Decrease) in Net Asset Value: 1998 1997 1998 1997
=========================================================================================================================
<S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period .................... $ 11.67 $ 10.00 $ 11.78 $ 10.00
Operating ------- ------- ------- -------
Performance: Investment income (loss)--net ........................... (.23) (.22) (.11) (.11)
Realized and unrealized gain on investments--net ........ 2.81 1.89 2.84 1.89
------- ------- ------- -------
Total from investment operations ........................ 2.58 1.67 2.73 1.78
------- ------- ------- -------
Less distributions from realized gain on investments--net (.99) -- (1.09) --
Net asset value, end of period .......................... $ 13.26 $ 11.67 $ 13.42 $ 11.78
======= ======= ======= =======
=========================================================================================================================
Total Investment Based on net asset value per share ...................... 22.17% 16.70%*+ 23.30% 17.80%*+
Return:** ======= ======= ======= =======
=========================================================================================================================
Ratios to Average Expenses, net of reimbursement .......................... 3.14% 3.88%* 2.23% 2.94%*
Net Assets: ======= ======= ======= =======
Expenses ................................................ 3.14% 4.05%* 2.23% 3.13%*
======= ======= ======= =======
Investment income (loss)--net ........................... (1.71%) (1.98%)* (.80%) (1.00%)*
======= ======= ======= =======
=========================================================================================================================
Supplemental Net assets, end of period (in thousands) ................ $13,059 $ 4,649 $ 1,612 $ 819
Data: ======= ======= ======= =======
Portfolio turnover ...................................... 60.24% 51.63% 60.24% 51.63%
======= ======= ======= =======
Average commission rate paid++++ ........................ $ .0631 $ .0626 $ .0631 $ .0626
======= ======= ======= =======
=========================================================================================================================
<CAPTION>
Quality Bond Portfolio
------------------------------------------------------
Class A Class B
-------------------------- ------------------------
For the Year For the Year
The following per share data and ratios have been derived Ended January 31, Ended January 31,
from information provided in the financial statements. -------------------------- ------------------------
Increase (Decrease) in Net Asset Value: 1998 1997 1996+ 1998 1997 1996+
=================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year .................... $ 9.79 $10.27 $ 10.00 $ 9.79 $10.27 $ 10.00
Operating ------- ------ ------- ------- ------ -------
Performance: Investment income--net ................................ .69 .68 .62 .60 .59 .54
Realized and unrealized gain (loss) on investments--net .31 (.44) .27 .30 (.44) .27
------- ------ ------- ------- ------ -------
Total from investment operations ...................... 1.00 .24 .89 .90 .15 .81
------- ------ ------- ------- ------ -------
Less dividends and distributions:
Investment income--net .............................. (.69) (.68) (.62) (.60) (.59) (.54)
Realized gain on investments--net ................... -- (.04) -- -- (.04) --
------- ------ ------- ------- ------ -------
Total dividends and distributions ..................... (.69) (.72) (.62) (.60) (.63) (.54)
------- ------ ------- ------- ------ -------
Net asset value, end of year .......................... $ 10.10 $ 9.79 $ 10.27 $ 10.09 $ 9.79 $ 10.27
======= ====== ======= ======= ====== =======
=================================================================================================================================
Total Investment Based on net asset value per share .................... 10.59% 2.51% 9.26%*+ 9.55% 1.62% 8.35%*+
Return:** ======= ====== ======= ======= ====== =======
=================================================================================================================================
Ratios to Expenses, net of reimbursement ........................ .00% .00% .00% .75% .78% .79%
Average Net ======= ====== ======= ======= ====== =======
Assets: Expenses .............................................. 2.62% 3.23% 2.60% 3.51% 4.08% 3.31%
======= ====== ======= ======= ====== =======
Investment income--net ................................ 7.01% 6.85% 6.22% 6.14% 6.00% 5.52%
======= ====== ======= ======= ====== =======
=================================================================================================================================
Supplemental Net assets, end of year (in thousands) ................ $ 1,214 $2,254 $ 2,196 $ 6,095 $4,824 $ 3,049
Data: ======= ====== ======= ======= ====== =======
Portfolio turnover .................................... 114.61% 91.10% 86.68% 114.61% 91.10% 86.68%
======= ====== ======= ======= ====== =======
=================================================================================================================================
<CAPTION>
Quality Bond Portfolio
------------------------------------------------------
Class C Class D
-------------------------- ------------------------
For the Year For the Year
The following per share data and ratios have been derived Ended January 31, Ended January 31,
from information provided in the financial statements. -------------------------- ------------------------
Increase (Decrease) in Net Asset Value: 1998 1997 1996+ 1998 1997 1996+
=================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year .................... $ 9.79 $10.27 $ 10.00 $ 9.79 $10.27 $ 10.00
Operating ------- ------ ------- ------- ------ -------
Performance: Investment income--net ................................ .60 .58 .53 .66 .65 .60
Realized and unrealized gain (loss) on investments--net .30 (.44) .27 .30 (.44) .27
------- ------ ------- ------- ------ -------
Total from investment operations ...................... .90 .14 .80 .96 .21 .87
------- ------ ------- ------- ------ -------
Less dividends and distributions:
Investment income--net .............................. (.60) (.58) (.53) (.66) (.65) (.60)
Realized gain on investments--net ................... -- (.04) -- -- (.04) --
------- ------ ------- ------- ------ -------
Total dividends and distributions ..................... (.60) (.62) (.53) (.66) (.69) (.60)
------- ------ ------- ------- ------ -------
Net asset value, end of year .......................... $ 10.09 $ 9.79 $ 10.27 $ 10.09 $ 9.79 $ 10.27
======= ====== ======= ======= ====== =======
=================================================================================================================================
Total Investment Based on net asset value per share .................... 9.46% 1.55% 8.27%*+ 10.21% 2.25% 8.99%*+
Return:** ======= ====== ======= ======= ====== =======
=================================================================================================================================
Ratios to Expenses, net of reimbursement ........................ .80% .85% .87% .25% .16% .19%
Average Net ======= ====== ======= ======= ====== =======
Assets: Expenses .............................................. 3.60% 4.15% 3.44% 2.90% 3.47% 2.70%
======= ====== ======= ======= ====== =======
Investment income--net ................................ 6.05% 5.93% 5.46% 6.75% 6.62% 6.11%
======= ====== ======= ======= ====== =======
=================================================================================================================================
Supplemental Net assets, end of year (in thousands) ................ $ 2,814 $1,885 $ 1,123 $ 609 $ 452 $ 221
Data: ======= ====== ======= ======= ====== =======
Portfolio turnover .................................... 114.61% 91.10% 86.68% 114.61% 91.10% 86.68%
======= ====== ======= ======= ====== =======
=================================================================================================================================
</TABLE>
* Annualized.
** Total investment returns exclude the effects of sales loads.
+ The Program commenced operations on February 1, 1995.
++ Based on average shares outstanding.
+++ Commencement of operations.
*+ Aggregate total investment return.
++++ For fiscal years beginning on or after September 1, 1995, the
Fund is required to disclose its average commission rate per
share for purchases and sales of equity securities. The
"Average Commission Rate Paid" includes commissions paid in
foreign currencies, which have been converted into US dollars
using the prevailing exchange rate on the date of the
transaction. Such conversions may significantly affect the
rate shown.
42 & 43
<PAGE>
Merrill Lynch Asset Builder Program, Inc., January 31, 1998
FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
US Government Securities Portfolio
------------------------------------------------------
Class A Class B
-------------------------- ------------------------
For the Year For the Year
The following per share data and ratios have been derived Ended January 31, Ended January 31,
from information provided in the financial statements. -------------------------- ------------------------
Increase (Decrease) in Net Asset Value: 1998 1997 1996+ 1998 1997 1996+
=================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year .................... $ 10.20 $10.48 $ 10.00 $ 10.20 $10.48 $ 10.00
Operating ------- ------ ------- ------- ------ -------
Performance: Investment income--net ................................ .69 .69 .76 .61 .60 .68
Realized and unrealized gain (loss) on investments--net .35 (.21) .74 .35 (.21) .74
------- ------ ------- ------- ------ -------
Total from investment operations ...................... 1.04 .48 1.50 .96 .39 1.42
------- ------ ------- ------- ------ -------
Less dividends and distributions:
Investment income--net .............................. (.69) (.69) (.76) (.61) (.60) (.68)
Realized gain on investments--net ................... (.07) (.07) (.26) (.07) (.07) (.26)
------- ------ ------- ------- ------ -------
Total dividends and distributions ..................... (.76) (.76) (1.02) (.68) (.67) (.94)
------- ------ ------- ------- ------ -------
Net asset value, end of year .......................... $ 10.48 $10.20 $ 10.48 $ 10.48 $10.20 $ 10.48
======= ====== ======= ======= ====== =======
=================================================================================================================================
Total Investment Based on net asset value per share .................... 10.66% 4.76% 15.47%*+ 9.76% 3.90% 14.53%*+
Return:* ======= ====== ======= ======= ====== =======
=================================================================================================================================
Ratios to Expenses, net of reimbursement ........................ .00% .00% .00% .75% .78% .81%
Average Net ======= ====== ======= ======= ====== =======
Assets: Expenses .............................................. 2.00% 2.92% 2.54% 2.82% 3.72% 3.35%
======= ====== ======= ======= ====== =======
Investment income--net ................................ 6.80% 6.69% 7.30% 5.94% 5.85% 6.28%
======= ====== ======= ======= ====== =======
=================================================================================================================================
Supplemental Net assets, end of year (in thousands) ................ $ 3,233 $4,486 $ 5,463 $ 6,627 $4,514 $ 3,043
Data: ======= ====== ======= ======= ====== =======
Portfolio turnover .................................... 361.31% 27.32% 113.05% 361.31% 27.32% 113.05%
======= ====== ======= ======= ====== =======
=================================================================================================================================
<CAPTION>
US Government Securities Portfolio
------------------------------------------------------
Class C Class D
-------------------------- ------------------------
For the Year For the Year
The following per share data and ratios have been derived Ended January 31, Ended January 31,
from information provided in the financial statements. -------------------------- ------------------------
Increase (Decrease) in Net Asset Value: 1998 1997 1996+ 1998 1997 1996+
=================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year .................... $ 10.19 $10.47 $ 10.00 $ 10.20 $10.48 $ 10.00
Operating ------- ------ ------- ------- ------ -------
Performance: Investment income--net ................................ .60 .59 .67 .67 .66 .74
Realized and unrealized gain (loss) on investments--net .36 (.21) .73 .35 (.21) .74
------- ------ ------- ------- ------ -------
Total from investment operations ...................... .96 .38 1.40 1.02 .45 1.48
------- ------ ------- ------- ------ -------
Less dividends and distributions:
Investment income--net .............................. (.60) (.59) (.67) (.67) (.66) (.74)
Realized gain on investments--net ................... (.07) (.07) (.26) (.07) (.07) (.26)
------- ------ ------- ------- ------ -------
Total dividends and distributions ..................... (.67) (.66) (.93) (.74) (.73) (1.00)
------- ------ ------- ------- ------ -------
Net asset value, end of year .......................... $ 10.48 $10.19 $ 10.47 $ 10.48 $10.20 $ 10.48
======= ====== ======= ======= ====== =======
=================================================================================================================================
Total Investment Based on net asset value per share .................... 9.79% 3.83% 14.36%*+ 10.38% 4.49% 15.13%*+
Return:* ======= ====== ======= ======= ====== =======
=================================================================================================================================
Ratios to Expenses, net of reimbursement ........................ .80% .85% .86% .25% .21% .22%
Average Net ======= ====== ======= ======= ====== =======
Assets: Expenses .............................................. 2.90% 3.78% 3.41% 2.25% 3.14% 2.77%
======= ====== ======= ======= ====== =======
Investment income--net ................................ 5.88% 5.78% 6.21% 6.53% 6.42% 6.90%
======= ====== ======= ======= ====== =======
=================================================================================================================================
Supplemental Net assets, end of year (in thousands) ................ $ 2,057 $1,757 $ 1,089 $ 315 $ 313 $ 182
Data: ======= ====== ======= ======= ====== =======
Portfolio turnover .................................... 361.31% 27.32% 113.05% 361.31% 27.32% 113.05%
======= ====== ======= ======= ====== =======
=================================================================================================================================
</TABLE>
* Total investment returns exclude the effects of sales loads.
+ The Program commenced operations on February 1, 1995.
*+ Aggregate total investment return.
See Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch Asset Builder Program, Inc. (the "Program") is registered under
the Investment Company Act of 1940 as a diversified, open-end management
investment company consisting of five separate portfolios: Fundamental Value
Portfolio, Global Opportunity Portfolio, Growth Opportunity Portfolio, Quality
Bond Portfolio and US Government Securities Portfolio (the "Portfolios"), except
for Growth Opportunity Portfolio which is classified as a non-diversified
portfolio. The Program's Portfolios offer four classes of shares under the
Merrill Lynch Select PricingSM System. Shares of Class A and Class D are sold
with a front-end sales charge. Shares of Class B and Class C may be subject to a
contingent deferred sales charge. All classes of shares have identical voting,
dividend, liquidation and other rights and the same terms and conditions, except
that Class B, Class C and Class D Shares bear certain expenses related to the
account maintenance of such shares, and Class B and Class C Shares also bear
certain expenses related to the distribution of such shares. Each class has
exclusive voting rights with respect to matters relating to its account
maintenance and distribution expenditures. The following is a summary of
significant accounting policies followed by the Program.
(a) Valuation of investments--Portfolio securities which are traded on stock
exchanges are valued at the last sale price on the exchange on which such
securities are traded, as of the close of business on the day the securities are
being valued or, lacking any sales, at the last available bid price. Securities
traded in the over-the-counter market are valued at the last available bid price
in the over-the-counter market prior to the time of valuation. In cases where
securities are traded on more than one exchange, the securities are valued on
the exchange designated by or under the authority of the Board of Directors as
the primary market. Securities which are traded both in the over-the-counter
market and on a stock exchange are valued according to the broadest and most
representative market. Options written are valued at the last sale price in the
case of exchange-traded options or, in the case of options traded in the
over-the-counter market, the last asked price. Options purchased are valued at
their last sale price in the case of exchange-traded options or, in the case of
options traded in the over-the-counter market, the last bid price. Short-term
securities are valued at amortized cost, which approximates market value. Other
investments, including futures contracts and related options, are stated at
market value. Securities and assets for which market quotations are not readily
available are valued at fair market value as determined in good faith by or
under the direction of the Board of Directors of the Program.
(b) Derivative financial instruments--Each Portfolio may engage in various
portfolio strategies to seek to increase its return by hedging its portfolio
against adverse movements in the equity, debt or currency markets. Losses may
arise due to changes in the value of the contract or if the counterparty does
not perform under the contract.
o Financial futures contracts--The Portfolios may purchase or sell futures
contracts and options on such futures contracts for the purpose of hedging the
market risk on existing securities or the intended purchase of securities.
Futures contracts are contracts for delayed delivery of securities at a specific
future date and at a specific price or yield. Upon entering into a contract, the
Portfolios
44 & 45
<PAGE>
Merrill Lynch Asset Builder Program, Inc., January 31, 1998
NOTES TO FINANCIAL STATEMENTS (continued)
deposit and maintain as collateral such initial margin as required by the
exchange on which the transaction is effected. Pursuant to the contract, the
Portfolios agree to receive from or pay to the broker an amount of cash equal to
the daily fluctuation in value of the contract. Such receipts or payments are
known as variation margin and are recorded by the Portfolios as unrealized gains
or losses. When the contract is closed, the Portfolios record a realized gain or
loss equal to the difference between the value of the contract at the time it
was opened and the value at the time it was closed.
o Options--The Portfolios are authorized to purchase and write call and put
options. When the Portfolios write an option, an amount equal to the premium
received by the Portfolios is reflected as an asset and an equivalent liability.
The amount of the liability is subsequently marked to market to reflect the
current market value of the option written. When a security is purchased or sold
through an exercise of an option, the related premium paid (or received) is
added to (or deducted from) the basis of the security acquired or deducted from
(or added to) the proceeds of the security sold. When an option expires (or the
Portfolios enter into a closing transaction), the Portfolios realize a gain or
loss on the option to the extent of the premiums received or paid (or gain or
loss to the extent the cost of the closing transaction exceeds the premium paid
or received).
Written and purchased options are non-income producing investments.
o Forward foreign exchange contracts--Fundamental Value, Global Opportunity and
Growth Opportunity Portfolios are authorized to enter into forward foreign
exchange contracts as a hedge against either specific transactions or portfolio
positions. Such contracts are not entered on the Portfolios' records. However,
the effect on operations is recorded from the date the Portfolios enter into
such contracts. Premium or discount is amortized over the life of the contracts.
o Foreign currency options and futures--Fundamental Value, Global Opportunity
and Growth Opportunity Portfolios may also purchase or sell listed or
over-the-counter foreign currency options, foreign currency futures and related
options on foreign currency futures as a short or long hedge against possible
variations in foreign exchange rates. Such transactions may be effected with
respect to hedges on non-US dollar denominated securities owned by the
Portfolios, sold by the Portfolios but not yet delivered, or committed or
anticipated to be purchased by the Portfolios.
(c) Foreign currency transactions--Transactions denominated in foreign
currencies are recorded at the exchange rate prevailing when recognized. Assets
and liabilities denominated in foreign currencies are valued at the exchange
rate at the end of the period. Foreign currency transactions are the result of
settling (realized) or valuing (unrealized) assets or liabilities expressed in
foreign currencies into US dollars. Realized and unrealized gains or losses from
investments include the effects of foreign exchange rates on investments.
(d) Income taxes--It is each Portfolio's policy to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its shareholders.
Therefore, no Federal income tax provision is required. Under the applicable
foreign tax law, a withholding tax may be imposed on interest, dividends and
capital gains at various rates.
(e) Security transactions and investment income--Security transactions are
recorded on the dates the transactions are entered into (the trade dates).
Dividend income is recorded on the ex-dividend dates. Dividends from foreign
securities where the ex-dividend date may have passed are subsequently recorded
when the Portfolios have determined the ex-dividend date. Interest income
(including amortization of discount) is recognized on the accrual basis.
Realized gains and losses on security transactions are determined on the
identified cost basis.
(f) Deferred organization expenses and prepaid registration fees--Deferred
organization expenses are charged to expense on a straight-line basis over a
five-year period. Prepaid registration fees are charged to expense as the
related shares are issued.
(g) Dividends and distributions--Dividends from net investment income of Quality
Bond and US Government Securities Portfolios are declared daily and paid
monthly. Dividends from net investment income of Fundamental Value, Global
Opportunity and Growth Opportunity Portfolios are recorded on the ex-dividend
dates. Distributions of capital gains for all Portfolios are recorded on the
ex-dividend dates. Distributions in excess of investment income and realized
capital gains are due primarily to differing tax treatments for futures
transactions and post-October losses.
(h) Dollar rolls--The USA Government Securities Portfolio sells mortgage-backed
securities for delivery in the current month and simultaneously contracts to
repurchase substantially similar (same type, coupon and maturity) securities on
a specific future date.
(i) Reclassification--Generally accepted accounting principles require that
certain components of net assets be adjusted to reflect permanent differences
between financial and tax reporting. Accordingly, current year's permanent
book/tax differences of $837,183 in the Fundamental Value Portfolio have been
reclassified between undistributed net realized capital gains and accumulated
net investment loss, differences of $438,067 in the Global Opportunity Portfolio
have been reclassified between accumulated distributions in excess of net
realized capital gains and accumulated distributions in excess of net investment
income and differences of $597,155 in the Growth Opportunity Portfolio have been
reclassified between undistributed net realized capital gains and accumulated
net investment loss. These reclassifications have no effect on net assets or net
asset values per share.
2. Investment Advisory Agreement and Transactions with Affiliates:
The Program has entered into an Investment Advisory Agreement with Merrill Lynch
Asset Management, L.P. ("MLAM"). The general partner of MLAM is Princeton
Services, Inc. ("PSI"), an indirect wholly-owned subsidiary of Merrill Lynch &
Co., Inc. ("ML & Co."), which is the limited partner. The Program has also
entered into a Distribution Agreement and Distribution Plans with Merrill Lynch
Funds Distributor, Inc. ("MLFD" or "Distributor"), a wholly-owned subsidiary of
Merrill Lynch Group, Inc.
MLAM is responsible for the management of the Program's portfolios and provides
the necessary personnel, facilities, equipment and certain other services
necessary to the operations of the Program. For such services, each Portfolio
pays a monthly fee based on the average daily value of that Portfolio's net
assets at the following annual rates; 0.65% for Fundamental Value and Growth
Opportunity Portfolios, 0.50% for Quality Bond and US Government Securities
Portfolios and 0.75% for Global Opportunity Portfolio.
For the year ended January 31, 1998, MLAM had voluntarily waived management fees
and reimbursed each Portfolio for additional expenses as follows:
- ------------------------------------------------------------------
Management Additional
Fee Expenses
- ------------------------------------------------------------------
Quality Bond Portfolio $48,576 $217,626
US Government Securities Portfolio $55,861 $171,285
- ------------------------------------------------------------------
Pursuant to the Distribution Plans adopted by the Program in accordance with
Rule 12b-1 under the Investment Company Act of 1940, each Portfolio pays the
Distributor ongoing account maintenance and distribution fees. The fees are
accrued daily and paid monthly at annual rates based upon the average daily
net assets of the shares as follows:
- ----------------------------------------------------------------------
Account Maintenance Fees
------------------------------
Class B Class C Class D
- ----------------------------------------------------------------------
Fundamental Value Portfolio 0.25% 0.25% 0.25%
Global Opportunity Portfolio 0.25% 0.25% 0.25%
Growth Opportunity Portfolio 0.25% 0.25% 0.25%
Quality Bond Portfolio 0.25% 0.25% 0.25%
US Government Securities Portfolio 0.25% 0.25% 0.25%
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Distribution Fees
--------------------------
Class B Class C
- ----------------------------------------------------------------------
Fundamental Value Portfolio 0.75% 0.75%
Global Opportunity Portfolio 0.75% 0.75%
Growth Opportunity Portfolio 0.75% 0.75%
Quality Bond Portfolio 0.50% 0.55%
US Government Securities Portfolio 0.50% 0.55%
- ----------------------------------------------------------------------
Pursuant to a sub-agreement with the Distributor, Merrill Lynch, Pierce, Fenner
& Smith Inc. ("MLPF&S"), a subsidiary of ML & Co., also provides account
maintenance and distribution services to the Program. The ongoing account
maintenance fee compensates the Distributor and MLPF&S for providing account
maintenance services to Class B, Class C and Class D shareholders. The ongoing
distribution fee compensates the Distributor and MLPF&S for providing
shareholder and distribution-related services to Class B and Class C
shareholders.
For the year ended January 31, 1998, MLFD earned underwriting discounts and
MLPF&S earned dealer concessions on sales of each Portfolio's Class A and Class
D Shares as follows:
- ------------------------------------------------------------------
MLFD MLPF&S
---------------- -----------------
Class A Class D Class A Class D
- ------------------------------------------------------------------
Fundamental Value Portfolio $18 $1,745 $350 $33,986
Global Opportunity Portfolio 6 1,226 119 25,695
Growth Opportunity Portfolio 1 1,165 24 23,000
Quality Bond Portfolio 1 172 12 2,520
US Government Securities
Portfolio -- 38 -- 573
- ------------------------------------------------------------------
For the year ended January 31, 1998, MLPF&S received contingent deferred sales
charges relating to transactions in Class B and Class C Shares as follows:
- -------------------------------------------------------------------
Class B Shares Class C Shares
- -------------------------------------------------------------------
Fundamental Value Portfolio $102,624 $5,816
Global Opportunity Portfolio 91,081 4,532
Growth Opportunity Portfolio 32,416 3,019
Quality Bond Portfolio 25,484 706
US Government Securities Portfolio 15,881 432
- -------------------------------------------------------------------
In addition, MLPF&S received $1,230, $7,772, and $971 in commissions on the
execution of portfolio security transactions for the Fundamental Value, Global
Opportunity and Growth Opportunity Portfolios, respectively, for the year ended
January 31, 1998.
46 & 47
<PAGE>
Merrill Lynch Asset Builder Program, Inc., January 31, 1998
NOTES TO FINANCIAL STATEMENTS (continued)
Merrill Lynch Financial Data Services, Inc. ("MLFDS"), a wholly-owned subsidiary
of ML & Co., is the Program's transfer agent.
During the year ended January 31, 1998, Quality Bond and US Government
Securities Portfolios paid Merrill Lynch Security Pricing Service, an affiliate
of MLPF&S, $3,382 and $1,441, respectively, for security price quotations to
compute the net asset value of the Portfolios.
Accounting services are provided to each Portfolio by MLAM at cost.
Certain officers and/or directors of the Program are officers and/or directors
of MLAM, PSI, MLFD, MLFDS, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the
year ended January 31, 1998 were as follows:
- -----------------------------------------------------------------
Purchases Sales
- -----------------------------------------------------------------
Fundamental Value Portfolio $50,879,691 $39,025,311
Global Opportunity Portfolio $56,458,624 $49,518,660
Growth Opportunity Portfolio $31,169,732 $14,531,860
Quality Bond Portfolio $10,942,161 $10,137,686
US Government Securities Portfolio $39,802,973 $38,562,211
- -----------------------------------------------------------------
Net realized and unrealized gains (losses) as of January 31, 1998 were as
follows:
- -------------------------------------------------------------------
Realized
Gains Unrealized
Fundamental Value Portfolio (Losses) Gains
- -------------------------------------------------------------------
Long-term investments .................... $7,145,890 $8,177,695
Short-term investments ................... (17) --
---------- ----------
Total .................................... $7,145,873 $8,177,695
========== ==========
- -------------------------------------------------------------------
- -------------------------------------------------------------------
Realized Unrealized
Gains Gains
Global Opportunity Portfolio (Losses) (Losses)
- -------------------------------------------------------------------
Long-term investments .................... $3,811,956 $3,116,531
Foreign currency transactions ............ (535,846) (9,436)
Forward foreign exchange contracts ....... 910,458 (16,522)
---------- ----------
Total .................................... $4,186,568 $3,090,573
========== ==========
- -------------------------------------------------------------------
- -------------------------------------------------------------------
Realized Unrealized
Growth Opportunity Portfolio Gains Gains
- -------------------------------------------------------------------
Long-term investments .................... $2,875,420 $4,054,980
---------- ----------
Total .................................... $2,875,420 $4,054,980
========== ==========
- -------------------------------------------------------------------
- -------------------------------------------------------------------
Realized Unrealized
Quality Bond Portfolio Gains Gains
- -------------------------------------------------------------------
Long-term investments ..................... $ 34,086 $ 172,764
-------- ---------
Total ..................................... $ 34,086 $ 172,764
======== =========
- -------------------------------------------------------------------
- -------------------------------------------------------------------
Realized Unrealized
US Government Securities Portfolio Gains Gains
- -------------------------------------------------------------------
Long-term investments ..................... $ 100,678 $ 280,576
--------- ---------
Total ..................................... $ 100,678 $ 280,576
========= =========
- -------------------------------------------------------------------
As of January 31, 1998, net unrealized appreciation (depreciation) for Federal
come tax purposes was as follows:
- --------------------------------------------------------------------
Gross Gross
Unrealized Unrealized Net Unrealized
Appreciation Depreciation Appreciation
- --------------------------------------------------------------------
Fundamental Value
Portfolio $9,931,514 $(1,757,011) $8,174,503
Global Opportunity
Portfolio $5,709,770 $(2,594,036) $3,115,734
Growth Opportunity
Portfolio $4,997,366 $ (942,386) $4,054,980
Quality Bond Portfolio $ 207,421 $ (34,657) $ 172,764
US Government Securities
Portfolio $ 284,169 $ (3,593) $ 280,576
- --------------------------------------------------------------------
The aggregate cost of investments at January 31, 1998 for Federal income tax
purposes was $69,297,206 for the Fundamental Value Portfolio, $54,199,284 for
the Global Opportunity Portfolio, $38,948,641 for the Growth Opportunity
Portfolio, $10,286,281 for the Quality Bond Portfolio, and $11,723,703 for the
US Government Securities Portfolio.
4. Capital Share Transactions:
Net increase in net assets derived from capital share transactions for the
years ended January 31, 1998 and January 31, 1997, respectively, were as
follows:
- ------------------------------------------------------------------
For the For the
Year Ended Year Ended
Jan. 31, 1998 Jan. 31, 1997
- ------------------------------------------------------------------
Fundamental Value Portfolio $20,907,035 $16,589,653
Global Opportunity Portfolio $19,283,250 $14,719,748
Growth Opportunity Portfolio $22,868,370 $13,569,697
Quality Bond Portfolio $ 1,015,801 $ 3,143,735
US Government Securities Portfolio $ 868,656 $ 1,556,845
- ------------------------------------------------------------------
Transactions in capital shares for each class were as follows:
- -------------------------------------------------------------------
Fundamental Value Portfolio
- -------------------------------------------------------------------
Class A Shares for the Year Dollar
Ended January 31, 1998 Shares Amount
- -------------------------------------------------------------------
Shares sold ................................... 9,220 $ 132,100
Shares issued to shareholders in
reinvestment of distributions ................. 2,200 30,166
------ ----------
Total issued .................................. 11,420 162,266
Shares redeemed ............................... (4,168) (58,954)
------ ----------
Net increase .................................. 7,252 $ 103,312
====== ==========
- -------------------------------------------------------------------
- -------------------------------------------------------------------
Fundamental Value Portfolio
- -------------------------------------------------------------------
Class A Shares for the Year Dollar
Ended January 31, 1997 Shares Amount
- -------------------------------------------------------------------
Shares sold ................................... 7,936 $ 102,340
Shares issued to shareholders in
reinvestment of distributions ................. 493 6,544
------ ----------
Total issued .................................. 8,429 108,884
Shares redeemed ............................... (3,359) (43,444)
------ ----------
Net increase .................................. 5,070 $ 65,440
====== ==========
- -------------------------------------------------------------------
- -------------------------------------------------------------------
Fundamental Value Portfolio
- -------------------------------------------------------------------
Class B Shares for the Year Dollar
Ended January 31, 1998 Shares Amount
- -------------------------------------------------------------------
Shares sold ............................... 1,066,388 $15,104,878
Shares issued to shareholders in
reinvestment of distributions ............. 364,846 4,925,423
--------- -----------
Total issued .............................. 1,431,234 20,030,301
Automatic conversion of shares ............ (18,069) (264,298)
Shares redeemed ........................... (518,101) (7,502,100)
--------- -----------
Net increase .............................. 895,064 $12,263,903
========= ===========
- -------------------------------------------------------------------
- -------------------------------------------------------------------
Fundamental Value Portfolio
- -------------------------------------------------------------------
Class B Shares for the Year Dollar
Ended January 31, 1997 Shares Amount
- -------------------------------------------------------------------
Shares sold ............................... 1,015,710 $12,783,442
Shares issued to shareholders in
reinvestment of distributions ............. 73,472 962,487
--------- -----------
Total issued .............................. 1,089,182 13,745,929
Automatic conversion of shares ............ (25,869) (323,827)
Shares redeemed ........................... (279,781) (3,545,224)
--------- -----------
Net increase .............................. 783,532 $ 9,876,878
========= ===========
- -------------------------------------------------------------------
- -------------------------------------------------------------------
Fundamental Value Portfolio
- -------------------------------------------------------------------
Class C Shares for the Year Dollar
Ended January 31, 1998 Shares Amount
- -------------------------------------------------------------------
Shares sold ................................. 601,444 $ 8,526,327
Shares issued to shareholders in
reinvestment of distributions ............... 170,139 2,296,877
------- -----------
Total issued ................................ 771,583 10,823,204
Shares redeemed ............................. (227,728) (3,289,347)
------- -----------
Net increase ................................ 543,855 $ 7,533,857
======= ===========
- -------------------------------------------------------------------
- -------------------------------------------------------------------
Fundamental Value Portfolio
- -------------------------------------------------------------------
Class C Shares for the Year Dollar
Ended January 31, 1997 Shares Amount
- -------------------------------------------------------------------
Shares sold ................................. 568,727 $ 7,170,424
Shares issued to shareholders in
reinvestment of distributions ............... 31,790 416,450
------- -----------
Total issued ................................ 600,517 7,586,874
Shares redeemed ............................. (170,842) (2,169,492)
------- -----------
Net increase ................................ 429,675 $ 5,417,382
======= ===========
- -------------------------------------------------------------------
- -------------------------------------------------------------------
Fundamental Value Portfolio
- -------------------------------------------------------------------
Class D Shares for the Year Dollar
Ended January 31, 1998 Shares Amount
- -------------------------------------------------------------------
Shares sold ................................. 56,654 $ 867,530
Automatic conversion of shares .............. 22,297 264,298
Shares issued to shareholders in
reinvestment of distributions ............... 41,085 562,040
------- ----------
Total issued ................................ 120,036 1,693,868
Shares redeemed ............................. (47,582) (687,905)
------- ----------
Net increase ................................ 72,454 $ 1,005,963
======= ===========
- -------------------------------------------------------------------
- -------------------------------------------------------------------
Fundamental Value Portfolio
- -------------------------------------------------------------------
Class D Shares for the Year Dollar
Ended January 31, 1997 Shares Amount
- -------------------------------------------------------------------
Shares sold ................................. 95,960 $ 1,214,323
Automatic conversion of shares .............. 25,591 323,827
Shares issued to shareholders in
reinvestment of distributions ............... 10,204 135,000
------- -----------
Total issued ................................ 131,755 1,673,150
Shares redeemed ............................. (35,230) (443,197)
------- -----------
Net increase ................................ 96,525 $ 1,229,953
======= ===========
- -------------------------------------------------------------------
48 & 49
<PAGE>
Merrill Lynch Asset Builder Program, Inc., January 31, 1998
NOTES TO FINANCIAL STATEMENTS (continued)
- -------------------------------------------------------------------
Global Opportunity Portfolio
- -------------------------------------------------------------------
Class A Shares for the Year Dollar
Ended January 31, 1998 Shares Amount
- -------------------------------------------------------------------
Shares sold ................................... 6,103 $ 76,288
Shares issued to shareholders in
reinvestment of dividends and distributions ... 1,486 16,699
----- ---------
Total issued .................................. 7,589 92,987
Shares redeemed ............................... (3,720) (45,571)
----- ---------
Net increase .................................. 3,869 $ 47,416
===== =========
- -------------------------------------------------------------------
- -------------------------------------------------------------------
Global Opportunity Portfolio
- -------------------------------------------------------------------
Class A Shares
for the Year Ended Dollar
January 31, 1997 Shares Amount
- -------------------------------------------------------------------
Shares sold ................................ 5,866 $ 65,458
Shares issued to shareholders in
reinvestment of dividends and distributions 209 2,379
-------- -----------
Total issued ............................... 6,075 67,837
Shares redeemed ............................ (274,907) (2,981,256)
-------- -----------
Net decrease ............................... (268,832) $(2,913,419)
======== ===========
- -------------------------------------------------------------------
- -------------------------------------------------------------------
Global Opportunity Portfolio
- -------------------------------------------------------------------
Class B Shares
for the Year Ended Dollar
January 31, 1998 Shares Amount
- -------------------------------------------------------------------
Shares sold ................................ 1,157,893 $14,316,582
Shares issued to shareholders in
reinvestment of dividends and distributions 341,688 3,813,239
--------- -----------
Total issued ............................... 1,499,581 18,129,821
Automatic conversion of shares ............. (21,068) (255,000)
Shares redeemed ............................ (449,247) (5,533,115)
--------- -----------
Net increase ............................... 1,029,266 $12,341,706
========= ===========
- -------------------------------------------------------------------
- -------------------------------------------------------------------
Global Opportunity Portfolio
- -------------------------------------------------------------------
Class B Shares
for the Year Ended Dollar
January 31, 1997 Shares Amount
- -------------------------------------------------------------------
Shares sold ................................ 1,345,701 $14,794,340
Shares issued to shareholders in
reinvestment of dividends and distributions 30,558 347,756
--------- -----------
Total issued ............................... 1,376,259 15,142,096
Automatic conversion of shares ............. (5,557) (61,320)
Shares redeemed ............................ (298,549) (3,316,163)
--------- -----------
Net increase ............................... 1,072,153 $11,764,613
========= ===========
- -------------------------------------------------------------------
- -------------------------------------------------------------------
Global Opportunity Portfolio
- -------------------------------------------------------------------
Class C Shares
for the Year Ended Dollar
January 31, 1998 Shares Amount
- -------------------------------------------------------------------
Shares sold ................................ 597,712 $ 7,395,862
Shares issued to shareholders in
reinvestment of dividends and distributions 130,118 1,449,520
------- -----------
Total issued ............................... 727,830 8,845,382
Shares redeemed ............................ (214,300) (2,642,190)
------- -----------
Net increase ............................... 513,530 $ 6,203,192
======= ===========
- -------------------------------------------------------------------
- -------------------------------------------------------------------
Global Opportunity Portfolio
- -------------------------------------------------------------------
Class C Shares for the Year Dollar
Ended January 31, 1997 Shares Amount
- -------------------------------------------------------------------
Shares sold ................................ 569,220 $ 6,253,388
Shares issued to shareholders in
reinvestment of dividends and distributions 10,679 121,315
------- -----------
Total issued ............................... 579,899 6,374,703
Shares redeemed ............................ (123,382) (1,369,969)
------- -----------
Net increase ............................... 456,517 $ 5,004,734
======= ===========
- -------------------------------------------------------------------
- -------------------------------------------------------------------
Global Opportunity Portfolio
- -------------------------------------------------------------------
Class D Shares for the Year Dollar
Ended January 31, 1998 Shares Amount
- -------------------------------------------------------------------
Shares sold ................................ 57,335 $ 713,616
Automatic conversion of shares ............. 20,888 255,000
Shares issued to shareholders in
reinvestment of dividends and distributions 26,790 300,854
------- ----------
Total issued ............................... 105,013 1,269,470
Shares redeemed ............................ (46,165) (578,534)
------- ----------
Net increase ............................... 58,848 $ 690,936
======= ==========
- -------------------------------------------------------------------
- -------------------------------------------------------------------
Global Opportunity Portfolio
- -------------------------------------------------------------------
Class D Shares for the Year Dollar
Ended January 31, 1997 Shares Amount
- -------------------------------------------------------------------
Shares sold ................................ 93,756 $1,043,467
Automatic conversion of shares ............. 5,516 61,320
Shares issued to shareholders in
reinvestment of dividends and distributions 3,910 44,693
------- ----------
Total issued ............................... 103,182 1,149,480
Shares redeemed ............................ (25,507) (285,660)
------- ----------
Net increase ............................... 77,675 $ 863,820
======= ==========
- -------------------------------------------------------------------
- -------------------------------------------------------------------
Growth Opportunity Portfolio
- -------------------------------------------------------------------
Class A Shares for the Year Dollar
Ended January 31, 1998 Shares Amount
- -------------------------------------------------------------------
Shares sold .................................. 11,373 $ 148,959
Shares issued to shareholders in
reinvestment of distributions ................ 959 12,711
------ ----------
Total issued ................................. 12,332 161,670
Shares redeemed .............................. (1,802) (24,112)
------ ----------
Net increase ................................. 10,530 $ 137,558
====== ==========
- -------------------------------------------------------------------
- -------------------------------------------------------------------
Growth Opportunity Portfolio
- -------------------------------------------------------------------
Class A Shares for the Period Dollar
February 2, 1996+ to January 31, 1997 Shares Amount
- -------------------------------------------------------------------
Shares sold ................................. 205,569 $ 2,057,557
Shares redeemed ............................. (200,796) (2,041,351)
-------- -----------
Net increase ................................ 4,773 $ 16,206
======== ===========
- -------------------------------------------------------------------
+ Prior to February 2, 1996 (commencement of operations), the Portfolio
issued 100 shares to MLAM for $1,000.
- -------------------------------------------------------------------
Growth Opportunity Portfolio
- -------------------------------------------------------------------
Class B Shares for the Year Dollar
Ended January 31, 1998 Shares Amount
- -------------------------------------------------------------------
Shares sold ............................... 1,121,578 $14,651,783
Shares issued to shareholders in
reinvestment of distributions ............. 113,008 1,483,802
--------- -----------
Total issued .............................. 1,234,586 16,135,585
Automatic conversion of shares ............ (614) (7,993)
Shares redeemed ........................... (134,463) (1,761,065)
--------- -----------
Net increase .............................. 1,099,509 $14,366,527
========= ===========
- -------------------------------------------------------------------
- -------------------------------------------------------------------
Growth Opportunity Portfolio
- -------------------------------------------------------------------
Class B Shares for the Period Dollar
February 2, 1996+ to January 31, 1997 Shares Amount
- -------------------------------------------------------------------
Shares sold ................................. 886,181 $ 9,203,628
Automatic conversion of shares .............. (947) (10,034)
Shares redeemed ............................. (44,611) (477,407)
------- -----------
Net increase ................................ 840,623 $ 8,716,187
======= ===========
- -------------------------------------------------------------------
+ Prior to February 2, 1996 (commencement of operations), the Portfolio
issued 100 shares to MLAM for $1,000.
- -------------------------------------------------------------------
Growth Opportunity Portfolio
- -------------------------------------------------------------------
Class C Shares for the Year Dollar
Ended January 31, 1998 Shares Amount
- -------------------------------------------------------------------
Shares sold ................................. 619,880 $ 8,145,982
Shares issued to shareholders in
reinvestment of distributions ............... 55,973 734,362
------- -----------
Total issued ................................ 675,853 8,880,344
Shares redeemed ............................. (89,393) (1,181,122)
------- -----------
Net increase ................................ 586,460 $ 7,699,222
======= ===========
- -------------------------------------------------------------------
- -------------------------------------------------------------------
Growth Opportunity Portfolio
- -------------------------------------------------------------------
Class C Shares for the Period Dollar
February 2, 1996+ to January 31, 1997 Shares Amount
- -------------------------------------------------------------------
Shares sold ................................. 429,086 $ 4,441,657
Shares redeemed ............................. (30,877) (324,727)
------- -----------
Net increase ................................ 398,209 $ 4,116,930
======= ===========
- -------------------------------------------------------------------
+ Prior to February 2, 1996 (commencement of operations), the Portfolio
issued 100 shares to MLAM for $1,000.
- -------------------------------------------------------------------
Growth Opportunity Portfolio
- -------------------------------------------------------------------
Class D Shares for the Year Dollar
Ended January 31, 1998 Shares Amount
- -------------------------------------------------------------------
Shares sold .................................. 50,926 $ 667,879
Automatic conversion of shares ............... 607 7,993
Shares issued to shareholders in
reinvestment of distributions ................ 7,535 99,917
------ ----------
Total issued ................................. 59,068 775,789
Shares redeemed .............................. (8,444) (110,726)
------ ----------
Net increase ................................. 50,624 $ 665,063
====== ==========
- -------------------------------------------------------------------
- -------------------------------------------------------------------
Growth Opportunity Portfolio
- -------------------------------------------------------------------
Class D Shares for the Period Dollar
February 2, 1996+ to January 31, 1997 Shares Amount
- -------------------------------------------------------------------
Shares sold .................................. 78,115 $ 811,625
Automatic conversion of shares ............... 944 10,034
------ ----------
Total issued ................................. 79,059 821,659
Shares redeemed .............................. (9,637) (101,285)
------ ----------
Net increase ................................. 69,422 $ 720,374
====== ==========
- -------------------------------------------------------------------
+ Prior to February 2, 1996 (commencement of operations), the Portfolio
issued 100 shares to MLAM for $1,000.
- -------------------------------------------------------------------
Quality Bond Portfolio
- -------------------------------------------------------------------
Class A Shares for the Year Dollar
Ended January 31, 1998 Shares Amount
- -------------------------------------------------------------------
Shares sold ................................ 10,350 $ 102,471
Shares issued to shareholders in
reinvestment of dividends .................. 12,748 125,532
-------- -----------
Total issued ............................... 23,098 228,003
Shares redeemed ............................ (133,027) (1,309,569)
-------- -----------
Net decrease ............................... (109,929) $(1,081,566)
======== ===========
- -------------------------------------------------------------------
50 & 51
<PAGE>
Merrill Lynch Asset Builder Program, Inc., January 31, 1998
NOTES TO FINANCIAL STATEMENTS (continued)
- -------------------------------------------------------------------
Quality Bond Portfolio
- -------------------------------------------------------------------
Class A Shares for the Year Dollar
Ended January 31, 1997 Shares Amount
- -------------------------------------------------------------------
Shares sold ................................... 1,729 $ 5,246
Shares issued to shareholders in
reinvestment of dividends and distributions ... 14,993 159,085
------ ----------
Total issued .................................. 16,722 164,331
Shares redeemed ............................... (298) (2,925)
------ ----------
Net increase .................................. 16,424 $ 161,406
====== ==========
- -------------------------------------------------------------------
- -------------------------------------------------------------------
Quality Bond Portfolio
- -------------------------------------------------------------------
Class B Shares for the Year Dollar
Ended January 31, 1998 Shares Amount
- -------------------------------------------------------------------
Shares sold ................................. 238,564 $ 2,356,757
Shares issued to shareholders
in reinvestment of dividends ................ 28,335 279,605
------- -----------
Total issued ................................ 266,899 2,636,362
Automatic conversion of shares .............. (3,080) (30,343)
Shares redeemed ............................. (152,591) (1,500,368)
------- -----------
Net increase ................................ 111,228 $ 1,105,651
======= ===========
- -------------------------------------------------------------------
- -------------------------------------------------------------------
Quality Bond Portfolio
- -------------------------------------------------------------------
Class B Shares for the Year Dollar
Ended January 31, 1997 Shares Amount
- -------------------------------------------------------------------
Shares sold ................................. 234,175 $ 2,302,903
Shares issued to shareholders
in reinvestment of dividends
and distributions ........................... 23,284 228,615
------- -----------
Total issued ................................ 257,459 2,531,518
Shares redeemed ............................. (61,643) (608,507)
------- -----------
Net increase ................................ 195,816 $ 1,923,011
======= ===========
- -------------------------------------------------------------------
- -------------------------------------------------------------------
Quality Bond Portfolio
- -------------------------------------------------------------------
Class C Shares for the Year Dollar
Ended January 31, 1998 Shares Amount
- -------------------------------------------------------------------
Shares sold ................................. 123,241 $ 1,215,099
Shares issued to shareholders
in reinvestment of dividends ................ 12,781 126,179
------- -----------
Total issued ................................ 136,022 1,341,278
Shares redeemed ............................. (49,669) (489,795)
------- -----------
Net increase ................................ 86,353 $ 851,483
======= ===========
- -------------------------------------------------------------------
- -------------------------------------------------------------------
Quality Bond Portfolio
- -------------------------------------------------------------------
Class C Shares for the Year Dollar
Ended January 31, 1997 Shares Amount
- -------------------------------------------------------------------
Shares sold ................................. 124,149 $ 1,218,787
Shares issued to shareholders
in reinvestment of dividends
and distributions ........................... 9,844 96,601
------- ------------
Total issued ................................ 133,993 1,315,388
Shares redeemed ............................. (50,842) (498,626)
------- ------------
Net increase ................................ 83,151 $ 816,762
======= ============
- -------------------------------------------------------------------
- -------------------------------------------------------------------
Quality Bond Portfolio
- -------------------------------------------------------------------
Class D Shares for the Year Dollar
Ended January 31, 1998 Shares Amount
- -------------------------------------------------------------------
Shares sold ................................. 18,271 $ 179,315
Automatic conversion of shares .............. 3,079 30,343
Shares issued to shareholders in
reinvestment of dividends ................... 3,192 31,498
------ ---------
Total issued ................................ 24,542 241,156
Shares redeemed ............................. (10,326) (100,923)
------ ---------
Net increase ................................ 14,216 $ 140,233
====== =========
- -------------------------------------------------------------------
- -------------------------------------------------------------------
Quality Bond Portfolio
- -------------------------------------------------------------------
Class D Shares for the Year Dollar
Ended January 31, 1997 Shares Amount
- -------------------------------------------------------------------
Shares sold .................................. 29,757 $ 292,294
Shares issued to shareholders in
reinvestment of dividends and distributions .. 2,068 20,304
------ ---------
Total issued ................................. 31,825 312,598
Shares redeemed .............................. (7,148) (70,042)
------ ---------
Net increase ................................. 24,677 $ 242,556
====== =========
- -------------------------------------------------------------------
- -------------------------------------------------------------------
US Government Securities Portfolio
- -------------------------------------------------------------------
Class A Shares for the Year Dollar
Ended January 31, 1998 Shares Amount
- -------------------------------------------------------------------
Shares sold ................................. 15,526 $ 160,174
Shares issued to shareholders in
reinvestment of dividends and distributions . 28,552 293,404
-------- -----------
Total issued ................................ 44,078 453,578
Shares redeemed ............................. (175,447) (1,802,826)
-------- -----------
Net decrease ................................ (131,369) $(1,349,248)
======== ===========
- -------------------------------------------------------------------
- -------------------------------------------------------------------
US Government Securities Portfolio
- -------------------------------------------------------------------
Class A Shares for the Year Dollar
Ended January 31, 1997 Shares Amount
- -------------------------------------------------------------------
Shares sold ................................. 3,546 $ 36,344
Shares issued to shareholders in
reinvestment of dividends and distributions . 32,786 334,190
-------- ----------
Total issued ................................ 36,332 370,534
Shares redeemed ............................. (117,931) (1,201,716)
-------- ----------
Net decrease ................................ (81,599) $ (831,182)
======== ==========
- -------------------------------------------------------------------
- -------------------------------------------------------------------
US Government Securities Portfolio
- -------------------------------------------------------------------
Class B Shares for the Year Dollar
Ended January 31, 1998 Shares Amount
- -------------------------------------------------------------------
Shares sold ................................. 276,296 $ 2,869,324
Shares issued to shareholders in reinvestment
of dividends and distributions .............. 24,351 250,752
------- -----------
Total issued ................................ 300,647 3,120,076
Automatic conversion of shares .............. (2,614) (26,842)
Shares redeemed ............................. (108,297) (1,114,491)
------- -----------
Net increase ................................ 189,736 $ 1,978,743
======= ===========
- -------------------------------------------------------------------
- -------------------------------------------------------------------
US Government Securities Portfolio
- -------------------------------------------------------------------
Class B Shares for the Year Dollar
Ended January 31, 1997 Shares Amount
- -------------------------------------------------------------------
Shares sold ................................. 186,113 $ 1,900,921
Shares issued to shareholders in reinvestment
of dividends and distributions .............. 18,945 193,085
------- -----------
Total issued ................................ 205,058 2,094,006
Automatic conversion of shares .............. (3,692) (37,683)
Shares redeemed ............................. (49,105) (500,968)
------- -----------
Net increase ................................ 152,261 $ 1,555,355
======= ===========
- -------------------------------------------------------------------
- -------------------------------------------------------------------
US Government Securities Portfolio
- -------------------------------------------------------------------
Class C Shares for the Year Dollar
Ended January 31, 1998 Shares Amount
- -------------------------------------------------------------------
Shares sold ................................. 63,483 $ 652,334
Shares issued to shareholders in reinvestment
of dividends and distributions .............. 11,384 117,111
------ ----------
Total issued ................................ 74,867 769,445
Shares redeemed ............................. (50,945) (524,818)
------ ----------
Net increase ................................ 23,922 $ 244,627
====== ==========
- -------------------------------------------------------------------
- -------------------------------------------------------------------
US Government Securities Portfolio
- -------------------------------------------------------------------
Class C Shares for the Year Dollar
Ended January 31, 1997 Shares Amount
- -------------------------------------------------------------------
Shares sold .................................. 92,431 $ 942,477
Shares issued to shareholders in reinvestment
of dividends and distributions ............... 8,932 91,008
------- ----------
Total issued ................................. 101,363 1,033,485
Shares redeemed .............................. (33,002) (336,458)
------- ----------
Net increase ................................. 68,361 $ 697,027
======= ==========
- -------------------------------------------------------------------
- -------------------------------------------------------------------
US Government Securities Portfolio
- -------------------------------------------------------------------
Class D Shares for the Year Dollar
Ended January 31, 1998 Shares Amount
- -------------------------------------------------------------------
Shares sold .................................. 9,830 $ 100,818
Automatic conversion of shares ............... 2,611 26,842
Shares issued to shareholders in reinvestment
of dividends and distributions ............... 1,742 17,916
------ ---------
Total issued ................................. 14,183 145,576
Shares redeemed .............................. (14,749) (151,042)
------ ---------
Net decrease ................................. (566) $ (5,466)
====== =========
- -------------------------------------------------------------------
- -------------------------------------------------------------------
US Government Securities Portfolio
- -------------------------------------------------------------------
Class D Shares for the Year Dollar
Ended January 31, 1997 Shares Amount
- -------------------------------------------------------------------
Shares sold .................................. 14,460 $ 147,648
Automatic conversion of shares ............... 3,691 37,683
Shares issued to shareholders in reinvestment
of dividends and distributions ............... 1,438 14,664
------ ----------
Total issued ................................. 19,589 199,995
Shares redeemed .............................. (6,300) (64,350)
------ ----------
Net increase ................................. 13,289 $ 135,645
====== ==========
- -------------------------------------------------------------------
5. Commitments:
At January 31, 1998, the Global Opportunity Portfolio had entered into foreign
exchange contracts, in addition to the contracts listed in the Schedule of
Investments, under which it had agreed to purchase foreign currency with an
approximate value of $161,000.
6. Loaned Securities:
At January 31, 1998, the US Government Securities Portfolio held US Treasury
Notes having aggregate value of approximately $1,011,000 as collateral for
portfolio securities loaned having a market value of approximately $1,010,000.
52 & 53
<PAGE>
Merrill Lynch Asset Builder Program, Inc., January 31, 1998
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders,
Merrill Lynch Asset Builder Program, Inc.:
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments, of Fundamental Value, Global Opportunity, Growth
Opportunity, Quality Bond and US Government Securities Portfolios of Merrill
Lynch Asset Builder Program, Inc. (the "Program") as of January 31, 1998, the
related statements of operations for the year then ended and changes in net
assets for each of the periods in the two-year period then ended, and the
financial highlights for the periods presented. These financial statements and
the financial highlights are the responsibility of the Program's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at January
31, 1998 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Fundamental Value,
Global Opportunity, Growth Opportunity, Quality Bond and US Government
Securities Portfolios of Merrill Lynch Asset Builder Program, Inc. as of January
31, 1998, the results of their operations, the changes in their net assets, and
the financial highlights for the respective stated periods in conformity with
generally accepted accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
March 20, 1998
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
Geraldine C. Gunn, Senior Vice President
Jay C. Harbeck, Senior Vice President
Norman R. Harvey, Senior Vice President
Robert J. Martorelli, Senior Vice President
Gregory Mark Maunz, Senior Vice President
Joseph T. Monagle Jr., Senior Vice President
Thomas R. Robinson, Senior Vice President
Donald C. Burke, Vice President
Lawrence R. Fuller, Vice President
Kevin M. Rendino, 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
54 & 55
<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--1/98
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