MERRILL LYNCH
ASSET BUILDER
PROGRAM, INC.
FUND LOGO
Semi-Annual Report
July 31, 1998
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
Printed on post-consumer recycled paper
Merrill Lynch Asset Builder Program, Inc.
Officers and
Directors
Arthur Zeikel, President and Director
Joe Grills, Director
Walter Mintz, Director
Robert S. Salomon Jr., Director
Melvin R. Seiden, Director
Stephen B. Swensrud, Director
Terry K. Glenn, Executive Vice President
Christopher G. Ayoub, Senior Vice President
Lawrence R. Fuller, Senior Vice President
Geraldine C. Gunn, Senior Vice President
Jay C. Harbeck, Senior Vice President
Norman R. Harvey, 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
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
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
Merrill Lynch Asset Builder Program, Inc., July 31, 1998
DEAR SHAREHOLDER
We are pleased to provide you with this semi-annual report for
Merrill Lynch Asset Builder Program, Inc. The Program consists of
five separate diversified portfolios, each with its own investment
objectives.
Complete performance information for all five portfolios can be
found on pages 7--10 of this report to shareholders.
Fundamental Value Portfolio
The quarter ended July 31, 1998 proved to be a particularly
turbulent one as the crisis in the Pacific Rim once again returned
to the forefront. Reflecting the economic dislocations resulting
from this crisis, many US companies expressed weaker profits
outlooks, provoking considerable investor anxiety. At first,
investors shrugged off the concerns, enabling the US stock market to
reach record highs. However, as the July quarter drew to a close,
the market once again succumbed to selling pressure. The unmanaged
Standard and Poor's 500 (S&P 500) Index ended the quarter with a
modest +1.18% total return.
The slight gain in the S&P 500 masks the considerable weakness
experienced in the bulk of the component issues. With concerns
mounting regarding the potential fallout from Asia's economic woes,
investors flocked to the perceived safety and security of an elite
group of large-capitalization growth issues. Investors shunned
equities affected by the situation in Asia, particularly those in
the basic industry, energy and technology sectors. Consequently,
valuations for such "value" equities languished at depressed levels,
while market-favored issues soared to lofty heights. For example,
price/earnings multiples on growth companies such as The Coca-Cola
Co., Lucent Technologies, Inc. and Pfizer, Inc. rose to near 45
times 1999 estimated earnings per share, while value issues such as
Sears, Roebuck & Co., Allstate Corporation and Crown Cork & Seal
Company, Inc. labored at approximately 13 times 1999 earnings per
share estimates. The dichotomy in the market is further evidenced by
the divergent performance of the unmanaged Morgan Stanley Consumer
and Cyclical Indexes, which gained 2.7% and declined 12%,
respectively, in the three-month period.
Against this market backdrop, the performance of Fundamental Value
Portfolio suffered during the quarter. Particularly weak during the
July quarter were basic industry, energy and retail holdings.
Standout performers included Ford Motor Co. (+24.4%), Eastman Kodak
Co. (+16.2%), International Business Machines Corp. (+14.3%) and
Novell, Inc. (+13.8%).
Capitalizing on the weakness in many value equities, we introduced
eight new positions to the Portfolio while eliminating six. New
commitments included two turnaround situations, General Mills, Inc.
and 3Com Corporation. General Mills has underperformed the market
for several years, reflecting competitive conditions in the cold
cereal market. The category has faced sluggish growth, share gains
by private label and low-priced bagged cereals, and increased trade
promotion by industry participants. We believed the outlook for
General Mills was improving, based on restructuring actions and a
less onerous pricing environment. Shares of this leading company
were available at a 25% discount to comparable companies'
price/earnings ratios and offered a dividend yield double that
provided by the S&P 500 Index.
3Com Corporation, a leading provider of a broad range of networking
equipment, has been a stock market laggard for some time, reflecting
the company's weak operating results. The problems stem from merger
integration challenges, excessive inventories, and intense
competitive conditions. We believed the company's prospects were
poised to improve, based on significant new product flows, a lean
inventory position and a heightened focus on cost control. 3Com was
available 68% below its 1997 high and at a reasonable 15 times
calendar 1999 estimated earnings per share.
In the energy area, we initiated a position in Sonat, Inc., a
natural gas company, and added to our existing commitments in
Diamond Offshore Drilling, Inc. and Royal Dutch Petroleum Company.
Petroleum and natural gas equities have been poor market performers,
reflecting the weak commodity price environment and resultant
lackluster earnings progress. We viewed the weaknesses as providing
buying opportunities in these reasonably valued shares. We believed
the fundamental outlook for energy markets will strengthen going
forward, reflecting expected Organization of Petroleum Exporting
Countries' production restraint and an improved demand outlook as
Asia stabilizes and as El Nino's adverse influence begins to
moderate.
Other new Portfolio additions included four positions in the
financial sector, increasing our weighting in that category to 13.3%
of net assets at July 31, 1998 from 8% at April 30, 1998. We had cut
back our exposure to financials in the past, but with share prices
for the group in a tight trading range recently and with valuations
remaining reasonable relative to the market, we believed the shares
offered attractive appreciation potential. New commitments in this
sector included Allstate Corporation, National City Corporation,
PartnerRe Ltd. and Travelers Group Inc.
Completed sales in the period included Humana, Inc., the subject of
a takeover; Black & Decker Corporation, which had reached our price
target; and Circus Circus Enterprises Inc. and Exabyte Corp., whose
fundamentals no longer appeared promising. Partial sales included
Pharmaceutical Product Development, Inc., AT&T Corp., Enron Corp.
and Kmart Corporation, as these shares neared our price targets.
The past several quarters have proven particularly challenging for
value investors as the market shunned many issues in our investment
universe. We continue to believe a strict value-oriented approach to
stock selection will prove beneficial to investors over the long
term. Indeed, we remain convinced that investors' current disdain
for lower-multiple issues has created many attractive investment
opportunities. We have capitalized on some of these opportunities
and expect to continue to do so in the weeks and months ahead. In
the meantime, Fundamental Value Portfolio continues to present
attractive valuation characteristics. On average, the Portfolio's
holdings have price/earnings multiples 35% below that of the S&P 500
and price/book ratios at a 65% discount to the market benchmark.
Global Opportunity Portfolio
As of July 31, 1998, the asset allocation for Global Opportunity
Portfolio was: foreign stocks, 39% of net assets; US stocks, 29%;
foreign bonds, 12%; US bonds, 14%; and cash reserves, 6%.
Concern that weakness in Asian economies could have a growing impact
on the United States and Europe led us to shift assets from foreign
and US stocks into US bonds and cash reserves during the three
months ended July 31, 1998. During the July quarter, we increased
the Portfolio's allocation to US bonds from 9% of net assets to 14%.
We maintained the average duration of our US fixed-income commitment
near the six-year level. Evidence of a slowdown in the US economy as
of the end of July reduced the risk of a significant upward spike in
US interest rates. Strength in US consumer demand was being
increasingly offset by weakness in US manufacturing as depressed
economic conditions in Asia negatively impacted US exports. At the
same time, inflation seemed likely to remain subdued in coming
quarters.
In the foreign bond sector, Portfolio representation was limited to
Germany, the United Kingdom and Sweden. We regarded German and UK
bonds as attractive safe-haven investments during a time of
instability in Asia and Eastern Europe. Yields of Swedish bonds
remained attractive compared to the remainder of Europe. Given our
expectation of renewed strength in the US dollar relative to
European currencies, we maintained our hedges against commitments in
European stocks and bonds. We also retained the hedge against
Japanese equities.
We reduced our US equity commitment from 34% of net assets to 29%
during the July quarter. Within the residual US equity position, we
emphasized the shares of companies that we believed could benefit
from a healthy US economy and a high level of consumer confidence.
We also preferred companies that have limited exposure to the
economic problems in Asia. At July 31, 1998, the largest weighting
was in consumer-related sectors, both cyclicals and staples. We
maintained significant representation in the financial services
sector. We reduced the Portfolio's representation in the largest-
capitalization issues through the sales of positions in Microsoft
Corporation and The Walt Disney Company.
During the July quarter, we reduced our representation in foreign
equities from 41% of net assets to 39%. We continued to place
emphasis on European companies that enjoyed positive fundamentals
despite Asian economic weakness. We also stressed areas that offer
strong prospects for consolidation and corporate restructuring.
Sectors that have appeal on this basis included aerospace, auto
parts and financial services. On the other hand, concern over the
Japanese economy led us to remain underweighted in Japanese equities
relative to the benchmark unmanaged Morgan Stanley Europe, Australia
Far East Index. We also continued to reduce the commitment to
emerging markets, with representation now limited to Mexico.
Merrill Lynch Asset Builder Program, Inc., July 31, 1998
Growth Opportunity Portfolio
For the quarter ended July 31, 1998, total returns for Growth
Opportunity Portfolio's Class A, Class B, Class C and Class D Shares
were +4.11%, +3.86%, +3.80% and +4.04%, respectively, exceeding the
total return for the unmanaged Standard & Poor's 500 (S&P 500) Index
of +1.18%. (Fund performance does not reflect sales charges and
would be lower if sales charges were included.) The Portfolio's
outperformance was attributable primarily to eight of the
Portfolio's top ten equity holdings providing better total returns
than the S&P 500 during the July quarter. Among these holdings, the
most significant absolute and relative investment returns were
provided by Wal-Mart Stores, Inc. (the largest equity holding in the
Portfolio), Microsoft Corporation, SAP AG, Cisco Systems, Inc. and
COMPAQ Computer Corp. The top ten equity holdings made up
approximately 30% of the Portfolio's net assets at July 31, 1998.
During the last six months, the industry sector that contributed
most to the positive absolute and relative investment performance
was computer software, which had the largest industry weighting at
the end of the July quarter at 9.1% of net assets. Other industries
of importance to Portfolio performance were communication equipment
(8.0% of net assets), specialty retailing (6.2%) and retail stores
(4.9%). The top ten industry sectors made up approximately 63% of
the Portfolio's net assets at the close of the July quarter.
Investment activities during the July quarter resulted in a
significant increase in the Portfolio's weighting in
telecommunications. We added Cable & Wireless PLC to the Portfolio
because of its attractive valuation relative to improving growth and
investment returns for its wireless phone operations and improving
prospects in Asia. We purchased shares of America Online, Inc.
because of continued rapid growth of the subscriber base and
improving revenue growth from advertising fees and license revenues.
Also, we added to positions in Sprint Corporation and Worldcom, Inc.
Telecommunications made up 5.8% of net assets at the close of the
July quarter as compared to 4.4% at the close of the April quarter.
Other companies added to the Portfolio during the quarter included
NationsBank Corporation and Safeway, Inc. In both situations, we
anticipated that significant improvements in rates of return and
earnings growth would emerge over the next several years as the
companies' managements accomplish major reorganizations and internal
restructuring.
Corporate earnings for the second quarter of 1998 appear to have
been modestly better than the cautious expectations of most
forecasters. Wholesale commodity and consumer price inflation do not
appear to be a problem. An above-average rate of growth in real
wages continues to translate into robust real growth in consumer
spending on apparel, healthcare, computers, entertainment and most
categories of services and nondurable goods. Our investment focus
continues to be on relatively large-capitalization growth companies
where we believe the stock valuations are reasonable relative to the
long-term expectations for above-average growth in earnings and
improving rates of return. We continue with a relatively fully
invested portfolio, with cash and cash equivalents equal to less
than 5% of net assets at July 31, 1998.
Quality Bond Portfolio
Although the overall trend in US interest rates since February 1998
has been a further flattening of the yield curve, fixed-income
markets have exhibited a significant degree of volatility, with
spread relationships widening among different types of bonds. With
respect to the investment-grade corporate bond market, yield spreads
versus Treasury issues have been somewhat impacted by the
significant increase in new underwritings coming to market, as well
as concerns regarding the sustainability of corporate profits and
the spillover effect of the situation in Asia. Recently, a number of
new issues have been postponed as a result of less-than-optimal
market conditions.
As we entered the six-month period ended July 31, 1998, our
investment strategy remained focused on efforts to take advantage of
the wider spreads that had developed within the A/BBB-rated credit
sectors of the corporate bond market. We accomplished this through a
reduction in our holdings of US Treasury securities as well as a
modest reduction in several AAA/AA-rated securities we believed were
overvalued. For example, we sold a McDonald's Corp. ten-year issue
at 45 basis points (0.45%) over the ten-year Treasury note, and
reinvested the proceeds in a duration-neutral Hospitality Properties
Trust issue at 160 basis points over the ten-year Treasury note. The
real estate investment trust sector was one in which we were
underweighted relative to the Merrill Lynch Corporate Master Index,
although we have since adopted an overweighted posture given the
attractive spread scenario. Another swap involved the sale of
Kimberly-Clark Corp. to purchase TCI Communication Inc. In this
case, we not only sought the incremental yield that the lower-rated
TCI generated, but we also believed that TCI had a more favorable
relative value. Specifically, it was our opinion that the
communications sector would continue to benefit from strong
fundamentals, and that TCI was properly positioned to take advantage
of the growth opportunities. In TCI's case, our opinion was rewarded
with the recent announcement that AT&T Corp. would be acquiring TCI.
By mid-March, investor nervousness once again heightened as the
investigations into the allegations of inappropriate conduct by
President Clinton intensified, providing the backdrop for a
steepening of the Treasury yield curve. As was the situation in late
January, the 30-year Treasury bond climbed above the critical 6%
level. We view this situation as an opportunity to add to the
Portfolio's longer-term Treasury positions, to seek to take
advantage of what we believe to be short-lived investor nervousness.
As the curve flattened, and given the volatility that fixed-income
markets were exhibiting, these trading positions unwound. It is
likely that a key component of the Portfolio's investment strategy
will continue to be identifying and taking advantage of short-term
overbought or oversold situations, especially in the US Treasury
market.
As we approached mid-year, corporate spreads trended wider versus
the Treasury market, a situation supported by a number of factors
including concerns surrounding the sustainability of corporate
profits, the deterioration of emerging markets and record issuance
as companies seek to lock in attractive funding levels. These
factors had a direct effect on investor sentiment regarding new
underwritings coming to market. As a result, a number of
transactions were either canceled ($600 million 30-year
International Paper Co.), downsized (Time Warner Entertainment Co.
from $1 billion to $600 million and Dillard's Inc. from $1.6 billion
to $1 billion), or issued at 5 basis points--15 basis points behind
initial pricing estimates. Adding further to the spread effect was
the strong performance of the Treasury market following a renewed
flight to quality. Specifically, economic conditions and liquidity
issues were rapidly deteriorating in Russia, while Japan's
leadership had yet to decide on a credible plan to revitalize its
ailing economy. Accordingly, the US dollar pushed substantially
higher, despite coordinated efforts to limit its rise. By early
July, the 30-year Treasury bond traded as low as 5.57%, with the
spread versus the two-year Treasury note compressing to under 20
basis points.
Looking ahead, we will continue to focus on the diversification
strategy we implemented during the early part of 1998. If yield
spreads continue to widen, we expect to consider adding to our
positions of high-quality BB spread product in sectors that we
believe have attractive long-term potential. Furthermore, we believe
asset-backed securities will continue to produce some very
attractive investment supplements to corporate bonds, both floating
and fixed rate.
Merrill Lynch Asset Builder Program, Inc., July 31, 1998
US Government Securities
Portfolio
The US economy continues to grow at a faster-than-expected pace.
Second calendar quarter gross domestic product, the total output of
goods and services, expanded at a 1.4% annual pace as heavy consumer
spending offset a drop in exports and inventory buildup. Heavy
consumer spending was fueled by low inflation and high employment.
Consumer and producer prices, as measured by the Consumer Price
Index and Producer Price Index, respectively, remain near or at
historical lows. Current low inflation is aided by the financial
crisis in Asia because competition from falling import prices makes
it difficult for companies to pass on costs and increase prices. The
employment cost index--the broadest measure of wage, salary and
benefit costs, and an index watched closely by the Federal Reserve
Board--registered a restrained increase in the second quarter.
Federal Reserve Board Chairman Alan Greenspan's ongoing concern has
been that rising labor costs may pose an inflationary threat.
Employment, though off its high seen earlier in the July quarter,
remains strong. In addition, the unemployment rate has remained
below 5% for more than a year. High employment and benign inflation
are keeping American consumers optimistic about current business
conditions. Consumer confidence, though falling to 135.4 in July,
reached a 30-year high of 138.7 during the July quarter.
The US Treasury yield curve continued to flatten during the six
months ended July 31, 1998. The two-year-- ten-year Treasury yield
spread compressed almost 20 basis points (0.20%), ending the six-
month period with only a single basis point difference in yield. The
flattening of this part of the Treasury curve was largely attributed
to intermediate-term Treasury note yields moving higher. Two-year,
three-year and five-year Treasury note yields ended the quarter 18
basis points, 14 basis points and 12 basis points higher,
respectively. Additionally, the 10-year and 30-year Treasury yields
were lower by 2 basis points and 9 basis points, respectively,
contributing to the flattening.
Although the ten-year Treasury note, a benchmark for mortgage-backed
securities (MBS), ended the July quarter only marginally lower from
where it began, it still is low enough for prepayment fears to be a
concern. We continued to avoid those MBS which we believed were the
most susceptible to the refinancing risk. We continued to overweight
Government National Mortgage Association (GNMA) MBS, which typically
have slower prepayments than conventional MBS. In addition to having
slower prepayments, GNMA MBS had better performance for the six-
month period. For example, GNMA 6.50%, 7% and 7.50%, which make up
over 25% of the Portfolio, outperformed similar coupon conventional
issues by 10 basis points, 20 basis points and 30 basis points,
respectively, for the six months ended July 31, 1998. Another 18% of
the Portfolio was invested in 15-year conventional 6.50% MBS whose
underlying homeowners currently have little incentive to refinance.
The Federal Home Loan Mortgage Corporation 11.50% position makes up
another 9% of the Portfolio. This security adds current income
through its coupon while continually experiencing favorable
prepayment rates. During the quarter, we purchased a Federal
National Mortgage Association multi-family pool. This security has
lockout and yield maintenance provisions that limit prepayments,
which are very favorable in the current low interest rate
environment. Finally, the Portfolio had a 28% US Treasury position,
which has no prepayment risk.
We used the Treasury sector of the Portfolio to maintain duration
while being heavily weighted in attractive high-yield MBS. This
strategy has worked well as long-term Treasury issues benefited from
a flattening yield curve and MBS benefited from historically low
volatility. During the six-month period, we also took advantage of
dollar rolls (when demand for a security causes its forward price to
be lower than its cost of carry) and lending of securities,
benefiting the Portfolio's performance.
In Conclusion
We thank you for your investment in Merrill Lynch Asset Builder
Program, Inc., and we look forward to reviewing our outlook and
strategy with you again in our upcoming quarterly report to
shareholders.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Geraldine C. Gunn)
Geraldine C. Gunn
Senior Vice President and
Portfolio Manager
Fundamental Value Portfolio
(Thomas R. Robinson)
Thomas R. Robinson
Senior Vice President and
Portfolio Manager
Global Opportunity Portfolio
(Lawrence R. Fuller)
Lawrence R. Fuller
Senior Vice President and
Portfolio Manager
Growth Opportunity Portfolio
(Jay C. Harbeck)
Jay C. Harbeck
Senior Vice President and
Portfolio Manager
Quality Bond Portfolio
(Gregory Mark Maunz)
Gregory Mark Maunz
Senior Vice President and
Portfolio Manager
US Government Securities Portfolio
September 10, 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:
* Class A Shares incur a maximum initial sales charge (front-end
load) of 5.25% and bear no ongoing distribution or account
maintenance fees for Fundamental Value, Global Opportunity and
Growth Opportunity Portfolios. Quality Bond and US Government
Securities Portfolios incur a maximum initial sales charge (front-
end load) of 4% and bear no ongoing distribution or account
maintenance fees. Class A Shares are available only to eligible
investors.
* Class B Shares are subject to a maximum contingent deferred sales
charge of 4% if redeemed during the first year, decreasing 1% each
year thereafter to 0% after the fourth year for Fundamental Value,
Global Opportunity, Growth Opportunity, Quality Bond and US
Government Securities Portfolios. In addition, Quality Bond and US
Government Securities Portfolios are subject to a distribution fee
of 0.50% and an account maintenance fee of 0.25%. Fundamental Value,
Global Opportunity and Growth Opportunity Portfolios are subject to
a 0.75% distribution fee and a 0.25% account maintenance fee.
Fundamental Value, Global Opportunity and Growth Opportunity
Portfolios automatically convert to Class D Shares after
approximately 8 years. Quality Bond and US Government Securities
Portfolios automatically convert to Class D Shares after
approximately 10 years. (There is no initial sales charge for
automatic share conversions.)
* Class C Shares are subject to a distribution fee of 0.55% and an
account maintenance fee of 0.25% for Quality Bond and US Government
Securities Portfolios. Fundamental Value, Global Opportunity and
Growth Opportunity Portfolios are subject to a distribution fee of
0.75% and an account maintenance fee of 0.25%. In addition, Class C
Shares are subject to a 1% contingent deferred sales charge if
redeemed within one year of purchase.
* Class D Shares incur a maximum initial sales charge of 5.25% and
an account maintenance fee of 0.25% (but no distribution fee) for
Fundamental Value, Global Opportunity and Growth Opportunity
Portfolios. Quality Bond and US Government Securities Portfolios
incur a maximum initial sales charge of 4% and an account
maintenance fee of 0.25% (but no distribution fee).
None of the past results shown should be considered a representation
of future performance. Figures shown in the "Recent Performance
Results" and "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.
Merrill Lynch Asset Builder Program, Inc., July 31, 1998
PERFORMANCE DATA (continued)
Fundamental
Value Portfolio
Average Annual
Total Returns
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 6/30/98 +19.58% +13.30%
Inception (2/01/95) to 6/30/98 +20.96 +19.06
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 6/30/98 +18.28% +14.28%
Inception (2/01/95) to 6/30/98 +19.68 +19.49
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Year Ended 6/30/98 +18.22% +17.22%
Inception (2/01/95) to 6/30/98 +19.67 +19.67
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Sales Charge Sales Charge**
Class D Shares*
Year Ended 6/30/98 +19.28% +13.02%
Inception (2/01/95) to 6/30/98 +20.68 +18.79
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
Global
Opportunity Portfolio
Average Annual
Total Returns
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 6/30/98 + 6.03% + 0.46%
Inception (2/01/95) to 6/30/98 +11.85 +10.09
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 6/30/98 + 4.81% + 1.01%
Inception (2/01/95) to 6/30/98 +10.65 +10.42
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Year Ended 6/30/98 + 4.75% + 3.80%
Inception (2/01/95) to 6/30/98 +10.60 +10.60
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Sales Charge Sales Charge**
Class D Shares*
Year Ended 6/30/98 + 5.69% +0.14%
Inception (2/01/95) to 6/30/98 +11.59 +9.84
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
Growth
Opportunity
Portfolio
Average Annual
Total Returns
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 6/30/98 +30.58% +23.72%
Inception (2/02/96) to 6/30/98 +26.07 +23.28
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 6/30/98 +29.20% +25.20%
Inception (2/02/96) to 6/30/98 +24.78 +24.17
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Year Ended 6/30/98 +29.04% +28.04%
Inception (2/02/96) to 6/30/98 +24.71 +24.71
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Sales Charge Sales Charge**
Class D Shares*
Year Ended 6/30/98 +30.27% +23.43%
Inception (2/02/96) to 6/30/98 +25.87 +23.08
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
Quality Bond
Portfolio
Average Annual
Total Returns
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 6/30/98 +10.86% +6.42%
Inception (2/01/95) to 6/30/98 + 7.39 +6.11
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 6/30/98 +9.86% +5.86%
Inception (2/01/95) to 6/30/98 +6.46 +6.21
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Year Ended 6/30/98 +9.90% +8.90%
Inception (2/01/95) to 6/30/98 +6.39 +6.39
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Sales Charge Sales Charge**
Class D Shares*
Year Ended 6/30/98 +10.48% +6.06%
Inception (2/01/95) to 6/30/98 + 7.09 +5.82
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
US Government
Securities
Portfolio
Average Annual
Total Returns
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 6/30/98 +10.11% +5.71%
Inception (2/01/95) to 6/30/98 + 9.71 +8.40
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 6/30/98 +9.25% +5.25%
Inception (2/01/95) to 6/30/98 +8.82 +8.58
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Year Ended 6/30/98 +9.18% +8.18%
Inception (2/01/95) to 6/30/98 +8.76 +8.76
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Sales Charge Sales Charge**
Class D Shares*
Year Ended 6/30/98 +9.84% +5.45%
Inception (2/01/95) to 6/30/98 +9.42 +8.12
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
Merrill Lynch Asset Builder Program, Inc., July 31, 1998
PERFORMANCE DATA (concluded)
<TABLE>
Recent
Performance
Results*
<CAPTION>
12 Month 3 Month Since Standardized
Total Total Inception 30-day Yield
Return Return Total Return As of 7/31/98
<S> <C> <C> <C> <C>
Fundamental Value Portfolio Class A Shares + 7.63% -8.24% +81.87% --
Fundamental Value Portfolio Class B Shares + 6.45 -8.52 +75.21 --
Fundamental Value Portfolio Class C Shares + 6.39 -8.53 +75.15 --
Fundamental Value Portfolio Class D Shares + 7.37 -8.34 +80.41 --
Global Opportunity Portfolio Class A Shares - 0.67 -0.51 +45.15 --
Global Opportunity Portfolio Class B Shares - 1.74 -0.75 +39.79 --
Global Opportunity Portfolio Class C Shares - 1.80 -0.76 +39.66 --
Global Opportunity Portfolio Class D Shares - 0.87 -0.53 +44.07 --
Growth Opportunity Portfolio Class A Shares +18.67 +4.11 +74.21 --
Growth Opportunity Portfolio Class B Shares +17.38 +3.86 +69.73 --
Growth Opportunity Portfolio Class C Shares +17.32 +3.80 +69.53 --
Growth Opportunity Portfolio Class D Shares +18.36 +4.04 +73.40 --
Quality Bond Portfolio Class A Shares + 7.68 +2.11 +27.50 6.11%
Quality Bond Portfolio Class B Shares + 6.82 +1.92 +23.70 5.61
Quality Bond Portfolio Class C Shares + 6.75 +1.91 +23.39 5.56
Quality Bond Portfolio Class D Shares + 7.41 +2.05 +26.28 5.86
US Government Securities Portfolio Class A Shares + 8.18 +1.85 +37.73 6.13
US Government Securities Portfolio Class B Shares + 7.33 +1.65 +33.88 5.63
US Government Securities Portfolio Class C Shares + 7.27 +1.64 +33.59 5.58
US Government Securities Portfolio Class D Shares + 8.01 +1.78 +36.60 5.88
<FN>
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included. Total
investment returns are based on changes in net asset values for the
periods shown, and assume reinvestment of all dividends and capital
gains distributions at net asset value on the ex-dividend or payable
date. The Program's inception dates are: Fundamental Value
Portfolio, Global Opportunity Portfolio, Quality Bond Portfolio and
US Government Securities Portfolio, 2/01/95; and Growth Opportunity
Portfolio, 2/02/96.
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
Fundamental Value Portfolio
MIDDLE Shares Value Percent of
EAST Industries Held Investments Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
Israel Computer Services 150,000 ++Scitex Corp. Ltd. $ 1,496,111 $ 1,753,125 1.8%
Total Investments in the
Middle East 1,496,111 1,753,125 1.8
NORTH
AMERICA
United Automotive 20,000 Ford Motor Co. 429,535 1,138,750 1.2
States 25,000 General Motors Corp. 1,286,517 1,807,813 1.9
----------- ----------- ------
1,716,052 2,946,563 3.1
Banking & Financials 13,000 Associates First Capital Corporation 751,607 1,009,938 1.1
15,000 Bankers Trust New York Corp. 1,157,132 1,680,938 1.8
80,000 Hibernia Corp. (Class A) 948,558 1,510,000 1.6
20,000 National City Corporation 1,390,249 1,337,500 1.4
25,000 Travelers Group Inc. 1,587,437 1,675,000 1.8
5,000 Wells Fargo & Company 1,274,628 1,779,375 1.9
----------- ----------- ------
7,109,611 8,992,751 9.6
Beverage & 55,000 Seagram Company Ltd. (The) 1,981,064 2,021,250 2.1
Entertainment
Chemicals 28,000 duPont (E.I.) de Nemours & Co. 1,580,055 1,736,000 1.8
40,000 Great Lakes Chemical Corporation 1,544,458 1,577,500 1.7
----------- ----------- ------
3,124,513 3,313,500 3.5
Computer Software 80,000 ++Mentor Graphics Corporation 771,977 770,000 0.8
140,000 ++Novell, Inc. 1,087,444 1,583,750 1.7
----------- ----------- ------
1,859,421 2,353,750 2.5
Computers 23,625 COMPAQ Computer Corporation 665,930 776,672 0.8
Conglomerates 47,000 Tenneco, Inc. 2,030,095 1,703,750 1.8
Cosmetics & Toiletries 35,000 Kimberly-Clark Corporation 1,713,017 1,572,812 1.7
Electric Utilities 42,000 Cinergy Corp. 1,440,557 1,325,625 1.4
Electrical Equipment 30,000 General Signal Corporation 1,229,451 1,196,250 1.3
Fertilizer 40,000 IMC Global, Inc. 1,408,459 1,022,500 1.1
Foods 30,000 General Mills, Inc. 2,065,059 1,858,125 2.0
Gaming 40,000 ++Harrah's Entertainment, Inc. 765,713 845,000 0.9
Health Care 17,500 Aetna Inc. 1,315,639 1,212,969 1.3
Services 45,000 Columbia/HCA Healthcare Corporation 1,398,834 1,282,500 1.4
----------- ----------- ------
2,714,473 2,495,469 2.7
Household Products 20,000 Whirlpool Corporation 1,085,682 1,210,000 1.3
Information 22,000 International Business Machines Corp. 1,309,275 2,915,000 3.1
Processing
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
Fundamental Value Portfolio (concluded)
NORTH AMERICA Shares Value Percent of
(concluded) Industries Held Investments Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
United Insurance 30,000 Allstate Corporation (The) $ 1,396,800 $ 1,273,125 1.3%
States 20,000 PartnerRe Ltd. 997,688 995,000 1.0
(concluded) 65,000 TIG Holdings, Inc. 1,861,888 1,344,688 1.4
----------- ----------- ------
4,256,376 3,612,813 3.7
Machinery 50,000 ITT Industries Inc. 1,177,983 1,743,750 1.8
Medical Services 45,000 ++Pharmaceutical Product
Development, Inc. 708,750 1,046,250 1.1
Metals--Non-Ferrous 45,000 ASARCO Inc. 1,240,590 959,062 1.0
Metals--Precious 60,000 Newmont Mining Corporation 1,814,626 1,132,500 1.2
Natural Gas 21,000 Enron Corp. 796,505 1,111,687 1.2
50,000 Sonat, Inc. 2,051,318 1,462,500 1.5
----------- ----------- ------
2,847,823 2,574,187 2.7
Networking 50,000 ++3Com Corporation 1,302,707 1,234,375 1.3
Oil--Domestic 72,000 Occidental Petroleum Corp. 1,664,031 1,602,000 1.7
20,000 Sun Company, Inc. 623,938 748,750 0.8
----------- ----------- ------
2,287,969 2,350,750 2.5
Oil--International 25,000 Exxon Corporation 1,524,560 1,753,125 1.8
Oil Services 30,000 Diamond Offshore Drilling, Inc. 1,407,556 984,375 1.0
30,000 Dresser Industries, Inc. 927,909 1,059,375 1.1
----------- ----------- ------
2,335,465 2,043,750 2.1
Packaging 32,000 Crown Cork & Seal Company, Inc. 1,502,264 1,316,000 1.4
Paper & Forest 25,000 International Paper Co. 989,942 1,115,625 1.2
Products 70,000 Louisiana-Pacific Corp. 1,551,112 1,395,625 1.5
----------- ----------- ------
2,541,054 2,511,250 2.7
Pharmaceuticals 11,000 Bristol-Myers Squibb Co. 421,102 1,253,312 1.3
40,000 Pharmacia & Upjohn, Inc. 1,326,355 1,895,000 2.0
----------- ----------- ------
1,747,457 3,148,312 3.3
Photography 22,000 Eastman Kodak Co. 1,556,016 1,850,750 2.0
Publishing/Newspapers 27,500 Dow Jones & Company, Inc. 1,021,761 1,493,594 1.6
Railroads 52,000 Union Pacific Corporation 2,863,902 2,184,000 2.3
Retail 85,000 ++Kmart Corporation 961,663 1,386,562 1.5
25,000 Sears, Roebuck & Co. 1,121,527 1,268,750 1.3
45,000 ++Toys `R' Us, Inc. 1,178,997 1,023,750 1.1
40,500 ++Venator Group Inc. (a) 570,707 582,188 0.6
----------- ----------- ------
3,832,894 4,261,250 4.5
Semiconductors 20,000 Texas Instruments Inc. 877,717 1,186,250 1.2
Steel 40,000 USX-US Steel Group, Inc. 1,147,077 1,077,500 1.1
100,000 ++WHX Corp. 902,908 1,118,750 1.2
----------- ----------- ------
2,049,985 2,196,250 2.3
Telecommunications 28,000 AT&T Corp. 994,867 1,697,500 1.8
30,000 Bell Atlantic Corporation 1,379,060 1,361,250 1.4
35,000 GTE Corp. 1,555,539 1,903,125 2.0
30,000 Motorola, Inc. 1,627,289 1,567,500 1.7
----------- ----------- ------
5,556,755 6,529,375 6.9
Total Investments in North America 75,265,026 81,676,610 86.3
WESTERN
EUROPE
Netherlands Oil-- 30,000 Royal Dutch Petroleum Company (NY
International Registered Shares) 1,646,844 1,530,000 1.6
Total Investments in Western Europe 1,646,844 1,530,000 1.6
<CAPTION>
SHORT-TERM Face
SECURITIES Amount Issue
<S> <C> <S> <C> <C> <C>
Commercial US$ 4,000,000 Delaware Funding Corp., 5.52% due
Paper* 9/03/1998 3,979,760 3,979,760 4.2
3,658,000 General Electric Capital Corp.,
5.65% due 8/03/1998 3,656,851 3,656,851 3.9
2,000,000 Park Avenue Receivables Corp.,
5.55% due 8/14/1998 1,995,992 1,995,992 2.1
Total Investments in Short-Term
Securities 9,632,603 9,632,603 10.2
Total Investments $88,040,584 94,592,338 99.9
===========
Other Assets Less Liabilities 95,245 0.1
----------- ------
Net Assets $94,687,583 100.0%
=========== ======
<FN>
*Commercial Paper is traded on a discount basis; the interest rates
shown reflect the discount rates paid at the time of purchase by the
Portfolio.
++Non-income producing security.
(a)Formerly Woolworth Corp.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Asset Builder Program, Inc., July 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
Global Opportunity Portfolio
Face Value Percent of
COUNTRY Amount Foreign Government Obligations Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
Germany Bundesrepublik Deutschland:
DM 1,150,000 6% due 7/04/2007 $ 672,594 $ 708,752 1.0%
850,000 6% due 6/20/2016 472,899 532,080 0.8
3,050,000 5.625% due 1/04/2028 1,728,761 1,806,163 2.7
----------- ----------- ------
2,874,254 3,046,995 4.5
Sweden Government of Sweden:
Skr 15,400,000 5.50% due 4/12/2002 1,956,294 2,007,183 3.0
5,800,000 8% due 8/15/2007 879,521 897,262 1.3
----------- ----------- ------
2,835,815 2,904,445 4.3
United Kingdom UK Treasury Gilt:
Pound 310,000 8% due 12/07/2000 523,871 520,473 0.7
Sterling 750,000 7.25% due 12/07/2007 1,241,406 1,356,602 2.0
----------- ----------- ------
1,765,277 1,877,075 2.7
Total Investments in Foreign
Government Obligations 7,475,346 7,828,515 11.5
US Government Obligations
United States US Treasury Notes and Bonds:
US$ 2,150,000 6% due 8/15/1999 2,153,820 2,160,406 3.2
3,350,000 6.50% due 5/31/2002 3,435,461 3,456,262 5.1
425,000 6.25% due 2/15/2007 428,387 443,726 0.7
635,000 6.625% due 5/15/2007 642,934 679,844 1.0
2,470,000 6.625% due 2/15/2027 2,685,583 2,759,064 4.1
Total Investments in US Government
Obligations 9,346,185 9,499,302 14.1
Total Investments in Foreign & US
Government Obligations 16,821,531 17,327,817 25.6
<CAPTION>
Shares
Industries Held US Stocks
<S> <S> <C> <S> <C> <C> <C>
United Aerospace & Defense 6,000 GenCorp, Inc. 169,941 138,375 0.2
States
Airlines 4,320 ++US Airways Group, Inc. 193,108 324,000 0.5
Auto--Related 5,400 Hertz Corporation (Class A) 204,171 251,438 0.4
Automobile Parts 6,300 Federal-Mogul Corporation 256,062 378,788 0.6
Automotive & 8,400 ++Avis Rent A Car, Inc. 199,607 216,825 0.3
Equipment
Banking 7,000 Bank of New York Company, Inc. (The) 225,778 448,000 0.7
3,540 BankAmerica Corp. 220,662 317,715 0.5
----------- ----------- ------
446,440 765,715 1.2
Banking & Financial 7,200 First Union Corporation 355,784 433,800 0.6
Beverages 5,100 PepsiCo, Inc. 204,534 197,944 0.3
Broadcasting/Cable 15,200 ++Capstar Broadcasting Corp. (Class A) 288,800 374,300 0.6
10,500 ++Tele-Communications, Inc. (Class A) 216,332 437,719 0.6
19,750 ++Tele-Communications TCI Ventures
Group (Class A) 225,783 388,828 0.6
----------- ----------- ------
730,915 1,200,847 1.8
Broadcasting/Radio 3,800 ++Chancellor Media Corp. 125,881 183,350 0.3
Chemicals 10,100 Great Lakes Chemical Corporation 434,921 398,319 0.6
Commercial Services 11,150 ++Gartner Group, Inc. (Class A) 375,859 338,681 0.5
Communication 9,000 ++WorldCom, Inc. 267,117 474,750 0.7
Equipment
Computer Products 3,180 ++Cisco Systems, Inc. 222,600 304,485 0.4
Computer Sales 2,200 International Business Machines Corp. 254,507 291,500 0.4
Computer Software 5,700 ++BMC Software, Inc. 252,581 280,725 0.4
Computers 12,000 COMPAQ Computer Corp. 334,219 394,500 0.6
Conglomerates 14,400 Dial Corporation (The) 288,578 343,800 0.5
Containers 8,100 ++Owens-Illinois, Inc. 253,620 357,413 0.5
Cosmetics 4,300 Gillette Company (The) 246,024 225,213 0.3
Electrical Equipment 3,700 General Electric Company 274,750 330,456 0.5
Electronics 4,600 Texas Instruments Inc. 298,912 272,838 0.4
Entertainment 10,400 ++Premier Parks Inc. 587,868 664,300 1.0
3,800 Royal Caribbean Cruises Ltd. 186,222 282,388 0.4
----------- ----------- ------
774,090 946,688 1.4
Financial Services 10,200 GreenPoint Financial Corp. 409,412 404,812 0.6
9,900 ++Heller Financial, Inc. 276,911 296,381 0.4
5,900 Providian Financial Corporation 376,331 463,519 0.7
----------- ----------- ------
1,062,654 1,164,712 1.7
Foods 5,600 ++Keebler Foods Company 158,217 137,200 0.2
Hardware Products 3,500 Black & Decker Corp. 125,053 199,063 0.3
Health Care 6,501 ++HEALTHSOUTH Corporation 166,146 163,338 0.2
5,250 United Healthcare Corporation 340,082 296,625 0.4
----------- ----------- ------
506,228 459,963 0.6
Healthcare-- 8,400 Columbia/HCA Healthcare Corporation 265,587 239,400 0.3
Products &
Services
Information 7,870 Computer Associates International, Inc. 435,249 261,186 0.4
Processing
Insurance 7,000 Allmerica Financial Corporation 430,546 468,125 0.7
6,400 Equitable Companies Inc. (The) 336,987 480,400 0.7
6,087 Travelers Group Inc. 269,107 407,829 0.6
2,200 UNUM Corporation 82,080 115,912 0.2
----------- ----------- ------
1,118,720 1,472,266 2.2
</TABLE>
Merrill Lynch Asset Builder Program, Inc., July 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Global Opportunity Portfolio (continued)
Shares Value Percent of
COUNTRY Industries Held US Stocks Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
United Leisure & Tourism 11,600 Carnival Corporation (Class A) $ 203,456 $ 428,475 0.6%
States
(concluded) Machinery 8,000 Ingersoll-Rand Company 265,166 353,500 0.5
Manufacturing 5,200 Tyco International Ltd. 268,961 322,075 0.5
Medical Instruments 4,100 Beckman Coulter Inc. 247,302 246,512 0.4
Medical Specialties 5,200 Warner-Lambert Company 236,371 392,925 0.6
Natural Gas 10,200 El Paso Natural Gas Co. 272,690 346,800 0.5
5,800 Enron Corp. 251,422 307,037 0.5
----------- ----------- ------
524,112 653,837 1.0
Oil Service 2,500 Schlumberger Ltd. 168,095 151,406 0.2
Petroleum 5,400 Unocal Corp. 199,495 176,850 0.3
Pharmaceutical-- 3,250 Bristol-Myers Squibb Co. 309,159 370,297 0.5
Diversified
Printing/Publishing 11,500 ++World Color Press, Inc. 349,551 391,719 0.6
Railroads 3,250 Burlington Northern Santa Fe Corp. 282,557 334,547 0.5
Real Estate 3,500 Starwood Hotels & Resorts 161,591 143,719 0.2
Investment Trusts
Retail 8,700 ++Safeway, Inc. 255,835 385,519 0.6
Retail--Drug Stores 13,110 Rite Aid Corporation 277,637 517,845 0.8
Retail--Specialty 7,500 Lowe's Companies, Inc. 270,205 288,750 0.4
Retail Stores 7,200 Wal-Mart Stores, Inc. 296,925 454,500 0.7
Retail Trade 6,540 Sears, Roebuck & Co. 340,538 331,905 0.5
Telecommunications 5,400 SmarTalk TeleServices, Inc. 148,769 88,762 0.1
Waste Management 9,450 ++Waste Management International (a) 394,339 520,931 0.7
Total Investments in US Stocks 16,035,993 19,538,314 28.8
Foreign Stocks
Canada Automobile Parts 8,100 Magna International, Inc. (Class A) 467,693 552,825 0.8
Beverages 7,100 Seagram Company Ltd. (The) 297,438 260,925 0.4
Total Stocks in Canada 765,131 813,750 1.2
Finland Holding Company 17,000 ++Amer Group Ltd. 306,406 292,512 0.4
Insurance 5,700 Sampo Insurance Co. Ltd. 263,633 319,543 0.5
Paper & Forest 24,000 UPM-Kymmene Oyj 500,294 612,777 0.9
Products
Pharmaceuticals 13,720 Orion-Yhtyma Oyj (Class B) 372,233 421,381 0.6
Real Estate 40,710 ++Sponda Oyj 287,017 301,282 0.5
Transportation 9,000 Finnlines Oyj 178,615 546,171 0.8
Total Stocks in Finland 1,908,198 2,493,666 3.7
France Electronics 16,900 Thomson-CSF S.A. 578,105 662,906 1.0
Insurance 6,100 Axa-Uap 691,003 835,771 1.2
10,300 Scor S.A. 404,903 720,292 1.1
----------- ----------- ------
1,095,906 1,556,063 2.3
Machinery & 19,300 ++Alstom S.A. 657,484 571,264 0.8
Equipment
Oil & Related 5,600 Elf Aquitaine S.A. 663,726 725,943 1.1
Semiconductor 9,500 ++STMicroelectronics N.V. (NY
Capital Equipment Registered Shares) 544,108 604,437 0.9
Total Stocks in France 3,539,329 4,120,613 6.1
Germany Auto & Truck 6,600 Daimler-Benz AG 647,906 675,401 1.0
Banking 8,600 Bayerische Vereinsbank AG 554,936 812,370 1.2
Chemicals 6,300 Henkel KGaA (Preferred) 373,750 577,397 0.9
Machinery & 6,000 Mannesmann AG 232,932 639,303 0.9
Equipment
Total Stocks in Germany 1,809,524 2,704,471 4.0
Ireland Banking 14,100 Bank of Ireland 298,205 286,961 0.4
Total Stocks in Ireland 298,205 286,961 0.4
Italy Banking 268,000 Banca di Roma 586,009 622,972 0.9
Machinery 116,500 Danieli & Co. 508,648 479,885 0.7
Publishing 57,000 Mondadori (Arnoldo) Editore S.p.A. 431,458 672,231 1.0
Total Stocks in Italy 1,526,115 1,775,088 2.6
Japan Banking & Financial 54,000 Bank of Tokyo--Mitsubishi, Ltd. 704,144 539,439 0.8
66,000 Sanwa Bank, Limited 579,728 563,364 0.8
----------- ----------- ------
1,283,872 1,102,803 1.6
Computer 12,000 Tokyo Electron Limited 408,915 333,126 0.5
Consumer--Electronics 4,000 Rohm Company Ltd. 262,940 431,706 0.6
Electrical Equipment 6,000 Sony Corporation 447,011 510,488 0.8
Electronics 36,000 Matsushita Electric Industrial
Co., Ltd. 577,190 575,701 0.8
Insurance 47,000 Tokio Marine & Fire Insurance Co., Ltd. 500,861 475,043 0.7
Machine Tools & 13,000 Minebea Co., Ltd. 140,134 138,145 0.2
Machinery
Machinery 52,000 Makino Milling Machine Co., Ltd. 370,298 341,987 0.5
Retail Stores 11,000 Ito--Yokado Co., Ltd. 594,268 530,772 0.8
Total Stocks in Japan 4,585,489 4,439,771 6.5
</TABLE>
Merrill Lynch Asset Builder Program, Inc., July 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
Global Opportunity Portfolio (concluded)
Shares Value Percent of
COUNTRY Industries Held Foreign Stocks Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
Mexico Beverages 7,650 Panamerican Beverages, Inc.
(Class A)(US Registered Shares) $ 277,438 $ 237,628 0.4%
Conglomerates 28,200 Grupo Carso, S.A. de C.V. (ADR)* 276,925 236,880 0.4
Utilities-- 6,000 Telefonos de Mexico, S.A. de
Communications C.V. (Telmex)(ADR)* 329,614 300,000 0.4
Total Stocks in Mexico 883,977 774,508 1.2
Netherlands Broadcast & 3,700 Wolters Kluwer N.V. 566,043 555,295 0.8
Publishing
Total Stocks in the Netherlands 566,043 555,295 0.8
Singapore Banking 58,000 Oversea-Chinese Banking Corp.
Ltd. 'Foreign' 276,031 203,361 0.3
Total Stocks in Singapore 276,031 203,361 0.3
Spain Building Materials 21,000 Uralita, S.A. 294,295 267,715 0.5
Diversified 17,200 ++Dinamia Capital Privado. Sociedad
de Capital Riesgo, S.A. 320,292 282,490 0.4
Petroleum 10,600 Repsol, S.A. (ADR)* 401,272 569,087 0.8
Real Estate 9,300 Metrovacesa, S.A. 290,232 254,364 0.4
Total Stocks in Spain 1,306,091 1,373,656 2.1
Sweden Auto & Truck 8,800 Autoliv AB 285,516 300,845 0.4
Automobile Parts 16,700 Haldex AB 295,290 290,728 0.4
Banking 7,700 ForeningsSparbanken AB (b) 97,378 230,699 0.3
53,900 Nordbanken Holding AB 356,228 387,574 0.6
----------- ----------- ------
453,606 618,273 0.9
Chemicals 17,000 Perstorp AB (Class B) 318,484 308,818 0.5
Diversified 4,600 Custos AB (Class A) 118,477 115,479 0.2
4,600 Custos AB (Class B) 121,232 114,898 0.2
----------- ----------- ------
239,709 230,377 0.4
Electronics 9,000 Spectra-Physics AB (Class A) 274,607 137,379 0.2
Investment 20,300 Bure Investment AB 192,973 297,061 0.4
Management
Real Estate 24,200 Castellum AB 211,107 280,863 0.4
9,800 Fastighets AB Tornet 161,306 156,390 0.2
----------- ----------- ------
372,413 437,253 0.6
Total Stocks in Sweden 2,432,598 2,620,734 3.8
Switzerland Banking & Financial 1,800 ++UBS AG 601,421 781,978 1.2
Machinery 381 Schindler Holding AG 656,417 556,419 0.8
Merchandising 500 Valora Holding AG 135,344 156,953 0.2
Total Stocks in Switzerland 1,393,182 1,495,350 2.2
United Aerospace & Defense 83,600 British Aerospace PLC 638,019 638,714 0.9
Kingdom
Automobile Parts 137,700 LucasVarity PLC 463,375 482,093 0.7
Beverages 53,904 Diageo PLC 501,499 642,001 1.0
Chemicals 6,700 Imperial Chemical Industries PLC 110,662 86,593 0.1
7,500 Imperial Chemical Industries PLC (ADR)* 389,042 393,281 0.6
----------- ----------- ------
499,704 479,874 0.7
Foods 40,200 Devro PLC 289,780 212,428 0.3
Travel Services 219,000 ++Thomson Travel Group PLC 661,346 630,580 0.9
Total Stocks in the United Kingdom 3,053,723 3,085,690 4.5
Total Investments in Foreign Stocks 24,343,636 26,742,914 39.4
Total Investments in US &
Foreign Stocks 40,379,629 46,281,228 68.2
SHORT-TERM Face
SECURITIES Amount Issue
<S> <S> <C> <S> <C> <C> <C>
Commercial US$ 1,000,000 Bell Atlantic Financial Services
Paper** Inc., 5.60% due 8/03/1998 999,689 999,689 1.5
2,664,000 General Motors Acceptance Corp.,
5.69% due 8/03/1998 2,663,158 2,663,158 3.9
Total Investments in Short-Term
Securities 3,662,847 3,662,847 5.4
Total Investments $60,864,007 67,271,892 99.2
===========
Unrealized Depreciation on Forward Foreign Exchange Contracts++++ (62,702) (0.1)
Other Assets Less Liabilities 574,963 0.9
----------- ------
Net Assets $67,784,153 100.0%
=========== ======
<FN>
*American Depositary Receipts (ADR).
**Commercial Paper is traded on a discount basis; the interest rates
shown reflect the discount rates paid at the time of purchase by the
Portfolio.
(a)Formerly USAWaste Services, Inc.
(b)Formerly Sparbanken Sverige AB.
++Non-income producing security.
++++Forward foreign exchange contracts as of July 31, 1998 were as
follows:
<CAPTION>
Unrealized
Appreciation
Foreign Expiration (Depreciation)
Currency Sold Date (Note 1b)
<S> <C> <S> <C>
C$ 1,250,000 August 1998 $ 6,659
Chf 2,250,000 August 1998 (28,789)
DM 11,450,000 August 1998 (73,513)
Fim 14,500,000 September 1998 (24,583)
Frf 25,400,000 August 1998 (89,649)
Pound 3,050,000 August 1998 28,508
Sterling
Lit 3,323,000,000 August 1998 (18,454)
Pta 223,000,000 August 1998 (15,790)
Skr 45,000,000 September 1998 (73,483)
YEN 621,000,000 September 1998 226,392
---------
Total Unrealized Depreciation on Forward
Foreign Exchange Contracts--Net
(US$ Commitment--$34,051,156) $ (62,702)
=========
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Asset Builder Program, Inc., July 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
Growth Opportunity Portfolio
Shares Value Percent of
Industries Held Common Stocks Cost (Note 1a) Net Assets
<S> <C> <S> <C> <C> <C>
Advertising 10,000 Interpublic Group of Companies, Inc. $ 455,324 $ 602,500 0.8%
Banking & Financial 19,800 Banc One Corp. 921,491 1,023,413 1.3
5,000 BankAmerica Corp. 355,782 448,750 0.6
5,000 Citicorp 724,668 850,000 1.1
20,000 Mellon Bank Corporation 1,175,065 1,347,500 1.7
10,000 NationsBank Corporation 794,450 797,500 1.0
12,000 State Street Corp. 594,654 831,750 1.1
----------- ----------- ------
4,566,110 5,298,913 6.8
Beverages 22,000 Coca-Cola Company (The) 1,773,746 1,775,125 2.3
5,000 Seagram Company Ltd. (The) 212,919 183,750 0.2
----------- ----------- ------
1,986,665 1,958,875 2.5
Broadcasting-- 15,500 ++Chancellor Media Corp. 726,275 747,875 1.0
Radio & Television 17,000 ++Clear Channel Communications, Inc. 747,053 955,188 1.2
----------- ----------- ------
1,473,328 1,703,063 2.2
Chemicals 13,500 duPont (E.I.) de Nemours & Co. 1,078,782 837,000 1.1
Communication 24,000 ++Cisco Systems, Inc. 1,488,667 2,298,000 2.9
Equipment 32,000 ++FORE Systems, Inc. 708,777 760,000 1.0
12,000 Lucent Technologies, Inc. 574,473 1,109,250 1.4
14,500 ++Newbridge Networks Corp. 614,672 304,500 0.4
5,000 Northern Telecom Limited 246,980 293,750 0.4
7,000 Telefonaktiebolaget LM Ericsson (ADR)* 143,423 193,813 0.3
----------- ----------- ------
3,776,992 4,959,313 6.4
Computers 66,000 COMPAQ Computer Corp. 1,603,245 2,169,750 2.8
10,000 ++Dell Computer Corporation 681,834 1,085,625 1.4
10,000 Hewlett-Packard Co. 677,888 555,000 0.7
----------- ----------- ------
2,962,967 3,810,375 4.9
Cosmetics 18,000 Gillette Company (The) 838,754 942,750 1.2
1,500 International Flavors &
Fragrances, Inc. 66,304 63,000 0.1
----------- ----------- ------
905,058 1,005,750 1.3
Electrical Equipment 2,000 Emerson Electric Company 108,040 118,875 0.1
26,000 General Electric Company 1,673,626 2,322,125 3.0
1,000 Honeywell, Inc. 74,816 83,813 0.1
----------- ----------- ------
1,856,482 2,524,813 3.2
Electronics 22,000 Intel Corporation 1,693,956 1,856,250 2.4
8,000 ++STMicroelectronics N.V. (NY
Registered Shares) 565,629 509,000 0.6
23,500 Texas Instruments Inc. 1,347,642 1,393,844 1.8
----------- ----------- ------
3,607,227 3,759,094 4.8
Energy 10,000 El Paso Natural Gas Co. 268,430 340,000 0.4
5,000 Enron Corp. 208,459 264,688 0.4
----------- ----------- ------
476,889 604,688 0.8
Entertainment 7,000 ++Viacom, Inc. (Class A) 260,391 475,125 0.6
45,000 Walt Disney Company (The) 1,477,489 1,549,688 2.0
----------- ----------- ------
1,737,880 2,024,813 2.6
Financial Services 4,000 American Express Company 390,615 441,500 0.6
10,000 Federal National Mortgage Association 602,416 620,000 0.8
10,000 Franklin Resources, Inc. 546,808 435,625 0.5
14,000 Morgan Stanley, Dean Witter,
Discover and Co. 885,329 1,218,875 1.6
14,000 Travelers Group, Inc. (The) 785,859 938,000 1.2
----------- ----------- ------
3,211,027 3,654,000 4.7
Food 2,000 ConAgra, Inc. 47,060 51,750 0.1
4,000 Wrigley (Wm.) Jr. Co. 288,597 358,750 0.4
----------- ----------- ------
335,657 410,500 0.5
Food Merchandising 3,000 Albertson's, Inc. 107,884 144,188 0.2
6,000 ++Meyer (Fred), Inc. 141,180 264,375 0.3
5,000 ++Safeway, Inc. 228,044 221,563 0.3
----------- ----------- ------
477,108 630,126 0.8
Home Furnishings 20,000 Ethan Allen Interiors, Inc. 1,075,713 826,250 1.1
Hotels 9,000 Marriott International, Inc.
(Class A) 305,627 292,500 0.4
Household Products 3,000 Colgate-Palmolive Co. 254,919 277,313 0.4
6,000 Kimberly-Clark Corporation 280,503 269,625 0.3
20,000 Procter & Gamble Company 1,485,044 1,587,500 2.0
17,000 Unilever N.V. (NY Registered Shares) 1,221,062 1,181,500 1.5
----------- ----------- ------
3,241,528 3,315,938 4.2
Information 27,000 First Data Corp. 961,514 781,313 1.0
Processing
Insurance 1,000 Aetna Inc. 82,249 69,313 0.1
9,000 American International Group, Inc. 928,860 1,357,312 1.7
----------- ----------- ------
1,011,109 1,426,625 1.8
Leisure 17,000 Polygram N.V. (NY Registered Shares) 878,725 925,437 1.2
Medical Technology 8,300 ++Boston Scientific Corp. 470,698 635,987 0.8
9,000 Guidant Corporation 594,452 668,812 0.9
1,000 Johnson & Johnson 66,560 77,250 0.1
----------- ----------- ------
1,131,710 1,382,049 1.8
Oil Services 10,000 Baker Hughes, Inc. 399,621 244,375 0.3
6,000 Diamond Offshore Drilling, Inc. 307,341 196,875 0.3
4,000 Schlumberger, Ltd. 235,120 242,250 0.3
----------- ----------- ------
942,082 683,500 0.9
Pharmaceuticals 2,000 ++Amgen, Inc. 131,750 146,750 0.2
16,000 Bristol-Myers Squibb Co. 1,543,087 1,823,000 2.3
12,000 Merck & Co., Inc. 1,408,564 1,479,750 1.9
20,000 Pfizer, Incorporated 1,623,087 2,200,000 2.8
----------- ----------- ------
4,706,488 5,649,500 7.2
Photography 2,000 Eastman Kodak Co. 141,535 168,250 0.2
Pollution Control 362 ++Waste Management, Inc. 14,160 19,955 0.0
Publishing 11,000 Gannett Co., Inc. 780,104 703,312 0.9
</TABLE>
Merrill Lynch Asset Builder Program, Inc., July 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
Growth Opportunity Portfolio (concluded)
Shares Value Percent of
Industries Held Common Stocks Cost (Note 1a) Net Assets
<S> <C> <S> <C> <C> <C>
Restaurants 5,000 McDonald's Corp. $ 277,822 $ 334,062 0.4%
Retail--Specialty 30,000 CVS Corporation 998,118 1,230,000 1.6
11,000 Gap Inc. 444,363 655,875 0.8
50,000 ++Staples, Inc. 929,565 1,640,625 2.1
30,000 Walgreen Co. 971,102 1,295,625 1.7
----------- ----------- ------
3,343,148 4,822,125 6.2
Retail Stores 17,000 ++Federated Department Stores, Inc. 847,205 899,937 1.2
46,000 Wal-Mart Stores, Inc. 2,015,994 2,903,750 3.7
----------- ----------- ------
2,863,199 3,803,687 4.9
Semiconductors 25,000 ++Applied Materials, Inc. 920,280 835,937 1.1
Software--Computer 8,000 ++Baan Company, N.V. (US Registered
Shares) 335,738 317,000 0.4
25,000 ++Microsoft Corporation 2,157,218 2,748,437 3.5
35,000 ++PeopleSoft, Inc. 1,578,986 1,312,500 1.7
44,000 SAP AG (Systeme, Anwendungen, Produkte
in der Datenverarbeitung) (ADR)* 783,324 2,700,170 3.5
----------- ----------- ------
4,855,266 7,078,107 9.1
Telecommunications 22,000 AT&T Corp. 1,435,871 1,333,750 1.7
6,000 ++America Online, Inc. 538,788 702,000 0.9
10,000 Cable & Wireless PLC (ADR)* 402,841 388,750 0.5
30,000 Sprint Corporation 1,944,115 2,100,000 2.7
24,000 ++WorldCom Inc. 1,098,329 1,266,000 1.6
----------- ----------- ------
5,419,944 5,790,500 7.4
Toys 19,000 Mattel, Inc. 716,164 730,312 0.9
Travel & Lodging 24,000 Carnival Corporation (Class A) 672,036 886,500 1.1
Total Investments in Common Stocks 63,165,650 74,239,682 95.2
<CAPTION>
Face
Amount Short-Term Securities
<S> <C> <S> <C> <C> <C>
Commercial $ 2,000,000 Countrywide Home Loans Inc.,
Paper** 5.55% due 8/19/1998 1,994,450 1,994,450 2.5
2,163,000 General Motors Acceptance Corp.,
5.69% due 8/03/1998 2,162,316 2,162,316 2.8
Total Investments in Short-Term
Securities 4,156,766 4,156,766 5.3
Total Investments $67,322,416 78,396,448 100.5
===========
Liabilities in Excess of Other Assets (423,424) (0.5)
----------- ------
Net Assets $77,973,024 100.0%
=========== ======
<FN>
*American Depositary Receipts (ADR).
**Commercial Paper is traded on a discount basis; the interest rates
shown reflect the discount rates paid at the time of purchase by the
Portfolio.
++Non-income producing security.
See Notes to Financial Statements.
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
Quality Bond Portfolio
S&P Moody's Face Value
INDUSTRIES Ratings Ratings Amount Bonds & Notes Cost (Note 1a)
<S> <S> <S> <C> <S> <C> <C>
Asset-Backed AAA Aaa $ 48,152 Arcadia Automobile Receivables Trust,
Securities++ 6.10% due 6/15/2000 $ 48,143 $ 48,204
- --2.8% AA Aa3 300,000 CIT Group Home Equity Loan Trust,
6.44% due 9/15/2026 299,886 299,886
----------- -----------
348,029 348,090
Banking-- A A2 250,000 Bank of New York Company, Inc. (The),
14.3% 7.875% due 11/15/2002 276,675 266,690
A+ Aa3 250,000 BankAmerica Corp., 6.65% due 5/01/2001 249,863 254,043
BBB a1 300,000 KeyCorp Capital I, 6.427% due 7/01/2028 296,982 301,125
BBB+ Baa1 250,000 MBNA American Bank N.A., 5.987% due 6/10/2004 246,143 245,918
A A3 250,000 Mellon Financial Co., 6.375% due 2/15/2010 251,010 249,475
AA- Aa3 250,000 Norwest Corporation, 6.75% due 5/12/2000 249,628 253,800
A- A2 200,000 Wells Fargo & Company, 8.375% due 5/15/2002 213,120 214,892
----------- -----------
1,783,421 1,785,943
Financial A A2 250,000 Beneficial Corporation, 6.80% due 9/16/2003 250,000 255,799
Services-- A aa3 150,000 CIT Capital Trust I, 7.70% due 2/15/2027 149,316 157,897
16.6% BBB- Baa2 100,000 Commercial Net Lease Realty, 7.125% due
3/15/2008 99,729 99,823
A- A3 38,000 Donaldson, Lufkin & Jenrette Inc., 6.875%
due 11/01/2005 37,694 38,905
BBB- Baa3 150,000 Hospitality Properties Trust, 7% due 3/01/2008 149,730 149,375
AA Aa2 200,000 MBIA, Inc., 7.15% due 7/15/2027 199,510 212,746
A+ A1 300,000 Morgan Stanley Group Inc., 6.875% due 3/01/2007 298,923 310,056
A+ A2 200,000 Prudential Insurance Co., 6.375% due
7/23/2006 (a) 199,116 199,514
A A2 150,000 Salomon Smith Barney Holdings, Inc., 7.375%
due 5/15/2007 149,867 159,471
BBB Baa2 150,000 Spieker Properties LP, 7.35% due 12/01/2017 151,550 147,425
A+ aa3 100,000 Travelers Capital II, 7.75% due 12/01/2036 100,170 103,499
AA- Aa3 200,000 Travelers Group Inc. (The), 7.875% due
5/15/2025 205,616 228,470
----------- -----------
1,991,221 2,062,980
Industrial-- A+ A1 100,000 Anheuser-Busch Cos., Inc., 8.75% due
Consumer 12/01/1999 107,905 103,545
Goods--8.5% AA- Aa3 250,000 Archer-Daniels-Midland Co., 8.375% due
4/15/2017 303,007 297,238
A A2 100,000 Bass America, Inc., 8.125% due 3/31/2002 105,928 106,152
BBB- Baa3 250,000 Flowers Industries, Inc., 7.15% due
4/15/2028 248,675 250,963
A A1 80,000 PepsiCo, Inc., 5.75% due 1/02/2003 79,595 79,047
AA Aa2 200,000 Wal-Mart Stores, Inc., 8.50% due 9/15/2024 207,350 225,990
----------- -----------
1,052,460 1,062,935
Industrial-- AA Aa2 175,000 BP America Inc., 9.375% due 11/01/2000 200,263 187,892
Energy--6.8% BBB Baa2 250,000 Occidental Petroleum Corp., 6.50% due
4/01/2005 248,575 248,425
BBB+ A3 400,000 Sonat, Inc., 7% due 2/01/2018 412,068 403,456
----------- -----------
860,906 839,773
</TABLE>
Merrill Lynch Asset Builder Program, Inc., July 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
Quality Bond Portfolio (concluded)
S&P Moody's Face Value
INDUSTRIES Ratings Ratings Amount Bonds & Notes Cost (Note 1a)
<S> <S> <S> <C> <S> <C> <C>
Industrial-- A A2 $200,000 AlliedSignal Inc., 6.20% due 2/01/2008 $ 199,732 $ 199,706
Manufacturing BBB+ A3 200,000 Applied Materials Inc., 6.75% due 10/15/2007 199,870 199,964
- --10.4% A A1 200,000 Ford Motor Credit Company, 8.20% due
2/15/2002 213,154 213,154
General Motors Acceptance Corp.:
A A2 100,000 8.50% due 1/01/2003 108,510 108,859
A A2 200,000 8.75% due 7/15/2005 226,232 228,382
A- Baa1 250,000 Lafarge Corporation, 6.375% due 7/15/2005 249,707 248,625
A A1 90,000 PPG Industries, Inc., 6.50% due 11/01/2007 89,725 91,092
----------- -----------
1,286,930 1,289,782
Industrial-- BBB- Baa3 250,000 ARAMARK Corp., 6.75% due 8/01/2004 248,730 247,739
Services-- A A2 150,000 Carnival Cruise Lines, Inc., 7.70% due
11.6% 7/15/2004 156,745 160,920
A- Baa1 150,000 Computer Associates International, Inc.,
6.375% due 4/15/2005 (a) 149,206 148,636
A A2 222,794 Disney Enterprises, Inc., 6.85% due
1/10/2007++ (a) 222,642 229,094
A A2 200,000 First Data Corp., 6.375% due 12/15/2007 199,486 200,320
BBB- Baa3 200,000 News America Inc., 7.30% due 4/30/2028 (a) 200,404 202,873
BBB- Baa3 120,000 TCI Communications Inc., 8.75% due 8/01/2015 140,767 142,675
BBB- Baa2 100,000 Time Warner Entertainment Co., 8.375% due
3/15/2023 107,029 115,762
----------- -----------
1,425,009 1,448,019
Mortgage- AAA Aaa 200,000 Government National Mortgage Association,
Backed 6.375% due 11/20/2026 198,469 199,812
Securities--
1.6%
Transpor- BBB Baa2 250,000 CSX Corp., 7.90% due 5/01/2017 279,712 277,105
tation--2.2%
US Government US Treasury Notes:
Obligations AAA Aaa 200,000 6% due 8/15/2000 202,000 201,844
- --10.4% AAA Aaa 25,000 5.875% due 9/30/2002 25,289 25,273
AAA Aaa 250,000 5.50% due 2/28/2003 250,105 249,335
AAA Aaa 275,000 7% due 7/15/2006 299,041 299,450
AAA Aaa 50,000 6.125% due 8/15/2007 52,836 51,883
AAA Aaa 200,000 5.625% due 5/15/2008 203,156 201,874
AAA Aaa 250,000 6.125% due 11/15/2027 264,414 264,257
----------- -----------
1,296,841 1,293,916
Utilities-- A- A2 300,000 ALLTEL Corporation, 6.75% due 9/15/2005 295,380 303,969
Communi- AAA Aaa 125,000 Indiana Bell Telephone Co., Inc., 7.30%
cations--7.9% due 8/15/2026 133,639 136,947
A Baa2 200,000 MCI Communications Corp., 6.125% due
4/15/2012 199,466 199,122
AA Aa3 125,000 Southwestern Bell Capital Corp., 6.50%
due 3/12/2003 126,222 127,789
BBB- Baa2 200,000 WorldCom Inc., 7.75% due 4/01/2007 217,758 214,948
972,465 982,775
Utilities-- A+ A1 100,000 Consolidated Edison Inc., 6.25% due 2/01/2008 100,000 99,485
Electric A A2 150,000 Virginia Electric & Power Co., 8.625%
- --2.1% due 10/01/2024 166,200 166,948
----------- -----------
266,200 266,433
Total Investments in Bonds & Notes--95.2% 11,761,663 11,857,563
<CAPTION>
SHORT-TERM
SECURITIES Issue
<S> <S> <C> <S> <C> <C>
Commercial 349,000 General Electric Capital Corp., 5.65%
Paper*--2.8% due 8/03/1998 349,000 349,000
Total Investments in Short-Term
Securities--2.8% 349,000 349,000
Total Investments--98.0% $12,110,663 12,206,563
===========
Other Assets Less Liabilities--2.0% 252,001
-----------
Net Assets--100.0% $12,458,564
===========
<FN>
*Commercial Paper is traded on a discount basis; the interest rate
shown reflects the discount rate paid at the time of purchase by the
Portfolio.
++Subject to principal paydowns.
(a)The security may be offered and sold to "qualified institutional
buyers" under Rule 144A of the Securities Act of 1933.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Asset Builder Program, Inc., July 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
US Government Securities Portfolio
Face Interest Maturity Value
Issue Amount Rate Date(s) (Note 1a)
<S> <S> <C> <C> <S> <C>
US Government Federal Home Loan Mortgage Corporation $ 896,003 11.50 % 6/01/2019 $ 1,011,291
Agency Federal National Mortgage Association--Dwarf 2,039,038 6.50 1/01/2013-4/01/2013 2,050,497
Mortgage-Backed Federal National Mortgage Association--
Obligations*-- Multi-Family#0073313++++ 2,021,984 6.18 1/01/2006 2,024,908
70.0% Government National Mortgage Association 483,465 6.50 1/15/2028 481,952
Government National Mortgage Association 400,000 7.00 TBA(1) 406,248
Government National Mortgage Association 933,062 7.00 11/15/2027 947,758
Government National Mortgage Association 1,108,981 7.50 10/15/2025-12/15/2026 1,141,293
Total US Government Agency Mortgage-
Backed Obligations (Cost--$7,981,331) 8,063,947
US Government US Treasury Notes 1,300,000 5.375 2/15/2001 1,295,736
Obligations--28.1% US Treasury Notes 1,000,000 5.875 11/15/2005 1,017,660
US Treasury STRIPS** 1,300,000 5.585++ 5/15/2006 842,920
US Treasury STRIPS** 300,000 6.09++ 8/15/2019 88,212
Total US Government Obligations (Cost--$3,187,907) 3,244,528
SHORT-TERM
SECURITIES Face Amount Issue
Repurchase $657,000 Nikko Securities Company, purchased on 7/31/1998 to yield 5.61% to 8/03/1998 657,000
Agreements***--5.7%
Total Investments in Short-Term Securities
(Cost--$657,000) 657,000
Total Investments (Cost--$11,826,238)--103.8% 11,965,475
Liabilities in Excess of Other Assets--(3.8%) (439,429)
-----------
Net Assets--100.0% $11,526,046
===========
<FN>
(1)Represents a "to-be-announced" (TBA) transaction. The Portfolio
has committed to purchasing securities for which all specific
information is not available at this time.
*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.
***Repurchase Agreements are fully collateralized by US Government &
Agency Obligations.
++Represents the yield-to-maturity on this zero coupon issue at the
time of purchase by the Portfolio.
++++Underlying multi-family loans have prepayment protection by
means of lockout periods and/or yield maintenance premiums.
See Notes to Financial Statements.
</TABLE>
EQUITY PORTFOLIO CHANGES
For the Quarter Ended July 31, 1998
FUNDAMENTAL
VALUE PORTFOLIO
Additions
3Com Corporation
Allstate Corporation (The)
Bell Atlantic Corporation
COMPAQ Computer Corporation
General Mills, Inc.
National City Corporation
PartnerRe Ltd.
Sonat, Inc.
Travelers Group Inc.
Deletions
Black & Decker Corp.
Circus Circus Enterprises, Inc.
Digital Equipment Corporation
Exabyte Corp.
Humana, Inc.
Pennsylvania Real Estate Investment Trust
GLOBAL OPPORTUNITY
PORTFOLIO
Additions
Alstom S.A.
Banca di Roma
Bank of Ireland
Beckman Coulter Inc.
Capstar Broadcasting Corp. (Class A)
Fastighets ABTornet
GreenPoint Financial Corp.
Haldex AB
Heller Financial, Inc.
*Mandamus AB
Metrovacesa, S.A.
Minebea Co., Ltd.
*Octel Corp.
PepsiCo, Inc.
Sanwa Bank, Limited
Schindler Holding AG
Sponda Oyj
Thomson Travel Group PLC
United Healthcare Corporation
Uralita, S.A.
Valora Holding AG
Wolters Kluwer N.V.
World Color Press, Inc.
Deletions
AlliedSignal, Inc.
Amway Japan Ltd.
Broken Hill Proprietary Co., Ltd.
COMSAT Corporation
Color Line ASA
Danka Business Systems PLC (ADR)
Dixons Group PLC
Globalstar Telecommunications Ltd.
Grupo Financiero Bancomer, S.A. de C.V.
(Class B)(ADR)
Henkel KGaA
Hyundai Engineering & Construction Co.,
Ltd. (GDR)
Imax Corp.
Intel Corporation
*Mandamus AB
Matsushita Electric Works, Ltd.
Microsoft Corporation
*Octel Corp.
Orbital Sciences Corporation
P.T. Indonesian Satellite Corp. (ADR)
Public Service Enterprise Group, Inc.
Roche Holding AG
Royal Dutch Petroleum Company (NY
Registered Shares)
SPX Corporation
Sasol Limited
Smith International, Inc.
Sun International Hotels Ltd.
Walt Disney Company
Yacimientos Petroliferos Fiscales S.A. (ADR)
GROWTH OPPORTUNITY
PORTFOLIO
Additions
America Online, Inc.
Cable & Wireless PLC (ADR)
duPont (E.I.) de Nemours & Co.
Gannett Co., Inc.
NationsBank Corporation
Safeway, Inc.
Seagram Company Ltd. (The)
WorldCom Inc.
[FN]
*Added and deleted in the same quarter.
Merrill Lynch Asset Builder Program, Inc., July 31, 1998
<TABLE>
STATEMENTS OF ASSETS AND LIABILITIES
<CAPTION>
Fundamental Global Growth Quality US Government
Value Opportunity Opportunity Bond Securities
As of July 31, 1998 Portfolio Portfolio Portfolio Portfolio Portfolio
<S> <S> <C> <C> <C> <C> <C>
Assets: Investments, at value* (Note 1a) $94,592,338 $67,271,892 $78,396,448 $12,206,563 $11,965,475
Foreign cash (Note 1c) -- 100,602 -- -- --
Cash 40,950 -- 705 910 118
Receivables:
Securities sold 371,682 566,033 270,727 523,939 --
Capital shares sold 271,774 104,791 411,551 69,150 10,400
Interest -- 363,268 -- 207,572 103,862
Dividends 115,440 74,212 51,325 -- --
Investment adviser (Note 2) -- -- -- 97,569 41,550
Principal paydowns -- -- -- -- 24,179
Deferred organization expenses (Note 1f) 14,827 34,594 48,382 8,486 18,549
Prepaid registration fees and other assets
(Note 1f) 62,460 75,580 11,795 35,284 32,577
----------- ----------- ----------- ----------- -----------
Total assets 95,469,471 68,590,972 79,190,933 13,149,473 12,196,710
----------- ----------- ----------- ----------- -----------
Liabilities: Unrealized depreciation on forward
foreign exchange contracts (Note 1b) -- 62,702 -- -- --
Payables:
Securities purchased 280,392 385,642 963,384 520,739 407,462
Capital shares redeemed. 223,836 78,749 51,653 105,968 184,646
Distributor (Note 2) 78,741 56,469 64,544 7,730 6,029
Investment adviser (Note 2) 54,050 44,125 43,317 -- --
Dividends to shareholders (Note 1g) -- -- -- 20,120 16,310
Forward foreign exchange contracts
(Note 1b) -- 6,978 -- -- --
Accrued expenses and other liabilities 144,869 172,154 95,011 36,352 56,217
----------- ----------- ----------- ----------- -----------
Total liabilities 781,888 806,819 1,217,909 690,909 670,664
----------- ----------- ----------- ----------- -----------
Net Assets: Net assets $94,687,583 $67,784,153 $77,973,024 $12,458,564 $11,526,046
=========== =========== =========== =========== ===========
Net Assets Class A Common Stock, $0.10 par value++ $ 2,547 $ 1,456 $ 2,524 $ 6,445 $ 23,138
Consist of: Class B Common Stock, $0.10 par value++++ 418,895 377,380 306,599 77,306 63,015
Class C Common Stock, $0.10 par value++++++ 204,916 152,308 168,737 33,549 21,033
Class D Common Stock, $0.10 par
value++++++++ 42,652 27,955 16,888 6,608 3,110
Paid-in capital in excess of par. 83,409,749 60,946,772 64,268,275 12,224,882 11,140,502
Undistributed (accumulated) investment
income (loss)--net (138,325) 188,553 (394,020) -- --
Undistributed realized capital gains on
investments and foreign currency trans-
actions--net 4,195,395 -- 2,529,989 13,874 136,011
Accumulated distributions in excess of
realized capital gains on investments--
net (Note 1g) -- (255,340) -- -- --
Unrealized appreciation on investments
and foreign currency transactions--net 6,551,754 6,345,069 11,074,032 95,900 139,237
----------- ----------- ----------- ----------- -----------
Net assets $94,687,583 $67,784,153 $77,973,024 $12,458,564 $11,526,046
=========== =========== =========== =========== ===========
Net Asset Class A:
Value: Net assets $ 367,940 $ 178,799 $ 404,308 $ 648,438 $ 2,418,405
=========== =========== =========== =========== ===========
Shares outstanding 25,466 14,557 25,241 64,447 231,383
=========== =========== =========== =========== ===========
Net asset value and redemption
price per share $ 14.45 $ 12.28 $ 16.02 $ 10.06 $ 10.45
=========== =========== =========== =========== ===========
Class B:
Net assets $59,223,120 $45,751,897 $48,309,391 $ 7,772,672 $ 6,584,834
=========== =========== =========== =========== ===========
Shares outstanding 4,188,947 3,773,800 3,065,989 773,055 630,152
=========== =========== =========== =========== ===========
Net asset value and redemption
price per share $ 14.14 $ 12.12 $ 15.76 $ 10.05 $ 10.45
=========== =========== =========== =========== ===========
Class C:
Net assets $28,958,180 $18,427,406 $26,558,635 $ 3,373,092 $ 2,197,582
=========== =========== =========== =========== ===========
Shares outstanding. 2,049,159 1,523,080 1,687,368 335,494 210,327
=========== =========== =========== =========== ===========
Net asset value and redemption price
per share $ 14.13 $ 12.10 $ 15.74 $ 10.05 $ 10.45
=========== =========== =========== =========== ===========
Class D:
Net assets $ 6,138,343 $ 3,426,051 $ 2,700,690 $ 664,362 $ 325,225
=========== =========== =========== =========== ===========
Shares outstanding 426,524 279,550 168,879 66,080 31,104
=========== =========== =========== =========== ===========
Net asset value and redemption price
per share $ 14.39 $ 12.26 $ 15.99 $ 10.05 $ 10.46
=========== =========== =========== =========== ===========
<FN>
*Identified cost $88,040,584 $60,864,007 $67,322,416 $12,110,663 $11,826,238
=========== =========== =========== =========== ===========
++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 10,000,000 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
=========== =========== =========== =========== ===========
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Asset Builder Program, Inc., July 31, 1998
<TABLE>
STATEMENTS OF OPERATIONS
<CAPTION>
Fundamental Global Growth Quality US Government
Value Opportunity Opportunity Bond Securities
For the Six Months Ended July 31, 1998 Portfolio Portfolio Portfolio Portfolio Portfolio
<S> <S> <C> <C> <C> <C> <C>
Investment Interest and discount earned $ 286,440 $ 567,273 $ 147,183 $ 384,346 $ 347,183
Income Dividends* 689,872 605,887 237,517 -- --
(Notes 1d Loaned securities -- -- -- -- 248
& 1e): Other -- -- -- -- 6,959
----------- ----------- ----------- ----------- -----------
Total income 976,312 1,173,160 384,700 384,346 354,390
----------- ----------- ----------- ----------- -----------
Expenses: Investment advisory fees (Note 2) 301,823 247,061 201,241 29,032 28,101
Account maintenance and distribution
fees--Class B (Note 2) 290,911 223,192 193,439 26,131 22,467
Transfer agent fees--Class B (Note 2) 139,824 124,353 106,539 18,576 11,253
Account maintenance and distribution
fees--Class C (Note 2) 140,443 88,395 103,423 12,378 8,240
Transfer agent fees--Class C (Note 2) 71,872 53,136 60,921 8,934 4,504
Registration fees (Note 1f) 28,187 24,907 24,247 39,748 31,809
Printing and shareholder reports 41,318 30,439 22,818 6,027 6,159
Accounting services (Note 2) 39,821 22,420 22,895 4,422 7,736
Custodian fees 11,553 28,408 9,916 7,222 4,883
Professional fees 14,897 23,035 13,548 3,586 6,468
Transfer agent fees--Class D (Note 2) 12,327 7,857 4,976 1,255 479
Amortization of organization expenses
(Note 1f) 3,428 8,618 6,519 2,148 4,878
Account maintenance fees--Class D (Note 2) 7,788 4,226 2,780 728 390
Directors' fees and expenses 5,345 3,902 2,417 602 1,019
Transfer agent fees--Class A (Note 2) 727 429 723 2,114 4,447
Pricing fees (Note 2) 532 3,503 103 1,809 683
Other 3,841 3,378 2,215 1,126 1,119
----------- ----------- ----------- ----------- -----------
Total expenses before reimbursement 1,114,637 897,259 778,720 165,838 144,635
Reimbursement of expenses (Note 2) -- -- -- (126,601) (113,538)
----------- ----------- ----------- ----------- -----------
Total expenses after reimbursement 1,114,637 897,259 778,720 39,237 31,097
----------- ----------- ----------- ----------- -----------
Investment income (loss)--net. (138,325) 275,901 (394,020) 345,109 323,293
----------- ----------- ----------- ----------- -----------
Realized & Realized gain from:
Unrealized Investments--net 4,198,597 766,048 2,529,992 34,284 109,749
Gain Foreign currency transactions--net -- 226,573 -- -- --
(Loss) on Change in unrealized appreciation/
Investments depreciation on:
& Foreign Investments--net (1,625,941) 3,291,354 7,019,052 (76,864) (141,339)
Currency Foreign currency transactions--net -- (36,858) -- -- --
Transactions ----------- ----------- ----------- ----------- -----------
- --Net (Notes Net realized and unrealized gain (loss)
1b, 1c, on investments and foreign currency
1e & 3): transactions 2,572,656 4,247,117 9,549,044 (42,580) (31,590)
----------- ----------- ----------- ----------- -----------
Net Increase in Net Assets Resulting
from Operations $ 2,434,331 $ 4,523,018 $ 9,155,024 $ 302,529 $ 291,703
=========== =========== =========== =========== ===========
<FN>
*Net of foreign withholding tax
on dividends $ 5,961 $ 57,341 $ 5,563 -- --
=========== =========== =========== =========== ===========
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
Fundamental Global Opportunity
Value Portfolio Portfolio
For the Six For the For the Six For the
Months Ended Year Ended Months Ended Year Ended
July 31, January 31, July 31, January 31,
Increase (Decrease) in Net Assets: 1998 1998 1998 1998
<S> <S> <C> <C> <C> <C>
Operations: Investment income (loss)--net $ (138,325) $ (358,548) $ 275,901 $ 117,575
Realized gain on investments and foreign currency
transactions--net 4,198,597 7,145,873 992,621 4,186,568
Change in unrealized appreciation/depreciation on
investments and foreign currency transactions--net (1,625,941) 2,970,461 3,254,496 (1,526,403)
----------- ----------- ----------- -----------
Net increase in net assets resulting from operations 2,434,331 9,757,786 4,523,018 2,777,740
----------- ----------- ----------- -----------
Dividends & Investment income--net:
Distributions Class A -- -- -- (611)
to Share- Class B -- -- -- (76,651)
holders Class C -- -- -- (30,314)
(Note 1g): Class D -- -- -- (9,999)
In excess of investment income--net:
Class A -- -- -- (2,673)
Class B -- -- -- (335,476)
Class C -- -- -- (132,675)
Class D -- -- -- (43,763)
Realized gain on investments--net:
Class A (5,968) (35,250) (561) (12,818)
Class B (912,155) (5,200,268) (107,053) (3,181,736)
Class C (444,566) (2,463,175) (43,148) (1,245,621)
Class D (97,333) (604,991) (9,798) (238,373)
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 (1,460,022) (8,303,684) (160,560) (5,960,044)
----------- ----------- ----------- -----------
Capital Net increase in net assets derived from capital share
Share transactions 17,113,440 20,907,035 3,468,090 19,283,250
Transactions ----------- ----------- ----------- -----------
(Note 4):
Net Assets: Total increase in net assets 18,087,749 22,361,137 7,830,548 16,100,946
Beginning of period 76,599,834 54,238,697 59,953,605 43,852,659
----------- ----------- ----------- -----------
End of period* $94,687,583 $76,599,834 $67,784,153 $59,953,605
=========== =========== =========== ===========
<FN>
*Undistributed (accumulated distributions in
excess of) investment income--net -- -- $ 188,553 $ (87,348)
=========== =========== =========== ===========
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Asset Builder Program, Inc., July 31, 1998
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS (concluded)
<CAPTION>
Growth Quality US Government
Opportunity Bond Securities
Portfolio Portfolio Portfolio
For the Six For the For the Six For the For the Six For the
Months Ended Year Ended Months Ended Year Ended Months Ended Year Ended
July 31, January 31, July 31, January 31, July 31, January 31,
Increase (Decrease) in Net Assets: 1998 1998 1998 1998 1998 1998
<S> <S> <C> <C> <C> <C> <C> <C>
Operations: Investment income (loss)--net $ (394,020) $ (443,121) $ 345,109 $ 612,919 $ 323,293 $ 692,750
Realized gain on invest-
ments--net 2,529,992 2,875,420 34,284 34,086 109,749 100,678
Change in unrealized
appreciation/depreciation
on investments--net 7,019,052 2,511,620 (76,864) 267,178 (141,339) 269,148
----------- ----------- ----------- ----------- ----------- -----------
Net increase in net assets
resulting from operations 9,155,024 4,943,919 302,529 914,183 291,703 1,062,576
----------- ----------- ----------- ----------- ----------- -----------
Dividends & Investment income--net:
Distribu- Class A -- -- (32,035) (123,527) (91,083) (266,916)
tions to Class B -- -- (204,481) (317,057) (166,094) (294,485)
Shareholders Class C -- -- (90,035) (137,274) (56,675) (110,661)
(Note 1g): Class D -- -- (18,558) (35,061) (9,441) (20,688)
Realized gain on investments
--net:
Class A (861) (13,310) -- -- -- (23,691)
Class B (81,490) (1,603,433) -- -- -- (37,250)
Class C (44,904) (796,299) -- -- -- (13,982)
Class D (5,418) (111,328) -- -- -- (2,134)
----------- ----------- ----------- ----------- ----------- -----------
Net decrease in net assets
resulting from dividends
and distributions to
shareholders (132,673) (2,524,370) (345,109) (612,919) (323,293) (769,807)
----------- ----------- ----------- ----------- ----------- -----------
Capital Share Net increase (decrease) in
Transactions net assets derived from
(Note 4): capital share transactions 28,320,956 22,868,370 1,768,937 1,015,801 (674,143) 868,656
----------- ----------- ----------- ----------- ----------- -----------
Net Assets: Total increase (decrease)
in net assets 37,343,307 25,287,919 1,726,357 1,317,065 (705,733) 1,161,425
Beginning of period 40,629,717 15,341,798 10,732,207 9,415,142 12,231,779 11,070,354
----------- ----------- ----------- ----------- ----------- -----------
End of period $77,973,024 $40,629,717 $12,458,564 $10,732,207 $11,526,046 $12,231,779
=========== =========== =========== =========== =========== ===========
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
Fundamental Value Portfolio++++
Class A Class B
The following per share data
and ratios have been derived For the For the
from information provided in Six Six
the financial statements. Months Months
Ended For the Year Ended For the Year
Increase (Decrease) in Net July 31, Ended January 31, July 31, Ended January 31,
Asset Value: 1998 1998 1997 1996++ 1998 1998 1997 1996++
<S> <S> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of
Operating period $ 13.98 $ 13.58 $ 11.67 $ 10.00 $ 13.75 $ 13.39 $ 11.55 $ 10.00
Performance: ------- ------- ------- ------- ------- ------- ------- -------
Investment income (loss)--net .06 .07 (.01) .25 (.03) (.09) (.15) (.07)
Realized and unrealized gain
on investments--net .64 2.22 2.70 1.76 .64 2.19 2.65 1.96
------- ------- ------- ------- ------- ------- ------- -------
Total from investment
operations .70 2.29 2.69 2.01 .61 2.10 2.50 1.89
------- ------- ------- ------- ------- ------- ------- -------
Less distributions:
Realized gain on invest-
ments--net (.23) (1.89) (.78) (.20) (.22) (1.74) (.66) (.20)
In excess of realized
gain on investments--net -- -- -- (.11) -- -- -- (.11)
Return of capital--net -- -- -- (.03) -- -- -- (.03)
------- ------- ------- ------- ------- ------- ------- -------
Total distributions (.23) (1.89) (.78) (.34) (.22) (1.74) (.66) (.34)
------- ------- ------- ------- ------- ------- ------- -------
Net asset value, end of
period $ 14.45 $ 13.98 $ 13.58 $ 11.67 $ 14.14 $ 13.75 $ 13.39 $ 11.55
======= ======= ======= ======= ======= ======= ======= =======
Total Based on net asset value
Investment per share 4.96%+++ 17.12% 23.20% 20.10%+++ 4.39%+++ 15.91% 21.79% 18.89%+++
Return:** ======= ======= ======= ======= ======= ======= ======= =======
Ratios to Expenses, net of reimbursement 1.37%* 1.63% 2.03% 1.54% 2.45%* 2.72% 3.11% 3.29%
Average Net ======= ======= ======= ======= ======= ======= ======= =======
Assets: Expenses 1.37%* 1.63% 2.03% 2.00% 2.45%* 2.72% 3.11% 3.39%
======= ======= ======= ======= ======= ======= ======= =======
Investment income (loss)--net .74%* .48% (.07%) 1.99% (.35%)* (.60%) (1.15%) (.61%)
======= ======= ======= ======= ======= ======= ======= =======
Supplemental Net assets, end of period
Data: (in thousands) $ 368 $ 317 $ 209 $ 121 $59,223 $48,073 $34,828 $20,989
======= ======= ======= ======= ======= ======= ======= =======
Portfolio turnover 17.56% 68.75% 80.60% 51.37% 17.56% 68.75% 80.60% 51.37%
======= ======= ======= ======= ======= ======= ======= =======
<FN>
*Annualized.
**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.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Asset Builder Program, Inc., July 31, 1998
<TABLE>
FINANCIAL HIGHLIGHTS (continued)
<CAPTION>
Fundamental Value Portfolio++++
Class C Class D
The following per share data
and ratios have been derived
from information provided in For the Six For the Six
the financial statements. Months Months
Ended For the Year Ended For the Year
Increase (Decrease) in July 31, Ended January 31, July 31, Ended January 31,
Net Asset Value: 1998 1998 1997 1996++ 1998 1998 1997 1996++
<S> <S> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of
Operating period $ 13.75 $ 13.39 $ 11.55 $ 10.00 $ 13.94 $ 13.54 $ 11.65 $ 10.00
Performance: ------- ------- ------- ------- ------- ------- ------- -------
Investment income (loss)--net (.03) (.09) (.15) (.09) .04 .03 (.04) .03
Realized and unrealized gain
on investments--net .63 2.19 2.66 1.98 .64 2.22 2.68 1.96
------- ------- ------- ------- ------- ------- ------- -------
Total from investment
operations .60 2.10 2.51 1.89 .68 2.25 2.64 1.99
------- ------- ------- ------- ------- ------- ------- -------
Less distributions:
Realized gain on invest-
ments--net (.22) (1.74) (.67) (.20) (.23) (1.85) (.75) (.20)
In excess of realized gain
on investments--net -- -- -- (.11) -- -- -- (.11)
Return of capital--net -- -- -- (.03) -- -- -- (.03)
------- ------- ------- ------- ------- ------- ------- -------
Total distributions (.22) (1.74) (.67) (.34) (.23) (1.85) (.75) (.34)
------- ------- ------- ------- ------- ------- ------- -------
Net asset value, end of period $ 14.13 $ 13.75 $ 13.39 $ 11.55 $ 14.39 $ 13.94 $ 13.54 $ 11.65
======= ======= ======= ======= ======= ======= ======= =======
Total Based on net asset value
Investment per share 4.31%+++ 15.93% 21.82% 18.89%+++ 4.81%+++ 16.89% 22.82% 19.90%+++
Return:** ======= ======= ======= ======= ======= ======= ======= =======
Ratios to Expenses, net of reimbursement 2.48%* 2.75% 3.15% 3.38% 1.62%* 1.89% 2.27% 2.45%
Average Net ======= ======= ======= ======= ======= ======= ======= =======
Assets: Expenses 2.48%* 2.75% 3.15% 3.46% 1.62%* 1.89% 2.27% 2.56%
======= ======= ======= ======= ======= ======= ======= =======
Investment income (loss)--net (.38%)* (.63%) (1.19%) (.75%) .49%* .23% (.31%) .24%
======= ======= ======= ======= ======= ======= ======= =======
Supplemental Net assets, end of period
Data: (in thousands) $28,958 $22,896 $15,022 $ 7,990 $ 6,139 $ 5,314 $ 4,180 $ 2,471
======= ======= ======= ======= ======= ======= ======= =======
Portfolio turnover 17.56% 68.75% 80.60% 51.37% 17.56% 68.75% 80.60% 51.37%
======= ======= ======= ======= ======= ======= ======= =======
<CAPTION>
Global Opportunity Portfolio++++
Class A Class B
The following per share data
and ratios have been derived
from information provided in For the Six For the Six
the financial statements. Months Months
Ended For the Year Ended For the Year
Increase (Decrease) in July 31, Ended January 31, July 31, Ended January 31,
Net Asset Value: 1998 1998 1997 1996++ 1998 1998 1997 1996++
<S> <S> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning
Operating of period $ 11.40 $ 11.93 $ 10.82 $ 10.00 $ 11.30 $ 11.86 $ 10.76 $ 10.00
Performance: ------- ------- ------- ------- ------- ------- ------- -------
Investment income (loss)--net .12 .16 .15 .34 .05 .02 (.04) .13
Realized and unrealized gain
on investments and foreign
currency transactions--net .80 .69 1.21 .77 .80 .68 1.29 .85
------- ------- ------- ------- ------- ------- ------- -------
Total from investment
operations .92 .85 1.36 1.11 .85 .70 1.25 .98
------- ------- ------- ------- ------- ------- ------- -------
Less dividends and distri-
butions:
Investment income--net -- (.05) -- (.20) -- (.02) -- (.15)
In excess of investment
income on investments--net -- (.20) (.13) (.06) -- (.11) (.03) (.04)
Realized gain on invest-
ments--net (.04) (.99) (.12) -- (.03) (.99) (.12) --
In excess of realized gain
on investments--net -- (.14) -- (.03) -- (.14) -- (.03)
------- ------- ------- ------- ------- ------- ------- -------
Total dividends and distri-
butions (.04) (1.38) (.25) (.29) (.03) (1.26) (.15) (.22)
------- ------- ------- ------- ------- ------- ------- -------
Net asset value, end of
period $ 12.28 $ 11.40 $ 11.93 $ 10.82 $ 12.12 $ 11.30 $ 11.86 $ 10.76
======= ======= ======= ======= ======= ======= ======= =======
Total Based on net asset value
Investment per share 8.04%+++ 7.27% 12.68% 11.15%+++ 7.50%+++ 5.97% 11.67% 9.89%+++
Return:** ======= ======= ======= ======= ======= ======= ======= =======
Ratios to Expenses, net of reimbursement 1.67%* 1.87% 2.47% 2.01% 2.76%* 2.96% 3.76% 3.50%
Average Net ======= ======= ======= ======= ======= ======= ======= =======
Assets: Expenses 1.67%* 1.87% 2.90% 2.32% 2.76%* 2.96% 4.01% 3.61%
======= ======= ======= ======= ======= ======= ======= =======
Investment income (loss)--net 1.91%* 1.28% 1.83% 2.92% .80%* .18% (.39%) 1.20%
======= ======= ======= ======= ======= ======= ======= =======
Supplemental Net assets, end of period
Data: (in thousands) $ 179 $ 167 $ 129 $ 3,025 $45,752 $40,687 $30,469 $16,117
======= ======= ======= ======= ======= ======= ======= =======
Portfolio turnover 53.42% 99.11% 125.68% 83.14% 53.42% 99.11% 125.68% 83.14%
======= ======= ======= ======= ======= ======= ======= =======
<CAPTION>
Global Opportunity Portfolio++++
Class C Class D
The following per share data
and ratios have been derived
from information provided in For the Six For the Six
the financial statements. Months Months
Ended For the Year Ended For the Year
Increase (Decrease) in July 31, Ended January 31, July 31, Ended January 31,
Net Asset Value: 1998 1998 1997 1996++ 1998 1998 1997 1996++
<S> <S> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of
Operating period $ 11.28 $ 11.84 $ 10.75 $ 10.00 $ 11.39 $ 11.92 $ 10.80 $ 10.00
Performance: ------- ------- ------- ------- ------- ------- ------- -------
Investment income (loss)--net .05 .02 (.05) .12 .10 .13 .05 .22
Realized and unrealized gain
on investments and foreign
currency transactions--net .80 .68 1.29 .85 .81 .70 1.29 .85
------- ------- ------- ------- ------- ------- ------- -------
Total from investment
operations .85 .70 1.24 .97 .91 .83 1.34 1.07
------- ------- ------- ------- ------- ------- ------- -------
Less dividends and distri-
butions:
Investment income--net -- (.02) -- (.15) -- (.04) -- (.18)
In excess of investment
income on investments--net -- (.11) (.03) (.04) -- (.19) (.10) (.06)
Realized gain on invest-
ments--net (.03) (.99) (.12) -- (.04) (.99) (.12) --
In excess of realized gain
on investments--net -- (.14) -- (.03) -- (.14) -- (.03)
------- ------- ------- ------- ------- ------- ------- -------
Total dividends and distri-
butions (.03) (1.26) (.15) (.22) (.04) (1.36) (.22) (.27)
------- ------- ------- ------- ------- ------- ------- -------
Net asset value, end of period $ 12.10 $ 11.28 $ 11.84 $ 10.75 $ 12.26 $ 11.39 $ 11.92 $ 10.80
======= ======= ======= ======= ======= ======= ======= =======
Total Based on net asset value
Investment per share 7.51%+++ 5.99% 11.61% 9.81%+++ 7.94%+++ 7.02% 12.56% 10.80%+++
Return:** ======= ======= ======= ======= ======= ======= ======= =======
Ratios to Expenses, net of reimbursement 2.80%* 3.00% 3.81% 3.58% 1.92%* 2.12% 2.91% 2.67%
Average Net ======= ======= ======= ======= ======= ======= ======= =======
Assets: Expenses 2.80%* 3.00% 4.06% 3.65% 1.92%* 2.12% 3.17% 2.77%
======= ======= ======= ======= ======= ======= ======= =======
Investment income (loss)--net .75%* .13% (.46%) 1.07% 1.66%* 1.03% .48% 2.00%
======= ======= ======= ======= ======= ======= ======= =======
Supplemental Net assets, end of period
Data: (in thousands) $18,427 $15,951 $10,659 $ 4,770 $ 3,426 $ 3,149 $ 2,596 $ 1,513
======= ======= ======= ======= ======= ======= ======= =======
Portfolio turnover 53.42% 99.11% 125.68% 83.14% 53.42% 99.11% 125.68% 83.14%
======= ======= ======= ======= ======= ======= ======= =======
<FN>
*Annualized.
**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.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Asset Builder Program, Inc., July 31, 1998
<TABLE>
FINANCIAL HIGHLIGHTS (continued)
<CAPTION>
Growth Opportunity Portfolio++++
Class A Class B
The following per share data and
ratios have been derived from
information provided in For the For the For the For the For the For the
the financial statements. Six Months Year Period Six Months Year Period
Ended Ended Feb. 2, 1996++++++ Ended Ended Feb. 2, 1996++++++
Increase (Decrease) in Net July 31, Jan. 31, to Jan. 31, July 31, Jan. 31, to Jan. 31,
Asset Value: 1998 1998 1997 1998 1998 1997
<S> <S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning
Operating of period $ 13.42 $ 11.79 $ 10.00 $ 13.27 $ 11.68 $ 10.00
Performance: --------- --------- --------- --------- --------- ---------
Investment income (loss)--net (.01) (.07) .03 (.10) (.22) (.21)
Realized and unrealized gain
on investments--net 2.64 2.83 1.76 2.62 2.80 1.89
--------- --------- --------- --------- --------- ---------
Total from investment
operations 2.63 2.76 1.79 2.52 2.58 1.68
--------- --------- --------- --------- --------- ---------
Less distributions from realized
gain on investments--net (.03) (1.13) -- (.03) (.99) --
--------- --------- --------- --------- --------- ---------
Net asset value, end of
period $ 16.02 $ 13.42 $ 11.79 $ 15.76 $ 13.27 $ 11.68
========= ========= ========= ========= ========= =========
Total Based on net asset value
Investment per share 19.62%+++ 23.52% 17.90%+++ 18.96%+++ 22.16% 16.80%+++
Return:** ========= ========= ========= ========= ========= =========
Ratios to Expenses, net of
Average Net reimbursement 1.43%* 1.98% 2.44%* 2.54%* 3.09% 3.84%*
Assets: ========= ========= ========= ========= ========= =========
Expenses 1.43%* 1.98% 3.08%* 2.54%* 3.09% 4.00%*
========= ========= ========= ========= ========= =========
Investment income (loss)--net (.19%)* (.55%) .23%* (1.30%)* (1.66%) (1.93%)*
========= ========= ========= ========= ========= =========
Supplemental Net assets, end of period
Data: (in thousands) $ 404 $ 207 $ 58 $ 48,309 $ 25,752 $ 9,816
========= ========= ========= ========= ========= =========
Portfolio turnover 20.43% 60.24% 51.63% 20.43% 60.24% 51.63%
========= ========= ========= ========= ========= =========
<CAPTION>
Growth Opportunity Portfolio++++
Class C Class D
The following per share data
and ratios have been derived
from information provided For the For the For the For the For the For the
in the financial statements. Six Months Year Period Six Months Year Period
Ended Ended Feb. 2, 1996++++++ Ended Ended Feb. 2, 1996++++++
Increase (Decrease) in Net July 31, Jan. 31, to Jan. 31, July 31, Jan. 31, to Jan. 31,
Asset Value: 1998 1998 1997 1998 1998 1997
<S> <S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning
Operating of period $ 13.26 $ 11.67 $ 10.00 $ 13.42 $ 11.78 $ 10.00
Performance: --------- --------- --------- --------- --------- ---------
Investment loss--net (.10) (.23) (.22) (.03) (.11) (.11)
Realized and unrealized gain
on investments--net 2.61 2.81 1.89 2.63 2.84 1.89
--------- --------- --------- --------- --------- ---------
Total from investment
operations 2.51 2.58 1.67 2.60 2.73 1.78
--------- --------- --------- --------- --------- ---------
Less distributions from realized
gain on investments--net (.03) (.99) -- (.03) (1.09) --
--------- --------- --------- --------- --------- ---------
Net asset value, end of
period $ 15.74 $ 13.26 $ 11.67 $ 15.99 $ 13.42 $ 11.78
========= ========= ========= ========= ========= =========
Total Based on net asset value
Investment per share 18.90%+++ 22.17% 16.70%+++ 19.39%+++ 23.30% 17.80%+++
Return:** ========= ========= ========= ========= ========= =========
Ratios to Expenses, net of
Average Net reimbursement 2.58%* 3.14% 3.88%* 1.69%* 2.23% 2.94%*
Assets: ========= ========= ========= ========= ========= =========
Expenses 2.58%* 3.14% 4.05%* 1.69%* 2.23% 3.13%*
========= ========= ========= ========= ========= =========
Investment loss--net (1.34%)* (1.71%) (1.98%)* (.44%)* (.80%) (1.00%)*
========= ========= ========= ========= ========= =========
Supplemental Net assets, end of period
Data: (in thousands) $ 26,559 $ 13,059 $ 4,649 $ 2,701 $ 1,612 $ 819
========= ========= ========= ========= ========= =========
Portfolio turnover 20.43% 60.24% 51.63% 20.43% 60.24% 51.63%
========= ========= ========= ========= ========= =========
<CAPTION>
Quality Bond Portfolio
Class A Class B
The following per share data
and ratios have been derived
from information provided in For the Six For the Six
the financial statements. Months Months
Ended For the Year Ended For the Year
Increase (Decrease) in July 31, Ended January 31, July 31, Ended January 31,
Net Asset Value: 1998 1998 1997 1996++ 1998 1998 1997 1996++
<S> <S> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning
Operating of period $ 10.10 $ 9.79 $ 10.27 $ 10.00 $ 10.09 $ 9.79 $ 10.27 $ 10.00
Performance: ------- ------- ------- ------- ------- ------- ------- -------
Investment income--net .33 .69 .68 .62 .29 .60 .59 .54
Realized and unrealized gain
(loss) on investments--net (.04) .31 (.44) .27 (.04) .30 (.44) .27
------- ------- ------- ------- ------- ------- ------- -------
Total from investment
operations .29 1.00 .24 .89 .25 .90 .15 .81
------- ------- ------- ------- ------- ------- ------- -------
Less dividends and distri-
butions:
Investment income--net (.33) (.69) (.68) (.62) (.29) (.60) (.59) (.54)
Realized gain on
investments--net -- -- (.04) -- -- -- (.04) --
------- ------- ------- ------- ------- ------- ------- -------
Total dividends and distri-
butions (.33) (.69) (.72) (.62) (.29) (.60) (.63) (.54)
------- ------- ------- ------- ------- ------- ------- -------
Net asset value, end of
period $ 10.06 $ 10.10 $ 9.79 $ 10.27 $ 10.05 $ 10.09 $ 9.79 $ 10.27
======= ======= ======= ======= ======= ======= ======= =======
Total Based on net asset value
Investment per share 2.93%+++ 10.59% 2.51% 9.26%+++ 2.55%+++ 9.55% 1.62% 8.35%+++
Return:** ======= ======= ======= ======= ======= ======= ======= =======
Ratios to Expenses, net of
Average Net reimbursement .00%* .00% .00% .00% .75%* .75% .78% .79%
Assets: ======= ======= ======= ======= ======= ======= ======= =======
Expenses 2.11%* 2.62% 3.23% 2.60% 2.93%* 3.51% 4.08% 3.31%
======= ======= ======= ======= ======= ======= ======= =======
Investment income--net 6.62%* 7.01% 6.85% 6.22% 5.87%* 6.14% 6.00% 5.52%
======= ======= ======= ======= ======= ======= ======= =======
Supplemental Net assets, end of period
Data: (in thousands) $ 649 $ 1,214 $ 2,254 $ 2,196 $ 7,773 $ 6,095 $ 4,824 $ 3,049
======= ======= ======= ======= ======= ======= ======= =======
Portfolio turnover 75.32% 114.61% 91.10% 86.68% 75.32% 114.61% 91.10% 86.68%
======= ======= ======= ======= ======= ======= ======= =======
<FN>
*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.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Asset Builder Program, Inc., July 31, 1998
<TABLE>
FINANCIAL HIGHLIGHTS (concluded)
<CAPTION>
Quality Bond Portfolio
Class C Class D
The following per share data
and ratios have been derived
from information provided in For the Six For the Six
the financial statements. Months Months
Ended For the Year Ended For the Year
Increase (Decrease) in July 31, Ended January 31, July 31, Ended January 31,
Net Asset Value: 1998 1998 1997 1996++ 1998 1998 1997 1996++
<S> <S> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning
Operating of period $ 10.09 $ 9.79 $ 10.27 $ 10.00 $ 10.09 $ 9.79 $ 10.27 $ 10.00
Performance: ------- ------- ------- ------- ------- ------- ------- -------
Investment income--net .29 .60 .58 .53 .32 .66 .65 .60
Realized and unrealized gain
(loss) on investments--net (.04) .30 (.44) .27 (.04) .30 (.44) .27
------- ------- ------- ------- ------- ------- ------- -------
Total from investment
operations .25 .90 .14 .80 .28 .96 .21 .87
------- ------- ------- ------- ------- ------- ------- -------
Less dividends and
distributions:
Investment income--net (.29) (.60) (.58) (.53) (.32) (.66) (.65) (.60)
Realized gain on
investments--net -- -- (.04) -- -- -- (.04) --
------- ------- ------- ------- ------- ------- ------- -------
Total dividends and
distributions (.29) (.60) (.62) (.53) (.32) (.66) (.69) (.60)
------- ------- ------- ------- ------- ------- ------- -------
Net asset value, end of
period $ 10.05 $ 10.09 $ 9.79 $ 10.27 $ 10.05 $ 10.09 $ 9.79 $ 10.27
======= ======= ======= ======= ======= ======= ======= =======
Total Based on net asset value
Investment per share 2.53%+++ 9.46% 1.55% 8.27%+++ 2.81%+++ 10.21% 2.25% 8.99%+++
Return:** ======= ======= ======= ======= ======= ======= ======= =======
Ratios to Expenses, net of
Average Net reimbursement .80%* .80% .85% .87% .25%* .25% .16% .19%
Assets: ======= ======= ======= ======= ======= ======= ======= =======
Expenses 3.03%* 3.60% 4.15% 3.44% 2.34%* 2.90% 3.47% 2.70%
======= ======= ======= ======= ======= ======= ======= =======
Investment income--net 5.82%* 6.05% 5.93% 5.46% 6.37%* 6.75% 6.62% 6.11%
======= ======= ======= ======= ======= ======= ======= =======
Supplemental Net assets, end of period
Data: (in thousands) $ 3,373 $ 2,814 $ 1,885 $ 1,123 $ 664 $ 609 $ 452 $ 221
======= ======= ======= ======= ======= ======= ======= =======
Portfolio turnover 75.32% 114.61% 91.10% 86.68% 75.32% 114.61% 91.10% 86.68%
======= ======= ======= ======= ======= ======= ======= =======
<CAPTION>
US Government Securities Portfolio
Class A Class B
The following per share data
and ratios have been derived
from information provided in For the Six For the Six
the financial statements. Months Months
Ended For the Year Ended For the Year
Increase (Decrease) in July 31, Ended January 31, July 31, Ended January 31,
Net Asset Value: 1998 1998 1997 1996++ 1998 1998 1997 1996++
<S> <S> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning
Operating of period $ 10.48 $ 10.20 $ 10.48 $ 10.00 $ 10.48 $ 10.20 $ 10.48 $ 10.00
Performance: ------- ------- ------- ------- ------- ------- ------- -------
Investment income--net .33 .69 .69 .76 .29 .61 .60 .68
Realized and unrealized gain
(loss) on investments--net (.03) .35 (.21) .74 (.03) .35 (.21) .74
------- ------- ------- ------- ------- ------- ------- -------
Total from investment
operations .30 1.04 .48 1.50 .26 .96 .39 1.42
------- ------- ------- ------- ------- ------- ------- -------
Less dividends and distri-
butions:
Investment income--net (.33) (.69) (.69) (.76) (.29) (.61) (.60) (.68)
Realized gain on invest-
ments--net -- (.07) (.07) (.26) -- (.07) (.07) (.26)
------- ------- ------- ------- ------- ------- ------- -------
Total dividends and distri-
butions (.33) (.76) (.76) (1.02) (.29) (.68) (.67) (.94)
------- ------- ------- ------- ------- ------- ------- -------
Net asset value, end of period $ 10.45 $ 10.48 $ 10.20 $ 10.48 $ 10.45 $ 10.48 $ 10.20 $ 10.48
======= ======= ======= ======= ======= ======= ======= =======
Total Based on net asset value
Investment per share 2.89%+++ 10.66% 4.76% 15.47%+++ 2.51%+++ 9.76% 3.90% 14.53%+++
Return:** ======= ======= ======= ======= ======= ======= ======= =======
Ratios to Expenses, net of reimbursement .00%* .00% .00% .00% .75%* .75% .78% .81%
Average Net ======= ======= ======= ======= ======= ======= ======= =======
Assets: Expenses 1.97%* 2.00% 2.92% 2.54% 2.77%* 2.82% 3.72% 3.35%
======= ======= ======= ======= ======= ======= ======= =======
Investment income--net 6.33%* 6.80% 6.69% 7.30% 5.54%* 5.94% 5.85% 6.28%
======= ======= ======= ======= ======= ======= ======= =======
Supplemental Net assets, end of period
Data: (in thousands) $ 2,418 $ 3,233 $ 4,486 $ 5,463 $ 6,585 $ 6,627 $ 4,514 $ 3,043
======= ======= ======= ======= ======= ======= ======= =======
Portfolio turnover 172.44% 361.31% 27.32% 113.05% 172.44% 361.31% 27.32% 113.05%
======= ======= ======= ======= ======= ======= ======= =======
<CAPTION>
US Government Securities Portfolio
Class C Class D
The following per share data
and ratios have been derived
from information provided in For the Six For the Six
the financial statements. Months Months
Ended For the Year Ended For the Year
Increase (Decrease) in July 31, Ended January 31, July 31, Ended January 31,
Net Asset Value: 1998 1998 1997 1996++ 1998 1998 1997 1996++
<S> <S> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning
Operating of period $ 10.48 $ 10.19 $ 10.47 $ 10.00 $ 10.48 $ 10.20 $ 10.48 $ 10.00
Performance: ------- ------- ------- ------- ------- ------- ------- -------
Investment income--net .29 .60 .59 .67 .32 .67 .66 .74
Realized and unrealized gain
(loss) on investments--net (.03) .36 (.21) .73 (.02) .35 (.21) .74
------- ------- ------- ------- ------- ------- ------- -------
Total from investment
operations .26 .96 .38 1.40 .30 1.02 .45 1.48
------- ------- ------- ------- ------- ------- ------- -------
Less dividends and distri-
butions:
Investment income--net (.29) (.60) (.59) (.67) (.32) (.67) (.66) (.74)
Realized gain on invest-
ments--net -- (.07) (.07) (.26) -- (.07) (.07) (.26)
------- ------- ------- ------- ------- ------- ------- -------
Total dividends and distri-
butions (.29) (.67) (.66) (.93) (.32) (.74) (.73) (1.00)
------- ------- ------- ------- ------- ------- ------- -------
Net asset value, end of
period $ 10.45 $ 10.48 $ 10.19 $ 10.47 $ 10.46 $ 10.48 $ 10.20 $ 10.48
======= ======= ======= ======= ======= ======= ======= =======
Total Based on net asset value
Investment per share 2.48%+++ 9.79% 3.83% 14.36%+++ 2.86%+++ 10.38% 4.49% 15.13%+++
Return:** ======= ======= ======= ======= ======= ======= ======= =======
Ratios to Expenses, net of reimbursement .80%* .80% .85% .86% .25%* .25% .21% .22%
Average Net ======= ======= ======= ======= ======= ======= ======= =======
Assets: Expenses 2.89%* 2.90% 3.78% 3.41% 2.21%* 2.25% 3.14% 2.77%
======= ======= ======= ======= ======= ======= ======= =======
Investment income--net 5.50%* 5.88% 5.78% 6.21% 6.05%* 6.53% 6.42% 6.90%
======= ======= ======= ======= ======= ======= ======= =======
Supplemental Net assets, end of period
Data: (in thousands) $ 2,198 $ 2,057 $ 1,757 $ 1,089 $ 325 $ 315 $ 313 $ 182
======= ======= ======= ======= ======= ======= ======= =======
Portfolio turnover 172.44% 361.31% 27.32% 113.05% 172.44% 361.31% 27.32% 113.05%
======= ======= ======= ======= ======= ======= ======= =======
<FN>
*Annualized.
**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.
</TABLE>
Merrill Lynch Asset Builder Program, Inc., July 31, 1998
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 an open-end
management investment company consisting of five diversified
separate portfolios: Fundamental Value Portfolio, Global Opportunity
Portfolio, Growth Opportunity Portfolio, Quality Bond Portfolio and
US Government Securities Portfolio (the "Portfolios"), except for
Growth Opportunity Portfolio which is classified as a non-
diversified portfolio. These unaudited financial statements reflect
all adjustments which are, in the opinion of management, necessary
to a fair statement of the results for the interim period presented.
All such adjustments are of a normal recurring nature. The Program's
Portfolios offer four classes of shares under the Merrill Lynch
Select Pricing SM System. Shares of Class A and Class D are sold
with a front-end sales charge. Shares of Class B and Class C may be
subject to a contingent deferred sales charge. All classes of shares
have identical voting, dividend, liquidation and other rights and
the same terms and conditions, except that Class B, Class C and
Class D Shares bear certain expenses related to the account
maintenance of such shares, and Class B and Class C Shares also bear
certain expenses related to the distribution of such shares. Each
class has exclusive voting rights with respect to matters relating
to its account maintenance and distribution expenditures. The
following is a summary of significant accounting policies followed
by the Program.
(a) Valuation of investments--Portfolio securities which are traded
on stock exchanges are valued at the last sale price on the exchange
on which such securities are traded, as of the close of business on
the day the securities are being valued or, lacking any sales, at
the last available bid price. Securities traded in the over-the-
counter market are valued at the last available bid price in the
over-the-counter market prior to the time of valuation. In cases
where securities are traded on more than one exchange, the
securities are valued on the exchange designated by or under the
authority of the Board of Directors as the primary market.
Securities which are traded both in the over-the-counter market and
on a stock exchange are valued according to the broadest and most
representative market. Options written are valued at the last sale
price in the case of exchange-traded options or, in the case of
options traded in the over-the-counter market, the last asked price.
Options purchased are valued at their last sale price in the case of
exchange-traded options or, in the case of options traded in the
over-the-counter market, the last bid price. Short-term securities
are valued at amortized cost, which approximates market value. Other
investments, including futures contracts and related options, are
stated at market value. Securities and assets for which market
quotations are not readily available are valued at fair market value
as determined in good faith by or under the direction of the Board
of Directors of the Program.
(b) Derivative financial instruments--Each Portfolio may engage in
various portfolio strategies to seek to increase its return by
hedging its portfolio against adverse movements in the equity, debt
or currency markets. Losses may arise due to changes in the value of
the contract or if the counterparty does not perform under the
contract.
* Financial futures contracts--The Portfolios may purchase or sell
financial futures contracts and options on such futures contracts
for the purpose of hedging the market risk on existing securities or
the intended purchase of securities. Futures contracts are contracts
for delayed delivery of securities at a specific future date and at
a specific price or yield. Upon entering into a contract, the
Portfolios deposit and maintain as collateral such initial margin as
required by the exchange on which the transaction is effected.
Pursuant to the contract, the Portfolios agree to receive from or
pay to the broker an amount of cash equal to the daily fluctuation
in value of the contract. Such receipts or payments are known as
variation margin and are recorded by the Portfolios as unrealized
gains or losses. When the contract is closed, the Portfolios record
a realized gain or loss equal to the difference between the value of
the contract at the time it was opened and the value at the time it
was closed.
* Options--The Portfolios are authorized to purchase and write call
and put options. When the Portfolios write an option, an amount
equal to the premium received by the Portfolios is reflected as an
asset and an equivalent liability. The amount of the liability is
subsequently marked to market to reflect the current market value of
the option written. When a security is purchased or sold through an
exercise of an option, the related premium paid (or received) is
added to (or deducted from) the basis of the security acquired or
deducted from (or added to) the proceeds of the security sold. When
an option expires (or the Portfolios enter into a closing
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.
* 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.
* 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 period not exceeding five years. Prepaid
registration fees are charged to expense as the related shares are
issued.
(g) Dividends and distributions--Dividends from net investment
income of Quality Bond and US Government Securities Portfolios are
declared daily and paid monthly. Dividends from net investment
income of Fundamental Value, Global Opportunity and Growth
Opportunity Portfolios are recorded on the ex-dividend dates.
Distributions of capital gains for all Portfolios are recorded on
the ex-dividend dates. Distributions in excess of investment income
and realized gains are due primarily to differing tax treatments for
financial 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.
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 ("MLFD" or "Distributor"), a division of Princeton
Funds Distributor, Inc. ("PFD"), which is 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 six months ended July 31, 1998, MLAM had voluntarily waived
management fees and reimbursed certain Portfolios for additional
expenses as follows:
Management Additional
Fee Expenses
Quality Bond Portfolio $29,032 $97,569
US Government Securities Portfolio $28,101 $85,437
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%
Merrill Lynch Asset Builder Program, Inc., July 31, 1998
NOTES TO FINANCIAL STATEMENTS (continued)
Distribution Fees
Class B Class C
Fundamental Value Portfolio 0.75% 0.75%
Global Opportunity Portfolio 0.75% 0.75%
Growth Opportunity Portfolio 0.75% 0.75%
Quality Bond Portfolio 0.50% 0.55%
US Government Securities Portfolio 0.50% 0.55%
Pursuant to a sub-agreement with the Distributor, Merrill Lynch,
Pierce, Fenner & Smith Inc. ("MLPF&S"), a subsidiary of ML & Co.,
also provides account maintenance and distribution services to the
Program. The ongoing account maintenance fee compensates the
Distributor and MLPF&S for providing account maintenance services to
Class B, Class C and Class D shareholders. The ongoing distribution
fee compensates the Distributor and MLPF&S for providing shareholder
and distribution-related services to Class B and Class C
shareholders.
For the six months ended July 31, 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 $7 $1,398 $143 $25,744
Global Opportunity Portfolio -- 495 -- 10,107
Growth Opportunity Portfolio 4 1,332 86 25,438
Quality Bond Portfolio -- 93 -- 1,410
US Government Securities
Portfolio -- 57 -- 749
For the six months ended July 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 $53,223 $3,732
Global Opportunity Portfolio 52,984 2,941
Growth Opportunity Portfolio 33,207 3,670
Quality Bond Portfolio 9,507 472
US Government Securities Portfolio 7,597 270
In addition, MLPF&S received $1,012, $7,451, and $3,138 in
commissions on the execution of portfolio security transactions for
the Fundamental Value, Global Opportunity and Growth Opportunity
Portfolios, respectively, for the six months ended July 31, 1998.
Financial Data Services, Inc. ("FDS"), a wholly-owned subsidiary of
ML & Co., is the Program's transfer agent.
During the six months ended July 31, 1998, Global Opportunity,
Quality Bond and US Government Securities Portfolios paid Merrill
Lynch Security Pricing Service, an affiliate of MLPF&S, $245, $1,842
and $1,158, 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, PFD, FDS, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended July 31, 1998 were as follows:
Purchases Sales
Fundamental Value Portfolio $29,451,385 $14,332,129
Global Opportunity Portfolio $41,668,317 $32,763,611
Growth Opportunity Portfolio $39,874,641 $11,534,248
Quality Bond Portfolio $10,459,915 $ 8,272,804
US Government Securities Portfolio $19,002,046 $19,658,701
Net realized gains (losses) for the six months ended July 31, 1998
and net unrealized gains (losses) as of July 31,1998 were as
follows:
Realized Unrealized
Fundamental Value Portfolio Gains Gains
Long-term investments $4,198,597 $ 6,551,754
---------- -----------
Total $4,198,597 $ 6,551,754
========== ===========
Realized Unrealized
Gains Gains
Global Opportunity Portfolio (Losses) (Losses)
Long-term investments $ 766,048 $ 6,407,885
Foreign currency transactions (106,436) (114)
Forward foreign exchange contracts 333,009 (62,702)
---------- -----------
Total $ 992,621 $ 6,345,069
========== ===========
Realized Unrealized
Growth Opportunity Portfolio Gains Gains
Long-term investments $2,529,992 $11,074,032
---------- -----------
Total $2,529,992 $11,074,032
========== ===========
Realized Unrealized
Quality Bond Portfolio Gains Gains
Long-term investments $ 34,284 $ 95,900
---------- -----------
Total $ 34,284 $ 95,900
========== ===========
Realized Unrealized
US Government Securities Portfolio Gains Gains
Long-term investments $ 109,749 $ 139,237
---------- -----------
Total $ 109,749 $ 139,237
========== ===========
As of July 31, 1998, net unrealized appreciation for Federal income
tax purposes was as follows:
Gross Gross Net
Unrealized Unrealized Unrealized
Appreciation Depreciation Appreciation
Fundamental Value
Portfolio $12,223,558 $(5,671,804) $ 6,551,754
Global Opportunity
Portfolio $ 8,214,492 $(1,806,607) $ 6,407,885
Growth Opportunity
Portfolio $13,290,091 $(2,216,059) $11,074,032
Quality Bond Portfolio $ 156,216 $ (60,316) $ 95,900
US Government Securities
Portfolio $ 148,916 $ (9,679) $ 139,237
The aggregate cost of investments at July 31, 1998 for Federal
income tax purposes was $88,040,584 for the Fundamental Value
Portfolio, $60,864,007 for the Global Opportunity Portfolio,
$67,322,416 for the Growth Opportunity Portfolio, $12,110,663 for
the Quality Bond Portfolio, and $11,826,238 for the US Government
Securities Portfolio.
4. Capital Share Transactions:
Net increase (decrease) in net assets derived from capital share
transactions for the six months ended July 31, 1998 and for the year
ended January 31, 1998, respectively, were as follows:
For the Six For the
Months Ended Year Ended
July 31, 1998 Jan. 31, 1998
Fundamental Value Portfolio $17,113,440 $20,907,035
Global Opportunity Portfolio $ 3,468,090 $19,283,250
Growth Opportunity Portfolio $28,320,956 $22,868,370
Quality Bond Portfolio $ 1,768,937 $ 1,015,801
US Government Securities Portfolio $ (674,143) $ 868,656
Transactions in capital shares for each class were as follows:
Fundamental Value Portfolio
Class A Shares for the Six Months Dollar
Ended July 31, 1998 Shares Amount
Shares sold 6,622 $ 104,029
Shares issued to shareholders in
reinvestment of distributions 290 4,367
---------- ------------
Total issued 6,912 108,396
Shares redeemed (4,109) (61,842)
---------- ------------
Net increase 2,803 $ 46,554
========== ============
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 B Shares for the Six Months Dollar
Ended July 31, 1998 Shares Amount
Shares sold 919,872 $ 13,985,080
Shares issued to shareholders in
reinvestment of distributions 56,268 830,512
Total issued 976,140 14,815,592
Shares redeemed (271,236) (4,095,567)
Automatic conversion of shares (11,697) (176,627)
---------- ------------
Net increase 693,207 $ 10,543,398
========== ============
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 C Shares for the Six Months Dollar
Ended July 31, 1998 Shares Amount
Shares sold 550,888 $ 8,360,724
Shares issued to shareholders in
reinvestment of distributions 26,828 395,719
---------- ------------
Total issued 577,716 8,756,443
Shares redeemed (193,939) (2,931,628)
---------- ------------
Net increase 383,777 $ 5,824,815
========== ============
Merrill Lynch Asset Builder Program, Inc., July 31, 1998
NOTES TO FINANCIAL STATEMENTS (continued)
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 D Shares for the Six Months Dollar
Ended July 31, 1998 Shares Amount
Shares sold 50,623 $ 781,806
Automatic conversion of shares 11,518 176,627
Shares issued to shareholders in
reinvestment of distributions 5,924 88,917
---------- ------------
Total issued 68,065 1,047,350
Shares redeemed (22,615) (348,677)
---------- ------------
Net increase 45,450 $ 698,673
========== ============
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
========== ============
Global Opportunity Portfolio
Class A Shares for the Six Months Dollar
Ended July 31, 1998 Shares Amount
Shares sold 3,193 $ 38,603
Shares issued to shareholders in
reinvestment of distributions 38 472
---------- ------------
Total issued 3,231 39,075
Shares redeemed (3,358) (41,395)
---------- ------------
Net decrease (127) $ (2,320)
========== ============
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 B Shares for the Six Months Dollar
Ended July 31, 1998 Shares Amount
Shares sold 529,387 $ 6,391,156
Shares issued to shareholders in
reinvestment of distributions 7,851 97,584
---------- ------------
Total issued 537,238 6,488,740
Automatic conversion of shares (15,275) (182,817)
Shares redeemed (347,346) (4,192,999)
---------- ------------
Net increase 174,617 $ 2,112,924
========== ============
Global Opportunity Portfolio
Class B Shares for the Year Dollar
Ended 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 C Shares for the Six Months Dollar
Ended July 31, 1998 Shares Amount
Shares sold 279,580 $ 3,368,475
Shares issued to shareholders in
reinvestment of distributions 3,028 37,573
---------- ------------
Total issued 282,608 3,406,048
Shares redeemed (173,135) (2,081,354)
---------- ------------
Net increase 109,473 $ 1,324,694
========== ============
Global Opportunity Portfolio
Class C Shares for the Year Dollar
Ended 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 D Shares for the Six Months Dollar
Ended July 31, 1998 Shares Amount
Shares sold 23,965 $ 290,475
Automatic conversion of shares 15,136 182,817
Shares issued to shareholders in
reinvestment of distributions 712 8,947
---------- ------------
Total issued 39,813 482,239
Shares redeemed (36,847) (449,447)
---------- ------------
Net increase 2,966 $ 32,792
========== ============
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
========== ============
Growth Opportunity Portfolio
Class A Shares for the Six Months Dollar
Ended July 31, 1998 Shares Amount
Shares sold 11,654 $ 176,470
Shares issued to shareholders in
reinvestment of distributions 41 677
---------- ------------
Total issued 11,695 177,147
Shares redeemed (1,857) (28,516)
---------- ------------
Net increase 9,838 $ 148,631
========== ============
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 B Shares for the Six Months Dollar
Ended July 31, 1998 Shares Amount
Shares sold 1,270,117 $ 19,054,968
Shares issued to shareholders in
reinvestment of distributions 4,478 73,044
---------- ------------
Total issued 1,274,595 19,128,012
Automatic conversion of shares (3,824) (58,803)
Shares redeemed (145,014) (2,182,951)
---------- ------------
Net increase 1,125,757 $ 16,886,258
========== ============
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 C Shares for the Six Months Dollar
Ended July 31, 1998 Shares Amount
Shares sold 781,230 $ 11,719,101
Shares issued to shareholders in
reinvestment of distributions 2,428 39,559
---------- ------------
Total issued 783,658 11,758,660
Shares redeemed (81,059) (1,218,544)
---------- ------------
Net increase 702,599 $ 10,540,116
========== ============
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 D Shares for the Six Months Dollar
Ended July 31, 1998 Shares Amount
Shares sold 55,363 $ 843,468
Automatic conversion of shares 3,773 58,803
Shares issued to shareholders in
reinvestment of distributions 292 4,829
---------- ------------
Total issued 59,428 907,100
Shares redeemed (10,695) (161,149)
---------- ------------
Net increase 48,733 $ 745,951
========== ============
Merrill Lynch Asset Builder Program, Inc., July 31, 1998
NOTES TO FINANCIAL STATEMENTS (concluded)
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
========== ============
Quality Bond Portfolio
Class A Shares for the Six Months Dollar
Ended July 31, 1998 Shares Amount
Shares sold 882 $ 8,884
Shares issued to shareholders in
reinvestment of dividends 3,271 32,945
---------- ------------
Total issued 4,153 41,829
Shares redeemed. (59,899) (601,070)
---------- ------------
Net decrease (55,746) $ (559,241)
========== ============
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)
========== ============
Quality Bond Portfolio
Class B Shares for the Six Months Dollar
Ended July 31, 1998 Shares Amount
Shares sold 224,813 $ 2,260,928
Shares issued to shareholders in
reinvestment of dividends 16,907 170,174
---------- ------------
Total issued. 241,720 2,431,102
Automatic conversion of shares (1,211) (12,197)
Shares redeemed (71,438) (718,268)
---------- ------------
Net increase 169,071 $ 1,700,637
========== ============
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 C Shares for the Six Months Dollar
Ended July 31, 1998 Shares Amount
Shares sold 88,225 $ 887,172
Shares issued to shareholders in
reinvestment of dividends 7,783 78,334
---------- ------------
Total issued 96,008 965,506
Shares redeemed (39,430) (395,975)
---------- ------------
Net increase 56,578 $ 569,531
========== ============
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 D Shares for the Six Months Dollar
Ended July 31, 1998 Shares Amount
Shares sold. 16,636 $ 167,812
Automatic conversion of shares 1,211 12,197
Shares issued to shareholders in
reinvestment of dividends 1,568 15,774
---------- ------------
Total issued 19,415 195,783
Shares redeemed (13,733) (137,773)
---------- ------------
Net increase 5,682 $ 58,010
========== ============
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
========== ============
US Government Securities Portfolio
Class A Shares for the Six Months Dollar
Ended July 31, 1998 Shares Amount
Shares sold 513 $ 5,359
Shares issued to shareholders in
reinvestment of dividends 8,878 92,756
---------- ------------
Total issued 9,391 98,115
Shares redeemed (86,529) (902,213)
---------- ------------
Net decrease (77,138) $ (804,098)
========== ============
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 B Shares for the Six Months Dollar
Ended July 31, 1998 Shares Amount
Shares sold 170,888 $ 1,784,652
Shares issued to shareholders in
reinvestment of dividends 12,021 125,570
---------- ------------
Total issued 182,909 1,910,222
Automatic conversion of shares (879) (9,217)
Shares redeemed (184,360) (1,928,148)
---------- ------------
Net decrease (2,330) $ (27,143)
========== ============
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 C Shares for the Six Months Dollar
Ended July 31, 1998 Shares Amount
Shares sold 50,498 $ 527,342
Shares issued to shareholders in
reinvestment of dividends 4,844 50,602
---------- ------------
Total issued 55,342 577,944
Shares redeemed (41,325) (431,566)
---------- ------------
Net increase 14,017 $ 146,378
========== ============
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 D Shares for the Six Months Dollar
Ended July 31, 1998 Shares Amount
Shares sold. 4,213 $ 43,999
Automatic conversion of shares 878 9,217
Shares issued to shareholders in
reinvestment of dividends 697 7,290
---------- ------------
Total issued. 5,788 60,506
Shares redeemed (4,766) (49,786)
---------- ------------
Net increase 1,022 $ 10,720
========== ============
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)
========== ============
5. Commitments:
At July 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 sell
foreign currency with an approximate value of $350,000.
6. Loaned Securities:
At July 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.
