MERRILL LYNCH
ASSET BUILDER
PROGRAM, INC.
FUND LOGO
Quarterly Report
October 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 Hertig, 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., October 31, 1998
DEAR SHAREHOLDER
We are pleased to provide you with this quarterly report for Merrill
Lynch Asset Builder Program, Inc. The Program consists of five
separate diversified portfolios, each with its own investment
objectives.
Complete performance information for all five portfolios can be
found on pages 7--10 of this report to shareholders.
Fundamental Value Portfolio
The three months ended October 30, 1998 proved to be a particularly
volatile period as the aftershocks of the Asian currency crisis
roiled markets and economies throughout the world. Responding to the
financial strains pressuring the markets, the US Federal Reserve
Board lowered interest rates twice during the October quarter. This
easing, coupled with similar moves in several other countries,
bolstered investor confidence and spurred a sharp rebound in equity
prices. Also comforting investors was the third quarter US gross
domestic product report, which indicated growth of 3.9%, which
exceeded investor expectations and represented an increase from the
second quarter growth of 1.8%. Other stock market catalysts included
the Group of Seven Industrialized Nations' plan for stabilizing
distressed economies as well as Japan's long-awaited bank bailout
program. The Standard & Poor's 500 Index (S&P 500) ended the October
quarter with a -1.57% total return, following a sharp 14.3% peak-to-
trough decline.
The divergent market crosscurrents resulted in significant sector
volatility during the October quarter. Early on, investors shunned
economically sensitive issues in response to the uncertain economic
climate. Later, these areas experienced a solid resurgence of
renewed optimism regarding economic stability following the Federal
Reserve Board's easing. However, the outperformance later in the
quarter was insufficient to overcome the earlier decline, as
reflected in the performance of the unmanaged Morgan Stanley
Cyclical and Consumer Indexes, which declined 6.7% and gained 2.5%,
respectively. The value style of investing also generated
disappointing returns during the quarter as evidenced by the S&P
Barra Value and Growth Indexes, which declined 4.5% and rose 0.3%,
respectively. For the three months ended October 31, 1998, the
Fund's Class A, Class B, Class C and Class D Shares had total
returns of -2.56%, -2.83%, -2.83% and -2.57%, respectively. The
Portfolio's performance during the October quarter was impacted
favorably by our technology and telecommunications holdings, with
leading individual gainers including 3Com Corporation, Novell, Inc.,
Union Pacific Corporation and Bell Atlantic Corporation. Sectors
that detracted from our performance included basic industry,
financial and retail.
Capitalizing on the weakness of many of our core holdings, we added
to these positions during the October quarter. Most notable
increments were to hard-hit technology, retail, energy and financial
holdings. We also initiated five positions and eliminated six
holdings during the October quarter.
Among the new commitments were two cyclical companies, Deere &
Company and Thomas & Betts Corporation. We purchased Deere on
weakness related to a softening outlook for agricultural equipment.
We believed the adversities were adequately reflected in the stock
price, with Deere down 50% from its 1998 high and with the shares
trading at a modest 8.5 times 1999 estimated earnings per share.
Thomas & Betts is a leading producer of electrical connectors and
electronic components used in computers, automobiles,
telecommunication systems and construction. The company's shares
have underperformed the market recently, reflecting weak operating
results stemming from the turmoil in Asia, a downturn in the
electronic connector industry and sluggish growth in the electrical
construction business. In response to the lackluster outlook, the
company's management has embarked on a major cost reduction program
entailing the relocation of manufacturing facilities to lower-cost
offshore sites and sizable headcount reductions. We believe that
these actions are likely to yield tangible results beginning in the
second half of 1999 and could enhance Thomas & Betts' competitive
position. Thomas & Betts was trading 38% below its 1998 high, at an
inexpensive 12 times 1999 estimated earnings per share, and offered
an above-average 2.9% dividend yield, valuations we judged offered
attractive long-term appreciation prospects.
Other new commitments during the October period included British
Petroleum Co. PLC, Dillard's, Inc. and Hewlett-Packard Co. British
Petroleum, a premier international oil company, represented an
attractive addition in the out-of-favor energy sector. We believe
the fundamental outlook for energy markets will improve in 1999,
reflecting anticipated Organization of Petroleum Exporting Countries
production restraints and an improved demand outlook as global
economies stabilize and as El Nino's adverse influence begins to
moderate. We believe the recent acquisition of Amoco Corp. is likely
to enhance British Petroleum's prospects, especially as industry
conditions begin to stabilize.
Dillard's, Inc., a major department store chain, represented an
attractive, domestically oriented addition to the Portfolio. The
shares have been poor performers over the last several years,
reflecting the company's limited earnings progress. We believe the
company's management is taking the steps necessary to improve
earnings prospects as exemplified by the recent acquisition of
Mercantile Stores. Shares of Dillard's were available at 12.5 times
1999 estimated earnings per share and at 1.3 times book value per
share, sharp discounts to comparable department store companies.
We purchased Hewlett-Packard Co., an important manufacturer of
computer products, on weakness related to a disappointing earnings
pre-announcement. The shortfall stemmed from channel overcapacity in
personal computers, weak Asian sales and a bloated cost structure.
We believed these adversities were beginning to moderate. Hewlett-
Packard shares were available at 39% below their 1998 high and at a
modest 15 times 1999 estimated earnings per share, a compelling
valuation, in our view.
During the three-month period, we completed sales of Dow Jones & Co.
Inc., Pharmaceutical Product Development, Inc. and COMPAQ Computer
Corp., all of which had reached our price targets. We eliminated
Whirlpool Corp., Harrah's Entertainment, Inc. and Bankers Trust New
York Corp. because their prospects no longer appeared promising, in
our view.
The past several quarters have proven particularly challenging for
value investors since the market has 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. 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.
Fundamental Value Portfolio continues to present attractive
valuation characteristics, with the Portfolio's price/earnings
multiple 30% below that of the S&P 500 Index and the price/ book
ratio at a 60% discount relative to the same stock market benchmark.
Global Opportunity Portfolio
As of October 31, 1998, the asset allocation for Global Opportunity
Portfolio was: foreign stocks, 22% of net assets; US stocks, 32%;
foreign bonds, 19%; US bonds, 15%; and cash reserves, 12%.
Increasingly uncertain global economic prospects led us to reduce
equity exposure in favor of bonds during the three months ended
October 31, 1998. We reduced the foreign equity sector from 39% of
net assets as of July 31, 1998 to 22% as of October 31, 1998. We
eliminated the remaining positions in emerging markets through the
sales of Oversea-Chinese Banking Corp. Ltd. in Asia and our
remaining positions in Latin America. We also made an additional
cutback in our commitment to Japanese equities. We continued to
emphasize European equities since we still regard long-term economic
prospects as favorable with continued potential for economic
restructuring. We took advantage of price weakness to enlarge
representation in companies expected to exhibit steady earnings
growth in areas such as telecommunications and food. New commitments
in telecommunications included Telecom Italia S.p.A. and Telefonica,
S.A., while newly initiated positions in the food industry included
Groupe Danone and Nestle S.A. We also established initial positions
in depressed resource-related companies such as Billiton PLC, Rio
Tinto PLC and British Petroleum Company PLC, where share prices
appeared to discount the impact of a global economic slowdown on
their operations.
US equity exposure at 32% of net assets was essentially unchanged
during the three months ended October 31, 1998. In view of
expectations of a slowing US economy, we reduced our commitment to
consumer cyclicals through the sales of Sears, Roebuck & Co. and
Carnival Corporation, and enlarged positions in the consumer staples
and health care sectors with commitments in Nabisco Holdings Corp.
and Johnson & Johnson. As was the case in international equities, we
initiated positions in depressed basic industry and energy-related
securities where the impact of an economic slowdown appeared to be
discounted. New commitments in these areas included Aluminum Co. of
America and Mobil Corporation. Significant representation is
maintained in the financial and technology-communications sectors.
Merrill Lynch Asset Builder Program, Inc., October 31, 1998
The increasing probability of a slowdown in global economic activity
led us to expand fixed-income representation. We slightly increased
our position in US bonds from 14% of net assets to 15% during the
three months ended October 31, 1998, and took advantage of a rally
in the US bond market to reduce duration slightly from 6 years to
5.7 years. While the major portion of assets remained allocated to
US Treasury obligations, we also took advantage of an unusually
large yield differential between US Treasury securities and Federal
National Mortgage Association (FNMA) obligations to initiate
commitments in FNMA securities.
We increased the Portfolio's foreign bond exposure from 12% of net
assets to 19% during the three months ended October 31, 1998. We
maintained representation in German and British obligations, given
the appeal of these markets as safe havens during the current period
of economic uncertainty. We lifted the currency hedges on
continental European stocks and bonds as it appeared that a period
of dollar weakness versus the European currencies was underway. We
also eliminated the hedge on Japanese stocks as the strength which
developed in the Japanese yen in October seemed likely to continue
in coming months. We maintained our hedge on UK stocks and bonds
given expectations that an increasingly accommodative monetary
policy by the Bank of England would result in weakness in the
British pound.
Growth Opportunity Portfolio
For the quarter ended October 31, 1998, total returns for Growth
Opportunity Portfolio's Class A, Class B, Class C and Class D Shares
of -5.62%, -5.84%, -5.84% and -5.63%, respectively, underperformed
the -1.57% total return of the unmanaged Standard & Poor's 500 (S&P
500) Index. (Fund performance does not reflect sales charges and
would be lower if sales charges were included.) The principal reason
for the Fund's underperformance was that we continued to maintain a
relatively fully invested portfolio through to the bottom of the
sell-off of the US equity market on October 8, 1998. However, we
also were fully invested through the early recovery during the
remainder of the month, and since the bottom of the sell-off, the
Portfolio has rebounded. Another factor in the comparative
investment performance during the October quarter was that the
relatively high dividend yield industries in the S&P 500 Index--
which are not significantly represented in Growth Opportunity
Portfolio--had substantially better investment performance during
the month of September and into the stock market bottom on October
8, 1998.
We remained relatively fully invested in common stocks, and added
new companies to the Portfolio in the retailing, communications
equipment and broadcasting industries. In the specialty retailing
industry, we added Abercrombie & Fitch Co. and Lowe's Companies,
Inc. to the Portfolio because their valuations appeared attractive
relative to anticipated above-average growth in earnings and
improving rates of return on equity over the next few years. We
added Ascend Communications, Inc. in the communications equipment
industry because of the potential earnings growth from a recent
strategic acquisition. We purchased shares of CBS Corporation in
response to the attractive valuation and the prospects for greater-
than-anticipated growth in earnings and improved returns from the
restructuring and reorganization of both radio and television
broadcasting operations.
We sold Hewlett-Packard Company in response to our growing concerns
about possible further deterioration in returns on equity from
continuing declines in the demand for test and measurement
equipment, which resulted from many corporations cutting back or
eliminating capital spending on manufacturing facilities as a result
of the slowdown in real economic growth around the globe. We sold
PolyGram N.V. in response to the relatively high valuation compared
to the takeover valuation offered by The Seagram Company Ltd. and
the continued decline in music industry sales outside the United
States.
Growth Opportunity Portfolio stock holdings reflect our outlook for
continued moderate real growth in consumer spending and the overall
level of business activity. Over 10% of the Portfolio is invested in
specialty and general merchandise retailers. The Portfolio's
investments in technology are focused on sectors in which we believe
capital investment will be ongoing during a period of relatively
modest real economic growth in the United States. In the
telecommunications service sector, we focused on companies that are
investing in growing capacity of their sophisticated digital
communications systems for primarily commercial customers. The top
five industry weightings are telecommunications, pharmaceuticals,
specialty retailing, computer software and banking and financial.
The top five individual stock holdings are Wal-Mart Stores, Inc.,
Cisco Systems, Inc., General Electric Company, Microsoft Corporation
and Pfizer, Inc. At the close of the October quarter, the
Portfolio's cash and cash equivalents were 5.7% of net assets.
Quality Bond Portfolio
During the three-month period ended October 31, 1998, fixed-income
markets reflected a flight to quality as investors focused on the US
Treasury and high-quality corporate bond markets. During the October
quarter, the yield curve shifted as interest rates in the United
States moved dramatically lower. (The long-term Treasury bond traded
toward a low yield of 4.70%.) Notwithstanding the strength in the
Treasury market, corporate bond spreads remained toward the wider
end of recent highs, given investor concerns relative to global
events and liquidity issues. Subsequent to the drop in the Federal
Funds rate to 5% on October 31, 1998, corporate yield spreads
reacted positively, retracing some of the year-to- date erosion.
As we entered the October quarter, there was weakness in the
emerging markets and mounting evidence that the US economy would
begin to be impacted by the troubles that many of our trading
partners were experiencing. We believed the Federal Reserve Board
would need to lower interest rates as a pre-emptive strike against a
recession, as well as to re-liquify troubled markets. Although
Quality Bond Portfolio's benchmark is the Merrill Lynch Corporate
Master Index, we believed it prudent to invest a portion of the
Portfolio's assets (5%--15% of net assets) in US Treasury securities
given prevailing liquidity issues. Furthermore, we decided to take
advantage of bond swaps, when available, which allowed us the
opportunity to trade up in credit quality with limited yield
concessions. We significantly reduced our exposure to the brokerage
and money center banking industries, as well as cyclical industrials
and domestic commodity-oriented companies such as chemicals and pulp
and paper. In addition, we continued to avoid those companies with
exposure to the emerging economies as well as high-end retailers.
Following a series of monetary policy easings by the Federal Reserve
Board, we sought to take advantage of the very attractive
opportunities that had developed in the spread between corporate
bonds and Treasury issues. Since liquidity was still a concern, we
limited our focus to the larger, higher-rated benchmark issues. This
strategy proved correct as corporate yield spreads in recent weeks
have tightened approximately 30 basis points--60 basis points, on
average, across the investment-grade spectrum. Recent additions
included such issuers as Associates Corp. of North America, Anheuser-
Busch Cos., Inc., Hershey Foods Corp., McDonald's Corporation,
Lucent Technologies Inc., Abbott Laboratories and Coca-Cola
Enterprises.
US Government Securities Portfolio
During the October quarter, Japan fell into recession, Russia
devalued its currency, and stock markets around the world tumbled,
causing investors worldwide to seek the safety and liquidity of US
Treasury bonds. The resulting strong demand for US Treasury bonds
pushed yields to lows not seen in over 30 years. The Federal Reserve
Board, in an effort to bring liquidity back to the credit markets,
lowered interest rates twice during the October quarter. The second
move, which followed the first by only two weeks, was an unexpected
surprise and a strong statement by the Federal Reserve Board that it
was taking aggressive actions to prevent the US economy from
slipping into a recession. Initially, the bond and equity markets
rallied. However, late in the October quarter, as world financial
markets began to stabilize, the flight-to-quality trades began to
unwind and the US Treasury curve steepened with longer-term
securities moving lower in price.
As a result of Federal Reserve Board interest rate cuts and the
increased yields of long-term Treasury notes, the two-year--ten-
year Treasury note yield curve steepened dramatically. This part of
the curve began the October quarter with only a single basis point
difference in yield and ended with a 50 basis point difference. The
US Treasury ten-year note yield began the quarter at 5.49% and,
although it reached a historic low of 4.16% early in October, ended
the quarter at 4.61%, almost 90 basis points lower than the start of
the quarter. This dramatically lower ten-year note yield, a
benchmark for mortgage rates, substantially increased the
refinancable mortgages universe.
Mortgage-backed security (MBS) yield spreads typically widen when
interest rates fall dramatically as prepayment risk gets priced into
their yields. However, prepayment risk played only a small role in
the widening of MBS spreads during the October quarter. The majority
of the widening came because of other spread product widening. In
fact, even those MBS that would actually benefit from an increase to
prepayments (those bought at a discounted price and received
prepayments at par) widened out with the more prepayment-sensitive
MBS. Heavy mortgage banker selling and the deleveraging and
liquidations of two major hedge funds put additional pressure on MBS
spreads.
Merrill Lynch Asset Builder Program, Inc., October 31, 1998
Early in the October quarter, as interest rates started to decline,
we increased our exposure to US Treasury Separate Trading of
Registered Interest and Principal of Securities (STRIPS). This
worked out well during August and September as long-term yields
continued to post new lows. This, coupled with our strategy of
avoiding prepayment-sensitive MBS, helped the Portfolio experience
strong performance in August and September. Late in the October
quarter, we reduced the allocation of US Treasury STRIPS in favor of
30-year Federal National Mortgage Association 6% and Federal Home
Loan Mortgage Corporation--Gold Program 15-year 5.50% as their
yields reached historically wide spreads relative to their Treasury
benchmarks. By the end of October, MBS spreads, though still very
wide, narrowed as investor sentiment started to improve. MBS
performed better than most fixed-income issues during the month of
October. However, because the portfolio had lower coupon MBS and
therefore longer duration, October returns dampened the two previous
months' returns as interest rates rose and negatively impacted those
securities with the longest durations.
US Government Securities Portfolio ended the October quarter with
43% of net assets allocated to 30-year MBS, 27% allocated to 15-year
MBS, a 10% prepayment protected FNMA multi-family pool allocation
and US Treasury and cash allocations of 10% each. Although interest
rates and mortgage rates are higher than those seen during the
October quarter, prepayment risk is still a concern, especially in
conventional 7% and higher MBS (of which the Portfolio has none). As
the market stabilizes, we will most likely reduce our cash
allocation in favor of MBS. MBS spreads are likely to continue to
tighten, barring another dramatic Treasury rally, as liquidity and
confidence return to the fixed-income markets. Prepayments will
probably remain high for the next couple of months; therefore, we
will likely continue to concentrate our investments in MBS, avoiding
those that have heavy prepayment risk. MBS with little prepayment
risk are a very attractive fixed-income investment. They have high
yields, and are likely to perform well in a steeper yield curve
environment.
In Conclusion
We thank you for your investment in Merrill Lynch Asset Builder
Program, Inc., and we look forward to reviewing our outlook and
strategy with you again in our upcoming annual report to
shareholders.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Geraldine Gunn Hertig)
Geraldine Gunn Hertig
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
(Christopher G. Ayoub)
Christopher G. Ayoub
Senior Vice President and
Co-Portfolio Manager
Quality Bond Portfolio
(Jay C. Harbeck)
Jay C. Harbeck
Senior Vice President and
Co-Portfolio Manager
Quality Bond Portfolio
(Gregory Mark Maunz)
Gregory Mark Maunz
Senior Vice President and
Portfolio Manager
US Government Securities Portfolio
December 14, 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., October 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 9/30/98 - 5.92% -10.86%
Inception (2/01/95) to 9/30/98 +15.21 +13.52
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 9/30/98 - 6.92% -10.15%
Inception (2/01/95) to 9/30/98 +13.98 +13.79
[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 9/30/98 - 6.98% - 7.78%
Inception (2/01/95) to 9/30/98 +13.97 +13.97
[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 9/30/98 - 6.20% -11.12%
Inception (2/01/95) to 9/30/98 +14.94 +13.26
[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 9/30/98 - 9.20% -13.96%
Inception (2/01/95) to 9/30/98 + 7.33 + 5.76
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 9/30/98 -10.22% -13.43%
Inception (2/01/95) to 9/30/98 + 6.18 + 5.95
[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 9/30/98 -10.31% -11.11%
Inception (2/01/95) to 9/30/98 + 6.13 + 6.13
[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 9/30/98 - 9.47% -14.22%
Inception (2/01/95) to 9/30/98 + 7.08 + 5.51
[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 9/30/98 + 3.98% - 1.48%
Inception (2/02/96) to 9/30/98 +17.02 +14.67
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 9/30/98 + 2.83% - 1.00%
Inception (2/02/96) to 9/30/98 +15.81 +15.22
[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 9/30/98 + 2.76% + 1.80%
Inception (2/02/96) to 9/30/98 +15.75 +15.75
[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 9/30/98 + 3.68% - 1.76%
Inception (2/02/96) to 9/30/98 +16.81 +14.46
[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 9/30/98 +11.52% + 7.06%
Inception (2/01/95) to 9/30/98 + 8.03 + 6.83
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 9/30/98 +10.77% + 6.77%
Inception (2/01/95) to 9/30/98 + 7.13 + 6.90
[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 9/30/98 +10.71% + 9.71%
Inception (2/01/95) to 9/30/98 + 7.06 + 7.06
[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 9/30/98 +11.25% + 6.80%
Inception (2/01/95) to 9/30/98 + 7.73 + 6.54
[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 9/30/98 +11.67% + 7.20%
Inception (2/01/95) to 9/30/98 +10.37 + 9.15
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 9/30/98 +10.92% + 6.92%
Inception (2/01/95) to 9/30/98 + 9.48 + 9.27
[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 9/30/98 +10.86% + 9.86%
Inception (2/01/95) to 9/30/98 + 9.42 + 9.42
[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 9/30/98 +11.39% + 6.94%
Inception (2/01/95) to 9/30/98 +10.08 + 8.86
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
Merrill Lynch Asset Builder Program, Inc., October 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 10/31/98
<S> <C> <C> <C> <C>
Fundamental Value Portfolio Class A Shares + 3.27% -2.56% +77.22% --
Fundamental Value Portfolio Class B Shares + 2.16 -2.83 +70.26 --
Fundamental Value Portfolio Class C Shares + 2.10 -2.83 +70.20 --
Fundamental Value Portfolio Class D Shares + 3.07 -2.57 +75.77 --
Global Opportunity Portfolio Class A Shares - 1.31 -8.63 +32.62 --
Global Opportunity Portfolio Class B Shares - 2.32 -8.83 +27.44 --
Global Opportunity Portfolio Class C Shares - 2.40 -8.93 +27.20 --
Global Opportunity Portfolio Class D Shares - 1.51 -8.73 +31.50 --
Growth Opportunity Portfolio Class A Shares +15.87 -5.62 +64.42 --
Growth Opportunity Portfolio Class B Shares +14.74 -5.84 +59.83 --
Growth Opportunity Portfolio Class C Shares +14.67 -5.84 +59.62 --
Growth Opportunity Portfolio Class D Shares +15.65 -5.63 +63.64 --
Quality Bond Portfolio Class A Shares + 8.74 +2.92 +31.22 5.69%
Quality Bond Portfolio Class B Shares + 7.92 +2.73 +27.08 5.16
Quality Bond Portfolio Class C Shares + 7.86 +2.72 +26.75 5.11
Quality Bond Portfolio Class D Shares + 8.48 +2.86 +29.88 5.44
US Government Securities Portfolio Class A Shares + 9.63 +3.71 +42.83 5.86
US Government Securities Portfolio Class B Shares + 8.70 +3.42 +38.46 5.30
US Government Securities Portfolio Class C Shares + 8.64 +3.40 +38.14 5.26
US Government Securities Portfolio Class D Shares + 9.36 +3.54 +41.44 5.58
<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 periods are: Fundamental Value
Portfolio, Global Opportunity Portfolio, Quality Bond Portfolio & US
Government Securities Portfolio, from 2/01/95 to 10/31/98; and
Growth Opportunity Portfolio, from 2/02/96 to 10/31/98.
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
Fundamental Value Portfolio
MIDDLE Shares Percent of
EAST Industries Held Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Israel Computer Services 150,000 Scitex Corp. Ltd. $ 1,496,111 $ 1,331,250 1.4%
Total Investments
in the Middle East 1,496,111 1,331,250 1.4
NORTH
AMERICA
United States Automotive 20,000 Ford Motor Co. 429,535 1,085,000 1.1
25,000 General Motors Corp. 1,286,517 1,576,563 1.7
------------ ------------ ------
1,716,052 2,661,563 2.8
Banking & Financial 13,000 Associates First Capital
Corporation 751,607 916,500 1.0
35,000 Citigroup Inc. (a) 2,002,413 1,647,187 1.7
80,000 Hibernia Corp. (Class A) 948,558 1,335,000 1.4
22,000 National City Corporation 1,521,910 1,414,875 1.5
5,000 Wells Fargo & Company 1,274,628 1,850,000 2.0
------------ ------------ ------
6,499,116 7,163,562 7.6
Beverage & 58,000 Seagram Company Ltd. (The) 2,076,026 1,906,750 2.0
Entertainment
Chemicals 30,000 du Pont (E.I.) de
Nemours & Co. 1,704,050 1,725,000 1.8
40,000 Great Lakes Chemical
Corporation 1,544,458 1,665,000 1.8
------------ ------------ ------
3,248,508 3,390,000 3.6
Computer Equipment 28,000 Hewlett-Packard Co. 1,485,362 1,685,250 1.8
Computer Software 80,000 Mentor Graphics Corporation 771,977 645,000 0.7
140,000 Novell, Inc. 1,087,444 2,082,500 2.2
------------ ------------ ------
1,859,421 2,727,500 2.9
Conglomerates 45,000 Tenneco, Inc. 1,940,725 1,366,875 1.5
Cosmetics & 45,000 Kimberly-Clark Corporation 2,133,972 2,171,250 2.3
Toiletries
Electric Utilities 45,000 Cinergy Corp. 1,534,555 1,552,500 1.7
Electronic Components 25,000 Thomas & Betts Corporation 1,036,823 1,117,188 1.2
Fertilizer 40,000 IMC Global, Inc. 1,408,459 1,040,000 1.1
Foods 35,000 General Mills, Inc. 2,365,671 2,572,500 2.7
Health Care 17,500 Aetna Inc. 1,315,639 1,305,938 1.4
Services 56,000 Columbia/HCA Healthcare
Corporation 1,671,831 1,176,000 1.2
------------ ------------ ------
2,987,470 2,481,938 2.6
Information 15,000 International Business
Processing Machines Corp. 992,340 2,226,563 2.4
Insurance 30,000 Allstate Corporation (The) 1,396,800 1,291,875 1.4
25,000 PartnerRe Ltd. 1,195,488 993,750 1.0
45,300 TIG Holdings, Inc. 1,286,943 631,369 0.7
------------ ------------ ------
3,879,231 2,916,994 3.1
Machinery 30,000 Deere & Company 929,241 1,061,250 1.1
50,000 ITT Industries Inc. 1,177,983 1,787,500 1.9
20,931 SPX Corporation (c) 1,229,451 1,139,431 1.2
------------ ------------ ------
3,336,675 3,988,181 4.2
Metals--Non-Ferrous 45,000 ASARCO Inc. 1,240,590 964,687 1.0
Metals--Precious 50,000 Newmont Mining Corporation 1,534,492 1,062,500 1.1
Natural Gas 24,000 Enron Corp. 936,185 1,266,000 1.3
50,000 Sonat, Inc. 2,051,318 1,515,625 1.6
------------ ------------ ------
2,987,503 2,781,625 2.9
Networking 50,000 3Com Corporation 1,302,707 1,803,125 1.9
</TABLE>
Merrill Lynch Asset Builder Program, Inc., October 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
Fundamental Value Portfolio (concluded)
NORTH AMERICA Shares Percent of
(concluded) Industries Held Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
United States Oil--Domestic 72,000 Occidental Petroleum Corp. $ 1,664,031 $ 1,431,000 1.5%
(concluded) 20,000 Sun Company, Inc. 623,938 686,250 0.7
------------ ------------ ------
2,287,969 2,117,250 2.2
Oil--International 25,000 Exxon Corporation 1,524,560 1,781,250 1.9
Oil Services 30,000 Diamond Offshore Drilling, Inc. 1,407,557 920,625 1.0
30,000 Halliburton Company (b) 927,909 1,078,125 1.1
------------ ------------ ------
2,335,466 1,998,750 2.1
Packaging 35,000 Crown Cork & Seal Company, Inc. 1,612,100 1,115,625 1.2
Paper & Forest 20,000 International Paper Co. 805,487 928,750 1.0
Products 70,000 Louisiana-Pacific Corp. 1,551,112 1,242,500 1.3
------------ ------------ ------
2,356,599 2,171,250 2.3
Pharmaceuticals 11,000 Bristol-Myers Squibb Co. 421,102 1,216,187 1.3
35,000 Pharmacia & Upjohn, Inc. 1,139,360 1,852,812 2.0
------------ ------------ ------
1,560,462 3,068,999 3.3
Photography 22,000 Eastman Kodak Co. 1,556,016 1,705,000 1.8
Railroads 55,000 Union Pacific Corporation 2,978,576 2,619,375 2.8
Retail 30,000 Dillard's, Inc. (Class A) 890,124 931,875 1.0
100,000 Kmart Corporation 1,144,288 1,412,500 1.5
30,000 Sears, Roebuck & Co. 1,360,889 1,348,125 1.4
45,000 Toys 'R' Us, Inc. 1,178,997 880,312 0.9
40,500 Venator Group Inc. 570,707 341,719 0.4
------------ ------------ ------
5,145,005 4,914,531 5.2
Semiconductors 20,000 Texas Instruments Inc. 877,717 1,278,750 1.4
Steel 40,000 USX-US Steel Group, Inc. 1,147,077 930,000 1.0
100,000 WHX Corp. 902,908 1,187,500 1.2
------------ ------------ ------
2,049,985 2,117,500 2.2
Telecommunications 28,000 AT&T Corp. 994,867 1,743,000 1.9
15,000 Bell Atlantic Corporation 686,660 796,875 0.8
35,000 GTE Corp. 1,555,539 2,054,062 2.2
35,000 Motorola, Inc. 1,880,193 1,820,000 1.9
------------ ------------ ------
5,117,259 6,413,937 6.8
Total Investments in
North America 74,967,412 78,882,768 83.6
WESTERN
EUROPE
Netherlands Oil--International 40,000 Royal Dutch Petroleum Company
(NY Registered Shares) 2,093,068 1,970,000 2.1
Total Investments
in the Netherlands 2,093,068 1,970,000 2.1
United Kingdom Petroleum 12,000 British Petroleum Co. PLC (ADR)* 924,528 1,061,250 1.1
Total Investments
in the United Kingdom 924,528 1,061,250 1.1
Total Investments
in Western Europe 3,017,596 3,031,250 3.2
SHORT-TERM Face
SECURITIES Amount Issue
US Government $ 5,000,000 Federal Home Loan Bank
Agency Corp., 5.06% due 11/12/1998 4,991,567 4,991,567 5.3
Obligations** 5,560,000 Federal Home Loan Mortgage
Corp., 5.42% due 11/02/1998 5,558,326 5,558,326 5.9
Total Investments in
Short-Term Securities 10,549,893 10,549,893 11.2
Total Investments $90,031,012 93,795,161 99.4
===========
Other Assets Less Liabilities 601,601 0.6
----------- ------
Net Assets $94,396,762 100.0%
=========== ======
Net Asset Value: Class A--Based on net assets of $357,409 and
25,380 shares outstanding $ 14.08
===========
Class B--Based on net assets of $58,925,999 and
4,288,108 shares outstanding $ 13.74
===========
Class C--Based on net assets of $29,146,177 and
2,122,147 shares outstanding $ 13.73
===========
Class D--Based on net assets of $5,967,177 and
425,677 shares outstanding $ 14.02
===========
<FN>
*American Depositary Receipts (ADR).
**US Government Agency Obligations are traded on a discount basis;
the interest rates shown reflect the rates paid at the time of
purchase by the Portfolio.
(a) Formerly Travelers Group Inc.
(b) Dresser Industries, Inc. merged with Halliburton Company.
(c) General Signal Corporation merged with SPX Corporation.
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
Global Opportunity Portfolio
Face Percent of
COUNTRY Amount Foreign Government Obligations Cost Value Net Assets
<S> <C> <S> <C> <C> <C>
Germany Bundesrepublik Deutschland:
DM 2,950,000 6% due 7/04/2007 $ 1,856,480 $ 2,008,674 3.2%
6,100,000 4.75% due 7/04/2008 3,983,026 3,864,562 6.3
850,000 6% due 6/20/2016 472,899 592,432 1.0
3,050,000 5.625% due 1/04/2028 1,728,761 1,958,450 3.2
------------ ------------ ------
8,041,166 8,424,118 13.7
United Kingdom UK Treasury Gilt:
Pound 310,000 8% due 12/07/2000 523,871 545,829 0.9
Sterling 1,350,000 7.25% due 12/07/2007 2,382,970 2,625,643 4.2
------------ ------------ ------
2,906,841 3,171,472 5.1
Total Investments in
Foreign Government Obligations 10,948,007 11,595,590 18.8
</TABLE>
Merrill Lynch Asset Builder Program, Inc., October 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Global Opportunity Portfolio (continued)
Face Percent of
COUNTRY Amount US Government & Agency Obligations Cost Value Net Assets
<S> <C> <S> <C> <C> <C>
United States Federal National Mortgage
Association:
US$ 1,140,000 5.625% due 3/15/2001 $ 1,143,993 $ 1,165,468 1.9%
1,340,000 5.75% due 4/15/2003 1,348,657 1,391,711 2.3
1,980,000 5.75% due 2/15/2008 1,973,853 2,057,952 3.3
US Treasury Notes and Bonds:
2,480,000 6.50% due 5/31/2002 2,557,888 2,650,897 4.3
1,620,000 6.625% due 2/15/2027 1,836,638 1,918,177 3.1
------------ ------------ ------
8,861,029 9,184,205 14.9
Total Investments in
US Government & Agency
Obligations 8,861,029 9,184,205 14.9
Total Investments in
Foreign & US Government &
Agency Obligations 19,809,036 20,779,795 33.7
Shares
Industries Held US Stocks
United States Aerospace & Defense 8,300 GenCorp, Inc. 220,331 183,638 0.3
1,200 United Technologies Corporation 94,462 114,300 0.2
------------ ------------ ------
314,793 297,938 0.5
Airlines 2,330 US Airways Group, Inc. 120,589 131,791 0.2
Auto--Related 3,460 Hertz Corporation (Class A) 137,482 123,911 0.2
Automobile Parts 7,200 Federal-Mogul Corporation 328,036 390,150 0.6
Automotive & 8,400 Avis Rent A Car, Inc. 206,970 171,150 0.3
Equipment
Banking 3,447 BankAmerica Corporation 198,840 197,987 0.3
13,100 Bank of New York Company,
Inc. (The) 244,369 413,469 0.7
------------ ------------ ------
443,209 611,456 1.0
Banking & Financial 7,000 First Union Corporation 349,606 406,000 0.7
Beverages 10,100 PepsiCo, Inc. 365,786 340,875 0.6
Broadcasting/Cable 18,250 Capstar Broadcasting
Corporation (Class A) 332,446 317,094 0.5
12,500 Tele-Communications, Inc.
(Class A) 290,528 525,000 0.8
23,500 Tele-Communications TCI
Ventures Group (Class A) 287,373 436,219 0.7
------------ ------------ ------
910,347 1,278,313 2.0
Chemicals 2,350 du Pont (E.I.) de
Nemours & Co. 146,528 135,125 0.2
12,000 Great Lakes Chemical
Corporation 511,510 499,500 0.8
------------ ------------ ------
658,038 634,625 1.0
Communication 10,400 MCI WorldCom, Inc. 337,369 574,600 0.9
Equipment
Computer Products 5,700 Cisco Systems, Inc. 279,563 359,456 0.6
Computer Sales 2,600 International Business
Machines Corp. 303,381 385,938 0.6
Computer Software 5,450 BMC Software, Inc. 248,722 261,600 0.4
Computers 14,300 COMPAQ Computer Corporation 406,663 452,238 0.7
Conglomerates 16,600 Dial Corporation (The) 339,659 457,538 0.7
Containers 5,700 Owens-Illinois, Inc. 193,073 174,206 0.3
Electrical Equipment 2,200 General Electric Company 172,817 192,500 0.3
Electronics 2,500 Micron Technology, Inc. 86,524 95,000 0.2
Entertainment 24,800 Premier Parks Inc. 652,230 550,250 0.9
6,240 Royal Caribbean Cruises Ltd. 154,971 173,940 0.3
------------ ------------ ------
807,201 724,190 1.2
Financial Services 12,100 GreenPoint Financial Corp. 467,849 397,031 0.6
11,800 Heller Financial, Inc. 319,863 283,200 0.5
4,700 Providian Financial
Corporation 298,637 373,063 0.6
------------ ------------ ------
1,086,349 1,053,294 1.7
Foods 4,900 ConAgra, Inc. 150,874 149,144 0.2
10,500 Keebler Foods Company 285,752 301,875 0.5
4,150 Nabisco Holdings Corp. (Class A) 148,532 156,662 0.3
------------ ------------ ------
585,158 607,681 1.0
Hardware Products 5,100 Black & Decker Corporation (The) 204,929 263,606 0.4
Health Care 17,801 HEALTHSOUTH Corporation 305,363 215,837 0.3
Information 1,000 Computer Associates 32,199 39,375 0.1
Processing International, Inc.
Instruments 3,900 Millipore Corporation 83,568 96,037 0.2
Insurance 4,650 Allmerica Financial Corporation 287,032 232,500 0.4
6,500 Equitable Companies
Incorporated (The) 337,296 318,500 0.5
6,500 UNUM Corporation 281,371 288,844 0.5
------------ ------------ ------
905,699 839,844 1.4
Machinery 8,500 Ingersoll-Rand Company 294,899 429,250 0.7
Manufacturing 7,400 Tyco International Ltd. 393,970 458,338 0.7
Medical Instruments 5,800 Beckman Coulter Inc. 346,363 272,600 0.4
Medical Specialties 6,200 Warner-Lambert Company 304,269 485,925 0.8
Medical Technology 3,750 Johnson & Johnson 299,682 305,625 0.5
Metals 1,200 Aluminum Co. of America 93,079 95,100 0.2
Natural Gas 13,350 El Paso Energy Corporation 365,609 473,091 0.8
8,100 Enron Corporation 358,832 427,275 0.7
------------ ------------ ------
724,441 900,366 1.5
Oil--Integrated 2,400 Mobil Corporation 187,937 181,650 0.3
Oil Service 3,300 Schlumberger Ltd. 207,737 173,250 0.3
Paper & Forest 3,250 Kimberly-Clark Corporation 149,779 156,812 0.3
Products
Petroleum 7,040 Unocal Corporation 255,533 238,920 0.4
Pharmaceutical-- 4,800 Bristol-Myers Squibb Co. 470,369 530,700 0.9
Diversified
Printing/Publishing 13,300 World Color Press, Inc. 395,983 403,988 0.7
Railroads 11,600 Burlington Northern Santa Fe Corp. 336,244 358,150 0.6
Retail 9,700 Safeway, Inc. 311,706 463,781 0.7
</TABLE>
Merrill Lynch Asset Builder Program, Inc., October 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Global Opportunity Portfolio (continued)
Shares Percent of
COUNTRY Industries Held US Stocks Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
United States Retail--Drug Stores 11,200 Rite Aid Corporation $ 290,385 $ 444,500 0.7%
(concluded)
Retail--Specialty 8,900 Lowe's Companies, Inc. 317,889 299,819 0.5
Retail Stores 4,700 Wal-Mart Stores, Inc. 214,053 324,300 0.5
Semiconductors 4,350 Motorola, Inc. 206,224 226,200 0.4
Services 5,620 Quintiles Transnational Corp. 261,368 253,954 0.4
Telecommunications 7,300 GTE Corporation 372,011 428,419 0.7
Utilities-- 7,900 Ameritech Corporation 380,902 426,106 0.7
Communication
Utilities--Electric 5,600 PECO Energy Company 191,301 216,650 0.3
4,900 Public Service Enterprise
Group Incorporated 190,396 186,200 0.3
4,300 Texas Utilities Company 192,432 188,125 0.3
574,129 590,975 0.9
------------ ------------ ------
Waste Management 6,000 Waste Management, Inc. 262,702 270,750 0.4
Total Investments in
US Stocks 17,864,747 19,898,627 32.3
Foreign Stocks
Austria Paper Products 1,700 Mayr-Melnhof Karton AG 83,319 78,871 0.1
Total Stocks in Austria 83,319 78,871 0.1
Canada Automobile Parts 4,500 Magna International, Inc.
(Class A) 287,394 279,281 0.4
Telecommunications 17,500 Teleglobe Inc. 473,533 481,250 0.8
Total Stocks in Canada 760,927 760,531 1.2
Denmark Services 800 ISS International Service
System A/S (Class B) 52,616 54,037 0.1
Total Stocks in Denmark 52,616 54,037 0.1
Finland Holding Company 11,900 Amer Group Ltd. 218,596 134,757 0.2
Insurance 5,700 Sampro Insurance Company
PLC (Class A) 263,633 177,789 0.3
Paper & Forest 5,700 UPM-Kymmene OYJ 131,458 136,456 0.2
Products
Pharmaceuticals 5,820 Orion-Yhtyma OY (Class B) 150,642 139,907 0.2
Real Estate 40,710 Sponda OYJ 287,017 270,942 0.5
Total Stocks in Finland 1,051,346 859,851 1.4
France Electronics 10,600 Thomson-CSF S.A. 378,781 368,215 0.6
Foods 711 Groupe Danone 186,153 187,988 0.3
Insurance 3,600 AXA-UAP 406,425 406,911 0.7
6,000 Scor S.A. 234,494 344,060 0.5
------------ ------------ ------
640,919 750,971 1.2
Machinery & 19,300 Alstom S.A. 657,484 480,763 0.8
Equipment
Oil & Related 3,100 Elf Aquitaine S.A. 375,559 358,765 0.6
Semiconductor 6,200 STMicroelectronics N.V.
Capital (NY Registered Shares) 419,958 377,038 0.6
Equipment
Utilities--Water 1,265 Vivendi 261,173 288,928 0.5
Total Stocks in France 2,920,027 2,812,668 4.6
Germany Chemicals 4,000 Henkel KGaA (Preferred) 275,763 341,994 0.6
Total Stocks in Germany 275,763 341,994 0.6
Ireland Banking 14,100 Bank of Ireland 298,205 259,227 0.4
Total Stocks in Ireland 298,205 259,227 0.4
Italy Banking 212,000 Banca di Roma 466,916 370,340 0.6
Publishing 35,800 Arnoldo Mondadori Editore S.p.A. 252,228 396,879 0.6
Telecommunications 35,200 Telecom Italia S.p.A. 266,974 254,776 0.4
Total Stocks in Italy 986,118 1,021,995 1.6
Japan Consumer--Electronics 2,000 Rohm Co., Ltd. 134,774 176,885 0.3
Electronics 12,000 Matsushita Electric
Industrial Co., Ltd. 187,392 176,301 0.3
Insurance 18,000 Tokio Marine & Fire
Insurance Co., Ltd. 208,039 204,791 0.3
Machine Tools & 18,000 Minebea Co., Ltd. 188,149 169,243 0.3
Machinery
Retail Stores 3,000 Ito-Yokado Co., Ltd. 154,861 175,167 0.3
Telecommunications 50 NTT Mobile Communication
Network, Inc. 164,989 180,749 0.3
48 Nippon Telegraph & Telephone
Corporation (NTT) 202,178 187,944 0.3
------------ ------------ ------
367,167 368,693 0.6
Total Stocks in Japan 1,240,382 1,271,080 2.1
Netherlands Broadcast & 2,100 Wolters Kluwer N.V. 321,109 407,112 0.7
Publishing
Multi-Industry 2,300 Unilever N.V. 165,854 170,717 0.3
Total Stocks in the
Netherlands 486,963 577,829 1.0
Norway Computer Software 8,300 Merkantildata ASA 63,459 83,324 0.1
Total Stocks in Norway 63,459 83,324 0.1
Spain Building Materials 21,000 Uralita, S.A. 294,295 217,431 0.4
Diversified 17,200 Dinamia Capital
Privado-Sociedad de
Capital Riesgo, S.A. 320,292 207,361 0.3
Real Estate 9,300 Metrovacesa, S.A. 290,232 268,098 0.4
Telecommunications 6,400 Telefonica, S.A. 275,582 288,660 0.5
Total Stocks in Spain 1,180,401 981,550 1.6
Sweden Auto & Truck 4,600 Autoliv, Inc. 153,809 153,027 0.3
Automobile Parts 16,700 Haldex AB 295,290 188,034 0.3
Banking 5,500 ForeningsSparbanken AB 69,546 148,837 0.2
25,700 Nordbanken Holding AB 180,684 153,892 0.3
------------ ------------ ------
250,230 302,729 0.5
</TABLE>
Merrill Lynch Asset Builder Program, Inc., October 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
Global Opportunity Portfolio (concluded)
Shares Percent of
COUNTRY Industries Held Foreign Stocks Cost Value Net Assets
<S> <C> <S> <C> <C> <C>
Sweden Diversified 1,800 Custos AB (Class A) $ 46,361 $ 38,462 0.1%
(concluded) 4,600 Custos AB (Class B) 121,232 98,879 0.1
------------ ------------ ------
167,593 137,341 0.2
Electronics 9,000 Spectra-Physics AB (Class A) 274,607 85,214 0.1
Investment 10,200 Bure Investment AB 104,571 135,076 0.2
Management
Real Estate 13,100 Castellum AB 136,644 115,653 0.2
9,800 Fastighets AB Tornet 161,306 125,390 0.2
------------ ------------ ------
297,950 241,043 0.4
Telecommunications 18,200 Telefonaktiebolaget
LM Ericsson (ADR)* 467,201 411,775 0.7
Total Stocks in Sweden 2,011,251 1,654,239 2.7
Switzerland Foods/Food Processing 90 Nestle S.A. (Registered Shares) 185,172 191,773 0.3
Merchandising 500 Valora Holding AG 135,344 134,840 0.2
Systems Integration 950 Swisscom AG (Registered) 254,660 322,618 0.5
Total Stocks in Switzerland 575,176 649,231 1.0
United Kingdom Aerospace & Defense 54,400 British Aerospace PLC 430,127 404,883 0.7
Automobile Parts 44,900 LucasVarity PLC 164,365 153,368 0.2
Banking 15,000 Lloyds TSB Group PLC 189,602 185,230 0.3
Beverages 36,104 Diageo PLC 358,414 389,919 0.6
Diversified 74,200 Billiton PLC 179,558 182,012 0.3
Foods 40,200 Devro PLC 289,780 189,817 0.3
Metal & Mining 15,000 Rio Tinto PLC (Registered) 185,193 182,091 0.3
Oil--Integrated 5,300 Shell Transport & Trading
Company (ADR)* 194,738 194,775 0.3
Oil & Related 8,200 British Petroleum Company PLC 117,310 120,413 0.2
Travel Services 154,000 Thomson Travel Group PLC 481,175 368,736 0.6
Total Stocks in the
United Kingdom 2,590,262 2,371,244 3.8
Total Investments in
Foreign Stocks 14,576,215 13,777,671 22.3
Total Investments in
US & Foreign Stocks 32,440,962 33,676,298 54.6
SHORT-TERM Face
SECURITIES Amount Issue
Commercial US$ 2,900,000 Concord Minutemen Capital
Paper** Co. LLC, 5.23% due 11/03/1998 2,898,736 2,898,736 4.7
1,593,000 General Motors Acceptance
Corp., 5.69% due 11/02/1998 1,592,496 1,592,496 2.6
1,000,000 International Securitization
Corp., 5.27% due 11/18/1998 997,365 997,365 1.6
1,900,000 Variable Funding Capital
Corp., 5.25% due 11/02/1998 1,899,446 1,899,446 3.1
Total Investments in
Short-Term Securities 7,388,043 7,388,043 12.0
Total Investments $59,638,041 61,844,136 100.3
===========
Unrealized Appreciation on Forward Foreign Exchange Contracts++ 77,707 0.1
Liabilities in Excess of Other Assets (262,356) (0.4)
----------- ------
Net Assets $61,659,487 100.0%
=========== ======
Net Asset Value: Class A--Based on net assets of $162,176 and
14,449 shares outstanding $ 11.22
===========
Class B--Based on net assets of $41,348,511 and
3,742,800 shares outstanding $ 11.05
===========
Class C--Based on net assets of $16,973,399 and
1,539,728 shares outstanding $ 11.02
===========
Class D--Based on net assets of $3,175,401 and
283,725 shares outstanding $ 11.19
===========
<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.
++Forward foreign exchange contracts as of October 31, 1998 were as follows:
Foreign Expiration Unrealized
Currency Sold Date Appreciation
C$ 1,200,000 November 1998 $ 9,461
Pound Sterling 1,450,000 November 1998 28,710
Pound Sterling 1,450,000 December 1998 39,536
--------
Total Unrealized Appreciation on Forward Foreign
Exchange Contracts--Net (US$ Commitment--$5,698,260) $ 77,707
========
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
Growth Opportunity Portfolio
Shares Percent of
Industries Held Common Stocks Cost Value Net Assets
<S> <C> <S> <C> <C> <C>
Advertising 10,000 Interpublic Group of
Companies, Inc. $ 455,324 $ 585,000 0.7%
Banking & Financial 19,800 Bank One Corporation 921,491 967,725 1.2
27,658 BankAmerica Corporation 1,888,950 1,588,606 2.0
26,500 Citigroup Inc 1,510,527 1,247,156 1.5
31,000 Mellon Bank Corporation 1,792,098 1,863,875 2.3
13,000 State Street Corporation 653,506 810,875 1.0
------------ ------------ ------
6,766,572 6,478,237 8.0
Beverages 24,000 Coca-Cola Company (The) 1,932,193 1,623,000 2.0
5,000 Seagram Company Ltd. (The) 212,919 164,375 0.2
------------ ------------ ------
2,145,112 1,787,375 2.2
Broadcasting--Radio 15,000 CBS Corporation 378,301 419,062 0.5
& Television 18,500 Chancellor Media Corporation 805,666 709,937 0.9
24,000 Clear Channel
Communications, Inc. 1,057,233 1,093,500 1.4
------------ ------------ ------
2,241,200 2,222,499 2.8
Chemicals 21,500 du Pont (E.I.) de Nemours &Co. 1,562,462 1,236,250 1.5
</TABLE>
Merrill Lynch Asset Builder Program, Inc., October 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Growth Opportunity Portfolio (continued)
Shares Percent of
Industries Held Common Stocks Cost Value Net Assets
<C> <C> <S> <C> <C> <C>
Communications 27,000 Ascend Communications, Inc. $ 1,307,680 $ 1,301,062 1.6%
Equipment 45,000 Cisco Systems, Inc. 2,065,506 2,837,812 3.5
4,000 FORE Systems, Inc. 78,000 62,500 0.1
2,000 Lucent Technologies, Inc. 144,995 160,375 0.2
1,500 Newbridge Networks Corporation 90,090 30,750 0.0
5,000 Northern Telecom Ltd. 246,979 214,063 0.3
2,000 Telefonaktiebolaget LM
Ericsson (ADR)* 40,978 45,250 0.1
------------ ------------ ------
3,974,228 4,651,812 5.8
Computers 74,000 COMPAQ Computer Corporation 1,866,564 2,340,250 2.9
20,000 Dell Computer Corporation 681,834 1,310,000 1.6
2,000 Network Appliance, Inc. 90,522 108,000 0.1
------------ ------------ ------
2,638,920 3,758,250 4.6
Cosmetics 18,000 Gillette Company (The) 838,754 808,875 1.0
1,500 International Flavors &
Fragrances, Inc. 66,303 56,156 0.1
------------ ------------ ------
905,057 865,031 1.1
Electrical Equipment 2,000 Emerson Electric Co. 108,040 132,000 0.2
30,000 General Electric Company 1,968,609 2,625,000 3.3
1,000 Honeywell, Inc. 74,816 79,875 0.1
------------ ------------ ------
2,151,465 2,836,875 3.6
Electronics 22,000 Intel Corporation 1,693,956 1,962,125 2.4
8,000 STMicroelectronics N.V.
(NY Registered Shares) 565,629 486,500 0.6
23,500 Texas Instruments Inc. 1,347,642 1,502,531 1.9
------------ ------------ ------
3,607,227 3,951,156 4.9
Energy 11,000 El Paso Energy Corporation 344,306 389,813 0.5
2,000 Enron Corporation 80,390 105,500 0.1
------------ ------------ ------
424,696 495,313 0.6
Entertainment 7,000 Viacom, Inc. (Class A) 260,391 415,625 0.5
50,000 Walt Disney Company (The) 1,629,106 1,346,875 1.7
------------ ------------ ------
1,889,497 1,762,500 2.2
Financial Services 4,000 American Express Company 390,615 353,500 0.4
10,000 Federal National Mortgage
Association 602,416 708,125 0.9
10,000 Franklin Resources, Inc. 546,808 378,125 0.5
14,000 Morgan Stanley, Dean Witter,
Discover & Co. 885,329 906,500 1.1
------------ ------------ ------
2,425,168 2,346,250 2.9
Food Merchandising 3,000 Albertson's, Inc. 107,884 166,687 0.2
6,000 Meyer (Fred), Inc. 141,180 319,875 0.4
5,000 Safeway, Inc. 228,044 239,063 0.3
------------ ------------ ------
477,108 725,625 0.9
Foods 5,000 ConAgra, Inc. 124,865 152,188 0.2
4,000 Wrigley (Wm.) Jr. Company 288,597 323,750 0.4
------------ ------------ ------
413,462 475,938 0.6
Home Furnishings 22,700 Ethan Allen Interiors, Inc. 1,190,938 780,313 1.0
Hotels 9,000 Marriott International, Inc.
(Class A) 305,627 241,875 0.3
Household Products 7,000 Colgate-Palmolive Company 540,199 618,625 0.8
6,000 Kimberly-Clark Corporation 280,503 289,500 0.3
20,000 Procter & Gamble Company (The) 1,485,044 1,777,500 2.2
17,000 Unilever N.V. (NY Registered
Shares) 1,221,062 1,279,250 1.6
------------ ------------ ------
3,526,808 3,964,875 4.9
Information 6,000 America Online, Inc. 538,788 762,375 0.9
Processing 27,000 First Data Corporation 961,514 715,500 0.9
------------ ------------ ------
1,500,302 1,477,875 1.8
Insurance 1,000 Aetna, Inc. 82,249 74,625 0.1
14,200 American International
Group, Inc. 991,902 1,210,550 1.5
------------ ------------ ------
1,074,151 1,285,175 1.6
Medical Technology 1,000 Boston Scientific Corporation 65,654 54,437 0.1
2,000 Guidant Corporation 136,943 153,000 0.2
1,000 Johnson & Johnson 66,560 81,500 0.1
------------ ------------ ------
269,157 288,937 0.4
Oil Services 3,000 Baker Hughes, Inc. 114,960 66,187 0.1
2,000 Diamond Offshore Drilling, Inc. 90,370 61,375 0.1
1,500 Schlumberger Ltd. 88,170 78,750 0.1
------------ ------------ ------
293,500 206,312 0.3
Pharmaceuticals 2,000 Amgen, Inc. 131,750 157,125 0.2
22,000 Bristol-Myers Squibb Co. 2,156,465 2,432,375 3.0
15,000 Merck & Co., Inc. 1,814,901 2,028,750 2.5
23,000 Pfizer Inc. 1,939,566 2,468,188 3.1
------------ ------------ ------
6,042,682 7,086,438 8.8
Photography 1,000 Eastman Kodak Company 66,840 77,500 0.1
Pollution Control 362 Waste Management, Inc. 14,160 16,335 0.0
Publishing 11,000 Gannett Co., Inc. 780,104 680,625 0.8
Restaurants 6,000 McDonald's Corporation 343,189 401,250 0.5
Retail--Specialty 10,000 Abercrombie & Fitch Co.
(Class A) 416,066 396,875 0.5
36,000 CVS Corporation 1,277,008 1,644,750 2.0
11,000 Gap, Inc. (The) 444,363 661,375 0.8
11,000 Lowe's Companies, Inc. 389,996 370,563 0.5
60,000 Staples, Inc. 1,242,295 1,953,750 2.4
30,000 Walgreen Co. 971,102 1,460,625 1.8
------------ ------------ ------
4,740,830 6,487,938 8.0
Retail--Stores 17,000 Federated Department
Stores, Inc. 847,205 653,438 0.8
50,000 Wal-Mart Stores, Inc. 2,272,534 3,450,000 4.3
------------ ------------ ------
3,119,739 4,103,438 5.1
Semiconductors 25,000 Applied Materials, Inc. 920,280 864,062 1.1
Software--Computer 4,800 Baan Company N.V.
(US Registered Shares) 216,266 52,800 0.1
25,000 Microsoft Corporation 2,157,218 2,646,875 3.3
37,000 PeopleSoft, Inc. 1,640,986 781,625 1.0
49,000 SAP AG (Systeme, Anwendungen,
Produkte in der
Datenverarbeitung (ADR)* 1,079,041 2,067,188 2.6
------------ ------------ ------
5,093,511 5,548,488 7.0
</TABLE>
Merrill Lynch Asset Builder Program, Inc., October 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
Growth Opportunity Portfolio (concluded)
Shares Percent of
Industries Held Common Stocks Cost Value Net Assets
<S> <C> <S> <C> <C> <C>
Telecommunications 22,000 AT&T Corp. $ 1,435,871 $ 1,369,500 1.7%
10,000 Cable & Wireless PLC (ADR)* 402,841 336,250 0.4
25,000 GTE Corporation 1,278,166 1,467,188 1.8
25,000 MCI WorldCom, Inc. 1,146,454 1,381,250 1.7
31,000 Sprint Corporation 2,018,344 2,379,250 3.0
------------ ------------ ------
6,281,676 6,933,438 8.6
Toys 19,000 Mattel, Inc. 716,164 681,625 0.8
Travel & Lodging 24,000 Carnival Corporation (Class A) 672,036 777,000 1.0
Total Common Stocks 69,029,192 76,081,610 94.5
Face
Amount Short-Term Securities
Commercial $1,574,000 General Motors Acceptance Corp.,
Paper** 5.69% due 11/02/1998 1,573,502 1,573,502 2.0
3,000,000 Variable Funding Capital Corp.,
5.20% due 11/13/1998 2,994,367 2,994,367 3.7
Total Short-Term Securities 4,567,869 4,567,869 5.7
Total Investments $73,597,061 80,649,479 100.2
===========
Liabilities in Excess of Other Assets (175,719) (0.2)
----------- ------
Net Assets $80,473,760 100.0%
=========== ======
Net Asset Value: Class A--Based on net assets of $406,080 and
26,849 shares outstanding $ 15.12
===========
Class B--Based on net assets of $49,194,901 and
3,315,928 shares outstanding $ 14.84
===========
Class C--Based on net assets of $28,165,147 and
1,900,704 shares outstanding $ 14.82
===========
Class D--Based on net assets of $2,707,632 and
179,431 shares outstanding $ 15.09
===========
<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.
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTIN>
Quality Bond Portfolio
S&P Moody's Face
INDUSTRIES Ratings Ratings Amount Bonds & Notes Cost Value
<S> <S> <S> <S> <S> <S> <S>
Asset-Backed AAA Aaa $ 8,788 Arcadia Automobile Receivables Trust,
Securities--2.7% 6.10% due 6/15/2000 (a) $ 8,786 $ 8,793
AA Aa2 300,000 CIT Group Home Equity Loan Trust,
6.44% due 11/15/2027 (a) 299,886 300,417
AAA Aaa 150,000 Money Store (The), Series 1998-B, 6.225%
due 9/15/2023 149,978 150,305
----------- -----------
458,650 459,515
Banking--12.5% A A2 250,000 Bank of New York Company, Inc., 7.875%
due 11/15/2002 276,675 270,112
A+ Aa3 250,000 BankAmerica Corp., 6.65% due 5/01/2001 249,862 255,575
BBB+ A3 300,000 Great Western Bank, 9.875% due 6/15/2001 332,535 331,716
BBB a1 300,000 KeyCorp Capital I, 6.427% due 7/01/2028 296,982 279,777
BBB+ Baa1 250,000 MBNA America Bank NA, 5.988% due 6/10/2004 246,142 247,915
A A3 250,000 Mellon Financial Co., 6.375% due 2/15/2010 251,010 250,365
AA- Aa3 250,000 Norwest Corp., Series F, 6.75% due 5/12/2000 249,627 256,537
A A2 200,000 Wells Fargo Company, 8.375% due 5/15/2002 213,120 216,528
----------- -----------
2,115,953 2,108,525
Financial A+ Aa3 100,000 Citigroup Capital II, 7.75% due 12/01/2036 100,170 99,024
Services-- BBB- Baa2 100,000 Commercial Net Lease Realty, 7.125%
6.4% due 3/15/2008 99,729 92,456
A- A3 38,000 Donaldson Lufkin & Jenrette Inc.,
6.875% due 11/01/2005 37,694 38,964
BBB- Baa3 150,000 Hospitality Properties Trust, 7% due
3/01/2008 149,730 132,141
AA Aa2 200,000 MBIA, Inc., 7.15% due 7/15/2027 199,510 213,674
A+ A2 200,000 Prudential Insurance Co., 6.375% due
7/23/2006 199,116 202,971
A Aa3 150,000 Salomon Smith Barney Holdings, Inc.,
7.375% due 5/15/2007 149,866 158,937
BBB Baa2 150,000 Spieker Properties LP, 7.35% due 12/01/2017 151,549 132,196
----------- -----------
1,087,364 1,070,363
Financial AA- Aa3 250,000 Associates Corp. of North America,
Services-- 6.95% due 11/01/2018 248,530 248,530
Consumer--5.6% A A2 250,000 Beneficial Corporation, 6.80% due 9/16/2003 250,000 262,614
A aa3 150,000 CIT Capital Trust I, 7.70% due 2/15/2027 149,316 154,913
A+ Aa3 120,000 Commercial Credit Co., 6.25% due 1/01/2008 122,456 119,185
A- Baa1 150,000 Finova Capital Corp., 6.25% due 11/01/2002 149,425 149,646
----------- -----------
919,727 934,888
Industrial-- Anheuser-Busch Cos., Inc.:
Consumer Goods-- A+ A1 100,000 8.75% due 12/01/1999 107,905 103,747
14.3% A+ A1 200,000 5.65% due 9/15/2008 199,322 199,250
A+ A1 300,000 6.50% due 1/01/2028 300,903 303,156
A A2 100,000 Bass America, Inc., 8.125% due 3/31/2002 105,928 107,244
A+ A3 250,000 Coca-Cola Enterprises, 5.75% due 11/01/2008 248,333 248,332
BBB- Baa3 250,000 Flowers Industries Inc., 7.15% due 4/15/2028 248,675 236,462
A+ A1 300,000 Hershey Foods Corp., 6.95% due 8/15/2012 331,608 327,870
AA Aa2 375,000 Kimberly-Clark Corp., 6.375% due 1/01/2028 371,910 380,501
AA Aa2 200,000 McDonald's Corporation, 5.35% due 9/15/2008 198,422 198,376
A A1 80,000 Pepsico, Inc., 5.75% due 1/02/2003 79,595 81,394
AA Aa2 200,000 Wal-Mart Stores, Inc., 8.50% due 9/15/2024 207,350 223,444
----------- -----------
2,399,951 2,409,776
Industrial-- AA Aa2 175,000 BP America Inc., 9.375% due 11/01/2000 200,263 189,644
Energy--5.0% BBB Baa2 250,000 Occidental Petroleum Corp., 6.50% due
4/01/2005 248,575 246,882
BBB+ A3 400,000 Sonat, Inc., 7% due 2/01/2018 412,068 405,536
----------- -----------
860,906 842,062
Industrial-- A A2 200,000 AlliedSignal Inc., 6.20% due 2/01/2008 199,732 198,600
Manufacturing-- BBB+ A3 200,000 Applied Materials Inc., 6.75% due 10/15/2007 199,870 202,002
15.6% A+ A2 200,000 Danaher Corp., 6% due 10/15/2008 198,926 200,042
AA+ Aa1 300,000 Emerson Electric Co., 5.50% due 9/15/2008 299,223 296,667
Ford Motor Credit Co.:
A A1 200,000 8.20% due 2/15/2002 213,154 215,448
A A1 300,000 5.787% due 8/27/2006 299,792 299,202
</TABLE>
Merrill Lynch Asset Builder Program, Inc., October 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTIN>
Quality Bond Portfolio (concluded)
S&P Moody's Face
INDUSTRIES Ratings Ratings Amount Bonds & Notes Cost Value
<S> <S> <S> <S> <S> <S> <S>
Industrial-- AAA Aaa $245,000 General Electric Capital Corporation,
Manufacturing 8.50% due 7/24/2008 $ 297,577 $ 298,724
(concluded) General Motors Acceptance Corp.:
A A2 100,000 8.50% due 1/01/2003 108,510 110,400
A A2 100,000 5.875% due 1/22/2003 101,120 101,415
A A2 200,000 8.75% due 7/15/2005 226,232 235,558
A- Baa1 250,000 LaFarge Corp., 6.375% due 7/15/2005 249,708 258,680
A A2 100,000 Lucent Technologies Inc., 6.50% due 1/15/2028 103,618 102,860
A A1 90,000 PPG Industries Inc., 6.50% due 11/01/2007 89,725 92,394
----------- -----------
2,587,187 2,611,992
Industrial-- AAA Aa1 300,000 Abbott Laboratories, 5.40% due 9/15/2008 299,403 302,505
Services--7.0% A A2 150,000 Carnival Corp., 7.70% due 7/15/2004 156,746 163,077
A A2 222,794 Disney-CRAVE-403, 6.85% due 1/10/2007 (a) 222,642 240,702
A A2 200,000 First Data Corporation, 6.375% due 12/15/2007 199,486 205,228
BBB- Baa3 120,000 TCI Communications Inc., 8.75% due 8/01/2015 140,767 145,614
BBB- Baa2 100,000 Time Warner Entertainment Co., 8.375% due
3/15/2023 107,029 116,335
----------- -----------
1,126,073 1,173,461
Mortgage-Backed AAA Aaa 200,000 Government National Mortgage Association,
Securities--1.2% Series 1998-14,6.375% due 11/20/2026 198,469 202,436
Transportation-- BBB Baa2 250,000 CSX Corp., 7.90% due 5/01/2017 279,713 275,370
1.6%
US Government US Treasury Notes:
Obligations--8.2% AAA Aaa 25,000 5.875% due 9/30/2002 25,289 26,297
AAA Aaa 250,000 5.50% due 2/28/2003 250,105 260,938
AAA Aaa 220,000 7.25% due 8/15/2004 248,342 250,972
AAA Aaa 150,000 6.50% due 5/15/2005 159,047 167,109
AAA Aaa 50,000 6.125% due 8/15/2007 52,836 55,203
AAA Aaa 200,000 5.625% due 5/15/2008 216,305 215,594
AAA Aaa 400,000 4.53% due 11/15/2008 400,000 400,000
----------- -----------
1,351,924 1,376,113
Utilities-- A- A2 300,000 ALLTEL Corporation, 6.75% due 9/15/2005 295,380 316,974
Communications-- A A3 250,000 Frontier Corp., 6% due 10/15/2013 249,660 254,220
10.3% A Baa1 150,000 GTE Corp., 6.84% due 4/15/2018 154,197 152,058
AAA Aa1 125,000 Indiana Bell Telephone Co., Inc.,
7.30% due 8/15/2026 133,639 141,929
MCI WorldCom Inc.:
BBB+ Baa2 200,000 7.75% due 4/01/2007 217,758 223,460
BBB+ Baa2 200,000 6.125% due 4/15/2012 199,466 204,510
AA Aa3 125,000 Southwestern Bell Telecommunications
Corp., 6.50% due 3/12/2003 126,223 131,829
A- A3 300,000 U.S. West Capital Funding Inc., 6.875%
due 7/15/2028 296,715 311,112
----------- -----------
1,673,038 1,736,092
Utilities-- A+ A1 100,000 Consolidated Edison, Inc., 6.25%
Electric--3.2% due 2/01/2008 100,000 104,282
A A1 250,000 Mississippi Power Co., Series B,
6.05% due 5/01/2003 255,620 262,253
A A2 150,000 Virginia Electric & Power Co., 8.625%
due 10/01/2024 166,200 173,584
----------- -----------
521,820 540,119
Total Investments in Bonds & Notes--93.6% 15,580,775 15,740,712
SHORT-TERM
SECURITIES Issue
US Government 1,448,000 Federal Home Loan Mortgage
Agency Corporation, 5.42% due 11/02/1998 1,448,000 1,448,000
Obligations*--
8.6%
Total Investments in
Short-Term Securities--8.6% 1,448,000 1,448,000
Total Investments--102.2% $17,028,775 17,188,712
===========
Liabilities in Excess of Other Assets--(2.2%) (368,571)
-----------
Net Assets--100.0% $16,820,141
===========
Net Asset Value: Class A--Based on net assets of $372,820 and
36,594 shares outstanding $ 10.19
===========
Class B--Based on net assets of $10,643,203 and
1,045,403 shares outstanding $ 10.18
===========
Class C--Based on net assets of $4,389,096 and
431,130 shares outstanding $ 10.18
===========
Class D--Based on net assets of $1,415,022 and
139,011 shares outstanding $ 10.18
===========
<FN>
*US Government Agency Obligation is traded on a discount basis; the
interest rate shown reflects the discount rate paid at the time of
purchase by the Portfolio.
(a)Subject to principal paydowns.
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
US Government Securities Portfolio
Face Interest Maturity
Issue Amount Rate Date(s) Value
<S> <S> <C> <C> <C> <C>
US Government Federal Home Loan Mortgage
Agency Corporation $ 825,326 11.50 % 6/01/2019 $ 926,775
Mortgage-Backed Federal Home Loan Mortgage
Obligations*--81.7% Corporation--Gold Program 4,012,339 5.50 3/01/2013-10/01/2013 3,966,421
Federal Home Loan Mortgage
Corporation--Gold Program 1,966,828 6.50 8/01/2010-9/01/2013 1,997,867
Federal National Mortgage
Association 3,600,000 6.00 TBA(1) 3,556,258
Federal National Mortgage Association 404,000 6.00 9/01/2028 399,200
Federal National Mortgage
Association--Multi-Family #0073313++++ 2,016,136 6.18 1/01/2006 2,081,448
Government National Mortgage
Association 476,617 6.50 1/15/2028 481,826
Government National Mortgage
Association 1,327,554 7.00 11/15/2027-7/15/2028 1,358,607
Government National Mortgage
Association 2,732,669 7.50 10/15/2025-3/15/2028 2,814,798
Total US Government Agency
Mortgage-Backed Obligations (Cost--$17,421,321) 17,583,200
US Government US Treasury Notes 1,300,000 5.375 2/15/2001 1,329,250
Obligations--10.2% US Treasury STRIPS** 2,800,000 5.402++ 8/15/2019 873,236
Total US Government Obligations (Cost--$2,216,282) 2,202,486
</TABLE>
Merrill Lynch Asset Builder Program, Inc., October 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
US Government Securities Portfolio (concluded)
SHORT-TERM Face
SECURITIES Amount Issue Value
<S> <C> <S> <C>
Repurchase $5,336,000 Morgan Stanley & Co., Inc. purchased on 10/30/1998 to
Agreements***-- yield 5.50% to 11/02/1998 $ 5,336,000
24.8%
Total Investments in Short-Term Securities (Cost--$5,336,000) 5,336,000
Total Investments (Cost--$24,973,603)--116.7% 25,121,686
Liabilities in Excess of Other Assets--(16.7%) (3,602,039)
-----------
Net Assets--100.0% $21,519,647
===========
Net Asset Value: Class A--Based on net assets of $1,939,156 and
181,631 shares outstanding $ 10.68
===========
Class B--Based on net assets of $13,840,845 and
1,296,725 shares outstanding $ 10.67
===========
Class C--Based on net assets of $4,082,603 and
382,536 shares outstanding $ 10.67
===========
Class D--Based on net assets of $1,657,043 and
155,159 shares outstanding $ 10.68
===========
<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.
</TABLE>
EQUITY PORTFOLIO CHANGES
For the Quarter Ended October 31, 1998
FUNDAMENTAL
VALUE PORTFOLIO
Additions
British Petroleum Co. PLC(ADR)
Deere & Company
Dillard's, Inc. (Class A)
Hewlett-Packard Co.
Thomas & Betts Corporation
Deletions
Bankers Trust New York Corp.
COMPAQ Computer Corporation
Dow Jones & Company, Inc.
Harrah's Entertainment, Inc.
Pharmaceutical Product Development, Inc.
Whirlpool Corporation
GLOBAL
OPPORTUNITY
PORTFOLIO
Additions
Aluminum Co. of America
Ameritech Corporation
Billiton PLC
British Petroleum Company PLC
ConAgra, Inc.
*Consolidated Stores Corporation
du Pont (E.I.) de Nemours & Co.
GTE Corporation
Groupe Danone
ISS International Service System A/S
(Class B)
Johnson & Johnson
Kimberly-Clark Corporation
Lloyds TSB Group PLC
Mayr-Melnhof Karton AG
Merkantildata ASA
Micron Technology, Inc.
Millipore Corporation
Mobil Corporation
Motorola, Inc.
NTT Mobile Communication Network, Inc.
Nabisco Holdings Corp. (Class A)
Nestle S.A. (Registered Shares)
Nippon Telegraph & Telephone
Corporation (NTT)
PECO Energy Company
Public Service Enterprise Group
Incorporated
Quintiles Transnational Corp.
Rio Tinto PLC (Registered)
Shell Transport & Trading Company (ADR)
Swisscom AG (Registered)
Telecom Italia S.p.A.
Telefonaktiebolaget LM Ericsson (ADR)
Telefonica, S.A.
Teleglobe Inc.
Texas Utilities Company
Unilever N.V.
United Technologies Corporation
Vivendi
Deletions
Bank of Tokyo--Mitsubishi
Bayerische Vereinsbank AG
Carnival Corporation (Class A)
Chancellor Media Corp.
Columbia/HCA Healthcare Corporation
*Consolidated Stores Corporation
Daimler-Benz AG
Danieli & Co.
Finnlines Oyj
Gartner Group, Inc. (Class A)
Gillette Company (The)
Grupo Carso, S.A. de C.V. (ADR)
Imperial Chemical Industries PLC
Imperial Chemical Industries PLC (ADR)
Makino Milling Machine Co., Ltd.
Mannesmann AG
Oversea-Chinese Banking Corp. Ltd.
'Foreign'
Panamerican Beverages, Inc.
(Class A)(US Registered Shares)
Perstorp AB (Class B)
Repsol, S.A. (ADR)
Sanwa Bank, Limited
Schindler Holding AG
Seagram Company Ltd. (The)
Sears, Roebuck & Co.
SmarTalk TeleServices, Inc.
Sony Corporation
Starwood Hotels & Resorts
Telefonos de Mexico, S.A. de C.V. (Telmex)(ADR)
Texas Instruments Inc.
Tokyo Electron Limited
Travelers Group Inc.
UBS AG
United Healthcare Corporation
GROWTH
OPPORTUNITY
PORTFOLIO
Additions
Abercrombie & Fitch Co. (Class A)
Ascend Communications, Inc.
CBS Corporation
GTE Corporation
Lowe's Companies, Inc.
MCI WorldCom, Inc.
Network Appliance, Inc.
Deletions
Hewlett-Packard Co.
NationsBank Corporation
Polygram N.V. (NY Registered Shares)
Travelers Group, Inc. (The)
[FN]
*Added and deleted in the same quarter.
