AIG ALL AGES FUNDS INC, N-30D, 1996-07-30

AIG ALL AGES FUNDS INC
N-30D, 1996-07-30

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AIG CHILDREN'S WORLD FUND - 2005

Semi-Annual Report

December 15, 1995 to May 31, 1996

(Unaudited)

Page
----

AIG Children's World Fund - 2005
Portfolio of Investments..................................... 1
Statement of Assets and Liabilities.......................... 2
Statement of Operations...................................... 3
Statement of Changes in Net Assets........................... 4
Financial Highlights......................................... 5
Notes to the Financial Statements............................ 6-10

First Global Equity Portfolio
Portfolio of Investments..................................... 11-12
Statement of Assets and Liabilities.......................... 13
Statement of Operations...................................... 14
Statement of Changes in Net Assets........................... 15
Ratios / Supplemental Data................................... 16
Notes to the Financial Statements............................ 17-21

<PAGE>

AIG CHILDREN'S WORLD FUND - 2005

- -------------------------------------------------------------------------------

Portfolio of Investments
May 31, 1996 (Unaudited)

- -------------------------------------------------------------------------------

Principal Maturity Value
Amount Description Date Yield * (Note 2a)
- ----------- ------------ ---------- --------- -------------
<S> <C> <C> <C> <C>
US ZERO COUPON BOND - 53.4%
$2,150,000 US Zero Coupon Bond............................ 11/15/05 6.76% $1,124,214
----------

Total Investments (Cost $1,146,791) - 53.4%................................ 1,124,214
Other Assets In Excess of Liabilities - 46.6%.............................. 980,143
----------
NET ASSETS - 100%.......................................................... $2,104,357
==========

</TABLE>

* Effective yield at time of purchase.

See Accompanying Notes to the Financial Statements.

<PAGE>

AIG CHILDREN'S WORLD FUND - 2005

- -------------------------------------------------------------------------------
Statement of Assets and Liabilities
May 31, 1996 (Unaudited)
- -------------------------------------------------------------------------------

ASSETS:
Investment in securities at value (Cost $1,146,791) .... $1,124,214
Investment in First Global Equity Portfolio at value ... 807,046
Cash ................................................... 89,377
Interest receivable .................................... 1,803
Receivable for fund shares sold ........................ 35,798
Deferred organization costs ............................ 63,730
Prepaid expenses ....................................... 21,746
----------
Total Assets ..................................... 2,143,714
----------

LIABILITIES:
Due to Manager ......................................... 8,792
Payable for fund shares redeemed ....................... 3,000
Accrued expenses ....................................... 27,565
----------
Total Liabilities ................................ 39,357
----------

NET ASSETS ................................................. $2,104,357
==========

COMPOSITION OF NET ASSETS:
Capital stock, at par .................................. $ 230
Additional paid in capital ............................. 2,110,415
Accumulated undistributed net investment income ........ 9,553
Accumulated net realized loss on investments ........... (3)
Net unrealized depreciation of investments ............. (15,838)
----------
Net Assets ................................................. $2,104,357
==========

Shares Outstanding ($0.001 par value) ...................... 229,609
==========

Net asset value and redemption price per share ............. $ 9.16
==========
Maximum offering price per share (Net asset value plus sales
charge - 4.75% of maximum offering price) .............. $ 9.62
==========

See Accompanying Notes to the Financial Statements.

<PAGE>

AIG CHILDREN'S WORLD FUND - 2005

- -------------------------------------------------------------------------------
Statement of Operations
For the period from December 15, 1995* to May 31, 1996 (Unaudited)
- -------------------------------------------------------------------------------

<TABLE>
<CAPTION>
INVESTMENT INCOME:
<S> <C> <C>
Interest ........................................................................ $ 15,951

Investment income allocated from the Equity Portfolio:
Interest ..................................................... $ 1,482
Expenses ..................................................... (83,473)
Less: Fee waivers and expense reimbursements ................ 82,300
--------

Net Investment Income Allocated From the Equity Portfolio ........................ 309
--------
16,260
--------

EXPENSES:
Registration fees .................................................... 27,192
Directors' fees and expenses ......................................... 20,810
Shareholder communication fees ....................................... 15,779
Transfer agent fees .................................................. 14,784
Insurance expense .................................................... 13,518
Legal fees ........................................................... 12,002
Organization expense ................................................. 6,770
Audit fees ........................................................... 2,400
Administrative fees .................................................. 2,169
Distribution fees .................................................... 1,970
Shareholder service fees ............................................. 985
Investment advisory fees ............................................. 672
Custodian fees ....................................................... 84
Miscellaneous expenses ............................................... 1,200
--------
120,335
Less: Fee waivers and expense reimbursements ......................... (113,628)
--------

Net expenses .................................................................... 6,707
--------
Net Investment Income ................................................... 9,553
--------

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on securities transactions from the Equity Portfolio........... (3)
Net unrealized appreciation of investments from the Equity Portfolio ............ 6,739
Net unrealized depreciation of investments from the Fund ........................ (22,577)
--------
Net realized and unrealized loss from investment activity ............... (15,841)
--------
Net Decrease in Net Assets Resulting From Operations ............ $ (6,288)
========
</TABLE>

- ----------------
*Commencement of Operations.

See Accompanying Notes to the Financial Statements.

<PAGE>

AIG CHILDREN'S WORLD FUND - 2005

- -------------------------------------------------------------------------------

Statement of Changes in Net Assets
For the period from December 15, 1995* to May 31, 1996 (Unaudited)
- -------------------------------------------------------------------------------

<TABLE>
<CAPTION>
OPERATIONS:
<S> <C>
Net investment income....................................................... $ 9,553
Net realized loss on investments............................................ (3)
Net unrealized depreciation of investments.................................. (15,838)
----------
Net Decrease in Net Assets Resulting From Operations.................. (6,288)
----------

FUND SHARE TRANSACTIONS:
Net proceeds from shares subscribed......................................... 2,035,770
Cost of shares redeemed..................................................... (25,125)
----------
Net Increase in Net Assets Resulting From Fund Share Transactions..... 2,010,645
----------

Total Increase in Net Assets................................... 2,004,357

Net assets at the beginning of the period....................................... 100,000
----------

NET ASSETS at the end of the period (including undistributed
net investment income of $9,553)........................................... $2,104,357
==========
</TABLE>

- ----------------

*Commencement of Operations.

See Accompanying Notes to the Financial Statements.

<PAGE>

AIG CHILDREN'S WORLD FUND - 2005

- -------------------------------------------------------------------------------
Financial Highlights
For the period from December 15, 1995* to May 31, 1996 (Unaudited)
- -------------------------------------------------------------------------------

Per Share Operating Performance
Net asset value, beginning of period........................ $ 9.15
------

Income (loss) from investment operations:
Net investment income................................... 0.04
Net realized and unrealized loss on investments ........ (0.03)
------
Total income from investment operations.......... 0.01
------

Net asset value, end of period.............................. $ 9.16
======

Total Return................................................ 0.11%(a)

Ratios / Supplemental Data:
Net assets, end of period (000's)........................... $2,104

Ratio to average net assets--
Expenses................................................ 2.00%(b)(c)
Net investment income................................... 2.42%(b)(c)

Portfolio turnover rate .................................... 0.00%

- -----------------

*Commencement of Operations.
(a) Calculated without deduction of sales charges.
(b) Net of fee waivers and expense reimbursements which had the effect of
reducing the ratio of expenses to average net assets and increasing the
ratio of net investment income to average net assets by 49.60 percentage
points (annualized).
(c) Annualized.

See Accompanying Notes to the Financial Statements.

<PAGE>

AIG CHILDREN'S WORLD FUND - 2005
- ------------------------------------------------------------------------------
Notes to Financial Statements
May 31, 1996 (Unaudited)
- ------------------------------------------------------------------------------

Note 1 - Organization

AIG All Ages Funds, Inc. (the "Company") is registered under the Investment
Company Act of 1940 (the "1940 Act"), as amended, as an open-ended diversified
management investment company. The Company was incorporated in Maryland on April
4, 1995 and commenced operations on December 15, 1995. At May 31, 1996, the
Company operated as a series company comprising two funds. The accompanying
financial statements and notes are those of the AIG Children's World Fund - 2005
(the "Fund") only.

Shares of the Fund will be offered to investors only from November 15, 1995
through December 31, 1996 (the "Offering Period"). The Offering Period may be
extended or shortened by the Fund at its discretion.

The Fund has two investment objectives. The first objective is to provide a
guaranteed return, on or after November 15, 2005 (the "Maturity Date"), of the
full amount originally invested (including any sales charges paid) by each
shareholder who has reinvested all dividends and distributions, which the Fund
pursues through investment of a portion of its assets in U.S. Treasury zero
coupon securities, combined with further assurance from a guarantee by AIG
Capital Management Corp., the Fund's investment adviser (the "Manager"). The
Manager's obligations under its guarantee will be backed by its parent, American
International Group, Inc. ("AIG").

The Fund's second objective is to achieve total return on capital through both
capital growth (realized and unrealized) and income, by investing the balance of
its assets primarily in a globally diversified portfolio of equity securities.
The Fund seeks to achieve this objective by investing the balance of its assets
in the First Global Equity Portfolio (the "Equity Portfolio"), an open-ended
management investment company that invests in a globally diversified portfolio
of equity securities. The Fund and the Equity Portfolio constitute a two-tier
master-feeder structure. The value of the Fund's investment in the Equity
Portfolio included in the accompanying Statement of Assets and Liabilities
reflects the Fund's proportionate beneficial interest of 79.7% in the net assets
of the Equity Portfolio at May 31, 1996. The financial statements of the Equity
Portfolio, including its portfolio of investments, are included within this
report and should be read in conjunction with the Fund's financial statements.

<PAGE>

Note 2 - Significant Accounting Policies

The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements. The preparation of
financial statements in accordance with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results could differ
from those estimates.

a) Security Valuations:

During the Offering Period, U.S. Treasury zero coupon securities are valued at
the average of the last reported bid and ask prices; thereafter, they will be
valued at the last reported bid price. Short-term securities with less than
sixty days remaining to maturity when acquired are valued at amortized cost,
which approximates market value. Short-term securities with more than sixty days
remaining to maturity are valued at current market value until the sixtieth day
prior to maturity, and are then valued on an amortized cost basis. The valuation
of the Fund's investment in the Equity Portfolio is discussed in Note 2 of the
Equity Portfolio's financial statements.

b) Investment Income and Security Transactions:

Security transactions of the Fund are accounted for on a trade date basis.
Realized gains and losses on securities transactions are determined on the
identified cost basis. Interest income, including accretion of discount and
amortization of premium, is accrued daily. The Fund records its pro-rata share
of investment income, expenses and realized and unrealized gains and losses
recorded by the Equity Portfolio on a daily basis. Expenses common to all funds
within the Company are allocated among the funds on the basis of average net
assets.

c) Dividends and Distributions:

The Fund declares and pays dividends from net investment income and distributes
net realized capital gains, if any, at least annually. Dividends and
distributions are recorded on the ex-dividend date. The amounts of dividends
from net investment income and distributions from net realized capital gains are
determined in accordance with federal income tax regulations which may differ
from generally accepted accounting principles, therefore, the Fund may
periodically make re-classifications among certain of its capital accounts as a
result of timing and characterization of certain income and capital gains
distributions.

<PAGE>

Note 2 - Continued

d) Federal Income Taxes:

The Fund has elected to be taxed as a regulated investment company and intends
to comply with the requirements of the Internal Revenue Code and to distribute
substantially all its taxable income to shareholders. Therefore, no federal
income tax provision is required.

e) Organization Expenses:

Expenses incurred in connection with the organization of the Fund are being
amortized on a straight line basis over a five year period beginning December
15, 1995. The amount paid by the Fund on any redemption by AIG Asset Management
Services, Inc. will be reduced by a proportion of any unamortized organizational
expenses determined by the proportion of the number of shares redeemed and the
number of the initial shares of the Equity Portfolio owned by such holder,
outstanding immediately prior to such redemption.

Note 3 - Agreements and Other Transactions with Affiliates

The Manager serves as the Fund's and the Equity Portfolio's investment adviser
and is responsible for the management of the assets of the Fund and the Equity
Portfolio in conformity with the stated objectives and policies of the Fund and
the Equity Portfolio. For its services, the Manager is entitled to a fee
calculated daily and paid monthly, at an annual rate of 0.20% of the average
daily net assets of the Fund (other than its interest in the Equity Portfolio)
and 1.20% of the average daily net assets of the Equity Portfolio. The Manager
has voluntarily agreed to waive its management fee or reimburse the Fund's
expenses to the extent that total Fund operating expenses exceed 2.00% of
average daily net assets during the Fund's limited Offering Period, subject to
reimbursement by the Fund in subsequent years under certain circumstances. For
the period ended May 31, 1996, the Manager waived its entire fee as adviser and
reimbursed the Fund in the aggregate amount of $113,628.

<PAGE>

Note 3 - Continued

a fee which is calculated daily and paid monthly at an annual rate of 0.0825% of
the average daily net assets of the Fund (other than the Fund's interest in the
Equity Portfolio) and 0.15% of the average daily net assets of the Equity
Portfolio. These fees are paid from the management fee paid to the Manager.

The Manager was previously party to a subadvisory agreement with AIGAM
International Limited ("AIGAM International"). AIGAM International, a wholly
owned subsidiary of AIG, was renamed AIG Global Investment Corp. (Europe) Ltd.,
("AIG Global Europe") on January 1, 1996. Effective May 28, 1996 AIG Global
Europe deregistered under the Advisers Act and the subadvisory agreement was
replaced with a service agreement pursuant to which AIG Global Europe agreed to
provide investment advisory services.

The Manager serves as the Fund's and the Equity Portfolio's investment adviser
and is responsible for the management of the assets and review and supervision
of the investment program. In addition to the subadvisory agreements, the
Manager has entered into service agreements with certain affiliates, including
AIG Global Europe, whereby such affiliates provide investment advisory services
under the direction of the Manager. Certain officers of these affiliates provide
representation on the Manager's Investment Committee. Under the terms of the
service agreements, the Manager is required to pay the service providers a total
combined fee at an annual rate of 0.0175% of the average daily net assets of the
Fund (other than the Fund's interest in the Equity Portfolio) and 0.45% of the
average daily net assets of the Equity Portfolio. These fees are paid from the
management fee paid to the Manager. There have been no such fees paid through
the period ended May 31, 1996.

Under the Shareholder Servicing Agreement, AIG Equity Sales Corp. (the
"Distributor"), a wholly owned subsidiary of AIG, provides administrative
services for the Fund's shareholders for which the Fund pays the Distributor a
fee at the annual rate of up to 0.25% of average daily net assets. Under a plan
of distribution pursuant to Rule 12b-1 under the 1940 Act (the "Plan"), the Fund
may pay the Distributor a distribution fee during the Offering Period at the
annualized rate of up to 0.50% of the average daily net assets of the Fund. The
Plan will terminate on the last day of the Offering Period.

PFPC International Ltd. serves as the Fund's administrator and accounting
agent. PFPC Inc. serves as Fund's transfer agent and dividend disbursing agent.
PNC Bank, NA serves as custodian of the Fund's assets.

<PAGE>

Note 3 - Continued

Certain directors and officers of the Company are also directors and/or officers
of the Manager or Distributor. These directors and officers are paid no
compensation by the Fund.

Note 4 - Capital Share Transactions

The Company has authorized 400 million shares of capital stock in the Fund with
a par value of $0.001. For the period ended May 31, 1996, there were 221,407
shares of capital stock sold, and 2,727 shares of capital stock redeemed.

Note 5 - Securities Transactions

For the period ended May 31, 1996 purchases of U.S. Treasury zero coupon
securities (other than short-term securities) were $1,145,111. There were no
sales of U.S. Treasury zero coupon securities in the period. At May 31, 1996,
the cost of the securities of the Fund for federal income tax purposes was
substantially the same as for financial reporting purposes. Accordingly, net
unrealized depreciation of investments amounted to $22,577.

<PAGE>

FIRST GLOBAL EQUITY PORTFOLIO
- -------------------------------------------------------------------------------

Portfolio of Investments
May 31, 1996 (Unaudited)

- -------------------------------------------------------------------------------

Value
Description Shares (Note 2)
----------- ------ --------

COMMON STOCKS - 106.7%

France - 6.8%
Generale des Eaux .............................. 300 $ 32,167
Total CIE Franc des Petroles B shares .......... 500 36,229
--------
68,396
--------
Hong Kong - 12.1%
Shanghai Industrial Holdings Ltd. .............. 49,000 59,534
Simsen Metals Holdings Ltd ..................... 200,000 34,123
Temfat Hingfung ................................ 250,000 29,082
--------
122,739
--------
Japan - 23.9%
Bank of Tokyo - Mitsubishi Ltd ................. 1,000 23,697
Bridgestone Corp. .............................. 1,000 17,403
Canon Inc ...................................... 1,000 19,624
Daihatsu Motor Co .............................. 2,000 12,311
Kajima ......................................... 1,000 10,460
Kao Corp ....................................... 1,000 13,330
Kirin Brewery .................................. 1,000 12,404
Komatsu Ltd .................................... 1,000 9,534
Mitsubishi Chemical Corp ....................... 2,000 9,886
Mitsubishi Heavy Industries .................... 1,000 8,599
Mitsubishi Trust & Banking ..................... 1,000 16,662
Mitsukoshi ..................................... 1,000 11,016
NEC ............................................ 1,000 11,016
Nippon Steel ................................... 3,000 10,192
Nomura Securities .............................. 1,000 18,884
Sankyo Co. Ltd. ................................ 1,000 23,697
Tokio Marine & Fire Insurance .................. 1,000 12,959
--------
241,674
--------
Netherlands - 7.5%
Getronics N.V .................................. 500 41,618
Hunter Douglas N.V ............................. 500 34,755
--------
76,373
--------
Sweden - 3.6%
Astra AB A - Free Shares ...................... 800 36,670
--------

<PAGE>

FIRST GLOBAL EQUITY PORTFOLIO

- -------------------------------------------------------------------------------

Portfolio of Investments - Continued
May 31, 1996 (Unaudited)

- -------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Value
Description Shares (Note 2)
----------- ------ --------
<S> <C> <C>
United Kingdom - 16.8%
Cable & Wireless ................................................... 5,000 $ 34,421
Glaxo Wellcome PLC ................................................. 2,500 32,599
Glynwed International PLC .......................................... 6,500 34,669
Legal & General Group PLC .......................................... 3,000 32,840
Vaux Group PLC ..................................................... 8,000 35,351
----------
169,880
----------
United States - 36.0%
Canadian Pacific Ltd. .............................................. 2,400 49,200
Flowers Industries Inc.............................................. 3,000 47,250
Kroger Co........................................................... 600 23,550
Octel Communications Corp........................................... 1,900 46,550
Pall Corp........................................................... 1,800 48,150
Snap - On Tools Corp................................................ 1,000 48,125
Ultramar ........................................................... 1,600 51,400
Unifi Inc........................................................... 1,800 49,950
----------
364,175
----------

Total Common Stocks (Cost $1,071,733)................................... 1,079,907
----------
SHORT-TERM INVESTMENTS - 26.8%
Cayman Island Time Deposit - 2.75% due 06/03/96 (Cost $272,000)................. 272,000
----------

Total Investments (Cost $1,343,733) - 133.5% ....................................... 1,351,907
Liabilities in excess of other assets - (33.5%) .................................... (339,464)
----------
NET ASSETS - 100% .................................................................. $1,012,443
==========
</TABLE>

See Accompanying Notes to the Financial Statements.

<PAGE>

FIRST GLOBAL EQUITY PORTFOLIO

ASSETS:
Investment in securities at value (cost $1,343,733)........ $1,351,907
Cash ...................................................... 7,971
Interest receivable ....................................... 21
Deferred organization costs ............................... 184,904
Prepaid expenses .......................................... 9,697
----------
Total Assets ........................................ 1,554,500
----------

LIABILITIES:
Payable for investment securities purchased ............... 349,329
Due to Manager ............................................ 156,804
Accrued expenses .......................................... 35,924
----------
Total Liabilities .................................. 542,057
----------

NET ASSETS .................................................... $1,012,443
==========

See Accompanying Notes to the Financial Statements.

<PAGE>

FIRST GLOBAL EQUITY PORTFOLIO

- -------------------------------------------------------------------------------

Statement of Operations
For the period from December 15, 1995* to May 31, 1996 (Unaudited)

- -------------------------------------------------------------------------------

<TABLE>
<CAPTION>
INVESTMENT INCOME:
<S> <C>
Interest ................................................................... $ 1,530
--------

EXPENSES:
Trustees' fees and expenses ................................................ 24,006
Organization expenses ...................................................... 19,641
Insurance expense .......................................................... 14,017
Legal fees ................................................................. 12,002
Audit fees ................................................................. 6,001
Administrative fees ........................................................ 4,963
Registration fees .......................................................... 2,068
Investment advisory fees ................................................... 755
Shareholder communication fees ............................................. 480
Miscellaneous .............................................................. 1,442
--------
85,375
Less: Fee waivers and expense reimbursements ............................... (84,117)
--------
Net expenses ............................................................... 1,258
--------
Net Investment Income ............................................. 272
--------

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on securities transactions ............................... (3)
Net change in unrealized appreciation of investments ....................... 8,174
--------
Net realized and unrealized gain from investment activity ......... 8,171
--------
Net Increase in Net Assets Resulting From Operations ...... $ 8,443
========
</TABLE>

- ------------------

*Commencement of Operations.

See Accompanying Notes to the Financial Statements.

<PAGE>

FIRST GLOBAL EQUITY PORTFOLIO

<TABLE>
<CAPTION>
OPERATIONS:
<S> <C>
Net investment income............................................ $ 272
Net realized loss on securities transactions..................... (3)
Net change in unrealized appreciation of investments............. 8,174
----------
Net Increase in Net Assets Resulting From Operations........ 8,443
----------

PORTFOLIO SHARE TRANSACTIONS:
Contributions.................................................... 903,000
----------

Total Increase in Net Assets .............................. 911,443

Net assets at the beginning of the period............................ 101,000
----------

NET ASSETS at the end of the period.................................. $1,012,443
==========
</TABLE>

- -----------------

*Commencement of Operations.

See Accompanying Notes to the Financial Statements.

<PAGE>

FIRST GLOBAL EQUITY PORTFOLIO

- -------------------------------------------------------------------------------
Ratios / Supplemental Data:
For the period from December 15, 1995* to May 31, 1996 (Unaudited)
- -------------------------------------------------------------------------------

Net assets, end of period (000's) ......................... $ 1,012

Ratio to average net assets--
Expenses............................................... 2.00%(a)(b)
Net investment income.................................. 0.43%(a)(b)

Portfolio turnover rate................................... 0.00%

Average commission rate paid............................... $0.0076

- -----------------

*Commencement of Operations.
(a) Net of fee waivers and expense reimbursements which had the effect of
reducing the ratio of expenses to average net assets and increasing the
ratio of net investment income to average net assets by 133.32 percentage
points (annualized).
(b) Annualized.

See Accompanying Notes to the Financial Statements.

16
<PAGE>

FIRST GLOBAL EQUITY PORTFOLIO
- ------------------------------------------------------------------------------
Notes to Financial Statements
May 31, 1996 (Unaudited)
- ------------------------------------------------------------------------------

Note 1 - Organization

First Global Equity Portfolio (the "Equity Portfolio"), a Delaware Business
Trust, is registered under the Investment Company Act of 1940, as amended, as an
open-end diversified management investment company. The Equity Portfolio was
organized on June 26, 1995 and commenced operations on December 15, 1995.

The investment objective of the Equity Portfolio is to achieve total return on
capital through both capital growth (realized and unrealized) and income. The
Equity Portfolio seeks to achieve this objective by making investments in
securities of issuers from around the world.

Note 2 - Significant Accounting Policies

The following is a summary of significant accounting policies followed by the
Equity Portfolio in the preparation of its financial statements. The preparation
of financial statements in accordance with generally accepted accounting
principles requires management to make estimates and assumptions that affect the
reported amounts and disclosures in the financial statements.
Actual results could differ from those estimates.

All the net investment income and unrealized and realized gains and losses from
securities and foreign currency transactions of the Equity Portfolio are
allocated pro-rata amongst the investors in the Equity Portfolio at the time of
such determination.

a) Security Valuations:

Securities traded on a foreign exchange or over-the-counter market are
valued at the last sales price on the primary exchange or market in
which they are traded. Securities for which there are no recent sales
transactions are valued based on quotations provided by primary market
makers in such securities. Any securities for which recent market
quotations are not readily available are valued at fair value
determined in accordance with procedures approved by the Board of
Trustees of the Equity Portfolio. Short-term securities with less than
sixty days remaining to maturity when acquired are valued at amortized
cost, which approximates market value. Short-term securities with more
than sixty days remaining to maturity are valued at current market
value until the sixtieth day prior to maturity, and are then valued on
an amortized cost basis.

<PAGE>

FIRST GLOBAL EQUITY PORTFOLIO
- -------------------------------------------------------------------------------
Notes to Financial Statements
May 31, 1996 (Unaudited)
- ------------------------------------------------------------------------------

Note 2 - Continued

b) Investment Income and Security Transactions:

Security transactions of the Equity Portfolio are accounted for on a
trade date basis. Realized gains and losses on securities transactions
are determined on the identified cost basis. Interest income, including
accretion of discount and amortization of premium, is accrued daily.
Dividend income is recognized on the ex-dividend date.

c) Foreign Currency Transactions:

The Equity Portfolio's investment valuations, other assets and
liabilities initially expressed in foreign currencies are converted
each day into U.S. dollars based upon currency exchange rates
determined prior to the close of the New York Stock Exchange. Purchases
and sales of foreign investments and income and expenses are converted
into U.S. dollars based upon currency exchange rates prevailing on the
respective dates of such transactions. The Equity Portfolio does not
isolate that portion of the results of operations resulting from
changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such
fluctuations are included in net realized and unrealized gains or
losses on securities.

The Equity Portfolio may enter into forward foreign currency exchange
contracts to fix the U.S. dollar value of a security it has agreed to
buy or sell for the period between the date the trade was entered into
and the date the security is delivered and paid for. A forward foreign
currency exchange contract is an agreement to purchase or sell a
specific currency at a future date and at a price set at the time the
contract is entered into.

The Equity Portfolio is not required to enter into forward contracts
with regard to settlement of its foreign currency-denominated
securities and will not do so unless deemed appropriate by AIG Capital
Management Corp. (the "Manager") or AIG Global Investment Corp. ("AIG
Global"), the subadvisor. Forward foreign currency exchange contracts
do not eliminate fluctuations in the underlying price of the
securities. They simply establish a rate of exchange at a future date.
Additionally, although such contracts tend to minimize the risk of loss
due to fluctuations in the value of the currency being traded, at the
same time, they tend to limit any potential gain which might result
from an increase in the value of that currency. With respect to foreign
forward currency exchange contracts losses in excess of amounts
recognized in the statement of assets and liabilities may arise due to
changes in value of the foreign currency or if the counterparty does
not perform under the contract.

<PAGE>

Note 2 - Continued

d) Federal Income Taxes:

The Equity Portfolio will be classified as a partnership for United
States federal income tax purposes. As a consequence, the Equity
Portfolio itself will not be subject to United States federal income
tax, but each investor in the Equity Portfolio will be required to take
into account its distributive share of items of partnership income,
gain, loss, deduction and credit substantially as though such items had
been realized directly by the investor and without regard to whether
any distribution from the Equity Portfolio has been or will be
received.

e) Organization Expenses:

Expenses incurred in connection with the organization of the Equity
Portfolio are being amortized on a straight line basis over a five year
period beginning December 15, 1995. The amount paid by the fund on any
redemption by AIG Asset Management Services, Inc. will be reduced by a
proportion of any unamortized organizational expenses determined by the
proportion of the amount of capital withdrawn and the amount of initial
capital of the Equity Portfolio owned by such holder, outstanding
immediately prior to such withdrawal.

Note 3 - Agreements and Other Transactions with Affiliates

The Manager, an indirect wholly owned subsidiary of American International
Group, Inc. ("AIG"), serves as the Equity Portfolio's investment adviser and is
responsible for the management of the assets of the Equity Portfolio in
conformity with its stated objectives and policies. For its services, the
Manager is entitled to a fee calculated daily and paid monthly, at an annual
rate of 1.20% of the average daily net assets of the Equity Portfolio. The
Manager has voluntarily agreed to waive its management fee or reimburse the
Equity Portfolio's expenses to the extent that its total operating expenses
exceed 2.00% of average daily net assets for a limited period. For the period
ended May 31, 1996, the Manager waived its entire fee as adviser and reimbursed
the Equity Portfolio in the aggregate amount of $84,117.

<PAGE>

Note 3 - Continued

The Manager has entered into a subadvisory agreement with AIG Global, a wholly
owned subsidiary of AIG which is registered under the Investment Advisers Act of
1940, as amended ("Advisers Act"). Pursuant to its subadvisory agreement, AIG
Global provides investment advisory services to the Manager in respect of the
management of the assets of the Equity Portfolio and officers of AIG Global
provide representation on the Manager's Investment Committee. Under the
subadvisory agreement, the Manager is required to pay AIG Global a fee at an
annual rate of 0.15% of the average daily net assets of the Equity Portfolio.
These fees are paid from the management fee paid to the Manager.

The Manager serves as the Equity Portfolio's investment adviser and is
responsible for the management of the assets and review and supervision of the
investment program. In addition to the subadvisory agreements, the Manager has
entered into service agreements with certain affiliates, including AIG Global
Europe, whereby such affiliates provide investment advisory services under the
direction of the Manager. Certain officers of these affiliates provide
representation on the Manager's Investment Committee. Under the terms of the
service agreements, the Manager is required to pay the service providers a total
combined fee at an annual rate of 0.45% of the average daily net assets of the
Equity Portfolio. These fees are paid from the management fee paid to the
Manager. There have been no such fees paid through the period ended May 31,
1996.

PFPC International Ltd. serves as the Equity Portfolio's administrator and
accounting agent. State Street Bank and Trust Company serves as custodian of the
Equity Portfolio's assets.

Certain trustees and officers of the Equity Portfolio are also directors
and/or officers of the Manager. These trustees and officers are paid no
compensation by the Equity Portfolio.

<PAGE>

Note 4 - Securities Transactions

For the period ended May 31, 1996, purchases of portfolio securities (other than
short-term securities) were $1,071,733. There were no sales of portfolio
securities. At May 31, 1996, the cost of the securities of the Equity Portfolio
for federal income tax purposes was substantially the same as for financial
reporting purposes. Accordingly, net unrealized appreciation of investments
amounted to $8,174 consisting of gross unrealized appreciation of $24,519 and
gross unrealized depreciation of $16,345.

<PAGE>

AIG RETIREE FUND - 2003

Semi-Annual Report

April 17, 1996 to May 31, 1996

(Unaudited)

Page

AIG Retiree Fund - 2003:
Portfolio of Investments............................................. 1
Statement of Assets and Liabilities.................................. 2
Statement of Operations.............................................. 3
Statement of Changes in Net Assets................................... 4
Financial Highlights................................................. 5
Notes to the Financial Statements.................................... 6-10

First Global Equity Portfolio:
Portfolio of Investments............................................. 11-12
Statement of Assets and Liabilities.................................. 13
Statement of Operations.............................................. 14
Statement of Changes in Net Assets................................... 15
Ratios / Supplemental Data........................................... 16
Notes to the Financial Statements.................................... 17-21

<PAGE>

AIG RETIREE FUND - 2003
- -------------------------------------------------------------------------------

Portfolio of Investments
May 31, 1996 (Unaudited)

- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>

Principal Maturity Value
Amount Description Date Yield* (Note 2a)
--------- ----------- -------- ----- -----------
<S> <C> <C> <C> <C>

US TREASURY BONDS - 54.7%
$ 625,000 US Zero Coupon Bond................................... 08/15/03 6.60% $ 385,906
340,000 US Zero Coupon Bond................................... 08/15/03 6.86% 209,933
-----------
Total Investments (Cost $600,631) - 54.7%.............................................. 595,839
Other Assets In Excess Of Liabilities - 45.3%.......................................... 492,859
-----------
NET ASSETS - 100%...................................................................... $ 1,088,698
===========
</TABLE>

* Effective yield at time of purchase.

See Accompanying Notes to the Financial Statements.

AIG RETIREE FUND - 2003

ASSETS:
Investment in securities at value (Cost $600,631) ............ $ 595,839
Investment in First Global Equity Portfolio at value ......... 204,415
Cash ......................................................... 322,587
Receivable for fund shares sold .............................. 176,017
Deferred organization costs .................................. 30,737
Prepaid expenses ............................................. 23,667
-----------
Total Assets .............................................. 1,353,262
-----------

LIABILITIES:
Payable for securities purchased ............................. 209,195
Due to Manager ............................................... 43,074
Accrued expenses ............................................. 12,295
-----------
Total Liabilities ......................................... 264,564
-----------

NET ASSETS ..................................................... $ 1,088,698
===========

COMPOSITION OF NET ASSETS:
Capital stock, at par ........................................ $ 119
Additional paid in capital ................................... 1,091,692
Accumulated undistributed net investment income .............. 226
Accumulated net realized loss on investments ................. (2)
Net unrealized depreciation of investments ................... (3,337)
-----------

Net Assets ..................................................... $ 1,088,698
===========
Shares Outstanding ($0.001 par value) .......................... 119,477
===========

Net asset value and redemption price per share ................. $ 9.11
===========
Maximum offering price per share (Net asset value plus sales
charge - 4.75% of maximum offering price) .................... $ 9.56
===========

See Accompanying Notes to the Financial Statements

2
<PAGE>

AIG RETIREE FUND - 2003

- -------------------------------------------------------------------------------
Statement of Operations
For the period from April 17, 1996* to May 31, 1996 (Unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>

<S> <C> <C>
INVESTMENT INCOME:
Interest ........................................................................................... $ 1,292

Investment income allocated from the Equity Portfolio:
Interest ...................................................................................... $ 35
Expenses ...................................................................................... (1,101)
Less: Fee waivers and expense reimbursements ................................................. 1,026
--------
Net Investment Income Allocated From the Equity Portfolio .......................................... (40)
--------
1,252
--------

EXPENSES:
Registration fees .................................................................................. 6,970
Directors' fees and expenses ....................................................................... 3,196
Legal fees ......................................................................................... 3,075
Transfer agent fees ................................................................................ 2,263
Organization expense ............................................................................... 1,263
Shareholder communication fees ..................................................................... 1,241
Audit fees ......................................................................................... 987
Insurance expense .................................................................................. 694
Miscellaneous expenses ............................................................................. 493
Distribution fees .................................................................................. 282
Shareholder service fees ........................................................................... 141
Investment advisory fees ........................................................................... 104
Administrative fees ................................................................................ 57
Custodian fees ..................................................................................... 14
--------
Less: Fee waivers and expense reimbursements ....................................................... (19,754)
--------

Net expenses ....................................................................................... 1,026
--------
Net Investment Income ......................................................................... 226
--------

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on securities transactions from the Fund ......................................... (2)
Net unrealized appreciation of investments from the Equity Portfolio ............................... 1,456
Net unrealized depreciation of investments from the Fund ........................................... (4,793)
--------
Net realized and unrealized loss from investment activity ..................................... (3,339)
--------
Net Decrease in Net Assets Resulting From Operations ..................................... $ (3,113)
========
</TABLE>

- -----------------
*Commencement of Operations.

See Accompanying Notes to the Financial Statements.

3
<PAGE>

AIG RETIREE FUND - 2003

- -------------------------------------------------------------------------------
Statement of Changes in Net Assets
For the period from April 17, 1996* to May 31, 1996 (Unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>

<S> <C>
OPERATIONS:
Net investment income ..................................................... $ 226
Net realized loss on investments .......................................... (2)
Net unrealized depreciation of investments ................................ (3,337)
-----------
Net Decrease in Net Assets Resulting From Operations ................ (3,113)
-----------
FUND SHARE TRANSACTIONS:
Net proceeds from shares subscribed ....................................... 1,091,843
Cost of shares redeemed ................................................... (32)
-----------
Net Increase in Net Assets Resulting From Fund Share Transactions.... 1,091,811
-----------

Total Increase in Net Assets ................................. 1,088,698

Net assets at the beginning of the period ................................... --
-----------

NET ASSETS at the end of the period (including undistributed
net investment income of $226) ............................................ $ 1,088,698
===========
</TABLE>

- -----------
*Commencement of Operations.

See Accompanying Notes to the Financial Statements.

4
<PAGE>

AIG RETIREE FUND - 2003

- -------------------------------------------------------------------------------
Financial Highlights
For the period from April 17, 1996* to May 31, 1996 (Unaudited)
- -------------------------------------------------------------------------------

Per Share Operating Performance
Net asset value, beginning of period......................... $ 9.15
--------

Income (loss) from investment operations:
Net investment income.................................... 0.00
Net realized and unrealized loss on investments ......... (0.04)
--------
Total income from investment operations........... (0.04)
--------

Net asset value, end of period............................... $ 9.11
========

Total Return................................................. (0.44%)(a)

Ratios / Supplemental Data:
Net assets, end of period (000's)............................ $ 1,089

Ratio to average net assets--
Expenses................................................. 1.95%(b)(c)
Net investment income.................................... 0.40%(b)(c)

Portfolio turnover rate ..................................... 0.00%

- -----------------
*Commencement of Operations.
(a) Calculated without deduction of sales charges.
(b) Net of fee waivers and expense reimbursements which had the effect of
reducing the ratio of expenses to average net assets and increasing the
ratio of net investment income to average net assets by 36.63 percentage
points (annualized).
(c) Annualized.

See Accompanying Notes to the Financial Statements.

<PAGE>

AIG RETIREE FUND - 2003
- ------------------------------------------------------------------------------
Notes to Financial Statements
May 31, 1996 (Unaudited)
- ------------------------------------------------------------------------------

Note 1 - Organization

Shares of the Fund will be offered to investors only from April 12, 1996 through
April 30, 1997 (the "Offering Period"). The Offering Period may be extended or
shortened by the Fund at its discretion.

The Fund has two investment objectives. The first objective is to provide a
guaranteed return, on or after November 15, 2003 (the "Maturity Date"), of the
full amount originally invested (including any sales charges paid) by each
shareholder who has reinvested all dividends and distributions, which the Fund
pursues through investment of a portion of its assets in U.S. Treasury zero
coupon securities, combined with further assurance from a guarantee by AIG
Capital Management Corp., the Fund's investment adviser (the "Manager"). The
Manager's obligations under its guarantee will be backed by its parent, American
International Group, Inc. ("AIG").

The Fund's second objective is to achieve total return on capital through both
capital growth (realized and unrealized) and income, by investing the balance of
its assets in the First Global Equity Portfolio (the "Equity Portfolio"), an
open-ended management investment company that invests in a globally diversified
portfolio of equity securities. The Fund and the Equity Portfolio constitute a
two-tier master-feeder structure. The value of the Fund's investment in the
Equity Portfolio included in the accompanying Statement of Assets and
Liabilities reflects the Fund's proportionate beneficial interest of 20.2% in
the net assets of the Equity Portfolio at May 31, 1996. The financial statements
of the Equity Portfolio, including its portfolio of investments, are included
within this report and should be read in conjunction with the Fund's financial
statements.

<PAGE>

Note 2 - Significant Accounting Policies

a) Security Valuations:

b) Investment Income and Security Transactions:

c) Dividends and Distributions:

<PAGE>

Note 2 - Continued

d) Federal Income Taxes:

e) Organization Expenses:

Expenses incurred in connection with the organization of the Fund are being
amortized on a straight line basis over a five year period beginning April 17,
1996.

Note 3 - Agreements and Other Transactions with Affiliates

The Manager serves as the Fund's and the Equity Portfolio's investment adviser
and is responsible for the management of the assets of the Fund and the Equity
Portfolio in conformity with the stated objectives and policies of the Fund and
the Equity Portfolio. For its services, the Manager is entitled to a fee
calculated daily and paid monthly, at an annual rate of 0.20% of the average
daily net assets of the Fund (other than its interest in the Equity Portfolio)
and 1.20% of the average daily net assets of the Equity Portfolio. The Manager
has voluntarily agreed to waive its management fee or reimburse the Fund's
expenses to the extent that total Fund operating expenses exceed 1.95% of
average daily net assets during the Fund's limited Offering Period, subject to
reimbursement by the Fund in subsequent years under certain circumstances. For
the period ended May 31, 1996, the Manager waived its entire fee as adviser and
reimbursed the Fund in the aggregate amount of $19,754.

The Manager has entered into subadvisory agreements with AIG Global Investment
Corp. ("AIG Global"), which is a wholly owned subsidiary of AIG and registered
under the Investment Advisers Act of 1940, as amended ("Advisers Act"). Pursuant
to its subadvisory agreements, AIG Global provides investment advisory services
to the Manager in respect of the management of the Fund's Treasury Securities
and in respect of the management of the assets of the Equity Portfolio and
officers of AIG Global provide representation on the Manager's Investment
Committee. Under the subadvisory agreements with AIG Global, the Manager pays
AIG Global a fee which is calculated daily and paid monthly at an annual rate of
0.0825% of the average daily net assets of the Fund (other than the Fund's
interest in the Equity Portfolio) and 0.15% of the average daily net assets of
the Equity Portfolio. These fees are paid from the management fee paid to the
Manager.

<PAGE>

Note 3 - Continued

The Manager serves as the Fund's and the Equity Portfolio's investment
adviser and is responsible for the management of the assets and review and
supervision of the investment program. In addition to the subadvisory
agreements, the Manager has entered into service agreements with certain
affiliates, including AIG Global Europe, whereby such affiliates provide
investment advisory services under the direction of the Manager. Certain
officers of these affiliates provide representation on the Manager's Investment
Committee. Under the terms of the service agreements, the Manager is required to
pay the service providers a total combined fee at an annual rate of 0.0175% of
the average daily net assets of the Fund (other than the Fund's interest in the
Equity Portfolio) and 0.45% of the average daily net assets of the Equity
Portfolio. These fees are paid from the management fee paid to the Manager.
There have been no such fees paid through the period ended May 31, 1996.

<PAGE>

Note 3 - Continued

Certain directors and officers of the Company are also directors and/or officers
of the Manager or Distributor. These directors and officers are paid no
compensation by the Fund.

Note 4 - Capital Share Transactions

The Company has authorized 100 million shares of capital stock in the Fund with
a par value of $0.001. For the period ended May 31, 1996, there were 119,481
shares of capital stock sold. There were 4 shares redeemed.

Note 5 - Securities Transactions

For the period ended May 31, 1996 purchases of U.S. Treasury zero coupon
securities (other than short-term securities) were $600,076. There were no sales
of U.S. Treasury zero coupon securities in the period. At May 31, 1996, the cost
of the securities of the Fund for federal income tax purposes was substantially
the same as for financial reporting purposes. Accordingly, net unrealized
depreciation of investments amounted to $4,792.

<PAGE>
FIRST GLOBAL EQUITY PORTFOLIO

- ------------------------------------------------------------------------------

Portfolio of Investments
May 31, 1996 (Unaudited)

- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>

Value
Description Shares (Note 2)
----------- ------- ---------

COMMON STOCKS - 106.7%

<S> <C> <C>
France - 6.8%
Generale des Eaux ............................................. 300 $ 32,167
Total CIE Franc des Petroles B shares ......................... 500 36,229
-------
68,396
-------
Hong Kong - 12.1%
Shanghai Industrial Holdings Ltd. ............................. 49,000 59,534
Simsen Metals Holdings Ltd .................................... 200,000 34,123
Temfat Hingfung ............................................... 250,000 29,082
-------
122,739
-------
Japan - 23.9%
Bank of Tokyo - Mitsubishi Ltd ................................ 1,000 23,697
Bridgestone Corp. ............................................. 1,000 17,403
Canon Inc ..................................................... 1,000 19,624
Daihatsu Motor Co ............................................. 2,000 12,311
Kajima ........................................................ 1,000 10,460
Kao Corp ...................................................... 1,000 13,330
Kirin Brewery ................................................. 1,000 12,404
Komatsu Ltd ................................................... 1,000 9,534
Mitsubishi Chemical Corp ...................................... 2,000 9,886
Mitsubishi Heavy Industries ................................... 1,000 8,599
Mitsubishi Trust & Banking .................................... 1,000 16,662
Mitsukoshi .................................................... 1,000 11,016
NEC ........................................................... 1,000 11,016
Nippon Steel .................................................. 3,000 10,192
Nomura Securities ............................................. 1,000 18,884
Sankyo Co. Ltd. ............................................... 1,000 23,697
Tokio Marine & Fire Insurance ................................. 1,000 12,959
-------
241,674
-------
Netherlands - 7.5%
Getronics N.V. ................................................ 500 41,618
Hunter Douglas N.V. ........................................... 500 34,755
-------
76,373
-------
Sweden - 3.6%
Astra AB A - Free Shares ..................................... 800 36,670
-------

</TABLE>

<PAGE>

FIRST GLOBAL EQUITY PORTFOLIO

- ------------------------------------------------------------------------------

Portfolio of Investments - Continued
May 31, 1996 (Unaudited)
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>

Value
Description Shares (Note 2)
----------- ------- -----------

<S> <C> <C>
United Kingdom - 16.8%
Cable & Wireless .............................................. 5,000 $ 34,421
Glaxo Wellcome PLC ............................................ 2,500 32,599
Glynwed International PLC ..................................... 6,500 34,669
Legal & General Group PLC ..................................... 3,000 32,840
Vaux Group PLC ................................................ 8,000 35,351
-----------
169,880
-----------
United States - 36.0%
Canadian Pacific Ltd. ......................................... 2,400 49,200
Flowers Industries Inc. ....................................... 3,000 47,250
Kroger Co. .................................................... 600 23,550
Octel Communications Corp. .................................... 1,900 46,550
Pall Corp. .................................................... 1,800 48,150
Snap - On Tools Corp. ......................................... 1,000 48,125
Ultramar ...................................................... 1,600 51,400
Unifi Inc. .................................................... 1,800 49,950
-----------
364,175
-----------

Total Common Stocks (Cost $1,071,733) ............................. 1,079,907
-----------

SHORT-TERM INVESTMENTS - 26.8%
Cayman Island Time Deposit - 2.75% due 06/03/96 (Cost $272,000) 272,000
-----------

Total Investments (Cost $1,343,733) - 133.5% ...................... 1,351,907
Liabilities in excess of other assets - (33.5%) ................... (339,464)
-----------
NET ASSETS - 100% ................................................. $ 1,012,443
===========

</TABLE>

See Accompanying Notes to the Financial Statements.

<PAGE>

FIRST GLOBAL EQUITY PORTFOLIO

ASSETS:
Investment in securities at value (cost $1,343,733) ....... $ 1,351,907
Cash....................................................... 7,971
Interest receivable........................................ 21
Deferred organization costs ............................... 184,904
Prepaid expenses .......................................... 9,697
------------
Total Assets ........................................ 1,554,500
------------

LIABILITIES:
Payable for investment securities purchased ............... 349,329
Due to Manager ............................................ 156,804
Accrued expenses .......................................... 35,924
------------
Total Liabilities................................... 542,057
------------

NET ASSETS..................................................... $ 1,012,443
============

See Accompanying Notes to the Financial Statements.

13
<PAGE>

FIRST GLOBAL EQUITY PORTFOLIO

- -------------------------------------------------------------------------------

Statement of Operations
For the period from December 15, 1995* to May 31, 1996 (Unaudited)

- -------------------------------------------------------------------------------

<TABLE>
<CAPTION>
INVESTMENT INCOME:
<S> <C>
Interest ............................................................................. $ 1,530
--------

EXPENSES:
Trustees' fees and expenses .......................................................... 24,006
Organization expenses ................................................................ 19,641
Insurance expense .................................................................... 14,017
Legal fees ........................................................................... 12,002
Audit fees ........................................................................... 6,001
Administrative fees .................................................................. 4,963
Registration fees .................................................................... 2,068
Investment advisory fees ............................................................. 755
Shareholder communication fees ....................................................... 480
Miscellaneous ........................................................................ 1,442
--------
85,375
Less: Fee waivers and expense reimbursements ......................................... (84,117)
--------
Net expenses ......................................................................... 1,258
--------
Net Investment Income ....................................................... 272
--------

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on securities transactions ......................................... (3)
Net change in unrealized appreciation of investments ................................. 8,174
--------
Net realized and unrealized gain from investment activity ................... 8,171
--------
Net Increase in Net Assets Resulting From Operations ................ $ 8,443
========
</TABLE>

- ------------------

*Commencement of Operations.

See Accompanying Notes to the Financial Statements.

<PAGE>

FIRST GLOBAL EQUITY PORTFOLIO

- -------------------------------------------------------------------------------
Statement of Changes in Net Assets
For the period from December 15, 1995* to May 31, 1996 (Unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
OPERATIONS:
Net investment income................................................. $ 272
Net realized loss on securities transactions.......................... (3)
Net change in unrealized appreciation of investments.................. 8,174
---------
Net Increase in Net Assets Resulting From Operations............. 8,443
---------

PORTFOLIO SHARE TRANSACTIONS:
Contributions......................................................... 903,000
---------

Total Increase in Net Assets ................................... 911,443

Net assets at the beginning of the period................................. 101,000
----------

NET ASSETS at the end of the period....................................... $1,012,443
==========
</TABLE>

- ---------------------
*Commencement of Operations.

See Accompanying Notes to the Financial Statements.

15
<PAGE>

FIRST GLOBAL EQUITY PORTFOLIO

Net assets, end of period (000's) ....................... $1,012

Ratio to average net assets--
Expenses............................................... 2.00%(a)(b)
Net investment income.................................. 0.43%(a)(b)

Portfolio turnover rate.................................. 0.00%

Average commission rate paid............................. $ 0.0076

- -----------------

See Accompanying Notes to the Financial Statements.

<PAGE>

Note 1 - Organization

Note 2 - Significant Accounting Policies

a) Security Valuations:

<PAGE>

Note 2 - Continued

b) Investment Income and Security Transactions:

c) Foreign Currency Transactions:

<PAGE>

Note 2 - Continued

d) Federal Income Taxes:

e) Organization Expenses:

Note 3 - Agreements and Other Transactions with Affiliates

<PAGE>

Note 3 - Continued

PFPC International Ltd. serves as the Equity Portfolio's administrator and
accounting agent. State Street Bank and Trust Company serves as custodian of the
Equity Portfolio's assets.

Certain trustees and officers of the Equity Portfolio are also directors
and/or officers of the Manager. These trustees and officers are paid no
compensation by the Equity Portfolio.

<PAGE>

Note 4 - Securities Transactions

<PAGE>