AIG ALL AGES FUNDS INC, N-30D, 1997-02-04

AIG ALL AGES FUNDS INC
N-30D, 1997-02-04

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<PAGE>

January 29, 1997

Dear Shareholder:

We are pleased to send you the Annual Report for the AIG Children's World Fund -
2005. It provides you with valuable information about your Fund's performance
and investments for the period ended November 30, 1996. Also enclosed is a
current AIG Children's World Fund - 2005 prospectus.

We have recently launched the AIG All Ages Funds Web Site on the Internet. This
site provides information about our funds, including answers to important
questions you may have. There is also a special "Kid's Money Center" page that
is specifically designed to aid in the financial education of children. You can
visit the site by typing the following address into your web browser:
"http://www.aigfunds.com".

We would also like to inform you that the limited offering period for shares of
the Fund has been extended through September 30, 1997.

You will find in the pages of this report an outline of the investment process
utilized by the Fund's advisor, a review of the Fund's performance, the
advisor's current outlook for the global equity markets and the Fund's audited
financial statements.

Should you have any questions about the AIG Children's World Fund - 2005, or if
you would like a prospectus for any other fund in the AIG All Ages Funds family,
please speak with your financial representative, or you may contact our
distributor's Investor Services Unit at 1-800-862-3984.

Thank you for your continued support and for allowing AIG All Ages Funds to
assist you in the development of a sound financial future. We look forward to
continuing to serve your investment needs.

Sincerely,

AIG Capital Management Corp.
<PAGE>

OUR INVESTMENT PROCESS

The investment process of the AIG Children's World Fund - 2005 (the "Fund") and
the First Global Equity Portfolio, a globally diversified equity fund in which
the Fund invests a portion of its assets, is managed by the Investment Committee
of AIG Capital Management Corp. (the "Advisor"), which consists of regional
portfolio managers from around the world. This committee meets on a quarterly
basis and conducts monthly conference calls to implement its global asset
allocation process. The committee's analysis includes economic, political and
market issues in the United States, Canada, Japan, Latin America, Southeast Asia
and Australia. This analysis results in a ranking of several variables driving
the relative performance of global markets. Factors examined include interest
rates, earnings momentum, liquidity, net equity demand, valuations, political
outlook, risks and forecasts.

PERFORMANCE REVIEW

In pursuit of its two investment objectives, the Fund invests a portion of its
assets in U.S. Treasury zero coupon securities and invests the balance of its
assets in the First Global Equity Portfolio. Therefore, the investment results
of the Fund are impacted significantly by changes in domestic interest rates as
well as by market movements in the global equity markets in which the First
Global Equity Portfolio invests. At November 30, 1996, 36% of the Fund's assets
were invested in the First Global Equity Portfolio.

For the period December 15, 1995 (commencement of operations) through November
30, 1996, the total return of the Fund was 4.05% (assuming deduction of the
maximum front-end sales charge). The total return of the Fund for this period
without deduction of front-end sales charges was 9.29%. During this same period
the Lehman Brothers Long Term Government/Corporate Bond Index appreciated 5.82%
and global equities, as measured by the Morgan Stanley Capital International
World Index, appreciated 17.34%.

Several principal factors contributed to the Fund's performance. First, after
the Fund became fully invested, as medium and long-term interest rates declined
at the end of the period, the market value of the Fund's holdings of Treasury
securities increased, contributing positively to the Fund's total return.
Likewise, after the Fund's initial start-up phase, the performance of the First
Global Equity Portfolio contributed positively to the Fund's total return. The
First Global Equity Portfolio's gains resulted primarily from the strong
performance of individual securities held by it, especially in Europe and
Southeast Asia. This positive return was offset somewhat by the First Global
Equity Portfolio's relative underweighting of the United States, whose equity
markets generally posted very strong gains for the period, and overweighting of
Japan, whose equity markets generally languished during the period. During its
start-up phase, when the Fund was predominately in cash, U.S. bond markets
depreciated more than global equity markets appreciated, and thus the fact that
the Fund was not able to fully participate in these markets during this initial
period was not significant. The First Global Equity Portfolio's regional
weightings, as discussed above, are determined by the Advisor's Investment
Committee through
<PAGE>

its global asset allocation process. The committee's allocations and outlook for
the global equity markets as of the beginning of the Fund's current fiscal year
are discussed in the "Current Outlook" section of this report.

Growth of an assumed $10,000 investment in AIG Children's World Fund - 2005 from
12/15/95 to 11/30/96 (adjusted for deduction of maximum front-end sales charge)*

[GRAPH APPEARS HERE]

Lehman Brothers Morgan Stanley AIG Children's
Long Term Gov't/ Capital International World Fund -
Corp. Bond Index World Index 2005

12/15/95 10,000 10,000 9,525
12/29/95 10,173 10,131 9,525
1/31/96 10,176 10,316 9,535
2/29/96 9,721 10,380 9,556
3/29/96 9,557 10,555 9,577
4/30/96 9,409 10,805 9,598
5/31/96 9,370 10,816 9,535
6/28/96 9,564 10,873 9,629
7/31/96 9,570 10,491 9,546
8/30/96 9,464 10,613 9,567
9/30/96 9,729 11,031 9,848
10/31/96 10,104 11,110 10,066
11/29/96 10,428 11,734 10,410

12/31/96 10,187 11,549

*The graph above shows the performance of a hypothetical investment in
the Fund
of $10,000, made on the date the Fund commenced operations, and held through
November 30, 1996. The performance of the Fund presented in the graph assumes
the deduction of the maximum front-end sales charge at the time the investment
in the Fund was made, assumes the reinvestment of dividends and distributions
and reflects the effect of certain fee waivers and expense reimbursements. The
graph also shows the performance of the Lehman Brothers Long Term
Government/Corp. Bond Index and the Morgan Stanley Capital International World
Index for the same period. Note that indices have inherent performance
advantages over any fund, as they do not have cash in their portfolio, incur no
operating expenses and impose no sales charges. Indices are not available for
direct investment. Past performance of the Fund is not predictive of future
results. Investment return and principal value of an investment in the Fund
will fluctuate and shares, when redeemed, may be worth more or less than their
original cost.

The Lehman Brothers Long Term Government/Corporate Bond Index is an unmanaged
index comprised of intermediate and long-term government and investment grade
corporate debt securities. The Morgan Stanley Capital International World Index
is a capitalization-weighted measure of global stock markets including the U.S.,
Canada, Europe, Australia and the Far East.

Top 10 holdings of First Global Equity Portfolio (FGEP) at November 30, 1996

Holding % Of FGEP Country
- ------- --------- -------
Cheung Kong Infrastructure 3.78 HK
Cementos de Mexico 3.77 Mexico
Veba AG 3.04 Germany
Flower Industries, Inc. 2.30 U.S.
Canadian Pacific Ltd. 2.14 Canada
Philip Environmental, Inc. 2.11 Canada
Koninklijke Ahold NV 2.03 Netherlands
Hutchinson Whampoa 2.00 HK
Roche Holdings AG 1.99 Switzerland
Allstate Corp. 1.95 U.S
<PAGE>

CURRENT OUTLOOK

The portion of the Fund's assets allocated to U.S. Treasury zero coupon
securities is determined by the prevailing interest rate environment. For the
portion of the Fund invested in the First Global Equity Portfolio, at November
30, 1996, the analysis of the Investment Committee resulted in the following
regional equity allocation:

MORGAN STANLEY CAPITAL
ACTUAL ALLOCATION INT'L WORLD INDEX*
------------------ -----------------------
U.S./Canada 30.5% 44%
Japan 27.1 21%
South East Asia 10.0 6%
Europe 27.7 29%
Latin America 3.8 -
Cash 0.9 -

* The Morgan Stanley Capital International World Index is a capitalization-
weighted measure of global stock markets including the U.S., Canada, Europe,
Australia and the Far East.

Our allocation, relative to market capitalization, reflects a continuing
underweighting of the United States, an overweighting of Japan and Southeast
Asia, a neutral position in Europe and a small exposure to Latin America.

UNITED STATES/CANADA

The allocation reflects a cautionary stance on the U.S. equity markets, where we
believe the first warning signs about earnings are appearing and that the strong
growth should recede slightly. Possible risks for the U.S. equity market are a
recession in 1997 caused by overly aggressive Federal Reserve policy, and weak
consumer demand which could trigger a correction in an already jittery market.

JAPAN

In Japan, interest rates have been low for some time now, earnings are having a
positive influence and it appears that a recovery is underway. We believe that
this bodes well for the Japanese equity market, however, there are risks from
the political situation and a possible market correction in the United States.

SOUTHEAST ASIA

The earnings situation for the southeast Asian equity markets remains positive,
although the outlook for economic growth is slightly weaker. The markets
reflect concerns about a possible hike in U.S. interest rates. Within this
region, we believe that the only markets to overweight are Hong Kong and China.
<PAGE>

EUROPE

In Europe, the current market driver is the positive interest rate outlook.
With growth sluggish, restructuring remains the main theme with large
privatization probably on the horizon. However, current budget discussions in
the major European centers could lead to political problems along with thorny
European Monetary Union (EMU) issues which still need to be resolved.

LATIN AMERICA

Our analysis concludes that the outlook for the Latin American equity markets is
the most bullish. Most Latin American economies have undergone significant
structural changes to improve competition and open markets. The downside is
that the risk attached to those markets is still the highest compared with the
other regions.
<PAGE>

AIG CHILDREN'S WORLD FUND - 2005

Financial Statements

December 15, 1995 (Commencement of Operations) to November 30, 1996

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
Report of Independent Accountants.................. 11

First Global Equity Portfolio:
Portfolio of Investments........................... 12-14
Statement of Assets and Liabilities................ 15
Statement of Operations............................ 16
Statement of Changes in Net Assets................. 17
Financial Highlights............................... 18
Notes to the Financial Statements.................. 19-23
Report of Independent Accountants.................. 24

<PAGE>

AIG CHILDREN'S WORLD FUND - 2005

-----------------------------------------------------------------------------
Portfolio of Investments
November 30, 1996
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>

Principal Maturity Value
Amount Description Date Yield * (Note 2a)
---------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C>
US TREASURY BONDS - 62.0%
$2,150,000 US Zero Coupon Bond...................15-Nov-05 6.76% $ 1,247,860
300,000 US Zero Coupon Bond...................15-Nov-05 7.00% 174,120
200,000 US Zero Coupon Bond...................15-Nov-05 7.13% 116,080
200,000 US Zero Coupon Bond...................15-Nov-05 6.97% 116,080
200,000 US Zero Coupon Bond...................15-Nov-05 6.97% 116,080
100,000 US Zero Coupon Bond...................15-Nov-05 6.97% 58,040
100,000 US Zero Coupon Bond...................15-Nov-05 6.91% 58,040
100,000 US Zero Coupon Bond...................15-Nov-05 6.75% 58,040
100,000 US Zero Coupon Bond...................15-Nov-05 6.67% 58,040
100,000 US Zero Coupon Bond...................15-Nov-05 6.65% 58,040
100,000 US Zero Coupon Bond...................15-Nov-05 6.61% 58,040
100,000 US Zero Coupon Bond...................15-Nov-05 6.60% 58,040
100,000 US Zero Coupon Bond...................15-Nov-05 6.33% 58,040
100,000 US Zero Coupon Bond...................15-Nov-05 6.24% 58,040
100,000 US Zero Coupon Bond...................15-Nov-05 6.22% 58,040
100,000 US Zero Coupon Bond...................15-Nov-05 6.16% 58,040
----------

Total Investments (Cost $2,288,275***) - 62.0%.............. 2,408,660

Other Assets in Excess of Liabilities** - 38.0%............. 1,478,138
----------
NET ASSETS - 100%........................................... $ 3,886,798
==========
</TABLE>
* Effective yield at time of purchase.
** Includes assets in First Global Equity Portfolio.
*** For federal income tax purposes, cost is substantially the same as for
financial reporting purposes with unrealized appreciation of $120,385.

See Accompanying Notes to the Financial Statements.

-1-
<PAGE>

AIG CHILDREN'S WORLD FUND - 2005

- -------------------------------------------------------------------------------
Statement of Assets and Liabilities
30-Nov-96
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investment in securities at value (Cost $2,288,275)........................... $ 2,408,660
Investment in Equity Portfolio at value....................................... 1,379,798
Cash.......................................................................... 113,142
Deferred organization costs................................................... 56,399
Prepaid expenses.............................................................. 2,764
Receivable for fund shares sold............................................... 2,381
Due from Manager.............................................................. 418
-----------
Total Assets............................................................ 3,963,562
-----------

LIABILITIES:
Accrued transfer agent expenses............................................... 44,783
Accrued legal expenses........................................................ 24,999
Accrued administration expenses............................................... 5,407
Miscellaneous accrued expenses................................................ 1,575
-----------
Total Liabilities 76,764
-----------

NET ASSETS........................................................................$ 3,886,798
==========
COMPOSITION OF NET ASSETS:
Capital paid in...............................................................$ 3,599,528
Undistributed net investment income........................................... 44,599
Undistributed net realized gain on investments
and foreign currency transactions........................................ 34,594
Net unrealized appreciation on investments.................................... 208,077
---------
Net Assets........................................................................$ 3,886,798
==========

Shares Outstanding................................................................ 388,574
==========

Net asset value and redemption price per share ($3,886,798 / 388,574 shares)......$ 10.00
==========
Maximum offering price per share (Net asset value plus sales
charge - 4.75% of maximum offering price).....................................$ 10.50
==========
</TABLE>

See Accompanying Notes to the Financial Statements.

-2-
<PAGE>

AIG CHILDREN'S WORLD FUND - 2005

- -------------------------------------------------------------------------------
Statement of Operations
For the period from December 15, 1995* to November 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest............................................................... $ 74,288
Net Investment Loss Allocated from the Equity
Portfolio............................................................ (2,072)
--------
72,216
--------

EXPENSES:
Transfer agent expense.................................... 74,528
Shareholder communication expense......................... 46,404
Registration expense...................................... 40,831
Administration expense.................................... 36,037
Directors' fees and expenses.............................. 33,807
Legal expense............................................. 24,999
Insurance expense......................................... 20,657
Organization expense...................................... 14,101
Distribution expense...................................... 9,378
Audit expense............................................. 4,998
Shareholder services expense.............................. 4,689
Investment advisory expense............................... 2,538
Custodian expense......................................... 298
Miscellaneous expenses.................................... 2,499
--------
Total expenses before reductions..................... 315,764
--------
Less: Fee waivers and expense reimbursements by Manager...(250,034)
Less: Fee waivers by Administrator........................ (21,163)
Less: Fee waivers by Transfer Agent....................... (19,358)
--------

Net expenses............................................................ 25,209
--------

Net Investment Income........................................... 47,007
--------

REALIZED AND UNREALIZED GAIN ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain on investments and foreign currency transactions
from the Equity Portfolio.............................................. 32,186
Net unrealized appreciation on investments and foreign currency transactions
from the Equity Portfolio.............................................. 87,692
Net unrealized appreciation on investments from the Fund................ 120,385
--------
Net realized and unrealized gain on investments
and foreign currency transactions................................. 240,263
--------
Net Increase in Net Assets Resulting from Operations............$287,270
========

</TABLE>
- -------------
*Commencement of Operations.

See Accompanying Notes to the Financial Statements.

-3-
<PAGE>

AIG CHILDREN'S WORLD FUND - 2005

- ------------------------------------------------------------------------------
Statement of Changes in Net Assets
For the period from December 15, 1995* to November 30, 1996
- ------------------------------------------------------------------------------

<TABLE>
<S> <C>
OPERATIONS:
Net investment income................................................................. $ 47,007
Net realized gain on investments and foreign currency transactions
from the Equity Portfolio........................................................ 32,186
Net unrealized appreciation on investments and foreign currency
transactions from the Equity Portfolio........................................... 87,692
Net unrealized appreciation on investments from the Fund.............................. 120,385
----------
Net Increase in Net Assets Resulting From Operations............................ 287,270
----------

FUND SHARE TRANSACTIONS:
Net proceeds from shares subscribed................................................... 3,623,996
Cost of shares redeemed............................................................... (124,468)
----------
Net Increase in Net Assets Resulting from Fund Share Transactions... 3,499,528
----------

Total Increase in Net Assets............................................. 3,786,798

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

NET ASSETS at the end of the period (including undistributed
net investment income of $44,599)........................................ $ 3,886,798
==========
</TABLE>
- --------

*Commencement of Operations.

See Accompanying Notes to the Financial Statements.

-4-
<PAGE>

AIG CHILDREN'S WORLD FUND - 2005

- --------------------------------------------------------------------------------
Financial Highlights
For the period from December 15, 1995* to November 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Per Share Operating Performance
Net asset value, beginning of period..................................... $ 9.15
-------

Income from investment operations:
Net investment income................................................... 0.12
Net realized and unrealized gain on investments ........................ 0.73
-------
Total income from investment operations.......................... 0.85
-------

Net asset value, end of period............................. $ 10.00
=======

Total Return................................................................ 9.29%(a)

Ratios / Supplemental Data:
Net assets, end of period (000's).......................... $ 3,887

Ratio of expenses to average net assets..................................... 2.00%(b)(c)
Ratio of net investment income to average net assets....... 2.52%(b)(c)

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

</TABLE>
- -------------
*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 26.05 percentage
points (annualized).
(c) Annualized.

See Accompanying Notes to the Financial Statements.

-5-
<PAGE>

AIG CHILDREN'S WORLD FUND - 2005
______________________________________________________________________________
Notes to Financial Statements
November 30, 1996
______________________________________________________________________________

NOTE 1 - ORGANIZATION

AIG All Ages Funds, Inc. (the "Company") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end diversified
management investment company. The Company was incorporated in Maryland on
April 4, 1995 and commenced operations on December 15, 1995. At November 30,
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 through September 30, 1997
(as such period may be extended or shortened by the Board of Directors of the
Company, the "Offering Period").

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 are 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-end 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 44.7% in
the net assets of the Equity Portfolio at November 30, 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.

-6-
<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
2a 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 on U.S. Treasury zero coupon securities, 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. On November 30, 1996, the Fund decreased undistributed net
investment income by $2,408 and increased undistributed net realized capital
gain on investments and foreign currency transactions by $2,408. These
differences are due to the reclassification of realized losses on foreign
currency contracts to ordinary income.

-7-
<PAGE>

AIG CHILDREN'S WORLD FUND - 2005
____________________________________________________________________
Notes to Financial Statements
November 30, 1996
____________________________________________________________________

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 of $70,500 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.

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 November 30, 1996, the Manager waived its entire fee as adviser
and reimbursed the Fund in the aggregate amount of $395,277 which is inclusive
of waiver amounts at the Equity Portfolio and Fund level.

The Manager has entered into subadvisory agreements with AIG Global Investment
Corp. ("AIG Global"), which is a wholly owned subsidiary of AIG and is
registered under the Investment Advisers Act of 1940, as amended (the "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.

-8-
<PAGE>

NOTE 3 - CONTINUED

The Manager was previously party to a subadvisory agreement with AIG Global
Investment Corp. (Europe) Ltd., ("AIG Global Europe"), a wholly owned subsidiary
of AIG. 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
funded from the management fee paid to the Manager. There have been no such
fees paid through the period ended November 30, 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 adopted 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.
For the period ended November 30, 1996, PFPC International Ltd. voluntarily
waived an aggregate $71,298 of its fee which is inclusive of waiver amounts at
the Equity Portfolio and Fund level. PFPC Inc. serves as Fund's transfer agent
and dividend disbursing agent. For the period ended November 30, 1996, PFPC
Inc. voluntarily waived an aggregate $20,891 of its fee which is inclusive of
waiver amounts at the Equity Portfolio and Fund level. PNC Bank, N.A. serves as
custodian of the Fund's assets.

-9-
<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 100,000,000 shares of capital stock in the Fund with
a par value of $0.001.

December 15, 1995*
to November 30, 1996
--------------------
Shares Amount
------ ------
Shares sold.......................... 390,836 $3,623,996
Shares redeemed...................... (13,191) (124,468)
--------- -----------

Net increase........................ 377,645 $3,499,528
======= ===========

* Commencement of Operations.

NOTE 5 - SECURITIES TRANSACTIONS

For the period ended November 30, 1996 purchases of U.S. Treasury zero coupon
securities (other than short-term securities) were $2,230,556. There were no
sales of U.S. Treasury zero coupon securities in the period.

DIVIDEND DISTRIBUTION (UNAUDITED)

On December 10, 1996, the Board of Directors of the Fund declared a dividend
$86,089, or $0.22 per share, payable on December 13, 1996 to shareholders of
record on December 9, 1996.

-10-
<PAGE>

AIG CHILDREN'S WORLD FUND - 2005

REPORT OF
INDEPENDENT ACCOUNTANTS

To the Shareholders and Board of Directors of AIG All Ages Funds, Inc.:

We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of AIG Children's World Fund - 2005 (one of the
funds comprising AIG All Ages Funds, Inc.) as of November 30, 1996, and the
related statement of operations, the statement of changes in net assets and the
financial highlights for the period from December 15, 1995 (commencement of
operations) to November 30, 1996. These financial statements and the financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and the financial
highlights based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
Our procedures included confirmation of securities owned as of November 30,
1996, by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements and the financial highlights referred
to above present fairly, in all material respects, the financial position of AIG
Children's World Fund - 2005 of AIG All Ages Funds, Inc. as of November 30,
1996, the results of its operations, the changes in its net assets and the
financial highlights for the period from December 15, 1995 (commencement of
operations) to November 30, 1996, in conformity with generally accepted
accounting principles.

COOPERS & LYBRAND L.L.P.

New York, New York
January 2, 1997

-11-
<PAGE>

FIRST GLOBAL EQUITY PORTFOLIO

- -------------------------------------------------------------------------------
Portfolio of Investments
November 30, 1996
- -------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Value
Description Shares (Note 2a)
---------- -------- ---------
<S> <C> <C>
COMMON STOCKS - 99.1%

Australia - 0.4%
News Corp Ltd........................................ 2,500 $ 13,317
---------

Canada - 4.3%
Canadian Pacific Ltd................................. 2,400 66,000
Philip Environmental, Inc............................ 5,000 65,000
---------
131,000
---------
France - 5.6%
Castorama Dubois Investissement...................... 180 31,708
Generale des Eaux.................................... 300 36,993
Schneider............................................ 450 21,412
Societe Generale..................................... 400 43,733
Total CIE Franc des Petroles B shares................ 500 39,990
---------
173,836
---------
Germany - 3.0%
Veba AG.............................................. 1,600 93,735
---------

Hong Kong - 7.7%
Cheung Kong Infrastructure........................... 48,000 116,710
DC Finance Holding................................... 90,000 56,163
DC Finance Warrants.................................. 9,000 1,047
Hutchinson Whampoa................................... 8,000 61,821
---------
235,741
---------
Japan - 27.1%
Advantest............................................ 500 21,353
Aoki International................................... 2,000 39,016
Bank of Tokyo - Mitsubishi Ltd....................... 2,000 40,949
Canon, Inc........................................... 1,000 21,090
Chiba Bank........................................... 5,000 37,917
Fanuc................................................ 500 16,301
Hitachi.............................................. 4,000 37,258
Hitachi Zosen Corp................................... 2,000 9,262
Kajima Corp.......................................... 3,000 23,990
Kao Corp............................................. 1,000 11,599
Katokichi............................................ 2,000 40,773
Kuraray Co........................................... 2,000 19,332
Marui Co............................................. 1,000 18,981
Matsushita Electrical Works.......................... 3,000 27,944
Mitsubishi Heavy Industries.......................... 1,000 8,172
Mitsubishi Motors.................................... 5,000 39,148
NEC Corp............................................. 2,000 24,253
Nippon Electric Glass................................ 2,000 30,229
Nippon Steel Corp.................................... 5,000 15,114
Nippon Telegraph and Telephone Corp.................. 3 21,406
Nomura Securities.................................... 1,000 16,872

</TABLE>

See Accompanying Notes to the Financial Statements.

-12-
<PAGE>

FIRST GLOBAL EQUITY PORTFOLIO

Value
Description Shares (Note 2a)
---------- -------- ---------
<S> <C> <C>
Japan- Continued
Sakura Bank.......................................... 4,000 $ 36,555
Sankyo Co. Ltd....................................... 1,000 26,801
Showa Shell Sekiyu................................... 2,000 19,156
Sumitomo............................................. 4,000 44,288
Toagosei Co. Ltd..................................... 4,000 17,153
Tokio Marine & Fire.................................. 2,000 22,144
Tokyo Electric Power................................. 1,800 40,650
Tokyo Ohka Kogyo..................................... 700 16,485
Tomen Corporation.................................... 5,000 15,905
Tonami Transport..................................... 5,000 28,515
Toto................................................. 1,000 13,093
Toyo Trust and Banking............................... 2,000 17,276
Yodogawa Steel Works................................. 3,000 18,111
---------
837,091
---------
Malaysia - 1.0%
Hong Leong Credit.................................... 5,000 30,861
---------

Mexico - 3.8%
Cementos de Mexico................................... 35,000 116,378
---------

Netherlands - 4.8%
Getronics NV......................................... 2,000 53,578
Hunter Douglas NV.................................... 500 32,703
Koninklijke Ahold NV................................. 1,000 62,565
---------
148,846
---------
Philippines - 0.9%
Universal Rightfield Properties......................213,000 27,551
---------

Spain - 2.5%
Bankinter SA......................................... 300 39,382
Corporacion Mapfre Compania.......................... 700 37,027
---------
76,409
Sweden - 1.3%
Astra AB A - Free Shares............................ 800 38,376
---------

Switzerland - 2.0%
Roche Holdings AG.................................... 8 61,553
---------

United Kingdom - 8.5%
Cable & Wireless PLC................................. 5,000 39,991
Glynwed International PLC............................ 6,500 38,172
Laporte PLC.......................................... 3,000 34,480
National Westminster................................. 3,500 40,491
Stanley Leisure Org. PLC............................. 9,000 38,638
Tarmac PLC........................................... 25,000 37,177
Vaux Group PLC....................................... 8,000 33,875
---------
262,824
---------

</TABLE>
See Accompanying Notes to the Financial Statements.

-13-
<PAGE>

FIRST GLOBAL EQUITY PORTFOLIO

- -------------------------------------------------------------------------------
Portfolio of Investments - Continued
November 30, 1996
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2a)
---------- -------- ---------
<S> <C> <C>
United States - 26.2%
Allstate Corp......................................... 1,000 $ 60,250
Bellsouth Corp........................................ 900 36,338
Cooper Industries, Inc................................ 1,000 41,500
Emerson Electric Co................................... 600 58,875
Federal National Mortgage Association................. 900 37,125
Flowers Industries, Inc............................... 3,000 70,875
Kroger Co............................................. 1,065 49,123
Nabisco Holdings Corp................................. 1,200 46,500
Octel Communications Corp............................. 1,000 18,000
Pall Corp............................................. 1,800 47,025
Penney (J.C.), Inc.................................... 1,000 53,750
Public Storage, Inc................................... 2,000 50,750
Snap - On, Inc........................................ 1,500 54,375
Ultramar Diamond...................................... 1,600 50,800
Unifi, Inc............................................ 1,800 54,675
Union Pacific Corp.................................... 700 40,775
Union Pacific Resources............................... 1,300 38,837
---------
809,573
---------

Total Common Stocks (Cost $2,876,960) - 99.1% ............. 3,057,091
Other Assets in Excess of Liabilities - 0.9%............... 28,299
---------
NET ASSETS - 100% ......................................... $3,085,390
=========

</TABLE>

* For federal income tax purposes, cost is substantially the same as for
financial reporting purposes and net unrealized appreciation is as follows:

Unrealized appreciation: $265,596
Unrealized depreciation: (85,465)
--------

Net unrealized appreciation: $180,131
=======

See Accompanying Notes to the Financial Statements.

-14-
<PAGE>

FIRST GLOBAL EQUITY PORTFOLIO

- -------------------------------------------------------------------------------
Statement of Assets and Liabilities
November 30, 1996
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investment in securities at value (cost $2,876,960) ................................$ 3,057,091
Deferred organization costs ........................................................ 163,636
Cash................................................................................ 118,511
Receivable for investment securities sold........................................... 42,899
Dividends and interest receivable................................................... 3,863
-----------
Total Assets ................................................................. 3,386,000
-----------

LIABILITIES:
Payable for investment securities purchased ........................................ 158,927
Due to Manager...................................................................... 58,534
Accrued legal fees ................................................................. 24,999
Accrued administration expenses .................................................... 17,659
Miscellaneous accrued expenses ..................................................... 40,491
-----------
Total Liabilities............................................................ 300,610
-----------

NET ASSETS..............................................................................$ 3,085,390
===========

COMPOSITION OF NET ASSETS:
Capital paid in.....................................................................$ 2,905,056
Net unrealized appreciation on investments and foreign
currency transactions and forward foreign currency
contracts...................................................................... 180,334
-----------
Net Assets..............................................................................$ 3,085,390
===========
</TABLE>

See Accompanying Notes to the Financial Statements.

-15-

<PAGE>

FIRST GLOBAL EQUITY PORTFOLIO

- --------------------------------------------------------------------------------
Statement of Operations
For the period from December 15, 1995* to November 30, 1996
- --------------------------------------------------------------------------------
<TABLE>

<S> <C>
INVESTMENT INCOME:
Dividends ................................................................... $ 13,228
Interest .................................................................... 3,404
---------
16,632
---------
EXPENSES:
Administrative expense....................................................... 95,423
Directors' fees and expenses................................................. 50,000
Organization expense......................................................... 40,909
Insurance expense............................................................ 29,195
Legal expense................................................................ 25,000
Investment advisory expense.................................................. 12,776
Audit expense................................................................ 12,500
Registration expense......................................................... 3,044
Miscellaneous accrued expenses............................................... 7,208
---------
Total expenses before reductions......................................... 276,055
---------
Less: Fee waivers and expense reimbursements by Manager...................... (195,435)
Less: Fee waivers by Administrator........................................... (57,591)
Less: Fee waivers by Transfer Agent.......................................... (1,763)
---------
Net expenses................................................................. 21,266
---------
Net Investment Loss ................................................ (4,634)
---------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain on investments and foreign currency transactions........... 59,180
Net unrealized appreciation on investments and foreign currency transactions. 180,334
---------
Net realized and unrealized gain on investments and foreign
currency transactions............................................ 239,514
---------
Net Increase in Net Assets Resulting from Operations........ $234,880
=========
</TABLE>

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

See Accompanying Notes to the Financial Statements.

-16-

<PAGE>

FIRST GLOBAL EQUITY PORTFOLIO

- -------------------------------------------------------------------------------
Statement of Changes in Net Assets
For the period from December 15, 1995* to November 30, 1996
- -------------------------------------------------------------------------------

<TABLE>

<S> <C>
OPERATIONS:
Net investment loss..................................................................... $ (4,634)
Net realized gain on investments and foreign currency transactions....................... 59,180
Net unrealized appreciation on investments and foreign currency transactions.... 180,334
---------
Net Increase in Net Assets Resulting from Operations................................ 234,880
---------

CAPITAL TRANSACTIONS:
Proceeds from capital invested........................................................... 2,749,510
---------

Total Increase in Net Assets ...................................................... 2,984,390

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

NET ASSETS at the end of the period................................................. $ 3,085,390
=========
</TABLE>
- -------------
*Commencement of Operations.

See Accompanying Notes to the Financial Statements.

-17-
<PAGE>

FIRST GLOBAL EQUITY PORTFOLIO

--------------------------------------------------------------------------
Financial Highlights
For the period from December 15, 1995* to November 30, 1996
--------------------------------------------------------------------------

Net assets, end of period (000's) .................... $3,085

Ratio of expenses to average net assets............... 2.00% (a)(b)
Ratio of net investment loss to average net assets.... (0.44%)(a)(b)

Portfolio turnover rate............................... 26.31% (c)

Average commission rate paid..........................$0.0069 (d)

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

*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 25.74 percentage
points (annualized).
(b) Annualized.
(c) This figure is calculated for the period during which there were
equity holdings.
(d) Represents total commissions paid on portfolio securities divided by the
total number of shares purchased and sold on which commissions are
charged.

See Accompanying Notes to the Financial Statements.

-18-
<PAGE>

FIRST GLOBAL EQUITY PORTFOLIO
______________________________________________________________________________
Notes to Financial Statements
November 30, 1996
______________________________________________________________________________

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
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.

-19-
<PAGE>

FIRST GLOBAL EQUITY PORTFOLIO
_______________________________________________________________________________
Notes to Financial Statements
November 30, 1996
______________________________________________________________________________

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 and 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 forward foreign 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.

-20-
<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 of $204,545 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 November 30, 1996, the Manager waived its entire fee as adviser and
reimbursed the Equity Portfolio in the aggregate amount of $195,435.

-21-
<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 (the "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 November
30, 1996.

PFPC International Ltd. serves as the Equity Portfolio's administrator and
accounting agent. For the period ended November 30, 1996, PFPC International
Ltd. voluntarily waived $57,591 of its fee. 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.

-22-
<PAGE>

FIRST GLOBAL EQUITY PORTFOLIO
__________________________________________________________________________
Notes to Financial Statements
November 30, 1996
__________________________________________________________________________

NOTE 4 - SECURITIES TRANSACTIONS

For the period ended November 30, 1996, purchases of portfolio securities (other
than short-term securities) were $3,312,710. Sales of portfolio securities were
$499,298.

NOTE 5 - FORWARD FOREIGN CURRENCY CONTRACTS AS OF NOVEMBER 30, 1996

<TABLE>
<CAPTION>
Unrealized
Market Value Contract Delivery Appreciation
Contracts to Buy: (U.S. Dollars) Price Date (Depreciation)
- ----------------- -------------- ---------- ---------- --------------
<S> <C> <C> <C> <C>
British Pound Sterling $ 41,483 0.59382 12/03/96 $ (49)
British Pound Sterling 37,951 0.59382 12/03/96 (44)
Spanish Peseta 35,517 129.50000 12/03/96 (140)
------- -----
Total Contracts to Buy: 114,951 (233)

Contracts to Sell:
- ------------------
British Pound Sterling 42,933 0.59382 12/03/96 51

Total Unrealized Depreciation $ (182)
======

</TABLE>

-23-
<PAGE>

FIRST GLOBAL EQUITY PORTFOLIO

REPORT OF
INDEPENDENT ACCOUNTANTS

To the Holders of Beneficial Interest and Board of Trustees of First Global
Equity Portfolio:

We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of First Global Equity Portfolio as of November
30, 1996, and the related statement of operations, the statement of changes in
net assets and the financial highlights for the period from December 15, 1995
(commencement of operations) to November 30, 1996. These financial statements
and the financial highlights are the responsibility of the Fund's management.
Our responsibility is to express an opinion on these financial statements and
the financial highlights based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosure in the financial statements. Our
procedures included confirmation of securities owned as of November 30, 1996, by
correspondence with the custodian and brokers. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements and the financial highlights referred
to above present fairly, in all material respects, the financial position of
First Global Equity Portfolio as of November 30, 1996, the results of its
operations, the changes in its net assets and the financial highlights for the
period from December 15, 1995 (commencement of operations) to November 30, 1996,
in conformity with generally accepted accounting principles.

COOPERS & LYBRAND L.L.P.

New York, New York
January 2, 1997

-24-
<PAGE>

January 29, 1997

Dear Shareholder:

We are pleased to send you the Annual Report for the AIG Retiree Fund - 2003.
It provides you with valuable information about your Fund's performance and
investments for the period ended November 30, 1996. Also enclosed is a current
AIG Retiree Fund - 2003 prospectus.

We have recently launched the AIG All Ages Funds Web Site on the Internet. This
site provides information about our funds, including answers to important
questions you may have. You can visit the site by typing the following address
into your web browser: "http://www.aigfunds.com".

We would also like to inform you that the limited offering period for shares of
the Fund has been extended through September 30, 1997.

Should you have any questions about the AIG Retiree Fund - 2003, or if you would
like a prospectus for any other fund in the AIG All Ages Funds family, please
speak with your financial representative, or you may contact our distributor's
Investor Services Unit at 1-800-862-3984.

Thank you for your continued support and for allowing AIG All Ages Funds to
assist you in the development of a sound financial future. We look forward to
continuing to serve your investment needs.

Sincerely,

AIG Capital Management Corp.
<PAGE>

OUR INVESTMENT PROCESS

The investment process of the AIG Retiree Fund - 2003 (the "Fund") and the First
Global Equity Portfolio, a globally diversified equity fund in which the Fund
invests a portion of its assets, is managed by the Investment Committee of AIG
Capital Management Corp. (the "Advisor"), which consists of regional portfolio
managers from around the world. This committee meets on a quarterly basis and
conducts monthly conference calls to implement its global asset allocation
process. The committee's analysis includes economic, political and market
issues in the United States, Canada, Japan, Latin America, Southeast Asia and
Australia. This analysis results in a ranking of several variables driving the
relative performance of global markets. Factors examined include interest
rates, earnings momentum, liquidity, net equity demand, valuations, political
outlook, risks and forecasts.

PERFORMANCE REVIEW

In pursuit of its two investment objectives, the Fund invests a portion of its
assets in U.S. Treasury zero coupon securities and invests the balance of its
assets in the First Global Equity Portfolio. Therefore, the investment results
of the Fund are impacted significantly by changes in domestic interest rates as
well as by market movements in the global equity markets in which the First
Global Equity Portfolio invests. At November 30, 1996, 28% of the Fund's assets
were invested in the First Global Equity Portfolio.

For the period April 17, 1996 (commencement of operations) through November 30,
1996, the total return of the Fund was 2.50% (assuming deduction of the maximum
front-end sales charge). The total return of the Fund for this period without
deduction of front-end sales charges was 7.65%. During this same period the
Lehman Brothers Long Term Government/Corporate Bond Index appreciated 10.44% and
global equities, as measured by the Morgan Stanley Capital International World
Index, appreciated 11.96%.

Several principal factors contributed to the Fund's performance. As medium and
long-term interest rates steadily declined during the period, the market value
of the Fund's holdings of Treasury securities increased, contributing positively
to the Fund's total return. The overall performance of the First Global Equity
Portfolio during the period also contributed positively to the Fund's total
return. While the upward movements of the U.S. bond and global equity markets
contributed to the Fund's performance, as a new fund with a significant cash
position, the Fund was unable to enjoy the full benefit of these rises. The
First Global Equity Portfolio's gains resulted primarily from the strong
performance of individual securities held by it, especially in Europe and
Southeast Asia. This positive return was offset somewhat by the First Global
Equity Portfolio's relative underweighting of the United States, whose equity
markets generally posted very strong gains for the period, and overweighting of
Japan, whose equity markets generally languished during the period. The First
Global Equity Portfolio's regional weightings, as discussed above, are
determined by the Advisor's Investment Committee through its global asset
allocation process. The committee's allocations and outlook for the global
equity
<PAGE>

markets as of the beginning of the Fund's current fiscal year are discussed in
the "Current Outlook" section of this report.

Growth of an assumed $10,000 investment in AIG Retiree Fund - 2003 from 4/17/96
to 11/30/96 (adjusted for deduction of maximum front-end sales charge)*

[GRAPH APPEARS HERE]

Lehman Brothers Morgan Stanley AIG Retiree
Long Term Gov't/ Capital International Fund -
Corp. Bond Index World Index 2003

4/17/96 10,000 10,000 9,525
4/30/96 9,957 10,309 9,525
5/31/96 9,916 10,320 9,483
6/28/96 10,121 10,374 9,567
7/31/96 10,128 10,009 9,535
8/30/96 10,015 10,126 9,525
9/30/96 10,295 10,524 9,775
10/31/96 10,692 10,600 9,993
11/29/96 11,035 11,196 10,254

12/31/96 10,781 11,018

Top 10 holdings of First Global Equity Portfolio (FGEP) at November 30, 1996

<PAGE>

CURRENT OUTLOOK

The portion of the Fund's assets allocated to U.S. Treasury zero coupon
securities is determined by the prevailing interest rate environment. For the
portion of the Fund invested in the First Global Equity Portfolio at November
30, 1996, the analysis of the Investment Committee resulted in the following
regional equity allocation:

* The Morgan Stanley Capital International World Index is a capitalization-
weighted measure of global stock markets including the U.S., Canada, Europe,
Australia and the Far East.

UNITED STATES/CANADA

JAPAN
In Japan, interest rates have been low for some time now, earnings are having a
positive influence and it appears that a recovery is underway. We believe that
this bodes well for the Japanese equity market, however, there are risks from
the political situation and a possible market correction in the United States.

SOUTHEAST ASIA

EUROPE

LATIN AMERICA

AIG RETIREE FUND - 2003

Financial Statements

April 17, 1996 (Commencement of Operations) to November 30, 1996

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
Report of Independent Accountants.................. 11

AIG RETIREE FUND - 2003

Principal Maturity Value
Amount Description Date Yield * (Note 2a)
--------- -------- --------- ------- -----------
<S> <C> <C> <C> <C>
US TREASURY BONDS - 68.7%
$ 625,000 US Zero Coupon Bond..............15-Aug-03 6.60% $ 421,894
340,000 US Zero Coupon Bond..............15-Aug-03 6.86% 229,510
500,000 US Zero Coupon Bond..............15-Nov-03 6.74% 332,155
500,000 US Zero Coupon Bond..............15-Nov-03 6.73% 332,155
400,000 US Zero Coupon Bond..............15-Nov-03 6.82% 265,724
300,000 US Zero Coupon Bond..............15-Nov-03 7.00% 199,293
300,000 US Zero Coupon Bond..............15-Nov-03 6.86% 199,293
300,000 US Zero Coupon Bond..............15-Nov-03 6.84% 199,293
300,000 US Zero Coupon Bond..............15-Nov-03 6.52% 199,293
300,000 US Zero Coupon Bond..............15-Nov-03 6.50% 199,293
200,000 US Zero Coupon Bond..............15-Nov-03 7.01% 132,862
200,000 US Zero Coupon Bond..............15-Nov-03 6.79% 132,862
200,000 US Zero Coupon Bond..............15-Nov-03 6.66% 132,862
200,000 US Zero Coupon Bond..............15-Nov-03 6.56% 132,862
200,000 US Zero Coupon Bond..............15-Nov-03 6.49% 132,862
200,000 US Zero Coupon Bond..............15-Nov-03 6.25% 132,862
200,000 US Zero Coupon Bond..............15-Nov-03 6.16% 132,862
200,000 US Zero Coupon Bond..............15-Nov-03 6.10% 132,862
200,000 US Zero Coupon Bond..............15-Nov-03 6.04% 132,862
100,000 US Zero Coupon Bond..............15-Nov-03 6.48% 66,431
100,000 US Zero Coupon Bond..............15-Nov-03 6.45% 66,431
100,000 US Zero Coupon Bond..............15-Nov-03 6.42% 66,431
100,000 US Zero Coupon Bond..............15-Nov-03 6.41% 66,431
100,000 US Zero Coupon Bond..............15-Nov-03 6.05% 66,431
100,000 US Zero Coupon Bond..............15-Nov-03 5.99% 66,431

Total Investments Cost 3,994,499***) - 68.7%.............. 4,172,247

Other Assets in Excess of Liabilities** - 31.3%........... 1,903,877
---------
NET ASSETS - 100%.........................................$ 6,076,124
==========
</TABLE>

* Effective yield at time of purchase.
** Includes assets in First Global Equity Portfolio.
*** For federal income tax purposes, cost is substantially the same as for
financial reporting purposes with unrealized appreciation of $177,748.

See Accompanying Notes to the Financial Statements.

1
<PAGE>

AIG RETIREE FUND - 2003
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities
November 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investment in securities at value (Cost $3,994,499)........................ $ 4,172,247
Investment in Equity Portfolio at value.................................... 1,704,497
Receivable for fund shares sold............................................ 149,829
Cash....................................................................... 86,539
Deferred organization costs................................................ 25,600
Interest Receivable........................................................ 4,176
Prepaid expenses........................................................... 349
--------------
Total Assets......................................................... 6,143,237
--------------
LIABILITIES:
Accrued transfer agent expense............................................. 17,758
Accrued legal expense...................................................... 15,597
Due to Manager............................................................. 5,518
Accrued administration expense............................................. 3,030
Miscellaneous accrued expenses............................................. 25,210
--------------
Total Liabilities.................................................... $ 67,113
--------------
NET ASSETS..................................................................... $ 6,076,124
==============
COMPOSITION OF NET ASSETS:
Capital paid in............................................................ $ 5,724,909
Undistributed net investment income........................................ 51,969
Undistributed net realized gain on investments
and foreign currency transactions..................................... 28,924
Net unrealized appreciation of investments................................. 270,322
--------------
Net Assets..................................................................... $ 6,076,124
==============

Shares Outstanding............................................................. 616,787
==============

Net asset value and redemption price per share ($6,076,124 / 616,787 shares)... $ 9.85
==============
Maximum offering price per share (Net asset value plus sales
charge - 4.75% of maximum offering price).................................. $ 10.34
==============
</TABLE>
See Accompanying Notes to the Financial Statements.

-2-
<PAGE>

AIG RETIREE FUND - 2003
- --------------------------------------------------------------------------------
Statement of Operations
For the period from April 17, 1996* to November 30, 1996
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME:
Interest.................................................................... $ 83,323
Net Investment Loss Allocated from the Equity Portfolio..................... (2,571)
--------
80,752
EXPENSES: --------
Transfer agent expense...................................... 36,195
Registration expense........................................ 32,171
Administrative expense...................................... 23,918
Directors' fees and expenses................................ 16,193
Legal expense............................................... 15,596
Distribution expense........................................ 9,228
Insurance expense........................................... 8,733
Shareholder communication expense........................... 7,847
Organization expense........................................ 6,400
Audit expense............................................... 4,978
Shareholder services expense................................ 4,614
Investment advisory expense................................. 2,767
Custodian expense........................................... 320
Miscellaneous expenses...................................... 2,499
---------
Total expenses before reductions...................... 171,459
---------
Less: Fee waivers and expense reimbursements by Manager..... (110,236)
Less: Fee waivers by Administrator.......................... (17,926)
Less: Fee waivers by Transfer Agent......................... (16,446)
---------
Net expenses.................................................................... 26,851
---------

Net Investment Income.................................................... 53,901
---------

REALIZED AND UNREALIZED GAIN ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain on investments and foreign currency transactions
from the Equity Portfolio...................................................... 26,992
Net unrealized appreciation on investments and foreign currency transactions
from the Equity Portfolio...................................................... 92,574
Net unrealized appreciation of investments from the Fund........................ 177,748
---------
Net realized and unrealized gain on investments and
foreign currency transactions..........................................
Net Increase in Net Assets Resulting from Operations............ 297,314
---------
$ 351,215
=========
</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 November 30, 1996
- ------------------------------------------------------------------------------
<TABLE>
<S> <C>
OPERATIONS:
Net investment income....................................................$ 53,901
Net realized gain on investments and foreign currency transactions
from the Equity Portfolio........................................... 26,992
Net unrealized appreciation on investments and foreign currency
transactions from the Equity Portfolio.............................. 92,574
Net unrealized appreciation on investments from the Fund................. 177,748
---------
Net Increase in Net Assets Resulting from Operations............... 351,215
---------

FUND SHARE TRANSACTIONS:
Net proceeds from shares subscribed...................................... 6,041,162
Cost of shares redeemed.................................................. (316,253)
---------
Net Increase in Net Assets Resulting from Fund Share Transactions.. 5,724,909
---------

Total Increase in Net Assets................................ 6,076,124

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

NET ASSETS at the end of the period (including undistributed
net investment income of $51,969).......................................$ 6,076,124
=========

</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 November 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Per Share Operating Performance
Net asset value, beginning of period.................................. $ 9.15
-------

Income from investment operations:
Net investment income............................................. 0.09
Net realized and unrealized loss on investments .................. 0.61
-------
Total income from investment operations.................... 0.70
-------

Net asset value, end of period........................................ $ 9.85
=======

Total Return.......................................................... (7.65%) (a)

Ratios / Supplemental Data:
Net assets, end of period (000's)..................................... $ 6,076

Ratio of expenses to average net assets............................... 1.95% (b)(c)
Ratio of net investment income to average net assets.................. 2.96% (b)(c)

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

</TABLE>
- -------------
*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 11.00 percentage
points (annualized).
(c) Annualized.

See Accompanying Notes to the Financial Statement.

-5-

<PAGE>

AIG RETIREE FUND - 2003
______________________________________________________________________________
Notes to Financial Statements
November 30, 1996
______________________________________________________________________________

NOTE 1 - ORGANIZATION

Shares of the Fund will be offered to investors only through September 30, 1997
(as such period may be extended or shortened by the Board of Directors of the
Company, the "Offering Period").

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 are 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-end 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 55.2% in
the net assets of the Equity Portfolio at November 30, 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.

-6-
<PAGE>

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

a) SECURITY VALUATIONS:

b) INVESTMENT INCOME AND SECURITY TRANSACTIONS:

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. On November 30, 1996, the Fund decreased undistributed net
investment income by $1,932 and increased undistributed net realized capital
gain on investments and foreign currency transactions by $1,932. These
differences are due to the reclassification of realized losses on foreign
currency contracts to ordinary income.

-7-
<PAGE>

AIG RETIREE FUND - 2003
____________________________________________________________________
Notes to Financial Statements
November 30, 1996
____________________________________________________________________

NOTE 2 - CONTINUED

d) FEDERAL INCOME TAXES:

e) ORGANIZATION EXPENSES:

Expenses of $32,000 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 November 30, 1996, the Manager waived its entire fee as adviser
and reimbursed the Fund in the aggregate amount of $159,580 which is inclusive
of waiver amounts at the Equity Portfolio and Fund level.

-8-
<PAGE>

NOTE 3 - CONTINUED

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.

PFPC International Ltd. serves as the Fund's administrator and accounting agent.
For the period ended November 30, 1996, PFPC International Ltd. voluntarily
waived an aggregate $24,986 of its fee which is inclusive of waiver amounts at
the Equity Portfolio and Fund level. PFPC Inc. serves as the Fund's transfer
agent and dividend disbursing agent. For the period ended November 30, 1996,
PFPC Inc. voluntarily waived an aggregate $16,664 of its fee which is inclusive
of waiver amounts at the Equity Portfolio and Fund level. PNC Bank, N.A. serves
as custodian of the Fund's assets.

-9-
<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 100,000,000 shares of capital stock in the Fund with
a par value of $0.001.

April 17, 1996*
to November 30, 1996
--------------------
Shares Amount
------ ------
Shares sold........................... 651,040 $6,041,162
Shares redeemed....................... (34,253) (316,253)

Net increase.......................... 616,787 $5,724,909

* Commencement of Operations.

NOTE 5 - SECURITIES TRANSACTIONS

For the period ended November 30, 1996 purchases of U.S. Treasury zero coupon
securities (other than short-term securities) were $3,918,290. There were no
sales of U.S. Treasury zero coupon securities in the period.

DIVIDEND DISTRIBUTION (UNAUDITED)

On December 10, 1996, the Board of Directors of the Fund declared a dividend of
$94,214, or $0.15 per share, payable on December 13, 1996 to shareholders of
record on December 9, 1996.

-10-
<PAGE>

AIG RETIREE FUND - 2003

REPORT OF
INDEPENDENT ACCOUNTANTS

To the Shareholders and Board of Directors of AIG All Ages Funds, Inc.:

We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of AIG Retiree Fund - 2003 (one of the funds
comprising AIG All Ages Funds, Inc.) as of November 30, 1996, and the related
statement of operations, the statement of changes in net assets and the
financial highlights for the period from April 17, 1996 (commencement of
operations) to November 30, 1996. These financial statements and the financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and the financial
highlights based on our audit.

In our opinion, the financial statements and the financial highlights referred
to above present fairly, in all material respects, the financial position of AIG
Retiree Fund - 2003 of AIG All Ages Funds, Inc. as of November 30, 1996, the
results of its operations, the changes in its net assets and the financial
highlights for the period from April 17, 1996 (commencement of operations) to
November 30, 1996, in conformity with generally accepted accounting principles.

COOPERS & LYBRAND L.L.P.

New York, New York
January 2, 1997

-11-
<PAGE>

FIRST GLOBAL EQUITY PORTFOLIO

- --------------------------------------------------------------------------------
Portfolio of Investments
November 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>

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

COMMON STOCKS - 99.1%
<S> <C> <C>
Australia - 0.4%
News Corp Ltd.............................................. 2,500 $ 13,317
--------

Canada - 4.3%
Canadian Pacific Ltd....................................... 2,400 66,000
Philip Environmental, Inc.................................. 5,000 65,000
--------
131,000
--------
France - 5.6%
Castorama Dubois Investissement............................ 180 31,708
Generale des Eaux.......................................... 300 36,993
Schneider.................................................. 450 21,412
Societe Generale........................................... 400 43,733
Total CIE Franc des Petroles B shares...................... 500 39,990
--------
173,836
--------
Germany - 3.0%
Veba AG.................................................... 1,600 93,735
--------

Hong Kong - 7.7%
Cheung Kong Infrastructure................................. 48,000 116,710
DC Finance Holding......................................... 90,000 56,163
DC Finance Warrants........................................ 9,000 1,047
Hutchinson Whampoa......................................... 8,000 61,821
--------
235,741
--------
Japan - 27.1%
Advantest.................................................. 500 21,353
Aoki International......................................... 2,000 39,016
Bank of Tokyo - Mitsubishi Ltd............................. 2,000 40,949
Canon, Inc................................................. 1,000 21,090
Chiba Bank................................................. 5,000 37,917
Fanuc...................................................... 500 16,301
Hitachi.................................................... 4,000 37,258
Hitachi Zosen Corp......................................... 2,000 9,262
Kajima Corp................................................ 3,000 23,990
Kao Corp................................................... 1,000 11,599
Katokichi.................................................. 2,000 40,773
Kuraray Co................................................. 2,000 19,332
Marui Co................................................... 1,000 18,981
Matsushita Electrical Works................................ 3,000 27,944
Mitsubishi Heavy Industries................................ 1,000 8,172
Mitsubishi Motors.......................................... 5,000 39,148
NEC Corp................................................... 2,000 24,253
Nippon Electric Glass...................................... 2,000 30,229
Nippon Steel Corp.......................................... 5,000 15,114
Nippon Telegraph and Telephone Corp........................ 3 21,406
Nomura Securities.......................................... 1,000 16,872

</TABLE>
See Accompanying Notes to the Financial Statements.

12
<PAGE>

FIRST GLOBAL EQUITY PORTFOLIO

- --------------------------------------------------------------------------------
Portfolio of Investments - Continued
November 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2a)
----------- -------- --------
<S> <C> <C>
Japan - Continued
Sakura Bank............................................................... 4,000 $ 36,555
Sankyo Co. Ltd............................................................ 1,000 26,801
Showa Shell Sekiyu........................................................ 2,000 19,156
Sumitomo.................................................................. 4,000 44,288
Toagosei Co. Ltd.......................................................... 4,000 17,153
Tokio Marine & Fire....................................................... 2,000 22,144
Tokyo Electric Power...................................................... 1,800 40,650
Tokyo Ohka Kogyo.......................................................... 700 16,485
Tomen Corporation......................................................... 5,000 15,905
Tonami Transport.......................................................... 5,000 28,515
Toto...................................................................... 1,000 13,093
Toyo Trust and Banking.................................................... 2,000 17,276
Yodogawa Steel Works...................................................... 3,000 18,111
--------
837,091
--------
Malaysia - 1.0%
Hong Leong Credit......................................................... 5,000 30,861
--------

Mexico - 3.8%
Cementos de Mexico........................................................ 35,000 116,378
--------

Netherlands - 4.8%
Getronics NV.............................................................. 2,000 53,578
Hunter Douglas NV......................................................... 500 32,703
Koninklijke Ahold NV...................................................... 1,000 62,565
--------
148,846
--------
Philippines - 0.9%
Universal Rightfield Properties........................................... 213,000 27,551
--------

Spain - 2.5%
Bankinter SA.............................................................. 300 39,382
Corporacion Mapfre Compania............................................... 700 37,027
--------
76,409
--------
Sweden - 1.3%
Astra AB A - Free Shares................................................. 800 38,376
--------

Switzerland - 2.0%
Roche Holdings AG......................................................... 8 61,553
--------

United Kingdom - 8.5%
Cable & Wireless PLC...................................................... 5,000 39,991
Glynwed International PLC................................................. 6,500 38,172
Laporte PLC............................................................... 3,000 34,480
National Westminster...................................................... 3,500 40,491
Stanley Leisure Org. PLC.................................................. 9,000 38,638
Tarmac PLC................................................................ 25,000 37,177
Vaux Group PLC............................................................ 8,000 33,875
--------
262,824
--------
</TABLE>

See Accompanying Notes to the Financial Statements.

13
<PAGE>

FIRST GLOBAL EQUITY PORTFOLIO

- --------------------------------------------------------------------------------
Portfolio of Investments - Continued
November 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2a)
----------- -------- ----------
<S> <C> <C>
United States - 26.2%
Allstate Corp................................................................ 1,000 $ 60,250
Bellsouth Corp............................................................... 900 36,338
Cooper Industries, Inc....................................................... 1,000 41,500
Emerson Electric Co.......................................................... 600 58,875
Federal National Mortgage Association........................................ 900 37,125
Flowers Industries, Inc...................................................... 3,000 70,875
Kroger Co.................................................................... 1,065 49,123
Nabisco Holdings Corp........................................................ 1,200 46,500
Octel Communications Corp.................................................... 1,000 18,000
Pall Corp.................................................................... 1,800 47,025
Penney (J.C.), Inc........................................................... 1,000 53,750
Public Storage, Inc.......................................................... 2,000 50,750
Snap - On, Inc............................................................... 1,500 54,375
Ultramar Diamond............................................................. 1,600 50,800
Unifi, Inc................................................................... 1,800 54,675
Union Pacific Corp........................................................... 700 40,775
Union Pacific Resources...................................................... 1,300 38,837
----------
809,573
----------

Total Common Stocks (Cost $2,876,960) - 99.1% .................................... 3,057,091
Other Assets in Excess of Liabilities - 0.9%...................................... 28,299
----------
NET ASSETS - 100% ................................................................ $ 3,085,390
==========
</TABLE>

* For federal income tax purposes, cost is substantially the same as for
financial reporting purposes and net unrealized appreciation is as follows:

Unrealized appreciation: $265,596
Unrealized depreciation: (85,465)
--------

Net unrealized appreciation: $180,131
=======

See Accompanying Notes to the Financial Statements.

14
<PAGE>

FIRST GLOBAL EQUITY PORTFOLIO

- --------------------------------------------------------------------------------
Statement of Assets and Liabilities
November 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investment in securities at value (cost $2,876,960) ................. $ 3,057,091
Deferred organization costs ......................................... 163,636
Cash................................................................. 118,511
Receivable for investment securities sold............................ 42,899
Dividends and interest receivable.................................... 3,863
---------
Total Assets .................................................. 3,386,000
---------

LIABILITIES:
Payable for investment securities purchased ......................... 158,927
Due to Manager....................................................... 58,534
Accrued legal fees .................................................. 24,999
Accrued administration expenses ..................................... 17,659
Miscellaneous accrued expenses ...................................... 40,491
---------
Total Liabilities............................................. 300,610
---------

NET ASSETS............................................................... $ 3,085,390
=========

COMPOSITION OF NET ASSETS:
Capital paid in..................................................... $ 2,905,056
Net unrealized appreciation on investments and foreign
currency transactions and forward foreign currency
contracts...................................................... 180,334
----------
Net Assets.............................................................. $ 3,085,390
=========

</TABLE>

See Accompanying Notes to the Financial Statements.

-15-

<PAGE>

FIRST GLOBAL EQUITY PORTFOLIO

<S> <C>
INVESTMENT INCOME:
Dividends .......................................................................... $ 13,228

Interest ........................................................................... 3,404
--------
16,632
--------
EXPENSES:
Administrative expense.............................................................. 95,423
Directors' fees and expenses........................................................ 50,000
Organization expense................................................................ 40,909
Insurance expense................................................................... 29,195
Legal expense....................................................................... 25,000
Investment advisory expense......................................................... 12,776
Audit expense....................................................................... 12,500
Registration expense................................................................ 3,044
Miscellaneous accrued expenses...................................................... 7,208
--------

Total expenses before reductions................................................ 276,055
--------
Less: Fee waivers and expense reimbursements by Manager............................. (195,435)
Less: Fee waivers by Administrator.................................................. (57,591)
Less: Fee waivers by Transfer Agent................................................. (1,763)
--------
Net expenses........................................................................ 21,266
--------

Net Investment Loss ....................................................... (4,634)
--------

REALIZED AND UNREALIZED GAIN ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain on investments and foreign currency transactions.................. 59,180
Net unrealized appreciation on investments and foreign currency transactions........ 180,334
--------
Net realized and unrealized gain on investments and foreign
currency transactions................................................... 239,514
--------
Net Increase in Net Assets Resulting from Operations............... $234,880
========

</TABLE>
- ----------------
*Commencement of Operations.

See Accompanying Notes to the Financial Statements.

-16-
<PAGE>

FIRST GLOBAL EQUITY PORTFOLIO

- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
For the period from December 15, 1995* to November 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
OPERATIONS:
Net investment loss.................................................................. $ (4,634)
Net realized gain on investments and foreign currency transactions................... 59,180
Net unrealized appreciation on investments and foreign currency transactions 180,334
---------
Net Increase in Net Assets Resulting from Operations............................ 234,880
---------
CAPITAL TRANSACTIONS:
Proceeds from capital invested....................................................... 2,749,510
---------

Total Increase in Net Assets .................................................. 2,984,390

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

NET ASSETS at the end of the period...................................................... $ 3,085,390
==========
</TABLE>

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

See Accompanying Notes to the Financial Statements.

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<PAGE>

FIRST GLOBAL EQUITY PORTFOLIO

------------------------------------------------------------------------
Financial Highlights
For the period from December 15, 1995* to November 30, 1996
-----------------------------------------------------------------------
<TABLE>
<S> <C>
Net assets, end of period (000's) ..................... $ 3,085

Ratio of expenses to average net assets................ 2.00% (a)(b)
Ratio of net investment loss to average net assets..... (0.44%) (a)(b)

Portfolio turnover rate................................ 26.31% (c)

Average commission rate paid........................... $ 0.0069 (d)

</TABLE>
-------------
*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 25.74 percentage points (annualized).
(b) Annualized.
(c) This figure is calculated for the period during which there were
equity holdings.
(d) Represents total commissions paid on portfolio securities divided by
the total number of shares purchased and sold on which commissions
are charged.

See Accompanying Notes to the Financial Statements.

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<PAGE>

NOTE 1 - ORGANIZATION

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

a) SECURITY VALUATIONS:

-19-

<PAGE>

NOTE 2 - CONTINUED

b) INVESTMENT INCOME AND SECURITY TRANSACTIONS:

c) FOREIGN CURRENCY TRANSACTIONS:

-20-

<PAGE>

NOTE 2 - CONTINUED

d) FEDERAL INCOME TAXES:

e) ORGANIZATION EXPENSES:

NOTE 3 - AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES

-21-

<PAGE>

NOTE 3 - CONTINUED

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.

-22-

<PAGE>

NOTE 4 - SECURITIES TRANSACTIONS

For the period ended November 30, 1996, purchases of portfolio securities (other
than short-term securities) were $3,312,710. Sales of portfolio securities were
$499,298.

NOTE 5 - FORWARD FOREIGN CURRENCY CONTRACTS AS OF NOVEMBER 30, 1996

Contracts to Sell:
- ------------------
British Pound Sterling 42,933 0.59382 12/03/96 51

Total Unrealized Depreciation $ (182)
======

</TABLE>

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<PAGE>

FIRST GLOBAL EQUITY PORTFOLIO

REPORT OF
INDEPENDENT ACCOUNTANTS

To the Holders of Beneficial Interest and Board of Trustees of First Global
Equity Portfolio:

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosure in the financial statements. Our
procedures included confirmation of securities owned as of November 30, 1996, by
correspondence with the custodian and brokers. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion.

COOPERS & LYBRAND L.L.P.

New York, New York
January 2, 1997

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