<PAGE> 1
MERRILL LYNCH GLOBAL HOLDINGS, INC.
P.O. BOX 9011
PRINCETON, NEW JERSEY 08543-9011
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 5, 1998
TO THE STOCKHOLDERS OF
MERRILL LYNCH GLOBAL HOLDINGS, INC.:
NOTICE IS HEREBY GIVEN that a special meeting of stockholders (the
"Meeting") of Merrill Lynch Global Holdings, Inc. ("Global Holdings") will be
held at the offices of Merrill Lynch Asset Management, L.P., 800 Scudders Mill
Road, Plainsboro, New Jersey on November 5, 1998 at 9:00 a.m., New York time,
for the following purposes:
(1) To approve or disapprove an Agreement and Plan of Reorganization
(the "Agreement and Plan of Reorganization") providing for the acquisition
of substantially all of the assets of Global Holdings by Merrill Lynch
Global Growth Fund, Inc. ("Global Growth Fund"), and the assumption of
substantially all of the liabilities of Global Holdings by Global Growth
Fund, in exchange solely for an equal aggregate value of newly-issued
shares of Global Growth Fund. The Agreement and Plan of Reorganization also
provides for distribution of such shares of Global Growth Fund to
stockholders of Global Holdings in liquidation of Global Holdings. A vote
in favor of this proposal will constitute a vote in favor of the
liquidation and dissolution of Global Holdings and the termination of its
registration under the Investment Company Act of 1940, as amended; and
(2) To transact such other business as properly may come before the
Meeting or any adjournment thereof.
The Board of Directors of Global Holdings has fixed the close of business
on September 15, 1998 as the record date for the determination of stockholders
entitled to notice of, and to vote at, the Meeting or any adjournment thereof.
A complete list of the stockholders of Global Holdings entitled to vote at
the Meeting will be available and open to the examination of any stockholders of
Global Holdings for any purpose germane to the Meeting during ordinary business
hours from and after October 22, 1998 at the offices of Global Holdings, 800
Scudders Mill Road, Plainsboro, New Jersey.
You are cordially invited to attend the Meeting. Stockholders who do not
expect to attend the Meeting in person are requested to complete, date and sign
the enclosed form of proxy and return it promptly in the envelope provided for
that purpose. The enclosed proxy is being solicited on behalf of the Board of
Directors of Global Holdings.
By Order of the Board of Directors,
PHILIP M. MANDEL
Secretary
Plainsboro, New Jersey
Dated: September 22, 1998
<PAGE> 2
MERRILL LYNCH GLOBAL HOLDINGS, INC.
MERRILL LYNCH GLOBAL GROWTH FUND, INC.
P.O. BOX 9011, PRINCETON, NEW JERSEY 08543-9011
(609) 282-2800
SPECIAL MEETING OF STOCKHOLDERS OF
MERRILL LYNCH GLOBAL HOLDINGS, INC.
NOVEMBER 5, 1998
This Proxy Statement and Prospectus is furnished in connection with the
solicitation of proxies on behalf of the Board of Directors of Merrill Lynch
Global Holdings, Inc., a Maryland corporation ("Global Holdings"), for use at
the Special Meeting of Stockholders of Global Holdings (the "Meeting") called to
approve or disapprove the proposed reorganization whereby Merrill Lynch Global
Growth Fund, Inc., a Maryland corporation ("Global Growth Fund"), will acquire
substantially all of the assets, and will assume substantially all of the
liabilities, of Global Holdings, in exchange solely for an equal aggregate value
of newly-issued shares of Global Growth Fund (the "Reorganization"). Immediately
upon the receipt by Global Growth Fund of the assets of Global Holdings and the
assumption by Global Growth Fund of the liabilities of Global Holdings, as
described in the preceding sentence, Global Holdings will distribute the shares
of Global Growth Fund received in the Reorganization to the stockholders of
Global Holdings. Thereafter, Global Holdings will terminate its registration
under the Investment Company Act of 1940, as amended (the "Investment Company
Act"), and will dissolve in accordance with the laws of the State of Maryland.
Holders of shares in Global Holdings will receive that class of shares of
Global Growth Fund having the same letter designation (i.e., Class A, Class B,
Class C or Class D) and the same distribution fees, account maintenance fees and
sales charges (including contingent deferred sales charges ("CDSCs")), if any
(the "Corresponding Shares"), as the shares of Global Holdings held by them
immediately prior to the Reorganization. The aggregate net asset value of the
Corresponding Shares of Global Growth Fund to be issued to the stockholders of
Global Holdings will equal the aggregate net asset value of the outstanding
shares of Global Holdings as set forth in the Agreement and Plan of
Reorganization. Global Holdings and Global Growth Fund sometimes are referred to
herein collectively as the "Funds" and individually as a "Fund," as the context
requires. The fund resulting from the reorganization is sometimes referred to
herein as the "Combined Fund."
This Proxy Statement and Prospectus serves as a prospectus of Global Growth
Fund under the Securities Act of 1933, as amended (the "Securities Act"), in
connection with the issuance of shares of Global Growth Fund to Global Holdings
pursuant to the terms of the Reorganization.
Both Global Holdings and Global Growth Fund are open-end management
investment companies with similar, though not identical, investment objectives.
Global Growth Fund seeks to provide stockholders with long-term growth of
capital by investing in a diversified portfolio of equity securities of issuers
in various foreign countries and the United States. Global Holdings seeks to
provide stockholders with the highest total return consistent with prudent risk
through worldwide investment in an internationally diversified portfolio of
securities. There can be no assurance that, after the Reorganization, Global
Growth Fund will achieve its investment objective.
The current prospectus relating to Global Growth Fund, dated March 6, 1998
(the "Global Growth Fund Prospectus"), accompanies this Proxy Statement and
Prospectus and is incorporated herein by reference. The Semi-Annual Report to
Stockholders of Global Growth Fund for the period ended February 28, 1998 also
accompanies this Proxy Statement and Prospectus. A statement of additional
information relating to Global Growth Fund, dated March 6, 1998 (the "Global
Growth Fund Statement"), a prospectus of Global Holdings dated March 5, 1998
(the "Global Holdings Prospectus") and a statement of additional information
relating to Global Holdings, dated March 5, 1998 (the "Global Holdings
Statement"), have been filed with the Securities and Exchange Commission (the
"Commission"). Such documents may be obtained, without charge, by writing either
Global Holdings or Global Growth Fund at the address above, or by calling
1-800-456-4587, ext. 123.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROXY STATEMENT AND PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
This Proxy Statement and Prospectus sets forth concisely the information
about Global Growth Fund that stockholders of Global Holdings should know before
considering the Reorganization and should be retained for future reference.
Global Holdings has authorized the solicitation of proxies in connection with
the Reorganization solely on the basis of this Proxy Statement and Prospectus
and the accompanying documents.
A statement of additional information relating to the Reorganization (the
"Statement of Additional Information"), including pro forma financial statements
of Global Holdings and Global Growth Fund, is on file with the Commission. It is
available from Global Growth Fund without charge, upon oral request by calling
the toll free telephone number set forth above or upon written request by
writing Global Growth Fund at its principal executive offices. The Statement of
Additional Information, dated September 22, 1998 is incorporated by reference
into this Proxy Statement and Prospectus. The Commission maintains a web site
(http://www.sec.gov) that contains the Statement of Additional Information, the
Global Growth Fund Prospectus, the Global Holdings Prospectus, the Global Growth
Fund Statement, the Global Holdings Statement, other material incorporated by
reference and other information regarding the Funds.
The address of the principal executive offices of both Global Holdings and
Global Growth Fund is 800 Scudders Mill Road, Plainsboro, New Jersey 08536, and
the telephone number is (609) 282-2800.
------------------------
THE DATE OF THIS PROXY STATEMENT AND PROSPECTUS IS SEPTEMBER 22, 1998.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
INTRODUCTION 3
SUMMARY 3
The Reorganization 3
Pro Forma Fee Table for Class A and Class B Stockholders
of Global Holdings, Global Growth Fund and the Combined
Fund as of June 30, 1998 (unaudited) 5
Pro Forma Fee Table for Class C and Class D Stockholders
of Global Holdings, Global Growth Fund and the Combined
Fund as of June 30, 1998 (unaudited) 6
RISK FACTORS AND SPECIAL CONSIDERATIONS 12
COMPARISON OF THE FUNDS 15
Financial Highlights 15
Investment Objectives and Policies 19
Other Investment Policies 21
Information Regarding Options, Futures and Foreign
Exchange Transactions 22
Investment Restrictions 22
Management 22
Purchase of Shares 24
Redemption of Shares 24
Performance 24
Stockholder Rights 25
Dividends and Distributions 25
Tax Information 26
Portfolio Transactions 26
Portfolio Turnover 26
Additional Information 26
THE REORGANIZATION 27
General 27
Procedure 27
Terms of the Agreement and Plan of Reorganization 28
Potential Benefits to Stockholders as a Result of the
Reorganization 29
Tax Consequences of the Reorganization 30
Capitalization 31
INFORMATION CONCERNING THE SPECIAL MEETING 31
Date, Time and Place of Meeting 31
Solicitation, Revocation and Use of Proxies 31
Record Date and Outstanding Shares 32
Security Ownership of Certain Beneficial Owners and
Management of Global Holdings and Global Growth Fund 32
Voting Rights and Required Vote 32
ADDITIONAL INFORMATION 33
LEGAL PROCEEDINGS 33
LEGAL OPINIONS 33
EXPERTS 34
STOCKHOLDER PROPOSALS 34
EXHIBIT I--AGREEMENT AND PLAN OF REORGANIZATION I-1
</TABLE>
2
<PAGE> 4
INTRODUCTION
This Proxy Statement and Prospectus is furnished in connection with the
solicitation of proxies on behalf of the Board of Directors of Global Holdings
for use at the Meeting to be held at the offices of Merrill Lynch Asset
Management, L.P. ("MLAM"), 800 Scudders Mill Road, Plainsboro, New Jersey on
November 5, 1998, at 9:00 a.m., New York time. The mailing address for Global
Holdings is P.O. Box 9011, Princeton, New Jersey 08543-9011. The approximate
mailing date of this Proxy Statement and Prospectus is September 25, 1998.
Any person giving a proxy may revoke it at any time prior to its exercise
by executing a superseding proxy, by giving written notice of the revocation to
the Secretary of Global Holdings at the address indicated above or by voting in
person at the Meeting. All properly executed proxies received prior to the
Meeting will be voted at the Meeting in accordance with the instructions marked
thereon or otherwise as provided therein. Unless instructions to the contrary
are marked, properly executed proxies will be voted "FOR" the proposal to
approve the Agreement and Plan of Reorganization between Global Holdings and
Global Growth Fund (the "Agreement and Plan of Reorganization").
Approval of the Agreement and Plan of Reorganization will require the
affirmative vote of Global Holdings stockholders representing a majority of the
total number of votes entitled to be cast thereon. Stockholders will vote as a
single class on the proposal to approve the Agreement and Plan of
Reorganization. See "Information Concerning the Special Meeting."
The Board of Directors of Global Holdings knows of no business other than
that discussed above which will be presented for consideration at the Meeting.
If any other matter is properly presented, it is the intention of the persons
named in the enclosed proxy to vote in accordance with their best judgment.
SUMMARY
The following is a summary of certain information contained elsewhere in
this Proxy Statement and Prospectus (including documents incorporated by
reference) and is qualified in its entirety by reference to the more complete
information contained in this Proxy Statement and Prospectus and in the
Agreement and Plan of Reorganization, attached hereto as Exhibit I.
In this Proxy Statement and Prospectus, the term "Reorganization" refers
collectively to (i) the acquisition of substantially all of the assets and the
assumption of substantially all of the liabilities of Global Holdings by Global
Growth Fund in exchange for the Corresponding Shares and the subsequent
distribution of Corresponding Shares of Global Growth Fund to the stockholders
of Global Holdings; and (ii) the subsequent deregistration and dissolution of
Global Holdings.
THE REORGANIZATION
At a meeting of the Board of Directors of Global Holdings held on April 15,
1998, the Board of Directors of Global Holdings approved a proposal that Global
Growth Fund acquire substantially all of the assets, and assume substantially
all of the liabilities, of Global Holdings in exchange solely for shares of
Global Growth Fund to be distributed to the stockholders of Global Holdings.
Based upon their evaluation of all relevant information, the Directors of
Global Holdings have determined that the Reorganization will potentially benefit
the stockholders of Global Holdings. Specifically, after the Reorganization,
Global Holdings stockholders will remain invested in an open-end fund that has
an investment objective similar though not identical to that of Global Holdings.
In addition, after the Reorganization, on a pro forma combined basis, Global
Growth Fund will pay an advisory fee to MLAM at a lower annual rate than that
currently paid by Global Holdings. Moreover, since the net assets of Global
Growth Fund as of June 30, 1998 were approximately $2.0 billion and will
increase by approximately $362.7 million (the net asset value of Global Holdings
as of June 30, 1998) as a result of the Reorganization, Global Holdings
stockholders are likely to experience certain additional benefits, including,
without limitation,
3
<PAGE> 5
lower expenses per share, economies of scale and greater flexibility in
portfolio management. See "The Reorganization--Potential Benefits to
Stockholders as a Result of the Reorganization."
The Board of Directors of Global Holdings, including a majority of the
Directors who are not "interested persons," as defined in the Investment Company
Act, has determined that the Reorganization is in the best interests of Global
Holdings and that the interests of existing Global Holdings stockholders will
not be diluted as a result of effecting the Reorganization.
If all of the requisite approvals are obtained, it is anticipated that the
Reorganization will occur as soon as practicable after such approval, provided
that Global Holdings and Global Growth Fund have obtained prior to that time a
favorable private letter ruling from the Internal Revenue Service (the "IRS")
concerning the tax consequences of the Reorganization as set forth in the
Agreement and Plan of Reorganization. The Agreement and Plan of Reorganization
may be terminated, and the Reorganization abandoned, whether before or after
approval by the stockholders of Global Holdings, at any time prior to the
Exchange Date (as defined below), (i) by mutual consent of the Board of
Directors of Global Holdings and the Board of Directors of Global Growth Fund;
(ii) by the Board of Directors of Global Holdings if any condition to Global
Holdings' obligations has not been fulfilled or waived by such Board; or (iii)
by the Board of Directors of Global Growth Fund if any condition to Global
Growth Fund's obligations has not been fulfilled or waived by such Board.
4
<PAGE> 6
PRO FORMA FEE TABLE FOR CLASS A AND CLASS B STOCKHOLDERS OF GLOBAL HOLDINGS,
GLOBAL GROWTH FUND
AND THE COMBINED FUND AS OF JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
CLASS A SHARES(a) CLASS B SHARES(b)
---------------------------------- -----------------------
ACTUAL ACTUAL
---------------------- -----------------------
GLOBAL GLOBAL PRO FORMA GLOBAL
HOLDINGS GROWTH FUND COMBINED HOLDINGS
-------- ----------- --------- -----------------------
<S> <C> <C> <C> <C>
STOCKHOLDER TRANSACTION EXPENSES:
Maximum Sales Charge Imposed on Purchases (as a
percentage of offering price) 5.25%(c) 5.25%(c) 5.25%(c) None
Sales Charge Imposed on Dividend Reinvestments None None None None
Deferred Sales Charge (as a percentage of original
purchase price or redemption proceeds, whichever
is lower) None(d) None(d) None(d) 4.0% during the first
year, decreasing 1.0%
annually thereafter to
0.0% after the fourth
year(e)
Exchange Fee None None None None
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF
TOTAL NET ASSETS):
Management Fees(f) 1.00% 0.74% 0.74% 1.00%
12b-1 Fees(g):
Account Maintenance Fees None None None 0.25%
Distribution Fees None None None 0.75%
Other Expenses:
(Class B shares convert
to Class D shares
automatically after
approximately eight
years and cease being
subject to distribution
fees)
Stockholder Servicing Costs(h) 0.29% 0.09% 0.09% 0.29%
Other 0.19% 0.10% 0.09% 0.19%
----- ------- ------ ---
Total Other Expenses 0.48% 0.19% 0.18% 0.48%
----- ------- ------ ---
Total Fund Operating Expenses(i) 1.48% 0.93% 0.92% 2.48%
----- ------- ------ ---
----- ------- ------ ---
<CAPTION>
CLASS B SHARES(b)
------------------------------------------------
ACTUAL
-----------------------
GLOBAL PRO FORMA
GROWTH FUND COMBINED
----------------------- -----------------------
<S> <C> <C>
STOCKHOLDER TRANSACTION EXPENSES:
Maximum Sales Charge Imposed on Purchases (as a
percentage of offering price) None None
Sales Charge Imposed on Dividend Reinvestments None None
Deferred Sales Charge (as a percentage of original
purchase price or redemption proceeds, whichever
is lower) 4.0% during the first 4.0% during the first
year, decreasing 1.0% year, decreasing 1.0%
annually thereafter to annually thereafter to
0.0% after the fourth 0.0% after the fourth
year(e) year(e)
Exchange Fee None None
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF
TOTAL NET ASSETS):
Management Fees(f) 0.74% 0.74%
12b-1 Fees(g):
Account Maintenance Fees 0.25% 0.25%
Distribution Fees 0.75% 0.75%
Other Expenses:
(Class B shares convert (Class B shares convert
to Class D shares to Class D shares
automatically after automatically after
approximately eight approximately eight
years and cease being years and cease being
subject to distribution subject to distribution
fees) fees)
Stockholder Servicing Costs(h) 0.09% 0.09%
Other 0.10% 0.09%
--- ---
Total Other Expenses 0.19% 0.18%
--- ---
Total Fund Operating Expenses(i) 1.93% 1.92%
--- ---
</TABLE>
- ---------------
(a) Class A shares are sold to a limited group of investors including existing
Class A stockholders, certain retirement plans and participants in certain
fee-based programs. See "Comparison of the Funds--Purchase of Shares."
(b) Class B shares convert to Class D shares automatically approximately eight
years after initial purchase. See "Comparison of the Funds--Purchase of
Shares."
(c) Reduced for Class A purchases of $25,000 and over, and waived for purchases
by certain retirement plans and in connection with certain fee-based
programs. Purchases of $1,000,000 or more may not be subject to an initial
sales charge. See "Comparison of the Funds--Purchase of Shares."
(d) Class A shares are not subject to a CDSC, except that certain purchases of
$1,000,000 or more that are not subject to an initial sales charge may
instead be subject to a CDSC of 1.0% of amounts redeemed within the first
year of purchase. Such CDSC may be waived in connection with certain
fee-based programs.
(e) The CDSC may be modified in connection with certain fee-based programs.
(f) See "Comparison of the Funds--Management."
(g) See "Comparison of the Funds--Purchase of Shares."
(h) See "Comparison of the Funds--Additional Information--Transfer Agent,
Dividend Disbursing Agent and Shareholder Servicing Agent."
(i) Pursuant to the Management Agreement between Global Growth Fund and MLAM,
Global Growth Fund pays MLAM a monthly fee at the annual rate of 0.75% of
the average daily net assets not exceeding $1.5 billion, and 0.725% of the
average daily net assets in excess of $1.5 billion. After the
Reorganization, the management fee paid by the Combined Fund will be at
Global Growth Fund's lower rate. Assuming the total net assets after the
Reorganization were approximately $2.4 billion, the effective management fee
rate paid by the Combined Fund would be 0.74%.
5
<PAGE> 7
PRO FORMA FEE TABLE FOR CLASS C AND CLASS D STOCKHOLDERS OF GLOBAL HOLDINGS,
GLOBAL GROWTH FUND
AND THE COMBINED FUND AS OF JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
CLASS C SHARES CLASS D SHARES
--------------------------------------------- ----------------------------------
ACTUAL ACTUAL
------------------------------ ----------------------
GLOBAL PRO FORMA GLOBAL GLOBAL PRO FORMA
GLOBAL HOLDINGS GROWTH FUND COMBINED HOLDINGS GROWTH FUND COMBINED
--------------- ------------ ------------ -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
STOCKHOLDER TRANSACTION EXPENSES:
Maximum Sales Charge Imposed on
Purchases (as a percentage of
offering price) None None None 5.25% (a) 5.25% (a) 5.25% (a)
Sales Charge Imposed on Dividend
Reinvestments None None None None None None
Deferred Sales Charge (as a
percentage of original purchase
price or redemption proceeds,
whichever is lower) 1.0% for one 1.0% for one 1.0% for one None (c) None (c) None (c)
year(b) year(b) year(b)
Exchange Fee None None None None None None
ANNUAL FUND OPERATING EXPENSES (AS A
PERCENTAGE OF TOTAL NET ASSETS):
Management Fees(d) 1.00% 0.74% 0.74% 1.00% 0.74% 0.74%
12b-1 Fees(e):
Account Maintenance Fees 0.25% 0.25% 0.25% 0.25% 0.25% 0.25%
Distribution Fees 0.75% 0.75% 0.75% None None None
Other Expenses:
Stockholder Servicing Costs(f) 0.29% 0.09% 0.09% 0.29% 0.09% 0.09%
Other 0.19% 0.10% 0.09% 0.19% 0.10% 0.09%
----- --- --- ----- ------ -----
Total Other Expenses 0.48% 0.19% 0.18% 0.48% 0.19% 0.18%
----- --- --- ----- ------ -----
Total Fund Operating Expenses(g) 2.48% 1.93% 1.92% 1.73% 1.18% 1.17%
===== === === ===== ====== =====
</TABLE>
- ---------------
(a) Reduced for Class D purchases of $25,000 and over. Like Class A purchases,
certain Class D purchases of $1,000,000 or more may not be subject to an
initial sales charge. See "Comparison of the Funds--Purchase of Shares."
(b) The CDSC may be waived in connection with certain fee-based programs.
(c) Like Class A shares, Class D shares are not subject to a CDSC, except that
purchases of $1,000,000 or more that are not subject to an initial sales
charge may instead be subject to a CDSC of 1.0% of amounts redeemed within
the first year after purchase. Such CDSC may be waived in connection with
certain fee-based programs.
(d) See "Comparison of the Funds--Management."
(e) See "Comparison of the Funds--Purchase of Shares."
(f) See "Comparison of the Funds--Additional Information--Transfer Agent,
Dividend Disbursing Agent and Shareholder Servicing Agent."
(g) Pursuant to a Management Agreement between Global Growth Fund and MLAM,
Global Growth Fund pays MLAM a monthly fee at the annual rate of 0.75% of
average daily net assets not exceeding $1.5 billion and 0.725% of average
daily net assets in excess of $1.5 billion. After the Reorganization, the
management fee paid by the Combined Fund will be at Global Growth Fund's
lower rate. Assuming the total net assets after the Reorganization were
approximately $2.4 billion, the effective management fee rate paid by the
Combined Fund would be 0.74%.
6
<PAGE> 8
EXAMPLES:
<TABLE>
<CAPTION>
CUMULATIVE EXPENSES PAID ON CLASS A AND CLASS B SHARES FOR THE PERIOD OF:
-----------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES
------------------------------------- -------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- -------- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
An investor would pay the following expenses
on a $1,000 investment, including the
maximum sales load of $52.50 (Class A
shares only) and assuming (1) the Total
Fund Operating Expenses set forth on page
5 for the relevant Fund, (2) a 5% annual
return throughout the periods and (3)
redemption at the end of the period
(including any applicable
CDSC for Class B shares):
Global Holdings $67 $97 $129 $220 $65 $97 $132 $263*
Global Growth Fund 61 81 101 161 60 81 104 206*
Combined Fund+ 61 80 101 160 60 80 104 205*
An investor would pay the following expenses
on the same $1,000 investment assuming no
redemption at the end of the period:
Global Holdings $67 $97 $129 $220 $25 $77 $132 $263*
Global Growth Fund 61 81 101 161 20 61 104 206*
Combined Fund+ 61 80 101 160 20 60 104 205*
</TABLE>
<TABLE>
<CAPTION>
CUMULATIVE EXPENSES PAID ON CLASS C AND CLASS D SHARES FOR THE PERIOD OF:
-----------------------------------------------------------------------------
CLASS C SHARES CLASS D SHARES
------------------------------------- -------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- -------- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
An investor would pay the following expenses
on a $1,000 investment, including the
maximum sales load of $52.50 (Class D
shares only) and assuming (1) the Total
Fund Operating Expenses set forth on page
6 for the relevant Fund, (2) a 5% annual
return throughout the periods and (3)
redemption at the end of the period
(including any applicable
CDSC for Class C shares):
Global Holdings $35 $77 $132 $282 $69 $104 $141 $246
Global Growth Fund 30 61 104 225 64 88 114 188
Combined Fund+ 30 60 104 224 64 88 113 187
An investor would pay the following expenses
on the same $1,000 investment assuming no
redemption at the end of the period:
Global Holdings $25 $77 $132 $282 $69 $104 $141 $246
Global Growth Fund 20 61 104 225 64 88 114 188
Combined Fund+ 20 60 104 224 64 88 113 187
</TABLE>
- ---------------
* Assumes conversion of Class B shares to Class D shares approximately eight
years after initial purchase.
+ Assuming the Reorganization had taken place on June 30, 1998.
7
<PAGE> 9
The foregoing Fee Tables are intended to assist investors in understanding
the costs and expenses that a Global Holdings or Global Growth Fund stockholder
bears directly or indirectly as compared to the costs and expenses that would be
borne by such investors taking into account the Reorganization. The Examples set
forth above assume reinvestment of all dividends and distributions and utilize a
5% annual rate of return as mandated by Commission regulations. THE EXAMPLES
SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR ANNUAL
RATES OF RETURN, AND ACTUAL EXPENSES OR ANNUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE ASSUMED FOR PURPOSES OF THE EXAMPLES. See "Summary," "The
Reorganization--Potential Benefits to Stockholders as a Result of the
Reorganization" and "Comparison of the Funds--Management," "--Purchase of
Shares" and "--Redemption of Shares."
BUSINESS OF GLOBAL HOLDINGS Global Holdings was incorporated under the laws of
the State of Maryland on March 7, 1984 and
commenced operations on July 2, 1984. Global
Holdings is a diversified, open-end management
investment company.
As of June 30, 1998, Global Holdings had net assets
of $362,706,779.
BUSINESS OF GLOBAL GROWTH
FUND Global Growth Fund was incorporated under the laws
of the State of Maryland on August 4, 1997 and
commenced operations on October 31, 1997. Global
Growth Fund is a diversified, open-end management
investment company.
As of June 30, 1998, Global Growth Fund had net
assets of $1,996,561,044.
COMPARISON OF THE FUNDS Investment Objectives. The investment objectives
of Global Growth Fund and Global Holdings are
similar, but not identical. Global Growth Fund
seeks to provide stockholders with long-term growth
of capital, which it seeks to achieve by investing
in a diversified portfolio of equity securities of
issuers located in various foreign countries and
the United States, placing particular emphasis on
companies that have exhibited above average growth
rates in earnings.
Global Holdings seeks to provide stockholders with
the highest total investment return consistent with
prudent risk through worldwide investment in an
internationally diversified portfolio of
securities. Total investment return is the
aggregate of income and capital value changes. In
pursuing this objective, management of Global
Holdings will utilize a fully managed investment
policy which permits Global Holdings to take a
flexible investment approach and vary its policies
as to geographic diversification and types of
securities based upon its evaluation of economic
and market trends throughout the world.
Accordingly, investments may be shifted among the
various capital markets of the world and among
different types of equity, debt and convertible
securities depending upon management's outlook with
respect to prevailing trends and developments.
Investment Policies. Global Growth Fund invests,
under normal circumstances, at least 65% of its
total assets in equity securities of issuers from
at least three different countries. To a lesser
extent, Global Growth Fund may invest in securities
convertible into common stock, preferred stock,
rights to subscribe for common stock and other
investments the return on which is determined by
the performance of a particular common stock or a
basket or index of common stocks.
Global Holdings utilizes a fully managed investment
policy which permits the management of Global
Holdings to vary its policies as to
8
<PAGE> 10
geographic diversification and types of securities;
it is expected, however, that its assets will be
invested in several countries, primarily the United
States, Japan and Western European nations. Global
Holdings' current emphasis is placed on equity
securities, but substantial portions of its assets
may be invested in debt, convertible securities or
non-convertible preferred stocks.
Both Global Growth Fund and Global Holdings may
invest heavily in securities denominated in
currencies other than the United States dollar.
Each Fund may engage in various portfolio
strategies to seek to increase its return through
the use of options on portfolio securities and to
hedge its portfolio against movements in the equity
markets, interest rates and exchange rates between
currencies.
Global Growth Fund and Global Holdings are each
subject to a fundamental investment restriction,
which provides that the Fund may borrow from banks
in amounts up to 33 1/3% of its total assets taken
at market value and may borrow an additional 5% of
its total assets for temporary purposes. As a
non-fundamental restriction, Global Holdings is
further limited and may not borrow amounts in
excess of 20% of its total assets taken at market
value, and then only from banks as a temporary
measure for extraordinary or emergency purposes.
Advisory Fees. The investment adviser for both
Global Holdings and Global Growth Fund is MLAM.
MLAM is responsible for the management of each
Fund's investment portfolio and for providing
administrative services to each Fund.
Lawrence A. Fuller serves as portfolio manager for
both Funds. Mr. Fuller has served as Portfolio
Manager of Global Growth Fund since its inception
(October 31, 1997) and was appointed Portfolio
Manager of Global Holdings in March 1998.
Pursuant to a management agreement between Global
Growth Fund and MLAM, Global Growth Fund pays MLAM
a monthly fee at the annual rate of 0.75% of the
average daily net assets of the Fund not exceeding
$1.5 billion and 0.725% of the average daily net
assets in excess of $1.5 billion; pursuant to a
management agreement between Global Holdings and
MLAM, Global Holdings pays MLAM a monthly fee at
the annual rate of 1.00% of the average daily net
assets of the Fund. Global Growth Fund pays
advisory fees at a lower rate than does Global
Holdings. After the Reorganization, the advisory
fee paid by the Combined Fund would be at Global
Growth Fund's lower rate. See "Summary--Pro Forma
Fee Tables" and "Comparison of the
Funds--Management."
MLAM has retained Merrill Lynch Asset Management
U.K. Limited ("MLAM U.K.") as sub-adviser to each
of the Funds. Pursuant to a separate sub-advisory
agreement between MLAM and MLAM U.K. with respect
to each Fund, MLAM pays MLAM U.K. a fee for
providing investment advisory services to MLAM with
respect to each Fund, in an amount to be determined
from time to time by MLAM and MLAM U.K. but in no
event in excess of the amount MLAM actually
receives for providing services to each Fund
pursuant to each management agreement.
9
<PAGE> 11
Class Structure. Each Fund offers four classes of
shares under the Merrill Lynch Select Pricing(SM)
System. The Class A, Class B, Class C and Class D
shares issued by Global Growth Fund are identical
in all respects to the Class A, Class B, Class C
and Class D shares issued by Global Holdings,
except that they represent ownership interests in a
different investment portfolio. See "Comparison of
the Funds--Purchase of Shares."
Overall Expense Ratio. The overall operating
expense ratio for Class A shares as of June 30,
1998 was 1.48% for Global Holdings and 0.93% for
Global Growth Fund. If the Reorganization had taken
place on that date, the overall operating expense
ratio for Class A shares of the Combined Fund on a
pro forma basis would have been 0.92%.
The foregoing expense ratios are for Class A
shares. Such ratios would differ for Class B, Class
C and Class D shares as a result of class specific
distribution and account maintenance expenditures.
See "Summary--Pro Forma Fee Tables."
Purchase of Shares. Shares of Global Growth Fund
are offered continuously for sale to the public in
substantially the same manner as shares of Global
Holdings. See "Comparison of the Funds--Purchase of
Shares."
Redemption of Shares. The redemption procedures
for shares of Global Growth Fund are substantially
the same as the redemption procedures for shares of
Global Holdings. For purposes of computing any CDSC
that may be payable upon disposition of
Corresponding Shares of Global Growth Fund acquired
by Global Holdings stockholders in the
Reorganization, the holding period of Global
Holdings shares outstanding on the date the
Reorganization takes place will be "tacked" onto
the holding period of the Corresponding Shares of
Global Growth Fund acquired in the Reorganization.
See "Comparison of the Funds--Redemption of
Shares."
Dividends and Distributions. Global Holdings'
policies with respect to dividends and
distributions are substantially the same as those
of Global Growth Fund. See "Comparison of the
Funds--Dividends and Distributions."
Net Asset Value. Both Global Holdings and Global
Growth Fund determine net asset value of each class
of shares once daily 15 minutes after the close of
business on the New York Stock Exchange (the
"NYSE") (generally, 4:00 p.m. New York time), on
each day during which the NYSE is open for trading.
Both Funds compute net asset value per share in the
same manner. See "Comparison of the
Funds--Additional Information--Net Asset Value."
Voting Rights. The corresponding voting rights of
the holders of shares of common stock of each Fund
are substantially the same. See "The
Reorganization--Comparison of the Funds--Capital
Stock."
Other Significant Considerations. Stockholder
services, including exchange privileges, available
to Global Holdings and Global Growth Fund
stockholders are substantially the same. See
"Comparison of the Funds--Additional
Information--Stockholder Services." An automatic
dividend reinvestment plan is available to
stockholders of each Fund. The plans are identical.
See "Comparison of the Funds--Automatic
10
<PAGE> 12
Dividend Reinvestment Plan." Other stockholder
services, including the provision of annual and
semi-annual reports, are the same for both Funds.
See "Comparison of the Funds--Stockholder
Services."
TAX CONSIDERATIONS Global Holdings and Global Growth Fund jointly have
requested a private letter ruling from the IRS with
respect to the Reorganization to the effect that,
among other things, neither Global Holdings nor
Global Growth Fund will recognize gain or loss on
the transaction, and Global Holdings stockholders
will not recognize gain or loss on the exchange of
their shares of Global Holdings stock for
Corresponding Shares of Global Growth Fund. The
consummation of the Reorganization is subject to
the receipt of such ruling. The Reorganization will
not affect the status of Global Growth Fund as a
regulated investment company. See "The
Reorganization--Tax Consequences of the
Reorganization."
11
<PAGE> 13
RISK FACTORS AND SPECIAL CONSIDERATIONS
Many of the investment risks associated with an investment in Global Growth
Fund are substantially the same as those of Global Holdings. Such risks include
investing in derivative instruments, illiquid securities and unrated debt
securities as well as investing on an international basis. As a result of the
Reorganization, the risk factors applicable to Global Holdings will be modified
by (i) the elimination of the additional restriction on borrowing currently
applicable to Global Holdings and (ii) the short operating history of Global
Growth Fund, which commenced operations on October 31, 1997.
Investing on an International Basis. Because a substantial portion of each
Fund's assets may be invested in securities of non-U.S. issuers, investors
should be aware of certain risk factors and special considerations relating to
international investing, which may involve risks that are not typically
associated with investments in securities of U.S. issuers, including
fluctuations in foreign exchange rates, future political and economic
developments, different legal systems and the possible imposition of economic
sanctions, exchange controls or other foreign governmental laws or restrictions.
Securities prices in different countries are subject to different economic,
financial, political and social factors. Since both Funds invest heavily in
securities denominated or quoted in currencies other than the U.S. dollar,
changes in foreign currency exchange rates will affect the value of securities
in each Fund and the unrealized appreciation or depreciation of investments.
Currencies of certain countries may be volatile and, therefore, may affect the
value of securities denominated in such currencies. In addition, with respect to
certain foreign countries, there is the possibility of expropriation of assets,
confiscatory taxation, difficulty in obtaining or enforcing a court judgment,
economic, political or social instability or diplomatic developments that could
affect investments in those countries. Moreover, individual foreign economies
may differ favorably or unfavorably from the U.S. economy in such respects as
growth of gross domestic product, rates of inflation, capital reinvestment,
resources, self-sufficiency and balance of payments position. Certain foreign
investments also may be subject to foreign withholding taxes. These risks often
are heightened for investments in smaller, emerging capital markets.
As a result of these potential risks, MLAM may determine that,
notwithstanding otherwise favorable investment criteria, it may not be
practicable or appropriate to invest in a particular country. Global Growth Fund
may invest in countries in which foreign investors, including MLAM, have had no
or limited prior experience.
Many of the foreign securities held by the Funds will not be registered
with the Commission, nor will the issuers thereof be subject to the reporting
requirements of such agency. Accordingly, there may be less publicly available
information about a foreign issuer than about a U.S. issuer and such foreign
issuers may not be subject to accounting, auditing and financial reporting
standards and requirements comparable to those of U.S. issuers. As a result,
traditional investment measurements, such as price/earnings ratios, as used in
the United States, may not be applicable to certain smaller, emerging foreign
capital markets. Foreign issuers, and issuers in smaller, emerging capital
markets in particular, may not be subject to uniform accounting, auditing and
financial reporting standards or to practices and requirements comparable to
those applicable to domestic issuers.
Foreign financial markets, while often growing in trading volume, have, for
the most part, substantially less volume than U.S. markets, and securities of
many foreign companies are less liquid and their prices may be more volatile
than securities of comparable domestic companies. Foreign markets also have
different clearance and settlement procedures, and in certain markets there have
been times when settlements have failed to keep pace with the volume of
securities transactions, making it difficult to conduct such transactions.
Further, satisfactory custodial services for investment securities may not be
available in some countries that have smaller, emerging capital markets, which
may result in the Funds incurring additional costs and delays in transporting
and custodying such securities outside such countries. Delays in settlement
could result in periods when assets of the Funds are uninvested and no return is
earned thereon. The inability of the Funds to make intended security purchases
due to settlement problems or the risk of intermediary counterparty failures
could cause the Funds to miss attractive investment opportunities. The inability
to dispose of a portfolio security due to settlement problems could result
either in losses to the Funds due to subsequent declines in the value of
12
<PAGE> 14
such portfolio security or, if a contract to sell the security has been entered,
could result in possible liability to the purchaser.
There generally is less governmental supervision and regulation of
exchanges, brokers and issuers in foreign countries than there is in the United
States. For example, there may be no comparable provisions under certain foreign
laws to insider trading and similar investor protection securities laws that
apply with respect to securities transactions consummated in the United States.
Further, brokerage commissions and other transaction costs on foreign securities
exchanges generally are higher than in the United States.
Some countries prohibit or impose substantial restrictions on investments
in their capital markets, particularly their equity markets, by foreign entities
such as Global Growth Fund. As illustrations, certain countries require
governmental approval prior to investments by foreign persons, or limit the
amount of investment by foreign persons in a company to only a specific class of
securities that may have less advantageous terms than securities of the company
available for purchase by nationals. Certain countries may restrict investment
opportunities in issuers or industries deemed important to national interests.
In some countries, banks or other financial institutions may constitute a
substantial number of the leading companies or companies with the most actively
traded securities. The Investment Company Act limits a Fund's ability to invest
in any equity security of an issuer which, in its most recent fiscal year,
derived more than 15% of its revenues from "securities related activities," as
defined by the rules thereunder. These provisions may also restrict a Fund's
investments in certain foreign banks and other financial institutions.
Borrowing. Global Growth Fund and Global Holdings are each subject to a
fundamental investment restriction, which provides that each Fund may borrow
from banks in amounts up to 33 1/3% of its total assets taken at market value
and may borrow an additional 5% of its total assets for temporary purposes. The
Funds may borrow only from banks as a temporary measure for extraordinary or
emergency purposes, including to meet redemptions (so as not to force the Funds
to liquidate securities at a disadvantageous time) or to settle securities
transactions. Global Holdings will not purchase securities while borrowings are
outstanding except to exercise prior commitments and to exercise subscription
rights. Global Growth Fund will not purchase securities at any time when
borrowings exceed 5% of its total assets except to honor prior commitments or to
exercise subscription rights. The purchase of securities while borrowings are
outstanding will have the effect of leveraging the Funds. Such leveraging
increases a Fund's exposure to capital risk, and borrowed funds are subject to
interest costs that will reduce net income. As a non-fundamental restriction,
Global Holdings is further limited and may not borrow amounts in excess of 20%
of its total assets taken at market value and then only from banks as a
temporary measure for extraordinary or emergency purposes such as the redemption
of the shares of Global Holdings. After the Reorganization, the Combined Fund
will be able to borrow from banks in amounts up to 33 1/3% of its total assets.
The 20% limitation on borrowings applicable to Global Holdings will be
eliminated.
Derivative Investments. Each Fund may engage in transactions in certain
instruments that may be characterized as derivatives. These instruments include
various types of options, futures and options thereon. The Funds may engage in
these transactions for hedging purposes to enhance total return or to gain
exposure to equity markets.
Transactions involving options, futures, options on futures or currencies
may involve the loss of an opportunity to profit from a price movement in the
underlying asset beyond certain levels or a price increase on other portfolio
assets (in the case of transactions for hedging purposes) or expose the Funds to
potential losses that exceed the amount originally invested by each respective
Fund in such instruments.
Illiquid Securities. Global Growth Fund may invest up to 15% of its net
assets and Global Holdings may invest up to 15% of its total assets in
securities that lack an established secondary trading market or otherwise are
considered illiquid. Liquidity of a security relates to the ability to dispose
easily of the security and the price to be obtained upon disposition of the
security, which may be less than would be obtained for a comparable more liquid
security. Investment of a Fund's assets in illiquid securities may restrict the
ability of a Fund to dispose of its investments in a timely fashion and for a
fair price as well as its ability to take advantage of market opportunities. The
risks associated with illiquidity will be particularly acute in situations
13
<PAGE> 15
in which a Fund's operations require cash, such as when a Fund redeems shares or
pays dividends, and could result in a Fund borrowing to meet short-term cash
requirements or incurring capital losses on the sale of illiquid investments.
Further, issuers whose securities are not publicly traded are not subject to the
disclosure and other investor protection requirements that would be applicable
if their securities were publicly traded. In making investments in such
securities, a Fund may obtain access to material nonpublic information which may
restrict the Fund's ability to conduct portfolio transactions in such
securities. In addition, each of the Funds may invest in privately placed
securities that may or may not be freely transferable under the laws of the
applicable jurisdiction or due to contractual restrictions on resale.
Withholding and Other Taxes. Income and capital gains on securities held
by the Funds may be subject to withholding and other taxes imposed by certain
jurisdictions, which would reduce the return to the respective Fund on those
securities. The Funds intend, unless ineligible, to elect to "pass-through" to
their respective shareholders the amount of foreign taxes paid by that Fund. The
taxes passed through to shareholders will be included in each shareholder's
income and could potentially be offset by either a deduction or a credit.
Certain shareholders, including non-U.S. shareholders, will not be entitled to
the benefit of a deduction or credit with respect to foreign taxes paid at the
Fund level. Non-U.S. shareholders may nevertheless be subject to withholding tax
on the foreign taxes included in their income. Other taxes, such as transfer
taxes, may be imposed on the Funds, but would not give rise to a credit or
deduction for shareholders.
14
<PAGE> 16
COMPARISON OF THE FUNDS
FINANCIAL HIGHLIGHTS
Global Growth Fund. The financial information in the table below is
unaudited and has been provided by MLAM. Financial information is not presented
prior to October 31, 1997 since no shares were publicly issued prior to that
date.
The following per share data and ratios have been derived from information
provided in Global Growth Fund's financial statements.
<TABLE>
<CAPTION>
FOR THE PERIOD
OCTOBER 31, 1997+ TO FEBRUARY 28, 1998
------------------------------------------------------
CLASS A CLASS B CLASS C CLASS D
------- ---------- -------- --------
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Asset Value:
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 10.00 $ 10.00 $ 10.00 $ 10.00
------- ---------- -------- --------
Investment income--net .03 .00++ .00++ .02
Realized and unrealized gain on
investments and foreign currency
transactions--net 1.19 1.18 1.18 1.19
------- ---------- -------- --------
Total from investment operations 1.22 1.18 1.18 1.21
------- ---------- -------- --------
Net asset value, end of period $ 11.22 $ 11.18 $ 11.18 $ 11.21
======= ========== ======== ========
TOTAL INVESTMENT RETURN:*
Based on net asset value per share 12.20%(#) 11.80%(#) 11.80%(#) 12.10%(#)
======= ========== ======== ========
RATIOS TO AVERAGE NET ASSETS:
Expenses .95%** 1.97%** 1.98%** 1.20%**
======= ========== ======== ========
Investment income (loss)--net .96%** (.07)%** (.07)%** .70%**
======= ========== ======== ========
SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $40,076 $1,084,580 $216,306 $196,406
======= ========== ======== ========
Portfolio turnover 14.61% 14.61% 14.61% 14.61%
======= ========== ======== ========
Average commission rate paid(##) $ .0257 $ .0257 $ .0257 $ .0257
======= ========== ======== ========
</TABLE>
- ---------------
<TABLE>
<C> <S>
+ Commencement of operations.
++ Amount is less than $(.01) per share.
* Total investment return excludes the effect of sales loads.
** Annualized.
# Aggregate total investment return.
## Includes commissions paid in foreign currencies, which have
been converted into U.S. dollars using the prevailing
exchange rate on the date of the transaction. Such
conversions may significantly affect the rate shown.
</TABLE>
Global Holdings. The financial information in the table below, except for
the six months ended May 31, 1998, which is unaudited, has been audited in
conjunction with the annual audits of the financial statements of Global
Holdings by Deloitte & Touche LLP, independent auditors.
15
<PAGE> 17
The following per share data and ratios have been derived from information
provided in Global Holdings' financial statements:
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------------------------------------
FOR THE SIX
MONTHS ENDED FOR THE YEAR ENDED NOVEMBER 30,
MAY 31, --------------------------------------------------------------------------
1998 1997++ 1996++ 1995++ 1994++ 1993++ 1992++ 1991
------------ -------- -------- -------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSET
VALUE:
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period $ 15.05 $ 15.12 $ 13.87 $ 12.82 $ 13.07 $ 11.78 $ 10.95 $ 10.48
-------- -------- -------- -------- -------- -------- -------- --------
Investment income(loss)--net .03 (.02) .13 .05 .03 .04 .10 .16
Realized and unrealized gain
(loss) on investments and
foreign currency
transactions--net 1.66 .86 1.87 1.52 .53 2.07 1.05 .53
-------- -------- -------- -------- -------- -------- -------- --------
Total from investment operations 1.69 .84 2.00 1.57 .56 2.11 1.15 .69
-------- -------- -------- -------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net -- (.02) -- (.01) (.01) -- (.10) (.21)
In excess of investment
income--net -- (.10) -- -- -- -- -- --
Realized gain on
investments--net (1.76) (.79) (.75) (.51) (.80) (.82) (.22) (.01)
-------- -------- -------- -------- -------- -------- -------- --------
Total dividends and distributions (1.76) (.91) (.75) (.52) (.81) (.82) (.32) (.22)
-------- -------- -------- -------- -------- -------- -------- --------
Net asset value, end of period $ 14.98 $ 15.05 $ 15.12 $ 13.87 $ 12.82 $ 13.07 $ 11.78 $ 10.95
======== ======== ======== ======== ======== ======== ======== ========
TOTAL INVESTMENT RETURN:**
Based on net asset value per
share 13.31%(#) 6.04% 15.20% 12.92% 4.39% 19.16% 10.67% 6.77%
======== ======== ======== ======== ======== ======== ======== ========
RATIOS TO AVERAGE NET ASSETS:
Expenses 1.44%* 1.39% 1.37% 1.51% 1.44% 1.43% 1.49% 1.48%
======== ======== ======== ======== ======== ======== ======== ========
Investment income(loss)--net .39%* (.12)% .92% .41% .23% .32% (.19)% 1.31%
======== ======== ======== ======== ======== ======== ======== ========
SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands) $343,859 $344,940 $398,310 $327,270 $330,132 $256,203 $166,947 $165,687
======== ======== ======== ======== ======== ======== ======== ========
Portfolio turnover 17.45% 54.50% 41.14% 44.64% 40.18% 56.98% 65.93% 63.94%
======== ======== ======== ======== ======== ======== ======== ========
Average commission rate paid(##) $ .0227 $ .0013 $ .0063 -- -- -- -- --
======== ======== ======== ======== ======== ======== ======== ========
<CAPTION>
CLASS A
---------------------------------------------
FOR THE
SEVEN-MONTH
PERIOD ENDED FOR THE YEAR ENDED APRIL 30,
NOV. 30, ------------------------------
1990 1990 1989 1988
------------ -------- -------- --------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSET
VALUE:
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period $ 10.91 $ 11.79 $ 12.23 $ 16.90
-------- -------- -------- --------
Investment income(loss)--net .17 .20 .29 .43
Realized and unrealized gain
(loss) on investments and
foreign currency
transactions--net (.30) .62 .88 (1.09)
-------- -------- -------- --------
Total from investment operations (.13) .82 1.17 (.66)
-------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.13) (.21) (.34) (.37)
In excess of investment
income--net -- -- -- --
Realized gain on
investments--net (.17) (1.49) (1.27) (3.64)
-------- -------- -------- --------
Total dividends and distributions (.30) (1.70) (1.61) (4.01)
-------- -------- -------- --------
Net asset value, end of period $ 10.48 $ 10.91 $ 11.79 $ 12.23
======== ======== ======== ========
TOTAL INVESTMENT RETURN:**
Based on net asset value per
share (1.45)%(#) 6.93% 10.99% (4.43)%
======== ======== ======== ========
RATIOS TO AVERAGE NET ASSETS:
Expenses 1.59%* 1.49% 1.47% 1.31%
======== ======== ======== ========
Investment income(loss)--net 2.63%* 1.65% 2.04% 2.90%
======== ======== ======== ========
SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands) $176,898 $187,843 $195,932 $249,736
======== ======== ======== ========
Portfolio turnover 34.44% 84.21% 102.77% 109.68%
======== ======== ======== ========
Average commission rate paid(##) -- -- -- --
======== ======== ======== ========
</TABLE>
- ---------------
* Annualized.
** Total investment returns exclude the effects of sales loads.
++ Based on average shares outstanding during the period.
# Aggregate total investment return.
## For fiscal years beginning on or after September 1, 1995, the Fund is
required to disclose its average commission rate per share for purchases and
sales of equity securities. The "Average Commission Rate Paid" includes
commissions paid in foreign currencies, which have been converted into U.S.
dollars using the prevailing exchange rate on the date of the transaction.
Such conversions may significantly affect the rate shown.
16
<PAGE> 18
GLOBAL HOLDINGS--FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
CLASS B
----------------------------------------------------------------------------------
FOR THE
SIX MONTHS
ENDED FOR THE YEAR ENDED NOVEMBER 30,
MAY 31, -------------------------------------------------------------------
1998 1997++ 1996++ 1995++ 1994++ 1993++ 1992++ 1991
----------- ------- ------- ------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSET VALUE:
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 14.31 $ 14.40 $ 13.38 $ 12.50 $ 12.74 $ 11.62 $ 10.82 $ 10.36
------- ------- ------- ------- ------- ------- ------- -------
Investment income (loss)--net (.04) (.17) (.02) (.08) (.10) (.08) (.03) .04
Realized and unrealized gain (loss) on
investments and foreign currency
transactions--net 1.59 .84 1.79 1.47 .52 2.02 1.05 .54
------- ------- ------- ------- ------- ------- ------- -------
Total from investment operations 1.55 .67 1.77 1.39 .42 1.94 1.02 .58
------- ------- ------- ------- ------- ------- ------- -------
Less dividends and distributions:
Investment income--net -- -- -- -- -- -- -- (.11)
Realized gain on investments--net (1.60) (.76) (.75) (.51) (.66) (.82) (.22) (.01)
------- ------- ------- ------- ------- ------- ------- -------
Total dividends and distributions (1.60) (.76) (.75) (.51) (.66) (.82) (.22) (.12)
------- ------- ------- ------- ------- ------- ------- -------
Net asset value, end of period $ 14.26 $ 14.31 $ 14.40 $ 13.38 $ 12.50 $ 12.74 $ 11.62 $ 10.82
======= ======= ======= ======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN:**
Based on net asset value per share 12.77%(#) 4.98% 13.97% 11.78% 3.32% 17.87% 9.58% 5.67%
======= ======= ======= ======= ======= ======= ======= =======
RATIOS TO AVERAGE NET ASSETS:
Expenses 2.47%* 2.42% 2.40% 2.55% 2.48% 2.46% 2.52% 2.51%
======= ======= ======= ======= ======= ======= ======= =======
Investment income (loss)--net (.64)%* (1.11)% (.11)% (.63)% (.80)% (.72)% (1.19)% .25%
======= ======= ======= ======= ======= ======= ======= =======
SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $63,712 $66,791 $44,311 $44,387 $49,647 $34,241 $22,925 $24,960
======= ======= ======= ======= ======= ======= ======= =======
Portfolio turnover 17.45% 54.50% 41.14% 44.64% 40.18% 56.98% 65.93% 63.94%
======= ======= ======= ======= ======= ======= ======= =======
Average commission rate paid(##) $ .0227 $ .0103 $ .0063 -- -- -- -- --
======= ======= ======= ======= ======= ======= ======= =======
<CAPTION>
CLASS B
----------------------------------------
FOR THE FOR THE
SEVEN-MONTH FOR THE PERIOD OCT.
PERIOD ENDED YEAR ENDED 21, 1988+ TO
NOV. 30, APRIL 30, APRIL 30,
1990 1990 1989
------------ ---------- ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSET VALUE:
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 10.82 $ 11.74 $ 11.29
------- ------- -------
Investment income (loss)--net .10 .16 .06
Realized and unrealized gain (loss) on
investments and foreign currency
transactions--net (.30) .55 .93
------- ------- -------
Total from investment operations (.20) .71 .99
------- ------- -------
Less dividends and distributions:
Investment income--net (.09) (.14) (.15)
Realized gain on investments--net (.17) (1.49) (.39)
------- ------- -------
Total dividends and distributions (.26) (1.63) (.54)
------- ------- -------
Net asset value, end of period $ 10.36 $ 10.82 $ 11.74
======= ======= =======
TOTAL INVESTMENT RETURN:**
Based on net asset value per share (2.08)%(#) 5.91% 9.10%(#)
======= ======= =======
RATIOS TO AVERAGE NET ASSETS:
Expenses 2.63%* 2.53% 2.50%*
======= ======= =======
Investment income (loss)--net 1.54%* .65% .10%*
======= ======= =======
SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $22,623 $16,342 $ 1,476
======= ======= =======
Portfolio turnover 34.44% 84.21% 102.77%
======= ======= =======
Average commission rate paid(##) -- -- --
======= ======= =======
</TABLE>
- ---------------
* Annualized.
** Total investment returns exclude the effects of sales loads.
+ Commencement of operations.
++ Based on the average shares outstanding during the period.
# Aggregate total investment return.
## For fiscal years beginning on or after September 1, 1995, the Fund is
required to disclose its average commission rate per share for purchases and
sales of equity securities. The "Average Commission Rate Paid" includes
commissions paid in foreign currencies, which have been converted into U.S.
dollars using the prevailing exchange rate on the date of the transaction.
Such conversions may significantly affect the rate shown.
17
<PAGE> 19
GLOBAL HOLDINGS--FINANCIAL HIGHLIGHTS (CONCLUDED)
<TABLE>
<CAPTION>
CLASS C++ CLASS D++
-------------------------------------------------------------------- -----------
FOR THE
FOR THE PERIOD OCT. FOR THE
SIX MONTHS FOR THE YEAR ENDED 21, SIX MONTHS
ENDED NOVEMBER 30, 1994+ TO ENDED
MAY 31, ------------------------------ NOV. 30, MAY 31,
1998 1997 1996 1995 1994 1998
----------- ------ ------ ------ --------------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSET
VALUE:
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period $14.28 $14.41 $13.38 $12.51 $13.08 $ 14.97
------ ------ ------ ------ ------ -------
Investment income (loss)--net (.04) (.17) (.01) (.08) (.02) .01
Realized and unrealized gain
(loss) on investments and
foreign currency
transactions--net 1.59 .83 1.79 1.46 (.55) 1.66
------ ------ ------ ------ ------ -------
Total from investment operations 1.55 .66 1.78 1.38 (.57) 1.67
------ ------ ------ ------ ------ -------
Less dividends and distributions:
Investment income--net -- --+++ -- -- -- --
In excess of investment
income--net -- --+++ -- -- -- --
Realized gain on
investments--net (1.63) (.79) (.75) (.51) -- (1.73)
------ ------ ------ ------ ------ -------
Total dividends and distributions (1.63) (.79) (.75) (.51) -- (1.73)
------ ------ ------ ------ ------ -------
Net asset value, end of period $14.20 $14.28 $14.41 $13.38 $12.51 $ 14.91
====== ====== ====== ====== ====== =======
TOTAL INVESTMENT RETURN:**
Based on net asset value per share 12.75%(#) 4.96% 14.05% 11.69% (4.36)%(#) 13.17%(#)
====== ====== ====== ====== ====== =======
RATIOS TO AVERAGE NET ASSETS:
Expenses 2.48%* 2.43% 2.41% 2.55% 3.00%* 1.69%*
====== ====== ====== ====== ====== =======
Investment income (loss)--net (.63)%* (1.09)% (.09)% (.63)% (1.31)%* .16%*
====== ====== ====== ====== ====== =======
SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands) $6,519 $5,964 $ 910 $ 376 $ 177 $10,382
====== ====== ====== ====== ====== =======
Portfolio turnover 17.45% 54.50% 41.14% 44.64% 40.18% 17.45%
====== ====== ====== ====== ====== =======
Average commission rate paid(##) $.0227 $.0103 $.0063 -- -- $ .0227
====== ====== ====== ====== ====== =======
<CAPTION>
CLASS D++
---------------------------------------------------
FOR THE
PERIOD OCT.
FOR THE YEAR ENDED 21,
NOVEMBER 30, 1994+ TO
------------------------------ NOV. 30,
1997 1996 1995 1994
------ ------ ------ ---------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSET
VALUE:
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period $15.04 $13.84 $12.81 $13.39
------ ------ ------ ------
Investment income (loss)--net (.06) .09 .02 (.01)
Realized and unrealized gain
(loss) on investments and
foreign currency
transactions--net .87 1.86 1.52 (.57)
------ ------ ------ ------
Total from investment operations .81 1.95 1.54 (.58)
------ ------ ------ ------
Less dividends and distributions:
Investment income--net (.01) -- --+++ --
In excess of investment
income--net (.08) -- -- --
Realized gain on
investments--net (.79) (.75) (.51) --
------ ------ ------ ------
Total dividends and distributions (.88) (.75) (.51) --
------ ------ ------ ------
Net asset value, end of period $14.97 $15.04 $13.84 $12.81
====== ====== ====== ======
TOTAL INVESTMENT RETURN:**
Based on net asset value per share 5.80% 14.86% 12.73% (4.33)%(#)
====== ====== ====== ======
RATIOS TO AVERAGE NET ASSETS:
Expenses 1.64% 1.63% 1.76% 2.23%*
====== ====== ====== ======
Investment income (loss)--net (.39)% .60% .18% (.67)%*
====== ====== ====== ======
SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands) $8,486 $4,688 $3,459 $1,591
====== ====== ====== ======
Portfolio turnover 54.50% 41.14% 44.64% 40.18%
====== ====== ====== ======
Average commission rate paid(##) $.0103 $.0063 -- --
====== ====== ====== ======
</TABLE>
- ---------------
* Annualized.
** Total investment returns exclude the effects of sales loads.
+ Commencement of operations.
++ Based on average shares outstanding during the period.
+++ Amount is less than $.01 per share.
# Aggregate total investment return.
## For fiscal years beginning on or after September 1, 1995, the Fund is
required to disclose its average commission rate per share for purchases and
sales of equity securities. The "Average Commission Rate Paid" includes
commissions paid in foreign currencies, which have been converted into U.S.
dollars using the prevailing exchange rate on the date of the transaction.
Such conversions may significantly affect the rate shown.
18
<PAGE> 20
INVESTMENT OBJECTIVES AND POLICIES
Investment Objectives. The investment objectives of Global Growth Fund and
Global Holdings are similar, but not identical. Global Growth Fund seeks to
provide stockholders with long-term growth of capital, which it seeks to achieve
by investing in a diversified portfolio of equity securities of issuers located
in various foreign countries and the United States, placing particular emphasis
on companies that have exhibited above-average growth rates in earnings. Global
Holdings seeks to provide stockholders with the highest total investment return
consistent with prudent risk through worldwide investment in an internationally
diversified portfolio of securities. Total investment return is the aggregate of
income and capital value changes. In pursuing this objective, management of
Global Holdings will utilize a fully managed investment policy which permits
Global Holdings to take a flexible investment approach and vary its policies as
to geographic diversification and types of securities based upon its evaluation
of economic and market trends throughout the world. Accordingly, investments may
be shifted among the various capital markets of the world and among different
types of equity, debt and convertible securities depending upon management's
outlook with respect to prevailing trends and developments.
There can be no assurance that, after the Reorganization, Global Growth
Fund will achieve its investment objective.
Investment Policies Generally. Global Growth Fund invests, under normal
circumstances, at least 65% of its total assets in equity securities of issuers
from at least three different countries. To a lesser extent, Global Growth Fund
may invest in securities convertible into common stock, preferred stock, rights
to subscribe for common stock and other investments the return on which is
determined by the performance of a particular common stock or a basket or index
of common stocks. Global Holdings utilizes a fully managed investment policy
which permits the Fund's management to vary its policies as to geographic
diversification and types of securities, but it is expected that its assets will
be invested in several countries, primarily the United States, Japan and Western
European nations. Global Holdings' current emphasis is placed on equity
securities, but substantial portions of its assets may be invested in debt,
convertible securities or non-convertible preferred stocks. Both Global Growth
Fund and Global Holdings may invest heavily in securities denominated in
currencies other than the U.S. dollar.
In addition, each Fund may engage in various portfolio strategies to seek
to increase its return through the use of options on portfolio securities and to
hedge its portfolio against movements in the equity markets, interest rates and
exchange rates between currencies.
MLAM believes that the securities currently held in the Global Holdings
portfolio are consistent with the investment objectives and policies of Global
Growth Fund and are not prohibited by the investment restrictions of Global
Growth Fund. Global Growth Fund has no plan or intention to sell or otherwise
dispose of any of the assets of Global Holdings acquired in the Reorganization,
except for dispositions made in the ordinary course of business.
A more specific comparison of the investment policies of Global Holdings
and Global Growth Fund follows.
Securities. Under normal market conditions, at least 65% of Global Growth
Fund's total assets will be invested in equity securities of issuers from at
least three different countries. Issuers may achieve above-average growth rates
in earnings from a variety of factors including, but not limited to,
above-average growth rates in sales, profit margin improvement, proprietary or
niche products or services, leading market shares and underlying strong industry
growth. Management of Global Growth Fund believes that companies which possess
above-average earnings growth frequently provide the prospect of above-average
stock market returns, although such companies tend to have higher relative stock
market valuations. Emphasis also will be given to companies having medium to
large stock market capitalizations ($2 billion or more). Investment in companies
with lower market capitalizations, especially those under $1 billion, may
involve special risks, including limited product lines, limited market or
financial resources or a limited management group. In addition, many smaller
company stocks trade less frequently and in smaller volume, and may be subject
to
19
<PAGE> 21
more abrupt or erratic price movements or may be more sensitive to market
fluctuations, than stocks of larger companies.
Global Growth Fund will emphasize investments in equity securities,
primarily common stock, and, to a lesser extent, securities convertible into
common stock, preferred stock, rights to subscribe for common stock and other
investments the return on which is determined by the performance of a common
stock or a basket or index of common stocks. Global Growth Fund reserves the
right, as a defensive measure and to provide for redemptions, to hold other
types of securities, including non-convertible preferred stocks and debt
securities rated investment grade by a nationally recognized statistical rating
organization, U.S. Government and money market securities, including repurchase
agreements, or cash, in such proportions as, in the opinion of MLAM, prevailing
market or economic conditions warrant.
Global Holdings invests in a diversified international portfolio of
companies located throughout the world. There are no prescribed limits on
geographic asset distribution and Global Holdings has the authority to invest in
any country in the world. Global Holdings' assets have been invested in several
countries, primarily the United States, Japan and Western European nations. The
allocation of Global Holdings' assets among the various securities markets of
the world is determined by MLAM. In making the allocation of assets among the
securities markets, MLAM considers such factors as the condition and growth
potential of the various economies and securities markets, currency and taxation
considerations and other pertinent financial, social, national and political
factors. Under certain adverse investment conditions, Global Holdings may
restrict the securities markets in which its assets will be invested and may
increase the proportion of assets invested in the U.S. securities markets. While
investment emphasis of Global Holdings has been placed on equity securities or
securities convertible into equities, substantial portions of Global Holdings'
assets may be invested in debt or convertible securities.
Temporary Investments. Global Growth Fund reserves the right, as a
temporary defensive measure, to hold in excess of 35% of its total assets in
cash or cash equivalents in U.S. dollars or foreign currencies and investment
grade, short-term securities including money market securities denominated in
U.S. dollars or foreign currencies ("Temporary Investments"). Under certain
adverse investment conditions, Global Growth Fund may restrict the markets in
which its assets will be invested and may increase the proportion of assets
invested in Temporary Investments. Investments made for defensive purposes will
be maintained only during periods in which MLAM determines that economic or
financial conditions are adverse for holding or being fully invested in equity
securities. A portion of the Global Growth Fund normally would be held in
Temporary Investments in anticipation of investment in equity securities or to
provide for possible redemptions. Global Holdings also reserves the right, as a
temporary defensive measure and to provide for redemptions, to hold cash or cash
equivalents (in U.S. dollars or foreign currencies) and short-term securities
including money market securities. In the case of Global Holdings, no limit is
stated as to the percentage of assets which may be invested in such Temporary
Investments.
Depositary Receipts. Each of Global Growth Fund and Global Holdings may
invest in the securities of foreign issuers in the form of Depositary Receipts
or other securities convertible into securities of foreign issuers. Depositary
Receipts may not necessarily be denominated in the same currency as the
underlying securities into which they may be converted. American Depositary
Receipts ("ADRs") are receipts typically issued by an American bank or trust
company that evidence ownership of underlying securities issued by a foreign
corporation. European Depositary Receipts ("EDRs") are receipts issued in Europe
that evidence a similar ownership arrangement. Global Depositary Receipts
("GDRs") are receipts issued throughout the world that evidence a similar
arrangement. Generally, ADRs, in registered form, are designed for use in the
U.S. securities markets, and EDRs, in bearer form, are designed for use in
European securities markets. GDRs are tradable both in the U.S. and in Europe
and are designed for use throughout the world. Global Growth Fund may invest in
unsponsored Depositary Receipts. The issuers of unsponsored Depositary Receipts
are not obligated to disclose material information in the United States, and
therefore, there may be less information available regarding such issuers and
there may not be a correlation between such information and the market value of
the Depositary Receipts.
20
<PAGE> 22
Warrants. Global Growth Fund may invest in warrants. Warrants do not carry
with them the right to dividends or voting rights with respect to the securities
that they entitle their holders to purchase, and they do not represent any
rights in the assets of the issuer. In addition, warrants involve the risk that
the price of the security underlying the warrant may not exceed the exercise
price of the warrant and the warrant may expire without any value.
Convertible Securities. Each of the Funds may invest in convertible
securities. A convertible security is a bond, debenture, note, preferred stock
or other security that may be converted into or exchanged for a prescribed
amount of common stock of the same or a different issuer within a particular
period of time at a specified price or formula. A convertible security entitles
the holder to receive interest generally paid or accrued on debt or the dividend
paid on preferred stock until the convertible security matures or is redeemed,
converted or exchanged. Convertible securities have several unique investment
characteristics such as (i) higher yields than common stocks, but lower yields
than comparable nonconvertible securities, (ii) a lesser degree of fluctuation
in value than the underlying stock since they have fixed-income characteristics
and (iii) the potential for capital appreciation if the market price of the
underlying common stock increases. A convertible security might be subject to
redemption at the option of the issuer at a price established in the convertible
security's governing instrument. If a convertible security held by one of the
Funds is called for redemption, the Fund may be required to permit the issuer to
redeem the security, convert it into the underlying common stock or sell it to a
third party.
Illiquid Securities. Global Growth Fund may invest up to 15% of its net
assets and Global Holdings may invest up to 15% of its total assets in
securities that lack an established secondary trading market or otherwise are
considered illiquid. Liquidity of a security relates to the ability to dispose
easily of the security and the price to be obtained upon disposition of the
security, which may be less than would be obtained for a comparable more liquid
security. Investment of a Fund's assets in illiquid securities may restrict the
ability of that Fund to dispose of its investments in a timely fashion and for a
fair price as well as its ability to take advantage of market opportunities. The
Fund may invest in securities of issuers that are sold in private placement
transactions between the issuers and their purchasers and that are neither
listed on an exchange nor traded in other established markets. In many cases,
privately placed securities will be subject to contractual or legal restrictions
on transfer.
No Rating Criteria for Debt Securities. Neither Fund has established any
rating criteria for the debt securities in which it may invest and such
securities may not be rated at all for creditworthiness. Securities rated in the
medium to low rating categories of nationally recognized statistical rating
organizations and unrated securities of comparable quality are speculative with
respect to the capacity to pay interest and repay principal in accordance with
the terms of the security and generally involve a greater volatility of price
than securities in higher rating categories. Neither Fund intends to purchase
debt securities that are in default.
OTHER INVESTMENT POLICIES
Both Global Holdings and Global Growth Fund have adopted certain other
investment policies as set forth below:
Borrowings. Global Growth Fund and Global Holdings are each subject to a
fundamental investment restriction, which provides that the Fund may borrow from
banks in amounts up to 33 1/3% of its total assets taken at market value and may
borrow an additional 5% of its total assets for temporary purposes. As a non-
fundamental restriction, Global Holdings is further limited and may not borrow
amounts in excess of 20% of its total assets taken at market value and then only
from banks as a temporary measure for extraordinary or emergency purposes. See
"Summary--Comparison of the Funds--Investment Policies."
Hedging Techniques; Investment Practices Involving the Use of Options,
Futures and Other Portfolio Strategies. Each of Global Growth Fund and Global
Holdings may engage in various portfolio strategies to hedge its portfolio
against investment, interest rate and currency risks. For a description of
hedging instruments and risks associated with investment therein, see
"Investment Objective and Policies--Other Investment Policies and Practices" in
the Global Holdings Prospectus and the Global Growth Fund Prospectus.
21
<PAGE> 23
Standby Commitment Agreements. Global Growth Fund may from time to time
enter into standby commitment agreements. For a description of standby
commitment agreements and the risks associated with investment therein, see
"Investment Objective and Policies--Other Investment Policies and Practices" in
the Global Growth Fund Prospectus.
Repurchase Agreements. Global Growth Fund may enter into repurchase
agreements. For a description of repurchase agreements and the risks associated
with investment therein, see "Investment Objective and Policies--Other
Investment Policies and Practices" in the Global Growth Fund Prospectus.
When-Issued Securities and Delayed Delivery Transactions. Global Growth
Fund may purchase or sell securities on a delayed delivery basis or on a
when-issued basis at fixed purchase or sale terms. For a description of
when-issued securities and delayed delivery transactions, including the risks
associated with investment therein, see "Investment Objective and
Policies--Other Investment Policies and Practices" in the Global Growth Fund
Prospectus.
Lending of Portfolio Securities. Each Fund may from time to time lend
securities from its portfolio with a value not exceeding 33 1/3% of its total
assets, to banks, brokers and other financial institutions and receive
collateral in cash or securities issued or guaranteed by the U.S. Government.
INFORMATION REGARDING OPTIONS, FUTURES AND FOREIGN EXCHANGE TRANSACTIONS
Each Fund may engage in certain investment practices including the use of
options, futures and foreign exchange. Global Growth Fund may utilize these
strategies for hedging purposes, to enhance total return or to gain exposure to
equity markets. Global Holdings may engage in such transactions to hedge its
portfolio against investment, interest rate and currency risks. Each Fund has
authority to write (i.e., sell) covered call options on its portfolio
securities, purchase put options on securities and engage in transactions in
stock index options, stock index futures and financial futures, and related
options on such futures. Each Fund may also deal in forward foreign exchange
transactions and foreign currency options and futures, and related options on
such futures.
The investment policies of each Fund with respect to futures and options
transactions are not fundamental policies and may be modified by the Board of
Directors of each Fund without the approval of the Fund's stockholders. Each
Fund is subject to the restrictions of the Commodity Futures Trading Commission
with respect to its investments in futures and options thereon.
For a detailed discussion of the Funds' investment policies regarding
futures and options, including the risks associated therewith, see "Investment
Objective and Policies--Other Investment Policies and Practices--Portfolio
Strategies Involving Options and Futures" in the Global Holdings Prospectus and
"Investment Objective and Policies--Other Investment Policies and
Practices--Portfolio Strategies Involving Options and Futures" in the Global
Growth Fund Prospectus.
INVESTMENT RESTRICTIONS
Other than as noted above under "Comparison of the Funds--Investment
Objectives and Policies," Global Holdings and Global Growth Fund have identical
investment restrictions. See "Investment Objective and Policies--Investment
Restrictions" in the Global Growth Fund Statement and "Investment Objective and
Policies--Investment Restrictions" in the Global Holdings Statement.
MANAGEMENT
Directors. The Board of Directors of Global Growth Fund consists of seven
individuals, six of whom are not "interested persons" as defined in the
Investment Company Act. The Board of Directors of Global Holdings consists of
six individuals, five of whom are not "interested persons" as defined in the
Investment Company Act. Three individuals, Arthur Zeikel, Donald Cecil and
Edward H. Meyer, serve on both Boards. After the Reorganization, the Board of
Directors of Global Growth Fund will serve as the Board of Directors of the
Combined Fund. The Directors are responsible for the overall supervision of the
operation of each Fund
22
<PAGE> 24
and perform the various duties imposed on the directors of investment companies
by the Investment Company Act.
The Directors of Global Growth Fund are:
ARTHUR ZEIKEL*--Chairman of MLAM and its affiliate, Fund Asset Management,
L.P.; Chairman and Director of Princeton Services, Inc.; and Executive Vice
President of Merrill Lynch & Co., Inc. ("ML & Co.").
DONALD CECIL--Special Limited Partner of Cumberland Associates (an
investment partnership).
M. COLYER CRUM--James R. Williston Professor of Investment Management
Emeritus, Harvard Business School.
EDWARD H. MEYER--Chairman of the Board of Directors, President and Chief
Executive Officer of Grey Advertising Inc.
JACK B. SUNDERLAND--President and Director of American Independent Oil
Company, Inc. (an energy company).
J. THOMAS TOUCHTON--Managing Partner of the Witt-Touchton Company (a
private investment partnership).
FRED G. WEISS--Managing Director of FGW Associates; and Director of Noven
Corporation (a pharmaceutical company).
- ---------------
* Interested person, as defined by the Investment Company Act, of each of the
Funds.
Management and Advisory Arrangements. MLAM serves as the manager for both
Global Holdings and Global Growth Fund pursuant to separate management
agreements (each, a "Management Agreement") that, except for their fee
structures and certain minor differences, are identical.
Pursuant to the Management Agreement between Global Growth Fund and MLAM,
Global Growth Fund pays MLAM a monthly fee at the annual rate of 0.75% of the
average daily net assets of the Fund not exceeding $1.5 billion and 0.725% of
the average daily net assets in excess of $1.5 billion. After the
Reorganization, the Combined Fund will pay the management fee rate paid by
Global Growth Fund. Pursuant to the Management Agreement between Global Holdings
and MLAM, Global Holdings pays MLAM a monthly fee at the annual rate of 1.00% of
the average daily net assets of the Fund. Assuming the total net assets after
the Reorganization were $2.4 billion, the effective fee rate paid by the
Combined Fund would be 0.74%. The advisory fee paid by the Combined Fund would
be at a lower rate than the management fee rate paid by Global Holdings prior to
the Reorganization.
MLAM has retained MLAM U.K. as sub-adviser to each of Global Holdings and
Global Growth Fund. Pursuant to a separate sub-advisory agreement between MLAM
and MLAM U.K. with respect to each Fund, MLAM pays MLAM U.K. a fee for providing
investment advisory services to MLAM with respect to each Fund, in an amount to
be determined from time to time by MLAM and MLAM U.K. but in no event in excess
of the amount MLAM actually receives for providing services to each Fund
pursuant to each Management Agreement. The address of MLAM U.K. is Milton Gate,
1 Moor Lane, London EC2Y 9HA, England.
After the Reorganization, on a pro forma combined basis, the total
operating expenses of Global Growth Fund, as a percent of net assets, would be
less than the current operating expenses of Global Holdings. In addition,
certain fixed costs, such as costs of printing stockholder reports and proxy
statements, legal expenses, audit fees, registration fees, mailing costs and
other expenses would be spread across a larger asset base, thereby lowering the
expense ratio borne by Global Holdings stockholders. The Board of Directors of
each of the Funds has determined that the Reorganization would be potentially
beneficial to that Fund and the Fund's stockholders. See "The
Reorganization--Potential Benefits to Stockholders as a Result of the
Reorganization" and "Summary--Pro Forma Fee Tables."
23
<PAGE> 25
PURCHASE OF SHARES
The class structure and purchase and distribution procedures for shares of
Global Holdings are substantially the same as those of Global Growth Fund. For a
complete discussion of the four classes of shares and the purchase and
distribution procedures related thereto, see "Merrill Lynch Select Pricing(SM)
System" and "Purchase of Shares" in either the Global Growth Fund Prospectus or
the Global Holdings Prospectus.
REDEMPTION OF SHARES
The procedure for redeeming shares of Global Growth Fund is substantially
the same as the procedure for redeeming shares of Global Holdings. For purposes
of computing any CDSC that may be payable upon disposition of Corresponding
Shares of Global Growth Fund acquired by Global Holdings stockholders in the
Reorganization, the holding period of Global Holdings shares outstanding on the
date the Reorganization takes place will be tacked onto the holding period of
the Corresponding Shares of Global Growth Fund acquired in the Reorganization.
PERFORMANCE
General. The following tables provide performance information for each
class of shares of Global Holdings and Global Growth Fund, including and
excluding maximum applicable sales charges, for the periods indicated. Past
performance is not indicative of future performance.
24
<PAGE> 26
GLOBAL GROWTH FUND
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES CLASS D SHARES
---------------------- ---------------------- ---------------------- ----------------------
WITHOUT WITHOUT WITHOUT WITHOUT
SALES WITH SALES SALES WITH SALES SALES WITH SALES SALES WITH SALES
PERIOD CHARGE(%) CHARGE*(%) CHARGE(%) CHARGE*(%) CHARGE(%) CHARGE*(%) CHARGE(%) CHARGE*(%)
------ --------- ---------- --------- ---------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
8 months ended 6/30/98+ 25.00 18.44 24.20 20.20 24.20 23.20 24.80 18.25
</TABLE>
- ---------------
* Assumes the maximum applicable sales charge. The maximum initial sales charge
on Class A and Class D shares is 5.25%. The maximum contingent deferred sales
charge ("CDSC") on Class B shares is 4.0% and is reduced to 0% after four
years. Class C shares are subject to a 1.0% CDSC for one year.
+ Aggregate total returns. Figures are since inception (October 31, 1997).
GLOBAL HOLDINGS
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES CLASS D SHARES
---------------------- ---------------------- ---------------------- ----------------------
WITHOUT WITHOUT WITHOUT WITHOUT
SALES WITH SALES SALES WITH SALES SALES WITH SALES SALES WITH SALES
PERIOD CHARGE(%) CHARGE*(%) CHARGE(%) CHARGE*(%) CHARGE(%) CHARGE*(%) CHARGE(%) CHARGE*(%)
------ --------- ---------- --------- ---------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
7 months ended 6/30/98+ 13.00 7.07 12.37 8.37 12.28 11.28 12.86 6.94
Year Ended 11/30/97 6.04 0.47 4.98 0.99 4.96 3.96 5.80 0.24
Five Years Ended 11/30/97 11.40 10.21 10.25 10.25 -- -- -- --
Inception** through 11/30/97 12.62 12.17 8.68 8.68 8.23 8.23 9.09 7.21
</TABLE>
- ---------------
* Assumes the maximum applicable sales charge. The maximum initial sales charge
on Class A and Class D shares is 5.25%. The maximum CDSC on Class B shares is
4.0% and is reduced to 0% after four years. Class C shares are subject to a
1.0% CDSC for one year.
** Class A shares commenced operations on July 2, 1984. Class B shares commenced
operations on October 21, 1988. Class C and Class D shares commenced
operations on October 21, 1994.
+ Aggregate total returns.
STOCKHOLDER RIGHTS
Stockholders of Global Growth Fund are entitled to one vote for each share
held and fractional votes for fractional shares held and will vote on the
election of Directors and any other matter submitted to a stockholder vote.
Global Growth Fund does not intend to hold meetings of stockholders in any year
in which the Investment Company Act does not require stockholders to act upon
any of the following matters: (i) election of Directors; (ii) approval of an
investment advisory agreement; (iii) approval of distribution arrangements; and
(iv) ratification of selection of independent accountants. Voting rights for
Directors are not cumulative. Shares of Global Growth Fund to be issued to
Global Holdings stockholders in the Reorganization will be fully paid and
non-assessable, will have no preemptive rights and will have the conversion
rights described in this Prospectus and Proxy Statement and in the Global Growth
Fund Prospectus. Each share of Global Growth Fund common stock is entitled to
participate equally in dividends and distributions declared by the Fund and in
the net assets of the Fund on liquidation or dissolution after satisfaction of
outstanding liabilities, except that Class B, Class C and Class D shares bear
certain additional expenses. Rights attributable to shares of Global Holdings
are identical to those described above.
DIVIDENDS AND DISTRIBUTIONS
The current policy of Global Holdings with respect to dividends and
distributions is substantially identical to the policy of Global Growth Fund. It
is each Fund's intention to distribute all of its net investment income, if any.
In addition, each Fund distributes all net realized capital gains, if any, to
stockholders at least annually.
25
<PAGE> 27
TAX INFORMATION
The tax consequences associated with investment in shares of Global
Holdings are substantially identical to the tax consequences associated with
investment in shares of Global Growth Fund.
PORTFOLIO TRANSACTIONS
The procedures for engaging in portfolio transactions are generally the
same for both Global Holdings and Global Growth Fund. For a discussion of these
procedures, see "Investment Objective and Policies--Other Investment Policies
and Practices" in the Global Growth Fund Prospectus and "Portfolio Transactions
and Brokerage" in the Global Growth Fund Statement.
Each Fund may effect portfolio transactions on foreign securities exchanges
and may incur settlement delays on certain of such exchanges. In addition, costs
associated with transactions in foreign securities are generally higher than
such costs associated with transactions in U.S. securities.
PORTFOLIO TURNOVER
Generally, neither Global Holdings nor Global Growth Fund purchases
securities for short-term trading profits. However, either Fund may dispose of
securities without regard to the time that they have been held when such action,
for defensive or other reasons, appears advisable to MLAM. Neither Fund has any
limit on its rate of portfolio turnover. The portfolio turnover rates for Global
Holdings for its fiscal years ended November 30, 1996 and 1997 were 41.14% and
54.50%, respectively. The portfolio turnover rate for Global Growth Fund for the
period October 31, 1997 (commencement of operations) to February 28, 1998 was
14.61%. Higher portfolio turnover may contribute to higher transactional costs
and negative tax consequences, such as an increase in capital gain dividends or
in ordinary income dividends of accrued market discount.
ADDITIONAL INFORMATION
Net Asset Value. Both Global Holdings and Global Growth Fund determine net
asset value of each class of its shares once daily 15 minutes after the close of
business on the NYSE (generally, 4:00 p.m. New York time), on each day during
which the NYSE is open for trading. Net asset value is computed by dividing the
market value of the securities held by the Fund plus any cash or other assets
(including interest and dividends accrued but not yet received) minus all
liabilities (including accrued expenses) by the total number of shares
outstanding at such time.
Stockholder Services. Global Growth Fund offers a number of stockholder
services and investment plans designed to facilitate investment in shares of the
Fund. In addition, U.S. stockholders of each class of shares of Global Growth
Fund have an exchange privilege with certain other MLAM-advised mutual funds.
Stockholder services, including exchange privileges, available to stockholders
of Global Holdings and Global Growth Fund are substantially identical. For a
description of these services, see "Stockholder Services" in the Global Growth
Fund Prospectus.
Independent Auditors. Currently Ernst & Young LLP serves as the
independent auditors of Global Growth Fund and Deloitte & Touche LLP serves as
the independent auditors of Global Holdings. If the Reorganization is approved,
it is anticipated that Ernst & Young LLP will serve as the independent auditors
of the Combined Fund.
Custodian. State Street Bank and Trust Company ("State Street") acts as
custodian of the cash and securities of Global Growth Fund. The principal
business address of State Street is P.O. Box 351, Boston, Massachusetts 02101.
The Chase Manhattan Bank ("Chase") acts as custodian for Global Holdings.
Chase's principal business address is 4 Chase MetroTech Center, Brooklyn, New
York 11245. It is presently anticipated that State Street will serve as the
custodian of the Combined Fund.
Transfer Agent, Dividend Disbursing Agent and Shareholder Servicing
Agent. Financial Data Services, Inc., 4800 Deer Lake Drive East, Jacksonville,
Florida 32246-6484, serves as the transfer agent, dividend disbursing agent and
shareholder servicing agent with respect to each Fund (the "Transfer Agent"), at
the
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<PAGE> 28
same fee schedule, pursuant to separate transfer agency, dividend disbursing and
service agreements with each of the Funds.
Capital Stock. Global Holdings has an authorized capital of 400,000,000
shares of common stock, par value $.10 per share, divided into four classes,
designated Class A, Class B, Class C and Class D common stock, each of which
consists of 100,000,000 shares. Global Growth Fund has an authorized capital of
600,000,000 shares of common stock, par value $0.10 per share, divided into four
classes, also designated Class A, Class B, Class C and Class D common stock.
Class A, Class C and Class D each consists of 100,000,000 shares and Class B
consists of 300,000,000 shares. The rights, preferences and expenses
attributable to the Class A, Class B, Class C and Class D shares of Global
Holdings are identical in all respects to those of the Class A, Class B, Class C
and Class D shares of Global Growth Fund.
Stockholder Inquiries. Stockholder inquiries with respect to Global
Holdings and Global Growth Fund may be addressed to either Fund by telephone at
(609) 282-2800 or at the address set forth on the cover page of this Proxy
Statement and Prospectus.
THE REORGANIZATION
GENERAL
Under the Agreement and Plan of Reorganization (attached hereto as Exhibit
I), Global Growth Fund will acquire substantially all of the assets, and will
assume substantially all of the liabilities, of Global Holdings, in exchange
solely for an equal aggregate value of shares to be issued by Global Growth
Fund. Upon receipt by Global Holdings of such shares, Global Holdings will
distribute the shares to the holders of shares of Global Holdings, as described
below.
Generally, the assets transferred by Global Holdings to Global Growth Fund
will equal all investments of Global Holdings held in its portfolio as of the
Valuation Time (as defined in the Agreement and Plan of Reorganization) and all
other assets of Global Holdings as of such time.
Global Holdings will distribute the shares of Global Growth Fund received
by it pro rata to its stockholders in exchange for such stockholders'
proportional interests in Global Holdings. The shares of Global Growth Fund
received by Global Holdings stockholders will be of the same class and have the
same aggregate net asset value as each such stockholder's interest in Global
Holdings as of the Valuation Time (previously defined as the "Corresponding
Shares"). (See "The Agreement and Plan of Reorganization--Valuation of Assets
and Liabilities" for information concerning the calculation of net asset value.)
The distribution will be accomplished by opening new accounts on the books of
Global Growth Fund in the names of all stockholders of Global Holdings,
including stockholders holding Global Holdings shares in certificate form, and
transferring to each stockholder's account the Corresponding Shares of Global
Growth Fund representing such stockholder's interest previously credited to the
account of Global Holdings. Stockholders holding Global Holdings shares in
certificate form may receive certificates representing the Corresponding Shares
of Global Growth Fund credited to their account in respect of such Global
Holdings shares by sending the certificates to the Transfer Agent accompanied by
a written request for such exchange.
Since the Corresponding Shares of Global Growth Fund would be issued at net
asset value in exchange for the net assets of Global Holdings having a value
equal to the aggregate net asset value of those shares of Global Holdings, the
net asset value per share of Global Growth Fund should remain virtually
unchanged solely as a result of the Reorganization. Thus, the Reorganization
should result in virtually no dilution of net asset value of Global Growth Fund
immediately following consummation of the Reorganization. However, as a result
of the Reorganization, a stockholder of Global Holdings likely would hold a
smaller percentage of ownership in Global Growth Fund than he or she did in
Global Holdings prior to the Reorganization.
PROCEDURE
On April 15, 1998, the Board of Directors of Global Holdings, including a
majority of the Directors who are not "interested persons," as defined by the
Investment Company Act, approved the Agreement and Plan of
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<PAGE> 29
Reorganization and the submission of such Agreement and Plan to Global Holdings
stockholders for approval. The Board of Directors of Global Growth Fund,
including all of the Directors who are not interested persons, also approved the
Agreement and Plan of Reorganization on August 4, 1998.
If the stockholders of Global Holdings approve the Reorganization at the
Meeting, all required regulatory approvals are obtained and certain conditions
are either met or waived, it is presently anticipated that the Reorganization
will take place during the first calendar quarter of 1999.
THE BOARD OF DIRECTORS OF GLOBAL HOLDINGS RECOMMENDS THAT GLOBAL HOLDINGS
STOCKHOLDERS APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION.
TERMS OF THE AGREEMENT AND PLAN OF REORGANIZATION
The following is a summary of the significant terms of the Agreement and
Plan of Reorganization. This summary is qualified in its entirety by reference
to the Agreement and Plan of Reorganization, attached hereto as Exhibit I.
Valuation of Assets and Liabilities. The respective assets of Global
Holdings and Global Growth Fund will be valued as of the Valuation Time. The
assets in each Fund will be valued according to the procedures set forth under
"Additional Information--Determination of Net Asset Value" in the Global Growth
Fund Prospectus. Purchase orders for Global Holdings shares which have not been
confirmed as of the Valuation Time will be treated as assets of Global Holdings
for purposes of the Reorganization; redemption requests with respect to Global
Holdings shares which have not settled as of the Valuation Time will be treated
as liabilities of Global Holdings for purposes of the Reorganization.
Distribution of Global Growth Fund Shares. On the next full business day
following the Valuation Time (the "Exchange Date"), Global Growth Fund will
issue to Global Holdings a number of shares the aggregate net asset value of
which will equal the aggregate net asset value of shares of Global Holdings as
of the Valuation Time. Each holder of Global Holdings shares will receive, in
exchange for his or her proportionate interest in Global Holdings, Corresponding
Shares of Global Growth Fund of the same class and having the same aggregate net
asset value as the Global Holdings shares held by such stockholder as of the
Valuation Time.
Expenses. The expenses of the Reorganization that are directly
attributable to each Fund and the conduct of its business will be deducted from
the assets of that Fund as of the Valuation Time. These expenses are expected to
include the expenses incurred in preparing materials to be distributed to each
Fund's board, legal fees incurred in preparing each Fund's board materials,
attending each Fund's board meetings and preparing the minutes, and accounting
fees associated with each Fund's financial statements. The expenses of the
Reorganization that are attributable to the transaction itself, including
expenses in connection with obtaining the IRS private letter ruling, will be
borne pro rata by each Fund according to its net assets as of the Valuation
Time. These expenses are expected to include expenses incurred in connection
with the preparation of the Agreement and Plan of Reorganization and the
Registration Statement on Form N-14 (including the Prospectus and Proxy
Statement), Commission and other filing fees and legal and audit fees in
connection with the Reorganization.
Required Approvals. Under Global Holdings' Articles of Incorporation (as
amended to date) and relevant Maryland law, stockholder approval of the
Agreement and Plan of Reorganization requires the affirmative vote of Global
Holdings stockholders representing a majority of the total number of votes
entitled to be cast thereon.
Deregistration and Dissolution. Following the transfer of the assets and
liabilities of Global Holdings to Global Growth Fund and the distribution of
Corresponding Shares of Global Growth Fund to Global Holdings stockholders,
Global Holdings will terminate its registration under the Investment Company Act
and its incorporation under Maryland law and will withdraw its authority to do
business in any state where it is required to do so.
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<PAGE> 30
Amendments and Conditions. The Agreement and Plan of Reorganization may be
amended at any time prior to the Exchange Date with respect to any of the terms
therein. The obligations of Global Holdings and Global Growth Fund pursuant to
the Agreement and Plan of Reorganization are subject to various conditions,
including a registration statement on Form N-14 being declared effective by the
Commission, approval of the Reorganization by Global Holdings stockholders, a
favorable IRS private letter ruling being received as to tax matters, an opinion
of counsel being received as to securities matters and the continuing accuracy
of various representations and warranties of Global Holdings and Global Growth
Fund being confirmed by the respective parties.
Termination, Postponement and Waivers. The Agreement and Plan of
Reorganization may be terminated, and the Reorganization abandoned at any time,
whether before or after adoption thereof by the Global Holdings stockholders,
prior to the Exchange Date or the Exchange Date may be postponed: (i) by mutual
consent of the Boards of Directors of Global Holdings and Global Growth Fund;
(ii) by the Board of Directors of Global Holdings if any condition to Global
Holdings' obligations has not been fulfilled or waived by such Board; or (iii)
by the Board of Directors of Global Growth Fund if any condition to Global
Growth Fund's obligations has not been fulfilled or waived by such Board.
POTENTIAL BENEFITS TO STOCKHOLDERS AS A RESULT OF THE REORGANIZATION
MLAM and the Board of Directors of Global Holdings have identified certain
potential benefits to stockholders that are likely to result from the
Reorganization. First, following the Reorganization, Global Holdings
stockholders will remain invested in an open-end fund that has an investment
objective similar, although not identical, to that of Global Holdings. In
addition, Global Holdings stockholders are likely to experience certain
additional benefits, including lower expenses per share, economies of scale and
greater flexibility in portfolio management.
Specifically, as described above under "Comparison of the
Funds--Management--Management and Advisory Fees," after the Reorganization, on a
pro forma basis, Global Growth Fund will pay an advisory fee to MLAM at a lower
annual rate than that currently paid by Global Holdings and the total operating
expenses of Global Growth Fund after the Reorganization, as a percent of net
assets, would be less than the current operating expenses for Global Holdings.
See "Summary--Pro Forma Fee Tables." In addition, certain fixed costs, such as
costs of printing stockholder reports and proxy statements, legal expenses,
audit fees, registration fees, mailing costs and other expenses would be spread
across a larger asset base, thereby lowering the expense ratio borne by Global
Holdings stockholders. To illustrate the potential economies of scale for Global
Holdings, on June 30, 1998, the total operating expense ratio for Global
Holdings Class A shares was 1.48% (based on total fund net assets of
approximately $362.7 million) and the total operating expense ratio for Global
Growth Fund Class A shares was 0.93% (based on total fund net assets of
approximately $2.0 billion). If the Reorganization had taken place on that date,
the total operating expense ratio for Global Growth Fund Class A shares on a pro
forma basis would have been 0.92% (based on total fund net assets of
approximately $2.4 billion).
The following table sets forth (i) the net assets of Global Holdings for
the last three fiscal year ends and as of June 30, 1998 and (ii) the net assets
of Global Growth Fund as of October 31, 1997 and as of June 30, 1998.
<TABLE>
<CAPTION>
GLOBAL GROWTH FUND GLOBAL HOLDINGS
- ------------------------------- ----------------------------
PERIOD NET ASSETS PERIOD NET ASSETS
- --------------- -------------- -------------- ------------
<S> <C> <C> <C>
As of 10/31/97* $1,203,296,899 As of 11/30/95 $375,492,407
As of 6/30/98 $1,996,561,044 As of 11/30/96 $448,219,330
As of 11/30/97 $426,181,034
As of 6/30/98 $362,706,779
</TABLE>
- ---------------
* Global Growth Fund commenced operations on October 31, 1997.
The net assets of Global Holdings as of June 30, 1998 are below the level
reached at fiscal year end November 30, 1995 and have been steadily decreasing
since fiscal year end November 30, 1996. MLAM
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<PAGE> 31
believes that the economies of scale that may be realized as a result of the
Reorganization would be beneficial to Global Holdings stockholders.
Based on the foregoing, the Board of Directors of Global Holdings concluded
that the Reorganization presents no significant risks or costs (including legal,
accounting and administrative costs) that would outweigh the benefits discussed
above. In approving the Reorganization, the Board of Directors of each Fund
determined that the interests of existing stockholders of that Fund would not be
diluted as a result of the Reorganization.
TAX CONSEQUENCES OF THE REORGANIZATION
General. The Reorganization has been structured with the intention that it
qualify for Federal income tax purposes as a tax-free reorganization under
Section 368(a)(1)(C) of the Code. Global Holdings and Global Growth Fund have
elected and qualified for the special tax treatment afforded "regulated
investment companies" under the Code, and Global Growth Fund intends to continue
to so qualify after the Reorganization. Global Holdings and Global Growth Fund
have jointly requested a private letter ruling from the IRS to the effect that
for Federal income tax purposes: (i) the Reorganization, as described, will
constitute a reorganization within the meaning of Section 368(a)(1)(C) of the
Code and Global Holdings and Global Growth Fund will each be deemed a "party" to
the Reorganization within the meaning of Section 368(b); (ii) in accordance with
Section 354(a)(1) of the Code, no gain or loss will be recognized by the
stockholders of Global Holdings upon the receipt of Corresponding Shares of
Global Growth Fund in the Reorganization solely in exchange for their shares of
Global Holdings; (iii) in accordance with Section 358 of the Code, immediately
after the Reorganization, the tax basis of the Corresponding Shares of Global
Growth Fund received by the stockholders of Global Holdings in the
Reorganization will be equal, in the aggregate, to the tax basis of the shares
of Global Holdings surrendered in exchange; (iv) in accordance with Section 1223
of the Code, the holding period of the Corresponding Shares of Global Growth
Fund received by stockholders of Global Holdings in the Reorganization will
include the holding period of the shares of Global Holdings immediately prior to
the liquidation of Global Holdings (provided that at the time of the
Reorganization the shares of Global Holdings were held as capital assets); (v)
in accordance with Section 361(a) of the Code, no gain or loss will be
recognized by Global Holdings on the asset transfer solely in exchange for
Global Growth Fund shares or on the distribution of Global Growth Fund shares to
Global Holdings stockholders under Section 361(c)(1); (vi) under Section 1032 of
the Code, no gain or loss will be recognized by Global Growth Fund on the
exchange of its shares for Global Holdings assets; (vii) in accordance with
Section 362(b) of the Code, the tax basis of the assets of Global Holdings in
the hands of Global Growth Fund will be the same as the tax basis of such assets
in the hands of Global Holdings immediately prior to the Reorganization; (viii)
in accordance with Section 1223 of the Code, the holding period of the
transferred assets in the hands of Global Growth Fund will include the holding
period of such assets in the hands of Global Holdings; and (ix) the taxable year
of Global Holdings will end on the effective date of the Reorganization and
pursuant to Section 381(a) of the Code and regulations thereunder, Global Growth
Fund will succeed to and take into account certain tax attributes of Global
Holdings, such as earnings and profits, capital loss carryovers and method of
accounting.
To the extent Global Growth Fund has unrealized capital gains at the time
of the Reorganization, Global Holdings stockholders may incur taxable gains in
the year that Global Growth Fund realizes and distributes those gains. This will
be true notwithstanding that the unrealized gains were reflected in the price of
Global Growth Fund shares at the time they were exchanged for assets of Global
Holdings in the Reorganization. Conversely, stockholders of Global Growth Fund
will share in unrealized capital gains of Global Holdings after the
Reorganization and bear a tax consequence on the subsequent realization of such
gains. Stockholders should consult their tax advisers regarding the effect of
the Reorganization in light of their individual circumstances. As the foregoing
relates only to Federal income tax consequences, stockholders also should
consult their tax advisers as to the foreign, state and local tax consequences
of the Reorganization.
Status as a Regulated Investment Company. Global Holdings has elected and
qualified and Global Growth Fund intends to elect and qualify to be taxed as a
regulated investment company under Sections 851-855 of the Code. After the
Reorganization, Global Growth Fund intends to continue to operate so as to
qualify
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<PAGE> 32
as a regulated investment company. Following the liquidation and dissolution of
Global Holdings and distribution of shares of Global Growth Fund to Global
Holdings stockholders, Global Holdings will terminate its registration under the
Investment Company Act and its incorporation under Maryland law.
CAPITALIZATION
The following table sets forth as of June 30, 1998: (i) the capitalization
of Global Holdings, (ii) the capitalization of Global Growth Fund and (iii) the
pro forma capitalization of the Combined Fund as adjusted to give effect to the
Reorganization.
PRO FORMA CAPITALIZATION OF GLOBAL GROWTH FUND, GLOBAL HOLDINGS AND
COMBINED FUND AS OF JUNE 30, 1998 (UNAUDITED)
GLOBAL GROWTH FUND
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS D
------------ -------------- ------------ ------------
<S> <C> <C> <C> <C>
Total Net Assets: $ 83,241,993 $1,398,702,147 $279,052,833 $235,564,071
Shares Outstanding: 6,658,381 112,646,856 22,474,628 18,874,439
Net Asset Value Per Share: $ 12.50 $ 12.42 $ 12.42 $ 12.48
</TABLE>
GLOBAL HOLDINGS
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS D
------------ -------------- ------------ ------------
<S> <C> <C> <C> <C>
Total Net Assets: $322,430,867 $ 29,947,957 $ 1,434,834 $ 8,893,121
Shares Outstanding: 21,580,528 2,108,039 101,462 598,038
Net Asset Value Per Share: $ 14.94 $ 14.21 $ 14.14 $ 14.87
</TABLE>
COMBINED FUND
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS D
------------ -------------- ------------ ------------
<S> <C> <C> <C> <C>
Total Net Assets:* $372,510,922 $1,414,140,621 $278,050,214 $241,625,816
Shares Outstanding: 30,042,674 114,833,744 22,579,407 19,520,514
Net Asset Value Per Share:* $ 12.40 $ 12.31 $ 12.31 $ 12.38
</TABLE>
- ---------------
* Total Net Assets and Net Asset Value Per Share include the aggregate value of
Global Holdings' net assets which would have been transferred to Global Growth
Fund had the Reorganization been consummated on June 30, 1998. The data does
not take into account expenses incurred in connection with the Reorganization
or the actual number of shares that would have been issued. No assurance can
be given as to how many shares of Global Growth Fund the Global Holdings
stockholders will receive on the date the Reorganization takes place, and the
foregoing should not be relied upon to reflect the number of shares of Global
Growth Fund that actually will be received on or after such date.
INFORMATION CONCERNING THE SPECIAL MEETING
DATE, TIME AND PLACE OF MEETING
The Meeting will be held on November 5, 1998, at the offices of Merrill
Lynch Asset Management, L.P., 800 Scudders Mill Road, Plainsboro, New Jersey at
9:00 a.m., New York time.
SOLICITATION, REVOCATION AND USE OF PROXIES
A stockholder executing and returning a proxy has the power to revoke it at
any time prior to its exercise by executing a superseding proxy or by submitting
a notice of revocation to the Secretary of Global Holdings. Although mere
attendance at the Meeting will not revoke a proxy, a stockholder present at the
Meeting may withdraw his proxy and vote in person.
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<PAGE> 33
All shares represented by properly executed proxies, unless such proxies
previously have been revoked, will be voted at the Meeting in accordance with
the directions on the proxies; if no direction is indicated on a properly
executed proxy, such shares will be voted "FOR" approval of the Agreement and
Plan of Reorganization.
It is not anticipated that any matters other than the adoption of the
Agreement and Plan of Reorganization will be brought before the Meeting. If,
however, any other business properly is brought before the Meeting, proxies will
be voted in accordance with the judgment of the persons designated on such
proxies.
RECORD DATE AND OUTSTANDING SHARES
Only holders of record of shares of Global Holdings at the close of
business on September 15, 1998 (the "Record Date") are entitled to vote at the
Meeting or any adjournment thereof. At the close of business on the Record Date,
there were 21,457,974 shares of Global Holdings common stock issued and
outstanding and entitled to vote.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF GLOBAL
HOLDINGS AND GLOBAL GROWTH FUND
To the knowledge of Global Holdings, as of the Record Date, Merrill Lynch
Trust entities owned of record an aggregate of approximately 42.2% of the
outstanding shares of Global Holdings on behalf of certain employee retirement
or savings plan accounts for which such entities act as trustee. The address of
Merrill Lynch Trust entities is P.O. Box 30532, New Brunswick, NJ 08989.
At the Record Date, the Directors and officers of Global Holdings as a
group (12 persons) owned an aggregate of less than 1% of the outstanding shares
of Global Holdings and owned an aggregate of less than 1% of the outstanding
shares of common stock of ML & Co.
To the knowledge of Global Growth Fund, as of September 17, 1998, no person
or entity owned beneficially or of record 5% or more of any class of shares of
Global Growth Fund or of all classes of Global Growth Fund shares in the
aggregate.
As of September 17, 1998, the Directors and officers of Global Growth Fund
as a group (13 persons) owned an aggregate of less than 1% of the outstanding
shares of Global Growth Fund and owned less than 1% of the outstanding shares of
common stock of ML & Co.
VOTING RIGHTS AND REQUIRED VOTE
For purposes of this Proxy Statement and Prospectus, each share of each
class of Global Holdings is entitled to one vote. Approval of the Agreement and
Plan of Reorganization requires the affirmative vote of Global Holdings
stockholders representing a majority of the total votes entitled to be cast
thereon, with all shares voting as a single class.
Under Maryland law, stockholders of a registered open-end investment
company such as Global Holdings are not entitled to demand the fair value of
their shares upon a transfer of assets and will be bound by the terms of the
Reorganization if approved at the Meeting. However, any stockholder of Global
Holdings may redeem his or her Global Holdings shares prior to the
Reorganization.
A quorum for purposes of the Meeting consists of a majority of the shares
entitled to vote at the Meeting, present in person or by proxy. If, by the time
scheduled for the Meeting, a quorum of Global Holdings' stockholders is not
present or if a quorum is present but sufficient votes in favor of the Agreement
and Plan of Reorganization are not received from the stockholders of Global
Holdings, the persons named as proxies may propose one or more adjournments of
the Meeting to permit further solicitation of proxies from stockholders. Any
such adjournment will require the affirmative vote of a majority of the shares
of Global Holdings present in person or by proxy and entitled to vote at the
session of the Meeting to be adjourned. The persons named as proxies will vote
in favor of any such adjournment if they determine that adjournment and
additional solicitation are reasonable and in the interests of the stockholders
of Global Holdings.
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<PAGE> 34
ADDITIONAL INFORMATION
The expenses of preparation, printing and mailing of the enclosed form of
proxy, the accompanying Notice and this Proxy Statement and Prospectus will be
borne by Global Growth Fund and Global Holdings pro rata according to the
aggregate net assets of each Fund's portfolio on the date of Reorganization.
Such expenses are currently estimated to be $330,000.
Global Holdings will reimburse banks, brokers and others for their
reasonable expenses in forwarding proxy solicitation materials to the beneficial
owners of shares of Global Holdings and will reimburse certain persons that
Global Holdings may employ for their reasonable expenses in assisting in the
solicitation of proxies from such beneficial owners of shares of Global
Holdings.
In order to obtain the necessary quorum at the Meeting, supplementary
solicitation may be made by mail, telephone, telegraph or personal interview by
officers of Global Holdings. Global Holdings has retained D.F. King & Co., Inc.,
77 Water Street, New York, New York, 10005, to aid in the solicitation of
proxies, at a cost to be borne by Global Holdings of approximately $15,000, plus
out-of-pocket expenses.
Broker-dealer firms, including Merrill Lynch, holding shares of Global
Holdings in "street name" for the benefit of their customers and clients will
request the instructions of such customers and clients on how to vote their
shares before the Meeting. Broker-dealer firms, including Merrill Lynch, will
not be permitted to vote without instructions with respect to the approval of
the Agreement and Plan of Reorganization. Properly executed proxies that are
returned but that are marked "abstain" or with respect to which a broker-dealer
has received no instructions and therefore has declined to vote on the proposal
("broker non-votes") will be counted as present for the purposes of determining
a quorum. However, abstentions and broker non-votes will have the same effect as
a vote against approval of the Agreement and Plan of Reorganization.
This Proxy Statement and Prospectus does not contain all of the information
set forth in the registration statements and the exhibits relating thereto which
Global Holdings and Global Growth Fund, respectively, have filed with the
Commission under the Securities Act and the Investment Company Act, to which
reference is hereby made.
Global Holdings and Global Growth Fund both file reports and other
information with the Commission. Reports, proxy statements, registration
statements and other information filed by Global Holdings and Global Growth Fund
can be inspected and copied at the public reference facilities of the Commission
in Washington, D.C. and at the New York Regional Office of the Commission at
Seven World Trade Center, New York, New York 10048. Copies of such materials
also can be obtained by mail from the Public Reference Branch, Office of
Consumer Affairs and Information Services, Securities and Exchange Commission,
Washington, D.C. 20549, at prescribed rates. The Commission maintains a web site
(http://www.sec.gov) that contains the Statement of Additional Information, the
Global Growth Fund Prospectus, the Global Holdings Prospectus, the Global Growth
Fund Statement, the Global Holdings Statement, other material incorporated by
reference and other information regarding the Funds.
LEGAL PROCEEDINGS
There are no material legal proceedings to which Global Holdings or Global
Growth Fund is a party.
LEGAL OPINIONS
Certain legal matters in connection with the Reorganization will be passed
upon for Global Holdings and Global Growth Fund by Brown & Wood LLP, One World
Trade Center, New York, New York 10048.
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<PAGE> 35
EXPERTS
The financial highlights of Global Holdings included in this Proxy
Statement and Prospectus have been so included in reliance on the report of
Deloitte & Touche LLP, independent auditors, given on their authority as experts
in auditing and accounting. The principal business address of Deloitte & Touche
LLP is 117 Campus Drive, Princeton, New Jersey 08540. The independent auditors
for Global Growth Fund are Ernst & Young LLP. Ernst & Young LLP will serve as
the independent auditors for the Combined Fund after the Reorganization. The
principal business address of Ernst & Young LLP is P.O. Box 5321, 202 Carnegie
Center, Princeton, New Jersey 08543-5321.
STOCKHOLDER PROPOSALS
A stockholder proposal intended to be presented at any subsequent meeting
of stockholders of Global Holdings must be received by Global Holdings in a
reasonable time before Global Holdings begins to print and mail the proxy
solicitation materials to be utilized in connection with such meeting in order
to be considered in Global Holdings' proxy statement and form of proxy relating
to the meeting.
By Order of the Board of Directors,
Philip M. Mandel
Secretary, Merrill Lynch Global
Holdings, Inc.
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<PAGE> 36
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made as of
the 21st day of September, 1998, by and between Merrill Lynch Global Growth
Fund, Inc., a Maryland corporation ("Global Growth"), and Merrill Lynch Global
Holdings, Inc., a Maryland corporation ("Global Holdings").
PLAN OF REORGANIZATION
The reorganization will comprise the acquisition by Global Growth of
substantially all of the assets, and the assumption of substantially all of the
liabilities, of Global Holdings in exchange solely for an equal aggregate value
of newly issued shares of Global Growth's common stock, with a par value of $.10
per share, and the subsequent distribution of Corresponding Shares (defined
below) of Global Growth to the stockholders of Global Holdings in exchange for
their shares of common stock of Global Holdings, each with a par value of $.10
per share, in liquidation of Global Holdings, all upon and subject to the terms
hereinafter set forth (the "Reorganization").
In the course of the Reorganization, shares of Global Growth will be
distributed to Global Holdings stockholders as follows: each holder of Global
Holdings shares will be entitled to receive that class of shares of Global
Growth having the same letter designation (e.g., Class A, Class B, Class C or
Class D), and the same distribution fees, account maintenance fees and sales
charges (including contingent deferred sales charges), if any ("Corresponding
Shares"), as the shares of Global Holdings owned by such stockholder on the
Exchange Date (as defined in Section 7 of this Agreement). The aggregate net
asset value of the Corresponding Shares of Global Growth to be received by each
stockholder of Global Holdings will equal the aggregate net asset value of the
Global Holdings shares owned by such stockholder on the Exchange Date. In
consideration therefor, on the Exchange Date, Global Growth shall acquire
substantially all of Global Holdings' assets and assume substantially all of
Global Holdings' obligations and liabilities then existing, whether absolute,
accrued, contingent or otherwise. It is intended that the Reorganization
described in this Plan shall be a reorganization within the meaning of Section
368(a)(1)(C) of the Internal Revenue Code of 1986, as amended (the "Code"), and
any successor provision.
As promptly as practicable after the consummation of the Reorganization,
Global Holdings shall be dissolved in accordance with the laws of the State of
Maryland and will terminate its registration under the Investment Company Act of
1940, as amended (the "1940 Act").
AGREEMENT
In order to consummate the Reorganization and in consideration of the
promises and the covenants and agreements hereinafter set forth, and intending
to be legally bound, Global Growth and Global Holdings hereby agree as follows:
1. Representations and Warranties of Global Growth.
Global Growth represents and warrants to, and agrees with, Global Holdings
that:
(a) Global Growth is a corporation duly organized, validly existing and in
good standing in conformity with the laws of the State of Maryland, and has the
power to own all of its assets and to carry out this Agreement. Global Growth
has all necessary Federal, state and local authorizations to carry on its
business as it is now being conducted and to carry out this Agreement.
(b) Global Growth is duly registered under the 1940 Act as a diversified,
open-end management investment company (File No. 811-8327), and such
registration has not been revoked or rescinded and is in full force and effect.
Global Growth intends to elect and qualify for the special tax treatment
afforded regulated investment companies ("RICs") under Sections 851-855 of the
Code at all times since its inception and intends to continue to so qualify
until consummation of the Reorganization and thereafter.
<PAGE> 37
(c) Global Holdings has been furnished with an unaudited statement of
assets and liabilities and an unaudited schedule of investments of Global
Growth, each as of February 28, 1998. An unaudited statement of assets and
liabilities of Global Growth and an unaudited schedule of investments of Global
Growth, each as of the Valuation Time, will be furnished to Global Holdings at
or prior to the Exchange Date for the purpose of determining the number of
shares of Global Growth to be issued pursuant to Section 4 of this Agreement;
and each will fairly present the financial position of Global Growth as of the
Valuation Time in conformity with generally accepted accounting principles
applied on a consistent basis.
(d) Global Holdings has been furnished with Global Growth's Semi-Annual
Report to Stockholders for the six months ended February 28, 1998, and the
unaudited financial statements appearing therein fairly present the financial
position of Global Growth as of the respective dates indicated in conformity
with generally accepted accounting principles.
(e) Global Holdings has been furnished with the prospectus and statement of
additional information of Global Growth, each dated March 6, 1998, and said
prospectus and statement of additional information do not contain any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
(f) Global Growth has full power and authority to enter into and perform
its obligations under this Agreement. The execution, delivery and performance of
this Agreement has been duly authorized by all necessary action of its Board of
Directors, and this Agreement constitutes a valid and binding contract
enforceable in accordance with its terms, subject to the effects of bankruptcy,
insolvency, moratorium, fraudulent conveyance and similar laws relating to or
affecting creditors' rights generally and court decisions with respect thereto.
(g) There are no material legal, administrative or other proceedings
pending or, to the knowledge of Global Growth, threatened against it which
assert liability on the part of Global Growth or which materially affect its
financial condition or its ability to consummate the Reorganization. Global
Growth is not charged with or, to the best of its knowledge, threatened with any
violation or investigation of any possible violation of any provisions of any
Federal, state or local law or regulation or administrative ruling relating to
any aspect of its business.
(h) Global Growth is not a party to or obligated under any provision of its
Articles of Incorporation, or its by-laws, or any contract or other commitment
or obligation, and is not subject to any order or decree which would be violated
by its execution of or performance under this Agreement.
(i) There are no material contracts outstanding to which Global Growth is a
party that have not been disclosed in the N-14 Registration Statement (as
defined in subsection (l) below) or will not otherwise be disclosed to Global
Holdings prior to the Valuation Time.
(j) Global Growth has no known liabilities of a material amount, contingent
or otherwise, other than those shown on its statements of assets and liabilities
referred to above, those incurred in the ordinary course of its business as an
investment company since February 28, 1998; and those incurred in connection
with the Reorganization. As of the Valuation Time, Global Growth will advise
Global Holdings in writing of all known liabilities, contingent or otherwise,
whether or not incurred in the ordinary course of business, existing or accrued
as of such time.
(k) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by Global Growth of the
Reorganization, except such as may be required under the Securities Act of 1933,
as amended (the "1933 Act"), the Securities Exchange Act of 1934, as amended
(the "1934 Act") and the 1940 Act or state securities laws (which term as used
herein shall include the laws of the District of Columbia and Puerto Rico).
(l) The registration statement filed by Global Growth on Form N-14 relating
to the shares of Global Growth to be issued pursuant to this Agreement which
includes the proxy statement of Global Holdings and the prospectus of Global
Growth with respect to the transaction contemplated herein, and any supplement
or amendment thereto or to the documents therein (as amended, the "N-14
Registration Statement"), on its
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effective date, at the time of the stockholders' meeting referred to in Section
6(a) of this Agreement and at the Exchange Date, insofar as it relates to Global
Growth (i) complied or will comply in all material respects with the provisions
of the 1933 Act, the 1934 Act and the 1940 Act and the rules and regulations
thereunder and (ii) did not or will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading; and the prospectus
included therein did not or will not contain any untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided, however, that the representations and warranties in this
subsection only shall apply to statements in or omissions from the N-14
Registration Statement made in reliance upon and in conformity with information
furnished by Global Growth for use in the N-14 Registration Statement as
provided in Section 6(e) of this Agreement.
(m) Global Growth is authorized to issue 600,000,000 shares of common
stock, par value $.10 per share, divided into four classes, designated Class A,
Class B, Class C and Class D Common Stock; Class A, Class C and Class D each
consists of 100,000,000 shares and Class B consists of 300,000,000 shares; each
outstanding share is fully paid and nonassessable and has full voting rights.
(n) Global Growth shares to be issued to Global Holdings pursuant to this
Agreement will have been duly authorized and, when issued and delivered pursuant
to this Agreement, will be legally and validly issued and will be fully paid and
nonassessable and will have full voting rights, and no stockholder of Global
Growth will have any preemptive right of subscription or purchase in respect
thereof.
(o) At or prior to the Exchange Date, Global Growth shares to be
transferred to Global Holdings for distribution to the stockholders of Global
Holdings on the Exchange Date will be duly qualified for offering to the public
in all states of the United States in which the sale of shares of Global Growth
presently are qualified, and there are a sufficient number of such shares
registered under the 1933 Act and, as may be necessary, with each pertinent
state securities commission to permit the transfers contemplated by this
Agreement to be consummated.
(p) At or prior to the Exchange Date, Global Growth will have obtained any
and all regulatory, Director and stockholder approvals necessary to issue the
shares of Global Growth to Global Holdings.
2. Representations and Warranties of Global Holdings.
Global Holdings represents and warrants to, and agrees with, Global Growth
that:
(a) Global Holdings is a corporation duly organized, validly existing and
in good standing in conformity with the laws of the State of Maryland, and has
the power to own all of its assets and to carry out this Agreement. Global
Holdings has all necessary Federal, state and local authorizations to carry on
its business as it is now being conducted and to carry out this Agreement.
(b) Global Holdings is duly registered under the 1940 Act as a diversified,
open-end management investment company (File No. 811-4351), and such
registration has not been revoked or rescinded and is in full force and effect.
Global Holdings has elected and qualified for the special tax treatment afforded
RICs under Sections 851-855 of the Code at all times since its inception, and
intends to continue to so qualify for its taxable year ending upon liquidation.
(c) As used in this Agreement, the term "Investments" shall mean (i) the
investments of Global Holdings shown on the schedule of its investments as of
the Valuation Time (as defined in Section 3(c) of this Agreement) furnished to
Global Growth, with such additions thereto and deletions therefrom as may have
arisen in the course of Global Holdings' business up to the Valuation Time; and
(ii) all other assets owned by Global Holdings or liabilities incurred as of the
Valuation Time.
(d) Global Holdings has full power and authority to enter into and perform
its obligations under this Agreement. The execution, delivery and performance of
this Agreement has been duly authorized by all necessary action of its Board of
Directors and this Agreement constitutes a valid and binding contract
enforceable in accordance with its terms, subject to the effects of bankruptcy,
insolvency, moratorium,
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<PAGE> 39
fraudulent conveyance and similar laws relating to or affecting creditors'
rights generally and court decisions with respect thereto.
(e) Global Growth has been furnished with a statement of assets and
liabilities and a schedule of investments of Global Holdings, each as of
November 30, 1997, said financial statements having been examined by Deloitte &
Touche LLP, independent public accountants. An unaudited statement of assets and
liabilities of Global Holdings and an unaudited schedule of investments of
Global Holdings, each as of the Valuation Time, will be furnished to Global
Growth at or prior to the Exchange Date for the purpose of determining the
number of shares of Global Growth to be issued pursuant to Section 4 of this
Agreement; and each will fairly present the financial position of Global
Holdings as of the Valuation Time in conformity with generally accepted
accounting principles applied on a consistent basis.
(f) Global Growth has been furnished with Global Holdings' Annual Report to
Stockholders for the year ended November 30, 1997 and the Semi-Annual Report to
Stockholders for the six months ended May 31, 1998, and the financial statements
appearing therein fairly present the financial position of Global Holdings as of
the dates indicated, in conformity with generally accepted accounting principles
applied on a consistent basis.
(g) Global Growth has been furnished with the prospectus and statement of
additional information of Global Holdings, each dated March 5, 1998, and said
prospectus and statement of additional information do not contain any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
(h) There are no material legal, administrative or other proceedings
pending or, to the knowledge of Global Holdings, threatened against it which
assert liability on the part of Global Holdings or which materially affect its
financial condition or its ability to consummate the Reorganization. Global
Holdings is not charged with or, to the best of its knowledge, threatened with
any violation or investigation of any possible violation of any provisions of
any Federal, state or local law or regulation or administrative ruling relating
to any aspect of its business.
(i) There are no material contracts outstanding to which Global Holdings is
a party that have not been disclosed in the N-14 Registration Statement or will
not otherwise be disclosed to Global Growth prior to the Valuation Time.
(j) Global Holdings is not a party to or obligated under any provision of
its Articles of Incorporation, as amended, or its by-laws, as amended, or any
contract or other commitment or obligation, and is not subject to any order or
decree which would be violated by its execution of or performance under this
Agreement.
(k) Global Holdings has no known liabilities of a material amount,
contingent or otherwise, other than those shown on its statements of assets and
liabilities referred to above, those incurred in the ordinary course of its
business as an investment company since May 31, 1998 and those incurred in
connection with the Reorganization. As of the Valuation Time, Global Holdings
will advise Global Growth in writing of all known liabilities, contingent or
otherwise, whether or not incurred in the ordinary course of business, existing
or accrued as of such time.
(l) Global Holdings has filed, or has obtained extensions to file, all
Federal, state and local tax returns which are required to be filed by it, and
has paid or has obtained extensions to pay, all Federal, state and local taxes
shown on said returns to be due and owing and all assessments received by it, up
to and including the taxable year in which the Exchange Date occurs. All tax
liabilities of Global Holdings have been adequately provided for on its books,
and no tax deficiency or liability of Global Holdings has been asserted and no
question with respect thereto has been raised by the Internal Revenue Service or
by any state or local tax authority for taxes in excess of those already paid,
up to and including the taxable year in which the Exchange Date occurs.
(m) At both the Valuation Time and the Exchange Date, Global Holdings will
have full right, power and authority to sell, assign, transfer and deliver the
Investments. At the Exchange Date, subject only to the delivery of the
Investments as contemplated by this Agreement, Global Holdings will have good
and
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marketable title to all of the Investments, and Global Growth will acquire all
of the Investments free and clear of any encumbrances, liens or security
interests and without any restrictions upon the transfer thereof (except those
imposed by the Federal or state securities laws and those imperfections of title
or encumbrances as do not materially detract from the value or use of the
Investments or materially affect title thereto).
(n) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by Global Holdings of
the Reorganization, except such as may be required under the 1933 Act, the 1934
Act, the 1940 Act or state securities laws.
(o) The N-14 Registration Statement, on its effective date, at the time of
the stockholders' meeting referred to in Section 6(a) of this Agreement and on
the Exchange Date, insofar as it relates to Global Holdings (i) complied or will
comply in all material respects with the provisions of the 1933 Act, the 1934
Act and the 1940 Act and the rules and regulations thereunder, and (ii) did not
or will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading; and the prospectus included therein did not or will not
contain any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that the
representations and warranties in this subsection shall apply only to statements
in or omissions from the N-14 Registration Statement made in reliance upon and
in conformity with information furnished by Global Holdings for use in the N-14
Registration Statement as provided in Section 6(e) of this Agreement.
(p) Global Holdings is authorized to issue 400,000,000 shares of common
stock, par value $.10 per share, divided into four classes, designated Class A,
Class B, Class C and Class D Common Stock, each of which consists of 100,000,000
shares, each outstanding share of which is fully paid and nonassessable and has
full voting rights.
(q) The books and records of Global Holdings made available to Global
Growth and/or its counsel are substantially true and correct and contain no
material misstatements or omissions with respect to the operations of Global
Holdings.
(r) Global Holdings will not sell or otherwise dispose of any of the shares
of Global Growth to be received in the Reorganization, except in distribution to
the stockholders of Global Holdings.
3. The Reorganization.
(a) Subject to receiving the requisite approval of the stockholders of
Global Holdings, and to the other terms and conditions contained herein, Global
Holdings agrees to convey, transfer and deliver to Global Growth and Global
Growth agrees to acquire from Global Holdings, on the Exchange Date, all of the
Investments (including interest accrued as of the Valuation Time on debt
instruments) of Global Holdings, and assume substantially all of the liabilities
of Global Holdings, in exchange solely for that number of shares of Global
Growth provided in Section 4 of this Agreement. Pursuant to this Agreement, as
soon as practicable Global Holdings will distribute all shares of Global Growth
received by it to its stockholders in exchange for their corresponding Global
Holdings shares. Such distribution shall be accomplished by the opening of
stockholder accounts on the stock ledger records of Global Growth in the amounts
due the stockholders of Global Holdings based on their respective holdings in
Global Holdings as of the Valuation Time.
(b) Global Holdings will pay or cause to be paid to Global Growth any
interest it receives on or after the Exchange Date with respect to the
Investments transferred to Global Holdings hereunder.
(c) The Valuation Time shall be 4:00 P.M., New York time, on February 19,
1999, or such earlier or later day and time as may be mutually agreed upon in
writing (the "Valuation Time").
(d) Global Growth will acquire substantially all of the assets of, and
assume substantially all of the known liabilities of, Global Holdings, except
that recourse for such liabilities will be limited to the net assets of Global
Holdings acquired by Global Growth. The known liabilities of Global Holdings as
of the Valuation Time shall be confirmed in writing to Global Growth by Global
Holdings pursuant to Section 2(k) of this Agreement.
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(e) Global Growth and Global Holdings will jointly file Articles of
Transfer with the State Department of Assessments and Taxation of Maryland and
any other such instrument as may be required by the State of Maryland to effect
the transfer of the Investments of Global Holdings to Global Growth.
(f) Global Holdings will be dissolved following the Exchange Date by filing
Articles of Dissolution with the State Department of Assessments and Taxation of
Maryland.
4. Issuance and Valuation of Shares of Global Growth in the Reorganization.
Full shares of Global Growth, and to the extent necessary, fractional
shares of Global Growth, of an aggregate net asset value equal to the net asset
value of the assets of Global Holdings acquired, determined as hereinafter
provided, reduced by the amount of liabilities of Global Holdings assumed by
Global Growth, shall be issued by Global Growth in exchange for such assets of
Global Holdings. The net asset value of Global Holdings and Global Growth shall
be determined in accordance with the procedures described in the prospectus of
Global Growth as of the Valuation Time. Such valuation and determination shall
be made by Global Growth in cooperation with Global Holdings. Global Growth
shall issue its Class A, Class B, Class C and Class D shares to Global Holdings
in certificates or share deposit receipts (one in respect of each class)
registered in the name of Global Holdings. Global Holdings shall distribute
Corresponding Shares of Global Growth to its stockholders by redelivering such
certificates to Financial Data Services, Inc.
5. Payment of Expenses.
(a) With respect to expenses incurred in connection with the
Reorganization, (i) Global Growth shall pay all expenses incurred which are
attributable solely to Global Growth and the conduct of its business, (ii)
Global Holdings shall pay all expenses incurred which are attributable solely to
Global Holdings and the conduct of its business and (iii) Global Growth and
Global Holdings shall pay, subsequent to the Exchange Date and pro rata
according to each Fund's net assets on the Exchange Date, all expenses incurred
in connection with the Reorganization, including, but not limited to, all costs
related to the preparation and distribution of the N-14 Registration Statement.
Such fees and expenses shall include the cost of preparing and filing a ruling
request with the Internal Revenue Service, legal and accounting fees, printing
costs, filing fees, portfolio transfer taxes (if any) and any similar expenses
incurred in connection with the Reorganization.
(b) If for any reason the Reorganization is not consummated, no party shall
be liable to any other party for any damages resulting therefrom, including,
without limitation, consequential damages.
6. Covenants of Global Growth and Global Holdings.
(a) Global Holdings agrees to call a special meeting of the stockholders of
Global Holdings as soon as is practicable after the effective date of the N-14
Registration Statement for the purpose of considering the Reorganization as
described in this Agreement, and it shall be a condition to the obligations of
each of the parties hereto that the holders of a majority of the shares of
Global Holdings issued and outstanding and entitled to vote thereon, shall have
approved this Agreement at such a meeting at or prior to the Valuation Time.
(b) Global Growth and Global Holdings each covenants to operate the
business of Global Growth and Global Holdings, respectively, as presently
conducted between the date hereof and the Exchange Date.
(c) Global Holdings agrees that following the consummation of the
Reorganization, it will dissolve in accordance with the laws of the State of
Maryland and any other applicable law, it will not make any distributions of any
Global Growth shares other than to the stockholders of Global Holdings and
without first paying or adequately providing for the payment of all of Global
Holdings' liabilities not assumed by Global Growth, if any, and on and after the
Exchange Date it shall not conduct any business except in connection with its
dissolution.
(d) Global Holdings undertakes that if the Reorganization is consummated,
it will file an application pursuant to Section 8(f) of the 1940 Act for an
order declaring that Global Holdings has ceased to be a registered investment
company.
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(e) Global Growth will file the N-14 Registration Statement with the
Securities and Exchange Commission (the "Commission") and will use its best
efforts to provide that the N-14 Registration Statement becomes effective as
promptly as practicable. Global Growth and Global Holdings agree to cooperate
fully with each other, and each will furnish to the other the information
relating to itself to be set forth in the N-14 Registration Statement as
required by the 1933 Act, the 1934 Act and the 1940 Act, and the rules and
regulations thereunder and the state securities laws.
(f) Global Growth has no plan or intention to sell or otherwise dispose of
the assets of Global Holdings to be acquired in the Reorganization, except for
dispositions made in the ordinary course of business.
(g) Global Holdings and Global Growth each agrees that by the Exchange Date
all of its Federal and other tax returns and reports required to be filed on or
before such date shall have been filed and all taxes shown as due on said
returns either have been paid or adequate liability reserves have been provided
for the payment of such taxes. In connection with this covenant, the funds agree
to cooperate with each other in filing any tax return, amended return or claim
for refund, determining a liability for taxes or a right to a refund of taxes or
participating in or conducting any audit or other proceeding in respect of
taxes. Global Growth agrees to retain for a period of ten (10) years following
the Exchange Date all returns, schedules and work papers and all material
records or other documents relating to tax matters of Global Holdings for its
taxable period first ending after the Exchange Date and for all prior taxable
periods. Any information obtained under this subsection shall be kept
confidential except as otherwise may be necessary in connection with the filing
of returns or claims for refund or in conducting an audit or other proceeding.
After the Exchange Date, Global Holdings shall prepare, or cause its agents to
prepare, any Federal, state or local tax returns, including any Forms 1099,
required to be filed by Global Holdings with respect to Global Holdings' final
taxable year ending with its complete liquidation and for any prior periods or
taxable years and further shall cause such tax returns and Forms 1099 to be duly
filed with the appropriate taxing authorities. Notwithstanding the
aforementioned provisions of this subsection, any expenses incurred by Global
Holdings (other than for payment of taxes) in connection with the preparation
and filing of said tax returns and Forms 1099 after the Exchange Date shall be
borne by Global Holdings to the extent such expenses have been accrued by Global
Holdings in the ordinary course without regard to the Reorganization; any excess
expenses shall be borne by Merrill Lynch Asset Management, L.P. ("MLAM") at the
time such tax returns and Forms 1099 are prepared.
(h) Global Holdings agrees to mail to its stockholders of record entitled
to vote at the special meeting of stockholders at which action is to be
considered regarding this Agreement, in sufficient time to comply with
requirements as to notice thereof, a combined Proxy Statement and Prospectus
which complies in all material respects with the applicable provisions of
Section 14(a) of the 1934 Act and Section 20(a) of the 1940 Act, and the rules
and regulations, respectively, thereunder.
(i) Following the consummation of the Reorganization, Global Growth expects
to stay in existence and continue its business as a diversified, open-end
management investment company registered under the 1940 Act.
7. Exchange Date.
(a) Delivery of the assets of Global Holdings to be transferred, together
with any other Investments, and the Global Growth shares to be issued, shall be
made at the offices of Brown & Wood LLP, One World Trade Center, New York, New
York 10048, at 10:00 A.M. on the next full business day following the Valuation
Time, or at such other place, time and date agreed to by Global Holdings and
Global Growth, the date and time upon which such delivery is to take place being
referred to herein as the "Exchange Date." To the extent that any Investments,
for any reason, are not transferable on the Exchange Date, Global Holdings shall
cause such Investments to be transferred to Global Growth's account with State
Street Bank and Trust Company at the earliest practicable date thereafter.
(b) Global Holdings will deliver to Global Growth on the Exchange Date
confirmations or other adequate evidence as to the tax basis of each of the
Investments delivered to Global Growth hereunder, certified by Deloitte & Touche
LLP.
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(c) As soon as practicable after the close of business on the Exchange
Date, Global Holdings shall deliver to Global Growth a list of the names and
addresses of all of the stockholders of record of Global Holdings on the
Exchange Date and the number of shares of Global Holdings owned by each such
stockholder, certified to the best of their knowledge and belief by the transfer
agent for Global Holdings or by its President.
8. Global Holdings Conditions.
The obligations of Global Holdings hereunder shall be subject to the
following conditions:
(a) That this Agreement shall have been adopted, and the Reorganization
shall have been approved, by the affirmative vote of the holders of a majority
of the shares of Global Holdings, issued and outstanding and entitled to vote
thereon, voting together as a single class, and by the Board of Directors of
Global Growth; and that Global Growth shall have delivered to Global Holdings a
copy of the resolution approving this Agreement adopted by Global Growth's Board
of Directors, certified by the Secretary of Global Growth.
(b) That Global Growth shall have furnished to Global Holdings a statement
of Global Growth's assets and liabilities, with values determined as provided in
Section 4 of this Agreement, together with a schedule of its investments, all as
of the Valuation Time, certified on Global Growth's behalf by its President (or
any Vice President) and its Treasurer, and a certificate signed by Global
Growth's President (or any Vice President) and its Treasurer, dated as of the
Exchange Date, certifying that as of the Valuation Time and as of the Exchange
Date there has been no material adverse change in the financial position of
Global Growth since February 28, 1998, other than changes in its portfolio
securities since that date or changes in the market value of its portfolio
securities.
(c) That Global Growth shall have furnished to Global Holdings a
certificate signed by Global Growth's President (or any Vice President) and its
Treasurer, dated as of the Exchange Date, certifying that, as of the Valuation
Time and as of the Exchange Date all representations and warranties of Global
Growth made in this Agreement are true and correct in all material respects with
the same effect as if made at and as of such dates, and that Global Growth has
complied with all of the agreements and satisfied all of the conditions on its
part to be performed or satisfied at or prior to each of such dates.
(d) That there shall not be any material litigation pending with respect to
the matters contemplated by this Agreement.
(e) That Global Holdings shall have received an opinion of Brown & Wood
LLP, as counsel to both Global Growth and Global Holdings, in form and substance
satisfactory to Global Holdings and dated the Exchange Date, to the effect that
(i) each of Global Growth and Global Holdings is a corporation duly organized,
validly existing and in good standing in conformity with the laws of the State
of Maryland; (ii) the Corresponding Shares of Global Growth to be issued
pursuant to this Agreement are duly authorized and, upon delivery, will be
validly issued and outstanding and fully paid and nonassessable by Global
Growth, and no stockholder of Global Growth has any preemptive right to
subscription or purchase in respect thereof (pursuant to the Articles of
Incorporation or the by-laws of Global Growth or, to the best of such counsel's
knowledge, otherwise); (iii) this Agreement has been duly authorized, executed
and delivered by each of Global Growth and Global Holdings, and represents a
valid and binding contract, enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization or other
similar laws pertaining to the enforcement of creditors' rights generally and
court decisions with respect thereto; provided, such counsel shall express no
opinion with respect to the application of equitable principles in any
proceeding, whether at law or in equity; (iv) the execution and delivery of this
Agreement does not, and the consummation of the Reorganization will not, violate
any material provisions of the Articles of Incorporation, as amended, the
by-laws, as amended, or any agreement (known to such counsel) to which either
Global Growth or Global Holdings is a party or by which either Global Growth or
Global Holdings is bound, except insofar as the parties have agreed to amend
such provision as a condition precedent to the Reorganization or Maryland law;
(v) Global Holdings has the power to sell, assign, transfer and deliver the
assets transferred by it hereunder and, upon consummation of the Reorganization
in accordance with the terms of this Agreement, Global Holdings will have duly
transferred such assets and liabilities in accordance
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with this Agreement; (vi) to the best of such counsel's knowledge, no consent,
approval, authorization or order of any United States federal court, Maryland
state court or governmental authority is required for the consummation by Global
Growth and Global Holdings of the Reorganization, except such as have been
obtained under the 1933 Act, the 1934 Act and the 1940 Act and the published
rules and regulations of the Commission thereunder and under Maryland law and
such as may be required under state securities laws; (vii) the N-14 Registration
Statement has become effective under the 1933 Act, no stop order suspending the
effectiveness of the N-14 Registration Statement has been issued and no
proceedings for that purpose have been instituted or are pending or contemplated
under the 1933 Act, and the N-14 Registration Statement, and each amendment or
supplement thereto, as of their respective effective dates, appear on their face
to be appropriately responsive in all material respects to the requirements of
the 1933 Act, the 1934 Act and the 1940 Act and the published rules and
regulations of the Commission thereunder; (viii) the descriptions in the N-14
Registration Statement of statutes, legal and governmental proceedings and
contracts and other documents are accurate and fairly present the information
required to be shown; (ix) such counsel does not know of any statutes, legal or
governmental proceedings or contracts or other documents related to the
Reorganization of a character required to be described in the N-14 Registration
Statement which are not described therein or, if required to be filed, filed as
required; (x) neither Global Growth nor Global Holdings, to the knowledge of
such counsel, is required to qualify to do business as a foreign corporation in
any jurisdiction except as may be required by state securities laws, and except
where each has so qualified or the failure so to qualify would not have a
material adverse effect on Global Growth, Global Holdings or their respective
stockholders; (xi) such counsel does not have actual knowledge of any material
suit, action or legal or administrative proceeding pending or threatened against
Global Growth or Global Holdings, the unfavorable outcome of which would
materially and adversely affect Global Growth or Global Holdings; (xii) all
corporate actions required to be taken by Global Growth and Global Holdings to
authorize this Agreement and to effect the Reorganization have been duly
authorized by all necessary corporate actions on the part of Global Growth and
Global Holdings; and (xiii) such opinion is solely for the benefit of Global
Growth and Global Holdings and their Directors and officers. Such opinion also
shall state that (x) while such counsel cannot make any representation as to the
accuracy or completeness of statements of fact in the N-14 Registration
Statement or any amendment or supplement thereto, nothing has come to their
attention that would lead them to believe that, on the respective effective
dates of the N-14 Registration Statement and any amendment or supplement
thereto, (1) the N-14 Registration Statement or any amendment or supplement
thereto contained any untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading; and (2) the prospectus included in the N-14
Registration Statement contained any untrue statement of a material fact or
omitted to state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading; and
(y) such counsel does not express any opinion or belief as to the financial
statements or other financial or statistical data relating to Global Growth or
Global Holdings contained or incorporated by reference in the N-14 Registration
Statement. In giving the opinion set forth above, Brown & Wood LLP may state
that it is relying on certificates of officers of Global Growth and Global
Holdings with regard to matters of fact and certain certificates and written
statements of governmental officials with respect to the good standing of Global
Growth and Global Holdings.
(f) That Global Holdings shall have received a private letter ruling from
the Internal Revenue Service to the effect that for Federal income tax purposes
(i) the transfer of substantially all of the Investments of Global Holdings to
Global Growth in exchange solely for shares of Global Growth as provided in this
Agreement will constitute a reorganization within the meaning of Section
368(a)(1)(C) of the Code, and Global Holdings and Global Growth will each be
deemed to be a "party" to the Reorganization within the meaning of Section
368(b); (ii) in accordance with Section 361(a) of the Code, no gain or loss will
be recognized to Global Holdings as a result of the asset transfer solely in
exchange for Global Growth shares or on the distribution of the Global Growth
stock to Global Holdings stockholders under Section 361(c)(1); (iii) under
Section 1032 of the Code, no gain or loss will be recognized to Global Growth on
the receipt of assets of Global Holdings in exchange for Global Growth shares;
(iv) in accordance with Section 354(a)(1) of the Code, no gain or loss will be
recognized to the stockholders of Global Holdings on the receipt of
Corresponding Shares of Global Growth in exchange for their shares of Global
Holdings; (v) in accordance
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<PAGE> 45
with Section 362(b) of the Code, the tax basis of the Global Holdings assets in
the hands of Global Growth will be the same as the tax basis of such assets in
the hands of Global Holdings immediately prior to the consummation of the
Reorganization; (vi) in accordance with Section 358 of the Code, immediately
after the Reorganization, the tax basis of the Corresponding Shares of Global
Growth received by the stockholders of Global Holdings in the Reorganization
will be equal, in the aggregate, to the tax basis of the shares of Global
Holdings surrendered in exchange; (vii) in accordance with Section 1223 of the
Code, a stockholder's holding period for the Corresponding Shares of Global
Growth will be determined by including the period for which such stockholder
held the shares of Global Holdings exchanged therefor, provided, that such
Global Holdings shares were held as a capital asset; (viii) in accordance with
Section 1223 of the Code, Global Growth's holding period with respect to the
Global Holdings assets transferred will include the period for which such assets
were held by Global Holdings; and (ix) the taxable year of Global Holdings will
end on the effective date of the Reorganization and pursuant to Section 381(a)
of the Code and regulations thereunder, Global Growth will succeed to and take
into account certain tax attributes of Global Holdings, such as earnings and
profits, capital loss carryovers and method of accounting.
(g) That all proceedings taken by Global Growth and its counsel in
connection with the Reorganization and all documents incidental thereto shall be
satisfactory in form and substance to Global Holdings.
(h) That the N-14 Registration Statement shall have become effective under
the 1933 Act, and no stop order suspending such effectiveness shall have been
instituted or, to the knowledge of Global Growth, be contemplated by the
Commission.
(i) That Global Holdings shall have received from Ernst & Young LLP a
letter dated as of the effective date of the N-14 Registration Statement and a
similar letter dated within five days prior to the Exchange Date, in form and
substance satisfactory to Global Holdings, to the effect that (i) they are
independent public accountants with respect to Global Growth within the meaning
of the 1933 Act and the applicable published rules and regulations thereunder;
(ii) in their opinion, the financial statements and supplementary information of
Global Growth included or incorporated by reference in the N-14 Registration
Statement and reported on by them comply as to form in all material respects
with the applicable accounting requirements of the 1933 Act and the published
rules and regulations thereunder; and (iii) on the basis of limited procedures
agreed upon by Global Holdings and Global Growth and described in such letter
(but not an examination in accordance with generally accepted auditing
standards) consisting of a reading of any unaudited interim financial statements
and unaudited supplementary information of Global Growth included in the N-14
Registration Statement, and inquiries of certain officials of Global Growth
responsible for financial and accounting matters, nothing came to their
attention that caused them to believe that (a) such unaudited financial
statements and related unaudited supplementary information do not comply as to
form in all material respects with the applicable accounting requirements of the
1933 Act and the published rules and regulations thereunder, (b) such unaudited
financial statements are not fairly presented in conformity with generally
accepted accounting principles, applied on a basis substantially consistent with
that of the audited financial statements, or (c) such unaudited supplementary
information is not fairly stated in all material respects in relation to the
unaudited financial statements taken as a whole; and (iv) on the basis of
limited procedures agreed upon by Global Holdings and Global Growth and
described in such letter (but not an examination in accordance with generally
accepted auditing standards), the information relating to Global Growth
appearing in the N-14 Registration Statement, which information is expressed in
dollars (or percentages derived from such dollars) (with the exception of
performance comparisons, if any), if any, has been obtained from the accounting
records of Global Growth or from schedules prepared by officials of Global
Growth having responsibility for financial and reporting matters and such
information is in agreement with such records, schedules or computations made
therefrom.
(j) That the Commission shall not have issued an unfavorable advisory
report under Section 25(b) of the 1940 Act, nor instituted or threatened to
institute any proceeding seeking to enjoin consummation of the Reorganization
under Section 25(c) of the 1940 Act, and no other legal, administrative or other
proceeding shall be instituted or threatened which would materially affect the
financial condition of Global Growth or would prohibit the Reorganization.
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<PAGE> 46
(k) That Global Holdings shall have received from the Commission such
orders or interpretations as Brown & Wood LLP, as counsel to Global Holdings,
deems reasonably necessary or desirable under the 1933 Act and the 1940 Act in
connection with the Reorganization, provided, that such counsel shall have
requested such orders as promptly as practicable, and all such orders shall be
in full force and effect.
9. Global Growth Conditions.
The obligations of Global Growth hereunder shall be subject to the
following conditions:
(a) That this Agreement shall have been adopted, and the Reorganization
shall have been approved, by the Board of Directors of Global Holdings and by
the affirmative vote of the holders of a majority of the shares of common stock
of Global Holdings issued and outstanding and entitled to vote thereon, voting
together as a single class; and that Global Holdings shall have delivered to
Global Growth a copy of the resolution approving this Agreement adopted by
Global Holdings' Board of Directors, and a certificate setting forth the vote
Global Holdings stockholders obtained, each certified by the Secretary of Global
Holdings.
(b) That Global Holdings shall have furnished to Global Growth a statement
of Global Holdings' assets and liabilities, with values determined as provided
in Section 4 of this Agreement, together with a schedule of investments with
their respective dates of acquisition and tax costs, all as of the Valuation
Time, certified on Global Holdings' behalf by its President (or any Vice
President) and its Treasurer, and a certificate signed by Global Holdings'
President (or any Vice President) and its Treasurer, dated as of the Exchange
Date, certifying that as of the Valuation Time and as of the Exchange Date there
has been no material adverse change in the financial position of Global Holdings
since May 31, 1998, other than changes in the Investments since that date or
changes in the market value of the Investments.
(c) That Global Holdings shall have furnished to Global Growth a
certificate signed by Global Holdings' President (or any Vice President) and its
Treasurer, dated the Exchange Date, certifying that as of the Valuation Time and
as of the Exchange Date all representations and warranties of Global Holdings
made in this Agreement are true and correct in all material respects with the
same effect as if made at and as of such dates and Global Holdings has complied
with all of the agreements and satisfied all of the conditions on its part to be
performed or satisfied at or prior to such dates.
(d) That Global Holdings shall have delivered to Global Growth a letter
from Deloitte & Touche LLP, dated the Exchange Date, stating that such firm has
performed a limited review of the Federal, state and local income tax returns of
Global Holdings for the period ended November 30, 1997 (which returns originally
were prepared and filed by Global Holdings), and that based on such limited
review, nothing came to their attention which caused them to believe that such
returns did not properly reflect, in all material respects, the Federal, state
and local income taxes of Global Holdings for the period covered thereby; and
that for the period from December 1, 1997, to and including the Exchange Date
and for any taxable year of Global Holdings ending upon the liquidation of
Global Holdings, such firm has performed a limited review to ascertain the
amount of applicable Federal, state and local taxes, and has determined that
either such amount has been paid or reserves have been established for payment
of such taxes, this review to be based on unaudited financial data; and that
based on such limited review, nothing has come to their attention which caused
them to believe that the taxes paid or reserves set aside for payment of such
taxes were not adequate in all material respects for the satisfaction of
Federal, state and local taxes for the period from December 1, 1997, to and
including the Exchange Date and for any taxable year of Global Holdings ending
upon the liquidation of Global Holdings or that Global Holdings would not
continue to qualify as a regulated investment company for Federal income tax
purposes for the tax years in question.
(e) That there shall not be any material litigation pending with respect to
the matters contemplated by this Agreement.
(f) That Global Growth shall have received an opinion of Brown & Wood LLP,
as counsel to both Global Growth and Global Holdings, in form and substance
satisfactory to Global Growth and dated the Exchange Date, with respect to the
matters specified in Section 8(e) of this Agreement and such other matters as
Global Growth reasonably may deem necessary or desirable.
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<PAGE> 47
(g) That Global Growth shall have received a private letter ruling from the
Internal Revenue Service with respect to the matters specified in Section 8(f)
of this Agreement.
(h) That Global Growth shall have received from Deloitte & Touche LLP a
letter dated as of the effective date of the N-14 Registration Statement and a
similar letter dated within five days prior to the Exchange Date, in form and
substance satisfactory to Global Growth, to the effect that (i) they are
independent public accountants with respect to Global Holdings within the
meaning of the 1933 Act and the applicable published rules and regulations
thereunder; (ii) in their opinion, the financial statements and supplementary
information of Global Holdings included or incorporated by reference in the N-14
Registration Statement and reported on by them comply as to form in all material
respects with the applicable accounting requirements of the 1933 Act and the
published rules and regulations thereunder; (iii) on the basis of limited
procedures agreed upon by Global Holdings and Global Growth and described in
such letter (but not an examination in accordance with generally accepted
auditing standards) consisting of a reading of any unaudited interim financial
statements and unaudited supplementary information of Global Holdings included
in the N-14 Registration Statement, and inquiries of certain officials of Global
Holdings responsible for financial and accounting matters, nothing came to their
attention that caused them to believe that (a) such unaudited financial
statements and related unaudited supplementary information do not comply as to
form in all material respects with the applicable accounting requirements of the
1933 Act and the published rules and regulations thereunder, (b) such unaudited
financial statements are not fairly presented in conformity with generally
accepted accounting principles, applied on a basis substantially consistent with
that of the audited financial statements, or (c) such unaudited supplementary
information is not fairly stated in all material respects in relation to the
unaudited financial statements taken as a whole; and (iv) on the basis of
limited procedures agreed upon by Global Growth and Global Holdings and
described in such letter (but not an examination in accordance with generally
accepted auditing standards), the information relating to Global Holdings
appearing in the N-14 Registration Statement, which information is expressed in
dollars (or percentages derived from such dollars) (with the exception of
performance comparisons, if any), if any, has been obtained from the accounting
records of Global Holdings or from schedules prepared by officials of Global
Holdings having responsibility for financial and reporting matters and such
information is in agreement with such records, schedules or computations made
therefrom.
(i) That the Investments to be transferred to Global Growth shall not
include any assets or liabilities which Global Growth, by reason of charter
limitations or otherwise, may not properly acquire or assume.
(j) That the N-14 Registration Statement shall have become effective under
the 1933 Act and no stop order suspending such effectiveness shall have been
instituted or, to the knowledge of Global Holdings, be contemplated by the
Commission.
(k) That the Commission shall not have issued an unfavorable advisory
report under Section 25(b) of the 1940 Act, nor instituted or threatened to
institute any proceeding seeking to enjoin consummation of the Reorganization
under Section 25(c) of the 1940 Act, and no other legal, administrative or other
proceeding shall be instituted or threatened which would materially affect the
financial condition of Global Holdings or would prohibit the Reorganization.
(l) That Global Growth shall have received from the Commission such orders
or interpretations as Brown & Wood LLP, as counsel to Global Growth, deems
reasonably necessary or desirable under the 1933 Act and the 1940 Act in
connection with the Reorganization, provided, that such counsel shall have
requested such orders as promptly as practicable, and all such orders shall be
in full force and effect.
(m) That all proceedings taken by Global Holdings and its counsel in
connection with the Reorganization and all documents incidental thereto shall be
satisfactory in form and substance to Global Growth.
(n) That prior to the Exchange Date, Global Holdings shall have declared a
dividend or dividends which, together with all such previous dividends, shall
have the effect of distributing to its stockholders all of its investment
company taxable income for the period from December 1, 1997 to and including the
Exchange Date, if any (computed without regard to any deduction for dividends
paid), and all of its net capital gain, if any, realized for the period from
December 1, 1997 to and including the Exchange Date.
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<PAGE> 48
10. Termination, Postponement and Waivers.
(a) Notwithstanding anything contained in this Agreement to the contrary,
this Agreement may be terminated and the Reorganization abandoned at any time
(whether before or after adoption thereof by the stockholders of Global
Holdings) prior to the Exchange Date, or the Exchange Date may be postponed, (i)
by mutual consent of the Boards of Directors of Global Holdings and Global
Growth; (ii) by the Board of Directors of Global Holdings if any condition of
Global Holdings' obligations set forth in Section 8 of this Agreement has not
been fulfilled or waived by such Board; or (iii) by the Board of Directors of
Global Growth if any condition of Global Growth's obligations set forth in
Section 9 of this Agreement has not been fulfilled or waived by such Board.
(b) If the transactions contemplated by this Agreement have not been
consummated by July 1, 1999, this Agreement automatically shall terminate on
that date, unless a later date is mutually agreed to by the Boards of Directors
of Global Holdings and Global Growth.
(c) In the event of termination of this Agreement pursuant to the
provisions hereof, the same shall become void and have no further effect, and
there shall not be any liability on the part of either Global Holdings or Global
Growth or persons who are their directors, trustees, officers, agents or
stockholders in respect of this Agreement.
(d) At any time prior to the Exchange Date, any of the terms or conditions
of this Agreement may be waived by the Board of Directors of either Global
Holdings or Global Growth, respectively (whichever is entitled to the benefit
thereof), if, in the judgment of such Board after consultation with its counsel,
such action or waiver will not have a material adverse effect on the benefits
intended under this Agreement to the stockholders of their respective fund, on
behalf of which such action is taken. In addition, the Boards of Directors of
Global Holdings and Global Growth have delegated to MLAM the ability to make
non-material changes to the transaction if it deems it to be in the best
interests of Global Holdings and Global Growth to do so.
(e) The respective representations and warranties contained in Sections 1
and 2 of this Agreement shall expire with, and be terminated by, the
consummation of the Reorganization, and neither Global Holdings nor Global
Growth nor any of their officers, directors or trustees, agents or stockholders
shall have any liability with respect to such representations or warranties
after the Exchange Date. This provision shall not protect any officer, director
or trustee, agent or stockholder of Global Holdings or Global Growth against any
liability to the entity for which that officer, director or trustee, agent or
stockholder so acts or to its stockholders, to which that officer, director or
trustee, agent or stockholder otherwise would be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties in
the conduct of such office.
(f) If any order or orders of the Commission with respect to this Agreement
shall be issued prior to the Exchange Date and shall impose any terms or
conditions which are determined by action of the Boards of Directors of Global
Holdings and Global Growth to be acceptable, such terms and conditions shall be
binding as if a part of this Agreement without further vote or approval of the
stockholders of Global Holdings unless such terms and conditions shall result in
a change in the method of computing the number of shares of Global Growth to be
issued to Global Holdings in which event, unless such terms and conditions shall
have been included in the proxy solicitation materials furnished to the
stockholders of Global Holdings prior to the meeting at which the Reorganization
shall have been approved, this Agreement shall not be consummated and shall
terminate unless Global Holdings promptly shall call a special meeting of
stockholders at which such conditions so imposed shall be submitted for
approval.
11. Indemnification.
(a) Global Holdings hereby agrees to indemnify and hold Global Growth
harmless from all loss, liability and expense (including reasonable counsel fees
and expenses in connection with the contest of any claim) which Global Growth
may incur or sustain by reason of the fact that (i) Global Growth shall be
required to pay any corporate obligation of Global Holdings, whether consisting
of tax deficiencies or otherwise, based upon a claim or claims against Global
Holdings which were omitted or not fairly reflected in the financial statements
to be delivered to Global Growth in connection with the Reorganization; (ii) any
representations
I-13
<PAGE> 49
or warranties made by Global Holdings in this Agreement should prove to be false
or erroneous in any material respect; (iii) any covenant of Global Holdings has
been breached in any material respect; or (iv) any claim is made alleging that
(a) the N-14 Registration Statement included any untrue statement of a material
fact or omitted to state any material fact required to be stated therein or
necessary to make the statements therein not misleading or (b) the Proxy
Statement and Prospectus delivered to the stockholders of Global Holdings and
forming a part of the N-14 Registration Statement included any untrue statement
of a material fact or omitted to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, except insofar as such claim is based on written
information furnished to Global Holdings by Global Growth.
(b) Global Growth hereby agrees to indemnify and hold Global Holdings
harmless from all loss, liability and expenses (including reasonable counsel
fees and expenses in connection with the contest of any claim) which Global
Holdings may incur or sustain by reason of the fact that (i) any representations
or warranties made by Global Growth in this Agreement should prove false or
erroneous in any material respect, (ii) any covenant of Global Growth has been
breached in any material respect, or (iii) any claim is made alleging that (a)
the N-14 Registration Statement included any untrue statement of a material fact
or omitted to state any material fact required to be stated therein or necessary
to make the statements therein, not misleading or (b) the Proxy Statement and
Prospectus delivered to stockholders of Global Holdings and forming a part of
the N-14 Registration Statement included any untrue statement of a material fact
or omitted to state any material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading,
except insofar as such claim is based on written information furnished to Global
Growth by Global Holdings.
(c) In the event that any claim is made against Global Growth in respect of
which indemnity may be sought by Global Growth from Global Holdings under
Section 11(a) of this Agreement, or in the event that any claim is made against
Global Holdings in respect of which indemnity may be sought by Global Holdings
from Global Growth under Section 11(b) of this Agreement, then the party seeking
indemnification (the "Indemnified Party"), with reasonable promptness and before
payment of such claim, shall give written notice of such claim to the other
party (the "Indemnifying Party"). If no objection as to the validity of the
claim is made in writing to the Indemnified Party by the Indemnifying Party
within thirty (30) days after the giving of notice hereunder, then the
Indemnified Party may pay such claim and shall be entitled to reimbursement
therefor, pursuant to this Agreement. If, prior to the termination of such
thirty-day period, objection in writing as to the validity of such claim is made
to the Indemnified Party, the Indemnified Party shall withhold payment thereof
until the validity of such claim is established (i) to the satisfaction of the
Indemnifying Party, or (ii) by a final determination of a court of competent
jurisdiction, whereupon the Indemnified Party may pay such claim and shall be
entitled to reimbursement thereof, pursuant to this Agreement, or (iii) with
respect to any tax claims, within seven (7) calendar days following the earlier
of (A) an agreement between Global Holdings and Global Growth that an indemnity
amount is payable, (B) an assessment of a tax by a taxing authority, or (C) a
"determination" as defined in Section 1313(a) of the Code. For purposes of this
Section 11, the term "assessment" shall have the same meaning as used in Chapter
63 of the Code and Treasury Regulations thereunder, or any comparable provision
under the laws of the appropriate taxing authority. In the event of any
objection by the Indemnifying Party, the Indemnifying Party promptly shall
investigate the claim, and if it is not satisfied with the validity thereof, the
Indemnifying Party shall conduct the defense against such claim. All costs and
expenses incurred by the Indemnifying Party in connection with such
investigation and defense of such claim shall be borne by it. These
indemnification provisions are in addition to, and not in limitation of, any
other rights the parties may have under applicable law.
12. Other Matters.
(a) Pursuant to Rule 145 under the 1933 Act, and in connection with the
issuance of any shares to any person who at the time of the Reorganization is,
to its knowledge, an affiliate of a party to the Reorganization
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<PAGE> 50
pursuant to Rule 145(c), Global Growth will cause to be affixed upon the
certificate(s) issued to such person (if any) a legend as follows:
THESE SHARES ARE SUBJECT TO RESTRICTIONS ON TRANSFER UNDER THE
SECURITIES ACT OF 1933 AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED
EXCEPT TO MERRILL LYNCH GLOBAL GROWTH FUND, INC. (OR ITS STATUTORY
SUCCESSOR) OR ITS PRINCIPAL UNDERWRITER UNLESS (I) A REGISTRATION
STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES ACT
OF 1933 OR (II) IN THE OPINION OF COUNSEL REASONABLY SATISFACTORY TO
THE FUND, SUCH REGISTRATION IS NOT REQUIRED.
and, further, that stop transfer instructions will be issued to Global Growth's
transfer agent with respect to such shares. Global Holdings will provide Global
Growth on the Exchange Date with the name of any Global Holdings stockholder who
is to the knowledge of Global Holdings an affiliate of Global Holdings on such
date.
(b) All covenants, agreements, representations and warranties made under
this Agreement and any certificates delivered pursuant to this Agreement shall
be deemed to have been material and relied upon by each of the parties,
notwithstanding any investigation made by them or on their behalf.
(c) Any notice, report or demand required or permitted by any provision of
this Agreement shall be in writing and shall be made by hand delivery, prepaid
certified mail or overnight service, addressed to Global Holdings or Global
Growth, in either case at 800 Scudders Mill Road, Plainsboro, New Jersey 08536,
Attn: Arthur Zeikel, President.
(d) This Agreement supersedes all previous correspondence and oral
communications between the parties regarding the Reorganization, constitutes the
only understanding with respect to the Reorganization, may not be changed except
by a letter of agreement signed by each party and shall be governed by and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed in said state.
(e) Copies of the Articles of Incorporation, as amended, of Global Holdings
and Global Growth are on file with the Department of Assessments and Taxation of
the State of Maryland and notice is hereby given that this instrument is
executed on behalf of the Directors of each fund.
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<PAGE> 51
This Agreement may be executed in any number of counterparts, each of
which, when executed and delivered, shall be deemed to be an original but all
such counterparts together shall constitute but one instrument.
MERRILL LYNCH GLOBAL GROWTH FUND,
INC.
By: /s/ ARTHUR ZEIKEL
----------------------------------
Arthur Zeikel, President
Attest:
/s/ PHILIP M. MANDEL
- ------------------------------------
Philip M. Mandel, Secretary
MERRILL LYNCH GLOBAL HOLDINGS, INC.
By: /s/ ARTHUR ZEIKEL
----------------------------------
Arthur Zeikel, President
Attest:
/s/ PHILIP M. MANDEL
- ----------------------------------------
Philip M. Mandel, Secretary
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<PAGE> 52
STATEMENT OF ADDITIONAL INFORMATION
MERRILL LYNCH GLOBAL HOLDINGS, INC.
MERRILL LYNCH GLOBAL GROWTH FUND, INC.
P.O. BOX 9011
PRINCETON, NEW JERSEY 08543-9011
(609) 282-2800
This Statement of Additional Information is not a prospectus and should be
read in conjunction with the Proxy Statement and Prospectus of Merrill Lynch
Global Holdings, Inc. ("Global Holdings") and Merrill Lynch Global Growth Fund,
Inc. ("Global Growth Fund") dated September 22, 1998 (the "Proxy Statement and
Prospectus"), which has been filed with the Securities and Exchange Commission
and can be obtained, without charge, by calling Global Growth Fund at
1-800-456-4587, ext. 123, or by writing to Global Growth Fund at the above
address. This Statement of Additional Information has been incorporated by
reference into the Proxy Statement and Prospectus.
Further information about Global Growth Fund is contained in and
incorporated by reference to its Prospectus, dated March 6, 1998, and its
Statement of Additional Information, dated March 6, 1998, which are incorporated
by reference into this Statement of Additional Information. Global Growth Fund's
Statement of Additional Information accompanies this Statement of Additional
Information.
Further information about Global Holdings is contained in and incorporated
by reference to its Prospectus, dated March 5, 1998, and its Statement of
Additional Information, dated March 5, 1998, which are incorporated by reference
into this Statement of Additional Information. Global Holdings Statement of
Additional Information accompanies this Statement of Additional Information.
The Commission maintains a web site (http://www.sec.gov) that contains the
prospectus and statement of additional information of each of Global Holdings
and Global Growth Fund, other material incorporated by reference and other
information regarding Global Holdings and Global Growth Fund.
The date of this Statement of Additional Information is September 22, 1998.
<PAGE> 53
TABLE OF CONTENTS
<TABLE>
<S> <C>
General Information 2
Financial Statements 2
Pro Forma Combined Schedule of Investments for Global
Growth Fund and Global Holdings as of June 30, 1998
(unaudited) F-1
Pro Forma Combined Statement of Assets and Liabilities for
Global Growth Fund and Global Holdings as of June 30,
1998 (unaudited) F-9
Pro Forma Combined Statement of Operations for Global
Growth Fund and Global Holdings as of June 30, 1998
(unaudited) F-11
</TABLE>
GENERAL INFORMATION
The stockholders of Global Holdings are being asked to approve the
acquisition of substantially all of the assets of Global Holdings, and the
assumption of substantially all of the liabilities of Global Holdings, by Global
Growth Fund in exchange solely for an equal aggregate value of shares of Global
Growth Fund (the "Reorganization"). Global Growth Fund is an open-end management
investment company organized as a Maryland corporation. A Special Meeting of
Stockholders of Global Holdings to consider the Reorganization will be held at
800 Scudders Mill Road, Plainsboro, New Jersey, on November 5, 1998, at 9:00
a.m., New York time.
For detailed information about the Reorganization, stockholders of Global
Holdings should refer to the Proxy Statement and Prospectus. For further
information about Global Growth Fund, Global Holdings stockholders should refer
to Global Growth Fund's Statement of Additional Information, dated March 6,
1998, which accompanies this Statement of Additional Information and is
incorporated by reference herein. For further information about Global Holdings,
stockholders should refer to Global Holdings' Statement of Additional
Information, dated March 5, 1998, which accompanies this Statement of Additional
Information and is incorporated by reference herein.
FINANCIAL STATEMENTS
Pro forma financial statements reflecting consummation of the
Reorganization are included herein.
GLOBAL GROWTH FUND
An audited statement of assets and liabilities and accompanying notes as of
September 5, 1997, and report of independent auditors thereon, dated September
8, 1997, of Global Growth Fund are incorporated by reference from Global Growth
Fund's Statement of Additional Information, dated March 6, 1998. Unaudited
financial statements and accompanying notes for the period October 31, 1997
(commencement of operations) through February 28, 1998 of Global Growth Fund are
incorporated by reference from Global Growth Fund's Semi-Annual Report to
Stockholders.
GLOBAL HOLDINGS
Audited financial statements and accompanying notes for the fiscal year
ended November 30, 1997, and the independent auditor's report thereon, dated
January 14, 1998, of Global Holdings are incorporated by reference from Global
Holdings' Statement of Additional Information, dated March 5, 1998. Unaudited
financial statements and accompanying notes for the six months ended May 31,
1998 of Global Holdings are incorporated by reference from Global Holdings'
Semi-Annual Report to Stockholders.
2
<PAGE> 54
COMBINED SCHEDULE OF INVESTMENTS FOR
MERRILL LYNCH GLOBAL GROWTH FUND, INC. AND
MERRILL LYNCH GLOBAL HOLDINGS, INC.
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA FOR
GLOBAL GLOBAL COMBINED
INDUSTRIES SHARES HELD INVESTMENTS GROWTH FUND++ HOLDINGS++ FUND++
---------- ----------- ----------------------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
LATIN AMERICA
ARGENTINA
Banking 146,875 Banco de Galicia y Buenos
Aires S.A. (ADR)* $ -- $ 2,662,109 $ 2,662,109
- -----------------------------------------------------------------------------------------------------------------------------
Multi-Industry 278,810 Compania Naviera Perez
Companc S.A.C.F.I.M.F.A. -- 1,399,836 1,399,836
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN
ARGENTINA -- 4,061,945 4,061,945
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
BRAZIL
Telecommunications 30,000,000 Telecommunicacoes Brasileiras
S.A.--Telebras PN (Preferred) -- 3,263,294 3,263,294
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN BRAZIL -- 3,263,294 3,263,294
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
MEXICO
Chemicals 150,000 DESC, Sociedad de Fomento
Industrial, S.A. de C.V.
(ADR)* -- 2,981,250 2,981,250
- -----------------------------------------------------------------------------------------------------------------------------
Financial Services 2,000,000 Grupo Financiero Banorte,
S.A. de C.V. (Class B) -- 2,226,180 2,226,180
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN MEXICO -- 5,207,430 5,207,430
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
PANAMA
Banking--International 75,000 Bladex Banco LatinAmerica de
Export -- 2,306,250 2,306,250
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN PANAMA -- 2,306,250 2,306,250
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN LATIN
AMERICA -- 14,838,919 14,838,919
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
NORTH AMERICA
CANADA
Banking & Financial 380,000 Bank of Montreal 20,943,050 -- 20,943,050
575,000 Canadian Imperial Bank of
Commerce 18,505,477 -- 18,505,477
500,000 National Bank of Canada 9,780,908 -- 9,780,908
300,000 Royal Bank of Canada 18,064,911 -- 18,064,911
-------------- ------------ --------------
67,294,346 -- 67,294,346
- -----------------------------------------------------------------------------------------------------------------------------
Beverages 50,000 Seagram Co., Ltd. (The) 2,046,875 -- 2,046,875
- -----------------------------------------------------------------------------------------------------------------------------
Communications Equipment 350,000 +Newbridge Networks Corp. 8,370,756 -- 8,370,756
90,000 Northern Telecom Ltd. 3,972,239 1,135,000 5,107,239
-------------- ------------ --------------
12,342,995 1,135,000 13,477,995
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN CANADA 81,684,216 1,135,000 82,819,216
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
UNITED STATES
Advertising 85,000 Interpublic Group of
Companies, Inc. 5,158,437 -- 5,158,437
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
F-1
<PAGE> 55
COMBINED SCHEDULE OF INVESTMENTS FOR
MERRILL LYNCH GLOBAL GROWTH FUND, INC. AND
MERRILL LYNCH GLOBAL HOLDINGS, INC.
JUNE 30, 1998 (UNAUDITED)--(CONTINUED)
<TABLE>
<CAPTION>
PRO FORMA FOR
GLOBAL GLOBAL COMBINED
INDUSTRIES SHARES HELD INVESTMENTS GROWTH FUND++ HOLDINGS++ FUND++
---------- ----------- ----------------------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Banking 120,000 Bank of New York Co., Inc.
(The) $ -- $ 7,282,500 $ 7,282,500
95,000 Northern Trust Corporation -- 7,237,812 7,237,812
65,000 Wachovia Corporation -- 5,492,500 5,492,500
-------------- ------------ --------------
-- 20,012,812 20,012,812
- -----------------------------------------------------------------------------------------------------------------------------
Banking & Financial 154,000 Banc One Corp. 8,595,125 -- 8,595,125
50,000 BankAmerica Corp. 4,321,875 -- 4,321,875
30,000 Citicorp 4,477,500 -- 4,477,500
145,000 Mellon Bank Corp. 10,095,625 -- 10,095,625
180,000 State Street Corp. 12,510,000 -- 12,510,000
-------------- ------------ --------------
40,000,125 -- 40,000,125
- -----------------------------------------------------------------------------------------------------------------------------
Beverages 275,000 Coca-Cola Co. (The) 23,512,500 -- 23,512,500
- -----------------------------------------------------------------------------------------------------------------------------
Broadcast 120,000 Chancellor Media Corp. (Class
A) 5,955,000 -- 5,955,000
- -----------------------------------------------------------------------------------------------------------------------------
Broadcasting Radio & Television 45,000 +Clear Channel
Communications, Inc. 4,910,625 -- 4,910,625
- -----------------------------------------------------------------------------------------------------------------------------
Chemicals 110,000 duPont (E.I.) de Nemours &
Co. 8,208,750 -- 8,208,750
- -----------------------------------------------------------------------------------------------------------------------------
Communications Equipment 567,500 +Cisco Systems, Inc. 43,269,375 8,976,094 52,245,469
440,000 +FORE Systems, Inc. 11,632,500 -- 11,632,500
80,000 Lucent Technologies, Inc. 6,655,000 -- 6,655,000
-------------- ------------ --------------
61,556,875 8,976,094 70,532,969
- -----------------------------------------------------------------------------------------------------------------------------
Computer Services 40,000 America Online, Inc. 4,240,000 -- 4,240,000
- -----------------------------------------------------------------------------------------------------------------------------
Computers 700,000 Compaq Computer Corp. 19,862,500 -- 19,862,500
125,000 +Dell Computer Corporation 8,811,250 2,782,500 11,593,750
45,000 Hewlett-Packard Co. 2,694,375 -- 2,694,375
-------------- ------------ --------------
31,368,125 2,782,500 34,150,625
- -----------------------------------------------------------------------------------------------------------------------------
Cosmetics 220,000 Gillette Co. (The) 12,471,250 -- 12,471,250
20,000 International Flavors &
Fragrances Inc. 868,750 -- 868,750
-------------- ------------ --------------
13,340,000 -- 13,340,000
- -----------------------------------------------------------------------------------------------------------------------------
Electrical Equipment 35,000 Emerson Electric Co. 2,113,125 -- 2,113,125
375,000 General Electric Co. 34,125,000 -- 34,125,000
10,000 Honeywell, Inc. 835,625 -- 835,625
-------------- ------------ --------------
37,073,750 -- 37,073,750
- -----------------------------------------------------------------------------------------------------------------------------
Electronics 235,000 Intel Corp. 11,109,375 6,295,312 17,404,687
125,000 Texas Instruments, Inc. 2,040,937 5,248,125 7,289,062
-------------- ------------ --------------
13,150,312 11,543,437 24,693,749
- -----------------------------------------------------------------------------------------------------------------------------
Energy 110,000 El Paso Natural Gas Co. 4,207,500 -- 4,207,500
50,000 Enron Corp. 2,703,125 -- 2,703,125
-------------- ------------ --------------
6,910,625 -- 6,910,625
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
F-2
<PAGE> 56
COMBINED SCHEDULE OF INVESTMENTS FOR
MERRILL LYNCH GLOBAL GROWTH FUND, INC. AND
MERRILL LYNCH GLOBAL HOLDINGS, INC.
JUNE 30, 1998 (UNAUDITED)--(CONTINUED)
<TABLE>
<CAPTION>
PRO FORMA FOR
GLOBAL GLOBAL COMBINED
INDUSTRIES SHARES HELD INVESTMENTS GROWTH FUND++ HOLDINGS++ FUND++
---------- ----------- ----------------------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Entertainment 35,000 +Viacom, Inc. (Class B) $ 2,038,750 $ -- $ 2,038,750
150,000 Walt Disney Co. (The) 15,759,375 -- 15,759,375
-------------- ------------ --------------
17,798,125 -- 17,798,125
- -----------------------------------------------------------------------------------------------------------------------------
Environmental Control 200,000 US Filter Corp. -- 5,612,500 5,612,500
- -----------------------------------------------------------------------------------------------------------------------------
Financial Services 40,000 American Express Co. 4,560,000 -- 4,560,000
70,000 Federal National Mortgage
Association 4,252,500 -- 4,252,500
100,000 Franklin Resources 5,400,000 -- 5,400,000
100,000 Morgan Stanley, Dean Witter,
Discover & Co. 9,137,500 -- 9,137,500
90,000 Travelers Group, Inc. 5,456,250 -- 5,456,250
-------------- ------------ --------------
28,806,250 -- 28,806,250
- -----------------------------------------------------------------------------------------------------------------------------
Food Merchandising 50,000 Albertsons, Inc. 2,590,625 -- 2,590,625
105,000 +Meyer (Fred), Inc. 4,462,500 -- 4,462,500
-------------- ------------ --------------
7,053,125 -- 7,053,125
- -----------------------------------------------------------------------------------------------------------------------------
Foods 40,000 ConAgra, Inc. 1,267,500 -- 1,267,500
35,000 Wrigley (Wm.) Jr. Co. (Class
B) Shares 3,430,000 -- 3,430,000
-------------- ------------ --------------
4,697,500 -- 4,697,500
- -----------------------------------------------------------------------------------------------------------------------------
Home Furnishings 175,000 Ethan Allen Interiors, Inc. 8,739,062 -- 8,739,062
- -----------------------------------------------------------------------------------------------------------------------------
Hotels 125,000 Marriott International, Inc.
(Class A) 4,046,875 -- 4,046,875
- -----------------------------------------------------------------------------------------------------------------------------
Household Products 35,000 Colgate-Palmolive Co. 3,080,000 -- 3,080,000
20,000 Kimberly-Clark Corp. 917,500 -- 917,500
60,000 Procter & Gamble Company 5,463,750 -- 5,463,750
-------------- ------------ --------------
9,461,250 -- 9,461,250
- -----------------------------------------------------------------------------------------------------------------------------
Information Processing 155,000 First Data Corp. 5,163,437 -- 5,163,437
- -----------------------------------------------------------------------------------------------------------------------------
Insurance 10,000 Aetna, Inc. 761,250 -- 761,250
150,000 American International Group,
Inc. 21,900,000 -- 21,900,000
150,000 Mercury General Corp. -- 9,646,875 9,646,875
80,000 The PMI Group, Inc. -- 5,870,000 5,870,000
-------------- ------------ --------------
22,661,250 15,516,875 38,178,125
- -----------------------------------------------------------------------------------------------------------------------------
Medical Technology 200,000 +Boston Scientific Corp. 10,743,750 3,581,250 14,325,000
90,000 Guidant Corporation 6,418,125 -- 6,418,125
125,000 Johnson & Johnson 1,843,750 7,375,000 9,218,750
-------------- ------------ --------------
19,005,625 10,956,250 29,961,875
- -----------------------------------------------------------------------------------------------------------------------------
Oil Services 190,000 Baker Hughes, Inc. 6,566,875 -- 6,566,875
175,000 Diamond Offshore Drilling,
Inc. 7,000,000 -- 7,000,000
55,000 Schlumberger Ltd., Inc. 3,757,187 -- 3,757,187
-------------- ------------ --------------
17,324,062 -- 17,324,062
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
F-3
<PAGE> 57
COMBINED SCHEDULE OF INVESTMENTS FOR
MERRILL LYNCH GLOBAL GROWTH FUND, INC. AND
MERRILL LYNCH GLOBAL HOLDINGS, INC.
JUNE 30, 1998 (UNAUDITED)--(CONTINUED)
<TABLE>
<CAPTION>
PRO FORMA FOR
GLOBAL GLOBAL COMBINED
INDUSTRIES SHARES HELD INVESTMENTS GROWTH FUND++ HOLDINGS++ FUND++
---------- ----------- ----------------------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Pharmaceuticals 25,000 Amgen, Inc. $ 1,634,375 $ -- $ 1,634,375
155,000 Bristol-Myers Squibb Co. 14,941,875 2,873,437 17,815,312
140,000 Merck & Co., Inc. 18,725,000 -- 18,725,000
490,000 Pfizer, Inc. 43,475,000 9,781,875 53,256,875
-------------- ------------ --------------
78,776,250 12,655,312 91,431,562
- -----------------------------------------------------------------------------------------------------------------------------
Photography 30,000 Eastman Kodak Co. 2,191,875 -- 2,191,875
- -----------------------------------------------------------------------------------------------------------------------------
Pollution Control 20,000 Waste Management, Inc. 700,000 -- 700,000
- -----------------------------------------------------------------------------------------------------------------------------
Publishing 32,000 Gannett Co., Inc. 2,274,000 -- 2,274,000
- -----------------------------------------------------------------------------------------------------------------------------
Restaurants 70,000 McDonald's Corporation 3,450,000 1,380,000 4,830,000
- -----------------------------------------------------------------------------------------------------------------------------
Retail 250,000 Federated Department Stores,
Inc. 5,381,250 8,071,875 13,453,125
420,000 Wal-Mart Stores, Inc. 25,515,000 -- 25,515,000
-------------- ------------ --------------
30,896,250 8,071,875 38,968,125
- -----------------------------------------------------------------------------------------------------------------------------
Retail Specialty 450,000 CVS Corporation 8,955,625 8,566,250 17,521,875
100,000 Gap, Inc. (The) 6,162,500 -- 6,162,500
200,000 OfficeMax, Inc. -- 3,300,000 3,300,000
450,000 PETsMART, Inc. -- 4,485,937 4,485,937
435,000 +Staples, Inc. 12,587,812 -- 12,587,812
165,000 Walgreen Co. 6,816,562 -- 6,816,562
-------------- ------------ --------------
34,522,499 16,352,187 50,874,686
- -----------------------------------------------------------------------------------------------------------------------------
Semiconductor 160,000 +Applied Materials, Inc. 3,687,500 1,032,500 4,720,000
70,000 ST Microelectronics -- 4,891,250 4,891,250
-------------- ------------ --------------
3,687,500 5,923,750 9,611,250
- -----------------------------------------------------------------------------------------------------------------------------
Software--Computer 205,000 +Microsoft Corp. 19,507,500 2,709,375 22,216,875
210,000 +PeopleSoft, Inc. 9,856,875 -- 9,856,875
-------------- ------------ --------------
29,364,375 2,709,375 32,073,750
- -----------------------------------------------------------------------------------------------------------------------------
Telecommunications 290,000 Sprint Corp. 16,215,000 4,230,000 20,445,000
225,000 World Communications, Inc. 10,870,312 -- 10,870,312
-------------- ------------ --------------
27,085,312 4,230,000 31,315,312
- -----------------------------------------------------------------------------------------------------------------------------
Toys 200,000 Mattel, Inc. 8,462,500 -- 8,462,500
- -----------------------------------------------------------------------------------------------------------------------------
Travel & Lodging 240,000 Carnival Corp. (Class A) 9,510,000 -- 9,510,000
- -----------------------------------------------------------------------------------------------------------------------------
Utilities--Communication 160,000 AT&T Corp. 9,140,000 -- 9,140,000
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN THE
UNITED STATES 640,202,246 126,722,967 766,925,213
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN NORTH
AMERICA 721,886,462 127,857,967 849,744,429
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
PACIFIC BASIN/ASIA
AUSTRALIA
Broadcasting & Publishing 351,883 News Corp. Ltd. (The)
(Ordinary) -- 2,873,128 2,873,128
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN
AUSTRALIA -- 2,873,128 2,873,128
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
F-4
<PAGE> 58
COMBINED SCHEDULE OF INVESTMENTS FOR
MERRILL LYNCH GLOBAL GROWTH FUND, INC. AND
MERRILL LYNCH GLOBAL HOLDINGS, INC.
JUNE 30, 1998 (UNAUDITED)--(CONTINUED)
<TABLE>
<CAPTION>
PRO FORMA FOR
GLOBAL GLOBAL COMBINED
INDUSTRIES SHARES HELD INVESTMENTS GROWTH FUND++ HOLDINGS++ FUND++
---------- ----------- ----------------------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
HONG KONG
Multi-Industry 400,000 Hutchison Whampoa, Ltd. $ -- $ 2,111,485 $ 2,111,485
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN HONG
KONG -- 2,111,485 2,111,485
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
JAPAN
Automobile 480,000 Honda Motor Co., Ltd. 17,111,929 -- 17,111,929
500,000 Toyota Motor Corp. 12,953,742 -- 12,953,742
-------------- ------------ --------------
30,065,671 -- 30,065,671
- -----------------------------------------------------------------------------------------------------------------------------
Broadcasting & Publishing 300,000 Tokyo Broadcasting System,
Inc. -- 3,355,705 3,355,705
- -----------------------------------------------------------------------------------------------------------------------------
Computers 700,000 Fujitsu Ltd. 7,375,334 -- 7,375,334
1,000,000 NEC Corporation 6,531,717 2,799,307 9,331,024
60,000 Tokyo Electron Ltd. -- 1,840,225 1,840,225
-------------- ------------ --------------
13,907,051 4,639,532 18,546,583
- -----------------------------------------------------------------------------------------------------------------------------
Electrical Equipment 200,000 Matsushita Electric
Industrial Co., Ltd. -- 3,218,590 3,218,590
250,000 Sumitomo Electric Industry,
Ltd. -- 2,531,212 2,531,212
-------------- ------------ --------------
-- 5,749,802 5,749,802
- -----------------------------------------------------------------------------------------------------------------------------
Electronics 30,000 Keyence Corp. -- 3,269,106 3,269,106
90,000 Murata Manufacturing Co.,
Ltd. -- 2,922,711 2,922,711
-------------- ------------ --------------
-- 6,191,817 6,191,817
- -----------------------------------------------------------------------------------------------------------------------------
Insurance 200,000 Tokio Marine & Fire Insurance
Co., Ltd. -- 2,058,166 2,058,166
- -----------------------------------------------------------------------------------------------------------------------------
Leisure 170,000 Sony Corp. 12,073,320 2,587,140 14,660,460
- -----------------------------------------------------------------------------------------------------------------------------
Machine Tools & Machinery 350,000 Minebea Co. Ltd. -- 3,488,129 3,488,129
- -----------------------------------------------------------------------------------------------------------------------------
Machinery & Equipment 500,000 Mitsubishi Heavy Industries,
Ltd. -- 1,890,741 1,890,741
- -----------------------------------------------------------------------------------------------------------------------------
Merchandising 150,000 Marui Co. Ltd. -- 2,240,745 2,240,745
- -----------------------------------------------------------------------------------------------------------------------------
Office Equipment 300,000 Canon, Inc. 4,546,439 2,273,219 6,819,658
- -----------------------------------------------------------------------------------------------------------------------------
Photography 400,000 Fuji Photo Film Co., Ltd. 13,942,412 -- 13,942,412
- -----------------------------------------------------------------------------------------------------------------------------
Retail--Stores 290,000 Ito-Yokado Co., Ltd. 11,781,049 1,884,968 13,666,017
- -----------------------------------------------------------------------------------------------------------------------------
Telecommunications 3,400 Nippon Telegraph & Telephone
Corp. 24,897,164 3,319,622 28,216,786
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN JAPAN 111,213,106 39,679,586 150,892,692
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
SINGAPORE
Banking 380,000 Overseas Chinese Banking
Corp. -- 1,294,048 1,294,048
- -----------------------------------------------------------------------------------------------------------------------------
Construction & Housing 330,000 City Development Ltd. -- 922,476 922,476
- -----------------------------------------------------------------------------------------------------------------------------
Newspaper/Publishing 242,440 Singapore Press Holdings Ltd. -- 1,622,489 1,622,489
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN
SINGAPORE -- 3,839,013 3,839,013
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN THE
PACIFIC BASIN/ASIA 111,213,106 48,503,212 159,716,318
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
F-5
<PAGE> 59
COMBINED SCHEDULE OF INVESTMENTS FOR
MERRILL LYNCH GLOBAL GROWTH FUND, INC. AND
MERRILL LYNCH GLOBAL HOLDINGS, INC.
JUNE 30, 1998 (UNAUDITED)--(CONTINUED)
<TABLE>
<CAPTION>
PRO FORMA FOR
GLOBAL GLOBAL COMBINED
INDUSTRIES SHARES HELD INVESTMENTS GROWTH FUND++ HOLDINGS++ FUND++
---------- ----------- ----------------------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
WESTERN EUROPE
DENMARK
Telecommunications 150,000 Tele-Denmark A.S. (Class B) $ 14,404,190 $ -- $ 14,404,190
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN DENMARK 14,404,190 -- 14,404,190
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
FINLAND
Communications Equipment 350,000 Nokia OY AS 'A' 18,426,286 7,370,514 25,796,800
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN FINLAND 18,426,286 7,370,514 25,796,800
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
FRANCE
Communications Equipment 120,000 Alcatel Alsthom Cie Generale
d'Electricite S.A. 22,405,891 2,036,899 24,442,790
- -----------------------------------------------------------------------------------------------------------------------------
Computer Services 50,000 Cap Gemini S.A. -- 7,859,684 7,859,684
- -----------------------------------------------------------------------------------------------------------------------------
Computer Software 120,000 Dassault Systems S.A. -- 5,658,972 5,658,972
- -----------------------------------------------------------------------------------------------------------------------------
Cosmetics 10,000 L'OREAL S.A. 5,564,656 -- 5,564,656
- -----------------------------------------------------------------------------------------------------------------------------
Education 15,000 Groupe Danone S.A. -- 4,137,503 4,137,503
- -----------------------------------------------------------------------------------------------------------------------------
Electronics 300,000 +SGS-Thomson Microelectronics
N.V. 21,270,787 -- 21,270,787
- -----------------------------------------------------------------------------------------------------------------------------
Foods 40,000 Groupe Danone S.A. 11,033,342 -- 11,033,342
15,000 Promodes S.A. 8,314,718 -- 8,314,718
-------------- ------------ --------------
19,348,060 -- 19,348,060
- -----------------------------------------------------------------------------------------------------------------------------
Information Processing 200,000 Cap Gemini S.A. 31,438,736 -- 31,438,736
- -----------------------------------------------------------------------------------------------------------------------------
Insurance 165,000 Axa-UAP 18,565,401 -- 18,565,401
- -----------------------------------------------------------------------------------------------------------------------------
Machinery & Equipment 240,000 Alstom 6,585,588 1,317,118 7,902,706
- -----------------------------------------------------------------------------------------------------------------------------
Oil-Related 25,000 Societe Nationale Elf
Equitaine S.A. -- 3,516,174 3,516,174
- -----------------------------------------------------------------------------------------------------------------------------
Retail--Stores 20,000 Carrefour S.A. (Ordinary) 12,658,228 -- 12,658,228
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN FRANCE 137,837,347 24,526,350 162,363,697
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
GERMANY
Apparel 100,000 Adidas AG 17,421,892 -- 17,421,892
- -----------------------------------------------------------------------------------------------------------------------------
Automobile 160,000 Daimler-Benz AG 15,732,329 -- 15,732,329
160,000 Daimler-Benz AG (Rights) 177,266 -- 177,266
-------------- ------------ --------------
15,909,595 -- 15,909,595
- -----------------------------------------------------------------------------------------------------------------------------
Banking & Financial 600,000 Commerzbank AG 22,834,035 -- 22,834,035
420,000 Deutche Bank AG (Ordinary) 29,586,749 5,917,350 35,504,099
525,000 Dresdner Bank AG 28,355,584 -- 28,355,584
-------------- ------------ --------------
80,776,368 5,917,350 86,693,718
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
F-6
<PAGE> 60
COMBINED SCHEDULE OF INVESTMENTS FOR
MERRILL LYNCH GLOBAL GROWTH FUND, INC. AND
MERRILL LYNCH GLOBAL HOLDINGS, INC.
JUNE 30, 1998 (UNAUDITED)--(CONTINUED)
<TABLE>
<CAPTION>
PRO FORMA FOR
GLOBAL GLOBAL COMBINED
INDUSTRIES SHARES HELD INVESTMENTS GROWTH FUND++ HOLDINGS++ FUND++
---------- ----------- ----------------------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Chemicals 150,000 BASF AG $ 7,125,249 $ -- $ 7,125,249
150,000 Bayer AG 7,760,913 -- 7,760,913
140,000 Hoechst AG 7,038,001 -- 7,038,001
100,000 SKW Trostberg AG -- 3,600,709 3,600,709
-------------- ------------ --------------
21,924,163 3,600,709 25,524,872
- -----------------------------------------------------------------------------------------------------------------------------
Electronics 200,000 Siemens AG 12,203,634 -- 12,203,634
- -----------------------------------------------------------------------------------------------------------------------------
Insurance 65,000 Allianz AG 21,658,265 -- 21,658,265
1,911 Allianz AG (New) 631,460 -- 631,460
-------------- ------------ --------------
22,289,725 -- 22,289,725
- -----------------------------------------------------------------------------------------------------------------------------
Machinery & Equipment 13,300 Heidelberger Druckmaschinen
AG -- 1,101,457 1,101,457
60,000 Mannesman AG 5,137,935 1,027,587 6,165,522
-------------- ------------ --------------
5,137,935 2,129,044 7,266,979
- -----------------------------------------------------------------------------------------------------------------------------
Multi-Industry 285,000 Veba Vereinigte Elektriz 11,763,932 7,394,472 19,158,404
- -----------------------------------------------------------------------------------------------------------------------------
Retail--Stores 250,000 Metro AG 15,095,280 -- 15,095,280
250,000 Metro AG (Rights) 9,694 -- 9,694
-------------- ------------ --------------
15,104,974 -- 15,104,974
- -----------------------------------------------------------------------------------------------------------------------------
Software--Computer 140,000 SAP AG--Vorzug (Preferred) 74,645,469 20,357,855 95,003,324
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN GERMANY 277,177,687 39,399,430 316,577,117
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
IRELAND
Banking & Financial 1,300,000 Allied Irish Banks PLC 18,794,818 -- 18,794,818
- -----------------------------------------------------------------------------------------------------------------------------
Telecommunications 100,000 ESAT Telecom Group PLC (ADR)* 3,775,000 -- 3,775,000
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN IRELAND 22,569,818 -- 22,569,818
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
ITALY
Insurance 500,000 Assicurazioni Generali S.p.A. 16,263,365 -- 16,263,365
3,750,000 Instituto Nazionale delle
Assicurazioni S.p.A. (INA) 10,657,006 -- 10,657,006
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN ITALY 26,920,371 -- 26,920,371
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
NETHERLANDS
Household Products 120,000 Unilever N.V. (NY Registered
Shares) 9,472,500 -- 9,472,500
200,000 Unilever N.V. 15,901,478 -- 15,901,478
-------------- ------------ --------------
25,373,978 -- 25,373,978
- -----------------------------------------------------------------------------------------------------------------------------
Insurance 400,000 AEGON N.V. 34,876,847 -- 34,876,847
235,000 ING Groep N.V. 15,419,704 -- 15,419,704
-------------- ------------ --------------
50,296,551 -- 50,296,551
- -----------------------------------------------------------------------------------------------------------------------------
Leisure 140,000 Philips Electronics N.V. 5,896,552 5,896,552 11,793,104
150,000 Polygram N.V. 7,669,951 -- 7,669,951
-------------- ------------ --------------
13,566,503 5,896,552 19,463,055
- -----------------------------------------------------------------------------------------------------------------------------
Retail--Stores 600,000 Koninklijke Ahold N.V. 19,300,493 -- 19,300,493
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
F-7
<PAGE> 61
COMBINED SCHEDULE OF INVESTMENTS FOR
MERRILL LYNCH GLOBAL GROWTH FUND, INC. AND
MERRILL LYNCH GLOBAL HOLDINGS, INC.
JUNE 30, 1998 (UNAUDITED)--(CONTINUED)
<TABLE>
<CAPTION>
PRO FORMA FOR
GLOBAL GLOBAL COMBINED
INDUSTRIES SHARES HELD INVESTMENTS GROWTH FUND++ HOLDINGS++ FUND++
---------- ----------- ----------------------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Software--Computer 190,000 Baan Company N.V. $ 5,761,576 $ 1,080,296 $ 6,841,872
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN THE
NETHERLANDS 114,299,101 6,976,848 121,275,949
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
PORTUGAL
Building Products 200,000 Cimpor Cimentos de Portugal
S.A. -- 7,030,277 7,030,277
- -----------------------------------------------------------------------------------------------------------------------------
Finance 170,000 BPI SGPS S.A. (Registered
Shares) -- 5,488,653 5,488,653
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN PORTUGAL -- 12,518,930 12,518,930
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
SPAIN
Banking & Financial 400,000 Banco Bilbao Vizcaya, S.A. 20,565,754 -- 20,565,754
550,000 Banco Santander, S.A. 14,103,025 -- 14,103,025
-------------- ------------ --------------
34,668,779 -- 34,668,779
- -----------------------------------------------------------------------------------------------------------------------------
Business & Public Services 400,000 Prosegur Compania de
Seguridad S.A. -- 4,808,258 4,808,258
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SPAIN 34,668,779 4,808,258 39,477,037
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
SWEDEN
Communication Equipment 250,000 Telefonaktiebolaget LM
Ericsson (Class B) 7,304,533 -- 7,304,533
- -----------------------------------------------------------------------------------------------------------------------------
Environmental Control 325,000 Munters AB -- 3,545,677 3,545,677
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SWEDEN 7,304,533 3,545,677 10,850,210
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
SWITZERLAND
Foods 10,000 Nestle S.A. (Registered) 21,414,435 -- 21,414,435
- -----------------------------------------------------------------------------------------------------------------------------
Insurance 20,000 Zurich
Versicherungs-Gesallschaft
(Registered Shares) 12,772,134 -- 12,772,134
- -----------------------------------------------------------------------------------------------------------------------------
Pharmaceuticals 17,000 Novartis AG (Registered
Shares) 28,307,165 -- 28,307,165
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN
SWITZERLAND 62,493,734 -- 62,493,734
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
UNITED KINGDOM
Banking & Financial 875,000 Barclays PLC 25,227,720 -- 25,227,720
500,000 HSBC Holdings PLC 12,688,943 -- 12,688,943
1,800,000 Lloyds TSB Group PLC 25,182,671 -- 25,182,671
1,885,000 National Westminster Bank PLC 26,804,453 6,879,809 33,684,262
500,000 Royal Bank of Scotland GRP -- 8,676,200 8,676,200
-------------- ------------ --------------
89,903,787 15,556,009 105,459,796
- -----------------------------------------------------------------------------------------------------------------------------
Broadcast--Media 1,000,000 British Sky Broadcasting
Group PLC 7,182,892 -- 7,182,892
- -----------------------------------------------------------------------------------------------------------------------------
Building 300,000 Berkeley Group PLC -- 3,123,432 3,123,432
- -----------------------------------------------------------------------------------------------------------------------------
Chemicals 365,000 Imperial Chemical Industries
PLC (Ordinary) 5,858,604 -- 5,858,604
- -----------------------------------------------------------------------------------------------------------------------------
Computer Services 1,100,000 Capital Group PLC -- 9,493,348 9,493,348
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
F-8
<PAGE> 62
COMBINED SCHEDULE OF INVESTMENTS FOR
MERRILL LYNCH GLOBAL GROWTH FUND, INC. AND
MERRILL LYNCH GLOBAL HOLDINGS, INC.
JUNE 30, 1998 (UNAUDITED)--(CONCLUDED)
<TABLE>
<CAPTION>
PRO FORMA FOR
GLOBAL GLOBAL COMBINED
INDUSTRIES SHARES HELD INVESTMENTS GROWTH FUND++ HOLDINGS++ FUND++
---------- ----------- ----------------------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Electrical Equipment 1,149,999 Siebe PLC (Ordinary) $ 14,978,959 $ 7,988,758 $ 22,967,717
- -----------------------------------------------------------------------------------------------------------------------------
Electronics 2,100,000 Astec (BSR) PLC -- 2,838,118 2,838,118
- -----------------------------------------------------------------------------------------------------------------------------
Household Products 750,000 Unilever PLC 7,983,773 -- 7,983,773
- -----------------------------------------------------------------------------------------------------------------------------
Information Processing 1,040,000 Reuters Group PLC New 11,886,394 -- 11,886,394
- -----------------------------------------------------------------------------------------------------------------------------
Insurance 1,000,000 Commercial Union PLC 18,653,830 -- 18,653,830
2,500,000 Guardian Royal Exchange PLC 14,641,087 -- 14,641,087
2,500,000 Sun Alliance Insurance Group
PLC 20,672,715 5,168,179 25,840,894
-------------- ------------ --------------
53,967,632 5,168,179 59,135,811
- -----------------------------------------------------------------------------------------------------------------------------
Pharmaceuticals 265,000 Glaxo Wellcome PLC 7,954,323 -- 7,954,323
575,000 SmithKline Beecham PLC 7,017,920 -- 7,017,920
400,000 Zeneca Group PLC 17,165,528 -- 17,165,528
-------------- ------------ --------------
32,137,771 -- 32,137,771
- -----------------------------------------------------------------------------------------------------------------------------
Publishing 750,000 Pearson PLC 13,740,098 -- 13,740,098
- -----------------------------------------------------------------------------------------------------------------------------
Retail--Stores 750,000 Boots Company PLC 12,426,154 -- 12,426,154
2,000,000 J. Sainsbury PLC 17,819,580 -- 17,819,580
1,400,000 Tesco PLC (Ordinary) 13,665,015 -- 13,665,015
-------------- ------------ --------------
43,910,749 -- 43,910,749
- -----------------------------------------------------------------------------------------------------------------------------
Telecommunications 700,000 +COLT Telecom Group PLC 28,381,185 -- 28,381,185
2,000,000 Vodafone Group PLC 25,377,885 -- 25,377,885
-------------- ------------ --------------
53,759,070 -- 53,759,070
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN THE
UNITED KINGDOM 335,309,729 44,167,844 379,477,573
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN WESTERN
EUROPE 1,051,411,575 143,313,851 1,194,725,426
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
FACE
SHORT-TERM SECURITIES AMOUNT ISSUE
- ------------------------------- ----------- -----------------------------
Commercial Paper** $32,341,000 Concord Minuteman Capital,
6.50% due 7/01/1998 32,341,000 -- 32,341,000
53,000,000 Newell Company, 6.25% due
7/01/1998 53,000,000 -- 53,000,000
31,991,000 Variable Funding Capital
Corp., 6.30% due 7/01/1998 31,991,000 -- 31,991,000
-------------- ------------ --------------
TOTAL INVESTMENTS IN SHORT-
TERM SECURITIES 117,332,000 -- 117,332,000
-------------- ------------ --------------
TOTAL INVESTMENTS
(COST -- $1,923,880,378) $2,001,843,143 $334,513,949 $2,336,357,092
============== ============ ==============
</TABLE>
- ---------------
* American Depositary Receipt (ADR).
** Commercial Paper is traded on a discount basis; the interest rate shown is
the discount rate paid at the time of purchase by the Fund.
+ Non-income producing security.
++ Value as discussed in the Combined Notes to Financial Statements.
F-9
<PAGE> 63
PRO FORMA COMBINED STATEMENT OF ASSETS AND LIABILITIES
FOR MERRILL LYNCH GLOBAL GROWTH FUND, INC. AND
MERRILL LYNCH GLOBAL HOLDINGS, INC.
AS OF JUNE 30, 1998 (UNAUDITED)
The following unaudited Pro Forma Combined Statement of Assets and
Liabilities for Merrill Lynch Global Growth Fund, Inc. ("Global Growth Fund")
and Merrill Lynch Global Holdings, Inc. ("Global Holdings") has been derived
from the Statements of Assets and Liabilities of Global Growth Fund and Global
Holdings as of June 30, 1998, and such information has been adjusted to give
effect to the Reorganization as if the Reorganization had occurred on June 30,
1998. The Pro Forma Statement of Assets and Liabilities is presented for
informational purposes only and does not purport to be indicative of the
financial condition that would have resulted if the Reorganization had been
consummated on June 30, 1998. The Pro Forma Combined Statement of Assets and
Liabilities should be read in conjunction with the financial statements and
related notes from the unaudited semi-annual financial statements for the period
October 31, 1997 (commencement of operations) to February 28, 1998 of Global
Growth Fund included in its Semi-Annual Report to Stockholders and from the
Global Holdings audited financial statements and related notes included in its
Statement of Additional Information dated March 5, 1998.
<TABLE>
<CAPTION>
GLOBAL GLOBAL PRO FORMA FOR
GROWTH FUND HOLDINGS ADJUSTMENTS COMBINED FUND
-------------- ------------ ------------ --------------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value* (Note 1a) $2,001,843,143 $334,513,949 $2,336,357,092
Cash -- 940 940
Foreign cash (Note 1b) 11,877,014 -- 11,877,014
Receivables:
Capital shares sold 57,554,277 390,166 57,944,443
Securities sold 69,044,000 83,309,031 152,353,031
Dividends 4,030,730 655,874 4,686,604
Deferred organization expenses
(Note 1f) 161,500 -- 161,500
Prepaid registration fees and
other assets (Note 1f) 400,000 3,257 403,257
-------------- ------------ ------------ --------------
Total assets 2,144,910,664 418,873,217 0 2,563,783,881
-------------- ------------ ------------ --------------
LIABILITIES:
Payables:
Securities purchased 141,647,233 2,059,195 143,706,428
Dividends to Shareholders -- -- $ 53,526,768(1) 53,526,768
Capital shares redeemed 2,716,391 53,282,375 55,998,766
Distributor (Note 2) 1,439,137 60,975 1,500,112
Investment adviser (Note 2) 1,223,222 361,775 1,584,997
Accrued expenses and other
liabilities 1,323,637 402,118 (586,518)(2) 1,139,237
-------------- ------------ ------------ --------------
Total liabilities 148,349,620 56,166,438 52,940,250 257,456,308
-------------- ------------ ------------ --------------
NET ASSETS:
Net Assets $1,996,561,044 $362,706,779 $(52,940,250) $2,306,327,573
============== ============ ============ ==============
</TABLE>
F-10
<PAGE> 64
PRO FORMA COMBINED STATEMENT OF ASSETS AND LIABILITIES
FOR MERRILL LYNCH GLOBAL GROWTH FUND, INC. AND
MERRILL LYNCH GLOBAL HOLDINGS, INC.
AS OF JUNE 30, 1998 (UNAUDITED)--(CONTINUED)
<TABLE>
<CAPTION>
GLOBAL GLOBAL PRO FORMA FOR
GROWTH FUND HOLDINGS ADJUSTMENTS COMBINED FUND
-------------- ------------ ------------ --------------
<S> <C> <C> <C> <C>
NET ASSETS CONSIST OF:
Class A Common Stock, $0.10 par
value, 100,000,000 shares
authorized $ 665,838 $ 2,158,053 $ 180,376 $ 3,004,267
Class B Common Stock, $0.10 par
value, 300,000,000 shares
authorized 11,264,686 210,804 7,884 11,483,374
Class C Common Stock, $0.10 par
value, 100,000,000 shares
authorized 2,247,463 10,146 332 2,257,941
Class D Common Stock, $0.10 par
value, 100,000,000 shares
authorized 1,887,444 59,804 4,803 1,952,051
Paid-in capital in excess of par 1,638,092,780 236,641,607 393,123 1,875,127,510
Undistributed investment income--
net 2,218,731 -- (2,218,731) 0
Accumulated distributions in
excess of investment
income--net (Note 1g) -- (2,167,863) 2,167,863 0
Undistributed realized capital
gains on investments and
foreign currency
transactions--net 14,682,984 38,792,916 (53,475,900) 0
Unrealized appreciation on
investments and foreign
currency transactions--net 325,501,118 87,001,312 -- 412,502,430
-------------- ------------ ------------ --------------
Net assets $1,996,561,044 $362,706,779 $(52,940,250) $2,306,327,573
============== ============ ============ ==============
NET ASSET VALUE:
Class A:
Net assets $ 83,241,993 $322,430,867 (33,161,938) $ 372,510,922
============== ============ ==============
Shares outstanding 6,658,381 21,580,528 1,803,765 30,042,674
============== ============ ==============
Net Asset Value $ 12.50 $ 14.94 -- $ 12.40
============== ============ ==============
Class B:
Net $1,398,702,147 $ 29,947,957 (14,509,483) $1,414,140,621
============== ============ ==============
Shares outstanding 112,646,856 2,108,039 78,849 114,833,744
============== ============ ==============
Net Asset Value $ 12.42 $ 14.21 -- $ 12.31
============== ============ ==============
Class C:
Net Assets $ 279,052,833 $ 1,434,834 (2,437,453) $ 278,050,214
============== ============ ==============
Shares outstanding 22,474,628 101,462 3,317 22,579,407
============== ============ ==============
Net Asset Value $ 12.42 $ 14.14 -- $ 12.31
============== ============ ==============
</TABLE>
F-11
<PAGE> 65
PRO FORMA COMBINED STATEMENT OF ASSETS AND LIABILITIES
FOR MERRILL LYNCH GLOBAL GROWTH FUND, INC. AND
MERRILL LYNCH GLOBAL HOLDINGS, INC.
AS OF JUNE 30, 1998 (UNAUDITED)--(CONCLUDED)
<TABLE>
<CAPTION>
GLOBAL GLOBAL PRO FORMA FOR
GROWTH FUND HOLDINGS ADJUSTMENTS COMBINED FUND
-------------- ------------ ------------ --------------
<S> <C> <C> <C> <C>
Class D:
Net Assets $ 235,564,071 $ 8,893,121 (2,831,376) $ 241,625,816
============== ============ ==============
Shares outstanding 18,874,439 598,038 48,037 19,520,514
============== ============ ==============
Net Asset Value $ 12.48 $ 14.87 -- $ 12.38
============== ============ ==============
- ---------------
* identified cost $1,676,441,139 $247,439,239 -- $1,923,880,378
============== ============ ==============
</TABLE>
(1) Reflects the payment of undistributed net investment income and
undistributed realized capital gains.
(2) Reflects the charge for estimated Reorganization expenses of $330,000 and
anticipated savings of the Reorganization.
See Notes to Financial Statements.
F-12
<PAGE> 66
PRO FORMA COMBINED STATEMENT OF OPERATIONS FOR
MERRILL LYNCH GLOBAL GROWTH FUND, INC. AND
MERRILL LYNCH GLOBAL HOLDINGS, INC.
FOR THE PERIOD OCTOBER 31, 1997* TO JUNE 30, 1998
(UNAUDITED)
The following unaudited Pro Forma Combined Statement of Operations for
Global Growth Fund and Global Holdings has been derived from the Statements of
Operations of Global Growth Fund and Global Holdings for the period ended June
30, 1998, and such information has been adjusted to give effect to the
Reorganization as if the Reorganization had occurred on October 31, 1997. The
Pro Forma Statement of Operations is presented for informational purposes only
and does not purport to be indicative of the financial condition that would have
resulted if the Reorganization had been consummated on October 31, 1997. The Pro
Forma Combined Statement of Operations should be read in conjunction with the
financial statements and related notes from the unaudited semi-annual financial
statements for the period October 31, 1997 (commencement of operations) to
February 28, 1998 of Global Growth Fund included in its Semi-Annual Report to
Stockholders and from the Global Holdings audited financial statements and
related notes included in its Statement of Additional Information dated March 5,
1998.
<TABLE>
<CAPTION>
GLOBAL GLOBAL PRO FORMA FOR
GROWTH FUND HOLDINGS ADJUSTMENTS COMBINED FUND
------------ ----------- ----------- -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME (NOTES 1d & 1e):
Dividends** $18,491,451 $ 2,878,664 $ 21,370,115
Interest and discount earned 4,595,284 955,981 5,551,265
------------ ----------- ------------
Total income 23,086,735 3,834,645 26,921,380
------------ ----------- ------------
EXPENSES:
Investment advisory fees 7,765,263 2,821,860 $(705,465)(3) 9,881,658
Account maintenance and distribution fees--Class B (Note
2) 7,234,587 438,398 7,672,985
Account maintenance and distribution fees--Class C (Note
2) 1,448,979 41,485 1,490,464
Transfer agent fees--Class B 736,014 123,562 859,576
Registration fees (Note 1f) 705,408 49,245 754,653
Account maintenance fees--Class D (Note 2) 323,171 15,079 338,250
Custodian fees 218,618 194,621 413,239
Transfer agent fees--Class C 153,946 12,183 166,129
Transfer agent fees--Class D 107,156 15,318 122,474
Printing and shareholder reports 134,519 101,847 (89,475)(2) 146,891
Accounting services (Note 2) 119,671 60,571 (71,508)(2) 108,734
Directors' fees and expenses 34,502 25,940 (29,675)(2) 30,767
Transfer agent fees--Class A (Note 2) 23,836 586,151 609,987
Professional fees 20,164 47,636 (20,395)(2) 47,405
Amortization of organization expenses 13,817 -- 13,817
Pricing fees 3,286 10,575 13,861
Other 4,175 8,652 330,000(1) 342,827
------------ ----------- --------- ------------
Total expenses before reimbursement 19,047,112 4,553,123 (586,518) 23,013,717
------------ ----------- --------- ------------
Reimbursement of expenses (Note 2) (79,576) -- -- (79,576)
------------ ----------- --------- ------------
Total expenses after reimbursement 18,967,536 4,553,123 (586,518) 22,934,141
------------ ----------- --------- ------------
Investment income (loss)--net 4,119,199 (718,478) 586,518 3,987,239
------------ ----------- --------- ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS & FOREIGN
CURRENCY TRANSACTIONS--NET (NOTES 1b, 1c, 1e & 3):
Realized gain (loss) from:
Investments--net 14,682,984 41,612,561 56,295,545
Foreign currency transactions--net (1,900,467) (399,031) (2,299,498)
Change in unrealized appreciation/depreciation on:
Investments--net 325,402,004 1,698,512 327,100,516
Foreign currency transactions--net 99,114 (67,318) 31,796
------------ ----------- --------- ------------
Net realized and unrealized gain on investments and
foreign currency transactions 338,283,635 42,844,724 381,128,359
------------ ----------- --------- ------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 342,402,834 42,126,246 586,518 385,115,598
------------ ----------- --------- ------------
$ 1,765,013 $ 287,418 -- $ 2,052,431
============ =========== ========= ============
</TABLE>
- ---------------
* The Global Growth Fund commenced operations on October 31, 1997.
** Net of foreign withholding tax on dividends.
(1) Reflects the charge for estimated Reorganization expenses of $330,000.
(2) Reflects the anticipated savings of the Reorganization.
(3) Pursuant to the Management Agreement between Global Growth Fund and MLAM,
Global Growth Fund pays MLAM a monthly fee at the annual rate of 0.75% of
average daily net assets not exceeding $1.5 billion, and 0.725% of average
daily net assets in excess of $1.5 billion. After the Reorganization, the
management fee paid by the Combined Fund will be at Global Growth Fund's
lower rate. Assuming the total net assets after the Reorganization were
approximately $2.4 billion, the effective management fee rate paid by the
Combined Fund would be 0.74%.
See Notes to Financial Statements.
F-13
<PAGE> 67
MERRILL LYNCH GLOBAL GROWTH FUND, INC. AND
MERRILL LYNCH GLOBAL HOLDINGS, INC.
NOTES TO PRO FORMA FINANCIAL STATEMENTS
(UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES:
Merrill Lynch Global Growth Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940 as a diversified, open-end management investment
company. Prior to commencement of operations on October 31, 1997, the Fund had
no operations other than those relating to organizational matters and the issue
of 10,000 capital shares of the Fund to Merrill Lynch Asset Management, L.P.
("MLAM") for $100,000. These unaudited financial statements reflect all
adjustments which are, in the opinion of management, necessary to a fair
statement of the results for the interim period presented. The Fund offers four
classes of shares under the Merrill Lynch Select Pricing(SM) System. Shares of
Class A and Class D are sold with a front-end sales charge. Shares of Class B
and Class C may be subject to a contingent deferred sales charge. All classes of
shares have identical voting, dividend, liquidation and other rights and the
same terms and conditions, except that Class B, Class C and Class D shares bear
certain expenses related to the account maintenance of such shares, and Class B
and Class C shares also bear certain expenses related to the distribution of
such shares. Each class has exclusive voting rights with respect to matters
relating to its account maintenance and distribution expenditures. The following
is a summary of significant accounting policies followed by the Fund.
(a) Valuation of investments--Portfolio securities which are traded on
stock exchanges are valued at the last sale price on the exchange on which such
securities are traded, as of the close of business on the day the securities are
being valued or, lacking any sales, at the last available bid price. Securities
traded in the over-the-counter market are valued at the last available bid price
prior to the time of valuation. In cases where securities are traded on more
than one exchange, the securities are valued on the exchange designated by or
under the authority of the Board of Directors as the primary market. Securities,
which are traded both in the over-the-counter market and on a stock exchange,
are valued according to the broadest and most representative market. Options
written are valued at the last sale price in the case of exchange-traded options
or, in the case of options traded in the over-the-counter market, the last asked
price. Options purchased are valued at the last sale price in the case of
exchange-traded options or, in the case of options traded in the over-the-
counter market, the last bid price. Short-term securities are valued at
amortized cost, which approximates market value. Other investments, including
futures contracts and related options, are stated at market value. Securities
and assets for which market quotations are not available are valued at fair
value as determined in good faith by or under the direction of the Fund's Board
of Directors.
(b) Foreign currency transactions--Transactions denominated in foreign
currencies are recorded at the exchange rate prevailing when recognized. Assets
and liabilities denominated in foreign currencies are valued at the exchange
rate at the end of the period. Foreign currency transactions are the result of
settling (realized) or valuing (unrealized) assets or liabilities expressed in
foreign currencies into US dollars. Realized and unrealized gains or losses from
investments include the effects of foreign exchange rates on investments.
(c) Derivative financial instruments--The Fund may engage in various
portfolio strategies to seek to increase its return by hedging its portfolio
against adverse movements in the equity and currency markets. Losses may arise
due to changes in the value of the contract or if the counterparty does not
perform under the contract.
- Options--The Fund is authorized to write and purchase call and put
options. When the Fund writes an option, an amount equal to the premium
received by the Fund is reflected as an asset and an equivalent
liability. The amount of the liability is subsequently marked to market
to reflect the current market value of the option written.
When a security is purchased or sold through an exercise of an option,
the related premium paid (or received) is added to (or deducted from) the
basis of the security acquired or deducted from (or added to) the
proceeds of the security sold. When an option expires (or the Fund enters
into a closing
F-14
<PAGE> 68
MERRILL LYNCH GLOBAL GROWTH FUND, INC. AND
MERRILL LYNCH GLOBAL HOLDINGS, INC.
NOTES TO PRO FORMA FINANCIAL STATEMENTS
(UNAUDITED)--(CONTINUED)
transaction), the Fund realizes a gain or loss on the option to the
extent of the premiums received or paid (or gain or loss to the extent
the cost of the closing transaction exceeds the premium paid or
received).
Written and purchased options are non-income producing investments.
- Forward foreign exchange contracts--The Fund is authorized to enter into
forward foreign exchange contracts as a hedge against either specific
transactions or portfolio positions. Such contracts are not entered on
the Fund's records. However, the effect on operations is recorded from
the date the Fund enters into such contracts. Premium or discount is
amortized over the life of the contracts.
- Foreign currency options and futures--The Fund may also purchase or sell
listed or over-the-counter foreign currency options, foreign currency
futures and related options on foreign currency futures as a short or
long hedge against possible variations in foreign exchange rates. Such
transactions may be effected with respect to hedges on non-US dollar
denominated securities owned by the Fund, sold by the Fund but not yet
delivered, or committed or anticipated to be purchased by the Fund.
- Financial futures contracts--The Fund may purchase or sell financial
futures contracts and options on such futures contracts for the purpose
of hedging the market risk on existing securities or the intended
purchase of securities. Futures contracts are contracts for delayed
delivery of securities at a specific future date and at a specific price
or yield. Upon entering into a contract, the Fund deposits and maintains
as collateral such initial margin as required by the exchange on which
the transaction is effected. Pursuant to the contract, the Fund agrees to
receive from or pay to the broker an amount of cash equal to the daily
fluctuation in value of the contract. Such receipts or payments are known
as variation margin and are recorded by the Fund as unrealized gains or
losses. When the contract is closed, the Fund records a realized gain or
loss equal to the difference between the value of the contract at the
time it was opened and the value at the time it was closed.
(d) Income taxes--It is the Fund's policy to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its shareholders.
Therefore, no Federal income tax provision is required. Under the applicable
foreign tax law, a withholding tax may be imposed on interest, dividends, and
capital gains at various rates.
(e) Security transactions and investment income--Security transactions are
recorded on the dates the transactions are entered into (the trade dates).
Dividend income is recorded on the ex-dividend dates. Dividends from foreign
securities where the ex-dividend date may have passed are subsequently recorded
when the Fund has determined the ex-dividend date. Interest income (including
amortization of discount) is recognized on the accrual basis. Realized gains and
losses on security transactions are determined on the identified cost basis.
(f) Deferred organization expenses and prepaid registration fees--Deferred
organization expenses are charged to expense on a straight-line basis over a
five-year period. Prepaid registration fees are charged to expense as the
related shares are issued.
(g) Dividends and distributions--Dividends and distributions paid by the
Fund are recorded on the ex-dividend dates.
2. INVESTMENT ADVISORY AGREEMENT AND TRANSACTIONS WITH AFFILIATES:
The Fund has entered into an Investment Advisory Agreement with MLAM. The
general partner of MLAM is Princeton Services, Inc. ("PSI"), an indirect
wholly-owned subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is the
limited partner. The Fund has also entered into Distribution Agreements
F-15
<PAGE> 69
MERRILL LYNCH GLOBAL GROWTH FUND, INC. AND
MERRILL LYNCH GLOBAL HOLDINGS, INC.
NOTES TO PRO FORMA FINANCIAL STATEMENTS
(UNAUDITED)--(CONTINUED)
and Distribution Plans with Merrill Lynch Funds Distributor, a division of
Princeton Funds Distributor, Inc. ("MLFD" or the "Distributor"), a wholly-owned
subsidiary of Merrill Lynch Group, Inc.
MLAM is responsible for the management of the Fund's portfolio and provides
the necessary personnel, facilities, equipment and certain other services
necessary to the operations of the Fund. Pursuant to the Investment Advisory
Agreement between the Fund and MLAM, the management fee payable by the Fund is
equal to 0.75% of average daily net assets not exceeding $1.5 billion and 0.725%
of average daily net assets in excess of $1.5 billion. After the Reorganization,
the management fee paid by the Combined Fund will be at the Fund's lower rate of
0.74%. For the period October 31, 1997 (commencement of operations) to June 30,
1998, MLAM earned fees of $7,765,263 from the Fund and $2,821,860 from Merrill
Lynch Global Holdings, Inc.
Pursuant to the Distribution Plans adopted by the Fund in accordance with
Rule 12b-1 under the Investment Company Act of 1940, the Fund pays the
Distributor ongoing account maintenance and distribution fees. The fees are
accrued daily and paid monthly at annual rates based upon the average daily net
assets of the shares as follows:
<TABLE>
<CAPTION>
ACCOUNT MAINTENANCE FEE DISTRIBUTION FEE
----------------------- ----------------
<S> <C> <C>
Class B 0.25% 0.75%
Class C 0.25% 0.75%
Class D 0.25% --
</TABLE>
Pursuant to a sub-agreement with the Distributor, Merrill Lynch, Pierce,
Fenner & Smith Inc. ("MLPF&S"), a subsidiary of ML & Co., also provides account
maintenance and distribution services to the Fund. The ongoing account
maintenance fee compensates the Distributor and MLPF&S for providing account
maintenance services to Class B, Class C and Class D shareholders. The ongoing
distribution fee compensates the Distributor and MLPF&S for providing
shareholder and distribution-related services to Class B and Class C
shareholders.
For the period October 31, 1997 (commencement of operations) to June 30,
1998, MLFD earned underwriting discounts and direct commissions and MLPF&S
earned dealer concessions on sales of the Fund's Class A and Class D shares as
follows:
<TABLE>
<CAPTION>
MERRILL LYNCH MERRILL LYNCH
GLOBAL GROWTH FUND, INC. GLOBAL HOLDINGS, INC.
------------------------ ---------------------
<S> <C> <C>
Class A:
MLFD $ 57 $ 460
MLPF&S $ 1,166 $6,516
Class D:
MLFD $ 55,103 $ 173
MLPF&S $5,765,620 $1,943
</TABLE>
For the period October 31, 1997 (commencement of operations) to June 30,
1998, MLPF&S received contingent deferred sales charges relating to transactions
subject to front-end sales charge waivers in Class A and Class D shares, as
follows:
<TABLE>
<CAPTION>
MERRILL LYNCH MERRILL LYNCH
GLOBAL GROWTH FUND, INC. GLOBAL HOLDINGS, INC.
------------------------ ---------------------
<S> <C> <C>
Class A -- --
Class D $8,473 --
</TABLE>
F-16
<PAGE> 70
MERRILL LYNCH GLOBAL GROWTH FUND, INC. AND
MERRILL LYNCH GLOBAL HOLDINGS, INC.
NOTES TO PRO FORMA FINANCIAL STATEMENTS
(UNAUDITED)--(CONCLUDED)
For the period October 31, 1997 to June 30, 1998, MLPF&S received
contingent deferred sales charges relating to transactions in Class B and Class
C shares, as follows:
<TABLE>
<CAPTION>
MERRILL LYNCH MERRILL LYNCH
GLOBAL GROWTH FUND, INC. GLOBAL HOLDINGS, INC.
------------------------ ---------------------
<S> <C> <C>
Class B $1,245,043* $113,394*
Class C $ 121,497 $ 488
</TABLE>
- ---------------
* Additional contingent deferred sales charges payable to the Distributor may
have been waived or converted to a contingent obligation in connection with a
shareholder's participation in certain fee-based programs.
Financial Data Services, Inc. ("FDS"), a wholly-owned subsidiary of ML &
Co., is the Fund's transfer agent.
Accounting services are provided to the Fund by MLAM at cost.
Certain officers and/or directors of the Fund are officers and/or directors
of MLAM, PSI, FDS, MLFD and/or ML & Co.
F-17
<PAGE> 71
MERRILL LYNCH GLOBAL HOLDINGS, INC.
P.O. BOX 9011
PRINCETON, NEW JERSEY 08543-9011
PROXY
This proxy is solicited on behalf of the Board of Directors
The undersigned hereby appoints Arthur Zeikel, Terry K. Glenn
and Philip M. Mandel as proxies, each of them with the power to appoint his
substitute, and hereby authorizes them to represent and to vote, as designated
below, all of the shares of common stock of Merrill Lynch Global Holdings, Inc.
(the "Fund") held of record by the undersigned on September 15, 1998, at the
Special Meeting of Stockholders of the Fund to be held on November 5, 1998, or
any adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED "FOR" PROPOSAL 1.
By signing and dating this card, you authorize the proxies to
vote each proposal as marked, or if not marked, to vote "FOR" each proposal,
and to use their discretion to vote for any other matter as may properly come
before the meeting or any adjournment thereof. If you do not intend to
personally attend the meeting, please complete and return this card at once in
the enclosed envelope.
TO VOTE MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: KEEP THIS PORTION
FOR YOUR RECORDS
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN
THIS PORTION ONLY
Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney or as executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by president or other authorized
officer. If a partnership, please sign in partnership name by authorized
persons.
Vote On Proposal
1. To approve the Agreement and Plan of Reorganization between
Merrill Lynch Global Holdings, Inc. and Merrill Lynch Global
Growth Fund, Inc.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
2. To transact such other business as may properly come before the
Meeting or any adjournment thereof.
- ------------------------------ ---------------------------------
| |
- ------------------------------ ---------------------------------
Signature (PLEASE DATE Signature (Joint Owners) DATE
SIGN WITHIN BOX)
