MERRILL LYNCH
GLOBAL GROWTH
FUND, INC.
FUND LOGO
Annual Report
August 31, 1998
This report is not authorized for use as an offer of sale or a
solicitation of an offer to buy shares of the Fund unless
accompanied or preceded by the Fund's current prospectus. Past
performance results shown in this report should not be considered a
representation of future performance. Investment return and
principal value of shares will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
Statements and other information herein are as dated and are subject
to change.
Merrill Lynch
Global Growth Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
Printed on post-consumer recycled paper
MERRILL LYNCH GLOBAL GROWTH FUND, INC.
Worldwide
Investments as of
August 31, 1998
Percent of
Ten Largest Industries Net Assets
Banking & Financial 14.9%
Insurance 10.6
Telecommunications 10.4
Pharmaceuticals 7.9
Retail Stores 7.2
Software--Computer 6.0
Communications Equipment 4.4
Electronics 3.8
Computers 3.1
Specialty Retailing 2.9
Country of Percent of
Ten Largest Equity Holdings Origin Net Assets
SAP AG (Systeme, Anwendungen,
Produkte in der Datenverar-
beitung)(Preferred) Germany 3.4%
Cisco Systems, Inc. United States 2.1
Wal-Mart Stores, Inc. United States 2.1
Pfizer, Inc. United States 2.0
AEGON N.V. Netherlands 2.0
Vodafone Group PLC United Kingdom 1.9
Microsoft Corporation United States 1.8
Cap Gemini S.A. France 1.7
COLT Telecom Group PLC United Kingdom 1.7
General Electric Company United States 1.7
Merrill Lynch Global Growth Fund, Inc., August 31, 1998
DEAR SHAREHOLDER
For the quarter ended August 31, 1998, total returns for Merrill
Lynch Global Growth Fund, Inc.'s Class A, Class B, Class C and Class
D Shares were -10.84%, -11.15%, -11.15% and -10.94%, respectively.
The unmanaged Morgan Stanley Capital International (MSCI) World
Stock Index for the same three-month period had a total return of
- -11.46%.
Renewed investor concerns about the declines in business activity
and consumer spending in Asia, as well as the economic and political
turmoil in Russia, contributed to the declines in world stock
markets in August 1998. However, Merrill Lynch Global Growth Fund,
Inc. did not have significant direct stock investments in the Asian
markets. In addition, the Fund had no investments in Latin America
or Eastern Europe. Year-to-date as of August 31, 1998 total returns
for Merrill Lynch Global Growth Fund, Inc.'s Class A, Class B, Class
C and Class D Shares were +7.69%, +6.91%, +6.91% and +7.39%,
respectively. These returns compared favorably to the MSCI World
Stock Index total return of +0.89% for the same year-to-date period.
(Fund results shown do not reflect sales charges and would be lower
if sales charges were included. Complete performance data can be
found on pages 6 and 7 of this report to shareholders.)
During the August quarter, the Fund experienced its best investment
returns, as compared to the MSCI World Stock Index, from stocks in
the telecommunications, retailing, pharmaceutical, computer software
and computer industries. At August 31, 1998, the telecommunications
industry represented 10.4% of the Fund's net assets, while the
pharmaceutical industry, the Fund's fourth-largest industry sector,
made up 7.9% of net assets. At quarter-end, retail stores and
specialty retailing sectors were 7.2% and 2.9% of net assets,
respectively. The computer and computer software industries weighed
in at 3.1% and 6.0% of net assets, respectively. Stock prices for
all of the Fund's ten largest equity investments outperformed the
MSCI World Stock Index during the August quarter. Also, seven of the
Fund's top ten equity holdings experienced positive stock price
returns in the quarter ended August 31, 1998. (For complete listings
of the Fund's ten largest industries and holdings, see page 1 of
this report to shareholders.)
The Environment
Investors appeared to focus on economic and political concerns as a
result of the continued decline in overall business activity and
consumer spending in Japan and other emerging Asian economies. While
economic difficulties in Russia produced a political crisis there,
political and economic problems also surfaced in some of the major
Latin American economies. However, the US economy appeared to be
experiencing a solid, but moderate rate of real growth in business
activity, with modest levels of inflation and declining long-term
interest rates. The balance of traded goods continued to show the
strength of US consumer demand for less-expensive imported
manufactured goods from motor vehicles to apparel, which are being
imported from Japan, South Korea, Taiwan and other Asian countries.
The most recent corporate reports and business information show that
US consumers continue to spend at an above-average rate on household
goods and furniture, computers, entertainment goods and services and
healthcare. We anticipate that US consumer spending will continue to
increase at an above-average rate for the remainder of 1998. The
recent declines in long-term US Treasury interest rates to record-
low levels is being welcomed by consumers with an increase in home
mortgage refinancing, which will assist in supporting a new higher
level of consumer spending. In the extremely important service
sector, US employment appears to be growing rapidly. Consumer
confidence, although down most recently, is still at a near-record
level.
Investment Strategy
Since the Fund's inception (October 31, 1997) through August 31,
1998, our investment strategy remained unchanged. The Fund's two
largest industry sectors continued to be banking & financial and
insurance, representing more than 25% of net assets. The majority of
these investments remained in the United Kingdom, major Western
European countries, Canada and the United States. However, investor
concerns about the possibility of rising central bank interest rates
and possible bank loan exposure to Russian enterprises and Asian
companies depressed the stock valuations of most of these companies.
Recently, the Bank of Japan reduced the interbank borrowing rates
and US Federal Reserve Board Chairman Alan Greenspan publicly
discussed the possibility of lowering the US Federal funds target
rate, which actually occurred in late September. Although the US
economy appears to be growing in real terms at a rate sufficient to
sustain a growth in employment, companies in many industries are
experiencing declines in revenues and earnings from reduced levels
of business in Asia and/or declines in many commodity prices. For
instance, global energy companies are realizing some of the sharpest
declines ever in revenues and earnings from lower energy prices.
During the August quarter, we added several companies to the Fund
because of their attractive valuations. Abercrombie & Fitch Co., a
relatively rapid growth and well-managed specialty retailer,
anticipates substantial increases in store locations and sales per
store over the next five years. Alstom was added to the Fund because
of the potential for rapid growth in revenues and earnings from a
growing backlog of orders for power generating and transportation
equipment. Ascend Communications, Inc., a leader in network
communications equipment, recently gained access to the local public
telephone equipment market through its acquisition of Stratus
Computer Corporation. As local exchange public telephone companies
build Internet access systems, we believe Ascend will be in a strong
market position to gain a significant share of this business. Equant
N.V. was added to the Fund because of the potential for a
substantial increase in earnings growth and rising rates of return
from the contractual sale of its global commercial communications
system, which it operates for the global airline industry.
Merrill Lynch Global Growth Fund, Inc., August 31, 1998
We also added MetroNet Communications Corp., a leading competitive
access provider of telecommunication services in Canada, because we
believe the company could experience an above-average rate of growth
in revenues and market share over the next five years. GTE
Corporation was added to the portfolio for its broad-based wireline
and wireless customer base across a significant geographic expanse
in the United States, as well as rapid growth in value-added
commercial communication services, including Internet access and
communications. Mannesmann AG is a leading multi-industry company
with a large and rapidly growing telecommunication franchise.
America Online Inc., the leading consumer access provider to the
Internet, was added because of continued rapid growth of new
subscribers from a relatively large base and the rapid growth of
revenues and fees from advertising and commercial access
partnerships. Cable & Wireless PLC has shown improved rates of
growth and profitability of its wireless communications operations
as well as an apparent improvement in prospects for more profitable
operations in Hong Kong and China. Network Appliance Inc. was added
because of the attractive valuation relative to a very rapid rate of
growth of revenues and earnings from the installation of proprietary
and advanced database file servers for primary usage in Internet
sites. The addition to the Fund of Esat Telecom Group PLC, the
leading competitive access provider for commercial customers in
Ireland, was based on expectations of a substantial rise in the rate
of growth in new customers and traffic volumes over the next five
years. Finally, we added Somerfield PLC, a UK-based retailer,
because we believe management can substantially improve returns and
earnings as recent acquisitions are downsized and restructured.
Fiscal Year in Review
Since inception (October 31, 1997) through August 31, 1998, Merrill
Lynch Global Growth Fund, Inc.'s Class A, Class B, Class C and Class
D Shares had total returns of +7.80%, +6.80%, +6.80% and +7.50%,
respectively. The total return for the unmanaged MSCI World Stock
Index was +3.90% for the same period. The positive investment
performance of the Fund for the period ended August 31, 1998 can be
attributed to a significant weighting in the insurance industry and
individual stock selection in several industries. During the period,
stock prices of the Fund's holdings in the insurance industry, which
represented 10.6% of net assets at fiscal year-end, appreciated by
+21.5%. At August 31, 1998, nine of the Fund's top ten equity
holdings had positive returns on investment.
Investment returns were aided during the fiscal period by our
reduction of the Fund's exposure to the communications equipment
industry, which began in April 1998 after most of the stocks had
appreciated from relatively low price levels at year-end 1997. We
anticipated that communications equipment companies would experience
deferrals, if not cancellations, of major infrastructure contracts
from public and private organizations. In April 1998, we
significantly reduced the Fund's weighting in the oil services
industry and other energy company holdings because of concern about
the continuation of recessionary domestic business conditions in the
major Asian countries. The depressed business conditions in Asia, in
combination with the Iraqi government reentering the world energy
markets with oil exports, led us to believe that the downward
pressure on energy prices would continue. Subsequently, major oil
companies announced mid-year reductions in the rate of growth of
exploration and development expenditures. As a result of our reduced
weightings in these sectors, the declines in the stock prices of
communications equipment companies, oil services companies and other
energy company stock holdings had only a modest negative effect on
the Fund.
In Conclusion
For the fiscal period ended August 31, 1998, Merrill Lynch Global
Growth Fund, Inc. produced positive investment returns during one of
the most volatile and turbulent periods for global investing. We
believe that the recent period of financial and stock market
volatility will abate, similar to the fourth quarter of 1997, as
central bankers and policy makers among the largest industrial
nations communicate and coordinate changes in policy. From our
perspective, the business conditions for many of the global
companies in which we invest are attractive and continue to improve.
Looking ahead, our investment focus will remain on the major
developed equity markets around the world.
We thank you for your investment in Merrill Lynch Global Growth
Fund, Inc., and we look forward to discussing our investment
strategy and outlook with you in our upcoming report to
shareholders.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Lawrence R. Fuller)
Lawrence R. Fuller
Senior Vice President and
Portfolio Manager
October 8, 1998
Merrill Lynch Global Growth Fund, Inc., August 31, 1998
PERFORMANCE DATA
About Fund
Performance
Investors are able to purchase shares of the Fund through the
Merrill Lynch Select Pricing SM System, which offers four pricing
alternatives:
* Class A Shares incur a maximum initial sales charge (front-end
load) of 5.25% and bear no ongoing distribution or account
maintenance fees. Class A Shares are available only to eligible
investors.
* Class B Shares are subject to a maximum contingent deferred sales
charge of 4% if redeemed during the first year, decreasing 1% each
year thereafter to 0% after the fourth year. In addition, Class B
Shares are subject to a distribution fee of 0.75% and an account
maintenance fee of 0.25%. These shares automatically convert to
Class D Shares after approximately 8 years. (There is no initial
sales charge for automatic share conversions.)
* Class C Shares are subject to a distribution fee of 0.75% and an
account maintenance fee of 0.25%. In addition, Class C Shares are
subject to a 1% contingent deferred sales charge if redeemed within
one year of purchase.
* Class D Shares incur a maximum initial sales charge of 5.25% and
an account maintenance fee of 0.25% (but no distribution fee).
None of the past results shown should be considered a representation
of future performance. Figures shown in the "Recent Performance
Results" and "Aggregate Total Return" tables assume reinvestment of
all dividends and capital gains distributions at net asset value on
the ex-dividend date. Investment return and principal value of
shares will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost. Dividends paid to each class
of shares will vary because of the different levels of account
maintenance, distribution and transfer agency fees applicable to
each class, which are deducted from the income available to be paid
to shareholders.
Total Return
Based on a $10,000
Investment
A line graph depicting the growth of an investment in the Fund's
Class A Shares and Class B Shares compared to growth of an
investment in the MSCI World Index. Beginning and ending values
are:
10/31/97** 8/98
ML Global Growth Fund, Inc.++--
Class A Shares* $ 9,475 $10,214
ML Global Grwoth Fund, Inc.++--
Class B Shares $10,000 $10,280
MSCI World Index++++ $10,000 $10,390
A line graph depicting the growth of an investment in the Fund's
Class C Shares and Class D Shares compared to growth of an
investment in the MSCI World Index. Beginning and ending values
are:
10/31/97** 8/98
ML Global Growth Fund, Inc.++--
Class C Shares* $10,000 $10,580
ML Global Grwoth Fund, Inc.++--
Class D Shares $ 9,475 $10,186
MSCI World Index++++ $10,000 $10,390
[FN]
*Assuming maximum sales charge, transaction costs and other
operating expenses, including advisory fees.
**Commencement of operations.
++ML Global Growth Fund, Inc. invests primarily in equity securities
with a particular emphasis on companies that have exhibited above-
average growth rates in earnings.
++++This unmanaged market capitalization-weighted Index is comprised
of a representative sampling of large-, medium-, and small-
capitalization companies in 22 countries, including the United
States.
Aggregate
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Inception (10/31/97) through 6/30/98 +25.00% +18.44%
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Inception (10/31/97) through 6/30/98 +24.20% +20.20%
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Inception (10/31/97) through 6/30/98 +24.20% +23.20%
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Sales Charge Sales Charge**
Class D Shares*
Inception (10/31/97) through 6/30/98 +24.80% +18.25%
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
<TABLE>
Recent
Performance
Results*
<CAPTION>
3 Month Since Inception
Total Return Total Return
<S> <C> <C>
ML Global Growth Fund, Inc. Class A Shares -10.84% +7.80%
ML Global Growth Fund, Inc. Class B Shares -11.15 +6.80
ML Global Growth Fund, Inc. Class C Shares -11.15 +6.80
ML Global Growth Fund, Inc. Class D Shares -10.94 +7.50
<FN>
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included. Total
investment returns are based on changes in net asset values for the
periods shown, and assume reinvestment of all dividends and capital
gains distributions at net asset value on the ex-dividend date. The
Fund's inception date is October 31, 1997.
</TABLE>
Merrill Lynch Global Growth Fund, Inc., August 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
NORTH Shares Value Percent of
AMERICA Industries Held Investments Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
Canada Banking & Financial 380,000 Bank of Montreal $ 17,744,280 $ 13,378,232 0.7%
700,000 Canadian Imperial
Bank of Commerce 21,401,590 13,159,911 0.7
500,000 National Bank of Canada 7,419,127 6,479,413 0.4
300,000 Royal Bank of Canada 16,480,599 11,327,801 0.6
-------------- -------------- ------
63,045,596 44,345,357 2.4
Beverages 50,000 Seagram Company Ltd. (The) 2,126,452 1,543,750 0.1
Communications 350,000 ++Newbridge Networks
Corporation 16,697,365 6,579,955 0.4
Equipment 70,000 Northern Telecom Ltd. 3,349,980 3,362,592 0.2
-------------- -------------- ------
20,047,345 9,942,547 0.6
Telecommunications 300,000 ++MetroNet Communications
Corp. (Class B) 8,702,918 5,287,500 0.3
Total Investments in Canada 93,922,311 61,119,154 3.4
United Advertising 85,000 Interpublic Group of
States Companies, Inc. 4,101,446 4,845,000 0.3
Banking & Financial 154,000 Banc One Corporation 7,522,284 5,852,000 0.3
50,000 BankAmerica Corporation 3,492,072 3,203,125 0.2
65,000 Citicorp 9,744,694 7,028,125 0.4
245,000 Mellon Bank Corporation 14,865,018 12,740,000 0.7
200,000 NationsBank Corporation 15,420,522 11,400,000 0.7
180,000 State Street Corporation 10,395,954 9,371,250 0.5
-------------- -------------- ------
61,440,544 49,594,500 2.8
Beverages 275,000 Coca-Cola Company (The) 22,543,677 17,909,375 1.0
Broadcasting--Radio & 120,000 ++Chancellor Media Corp. 5,586,537 4,282,500 0.2
Television 90,000 ++Clear Channel Communications,
Inc. 3,785,427 4,050,000 0.2
-------------- -------------- ------
9,371,964 8,332,500 0.4
Chemicals 110,000 duPont (E.I.) de Nemours
& Company 8,806,972 6,345,625 0.4
Communications 105,000 ++Ascend Communications, Inc. 4,970,671 3,688,125 0.2
Equipment 470,000 ++Cisco Systems, Inc. 31,682,031 38,481,250 2.1
80,600 ++FORE Systems, Inc. 1,383,709 1,390,350 0.1
30,000 Lucent Technologies, Inc. 1,284,023 2,126,250 0.1
-------------- -------------- ------
39,320,434 45,685,975 2.5
Computers 925,000 COMPAQ Computer Corporation 31,574,465 25,842,187 1.4
150,000 ++Dell Computer Corporation 12,066,755 14,990,625 0.8
45,000 Hewlett-Packard Company 2,922,777 2,185,312 0.1
25,000 ++Network Appliance, Inc. 1,132,233 1,042,187 0.1
-------------- -------------- ------
47,696,230 44,060,311 2.4
Cosmetics 220,000 Gillette Company (The) 10,104,061 9,047,500 0.5
20,000 International Flavors &
Fragrances, Inc. 968,044 775,000 0.0
-------------- -------------- ------
11,072,105 9,822,500 0.5
Electrical Equipment 35,000 Emerson Electric Co. 1,975,074 1,995,000 0.1
375,000 General Electric Company 27,679,379 30,000,000 1.7
10,000 Honeywell, Inc. 710,689 625,000 0.0
-------------- -------------- ------
30,365,142 32,620,000 1.8
Electronics 250,000 Intel Corporation 19,217,677 17,796,875 1.0
300,000 Texas Instruments Inc. 18,071,754 14,306,250 0.8
-------------- -------------- ------
37,289,431 32,103,125 1.8
Energy 25,000 El Paso Energy Corporation 792,881 620,312 0.0
30,000 Enron Corp. 1,153,386 1,269,375 0.1
-------------- -------------- ------
1,946,267 1,889,687 0.1
Entertainment 35,000 ++Viacom, Inc. (Class B) 1,088,787 1,736,875 0.1
450,000 Walt Disney Company (The) 14,343,318 12,346,875 0.7
-------------- -------------- ------
15,432,105 14,083,750 0.8
Financial Services 40,000 American Express Company 3,224,880 3,120,000 0.2
125,000 Federal National Mortgage
Association 7,374,046 7,101,562 0.4
100,000 Franklin Resources, Inc. 5,500,811 3,225,000 0.2
100,000 Morgan Stanley, Dean Witter,
Discover & Co. 6,021,422 5,806,250 0.3
90,000 Travelers Group, Inc. 4,659,223 3,993,750 0.2
-------------- -------------- ------
26,780,382 23,246,562 1.3
Food Merchandising 40,000 Albertson's, Inc. 1,564,107 2,022,500 0.1
50,000 ++Meyer (Fred), Inc. 1,566,135 1,965,625 0.1
-------------- -------------- ------
3,130,242 3,988,125 0.2
Foods 40,000 ConAgra, Inc. 1,360,116 990,000 0.1
35,000 Wrigley (Wm.) Jr. Company
(Class B) 2,610,412 2,712,500 0.1
-------------- -------------- ------
3,970,528 3,702,500 0.2
Home Furnishings 175,000 Ethan Allen Interiors, Inc. 8,275,521 5,687,500 0.3
Hotels 125,000 Marriott International,
Inc. (Class A) 4,268,224 3,507,812 0.2
Household Products 35,000 Colgate-Palmolive Company 2,288,342 2,524,375 0.1
20,000 Kimberly-Clark Corporation 1,056,650 762,500 0.0
60,000 Procter & Gamble Company
(The) 4,312,704 4,590,000 0.3
-------------- -------------- ------
7,657,696 7,876,875 0.4
Information Processing 48,000 America Online Inc. 4,310,300 3,933,000 0.2
155,000 First Data Corporation 4,599,284 3,206,562 0.2
-------------- -------------- ------
8,909,584 7,139,562 0.4
Insurance 10,000 Aetna Inc. 737,856 601,875 0.0
225,000 American International
Group, Inc. 15,884,252 17,395,312 1.0
-------------- -------------- ------
16,622,108 17,997,187 1.0
Medical Technology 150,000 ++Boston Scientific
Corporation 7,648,860 10,387,500 0.6
20,000 Guidant Corporation 1,258,388 1,235,000 0.0
25,000 Johnson & Johnson 1,503,390 1,725,000 0.1
-------------- -------------- ------
10,410,638 13,347,500 0.7
Oil Services 190,000 Baker Hughes, Inc. 9,059,363 3,467,500 0.2
75,000 Diamond Offshore Drilling,
Inc. 3,665,682 1,565,625 0.1
25,000 Schlumberger Ltd. 2,336,420 1,095,312 0.0
-------------- -------------- ------
15,061,465 6,128,437 0.3
</TABLE>
Merrill Lynch Global Growth Fund, Inc., August 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
NORTH AMERICA Shares Value Percent of
(concluded) Industries Held Investments Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
United Pharmaceuticals 25,000 ++Amgen, Inc. $ 1,328,782 $ 1,525,000 0.1%
States 180,000 Bristol-Myers Squibb Co. 17,977,083 17,617,500 1.0
(concluded) 150,000 Merck & Co., Inc. 14,783,287 17,390,625 1.0
400,000 Pfizer, Inc. 37,659,850 37,200,000 2.0
-------------- -------------- ------
71,749,002 73,733,125 4.1
Photography 13,000 Eastman Kodak Company 815,032 1,015,625 0.1
Pollution Control 14,500 ++Waste Management, Inc. 505,400 639,812 0.0
Publishing 140,000 Gannett Co., Inc. 9,998,409 8,260,000 0.5
Restaurants 50,000 McDonald's Corporation 2,743,040 2,803,125 0.2
Retail Stores 100,000 ++Federated Department
Stores, Inc. 4,964,030 4,356,250 0.2
640,000 Wal-Mart Stores, Inc. 29,396,296 37,600,000 2.1
-------------- -------------- ------
34,360,326 41,956,250 2.3
Semiconductor 125,000 ++Applied Materials, Inc. 4,033,911 3,070,312 0.2
Software--Computer 340,000 ++Microsoft Corporation 31,764,740 32,618,750 1.8
410,000 ++PeopleSoft, Inc. 17,472,060 11,531,250 0.7
-------------- -------------- ------
49,236,800 44,150,000 2.5
Specialty Retailing 60,000 ++Abercrombie & Fitch Co. 2,901,100 2,580,000 0.1
400,000 CVS Corporation 14,726,207 14,550,000 0.8
170,000 Gap, Inc. (The) 8,580,501 8,680,625 0.5
760,000 ++Staples, Inc. 18,257,636 20,615,000 1.1
165,000 Walgreen Co. 4,931,108 6,352,500 0.4
-------------- -------------- ------
49,396,552 52,778,125 2.9
Telecommunications 160,000 AT&T Corp. 10,434,749 8,020,000 0.5
195,000 GTE Corporation 9,779,319 9,750,000 0.5
390,000 Sprint Corporation 26,920,978 26,154,375 1.5
325,000 ++WorldCom, Inc. 15,203,420 13,284,375 0.7
-------------- -------------- ------
62,338,466 57,208,750 3.2
Toys 200,000 Mattel, Inc. 7,823,472 6,475,000 0.4
Travel & Lodging 330,000 Carnival Corporation
(Class A) 10,492,275 9,528,750 0.5
Total Investments in the
United States 697,965,390 661,533,282 36.7
Total Investments in
North America 791,887,701 722,652,436 40.1
PACIFIC
BASIN
Japan Automobiles 480,000 Honda Motor Co., Ltd. 17,468,820 16,523,587 0.9
500,000 Toyota Motor Corporation 13,656,899 10,660,150 0.6
-------------- -------------- ------
31,125,719 27,183,737 1.5
Computers 700,000 Fujitsu Ltd. 7,951,104 7,090,239 0.4
700,000 NEC Corporation 7,957,519 5,161,496 0.3
-------------- -------------- ------
15,908,623 12,251,735 0.7
Leisure 140,000 Sony Corporation 12,422,680 10,223,828 0.7
Office Equipment 200,000 Canon, Inc. 4,706,266 4,058,649 0.2
Photography 400,000 Fuji Photo Film Co., Ltd. 15,918,085 12,891,344 0.7
Retail 250,000 Ito-Yokado Co., Ltd. 13,794,985 11,634,084 0.6
Telecommunications 3,000 ++Nippon Telegraph & Telephone
Corporation (NTT) 26,362,868 22,736,932 1.2
Total Investments in the
Pacific Basin 120,239,226 100,980,309 5.6
WESTERN
EUROPE
Denmark Telecommunications 150,000 Tele Danmark A/S (Class B) 11,610,765 15,909,192 0.9
Total Investments in Denmark 11,610,765 15,909,192 0.9
Finland Communications 60,000 Nokia Oyj (Class A) 2,745,757 4,318,720 0.2
Equipment
Total Investments in Finland 2,745,757 4,318,720 0.2
France Communications 110,000 Alcatel Alsthom Cie Generale
Equipment d'Electricite S.A. 17,556,385 17,773,454 1.0
Cosmetics 10,000 L'OREAL S.A. 3,739,626 5,390,407 0.3
Electrical Equipment 200,000 ++Alstom 6,816,293 4,669,656 0.3
Electronics 300,000 ++STMicroelectronics N.V. 23,513,450 16,648,338 0.9
Foods 40,000 Groupe Danone S.A. 8,680,689 10,584,553 0.6
15,000 Promodes S.A. 6,249,958 9,742,831 0.5
-------------- -------------- ------
14,930,647 20,327,384 1.1
Information Processing 200,000 Cap Gemini S.A. 17,173,476 31,469,419 1.7
Insurance 165,000 AXA-UAP S.A. 11,694,023 18,983,166 1.1
Retail Stores 30,000 Carrefour S.A. 17,681,298 17,561,966 1.0
Total Investments in France 113,105,198 132,823,790 7.4
Germany Apparel 50,000 Adidas-Salomon AG 8,340,102 5,900,709 0.3
Automobiles 176,000 Daimler-Benz AG 17,205,879 15,877,447 0.9
Banking & Financial 600,000 Commerzbank AG 21,297,933 17,361,702 1.0
350,000 Deutsche Bank AG 23,047,332 21,784,397 1.2
525,000 Dresdner Bank AG 22,202,477 23,621,277 1.3
-------------- -------------- ------
66,547,742 62,767,376 3.5
Chemicals 150,000 BASF AG 5,213,865 6,000,000 0.3
150,000 Bayer AG 5,341,904 5,634,043 0.3
300,000 Hoechst AG 14,182,600 12,289,362 0.7
-------------- -------------- ------
24,738,369 23,923,405 1.3
Electronics 300,000 Siemens AG 20,165,738 19,489,362 1.1
Insurance 66,911 Allianz AG 17,351,225 19,209,626 1.1
Multi-Industry 60,000 Mannesman AG 5,425,439 5,412,766 0.3
175,000 VEBA AG 11,173,578 8,824,965 0.5
-------------- -------------- ------
16,599,017 14,237,731 0.8
</TABLE>
Merrill Lynch Global Growth Fund, Inc., August 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
Western Europe Shares Value Percent of
(concluded) Industries Held Investments Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
Germany Retail Stores 250,000 Metro AG $ 11,962,548 $ 14,113,475 0.8%
(concluded)
Software--Computer 110,000 SAP AG (Systeme,
Anwendungen, Produkte in
der Datenverarbeitung)
(Preferred) 34,118,327 62,411,348 3.4
Total Investments in
Germany 217,028,947 237,930,479 13.2
Ireland Banking & Financial 1,300,000 Allied Irish Banks PLC 13,137,895 18,222,411 1.0
Telecommunications 100,000 ++Esat Telecom Group PLC (ADR)* 3,206,252 2,050,000 0.1
Total Investments in
Ireland 16,344,147 20,272,411 1.1
Italy Insurance 550,000 Assicurazioni Generali S.p.A. 13,942,232 18,657,980 1.0
3,750,000 Istituto Nazionale delle
Assicurazioni S.p.A. (INA) 7,008,593 10,009,184 0.6
Total Investments in Italy 20,950,825 28,667,164 1.6
Netherlands Household Products 200,000 Unilever N.V. 11,380,224 13,816,683 0.8
120,000 Unilever N.V. (NY
Registered Shares) 8,031,036 7,605,000 0.4
-------------- -------------- ------
19,411,260 21,421,683 1.2
Insurance 400,000 AEGON N.V. 21,905,046 36,200,915 2.0
235,000 ING Groep N.V. 10,003,319 13,847,856 0.8
-------------- -------------- ------
31,908,365 50,048,771 2.8
Leisure 30,000 Philips Electronics N.V. 2,942,792 1,957,866 0.1
150,000 Polygram N.V. 7,985,515 8,220,624 0.4
-------------- -------------- ------
10,928,307 10,178,490 0.5
Retail Stores 600,000 Koninklijke Ahold N.V. 17,678,413 17,647,946 1.0
Software--Computer 60,000 ++Baan Company N.V. 2,240,629 1,755,744 0.1
Telecommunications 187,500 ++Equant N.V. 6,773,837 7,899,078 0.4
Total Investments in
the Netherlands 88,940,811 108,951,712 6.0
Spain Banking & Financial 600,000 Banco Bilbao Vizcaya, S.A. 10,292,072 7,933,752 0.4
275,000 Banco Santander, S.A. 6,347,551 5,142,247 0.3
Total Investments in Spain 16,639,623 13,075,999 0.7
Sweden Communications 50,000 Telefonaktiebolaget LM
Equipment Ericsson (Class B) 998,239 1,165,955 0.1
Total Investments in Sweden 998,239 1,165,955 0.1
Switzerland Foods 12,000 Nestle S.A. (Registered
Shares) 20,005,700 22,272,664 1.2
Insurance 20,000 Zuerich Allied AG (Registered
Shares) 8,709,180 11,986,159 0.7
Pharmaceuticals 18,000 Novartis AG (Registered
Shares) 28,480,812 28,015,225 1.6
Total Investments in
Switzerland 57,195,692 62,274,048 3.5
United Banking & Financial 875,000 Barclays PLC 22,582,208 20,734,879 1.1
Kingdom 500,000 HSBC Holdings PLC 14,210,888 10,374,767 0.6
2,000,000 Lloyds TSB Group PLC 25,390,195 23,881,222 1.3
1,500,000 National Westminster Bank
PLC (Ordinary) 22,162,632 26,451,887 1.5
-------------- -------------- ------
84,345,923 81,442,755 4.5
Broadcast--Media 1,300,000 British Sky Broadcasting
Group PLC 8,212,658 10,194,318 0.6
Chemicals 365,000 Imperial Chemical
Industries PLC 5,501,341 3,991,564 0.2
Electrical Equipment 1,000,000 Siebe PLC 5,015,483 3,516,870 0.2
Household Products 750,000 Unilever PLC 5,692,608 6,996,059 0.4
Information Processing 1,040,000 Reuters Group PLC 13,444,894 8,691,023 0.5
Insurance 1,000,000 CGU PLC 14,287,623 14,603,384 0.8
2,500,000 Guardian Royal Exchange PLC 14,020,735 10,759,948 0.6
2,000,000 Royal & Sun Alliance
Insurance Group PLC 20,023,591 16,813,988 0.9
-------------- -------------- ------
48,331,949 42,177,320 2.3
Pharmaceuticals 550,000 Glaxo Wellcome PLC 14,392,509 16,579,530 0.9
575,000 SmithKline Beecham PLC 5,491,124 6,788,815 0.4
400,000 Zeneca Group PLC 15,610,472 15,641,698 0.9
-------------- -------------- ------
35,494,105 39,010,043 2.2
Publishing 250,000 Pearson PLC 3,653,585 4,174,190 0.2
Retail Stores 750,000 Boots Company PLC (The) 11,223,919 12,472,328 0.7
500,000 J Sainsbury PLC 4,238,967 4,312,353 0.2
1,499,200 Somerfield PLC 9,606,795 9,553,252 0.5
4,200,000 Tesco PLC 11,323,155 11,816,683 0.7
-------------- -------------- ------
36,392,836 38,154,616 2.1
Telecommunications 1,250,000 Cable & Wireless PLC 16,911,329 12,141,575 0.7
700,000 ++COLT Telecom Group PLC 9,536,664 30,098,546 1.7
2,500,000 Vodafone Group PLC 17,949,999 34,875,628 1.9
-------------- -------------- ------
44,397,992 77,115,749 4.3
Total Investments in
the United Kingdom 290,483,374 315,464,507 17.5
Total Investments in
Western Europe 836,043,378 940,853,977 52.2
SHORT-TERM Face
SECURITIES Amount Issue
Commercial Paper** $46,181,000 General Motors Acceptance
Corp., 5.81% due 9/01/1998 46,181,000 46,181,000 2.5
Total Investments in
Short-Term Securities 46,181,000 46,181,000 2.5
Total Investments $1,794,351,305 1,810,667,722 100.4
==============
Liabilities in Excess of Other Assets (7,532,010) (0.4)
-------------- ------
Net Assets $1,803,135,712 100.0%
============== ======
<FN>
*American Depositary Receipts (ADR).
**Commercial Paper is traded on a discount basis; the interest rate
shown reflects the discount rate paid at the time of purchase by the
Fund.
++Non-income producing security.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Global Growth Fund, Inc., August 31, 1998
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
<CAPTION>
As of August 31, 1998
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$1,794,351,305) (Note 1a) $1,810,667,722
Foreign cash (Note 1b) 14,015,539
Cash 120
Receivables:
Dividends $ 4,598,795
Capital shares sold 2,093,785
Securities sold 165,369 6,857,949
--------------
Deferred organization expenses (Note 1f) 92,828
Prepaid registration fees and other assets (Note 1f) 258,492
--------------
Total assets 1,831,892,650
--------------
Liabilities: Payables:
Capital shares redeemed 12,501,172
Securities purchased 12,195,803
Distributor (Note 2) 1,477,771
Investment adviser (Note 2) 1,267,662 27,442,408
--------------
Accrued expenses and other liabilities 1,314,530
--------------
Total liabilities 28,756,938
--------------
Net Assets: Net assets $1,803,135,712
==============
Net Assets Class A Shares of Common Stock, $0.10 par value,
Consist of: 100,000,000 shares authorized $ 747,219
Class B Shares of Common Stock, $0.10 par value,
300,000,000 shares authorized 11,803,223
Class C Shares of Common Stock, $0.10 par value,
100,000,000 shares authorized 2,332,480
Class D Shares of Common Stock, $0.10 par value,
100,000,000 shares authorized 1,973,970
Paid-in capital in excess of par 1,739,566,524
Undistributed investment income--net 330,777
Undistributed realized capital gains on investments and
foreign currency transactions--net 29,771,128
Unrealized appreciation on investments and foreign currency
transactions--net 16,610,391
--------------
Net assets $1,803,135,712
==============
Net Asset Class A--Based on net assets of $80,524,661 and
Value: 7,472,189 shares outstanding $ 10.78
==============
Class B--Based on net assets of $1,261,128,724 and
118,032,226 shares outstanding $ 10.68
==============
Class C--Based on net assets of $249,208,412 and
23,324,800 shares outstanding $ 10.68
==============
Class D--Based on net assets of $212,273,915 and
19,739,701 shares outstanding $ 10.75
==============
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Period October 31, 1997++ to August 31, 1998
<S> <S> <C> <C>
Investment Dividends (net of $2,292,595 foreign withholding tax) $ 22,935,291
Income Interest and discount earned 5,030,788
(Notes 1d & 1e): ------------
Total income 27,966,079
------------
Expenses: Investment advisory fees (Note 2) $ 10,274,289
Account maintenance and distribution fees--Class B (Note 2) 9,668,057
Account maintenance and distribution fees--Class C (Note 2) 1,934,268
Registration fees (Note 1f) 1,044,106
Transfer agent fees--Class B (Note 2) 1,024,372
Account maintenance fees--Class D (Note 2) 425,973
Custodian fees 334,510
Printing and shareholder reports 230,625
Transfer agent fees--Class C (Note 2) 214,188
Accounting services (Note 2) 161,450
Transfer agent fees--Class D (Note 2) 148,051
Directors' fees and expenses 46,427
Transfer agent fees--Class A (Note 2) 39,598
Amortization of organization expenses--net (Note 1f) 18,566
Professional fees 15,702
Pricing fees 4,713
Other 3,450
------------
Total expenses 25,588,345
------------
Investment income--net 2,377,734
------------
Realized & Realized gain (loss) from:
Unrealized Gain Investments--net 29,771,128
(Loss) on Foreign currency transactions--net (2,046,957) 27,724,171
Investments & ------------
Foreign Currency Unrealized appreciation on:
Transactions--Net Investments--net 16,316,417
(Notes 1b, 1c, Foreign currency transactions--net 293,974 16,610,391
1e & 3): ------------ ------------
Net realized and unrealized gain on investments and
foreign currency transactions 44,334,562
------------
Net Increase in Net Assets Resulting from Operations $ 46,712,296
============
<FN>
++Commencement of operations.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Global Growth Fund, Inc., August 31, 1998
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<CAPTION>
For the Period
October 31, 1997++
Increase (Decrease) in Net Assets: to August 31, 1998
<S> <S> <C>
Operations: Investment income--net $ 2,377,734
Realized gain on investments and foreign currency transactions--net 27,724,171
Unrealized appreciation on investments and foreign currency transactions--net 16,610,391
--------------
Net increase in net assets resulting from operations 46,712,296
--------------
Capital Share Net increase in net assets derived from capital share transactions 1,756,323,416
Transactions --------------
(Note 4):
Net Assets: Total increase in net assets 1,803,035,712
Beginning of period 100,000
--------------
End of period* $1,803,135,712
==============
<FN>
*Undistributed investment income--net (Note 1h) $ 330,777
==============
++Commencement of operations.
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
The following per share data and ratios have been derived
from information provided in the financial statements. For the Period
October 31, 1997++ to August 31, 1998
Increase (Decrease) in Net Asset Value: Class A Class B Class C Class D
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 10.00 $ 10.00 $ 10.00 $ 10.00
Operating ---------- ---------- ---------- ----------
Performance: Investment income--net .06 --++++ --++++ .07
Realized and unrealized gain on
investments and foreign currency
transactions--net .72 .68 .68 .68
---------- ---------- ---------- ----------
Total from investment operations .78 .68 .68 .75
---------- ---------- ---------- ----------
Net asset value, end of period $ 10.78 $ 10.68 $ 10.68 $ 10.75
========== ========== ========== ==========
Total Investment Based on net asset value per share 7.80%+++ 6.80%+++ 6.80%+++ 7.50%+++
Return:** ========== ========== ========== ==========
Ratios to Average Expenses .98%* 1.99%* 1.99%* 1.22%*
Net Assets: ========== ========== ========== ==========
Investment income--net 1.00%* .05%* .04%* .82%*
========== ========== ========== ==========
Supplemental Net assets, end of period (in thousands) $ 80,525 $1,261,129 $ 249,208 $ 212,274
Data: ========== ========== ========== ==========
Portfolio turnover 29.67% 29.67% 29.67% 29.67%
========== ========== ========== ==========
<FN>
*Annualized.
**Total investment return excludes the effects of sales loads.
++Commencement of operations.
++++Amount is less than $.01 per share.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
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 issuance of 10,000
capital shares of the Fund to Merrill Lynch Asset Management, L.P.
("MLAM") for $100,000. 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.
Merrill Lynch Global Growth Fund, Inc., August 31, 1998
NOTES TO FINANCIAL STATEMENTS (continued)
(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 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 period not exceeding five years. 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.
(h) Reclassification--Generally accepted accounting principles
require that certain components of net assets be adjusted to reflect
permanent differences between financial and tax reporting.
Accordingly, current year's permanent book/tax differences of
$2,046,957 have been reclassified between undistributed net realized
capital gains and undistributed net investment income. These
reclassifications have no effect on net assets or net asset value
per share.
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 a Distribution Agreement and Distribution Plans with
Merrill Lynch Funds Distributor ("MLFD" or "Distributor"), a
division of Princeton Funds Distributor, Inc. ("PFD"), which is a
wholly-owned subsidiary of Merrill Lynch Group, Inc.
MLAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee of 0.75%, on an annual basis,
of the average daily value of the Fund's net assets. Effective May
8, 1998, MLAM agreed to waive a portion of the investment advisory
fee payable by the Fund so that such fee is equal to 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.
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:
Account Distribution
Maintenance Fee Fee
Class B 0.25% 0.75%
Class C 0.25% 0.75%
Class D 0.25% --
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
August 31, 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:
MLFD MLPF&S
Class A $ 61 $ 1,226
Class D $65,235 $5,925,052
For the period October 31, 1997 to August 31, 1998, MLPF&S received
contingent deferred sales charges of $1,894,801 and $159,241
relating to transactions in Class B and Class C Shares,
respectively. Furthermore, MLPF&S received contingent deferred sales
charges of $8,473 relating to transactions subject to front-end
sales charge waivers in Class D Shares.
In addition, MLPF&S received $110,228 in commissions on the
execution of portfolio security transactions for the Fund for the
period October 31, 1997 to August 31, 1998.
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, PFD, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the period October 31, 1997 to August 31, 1998 were
$2,150,597,961 and $432,137,148, respectively.
Net realized gains (losses) for the period October 31, 1997 to
August 31, 1998 and net unrealized gains as of August 31, 1998
were as follows:
Realized
Gains Unrealized
(Losses) Gains
Long-term investments $29,771,128 $ 16,316,417
Foreign currency transactions (2,046,957) 293,974
----------- ------------
Total $27,724,171 $ 16,610,391
=========== ============
Merrill Lynch Global Growth Fund, Inc., August 31, 1998
NOTES TO FINANCIAL STATEMENTS (concluded)
As of August 31, 1998, net unrealized appreciation for Federal
income tax purposes aggregated $16,280,046, of which $197,976,888
related to appreciated securities and $181,696,842 related to
depreciated securities. At August 31, 1998, the aggregate cost of
investments for Federal income tax purposes was $1,794,387,676.
4. Capital Share Transactions:
Net increase in net assets derived from capital share transactions
was $1,756,323,416 for the period October 31, 1997 to August 31,
1998.
Transactions in capital shares for each class were as follows:
Class A Shares for the Period Dollar
October 31, 1997++ to August 31, 1998 Shares Amount
Shares sold 8,733,319 $ 98,620,470
Shares redeemed (1,263,630) (14,666,307)
-------------- --------------
Net increase 7,469,689 $ 83,954,163
============== ==============
[FN]
++Prior to October 31, 1997 (commencement of operations), the Fund
issued 2,500 shares to MLAM for $25,000.
Class B Shares for the Period Dollar
October 31, 1997++ to August 31, 1998 Shares Amount
Shares sold 129,773,552 $1,359,632,710
Automatic conversion of shares (286,218) (3,336,866)
Shares redeemed (11,457,608) (129,196,050)
-------------- --------------
Net increase 118,029,726 $1,227,099,794
============== ==============
[FN]
++Prior to October 31, 1997 (commencement of operations), the Fund
issued 2,500 shares to MLAM for $25,000.
Class C Shares for the Period Dollar
October 31, 1997++ to August 31, 1998 Shares Amount
Shares sold 26,547,559 $ 278,291,914
Shares redeemed (3,225,259) (35,955,631)
-------------- --------------
Net increase 23,322,300 $ 242,336,283
============== ==============
[FN]
++Prior to October 31, 1997 (commencement of operations), the Fund
issued 2,500 shares to MLAM for $25,000.
Class D Shares for the Period Dollar
October 31, 1997++ to August 31, 1998 Shares Amount
Shares sold 24,442,157 $ 256,423,360
Automatic conversion of shares 284,885 3,336,866
-------------- --------------
Total issued 24,727,042 259,760,226
Shares redeemed (4,989,841) (56,827,050)
-------------- --------------
Net increase 19,737,201 $ 202,933,176
============== ==============
[FN]
++Prior to October 31, 1997 (commencement of operations), the Fund
issued 2,500 shares to MLAM for $25,000.
5. Commitments:
At August 31, 1998, the Fund had entered into foreign exchange
contracts under which it had agreed to purchase foreign currency
with an approximate value of $1,584,000.
6. Reorganization Plan:
On August 4, 1998, the Fund's Board of Directors approved a plan of
reorganization whereby the Fund would acquire substantially all of
the assets and liabilities of Merrill Lynch Global Holdings, Inc. in
exchange for newly issued shares of the Fund. The plan of
reorganization is subject to Merrill Lynch Global Holdings, Inc.
shareholder approval. Merrill Lynch Global Holdings, Inc. is a
registered, diversified, open-end management investment company.
Both entities have a similar investment objective and are managed by
MLAM.
<AUDIT-REPORT>
REPORT OF INDEPENDENT AUDITORS
To the Shareholders and Board of Directors,
Merrill Lynch Global Growth Fund, Inc.
We have audited the accompanying statement of assets and liabilities
of Merrill Lynch Global Growth Fund, Inc., including the schedule of
investments, as of August 31, 1998, and the related statements of
operations and changes in net assets and financial highlights for
the period from October 31, 1997 (commencement of operations) to
August 31, 1998. These financial statements and financial highlights
are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial
highlights based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements
and financial highlights. Our procedures included confirmation of
securities owned as of August 31, 1998 by correspondence with the
custodian and brokers. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of Merrill Lynch Global Growth Fund, Inc. at
August 31, 1998, and the results of its operations, the changes in
its net assets, and the financial highlights for the period from
October 31, 1997 to August 31, 1998, in conformity with generally
accepted accounting principles.
(ERNST & YOUNG)
Princeton, New Jersey
October 5, 1998
Merrill Lynch Global Growth Fund, Inc., August 31, 1998
PORTFOLIO CHANGES (unaudited)
For the Quarter Ended August 31, 1998
Additions
Abercrombie & Fitch Co.
Alstom
America Online Inc.
Ascend Communications, Inc.
*Banco Santander
Cable & Wireless PLC
Equant N.V.
Esat Telecom Group PLC (ADR)
GTE Corporation
Mannesman AG
MetroNet Communications Corp. (Class B)
NationsBank Corporation
Network Appliance, Inc.
Somerfield PLC
Deletion
*Banco Santander
[FN]
*Added and deleted in the same quarter.
OFFICERS AND DIRECTORS
Arthur Zeikel, President and Director
Donald Cecil, Director
M. Coyler Crum, Director
Edward H. Meyer, Director
Jack B. Sunderland, Director
J. Thomas Touchton, Director
Fred G. Weiss, Director
Terry K. Glenn, Executive Vice President
Lawrence R. Fuller, Senior Vice President
and Portfolio Manager
Norman R. Harvey, Senior Vice President
Donald C. Burke, Vice President
Gerald M. Richard, Treasurer
Philip M. Mandel, Secretary
Custodian
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02101
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
