MERRILL LYNCH
ASSET GROWTH
FUND, INC.
FUND LOGO
Quarterly Report
May 31, 1998
Officers and Directors
Arthur Zeikel, President and Director
Joe Grills, Director
Walter Mintz, Director
Robert S. Salomon Jr., Director
Melvin R. Seiden, Director
Stephen B. Swensrud, Director
Terry K. Glenn, Executive Vice President
Norman R. Harvey, Senior Vice President
Thomas R. Robinson, Senior Vice President and
Portfolio Manager
Donald C. Burke, Vice President
Gerald M. Richard, Treasurer
Barbara G. Fraser, Secretary
Custodian
The Chase Manhattan Bank
4 MetroTech Center, 18th Floor
Brooklyn, NY 11245
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800)637-3863
Investing in emerging market securities involves a number of risk
factors and special considerations, including restrictions on
foreign investments and on repatriation of capital invested in
emerging markets, currency fluctuations, and potential price
volatility and less liquidity of securities traded in emerging
markets. In addition, there may be less publicly available
information about the issuers of securities, and such issuers may
not be subject to accounting, auditing and financial reporting
standards and requirements comparable to those to which US companies
are subject. Therefore, the Fund is designed as a long-term
investment for investors capable of assuming the risks of investing
in emerging markets. The Fund should be considered as a vehicle for
diversification and not as a complete investment program. Please
refer to the propectus for details.
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 Asset
Growth Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
Printed on post-consumer recycled paper
MERRILL LYNCH ASSET GROWTH FUND, INC.
Worldwide
Investments as of
May 31, 1998
Breakdown of
Stocks & Fixed-Income Percent of
Securities by Country Net Assets++
United States* 39.6%
Sweden 10.2
United Kingdom 9.3
Germany 9.2
France 5.4
Japan 4.8
Finland 3.9
Mexico 2.6
Canada 2.0
Switzerland 1.9
Italy 1.8
Spain 1.3
Netherlands 1.0
Argentina 0.8
Australia 0.7
Indonesia 0.6
Bahamas 0.6
South Africa 0.6
Singapore 0.3
Norway 0.3
South Korea 0.0++++
-----
Total 96.9%
=====
[FN]
*Includes investments in short-term securities.
++Total may not equal 100%.
++++Amount is less than 0.1%.
Ten Largest Industries Percent of
(Equity Investments) Net Assets
Insurance 4.7%
Banking 4.6
Retail Stores 3.8
Chemicals 3.5
Electronics 3.2
Machinery 3.1
Automobile Parts 2.9
Pharmaceuticals 2.9
Telecommunications 2.6
Diversified 2.5
Country Percent
Ten Largest Holdings of of Net
(Equity Investments) Origin Assets
Elf Aquitaine S.A. France 1.2%
British Aerospace PLC UK 1.2
Bayerische
Vereinsbank AG Germany 1.1
Henkel KGaA
(Preferred) Germany 1.1
AXA-UAP S.A. France 1.1
Thomson-CSF S.A. France 1.1
Magna
International, Inc. Canada 1.1
LucasVarity PLC UK 1.1
Royal Dutch Petroleum
Company (NY
Registered Shares) Netherlands 1.0
Repsol, S.A. (ADR) Spain 1.0
Merrill Lynch Asset Growth Fund, Inc., May 31, 1998
DEAR SHAREHOLDER
Increasing volatility characterized the capital markets during the
three-month period ended May 31, 1998. At times, US stock and bond
prices reflected expectations that the slowdown in Asian economic
growth would lead to a sharp decline in US business activity and,
ultimately, a deflationary environment. The deterioration of
economic conditions in Japan was of particular concern, and caused a
sharp drop in the yen's value relative to the US dollar. During
other periods, US investors appeared to expect that the positive
trends of a moderately expanding economy, declining unemployment,
enhanced productivity and corporate profits growth would continue,
unimpeded by the developments in Asia. To date, there have been only
a few signs that Asia's troubles are influencing US economic
activity. In Europe, the major event was greater progress toward
achieving European Monetary Union, although concerns have arisen
that interest rates will have to be increased to curtail
inflationary pressures.
As 1998 progresses, it is likely that investor focus will remain on
developments in Asia. For those economies that continue to expand,
investors will watch for signs that inflation is still not a threat.
Evidence of ongoing, noninflationary economic growth should continue
to exert a positive influence on the capital markets worldwide.
Portfolio Matters
As of May 31, 1998, the asset allocation for Merrill Lynch Asset
Growth Fund, Inc. was: foreign stocks, 45% of net assets; US stocks,
31%; foreign bonds, 13%; US bonds, 8%; and cash reserves, 3%.
During the quarter ended May 31, 1998, we shifted funds of Merrill
Lynch Asset Growth Fund, Inc. into foreign stocks while reducing our
commitment to US stocks and bonds. Foreign equity representation was
increased from 37% as of February 28, 1998 to 45% as of May 31,
1998. We continued to place emphasis on European equities, given the
favorable economic fundamentals and prospects for corporate
restructuring. Merrill Lynch Asset Growth Fund, Inc.'s new positions
in Europe include Union Bank of Switzerland, Daimler-Benz AG, AXA-
UAP S.A., Elf Aquitaine S.A. and Thomson Travel Group PLC. On the
other hand, concern over prospects in the Japanese economy has led
us to remain underweighted in Japanese equities relative to the
benchmark Morgan Stanley Capital International Europe Australasia
Far East Index. In emerging markets, we continue to prefer Latin
American equities (particularly in Mexico) over the shares of Asian
companies.
Following the rally in the US stock market during the beginning of
1998, we reduced our US equity weighting to 31% as of May 31, 1998
as compared to an allocation of 37% as of February 28, 1998. Within
the Fund's US equity commitment, we reduced the weighting in the
financial services sector in favor of areas that are more sensitive
to US economic growth. Among the latter, consumer cyclical equities
now account for the largest proportion of assets within the US
equity sector. We also reduced the Fund's commitment to the largest-
capitalization issues through the sale of positions in Microsoft
Corp., Walt Disney Company, American Express Company and Pfizer Inc.
While reducing the allocation to US bonds from 13% to 8% during the
three months ended May 31, 1998, we also reduced the average
duration of these investments from 6.9 years to 5.3 years. The
increasingly cautious view toward US bonds reflected our belief that
there was limited potential for a significant further decline in US
interest rates. As of May 31, 1998, strength in domestic consumer
demand within the United States seemed to be offsetting the impact
of weakness in Asian economies on US exports. While US inflation
remained subdued, we believe that conditions were absent for a
significant further deceleration in inflation, a prerequisite for
any significant additional decline in long-term US interest rates.
Within the foreign bond sector, we took advantage of price strength
to liquidate the Fund's commitments in Danish and Italian bonds, and
sold the Fund's position in Canadian bonds during the quarter. The
residual foreign bond weighting is allocated to Europe, including
Germany, Sweden and the United Kingdom. We continue to hedge the
equivalent of the full weighting in European stocks and bonds and
Japanese equities back into US dollars, reflecting our expectation
of further strength in the US currency.
In Conclusion
We thank you for your investment in Merrill Lynch Asset Growth Fund,
Inc., and we look forward to reviewing our outlook and strategy with
you in our upcoming report to shareholders.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Thomas R. Robinson)
Thomas R. Robinson
Senior Vice President and
Portfolio Manager
June 26, 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 "Average Annual Total
Return" tables as well as the total returns and cumulative total
returns in the "Performance Summary" tables assume reinvestment of
all dividend 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.
Merrill Lynch Asset Growth Fund, Inc., May 31, 1998
PERFORMANCE DATA (concluded)
Average Annual
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 3/31/98 +16.46% +10.35%
Inception (9/02/94)
through 3/31/98 + 8.67 + 7.04
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 3/31/98 +15.22% +11.24%
Inception (9/02/94)
through 3/31/98 + 7.56 + 7.33
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Year Ended 3/31/98 +15.13% +14.14%
Inception (10/21/94)
through 3/31/98 + 8.30 + 8.30
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Sales Charge Sales Charge**
Class D Shares*
Year Ended 3/31/98 +16.08% +9.99%
Inception (10/21/94)
through 3/31/98 + 9.18 +7.48
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
<TABLE>
Recent
Performance
Results*
<CAPTION>
12 Month 3 Month Since Inception
Total Return Total Return Total Return
<S> <C> <C> <C>
ML Asset Growth Fund, Inc. Class A Shares +8.53% +4.31% +34.72%
ML Asset Growth Fund, Inc. Class B Shares +7.44 +4.03 +29.64
ML Asset Growth Fund, Inc. Class C Shares +7.42 +4.05 +31.59
ML Asset Growth Fund, Inc. Class D Shares +8.29 +4.19 +35.42
<FN>
*Investment results shown do not reflect sales charges; results
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 dates are: Class A and Class B Shares, 9/02/94; and Class
C and Class D Shares, 10/21/94.
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
Shares Percent of
COUNTRY Industries Held Common Stocks Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Argentina Petroleum 2,700 Yacimientos Petroliferos Fiscales
S.A. (ADR)(a) $ 81,942 $ 83,869 0.8%
Total Common Stocks in Argentina 81,942 83,869 0.8
Australia Diversified 9,000 Broken Hill Proprietary Co., Ltd. 118,416 77,135 0.7
Total Common Stocks in Australia 118,416 77,135 0.7
Bahamas Hotels & Casinos 1,300 Sun International Hotels Ltd. 50,936 59,394 0.6
Total Common Stocks in the Bahamas 50,936 59,394 0.6
Canada Automobile Parts 1,600 Magna International, Inc. 88,449 112,800 1.1
Beverages 600 Seagram Company, Ltd. (The) 25,767 26,363 0.2
Entertainment 2,700 Imax Corporation 43,811 68,175 0.7
Total Common Stocks in Canada 158,027 207,338 2.0
Finland Diversified 3,900 Amer Group Ltd. 69,340 82,083 0.8
Insurance 900 Sampro Insurance Company Ltd. (Class A) 41,729 41,872 0.4
Paper & Forest 3,200 UPM-Kymmene OY 69,613 92,872 0.9
Products
Pharmaceuticals 2,520 Orion-yhtymae OY (Class B) 68,840 75,602 0.7
Real Estate 1,290 Sponda Oyj 8,340 8,336 0.1
Investment Trust
Transportation 1,600 Finnlines OY 29,618 96,298 1.0
Total Common Stocks in Finland 287,480 397,063 3.9
France Electronics 2,800 Thomson-CSF S.A. 95,316 113,387 1.1
Insurance 1,000 AXA-UAP S.A. 113,615 113,956 1.1
Oil & Related 900 Elf Aquitaine S.A. 106,779 125,151 1.2
Reinsurance 1,600 Scor S.A. 61,312 100,937 1.0
Semiconductor Capital 1,300 ST Microelectronics (NY
Equipment Registered Shares) (d) 79,896 100,588 1.0
Total Common Stocks in France 456,918 554,019 5.4
Germany Auto & Truck 1,000 Daimler-Benz AG 98,126 100,898 1.0
Banking 1,400 Bayerische Vereinsbank AG 91,254 117,452 1.1
Chemicals 200 Henkel KGaA 8,891 15,690 0.2
1,300 Henkel KGaA (Preferred) 55,343 116,723 1.1
----------- ----------- ------
64,234 132,413 1.3
Machinery & Equipment 100 Mannesmann AG 36,975 97,924 1.0
Total Common Stocks in Germany 290,589 448,687 4.4
</TABLE>
Merrill Lynch Asset Growth Fund, Inc., May 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Shares Percent of
COUNTRY Industries Held Common Stocks Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Indonesia Telecommunications 4,290 P.T. Indonesian Satellite Corp.
(ADR)(a) $ 117,402 $ 60,596 0.6%
Total Common Stocks in Indonesia 117,402 60,596 0.6
Italy Machinery 19,000 Danieli & C. Officine Meccaniche S.p.A. 57,397 95,757 0.9
Publishing 7,000 Mondadori (Arnoldo) Editore S.p.A. 59,094 85,706 0.9
Total Common Stocks in Italy 116,491 181,463 1.8
Japan Banking & Financial 4,000 Bank of Tokyo-Mitsubishi, Ltd. (The) 60,434 41,173 0.4
Building & 6,000 Matsushita Electric Works, Ltd. 63,538 50,231 0.5
Construction
Computers 2,000 Tokyo Electron Limited 74,245 63,565 0.6
Consumer-- 5,000 Matsushita Electric Industrial Co., Ltd. 78,495 78,373 0.8
Electronics
Electronics 1,000 Sony Corporation 72,316 84,513 0.8
Insurance 6,000 Tokio Marine & Fire Insurance Co., Ltd. 60,133 56,862 0.6
Machinery 9,000 Makino Milling Machine Co., Ltd. 64,593 60,199 0.6
Merchandising 300 Amway Japan, Ltd. 6,644 3,684 0.0
Retail Stores 1,000 Ito-Yokado Co., Ltd. 54,556 49,841 0.5
Total Common Stocks in Japan 534,954 488,441 4.8
Mexico Beverages 2,100 Panamerican Beverages, Inc. (Class A) 67,285 71,006 0.7
Financial 5,750 Grupo Financiero Bancomer S.A.
Services (Class B) (ADR)(a) 74,447 57,656 0.6
Multi-Industry 4,600 Grupo Carso, S.A. de C.V. (ADR)(a) 54,698 45,586 0.4
Telecommunications 1,850 Telefonos de Mexico, S.A. de C.V.
(ADR)(a) 92,145 87,759 0.9
Total Common Stocks in Mexico 288,575 262,007 2.6
Netherlands Oil--International 1,900 Royal Dutch Petroleum Company
(NY Registered Shares) 105,223 106,519 1.0
Total Common Stocks in the Netherlands 105,223 106,519 1.0
Norway Cruise Lines 10,000 Color Line ASA 35,936 31,243 0.3
Total Common Stocks in Norway 35,936 31,243 0.3
Singapore Banking 8,000 Overseas Chinese Banking Corp. Ltd. 38,099 31,799 0.3
Total Common Stocks in Singapore 38,099 31,799 0.3
South Diversified 7,400 Sasol Ltd. 86,342 58,861 0.6
Africa
Total Common Stocks in South Africa 86,342 58,861 0.6
South Engineering & 2,753 Hyundai Engineering & Construction
Korea Construction Co., Ltd. (GDR)(b) 35,336 1,143 0.0
Total Common Stocks in South Korea 35,336 1,143 0.0
Spain Petroleum 1,900 Repsol, S.A. (ADR)(a) 68,090 104,025 1.0
Venture Capital 1,900 Dinamia Capital Privado. Sociedad
de Capital Reisgo, S.A. 35,716 32,135 0.3
Total Common Stocks in Spain 103,806 136,160 1.3
Sweden Auto & Truck 1,300 Autoliv AB 42,179 40,622 0.4
Banking 2,600 ForeningsSparbanken AB 32,332 78,254 0.8
12,800 Nordbanken Holding AB 74,679 90,792 0.9
----------- ----------- ------
107,011 169,046 1.7
Chemicals 3,000 Perstorp AB (Class B) 56,249 63,646 0.6
Diversified 700 Custos AB (Class A) 18,029 18,787 0.2
700 Custos AB (Class B) 18,434 18,519 0.2
----------- ----------- ------
36,463 37,306 0.4
Investment Management 3,900 Bure Investment AB 32,910 62,803 0.6
Laser Components 1,600 Spectra-Physics AB (Class A) 48,844 33,638 0.3
Machinery 56 Schindler Holding AG 101,112 96,375 0.9
Real Estate 4,600 Castellum AB 38,997 55,850 0.6
Investment Trusts 1,500 Fastighets Tornet AB 24,694 24,538 0.2
130 Mandamus AB 373 831 0.0
----------- ----------- ------
64,064 81,219 0.8
Total Common Stocks in Sweden 488,832 584,655 5.7
Switzerland Banking & 58 Union Bank of Switzerland 96,896 97,660 0.9
Financial
Pharmaceuticals 10 Roche Holding AG 88,397 103,023 1.0
Total Common Stocks in Switzerland 185,293 200,683 1.9
United Aerospace & Defense 13,600 British Aerospace PLC 102,562 120,483 1.2
Kingdom
Automobile Parts 24,900 LucasVarity PLC 79,024 109,686 1.1
Beverages 8,208 Diageo PLC 64,774 92,735 0.9
Chemicals 4,800 Imperial Chemical Industries PLC
(Ordinary) 57,775 90,920 0.9
Foods 4,900 Devro PLC 32,782 39,012 0.4
Retail Stores 5,900 Dixons Group PLC 62,128 56,600 0.5
Travel & Lodging 32,000 Thomson Travel Group PLC 96,643 93,974 0.9
Total Common Stocks in the
United Kingdom 495,688 603,410 5.9
United Aerospace 300 Orbital Sciences Corporation 7,888 12,263 0.1
States
Aerospace & 1,200 GenCorp, Inc. 34,074 35,775 0.3
Defense
Airlines 850 US Airways Group Inc. 37,075 59,500 0.6
Automobile Parts 1,150 Federal-Mogul Corp. 45,834 68,066 0.7
Automobile 1,550 Avis Rent A Car, Inc. 36,870 37,588 0.4
Rental & Leasing 1,000 Hertz Corp. (Class A) 35,974 45,875 0.4
----------- ----------- ------
72,844 83,463 0.8
</TABLE>
Merrill Lynch Asset Growth Fund, Inc., May 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Shares Percent of
COUNTRY Industries Held Common Stocks Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
United Banking 600 Bank of New York Company, Inc. (The) $ 19,867 $ 36,675 0.3%
States 470 BankAmerica Corp. 27,759 38,863 0.4
(concluded) 1,400 First Union Corp. 69,099 77,438 0.8
----------- ----------- ------
116,725 152,976 1.5
Broadcast 710 Chancellor Media Corp. 23,226 29,643 0.3
Broadcasting--Cable 1,763 Tele-Communications, Inc. (Class A) 36,060 60,383 0.6
3,274 Tele-Communications TCI Ventures
Group (Class A) 31,640 56,886 0.5
----------- ----------- ------
67,700 117,269 1.1
Chemicals 1,800 Great Lakes Chemical Corporation 77,123 72,000 0.7
Commercial Services 1,200 Gartner Group, Inc. (Class A) 40,872 39,600 0.4
Computer Services 640 Cisco Systems, Inc. 38,095 48,320 0.5
& Software 850 Computer Associates International, Inc. 28,455 44,625 0.4
600 International Business Machines Corp. 58,198 70,425 0.7
----------- ----------- ------
124,748 163,370 1.6
Computers 2,500 COMPAQ Computer Corp. 87,766 68,281 0.7
Consumer Products 1,200 Black & Decker Corporation 41,254 70,050 0.7
2,600 Dial Corp. 52,225 64,513 0.6
----------- ----------- ------
93,479 134,563 1.3
Containers 1,500 Owens-Illinois, Inc. 45,303 67,406 0.7
Cosmetics 270 Gillette Company (The) 30,870 31,624 0.3
Cruise Lines 700 Royal Caribbean Cruises Ltd. 33,969 48,781 0.5
Electronics 610 General Electric Company 44,762 50,859 0.5
650 Intel Corp. 53,266 46,394 0.4
750 Texas Instruments Inc. 48,775 38,531 0.4
----------- ----------- ------
146,803 135,784 1.3
Entertainment 1,400 Premier Parks, Inc. 78,950 74,375 0.7
Financial Services 800 Heller Financial, Inc. 22,014 22,300 0.2
Foods 800 Keebler Foods Company 22,608 23,250 0.2
Healthcare-- 800 Columbia/HCA Healthcare Corp. 24,501 26,150 0.3
Products & Services
Industrial 1,900 Comsat Corp. 58,557 66,263 0.6
Insurance 1,100 Allmerica Financial Corporation 67,690 68,956 0.7
1,000 Equitable Companies Inc. (The) 52,945 68,875 0.6
650 Providian Corporation 40,573 41,356 0.4
1,150 Travelers Group, Inc. 50,252 70,150 0.7
400 UNUM Corporation 12,712 22,225 0.2
----------- ----------- ------
224,172 271,562 2.6
Machinery 1,600 Ingersoll-Rand Company 51,250 72,100 0.7
Manufacturing 900 Tyco International Ltd. 46,584 49,838 0.5
Medical 600 Beckman Coulter, Inc. 36,262 33,450 0.3
Medical Services 2,500 HEALTHSOUTH Corp. 66,149 70,938 0.7
Natural Gas 1,600 El Paso Natural Gas Co. 43,193 61,800 0.6
720 Enron Corp. 28,369 36,090 0.3
----------- ----------- ------
71,562 97,890 0.9
Office Equipment 640 Danka Business Systems PLC (ADR)(a)(c) 31,542 10,720 0.1
Oil Services 450 Schlumberger Ltd. 30,570 35,128 0.3
Petroleum 1,400 Unocal Corp. 49,195 49,875 0.5
Pharmaceuticals 600 Bristol-Myers Squibb Co. 57,128 64,500 0.6
1,000 Warner-Lambert Co. 45,512 63,813 0.6
----------- ----------- ------
102,640 128,313 1.2
Printing & 1,600 World Color Press, Inc. 48,086 48,100 0.5
Publishing
Radio & Television 2,400 Capstar Broadcasting Corporation
(Class A) 45,600 45,600 0.4
Railroads 500 Burlington Northern Santa Fe Corp. 41,528 49,750 0.5
Real Estate 600 Starwood Hotels & Resorts 27,000 28,313 0.3
Investment Trusts
Retail Specialty 600 Lowe's Companies, Inc. 43,185 47,512 0.5
Retail Stores 2,010 Rite Aid Corporation 35,356 71,983 0.7
1,700 Safeway, Inc. 49,747 61,944 0.6
1,190 Sears, Roebuck & Co. 57,030 73,557 0.7
1,400 Wal-Mart Stores, Inc. 57,672 77,262 0.8
----------- ----------- ------
199,805 284,746 2.8
Software--Computer 1,500 BMC Software, Inc. 34,130 69,000 0.7
Telecommunications 400 Globalstar Telecommunications Ltd. 23,568 23,600 0.2
950 SmarTalk Teleservices, Inc. 26,193 17,397 0.2
1,500 WorldCom, Inc. 44,306 68,250 0.7
----------- ----------- ------
94,067 109,247 1.1
Travel & Lodging 950 Carnival Corporation (Class A) 32,237 64,362 0.6
Waste Management 1,490 USA Waste Services, Inc. 62,468 70,309 0.7
Total Common Stocks in the
United States 2,630,961 3,169,455 30.8
Total Investments in Common Stocks 6,707,246 7,743,940 75.4
Face
Amount Fixed-Income Securities
Germany Foreign Bundesrepublik Deutschland:
Government DM 225,000 6.50% due 10/14/2005 142,066 139,609 1.4
Obligations 165,000 6% due 7/04/2007 96,503 100,176 1.0
130,000 6% due 6/20/2016 72,326 79,765 0.8
220,000 5.625% due 1/04/2028 124,471 126,864 1.2
75,000 Treuhandanstalt, 6.875% due 6/11/2003 49,877 46,452 0.4
Total Fixed-Income Securities
in Germany 485,243 492,866 4.8
</TABLE>
Merrill Lynch Asset Growth Fund, Inc., May 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in USdollars)
<CAPTION>
Face
Amount Fixed-Income Securities
<S> <S> <S> <C> <S> <C> <C> <C>
Sweden Foreign Government of Sweden:
Government Skr 2,000,000 5.50% due 4/12/2002 $ 254,064 $ 262,718 2.5%
Obligations 1,300,000 8% due 8/15/2007 185,475 201,592 2.0
Total Fixed-Income Securities in Sweden 439,539 464,310 4.5
United Foreign UK Treasury Gilt:
Kingdom Government Pound 60,000 8% due 12/07/2000 101,394 101,530 1.0
Obligations Sterling 135,000 7.25% due 12/07/2007 223,453 245,100 2.4
Total Fixed-Income Securities in
the United Kingdom 324,847 346,630 3.4
United US US$ 245,000 US Treasury Bonds, 6.625% due 2/15/2027 268,189 270,112 2.6
States Government US Treasury Notes:
Obligations 400,000 6% due 8/15/1999 401,094 402,064 3.9
125,000 6.25% due 2/15/2007 124,910 129,882 1.3
Total Fixed-Income Securities in
the United States 794,193 802,058 7.8
Total Investments in Fixed-Income
Securities 2,043,822 2,105,864 20.5
Short-Term Securities
United Commercial US$ 104,000 General Motors Acceptance Corp.,
States Paper* 5.69% due 6/01/1998 103,967 103,967 1.0
Total Investments in Short-Term
Securities 103,967 103,967 1.0
Total Investments $ 8,855,035 9,953,771 96.9
===========
Unrealized Depreciation on Forward Foreign Exchange Contracts** (84) (0.0)
Other Assets Less Liabilities 320,909 3.1
----------- ------
Net Assets $10,274,596 100.0%
=========== ======
Net Asset Class A--Based on net assets of $2,219,928 and
Value: 204,038 shares outstanding $ 10.88
===========
Class B--Based on net assets of $7,164,316 and
660,863 shares outstanding $ 10.84
===========
Class C--Based on net assets of $584,886 and
54,263 shares outstanding $ 10.78
===========
Class D--Based on net assets of $305,466 and
27,944 shares outstanding $ 10.93
===========
<FN>
(a)American Depositary Receipts (ADR).
(b)Global Depositary Receipts (GDR).
(c)Consistent with the general policy of the Securities
and Exchange Commission, the nationality or domicile
of an issuer for determination of foreign issuer status
may be (i) the country under whose laws the issuer is
organized, (ii) the country in which the issuer's
securities are principally traded, or (iii) the country
in which the issuer derives a significant proportion (at
least 50%) of its revenue or profits from goods produced
and sold, investments made, or services performed in the
country, or in which at least 50% of the assets of the
issuer are situated.
(d)Formerly known as SGS--Thomson Microelectronics N.V.
*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.
**Forward foreign exchange contracts as of May 31, 1998 were
as follows:
<CAPTION>
Unrealized
Expiration Appreciation
Foreign Currency Sold Date (Depreciation)
<S> <C> <S> <C>
A$ 115,000 July 1998 $ 419
C$ 290,000 June 1998 465
Chf 410,000 July 1998 (932)
DM 1,920,000 July 1998 (8,182)
Fim 2,000,000 June 1998 (1,042)
Frf 3,300,000 July 1998 (4,768)
Pound 575,000 June 1998 (4,412)
Sterling
Lit 320,000,000 June 1998 (390)
Pta 19,900,000 June 1998 (215)
Skr 7,500,000 June 1998 10,462
YEN 66,600,000 June 1998 8,511
Total Unrealized Depreciation--Net on
Forward Foreign Exchange Contracts (US$
Commitment--$5,245,910) $ (84)
========
EQUITY PORTFOLIO CHANGES
For the Quarter Ended May 31, 1998
Additions
AXA-UAP S.A.
Autoliv AB
Beckman Coulter, Inc.
Capstar Broadcasting Corporation (Class A)
Columbia/HCA Healthcare Corp.
Custos AB (Class A)
Custos AB (Class B)
Daimler-Benz AG
Dinamia Capital Privado. Sociedad
de Capital Riesgo, S.A.
Elf Aquitaine S.A.
Fastighets Tornet AB
Gillette Company (The)
Heller Financial, Inc.
Hyundai Engineering & Construction Co.,
Ltd. (New Shares) (GDR)
Intel Corp.
Lowe's Companies, Inc.
Mandamus AB
*Octel Corp.
Overseas Chinese Banking Corp. Ltd.
Premier Parks, Inc.
Providian Corporation
Sampro Insurance Company Ltd. (Class A)
Schindler Holding AG
Seagram Company, Ltd. (The)
Sponda Oyj
Texas Instruments Inc.
Thomson Travel Group PLC
Tokyo Electron Limited
Tyco International Ltd.
Union Bank of Switzerland
World Color Press, Inc.
Deletions
AT&T Corp.
AlliedSignal, Inc.
American Express Company
Bridgestone Corporation
Brunswick Corporation
DENTPSLY International Inc.
Glenborough Realty Trust
Gucci Group N.V. (NY Registered Shares)
Harnischfeger Industries, Inc.
Hartford Life, Inc. (Class A)
Illinova Corporation
Lockheed Martin Corporation
MGIC Investment Corp.
Maeda Corp.
Microsoft Corp.
National Semiconductor Corp.
*Octel Corp.
Okumura Corp.
Pfizer Inc.
Philip Morris Companies, Inc.
Provident Companies, Inc.
Public Service Enterprise Group, Inc.
Rio Tinto PLC
SPX Corp.
San Miguel Corp. (Class B)
Smith International, Inc.
Texas Utilities Company
Travelers Property Casualty Corp. (Class A)
Walt Disney Company
<FN>
*Added and deleted in the same quarter.
</TABLE>
