MERRILL LYNCH
ASSET GROWTH
FUND, INC.
FUND LOGO
Quarterly Report
May 31, 1999
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, 1999
Breakdown of
Stocks & Fixed-Income Percent of
Securities by Country Net Assets
United States 52.3%
Japan 12.5
United Kingdom 11.2
France 4.9
Germany 3.6
Sweden 3.5
Spain 2.4
Finland 2.2
Netherlands 1.4
Brazil 1.0
Ireland 0.9
Italy 0.8
Canada 0.8
Australia 0.6
Switzerland 0.5
Austria 0.4
Norway 0.3
Singapore 0.3
South Korea 0.2
Hong Kong 0.1
Denmark 0.1
------
Total 100.0%
======
Ten Largest Industries Percent of
(Equity Investments) Net Assets
Telecommunications 8.7%
Banking 6.9
Computer Services/Software 4.8
Pharmaceuticals 4.6
Electronics 3.9
Insurance 3.5
Retail-Stores 2.7
Computers 2.5
Broadcasting/Cable 2.5
Automobiles 2.5
Ten Largest Holdings Percent of
(Equity Investments) Net Assets
Microsoft Corporation 1.8%
Bristol-Myers Squibb Company 1.6
MCI WorldCom Inc. 1.5
GreenPoint Financial Corp. 1.4
AT&T Corp.-Liberty Media Group
(Class A) 1.3
Cisco Systems, Inc. 1.3
AT&T Corp. 1.2
Premier Parks Inc. 1.2
Mobil Corporation 1.2
Mellon Bank Corporation 1.2
Merrill Lynch Asset Growth Fund, Inc., May 31, 1999
DEAR SHAREHOLDER
There were some conflicting signals regarding the future direction
of the US economy during the quarter ended May 31, 1999. However, on
balance the economic outlook continued to be positive. The US
economic expansion is ongoing, especially in the consumer sector.
Economic growth is not occurring at inflationary rates, although the
Organization of Petroleum Exporting Countries (OPEC) successfully
engineered a near-term increase in the price of crude oil. Against
this backdrop, the US Federal Reserve Board raised the Federal Funds
rate 0.25% on June 30, 1999. Outside of the United States, signs of
growth are less apparent in other major industrial economies.
Although the crisis in Yugoslavia has raised serious geopolitical
concerns, it was not a significant factor in the economic or
investment outlook. In Japan, there are not yet clear signs that
Japan's economy is improving. There were growing signs of
improvement in some emerging economies (most notably South Korea and
Mexico), although concerns remain for others (such as Brazil and
Argentina).
In the US capital markets, long-term interest rates rose during the
May quarter. Although the spread between yields on Treasury
securities and corporate issues of similar maturities has narrowed
somewhat, it remains wide by historic standards. Although the US
stock market exhibited greater price volatility, its advances
broadened beyond relatively few growth stocks to the previously
languishing cyclical sectors.
Portfolio Matters
As of May 31, 1999, the asset allocation for Merrill Lynch Asset
Growth Fund, Inc. was: US stocks, 50% of net assets; foreign stocks,
44%; US bonds, 2%; foreign bonds, 4%; and cash reserves of less than
1%.
During the May quarter, we continued to enlarge the Fund's foreign
equity representation, increasing our position in foreign stocks
from 37% of net assets to 44%. We accomplished this largely through
a further increase in Japanese equity representation. The expansion
continued to reflect evidence that an increased number of Japanese
corporations are undertaking significant restructuring that is
likely to lead to improved profitability and earnings over the
longer term. Our increased optimism also reflects indications that
monetary policy remains accommodative and that the Japanese economy
is showing signs of bottoming. New Japanese equity commitments
included Takeda Chemical Industries and The Daimaru, Inc. We
continue to hedge the Japanese equity positions back to US dollars
because we expect the positive stock market environment to be
accompanied by a weaker Japanese yen.
We also enlarged the Fund's commitment to Asian markets other than
Japan in response to increased evidence that the problems associated
with the 1997--1998 financial crisis are gradually abating. Among
the new Asian commitments are Pohang Iron and Steel Company, Ltd.
and Hutchison Whampoa Limited. Brazil's ability to weather currency
devaluation also led us to initiate commitments in Brazilian
equities, including Embratel Participacoes SA, Telecomunicacoes
Brasileiras SA--Telebras, Aracruz Celulose SA and Companhia Vale do
Rio Doce. While Europe remains our largest regional commitment, we
reduced overall representation there. At the same time, we enlarged
our commitment to the United Kingdom as a result of expectations of
improving economic conditions in coming quarters. Within Europe, we
maintained significant representation in financial services,
telecommunications services and equipment, and consumer staples.
We reduced the Fund's US equity representation from 57% of net
assets to 50% during the three months ended May 31, 1999. We
continue to believe that investors will favor the shares of
companies that offer a high degree of earnings visibility in a
steady growth/low inflation environment for the US economy as a
whole. On this basis, technology remains the largest single group
represented among our US equity commitments. Financial services and
consumer staples, including healthcare, also continue to account for
a significant portion of US equity assets.
We increased our commitment to foreign bonds from 3% of net assets
to 4% during the May quarter. We eliminated our commitment to
Japanese bonds following a decline in yields, which reduced
potential for additional appreciation. We also took advantage of
appreciation to liquidate our position in New Zealand bonds. We
retained positions in German and UK bonds where we believed the
risk/reward relationship remains favorable.
During the three months ended May 31, 1999, we reduced the average
duration of our US bond commitment from 7.2 years to 6.6 years.
Contrary to our earlier expectations, the strength of the US economy
persisted during the second quarter of 1999. However, the rise in
intermediate-term and longer-term interest rates that has taken
place in recent months is likely to begin to gradually slow the rate
of US economic growth in coming quarters. The resultant reduction of
inflationary expectations is likely to be supportive of a decline in
US interest rates during the second half of 1999.
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 semi-annual report to shareholders.
Sincerely,
(Terry K. Glenn)
Terry K. Glenn
President and Director
(Thomas R. Robinson)
Thomas R. Robinson
Senior Vice President and
Portfolio Manager
July 12, 1999
Merrill Lynch Asset Growth Fund, Inc., May 31, 1999
PERFORMANCE DATA
About Fund
erformance
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 "Average Annual 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.
Average Annual
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 3/31/99 +0.11% -5.14%
Inception (9/02/94)
through 3/31/99 +6.74 +5.48
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 3/31/99 -0.94% -4.89%
Inception (9/02/94)
through 3/31/99 +5.64 +5.64
[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 3/31/99 -0.85% -1.84%
Inception (10/21/94)
through 3/31/99 +6.17 +6.17
[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 3/31/99 -0.09% -5.34%
Inception (10/21/94)
through 3/31/99 +7.02 +5.73
[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 -0.44% +2.77% +34.12%
ML Asset Growth Fund, Inc. Class B Shares -1.41 +2.50 +27.82
ML Asset Growth Fund, Inc. Class C Shares -1.41 +2.52 +29.73
ML Asset Growth Fund, Inc. Class D Shares -0.64 +2.76 +34.55
<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 since inception periods are Class A & Class B Shares, from
9/02/94 to 5/31/99 and Class C & Class D Shares, from 10/21/94 to
5/31/99.
</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>
Australia Broadcasting & Publishing 500 The News Corporation Limited
(Preferred) (ADR)(a) $ 16,780 $ 15,219 0.2%
Diversified 2,600 Broken Hill Proprietary
Company Limited 28,621 26,752 0.4
Total Common Stocks in Australia 45,401 41,971 0.6
Austria Paper Products 500 Mayr-Melnhof Karton AG 25,314 23,481 0.4
Total Common Stocks in Austria 25,314 23,481 0.4
Brazil Diversified 1,000 Companhia Vale do Rio Doce 'A'
(Preferred) 14,300 17,705 0.3
Forest Products 1,050 Aracruz Celulose SA (ADR)(a) 14,730 20,212 0.3
Telecommunications 810 Embratel Participacoes SA (ADR)(a) 13,393 11,137 0.2
176 Telecomunicacoes Brasileiras
SA-Telebras (ADR)(a) 27 11 0.0
176 Telecomunicacoes Brasileiras
SA-Telebras (Preferred Block)
(ADR)(a) 13,874 14,696 0.2
----------- ----------- ------
27,294 25,844 0.4
Total Common Stocks in Brazil 56,324 63,761 1.0
Canada Computer Graphics 800 ATI Technologies Inc. 12,531 11,316 0.2
Paper Products 2,000 Domtar, Inc. 16,071 15,845 0.3
Telecommunications 700 Teleglobe Inc. 19,864 21,131 0.3
Total Common Stocks in Canada 48,466 48,292 0.8
Denmark Commercial Services 100 ISS International Service
System A/S 'B' 6,525 5,035 0.1
Total Common Stocks in Denmark 6,525 5,035 0.1
Finland Communications Equipment 316 Nokia Oyj 15,923 22,521 0.4
Diversified 1,900 Amer Group Ltd. 33,365 28,492 0.4
Insurance 900 Sampo Insurance Company Ltd. 'A' 41,729 27,275 0.4
</TABLE>
Merrill Lynch Asset Growth Fund, Inc., May 31, 1999
<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>
Finland Paper & Forest Products 1,000 UPM-Kymmene Oyj $ 24,951 $ 29,364 0.5%
(concluded)
Real Estate Investment 5,990 Sponda Oyj 42,205 32,863 0.5
Trusts
Total Common Stocks in Finland 158,173 140,515 2.2
France Electronics 700 Thomson CSF 26,480 22,574 0.4
Foods 126 Danone 36,107 34,761 0.5
Information Processing 50 Cap Gemini SA 7,627 7,216 0.1
Insurance 215 Axa 23,956 24,827 0.4
Metals 1,300 Pechiney SA 'A' 58,855 50,482 0.8
Oil--Related 279 Elf Aquitaine SA 34,914 40,468 0.6
Reinsurance 723 Scor 29,305 38,532 0.6
Semiconductor Capital 380 STMicroelectronics NV
Equipment (NY Registered Shares) 26,971 44,128 0.7
Telecommunications 308 France Telecom SA 21,624 23,657 0.4
Utilities--Water 348 Vivendi 25,977 25,820 0.4
Total Common Stocks in France 291,816 312,465 4.9
Germany Automobiles 485 DaimlerChrysler AG 42,307 41,940 0.6
Chemicals 150 BASF AG 6,731 5,847 0.1
370 Henkel KGaA (Preferred) 15,770 25,287 0.4
----------- ----------- ------
22,501 31,134 0.5
Total Common Stocks in Germany 64,808 73,074 1.1
Hong Kong Multi-Industry 800 Hutchison Whampoa Limited 7,387 6,655 0.1
Total Common Stocks in Hong Kong 7,387 6,655 0.1
Ireland Banking 2,100 Bank of Ireland 44,433 39,513 0.6
Pharmaceuticals 400 Elan Corporation PLC (ADR)(a) 33,790 21,600 0.3
Total Common Stocks in Ireland 78,223 61,113 0.9
Italy Publishing 2,800 Mondadori (Arnoldo) Editore SpA 23,578 48,718 0.8
Total Common Stocks in Italy 23,578 48,718 0.8
Japan Appliances 522 Sony Corporation (ADR)(a) 43,387 48,774 0.8
Automobiles 516 Honda Motor Co., Ltd. (ADR)(a) 40,304 42,376 0.7
704 Toyota Motor Corporation (ADR)(a) 37,870 38,060 0.6
----------- ----------- ------
78,174 80,436 1.3
Banking 2,000 The Bank of Tokyo-Mitsubishi, Ltd. 25,861 26,843 0.4
3,000 The Sanwa Bank, Ltd. 30,571 29,180 0.4
3,000 The Sumitomo Bank, Ltd. 38,838 36,363 0.6
----------- ----------- ------
95,270 92,386 1.4
Computers 3,000 NEC Corporation 29,575 33,306 0.5
342 TDK Corporation (ADR)(a) 27,466 29,198 0.5
----------- ----------- ------
57,041 62,504 1.0
Consumer--Electronics 2,000 Matsushita Electric Industrial
Company, Ltd. 35,011 36,288 0.6
Cosmetics/Toiletries 1,000 Kao Corporation 19,901 27,506 0.4
Distribution 100 Softbank Corporation 15,842 11,516 0.2
Diversified Companies 2,000 Olympus Optical Co., Ltd. 22,472 24,855 0.4
Electronics 4,000 Fujitsu Limited 53,661 66,943 1.0
4,000 Toshiba Corporation 26,299 24,756 0.4
----------- ----------- ------
79,960 91,699 1.4
Glass 10,000 Nippon Sheet Glass Company, Ltd. 31,327 32,974 0.5
Insurance 4,000 The Tokio Marine & Fire
Insurance Co. Ltd. 43,929 43,745 0.7
Machine Tools & 2,000 Minebea Company Ltd. 20,620 19,917 0.3
Machinery
Merchandising 1,000 Marui Co., Ltd. 19,189 15,054 0.2
Pharmaceuticals 1,000 Takeda Chemical Industries 36,141 44,490 0.7
Photography 1,000 Fuji Photo Film 37,194 35,791 0.6
280 Fuji Photo Film (ADR)(a) 10,010 10,010 0.1
----------- ----------- ------
47,204 45,801 0.7
Retail 384 Ito-Yokado Co., Ltd. (ADR)(a) 22,272 22,896 0.3
Retail--Stores 1,000 The Daimaru, Inc. 4,534 4,068 0.1
Telecommunications 1 NTT Mobile Communication
Network, Inc. 32,998 54,764 0.9
4 Nippon Telegraph & Telephone
Corporation (NTT) 34,178 39,105 0.6
----------- ----------- ------
67,176 93,869 1.5
Total Common Stocks in Japan 739,450 798,778 12.5
Netherlands Broadcasting & Publishing 960 Wolters Kluwer NV 'A' 36,667 38,673 0.6
Chemicals 150 Akzo Nobel NV 6,857 6,239 0.1
Electronics Components 160 ASM Lithography Holding NV 6,429 7,064 0.1
Multi-Industry 536 Unilever NV 'A' 44,862 35,689 0.6
Total Common Stocks in the Netherlands 94,815 87,665 1.4
Norway Computer Software 1,300 Merkantildata ASA 9,939 12,609 0.2
Transport Services 500 Bergesen d.y. ASA 'B' 7,018 7,259 0.1
Total Common Stocks in Norway 16,957 19,868 0.3
Singapore Electronics Components 360 Flextronics International Ltd. 12,587 18,000 0.3
Total Common Stocks in Singapore 12,587 18,000 0.3
South Korea Electronics 90 Samsung Electronics 6,515 6,263 0.1
7 Samsung Electronics (Rights)(b) 0 78 0.0
----------- ----------- ------
6,515 6,341 0.1
Steel 300 Pohang Iron & Steel Company,
Ltd. (ADR)(a) 7,893 7,594 0.1
Total Common Stocks in South Korea 14,408 13,935 0.2
</TABLE>
Merrill Lynch Asset Growth Fund, Inc., May 31, 1999
<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>
Spain Building Materials 3,100 Uralita, SA $ 42,700 $ 28,605 0.4%
Construction 270 Grupo Ferrovial, SA 6,571 6,038 0.1
Real Estate 755 Metrovacesa, SA 23,532 17,018 0.3
Telecommunications 1,000 Telefonica, SA 45,827 48,049 0.7
Utilities--Electric 1,800 Endesa, SA 46,988 38,391 0.6
Venture Capital 1,800 Dinamia Capital Privado-Sociedad
de Capital Riesgo, SA 31,872 18,622 0.3
Total Common Stocks in Spain 197,490 156,723 2.4
Sweden Auto & Truck 800 Autoliv, Inc. 26,701 25,423 0.4
Automobile & Equipment 500 Volvo AB 'B' 13,941 12,711 0.2
Automobile Parts 2,500 Haldex AB 44,179 33,382 0.5
Banking 900 ForeningsSparbanken AB 11,192 18,472 0.3
4,100 Nordbanken Holding AB 27,195 25,341 0.4
----------- ----------- ------
38,387 43,813 0.7
Diversified Companies 700 Custos AB 'B' 18,434 14,612 0.2
Investment Management 3,400 Investment AB Bure 14,475 18,596 0.3
Paper Products 1,600 Stora Enso Oyj 'R' 17,997 16,233 0.3
Real Estate Investment 2,200 Castellum AB 22,897 19,755 0.3
Trust 1,650 Fastighets AB Tornet 26,234 22,513 0.3
----------- ----------- ------
49,131 42,268 0.6
Telecommunications 706 Telefonaktiebolaget LM
Ericsson (ADR)(a) 17,375 18,974 0.3
Total Common Stocks in Sweden 240,620 226,012 3.5
Switzerland Telephone Service 80 Swisscom AG (Registered Shares) 22,160 28,928 0.5
Total Common Stocks in Switzerland 22,160 28,928 0.5
United Banking 2,240 Bank of Scotland 25,930 31,168 0.5
Kingdom 1,600 HSBC Holdings PLC 42,778 53,442 0.8
3,000 Lloyds TSB Group PLC 40,193 39,630 0.6
1,365 National Westminster Bank PLC 26,106 31,298 0.5
----------- ----------- ------
135,007 155,538 2.4
Beverages 4,008 Diageo PLC 45,227 42,132 0.7
Cable Television Services 1,600 TeleWest Communications PLC 6,196 6,872 0.1
Diversified 13,000 Billiton PLC 29,828 40,747 0.6
Drugs 1,200 AstraZeneca Group PLC 49,019 47,671 0.7
Foods 4,900 Devro PLC 32,782 10,435 0.2
Leisure 5,600 Hilton Group PLC 29,485 24,524 0.4
Metal & Mining 2,600 Rio Tinto PLC (Registered Shares) 31,437 38,093 0.6
Oil--Integrated 1,500 Shell Transport & Trading
Company (ADR)(a) 54,649 66,187 1.0
Oil--Related 2,335 BP Amoco PLC 37,136 41,762 0.7
Pharmaceuticals 1,400 Glaxo Wellcome PLC 44,761 39,274 0.6
Real Estate 1,700 The British Land Company PLC 15,146 14,971 0.2
Retail--Stores 600 Dixons Group PLC 13,817 10,770 0.2
Telecommunications 600 British Telecommunications PLC 9,902 10,001 0.2
600 Cable & Wireless PLC 9,850 7,398 0.1
500 Energis PLC 13,641 12,057 0.2
1,680 Vodafone Group PLC 30,465 31,984 0.5
----------- ----------- ------
63,858 61,440 1.0
Transport Services 400 The Peninsular and Oriental
Steam Navigation Company 6,175 5,841 0.1
Total Common Stocks in the
United Kingdom 594,523 606,257 9.5
United Aerospace & Defense 600 United Technologies Corporation 25,926 37,238 0.6
States
Application Development 500 Siebel Systems, Inc. 18,461 22,750 0.4
Software
Automobile Rental & 150 Avis Rent A Car, Inc. 3,222 4,303 0.1
Leasing 300 The Hertz Corporation (Class A) 12,060 16,481 0.3
----------- ----------- ------
15,282 20,784 0.4
Automobiles 1,100 Delphi Automotive Systems
Corporation 18,700 21,588 0.3
300 Ford Motor Company 19,136 17,119 0.3
----------- ----------- ------
37,836 38,707 0.6
Banking 615 Bank of America Corporation 34,298 39,783 0.6
2,120 Mellon Bank Corporation 66,458 75,658 1.2
----------- ----------- ------
100,756 115,441 1.8
Beverages 1,550 PepsiCo, Inc. 53,862 55,509 0.9
Broadcasting/Cable 1,238 AT&T Corp.-Liberty Media Group
(Class A) 37,811 82,250 1.3
Building Products 700 American Tower Corporation (Class A) 17,500 15,750 0.2
Capital Equipment 200 Eaton Corporation 13,474 17,438 0.3
100 Hewlett-Packard Company 7,340 9,431 0.1
----------- ----------- ------
20,814 26,869 0.4
Chemicals 600 E.I. du Pont de Nemours and
Company 37,600 39,263 0.6
500 Rohm and Haas Company 18,324 20,062 0.3
----------- ----------- ------
55,924 59,325 0.9
Computer Services/ 320 America Online, Inc. 26,973 38,200 0.6
Software 750 Cisco Systems, Inc. 42,898 81,703 1.3
630 International Business Machines
Corporation 40,056 73,277 1.1
1,400 Microsoft Corporation 118,548 112,962 1.8
----------- ----------- ------
228,475 306,142 4.8
Computers 300 EMC Corporation 21,965 29,888 0.5
750 Tandy Corporation 43,192 61,875 1.0
----------- ----------- ------
65,157 91,763 1.5
</TABLE>
Merrill Lynch Asset Growth Fund, Inc., May 31, 1999
<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 Consumer--Electronics 650 Dell Computer Corporation $ 19,935 $ 22,344 0.3%
States
(concluded) Cruise Lines 700 Royal Caribbean Cruises Ltd. 18,225 27,387 0.4
Drugs 500 Centocor, Inc. 19,691 21,687 0.3
Electronics 550 General Electric Company 45,945 55,928 0.9
1,005 Intel Corporation 60,450 54,584 0.9
300 Lattice Semiconductor Corporation 15,052 14,700 0.2
----------- ----------- ------
121,447 125,212 2.0
Entertainment 2,150 Premier Parks Inc. 52,882 76,594 1.2
300 The Walt Disney Company 10,490 8,738 0.1
----------- ----------- ------
63,372 85,332 1.3
Finance 300 The Goldman Sachs Group, Inc. 15,900 20,381 0.3
Financial Services 500 Associates First Capital
Corporation (Class A) 17,522 20,500 0.3
500 Wells Fargo Company 19,465 20,000 0.3
----------- ----------- ------
36,987 40,500 0.6
Financial Services-- 1,250 Household International, Inc. 54,011 54,219 0.8
Consumer
Foods 1,510 Keebler Foods Company 42,826 50,585 0.8
Household Products 300 Colgate-Palmolive Company 27,601 29,963 0.5
Information Processing 1,200 Unisys Corporation 38,635 45,525 0.7
200 Xerox Corporation 11,198 11,237 0.2
----------- ----------- ------
49,833 56,762 0.9
Insurance 200 American International Group, Inc. 23,419 22,863 0.4
200 Clear Channel Communications, Inc. 14,127 13,212 0.2
525 The Equitable Companies Incorporated 27,983 36,848 0.6
570 Providian Financial Corporation 28,607 54,684 0.8
----------- ----------- ------
94,136 127,607 2.0
Laser Systems & Components 190 Uniphase Corporation 18,148 25,519 0.4
Machinery 500 Case Corporation 13,456 23,500 0.4
1,180 Ingersoll-Rand Company 47,550 75,151 1.2
----------- ----------- ------
61,006 98,651 1.6
Machinery & Equipment 200 Caterpillar Inc. 11,099 10,975 0.2
Manufacturing 750 Tyco International Ltd. 42,433 65,531 1.0
Medical Technology 550 Johnson & Johnson 44,104 50,944 0.8
Metals 600 Alcoa Inc. 23,406 33,000 0.5
Natural Gas 1,000 Enron Corp. 47,101 71,375 1.1
Oil--Integrated 750 Mobil Corporation 59,459 75,937 1.2
Oil Services 560 Schlumberger Limited 37,708 33,705 0.5
Paper & Forest Products 400 International Paper Company 19,414 20,000 0.3
Petroleum 1,650 Unocal Corporation 57,331 65,588 1.0
Pharmaceutical-- 1,150 American Home Products Corporation 67,032 66,269 1.0
Diversified
Pharmaceutical-- 300 Pharmacia & Upjohn, Inc. 18,960 16,631 0.3
Prescription
Pharmaceuticals 1,500 Bristol-Myers Squibb Company 77,591 102,937 1.6
600 Cardinal Health, Inc. 41,551 36,225 0.6
500 Pfizer Inc. 64,826 53,500 0.8
----------- ----------- ------
183,968 192,662 3.0
Radio & Television 2,750 Capstar Broadcasting
Corporation (Class A) 52,043 69,094 1.1
Retail 200 Best Buy Co., Inc. 9,406 9,100 0.1
Retail--Specialty 650 Lowe's Companies, Inc. 23,755 33,759 0.5
Retail--Stores 500 Dayton Hudson Corporation 33,509 31,500 0.5
1,250 Safeway Inc. 51,573 58,125 0.9
1,500 Wal-Mart Stores, Inc. 39,260 63,937 1.0
----------- ----------- ------
124,342 153,562 2.4
Savings & Loan 2,650 GreenPoint Financial Corp. 99,492 91,425 1.4
Associations
Semiconductors 300 Applied Materials, Inc. 19,197 16,500 0.3
810 Motorola, Inc. 43,565 67,078 1.0
----------- ----------- ------
62,762 83,578 1.3
Services 540 Quintiles Transnational Corp. 25,741 21,870 0.3
Telecommunications 1,443 AT&T Corp. 42,613 80,087 1.2
1,100 GTE Corporation 60,068 69,369 1.1
350 Lucent Technologies Inc. 19,470 19,906 0.3
1,100 MCI WorldCom Inc. 50,166 94,944 1.5
----------- ----------- ------
172,317 264,306 4.1
Tobacco 460 Philip Morris Companies Inc. 21,065 17,739 0.3
Utilities--Communication 1,130 Ameritech Corporation 57,315 74,368 1.2
Waste Management 1,200 Waste Management, Inc. 53,711 63,450 1.0
Total Common Stocks in the
United States 2,634,886 3,243,545 50.6
Total Investments in
Common Stocks 5,373,911 6,024,791 94.1
Face
Amount Fixed-Income Securities
<S> <S> <C> <S> <C> <C> <C>
Germany Foreign EURO 120,000 BundesObligation,
Government 4.75% due 11/20/2001 138,200 130,757 2.0
Obligations 30,000 Deutschland Republic, 4.75%
due 7/04/2028 35,549 29,729 0.5
Total Fixed-Income Securities
in Germany 173,749 160,486 2.5
United Foreign POUND 60,000 United Kingdom Treasury Gilt,
Kingdom Government STERLING 7.25% due 12/07/2007 114,668 110,248 1.7
Obligations
Total Fixed-Income Securities
in the United Kingdom 114,668 110,248 1.7
</TABLE>
Merrill Lynch Asset Growth Fund, Inc., May 31, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
Face Percent of
COUNTRY Amount Fixed-Income Securities Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
United US Government & US$ 100,000 Federal National Mortgage
States Agency Obligations Association, 5.25% due 1/15/2009 $ 93,600 $ 92,906 1.5%
15,000 US Treasury Notes, 4.25% due
11/15/2003 14,202 14,177 0.2
Total Fixed-Income Securities
in the United States 107,802 107,083 1.7
Total Investments in
Fixed-Income Securities 396,219 377,817 5.9
Total Investments $ 5,770,130 6,402,608 100.0
===========
Unrealized Appreciation on Forward Foreign Exchange Contracts* 3,024 0.0
Liabilities in Excess of Other Assets (684) (0.0)
----------- ------
Net Assets $ 6,404,948 100.0%
=========== ======
Net Asset Value: Class A--Based on net assets of $523,726 and
48,678 shares outstanding $ 10.76
===========
Class B--Based on net assets of $5,235,492 and
492,046 shares outstanding $ 10.64
===========
Class C--Based on net assets of $388,959 and
36,776 shares outstanding $ 10.58
===========
Class D--Based on net assets of $256,771 and
23,751 shares outstanding $ 10.81
===========
<FN>
(a)American Depositary Receipts (ADR).
(b)The rights may be exercised until 6/30/99.
*Forward foreign exchange contracts as of May 31, 1999 were as
follows:
Foreign Expiration Unrealized
Currency Sold Date Appreciation
C$ 70,000 July 1999 $ 478
YEN 57,000,000 June 1999 1,396
YEN 39,000,000 July 1999 1,150
-------
Total Unrealized Appreciation on Forward
Foreign Exchange Contracts--Net
(US$ Commitment--$848,591) $ 3,024
=======
</TABLE>
EQUITY PORTFOLIO CHANGES
For the Quarter Ended May 31, 1999
Additions
AT&T Corp.
AT&T Corp.-Liberty Media Group (Class A)
Akzo Nobel NV
American International Group, Inc.
Applied Materials, Inc.
Aracruz Celulose SA (ADR)
BASF AG
Bergesen d.y. ASA 'B'
Best Buy Co., Inc.
The British Land Company PLC
Broken Hill Proprietary Company Limited
Caterpillar Inc.
Clear Channel Communications, Inc.
Colgate-Palmolive Company
Companhia Vale do Rio Doce 'A'
(Preferred)
The Daimaru, Inc.
Dayton Hudson Corporation
Dixons Group PLC
Domtar, Inc.
Elan Corporation PLC (ADR)
Embratel Participacoes SA (ADR)
Ford Motor Company
The Goldman Sachs Group, Inc.
Grupo Ferrovial, SA
Hewlett-Packard Company
Hilton Group PLC
Hutchison Whampoa Limited
International Paper Company
Lattice Semiconductor Corporation
*News Corp. (ADR)
The News Corporation Limited
(Preferred) (ADR)
Nippon Sheet Glass Company, Ltd.
Pechiney SA 'A'
The Peninsular and Oriental Steam
Navigation Company
Pharmacia & Upjohn, Inc.
Pohang Iron & Steel Company, Ltd. (ADR)
Rohm and Haas Company
Siebel Systems, Inc.
Softbank Corporation
Sony Corporation (ADR)
Stora Enso Oyj 'R'
TDK Corporation (ADR)
Takeda Chemical Industries
Telecomunicacoes Brasileiras SA-
Telebras (ADR)
Telecomunicacoes Brasileiras SA-Telebras
(Preferred Block) (ADR)
Uniphase Corporation
Unisys Corporation
The Walt Disney Company
Wells Fargo Company
Xerox Corporation
Deletions
BMC Software, Inc.
Beckman Coulter Inc.
Bethlehem Steel Corporation
The Black & Decker Corporation
Burlington Northern Santa Fe Corp.
Compaq Computer Corporation
The Dial Corporation
El Paso Energy Corporation
Federal-Mogul Corporation
Fujikura Ltd.
General Motors Corporation
HEALTHSOUTH Corporation
Heller Financial, Inc.
Keane, Inc.
LucasVarity PLC
Mattel, Inc.
Micron Technology, Inc.
Millipore Corporation
Morgan Stanley Dean Witter & Co.
*News Corp. (ADR)
Nabisco Holdings Corp. (Class A)
Novartis AG (Registered Shares)
Oracle Corporation
Orion-Yhtyma OY 'B'
PECO Energy Company
Public Service Enterprise Group
Incorporated
Rite Aid Corporation
Sundstrand Corporation
Tele-Communications, Inc. (Class A)
Tele-Communications TCI Ventures Group
(Class A)
Telecom Italia SpA
UNUM Corporation
USX-U.S. Steel Group
World Color Press, Inc.
[FN]
*Added and deleted in the same quarter.
Merrill Lynch Asset Growth Fund, Inc., May 31, 1999
OFFICERS AND DIRECTORS
Terry K. Glenn, President and Director
Joe Grills, Director
Walter Mintz, Director
Robert S. Salomon Jr., Director
Melvin R. Seiden, Director
Stephen B. Swensrud, Director
Arthur Zeikel, Director
Thomas R. Robinson, Senior Vice President and
Portfolio Manager
Donald C. Burke, Vice President and Treasurer
Barbara G. Fraser, Secretary
Custodian
The Chase Manhattan Bank
4 MetroTech Center, 18th Floor
Brooklyn, NY 11245
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800)637-3863
