1
EXHIBIT (17)(b)
MERRILL LYNCH GLOBAL GROWTH FUND, INC.
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
Norman R. Harvey, Senior Vice President
Donald C. Burke, Vice President
Lawrence R. Fuller, Vice President and
Portfolio Manager
Gerald M. Richard, Treasurer
Philip M. Mandel, Secretary
CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02101
TRANSFER AGENT
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
2
MERRILL LYNCH GLOBAL GROWTH FUND, INC., FEBRUARY 28, 1998
DEAR SHAREHOLDER
We are pleased to provide you with the first shareholder report for Merrill
Lynch Global Growth Fund, Inc. The Fund seeks long-term growth of capital by
investing in a diversified portfolio of equity securities of issuers located in
various foreign countries and the United States. In this and future reports to
shareholders, we will provide information on the Fund's performance, discuss our
investment strategies, and highlight some of the Fund's holdings.
Merrill Lynch Global Growth Fund, Inc. commenced operations on October 31, 1997.
Since inception through February 28, 1998, the Fund's Class A, Class B, Class C
and Class D Shares had total returns of +12.20%, +11.80%, +11.80% and +12.10%,
respectively. (Investment results shown do not reflect sales charges, and would
be lower if sales charges were included. Complete performance information,
including aggregate total returns, can be found on pages 4 and 5 of this report
to shareholders.)
The Fund's performance reflects our overweighting of banking and finance,
insurance and financial service companies in western Europe and Canada, as well
as our limiting the Fund's weighting in Asian stock markets, including Japan. A
negative factor for the Fund during this initial investment period was the
decline in stock prices of a few of the portfolio's US companies in the
telecommunications equipment, computer, computer software and oil service
industries. The prospective earnings of companies in these industries have been
perceived to be particularly vulnerable to the recessions developing in major
Asian countries, including Japan.
THE ENVIRONMENT
The start-up of the Fund occurred during a very volatile period for the world's
developing stock markets. Merrill Lynch Global Growth Fund, Inc. is focused on
equity investments in primarily large-capitalization growth companies in the
developed equity markets. However, the steep declines in currency values and
local stock markets in the emerging markets of Asia also affected the developed
stock markets of Europe and North America. Investor concerns have related to the
potential declines in earnings for global companies, which have significant
product and/or service markets in Asia. We recognized the possibility of a
slowdown in real business activity around the world as a result of governmental
austerity programs in the major Asian countries. However, we believed the stock
price declines experienced in October and November of 1997 in most of the
developed countries' equity markets represented an opportunity to invest the
proceeds of the record $1.2 billion initial public offering of the Fund at
relatively attractive valuations.
Quarterly earnings reports released in early 1998 for the fourth quarter of 1997
have helped to reduce the concerns regarding the negative effects of the
developing Asian crisis on individual companies. In recent weeks, officials at
the International Monetary Fund, in addition to central bankers, commercial
bankers and investment bankers from developed countries, have cooperated with
government officials and business executives in the Asian countries in an effort
to develop solutions to that region's financial liquidity problems. We believe
that investors will view this as positive.
INVESTMENT STRATEGY
Our investment focus is on medium-to-large-capitalization companies around the
world, where we anticipate above-average growth in earnings. As of February 28,
1998, a majority of the companies in the Fund were foreign-based companies,
representing over 65% of net assets. Our current investment strategy with
respect to industry allocations reflects the potential of a global slowdown in
real economic growth during 1998, accompanied by declining rates of inflation
and lower interest rates. Consequently, the portfolio's two largest industry
sector allocations are banking/financial and insurance.
The Fund also has exposure to what we believe will continue to be relatively
high-growth capital investment sectors. We believe that selected communications
equipment companies will continue to experience above-average growth in earnings
despite the foregone sales in some Asian markets. The Fund's primary investments
in this sector are represented by Northern Telecom Ltd., Telefonaktiebologet LM
Ericsson (Class B), Nokia oyj and Lucent Technologies, Inc. Major
telecommunications companies in the United States, Europe and Latin America seem
to be continuing substantial capital investment programs in new cellular as well
as wireline telecommunication switch infrastructure. These telecommunications
equipment investments relate to government programs to increase competition
under global deregulation as well as to corporate programs to develop global
infrastructures of new networked computer business application programs. In our
opinion, two of the top ten equity investments in the Fund, SAP AG and Baan
Company, N.V., are among the leading software companies providing the consulting
and systems integration for the implementation of globally networked business
applications for some of the largest corporate organizations in the world.
We have sold only two of the initial investments in the Fund. We eliminated
Oracle Corporation at a capital loss after the company's management reported
what was a surprisingly unsatisfactory operational result. Oracle Corporation
appears to be losing business and market share to Microsoft Corporation at the
low-end of the relational database market. Also, Oracle Corporation appears to
be growing at a substantially slower rate than the leading companies, such as
SAP AG and Baan Company, N.V., in business applications software for networked
operational systems. We also eliminated, at a modest capital loss, Assurances
Generales de France, which is being acquired in stages by Allianz AG in an
agreement which, in our opinion, would significantly limit future investment
returns.
IN CONCLUSION
We thank you for subscribing to the initial public offering of Merrill Lynch
Global Growth Fund, Inc. and your subsequent support. It was a record equity
fund public offering for the US mutual fund industry. We have a positive outlook
for potential equity investment returns, and we look forward to serving your
investment needs in the months and years ahead.
Sincerely,
/s/ Arthur Zeikel
Arthur Zeikel
President
/s/ Lawrence R. Fuller
Lawrence R. Fuller
Vice President and
Portfolio Manager
March 31, 1998
2
3
MERRILL LYNCH GLOBAL GROWTH FUND, INC., FEBRUARY 28, 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 "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.
RECENT PERFORMANCE RESULTS*
3 MONTH SINCE INCEPTION
TOTAL RETURN TOTAL RETURN
- ---------------------------------------------------------------------------------------------------
ML GLOBAL GROWTH FUND, INC. CLASS A SHARES +14.37% +12.20%
- ---------------------------------------------------------------------------------------------------
ML GLOBAL GROWTH FUND, INC. CLASS B SHARES +14.08 +11.80
- ---------------------------------------------------------------------------------------------------
ML GLOBAL GROWTH FUND, INC. CLASS C SHARES +14.08 +11.80
- ---------------------------------------------------------------------------------------------------
ML GLOBAL GROWTH FUND, INC. CLASS D SHARES +14.27 +12.10
- ---------------------------------------------------------------------------------------------------
* 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.
4
4
5
AGGREGATE TOTAL RETURN
- --------------------------------------------------------------------------------
% RETURN WITHOUT % RETURN WITH
SALES CHARGE SALES CHARGE**
- --------------------------------------------------------------------------------
CLASS A SHARES*
- --------------------------------------------------------------------------------
Inception (10/31/97) through 12/31/97 +0.10% -5.16%
- --------------------------------------------------------------------------------
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
- --------------------------------------------------------------------------------
% RETURN % RETURN
WITHOUT CDSC WITH CDSC**
- --------------------------------------------------------------------------------
CLASS B SHARES*
- --------------------------------------------------------------------------------
Inception (10/31/97) through 12/31/97 -0.10% -4.10%
- --------------------------------------------------------------------------------
* 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 12/31/97 -0.10% -1.10%
- --------------------------------------------------------------------------------
* 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 12/31/97 +0.10% -5.16%
- --------------------------------------------------------------------------------
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
PORTFOLIO INFORMATION
WORLDWIDE INVESTMENTS AS OF FEBRUARY 28, 1998
PERCENT OF
TEN LARGEST INDUSTRIES NET ASSETS
Banking & Financial ........................ 20.3%
Insurance .................................. 10.9
Communications Equipment ................... 7.5
Pharmaceuticals ............................ 6.4
Software--Computer ......................... 5.8
Retail ..................................... 5.8
Telecommunications ......................... 4.6
Electronics ................................ 2.9
Computers .................................. 2.8
Electrical Equipment ....................... 2.5
COUNTRY OF PERCENT OF
TEN LARGEST EQUITY HOLDINGS ORIGIN NET ASSETS
SAP AG (Systeme, Anwendungen,
Produkte in der Datenverar-
beitung)(Preferred) .................. Germany 3.0%
Baan Company, N.V. .................... Netherlands 2.1
Novartis AG (Registered Shares) ....... Switzerland 2.0
National Westminster Bank PLC
(Ordinary) ........................... United Kingdom 1.8
Nippon Telegraph & Telephone
Corp. ................................ Japan 1.8
Lloyds TSB Group PLC .................. United Kingdom 1.8
Northern Telecom Ltd. ................. Canada 1.7
Barclays PLC .......................... United Kingdom 1.7
Nokia oyj (Class A) ................... Finland 1.6
Dresdner Bank AG ...................... Germany 1.6
5
MERRILL LYNCH GLOBAL GROWTH FUND, INC., FEBRUARY 28, 1998
- -----------------------------------------------------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (IN US DOLLARS)
- -----------------------------------------------------------------------------------------------------------------------------
Shares Value Percent of
NORTH AMERICA Industries Held Investments Cost (Note 1a) Net Assets
=============================================================================================================================
Canada BANKING & FINANCIAL 380,000 Bank of Montreal $ 17,744,280 $ 20,298,004 1.3%
575,000 Canadian Imperial Bank of Commerce 18,142,347 18,307,211 1.2
500,000 National Bank of Canada 7,419,127 8,328,648 0.6
300,000 Royal Bank of Canada 16,480,599 17,563,958 1.1
------------ ------------ ----
59,786,353 64,497,821 4.2
- -----------------------------------------------------------------------------------------------------------------------------
COMMUNICATIONS 350,000 +Newbridge Networks Corp. 16,697,365 8,203,894 0.6
EQUIPMENT 500,000 Northern Telecom Ltd. 23,928,428 26,637,616 1.7
------------ ------------ ----
40,625,793 34,841,510 2.3
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN CANADA 100,412,146 99,339,331 6.5
=============================================================================================================================
United States ADVERTISING 85,000 Interpublic Group of
Companies, Inc. 4,101,446 4,632,500 0.3
- -----------------------------------------------------------------------------------------------------------------------------
BANKING & FINANCIAL 154,000 Banc One Corp. 7,522,284 8,701,000 0.6
50,000 BankAmerica Corp. 3,492,072 3,875,000 0.3
132,000 Citicorp 17,428,427 17,490,000 1.1
145,000 Mellon Bank Corp. 8,033,775 9,035,313 0.6
180,000 State Street Corp. 10,395,954 11,126,250 0.7
------------ ------------ ----
46,872,512 50,227,563 3.3
- -----------------------------------------------------------------------------------------------------------------------------
BEVERAGES 40,000 The Coca-Cola Company 2,321,880 2,747,500 0.2
- -----------------------------------------------------------------------------------------------------------------------------
BROADCASTING -- RADIO & 45,000 +Clear Channel
TELEVISION Communications, Inc. 3,785,427 4,078,125 0.3
- -----------------------------------------------------------------------------------------------------------------------------
COMMUNICATIONS 135,000 +Cisco Systems, Inc. 7,735,941 8,893,125 0.6
EQUIPMENT 440,000 +FORE Systems, Inc. 7,553,744 7,040,000 0.5
90,000 Lucent Technologies, Inc. 7,704,135 9,753,750 0.6
------------ ------------ ----
22,993,820 25,686,875 1.7
- -----------------------------------------------------------------------------------------------------------------------------
COMPUTERS 700,000 Compaq Computer Corp. 23,821,910 22,443,750 1.4
20,000 +Dell Computer Corporation 2,492,500 2,796,250 0.2
45,000 Hewlett-Packard Co. 2,922,777 3,015,000 0.2
------------ ------------ ----
29,237,187 28,255,000 1.8
- -----------------------------------------------------------------------------------------------------------------------------
COSMETICS 110,000 The Gillette Company 10,104,061 11,866,250 0.8
20,000 International Flavors
& Fragrances, Inc. 968,044 920,000 0.0
------------ ------------ ----
11,072,105 12,786,250 0.8
- -----------------------------------------------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT 35,000 Emerson Electric Co. 1,975,075 2,233,438 0.1
260,000 General Electric Co. 18,067,322 20,215,000 1.3
10,000 Honeywell, Inc. 710,689 792,500 0.1
------------ ------------ ----
20,753,086 23,240,938 1.5
- -----------------------------------------------------------------------------------------------------------------------------
ELECTRONICS 227,000 Intel Corporation 17,179,260 20,344,875 1.3
35,000 Texas Instruments Inc. 2,003,866 2,025,625 0.1
------------ ------------ ----
19,183,126 22,370,500 1.4
- -----------------------------------------------------------------------------------------------------------------------------
Energy 150,000 El Paso Natural Gas Co. 9,480,786 9,956,250 0.7
75,000 Enron Corp. 2,883,465 3,525,000 0.2
------------ ------------ ----
6
6
12,364,251 13,481,250 0.9
- -----------------------------------------------------------------------------------------------------------------------------
ENTERTAINMENT 35,000 +Viacom, Inc. (Class B) 1,088,787 1,680,000 0.1
130,000 The Walt Disney Company 11,960,634 14,551,875 1.0
------------ ------------ ----
13,049,421 16,231,875 1.1
- -----------------------------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES 40,000 American Express Company 3,224,880 3,602,500 0.2
70,000 Federal National Mortgage
Association 3,823,246 4,466,875 0.3
100,000 Morgan Stanley, Dean Witter,
Discover & Co. 6,021,422 6,968,750 0.5
400,000 Travelers Group, Inc. 19,984,610 22,300,000 1.5
------------ ------------ ----
33,054,158 37,338,125 2.5
- -----------------------------------------------------------------------------------------------------------------------------
FOOD MERCHANDISING 100,000 Albertsons, Inc. 3,854,535 4,681,250 0.3
105,000 +Fred Meyer, Inc. 3,288,884 4,665,938 0.3
------------ ------------ ----
7,143,419 9,347,188 0.6
- -----------------------------------------------------------------------------------------------------------------------------
FOODS 40,000 ConAgra, Inc. 1,360,116 1,200,000 0.1
35,000 Wrigley (Wm.) Jr. Company
(Class B) 2,610,412 2,673,125 0.2
------------ ------------ ----
3,970,528 3,873,125 0.3
- -----------------------------------------------------------------------------------------------------------------------------
HOME FURNISHINGS 164,500 Ethan Allen Interiors, Inc. 7,659,087 9,170,875 0.6
- -----------------------------------------------------------------------------------------------------------------------------
HOTELS 25,000 Marriott International, Inc. 1,702,250 1,893,750 0.1
- -----------------------------------------------------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS 35,000 Colgate-Palmolive Co. 2,288,342 2,841,563 0.2
20,000 Kimberly-Clark Corp. 1,056,650 1,113,750 0.1
60,000 Procter & Gamble Company 4,312,704 5,096,250 0.3
------------ ------------ ----
7,657,696 9,051,563 0.6
- -----------------------------------------------------------------------------------------------------------------------------
INFORMATION PROCESSING 155,000 First Data Corp. 4,599,284 5,270,000 0.3
- -----------------------------------------------------------------------------------------------------------------------------
INSURANCE 10,000 Aetna Inc. 737,856 873,750 0.0
150,000 American International Group, Inc. 15,884,252 18,028,125 1.2
------------ ------------ ----
16,622,108 18,901,875 1.2
- -----------------------------------------------------------------------------------------------------------------------------
MEDICAL TECHNOLOGY 150,000 +Boston Scientific Corp. 7,648,860 8,962,500 0.6
90,000 Guidant Corporation 5,835,558 6,564,375 0.4
25,000 Johnson & Johnson 1,503,390 1,887,500 0.1
------------ ------------ ----
14,987,808 17,414,375 1.1
- -----------------------------------------------------------------------------------------------------------------------------
OIL SERVICES 190,000 Baker Hughes, Inc. 9,059,363 7,778,125 0.5
250,000 Diamond Offshore Drilling, Inc. 15,343,835 11,328,125 0.7
140,000 Schlumberger Ltd. 13,083,952 10,552,500 0.7
------------ ------------ ----
37,487,150 29,658,750 1.9
- -----------------------------------------------------------------------------------------------------------------------------
PHARMACEUTICALS 25,000 Amgen, Inc. 1,328,783 1,328,125 0.1
120,000 Bristol-Myers Squibb Co. 11,138,426 12,022,500 0.8
140,000 Merck & Co., Inc. 13,482,770 17,858,750 1.1
100,000 Pfizer Inc. 7,279,046 8,850,000 0.6
------------ ------------ ----
33,229,025 40,059,375 2.6
- -----------------------------------------------------------------------------------------------------------------------------
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MERRILL LYNCH GLOBAL GROWTH FUND, INC., FEBRUARY 28, 1998
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (IN US DOLLARS)
- --------------------------------------------------------------------------------
NORTH AMERICA Shares Value Percent of
(Concluded) Industries Held Investments Cost (Note 1a) Net Assets
=============================================================================================================================
United States
(Concluded)
PHOTOGRAPHY 30,000 Eastman Kodak Co. $ 1,880,844 $ 1,968,750 0.1%
- -----------------------------------------------------------------------------------------------------------------------------
POLLUTION CONTROL 20,000 Waste Management, Inc. 505,400 500,000 0.0
- -----------------------------------------------------------------------------------------------------------------------------
RESTAURANTS 30,000 McDonald's Corporation 1,391,850 1,642,500 0.1
- -----------------------------------------------------------------------------------------------------------------------------
RETAIL 420,000 Wal-Mart Stores, Inc. 15,286,530 19,451,250 1.3
- -----------------------------------------------------------------------------------------------------------------------------
SEMICONDUCTOR 60,000 +Applied Materials, Inc. 2,061,564 2,208,750 0.1
- -----------------------------------------------------------------------------------------------------------------------------
SOFTWARE -- COMPUTER 40,000 +Microsoft Corporation 2,672,322 3,390,000 0.2
180,000 +PeopleSoft, Inc. 7,340,062 8,032,500 0.5
------------ ------------ ----
10,012,384 11,422,500 0.7
- -----------------------------------------------------------------------------------------------------------------------------
SPECIALTY RETAILING 80,000 CVS Corporation 5,197,738 5,925,000 0.4
100,000 The Gap, Inc. 4,014,457 4,468,750 0.3
435,000 +Staples, Inc. 7,849,691 9,189,375 0.6
165,000 Walgreen Co. 4,931,108 6,053,438 0.4
------------ ------------ ----
21,992,994 25,636,563 1.7
- -----------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS 110,000 Sprint Corporation 6,630,434 7,260,000 0.5
- -----------------------------------------------------------------------------------------------------------------------------
TOYS 200,000 Mattel, Inc. 7,823,472 8,462,500 0.6
- -----------------------------------------------------------------------------------------------------------------------------
TRAVEL & LODGING 60,000 Carnival Corp. (Class A) 2,997,084 3,532,500 0.2
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN THE
UNITED STATES 424,429,330 467,802,690 30.4
=============================================================================================================================
TOTAL INVESTMENTS IN NORTH AMERICA 524,841,476 567,142,021 36.9
=============================================================================================================================
PACIFIC BASIN
=============================================================================================================================
Japan
AUTOMOBILES 480,000 Honda Motor Co., Ltd. 17,468,820 16,627,824 1.1
500,000 Toyota Motor Corp. 13,656,899 13,832,739 0.9
------------ ------------ ----
31,125,719 30,460,563 2.0
- -----------------------------------------------------------------------------------------------------------------------------
COMPUTERS 700,000 Fujitsu Ltd. 7,951,104 7,879,509 0.5
700,000 NEC Corporation 7,957,519 7,824,019 0.5
------------ ------------ ----
15,908,623 15,703,528 1.0
- -----------------------------------------------------------------------------------------------------------------------------
LEISURE 140,000 Sony Corp. 12,422,680 12,651,605 0.8
- -----------------------------------------------------------------------------------------------------------------------------
OFFICE EQUIPMENT 200,000 Canon, Inc. 4,706,266 4,581,847 0.3
- -----------------------------------------------------------------------------------------------------------------------------
PHOTOGRAPHY 300,000 Fuji Photo Film Co., Ltd. 11,929,829 11,771,700 0.8
- -----------------------------------------------------------------------------------------------------------------------------
RETAIL 250,000 Ito-Yokado Co., Ltd. 13,794,985 13,674,197 0.9
- -----------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS 3,000 Nippon Telegraph & Telephone Corp. 26,362,868 27,586,206 1.8
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN THE
PACIFIC BASIN 116,250,970 116,429,646 7.6
=============================================================================================================================
WESTERN EUROPE
=============================================================================================================================
Denmark
TELECOMMUNICATIONS 70,000 Tele-Denmark A.S. 4,531,731 4,533,561 0.3
- -----------------------------------------------------------------------------------------------------------------------------
8
8
TOTAL INVESTMENTS IN DENMARK 4,531,731 4,533,561 0.3
=============================================================================================================================
Finland
Communications
Equipment 250,000 Nokia oyj (Class A) 21,791,192 25,029,500 1.6
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN FINLAND 21,791,192 25,029,500 1.6
=============================================================================================================================
France
COMMUNICATIONS
EQUIPMENT 50,000 Alcatel Alsthom Cie
Generale d'Electricite S.A. 6,141,367 6,507,806 0.4
- -----------------------------------------------------------------------------------------------------------------------------
COSMETICS 10,000 L'OREAL 3,739,626 4,506,163 0.3
- -----------------------------------------------------------------------------------------------------------------------------
ELECTRONICS 100,000 +SGS-Thomson Microelectronics N.V. 7,121,888 7,666,393 0.5
- -----------------------------------------------------------------------------------------------------------------------------
FOODS 15,000 Promodes S.A. 6,249,958 6,692,687 0.4
- -----------------------------------------------------------------------------------------------------------------------------
INFORMATION PROCESSING 180,000 Cap Gemini S.A. 15,395,411 20,706,656 1.4
- -----------------------------------------------------------------------------------------------------------------------------
INSURANCE 165,000 Axa-UAP 11,694,023 15,971,241 1.0
- -----------------------------------------------------------------------------------------------------------------------------
RETAIL 20,000 Carrefour S.A. 11,290,715 12,009,860 0.8
- -----------------------------------------------------------------------------------------------------------------------------
Total Investments in France 61,632,988 74,060,806 4.8
=============================================================================================================================
Germany
APPAREL 50,000 Adidas AG 7,026,333 7,826,279 0.5
- -----------------------------------------------------------------------------------------------------------------------------
AUTOMOBILES 40,000 Daimler-Benz AG 2,783,283 3,276,014 0.2
- -----------------------------------------------------------------------------------------------------------------------------
BANKING & FINANCIAL 600,000 Commerzbank AG 21,297,933 21,726,190 1.4
335,000 Deutsche Bank AG 21,864,670 23,014,633 1.5
525,000 Dresdner Bank AG 22,202,477 23,813,657 1.6
------------ ------------ ----
65,365,080 68,554,480 4.5
- -----------------------------------------------------------------------------------------------------------------------------
CHEMICALS 150,000 BASF AG 5,213,865 5,460,483 0.4
150,000 Bayer AG 5,341,904 6,324,405 0.4
140,000 Hoechst AG 5,771,079 5,424,383 0.3
------------ ------------ ----
16,326,848 17,209,271 1.1
- -----------------------------------------------------------------------------------------------------------------------------
ELECTRONICS 250,000 Siemens AG 16,074,487 15,383,873 1.0
- -----------------------------------------------------------------------------------------------------------------------------
INSURANCE 65,000 Allianz AG 17,121,210 20,473,710 1.3
- -----------------------------------------------------------------------------------------------------------------------------
MULTI-INDUSTRY 50,000 VEBA AG 2,887,107 3,355,104 0.2
- -----------------------------------------------------------------------------------------------------------------------------
RETAIL 180,000 Metro AG 7,700,813 8,184,524 0.6
- -----------------------------------------------------------------------------------------------------------------------------
SOFTWARE -- COMPUTER 110,000 SAP AG (Systeme, Anwendungen,
Produkte in der Datenverarbeitung)
(Preferred) 34,118,327 45,348,325 3.0
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN GERMANY 169,403,488 189,611,580 12.4
=============================================================================================================================
Ireland
BANKING & FINANCIAL 1,300,000 Allied Irish Banks PLC 13,137,895 16,880,163 1.1
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN IRELAND 13,137,895 16,880,163 1.1
=============================================================================================================================
Italy
INSURANCE 464,000 Assicurazioni Generali S.p.A. 11,016,623 13,259,367 0.8
3,750,000 Istituto Nazionale delle
Assicurazioni S.p.A. (INA) 7,008,593 10,191,813 0.7
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN ITALY 18,025,216 23,451,180 1.5
=============================================================================================================================
9
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MERRILL LYNCH GLOBAL GROWTH FUND, INC., FEBRUARY 28, 1998
SCHEDULE OF INVESTMENTS (CONCLUDED) (IN US DOLLARS)
Shares Value Percent of
Industries Held Investments Cost (Note 1a) Net Assets
=============================================================================================================================
WESTERN EUROPE
(concluded)
Netherlands
- -----------------------------------------------------------------------------------------------------------------------------
FOOD MERCHANDISING 300,000 Koninklijke Ahold N.V. $ 8,057,506 $ 9,182,476 0.6%
- -----------------------------------------------------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS 200,000 Unilever N.V. 11,380,224 12,878,936 0.8
60,000 Unilever N.V. (NY Registered
Shares) 3,751,836 3,858,750 0.3
------------ ------------ ----
15,132,060 16,737,686 1.1
- -----------------------------------------------------------------------------------------------------------------------------
INSURANCE 70,000 AEGON N.V. 5,669,294 7,974,770 0.5
235,000 ING Groep N.V. 10,003,319 12,444,015 0.8
------------ ------------ ----
15,672,613 20,418,785 1.3
- -----------------------------------------------------------------------------------------------------------------------------
LEISURE 35,000 Philips Electronics N.V. 2,809,946 2,721,005 0.2
50,000 Polygram N.V. 2,816,709 2,593,878 0.2
------------ ------------ ----
5,626,655 5,314,883 0.4
- -----------------------------------------------------------------------------------------------------------------------------
SOFTWARE-- COMPUTER 720,000 +Baan Company, N.V. 26,223,931 32,564,052 2.1
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN THE
NETHERLANDS 70,712,765 84,217,882 5.5
=============================================================================================================================
Spain
- -----------------------------------------------------------------------------------------------------------------------------
BANKING & FINANCIAL 200,000 Banco Bilbao Vizcaya, S.A. 5,505,054 9,141,743 0.6
175,000 Banco Santander, S.A. 4,941,976 8,101,430 0.5
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SPAIN 10,447,030 17,243,173 1.1
=============================================================================================================================
Sweden
- -----------------------------------------------------------------------------------------------------------------------------
COMMUNICATIONS 500,000 Telefonaktiebolaget LM Ericsson
EQUIPMENT (Class B) 22,955,241 22,746,304 1.5
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SWEDEN 22,955,241 22,746,304 1.5
=============================================================================================================================
Switzerland
- -----------------------------------------------------------------------------------------------------------------------------
FOODS 7,000 Nestle S.A. (Registered) 10,009,777 12,271,487 0.8
- -----------------------------------------------------------------------------------------------------------------------------
INSURANCE 20,000 Zuerich Versicherungs-Gesellschaft
(Registered Shares) 8,709,180 10,914,052 0.7
- -----------------------------------------------------------------------------------------------------------------------------
PHARMACEUTICALS 17,000 Novartis AG (Registered Shares) 26,865,087 31,042,974 2.0
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SWITZERLAND 45,584,044 54,228,513 3.5
=============================================================================================================================
United Kingdom
- -----------------------------------------------------------------------------------------------------------------------------
BANKING & FINANCIAL 875,000 Barclays PLC 22,582,208 25,969,482 1.7
400,000 HSBC Holdings PLC 11,097,646 12,279,773 0.8
1,800,000 Lloyds TSB Group PLC 22,830,755 27,066,830 1.8
1,500,000 National Westminster Bank PLC
(Ordinary) 22,162,632 27,614,682 1.8
------------ ------------ ----
78,673,241 92,930,767 6.1
- -----------------------------------------------------------------------------------------------------------------------------
BROADCAST-- MEDIA 1,000,000 British Sky Broadcasting Group PLC 6,087,391 6,465,636 0.4
- -----------------------------------------------------------------------------------------------------------------------------
CHEMICALS 365,000 Imperial Chemical Industries PLC 5,501,341 6,656,520 0.4
- -----------------------------------------------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT 750,000 Siebe PLC 14,965,916 15,510,123 1.0
- -----------------------------------------------------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS 750,000 Unilever PLC 5,692,608 6,786,450 0.4
- -----------------------------------------------------------------------------------------------------------------------------
INFORMATION PROCESSING 1,039,999 Reuters Group PLC 13,444,894 10,462,804 0.7
- -----------------------------------------------------------------------------------------------------------------------------
INSURANCE 1,000,000 Commercial Union PLC 14,287,623 18,064,296 1.2
2,500,000 Guardian Royal Exchange PLC 13,253,258 18,775,845 1.2
1,800,000 Royal & Sun Alliance Insurance
Group PLC 17,885,194 22,906,120 1.5
------------ ------------ ----
45,426,075 59,746,261 3.9
10
10
- -----------------------------------------------------------------------------------------------------------------------------
PHARMACEUTICALS 265,000 Glaxo Wellcome PLC 5,881,443 7,411,626 0.5
575,000 SmithKline Beecham PLC 5,491,124 7,189,524 0.5
300,000 Zeneca Group PLC 11,066,411 13,029,984 0.8
------------ ------------ ----
22,438,978 27,631,134 1.8
- -----------------------------------------------------------------------------------------------------------------------------
PUBLISHING 750,000 Pearson PLC 10,169,178 11,166,795 0.7
- -----------------------------------------------------------------------------------------------------------------------------
RETAIL 750,000 Boots Company PLC 11,223,919 11,259,337 0.7
1,320,000 J Sainsbury PLC 11,275,003 10,228,537 0.7
1,400,000 Tesco PLC 11,323,155 11,896,441 0.8
------------ ------------ ----
33,822,077 33,384,315 2.2
- -----------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS 600,000 +COLT Telecom Group PLC 7,164,771 13,126,919 0.8
2,000,000 Vodafone Group PLC 11,380,920 17,768,160 1.2
------------ ------------ ----
18,545,691 30,895,079 2.0
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN THE
UNITED KINGDOM 254,767,390 301,635,884 19.6
=============================================================================================================================
TOTAL INVESTMENTS IN WESTERN
EUROPE $692,988,980 $813,638,546 52.9
=============================================================================================================================
Face
Amount Issue
=============================================================================================================================
SHORT TERM
SECURITIES
COMMERCIAL PAPER* $49,660,000 General Motors Acceptance Corp.,
5.69% due 3/02/1998 49,644,302 49,644,302 3.2
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SHORT-TERM
SECURITIES 49,644,302 49,644,302 3.2
=============================================================================================================================
TOTAL INVESTMENTS $1,383,725,728 1,546,854,515 100.6
LIABILITIES IN EXCESS OF OTHER ASSETS (9,486,627) (0.6)
-------------- -----
NET ASSETS $1,537,367,888 100.0%
-------------- -----
=============================================================================================================================
* Commercial Paper is traded on a discount basis; the interest rate shown
is the discount rate paid at the time of purchase by the Fund.
+ Non-income producing security.
See Notes to Financial Statements.
11
11
MERRILL LYNCH GLOBAL GROWTH FUND, INC., FEBRUARY 28, 1998
STATEMENT OF ASSETS AND LIABILITIES
AS OF FEBRUARY 28, 1998
=======================================================================================================================
ASSETS:
Investments, at value (identified cost--$1,383,725,728) (Note 1a) ....................... $1,546,854,515
Foreign cash (Note 1b)................................................................... 5,937,000
Receivables:
Capital shares sold.................................................................... $ 6,077,361
Dividends.............................................................................. 1,269,937 7,347,298
------------
Deferred organization expenses (Note 1f)................................................. 134,583
Prepaid registration fees and other assets (Note 1f)..................................... 426,917
--------------
Total assets............................................................................. 1,560,700,313
--------------
=======================================================================================================================
LIABILITIES:
Payables:
Securities purchased................................................................... 19,291,724
Capital shares redeemed................................................................ 1,546,936
Distributor (Note 2)................................................................... 984,573
Investment adviser (Note 2) ........................................................... 840,495 22,663,728
------------
Accrued expenses and other liabilities................................................... 668,697
--------------
Total liabilities ....................................................................... 23,332,425
--------------
=======================================================================================================================
NET ASSETS:
Net assets............................................................................... $1,537,367,888
==============
=======================================================================================================================
NET ASSETS CONSIST OF:
Class A Shares of Common Stock, $0.10 par value, 100,000,000 shares authorized........... $ 357,108
Class B Shares of Common Stock, $0.10 par value, 300,000,000 shares authorized........... 9,697,050
Class C Shares of Common Stock, $0.10 par value, 100,000,000 shares authorized........... 1,933,981
Class D Shares of Common Stock, $0.10 par value, 100,000,000 shares authorized........... 1,751,586
Paid-in capital in excess of par......................................................... 1,361,381,122
Undistributed investment income--net..................................................... 254,797
Accumulated realized capital losses on investments and foreign currency transactions--net. (1,069,748)
Unrealized appreciation on investments and foreign currency transactions--net............ 163,061,992
--------------
Net assets............................................................................... $1,537,367,888
==============
=======================================================================================================================
NET ASSEST VALUE:
Class A--Based on net assets of $40,076,341 and 3,571,077 shares outstanding............. $ 11.22
==============
Class B--Based on net assets of $1,084,580,104 and 96,970,497 shares outstanding......... $ 11.18
==============
Class C--Based on net assets of $216,305,485 and 19,339,810 shares outstanding........... $ 11.18
==============
Class D--Based on net assets of $196,405,958 and 17,515,861 shares outstanding........... $ 11.21
==============
=======================================================================================================================
See Notes to Financial Statements.
12
12
MERRILL LYNCH GLOBAL GROWTH FUND, INC., FEBRUARY 28, 1998
STATEMENT OF OPERATIONS
FOR THE PERIOD OCTOBER 31, 1997+ TO FEBRUARY 28, 1998
======================================================================================================================
INVESTMENT INCOME (NOTES 1d & 1e):
Dividends (net of $288,956 foreign withholding tax)...................................... $ 4,871,279
Interest and discount earned............................................................. 3,507,011
------------
Total income............................................................................. 8,378,290
------------
======================================================================================================================
EXPENSES:
Investment advisory fees (Note 2)........................................................ 3,299,323
Account maintenance and distribution fees--Class B (Note 2).............................. 3,096,359
Account maintenance and distribution fees--Class C (Note 2).............................. 623,740
Transfer agent fees--Class B (Note 2).................................................... 337,312
Registration fees (Note 1f).............................................................. 257,755
Account maintenance fees--Class D (Note 2)............................................... 142,432
Custodian fees........................................................................... 104,466
Transfer agent fees--Class C (Note 2).................................................... 70,517
Transfer agent fees--Class D (Note 2).................................................... 50,793
Printing and shareholder reports......................................................... 47,706
Accounting services (Note 2)............................................................. 44,921
Directors' fees and expenses............................................................. 16,506
Transfer agent fees--Class A (Note 2).................................................... 9,750
Professional fees........................................................................ 9,402
Amortization of organization expenses--net (Note 1f)..................................... 9,373
Pricing fees............................................................................. 1,741
Other.................................................................................... 1,397
------------
Total expenses........................................................................... 8,123,493
------------
Investment income--net................................................................... 254,797
------------
======================================================================================================================
REALIZED & UNREALIZED GAIN (LOSS) ON
INVESTMENTS & FOREIGN CURRENCY TRANSACTIONS--NET
(NOTES 1b, 1c, 1e & 3)
Realized gain (loss) from:
Investments-- net ..................................................................... $ 152,240
Foreign currency transactions--net..................................................... (1,221,988) (1,069,748)
------------
Unrealized appreciation/depreciation on:
Investments-- net...................................................................... 163,128,787
Foreign currency transactions-- net.................................................... (66,795) 163,061,992
------------ ------------
Net realized and unrealized gain on investments and foreign currency transactions........ 161,992,244
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS..................................... $162,247,041
============
======================================================================================================================
+ Commencement of operations.
See Notes to Financial Statements.
13
13
MERRILL LYNCH GLOBAL GROWTH FUND, INC., FEBRUARY 28, 1998
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD
OCTOBER 31, 1997+ TO
Increase (Decrease) in Net Assets: FEBRUARY 28, 1998
==============================================================================================================================
OPERATIONS:
Investment income--net.................................................................................. $ 254,797
Realized loss on investments and foreign currency transactions--net..................................... (1,069,748)
Unrealized appreciation on investments and foreign currency transactions--net........................... 163,061,992
---------------
Net increase in net assets resulting from operations.................................................... 162,247,041
---------------
==============================================================================================================================
CAPITAL SHARE TRANSACTIONS (NOTE 4):
Net increase in net assets derived from capital share transactions...................................... 1,375,020,847
---------------
==============================================================================================================================
NET ASSETS:
Total increase in net assets............................................................................ 1,537,267,888
Beginning of period..................................................................................... 100,000
---------------
End of period*.......................................................................................... $ 1,537,367,888
===============
* Undistributed investment income-- net................................................................. $ 254,797
===============
====================================
+ Commencement of operations.
See Notes to Financial Statements.
FINANCIAL HIGHLIGHTS
The following per share data and ratios have been derived FOR THE PERIOD
from information provided in the financial statements. OCTOBER 31, 1997+ TO FEBRUARY 28, 1998
-------------------------------------------------------
Increase (decrease) in net asset value: CLASS A CLASS B CLASS C CLASS D
==================================================================================================================================
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period .................................. $ 10.00 $ 10.00 $ 10.00 $ 10.00
-------- ----------- --------- ---------
Investment income--net................................................. .03 .00++ .00++ .02
Realized and unrealized gain on investments and foreign
currency transactions--net 1.19 1.18 1.18 1.19
-------- ----------- --------- ---------
Total from investment operations....................................... 1.22 1.18 1.18 1.21
-------- ----------- --------- ---------
Net asset value, end of period ........................................ $ 11.22 $ 11.18 $ 11.18 $ 11.21
======== =========== ========= =========
==================================================================================================================================
TOTAL INVESTMENT
RETURN**
Based on net asset value per share..................................... 12.20%# 11.80%# 11.80%# 12.10%#
======== =========== ========= =========
==================================================================================================================================
RATIOS TO AVERAGE NET ASSETS:
Expenses............................................................... .95%* 1.97%* 1.98%* 1.20%*
======== =========== ========= =========
Investment income (loss)--net.......................................... .96%* (.07%)* (.07%)* .70%*
======== =========== ========= =========
14
14
==================================================================================================================================
SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) .............................. $ 40,076 $ 1,084,580 $ 216,306 $ 196,406
======== =========== ========= =========
Portfolio turnover..................................................... 14.61% 14.61% 14.61% 14.61%
======== =========== ========= =========
Average commission rate paid+++........................................ $ .0257 $ .0257 $ .0257 $ .0257
======== =========== ========= =========
==================================================================================================================================
* Annualized.
** Total investment return excludes the effects of sales loads.
# Aggregate total investment return.
+ Commencement of operations.
++ Amount is less than $(.01) per share.
+++ Includes commissions paid in foreign currencies, which have been
converted into US dollars using the prevailing exchange rate on the
date of the transaction. Such conversions may significantly affect the
rate shown.
See Notes to Financial Statements.
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 issue
of 10,000 capital shares of the Fund to Merrill Lynch Asset Management, L.P.
("MLAM") for $100,000. These unaudited financial statements reflect all
adjustments which are, in the opinion of management, necessary to a fair
statement of the results for the interim period presented. All such adjustments
are of a normal recurring nature. 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.
15
15
MERRILL LYNCH GLOBAL GROWTH FUND, INC., FEBRUARY 28, 1998
NOTES TO FINANCIAL STATEMENTS (continued)
(b) Foreign currency transactions -- Transactions denominated in foreign
currencies are recorded at the exchange rate prevailing when recognized. Assets
and liabilities denominated in foreign currencies are valued at the exchange
rate at the end of the period. Foreign currency transactions are the result of
settling (realized) or valuing (unrealized) assets or liabilities expressed in
foreign currencies into US dollars. Realized and unrealized gains or losses from
investments include the effects of foreign exchange rates on investments.
(c) Derivative financial instruments -- The Fund may engage in various portfolio
strategies to seek to increase its return by hedging its portfolio against
adverse movements in the equity and currency markets. Losses may arise due to
changes in the value of the contract or if the counterparty does not perform
under the contract.
- - Options -- The Fund is authorized to write and purchase call and put options.
When the Fund writes an option, an amount equal to the premium received by the
Fund is reflected as an asset and an equivalent liability. The amount of the
liability is subsequently marked to market to reflect the current market value
of the option written.
When a security is purchased or sold through an exercise of an option, the
related premium paid (or received) is added to (or deducted from) the basis of
the security acquired or deducted from (or added to) the proceeds of the
security sold. When an option expires (or the Fund enters into a closing
transaction), the Fund realizes a gain or loss on the option to the extent of
the premiums received or paid (or gain or loss to the extent the cost of the
closing transaction exceeds the premium paid or received).
Written and purchased options are non-income producing investments.
- - Forward foreign exchange contracts -- The Fund is authorized to enter into
forward foreign exchange contracts as a hedge against either specific
transactions or portfolio positions. Such contracts are not entered on the
Fund's records. However, the effect on operations is recorded from the date the
Fund enters into such contracts. Premium or discount is amortized over the life
of the contracts.
- - Foreign currency options and futures -- The Fund may also purchase or sell
listed or over-the-counter foreign currency options, foreign currency futures
and related options on foreign currency futures as a short or long hedge against
possible variations in foreign exchange rates. Such transactions may be effected
with respect to hedges on non-US dollar denominated securities owned by the
Fund, sold by the Fund but not yet delivered, or committed or anticipated to be
purchased by the Fund.
- - Financial futures contracts -- The Fund may purchase or sell financial futures
contracts and options on such futures contracts for the purpose of hedging the
market risk on existing securities or the intended purchase of securities.
Futures contracts are contracts for delayed delivery of securities at a specific
future date and at a specific price or yield. Upon entering into a contract, the
Fund deposits and maintains as collateral such initial margin as required by the
exchange on which the transaction is effected. Pursuant to the contract, the
Fund agrees to receive from or pay to the broker an amount of cash equal to the
daily fluctuation in value of the contract. Such receipts or payments are known
as variation margin and are recorded by the Fund as unrealized gains or losses.
When the contract is closed, the Fund records a realized gain or loss equal to
the difference between the value of the contract at the time it was opened and
the value at the time it was closed.
(d) Income taxes -- It is the Fund's policy to comply with the requirements of
the Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its shareholders.
Therefore, no Federal income tax provision is required. Under the applicable
foreign tax law, a withholding tax may be imposed on interest, dividends, and
capital gains at various rates.
(e) Security transactions and investment income -- Security transactions are
recorded on the dates the transactions are entered into (the trade dates).
Dividend income is recorded on the ex-dividend dates. Dividends from foreign
securities where the ex-dividend date may have passed are subsequently recorded
when the Fund has determined the ex-dividend date. Interest income (including
amortization of discount) is recognized on the accrual basis. Realized gains and
losses on security transactions are determined on the identified cost basis.
(f) Deferred organization expenses and prepaid registration fees -- Deferred
organization expenses are charged to expense on a straight-line basis over a
five-year period. Prepaid registration fees are charged to expense as the
related shares are issued.
(g) Dividends and distributions -- Dividends and distributions paid by the Fund
are recorded on the ex-dividend dates.
2. INVESTMENT ADVISORY AGREEMENT AND TRANSACTIONS WITH AFFILIATES:
The Fund has entered into an Investment Advisory Agreement with MLAM. The
general partner of MLAM is Princeton Services, Inc. ("PSI"), an indirect
wholly-owned subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is the
limited partner. The Fund has also entered into a Distribution Agreement and
Distribution Plans with Merrill Lynch Funds Distributor, Inc. ("MLFD" or
"Distributor"), a wholly-owned subsidiary of Merrill Lynch Group, Inc.
MLAM is responsible for the management of the Fund's portfolio and provides the
necessary personnel, facilities, equipment and certain other services necessary
to the operations of the Fund. 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.
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
MAINTENANCE DISTRIBUTION
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 to February 28, 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 ....................... $ 1 $ 20
Class D........................ $ 30,242 $ 5,403,546
- -------------------------------------------------------------------------------
For the period October 31, 1997 to February 28, 1998, MLPF&S received contingent
deferred sales charges of $411,085 and $43,181 relating to transactions in Class
B and Class C Shares, respectively.
In addition, MLPF&S received $40,473 in commissions on the execution of
portfolio security transactions for the Fund for the period October 31, 1997 to
February 28, 1998.
Merrill Lynch Financial Data Services, Inc. ("MLFDS"), 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, MLFDS, MLFD, and/or ML & Co.
3. INVESTMENTS:
Purchases and sales of investments, excluding short-term securities, for the
period October 31, 1997 to February 28, 1998 were $1,487,740,656 and
$153,811,470, respectively.
Net realized gains (losses) for the period October 31, 1997 to February 28, 1998
and net unrealized gains (losses) as of February 28, 1998 were as follows:
- -------------------------------------------------------------------------------
REALIZED UNREALIZED
GAINS GAINS
(LOSSES) (LOSSES)
- -------------------------------------------------------------------------------
Long-term investments.......... $ 152,240 $ 163,128,787
Foreign currency transactions.. (1,221,988) (66,795)
------------ -------------
Total ......................... $ (1,069,748) $ 163,061,992
============ =============
- -------------------------------------------------------------------------------
As of February 28, 1998, net unrealized appreciation for Federal income tax
purposes aggregated $163,128,787, of which $188,592,782 related to appreciated
securities and $25,463,995 related to depreciated securities. At February 28,
1998, the aggregate cost of investments for Federal income tax purposes was
$1,383,725,728.
16
MERRILL LYNCH GLOBAL GROWTH FUND, INC., FEBRUARY 28, 1998
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
4. CAPITAL SHARE TRANSACTIONS:
Net increase in net assets derived from capital share transactions was
$1,375,020,847 for the period October 31, 1997 to February 28, 1998.
Transactions in capital shares for each class were as follows:
- -------------------------------------------------------------------------------
CLASS A SHARES FOR THE PERIOD DOLLAR
OCTOBER 31, 1997+ TO FEBRUARY 28, 1998 SHARES AMOUNT
- -------------------------------------------------------------------------------
Shares sold............................. 3,871,610 $ 39,000,585
Shares redeemed ........................ (303,033) (3,105,440)
--------- ------------
Net increase ........................... 3,568,577 $ 35,895,145
========= ============
- -------------------------------------------------------------------------------
+ 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 FEBRUARY 28, 1998 SHARES AMOUNT
- -------------------------------------------------------------------------------
Shares sold............................. 100,914,200 $ 1,009,957,399
Automatic conversion of shares.......... (45,127) (444,445)
Shares redeemed ........................ (3,901,076) (39,278,253)
----------- ---------------
Net increase ........................... 96,967,997 $ 970,234,701
=========== ===============
- -------------------------------------------------------------------------------
+ Prior to October 31, 1997 (commencement of operations), the Fund issued
2,500 shares to MLAM for $25,000.
17
- -------------------------------------------------------------------------------
CLASS C SHARES FOR THE PERIOD DOLLAR
OCTOBER 31, 1997+ TO FEBRUARY 28, 1998 SHARES AMOUNT
- -------------------------------------------------------------------------------
Shares sold............................. 20,516,032 $ 205,431,092
Shares redeemed ........................ (1,178,722) (11,919,392)
---------- ---------------
Net increase ........................... 19,337,310 $ 193,511,700
========== ===============
- -------------------------------------------------------------------------------
+ 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 FEBRUARY 28, 1998 SHARES AMOUNT
- -------------------------------------------------------------------------------
Shares sold............................. 18,955,365 $ 189,856,729
Automatic conversion of shares.......... 45,078 444,445
---------- ---------------
Total issued............................ 19,000,443 190,301,174
Shares redeemed ........................ (1,487,082) (14,921,873)
---------- ---------------
Net increase ........................... 17,513,361 $ 175,379,301
========== ===============
- -------------------------------------------------------------------------------
+ Prior to October 31, 1997 (commencement of operations), the Fund issued
2,500 shares to MLAM for $25,000.
5. COMMITMENTS:
At February 28, 1998, the Fund had entered into foreign exchange contracts under
which it had agreed to purchase foreign currency with an approximate value of
$14,941,000.
18
18
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 #GLBLGR- 2/98
[RECYCLE LOGO] Printed on post consumer recycled paper
MERRILL LYNCH GLOBAL GROWTH FUND, INC.
[GRAPHIC]
SEMI-ANNUAL REPORT FEBRUARY 28, 1998