N-CSR 1 ml6993.txt MERRILL LYNCH GLOBAL GROWTH UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-8327 Name of Fund: Merrill Lynch Global Growth Fund, Inc. Fund Address: P.O. Box 9011 Princeton, NJ 08543-9011 Name and address of agent for service: Terry K. Glenn, President, Merrill Lynch Global Growth Fund, Inc. 800 Scudders Mill Road, Plainsboro, NJ, 08536. Mailing address: P.O. Box 9011, Princeton, NJ, 08543-9011 Registrant's telephone number, including area code: (609) 282-2800 Date of fiscal year end: 08/31/03 Date of reporting period: 09/01/02 - 2/28/03 Item 1 - Attach shareholder report (BULL LOGO) Merrill Lynch Investment Managers Semi-Annual Report February 28, 2003 Merrill Lynch Global Growth Fund, Inc. www.mlim.ml.com This report is not authorized for use as an offer of sale or a solicitation of an offer to buy shares of the Fund unless accompanied or preceded by the Fund's current prospectus. Past performance results shown in this report should not be considered a representation of future performance. Investment return and principal value of shares will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Statements and other information herein are as dated and are subject to change. Merrill Lynch Global Growth Fund, Inc. Box 9011 Princeton, NJ 08543-9011 Printed on post-consumer recycled paper MERRILL LYNCH GLOBAL GROWTH FUND, INC. Portfolio Information as of February 28, 2003 Country of Percent of Ten Largest Equity Holdings Origin Net Assets ExxonMobil Corporation United States 3.0% Unilever PLC United Kingdom 2.9 Verizon Communications United States 2.8 HSBC Holdings PLC United Kingdom 2.8 3M Co. United States 2.8 Porsche AG (Preferred) Germany 2.5 Clear Channel Communications, Inc. United States 2.4 BP Amoco PLC United Kingdom 2.3 Unicredito Italiano SpA Italy 2.1 Microsoft Corporation United States 2.1 Percent of Five Largest Industries* Net Assets Oil & Gas 14.9% Media 7.8 Food Products 5.7 Metals & Mining 5.1 Specialty Retail 5.1 *For Fund compliance purposes, "Industry" means any one or more of the industry sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by Fund management. This definition may not apply for purposes of this report, which may combine such industry sub- classifications for reporting ease. Merrill Lynch Global Growth Fund, Inc., February 28, 2003 DEAR SHAREHOLDER For the six-month period ended February 28, 2003, Merrill Lynch Global Growth Fund, Inc.'s Class A, Class B, Class C and Class D Shares had total returns of -11.86%, -12.30%, -12.30% and -11.94%, respectively. (Fund results shown do not reflect sales charges and would be lower if sales charges were included. Complete performance information can be found on pages 5 and 6 of this report to shareholders.) The total returns of the Fund were below the Lipper Global Funds Average investment return of -9.32% for the same period. The Fund also underperformed the net investment return of -8.75% for the Morgan Stanley Capital International (MSCI) World Stock Index (in U.S. dollars). During the six-month period ended February 28, 2003, major global stock markets continued in a downward trend with overall market indexes almost touching new lows in comparison to the most recent low level reached in early October 2002. News media reports and investment community commentaries continuously focused on the military confrontation with Iraq. It appears that this emphasis imposed a negative discount on overall equity market valuations. We shifted our investment strategy for the Fund during the last three months of the period by significantly increasing the Fund's exposure to the energy sector by adding equity positions in Europe, Canada, Australia and China. At February 28, 2003, almost 15% of the Fund's net assets were invested in energy company equities, which compared to an energy sector weighting in the MSCI World Stock Index of 8%. The energy reserves and production of the major integrated energy companies worldwide have been declining absolutely for about three years, reflecting the decreasing production of the major energy fields outside of the Middle East and Russia. The real price of oil has been in a downward trend since 1990 when Iraq invaded Kuwait. In the last three years, China has become a major new source of increasing demand for oil, natural gas, coal, copper, steel and most basic materials. Industrial and manufacturing activities in China, which many economists forecasted to have real economic growth above 5% per year, caused the country to become one of the largest consumers of basic materials in the world. Over the same period, global expenditures for the exploration and development of new and existing energy reserves declined absolutely. Assuming a recovery in manufacturing activity in Europe and the United States during the coming years from today's recessionary levels, there may be a persistently higher level of nominal prices for energy and basic commodities. On average, over the last two years the comparative investment returns on stocks of companies in the basic materials and chemicals, energy and industrials were among the best. The relatively high dividend yields on many of these stocks was a material factor in comparative investment returns. We added investments in the metals and mining industry including Barrick Gold Corporation in Canada, BHP Billiton Limited in Australia, Companhia Vale do Rio Doce in Brazil, POSCO in South Korea and Rio Tinto PLC in the United Kingdom. The materials and industrial sectors were equal to almost 9% of the Fund's net assets at February 28, 2003. We also added shares of General Dynamics Corporation, United Technologies Corporation, Danaher Corporation and Illinois Tool Works Inc. in the United States, Johnson Electric Holdings Limited in Hong Kong and Wesfarmers Limited in Australia. We sold equity holdings in the diversified financials, insurance, media, pharmaceuticals, banks and diversified telecommunication services sectors, and used the proceeds to purchase investments in the energy, industrial and materials sectors. In the residential mortgage banking industry, we sold investments in Washington Mutual, Inc. and Fannie Mae because of our concern that the record levels of mortgage refinancing may be coming to an end and that the interest rates may increase as the conflict with Iraq is resolved. These developments would likely reduce the valuations and earnings prospects for these companies. With respect to Citigroup Inc., American Express Company and MBNA Corporation, we were concerned about increasing credit quality problems in the consumer credit arena and the possible decline in earnings estimates and valuations as a result of these developments. The delinquency rates on both residential mortgage loans and lower quality consumer installment loans have been rising in recent months. We sold Credit Lyonnais in France because of a continued deterioration in commercial credit quality. In the insurance industry, the increase in loss reserves by American International Group, Inc. was a disturbing development. Substantial increases in loss reserves for several commercial lines of insurance that were historically very profitable may not be the end of the deterioration in profitability of these lines of coverage. Therefore, we sold the Fund's holdings in Travelers Property Casualty Corp. In Europe, we liquidated insurance company equity investments in Allianz AG, Assicurazioni Generali, Aegon NV and Swiss Re because of a continued deterioration in adequate policy reserves for guaranteed investment returns on annuity products and the changes in the cost of liabilities for various commercial coverages resulting from case court rulings. In the media sector, we had a cyclical recovery in advertising and pricing for services, but the profitability of individual companies suffered as a result of poor management policies and strategies. We liquidated the Fund's holdings in The Interpublic Group of Companies, Inc., Viacom, Inc. (Class B), The Walt Disney Company in the United States and Seat Pagine Gialle SpA in Italy. The persistency of relatively deflated equity markets and relatively low interest rates in most of the major developed economies in the world is a significant problem for generating improved earnings and returns in the insurance, commercial banking and investment banking industries around the globe. In the global pharmaceutical industry, we are concerned about the adverse pricing and regulatory environment in the most important U.S. market. A group of state governments with major purchasing power in terms of matching Medicare payments for drugs have banded together to form a non-profit pharmaceutical benefit management company that is being challenged by the for-profit pharmaceutical industry. This case is presently before the U.S. Supreme Court. Another concern is that the research pipeline for new drug therapies is slim. The U.S. Securities & Exchange Commission and the New York State Attorney General have become involved in investigating the pricing and marketing practices of the ethical drug industry that may produce very negative repercussions. Thus, we sold the Fund's holdings in Pfizer Inc., Aventis SA, Sanofi-Synthelabo SA, Novartis AG and AstraZeneca Group PLC. In the telecommunications services sector, we observed continued deterioration in overall business conditions in Europe and the United States during the six months ended February 28, 2003. European service providers collectively paid more than $100 billion for rights to offer enhanced wireless services that were only modestly successful in attracting new subscribers. Additionally, the debt leverage of the companies proved to be a problem in a recessionary type of environment. We sold equity investments in Nextel Communications, Inc. (Class A), Sprint Corp. (PCS Group), France Telecom SA, Deutsche Telekom AG, Telecom Italia Mobile (TIM) SpA and Telefonica SA. The consumer endorsement rate of the new wireless services was much less than that projected by all of the European service companies after extraordinary expenses were incurred to gear up to provide these services. We reduced the Fund's investment exposure to the information technology sector. There has been a normal cyclical recovery in global spending on technology as represented by data from the Semiconductor Industry Association on corporate sales of all types of semiconductor devices. The cyclical bottom occurred in September 2001, with a year-to-year decline in industry revenues of over 50%. The first year-to-year positive comparison in total industry sales was May 2002 at approximately 5%. There was so much built up capacity to provide product that only a few companies were successful. The Fund's investment in Samsung Electronics in South Korea was an example of a successful company able to generate a cyclical rise in revenues and profits with more than a 20% return on equity. However, U.S., European and Japanese information technology companies still remain in a recession and as a result, we sold the Fund's holdings in Sun Microsystems, Inc., Oracle Corporation and STMicroelectronics NV. Merrill Lynch Global Growth Fund, Inc., February 28, 2003 We added numerous companies in the health care equipment and supplies industry as substitutes for ethical drug companies. These companies included Alcon Inc., Medtronic, Inc., Stryker Corporation, Varian Medical Systems, Inc. and Zimmer Holdings, Inc. These companies are focused on minimally invasive devices for diagnostics and therapy within the human body, cardiac therapy devices, orthopedic replacement devices and precision laser therapy, and optometry devices and therapies. Our investments in these companies proved to be more successful on a comparative return basis than those in ethical drug companies. Over the last six months, the best investment performance came from companies that were characterized by small- to mid-size market capitalizations and lower-quality balance sheets and credit ratings. The Fund is focused on what we believe are the largest companies with the best quality balance sheets and credit ratings. Thus, the Fund's comparative investment performance has lagged relative to the opportunities for investment. Market Outlook We anticipate that a resolution of the hostilities between the United States and Iraq may result in an upward trend in U.S. and other major global equity market prices. Formerly, this development took place shortly after the start of the Gulf War in 1991 and the Vietnam War in late 1974 - early 1975. Alan Greenspan, Chairman of the U.S. Federal Reserve Board of Governors, stated in a recent public speech that it was likely that Americans raised $200 billion in 2002 in new liquidity from the refinancing of residential mortgages. It may be that they did not spend this increased liquidity in the year-end holiday season. Military conflict or the prospect of a conflict has dampened consumer spending in the past. We believe that the household sector has the liquidity and the relatively low-financing interest rates for durable goods purchases and homeowner purchases to spark a meaningful economic recovery when the Middle East problems are resolved even on a short-term basis. We remain relatively fully invested in equities. If the Bush Administration is successful in the Middle East and convinces the U.S. Congress to bring forward the 2004 and 2006 income tax reductions and make them permanent, the U.S. economy could be the leading force for a global economic recovery of real growth and corporate profitability. Another important global economic force is China, which is investing significantly in an infrastructure that is leading, in our opinion, to the upward trend in energy and basic material prices. We attempted to restructure the Fund to benefit from these perceived trends in the world economy and markets, and recent positive comparative investment results have reflected these changes in the Fund's investment strategy. In Conclusion We thank you for your continued investment in Merrill Lynch Global Growth Fund, Inc., and we look forward to sharing our investment results and strategy with you in our next report to shareholders. Sincerely, (Terry K. Glenn) Terry K. Glenn President and Director (Lawrence R. Fuller) Lawrence R. Fuller Vice President and Portfolio Manager March 26, 2003 Merrill Lynch Global Growth Fund, Inc., February 28, 2003 PERFORMANCE DATA About Fund Performance Investors are able to purchase shares of the Fund through five 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. * Effective June 1, 2001, Class B Shares are subject to a maximum contingent deferred sales charge of 4% declining to 0% after six years. All Class B Shares purchased prior to June 1, 2001 will maintain the four-year schedule. 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 eight 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). * Class R Shares do not incur a maximum sales charge (front-end load) or deferred sales charge. These shares are subject to a distribution fee of 0.25% and an account maintenance fee of 0.25%. Class R Shares are available only to certain retirement plans. None of the past results shown should be considered a representation of future performance. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Figures shown in each of the following 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
6-Month 12-Month Since Inception As of February 28, 2003 Total Return Total Return Total Return ML Global Growth Fund, Inc. Class A Shares* -11.86% -29.73% -22.72% ML Global Growth Fund, Inc. Class B Shares* -12.30 -30.43 -26.84 ML Global Growth Fund, Inc. Class C Shares* -12.30 -30.51 -26.89 ML Global Growth Fund, Inc. Class D Shares* -11.94 -29.90 -23.78 ML Global Growth Fund, Inc. Class R Shares* -- -- - 7.69 MSCI World Index** - 8.75 -20.60 -11.84/-1.75 *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 dates are from 10/31/97 for Class A, Class B, Class C and Class D Shares and from 1/03/03 for Class R Shares. **This unmanaged market capitalization-weighted Index is comprised of a representative sampling of large-, medium- and small- capitalization companies in 22 countries, including the United States. Since inception total returns are from 10/31/97 and 1/31/03, respectively.
Merrill Lynch Global Growth Fund, Inc., February 28, 2003 PERFORMANCE DATA (CONCLUDED) Average Annual Total Return % Return Without % Return With Sales Charge Sales Charge** Class A Shares* One Year Ended 2/28/03 -29.73% -33.42% Five Years Ended 2/28/03 - 7.19 - 8.18 Inception (10/31/97) through 2/28/03 - 4.72 - 5.68 *Maximum sales charge is 5.25%. **Assuming maximum sales charge. % Return % Return Without CDSC With CDSC** Class B Shares* One Year Ended 2/28/03 -30.43% -33.21% Five Years Ended 2/28/03 - 8.13 - 8.44 Inception (10/31/97) through 2/28/03 - 5.70 - 5.84 *Maximum contingent deferred sales charge is 4% and is reduced to 0% after six years. **Assuming payment of applicable contingent deferred sales charge. % Return % Return Without CDSC With CDSC** Class C Shares* One Year Ended 2/28/03 -30.51% -31.21% Five Years Ended 2/28/03 - 8.14 - 8.14 Inception (10/31/97) through 2/28/03 - 5.71 - 5.71 *Maximum contingent deferred sales charge is 1% and is reduced to 0% after one year. **Assuming payment of applicable contingent deferred sales charge. % Return Without % Return With Sales Charge Sales Charge** Class D Shares* One Year Ended 2/28/03 -29.90% -33.58% Five Years Ended 2/28/03 - 7.42 - 8.42 Inception (10/31/97) through 2/28/03 - 4.97 - 5.92 *Maximum sales charge is 5.25%. **Assuming maximum sales charge. Aggregate Total Return % Return Without Sales Charge Class R Shares* Inception (1/03/03) through 2/28/03 - 7.69% SCHEDULE OF INVESTMENTS (in U.S. dollars)
LATIN Shares Percent of AMERICA Industry* Held Common Stock Value Net Assets Brazil Metals & 210,900 Companhia Vale do Rio Doce (ADR)(a) $ 5,747,025 1.1% Mining Total Common Stock in Latin America (Cost--$5,770,642) 5,747,025 1.1 NORTH AMERICA Canada Auto 101,000 Magna International Inc. 'A' 5,606,591 1.1 Components Media 1,113,300 ++Rogers Communications, Inc. 'B' 10,275,121 1.9 Metals & 356,100 Barrick Gold Corporation 5,743,780 1.1 Mining Oil & Gas 198,200 Petro-Canada 7,058,996 1.3 337,600 Suncor Energy, Inc. 6,118,405 1.2 -------------- ------ 13,177,401 2.5 Total Common Stock in Canada 34,802,893 6.6 United Aerospace & 128,100 General Dynamics Corporation 7,591,206 1.5 States Defense 95,900 United Technologies Corporation 5,617,822 1.1 -------------- ------ 13,209,028 2.6 Air Freight & 91,000 United Parcel Service, Inc. (Class B) 5,236,140 1.0 Logistics Beverages 128,000 The Coca-Cola Company 5,148,160 1.0 Biotechnology 106,700 ++Amgen Inc. 5,822,619 1.1 Chemicals 199,700 The Dow Chemical Company 5,451,810 1.0 144,400 E.I. du Pont de Nemours and Company 5,295,148 1.0 -------------- ------ 10,746,958 2.0 Communications 431,100 ++Cisco Systems, Inc. 6,022,467 1.2 Equipment Computers & 78,800 International Business Machines Corporation 6,142,460 1.2 Peripherals Diversified 209,400 BellSouth Corporation 4,537,698 0.9 Telecommuni- 210,300 SBC Communications Inc. 4,374,240 0.8 cation 429,400 Verizon Communications 14,848,652 2.8 Services -------------- ------ 23,760,590 4.5 Energy 141,900 Diamond Offshore Drilling, Inc. 3,114,705 0.6 Equipment & Service Food & Drug 292,300 SYSCO Corporation 7,927,176 1.5 Retailing Health Care 130,000 Medtronic, Inc. 5,811,000 1.1 Equipment & 107,100 Stryker Corporation 6,982,920 1.3 Supplies 30,100 ++Varian Medical Systems, Inc. 1,521,555 0.3 151,900 ++Zimmer Holdings, Inc. 6,742,841 1.3 -------------- ------ 21,058,316 4.0 Health Care 180,000 HCA Inc. 7,423,200 1.4 Providers & 405,500 Health Management Associates, Inc. (Class A) 7,266,560 1.4 Services 320,500 ++Tenet Healthcare Corporation 5,823,485 1.1 -------------- ------ 20,513,245 3.9
Merrill Lynch Global Growth Fund, Inc., February 28, 2003 SCHEDULE OF INVESTMENTS (continued) (in U.S. dollars)
NORTH AMERICA Shares Percent of (concluded) Industry* Held Common Stock Value Net Assets United Household 159,300 The Clorox Company $ 6,739,983 1.3% States Products 75,000 The Procter & Gamble Company 6,139,500 1.2 (concluded) -------------- ------ 12,879,483 2.5 Industrial 117,400 3M Co. 14,718,438 2.8 Conglomerates Leisure 153,100 Eastman Kodak Company 4,531,760 0.8 Equipment & Products Machinery 45,100 Danaher Corporation 2,932,402 0.5 91,000 Illinois Tool Works Inc. 5,420,870 1.0 -------------- ------ 8,353,272 1.5 Media 798,300 ++AOL Time Warner Inc. 9,036,756 1.7 342,100 ++Clear Channel Communications, Inc. 12,490,071 2.4 -------------- ------ 21,526,827 4.1 Multiline 140,000 Wal-Mart Stores, Inc. 6,728,400 1.3 Retail Oil & Gas 459,600 ExxonMobil Corporation 15,635,592 3.0 Paper & Forest 171,200 International Paper Company 5,997,136 1.1 Products Semiconductor 343,500 Intel Corporation 5,925,375 1.1 Equipment & Products Software 141,200 ++Electronic Arts Inc. 7,453,948 1.4 462,000 Microsoft Corporation 10,954,020 2.1 -------------- ------ 18,407,968 3.5 Specialty 193,800 Lowe's Companies, Inc. 7,616,340 1.4 Retail 322,700 The TJX Companies, Inc. 5,185,789 1.0 -------------- ------ 12,802,129 2.4 Total Common Stock in the United States 256,208,244 48.7 Total Common Stock in North America (Cost--$351,535,132) 291,011,137 55.3 PACIFIC BASIN Australia Industrial 168,300 Wesfarmers Limited 2,601,538 0.5 Conglomerates Media 419,000 The News Corporation Limited 2,591,226 0.5 Metals & 1,142,300 BHP Billiton Limited 6,343,346 1.2 Mining Oil & Gas 389,000 Woodside Petroleum Limited 2,561,512 0.5 Total Common Stock in Australia 14,097,622 2.7 China Oil & Gas 15,390,000 PetroChina Company Limited 3,216,487 0.6 Total Common Stock in China 3,216,487 0.6 Hong Kong Construction 1,550,000 Cheung Kong Infrastructure Holdings Limited 2,822,121 0.5 Materials Electric 3,896,000 Huaneng Power International, Inc. 'H' 3,471,836 0.7 Utilities Electrical 2,692,500 Johnson Electric Holdings Limited 3,003,520 0.6 Equipment Oil & Gas 2,369,000 CNOOC Limited 3,326,095 0.6 Specialty 673,500 Esprit Holdings Limited 1,334,202 0.3 Retail Total Common Stock in Hong Kong 13,957,774 2.7 Japan Food & Drug 113,000 Seven-Eleven Japan Co., Ltd. 2,642,800 0.5 Retailing Total Common Stock in Japan 2,642,800 0.5 South Korea Metals & 27,300 POSCO 2,527,248 0.5 Mining Semiconductor 34,900 Samsung Electronics 8,172,035 1.5 Equipment & Products Total Common Stock in South Korea 10,699,283 2.0 Total Common Stock in the Pacific Basin (Cost--$47,525,162) 44,613,966 8.5 WESTERN EUROPE France Automobiles 164,300 PSA Peugeot Citroen 7,260,384 1.4 Food & Drug 137,500 Carrefour SA 5,209,142 1.0 Retailing Food Products 44,300 Groupe Danone 5,242,570 1.0 Media 158,000 Societe Television Francaise 1 3,613,605 0.7 Oil & Gas 75,000 TotalFinaElf SA 9,910,371 1.9 Total Common Stock in France 31,236,072 6.0 Germany Software 32,600 SAP AG (Systeme, Anwendungen, Produkte in der Datenverarbeitung) 2,725,170 0.5 Total Common Stock in Germany 2,725,170 0.5 Italy Banks 2,792,300 Unicredito Italiano SpA 11,180,445 2.1 Oil & Gas 521,500 ENI SpA 7,715,572 1.5 Total Common Stock in Italy 18,896,017 3.6 Netherlands Beverages 77,700 Heineken NV 2,776,149 0.5 Oil & Gas 265,700 Royal Dutch Petroleum Company 10,524,151 2.0 Total Common Stock in the Netherlands 13,300,300 2.5 Spain Banks 154,600 Banco Popular Espanol SA 6,298,534 1.2 Specialty 210,100 Industria de Disenso Textil, SA 5,072,385 1.0 Retail Total Common Stock in Spain 11,370,919 2.2 Sweden Specialty 345,100 Hennes & Mauritz AB 'B' 7,279,992 1.4 Retail Total Common Stock in Sweden 7,279,992 1.4 Switzerland Food Products 46,400 Nestle SA (Registered Shares) 9,341,593 1.8 Health Care 100,000 ++Alcon, Inc. 3,915,000 0.7 Equipment & Supplies Total Common Stock in Switzerland 13,256,593 2.5
Merrill Lynch Global Growth Fund, Inc., February 28, 2003 SCHEDULE OF INVESTMENTS (concluded) (in U.S. dollars)
WESTERN EUROPE Shares Percent of (concluded) Industry* Held Common Stock Value Net Assets United Banks 1,367,300 HSBC Holdings PLC $ 14,730,858 2.8% Kingdom 430,900 Royal Bank of Scotland Group PLC 9,861,665 1.9 -------------- ------ 24,592,523 4.7 Beverages 1,070,400 Allied Domecq PLC 5,049,531 0.9 Food 1,708,600 Unilever PLC 15,232,282 2.9 Products Household 238,800 Reckitt Benckiser PLC 3,765,100 0.7 Products Media 330,000 ++British Sky Broadcasting Group PLC ("BSkyB") 3,266,836 0.6 Metals & 308,200 Rio Tinto PLC (Registered Shares) 6,237,979 1.2 Mining Oil & Gas 1,901,500 BP Amoco PLC 11,980,211 2.3 Total Common Stock in the United Kingdom 70,124,462 13.3 Total Common Stock in Western Europe (Cost--$178,348,596) 168,189,525 32.0 Western Europe Preferred Stock Germany Automobiles 40,407 Porsche AG 13,047,779 2.5 Total Preferred Stock in Western Europe (Cost--$16,963,186) 13,047,779 2.5 SHORT-TERM SECURITIES Issue 19,880,684 Merrill Lynch Premier Institutional Fund (b)(c) 19,880,684 3.8 Beneficial Interest $ 5,431,679 Merrill Lynch Liquidity Series, LLC Cash Sweep Series I (c) 5,431,679 1.0 24,298,616 Merrill Lynch Liquidity Series, LLC Money Market Series (b)(c) 24,298,616 4.6 -------------- ------ 29,730,295 5.6 Total Investments in Short-Term Securities (Cost--$49,610,979) 49,610,979 9.4 Total Investments (Cost--$649,753,697) 572,220,411 108.8 Liabilities in Excess of Other Assets (46,432,187) (8.8) -------------- ------ Net Assets $ 525,788,224 100.0% ============== ====== *For Fund compliance purposes, "Industry" means any one or more of the industry sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by Fund management. This definition may not apply for purposes of this report, which may combine such industry sub- classifications for reporting ease. ++Non-income producing security. (a)American Depositary Receipts (ADR). (b)Security was purchased with the cash proceeds from securities loans. (c)Investments in companies considered to be an affiliate of the Fund (such companies are defined as "Affiliated Companies" in Section 2 (a)(3) of the Investment Company Act of 1940) are as follows: Dividend/ Net Interest Affiliate Activity Income Merrill Lynch Liquidity Series, LLC Cash Sweep Series I $ 5,431,679 $185,063 Merrill Lynch Liquidity Series, LLC Money Market Series $24,298,616 53,299 Merrill Lynch Premier Institutional Fund 19,880,684 59,910 See Notes to Financial Statements.
STATEMENT OF ASSETS AND LIABILITIES
As of February 28, 2003 Assets: Investments, at value (including securities loaned of $43,154,839) (identified cost--$649,753,697) $ 572,220,411 Receivables: Securities sold $ 2,196,585 Dividends 1,081,375 Capital shares sold 44,191 Securities lending--net 15,103 Interest 9,794 3,347,048 -------------- Prepaid registration fees and other assets 110,925 -------------- Total assets 575,678,384 -------------- Liabilities: Collateral on securities loaned, at value 44,179,300 Payables: Securities purchased 2,621,139 Capital shares redeemed 1,898,132 Distributor 322,028 Investment adviser 309,098 5,150,397 -------------- Accrued expenses and other liabilities 560,463 -------------- Total liabilities 49,890,160 -------------- Net Assets: Net assets $ 525,788,224 ============== Net Assets Class A Shares of Common Stock, $.10 par value, 100,000,000 Consist of: shares authorized $ 691,774 Class B Shares of Common Stock, $.10 par value, 300,000,000 shares authorized 5,297,831 Class C Shares of Common Stock, $.10 par value, 100,000,000 shares authorized 1,145,699 Class D Shares of Common Stock, $.10 par value, 100,000,000 shares authorized 1,589,064 Class R Shares of Common Stock, $.10 par value, 300,000,000 shares authorized 2 Paid-in capital in excess of par 1,271,861,327 Accumulated investment loss--net $ (6,119,309) Accumulated realized capital losses on investments and foreign currency transactions--net (671,183,056) Unrealized depreciation on investments and foreign currency transactions--net (77,495,108) -------------- Total accumulated losses--net (754,797,473) -------------- Net assets $ 525,788,224 ============== Net Asset Class A--Based on net assets of $42,660,374 and 6,917,738 Value: shares outstanding $ 6.17 ============== Class B--Based on net assets of $317,270,160 and 52,978,310 shares outstanding $ 5.99 ============== Class C--Based on net assets of $68,615,805 and 11,456,989 shares outstanding $ 5.99 ============== Class D--Based on net assets of $97,241,793 and 15,890,641 shares outstanding $ 6.12 ============== Class R--Based on net assets of $92.35 and 15.385 shares outstanding $ 6.00 ============== See Notes to Financial Statements.
Merrill Lynch Global Growth Fund, Inc., February 28, 2003 STATEMENT OF OPERATIONS
For the Six Months Ended February 28, 2003 Investment Dividends (net of $214,232 foreign withholding tax) $ 2,758,517 Income: Interest 416,188 Securities lending--net 113,209 -------------- Total income 3,287,914 -------------- Expenses: Investment advisory fees $ 2,344,586 Account maintenance and distribution fees--Class B 1,912,059 Transfer agent fees--Class B 690,958 Account maintenance and distribution fees--Class C 407,782 Transfer agent fees--Class D 177,127 Transfer agent fees--Class C 155,295 Account maintenance fees--Class D 140,545 Accounting services 136,879 Transfer agent fees--Class A 76,906 Professional fees 50,487 Custodian fees 41,330 Printing and shareholder reports 39,216 Directors' fees and expenses 33,750 Registration fees 24,754 Pricing fees 6,888 Other 35,618 -------------- Total expenses 6,274,180 -------------- Investment loss--net (2,986,266) -------------- Realized & Realized loss on: Unrealized Investments--net (161,766,990) Gain (Loss) on Foreign currency transactions--net (1,295,188) (163,062,178) Investments & -------------- Foreign Currency Change in unrealized appreciation/depreciation on: Transactions-- Investments--net 83,776,472 Net: Foreign currency transactions--net (101,549) 83,674,923 -------------- -------------- Total realized and unrealized loss on investments and foreign currency transactions--net (79,387,255) -------------- Net Decrease in Net Assets Resulting from Operations $ (82,373,521) ============== See Notes to Financial Statements.
STATEMENTS OF CHANGES IN NET ASSETS
For the Six For the Months Ended Year Ended February 28, August 31, Increase (Decrease) in Net Assets: 2003 2002 Operations: Investment loss--net $ (2,986,266) $ (9,227,449) Realized loss on investments and foreign currency transactions--net (163,062,178) (277,713,019) Change in unrealized appreciation/depreciation on investments and foreign currency transactions--net 83,674,923 (45,374,886) -------------- -------------- Net decrease in net assets resulting from operations (82,373,521) (332,315,354) -------------- -------------- Capital Share Net decrease in net assets derived from capital share transactions (129,183,378) (570,533,138) Transactions: -------------- -------------- Net Assets: Total decrease in net assets (211,556,899) (902,848,492) Beginning of period 737,345,123 1,640,193,615 -------------- -------------- End of period* $ 525,788,224 $ 737,345,123 ============== ============== *Accumulated investment loss--net $ (6,119,309) $ (3,133,043) ============== ============== See Notes to Financial Statements.
Merrill Lynch Global Growth Fund, Inc., February 28, 2003 FINANCIAL HIGHLIGHTS
The following per share data and ratios Class A have been derived from information For the Six provided in the financial statements. Months Ended February 28, For the Year Ended August 31, Increase (Decrease) in Net Asset Value: 2003 2002 2001 2000 1999 Per Share Net asset value, beginning of period $ 7.00 $ 9.48 $ 18.01 $ 13.55 $ 10.78 Operating ---------- ---------- ---------- ---------- ---------- Performance: Investment income (loss)--net++++ --++ --++ .03 (.02) .11 Realized and unrealized gain (loss) on investments and foreign currency transactions--net (.83) (2.48) (6.65) 5.51 2.93 ---------- ---------- ---------- ---------- ---------- Total from investment operations (.83) (2.48) (6.62) 5.49 3.04 ---------- ---------- ---------- ---------- ---------- Less distributions: Realized gain on investments--net -- -- (.59) -- (.18) In excess of realized gain on investments--net -- -- (1.32) (1.03) (.09) ---------- ---------- ---------- ---------- ---------- Total distributions -- -- (1.91) (1.03) (.27) ---------- ---------- ---------- ---------- ---------- Net asset value, end of period $ 6.17 $ 7.00 $ 9.48 $ 18.01 $ 13.55 ========== ========== ========== ========== ========== Total Investment Based on net asset value per share (11.86%)+++ (26.16%) (39.39%) 41.47% 28.46% Return:** ========== ========== ========== ========== ========== Ratios to Expenses 1.18%* 1.06% .93% .87% .90% Average ========== ========== ========== ========== ========== Net Assets: Investment income (loss)--net (.12%)* .04% .25% (.09%) .88% ========== ========== ========== ========== ========== Supplemental Net assets, end of period (in thousands) $ 42,660 $ 55,525 $ 155,922 $ 288,517 $ 171,140 Data: ========== ========== ========== ========== ========== Portfolio turnover 68.34% 105.73% 126.37% 75.48% 46.91% ========== ========== ========== ========== ========== *Annualized. **Total investment return excludes the effects of sales charges. ++Amount is less than $.01 per share. ++++Based on average shares outstanding. +++Aggregate total investment return. See Notes to Financial Statements.
FINANCIAL HIGHLIGHTS (continued)
The following per share data and ratios Class B have been derived from information For the Six provided in the financial statements. Months Ended February 28, For the Year Ended August 31, Increase (Decrease) in Net Asset Value: 2003 2002 2001 2000 1999 Per Share Net asset value, beginning of period $ 6.83 $ 9.35 $ 17.75 $ 13.39 $ 10.68 Operating ---------- ---------- ---------- ---------- ---------- Performance: Investment loss--net++++ (.04) (.08) (.10) (.18) (.03) Realized and unrealized gain (loss) on investments and foreign currency transactions--net (.80) (2.44) (6.56) 5.44 2.92 ---------- ---------- ---------- ---------- ---------- Total from investment operations (.84) (2.52) (6.66) 5.26 2.89 ---------- ---------- ---------- ---------- ---------- Less distributions: Realized gain on investments--net -- -- (.54) (.90) (.18) In excess of realized gain on investments--net -- -- (1.20) -- --++ ---------- ---------- ---------- ---------- ---------- Total distributions -- -- (1.74) (.90) (.18) ---------- ---------- ---------- ---------- ---------- Net asset value, end of period $ 5.99 $ 6.83 $ 9.35 $ 17.75 $ 13.39 ========== ========== ========== ========== ========== Total Investment Based on net asset value per share (12.30%)+++ (26.95%) (40.01%) 40.04% 27.27% Return:** ========== ========== ========== ========== ========== Ratios to Expenses 2.23%* 2.09% 1.95% 1.88% 1.91% Average ========== ========== ========== ========== ========== Net Assets: Investment loss--net (1.18%)* (.99%) (.77%) (1.11%) (.27%) ========== ========== ========== ========== ========== Supplemental Net assets, end of period (in thousands) $ 317,270 $ 456,393 $1,046,889 $2,293,020 $1,677,022 Data: ========== ========== ========== ========== ========== Portfolio turnover 68.34% 105.73% 126.37% 75.48% 46.91% ========== ========== ========== ========== ========== *Annualized. **Total investment return excludes the effects of sales charges. ++Amount is less than $.01 per share. ++++Based on average shares outstanding. +++Aggregate total investment return. See Notes to Financial Statements.
Merrill Lynch Global Growth Fund, Inc., February 28, 2003 FINANCIAL HIGHLIGHTS (continued)
The following per share data and ratios Class C have been derived from information For the Six provided in the financial statements. Months Ended February 28, For the Year Ended August 31, Increase (Decrease) in Net Asset Value: 2003 2002 2001 2000 1999 Per Share Net asset value, beginning of period $ 6.83 $ 9.36 $ 17.76 $ 13.39 $ 10.68 Operating ---------- ---------- ---------- ---------- ---------- Performance: Investment loss--net++ (.04) (.08) (.10) (.19) (.04) Realized and unrealized gain (loss) on investments and foreign currency transactions--net (.80) (2.45) (6.56) 5.45 2.93 ---------- ---------- ---------- ---------- ---------- Total from investment operations (.84) (2.53) (6.66) 5.26 2.89 ---------- ---------- ---------- ---------- ---------- Less distributions: Realized gain on investments--net -- -- (.54) (.89) (.18) In excess of realized gain on investments--net -- -- (1.20) -- -- ---------- ---------- ---------- ---------- ---------- Total distributions -- -- (1.74) (.89) (.18) ---------- ---------- ---------- ---------- ---------- Net asset value, end of period $ 5.99 $ 6.83 $ 9.36 $ 17.76 $ 13.39 ========== ========== ========== ========== ========== Total Investment Based on net asset value per share (12.30%)+++ (27.03%) (39.97%) 40.05% 27.23% Return:** ========== ========== ========== ========== ========== Ratios to Expenses 2.25%* 2.11% 1.96% 1.89% 1.92% Average ========== ========== ========== ========== ========== Net Assets: Investment loss--net (1.19%)* (.99%) (.78%) (1.12%) (.30%) ========== ========== ========== ========== ========== Supplemental Net assets, end of period (in thousands) $ 68,616 $ 95,117 $ 197,356 $ 423,800 $ 302,247 Data: ========== ========== ========== ========== ========== Portfolio turnover 68.34% 105.73% 126.37% 75.48% 46.91% ========== ========== ========== ========== ========== *Annualized. **Total investment return excludes the effects of sales charges. ++Based on average shares outstanding. +++Aggregate total investment return. See Notes to Financial Statements.
FINANCIAL HIGHLIGHTS (continued)
The following per share data and ratios Class D have been derived from information For the Six provided in the financial statements. Months Ended February 28, For the Year Ended August 31, Increase (Decrease) in Net Asset Value: 2003 2002 2001 2000 1999 Per Share Net asset value, beginning of period $ 6.95 $ 9.44 $ 17.95 $ 13.51 $ 10.75 Operating ---------- ---------- ---------- ---------- ---------- Performance: Investment income (loss)--net++++ (.01) (.02) --++ (.06) .07 Realized and unrealized gain (loss) on investments and foreign currency transactions--net (.82) (2.47) (6.64) 5.50 2.94 ---------- ---------- ---------- ---------- ---------- Total from investment operations (.83) (2.49) (6.64) 5.44 3.01 ---------- ---------- ---------- ---------- ---------- Less distributions: Realized gain on investments--net -- -- (.58) (1.00) (.18) In excess of realized gain on investments--net -- -- (1.29) -- (.07) ---------- ---------- ---------- ---------- ---------- Total distributions -- -- (1.87) (1.00) (.25) ---------- ---------- ---------- ---------- ---------- Net asset value, end of period $ 6.12 $ 6.95 $ 9.44 $ 17.95 $ 13.51 ========== ========== ========== ========== ========== Total Investment Based on net asset value per share (11.94%)+++ (26.38%) (39.58%) 41.18% 28.21% Return:** ========== ========== ========== ========== ========== Ratios to Expenses 1.43%* 1.31% 1.18% 1.12% 1.14% Average ========== ========== ========== ========== ========== Net Assets: Investment income (loss)--net (.37%)* (.18%) (.001%) (.35%) .51% ========== ========== ========== ========== ========== Supplemental Net assets, end of period (in thousands) $ 97,242 $ 130,310 $ 240,027 $ 511,367 $ 301,552 Data: ========== ========== ========== ========== ========== Portfolio turnover 68.34% 105.73% 126.37% 75.48% 46.91% ========== ========== ========== ========== ========== *Annualized. **Total investment return excludes the effects of sales charges. ++Amount is less than $.01 per share. ++++Based on average shares outstanding. +++Aggregate total investment return. See Notes to Financial Statements.
Merrill Lynch Global Growth Fund, Inc., February 28, 2003 FINANCIAL HIGHLIGHTS (concluded)
Class R For the The following per share data and ratios have been derived Period from information provided in the financial statements. Jan. 3, 2003++ to Feb. 28, Increase (Decrease) in Net Asset Value: 2003 Per Share Net asset value, beginning of period $ 6.50 Operating ---------- Performance: Investment income--net++++ .01 Realized and unrealized loss on investments and foreign currency transactions--net (.51) ---------- Total from investment operations (.50) ---------- Net asset value, end of period $ 6.00 ========== Total Investment Based on net asset value per share (7.69%)+++ Return:** ========== Ratios to Expenses 1.67%* Average ========== Net Assets: Investment income--net .45%* ========== Supplemental Net assets, end of period (in thousands) --+++++ Data: ========== Portfolio turnover 68.34% ========== *Annualized. **Total investment return excludes the effects of sales charges. ++Commencement of operations. ++++Based on average shares outstanding. +++Aggregate total investment return. +++++Amount is less than $1,000. 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. The Fund's financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which may require the use of management accruals and estimates. 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 five classes of shares. 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. Class R Shares are sold only to certain retirement plans. All classes of shares have identical voting, dividend, liquidation and other rights and the same terms and conditions, except that Class B, Class C, Class D and Class R Shares bear certain expenses related to the account maintenance of such shares, and Class B, Class C and Class R 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. Income, expenses (other than expenses attributable to a specific class) and realized and unrealized gains and losses on investments and foreign currency transactions are allocated daily to each class based on its relative net assets. The following is a summary of significant accounting policies followed by the Fund. (a) Valuation of investments--Portfolio securities that 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 that 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 or purchased are valued at the last sale price in the case of exchange- traded options. In the case of options traded in the over-the- counter market, valuation is the last asked price (options written) or the last bid price (options purchased). 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. Occasionally, events affecting the values of securities and other assets may occur between the times at which valuations of such securities are determined (that is, close of the market on which such security trades) and the close of business on the NYSE. If events (for example, company announcement, natural disasters, market volatility) occur during such periods that are expected to materially affect the value for such securities, those securities may be valued at their fair market value as determined in good faith by the Fund's Board of Directors or by the investment adviser using a pricing service and/or procedures approved by the Board of Directors of the Fund. (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 U.S. 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 investment strategies to increase or decrease the level of risk to which the Fund is exposed more quickly and efficiently than transactions in other types of instruments. 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. Merrill Lynch Global Growth Fund, Inc., February 28, 2003 NOTES TO FINANCIAL STATEMENTS (continued) 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. The contract is marked to market daily and the change in market value is recorded by the Fund as an unrealized gain or loss. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value at the time it was opened and the value at the time it was closed. * 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-U.S. 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). Realized gains and losses on security transactions are determined on the identified cost basis. 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 is recognized on the accrual basis. (f) Prepaid registration fees--Prepaid registration fees are charged to expense as the related shares are issued. (g) Dividends and distributions--Dividends and distributions paid by the Fund are recorded on the ex-dividend dates. (h) Securities lending--The Fund may lend securities to financial institutions that provide cash or securities issued or guaranteed by the U.S. government as collateral, which will be maintained at all times in an amount equal to at least 100% of the current market value of the loaned securities. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. Where the Fund receives securities as collateral for the loaned securities, it collects a fee from the borrower. The Fund typically receives the income on the loaned securities but does not receive the income on the collateral. Where the Fund receives cash collateral, it may invest such collateral and retain the amount earned on such investment, net of any amount rebated to the borrower. Loans of securities are terminable at any time and the borrower, after notice, is required to return borrowed securities within five business days. The Fund may pay reasonable finder's, lending agent, administrative and custodial fees in connection with its loans. In the event that the borrower defaults on its obligation to return borrowed securities because of insolvency or for any other reason, the Fund could experience delays and costs in gaining access to the collateral. The Fund also could suffer a loss where the value of the collateral falls below the market value of the borrowed securities, in the event of borrower default or in the event of losses on investments made with cash collateral. 2. Investment Advisory Agreement and Transactions with Affiliates: The Fund has entered into an Investment Advisory Agreement with Merrill Lynch Investment Managers, L.P. ("MLIM"). The general partner of MLIM 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 FAM Distributors, Inc. ("FAMD" or the "Distributor"), which is a wholly-owned subsidiary of Merrill Lynch Group, Inc. MLIM 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 based upon the average daily value of the Fund's net assets at an annual rate of .75% of the average daily net assets not exceeding $1.5 billion and .725% of the average daily net assets in excess of $1.5 billion. MLIM has entered into a Sub-Advisory Agreement with Merrill Lynch Asset Management U.K. Limited ("MLAM U.K."), an affiliate of MLIM, pursuant to which MLAM U.K. provides investment advisory services to MLIM with respect to the Fund. There is no increase in the aggregate fees paid by the Fund for these services. 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 .25% .75% Class C .25% .75% Class D .25% -- Class R .25% .25% Pursuant to a sub-agreement with the Distributor, Merrill Lynch, Pierce, Fenner & Smith Incorporated ("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, Class D and Class R shareholders. The ongoing distribution fee compensates the Distributor and MLPF&S for providing shareholder and distribution- related services to Class B, Class C and Class R shareholders. For the six months ended February 28, 2003, FAMD 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: FAMD MLPF&S Class A $ 15 $ 334 Class D $397 $6,316 For the six months ended February 28, 2003, MLPF&S received contingent deferred sales charges of $161,585 and $2,160 relating to transactions in Class B and Class C Shares, respectively. The Fund has received an exemptive order from the Securities and Exchange Commission permitting it to lend portfolio securities to MLPF&S or its affiliates. As of February 28, 2003, the Fund lent securities with a value of $4,801,552 to MLPF&S or its affiliates. Pursuant to that order, the Fund also has retained Merrill Lynch Investment Managers, LLC ("MLIM, LLC"), an affiliate of MLIM, as the securities lending agent for a fee based on a share of the returns on investment of cash collateral. MLIM, LLC may, on behalf of the Fund, invest cash collateral received by the Fund for such loans, among other things, in a private investment company managed by MLIM, LLC or in registered money market funds advised by MLIM or its affiliates. For the six months ended February 28, 2003, MLIM, LLC received $46,448 in securities lending agent fees. In addition, MLPF&S received $184,280 in commissions on the execution of portfolio security transactions for the Fund for the six months ended February 28, 2003. Financial Data Services, Inc. ("FDS"), a wholly-owned subsidiary of ML & Co., is the Fund's transfer agent. For the six months ended February 28, 2003, the Fund reimbursed MLIM $7,336 for certain accounting services. Certain officers and/or directors of the Fund are officers and/or directors of MLIM, PSI, MLAM U.K., FDS, FAMD, and/or ML & Co. 3. Investments: Purchases and sales of investments, excluding short-term securities, for the six months ended February 28, 2003 were $388,919,188 and $491,206,383, respectively. Net realized losses for the six months ended February 28, 2003 and net unrealized gains (losses) as of February 28, 2003 were as follows: Realized Unrealized Losses Gains (Losses) Long-term investments $ (161,766,990) $ (77,533,286) Foreign currency transactions (1,295,188) 38,178 --------------- ---------------- Total $ (163,062,178) $ (77,495,108) =============== ================ Merrill Lynch Global Growth Fund, Inc., February 28, 2003 NOTES TO FINANCIAL STATEMENTS (concluded) As of February 28, 2003, net unrealized depreciation for Federal income tax purposes aggregated $78,612,805, of which $6,127,239 related to appreciated securities and $84,740,044 related to depreciated securities. At February 28, 2003, the aggregate cost of investments for Federal income tax purposes was $606,653,916. 4. Capital Share Transactions: Net decrease in net assets derived from capital share transactions was $129,183,378 and $570,533,138 for the six months ended February 28, 2003 and for the year ended August 31, 2002, respectively. Transactions in capital shares for each class were as follows: Class A Shares for the Six Months Dollar Ended February 28, 2003 Shares Amount Shares sold 500,685 $ 3,269,410 Shares redeemed (1,515,273) (9,903,783) -------------- --------------- Net decrease (1,014,588) $ (6,634,373) ============== =============== Class A Shares for the Year Dollar Ended August 31, 2002 Shares Amount Shares sold 1,497,562 $ 13,033,319 Shares redeemed (10,007,288) (83,170,795) -------------- --------------- Net decrease (8,509,726) $ (70,137,476) ============== =============== Class B Shares for the Six Months Dollar Ended February 28, 2003 Shares Amount Shares sold 625,855 $ 4,015,585 Automatic conversion of shares (938,427) (6,069,214) Shares redeemed (13,499,457) (86,253,429) -------------- --------------- Net decrease (13,812,029) $ (88,307,058) ============== =============== Class B Shares for the Year Dollar Ended August 31, 2002 Shares Amount Shares sold 2,161,507 $ 18,590,028 Automatic conversion of shares (4,194,473) (36,215,355) Shares redeemed (43,110,945) (365,570,987) -------------- --------------- Net decrease (45,143,911) $ (383,196,314) ============== =============== Class C Shares for the Six Months Dollar Ended February 28, 2003 Shares Amount Shares sold 195,681 $ 1,267,539 Shares redeemed (2,656,153) (16,904,943) -------------- --------------- Net decrease (2,460,472) $ (15,637,404) ============== =============== Class C Shares for the Year Dollar Ended August 31, 2002 Shares Amount Shares sold 728,112 $ 6,328,168 Shares redeemed (7,905,731) (67,050,802) -------------- --------------- Net decrease (7,177,619) $ (60,722,634) ============== =============== Class D Shares for the Six Months Dollar Ended February 28, 2003 Shares Amount Shares sold 428,666 $ 2,776,792 Automatic conversion of shares 920,686 6,069,214 -------------- --------------- Total issued 1,349,352 8,846,006 Shares redeemed (4,195,555) (27,450,649) -------------- --------------- Net decrease (2,846,203) $ (18,604,643) ============== =============== Class D Shares for the Year Dollar Ended August 31, 2002 Shares Amount Shares sold 2,035,700 $ 18,183,018 Automatic conversion of shares 4,139,062 36,215,355 -------------- --------------- Total issued 6,174,762 54,398,373 Shares redeemed (12,851,926) (110,875,087) -------------- --------------- Net decrease (6,677,164) $ (56,476,714) ============== =============== Class R Shares for the Period January 3, 2003++ to Dollar February 28, 2003 Shares Amount Shares sold 15 $ 100 -------------- --------------- Net increase 15 $ 100 ============== =============== ++Commencement of operations. 5. Short-Term Borrowings: The Fund, along with certain other funds managed by MLIM and its affiliates, is a party to a $500,000,000 credit agreement with Bank One, N.A. and certain other lenders. The Fund may borrow under the credit agreement to fund shareholder redemptions and for other lawful purposes other than for leverage. The Fund may borrow up to the maximum amount allowable under the Fund's current prospectus and statement of additional information, subject to various other legal, regulatory or contractual limits. The Fund pays a commitment fee of .09% per annum based on the Fund's pro rata share of the unused portion of the credit agreement. Amounts borrowed under the credit agreement bear interest at a rate equal to, at each fund's election, the Federal Funds rate plus .50% or a base rate as determined by Bank One, N.A. On November 29, 2002, the credit agreement was renewed for one year under the same terms, except that the total commitment was reduced from $1,000,000,000 to $500,000,000. The Fund did not borrow under the credit agreement during the six months ended February 28, 2003. 6. Commitments: At February 28, 2003, the Fund had entered into foreign exchange contracts, under which it had agreed to purchase and sell various foreign currencies with approximate values of $2,613,000 and $2,205,000, respectively. 7. Capital Loss Carryforward: On August 31, 2002, the Fund had a net capital loss carryforward of $242,107,678, all of which expires in 2010. This amount will be available to offset like amounts of any future taxable gains. OFFICERS AND DIRECTORS Terry K. Glenn, President and Director Donald W. Burton, Director M. Colyer Crum, Director Laurie Simon Hodrick, Director Fred G. Weiss, Director Robert C. Doll Jr., Senior Vice President Lawrence R. Fuller, Vice President and Portfolio Manager Donald C. Burke, Vice President and Treasurer Susan B. Baker, Secretary J. Thomas Touchton, Director of Merrill Lynch Global Growth Fund, Inc., has recently retired. The Fund's Board of Directors wishes Mr. Touchton well in his retirement. Custodian State Street Bank and Trust Company P.O. Box 351 Boston, MA 02101 Transfer Agent Financial Data Services, Inc. 4800 Deer Lake Drive East Jacksonville, FL 32246-6484 800-637-3863 Item 2 - Did registrant adopt a code of ethics, as of the end of the period covered by this report, that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party? If not, why not? Briefly describe any amendments or waivers that occurred during the period. State here if code of ethics/amendments/waivers are on website and give website address-. State here if fund will send code of ethics to shareholders without charge upon request--N/A (not answered until July 15, 2003 and only annually for funds) Item 3 - Did the registrant's board of directors determine that the registrant either: (i) has at least one audit committee financial expert serving on its audit committee; or (ii) does not have an audit committee financial expert serving on its audit committee? If yes, disclose name of financial expert and whether he/she is "independent," (fund may, but is not required, to disclose name/ independence of more than one financial expert) If no, explain why not. -N/A (not answered until July 15, 2003 and only annually for funds) Item 4 - Disclose annually only (not answered until December 15, 2003) (a) Audit Fees - Disclose aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the registrant's annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years. N/A. (b) Audit-Related Fees - Disclose aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant's financial statements and are not reported under paragraph (a) of this Item. Registrants shall describe the nature of the services comprising the fees disclosed under this category. N/A. (c) Tax Fees - Disclose aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning. Registrants shall describe the nature of the services comprising the fees disclosed under this category. N/A. (d) All Other Fees - Disclose aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) of this Item. Registrants shall describe the nature of the services comprising the fees disclosed under this category. N/A. (e)(1) Disclose the audit committee's pre-approval policies and procedures described in paragraph (c)(7) of Rule 2-01 of Regulation S-X. N/A. (e)(2) Disclose the percentage of services described in each of paragraphs (b) through (d) of this Item that were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X. N/A. (f) If greater than 50%, disclose the percentage of hours expended on the principal accountant's engagement to audit the registrant's financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant's full-time, permanent employees. N/A. (g) Disclose the aggregate non-audit fees billed by the registrant's accountant for services rendered to the registrant, and rendered to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for each of the last two fiscal years of the registrant. N/A. (h) Disclose whether the registrant's audit committee has considered whether the provision of non-audit services that were rendered to the registrant's investment adviser (not including any subadviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant's independence. N/A. Items 5-6 - Reserved Item 7 - For closed-end funds that contain voting securities in their portfolio, describe the policies and procedures that it uses to determine how to vote proxies relating to those portfolio securities. N/A (not answered until July 1, 2003) Item 8--Reserved Item 9(a) - Disclose the conclusions of the registrant's principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, about the effectiveness of the registrant's disclosure controls and procedures (as defined in Rule 30a-2(c) under the Act (17 CFR 270.30a-2(c))) based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph. N/A (not answered until July 15, 2003 and only annually for funds) Item 9(b)--There were no significant changes in the registrant's internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Item 10 - Exhibits 10(a) - Attach code of ethics or amendments/waivers, unless code of ethics or amendments/waivers is on website or offered to shareholders upon request without charge. N/A. 10(b) - Attach certifications (4 in total pursuant to Sections 302 and 906 for CEO/CFO). Attached hereto. Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Merrill Lynch Global Growth Fund, Inc. By: /s/ Terry K. Glenn Terry K. Glenn, President of Merrill Lynch Global Growth Fund, Inc. Date: April 21, 2003 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ Terry K. Glenn Terry K. Glenn, President of Merrill Lynch Global Growth Fund, Inc. Date: April 21, 2003 By: /s/ Donald C. Burke Donald C. Burke, Chief Financial Officer of Merrill Lynch Global Growth Fund, Inc. Date: April 21, 2003