MERRILL LYNCH
GLOBAL VALUE
FUND, INC.
FUND LOGO
Annual Report
October 31, 1997
Officers and Directors
Arthur Zeikel, President and Director
Donald Cecil, Director
Edward H. Meyer, Director
Charles C. Reilly, Director
Richard R. West, Director
Edward D. Zinbarg, Director
Terry K. Glenn, Executive Vice President
Norman R. Harvey, Executive Vice President
Donald C. Burke, Vice President
Stephen I. Silverman, Vice President and
Portfolio Manager
Gerald M. Richard, Treasurer
Barbara G. Fraser, Secretary
Custodian
Brown Brothers Harriman & Co.
40 Water Street
Boston, MA 02109
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
<PAGE>
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 Value Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
Printed on post-consumer recycled paper
MERRILL LYNCH GLOBAL VALUE FUND, INC.
Worldwide
Investments
As of 10/31/97
Percent of
Ten Largest Industries Net Assets
Financial Services 16.0%
Food--Diversified 14.5
Insurance 12.3
Diversified Operations 5.4
Utilities--Electric, Gas & Water 5.2
Beverages 5.1
Electric Products 4.6
Airlines 4.1
Food Merchandising 3.7
Electronics 3.6
<PAGE>
Country of Percent of
Ten Largest Equity Holdings Origin Net Assets
Cadbury Schweppes PLC United Kingdom 6.0%
Nestle S.A. (Registered) Switzerland 5.8
Westinghouse Electric Corporation United States 5.4
Guinness PLC United Kingdom 5.1
Mercury Asset Management
Group PLC United Kingdom 4.7
Siemens AG Germany 4.6
Assicurazioni Generali S.p.A. Italy 4.4
Federal National Mortgage
Association United States 4.3
Lufthansa AG Germany 4.1
Zurich Insurance Group Switzerland 3.8
Important Tax
Information
(unaudited)
Of the ordinary income distributions paid by Merrill Lynch Global
Value Fund, Inc. to shareholders of record on December 10, 1996,
7.94% qualifies for the dividends received deduction for
corporations. Additionally, there were no long-term capital gains
distributions paid by the Fund during the year.
Please retain this information for your records.
Merrill Lynch Global Value Fund, Inc., October 31, 1997
DEAR SHAREHOLDER
Fiscal Year in Review
Since inception (November 1, 1996) through October 31, 1997, total
returns for Merrill Lynch Global Value Fund, Inc.'s Class A, Class
B, Class C and Class D Shares were +18.91%, +17.62%, +17.62% and
+18.56%, respectively, outperforming the +16.77% total return for
the unmanaged Morgan Stanley Capital International (MSCI) World
Index. (Fund results shown do not reflect sales charges, and would
be lower if sales charges were included. Complete performance
information, including average annual total returns, can be found on
pages 4--5 of this report to shareholders.)
<PAGE>
We are pleased with the Fund's performance in its first fiscal year,
especially considering that we spent the first six months of the
Fund's operations getting fully invested while many stock markets
were appreciating substantially. During the fiscal year, we had a
relatively light weighting in US stocks (averaging about 30% of net
assets as compared to a 45% benchmark weighting). In retrospect, it
would have been advantageous to have had a greater weighting in this
strong stock market. On the other hand, we were underweighted in the
lackluster Japanese stock market, which enhanced performance.
However, the key contributor to the Fund's relative outperformance
was stock selection. By this we mean that the Fund's market
weightings had a net neutral influence on performance and that
holding a somewhat greater-than-normal cash position for much of the
fiscal year was a net negative. Therefore, all of the Fund's
outperformance relative to the MSCI World Index was a function of
stock selection.
Generally, we have been able to invest in companies that we believe
have businesses that are better, and are worth more, than what the
investment community recognizes. For some portfolio companies, at
the time of our purchase, business was clearly improving. These
companies were cutting costs, increasing units sold, raising prices,
or achieving a combination of all three. At the same time, the
managements of some of these companies have interests that were more
apparently aligned with those of their non-controlling, passive
shareholders. Some of the largest investments fall into this
category: Cadbury Schweppes PLC, Guinness PLC and Westinghouse
Electric Corporation.
Some other of our largest positions--such as Federal National
Mortgage Association (FNMA)--are simply stocks that seemed to us to
be reasonably to inexpensively priced in light of their earnings
growth prospects. FNMA's earnings were growing at a 10%--15% rate per
year, and its stock was selling at a discount to the average US
stock. We believed that FNMA was a better-than-average company and
was going to have earnings growth that was significantly better than
that of the average US company. Therefore, FNMA was selling at a
valuation discount to the average US stock, and has better earnings
growth prospects. This is an anomaly that we exploited.
How We Define "Value"
As we begin the Fund's new fiscal year, it seems appropriate to
review our definition of "value" as it relates to the Fund. The term
does not necessarily imply that our stocks must have low
price/earnings ratios, low price/book value ratios, high dividend
yields, or any combination of these traditional valuation measures.
Of course, we do utilize these measures as a way to screen for
potential portfolio candidates. However, some of the companies in
which we have invested do not appear to be inexpensive on the basis
of some of these better-known valuation parameters.
<PAGE>
Our approach to value investing involves our attempt to assess what
we believe companies are worth. In some cases, we will look to
earnings as a measure of value. However, we might instead consider
one or more of a variety of other measures to determine what a
particular company is worth, such as cash flow, free cash flow,
earnings before interest, taxes, depreciation and amortization
(EBITDA), the replacement value of physical assets, or the value of
intangible assets.
Although our method of assessing value may differ from one company
to another, we nonetheless look to "value" as the key variable in
making investment decisions. We do not give much (if any)
consideration to macroeconomic forecasts or the consensus opinion
regarding stock market prospects. Furthermore, we do not employ
technical analysis, nor do we make investments with the hope of
making a rapid trading profit. Our approach is to simply buy stocks
that we believe represent economic value that is greater on a per
share basis than their current prices.
Volatility Highlights October
Quarter
The world economic environment has been unsettled during the October
quarter and into the first quarter of the Fund's new fiscal year.
Many Pacific Basin stock markets and currencies weakened, which has
raised investors' concerns regarding the viability of world economic
growth. For example, for year-to-date 1997 (through November month-
end), markets such as Thailand, Malaysia, Indonesia and the
Philippines declined 40%--50% in local currency terms, and as much as
60% in US dollar terms. The Japanese stock market, which held up
very well through most of the summer, had declined by 11.5% for 1997
through the end of November in local currency terms, and by 19.5% if
we factor in the yen's depreciation relative to the US dollar.
One of the most startling and sharpest declines of all occurred in
the Hong Kong stock market which, as of the end of September, was
still ahead approximately 15% for the year. However, from October 3
until October 28 (just 17 trading days), the Hong Kong stock market
plummeted by 40%. This extraordinary decline has led many investors
to wonder about the viability of worldwide economic growth as a
result of the Asian stock market turmoil and, accordingly, these
concerns have had a negative effect on US and European stock prices.
South Korea's collapse (both its currency and stock market) continue
to occur as we write this.
While we were fortunate to have no investments in the Southeast
Asian stock markets that declined so sharply, we did have an 11.1%
exposure to Japan at the end of the October quarter. However, our
investment strategy is unchanged in the face of recent stock market
turbulence. We continue to purchase stocks that are reasonably
valued relative to the businesses they represent. We expect to
participate in the annual accretion in the value of these
businesses. In addition, we hope for an increase in the relative
valuations of these companies as the rest of the investment
community comes to regard the attraction of these businesses more as
we do.
<PAGE>
In Conclusion
Our strong relative performance during the Fund's first fiscal year
was somewhat surprising to us. We expect our value-oriented
investments to outperform during lackluster or declining stock
markets, not necessarily during periods of stock market strength.
As we discussed in a previous report to shareholders, reasonable
historic returns on common stock investments are in the range of
6%--7% above the rate of inflation. These returns are much lower than
common stock investors have become accustomed to in recent years. We
doubt that common stocks in general can continue to provide returns
that are equal to those achieved over the past several years.
However, while we do not anticipate lofty annual returns for our
investments, we continue to believe that, over time, our focus on
value will provide attractive returns for shareholders.
We thank you for your investment in Merrill Lynch Global Value Fund,
Inc., and we look forward to serving your financial needs throughout
the Fund's new fiscal year and beyond.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Stephen I. Silverman)
Stephen I. Silverman
Senior Vice President and
Portfolio Manager
December 12, 1997
Merrill Lynch Global Value Fund, Inc., October 31, 1997
<PAGE>
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.
<PAGE>
Total Return
Based on a $10,000
Investment
A line graph depicting the growth of an investment in the Fund's
Class A Shares and Class B Shares compared to growth of an
investment in the MSCI World Index. Beginning and ending
values are:
11/01/96** 10/97
ML Global Value Fund, Inc.++--
Class A Shares* $ 9,475 $11,267
ML Global Value Fund Inc.++--
Class B Shares* $10,000 $11,362
MSCI World Index++++ $10,000 $11,677
A line graph depicting the growth of an investment in the Fund's
Class C Shares and Class D Shares compared to growth of an
investment in the MSCI World Index. Beginning and ending
values are:
11/01/96** 10/97
ML Global Value Fund, Inc.++--
Class C Shares* $10,000 $11,662
ML Global Value Fund Inc.++--
Class D Shares* $ 9,475 $11,234
MSCI World Index++++ $10,000 $11,677
[FN]
*Assuming maximum sales charge, transaction costs and other
operating expenses, including advisory fees.
**Commencement of operations.
++ML Global Value Fund, Inc. invests primarily in equity securities
of issuers located in various foreign countries and the United
States.
++++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.
<PAGE>
Aggregate
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Inception (11/01/96) through 9/30/97 +24.44% +17.90%
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Inception (11/01/96) through 9/30/97 +23.24% +19.24%
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Inception (11/01/96) through 9/30/97 +23.24% +22.24%
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Sales Charge Sales Charge**
Class D Shares*
Inception (11/01/96) through 9/30/97 +24.09% +17.57%
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
<PAGE>
<TABLE>
Recent
Performance
Results*
<CAPTION>
Total Return
Net Asset Value 3 Month Since Inception++
10/31/97 7/31/97 11/01/96++ % Change % Change
<S> <C> <C> <C> <C> <C>
ML Global Value Fund, Inc. Class A Shares $11.83 $12.28 $10.00 -3.66% +18.91%(1)
ML Global Value Fund, Inc. Class B Shares 11.72 12.20 10.00 -3.93 +17.62(2)
ML Global Value Fund, Inc. Class C Shares 11.72 12.20 10.00 -3.93 +17.62(2)
ML Global Value Fund, Inc. Class D Shares 11.80 12.26 10.00 -3.75 +18.56(3)
<FN>
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included.
++The Fund commenced operations on 11/01/96.
(1)Percent change includes reinvestment of $0.051 per share ordinary
income dividends.
(2)Percent change includes reinvestment of $0.035 per share ordinary
income dividends.
(3)Percent change includes reinvestment of $0.047 per share ordinary
income dividends.
</TABLE>
Merrill Lynch Global Value Fund, Inc., October 31, 1997
PORTFOLIO CHANGES
For the Quarter Ended October 31, 1997
Additions
Houston Industries, Inc.
J.P. Morgan & Company, Inc.
Mitsubishi Heavy Industries, Ltd.
Suzuki Motor Corporation
Teleport Communications Group Inc. (Class A)
Deletions
BTR PLC
Bank of Scotland PLC
Kansas City Southern Industries, Inc.
Tomkins PLC
UNUM Corporation
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
NORTH Shares Value Percent of
AMERICA Industries Held Investments Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
United States Diversified 3,450,000 Westinghouse Electric
Operations Corporation $ 61,738,204 $ 91,209,375 5.4%
Financial Services 1,485,000 Federal National Mortgage
Association 58,560,791 71,929,687 4.3
570,000 J.P. Morgan & Company, Inc. 62,920,976 62,557,500 3.7
620,000 Washington Mutual, Inc. 34,548,199 42,392,500 2.5
-------------- -------------- ------
156,029,966 176,879,687 10.5
Food 366,300 Wrigley (Wm.) Jr.
Company (Class B) 25,168,429 26,510,962 1.6
Food Merchandising 2,414,000 American Stores Company 60,081,759 62,009,625 3.7
Insurance 690,000 Horace Mann Educators Corp. 25,535,781 38,812,500 2.3
Medical Products 1,144,000 Baxter International, Inc. 61,537,393 52,910,000 3.1
Telecommunications 586,700 ++Teleport Communications
Group Inc. (Class A) 27,972,114 28,308,275 1.7
Utilities--Electric, 2,202,100 Houston Industries, Inc. 49,617,722 47,895,675 2.8
Gas & Water
Total Investments in
North America 467,681,368 524,536,099 31.1
PACIFIC
BASIN/ASIA
Australia Leisure 10,076,186 Village Roadshow Limited
(Preferred) (Class A) 27,215,280 18,827,505 1.1
Property 1,147,500 Lend Lease Corporation 21,243,272 23,561,058 1.4
Total Investments in Australia 48,458,552 42,388,563 2.5
Japan Automobiles 124,000 Suzuki Motor Corporation 1,058,449 1,320,356 0.1
Capital Goods 2,855,000 Mitsubishi Heavy
Industries, Ltd. 14,616,188 14,036,311 0.8
<PAGE>
Electrical 883,400 Chudenko Corporation 21,793,001 21,532,002 1.3
Construction 795,000 Kinden Corporation 9,753,962 9,920,140 0.6
-------------- ------------- ------
31,546,963 31,452,142 1.9
Electronics 1,690,000 Matsushita Electric
Industrial Company, Ltd. 28,894,269 28,398,636 1.7
400,000 Sony Corporation 36,894,499 33,241,827 1.9
-------------- -------------- ------
65,788,768 61,640,463 3.6
Insurance 1,829,000 Dai-Tokyo Fire & Marine
Insurance Co., Ltd. 7,878,152 7,850,961 0.5
784,000 Nichido Fire & Marine
Insurance Co., Ltd. 4,117,378 5,067,532 0.3
1,300,000 Sumitomo Marine & Fire
Insurance Co., Ltd. 10,316,345 8,673,155 0.5
850,000 Tokio Marine & Fire
Insurance Co., Ltd. 10,618,405 8,485,151 0.5
-------------- -------------- ------
32,930,280 30,076,799 1.8
Office Equipment 1,987,000 Canon, Inc. 47,474,231 48,265,868 2.9
Total Investments in Japan 193,414,879 186,791,939 11.1
Total Investments in the
Pacific Basin/Asia 241,873,431 229,180,502 13.6
WESTERN
EUROPE
France Food--Diversified 302,000 Groupe Danone S.A. 43,350,953 46,203,643 2.7
Total Investments in France 43,350,953 46,203,643 2.7
Germany Airlines 3,957,200 Lufthansa AG 66,424,269 69,246,974 4.1
Electric Products 1,241,500 Siemens AG 82,182,413 76,578,774 4.6
Total Investments in Germany 148,606,682 145,825,748 8.7
Ireland Banking 3,800,000 Allied Irish Banks PLC 29,461,508 32,001,898 1.9
9,500 Allied Irish Banks PLC (ADR)* 482,133 483,312 0.0
Total Investments in Ireland 29,943,641 32,485,210 1.9
Italy Financial Services 1,610,000 Istituto Mobiliare
Italiano S.p.A. (Ordinary) 16,269,349 14,425,021 0.8
<PAGE>
Insurance 3,302,000 Assicurazioni Generali S.p.A. 71,360,717 73,961,830 4.4
Total Investments in Italy 87,630,066 88,386,851 5.2
Netherlands Telecommunications 625,500 Koninklijke PTT Nederland N.V. 23,557,331 23,921,297 1.4
Total Investments in the
Netherlands 23,557,331 23,921,297 1.4
Switzerland Food--Diversified 68,800 Nestle S.A. (Registered) 76,406,314 97,271,516 5.8
Insurance 155,000 Zurich Insurance Group 44,779,878 64,199,212 3.8
Pharmaceuticals 36,000 Novartis AG (Registered) 42,062,908 56,573,271 3.3
Total Investments in
Switzerland 163,249,100 218,043,999 12.9
United Beverages 9,560,000 Guinness PLC 73,020,852 85,481,772 5.1
Kingdom
Financial Services 3,628,800 Mercury Asset Management
Group PLC 80,411,027 80,052,925 4.7
Food--Diversified 10,100,000 Cadbury Schweppes PLC 91,146,039 101,662,560 6.0
Utilities-- 3,245,000 United Utilities PLC 32,322,019 39,658,170 2.4
Electric,
Gas & Water
Total Investments in the
United Kingdom 276,899,937 306,855,427 18.2
Total Investments in
Western Europe 773,237,710 861,722,175 51.0
</TABLE>
Merrill Lynch Global Value Fund, Inc., October 31, 1997
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
SHORT-TERM Face Value Percent of
SECURITIES Amount Issue Cost (Note 1a) Net Assets
<S> <C> <S> <C> <C> <C>
Commercial $21,718,000 General Motors Acceptance
Paper** Corp., 5.75% due 11/03/1997 $ 21,711,062 $ 21,711,062 1.3%
Total Investments in
Short-Term Securities 21,711,062 21,711,062 1.3
Total Investments $1,504,503,571 1,637,149,838 97.0
==============
Unrealized Depreciation on Forward Foreign Exchange Contracts++++ (4,273,495) (0.3)
Other Assets Less Liabilities 55,156,785 3.3
-------------- ------
Net Assets $1,688,033,128 100.0%
============== ======
<PAGE>
<FN>
*American Depositary Receipts (ADR).
**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.
++++Forward foreign exchange contracts as of October 31, 1997 were
as follows:
<CAPTION>
Unrealized
Foreign Appreciation
Currency Expiration (Depreciation)
Purchased Date (Note 1c)
<S> <C> <S> <C>
Chf 3,341,304 January 1998 $ 84,483
DM 12,599,872 January 1998 (336,643)
Frf 25,039,501 January 1998 60,784
Pound Sterling 3,066,000 January 1998 147,591
YEN 4,914,943,198 January 1998 (1,486,585)
Total (US$ Commitment--$62,095,363) (1,530,370)
-----------
Foreign
Currency Sold
Chf 218,010,167 January 1998 $ (598,485)
Chf 16,625,000 August 1998 (490,461)
DM 205,746,631 January 1998 256,906
Frf 371,183,000 January 1998 3,661,868
Pound Sterling 138,698,880 January 1998 (9,076,615)
Lit 97,882,627,500 October 1998 (1,228,150)
Nlg 52,295,660 January 1998 1,227,038
YEN 13,023,536,143 January 1998 3,504,774
Total (US$ Commitment--$778,096,772) (2,743,125)
-----------
Total Unrealized Depreciation on
Forward Foreign Exchange Contracts--Net $(4,273,495)
===========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
<CAPTION>
As of October 31, 1997
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$1,504,503,571) (Note 1a) $1,637,149,838
Cash 166
Foreign cash (Note 1b) 71,756,228
Receivables:
Dividends $ 3,673,583
Capital shares sold 2,402,826 6,076,409
--------------
Deferred organization expenses (Note 1g) 157,230
Prepaid registration fees and other assets (Note 1g) 78,141
--------------
Total assets 1,715,218,012
--------------
Liabilities: Unrealized depreciation on forward foreign
exchange contracts (Note 1c) 4,273,495
Payables:
Securities purchased 17,101,625
Capital shares redeemed 2,149,711
Distributor (Note 2) 1,284,551
Investment adviser (Note 2) 1,116,614 21,652,501
--------------
Accrued expenses and other liabilities 1,258,888
--------------
Total liabilities 27,184,884
--------------
Net Assets: Net assets $1,688,033,128
==============
Net Assets Class A Shares of Common Stock, $0.10 par value,
Consist of: 100,000,000 shares authorized $ 454,710
Class B Shares of Common Stock, $0.10 par value,
300,000,000 shares authorized 10,056,806
Class C Shares of Common Stock, $0.10 par value,
100,000,000 shares authorized 1,853,793
Class D Shares of Common Stock, $0.10 par value,
100,000,000 shares authorized 2,014,926
Paid-in capital in excess of par 1,469,175,588
Undistributed investment income--net 10,195,652
Undistributed realized capital gains on investments and
foreign currency transations--net 63,319,495
Unrealized appreciation on investments and foreign
currency transactions--net 130,962,158
--------------
Net assets $1,688,033,128
==============
<PAGE>
Net Asset Class A--Based on net assets of $53,775,510 and
Value: 4,547,095 shares outstanding $ 11.83
==============
Class B--Based on net assets of $1,179,124,848 and
100,568,058 shares outstanding $ 11.72
==============
Class C--Based on net assets of $217,341,363 and
18,537,933 shares outstanding $ 11.72
==============
Class D--Based on net assets of $237,791,407 and
20,149,261 shares outstanding $ 11.80
==============
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Global Value Fund, Inc., October 31, 1997
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Year Ended October 31, 1997++
<S> <S> <C> <C>
Investment Dividends (net of $2,588,136 foreign withholding tax) $ 27,596,209
Income Interest and discount earned 9,902,447
(Notes 1e & 1f): ------------
Total income 37,498,656
------------
Expenses: Investment advisory fees (Note 2) 9,957,530
Account maintenance and distribution fees--Class B (Note 2) 9,355,347
Account maintenance and distribution fees--Class C (Note 2) 1,696,508
Transfer agent fees--Class B (Note 2) 1,047,174
Registration fees (Note 1g) 739,842
Custodian fees 513,563
Account maintenance fees--Class D (Note 2) 484,472
Transfer agent fees--Class C (Note 2) 193,464
Accounting services (Note 2) 191,495
Transfer agent fees--Class D (Note 2) 178,244
Printing and shareholder reports 161,582
Amortization of organization expenses--net (Note 1g) 39,307
Professional fees 38,989
Directors' fees and expenses 37,950
Transfer agent fees--Class A (Note 2) 25,932
Pricing fees 6,367
Other 8,724
------------
Total expenses 24,676,490
------------
Investment income--net 12,822,166
------------
<PAGE>
Realized & Realized gain from:
Unrealized Gain Investments--net $ 63,319,496
(Loss) on Foreign currency transactions--net 1,202,141 64,521,637
Investments & ------------
Foreign Currency Unrealized appreciation/depreciation on:
Transactions--Net Investments--net 132,646,267
(Notes 1b, 1c, Foreign currency transactions--net (1,684,109) 130,962,158
1f & 3): ------------ ------------
Net realized and unrealized gain on investments and
foreign currency transactions 195,483,795
------------
Net Increase in Net Assets Resulting from Operations $208,305,961
============
</TABLE>
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<CAPTION>
Increase (Decrease) in Net Assets: For the Year Ended October 31, 1997++
<S> <S> <C>
Operations: Investment income--net $ 12,822,166
Realized gain on investments and foreign currency
transactions--net 64,521,637
Unrealized appreciation on investments and foreign
currency transactions--net 130,962,158
--------------
Net increase in net assets resulting from operations 208,305,961
--------------
Dividends to Investment income--net:
Shareholders Class A (72,233)
(Note 1h): Class B (2,571,571)
Class C (463,638)
Class D (721,214)
--------------
Net decrease in net assets resulting from dividends to shareholders (3,828,656)
--------------
Capital Share Net increase in net assets derived from capital share transactions 1,483,455,823
Transactions --------------
(Note 4):
Net Assets: Total increase in net assets 1,687,933,128
Beginning of period 100,000
--------------
End of period* $1,688,033,128
==============
<FN>
*Undistributed investment income--net (Note 1i) $ 10,195,652
==============
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
The following per share data and ratios have been derived
from information provided in the financial statements. For the Year Ended
October 31, 1997++
Increase (Decrease) in Net Asset Value: Class A** Class B** Class C** Class D**
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period. $ 10.00 $ 10.00 $ 10.00 $ 10.00
Operating -------- ---------- -------- --------
Performance: Investment income--net .17 .09 .09 .18
Realized and unrealized gain on
investments and foreign currency
transactions--net 1.71 1.67 1.67 1.67
-------- ---------- -------- --------
Total from investment operations 1.88 1.76 1.76 1.85
-------- ---------- -------- --------
Less dividends from investment
income--net (.05) (.04) (.04) (.05)
-------- ---------- -------- --------
Net asset value, end of period $ 11.83 $ 11.72 $ 11.72 $ 11.80
======== ========== ======== ========
Total Investment Based on net asset value per share 18.91% 17.62% 17.62% 18.56%
Return:* ======== ========== ======== ========
Ratios to Average Expenses .97% 1.99% 1.99% 1.22%
Net Assets: ======== ========== ======== ========
Investment income--net 1.88% .84% .83% 1.62%
======== ========== ======== ========
Supplemental Net assets, end of period
Data: (in thousands) $ 53,776 $1,179,125 $217,341 $237,791
======== ========== ======== ========
Portfolio turnover 77.65% 77.65% 77.65% 77.65%
======== ========== ======== ========
Average commission rate paid++++ $ .0351 $ .0351 $ .0351 $ .0351
======== ========== ======== ========
<FN>
*Total investment returns exclude the effects of sales loads.
**Based on average shares outstanding during the period.
++The Fund commenced operations on November 1, 1996.
++++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.
</TABLE>
<PAGE>
Merrill Lynch Global Value Fund, Inc., October 31, 1997
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch Global Value Fund, Inc. (the "Fund") is registered
under the Investment Company Act of 1940 as a non-diversified, open-
end management investment company. Prior to commencement of
operations on November 1, 1996, 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. 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 securities--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 financial futures
contracts and related options, are stated at market value.
Securities and assets for which market quotations are not readily
available are valued at their fair value as determined in good faith
by or under the direction of the Fund's Board of Directors.
<PAGE>
(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.
<PAGE>
* Financial futures contracts--The Fund may purchase or sell
interest rate 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) Repurchase agreements--The Fund invests in US Government
securities pursuant to repurchase agreements with a member bank of
the Federal Reserve System or a primary dealer in US Government
securities. Under such agreements, the bank or primary dealer agrees
to repurchase the security at a mutually agreed upon time and price.
The Fund takes possession of the underlying securities, marks to
market such securities and, if necessary, receives additions to such
securities daily to ensure that the contract is fully collateralized.
(e) 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.
(f) 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.
(g) 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.
<PAGE>
(h) Dividends and distributions--Dividends and distributions paid by
the Fund are recorded on the ex-dividend dates.
(i) Reclassification--Generally accepted accounting principles
require that certain components of net assets be adjusted to reflect
permanent differences between financial and tax reporting for
foreign currency transactions. Accordingly, current year's permanent
book/tax differences of $1,202,142 have been reclassified between
undistributed net realized capital gains and undistributed net
investment income. These reclassifications have no effect on net
assets or net asset values per share.
2. Investment Advisory Agreement and Transactions
with Affiliates:
The Fund has entered into an Investment Advisory Agreement with
MLAM. The general partner of MLAM is Princeton Services, Inc.
("PSI"), an indirect wholly-owned subsidiary of Merrill Lynch & Co.,
Inc. ("ML & Co."), which is the limited partner. The Fund has also
entered into a Distribution Agreement and Distribution Plans with
Merrill Lynch Funds Distributor, 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 Distribution
Maintenance Fee Fee
Class B 0.25% 0.75%
Class C 0.25% 0.75%
Class D 0.25% --
Pursuant to a sub-agreement with the Distributor, Merrill Lynch,
Pierce, Fenner & Smith Inc. ("MLPF&S"), a subsidiary of ML & Co.,
also provides account maintenance and distribution services to the
Fund. The ongoing account maintenance fee compensates the
Distributor and MLPF&S for providing account maintenance services
to Class B, Class C and Class D shareholders. The ongoing
distribution fee compensates the Distributor and MLPF&S for
providing shareholder and distribution-related services to Class B
and Class C shareholders.
<PAGE>
Merrill Lynch Global Value Fund, Inc., October 31, 1997
NOTES TO FINANCIAL STATEMENTS (concluded)
For the period November 1, 1996 (commencement of operations) to
October 31, 1997, MLFD earned underwriting discounts 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 $ 49 $ 865
Class D $96,252 $1,346,139
For the period November 1, 1996 to October 31, 1997, MLPF&S received
contingent deferred sales charges of $1,230,604 and $122,657 relating
to transactions in Class B and Class C Shares, respectively. Furthermore,
MLPF&S received contingent deferred sales charges of $10,000 relating
to transactions subject to front-end sales charge waivers in
Class D Shares.
In addition, MLPF&S received $396,160 in commissions on the
execution of portfolio security transactions for the Fund for the
period November 1, 1996 to October 31, 1997.
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 November 1, 1996 to October 31, 1997 were
$2,263,937,637 and $844,464,820, respectively.
Net realized and unrealized gains (losses) as of October 31, 1997
were as follows:
Realized Unrealized
Gains (Losses) Gains (Losses)
Long-term investments $ 63,319,692 $ 132,646,267
Short-term investments (196) --
Forward foreign exchange contracts -- (4,273,495)
Foreign currency transactions 1,202,141 2,589,386
------------ -------------
Total $ 64,521,637 $ 130,962,158
============ =============
<PAGE>
As of October 31, 1997, net unrealized appreciation for Federal
income tax purposes aggregated $132,646,267, of which $168,345,842
related to appreciated securities and $35,699,575 related to
depreciated securities. The aggregate cost of investments at October
31, 1997 for Federal income tax purposes was $1,504,503,571.
4. Capital Share Transactions:
Net increase in net assets derived from capital share transactions
was $1,483,455,823 for the period November 1, 1996 to October 31,
1997.
Transactions in capital shares for each class were as follows:
Class A Shares for the Period Dollar
November 1, 1996++ to October 31, 1997 Shares Amount
Shares sold 5,152,431 $ 57,303,237
Shares issued to shareholders in
reinvestment of dividends 6,207 62,009
------------ -------------
Total issued 5,158,638 57,365,246
Shares redeemed (614,043) (6,856,145)
------------ -------------
Net increase 4,544,595 $ 50,509,101
============ =============
[FN]
++Prior to November 1, 1996 (commencement of operations), the Fund
issued 2,500 shares to MLAM for $25,000.
Class B Shares for the Period Dollar
November 1, 1996++ to October 31, 1997 Shares Amount
Shares sold 109,016,851 $1,127,788,851
Shares issued to shareholders in
reinvestment of dividends 211,285 2,110,732
------------ --------------
Total issued 109,228,136 1,129,899,583
Automatic conversion of shares (207,246) (2,300,318)
Shares redeemed (8,455,332) (92,416,446)
------------ --------------
Net increase 100,565,558 $1,035,182,819
============ ==============
[FN]
++Prior to November 1, 1996 (commencement of operations), the Fund
issued 2,500 shares to MLAM for $25,000.
<PAGE>
Class C Shares for the Period Dollar
November 1, 1996++ to October 31, 1997 Shares Amount
Shares sold 20,686,388 $ 214,642,345
Shares issued to shareholders in
reinvestment of dividends 39,137 390,984
------------ -------------
Total issued 20,725,525 215,033,329
Shares redeemed (2,190,092) (23,679,275)
------------ -------------
Net increase 18,535,433 $ 191,354,054
============ =============
[FN]
++Prior to November 1, 1996 (commencement of operations), the Fund
issued 2,500 shares to MLAM for $25,000.
Class D Shares for the Period Dollar
November 1, 1996++ to October 31, 1997 Shares Amount
Shares sold 22,812,954 $ 235,349,723
Automatic conversion of shares 206,573 2,300,318
Shares issued to shareholders
in reinvestment of dividends 62,231 621,693
------------ -------------
Total issued 23,081,758 238,271,734
Shares redeemed (2,934,997) (31,861,885)
------------ -------------
Net increase 20,146,761 $ 206,409,849
============ =============
[FN]
++Prior to November 1, 1996 (commencement of operations), the Fund
issued 2,500 shares to MLAM for $25,000.
5. Commitments:
At October 31, 1997, the Fund had entered into foreign exchange
contracts, in addition to the contracts listed on the Schedule of
Investments, under which it had agreed to purchase foreign currency
with an approximate value of $10,254,000.
<PAGE>
<AUDIT-REPORT>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders,
Merrill Lynch Global Value Fund, Inc.:
We have audited the accompanying statement of assets and
liabilities, including the schedule of investments, of Merrill Lynch
Global Value Fund, Inc. as of October 31, 1997, the related
statements of operations and changes in net assets and the financial
highlights for the year ended October 31, 1997. These financial
statements and the financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion
on these financial statements and the financial highlights based on
our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements and the financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.
Our procedures included confirmation of securities owned at October
31, 1997 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of
Merrill Lynch Global Value Fund, Inc. as of October 31, 1997, the
results of its operations, the changes in its net assets, and the
financial highlights for the year ended October 31, 1997 in
conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
December 12, 1997
</AUDIT-REPORT>
