MERRILL LYNCH
GLOBAL VALUE
FUND, INC.
FUND LOGO
Quarterly Report
July 31, 1997
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
<PAGE>
Printed on post-consumer recycled paper
MERRILL LYNCH GLOBAL VALUE FUND, INC.
Worldwide
Investments
As of 7/31/97
Percent of
Ten Largest Industries Net Assets
Insurance 14.5%
Financial Services 12.4
Diversified Operations 12.0
Food--Diversified 11.2
Electric Products 5.3
Beverages 4.7
Electronics 4.6
Pharmaceuticals 3.6
Airlines 3.3
Medical Products 3.2
Country of Percent of
Ten Largest Equity Holdings Origin Net Assets
Siemens AG Germany 5.3%
Westinghouse Electric Corporation United States 5.1
Cadbury Schweppes PLC United Kingdom 4.7
Guinness PLC United Kingdom 4.7
Federal National Mortgage
Association United States 4.3
Nestle S.A. (Registered) Switzerland 4.1
Zurich Insurance Group Switzerland 3.9
Assicurazioni Generali S.p.A. Italy 3.8
Washington Mutual, Inc. United States 3.6
Novartis AG (Registered) Switzerland 3.6
Officers and
Directors
<PAGE>
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
DEAR SHAREHOLDER
Total returns for Merrill Lynch Global Value Fund, Inc.'s Class A,
Class B, Class C and Class D Shares were +18.19%, +17.87%, +17.87%
and +18.11%, respectively, during the three-month period ended July
31, 1997, slightly outperforming the +16.54% total return of the
unmanaged Morgan Stanley Capital International World Index. Keeping
pace with a surging stock market is probably not typical for the
Fund, since we envision our investment strategy as one which is more
likely to outperform during periods of more modest price gains for
stocks.
The Fund's outperformance during the quarter is attributable to the
substantial outperformance of a few of our larger positions relative
to their respective local market indexes. In particular, Westinghouse
Electric Corporation, Zurich Insurance Group, Washington Mutual, Inc.,
Lufthansa AG, and Kansas City Southern Industries, Inc. all significantly
outperformed their local markets. Although none of our larger positions
substantially underperformed their local markets, some did not meet our
expectations.
<PAGE>
Portfolio Matters
The continued strength of all the world's major equity markets
continues to surprise us. We are concerned that companies' share
prices are rising at a much faster rate than the values of their
businesses, as discussed in our last report to shareholders. We
recognize that the current trends of rising company values and
falling interest rates (reflecting limited current and future
inflationary expectations) should lead to higher share prices.
However, we must remind shareholders that many stock markets have
reached levels that reflect the expectation that companies will post
results far exceeding current levels, which are already far superior
to prior peaks.
Focus on Westinghouse Electric
Corporation
During the Fund's first months of operation, we have taken a number
of different approaches to identifying value in individual stocks.
In each of our first two reports to shareholders, we discussed the
rationale behind two of our larger and more successful investments
to date: Groupe Danone S.A. and Guinness PLC. Westinghouse Electric
Corporation represents yet another example of a successful
investment strategy. For many years, this company tried (and failed)
to imitate the strategy of its much larger and more successful
competitor, General Electric Company. By the early 1990s,
Westinghouse was in very poor financial condition because of
extraordinarily large losses incurred in its credit subsidiary,
massive product liabilities associated with its nuclear power
generators, and large unfunded pension liabilities. However, in 1993
Westinghouse hired a new chief executive officer, Michael Jordan,
who created and subsequently implemented a business plan to reorient
the company. Building on a small core of 18 Group W radio stations,
Jordan's team has transformed Westinghouse into a media powerhouse
with 70 radio stations, 14 television stations, and the CBS
television network. They have also significantly improved the
company's balance sheet by selling assets and reducing debt and
other liabilities.
We believe that Westinghouse's transformation bodes well for the
company's future prospects. The financial restructuring provides a
sound foundation for future growth. The rationalization and
divestiture of the industrial businesses should be completed by the
end of 1997. However, most important, is the strength of the
management team. The radio and television stations, the company's
primary cash flow generators, are headed by Mel Karmazin, who became
Westinghouse's largest shareholder in December 1996 when it acquired
his company, Infinity Broadcasting. Karmazin, in our view an
exemplary manager, focused on expanding revenues, containing costs,
rewarding employees who achieve results, and reinvesting cash flow
as long as the return on investment exceeds the cost of capital. The
CBS television network is led by another able executive, Leslie
Moonves, who has taken the network from third to second place in the
last 12 months. Given Moonves's new programming initiatives, we
expect further improvement in the network ratings and cash flow
performance starting late this year. We believe that the combination
of high-quality, cash-generative businesses and superior management
makes Westinghouse an attractive investment.
<PAGE>
In contrast to Westinghouse was our investment in Pharmacia &
Upjohn, Inc., which we eliminated during the July quarter. The
motivation for our investment--and for the merger between the two
pharmaceutical companies that created this firm--was the belief that
the merged entity could boost prescription sales by combining sales
forces, enhance research productivity with a bigger budget, and
substantially reduce costs through shedding duplicative functions.
Moreover, at the time of our purchase, the stock was by far the
least expensive in the global pharmaceutical industry based on
several measures. However, after two quarters of disappointing
earnings, coupled with management's failure to implement necessary
and promised restructuring actions, we lost confidence in the
company's ability to meet its challenges. As a result, once the
stock rebounded modestly from an oversold position, we took
advantage of the opportunity and sold our shares. Our experience
with Pharmacia & Upjohn has reinforced in our minds the importance
of capable and credible management teams to the success of
businesses.
Higher Turnover in Rising
Stock Market
In an environment of rapidly rising share prices that prevailed
throughout much of the July quarter, our portfolio turnover was much
higher than expected.
A number of our stocks have already appreciated 25% or more in just
a few months. Under normal circumstances, we would probably sell
these stocks and invest the proceeds in new opportunities. However,
the stock market overall has been appreciating at the same rate as
our investments, making it more difficult to determine if a stock's
valuation has "gotten ahead of itself." Our compromise solution in
this environment is to sell some of our investments and continue to
hold others, depending largely on our confidence in their growth
prospects and our assessment of their overall quality. Despite
holding onto some of our stocks that rose rapidly, the Fund's
turnover rate is much higher than we had expected, and than we
expect in the future when stock markets become less buoyant.
We also believe that the approach of selling stocks which appreciate
strongly in a short period is warranted given the nature of the
companies in which we invest. When a great growth company's shares
reach the high end of an appropriate valuation level, it can be
argued that there is limited risk to maintaining an investment.
However, for the typical company in which we invest--with good, but
not great, businesses--we believe that there is greater risk when
its shares become overvalued. Therefore, if the current stock market
environment persists, we expect the portfolio's turnover rate to
remain at a higher level than we expect over the longer term.
<PAGE>
In Conclusion
We thank you for your investment in Merrill Lynch Global Value Fund,
Inc., and we look forward to reviewing our outlook and strategy with
you again in our upcoming annual report to shareholders.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Stephen I. Silverman)
Stephen I. Silverman
Vice President and
Portfolio Manager
September 8, 1997
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.)
<PAGE>
*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.
<TABLE>
Recent
Performance
Results*
<CAPTION>
Total Return
Net Asset Value 3 Month Since Inception++
7/31/97 4/30/97 11/01/96++ % Change % Change
<S> <C> <C> <C> <C> <C>
ML Global Value Fund, Inc. Class A Shares $12.28 $10.39 $10.00 +18.19% +23.43%(1)
ML Global Value Fund, Inc. Class B Shares 12.20 10.35 10.00 +17.87 +22.43(2)
ML Global Value Fund, Inc. Class C Shares 12.20 10.35 10.00 +17.87 +22.43(2)
ML Global Value Fund, Inc. Class D Shares 12.26 10.38 10.00 +18.11 +23.18(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>
<PAGE>
Aggregate
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Inception (11/01/96) through 6/30/97 +16.19% +10.09%
[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 6/30/97 +15.41% +11.41%
[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 6/30/97 +15.41% +14.41%
[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 6/30/97 +16.05% + 9.96%
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
NORTH Shares Percent of
AMERICA Industries Held Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
United States Diversified 597,900 Kansas City Southern
Operations Industries, Inc. $ 32,737,819 $ 45,066,713 2.8%
3,450,000 Westinghouse Electric
Corporation 61,738,204 83,015,625 5.1
-------------- -------------- ------
94,476,023 128,082,338 7.9
Financial Services 1,485,000 Federal National Mortgage
Association 58,560,791 70,259,063 4.3
840,000 Washington Mutual, Inc. 46,572,497 57,960,000 3.6
-------------- -------------- ------
105,133,288 128,219,063 7.9
Food 366,300 Wm. Wrigley Jr. Company 25,168,429 28,182,206 1.7
Food Merchandising 1,887,000 American Stores Company 47,395,448 47,646,750 2.9
Insurance 690,000 Horace Mann Educators Corp. 25,535,781 37,303,125 2.3
788,400 UNUM Corporation 27,200,632 35,083,800 2.2
-------------- -------------- ------
52,736,413 72,386,925 4.5
Medical Products 900,000 Baxter International, Inc. 49,038,288 52,031,250 3.2
Total Investments in
North America 373,947,889 456,548,532 28.1
PACIFIC BASIN/
ASIA
Australia Leisure 9,492,186 Village Roadshow Limited
(Preferred)(Class A) 25,908,442 25,299,618 1.6
Property 1,147,500 Lend Lease Corporation 21,243,272 26,039,483 1.6
Total Investments in Australia 47,151,714 51,339,101 3.2
Japan Electrical 757,400 Chudenko Corporation 19,095,514 17,193,300 1.0
Construction 795,000 Kinden Corporation 9,753,962 11,405,063 0.7
-------------- -------------- ------
28,849,476 28,598,363 1.7
<PAGE>
Electronics 1,690,000 Matsushita Electric
Industrial Co. 28,894,269 35,226,160 2.2
400,000 Sony Corporation 36,894,499 39,831,224 2.4
-------------- -------------- ------
65,788,768 75,057,384 4.6
Insurance 1,829,000 Dai-Tokyo Fire & Marine
Insurance Co., Ltd. 7,878,152 10,680,743 0.7
784,000 Nichido Fire & Marine
Insurance Co., Ltd. 4,117,378 5,484,692 0.3
1,300,000 Sumitomo Marine & Fire
Insurance Co., Ltd. 10,316,345 9,928,270 0.6
850,000 Tokio Marine & Fire
Insurance Co., Ltd. 10,618,405 10,831,224 0.7
-------------- -------------- ------
32,930,280 36,924,929 2.3
Office Equipment 1,618,000 Canon, Inc. 38,386,441 51,612,152 3.2
Total Investments in Japan 165,954,965 192,192,828 11.8
Total Investments in the
Pacific Basin/Asia 213,106,679 243,531,929 15.0
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
WESTERN Shares Percent of
EUROPE Industries Held Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
France Food--Diversified 252,000 Groupe Danone S.A. $ 35,885,017 $ 39,801,040 2.4%
Total Investments in France 35,885,017 39,801,040 2.4
Germany Airlines 2,648,200 Lufthansa AG 41,417,868 53,442,894 3.3
Electric Products 1,240,000 Siemens AG 82,086,025 86,521,052 5.3
Total Investments in Germany 123,503,893 139,963,946 8.6
Ireland Banking 3,100,000 Allied Irish Banks PLC 23,499,582 28,502,392 1.8
9,500 Allied Irish Banks PLC (ADR)* 482,133 521,906 0.0
Total Investments in Ireland 23,981,715 29,024,298 1.8
Italy Financial Services 1,610,000 Istituto Mobiliare Italiano
S.p.A. (Ordinary) 16,269,349 15,545,137 1.0
Insurance 3,052,000 Assicurazioni Generali S.p.A. 66,401,899 62,513,409 3.8
Total Investments in Italy 82,671,248 78,058,546 4.8
<PAGE>
Netherlands Telecommunications 730,000 Koninklijke PTT Nederland N.V. 27,516,044 30,016,447 1.8
Total Investments in the
Netherlands 27,516,044 30,016,447 1.8
Switzerland Food--Diversified 52,000 Nestle S.A. (Registered) 55,502,182 66,084,768 4.1
Insurance 155,000 Zurich Insurance Group 44,779,878 63,231,788 3.9
Pharmaceuticals 36,000 Novartis AG (Registered) 42,062,908 57,862,252 3.6
Total Investments in
Switzerland 142,344,968 187,178,808 11.6
United Kingdom Banking 3,000,000 Bank of Scotland PLC 16,293,049 21,816,060 1.3
Beverages 7,950,000 Guinness PLC 58,242,074 76,086,270 4.7
Diversified 10,400,000 BTR PLC 42,871,374 32,242,288 2.0
Operations 6,800,000 Tomkins PLC 31,428,861 34,264,384 2.1
-------------- -------------- ------
74,300,235 66,506,672 4.1
Financial Services 2,509,000 Mercury Asset Management
Group PLC 57,834,453 57,219,853 3.5
Food--Diversified 7,900,000 Cadbury Schweppes PLC 70,749,078 76,189,338 4.7
Utilities-- 3,245,000 United Utilities PLC 32,322,020 37,453,725 2.3
Electric,
Gas & Water
Total Investments in the
United Kingdom 309,740,909 335,271,918 20.6
Total Investments in
Western Europe 745,643,794 839,315,003 51.6
Total Investments $1,332,698,362 1,539,395,464 94.7
==============
Unrealized Appreciation on Forward Foreign Exchange Contracts++ 24,753,256 1.5
Other Assets Less Liabilities 62,328,517 3.8
-------------- ------
Net Assets $1,626,477,237 100.0%
============== ======
<PAGE>
Net Asset Value: Class A--Based on net assets of $46,329,
and 3,774,150 shares outstanding $ 12.28
==============
Class B--Based on net assets of $1,136,693,003
and 93,161,158 shares outstanding $ 12.20
==============
Class C--Based on net assets of $207,365,302 and
16,995,877 shares outstanding $ 12.20
==============
Class D--Based on net assets of $236,089,648 and
19,260,788 shares outstanding $ 12.26
==============
<FN>
*American Depositary Receipts (ADR).
++Forward foreign exchange contracts as of July 31, 1997 were as follows:
<CAPTION>
Unrealized
Foreign Expiration Appreciation
Currency Purchased Date (Depreciation)
<S> <C> <S> <C>
Chf 3,341,304 January 1998 $ (74,434)
DM 12,599,871 January 1998 (753,776)
Frf 5,550,897 January 1998 (96,504)
Pound Sterling 3,066,000 January 1998 2,652
YEN 3,214,199,536 January 1998 (397,221)
------------
Total (US$ Commitment--$44,154,765) $ (1,319,283)
============
Foreign
Currency Sold
Chf 191,233,950 January 1998 $ 9,831,885
DM 205,746,631 January 1998 7,068,385
Frf 371,183,000 January 1998 7,765,693
Pound Sterling 138,698,880 January 1998 (2,519,903)
Nlg 52,295,661 January 1998 2,733,645
YEN 10,255,893,722 January 1998 1,192,834
Total (US$ Commitment--$668,436,822) $ 26,072,539
------------
Total Unrealized Appreciation on Forward Foreign
Exchange Contracts--Net $ 24,753,256
============
</TABLE>
<PAGE>
PORTFOLIO CHANGES
For the Quarter Ended July 31, 1997
Additions
Allied Irish Banks PLC (ADR)
American Stores Company
Assicurazioni Generali S.p.A.
Baxter International, Inc.
*EDP--Electricidade de Portugal, S.A.
Istituto Mobiliare Italiano S.p.A. (Ordinary)
Mercury Asset Management Group PLC
*Murata Manufacturing Co., Ltd.
*Safeco Corporation
Siemens AG
Sony Corporation
Sumitomo Marine & Fire Insurance Co., Ltd.
Tokio Marine & Fire Insurance Co., Ltd.
Washington Mutual, Inc.
Wm. Wrigley Jr. Company
Deletions
Aetna, Inc.
Amoco Corporation
Cheung Kong (Holdings) Limited
Commerzbank AG
Darden Restaurants, Inc.
Donnelley (R.R.) & Sons Company
*EDP--Electricidade de Portugal, S.A.
Fuji Photo Film Co., Ltd.
Great Atlantic & Pacific Tea Co., Inc.
HSBC Holdings PLC
Hitachi, Ltd.
Intimate Brands, Inc.
Koa Fire and Marine Insurance Co., Ltd.
Mercantile Stores Company, Inc.
Merck KGaA
Morgan Stanley Group, Inc.
*Murata Manufacturing Co., Ltd.
National Grid Group PLC
National Power PLC
Pharmacia & Upjohn, Inc.
PowerGen PLC
*Safeco Corporation
Societe Generale de France S.A.
Super Valu, Inc.
Suzuki Motor Corporation
<PAGE>
[FN]
*Added and deleted in the same quarter.
