MERRILL LYNCH
GLOBAL VALUE
FUND INC.
FUND LOGO
Quarterly Report
January 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.
<PAGE>
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 1/31/97
Percent of
Ten Largest Industries Net Assets
Insurance 11.5%
Utilities--Electric, Gas & Water 9.6
Food 7.3
Financial Services 5.6
Banking 5.2
Beverages 4.5
Pharmaceuticals 4.4
Multi-Industry 3.4
Retail Apparel 2.1
Paper & Forest Products 1.8
<PAGE>
Country of Percent of
Ten Largest Equity Holdings Origin Net Assets
Guinness PLC United Kingdom 4.5%
Nestle S.A. (Registered) Switzerland 4.1
UNUM Corporation United States 3.7
Pharmacia & Upjohn, Inc. United States 3.6
BTR PLC United Kingdom 3.4
Federal National Mortgage
Association United States 3.3
Groupe Danone S.A. France 3.2
United Utilities PLC United Kingdom 3.1
Zurich Versicherungs Switzerland 3.0
Horace Mann Educators
Corporation United States 2.6
DEAR SHAREHOLDER
We are pleased to provide you with this first shareholder report for
Merrill Lynch Global Value Fund, Inc. The Fund seeks long-term
capital appreciation by investing primarily in equity securities of
issuers located in various foreign countries and the United States
that we believe represent investment value. In this and future
reports to shareholders, we will provide information on the Fund's
performance, discuss our investment strategies, list current
portfolio investments, and highlight some of the Fund's holdings.
Merrill Lynch Global Value Fund, Inc. commenced operations on
November 1, 1996, with net assets of $799.9 million. From inception
through January 31, 1997, the Fund's assets grew to approximately
$1.1 billion. Since inception through January 31, 1997, the Fund's
Class A, Class B, Class C and Class D Shares had total returns of
+0.81%, +0.56%, +0.56% and +0.78%, respectively. (Results shown do
not reflect sales charges, and would be lower if sales charges were
included. Complete performance information, including aggregate
total returns, can be found on pages 4 and 5 of this report to
shareholders.)
Portfolio Matters
As of January 31, 1997, 72% of the portfolio's net assets was
invested in equity securities, with the remaining 28% in cash
reserves. Initially, our expectation was that the Fund would be
fully invested by early January 1997. However, because most world
stock markets appreciated so rapidly during the Fund's first months
of operation--and since we generally avoid buying stocks on strength-
- -we now expect to reach an essentially fully invested position by
the end of March 1997.
<PAGE>
Initially, we expected that our investment process would take two
different approaches. The first approach is to invest in stocks that
are selling at valuations which are modest relative to the
attractiveness of their businesses, based on our fundamental
analysis. (We will illustrate this approach later in this letter to
shareholders by examining one of our larger holdings.) The second
investment approach is also designed to identify undervalued issues.
It is more quantitative, and focuses on screening stocks for
traditional valuation measures such as price/earnings, price/book
value, and price/cash flow ratios. During the Fund's first months of
operation, we placed significantly less emphasis on the quantitative
approach, since we have found that, although it worked well in some
markets, it was inconsistent and resulted in sub-par investment
returns in other stock markets. More importantly, however, we
believe that we will be able to identify a sufficient number of
relatively undervalued investment opportunities to warrant greater
emphasis on a traditional fundamental investment approach rather
than on a quantitative one.
Our approach to defining "value" is somewhat eclectic, and does not
focus simply on companies whose shares are selling at depressed
valuations. Therefore, shareholders may be surprised at some of the
companies represented in the portfolio, and may also question why we
do not own some classically undervalued issues, such as deep
cyclical stocks, currently selling at depressed prices. Generally,
we prefer to invest in companies with good or superior businesses
that have one or more of the following characteristics:
* Reasonable revenue growth prospects.
* A high degree of control over costs and the prices that they
charge for their products. As a result, these companies are also in
control of their operating margins.
* A high enough return on capital invested to justify our investment.
* Managements (and, if possible, board members) that are important
stakeholders.
One of our larger holdings that exhibits some of these
characteristics is the French firm, Groupe Danone S.A. Danone's
primary businesses are dairy products (Dannon brand yogurt) and
biscuits and mineral water (Evian). From 1987 to 1993, Danone's
stock traded at a relative price/earnings premium of approximately
25% to the French stock market. In other words, if the average
French company's shares sold for 16 times earnings per share, then
Danone shares, on average, would sell for approximately 20 times
earnings.
<PAGE>
This valuation premium occurred because Danone was regarded as a
company that could increase earnings more rapidly than the average
French company. However, as Danone's businesses slowed and its
future earnings growth prospects were called into question, the
stock was "de-rated"; that is, the price/earnings premium of Danone
shares relative to the French stock market collapsed. Eventually,
its shares traded at a discount to the average French stock.
Danone experienced problems with revenue growth because management
found it difficult to increase sales volume and raise prices. In
addition, the company's operating margins narrowed because
management could not sufficiently contain cost increases as revenue
growth slowed. However, Danone's management has been addressing
these issues, and the company began to generate revenue growth from
emerging markets such as The People's Republic of China, Eastern
Europe and Argentina. Finally, management is demonstrating the
ability to better control costs, and recently posted an encouraging
increase in earnings before interest and taxes for the first time in
the past five years. We believe that management is committed to
maintaining the strong positive identity of the Danone's brand-name
products, and is gradually restructuring the company to improve the
return generated from its operating assets.
In our view, the question is not whether Danone should be trading at
a premium relative to the French stock market, but whether it should
at least be trading at a valuation comparable to that of the average
French stock. Based on our analysis, Danone is currently better than
the average French company, and is in the process of effecting
additional improvements. Therefore, we would expect that Danone's
shares will again trade at a premium relative to the French stock
market.
As is the case with Danone, all of the Fund's large positions are
currently worth more than their current valuations, in our view, and
therefore we believe that they are likely to trade at higher prices
over the longer term. We hope to find companies whose shares are
worth, in our estimation, 25%--50% more than their current prices,
and whose values will continue to accrete each year.
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 next report to shareholders.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
<PAGE>
(Stephen I. Silverman)
Stephen I. Silverman
Vice President and Portfolio Manager
March 11, 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.)
* 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).
<PAGE>
None of the past results shown should 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. 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 Since Inception++
1/31/97 11/01/96++ % Change
<S> <C> <C> <C>
ML Global Value Fund, Inc. Class A Shares $10.03 $10.00 +0.81%(1)
ML Global Value Fund, Inc. Class B Shares 10.02 10.00 +0.56(2)
ML Global Value Fund, Inc. Class C Shares 10.02 10.00 +0.56(2)
ML Global Value Fund, Inc. Class D Shares 10.03 10.00 +0.78(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>
Aggregate
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Inception (11/01/96) through 12/31/96 +1.82% -3.53%
<PAGE>
[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 12/31/96 +1.66% -2.34%
[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 12/31/96 +1.66% -2.34%
[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 12/31/96 +1.78% -3.56%
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
<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 Automobiles 142,000 Ford Motor Company $ 4,490,523 $ 4,561,750 0.4%
States 82,000 General Motors Corporation 4,465,294 4,838,000 0.4
-------------- -------------- ------
8,955,817 9,399,750 0.8
<PAGE>
Commercial 252,000 Ogden Corporation 4,883,737 5,103,000 0.5
Services
Computer Software 495,000 Compuserve Corporation 5,560,881 5,383,125 0.5
137,000 Sterling Software, Inc. 4,549,322 3,955,875 0.3
-------------- -------------- ------
10,110,203 9,339,000 0.8
Diversified 311,700 Kansas City Southern Industries,
Operations Inc. 15,009,596 15,312,262 1.3
Electronics 477,000 Integrated Device Technology, Inc. 4,456,386 4,948,875 0.4
177,100 MEMC Electronic Materials, Inc. 4,513,303 4,892,387 0.4
-------------- -------------- ------
8,969,689 9,841,262 0.8
Financial Services 958,900 Federal National Mortgage
Association 36,912,612 37,876,550 3.3
400,000 Morgan Stanley Group, Inc. 23,009,720 22,850,000 2.0
-------------- -------------- ------
59,922,332 60,726,550 5.3
Food Distribution 155,000 Super Valu, Inc. 4,693,026 4,785,625 0.4
Food Merchandising 143,700 Great Atlantic & Pacific Tea Co.,
Inc. 4,756,797 4,490,625 0.4
Information 155,300 Imation Corporation 4,682,292 4,523,113 0.4
Processing
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
NORTH AMERICA Shares Percent of
(concluded) Industries Held Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
United Insurance 147,400 Aetna, Inc. $ 10,351,161 $ 11,644,600 1.0%
States 690,000 Horace Mann Educators Corp. 25,535,781 29,497,500 2.6
(concluded) 550,000 UNUM Corporation 36,100,989 41,593,750 3.7
-------------- -------------- ------
71,987,931 82,735,850 7.3
Oil-Field Services 161,000 Weatherford/Enterra, Inc. 4,697,361 5,856,375 0.5
<PAGE>
Paper & Forest 154,000 Boise Cascade Corporation 4,477,433 5,313,000 0.5
Products 128,800 Bowater Incorporated 4,731,903 5,248,600 0.5
107,000 Champion International Corporation 4,524,393 4,480,625 0.4
313,000 Stone Container Corporation 4,737,936 4,225,500 0.4
-------------- -------------- ------
18,471,665 19,267,725 1.8
Petroleum 87,000 Helmerich & Payne, Inc. 4,737,420 4,208,625 0.4
Pharmaceuticals 1,108,000 Pharmacia & Upjohn, Inc. 43,767,109 41,273,000 3.6
Pollution Control 302,700 Wheelabrator Technologies Inc. 4,880,277 5,108,062 0.5
Printing & 150,000 Donnelley (R.R.) & Sons Company 5,008,152 4,687,500 0.4
Publishing
Printing/Forms 90,000 Banta Corporation 2,207,902 2,092,500 0.2
Publishing-- 151,300 Dow Jones & Company, Inc. 5,105,243 5,995,263 0.5
Newspapers
Restaurants 553,000 Darden Restaurants, Inc. 4,749,034 4,009,250 0.4
Retail 87,000 Mercantile Stores Company, Inc. 4,425,617 4,263,000 0.4
Retail Apparel 1,326,000 Intimate Brands, Inc. 21,626,588 23,536,500 2.1
Utilities-- 537,000 Niagara Mohawk Power Corporation 4,602,830 5,437,125 0.5
Electric, Gas & 388,000 Northeast Utilities System 5,019,554 5,092,500 0.4
Water -------------- -------------- ------
9,622,384 10,529,625 0.9
Total Investments in the United
States 323,270,172 337,084,462 29.7
Total Investments in North America 323,270,172 337,084,462 29.7
PACIFIC
BASIN/ASIA
Australia Recreational/Other 2,557,186 Village Roadshow Limited
Consumer Goods (Preferred) (Class A) 7,559,398 6,817,330 0.6
Total Investments in Australia 7,559,398 6,817,330 0.6
Japan Broadcasting & 287,000 Tokyo Broadcasting System, Inc. 4,782,110 3,930,858 0.3
Publishing
<PAGE>
Building & 247,000 Chudenko Corporation 7,112,851 6,786,386 0.6
Construction 509,000 Kinden Corporation 6,569,741 6,383,498 0.6
-------------- -------------- ------
13,682,592 13,169,884 1.2
Distribution/ 602,000 Shinagawa Fuel Co., Ltd. 4,660,846 3,352,723 0.3
Wholesale
Electronics 483,000 Hitachi, Ltd. 4,471,526 4,343,812 0.4
Energy 210,000 Kyushu Electric Power Company Inc. 4,468,264 3,777,228 0.3
Financial Services 797,000 Yamaichi Securities Co., Ltd. 4,459,993 2,899,975 0.3
Foods/Food 347,000 Nippon Meat Packers, Inc. 4,752,678 3,950,990 0.3
Processing
Insurance 1,829,000 Dai-Tokyo Fire & Marine Insurance Co. 7,878,152 7,651,015 0.7
735,000 Koa Fire and Marine Insurance Co.,
Ltd. 3,302,697 3,013,985 0.3
502,000 Nichido Fire & Marine Insurance
Co., Ltd. 2,692,443 2,808,218 0.2
-------------- -------------- ------
13,873,292 13,473,218 1.2
Petroleum 747,000 Nippon Oil Co., Ltd. 4,488,306 3,328,218 0.3
Pharmaceuticals 495,000 Fujisawa Pharmaceutical Company
Limited 4,794,418 3,851,361 0.3
Real Estate 345,000 Daito Trust Construction Co., Ltd. 4,693,979 3,330,446 0.3
Retail--Leasing 160,800 Aoyama Trading Co., Ltd. 4,420,587 4,165,941 0.4
Steel 1,400,000 Nisshin Steel Co., Ltd. 4,573,679 3,303,630 0.3
Telecommunications 55,000 Kokusai Denshin Denwa (KDD) 4,632,537 3,344,472 0.3
& Equipment
Textiles & Apparel 772,000 Gunze Limited 4,456,279 3,503,300 0.3
Utilities-- 214,000 Tohoku Electric Power Company, Inc. 4,517,778 3,690,264 0.3
Electric, Gas &
Water
Wholesale & 567,000 Kamigumi Co., Ltd. 4,502,184 3,040,842 0.3
International Trade 956,000 Marubeni Corporation 4,542,232 3,786,139 0.3
-------------- -------------- ------
9,044,416 6,826,981 0.6
<PAGE>
Total Investments in Japan 100,773,280 84,243,301 7.4
Total Investments in the 108,332,678 91,060,631 8.0
Pacific Basin/Asia
SOUTHEAST
ASIA
Hong Kong Banking 862,800 HSBC Holdings PLC 17,752,154 19,987,430 1.8
Real Estate 531,000 Cheung Kong (Holdings) Limited 4,718,722 4,951,249 0.4
490,000 Henderson Land Development
Company Ltd. 4,818,555 4,537,330 0.4
-------------- -------------- ------
9,537,277 9,488,579 0.8
Total Investments in Hong Kong 27,289,431 29,476,009 2.6
Total Investments in Southeast
Asia 27,289,431 29,476,009 2.6
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
WESTERN Shares Percent of
EUROPE Industries Held Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
France Banking 240,000 Societe Generale de France S.A. $ 25,465,575 $ 27,602,170 2.4%
Food 237,000 Groupe Danone S.A. 33,695,963 36,642,857 3.2
Oil & Related 10,000 Elf Aquitaine S.A. 843,258 971,067 0.1
Total Investments in France 60,004,796 65,216,094 5.7
Germany Airlines 406,000 Lufthansa AG 5,454,966 5,477,109 0.5
Automotive 14,000 Volkswagen AG 5,815,886 6,571,847 0.6
Banking 469,000 Commerzbank AG 11,345,985 11,881,028 1.0
Pharmaceuticals 149,000 Merck KGaA 5,639,074 5,652,759 0.5
Total Investments in Germany 28,255,911 29,582,743 2.6
<PAGE>
Switzerland Food 43,000 Nestle S.A. (Registered) 45,688,125 46,656,360 4.1
Insurance 120,000 Zurich Versicherungs 34,453,345 33,815,882 3.0
Total Investments in Switzerland 80,141,470 80,472,242 7.1
United Beverages 7,350,000 Guinness PLC 53,594,564 51,294,823 4.5
Kingdom
Multi-Industry 9,400,000 BTR PLC 38,489,360 38,939,147 3.4
Utilities-- 2,600,000 National Grid Group PLC 8,616,526 8,676,736 0.8
Electric, Gas & 2,305,000 National Power PLC 16,536,414 18,431,875 1.6
Water 1,450,000 PowerGen PLC 13,071,490 15,161,653 1.3
1,563,000 Severn Trent PLC 16,603,626 17,645,664 1.6
3,245,000 United Utilities PLC 32,322,019 35,022,758 3.1
-------------- -------------- ------
87,150,075 94,938,686 8.4
Total Investments in the 179,233,999 185,172,656 16.3
United Kingdom
Total Investments in Western
Europe 347,636,176 360,443,735 31.7
SHORT-TERM Face
SECURITIES Amount Issue
Commercial Paper* $ 8,000,000 American Brands, Inc., 5.33% due
2/12/1997 7,986,971 7,986,971 0.7
Atlantic Asset Securitization Corp.:
20,088,000 5.375% due 2/11/1997 20,058,007 20,058,007 1.8
22,000,000 5.36% due 2/19/1997 21,941,040 21,941,040 1.9
40,000,000 Clipper Receivables Corp., 5.35%
due 2/04/1997 39,982,167 39,982,167 3.6
24,139,000 Countrywide Home Loans, 5.37% due
2/27/1997 24,045,381 24,045,381 2.1
30,445,000 Eksportfinans A/S, 5.30% due
3/18/1997 30,243,302 30,243,302 2.7
20,000,000 Eureka Securitization Inc., 5.33%
due 2/04/1997 19,991,117 19,991,117 1.8
34,612,000 General Motors Acceptance Corp.,
5.62% due 2/03/1997 34,601,193 34,601,193 3.0
21,000,000 National Fleet Funding Corp., 5.34%
due 3/14/1997 20,872,285 20,872,285 1.8
Three Rivers Funding Corp.:
17,000,000 5.32% due 2/06/1997 16,987,439 16,987,439 1.5
26,358,000 5.32% due 2/20/1997 26,283,993 26,283,993 2.3
50,000,000 Xerox Corp., 5.30% due 2/20/1997 49,860,139 49,860,139 4.4
Total Investments in Short-Term
Securities 312,853,034 312,853,034 27.6
<PAGE>
Total Investments $1,119,381,491 1,130,917,871 99.6
==============
Unrealized Appreciation on Forward Foreign Exchange Contracts** 920,666 0.1
Other Assets Less Liabilities 3,136,246 0.3
-------------- ------
Net Assets $1,134,974,783 100.0%
============== ======
Net Asset Value: Class A--Based on net assets of $16,698,659 and
1,664,209 shares outstanding $ 10.03
==============
Class B--Based on net assets of $804,063,824 and
80,213,196 shares outstanding $ 10.02
==============
Class C--Based on net assets of $144,868,098 and
14,452,277 shares outstanding $ 10.02
==============
Class D--Based on net assets of $169,344,202 and
16,880,870 shares outstanding $ 10.03
==============
<FN>
*Commercial Paper is traded on a discount basis; the interest rates
shown are the discount rates paid at the time of purchase by the
Fund.
**Forward foreign exchange contracts sold as of January 31, 1997
were as follows:
<CAPTION>
Unrealized
Foreign Expiration Appreciation
Currency Sold Date (Depreciation)
<S> <C> <S> <C>
Chf 63,162,443 January 1998 $1,235,799
DM 48,400,000 January 1998 (77,167)
Frf 346,500,000 January 1998 (208,041)
Pound 45,000,000 January 1998 (29,925)
Sterling
Total Unrealized Appreciation on
Forward Foreign Exchange Contracts--Net
(US$ Commitment--$212,930,138) $ 920,666
==========
</TABLE>
<PAGE>
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
Mark B. Goldfus, Secretary
Custodian
Brown Brothers Harriman & Co.
40 Water Street
Boston, Massachusetts 02109
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
