MERRILL LYNCH
GLOBAL VALUE
FUND, INC.
FUND LOGO
Semi-Annual Report
April 30, 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 4/30/97
Percent of
Ten Largest Industries Net Assets
Insurance 12.5%
Food 8.1
Banking 7.7
Pharmaceuticals 6.9
Utilities--Electric, Gas & Water 6.5
Financial Services 6.3
Multi-Industry 5.8
Beverages 5.3
Diversified Operations 4.7
Food & Beverage 3.8
Country of Percent of
Ten Largest Equity Holdings Origin Net Assets
Guinness PLC United Kingdom 5.3%
Nestle S.A. (Registered) Switzerland 5.1
Federal National Mortgage
Association United States 4.3
Zurich Versicherungs Switzerland 4.1
Novartis AG (Registered) Switzerland 3.8
Cadbury Schweppes PLC United Kingdom 3.8
BTR PLC United Kingdom 3.4
UNUM Corporation United States 3.4
Westinghouse Electric Corporation United States 3.4
Amoco Corporation United States 3.3
<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
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 +3.59%, +3.29%, +3.29% and
+3.49%, respectively, during the three-month period ended April 30,
1997. This performance surpassed the +2.33% total return of the
unmanaged Morgan Stanley Capital International World Index for the
same three-month period. Since the Fund was not yet fully invested
during much of the April quarter, we view the Fund's relative
performance as satisfactory. (Fund results 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.)
We continue to move toward a fully invested position. Typically, we
are not comfortable investing into strength; that is, buying
equities during and following a period of price appreciation.
However, during the April quarter we used the proceeds generated by
sales of a number of our smaller holdings, along with cash reserves,
to make commitments to new positions and add to existing holdings
that we believed continued to offer attractive long-term capital
appreciation potential even though their share prices had
appreciated.
<PAGE>
Largest Positions Increased
Each of our largest positions is now greater than 3% of net assets.
Eventually, we plan to have the Fund's five-largest positions at
over 5% of net assets, and for each of the next five-largest
positions to be in excess of 4%. As a result, the Fund's top ten
holdings are likely to comprise over 45% of the portfolio. Although
the Fund will soon reach a fully invested position, we expect that
reaching our desired concentrations in the Fund's largest holdings
will take more time, and will be achieved over the balance of 1997.
(See page 1 of this report to shareholders for the Fund's top ten
holdings.)
At this time, we believe it is appropriate to remind shareholders of
what types of returns we can reasonably expect from equity
investments in the years ahead. From 1926 through year-end 1996, the
compound annual return on US stocks has been approximately 10%.
Taking inflation into account, the compound annual return declines
to approximately 6%--7%. This long-term return has kept share prices
(the cost of purchasing stock) and values (what stocks are actually
worth) in a reasonable relationship to each other.
However, in the past 10 years--15 years, US stocks have returned
over 15% compounded per year, and the rate of inflation has been
very low. This performance implies one of three possibilities.
First, stock prices were very undervalued before they began to
appreciate. Second, stock values have risen considerably and prices
rose to reflect this increased value. The third possibility is that
stock prices have risen more than the increase in the value of the
companies, and therefore at some point in the future, share price
appreciation will become much more subdued so that values and prices
can move into line. In our opinion, the third scenario is the most
plausible.
Although we believe that share prices have appreciated substantially
more than their underlying values, we are not forecasting a bear
market. However, when companies with fairly valued to expensive
share prices appreciate by 20%--40% in a few months--which many US
stocks have done recently--then it appears that share prices are
becoming disconnected from reasonable valuations. In our view,
companies in general, especially in the United States, are not
increasing their economic value at the same rate at which their
stock prices are increasing.
Of course, it is not inevitable that overvalued stocks will soon
decline in price. In our view, in the short term, prices of
individual equities and the stock market in the aggregate may be a
function more of supply/demand relationships than price/value
relationships. Currently, it appears that investors are generally
judging equities to be the preferred asset class for long-term
investors. There have been no protracted bear markets in recent
years to test the premise that equity investments are, at all entry
points, the best alternative for long-term investors. Nevertheless,
we do believe that our shareholders will ultimately benefit from our
investments in stocks that we view as undervalued. That is, we have
invested in companies of reasonably good quality at share prices
that are low enough so that the Fund can participate in the increase
in economic value that we expect they will provide. In addition, the
Fund can benefit from an upward revaluation if investors generally
recognize their undervaluation.
<PAGE>
With this investment approach, we do not expect to invest in
superior companies whose share valuations fully reflect their
outstanding fundamental strengths. All of our largest portfolio
positions represent relatively stable businesses with positive (but
not exceptional) revenue growth prospects. In addition, they all
have the ability and the often new-found willingness to control
costs. Furthermore, our largest investments are selling at
valuations that are in line with or lower than those of their local
stock markets, yet we believe they have better financial
characteristics and growth prospects than the average company in
their local stock markets.
Focus on Guinness PLC
A good example of our investment approach is Guinness PLC, which was
our largest holding as of April 30, 1997. The company is currently
involved in a merger with Grand Metropolitan PLC, another British
company. As a result, Guinness' share price has appreciated since
the end of the April quarter. However, we believe that a review of
our reasons for investing in Guinness will provide shareholders with
some insight into our investment process.
Guinness is in the business of manufacturing and marketing distilled
spirits (Johnnie Walker and Dewar's scotch as well as Gordon's gin)
and beer (Guinness stout). Even before the proposed Grand
Metropolitan merger, Guinness was a large company, with a market
capitalization of approximately $15 billion and net income of
approximately $1 billion. Once a perennial investor favorite, when
we bought Guinness stock it was selling for approximately 13 times
earnings after it had been consistently "de-rated" relative to the
overall UK stock market. Guinness' shares underperformed the UK
stock market by 40% since the beginning of 1992.
In early 1992, Guinness was generally regarded by investors as a
superior company and traded at higher valuation multiples than the
UK stock market. However, investor perception of the company's
prospects deteriorated with the decline in per capita consumption of
distilled spirits in the United States and as earnings stopped
growing. In short, the company's future was not as positive as its
past had been.
However, in our view, the outlook for Guinness was still positive.
Although US consumption trends were declining, greater prosperity in
developing markets suggests that growing demand there will
ultimately lead to a meaningful increase in Guinness' future cash
flow generation. Just as important, we believed that the company was
ready to resolve, and perhaps even reverse, its problems in the
United States. Guinness' first attempt to address the negative
impact of declining distilled liquor consumption in the United
States was to try and increase revenues by lowering prices and
thereby increasing sales volume. However, we believe that it is more
productive for a "branded goods" company--especially one like
Guinness that sells premium products--to reinvest its cash flow in
brand development and not cut prices. Based on Guinness' recent
actions, it appeared that its management was finally agreeing with
this point of view and US consumption trends were ceasing their
decline. In addition, the company's Board of Directors seemed to be
increasingly focused on returning value to shareholders through
either dividend increases or stock repurchases.
<PAGE>
All of these factors led us to believe that, at our purchase price,
an investment in Guinness had little downside risk along with
reasonably strong upside potential. After the announced merger with
Grand Metropolitan, Guinness' share price has appreciated
substantially. Now, our task is to analyze the prospects for the
combined company to determine whether continued investment is
warranted. Nonetheless, Guinness is illustrative of the types of
companies we hope to invest in. Typically, we would expect to hold
such investments for at least three years, unless their prices or
their values change appreciably in the interim.
Foreign Exchange
Hedging Strategy
There are basically two extreme points of view regarding foreign
currency risk in global equity portfolios. The first point of view
maintains that it is unnecessary to hedge foreign currency risk,
since over the long run US dollar-based equity investors neither win
nor lose based on currency exposure, and that there are costs
associated with hedging. The second point of view maintains that one
should hedge all investments back into US dollars, and is followed
by those US-based investors who find attractive investments in other
markets but wish to avoid all foreign currency risk as well as
forego the potential for foreign currency gains.
Our view of foreign currency hedging follows neither extreme, and is
a more flexible and opportunistic approach. At present, there are
some currency risks we do not wish to incur, such as those
associated with most European currencies. In these cases, we have
hedged (sold forward) the portfolio's currency exposures back into
US dollars. In other cases, such as the British pound and Swiss
franc, our benchmark-weighted currency exposure implies a neutral
outlook for these currencies relative to the US dollar. We are
following yet another strategy for the portfolio's Japanese yen
exposure, which we have partially hedged back into US dollars.
We believe that this flexibility will benefit the Fund over the
longer term. There will be times in the future when we wish to
overweight a particular stock market along with its local currency
when we believe it will appreciate relative to the US dollar. At
these times, we will own stocks denominated in foreign currencies
and keep our currency exposure completely unhedged.
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,
<PAGE>
(Arthur Zeikel)
Arthur Zeikel
President
(Stephen I. Silverman)
Stephen I. Silverman
Vice President and Portfolio Manager
June 5, 1997
PERFORMANCE DATA
About Fund
Performance
Investors are able to purchase shares of the Fund through the
Merrill Lynch Select PricingSM 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.
<PAGE>
* 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++
4/30/97 1/31/97 11/01/96++ % Change % Change
<S> <C> <C> <C> <C> <C>
ML Global Value Fund, Inc. Class A Shares $10.39 $10.03 $10.00 +3.59% +4.43%(1)
ML Global Value Fund, Inc. Class B Shares 10.35 10.02 10.00 +3.29 +3.87(2)
ML Global Value Fund, Inc. Class C Shares 10.35 10.02 10.00 +3.29 +3.87(2)
ML Global Value Fund, Inc. Class D Shares 10.38 10.03 10.00 +3.49 +4.29(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 3/31/97 +2.42% -2.95%
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
<PAGE>
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Inception (11/01/96) through 3/31/97 +1.96% -2.04%
[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 3/31/97 +1.96% +0.96%
[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 3/31/97 +2.28% -3.09%
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
<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 Diversified 311,700 Kansas City Southern Industries, Inc. $ 15,009,597 $ 16,052,550 1.3%
States Operations 2,445,000 Westinghouse Electric Corporation 43,930,463 41,565,000 3.4
-------------- -------------- ------
58,940,060 57,617,550 4.7
<PAGE>
Financial Services 1,285,000 Federal National Mortgage Association 50,040,971 52,845,625 4.3
400,000 Morgan Stanley Group, Inc. 23,009,720 25,250,000 2.0
-------------- -------------- ------
73,050,691 78,095,625 6.3
Food Distribution 155,000 Super Valu, Inc. 4,693,026 4,746,875 0.4
Food Merchandising 143,700 Great Atlantic & Pacific Tea Co., Inc. 4,756,797 3,574,538 0.3
Insurance 147,400 Aetna, Inc. 10,351,161 13,431,825 1.1
690,000 Horace Mann Educators Corp. 25,535,781 32,343,750 2.6
552,200 UNUM Corporation 36,260,621 42,519,400 3.4
-------------- -------------- ------
72,147,563 88,294,975 7.1
Oil--Integrated 490,000 Amoco Corporation 43,495,006 40,976,250 3.3
Pharmaceuticals 1,108,000 Pharmacia & Upjohn, Inc. 43,767,109 32,824,500 2.6
Printing & 150,000 Donnelley (R.R.) & Sons Company 5,008,152 5,137,500 0.4
Publishing
Restaurants 553,000 Darden Restaurants, Inc. 4,749,034 4,285,750 0.3
Retail 87,000 Mercantile Stores Company, Inc. 4,425,617 4,284,750 0.3
Retail Apparel 1,326,000 Intimate Brands, Inc. 21,626,588 24,696,750 2.0
Total Investments in North America 336,659,643 344,535,063 27.7
PACIFIC
BASIN/ASIA
Australia Leisure 9,492,186 Village Roadshow Limited (Preferred)
(Class A) 25,908,442 24,108,966 1.9
Property 1,147,500 Lend Lease Corporation 21,243,272 22,006,767 1.8
Total Investments in Australia 47,151,714 46,115,733 3.7
Japan Automobile 1,184,000 Suzuki Motor Corporation 10,878,022 12,598,723 1.0
Electric 532,400 Chudenko Corporation 13,246,884 13,596,406 1.1
Construction 795,000 Kinden Corporation 9,753,962 8,960,747 0.7
-------------- -------------- ------
23,000,846 22,557,153 1.8
<PAGE>
Electronics 1,773,000 Hitachi, Ltd. 16,012,995 16,071,175 1.3
1,190,000 Matsushita Electric Industrial Co. 18,615,583 19,040,750 1.6
-------------- -------------- ------
34,628,578 35,111,925 2.9
Insurance 1,829,000 Dai-Tokyo Fire & Marine Insurance
Co., Ltd. 7,878,152 8,577,717 0.7
735,000 Koa Fire and Marine Insurance Co., Ltd. 3,302,697 3,447,032 0.3
746,000 Nichido Fire & Marine Insurance Co.,
Ltd. 3,861,215 4,016,064 0.3
-------------- -------------- ------
15,042,064 16,040,813 1.3
Office Equipment 619,000 Canon, Inc. 13,246,800 14,685,820 1.2
Photography 560,000 Fuji Photo Film Co., Ltd. 19,628,032 21,407,740 1.7
Total Investments in Japan 116,424,342 122,402,174 9.9
Total Investments in the Pacific
Basin/Asia 163,576,056 168,517,907 13.6
SOUTHEAST
ASIA
Hong Kong Banking 862,800 HSBC Holdings PLC 17,752,154 21,831,758 1.8
Real Estate 531,000 Cheung Kong (Holdings) Limited 4,718,722 4,661,503 0.4
Total Investments in Southeast Asia 22,470,876 26,493,261 2.2
WESTERN
EUROPE
France Banking 240,000 Societe Generale de France S.A. 25,465,575 26,892,830 2.1
Food 252,000 Groupe Danone S.A. 35,885,017 36,700,077 3.0
Total Investments in France 61,350,592 63,592,907 5.1
Germany Airlines 1,977,200 Lufthansa AG 27,971,808 27,572,110 2.2
Banking 469,000 Commerzbank AG 11,345,985 12,579,426 1.0
Pharmaceuticals 149,000 Merck KGaA 5,639,074 5,910,786 0.5
<PAGE>
Total Investments in Germany 44,956,867 46,062,322 3.7
Ireland Banking 2,400,000 Allied Irish Banks PLC 17,767,104 17,134,629 1.4
Total Investments in Ireland 17,767,104 17,134,629 1.4
Netherlands Telecommunications 730,000 Koninklijke PTT Nederland N.V. 27,516,044 25,925,584 2.1
Total Investments in the Netherlands 27,516,044 25,925,584 2.1
Switzerland Food 52,000 Nestle S.A. (Registered) 55,502,182 63,190,767 5.1
Insurance 155,000 Zurich Versicherungs 44,779,878 50,930,075 4.1
Pharmaceuticals 36,000 Novartis AG (Registered) 42,062,908 47,462,322 3.8
Total Investments in Switzerland 142,344,968 161,583,164 13.0
United Banking 3,000,000 Bank of Scotland PLC 16,293,049 17,977,680 1.4
Kingdom
Beverages 7,950,000 Guinness PLC 58,242,074 65,845,080 5.3
Food & Beverage 5,600,000 Cadbury Schweppes PLC 49,493,081 46,563,328 3.8
Multi-Industry 10,400,000 BTR PLC 42,871,374 42,561,792 3.4
6,800,000 Tomkins PLC 31,428,861 29,374,912 2.4
-------------- -------------- ------
74,300,235 71,936,704 5.8
Utilities-- 2,600,000 National Grid Group PLC 8,616,526 9,373,728 0.8
Electric, 2,305,000 National Power PLC 16,536,414 19,914,462 1.6
Gas & Water 1,450,000 PowerGen PLC 13,071,490 15,212,008 1.2
3,245,000 United Utilities PLC 32,322,020 35,624,389 2.9
-------------- -------------- ------
70,546,450 80,124,587 6.5
Total Investments in the United
Kingdom 268,874,889 282,447,379 22.8
Total Investments in Western Europe 562,810,464 596,745,985 48.1
</TABLE>
<PAGE>
<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 Paper* $18,500,000 American Brands, Inc., 5.50% due
5/02/1997 $ 18,497,174 $ 18,497,174 1.5%
57,546,000 CIT Group Holdings, Inc., 5.62% due
5/01/1997 57,546,000 57,546,000 4.6
Total Investments in Short-Term
Securities 76,043,174 76,043,174 6.1
Total Investments $1,161,560,213 1,212,335,390 97.7
==============
Unrealized Appreciation on Forward Foreign Exchange Contracts** 10,597,365 0.9
Other Assets Less Liabilities 17,838,429 1.4
-------------- ------
Net Assets $1,240,771,184 100.0%
============== ======
<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 as of April 30, 1997 were as
follows:
<CAPTION>
Unrealized
Foreign Appreciation
Currency Expiration (Depreciation)
Purchased Date (Note 1b)
<S> <C> <S> <C>
Chf 3,341,304 January 1998 $ 8,594
DM 12,599,871 January 1998 (273,650)
Frf 5,550,897 January 1998 (34,153)
YEN 555,003,072 January 1998 (32,819)
-----------
Total (US$ Commitment--$15,599,611) (332,028)
-----------
<CAPTION>
Foreign
Currency Sold
<S> <C> <S> <C>
Chf 162,511,950 January 1998 $ 4,933,670
DM 88,205,793 January 1998 2,190,344
Frf 371,183,000 January 1998 3,596,309
Pound
Sterling 120,339,112 January 1998 (2,054,824)
Nlg 52,295,661 January 1998 933,640
YEN 4,370,144,388 January 1998 1,330,254
<PAGE> -----------
Total (US$ Commitment--$498,974,391) 10,929,393
-----------
Total Unrealized Appreciation on
Forward Foreign Exchange Contracts--Net $10,597,365
===========
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
As of April 30, 1997
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$1,161,560,213) (Note 1a) $1,212,335,390
Unrealized appreciation on forward foreign exchange
contracts (Note 1c) 10,597,365
Cash 145,801
Foreign cash (Note 1b) 1,952,201
Receivables:
Securities sold $ 19,484,599
Dividends 5,859,045
Capital shares sold 2,321,532 27,665,176
--------------
Deferred organization expenses (Note 1g) 110,600
Prepaid registration fees and other assets (Note 1g) 270,569
--------------
Total assets 1,253,077,102
--------------
Liabilities: Payables:
Securities purchased 8,537,528
Capital shares redeemed 1,190,803
Distributor (Note 2) 866,426
Investment adviser (Note 2) 744,927 11,339,684
--------------
Accrued expenses and other liabilities 966,234
--------------
Total liabilities 12,305,918
--------------
Net Assets: Net assets $1,240,771,184
==============
<PAGE>
Net Assets Class A Shares of Common Stock, $0.10 par value, 100,000,000
Consist of: shares authorized $ 202,625
Class B Shares of Common Stock, $0.10 par value, 300,000,000
shares authorized 8,486,281
Class C Shares of Common Stock, $0.10 par value, 100,000,000
shares authorized 1,530,340
Class D Shares of Common Stock, $0.10 par value, 100,000,000
shares authorized 1,763,496
Paid-in capital in excess of par 1,189,059,143
Undistributed investment income--net 5,981,675
Accumulated realized capital losses on investments and foreign
currency transactions--net (27,609,861)
Unrealized appreciation on investments and foreign currency
transactions--net 61,357,485
--------------
Net assets $1,240,771,184
==============
Net Asset Class A--Based on net assets of $21,044,436 and 2,026,251
Value: shares outstanding $ 10.39
==============
Class B--Based on net assets of $878,334,520 and 84,862,809
shares outstanding $ 10.35
==============
Class C--Based on net assets of $158,386,370 and 15,303,401
shares outstanding $ 10.35
==============
Class D--Based on net assets of $183,005,858 and 17,634,962
shares outstanding $ 10.38
==============
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
For the Period November 1, 1996++ to April 30, 1997
<S> <S> <C> <C>
Investment Dividends (net of $1,207,121 foreign withholding tax) $ 11,865,701
Income Interest and discount earned 8,277,791
(Notes 1e & 1f): ------------
Total income 20,143,492
------------
<PAGE>
Expenses: Investment advisory fees (Note 2) 4,103,256
Account maintenance and distribution fees--Class B (Note 2) 3,875,618
Account maintenance and distribution fees--Class C (Note 2) 697,485
Transfer agent fees--Class B (Note 2) 565,411
Registration fees (Note 1g) 237,951
Account maintenance fees--Class D (Note 2) 203,452
Custodian fees 186,684
Transfer agent fees--Class D (Note 2) 102,812
Transfer agent fees--Class C (Note 2) 102,773
Accounting services (Note 2) 100,188
Printing and shareholder reports 69,997
Professional fees 21,374
Amortization of organization expenses--net (Note 1g) 21,047
Directors' fees and expenses 20,361
Transfer agent fees--Class A (Note 2) 10,264
Pricing fees 1,631
Other 12,857
------------
Total expenses 10,333,161
------------
Investment income--net 9,810,331
------------
Realized & Realized gain (loss) from:
Unrealized Gain Investments--net $(28,057,554)
(Loss) on Foreign currency transactions--net 447,693 (27,609,861)
Investments & ------------
Foreign Currency Unrealized appreciation on:
Transactions--Net Investments--net 50,775,177
(Notes 1b, Foreign currency transactions--net 10,582,308 61,357,485
1c, 1f & 3): ------------ ------------
Net realized and unrealized gain on investments and
foreign currency transactions 33,747,624
------------
Net Increase in Net Assets Resulting from Operations $ 43,557,955
============
<FN>
++Commencement of Operations.
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<CAPTION>
For the Period
November 1, 1996++
Increase (Decrease) in Net Assets: to April 30, 1997
<S> <S> <C>
Operations: Investment income--net $ 9,810,331
Realized loss on investments and foreign currency transactions--net (27,609,861)
Unrealized appreciation on investments and foreign currency transactions--net 61,357,485
--------------
Net increase in net assets resulting from operations 43,557,955
--------------
<PAGE>
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 1,200,941,885
Transactions --------------
(Note 4):
Net Assets: Total increase in net assets 1,240,671,184
Beginning of period 100,000
--------------
End of period* $1,240,771,184
==============
<FN>
*Undistributed investment income--net $ 5,981,675
==============
++Commencement of Operations.
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
The following per share data and ratios have been derived
from information provided in the financial statements. For the Period
November 1, 1996++ to April 30, 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 .13 .09 .09 .12
Realized and unrealized gain on investments and
foreign currency transactions--net .31 .30 .30 .31
-------- -------- -------- --------
Total from investment operations .44 .39 .39 .43
-------- -------- -------- --------
Less dividends from investment income--net (.05) (.04) (.04) (.05)
-------- -------- -------- --------
Net asset value, end of period $ 10.39 $ 10.35 $ 10.35 $ 10.38
======== ======== ======== ========
<PAGE>
Total Investment Based on net asset value per share 4.43%+++ 3.87%+++ 3.87%+++ 4.29%+++
Return:** ======== ======== ======== ========
Ratios to Average Expenses .99%* 2.02%* 2.02%* 1.25%*
Net Assets: ======== ======== ======== ========
Investment income--net 2.69%* 1.66%* 1.66%* 2.43%*
======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $ 21,044 $878,335 $158,386 $183,006
Data: ======== ======== ======== ========
Portfolio turnover 30.42% 30.42% 30.42% 30.42%
======== ======== ======== ========
Average commission rate paid++++ $ .0321 $ .0321 $ .0321 $ .0321
======== ======== ======== ========
<FN>
*Annualized.
**Total investment returns exclude the effects
of sales loads.
++Commencement of Operations.
++++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.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch Global Value, 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 1,000 capital
shares of the Fund to Merrill Lynch Asset Management, L.P. ("MLAM")
for $100,000. These unaudited financial statements reflect all
adjustments which are, in the opinion of management, necessary to a
fair statement of the results for the interim period presented. All
such adjustments are of a normal recurring nature. The Fund offers
four classes of shares under the Merrill Lynch Select PricingSM
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.
<PAGE>
(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 available
are valued at their fair value as determined in good faith by or
under the direction of the Fund's Board of Directors.
(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, debt 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).
<PAGE>
Written and purchased options are non-income producing investments.
* Forward foreign exchange contracts--The Fund is authorized to
enter into forward foreign exchange contracts as a hedge against
either specific transactions or portfolio positions. Such contracts
are not entered on the Fund's records. However, the effect on
operations is recorded from the date the Fund enters into such
contracts. Premium or discount is amortized over the life of the
contracts.
* Foreign currency options and futures--The Fund may also purchase
or sell listed or over-the-counter foreign currency options, foreign
currency futures and related options on foreign currency futures as
a short or long hedge against possible variations in foreign
exchange rates. Such transactions may be effected with respect to
hedges on non-US dollar denominated securities owned by the Fund,
sold by the Fund but not yet delivered, or committed or anticipated
to be purchased by the Fund.
* Financial futures contracts--The Fund may purchase or sell
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 of 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 shareholders. Therefore, no Federal income tax
provision is required. Under the applicable foreign tax law, a with-
holding tax may be imposed on interest, dividends, and capital gains
at various rates.
<PAGE>
(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 date. 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.
NOTES TO FINANCIAL STATEMENTS (concluded)
(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.
(h) Dividends and distributions--Dividends and distributions paid by
the Fund are recorded on the ex-dividend dates.
2. Investment Advisory Agreement and Transactions
with Affiliates:
The Fund has entered into an Investment Advisory Agreement with
MLAM. The general partner of MLAM is Princeton Services, Inc.
("PSI"), an indirect wholly-owned subsidiary of Merrill Lynch & Co.,
Inc. ("ML & Co."), which is the limited partner. The Fund has also
entered into a Distribution Agreement and Distribution Plans with
Merrill Lynch Funds Distributor, Inc. ("MLFD" or "Distributor"), a
wholly-owned subsidiary of Merrill Lynch Group, Inc.
MLAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee of 0.75%, on an annual basis,
of the average daily value of the Fund's net assets.
Pursuant to the distribution plans (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% --
<PAGE>
Pursuant to a sub-agreement with the Distributor, Merrill Lynch,
Pierce, Fenner & Smith Inc. ("MLPF&S"), a subsidiary of ML & Co.,
also provides account maintenance and distribution services to the
Fund. The ongoing account maintenance fee compensates the
Distributor and MLPF&S for providing account maintenance services to
Class B, Class C and Class D shareholders. The ongoing distribution
fee compensates the Distributor and MLPF&S for providing shareholder
and distribution-related services to Class B and Class C
shareholders.
For the period November 1, 1996 (commencement of operations) to
April 30, 1997, MLFD earned underwriting discounts and direct
commissions and MLPF&S earned dealer concessions on sales of the
Fund's Class A and Class D Shares as follows:
MLFD MLPF&S
Class A $ 24 $ 515
Class D $58,405 $832,928
For the period November 1, 1996 to April 30, 1997, MLPF&S received
contingent deferred sales charges of $417,342 and $59,140 relating
to transactions in Class B and Class C shares, respectively.
In addition, MLPF&S received $198,171 in commissions on the
execution of portfolio security transactions for the Fund for the
period November 1, 1996 to April 30, 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 April 30, 1997 were
$1,346,681,967 and $233,107,569, respectively.
Net realized and unrealized gains (losses) as of April 30, 1997 were
as follows:
Realized Unrealized
Gains (Losses) Gains (Losses)
Long-term investments $(28,057,359) $ 50,775,177
Short-term investments (195) --
Forward foreign exchange contracts -- 10,597,365
Foreign currency transactions 447,693 (15,057)
------------ ------------
Total $(27,609,861) $ 61,357,485
============ ============
<PAGE>
As of April 30, 1997, net unrealized appreciation for Federal income
tax purposes aggregated $50,775,177, of which $78,954,244 related to
appreciated securities and $28,179,067 related to depreciated
securities. The aggregate cost of investments at April 30, 1997 for
Federal income tax purposes was $1,161,560,213.
4. Capital Share Transactions:
Net increase in net assets derived from capital share transactions
was $1,200,941,885 for the period November 1, 1996 to April 30,
1997.
Transactions in capital shares for each class were as follows:
Class A Shares for the Period Dollar
November 1, 1996++ to April 30, 1997 Shares Amount
Shares sold 2,265,877 $ 22,755,773
Shares issued to shareholders
in reinvestment of dividends 6,207 62,009
------------- -------------
Total issued 2,272,084 22,817,782
Shares redeemed (248,333) (2,512,328)
------------- -------------
Net increase 2,023,751 $ 20,305,454
============= =============
[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 April 30, 1997 Shares Amount
Shares sold 88,948,807 $ 891,890,725
Shares issued to shareholders
in reinvestment of dividends 211,285 2,110,732
------------- -------------
Total issued 89,160,092 894,001,457
Automatic conversion of shares (84,168) (853,549)
Shares redeemed (4,215,615) (42,571,393)
------------- -------------
Net increase 84,860,309 $ 850,576,515
============= =============
[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 April 30, 1997 Shares Amount
Shares sold 16,483,808 $ 165,299,019
Shares issued to shareholders
in reinvestment of dividends 39,138 390,984
------------- -------------
Total issued 16,522,946 165,690,003
Shares redeemed (1,222,045) (12,347,702)
------------- -------------
Net increase 15,300,901 $ 153,342,301
============= =============
[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 April 30, 1997 Shares Amount
Shares sold 19,146,313 $ 192,071,784
Automatic conversion of shares 84,101 853,549
Shares issued to shareholders
in reinvestment of dividends 62,231 621,693
------------- -------------
Total issued 19,292,645 193,547,026
Shares redeemed (1,660,183) (16,829,411)
------------- -------------
Net increase 17,632,462 $ 176,717,615
============= =============
[FN]
++Prior to November 1, 1996 (commencement of operations), the Fund
issued 2,500 shares to MLAM for $25,000.
PORTFOLIO CHANGES
For the Quarter Ended April 30, 1997
Additions
<PAGE>
Allied Irish Banks PLC
Amoco Corporation
Bank of Scotland PLC
Cadbury Schweppes PLC
Canon, Inc.
*Ciba Speciality Chemicals AG (Rights)
Fuji Photo Film Co., Ltd.
Koninklijke PTT Nederland N.V.
Lend Lease Corporation
Matsushita Electric Industrial Co.
Novartis AG (Registered)
Suzuki Motor Corporation
Tomkins PLC
Westinghouse Electric Corporation
Deletions
Aoyama Trading Co., Ltd.
Banta Corporation
Boise Cascade Corporation
Bowater Incorporated
Champion International Corporation
*Ciba Speciality Chemicals AG (Rights)
Compuserve Corporation
Daito Trust Construction Co., Ltd.
Dow Jones & Company, Inc.
Elf Aquitaine S.A.
Ford Motor Company
Fujisawa Pharmaceutical Company Limited
General Motors Corporation
Gunze Limited
Helmerich & Payne, Inc.
Henderson Land Development Company Ltd.
Imation Corporation
Integrated Device Technology, Inc.
Kamigumi Co., Ltd.
Kokusai Denshin Denwa (KDD)
Kyushu Electric Power Company Inc.
MEMC Electronic Materials, Inc.
Marubeni Corporation
Niagara Mohawk Power Corporation
Nippon Meat Packers, Inc.
Nippon Oil Co., Ltd.
Nisshin Steel Co., Ltd.
Northeast Utilities System
<PAGE>
Ogden Corporation
Severn Trent PLC
Shinagawa Fuel Co., Ltd.
Sterling Software, Inc.
Stone Container Corporation
Tohoku Electric Power Company, Inc.
Tokyo Broadcasting System, Inc.
Volkswagen AG
Weatherford Enterra, Inc.
Wheelabrator Technologies Inc.
Yamaichi Securities Co., Ltd.
[FN]
*Added and deleted in the same quarter.
