MERRILL LYNCH
GLOBAL VALUE
FUND, INC.
FUND LOGO
Quarterly Report
March 31, 1998
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 3/31/98
Percent of
Ten Largest Industries Net Assets
Financial Services 11.5%
Utilities--Electric & Gas 10.4
Beverages & Tobacco 9.9
Food & Household Products 8.8
Insurance 8.3
Telecommunications 7.7
Health & Personal Care 6.3
Electronic Components, Instruments 5.3
Transportation--Road & Rail 3.2
Broadcasting & Publishing 3.1
Country of Percent of
Ten Largest Equity Holdings Origin Net Assets
Cadbury Schweppes PLC United Kingdom 6.1%
Nestle S.A. (Registered) Switzerland 5.1
ING Groep N.V. Netherlands 4.4
WorldCom, Inc. United States 4.1
Federal National Mortgage
Association United States 4.1
General Re Corporation United States 3.9
Diageo PLC United Kingdom 3.8
Lattice Semiconductor
Corporation United States 3.8
Canadian National Railway
Company Canada 3.2
Groupe Danone S.A. France 3.1
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
Stephen I. Silverman, Senior Vice President
and Portfolio Manager
Donald C. Burke, Vice President
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
Merrill Lynch Global Value Fund, Inc., March 31, 1998
DEAR SHAREHOLDER
Merrill Lynch Global Value Fund, Inc.'s Class A, Class B, Class C
and Class D Shares had total returns of +18.73%, +18.38%, +18.38%
and +18.58% for the quarter ended March 31, 1998, outperforming the
+14.32% return for the unmanaged Morgan Stanley Capital
International (MSCI) World Index. (Fund results 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 page 4 of this report to shareholders.)
Strong Relative Performance
Continues
As we discussed in our last two reports to shareholders, we continue
to be surprised that the Fund is providing such strong relative
performance in a buoyant stock market environment. We had expected
the Fund to perform more in line with the MSCI Index during periods
of sharply rising share prices, and to substantially outperform the
Index only during weak stock markets. Furthermore, even though our
often-expressed opinion is that investors should moderate their
expectations for the future, these admonitions may appear ill-
advised in light of the strong stock market returns that we continue
to experience. Nevertheless, we believe it is important to once
again remind shareholders that over time, stock prices should
largely reflect the value of companies, and that companies do not
increase their value at a rate of 20% per year. Based on historical
precedent, the +18.73% return of the Fund's Class A Shares during
the March quarter is even more anomalous, in our view. Although we
still do not believe that there is a bear market looming ahead of
us, we must recognize that as stock prices go higher, valuations are
stretched further (that is, stock prices are at a premium relative
to the value of the businesses that these prices represent.)
We also must highlight that the Fund may not outperform the MSCI
Index to such a substantial degree in the future. We consider
outperforming the Index by 200 basis points (2.00%) per year over a
few years' time to be very good performance. We believe that over
the longer term it is not possible for the Fund to continue to
outperform the Index by 441 basis points (Class A Shares) as it did
in the March quarter. Outperforming the Index by 400 basis points
for a full year over the long term would be extraordinarily good
performance.
However, finding new investments is becoming increasingly difficult
for value-oriented investors like us who are trying to buy stocks
that we believe are worth more than their current prices. Many of
our largest positions - such as Cadbury Schweppes PLC, Nestle S.A.,
Federal National Mortgage Association and ING Groep N.V.- are not
yet at valuation levels that would lead us to sell them. However,
portfolio turnover has continued to be higher than we anticipated,
since stocks that we expected would provide 15% annual returns
achieved twice this level in only three months.
Focus on New Positions
Despite sharply rising stock prices, we established some new
positions during the March quarter. These included Columbia Energy
Group, K N Energy, Inc., General Re Corporation, Unicom Corporation,
Frontier Corporation, WorldCom, Inc. and Berliner Kraft-und Licht
(Bewag) AG. A few of these investments may prove to be core long-
term holdings, while others offer sufficiently high dividend yields
which, together with the anticipated capital appreciation, suggests
that they have attractive total return potential. We would like to
highlight three of these holdings in this letter to shareholders:
Columbia Energy Group, K N Energy, Inc. and WorldCom, Inc.
Columbia Energy Group and K N Energy, Inc. are both integrated gas
pipelines, which have both regulated and non-regulated components to
their earnings. The regulated component produces modest but stable
returns on capital, and generates large amounts of cash flow to
reinvest in the unregulated businesses. The unregulated component
provides much of the projected earnings growth of 10%--15% per year
for these companies. Despite these fundamental characteristics,
shares of both companies traded for what appeared to us as
unreasonable discounts to the overall stock market. Both stocks
illustrate our focus on companies that are selling today for less
than they are arguably worth and have reasonably robust growth
prospects. We believe that both companies should be able to meet
10%--15% earnings forecasts, with limited downside risk.
WorldCom, Inc. has an unusual set of assets within the
telecommunications industry. It is the only fully integrated,
facilities-based provider of voice, data and internet protocol (IP)
services in the United States, and has begun exporting its platform
to other coun-tries. The pending merger with MCI Corporation
complements WorldCom's network-focused strategy. MCI brings to the
new company a 45,000 mile domestic long-distance fiber optic
network, comparable in scale to that of AT&T Corp. WorldCom
contributes local networks in over 100 domestic and 30 international
markets, plus extensive IP networks in both the United States and
Europe. WorldCom and MCI have equity interests in all the major
undersea cables crossing the Atlantic, and WorldCom owns a pan-
European fiber optic network connecting all the important European
business centers. In addition, WorldCom just became the first non-
Japanese carrier licensed to build and operate local networks in
Japan. Since just six countries generate 70% of the world's telecom
revenues, network ownership in these markets is critical for any
company aspiring to become a global telecommunications provider. We
believe that the new company will be well-positioned to participate
in the fastest-growing, most profitable segments of the
telecommunications sector today. WorldCom, joined with MCI, has the
potential to increase earnings at a 28% compound annual growth rate
over the next four years. Unwarranted concerns about the combination
gave us the rare opportunity to purchase shares of this fast-
growing, large-capitalization company at less than a market multiple
of earnings.
In Conclusion
Merrill Lynch Global Value Fund, Inc.--like many other equity mutual
funds--is managed by a team of investment professionals with
different areas of expertise. Each of the Fund's team members has
made significant contributions to its investment success during its
first seventeen months of operations. We expect that their efforts
will make even more valuable contributions to our investment
performance over time, and we thank you for your continued
investment.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Stephen I. Silverman)
Stephen I. Silverman
Senior Vice President and
Portfolio Manager
May 14, 1998
EQUITY PORTFOLIO CHANGES
For the Quarter Ended March 31, 1998
Additions
Berliner Kraft-und Licht (Bewag) AG
Columbia Energy Group
Frontier Corporation
General Re Corporation
K N Energy, Inc.
Unicom Corporation
WorldCom, Inc.
Deletions
Assicurazioni Generali S.p.A.
Central & South West Corporation
Chubb Corporation
Istituto Mobiliare Italiano S.p.A. (Ordinary)
Mitsubishi Heavy Industries, Ltd.
Ralston-Ralston Purina Group
Teleport Communications Group Inc.
(Class A)
Teligent, Inc. (Class A)
Wrigley (Wm.) Jr. Company (Class B)
Zurich Insurance Group
Merrill Lynch Global Value Fund, Inc., March 31, 1998
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.
<TABLE>
Recent
Performance
Results*
<CAPTION>
Since
3 Month 12 Month Inception
Total Return Total Return Total Return
<S> <C> <C> <C>
ML Global Value Fund, Inc. Class A Shares +18.73% +46.38% +49.93%
ML Global Value Fund, Inc. Class B Shares +18.38 +44.94 +47.78
ML Global Value Fund, Inc. Class C Shares +18.38 +44.94 +47.78
ML Global Value Fund, Inc. Class D Shares +18.58 +45.98 +49.31
<FN>
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included. Total
investment returns are based on changes in net asset values for the
periods shown, and assume reinvestment of all dividends and capital
gains distributions at net asset value on the ex-dividend date. The
Fund commenced operations on 11/01/96.
</TABLE>
Average Annual
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 3/31/98 +46.38% +38.70%
Inception (11/01/96) through 3/31/98 +33.25 +28.25
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 3/31/98 +44.94% +40.94%
Inception (11/01/96) through 3/31/98 +31.89 +29.98
[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*
Year Ended 3/31/98 +44.94% +43.94%
Inception (11/01/96) through 3/31/98 +31.89 +31.89
[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*
Year Ended 3/31/98 +45.98% +38.31%
Inception (11/01/96) through 3/31/98 +32.86 +27.87
[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>
Canada Transportation-- 1,150,000 Canadian National Railway
Road & Rail Company $ 54,035,092 $ 73,600,000 3.2%
Total Investments in Canada 54,035,092 73,600,000 3.2
United Broadcasting 2,074,500 CBS Corporation 36,379,140 70,403,344 3.1
States & Publishing
Electronic 1,695,700 Lattice Semiconductor Corporation 88,125,999 87,116,588 3.8
Components,
Instruments
Financial 1,485,000 Federal National Mortgage
Services Association 58,560,791 93,926,250 4.1
510,000 Morgan (J.P.) & Co., Inc. 56,314,142 68,499,375 3.0
-------------- -------------- ------
114,874,933 162,425,625 7.1
Health & Personal 1,144,000 Baxter International, Inc. 61,537,393 63,063,000 2.7
Care
Insurance 409,800 General Re Corporation 86,926,790 90,412,125 3.9
1,380,000 Horace Mann Educators Corp. 25,535,781 48,472,500 2.1
-------------- -------------- ------
112,462,571 138,884,625 6.0
Merchandising 2,414,000 American Stores Company 60,081,759 62,764,000 2.7
Oil & Gas 789,600 K N Energy, Inc. 44,059,896 46,635,750 2.0
Producers
Telecommunications 740,100 Frontier Corporation 24,266,535 24,099,506 1.0
2,186,000 WorldCom, Inc. 77,895,778 93,998,000 4.1
-------------- -------------- ------
102,162,313 118,097,506 5.1
Utilities-- 722,300 Columbia Energy Group 55,612,896 56,158,825 2.4
Electric & Gas 2,202,100 Houston Industries Inc. 49,617,722 63,310,375 2.8
1,830,000 Unicom Corporation 57,049,442 64,050,000 2.8
-------------- -------------- ------
162,280,060 183,519,200 8.0
Total Investments in the
United States 781,964,064 932,909,638 40.5
Total Investments in North
America 835,999,156 1,006,509,638 43.7
PACIFIC
BASIN/ASIA
Australia Leisure & 11,705,286 Village Roadshow Limited (Preferred)
Tourism (Class A) 30,548,199 24,165,610 1.1
Real Estate 1,702,858 Lend Lease Corporation Ltd. 31,963,575 39,662,696 1.7
Total Investments in Australia 62,511,774 63,828,306 2.8
Japan Appliances & 1,690,000 Matsushita Electric Industrial
Household Co., Ltd. 28,894,269 27,176,135 1.2
Durables 400,000 Sony Corporation 36,894,499 33,964,533 1.5
-------------- -------------- ------
65,788,768 61,140,668 2.7
</TABLE>
Merrill Lynch Global Value Fund, Inc., March 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
PACIFIC
BASIN/ASIA Shares Percent of
(concluded) Industries Held Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Japan Automobiles 101,000 Suzuki Motor Corporation $ 862,124 $ 948,677 0.0%
(concluded)
Construction 1,000,400 Chudenko Corporation 24,508,187 25,258,070 1.1
& Housing 795,000 Kinden Corporation 9,753,962 10,334,761 0.5
-------------- -------------- ------
34,262,149 35,592,831 1.6
Data Processing & 2,166,000 Canon Inc. 51,626,097 48,990,532 2.1
Reproduction
Electronic 1,276,000 Murata Manufacturing Company, Ltd. 39,076,429 35,284,641 1.5
Components,
Instruments
Health & Personal 1,097,000 Sankyo Company, Limited 26,165,419 30,499,699 1.3
Care
Insurance 3,203,000 Dai-Tokyo Fire & Marine Insurance
Co., Ltd. 12,985,299 12,611,752 0.5
784,000 Nichido Fire & Marine Insurance
Co., Ltd. 4,117,378 4,241,659 0.2
4,411,000 Sumitomo Marine & Fire Insurance
Co., Ltd. 30,544,736 27,311,873 1.2
850,000 Tokio Marine & Fire Insurance
Co., Ltd. 10,618,405 9,516,832 0.4
-------------- -------------- ------
58,265,818 53,682,116 2.3
Total Investments in Japan 276,046,804 266,139,164 11.5
Total Investments in the
Pacific Basin/Asia 338,558,578 329,967,470 14.3
WESTERN
EUROPE
Denmark Telecommunications 531,700 Tele Danmark A/S 33,945,434 48,334,990 2.1
Total Investments in Denmark 33,945,434 48,334,990 2.1
France Food & Household 302,000 Groupe Danone S.A. 43,350,952 73,028,691 3.1
Products 275,000 Groupe Danone S.A. (ADR)* 8,525,000 13,234,375 0.6
Total Investments in France 51,875,952 86,263,066 3.7
Germany Transportation 3,397,200 Lufthansa AG 58,750,712 71,641,007 3.1
--Airlines
Utilities-- 1,284,550 Berliner Kraft-und Licht
Electric & Gas (Bewag) AG 56,180,793 55,638,332 2.4
Total Investments in Germany 114,931,505 127,279,339 5.5
Ireland Banking 3,800,000 Allied Irish Banks PLC 29,461,508 47,166,696 2.1
9,500 Allied Irish Banks PLC (ADR)* 482,132 705,375 0.0
Total Investments in Ireland 29,943,640 47,872,071 2.1
Netherlands Financial Services 1,796,500 ING Groep N.V. 76,829,176 102,067,981 4.4
Telecommunications 199,550 Koninklijke PTT Nederland N.V. 8,494,742 10,350,303 0.5
Total Investments in the
Netherlands 85,323,918 112,418,284 4.9
Switzerland Food & Household 60,800 Nestle S.A. (Registered) 67,899,128 116,359,241 5.1
Products
Health & Personal 30,000 Novartis AG (Registered) 35,109,090 53,176,532 2.3
Care
Total Investments in Switzerland 103,008,218 169,535,773 7.4
United Beverages 10,100,000 Cadbury Schweppes PLC 91,146,039 140,329,804 6.1
Kingdom & Tobacco 7,470,078 Diageo PLC 67,457,499 88,014,551 3.8
Total Investments in the
United Kingdom 158,603,538 228,344,355 9.9
Total Investments in Western
Europe 577,632,205 820,047,878 35.6
<CAPTION>
SHORT-TERM Face
SECURITIES Amount
<S> <C> <S> <C> <C> <C>
Commercial $ 82,559,000 General Electric Capital Corp.,
Paper** 6.125% due 4/01/1998 82,559,000 82,559,000 3.6
Total Investments in Short-Term
Securities 82,559,000 82,559,000 3.6
<CAPTION>
OPTIONS Nominal Value Premiums
PURCHASED Covered by Options Issue Paid
<S> <C> <S> <C> <C> <C>
Currency Put 260,000,000 Japanese Yen, expiring December
Options Purchased 1998 at YEN 130 7,683,000 11,128,000 0.5
Total Options Purchased 7,683,000 11,128,000 0.5
Total Investments $1,842,431,939 2,250,211,986 97.7
==============
Unrealized Appreciation on Forward Foreign Exchange Contracts*** 13,210,940 0.6
Other Assets Less Liabilities 38,206,053 1.7
-------------- ------
Net Assets $2,301,628,979 100.0%
============== ======
Net Asset Value: Class A--Based on net assets of $118,465,224
and 8,309,949 shares outstanding $ 14.26
==============
Class B--Based on net assets of $1,566,644,768
and 110,585,853 shares outstanding $ 14.17
==============
Class C--Based on net assets of $289,125,427
and 20,410,697 shares outstanding $ 14.17
==============
Class D--Based on net assets of $327,393,560
and 22,999,840 shares outstanding $ 14.23
==============
<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.
***Forward foreign exchange contracts as of March 31, 1998 were as
follows:
Unrealized
Foreign Expiration Appreciation
Currency Purchased Date (Depreciation)
Lit 97,882,627,500 October 1998 $ (905,236)
Total (US$ Commitment--$54,872,910) (905,236)
------------
Foreign
Currency Sold
Chf 16,625,000 August 1998 676,013
Chf 99,330,352 December 1998 2,309,103
DM 103,401,204 December 1998 1,090,912
Frf 499,849,499 December 1998 1,368,604
Pound
Sterling 20,888,953 December 1998 (1,297,039)
Lit 97,882,627,500 October 1998 2,732,326
Nlg 234,470,221 December 1998 3,378,213
YEN 18,055,474,614 December 1998 3,858,044
Total (US$ Commitment--$574,582,879) 14,116,176
------------
Total Unrealized Appreciation on Forward Foreign
Exchange Contracts--Net $ 13,210,940
============
</TABLE>
