MERRILL LYNCH
GLOBAL VALUE
FUND, INC.
FUND LOGO
Quarterly Report
September 30, 1999
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 9/30/99
Percent of
Ten Largest Industries Net Assets
Utilities--Electric & Gas 13.5%
Banking 9.0
Electronic Components & Instruments 8.9
Telecommunications 8.7
Food & Household Products 8.5
Financial Services 6.9
Health & Personal Care 6.9
Insurance 6.7
Data Processing & Reproduction 5.9
Appliances & Household Durables 5.4
Country of Percent of
Ten Largest Equity Holdings Origin Net Assets
The AES Corporation United States 6.6%
Cadbury Schweppes PLC United Kingdom 5.0
Lattice Semiconductor
Corporation United States 4.8
GTE Corporation United States 4.1
Murata Manufacturing Co.,
Ltd. Japan 4.1
Monsanto Company United States 3.7
Federal National Mortgage
Association United States 3.5
Nestle SA (Registered
Shares) Switzerland 3.5
Berkshire Hathaway Inc.
(Class A) United States 3.5
AT&T Corp. United States 3.4
Officers and
Directors
Terry K. Glenn, President and Director
Donald Cecil, Director
Edward H. Meyer, Director
Charles C. Reilly, Director
Richard R. West, Director
Arthur Zeikel, Director
Edward D. Zinbarg, Director
Robert C. Doll, Senior Vice President
Stephen I. Silverman, Senior Vice President and
Portfolio Manager
Donald C. Burke, Vice President and Treasurer
Lori A. Martin, Secretary
Custodian
Brown Brothers Harriman & Co.
40 Water Street
Boston, MA 02109
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
Merrill Lynch Global Value Fund, Inc., September 30, 1999
DEAR SHAREHOLDER
Merrill Lynch Global Value Fund, Inc.'s Class A, Class B, Class C
and Class D shares had total returns of -5.44%, -5.72%, -5.72% and
- -5.45%, respectively, for the quarter ended September 30, 1999. The
unmanaged Morgan Stanley Capital International (MSCI) World Index
declined by 1.48% for the same period. Stocks in general and value
stocks in particular registered greater declines during the period,
as measured by the unmanaged Standard & Poor's (S&P) 500 Index
(-6.24%) and the unmanaged S&P-Barra Value Index (-9.62%). (Fund
results do not reflect sales charges, and would be lower if sales
charges were included. Complete performance information can be found
on pages 4 and 5 of this report to shareholders.)
Investment Environment
During the September quarter, the US stock market underperformed
other world stock markets, and value stocks underperformed relative
to other types of stocks. This did not create a positive investment
environment for the Fund, since most of our investments are in the
United States (55.4% of net assets at the end of September) and we
do not typically invest in stocks that can be characterized in the
growth category. Our stock selection further hindered our
performance during the period.
In the United States, the worst-performing sectors were consumer
staples, financials and healthcare. Unfortunately, the Fund had
significant holdings in financials (approximately 20% of net
assets), which declined approximately 15% during the quarter. We
also owned some healthcare stocks, which were poor performers. Our
stocks underperformed relative to their respective sectors.
Stock Selection Proves Challenging
The performance of one of our holdings, Maytag Corporation, was also
detrimental to performance during the September quarter. We
initiated a position in Maytag when it was selling for approximately
$65 per share. However, when the company announced that quarterly
earnings would be flat compared to the same quarter last year--and
not grow 18% to the $0.99 per share investors were expecting--
Maytag shares tumbled to the low $30s. Since we thought that Maytag
shares had been attractively valued at $65, we chose to purchase
more when the stock price fell, thus lowering our average purchase
price. However, we were surprised by the extent of the stock price
decline, given that the company had experienced a mere short-term
earnings "stumble."
Subsequently, Maytag announced quarterly earnings of $0.92 per
share. After the surprising earnings downgrade, Maytag's new
chairman announced a plan to reenergize the company to enable it to
manage its businesses better. We believe that these efforts may well
prove successful. If Maytag earns the consensus earnings estimates
of $3.90--$4.00 per share for fiscal year 2000, we believe that the
stock should be positioned to appreciate meaningfully from current
levels.
When Maytag stock dropped sharply, we had to ask ourselves whether
this extremely low valuation (eight times consensus 2000 earnings
per share) was justified. We viewed this decline as an opportunity
to increase our investment in a company that makes quality products
and has reasonable growth prospects based on demographics--at a
price that was so low it seemed to indicate that a recession was at
hand. We concluded that Maytag is a relatively good company with
good products and reasonable growth prospects; therefore, if its
shares are selling at less than 10 times earnings, we believed it
should be part of our portfolio, and increased our investment.
Another investment that is in similar circumstances is The Chase
Manhattan Corporation. Chase stock was selling for less than 12
times next year's earnings as of the end of October following an
approximate 12% decline during the September quarter. Third-quarter
earnings recently came in well above expectations--which may in
turn raise earnings expectations for next year--but even without
these higher expectations, we believe that Chase continues to
represent an attractive investment for the Fund.
Several of our investments are in similar circumstances. In general,
the stocks that have powered ahead during the September quarter and
1999 year to date are in the telecommunications and technology
sectors, along with Japanese stocks (especially small-capitalization
issues). There are few stocks that meet our definition of
undervalued in these areas. We do not mean to imply that there are
not plenty of stocks that have performed very well which fit into
our investment universe. For example, in the financial sector,
Citigroup Inc., American Express Company and Morgan Stanley, Dean
Witter & Co. have all provided exceptionally good returns this year,
and we could have invested in them. Unfortunately, we did not.
Although our stock selection could have been better, we know of no
reason why some of our largest positions--such as Federal National
Mortgage Association, Monsanto Company, AT&T Corp., as well as
Maytag and Chase Manhattan--should have declined by as much as they
have this year. Furthermore, based on current information, we
believe these companies should provide attractive longer-term
returns for the Fund. Of course, as our views on the market and the
values of these companies evolve, our investment strategy may
change.
In Conclusion
During the first two years of the Fund's existence, it performed
much better than we expected. Just as we earlier pointed out to
shareholders that our long-term performance could not remain at
these exceptional levels, so we now would like to point out that, in
our opinion, the Fund's performance thus far this year is not
indicative of a long-term trend. During the past 21/2 years, growth
stocks have outperformed value stocks, and the US stock market has
outperformed other world stock markets. Therefore, we do not expect
Merrill Lynch Global Value Fund's returns to be competitive with a
growth fund investing in US stocks, especially one focused on the
"hottest" sectors, such as telecommunications and technology.
However, we believe that there will be times when the Fund will
outperform large cap US growth funds.
Therefore, while we are disappointed with the Fund's performance
thus far this year, we continue to believe that its investment style
is a viable one, and that our investments represent attractive
values that will be realized over the longer term.
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,
(Terry K. Glenn)
Terry K. Glenn
President and Director
(Stephen I. Silverman)
Stephen I. Silverman
Senior Vice President and
Portfolio Manager
November 15, 1999
Merrill Lynch Global Value Fund, Inc., September 30, 1999
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 "Recent Performance
Results" and "Average Annual 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>
3 Month 12 Month Since Inception
As of September 30, 1999 Total Return Total Return Total Return
<S> <C> <C> <C>
ML Global Value Fund, Inc. Class A Shares -5.44% +4.70% +48.10%
ML Global Value Fund, Inc. Class B Shares -5.72 +3.68 +43.77
ML Global Value Fund, Inc. Class C Shares -5.72 +3.67 +43.75
ML Global Value Fund, Inc. Class D Shares -5.45 +4.56 +47.11
<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's inception date is 11/01/96.
</TABLE>
Average Annual
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 9/30/99 + 4.70% - 0.80%
Inception (11/01/96) through 9/30/99 +14.44 +12.34
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 9/30/99 + 3.68% - 0.07%
Inception (11/01/96) through 9/30/99 +13.28 +12.73
[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 9/30/99 + 3.67% + 2.73%
Inception (11/01/96) through 9/30/99 +13.27 +13.27
[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 9/30/99 + 4.56% -0.93%
Inception (11/01/96) through 9/30/99 +14.17 +12.08
[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 Value Net Assets
<S> <S> <C> <S> <C> <C>
Canada Transportation-- 2,725,500 Canadian National Railway Company $ 82,616,719 3.3%
Road & Rail
Total Investments in Canada 82,616,719 3.3
United Appliances & 1,684,800 Maytag Corporation 56,124,900 2.2
States
Household Durables
Banking 2,436,000 Washington Mutual, Inc. 71,253,000 2.8
Data Processing & 921,750 Hewlett-Packard Company 84,801,000 3.4
Reproduction
Electrical & Electronics 536,300 Honeywell Inc. 59,696,894 2.4
Electronic Components & 4,047,600 Lattice Semiconductor Corporation 119,910,150 4.8
Instruments
Financial Services 1,137,300 The Chase Manhattan Corporation 85,723,988 3.4
1,425,750 Federal National Mortgage Association 89,376,703 3.5
-------------- ------
175,100,691 6.9
Health & Personal 2,850,100 Becton, Dickinson and Company 79,980,931 3.2
Care 2,645,800 Monsanto Company 94,421,987 3.7
174,402,918 6.9
Industrial Components 420,700 SPX Corporation 38,178,525 1.5
Insurance 1,612 Berkshire Hathaway Inc. (Class A) 88,660,000 3.5
Recreation & Other 476,500 The Black & Decker Corporation 21,770,094 0.9
Consumer Goods
Telecommunications 1,999,300 AT&T Corp. 86,969,550 3.4
1,254,000 ECI Telecom Limited (US$ Registered Shares) 30,801,375 1.2
1,347,800 GTE Corporation 103,612,125 4.1
-------------- ------
221,383,050 8.7
Utilities--Electric & Gas 2,820,500 The AES Corporation 166,409,500 6.6
1,095,950 Columbia Energy Group 60,688,231 2.4
1,629,500 Unicom Corporation 60,189,656 2.4
-------------- ------
287,287,387 11.4
Total Investments in the United States 1,398,568,609 55.4
Total Investments in North America 1,481,185,328 58.7
</TABLE>
Merrill Lynch Global Value Fund, Inc., September 30, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
NORTH Shares Percent of
AMERICA Industries Held Investments Value Net Assets
<S> <S> <C> <S> <C> <C>
Australia Leisure & Tourism 11,800,652 Village Roadshow Limited `A' (Preferred) $ 22,198,885 0.9%
360,000 Village Roadshow Limited (Convertible
Preferred) 14,400,000 0.5
-------------- ------
36,598,885 1.4
Real Estate 3,506,367 Lend Lease Corporation Limited 42,786,101 1.7
Total Investments in Australia 79,384,986 3.1
Japan Appliances & 953,000 Matsushita Electric Industrial Company, Ltd. 20,285,171 0.8
Household Durables 400,000 Sony Corporation 59,806,409 2.4
-------------- ------
80,091,580 3.2
Construction & 1,105,602 Chudenko Corporation 19,626,747 0.8
Housing 788,000 Kinden Corporation 6,516,681 0.3
-------------- ------
26,143,428 1.1
Data Processing & 2,166,000 Canon, Inc. 63,101,212 2.5
Reproduction
Electronic Components & 1,030,000 Murata Manufacturing Co., Ltd. 103,571,093 4.1
Instruments
Industrial Components 3,588,000 The Furukawa Electric Co., Ltd. 21,411,334 0.8
Insurance 3,438,000 The Dai-Tokyo Fire and Marine Insurance
Co., Ltd. 12,600,507 0.5
784,000 The Nichido Fire & Marine Insurance Co., Ltd. 3,868,058 0.2
4,411,000 The Sumitomo Marine & Fire Insurance
Co., Ltd. 28,187,952 1.1
2,125,000 The Tokio Marine & Fire Insurance Co. Ltd. 25,162,109 1.0
-------------- ------
69,818,626 2.8
Machinery & 1,000,000 Toyoda Automatic Loom Works, Ltd. 18,381,731 0.7
Engineering
Total Investments in Japan 382,519,004 15.2
Total Investments in the Pacific Basin 461,903,990 18.3
WESTERN
EUROPE
Denmark Banking 716,200 Den Danske Bank Group 81,518,032 3.2
Total Investments in Denmark 81,518,032 3.2
Germany Insurance 129,700 Hannover Rueckversicherungs-AG 10,034,544 0.4
Transportation-- 3,068,200 Deutsche Lufthansa AG (Registered Shares) 56,095,766 2.2
Airlines
Utilities--Electric & Gas 3,621,300 Bewag Aktiengesellschaft 52,796,888 2.1
Total Investments in Germany 118,927,198 4.7
Ireland Banking 6,137,000 Allied Irish Banks PLC 74,126,798 3.0
28,500 Allied Irish Banks PLC (ADR)* 724,969 0.0
Total Investments in Ireland 74,851,767 3.0
Switzerland Food & Household 47,400 Nestle SA (Registered Shares) 89,005,194 3.5
Products
Total Investments in Switzerland 89,005,194 3.5
United Food & Household 18,219,400 Cadbury Schweppes PLC 126,494,534 5.0
Kingdom Products
Total Investments in the United Kingdom 126,494,534 5.0
Total Investments in Western Europe 490,796,725 19.4
Total Long-Term Investments (Cost--
$2,288,311,541) 2,433,886,043 96.4
SHORT-TERM Face
SECURITIES Amount Issue
Commercial Paper** $112,489,000 General Electric Capital Corp., 5.60%
due 10/01/1999 112,489,000 4.5
Total Investments in Short-Term Securities
(Cost--$112,489,000) 112,489,000 4.5
OPTIONS Nominal Value
PURCHASED Covered by Options
Currency Put 100,000,000 Japanese Yen, expiring June 2000 at YEN 123 470,000 0.0
Options Purchased 100,000,000 Japanese Yen, expiring June 2000 at YEN 124 430,000 0.0
300,000,000 Japanese Yen, expiring June 2000 at YEN 124 1,248,000 0.1
Total Options Purchased (Cost--$12,595,000) 2,148,000 0.1
OPTIONS
WRITTEN
Call Options 782,000 The AES Corporation, expiring November
1999 at US$63.36 (1,704,760) (0.1)
Written 549,600 Monsanto Company, expiring December
1999 at US$50 (131,904) 0.0
915,800 Monsanto Company, expiring December
1999 at US$51.1242 (238,108) 0.0
82,300 Monsanto Company, expiring December
1999 at US$52.4 (15,637) 0.0
Total Options Written (Premiums
Received--$5,928,234) (2,090,409) (0.1)
Total Investments, Net of Options Written (Cost--$2,407,467,307) 2,546,432,634 100.9
Liabilities in Excess of Other Assets (23,038,279) (0.9)
-------------- ------
Net Assets $2,523,394,355 100.0%
============== ======
Net Asset Value: Class A--Based on net assets of $173,037,151 and
14,062,926 shares outstanding $ 12.30
==============
Class B--Based on net assets of $1,681,356,504
and 138,328,851 shares outstanding $ 12.15
==============
Class C--Based on net assets of $299,186,286 and
24,614,534 shares outstanding $ 12.15
==============
Class D--Based on net assets of $369,814,414 and
30,145,234 shares outstanding $ 12.27
==============
<FN>
*American Depositary Receipts (ADR).
**Commercial Paper is traded on a discount basis; the interest rate
shown reflects the discount rate paid at the time of purchase by the
Fund.
</TABLE>
