MERRILL LYNCH
GLOBAL VALUE
FUND, INC.
FUND LOGO
Semi-Annual Report
June 30, 2000
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 6/30/00
Percent of
Ten Largest Industries Net Assets
Electronic Components & Instruments 11.0%
Financial Services 9.7
Independent Power Producers 9.6
Food & Beverage 7.0
Integrated Telecommunication Services 5.6
Banking 5.0
Retail 4.2
Diversified Companies 4.1
Computers 4.0
Electric Construction 3.5
Country of Percent of
Ten Largest Holdings Origin Net Assets
Lattice Semiconductor Corporation United States 11.0%
The AES Corporation United States 9.6
Nestle SA (Registered Shares) Switzerland 3.6
Cadbury Schweppes PLC United Kingdom 3.4
ECI Telecom Limited (US Registered
Shares) United States 3.4
Associates First Capital Corporation
(Class A) United States 3.2
The Chase Manhattan Corporation United States 3.1
Safeway Inc. United States 3.0
Canon, Inc. Japan 2.9
BP Amoco PLC United Kingdom 2.8
Officers and
Directors
Terry K. Glenn, President and Director
Charles C. Reilly, Director
Roscoe Sudarth, Director
Richard R. West, Director
Arthur Zeikel, Director
Edward D. Zinbarg, Director
Robert C. Doll, Jr., 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., June 30, 2000
DEAR SHAREHOLDER
For the six-month period ended June 30, 2000, Merrill Lynch Global
Value Fund, Inc. provided total investment returns of +2.45%,
+1.93%, +1.93% and +2.25% for Class A, Class B, Class C and Class D
Shares, respectively, outperforming our benchmark unmanaged MSCI
World Index, which had a total return of -2.56%. (Fund performance
does 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 pages 4 and 5 of this report
to shareholders.)
"Value" and "Growth"
Perform in Line
"Growth" and "value" stocks performed roughly the same for the first
six months of the year. This is in contrast to 1998 and 1999, when
the unmanaged MSCI Developed Markets Value Index returned +15.5% and
+16.8%, respectively, compared to +33.4% and +32.7% returns for the
unmanaged MSCI Developed Markets Growth Index, respectively.
Although we have no particular reason to believe that this wide
disparity between the investment performance of growth and value
stocks has finally ended (with growth stocks dramatically
outperforming value stocks during the past few years), we do
continue to maintain that there are no convincing reasons to believe
that so-called value stocks should perform any differently over time
than growth stocks.
In our view, what distinguishes value stocks from growth stocks for
most people is the rate at which a company is growing its business.
However, the way the two categories are determined by MSCI or
Standard & Poor's is by the measure of price to book value.
Companies with lower price/book value ratios are called value
stocks, while companies with higher price/book value ratios are
called growth stocks. It is often the case that most companies that
are put into the growth category are growing fast and that most so-
called value stocks are growing less rapidly, if at all. However,
despite being widely recognized by investors as a growth stock, if a
high growth company were to have a low price-to-book value ratio, it
would be categorized as a value stock.
One reason why a value-oriented investment strategy has some appeal
(at least in theory) is because there is academic evidence that
people overvalue growth stocks (so-called glamour stocks) and
undervalue value stocks. In this view, the expectation is that many
(if not most) of the companies that are very highly valued (that is,
their shares are at very high multiples of book value, revenues and
earnings) will not fulfill the "overblown" investor expectations.
Furthermore, this argument continues, when the inevitable shortfall
in earnings occurs, their stock prices will decline by a larger
percentage decrease than would occur for a not-so-highly valued
company, which did not fulfill investor expectations.
Similarly, value stocks, which trade at low multiples of book value,
revenues and earnings, are often better companies than implied by
their valuations. (This does not necessarily mean that they are
superior companies.) These low valuations seem to be simply a
temporary reaction to business problems that will soon be seen as
transitory. Therefore, the argument concludes, when the problems are
overcome, the value stock will get valued at a higher multiple of
book value (or perhaps a higher multiple of much-improved earnings).
These different approaches to investing result in different
approaches to valuation. Value-style managers often try to compute
the value of a business as an ongoing enterprise, because current
business problems make it difficult to value a company based on
current earnings. By contrast, typical growth managers do not
necessarily try to value a company. Instead, they often focus on a
company's growth rate and its ability to sustain growth. They
typically base their evaluation on the size of the market
opportunity for a particular company, its leadership position, and
whether the company is exceeding security analysts' estimates and
guiding these analysts toward ever-more bullish forecasts.
How We Define Value
Rather than debate the virtues of traditional value investing versus
traditional growth investing, we choose to define our investment
approach in our own way, as we have discussed in previous reports to
shareholders. We strive to buy shares of companies that we believe
are worth more than their current share prices. In other words, we
invest in companies whose valuations are sufficiently low so that
the growth that we conservatively forecast for the business will
justify the stock appreciating at a reasonable rate. What we judge
to be a "margin of safety" (a term popularized by Benjamin Graham,
who is regarded as the creator of security analysis) is not
determined by low price/book value ratios. Instead, our margin of
safety is defined by a valuation that is too low based upon
conservative forecasts for a company's business.
We have found over the last few years that the stock prices of
companies with low valuations as well as high valuations both
decline substantially if they deliver earnings that are lower than
security analyst expectations. While we have not conducted a
comprehensive study, we have observed that a stock selling at 15
times earnings (with expectations of 10% earnings per share growth)
can decline by 40% to a price that is 9 times earnings, if the
company suggests that earnings will grow at only 8% - 9%. This
strikes us as an overreaction, especially in the context of an
investment environment in which many companies trade at triple-digit
multiples of revenues. This leads to an odd situation in which the
traditional value managers have the same level of risk as growth
managers, but with lower returns. We doubt this situation will
persist, but we cannot predict when a change will occur.
Furthermore, in our style of investing, timing is not really a
factor that affects our investment decisions, since we strive to
keep our investment for a long time. Accordingly, we tend to avoid
industries that we believe have inferior economics. A company can
have a modest price/earnings ratio, but if its return on capital is
lower than its cost of capital, it is destroying value. These are
the companies that we strive to avoid. Similarly, a company can be
selling for upwards of 35 times earnings but could be growing fast
enough and its returns sufficiently higher than its cost of capital
so that we would conclude that it is undervalued. In other words, we
could determine that it is undervalued, even though its
price/earnings ratio is appreciably higher than the average company.
Our Fund does have some companies whose shares sell at low multiples
of earnings and some whose shares sell at higher multiples of
earnings. Examples of low price/earnings companies are Associates
First and Washington Mutual, two financial stocks that sell for
approximately 10 times earnings. Both of these companies appear to
be growing, yet their share prices sell at multiples of earnings
that are much lower than the average company. In contrast, our
largest positions, AES and Lattice Semiconductor, sell at about
20 - 30 times earnings, which is more expensive than Associates
First and Washington Mutual. However, we believe that our growth
forecasts for these companies are high enough to justify multiples
of current year's earnings that are much higher than current multiples.
1999 was bad for value investors, and we underperformed value as
measured by the MSCI Developed Markets Value Index as well as the
MSCI World Index. However, from January 1, 1997 to June 30, 2000,
the Fund outperformed not only the MSCI Developed Markets Value
Index, but the MSCI World Index as well.
In Conclusion
We thank you for your investment in Merrill Lynch Global Value Fund,
Inc., and we look forward to reviewing our outlook and strategy with
you again in our upcoming annual report to shareholders.
Sincerely,
(Terry K. Glenn)
Terry K. Glenn
President and Director
(Stephen I. Silverman)
Stephen I. Silverman
Senior Vice President and
Portfolio Manager
August 18, 2000
Merrill Lynch Global Value Fund, Inc., June 30, 2000
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>
6 Month 12 Month Since Inception
As of June 30, 2000 Total Return Total Return Total Return
<S> <C> <C> <C>
ML Global Value Fund, Inc. Class A Shares +2.45% +15.94% +81.58%
ML Global Value Fund, Inc. Class B Shares +1.93 +14.69 +74.89
ML Global Value Fund, Inc. Class C Shares +1.93 +14.69 +74.87
ML Global Value Fund, Inc. Class D Shares +2.25 +15.59 +79.84
*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 6/30/00 +15.94% + 9.85%
Inception (11/01/96) through 6/30/00 +17.69 +15.97
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 6/30/00 +14.69% +10.69%
Inception (11/01/96) through 6/30/00 +16.49 +16.30
*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 6/30/00 +14.69% +13.69%
Inception (11/01/96) through 6/30/00 +16.48 +16.48
*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 6/30/00 +15.59% + 9.52%
Inception (11/01/96) through 6/30/00 +17.38 +15.66
*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 Auto Parts & Equipment 2,620,300 Delphi Automotive Systems
States Corporation $ 50,115,432 $ 38,158,119 1.5%
Communications Equipment 971,000 ++Tellabs, Inc. 52,332,066 66,452,813 2.6
Computers 2,515,000 Compaq Computer Corporation 72,553,894 64,289,687 2.6
745,000 ++Xircom, Inc. 27,098,730 35,387,500 1.4
-------------- -------------- ------
99,652,624 99,677,187 4.0
Diversified Companies 1,307,875 Honeywell International Inc. 79,248,247 44,059,039 1.8
467,700 ++SPX Corporation 40,402,704 56,562,469 2.3
-------------- -------------- ------
119,650,951 100,621,508 4.1
Electrical & 1,100,000 Emerson Electric Co. 70,327,603 66,412,500 2.6
Electronics
Electronic Components & 4,009,200 ++Lattice Semiconductor
Instruments Corporation (b) 101,127,464 277,135,950 11.0
</TABLE>
Merrill Lynch Global Value Fund, Inc., June 30, 2000
<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 Financial Services 3,628,200 Associates First Capital
States Corporation (Class A) $ 85,270,444 $ 80,954,213 3.2%
(concluded) 1,661,700 The Chase Manhattan
Corporation 92,480,909 76,542,056 3.1
1,108,240 Federal Home Loan Mortgage
Association 50,277,640 44,883,720 1.8
1,388,200 Washington Mutual, Inc. 50,471,112 40,084,275 1.6
-------------- -------------- ------
278,500,105 242,464,264 9.7
Independent Power 5,305,000 ++The AES Corporation 84,067,554 242,040,625 9.6
Producers
Integrated 1,069,900 GTE Corporation 80,821,637 66,601,275 2.7
Telecommunication
Services
Multi-Industry 348,800 Minnesota Mining and
Manufacturing Company (3M) 29,656,480 28,776,000 1.1
Retail 608,700 ++Costco Wholesale Corporation 18,236,127 20,087,100 0.8
1,687,000 ++Safeway Inc. 61,103,163 76,125,875 3.0
-------------- -------------- ------
79,339,290 96,212,975 3.8
Telecommunications 749,700 ++Gilat Satellite
Equipment Networks Ltd. (US
Registered Shares) 42,075,514 52,010,437 2.1
Telecommunication 2,364,000 ECITelecom Limited
Services (US Registered Shares) 71,242,740 84,217,500 3.4
Total Investments in
North America 1,158,909,460 1,460,781,153 58.2
PACIFIC
BASIN
Australia Leisure 8,877,054 Village Roadshow Limited
'A' (Preferred) 22,160,165 9,913,397 0.4
47,500 Village Roadshow Limited
(Convertible
Preferred)(a) 2,375,000 1,235,000 0.0
-------------- -------------- ------
24,535,165 11,148,397 0.4
Property 3,421,567 Lend Lease Corporation
Limited 32,059,621 43,773,212 1.8
Total Investments in
Australia 56,594,786 54,921,609 2.2
Japan Consumer-- 251,600 Sony Corporation 11,590,394 23,541,799 0.9
Electronics
Electric Construction 1,079,602 Chudenko Corporation 25,311,234 15,244,321 0.6
769,000 Kinden Corporation 9,431,527 4,840,546 0.2
2,560,000 Matsushita Electric
Industrial Company, Ltd. 57,928,267 66,537,498 2.7
-------------- -------------- ------
92,671,028 86,622,365 3.5
Electrical Equipment 1,925,000 The Furukawa Electric
Co., Ltd. 11,530,431 40,299,371 1.6
145,000 Murata Manufacturing
Co., Ltd. 3,972,502 20,858,183 0.8
-------------- -------------- ------
15,502,933 61,157,554 2.4
Machinery 1,000,000 Toyoda Automatic Loom
Works, Ltd. 18,166,448 21,690,846 0.9
Office Equipment 1,476,000 Canon, Inc. 33,945,680 73,657,011 2.9
Property & Casualty 3,355,000 The Dai-Tokyo Fire and
Insurance Marine Insurance Co., Ltd. 13,412,140 11,954,397 0.5
765,000 The Nichido Fire & Marine
Insurance Co., Ltd. 3,989,297 4,193,564 0.2
4,304,000 The Sumitomo Marine & Fire
Insurance Co., Ltd. 29,695,622 25,098,700 1.0
2,073,000 The Tokio Marine & Fire
Insurance Co. Ltd. 26,275,154 23,981,400 0.9
-------------- -------------- ------
73,372,213 65,228,061 2.6
Retail 167,000 Ito-Yokado Co., Ltd. 13,473,111 10,070,035 0.4
Total Investments in Japan 258,721,807 341,967,671 13.6
Total Investments in the
Pacific Basin 315,316,593 396,889,280 15.8
WESTERN
EUROPE
Denmark Banking 574,700 Den Danske Bank Group 76,215,263 69,415,347 2.8
Total Investments in Denmark 76,215,263 69,415,347 2.8
Germany Utilities--Electric 3,545,700 Bewag Aktiengesellschaft 78,219,910 43,845,913 1.7
& Gas
Total Investments in Germany 78,219,910 43,845,913 1.7
Greece Integrated 2,008,730 Hellenic Telecommunications
Organization SA (OTE) 43,554,151 49,413,741 2.0
Telecommunication 2,005,880 Hellenic Telecommunications
Services Organization SA
(OTE) (ADR)* 22,878,980 24,446,663 0.9
Total Investments in Greece 66,433,131 73,860,404 2.9
Ireland Banking 5,980,000 Allied Irish Banks PLC 58,501,602 53,770,175 2.2
28,500 Allied Irish Banks PLC (ADR)* 482,133 505,875 0.0
Total Investments in Ireland 58,983,735 54,276,050 2.2
Italy Aerospace & Defense 17,902,000 ++Finmeccanica SpA 25,362,658 24,711,634 1.0
Total Investments in Italy 25,362,658 24,711,634 1.0
Switzerland Food & Beverage 44,600 Nestle SA (Registered
Shares) 47,747,292 89,551,073 3.6
Total Investments in
Switzerland 47,747,292 89,551,073 3.6
United Food & Beverage 12,904,900 Cadbury Schweppes PLC 57,871,348 84,789,400 3.4
Kingdom
Oil--Related 7,417,310 BP Amoco PLC 62,407,163 71,192,276 2.8
Transportation-- 4,119,000 Railtrack Group PLC 83,543,774 64,010,015 2.6
Railroads
Total Investments in the
United Kingdom 203,822,285 219,991,691 8.8
Total Investments in
Western Europe 556,784,274 575,652,112 23.0
SHORT-TERM Face
SECURITIES Amount Issue
Commercial Paper** $ 81,405,000 General Electric Capital
Corp., 6.90% due 7/03/2000 81,373,795 81,373,795 3.3
81,000,000 General Motors Acceptance
Corp., 7.13% due 7/03/2000 80,967,915 80,967,915 3.2
Total Investments in
Short-Term Securities 162,341,710 162,341,710 6.5
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (CONCLUDED) (IN US DOLLARS)
<CAPTION>
OPTIONS Nominal Value Premiums Percent of
PURCHASED Covered by Options Issue Paid Value Net Assets
<S> <C> <S> <C> <C>
Put Options 51,888 The AES Corporation,
Purchased expiring August 2000
at USD 36.87 $ 118,305 $ 21,793 0.0%
512,112 The AES Corporation,
expiring September 2000
at USD 37.22 1,188,100 261,177 0.0
752,000 The AES Corporation,
expiring September 2000
at USD 37.628 1,434,327 304,560 0.0
194,106 The AES Corporation,
expiring October 2000
at USD 39.585 496,911 372,684 0.0
94,682 The AES Corporation,
expiring October 2000
at USD 39.98 246,173 199,779 0.0
233,750 The AES Corporation,
expiring December 2000
at USD 39.75 589,284 603,075 0.0
233,750 The AES Corporation,
expiring December 2000
at USD 39.78 589,518 591,388 0.0
15,516 The AES Corporation,
expiring December 2000
at USD 40.43 39,783 44,065 0.0
121,000 Lattice Semiconductor
Corporation, expiring
August 2000 at USD 57.9 932,910 226,270 0.0
41,000 Lattice Semiconductor
Corporation, expiring
August 2000 at USD 57.95 320,210 86,920 0.0
66,000 Lattice Semiconductor
Corporation, expiring
August 2000 at USD 58 516,120 129,360 0.0
34,000 Lattice Semiconductor
Corporation, expiring
August 2000 at USD 58.85 269,960 84,320 0.0
239,027 Lattice Semiconductor
Corporation, expiring
August 2000 at USD 59.7 1,931,338 829,424 0.1
307,004 Lattice Semiconductor
Corporation, expiring
September 2000 at USD 64.07 2,680,145 1,636,331 0.1
133,668 Lattice Semiconductor
Corporation, expiring
September 2000 at USD 65.75 1,197,665 824,732 0.1
68,100 Lattice Semiconductor
Corporation, expiring
December 2000 at USD 65.25 519,603 611,946 0.0
41,211 Lattice Semiconductor
Corporation, expiring
December 2000 at USD 67.92 327,627 432,262 0.0
41,211 Lattice Semiconductor
Corporation, expiring
December 2000 at USD 71.925 346,997 527,418 0.0
Total Options Purchased 13,744,976 7,787,504 0.3
Total Investments 2,207,097,013 2,603,451,759 103.8
OPTIONS Premiums
WRITTEN Received
Call Options 51,888 The AES Corporation,
Written expiring August 2000
at USD 51 (118,305) (81,464) 0.0
512,112 The AES Corporation,
expiring September 2000
at USD 51.66 (1,188,100) (819,379) 0.0
752,000 The AES Corporation,
expiring September 2000
at USD 51.9 (1,434,327) (932,480) (0.1)
194,106 The AES Corporation,
expiring October 2000
at USD 54 (496,911) (479,442) 0.0
94,682 The AES Corporation,
expiring October 2000
at USD 54.54 (246,173) (231,024) 0.0
233,750 The AES Corporation,
expiring December 2000
at USD 55.08 (589,284) (729,300) 0.0
233,750 The AES Corporation,
expiring December 2000
at USD 55.12 (589,518) (703,588) 0.0
15,516 The AES Corporation,
expiring December 2000
at USD 56.02 (39,783) (45,152) 0.0
41,000 Lattice Semiconductor
Corporation, expiring
August 2000 at USD 78.1 (320,210) (149,240) 0.0
66,000 Lattice Semiconductor
Corporation, expiring
August 2000 at USD 78.17 (516,120) (221,100) 0.0
121,000 Lattice Semiconductor
Corporation, expiring
August 2000 at USD 78.9 (932,910) (370,260) 0.0
34,000 Lattice Semiconductor
Corporation, expiring
August 2000 at USD 79.28 (269,960) (118,660) 0.0
239,027 Lattice Semiconductor
Corporation, expiring
August 2000 at USD 80.4 (1,931,338) (963,279) (0.1)
307,004 Lattice Semiconductor
Corporation, expiring
September 2000 at USD
86.22 (2,680,145) (887,242) (0.1)
133,668 Lattice Semiconductor
Corporation, expiring
September 2000 at USD
88.5 (1,197,665) (346,200) 0.0
68,100 Lattice Semiconductor
Corporation, expiring
December 2000 at USD 91.5 (519,603) (354,391) 0.0
41,211 Lattice Semiconductor
Corporation, expiring
December 2000 at USD 95.244 (327,627) (192,208) 0.0
41,211 Lattice Semiconductor
Corporation, expiring
December 2000 at USD 100.955 (346,997) (157,138) 0.0
Total Options Written (13,744,976) (7,781,547) (0.3)
Total Investments, Net of Options Written $2,193,352,037 2,595,670,212 103.5
==============
Unrealized Appreciation on Forward Foreign Exchange Contracts*** 6,705,668 0.3
Liabilities in Excess of Other Assets (94,109,536) (3.8)
-------------- ------
Net Assets $2,508,266,344 100.0%
============== ======
++Non-income producing security.
*American Depositary Receipts (ADR).
**Commercial Paper is traded on a discount basis; the interest rates
shown reflect the discount rates paid at the time of purchase by the
Fund.
***Forward foreign exchange contracts as of June 30, 2000 were as
follows:
Foreign Expiration Unrealized
Currency Sold Date Appreciation
YEN 26,419,021,760 January 2001 $6,705,668
----------
Unrealized Appreciation on Forward
Foreign Exchange Contracts
(US$ Commitment--$265,237,907) $6,705,668
==========
(a)The security may be offered and sold to "qualified institutional
buyers" under Rule 144A of the Securities Act of 1933.
(b)Investments in companies 5% or more of whose outstanding
securities are held by the Fund (such companies are defined as
"Affiliated Companies" in section 2(a)(3) of the Investment Company
Act of 1940) are as follows:
Net Share Net Dividend
Industry Affiliate Activity Cost Income
Electronic Lattice -- -- ++
Components & Semiconductor
Instruments Corporation
++Non-income producing security.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Global Value Fund, Inc., June 30, 2000
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
<CAPTION>
As of June 30, 2000
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$2,193,352,037) $2,595,664,255
Put options purchased, at value (cost--$13,744,976) 7,787,504
Unrealized appreciation on forward foreign exchange contracts 6,705,668
Foreign cash 57,357
Receivables:
Dividends $ 4,942,091
Capital shares sold 1,854,188 6,796,279
--------------
Deferred organization expenses 37,375
Prepaid registration fees and other assets 150,430
--------------
Total assets 2,617,198,868
--------------
Liabilities: Call options written, at value (premiums received--$13,744,976) 7,781,547
Payables:
Securities purchased 91,217,815
Capital shares redeemed 5,647,025
Distributor 1,676,027
Investment adviser 1,467,215 100,008,082
--------------
Accrued expenses and other liabilities 1,142,895
--------------
Total liabilities 108,932,524
--------------
Net Assets: Net assets $2,508,266,344
==============
Net Assets Class A Shares of Common Stock, $.10 par value,
Consist of: 100,000,000 shares authorized $ 1,352,670
Class B Shares of Common Stock, $.10 par value,
300,000,000 shares authorized 10,875,072
Class C Shares of Common Stock, $.10 par value,
100,000,000 shares authorized 2,022,549
Class D Shares of Common Stock, $.10 par value,
100,000,000 shares authorized 2,654,525
Paid-in capital in excess of par 1,816,259,465
Accumulated investment loss--net (1,569,588)
Undistributed realized capital gains on investments
and foreign currency transactions--net 267,683,552
Unrealized appreciation on investments
and foreign currency transactions--net 408,988,099
--------------
Net assets $2,508,266,344
==============
Net Asset Class A--Based on net assets of $203,921,705
Value: and 13,526,696 shares outstanding $ 15.08
==============
Class B--Based on net assets of $1,607,202,260
and 108,750,717 shares outstanding $ 14.78
==============
Class C--Based on net assets of $298,900,757 and
20,225,488 shares outstanding $ 14.78
==============
Class D--Based on net assets of $398,241,622 and
26,545,253 shares outstanding $ 15.00
==============
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Six Months Ended June 30, 2000
<S> <S> <C> <C>
Investment Dividends (net of $1,022,371 foreign withholding tax) $ 15,908,617
Income: Interest and discount earned 2,970,051
--------------
Total income 18,878,668
--------------
Expenses: Investment advisory fees $ 9,492,480
Account maintenance and distribution fees--Class B 8,236,013
Account maintenance and distribution fees--Class C 1,499,991
Transfer agent fees--Class B 932,513
Account maintenance fees--Class D 489,084
Custodian fees 446,753
Transfer agent fees--Class D 184,602
Transfer agent fees--Class C 175,346
Accounting services 92,938
Transfer agent fees--Class A 90,934
Printing and shareholder reports 87,025
Professional fees 61,962
Registration fees 51,794
Amortization of organization expenses 18,983
Directors' fees and expenses 16,050
Pricing fees 13,343
Other 24,916
--------------
Total expenses 21,914,727
--------------
Investment loss--net (3,036,059)
--------------
Realized & Realized gain (loss) from:
Unrealized Gain Investments--net 222,051,811
(Loss) on Foreign currency transactions--net (12,398,450) 209,653,361
--------------
Investments & Change in unrealized appreciation/depreciation on:
Foreign Currency Investments--net (182,048,027)
Transactions--Net: Foreign currency transactions--net 19,038,044 (163,009,983)
-------------- --------------
Net Increase in Net Assets Resulting from Operations $ 43,607,319
==============
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Global Value Fund, Inc., June 30, 2000
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
For the Six For the
Months Ended Year Ended
June 30, Dec. 31,
Increase (Decrease) in Net Assets: 2000 1999
<S> <S> <C> <C>
Operations: Investment loss--net $ (3,036,059) $ (9,399,995)
Realized gain on investments and foreign currency
transactions--net 209,653,361 65,058,622
Change in unrealized appreciation/depreciation on
investments and foreign currency transactions--net (163,009,983) 170,665,649
-------------- --------------
Net increase in net assets resulting from operations 43,607,319 226,324,276
-------------- --------------
Dividends & Investment income--net:
Distributions to Class A -- (526,085)
Shareholders: Class B -- (5,305,144)
Class C -- (941,587)
Class D -- (1,149,043)
Realized gain on investments--net:
Class A -- (4,329,355)
Class B -- (43,828,286)
Class C -- (7,777,614)
Class D -- (9,465,496)
-------------- --------------
Net decrease in net assets resulting from dividends and
distributions to shareholders -- (73,322,610)
-------------- --------------
Capital Share Net decrease in net assets derived from capital
Transactions: share transactions (292,265,931) (377,884,006)
-------------- --------------
Net Assets: Total decrease in net assets (248,658,612) (224,882,340)
Beginning of period 2,756,924,956 2,981,807,296
-------------- --------------
End of period* $2,508,266,344 $2,756,924,956
============== ==============
*Undistributed (accumulated) investment income (loss)--net $ (1,569,588) $ 1,466,471
=============== ==============
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
Class A++++
For the For the For the
The following per share data and ratios have been derived Six Months For the Period Year
from information provided in the financial statements. Ended Year Ended Nov. 1, 1997 Ended
June 30, December 31, to Dec. 31, Oct. 31,
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997 1997++
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value,
Operating beginning of period $ 14.72 $ 13.67 $ 12.01 $ 11.83 $ 10.00
Performance: ---------- ---------- ---------- ---------- ----------
Investment income--net .04 .07 .18 .01 .17
Realized and unrealized gain on
investments and foreign currency
transactions--net .32 1.32 3.00 .72 1.71
---------- ---------- ---------- ---------- ----------
Total from investment operations .36 1.39 3.18 .73 1.88
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net -- (.04) (.14) (.11) (.05)
In excess of investment income--net -- -- (.20) -- --
Realized gain on investments--net -- (.30) (1.18) (.44) --
---------- ---------- ---------- ---------- ----------
Total dividends and distributions -- (.34) (1.52) (.55) (.05)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 15.08 $ 14.72 $ 13.67 $ 12.01 $ 11.83
========== ========== ========== ========== ==========
Total Investment Based on net asset value per share 2.45%+++ 10.44% 27.10% 6.19%+++ 18.91%
Return:** ========== ========== ========== ========== ==========
Ratios to Average Expenses .91%* .91% .90% .96%* .97%
Net Assets: ========== ========== ========== ========== ==========
Investment income--net .58%* .51% 1.32% .54%* 1.88%
========== ========== ========== ========== ==========
Supplemental Net assets, end of period
Data: (in thousands) $ 203,922 $ 195,511 $ 202,980 $ 63,075 $ 53,776
========== ========== ========== ========== ==========
Portfolio turnover 27.33% 70.93% 44.94% 24.49% 77.65%
========== ========== ========== ========== ==========
*Annualized.
**Total investment returns exclude the effects of sales charges.
++The Fund commenced operations on November 1, 1996.
++++Based on average shares outstanding.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Global Value Fund, Inc., June 30, 2000
FINANCIAL HIGHLIGHTS (CONCLUDED)
<TABLE>
FINANCIAL HIGHLIGHTS (CONCLUDED)
<CAPTION>
Class B++++
For the For the For the
The following per share data and ratios have been derived Six Months For the Period Year
from information provided in the financial statements. Ended Year Ended Nov. 1, 1997 Ended
June 30, December 31, to Dec. 31, Oct. 31,
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997 1997++
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value,
Operating beginning of period $ 14.50 $ 13.61 $ 11.97 $ 11.72 $ 10.00
Performance: ---------- ---------- ---------- ---------- ----------
Investment income (loss)--net (.03) (.07) .06 (.01) .09
Realized and unrealized gain on
investments and foreign currency
transactions--net .31 1.30 2.96 .73 1.67
---------- ---------- ---------- ---------- ----------
Total from investment operations .28 1.23 3.02 .72 1.76
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net -- (.04) (.08) (.03) (.04)
In excess of investment income--net -- -- (.12) -- --
Realized gain on investments--net -- (.30) (1.18) (.44) --
---------- ---------- ---------- ---------- ----------
Total dividends and distributions -- (.34) (1.38) (.47) (.04)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 14.78 $ 14.50 $ 13.61 $ 11.97 $ 11.72
========== ========== ========== ========== ==========
Total Investment Based on net asset value per share 1.93%+++ 9.29% 25.76% 6.14%+++ 17.62%
Return:** ========== ========== ========== ========== ==========
Ratios to Average Expenses 1.92%* 1.93% 1.92% 1.98%* 1.99%
Net Assets: ========== ========== ========== ========== ==========
Investment income (loss)--net (.44%)* (.51%) .44% (.49%)* .84%
========== ========== ========== ========== ==========
Supplemental Net assets, end of period
Data: (in thousands) $1,607,202 $1,818,746 $1,988,580 $1,251,956 $1,179,125
========== ========== ========== ========== ==========
Portfolio turnover 27.33% 70.93% 44.94% 24.49% 77.65%
========== ========== ========== ========== ==========
<CAPTION>
Class C++++
For the For the For the
The following per share data and ratios have been derived Six Months For the Period Year
from information provided in the financial statements. Ended Year Ended Nov. 1, 1997 Ended
June 30, December 31, to Dec. 31, Oct. 31,
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997 1997++
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value,
Operating beginning of period $ 14.50 $ 13.61 $ 11.97 $ 11.72 $ 10.00
Performance: ---------- ---------- ---------- ---------- ----------
Investment income (loss)--net (.03) (.07) .06 (.01) .09
Realized and unrealized gain on
investments and foreign currency
transactions--net .31 1.30 2.96 .73 1.67
---------- ---------- ---------- ---------- ----------
Total from investment operations .28 1.23 3.02 .72 1.76
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net -- (.04) (.08) (.03) (.04)
In excess of investment income--net -- -- (.12) -- --
Realized gain on investments--net -- (.30) (1.18) (.44) --
---------- ---------- ---------- ---------- ----------
Total dividends and distributions -- (.34) (1.38) (.47) (.04)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 14.78 $ 14.50 $ 13.61 $ 11.97 $ 11.72
========== ========== ========== ========== ==========
Total Investment Based on net asset value per share 1.93%+++ 9.29% 25.73% 6.14%+++ 17.62%
Return:** ========== ========== ========== ========== ==========
Ratios to Average Expenses 1.93%* 1.94% 1.92% 1.98%* 1.99%
Net Assets: ========== ========== ========== ========== ==========
Investment income (loss)--net (.44%)* (.52%) .43% (.49%)* .83%
========== ========== ========== ========== ==========
Supplemental Net assets, end of period
Data: (in thousands) $ 298,901 $ 324,169 $ 363,134 $ 229,601 $ 217,341
========== ========== ========== ========== ==========
Portfolio turnover 27.33% 70.93% 44.94% 24.49% 77.65%
========== ========== ========== ========== ==========
<CAPTION>
Class D++++
For the For the For the
The following per share data and ratios have been derived Six Months For the Period Year
from information provided in the financial statements. Ended Year Ended Nov. 1, 1997 Ended
June 30, December 31, to Dec. 31, Oct. 31,
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997 1997++
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value,
Operating beginning of period $ 14.67 $ 13.65 $ 12.00 $ 11.80 $ 10.00
Performance: ---------- ---------- ---------- ---------- ----------
Investment income--net .02 .03 .16 .01 .18
Realized and unrealized gain
on investments and foreign currency
transactions--net .31 1.33 2.98 .72 1.67
---------- ---------- ---------- ---------- ----------
Total from investment operations .33 1.36 3.14 .73 1.85
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net -- (.04) (.12) (.09) (.05)
In excess of investment income--net -- -- (.19) -- --
Realized gain on investments--net -- (.30) (1.18) (.44) --
---------- ---------- ---------- ---------- ----------
Total dividends and distributions -- (.34) (1.49) (.53) (.05)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 15.00 $ 14.67 $ 13.65 $ 12.00 $ 11.80
========== ========== ========== ========== ==========
Total Investment Based on net asset value per share 2.25%+++ 10.23% 26.72% 6.20%+++ 18.56%
Return:** ========== ========== ========== ========== ==========
Ratios to Average Expenses 1.16%* 1.16% 1.15% 1.21%* 1.22%
Net Assets: ========== ========== ========== ========== ==========
Investment income--net .33%* .25% 1.19% .28%* 1.62%
========== ========== ========== ========== ==========
Supplemental Net assets, end of period
Data: (in thousands) $ 398,241 $ 418,499 $ 427,113 $ 258,868 $ 237,791
========== ========== ========== ========== ==========
Portfolio turnover 27.33% 70.93% 44.94% 24.49% 77.65%
========== ========== ========== ========== ==========
*Annualized.
**Total investment returns exclude the effects of sales charges.
++The Fund commenced operations on November 1, 1996.
++++Based on average shares outstanding.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Global Value Fund, Inc., June 30, 2000
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch Global Value Fund, Inc. (the "Fund") is registered
under the Investment Company Act of 1940 as a non-diversified, open-
end management investment company. The Fund's financial statements
are prepared in accordance with accounting principles generally
accepted in the United States of America, which may require the use
of management accruals and estimates. 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 Pricing SM 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.
(a) Valuation of securities--Portfolio securities that 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 that 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 or purchased are valued at
the last sale price in the case of exchange-traded options. In the
case of options traded in the over-the-counter market, valuation is
the last asked price (options written) or the last bid price
(options purchased). 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 readily 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) Repurchase agreements--The Fund invests in US Government
securities pursuant to repurchase agreements. Under such agreements,
the counterparty 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. If the counterparty
defaults and the fair value of the collateral declines, liquidation
of the collateral by the Fund may be delayed or limited.
(c) 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.
(d) Derivative financial instruments--The Fund may engage in various
portfolio investment strategies to increase or decrease the level of
risk to which the Fund is exposed more quickly and efficiently than
transactions in other types of instruments. 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).
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.
* 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
financial 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.
(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 its shareholders. Therefore, no Federal income tax
provision is required. Under the applicable foreign tax law, a
withholding tax may be imposed on interest, dividends, and capital
gains at various rates.
(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 dates. 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.
(g) Deferred organization expenses and prepaid registration fees--
Deferred organization expenses are charged to expense on a straight-
line basis over a period not exceeding five years. 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
Merrill Lynch Investment Managers, L.P. ("MLIM"). The general
partner of MLIM 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 FAM Distributors,
Inc. ("FAMD" or the "Distributor"), which is a wholly-owned
subsidiary of Merrill Lynch Group, Inc.
MLIM 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 .75%, on an annual basis,
of the average daily value of the Fund's net assets.
Pursuant to 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 .25% .75%
Class C .25% .75%
Class D .25% --
Merrill Lynch Global Value Fund, Inc., June 30, 2000
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
Pursuant to a sub-agreement with the Distributor, Merrill Lynch,
Pierce, Fenner & Smith Incorporated ("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 six months ended June 30, 2000, FAMD earned underwriting
discounts and MLPF&S earned dealer concessions on sales of the
Fund's Class A and Class D Shares as follows:
FAMD MLPF&S
Class A $ 59 $ 1,073
Class D $6,591 $94,195
For the six months ended June 30, 2000, MLPF&S received contingent
deferred sales charges of $1,558,326 and $19,984 relating to
transactions in Class B and Class C Shares, respectively.
Furthermore, MLPF&S received contingent deferred sales charges of
$99,616 and $73,145 relating to transactions subject to front-end
sales charge waivers in Class A and Class D Shares, respectively.
In addition, MLPF&S received $305,057 in commissions on the
execution of portfolio security transactions for the Fund for the
six months ended June 30, 2000.
Financial Data Services, Inc. ("FDS"), a wholly-owned subsidiary of
ML & Co., is the Fund's transfer agent.
Accounting services are provided to the Fund by MLIM at cost.
Certain officers and/or directors of the Fund are officers and/or
directors of MLIM, PSI, FDS, FAMD, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended June 30, 2000 were $683,455,121 and
$1,007,176,189, respectively.
Net realized gains (losses) for the six months ended June 30, 2000
and net unrealized gains (losses) as of June 30, 2000 were as
follows:
Realized Unrealized
Gains Gains
(Losses) (Losses)
Investments:
Long-term $ 222,051,811 $ 402,312,218
Options purchased -- (5,957,472)
Options written -- 5,963,429
-------------- -------------
Total investments 222,051,811 402,318,175
-------------- -------------
Currency transactions:
Options purchased (12,595,000) --
Forward foreign exchange
contracts -- 6,705,668
Foreign currency transactions 196,550 (35,744)
-------------- -------------
Total currency transactions (12,398,450) 6,669,924
-------------- -------------
Total $ 209,653,361 $ 408,988,099
============== =============
Transactions in call options written for the six months ended June
30, 2000 were as follows:
Nominal Value
Covered by Premiums
Options Written Received
Outstanding call options written,
beginning of period -- --
Options written 3,180,025 $ 13,744,976
-------------- -------------
Outstanding call options written,
end of period 3,180,025 $ 13,744,976
============== =============
As of June 30, 2000, net unrealized appreciation for Federal income
tax purposes aggregated $402,318,175, of which $633,965,209 related
to appreciated securities and $231,647,034 related to depreciated
securities. The aggregate cost of investments, including options, at
June 30, 2000 for Federal income tax purposes was $2,193,352,037.
4. Capital Share Transactions:
Net decrease in net assets derived from capital share transactions
was $292,265,931 and $377,884,006 for the six months ended June 30,
2000 and the year ended December 31, 1999, respectively.
Transactions in capital shares for each class were as follows:
Class A Shares for the Six Months Dollar
Ended June 30, 2000 Shares Amount
Shares sold 3,697,157 $ 54,093,746
Shares redeemed (3,451,676) (50,260,289)
-------------- -------------
Net increase 245,481 $ 3,833,457
============== =============
Class A Shares for the Year Dollar
Ended December 31, 1999 Shares Amount
Shares sold 6,381,325 $ 84,980,896
Shares issued to shareholders in
reinvestment of dividends and
distributions 200,732 2,645,651
-------------- -------------
Total issued 6,582,057 87,626,547
Shares redeemed (8,149,883) (108,186,635)
-------------- -------------
Net decrease (1,567,826) $ (20,560,088)
============== =============
Class B Shares for the Six Months Dollar
Ended June 30, 2000 Shares Amount
Shares sold 3,839,860 $ 55,162,743
Automatic conversion of shares (1,157,898) (16,753,921)
Shares redeemed (19,323,156) (275,703,814)
-------------- -------------
Net decrease (16,641,194) $(237,294,992)
============== =============
Class B Shares for the Year Dollar
Ended December 31, 1999 Shares Amount
Shares sold 23,913,192 $ 315,765,908
Shares issued to shareholders in
reinvestment of dividends and
distributions 3,270,641 42,681,877
-------------- -------------
Total issued 27,183,833 358,447,785
Automatic conversion of shares (2,089,262) (27,350,251)
Shares redeemed (45,818,424) (597,428,034)
-------------- -------------
Net decrease (20,723,853) $(266,330,500)
============== =============
Class C Shares for the Six Months Dollar
Ended June 30, 2000 Shares Amount
Shares sold 1,134,099 $ 16,265,636
Shares redeemed (3,258,316) (46,506,600)
-------------- -------------
Net decrease (2,124,217) $ (30,240,964)
============== =============
Class C Shares for the Year Dollar
Ended December 31, 1999 Shares Amount
Shares sold 4,283,140 $ 56,413,432
Shares issued to shareholders in
reinvestment of dividends and
distributions 579,612 7,563,937
-------------- -------------
Total issued 4,862,752 63,977,369
Shares redeemed (9,194,005) (119,834,496)
-------------- -------------
Net decrease (4,331,253) $ (55,857,127)
============== =============
Class D Shares for the Six Months Dollar
Ended June 30, 2000 Shares Amount
Shares sold 2,648,866 $ 38,471,389
Automatic conversion of shares 1,142,592 16,753,921
-------------- -------------
Total issued 3,791,458 55,225,310
Shares redeemed (5,777,996) (83,788,742)
-------------- -------------
Net decrease (1,986,538) $ (28,563,432)
============== =============
Class D Shares for the Year Dollar
Ended December 31, 1999 Shares Amount
Shares sold 5,587,713 $ 74,242,316
Automatic conversion of shares 2,074,596 27,350,251
Shares issued to shareholders in
reinvestment of dividends and
distributions 711,495 9,349,055
-------------- -------------
Total issued 8,373,804 110,941,622
Shares redeemed (11,121,027) (146,077,913)
-------------- -------------
Net decrease (2,747,223) $ (35,136,291)
============== =============
5. Short-Term Borrowings:
On December 3, 1999, the Fund, along with certain other funds
managed by MLIM, entered into a one-year, unsecured $1,000,000,000
credit agreement with The Bank of New York and certain other
institutions party thereto. The funds may borrow money for temporary
or emergency purposes to fund shareholder redemptions. The agreement
bears interest at the Federal Funds rate plus .50%. The Fund did not
borrow from the facility during the six months ended June 30, 2000.
6. Subsequent Event:
On July 3, 2000, the Fund's Board of Directors declared an ordinary
income dividend and a long-term capital gains distribution payable
on July 11, 2000 to shareholders of record as of July 5, 2000 as
follows:
Ordinary Long-Term
Income Capital Gains
Class A $.063246 $.343440
Class B -- $.343440
Class C -- $.343440
Class D $.024545 $.343440
